Annual Report 2017 Stock code: 600320 900947 Stock Name: Zhenhua Heavy Zhenhua B-share
Shanghai Zhenhua Heavy Industries Co., Ltd.
Annual Report 2017
Important Notice
I. The Board of Directors, the Board of Supervisors and directors, supervisors and senior executives of the Company hereby guarantee the truthfulness, accuracy and completeness of the contents in this annual report; it contains no major omission, false record or serious misleading statement; they will assume the legal responsibilities jointly and separately.
II. All directors of the Company are present at the board meeting.
III. Ernst& Young LLP. (Special general partnership) issued the standard unqualified audit report for the Company.
IV. Zhu Lianyu, the person in charge of the Company, Huang Qingfeng responsible person for accounting, and Zhu Xiaohuai , the leading accountant of accounting department (accountant in charge) hereby declare that the financial statements in this Annual Report are true, accurate and complete.
V. The profit distribution preplan or the common reserves capitalizing preplan during the reporting period reviewed by the board of directors
Based on the total capital stock of 4,390,294,584 shares by Dec. 31, 2017, distribute RMB 0.5 Yuan (in cash) (including tax) from the undistributed profit by Dec. 31, 2017 to all of the stockholders, with the total stock dividend of RMB 219,514,729Yuan to be distributed.
Based on the total capital stock of 4,390,294,584 shares by Dec. 31, 2017, transfer 2 shares per 10 shares from the capital reserves to all of the stockholders, totaling 878,058,917 shares to be transferred (with the face value of each share of RMB 1 Yuan); after transferring, the total capital stock of the Company is 5,268,353,501 shares.
VI. Risks declaration of prospective statements
□Applicable√Not applicable
VII. Whether non-operational fund occupancy by the controlling shareholder or its related parties exists?
No.
Annual Report 2017 VIII. Does the Company provide the outward guarantees in breach of the stipulated decision-making process?
No.
IX. Major risk warnings
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
Annual Report 2017 Contents
Chapter I Definition ............................................................................................... 4 Chapter II Company Profiles and Key Financial Indicators .................................... 4 Chapter III Business Profile ..................................................................................... 8 Chapter IV Discussion and Analysis of Operation Performance .............................. 8 Chapter V Substantial Events............................................................................... 21 Chapter VI Changes in Ordinary Shares Capital and Shareholders ...................... 39 Chapter VII Related Information about Preference Shares .................................... 44 Chapter VIIIDirectors, Supervisors, Senior Management and Staff 45
Chapter IX Corporate Governance ........................................................................ 54 Chapter X Corporate Bonds ................................................................................. 56 Chapter XI Financial Reports ................................................................................ 57 Chapter XII Catalogue of Documents available for Inspection ........................... 325
Annual Report 2017 Chapter I Definition
I. Definition
Terms used in this report shall be defined as follows, unless otherwise specified:
|||||
|-|-|-|-|
|Definition of frequently used terms||||
|Company, theCompany|Refers to|Shanghai Zhenhua Heavy Industries Co., Ltd.||
|CCCC|Refers to|China Communications Construction Company Ltd.||
|CCCG|Refers to|China Communications Construction Group||
|CCCG HK|Refers to|CCCG (HK) Holding Limited.||
|PPP|Refers to||Public-Private-Partnership, a cooperation mode between the|
||||government and the social capital, refers to the pooling of|
||||interest, allocation of risks and the long-term cooperation|
||||relationship established between the government and the social|
||||capital by means of licensed operation, service procurement and|
||||stock equity cooperation in order to increase the supply capability|
||||of the public goods and services and improve the supply|
||||efficiency.|
|Reporting period|Refers to||From Jan. 1, 2017 to Dec. 31, 2017|

Chapter II Company Profiles and Key Financial Indicators
I. Company information
|||
|-|-|
|Company name in Chinese|上海振华重工 (集团)股份有限公司|
|Chinese Abbreviation of the Company|振华重工|
|English name of the Company|SHANGHAI ZHENHUA HEAVY INDUSTRIES CO.,LTD.|
|English Abbreviation of the Company|ZPMC|
|Legal representative|Zhu Lianyu|

II. Contact information
|||
|-|-|
||Board secretary|
|Name|Sun Li|
|Address|No. 3261 Dongfang Road, Shanghai|
|Tel.|021-50390727|
|Fax|021-31193316|
|Email|IR@ZPMC.COM|

III. Basic information of the Company
|||
|-|-|
|Registered address|No. 3470, South Pudong Road, Shanghai|
|Post code of registered address|200125|
|Office address|No. 3261 Dongfang Road, Shanghai|
|Post code of office address|200125|
|Website|Http://www.zpmc.com|
|Email|IR@ZPMC.COM|

Annual Report 2017 IV. Information disclosure and reference
|||
|-|-|
|Designated media for information disclosure|Shanghai Securities News, Hong Kong Wen WeiPo|
|Website designated by China SecurityRegulatory Commission for disclosure ofannual report|www.sse.com.cn|
|Annual report available at of the Company|Securities Office|

V. Stock Profiles of the Company
||||||
|-|-|-|-|-|
|Stock Profiles of the Company|||||
|Stock type|Stock exchange listedat|Stock Name|Stock code|Stock before change|
|A-share|Shanghai StockExchange|Shanghai ZhenhuaHeavy|600320|ZPMC Industries|
|B-share|Shanghai StockExchange|Zhenhua B-share|900947|-|

VI. Others
||||
|-|-|-|
|Public accounting firm employedby the Company (domestic)|Name|Ernst & Young (special generalpartnership)|
||Office address|Room 01-12, 17th Floor, AnyongBuilding, Dongfang Plaza, No.1 ChanganStreet, Dongcheng District, Beijing|
||Name ofaccountants forsignature|Yang Lei, Liu Wei|

VII. Major Accounting Data and Financial Indicators in Last Three Years
(I) Major accounting data
Unit: Yuan Currency: RMB
||||||
|-|-|-|-|-|
|Major accounting data|2017|2016|Year-on-year GrowthRate (%)|2015|
|Operating Income|21,858,814,000|24,348,087,928|-10.22|23,272,394,677|
|Net Profit Attributable toShareholders of theListed Company|300,195,422|212,419,946|41.32|212,411,967|
|Net Profit Attributable toShareholders of theListed Company afterNon-recurringGains/Losses|277,837,568|157,445,435|76.47|-214,409,604|
|Net Cash Flow fromOperating Activities|1,332,209,274|1,658,422,636|-19.67|-1,831,961,473|
||End of 2017|End of 2016|Year-on-year GrowthRate (%)|End of 2015|
|Net Asset Attributable toShareholders of theCompany|15,011,306,366|15,196,736,263|-1.22|14,869,572,883|
|Total Assets|67,519,953,829|60,823,819,098|11.01|59,020,752,259|

Annual Report 2017 (II) Major financial indicators
||||||
|-|-|-|-|-|
|Major financial indicators|2017|2016|Year-on-yearGrowth Rate (%)|2015|
|Basic EPS (Yuan/share)|0.068|0.048|41.67|0.05|
|Diluted EPS (Yuan/share)|0.068|0.048|41.67|0.05|
|Basic EPS after Non-recurring Gains/Losses(Yuan/share)|0.063|0.036|75.00|-0.05|
|Weighted Average ROE (%)|1.99|1.41|+0.58 base point|1.41|
|Weighted Average ROE after Non-recurringGains/Losses (%)|1.84|1.05|+0.79 base point|-1.45|

Description of the main accounting data and financial indicators for the first three years at the end of the reporting period
□Applicable√Not applicable
VIII. Differences in accounting data under domestic and international accounting standards
(I) Difference between net profit and net assets attributable to shareholders of listed company in the financial report synchronously disclosed according to international accounting standards and domestic accounting standards.
□Applicable√Not applicable
(II) Difference between 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) Explanation for differences between the international and Chinese accounting standards:
□Applicable√Not applicable
IX. Quarterly Major Financial Data in 2017
Unit: Yuan Currency: RMB
||||||
|-|-|-|-|-|
||Q1 (Jan. to Mar.)|Q2 (Apr. to Jun.)|Q3 (Jul. to Sep.)|Q4 (Oct. to Dec.)|
|Operating Income|4,223,173,077|6,393,613,804|4,589,496,658|6,652,530,461|
|Net Profit Attributable toShareholders of the Company|66,367,907|49,063,413|55,547,130|129,216,972|
|Net Profit Attributable toShareholders of ListedCompany after Non-recurringGains/Losses|65,423,907|44,138,085|44,317,567|123,958,009|
|Net Cash Flow from|581,290,268|-535,238,734|45,918,788|1,240,238,952|

Annual Report 2017
||
|-|
|Operating Activities|

Description of difference between quarterly data and disclosed periodic data
□Applicable√Not applicable
X. Non-recurring profit and loss items and amount
√Applicable□Not applicable
Unit: Yuan Currency: RMB
|||||
|-|-|-|-|
|Non-recurring Profit and Loss Items|Amount in 2017|Amount in 2016|Amount in2015|
|Profit and loss from disposal of non-currentassets|13,285,984|1,340,612|9,338,797|
|Governmental subsidies included in currentprofit and loss, except those closely related tothe Company's normal business operation,meeting the regulation of national policy andenjoying constantly in certain quota or quantityaccording to a certain standard|83,502,544|45,042,910|22,847,200|
|Net current profit and loss of the subsidiaryunder the same control of the company fromthe beginning to the consolidated day|0|0|55,523,666|
|Except for valid hedging business related withthe Company’s normal operation, profit andloss from fair value changes in tradablefinancial assets, liabilities held and theinvestment income from disposal of tradablefinancial assets and liabilities and financialassets available for sale|20,563,270|23,420,959|445,766,951|
|Other non-operating incomes and expendituresexcept for those above mentioned|-70,077,032|6,435,660|15,490,536|
|Amount affected by minority shareholders’interest|-14,565,022|-6,708,080|-31,568,397|
|Amount affected by income tax|-10,351,890|-14,557,550|-90,577,182|
|Total|22,357,854|54,974,511|426,821,571|

 XI. Items calculated by fair value
√Applicable□Not applicable
Unit: Yuan Currency: RMB
||||||
|-|-|-|-|-|
|Item name|BeginningBalance|ClosingBalance|Changes|Impact on CurrentProfit|
|Trading financial assets -equity instrument investment|0|8,438,278|8,438,278|0|
|Trading financial assets -derivative financial assets|4,615,775|0|-4,615,775|-4,615,775|
|Equity Instrument available forsale - Jiangxi Huawu|313,612,402|178,952,712|-134,659,690|665,346|
|Equity Instrument available forsale - Qingdao Port|340,253,175|451,528,660|111,275,485|12,103,621|
|Equity Instrument available forsale - CRSC|615,346,381|629,554,373|14,207,992|11,075,670|
|Equity Instrument available forsale - Shenwan Hongyuan|1,366,388|1,174,000|-192,388|21,866|
|Total|1,275,194,121|1,269,648,023|-5,546,098|19,250,728|

Annual Report 2017 XII. Others
□Applicable√Not applicable
Chapter III Business Profile
I. Main business, operation model and industry profile of the Company during the
reporting period
||
|-|
|The Company is a well-known enterprise in heavy equipment manufacturing industry, and is the|
|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|
|business scope of the Company 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 (in case of involving quota,|
|permit management, specific regulations, quality inspection, safety inspection and construction|
|qualification requirements, operate after obtaining corresponding qualification or permit in accordance|
|with the relevant national regulations).|

II. Description of the major changes in main assets of the Company during the reporting period
□Applicable√Not applicable
III. Analysis on the core competitiveness during the reporting period
√Applicable□Not applicable
There is no significant change in core competitiveness of the Company during the reporting period.
Chapter IV Discussion and Analysis of Operation Performance I. Discussion and analysis of the operation performance
||
|-|
|In 2017, confronted with the complicated economic situation both at home and abroad, guided|
|by the development strategy of “One Body Two Wings”, based on the gross working keynote of|
|“making progress while ensuring stability”, the board of directors and the management of the|
|Company led all the employees to rise to the challenge and make pioneering efforts, and|
|successfully achieved the moderate development of the Company and entered into a new stage of|
|the positive operation in an all-round way through strengthening the operation, continuously|
|carrying out reforming and innovation and upgrading the management in an all-round way.|
|During the reporting period, the Company had made great achievements in the adjustment of|
|the business structure, the business sectors had developed in an orderly manner, risks mitigation|
|had been achieved an initial success and the profitability had been stably improved. The|

Annual Report 2017
||
|-|
|development of our business in port machine is sound and solid, and the products had successfully|
|entered 99 countries and regions and had continuously taken the first place in the global market|
|share for 19 years. The ocean engineering had continuously sought for the new opportunity in such|
|recovering market. The steel structure business had developed in good condition. The general|
|system contracting had made pleasant progress and many projects had been put into place. The|
|largest full-auto dock in the world, namely Yangshan Port, being built by the Company as a|
|participant, was successfully opened in Dec. 2017. At the same time, the Company had|
|successfully undertaken the general system contracting of many automatic docks at abroad and|
|thoroughly revealed its comprehensive strength in construction of the automatic dock. The|
|investment business had gradually closed to the related fields of the primary service of the company|
|step by step and made great pleasant achievements. As to the electric business, the market share|
|had been continuously rising through the independently developed EZ brand. The shipping|
|business had been expanded in an all-round way. The integrated service has a promising outlook.|

 II. Operation performance during reporting period
In the reporting period, the Company realized operation revenue of RMB 21.859 billion Yuan, decreased by10.22%; realized the net profits of RMB 422 million Yuan, increased by14.34%; the net profit attributable to parent company was RMB 300 million Yuan, increased by41.32%.
(I) Major business analysis
Analysis on Changes in the income statement and cash flow statement
Unit: Yuan Currency: RMB
|||||
|-|-|-|-|
|Item|Report Year|Prior Year|Growth (%)|
|Operating Income|21,858,814,000|24,348,087,928|-10.22|
|Operating Cost|18,019,075,299|19,727,663,875|-8.66|
|Selling expenses|121,457,892|100,435,778|20.93|
|Management expenses|1,742,167,300|1,759,032,746|-0.96|
|Financial expenses|758,201,305|1,218,992,788|-37.80|
|Net cash flow from operating activities|1,332,209,274|1,658,422,636|-19.67|
|Net cash flow from investmentactivities|-1,681,611,030|-726,215,078|NA|
|Net cash flow from financing activities|2,576,865,754|152,344,993|1,591.47|
|R&D expenses – expensing expenses|702,392,513|851,544,356|-17.52|
|Asset impairment loss|824,836,448|1,221,116,175|-32.45|
|Non-operating income|29,343,558|56,993,416|-48.51|
|Non-operating expenditure|92,116,253|5,514,846|1,570.33|
|Income tax expense|92,319,416|61,516,908|50.07|
|Net profit attributable to the owner ofthe parent company|300,195,422|212,419,946|41.32|
|Minority interest|29,247,998|94,924,290|-69.19|
|Balance arising from the translation offoreign currency financial statements|-30,234,827|25,605,643|-218.08|

Annual Report 2017 1. Revenue and cost analysis
√Applicable□Not applicable
The decrease in operating revenue and operating cost was mainly attributed to the decrease in the orders of the offshore heavy duty equipment in this year, which resulted in the reduction in operating revenue/operating cost.
The sales expenses increased due to the expansion and marketing on global market.
The management expenses decreased because theR&D expense decreased this year.
The decrease in financial expenses was mainly attributed to by the increase in the gain on foreign exchange as a result of the fluctuation of the exchange rate of RMB to USD.
The net cash flow amount in operation changed because the raw materials purchasing expenses and payment of engineering expenses increased.
The change in the net amount of cash flows from investing activities was mainly attributed to by the decrease in the payment for the cash flow for investment of this Company.
The increase in the net cash flow from financing activities was mainly attributed to by the increase in the loan from the bank by this Company in this year.
The decrease in the payment forR&D was attributed to by the one in the payment forR&D of this Company.
The decrease in the assets impairment loss was mainly attributed to by the decrease in the provision for impairment and the expected contracted losses.
The decrease in the non-business revenue was mainly attributed to by the change in the accounting standard as well as the governmental subsidy related to the day-to-day operations of the Company which was charged to other revenues.
The increase in the non-business revenue was mainly attributed to by the compensation for the judgment of the case related to British Fluor Wind Power Generation Project.
The increase in the income tax was mainly attributed to by the one in the total profit of this Company in this year.
The increase in the net profit attributed to the owner of the parent company was mainly attributed to by the one in the total net profit of the sole subsidiaries under this Company in this year.
The minority interest decreased because the total net profit of the non-wholly owned subsidiaries of the Company decreased.
The decrease in the conversion difference of foreign currency statements was mainly caused by the fluctuation of the exchange rate of RMB to USD.
(1). Major business by industry, product and region
Unit: Yuan Currency: RMB
||||||||
|-|-|-|-|-|-|-|
|Major business by products|||||||
|By product|OperatingIncome|Operation cost|Grossmargin (%)|Operationrevenueincreaseover prioryear (%)|Operation costincreaseover prioryear (%)|Gross marginincrease overprior year (%)|
|Container cranes|13,120,859,480|9,940,403,610|24.24|-23.19|-23.93|+0.74|
|Bulk-cargomachinery parts|1,615,504,267|1,551,779,298|3.94|-48.8|-49.2|+0.77|
|Heavy equipment|3,384,886,419|3,084,117,712|8.89|163.44|140.99|+8.49|
|Steel structure andrelated income|1,520,119,032|1,487,522,614|2.14|46.75|58.57|-7.29|
|Build-transfer , PPPprojects|1,549,820,489|1,548,520,638|0.08|54.2|51.95|+1.48|
|Vessel shipping andothers|451,081,492|281,599,002|37.57|-22.26|69.35|-33.77|
|Major business by region|||||||
|By region|Operating|Operation cost|Gross|Operatio|Operatio|Gross margin|

Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
||Income||margin (%)|nrevenueincreaseover prioryear (%)|n costincreaseover prioryear (%)|increase overprior year (%)|
|Mainland China|10,142,318,348|9,432,323,323|7.00|11.98|25.99|-10.34|
|Asia (excludingMainland China)|5,410,267,855|4,076,972,241|24.64|-38.34|-45.31|+9.60|
|America|2,548,717,321|1,860,108,627|27.02|53.47|81.43|-11.25|
|Europe|462,606,586|201,531,690|56.44|-72.70|-87.12|+48.75|
|Mainland China(export)|1,372,828,183|1,142,998,882|16.74|-29.23|-8.60|-18.8|
|Africa|1,384,873,367|920,862,698|33.51|70.02|52.04|+7.87|
|Oceania|320,659,519|259,145,413|19.18|59.10|87.27|-12.16|

 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
□Applicable√Not applicable
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
||||||||
|-|-|-|-|-|-|-|
|Major business by product|||||||
|Product|Cost composition|Reportperiodamount|Reportperiodrate intotalcost (%)|Amount in thesame period lastyear|Totalcost inthesameperiodlastyear(%)|Reportperiodamountcomparedwith thesameperiodlast year(%)|
|Containercranes|Raw material, labor,production costs|9,940,403,610|55.56|13,067,811,357|66.94|-23.93|
|Heavyequipment|Raw material, labor,production costs|3,084,117,712|17.24|1,279,775,256|6.55|140.99|
|Bulk-cargomachinery parts|Raw material, labor,production costs|1,551,779,298|8.67|3,054,772,000|15.64|-49.2|
|Build-transfer ,PPP projects|Raw material, labor,production costs|1,548,520,638|8.65|1,019,082,565|5.22|51.95|
|Steel structure|Raw material, labor,production costs|1,487,522,614|8.31|938,105,979|4.8|58.57|
|Vessel shippingand others|Raw material, labor,production costs|281,599,002|1.57|166,282,313|0.85|69.35|
|Total||17,893,942,874|100.00|19,525,829,470|100.00|-8.36|

Other description of cost analysis
□Applicable√Not applicable
Annual Report 2017 (4). Main clients and suppliers
√Applicable□Not applicable
The sales of the top five clients reached to RMB 4,021.41 million Yuan which accounted for18% of the whole sales, and the related sales among them were RMB 728.95 million Yuan which accounted for3% of the whole sales.
The purchase amount of the top five suppliers reached to RMB 1,647.33 million Yuan, which accounted for12.04% of the whole.
2. Cost
□Applicable√Not applicable
3. R&D investment
R&D investment table
√Applicable□Not applicable
Unit: Yuan
|||
|-|-|
|R&D expense in current period|702,392,513|
|Capitalized R&D expense in current period|22,968,076|
|Total R&D expense|725,360,589|
|Total R&D expenses ratio in operation revenue (%)|3.32|
|Number of R&D employees|1599|
|R&D employees’ ratio in the total employees (%)|18.05|
|Proportion of capitalization of R&D investment (%)|3.17|

 Statement of situation
√Applicable□Not applicable
The Company had built and accomplished the scientific research and innovation systems of the research headquarters and6+1 research branches and effectively established the organizational structure and operation mode of the research headquarters. It had actively accelerated the
|||
|-|-|
||It had applied for 208 patents in total, with the growth|
|rate of 98% on year-on-year basis, with 67 patents approved, among which there were 24 patents of||
|invention. Many key innovation technologies including the new port machine intelligent R&D||
|platform, the port machine equipment automation and the offshore wind power installation||
|multi-function platform had been successfully transformed and put into use. It had accomplished||
|the reevaluation of the hi-tech enterprise for 2017, with 15% of the income tax debated. There||
|were 13 projects approved by the ministries and commissions of the state. The project of “Key||
|Technology for Handling System of Automatic Container Dock” was granted First Prize for Scientific||
|and Technical Progress in Shanghai City in 2017.||

4. Cash flow
√Applicable□Not applicable
The net cash flow from operating activities was RMB 1.332 billion Yuan, mainly due to the decrease in payment received for sales of goods and rendering of service and decrease in engineering funds. The net cash flow from the investment activities was RMB -1.682 billion Yuan, mainly due to the decrease in the expenditure of investment cash flow of the Company. The net cash flow from the financing activities was RMB 2.577 billion Yuan, mainly due to the increase in bank borrowings this year.
Annual Report 2017 (II) Description of non-major business causing significant change to profit
□Applicable√Not applicable
(III) Assets and liabilities analysis
√Applicable□Not applicable
1. Assets/liabilities statements
Unit: Yuan
|||||||
|-|-|-|-|-|-|
|Item|Closing balanceof currentperiod|Proportionin totalassets (%)|Closingbalance of lastperiod|Proportionin totalassets (%)|Changeproportion(%)|
|Monetary fund|5,770,227,369|8.55|3,597,044,199|5.91|60.42|
|Financial assetsmeasured at fairvalue with changesincluded in currentprofit and loss|8,438,278|0.01|4,615,775|0.01|82.81|
|Notes receivable|420,786,012|0.62|296,920,781|0.49|41.72|
|Other receivables|996,161,366|1.48|736,554,593|1.21|35.25|
|Non-current assetsdue within one year|1,896,475,472|2.81|1,384,438,569|2.28|36.99|
|Construction inprogress|1,889,146,009|2.80|4,025,449,461|6.62|-53.07|
|Goodwill|265,188,465|0.39|149,212,956|0.25|77.72|
|Accounts payable|6,887,598,171|10.20|5,103,018,897|8.39|34.97|
|Deposit received|591,727,255|0.88|292,941,206|0.48|102.00|
|Non-currentliabilities due withinone year|2,198,931,219|3.26|799,574,356|1.31|175.01|
|Long term loans|6,664,914,383|9.87|3,925,335,497|6.45|69.79|
|Accrued liabilities|464,888,663|0.69|293,115,783|0.48|58.60|
|Other non-currentliabilities|152,954,098|0.23|56,025,416|0.09|173.01|
|Minority equity|1,817,314,295|2.69|1,290,413,687|2.12|40.83|

 Statement of situation
The monetary fund increased because the account receivable was received and the external payment was decreased.
The increase in the financial assets measured with the fair value, with the change charged into current profits and losses, was mainly attributed to the increase in the investment in the equity instruments of this Company.
The increase in the notes receivable was mainly attributed to the increase in thebanker’s acceptance bill in the loan received by this Company.
The increase in other accounts receivable was mainly attributed to the increase in the taxes for the receivable but unsettled accounts and the performance bond for bidding.
The increase in non-current assets due within one year was mainly because the increase of the long-term receivables of “construction-transfer” project was due.
The decrease in the construction in progress was mainly attributed to the completion of the construction in progress of the Company which changed to the fixed assets.
The increase in the goodwill was mainly attributed to the increase of the goodwill caused by the
acquisition of the companies by this Company.
The increase in the account payable was mainly attributed to the increase in the payment for goods
payable for the procurement of the materials by this Company.
Annual Report 2017 The increase in the advance payment from customers was mainly attributed to the increase in the advanced contracted value of this Company in this year.
Non-current liabilities due within one year increased because the long-term loan that due within one year increased.
The increase in the long-term loans was mainly attributed to the increase in the long-term loans of this Company from the banks over one year.
The increase in the accrued liabilities was mainly attributed to the increase in after-sale service cost of this Company and the withheld litigation compensation for British wind power project.
The increase in other non-current liabilities was mainly attributed to the increase in the pending output tax of this Company.
The minority equity increased because the capital investment of the minority shareholders increased this year.
2. Restriction on main assets by the end of reporting period
√Applicable□Not applicable
||||
|-|-|-|
|Item|Final book value|Reasons of restriction|
|Monetary fund|96,380,368|Bank guarantee deposit|
|Fixed assets|4,124,080,499|Mortgage of loans|
|Long-term account payable|2,571,908,986|Mortgage of loans|
|Total|6,792,369,853|-|

3. Others
□Applicable√Not applicable
(IV) Industry operating conditions analysis
√Applicable□Not applicable
During the reporting period, the Company signed the new contract of port machinery with amount of 2.52 billion USD, decreased by3.7% on yearly basis. The Company signed new contracts of ocean engineering products and steel structure with amount of 714 million USD, increased by32.96% on yearly basis. The Company signed new contracts of investment business with amount of RMB 12.35 billion Yuan, increased by23.24% on yearly basis.
The port machine industry was influenced by the cutback of the global economy and trade, the investment in the dock equipment was relatively reduced, as a result, the new orders of the Company in 2017 fell down. In 2018, although the Company expects that the overall recovery of the port machine industry needs a certain time, the overall market resurgence trend is obvious, the market will pay more attention to the systematized competitiveness. At the same time, the demand for newly building ports and docks in the countries and regions along Belt and Road is more intense, the service life of the in-service port machine expires, the shipping centers and free trade ports are being built and the port automation is being upgraded and reconstructed, as a result, the market demand for the port machine and equipment will be driven. In the future, the Company will exert itself to expand the general contracting of the automatic dock, establish the special automatic dock
popularization group and vigorously generalize the automatic dock system resolutions in an
all-round way so as to guarantee the stable development of the port machine business.
Annual Report 2017 In 2017, the international oil price, rose up after fell down, indicated a wide oscillation rising trend in overall.. Influenced by the bull of the rise in the oil price, the market retains an optimistic attitude towards the offshore engineering industry; the offshore engineering equipment market touches ground and tends to stabilize, however, the offshore equipment manufacturers are still confronted with the pressure in a short time such as business decline, difficulty in getting profit and high inventory. In a short period, the Company will continue to adjust the structure, change the direction and carry out the destocking to deal with the market trough. With respect to the large-sized, heavy-type and special-type steel structure market, with the in-depth implementation of the national proposal for “Belt and Road”, the starting of the large-sized capital construction projects at home and abroad and the recovery of the offshore wind power market, the market capacity increases, the market changes for the better and the orders increase in a sustainable manner. However, it is also confronted with the rise in the price of the raw materials, more and more participants and more and more intense competition. As to the investment business, with the diversification of the services, it will focus on the policy orientation and risk control.
(V) Investment analysis
1. Overall analysis of external equity investment
√Applicable□Not applicable
|||
|-|-|
|Investment amount at the end of reporting period (Yuan)|3,624,674,426|
|Changes in investment amount (Yuan)|109,680,467|
|Investment amount over a year earlier (Yuan)|3,514,993,959|
|Increase or decrease percentage of investment amount (%)|3.12|

 (1) Major equity investment
□Applicable√Not applicable
(2) Major non-equity investment
□Applicable√Not applicable
(3) Finance assets measured at fair value
√Applicable□Not applicable
Stock ownership held in other listed companies
||||||||||
|-|-|-|-|-|-|-|-|-|
|Stockcode|Shortform ofstock|Initialinvestmentcost|Initialshareholdingratio (%)|Finalshareholdingratio (%)|Final bookvalue|Gainsandlosses ofreportingperiod|Owner’sequitymovement ofreportingperiod|Accountingaccount|
|300095|HuawuShare|11,071,606|5.9|5.9|178,952,712|665,346|-134,659,690|Finance assetsavailable-for-sale|
|03969|CRSC|617,854,000|1.4|1.4|629,554,373|11,075,670|14,207,992|Finance assetsavailable-for-sale|
|06198(H-share)|QingdaoPort|308,515,588|2.16|1.71|451,528,660|12,103,621|111,275,485|Finance assetsavailable-for-sale|

Share-participating condition of financial companies
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Stock|Short|Initial|Initial|Final|Final|Gains|Owner’s equity|Accounti|Source of|

Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|code|form ofstock|investmentcost|shareholdingratio (%)|shareholding ratio(%)|bookvalue|andlosses ofreportingperiod|movement ofreportingperiod|ngaccount|equity|
|000166|ShenwanHongyuan|200,000|＜0.01|＜0.01|1,174,000|21,866|-192,388|Financeassetsavailable-for-sale|Subscription|

 (VI) Major assets and equity sales
□Applicable√Not applicable
(VII) Major holding companies and joint-stock companies√Applicable□Not applicable
||||||
|-|-|-|-|-|
|Company name|Major product or service|Registeredcapital|Asset scale|Netprofit/(loss)|
|Shanghai ZhenhuaShipping Co., Ltd|Operation of sea transportation incoastal waters; ordinary transportationin the middle and lower reaches ofYangtze River; transportation of portmachinery.|120,000,000|2,722,835,624|14,844,515|
|Shanghai ZhenhuaPort Machinery(Hong Kong) Co.,Ltd.|Design, manufacturing and sales of portmachinery, engineering vessel, steelstructure and other parts|50,000,000 HKD|11,659,509,205|141,063,708|
|Shanghai ZhenhuaHeavy PortMachinery GeneralEquipment Co., Ltd.|Sales of port loading machine, bulkcargo and container machine, portengineering vessels (including floatingengineering crane), material handlingmechanical products and parts, salesand technical services, installation andmaintenance, technical consultation ofall types of machine and equipment,key parts of the raw materials andaccessories equipment.|2,184,730,000|2,280,424,373|20,307,453|
|Shanghai ZhenhuaHeavy Industries(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 anchorcutter, offshore oil platform lifting deviceand components, accessories relatedweaving.|300,000,000|2,820,384,054|10,889,450|
|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|1,436,283,711|-41,533,182|
|Tianhe MechanicalEquipmentManufacturing Co.,Ltd of CCCC|Integration design, R&D andmanufacturing of shield machinesystem with diameter of over6m;integration design, R&D andmanufacturing of tunnel boringmachine (TBM) system withdiameter of over 5m; design, R&D andmanufacturing of marine machinery and|681,627,100|4,182,299,545|58,140,097|

Annual Report 2017
||||||
|-|-|-|-|-|
||parts, cranes and parts, bridges andhigh damping bracket for buildings;sales of self-produced products. Wholesales and import & export business ofmarine machinery and parts, cranesand parts, bridges and high dampingbracket for buildings (if thestate-operated trade commodities,design quota and license managementis not involved, the related nationalrules will prevail);installation,maintenance, leasing, consulting,technical services for ourproducts.(foreign capital proportion isless than 25%) (as for the itemsrequiring the approval, carry out thebusiness activities after obtaining theapproval from the authorities)||||
|Shanghai ZhenhuaHeavy IndustriesQidong OceanEngineering Co.,Ltd|Machinery manufacturing|303,000,000|2,042,858,235|-176,635,961|
|Shanghai ZhenhuaOcean EngineeringService Co., Ltd|International land, air, maritime freightforwarding, business, domestic freightforwarding, undertaking large-scale portequipment, marine equipment, oceanengineering materials sales, marineconstruction and engineering and shipleasing, engaged in import and exportof goods and technologies, transittrade, trade between enterprisesand trade agents within the freetrade zone.|100,000,000|297,910,175|5,125,239|
|Nanjing NinggaoNew ChannelConstruction Co.,Ltd|Engaged in construction, investmentand management of Ninggao newchannel project.|100,000,000|1,918,373,079|72,159,919|
|Zhenhua PufengWind Energy (HongKong) Co., Ltd|Offshore wind turbine installation|16,326,531 USD|23,942,973|-32,106,589|
|CCCC FinancialLeasing Co., Ltd|Financing lease|5,000,000,000|26,580,144,879|272,052,060|
|ChinaCommunicationsConstructionUSA Inc.|Construction of port, waterway,highway and bridge.|50,000,000USD|280,386,057|-19,040,428|
|CCCC EstateYixing Co., Ltd.|Engaged in real estate development.|900,000,000|1,328,507,016|12,425,899|
|Jiangsu LongyuanZhenhua OceanEngineering Co.,Ltd|Steel structure fabrication andinstallation, Foundation construction ofoffshore wind power facilities,equipment installation andmaintenance, submarine cable systemconstruction, maintenance, marineconstruction, equipment installation andmaintenance, and installation ofequipment leasing.|26,000,000|1,630,604,923|69,370,135|
|Greenland HeavyLift (Hong Kong)Limited|Shipping|91,975,158 USD|837,272,543|17,523,291|

Annual Report 2017 (VIII) Structure entity under the control of the Company
□Applicable√Not applicable
III. Discussion and analysis of theCompany’s future development
(I) Sector competition pattern and development trend
√Applicable□Not applicable
||
|-|
|In the reporting period, the global economic recovery trend was obvious and the|
|macro-economic indexes of the main economic entities changed for the better. However, the|
|factors including the tense situation of geopolitics, the political and economic trend of USA, rise of|
|the total global debts and the rise of the isolationism intensified the uncertainty of the global political|
|and economic situation.|
|Now the economy in China is in the critical period of transforming the development mode,|
|optimizing the economic structure and transforming the growth power. The report on 19th National|
|Congress of the Communist Party of China proposed the strategy of vigorously developing the real|
|economy and building a transportation power, marine power and manufacture power. The overflow|
|effect of the powerful national strategy will bring the new opportunity to the development of the|
|Company. Meanwhile, the trend of the in-depth fusion of the information technology with Internet,|
|big data and AI as the representative and manufacturing industry accelerates the Company to|
|upgrade the core competition.|
|The global port machine market pays more attention to the systematized competition. The|
|competition of the stand-alone market of the traditional port machine is still intense. Belt and Road|
|proposed that the countries along it should increase the new-type port and the demand for|
|procurement of the new machine is obvious. The service life of the in-service port machine expires|
|and the old port machine is in the stage of renewal. The construction of shipping center and free|
|trade port will release the new demand; the upgrade and reconstruction of the port automation will|
|become the main force of the port machine market in the future.|
|The offshore engineering market faces the recovery. Affected by the factors such as the|
|reduction of output of OPEC and the intensified geopolitical risk, the international oil price firstly fell|
|down and then rose and it rose up in a wave-like way in a wide range in 2017, WTI oil price was at|
|USD 40-60 dollars/barrel in the whole year. At the beginning of 2018, the oil price in the world|
|continues to rise, which increases the drive of the oil enterprise to produce the crude oil and the|
|optimistic emotion about the “initial recovery” of the offshore engineering continues to increase.|
|The primary keynote of PPP investment policy turns to prevent the risk and standardize the|
|project. In 2017, the state successively issued a series of documents and the focus of PPP policy|
|turned to standardization and risk prevention from the landing rate. State-owned Assets Supervision|
|and Administration Commission of the State Council took measures to prevent the central|
|enterprises from the operation risks of participating in PPP. It required that the company should|
|increase the risk consciousness, pay attention to the market order and management, strictly control|

Annual Report 2017
||
|-|
|the risk and select the project and carry out the project without ostentation in implementing PPP|
|project.|
|Other increment market faces the development opportunity. The offshore transportation and|
|installation market recovers together with the offshore engineering market. It is expected that the|
|transportation market of the heavy and large parts for the offshore engineering will bounce back,|
|water power engineering market and offshore wind power installation market will continue to provide|
|the good achievements support; the steel structure market, the electric market and the smart city|
|construction market compete intensely, so the Company shall exert its unique advantages to enter|
|the high-end differentiated market; the global service market has wide market space.|

(II) Development strategy of the Company
√Applicable□Not applicable
||
|-|
|With “equipment manufacture” as the main body, “capital operation” and “Internet” as two wings|
|it aims to build “Flag + Flagship” of Chinese national industry. “One main body and two wings”|
|strategy is a new strategy for transformation and upgrade of the Company, based on objective|
|analysis of development stage and orientation, in combination with the development features of|
|equipment manufacturing industry, on account of the current and future national and industrial|
|development trend around “Industry 4.0”, “China Manufacture 2025” and trial reform of state-owned|
|capital investment company. “Capital operation” will help the Company to extend the industrial chain|
|of the port machine business and create the full industrial chain of marine heavy industry and|
|offshore wind power full industrial chain; help the Company and the customers as well as the|
|partners to form a community of common destiny with the capital as the tie. The digitized|
|transformation and upgrade of the Company under “Internet” can accelerate the upgrade of the|
|information system in an all-round way and create the cloud platform through the top|
|information-oriented design of the Company to offer more convenient, efficient, intelligent and|
|integrated service to the global customers and greatly improve the management level and operation|
|efficiency of the company.|

(III) Business plan
√Applicable□Not applicable
Guide by “one main body and two wings” strategy, with improvement of operation achievements and profitability as the core, the Company will carry out the reform and innovation and deepen the fundamental management in an all-round way to realize the stable increase of the scale of the Company.
The port machine business, with the brand as the assistance, with the customer demand as the guide, with the market development as the objective, actively seeks for new business point of
growth while continuing to guarantee the global market position. The offshore engineering business
is in the market recovery and the existing risks are gradually eliminated. It aims at the high-end
Annual Report 2017 orientation, makes the overall arrangement in advance and expands the multiple services. The steel structure business focuses on the market of the high end “heavy, large and special” steel structure with relatively high value added for key incubation and stable development so as to build the core capability in a specialized manner. As to the low-end steel structure products with relatively low value added, improve its own profitability by means of cost reduction and efficiency increase. As to the marine transportation and installation market, seize the development opportunity of the wind power and vigorously accelerate the civil-military integration. As to the integrated service, bring the oversea efforts into full play and properly launch the innovation plan while sustainably stabilizing the routine business. The electric business shall regard serving the port machine business as the main goal, hold the core position and market share of the related technology, seize the opportunity and expand the increment scale. The general system contracting shall bring the brand advantages of the Company into full play, vigorously accelerate the intelligent development and carry out the scientific and technical innovation. Further expand the market advantages of the Company in the field of the general contracting for the automation dock system.
(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.|
|Countermeasures: facing the market challenges at home and abroad, the Company will|
|deepen the reform, consolidate the basic management and enhance the risk resistance, optimize|
|and adjust the market and business structure, look for increment from strategic opportunities,|
|business expansion, internal and external cooperation, investment and acquisition, and foreign|
|projects, to promote the structure adjustment and resources integration and to drive enterprise|
|sustainable development by transformation and upgrading.|
|Financial risks: credit risk and exchange rate risk, especially the large scale of|
|interest-bearing liabilities, increased volatility of the RMB bidirectional fluctuation of|
|exchange rate and large load capacity.|
|Countermeasures: 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 the company’s exchange rate risk. By arranging favorable settlement|
|terms in the contract (such as the signing of a contract with RMB exchange rate pegged, increase|
|the prepayments proportion plus early settlement, etc.), or 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 the Company’s debt structure through a variety of ways (such as medium-term notes,|

Annual Report 2017
||
|-|
|short-term bonds), reducing financing costs, strengthening the collection of accounts receivable,|
|gradually reducing the amount of bank debt, reduce business risks.|

(V) Others
□Applicable√Not applicable
IV. Explanation of the case and reasons that the Company does not disclose due to rules not applicable or special reasons
□Applicable√Not applicable
Chapter V Substantial Events
I. Profit distribution plan of ordinary shares or the plan of share capital increase from the accumulation fund
(I) 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 (ZJF[2012] No. 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) The Company's dividend distribution plan or proposal for ordinary shares and the plan or proposal for capital reserves transferred to share capital in recent 3 years (including the reporting period)
Unit: Yuan Currency: RMB
||||||||
|-|-|-|-|-|-|-|
|BonusYear|Bonusshare forevery 10shares(share)|Dividendfor every10 shares(Yuan)(beforetax)|Sharesconvertedfor every 10shares(share)|Cashdividendamount(before tax)|Net profitAttributable tolisted companyshareholders inprofit-sharingyear|The ratio of netprofit attributableto listedcompanyshareholders inprofit-sharingyear (%)|
|2017|0|0.5|2|219,514,729|300,195,422|73.12|
|2016|0|1|0|439,029,458|212,419,946|206.68|
|2015|0|0|0|0|212,411,967|0|

