2016 Annual Report Stock code: 600320 900947 The company referred to: Shanghai Zhenhua Heavy, Zhenhua B share Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2016
Important Notice
I. Hereunder, the Board of Directors, the Supervisory Board, directors, supervisors and senior executives of the Company guarantee that the Annual Report is of authenticity, accuracy and integrity; it contains no major omission, false record or serious misleading statement; they will be responsible both individually and jointly for any of above guaranty.
II. All the directors of the company attend meeting of the board of directors.
III. Ernst& Young LLP. (Special general partnership) issued standard unqualified audit report for the Company. IV. TheCompany′s responsible person Song Hailiang, accounting responsible person Huang Qingfeng and accounting responsible person (accounting chief) Wang Jue hereby declare that the financial reports in this Annual Report are true, accurate and complete.
V. Report period profit distribution preplan or preplan for capital reserve transfer to increase capital stock as audited by the board not to distribute profit; not to convert reserve into capital stock.
VI. Risks declaration of prospective statements
□Applicable√Not applicable
VII. Whether non-operational fund occupancy by the controller and its related parties exists with the Company? No.
VIII. Whether there is external guaranty provision violating regulation or procedural decision-making within the Company?
No.
IX. Significant risk remind
√Applicable□Not applicable
The Company has described the risks in the annual report in details and the investors shall pay attention to that. Refer to the related chapters in thedirectors’ report for the description of the risk of the Company.
X. Others
□Applicable√Not applicable
2016 Annual Report Contents
Chapter I Definition ............................................................................................................................. 3 Chapter II Company Profiles and Key Financial Indicator .................................................................. 3 Chapter III Business Profile ................................................................................................................. 9 Chapter IV Discussion and Analysis of the Board of Directors ........................................................ 10 Chapter V Substantial Events ............................................................................................................ 23 Chapter VI Equity Movement andShareholder′s Profile ............................................................... 46 Chapter VII Preferred stock information ........................................................................................... 53 Chapter VIII Directors, Supervisors, Senior Executives and Employees .......................................... 54 Chapter IX Company Governance ..................................................................................................... 64 Chapter X Company Bond Information ............................................................................................. 68 Chapter XI Financial Statements ....................................................................................................... 71 Chapter XII Backup Documents Contents ....................................................................................... 507
2016 Annual Report Chapter I Definition
I. Definition
Terms used in this report means the following except for otherwise specified:
||||
|-|-|-|
|Definition of frequently used terms|||
|The Company|Refers to|Shanghai Zhenhua Heavy Industries Co., Ltd.|
|CCCC, controlling shareholder|Refers to|China Communications Co., Ltd.|
|Effective controller|Refers to|China Communications Construction Group|

 Chapter II Company Profiles and Key Financial Indicator
I. Company information
|||
|-|-|
|Statutory company name in Chinese|Shanghai Zhenhua Heavy Industries Co., Ltd.|
|Statutory Chinese Abbreviation of theCompany|Shanghai Zhenhua Heavy|
|English name of the Company|SHANGHAI ZHENHUA HEAVY INDUSTRIES CO.,LTD.|
|English Abbreviation of the Company|ZPMC|
|Legal representative|Song Hailiang|

II. Contact information
||||
|-|-|-|
||Board secretary|Securities Affair Agent|
|Name|Wang Jue|Li Min|
|Address|3261 Dongfang Road, Shanghai|3261 Dongfang Road, Shanghai|
|Tel.|021-50390727|021-50390727|
|Fax|021-31193316|021-31193316|
|Email|IR@zpmc.com|IR@zpmc.com|

III. Basic information of the Company
|||
|-|-|
|Registered address|3470, South Pudong Road, Shanghai|
|Post code|200125|

2016 Annual Report
|||
|-|-|
|Office address|3261 Dongfang Road, Shanghai|
|Post code|200125|
|Website|http://www.zpmc.com|
|Email|zpmc@public.sta.net.cn|

IV. Information disclosure and reference
|||
|-|-|
|Designated media for information|Shanghai Securities News, Hong Kong Wen Wei Po|
|Website designated by China Security RegulatoryCommission for disclosure of annual report|www.sse.com.cn|
|Annual report available at of the Company|Securities and Law Affairs Office|

V. Stock Profiles of the Company
||||||
|-|-|-|-|-|
|Stock Profiles of the Company|||||
|Short form of Stocktype|Stock exchange listedat|Short form of stock|Share code|Stock before change|
|A-share|Shanghai StockExchange|Shanghai ZhenhuaHeavy|600320|ZPMC Industries|
|B-share|Shanghai StockExchange|Zhenhua B-share|900947|-|

VI. Others
||||
|-|-|-|
|CPA’s employed by theCompany(Domestic)|Title|Ernst & Young (special general partnership)|
||Office address|Room 01-12, 17th Floor, No.1 DongfangDongcheng District, Beijing|
||CPAs to sign|Yang Lei， Tao Baiyi|

VII. Major Accounting Data and Financial Indicators in Last Three Years
(I) Major accounting data
Unit: Yuan Currency: RMB
|||||||
|-|-|-|-|-|-|
|Majoraccounting data|2016|2015|Growthover sameperiod prioryear (%)|2014||
|||||After adjustment|Before adjustment|

2016 Annual Report
|||||||
|-|-|-|-|-|-|
|OperatingIncome|24,348,087,928|23,272,394,677|4.62|25,477,011,081|25,069,421,487|
|Net Profitattributable toshareholders ofthe Company|212,419,946|212,411,967|0.004|202,223,273|199,386,986|
|Net Profit afterdeductingnon-recurringgains/losses|157,445,435|-214,409,604|Notapplicable|-79,581,135|-79,581,135|
|Net cashgenerated fromoperatingactivities|1,658,422,636|-1,831,961,473|Notapplicable|-863,628,925|-873,383,052|
||End of 2016|End of 2015|Growthover sameperiod prioryear（%）|End of 2014||
|||||After adjustment|Before adjustment|
|Net assetattributable toshareholders ofthe Company|15,196,736,263|14,869,572,883|2.20|14,990,495,511|14,780,603,810|
|Total assets|60,823,819,098|59,020,752,259|3.05|58,024,869,184|56,145,227,254|

 (II) Major Financial Indicators
|||||||
|-|-|-|-|-|-|
|Major financial index|2016|2015|Growth over sameperiod prior year (%)|2014||
|||||Afteradjustment|Beforeadjustment|
|Basic EPS (Yuan/share)|0.05|0.05|0.00|0.05|0.05|
|Diluted EPS (Yuan/share)|0.05|0.05|0.00|0.05|0.05|
|Basic EPS after deductingnon-recurringgains/losses(Yuan/share)|0.04|-0.05|Not applicable|-0.02|-0.02|
|Weighted average net assets earnings（%）|1.41|1.41|0.00|1.36|1.36|
|Weighted average net assets earningsratio after deducting non-recurringgains/losses（%）|1.05|-1.45|Increase 2.5 basepoint|-0.54|-0.54|

2016 Annual Report Description of the main accounting data and financial indicators for the first three years at the end of the reporting period
√Applicable□Not applicable
1. The company changed its accounting policies about methods on taxes calculation and report according to the Provision on Value-Added Tax issued by Ministry of Finance in Dec. 2016. It had no impact on the consolidation of 2016 and 2015 financial statement, as well as the net profit andowner’s equity. It can be seen on the 19th board meeting announcement.
2. This year, the company acquired32.51% of the equity of CCCC Tianhe Co., Ltd, and obtained its control rights through a concerted action agreement. Since China Communication Construction Co., Ltd is the controlling shareholder of the Company and CCCC Tianhe Co., Ltd before the acquisition, so this is the acquisition under the same control. The assets and liabilities of CCCC Tianhe acquired are accounted as the historical cost and included in the consolidated financial statements, namely regarded CCCC Tianhe as a part of the Company and the presented in the earliest period. Accordingly, the company has relisted the beginning balance of the corresponding data.
VIII. Accounting data difference in domestic and international accounting standards
(I)Difference of net profit and net assets attributable to shareholders of listed company in the financial report disclosed according to international accounting standards and domestic accounting standards.
□Applicable√Not applicable
(II) Difference of net profit and net assets attributable to shareholders of listed company disclosed in accordance with the foreign and domestic accounting standards.
□Applicable√Not applicable
(III) Description of the difference between accounting standards at home and aboard.
□Applicable√Not applicable
IX. Quarterly Major Financial Indicator in 2016
Unit: Yuan Currency: RMB
||||||
|-|-|-|-|-|
||Q1（Jan-Mar）|Q2（Apr-June）|Q3（July-Sept）|Q4(October-December)|
|Operating Income|4,635,581,695|7,166,060,906|6,590,100,486|5,956,344,841|
|Net Profit attributable toshareholders of the Company|53,657,723|58,635,638|43,276,720|56,849,865|
|Net profit attributable toshareholders of listed companyafter deducting non-recurringgains and losses|33,458,662|77,209,410|27,270,343|19,507,020|
|Net cash generated fromoperating activities|384,687,691|-279,931,650|4,210,477|1,549,456,118|

Description of difference between quarterly data and disclosed periodic data
□Applicable√Not applicable
X. Items and amount of non-recurring gains/losses
√Applicable□Not applicable
2016 Annual Report Unit: Yuan Currency: RMB
|||||
|-|-|-|-|
|Items of non-recurring gains/losses|2016|2015|2014|
|Gains and losses on disposal of non-currentassets|1,340,612|9,338,797|13,948,136|
|Government subsidy on current profit and lossstatement except for those closely related to theCompany′s operation, enjoyed by certain statestandard or certain quota|45,042,910|22,847,200|20,316,889|
|Current net profit and loss of the subsidiaryunder the same control of the company from thebeginning to the consolidated day|0|55,523,666|15,289,013|
|Gains/losses on fair value movement of tradablefinancial assets, tradable financial liabilitiesheld except for valid hedging business relatedwith company’s normal operation, andinvestment income acquired from disposal oftradable financial assets, tradable financialliabilities and financial assets available for sale|23,420,959|445,766,951|286,253,779|
|Non-operation revenue/expense apart fromabove|6,435,660|15,490,536|15,164,034|
|Minor shareholder′s equity impact|-6,708,080|-31,568,397|-9,922,714|
|Income tax impact|-14,557,550|-90,577,182|-59,244,729|
|Total|54,974,511|426,821,571|281,804,408|

XI. Items calculated by fair value
√Applicable□Not applicable
Unit: Yuan Currency: RMB
||||||
|-|-|-|-|-|
|Item name|Beginning Balance|Closing Balance|Currentmovement|Impact onCurrent Profit|
|Forward foreign exchange contract-FairValue appraisal income|676,082|4,615,775|3,939,693|3,939,693|
|Forward foreign exchange contract-FairValue appraisal income loss|-24,918,115|0|24,918,115|24,918,115|
|Equity Instrument available forsale-Jiangxi Huawu|337,650,826|313,612,402|-24,038,424|1,112,890|
|Equity Instrument available forsale-Qingdao port|298,821,560|340,253,175|41,431,615|13,058,634|

2016 Annual Report
||||||
|-|-|-|-|-|
|Equity Instrument available forsale-CRSC|530,976,235|615,346,381|84,370,146|2,814,813|
|Equity Instrument available forsale-Shenwan Hongyuan|1,734,399|1,366,388|-368,011|24,291|
|Equity Instrument available for sale-financial products|46,000,000|0|-46,000,000|2,101,669|
|Total|1,190,940,987|1,275,194,121|84,253,134|47,970,105|

 XII. Others
□Applicable√Not applicable
2016 Annual Report Chapter III Business Profile
I. The Company engaged in the main business, operation model and industry profile of the Company during the reporting period
The company is a well-known enterprise of heavy equipment manufacturing industry, and state-owned listed company holding A, B shares, headquartered in Shanghai, There are ten production bases in Shanghai, Nantong and other cities. Since 1998, it has been in the first place in global container crane order ranking. To seek for further development, the company actively explored the large steel structure and offshore heavy equipment market while consolidated the port machinery market. The company business scope includes: design, construction, installation and contracting of large port loading system and equipment, offshore heavy equipment, engineering machinery, engineering ships and large metal structural parts and their components and spare parts, ship repair; self-produced crane rental business, sales of the company products; international shipment by available machine special transportation ships, steel structure engineering professional contracting (operate the business if the related license is required).
II. Description of the massive change in main assets of the company during the reporting period
□Applicable√Not applicable
III. Analysis on the core competence during the reporting period
√Applicable□Not applicable
There is no significant change in core competitiveness of the Company during the reporting period.
2016 Annual Report Chapter IV Discussion and Analysis of the Board of Directors
I. Discussion and analysis of the Board
During the reporting period, facing the complicated situation both at home and abroad, the Company Board of Director and the management led all the employees to deeply implement “4321” and “1521” strategy and fully apply the 24 letters principle: “firm foundations, always innovate, adjust structure, change mode, integrate resources, reinforce management, develop culture and increase quality”. With focus on the enhancement of operation quality and core competitiveness, the Company aim to build a world-class company with international competition strength base on the assurance of thecompany’s stable and healthy continuous development in new state, reform and development. During the reporting period, the market structure was effectively adjusted, and the reform as deepened, the layout was gradually optimized and the ability to allocate the global resources was improved. Various business sectors achieved remarkable results while the profit increased steadily. The company made new records in the port machinery market, now the products were sold in 97 countries and regions in the world. Especially, the Quay Cranes occupied the82% market share in the global market counted by a famous English magazine-World Cargo News, which saw the peak since the company was founded in 1992.Though the global marine industry still developed slowly, the Company even made progress by strategies adjustment, the Company successfully produced 1000t wind turbine installation vessels, crane ships with autopilot and all-direction propeller system as well as programs like the two SEP-650 gained marvelous attention in this market. The big heavy special steel structure projects had more expansion and layout. There were highlights in the system integration and general contracting market. Our investment Portfolio has achieved gradual improvement, the shipping, installation and offshore wind power market have a higher level of potential the electrical market under going a steady development. The layout of the integrated services market was improved further.
II. Operation performance during reporting period
In period of report, the Company realized operation revenue 24.348 billion RMB, increased by4.62%; realized net profits 212 million RMB which belongs to parent company, nearly the same to 2015.
(I)Major business analysis
P&L and Cash Flow Statement related item movement analysis
Unit: Yuan Currency: RMB
|||||
|-|-|-|-|
|Item|Report Year|Prior Year|Growth （%）|
|Operating Income|24,348,087,928|23,272,394,677|4.62|
|Operating Cost|19,727,663,875|19,717,314,855|0.05|
|Selling expenses|100,435,778|79,388,743|26.51|
|Management expenses|1,759,032,746|1,551,222,564|13.4|
|Financial expenses|1,218,992,788|1,532,851,096|-20.48|
|Net cash flow from operating activities|1,658,422,636|-1,831,961,473|Not applicable|
|Net cash flow from investment activities|-726,215,078|2,565,598,510|-128.31|
|Net cash flow from financing activities|152,344,993|-318,811,177|Not applicable|
|R&D expenses|851,544,356|717,412,492|18.70|
|Operation taxes and surcharges|152,175,837|24,550,179|519.86|

2016 Annual Report
|||||
|-|-|-|-|
|Changes in fair value gains and losses - net|1,221,116,175|637,391,199|91.58|
|Gain on investment|118,513,425|498,236,958|-76.21|
|Net profits|307,344,236|194,205,688|58.26|
|Balance arising from the translation offoreign currency financial statements|25,605,643|10,400,161|146.20|
|Total comprehensive income attributed toparent company owners|327,163,380|100,532,162|225.43|
|Minority interest|94,924,290|-18,206,279|-|

1. Revenue and cost analysis
√Applicable□Not applicable
1.The operation revenues and costs increased because the selling of new projects increased. The average of gross margin in products increased because of the increase of operating income and the improvement of our management. 2. The sales expenses increased due to the expansion on global market.
3. The management expenses increased because theR&D expense increased this year.
4. The financial expenses decreased because of the decrease of exchange loss and interest cost.
5. The cash flow net amount in operation changed because the raw materials purchasing expenses and payment of engineering expenses increased.
6. The cash flow net amount in investment changed because our bank financial products became due and the profits increased.
7. The cash flow net amount in financing changed because the repayment of bank loan increased this year.
8. TheR&D expenses increased because the importantR&D projects like automated terminal increased this year. 9. The operation taxes and surcharges increased because the management expenses now are included in the operation taxes and surcharges according to the new accounting rules.
10. The fair value gains and losses– net amount increased because the increase of the products and account receivable depreciation reserves as well as the predictable losses that bring by contracts.
11. The gain on investment decreased because the restriction on bank financial products purchasing which led to profit decrease.
12. The net profit increased because the gross profit of the product increased.
13. The balance arising from the translation of foreign currency financial statements increased due to the changes of exchange rate.
14. The total comprehensive income attributed to parent company owners increased because the fair value of financial assets available for sale increased.
15. The minority interest changed because the total net profit of the non-wholly owned subsidiaries of the Company increased.
(1) Major business by industry, product and region
Unit: Yuan Currency: RMB
2016 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Major business by products||||||||
|By product|Operating Income|Operation cost|Grossmargin（%）||Operationrevenueincreaseover prioryear（%）|Operationcostincreaseover prioryear（%）|Gross margin increaseover prior year （%）|
|Container cranes|17,082,391,036|13,067,811,357|23.50||13.92|8.54|Increase 3.80percentage points|
|Bulk-cargomachinery parts|3,154,983,915|3,054,772,000|3.18||56.70|64.02|Decreased by 4.32percentage points|
|Heavy equipments|1,284,872,909|1,279,775,256|0.40||-67.76|-67.60|Decreased by 0.48percentage points|
|Steel structure andrelated income|1,035,829,290|938,105,979|9.43||25.38|17.78|Increase 5.83 percentagepoints|
|Construction-transferprojects|1,005,087,825|1,019,082,565|-1.39||95.52|127.63|Decreased by 14.30percentage points|
|Vessel shipping andothers|580,231,787|166,282,313|71.34||-14.77|-55.84|Increase 26.65percentage points|
|Major business by region||||||||
|By region|Operating Income|Operation cost||Grossmargin（%）|Operationrevenueincreaseover prioryear（%）|Operationcostincreaseover prioryear（%）|Gross margin increaseover prior year （%）|
|Mainland, China|9,057,171,421|7,486,770,441||17.34|9.51|11.28|Decreased by 1.31percentage points|
|Asia (excludingMainland, China)|8,774,618,285|7,454,726,034||15.04|49.88|55.99|Decreased by 3.33percentage points|
|America|1,660,773,333|1,025,270,894||38.27|-63.54|-75.11|Increase 28.68percentage points|
|Europe|1,694,807,875|1,564,465,012||7.69|-25.15|-29.01|Increase 5.02 percentagepoints|
|Mainland, China(export)|1,939,957,027|1,250,525,343||35.54|80.9|45.75|Increase 15.55percentage points|
|Africa|814,524,109|605,690,798||25.64|-2.51|-7.64|Increase 4.13 percentagepoints|
|Oceania|201,544,712|138,380,948||31.34|24.44|6.17|Increase 11.81percentage points|

2016 Annual Report Description of main business by industry, product, and region
√Applicable□Not applicable
Note: the amounts in the “Mainland, China (export)” means operation income exported to the overseas subsidiaries or affiliates, and then sold to the domestic customers.
(2) Production volume and sales volume analysis table
Description of production volume and sales volume
The Company mainly manufactures and sells the large port equipment, heavy equipment and steel structure, the "Accounting Standards- Construction Contract" is applicable.The income shall be confirmed according to the completion percentage method, so this table is not applicable.
(3) Cost analysis statement
Unit: Yuan
||||||||
|-|-|-|-|-|-|-|
|Product category|||||||
|Product|Costcomposition|Report periodamount|Reportperiod ratein totalcost (%)|Amount in the sameperiod last year|Total costin the sameperiod lastyear (%)|Reportperiodamountcomparedwith thesame periodlast year(%)|
|Container cranes|Raw material,labor,production costs|13,067,811,357|66.93|12,039,998,425|61.83|8.54|
|Bulk-cargo machineryparts|Raw material,labor,production costs|3,054,772,000|15.64|1,862,388,384|9.56|64.02|
|Heavy equipments|Raw material,labor,production costs|1,279,775,256|6.55|3,950,151,042|20.29|-67.60|
|Steel structure andrelated income|Raw material,labor,production costs|938,105,979|4.80|796,465,278|4.09|17.78|
|Construction-transferprojects|Subcontractingexpenses, rawmaterials|1,019,082,565|5.22|447,701,799|2.30|127.63|
|Vessel shipping andothers|Labor, fuelconsumption,depreciation etc.|166,282,313|0.85|376,525,357|1.93|-55.84|

Other description of cost analysis
□Applicable√Not applicable
2016 Annual Report (4) Main clients and suppliers statement
√Applicable□Not applicable
The sales of the first five clients reached to 6,245.59 million yuan which accounted for26% of the whole sales, and the related sales among them were 0.
The purchase amount of the first five suppliers reached to 1,839.73 million yuan which accounted for10.13% of the whole, and the related purchase amount among them were 0.
II. Cost
□Applicable√Not applicable
III.R&D expenses
R&D expenses breakdown
√Applicable□Not applicable
Unit: Yuan
|||
|-|-|
|R&D into cost expenses in reporting year|851,544,356|
|R&D into capital expenses in reporting year|0|
|R&D expenses total|851,544,356|
|Total R&D expenses ratio in operation revenue（%）|3.5|
|R&D employees quantity|1617|
|R&D employees’ ratio in the total employees(%)|18.25|
|R&D expenses ratio in capital (%)|0|

Deliberation
√Applicable□Not applicable
During the reporting period, the company was honored “Key industrial enterprises in well using intellectual property” by MIIT, the "Project of American New Bay Bridge" won the first prize of Shanghai Scientific and Technological Progress. Also, the company founded Shanghai Off-shore Engineer Research Institute with Shanghai Maritime University. This year our center of Lifting and Pipe laying Engineer Offshore was evaluated by the national Ministry of Science and Technology as well the assessments on Shanghai Intelligent Welding and Port Machinery Engineer centers by Shanghai STCSM.
4. Cash flow
√Applicable□Not applicable
The net cash flow from operating activities was 1.658 billion Yuan, mainly due to increase orders and payment for the purchase of raw materials and engineering costs. The net cash flows from the investment activities was -0.726 billionYuan，mainly due to increase payment of the bank financial product due. The net cash flow from the financing
activities is 0.152 billion Yuan, mainly due to the increasing repayment of bank loan, and the changes of exchange
rate contributed 0.075 billion Yuan changes.
(II) Description of non-major business causing significant change to profit
2016 Annual Report□Applicable√Not applicable
(III) Assets and liabilities analysis
√Applicable□Not applicable
1. Assets/liabilities statements
Unit: Yuan
|||||||
|-|-|-|-|-|-|
|Item|Closing balance atreporting period end|Reportingperiodend overtotalassets（%）|Closing balance atprior period end|Prior periodend overtotal assets（%）|Reportingperiod endamount overPrior periodend amountchange ratio（%）|
|Cash and cash equivalents|3,597,044,199|5.91|2,458,333,716|4.17|46.32|
|Non-current assets due withinone year|1,384,438,569|2.28|2,625,135,212|4.45|-47.26|
|Long-term equity investment|2,201,421,453|3.62|1,597,134,817|2.71|37.84|
|Advance payment|292,941,206|0.48|423,603,129|0.72|-30.85|
|Interest payable|140,195,803|0.23|289,590,733|0.49|-51.59|
|Non-current liabilities due withinone yea|799,574,356|1.31|6,837,115,692|11.58|-88.31|
|Other current liabilities|3,996,025,335|6.57|1,995,655,739|3.38|100.24|
|Long term loans|3,925,335,497|6.45|1,761,904,000|2.99|122.79|
|Long-term payable|1,618,361,164|2.66|719,861,943|1.22|124.82|
|Provision|293,115,783|0.48|220,141,178|0.37|33.15|
|Other comprehensive income|322,403,671|0.53|207,660,237|0.35|55.26|
|Minority equity|1,290,413,687|2.12|917,076,421|1.55|40.71|

Other statement
1. The cash and cash equivalents increased because the account receivable was due and the external payment decreased.
2. The non-current assets due within one year are increased mainly because the receivable of the long-term receivables of the NanjingNing High-tech “construction-transfer” project was due.
3. The long-term equity investment is increased mainly because the Company had more investment in overseas
corporate.
4. The deposit received decreased because this item was due, the company closed an account.
5. The interest payable decreased mainly because the Company paid the loan interest this year.
2016 Annual Report 6. Non-current liabilities due within one year decreased because the long-term loan that due within one year was due. 7. The other current liabilities increased because of the issue of short-term bonds.
8. The long-term loan increased because the meet the long-term development,
9. The long-term payable increased because the increase of equipment Leasing.
10. The provision increased because the company accrued the expense of services after sale.
11. The other comprehensive income increased because the fair value of financial assets available for sale increased. 12. The minority equity increased because the capital investment of the minority shareholders increased this year. 2. Restriction on main assets at the reporting period end
√Applicable□Not applicable
Restriction on main assets at the reporting period end
||||
|-|-|-|
|Item|Reporting period end book value|Reasons of restriction|
|Cash and cash equivalents|99,839,013|Open L/Cs and bond of L/Gs|
|Fixed assets|2,438,314,390|For mortgage of loans|
|Restricted long-term account payable|2,996,201,650|For pledge of loans|
|Total|5,534,355,053||

3. Others
□Applicable√Not applicable
(IV) Industry operating conditions analysis
In 2016, the Company signed the new contract of port machinery with amount of 2.617 billion USD, decreased by20.46% on yearly basis. The Company signed new contracts of marine engineering products and steel structure with amount of 537 million USD, decreased by35% on yearly basis. The Company signed new contracts of PPP investment with amount of 10.021 billion Yuan.
The global shipping market is readjusted, the port machinery market is maintaining an usual level, the domestic market needs time to develop. We can see that the needs of traditional port machinery reached saturation when the automatic equipments need is rising. The global market of ore and oil development keeps declining, and itwon’t be recovered in a short time. When it comes to the situation of steel structure market, it benefits from the blueprint of One Belt One Road. In the meanwhile, the company investment and exploration both at home and aboard are rising that will contribute a lot to the traditional major works.
(V) Investment analysis
1. External equity investment overall analysis
√Applicable□Not applicable
|||
|-|-|
|Investment amount of periodend|3,514,993,959|
|Investment amount movement|705,681,962|
|Investment amount same|1,428,141,461|

2016 Annual Report
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|-|-|
|period prior year||
|Investment amount movementratio (%)|-50.59|

(1) Major equity investment
□Applicable√Not applicable
(2 )Major non-equity investment
□Applicable√Not applicable
(3) Finance assets measured by fair value
√Applicable□Not applicable
Invested companies
Unit: RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Stock code|Shortform ofstock|Initialinvestmentcost|Equityratioofperiodbegin(%)|Equityratioofperiodend(%)|Book value ofperiod end|Gains andlosses ofreportingperiod|Owner’sequitymovement ofreportingperiod|Accountingaccount|Source ofequity|
|300095|Huawushare|11,071,606|7.22|5.90|313,612,402|1,112,890|-24,038,424|Finance assetsavailable-for-sale|Pay incurrency|
|06198（H-share）|QingdaoPort|308,515,588|2.16|2.16|340,253,175|13,058,634|41,431,614|Finance assetsavailable-for-sale|Marketpurchasing|
|03969（H-share）|CRSC|617,854,000|1.4|1.4|615,346,381|2,814,813|84,370,147|Finance assetsavailable-for-sale|Marketpurchasing|
|Total||937,441,194|/|/|1,269,211,958|16,986,337|101,763,337|/|/|

 Share-participating condition of financial companies
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name ofinvestedcompany|Initialinvestment(Yuan)|Equityratio ofperiodbegin(%)|Equityratio ofperiodend (%)|Book valueof periodend (Yuan)|Gains andlosses ofreportingperiod (Yuan)|Owner’sequitymovementofreportingperiod(Yuan)|Accountingaccount|Source ofequity|
|ShenwanHongyuan|200,000|Lessthan 0.01|Lessthan 0.01|1,366,388|24,291|-368,011|Finance assetsavailable-for-sale|Subscription|
|Total|200,000|/|/|1,366,388|24,291|-368,011|/|/|

(VI) Major assets and equity sales
□Major assetsot applicable
(VII)Key subsidiaries and share-participating companies
2016 Annual Report√Applicable□Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
|Company|Major product or service|Registeredcapital|Asset scale|Netprofit/(loss)|
|Shanghai ZhenhuaPort Machinery(Hong Kong) Co.,Ltd.|Design, manufacturing and sales of portmachinery, engineering vessel, steelstructure and other parts|50,000,000HKD|10,427,736,759|3,352,889|
|Shanghai ZhenhuaShipping Co., Ltd|Operation of sea transportation in coastalwaters; ordinary transportation in themiddle and lower reaches of YangtzeRiver; transportation of port machinery.|120,000,000|2,299,892,178|54,894,998|
|Nantong ZhenghuaHeavy EquipmentManufacturing Co.,Ltd|Installation of heavy port equipment,engineering vessels, heavy metalstructure and its parts; Gear box,container yard crane, super heavy-dutybridge steel structure, heavy marinemachinery equipment, weaving,installation; lease of cranes; contractingof steel structures etc|854,936,900|2,422,076,284|-59,150,920|
|Shanghai ZhenhuaHeavy IndustriesGroup (Nantong)Transmitter Co., Ltd|Construction and installation oflarge-scale port equipment, engineeringvessels, offshore heavy equipment,machinery and equipment, wind powergeneration equipment to use gear box;large slewing bearings, transmission,dynamic positioning, large anchor cutter,offshore oil platform lifting device andcomponents, accessories related weaving.|300,000,000|2,742,735,527|22,259,257|
|Shanghai Zhenhuamarine engineeringservice Co., Ltd(Primitive name:Shanghai ZhenhuaHeavy IndustriesVessel Transport Co.,Ltd)|International land, air, maritime freightforwarding, business, domestic freightforwarding, undertaking large-scale portequipment, marine equipment, marineengineering materials sales, marineconstruction and engineering and shipleasing, engaged in import and export ofgoods and technologies, transit trade,trade between enterprises and tradeagents within the free trade zone.|100,000,000|304,927,252|-18,779,615|
|Zhenhua PufengWind Energy(HongKong) Co., Ltd|Offshore wind turbine installation|16,326,531USD|17,510,018|-19,659,559|
|CCCC Tianhe Co.,Ltd|Integration design, R&D andmanufacturing of shield machine systemwith diameter of over 6m;integrationdesign, R&D and manufacturing oftunnel boring machine (TBM) system|681,627,100|2,722,807,116|85,197,056|

2016 Annual Report
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||with diameter of over 5m; design, R&Dand manufacturing of marine machineryand parts, cranes and parts, bridges andhigh damping bracket for buildings; salesof self-produced products. whole salesand import & export business of marinemachinery and parts, cranes and parts,bridges and high damping bracket forbuildings (if the state-operated tradecommodities, design quota and licensemanagement is not involved, the relatednational rules will prevail);installation,maintenance, leasing, consulting,technical services for ourproducts.(foreign capital proportion isless than 25%) (as for the items requiringthe approval, carry out the businessactivities after obtaining the approvalfrom the authorities)||||
|Shanghai ZhenhuaHeavy PortMachinery GeneralEquipment Co.,Ltd.|Sales of port loading machine, bulk cargoand container machine, port engineeringvessels (including floating engineeringcrane), material handling mechanicalproducts and parts, sales and technicalservices, installation and maintenance,technical consultation of all types ofmachine and equipment, key parts of theraw materials and accessories equipment.|2,184,730,000|2,273,914,423|12,569,775|
|Nanjing NinggaoNew ChannelConstruction Co.,Ltd|Engaged in construction, investment andmanagement of Ninggao NewChannelproject.|100,000,000|3,140,658,145|109,557,250|
|Shanghai ZhenhuaHeavy IndustriesQidong Marine Co.,Ltd|Machinery manufacturing|303,000,000|1,894,868,401|-6,401,505|
|Jiangsu LongYuanZhenhua MarineEngineering Co.,Ltd|Steel structure fabrication andinstallation, Foundation construction ofoffshore wind power facilities, equipmentinstallation and maintenance, submarinecable system construction, maintenance,marine construction, equipmentinstallation and maintenance, andinstallation of equipment leasing.|260,000,000|1,278,961,358|46,943,972|
|CCCC Estate YixingCo., Ltd.|Engaged in real estate development.|900,000,000|1,364,677,410|4,801,514|
|CCCC FinancialLeasing Co., Ltd|Financing lease|5,000,000,000|22,840,873,119|251,014,262|
|China|Construction of port, waterway, highway|50,000,000|315,835,115|-16,452,070|

2016 Annual Report
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|-|-|-|
|CommunicationsConstruction USAInc.|and bridge.|USD|

(VIII) Conditions of the structure of and share-participating companies
□Applicable√Not applicable
III. TheCompany’s discussion and analysis of theCompany’s future development
(I) Sector competition pattern and development trend
√Applicable□Not applicable
According to the analysis of port machinery market about purchase orders, the company reached to a peak in 2015 because of the major projects of automatic-port equipment sets. And it back blended to normal amount since changes of global economic and trends of trade. The domestic market keep steady, the Asia market remain firm, the North America market is still in the adjustmentperiod，and markets in Africa and Latin America are full of potentiality, but the Europe and Australia ones are declining.
The world economic and trades conditions are in downturns, Britain exited from EU and other members want to follow it, which makes the situation more puzzling. Many shipping lines are in dilemma. The Hanjin shipping Co. bankrupted, the MAERSK Group needed to be reorganized, the three top shipping companies must consolidated as well as Zhongyuan and Zhonghai. These changes had an influence on the market and investment on port construction. So, the port machinery market will definitely be in huge pressure. The global shipping market is readjusted, the port machinery market is maintaining an usual level, the domestic market needs time to develop. We can see that the needs of traditional port machinery reached saturation. The total needs are declining, so the operation and competitiveness will be worsening.
Though the global needs are declining in the port machinery market, but there are some hot-spots some area. The trend of world economic center transformation to the Asian-Pacific region is more apparent. Chinese economic growth will still remain at about6.5% in 2017.And the economic growth Southeast Asia will reach to4.8%, predicted by Asian Development Bank in 2017.With the consolidation of ASEAN economic speeding up and the One Belt One Road strategy, the trading level of 65 countries of Asia, Africa and Europe will be enhanced, that will produce a lot of demands on port machinery. The company thinks that the market will still be in the adjustment, the port machinery work will increase slightly.
The marine market has kept declining over two years, the company now is facing huge pressure on difficulties in manufacturing ships, financing and making new orders. The world economic development is still in the deep adjustment period, the consumption of oil and gas is not so good, now we can see that the supply exceeds demand. The rental of marine equipments became lower and lower so do the newly made ships and the used ones. Even the price of oil and gas increase and the explosion of oil and gas became better, the recovery weak state will continue for a long time because of the surplus of oil platforms and marine supported ships. In general, the low oil price that led to the decline of demand of equipments, the surplus of equipments and huge amount of orders make the world marine equipmentmarket’s recovery weak state will continue for a long time. Delay, be put on ice and even cancel projects and orders will become common.
With One Belt One Road strategy and Yangtze River economic belt improvement, solid foundation at home and aboard, the recovery of offshore wind power facilities market, the capacity steel structure market are enhancing. Although the company has its advantage on the steel structure of bridge in high-end market, but it still in the middle and lower reach to the industry chain. There is cut-throat competition in the steel structure of bridge market, and the price of offshore wind power facilities nearly reach to the cost. Also there are some exacting terms in contracts. The lack of structural supply, technology and manufacturing experience in high-end marine region, on advantages in low-end marine region. The financialsector’s protection, transportation cost and etc. bring challenges to the steel
structural industry.
(II) The Companyialsector’s protection,
√Applicable pplicapplicable
2016 Annual Report The Board systematically and scientifically studied the basic situation both at home and abroad, analyzed domestic reform status, analyzed major competitions and self-owned advantages and disadvantages. The Board clearly set the overall development concept, key tasks and guarantee measures in 2017, focusing on innovating drive, transformation and upgrade, improving the quality and efficiency, which ensures the stable development of the Company in new common state, reform and development.
1. Strategic position: to build the Company into an excellent international company. Build the industry layout of vertical integration, horizontal correlation limited diversification and internationalization. Build No. 1 general contractor of port machinery manufacturing and automated port system; world-famous and domestic leading marine engineering equipment integrator; world-famous and Asia No. 1 marine engineering services and new energy engineering general contractor; world-famous and domestic leading electrical system general contractor; world-famous special overseas developer and industry well-known equipment manufacturer and transit infrastructure investment operator.
2. The overall working concept for 2017: Establish innovative, coordinative, green, open and sharing development concept, surrounding “one center”, promote “three industrialization” target, emphasize the “4 main lines”, establish “6 driving forces” and improve “6 capacities”, insist on “24word′s principle”, continue to act as a powerful player, lay foundation to become the world excellent company with international competition.
3. 2017 major tasks:
（1）Continuously develop eight major works and make sure for the stable growth.
（2）Continuously center on reform and innovation principle and make the business strategies done.
（3）Continuously center on overall cost efficiency and focus on basis management and benefit increasing.
（4）Continuously center on solid foundation and improve the operation quality
（5）Continuously strengthen team building and improve the human resources management ability.
（6）Continuously strengthen party buildings as a state-own enterprise and fight for corruption.
(III) Business planning
√Applicable□Not applicable
In 2017, the Company plans to achieve steady growth in revenue, and signs more new orders, implements “insist on the innovation and development, the coordinated development, the green development, open development and sharing development” ; insist on five development concepts to accelerate the innovation, mergers and acquisitions, digitalization and internationalization development r, focus on reform and innovation, deepen the organizational structure adjustment, reduce the cost and improve the efficiency, consolidate the foundation, enhance the operation quality, accelerate the integration of resources, increase the gross profit margin, to ensure the stable development of the company in new common state, reform and development.
(IV) Possible risks
√Applicable□Not applicable
Market risk: the international economy is still in the declining state with limited growth, the slow economic development may become the “new ordinary state” in the domestic market. The industry trend is impacted by the decreasing ore and oil prices. The shipping capacity is excessive and the port machinery market increased a little. The marine heavy industry is in the low position in the market. As for the offshore oil and gas service, the large piece handing and movement transportation market decreases with excessive capacity. The port machinery market is still in main position in scale and profit contribution, but other markets are still being cultivated.
Solution: facing the market challenges at home and abroad, the Company will deepen the reform, consolidate the basic management and enhance the risk resistance, focus on “1.5.2.1”for optimal adjustment of market and business structure; to promote the four transition from selling products to sell excellent products (Technology); from selling equipment to selling system; from selling hardware to selling software (service); from the production mode, management mode, the business model in Industry 2.0 change to new model, profit model innovation in Industry 4.0, promote structure adjustment and resources integration, drive structure adjustment and resource integration; drive
enterprise sustainable development by transformation and upgrade.
2016 Annual Report Financial risks: credit risk and exchange rate risk, increased volatility of the RMB bidirectional fluctuation of exchange rate and large load capacity.
Solution: Develop rational planning for forward rate look, control exchange rate risk, emphasis on research on policies and strategies of foreign exchange risk management, pay close attention to change in exchange rates, regularly complete analysis of exchange rate movements, conduct strict implementation of financial derivatives related to the approval process, produce good statistics on product current exchange rate, further reinforce the basic work of foreign exchange management, and reduce thecompany’s exchange rate risk. By arranging favorable settlement terms in the contract (such as the signing of a contract with the RMB exchange rate pegged, increase the prepayments proportion plus early settlement, etc.), or within the range permitted by thecountry’s financial foreign exchange policy, make use of hedging, foreign exchange factoring and other appropriate financial instruments or means to control and lock the exchange rate risk.
As for credit risk, by reducing raw material reserves, compression of infrastructure spending, adjusting thecompany’s debt structure through a variety of ways (such as medium-term notes, short-term bonds), reducing financing costs, strengthening the collection of accounts receivable, gradually reducing the amount of bank debt, reduce business risks. (V) Other
□Applicable√Not applicable
IV. Explanation of the case and reasons that company does not disclose due to rules not applicable or special reasons□Applicable√Not applicable
2016 Annual Report Chapter V Substantial Events
I. The plan for the distribution of ordinary profits or the transfer of capital accumulation fund
(I) The formulation, implementation or adjustment of the cash dividends policy
√Applicable□Not applicable
According to CSRC Notification on further implementation of issues concerning listed company cash dividends sharing (Zhengjian Fa[2012]37), as proposed by the 10th meeting of theCompany’s fifth session of Board held on August 21, 2012, amendment would be made to the Articles of Association of the Company concerning profit distribution and cash dividends policy, and as result dividends sharing standard and proportion are clear, related decision making program and mechanism compete, with full maintenance of smallshareholders’ legitimate rights and interests, giving them full excess to expressing their views and demands.
(Ⅱ) Profit distribution pre-plan or plan, capital reserve converted into share capital plan or preplan of the Company for last three years (including report period)
Unit: Yuan Currency: RMB
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|-|-|-|-|-|-|-|
|BonusYear|Bonus sharefor every 10shares (share)|Dividend forevery 10 shares(Yuan) (beforetax)|Sharesconverted forevery 10 shares(share)|Cash dividendamount(before tax)|Net profitattributable to listedcompanyshareholders inprofit-sharing year|The ratio of netprofit attributable tolisted companyshareholders inprofit-sharing year(%)|
|2016|0|0|0|0|212,419,946|0|
|2015|0|0|0|0|212,411,967|0|
|2014|0|0|0|0|202,223,273|0|

(III) Share repurchase is included in the cash dividend by cash offer
□Applicable√Not applicable
(IV) The profit in the report period and the profit that can be distributed by common shareholders of parent company are positive, if the cash profit distribution plan of common stock is not proposed, the company shall disclose the reasons, purpose and use plan of the profit not distributed in details
√Applicable□Not applicable
|||
|-|-|
|Reason for profit in the report period and the profit that can bedistributed by common shareholders of parent company arepositive but the common stock cash profit distribution plan isnot proposed|Purpose and use plan of profits not distributed|
|Although the company made profit in 2016 the company wasin the important period of adjustment of the business structure.The bank liability with interest is still large, accounting for ahigher proportion of the total liabilities. In order to effectivelyreduce the turnover of capital and operating risk, and maintainthe long-term interest of shareholders. The profits distributionplan in 2016 is:, not distributed or capital reserve for capitalstock.|For the daily operation of the company|

II. Commitment performance
2016 Annual Report (I) Note of the board of directors and the board of supervisors for "non-standard audit report" of the accounting firm.
□Applicable√Not applicable
(II) Analysis of the reasons and impact of the board of directors on the changes of accounting policies, accounting estimates and accounting methods
Whether to achieve the original profit forecast and the analysis for reasons
□Achieved□Not Achieved√Not applicable
III. Capital occupied situation and clearing arrears progress in the report period
□Applicable√Not applicable
IV. Notes of the board of directors for "non-standard audit report" of the accounting firm
□Applicable√Not applicable
V. The analysis of reasons and effects on the changes of accounting policies, accounting estimates and the major error correction
(I)The analysis of reasons and effects on the changes of accounting policies and accounting estimates
√Applicable□Not applicable
In December 2016, the Ministry of Finance promulgated the Treatment Provisions for Value-added Tax (Cai Kuai[2016] No. 22, relevant taxes accounting documents and accounting policy for presentation shall be changed according to the provisions.
I. The title of “Business tax and Charges” is changed to “Tax and Charges”, which accounts consumption tax, urban maintenance and construction tax, resource tax, education surcharges and the property tax, land use tax, vehicle use taxes, stamp duty and other relevant taxes for enterprise ' s business activities; the project “Business tax and Charges” is adjusted to “Tax and Charges”. Since May 1, 2016, “Tax and Charges” listed in the profit statement is no longer listed in "Management Fee"; the charges produced before May 1, 2016 (with the exception of the the property tax and land use tax have been included in the “Business tax and Charges” related to the investment real estate), are still listed in "Management Fee". Due to the above requirements, the content of the presentation is different between the year 2016 and 2015 of "Tax and Charges" and "Management Fees", but had no effect on for the year 2016 and 2015 merger and net profit and the merger and shareholders' equity.
2. "VAT Payable" account under the "Taxes Payable", "VAT Unpaid", " Pending Deduct VAT on Purchase", “Input Tax on Pending Certification" and "Left the Deductible Tax" shall be listed in the "Other Current Assets" in the balance sheet or "Other Non-current Assets"; the same as "Taxes Payable, Stay - recognition Tax ". Due to the above requirements, the content of the presentation is different between the year 2016 and 2015 of "Other Current Assets" in the balance sheet or "Other Non-current Assets", but in the end of 2015 the merger and the company had no effect on the balance sheet.
(II) The analysis of reasons and effects on the changes of the major error correction
□Applicable√Not applicable
(III)Communicate with former accounting firm
□Applicable√Not applicable
(IV)Other statement
□Applicable√Not applicable
VI Appointment and dismissal of accounting firm
Unit: (10,000) Yuan Currency: RMB
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|Original appointment|Current appointment|

2016 Annual Report
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|Domestic accounting firm|PricewaterhouseCoopers Zhong Tian CPAsCo. Ltd.(Special general partnership)|Ernst & Young(Special general partnership)|
|Domestic accounting firm payment||340|
|Domestic accounting firm auditperiod|22|1|

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|-|-|-|
||Name|Payment|
|Internal control audit accountingfirm|Ernst & Young (special general partnership)|40|

Appointment and dismissal of accounting firm
√Applicable□Not applicable
In accordance with relevant provisions of SASAC, the audit team of PricewaterhouseCoopers Zhong Tian CPAs Co. Ltd. (Special general partnership) has provided audit services for the company for many years. By the decision for 11th meeting of the Board of Directors and 2015 Annual General Meeting of Shareholders, Ernst& Young (special general partnership) is hired ascompay’s domestic auditing institution in 2016.
Change to appointment accounting firm during auditing period
□Applicable√Not applicable
VII. Face with the risk for suspended marketing
(I) Reasons for suspended marketing
□Applicable√Not applicable
(II) To make measures for the company
□Applicable√Not applicable
VIII The situations and reasons for delisting
□Applicable√Not applicable
VI. Bankruptcy reorganization related matters
□Applicable√Not applicable
X. Substantial lawsuits, arbitrations
√The Company has major litigation and arbitration. The Company has no major litigation and arbitration.
(I) Lawsuits, arbitrations disclosed in the provisional announcement without subsequent progress
□Applicable√Not applicable
(II) Lawsuits, arbitrations not disclosed in the provisional announcement with subsequent progress
√Applicable□Not applicable
Unit: Yuan Currency: RMB
In the report period
2016 Annual Report
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|Prosecut or(applicant)|Defendant|Partywithjointliabilities|Type ofsuing orarbitration|Suit(arbitration)profiles)|Suit(arbitration) amountinvolved|Suit(arbitration)constitutesprojectliabilitiesor not|Suit(arbitration)progress|Suit(arbitration) rulingand impact|Suit(arbitration)rulingimplementation|
|ShanghaiZhenhuaHeavyIndustries Co.,Ltd|Petrofac|No|Arbitration|In 2013, theCompany hassigned theconstructionand salescontractabout a 6000ton pipingship withPetrofac(JSD6000)Limited(hereinafterreferred to asPetrofac). OnOctober 9,2015,PetrofacissuedContractTerminationLetter withthe reasonthat theproject isdelayed andmeets theterminationarticle.Petrofacasked forterminatingthe contractand requestedthe Companyto return theprepaidpayment andinterest, aswell asassumed theresponsibilityof the losscaused by theterminationof thecontract. The|We standfor about$200million;Petrofac'scounterclaim calls for$182million or$213million intwodifferentways.|0|Court tobe opensoon|Not yetruled|Not yet ruled|

2016 Annual Report
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|Companyrejected theclaim.Petrofachonored thedemandguaranteefrom theopening bankin December2015, withtotal amountof 44,720,000USD. TheCompanyestablishedspecial teamand hiredsenior legalteam both athome andabroad toactivelyadvocate theCompany’srights andprotect theCompany’srights fromdamaged. TheCompany hasapplied forarbitration tothe LondonInternationalArbitrationCourt inJanuary andaskedPetrofac toreturn thepayment ofLetter ofGuaranteeandcompensatedfor the loss of$200 million.Afterreceiving thearbitrationapplicant ofthe Company,Petrofacfilled acounterclaim,|

2016 Annual Report
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|||||and asked theCompany forcompensatingabout 182million USDor 213million USDunder therequirementsof continuingbuilt ship ornotcontinuingbuilt ship.||||||
|FlourCompany|ShanghaiZhenhuaHeavyIndustries Co.,Ltd|No|Lawsuits|In 2008 theCompany andFlour Limited(hereinafterreferred to as"Fluor")signed anagreement ofsales andinstallationfor windpower steelpipe pileproducts forthe BritishWind PowerProject. In theprojectconstructionprocess, theCompany andFluor, by wayof friendlyconsultationsand in thespirit of goodcooperation,maintaindisputehandlingnormalcommunicationmechanism.In 2010, fortheimplementation of thecontract, afterreview by theboard of|About£250million|0|Court tobe opensoon|Thequantitativeexamination of a casehas not yetbeenrendered|Thequantitativeexaminationof a case hasnot yet beenrendered|

2016 Annual Report
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|directors ofthe(cid:13)Company, theCompanysigned amutualexemptionletter withFluor, and in2011 settledthe remainingpayment.Afterwards,Flourproducedclaim to theCompany forqualitycompensation, andrequested theCompany tocash thepay-on-claimqualityguaranteebond, whilethe Companyrejected theclaim. OnMarch 20,2014, Flourcashed theabove amountof 23,409,750euro letter ofguarantee tothe bankopened theletter ofguarantee. InSeptember2014, Flourinitiatedproceedingsfor the breachcaused by theproblemsrelated to theproductquality toHigh Court ofJustice,Queen’sBenchDivision, The|

2016 Annual Report
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|TechnologyandConstructionCourt(hereinafterreferred to as“TCC Courtof BritainQueen’sBench”) andasked theCompany forthecompensationof 250millionPounds foradditional testand repaircost, projectperiod delayand relatedloss.(including thecashed letterof guaranteeamount of23,409,750Euro). TheCompanydidn’tacknowledgethe claim forthecompensationfrom Flour.Since then,the Companyprepared theevidencedisclosure,witnesstestimony,exchangework andotherpreparatorywork beforethe court.FromFebruary toMarch, April,June of 2016,British HighCourt TCCcourt was in|

2016 Annual Report
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|||||trial for firstinstance onobligationpart. Thecourt trailplan of thefirstinstance’squantitativepart will be intrail inMay, 2017.||||||
|ShanghaiZhenhuaHeavyIndusries(Group) Co., Ltd,ShanghaiZhenhua PortMachineryHeavy IndustryCo., Ltd.|NantongHuafuPort Co.,Ltd, LiAidong,ZhaoXiaohua|No|Lawsuits|At the end ofFebruary2014, thecompanycompleted theincreasingassets fororiginalJiangsuDaoda OceanEngineeringCo., Ltd, thecapital of67% stake, atthe sametime, beforeFebruary 28,2014, thelosses of thecompany is incharged of bythe originalshareholders -Li Aidong,ZhaoXiaohua ofNantongHuafu PortCo., Ltd.During theubsequentbusinessprocess, findthe disclosefalse ofparts of thecompanylitigationmatters ordebt leadingto produce aseries oflosses,|RMB368.722millionYuan|0|Court tobe opensoon|Not yetruled|Not yet ruled|

2016 Annual Report
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|through therelated auditandadjustment,etc, that lossof RMB368.7222million Yuanshould be incharged in theoriginalshareholdersand thelawsuit againafter aninconclusive.|