Annual Report 2017 (III) Shares repurchased through cash offer, to be included in the cash dividend
□Applicable√Not applicable
(IV) If the profit and the profit distributable to common shareholders by the parent company during the reporting period is positive but the Company does not lodge the proposal for profit distribution in cash for ordinary shares, the Company shall disclose in detail the reasons and the purpose and use plan of the undistributed profit
□Applicable√Not applicable
II. Commitment performance
(I) Commitments of the actual controllers of the company, the shareholders, the related parties, the purchaser and the Company during the reporting period or the ones lasting the reporting period
□Applicable√Not applicable
(II) Where there is a profit forecast for an asset or project and the reporting period is still within the profit forecast period, please explain whether the original earnings forecast of the assets or the project is achieved and explain the reason
□Achieved□Not achieved√Not applicable
III. Capital occupied situation and clearing arrears progress in the report period
□Applicable√Not applicable
IV. Explanation of the Company for “non-standard audit report” of the accounting firm□Applicable√Not applicable
V. Analysis and explanation of the Company on the reasons and impacts of the accounting policy, the accounting estimate or the correction of the important accounting error (I) Analysis and explanation of the Company on the reasons and the impacts of the alteration of the accounting policy and accounting estimate
√Applicable□Not applicable
||
|-|
|1. Alteration of statement mode of losses and gains from assets disposal|
|In accordance with the requirements of Notice of Modifying and Issuing Financial Statement|
|Format of Common Enterprise by Ministry of Finance (CK [2017] No. 30), the items separately listed|
|and reported in the item “gains from assets disposal” in the item “operating profit” in Profit Statement|
|of this Company as well as the losses and gains from the non-current assets disposal originally|
|recorded in “non-business revenue” and “non-operating expenses” were altered to be listed and|
|reported in “Gains from assets disposal”; this Company correspondingly traced back and restated|

Annual Report 2017
||
|-|
|the comparative profit statement. The alteration of this accounting policy had no effect on the|
|consolidation and the net profit of the Company as well as the consolidation and the stockholders’|
|equity of the Company.|
|2. Alteration of statement mode of government subsidy|
|In accordance with the requirements of Notice of Issuing and Revising Accounting Standard No|
|16------Governmental Subsidy (CK [2017] No. 15), the item “Other Revenue” separately listed and|
|reported in the item “Operating profit” in Profit Statement of this Company and the governmental|
|subsidy related to the routine activities of the enterprise were altered to be listed and reported in|
|“Other revenue” instead of “non-business revenue”; according to the linking regulations of this|
|standard, this Company adopted Prospective Application for disposal of the governmental subsidy|
|existing before Jan. 1, 2017 and the newly increased governmental subsidy from Jan. 1, 2017 to the|
|implementation date of this standard (June 12, 2017) was adjusted according to this standard. The|
|alteration of this accounting policy had no effect on the consolidation and the net profit of the|
|Company as well as the consolidation of the stockholders’ equity of the Company.|

(II) Analysis and explanation of the Company on the reasons and impacts of the correction of the important accounting errors
□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
|||
|-|-|
||Current appointment|
|Domestic accounting firm|Ernst & Young (Special general partnership)|
|Domestic accounting firm payment|380|
|Domestic accounting firm audit period|2|

||||
|-|-|-|
||Name|Payment|
|Internal control audit accounting firm|Ernst & Young (special generalpartnership)|40|

Appointment and dismissal of accounting firm
□Applicable√Not applicable
Change to appointment accounting firm during auditing period
□Applicable√Not applicable
VII. Risk of listing suspension
(I) Reasons for suspension
□Applicable√Not applicable
(II) Countermeasures to be taken
□Applicable√Not applicable
Annual Report 2017 VIII. Situation and reasons for the termination of listing
□Applicable√Not applicable
IX. Bankruptcy reorganization related matters
□Applicable√Not applicable
X. Substantial lawsuits and arbitrations
□The Company has major litigation and arbitration
□The Company has no major litigation and arbitration
(I) Lawsuits and arbitrations disclosed in the provisional announcement without subsequent progress
□Applicable√Not applicable
(II) Lawsuits, and arbitrations not disclosed in the provisional announcement with subsequent progress
√Applicable□Not applicable
Unit:- Currency:-
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|In the report period:||||||||||
|Prosecutor(applicant)|Responding party|Partywithjointliabilities|Type ofsuitorarbitration|Suit (arbitration) profiles|Suit(arbitration) amountinvolved|Suit(arbitration)constitutesestimatedliabilities ornot|Suit(arbitration) progress|Suit(arbitration) trailresults andimpact|Execution ofSuit(arbitration)judgment|
|FlourCorporation|ShanghaiZhenhuaHeavyIndustriesCo., Ltd|No|Lawsuit|In 2008, the Company andFluor Limited (hereinafterreferred to as “Fluor”)signed an agreement onsales and installation forwind power steel pipe pileproducts for the British WindPower Project. In the projectconstruction process, theCompany and Fluor, by wayof friendly consultations andin the spirit of goodcooperation, maintained thenormal dispute settlementand communicationmechanism. In 2010, for theissues in contract executionprocess, after reviewed bythe board of directors of theCompany, the Companysigned a mutual exemptionletter with Fluor, and settledthe remaining payment in2011. Afterwards, Flourlodged a quality claimagainst the Company, andrequested the payment ofthe demand qualityguarantee issued by theCompany, while theCompany rejected theclaim. On March 20, 2014,Flour cashed the aboveletter of guarantee with theamount of 23,409,750 EURin the bank opening theletter of guarantee. InSeptember 2014, Flourinitiated proceedings for thebreach attributed to by theproblems related to theproduct quality to HighCourt of Justice, Queen’sBench Division, theTechnology andConstruction Court(hereinafter referred to as“TCC Court of BritainQueen’s Bench”) and askedthe Company for the totalcompensation of 250 millionPounds for additional testand repair cost, projectperiod delay and other|About 250millionpounds|0|Court tobe opensoon|On Jan.11, 2018,the courtmadequantizedjudgmenton thiscase;however,the specificamount ofthe legalcost andotherexpensesrelated tothejudgmentamount willbeadditionallyjudged anddecided bythe court.|On Jan. 11,2018, thecourt madequantizedjudgment onthis case andadjudicatedthis Companyto pay USD5,893,591dollars,15,033,681pounds,7,165,740Eurodollars,7,259Canadiandollars andRMB 485,346Yuan to Flour.On Mar. 16,2018, thecourt madethe judgmenton the interestandadjudicatedthis Companyto pay3,518,549pounds toFlour.However, thelegal cost andotherexpensesrelated to thejudgmentamount wereadditionallymeasured.|

Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||related loss (including thecashed letter of guaranteeamount of 23,409,750EUR). The Company didn’tacknowledge the claim forthe compensation fromFlour. Since then, theCompany prepared theevidence disclosure,witness testimony,exchange work and otherpreparatory work before thecourt. From February toMarch, April, June of 2016,British High Court TCCcourt was in trial for firstinstance on obligation part.In May 2017, the trial ofquantitative part of this casewas conducted. In July2017, both partiesexchanged the written finaladdress. In Aug. 2017, theproceeding at law for thequantitative part of this casewas settled.||||||
|ShanghaiZhenhuaHeavyIndustriesCo., Ltd|Petrofac(ship-owner)|No|Arbitration|In 2013, the Company hassigned theconstruction and salescontract about a 6000 tonpiping ship with Petrofac(JSD6000) Limited(hereinafter referred to asPetrofac). On October 9,2015, Petrofac issuedContract Termination Letterwith the reason that theproject is delayed andmeets the terminationarticle. Petrofac asked forterminating the contract andrequested the Company toreturn the prepaid paymentand interest, as well asassumed the responsibilityof the loss attributed to bythe termination of thecontract. The Companyrejected the claim. Petrofachonored the demandguarantee from the openingbank in December 2015,with total amount of44,720,000 USD. TheCompany establishedspecial team and hiredsenior legal team both athome and abroad to activelyadvocate the Company’srights and protect theCompany’s rights fromdamaged. The Companyhas applied for arbitration tothe London InternationalArbitration Court in Januaryand asked Petrofac to returnthe payment of Letter ofGuarantee andcompensated for the loss of$200 million. After receivingthe arbitration applicantof theCompany, Petrofac filed acounterclaim, and asked theCompany for compensatingabout 182 million USD or213 million USD under therequirements of continuingor not continuing toconstruct the ship.|We standfor about$200million;Petrofac'scounterclaim callsfor $182million or$213million intwodifferentways.|0|Court tobe opensoon|Not yetruled|Not yetruled|
|IndustriesShanghaiZhenhuaHeavyIndustriesCo., Ltd,ShanghaiZhenhuaHeavyIndustriesQidongMarine|NantongHuafuPort Co.,Ltd, LiAidong,ZhaoXiaohua|No|Lawsuit|At the end of February2014, the Companycompleted the increasingassets for original JiangsuDaoda Ocean EngineeringCo., Ltd, the capital of 67%stock, at the same time,before February 28,2014, the loss of theCompany was borne by theoriginal shareholders - LiAidong, Zhao and Xiaohua|RMB368.722MillionYuan|0|Court tobe opensoon|Not yetruled|Not yetruled|

Annual Report 2017
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|-|-|-|-|-|-|-|-|-|-|
|Engineering Co.,Ltd.||||of Nantong Huafu PortCo., Ltd. During thesubsequent businessprocess, it was found of thedisclose false of parts ofthe company litigationmatters or debt leading toproduce a series of losses,through the related auditand adjustment, etc, thatloss of RMB 368.7222million Yuan should be incharged in the originalshareholders and thelawsuit again after aninconclusive.||||||
|LovandaOffshoreLtd|IndustriesShanghaiZhenhuaHeavyIndustriesCo., Ltd|No|Arbitration|In 2014, Lovanda signed aconstruction contract(ZP14-2125) on oneJU2000E offshore drillingplatform with this Company,which was designed, built,commissioned anddelivered by this Company.In the construction process,some disputes arosebetween Lovanda and thisCompany regarding theconstruction schedule ofthis platform, the extensionof delivery time and otheraspects. Lovanda submittedto arbitration to LondonMaritime ArbitratorsAssociation against thisCompany on Mar. 6, 2017and proposed to terminatethe platform constructioncontract and required thisCompany to repay USD13800000 dollars includingthe advance cost ofconstruction, relatedexpenses and interest. ThisCompany established aspecial working group andemployed the professionaldomestic and foreignlawyers and experts toactively respond to action tomaintain the legitimate rightof this Company. Afterreceiving the request forarbitration, this Companytook a cross bill applicationagainst Lovanda andclaimed: 1) the other partyshould pay the last sum ofmoney payable under thecontract and its interestarising herefrom, totalingUSD 186,200,000 dollars tothis party; 2) the income ofthis party from the sale ofthe platform minus the costof sale should be used fordeducting the accountpayable of the other party;3) Other losses, interest andother expenses that mayoccur in the future.|The claimof Lovandawas aboutUSD13,800,000 dollars.The crossbill claim ofthisCompany:1) theother partyshould paythe lastsum ofmoneypayableunder thecontractand itsinterestarisingherefrom,totalingUSD186,200,000 dollarsto thisparty; 2)the incomeof thisparty fromthe sale oftheplatformminus thecost ofsaleshould beused fordeductingtheaccountpayable ofthe otherparty; 3)Otherlosses,interestand otherexpensesthat mayoccur inthe future.|0|Court tobe opensoon|Not yetruled|Not yetruled|
|LovansingOffshoreLtd|IndustriesShanghaiZhenhuaHeavyIndustriesCo., Ltd|No|Arbitration|In 2014, Lovanda signed aconstruction contract(ZP14-2126) on oneJU2000E offshore drillingplatform with this Company,which was designed, built,commissioned anddelivered by this Company.In the construction process,some disputes arosebetween Lovanda and thisCompany regarding theconstruction schedule ofthis platform, the extensionof delivery time and otheraspects. Lovanda submittedto arbitration to LondonMaritime ArbitratorsAssociation against thisCompany on Mar. 6, 2017and proposed to terminate|The claimof Lovandawas aboutUSD13,800,000 dollars.The crossbill claim ofthisCompany:1) theother partyshould paythe lastsum ofmoneypayableunder thecontractand itsinterest|0|Court tobe opensoon|Not yetruled|Not yetruled|

Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||the platform constructioncontract and required thisCompany to repay USD13,800,000 dollars includingthe advance cost ofconstruction, relatedexpenses and interest. ThisCompany established aspecial working group andemployed the professionaldomestic and foreignlawyers and experts toactively respond to action tomaintain the legitimate rightof this Company. Afterreceiving the request forarbitration, this Companytook a cross bill applicationagainst Lovanda andclaimed: 1) the other partyshould pay the last sum ofmoney payable under thecontract and its interestarising herefrom, totalingUSD 186,200,000 dollars tothis party; 2) the income ofthis party from the sale ofthe platform minus the costof sale should be used fordeducting the accountpayable of the other party;3) Other losses, interest andother expenses that mayoccur in the future.|arisingherefrom,totalingUSD186,200,000 dollarsto thisparty; 2)the incomeof thisparty fromthe sale oftheplatformminus thecost ofsaleshould beused fordeductingtheaccountpayable ofthe otherparty; 3)Otherlosses,interestand otherexpensesthat mayoccur inthe future.|||||
|IndustriesShanghaiZhenhuaHeavyIndustriesCo., Ltd|XinyudaOceanEngineering (HongKong) Co.,Ltd|No|Arbitration|On Jan. 28, 2014, thisCompany signedProcurement Contract onMain Chord of Spud Leg forF&G-JU2000ESelf-elevating DrillingPlatform with XinyudaOcean Engineering (HongKong) Co., Ltd (hereinafterreferred to as “XinyudaCompany”) (Contract No.:ZP14-2125-0030, based onwhich Xinyuda Companyprovided one set of mainchord equipment for theZhenhai No. 5 DrillingPlatform. The productprovided by XinyudaCompany had the qualitydefects and was in breachof the requirements of thecontract, as a result, theconstruction schedule ofZhenhai No. 5 DrillingPlatform of this Companywas seriously affected. ThisCompany had sent manyletters to request XinyudaCompany to settle thequality defects, but XinyudaCompany had noteffectively responded tothem and dealt with thesedefects. therefore, based onthe dispute settlement modestipulated by the contract,this Company took aarbitration against XinyudaCompany to Hong KongInternational ArbitrationCenter on May 9, 2017 andrequested XinyudaCompany to compensatethis Company for theexpenses for replacement,repair, removal,reconstruction andreinstallation of main chord,about USD 35,250,000dollars, and reserved therights of compensation forthe losses caused by thequality of the main chordunder the platformconstruction contract andother losses arisingherefrom.|About USD35,250,000 dollars|0|Court tobe opensoon|Not yetruled|Not yetruled|
|Industries|Xinyuda|No|Arbitration|On Jan. 28, 2014, this|About USD|0|Court to|Not yet|Not yet|

Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|ShanghaiZhenhuaHeavyIndustriesCo., Ltd|OceanEngineering (HongKong) Co.,Ltd|Company signedProcurement Contract onMain Chord of Spud Leg forF&G-JU2000ESelf-elevating DrillingPlatform with XinyudaOcean Engineering (HongKong) Co., Ltd (hereinafterreferred to as “XinyudaCompany”) (Contract No.:ZP14-2126-0030, based onwhich Xinyuda Companyprovided one set of mainchord equipment for theZhenhai No. 6 DrillingPlatform. The productprovided by XinyudaCompany had the qualitydefects and was in breachof the requirements of thecontract, as a result, theconstruction schedule ofZhenhai No. 6 DrillingPlatform of this Companywas seriously affected. ThisCompany had sent manyletters to request XinyudaCompany to settle thequality defects, but XinyudaCompany had noteffectively responded tothem and dealt with thesedefects. therefore, based onthe dispute settlement modestipulated by the contract,this Company took aarbitration against XinyudaCompany to Hong KongInternational ArbitrationCenter on May 9, 2017 andrequested XinyudaCompany to compensatethis Company for theexpenses for replacement,repair, removal,reconstruction andreinstallation of main chord,about USD 35,250,000dollars, and reserved therights of compensation forthe losses caused by thequality of the main chordunder the platformconstruction contract andother losses arisingherefrom.|35,250,000 dollars|be opensoon|ruled|ruled|

(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. Integrity conditions of the Company and its controlling shareholders, actual controller during the reporting period
□Applicable√Not applicable
Annual Report 2017 XIII. Company equity incentive plans and employee stock ownership plan or other incentive to the staff and their impacts
(I) Incentive events already disclosed in the provisional notice but without any progress or change in subsequent implementation
□Applicable√Not applicable
(II) Incentives not disclosed in the provisional announcement or with progress in subsequent implementation
Stock ownership incentive
□Applicable√Not applicable
Other descriptions
□Applicable√Not applicable
Employee stock ownership plan
□Applicable√Not applicable
Other incentive measures
□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 in follow-up implementation
√Applicable□Not applicable
|||
|-|-|
|Events overview|Index|
|18th meeting of 6th board of directors approvedProposal for Participating in Investment andConstruction of Rebuilding and RelocationHouses in Rundown Urban Area andSupporting Facilities in Dongming County,Heze City on Jan. 23, 2017.|Shanghai Stock Exchange website:www.sse.com.cn and Shanghai SecuritiesNews and Hong Kong Wen Wei Po on Jan 24,2017.|
|23rd meeting of 6th board of directors approvedProposal for Investment and Construction ofPPP Project for Bridge and Liquefied Dock InYangkou Port Zone, Nantong City on June 22,2017.|Shanghai Stock Exchange website:www.sse.com.cn and Shanghai SecuritiesNews and Hong Kong Wen Wei Po on June23, 2017.|

2. Events disclosed in the provisional announcement and with changes or progresses in follow-up implementation
□Applicable√Not applicable
3. Events not disclosed in the provisional announcement
√Applicable□Not applicable
Unit: Yuan Currency: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|Related transactionparty|Incidencerelation|Type ofrelatedtransaction|Content ofrelatedtransaction|Pricingprinciple ofrelated|Price ofrelatedtransaction|Relatedtransactionamount|Proportionin similartransaction|

Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|||||transaction|||amount (%)|
|CCCC FinancialLeasing Co., Ltd.|Affiliatedcompany|Sale ofgoods|Project income|Based onmarketprice|728,945,754|728,945,754|3.33|
|CCCC TianjinDredging Co., Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|471,642,717|471,642,717|2.16|
|Jiangsu LongyuanZhenhua OceanEngineering Co.,Ltd|Affiliatedcompany|Sale ofgoods|Project income|Based onmarketprice|439,726,261|439,726,261|2.01|
|CCCC First HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|311,673,509|311,673,509|1.43|
|China HarborEngineering Co.,Ltd|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|232,091,723|232,091,723|1.06|
|ChinaCommunicationsConstructionCompany Ltd.|Parentcompany|Sale ofgoods|Project income|Based onmarketprice|221,713,310|221,713,310|1.01|
|Road & BridgeInternational Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|97,734,474|97,734,474|0.45|
|CCCC TunnelEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|96,474,819|96,474,819|0.44|
|CCCC SecondHarbor EngineeringCo., Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|62,392,577|62,392,577|0.29|
|No.1 EngineeringCo., Ltd. of CCCCSecond HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|57,742,023|57,742,023|0.26|
|CCCC Electricaland MechanicalEngineeringBureau Co., Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|56,423,470|56,423,470|0.26|
|CCCC SecondHighwayEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|51,535,600|51,535,600|0.24|
|Road & BridgeSouth ChinaEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|44,066,592|44,066,592|0.2|
|No.4 EngineeringCo., Ltd. Of CCCCSecond HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|36,707,819|36,707,819|0.17|
|No.3 EngineeringCo., Ltd. Of CCCCSecond HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|28,130,115|28,130,115|0.13|
|CCCC First HarborConsultants Co.,Ltd.|Parentcompany’sholding|Sale ofgoods|Project income|Based onmarketprice|27,435,897|27,435,897|0.13|

Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
||subsidiary|||||||
|CCCC Third HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|23,994,666|23,994,666|0.11|
|China Road &Bridge Corporation|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|23,045,665|23,045,665|0.11|
|Chuwa Bussan Co.Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|20,992,826|20,992,826|0.1|
|CCCC-SHEC ThirdHighwayEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|15,152,103|15,152,103|0.07|
|Hainan CCCCFourth HarborConstruction Co.,Ltd|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|7,710,256|7,710,256|0.04|
|CCCC FourthHarbor EngineeringCo., Ltd|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|5,805,005|5,805,005|0.03|
|CCCC-FHDIEngineering Co.,Ltd|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|5,058,462|5,058,462|0.02|
|ZPMCMediterraneanLiman MakinalariTicaretAnonim Sirketi|Affiliatedcompany|Sale ofgoods|Project income|Based onmarketprice|4,167,390|4,167,390|0.02|
|CCCC ThirdHighwayEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|2,752,482|2,752,482|0.01|
|CCCC GuangzhouDredging Co. Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|1,949,573|1,949,573|0.01|
|CCCC-SHECSecondEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Sale ofgoods|Project income|Based onmarketprice|1,729,907|1,729,907|0.01|
|No.1 EngineeringCo., Ltd. Of CCCCFirst HarborEngineering Co.,Ltd.|Sale ofgoods|Renderingof service|Project income|Based onmarketprice|14,151|14,151|0|
|CCCC TianjinDredging Co., Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|462,492,064|462,492,064|3.38|
|CCCC SecondHarbor EngineeringCo., Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|161,465,657|161,465,657|1.18|
|CCCC FirstHighwayEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|137,930,629|137,930,629|1.01|
|CCCC Third HarborEngineering Co.,Ltd.|Parentcompany’sholding|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|134,235,980|134,235,980|0.98|

Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
||subsidiary|||||||
|CCCC-SHECSecondEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|112,198,187|112,198,187|0.82|
|CCCC FourthHighwayEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|96,055,525|96,055,525|0.7|
|No.1 EngineeringCo., Ltd. Of CCCCFirst HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|63,578,055|63,578,055|0.46|
|ShanghaiCommunicationsConstruction Co.Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|61,115,756|61,115,756|0.45|
|CCCC SecondHighwayConsultants Co.Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|30,059,257|30,059,257|0.22|
|The SecondEngineeringCompany of CCCCFourth HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|28,312,923|28,312,923|0.21|
|CCCC First HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|26,777,335|26,777,335|0.2|
|Jiangsu LongyuanZhenhua OceanEngineering Co.,Ltd|Affiliatedcompany|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|21,662,715|21,662,715|0.16|
|No.3 EngineeringCo., Ltd. Of CCCCThird HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|17,743,903|17,743,903|0.13|
|CCCC WaterTransportationPlanning andDesign InstituteCo., Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|12,105,094|12,105,094|0.09|
|No.2 EngineeringCo., Ltd. Of CCCCThird HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|10,427,350|10,427,350|0.08|
|InstallationEngineeringCompany of CCCCFirst HighwayEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|5,989,401|5,989,401|0.04|
|CCCC First HarborConsultants Co.,Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|5,858,503|5,858,503|0.04|
|ZPMCMediterraneanLiman MakinalariTicaretAnonim Sirketi|Affiliatedcompany|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|3,548,020|3,548,020|0.03|

Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|CCCC HighwayBridges NationalEngineeringResearch CentreCo., Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|1,777,778|1,777,778|0.01|
|CCCC ShanghaiDredging Co. Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|1,727,336|1,727,336|0.01|
|CTTIC ShanghaiCo., Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|929,915|929,915|0.01|
|CCCC Third HarborConsultants Co.Ltd.|Parentcompany’sholdingsubsidiary|Acceptinglaborservices|Commissionedprocessing forthe Company|Based onmarketprice|142,383|142,383|0|
|CCCC ShanghaiEquipmentEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|131,400,593|131,400,593|0.96|
|ZPMC ChangzhouCoatings Co., Ltd.|Affiliatedcompany|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|88,611,099|88,611,099|0.65|
|Chuwa Bussan Co.Ltd.|Parentcompany’sholdingsubsidiary|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|42,752,896|42,752,896|0.31|
|Shanghai JiangtianIndustrial Co., Ltd|Parentcompany’sholdingsubsidiary|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|15,435,145|15,435,145|0.11|
|ChinaCommunicationsMaterials &Equipment Co., Ltd|Parentcompany’sholdingsubsidiary|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|5,989,665|5,989,665|0.04|
|CCCC FourthHighwayEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|4,868,840|4,868,840|0.04|
|Nanjing CCCCWeisanlu RiverTunnel Co., Ltd|Parentcompany’sholdingsubsidiary|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|418,291|418,291|0|
|CCCC TianjinIndustry and TradeCo., Ltd.|Parentcompany’sholdingsubsidiary|Purchasegoods|Supplymaterials to theCompany|Based onmarketprice|22,846|22,846|0|
|Zhenhua OceanEnergy (HongKong) Co., Ltd|Jointventure|Otherinflows|Vessel leasing|Based onmarketprice|158,746,932|158,746,932|0.73|
|Jiangsu LongyuanZhenhua OceanEngineering Co.,Ltd|Jointventure|Otherinflows|Vessel leasing|Based onmarketprice|27,414,329|27,414,329|0.13|
|CCCC-FHECUrban TrafficEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Otherinflows|Shield leasing|Based onmarketprice|26,525,385|26,525,385|0.12|
|CCCC SecondHighwayEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Otherinflows|Shield leasing|Based onmarketprice|6,727,590|6,727,590|0.03|
|Road & BridgeInternational Co.,Ltd.|Parentcompany’sholding|Otherinflows|Shield leasing|Based onmarketprice|3,499,733|3,499,733|0.02|

Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
||subsidiary|||||||
|CCCC ThirdHighwayEngineering Co.Ltd.|Parentcompany’sholdingsubsidiary|Otherinflows|Shield leasing|Based onmarketprice|2,928,360|2,928,360|0.01|
|ChinaCommunicationsConstructionCompany Ltd.|Parentcompany’sholdingsubsidiary|Otherinflows|Shield leasing|Based onmarketprice|2,162,605|2,162,605|0.01|
|CCCC-SHEC No.4Engineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Otherinflows|Shield leasing|Based onmarketprice|1,841,219|1,841,219|0.01|
|CCCC-SHEC No.1Engineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Otherinflows|Shield leasing|Based onmarketprice|1,336,752|1,336,752|0.01|
|CCCC First HarborEngineering Co.,Ltd.|Parentcompany’sholdingsubsidiary|Otherinflows|Shield leasing|Based onmarketprice|895,138|895,138|0|
|Total||||||4,994,520,330|14.05|
|Explanation ofrelated transaction|Note: May 9, 2016, the Company 2015 Annual General Meeting approved Motion on theCompany Signing Framework Agreement with CHINA COMMUNICATIONS CONSTRUCTION CO.,LTD on Routine Related Transactions. In 2016, our company and its subordinate units and theChina Communications Corporation and its subsidiary bodies could undertake related partytransactions in the daily operation on annual basis with transaction amount not exceeding 11 billionYuan. The Annual General Meeting has authorized the Company’s management to handle relevantspecific matters.|||||||

(II) Associated transactions of asset or equity acquisition and sales
1. Events disclosed in the provisional announcement, without changes or progresses in follow-up implementation
□Applicable√Not applicable
2. Events disclosed in the provisional announcement, with changes or progresses in follow-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, without changes or progresses in follow-up implementation
□Applicable√Not applicable
Annual Report 2017 2. Events disclosed in the provisional announcement, with changes or progresses in follow-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, without changes or progresses in follow-up implementation
√Applicable□Not applicable
|||
|-|-|
|Events overview|Index|
|19th meeting of 6th board of directors approvedProposal for Handling Loan by Mandate ofBudgetary Funds of State-owned Capital toChina Communications Construction Co., Ltd.on Mar. 27, 2017.|Shanghai Stock Exchange website:www.sse.com.cnand Shanghai SecuritiesNews and Hong Kong Wen Wei Po on Mar.29, 2017.|
|26th meeting of 6th board of directors approvedProposal for Splitting Credit Extension of ThisCompany in CCCC Finance Co., Ltd byTianhe Mechanical Equipment ManufacturingCo., Ltd on Oct. 30, 2017.|Shanghai Stock Exchange website:www.sse.com.cnand Shanghai SecuritiesNews and Hong Kong Wen Wei Po on Oct. 31,2017.|

2. Events disclosed in the provisional announcement, with changes or progresses in follow-up implementation
□Applicable√Not applicable
3. Events not disclosed in the provisional announcement
□Applicable√Not applicable
(V) Other
□Applicable√Not applicable
XV. Major contracts and their performance
(I) Entrusting, contracting and leasing
1. Entrusting
□Applicable√Not applicable
2. Contracting
□Applicable√Not applicable
3. Leasing
√Applicable□Not applicable
Unit: Yuan Currency: RMB
Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Lessor|Lessee|Leasedassets|Amountinvolved|Lease startdate|Leaseterminationdate|Rentalincome|Determinationbasis of rentalincome|Impact ontheCompany|Relatedtransactionor not|
|TheCompany|ShanghaiZhenlongAssetManagementCo., Ltd, andothercompanies|HousingRental|273,401,305|2012/08/10|2025/07/09|48,361,731|Agreed|48,361,731|No|

(II) Guarantee
√Applicable□Not applicable
Unit: Yuan Currency: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|External guarantee of the Company (excluding those for held subsidiaries)|||||||||||||
|Guarantor|Relationshipbetween theguarantorand listedcompany||Guaranteedparty|Guaranteeamount|Date ofguarantee(date ofagreement)|Start dateofguarantee|Guaranteematuritydate|Type ofguarantee|Whether theGuarantee isimplemented|Is theguaranteeoverdue|Whetherthere iscounterguarantee|Whetherguaranteeto relatedparty|
|TheCompany|Home office||JiangsuYanwei PortCo., Ltd|10,790,000|Nov. 11,2014|Nov. 11,2014|May 8,2018|Joint andseveralliabilityguarantee|No|No|No|No|
|Total guaranties incurred in report period (excluding those forsubsidiaries)||||||-185,641,287|||||||
|Total Guarantee balance at the end of report period (A)(excluding those for subsidiaries)||||||10,790,000|||||||
|Guarantee of the Company and its subsidiaries to subsidiaries|||||||||||||
|Total guaranties for subsidiaries incurred in report period||||||-1,053,735,000|||||||
|Total guaranties for subsidiary balance at the end of reportperiod (B)||||||2,156,286,000|||||||
|Total amount of guarantee of the Company (including those for subsidiaries)|||||||||||||
|Total guarantee amount (A+B)||||||2,167,076,000|||||||
|Proportion in net assets of the Company (%)||||||12.88|||||||
|In which:|||||||||||||
|Amount provided to shareholders, effective controller and itsrelated parties (C)||||||0|||||||
|Amount of debt guarantee directly or indirectly provided for theguaranteed party with the asset-liability ratio exceeding 70% (D)||||||2,058,273,000|||||||
|Amount of guaranties exceeding 50% of net assets (E)||||||0|||||||
|Total of the above 3 kinds of guarantee (C+D+E)||||||2,058,273,000|||||||
|Explanation of the joint and several liability might undertaken byundue guarantee|||||||||||||
|Guaranteestatusexplanation||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 financingsupport to Hong Kong subsidiary. The bank will issue guarantee for the loan with the upper limit of 500 million USD. The 30thmeeting of fifth Board of Directors, the 20th, 24th, 25th and 26th meeting of sixth Board of Directors approved other guarantees.|||||||||||

 (III) Entrusted cash assets management
1. Trust management
(1). General of trust management
□Applicable√Not applicable
Others
□Applicable√Not applicable
(2). Information on individual trust management
Annual Report 2017□Applicable√Not applicable
Others
□Applicable√Not applicable
(3). Impairment provision for trust management
□Applicable√Not applicable
2. Entrusted loans
(1). General of entrusted loans
□Applicable√Not applicable
Others
□Applicable√Not applicable
(2). Information on individual entrusted loan
□Applicable√Not applicable
Others
□Applicable√Not applicable
(3). Impairment provision for entrusted loans
□Applicable√Not applicable
3. Others
□Applicable√Not applicable
(IV) Other substantial contracts
□Applicable√Not applicable
XVI. Notes to other major issues
□Applicable√Not applicable
XVII. Active fulfillment of social responsibilities
(I) Poverty alleviation of listed company
□Applicable√Not applicable
(II) Social responsibility work
√Applicable□Not applicable
Based on the social responsibility consciousness of “creating the elaborate works for customers, creating the benefit for the shareholders, creating the happiness for the staff and creating the harmony for the society”, this Company abides by the lawful and compliant operation, frankly communicates with the stakeholders, continuously perfects the social responsibility construction system and sets up the good image of a large-sized state-owned enterprise for fulfilling its duties and obligations.
The Company persists in building the elaborate works, pursues and carries out the quality management mode of “being off-land without any debt”, continuously increases the investment in scientific and technical innovation and advocates the green production and energy-saving production. It impels the construction of the oversea regional center and deepens the construction of full-life cycle service and integrated service to make the customers enjoy quicker and high quality service.
The Company persists in human-oriented principle, strictly abides by the labor laws and regulations and sticks to equalized and humanized labor policy. It continuously perfects distribution incentive system and performance evaluation system and establishes the distribution mode
Annual Report 2017 connected with the market. It regularly holds the cultural and sport activities to form good working and living atmosphere.
The Company pays high attention to the regional cooperative development and continuously upgrades the joint construction level of government and enterprise, society and enterprise and university and enterprise as well as the integrated construction of industry, university and institute to promote the further integration of the cultural spirits of the enterprise into the society.
(III) Environmental information
1. Environmental protection of the listed company and its key subsidiaries defined as industry of heavy pollution industry specified by national environmental protection department
√Applicable□Not applicable
Changxing Branch of this Company belongs to the key pollutant-discharge unit issued by the environmental protection authorities, with the main pollutants including wastewater, waste gas, smoke dust, volatile organic compounds, general industrial solid wastes and hazardous wastes. Emission mode: the wastewater is drained after reaching up to the standard through treatment; the atmospheric pollutants such as waste gas, smoke dust and volatile organic compounds adopt the combination of organized emission and unorganized emission; the hazardous waste and the solid waste are transported to the qualified unit for treatment. Changxing Branch has basically accomplished the reconstruction of pre-treatment coating flow line and actively advanced VOCs end control, as a result, it has made good achievements in construction and operation of the pollution prevention and control facilities. According to the prepared environmental emergency preplan, in combination with the actual conditions of the Company, it perfected the configuration of the emergency aid equipment and facilities, developed the emergency aid technical training and practice drilling in a normalized manner and practically improved the emergency response capability and emergency aid capability. The self-monitoring plan of Changxing Branch: 1. wastewater online monitoring; 2. entrust the third party to carry out the environmental monitoring; 3. boundary noise self-measurement.
2. Companies other than those defined as key pollutant-discharge unit
√Applicable□Not applicable
In 2017, the environmental impact report assessment report on the expansion of output of the construction project of Nantong Zhenhua Heavy Equipment Manufacturing Co., Ltd from 100000t/a sand clean paint steel member to 200,000t/a sand clean oil steel member and 2,980t stainless and non-ferrous metal pipe fittings was approved by Nantong Administration of Environmental Protection. The construction project met the requirements on environmental protection and obtained the administrative license of Nantong Administration of Environmental Protection.
3. Other explanations
□Applicable√Not applicable
(IV) Other explanations
□Applicable√Not applicable
XVIII. Convertible bonds
(I) Status of issuance of convertible bonds
□Applicable√Not applicable
(II) Status of holders and underwriter of convertible bonds during the reporting period
□Applicable√Not applicable
Annual Report 2017 (III) Changes in convertible bonds during the reporting period
□Applicable√Not applicable
Accumulated conversion of convertible bonds during the reporting period
□Applicable√Not applicable
(IV) Information on all adjustments of conversion price
□Applicable√Not applicable
(V) Liabilities, changes in credit and cash arrangements of the Company in the future
□Applicable√Not applicable
(VI) Other information about convertible bonds
□Applicable√Not applicable
Chapter VI Changes in Ordinary Shares Capital and Shareholders I. Changes in ordinary shares capital
(I) Ordinary shares changes statement
1. Ordinary shares changes statement
During the reporting period, there was no change in the total number of ordinary shares and the equity structure of the Company.
2. Explanation for changes in the ordinary shares
□Applicable√Not applicable
3. Effect of ordinary share changes on the financial index such as earnings per share and net assets per share in the past one year or the latest period (if any)
□Applicable√Not applicable
4. Other information deemed to be necessarily disclosed by the Company or as required by a security supervision institution
□Applicable√Not applicable
(II) Changes in restricted shares
□Applicable√Not applicable
II. Securities issue and listing
(I) Securities issue by the end of the reporting period
□Applicable√Not applicable
Explanation for securities issue by the end of the reporting period (describe the bonds with different interest rate respectively in the duration):
□Applicable√Not applicable
Annual Report 2017 (II) Changes in total number of ordinary shares, shareholder structure and assets and liabilities structure of the Company
□Applicable√Not applicable
(III) Description of status of existing employee shares
□Applicable√Not applicable
III. Shareholders and actual controllers
(I) Total number of shareholders
|||
|-|-|
|Total number of shareholders of ordinary shares by the end of reporting period|255,997|
|Total number of shareholders or ordinary shares at the end of last month prior tothe disclosure date of annual report|252,635|

(II) Shareholding profile of top 10 shareholders and top 10 circulating shareholders (or tradable shareholders) by the end of the reporting period
Unit: share
|||||||||
|-|-|-|-|-|-|-|-|
|Shareholding profile of top 10 shareholders||||||||
|Name of Shareholder(Full Name)|Change inreportingperiod|Shares heldat the end ofthe period|Proportion(%)|Number ofrestrictedsharesheld|Pledged or frozen||Nature ofshareholder|
||||||Sharestatus|Quantity||
|CCCG (HK)HOLDING LIMITED|763,963,200|763,963,200|17.401|0|None|0|Overseaslegal person|
|ChinaCommunicationsConstruction Co., Ltd.|-552,686,146|712,951,703|16.239|0|None|0|State-ownlegal person|
|ChinaCommunicationsConstruction Group|552,686,146|552,686,146|12.589|0|None|0|State-ownlegal person|
|Central Huijin AssetsManagement Co., Ltd|0|74,482,200|1.70||Unknown||Unknown|
|China SecuritiesFinance Co., Ltd|0|56,788,474|1.29||Unknown||Unknown|
|BOSERA FUNDS -Agricultural Bank ofChina - BOSAREChina SecuritiesFinancial AssetsManagement Plan|0|16,546,600|0.38||Unknown||Unknown|
|E FUND Management- Agricultural Bank ofChina - E FUNDManagement ChinaSecurities FinancialAssets ManagementPlan|0|16,546,600|0.38||Unknown||Unknown|
|DACHENG FUND -Agricultural Bank ofChina - DACHENGChina SecuritiesFinancial AssetsManagement Plan|0|16,546,600|0.38||Unknown||Unknown|

Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|Harvest Fund -Agricultural Bank ofChina - Harvest ChinaSecurities FinancialAssets ManagementPlan|0|16,546,600||0.38||Unknown|Unknown|
|GF Fund - AgriculturalBank of China - GFChina SecuritiesFinancial AssetsManagement Plan|0|16,546,600||0.38||Unknown|Unknown|
|Lombarda ChinaFund - AgriculturalBank of China -Lombarda ChinaFund China SecuritiesFinancial AssetsManagement Plan|0|16,546,600||0.38||Unknown|Unknown|
|China AssetManagement -Agricultural Bank ofChina - China AssetManagement ChinaSecurities FinancialAssets ManagementPlan|0|16,546,600||0.38||Unknown|Unknown|
|Yinhua Fund -Agricultural Bank ofChina - Yinhua ChinaSecurities FinancialAssets ManagementPlan|0|16,546,600||0.38||Unknown|Unknown|
|China Southern AssetManagement -Agricultural Bank ofChina - CSAM ChinaSecurities FinancialAssets ManagementPlan|0|16,546,600||0.38||Unknown|Unknown|
|ICBC CreditSuisse Fund -Agricultural Bank ofChina - ICBC CreditSuisse ChinaSecurities FinancialAssets ManagementPlan|0|16,546,600||0.38||Unknown|Unknown|
|Shares held by Top 10 unrestricted shareholders||||||||
|Name of Shareholder|||Number oftradable sharesheld||Type and quantity of shares|||
||||||Type||Quantity|
|CCCG (HK) HOLDING LIMITED|||763,963,200||B-shares|||
|China Communications Construction Co., Ltd.|||712,951,703||A-shares|||
|China Communications Construction Group|||552,686,146||A-shares|||
|Central Huijin Assets Management Co.,Ltd|||74,482,200||A-shares|||
|China Securities Finance Co., Ltd|||56,788,474||A-shares|||
|BOSERA FUNDS - Agricultural Bank of China -BOSARE China Securities Financial AssetsManagement Plan|||16,546,600||A-shares|||
|E FUND Management - Agricultural Bank ofChina - E FUND Management China SecuritiesFinancial Assets Management Plan|||16,546,600||A-shares|||
|DACHENG FUND - Agricultural Bank of China -DACHENG China Securities Financial AssetsManagement Plan|||16,546,600||A-shares|||