(III) Other statements
□Applicable√Not applicable
XI. Punishment and correction of listed company and its directors, supervisors and senior executives, the controlling shareholder, actual controller and purchasers
□Applicable√Not applicable
XII. During the period of report, the credit statement for the company, holding shareholder and actual controller□Applicable√Not applicable
XIII. Company equity incentive plan, employee ownership plan or other employee incentive situations and its influence
(I) Incentive awarded for events disclosed in the provisional announcement and without changes or progresses of following-up implementation
□Applicable√Not applicable
(II) Incentive awarded for events not disclosed in the provisional announcement
Stock ownership incentive awarded
□Applicable√Not applicable
Other descriptions
□Applicable√Not applicable
Employee stock ownership plan
□Applicable√Not applicable
Other incentive awarded
□Applicable√Not applicable
XIV.Magnificent related transactions
(I) Related transactions in connection with routine operations
1. Events disclosed in the provisional announcement and without changes or progresses of following-up
implementation
√Applicable□Not applicable
2016 Annual Report
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|-|-|
|Events overview|Index|
|The twelfth meeting of sixth Board of Directors on June30, 2016approved “Proposal to Invest and EstablishChengdong District of Huaiyin and PPP project ofsurround port”, “Proposal to Invest and Establish Urbanlife support and infrastructure of Zhenjiang,Jiangsu ”|Shanghai Stock Exchange website: www.sse.com.cn andShanghai Securities News and Hong Kong Wen Wei Po onJul 2, 2016.|
|The seventeenth meeting of sixth Board of Directors onDec. 26, 2016approved “Proposal toPhase I Project ofInvestemnt in Building Xiangtan Xiashesi Jingyisu Riverto Huashi Road”.|Shanghai Stock Exchange website: www.sse.com.cnandShanghai Securities News and Hong Kong Wen Wei Po onDecember 27, 2016.|

2. Events disclosed in the provisional announcement and without changes or progresses of following-up implementation
□Applicable√Not applicable
3. Events not disclosed in the provisional announcement
√Applicable□Not applicable
Unit: Yuan Currency: RMB
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|Related partytransaction|Incidencerelation|Type of relatedpartytransaction|Type of relatedtransaction|Pricingprinciple ofrelatedtransaction|Price of relatedtransaction|Relatedtransactionamount (%)|
|CCCC SecondHarborEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|389,557,043|1.60|
|CCCCInternationalShipping Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|233,003,192|0.96|
|CHUWABUSSANcompany limited|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|193,053,287|0.79|
|China Road andBridge Co., Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|179,013,839|0.74|
|CCCC ThirdHarborEngineeringInvestigationand Design|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|175,876,344|0.72|

2016 Annual Report
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|Institute Co., Ltd|||||||
|CCCC TianjinWaterwayBureau Co., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|155,198,269|0.64|
|China HarborEngineering Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|147,800,178|0.61|
|CCCC TunnelEngineering Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|144,526,777|0.59|
|CCCC FourthHarborEngineeringInvestigationand DesignInstitute Co., Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|121,403,077|0.50|
|Road & BridgeInternationalCo., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|81,639,431|0.34|
|CCCC ThirdHarborEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|81,407,370|0.33|
|No.3Engineering Co.,Ltd. of CCCCSecond HarborEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|69,043,050|0.28|
|No.2Engineering Co.,Ltd. of CCCCSecond HarborEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|62,720,000|0.26|
|No.2Engineering Co.,Ltd. of CCCCFirst HarborEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|42,279,112|0.17|

2016 Annual Report
||||||||
|-|-|-|-|-|-|-|
|CCCC-SHECSecondEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|37,101,137|0.15|
|Friede &Goldman, Llc|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|26,755,168|0.11|
|CCCC FourthHarborEngineeringInstitute Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|26,568,685|0.11|
|CCCC ThirdHighwayEngineeringBureau Co., Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|22,068,890|0.09|
|CCCCFinancingRental Co., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|20,652,755|0.08|
|Hainan CCCCFourth HarborConstructionCo., Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|19,279,683|0.08|
|CCCC FourthHarborEngineering Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|17,389,362|0.07|
|JiangsuLongYuanZhenhua MarineEngineeringCo.,Ltd|Joint venture|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|16,648,649|0.07|
|CCCC SecondHighwayEngineeringBureau Co., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|11,802,499|0.05|
|ChinaCommunicationsCorporation|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|11,627,327|0.05|
|CCCC EastChina|Parentcompany ′ s|Sell goods|Purchase portmachinery|Based on|10,697,446|0.04|

2016 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Investment Co.,Ltd|wholly-ownedsubsidiary||from theCompany|market price|||
|CCCC FirstHarborEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|8,219,845|0.03|
|CCCC HighwayBridges NationalEngineeringResearch CentreCo., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|4,829,060|0.02|
|Hong KongZhenhuaEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Sell goods|Purchase portmachineryfrom theCompany|Based onmarket price|134,656|0.00|
|Zhenhua MarineEnergy (HongKong) Co., Ltd|Joint venture|Other|Lease the shipsfrom theCompany|Based onmarket price|169,580,194|0.70|
|CCCC TunnelEngineering Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Other|Lease theshield from theCompany|Based onmarket price|125,440,000|0.52|
|ChinaCommunicationsCorporation|Parentcompany ′ swholly-ownedsubsidiary|Other|Lease the shipsfrom theCompany|Based onmarket price|1,606,804|0.01|
|CCCC ThirdHarbor SecondEngineering Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Other|Lease theshield from theCompany|Based onmarket price|501,755|0.00|
|CCCC TianjinWaterwayBureau Co., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|331,677,108|1.83|
|CCCC SecondHighwayConsultantCo., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|91,221,324|0.50|
|CCCC FourthHighwayEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|75,048,039|0.41|
|CCCC Third|Parent|Accepting|Entrusting|Based on|64,290,666|0.35|

2016 Annual Report
||||||||
|-|-|-|-|-|-|-|
|HarborEngineering Co.,Ltd.|company ′ swholly-ownedsubsidiary|labor|company forprocessing|market price|||
|No.1Engineering Co.,Ltd. of CCCCFirst HarborEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|22,573,250|0.12|
|ShanghaiCommunicationsConstructionContracting Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|21,633,168|0.12|
|JiangsuLongYuanZhenhua MarineEngineeringCo.,Ltd|Joint venture|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|14,565,939|0.08|
|ChinaCommunicationsCorporation|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|13,661,221|0.08|
|CCCC SecondHighwayEngineeringBureau Co., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|7,079,715|0.04|
|CCCC TianjinIndustry andTrade Co., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|296,154|0.00|
|CCCC EastChinaInvestment Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|247,863|0.00|
|CCCC ThirdHarborEngineeringInvestigationand DesignInstitute Co. Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|56,913|0.00|
|ShanghaiJiangtianIndustrial Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|25,173|0.00|

2016 Annual Report
||||||||
|-|-|-|-|-|-|-|
|CTTICShanghai Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Acceptinglabor|Entrustingcompany forprocessing|Based onmarket price|17,094|0.00|
|CHUWABUSSANcompany limited|Parentcompany ′ swholly-ownedsubsidiary|Purchasegoods|Supplymaterials toCompany|Based onmarket price|182,477,645|1.01|
|ShanghaiZhenhua HeavyIndustries(Group)ChangzhouPaint Co., Ltd.|Joint venture|Purchasegoods|Supplymaterials toCompany|Based onmarket price|120,664,901|0.66|
|CCCC ShanghaiEquipmentEngineering Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Purchasegoods|Supplymaterials toCompany|Based onmarket price|100,037,221|0.55|
|CCCC FourthHighwayEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Purchasegoods|Supplymaterials toCompany|Based onmarket price|2,993,504|0.02|
|CCCC TianjinPort &WaterwayProspection &Design ResearchInstitute Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Purchasegoods|Supplymaterials toCompany|Based onmarket price|1,084,615|0.01|
|CCCC TianjinPort Prospection& DesignResearchInstitute Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|Purchasegoods|Supplymaterials toCompany|Based onmarket price|1,084,615|0.01|
|Nanjing CCCCWeisanlu RiverTunnel Co., Ltd|Parentcompany ′ swholly-ownedsubsidiary|Purchasegoods|Supplymaterials toCompany|Based onmarket price|72,175|0.00|
|ChinaCommunicationMaterials &Shipment Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|Purchasegoods|Supplymaterials toCompany|Based onmarket price|14,248|0.00|
|Total||||/|3,658,247,435|8.61|

2016 Annual Report
|||
|-|-|
|Details about the returned sales with high amount||
|Explanation of related trade|Note: May 9, 2016, the Company2015 Annual General Meetingapproved ”Motion on the CompanySigning Framework Agreementwith CHINACOMMUNICATIONSCONSTRUCTION CO., LTD onRoutine Related Transactions.”In 2016, our companyand its subordinate units and theChina CommunicationsCorporation and its subsidiarybodies could undertake relatedparty transactions in the dailyoperation on annual basis withtransaction amount not exceeding11 billion Yuan. TheAnnual General Meeting hasauthorized the Company ′ smanagement to handle relevantspecific matters.|

(Ⅱ) Associated transactions of asset or equity acquisition, sales
1.Events disclosed in the provisional announcement and without changes or progresses of following-up implementation
□Applicable√Not applicable
2. Events disclosed in the provisional announcement and without changes or progresses of following-up implementation
□Applicable√Not applicable
3. Events not disclosed in the provisional announcement
□Applicable√Not applicable
4. When the performance agreement is concerned, the performance during the reporting period shall be disclosed□Applicable√Not applicable
(III) Major related transactions of common foreign investment
1. Events disclosed in the provisional announcement and without changes or progresses of following-up implementation
√Applicable□Not applicable
|||
|-|-|
|Events overview|Index|
|The thirteenth meeting of sixth Board of Directors onAug. 30th, 2016 approved “Proposals for theEstablishment of Zhenhua Huigu (China) GeologicalServices Co., Ltd”, “Proposal for Joint Stock to LatinAmerican’s Regional Company”|Shanghai Stock Exchange website: www.sse.com.cnandShanghai Securities News and Hong Kong Wen Wei Po onAugust 31, 2016.|
|The thirteenth meeting of sixth Board of Directors on|Shanghai Stock Exchange website: www.sse.com.cnand|

2016 Annual Report
|||
|-|-|
|Aug. 30th, 2016 approved “Proposals for theEstablishment of Zhenhua Huigu (China) GeologicalServices Co., Ltd”, “Proposal for Joint Stock to LatinAmerican’s Regional Company”|Shanghai Securities News and Hong Kong Wen Wei Po onOctober 29, 2016.|
|The thirteenth meeting of sixth Board of Directors onAug. 30th, 2016 approved “Proposals for theEstablishment of Zhenhua Huigu (China) GeologicalServices Co., Ltd”, “Proposal for Joint Stock to LatinAmerican’s Regional Company”|Shanghai Stock Exchange website: www.sse.com.cnandShanghai Securities News and Hong Kong Wen Wei Po onDecember 20, 2016.|

2. Events disclosed in the provisional announcement and without changes or progresses of following-up implementation
□Applicable√Not applicable
3. Events not disclosed in the provisional announcement
□Applicable√Not applicable
(IV) Current accounts of credits and liabilities with related parties
1.Events disclosed in the provisional announcement and without changes or progresses of following-up implementation
□Applicable√Not applicable
2. Events disclosed in the provisional announcement and without changes or progresses of following-up implementation
□Applicable√Not applicable
3. Events not disclosed in the provisional announcement
√Applicable□Not applicable
Unit: Yuan Currency: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|Related party|Incidencerelation|The Company providing fund torelated party|||Related party providing fund to theCompanyproviding fund|||
|||Openingbalance|Currentamount|Closingbalance|Openingbalance|Currentamount|Closingbalance|
|CCCC FinancialCo., Ltd|Parentcompany ′ swholly-ownedsubsidiary|134,534,649|528,772,323|663,306,972|0|300,000,000|300,000,000|
|CCCCFinancingRental Co., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|1,118,000,000|2,120,845,793|3,238,845,793|
|CCCC LeasingJiahuayi Co.,Ltd|Parentcompany ′ swholly-owned|0|0|0|383,838,000|-383,838,000|0|

2016 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
||subsidiary|||||||
|CCCC LeasingJiahuayi Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|383,838,000|-383,838,000|0|
|ChinaCommunicationsCorporation|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|104,440,235|-1,112,929|103,327,306|
|ShanghaiJiangtianIndustrial Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|17,586,085|-831,502|16,754,583|
|TianjinWaterway Co.,Ltd|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|25,079,494|0|25,079,494|
|CHUWABUSSANcompany limited|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|6,269,873|0|6,269,873|
|Hong KongZhenhuaEngineering Co.,Ltd.|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|346,005|0|346,005|
|Macau ZhenhuaBay EngineeringCo., Ltd.|Parentcompany ′ swholly-ownedsubsidiary|0|0|0|6,593|0|6,593|
|Total||134,534,649|528,772,323|663,306,972|2,039,404,285|1,651,225,362|3,690,629,647|
|Reasons of related credits andliabilities||Dividends payable by the Company to related parties, investment of the cancellationof s subsidiary and current amount loan.||||||

(V) Other
□Applicable√Not applicable
XV. Major contracts and their implantation
(1)Entrusting, contracting and leasing
1. Entrusting
□Applicable√Not applicable
2. Contracting
□Applicable√Not applicable
2016 Annual Report 3. Leasing
√Applicable□Not applicable
Unit: Yuan Currency: RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Lessor|Lessee|Lease dassets|Amountinvolvingleased assets|Lease startdate|Lease termnation date|Rentalincome|RentalincomedeterminedbyProtocol|Rentalrevenueimpact onthecompany|Whetherrelatedpartytransactions|
|TheCompany|ShanghaiZhenlong AssetManagementCo., Ltd, andothercompanies|HousingRental|284,337,357|Aug 10,2012|2025/07/09|46,314,775|Protocolagreed|46,314,775|No|

Related transactions
(II) Provide guarantee to related parties
√Applicable□Not applicable
Unit: Currency: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Total guaranties for subsidiaries incurred in report period (excluding those for held subsidiaries)||||||||||||||
|(2)Guaranty|Relationshipbetweenguarantyparty andlistedcorporation|Guaranteed party|Guaranteeamount|Guarantycurrentdate(agreementsign date)||GuaranteedStart date|GuaranteedGuarantyterminaldate|Guarantyclassification|Whether theGuarantee isimplemented|Whetherguarantyoverdue|Whetherthere iscounterguarantee|Whetherguaranteeto relatedparty|RelatedRelate|
|TheCompany|Home office|Jiangsu YanweiPort Co., Ltd|19,184,000|2014Nov. 11||2014Nov. 11|2017Nov. 11|Joint andseveralliability|No|No|No|No||
|TheCompany|Home office|Zhenhua MarineEnergy(Hongkong) Co.,Ltd.|177,247,287|2015September14||2015September14|2017April 14|Generalguarantee|No|No|Yes|Yes|Jointventure|
|Total guaranties for subsidiaries incurred in report period(excluding those for held subsidiaries)|||||0|||||||||
|Total Guarantee balance at the end of report period (A)|||||196,431,287|||||||||
|Guaranty of the company and subsidiaries||||||||||||||
|Total guaranties for subsidiaries incurred in report period|||||1,016,850,000|||||||||
|Total guaranties for subsidiary balance at the end of report period(B)|||||3,210,021,000|||||||||
|Company guaranty total amount (guaranty for subsidiaries )||||||||||||||
|Total guarantee amount (A+B)|||||3,406,452,287|||||||||
|Proportion of net assets of the Company (%)|||||20.66|||||||||
|In which:||||||||||||||

2016 Annual Report
||||
|-|-|-|
|Amount guaranties to shareholders, effective controller and itsrelated parties (C)||0|
|Amount guaranties to shareholders, effective controller and itsrelated parties (C)||3,387,268,287|
|Amount of guaranties exceeding 50% of net assets (E)||0|
|Total of the above 3 kinds of guarantee(C+D+E)||3,387,268,287|
|Guarantee status explanation|Note: the first interim general meeting of stockholders held on September 22, 2008 approved "Proposal of Company ProvidingFinancing Guarantee to Subsidiary Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd.", and agreed to provide financing supportto Hong Kong subsidiary. The bank will issue guarantee for the loan with the upper limit of 500 million USD. The Company willprovide the guarantee to Hong Kong subsidiary in the report period. The twenty-ninth and thirtieth meeting of fifth Board of Directorsmeeting approved other guarantees.||

(III) Non-financial companies entrusted investment financing and derivatives
1. Entrusted financing
√Applicable□Not applicable
Unit: Yuan Currency: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Partner|Financingproduct type|Financingproduct amount|Startingday||Ending day|Reward|Principalactuallycovered|Principalactuallycovered|Relatedtradeor not|Theamount ofprovisionforimpairment|Relatedpartytransaction?|Suitinvolvedor not|
|ABank|BankFinancialProduct|100,000,000|2016/5/24||2016/11/22|Interestuponmaturity|100,000,000|1,969,590|Yes|0|No|No|
|BBank|Floatingproceedsfinancialproduct|44,000,000|2015/12/31||2016/1/12|Interestuponmaturity|44,000,000|32,547|Yes|0|No|No|
|BBank|Floatingproceedsfinancialproduct|2,000,000|2015/12/31||2016/3/21|Interestuponmaturity|2,000,000|11,984|Yes|0|No|No|
|BBank|Floatingproceedsfinancialproduct|14,000,000|2016/1/8||2016/3/31|Interestuponmaturity|14,000,000|87,548|Yes|0|No|No|
|Total|/|160,000,000|/||/|/|160,000,000|2,101,669|/|0|/|/|
|Principal not withdrew overdue andaccumulated income amount (Yuan)||||0|||||||||
|Description of the entrusted financing||||Note: the tenth meeting of sixth Board of Directors meeting and 2015 general meeting of shareholders approved therelevant amount of the entrusted financing issues in the table above by the report day.|||||||||

2. Entrusted loans
□Applicable√Not applicable
3. Investment in other financing investments and derivatives
□Applicable√Not applicable
(IV) Other substantial contracts
√Applicable□Not applicable
2016 Annual Report 1. On Jan. 9, 2016 the Company published announcement signed general contracting contract of automation loading system with PSA, details see Shanghai Securities News and Hong Kong Wen Wei Po.
2. On July 2, 2016, the Company published announcement signed sales contract of automation container crane with Huaiyin Port East Area and PPP etc., details see Shanghai Securities News and Hong Kong Wen Wei Po.
3. On Jul 2, 2016, the Company published announcement signed sales contract of Zhenjiang School Life Support and Infrastructure, details see Shanghai Securities News and Hong Kong Wen Wei Po.
4. On Dec. 27, 2016, the Company published announcement winning the bid of the First phase of the project of Yisu River to Huashi Road in Xiangtan with Sangong Ju, and CAUPO, details see Shanghai Securities News and Hong Kong Wen Wei Po.
XVI.Other current liabilities
√Applicable□Not applicable
1. The Company issued 2,000,000,000 Yuan First short-term financing bonds in April 28, 2016, with term of 1 year and the fixed annual interest rate of3.7%, principal and interest paid at one time on Appril 29, 2017.
2. The Company issued 2,000,000,000 Yuan First short-term financing bonds in October 28, 2016. The note term is 270 days, and the annual interest of face value is3.2%, capital with interest shall be repaid at one time on Friday, July 28, 2017.
Note: The bonds above have no mortgage orsecurity.。
XIII. Active fulfillment of social responsibilities
(I) Poverty alleviation work situation of listed company
□Applicable√Not applicable
(II) Social responsibility work
√Applicable□Not applicable
The Company actively fulfills its social responsibilities, effectively adjusts industrial structure and business arrangement, optimizes development strategy, forms 8 business sectors arrangements; increases investment inR&D; enhances the innovation capacity; promote technological progress; actively promote the overseas center construction, improve the service response speed to the global customers and provide customers with high quality and rapid services.
Company always adheres to the "people-oriented", to safeguard employees' rights and interests, actively build development platform for the worker, encourage the staff innovation, establish the typical innovation, forming a good enterprise atmosphere; attach great importance to link with the community and schools, strengthen smooth and friendly development situation between social enterprises and colleges, promote enterprise culture to further integrate into society; advocate green sustainable development, advocate green production, green office, green propaganda (III) The explain for environmental protection of the environmental protection department of the company and its subsidiary
□Applicable√Not applicable
(IV)Other
□Applicable√Not applicable
XVIII. Negotiable company bond
（I） The issuance of bond transfer
□Applicable√Not applicable
(II) The status for holder and guarantor of bond transfer during the report period
□Applicable√Not applicable
2016 Annual Report (III) The status for bond transfer
□Applicable√Not applicable
The status for bond transfer during the report period
□Applicable√Not applicable
(IV) Adjustment of the bond transfer
□Applicable√Not applicable
(V) The company's liabilities, the change of credit and the cash arrangement for the repayment of the debt in the next year
□Applicable√Not applicable
(VI) Other information about transfering debt
□Applicable√Not applicable
2016 Annual Report Chapter VI Equity Movement andShareholder′s Profile
I. The sheet for change of common stock shares
(1) The sheet for change of common stock shares
1. The sheet for change of common stock shares
During the reporting period, the total number of shares and share capital structure of the Company have not changed. 2. The explain for change of common stock shares
□Applicable√Not applicable
3. The impact of the common stock changes on financial indicators such as earnings and net asset per share in the last year and recently (if yes)
□Applicable√Not applicable
4. Other content that the company considers necessary or securities regulator to require disclosure
□Applicable√Not applicable
(II) Stock with sales limit change
□Applicable√Not applicable
II. Issuance and listing of securities
(I) The issuance of securities by the time of the reporting period
□Applicable√Not applicable
Description of securities issuance as of the time of reporting period (different interest rates for the period of maturity)□Applicable√Not applicable
(II) The total number of common shares and the changes in the structure of the shareholders and the structure of the company's assets and liabilities
□Applicable√Not applicable
(III) The status of existing internal employment stocks
□Applicable√Not applicable
III. Particulars about shareholder and effective controller of the Company
(I) Number of shareholders
|||
|-|-|
|Number of shareholders at period end|269,424|
|Total shareholders end of 5th trading day prior to release day ofcurrent annual report|265,667|

(II) End to report period, shareholding profile of top 10 shareholders and top 10 current shareholders (or Tradable shareholders)
Unit: share
||||||||
|-|-|-|-|-|-|-|
|Shareholding profile of top 10 shareholders|||||||
|Shareholder′s Name|MovementDuring the|Total sharesheld|%|Sharesheld|Share pledged orfrozen|Shareholder|

2016 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|(Full name)|Year|||subject toconditionalsales|Sharestatus|Amount|Nature|
|China CommunicationConstruction Co., Ltd|0|1,265,637,849|28.83|0|No|0|State legal|
|ZHEN HUAENGINEERINGCOMPANY LIMITED|0|749,677,500|17.08|0|No|0|Overseaslegal person|
|Central Huijin AssetsManagement Co., Ltd|0|74,482,200|1.70||Unknown||Unknown|
|China Securities FinanceCo., Ltd|0|56,788,474|1.29||Unknown||Unknown|
|BOSARE FUNDS- －agricultural bank －BOSARE ChinaSecurities FinancialAssets Management Plan|0|16,546,600|0.38||Unknown||Unknown|
|Dacheng Funds －agricultural bank －Dacheng China SecuritiesFinancial AssetsManagement Plan|0|16,546,600|0.38||Unknown||Unknown|
|ICBC Credit Suisse Fund－ agricultural bank －ICBC CreditSuisse ChinaSecurities FinancialAssets Management Plan|0|16,546,600|0.38||Unknown||Unknown|
|GF Fund － agriculturalbank － GF ChinaSecurities FinancialAssets Management Plan|0|16,546,600|0.38||Unknown||Unknown|
|China Asset Managementagricultural bank －China Asset ManagementChina Securities FinancialAssets Management Plan|0|16,546,600|0.38||Unknown||Unknown|
|Harvest Fund- agriculturalbank- Harvest Fund ChinaSecurities FinancialAssets Management Plan|0|16,546,600|0.38||Unknown||Unknown|
|Southern Fund －agricultural bank －Southern Fund China|0|16,546,600|0.38||Unknown||Unknown|

2016 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|Securities FinancialAssets Management Plan|||||||||
|E fund management －agricultural bank－E fundmanagement ChinaSecurities FinancialAssets Management Plan|0|16,546,600||0.38||Unknown|Unknown||
|Yinhua Fund －agricultural bank －Yinhua Fund ChinaSecurities FinancialAssets Management Plan|0|16,546,600||0.38||Unknown|Unknown||
|Lombarda China FundManagement －agricultural bank －Lombarda China FundManagement ChinaSecurities FinancialAssets Management Pla|0|16,546,600||0.38||Unknown|Unknown||
|Particulars about top 10 shareholders of shares not subject to conditional sales|||||||||
|Shareholder name|||Shares notsubject toconditional salesheld at periodv||Type and quantity of shares||||
||||||Type|||Amount|
|China Communication Construction Co.,Ltd|||1,265,637,849||RMB common shares||||
|ZHEN HUA ENGINEERING COMPANYLIMITED|||749,677,500||Shares with foreign investmentlisted on domestic market||||
|Central Huijin Assets Management Co., Ltd|||74,482,200||RMB common shares||||
|China Securities Finance Co., Ltd|||56,788,474||RMB common shares||||
|BOSARE FUNDS - agricultural bank －BOSARE China Securities Financial AssetsManagement Plan|||16,546,600||RMB common shares||||
|Dacheng Funds － agricultural bank －Dacheng China Securities Financial AssetsManagement Plan|||16,546,600||RMB common shares||||
|ICBC Credit Suisse Fund － agricultural bank－ ICBC Credit Suisse China SecuritiesFinancial Assets Management Plan|||16,546,600||RMB common shares||||
|GF Fund － agricultural bank － GF China|||16,546,600||RMB common shares||||

2016 Annual Report
|||||
|-|-|-|-|
|Securities Financial Assets Management Plan||||
|China Asset Management agricultural bank－China Asset Management China SecuritiesFinancial Assets Management Plan||16,546,600|RMB common shares|
|Harvest Fund - agricultural bank - Harvest FundChina Securities Financial Assets ManagementPlan||16,546,600|RMB common shares|
|Southern Fund－agricultural bank－SouthernFund China Securities Financial AssetsManagement Plan||16,546,600|RMB common shares|
|E fund management－agricultural bank－E fundmanagement China Securities Financial AssetsManagement Plan||16,546,600|RMB common shares|
|Yinhua Fund－agricultural bank－Yinhua FundChina Securities Financial Assets ManagementPlan||16,546,600|RMB common shares|
|Zhongou Fund－agricultural bank－ZhongouFund China Securities Financial AssetsManagement Plan||16,546,600|RMB common shares|
|Explanationon theaboverelatedrelationshiporconsistentaction|1. Among above top 10 shareholders, CHINA COMMUNICATIONS CONSTRUCTION CO., LTD.Constitutes related party relationship with ZHEN HUA ENGINEERING COMPANY LIMITED,ZHEN HWA HARBOUR CONSTRUCTION COMPANY LIMITED, with ultimate controllerbeing China Communications Group Corporation. The Company is not aware of whether they haveassociated relationship among them or belong to the consistent actionists as defined inAdministrative Rules on Disclosure of Information on Stock Change of Listed Company′sShareholders.On January 8, 2014, the Company disclosed the “Announcement on Changes in Shareholders’ Equity”,according to which Hong Kong （ZHEN HUA ENGINEERING COMPANY LIMITED） was totransfer all the shares it held to CCCC International (Hong Kong) Holdings Limited. After the transferof shares, the controlling shareholder of the Company and the actual controller remain unchanged. Theshare transfer is required to obtain the SAC of the State Council and other department for approval.|||

 Particulars about top 10 shareholders of shares not subject to conditional sales
□Applicable√Not applicable
(III) A strategic investor or a general legal person shall be the top 10 shareholder because of new stocks
□Applicable√Not applicable
IV. Controlling shareholders and actual controllers
(I)Particulars about the corporate controlling shareholder
1 Legal representative
√Applicable□Not applicable
|||
|-|-|
|Name|China Communication Construction Co., Ltd|

2016 Annual Report
|||
|-|-|
|The person in charge of the unit/legalrepresentative|Liu Qitao|
|Date of incorporation|October 8, 2006|
|Principal business|Engaging in the general contracting of construction projects for ports,channels, highways and bridges both home and abroad, including technicaland economic consultation of engineering, feasibility study, survey,construction, supervision, procurement and supply for related complete set ofequipment or materials, and equipment installation: undertaking the generalcontracting of the construction of industrial and civil works, railway,metallurgy, petrochemical, power and water conservancy facilities, channel,mine and municipal works; import and export business; real estatedevelopment and property management, investment and management oflogistics, transportation, hotel and tourist industries.|

2. Natural person
□Applicable√Not applicable
3. Special status of actual controllers not existed
□Applicable√Not applicable
4. Changes index and date for actual controllers during the report period
□Applicable√Not applicable
5. Block diagram of property right and control relationship between Company and controlling shareholders
√Applicable□Not applicable
||||
|-|-|-|
||中国交建||
|持股100%||持股100%|

香港振华工程有限公司 澳门振华海湾工程有限公司
持股17.08% 持股28.83%
持股0.33%
上海振华重工（集团）股份有限公司
(III) Particulars about the actual controllers
1 Legal representative
√Applicable□Not applicable
|||
|-|-|
|Name|China Communication Construction Co., Ltd|
|Legal representative:|Liu Qitao|
|Date of establishment|December 8, 2005|
|Main operating business|Engaging in the general contracting of construction projects for ports,channels, highways and bridges both home and abroad, includingtechnical and economic consultation of engineering, feasibility study,survey, construction, supervision, procurement and supply for relatedcomplete set of equipment or materials, and equipment installation:|

2016 Annual Report
||
|-|
|undertaking the general contracting of the construction of industrial andcivil works, railway, metallurgy, petrochemical, power and waterconservancy facilities, channel, mine and municipal works; import andexport business; real estate development and property management,investment and management of logistics, transportation, hotel and touristindustries.|

2. Natural person
□Applicable√Not applicable
3. Special status of actual controllers not existed
□Applicable√Not applicable
4. Changes index and date for actual controllers during the report period
□Applicable√Not applicable
5. Block diagram of property right and control relationship between Company and actual controllers.
√Applicable□Not applicable
国务院国资委
中国集团
||||
|-|-|-|
||中国交建||
|持股100%||持股100%|

香港振华工程有限公司 澳门振华海湾工程有限公司
持股17.08% 持股28.83%
持股0.33%
上海振华重工（集团）股份有限公司
6. The actual controller controls the company through a trust or other asset management style
□Applicable√Not applicable
(III). Controlling shareholders and actual controllers
□Applicable√Not applicable
V.Other corporate shareholders holding over10% of theCompany′s shares
√Applicable□Not applicable
Unit: Yuan Currency: RMB
|||||||
|-|-|-|-|-|-|
|Corporate shareholders|The person incharge of theunit/legalrepresentative|Date of establishment|Organizationcode|Registeredcapital|Main operatingbusiness|
|ZHEN HUAENGINEERINGCOMPANY LIMITED|Wang Yan|May 14, 1982|-|35,000,000|Marine works, roadsand bridges, dredgingand site formation,port machinery,|

2016 Annual Report
||||
|-|-|-|
|||survey and design.|
|Description|China Communications Construction Co., Ltd. Holds 100% stake of ZHEN HUAENGINEERING COMPANY LIMITED, the ultimate shareholder is ChinaCommunications Construction Group Co., Ltd||

VI. Share limit reduction
□Applicable√Not applicable
2016 Annual Report Chapter VII Preferred stock information
□Applicable√Not applicable
2016 Annual Report
Chapter VIII Directors, Supervisors, Senior Executives and Employees
I. Change of holdings and remuneration
(I) Shareholding changes and remuneration of directors, supervisors and senior executives under employment or retired during report period.
√Applicable□Not applicable
Unit: share
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Title (note)|Sex|Age|Start of Tenure|End of Tenure|Sharesheld at thebeginningof year|Shares atend of year|Changeinreportperiod|Reason|Total paidby theCompanyduringreportperiod(RMB10,000)|Whetherpaid byrelatedparties oftheCompany|
|SongHailiang|Chairman of theBoard|M|52|April 21, 2015|April 20, 2018|0|0|0|N/A|0|Yes|
|ZhuLianyu|Vice Chairman of theBoard, Party Secretary|M|47|April 21, 2015|April 20, 2018|0|0|0|N/A|100.04|No|
|HuangQingfeng|Director, President|M|42|April 21, 2015|April 20, 2018|0|0|0|N/A|100.04|No|
|Chen Qi|Director|F|55|April 21, 2015|April 20, 2018|0|0|0|N/A|0|Yes|
|YanYunfu|Director,Chief Engineer|M|58|April 21, 2015|April 20, 2018|0|0|0|N/A|83.03|No|
|LiuQizhong|Director, Vice President|M|53|April 21, 2015|April 20, 2018|0|0|0|N/A|88.04|No|
|DaiWenkai|Director, Vice President|M|50|April 21, 2015|April 20, 2018|0|0|0|N/A|80.03|No|
|Wang Jue|Director, CFO, BoardSecretary|M|53|April 21, 2015|April 20, 2018|0|0|0|N/A|83.03|No|

2016 Annual Report
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|She Lian|Independent Director|M|58|April 21, 2015|April 20, 2018|0|0|0|N/A|12|No|
|Gu Wei|Independent Director|M|60|April 21, 2015|April 20, 2018|0|0|0|N/A|12|No|
|Ling He|Independent Director|M|65|April 21, 2015|April 20, 2018|0|0|0|N/A|12|No|
|Yang Jun|Independent Director|M|60|April 21, 2015|April 20, 2018|0|0|0|N/A|12|No|
|Cui Wei|Supervisor, deputysecretary of the Partycommittee, commission forDiscipline Inspection, tradeunion chairman|M|41|April 21, 2015|April 20, 2018|0|0|0|N/A|80.03|No|
|ZhangMinghai|Supervisor|M|55|April 21, 2015|April 20, 2018|20,259|20,259|0|N/A|72.08|No|
|XiangXudong|Supervisor|M|41|April 21, 2015|April 20, 2018|0|0|0|N/A|69.92|No|
|Liu Jianbo|Vice president|M|54|April 21, 2015|April 20, 2018|0|0|0|N/A|83.03|No|
|Zhou Qi|Vice president|M|45|April 21, 2015|April 20, 2018|0|0|0|N/A|80.03|No|
|Chen Bin|Vice president|M|43|April 21, 2015|April 20, 2018|89,440|89,440|0|N/A|80.03|No|
|ShanJianguo|Vice president|M|53|April 21, 2015|April 20, 2018|0|0|0|N/A|80.03|No|
|ZhangJian|Vice president|M|48|April 21, 2015|April 20, 2018|0|0|0|N/A|80.03|No|
|Fei Guo|Chief engineer|M|55|April 21, 2015|April 20, 2018|0|0|0|N/A|78.03|No|
|LiRuixiang|Chief economist|M|42|April 21, 2015|April 20, 2018|0|0|0|N/A|83.03|No|
|Sun Li|General counsel|M|45|April 21, 2015|April 20, 2018|0|0|0|N/A|78.03|No|

2016 Annual Report
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Ge Ming|Former IndependentDirector|M|66|April 21, 2015|November 25, 2016|0|0|0|N/A|11|No|
|Total|/|/|/|/|/|109,699|109,699|0|/|1,457.48|/|

|||
|-|-|
|Name|Main work experience|
|SongHailiang|born in 1965, male, Ph.D., professor-level senior engineer, began his career in July 1987, served as engineer, Design Office director, Vice President,President, member of Party Committee, Vice Secretary of the Party Committee, Chairman of the Board and simultaneously General Manager withCCCC Water Transportation Planning and Design Institute Co., Ltd.; current vice President of China Communications Construction Co., Ltd. andsimultaneously General Manager of Equipment Manufacturing Marine Heavy Industry Department and Chairman of the Board of Zhenhua HeavyIndustries.|
|ZhuLianyu|born in 1970, male, Ph.D., professor-level senior engineer; began his career in September 1992, served as engineer, equipment leader of overseasproject, vice chief of Marine Machine Department, manager of Enterprise Development Department of CCCC First Harbor Engineering Co., Ltd;general manager of CCCC International Shipping Co., Ltd, general manager of Equipment Manufacturing Marine Heavy Industry Department ofChina Communications Construction Co., Ltd.; current vice Chairman of the Board and secretary of Party Committee.|
|HuangQingfeng|born in 1972, male, EMBA, senior engineer; began his career in August 1996, used to be quality project chief, director of field bridge office of qualitymanagement department; deputy manager of after-sales department, general manager of Quality Inspection Company; vice director of off-shoreoffice, director of Quality Safety Department, director of Product Service Center and assistant president of the Group; from Jan. 2005 on is VP of theCompany and executive vice president and director of Production and Project Management Center since 2014, current director and president of theCompany.|
|Chen Qi|born in 1962, female, master degree, senior engineer, was project manager of China Harbor Engineering Co., Ltd. Import and Export Port MachineryDivision, China Harbor (Group) Co., Ltd. Industry and Trade Business Unit deputy general manager, General manager; China CommunicationsConstruction Co., Ltd Industry and Trade Business Unit general manager; has been director of the Company since 2011, current executive generalmanager of Equipment Manufacturing Marine Heavy Industry Department of China Communications Construction Co., Ltd.|
|YanYunfu|born in 1959, male, EMBA, professor-level senior engineer; served as Vice Chief of Technical Department, Manager of Mechanical DesignDepartment, Vice General Engineer, General Engineer and VP of the Company, President of Land Heavy Industry Equipment Design Institute, isdirector of board of the Company since 2004, current director and general engineer.|
|LiuQizhong|born in 1964, male, bachelor degree, senior economist; was Vice Manager, Manager of Operating Department, was director of the Company since1997, current director and VP of Company.|
|Dai|born in 1967, male, master of physics, EMBA, senior engineer. Began his career in 1993, was Vice Manger and Manager of Operating Department,|

2016 Annual Report
|||
|-|-|
|Wenkai|Vice Chief Economist, Chief Economist; current director and VP of the Company.|
|WangJue|born in 1964, male, MBA, CPA and senior accountant, successively held the posts of director and General Accountant of the Financial Office of No.3Engineering Co., Ltd. Of CCCC Third Harbor Engineering Co., Ltd., Chief of Audit Department, Chief of Financial Department and Vice GeneralAccountant; is the Chief Financial Executive and Secretary of the Board of Directors of the Company since November of 2005; director of Companyfrom 2006 to 2011, current director, CFO and Secretary of the Board of Directors of the Company.|
|She Lian|born in 1959, male, professor, doctoral tutor; from 1995 on, enjoys special government allowances from the State Council since 1995; deputy directorand Party Secretary of the Department of Business Administration, Wuhan University of Communications Science; chief editor of "TransportationEnterprise Management" magazine run by Ministry of Transportation; director of Early Warning Management Research Center, Wuhan University ofTechnology, Professor of Management, doctoral tutor; director of Early Warning Management Research Center, Huazhong University of Science andTechnology, Professor of Management, doctoral tutor; Professor of CEIBS Emergency Management Institute incumbent National School ofAdministration, doctoral tutor, current independent director of the Company.|
|Gu Wei|born in 1957, male, Ph.D., professor and doctoral tutor; since 1982, has been teaching at Shanghai Maritime University; since the year 2000, enjoysspecial government allowances from the State Council, and the IEEE Society member, MTS Society member and the British Royal Physical Societymember, senior member of China Electro technical Society, senior member of Chinese Society of Naval Architects, senior member of ChineseMechanical Engineering Society; is currently director of the Key Laboratory of the Ministry of Transportation's Shipping Technology and ControlEngineering; member of China Electro technical Society's Vessel Electrical Committee; member of the Committee of Experts of Shanghai JiaotongElectronics Industry Association; procurement consulting expert of Shanghai Municipal Government; member of the Committee of Experts ofMinistry of Transport East China Sea Rescue Bureau and other duties; current independent director of the Company.|
|Ling He|born in 1952, male, professor, senior editor (Senior professional title) of Liberation Daily, director of Shanghai Journalists Association, director ofShanghai Institute of Essays, served as member, assistant chief editor, director of Editing Department of the democratic and legal magazine agency,vice director and director of Comment Department of Liberation Daily, main editor of Liberation Daily, chief editor of Liberty Forum; with honor ofthe first National 100 Journalists, China News first prize for three times, Shanghai News first prize for 15 times, current independent director of theCompany.|
|Yang Jun|born in 1957, male, master degree, served as intermediate and Senior court judge of Shanghai Court, president and members of the judicial committeemember, Property Trade Operation Director of Shanghai United Property Rights Exchange, now is the assistant president of Shanghai UnitedProperty Rights Exchange, general manager of Beijing HQ, director of Financial Property Rights Trade Center, arbitrator of China InternationalEconomic and Trade Arbitration Commission, Shanghai International Economic and Trade Arbitration Commission, arbitrator of ShanghaiArbitration Commission, Shanghai Financial Arbitration Court, expert of China domain name dispute resolution center, director of IntellectualProperty Association of China Law Society, director of Company Law Research Society of Shanghai Law Society, director of Shanghai Patent /Trademark / Copyright Association, current independent director of the Company.|
|Cui Wei|born in 1976, male, bachelor degree, began his career in 2000, served as deputy director (hosting) of general manager office, legal consultant office ofCCCC First Harbor Co., Ltd, director and minister of Party Work Department and President Affair Office of Zhenhua Heavy Industry Co., Ltd,current chief supervisors, deputy secretary of the Party committee, secretary of Commission for Discipline Inspection, chairman of Trade Union|

2016 Annual Report
|||
|-|-|
|ZhangMinghai|born in1962, male, master degree, professor-level senior engineer; formerly Shanghai Port Machinery Plant Technology Division engineer;mechanical office deputy manager, deputy chief engineer, general manager of Mechanical Office Shore Bridge First Company, of the machineryto do the shore bridge, general manager of Land-base Heavy Industry Co., Ltd. with Shanghai Zhenhua Heavy Industries (Group) Co., Ltd.; currentlyLand-based Heavy Industry Research Design vice president and also Shore Bridge Design Institute director; chief supervisor of the Company since2011.|
|XiangXudong|born in 1976, male, bachelor degree, senior engineer; served as Vice Director and Vice Manager of Quality Department, General manager of ZhenhuaHeavy Industry Inspection Co., Ltd, current employee representative supervisor, Party Secretary and Vice General Manager of Zhenhua HeavyIndustry Changxin branch.|
|LiuJianbo|born in 1963, male, master degree，senior engineer; was engineer at technological office of Shanghai Port Machinery Plant; assistant director inengineering with Technology Office of Shanghai Container Dock Co. Ltd., deputy general manager and general manager of ZPMC Changxing Base;current VP of the Company and chairman of board of Shanghai Zhenhua Marine Engineering Service Co., Ltd.|
|Zhou Qi|born in 1972, male, EMBA, senior engineer; was manager and deputy general engineer, general manager and chief engineer of the Electric ApplianceOffice of the Company; current VP of the Company and chairman of Company Electric Group.|
|Chen Bin|born in 1974 , male, EMBA, senior engineer; project quality leader of Quality Control office, deputy manager of tire crane office of quality controloffice, manager of quality control office, deputy general manager and general manager of quality control company, vice director of quality andsafety office, manager of Quality Safety Office; supervisor of the Company, general manager of Shanghai Zhenhua Shipment Co., Ltd, presidentassistant of the Company, current VP of Company and general manager of Shanghai Zhenhua Marine Engineering Service Co., Ltd.|
|ShanJianguo|born in 1964, male, bachelor degree, served in Shanghai Port Machinery Manufacturing Plant, started to work in Shanghai Zhenhua Port MachineryCo., Ltd from 1992, served as engineer, chief engineer of Machinery Office, general manager of Design company, deputy director and director ofMachinery Office, manager of budget assessment department, is now the VP and president of Land Heavy Industry Institute.|
|ZhangJian|born in 1969, male, MBA, served as technician, production planner and assistant of director of No. 2 Panel beater of Shanghai Port MachineryManufacturing Plant, chief of Changzhou Plant of Shanghai Port Machinery Manufacturing Plant, vice general manager of Shanghai Port MachineryCo., Ltd, vice general manager of Shanghai Port Machinery Heavy Industry Co., Ltd, general manager, assistant of president of Port Machinery Co.,Ltd, current VP.|
|Fei Guo|born in 1962, male, EMBA, professor level senior engineer, served as engineer of Shanghai Port Machinery Plant, director of No. 5 electrical office,vice chief engineer, director of Development Office of Shanghai Zhenhua Port Machinery Co., Ltd, VP and executive director of Shanghai ZhenhuaHeavy Industry Electric Co., Ltd, current chief engineer of Company.|
|Li|born in 1975, male, bachelor degree, served as vice manager of Manufacturing Department, vice director of Quality Safety Office of Zhangjiagang|

2016 Annual Report
|||
|-|-|
|Ruixiang|Base of Shanghai Machinery Plant; manager of Quality Inspection Company, vice director of Quality and Safety Office, vice general manager,generally manager, of machinery supporting base, Party branch secretary and president assistant, current chief economist and generalmanager of budget assessment department|
|Sun Li|1. born in 1972, male, EMBA, senior engineer; was project supervisor of Operating Department, vice manager and assistant of General Manager of theCompany, Vice President and director of the Company , current Chief Legal Counsel of Company|

 Other description
□Applicable√Not applicable
(II) Stock ownership incentive awarded for the directors, supervisors and senior executives during the reporting period
□Applicable√Not applicable
Office-holding of directors, supervisors and senior executives under employment or retired during report period.
(I) Particulars about office-holding with shareholding companies
√Applicable□Not applicable
|||||
|-|-|-|-|
|Name|Name of shareholder|Title in the shareholding company|Starting date of service term|
|Song Hailiang|China Communication ConstructionCo., Ltd|Vice president|January 27, 2014|
|Chen Qi|China Communication ConstructionCo., Ltd|General manager of Industry andTrade Department|December 29, 2009|
|Particulars about office-holding withshareholding companies||||

(II) Particulars about office-holding with other companies
√Applicable□Not applicable
||||
|-|-|-|
|Name|Name of companies|Title|

2016 Annual Report
||||
|-|-|-|
|She Lian|CEIBS Emergency Management Institute Incumbent National Schoolof Administration|Professor, doctoral tutor|
|Gu Wei|Shipping Technology and Engineering key Lab of Ministry ofTransportation, Vessel Electrical Committee of China Electro technicalSociety, Control Committee of Experts of Shanghai Jiaotong ElectronicsIndustry Association; procurement consulting expert of Shanghai MunicipalGovernment; Committee of Experts of Ministry of Transport East ChinaSea Rescue Bureau and other duties|Director, professor, doctoral tutor, councilmember, committee member|
|Ling He|Liberation Daily, Shanghai Journalists Association, Shanghai Institute ofEssays.|Senior editor (Senior professional title), director|
|Yang Jun|Shanghai United Property Rights Exchange, Financial Property RightsTrade Center, Chin International Economic and Trade ArbitrationCommission, Shanghai International Economic and Trade ArbitrationCommission, Shanghai Arbitration Commission, Shanghai ArbitrationInstitute of finance, the Chinese domain name dispute solution center,jurisprudence of China Intellectual Property Association, Company LawAssociation of Shanghai Law Society, ShanghaiPatent/Trademark/Copyright Association.|Assistant president, general manager, director,arbitrator, expert, director|
|Description of position held inother companies andinstitutions|||

III. Remuneration of Directors, Supervisors and senior executives
√Applicable□Not applicable
|||
|-|-|
|Decision-making procedures for remuneration ofDirectors, Supervisors and senior executives|In accordance with the Articles of Association, the remuneration of Directors and Supervisors are subject tothe Annual Shareholder’s General Meeting and the remuneration of the management are assessed andapproved by the President.|
|Calculation basis for remuneration of Directors,Supervisors and senior executives|Basic salary plus performance bonus, combined with assessment utilizing quantizing index of production andoperation.|
|Total remuneration received by all directors,|Chairman Song Hailiang, vice chairman Zhu Lianyu and director Chen Qi are not paid by the Company,|

2016 Annual Report
|||
|-|-|
|supervisors and senior executives|whereas all other director, supervisor and senior executives are paid by the Company|
|Total remuneration received by all directors,supervisors and senior executives at period end|14.5748 million yuan|

IV. Particulars about changes of directors, supervisors and senior executives
√Applicable□Not applicable
|||||
|-|-|-|-|
|Name|Title|Change|Reason|
|Zhu Lianyu|Deputy director|Election|Job demand|
|Ge Ming|Independent Director|Leaving post|Personal reason|

 V. Punishment in the recent three years by securities regulatory agencies
□Applicable√Not applicable
2016 Annual Report VI. Employee status of the Parent Company and its key subsidiaries
(I) Particulars about employee
|||
|-|-|
|Number of employees of Parent Company in service|3,200|
|Number of employees of key subsidiaries in service|5,661|
|Total headcount in employment|8,861|
|Number of retired employees with the costborne by the parentcompany and subsidiaries|0|
|In specialties||
|Classification|Number|
|Production staff|3,301|
|Production staff|211|
|Technical staff|4,524|
|Financial staff|125|
|Administrative staff|700|
|Total|8,861|
|Educational level||
|Education|Number (person)|
|Doctor|27|
|Master|522|
|Undergraduate|3,731|
|Junior College|2,684|
|Technical secondary school|1,897|
|Total|8,861|

 (II) Remuneration policies
√Applicable□Not applicable
In line with theCompany′s development strategy, continuously perfect distribution incentive system, perfect
performance assessment system, establish a system linking performance distribution and unit or office performance,
staff performance, industrial characters and post value; establish a salary incentive system linking staff achievement,
position duty and value contribution and establish a distribution mode integrating with market.
2016 Annual Report (III) Training program
√Applicable□Not applicable
At each year start, the Company sets up all-staff annual educational and training plan and implements according to the plan to improve the competence level and professional quality of staff at various levels. In line with theCompany′s development strategy, gradually establish a rigid staff training system with systematic, directional and continuous features.
(IV) Labor outsourcing situation
√Applicable□Not applicable
|||
|-|-|
|Labor outsourcing hours|10058048 hours|
|Total Labor outsourcing remuneration|324.49 million yuan|

 VII. Others
□Applicable√Not applicable
2016 Annual Report Chapter IX Company Governance
I. Company governance profile
√Applicable□Not applicable
The Company strictly followed the regulations specified in “Company law”, “Securities Law”, “Stock Listing Rules”, Company Articles of Association” and the legal requirements of China Securities Regulatory Commission in the report period, to standardize thecompany’s daily operation, further establish and improve the internal control system, improve the internal control management and corporate governance structure, strengthen the insider information management, strengthen the information disclosure, continuously improve the company governance, making efforts to improve the construction of legal person governance structure, and gradually establish a modern enterprise system, earnestly protect the legal rights and interests of the company and all the shareholders, ensuring the sustainable and stable development.
After the inspection, the staffs who know the insider informationdidn’t trade the stocks of the company before significant price information is disclosed. After the inspection, the staffs who know the insider informationdidn’t trade the stocks of the company before significant price information is disclosed.
Whether there is any difference between the company governance and the regulation of the China Securities Regulatory Commission, if any, the reason should be explained.
□Applicable√Not applicable
II. Shareholders conference
|||||
|-|-|-|-|
|Session|Date|Query index of the specified website withresolution published|Disclosure date ofresolution publication|
|2015 shareholdersconference|May 09, 2016|www.sse.com.cn，Enter the stock code|May 10, 2016|

Description of General Meeting
□Applicable√Not applicable
III. Directors duties performance
(I) Participation of directors in the Board of Directors and the shareholders conference
||||||||||
|-|-|-|-|-|-|-|-|-|
|DirectorName|Independent director ornot|Participation in the Board of Directors||||||Participation in theshareholdersconference|
|||Desiredparticipation time inthe Board ofDirectors|Participation time inperson|Participationnumbers incommunication way|Entrustedparticipation numbers|Absencetimes|Notparticipated in themeeting inperson forcontinuoustwo times?|Participation time inshareholdersconference|
|Song|No|9|1|8|0|0|No|1|