Annual Report 2017
|||||
|-|-|-|-|
|Harvest Fund - Agricultural Bank of China -Harvest China Securities Financial AssetsManagement Plan||16,546,600|A-shares|
|GF Fund - Agricultural Bank of China - GF ChinaSecurities Financial Assets Management Plan||16,546,600|A-shares|
|Lombarda China Fund - Agricultural Bank ofChina - Lombarda China Fund China SecuritiesFinancial Assets Management Plan||16,546,600|A-shares|
|China Asset Management - Agricultural Bank ofChina - China Asset Management ChinaSecurities Financial Assets Management Plan||16,546,600|A-shares|
|Yinhua Fund - Agricultural Bank of China -Yinhua China Securities Financial AssetsManagement Plan||16,546,600|A-shares|
|China Southern Asset Management - AgriculturalBank of China - CSAM China SecuritiesFinancial Assets Management Plan||16,546,600|A-shares|
|ICBC Credit Suisse Fund - Agricultural Bankof China - ICBC Credit Suisse ChinaSecurities Financial Assets Management Plan||16,546,600|A-shares|
|Explanation of theabove relatedrelationship orconsistent action|1. This Company issued Announcement of Completion of Transfer and Registration of Shares ofShanghai Zhenhua Heavy Industries Co., Ltd Transferred by China CommunicationsConstruction Co., Ltd through Agreement on Dec. 28, 2017. As of Dec. 27, 2017, CCCC directlyheld 12.589% of the shares of this Company and indirectly held 17.401% of the shares of thisCompany through CCCC Hong Kong. In addition, it still held 16.239% of the shares of thisCompany through CCCC and became the controlling shareholder of this Company.2. Among above top 10 shareholders, CCCG (HK) HOLDING LIMITED, China CommunicationsConstruction Group. And China Communications Construction Co., Ltd. Belong to relatedcompanies. The Company is not aware of whether other shareholders have associatedrelationship among them or belong to the consistent actionists as defined in the AdministrativeRules on Disclosure of Stock Change Information of Listed Company’s Shareholders.|||

Number of shares held by top 10 restricted shareholders and restriction conditions
□Applicable√Not applicable
(III) Strategic investors or general legal entities who become top 10 shareholders due to rights issue
□Applicable√Not applicable
IV. Status of controlling shareholder and actual controller
(I) Controlling shareholder
1 Legal person
√Applicable□Not applicable
|||
|-|-|
|Name|China Communications Construction Group|
|Person in charge of the unit or thelegal representative|Liu Qitao|
|Date of incorporation|Dec. 8, 2005|
|Main businesses|Undertaking overseas projects and international bidding projects at home;general contracting for construction of various special ships, leasing andmaintenance of special ship and construction machines; offshore towageand professional services related to the ocean engineering; technicalconsultant services regarding the ship and the supporting port equipment;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, design,construction, supervision, procurement and supply for related complete setof equipment or materials, and equipment installation); undertaking thegeneral contracting of the construction of industrial and civil works, railway,metallurgy, petrochemical, tunnel, power, mine, water conservancy, andmunicipal works; import and export business; real estate development andproperty management; investment and management of transportation, hotel|

Annual Report 2017
||
|-|
|and tourist industries.|

2 Natural person
□Applicable√Not applicable
3 Special statement for the Company without controlling shareholder
□Applicable√Not applicable
4 Index and date of the changes in controlling shareholders during the reporting period
√Applicable□Not applicable
This Company issued the Announcement of Completion of Transfer and Registration of Shares of Shanghai Zhenhua Heavy Industries Co., Ltd Transferred by China Communications Construction Co., Ltd through Agreement on Dec. 28, 2017. Please refer to www.sse.com.cn and input the stock code for reference or refer to Shanghai Securities News and Hong Kong Wen Wei Po on Dec. 28, 2017.
5 Block diagram of property right and control relationship between the Company and controlling shareholders
√Applicable□Not applicable
(II) Actual controller
1 Legal person
□Applicable√Not applicable
2 Natural person
□Applicable√Not applicable
3 Special statement for the company without actual controller
□Applicable√Not applicable
4 Index and date of the change of actual controller during the
reporting period
□Applicable√Not applicable
Annual Report 2017 5 Block diagram of property right and control relationship between the Company and actual controller
√Applicable□Not applicable
6 Actual controllers control the company through trust or other asset management methods
□Applicable√Not applicable
(III) Other information of the controlling shareholder and the actual controllers
□Applicable√Not applicable
V. Other corporate shareholders holding over10% shares
□Applicable√Not applicable
VI. Explanation for restricted reduction of the shares
□Applicable√Not applicable
Chapter VII Related Information about Preference Shares
□Applicable√Not applicable
Annual Report 2017
Chapter VIII Directors, Supervisors, Senior Management and Staff
I. Changes in holdings and remuneration
(I) Shareholding changes and remuneration of directors, supervisors and senior management under employment or retired during report period
√Applicable□Not applicable
Unit: share
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Title (note)|Sex|Age|Start ofTenure|End of tenure|Shares heldat thebeginning ofyear|Shares heldat the end ofyear|Changes in theyear|Notes toremunerationcalculationinterval|Total pre-taxremunerationreceived fromthe Companyduringreportingperiod(RMB10,000Yuan )|Paid byrelatedparties oftheCompanyor not|
|ZhuLianyu|Chairman of the Board,Party Secretary|Male|48|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|73.74|No|
|HuangQingfeng|Director, President,Deputy Party Secretary|Male|43|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|70.41|No|
|ZhangHongwen|Director|Male|58|Mar. 7, 2018|Apr. 20, 2018|0|0|0|-|0|Yes|
|Yan Yunfu|Director, Chief Engineer|Male|59|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.82|No|
|LiuQizhong|Director, Vice President|Male|54|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.67|No|
|DaiWenkai|Director, Vice President|Male|51|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|57.23|No|
|ZhuXiaohuai|Director, CFO|Male|49|Mar. 7, 2018|Apr. 20, 2018|0|0|0||0|No|
|She Lian|Independent Director|Male|59|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|12|No|
|Gu Wei|Independent Director|Male|61|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|12|No|
|Ling He|Independent Director|Male|66|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|12|No|
|Yang Jun|Independent Director|Male|61|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|12|No|

Annual Report 2017
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|BaiYunxia|Independent Director|Female|45|May 9, 2017|Apr. 20, 2018|0|0|0|May toDec.|8|No|
|WangCheng|Deputy Party Secretary,Secretary of Committeefor Discipline Inspection,Chairman of Labor Union|Male|45|Mar. 7, 2018|Apr. 20, 2018|0|0|0|July toDec.|22.92|No|
|ZhangMinghai|Supervisor|Male|56|Apr. 21,2015|Apr. 20, 2018|20,259|20,259|0|Jan. ToDec.|76.07|No|
|XiangXudong|Supervisor|Male|42|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|72.76|No|
|Liu Jianbo|Vice President|Male|55|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.55|No|
|Zhou Qi|Vice President|Male|46|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|57.18|No|
|Chen Bin|Vice President|Male|44|Apr. 21,2015|Apr. 20, 2018|89,440|89,440|0|Jan. ToDec.|56.67|No|
|ShanJianguo|Vice President|Male|54|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.67|No|
|ZhangJian|Vice President|Male|49|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.41|No|
|Fei Guo|Chief Engineer|Male|56|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.7|No|
|LiRuixiang|Chief economist|Male|43|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.23|No|
|Sun Li|General counsel|Male|46|Apr. 21,2015|Apr. 20, 2018|0|0|0|Jan. ToDec.|56.67|No|
|SongHailiang|Former chairman of theboard|Male|53|Apr. 21,2015|Apr. 28, 2017|0|0|0|-|0|Yes|
|Chen Qi|Former director|Female|56|Apr. 21,2015|Dec. 27, 2017|0|0|0|-|0|Yes|
|Wang Jue|Former director, CFO,secretary of the board|Male|54|Apr. 21,2015|Dec. 18, 2017|0|0|0|Jan. ToDec.|56.67|No|
|Cui Wei|Former chief supervisor,Deputy party secretary,Secretary of Committeefor Discipline Inspection,chairman of Labor Union|Male|42|Apr. 21,2015|Aug. 29, 2017|0|0|0|Jan. ToJune|33.15|Yes|
|Total|/|/|/|/|/|109,699|109,699|0||1085.52|/|

|||
|-|-|
|Name|Main work experiences|

Annual Report 2017
||||
|-|-|-|
|ZhuLianyu|Born in 1970, male, Ph.D., professor-level senior engineer; began his career in September 1992, served as engineer, equipment leader ofoverseas project, vice chief of Marine Machine Department, manager of Enterprise Development Department of CCCC First HarborEngineering Co., Ltd; general manager of CCCC International Shipping Co., Ltd, general manager of Equipment Manufacturing MarineHeavy Industry Department of China Communications Construction Co., Ltd. Current: Chairman of the Board and secretary of Party.||
|HuangQingfeng|Born in 1975, male, EMBA, senior engineer; began his career in August 1996, used to be quality project chief, director of field bridge office ofquality management department; deputy manager of after-sales department, general manager of Quality Inspection Company; vice directorof off-shore office, director of Quality Safety Department, director of Product Service Center and assistant president of the Group; VP of theCompany from Jan. 2005 and executive vice president and director of Production and Project Management Center since 2014. Current:Director, President, Deputy party secretary of the Company.||
|ZhangHongwen|Born in 1960, male, undergraduate, senior engineer; engaged in work in Aug., 1983. Successively serving as deputy general manager ofInternational Engineering Branch of Zhonggung Headquarters, deputy general manager of Overseas Division and manager ofComprehensive Department of Zhonggung Group, deputy general manager of Engineering Management Department and Operation &Management Department of China Communications Construction Co., Lt, deputy general manager and general manager of CapitalConstruction Department (Dredging Department) of CCCC, CEO and general manager of Dredging Business Department of ShanghaiInternational Port (Group) Co., Ltd, director, CEO, temporary member of the Party committee and non-executive director of CCCC Dredging(Group) Co., Ltd. Now serving as the general manager and director of Equipment Manufacturing & Ocean Heavy Industry Department ofCCCC.||
|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, and President of Land Heavy Industry Equipment DesignInstitute, director of board of the Company since 2004. Current: director and chief engineer.||
|LiuQizhong|Born in 1964, male, bachelor degree, senior economist; Vice Manager and Manager of Operating Department, director of the Companysince 1997. Current: director and VP of Company.||
|DaiWenkai|Born in 1967, male, master of physics, EMBA, senior engineer. Began his career in 1993, served as Vice Manger and Manager of OperatingDepartment, Vice Chief Economist, Chief Economist. Current: director and VP of the Company.||
|ZhuXiaohuai||Born in 1969, male, master of MBA, senior account. Successively served as deputy section manager of Financial Division of CCCC|
|||Shanghai Dredging Co., Ltd, deputy director of Budget and Finance Department, deputy manager, manager of Finance Department of|
|||CCCC Shanghai Dredging Co., Ltd and concurrently serving as a member of commission for disciplinary inspection, director, chief account,|
|||standing committee member of CCCC Shanghai Dredging Co. Ltd. Now serving as the director and CFO of the company.|
|She Lian|Born in 1959, male, professor, doctoral tutor; enjoying 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"Transportation Enterprise Management" magazine run by Ministry of Transportation; director of Early Warning Management ResearchCenter, Wuhan University of Technology, Professor of Management, doctoral tutor; director of Early Warning Management ResearchCenter, Huazhong University of Science and Technology, Professor of Management, doctoral tutor; Professor of CEIBS EmergencyManagement Institute incumbent National School of Administration, 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,enjoys special government allowances from the State Council, and the IEEE Society member, MTS Society member and the British Royal||

Annual Report 2017
|||
|-|-|
||Physical Society member, senior member of China Electro technical Society, senior member of Chinese Society of Naval Architects, seniormember of Chinese Mechanical Engineering Society; is currently director of the Key Laboratory of the Ministry of Transportation's ShippingTechnology and Control Engineering; member of China Electro technical Society's Vessel Electrical Committee; member of the Committeeof Experts of Shanghai Jiaotong Electronics Industry Association; procurement consulting expert of Shanghai Municipal Government;member of the Committee of Experts of Ministry of Transport East China Sea Rescue Bureau and other duties. Current: independent directorof the Company.|
|Ling He|Born in 1952, male, professor, senior editor (Senior professional title) of Liberation Daily, director of Shanghai Journalists Association,director of Shanghai Institute of Essays, served as member, assistant chief editor, director of Editing Department of the democratic and legalmagazine agency, vice director and director of Comment Department of Liberation Daily, main editor of Liberation Daily, chief editor ofLiberty Forum; with honor of the first National 100 Journalists, China News first prize for three times, Shanghai News first prize for 15 times.Current independent director of the Company.|
|Yang Jun|Born in 1957, male, master degree, served as intermediate and Senior court judge of Shanghai Court, president and members of the judicialcommittee member, Property Trade Operation Director of Shanghai United Property Rights Exchange, now is the assistant president ofShanghai United Property Rights Exchange, general manager of Beijing HQ, director of Financial Property Rights Trade Center, arbitrator ofChina International Economic and Trade Arbitration Commission, Shanghai International Economic and Trade Arbitration Commission,arbitrator of Shanghai Arbitration Commission, Shanghai Financial Arbitration Court, expert of China domain name dispute resolution center,director of Intellectual Property 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.|
|BaiYunxia|Born in Oct. 1973, female, Doctor of Accounting of Xiamen University, Post-doctor of Accounting, professor and doctoral student’s tutor ofGuanghua School of Management of Peking University. Engaged in work in 1995. Successively serving as the assistant engineer of KaiyuanGroup under Xi’an Jiaotong University, lecturer of School of Economics and Management of Tongji University, research scholar of CheungKong Graduate School of Business. Now serving as the director of Department of Accounting of School of Economics and Management ofTongji University, research scholar of Investment Center of Cheung Kong Graduate School of Business. Serving as the independent directorof the Company.|
|WangCheng|Born in 1973, male, undergraduate, senior political worker. Successively serving as secretary of Committee of the Communist Youth Leagueand secretary of Party Branch of No. 2 Engineering Co., Ltd of CCCC Third Harbor Engineering Co., Ltd; deputy director and director ofOrganization Department of CCCC Third Harbor Engineering Co., Ltd; Secretary of the Party Committee and vice general manager of No. 2Engineering Co., Ltd of CCCC Third Harbor Engineering Co., Ltd; chairman of board of supervisors and Vice Secretary of the PartyCommittee of CCCC Third Harbor Engineering Co., Ltd. Now serving as the Vice Secretary of the Party Committee, Secretary ofCommission for Disciplinary Inspection, chairman of labor union and supervisor of this Company.|
|ZhangMinghai|Born in1962, male, EMBA, professor-level senior engineer; formerly served as the engineer of Technology Division of Shanghai PortMachinery Plant; deputy manager of mechanical office, deputy chief engineer, general manager of Shore Bridge No. 1 Company ofMechanical Office, and general manager of Land-based Heavy Industry Co., Ltd. Of Shanghai Zhenhua Heavy Industries Co., Ltd. Current:director of the Company, chief designer and deputy dean of Land-based Heavy Industry Research & Design Institute, and vice chairman ofLogistics Engineering Institution, CMES.|
|Xiang|Born in 1976, male, bachelor degree, senior engineer; served as Vice Director and Vice Manager of Quality Department, General manager|

Annual Report 2017
|||
|-|-|
|Xudong|of Zhenhua Heavy Industry Inspection Co., Ltd. Current: worker’s representative supervisor of the board of supervisors, Vice GeneralManager of Zhenhua Heavy Industry Changxin Branch, Secretary of the Party Committee of Changxing Branch, and executive deputygeneral manager.|
|LiuJianbo|Born in 1963, male, master degree，senior engineer; served as the engineer at technological office of Shanghai Port Machinery Plant;assistant director in engineering with Technology Office of Shanghai Container Dock Co. Ltd., deputy general manager and general managerof ZPMC Changxing Base. Current: VP of the Company and chairman of board of Shanghai Zhenhua Ocean 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 ElectricAppliance Office of the Company; current VP of the Company and chairman of Electric Group of the Company.|
|Chen Bin|Born in 1974, male, EMBA, senior engineer; formerly served as project quality leader of Quality Control Division, deputy manager of tirecrane office of quality control division, manager of quality control division, deputy general manager and general manager of qualityinspection company, vice director of quality and safety office, manager of Quality Safety Division, supervisor of the Company, generalmanager of Shanghai Zhenhua Shipment Co., Ltd, president assistant of the Company. Current: VP of the Company and general managerof Shanghai Zhenhua Ocean Engineering Service Co., Ltd.|
|ShanJianguo|Born in 1964, male, bachelor degree; formerly worked in Shanghai Port Machinery Manufacturing Plant and started to work in ShanghaiZhenhua Port Machinery Co., Ltd since 1992, served as the engineer, chief engineer of Machinery Office, general manager of designcompany, deputy director and director of Machinery Office, manager of budget assessment department. He is now the VP of the Companyand the dean of Land-based Heavy Industry Research & Design Institute.|
|ZhangJian|Born in 1969, male, MBA, served as technician, production planner and assistant of director of No. 2 Panel beater of Shanghai PortMachinery Manufacturing Plant, chief of Changzhou Plant of Shanghai Port Machinery Manufacturing Plant, vice general manager ofShanghai Port Machinery Co., Ltd, vice general manager of Shanghai Port Machinery Heavy Industry Co., Ltd, general manager, assistant ofpresident of Port Machinery Co., Ltd. Current: VP of the Company.|
|Fei Guo|Born in 1962, male, EMBA, professor level senior engineer, served as engineer of Shanghai Port Machinery Plant, director of No. 5 electricaloffice, vice chief engineer, director of Development Office of Shanghai Zhenhua Port Machinery Co., Ltd, VP and executive director ofShanghai Zhenhua Heavy Industry Electric Co., Ltd, currently chief engineer of the Company.|
|LiRuixiang|Born in 1975, male, bachelor degree, served as the vice manager of Manufacturing Department, vice director of Quality Safety Office ofZhangjiagang Base of Shanghai Machinery Plant; manager of Quality Inspection Company, vice director of Quality and Safety Office, vicegeneral manager, generally manager, of machinery supporting base, Party branch secretary and president assistant, current chief economistof the Company and general manager of Ocean Engineering Group.|
|Sun Li|Born in 1972, male, EMBA, senior engineer; served as project supervisor of Operating Department, vice manager and assistant of GeneralManager of the Company, Vice President and director of the Company , currently Chief Legal Counsel of the Company|
|SongHailiang|Born in 1965, male, Ph.D., professor-level senior engineer, began his career in July 1987, served as engineer, Design Office director, VicePresident, President, member of Party Committee, Vice Secretary of the Party Committee, Chairman of the Board and simultaneouslyGeneral Manager of CCCC Water Transportation Planning and Design Institute Co., Ltd.; former vice President of China CommunicationsConstruction Co., Ltd. And General Manager of Equipment Manufacturing Marine Heavy Industry Department and Chairman of the Board ofthe Company.|

Annual Report 2017
|||
|-|-|
|Chen Qi|Born in 1962, female, master degree, senior engineer; served as the project manager of China Harbor Engineering Co., Ltd. Import andExport Port Machinery Division, deputy general manager of General manager of the Industry and Trade Business Division of China Harbor(Group) Co., Ltd., General manager of the Industry and Trade Business Division of China Communications Construction Co., Ltd. Sheserved as the director of the Company since 2011, former executive general manager of Equipment Manufacturing Marine Heavy IndustryDepartment of China Communications Construction Co., Ltd.|
|WangJue|Born in 1964, male, MBA, CPA and senior accountant; successively held the posts of director and General Accountant of the Financial Officeof No.3 Engineering Co., Ltd. Of CCCC Third Harbor Engineering Co., Ltd., Chief of Audit Department, Chief of Financial Department andVice General Accountant; is the Chief Financial Executive and Secretary of the Board of Directors of the Company since November of 2005;director of Company from 2006 to 2011; former director, CFO and Secretary of the Board of Directors 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, legalconsultant office of CCCC First Harbor Co., Ltd, director and minister of Party Work Department and President Affair Office of ZhenhuaHeavy Industry Co., Ltd; former chief supervisor, deputy secretary of the Party committee, secretary of Commission for Discipline Inspection,and chairman of Trade Union of the Company.|

Other information
□Applicable√Not applicable
(II) Equity incentives granted to the directors and senior management during the reporting period
□Applicable√Not applicable
II. Positions of the present directors, supervisors and senior management or the ones resigned during reporting period
(I) Position in the firm of the shareholders
√Applicable□Not applicable
||||||
|-|-|-|-|-|
|Name|Name of the firm of the shareholder|Post held in the firm of the shareholders|Starting date ofservice|Expiration date ofservice|
|Song Hailiang|China Communications Construction Co.,Ltd.|Vice president|Jan. 27, 2014||
|Chen Qi|China Communications Construction Co.,Ltd.|General manager of Industry and Trade Department|Dec. 29, 2009||
|ZhangHongwen|China Communications Construction Co.,Ltd.|General manger of equipment manufacturing and marine heavyindustry division|Jan. 4, 2018||

Annual Report 2017
(II) Positions in other companies
√Applicable□Not applicable
||||
|-|-|-|
|Name|Name of companies|Post held in other company|
|She Lian|CAG CEIBS Emergency Management Institute|Professor, doctoral tutor|
|Gu Wei|Shipping Technology and Engineering key Lab of Ministry ofTransportation, Vessel Electrical Committee of China ElectricalAssociation, Committee of Experts of Shanghai TransportationElectronics Association, etc.|Director, professor, doctoral tutor, councilmember, committee member|
|Ling He|Jiefang Daily, Shanghai Journalists Association, Shanghai EssaysSociety.|Senior editor (Senior professional title), director|
|Yang Jun|Shanghai United Assets and Equity Exchange, Financial AssetsExchange, Shanghai International Economic and Trade ArbitrationCommission, Shanghai Arbitration Commission, Shanghai Court ofFinancial Arbitration, Chinese Domain Name Dispute SettlementCenter, Intellectual Property Association of China Law Society,Company Law Association of Shanghai Law Society, ShanghaiPatent/Trademark/Copyright Association.|Assistant president, general manager, director,arbitrator, expert, director|
|Bai Yunxia|School of Economics and Management of Tongji University,Investment Centre of Cheung Kong Graduate School of Business|Director of Accounting Department, researchscholar|

III. Remuneration of directors, supervisors and senior executives
√Applicable□Not applicable
|||
|-|-|
|Decision-making procedures for remunerationof directors, supervisors and senior executives|In accordance with the regulations of Articles of Association, the remuneration of Directors andSupervisors are subject to the Annual Shareholder’s General Meeting and the remuneration of themanagement are assessed and approved by the President.|
|Calculation basis for remuneration of directors,supervisors and senior executives|Basic salary plus performance bonus, combined with assessment utilizing quantizing index ofproduction and operation.|
|Actual payment of remuneration to directors,supervisors and senior executives|Former Chairman Song Hailiang and the former director Chen Qi are not paid by the Company,whereas all other in-service and resigned director, supervisor and senior executives are paid by theCompany|
|Total remuneration received by all directors,supervisors and senior executives|RMB 10,855,200 Yuan|

Annual Report 2017
IV. Particulars about changes of directors, supervisors and senior executives
√Applicable□Not applicable
|||||
|-|-|-|-|
|Name|Post|Change|Reason|
|Song Hailiang|Chairman of the board|Resigned|Work transfer|
|Chen Qi|Director|Resigned|Age-related|
|Zhu Lianyu|Chairman of the board|Engaged|Job demand|
|Zhang Hongwen|Director|Elected|Job demand|
|Wang Jue|Director, CFO, secretary of the board|Resigned|Work transfer|
|Zhu Xiaohuai|Director, CFO|Elected|Job demand|
|Wang Cheng|Supervisor, Deputy Party Secretary, Secretary of Committeefor Discipline Inspection and Chairman of Labor Union|Elected|Job demand|
|Bai Yunxia|Independent director|Elected|Job demand|

 V. Explanation for punishment by securities regulatory institution in past three years
□Applicable√Not applicable
Annual Report 2017 VI. Employees in Parent Company and key subsidiaries
(I) Particulars about employee
|||
|-|-|
|Number of serving staff in Parent Company|3,104|
|Number of serving staff in key subsidiaries|5,679|
|Total number of serving staff|8,783|
|Number of retired employees to be borne byparent company and key subsidiaries|0|
|In specialties||
|Classification|Number|
|Production staff|3,346|
|Sales staff|212|
|Technical staff|4,400|
|Financial staff|130|
|Administrative staff|695|
|Total|8783|
|Education background||
|Educational level|Number (person)|
|Doctor|22|
|Master|596|
|Bachelor|3,521|
|Junior college|2,286|
|Technical secondary school|2,358|
|Total|8,783|

(II) Remuneration policies
√Applicable□Not applicable
In line with theCompany’s development strategy, continuously perfecting the distribution incentive and performance assessment system, established and improved the performance assessment scheme based on the different properties and characteristics of each unit and division; the implemented salary incentive system is closely linked to the performance distribution with the unit or division performance, value contribution, industrial characteristics, growth phase and similar factors, and is comprehensively linked to the staff performance with position duty and value contribution, and thus initially established the distribution mode integrating with the market.
(III) Training plan
√Applicable□Not applicable
In line with theCompany’s development strategy, gradually establish a rigid staff training system with systematic, directional and continuous features. At the beginning of each year, 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.
(IV) Labor outsourcing situation
√Applicable□Not applicable
|||
|-|-|
|Labor outsourcing hours|8189136 hours|
|Total Labor outsourcing remuneration|RMB 307.53 million Yuan|

VII. Others
□Applicable√Not applicable
Annual Report 2017 Chapter IX Corporate Governance
I. Information about corporate governance
√Applicable□Not applicable
The Company strictly followed the regulations specified in Company law, Securities Law, Stock Listing Rules, Articles of Association and the legal requirements of China Securities Regulatory Commission in the report period to standardize theCompany’s daily operation, further established and improved the internal control system, improved the internal control management and corporate governance structure, strengthened the insider information management, strengthened the information disclosure, continuously improved the company governance, made efforts to improve the construction of legal person governance structure, and gradually established a modern enterprise system, earnestly protected the legal rights and interests of the company and all the shareholders, ensuring the sustainable and stable development.
After self-inspection, the staffs who know the insider informationdidn’t trade the stocks of the company before significant price information is disclosed. There is no difference between the company governance and the regulations of China Securities Regulatory Commission. Whether there is significant difference in corporate governance and relevant regulations of CSRC? If any, please specify the reasons.
□Applicable√Not applicable
II. Summary of general meeting of shareholders
|||||
|-|-|-|-|
|Session|Date|Website index of the specifiedwebsite with resolutionpublication|Disclosure date ofresolutionpublication|
|2016 annualgeneral meeting ofshareholders|May 9, 2017|www.sse.com.cn,Enter the stock code to search|May10, 2017|

Particulars about the general meeting of shareholders
□Applicable√Not applicable
III. Duty fulfillment of directors
(I) Attendance of directors at the meetings of the Board of Directors andshareholders’ general meetings
|||||||||
|-|-|-|-|-|-|-|-|
|Name ofdirector|Independentdirector ornot|Attendance at the meetings of the Board of Directors||||||
|||Desiredattendancetimes|Attendancetimes inperson|Attendance bycorrespondence|Entrustedattendance|Absences|Consecutivetwoabsencesin person ornot|
|Zhu|No|11|1|10|0|0|No|

Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|Lianyu||||||||
|HuangQingfeng|No|11|1|10|0|0|No|
|YanYunfu|No|11|1|10|0|0|No|
|LiuQizhong|No|11|1|10|0|0|No|
|DaiWenkai|No|11|1|10|0|0|No|
|She Lian|Yes|11|1|10|0|0|No|
|Gu Wei|Yes|11|1|10|0|0|No|
|Ling He|Yes|11|1|10|0|0|No|
|YangJun|Yes|11|1|10|0|0|No|
|BaiYunxia|Yes|5|0|5|0|0|No|
|SongHailiang|No|4|1|3|0|0|No|
|Chen Qi|No|11|1|10|0|0|No|
|WangJue|No|10|1|9|0|0|No|

Explanation for consecutive two absences in Board meetings in person
□Applicable√Not applicable
|||
|-|-|
|Number of board meetings in reporting year|11|
|Including: number of on-site meeting|1|
|Number of meeting by correspondence|10|
|Number of meeting combined of on-site & by correspondence|0|

(II) Objection proposed by independent director to the company issues
□Applicable√Not applicable
(III) Others
□Applicable√Not applicable
IV. Dissent expressed by the special committee under the board during duty performance on related issues of the Company should be disclosed in detail
□Applicable√Not applicable
V. Description of risk found by the Board of Supervisors
□Applicable√Not applicable
VI. Description of the Company for the shareholders that cannot guarantee the independence and keep the independent operation ability in business, personnel, assets, organization and finance
□Applicable√Not applicable
Corresponding solution, progress and follow-up plan for horizontal competition by
the Company
□Applicable√Not applicable
Annual Report 2017 VII. Evaluation system of senior executives, and 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 “being 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. Disclosure of internal control self-assessment report or not
√Applicable□Not applicable
2017 Company Annual Internal Control Evaluation Report will be published on the website of Shanghai Stock Exchange http://www.sse.com.cn
Explanation of significant internal control deficiency during the reporting period□Applicable√Not applicable
IX. Explanation of internal control audit report
√Applicable□Not applicable
Ernst& Young LLP (special general partnership), engaged by the Company, had audited the effectiveness of the internal control of the financial report as of December 31, 2017 and issued a standard internal control audit report without qualified opinion (see the attachment to the announcement for details).
Disclose the internal control audit report or not: Yes
X. Others
□Applicable√Not applicable
Chapter X Corporate Bonds
□Applicable√Not applicable
Annual Report
2017
Chapter XI Financial Reports
I. Audit report
√Applicable□Not applicable
Audit Report
Ernst& Young (2018) SZNo.61249778_B01 Shanghai Zhenhua Heavy Industries Co., Ltd. To all Shareholders of Shanghai Zhenhua Heavy Industries Co., Ltd.,:
I. Audit Opinion
We have audited the financial statements of Shanghai Zhenhua Heavy Industries Co., Ltd., including the consolidated and theCompany’s balance sheets as of December 31, 2017, consolidated and theCompany’s Income Statement in 2017, statement of changes in stockholder equity, cash flow statements and notes to the financial statements.
In our opinion, the accompanying financial statements of Zhenhua Heavy Industries Co., Ltd. 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 Co., Ltd as of December 31, 2017 and the results of operations and cash flows of consolidation and the Company for the year 2017.
II. Basis for Audit Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under those standards are further described in theAuditor’s Responsibilities for Audit of Financial Statements section of our report. We are independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The following
Annual Report
2017
description of how our audit addressed the key audit matter is also against this background.
We have fulfilled the responsibilities stated in “Responsibilities of Certified Public Accountant for Auditing of Financial Statement” in this report, including the responsibilities related to these key auditing matters. Correspondingly, our auditing work includes the implementation of the auditing procedure designed for dealing with the great misstatement risks of the financial statement to be evaluated. The results from the implementation of the auditing procedure by us, including the procedure to be implemented for the following key auditing matters, offers a foundation for releasing the auditing opinions of the financial statements.
Annual Report
2017
Audit Report (continued)
Ernst& Young (2018) SZNo.61249778_B01 Shanghai Zhenhua Heavy Industries Co., Ltd. III. Key Audit Matters (continued)
|||||
|-|-|-|-|
||Key audit matter:||How our audit addressed this key audit|
||||matter:|
||1. Provision of inventory depreciation reserves|||
|Shanghai Zhenhua Heavy Industries Co.,Ltd. and its subsidiaries (“Group”) are mainlyengaged in manufacturing the port containercrane; in addition, they are also engaged in themanufacture of bulk handling machine,offshore heavy-duty machine and large-sizedsteel structure. Its inventory mainly includesengineering raw materials, outsourcing partsand components, products in the process andinventory goods. Since the production cycle ofthe products of this group is relatively long, thenet realizable value of the related inventorymay fluctuate with the change in the marketdemand, resulting in the inventory depreciationrisks. The Group withdraws the inventorydepreciation reserves according to the balanceof the inventory cost and the net realizablevalue. The net realizable value is determinedas per the estimated selling price of theinventory minus the cost, the estimated sellingexpenses and the related taxes that may occurin the completion on the assumption that themanagement layer adopts a certain estimateand hypothesis in determining the netrealizable value. In case of difference betweenthe actual figure and the originally estimatedfigure, the related balance will affect the bookvalue of the inventory and the depreciation lossin the estimated fluctuation.The accounting policy and otherdisclosures regarding the inventory are statedin Note (III) (10), Note (III) (29) and Note (V) (7)of the financial statement.||Our procedure mainly included knowingand testing the validity of the control related tothe provision of inventory depreciationreserves and the method of calculating the netrealizable value of the Group. We alsoimplemented the related auditing proceduresover the inventory such as supervision ofinventory taking to verify the Group hadmarked the inventory with slow turnover anddefectives and taken into full account inprovision of inventory depreciation reserves.In addition, we obtained the computationsheet of provision of inventory depreciationreserves on Dec. 31, 2017 from the Group,rechecked the rationality of the calculationmethod. As to the key elements such as theestimated selling price, the cost that mayoccur from the inventory to the completion, theestimated selling expenses and the relatedtaxes, taken into consideration by the Group incalculating the net realizable value, weevaluated the rationality of the hypothesis andthe estimates through analyzing the relatedhistorical data and comparing the after-datedata. We also tested the mathematicalaccuracy of the calculation of the provisionamount of the inventory depreciation reserves.||

Annual Report
2017
Audit Report (continued)
Ernst& Young (2018) SZNo.61249778_B01 Shanghai Zhenhua Heavy Industries Co., Ltd. III. Key Audit Matters (continued)
|||||
|-|-|-|-|
||Key audit matter:||How our audit addressed this key|
||||audit matter:|
||2．Provision of bad debt reserves of account receivable|||
|The account receivable of theGroup is mainly from the businesscontract on port machine and oceanengineering manufacturing. Since itinvolves large contracted value, longconstruction period, relativelycomplicated technical parameters, theimplementation of the contract maybe affected by the periodicity of theeconomic environment. The accountreceivable of the Group is imposed toa certain risk in the recovery in caseof disputes in contract or the stagnantindustry. As to the bad debt reserveswithdrawn for the account receivable,the management layer evaluates theguarantee obtained for the accountreceivable, aging of accountreceivable, credit rating and historicalrepayment record of the counterpartbased on the financial status of thecounterpart. The provision of the baddebt reserves needs to adopt the keyaccounting estimate, including theconsideration of the credit risk,historical repayment record and theexisting disputes of the customer.The accounting policy and otherdisclosures related to the accountreceivable are stated Note (III) (9),Note (III) (29) and Note (V) (4) of thefinancial statement.||We evaluated the rationality ofaccounting estimate related to thedepreciation reserves, such as thefinancial status and credit rating ofthe counterpart; checked the agingof the account receivable andhistorical repayment record andevaluated whether the financialproblems of the counterpart hadeffects on the recovery of theaccount receivable; we checkedthe related supporting documentsfor the selected samples so as tovalidate the accuracy of the aging ofthe account receivable; reviewedthe after-date received payment ofthe account receivable andrechecked the related evidences ofthe account receivable that couldnot be received and was written off.||

Annual Report
2017
Audit Report (continued)
Ernst& Young (2018) SZNo.61249778_B01 Shanghai Zhenhua Heavy Industries Co., Ltd. III. Key Audit Matters (continued)
|||||
|-|-|-|-|
||Key audit matter:||How our audit addressed this key|
||||audit matter:|
||3．Confirmation of income from construction contract|||
|Most of the income of the Groupcomes from the one of the constructioncontracts on the large-sized portequipment, heavy equipment, steelstructure and construction projectscustomized by the customer. The Groupadopts the percentage ofcompletion method to calculate the incomeof the construction contracts. As to thelarge-sized port equipment, its completionschedule is determined according to thecorresponding percentage of completionmethod of the confirmation node of theincome achieved at the period end of theconstruction contract. As to the heavyequipment and construction period, itscompletion schedule is determinedaccording to the ratio of the accumulativecontract cost occurring to the expectedtotal contract cost. As to the fabrication ofthe steel structure, its completion scheduleis determined according to the ratio of theaccumulatively completed processingtonnage to the expected total processingtonnage. The above-mentioned methodsinvolve the use of the great judgment andestimate of the management, including theachieved node, expected total contractcost, total contract income and expectedcontract loss. In addition, the income, costand realizable gross profit of the contractmay change with the actual conditions,resulting in great differences in the initialestimate of the group.The accounting policy and otherdisclosures related to the income of theconstruction contract are stated in Note (III)(11), (III) (29) and (V) (8) and Note (V) (45)of the financial statement.||We evaluated and tested theaccounting contract cost, contractincome, achieved node confirmationand the internal control over the flow forcalculating the completion schedule.We got the important contracts to verifythe total contract income and reviewthe important contract clauses.Through selecting the samples, weverified whether the contract cost thatoccurred conformed to the certification.We implemented the cutoff checkprocedure to validate the cost wasconfirmed in the proper accountingperiod; as to the large-sized portequipment, through sampling, we gotthe certification for the achieved nodeand made the sampling for fieldobservation. We evaluated thejudgment and estimate of the totalcontract cost made by themanagement. We made sampling tocalculate and check the incomedetermined by the occurred contractcost and the expected total contractcost again. In addition, we implementedthe analysis-oriented recheckprocedure against the gross profit ofthe key construction contract of theGroup.||

Annual Report
2017
Audit Report (continued)
Ernst& Young (2018) SZNo.61249778_B01 Shanghai Zhenhua Heavy Industries Co., Ltd. IV. Other Information
The management of Shanghai Zhenhua Heavy Industries Co., Ltd. (hereafter referred to as the management) is responsible for other information. The other information comprises all of the information included in the annual report other than the financial statements and ourauditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibility of the Management and Those Charged with Governance for the Financial Statements
The management of the Company is responsible for the preparation of these financial statements in accordance with Accounting Standards for Business Enterprises to make them a fair presentation and designing, implementing and maintaining necessary internal control, to ensure that the financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the ability of Shanghai Zhenhua Heavy Industries Co., Ltd. to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless BOE either intends to liquidate or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial reporting process of Shanghai Zhenhua Heavy Industries Co., Ltd.
Annual Report
2017
Audit Report (continued)
Ernst& Young (2018) SZNo.61249778_B01 Shanghai Zhenhua Heavy Industries Co., Ltd. VI.CPA’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
(4) Conclude on the appropriateness ofmanagement’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of Shanghai Zhenhua Heavy Industries Co., Ltd. to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements, or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause Shanghai Zhenhua Heavy Industries Co., Ltd. to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
Annual Report
2017
statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Shanghai Zhenhua Heavy Industries Co., Ltd. to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
Annual Report
2017
Audit Report (continued)
Ernst& Young (2018) SZNo.61249778_B01 Shanghai Zhenhua Heavy Industries Co., Ltd. VI.CPA’s Responsibility for the Audit of the Financial Statements (continued)
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Ernst& Young LLP. (Special general partnership) Chinese Certified Public Accountant: Yang Lei (Engagement partner)
Chinese Certified Public Accountant: Liu Wei Beijing China Mar. 28, 2018
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Balance Sheet
Dec. 31, 2017
RMB Yuan
Assets Note V Dec. 31, 2017 Dec. 31, 2016 Current assets
||
|-|
|5,770,227,369|
|8,438,278|
|420,786,012|
|3,980,017,611|
|1,036,783,170|

||
|-|
|3,597,044,199|
|4,615,775|
|296,920,781|
|4,230,746,458|
|900,422,234|

 Dividend receivable 665,346 -
||
|-|
|996,161,366|
|7,071,266,879|
|13,453,980,326|
|1,896,475,472|
|591,311,853|

||
|-|
|736,554,593|
|6,776,086,014|
|11,105,813,767|
|1,384,438,569|
|553,363,139|