2016 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|Hailiang|||||||||
|ZhuLianyu|No|9|1|8|0|0|No|1|
|HuangQingfeng|No|9|1|8|0|0|No|0|
|Chen Qi|No|9|1|8|0|0|No|1|
|YanYunfu|No|9|1|8|0|0|No|0|
|LiuQizhong|No|9|1|8|0|0|No|0|
|DaiWenkai|No|9|1|8|0|0|No|0|
|WangJue|No|9|1|8|0|0|No|1|
|She Lian|Yes|9|1|8|0|0|No|1|
|Gu Wei|Yes|9|1|8|0|0|No|1|
|Ling He|Yes|9|1|8|0|0|No|0|
|YangJun|Yes|9|1|8|0|0|No|0|
|Ge Ming|Yes|6|1|5|0|0|No|0|

 Explanation for not participated in the meeting in person for continuous two times
□Applicable√Not applicable
|||
|-|-|
|Number of directors meeting held in the year|9|
|In which: onsite meeting|1|
|Meetings held in communication method|8|
|Combined with onsite meeting and meetings held incommunication method|0|

(II) Objection proposed by independent director to the company issues
□Applicable√Not applicable
During the report period, the independent directorsdidn’t propose any objection to the proposals of from the board of
directors of the year and other proposals not from the board of directors meeting.
2016 Annual Report (III) Others
□Applicable√Not applicable
IV. The special opinions and suggestions put forward by the special committee of the board of directors during the reporting period shall disclose the specific situation
□Applicable√Not applicable
V. Description of risk found by the Board of Supervisors
□Applicable√Not applicable
VI. If the Company is unable to guarantee its independence and cannot maintain its independent operating capability in respect of its business, personnel, assets, institutions and finance, etc.
□Applicable√Not applicable
Corresponding solution, work progress and follow - up work plan exist for the company with competition in the industry
□Applicable√Not applicable
VII. Evaluation system of senior executives, the establishment and implementation of incentive system in the report period
√Applicable□Not applicable
The Company appoints the directors, supervisors and senior executives in accordance with the provisions of Company Law and the Articles of Association, has built up a preliminary the cultivation, selection, supervision, assessment, reward and punishment, constraint system for thecompany’s senior executives suitable for the actual situation. The Company formulated the administrative methods for relevant senior executives. According to the production and development need of the Company, the senior executives are appointed, resigned and assessed following the principles of “from top to bottom integrating the virtue and talent”. The Company assessed the senior executives according to the due diligence and job performance, the company will gradually improve the existing performance evaluation system and salary system, promote medium- and long term incentive system for all senior executives and the core technical personnel of the company, to continue to stimulate the enthusiasm of the senior executives, to create new performance, and ensure the benefit maximization and standardize the operation of the company.
VIII. Disclose the internal control self-assessment report
√Applicable□Not applicable
“2016 Company Annual Internal Control Evaluation Report” is published in the Shanghai Stock http://www.sse.com.cn
Significant defect of internal control in the report period
□Applicable√Not applicable
IX. Internal control audit report description
√Applicable□Not applicable
The Company hired Ernst& Young LLP (special general partnership) to audit the effectiveness of the internal control
of the financial report on December 31, 2016, issued a standard internal control audit report without advice (see
2016 Annual Report Appendix).
Disclose the internal control audit report or not: Yes
X. Others
□Applicable√Not applicable
2016 Annual Report Chapter X Company Bond Information
□Applicable√Not applicable
Shanghai Zhenhua Heavy Industries Co., Ltd.
Financial statement (audited)
December 31, 2016
Shanghai Zhenhua Heavy Industries Co., Ltd.
Content
Page I. Audit Report 1 - 2 II. Financial statement (audited)
Consolidated andCompany’s B/S 3 - 5 Consolidated statement of income 6 - 7 Consolidated Statement of Change in Equity 8 - 9 Consolidated statement of cash flow 10 - 11 Consolidated and company assets balance sheet 12 - 13 Profit statement of the parent company 14 Statement of Change in Equity of the parent company 15 - 16 Parent company statement of cash flow 17 - 18 Financial Statements Notes 19 - 194 Supplementary Information
1. Details of non-recurring profit and loss for current period 1
Audit Report
Ernst& Young (2017) ShenziNo.61249778_B01 To the Shareholders of Shanghai Zhenhua Heavy Industries Co., Ltd.,
We have audited the accompanying consolidated as well ascompany’s financial statement of Shanghai Zhenhua Heavy Industries Co., Ltd., including thecompany’s and the consolidated balance sheets as of December 31, 2016,2016’sP&L andcompany’s income statement,shareholders’ equity movement statements, cash flow statements and notes to the financial statements.
I. The Management Responsibilities on the Statements
Preparing and fairly stating financial statements are the responsibilities of the management of Shanghai Zhenhua Heavy Industries Co., Ltd.. These responsibilities include: (1) The preparation of financial statements in accordance with the provisions of the corporate accounting standards, and to achieve a fair reflection; (2) Design, implement and maintain the necessary internal controls, to material misstatement due to fraud or error in the financial statements.
II. TheCPA’s Responsibilities
Our responsibilities are to provide audit opinions based on our auditing. We conducted the audit on the basis of China CPA Norms, which requires us to abide by professional virtues and norms to plan and conduct audit to ensure there exist no serious reporting errors in the financial statements.
The audit includes implementing the audit procedures to acquire financial statements figures and disclosed audit evidence. Audit procedures are chose based onCPA’s judgment, including the estimate of risks for possible misreports due to cheating or errors. When estimating risks, certified public accountants consider internal control related to the financial statements preparation and fair presentation, in order to design audit procedures that are appropriate. The audit also includes the evaluating of the appropriateness of utilization of accounting policies and accounting estimates by the management, and the evaluating of the total reporting of the financial statements. We believe that we have acquired sufficient and appropriate audit evidences, which provide the basis for theauditor’s opinions.
Audit Report (continued)
Ernst& Young (2017) ShenziNo.61249778_B01 III.Auditor’s Opinions
In our opinion, the accompanying financial statements of Zhenhua Heavy Industries has been prepared according to stipulations of the enterprise accounting norms and present fairly, in all material respects, the financial position of the Consolidation and Zhenhua Heavy Industries as of December 31, 2016 and of the results of its operations and its cash flows in 2016.
Ernst& Young Global Limited CPA:
The accounting firm (special general partnership) CPA:
Beijing, China March 27, 2017
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated balance sheet
Dec. 31, 2016
RMB Yuan
Assets Note V December 31, 2016 December 31, 2015 Current assets
Monetary capital 1
3,597,044,199 2,458,333,716 Financial assets measured at fair 2 4,615,775 676,082 value with the change
accounted in current profit and 3 296,920,781 243,159,622 loss Notes receivable
Receivables 4 4,230,746,458 3,894,762,468 Prepayment 5 900,422,234 1,226,345,632 Other Receivables 6 736,554,593 667,660,167 Stock 7 6,776,086,014 5,785,699,346 Construction completed account 8 11,105,813,767 11,217,591,856 yet has not been settled
Non-current assets due within one 9 1,384,438,569 2,625,135,212 year
Other current assets 10 553,363,139 553,205,272 Total current assets 29,586,005,529 28,672,569,373 Non-current assets
Financial assets available-for 11 1,313,572,506 1,212,177,180 -sale
Long-term receivables 12 3,791,218,020 3,558,501,537 Long-term stock ownership 13 2,201,421,453 1,597,134,817 investment
Real estate as investment 14 473,380,251 361,172,808 Fixed assets 15 15,022,782,366 15,655,536,876 Projects in process 16 4,025,449,461 3,577,371,504 Intangible assets 17 3,744,448,606 3,819,437,866 Goodwill 18 149,212,956 149,212,956 Long-term prepaid expenses 19 10,881,263 4,592,043
Deferred corporate tax 20 505,446,687 413,045,299
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated balance sheet (continued)
Dec. 31, 2016
RMB Yuan
Total non-current assets 31,237,813,569 30,348,182,886 Total assets 60,823,819,098 59,020,752,259 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated balance sheet (continued)
Dec. 31, 2016
RMB Yuan
Liabilities andstockholders’
Note V December 31, 2016 December 31, 2015 equity
Current liabilities
Short term loans 22 21,485,919,393 18,216,928,490 Financial liabilities measured
at fair value with the change
23 - 24,918,115 accounted in current profit and
loss
Notes payable 24 1,905,121,706 1,785,201,236 Payables 25 5,103,018,897 5,471,141,022 Pre-received payment 26 292,941,206 423,603,129 Construction not completed
8 2,393,446,122 2,866,437,832 account
Employee remuneration payable 27 264,549,756 257,822,610 Tax payables 28 251,000,724 251,551,006 Interest payable 29 140,195,803 289,590,733 Dividend payable 30 31,701,965 32,237,912 Other payables 31 1,225,135,428 1,604,523,386 Non-current liabilities due
32 799,574,356 6,837,115,692 within one year
Other current liabilities 33 3,996,025,335 1,995,655,739 Total current liabilities 37,888,630,691 40,056,726,902 Non-current liabilities
Long-term loans 34 3,925,335,497 1,761,904,000 Bond payables 35 1,618,361,164 719,861,943 Predicted liabilities 36 293,115,783 220,141,178 Deferred profit 37 451,036,024 405,425,947 Deferred corporate tax
20 104,164,573 70,042,985 liabilities
Other non-current liabilities 38 56,025,416 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated balance sheet (continued)
Dec. 31, 2016
RMB Yuan
Total non-current liabilities 6,448,038,457 3,177,376,053 Total liabilities 44,336,669,148 43,234,102,955 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated balance sheet (continued)
Dec. 31, 2016
RMB Yuan
Liabilities and stockholders’
Note V December 31, 2016 December 31, 2015 equity
Shareholders' equity
Share capital 39 4,390,294,584 4,390,294,584 Contributed surplus 40 5,526,978,575 5,526,978,575 Other comprehensive profits 41 322,403,671 207,660,237 Surplus reserves 43 1,603,122,982 1,576,100,786 Profit not distributed 44 3,353,936,451 3,168,538,701 Total shareholders’ equity
15,196,736,263 14,869,572,883 attributed to parent company
Minority equity 1,290,413,687 917,076,421 Totalshareholders’ equity 16,487,149,950 15,786,649,304 Total liabilities and
60,823,819,098 59,020,752,259shareholders’ equity
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated balance sheet (continued)
Dec. 31, 2016
RMB Yuan
The notes of the financial statements are part of the financial statements.
Financial statements signed by:
Enterprise principal: Accounting principal: Accounting firm principal:
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated income statement
Year 2016
RMB Yuan
Note V 2016 2015 Operating revenue 45 24,348,087,928 23,272,394,677 Less: Operating cost 45 19,727,663,875 19,717,314,855 Operation taxes and surcharges 46 152,175,837 24,550,179 Selling expense 47 100,435,778 79,388,743 Management expense 48 1,759,032,746 1,551,222,564 Financial expenses 49 1,218,992,788 1,532,851,096 Assets impairment loss 50 1,221,116,175 637,391,199 Add: Changes in fair value gains
51 28,857,808 (21,225,034) and losses
Gain on investment 52 118,513,425 498,236,958 In which: Investment gains to
affiliated companies and joint
ventures
Investment gains 99,395,952 55,252,057 Operating profit 316,041,962 206,687,965 Add: Non-operating income 53 63,643,243 70,713,471 In which: Non-current assets
6,649,827 14,128,543 disposal income
Less: Non-operating expense 54 10,824,061 5,665,872 In which: Non-current assets
5,309,215 4,789,746 disposal loss
Total profit 368,861,144 271,735,564 Less: Corporate income tax expense 56 61,516,908 77,529,876 Net profit 307,344,236 194,205,688 In which: Net profit achieved
before the merging
by the consolidated under the same
- 42,357,907 control
Net profit attributable to the 212,419,946 212,411,967
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated income statement (continued)
Year 2016
RMB Yuan
parent company shareholders
Minority interest 94,924,290 (18,206,279) The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated income statement (continued)
Year 2016
RMB Yuan
Note V 2016 2015 Net amount after tax of other
comprehensive income
Other comprehensive income that
will be reclassified into gains
and losses subsequently
Portion of other comprehensive 4,801,990 1,256,397 income to be reclassified as
profit or loss under equity method
Fair value change profit or loss of 84,335,801 (123,536,363) financial assets available for
sale
Conversion difference of foreign 25,605,643 10,400,161 currency statements
41 114,743,434 (111,879,805) Net amount after tax attributed to 41 7,765,004 5,309,103 minority
Total comprehensive income 429,852,674 87,634,986 In which:
Total comprehensive income 327,163,380 100,532,162 attributable to the parent company
shareholders
Total comprehensive income 102,689,294 (12,897,176) attributable to the minority
Profit per share 57
Basic earnings per share 0.05 0.05 Diluted earnings per share 0.05 0.05 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated statement of change in stockholder equity
Year 2016
RMB Yuan
Shareholders’ equity attributed to parent company Minoritystockholders’ equity Share capital Contributed Other Surplus Special Undistribute Subtotal Equity Total surplus comprehensi reserves reserve d profit
ve income
I. Balance at the 4,390,294,584 5,526,978,5 207,660,237 1,576,100,78 - 3,168,538,70 14,869,572,88 917,076,421 15,786,649,30 beginning of 75 6 1 3 4 current year
II. Amount of
increased/decreas
ed in this year
(I) Total - - 114,743,434 - - 212,419,946 327,163,380 102,689,294 429,852,674 comprehensive
income
(II) Capital
increased and
reduced by
shareholders
1. Capital - - - - - - - 273,048,439 273,048,439 increased by
shareholders
(III) Profit
distributed
1. Picking surplus - - - 27,022,196 - (27,022,196) - - - reserves
2. Distribution to - - - - - - - (2,400,467) (2,400,467) shareholders
(IV) Special
reserve
1. Picking in this - - - - 26,851,099 - 26,851,099 - 26,851,099
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated statement of change in stockholder equity (continued)
Year 2016
RMB Yuan
year
2. Use in this year - - - - (26,851,09 - (26,851,099) - (26,851,099) 9)
III. Balance at the 4,390,294,584 5,526,978,5 322,403,671 1,603,122,98 - 3,353,936,45 15,196,736,26 1,290,413,68 16,487,149,95 end of current year 75 2 1 3 7 0 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated statement of change in stockholder equity
Year 2015
RMB Yuan
Shareholders’ equity attributed to parent company Minority stockholders’ equity Share capital Contributed Other Surplus Undistributed Subtotal Equity Total surplus comprehensive reserves profit
income
I. Balance at the 4,390,294,584 5,738,241,686 319,540,042 1,554,606,025 2,987,813,174 14,990,495,511 618,105,524 15,608,601,035 beginning of current
year
II. Amount of
increased/decreased
in this year
(I) Total - - (111,879,805) - 212,411,967 100,532,162 (12,897,176) 87,634,986 comprehensive income
(II) Capital
increased and reduced
by shareholders
1. Capital increased - - - - - - 273,402,314 273,402,314 by shareholders
(III) Profit
distributed
1. Picking surplus - - - 21,494,761 (21,494,761) - - - reserves
2. Distribution to - - - - (10,191,679) (10,191,679) (31,383,031) shareholders (21,191,352)
(IV) Business - (211,263,111) - - - (211,263,111) 59,657,111 (151,606,000) Combination under
Common Control
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated statement of change in stockholder equity (continued)
Year 2015
RMB Yuan
III. Balance at the 4,390,294,584 5,526,978,575 207,660,237 1,576,100,786 3,168,538,701 14,869,572,883 917,076,421 15,786,649,304 end of current year
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flows
Year 2016
RMB Yuan
Note V 2016 2015 I. Cash generated from operating
activities
Cash receipt from products sales 21,354,693,208 19,506,900,429 and labor provision
Tax return received 917,117,592 984,630,764 Net cash from other operating 58 437,301,182 447,191,781 activities
Subtotal of cash receipt from 22,709,111,982 20,938,722,974 operation activities
Cash payment of purchase 18,154,428,952 20,174,319,424 commodity and receiving labor
Cash payment to and for the 1,782,356,763 1,753,695,004 employee
Tax payment 525,276,408 269,565,520 Other cash payments relating to 58 588,627,223 573,104,499 operating activities
Subtotal cash disburse of 21,050,689,346 22,770,684,447 operating activities
Net cash flows from operating 59 (1) 1,658,422,636 (1,831,961,473) activities
II. Cash flow of investment
Cash receipt of investment return 160,000,000 8,014,070,972 Cash receipt of obtaining 53,350,539 444,664,901 investment gains
Losses on disposal of fixed
assets, intangible assets and
other long-term assets
Net cash received 13,381,153 51,566,366 Other cash receipts relating to 58 852,787,742 93,974,040 investing activities
Subtotal of investment cash 1,079,519,434 8,604,276,279
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flows (continued)
Year 2016
RMB Yuan
receipt
Cash payment of construction of 1,157,412,752 2,068,707,329 fixed assets, project in process
and intangible assets
Cash payment of investment 1,157,412,752 2,068,707,329 Net cash paid for acquiring 59 (2) - 76,606,000 subsidiaries and other business
units
Subtotal of cash disburse of 1,805,734,512 6,038,677,769 investment activities
Net cash flows from operating (726,215,078) 2,565,598,510 activities
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flows (continued)
Year 2016
RMB Yuan
Note V 2016 2015 III. Cash flow of financing
activities
Cash received from borrowings 36,889,288,147 31,419,366,773 Cash received from issuing bonds 4,000,000,000 2,000,000,000 Receipt of other cash related to 58 3,038,684,232 4,740,276,534 financing activities
Subtotal of cash receipt of 43,927,972,379 38,159,643,307 financing activities
Cash to pay the debts 40,386,569,653 35,746,949,298 Cash payment of dividend 1,247,523,244 1,591,961,686 distribution or interest
Payment of other cash related to 58 2,141,534,489 1,139,543,500 financing activities
Subtotal of cash disburse of 43,775,627,386 38,478,454,484 financing activities
Net cash flows from operating 152,344,993 (318,811,177) activities
IV. Influence of exchange rate 74,727,024 40,816,432 changed to cash
V. Net increase in cash and cash 1,159,279,575 455,642,292 equivalents
Add: Cash and cash equivalent 2,337,925,611 1,882,283,319 Closing balance
VI. Cash and cash equivalent 59 (3) 3,497,205,186 2,337,925,611 Closing balance
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flows (continued)
Year 2016
RMB Yuan
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance sheet of the company
Year 2016
RMB Yuan
Assets Note XII December 31, 2016 December 31, 2015 Current assets
Monetary capital 1,972,249,599 1,905,662,392 Financial liabilities
measured at fair value with
the change accounted in
current profit and loss 4,615,775 192,133 Notes receivable 259,055,935 226,205,622 Receivables 1 6,476,087,696 6,782,715,639 Prepayment 1,960,350,424 2,237,777,316 Other receivables 2 13,878,003,016 11,305,096,974 Stock 5,589,869,550 6,093,661,038 Construction completed 8,583,910,209 8,529,348,226 account yet has not been
settled
Non-current assets 10 173,417,465 170,144,226 Total current assets 38,897,559,669 37,250,803,566 Non-current assets
Available-for-sale 356,606,562 380,644,986 financial assets
Long-term stock ownership 3 8,582,775,282 7,390,184,826 investment
Real estate as investment 473,380,251 361,172,808 Fixed assets 5,633,993,352 6,084,245,840 Projects in process 761,374,018 759,763,993 Intangible assets 1,664,941,415 1,691,754,895 Deferred corporate tax 474,102,945 398,842,987 Total non-current assets 17,947,173,825 17,066,610,335 Total assets 56,844,733,494 54,317,413,901
Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance sheet of the company (continued)
Year 2016
RMB Yuan
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance sheet of the company (continued)
Year 2016
RMB Yuan
Liabilities andstockholders’ Note XII December 31, 2016 December 31, 2015 equity
Current liabilities
Short term loans 18,095,748,393 14,899,812,954 Financial liabilities measured
at fair value with the change
accounted in current profit and
loss fair value with the change - 22,611,400 Notes payable 1,860,260,636 1,804,985,262 Payables 6,072,079,752 7,717,863,159 Pre-received payment 291,785,327 221,831,681 Construction not completed 3,989,249,948 3,564,886,225 account
Employee remuneration payable 253,913,374 247,867,168 Tax payables 101,878,736 33,357,053 Interest payable 128,368,841 274,442,941 Dividend payable 352,598 352,598 Other payables 1,852,554,158 1,623,119,170 Non-current liabilities due 407,455,030 5,514,245,635 within one year
Other current liabilities 3,996,025,335 1,995,655,739 Total current liabilities 37,049,672,128 37,921,030,985 Non-current liabilities
Long-term loans 2,891,136,000 778,404,000 Long-term payables 905,899,355 - Predicted liabilities 284,982,328 213,158,056 Deferred profit 327,313,110 274,380,601 Total non-current liabilities 4,409,330,793 1,265,942,657 Total liabilities 41,459,002,921 39,186,973,642 Shareholders' equity
Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance sheet of the company (continued)
Year 2016
RMB Yuan
Share capital 4,390,294,584 4,390,294,584 Contributed surplus 5,792,527,600 5,792,527,600 Other comprehensive income 264,075,193 279,006,839 Surplus reserves 1,602,614,709 1,575,592,513 Profit not distributed 3,336,218,487 3,093,018,723 Totalshareholders’ equity 15,385,730,573 15,130,440,259 Total liabilities and 56,844,733,494 54,317,413,901shareholders’ equity
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Income statement of the company
Year 2016
RMB Yuan
Note XII 2016 2015 Operating revenue 4 24,248,483,693 21,869,889,813 Less: Operating cost 4 20,545,946,108 19,069,970,322 Operation taxes and surcharges 62,382,292 10,246,519 Selling expense 81,744,285 63,655,157 Management expense 1,163,620,534 1,054,137,881 Financial expenses 1,029,965,201 1,311,666,888 Assets impairment loss 1,208,850,889 634,618,962 Add: Changes in fair value gains
and losses 27,035,042 (19,402,267) Gain on investment 5 102,879,065 499,257,330 In which: Investment gains to
affiliated companies and joint
ventures
Investment gains 99,395,952 61,885,725 Operating profit 285,888,491 205,449,147 Add: Non-operating income 8,682,882 24,915,350 In which: Non-current assets
disposal income 1,376,710 2,991,948 Less: Non-operating expense 7,961,979 1,940,975 In which: Non-current assets
disposal loss 4,373,646 1,931,654 Total profit 286,609,394 228,423,522 Less: Corporate income tax
expense 16,387,434 13,475,916 Net profit 270,221,960 214,947,606 Net amount after tax of other
comprehensive income
Other comprehensive income that
will be reclassified into gains
and losses subsequently
Shanghai Zhenhua Heavy Industries Co., Ltd.
Income statement of the company (continued)
Year 2016
RMB Yuan
Portion of other comprehensive
income to be reclassified as
profit or loss under equity
method 4,801,990 1,256,397 Fair value change profit or loss
of financial assets available
for sale (20,432,661) (73,498,300) Conversion difference of
foreign currency statements 699,025 158,108 (14,931,646) (72,083,795) Total comprehensive income 255,290,314 142,863,811 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of change in stockholder equity of the company
Year 2016
RMB Yuan
Share Contributed Other Special Surplus Undistribut Total capital surplus comprehensi reserve reserves ed profitshareholder’s ve income equity I. Balance at the
beginning of 4,390,294,5 5,792,527,6 1,575,592,5 3,093,018,7 15,130,440,2 current year 84 00 279,006,839 - 13 23 59 II. Amount of
increased/decreas
ed in this year
(I) Total
comprehensive (14,931,646
income - - ) - - 270,221,960 255,290,314 (II) Profit
distribution
1. Picking surplus (27,022,196
reserves - - - - 27,022,196 ) - Special reserve
1. Picking in this
year - - - 14,726,377 - - 14,726,377 2. Usage in this (14,726,37
year - - - 7) - - (14,726,377) III. Balance at 4,390,294,5 5,792,527,6 1,602,614,7 3,336,218,4 15,385,730,5 the end of current 84 00 264,075,193 - 09 87 73
Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of change in stockholder equity of the company (continued)
Year 2016
RMB Yuan
year
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of change in stockholder equity of the company (continued)
Year 2016
RMB Yuan
Share capital Contributed Other Surplus Undistributed Total surplus comprehensive reserves profit shareholder’s income equity I. Balance at the
beginning of current
year 4,390,294,584 5,789,984,601 351,090,634 1,554,097,752 2,899,565,878 14,985,033,449 II. Amount of
increased/decreased
in this year
(I) Total
comprehensive
income - - (72,083,795) - 214,947,606 142,863,811 (II) Profit
distribution
1. Picking surplus
reserves - - - 21,494,761 (21,494,761)
(III) Business
Combination under
Common Control - 2,542,999 - - - 2,542,999 III. Closing balance 4,390,294,584 5,792,527,600 279,006,839 1,575,592,513 3,093,018,723 15,130,440,259 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of cash flows of the company
Year 2016
RMB Yuan
Note XII 2016 2015 I. Cash generated from operating
activities
Cash receipt from products sales
and labor provision 18,091,209,000 17,397,816,931 Tax return received 822,041,413 977,076,832 Description of obtained net cash
from other operating activities: 395,515,334 389,419,585 Subtotal of cash receipt from
operation activities 19,308,765,747 18,764,313,348 Cash payment of purchase
commodity and receiving labor 17,894,901,564 19,747,089,361 Cash payment to and for the
employee 965,476,776 980,395,055 Tax payment 91,325,029 47,632,264 Description of other obtained
cash payments relating to
operating activities: 432,920,475 560,532,424 Subtotal cash disburse of
operating activities 19,384,623,844 21,335,649,104 Net cash flows from operating
activities 6 (75,858,097) (2,571,335,756) II. Cash flow of investment
Cash receipt of investment return 100,000,000 7,822,070,972 Cash receipt of obtaining
investment gains 37,716,179 439,051,605 Losses on disposal of fixed
assets, intangible assets and
other long-term assets
Net cash received 8,290,642 39,046,255 Other cash receipts relating to
investing activities - 98,461,064
Shanghai Zhenhua Heavy Industries Co.,Ltd
Statement of cash flows of the company (continued)
Year 2016
RMB Yuan
Subtotal of investment cash
receipt 146,006,821 8,398,629,896 Cash payment of construction of
fixed assets, project in process
and intangible assets 257,016,945 462,866,404 Cash payment of investment 1,222,623,689 3,301,502,230 Net cash paid by obtaining
subsidiary and other business
entities - 165,000,000 Subtotal of cash disburse of
investment activities 1,479,640,634 3,929,368,634 Net cash flows from operating
activities 1,333,633,813 (4,469,261,262) The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Statement of cash flows of the company (continued)
Year 2016
RMB Yuan
Note XII 2016 2015 III. Cash flow of financing
activities
Cash received from borrowings 32,313,411,400 25,288,627,079 Cash received from issuing bonds 4,000,000,000 2,000,000,000 Receipt of other cash related to
financing activities 1,817,635,793 2,418,923,970 Subtotal of cash receipt of
financing activities 38,131,047,193 29,707,551,049 Cash to pay the debts 35,132,081,497 28,697,183,212 Cash payment of dividend
distribution or interest 1,032,636,806 1,263,355,113 Payment of other cash related to
financing activities 526,482,447 1,139,543,500 Subtotal of cash disburse of
financing activities 36,691,200,750 31,100,081,825 Net cash flows from operating
activities 1,439,846,443 (1,392,530,776) IV. Influence of exchange rate
changed to cash 35,989,736 28,442,821 V. Net increase in cash and cash
equivalents 66,344,269 533,837,551 Add: Cash and cash equivalent
Closing balance 1,806,066,316 1,272,228,765 VI. Cash and cash equivalent
Closing balance 6 1,872,410,585 1,806,066,316 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Notes to financial statements
Year 2016
RMB Yuan
I. Basic information of the group
Shanghai Zhenhua Heavy Industries (Group) Co., Ltd. (hereinafter “the Company”) was established in Shanghai, on September 8, 1997 as part of an exercise to reorganize its predecessor, Shanghai Zhenhua Port Machinery Company Limited. The Company is registered in P. R.China’s Shanghai.
As approved by Zheng Wei Fa Zi (1997) No.42 document issued by the Securities Commission under the State Council, the Company issued 100 million listed foreign investment shares (B-shares) to overseas investors from July 15, 1997 till July 17, 1997. The B-shares were listed for trading at Shanghai Stock Exchange on Aug. 5, 1997.
As approved by Gongsi Zi (2000) No. 200 of China Securities Regulatory Commission, the Company added issuing of 88 million RMB common shares (A- shares) to domestic investors in Dec. 2000. The A-shares were listed for trading at Shanghai Stock Exchange on Dec 21, 2000.
In accordance with Zhen Jian Fa Xing Zi (2004) No.165 by China Securities Regulatory Commission, the Company issued 114,280,000 A-shares to domestic investors on Dec. 23, 2004.The said issuances were listed at Shanghai Stock Exchange respectively on Dec. 31, 2004 and Jan 31, 2005 for trading.
In accordance with Zhen Jian Fa Xing Zi (2007) No.3466 by China Securities Regulatory Commission, the Company issued 125,515,000 A-shares to domestic investors on October 15,2007.The said issuances were listed at Shanghai Stock Exchange respectively on October 23, 2007 and January 23, 2008 for trading.
As approved by CSRC Zheng Jian Xuke (2009) No.71 document, the Company issued non-publicly 169,794,680 A-shares on Sep. 22, 2008, to its controller China Communications Construction Co., Ltd. (“China Communications Corporation”).A-shares issued non-publicly are circulation stock with limited sale conditions. From Mar. 20, 2012 on, limitation term expires for above-mentioned A-shares which are listed at Shanghai Stock Exchange for trading.
As of 2016 and Dec. 31, 2015, after all issues of shares and bonus shares distribution, capital stock of the Company is increased to 4,390,294,584 shares, par value per share 1 Yuan, totally 4,390,294,584 Yuan.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
I. Basic information of the group
On Dec. 18, 2005, China Road and Bridge Construction Group General Company combined with thecompany’s controlling holder China Harbor Construction (Group) General Company after reorganization into China Transportation Construction (Group) Co. Ltd. (hereafter called Communications Group).In accordance with the Reply to Issue Concerning Listing of China Communications Construction Co. Ltd. Entirely after Reorganization on Both Domestic and Overseas Market (Guozi Gaige[2006] No.1063) by State Assets Commission on Aug. 16, 2006, Reply to Issue Concerning Management of State Stock of China Communications Construction Co. Ltd. (Guozi Chanquan[2006] No.1072) on Sep.30, 2006, which granted the reorganization proposal of Communications Group, and in addition to the Reply to Approve China Communications Construction Co.Ltd.’s Announcement of Purchase Report of Road and Bridge Construction Co. Ltd. and Shanghai Zhenhua Port Machinery (Group) Co. Ltd. and the Exemption of Purchase Offer Obligations (Zhengjian Gongsi Zi[2006] No. 227), on Oct.8, 2006 Communications Group solely initiated the establishment of China Communications Construction Co. Ltd. (hereinafter called Communications Company), and invested the stock rights of the Company it held into the newly established Communications Company. With completion of reorganization, Communications Company thus becomes the controlling shareholder of the Company.
The company and subsidiaries (hereinafter called “the Company”) mainly engage in: design, construction, installation and contracting of large port loading system and equipment, offshore heavy equipment, engineering machinery, engineering ships and large metal structural parts and their components and spare parts; ship repair; self-produced crane rental business, sales of the company products; international shipment by available machine special transportation ships, steel structure engineering professional contracting.
The financial statements have been approved by the company's board of directors on Mar.27, 2017.
The scope of consolidation of the consolidated statements is confirmed based on the control, refer to the footnote for theyear’s changing situation and the consolidated subsidiaries consisted in the scope.
II. Basis of preparation of financial statements
The financial statements are prepared on the basis of Enterprise Accounting Standards– Basic Standards issued by the financial department and the subsequently issued and revised guidelines, explanation of the accounting standards, and other related
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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stipulations (hereinafter totally called “Enterprise Accounting Standards”).
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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II. Basis of Preparation of Financial Statements (continued)
As of December 31, 2016, the Group's current liabilities exceed current assets by about 83 billion Yuan. In the preparation of the financial statements for the year, given the amount of bank credit, financing record the Group has achieved to obtain, good cooperation relationship with banks and financial institutions and the operating performance, the board of directors of the Company considers that the Group is able to continue to acquire sufficient operating cash flow and sources of financing, to ensure funds required for repayment of debt maturity and capital expenditure. Therefore, the board of directors of the Company ensures that the Group will continue to operate, and thus to base the preparation of the financial statements for the year on sustainable operation.
The preparation of the financial statements, in addition to certain financial instruments, are based on the principle of historical cost valuation. If an asset is impaired, the impairment provision shall be made in accordance with the relevant provisions.
III. Major Accounting Policies and Accounting Estimates
The Company determines specific accounting policies and accounting estimates based on actual operating characteristics, which mainly reflects in the provision for bad debts receivable, inventory valuation methods, depreciation of fixed assets, amortization of intangible assets, investment real estate measurement model and income recognition and measurement and so on.
1. Declaration on Abiding by the Enterprise Accounting Standards
The financial statements follow the requirements of enterprise accounting standards, which authentically and completely reflect the consolidated and theCompany’s financial status on Dec. 31 of 2016 and the consolidated and theCompany’s operating result and cash flow during 2016.
2. Accounting Period
The Group's accounting period is the calendar year, from January 1 to December 31 each year.
3. Recording Currency
RMB is the monetary currency of the Group and in the preparation of the financial statements. Unless otherwise specified, the amount unit is RMB.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
3. Recording Currency
The subsidiaries, joint ventures and associated enterprises of the Group shall, on the basis of the main economic environment in which they operate, decide on their own standard currency, and convert them into RMB when preparing financial statements.
4. Corporate Merger Increase
The term "business combination" refers to a transaction or event in which a merger of two or more than two individual enterprises forms a reporting entity. The enterprise merger is divided into enterprise merger under the same control and enterprise merger not under the same control.
Business Combination under Common Control
The merger of enterprises under the same controller refers to the enterprises involved in the merger will be controlled by the same party or the same multiple parties before and after the merger, and which is not temporary. The merger of the enterprise under the same control, the party who gains the control of other enterprises involved in the merger on the combination day shall be the merging party, and the other enterprises involved will be the merged party. The combination date refers to the date on which the merging party actually obtains control of the merged party.
The assets and liabilities the merging party obtains in the merger of enterprises under the same control (including the goodwill formed by the acquisition of the ultimate controlling party of the merged party), shall be processed with relevant accounting treatment according to the date of merger on the basis of the book value of the financial statements from the ultimate controlling party. The difference between the book value of the net assets acquired by the merger party and the merger consideration paid is adjusted to the capital reserve. When capital reserve is not sufficient to compensate, retained interest is thus adjusted.
Corporate Merger under Different Control
The merger of enterprises not under the same controller refers to the enterprises involved in the merger will not be controlled by the same party or the same multiple parties before and after the merger. The merger of the enterprises not under the same control, the party who gains the control of other enterprises involved in the merger on the combination day shall be the purchaser, and the other enterprises involved will be the acquiree. The combination date refers to the date on which the purchaser actually
obtains control of the acquiree.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
The identifiable assets, liabilities and contingent liabilities obtained by the purchasers of the merger of enterprises not under the same controller on purchase day
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
4. Corporate Merger Increase (continued)
Corporate Merger under Different Control (continued)
The summation of the fair value of the combined consideration paid by the merger (or fair value of the issued equity securities) and the held fair value of the equity of the acquiree before the purchase day larger than the difference in the fair value of the identifiable net assets of the acquiree is confirmed as goodwill, and subtract the accumulated impairment losses with cost for subsequent measurement. The summation of the fair value of the combined consideration paid by the merger (or fair value of the issued equity securities) and the held fair value of the equity of the acquiree before the purchase day less than the difference in the fair value of the identifiable net assets of the acquiree, firstly double-check the fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree, and the fair value of the combined consideration paid (or fair value of the issued equity securities), and the measurement of the held fair value of the equity of the acquiree before the purchase day, after review, if the summation of the fair value of the combined consideration paid by the merger (or fair value of the issued equity securities) and the held fair value of the equity of the acquiree before the purchase day still less than the difference in the fair value of the identifiable net assets of the acquiree, the difference shall be recorded in the current profits and losses.
5. Preparation of Consolidated Statements
The consolidated scope of consolidated financial statements is based on control, including the financial statements of the Company and its subsidiaries as of December 31, 2016.A subsidiary is a subject which is controlled by the Company (including the enterprise, the separable part of the invested entity, and the structural entity controlled by the Company)
When preparing consolidated financial statements, the subsidiary adopts the accounting period and accounting policies consistent with the Company. Assets, liabilities, equity, income, expenses and cash flows arising from all transactions between the Group's internal companies are fully offset at the time of the merger.
The current loss of the minority shareholders of the subsidiary exceeds the share enjoyed by the minority shareholders in the initial shareholders' equity of the subsidiary company, and the balance still reduces the number of shareholders' equity.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
5. Preparation of Consolidated Statements (continued)
The current loss of the minority shareholders of the subsidiary exceeds the share enjoyed by the minority shareholders in the initial shareholders' equity of the subsidiary company, and the balance still offsets the equity of minority shareholders. When preparing consolidated financial statements, the subsidiary company's financial statements are adjusted on the basis of the fair value of identifiable assets, liabilities and contingent liabilities determined on the date of purchase.
For the subsidiaries acquired through the merger of enterprise under the same control, the operating results and cash flows of the merged party shall be included in the consolidated financial statements at the beginning of the merger period. When preparing the consolidated financial statements, relevant items of the financial statements of the previous period shall be adjusted and the reporting entity formed after the merger is regarded as having been in existence since the ultimate controlling party began to implement control.
If changes in the relevant facts and circumstances lead to changes in one or more of the elements of the control, the Group will reevaluate whether or not the investee is controlled.
6. Cash and Cash Equivalents
Cash refers to the Group's cash in stock and deposits that are available for payment at any time; Cash equivalents refer to investments held by the Group of short-term, highly liquid and readily convertible to known amounts of cash, with an insignificant risk of changes in value.
7. Translation of Foreign Currency Business and Foreign Currency Statements
In the case of a foreign currency transaction, the Group changes the amount of foreign currency into the amount of the recording currency.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
7. Translation of Foreign Currency Business and Foreign Currency Statements (continued)
At the time of initial confirmation, the foreign currency transaction shall convert the amount of the foreign currency into the amount of the recording currency at the spot rate of the transaction. At the balance sheet date, the currency exchange rate of the currency denominated items shall be translated at the spot exchange rate at sight on the balance sheet date. The resulting settlement and monetary items, except for the translation differences, which belongs to the purchase and construction of qualified assets of specialized foreign currency in accordance with the principle of processing the capitalization of borrowing costs, are included in the current profits and losses. Non-currency items of foreign currency calculated on historical cost basis are still translated at the rate at sight on the date of transaction, not changing the amount of its recording currency. The foreign currency non-monetary items measured at fair value shall be converted at the spot exchange rate on the basis of the fair value determination date, and the resulting difference shall be recorded in the current profits and losses or other comprehensive income according to the nature of the non-monetary items. In the case of overseas operations, the Group changes its recording currency into RMB in preparing the financial statements: for Assets/liabilities items in the Assets/liabilities statements, exchange rate at sight on the Assets/liabilities statements date is used for translation. In the shareholders ' equity, except retained earnings items, other items are translated using the spot exchange rate at the time of incurrence; the income and expense items in the income statement shall be translated at the spot exchange rate of the transaction. Translation of foreign currency financial statements in accordance with the above translation difference is recognized as other comprehensive income. When dealing with overseas operations, other comprehensive income related to the overseas operation shall be transferred into the current profits and losses, part of the disposal is calculated according to the proportion of disposal. Foreign currency cash flow are translated by the spot exchange rate on the day of cash flows incurrence. Cash flow from offshore subsidiaries are translated by the spot exchange rate on the day of cash flows incurrence. Effect of exchange rate changes on cash amount is shown separately in the cash flow statements as an adjustment item. 8. Financial Instruments
A financial instrument is a contract that forms the financial assets of an enterprise and forms financial liabilities or equity instruments of other enterprises.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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Confirmation and Termination of Financial Instruments
The Group identifies a financial asset or financial liability when becomes a party to a financial instrument contract.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial Instruments (continued)
Satisfying the following conditions, derecognise a financial asset (or part of a financial asset or a group of similar financial assets), which is to be transferred from its account and balance sheet:
(1) the right to receive cash flows from financial assets expires;
(2)The right to receive the cash flow of the financial asset has been transferred, or have assumed the obligation in the "pass-through agreement" to take timely collected cash flow to the third party in full payment; and (a) has transferred substantially almost all the risks and rewards of ownership of the financial asset, or (b) although does not transfer or retain substantially nearly all of the risks and rewards of ownership of the financial asset, but has given up the control over the financial asset.
In the event that the liability of a financial liability has been fulfilled, withdrawn or expired, the financial liabilities will be derecognised. If the existing financial liability is replaced by the same creditors with another financial liabilities of virtually entirely different terms, or the terms of the existing liabilities are almost entirely modified substantially, such substitutions or modifications shall be used for the termination of the original liability and the recognition of the new liabilities and the difference shall be included in current profits and losses.
Buying and selling financial assets in a conventional manner, confirm and terminate the transaction on the basis of trade-date accounting. The conventional way to buy and sell financial assets refers to collecting or delivering financial assets within the time limit prescribed in the law or the prevailing practice in accordance with the terms and conditions of the contract. Trading day is the date on which the Group commits to buy or sell financial assets.
Classification and Measurement of Financial Assets
TheGroup’s financial assets are classified at the beginning of recognition into: Financial assets calculated by fair value whose movement booked into current income statement, held to maturity investment, loans and Receivables, Available-for-sale financial assets. Financial assets are measured at fair value at the time of initial recognition. Of the financial assets whose amount initially recognized fair value and changes into current profit or loss statement, related transaction costs incurred at acquisition are included directly in current profit or loss, other financial assets transaction costs are included in the initially recognized amount. The Group does not
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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held maturity investment.
Subsequent measurement of financial assets depends on their classification.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial Instruments (continued)
Financial assets measured at fair value and whose variation is included in the current profits and losses
Financial assets measured at fair value and whose changes are recorded in the profits and losses of the current period shall include the trading financial assets and the financial assets designated at the time of initial recognition, which are measured at fair value and whose changes are recorded in the profits and losses of the current period. Trading financial assets are financial assets that meet one of the following conditions: getting the financial assets for the purpose of selling in the short term; belonging to the part of a combination of identifiable financial for centralized management, and there is objective evidence that the company has recently adopted a short-term profit approach to manage the portfolio; belonging to the derivatives, but the derivatives that are designated and are effective hedging tool, the derivatives which belong to financial guarantee contracts and the derivatives that are linked to equity instrument investment which has no offer in the active market and its fair value cannot be measured reliably and shall be settled through the delivery of the equity instrument must be excluded. For such financial assets, use fair value to have subsequent measurement, all realized and unrealized gains and losses are included in the current profits and losses. Dividends or interest income related to the financial assets measured at fair value and whose changes are included in the current profits and losses shall be recorded in the profits and losses of the current period.
Classification and measurement of financial assets (continued)
The equity instrument investment that has no offer in the active market and whose fair value cannot be measured reliably shall not be designated as a financial asset that is measured at fair value and its changes are recorded in the current profits and losses. An enterprise shall not be reclassified as other financial assets after a financial asset is divided at the time of initial confirmation into financial assets measured at fair value and whose changes are recorded in the current profits and losses; other types of financial assets may also not be reclassified as financial assets measured at fair value and whose changes are recorded in the profits and losses of the current period. In accordance with the above conditions, the Group's financial assets mainly include forward foreign exchange contracts.
Loads and Receivables
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial Instruments (continued)
Loads and receivables are non-derivative financial assets which have no quotation on active market, whose collectable amount is fixed or can be determined. For such financial assets, adopt the actual interest rate method in accordance with the amortized cost to have subsequent measurement, gains or losses arising from its amortization or impairment are included in the current profits and losses.
Fair value changes of Available for sale financial assets refer to the non-derivative financial assets that are designated as available for sale at the time of initial recognition, and the financial assets other than those listed above. For such financial assets, use fair value for subsequent measurement. The discount or premium is amortized using the effective interest method and recognized as interest income or expense. In addition to the impairment loss and foreign currency financial assets exchange balance is recognised in profit or loss for the period, the changes in fair value of available for sale financial assets are recognised as other comprehensive income, and the cumulative gain or loss is transferred to the current profits and losses until the financial asset has been derecognised or impaired. Dividends or interest income related to the available for sale financial assets shall be included in the current profits and losses.
Equity instrument investments that are not quoted in an active market and whose fair value cannot be reliably measured shall be measured at cost.
Classification and Measurement of Financial Liabilities.
The Group's financial liabilities are classified at the time of initial recognition as: financial liabilities measured at fair value and whose changes are recorded in the current profits and losses, other financial liabilities, and derivative instruments that are designated as effective hedging instruments. For the financial liabilities measured at fair value and whose changes are included in the current profits and losses, the relevant transaction costs shall be directly included in the current profits and losses, and the related transaction costs of other financial liabilities shall be included in the initial recognition amount. The Group has no derivative instruments designated as effective hedging instruments.
Subsequent measurement of financial liabilities depends on their classification: Measured at fair value and the changes are recorded into the profits and losses of the current financial liabilities
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial Instruments (continued)
Financial liabilities measured at fair value and the variations included in the current profits and losses include the financial liabilities of trading financial liabilities and those specified at fair value and whose variations are included in the current profits and losses in the initial recognition. Trading financial assets are financial assets that meet one of the following conditions: undertaking the financial liabilities in order to repurchase in the near future; belonging to the part of a combination of identifiable financial for centralized management, and there is objective evidence that the company has recently adopted a short-term profit approach to manage the portfolio; belonging to the derivatives, but the derivatives that are designated and are effective hedging tool, the derivatives which belong to financial guarantee contracts and the derivatives that are linked to equity instrument investment which has no offer in the active market and its fair value cannot be measured reliably and shall be settled through the delivery of the equity instrument must be excluded. For such financial liabilities, have subsequent measurement in accordance with the fair value, all realized and unrealized gains and losses are included in the current profits and losses.
An enterprise shall not be reclassified as other financial liabilities after a financial liability is divided at the time of initial confirmation into financial liabilities measured at fair value and whose changes are recorded in the current profits and losses; other types of financial liabilities may also not be reclassified as financial liabilities measured at fair value and whose changes are recorded in the profits and losses of the current period.
In accordance with the above conditions, the financial liabilities designated by the Group include the forward foreign exchange contracts.
Other financial liabilities
For such financial liabilities, use the actual interest rate method in accordance with the amortized cost to have subsequent measurement.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial Instruments (continued)
Financial Instruments Offset
When meet the following conditions simultaneously, the net amount after financial assets and financial liabilities offsetting shall be listed in the balance sheet: having the legal right to offset the recognised amount, and that legal rights are currently enforceable; the plan is to be settled in net, or at the same time, realise the financial assets and pay off the financial liabilities.
Financial Guarantee Contract
A financial guarantee contract is a contract signed between the guarantor and the creditor, when the debtor fails to perform the obligations, the guarantor shall perform the obligation or bear the liability in accordance with the contract. The financial guarantee contract is measured at fair value at the time of initial confirmation, does not belong to the financial guarantee contract designated as the financial liabilities measured at fair value and whose changes are included in the current profits and losses, after initial recognition, in accordance with the amount confirmed by the current best estimate of the expenditure required to perform the relevant obligations at the balance sheet date and the balance of the initial recognition amount deducing the accumulative amortization determined in accordance with the revenue recognition principle, have subsequent measurement with the higher of which two.
Derivative Financial Instruments
The Group uses derivative financial instruments such as forward exchange contracts to hedge against exchange rate risk. Derivative financial instruments are measured on the basis of the fair value of the derivative trading contract on the signing day, and have subsequent measurement with its fair value. The derivative financial instrument whose fair value is positive is recognized as an asset, and the one whose fair value is negative is recognised as a liability. However, for the derivative financial instruments that are linked to equity instrument which has no offer in the active market and its fair value cannot be measured reliably and shall be settled through the delivery of the equity instrument shall be measured at cost.
In addition to the part of an effective hedge in a cash flow hedge included in other comprehensive income, and rolled out from the current profits and losses in the event that the hedged item affects the profit or loss, gains or losses arising from changes in fair value of derivative instruments are directly included into the current profits
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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and losses.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
Financial Assets Impairment
The Group checks up over the carrying value of the financial assets on balance sheet date. If there is objective evidence that particular financial assets are impaired, provision for impairment is made. The objective evidence to prove financial assets impairment refers to the items which actually happened after initial confirmation of financial assets, influenced the estimated future cash flows of the financial assets, and its impact can be reliably measured by the enterprise. Objective evidence of impairment of financial assets, including serious financial difficulties, debt occurred to the issuer or debtor.
Violating the terms of the contract (such as payment of interest or principal default or late), the debtor is likely to collapse or have other financial restructuring, and public data shows the expected future cash flow has been reduced and measurable. Financial assets measured at amortised cost
In the event of impairment, the book value of the financial asset is reduced through the allowance for project value to the current value of estimated future cash flows (excluding the future credit losses that have not yet occurred), the amount of write downs shall be recorded in the current profits and losses. The present value of the expected future cash flow is determined in accordance with the original effective interest rate of the financial asset discounting (the actual interest rate determined at the time of the initial confirmation), and the value of the underlying collateral is taken into account. The impaired Interest income uses the discount rate used to discount future cash flows in the light of the determination of impairment losses as the interest rates to calculate and determine. For loans and receivables, if there is no real expectation of future recovery and all collateral has been realized or transferred to the Group, transfer the loans and receivables and have associated impairment provision.
If the amount of individual financial assets is significant, individual impairment test is conducted. If there is objective evidence to prove that the impairment has occurred, the impairment loss is calculated in current profit and loss after confirming. The financial assets that are not significant for the individual amount shall include an impairment test or a separate impairment test in a portfolio of financial assets with similar credit risk characteristics. Separate testing of financial assets that have not
been impaired (including a single amount of significant and non-significant financial
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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assets), shall have an impairment test for a portfolio of financial assets with similar credit risk characteristics. The financial assets that have been recognised for impairment losses are not included in the impairment test of a portfolio of financial assets with similar credit risk characteristics.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial Instruments (continued)
Devaluation of Finance Assets (continued)
After the Group confirms the impairment losses on financial assets measured at amortised cost, if there is objective evidence that the financial assets value has been restored, and it is objectively related with the events incurred after the confirmation of the loss, the previously recognized impairment loss is reversed into current profit or loss. However, the book value after the reversal does not exceed the amortized cost of the financial asset at the reversal date, assuming that the impairment provision is not included.
Fair value changes of
If there is objective evidence that the financial asset impairment has occurred, the cumulative losses originally included in other comprehensive income due to the decline in the fair value, shall be transferred out and included in the current profits and losses. The transferred cumulative loss refers to the initial acquisition cost of the financial assets available for sale deduct the retrieved principal and the amortized amount, the balance between the current fair value and the original value of the impairment loss which has been included in the profits and losses.
Objective evidence proving impairment of available-for-sale equity instruments investments includes serious or non-temporary decline in fair value. "Serious" is judged on the basis of the fair value below the cost, and "non-temporary" is judged according to the length of period when the fair value is lower than the cost. If there is any objective evidence of impairment, the roll-out accumulated loss shall be the balance of the acquisition cost after deducting the current fair value and the impairment loss which has been included in the profits or losses. Impairment losses on equity instrument investment available for sale are not reversed through profit or loss, and the increase in fair value after impairment is recognised directly in other comprehensive income. It needs to judge when determining what is "serious" or "non-temporary". The Group judges on the basis of the level or duration of the fair value below cost combined with other factors.
For the debt instruments investment available for sale, the impairment is assessed in the same manner as the financial assets measured at amortised cost. However, the roll-out accumulated loss is the balance of the amortized cost after deducting the current fair value and the impairment loss that has been included in the profits or losses. The
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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impaired Interest income uses the discount rate used to discount future cash flows in the light of the determination of impairment losses as the interest rates to calculate and determine.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial Instruments (continued)
For the debt instruments available for sale that have recognized impairment losses, in the subsequent accounting period, the fair value has risen and objectively related to events that occur after the impairment losses were recognised, the previously recognised impairment losses shall be reversed and included in the current profits and losses. Financial assets measured at cost
If there is objective evidence that shows the impairment of the financial assets, the book value of the financial assets and the balance between the market return rate then in accordance with the similar financial assets and the discounted present value of future cash flows is recognized as impairment loss and shall be included into the profits and losses of the current period. The occurred value decrease loss is not returned in the next period.
Transfer of Financial Assets
When substantially all the risks and rewards of ownership of the financial assets are transferred to the transferee, the Group derecognizes the financial asset; when such risks and rewards retains, the financial asset is not derecognized.
When the Group has neither transferred nor retained substantially all the risks and rewards of ownership of financial assets, they're disposed by the following circumstances: when the control of the financial asset is given up, derecognize the financial assets and recognize assets and liabilities arising; when the control is not given up, recognize the financial assets and liabilities accordingly by the extent of its continuing involvement in the transferred financial assets.
By continuing to involve in the manner in which financial security is provided for the transferred financial assets, confirm the assets formed by the continuing involvement in accordance with the lower between the book value of the financial asset and the amount of the financial guarantee. The amount of the financial guarantee refers to the maximum amount to be asked to repaid in the received consideration.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
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III. Major Accounting Policies and Accounting Estimates (continued)
9. Accounts Receivable
Receivables include accounts receivable, other receivables, prepayments and others. The fair value of the contract or agreement receivable from the buyer or the service receiver shall be regarded as the initial recognition amount.
(a) Accounts receivable
Big single amount, provided for bad debt separately
As of accounts receivable with single big amount, individual test is made on value depreciation. When proof shows the Group is not able to collect the account receivable as prescribed, bad debt provision is made.
Standard of single big amount: top 5 of the receivable from third party
Method of bad debt provision being made with big single amount: based on the difference of the present value of the expected future cash flow of the account receivable lower than its book value.
Reason for individual accrual of bad debt provision: proof shows the Group will not be able to the accounts receivable on the basis of former clauses.
Method of accrual of bad debt provision: accrued according to the difference between the present value of its expected future cash flow lower than its book value
Bad debt reserve is calculated as per the credit risk combination
Accounts receivable not with big single amount, together with accounts receivable whose value is not decreased after being individual test, are classified into groups by credit risk features and bad debt provision is made, on the basis of actual loss rate of prior period accounts receivable of the same or similar kind, with similar credit risk features, combining present situation.
Credit risk groups are determined by the following criteria:
Group 1 Accounts receivable from related party
Group 2 Accounts receivable from third party
Method of bad debt provision being made by credit risk groups:
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
9. Accounts Receivable (continued)
Group 1 Bad debt provision shall not be made of accounts receivable from related party except proof shows the Group is not able to collect them.
Group 2 Debt age analysis method (considering future collection)
Accounts receivable (continued)
Bad debt reserve is calculated as per the credit risk combination (continued) Among the groups, proportion of accrual on aging analysis basis is listed as follows: Debt age Provision proportion One to six months - Seven to twelve months 1% One to two years 15% Two to three years 30% Three to four years 50% Four to five years 75% Above five years 100% (b) Other receivables
Big single amount, provided for bad debt separately
As for other receivables of big single amount, individual impairment test is made. When proof exists to show the Group will not be able to collect them according to prescribed clauses, bad debt provision is made.
Standard of single big amount: top 5 of the receivable from third party
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
9. Accounts Receivable (continued)
Method of bad debt provision being made with big single amount: based on the difference of the present value of the expected future cash flow of the other receivables lower than its book value.
(b) Other receivables (continued)
Other accounts receivable for insignificant single amount and single Provision for bad debts
Reason for individual accrual of bad debt provision: proof shows the Group will not be able to the other receivables on the basis of former clauses.
Reason for individual accrual of bad debt provision: proof shows the Group will not be able to the other receivables on the basis of former clauses.
Group assessment for provision for bad debts
Other accounts receivable not with big single amount, together with accounts receivable whose value is not decreased after being individual test, are classified into groups by credit risk features and bad debt provision is made, on the basis of actual loss rate of prior period accounts receivable of the same or similar kind, with similar credit risk features, combining present situation.
Credit risk groups are determined by the following criteria:
Group 1 Guarantee deposit (excluding quality guarantee deposit)
Group 2 Employee individual loans and reserve funds
Group 3 Other accounts receivable
Method of bad debt provision being made by credit risk groups:
Group 1 Except for that the objective evidence proves that the Groupcan’t retake the payment according to the original articles of other receivables, the Group shall not make bad debt provision for the cash deposit (excluding quality cash deposit)
Group 2 Bad debt provision shall not be made of accounts receivable fromemployee’s loan and reserve fund except proof shows the Group is not able to collect
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
them.
Group 3 Debt age analysis method
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
9. Accounts receivable (continued)
(b) Other receivables (continued)
Group assessment for provision for bad debts (continued)
Among the groups, proportion of accrual on aging analysis basis is listed as follows: Debt age Provision proportion One to six months - Seven to twelve months 1% One to two years 15% Two to three years 30% Three to four years 50% Four to five years 75% Above five years 100% 10. Inventories
Stock includes raw materials purchased spare parts and semi-products, reported in the lower between cost and cashable net value.
Inventories are initially measured at cost. Inventory costs include purchase costs, processing costs and other costs. The actual cost is determined by the weighted average method when sending out the stock. Turn-over materials include perishables and packing materials etc. Perishables are amortized by turns while packing is amortized at one time. The inventory system uses a perpetual inventory system.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
10. Inventories (continued)
At the balance sheet date, inventories are measured at the lower of cost and net realizable value, for the cost that is higher than the net realizable value, the provision for depreciation of inventories shall be included in the current profits and losses. If the influence factors of the provision for depreciation of inventories before have disappeared, making the net realizable value of inventories higher than the book value, in the amount of original provision for depreciation of inventories, the previously reduced amount shall be recovered and the reversed amount shall be recorded in the current profits and losses.
Net realizable value is the amount that the estimated selling price of the stock minus the cost that would incur at the time of completion, the estimated cost of sales, and the amount of the relevant taxes and fees in the daily activities. For the provision for loss on decline in value of inventories, raw materials are classified by category, and finished goods are accounted for by a single inventory item.
11. Construction contract
For customized large port equipment with fixed price, because the start and the finishing of the project are in different accounting years, the Company uses building-contract method to calculate the revenue and the cost.
(a) If the selling result of individual building contract can be reliably estimated, the revenue and expenses can be recognized in proportion of completeness on the day of balance sheet. The result of the construction contract can be estimated reliably, which means that the economic benefit associated with the contract is likely to flow into the group. The actual cost of the contract can be measured clearly and reliably. In the case of a fixed cost contract, the following conditions must be satisfied: the total contract revenue can be measured reliably, and the contract completion progress and the cost to be taken for the completion of the contract can be reliably determined. The amount of the total contract income, including the initial revenue stipulated in the contract and income resulting from contract change, claim, award, etc. The Group determines the progress of the Contract Completion by the following methods:
(i) Project progress proportion is made on the report day according to the revenue recognition stage stipulated in the contract. The Company confirmed the following 3 revenue recognition stages:
Stage 1: body steel structure completed and erected;
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
Stage 2: manufacturing, installation and initial testing completed, product ex-plant qualification certificate issued, shipping documents acquired, product ready to be shipped;
Stage 3: product finally delivered after being checked and approved by purchaser, final delivery certificate issued by purchaser acquired.
Shanghai Zhenhua Heavy Industries Co., Ltd
Notes to financial statements (continued)
Year 2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
11. Construction contract (continued)
The Group will analyze the building contracts completed in prior year and recognize progress proportion of each revenue recognition stage on the basis of the proportion of the cost of the revenue recognition stage in real total costs and recognize it as the progress proportion at various stages in current period.
(ii) For heavy equipment and construction project, progress of completeness is recognized by the proportion of accumulated cost incurred in total expected cost. The accumulated cost does not include that related to contract future activities. (iii) Progress of completeness of steel structures is determined by the proportion of cumulative tons of processing completed in total tons of processing.
(b) When individual building contract result is not able to be reliably estimated, the following methods are used:
(i) When contract cost can be covered, contract revenue is recognized according to real contract cost that can be covered, contract cost is recognized as expenses in the period when cost incurs.
(ii) When contract cost cannot be covered, it can be recognized as expenses immediately when it incurs; no contract revenue is confirmed.
(c) When expected total contract cost exceeds total revenue, the expected losses should be immediately recognized as expenses in current period.