 Total current assets 35,226,113,682 29,586,005,529 Non-current assets
||
|-|
|1,304,203,905|
|4,238,704,827|
|2,320,470,521|
|455,063,723|
|17,335,351,611|
|1,889,146,009|
|3,683,165,608|
|265,188,465|
|7,764,501|
|618,054,364|

||
|-|
|1,313,572,506|
|3,791,218,020|
|2,201,421,453|
|473,380,251|
|15,022,782,366|
|4,025,449,461|
|3,744,448,606|
|149,212,956|
|10,881,263|
|505,446,687|

 Other non-current assets 21 176,726,613 - Total non-current assets 32,293,840,147 31,237,813,569 Total assets 67,519,953,829 60,823,819,098 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Balance Sheet (continued)
Dec. 31, 2017
RMB Yuan
Liabilities and stockholders’ equity Note V Dec. 31, 2017 Dec. 31, 2016 Current liabilities
||
|-|
|25,468,980,401|
|1,893,227,482|
|6,887,598,171|
|591,727,255|
|2,508,598,913|
|273,733,207|
|194,948,927|
|118,825,582|
|31,701,965|
|692,680,129|
|2,198,931,219|
|-|

||
|-|
|21,485,919,393|
|1,905,121,706|
|5,103,018,897|
|292,941,206|
|2,393,446,122|
|264,549,756|
|251,000,724|
|140,195,803|
|31,701,965|
|1,225,135,428|
|799,574,356|
|3,996,025,335|

 Total current liabilities 40,860,953,251 37,888,630,691 Non-current liabilities
||
|-|
|6,664,914,383|
|1,884,986,333|
|464,888,663|
|479,174,120|
|183,462,320|
|152,954,098|

||
|-|
|3,925,335,497|
|1,618,361,164|
|293,115,783|
|451,036,024|
|104,164,573|
|56,025,416|

 Total non-current liabilities 9,830,379,917 6,448,038,457 Total liabilities 50,691,333,168 44,336,669,148 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Balance Sheet (continued)
Dec. 31, 2017
RMB Yuan
Liabilities and stockholders’ equity Note V Dec. 31, 2017 Dec. 31, 2016Stockholders’ equity
||
|-|
|4,390,294,584|
|5,526,978,575|
|273,892,978|

||
|-|
|4,390,294,584|
|5,526,978,575|
|322,403,671|

 Special reserves
42
1,914,832
-
||
|-|
|1,618,543,971|
|3,199,681,426|
|15,011,306,366|

||
|-|
|1,603,122,982|
|3,353,936,451|
|15,196,736,263|

 Minority equity 1,817,314,295 1,290,413,687 Totalshareholders’ equity 16,828,620,661 16,487,149,950 Total Liabilities andstockholders’ equity 67,519,953,829 60,823,819,098 The notes of the financial statements are part of the financial statements.
Financial statements signed by:
Legal representative: Accounting principal: Accounting firm
principal:
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Income Statement
Year 2017
RMB Yuan
Note V 2017 2016
||
|-|
|21,858,814,000|
|18,019,075,299|
|114,240,644|
|121,457,892|
|1,742,167,300|
|758,201,305|
|824,836,448|
|(4,615,775|
|123,368,931|
|94,274,214|

||
|-|
|24,348,087,928|
|19,727,663,875|
|152,175,837|
|100,435,778|
|1,759,032,746|
|1,218,992,788|
|1,221,116,175|
|28,857,808|
|118,513,425|
|99,395,952|

 Gains from assets disposal 53 10,749,056 1,340,612 Other revenue 54 76,198,207 -
||
|-|
|484,535,531|
|29,343,558|
|92,116,253|

||
|-|
|317,382,574|
|56,993,416|
|5,514,846|

||
|-|
|421,762,836|
|92,319,416|

||
|-|
|368,861,144|
|61,516,908|

||
|-|
|329,443,420|
|329,443,420|
|-|
|300,195,422|
|29,247,998|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Income Statement (continued)
Year 2017
RMB Yuan
Note V 2017 2016 Net amount of other comprehensive income
after tax
Net amount of other comprehensive income
after tax attributable to the shareholders of
parent company 41
Other comprehensive income that will be
reclassified into gains and losses
subsequently
||
|-|
|(8,449,542|
|(9,826,324|
|(30,234,827|
|(48,510,693|
|(18,166,833|

||
|-|
|4,801,990|
|84,335,801|
|25,605,643|
|114,743,434|
|7,765,004|

 Total comprehensive income 262,765,894 429,852,674 Including:
||
|-|
|251,684,729|
|11,081,165|

||
|-|
|327,163,380|
|102,689,294|

 Earnings per share 59
||
|-|
|0.07|
|0.07|

||
|-|
|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 Changes inStockholder’s Equity
Year 2017
RMB Yuan
Stockholders’ Minority
Stockholders’ equity attributable to parent company equity Capital stock Capital reserves Other Surplus reserves Special reserves Undistributed Subtotal Equity Total comprehensive profit
income
||
|-|
|4,390,294,584|

||
|-|
|5,526,978,575|

||
|-|
|322,403,671|

||
|-|
|1,603,122,982|

||
|-|
|-|

||
|-|
|3,353,936,451|

||
|-|
|15,196,736,263|

||
|-|
|1,290,413,687|

||
|-|
|16,487,149,950|

||
|-|
|-|

||
|-|
|-|

||
|-|
|(48,510,693|

||
|-|
|-|

||
|-|
|-|

||
|-|
|300,195,422|

||
|-|
|251,684,729|

||
|-|
|11,081,165|

||
|-|
|262,765,894|

Shareholders’
contributions and
(II) decrease of capital
||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|513,802,736|

||
|-|
|513,802,736|

 (III) Profit distribution
Withdrawal surplus
1 reserves - - - 15,420,989 - (15,420,989 ) - - -
||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|(439,029,458|

||
|-|
|(439,029,458|

||
|-|
|(545,570|

||
|-|
|(439,575,028|

 (IV) Special reserves
||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|45,958,231|
|(44,043,399|

||
|-|
|-|
|-|

||
|-|
|45,958,231|
|(44,043,399|

||
|-|
|5,006,115|
|(2,443,838|

||
|-|
|50,964,346|
|(46,487,237|

||
|-|
|4,390,294,584|

||
|-|
|5,526,978,575|

||
|-|
|273,892,978|

||
|-|
|1,618,543,971|

||
|-|
|1,914,832|

||
|-|
|3,199,681,426|

||
|-|
|15,011,306,366|

||
|-|
|1,817,314,295|

||
|-|
|16,828,620,661|

The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Changes inStockholder’s Equity (continued)
Year 2016
RMB Yuan
Stockholders’ equity attributable to parent company Minority Stockholders’ equity Capital stock Capital reserves Other Surplus reserves Special reserves Undistributed Subtotal Equity Total comprehensive profit
income
||
|-|
|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|

||
|-|
|-|

||
|-|
|-|

||
|-|
|114,743,434|

||
|-|
|-|

||
|-|
|-|

||
|-|
|212,419,946|

||
|-|
|327,163,380|

||
|-|
|102,689,294|

||
|-|
|429,852,674|

Shareholders’ contributions
(II) and decrease of capital
||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|273,048,439|

||
|-|
|273,048,439|

 (III) Profit distribution
||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|27,022,196|
|-|

||
|-|
|-|
|-|

||
|-|
|(27,022,196|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|(2,400,467|

||
|-|
|-|
|(2,400,467|

 (IV) Special reserves
||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|26,851,099|
|(26,851,099|

||
|-|
|-|
|-|

||
|-|
|26,851,099|
|(26,851,099|

||
|-|
|-|
|-|

||
|-|
|26,851,099|
|(26,851,099|

 III. Balance at the end of the year 4,390,294,584 5,526,978,575 322,403,671 1,603,122,982 - 3,353,936,451 15,196,736,263 1,290,413,687 16,487,149,950 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flow
Year 2017
RMB Yuan
Note V 2017 2016 I. Cash flows from operating activities:
||
|-|
|16,640,760,111|
|889,705,824|
|382,299,156|

||
|-|
|21,354,693,208|
|917,117,592|
|437,301,182|

||
|-|
|17,912,765,091|

||
|-|
|22,709,111,982|

||
|-|
|13,683,031,255|
|1,897,864,942|
|477,730,293|
|521,929,327|

||
|-|
|18,154,428,952|
|1,782,356,763|
|525,276,408|
|588,627,223|

||
|-|
|16,580,555,817|

||
|-|
|21,050,689,346|

 Net cash flows from operating activities 61(1) 1,332,209,274 1,658,422,636 II. Cash flows from investing activities
||
|-|
|-|
|23,201,157|
|98,401,263|
|50,163,105|

||
|-|
|160,000,000|
|53,350,539|
|13,381,153|
|852,787,742|

||
|-|
|171,765,525|

||
|-|
|1,079,519,434|

||
|-|
|1,333,961,486|
|286,000,000|
|60,338,410|
|173,076,659|

||
|-|
|1,157,412,752|
|648,321,760|
|-|
|-|

||
|-|
|1,853,376,555|

||
|-|
|1,805,734,512|

Net cash flow used for investing activities (1,681,611,030 ) (726,215,078 )
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flow (continued)
Year 2017
RMB Yuan
Note 2017 2016 V
III. Cash flows from financing activities:
||
|-|
|33,077,608,125|
|-|
|1,566,959,110|

||
|-|
|36,889,288,147|
|4,000,000,000|
|3,038,684,232|

||
|-|
|34,644,567,235|

||
|-|
|43,927,972,379|

||
|-|
|29,020,665,806|
|1,623,289,546|
|1,423,746,129|

||
|-|
|40,386,569,653|
|1,247,523,244|
|2,141,534,489|

||
|-|
|32,067,701,481|

||
|-|
|43,775,627,386|

 Net cash flows from financing activities 2,576,865,754 152,344,993
||
|-|
|(50,822,183|

||
|-|
|74,727,024|

||
|-|
|2,176,641,815|
|3,497,205,186|

||
|-|
|1,159,279,575|
|2,337,925,611|

||
|-|
|5,673,847,001|

||
|-|
|3,497,205,186|

The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance Sheet of the Company
Year 2017
RMB Yuan
Assets Note XII Dec. 31, 2017 Dec. 31, 2016 Current assets
||
|-|
|3,392,595,294|
|-|
|413,779,017|
|6,547,864,759|
|1,173,384,482|

||
|-|
|1,972,249,599|
|4,615,775|
|259,055,935|
|6,476,087,696|
|1,960,350,424|

 Dividend receivable 665,346 -
||
|-|
|13,665,850,616|
|5,786,210,236|
|9,021,852,353|
|261,325,439|

||
|-|
|13,878,003,016|
|5,589,869,550|
|8,583,910,209|
|173,417,465|

 Total current assets 40,263,527,542 38,897,559,669 Non-current assets
Financial assets available-for-sale 221,946,872 356,606,562 Long-term receivables 417,914,193 -
||
|-|
|8,922,200,826|
|455,063,723|
|5,231,211,582|
|660,662,593|
|1,618,835,106|
|563,785,515|

||
|-|
|8,582,775,282|
|473,380,251|
|5,633,993,352|
|761,374,018|
|1,664,941,415|
|474,102,945|

 Total non-current assets 18,091,620,410 17,947,173,825 Total assets 58,355,147,952 56,844,733,494
The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance Sheet of the Company (continued)
Dec. 31, 2017
RMB Yuan
Liabilities and stockholders’ equity Note XII Dec. 31, 2017 Dec. 31, 2016 Current liabilities
||
|-|
|22,855,801,381|
|1,657,137,654|
|5,970,208,396|
|393,410,039|
|2,922,827,192|
|258,990,282|
|50,220,742|
|102,690,137|
|352,598|
|1,541,880,536|
|1,367,901,030|
|-|

||
|-|
|18,095,748,393|
|1,860,260,636|
|6,072,079,752|
|291,785,327|
|3,989,249,948|
|253,913,374|
|101,878,736|
|128,368,841|
|352,598|
|1,852,554,158|
|407,455,030|
|3,996,025,335|

 Total current liabilities 37,121,419,987 37,049,672,128 Non-current liabilities
||
|-|
|4,897,199,999|
|556,387,041|
|451,128,341|
|348,455,388|
|3,456,670|

||
|-|
|2,891,136,000|
|905,899,355|
|284,982,328|
|327,313,110|
|-|

 Total non-current liabilities 6,256,627,439 4,409,330,793
||
|-|
|43,378,047,426|
|4,390,294,584|
|5,792,527,600|
|140,264,717|
|1,618,035,698|
|3,035,977,927|
|14,977,100,526|
|58,355,147,952|

||
|-|
|41,459,002,921|
|4,390,294,584|
|5,792,527,600|
|264,075,193|
|1,602,614,709|
|3,336,218,487|
|15,385,730,573|
|56,844,733,494|

The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Income Statement of the Company
Year 2017
RMB Yuan
Note XII 2017 2016
||
|-|
|18,982,284,728|
|16,062,361,939|
|44,763,858|
|83,481,628|
|1,090,711,385|
|1,060,351,306|
|619,199,093|
|(4,615,775|
|156,502,074|
|94,574,906|
|1,303,038|

||
|-|
|24,248,483,693|
|20,545,946,108|
|62,382,292|
|81,744,285|
|1,163,620,534|
|1,029,965,201|
|1,208,850,889|
|27,035,042|
|102,879,065|
|99,395,952|
|(2,996,936|

 Other revenue 47,634,541 - Operating profit 222,239,397 282,891,555
||
|-|
|3,753,311|
|86,711,533|

||
|-|
|7,306,172|
|3,588,333|

 Total profit 139,281,175 286,609,394 Less: income tax expense (14,928,712 ) 16,387,434
||||
|-|-|-|
|154,209,887||270,221,960|
|||270,221,960|
|154,209,887|||
|||-|
|-|||
|(8,449,542|)|4,801,990|
|||(20,432,661|
|(114,460,736|)||
|||699,025|
|(900,198|)||
|(123,810,476|)|(14,931,646|
|30,399,411||255,290,314|

The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of Changes inStockholder’s Equity of the Company
Year 2017
RMB Yuan
Other Total Special Surplus Undistributed
Capital stock Capital reserves comprehensive shareholders’ reserves reserves profit
income equity Balance at the
beginning of the
I. year 4,390,294,584 5,792,527,600 264,075,193 - 1,602,614,709 3,336,218,487 15,385,730,573 Changes for the
II.
year
Total
(I) comprehensive
income - - (123,810,476 ) - - 154,209,887 30,399,411 (II) Profit distribution
Withdrawal surplus
1 )
reserves - - - - 15,420,989 (15,420,989 - 2
D shis at rr eib hu ot li do en
r
t so
- - - - - (439,029,458 ) (439,029,458 )
||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|25,340,978|
|(25,340,978|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|25,340,978|
|(25,340,978|

||
|-|
|4,390,294,584|

||
|-|
|5,792,527,600|

||
|-|
|140,264,717|

||
|-|
|-|

||
|-|
|1,618,035,698|

||
|-|
|3,035,977,927|

||
|-|
|14,977,100,526|

 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of Changes inStockholder’s Equity of the Company (continued)
Year 2016
RMB Yuan
Other
Capital Special Surplus Undistributed Totalshareholders’ Capital stock comprehensive
reserves reserves reserves profit equity income
Balance at the
beginning of the
I. year 4,390,294,584 5,792,527,600 279,006,839 - 1,575,592,513 3,093,018,723 15,130,440,259 Changes for the
II.
year
Total
(I) comprehensive
income - - (14,931,646 ) - - 270,221,960 255,290,314
||
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|

||
|-|
|-|
|14,726,377|
|(14,726,377|

||
|-|
|27,022,196|
|-|
|-|

||
|-|
|(27,022,196|
|-|
|-|

||
|-|
|-|
|14,726,377|
|(14,726,377|

||
|-|
|4,390,294,584|

||
|-|
|5,792,527,600|

||
|-|
|264,075,193|

||
|-|
|-|

||
|-|
|1,602,614,709|

||
|-|
|3,336,218,487|

||
|-|
|15,385,730,573|

 The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Cash Flow Statement of the Company
Year 2017
RMB Yuan
Note XII 2017 2016 I. Cash flows from operating activities
||
|-|
|15,763,239,504|
|831,198,628|
|292,626,816|

||
|-|
|18,091,209,000|
|822,041,413|
|395,515,334|

||
|-|
|16,887,064,948|

||
|-|
|19,308,765,747|

||
|-|
|15,196,972,901|
|991,857,309|
|162,924,111|
|494,142,751|

||
|-|
|17,894,901,564|
|965,476,776|
|91,325,029|
|432,920,475|

||
|-|
|16,845,897,072|

||
|-|
|19,384,623,844|

||
|-|
|41,167,876|

||
|-|
|(75,858,097|

 II. Cash flows from investing activities
||
|-|
|-|
|1,160,353|
|3,487,103|

||
|-|
|100,000,000|
|37,716,179|
|8,290,642|

||
|-|
|4,647,456|

||
|-|
|146,006,821|

||
|-|
|99,333,396|
|509,898,290|

||
|-|
|257,016,945|
|1,222,623,689|

||
|-|
|609,231,686|

||
|-|
|1,479,640,634|

||
|-|
|(604,584,230|

||
|-|
|(1,333,633,813|

The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Cash Flow Statement of the Company (continued)
Year 2017
RMB Yuan
Note XII 2017 2016 III. Cash flows from financing activities
||
|-|
|28,289,415,519|
|-|
|-|