(d) When contract value is settled in installments, the settled installment is recognized as settled value, which will be transferred and set off with related accumulated costs and confirmed margin on the day of building contract completed. On the balance sheet day, when the addition of accumulated costs and confirmed margin exceeds the accumulated settled value, the difference is listed as completed but not yet settled item in current assets. Otherwise, it will be listed in settled but not completed item in current liabilities.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
12. Long-term equity investments
Long term equity investment including: Long term equity investment into theCompany’s subsidiaries, joint venture and associate.
Long term equity investments are initially measured by the initial investment cost on acquisition. Long term equity investments obtained by the merger of the enterprises under the same control take the share of the book value in the consolidated financial statements acquired by the merging party owner on the combination day as the initial investment cost; The difference between the initial investment cost and the book value of the combined consideration is adjusted to the capital reserve.(When capital reserve is not sufficient to compensate, retained interest is thus adjusted); Other comprehensive income of the prior to the date of the merger, when handling the investment, it shall carry out the accounting treatment on the same basis of the relevant assets or liabilities directly disposed of by the invested entity, the investment, it shall carry out the accounting treatment on the same basis of the relevant assets or liabilities directly disposed of by the invested entity, theshareholders’ rights and interests recognized by the other changes in the equity of the invested entity other than net gains/losses, other comprehensive income and profit distribution shall be transferred fully into the current profits and losses when handling the investment; In which, if it is still long term equity investment after the disposal, carry forward in proportion, if it is converted to the financial instruments, then carry forward fully.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
12. Long-term equity investments (continued)
Long term equity investments obtained by the merger of the enterprises not under the same control take the combined cost as the initial investment cost(the merger of enterprises not under the same control realized by two or more transactions of exchanges take the combination costs of the book value of equity investments held by acquiree prior to purchase date and newly increased investment cost on purchase day as the initial investment cost, the costs of consolidation include the summation of the assets paid by the purchaser, the liabilities incurred or assumed, the fair value of the equity securities issued; other comprehensive income of the prior to the purchasing date recognized by the equity method accounting, when handling the investment, it shall carry out the accounting treatment on the same basis of the relevant assets or liabilities directly disposed of by the invested entity, theshareholders’ rights and interests recognized by the other changes in the equity of the invested entity other than net gains/losses, other comprehensive income and profit distribution shall be transferred fully into the current profits and losses when handling the investment; In which, if it is still long term equity investment after the disposal, carry forward in proportion, and if it is converted to the financial instruments, then carry forward fully; when equity investments held prior to the purchasing date as financial instrument included in the cumulative changes in fair value of other comprehensive income is counted according to the cost method, it shall be transferred fully into the current profit and loss. Long term equity investments acquired other than long term equity investments formed by the business combination, shall determine the initial investment cost according to the following methods: obtained by making payment in cash, it shall take the actual purchase price paid and the directly related costs and taxes with the acquisition of long term equity investment and other necessary expenses as the initial investment cost; obtained by issuing equity securities, it shall take the fair value of the issuance of equity securities as the initial investment cost.
The Company can measure the long term equity investments which can be controlled by the investment enterprises with the cost method in the individual financial statements of the Company. Control means having the power to decide on investee, and thus obtaining the variable gains from its operation, with the ability to utilize the power of the investee to influence the gains amount.
When the cost method is used, the long-term equity investment is determined by the initial investment cost. The cost of the long-term equity investment shall be adjusted if the investment is added or withdrawn. The cash dividends or profits declared by the invested entity shall be recognized as the current investment income.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
12. Long-term equity investments (continued)
If the group has a joint control or significant influence on the invested entity, the long-term equity investment shall be accounted by the equity method. Co-control means enjoying control over certain arrangement according to contract. Such arranged activities must be decided upon agreement of the Group and the other participants that share the control rights. Significant effect means that the company possesses the right of decision-making participation in the financial and operating policies of the investee but is not able to control or co-control with other party the making of such policies.
When using the equity method, if the initial cost of a long-term equity investment larger than the share of fair value of identifiable net assets of the invested enterprise, it shall be included in the initial investment cost of long-term equity investment; if the initial cost of a long-term equity investment less than the share of fair value of identifiable net assets the invested enterprise, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted.
When using the equity method, after obtaining a long-term equity investment, in accordance with the share of other comprehensive income and net income achieved by the invested enterprise which should be enjoyed or shared, respectively confirm the investment profit and loss and other comprehensive income, and adjust the book value of the long-term equity investment. In confirmation of the share of the net profit or loss of the invested entity, based on the fair value of the identifiable assets of the invested entity when obtaining the investment, in accordance with the Group's accounting policies and accounting periods, offset the internal transaction gains and losses between affiliated enterprises and joint ventures and attribute to the investing party in accordance with the enjoyed proportion (but the loss of internal transactions is an impairment loss of assets, which should be fully recognized), confirm the net profit of the invested entity after adjustment, except for the assets that are invested or sold to form a business. In accordance with the portion of the profits or cash dividends declared by the investee entity, the book value of the long-term equity investment shall be reduced accordingly. The Group confirms the net losses of the invested enterprise, the book value of the long-term equity investment and other long-term interests in the net investment of the invested entity is reduced to zero, except for which the Group bears extra liability for loss. For the other changes in the equity of the invested entity other than net gains/losses, other comprehensive income and profit distribution, the book value of the long-term equity investment shall be adjusted and included in the shareholders' equity.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
12. Long-term equity investments (continued)
For the disposal of long term equity investment, the difference between the book value and the actual purchase price shall be included in the profits and losses of the current period. Long term equity investments accounted for using the equity method, terminating the equity method, other comprehensive income related with the original equity accounting shall carry out the accounting treatment on the same basis of the relevant assets or liabilities directly disposed of by the invested entity, theshareholders’ rights and interests recognized by the other changes in the equity of the invested entity other than net gains/losses, other comprehensive income and profit distribution shall be it shall be transferred fully into the current profits and losses; Still using the equity method, other comprehensive income related with the original equity accounting shall carry out the accounting treatment on the same basis of the relevant assets or liabilities directly disposed of by the invested entity and transfer into the current profits and losses in proportion, theshareholders’ rights and interests recognized by the other changes in the equity of the invested entity other than net gains/losses, other comprehensive income and profit distribution shall be transferred into the current profits and losses in proportion.
13. Real estate as investment
Investment real estate refers to real estate held for purposes of earning rentals or capital gain, including leased-out land use right and leased-out buildings.
Initial measurement is made by cost. Subsequent expenditure relating to investment real estate, when economic benefits related to such assets are likely to flow into the Group and its cost can be measured reliably, is accounted into the cost of investment real estate. Otherwise, it is included in the current profits and losses statements at the time of incurrence.
Cost models for all investment property are adopted by the Group to undertake follow-up measures. Depreciation or amortization is made for buildings and land use rights according to their estimated useful life and residual value rate. Investment real estate rate and years of estimated useful life and residual value depreciation (amortization) rates are listed below:
Estimated useful life Estimated residual value rate Annual depreciation (amortization) rate
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
13. Real estate as investment (continued)
Building 30 years 0% 3.3% Land use rights Land use years 0% Decided by estimated net residual value and land use years The anticipated service life of investment real estate, estimated net residual values and depreciation (amortization) method is reviewed and made appropriate adjustments at least at each year end.
When purpose of investment property changes to self-use, from the date of change, convert the investment properties to fixed assets or intangible assets. When self-use property changes to the purpose of earning rentals or for capital appreciation from the date of change, convert the fixed assets or intangible assets to investment properties. Upon conversion, book value before the conversion is the recorded as the converted value.
14. Fixed assets
Fixed assets are confirmed when financial benefits related will probably flow into the Group and their costs can be reliably valued. Subsequent expenditure relating to fixed assets, when passing validation, is accounted into the cost of fixed assets, and related book value for the replaced part ceases confirmation. Otherwise, subsequent expenses are booked into current income statement at the time of incurrence.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
14. Fixed assets (continued)
In addition to the formation of the extracted safety production cost, the depreciation of fixed assets is calculated and withdrawn by the average method of years, and the service life, expected net residual value rate and annual depreciation rate of the fixed assets are as follows:
Useful life Estimated residual value Annual depreciation rate rate
House and building 20-40 years 0% 2.5%-5% Manufacturing 3-20 years0%/Based on the price of Calculated in estimated equipment wasted vessel steel net residual value and estimated service life Office equipment and 3-5 years 0% 20%-33.3% electrical equipment
Transportation means 5 years 0% 20% (other than vessels)
Vessels 10-25 years 5%/10% 3.6%-9.5% Depreciation for fixed assets under financing lease is calculated in accordance with policy for fixed assets. If the acquisition of ownership of the leased asset at the expiration of the lease period can be confirmed rationally, depreciation shall be accrued within the service life of the leased asset. If not, depreciation shall be accrued within lease term or the service life of the leased asset, whichever is shorter.
Double check is made by the group to the estimated life of use, estimated net residual value and method of depreciation at least at the end of each report year and necessary adjustment is made.
15. Construction in progress
Construction in progress is booked as project costs in real expenditure, which includes necessary project expenditure occurred in construction period, capitalized loan expenses which make the construction in progress reach expected status of use and other relevant expenses.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
15. Construction in progress (continued)
When the project under construction reaches the expected condition for use, it is transferred into fixed assets items.
16. Loan expenses
Loan expenses refers to the interest and other relevant costs arising from the loan of Group, including the loan interest, the amortization of the discount or premium, auxiliary expenses and the exchange difference arising from the foreign currency loan.
Loan expenses borrowed to purchase, construct or manufacture assets applicable to be capitalized shall be capitalized. Other loan expenses shall be taken into current profit/loss statement. Assets applicable to be capitalized refers to assets such as fixed assets and investment real estates which take rather long period of time to purchase, construct or manufacture in order to reach their expected state of use or sale.
Loan expense can be capitalized when it meets the following conditions:
(1) Asset expenditures have incurred;
(2) Loan expenses have incurred;
(3) Purchasing, building or manufacturing activities start as a necessity to make that asset reach expected usable or salable condition.
When the purchased, built or manufactured fixed asset reached expected usable or salable condition, stop capitalization. Loan expenses that follow are taken into current profit/loss statement.
The amount of interest capitalization in each accounting period during the capitalization period is determined by the following method:
(1) Amount of expenses of special loans is determined by the interest expense actually incurred in the current period to less the temporary deposit interest income or the investment income.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
16. Loan expenses (continued)
(2) Amount of expenses of general loans is determined by the weighted average amount of expenses of accumulated asset expenses exceeding that of special loans to multiply the weighted average actual interest rate of the general expenses.
In case purchasing, building or manufacturing activities of assets ceases accidentally for reasons other than reaching expected usable or salable status and term of cease exceeds 3 months on end, capitalization of loan expenses shall be stopped. Loan expenses occurring during the term of cease shall be confirmed and taken into profit/loss statement until purchasing, building or manufacturing activities resume.
17. Intangible assets
Intangible assets are confirmed when financial benefits related will probably flow into the Group and their costs can be reliably valued, and initial measure is taken by cost. However, intangible assets acquired in merger under the same control can be measured reliably, that is, intangible assets are recognized as intangible assets and measured at fair value. The evaluation value confirmed by the state-owned administration department acts as the book value for the intangible assets invested by the state-owned shareholders at the re-structuring of the Company.
Service life of intangible assets shall be confirmed as the term in which they can bring benefits to the company. If the term in which intangible assets bring benefits to the company can be expected, such assets shall be confirmed as intangible assets with uncertain service life.
Service life of intangible assets are as follows:
Expected years for use Rights of land use Years of land use Software use cost 5 years Patented technologies 10 years
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
17. Intangible assets (continued)
Land use right obtained by the Group is usually accounted for as intangible assets. For self-developed and self-constructed buildings, relevant land use right and the buildings shall be regarded as intangible assets and fixed assets respectively. If the price paid for outsourced land and building is difficult to distribute in a reasonable way between the land use rights and the building, they are all regarded as fixed assets. Intangible assets with limited service life are amortized in straight line method in the expected years for use. Double check is made by the group at least at the end of each year to expected life in use and amortization method of intangible assets with limited use of life and adjustment is thus made.
The Group classifies the expenses of the internal R& D project into expenses in research phase and expenses in development phase. Expenditure in research phase shall be included in the current profits and losses statements at the time of incurrence. Expenses in development stage are capitalized when simultaneously satisfying the following conditions: It is technically feasible to complete the intangible assets to make them usable and marketable; the management has the intention to complete the intangible assets and to use them or to sell them; the ways intangible assets yield financial benefits.It’s able to prove the products manufacturing by intangible assets exist in the market, or intangible assets are in the market, or intangible intended to be used for interior; Enough technology and financial resources and other resources support and will enable the completion of the development of the intangible assets and make them to be used to sell; Expenses belonging to the intangible assets can be reliably measured. Expenses of development stage not satisfying the conditions are put into currentP&L.
18. Assets impairment
The impairment of assets except inventories, deferred income tax and financial assets is determined as follows: The Group will determine whether there is sign of impairment for assets on the balance sheet date. If there is sign of impairment, the Group will estimate recoverable amount and conduct impairment test. Impairment test is made at least once at the end of each year for goodwill formed because of enterprise merger no matter whether there is sign of impairment. Impairment test is made at least once each year for the intangible assets not reaching the usable state.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
18. Assets impairment provision (continued)
The collectible amount is the higher between net amount ofasset’s fair value deducting disposal expenses and the present value of expected future cash flow. Collectible amount is estimated by individual piece of asset. In case collectible amount of individual asset is difficult to value, collectible amount of asset group to which they said individual asset belongs is confirmed. An asset group can be confirmed on the basis that its main cash in-flow is generated independently of other assets or asset groups.
When the collectible amount of the asset or asset group is lower than its carrying value, the Group reduces its carrying value to the recoverable amount, the amount written down is included in the current profits and losses, and the corresponding asset impairment provision is withdrawn.
In terms of goodwill impairment test, the carrying value of goodwill formed by the merger of the enterprise shall be amortized to the relevant asset group by reasonable means from the date of purchase; it shall be amortized to relevant combination of asset groups when it is difficult to amortize the relevant asset group to the relevant asset group. The relevant asset group or combination of asset groups is an asset group or combination of asset groups that can benefit from the synergy effect of the enterprise merger, and is not larger than the reporting subsection determined by the group.
For impairment test of relevant asset groups or combination of asset groups that contain goodwill, if there is a sign of impairment, the impairment test on the asset group or the asset group that does not include goodwill is performed first. Then calculate the recoverable amount and confirm corresponding impairment loss. Next, impairment test is made to relevant asset groups or combination of asset groups that contain goodwill. If the collectible amount is lower than carrying value of the asset. The impairment loss is firstly to compensate the book value of the goodwill amortized in the asset group or portfolio, and then to compensate the book value of other assets in the proportion of the book value of other assets except for the goodwill in the asset group or portfolio.
Once asset impairment provision is made, it shall not be transferred back in the following accounting period.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
19. Long-term unamortized expenses
The long-term unamortized expenses shall be amortized by straight-line method, and the amortization period is as follows:
Amortization period Improve operation of leased fixed asset
20. Employee remuneration
The employee compensation means all forms of remuneration or compensation that the Group pays for obtaining the service to be provided by the employees or severing labor relation, mainly including short-term compensation, post-employment benefit, dismission welfare and other long-term employee benefits. The benefits provided by the Group to theemployee’s spouse, children, dependent, survivor of the deceased employee is also contained in the employee compensation.
Short-term pay
The Group takes the actual short-term remuneration as debt during the accounting period when the employees provide service. It will be booked in the current profit and loss or related assets cost, in which the non-currency benefit is accounted according to the fair value.
Welfare after resignation - defined drawing plan
The Group shall buy endowment insurance and unemployment insurance managed by the local government and open annuity for employees. The corresponding expenditure is included in the current profits and losses statements at the time of incurrence.
21. Estimated liabilities
In addition to contingent consideration or contingent liability of an enterprise merger under non-unitary control, when a contingency related liability meets the following conditions, the Group recognizes it as an estimated liability:
(1) This liability is the current liability of the Group;
(2) The fulfillment of the liability may cause outflow of financial Interest;
21. Estimated liabilities (continued)
(3) The amount of the liability can be measured reliably.
Expected liabilities are initially valued by the best estimates to be spent on fulfillment of related present obligation, combining risks and uncertainty with probabilities and time value of currency. The book value of expected liabilities is double-checked and thus adjusted on B/S day to reflect present best estimates. Where there is conclusive evidence that the carrying value does not reflect the current best estimate, the book value is adjusted in accordance with the current best estimate.
22. Revenue
Revenue is confirmed when related benefits may flow into the Group, sales can be reliably calculated, and the following conditions are met.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
(a) Revenue from sales of large port equipment, ocean heavy equipment, product of steel structure and construction project is recognized by the proportion of completeness.
(b) Income from ship transportation is recognized at the completion of the voyage.
(c) Income is recognized at the time of delivery for the sale of spare goods or parts.
(d) Interest income is recognized by deposit term and real interest rate.
(e) Operating leasing income is recognized in leasing period by straight line method.
(f) Activities under the construction and transfer of contracts usually include construction and transfer. As for constructing item the Group responsible for, in the construction phase, in accordance with the construction contract standards, when the results can be estimated reliably, the construction contract revenue should be valued by the fair value of consideration chargeable, at the same time to confirm the "Long term receivables", to be written off when payment received from the owners.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
23. Government subsidy
Government subsidies are recognized when they are able to meet the conditions attached and can be received. Where government subsidies are monetary assets, they are measured in amounts received or receivable. Where the government subsidies are non-monetary assets, they shall be measured at fair value; if the fair value cannot be reliably obtained, it shall be measured in nominal amount.
According to government documents, for long-term assets for the purposes of purchasing and constructing or formed in other ways, relevant subsidy shall be recognized as government subsidy related to assets; if it is not clear in the government documents, judgment shall be based on the basic conditions necessary to obtain the subsidy. If the basic condition is that long-term assets are for the purposes of purchasing and constructing or formed in other ways, the subsidy is recognized as government subsidy related to assets. Otherwise, it shall be recognized as government subsidy related to income.
Government subsidy related to the income when used to compensate related expenses or losses in future periods is recognized as deferred income and is booked into currentP&L in the period when related expenses are recognized. That used to compensate paid expenses or losses is booked directly into currentP&L. If the government subsidy related to the assets is recognized as deferred income and distributed within the life time of the assets, it is booked into currentP&L. If the government subsidy is accounted in namely amount, it is booked directly into currentP&L
24. Income tax expense
Income tax includes current income tax and deferred income tax. In addition to the goodwill adjustment arising from the merger of the enterprise, or transactions or relevant matters directly included in the shareholder's equity, the income tax expenses or income shall be included in the current profits and losses. TheGroup’s income tax liabilities or assets formed during the current period and previous period shall be measured by the amount of income tax payable or returned in accordance with the provisions of the Tax Law.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
24. Income tax expense (continued)
For the margin between the book value and tax base of some asset, liability items and the temporary differences generated from the difference between the book value and tax base of the item that is not recognized as the asset and liability but which tax base can be determined according to tax law, the deferred income tax asset and deferred income tax liabilities are recognized by using the balance sheet liability method.
The deferred income tax liabilities are recognized on the basis of various taxable temporary differences unless: (1) Taxable temporary differences arise from the following transaction: The initial recognition of goodwill, or the initial recognition of assets or liabilities arising from transactions with the following characteristics: the transaction is not an enterprise merger, and the accounting profits, taxable income and deductible loss are not affected when the transaction occurs.
(2) For investment-related taxable temporary differences of subsidiaries, associates and joint ventures, the time of the temporary difference reversal can be controlled and the temporary difference will not likely be transferred back in the foreseeable future.
For deductible temporary differences, deductible losses and tax credits can be carried over to future years, and the Group will confirm the deferred income tax assets arising therefrom to the extent that it is likely to obtain the amount of future taxable income that is used to offset temporary differences, deductible losses and tax credits, unless:
(1) Deductable temporary differences arise from the following transaction: the transaction is not an enterprise merger, and the accounting profits, taxable income and deductible loss are not affected when the transaction occurs.
(2) Deferred income tax assets generated from investment-related provisional difference of subsidiaries, associates and joint ventures are confirmed as deferred income tax assets, when the temporary difference is able to be transferred back in the foreseeable future and when possible taxable income which is used to compensate the provisional difference can be possibly obtained in future.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
24. Income tax expense (continued)
On B/S day, deferred income tax assets and deferred income tax liabilities are calculated by tax rate applicable to the period of term the assets or liabilities are expected to be collected back in accordance with regulations of tax law, and reflect income tax effect from the way that assets or liabilities are expected to be collected back.
On B/S day, the Group reviews the carrying value of the deferred income tax assets, and if it is likely that taxable income obtained in future periods is not enough to deduct the benefits from carrying value of the deferred income tax assets, the carry value of deferred income tax assets shall be written down. On the balance sheet date, the Group reevaluates unrecognized deferred income tax assets and recognizes the deferred income tax assets to the extent that sufficient taxable income is likely to be transferred back to all or part of the deferred income tax assets.
If there is a legal right to netting the current income tax assets and current income tax liabilities and the deferred income tax is relevant to the same subject of tax and the same tax administration department, then the deferred income tax assets and deferred income tax liabilities shall be presented in net amount after offset.
25. Leases
The finance lease criteria: transfers substantially all the risks and rewards of ownership of an asset leased. Act as a tenant of operating lease
The rental expenses of operating leases are included in the asset cost or the currentP&L according to straight-line method in the lease period.
Act as a leaser of operating lease
The rental income of the operating lease is included in the asset cost or the currentP&L according to straight-line method in the lease period.
Act as a tenant of financing lease
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
25. Leases (continued)
The lower one of the fair value of the leased asset and the minimum rental payment the present value is accounted in the book as the leased assets. The minimum lease payment is the carrying value of long term payable. The difference between the booking value of leased assets and the minimum lease payment is not confirmed as the financing charges. It is amortized within the leasing period according to the actual interest method. Contingent rental is included in the current profits and losses statements at the time of incurrence.
Leaseback
Leaseback for financing purposes will be treated as a whole, which is accounted by mortgage loan, on the condition that asset sale is related to lease transaction and can be repurchased when the lease term expires.
26. Profit distribution
Cash dividends of the Company are recognized as liabilities after approval by the general meeting of shareholders.
27. Safety production costs
The safety production expense extracted in accordance with the regulations shall be included into the cost of relevant products or current profit or loss, and shall also be included into the special reserve; if safety production expense is disbursement cost, it shall deduct the special reserve directly; if safety production expenses are forms into fixed assets, the fixed assets shall be confirmed when reaching expected usable status, deducting equivalent special reserve and the accumulated depreciation shall be confirmed.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
28. Fair Value Measurement
The Group measures derivative financial instruments and listed equity instruments investments at fair value on B/S day. Fair value refers to the price that a market participant gains or pay for sale of an asset or transfer of a liability in an orderly transaction occurring on the measurement date. For relevant assets or liabilities measured by fair value, the orderly transaction for sale of an asset or transfer of a liability is assumed to be conducted in the main market. If it relevant assets or liability measured by fair value do not exist in the market, the transaction is assumed to be conducted in the most advantageous market for relevant assets or liabilities. The main market (or the most advantageous market) is the trading market in which the Group is able to enter on the measurement date. The Group assumes that market participants intend to realize their maximize economic benefits when pricing the assets or liabilities.
For non-financial assets measured by fair value, the ability of market participants to put the assets in best use for economic benefits, or to sell the assets to other market participants that can put the assets in best use for economic benefits.
Estimation technique that is applicable and supported by sufficient available data and other information is adopted. Priority is given to the observed input value, and the unobservable input value is used only if the observable input value cannot be obtained or is not practicable.
For assets and liabilities measured or disclosed at fair value in the financial statements, fair value level shall be determined by the input value of lowest level, which is important for the fair value measurement as a whole: the input value of the first level is the unadjusted quotation on the active market of the same assets or liabilities that can be obtained on the measurement date; the input value of the second level is the input value that may be observed directly or indirectly by the relevant assets or liabilities except the first level input value; the input value of the third level is the unobservable input value of the relevant assets or liabilities.
On B/S day, the Group reevaluates the assets and liabilities that continue to be measured at fair value as recognized in the financial statements to determine whether a conversion has occurred at the fair value level.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
29. Major accounting judgments and estimates
For the preparation of financial statements, the management is required to make judgments, estimates and assumptions that will affect the presentation amount of income, costs, assets and liabilities and disclosure thereof, as well as disclosure of contingent liabilities on B/S day. However, the results of these assumptions and uncertainties may result in significant adjustments to the carrying amount of future affected assets or liabilities.
Uncertainty of estimates
The following key assumptions about the future on the balance sheet date and other key sources of estimate uncertainty may lead to significant adjustments in the carrying amount of assets and liabilities during future accounting periods.
Construction contract
Construction contract is adopted to calculate its revenue and cost for large port equipment and construction projects. During the course of the project, the group shall continuously review and revise the expected total cost of the construction contract based on the situation of actual cost of the construction contract and the actual cost of the similar products in the reference, so that the expected total cost of the contract is approximate to its final actual cost. If there is a discrepancy between the expected total cost and the actual total cost of contracts in the future, the discrepancy will affect the cost confirmed by the Group this year. At the same time, the Group management regularly performs impairment testing on construction contracts. If the expected total cost of the construction contract exceeds the total contract income, the contract expected loss shall be calculated and withdrawn. Changes of the expected total cost due to continuous review and revision may affect the carrying value of the construction completed amount not closed/construction uncompleted amount closed and impairment losses during the estimated changes.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
29. Major accounting judgments and estimates (continued)
Uncertainty of estimates (continued)
Impairment of receivables
The management of the Group continues to pay attention to the recoverable extent of the receivables, and estimates the bad debt reserves of the accounts receivable based on the analysis of the actual conditions (including but not limited to the repayment capacity of the debtor, the age of the accounts receivable, the collection after the period),In case of any event or change, if the estimate adopted is changed, the estimate shall be adjusted accordingly, and the appropriate bad debt reserve for receivables shall be accrued. If the expected amount is different from the original estimate, the difference will affect the carrying value of the receivable and the impairment loss during the estimated change.
Inventory impairments
The management shall estimate the net realizable value of inventories in time so as to estimate inventory falling price reserves. If any event or circumstance changes, it is necessary to use the estimate to prepare the inventory falling price if the inventory is not likely to realize the relevant value. If the expected amount is different from the original estimate, the difference will affect the carrying value of the inventories and the impairment loss during the estimated change.
Service life and the net residual value of fixed assets
Expected service life and the net residual value of fixed assets are estimated by the Group. These estimates are based on the actual service life and net residual value of fixed assets similar in nature and function. Technological innovation and the actions taken by competitors due to severe industry cycles may cause major changes to such estimates; changes in the economic environment, technical environment and other environmental changes in service life of fixed assets may also lead to significant changes in the expected implementation of the economic benefits associated with fixed assets.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
29. Major accounting judgments and estimates (continued)
Uncertainty of estimates (continued)
Impairment of non-current assets except financial assets (except goodwill)
The Group determines whether there is any indication of possible impairment of non-current assets other than financial assets on the B/S day. For non-current assets except financial assets, when there are indications that its carrying amount is not recoverable, an impairment test is conducted. Impairment is indicated when the carrying value of the asset or asset group is higher than the recoverable amount, that is, the higher one between the net amount of the fair value lessing the disposal expenses and the present value of the expected future cash flows.Net amount gained by fair value lessing disposal expenses shall be determined by the price in sale agreement of similar assets in fair transaction or market price observed lessing the incremental cost attributable to the assets. The management must estimate the expected future cash flow of the asset or asset group and select the appropriate discount rate to determine the present value of the future cash flow when estimating current value of future cash flow.
Goodwill impairments
Impairment test for goodwill shall be conducted at least annually. This requires estimate of the present value of the future cash flows of the asset group or the asset group to which goodwill is distributed. The Group shall estimate the expected future cash flow of asset or asset group and select the appropriate discount rate to determine the present value of the future cash flow when estimating current value of future cash flow. Income tax and deferred income tax
The Company was recognized as a high-tech enterprise in 2014. The company calculated and paid the enterprise income tax at the rate of15% according to the relevant income tax laws. According to the relevant regulations, one condition for the qualification of high-tech enterprises is that the proportion of R& D expenditure in sales income must not be lower than the specified proportion, in which the proportion is3% for enterprise with annual sales income more than 200 million Yuan. If the final determination result given by tax authority in charge is different from that of the company, the difference will affect the income tax expenses of the year.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
29. Major accounting judgments and estimates (continued)
Uncertainty of estimates (continued)
Income tax and deferred income tax (continued)
In addition, the Group calculates enterprise income tax and deferred income tax in accordance with current tax laws and takes into consideration applicable income tax provisions and tax preferences. There is uncertainty in the final tax treatment for some of the transactions and events involved in normal operations. The Group needs to make significant judgments when the income tax is calculated and withdrawn. The Group shall estimate whether additional taxes need to be paid in respect of future tax adjustments for tax purposes so as to confirm corresponding income tax liabilities. If the final determination result of these tax matters is different from the originally entered amount, the difference will affect the amount of income tax and deferred income tax for the period of final determination. When evaluating temporary differences, the Group also considers the possibility that deferred income tax assets can be recovered. The temporary differences mainly include the effects of deductible losses, asset impairment provision, unrealized profits of internal transactions, expected liabilities that have not been approved before tax, interest not yet paid, wages and salaries, financial assets whose changes are measured at fair value and included in current profits and losses, and changes in the fair value of liabilities. The confirmation of the deferred income tax assets is based on the estimation of the Group and assumes that the deferred income tax assets are reversed through theGroup’s continuous operation in the foreseeable future. At the same time, the Group also takes into account the deferred tax assets and the tax rate at which the deferred income tax liabilities are reversed. Based on the experience gained by the Company for many years, as well as the continuous input into the research and development projects, the Company is expected to obtain the qualification of high-tech enterprises the year and beyond, and hereby calculate and confirm the deferred income tax assets and deferred income tax liabilities at the preferential tax rate.
The Group has calculated and withdrawn income tax liabilities and deferred income tax items of this year based on current tax laws and current best estimates and assumptions. In the future, tax liabilities and deferred income tax items may need to be adjusted due to changes of tax laws or related circumstances.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
III. Major accounting policies and accounting estimates (continued)
30. Change to accounting policies and accounting estimates
Change to accounting policies
Change to tax presentation
In 2016, the Group will adjust the “Business tax and additional” items in the income statement to “tax and add - on” items in accordance with the requirements of “VAT Accounting Disposal Regulations” (FinancialAccounting[2016] No.22); the taxes on house property, land use tax, vehicle and vessel use tax, stamp duty, etc. arising from the operation activities of the enterprise shall be listed in the “tax and add - on” project as of May 1, 2016, and shall not be listed in the “administrative expenses” project; (except that it was originally included in “Business Tax” and “Additional”) The real estate tax and land use tax related to investment real estate of the project are still listed in the project of “administrative expenses”. The credit balance of the detailed accounting items (“tax for goods to be transferred” etc.) in the accounting item of “tax payable” shall be classified by “tax payable” to “other non - current liabilities” in the balance sheet by the end of 2016; the credit balance of the above detailed items at the end of 2015 shall be presented in the original presentation. As a result of the above requirements, the contents of the “tax and plus” and “overhead” items in 2016 and 2015, the “overhead”, the “tax payable” at the end of 2016 and at the end of 2015 and “other non - current liabilities” are presented differently, but there is no impact on the merger of 2016 and 2015 and the net profit and consolidation of the company and theCompany’s Membership Interests.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Notes to financial statements
Year 2016
RMB Yuan
IV. Taxes
1. Main tax types and the ratio
VAT – TheGroup’s product sales business is applicable to VAT. Among which, the domestic product sales output tax ratio is17%, export sales output tax ratio is subject to “exemption, counteraction, refund”, the applicable refunding ratio is17%,15% and13%.TheGroup’s vessel transport business revenue is applicable to VAT with the tax ratio of11%; the equipment rental is applicable to VAT with tax ratio of17%; the equipment rental is applicable to theVAT’s simple collection method, and the tax ratio halved is2%; theGroup’s rental housing is applicable to theVAT’s simple collection method since May 1, 2016, the ratio is5%; the “Construction-Transfer” project is applicable to VAT, the ratio is11%. The above output tax shall calculate and pay VAT after deducting the amount of input tax deductible, except for the applicableVAT’s simple collection method.
Business tax – Business tax applied to revenues of the Group from rental housing with rate of 5%. Business tax is applicable to the revenues of “Construction-Transfer” projects with rate of3%. Business tax shall be replaced by VAT since May 1, 2016.
Urban maintenance– The Group calculates and pays by7% and3% of the actual payment of and construction tax turnover tax.
and educational
surtax
Corporate income– Corporate income tax is calculated and paid in accordance with P.R. China tax Corporate Income Tax Law (“Income Tax Law”).According to the High-tech Enterprise Recognition Management Approaches (Guo Ke Fa Huo[2016] 32,) and the High-tech Enterprise Recognition Management Work Guidelines (Guo Ke Fa Huo[2016] 195) and the Notification on Announcing List of Second Batch of Shanghai Municipality 2014 High-tech Enterprises Recognition, the Company was recognized as a high-tech enterprise in the year2014, and was awarded the High-tech Enterprise Certificate (certificate number: GR201431001646). The certificate is valid for 3 years. According to Article 28 of the Income Tax Law, the Company actually applied a15% corporate income tax rate this year (2015:15%).
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
The applicable income tax rates of the Company and the controlling subsidiaries are as follows:
Registration place 2016 2015 Applicable tax Applicable tax rate rate The Company Pudong New District 15% 15% Shanghai Zhenhua Port Machinery Heavy Chongming 25% 25% Industry Co., Ltd.
Shanghai Zhenhua Port Machinery Hongkong 16.5% 16.5% (Hong Kong) Co., Ltd. (Note 1)
Shanghai Zhenhua Shipping Co. Ltd. Pudong New District 25% 25% Nantong Zhenhua Heavy Industry Nantong, Jiangsu 25% 25% Equipment Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Nantong, Jiangsu 15% 15% Group
(Nantong) Transmission Machinery
Co.,Ltd.(Note 2)
Shanghai Zhenhua Heavy Industries Pudong New District 25% 25% Electric Co.,Ltd.
Nantong Zhenhua Heavy Industry Steel Nantong, Jiangsu 25% 25% Structure Processing Co., Ltd.
Jiangyin Zhenhua Port Machinery Steel Jiangyin, Jiangsu 25% 25% Structure Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Steel Pudong New District 25% 25% Structure Co., Ltd.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
Shanghai Zhenhua Heavy Industries Yangshan, Shanghai 25% 25% Vessel Transport Co., Ltd
Bonded Port
Shanghai Zhenhua Testing Technology 25% 25% Consulting Co., Ltd.Pudong New
District
Shanghai Zhenhua Port Machinery Pudong New District 25% 25% General Equipment Co., Ltd
Shanghai Port Machinery Heavy Pudong New District 25% 25% Industries Co., Ltd.
Shanghai Zhenhua Heavy Industry Jingang, Jiangsu 25% 25% (Group)
Zhangjiagang Port Machinery Co., Ltd.
Shanghai Zhenhua Heavy Industries Nantong, Jiangsu 15% 15% Qidong Ocean Engineering
Co., Ltd. (Note 2)
Jiangsu Daoda Marine Engineering Co., Nantong, Jiangsu 25% 25% Ltd.
Jiahua Shipment Co., Ltd (Note 1) Hongkong 16.5% 16.5% Zhenhua Pufeng Wind Power (Hong Hongkong 16.5% 16.5% Kong) Co.,Ltd (Note 1)
Zhenhua Shende Offshore Hongkong 16.5% 16.5% Installation Co.,Ltd (Note 1)
CCCC Tianhe Changshu, Jiangsu 15% 25%
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
Registration place 2016 2015 Applicable tax Applicable tax rate rate CCCC Investment Development Qidong Nantong, Jiangsu 25% 25% Co., Ltd
CCCC Liyang City Investment Liyang, Jiangsu 25% 25% Construction Co., Ltd
CCCC (Huaian) Construction Huaian, Jiangsu 25% N.A. Development Co., Ltd.
CCCC Zhenjiang Investment Zhenjiang, Jiangsu 25% N.A. Construction Management
Development Co., Ltd
ZPMC Netherlands B.V. (Note 3) Rotterdam, the 20% 20% Netherlands
Hotel de Herberg B.V. (Note 3) Rotterdam, the 20% 20% Netherlands
ZPMC Espana S.L.(Note 4) Spain 28% 28% Los Barrios
ZPMC GmbH Hamburg(Note 5) Hamburg Germany 32.28% 32.28% ZPMC Lanka Company Colombo, Sri Lanka 17.5% 17.5% (Private) Limited(Note 6)
ZPMC North Amercia Inc.(Note 7) Delaware, USA 15% 15% Co., Ltd. (Note 2)
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
Fujian CCCC Qianda Heavy Industry Co., Minhou, Fujian 25% 25% Ltd.
Nanjing Ninggao New Channel Nanjing, Jiangsu 25% 25% Construction Co., Ltd.
The applicable income tax rates of the
Company and the controlling
subsidiaries are as follows
(continued):
ZPMC Korea Co., Ltd.(Note 8) Pusan, Korea 10% 10% ZPMC Engineering Africa The Republic of South 28% 28% Africa
(Pty) Ltd.(Note 9) KwaZulu - Natal
ZPMC Engineering Mahala, India 30% 30% (India) Private Limited(Note 10) Strabang
ZPMC Southeast Singapore 17% 17% Asia Holding Pte. Ltd.(Note 11)
ZPMC Southeast Singapore 17% 17% Asia Pte. Ltd.(Note 11)
ZPMC Engineering Malaysia 20% 20% (Malaysia) Sdn. Bhd.(Note 12)
ZPMC Australia Company Australia 30% 30% (Pty) Ltd.(Note 13) New South Wales
ZPMC Brazil Holdings Ltda.(Note 14) Rio de Janeiro, Brazil 25% 13% ZPMC Limited Liability Moscow, Russia 20% 20%
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
Company(Note 15)
ZPMC NA East Coast Inc.(Note 7) Delaware, USA 15% 15% ZPMC NA Huston Inc.(Note 7) Delaware, USA 15% 15% ZPMC Middle East FZE(Note 16) Dubai, UAE 0% N.A. The applicable income tax rates of the Company and the controlling subsidiaries are as follows (continued): Registration place 2016 2015 Applicable tax Applicable tax rate rate ZPMC UK LTD(Note 17) Cardiff, UK 20% N.A. ZPMC Brazil Service Brazilian Santos 25% N.A. Portuarios LTDA (Note 18)
Note 1: Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd., Jiahua Shipping Co., Ltd, Zhenhua Pufeng Wind Power(Hong Kong) Co., Ltd and Zhenhua Shende Offshore Engineering Installation Co., Ltd. are legal entities registered in Hong Kong, China. Based on HongKong’s taxation regulations, the Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltdactually fits in a profit tax rate of16.5%(2015：16.5%).
Note 2: Shanghai Zhenhua Heavy Industry Group (Nantong) Drive Machinery is recognized as hitech enterprise in August, 2013 and won Hi-tech Enterprise Certificate (No. GR201632001352) in 2016 with the valid terms of 3 years. Shanghai Zhenhua Heavy Industries Qidong Ocean Engineering Company is recognized as hi-tech enterprise in November, 2015 and won Hi-tech Enterprise Certificate (No.GF201532000832) with the valid terms of 3 years. CCCC Tianhe Company is recognized as hitech enterprise in August, 2015 and won Hi-tech Enterprise Certificate (No. GF201532000389) with the valid terms of 3 years. According to Article 28 of the Income Tax Law, the Company actually applied a15% corporate income tax rate this year (2015: Shanghai Zhenhua Heavy Industries Group(Nantong) Transmission Machinery Co., Ltd. and Shanghai Zhenhua Heavy Industries Qidong Ocean Engineering Co., Ltd. is15%, and CCCC Tianhe Company is25%).
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
Note 3: ZPMC Netherlands B.V, Hotel de Herberg B.V. and Daoda (Holland) Marine Technology Co., Ltd are private limited liability companies registered in Holland. According to related provisions of the income tax in Holland, the enterprise revenue tax is collected with the progressive tax rate in excess of specific amount for the profit of the Company. The tax rate is20% for the profit less than 200000 Euro, and25% for the profit over 200000 Euro. The actual income tax rate is20% this year (2015:20%). Note 4: ZPMCEspaña S.L. is the limited liability company registered in Spain. According to related provisions of the income tax in Spain, the enterprise revenue tax is collected with the progressive tax rate in excess of specific amount for the profit of the Company. The tax rate is25% for the consolidated profits of the Company less than 300000 Euro, and28% for the profit over 300000 Euro. The actual income tax rate is28% this year. (2015: The tax rate is25% for the consolidated profits of the Company less than 300000 Euro, and30% for the profit over 300000 Euro. The actual income tax rate is28% in 2015). Note 5: ZPMC GmbH Hamburg is registered in Germany, a limited liability company; according toGermany’s related provisions of the income tax act, applicable income tax rate for the year is30.6%, and on the basis of the corresponding income tax amount,5.5% of solidarity surcharge is imposed; the actual total income tax rate applicable to32.28% (2015:32.28%).
Note 6: ZPMC LANKA COMPANY (PRIVATE) LIMITED is a limited liability company registered in Sri Lanka; according to the related income tax provisions of Sri Lanka, the applicable income tax rate is17.5% (2015:17.5%).
Note 7: ZPMC North Amercian Inc., ZPMC NA East Coast Inc., ZPMC NA Huston Inc., are the limited liability companies registered in USA; according to the related income tax provisions of USA, the applicable income tax rate is15% (2015:15%).
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
Note 8: ZPMC Korea Co., Ltd. is limited liability company registered in Korea. According to related provisions of the income tax in Korea, the enterprise revenue tax is collected with the progressive tax rate in excess of specific amount for the profit of the Company. The tax rate is10% for the profit less than 200 million won, and20% for the profit between 200 million won and 20,000 million won, and22% for the profit over 200 million won. The actual income tax rate is10% this year (2015:10%).
Note 9: ZPMC Engineering Africa (PTY) LTD. is a limited liability company registered in Republic of South Africa; according to the related income tax provisions of Republic of South Africa, the applicable income tax rate is28% (2015:28%).
Note 10: ZPMC Engineering (India) Private Limited is a limited liability company registered in India; according to the related income tax provisions of India, the applicable income tax rate is30% (2015:30%).
Note 11: ZPMC Southeast Asia Holding PTE. LTD. is a limited liability company registered in Singapore; according to the related income tax provisions of Singapore, the applicable income tax rate is17% (2015:17%).
Note 12: ZPMC Engineering (Malaysia) Sdn. Bhd.is a limited liability company registered in Malaysia; according to the related income tax provisions of Malaysia, the applicable income tax rate is20% (2015:20%).
Note 13: ZPMC Australia Company (PTY) LTD. is a limited liability company registered in Australia; according to the related income tax provisions of Australia, the applicable income tax rate is30% (2015:30%).
Note 14: ZPMC Brazil Holdings Ltda. is a limited liability company registered in Brazil; according to the related income tax provisions of Brazil, the applicable income tax rate is25% (2015:13%).
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IV. Taxes (continued)
1. Main tax types and the ratio (continued)
Note 15: ZPMC Limited Liability Company is a limited liability company registered in Russia; according to the related income tax provisions of Russia, the applicable income tax rate is20% (2015:20%).
Note 16: ZPMC Middle East FZE is a limited liability company registered in Dubai, United Arab Emirates; according to the related income tax provisions of Dubai, United Arab Emirates, the applicable income tax rate is0%.
Note 17: ZPMC UK LTD is a limited liability company registered in Cardiff; according to the related income tax provisions of Cardiff, the applicable income tax rate is20%.
Note 18: ZPMC Brazil Service Portuarios LTDA is a limited liability company registered in Santos Brazil; according to the related income tax provisions of Santos Brazil, the applicable income tax rate is25%.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements
1. Monetary capital
2016 2015 Cash on hand 774,626 746,967 Bank deposit 3,496,430,560 2,318,579,147 Other monetary capital 99,839,013 139,007,602 3,597,044,199 2,458,333,716 As of Dec, 31, 2016, the other monetary capital with restricted is RMB 99,839,013 Yuan, which is the margin deposit that our Group applied to banks for letters of credit and bank guarantees (Dec, 31, 2015: the other monetary capital with restricted is RMB 120,408,105 Yuan, which is the margin deposit that our Group applied to banks for letters of credit and bank guarantees and the foreign exchange settlement capital deposited in bank of RMB 18,599,497 Yuan).
As of Dec, 31, 2016, the monetary capital deposited abroad by the Group is RMB 621,197,660 Yuan (Dec, 31, 2015: RMB 299,033,408 Yuan).
Interest income from bank deposits shall be obtained in accordance with the current interest rate. Deposit term for the short term fixed deposit is 7 days, and the interest income shall be obtained in accordance with the fixed time deposit interest rate.
2. Financial assets measured at fair value and whose variation is included in the current profits and loss
2016 2015 Trading financial assets
Derivative assets 4,615,775 676,082
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
As of Dec. 31, 2016, in the forward foreign exchange contract established by the derivate financial instruments held by the Group with bank but not due: Total amount of principal in Won for USD contract is Won 15,018,200,000 (2015: USD for RMB contract is USD 50,000,000); agreed exchange rate is 1,145.45 to 1,145.50 (6.3604 to 6.7470, 2015contract is due between Jan. 25, 2017 and Dec. 29, 2017 (January 20, 2016 and August 25, 2016).
Closing fair value estimated gains/losses of above forward foreign exchange contracts are shown in transactional bank confirmed amount or the amount based on end-of market exchange rate.
3. Notes receivable
2016 2015 Bank acceptance draft 286,220,781 230,959,622 Commerce acceptance draft 10,700,000 12,200,000 296,920,781 243,159,622 As of December 31, 2016, no bill receivable is pledged to the Bank.
2. The final has been endorsed or discounted, and notes receivable that the balance sheet date has not expired yet
2016 2015
Termination Termination Termination Termination confirmed unconfirmed confirmed unconfirmed Bank acceptance 471,132,348 4,390,096 302,708,598 - bill
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
4. Accounts receivable
Long-term receivables analyzed by age:
2016 2015 Within 6 months 2,412,791,452 2,579,542,464 7 to 12 months 762,252,912 553,868,900 1 to 2 years 864,213,900 621,512,391 2 to 3 years 363,374,243 501,080,688 3 to 4 years 383,314,678 172,256,976 4 to 5 years 136,097,550 106,602,535 Over 5 years 648,577,646 496,747,275 5,570,622,381 5,031,611,229 Less: receivables - provisions for bad debt 1,339,875,923 1,136,848,761 4,230,746,458 3,894,762,468 Change of receivables - provisions for bad debt:
Opening Provision in this Change back Write-Off in Closing balance balance in year this year this year in current current year year
2016 1,136,848,761 209,863,641 (4,997,815) (1,838,664) 1,339,875,923 2015 858,128,277 287,019,897 (8,299,413) - 1,136,848,761
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
4. Accounts receivable (continued)
2016 2015
Closing balance Provision for bad debts Closing balance Provision for bad debts Amount Proportio Amount Withdraw Amount Proportio Amount Withdraw n ing n ing% % % % Accounts 159,594,037 3 159,594,037 100 257,212,586 5 257,212,586 100 receivables
that are
individuall
y
insignifica
nt but
provision
for bad
debts
Bad debt
reserve is
calculated
as per the
credit risk
combinatio
n
-Related party 567,576,374 10 - - 716,117,651 14 - -Non-related 4,557,809,557 82 895,607,566 20 3,895,457,967 78 716,813,150 18 party
Accounts
receivables
that are
individuall
y
insignifica
nt but
provision
for bad
debts is
assessed
individuall
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
y
285,642,413 5 284,674,320 100 162,823,025 3 162,823,025 100 5,570,622,381 100 1,339,875,923 24 5,031,611,229 100 1,136,848,761 23
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
4. Accounts receivable (continued)
As of Dec, 31, 2016, situation of the accounts receivables that are individually insignificant but provision for bad debts is assessed individually is as follows:
Book value balance Bad debt provision Provision ratio Provision reasons Accounts receivable 159,594,037 159,594,037 100% Contract dispute 1
As of Dec, 31, 2015, situation of the accounts receivables that are individually insignificant but provision for bad debts is assessed individually is as follows:
Book value balance Bad debt provision Provision ratio Provision reasons Accounts receivable 149,393,086 149,393,086 100% Contract dispute 1
Accounts receivable 107,819,500 107,819,500 100% Counter-party 2 seriously lacks funds 257,212,586 257,212,586 100%
Accounts receivable for which the bad debt reserve is calculated as per the aging analysis method:
2016 2015
Closing Provision for bad debts Closing Provision for bad debts balance balance
Amount Amount Proportion Amount Amount Proportion Within 6 2,127,697,593 - - 2,039,019,778 - - month
s
7 - 12 691,765,805 6,917,658 1 486,194,724 3,811,519 1 month
s
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
4. Accounts receivable (continued)
1 - 2 years 668,819,686 100,322,953 15 540,630,618 79,588,609 15 2 - 3 years 302,286,737 90,686,021 30 173,228,095 51,968,428 30 3 - 4 years 101,304,733 50,652,291 50 115,657,539 56,328,769 49 4 - 5 years 75,625,443 56,719,083 75 51,739,809 36,128,421 70 Over 5 590,309,560 590,309,560 100 488,987,404 488,987,404 100 years
4,557,809,557 895,607,566 20 3,895,457,967 716,813,150 18 As of Dec, 31, 2016, situation of the other accounts receivables that are individually not insignificant but provision for bad debts is assessed individually is as follows:
Book value balance Bad debt provision Provision ratio Reason Accounts receivable 107,819,500 107,819,500 100% Counter-party 1 seriously lacks funds Accounts receivable 50,365,000 50,365,000 100% Counter-party 2 seriously lacks funds Accounts receivable 27,748,069 27,748,069 100% Contract dispute 3
Accounts receivable 21,932,297 21,932,297 100% Contract dispute 4
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
4. Accounts receivable (continued)
Accounts receivable 19,480,920 18,512,827 95% Contract dispute 5
Accounts receivable 17,735,070 17,735,070 100% Contract dispute 6
Accounts receivable 10,049,240 10,049,240 100% Contract dispute 7
Accounts receivable 7,664,629 7,664,629 100% Contract dispute 8
Accounts receivable 7,421,237 7,421,237 100% Contract dispute 9
Accounts receivable 7,306,800 7,306,800 100% Contract dispute 10
Accounts receivable 4,557,644 4,557,644 100% Contract dispute 11
Accounts receivable 3,562,007 3,562,007 100% Contract dispute 12
285,642,413 284,674,320 100%
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
4. Accounts receivable (continued)
As of Dec, 31, 2015, situation of the other accounts receivables that are individually not insignificant but provision for bad debts is assessed individually is as follows:
Book value balance Bad debt provision Provision ratio Provision reasons Accounts receivable 50,365,000 50,365,000 100% Counter-party 1 seriously lacks funds Accounts receivable 25,974,465 25,974,465 100% Contract dispute 2
Accounts receivable 20,530,426 20,530,426 100% Contract dispute 3
Accounts receivable 18,235,736 18,235,736 100% Contract dispute 4
Accounts receivable 16,150,830 16,150,830 100% Contract dispute 5
Accounts receivable 9,758,221 9,758,221 100% Contract dispute 6
Accounts receivable 7,260,803 7,260,803 100% Contract dispute 7
Accounts receivable 6,946,886 6,946,886 100% Contract dispute 8
Accounts receivable 4,266,328 4,266,328 100% Contract dispute 9
Accounts receivable 3,334,330 3,334,330 100% Contract dispute 10
162,823,025 162,823,025 100%
As of Dec. 31, 2016, the accounts receivable summary analysis of top 5 arrears is shown as following:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
4. Accounts receivable (continued)
Accounting for balance of receivables Balance Bad debt provision Proportion in total amount accounts receivable Balance of top 5 account 862,228,750 382,166,701 15% receivables
As of Dec. 31, 2015, the accounts receivable summary analysis of top 5 arrears is shown as following:
Accounting for balance of receivables Balance Bad debt provision Proportion in total amount accounts receivable Total amount of top 5 1,045,784,935 382,306,518 21% account receivables
account receivables
5. Advanced payment
Long-term payables analyzed by age:
2016 2015
Booking balance% Booking balance%
Within one year 743,820,095 83 994,457,189 81 1 to 2 years 72,700,327 8 118,979,425 10 2 to 3 years 41,846,911 4 25,983,355 2 Over 3 years 42,054,901 5 86,925,663 7 900,422,234 100 1,226,345,632 100 As of Dec. 31, 2016, theCompany’s prepayment with age over a year is RMB 156,602,139 Yuan (Dec.31, 2015: RMB 231,888,443 Yuan), mainly prepayment for the procurement of imported parts, which has not been yet settled because purchased imported parts not
delivered.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
5. Advanced payment (continued)
As of Dec. 31, 2016, the summary analysis payment with top five ending balance collected by the party in debt is shown as following:
Advanced payment Amount Proportion in total Total advances balance of 265,464,546 29% top 5
As of Dec. 31, 2015, the summary analysis payment with top five ending balance collected by the party in debt is shown as following:
Advanced payment Amount Proportion in total Total advances balance of 497,490,559 41% top 5
6. Other accounts receivable
Other accounts receivables analyzed by age:
2016 2015 Within 6 months 722,015,188 552,591,379 7 to 12 months 3,320,248 30,829,138 1 to 2 years 5,050,048 60,426,009 2 to 3 years 17,396,586 6,649,212 3 to 4 years 3,690,767 1,069,700 4 to 5 years 223,263 4,944,478
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Over 5 years 22,533,895 39,212,788 774,229,995 695,722,704
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
6. Other accounts receivable (continued)
Less: other receivables - 37,675,402 28,062,537 provisions for bad debt
736,554,593 667,660,167 Change of other receivables - provisions for bad debt:
Opening Provision in Change back Write-Off in Closing balance in this year this year this year balance in current year current year 2016 28,062,537 9,612,865 - - 37,675,402 2015 27,148,264 914,273 - - 28,062,537 2016 2015
Closing balance Provision for bad Closing balance Provision for bad debts debts
Amount Proportion Amount Withdrawing Amount Proportion Amount Withdrawing% % % % Accounts 23,410,851 3 7,023,255 30 - - - - receivables that
are individually
insignificant but
provision for bad
debts
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
6. Other accounts receivable (continued)
Bad debt reserve is 227,641,09 30 - - 153,602,04 22 - - calculated as per 5 9
the credit risk
combination-Guaran
ty deposit
(excluding quality
guarantee deposit)
-Employee 119,097,93 15 - - 141,150,87 20 - - individual loans 6 1
and reserve funds
reserve funds
-Others 386,333,01 50 12,905,04 3 383,162,68 55 10,255,43 3 1 5 2 5 Accounts 17,747,102 2 17,747,10 10 17,807,102 3 17,807,10 10 receivables that 2 0 2 0 are individually
insignificant but
provision for bad
debts is assessed
individually
774,229,99 10 37,675,40 5 695,722,70 10 28,062,53 4 5 0 2 4 0 7 As of Dec, 31, 2016, situation of the other accounts payables that are individually insignificant but provision for bad debts is assessed individually is as follows: Book value Bad debt Provision ratio Provision balance provision reasons Other accounts 23,410,851 7,023,255 30% Contract
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
payables 1 dispute In combination, other payables for which the bad debt reserve is calculated as per the aging analysis method:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
6. Other accounts receivable (continued)
2016 2015
Closing Provision for bad debts Closing Provision for bad debts balance balance
Amount Amount Proportion Amount Amount Proportion Within 6 357,174,789 - - 353,228,089 - - months
7 - 12 2,872,043 28,720 1 3,927,262 39,271 1 months
1 - 2 1,530,100 229,515 15 15,680,501 2,352,075 15 years
2 - 3 14,946,482 4,483,945 30 3,203,485 961,037 30 years
3 - 4 3,203,035 1,601,517 50 180,855 90,427 50 years
4 - 5 180,855 135,641 75 519,460 389,595 75 years
Over 5 6,425,707 6,425,707 100 6,423,030 6,423,030 100 years
386,333,011 12,905,045 3 383,162,682 10,255,435 3 As of Dec, 31, 2016, situation of the other accounts receivables that are individually insignificant but provision for bad debts is assessed individually is as follows: Book value Bad debt Provision ratio Provision balance provision reasons
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Other 5,540,286 5,540,286 100% Contract receivables1 cancelled Other 4,214,642 4,214,642 100% Bankruptcy of receivables2 the opposite side Other 3,037,042 3,037,042 100% Contract receivables3 cancelled Other 1,692,765 1,692,765 100% Contract receivables4 cancelled
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
6. Other accounts receivable (continued)
Others 3,262,367 3,262,367 100%
17,747,102 17,747,102 100%
As of Dec, 31, 2015, situation of the other accounts receivables that are individually insignificant but provision for bad debts is assessed individually is as follows: Book value Bad debt Provision ratio Provision balance provision reasons Other 5,540,286 5,540,286 100% Contract
receivables1 cancelled Other 4,214,642 4,214,642 100% Bankruptcy of receivables2 the
opposite side
Other 3,037,042 3,037,042 100% Contract
receivables3 cancelled Other 1,692,765 1,692,765 100% Contract
receivables4 cancelled Others 3,322,367 3,322,367 100%
17,807,102 17,807,102 100%
Category of other payables by nature of payment
2016 2015 Unsettled tax and surtax receivable 169,252,637 138,270,252 Bid bond payments 153,797,532 45,724,321
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Products or field service temporary loans 93,565,532 93,107,920 Customs guaranty deposit 71,148,199 104,071,196 Export tax rebate 63,023,350 101,381,047
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
6. Other accounts receivable (continued)
Employee’s loans receivable 43,553,963 48,042,951 Payments deposit for third party receivable 39,969,061 36,490,744 Lease receivables 33,434,668 33,484,980 Deposit receivable 6,742,361 13,806,532 Others 99,742,692 81,342,761 774,229,995 695,722,704 Other receivables with top five ending balance collected by the party in debt as of December 31, 2016
Closing Proportion Nature Account age Provision balance in other for bad debts total ending Closing balance balance receivable
(%)
Other 71,148,199 9 Customs Within 1 year - receivables guarantee
1 deposit
Other 50,000,000 6 Bid bond Within 1 - receivables year
2
Other 50,000,000 6 Bid bond Within 1 year - receivables
3
Other 33,434,668 5 Lease fund Within 1 year -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
receivables
4
Other 23,410,851 3 Advance 2 to 3 years 7,023,255 receivables money for
5 another
227,993,718 29 7,023,255 Other receivables with top five ending balance collected by the party in debt as of December 31, 2015
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
6. Other accounts receivable (continued)
Closing Proportion Nature Account age Provision balance in other for bad debts total ending Closing balance balance receivable
(%)
Other 90,780,980 13 Customs Within 1 year - receivables guarantee
1 deposit
Other 33,484,980 5 Lease fund Within 1 year - receivables
2
Share 1-2 years
transfer
Other 12,444,088 2 and sale of and over 5 3,944,088 receivables equipment years
3
Other 10,000,000 1 Fixed assets 2-3 years - receivables disposal
4 fund
Other 5,540,286 1 Advance over 5 years 5,540,286 receivables payment of
5 materials
152,250,334 22 9,484,374 7. Inventories
2016 2015
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Booking Falling Booking Booking Falling Booking balance price balance balance price balance reserves reserves
Raw 2,851,653,92 141,839,752 2,709,814,17 4,063,294,03 324,784,79 3,738,509,24 materials 6 4 2 2 0 and
purchased
parts
Unfinishe 5,190,856,98 1,124,585,14 4,066,271,84 2,279,404,26 232,214,15 2,047,190,10 d products 6 6 0 4 8 6
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
7. Inventories (continued)
Merchandis 11,153,985 11,153,985 - 11,153,985 11,153,985 - e
inventory
8,053,664,89 1,277,578,88 6,776,086,01 6,353,852,28 568,152,93 5,785,699,34 7 3 4 1 5 6 The Group is in the manufacture of marine heavy equipment products that are already under construction but have not yet signed sales orders.
Conditions of inventory revaluation reserve are as follows:
2016
Opening balance Provision in Deduction in Closing balance in current year this year this year Return in current year or resell
Raw materials 324,784,792 4,565,125 (187,510,165) 141,839,752 and purchased
parties
Unfinished 232,214,158 892,370,988 - 1,124,585,146 products
Merchandise 11,153,985 - - 11,153,985 inventory
568,152,935 896,936,113 (187,510,165) 1,277,578,883 2015
Opening balance Provision in Deduction in Closing balance in current year this year this year Return in current year or resell
Raw materials 373,339,801 - (48,555,009) 324,784,792
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
and purchased
parties
Unfinished 130,810,331 158,448,216 (57,044,389) 232,214,158 products
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
7. Inventories (continued)
Merchandise 11,153,985 - - 11,153,985 inventory
515,304,117 158,448,216 105,599,398 568,152,935 Conditions of inventory revaluation reserve are as follows:
||||
|-|-|-|
|||Reason for impairment|
||Particular basis of||
|||provision of the returned or|
||determining net realizable||
|||resold inventory in the|
||value||
|||report year|
|Raw materials and purchased|the difference between the||
|parts|realizable value of raw|Steel prices rose or sold|
||material and purchased parts||
|||abroad|
||due to lower product sales||
||price and the book value||
|Inventories goods|the difference between the||
||realizable value of|None|
||inventories goods and the||
||book value||
|Semi products|the difference between the||
|||None|
||realizable value of semi||
||products and the book value||