||
|-|
|32,313,411,400|
|4,000,000,000|
|1,817,635,793|

||
|-|
|28,289,415,519|

||
|-|
|38,131,047,193|

||
|-|
|24,398,943,306|
|1,466,838,827|
|407,455,030|

||
|-|
|35,132,081,497|
|1,032,636,806|
|526,482,447|

||
|-|
|26,273,237,163|

||
|-|
|36,691,200,750|

||
|-|
|2,016,178,356|

||
|-|
|1,439,846,443|

||
|-|
|(23,870,002|

||
|-|
|35,989,736|

||
|-|
|1,428,892,000|
|1,872,410,585|

||
|-|
|66,344,269|
|1,806,066,316|

||
|-|
|3,301,302,585|

||
|-|
|1,872,410,585|

The notes of the financial statements are part of the financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements
Dec. 31, 2017
RMB Yuan
I. Basic Information of the Group
Shanghai Zhenhua Heavy Industries Co., Ltd. (hereinafter referred to as “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 (hereafter referred to as “Zhenhua Company”). Both the registration place and headquarters address of the Company are Shanghai City, P. R. China.
As approved by ZWFZ (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 ZJFXZ (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.
As approved by ZJFXZ (2004) No.165 of 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.
As approved by ZJFXZ (2007) No. 3466 of 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 ZJXKZ (2009) No.71 document of China Securities Regulatory Commission, the Company issued non-publicly 169,794,680 A-shares on Sep. 22, 2008 to its controller China Communications Construction Co., Ltd. (hereafter referred to as “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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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As of 2017 and Dec. 31, 2016, after all issues of shares and bonus shares distribution, the capital stock of the Company was 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)
Dec. 31, 2017
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I. Basic Information of the Group (continued)
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 Communications Construction (Group) Co. Ltd. (hereafter referred to as “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 (GZGG[2006] No.1063) by State Assets Commission on Aug. 16, 2006, and the Reply to Issue Concerning Management of State Stock of China Communications Construction Co. Ltd. (GZCQ[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 (ZJGSZ[2006] No. 227), on Oct.8, 2006 Communications Group solely initiated the establishment of China Communications Construction Co. Ltd. and invested the stock rights of the Company it held into the newly established Communications Company. With the completion of reorganization, Communications Company thus became the controlling shareholder of the Company.
In 2016, the Company was granted Uniform Social Credit Code 91310000607206953D.
On July 18, 2017, the board of directors of China Communications Construction Company Ltd. approved through discussion Proposal for Transfer of Some Shares of Shanghai Zhenhua Heavy Industries Co., Ltd through Agreement and Associated Transaction and agreed to transfer totally 1,316,649,346 shares of this Company held by it to CCCC and CCCG (HK) HOLDING LIMITED (hereinafter referred to as “CCCG Hong Kong”), accounting for29.990% of the total shares of this Company, after that, China Communications Construction Company Ltd. held16.239% of the stock equity of this Company. The transfer and registration of shares was accomplished on Dec. 27, 2017. As of the date of the transfer of shares, CCCC directly held 552,686,146 A-shares of this Company (accounting for12.589% of the total shares of this Company), indirectly held 763,963,200 B-shares of this Company through CCCG (Hong Kong) (accounting for17.401% of the total shares
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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of this Company) and held 712,951,703 A-shares of this Company through China Communications Construction Company Ltd. (accounting for16.239% of the total shares of this Company), as a result, it became the holding shareholder of this Company.
The company and subsidiaries (hereinafter referred to as “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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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I. Basic Information of the Group (continued)
The financial statements were approved by theCompany’s board of directors on Mar. 28, 2018.
The scope of consolidation of the consolidated statements is confirmed based on the control, and please refer to the 1 in Note VII for theyear’s changing situation and the consolidated subsidiaries consisted in the scope.
II. Basis of Preparation for Financial Statements
The financial statements are prepared on the basis of Enterprise Accounting Standards– Basic Standards issued by the Ministry of Finance and the subsequently issued and revised specific accounting principles, guidelines, explanation of the accounting standards, and other related stipulations (hereinafter collectively referred to as “Enterprise Accounting Standards”).
The financial statements are based on continuous operation.
As of December 31, 2017, theGroup’s current liabilities exceed current assets by about RMB 5.6 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 Group still has more than 8 billion Yuan unused upper short-term commercial paper, 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, is 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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates
The Company determines the 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, measurement model of real estate as investment 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 financial status on Dec. 31, 2017 and the operating results and cash flow during 2017 of the Company and the Group.
2. Accounting period
The accounting period is the calendar year, from January 1 to December 31 each year.
3. Recording currency
RMB is the recording currency of the Group and also the currency used in the preparation of financial statements. Unless otherwise specified, the amount unit is RMB.
The subsidiaries, joint ventures and associated enterprises of the Group shall, on the basis of the main economic environment in which they operate, decide their own recording currency, and convert them into RMB when preparing financial statements.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
4. Business combination
The term “business combination” refers to a transaction or event combining two or more individual enterprises into a reporting entity. The enterprise merger is divided into the business combination under the same control and business combination not under the same control.
Business combination under the same control
The business combination under the same controller refers to the enterprises involved in the combination will be controlled by the same party or the same multiple parties before and after the combination, and which is not temporary. As for the business combination under the same control, the party who gains the control of other enterprises involved 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 business combination 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.
Business combination not under the same control
The business combination not under the same controller refers to the enterprises involved will not be controlled by the same party or the same multiple parties before and after the combination. As for the business combination not under the same control, the party who gains the control of other enterprises involved on the combination day shall be the purchaser, and the other enterprises involved will be the acquiree.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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The combination date refers to the date on which the purchaser actually obtains the control of the acquiree.
The identifiable assets, liabilities and contingent liabilities obtained in the business combination not under the same control shall be measured at fair value on purchase day.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
4. Business combination (continued)
Business combination not under the same control (continued)
The positive difference between 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 and the fair value of the identifiable net assets obtained in the combination from the acquiree is confirmed as goodwill, and shall be for subsequent measurement after subtracting the accumulated impairment losses from the cost. 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 is smaller than the fair value of the identifiable net assets of the acquiree, firstly recheck 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 that, 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 is still smaller than the fair value of the identifiable net assets obtained in combination from the acquiree, the difference shall be recorded in the current profits and losses.
5. Consolidated financial 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, 2017. 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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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flows arising from all transactions between theGroup’s internal companies are fully offset at the time of combination.
If the current loss of the minority shareholders of the subsidiary exceeds the share held by the minority shareholders in the initialshareholders’ equity of the subsidiary company, the balance still offsets theminority’s equity.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 5. Consolidated financial statements (continued)
For the subsidiaries acquired through business combination under the same control, the operating results and cash flows of the merged party shall be included in the consolidated financial statements from the date of acquisition of control till the termination of control. When preparing the consolidated financial statements, the financial statements shall be adjusted based on the fair value of various identifiable assets, liabilities and contingent liability confirmed on the date of purchase.
For the subsidiaries acquired through business combination 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 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 theGroup’s cash in stock and the deposits that are available for payment at any time; cash equivalents refer to the 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. Foreign Currency Business and Foreign Currency Statements
Translation
In the case of a foreign currency transaction, the Group changes the amount of foreign currency into the amount of the recording currency.
At the time of initial confirmation, the foreign currency transaction shall convert the amount of the foreign currency into the amount of the
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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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 transaction difference of settlement and monetary items, in addition to the difference resulting from foreign currency special borrowing relating to the assets of which the purchase and construction conform to the capitalized conditions, which shall be handled in accordance with the principle of capitalization of borrowing costs, shall be included in the current profits and losses. The foreign currency non-currency items calculated on historical cost basis are still translated at spot rate 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 translated at the spot rate on 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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 7. Foreign Currency Business and Translation of Foreign Currency
Statements (continued)
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 balance sheet, exchange rate at sight on the date of balance sheet is used for translation. As for the items under theshareholders’ equity, except for those under “undistributed profit”, 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. The conversion difference of foreign currency statements resulting from above translation shall be recognized as other comprehensive income. When disposing overseas operations, other comprehensive income related to the overseas operation shall be transferred into the current profits and losses, partial disposal shall be calculated according to the proportion of disposal.
Foreign currency cash flows shall be translated at the spot exchange rate on the day of incurrence. Cash flow from offshore subsidiaries is translated at the spot exchange rate on the day of incurrence. Effect of exchange rate changes on cash amount is shown separately in the cash flow statements as an adjustment item.
8. Financial instruments
Financial instrument is the contract that forms the financial assets of an enterprise and forms financial liabilities or equity instruments of other enterprises.
Confirmation and Termination of Financial Instruments
The Group identifies a financial asset or financial liability when becoming a party to a financial instrument contract.
In case of satisfying the following conditions, terminate the confirmation of financial assets (or part of financial assets or of a group of similar financial assets), that is to say, write off from its account and balance sheet:
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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(1) The right to receive cash flows from financial assets expires;
(2) The right to receive the cash flow from financial asset has been transferred, or have assumed the obligation in the “pass-through agreement” to pay the collected cash flow timely to the third party in full; 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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 8. Financial instruments (continued)
In the event that the liability of a financial liability has been fulfilled, cancelled or expired, the determination of financial liabilities shall be terminated. If the existing financial liability is replaced by the same creditor 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 handled as the termination of the original liability and the recognition of new liabilities, and the difference shall be included in current profits and losses.
In case of trading financial assets in the conventional way, confirm and terminate on the basis of trade-date accounting. Trading financial assets in the conventional way 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
During initial recognition, the financial assets of the Group shall be classified into: financial assets measured at fair value with the changes included into current profits and losses, loans and receivables, and financial assets available-for-sale. The financial assets are measured at fair value at the time of initial recognition. As for the financial assets measured at fair value with the changes included into current profits and losses, related transaction costs shall be included directly in current profit or loss, while the related transaction costs of other financial assets are included in the initially recognized amount.
Subsequent measurement of financial assets is subject to its
classification:
Financial assets measured at fair value with the changes included into current profits and losses
Financial assets measured at fair value with changes included in current profits and losses shall include the trading financial assets and the financial assets designated at the time of initial recognition, which are
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Notes to Financial Statements (continued)
Dec. 31, 2017
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measured at fair value with changes included in current profits and losses. 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 part of a combination of identifiable financial for centralized management, and there is objective evidence showing that the company has recently adopted a short-term profit approach to manage the portfolio; belonging to derivatives, but excepting for the derivatives that are designated and are effective hedging tools, the derivatives belongings 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 must be settled through the delivery of the equity instrument. For such financial assets, use fair value for 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 with changes included in current profits and losses shall be recorded in current profits and losses.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 8. Financial instruments (continued)
Classification and measurement of financial assets (continued)
Financial assets measured at fair value with the changes included into current profits and losses (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 measured at fair value with changes included in current profits and losses.
The financial assets classified as the financial asset measured at fair value with changes included in current profits and losses by the enterprise during initial recognition shall not be reclassified as any other type of financial assets; while other types of financial assets shall not be reclassified as the financial assets measured at fair value with changes included in current profits and losses.
In accordance with the above conditions, such financial assets of the Group mainly include forward foreign exchange contracts.
Loans and receivables
Loans and receivables refer to the non-derivative financial assets with no quotation on active market and fixed or identifiable recoverable amount. For such financial assets, adopt the actual interest rate method for subsequent measurement based on amortized cost, and the gains or losses arising from its amortization or impairment shall be included in current profits and losses.
Financial assets available-for-sale
The financial assets available-for-sale refer to the non-derivative financial assets that are designated as available for sale during 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 shall be amortized using the effective interest method and be recognized as interest income or expense. In addition to recognizing the impairment loss and the balance of exchange of foreign currency monetary financial assets as the current profits and losses, the changes in fair value of financial assets available-for-sale shall be
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Notes to Financial Statements (continued)
Dec. 31, 2017
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recognized as other comprehensive income, and the cumulative gains or losses shall be transferred to the current profits and losses until the financial asset has been derecognized or impaired. Dividends or interest income related to the financial assets available-for-sale shall be included in the current profits and losses.
The equity instrument investments that are not quoted in an active market and whose fair value cannot be reliably measured shall be measured at cost.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 8. Financial instruments (continued)
Classification and Measurement of Financial Liabilities
The financial liabilities of the Group are classified as other financial liabilities at the time of initial recognition. The related transaction costs of other financial liabilities shall be included in the initial recognized amount; actual interest rate method shall be used for subsequent measurement based on amortized cost.
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 recognized amount, and that legal rights are currently enforceable; the plan is to be settled in net, or at the same time, realize 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 recognition, does not belong to the financial guarantee contract designated as the financial liabilities measured at fair value with changes 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 relevant obligations at the balance sheet date and the balance after deducting the accumulative amortization determined in accordance with the revenue recognition principle from the initial recognized amount, the higher of the two shall be for subsequent measurement
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 8. Financial instruments (continued)
Derivative Financial Instruments
The Group uses derivative financial instruments, such as forward exchange contracts, to hedge against exchange rate risk. Derivative financial instruments are initially measured at the fair value on the date of derivative trading contract signing, with subsequent measurement at fair value. The derivative financial instrument with positive fair value is recognized as an asset, and the one with negative fair value is recognized as a liability. However, the derivative financial instruments, which are linked to the 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, the gains or losses arising from changes in fair value of derivative instruments are directly included into the current profits and losses.
Financial assets impairment
The Group checks the book value of the financial assets on balance sheet date. If there is objective evidence showing that financial assets are impaired, the provision for impairment shall be made. The objective evidence for financial assets impairment refers to the items which actually happened after initial recognition of financial assets, influenced the estimated future cash flows of the financial assets, and its impact can be reliably measured by the enterprise. The objective evidences for impairment of financial assets include: serious financial difficulties occurred to the issuer or debtor, violating the terms of the contract (such as default or overdue payment of interest or principal) by the debtor, likely bankruptcy or other financial restructuring of the debtor, and reduction in and measurable expected future cash flows shown by public data.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 8. Financial instruments (continued)
Financial assets impairment (continued)
Financial assets measured at amortized cost
In the event of, the book value of the financial asset shall be written down through the allowance for project value to the present value of estimated future cash flow (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 by discounting based on the original effective interest rate (the actual interest rate calculated and determined at the time of initial recognition) of the financial asset, and the value of collateral shall also be taken into account. The interest income after impairment shall be calculated and determined using the discount rate used to discount future cash flows in the light of the determination of impairment losses as the interest rate. For loans and receivables, if there is no real expectation for future recovery and all collaterals have been realized or transferred to the Group, the loans and receivables and related impairment provisions shall be written off.
If the amount of individual financial assets is significant, individual impairment test shall be conducted. If there is objective evidence to prove that the impairment has occurred, the impairment loss shall be recognized and included in current profit and loss. As for individual financial asset with no significant amount, the impairment test shall be conducted in the portfolio of financial assets with similar credit risk features or conducted separately. As for the financial assets (including the financial assets with or without significant amount) with no impairment in separate test, impairment test shall be conducted again in the portfolio of financial assets with similar credit risk features. The financial assets which have suffered from an impairment loss in any single amount shall not be included in any portfolio of financial assets with similar risk features for any impairment test.
When the Group have confirmed the impairment losses on financial assets measured at amortized cost, if there is any objective evidence showing that the financial assets value has been restored, and it is objectively related with the events incurred after the confirmation of the
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Notes to Financial Statements (continued)
Dec. 31, 2017
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loss, the previously recognized impairment loss shall be reversed into current profit or loss. However, the book value after the reversal shall not exceed the amortized cost of the financial asset at the reversal date, assuming that the impairment provision is not included.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 8. Financial instruments (continued)
Financial assets impairment (continued)
Financial assets available-for-sale
If there is objective evidence for financial asset impairment, 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 balance after deducting the recovered principal and the amortized amount, current fair value and the impairment loss originally included in the profits and losses from the initial acquisition cost of the financial assets available-for-sale.
The objective evidences for proving impairment of available-for-sale equity instruments investments includes serious or non-temporary decline in fair value. “Serious” shall be judged according to the extent of fair value the cost, and “non-temporary” shall be judged according to the duration of fair value below the cost. If there is any objective evidence of impairment, the transferred aggregate losses shall be the balance after deducting the current fair value and the impairment loss originally included in the profits or losses from the acquisition cost. The impairment losses of equity instrument investment available for sale shall not be carried back through profit or loss, and the increase in fair value after impairment shall be recognized directly in other comprehensive income.
It needs to judge when determining what is “serious” or “non-temporary”. The Group shall judge according to the degree or duration of the fair value below cost as well as other factors.
For the debt instruments investment available for sale, the impairment shall be assessed in the same manner as the financial assets measured at amortized cost. However, the transferred aggregate losses shall be the balance after deducting the current fair value and the impairment loss originally included in the profits or losses from the acquisition cost. The interest income after impairment shall be calculated and recognized in accordance with the discount rate used to discount future cash flows during the determination of impairment losses.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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As for the debt instruments available for sale of which impairment losses have been recognized, if, in the subsequent accounting period, the fair value rises and is objectively related to events that occur after the impairment losses were recognized, the previously recognized impairment losses shall be reversed and included in the current profits and losses.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 8. Financial instruments (continued)
Financial assets measured at cost
If there is objective evidence showing the impairment of financial assets, the difference between the book value of financial assets and the present value determined by discounting the future cash flows according to the market return of similar financial assets at that time shall be recognized as impairment loss and included in current profits and losses. Once recognized, the impairment loss shall not be carried back.
Transfer of financial assets
If the Group has transferred almost all risks and rewards of the ownership of the financial assets to the transferee, the recognition of such financial assets shall be terminated. If almost all risks and rewards of the ownership of the financial assets are retained, the recognition of such financial assets shall not be terminated.
When the Group has neither transferred nor retained almost all risks and rewards of the ownership of financial assets, handle respectively in the following manners: if the control over the financial asset is given up, stop recognizing the financial assets and recognize assets and liabilities arising; if the control is not given up, recognize related financial assets and liabilities accordingly according to the extent of its continued involvement in the transferred financial assets.
In case of continued involvement in the manner of providing financial security for the transferred financial assets, recognize the assets formed by the continued involvement in accordance with the lower of the book value of the financial asset and the amount of financial guarantee. The amount of financial guarantee refers to the maximum amount to be repaid in the considerations received.
9. Receivables
The receivables include accounts receivable and other receivables. As for the receivables from sales of goods or rendering of service, the fair value of the contract or agreement price receivable from the buyer or the service receiver shall be regarded as the initial recognition amount.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 9. Receivables (continued)
(a) Accounts receivable
Accounts receivable with significant single amount and separate provision for bad debits
As for the accounts receivable with significant single amount, separate impairment test shall be done. When there is objective evidence showing that the Group is unable to recover the money according to the original provisions of account receivables, the provision for bad debt shall be made.
Judgment standard for significant single amount: top 5 of the receivables from non-related party.
Method for making of provision of bad debt with significant single amount: based on the difference of the present value of the expected future cash flow of the account receivable less than its book value.
Reason for the provision of bad debt for single item: there is objective evidence showing that the Group is unable to recover the money according to the original provisions of account receivables.
Method for provision of bad debt: according to the difference of the present value of its expected future cash flow less than its book value
Accounts receivable with the provision for bad debt based on portfolio of credit risk features
Accounts receivable with insignificant single amount, together with the unimpaired accounts receivable after individual test, shall be classified into groups by credit risk features, and the provision of bad debt shall be determined on the basis of actual loss rate of the accounts receivable group with similar credit risk features in previous year and in combination with present situations.
The basis for determining the credit risk portfolio is as follows:
Group 1 Accounts receivables from related party
Group 2 Accounts receivables from non-related party
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Notes to Financial Statements (continued)
Dec. 31, 2017
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The method for making provision of bad debt based on credit risk portfolio is as follows:
Group 1 The provision of bad debt shall not be made for the accounts receivable from related party except that there is objective evidence showing that the Group is unable to recover the money according to the original provisions of account receivables
Group 2 Aging analysis method (future collection considered)
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 9. Receivables (continued)
(a) Accounts receivable (continued)
Accounts receivable with the provision for bad debt based on portfolio of credit risk characteristics (continued)
In the group, the proportion of provision based on aging analysis method is listed as follows:
Age Proportion Within 6 months -7~12 months 1%1~2 years 15%2~3 years 30%3~4 years 50%4~5 years 75% Over 5 years 100% (b) Other receivables
Other receivables with significant single amount but for separate provision of bad debt
As for the other receivables with significant single amount, separate impairment test shall be done. When there is objective evidence showing that the Group is unable to recover the money according to the original provisions of other receivables, the provision for bad debt shall be made.
Judgment standard for significant single amount: top 5 of the receivables from non-related party.
Method for provision of bad debt: according to the difference of the present value of its expected future cash flow less than its book value
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 9. Receivables (continued)
(b) Other receivables (continued)
Other receivables with insignificant single amount but for individual withdrawal of the provision of bad debt
Reason for the provision of bad debt for single item: there is objective evidence showing that the Group is unable to recover the money according to the original provisions of other receivables.
Method for withdrawal of the provision of bad debt: according to the difference of the present value of the expected future cash flow of other receivable less than its book value
Other receivables with the provision for bad debt withdrawn by group
Other receivable with insignificant single amount, together with the unimpaired other receivables after individual test, shall be classified into groups by credit risk features, and the provision of bad debt shall be determined on the basis of actual loss rate of the collection of receivable with similar credit risk features in previous year and in combination with present situations.
The basis for determining the credit risk portfolio is as follows:
Group 1 Guarantee deposit (excluding quality guarantee deposit)
Group 2 Personal loan and petty fund of the employee
Group 3 Other receivables of other natures
The method for making provision of bad debt based on credit risk portfolio is as follows:
Group 1 The provision of bad debt shall not be made for the guarantee deposit (excluding quality guarantee deposit) except that there is objective evidence showing that the Group is unable to recover the money according to the original provisions of other receivables
Group 2 The provision of bad debt shall not be made for the individual loan and petty fund of the employee except that there is
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Notes to Financial Statements (continued)
Dec. 31, 2017
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objective evidence showing that the Group is unable to recover the money according to the original provisions of other receivables
Group 3 Aging analysis method
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 9. Receivables (continued)
(b) Other receivables (continued)
Other receivables with the provision for bad debt withdrawn by group (continued)
In the group, the proportion of provision based on aging analysis method is listed as follows:
Age Proportion Within 6 months -7~12 months 1%1~2 years 15%2~3 years 30%3~4 years 50%4~5 years 75% Over 5 years 100% 10. Inventory
Inventory includes raw materials, purchased spare parts, goods in process and merchandise inventory, etc.
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 inventory. Turn-over materials include low-value consumption goods and the packing, etc.; the low-value consumption goods are amortized by installment while packing is amortized at one time.
The inventory system shall be perpetual inventory system.
At the balance sheet date, inventories are measured at the lower of the 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,
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 10. Inventory (continued)
Net realizable value is the amount that the estimated selling price of the inventory minus the cost that would incur at the time of completion, the estimated cost of sales and relevant taxes and fees in daily activities. For the provision for decline in value of inventories, the raw materials shall be by category while the finished goods shall be by individual inventory item.
11. Construction contract
For customized production of large port equipment, heavy equipment, steel structure product and construction project, because the commencement and completion dates usually in different fiscal years, the Group shall use construction contract calculate the revenue and cost.
(a) If the result of individual construction contract can be reliably estimated, the revenue and cost of the construction project can be recognized on balance sheet date with completeness construction method according to the schedule of contract. Reliable estimation of the result of construction contract means that the economic benefit related to the contract is likely to flow into the group, and the actual contract cost can be clearly distinguished and measured reliably. In the case of a fixed cost contract, the following conditions should 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 total contract revenue includes the initial revenue stipulated in the contract and income resulting from contract change, claim, and award, etc. The Group determines the contract completion progress by the following methods:
(i) As for large port equipment, the completion rate shall be determined according to the completion percentage corresponding to the revenue recognition node of the construction contract reached at the end of the term. The Group has established the following three revenue recognition nodes:
First node: the main steel structure completed and erected;
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Notes to Financial Statements (continued)
Dec. 31, 2017
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Second node: manufacturing, installation and initial commissioning completed, product ex-factory qualification certificate issued, shipping documents acquired, product ready for shipping;
Third node: the product is delivered after final inspection by the buyer and the final delivery certificate issued by the buyer is obtained.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 11. Construction contract (continued)
The Group will analyze the construction contracts completed in prior year by product category, and will calculate and determine the completion percentage that should be recognized when reaching the revenue recognition node, and take it as the completion percentage to be recognized at various stages in current period.
(ii) For heavy equipment and construction project, the progress of completion shall be determined by the proportion of accumulated contract cost incurred in total expected contract cost. The accumulated contract cost does not include that related to future activities of the contract.
(iii) The completion progress of steel structure manufacturing shall be determined by the proportion of cumulative processing tonnage completed in total processing tonnage.
(b) If reliable estimation of the results of individual construction contract is unavailable, the following shall be used:
(i) If the contract cost can be recovered, the contract revenue shall be recognized according to the actual contract cost that can be recovered, and the contract cost is recognized as contract expense in the period when cost incurs.
(ii) When contract cost cannot be recovered, it shall be recognized as contract expense immediately when it incurs other than contract revenue.
(c) When expected total contract cost exceeds total revenue, the expected losses should be immediately recognized as current profits and losses. (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 after the settlement of construction contract. On the balance sheet date, when the sum of accumulated costs and confirmed margin is greater than the
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Notes to Financial Statements (continued)
Dec. 31, 2017
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accumulated settled value, the difference shall be listed as the construction completed account yet has not been settled is current assets. Otherwise, it shall be listed in the amount due from customer for contract work in current liabilities.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 12. Long-term equity investment
Long-term equity investment includes the equity investments in subsidiaries, joint ventures and associated enterprises.
Long-term equity investments are initially measured by the initial investment cost on acquisition. Long term equity investments obtained by business combination 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 reserves (when sufficient for write-downs, write down the retained earnings); as for other comprehensive income prior to the date of combination, when handling the investment, it shall carry out the accounting treatment on the same basis of the relevant assets or liabilities directly disposed by the invested entity, as for theshareholders’ equity recognized due to the changes in othershareholders’ equity except for net profit or loss, other comprehensive income and profit distribution in the invested entity, it shall be transferred to current profits and losses during disposal of the investment. In which, if it is still long-term equity investment after disposal, carry forward in proportion, if it is converted to the financial instruments, then carry forward fully.
Long-term equity investments obtained by business combination not under the same control shall take the combined cost as the initial investment cost (if the business combination not under the same control is realized by two or more transactions in steps, take the sum of the book value of equity investments held by acquiree prior to purchase date and newly increased investment cost on purchase date as the initial investment cost), and the combined cost includes the sum of the assets paid by the purchaser, the liabilities incurred or assumed, the fair value of the equity securities issued; as for other comprehensive income prior to the purchasing date recognized by the equity method accounting, such investment shall be handled by using the same basis as the investee for handling relevant assets or liabilities directly. As for theshareholders’ equity recognized due to the changes in othershareholders’ equity except for net profit or loss, other comprehensive income and profit distribution in the invested entity, it shall be
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Notes to Financial Statements (continued)
Dec. 31, 2017
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transferred to current profits and losses during disposal of 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. As for the long term equity investments acquired other than long term equity investments formed by the business combination, the initial investment cost shall be determined 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; obtained by issue of equity securities, the fair value of the issue of equity securities shall be taken as the initial investment cost.
The Company can measure the long-term equity investments controlled by the investment enterprises with cost method in individual financial statement of the Company. Control means having the power over the investee and enjoying variable gains through participating in related activities of the investee, and having the ability to utilize the power over the investee to influence the return amount.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 12. Long-term equity investment (continued)
When the cost method is used, the long-term equity investment is priced at 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 gain on investment.
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. Joint control means enjoying control over certain arrangement according to contract, and 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 jointly control with other parties 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 also 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 entity 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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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 theshareholders’ equity.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 12. Long-term equity investment (continued)
For the disposal of long term equity investment, the difference between the book value and the actual purchase price shall be included in current profits and losses. Accounting treatment shall be carried out for the long-term equity investments accounted for using the equity method, terminating the equity method, and relevant other comprehensive income accounted for using original equity on the same basis of direct disposal of relevant assets or liabilities by the invested entity. Theshareholders’ equity recognized by the changes in othershareholder’s equity of the invested entity other than net profit or loss, other comprehensive income and profit distribution shall be transferred fully into the current profits and losses; in case of still using the equity method, carry out the accounting treatment for other comprehensive income related to the original equity accounting shall on the same basis of direct disposal of relevant assets or liabilities by the invested entity and transfer into the current profits and losses in proportion, and theshareholders’ equity recognized by the changes in othershareholder’s equity of the invested entity other than net profit or loss, other comprehensive income and profit distribution shall be transferred into the current profits and losses in proportion.
13. Real estate as investment
Real estate as investment 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 of the real estate as investment shall be made by cost. The 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, shall be included in the cost of real estate as investment. Otherwise, it shall be included in current profits and losses 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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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residual value rate. The estimated useful life, net residual value rate and annual depreciation (amortization) rate of the real estate as investment are listed below:
Estimated useful life Estimated net residual value rate Annual depreciation (amortization) rate
Building 30 years 0% 3.3% Land use right Land use years 0% Calculated and determined based on the estimated residual value rate and land use years
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 13. Real estate as investment (continued)
The estimated useful life, estimated net residual values and depreciation (amortization) method of the investment real estate shall be reviewed and adjusted appropriately by the Group at the end of each year.
When the purpose of the real estate as investment is changed to self-use, from the date of change, convert the real estate as investment to fixed assets or intangible assets. When the purpose of self-use real estate is changed to earning rentals or for capital appreciation, from the date of change, convert the fixed assets or intangible assets to real estate as investment. Upon conversion, the book value before the conversion shall be recorded as the entry value after conversion.
14. Fixed assets
Fixed assets shall only be recognized when the economic interests related is likely to flow into the Group and their costs can be reliably measured. In case of meeting the recognition condition, the subsequent expenditure relating to fixed assets shall be included in the cost of fixed assets, and stop recognizing the book value of the replaced part; otherwise, it shall be included in current profits and losses at the time of incurrence.
The initial measurement of a fixed asset shall be made at its cost. The cost of purchasing a fixed asset consists of the purchase price, relevant taxes, and other expenditures incurred before making the fixed asset reaching the expected conditions for use and attributable directly to such asset.
In addition to the formation of the extracted safety production cost, the depreciation of fixed assets is calculated and withdrawn by straight-line method, and the service life, expected net residual value rate and annual depreciation rate of the fixed assets are as follows:
Service life Estimated net residual value rate Annual depreciation rate House and building 20-40 years 0% 2.5%-5% Machinery equipment 3-20 years0%/based on the Determined based on the
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Notes to Financial Statements (continued)
Dec. 31, 2017
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price of scrap steel based on the estimated residual value rate and service life Office and 3-5 years 0% 20%-33.3% electronic equipment
Means of transport (other than vessels)5 years 0% 20% Vessels 10-30 years 5%/10% 3%-9.5%
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 14. Fixed assets (continued)
Depreciation for fixed assets under financing lease is calculated in accordance with the same policy as 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.
The Group shall check the estimated life of use, estimated net residual value and method of depreciation at the end of each report year and make necessary adjustments.
15. Construction in process
The cost of construction in process is determined based on actual project expenditure, including necessary project expenditures occurred in construction period, capitalized loan expenses before making the construction in progress reach expected status of use and other relevant expenses.
When the construction in progress reaches the expected condition for use, it shall be transferred into fixed assets.
16. Borrowing cost
Borrowing cost refers to the interest and other relevant costs arising from the borrowing by the Group, including the interest on borrowings, the amortization of the discount or premium, auxiliary expenses and the exchange difference arising from the foreign currency borrowings.
The borrowing cost directly attributable to the purchase, construction or production of assets eligible for capitalization shall be capitalized, while other borrowing costs shall be included in current profits and losses. The assets eligible for capitalization refers to assets such as fixed assets and investment real estate which take a rather long period of time to purchase, construct or manufacture in order to reach their expected state of use or sale.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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When the following conditions are also met, the borrowing cost can be capitalized:
(1) Asset expenditures have incurred;
(2) Borrowing costs have incurred;
(3) Purchasing, constructing or manufacturing activities necessity to make that asset reach expected usable or salable condition has started.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 16. Borrowing cost (continued)
When the purchased, built or manufactured fixed asset reached expected usable or salable condition, stop capitalization. The subsequent borrowing costs shall be included in current profits and losses.
The amount of interest capitalization in each accounting period during the capitalization period is determined by the following method:
(1) The special borrowings shall be determined based on the amount that the interest expense actually incurred in the current period less the temporary deposit interest income or the investment income.
(2) The general borrowing occupied is determined by multiplying the weighted average of accumulated assets expenditures expenses exceeding that of special borrowings by the weighted average interest rate of the general borrowings occupied.
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 borrowing cost shall be stopped. The borrowing costs occurring during the term of cease shall be recognized as cost and included in current profits and losses until purchasing, building or manufacturing activities resume.
17. Intangible assets
Intangible assets are recognized when financial benefits related will probably flow into the Group and their costs can be reliably valued, and initial measurement is taken at cost. However, intangible assets acquired in business combination under the same control can be measured reliably, that is, intangible assets are recognized as intangible assets separately and measured at fair value. The evaluation value confirmed by the state-owned authority shall be the book value for the intangible assets invested by the state-owned shareholders at the re-structuring of the Company.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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Service life of intangible assets shall be confirmed based on the term in which they can bring benefits to the Company. If the term in which intangible assets bring benefits to the Company cannot be expected, such assets shall be confirmed as intangible assets with uncertain service life.
The service life of intangible assets is shown as follows:
Service life Land use right Land service life Software use cost 5 years Proprietary technology 10 years
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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 the end of each year to expected life in use and amortization method of intangible assets with limited use of life and necessary 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 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; there are enough technology and financial resources and other resources supports to complete the development of the intangible assets, with the ability to use and sell; the expenses attributable to such development stage of intangible assets can be reliably measured. The development expenditures not satisfying the above conditions are included in current profits and losses when incurred.
18. Assets impairment
The assets impairment, except for inventories, deferred income tax and financial assets, shall be 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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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 shall also be made at least once each year for the intangible assets not reaching the usable state.
The recoverable amount is the higher between net amount ofasset’s fair value deducting disposal expenses and the present value of expected future cash flow. Recoverable amount is estimated by individual piece of asset. In case recoverable amount of individual asset is difficult to value, recoverable amount of asset group to which they said individual asset belongs is confirmed. An asset group can be recognized on the basis that its main cash in-flow is independent of that of other assets or asset groups.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 18. Assets impairment (continued)
When the recoverable amount of the asset or asset group is lower than its book value, the Group shall reduce its book value to the recoverable amount, the amount written down is included in the current profits and losses, and the corresponding asset impairment provision shall be withdrawn.
In terms of goodwill impairment test, the book value of goodwill formed by the business combination 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 to relevant asset group. The relevant asset group or combination of asset groups is the one that can benefit from the synergy effect of the business combination, 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 recoverable amount is lower than the book 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.
19. Long-term deferred expenses
Long-term deferred expenses shall be amortized by straight-line method, and the amortization period is as follows:
Amortization period Improvement of leased fixed asset Expected benefit period for operation
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Notes to Financial Statements (continued)
Dec. 31, 2017
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20. Employee compensation
The employee compensation refers to 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-service welfare, dismissal welfare and other long-term employee benefits. The benefits provided by the Group to theemployee’s spouse, children, dependent and survivor of the deceased employee are also contained in the employee compensation.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 20. Employee compensation (continued)
Short-term compensation
During the accounting period when the employees provide service, the actual short-term compensation shall be recognized as liability and included in current profit and loss or related assets cost.
Post-service welfare (defined contribution plans)
The Group shall buy endowment insurance and unemployment insurance managed by the local government and open annuity for employees. The corresponding expenditure shall be included in related asset cost or current profits and losses at the time of incurrence.
21. Predicted liabilities
In addition to contingent consideration or contingent liability of business combination not under the same 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 economic interests;
(3) The amount can be reliably measured.
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 Balance sheet date to reflect present best estimates. Where there is conclusive evidence that the book value does not reflect the current best estimate, the book value is adjusted in accordance with the current best estimate.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 22. Revenue
Revenue shall be recognized when related benefits are likely to flow into the Group, the amount can be reliably calculated, and the following conditions are met.
(a) Revenue from sales of large port equipment, ocean heavy equipment, product of steel structure and construction project is recognized by the proportion of completion, please refer to Note III. 11.
(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 term for using monetary fund of the Group by others 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.
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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 23. Government subsidy (continued)
Government subsidy related to the income when used to compensate related cost 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.
Asset-related government subsidy shall write down the book value of relevant asset or recognized as deferred income, and shall be included in the profits and losses by installments in reasonable and systemic way within the service life of the asset (but the government subsidy measured based on nominal amount shall be directly included in current profits and losses); of relevant assets are sold, transferred, retired or damaged before the end of service life, the balance of undistributed deferred income shall be transferred to profits and losses in the period of assets disposal.
24. Income tax
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 theshareholder’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.
According to the temporary difference between the book value and tax base of assets and liabilities on balance sheet date, the temporary differences arising 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 Group shall withdraw the deferred income tax using the balance sheet liability method.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 24. Income tax (continued)
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 to be carried forward to subsequent year, 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 business combination, 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.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 24. Income tax (continued)
On Balance sheet date, 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 Balance sheet date, the Group reviews the book 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 book 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.
When all of the following conditions are met, the net amount deferred income tax assets and deferred income tax liabilities after offset shall be listed: the Company is legally authorized to settle the income tax assets and liabilities of the current period at net amounts; the deferred income tax assets and liabilities are related to the income tax levied by the same tax authority on the same tax payer, or such on different tax payers but in the future period of the reversal of each important deferred income tax assets and liabilities, the involved tax payers intend to settle the income tax assets and liabilities of the current period at net amounts or obtain assets and repay debts at the same time.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 25. Lease
A lease substantially transferring all risks and remuneration related to the ownership of the assets is a financing lease. Others are operating leases.
As the lessee of operating lease
The rental expenses of operating leases are included in the asset cost or the currentP&L based on straight-line method in the lease period.
As the lessor of operating lease
The rental income of the operating lease is included in the asset cost or the currentP&L based on straight-line method in the lease period.
As the lessee of financial lease
As for the assets financed by leasing, on the beginning date of lease term, 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 shall be the entry value of long-term payables; the difference shall be the unrecognized financing charges, which shall be amortized in each period within the leasing term based on actual interest rate 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, that is to say, the accounting treatment shall be conducted as per mortgage loan.
26. Profit distribution
The cash dividends of the Company are recognized as liabilities after approval by the general meeting of shareholders.
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued) 27. Safe production cost
The safe production cost 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 in the special reserves; it shall be processed separately when used by distinguishing whether to form fixed asset or not: in case of belonging to expense expenditure, write down the special reserves directly; in case of forming fixed assets, collect the expenditures incurred and recognize the fixed assets when reaching expected usable status, and write down the equivalent special reserves and recognize equivalent accumulated depreciation at the same time.
28. Fair value measurement
The Group measures the derivative financial instruments and listed equity instruments investments at fair value on each balance sheet date. 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 maximum 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 benefit 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.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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.
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued) 28. Fair value measurement (continued)
On each balance sheet date, 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.
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 Balance sheet date. 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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 29. Major accounting judgments and estimates (continued)
Uncertainty of estimates (continued)
Impairment of account 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 book 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 book 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.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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 for financial assets (except for goodwill)
The Group determines whether there is any indication of possible impairment of non-current assets other than financial assets on the balance sheet date. 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 book 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 less the disposal expenses and the present value of the expected future cash flows.Net amount gained by fair value less disposal expenses shall be determined by the price in sale agreement of similar assets in fair transaction or market price observed less 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 the present value of future cash flow.
Goodwill impairment
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 present value of future cash flow.
Income tax and deferred income tax
The Company was recognized as a high-tech enterprise in 2014, with a three-year period of validity. 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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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difference will affect the income tax expenses of the year.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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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 recognition.
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 recognize 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.
Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued) 30. Changes in accounting policies and accounting estimates
Changes in accounting policies
Alteration of statement mode of losses and gains from assets disposal In accordance with requirements of Notice on Modifying and Issuing Financial Statement Format of Common Enterprise by Ministry of Finance (CK[2017] No. 30), the items separately listed and reported in the item “gains from assets disposal” in the item “operating profit” in Profit Statement of this Company as well as the losses and gains from the non-current assets disposal originally recorded in “non-business revenue” and “non-operating expenses” were altered to be listed and reported in “Gains from assets disposal”; this Company correspondingly traced back and restated the comparative profit statement. The alteration of this accounting policy had no effect on the consolidation and the net profit of the Company as well as the consolidation and thestockholders’ equity of the Company.
Alteration of statement mode of government subsidy
In accordance with the requirements of Notice on Issuing and Revising Accounting Standard No. 16------Governmental Subsidy (CK[2017] No. 15), the item “Other Revenue” separately listed and reported in the item “Operating profit” in Profit Statement of this Company and the governmental subsidy related to the routine activities of the enterprise were altered to be listed and reported in “Other revenue” instead of “non-business revenue”; according to the linking regulations of this standard, this Company adopted Prospective Application for disposal of the governmental subsidy existing before Jan. 1, 2017 and the newly increased governmental subsidy from Jan. 1, 2017 to the implementation date of this standard (June 12, 2017) was adjusted according to this standard. The alteration of this accounting policy had no effect on the consolidation and the net profit of the Company as well as the consolidation of thestockholders’ equity of the Company.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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IV. Taxation
1. Main taxes and tax rates
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 – The original business tax rate applicable to revenues from house rental of the Group was5%. The original business tax rate applicable to the income and interest income from “Construction-Transfer” projects was3%. The business tax was replaced by VAT from May 1, 2016.
Urban maintenance– The Group calculates and pays by7% and3% of
and construction tax the actual payment of turnover tax respectively.
and educational surtax
Corporate income tax –Corporate income tax is calculated and paid in accordance with P.R. China Corporate Income Tax Law (“Income Tax Law”). The Company was recognized the High-tech enterprise in 2014, with
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Notes to Financial Statements (continued)
Dec. 31, 2017
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the certificate valid for 3 years. Afterwards, in accordance with relevant regulations in High-tech Enterprise Recognition Management Approaches (GKFH[2016] No. 32) and the High-tech Enterprise Recognition Management Work Guidelines (GKFH[2016] No. 195) and the Notification on Announcing List of Second Batch of Shanghai Municipality 2017 High-tech Enterprises Recognition, the Company replied and passed the reexamination in 2017, and was awarded the High-tech Enterprise Certificate (certificate number: GR201731002345). The certificate shall be valid for 3 years. According to the regulations in Article 28 of the Income Tax Law, the Company actually applied the corporate income tax rate of15% this year (2016:15%).
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Notes to Financial Statements (continued)
Dec. 31, 2017
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IV. Taxation (continued)
1. Main taxes and tax rates (continued)
The applicable income tax rates of the Company and the controlling subsidiaries are as follows:
Registration place 2017 2016 Applicable tax rate Applicable tax rate The Company Pudong New Area,15% 15% Shanghai
Shanghai Zhenhua Port Machinery Chongming District,25% 25% Heavy Industry Co., Ltd. Shanghai
Shanghai Zhenhua Port Machinery Hong Kong 16.5% 16.5% (Hong Kong) Co., Ltd. (Note 1)
Shanghai Zhenhua Shipping Co., Ltd. Pudong New Area,25% 25% Shanghai
Nantong Zhenhua Heavy Industry Nantong, Jiangsu 25% 25% Equipment Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Group Nantong, Jiangsu 15%15%
(Nantong) Transmission Machinery
Co., Ltd. (Note 2)
Nantong Zhenhua Heavy Industries Pudong, Shanghai15% 25% Electric Co., Ltd. (Note 2)
Jiangyin Zhenhua Port Machinery Steel Jiangyin, Jiangsu 25% 25% Structure Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Steel Pudong, Shanghai 25%25%
Structure Co., Ltd.
Shanghai Zhenhua Ocean Engineering Yangshan, Shanghai25% 25% Services Co., Ltd. (former: Shanghai Bonded port
Zhenhua Heavy Industries Vessel
Transport Co., Ltd)
Shanghai Zhenhua Testing Technology Pudong, Shanghai25% 25% Consulting Co., Ltd.
Shanghai Zhenhua Port Machinery Pudong, Shanghai25% 25% General Equipment Co., Ltd
Shanghai Port Machinery Heavy Pudong, Shanghai25% 25% Industries Co., Ltd.
Shanghai Zhenhua Heavy Industries (Group) Jingang, Jiangsu 25%25%
Zhangjiagang Port Machinery Co., Ltd. Port area
Shanghai Zhenhua Heavy Industries Nantong, Jiangsu 15% 15%
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Notes to Financial Statements (continued)
Dec. 31, 2017
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Qidong Ocean Engineering Co., Ltd. (Note 2)
Jiangsu Daoda Ocean Engineering Nantong, Jiangsu NA 25% Co., Ltd. (Note 18)
Jiahua Shipment Co., Ltd (Note 1) Hong Kong 16.5% 16.5% Zhenhua Pufeng Wind Power Hong Kong 16.5% 16.5% (Hong Kong) Co., Ltd (Note 1)
CCCC Tianhe Mechanical Equipment Changshu, Jiangsu15% 15% Manufacturing Co., Ltd (Note 2)
Fujian CCCC Qianda Heavy Fuzhou, Fujian 25% 25% Industries Co., Ltd.
Najing Ninggao New Channel Nanjing, Jiangsu 25% 25% Construction Co., Ltd.
CCCC Investment& Development Nantong, Jiangsu 25% 25% Qidong Co., Ltd.
CCCC Liyang Urban Investment and Liyang Jiangsu 25% 25% Construction Co., Ltd.
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
The applicable income tax rates of the Company and the controlling subsidiaries are as follows (continued):
Registration place 2017 2016 Applicable tax rate Applicable tax rate CCCC (Huaian) Construction Development Huaian, Jiangsu 25%25%
Co., Ltd.
CCCC Zhengjiang Investment Construction Zhenjiang, Jiangsu 25%25%
Management Development Co., Ltd
CCCC Rudong Construction Nantong, Jiangsu 25% NA Development Co., Ltd
ZPMC Netherlands Rotterdam,Netherlands20% 20%Coöperatie U.A. (Note 3)
ZPMC Netherlands B.V. (Note 3) Rotterdam, Netherlands20% 20% Verspannen B.V (Note 3) Rotterdam, Netherlands20% NA ZPMC Espana S.L. (Note 4) Spain 28% 28% Los Barrios
ZPMC GmbH Hamburg (Note 5) HamburgGermany32.28% 32.28% ZPMC Lanka Company Colombo, SriLanka17.5% 17.5% (Private) Limited (Note 6)
ZPMC North America Inc. (Note 7) Delaware, USA 15% 15% ZPMC Korea Co., Ltd. (Note 8) Pusan, Korea 10% 10% ZPMC Engineering Africa The Republic ofSouth28% 28%
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Notes to Financial Statements (continued)
Dec. 31, 2017
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(Pty) Ltd. (Note 9) Africa
KwaZulu - Natal
ZPMC Engineering Strabang, 30% 30% (India) Private Limited (Note10) Mahala, India
ZPMC Southeast Singapore 17% 17% Asia Holding Pte. Ltd. (Note 11)
ZPMC Engineering Malaysia 20% 20% (Malaysia) Sdn. Bhd. (Note 12)
ZPMC Australia Company New South Wales,30% 30% (Pty) Ltd. (Note 13) Australia
ZPMC BrazilServiço Rio de Janeiro,Brazil25% 25%Portuários LTDA (Note 14)
ZPMC Limited Liability Moscow, Russia 20% 20% Company (Note 15)
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Notes to Financial Statements (continued)
Dec. 31, 2017
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IV. Taxation (continued)
1. Main taxes and tax rates (continued)
The applicable income tax rates of the Company and the controlling subsidiaries are as follows(continued)：
Registration place 2017 2016 Applicable tax rate Applicable tax rate 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% 0% ZPMC UK LTD (Note 17) Cardiff, UK 20% 20% Greenland Heavylift (Hong Kong) Hong Kong 16.5% NA Limited (Note 1)
GPO Grace Limited (Note 19) Marshall Islands 0% NA GPO Amethyst Limited (Note 19) Marshall Islands 0% NA GPO Sapphire Limited (Note 19) Marshall Islands 0% NA GPO Emerald Limited (Note 19) Marshall Islands 0% NA GPO Heavylift Limited (Note 20) Cayman Islands 0% NA GPO Heavylift AS (Note 21) Oslo, Norway 0% NA Note1： Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd., Jiahua Shipping Co., Ltd, Zhenhua Pufeng Wind Power (Hong Kong) Co., Ltd and Greenland Heavylift (Hong Kong) Limited are legal entities registered in Hong Kong, China. Based on HongKong’s taxation regulations, the actual profits tax rate applicable to such companies is16.5% (2016:16.5%).
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Notes to Financial Statements (continued)
Dec. 31, 2017
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IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note2： Shanghai Zhenhua Heavy Industry Group (Nantong) Drive Machinery was recognized as hi-tech enterprise in August, 2013 and won Hi-tech Enterprise Certificate (No. GR201632001352) in 2016, with the valid term of 3 years. Shanghai Zhenhua Heavy Industries Electric Co., Ltd was recognized as hi-tech enterprise in November, 2017 and won Hi-tech Enterprise Certificate (No.: GR201731003143) with the valid terms of 3 years. ZMPC Qidong Ocean Engineering Company was recognized as hi-tech enterprise in November, 2015 and won Hi-tech Enterprise Certificate (No.GF201532000832) with the valid term of 3 years. Tianhe Mechanical Equipment Manufacturing Co., Ltd of CCCC was recognized as hi-tech enterprise in August, 2015 and won Hi-tech Enterprise Certificate (No. GF201532000389) with the valid term of 3 years. In accordance with relevant provisions in Article 28 of the Income Tax Law, the Company actually applied a15% corporate income tax rate this year (2016: Shanghai Zhenhua Heavy Industries Group (Nantong) Transmission Machinery Co., Ltd., CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd. and ZMPC Qidong Ocean Engineering Co., Ltd. was15%, while Shanghai Zhenhua Heavy Industries Electric Co., Ltd was25%).
Note3： ZPMC NetherlandsCoöperatie U.A., ZPMC Netherlands B.V. and Verspannen B.V. 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 200,000EUR, and25% for the profit over 200,000 EUR. The actual income tax rate is20% this year (2016:20%).
Note4： ZPMC Espana 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
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Notes to Financial Statements (continued)
Dec. 31, 2017
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of the Company. The tax rate is25% for the consolidated profits of the Company less than 300,000 EUR, and28% for the profit over 300,000EUR. The actual income tax rate is28% this year. (2016:28%).
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Notes to Financial Statements (continued)
Dec. 31, 2017
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IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note5： ZPMC GmbH Hamburg is registered in Germany, a limited liability company; according to related provisions of income tax law in Germany, the 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 applicable income tax rate is32.28% (2016:32.28%).
Note6： 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% (2016:17.5%).
Note7： ZPMC North America Inc., ZPMC NA East Coast Inc. and 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% (2016:15%).
Note8： ZPMC Korea Co., Ltd. is a 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 KRW, and20% for the profit between 200 million KEW and 20,000 million KRW, and22% for the profit over 200 million KRW. The actual income tax rate is10% this year (2016:10%).
Note9： 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% (2016:28%).
Note 10: ZPMC Engineering (India) Private Limited is a limited liability company registered in India; according to the related income
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Notes to Financial Statements (continued)
Dec. 31, 2017
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tax provisions of India, the applicable income tax rate is30% (2016:30%).
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note11：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% (2016:17%).
Note12：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% (2016:20%).
Note13：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% (2016:30%).
Note 14: ZPMC BrazilServiçoPortuários LTDA is a limited liability company registered in Brazil, and former ZPMC Brazil Holdings Ltda. was cancelled in 2017. According to the related income tax provisions of Brazil, the applicable income tax rate is25% (2016:25%).
Note15：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% (2016:20%).
Note16：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% (2016:0%).
Note17：ZPMC UK LTD is a limited liability company registered in Cardiff, UK; according to the related income tax provisions of Cardiff, the applicable income tax rate is20% (2016:20%).
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Notes to Financial Statements (continued)
Dec. 31, 2017
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IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note18：Jiangsu Marine Equipment Technology Co., Ltd. was cancelled in 2016, and the applicable income tax rate in 2016 was25%.
Note19：GPO Grace Limited, GPO Amethyst Limited, GPO Sapphire Limited and GPO Emerald Limited are limited liability companies registered in Marshall Islands. In accordance with relevant provisions of income tax law of Marshall Islands, the applicable income tax rate for the Company in the year is0% (2016: not applicable).
Note20：GPO Heavylift Limited is a limited liability company registered in Cayman Islands. In accordance with relevant provisions of income tax law of Cayman Islands, the applicable income tax rate for the Company in the year is0% (2016: not applicable). Note21：GPO Heavylift AS is a limited liability company registered in Oslo, Norway. In accordance with relevant provisions of income tax law of Norway, the applicable income tax rate for the Company in the year is0% (2016: not applicable).
V. Notes to Main Items of Consolidated Financial Statements
1. Monetary fund
2017 2016
||
|-|
|1,365,865|
|5,672,481,136|
|96,380,368|

||
|-|
|774,626|
|3,496,430,560|
|99,839,013|

 5,770,227,369 3,597,044,199
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
1. Monetary fund (continued)
As of Dec, 31, 2017, the other monetary funds, including the restricted deposit of RMB 96,380,368 Yuan, were the margin deposit that our Group applied to banks for letters of credit and bank guarantees (Dec, 31, 2016: RMB 99,839,013 Yuan).
As of Dec, 31, 2017, the monetary fund deposited abroad by the Group is RMB 637,201,842 Yuan (Dec, 31, 2016: RMB 621,197,660 Yuan).
As of Dec, 31, 2017, the bank deposit included deposit money and short-term fixed deposit. The 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 with changes included in current profits and loss
2017 2016 Trading financial assets
-Equity instrument
(i)
investment 8,438,278 -
||
|-|
|-|
|8,438,278|

||
|-|
|4,615,775|
|4,615,775|

 (i) As of Dec. 31, 2017, the trading financial assets - equity instrument investment held by the Company was acquired at the acquisition of Greenland Heavylift (Hong Kong) Limited. The faire value of purchase right corresponding to1% stock rights can be purchased with 1 USD at any time in the future.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
3. Notes receivable
2017 2016
||
|-|
|395,649,259|
|25,136,753|

||
|-|
|286,220,781|
|10,700,000|

 420,786,012 296,920,781 As of Dec. 31, 2017, the notes receivable of RMB 32,340,000 Yuan (Dec. 31, 2016: none) had been pledged to the bank as a pledge to open a new bank acceptance bill.
The notes receivable that have been endorsed or discounted but not yet matured on the balance sheet date are as follows:
2017 2016
Derecognition Non- Derecognition Non- derecognition derecognition
||
|-|
|Bank acceptance|
|bill|

||
|-|
|1,519,002,534|

||
|-|
|-|

||
|-|
|471,132,348|

||
|-|
|4,390,096|

 4. Accounts receivable
The aging analysis of accounts receivables is as follows:
2017 2016
||
|-|
|Within 6 months|
|7~12 months|
|1~2 years|
|2~3 years|
|3~4 years|
|4~5 years|
|Over 5 years|

||
|-|
|2,301,189,821|
|402,959,451|
|874,631,229|
|390,411,499|
|257,848,181|
|316,465,411|
|771,913,799|
|5,315,419,391|
|1,335,401,780|

||
|-|
|2,412,791,452|
|762,252,912|
|864,213,900|
|363,374,243|
|383,314,678|
|136,097,550|
|648,577,646|
|5,570,622,381|
|1,339,875,923|

3,980,017,611 4,230,746,458
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
4. Accounts receivable (continued)
The changes in provision for bad debt of accounts receivable are as follows:
Opening balance Proportion in Reversal in Write-off in current Closing balance current year current year year
||
|-|
|1,339,875,923|
|1,136,848,761|

||
|-|
|248,322,946|
|209,863,641|

||
|-|
|(252,797,089|
|(4,997,815|

||
|-|
|-|
|(1,838,664 )|

||
|-|
|1,335,401,780|
|1,339,875,923|

 2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt Amount Propo Provisio Provision Prop
rtion
Amount proportion Amount ortion Amount
n(%) proportio(%) (%)
n(%)
||
|-|
|182,649,892|
|837,635,985|
|4,079,011,980|
|216,121,534|

||
|-|
|182,649,892|
|-|
|936,630,354|
|216,121,534|

||||
|-|-|-|
|100|159,594,037|3|
|-|567,576,374|10|
|23|4,557,809,557|82|
|100|285,642,413|5|

||
|-|
|159,594,037|
|-|
|895,607,566|
|284,674,320|

||
|-|
|100|
|-|
|20|
|100|

||
|-|
|5,315,419,391|

||
|-|
|1,335,401,780|

||||
|-|-|-|
|25|5,570,622,381|100|

||
|-|
|1,339,875,923|

||
|-|
|24|

 As of Dec. 31, 2017, the accounts receivable with significant single amount and for separate provision for bad debt is as follows:
Book Provision for Provision
Reason balance bad debtproportion%
||
|-|
|182,649,892|

||
|-|
|182,649,892|

||
|-|
|100|

 As of Dec. 31, 2016, the accounts receivable with significant single amount and for separate provision for bad debt is as follows:
Book Provision for Provision
Reason
balance bad debtproportion%
|||
|-|-|
|Accounts receivable 1|159,594,037|

||
|-|
|159,594,037|

||
|-|
|100|

||
|-|
|Contract|
|disputes|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
4. Accounts receivable (continued)
The accounts receivable of non-related party for the provision for bad debt by aging analysis method is as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Amount Amount
Proporti
Amount Amount
Proportio on(%) n(%)
||
|-|
|1,686,464,114|
|426,601,821|
|754,431,295|
|371,207,128|
|226,157,120|
|77,566,235|
|536,584,267|

||
|-|
|-|
|4,266,018|
|113,164,694|
|111,362,139|
|113,078,560|
|58,174,676|
|536,584,267|

||
|-|
|-|
|1|
|15|
|30|
|50|
|75|
|100|

||
|-|
|2,127,697,593|
|691,765,805|
|668,819,686|
|302,286,737|
|101,304,733|
|75,625,443|
|590,309,560|

||
|-|
|-|
|6,917,658|
|100,322,953|
|90,686,021|
|50,652,291|
|56,719,083|
|590,309,560|

||
|-|
|-|
|1|
|15|
|30|
|50|
|75|
|100|

||
|-|
|4,079,011,980|

||
|-|
|936,630,354|

||
|-|
|23|

||
|-|
|4,557,809,557|

||
|-|
|895,607,566|

||
|-|
|20|

 As of Dec. 31, 2017, the accounts receivable with insignificant single amount but for separate provision for bad debt is as follows:
Book Provision for Provision
Reason balance bad debt proportion%
|||
|-|-|
|Accounts receivable 1|107,819,500|

||
|-|
|107,819,500|

||
|-|
|100|

||
|-|
|Counter-party in funds|
|shortage|

 Counter-party in funds Accounts receivable 2 50,365,000 50,365,000 100 shortage Accounts receivable 3 26,136,865 26,136,865 100 Contract disputes Accounts receivable 4 10,730,715 10,730,715 100 Contract disputes Accounts receivable 5 7,802,300 7,802,300 100 Contract disputes Accounts receivable 6 6,990,320 6,990,320 100 Contract disputes Accounts receivable 7 3,355,177 3,355,177 100 Contract disputes Accounts receivable 8 2,083,103 2,083,103 100 Contract disputes Accounts receivable 9 838,554 838,554 100 Contract disputes
||
|-|
|100|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
4. Accounts receivable (continued)
As of Dec. 31, 2016, the accounts receivable with insignificant single amount but for separate provision for bad debt is as follows:
Book balance Provision for bad Provision
debt proportion Reason%
||
|-|
|Accounts receivable|
|1|
|Accounts receivable|
|2|
|Accounts receivable|
|3|
|Accounts receivable|
|4|
|Accounts receivable|
|5|
|Accounts receivable|
|6|
|Accounts receivable|
|7|
|Accounts receivable|
|8|
|Accounts receivable|
|9|
|Accounts receivable|
|10|
|Accounts receivable|
|11|
|Accounts receivable|
|12|

||
|-|
|107,819,500|
|50,365,000|
|27,748,069|
|21,932,297|
|19,480,920|
|17,735,070|
|10,049,240|
|7,664,629|
|7,421,237|
|7,306,800|
|4,557,644|
|3,562,007|

||
|-|
|107,819,500|
|50,365,000|
|27,748,069|
|21,932,297|
|18,512,827|
|17,735,070|
|10,049,240|
|7,664,629|
|7,421,237|
|7,306,800|
|4,557,644|
|3,562,007|

||
|-|
|100|
|100|
|100|
|100|
|95|
|100|
|100|
|100|
|100|
|100|
|100|
|100|
|100|

As of Dec. 31, 2017, the accounts receivable of the top five balances collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of total provision for bad balance of debt accounts receivable%
||
|-|
|Total accounts receivable of the top|
|five balances|

||
|-|
|777,865,552|

||
|-|
|279,069,69|

||
|-|
|15|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
As of Dec. 31, 2016, the accounts receivable of the top five balances collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of total provision for bad balance of debt accountsreceivable%
||
|-|
|Total accounts receivable of the top|
|five balances|

||
|-|
|862,228,750|

||
|-|
|382,166,701|

||
|-|
|15|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
5. Prepayment
The aging analysis of prepayment is as follows:
2017 2016
Book balance Proportion Book balance Proportion(%) (%)
||
|-|
|Within 1 year|
|1~2 years|
|2~3 years|
|Over 3 years|

||
|-|
|819,125,581|
|108,191,230|
|28,266,965|
|81,199,394|

||
|-|
|79|
|10|
|3|
|8|

||
|-|
|743,820,095|
|72,700,327|
|41,846,911|
|42,054,901|

||
|-|
|83|
|8|
|4|
|5|

 1,036,783,170 100 900,422,234 100 As of Dec. 31, 2017, the repayment of the company with the age over one year was RMB 217,657,589 Yuan (Dec. 31, 2016: RMB 156,602,139Yuan), mainly the prepayment for the procurement of imported parts, which has not been yet settled because the purchased imported parts have not been delivered.
As of Dec. 31, 2017, the prepayment of the top five balances collected by debtor is summarized and analyzed as follows:
Amount Proportion in total Proportion of total prepayment balance ofamount% accountsreceivable%
||
|-|
|Total prepayment of the top five|
|balances|

||
|-|
|210,805,030|

||
|-|
|4|

 As of Dec. 31, 2016, the prepayment of the top five balances collected by debtor is summarized and analyzed as follows:
Amount Proportion in total Proportion of total prepayment balance ofamount% accountsreceivable%
||
|-|
|Total prepayment of the top five|
|balances|

||
|-|
|265,464,546|

||
|-|
|29|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
6. Other receivables
The aging analysis of other receivables is as follows:
2017 2016
||
|-|
|1,076,997,530|
|31,600,949|
|239,277,814|
|2,061,944|
|5,438,287|
|3,007,066|
|15,616,617|
|1,374,000,207|
|377,838,841|

||
|-|
|722,015,188|
|3,320,248|
|5,050,048|
|17,396,586|
|3,690,767|
|223,263|
|22,533,895|
|774,229,995|
|37,675,402|

||
|-|
|996,161,366|

||
|-|
|736,554,593|

 The changes of provision for bad debt of other receivables are as follows:
Opening balance Proportion in Reversal in Write-off in Closing current year current year current year balance
||
|-|
|37,675,402|
|28,062,537|

||
|-|
|347,764,450|
|9,612,865|

||
|-|
|(7,601,011|
|-|

||
|-|
|-|
|-|

||
|-|
|377,838,841|
|37,675,402|

 2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt Provisio Provision
Proportion Proportion n Amount Amount proportio Amount Amount
(%) (%) proporti n(%)
on(%)
||
|-|
|366,281,031|
|408,645,730|
|117,930,613|
|465,113,551|
|16,029,282|

||
|-|
|26|
|30|
|9|
|34|
|1|

||
|-|
|354,460,071|
|-|
|-|
|7,349,488|
|16,029,282|

||
|-|
|97|
|-|
|-|
|2|
|100|

||
|-|
|23,410,851|
|227,641,095|
|119,097,936|
|386,333,011|
|17,747,102|

||
|-|
|3|
|30|
|15|
|50|
|2|

||
|-|
|7,023,255|
|-|
|-|
|12,905,045|
|17,747,102|

||
|-|
|30|
|-|
|-|
|3|
|100|

1,374,000,207 100 377,838,841 27 774,229,995 100 37,675,402 5
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
6. Other receivables (continued)
As of Dec. 31, 2017, the other receivables with significant single amount and separate provision for bad debt are as follows:
Book Provision for Provision
Reason balance bad debtproportion%
|||
|-|-|
|Other receivables1|164,124,678|

||
|-|
|164,124,678|

||
|-|
|100|

||
|-|
|Counter-party|
|in funds|
|shortage|

 Contract Other receivables2 150,327,138 150,327,138 100 disputes Contract Other receivables3 51,829,215 40,008,255 77 disputes
||
|-|
|97|