8. Construction completed but account not settled/Construction not completed and account settled
Construction completed account yet has not been settled
2016 2015
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Accumulated cost incurred 41,699,798,181 36,191,103,411 Accumulated margin 4,502,784,376 3,630,893,816 confirmed
Less: Accumulated accounts 34,669,961,103 28,302,110,279 settled
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
8. Construction completed but account not settled/Construction not completed and account settled (continued)
Accumulated expected 426,807,687 302,295,092 contract losses confirmed
11,105,813,767 11,217,591,856 Construction not completed account
2016 2015
Accumulated accounts 18,189,689,578 22,695,320,583 settled
Less: Accumulated margin 2,105,056,605 2,354,514,459 confirmed
Accumulated cost incurred 13,716,197,938 17,575,517,723 Add: Accumulated expected 25,011,087 101,149,431 contract losses confirmed
2,393,446,122 2,866,437,832 Expected contract losses
2016 Opening balance Addition report Deduction Closing balance in current year period report year in current year Construction 302,295,092 315,817,045 (191,304,450) 426,807,687 completed
account not
closed
Account closed 101,149,431 73,576,110 (149,714,454) 25,011,087 construction
not completed
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
403,444,523 389,393,155 (341,018,904) 451,818,774
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
8. Construction completed but account not settled/Construction not completed and account settled (continued)
2015 Opening balance Addition report Deduction Closing balance in current year period report year in current year Construction 292,239,376 191,716,159 (181,660,443) 302,295,092 completed
account not
closed
Account closed 20,778,569 113,191,465 (32,820,603) 101,149,431 construction
not completed
313,017,945 304,907,624 (214,481,046) 403,444,523 As of Dec. 31, 2016, amount of contracts still in construction (VAT not included) is about 38,629,601,047 Yuan (Dec. 31, 2015: 40,657,492,935 Yuan).
Probable fines in case of delay in delivery as contracted:
2016 2015 Bank issued valid guaranty 19,456,969,669 17,808,442,159 letter
Bankdidn’t issue guaranty 281,462,898 1,875,250,415 letter
19,738,432,567 19,683,692,574 9. Non-current asset due within 1 year
2016 2015 Long-term receivable due
within one year
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
(Note V.12) 1,384,438,569 2,625,135,212
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
10. Other current assets
2016 2015 The input tax amount to be 553,363,139 507,205,272 deducted
Bank short-term financing - 46,000,000 products
553,363,139 553,205,272 11. Financial assets available for sale
2016 2015
Booking Provision Booking Booking Provision Booking balance for balance balance for balance impairment impairment
Available-for-sale equity instruments
To be 1,270,578,346 - 1,270,578,346 1,169,183,020 - 1,169,183,020 measured
per fair
value
To be 72,994,160 30,000,000 42,994,160 72,994,160 30,000,000 42,994,160 measured
per cost
1,343,572,506 30,000,000 1,313,572,506 1,242,177,180 30,000,000 1,212,177,180 Financial assets available for sale and measured by fair value:
2016 2015 Cost of the equity 937,641,194 937,641,194
instrument/amortized cost
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
of debt instrument
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
11. Financial assets available for sale (continued)
Amounts from changes of fair 332,937,152 231,541,826 value to be included in other
comprehensive income
accumulatively
Fair value 1,270,578,346 1,169,183,020 The available-for-sales equity instruments measured at fair value include:
(I) The Group holds5.9% shares of stock of Jiangxi Huawu Brake Co., Ltd (Dec 31, 2015:7.22%) and the initial investment cost is 11,071,606Yuan.
The available-for-sales equity instruments measured at fair value is confirmed by the closing price of the last trading day of Shenzhen Stock Exchange. As of Dec 31, 2016, the Company has confirmed the profit of RMB 302,540,796 Yuan available for-sales equity instruments, accounted in other comprehensive profit.
The Group received RMB 1,112,890 Yuan cash dividends from Jiangxi Huawu Brake Co., Ltd, accounted in investment income.
(ii). The Group holds2.16% (Dec 31, 2015:2.16%) shares of stock of Qingdao Port International Co., Ltd and the initial investment cost is 308,515,588 Yuan.
The available-for-sales equity instruments measured at fair value is confirmed by the closing price of the last trading day of Hong Kong Stock Exchange. As of Dec 31, 2016, the Company has confirmed the profit of RMB 31,737,587 Yuan available for-sales equity instruments, accounted in other comprehensive profit.
The Group received RMB 13,058,634 Yuan cash dividends from Qingdao Port International Co., Ltd, accounted in investment income.
(iii) The Group holds 1.40 (Dec 31, 2015:1.40%) shares of stock of CRSC and the initial investment costs RMB 617,854,000 Yuan.
The available-for-sales equity instruments measured at fair value is confirmed by the closing price of the last trading day of Hong Kong Stock Exchange. As of Dec 31, 2016, the Company has confirmed the loss of RMB 2,507,619 Yuan available for-sales equity instruments, accounted in other comprehensive profit.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
The Group received RMB 2,814,813 Yuan cash dividends from CRSC, accounted in investment income.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
11. Financial assets available for sale (continued)
Financial assets available for sale and measured by fair value (continued):
(iv). The Group holds less than0.01% shares of stock of Shenwan Hongyuan Group and the initial investment cost is RMB 200,000 Yuan.
The available-for-sales equity instruments measured at fair value is confirmed by the closing price of the last trading day of Shenzhen Stock Exchange. As of Dec 31, 2016, the Company has confirmed the profit of RMB 1,166,388 Yuan available for-sales equity instruments, accounted in other comprehensive profit.
The Group received RMB 24,291 Yuan cash dividends from Shenwan Hongyuan Group, accounted in investment income.
Financial assets available for sale and measured by cost:
2016
Booking balance Shareholding Cash bonuses Opening This This Closing ratio in this year increase decrease
21st Century
Science and
Technology
Investment
Co., Ltd. 30,000,000 - - 30,000,000 8.96% - CCCC Highway
Bridges
National
Engineering
Research
Centre Co.,
Ltd. 13,000,000 - - 13,000,000 10% - CCCC Dredging
Technology
Equipment
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
State
Engineering
Research
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
11. Financial assets available for sale (continued)
Center Co.,
Ltd. 6,400,000 - - 6,400,000 3.2% - Longchang
Lifting
Equipment
Co., Ltd. of
Shanghai
Zhenhua Port
Machinery
(Group) 800,000 - - 800,000 10% - Shenyang
Elevator Co.,
Ltd of
Shanghai
Zhenhua Port
Machinery
(Group) 1,500,000 - - 1,500,000 10% - Ningbo
Transmission
Machinery
Co., Ltd of
Shanghai
Zhenhua Port
Machinery
(Group) 1,296,000 - - 1,296,000 10% - Hunan Fengri
Power &
Electric Co.,
Ltd. 19,998,160 - - 19,998,160 6.38% - 72,994,160 - - 72,994,160 -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
11. Financial assets available for sale (continued)
Available-fo
r-sale equity
instruments -
Provision for
impairment
21st Century (30,000,00 - - (30,000,00
Science and 0) 0)
Technology
Investment
Co., Ltd.
42,994,160 - - 42,994,160
Financial assets available for sale and measured by cost (continued):
2015
Booking balance Shareholding Cash bonuses Opening This Reclassification Closing ratio in this increase year Available-for-sale
equity instruments
- cost
21st Century
Science and
Technology
Investment Co.,
Ltd. 30,000,000 - - 30,000,000 8.96% - CCCC Highway
Bridges National
Engineering
Research
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Center Co., Ltd. 13,000,000 - - 13,000,000 10% -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
11. Financial assets available for sale (continued)
CCCC Dredging
Technology
Equipment State
Engineering
Research
Center Co., Ltd. 6,400,000 - - 6,400,000 3.2% - Longchang
Lifting
Equipment Co.,
Ltd. of Shanghai
Zhenhua Port
Machinery
(Group) 800,000 - - 800,000 10% - Shenyang
Elevator Co.,
Ltd of
Shanghai
Zhenhua Port
Machinery
(Group) 1,500,000 - - 1,500,000 10% - Ningbo
Transmission
Machinery Co.,
Ltd of Shanghai
Zhenhua Port
Machinery
(Group)
740,000 556,000 - 1,296,000 10% 9,465,520 Shenwan less than
Hongyuan Group 200,000 - (200,000) - 0.01% -
Hunan Fengri - 19,998,160 - 19,998,160 6.38% -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Power& Electric
Co., Ltd.
52,640,000 20,554,160 (200,000) 72,994,160 9,465,520
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
11. Financial assets available for sale (continued)
Available-for-sale
equity instruments
- Provision for
impairment
21st Century
Science and
Technology
Investment Co.,
Ltd. (30,000,000) - - (30,000,000)
22,640,000 20,554,160 (200,000) 42,994,160
The available-for-sale financial assets measured in cost are the non-listed stock investment held by the Group. There is no active market quotation for the investment. The change range of the reasonable count of fair value is higher. The probability of the fair value estimatecan’t be reasonably confirmed, so the fair valuecan’t be reliably measured. The Group has no plan to dispose the investment.
12. Long-term receivables
2016 2015 “Construction-Transfer”
project accounts receivable
- Capital 5,142,731,788 5,594,243,805 - Interest receivable 32,924,801 589,392,944 5,175,656,589 6,183,636,749 Less: long-term receivable
due within one year
(Note V.9) 1,384,438,569 2,625,135,212
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
3,791,218,020 3,558,501,537
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
12. Long-term receivables (continued)
The Group in 2013 undertook the Nanjing to Gaochun New Channel project and Nanjing-Gaochun Inter-city Rail Transit Phase II (cross-lake section) project (referred to as "Nanjing High Speed 'Construction - transfer' Item"); total investment of the project 5,918,800,000 Yuan, the construction of Item for a period of 2 years, repurchase period is 2.5 years, return on investment 3 - 5year, bank loans surface30% over benchmark interest rate. The Group established a wholly owned subsidiary Nanjing Ninggao New Channel Construction Co., Ltd. responsible for the financing and construction management of the said project. By October, 2015, the entire line was open to traffic. The returned payments shall be reclassified to the long term accounts receivable in 2017 according to the contract terms.
The Group undertook Jiangsu Qidong Lvsi port surrounded PPP project in 2015, with total investment of 2 billion Yuan. The project construction period is 2 years, and the repurchase period is 10 years, the return on investment is the bank loans benchmark interest rate increased by30% for over 5 years. The Group, CCCC Tianjin Waterway Bureau Co., Ltd. and Jiangsu Qidong Lvsi Port Economic Development Zone Management Committee jointly established CCCC Qidong Investment Development Co., Ltd. responsible for the project investment, financing and construction management.
The Group undertook the Phase I of infrastructure and public utilities projects of Jiangsu Zhongguancun Science and Technology Industrial Park in 2015. The project total investment is 3.7 billion Yuan, with project construction period of 2 years, the purchase back period is 4 years, the return on investment is the bank loans benchmark interest rate increased by30% for over 5 years. The Group, CCCC Shanghai Waterway Bureau Co., Ltd., CCCC East China Investment Co., Ltd., CCCC Second Highway Survey Design and Research Institute Co., Ltd. And Jiangsu Zhongguancun Science and Technology Industrial Park Administrative Committee jointly established CCCC Liyang City Investment Construction Co., Ltd. responsible for the project investment, financing and construction management.
The Group undertook Zhenjiang campus life mating project in 2016, with total investment of 6 billion Yuan. The project construction period is 2 years, and the repurchase period is 3 years, the return on investment is the annual rate7%.The Group, CCCC The Second Harbor Engineering Bureau Co., Ltd., CCCC East China Investment Co., Ltd., CCCC Highway Planning and Design Institute Co., Ltd., CCCC East China Investment Co., Ltd., and
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Zhenjiang Higher Education Investment Development (Group) Co., Ltd. jointly established CCCC Zhenjiang Investment Construction Management Development Co., Ltd. responsible for the project investment, financing and construction management.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
12. Long-term receivables (continued)
The Group undertook the Huaian City, Huaiyin port east district and transportation infrastructure projects in 2016.The total investment of 2.855 billion Yuan. The project construction period is 2 years, and the repurchase period is 6 years, the return on investment is the bank loans benchmark interest rate for over 5 years. The Group, CCCC The Third Harbor Engineering Bureau Co., Ltd., CCCC The First Highway Survey and Design Institute Co., Ltd., CCCC East China Investment Co., Ltd. and Huaian City Huaiyin Traffic Investment Co., Ltd. jointly established CCCC Huaian Construction Development Co., Ltd. responsible for the project investment, financing and construction management. As of Dec. 31, 2016, the long-term receivables refer to the investment amount as principal the Group invested in "Construction - Transfer" project, interest receivable subject to confirmation of financing return according to the contract.
As of Dec. 31, 2016, the long-term receivable RMB 2,996,201,650 Yuan is the pledged in full amount to the bank as the guarantee of long-term loan of RMB 727,000,000 Yuan and (Dec 31, 2015: RMB 5,680,467,098 Yuan and long-term loan of RMB 2,187,000,000 Yuan (Note V (34 (ii))).
Long-term receivables analyzed by age:
2016 2015 Within one year 1,956,609,083 844,466,601 1 to 2 years 518,450,490 3,121,550,855 2 to 3 years 2,700,597,016 2,217,619,293 5,175,656,589 6,183,636,749 Less: long-term receivable 1,384,438,569 2,625,135,212 due within one year
3,791,218,020 3,558,501,537
13. Long-term equity investments
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
13. Long-term equity investments (continued)
2016 2015 Joint venture 200,209,849 175,387,196 Associates 2,001,211,604 1,421,747,621 2,201,421,453 1,597,134,817 Joint venture:
2016
Opening This change Closing Closing balance balance impairment reserve Increase Decrease Investmen
investmen investmen t profit
t t and loss
Jiangsu LongYuan
Zhenhua Marine
Engineering 25,046,72
Co.,Ltd 171,577,489 - - 2 196,624,211 - ZPMC
Mediterranean
Liman
Makinalari
Ticaret Anonim
Sirketi 3,059,427 - - (224,069) 2,835,358 - Zhenhua Marine
Energy (Hong
Kong) Co.,
Ltd(i) - - - - - -
Cranetech Global 750,280 - - - 750,280 -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Sdn. Bnd.
24,822,65
175,387,196 - - 3 200,209,849 -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
13. Long-term equity investments (continued)
2015
Opening This change Closing Closing
balance Increase Decrease Investment balance impairment
investment investment profit and loss reserve
Opening This change Closing Closing balance balance impairment reserve Increase Decrease Investment
investment investment profit and
loss
Jiangsu
LongYuan
Zhenhua
Marine
Engineerin 162,922,64 171,577,48
g Co., Ltd 1 - - 8,654,848 9 - ZPMC
Mediterran
ean Liman
Makinalari
Ticaret
Anonim
Sirketi 327,639 - - 2,731,788 3,059,427 - Zhenhua
Marine
Energy
(6,633,668
(Hong
6,633,668 - - ) - - Kong) Co.,
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
13. Long-term equity investments (continued)
Cranetech
Global
Sdn.
Bnd.(ii) - 750,280 - - 750,280 - 169,883,94 175,387,19
8 750,280 - 4,752,968 6 - Joint venture (continued):
(i) On May 5, 2014, the subsidiary of the Company and the partner invested to establish Zhenhua Marine Energy (Hong Kong) Co., Ltd (Zhenhua Marine Energy).The registered capital is 5,969,998 USD;, the subsidiary of the Company contributed 3,044,699 USD, holding51% of the shares. The company focused on the vessel transportation business. Based on the regulations of the shareholder agreement, the significant issues of the company shall be agreed by at least75% shareholders via voting. The Group has no control rights but joint controls the company together with the partner.
On January 20, 2016, the Group and RBF HK Limited (other shareholder of Zhenhua Marine Energy) singed the exit contract about Zhenhua Marine Energy. The Group has the rights to sell51% of the total shares of Zhenhua Marine Energy to RBF HK Limited when meeting the related articles of the exit contract; or purchased32.5% of the total shares of Zhenhua Marine Energy from RBF HK Limited. RBF HK Limited began to execute its right of holding51% shares of Zhenhua Marine Energy on June 2, 2016, in accordance with the signed exit contract, but ultimately failed to meet all the share delivery conditions of exiting the contract agreement, the purchase rights has been expired on November 23, 2016.As of Dec, 31, 2016, the Group has not exercised its purchasing right to purchase32.5% shares of Zhenhua Marine Energy held by RBF HK Limited.
The Group considered that the purchasing right of purchasing32.5% shares of joint venture held by the RBF HK Limited (other shareholder of Zhenhua Marine Energy) was unable to control Zhenhua Marine Energy. As of Dec, 31, 2016, the Group considered that this fair value of this purchasing rightwasn’t significant.
(ii) On July 30, 2015, the subsidiary of the Company and the partner invested to establish Cranetech Global Sdn. Bhd..The registered capital is 1,000,000 MYR;, the subsidiary of
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
the Company contributed 499,999 MYR, holding49.99% of the shares. The company focused on the spare parts sales. Based on the regulations of the shareholder agreement, the significant issues of the company shall be agreed by both parties. Therefore, the jointly controls the company together with the partner.
Associates:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
13. Long-term equity investments (continued)
2016
Opening This change Closing Closing balance balance Impairmen t reserve Increase Investment Other Declaration
investment profit and comprehensiv of cash
loss e income dividend or
adjustment profit
CCCC Marine
Engineering
Vessel
Technology
Research
Centre Co.,
Ltd 15,269,200 - 376,318 - - 15,645,518 - Shanghai
Zhenhua Heavy
Industries
(Group)
Changzhou
Paint Co.,
Ltd. 14,626,156 - 1,978,952 - (1,833,066) 14,772,042 - CCCC Estate
Yixing Co.,
Ltd. 174,697,785 - 916,743 - - 175,614,528 - CCCC Financing
Rental Co., 1,141,740,69 420,000,00 (32,400,000 1,605,244,85
Ltd.(i) 8 0 75,648,845 255,310 ) 3 - China
Communication
s
Construction (4,347,559
USA Inc. 75,413,782 - ) 4,546,680 - 75,612,903 - CCCC South
American
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Regional
Company
SARL (ii) 114,321,76
- 0 - - - 114,321,760 - 1,421,747,62 534,321,76 (34,233,066 2,001,211,60
1 0 74,573,299 4,801,990 ) 4 -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
13. Long-term equity investments (continued)
2015
Opening This change Closing Closing balance balance Impairment reserve Increase Investment Other Declaration
investment profit and comprehensive of cash
loss income dividend or
adjustment profit
CCCC Marine
Engineering
Vessel
Technology
Research
Centre Co., Ltd 15,079,243 - 189,957 - - 15,269,200 - Shanghai
Zhenhua Heavy
Industries
(Group)
Changzhou
Paint Co., Ltd. 14,349,607 - 1,956,549 - (1,680,000) 14,626,156 - CCCC Estate
Yixing Co.,
Ltd. 174,686,810 - 10,975 - - 174,697,785 - CCCC Financing
Rental Co.,
Ltd.(i) 551,350,475 540,000,000 50,390,223 - - 1,141,740,698 - China
Communications
Construction
USA Inc.(iii) - 76,206,000 (2,048,615) 1,256,397 - 75,413,782 - 755,466,135 616,206,000 50,499,089 1,256,397 (1,680,000) 1,421,747,621 - (i) As of May 29, 2015, the Company increased the capital to CCCC Financial Rental Co.,
Ltd of RMB 540,000,000 Yuan. After the capital increased, theGroup’s investment costs
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
to CCCC Financial Rental Co., Ltd increased to RMB 1,080,000,000 Yuan. The holding proportion is the same, that is30%. As of May 31, 2016, the Company increased the capital to CCCC Financial Rental Co., Ltd of RMB 420,000,000 Yuan. After the capital increased, theGroup’s investment costs to CCCC Financial Rental Co., Ltd increased to RMB 1,500,000,000 Yuan. The holding proportion is the same, that is30%.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
13. Long-term equity investments (continued)
(ii) As of Dec. 15, 2016, the Company invested 16,480,000 USD (in RMB 114,321,760 Yuan) to share CCCC South American Regional Company SARL. The registration capital is 103,000,000 USD, in RMB 114,321,760 Yuan, holding16% of the share. The company focuses on port construction business. Based on the regulations of the shareholder agreement, the Company has the right to designate one director to that company and implement significant impact to that company.
(iii) As of Oct. 8, 2015, the Company invested to establish China Communications Construction USA Inc.. The registration capital is 50,000,000 USD, and theCompany’s investment is 12,000,000 USD, in RMB 76,206,000 Yuan, holding24% of the share. The company focuses on port construction business.
14. Investment property
Investment property measured at cost:
2016
Premises and Land use right Total buildings
Original book value
Opening balance 260,039,373 209,845,794 469,885,167 Fixed assets 137,781,316 - 137,781,316 transfer-in
Closing balance 397,820,689 209,845,794 607,666,483 Accumulated
depreciation
Opening balance 63,874,113 44,838,246 108,712,359 Fixed assets 9,647,865 - 9,647,865
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
transfer-in
Provision or 10,601,341 5,324,667 15,926,008 amortization
Closing balance 84,123,319 50,162,913 134,286,232 Book value
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
14. Real estate as investment (continued)
Book value at the end 313,697,370 159,682,881 473,380,251
of year
Book value at the 196,165,260 165,007,548 361,172,808
beginning of year
2015
Premises and Land use right Total buildings
Original book value
Opening and closing 260,039,373 209,845,794 469,885,167 balance
Accumulated
depreciation
Opening balance 55,489,717 39,513,581 95,003,298 Provision or 8,384,396 5,324,665 13,709,061 amortization
Closing balance 63,874,113 44,838,246 108,712,359 Book value
Book value at the end 196,165,260 165,007,548 361,172,808 of year
Book value at the 204,549,656 170,332,213 374,881,869 beginning of year
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
14. Real estate as investment (continued)
As of Dec. 31, 2016, real estate as investment of not completing the certificate of title is as follows:
Book value Reasons for not completing the certificate of title House and building 284,337,357 Property application procedures are still under approval 15. Fixed assets
2016
Houses and Machinery Office Transportati Vessel Total buildings equipment electroni on tools
c (except for
equipment vessel)
Original
book value
Opening 11,616,605,3 6,773,564,9 230,069,1 263,556,659 7,044,013,0 25,927,809,1 balance 96 36 74 15 80 Purchase 151,768,037 35,813,084 16,754,53 25,392,444 96,717,619 326,445,719 5
Constructi 21,998,269 28,683,570 - - 299,120,833 349,802,672 on in
progress
transfer-i
n
Transfer-o
ut to
the (137,781,316 - - - - (137,781,316
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
investment ) ) property
Dispositio (1,607,253) (119,329,31 (5,728,31 (15,671,365) (9,995,664) (152,331,912 n or 6) 4) ) scrapping
Closing 11,650,983,1 6,718,732,2 241,095,3 273,277,738 7,429,855,8 26,313,944,3 balance 33 74 95 03 43
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
15. Fixed assets (continued)
Accumulated depreciation
Opening 2,733,703,55 4,473,964,11 159,312,83 183,537,690 2,721,754,11 10,272,272,30 balance 0 2 5 7 4 Provision 381,944,729 428,237,329 17,429,109 16,885,021 324,332,721 1,168,828,909 Transfer-ou
t to
the (9,647,865) - - - - (9,647,865) investment
property
Disposition (481,275) (111,702,878 (5,448,937 (15,331,361 (7,326,920) (140,291,371) or ) ) )
scrapping
Closing 3,105,519,13 4,790,498,56 171,293,00 185,091,350 3,038,759,91 11,291,161,97 balance 9 3 7 8 7 Book value
Book value 8,545,463,99 1,928,233,71 69,802,388 88,186,388 4,391,095,88 15,022,782,36 at the end 4 1 5 6 of year
Book value 8,882,901,84 2,299,600,82 70,756,339 80,018,969 4,322,258,89 15,655,536,87 at the 6 4 8 6 beginning
of year
2015
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
15. Fixed assets (continued)
Houses and Machinery Office Transportati Vessel Total buildings equipment electronic on tools
equipment (except for
vessel)
Original
book value
Opening 11,604,062,9 7,619,840,7 224,037,85 299,095,591 5,787,470,5 25,534,507,7 balance 41 61 6 98 47 Purchase - 92,012,999 22,587,196 10,147,948 92,568,573 217,316,716 Constructi 22,188,417 79,192,802 348,905 806,376 1,163,973,8 1,266,510,34 on in 44 4 progress
transfer-i
n
Projects in
process
transfer-i - (854,863,28 - - - (854,863,281 n this year 1) ) Dispositio (9,645,962) (162,618,34 (16,904,78 (46,493,256) - (235,662,346 n or 5) 3) ) scrapping
Closing 11,616,605,3 6,773,564,9 230,069,17 263,556,659 7,044,013,0 25,927,809,1 balance 96 36 4 15 80 Accumulate
d
depreciati
on
Opening 2,367,995,92 4,298,721,1 147,156,90 216,008,230 2,434,066,3 9,463,948,57
balance 8 60 7 53 8
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Provision 368,126,953 553,828,270 22,112,064 3,396,292 287,687,764 1,235,151,34 3 Projects in
process
transfer-i - (233,392,84 - - - (233,392,840 n this year 0) )
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
15. Fixed assets (continued)
Dispositio (2,419,331) (145,192,478 (9,956,136 (35,866,832 - (193,434,777) n or ) ) )
scrapping
Closing 2,733,703,55 4,473,964,11 159,312,83 183,537,690 2,721,754,11 10,272,272,30 balance 0 2 5 7 4 Book value
Book value 8,882,901,84 2,299,600,82 70,756,339 80,018,969 4,322,258,89 15,655,536,87 at the end 6 4 8 6 of year
Book value 9,236,067,01 3,321,119,60 76,880,949 83,087,361 3,353,404,24 16,070,559,16 at the 3 1 5 9 beginning
of year
As of Dec. 31,2016，the fixed assets are regarded as loan mortgage:
Loan
Original price Book value Property Amount Machinery 1,403,907,681 555,450,350 Long term 575,223,848 equipment payable
Vessel 2,532,724,844 1,882,864,040 Long term 1,507,146,538 payable
3,936,632,525 2,438,314,390 2,082,370,386 As of Dec. 31,2015，the fixed assets are regarded as loan mortgage:
Loan
Original price Book value Property Amount
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Machinery 688,768,652 542,853,378 Short term loan 500,000,000 equipment
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
15. Fixed assets (continued)
Vessel 1,050,416,521 1,036,238,241 Long term 779,232,000 payable
1,739,185,173 1,579,091,619 1,279,232,000 As of Dec. 31, 2016 and Dec. 31, 2015, book value of the fixed assets for operating lease: 2016 2015 Vessel 1,882,864,040 1,036,238,241 As of Dec. 31, 2016, fixed assets status of not completing the certificate of title is as follows:
Book value Reasons for not completing the certificate of title House and building 3,579,676,294 Property application procedures are still under approval 16. Construction in progress
Dec. 31, 2016 Dec. 31, 2015
Booking Provision Booking Booking Provision Booking balance for balance balance for balance impairment impairment
Nantong base 53,892,601 - 53,892,601 29,440,311 - 29,440,311 infrastructure
construction
Changxing base 16,743,055 - 16,743,055 32,251,760 - 32,251,760 infrastructure
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
construction
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
16. Construction in progress (continued)
Base heavy 3,202,580,355 - 3,202,580,355 2,889,709,277 - 2,889,709,277 machinery and
engineering
equipment in
construction
Office - - - 606,274 - 606,274 buildings and
ancillary
facilities
Shield machine 55,402,134 - 55,402,134 - - - parts project
Nanhui base 5,888,313 - 5,888,313 3,893,441 - 3,893,44 infrastructure
construction
Large
mechanical
transformation
and upgrading 690,943,003 - 690,943,003 621,470,441 - 621,470,441 project
4,025,449,461 - 4,025,449,461 3,577,371,504 - 3,577,371,504 Changes of the important projects under construction in 2016 are as follows:
Budget Opening This Transfer-in Fixed assets Intangible Closing balance increase of fixed transfer-in assets balance assets this year transfer-in
this year
(note V.15) (note V.17)
Nantong base 6,465,698,0 29,440,311 28,515,986 - (4,063,696) - 53,892,601 infrastruct 00
ure
constructio
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
n
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
16. Construction in progress (continued)
Changxing 8,645,540,0 32,251,760 6,100,428 - (21,609,133 - 16,743,055 base 00 )
infrastruct
ure
constructio
n
Base heavy 3,916,155,8 2,889,709,2 639,000,626 - (322,437,12 (3,692,425) 3,202,580,3 machinery 61 77 3) 55 and
engineering
equipment in
constructio
n
Office 5,000,000 606,274 - - (606,274) - - buildings
and
ancillary
facilities
Shield 99,956,500 - 55,402,134 - - - 55,402,134 machine
parts
project
Nanhui base 504,500,500 3,893,441 1,994,872 - - - 5,888,313 infrastruct
ure
constructio
n
Large 700,000,000 621,470,441 70,559,008 - (1,086,446) - 690,943,003 mechanical
transformat
ion and
upgrading
project
3,577,371,5 801,573,054 - (349,802,67 (3,692,425) 4,025,449,4 04 2) 61
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Changes of the important projects under construction in 2015 are as follows:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
16. Construction in progress (continued)
Budget Opening This Transfer-i Fixed assets Intangible Closing balance increase n of fixed transfer-in assets balance assets this year transfer-in
this year
(note V.15) (note V.15) (note V.17)
Nantong base 6,465,698,0 22,012,970 20,262,621 - (12,835,280) - 29,440,311 infrastruct 00
ure
constructio
n
Changxing 8,645,540,0 361,078,310 152,687,101 - (17,014,084) (464,499,56 32,251,760 base 00 7)
infrastruct
ure
constructio
n
Base heavy 3,419,155,8 2,422,182,7 1,699,302,5 - (1,231,776,00 - 2,889,709,2 machinery 61 64 21 8) 77 and
engineering
equipment in
constructio
n
Office 5,000,000 355,140 5,136,106 - (4,884,972) - 606,274 buildings
and
ancillary
facilities
Nanhui base 504,500,500 3,157,532 735,909 - - - 3,893,441 infrastruct
ure
constructio
n
Large
mechanical
transformat
ion
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
and 630,699,732 - - 621,470,41 - - 621,470,441 upgrading 1
project
Information 5,581,847 - 5,581,847 - - (5,581,847) - system
development
2,808,786,7 1,883,706,1 621,470,44 (1,266,510,34 (470,081,41 3,577,371,5 16 05 1 4) 4) 04
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
16. Construction in progress (continued)
Changes of the important projects under construction in 2016 are as follows:
Proport Project Accumula Among Interest Financia ion of progress tive which: capitali l project (Note 1) amount interest zation sourcing investm of capitali rate for
ent to interest zation the
budget capitali for the current
zation current year
year
99% 99% - - - Owned funds and bank Nantong base infrastructure
loans construction
Changxing base infrastructure 82% 82% 23,531,836 - - Owned funds construction and bank loans Base heavy machinery and 87% 87% 96,492,705 - - Owned funds engineering equipment in and bank construction loans Owned funds and bank loans
Office buildings and ancillary 100% 100% - - - Owned funds facilities
Shield machine parts project 55% 55% 268,297 268,297 4.75% Bank loans Nanhui base infrastructure 91% 91% - - - Owned funds construction
Large mechanical transformation
and upgrading project 99% 99% - - - Owned funds 120,292,83 268,297
8
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
16. Construction in progress (continued)
Proporti Project Accumula Among Interest Financia on of progress tive which: capitali l project (Note 1) amount interest zation sourcing investme of capitali rate for
nt to interest zation the
budget capitali for the current
zation current year
year
Nantong base infrastructure 99% 99% - - - Owned funds construction
Changxing base infrastructure 82% 82% 23,531,836 - - Owned funds construction
Base heavy machinery and 82% 82% 96,492,705 - - Owned funds engineering equipment in
construction
engineering equipment in
construction
Office buildings and ancillary 99% 99% - - - Owned funds facilities
Nanhui base infrastructure 90% 90% - - - Owned funds construction
Large mechanical transformation
and upgrading project 0% 0% - - - Owned funds Information system development 100% 100% - - - Owned funds 120,024,54 -
1
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
16. Construction in progress (continued)
Note 1: Project progress is estimated based on budget and accumulated input.
17. Intangible assets
2016
Land use right Software usage fee Patent right Total Original book
value
Opening balance 4,246,345,484 46,219,868 65,201,810 4,357,767,162 Construction in - 3,692,425 - 3,692,425 progress
transfer-in
Purchase 16,129,485 2,206,555 - 18,336,040 Closing balance 4,262,474,969 52,118,848 65,201,810 4,379,795,627 Accumulated
amount of
amortization
Opening balance 467,548,195 33,094,826 37,686,275 538,329,296 Provision or 87,762,464 2,667,970 6,587,291 97,017,725 amortization
Closing balance 555,310,659 35,762,796 44,273,566 635,347,021 Book value
Book value at the 3,707,164,310 16,356,052 20,928,244 3,744,448,606 end of year
Book value at the 3,778,797,289 13,125,042 27,515,535 3,819,437,866
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
beginning of year
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
17. Intangible assets (continued)
2015
Land use right Software usage Patent right Total fee
Original book
value
Opening balance 3,781,845,917 38,176,745 65,201,810 3,885,224,472 Projects in 464,499,567 5,581,847 470,081,414
process
Purchase - 2,461,276 - 2,461,276 Closing balance 4,246,345,484 46,219,868 65,201,810 4,357,767,162 Accumulated
amount of
amortization
Opening balance 381,984,998 31,798,450 31,098,984 444,882,432 Provision or 85,563,197 1,296,376 6,587,291 93,446,864 amortization
Closing balance 467,548,195 33,094,826 37,686,275 538,329,296 Book value
Book value at 3,778,797,289 13,125,042 27,515,535 3,819,437,866 the end of year
Book value at 3,399,860,919 6,378,295 34,102,826 3,440,342,040 the beginning of
year
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
17. Intangible assets (continued)
In 2016, the Group totally expended RMB 851,544,356 Yuan onR&D (2015:717,412,492 Yuan, see Note V (48)).The expenses are not capitalized. Above mentioned intangible assets do not include any expenditure onR&D.
As of Dec. 31, 2016, there is no mortgage of the loan in the intangible assets. As of Dec. 31, 2016, intangible assets of not completing the certificate of title is as follows:
Book value Reasons for not completing the certificate of title Land use rights 463,005,986 Property application procedures are still under approval 18. Goodwill
2016
Opening balance Addition report Deduction Closing balance in current year period report year in current year Shanghai 149,212,956 - - 149,212,956 Zhenhua Heavy
Industries
Qidong Marine
Co., Ltd
2015
Opening balance Addition report Deduction Closing balance in current year period report year in current year Shanghai 149,212,956 - - 149,212,956 Zhenhua Heavy
Industries
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Qidong Marine
Co., Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
18. Goodwill (continued)
The goodwill added in report period is caused by purchase shares of Shanghai Zhenhua Heavy Industries Qidong Ocean Engineering Co., Ltd. in 2014.
As of Dec, 31, 2016, the Group did not accrue the goodwill impairment preparation. In impairment testing, the book value of the goodwill is allocated to asset group benefited from synergistic effect of expected enterprise consolidation.
The collectable amount in assets group is measured based on five-year period approved by management and in cash flow forecast method. Cash flow over 5-year period is calculated based on estimated growth rate.
Key hypotheses of future cash flow discount method:
Growth rate in predictive period 7.41%-12.50% Sustainable growth rate 3% Gross profit rate 11.75%-13.70% Discount rate 11% The weighted average growth rate adopted by management is in accordance with the forecast data in industrial report and does not exceed the industrial long-term average growth rate. The management determines gross rate according to forecast to historical experience and market development and adopts pre tax rate which can reflect related assets group with specific risks as discount rate. Above hypothesis is used to analyze collectable amount of assets group.
19. Long-term unamortized expenses
2016
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
19. Long-term unamortized expenses (continued)
Opening Addition Deduction Other Closing balance report year report year decrease balance Fixed assets 4,592,043 9,545,510 (3,256,290) - 10,881,263 under
operating
lease
2015
Opening Addition Deduction Other Closing balance report year report year decrease balance Fixed assets - 4,604,044 (12,001) - 4,592,043 under
operating
lease
20. Deferred corporate tax assets and liabilities
Deferred corporate tax assets before offset
2016 2015
Deductible Deferred Deductible Deferred temporary corporate tax temporary corporate tax difference and assets difference and assets losses losses
Assets 3,034,109,090 455,116,363 2,071,800,834 310,888,702 impairment
provision
Profit not 141,961,692 22,041,889 - - realized in
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
internal
trading
Expected 285,223,845 42,783,577 214,619,364 32,339,037 liabilities
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
20. Deferred corporate tax assets and liabilities (continued)
Salaries and wages 27,802,006 4,170,301 286,998,209 43,049,731 unpaid
Unpaid interest 128,368,841 19,255,326 274,442,941 41,166,441 Fair value change
that the financial
debts are measured
at fair value
change with its
change accounted in
current profit and
loss - - 24,918,115 3,772,318 Fair value changes - - 96,571,793 15,934,346 of
available-for-sale
financial assets
Deferred income 47,536,247 7,130,437 53,508,679 12,307,170 Deductible deficit 6,815,216 1,022,282 123,919,655 18,918,211 3,671,816,937 551,520,175 3,146,779,590 478,375,956 Deferred corporate tax liabilities before offset:
Tax payable Tax payable Tax payable Tax payable provisional corporate tax provisional corporate tax difference liabilities difference liabilities Fixed assets 409,482,226 74,116,286 359,472,141 59,312,902
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
depreciation
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
20. Deferred corporate tax assets and liabilities (continued)
Fair value change
that the financial
debts are measured
at fair value
change with its
change accounted in
current profit and
loss 4,615,775 692,369 676,082 108,672 Fair value changes
of
available-for-sale
financial assets 332,937,152 50,495,661 328,113,620 49,370,483 Asset evaluation
increment from
enterprise merger
not under the same
control 166,224,963 24,933,745 177,210,567 26,581,585 913,260,116 150,238,061 865,472,410 135,373,642 Net value of deferred corporate tax assets and deferred corporate tax liabilities after offset:
2016 2015
Deferred Deferred Deferred Deferred corporate tax corporate tax corporate tax corporate tax assets and assets and assets and assets and liabilities liabilities liabilities liabilities closing offset closing balance closing offset closing balance amount after offset amount after offset
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Deferred
corporate tax
assets 46,073,488 505,446,687 65,330,657 413,045,299 Deferred
corporate tax
liabilities 46,073,488 104,164,573 65,330,657 70,042,985
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
20. Deferred corporate tax assets and liabilities (continued)
Details of unacknowledged deferred corporate tax assets:
2016 2015 Deductible deficit 1,276,126,566 1,352,502,582 Deductible loss of unacknowledged deferred corporate tax assets will be mature in the year as follows:
2016 2015 2016 - 132,359,784 2017 185,000,368 239,989,509 2018 262,745,183 262,745,183 2019 341,404,744 341,568,548 2020 373,462,715 375,839,558 2021 113,513,556 - 1,276,126,566 1,352,502,582 21. Assets impairment provision
2016
Opening This This decrease Closing balance provision balance transfer-back Reseller/cancel
after
verification
Provision 1,164,911,298 219,476,506 (4,997,815) (1,838,664) 1,377,551,325
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
for bad
debts
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
21. Assets impairment provision (continued)
In which: 1,136,848,7 1,339,875,9 Receivables 61 209,863,641 (4,997,815) (1,838,664) 23 Other
receivables 28,062,537 9,612,865 - - 37,675,402 Expected (186,569,70 (154,449,19
contract loss 403,444,523 389,393,155 6) 8) 451,818,774 Inventory
falling price (93,122,078 (94,388,087 1,277,578,8 reserves 568,152,935 896,936,113 ) ) 83 Provision for
impairment of
financial assets
available-for-sa
le 30,000,000 - - - 30,000,000 2,166,508,7 1,505,805,7 (284,689,59 (250,675,94 3,136,948,9 56 74 9) 9) 82 2015
Opening This This decrease Closing balance provision balance transfer-back Reseller/cancel
after
verification
Provision
for bad
debts 885,276,541 289,433,716 9,798,959 1,164,911,298
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
In which:
Receivables 858,128,277 287,019,897 (8,299,413) - 1,136,848,761 Other
receivables 27,148,264 2,413,819 (1,499,546) - 28,062,537
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
21. Assets impairment provision (continued)
Expected 304,907,62 (214,481,04
contract loss 313,017,945 4 - 6) 403,444,523 Inventory
falling price 158,448,21 (105,599,39
reserves 515,304,117 6 8) - 568,152,935 Provision for
impairment of
financial assets
available-for-sa
le 30,000,000 - - - 30,000,000 1,743,598,6 752,789,55 (115,398,35 (214,481,04 2,166,508,7 03 6 7) 6) 56 22. Short term loans
2016 2015 Pledged loans(i) 4,390,096 - Mortgage loans(ii) 2,863,171,000 2,842,115,536 Guaranteed loans(iii) - 500,000,000 Credit loans 18,618,358,297 14,874,812,954 21,485,919,393 18,216,928,490 As of Dec. 31, 2016, the annual interest rate of the above loans is from0.81% -5.65%, (Dec. 31, 2015:1.12% -6.00%).
(i). As of Dec. 31, 2016, RMB 4,390,096 Yuan (Dec. 31, 2015: none) of bank pledged loan
is the bank acceptance bill discount, see Note V (3).
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
(ii). As of Dec. 31, 2016, bank guarantee loan USD 191,500,000 in RMB1,328,435,500 Yuan (Dec. 31, 2015: USD 207,260,000, in RMB 1,345,863,536Yuan), is the bank loan by theCompany’s subsidiary guaranteed with the letters of guarantee issued, within the credit lines awarded to the Company.
As of Dec. 31, 2016, bank guarantee loan USD 91,500,000, in RMB634,735,500 Yuan (Dec. 31, 2015: USD 195,000,000, in RMB 1,266,252,000Yuan), is the bank loan of theCompany’s subsidiary, guaranteed by the Company, and the Company will provide the credit guarantee.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
22. Short term loans (continued)
As of Dec. 31, 2016, the bank guarantee loan of 900,000,000 Yuan is the loan borrowed from the subsidiary, and the Company provides the guarantee (Dec. 31,2015: 230,000,000 Yuan is the loan borrowed from the subsidiary, and the Company provides the credit guarantee.
(iii). As of Dec. 31, 2015, the bank mortgage loan of 500,000,000 Yuan is obtained by mechanical equipment with book value of 542,853,378 Yuan (Original price of688,768,65 Yuan) (Note V (15)) selling to CCCC Financial Rental Co., Ltd and bank in way of rental after sales. The loan term is 1 year. The loan has been paid back on Dec. 6, 2016. 23. Measured at fair value and the changes are recorded into the profits and losses of the current financial liabilities
2016 2015 Trading financial
liabilities
Financial derivative assets - 24,918,115 24. Notes payable
2016 2015 Bank acceptance draft 1,905,121,706 1,785,201,236 25. Accounts payable
2016 2015 Material purchase and 4,853,217,936 5,221,670,634 product manufacturing
payables
Equipment purchase payables 121,413,650 136,011,638 Infrastructure building 86,257,192 73,171,633
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
payables
Retention payables 37,826,248 34,726,344 Port use payables 4,303,871 5,560,773 5,103,018,897 5,471,141,022
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
25. Accounts payable (continued)
Accounts payable analyzed by age:
2016 2015
Amount Proportion in Amount Proportion in total total Within one year 3,749,654,509 73% 4,233,618,165 77% Above one year 1,353,364,388 27% 1,237,522,857 23% 5,103,018,897 100% 5,471,141,022 100% By Dec. 31, 2016, accounts payable aging above 1 year mainly being payables of imported parts.
26. Prepayment received
2016 2015 Goods sale prepayment 292,941,206 423,603,129 received
Prepayment received analyzed by age:
Dec. 31, 2016 Dec. 31, 2015
Amount Proportion in Amount Proportion in total total Within one year 268,730,790 92% 348,798,640 82% Above one year 24,210,416 8% 74,804,489 18% 292,941,206 100% 423,603,129 100% By Dec. 31, 2016, accounts payable aging above 1 year mainly being payables of hull
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
construction payments and spare parts payments received in advance that has not been settled yet.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
27. Salary payable
2016 2015
Short-term pay 263,414,249 256,306,845 Welfare after resignation - 1,135,507 1,515,765 defined drawing plan
264,549,756 257,822,610 Short-term pay listing:
2016
Opening balance in Addition report Deduction report Closing balance in current year period year current year Salary, bonus,
allowance and
subsidy 222,647,867 1,223,482,995 (1,217,155,923) 228,974,939 Staff welfare - 24,847,047 (24,847,047) - Social security 747,129 123,657,388 (123,783,841) 620,676 Including:
medical insurance 614,763 104,976,902 (105,076,510) 515,155 Labor injury fund 98,397 8,787,233 (8,812,499) 73,131 Birth insurance 33,969 9,893,253 (9,894,832) 32,390 Housing fund 435,294 113,233,900 (113,205,494) 463,700 Labor union fund
and staff
education
expenditure 32,476,555 19,136,815 (18,258,436) 33,354,934
Others - 8,424,852 (8,424,852) -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
256,306,845 1,512,782,997 (1,505,675,593) 263,414,249
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
27. Salary payable (continued)
2015
Opening balance Addition report Deduction Closing balance in current year period report year in current year Salary, bonus,
allowance and
subsidy 210,975,170 1,147,483,869 (1,135,811,172) 222,647,867 Staff welfare - 31,565,042 (31,565,042) - Social security 928,094 112,537,032 (112,717,997) 747,129 Including:
medical
insurance 757,763 95,224,571 (95,367,571) 614,763 Labor injury
fund 111,984 9,306,893 (9,320,480) 98,397 Birth insurance 58,347 8,005,568 (8,029,946) 33,969 Housing fund 512,785 97,350,291 (97,427,782) 435,294 Labor union fund
and staff
education
expenditure 31,121,189 16,234,764 (14,879,398) 32,476,555 Others 188,225 11,997,705 (12,185,930) - 243,725,463 1,417,168,703 (1,404,587,321) 256,306,845 Listings of setting drawing plan:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
27. Salary payable (continued)
2016
Opening balance Addition report Deduction Closing balance in current year period report year in current year Basic pension 1,429,703 216,311,014 (216,661,564) 1,079,153 insurance
Unemployment - 48,394,936 (48,394,936) - insurance
expense
Enterprise’s 86,062 11,665,639 (11,695,347) 56,354 annuity payment
1,515,765 276,371,589 (276,751,847) 1,135,507 2015
Opening balance Addition report Deduction Closing balance in current year period report year in current year Basic pension 1,719,925 194,575,647 (194,865,869) 1,429,703 insurance
Unemployment - 66,460,214 (66,460,214) - insurance
expense
Enterprise’s 117,547 13,541,199 (13,572,684) 86,062 annuity payment
1,837,472 274,577,060 (274,898,767) 1,515,765
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
28. Taxes and charges payable
2016 2015 VAT 72,920,316 36,379,940 Business tax - 105,775,332 Corporate income tax 142,223,431 46,989,244 Individual income tax 4,734,973 4,664,656 Urban maintenance and 2,720,271 8,832,871 construction tax
Educational surtax 2,561,018 6,664,267 Others 25,840,715 42,244,696 251,000,724 251,551,006 29. Interest payable
2016 2015 Interest on corporate bond 61,068,417 197,867,828 Interest on loan payable 79,127,386 91,722,905 140,195,803 289,590,733 30. Dividends payable
2016 2015 CCCC Tianjin Dredging Co., 25,079,494 25,079,494 Ltd
CHUWA BUSSAN company limited 6,269,873 6,269,873
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
30. Dividends payable (continued)
Hong Kong Zhenhua 346,005 346,005 Engineering Co., Ltd
Macau Zhenhua Harbor 6,593 6,593 Engineering Co., Ltd
China Communications - 502,283 Corporation
Access Engineering Plc. - 33,664 31,701,965 32,237,912 As of Dec. 31, 2016, the dividends payable over one 1 year is RMB 31,701,965 Yuan (Dec. 31, 2015: RMB 542,540 Yuan) is the Group actual payments that the minority shareholders of relatedparty’s required.
31. Other payables
2016 2015 Related parties loans 523,000,000 1,118,000,000 Construction deposit 278,510,650 205,692,211 CCCC investment payment(i) 100,971,833 100,971,833 Related parties payables 308,637,187 50,158,344 Tax to be carried forward - 25,997,127 Others 14,015,758 103,703,871 1,225,135,428 1,604,523,386 (i). The Group completed the cancellation of a subsidiary during the year 2011.The
balance of 25,971,833 Yuan shall be accounted into the payable by the Group attributable
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
to shareholders of the subsidiary of another CCCC liquidation of the investment; meanwhile, the Group completed the acquisition of subsidiary of CCC in 2015. The balance of 75,000,000 Yuan is the payment of the Group to CCC.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
31. Other payables (continued)
Other accounts payable analyzed by age:
Dec. 31, 2016 Dec. 31, 2015
Amount Proportion Amount Proportion Within one year 978,705,261 80% 1,468,169,962 92% Above one year 246,430,167 20% 136,353,424 8% 1,225,135,428 100% 1,604,523,386 100% As of Dec. 31, 2016, other payables aged over one year mainly payables to related parties, deposits to outsourced construction team and quality guarantee deposit received. 32. Non-current liabilities due within one year
2016 2015 Less: long-term loan within 270,000,000 2,977,796,000 one year (Note V.34)
Less: bonds payable due - 3,799,949,635 within 1 year
Non-current liabilities due 529,574,356 59,370,057 within one year (Note V.35)
799,574,356 6,837,115,692 Bonds payable
Approved by the Z.S.X.Z. (2011) MTN25 Document “Acceptance Notice of the National Association of Financial Market Institutional Investors” of National Association of Financial Market Institutional Investors, the Company issued a medium - term note of RMB 3,800, 000.00 Yuan on February 24, 2011. The term of this medium - term note is 5 years, and the annual interest rate is 5.85% each year. The bond issue costs are paid
annually. The bond has no collateral or security and is fully repaid in February 2016.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
As of December 31, 2016, the balance of bonds payable is as follows:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
32. Non-current liabilities due within one year (continued)
Total face Issue cost Opening Amortization This repayment Closing value balance of this year's balance issuance cost
Issued in 2011
Note of first 3,800,000,000 (56,450,000) 3,799,949,635 50,365 (3,800,000,00 - mid-term 0)
As of December 31, 2015, the balance of bonds payable is as follows:
Total face Issue cost Opening Amortization This repayment Closing value balance of this year's balance issuance cost
Issued in 2011
Note of first 3,800,000,000 (56,450,000) 3,799,615,401 (11,400,000) 11,734,234 3,799,949,635 mid-term
33. Other current liabilities
2016 2015 Short-term financing 1,998,695,891 - securities of the first term
of 2016
Super short-term financing 1,997,329,444 - securities of the first term
of 2016
Short-term financing - 1,995,655,739 securities of the first term
of 2015
3,996,025,335 1,995,655,739
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Related detail of short-term bonds payable is as follow:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
33. Other current liabilities (continued)
Face value Issue cost Amortization of December 31, issue cost 2016 Issued in 2016
Short-term 2,000,000,000 (4,000,000) 2,695,891 1,998,695,891 financing
securities of
the first term
Super 2,000,000,000 (3,450,000) 779,444 1,997,329,444 short-term
financing
securities of
the first term
Face value Issue cost Amortization of December 31, issue cost 2015 Issued in 2015
Short-term 2,000,000,000 (5,000,000) 655,739 1,995,655,739 financing
securities of
the first term
As approved by the No.CP47925 "China Inter-bank Market Dealers Association File Receiving Registration Notice" issued by China inter-bank market dealers association in the City Association (2014) , the Company can issue registered amount of RMB 5,000,000,000Yuan short-term financing bonds, the registered amount shall be valid for 2 years from Dec. 3, 2014.
As approved by the No.SCP321 "China Inter-bank Market Dealers Association File Receiving
Registration Notice" issued by China inter-bank market dealers association in the City
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Association (2016) , the Company can issue registered amount of RMB 10,000,000,000Yuan super short-term financing bonds, the registered amount shall be valid for 2 years from Oct. 19, 2016.
The Company issued RMB 2,000,000,000 Yuan short-term financing bonds on Nov. 11, 2015, the note term is 1 year, and the fixed annual interest is3.5%, capital with interest shall be repaid at one time at maturity. The short term financing bonds has been expired in November 2016 and has been paid up.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
33. Other current liabilities (continued)
The Company issued RMB 2,000,000,000 Yuan short-term financing bonds of the first term on April 28, 2016, the note term is 1 year, and the annual interest of face value is3.7%, capital with interest shall be repaid at one time on April 29, 2017.
The Company issued RMB 2,000,000,000 Yuan super short-term financing bonds of the first term on Oct. 28, 2016.The note term is 270 days, and the annual interest of face value is3.2%, capital with interest shall be repaid at one time on Friday, July 28, 2017. The bonds above have no mortgage or security.
34. Long term loans
2016 2015 Credit loans 3,121,485,497 2,492,700,000 Mortgage loans(i) 346,850,000 60,000,000 Pledged loans(ii) 727,000,000 2,187,000,000 4,195,335,497 4,739,700,000 Less: long-term loan within
one year
Guaranteed loans - (60,000,000) Credit loans - (1,714,296,000) Mortgage loans (270,000,000) (1,203,500,000) (270,000,000) (2,977,796,000) 3,925,335,497 1,761,904,000 As of Dec. 31, 2016, the annual interest rate of the above loans is from1.20% -6.89%, (Dec. 31, 2015:1.20% -6.91%).
As of Dec. 31, 2016, the bank guarantee loan of 346,850,000 Yuan is the loan borrowed
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
from the subsidiary, and the Company provides the guarantee. The interest is paid quarterly; the principal shall be paid on July 27, 2018.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
34. Long term loans (continued)
As of Dec. 31, 2015, the bank guarantee loan of 60,000,000 Yuan is the loan borrowed from the subsidiary, and theCompany’s related company (CCCC Tianjin Waterway Bureau Co., Ltd.) provides the guarantee. The interest is paid quarterly, the principal shall be paid on Feb. 22, 2016 and August 22, 2016.
(ii). As of Dec. 31, 2016, multiple pledge loans of the bank is 727,000,000 Yuan (Dec. 31, 2015: RMB 2,187,000,000 Yuan) in total as pledge of the wholly-owned subsidiary of the Group - Nanjing Ninggao New Channel Construction Co., Ltd. “construction-transfer” project long-term receivable in whole amount (Note V (12)).The interest is paid quarterly, the principal shall be paid between June 21, 2017 and Nov. 25, 2018 (Dec 31, 2015: the principal shall be paid between June 21, 2016 and Nov. 25, 2018).
35. Long-term payable
2016 2015 Sale-leaseback financing 2,082,370,386 779,232,000 funds(i)
“Construction-transfer” 65,565,134 - project funds(ii)
Less: sale-leaseback (529,574,356) (59,370,057) financing funds due within
one year (Note V.32)
1,618,361,164 719,861,943 (i). As of Dec. 31, 2016, the long-term payable of RMB 2,082,370,386 Yuan (Dec. 31, 2015: 779,232,000) is obtained by vessel with book value of RMB 1,882,864,040 Yuan (Dec. 31, 2015: RMB 1,036,238,241 Yuan) (Note V (15)) and the mechanical equipment with book value of RMB 555,450,350 Yuan (Dec. 31, 2015: None (Note V (15)) selling to financing lease company and bank in way of rental after sales. The financing term is 4 to 6 years (Dec. 31, 2015: 6 years).The Group pays the sale-leaseback financing funds to financing lease company every year on schedule in accordance with the Contract terms. The Group will take the trade as the mortgage loan.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
(ii). TheCompany’s subsidiary and the Construction Party of “construction-transfer” project construction agreed that part of the project payments will be paid to the Construction Party after the final acceptance of the “construction-transfer” project within a certain term. The Group expects that the above “Construction-transfer” project funds will be paid in 2019.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
36. Estimated liabilities
2016
Opening balance Addition report Deduction Closing balance in current year period report year in current year Estimated 216,306,557 235,780,889 (161,871,330) 290,216,116 aftersales
service cost
Product quality 1,176,471 - (934,954) 241,517 guarantee
Others 2,658,150 - - 2,658,150 220,141,178 235,780,889 (162,806,284) 293,115,783 2015
Opening balance Addition report Deduction Closing balance in current year period report year in current year Estimated 200,563,933 183,742,973 (168,000,349) 216,306,557 aftersales
service cost
Product quality 2,466,240 306,368 (1,596,137) 1,176,471 guarantee
Pending 5,725,890 - (5,725,890) - litigation or
arbitration
Others 3,488,353 - (830,203) 2,658,150 212,244,416 184,049,341 (176,152,579) 220,141,178
37. Deferred income
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
2016
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
37. Deferred income (continued)
Opening balance Addition report Deduction Closing balance in current year period report year in current year Government 323,237,563 70,020,819 (22,478,059) 370,780,323 grants
Land 82,188,384 - (1,932,683) 80,255,701 compensation
405,425,947 70,020,819 (24,410,742) 451,036,024 2015
Opening balance Addition report Deduction Closing balance in current year period report year in current year Government 256,227,380 115,204,307 (48,194,124) 323,237,563 grants
Land 84,120,528 - (1,932,144) 82,188,384 compensation
340,347,908 115,204,307 (50,126,268) 405,425,947 As of December 31, 2016, the liabilities projects involved government grants are as follow:
Opening New Amounts Other Closing balance subsidies of included in changes balance the current non-operating
period income in the
current
period
Non-operating
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
income
Lifting cable 92,500,000 - - - 92,500,000 layout vessel
R&D project
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
37. Deferred income (continued)
Submarine
pipeline laying
R&D project 43,125,500 - (2,000,000) - 41,125,500 Automated dock
R&D project 25,620,000 - - - 25,620,000 Floating crane
R&D project 19,510,000 - - - 19,510,000 Intelligent
equipment for
container yard 5,985,000 12,600,000 - (640,000) 17,945,000 Research project
of deep water
drilling ship and
related
equipment 5,360,000 9,500,000 - - 14,860,000 50000 ton
semi-submersible
shipR&D projects 14,000,000 - - - 14,000,000 Drilling
platform
development
project 13,650,000 3,040,000 - (3,880,000) 12,810,000 Transportation
positioning
system R&D
project 8,000,000 2,000,000 - - 10,000,000
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
37. Deferred income (continued)
Comprehensive
standardization
of intelligent
manufacturing
for marine 5,300,000 4,700,000 - - 10,000,000 Large
underwater
manipulator
system
equipmentR&D 7,000,000 3,000,000 - (792,000) 9,208,000 Marine
engineering
positioning
system R&D
project 10,250,000 - (1,057,661) - 9,192,339 Drilling
package R&D
project 8,000,000 400,000 - - 8,400,000 Marine
manufacturing
process
optimization
R&D project - 8,000,000 - - 8,000,000 Nantong Drive
R&D projects 17,900,000 - (10,700,000) - 7,200,000
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
37. Deferred income (continued)
Intelligent
transportation
system of
Automatic Guided
Vehicle (AGV) - 6,000,000 - - 6,000,000 CCC DCM ship
achievement
transformation
project - 7,000,000 (1,093,750) - 5,906,250 Development and
industrialization
of large deep
water crane piping
ship 5,340,000 232,000 - - 5,572,000 Self-elevating
platform central
control system - 3,500,000 - - 3,500,000 Special gear shaft
for port machinery
Finishing
intelligent
production line - 3,200,000 - (640,000) 2,560,000 Intelligent
electric
differential
traction bridge
crane - 2,030,000 - (586,000) 1,444,000
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
37. Deferred income (continued)
Other R&D
projects 41,697,063 4,818,819 (960,751) (127,897) 45,427,234 Other R&D
projects 323,237,563 70,020,819 (15,812,162) (6,665,897) 370,780,323 As of December 31, 2015, the liabilities projects involved government grants are as follow:
Opening New Amounts Other Closing balance subsidies of included in changes balance the current non-operating
period income in the
current
period
Non-operating
income
Lifting cable
layout vessel
R&D project 94,050,000 - - (1,550,000) 92,500,000 Submarine
pipeline
laying R&D
project 23,901,800 25,100,000 - (5,876,300) 43,125,500 Automated
dock R&D
project 21,900,000 4,320,000 - (600,000) 25,620,000 Floating
crane R&D
project 19,510,000 - - - 19,510,000
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Nantong Drive
R&D projects 8,700,000 9,200,000 - - 17,900,000
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
37. Deferred income (continued)
50000 ton
semi-submersible
shipR&D projects - 14,000,000 - - 14,000,000 Drilling
platform
development
project 13,850,000 - (200,000) - 13,650,000 Marine
engineering
positioning
system R&D
project 10,250,000 - - - 10,250,000 Transportation
positioning
system R&D
project 8,000,000 - - - 8,000,000 Drilling package
R&D project 8,000,000 - - - 8,000,000 Large underwater
manipulator
system equipment
R&D - 7,000,000 - - 7,000,000 Intelligent
equipment for
container yard - 7,200,000 - (1,215,000) 5,985,000
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
37. Deferred income (continued)
Research project
of deep water
drilling ship and
related equipment - 16,000,000 - (10,640,000) 5,360,000 Development and
industrialization
of large deep
water crane piping
ship 5,340,000 - - - 5,340,000 Comprehensive
standardization
of intelligent
manufacturing for
marine - 10,000,000 - (4,700,000) 5,300,000 OtherR&D projects 42,725,580 22,384,307 (21,569,924) (1,842,900) 41,697,063 256,227,380 115,204,307 (21,769,924) (26,424,200) 323,237,563 The above-mentioned government subsidy is related to the income.
Other changes in this year are the research and development subsidies allocated to the partners under the cooperative R& D agreement.
Land compensation funds shall be compensated by theCompany’s subsidiaries. The amount of compensation shall be amortized on average for 50 years.
38. Other non-current liabilities
2016 2015 Stay - recognition tax 56,025,416 -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
38. Other non-current liabilities (continued)
During the “Construction - Transfer” project, the Group adopts the construction contract to calculate its income. At the date of the balance sheet, the income of part of the construction contract and interest income have not reached the time point of the value - added tax obligation. The end - of - term credit balance of such accounting items as “tax for tax payable - to - transferred output tax” shall be classified by the “tax payable” to “other non - current liabilities” in the balance sheet at the end of 2016 in, accordance with the requirements of “Provisions on Treatment of Value - added Tax Accounting” in 2016 (according to the Accounting Regulations 2016).
39. Capital stock
2016
Opening Change in this year Closing balance balance issuing stock Accumulation Other subtotal
new dividend fund turn add
shares
Unlimited
shares sold
conditions
-RMB 2,768,331,384 - - - - - 2,768,331,384 ordinary
shares
- Foreign 1,621,963,200 - - - - - 1,621,963,200 share
4,390,294,584 - - - - - 4,390,294,584 2015
Opening Change in this year Closing balance balance
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
issuing stock Accumulation Other subtotal
new shares dividend fund turn add
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
39. Capital stock (continued)
Unlimited
shares
sold
conditions
-RMB 2,768,331,384 - - - - - 2,768,331,384 ordinary
shares
-Foreign 1,621,963,200 - - - - - 1,621,963,200 share
4,390,294,584 - - - - - 4,390,294,584 40. Capital reserve
2016
Opening balance Addition report Deduction Closing balance in current year period report year in current year Capital stock 5,415,833,470 - - 5,415,833,470 premium
Other capital
surplus
-Business (16,203,111) - - (16,203,111) Combination
under Common
Control
-Purchasing of (711,345) - - (711,345) minority
interest of
subsidiaries
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
-Transfer-in of 128,059,561 - - 128,059,561 capital reserve
5,526,978,575 - - 5,526,978,575
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
40. Capital reserve (continued)
2015
Opening balance Addition report Deduction Closing balance in current year period report year in current year Capital stock 5,415,833,470 - - 5,415,833,470 premium
Other capital
surplus
-Business 195,060,000 - (211,263,111) (16,203,111) Combination
under Common
Control
-Purchasing of (711,345) - - (711,345) minority
interest of
subsidiaries
-Transfer-in of 128,059,561 - - 128,059,561 capital reserve
5,738,241,686 - (211,263,111) 5,526,978,575 41. Other comprehensive income
Accumulative balance of other comprehensive income attributable to the parent company in the balance sheet:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
41. Other comprehensive income (continued)
January 1 Change December 31, Change December 31 2015 2015 2016 Other
comprehensive
income that
will be
reclassified
into gains and
losses
subsequently
-Portion of - 1,256,397 1,256,397 4,801,990 6,058,387 other
comprehensive
income to be
reclassified
as profit or
loss under
equity method
-Fair value 321,642,049 (123,536,363) 198,105,686 84,335,801 282,441,487 change profit
or loss of
financial
assets
available for
sale
-Converted (2,102,007) 10,400,161 8,298,154 25,605,643 33,903,797 difference in
Foreign
Currency
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Statements
319,540,042 (111,879,805) 207,660,237 114,743,434 322,403,671
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
41. Other comprehensive income (continued)
Amount incurred by other comprehensive income in the income statement:
2016
Amount Less: it was Less：income Parent Minority incurred included in stockholder's other
before tax comprehensive tax company interest income at prior
period
and was
transferred
into profit and
loss at current
period
Other
comprehensive
income that
will be
reclassified
into gains and
losses
subsequently
-Portion of
other
comprehensive
income to be
reclassified
as profit or
loss under
equity method
Fair value 4,801,990 - - 4,801,990 - change profit
or loss of
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
financial
assets
available for
sale
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
41. Other comprehensive income (continued)
-Fair value 101,395,326 - 17,059,525 84,335,801 - change profit
or loss of
financial
assets
available for
sale
-Converted 33,370,647 - - 25,605,643 7,765,004 difference in
Foreign
Currency
Statements
139,567,963 - 17,059,525 114,743,434 7,765,004 2015
Amount Less: it was Less：income Parent Minority incurred included in stockholder's other
before tax comprehensive tax company interest income at prior
period
and was
transferred
into profit and
loss at current
period
Other
comprehensive
income that
will be
reclassified
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
into gains and
losses
subsequently
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
41. Other comprehensive income (continued)
-Portion of
other
comprehensive
income to be
reclassified
as profit or
loss under
equity method
Fair value 1,256,397 - - 1,256,397 - change profit
or loss of
financial
assets
available for
sale
Fair value 280,878,768 363,049,437 41,365,694 (123,536,363) - change profit
or loss of
financial
assets
available for
sale
-Converted 15,709,264 - - 10,400,161 5,309,103 difference in
Foreign
Currency
Statements
297,844,429 363,049,437 41,365,694 (111,879,805) 5,309,103 42. Specialized reserve
2016
Opening balance Addition report Deduction Closing balance
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
in current year period report year in current year Safety - 26,851,099 (26,851,099) - production
costs
According to the relevant requirements of the “Administrative Measures for the Extraction and Use of Safety in Production of Enterprises”, enterprises engaged in large - scale machinery manufacture, construction engineering construction, etc., shall draw safe production costs according to the standards. Increase and decrease the safety production cost of this year in accordance with relevant requirements.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
43. Surplus reserve
2016
Opening balance Addition report Deduction Closing balance in current year period report year in current year Surplus 1,283,722,118 27,022,196 - 1,310,744,314 reserves
Other surplus 292,378,668 - - 292,378,668 reserve
1,576,100,786 27,022,196 - 1,603,122,982 2015
Opening balance Addition report Deduction Closing balance in current year period report year in current year Surplus 1,262,227,357 21,494,761 - 1,283,722,118 reserves
Other surplus 292,378,668 - - 292,378,668 reserve
1,554,606,025 21,494,761 - 1,576,100,786 According to P. R. China Company Law, theCompany’s Article of Association and board meeting decisions, the Company accrues10% of its net profit as statutory surplus reserve. When statutory surplus reserve accumulatedreached50% of the Capital stock, the Company can stop accruing. Statutory surplus reserve can be used to compensate loss upon approval, or to increase Capital stock. TheCompany′s statutory surplus reserve is RMB 27,022,196 Yuan in 2016(2015: RMB 21,494,761 Yuan).
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
44. Undistributed profit
2016 2015 Undistributed profit at 3,168,538,701 2,987,813,174 beginning of the period
Net profit attributable to 212,419,946 212,411,967 parent company
Less: statutory surplus (27,022,196) (21,494,761) reserve
Common stock dividends - (10,191,679) payable
Undistributed profit at end 3,353,936,451 3,168,538,701 of the period
45. Operating income and operating cost
2016 2015
Income Cost Income Cost Main operations 24,143,396,762 19,525,829,470 23,014,315,324 19,473,230,285 Other 204,691,166 201,834,405 258,079,353 244,084,570 operations
24,348,087,928 19,727,663,875 23,272,394,677 19,717,314,855 Major operating income and operating cost are listed as follows:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
45. Operating income and operating cost (continued)
2016 2015
Major operating Major operating Major operating Major operating income cost income cost Container 17,082,391,036 13,067,811,357 14,994,515,929 12,039,998,425 cranes
Bulk machinery 3,154,983,915 3,054,772,000 2,013,370,826 1,862,388,384 Heavy equipment 1,284,872,909 1,279,775,256 3,985,411,881 3,950,151,042 Steel 1,035,829,290 938,105,979 826,175,120 796,465,278 structures and
related income
“Construction– 1,005,087,825 1,019,082,565 514,064,790 447,701,799 transfer” Item
Vessel shipping 580,231,787 166,282,313 680,776,778 376,525,357 and others
24,143,396,762 19,525,829,470 23,014,315,324 19,473,230,285 Other operating income and other operating cost
2016 2015
Other operating Other operating Other operating Other operating income cost income cost Sales of 81,273,472 139,919,381 132,403,534 146,110,137 materials
Equipment 123,417,694 61,915,024 125,675,819 97,974,433 leasing and
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
others
204,691,166 201,834,405 258,079,353 244,084,570
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
46. Business taxes and surcharges
2016 2015 Business tax 47,494,080 10,974,073 Urban maintenance and 15,645,413 6,074,911 construction tax
Educational surtax 12,504,639 5,496,235 House property tax 48,028,255 - Land use tax 16,874,815 - Stamp tax 9,661,367 - Others 1,967,268 2,004,960 152,175,837 24,550,179 47. Selling expenses
2016 2015 Employee remuneration 53,604,675 44,644,978 payable
Travel expenses 24,261,692 22,084,463 Office expenses 5,063,286 3,739,877 Sales service expenses 3,561,444 285,529 Exhibition expenses 2,866,724 2,176,378 Tender expenses 1,582,134 1,797,466 Advert expenses 1,370,622 1,651,244
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Maintenance costs 574,737 179,725 (including materials)
Fixed assets depreciation 135,265 135,960 Others 7,415,199 2,693,123 100,435,778 79,388,743 48. Administrative expenses
2016 2015R&D expenses 851,544,356 717,412,492 Employee remuneration 435,509,342 344,563,366 payable
Intangible assets 97,017,725 93,446,864 amortization
Expenses on employing 76,540,843 54,836,758 intermediary
Fixed assets depreciation 73,752,507 67,811,262 Office expenses 43,843,424 43,037,316 Taxes 39,216,370 109,946,415 Travel expenses 21,821,209 16,708,445 Consulting fees 18,030,885 5,869,779 Business entertainment 15,921,003 14,853,947 expenses
Informatization expenses 13,574,204 10,445,654
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Insurance expenses 7,865,652 8,582,832 Maintenance expense 6,483,287 3,626,881 (To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
48. Administrative expenses (continued)
(Continued) 2016 2015 Conference expenses 1,723,476 1,589,710 Others 56,188,463 58,490,843 1,759,032,746 1,551,222,564 49. Finance expenses
2016 2015 Interest expenditure 1,095,191,900 1,279,031,963 Less: interest income 308,686,445 369,131,564 Less: capitalized amount of 268,297 - interest
Foreign exchange loss 369,552,810 562,525,676 Amortization of issue cost 7,869,961 12,389,973 of intermediate term bills
Others 55,332,859 48,035,048 1,218,992,788 1,532,851,096 The capitalization amount of loan expenses is included in the construction in progress. 50. Impairment on assets
2016 2015 Loss on inventory (Note 803,814,035 52,848,818 V.21)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Loss on bad debt (Note V.21) 214,478,691 279,634,757
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
50. Impairment on assets (continued)
Expected contract losses 202,823,449 304,907,624 (Note V.21)
1,221,116,175 637,391,199 51. Gain/loss from fair-value changes
2016 2015 Measured at fair value and 3,939,693 (25,058,919) the changes are recorded
into the profits and losses
of the current financial
asset (Note V.2)
Measured at fair value and 24,918,115 3,833,885 the changes are recorded
into the profits and losses
of the current financial
liabilities (Note V.23)
28,857,808 21,225,034 52. Investment income
2016 2015
Investment gains from 99,395,952 55,252,057 long-term equity verified by
equity method (Note V.13)
Investment gains from - 9,465,520 disposal financial assets
available-for-sale–equity
tool period (Note V.11)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Investment income of 17,010,628 6,402,396 available-for-sale
financial assets (Note V.11)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
52. Investment income (continued)
Bank financial products 2,101,669 393,033,507 investment income
Investment income from 5,176 34,083,478 disposal of
available-for-sale
financial assets
-
--
498,236,958 53. Non-operating income
2016 2015 Accrued in current period Non-recurring profit and loss Gains from disposal 6,649,827 14,128,543 6,649,827 of non-current
assets
Among which: gains 6,649,827 14,128,543 6,649,827 on the disposal of
fixed assets
Government grants 45,042,910 40,881,189 45,042,910 Donation obtained - 2,549,000 - Others 11,950,506 13,154,739 100% 63,643,243 70,713,471 63,643,243 Government subsidy included in the current profits and losses:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
2016 2015 Related to assets/income Financial 39,982,226 36,449,045 Related to income allocation
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
53. Non-operating income (continued)
Science and 3,128,000 2,500,000 Related to income technology subsidy
Land compensation 1,932,684 1,932,144 Related to assets (Note V.37)
45,042,910 40,881,189
54. Non-operating expenses
2016 2015 Accrued in current period Non-recurring
profit and loss
Non Current assets 5,309,215 4,789,746 5,309,215 disposal loss
Among which: losses 5,309,215 4,789,746 5,309,215 on the disposal of
fixed assets
External donation 20,000 530,000 20,000 External donation 3,474,664 39,593 3,474,664 Others 2,020,182 306,533 2,020,182 10,824,061 5,665,872 10,824,061 55. Cost classification by nature
Further information about theGroup’s operating costs, sales expenses and management expenses are classified by nature as follows:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
55. Cost classification by nature (continued)
2016 2015 Expendable raw material and 14,371,771,965 14,623,452,686 low value consumables
Employee remuneration (Note 1,789,154,586 1,691,745,763 V (27))
Depreciation and
amortization expenses
(Note V (14), (15),(17), 1,285,028,932 1,342,307,268 (19))
External coordination costs 1,277,245,080 911,640,427 Transportation expenses 671,016,351 749,214,023 Technical R& D expenses 851,544,356 717,412,492 (Note V (48))
Energy expenses 298,219,379 280,917,025 On-site installation 216,944,442 194,104,215 expenses
Rental fee 172,780,365 162,684,322 After-sales costs 127,301,003 125,219,471 Expenses on employing 76,540,843 54,836,758 intermediary
Office expenses 48,906,710 51,688,823 Travel expenses 46,082,901 38,792,908
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Taxes (Note V (48) 39,216,370 109,946,415 Business entertainment 15,921,003 14,853,947 expenses
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
55. Cost classification by nature (continued)
Informatization expenses 13,574,204 10,445,654 Bidding fee 1,582,134 1,797,466 Other expenses 284,301,775 266,866,499 21,587,132,399 21,347,926,162 56. Income tax expense
2016 2015 Income tax expenses in 136,856,233 49,477,423 current period
Deferred income tax expense (75,339,325) 28,052,453 61,516,908 77,529,876 The relationship between income tax expense and total profit is as follows:
2016 2015 Total profit 368,861,144 271,735,564 Income tax expense 55,329,171 40,760,335 calculated according to the
applicable tax rate(15%)
Subsidiaries applied to the 21,202,805 20,241,955 influence of different tax
rate
Gains and loss gains and (14,966,483) (8,287,809) loss joint venture and
jointly run enterprise
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Non-taxable income (108,251) (2,876,713)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
56. Income tax expense (continued)
Non-deductible costs, 2,972,594 3,305,801 expenses and losses
Income tax before adjusting (8,933,223) (47,286) Use the deductible deficit (10,334,298) (2,795,677) of the previous year
Effect of the deductible 39,776,493 50,070,071 temporary difference or the
deductible loss of the
deferred income tax assets
whichwasn’t conformed at
current period
Deduction of technological (23,421,900) (22,840,801) development expenses
Income tax expense 61,516,908 77,529,876 57. Earnings per share
The basic earnings per share shall be calculated in accordance with the current net profits of the ordinary shareholders of the company divided by the weighted average of the common stock issued.
The basic earnings per share and diluted earnings per share are calculated as follows: 2016 2015 Net profit attributive to 212,419,946 212,411,967 holders of common shares of
the Company
Weighted average of 4,390,294,584 4,390,294,584 outstanding common stock
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Basic earning per share 0.05 0.05 In 2016 and 2015, the Company does not have a diluted potential common stock, so diluted earnings per share are equal to the basic earnings per share.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
58. Cash flow statements notes
2016 2015 Net cash from other
operating activities
Customs deposits received 297,589,755 288,908,075 Cash receipt of government 97,318,883 132,383,428 allowance and bonus
Employee’s loans received 4,488,988 10,574,725 Cash receipt from income 532,240 7,958,851 from fines
Others 37,371,316 7,366,702 437,301,182 447,191,781 Other cash payments relating
to operating activities
Customs guarantee deposit 264,666,758 323,819,681 paid
Selling and administrative 201,911,238 188,362,388 expenses
Financial expenses 55,332,859 48,035,048 formality cost
R&D subsidy paid to 26,613,797 6,476,300 cooperation units
Others 40,102,571 6,411,082
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
588,627,223 573,104,499
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
58. Cash flow statements notes (continued)
2016 2015 Other cash receipts relating
to investing activities
Interest income 852,787,742 93,974,040 Cash receipts related to
other financing activities
Recovery of restricted bank 344,790,000 2,681,198,220 deposits
Related parties loans 2,420,845,793 1,785,676,000 received
Capital invested by minority 273,048,439 273,402,314 shareholders
3,038,684,232 4,740,276,534 Other cash payments relating
to financing activities
Restricted bank deposits 326,925,000 1,123,143,500 refundable
Short and super short term
notes issuance cost expenses
7,450,000 16,400,000 Offshore financing against 38,776,961 - domestic guarantee expenses
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Compensative related 1,768,382,528 - parties loans
2,141,534,489 1,139,543,500
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
59. Supplementary information of cash flow statements
(1) Supplementary information of cash flow statements
Reconciliation of net profit to cash flows from operating activities:
2016 2015 Net profit 307,344,236 194,205,688 Add: Assets impairment 1,221,116,175 637,391,199 provision
Depreciation of fixed 1,184,754,917 1,248,860,404 assets, depletion of oil gas
assets, depreciation of
productive living assets
Intangible assets 100,274,015 93,446,864 amortization
Net gain on disposal of fixed (1,340,612) (9,338,797) assets, intangible assets
Changes in fair value gains (28,857,808) 21,225,034 and losses
Financial expenses 1,256,194,822 1,752,677,447 Investment gains (118,513,425) (498,236,958) Increase/decrease in (75,339,325) 28,052,453 deferred income tax asset
(increase was filled in with
“-”)
Inventory reduction (1,794,200,703) (1,371,334,146)
Increase of construction (409,587,873) (3,108,564,518)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
contract price
Decrease/increase in 94,234,166 (902,563,051) operating receivables
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
59. Supplementary information of cash flow statements (continued)
Decrease/increase in (77,655,949) 82,216,908 operating payables
Net cash flows from 1,658,422,636 (1,831,961,473) operating activities
2016 2015 Endorsement of bank
acceptance received from
sales and services
Net alteration of cash and 2,038,671,320 1,629,629,350 cash equivalents:
2016 2015 Cash balance at end of year 3,497,205,186 2,337,925,611 Less: cash at beginning of 2,337,925,611 1,882,283,319 year
Net increase in cash and cash 1,159,279,575 455,642,292 equivalents
(2) Net cash received from disposal of subsidiaries and other business units
Information of acquiring subsidiaries
2016 2015 Price of acquiring - 211,263,111 subsidiaries
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Less: Cash and cash - (134,657,111) equivalents for acquiring
subsidiaries
Net cash paid for acquiring - 76,606,000 subsidiaries and other
business units
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
59. Supplementary information of cash flow statements (continued)
(3) Cash and cash equivalents
2016 2015 Cash 3,497,205,186 2,337,925,611 Among which: Cash on hand 774,626 746,967 Deposits that can be readily 3,496,430,560 2,318,579,147 paid
Other monetary capitals that - 18,599,497 can be readily paid
Cash equivalents - - Cash and cash equivalent 3,497,205,186 2,337,925,611 Closing balance
60. Assets with restricted ownership and right of use
2016 2015
Monetary capital 99,839,013 120,408,105 Note 1 (note V.1)
Fixed assets (note 2,438,314,399 1,579,091,619 Note 2 V.15)
Long-term 2,996,201,650 5,680,467,098 Note 3 receivables (note
V.12)
5,534,355,062 7,379,966,822
Note 1: As of Dec, 31, 2016, the monetary capital with restricted is RMB 99,839,013 Yuan,
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
which is the margin deposit that our Group applied to banks for letters of credit and bank guarantees (Dec, 31, 2015: RMB 120,408,105 Yuan).
Note 2: As of Dec. 31, 2016, the vessel with book value of RMB 1,882,864,040 Yuan (Dec. 31, 2015: RMB 1,036,238,241 Yuan) (Note V (15)) and the mechanical equipment with book value of RMB 555,450,350 Yuan (Dec. 31, 2015: None (Note V (15)) selling to financing lease company and bank in way of rental after sales. The financing term is 4 to 6 years.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
60. Assets with restricted ownership and right of use (continued)
As of Dec. 31, 2015, the mechanical equipment with book value of RMB 542,853,378 Yuan selling to financing lease company and bank in way of rental after sales. The borrowing term is 1 year, and the borrowings have been paid on Dec. 31, 2016.
Note 3: As of Dec. 31, 2016, the Nanjing Highway “construction-transfer” project long-term receivable with book value RMB 2,996,201,650 Yuan (Dec. 31, 2015: RMB 5,680,467,098 Yuan) is used for obtaining bank loan pledge.
61. Foreign currency monetary items:
2016 2015
Original Exchange Equivalent RMB Original Exchange Equivalent RMB rate rate
Monetary
capital
USD 356,373,402 6.9370 2,472,162,288 137,115,012 6.4936 890,370,042 EUR 25,423,957 7.3068 185,767,768 57,367,233 7.0952 407,031,992 SGD 20,744,399 4.7995 99,562,745 1,592,667 4.5875 7,306,360 NZD 625 4.8191 3,012 625 4.4426 2,777 HKD 18,540,418 0.8945 16,584,404 221,140 0.8378 185,271 Pound 1,462,267 8.5094 12,443,017 2,514,663 9.6159 24,180,748 South Korean 2,038,285,822 0.0058 11,822,058 668,453,325 0.0055 3,676,493 won
Oman riyal 567,011 18.0060 10,209,598 580,139 16.8966 9,802,377 JPY 144,285,734 0.0596 8,598,131 521,999 0.0539 28,136 Rand 14,635,312 0.5083 7,439,129 3,036,362 0.4174 1,267,377 Sri Lankan 168,823,164 0.0463 7,816,513 201,277,172 0.0460 9,258,750 rupee
AUD 1,190,016 5.0157 5,968,763 310,654 4.7276 1,468,648
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
Indian rupee 23,686,064 0.1023 2,422,824 11,372,514 0.0977 1,111,095 Real 708,428 2.1357 1,512,989 937,867 1.6483 1,545,886
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
61. Foreign currency monetary items: (continued)
Rupee 12,938,990 0.1161 1,502,217 53,495,135 0.0885 4,734,319 Malaysian 838,089 1.5507 1,299,625 - - - ringgit
CAD 423 5.1406 2,176 15,452 4.6814 72,337 2,845,117,257 1,362,042,608 Accounts
receivable
USD 382,943,787 6.9370 2,656,481,050 284,106,383 6.4936 1,844,873,209 EUR 50,412,079 7.3068 368,350,979 50,889,618 7.0952 361,072,018 SGD 62,524,894 4.7995 300,088,229 36,803,153 4.5875 168,834,464 Pound 3,311,616 8.5094 28,179,865 87,474 9.6159 841,141 CAD 5,248,147 5.1406 26,978,624 5,267,000 4.6814 24,656,934 AED 6,268,825 1.8890 11,841,810 - - - Saudi riyal 5,865,574 1.8497 10,849,552 6,132,462 1.7356 10,643,501 Sri Lankan 67,543,175 0.0463 3,127,249 50,964,343 0.0460 2,344,360 rupee
AUD 272,129 5.0157 1,364,917 326,303 4.7276 1,542,630 Rand 1,631,102 0.5083 829,089 9,836,195 0.4174 4,105,628 South Korean 142,923,050 0.0058 828,954 501,139,157 0.0055 2,756,265 won
HKD 196,859 0.8945 176,090 206,025 0.8378 172,608 Rupee 481,395 0.1161 55,890 - - - Indian rupee 181,114 0.1023 18,526 5,413,116 0.0977 528,861 Real 4,828 2.1357 10,311 65,200 1.6483 107,469
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
3,409,181,135 2,422,479,088
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
61. Foreign currency monetary items: (continued)
2016 2015
Original Exchange Equivalent RMB Original Exchange Equivalent RMB rate rate
Other
receivables
USD 3,989,080 6.9369 27,671,849 8,784,474 6.4936 57,042,860 Pound 195,990 8.5094 1,667,757 8,346 9.6159 80,254 AUD 103,710 5.0157 520,178 375,870 4.7276 1,776,963 EUR 12,329 7.3070 90,088 3,930,049 7.0952 27,884,484 South Korean 5,285,609 0.0058 30,657 45,916,744 0.0055 252,542 won
SGD - - - 652,109 4.5875 2,991,550 Omani rial - - - 33,018 16.8966 557,892 CAD - - - 3,500 4.6814 16,385 29,980,529 90,602,930 Accounts
payable
USD 120,343,389 6.9370 834,822,091 135,530,187 6.4936 880,078,822 EUR 38,684,841 7.3068 282,662,394 42,578,241 7.0952 302,101,136 JPY 161,884,564 0.0596 9,648,320 10,150,520 0.0539 547,113 Pound 67,565 8.5094 574,938 22,236 9.6159 213,819 SGD 20,934 4.7995 100,475 2,848,622 4.5875 13,068,053 AUD 10,018 5.0157 50,247 40,888 4.7276 193,302 Dirham - - - 2,136,087 1.6719 3,571,324
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
South Korean - - - 44,915,818 0.0055 247,037 won
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
61. Foreign currency monetary items: (continued)
HKD - - - 78,850 0.8378 66,061 Rupee - - - 85,295 0.0885 7,549 1,127,858,465 1,200,094,216 Other payables
USD 4,985,404 6.9370 34,583,748 4,456,481 6.4936 28,938,605 HKD 8,074,953 0.8945 7,223,045 - - - EUR 10,092,794 7.3509 74,191,119 3,144,887 7.0952 22,313,602 SGD - - 982,209 4.5875 4,505,884 Pound - - 36,849 9.6159 354,336 115,997,912 56,112,427 Short-term
loans
USD 837,000,000 6.9370 5,806,269,000 1,767,690,890 6.4936 11,478,677,563 Euro 67,901,197 7.3068 496,140,465 15,961,626 7.0952 113,250,929 6,302,409,465 11,591,928,492 2016 2015
Original Exchange Equivalent RMB Original Exchange Equivalent RMB rate rate
Long-term
loans due
within one year
USD - - - 110,000,000 6.4936 714,296,000 Long-term
payables due
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
within one year
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
V. Notes to items in the consolidated financial statements (continued)
61. Foreign currency monetary items: (continued)
USD 17,604,054 6.9370 122,119,326 9,142,857 6.4936 59,370,057 Long-term
loans
USD 50,000,000 6.9370 346,850,000 - - - Euro 20,000,000 7.3068 146,136,000 20,000,000 7.0952 141,904,000 492,986,000 141,904,000 Long-term
payable
USD 93,253,088 6.9370 646,896,674 110,857,143 6.4936 719,861,943
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VI. Consolidation scope change
1. Change in scope of consolidation for other reasons
TheCompany’s subsidiary company was renamed as Shanghai Zhenhua Heavy Industries Vessel Transport Co., Ltd. on February 5, 2016.
The Company established the wholly-owned subsidiary ZPMC UK LD with cash of 300,000 pond on March 10, 2016.
The Company set up a wholly - owned subsidiary ZPMC Middle East FZE on June 12, 2016. The controlling subsidiary ZPMC Brazil Service Portuarios LTDA was jointly established by theCompany’s subsidiary and Port Side Construction LTDA with 90,000 Real of cash on April 25, 2016.As of December 31, 2016, theGroup’s shareholding ratio to the subsidiary is80%.
The Company paid USD10,000,000 in cash on July 15, 2016 to Huaian Huaiyin Transportation Co., Ltd., Zhongjiao Huadong Investment Co., Ltd., CCCC Third Harbor Engineering Co., Ltd. and CCCC First Highway Investigation and Design Research Institute Co., Ltd. jointly contributed and established Sino - intersection (Huaian) Construction Development Co., Ltd. As of December 31, 2016, theGroup’s shareholding ratio to the subsidiary is66%. The Company has set up the controlling subsidiary company (Zhenjiang) Construction Development Co., Ltd. with RMB 6,300,000 in cash, RMB 560,700, 000.00 Yuan, China - AC East China Investment Co., Ltd., CCCC Second Harbor Engineering Co., Ltd., CCAC Highway Planning& Design Co., Ltd. and Zhenjiang University Investment Construction Development (Group) Co., Ltd. As of December 31, 2016, theGroup’s shareholding ratio to the subsidiary is63%.
The original subsidiary of the Company, ZPMC - OTL Marine Contractor USA USA, was cancelled on November 30, 2016 and changed into the office of the subsidiary of the Company.
The Company and its subsidiaries Shanghai Zhenhua Heavy Industries Machinery Companion Co., Ltd. and Shanghai Zhenhua Heavy Industries Group (Nantong ) Co., Ltd. have cancelled the industrial and commercial enterprises on December 23, 2016, and changed into subsidiary companies of the Company.
Jiangsu Taoda Marine Equipment Technology Co., Ltd., an atomic company, cancelled the industrial and commercial cancellation on December 16, 2016.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VII. Interests in Other Entities
1. Interests in subsidiary
The information of theCompany’s subsidiaries are as follows:
Main
Business
Shareholdingratio(%)
Gain Subsidiary name operating Registered in
address
nature
Direct Indirect
mode Shanghai Chongming Chongming Machinery 94.76% Investment to Zhenhua Port District, District, manufacturing set up Machinery Heavy Shanghai Shanghai
Industry Co.,
Ltd.
Shanghai Hongkong Hongkong Trade selling 99.99% Investment to Zhenhua Port set up Machinery (Hong
Kong) Co., Ltd.
Shanghai Pudong New Pudong New Ship 55% Investment to Zhenhua District, District, transportation set up Shipping Co., Shanghai Shanghai
Ltd.
Nantong Zhenhua Nantong, Nantong, Machinery 100% Investment to Heavy Equipment Jiangsu Jiangsu manufacturing set up Manufacturing
Co., Ltd.
Shanghai Nantong, Nantong, Machinery 100% Investment to Zhenhua Heavy Jiangsu Jiangsu manufacturing set up Industries
Group (Nantong)
Transmission
Machinery Co.,
Ltd
Shanghai Pudong New Pudong New Electrical 100% Investment to Zhenhua Heavy District, District, equipment set up Industries Shanghai Shanghai research and
Electric Co., development
Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidiary (continued)
Nantong ZPMC Nantong, Nantong, Machinery 75% 25% Investment to Steel Structure Jiangsu Jiangsu manufacturing set up Processing
Co.,Ltd.
Jiangyin ZPMC Jiangyin, Jiangyin, Machinery 75% 25% Investment to Steel Structure Jiangsu Jiangsu manufacturing set up Manufacturing
Co., Ltd.
Shanghai Pudong New Pudong New Machinery 49% Investment to Zhenhua Heavy District, District, manufacturing set up Industries Shanghai Shanghai
Steel Structure
Co., Ltd.
Shanghai Yangshan Free Yangshan Free Ship 100% Investment to Zhenhua Heavy Trade Port Trade Port transportation set up Industries Area, Area,
Vessel Shanghai Shanghai
Transport Co.,
Ltd.
Shanghai Pudong New Pudong New Technology 100% Investment to Zhenhua Testing District, District, consulting set up Technology Shanghai Shanghai
Consulting Co.,
Ltd.
ZPMC Rotterdam Rotterdam Trade selling 100% Investment to Netherlands B.V set up Hotel de Herberg Rotterdam Rotterdam Trade selling 100% Investment to B.V. set up ZPMC Espana S.L Spanish Los Spanish Los Trade selling 100% Investment to Barrios Barrios set up ZPMC GmbH Germany Germany Trade selling 100% Investment to Hamburg Hamburg Hamburg set up
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidiary (continued)
ZPMC Lanka Sri Lanka Sri Lanka Trade selling 70% Investment to Company set up (Private)
Limited
ZPMC North USA Delaware USA Delaware Trade selling 100% Investment to America Inc. set up ZPMC Korea Co., South Korea South Korea Trade selling 70% Investment to Ltd. Busan Busan set up ZPMC Kwazulu-Natal Kwazulu-Natal Trade selling 100% Investment to Engineering Province, Province, set up Africa (Pty) Republic of Republic of
Ltd. South Africa South Africa
ZPMC Maharashtra Maharashtra Trade selling 100% Investment to Engineering State State set up (India) Private
Limited
ZPMC Southeast Singapore Singapore Trade selling 100% Investment to Asia set up Holding Pte.
Ltd.
ZPMC Southeast Singapore Singapore Trade selling 70% Investment to Asia Pte. Ltd. set up ZPMC Malaysia Malaysia Trade selling 70% Investment to Engineering set up (Malaysia) Sdn.
Bhd.
ZPMC Australia New south New south Trade selling 100% Investment to Company (Pty) wales, wales, set up Ltd. Australia Australia
Shanghai Pudong New Pudong New Machinery 100% Corporate Zhenhua Heavy District, District, manufacturing merger under Industry Shanghai Shanghai different General control
Equipment Co.,
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidiary (continued)
Shanghai Port Pudong New Pudong New Machinery 74.02% Corporate Machinery Heavy District, District, manufacturing merger under Industries Co., Shanghai Shanghai different Ltd. control Shanghai Zhangjiagang, Zhangjiagang, Machinery 90% Corporate Zhenhua Heavy Jiangsu Jiangsu manufacturing merger under Industries different (Group) control Zhangjiagang
Port Machinery
Co., Ltd.
Nanjing Ninggao Nanjing, Nanjing, Trade selling 100% Investment to New Channel Co., Jiangsu Jiangsu set up Ltd.
Shanghai Nantong, Nantong, Machinery 67% Corporate Zhenhua Heavy Jiangsu Jiangsu manufacturing merger under Industries different Qidong Marine control Co., Ltd
Jiahua Shipment Hongkong Hongkong Ship 70% Investment to Co., Ltd (Note transportation set up 1)
Zhenhua Pufeng Hongkong Hongkong Ship 51% Investment to Wind Power (Hong transportation set up Kong) Co.,Ltd