As of Dec. 31, 2016, the other receivables with significant single amount and separate provision for bad debt are as follows:
Book Provision for Provision
Reason balance bad debtproportion%
|||
|-|-|
|Other receivables1|23,410,851|

||
|-|
|7,023,255|

||
|-|
|30|

||
|-|
|Contract|
|disputes|

 The situations of other receivables of the Group with the provision for bad debt based on aging analysis method are followings:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Amount Amount
Proportion
Amount Amount
Proportion(%) (%)
||
|-|
|455,410,636|
|993,082|
|191,090|
|658,927|
|195,769|
|2,594,866|
|5,069,181|

||
|-|
|-|
|9,931|
|28,664|
|197,678|
|97,884|
|1,946,150|
|5,069,181|

||
|-|
|-|
|1|
|15|
|30|
|50|
|75|
|100|

||
|-|
|357,174,789|
|2,872,043|
|1,530,100|
|14,946,482|
|3,203,035|
|180,855|
|6,425,707|

||
|-|
|-|
|28,720|
|229,515|
|4,483,945|
|1,601,517|
|135,641|
|6,425,707|

||
|-|
|-|
|1|
|15|
|30|
|50|
|75|
|100|

||
|-|
|465,113,551|

||
|-|
|7,349,488|

||
|-|
|2|

||
|-|
|386,333,011|

||
|-|
|12,905,045|

||
|-|
|3|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
6． Other receivables (continued)
As of Dec. 31, 2017, the situations of other receivables with insignificant single amount but for separate provision for bad debt are as follows:
Book Provision for Provision
Reason balance bad debtproportion%
|||
|-|-|
|Other receivables 1|4,214,642|
|Other receivables 2|3,037,042|

||
|-|
|4,214,642|
|3,037,042|

||
|-|
|100|
|100|

||
|-|
|Counter-par|
|y bankruptcy|
|Contrac|
|cancellation|

 Contract Other receivables 3 1,692,765 1,692,765 100 cancellation Contract Other receivables 4 1,539,600 1,539,600 100 cancellation Contract Other receivables 5 1,170,282 1,170,282 100 cancellation
|||
|-|-|
|Others|4,374,951|

||
|-|
|4,374,951|

||
|-|
|100|
|100|

||
|-|
|16,029,282|

||
|-|
|16,029,282|

As of Dec. 31, 2016, the situations of other receivables with insignificant single amount but for separate provision for bad debt are as follows:
Book Provision for Provision
Reason balance bad debtproportion%
|||
|-|-|
|Other receivables 1|5,540,286|
|Other receivables 2|4,214,642|
|Other receivables 3|3,037,042|
|Other receivables 4|1,692,765|
|Others|3,262,367|

||
|-|
|5,540,286|
|4,214,642|
|3,037,042|
|1,692,765|
|3,262,367|

||
|-|
|100|
|100|
|100|
|100|
|100|
|100|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
6． Other receivables (continued)
The classification of other receivables by nature is as follows:
2017 2016 Bid and performance bond 509,244,563 153,797,532
||
|-|
|359,755,913|
|164,124,678|
|83,673,256|
|45,458,548|
|34,257,357|
|33,434,668|
|26,010,084|
|4,269,756|
|4,258,496|
|109,512,888|

||
|-|
|169,252,637|
|-|
|93,565,532|
|6,742,361|
|43,553,963|
|33,434,668|
|39,969,061|
|71,148,199|
|63,023,350|
|99,742,692|

 1,374,000,207 774,229,995 (i) In 2016, the Group provided the loan guarantee of 25.51 million USD for the joint venture Zhenhua Ocean Energy (Hong Kong) Co., Ltd. The guarantee expired on Apr. 14, 2017. As Zhenhua Ocean Energy (Hong Kong) Co., Ltd failed to repay the matured loan principal, the Group fulfilled the guarantee obligation and paid 25.1178 million USD to the bank, with the closing balance equivalent to RMB 164,124,678 Yuan.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
6． Other receivables (continued)
As of Dec. 31, 2017, the top five other receivables are as follows:
Closing balance Proportion in Nature Age Closing the total balance of balance of provision for other bad debt receivables
(%)
||
|-|
|Other|
|receivables 1|
|Other|
|receivables 2|
|Other|
|receivables 3|
|Other|
|receivables 4|
|Other|
|receivables 5|

||
|-|
|176,800,000|
|164,124,678|
|150,327,138|
|51,829,215|
|46,715,000|

||
|-|
|13|
|12|
|11|
|4|
|3|

||
|-|
|Performance|
|bond|
|Guarantee|
|liability|
|repayment|
|Performance|
|bond|
|Advance|
|money for|
|another|
|Bid bond|

||
|-|
|Within|
|one year|
|Within|
|one year|
|1~2|
|years|
|1~2|
|years|
|Within|
|one year|

||
|-|
|-|
|164,124,678|
|150,327,138|
|40,008,255|
|-|

 589,796,031 43 354,460,071 As of Dec. 31, 2016, the top 5 other receivables are as follows:
Closing balance Proportion in Nature Age Closing the total balance of balance of provision for other bad debt receivables
(%)
||
|-|
|Other|
|receivables 1|
|Other|
|receivables 2|
|Other|
|receivables 3|
|Other|
|receivables 4|
|Other|
|receivables 5|

||
|-|
|71,148,199|
|50,000,000|
|50,000,000|
|33,434,668|
|23,410,851|

||
|-|
|9|
|6|
|6|
|5|
|3|

||
|-|
|Customs|
|guarantee|
|deposit|
|Bid bond|
|Bid bond|
|Lease|
|payment|
|Advance|
|money for|
|another|

||
|-|
|Within 1|
|year|
|Within 1|
|year|
|Within 1|
|year|
|Within 1|
|year|
|2~3|
|years|

||
|-|
|-|
|-|
|-|
|-|
|7,023,255|

227,993,718 29 7,023,255
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
7. Inventory
2017 2016
Book balance Falling price Book value Book balance Falling price Book value reserves reserves
|||
|-|-|
|Raw material||
|and purchased||
|parts|2,160,945,988|
|Unfinished||
|products|6,492,603,460|
|Merchandise||
|inventory|24,284,499|

||
|-|
|78,519,214|
|1,516,893,869|
|11,153,985|

||
|-|
|2,082,426,774|
|4,975,709,591|
|13,130,514|

||
|-|
|2,851,653,926|
|5,190,856,986|
|11,153,985|

||
|-|
|141,839,752|
|1,124,585,146|
|11,153,985|

||
|-|
|2,709,814,174|
|4,066,271,840|
|-|

 8,677,833,947 1,606,567,068 7,071,266,879 8,053,664,897 1,277,578,883 6,776,086,014 The unfinished products of the Group mainly refer to the marine heavy equipment products and prepared parts that are already under construction but not yet signed sales orders.
The changes in inventory falling price reserves are as follows:
2017
Reduction in
current year
Beginning Proportion in Reversal or Closing balance amount current year write-off
||
|-|
|Raw material and|
|purchased parts|
|Unfinished products|
|Merchandise inventory|

||
|-|
|141,839,752|
|1,124,585,146|
|11,153,985|

||
|-|
|10,050,143|
|414,123,334|
|-|

||
|-|
|(73,370,681|
|(21,814,611|
|-|

||
|-|
|78,519,214|
|1,516,893,869|
|11,153,985|

 1,277,578,883 424,173,477 (95,185,292 ) 1,606,567,068 2016
Reduction in
current year
Beginning Proportion in Reversal or Closing balance amount current year write-off
||
|-|
|Raw material and|
|purchased parts|
|Unfinished products|
|Merchandise inventory|

||
|-|
|324,784,792|
|232,214,158|
|11,153,985|

||
|-|
|4,565,125|
|892,370,988|
|-|

||
|-|
|(187,510,165|
|-|
|-|

||
|-|
|141,839,752|
|1,124,585,146|
|11,153,985|

568,152,935 896,936,113 (187,510,165 ) 1,277,578,883
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
7. Inventory (continued)
The information of inventory falling price reserves is as follows:
Particular basis for determining Reason for reversal or write off-of
net realizable value inventory falling price reserves in current year Raw material and Difference between net realizable value of Steel price rise or for sale
purchased parts raw materials and purchased parts and the
book value due to the decline in product prices
Unfinished products Difference between the net realizable value Value recovery or disposal and the book value of unfinished products
Merchandise inventory Difference between the net realizable value None and the book value of merchandise inventory
8. Construction completed account yet has not been settled/Amount due from customer for contract work
Construction completed account yet has not been settled
2017 2016
||
|-|
|51,707,541,499|
|5,478,940,652|
|43,565,127,875|
|167,373,950|

||
|-|
|41,699,798,181|
|4,502,784,376|
|34,669,961,103|
|426,807,687|

 13,453,980,326 11,105,813,767 Amount due from customer for contract work
2017 2016
||
|-|
|11,936,912,116|
|1,047,746,429|
|8,502,920,498|
|122,353,724|

||
|-|
|18,189,689,578|
|2,105,056,605|
|13,716,197,938|
|25,011,087|

2,508,598,913 2,393,446,122
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
8. Construction completed account yet has not been settled/Amount due from customer for contract work (continued)
Expected contract loss
Opening Increase in Reduction in Closing 2017
balance current year current year balance
||
|-|
|Completed but not|
|settled|
|Settled but not|
|completed|

||
|-|
|426,807,687|
|25,011,087|

||
|-|
|114,395,849|
|103,234,343|

||
|-|
|(373,829,586|
|(5,891,706|

||
|-|
|167,373,950|
|122,353,724|

 451,818,774 217,630,192 (379,721,292) 289,727,674 Opening Increase in Reduction in Closing 2016
balance current year current year balance
||
|-|
|Completed but not|
|settled|
|Settled but not|
|completed|

||
|-|
|302,295,092|
|101,149,431|

||
|-|
|315,817,045|
|73,576,110|

||
|-|
|(191,304,450|
|(149,714,454|

||
|-|
|426,807,687|
|25,011,087|

 403,444,523 389,393,155 (341,018,904) 451,818,774 As of Dec. 31, 2017, the total amount of contracts still in construction (VAT not included) was about RMB 32,334,004,931 Yuan (Dec. 31, 2016: 38,629,601,047 Yuan).
In case of failing to fulfill the obligations as contracted, the total penalty may be imposed:
2017 2016
||
|-|
|15,315,071,475|
|4,101,363,500|

||
|-|
|19,456,969,669|
|281,462,898|

 19,416,434,975 19,738,432,567 9. Non-current assets due within one year
2017 2016
||
|-|
|1,896,475,472|

||
|-|
|1,384,438,569|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued) 10. Other current assets
2017 2016 Input tax to be deducted 591,311,853 553,363,139 11. Financial assets available-for-sale
2017 2016
Book balance Depreciation Book value Book balance Depreciation Book value reserves reserves
|||
|-|-|
|Available-for-sale||
|equity instruments||
|Measured at fair||
|value|1,261,209,745|
|Measured at||
|cost|72,994,160|

||
|-|
|-|
|30,000,000|

||
|-|
|1,261,209,745|
|42,994,160|

||
|-|
|1,270,578,346|
|72,994,160|

||
|-|
|-|
|30,000,000|

||
|-|
|1,270,578,346|
|42,994,160|

 1,334,203,905 30,000,000 1,304,203,905 1,343,572,506 30,000,000 1,313,572,506 Financial assets available-for-sale measured at fair value:
2017 2016
||
|-|
|Cost of available-for-sale equity|
|instruments|
|Changes in fair value|
|accumulated included in other|
|comprehensive income|

||
|-|
|937,641,194|
|323,568,551|

||
|-|
|937,641,194|
|332,937,152|

 1,261,209,745 1,270,578,346
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
11. Financial assets available-for-sale (continued)
Available-for-sale equity instruments measured at fair value include (continued):
(i) The Group holds5.9% shares of stock of Jiangxi Huawu Brake Co., Ltd (Dec 31, 2016:5.9%) and the initial investment cost was RMB 11,071,606Yuan. The available-for-sales equity instruments measured at fair value shall be confirmed by the closing price on the last trading day of Shenzhen Stock Exchange. As of Dec 31, 2017, the Company had confirmed the accumulated revenue of RMB 167,881,106 Yuan for available for-sales equity instruments, included in other comprehensive income.
The Group received the cash dividends of RMB 665,346 Yuan from Jiangxi Huawu Brake Co., Ltd, included in the gain on investment.
(ii) The Group holds1.71% (Dec 31, 2016:2.16%) shares of stock of Qingdao Port International Co., Ltd and the initial investment cost was RMB 308,515,588 Yuan.
The available-for-sales equity instruments measured at fair value is confirmed by the closing price on the last trading day of Hong Kong Stock Exchange. As of Dec 31, 2017, the Company has confirmed the revenue of RMB 143,013,072 Yuan for the available-for-sale equity instruments, included in other comprehensive income.
The Group received the cash dividends of RMB 12,103,621 Yuan from Qingdao Port International Co., Ltd, included in the gain on investment.
(iii) The Group holds1.40% (Dec 31, 2016:1.40%) shares of stock of CRSC and the initial investment costs was RMB 617,854,000 Yuan.
The available-for-sale equity instruments measured at fair value is confirmed by the closing price on the last trading day of Hong Kong Stock Exchange. As of Dec 31, 2017, the Company has confirmed the revenue of RMB 11,700,373 Yuan for the available-for-sale equity instruments, included in other comprehensive income.
The Group received the cash dividends of RMB 11,075,670 Yuan from CRSC, accounted in investment income.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
11. Financial assets available-for-sale (continued)
Financial assets available-for-sale measured at 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 on the last trading day of Shenzhen Stock Exchange. As of Dec 31, 2017, the Company has confirmed the revenue of RMB 974,000 Yuan for the available-for-sale equity instruments, accounted in other comprehensive income
The Group received the cash dividends of RMB 21,866 Yuan from Shenwan Hongyuan Group, accounted in investment income.
Financial assets available-for-sale measured at cost：
2017
Book balance
Opening Increase Reduction Closing Shareh Cash in current in current olding bonus in year year ratio current(%) year 21st
|||
|-|-|
|21st Century Science and||
|Technology Investment Co., Ltd.|30,000,000|
|CCCC Highway Bridges National||
|Engineering Research Centre||
|Co., Ltd.|13,000,000|
|CCCC Dredging Technology||
|Equipment State Engineering||
|Research Center Co., Ltd.|6,400,000|
|Longchang Lifting Equipment||
|Co., Ltd. of Shanghai Zhenhua||
|Port Machinery (Group)|800,000|
|Shenyang Elevator Co., Ltd of||
|Shanghai Zhenhua Port||
|Machinery (Group)|1,500,000|
|ZMPC Ningbo Transmission||
|Machinery Co., Ltd|1,296,000|
|Hunan Fengri Power & Electric||
|Co., Ltd.|19,998,160|
||72,994,160|
|Available-for-sale equity||
|instruments-Depreciation||
|reserves||
|21st Century Science and||
|Technology Investment Co., Ltd.|(30,000,000|
||42,994,160|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|30,000,000|
|13,000,000|
|6,400,000|
|800,000|
|1,500,000|
|1,296,000|
|19,998,160|
|72,994,160|
|(30,000,000|
|42,994,160|

||
|-|
|8.96|
|10|
|3.2|
|10|
|10|
|10|
|6.38|

||
|-|
|-|
|-|
|-|
|-|
|2,691,286|
|-|
|-|
|2,691,286|
|-|
|2,691,286|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
11. Financial assets available-for-sale (continued)
Financial assets available-for-sale measured at cost(continued)：
2016
Book balance
Beginning of Increase Reductio End of the Sharehol Cash year in current n in year ding bonus year current ratio(%) in year current year 21st
||
|-|
|21st Century Science and|
|Technology Investment Co., Ltd.|
|CCCC Highway Bridges National|
|Engineering Research Centre Co.,|
|Ltd.|
|CCCC Dredging Technology|
|Equipment State Engineering|
|Research Center Co., Ltd.|
|Longchang Lifting Equipment Co.,|
|Ltd. of Shanghai Zhenhua Port|
|Machinery (Group)|
|Shenyang Elevator Co., Ltd of|
|Shanghai Zhenhua Port Machinery|
|(Group)|
|ZMPC Ningbo Transmission|
|Machinery Co., Ltd|
|Hunan Fengri Power & Electric|
|Co., Ltd.|
|Available-for-sale equity|
|instruments-Depreciation reserves|
|21st Century Science and|
|Technology Investment Co., Ltd.|

||
|-|
|30,000,000|
|13,000,000|
|6,400,000|
|800,000|
|1,500,000|
|1,296,000|
|19,998,160|
|72,994,160|
|(30,000,000|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|30,000,000|
|13,000,000|
|6,400,000|
|800,000|
|1,500,000|
|1,296,000|
|19,998,160|
|72,994,160|
|(30,000,000|

||
|-|
|8.96|
|10|
|3.2|
|10|
|10|
|10|
|6.38|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|

 42,994,160 - - 42,994,160 - The available-for-sale financial assets measured at 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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
12. Long-term receivables
2017 2016
||
|-|
|5,893,243,470|
|241,936,829|
|6,135,180,299|

||
|-|
|5,142,731,788|
|32,924,801|
|5,175,656,589|

||
|-|
|1,896,475,472|

||
|-|
|1,384,438,569|

 4,238,704,827 3,791,218,020 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; total investment of the project was RMB 5,918,800,000 Yuan, with the construction period of 2 years and the buy-back period of 2.5 years, and the return on investment shall be30% higher than the benchmark interest rate of 3-5years’ bank loan. 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 receivables mature within one year in 2018 according to the contract terms.
The Group undertook Jiangsu Qidong Lvsi Port Surrounded PPP Project in 2015, with total investment of RMB 2 billion Yuan. The project construction period is 2 years, and the buy-back period shall be 10 years, the return on investment shall be30% higher than the benchmark interest rate of over 5years’ bank loan. 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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
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 RMB 3.7 billion Yuan, with the construction period of 2 years and the buy-back period of 4 years, the return on investment shall be30% higher than the benchmark interest rate of over 5years’ bank loan. The Group, CCCC Shanghai Dredging 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 Urban Investment Construction Co., Ltd. responsible for the project investment, financing and construction management.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
12. Long-term receivables (continued)
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 buy-back period is 3 years, the return on investment is the annual rate7%. The Group, CCCC Second Harbor Engineering Co., Ltd., CCCC Highway Planning and Design Institute Co., Ltd., CCCC East China Investment Co., Ltd. and 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.
The Group undertook the Huaiyin port east district and transportation infrastructure projects in Huaian City in 2016. The total investment is RMB 2.855 billion Yuan, with the construction period of 2 years and the buy-back period of 6 years, the return on investment shall be the bank loans benchmark interest rate for over 5 years. The Group, CCCC Third Harbor Engineering Co., Ltd., CCCC First Highway Survey and Design Institute Co., Ltd., CCCC East China Investment Co., Ltd. and Huaian Huaiyin Traffic Investment Co., Ltd. jointly established CCCC Huaian Construction Development Co., Ltd. responsible for the project investment, financing and construction management.
The project undertook the renovation and resettlement housing and supporting facilities construction project for shanty town in the core area of Dongming County in 2017. The total investment of the project is RMB 2.7 billion Yuan, the construction period is 3 years, the buy-back period is 3 years, and the gain on investment shall be the annual interest rate of6.5%. The Group, CCCC Water Transportation Planning and Design Institute Co., Ltd. and CCCC First Harbor Engineering Co., Ltd. are jointly responsible for the investment, financing, construction and management of the project.
The Group, CCCC Third Highway Engineering Co. Ltd. and CCCC Highway Consultants Co., Ltd. jointly signed the investment and construction cooperation agreement on Xiashesi– Yinsuhe– Huashi Highway Project Phase I of Xiangtan City in 2017, with the total investment of RMB 2.0 billion Yuan, the construction period of 3 years
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
and the buy-back period of 12. Within the term of cooperation, the return on project capital shall be calculated20% above the benchmark interest rate for over 5years’ loan recognized byPeople’s Bank of China for corresponding period.
The Group, CCCC East China Investment Co., Ltd., Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd. and CCCC Second Harbor Engineering Co., Ltd. jointly established the project company CCCC Rudong Construction and Development Co., Ltd., and signed the cooperative contract on Bridges and Liquefaction Dock Project in Nantong Yangkou Port Area with Jiangsu Yangkou Port Affairs Co., Ltd. authorized by thePeople’s Government of Rudong County on in June, 2017, with the predicted total investment of RMB 1.77 billion Yuan, the construction period of 2 years and the buy-back period of 10 years. The gain on investment shall be15% above the benchmark interest rate for over 5years’ loan ofPeople’s Bank of China for corresponding period.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
12. Long-term receivables (continued)
As of Dec. 31, 2017, the long-term receivables refereed to the investment amount as principal the Group invested in above “Construction– Transfer” project, interest receivable was subject the financing return confirmed by contract.
As of Dec. 31, 2017, the long-term receivables of Jiangsu Qidong Lvsi Port Surrounded PPP Project, Huaian Huaiyin Port Area East Operation Area and Transportation Infrastructure Project and Infrastructure and Public Utilities Project Phase I of Jiangsu Zhongguancun Science and Technology Industrial Park were RMB 2,571,908,986 Yuan (Dec. 31, 2016: RMB 2,996,201,650 Yuan), which had been pledged to the bank as the guarantee for the long-term loans of RMB 1,066,150,000 Yuan (Dec. 31, 2016: long-term loans of RMB 727,000,000Yuan), please refer to 34(ii) in Note V.
The aging analysis of long-term receivables is as follows:
2017 2016
||
|-|
|2,274,432,739|
|1,935,013,530|
|518,450,490|
|1,407,283,540|
|6,135,180,299|
|1,896,475,472|

||
|-|
|1,956,609,083|
|518,450,490|
|2,700,597,016|
|-|
|5,175,656,589|
|1,384,438,569|

 4,238,704,827 3,791,218,020
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
13. Long-term equity investment
2017 2016 Joint venture 268,510,756 200,209,849 Associated enterprise 2,051,959,765 2,001,211,604 2,320,470,521 2,201,421,453 Joint venture:
2017
Change in current year
Opening Additional Negative Investment Closing Depreciatio balance investment investment profit and balance n reserves loss under at the end of equity year method
|||
|-|-|
|Jiangsu LongYuan||
|Zhenhua Ocean||
|Engineering Co., Ltd|196,624,211|
|CCCC Tianhe Xi’an||
|Equipment||
|Manufacturing Co.,||
|Ltd (iii)|-|
|ZPMC||
|Mediterranean||
|Liman Makinalari||
|Ticaret Anonim||
|Sirketi|2,835,358|

||
|-|
|-|
|30,000,000|
|-|

||
|-|
|-|
|-|
|-|

||
|-|
|34,685,071|
|(179,653|
|939,788|

||
|-|
|231,309,282|
|29,820,347|
|3,775,146|

||
|-|
|-|
|-|
|-|

 Zhenhua Shende
Ocean Engineering
Installation Co., Ltd.
(iv) - 2,976,740 - - 2,976,740 - Zhenhua Ocean
Energy (Hong Kong)
Co., Ltd. (i) - - - - - -
|||
|-|-|
|Cranetech Global||
|Sdn. Bnd. (ii)|750,280|

||
|-|
|-|

||
|-|
|-|

||
|-|
|(121,039|

||
|-|
|629,241|

||
|-|
|-|

 200,209,849 32,976,740 - 35,324,167 268,510,756 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
13. Long-term equity investment (continued)
2016
Change in current year
Opening Additional Negative Investment Closing Depreciati balance investment investment profit and balance on loss under reserves equity at the end method of year
|||
|-|-|
|Jiangsu Longyuan||
|Zhenhua Ocean||
|Engineering Co., Ltd|171,577,489|
|ZPMC||
|Mediterranean||
|Liman Makinalari||
|Ticaret Anonim||
|Sirketi|3,059,427|
|Zhenhua Ocean||
|Energy (Hong Kong)||
|Co., Ltd. (i)|-|
|Cranetech Global||
|Sdn. Bnd.(ii)|750,280|

||
|-|
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|

||
|-|
|25,046,722|
|(224,069|
|-|
|-|

||
|-|
|196,624,211|
|2,835,358|
|-|
|750,280|

||
|-|
|-|
|-|
|-|
|-|

 175,387,196 - - 24,822,653 200,209,849 - Joint venture (continued):
(i) On May 5, 2014, the subsidiary of the Company and the partner invested to establish Zhenhua Ocean Energy (Hong Kong) Co., Ltd (Zhenhua Ocean 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 Ocean Energy) singed the exit contract about Zhenhua Ocean Energy. The Group has the rights to sell51% of the total shares of Zhenhua Ocean Energy to RBF HK Limited when meeting the related articles of the exit contract; or purchased32.5% of the total shares of Zhenhua Ocean Energy from RBF HK Limited. RBF HK Limited began to execute its right of holding51% shares of Zhenhua Ocean 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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
13. Long-term equity investment (continued)
Joint venture(continued)：
In March, 2017, the Group once again signed an exit framework agreement with RBF HK Limited on the sale of Zhenhua Ocean Energy held by the Group. Under this agreement, RBF HK Limited had the right to exercise its right of purchasing the shares of Zhenhua Ocean Energy held by the Group before Sept. 30, 2017; however, the right was ultimately unfilled and expired automatically. By Dec. 31, 2017, there was no equity purchase agreement in process between this Group and RBF HK Limited.
(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 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 Group controls the company together with the partner.
(iii) On May 5, 2017, the subsidiary of the Company and the partner jointly established CCCC TianheXi’an Mechanical Equipment Manufacturing Co., Ltd. The registered capital of the company is RMB 300 million Yuan, of which, the contribution its subsidiary is RMB 3,000,000 Yuan, with the shareholding ratio of50%. The company is mainly engaged in machinery manufacture of tunnel boring machine. Based on the regulations of the shareholder agreement, the significant issues of the company shall be agreed by both parties. Therefore, the Group controls the company together with the partner.
(iv) On Nov. 22, 2017, the Company sold20% stock right of its original subsidiary Zhenhua Shende Ocean Engineering Installation Co., Ltd. at the price of 400,000 USD. After alternation, the registered capital of the company became 2,000,000 USD for the shareholding ratio of50%. The company is mainly engaged in
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
shipping business. Based on the regulations of the shareholder agreement, the significant issues of the company shall be agreed by both parties. Therefore, the Group controls the company together with the partner.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
13. Long-term equity investment (continued)
Associatedenterprise：
2017
Change in current year
Additional Investment Other Declaration of Depreci
investment profit and comprehen cash dividend ation
Opening loss under sive or profit Closing reserves
balance equity income balance at the
method adjustment end of
year
CCCC Financial Leasing
Co., Ltd. (i) 1,605,244,853 - 73,336,694 (30,964) - 1,678,550,583 -
||
|-|
|CCCC Real Estate Yixing|
|Co., Ltd.|
|CCCC South American|
|Regional Company SARL|
|(ii)|
|China Communications|
|Construction USA|
|Inc.(iii)|
|CCCC Ocean Engineering|
|Vessel Technology|
|Research Centre Co., Ltd|
|Changzhou Paint Co., Ltd.|
|of Shanghai Zhenhua Heavy|
|Industries Co., Ltd|

||
|-|
|175,614,528|
|114,321,760|
|75,612,903|
|15,645,518|
|14,772,042|

||
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|2,485,179|
|(13,520,543|
|(4,569,705|
|204,026|
|1,014,396|

||
|-|
|-|
|(4,605,830|
|(3,812,748|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|178,099,707|
|96,195,387|
|67,230,450|
|15,849,544|
|15,786,438|

||
|-|
|-|
|-|
|-|
|-|
|-|

ZPMC Southe ast Asia
Pte. Ltd (iv) - 247,656 - - - 247,656 -
2,001,211,604 247,656 58,950,047 (8,449,542) - 2,051,959,765 -
2016
Change in current year
Opening Additional Investment Other Declaration of Closing Depre
balance investment profit and loss comprehen cash dividend balance ciation
under equity sive income or profit reserv
method adjustment es at
the
end of
year
CCCC Financial Leasing Co.,
Ltd. (i) 1,141,740,698 420,000,000 75,648,845 255,310 (32,400,000 ) 1,605,244,853 -
CCCC Real Estate Yixing Co.,
Ltd. 174,697,785 - 916,743 - - 175,614,528 -
|||
|-|-|
|CCCC South American||
|Regional Company SARL||
|(ii)|-|

||
|-|
|114,321,760|

||
|-|
|-|

||
|-|
|-|

||
|-|
|-|

||
|-|
|114,321,760|

||
|-|
|-|

China Communications
Construction USA
Inc.(iii) 75,413,782 - (4,347,559 ) 4,546,680 - 75,612,903 -
|||
|-|-|
|CCCC Ocean Engineering||
|Vessel Technology Research||
|Centre Co., Ltd|15,269,200|
|Changzhou Paint Co., Ltd. of||
|Shanghai Zhenhua Heavy||
|Industries Co., Ltd|14,626,156|

||
|-|
|-|
|-|

||
|-|
|376,318|
|1,978,952|

||
|-|
|-|
|-|

||
|-|
|-|
|(1,833,066 )|

||
|-|
|15,645,518|
|14,772,042|

||
|-|
|-|
|-|

1,421,747,621 534,321,760 74,573,299 4,801,990 (34,233,066 ) 2,001,211,604 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued) 13. Long-term equity investment (continued)
(i) On May 29, 2015, the Company increased the capital to CCCC Financial Leasing Co., Ltd. of RMB 540,000,000 Yuan. After the capital increase, theGroup’s investment costs to CCCC Financial Leasing Co., Ltd. increased to RMB 1,080,000,000 Yuan. The holding proportion remained unchanged at30%. As of May 31, 2016, the Company increased the capital to CCCC Financial Leasing Co., Ltd. of RMB 420,000,000 Yuan. After the capital increase, theGroup’s investment costs to CCCC Financial Leasing Co., Ltd. increased to RMB 1,500,000,000 Yuan. The holding proportion remained unchanged at30%.
(ii) On Dec. 15, 2016, the Company invested 16,480,000 USD (equivalent to RMB 114,321,760 Yuan) to share CCCC South American Regional Company SARL. The registration capital is 103,000,000 USD, equivalent to 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) On Oct. 8, 2015, the Company participated and invested to establish China Communications Construction USA Inc. The registered capital is 50,000,000 USD, of which, theCompany’s contribution is 12,000,000 USD, equivalent to RMB 76,206,000 Yuan, holding24% of the share. The company focuses on port construction business.
(iv) On Dec. 21, 2017, the Company sold30% stock rights of its original subsidiary ZPMC Southeast Asia Pte. Ltd at the price of 186,321 SGD. After alternation, the registered capital of the company was 620,770 SGD, and the shareholding ratio of the Company changed from70% to40%. The company focuses on port construction business.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued) 14. Real estate as investment
Subsequent measurement with cost model:
2017
Housing& Land use right Total buildings
Original cost
||
|-|
|397,820,689|

||
|-|
|209,845,794|

||
|-|
|607,666,483|

 Accumulated depreciation
and amortization
||
|-|
|84,123,319|
|12,991,865|

||
|-|
|50,162,913|
|5,324,663|

||
|-|
|134,286,232|
|18,316,528|

 Closing balance 97,115,184 55,487,576 152,602,760 Book value
||
|-|
|300,705,505|
|313,697,370|

||
|-|
|154,358,218|
|159,682,881|

||
|-|
|455,063,723|
|473,380,251|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
14. Real estate as investment (continued)
Subsequent measurement with cost model(continued)：
2016
Housing& Land use right Total buildings
Original cost
||
|-|
|260,039,373|
|137,781,316|

||
|-|
|209,845,794|
|-|

||
|-|
|469,885,167|
|137,781,316|

 Closing balance 397,820,689 209,845,794 607,666,483 Accumulated depreciation
and amortization
||
|-|
|63,874,113|
|9,647,865|
|10,601,341|

||
|-|
|44,838,246|
|-|
|5,324,667|

||
|-|
|108,712,359|
|9,647,865|
|15,926,008|

 Closing balance 84,123,319 50,162,913 134,286,232 Book value
||
|-|
|313,697,370|
|196,165,260|

||
|-|
|159,682,881|
|165,007,548|

||
|-|
|473,380,251|
|361,172,808|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
14. Real estate as investment (continued)
As of Dec. 31, 2017, the real estate as investment not completing the certificate of title is as follows:
Book value Reason for not completing the certificate of title
||
|-|
|273,401,305|

||
|-|
|Relevant formalities of|
|property right are still in|
|process|

 15. Fixed assets
2017
Housing& Machinery Office and Means of Vessels Total buildings equipment electronic transport
equipment (except for
vessels)
Original cost
||
|-|
|11,650,983,133|
|2,793,908|
|24,021,338|
|(1,962,638|
|-|

||
|-|
|6,718,732,274|
|40,259,218|
|377,168,935|
|(74,923,742|
|-|

||
|-|
|241,095,395|
|14,773,519|
|1,003,053|
|(8,823,895|
|-|

||
|-|
|273,277,738|
|11,944,155|
|950,265|
|(11,380,895|
|-|

||
|-|
|7,429,855,803|
|669,393,206|
|2,542,295,845|
|(323,453,989|
|(66,561,579|

||
|-|
|26,313,944,343|
|739,164,006|
|2,945,439,436|
|(420,545,159|
|(66,561,579|

||
|-|
|11,675,835,741|

||
|-|
|7,061,236,685|

||
|-|
|248,048,072|

||
|-|
|274,791,263|

||
|-|
|10,251,529,286|

||
|-|
|29,511,441,047|

 Accumulated
depreciation
||
|-|
|3,105,519,139|
|382,349,971|
|(355,570|
|-|

||
|-|
|4,790,498,563|
|429,564,030|
|(67,093,654|
|-|

||
|-|
|171,293,007|
|20,591,575|
|(7,118,467|
|-|

||
|-|
|185,091,350|
|11,357,767|
|(9,999,797|
|-|

||
|-|
|3,038,759,918|
|378,659,028|
|(248,325,464|
|(4,701,960|

||
|-|
|11,291,161,977|
|1,222,522,371|
|(332,892,952|
|(4,701,960|

||
|-|
|3,487,513,540|

||
|-|
|5,152,968,939|

||
|-|
|184,766,115|

||
|-|
|186,449,320|

||
|-|
|3,164,391,522|

||
|-|
|12,176,089,436|

 Book value
||
|-|
|8,188,322,201|
|8,545,463,994|

||
|-|
|1,908,267,746|
|1,928,233,711|

||
|-|
|63,281,957|
|69,802,388|

||
|-|
|88,341,943|
|88,186,388|

||
|-|
|7,087,137,764|
|4,391,095,885|

||
|-|
|17,335,351,611|
|15,022,782,366|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
15. Fixed assets (continued)
2016
Housing& Machinery Office and Means of Vessels Total buildings equipment electronic transport
equipment (except for
vessels)
Original cost
||
|-|
|11,616,605,396|
|151,768,037|
|21,998,269|
|(137,781,316|
|(1,607,253|

||
|-|
|6,773,564,936|
|35,813,084|
|28,683,570|
|-|
|(119,329,316|

||
|-|
|230,069,174|
|16,754,535|
|-|
|-|
|(5,728,314|

||
|-|
|263,556,659|
|25,392,444|
|-|
|-|
|(15,671,365|

||
|-|
|7,044,013,015|
|96,717,619|
|299,120,833|
|-|
|(9,995,664|

||
|-|
|25,927,809,180|
|326,445,719|
|349,802,672|
|(137,781,316|
|(152,331,912|

 Closing balance 11,650,983,133 6,718,732,274 241,095,395 273,277,738 7,429,855,803 26,313,944,343 Accumulated
depreciation
||
|-|
|2,733,703,550|
|381,944,729|
|(9,647,865|
|(481,275|

||
|-|
|4,473,964,112|
|428,237,329|
|-|
|(111,702,878|

||
|-|
|159,312,835|
|17,429,109|
|-|
|(5,448,937|

||
|-|
|183,537,690|
|16,885,021|
|-|
|(15,331,361|

||
|-|
|2,721,754,117|
|324,332,721|
|-|
|(7,326,920|

||
|-|
|10,272,272,304|
|1,168,828,909|
|(9,647,865|
|(140,291,371|

 Closing balance 3,105,519,139 4,790,498,563 171,293,007 185,091,350 3,038,759,918 11,291,161,977 Book value
||
|-|
|8,545,463,994|
|8,882,901,846|

||
|-|
|1,928,233,711|
|2,299,600,824|

||
|-|
|69,802,388|
|70,756,339|

||
|-|
|88,186,388|
|80,018,969|

||
|-|
|4,391,095,885|
|4,322,258,898|

||
|-|
|15,022,782,366|
|15,655,536,876|

 As of Dec. 31, 2017, the following fixed assets were taken as loan mortgage:
Borrowing
Original cost Book value Nature Amount
||
|-|
|Machinery|
|equipmen|
|t|
|Vessel|

||
|-|
|1,403,907,681|
|4,455,152,847|

||
|-|
|437,072,634|
|3,687,007,865|

||
|-|
|Long-term|
|payables|
|Long-term|
|payables|

||
|-|
|447,048,030|
|2,103,131,945|

5,859,060,528 4,124,080,499 2,550,179,975
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
15. Fixed assets (continued)
As of Dec. 31, 2016, the following fixed assets were taken as loan mortgage:
Borrowing
Original cost Book value Nature Amount
||
|-|
|Machinery|
|equipment|
|Vessel|

||
|-|
|1,403,907,681|
|2,532,724,844|

||
|-|
|555,450,350|
|1,882,864,040|

||
|-|
|Long-term|
|payables|
|Long-term|
|payables|

||
|-|
|575,223,848|
|1,507,146,538|

 3,936,632,525 2,438,314,390 2,082,370,386 As of Dec. 31, 2017 and Dec. 31, 2016, the book value of fixed assets for operating lease was as follows:
2017 2016 Vessel 1,733,818,283 1,882,864,040 As of Dec. 31, 2017, the fixed assets not completing the certificate of title were as follows:
Book value Reason for not completing the certificate of title
|||
|-|-|
||Relevant formalities are still in|
|2,825,816,582|process|