Zhenhua Shende Hongkong Hongkong Ship 70% Investment to Offshore transportation set up Installation
Co.,Ltd
ZPMC Brazil Rio DE Rio DE Trade selling 99% 1% Investment to Holdings Ltda. Janeiro, Janeiro, set up Brazil Brazil
ZPMC Limited Moscow, Moscow, Trade selling 85% Investment to Liability Russia Russia set up Company
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
ZPMC NA East Virginia Delaware Trade selling 100% Investment to Coast lnc. set up ZPMC NA Huston Texas Delaware Trade selling 100% Investment to lnc. set up
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidiary (continued)
The information of theCompany’s subsidiaries are as follows (continued):
Main Registered in Business Shareholdingratio(%) Gainmode operating nature
address
Direct Indirect
CCCC Tianhe Co., Changshu, Changshu, Machinery 32.51% Corporate Ltd. (Note 2) Jiangsu Jiangsu manufacturing merger under different control Fujian CCCC Fuzhou, Fuzhou, Machinery 51% Corporate Qianda Heavy Fujian Fujian manufacturing merger under Industry Co., different Ltd. control CCCC Investment Nantong, Nantong, Engineering 47.50% Investment to Development Jiangsu Jiangsu construction set up Qidong Co., Ltd
(note 3)
CCCC Liyang City Liyang, Liyang, Engineering 48% Investment to Investment Jiangsu Jiangsu construction set up Construction
Co., Ltd (Note
4)
ZPMC UK LD Cardiff Cardiff Trade selling 100% Investment to set up ZPMC Middle East AED AED Trade selling 100% Investment to Fze set up ZPMC Brazil Santos, Santos, Trade selling 80% Investment toServiço Brazil Brazil set upPortuários LTDA
CCCC (Huaian) Huaian, Huaian, Engineering 5% 61% Investment to Construction Jiangsu Jiangsu construction set up Development
Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
CCCC Zhenjiang Zhenjiang, Zhenjiang, Engineering 63% I nvestment to Investment Jiangsu Jiangsu construction set up Construction
Management
Development
Co., Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidiary (continued)
Note 1: Based on constitution of Shanghai Zhenhua Heavy Industries Steel Structure Co., Ltd, Company has right to appoint and dismiss most members in board of directors. In fact, Company obtains control right, so Company is included in Group financial statements consolidation scale.
Note 2: the Group has completed the procedures of stock change of CCCC Tianhe Co., Ltd. The Group obtained55.98% of the shareholders' meeting and80% of the board's voting rights via amendment of Articles of Association of CCCC Tianhe Co., Ltd, reconstruction of Board of directors and signing the agreement of the concerted action with China Communications Corporation, one of the shareholders of CCCC Tianhe Co., Ltd. Based on the Articles of Association, the Group has obtained the control rights of the company and includes it into the consolidation scope.
Note 3: The Group obtained95% of theshareholders’ meeting and100% the voting rights of the board of directors by signing concerted action agreement with CCCC Tianjin Waterway Bureau Co., Ltd. Based on the Articles of Association; the Group obtained the control rights of the company and includes it into the consolidation scope.
Note 4: The Group obtained76% of the shareholders' meeting and71% the voting rights of the board of directors by signing concerted action agreement with CCCC Shanghai Waterway Bureau Co., Ltd. and CCCC East China Investment Co., Ltd... Based on the Articles of Association, the Group obtained the control rights of the company and includes it into the consolidation scope. Based on the Articles of Association, the Group obtained the control rights of the company and includes it into the consolidation scope. The information of theCompany’s subsidiaries is as follows (continued):
Important minority subsidiary company exists as follows:
2016
Proportion of Minority Dividend Accumulated shareholding shareholders' payments to minority for minority interests minority shareholders' shareholders equity
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
CCCC Tianhe Co., 67.49% 57,388,211 - 561,643,011 Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidiary (continued)
2015
Proportion of Minority Dividend Accumulated shareholding shareholders' payments to minority for minority interests minority shareholders' shareholders equity CCCC Tianhe 67.49% 28,251,819 31,349,367 504,254,800 Co., Ltd
Main financial information of above subsidiary this information is the amount of mutual offset between the enterprises within the Group:
2016
Current asset Non-current Total assets Current Non-current Total asset liabilities liabilities liabilities CCCC Tianhe 1,498,862,582 1,224,395,571 2,723,258,153 (1,660,805,16 (230,591,014) (1,891,396,18 Co., Ltd 6) 0) 2016
Operating revenue Net profit Total comprehensive Operating cash flow income
CCCC Tianhe 1,101,425,520 85,197,056 85,197,056 35,261,157 Co., Ltd
2015
Current asset Non-current Total assets Current Non-current Total asset liabilities liabilities liabilities CCCC Tianhe 1,134,335,686 1,118,330,758 2,252,666,444 (1,462,753,598) (43,115,047) (1,505,868,645)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
Co., Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidiary (continued)
2015
Operating Net profit Total Operating cash revenue comprehensive flow income
CCCC Tianhe Co., 804,955,947 42,357,907 42,357,907 68,610,363 Ltd
2. Gains and loss gains and loss joint venture and jointly run enterprise
Main operating address Registered in Business nature Registered capital Shareholding ratio(%) Accounting treatment
Direct Indirect
Joint venture
Jiangsu LongYuan Jiangsu Jiangsu Ocean 50% - Equity Zhenhua Marine Nantong Nantong engineering method Engineering construction
Co.,Ltd
ZPMC Istanbul Istanbul Port equipment 50% - Equity Mediterranean Turkey Turkey technical method Liman Makinalari services
Ticaret Anonim
Sirketi
Zhenhua Marine Hongkong Hongkong Ship 51% - Equity Energy transportation method (Hongkong) Co.,
Ltd.
Cranetech Global Malaysia Malaysia Port equipment 49.99% - Equity Sdn. Bhd. technical method services
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
2. Gains and loss gains and loss joint venture and jointly run enterprise (continued) Associates
CCCC Marine Pudong, Pudong, Ship 25% - Equity Engineering Shanghai Shanghai technology method Vessel development
Technology consulting
Research Centre
Co., Ltd
CCCC Estate Wuxi, Wuxi, Real estate 20% - Equity Yixing Co., Ltd. Jiangsu Jiangsu development method Shanghai Zhenhua Changzhou, Changzhou, Paint 20% - Equity Heavy Industries Jiangsu Jiangsu manufacturing method (Group)
Changzhou Paint
Co., Ltd.
CCCC Financing Pudong, Pudong, Finance lease 30% - Equity Rental Co., Ltd. Shanghai Shanghai fund method China USA USA Port, Channel 24% - Equity Communications Highway and method Construction USA Bridge
Inc. Construction
CCCC South USA USA Port, Channel 16% - Equity American Highway and method Regional Company Bridge
SARL Construction
(Note 2)
2. Gains and loss gains and loss joint venture and jointly run enterprise (continued) Note 1: On May 5, 2014, the subsidiary of the Company and the partner invested to establish Zhenhua Marine Energy (Hong Kong) Co., Ltd. The registered capital is 5,969,998 USD;, the subsidiary of the Company contributed 3,044,699 USD, holding51% of the shares. The
company focused on the vessel transportation business. Based on the regulations of the
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
shareholder agreement, the significant issues of the company shall be agreed by at least75% shareholders via voting. The Group has no control rights but joint controls the company together with the partner.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
2. Gains and loss gains and loss joint venture and jointly run enterprise (continued) Note 2: As of Dec. 15, 2016, the Company invested 16,480,000 USD (in RMB 114,321,760 Yuan) to share CCCC South American Regional Company SARL. The registration capital is 103,000,000 USD, in RMB 114,321,760 Yuan, holding16% of the share. The company focuses on port construction business. Based on the regulations of the shareholder agreement, the Company has the right to designate one director to that company and implement significant impact to that company.
The significant financial information of the main jointly run enterprise:
The amount in the consolidated financial statements of the joint venture takes into account the fair value of the identifiable assets and liabilities of the consortium in the acquisition of investments and the impact of the harmonization of accounting policies.
CCCC Financing Rental Co., 2016 2015 Ltd.
Current assets 9,420,615,029 3,409,763,003 Non-current assets 13,727,208,395 8,353,597,281 Total assets 23,147,823,424 11,763,360,284 Current liabilities (10,051,593,074) (4,441,872,270) Non-current liabilities (7,249,806,724) (3,515,685,686) Total liabilities (17,301,399,798) (7,957,557,956)Owners’ equity 5,846,423,626 3,805,802,328 The share of net assets 1,605,244,853 1,141,740,698 calculated by the share
holding ratio
The book value of the 1,605,244,853 1,141,740,698 investment for joint
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
ventures
CCCC Financing Rental Co., 2016 2015 Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
2. Gains and loss gains and loss joint venture and jointly run enterprise (continued) Operating revenue 780,323,172 456,990,739 Finance expenses - interest 5,790,545 2,876,941 expenditure
Finance expenses - interest 8,495,925 1,568,222 expenditure
Income tax expense 85,261,887 55,688,952 Net profit 251,014,262 167,967,410 Other comprehensive income 580,861 270,171 Total comprehensive income 258,329,639 168,237,582 Dividend received 32,400,000 - The non-significant joint venture and associates of the summary financial information: Joint venture
2016 2015 Total book value of 200,209,849 175,387,196 investment
The share of net assets
calculated by the
Net profit(i) 24,822,653 4,752,968 Other comprehensive income - - Total comprehensive income 23,247,916 4,752,968
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31, 2016
RMB Yuan
VII. Interests in Other Entities (continued)
2. Gains and loss gains and loss joint venture and jointly run enterprise (continued) Associates
2016 2015 Total book value of 395,966,751 280,006,923 investment
The share of net assets
calculated by the
Net profit(i) (1,075,546) 108,866 Other comprehensive income 4,546,680 1,256,397 Total comprehensive income (3,471,134) 1,365,263 (i) Net profits and other comprehensive benefits have taken into account the fair value of identifiable assets and liabilities and the adjustment impact of the harmonization of accounting policies at the time of investment.
On December 31, 2016, the Group provided USD 25.551 million of loan guarantee of overseas loan under domestic guarantee to the joint venture Zhenhua Marine Energy (Hong Kong) Co., Ltd. The total converted guarantee amount in RMB is 177,247,287yuan which will be due on April 14, 2017.The amount above reflects the max loss caused to the Group once it breaches the agreement. The joint venture Zhenhua Marine Energy (Hong Kong) Co., Ltd. has health finance with no predicted significant debt breach risk. The Groupdidn’t confirm the debt related to the financial guarantee.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks
1. Financial instruments
The booking value of the various financial instruments on the balance sheet date is as follows:
December 31, 2016
Financial assets
Financial assets Loans and financial assets Total measured at fair receivables available-for-sale
value and whose
variation is
included in the
current profits
and losses
Monetary capital - 3,597,044,199 - 3,597,044,199 Measured at fair
value and the
changes are
recorded into the
profits and losses
of the current
financial assets
4,615,775 - - 4,615,775 Notes receivable - 296,920,781 - 296,920,781 Accounts - 4,230,746,458 - 4,230,746,458 receivable
Other receivables - 433,130,407 - 433,130,407 Non-current asset - 1,384,438,569 - 1,384,438,569 due within 1 year
Available-for-sale - - 1,313,572,506 1,313,572,506 financial assets
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
Long-term - 3,791,218,020 - 3,791,218,020 receivables
4,615,775 13,733,498,434 1,313,572,506 15,051,686,715
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
1. Financial instruments (continued)
Financial liabilities
Others Financial liabilities Short term loans 21,485,919,393 Notes payable 1,905,121,706 Payables 5,103,018,897 Interest payable 140,195,803 Dividend payable 31,701,965 Other payables 1,225,135,428 Non-current liabilities due within one year 799,574,356 Other current liabilities 3,996,025,335 Long-term loans 3,925,335,497 Long-term payables 1,618,361,164 40,230,389,544
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
1. Financial instruments (continued)
December 31, 2015
Financial assets
Financial assets Loans and financial assets Total measured at fair receivables available-for-sale
value and whose
variation is
included in the
current profits
and losses
Monetary capital - 2,458,333,716 - 2,458,333,716 Measured at fair
value and the
changes are
recorded into the
profits and losses
of the current
financial
liabilities
676,082 - - 676,082 Notes receivable - 243,159,622 - 243,159,622 Accounts - 3,894,762,468 - 3,894,762,468 receivable
Other receivables - 667,660,167 - 667,660,167 Non-current asset - 2,625,135,212 - 2,625,135,212 due within 1 year
Other current - 46,000,000 - 46,000,000 assets
Available-for-sale - - 1,212,177,180 1,212,177,180
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
financial assets
Long-term - 3,558,501,537 - 3,558,501,537 receivables
676,082 13,493,552,722 1,212,177,180 14,706,405,984
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
1. Financial instruments (continued)
December 31, 2015 (continued)
Financial liabilities
Financial assets Loans and receivables Total measured at fair value financial assets
and whose variation is available-for-sale
included in the current
profits and losses
Short term loans - 18,216,928,490 18,216,928,490 Measured at fair value
and the changes are
recorded into the
profits and losses of
the current financial
liabilities
24,918,115 - 24,918,115 Notes payable - 1,785,201,236 1,785,201,236 Payables - 5,471,141,022 5,471,141,022 Interest payable - 289,590,733 289,590,733 Dividend payable - 32,237,912 32,237,912 Other payables - 1,604,523,386 1,604,523,386 Non-current - 6,837,115,692 6,837,115,692 liabilities due within
one year
Other current - 1,995,655,739 1,995,655,739 liabilities
Long-term loans - 1,761,904,000 1,761,904,000
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
Long-term payables - 719,861,943 719,861,943 24,918,115 38,714,160,153 38,739,078,268
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
2. Transfer of financial assets
Transfer transferred financial assets that have been globally terminated but continue to be involved
On December 31, 2016, the book value of the bank acceptance bill that the Group has endorsed to the supplier for clearing accounts payable is RMB 471,132,348 (December 31, 2015: RMB 302,708,598 ).On December 31, 2016, its maturity date is 1 to, 11 months, and in accordance with the relevant provisions of the Notes Law, if the acceptance bank refuses to pay, its holder is entitled to recourse to the Group (”continue to be involved”).The Group considers that the Group has transferred almost all of its risks and rewards and therefore terminates the carrying value of its settled accounts payable in connection with it. The maximum losses and undiscounted cash flows that continue to be involved and repurchase are equal to their book value. The Group considers that it is not important to continue to engage in fair value.
Transfer transferred financial assets that have been globally terminated but continue to be involved (continued)
In 2016, the Group shall not be involved in any gains or expenses that have ceased to be recognized in the current year and in aggregate due to continued involvement. 3. Financial instruments
TheGroup’s operations face various financial risks: credit risk, liquidity risk and market risk (mainly exchange rate risk and interest rate risk).TheGroup’s overall risk management plan addresses the unpredictability of financial markets and seeks to reduce the potential adverse impact on theGroup’ s financial performance.
Credit risks
The Group manages credit risks by portfolio classification. Credit risks mainly originate from notes receivables, accounts receivable, other receivables, available-for-sale financial assets and long-term receivables etc.
Other financial assets of the Group include available - for - sale financial assets, other receivables and certain derivatives, whose credit risk arises from counterparty default and the maximum exposure is equal to the carrying amount of these instruments. The Group also faces credit risk for providing financial security, as disclosed in Note XI.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
Since the Group is trading only with a recognized and credibility third party, no collateral is required. Since the Group is trading only with a recognized and credibility third party, no collateral is required. Since theGroup’s accounts receivable are widely dispersed across sectors and industries, there is no significant credit risk concentration within the Group. The Group does not hold any collateral or other credit enhancements to the balance of accounts receivable.
Credit risks (continued)
Bank deposits of the Group and other current assets -bank financial products are mainly put in state-owned banks and other large or medium-sized listed banks.
In addition, speaking of notes receivable, other accountant receivables, and other receivable, the Group established related policies to control credit risks. The Group evaluatesclients’ credit qualification and sets corresponding credit terms on the basis ofclients’ financial status, possibility of obtaining guaranty from a third-party, credit record and other factors including current market status rating. The Group monitorsclients’ credit record on regular basis. When client is found with bad credit record, the Group will sent out written calls, shorten credit terms or cancel credit terms, in an attempt to ensure that theGroup’s overall credit risks be within control. On December 31, 2016, the term analysis of financial assets with maturity due to no impairment of either individual or combination has been analyzed as follows:
2016
Total not overdue Overdue time
overdue within 1 1-2 years 2-3 years over 3 years year
Notes 296,920,781 296,920,781 - - - - receivable
Accounts 2,695,273,967 2,405,484,652 70,487,107 18,329,699 58,173,966 142,798,542 receivables
Other 703,913,820 703,913,820 - - - - receivables
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
Non-current 1,384,438,569 1,384,438,569 - - - - liabilities
due within
one year
Long-term 3,791,218,020 3,791,218,020 - - - - receivables
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
2015
Total not overdue Overdue time overdue within 1 1-2 years 2-3 years over 3 year years Notes 243,159,622 243,159,622 - - - - receivable
Accounts 2,755,137,429 2,420,391,157 60,727,290 78,154,461 177,744,854 18,119,667 receivables
Other 647,981,009 647,981,009 - - - - receivables
Non-current 2,625,135,272 2,625,135,272 - - - - assets due
within one
year
Other 46,000,000 46,000,000 - - - - current
assets
Long-term 3,558,501,537 3,558,501,537 - - - - receivables
Credit risks (continued)
As of December 31, 2016, accounts receivable that have not been past due and impaired are related to a large number of decentralized customers who have not recently been documented.
As of December 31, 2016, accounts receivable that have been overdue but not impaired are related to a large number of independent customers who have good transaction records with the Group. Based on past experience, the Group considers that no provision for impairment is required since the credit quality has not changed significantly and is still considered recoverable.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
Liquidity risks
Subsidiaries within the Group are responsible for their own prediction of cash flow. The financial section of the head office continues to monitor the capital demand for short-term and long-term capital at the group level after collecting all predictions of subsidiaries, to ensure sufficient cash reserve and cashable securities. Meanwhile, the financial section of the head office continues to monitor the financial and non-financial factors prescribed in credit agreements and loan agreements, to ensure the Group should get sufficient line of credit from key financial institutions to satisfy capital demand both in short term and long term.
On Dec. 31, 2016, as of B/S day, various financial assets and liabilities of the Group are listed as follows by due dates in undiscounted contracted cash flow (principal and interest included):
2016
Within 1 year 1-2 years 2-5 years Over 5 years Total Short term 21,839,991,371 - - - 21,839,991,371 loans
Notes payable 1,905,121,706 - - - 1,905,121,706 Payables 5,103,018,897 - - - 5,103,018,897 Interest 140,195,803 - - - 140,195,803 payable
Dividend 31,701,965 - - - 31,701,965 payable
Other payables 1,244,199,969 - - - 1,244,199,969 Non-current 835,619,032 - - - 835,619,032 liabilities
due within one
year
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
Other current 4,123,027,778 - - - 4,123,027,778 liabilities
statement
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
Long-term - 1,869,935,509 2,202,260,025 58,345,000 4,130,540,534 loans
Long-term - 543,599,402 1,219,108,721 - 1,762,708,123 payables
Financial 196,431,287 - - - 196,431,287 guarantee
35,419,307,808 2,413,534,911 3,421,368,746 58,345,000 41,312,556,465 Liquidity risks (continued)
On Dec. 31, 2015, as of B/S day, various financial assets and liabilities of the Group are listed as follows by due dates in undiscounted contracted cash flow (principal and interest included):
2015
Within 1 year 1-2 years 2-5 years Over 5 years Total Short term 18,503,526,869 - - - 18,503,526,869 loans
Notes payable 1,785,201,236 - - - 1,785,201,236 Payables 5,471,141,022 - - - 5,471,141,022 Interest 289,590,733 - - - 289,590,733 payable
Dividend 32,237,912 - - - 32,237,912 payable
Other payables 1,604,523,386 - - - 1,604,523,386 Non-current 6,951,051,584 - - - 6,951,051,584 liabilities
due within one
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
year
Other current 2,061,250,000 - - - 2,061,250,000 liabilities
Long-term 75,597,542 726,184,434 1,076,400,504 - 1,878,182,480 loans
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
Long-term 32,465,774 149,197,695 415,462,011 253,938,352 851,063,832 payables
Financial 185,101,974 - - - 185,101,974 guarantee
36,991,688,032 875,382,129 1,491,862,515 253,938,352 39,612,871,028 Market risks
Interest rate risks
Interest rate risks of the Group mainly originate from long-term liabilities with interest including long term bank loans and long-term payables. Financial liabilities with flexible rates confront the Group with cash flow interest rate risks, while financial liabilities with fixed rates put the Group against fair value interest rate risks. The Group fixes the fraction of contracts with fixed rates and those with flexible rates based on corresponding market environment. As of Dec. 31, 2016, theGroup’s long-term liabilities with interests include only contracts with flexible rates priced in RMB, USD and Euro and contracts with fixed rates priced in RMB and USD.
Market risks (continued)
Interest rate risks (continued)
The risk of market interest rate changes which the Group faces is mainly related to the long-term liability of the Group for interest-bearing interest rates.
The financial division of the Group keeps close watch over the interest rates level of the Group. Since the rise of interest rates will increase the cost of newly added liabilities with interests, interest expenses on unpaid liabilities with interests priced in flexible rates, and will significantly impact the financial results of the Group, the management will lower the rate risks via swap contracts based on current market status. In 2015 and 2016, the Group had no such swap arrangements.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
The following table shows the sensitivity analysis of the interest rate risk, reflecting the effect of the reasonable and possible changes in the interest rate on net income after tax (through the impact of floating interest rates) and other consolidated income when interest rates are reasonable and possible under other variables.
2016
Base point Net profit or loss Net amount after total tax of
other comprehensive stockholders' income equity Increase/(decrease) Increase/(decrease) Increase/(decrease) Increase/(decrease) RMB +100 (19,483,309) - (19,483,309) RMB -100 19,483,309 - 19,483,309 2015
Base point Net profit or loss Net amount after total tax of
other comprehensive stockholders' income equity Increase/(decrease) Increase/(decrease) Increase/(decrease) Increase/(decrease) RMB +100 (20,670,010) - (20,670,010) RMB -100 (20,670,010) - (20,670,010) Exchange rate risk
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
The Group is exposed to transactional currency risk. Such risks are due to sales or purchases made by the operating entity in currencies other than its currency. TheGroup’s main production is located in China, but the main business is settled in USD and EUR. Therefore, the foreign currency assets and liabilities recognized by the Group and the future foreign currency transactions (foreign currency assets and liabilities and the pricing currency denominated in foreign currency transactions are mainly USD and EUR). The Financial Department of theGroup’s headquarters is responsible for monitoring the size of theGroup’ s foreign currency transactions and foreign currency assets and liabilities to minimize the exposure to foreign currency risks; to that end, the Group has signed forward foreign exchange contracts to achieve the purpose of circum circumvention of a partial foreign exchange risk. On December 31, 2016 and December 31, 2015, theGroup’s outstanding forward foreign exchange contracts are disclosed in Notes V.2 and 23.
The following table shows the sensitivity analysis of the exchange rate risk, reflecting the impact on net gains (due to changes in the fair value of currency assets and monetary liabilities) and net after - tax (due to changes in the fair value of forward exchange contracts) of net gains and losses (due to changes in the fair value of monetary assets and monetary liabilities) and other consolidated gains in the case of reasonable and possible changes in the United States dollar under other variables.
2016
Dollar currency Net profit or loss Net amount after tax Total rate of
other comprehensive stockholders' income equity Increase/(decrease) Increase/(decrease) Increase/(decrease) Increase/(decrease) Depreciation (1%) 26,232,074 - 26,232,074 of RMB against
USD
Appreciation 1% (26,232,074) - (26,232,074) of RMB against
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
USD
2015
Dollar currency Net profit or loss Net amount after Total rate tax of
other stockholders' comprehensive equity income
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
VIII. Financial risks (continued)
3. Financial instruments (continued)
Increase/(decrease) Increase/(decrease) Increase/(decrease) Increase/(decrease) Depreciation (1%) 94,255,964 - 94,255,964 of RMB against
USD
Appreciation 1% (94,255,964) - (94,255,964) of RMB against
USD
4. Capital management
The objective of theGroup’s capital management policy is to ensure that the Group is able to operate on a continuous basis to provide returns to shareholders and to benefit other stakeholders while maintaining the best capital structure to reduce capital costs. To maintain or adjust capital structure, the Group may adjust the dividend amount paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The total capital of the Group is the Membership Interests listed in the consolidated balance sheet. The Group is not subject to mandatory external capital requirements and utilizes debt ratio monitoring capital. This ratio is calculated by dividing the net debt by total capital. Net debt is reduced by cash and cash equivalents for total borrowing (including short - term loans included in the consolidated balance sheet), other non - current liabilities that are due within one year, other current liabilities, long - term loans, bonds payable, and other payable and long - term payables. The total capital is Membership Interests total plus net debt).
As of December 31, 2016 and December 31, 2015, the ratio of liabilities of the Group is as follows:
December 31, 2016 December 31, 2015 Ratio of liabilities 64% 64%
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement
The tire attributed to the fair value measurement results is determined by the min tire of the input value with significant meaning to the fair value measurement.
Tier One: quotation of the same kind of assets or liabilities on activating market. Tier Two: input value of assets or liabilities observable directly or indirectly except for market quotation at Tier One.
Tier Three: unobservable input value of related assets and liabilities
1. Assets and liabilities measured at fair value
On Dec. 31, 2016, continuous financial assets measured by fair value are listed as follows based on above 3 tiers:
To be measured per fair value
Active market Important observa Important
quotation ble input value non-observable
input value
(Tier One) (Tier Two) (Tier Three) Total Financial assets
Financial assets
measured at fair
value with the
change accounted in
current profit and
loss
Forward foreign - 4,615,775 - 4,615,775 exchange contracts
Available-for-sale
financial assets
Available-for-sale 1,270,578,346 - - 1,270,578,346 equity instruments
1,270,578,346 4,615,775 - 1,275,194,121
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
On Dec. 31, 2015, continuous financial assets measured by fair value are listed as follows based on above 3 tiers:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
1. Assets and liabilities measured at fair value (continued)
To be measured per fair value
Important Important
Active market
observable input non-observable
quotation
value input value
(Tier One) (Tier Two) (Tier Three) Total Financial assets
Financial assets
measured at fair
value with the
change accounted in
current profit and
loss
Forward foreign - 676,082 - s676,082 exchange contracts
Available-for-sale
financial assets
Bank short-term - 46,000,000 - 46,000,000 financing products
Available-for-sale 1,169,183,020 - - 1,169,183,020 equity instruments
1,169,183,020 46,676,082 - 1,215,859,102 On Dec. 31, 2015, continuous liabilities measured by fair value are listed as follows based on above 3 tiers:
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
1. Assets and liabilities measured at fair value (continued)
To be measured per fair value
Important Important
Active market
observable input non-observable
quotation
value input value
(Tier One) (Tier Two) (Tier Three) Total Financial
liabilities
Financial
liabilities
measured at fair
value with the
change accounted
in current profit
and loss
Forward foreign - 24,918,115 - 24,918,115 exchange
contracts
The Group regards the event occurring date transferring between the tires as the time point for confirmation. There is no transfer between tire 1 and 2 this year.
As for the financial instrument traded on active market, the Group will confirm the fair value with the quotation in the active market; as for the financial instrument not traded on active market, the Group confirms the fair value using the value estimation technology. Cash flow discount model is used as value estimation model. The input values of the value estimate technology includes the riskless interest rate and long exchange rate. Related information of fair value measurement at tire 2:
December 31, 2016 Observable input values Fair value Value estimate Name Scope technology
Financial Cash flow South Korean won 1,145.45- assets measured to USD
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
at fair value
with the change
accounted in
current profit
and loss
-USD long 4,615,775 Cash flow forward rate 1,145.50 exchange discount model
contract
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
1. Assets and liabilities measured at fair value (continued)
December 31, 2015 Observable input values Fair value Value estimate Name Scope technology
Measured at fair value and the changes are recorded into the profits and losses of the current financial asset
Cash flow USD to RMB 6.5824- -USD long 676,082 Cash flow forward rate 6.7302 exchange discount model
contract
December 31, 2015 Observable input values Fair value Value estimate Name Scope technology
Financial Cash flow Contract agreed 0%- assets
available for
sale
-Bank 46,000,000 discount model profit rate 2.95% short-term
financing
product
December 31, 2015 Observable input values
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
Fair value Value estimate Name Scope technology
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
1. Assets and liabilities measured at fair value (continued)
Measured at fair value and the changes are recorded into the profits and losses of the current financial liabilities
Cash flow USD to RMB 6.4971- -USD long (24,918,115) discount model forward rate 6.7302 exchange
contract
2. Assets and liabilities not measured at fair value but disclosing the fair value Financial assets and financial debt measured with amortized cost include: receivables, long-term receivables, short-term loan, payables, long-term loan and payable bond. The long-term receivables are the receivables with floating rate. The difference between the book value and fair value is small. Besides the financial assets and financial debt below, the difference between the book values and fair values of the financial assets and financial debt not measured at the fair value is small.
The following is the book value and fair value of all kinds of financial instruments other than the equity instruments that have little difference between the carrying value and the fair value, and are not quoted in the active market and whose fair value cannot be measured reliably:
2016 2015
Booking value Fair value Booking value Fair value Financial
liabilities
-Long-term 3,925,335,497 3,905,480,658 1,761,904,000 1,700,572,166 loans
-Long-term 1,618,361,164 1,638,536,115 719,861,943 704,509,277 payables
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
IX. Fair Value Measurement (continued)
5,543,696,661 5,544,016,773 2,481,765,943 2,405,081,443 As for the long-term loan, long-term payables and payables without active market, the fair value is confirmed by the future cash flow specified in the contract according to the comparable credit level and the same cash flow rate provided in the same conditions, which belongs to tire 3.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions
1. Parent company
Name of parent Registered Business Registered Parent Parent company place nature capital company’s company’s holding voting proportion in proportion in the the Corporation Corporation(%) (%) China No. 88, Outer Port project 16,174,735,425 28.828% 28.828% Communications Street No. contracting
Corporation Third, and related
Andingmen, businesses
Dongcheng
District,
Beijing
As of Dec. 31, 2016, China Communications Corporation and its controlled Hong Kong Zhenhua Engineering Co., Ltd. (holding17.076% stake of the Company) and Macau Zhenhua Bay Engineering Co., Ltd. (holding0.325% stake of the Company) together hold46.229% of theCompany’s stake (Dec. 31, 2015:46.229%).
The final controlling party of the Company is China Communications Construction Group Co., Ltd.
2. Subsidiary
See Note VII.1 for details about subsidiary
3. Joint venture and associates
See Note VII.2 for details about joint venture and associates.
4. Other related parties
Related party CCCC First Harbor Engineering Co., Ltd. Controlled by the same parent company No.1 Engineering Co., Ltd. of CCCC First Controlled by the same parent company Harbor Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
No.2 Engineering Co., Ltd. of CCCC First Controlled by the same parent company Harbor Engineering Co., Ltd.
No.5 Engineering Co., Ltd. of CCCC First Controlled by the same parent company Harbor Engineering Co., Ltd.
Installation Engineering Co., Ltd. of CCCC Controlled by the same parent company First Harbor Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
4. Other related parties (continued)
CCCC First Harbor City Traffic Engineering Controlled by the same parent company Co., Ltd
CCCC First Harbor First Engineering Co., Controlled by the same parent company Ltd
No. 6 Engineering Co., Ltd of CCCC First Controlled by the same parent company Highway engineering Co., Ltd.
CCCC Second Harbor Engineering Co., Ltd. Controlled by the same parent company No.2 Engineering Co., Ltd. of CCCC Second Controlled by the same parent company Harbor Engineering Co., Ltd.
No.3 Engineering Co., Ltd. of CCCC Second Controlled by the same parent company Harbor Engineering Co., Ltd.
CCCC Second harbor engineering Controlled by the same parent company investigation and Design Institute Co., Ltd
CCCC Second Highway Engineering Bureau Co., Controlled by the same parent company Ltd.
CCCC-SHEC Second Engineering Co., Ltd. Controlled by the same parent company CCCC Third Harbor Engineering Co., Ltd. Controlled by the same parent company CCCC Third Harbor Second Engineering Co., Controlled by the same parent company Ltd
Third Engineering Company of CCCC Fourth Controlled by the same parent company Harbor Engineering Co., Ltd
(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
4. Other related parties (continued)
Related party (continued)
CCCC Fourth Harbor Engineering Controlled by the same parent company Investigation and Design Institute Co., Ltd
CCCC Fourth Harbor Engineering Institute Controlled by the same parent company Co., Ltd.
CCCC Fourth Highway Engineering Co., Ltd. Controlled by the same parent company Shanghai Zhenhua Heavy Industries (Group) Controlled by the same parent company Changzhou Paint Co., Ltd.
Hong Kong Zhenhua Engineering Co., Ltd Controlled by the same parent company Zhenhua Marine Energy (Hong Kong) Co., Ltd Controlled by the same parent company CCCC Third Harbor Engineering Xing‘an Controlled by the same parent company Construction Engineering Co., Ltd.
CCCC Third Harbor Engineering Controlled by the same parent company Investigation and Design Institute Co., Ltd
CCCC Third Highway Engineering Bureau Co., Controlled by the same parent company Ltd
CCCC Fourth Harbor Engineering Co., Ltd Controlled by the same parent company Second Engineering Company of CCCC Fourth Controlled by the same parent company Harbor Engineering Co., Ltd
Macau Zhenhua Harbor Engineering Co., Ltd Controlled by the same parent company CCCC Financial Co., Ltd Controlled by the same parent company
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
4. Other related parties (continued)
China Communication Materials& Shipment Controlled by the same parent company Co., Ltd
CCCC Financial Leasing CO., Ltd Controlled by the same parent company CCCC Rental Jiahuayi Co., Ltd Controlled by the same parent company CCCC Rental Jiahuaer Co., Ltd Controlled by the same parent company Road& Bridge International Co., Ltd. Controlled by the same parent company CCCC International Shipping Co., Ltd Controlled by the same parent company Shanghai Waterway Logistics Co., Ltd. Controlled by the same parent company Shanghai Jiangtian Industrial Co., Ltd Controlled by the same parent company Shanghai Zhensha Longfu Machinery Co., Ltd Controlled by the same parent company CCCC Shanghai Equipment Engineering Co., Controlled by the same parent company Ltd
Shanghai Communications Construction Controlled by the same parent company Contracting Co., Ltd
CTTIC Shanghai Co., Ltd Controlled by the same parent company CCCC Tianjin Industry and Trade Co., Ltd. Controlled by the same parent company CCCC Tianjin Dredging Co., Ltd Controlled by the same parent company
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
4. Other related parties (continued)
Tianjin Dredging Company—Binhai Controlled by the same parent company Environmental Protection Engineering Co.,
Ltd
CCCC Tianjin Port& Waterway Prospection& Controlled by the same parent company Design Research Institute Co., Ltd.
CCCC Tianjin Port Prospection& Design Controlled by the same parent company Research Institute Co., Ltd.
Jiangsu Long Yuan Zhenhua Marine Controlled by the same parent company Engineering Co., Ltd
Nanjing CCCC Weisanlu River Tunnel Co., Ltd Controlled by the same parent company Hainan CCCC Fourth Harbor Construction Co., Controlled by the same parent company Ltd
China Communications Water Transportation Controlled by the same parent company Design& Research Co., Ltd
(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
4. Other related parties (continued)
Related party (continued)
CCCC Highway Planning and Design Institute Controlled by the same parent company Co., Ltd
CCCC Tunnel Engineering Co., Ltd Controlled by the same parent company CCCC East China Investment Co., Ltd Controlled by the same parent company CCCC Highway Bridges National Engineering Controlled by the same parent company Research Centre Co., Ltd.
China Harbor Engineering Co., Ltd Controlled by the same parent company China Road and Bridge Co., Ltd Controlled by the same parent company Beijing Qiaoyu Science and Technology Co., Controlled by the same parent company Ltd
CHUWA BUSSAN company limited Controlled by the same parent company Yueyang Chenglingji Xingang Co., Ltd. Controlled by the same parent company Friede& Goldman, Llc. Controlled by the same parent company 5. Main transactions
The Group and the related party, the transaction price is based on mutual agreement and with reference to market price as the pricing basis.
(1) Related party trading goods and services
Selling goods to related party
2016 2015
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
CCCC Second Harbor 389,557,043 277,237,614 Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
CCCC International Shipping 233,003,192 - Co., Ltd
CHUWA BUSSAN company limited 193,053,287 331,102,486 China Road and Bridge Co., 179,013,839 1,089,606 Ltd
CCCC Third Harbor 175,876,344 4,515,993 Engineering Investigation
and Design Institute Co.,
Ltd
CCCC Tianjin Dredging Co., 155,198,269 - Ltd
China Harbor Engineering 147,800,178 34,099,381 Co., Ltd
CCCC Tunnel Engineering Co., 144,526,777 52,226,007 Ltd
CCCC Fourth Harbor 121,403,077 - Engineering Investigation
and Design Institute Co.,
Ltd
Road& Bridge International 81,639,431 - Co., Ltd.
CCCC Third Harbor 81,407,370 257,912,687 Engineering Co., Ltd.
No.3 Engineering Co., Ltd. 69,043,050 - of CCCC Second Harbor
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Engineering Co., Ltd.
CCCC-SHEC Second 62,720,000 3,678,378 Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
No.2 Engineering Co., Ltd. 42,279,112 643,333 of CCCC First Harbor
Engineering Co., Ltd.
CCCC-SHEC Second 37,101,137 75,530,025 Engineering Co., Ltd.
Friede& Goldman, Llc. 26,755,168 140,108,319 CCCC Fourth Harbor 26,568,685 - Engineering Institute Co.,
Ltd.
CCCC Third Highway 22,068,890 38,213,139 Engineering Bureau Co., Ltd
CCCC Financing Rental Co., 20,652,755 12,020,237 Ltd.
Hainan CCCC Fourth Harbor 19,279,683 17,202,584 Construction Co., Ltd
CCCC Second Harbor 17,389,362 44,663,030 Engineering Co., Ltd.
Jiangsu LongYuan Zhenhua 16,648,649 53,734,600 Marine Engineering Co., Ltd
(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
(1) Related party trading goods and services (continued)
Selling goods or assets to related parties (continued)
2016 2015 (continued)
CCCC Second Highway 11,802,499 56,534,225 Engineering Bureau Co., Ltd
China Communications 11,627,327 14,436,561 Corporation
CCCC East China Investment 10,697,446 - Co., Ltd
CCCC First Harbor 8,219,845 - Engineering Co., Ltd.
CCCC Highway Bridges
National Engineering
Research
4,829,060 -
Hong Kong Zhenhua 134,656 - Engineering Co., Ltd
Second Engineering Company - 24,687,230 of CCCC Fourth Harbor
Engineering Co., Ltd
Second Engineering Company - 18,699,952 of CCCC Fourth Harbor
Engineering Co., Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Nanjing CCCC Weisanlu River - 15,362,383 Tunnel Co., Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
No.1 Engineering Co., Ltd. - 3,173,735 of CCCC First Harbor
Engineering Co., Ltd.
CCCC Shanghai Equipment - 1,222,449 Engineering Co., Ltd
2,310,296,131 1,478,093,954 Related party provided labor service for the Company
2016 2015 CCCC Tianjin Dredging Co., 331,677,108 202,023,996 Ltd
CCCC Second Highway 91,221,324 - Consultant Co., Ltd.
CCCC Fourth Highway 75,048,039 - Engineering Co., Ltd.
CCCC Third Harbor 64,290,666 - Engineering Co., Ltd.
No.1 Engineering Co., Ltd. 22,573,250 - of CCCC First Harbor
Engineering Co., Ltd.
(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
(1) Related party trading goods and services (continued)
Related party provided labor service for the Company (continued)
2016 2015 (continued)
Shanghai Communications 21,633,168 - Construction Contracting
Co., Ltd
Jiangsu Long Yuan Zhenhua 14,565,939 - Marine Engineering Co.,Ltd
China Communications 13,661,221 15,608,642 Corporation
CCCC Second Highway 7,079,715 10,713,240 Engineering Bureau Co., Ltd
CCCC Tianjin Industry and 296,154 - Trade Co., Ltd.
CCCC East China Investment 247,863 30,900,000 Co., Ltd
CCCC Third Harbor 56,913 - Engineering Investigation
and Design Institute Co.,
Ltd
Shanghai Jiangtian 25,173 - Industrial Co., Ltd
CTTIC Shanghai Co., Ltd 17,094 -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
642,393,627 259,245,878
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
Purchase products from related parties
2016 2015 CHUWA BUSSAN company limited 182,477,645 291,769,656 Shanghai Zhenhua Heavy 120,664,901 104,139,666 Industries (Group)
Changzhou Paint Co., Ltd.
CCCC Shanghai Equipment 100,037,221 137,622,776 Engineering Co., Ltd
CCCC Fourth Highway 2,993,504 - Engineering Co., Ltd.
CCCC Tianjin Port& Waterway 1,084,615 - Prospection & Design
Research Institute Co., Ltd.
CCCC Tianjin Port 1,084,615 - Prospection & Design
Research Institute Co., Ltd.
Nanjing CCCC Weisanlu River 72,175 - Tunnel Co., Ltd
China Communication 14,248 16,721,301 Materials& Shipment Co.,
Ltd
408,428,,924 550,253,399 (2) Pay dividend to related parties
2016 2015
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
China Communications 502,283 - Corporation
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
(3) Net deposit to related parties
2016 2015 CCCC Financial Co., Ltd 528,772,323 14,114,145 (4) Loans to Related parties
2016 2015 CCCC Financing Rental Co., 2,120,845,793 1,018,000,000 Ltd.
CCCC Financial Co., Ltd 300,000,000 - CCCC Rental Jiahuayi Co., - 383,838,000 Ltd
CCCC Rental Jiahuaer Co., - 383,838,000 Ltd
2,420,845,793 1,785,676,000 (5) Received interest from related parties
2016 2015 CCCC Financial Co., Ltd 513,218 616,290 (6) Pay interest to related parties
2016 2015 CCCC Financing Rental Co., 46,047,152 53,723,710 Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
CCCC Financial Co., Ltd 11,201,250 13,594,125 CCCC Rental Jiahuayi Co., 8,819,415 11,483,154 Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
CCCC Rental Jiahuaer Co., 8,819,415 11,483,154 Ltd
74,887,232 90,284,143 (7) Leasing
The Group as lessor
Types of leasing 2016 2015 assets
Zhenhua Marine Ship 169,580,194 67,924,038 Energy (Hong Kong)
Co., Ltd
CCCC Tunnel Shield 125,440,000 14,365,684 Engineering Co., Ltd
China Ship 1,606,804 3,384,615 Communications
Corporation
CCCC Third Harbor Shield 501,755 - Second Engineering
Co., Ltd
No.3 Engineering Shield - 19,671,628 Co., Ltd. of CCCC
Second Harbor
Engineering Co.,
Ltd.
297,128,753 105,345,965
(8) Guarantee
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
The Company as guarantor
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5. Main transactions (continued)
Guarantee Guarantee Guarantee Whether the Guarantee is amount start date due date implemented Zhenhua Marine 177,247,287 September 14, April 14, 2017 No Energy (Hong 2015
Kong) Co., Ltd
In current period, the Group provide loan guarantee to Zhenhua Marine Energy (Hong Kong) Co., Ltd for free. The total converted guarantee amount in RMB is 177,247,287yuan (2015: RMB 165,917,974 yuan).
(9). Keyexecutives’ salaries
2016 2015 Keyexecutives’ salaries 14,574,800 12,544,400 The number of key executives of the Group in 2016 is 24 (2014: 29). The salaries of the newly added executives and the resigned executives are calculated according to the tenure. It is calculated on a yearly basis for other employees.
X. Related party relationships and transactions (continued)
6. Promises with related parties
The following are promises contracted but not necessarily shown on balance sheet with related parties as of balance sheet day:
Related party provided labor 2016 2015 service for the Company
CCCC Tianjin Dredging Co., 1,344,348,653 - Ltd
CCCC Fourth Highway 835,973,095 -
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
6. Promises with related parties (continued)