 16. Construction in process
Dec. 31, 2017 Dec. 31, 2016
Book balance Depreciation Book value Book balance Depreciati Book value reserves on
reserves
|||
|-|-|
|Infrastructure||
|construction of||
|Nantong Base|53,508,755|
|Infrastructure||
|construction of||
|Changxing Base|30,242,212|
|Large machinery||
|and engineering|1,123,208,028|

||
|-|
|-|
|-|
|-|

||
|-|
|53,508,755|
|30,242,212|
|1,123,208,028|

||
|-|
|53,892,601|
|16,743,055|
|3,202,580,355|

||
|-|
|-|
|-|
|-|

||
|-|
|53,892,601|
|16,743,055|
|3,202,580,355|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
|||
|-|-|
|equipment of the||
|base under||
|construction||
|Shield machine||
|parts project|74,507,300|
|Infrastructure||
|construction of||
|Nanhui Base|3,893,442|
|Large mechanical||
|reconstruction and||
|upgrading project|603,786,272|

||
|-|
|-|
|-|
|-|

||
|-|
|74,507,300|
|3,893,442|
|603,786,272|

||
|-|
|55,402,134|
|5,888,313|
|690,943,003|

||
|-|
|-|
|-|
|-|

||
|-|
|55,402,134|
|5,888,313|
|690,943,003|

 1,889,146,009 - 1,889,146,009 4,025,449,461 - 4,025,449,461
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
16. Construction in process (continued)
The changes of major construction in process in 2017 are as follows:
Opening Increase in Transfer-in fixed Transfer-in Closing balance balance current year assets in current intangible
Budget year (15 in Note assets in current
V) year (17 in Note
V)
||
|-|
|Infrastructure construction|
|of Nantong Base|
|Infrastructure construction|
|of Changxing Base|
|Large machinery and|
|engineering equipment of|
|the base under|
|construction|
|Shield machine parts|
|project|
|Infrastructure construction|
|of Nanhui Base|
|Large mechanical|
|reconstruction and|
|upgrading project|

||
|-|
|6,465,698,000|
|8,645,540,000|
|4,832,518,861|
|99,956,500|
|504,500,000|
|709,925,368|

||
|-|
|53,892,601|
|16,743,055|
|3,202,580,355|
|55,402,134|
|5,888,313|
|690,943,003|

||
|-|
|7,993,285|
|18,781,424|
|728,933,794|
|44,296,307|
|1,329,915|
|8,046,405|

||
|-|
|(8,377,131|
|(5,037,121|
|(2,808,306,121|
|(25,191,141|
|(3,324,786|
|(95,203,136|

||
|-|
|-|
|(245,146|
|-|
|-|
|-|
|-|

||
|-|
|53,508,755|
|30,242,212|
|1,123,208,028|
|74,507,300|
|3,893,442|
|603,786,272|

 4,025,449,461 809,381,130 (2,945,439,436 ) (245,146) 1,889,146,009 The changes of major construction in process in 2016 are as follows:
Opening Increase in Transfer-in fixed Transfer-in Closing balance balance current year assets in current intangible assets
Budget
year (15 in Note in current year
V) (17 in Note V)
||
|-|
|Infrastructure construction|
|of Nantong Base|
|Infrastructure construction|
|of Changxing Base|
|Large machinery and|
|engineering equipment of|
|the base under|
|construction|
|Office building and|
|ancillary facilities|
|Shield machine parts|
|project|
|Infrastructure construction|
|of Nanhui Base|
|Large mechanical|
|reconstruction and|
|upgrading project|

||
|-|
|6,465,698,000|
|8,645,540,000|
|3,916,155,861|
|5,000,000|
|99,956,500|
|504,500,500|
|700,000,000|

||
|-|
|29,440,311|
|32,251,760|
|2,889,709,277|
|606,274|
|-|
|3,893,441|
|621,470,441|

||
|-|
|28,515,986|
|6,100,428|
|639,000,626|
|-|
|55,402,134|
|1,994,872|
|70,559,008|

||
|-|
|(4,063,696|
|(21,609,133|
|(322,437,123|
|(606,274|
|-|
|-|
|(1,086,446|

||
|-|
|-|
|-|
|(3,692,425|
|-|
|-|
|-|
|-|

||
|-|
|53,892,601|
|16,743,055|
|3,202,580,355|
|-|
|55,402,134|
|5,888,313|
|690,943,003|

 3,577,371,504 801,573,054 (349,802,672) (3,692,425 ) 4,025,449,461 The changes of major construction in process in 2017 are as follows:
Proportion of Work Accumulative Including: Interest Interest Source of funds project investment progress(Not amount of interest capitalization in capitalization
inbudget% e1)% capitalization current year rate in current
year%
||
|-|
|Infrastructure construction of|
|Nantong Base|
|Infrastructure construction of|
|Changxing Base|
|Large machinery and engineering|
|equipment of the base under|
|construction|
|Shield machine parts project|
|Infrastructure construction of|
|Nanhui Base|
|Large mechanical reconstruction|
|and upgrading project|

||
|-|
|99|
|82|
|85|
|99|
|91|
|98|

||
|-|
|99|
|82|
|85|
|99|
|91|
|98|

||
|-|
|-|
|23,531,836|
|96,492,705|
|5,762,616|
|-|
|-|

||
|-|
|-|
|-|
|-|
|5,494,319|
|-|
|-|

||
|-|
|-|
|-|
|-|
|4.75|
|-|
|-|

||
|-|
|Own funds and|
|bank loans|
|Own funds and|
|bank loans|
|Own funds and|
|bank loans|
|Bank loans|
|Own funds|
|Own funds|

125,787,157 5,494,319
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
16. Construction in process (continued)
The changes of major construction in process in 2016 are as follows:
Proportion of Work Accumulative Including: Interest Source of project progress( amount of Interest capitalizatio funds investment in Note1)% interest capitalizatio n rate in
budget% capitalization n in current current
year year%
|||
|-|-|
|Infrastructure construction||
|of Nantong Base|99|
|Infrastructure construction||
|of Changxing Base|82|
|Large machinery and||
|engineering equipment of||
|the base under||
|construction|87|
|Office building and||
|ancillary facilities|100|
|Shield machine parts||
|project|55|
|Infrastructure construction||
|of Nanhui Base|91|
|Large mechanical||
|reconstruction and||
|upgrading project|99|

||
|-|
|99|
|82|
|87|
|100|
|55|
|91|
|99|

||
|-|
|-|
|23,531,836|
|96,492,705|
|-|
|268,297|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|
|268,297|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|
|4.75|
|-|
|-|

||
|-|
|Own funds|
|and bank|
|loans|
|Own funds|
|and bank|
|loans|
|Own funds|
|and bank|
|loans|
|Own funds|
|Bank loans|
|Own funds|
|Own funds|

 120,292,838 268,297
Note 1: The work progress shall be estimated based on the budget and accumulated investments.
17. Intangible assets
Land use right Software usage Know-how Total fee
Original cost
||
|-|
|4,262,474,969|
|-|
|34,603,859|

||
|-|
|52,118,848|
|245,146|
|2,682,840|

||
|-|
|65,201,810|
|-|
|-|

||
|-|
|4,379,795,627|
|245,146|
|37,286,699|

 Closing balance 4,297,078,828 55,046,834 65,201,810 4,417,327,472 Accumulated amortization
||
|-|
|555,310,659|
|86,920,486|

||
|-|
|35,762,796|
|6,688,876|

||
|-|
|44,273,566|
|5,205,481|

||
|-|
|635,347,021|
|98,814,843|

 Closing balance 642,231,145 42,451,672 49,479,047 734,161,864 Book value
||
|-|
|3,654,847,683|
|3,707,164,310|

||
|-|
|12,595,162|
|16,356,052|

||
|-|
|15,722,763|
|20,928,244|

||
|-|
|3,683,165,608|
|3,744,448,606|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
17. Intangible assets (continued)
2016
Land use right Software usage Know-how Total fee
Original cost
||
|-|
|4,246,345,484|
|-|
|16,129,485|

||
|-|
|46,219,868|
|3,692,425|
|2,206,555|

||
|-|
|65,201,810|
|-|
|-|

||
|-|
|4,357,767,162|
|3,692,425|
|18,336,040|

 Closing balance 4,262,474,969 52,118,848 65,201,810 4,379,795,627 Accumulated
amortization
||
|-|
|467,548,195|
|87,762,464|

||
|-|
|33,094,826|
|2,667,970|

||
|-|
|37,686,275|
|6,587,291|

||
|-|
|538,329,296|
|97,017,725|

 Closing balance 555,310,659 35,762,796 44,273,566 635,347,021 Book value
||
|-|
|3,707,164,310|
|3,778,797,289|

||
|-|
|16,356,052|
|13,125,042|

||
|-|
|20,928,244|
|27,515,535|

||
|-|
|3,744,448,606|
|3,819,437,866|

 In 2017, the Group totally expended RMB 702,392,513 Yuan onR&D (2016: RMB 851,544,356 Yuan, see Note V (48)).The expenses were not capitalized. Above mentioned intangible assets as of Dec. 31, 2017 and Dec. 31, 2016 excluded any expenditure onR&D
As of Dec. 31, 2017, there was no mortgage of the loan in the intangible assets.
As of Dec. 31, 2017, the intangible assets not completing the certificate of title were as follows:
Book value Reason for not completing the
certificate of title
||
|-|
|395,895,729|

||
|-|
|Application for property right under|
|approval|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
18. Goodwill
2017
Opening Increase in Reduction Closing balance current year in current balance year
||
|-|
|149,212,956|
|-|
|-|
|149,212,956|

||
|-|
|-|
|5,412,807|
|110,562,702|
|115,975,509|

||
|-|
|-|
|-|
|-|
|-|

||
|-|
|149,212,956|
|5,412,807|
|110,562,702|
|265,188,465|

 2016
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|149,212,956|

||
|-|
|-|

||
|-|
|-|

||
|-|
|149,212,956|

 The Group acquired Verspannen B.V. and Greenland Heavylift (Hong Kong) Limited (“GHHL”) respectively in April 2017 and June 2017, forming the goodwill of RMB 5,412,807 Yuan and RMB 110,562,702 Yuan respectively. The calculation process is given in Note VI.1.
As of Dec, 31, 2017, the Group did not accrue the goodwill depreciation reserves. In impairment testing, the book value of the goodwill is allocated to asset group portfolio benefiting from synergistic effect of expected business combination.
The goodwill acquired from business combination has been distribution to the following asset group for impairment testing:
 Heavy equipment asset group
 GHHL semi-submerged ship transport assets group
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Heavy equipment asset group
The recoverable amount of heavy equipment asset group is measured based on five-year budget approved by the management and shall be measured with cash flow forecast method. Cash flow over 5-year period shall be calculated based on the estimated growth rate.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
18. Goodwill (continued)
Main assumptions based on future cash flow discount method:
Growth rate in forecast period 9.09%-14.37% Perpetual growth rate 3% Gross profit rate 13.87%-15.28% Discount rate 11% GHHL semi-submerged ship transport assets group
The recoverable amount of GHHL semi-submerged ship transport assets group is determined based on the expected future cash flow of the asset group, and the expected future cash flow is determined according to the cash flows based on the customized short-distance and long-distance transport service contract revenue expected to be obtained within the service life of vessel and general charter party revenue
Main assumptions based on future cash flow discount method:
Number of customized short-distance
and long-distance transport service
contracts expected to be obtained 3 /year/vessel; Vessel utilization rate of general charter party 65% Charter rate of general charter party 65,000 USD/day Discount rate 11% The distributions of the book value of goodwill to asset groups are as follows: Heavy equipment asset group GHHL semi-submerged ship transport assets group Total 2017 2016 2017 2016 2017 2016 Book amount of goodwill 154,625,763 149,212,956 110,562,702 - 265,188,465 149,212,956 The perpetual growth rate adopted by the management is consistent with the forecast data contained in the industry report, and shall not exceed the long-term average growth rate of the industry. Based on the historical experience and the forecasts of market development, the management determines the budget gross profit rate and adopts the pretax interest rate which can reflect the specific risk of relevant asset group portfolio as the discount rate. The above assumptions are used to analyze the recoverable amount of the asset group portfolio.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
19. Long-term deferred expenses
2017
Opening Increase in Amortizatio Other Closing balance current n in current reductions balance year year
||
|-|
|10,881,263|

||
|-|
|-|

||
|-|
|(3,116,762|

||
|-|
|-|

||
|-|
|7,764,501|

 2016
Opening Increase in Amortization Other Closing balance current year in current reductions balance year
||
|-|
|4,592,043|

||
|-|
|9,545,510|

||
|-|
|(3,256,290|

||
|-|
|-|

||
|-|
|10,881,263|

 20. Deferred income tax assets/liabilities
Deferred income tax assets before offset:
2017 2016
Deductible Deferred income Deductible Deferred income temporary tax assets temporary tax assets difference difference
||
|-|
|Assets depreciation|
|reserves|
|Unrealized profit of|
|internal transaction|
|Predicted liabilities|
|Unpaid wages and|
|salaries|
|Unpaid interest|
|Deferred income|

||
|-|
|3,492,989,876|
|93,487,825|
|451,642,802|
|27,824,781|
|102,690,137|
|90,237,676|

||
|-|
|526,410,350|
|14,515,523|
|67,746,420|
|4,173,717|
|15,403,520|
|13,535,651|

||
|-|
|3,034,109,090|
|141,961,692|
|285,223,845|
|27,802,006|
|128,368,841|
|47,536,247|

||
|-|
|455,116,363|
|22,041,889|
|42,783,577|
|4,170,301|
|19,255,326|
|7,130,437|

Special reserves 1,234,252 185,138 - -
Deductible loss 8,441,406 1,266,211 6,815,216 1,022,282
4,268,548,755 643,236,530 3,671,816,937 551,520,175
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
20. Deferred income tax assets/liabilities (continued)
Deferred income tax liabilities not offset:
2017 2016
Taxable Deferred Taxable Deferred temporary income tax temporary income tax differences liabilities differences liabilities
||
|-|
|Depreciation of fixed assets|
|Changes in fair value of the|
|financial assets measured at|
|fair value with changes|
|included in current profits|
|and losses|
|Changes in fair value of|
|financial assets|
|available-for-sale|
|Assets appreciation from|
|business combination under|
|the same control|

||
|-|
|814,903,900|
|-|
|323,568,551|
|154,879,706|

||
|-|
|134,459,143|
|-|
|50,953,384|
|23,231,959|

||
|-|
|409,482,226|
|4,615,775|
|332,937,152|
|166,224,963|

||
|-|
|74,116,286|
|692,369|
|50,495,661|
|24,933,745|

 1,293,352,157 208,644,486 913,260,116 150,238,061 The net amounts of deferred income tax assets and deferred income tax
liabilities after offset are listed as follows:
2017 2016
Offset amount Balance after Offset amount Balance after offset offset
||
|-|
|Deferred income tax|
|assets|
|Deferred income tax|
|liabilities|

||
|-|
|25,182,166|
|25,182,166|

||
|-|
|618,054,364|
|183,462,320|

||
|-|
|46,073,488|
|46,073,488|

||
|-|
|505,446,687|
|104,164,573|

 The unrecognized deductible loss and temporary difference of deferred income tax assets are as follows:
2017 2016 Deductible temporary difference 154,900,393 42,779,534 Deductible loss 1,336,383,846 1,276,126,566
1,491,284,239 1,318,906,100
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
20. Deferred income tax assets/liabilities (continued)
The unrecognized deductible loss of deferred income tax assets shall mature or be returned in the following years:
2017 2016
||
|-|
|2017|
|2018|
|2019|
|2020|
|2021|

||
|-|
|-|
|257,678,634|
|320,476,005|
|373,462,715|
|111,737,653|

||
|-|
|185,000,368|
|262,745,183|
|341,404,744|
|373,462,715|
|113,513,556|

 2022 273,028,839 - 1,336,383,846 1,276,126,566 21. Other non-current assets
2017 2016 Advance payment for vessels 148,060,378 - Advance payment for office 28,666,235 - buildings
176,726,613 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
22. Assets depreciation reserves
2017
Reduction in current year
Opening Proportion in Reversal Write-off Closing balance current year balance
||
|-|
|1,377,551,325|
|1,339,875,923|
|37,675,402|
|451,818,774|
|1,277,578,883|
|30,000,000|
|3,136,948,982|

||
|-|
|596,087,396|
|248,322,946|
|347,764,450|
|217,630,192|
|424,173,477|
|-|
|1,237,891,065|

||
|-|
|(260,398,100|
|(252,797,089|
|(7,601,011|
|(143,381,459|
|(9,275,058|
|-|
|(413,054,617|

||
|-|
|-|
|-|
|-|
|(236,339,833|
|(85,910,234|
|-|
|(322,250,067|

||
|-|
|1,713,240,621|
|1,335,401,780|
|377,838,841|
|289,727,674|
|1,606,567,068|
|30,000,000|
|3,639,535,363|

 2016
Reduction in current year
Opening balance Proportion in Reversal Write-off Closing current year balance
||
|-|
|1,164,911,298|
|1,136,848,761|
|28,062,537|
|403,444,523|
|568,152,935|
|30,000,000|

||
|-|
|219,476,506|
|209,863,641|
|9,612,865|
|389,393,155|
|896,936,113|
|-|

||
|-|
|(4,997,815|
|(4,997,815|
|-|
|(186,569,706|
|(93,122,078|
|-|

||
|-|
|(1,838,664|
|(1,838,664|
|-|
|(154,449,198|
|(94,388,087|
|-|

||
|-|
|1,377,551,325|
|1,339,875,923|
|37,675,402|
|451,818,774|
|1,277,578,883|
|30,000,000|

 2,166,508,756 1,505,805,774 (284,689,599 ) (250,675,949 ) 3,136,948,982
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
23. Short-term loans
2017 2016 Debt of honor 22,214,681,401 18,618,358,297 Guarantee loan (i) 3,254,299,000 2,863,171,000 Pledged loan (ii) - 4,390,096 25,468,980,401 21,485,919,393 On Dec. 31, 2017, the annual interest rate of above loans was1.1%~4.79% (Dec. 31, 2016:0.81%~5.65%).
(i) As of Dec. 31, 2017, the bank guarantee loan of 265,000,000 USD, equivalent to RMB 1,731,563,000 Yuan (Dec. 31, 2016: 191,500,000 USD, equivalent to RMB 1,328,435,500 Yuan) was the bank loans borrowed by the subsidiary of the Company, which was guaranteed by the letter of guarantee issued by the bank for the Company within the scope of credit.
As of Dec. 31, 2017, the bank guarantee loan of RMB 1,000,000,000 Yuan (Dec. 31, 2016: RMB 900,000,000 Yuan) was the bank loan borrowed by the Company, and the subsidiaries of Company provided joint and several liability repayment guarantee.
As of Dec. 31, 2017, the bank guarantee loan of 80,000,000 USD, equivalent to RMB 522,736,000 Yuan (Dec. 31, 2016: 91,500,000 USD, equivalent to RMB 634,735,500 Yuan) was the bank loan borrowed by the Company, and the subsidiaries of Company provided joint and several liability repayment guarantee.
(ii) As of Dec. 31, 2017, the Company had no pledged loan (Dec. 31, 2016: RMB 4,390,096 Yuan). Refer to Note V (3).
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
24. Notes payable
2017 2016 Bank acceptance bill 1,893,227,482 1,905,121,706 25. Accounts payable
2017 2016
||
|-|
|6,189,910,557|
|303,044,496|
|81,145,537|
|309,201,127|
|4,296,454|

||
|-|
|4,853,217,936|
|121,413,650|
|86,257,192|
|37,826,248|
|4,303,871|

 6,887,598,171 5,103,018,897 The aging analysis of accounts payable is as follows:
2017 2016
Amount Proportion in Amount Proportion in total totalamount% amount%
||
|-|
|Within 1 year|
|Over 1 year|

||
|-|
|5,301,236,729|
|1,586,361,442|

||
|-|
|77|
|23|

||
|-|
|3,749,654,509|
|1,353,364,388|

||
|-|
|73|
|27|

 6,887,598,171 100 5,103,018,897 100 As of Dec. 31, 2017, the accounts payable aged over 1 year were mainly the purchase receivable for imported parts, which had not been liquidated.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
26. Advances from customers
2017 2016
||
|-|
|591,727,255|

||
|-|
|292,941,206|

 The aging analysis of advances from customers is as follows:
Dec. 31, 2017 Dec. 31, 2016
Amount Propor Amount Propor tion in tion in total total amoun amount% t%
||
|-|
|Within 1 year|
|Over 1 year|

||
|-|
|474,250,196|
|117,477,059|

||
|-|
|80|
|20|

||
|-|
|268,730,790|
|24,210,416|

||
|-|
|92|
|8|

 591,727,255 100 292,941,206 100 As of Dec. 31, 2017, the advances from customers aged over 1 year mainly included the hull construction and spare parts sales money received in advance, which had not been liquidated.
V. Notes to Main Items of Consolidated Financial Statements (continued)
27. Employee remuneration payable
2017 2016
||
|-|
|272,766,860|
|966,347|

||
|-|
|263,414,249|
|1,135,507|

273,733,207 264,549,756
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
27. Employee remuneration payable (continued)
The short-term compensation is as follows:
2017
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|228,974,939|
|-|
|620,676|
|515,155|
|73,131|
|32,390|
|463,700|
|33,354,934|
|-|

||
|-|
|1,331,833,695|
|46,449,241|
|118,832,051|
|100,110,487|
|9,302,735|
|9,418,829|
|116,585,167|
|26,132,282|
|6,230,457|

||
|-|
|(1,323,727,003|
|(46,449,241|
|(118,898,275|
|(100,180,148|
|(9,306,528|
|(9,411,599|
|(116,569,481|
|(24,946,183|
|(6,120,099|

||
|-|
|237,081,631|
|-|
|554,452|
|445,494|
|69,338|
|39,620|
|479,386|
|34,541,033|
|110,358|

 263,414,249 1,646,062,893 (1,636,710,282 ) 272,766,860 2016
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|222,647,867|
|-|
|747,129|
|614,763|
|98,397|
|33,969|
|435,294|
|32,476,555|
|-|

||
|-|
|1,223,482,995|
|24,847,047|
|123,657,388|
|104,976,902|
|8,787,233|
|9,893,253|
|113,233,900|
|19,136,815|
|8,424,852|

||
|-|
|(1,217,155,923|
|(24,847,047|
|(123,783,841|
|(105,076,510|
|(8,812,499|
|(9,894,832|
|(113,205,494|
|(18,258,436|
|(8,424,852|

||
|-|
|228,974,939|
|-|
|620,676|
|515,155|
|73,131|
|32,390|
|463,700|
|33,354,934|
|-|

256,306,845 1,512,782,997 (1,505,675,593) 263,414,249
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
27. Employee remuneration payable (continued)
The defined contribution plans are as follows:
2017
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|Basic endowment|
|insurance premium|
|Supplementary|
|endowment|
|insurance premium|
|Unemployment|
|insurance expense|

||
|-|
|1,079,153|
|-|
|56,354|

||
|-|
|212,439,518|
|49,316,808|
|6,880,759|

||
|-|
|(212,577,142|
|(49,316,808|
|(6,912,295|

||
|-|
|941,529|
|-|
|24,818|

 1,135,507 268,637,085 (268,806,245) 966,347 2016
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|Basic endowment|
|insurance premium|
|Supplementary|
|endowment|
|insurance premium|
|Unemployment|
|insurance expense|

||
|-|
|1,429,703|
|-|
|86,062|

||
|-|
|216,311,014|
|48,394,936|
|11,665,639|

||
|-|
|(216,661,564|
|(48,394,936|
|(11,695,347|

||
|-|
|1,079,153|
|-|
|56,354|

 1,515,765 276,371,589 (276,751,847) 1,135,507 28. Tax payable
2017 2016
||
|-|
|58,341,748|
|98,206,405|
|12,386,558|
|1,758,287|
|2,018,432|
|22,237,497|

||
|-|
|72,920,316|
|142,223,431|
|4,734,973|
|2,720,271|
|2,561,018|
|25,840,715|

194,948,927 251,000,724
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
29. Interest payable
2017 2016
||
|-|
|118,825,582|
|-|

||
|-|
|79,127,386|
|61,068,417|

 118,825,582 140,195,803 30. Dividend payable
2017 2016
||
|-|
|25,079,494|
|6,269,873|
|346,005|
|6,593|

||
|-|
|25,079,494|
|6,269,873|
|346,005|
|6,593|

 31,701,965 31,701,965 As of Dec. 31, 2017, the dividend payable aged over 1 year of RMB 31,701,965 Yuan (Dec. 31, 2016: RMB 31,701,965 Yuan) was because the minority shareholder of related party had not requested for actual payment by the Group.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
31. Other payables
2017 2016 Engineering deposit and quality
guarantee deposit 225,779,472 278,510,650 Payables to related party 133,772,685 308,637,187 Investment section payable to
China Communications
Construction Company Ltd. (i) 100,971,833 100,971,833
||
|-|
|38,700,000|
|193,456,139|

||
|-|
|523,000,000|
|14,015,758|

 692,680,129 1,225,135,428 (i) The Group completed the cancellation of a subsidiary in the year 2011. RMB 25,971,833 Yuan in the balance was the investment liquidation fund payable by the Group and attributable to China Communications Construction Company Ltd., another shareholder of the subsidiary; meanwhile, the Group completed the merger and acquisition of the subsidiary of CCCC under the same control in 2015, and RMB 75,000,000 Yuan in the balance was the purchase fund payable by the Group to China Communications Construction Company Ltd.
The aging analysis of other payables is as follows:
Dec. 31, 2017 Dec. 31, 2016
Amount Propor Amount Propotion% rtion%
||
|-|
|Within 1 year|
|Over 1 year|

||
|-|
|355,748,932|
|336,931,197|

||
|-|
|51|
|49|

||
|-|
|978,705,261|
|246,430,167|

||
|-|
|80|
|20|

 692,680,129 100 1,225,135,428 100 As of Dec. 31, 2017, the other payables aged over 1 year were mainly the investment section payable to China Communications Construction
Company Ltd., payable deposit and quality guarantee deposited
collected from outsourcing engineering team and payables to related
party.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
32. Non-current liabilities due within one year
2017 2016
||
|-|
|1,343,956,000|
|854,975,219|

||
|-|
|270,000,000|
|529,574,356|

 2,198,931,219 799,574,356 33. Other current liabilities
2017 2016
||
|-|
|2016 short-term commercial paper Series 1|
|2016 Super & Short-term Commercial|
|Paper Series 1|

||
|-|
|-|
|-|

||
|-|
|1,998,695,891|
|1,997,329,444|

 - 3,996,025,335 The short-term bonds payable are as follows:
Total par value Issue cost Issue cost Repayment in Dec. 31, 2017 amortization current period
|||
|-|-|
|2017||
|2016 short-term||
|commercial||
|paper Series 1|2,000,000,000|
|2016 Super &||
|Short-term||
|Commercial||
|Paper Series 1|2,000,000,000|

||
|-|
|(4,000,000|
|(3,450,000|

||
|-|
|4,000,000|
|3,450,000|

||
|-|
|-|
|-|

 Total par value Issue cost Issue cost Repayment in Dec. 31, 2016 amortization current period
||
|-|
|2016|
|2016|
|short-term|
|commercial|
|paper Series|
|1|
|2016 Super &|
|Short-term|
|Commercial|
|Paper Series|
|1|

||
|-|
|2,000,000,000|
|2,000,000,000|

||
|-|
|(4,000,000|
|(3,450,000|

||
|-|
|2,695,891|
|779,444|

||
|-|
|1,998,695,891|
|1,997,329,444|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
33. Other current liabilities (continued)
As approved by NAFMII ZSXZ (2016) No. SCP321 Notice on Acceptance of Registration, the Document of National Association of Financial Market Institutional Investors (NAFMII), the registered amount for issuing Super& Short-term Commercial Paper by the Company was RMB 10,000,000,000 Yuan which would be valid for 2 years from Oct. 19, 2016.
The Company issued 2016 short-term commercial paper Series 1 of RMB 2,000,000,000 Yuan on Apr. 28, 2016, with the tenor of 1 year and the coupon annual rate of3.7%, the maturity date would be Apr. 29, 2017 and the capital with interest would be repaid at maturity.
The Company issued the 2016 Super& Short-term Commercial Paper Series 1 of RMB 2,000,000,000 Yuan on Oct. 28, 2016, with the tenor of 270 days and the coupon annual rate of3.2%, the maturity date would be July 28, 2017 and the capital with interest would be repaid at maturity.
The bonds above have no mortgage or guarantee.
34. Long-term loans
2017 2016
||
|-|
|6,616,010,383|
|326,710,000|
|1,066,150,000|
|8,008,870,383|
|(971,446,000|
|(326,710,000|
|(45,800,000|
|(1,343,956,000|

||
|-|
|3,121,485,497|
|346,850,000|
|727,000,000|
|4,195,335,497|
|-|
|-|
|(270,000,000|
|(270,000,000|

6,664,914,383 3,925,335,497
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
34. Long-term loans (continued)
As of Dec. 31, 2017, the annual interest rate of the above loans was1.20% -5.13% (Dec. 31, 2016:1.20% -6.89%).
(i) As of Dec. 31, 2017, the bank guarantee loan of 50,000,000 USD, equivalent to RMB 326,710,000 Yuan (Dec. 31, 2016: 50,000,000 USD, equivalent to RMB 346,850,000 Yuan), was the bank loan borrowed by the subsidiary of the Company in Hong Kong, and the guarantee was provided by the Company. The interest shall be paid quarterly and the principal shall be paid at maturity on July 27, 2018.
(ii) As of Dec. 31, 2017, the total amount of multiple pledged loans of RMB 1,066,150,000Yuan (Dec. 31, 2016: RMB 727,000,000 Yuan) took the long-term accounts receivable of the “construction-transfer” project of the Group as pledge (Note V, 12). The interest shall be paid quarterly, and the principal shall be paid at maturity between June 21, 2020 and Dec. 31, 2026 (Dec 31, 2016: the principal shall be paid respectively between June 21, 2017 and Nov. 25, 2018).
35. Long-term payables
2017 2016
||
|-|
|2,550,179,975|
|108,466,881|
|81,314,696|
|(854,975,219|

||
|-|
|2,082,370,386|
|65,565,134|
|-|
|(529,574,356|

 1,884,986,333 1,618,361,164
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
35. Long-term payables (continued)
(i) Dec. 31, 2017, the long-term payables of RMB 2,550,179,975 Yuan (Dec. 31, 2016: 2,082,370,386 Yuan) were obtained from the vessel with the book value of RMB 3,687,007,865 Yuan (Dec. 31, 2016: RMB 1,882,864,040 Yuan) (Note V, 15) and the mechanical equipment with book value of RMB 437,072,634 Yuan (Dec. 31, 2016: RMB 555,450,350 Yuan) (Note V, 15) in sale and leaseback transaction way from the financial leasing company, with the financing maturity of4~6 years (Dec. 31, 2016:4~6 years). The Group pays the sale and leaseback financing fund on schedule each year in accordance with the contract terms. The Group takes the above series of transactions as mortgage loans for accounting treatment.
(ii) The Group and the Construction Party of “construction-transfer” project agreed that part of the project payments would 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 will be paid between 2020 and 2022.
36. Predicted liabilities
2017
Opening Increase in Reduction in
Closing balance balance current year current year
|||||
|-|-|-|-|
|Estimated after-sales||||
|service cost|290,216,116|285,144,031|(198,844,436|
|Product quality assurance|241,517|524,561|(251,616|

||
|-|
|376,515,711|
|514,462|

 Litigation compensation (i) - 85,200,340 - 85,200,340
|||||
|-|-|-|-|
|Others|2,658,150|-|-|

||||
|-|-|-|
|293,115,783|370,868,932|(199,096,052|

 2016
Opening Increase in Reduction in Closing balance current year current year balance
|||
|-|-|
|Estimated||
|after-sales service||
|cost|216,306,557|
|Product quality||
|assurance|1,176,471|
|Others|2,658,150|

||
|-|
|235,780,889|
|-|
|-|

||
|-|
|(161,871,330|
|(934,954|
|-|

||
|-|
|290,216,116|
|241,517|
|2,658,150|

220,141,178 235,780,889 (162,806,284 ) 293,115,783
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
36. Predicted liabilities (continued)
(i) In 2008, the Company and Fluor Limited (hereinafter referred to as “Fluor”) signed an agreement on sales and installation for wind power steel pipe pile products for the British Wind Power Project. In the project construction process, the Company and Fluor, by way of friendly consultations and in the spirit of good cooperation, maintained the normal dispute settlement and communication mechanism. In 2010, for the issues in contract execution process, after reviewed by the board of directors of the Company, the Company signed a mutual exemption letter with Fluor, and settled the remaining payment in 2011. Afterwards, Flour lodged a quality claim against the Company, and requested the payment of the demand quality guarantee issued by the Company, while the Company rejected the claim. On March 20, 2014, Flour cashed the above letter of guarantee with the amount of 23,409,750 EUR in the bank opening the letter of guarantee.
In September 2014, Flour initiated proceedings for the breach attributed to 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 total compensation of 250 million Pounds for additional test and repair cost, project period delay and other related loss (including the cashed letter of guarantee amount of 23,409,750 EUR). 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, June of 2016, British High Court TCC court was in trial for first instance on obligation part. In May 2017, the trial of quantitative part of this case was conducted. In July 2017, both parties exchanged the written final address. In Aug. 2017, the proceeding at law for the quantitative part of this case was settled.
On Jan. 11, 2018, the court made quantized judgment on this case and adjudicated this Company to pay USD 5,893,591 dollars, 15,033,681 pounds, 7,165,740 Euro dollars, 7,259 Canadian dollars and RMB 485,346 Yuan to Flour. On Mar. 16, 2018, the court made the judgment on the interest and adjudicated this Company to pay 3,518,549 pounds to Flour. However, the legal cost and other expenses related to the judgment amount were additionally measured. The above amount is equivalent to RMB 85,200,340 Yuan.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
37. Deferred income
2017
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|Governmental|
|subsidy|
|Land compensation|

||
|-|
|370,780,323|
|80,255,701|

||
|-|
|69,526,880|
|25,030,000|

||
|-|
|(64,068,935|
|(2,349,849|

||
|-|
|376,238,268|
|102,935,852|

 451,036,024 94,556,880 (66,418,784) 479,174,120 2016
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|Governmental|
|subsidy|
|Land compensation|

||
|-|
|323,237,563|
|82,188,384|

||
|-|
|70,020,819|

||
|-|
|(22,478,059|
|(1,932,683|

||
|-|
|370,780,323|
|80,255,701|

 405,425,947 70,020,819 (24,410,742) 451,036,024 As of Dec. 31, 2017, the liabilities involving governmental subsidy were as follows:
Opening Newly Included in Other Closing balance increase in other changes balance current year revenues of
current year
||
|-|
|92,500,000|
|41,125,500|
|25,620,000|
|19,510,000|
|17,945,000|
|14,860,000|
|14,000,000|
|12,810,000|
|10,000,000|
|10,000,000|
|9,208,000|
|9,192,339|
|8,400,000|
|8,000,000|
|7,200,000|

||
|-|
|-|
|175,000|
|-|
|-|
|13,500,000|
|-|
|-|
|-|
|-|
|7,000,000|
|-|
|-|
|8,560,000|
|-|
|-|

||
|-|
|-|
|-|
|(800,000|
|(1,370,200|
|(30,000,000|
|-|
|(373,333|
|-|
|-|
|-|
|-|
|(1,495,018|
|-|
|-|
|(7,200,000|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|(3,420,000|
|-|
|-|
|(675,000|
|-|
|(2,550,000|
|-|
|-|

||
|-|
|92,500,000|
|41,300,500|
|24,820,000|
|18,139,800|
|1,445,000|
|14,860,000|
|13,626,667|
|9,390,000|
|10,000,000|
|17,000,000|
|8,533,000|
|7,697,321|
|14,410,000|
|8,000,000|
|-|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
||
|-|
|6,000,000|
|5,906,250|
|5,572,000|
|3,500,000|
|2,560,000|
|1,444,000|

||
|-|
|-|
|1,000,000|
|-|
|2,370,000|
|-|
|-|

||
|-|
|-|
|(2,875,000|
|-|
|(2,060,000|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|
|-|
|(321,100|

||
|-|
|6,000,000|
|4,031,250|
|5,572,000|
|3,810,000|
|2,560,000|
|1,122,900|

 Intelligent manufacturing workshop for
crane box of automated terminal - 16,860,000 - (2,688,204 ) 14,171,796 Retractable boarding trestle systemR&D
project - 2,160,300 - - 2,160,300 Others 45,427,234 17,901,580 (5,158,580 ) (3,082,500 ) 55,087,734 370,780,323 69,526,880 (51,332,131 ) (12,736,804 ) 376,238,268
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
37. Deferred income (continued)
As of Dec. 31, 2016, the liabilities involving governmental subsidy are as follows:
Opening Newly increase Included in Other changes Closing balance in current year non-operatin balance g business
of current
year
||
|-|
|92,500,000|
|43,125,500|
|25,620,000|
|19,510,000|
|5,985,000|
|5,360,000|
|14,000,000|
|13,650,000|
|8,000,000|
|5,300,000|
|7,000,000|
|10,250,000|
|8,000,000|
|-|
|17,900,000|
|-|
|-|
|5,340,000|
|-|
|-|
|-|
|41,697,063|

||
|-|
|-|
|-|
|-|
|-|
|12,600,000|
|9,500,000|
|-|
|3,040,000|
|2,000,000|
|4,700,000|
|3,000,000|
|-|
|400,000|
|8,000,000|
|-|
|6,000,000|
|7,000,000|
|232,000|
|3,500,000|
|3,200,000|
|2,030,000|
|4,818,819|

||
|-|
|-|
|(2,000,000|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|(1,057,661|
|-|
|-|
|(10,700,000|
|-|
|(1,093,750|
|-|
|-|
|-|
|-|
|(960,751|

||
|-|
|-|
|-|
|-|
|-|
|(640,000|
|-|
|-|
|(3,880,000|
|-|
|-|
|(792,000|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|(640,000|
|(586,000|
|(127,897|

||
|-|
|92,500,000|
|41,125,500|
|25,620,000|
|19,510,000|
|17,945,000|
|14,860,000|
|14,000,000|
|12,810,000|
|10,000,000|
|10,000,000|
|9,208,000|
|9,192,339|
|8,400,000|
|8,000,000|
|7,200,000|
|6,000,000|
|5,906,250|
|5,572,000|
|3,500,000|
|2,560,000|
|1,444,000|
|45,427,234|

 323,237,563 70,020,819 (15,812,162 ) (6,665,897 ) 370,780,323 The above governmental subsidies are related to income.
Other changes in current year are theR&D subsidies allocated to the
partner in accordance with the research and development agreement.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Land compensation refers to the land compensation acquired by the subsidiary of the Company, which shall be amortized over the 50years’ land use term.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
38. Other non-current liabilities
2017 2016 Stay-recognition tax 152,954,098 56,025,416 On balance sheet date, the income of some construction contracts and interest income of “construction-transfer” projects of the Company had not reached the time point of the VAT liability. In accordance with the requirements of the Provisions on Accounting Treatment of VAT (CK 2016 No.[22]), the Group reclassified the ending credit balance of the item “Tax payable - Stay-recognition tax” from “Tax payable” to “Other non-current liabilities” and listed in the balance sheet.
39. Capital stock
2017
Changes in current year
Issue of Issue Share Other Closing new of increase s balance Opening Subtot
shares bonus from
balance al
share accumulati
on fund
|||
|-|-|
|Unrestricted||
|shares||
|-RMB common||
|stock|2,768,331,384|
|-Foreign capital||
|stock listed in||
|China|1,621,963,200|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|2,768,331,384|
|1,621,963,200|

 4,390,294,584 - - - - - 4,390,294,584 2016
Changes in current year Closing balance Issue of Issue Share Other
new of increase s
Opening Subtot
shares bonus from
balance al
share accumulati
on fund
|||
|-|-|
|Unrestricted shares||
|-RMB common||
|stock|2,768,331,384|
|-Foreign capital||
|stock listed in||
|China|1,621,963,200|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|2,768,331,384|
|1,621,963,200|