CCCC Third Harbor 387,588,088 79,010,254 Engineering Co., Ltd.
No.1 Engineering Co., Ltd. 139,829,924 - of CCCC First Harbor
Engineering Co., Ltd.
CCCC Second Highway 34,418,446 - Consultant Co., Ltd.
CCCC Tunnel Engineering Co., 5,265,067 23,777,752 Ltd
Shanghai Communications 650,837 - Construction Contracting
Co., Ltd
CCCC Second Harbor - 70,313,613 Engineering Co., Ltd
CCCC Third Harbor - 37,076,943 Engineering Xing’an
Construction Engineering
Co., Ltd.
Installation Engineering - 29,435,537 Co., Ltd. Of CCCC First
Harbor Engineering Co., Ltd.
China Communications - 29,333,629 Corporation
CCCC First Harbor - 1,000,000 Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
2,748,074,110 269,947,728
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
6. Promises with related parties (continued)
Leased assets from related 2016 2015 parties
Shanghai Waterway Logistics - 1,800,000 Co., Ltd
Leased assets to related 2016 2015 parties
Zhenhua Marine Energy (Hong 1,522,081,855 1,582,750,064 Kong) Co., Ltd
China Communications - 2,880,000 Corporation
1,522,081,855 1,585,630,064 The related parties build base and production workshop
2016 2015 CCCC Third Harbor - 13,750,000 Engineering Co., Ltd.
Selling goods or assets to related parties
2016 2015 CCCC Tianjin Dredging Co., 495,528,226 - Ltd
CCCC Second Harbor 126,518,010 269,536,252 Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
6. Promises with related parties (continued)
Road& Bridge International 74,183,233 - Co., Ltd.
No.3 Engineering Co., Ltd. 69,043,050 - of CCCC Second Harbor
Engineering Co., Ltd.
CCCC Second Highway 55,801,029 - Engineering Bureau Co., Ltd.
CCCC Financing Rental Co., 41,121,422 650,726,496 Ltd.
China Road and Bridge Co., 28,043,324 138,189 Ltd
CCCC International Shipping 26,318,763 - Co., Ltd
CHUWA BUSSAN company limited 13,138,761 - CCCC Third Harbor 11,620,766 47,321,305 Engineering Co., Ltd.
(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
6. Promises with related parties (continued)
Selling goods or assets to related parties (continued)
2016 2015 (continued)
CCCC Tunnel Engineering Co., 11,054,256 9,119,658 Ltd
Friede& Goldman, Llc. 11,000,000 102,518,684 Hainan CCCC Fourth Harbor 7,723,504 507,461 Construction Co., Ltd
China Communications Water 6,672,629 6,672,629 Transportation Design &
Research Co., Ltd
No.1 Engineering Co., Ltd. 5,264,957 6,210,620 of CCCC First Harbor
Engineering Co., Ltd.
CCCC Fourth Harbor
Engineering Investigation
and Design Institute Co.,
Ltd
5,058,462 126,461,538 No.2 Engineering Co., Ltd. 4,528,473 9,701,516 of CCCC First Harbor
Engineering Co., Ltd.
CCCC-SHEC Second 1,541,429 1,541,429 Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
CCCC Third Highway 1,127,786 3,850,109 Engineering Bureau Co., Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
6. Promises with related parties (continued)
CCCC First Harbor 341,880 - Engineering Co., Ltd.
CCCC Fourth Harbor 36,103 - Engineering Institute Co.,
Ltd.
China Communications - 74,715,733 Corporation
China Harbor Engineering - 63,799,620 Co., Ltd
Second Engineering Company - 14,872,470 of CCCC Fourth Harbor
Engineering Co., Ltd
No.2 Engineering Co., Ltd. - 7,494,175 of CCCC Second Harbor
Engineering Co., Ltd.
Jiangsu LongYuan Zhenhua - 450,106 Marine Engineering Co.,Ltd
CCCC Fourth Harbor - 333,806 Engineering Co., Ltd
CCCC Third Harbor Second - 144,794 Engineering Co., Ltd
926,623,013 1,396,116,590 Signed a standby leasing agreement with the related party
On December 16,2015, the Company signed ship rental standby agreement with CCCC Rental Jiahuayi Co., Ltd and CCCC Rental Jiahuaer Co., Ltd, with the rental term from March
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
5, 2016 to December 5, 2021.The Company will pay contractual compensations when the ship rental agreement signed by the subsidiary and Zhenhua Marine Energy (Hong Kong) Co., Ltdcan’t be performed. The max contractual amount is RMB 737,304,000 Yuan.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties
2016 2015
Closing balance Provision for bad Closing balance Provision for bad debts debts Accounts
receivable
No.1 Engineering 100,793,713 - 40,000,000 - Co., Ltd. of CCCC
First Harbor
Engineering Co.,
Ltd.
CCCC Fourth Harbor 88,776,000 - 29,592,000 - Engineering
Investigation and
Design Institute
Co., Ltd
CCCC First Harbor 72,345,219 - 90,636,388 - Engineering Co.,
Ltd.
China 58,509,343 - 27,772,867 - Communications
Corporation
Jiangsu LongYuan 37,087,652 - 45,398,459 - Zhenhua Marine
Engineering Co.,
Ltd
China Harbor 33,636,903 - 15,125,880 - Engineering Co.,
Ltd
CCCC Second Harbor 31,166,430 - 56,432,975 -
Engineering Co.,
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Ltd.
CCCC Third Harbor 32,184,194 - 56,419,273 - Engineering Co.,
Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties (continued)
CCCC Fourth 24,670,995 - 19,047,086 - Harbor
Engineering
Co., Ltd
China 18,382,000 - - - Communications
Water
Transportation
Design &
Research
Co.,Ltd
Friede & 16,718,142 - 114,763,068 - Goldman, Llc.
Road& Bridge 9,032,783 - - - International
Co., Ltd.
CCCC-SHEC 6,098,300 - 13,171,700 - Second
Engineering
Co., Ltd.
CCCC Fourth 6,000,000 - 6,000,000 - Harbor
Engineering
Investigation
and Design
Institute Co.,
Ltd
(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties (continued)
2016 2015 Closing balance Provision for Closing balance Provision for bad debts bad debts Accounts
receivable
(continued)
(continued)
No.2 5,700,505 - 8,999,544 - Engineering
Co., Ltd. of
CCCC Second
Harbor
Engineering
Co., Ltd.
CCCC Highway 5,650,000 - - - Bridges
National
Engineering
Research
Second 5,233,497 - 10,402,788 - Engineering
Company of CCCC
Fourth Harbor
Engineering
Co., Ltd
No.2 5,053,317 - 5,753,557 - Engineering
Co., Ltd. of
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
CCCC First
Harbor
Engineering
Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties (continued)
CCCC Third 5,008,691 - -
Harbor Second
Engineering
Co., Ltd
Tianjin 2,170,000 - 2,170,000 - Dredging
Company—Binhai
Environmental
Protection
Engineering
Co., Ltd
CCCC-SHEC 1,438,507 - 14,753,046 - Second
Engineering
Co., Ltd.
CCCC Marine 1,100,000 - 1,100,000 - Engineering
Vessel
Technology
Research Centre
Co., Ltd
CCCC Third 331,860 - -
Harbor
Engineering
Xing’an
Construction
Engineering
Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties (continued)
Installation 253,297 - 900,797 - Engineering
Co., Ltd.of CCCC
First Harbor
Engineering
Co., Ltd.
CCCC Tianjin 140,711 - - - Industry and
Trade Co., Ltd.
Yueyang 48,680 - 42,000 - Chenglingji
Xingang Co.,
Ltd.
CCCC Shanghai 45,635 - 1,083,425 - Equipment
Engineering
Co., Ltd
Zhenhua Marine - - 69,319,180 - Energy (Hong
Kong) Co., Ltd
CHUWA BUSSAN - - 45,103,892 - company limited
CCCC Second - - 25,595,000 - Highway
Engineering
Bureau Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties (continued)
No.1 - - 5,760,000 - Engineering
Co., Ltd. of
CCCC First
Harbor
Engineering
Co., Ltd.
CCCC Tunnel - - 4,809,915 - Engineering
Co., Ltd
CCCC First - 4,719,000
Harbor City
Traffic
Engineering
Co., Ltd
No.2 - - 1,245,810 - Engineering
Co., Ltd. of
CCCC Second
Harbor
Engineering
Co., Ltd.
567,576,374 - 716,117,651 - 2016 2015
Closing balance Provision for Closing balance Provision for bad debts bad debts
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Monetary
capital
CCCC Financial 663,820,190 - 134,534,649 - Co., Ltd
Other
receivables
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties (continued)
Jiangsu 1,750,622 - 1,726,800 - LongYuan
Zhenhua Marine
Engineering
Co.,Ltd
CCCC First 100,000 - - - Harbor
Engineering
Co., Ltd.
No.1 - - 10,000,000 - Engineering
Co., Ltd. of
CCCC First
Harbor
Engineering
Co., Ltd.
1,850,622 - 11,726,800 - Advanced
payment
CCCC East China 7,210,205 - - - Investment Co.,
Ltd
China - - 7,192,680 - Communications
Corporation
CCCC Third - - 2,200,000 - Harbor
Engineering
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Xing ‘an
Construction
Engineering
Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
7. Receivables from related parties (continued)
CCCC Shanghai - - 630,000 - Equipment
Engineering
Co., Ltd
7,210,205 - 10,022,680 - 8. Balances of payables to related parties
2016 2015 Accounts payable
CHUWA BUSSAN company limited 358,758,413 296,437,449 CCCC-SHEC Second 221,168,711 187,941,127 Engineering Co., Ltd.
CCCC Second Highway 149,221,661 259,445,458 Engineering Bureau Co., Ltd
CCCC Third Harbor 115,648,769 43,224,566 Engineering Co., Ltd.
CCCC Tianjin Dredging Co., 92,096,212 162,023,996 Ltd
CCCC Fourth Highway 81,806,205 - Engineering Co., Ltd.
CCCC Second Highway 48,804,871 - Consultant Co., Ltd.
CCCC Tunnel Engineering Co., 29,059,546 28,854,070 Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
8. Balances of payables to related parties (continued)
Jiangsu LongYuan Zhenhua 17,042,149 - Marine Engineering Co.,Ltd
CCCC Shanghai Equipment 14,170,536 32,594,294 Engineering Co., Ltd
No.1 Engineering Co., Ltd. 11,410,703 - of CCCC First Harbor
Engineering Co., Ltd.
CCCC Third Harbor 10,051,352 10,051,352 Engineering Xing’an
Construction Engineering
Co., Ltd.
Shanghai Communications 9,675,865 - Construction Contracting
Co., Ltd
CCCC Marine Engineering 9,363,830 9,363,830 Vessel Technology Research
Centre Co., Ltd
China Communications 8,777,876 - Corporation
Shanghai Zhenhua Heavy 8,725,170 24,086,487 Industries (Group)
Changzhou Paint Co., Ltd.
CCCC Tianjin Industry and 1,178,100 - Trade Co., Ltd.
CCCC East China Investment 290,000 - Co., Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
8. Balances of payables to related parties (continued)
China Communications Water 160,000 160,000 Transportation Design &
Research Co.,Ltd
China Communication 16,670 14,821,551 Materials& Shipment Co.,
Ltd
Shanghai Jiangtian 4,380 289 Industrial Co., Ltd
Beijing Qiaoyu Science and - 1,198,882 Technology Co., Ltd
1,187,431,019 1,070,203,351 2016 2015 Advance receipts
China Harbor Engineering 736,500 736,500 Co., Ltd
Jiangsu LongYuan Zhenhua 366,574 - Marine Engineering Co.,Ltd
CCCC Shanghai Equipment 100,000 - Engineering Co., Ltd
CCCC Tunnel Engineering Co., - 107,781,197 Ltd
No.2 Engineering Co., Ltd. - 82,277,608
of CCCC Second Harbor
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
Engineering Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
8. Balances of payables to related parties (continued)
CHUWA BUSSAN company limited - 32,378,055 No.1 Engineering Co., Ltd. - 1,788,70 of CCCC First Harbor
Engineering Co., Ltd.
China Communications - 934,516 Corporation
No.2 Engineering Co., Ltd. - 699,388 of CCCC Second Harbor
Engineering Co., Ltd.
Friede& Goldman, Llc. - 599,112 CCCC Third Harbor - 200,000 Engineering Xing ‘an
Construction Engineering
Co., Ltd.
1,203,074 227,395,077 Dividend payable
Hong Kong Zhenhua 346,005 346,005 Engineering Co., Ltd
Macau Zhenhua Harbor 6,593 6,593 Engineering Co., Ltd
CCCC Tianjin Dredging Co., 25,079,494 25,079,494 Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
8. Balances of payables to related parties (continued)
CHUWA BUSSAN company limited 6,269,873 6,269,873 China Communications - 502,283 Corporation
31,701,965 32,204,248 Interest payable
CCCC Financing Rental Co., 132,917 1,784,054 Ltd.
2016 2015 Other payables
China Communications 103,327,306 103,937,952 Corporation
CCCC Financing Rental Co., 100,000,000 1,118,000,000 Ltd.
Shanghai Jiangtian 16,754,583 17,586,085 Industrial Co., Ltd
CCCC Third Harbor 3,195,324 3,376,879 Engineering Co., Ltd.
CCCC-SHEC Second 7,912,758 7,912,758 Engineering Co., Ltd.
CCCC Tianjin Dredging Co., 2,000,000 2,669,988 Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
8. Balances of payables to related parties (continued)
CCCC Tunnel Engineering Co., 1,819,211 1,637,656 Ltd
CCCC Second Highway 1,437,244 13,750,047 Engineering Bureau Co., Ltd
Jiangsu LongYuan Zhenhua 143,395 - Marine Engineering Co.,Ltd
Shanghai Zhenhua Heavy 99,606 - Industries (Group)
Changzhou Paint Co., Ltd.
CCCC Shanghai Equipment 89,000 - Engineering Co., Ltd
Shanghai Zhensha Longfu - 257,612 Machinery Co., Ltd
CCCC Third Harbor - 1,200 Engineering Xing’an
Construction Engineering
Co., Ltd.
236,778,427 1,269,130,177 Short-term loans
CCCC Financial Co., Ltd 100,000,000 - Non-current liabilities due
within one year
CCCC Financing Rental Co., 407,455,030 - Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
CCCC Rental Jiahuayi Co., 61,059,663 29,685,028 Ltd
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
X. Related party relationships and transactions (continued)
8. Balances of payables to related parties (continued)
CCCC Rental Jiahuaer Co., 61,059,663 29,685,029 Ltd
529,574,356 59,370,057 Long-term payable
CCCC Financing Rental Co., 905,899,356 - Ltd.
CCCC Rental Jiahuayi Co., 323,448,337 359,930,972 Ltd
CCCC Rental Jiahuaer Co., 323,448,337 359,930,971 Ltd
CCCC Tianjin Dredging Co., 65,565,134 - Ltd
1,618,361,164 719,861,943
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XI. Promises and contingencies
1. Significant promises
(1) Capital expense promises
List in the following is the capital expenses promises not yet to be listed in the financial statements but the contracts have been signed on the balance sheet date. December 31, 2016 December 31, 2015 House, building and 225,842,432 206,585,921 equipment
(2) Operating leasing Promises
List in the following is the minimum leasing payment of the Group in the future according to the irrevocable operating leasing contract that has been signed:
December 31, 2016 December 31, 2015 Within one year 58,763,290 57,354,128 One to two years 58,264,180 57,733,328 Two to three years 58,689,123 57,235,328 Over 3 years 76,480,021 138,342,848 252,196,614 310,665,632 (3) L/C Promises
The company entrusted bank to issue several L/C to purchase imported components or parts. As of Dec. 31, 2016, the unpaid amount under theL/C’s is about RMB 2,464,170,714 Yuan (Dec. 31, 2015: RMB 2,226,236,545 Yuan).
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XI. Promises and contingencies (continued)
2. Contingencies
As of Dec 31, 2016, the significant contingencies of the Group are as follows: (1) In 2008, the Company signed an agreement of sales and installation for wind power steel pipe pile products for the British Wind Power Project with Flour Limited (hereinafter referred to as "Fluor") .In the project construction process, the Company and Fluor, by way of friendly consultations and in the spirit of good cooperation, maintain dispute handling normal communication mechanism. In June 2010, for the implementation of the contract, after review by the board of directors of the Company, the Company signed a mutual exemption letter with Fluor, and in 2011 settled the remaining payment. Afterwards, Flour produced claim to the Company for quality compensation, and requested the Company to cash the pay-on-claim quality guarantee bond, while the Company rejected the claim. On March 20, 2014, Flour cashed the amount of 23,409,750 euro bond to guarantee bond bank.
In September 2014, Flour initiated proceedings for the breach caused by the problems related to the product quality to High Court of Justice,Queen’s Bench Division, The Technology and Construction Court (hereinafter referred to as “TCC Court of BritainQueen’s Bench”) and asked the Company for the compensation of 250 million Pounds for additional test and repair cost, project period delay and related loss. (Including the cashed bond amount of 23,409,750 Euro). The Companydidn’t acknowledge the claim for the compensation from Flour. Since then, the Company prepared the evidence disclosure, witness testimony, exchange work and other preparatory work before the court. From February to March, April, April, June, the Trial Chamber of the British High Court held a trial of the responsibility for the first instance, the trial of the quantitative part of the first instance continued in May 2017. At present, the Company is actively preparing works on ration part before the court, including exchanging testimony of witnesses, disclosing and drafting document, and exchanging expert report in respect of ration and work period.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XI. Promises and contingencies (continued)
2. Contingencies (continued)
The Company attached great importance to this case, established special team and hired senior legal team both at home and abroad to actively advocate theCompany’s rights and protect theCompany’s rights from damaged. At present, this case is still at the stage of preparing and exchanging various litigation documents and evidences before the first instance on ration part. Therefore, the Company is unable to reliably estimate the possible result of the case, possible loss and profit possibility and amount arising from that. The Company will timely disclose the related impact based on the progress. (2) In 2013, the Company has signed the construction and sales contract about a 6000 tons piping ship with Petrofac (JSD6000) Limited (hereinafter referred to as Petrofac).The Company kept normal contact with Petrofac in the process of the construction. On October 9, 2015, Petrofac issued Contract Termination Letter with the reason that the project is delayed and meets the termination article. Petrofac asked for terminating the contract and requested the Company to return the prepaid payment and interest, as well as assumed the responsibility of the loss caused by the termination of the contract. The Company rejected the claim. Petrofac honored the demand guarantee from the opening bank in December 2015, with total amount of 44,720,000 USD.
The Company attached great importance to this case, established special team and hired senior legal team both at home and abroad to actively advocate theCompany’s rights and protect theCompany’s rights from damaged. The Company has applied for arbitration to the London Court of International Arbitration in January 2016, and asked Petrofac to return the payment of Letter of Guarantee and compensated for the loss in total of 200 million USD. After receiving the arbitration applicant of the Company, Petrofac filled a counterclaim, and asked the Company for compensating about 182 million USD or 213 million USD under the requirements of continuing built ship or not continuing built ship. At present, the arbitration court has been build. The company has submitted attribution schedule by negotiation with Petrofac, with two rounds of arbitration documents on respective opinions. The trail of the case has not yet initiated officially, and the relative materials are on preparation stage, such as evidentiary document, testimony of witnesses and expert report. Therefore, the Company is unable to reliably estimate the possible result of the case, possible loss and profit possibility and amount arising from that. The Company will timely disclose the related impact based on the progress.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XI. Promises and contingencies (continued)
2. Contingencies (continued)
(3) On December 31, 2016, the Group provided USD 25.551 million of loan guarantee of overseas loan under domestic guarantee to the joint venture Zhenhua Marine Energy (Hong Kong) Co., Ltd. The total converted guarantee amount in RMB is 177,247,287yuan which will be due on April 14, 2017.The amount above reflects the max loss caused to the Group once it breaches the agreement. The joint venture Zhenhua Marine Energy (Hong Kong) Co., Ltd. has health finance with no predicted significant debt breach risk. The Groupdidn’t confirm the debt related to the financial guarantee.
(4) As of Dec. 31,2015， the Group provided financial guarantee amount of 19,184,000 Yuan to customer Jiangsu Yanweigang Port Co., Ltd which will be due on Nov 11, 2017.The amount above reflects the max loss caused to the Group once it breaches the agreement. The Jiangsu Yanweigang Port Co., Ltd has health finance with no predicted significant debt breach risk. The Groupdidn’t confirm the debt related to the financial guarantee.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements
1. Accounts receivable
2016 2015 Accounts receivable 7,787,866,391 7,891,037,413 Less: Bad debt provision 1,311,778,695 1,108,321,774 6,476,087,696 6,782,715,639 Long-term receivables analyzed by age:
2016 2015 Within 6 months 4,697,825,773 5,529,667,647 7 to 12 months 754,026,913 513,185,844 1 to 2 years 846,748,647 603,261,900 2 to 3 years 347,663,847 496,633,694 3 to 4 years 377,828,003 170,481,093 4 to 5 years 132,261,040 102,873,101 Over 5 years 631,512,168 474,934,134 7,787,866,391 7,891,037,413 Less: Bad debt provision 1,311,778,695 1,108,321,774 6,476,087,696 6,782,715,639 Change of receivables - provisions for bad debt:
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
1. Accounts receivable (continued)
Opening Provision in Changeback Write-Off in Closing balance in this year back this year this year balance in current year current year 2016 1,108,321,774 203,456,921 - - 1,311,778,695 2015 832,754,361 275,567,413 - - 1,108,321,774 The accounts receivable are analyzed by types as follows:
2016 2015
Closing balance Provision for bad debts Closing balance Provision for bad debts Amount Proportion Amount Withdrawing Amount Proportion Amount Withdrawing% % % %
Accounts 159,594,037 2 159,594,037 100 257,212,586 3 257,212,586 100 receivables
that are
individually
insignifican
t but
provision
for bad debts
Bad debt
reserve is
calculated
as per the
credit risk
combination
-Related 3,350,449,30 43 - - 3,967,741,78 51 - - party 6 1
-Third party 3,992,180,63 51 867,510,413 22 3,503,260,02 44 688,286,163 20 5 1
Accounts 285,642,413 4 284,674,245 100 162,823,025 2 162,823,025 100 receivables
that are
individually
insignifican
t but
provision
for bad debts
is assessed
individually
7,787,866,39 100 1,311,778,69 17 7,891,037,41 100 1,108,321,77 14
1 5 3 4
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
1. Accounts receivable (continued)
As of Dec, 31, 2016, situation of the accounts receivables that are individually insignificant but provision for bad debts is assessed individually is as follows: Book value Bad debt Provision ratio Reason balance provision (%)
Accounts 159,594,037 159,594,037 100% Contract receivable 1 dispute As of Dec, 31, 2015, situation of the accounts receivables that are individually insignificant but provision for bad debts is assessed individually is as follows: Book value Bad debt Provision ratio Provision balance provision reasons Accounts 149,393,086 149,393,086 100% Contract receivable 1 dispute Accounts 107,819,500 107,819,500 100% Counter-party receivable 2 seriously lacks funds 257,212,586 257,212,586 100%
Accounts receivable for which the bad debt reserve is calculated as per the aging analysis method:
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
1. Accounts receivable (continued)
2016 2015 Closing Provision for bad debts Closing Provision for bad debts balance balance
Amount Amount Proportio Amount Amount Proportio n n Withi 1,638,214,66 - - 1,725,233,94 - - n 6 1 0
month
s
7 - 12 669,637,393 6,696,374 1 449,328,126 3,442,852 1 month
s
1 - 2 649,760,167 97,704,025 15 530,521,126 78,072,185 15 years
2 - 3 293,717,341 88,115,202 30 168,781,101 50,634,330 30 years
3 - 4 95,818,058 47,909,029 50 113,881,656 55,440,828 49 years
4 - 5 71,788,934 53,841,700 75 48,339,809 33,521,705 69 years
Over 5 573,244,081 573,244,08 100 467,174,263 467,174,26 100 years 3 3
3,992,180,63 867,510,41 22 3,503,260,02 688,286,16 20 5 3 1 3
As of Dec, 31, 2016, situation of the other accounts receivables that are individually
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
not insignificant but provision for bad debts is assessed individually is as follows: Book value Bad debt Provision ratio Reason balance provision
Accounts 107,819,500 107,819,500 100% Contract receivable 1 dispute Accounts 50,365,000 50,365,000 100% Counter-party receivable 2 seriously lacks funds
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
1. Accounts receivable (continued)
Accounts 27,748,069 27,748,069 100% Contract receivable 3 dispute Accounts 21,932,297 21,932,297 100% Contract receivable 4 dispute Accounts 19,480,920 18,512,752 95% Contract receivable 5 dispute Accounts 17,735,070 17,735,070 100% Contract receivable 6 dispute Accounts 10,049,240 10,049,240 100% Contract receivable 7 dispute Accounts 7,664,629 7,664,629 100% Contract receivable 8 dispute Accounts 7,421,237 7,421,237 100% Contract receivable 9 dispute Accounts 7,306,800 7,306,800 100% Contract receivable 10 dispute Accounts 4,557,644 4,557,644 100% Contract receivable 11 dispute Accounts 3,562,007 3,562,007 100% Contract receivable 12 dispute 285,642,413 284,674,245 100%
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
1. Accounts receivable (continued)
As of Dec, 31, 2015, situation of the other accounts receivables that are individually not insignificant but provision for bad debts is assessed individually is as follows: Book value Bad debt Provision ratio Reason balance provision (%)
Accounts 50,365,000 50,365,000 100% Counter-party receivable 1 seriously lacks funds Accounts 25,974,465 25,974,465 100% Contract receivable 2 dispute Accounts 20,530,426 20,530,426 100% Contract receivable 3 dispute Accounts 18,235,736 18,235,736 100% Contract receivable 4 dispute Accounts 16,150,830 16,150,830 100% Contract receivable 5 dispute Accounts 9,758,221 9,758,221 100% Contract receivable 6 dispute Accounts 7,260,803 7,260,803 100% Contract receivable 7 dispute Accounts 6,946,886 6,946,886 100% Contract receivable 8 dispute Accounts 4,266,328 4,266,328 100% Contract receivable 9 dispute Accounts 3,334,330 3,334,330 100% Contract receivable 10 dispute
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
162,823,025 162,823,025 100%
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
1. Accounts receivable (continued)
As of Dec. 31, 2016, the accounts receivable summary analysis of top 5 arrears is shown as following:
Accounting for balance of receivables Balance Bad debt provision Proportion in total amount accounts receivable Total amount of top 5 2,641,634,401 42,868,900 34% account receivables
account receivables
As of Dec. 31, 2015, the account receivable summary analysis of top 5 debtors is shown as following:
Accounting for balance of receivables Balance Bad debt provision Proportion in total amount accounts receivable Total amount of top 5 3,094,418,881 - 39% account receivables
account receivables
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
2. Other accounts receivable
Other accounts receivables analyzed by age:
2016 2015 Within one year 13,861,142,297 11,225,646,626 1 to 2 years 4,247,938 55,855,439 2 to 3 years 14,168,062 4,952,612 3 to 4 years 3,685,185 980,855 4 to 5 years 180,855 686,960 Over 5 years 15,281,311 35,555,503 13,898,705,648 11,323,677,995 Less: Bad debt provision 20,702,632 18,581,021 13,878,003,016 11,305,096,974 Change of other receivables - provisions for bad debt:
Opening Provision in Changeback Write-Off in Closing balance in this year back this this year balance in current year year current year 2016 18,581,021 2,121,611 - - 20,702,632 2015 16,776,791 1,804,230 - - 18,581,021
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
2. Other accounts receivable (continued)
Other accounts receivables analyzed by types:
2016 2015
Closing balance Provision for bad debts Closing balance Provision for bad debts Amount Proportion Amount Withdrawing Amount Proportion Amount Withdrawing% % % % Big single - - - - - - - - amount,
provided for
bad debt
separately
Bad debt
reserve is
calculated as
per the credit
risk
combination
-Guaranty
deposit
(excluding 99,337,723 1 - - 149,741,517 1 - - quality
guarantee
deposit)
-Employee 102,865,415 1 - - 127,444,785 1 - - individual
loans and
reserve funds
-Others 13,685,062,13 98 9,262,257 - 11,035,051,31 98 7,140,646 - 5 8
Single amount, 11,440,375 - 11,440,375 100 11,440,375 - 11,440,375 100 though not
significant,
separate
provision for
bad debt made
13,898,705,64 100 20,702,632 11,323,677,99 100 18,581,021
8 5
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
2. Other accounts receivable (continued)
As of December 31, 2016, the Company has no separate provision for bad debt for other accounts receivable with significant individual amount.
In combination, other receivables for which the bad debt reserve is calculated as per the aging analysis method:
2016 2015
Closing Provision for bad debts Closing Provision for bad debts balance balance
Amount Amount Proportion Amount Amount Proportion Within 6 13,662,394,513 - - 11,008,231,524 - - months
7 - 12 2,834,483 28,345 1 3,927,262 39,273 1 months
1 - 2 years 747,938 112,191 15 15,680,501 2,352,076 15 2 - 3 years 11,881,104 3,564,331 30 3,203,485 961,044 30 3 - 4 years 3,202,985 1,601,492 50 180,855 90,427 50 4 - 5 years 180,855 135,641 75 519,460 389,595 75 Over 5 3,820,257 3,820,257 100 3,308,231 3,308,231 100 years
13,685,062,135 9,262,257 11,035,051,318 7,140,646
As of Dec. 31, 2016 and Dec. 31, 2015, other receivables which single amount, though not significant, separate provision for bad debtmade：
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
2. Other accounts receivable (continued)
Book value balance Bad debt provision Provision ratio Reason(%)
Other receivables 1,692,765 1,692,765 100 Contract 1 cancelled Other receivables 1,170,282 1,170,282 100 Contract 2 cancelled Other receivables 5,540,286 5,540,286 100 Contract 3 cancelled Other receivables 3,037,042 3,037,042 100 Contract 4 cancelled 11,440,375 11,440,375 100
Category of other payables by nature of payment
2016 2015 Intercourse funds of subsidiary 13,429,629,328 10,700,493,210 Unsettled tax and surtax 119,175,846 138,270,252 receivable
Export tax rebate 55,755,562 101,381,047 Products or field service 60,496,560 82,048,741 temporary loans
Customs guaranty deposit 71,148,199 104,071,196 Bid bond payments 29,189,524 45,670,321Employee’s loans receivable 42,368,855 45,396,044 Lease receivables 33,434,668 33,484,980
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
Others 57,507,106 72,862,204 13,898,705,648 11,323,677,995
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
2. Other accounts receivable (continued)
Other receivables with top five ending balance collected by the party in debt as of December 31, 2016
Closing Proportion in Nature Account age Provision for balance other total bad debts ending balance Closing receivable(%) balance Other 4,370,239,666 31 Intercourse Within one year - receivables 1 funds of
subsidiary
Other 2,518,908,707 18 Intercourse Within one year - receivables 2 funds of
subsidiary
Other 2,092,489,070 15 Intercourse Within one year - receivables 3 funds of
subsidiary
Other 2,077,530,443 15 Intercourse Within one year - receivables 4 funds of
subsidiary
Other 1,458,611,248 10 Intercourse Within one year - receivables 5 funds of
subsidiary
12,517,779,134 89 -
Other receivables with top five ending balance collected by the party in debt as of December 31, 2015
Closing Proportion in Nature Account age Provision for balance other total bad debts ending balance Closing receivable(%) balance
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
Other 2,521,927,692 22 Intercourse Within one year - receivables 1 funds of
subsidiary
Other 2,375,267,363 21 Intercourse Within one year - receivables 2 funds of
subsidiary
Other 1,506,297,530 13 Intercourse Within one year - receivables 3 funds of
subsidiary
Other 1,283,337,049 11 Intercourse Within one year - receivables 4 funds of
subsidiary
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
2. Other accounts receivable (continued)
Other 1,144,708,573 10 Intercourse Within one year - receivables 5 funds of
subsidiary
8,831,538,207 77 -
3. Long-term equity investments
2016 2015 Subsidiary 6,381,423,422 5,793,119,602 Joint venture 199,459,569 174,636,916 Associates 2,001,892,291 1,422,428,308 8,582,775,282 7,390,184,826
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
(1) Subsidiary
2016
2015 Increase/ decrease in
current year
Dec. 31 Additional investment/ Dec. 31 disinvestment
Shanghai Zhenhua Port 4,950,000 5,014,200 9,964,200 Machinery Heavy
Industry Co., Ltd.
Shanghai Zhenhua Heavy 5,014,200 (5,014,200) - Industries Machinery
Co., Ltd.
Shanghai Zhenhua Port - - - Machinery (Hong Kong)
Co., Ltd.
Shanghai Zhenhua 140,260,673 - 140,260,673 Shipping Co., Ltd.
Shanghai Zhenhua Heavy 4,518,000 - 4,518,000 Industries (Group)
Changzhou Paint Co.,
Ltd.
Nantong Zhenhua Heavy 854,936,900 - 854,936,900 Industry Equipment
Manufacturing Co., Ltd.
Nantong Zhenhua Heavy 598,110 - 598,110 Industry Steel
Structure Processing
Co., Ltd.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
Jiangyin Zhenhua Port 579,983 - 579,983 Machinery Steel
Structure
Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
Shanghai Zhenhua Heavy 2,201,086,744 - 2,201,086,744 Industry General
Equipment Co., Ltd.
Shanghai Zhenhua Heavy 300,000,000 300,000,000 600,000,000 Industries Group
(Nantong) Transmission
Machinery Co., Ltd.
Shanghai Zhenhua Heavy 300,000,000 (300,000,000) - Industries Group
(Nantong) Co., Ltd.
Shanghai Zhenhua Heavy 50,000,000 - 50,000,000 Industries Electric
Co., Ltd.
ZPMC GmbH Hamburg 207,940 - 207,940 ZPMC Netherlands B.V. 2,334,799 13,283,280 15,618,079 Shanghai Zhenhua Heavy 100,000,000 - 100,000,000 Industries Vessel
Transport Co., Ltd.
Shanghai Zhenhua 7,000,000 - 7,000,000 Testing Technology
Consulting Co., Ltd.
ZPMC Lanka Company
(Private) Limited 6,183,978 - 6,183,978 Nanjing Ninggao New 1,098,000,000 - 1,098,000,000 Channel Construction
Co., Ltd.
Shanghai Zhenhua Heavy 203,000,000 - 203,000,000
Industries Qidong
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
Marine Co., Ltd
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
ZPMC Engineering Africa 3,084,000 - 3,084,000 (Pty) Ltd.
ZPMC Korea Co., Ltd. 2,876,209 - 2,876,209 ZPMC Engineering
(India) Private Limited 2,953,200 - 2,953,200 ZPMC Australia Company
(Pty) Limited 2,708,500 - 2,708,500 ZPMC North America Inc. 18,564,520 - 18,564,520 (To be continued)
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
(1) Subsidiary (continued)
2015 Increase/ decrease in 2016 current year
Dec. 31 Additional investment/ Dec. 31 disinvestment
(continued)
ZPMC Southeast Asia
Holding Pte. Ltd. 3,875,949 - 3,875,949 ZPMC Brazil Holdings 2,985,272 (48,501) 2,936,771 Ltda.
ZPMC Limited Liability 4,357,626 - 4,357,626 Company
CCCC Liyang City 183,000,000 - 183,000,000 Investment
Construction Co., Ltd
CCCC Tianhe Co., Ltd. 242,542,999 - 242,542,999 CCCC Investment 47,500,000 - 47,500,000 Development Qidong Co.,
Ltd
CCCC Zhenjiang - 567,000,000 567,000,00 Investment
Construction
Management Development
Co., Ltd
ZPMC Middle East Fze - 5,271,120 5,271,120 ZPMC UK LD - 2,797,921 2,797,921
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
5,793,119,602 588,303,820 6,381,423,422
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
2015
2014 Increase/ decrease 2015 in current year
Dec. 31 Additional Dec. 31 investment/
disinvestment
Shanghai Zhenhua 4,950,000 - 4,950,000 Port Machinery Heavy
Industry Co., Ltd.
Shanghai Zhenhua 5,014,200 - 5,014,200 Heavy Industries
Machinery Co., Ltd.
Shanghai Zhenhua - - - Port Machinery (Hong
Kong) Co., Ltd.
Shanghai Zhenhua 140,260,673 - 140,260,673 Shipping Co., Ltd.
Shanghai Zhenhua 4,518,000 - 4,518,000 Heavy Industries
(Group) Changzhou
Paint Co., Ltd.
Nantong Zhenhua 854,936,900 - 854,936,900 Heavy Industry
Equipment
Manufacturing Co.,
Ltd.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
Nantong Zhenhua 598,110 - 598,110 Heavy Industry Steel
Structure
Processing Co., Ltd.
Jiangyin Zhenhua 579,983 - 579,983 Port Machinery Steel
Structure
Manufacturing Co.,
Ltd.
Shanghai Zhenhua 2,201,086,744 - 2,201,086,744 Heavy Industry
General Equipment
Co., Ltd.
Shanghai Zhenhua
Heavy Industries
Group (Nantong)
Transmission
Machinery Co., Ltd.
(To be continued)
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
(1) Subsidiary (continued)
2014 Increase/ decrease 2015 in current year
Dec. 31 Additional Dec. 31 investment/
disinvestment
(continued)
300,000,000 - 300,000,000 Shanghai Zhenhua 300,000,000 - 300,000,000 Heavy Industries
Group (Nantong) Co.,
Ltd.
Shanghai Zhenhua 50,000,000 - 50,000,000 Heavy Industries
Electric Co., Ltd.
ZPMC GmbH Hamburg 207,940 - 207,940 ZPMC Netherlands 149,717 2,185,082 2,334,799 B.V.
Shanghai Zhenhua 100,000,000 - 100,000,000 Heavy Industries
Vessel Transport
Co., Ltd.
Shanghai Zhenhua 7,000,000 - 7,000,000 Testing Technology
Consulting Co., Ltd.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
ZPMC Lanka Company
(Private) Limited 6,183,978 - 6,183,978
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
Nanjing Ninggao New 1,090,000,000 8,000,000 1,098,000,000 Channel
Construction Co.,
Ltd.
Shanghai Zhenhua 203,000,000 - 203,000,000 Heavy Industries
Qidong Marine Co.,
Ltd
ZPMC Engineering 3,084,000 - 3,084,000 Africa (Pty) Ltd.
ZPMC Korea Co., Ltd. 2,876,209 - 2,876,209 ZPMC Engineering
(India) Private 2,953,200 - 2,953,200 Limited
ZPMC Australia
Company
(Pty) Limited 2,708,500 - 2,708,500 ZPMC North America 1,850,430 16,714,090 18,564,520 Inc.
ZPMC Southeast Asia
Holding Pte. Ltd. 3,875,949 - 3,875,949 ZPMC Brazil Holdings - 2,985,272 2,985,272 Ltda.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
ZPMC Limited - 4,357,626 4,357,626 Liability Company
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
CCCC Liyang City - 183,000,000 183,000,000 Investment
Construction Co.,
Ltd
CCCC Tianhe Co., - 242,542,999 242,542,999 Ltd.
CCCC Investment - 47,500,000 47,500,000 Development Qidong
Co., Ltd
5,285,834,533 507,285,069 5,793,119,602 (2) Joint venture
2016
Beginning Change in current year Ending book Ending value depreciation reserve balance Additional Withdrawn Investment
investment investment profit and
loss under
equity method
Joint venture
Jiangsu 171,577,489 - - 25,046,722 196,624,211 - LongYuan
Zhenhua Marine
Engineering
Co.,Ltd
ZPMC
Mediterranean
Liman
Makinalari 3,059,427 - - (224,069) 2,835,358 -
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
Ticaret Anonim
Sirketi
174,636,916 - - 24,822,653 199,459,569 -
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
2015
Beginning Change in current year Ending book Ending value depreciation reserve balance Additional Withdrawn Investment
investment investment profit and
loss under
equity
method
Joint venture
Jiangsu Long Yuan 162,922,641 - - 8,654,848 171,577,489 - Zhenhua Marine
Engineering
Co.,Ltd
ZPMC
Mediterranean
Liman
Makinalari 327,639 - - 2,731,788 3,059,427 - Ticaret Anonim
Sirketi
163,250,280 - - 11,386,636 174,636,916 - (3) Associates
2016
Beginning Change in current Ending book Ending balance value Depreciation reserve Additional Investment Adjustments Cash
investment profit and to other dividends
loss under comprehensive or profits
equity income that are
method announced
to be
released
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
CCCC Marine 15,269,200 - 376,318 - - 15,645,518 - Engineering
Vessel
Technology
Research
Centre Co.,
Ltd
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
Shanghai 15,306,843 - 1,978,952 - (1,833,066) 15,452,729 - Zhenhua Heavy
Industries
(Group)
Changzhou
Paint Co., Ltd.
CCCC Estate 174,697,785 - 916,743 - - 175,614,528 - Yixing Co.,
Ltd.
CCCC Financing 1,141,740,698 420,000,000 75,648,845 255,310 (32,400,000) 1,605,244,853 - Rental Co.,
Ltd.
China
Communications
Construction 75,413,782 - (4,347,559) 4,546,680 - 75,612,903 - USA Inc.
CCCC South
American
Regional
Company
SARL - 114,321,760 - - - 114,321,760 - 1,422,428,308 534,321,760 74,573,299 4,801,990 (34,233,066) 2,001,892,291 - 2015
Beginning Change in current Ending book Ending balance value Depreciation reserve Additional Investment Adjustments Cash
investment profit and to other dividends
loss under comprehensive or profits
equity income that are
method announced
to be
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
released
CCCC Marine 15,079,243 - 189,957 - - 15,269,200 - Engineering
Vessel
Technology
Research
Centre Co.,
Ltd
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
3. Long-term equity investments (continued)
Shanghai 15,030,294 - 1,956,549 - (1,680,000) 15,306,843 - Zhenhua Heavy
Industries
(Group)
Changzhou Paint
Co., Ltd.
CCCC Estate 174,686,810 - 10,975 - - 174,697,785 - Yixing Co.,
Ltd.
CCCC Financing 551,350,475 540,000,000 50,390,223 - 1,605,244,853 - -
Rental Co.,
Ltd.
China
Communications
Construction - 76,206,000 (2,048,615) 1,256,397 - 75,413,782 - USA Inc.
756,146,822 616,206,000 50,499,089 1,256,397 (1,680,000) 1,422,428,308 - 4. Operating income and operating cost
2016 2015
Income Cost Income Cost Main operations 22,901,854,062 19,219,649,675 20,816,918,328 18,021,832,539 Other 1,346,629,631 1,326,296,433 1,052,971,485 1,048,137,783 operations
24,248,483,693 20,545,946,108 21,869,889,813 19,069,970,322 The main operating revenue and cost analyzed by product are listed as followings: 2016 2015
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
Major operating Major operating Major operating Major operating income cost income cost Container 16,966,005,765 13,385,624,468 14,856,548,107 12,151,678,786 cranes
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
4. Operating income and operating cost (continued)
Bulk machinery 3,133,488,466 3,134,543,276 1,994,845,361 1,901,125,005 Heavy equipment 1,773,587,826 1,760,404,529 3,085,784,614 3,140,472,952 Steel structure 1,028,772,006 939,077,402 879,740,246 828,555,796 and related
income
22,901,854,063 19,219,649,675 20,816,918,328 18,021,832,539 Other operating income and Other operating cost
2016 2015
Other operating Other operating Other operating Other operating income cost income cost Sales of 1,063,590,327 1,110,261,460 775,268,362 858,260,360 materials
Equipment 283,039,304 216,034,973 277,703,123 189,877,423 leasing and
others
1,346,629,631 1,326,296,433 1,052,971,485 1,048,137,783 5. Investment income
2016 2015
Investment income from 400,633 9,465,520 long-term equity verified by
cost method
Investment gains from 99,395,952 61,885,725
long-term equity verified by
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
equity method
Investment gains from 1,112,890 789,100 available-for-sale
financial assets during
holding period
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
5. Investment income (continued)
Bank financial products 1,969,590 393,033,507 investment income
Investment income from 5,176 34,083,478 disposal of
available-for-sale
financial assets
102,879,065 499,257,330 6. Supplementary information of cash flow statements
Reconciliation of net profit to cash flows from operating activities:
2016 2015 Net profit 270,221,960 214,947,606 Add: Assets impairment 1,208,850,889 634,618,962 provision
Depreciation of fixed 510,588,106 563,202,254 assets, depletion of oil gas
assets, depreciation of
productive living assets
Intangible assets 53,045,981 49,544,923 amortization
Losses on disposal of fixed
assets, intangible assets
and other long-term assets
2,996,936 (1,060,294)
Changes in fair value gains (27,035,042) 19,402,267
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
and losses
Financial expenses 1,504,100,506 1,541,640,234
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XII. Notes to items in theCompany’s statements (continued)
6. Supplementary information of cash flow statements (continued)
Investment gains (102,879,065) (499,257,330) Increase/decrease in (70,957,061) 13,227,627 deferred income tax asset
(increase was filled in with
“-”)
Increase of inventories (295,457,421) (1,377,428,119) Increase of construction 321,427,489 (1,544,276,536) contract price
Decrease/increase in (2,249,861,228) (4,007,049,883) operating receivables
Decrease/increase in (1,200,900,147) 1,821,152,533 operating payables
Net cash flows from (75,858,097) (2,571,335,756) operating activities
Net alteration of cash and cash equivalents:
2016 2015 Cash balance at end of year 1,872,410,585 1,806,066,316 Less: cash at beginning of 1,806,066,316 1,272,228,765 year
Net increase in cash and cash 66,344,269 533,837,551 equivalents
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XIII. Events after assets balance date
As of the date of approval of this financial statement, the Company is not required to disclose any future events of the balance sheet date.
Shanghai Zhenhua Heavy Industries Co.,Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XIV. Other important matters
1. Report by branches
The Group determines the operating branch based on internal organizational structure, management requirement and internal report system, determine the report branch based on business branch, and disclose the information of branch.
Operating branch refers to the components that the Group coincides with all the following requirements: (1) it may earn revenues and incur expenses in daily activities; (2) its operating results are regularly reviewed by theGroup’s management to make decisions about resource to be allocated to the branch and assess its performance; (3) The Group is able to obtain its accounting information regarding financial position, operating results and cash flows, etc. Two operating branches or above, with same economic characteristics and meeting relative requirements, can be integrated to a new one. The Group identifies the business as an operating branch based on internal organization structure, management requirement and internal report system, and carry out analysis and assessment.
Products and labor service
Income from external transaction
2016 2015 Container crane 17,082,391,036 14,994,515,929 Weight equipment 1,284,872,909 3,985,411,881 Bulk machine part 3,154,983,915 2,013,370,826 “Construction-transfer” 1,005,087,825 514,064,790 project
Steel structure and related 1,035,829,290 826,175,120 income
Shipping and others 580,231,787 680,776,778 Sales materials 81,273,472 132,403,534
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XIV. Other important matters (continued)
Equipment leasing and others 123,417,694 125,675,819 24,348,087,928 23,272,394,677
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XIV. Other important matters (continued)
1. Report by branches (continued)
Geographic
Income from external transaction
2016 2015 Mainland China 9,261,862,587 8,528,436,051 Asia (excluding mainland 8,774,618,285 5,854,518,426 China)
The America 1,660,773,333 4,555,300,460 Europe 1,694,807,875 2,264,289,477 Mainland China (export 1,939,957,027 1,072,367,341 sales)
Others 1,016,068,821 997,482,922 24,348,087,928 23,272,394,677 Income from external transaction ascribes to the area where custom located.
Shanghai Zhenhua Heavy Industries Co., Ltd
Note for financial statements (continued)
Dec. 31,2016
RMB Yuan
XIV. Other important matters (continued)
1. Report by branches (continued)
Geographic (continued)
Non-current assets
2016 2015 Mainland China 19,820,827,959 19,972,238,305 Asia (excluding mainland 3,418,721,827 3,435,683,134 China)
Others 37,392,161 10,189,659 23,276,941,947 23,418,111,097 Non-current asset ascribes to the local area, excluding financial asset and deferred income tax assets.
1. Details of non-recurring profit and loss for current period
2016 2015 Gains from disposal of 1,340,612 9,338,797 non-current assets
Government subsidy included
in the current profits and
losses
(except for those which 45,042,910 22,847,200 closely associated with
normal business operations,
in line with national
policies and regulations,
and continuous enjoyment in
accordance with certain
standards in terms of
unified quota or ration)
Holding of trading financial
assets and liabilities
Profit and loss from change 23,420,959 445,766,951 of fair values due to the
holding of trading financial
assets and liabilities, and
investment incomes obtained
from the disposals of
trading financial assets and
liabilities and
available-for-sale
financial assets
Current profit and loss of - 55,523,666 the subsidiary generated
from consolidation of
enterprises under the same
control from the beginning
to the end of the period
1. Details of non-recurring profit and loss for current period (continued)
Other non-operating incomes 6,435,660 15,490,536 and expenditures except
above items
Income tax influence (14,557,550) (90,577,182) Minority shareholders’ (6,708,080) (31,568,397) equity influence (after tax)
54,974,511 426,821,571 2. Return on equity and earnings per share
Earnings per share
Weighted average return on net Basic earnings per share Diluted earnings per share assets yield(%)
2016 2015 2016 2015 2016 2015 Net profit 1.41% 1.41% 0.05 0.05 0.05 0.05 attributive to
holders of
common shares
of the Company
Net profit 1.05% (1.45%) 0.04 (0.05) 0.04 (0.05) attributive to
holders of
common shares
of the Company
after deducting
the
non-recurring
profit and loss
Chapter XII Backup Documents Contents
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|Backup documents contents|Accounting statements signed and sealed by legal representative, responsible person foraccounting, and responsible person of accounting firm.|
|Backup documents contents|Original of audit report sealed by accountant firm and signed and sealed by certifiedaccountant.|
|Backup documents contents|Originals of all documents and announcements published in newspaper designated byChina Securities Regulatory Commission within report period|

Director: Song Hailiang Date of submission upon approved by the board of director: March 29, 2017 Revised information
□Applicable√Not applicable