4,390,294,584 - - - - - 4,390,294,584
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
40. Capital reserves
2017
Opening Increase Reductio Closing balance in current n in balance year current
year
||
|-|
|Capital stock premium|
|Other capital reserves|
|-Business combination|
|under the same control|
|- Acquisition of minority|
|shareholders’ equity of the|
|subsidiary|
|-Capital reserves|
|transferred-in from original|
|system|

||
|-|
|5,415,833,470|
|(16,203,111|
|(711,345|
|128,059,561|

||
|-|
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|

||
|-|
|5,415,833,470|
|(16,203,111|
|(711,345|
|128,059,561|

 5,526,978,575 - - 5,526,978,575 2016
Opening Increase Reductio Closing balance in current n in balance year current
year
||
|-|
|Capital stock premium|
|Other capital reserves|
|-Business combination|
|under the same control|
|- Acquisition of minority|
|shareholders’ equity of the|
|subsidiary|
|- Capital reserves|
|transferred-in from original|
|system|

||
|-|
|5,415,833,470|
|(16,203,111|
|(711,345|
|128,059,561|

||
|-|
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|
|-|

||
|-|
|5,415,833,470|
|(16,203,111|
|(711,345|
|128,059,561|

5,526,978,575 - - 5,526,978,575
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
41. Other comprehensive income
Accumulative balance of other comprehensive income attributable to parent company in balance sheet table:
Jan. 1, 2016 Changes Dec. 31, 2016 Changes Dec. 31, 2017
|||
|-|-|
||1,256,397|
||198,105,686|
|Converted difference in||
|foreign currency statements|8,298,154|

||
|-|
|4,801,990|
|84,335,801|
|25,605,643|

||
|-|
|6,058,387|
|282,441,487|
|33,903,797|

||
|-|
|(8,449,542|
|(9,826,324|
|(30,234,827|

||
|-|
|(2,391,155|
|272,615,163|
|3,668,970|

 207,660,237 114,743,434 322,403,671 (48,510,693) 273,892,978 Current amount of other comprehensive income in income statement:
2017
Pretax amount Less: Less: income Attributable to Attributable to incurred Included in tax parent minority other companyshareholders’ comprehensiv equity e income in
prior period
and
transferred
into profits
and losses of
current period
||
|-|
|(8,449,542|
|(9,368,601|
|(48,401,660|

||
|-|
|-|
|-|
|-|

||
|-|
|-|
|457,723|
|-|

||
|-|
|(8,449,542|
|(9,826,324|
|(30,234,827|

||
|-|
|-|
|-|
|(18,166,833|

(66,219,803 ) - 457,723 (48,510,693 ) (18,166,833 )
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
2016
Pretax amount Less: Less: income Attributable to Attributable to incurred Included in tax parent minority other companyshareholders’ comprehensi equity ve income in
prior period
and
transferred
into profits
and losses of
current period
||
|-|
|4,801,990|
|101,395,326|
|33,370,647|

||
|-|
|-|
|-|
|-|

|||
|-|-|
|-|4,801,990|
|17,059,525|84,335,801|
|-|25,605,643|

||
|-|
|-|
|-|
|7,765,004|

|||
|-|-|
|17,059,525|114,743,434|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
42． Special reserves
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|-|

||
|-|
|45,958,231|

||
|-|
|(44,043,399|

||
|-|
|1,914,832|

 According to the relevant requirements of the Administrative Measures for the Extraction and Use of Safe Production Costs, the enterprises engaged in large - scale machinery manufacture, engineering construction, etc., shall draw safe production costs according to the standards. Increase and decrease the safe production cost of the Group in current year in accordance with relevant requirements.
43. Surplus reserves
2017
Opening Increase in Reduction in Closing balance balance current year current year
||
|-|
|Statutory|
|surplus|
|reserves|
|Discretionary|
|surplus|
|reserves|

|||
|-|-|
|1,310,744,314|15,420,989|
|292,378,668|-|

||
|-|
|-|
|-|

||
|-|
|1,326,165,303|
|292,378,668|

|||
|-|-|
|1,603,122,982|15,420,989|

 2016
Opening Increase in Reduction in Closing balance current year current year balance
||
|-|
|Statutory|
|surplus|
|reserves|
|Discretionary|
|surplus|
|reserves|

||
|-|
|1,283,722,118|
|292,378,668|

||
|-|
|27,022,196|
|-|

||
|-|
|-|
|-|

||
|-|
|1,310,744,314|
|292,378,668|

1,576,100,786 27,022,196 - 1,603,122,982
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
In accordance with P. R. China Company Law, theCompany’s Article of Association and board meeting resolutions, the Company accrues10% of its net profit as statutory surplus reserve. When the accumulated amount of statutory surplus reserve reaches50% or more 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 was RMB 15,420,989 Yuan in 2017 (2016: RMB 27,022,196 Yuan).
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
44. Undistributed profit
2017 2016
||
|-|
|3,353,936,451|
|300,195,422|
|(15,420,989|
|(439,029,458|

||
|-|
|3,168,538,701|
|212,419,946|
|(27,022,196|
|-|

 Ending undistributed profit 3,199,681,426 3,353,936,451 45. Operating revenue and cost
2017 2016
Cost Revenue Cost Revenue
||
|-|
|Main business|
|Other|
|business|

||
|-|
|21,642,271,179|
|216,542,821|

||
|-|
|17,893,942,874|
|125,132,425|

||
|-|
|24,143,396,762|
|204,691,166|

||
|-|
|19,525,829,470|
|201,834,405|

 21,858,814,000 18,019,075,299 24,348,087,928 19,727,663,875 Main business income and cost are listed below:
2017 2016
Main business Main business Main business Main business income cost income cost
|||
|-|-|
|Container cranes|13,120,859,480|
|Bulk machine||
|members|1,615,504,267|
|Heavy equipment|3,384,886,419|
|Steel structures||
|and related income|1,520,119,032|
|“Construction–tran||
|sfer” project|1,549,820,489|
|Vessel shipping||
|and others|451,081,492|

||
|-|
|9,940,403,610|
|1,551,779,298|
|3,084,117,712|
|1,487,522,614|
|1,548,520,638|
|281,599,002|

||
|-|
|17,082,391,036|
|3,154,983,915|
|1,284,872,909|
|1,035,829,290|
|1,005,087,825|
|580,231,787|

||
|-|
|13,067,811,357|
|3,054,772,000|
|1,279,775,256|
|938,105,979|
|1,019,082,565|
|166,282,313|

21,642,271,179 17,893,942,874 24,143,396,762 19,525,829,470
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
45. Operating revenue and cost (continued)
Other business income and cost are listed below:
2017 2016
Other business Other business Other Other income cost business business cost income
||
|-|
|Sales of materials|
|Equipment leasing|
|and others|

||
|-|
|58,465,010|
|158,077,811|

||
|-|
|58,551,465|
|66,580,960|

||
|-|
|81,273,472|
|123,417,694|

||
|-|
|139,919,381|
|61,915,024|

 216,542,821 125,132,425 204,691,166 201,834,405 46. Taxes and surcharges
2017 2016 Housing property tax 52,506,650 48,028,255 Land use tax 27,395,297 16,874,815 Stamp tax 14,088,249 9,661,367
||
|-|
|9,591,497|
|8,764,726|
|-|
|1,894,225|

||
|-|
|15,645,413|
|12,504,639|
|47,494,080|
|1,967,268|

 114,240,644 152,175,837
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
47. Selling expenses
2017 2016
||
|-|
|58,860,634|
|28,710,299|
|6,616,534|
|5,997,281|
|4,332,045|
|2,394,084|
|2,038,404|
|12,508,611|

||
|-|
|53,604,675|
|24,261,692|
|3,561,444|
|5,063,286|
|1,370,622|
|1,582,134|
|2,866,724|
|8,125,201|

 121,457,892 100,435,778
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
48. Management expenses
2017 2016
||
|-|
|702,392,513|
|480,979,047|
|143,878,907|
|96,889,767|
|74,485,191|
|47,525,626|
|26,877,773|
|26,332,516|
|22,892,275|
|17,283,659|
|14,644,990|
|14,560,712|
|7,083,929|
|5,019,467|
|-|
|61,320,928|
|1,742,167,300|

||
|-|
|851,544,356|
|435,509,342|
|76,540,843|
|97,017,725|
|73,752,507|
|43,843,424|
|18,030,885|
|21,821,209|
|15,116,607|
|13,574,204|
|15,921,003|
|13,862,656|
|7,865,652|
|6,483,287|
|39,216,370|
|28,932,676|
|1,759,032,746|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
49. Financial expenses
2017 2016
||
|-|
|1,162,344,297|
|293,152,359|
|5,494,319|

||
|-|
|1,095,191,900|
|308,686,445|
|268,297|

||
|-|
|Less: Amount of interest|
|capitalization|

 Exchange (gains)/losses (180,764,448 ) 369,552,810
||
|-|
|Bond issue cost discount|
|amortization|

||
|-|
|3,974,665|
|71,293,469|

||
|-|
|7,869,961|
|55,332,859|

 758,201,305 1,218,992,788 The capitalized amount of borrowing cost has been included in the construction in process.
50. Assets impairment loss
2017 2016
||
|-|
|414,898,419|
|335,689,296|
|74,248,733|

||
|-|
|803,814,035|
|214,478,691|
|202,823,449|

 824,836,448 1,221,116,175
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
51. Gain/loss from fair value changes
2017 2016
||
|-|
|(4,615,775|
|-|

||
|-|
|3,939,693|
|24,918,115|

 (4,615,775 ) 28,857,808 52. Gain on investment
2017 2016
||
|-|
|94,274,214|

||
|-|
|99,395,952|

 Gain on investment from the
disposal of long-term equity
investment 2,536,928
-
||
|-|
|23,866,503|
|2,691,286|
|-|
|-|

||
|-|
|17,010,628|
|-|
|2,101,669|
|5,176|

123,368,931 118,513,425
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
53. Gains from assets disposal
2017 2016 Gains from assets disposal 17,491,522 6,649,827 Loss on assets disposal (6,742,466) (5,309,215) 10,749,056 1,340,612 54. Other revenue
The governmental subsidies related daily activities are as follows:
2017 2016 Related to asset/income Financial Related to appropriations 71,702,575 - income Technological Related to subsidies 2,145,783 - income Land compensation 2,349,849 - Related to assets 76,198,207 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
55. Non-operating income
2017 2016 Included in on-recurring profit and loss of current period
||
|-|
|7,304,337|
|12,383,293|
|9,655,928|

||
|-|
|45,042,910|
|45,531|
|11,904,975|

||
|-|
|7,304,337|
|12,383,293|
|9,655,928|

 29,343,558 56,993,416 29,343,558 The governmental subsidies included in current profits and losses are as follows:
2017 2016 Related to asset/income
||
|-|
|7,304,337|
|-|
|-|

||
|-|
|39,982,226|
|3,128,000|
|1,932,684|

||
|-|
|Related to|
|income|
|Related to|
|income|
|Related to|
|assets|

 7,304,337 45,042,910
Note: The governmental subsidies or financial appropriations in 2007 are unrelated to daily activities.
56. Non-operating expenditures
2017 2016 Included in on-recurring profit and loss of current period Litigation compensation 85,200,340 - 85,200,340 Overdue fine expenditure 2,402,174 3,474,664 2,402,174
||||
|-|-|-|
|225,279|20,000|225,279|
|4,288,460|2,020,182|4,288,460|

||||
|-|-|-|
|92,116,253|5,514,846|92,116,253|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
57. Cost classification by nature
The supplementary information about theGroup’s operating costs, selling expenses and management expenses classified by nature are as follows:
2017 2016
||
|-|
|12,641,926,856|
|1,914,699,978|
|1,342,770,504|
|1,092,912,581|
|762,378,145|
|702,392,513|
|337,664,631|
|222,598,174|
|183,475,422|
|143,878,907|
|109,885,037|
|55,042,815|
|53,522,907|
|17,283,659|
|14,644,990|
|2,394,084|
|-|
|285,229,288|

||
|-|
|14,371,771,965|
|1,789,154,586|
|1,285,028,932|
|1,277,245,080|
|671,016,351|
|851,544,356|
|216,944,442|
|298,219,379|
|172,780,365|
|76,540,843|
|127,301,003|
|46,082,901|
|48,906,710|
|13,574,204|
|15,921,003|
|1,582,134|
|39,216,370|
|284,301,775|

 19,882,700,491 21,587,132,399
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
58. Income tax expenses
2017 2016
||
|-|
|126,087,069|
|(33,767,653|

||
|-|
|136,856,233|
|(75,339,325|

 92,319,416 61,516,908 V. Notes to Main Items of Consolidated Financial Statements (continued)
58. Income tax expenses (continued)
The relationship between income tax expenses and total profit is listed below:
2017 2016 Total profit 421,762,836 368,861,144
||
|-|
|Income tax expense calculated based on the|
|applicable tax rate (Tax rate: 15%)|
|Some subsidiaries applied to the influence of|
|different tax rate|
|Profits and losses attributable to the joint|
|venture and associated enterprise|
|Non-taxable income|
|Non-deductible expenses|
|Final settlement and adjustment for previous|
|year|
|Use the deductible loss of the previous year|
|Unrecognized impact of deductible temporary|
|difference and deductible loss|
|Weighted deduction of technological|
|development cost|

||
|-|
|63,264,425|
|23,000,890|
|(27,662,116|
|(9,386|
|3,546,281|
|5,138,773|
|(7,493,909|
|53,606,776|
|(21,072,318|

||
|-|
|55,329,171|
|21,202,805|
|(14,966,483|
|(108,251|
|2,972,594|
|(8,933,223|
|(10,334,298|
|39,776,493|
|(23,421,900|

||
|-|
|92,319,416|

||
|-|
|61,516,908|

 59. 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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
The calculations of basic earnings per share and diluted earnings per share are as follows:
2017 2016
||
|-|
|300,195,422|
|4,390,294,584|

||
|-|
|212,419,946|
|4,390,294,584|

 Basic earnings per share 0.07 0.05
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
59. Earnings per share (continued)
In 2017 and 2016, the Company had no diluted potential common stock, so the diluted earnings per share were equal to the basic earnings per share.
60. Notes to items in cash flow statement
2017 2016
||
|-|
|185,539,292|
|124,377,444|
|9,296,606|
|7,234,130|
|55,851,684|
|382,299,156|

||
|-|
|297,589,755|
|97,318,883|
|4,488,988|
|532,240|
|37,371,316|
|437,301,182|

 2017 2016 Other cash payments relating to
operating activities
Customs guarantee deposit paid 118,660,849 264,666,758 Selling and management expenses 240,550,811 201,911,238 Financial expenses commission 28,677,981 55,332,859R&D subsidy paid to cooperation 26,613,797 units 12,736,804
Others 121,302,882 40,102,571 521,929,327 588,627,223
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
60. Notes to items in cash flow statement (continued)
2017 2016
||
|-|
|50,163,105|

||
|-|
|852,787,742|

 2017 2016
||
|-|
|173,076,659|

||
|-|
|-|

 2017 2016
||
|-|
|326,925,000|
|1,034,005,000|
|206,029,110|
|1,566,959,110|

||
|-|
|344,790,000|
|2,420,845,793|
|273,048,439|
|3,038,684,232|

 2017 2016
||
|-|
|323,466,355|
|-|
|42,615,488|
|1,057,664,286|
|1,423,746,129|

||
|-|
|326,925,000|
|7,450,000|
|38,776,961|
|1,768,382,528|
|2,141,534,489|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
61. Supplementary information of cash flow statements
(1) Supplementary information of cash flow statements
Adjust the net profit to the cash flow from operating activities:
2017 2016
||
|-|
|329,443,420|
|824,836,448|
|1,240,838,899|
|101,931,605|
|(10,749,056|
|4,615,775|
|747,304,445|
|(123,368,931|
|(33,767,653|
|(710,079,284|
|(2,070,922,668|
|(979,057,110|
|2,009,268,552|
|1,914,832|

||
|-|
|307,344,236|
|1,221,116,175|
|1,184,754,917|
|100,274,015|
|(1,340,612|
|(28,857,808|
|1,256,194,822|
|(118,513,425|
|(75,339,325|
|(1,794,200,703|
|(409,587,873|
|94,234,166|
|(77,655,949|
|-|

 Net cash flows from operating activities 1,332,209,274 1,658,422,636 2017 2016
||
|-|
|3,030,329,565|

||
|-|
|2,038,671,320|

 Changes in cash and cash equivalents:
2017 2016
||
|-|
|5,673,847,00|
|1|
|3,497,205,18|
|6|

||
|-|
|3,497,205,186|
|2,337,925,611|

||
|-|
|2,176,641,81|
|5|

||
|-|
|1,159,279,575|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
61. Supplementary information of cash flow statements (continued)
(2) Information on acquisition or disposal of subsidiaries and other business units
Information on acquisition subsidiary
2017 2016
||
|-|
|61,873,500|
|1,535,090|

||
|-|
|-|
|-|

||
|-|
|60,338,410|

||
|-|
|-|

 (3) Cash and cash equivalents
2017 2016
||
|-|
|1,365,865|
|5,672,481,136|
|-|
|5,673,847,001|

||
|-|
|774,626|
|3,496,430,560|
|-|
|-|
|3,497,205,186|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
62. Assets with restricted ownership and use right
2017 2016
||
|-|
|Monetary fund(Note V, 1)|
|Fixed assets (Note V, 15)|
|Long-term|
|receivables(Note V, 12)|

||
|-|
|96,380,368|
|4,124,080,499|
|2,571,908,986|

||
|-|
|99,839,013|
|2,438,314,390|
|2,996,201,650|

||
|-|
|Note 1|
|Note 2|
|Note 3|

 6,792,369,853 5,534,355,053
Note 1: As of Dec. 31, 2017, the restricted monetary fund of RMB 96,380,368 Yuan was the margin deposit saved by the Group for applying to the bank for letter of credit and bank guarantee (Dec, 31, 2016: RMB 99,839,013Yuan).
Note 2: As of Dec. 31, 2017, the vessel with the book value of RMB 3,687,007,865 Yuan (Dec. 31, 2016: RMB 1,882,864,040 Yuan) and the mechanical equipment with the book value of RMB 437,072,634 Yuan (Dec. 31, 2016: RMB 555,450,350 Yuan) had been used for sale and lease-back transaction with the financial leasing company, with the financing term of 4 to 6 years.
Note 3: As of Dec. 31, 2017, the long-term accounts receivable of “construction-transfer” project of CCCC Investment Qidong Co.,Ltd、CCCC Liyang Urban Construction Co., Ltd and CCCC Huaian Construction Development Co., Ltd with the book value of RMB 2,571,908,986 Yuan (Dec. 31, 2016: RMB 2,996,201,650 Yuan) had been used as the pledge for obtaining bank loans.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
63. Foreign currency monetary items
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to currency rate RMB currency rate RMB
|||
|-|-|
|Monetary fund||
|USD|425,144,321|
|EUR|18,173,433|
|SGD|1,228,561|
|NZD|625|
|HKD|45,494,381|
|GBP|2,968,594|
|KEW|2,021,852,290|
|OMR|606,629|
|Yen|47,374,873|
|ZAR|31,696,233|
|LKR|140,778,939|
|AUD|978,149|
|INR|20,869,322|
|BRL|165,211|
|Ruble|3,757,976|
|MYR|534,419|
|CAD|392|
|AED|654,883|

||
|-|
|6.5342|
|7.8023|
|4.8831|
|4.6327|
|0.8359|
|8.7792|
|0.0061|
|18.1404|
|0.0579|
|0.5277|
|0.0424|
|5.0928|
|0.1020|
|1.9725|
|0.1135|
|1.5779|
|5.2009|
|1.7790|

|||
|-|-|
|2,777,978,022|356,373,402|
|141,794,576|25,423,957|
|5,999,186|20,744,399|
|2,895|625|
|38,028,753|18,540,418|
|26,061,880|1,462,267|
|12,333,299|2,038,285,822|
|11,004,493|567,011|
|2,743,005|144,285,734|
|16,726,102|14,635,312|
|5,969,027|168,823,164|
|4,981,517|1,190,016|
|2,128,671|23,686,064|
|325,879|708,428|
|426,530|12,938,990|
|843,260|838,089|
|2,039|423|
|1,165,037|-|

|||
|-|-|
|6.9370|2 ,472,162,288|
|7.3068|185,767,768|
|4.7995|99,562,745|
|4.8191|3,012|
|0.8945|16,584,404|
|8.5094|12,443,017|
|0.0058|11,822,058|
|18.0060|10,209,598|
|0.0596|8,598,131|
|0.5083|7,439,129|
|0.0463|7,816,513|
|5.0157|5,968,763|
|0.1023|2,422,824|
|2.1357|1,512,989|
|0.1161|1,502,217|
|1.5507|1,299,625|
|5.1406|2,176|
|-|-|

||
|-|
|3,048,514,171|

||
|-|
|2,845,117,257|

 2017 2016
Original Exchange Equivalent to Original Exchang Equivalent to currency rate RMB currency e rate RMB
|||
|-|-|
|Accounts||
|receivable||
|USD|237,611,976|
|EUR|59,375,663|
|SGD|19,780,477|
|QAR|17,363,477|
|CAD|4,132,514|
|SAR|6,510,484|
|ZAR|18,087,082|
|KEW|1,368,788,719|
|GBP|868,960|
|LKR|50,117,375|
|AUD|224,642|
|INR|5,460,783|
|Ruble|4,893,519|
|HKD|13,500|
|BRL|-|
|AED|-|

||
|-|
|6.5342|
|7.8023|
|4.8831|
|2.0746|
|5.2009|
|1.7423|
|0.5277|
|0.0061|
|8.7792|
|0.0424|
|5.0928|
|0.1020|
|0.1135|
|0.8359|
|-|
|-|

||
|-|
|1,552,604,174|
|463,266,735|
|96,590,047|
|36,022,269|
|21,492,792|
|11,343,216|
|9,544,553|
|8,349,611|
|7,628,774|
|2,124,977|
|1,144,057|
|557,000|
|555,414|
|11,285|
|-|
|-|

||
|-|
|382,943,787|
|50,412,079|
|62,524,894|
|-|
|5,248,147|
|5,865,574|
|1,631,102|
|142,923,050|
|3,311,616|
|67,543,175|
|272,129|
|181,114|
|481,395|
|196,859|
|4,828|
|6,268,825|

||
|-|
|6.9370|
|7.3068|
|4.7995|
|-|
|5.1406|
|1.8497|
|0.5083|
|0.0058|
|8.5094|
|0.0463|
|5.0157|
|0.1023|
|0.1161|
|0.8945|
|2.1357|
|1.8890|

||
|-|
|2,656,481,050|
|368,350,979|
|300,088,229|
|-|
|26,978,624|
|10,849,552|
|829,089|
|828,954|
|28,179,865|
|3,127,249|
|1,364,917|
|18,526|
|55,890|
|176,090|
|10,311|
|11,841,810|

2,211,234,904 3,409,181,135
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
63. Foreign currency monetary items (continued)
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to currency rate RMB currency rate RMB
|||
|-|-|
|Other||
|receivables||
|USD|34,192,234|
|EUR|362,703|
|SGD|507,308|

||
|-|
|6.5342|
|7.8023|
|4.8831|

||
|-|
|223,418,895|
|2,829,918|
|2,477,236|

||
|-|
|3,989,080|
|12,329|
|-|

||
|-|
|6.9369|
|7.3070|
|-|

||
|-|
|27,671,849|
|90,088|
|-|

 INR 23,073,417 0.1020 2,353,489 - - - Ruble 15,955,229 0.1135 1,810,918 - - - ZAR 3,027,546 0.5277 1,597,636 - - - BRL 552,575 1.9725 1,089,954 - - -
|||
|-|-|
|AUD|172,003|
|KEW|86,341,866|
|GBP|-|

||
|-|
|5.0928|
|0.0061|
|-|

||
|-|
|875,977|
|526,685|

||
|-|
|103,710|
|5,285,609|
|195,990|

||
|-|
|5.0157|
|0.0058|
|8.5094|

||
|-|
|520,178|
|30,657|
|1,667,757|

 236,980,708 29,980,529 2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to currency rate RMB currency rate RMB
|||
|-|-|
|Accounts||
|payable||
|USD|166,604,576|
|EUR|71,504,046|
||4,402,716,49|
|Yen|4|
|SGD|1,650,625|
|GBP|428,331|
|KEW|552,903,279|
|ZAR|4,835,147|
|Ruble|12,311,200|
|AUD|10,018|

||
|-|
|6.5342|
|7.8023|
|0.0579|
|4.8831|
|8.7792|
|0.0061|
|0.5277|
|0.1135|
|5.0928|

||
|-|
|1,088,627,620|
|557,896,018|
|254,917,285|
|8,060,167|
|3,760,404|
|3,372,710|
|2,551,507|
|1,397,321|
|51,020|

||
|-|
|120,343,389|
|38,684,841|
|161,884,564|
|20,934|
|67,565|
|-|
|-|
|-|
|10,018|

||
|-|
|6.9370|
|7.3068|
|0.0596|
|4.7995|
|8.5094|
|-|
|-|
|-|
|5.0157|

||
|-|
|834,822,091|
|282,662,394|
|9,648,320|
|100,475|
|574,938|
|-|
|-|
|-|
|50,247|

 1,920,634,052 1,127,858,465 2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to currency rate RMB currency rate RMB
||
|-|
|Other|
|payables|
|USD|
|EUR|
|SGD|

||
|-|
|36,885,08|
|6|
|3,706,727|
|1,096,576|

||
|-|
|6.5342|
|7.8023|
|4.8831|

||
|-|
|241,014,529|
|28,920,996|
|5,354,690|

||
|-|
|4,985,404|
|10,092,794|
|1,501,789|

||
|-|
|6.9370|
|7.3509|
|4.7995|

||
|-|
|34,583,748|
|74,191,119|
|7,207,838|

 36,964,22 0.1020 - - - INR 5 3,770,351
||
|-|
|GBP|
|HKD|

||
|-|
|178,694|
|-|

||
|-|
|8.7792|
|-|

||
|-|
|1,568,790|
|-|

||
|-|
|-|
|17,000|

||
|-|
|-|
|0.8945|

||
|-|
|-|
|15,207|

280,629,356 115,997,912
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
63. Foreign currency monetary items (continued)
2017 2016
Original Exchange Equivalent to Original Exchang Equivalent to
currency rate RMB currency e rate RMB
|||
|-|-|
|Short-term||
|loans||
|USD|825,116,556|
|EUR|50,000,000|

||
|-|
|6.5342|
|7.8023|

||
|-|
|5,391,476,600|
|390,115,000|

||
|-|
|837,000,000|
|67,901,197|

5,781,591,600 6,302,409,465
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent
currency rate RMB currency rate to RMB
|||
|-|-|
|Long-term loans due within one year||
||6.5342|
||7.8023|

||
|-|
|326,710,000|
|156,046,000|
|482,756,000|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|

||
|-|
|50,000,000|
|20,000,000|

2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
|||
|-|-|
|Long-term payables due within one year||
||6.5342|

||
|-|
|119,482,512|

||
|-|
|17,604,054|

||
|-|
|6.9370|

||
|-|
|122,119,326|

2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
|||
|-|-|
|Long-term||
|loans||
|USD|-|
|EUR|-|

||
|-|
|-|
|-|

||
|-|
|-|
|-|

||
|-|
|50,000,000|
|20,000,000|

||
|-|
|6.9370|
|7.3068|

||
|-|
|346,850,000|
|146,136,000|

- 492,986,000
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
|||
|-|-|
|Long-term||
|payables||
||174,285,714|

||
|-|
|6.5342|

||
|-|
|1,138,817,712|

||
|-|
|93,253,088|

||
|-|
|6.9370|

||
|-|
|646,896,674|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope
1. Business combination not under the same control
(1) In 2017, the Group acquired50% stock equity of Greenland Heavylift (Hong Kong) Limited through paying the cash of 7,500,000USD (equivalent to RMB 50,829,000Yuan) to the original shareholders of Greenland Heavylift (Hong Kong) Limited and through increasing the capital of 56,000,000USD (equivalent to RMB 379,523,200 Yuan) to Greenland Heavylift (Hong Kong) Limited, and also obtained the right to buy its1% stock equity with 1 USD at any time in the future. The purchase date was set for June 30, 2017.
In accordance with the acquisition agreement, the chairman of the board of directors appointed by the Group has super voting power in the voting rights of the board of director, and the Group also has the right to buy its1% stock equity with 1 USD at any time in the future, therefore, the Group has control power over Greenland Heavylift (Hong Kong) Limited substantially.
The fair value and book value of the recognizable assets and liabilities of Greenland Heavylift (Hong Kong) Limited on purchase date are as follows:
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope (continued)
1. Business combination not under the same control (continued)
June 30, 2017 June 30, 2017 Fair value Book value Monetary fund 1,535,090 1,535,090 Receivables 110,130 110,130 Other receivables and prepayment 3,622,474 3,622,474 Other non-current assets 252,077,771 252,077,771 Other payables (7,074,536) (7,074,536) Deferred income (6,923,077) (6,923,077) 243,347,852 243,347,852 Capital increase invested 379,523,200 379,523,200 Minorityshareholders’ equity (311,519,832) (311,519,832) 311,351,220 311,351,220 Goodwill arising from purchase 110,562,702
Value of1% stock equity recognized
and to be purchased at 1 USD 8,438,278
in the future
430,352,200 Note
Note: the amount includes the cash of 7,500,000 USD paid to the original shareholders during business combination and the capital increase of 56,000,000 USD to Greenland Heavylift (Hong Kong) Limited by the Group.
The business performance and cash flows of Greenland Heavylift (Hong Kong) Limited from the date of purchase to the end of the year are listed below:
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope (continued)
1. Business combination not under the same control (continued)
June, 30,2017~ Dec. 31, 2017 Operating revenue 85,079,934 Net profit 17,523,291 Net cash flows 39,479,155 (2) In the year 2017, the Group acquired the100% stock equity of Verspanen B.V. with the cash of 1,500,000EUR (equivalent to RMB 11,044,500 Yuan) and the purchase date was set for Apr. 30, 2017.
The fair value and book value of the recognizable assets and liabilities of Verspanen B.V. are listed below:
Apr. 30, 2017 Apr. 30, 2017 Fair value Book value Accounts receivable 3,198,602 3,198,602 Other receivables and prepayment 32,012 32,012 Inventory 2,220,585 2,220,585 Other current assets 49,945 49,945 Fixed assets 4,695,840 4,695,840 Short-term loans (1,104,069) (1,104,069) Accounts payable (2,893,803) (2,893,803) Employee remuneration payable (263,932) (263,932) Other payables (159,678) (159,678) Deferred income tax liabilities (143,809) (143,809) 5,631,693 5,631,693 Goodwill arising from purchase 5,412,807
11,044,500
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope (continued)
1. Business combination not under the same control (continued)
The business performance and cash flows of Verspanen B.V. from the date of purchase to the end of the year are listed below:
Apr. 30,2017~ Dec. 31, 2017 Operating revenue 9,150,537 Net profit 157,021 Net cash flows 271,442 2. Changes in consolidation scope for other reasons
Nantong Zhenhua Heavy Industries Steel Structure Processing Co., Ltd., an original subsidiary of the Company, was cancelled on May 24, 2017.
On June 15, 2017, the Company, CCCC Second Harbor Engineering Co., Ltd. and Jiangsu Yangkou Port Affairs Co., Ltd. jointly invested and incorporated the holding subsidiary CCCC Rudong Construction and Development Co., Ltd. with the cash of 10,000,000 USD. As of Dec. 31, 2017, the shareholding ratio of the Group in the subsidiary was73%.
Hotel De Herberg B.V., an original subsidiary of the Company, was cancelled on June 19, 2017.
On Nov. 22, 2017, the Company sold20% shares of its original subsidiary Zhenhua Shende Ocean Engineering Installation Co., Ltd. to another shareholder Offshore Tech, LLC of the subsidiary for 400,000 USD in cash. As of Dec. 31, 2017, the shareholding ratio of the Company in the original subsidiary was50%, and the original subsidiary was changed to the joint venture of the Company.
On Nov. 22, 2017, the Company sold30% shares of its original subsidiary ZPMC Southeast Asia Pte. Ltd to another shareholder of the subsidiary Satomas PTE LTD for 186,231 SGD in cash. As of Dec. 31, 2017, the shareholding ratio of the Company in the original subsidiary was40%, and the original subsidiary was changed to the affiliated company of the Company.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
ZPMC Brazil Holdings LTDA., an original subsidiary of the Company, was cancelled on Dec. 12, 2017.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities
1. Interests in subsidies
The information of theCompany’s subsidiaries is as follows:
Main business location Registered in Business nature Shareholding ratio(%) Gaining way Direct Indirect
Shanghai Zhenhua Port Machinery Chongming, Shanghai Chongming, Shanghai Machinerymanufacture94.76% -Invest to set up
Heavy Industry Co., Ltd
Shanghai Zhenhua Port Machinery Hong Kong Hong Kong Trade& sales99.99% -Invest to set up
(Hong Kong) Co., Ltd
Shanghai Zhenhua Shipping Co., Ltd. Pudong, Shanghai Pudong, Shanghai Shipping 55% -Invest to set up
Nantong Zhenhua Heavy Equipment Nantong, Jiangsu Nantong, Jiangsu Machinery manufacture100% -Invest to set up
Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd. Nantong, Jiangsu Nantong, Jiangsu Machinery manufacture100% -Invest to set up
Drive Mechanism Company (Nantong)
Shanghai ZPMC Electric Co., Ltd. Pudong, Shanghai Pudong, Shanghai Electrical equipmentR&D100% -Invest to set up
Jiangyin Zhenhua Port Machinery Steel Jiangyin, Jiangsu Jiangyin, Jiangsu Machinery manufacture75%25%Invest to set up
Structure Fabrication Co., Ltd
ZMPC Steel Structure Co., Ltd (Note 1) Pudong, Shanghai Pudong, ShanghaiMachinery manufacture -49%Invest to set up
Shanghai Zhenhua Ocean Engineering Yangshan Bonded Port Area,Yangshan Bonded Port Shipping 100% -Invest to set up
Service Co., Ltd Shanghia Area, Shanghai
ZPMC Inspection Technology Pudong, Shanghai Pudong, ShanghaiTechnical consulting 100% -Invest to set up
Consulting Co., Ltd
ZPMC NetherlandsCoöperatie U.A. Rotterdam, NetherlandsRotterdam, Netherlands Trade& sales 100% -Invest to set up
ZPMC Netherlands B.V. Rotterdam, NetherlandsRotterdam, Netherlands Trade& sales 100% -Invest to set up
Verspannen B.V. Rotterdam, NetherlandsRotterdam, Netherlands Machinery manufacture -100% Business Combination not under the same control ZPMC Espana S.L. Los Barrios Los Barrios Trade& sales -100%Invest to set up
Spain Spain
ZPMC GmbH Hamburg Hamburg Germany Hamburg Germany Trade& sales 100% -Invest to set up
ZPMC Lanka Company Colombo, Sri Lanka Colombo, Sri Lanka Trade& sales 70% -Invest to set up
(Private) Limited
ZPMC North America Inc. Delaware, USA Delaware, USA Trade& sales 100% -Invest to set up
ZPMC Korea Co., Ltd. Pusan, Korea Pusan, Korea Trade& sales 70% -Invest to set up
ZPMC Engineering Africa (Pty) Ltd. Kwazulu-Natal Province,Kwazulu-Natal Province, Trade& sales 100% -Invest to set up
Republic of South AfricaRepublic of South Africa
ZPMC Engineering (India) Private Maharashtra State, Maharashtra State, Trade& sales 100% -Invest to set up
Limited India India
ZPMC Southeast Asia Singapore Singapore Trade& sales 100% -Invest to set up
Holding Pte. Ltd.
ZPMC Engineering (Malaysia) Malaysia Malaysia Trade& sales -70%Invest to set up
Sdn. Bhd.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
ZPMC Australia Company (Pty) Ltd. New South Wales, Australia New South Wales, Trade& sales 100% -Invest to set up
Australia
ZPMC General Equipment Co., Ltd. Pudong, Shanghai Pudong, ShanghaiMachinery manufacture100% - Business combination under the same control Shanghai Port Machinery Heavy Pudong, Shanghai Pudong, ShanghaiMachinery manufacture -74.02% Business Industries Co., Ltd. combination under the same control ZPMC Zhangjiagang Zhangjiagang, JiangsuZhangjiagang, JiangsuMachinery manufacture90% - Business Port Machinery Co., Ltd. combination under the same control Nanjing Ninggao New Channel Co., Ltd. Nanjing, Jiangsu Nanjing, Jiangsu Trade& sales 100% -Invest to set up
Shanghai Zhenhua Heavy Industries Qidong
Marine Engineering Co., Ltd. Nantong, Jiangsu Nantong, JiangsuMachinery manufacture67% - Business Engineering Co., Ltd. combination not under the same control Jiahua Shipment Co., Ltd Hong Kong Hong Kong Shipping -70%Invest to set up
Zhenhua Pufeng Wind Power Hong Kong Hong Kong Shipping -51%Invest to set up
(Hong Kong) Co., Ltd.
ZPMC BrazilServiçoPortuários LTDA Rio DE Janeiro, Brazil Rio DE Janeiro, Brazil Trade& sales 80% -Invest to set up
ZPMC Limited Liability Company Moscow, Russia Moscow, Russia Trade& sales 85% -Invest to set up
ZPMC NA East Coast lnc. Virginia Delaware, USA Trade& sales -100%Invest to set up
ZPMC NA Huston lnc. Texas Delaware, USA Trade& sales -100%Invest to set up
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidies (continued)
The information of theCompany’s subsidies is as follows (continued):
Main business location Registered in Business nature Shareholding ratio Gaining way Direct indirect
CCCC Tianhe Mechanical Equipment Changshu, Jiangsu Changshu, JiangsuMachinery manufacture32.51% - Business Manufacturing Co., Ltd. (Note 2) combination under the same control Fujian CCCC Qianda Heavy Fuzhou, Fujian Fuzhou, FujianMachinery manufacture -51% Business Industry Co., Ltd. combination under the same control CCCC Investment Development Nantong, Jiangsu Nantong, Jiangsu Engineeringconstruction47.50% -Invest to set up
Qidong Co., Ltd (Note 3)
CCCC Liyang Urban Investment Liyang, Jiangsu Liyang, Jiangsu Engineering construction48% -Invest to set up
and Construction Co., Ltd (Note 4)
ZPMC UK LD Cardiff, UK Cardiff, UK Trade& sales 100% -Invest to set up
ZPMC Middle East Fze Dubai, UAE Dubai, UAE Trade& sales 100% -Invest to set up
CCCC (Huaian) Construction and Huaian, Jiangsu Huaian, Jiangsu Engineering construction -76.02%Invest to set up
Development Co., Ltd
CCCC Zhenjiang Investment Construction,
Management and Development Co., Ltd Zhenjiang, Jiangsu Zhenjiang, Jiangsu Engineering construction70% -Invest to set up
CCCC Rudong Construction and Rudong, Jiangsu Rudong, Jiangsu Engineering construction -72.91%Invest to set up
Development Co., Ltd.
Greenland Heavylift (Hong Kong)
Limited (Note 5) Hong Kong Hong Kong Shipping -50% Business combination not under the same control GPO Grace Limited Marshall Islands Marshall Islands Shipping -100% Business combination not under the same control GPO Amethyst Limited Marshall Islands Marshall Islands Shipping -100% Business combination not under the same control GPO Sapphire Limited Marshall Islands Marshall Islands Shipping -100% Business combination not under the same control GPO Emerald Limited Marshall Islands Marshall Islands Shipping -100% Business combination not under the same control GPO Heavylift Limited Cayman Islands Cayman Islands Shipping -60% Business combination not under the same control GPO Heavylift AS Oslo, Norway Oslo, Norway Shipping -100% Business combination not under the same control Note 1: In accordance with the Articles of Association of ZMPC Steel Structure Co., Ltd, the Group shall have the right to appoint and remove most members of thecompany’s board of directors and, in essence, control the company, so it shall be incorporated into the financial statements of the Group.
Note 2: The Group obtained55.98% of theshareholders’ meeting and80% of theboard’s voting rights of the company via amendment of Articles of Association of CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd., reconstruction of board of directors and signing the agreement for concerted action with China Communications Corporation (one of the shareholders of CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd.). In accordance with the regulations in the Articles of Association o the company, the Group has obtained the control rights of the company, and thus the company shall be in the consolidation scope of the Group.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Note 3: By signing the agreement for concerted action with CCCC Tianjin Dredging Co., Ltd., the Group has obtained95% voting power of the shareholders meeting and100% voting power of the board of directors. In accordance with the regulations in the Articles of Association o the company, the Group has obtained the control rights of the company, and thus the company shall be in the consolidation scope of the Group.
Note 4: By signing the agreement for concerted action with CCCC Shanghai Dredging Co. Ltd. and CCCC East China Investment Co., Ltd., the Group has obtained76% voting power of the shareholders meeting and71% voting power of the board of directors. In accordance with the regulations in the Articles of Association o the company, the Group has obtained the control rights of the company, and thus the company shall be in the consolidation scope of the Group.
Note 5: In accordance with the acquisition agreement, the chairman of the board of directors appointed by the Group has super voting power in the voting rights of the board of director, and the Group also has the right to buy its1% stock equity with 1 USD at any time in the future. The Group has control power substantially and the company shall be included in the consolidation scope of the financial statement of the Group.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidies (continued)
The information of theCompany’s subsidies is as follows (continued):
The subsidiaries with important minorityshareholders’ equity are as follows:
2017
Minority Minority Interest Provision of Accumulated shareholdershareholders income to special minoritys’ ’ minority reserves for shareholders shareholdincontributions shareholder minority ’ equity at g ratio% of capital s shareholders the end of year
|||
|-|-|
|CCCC Tianhe||
|Mechanical||
|Equipment||
|Manufacturing Co.,||
|Ltd.|67.49|
|CCCC Zhenjiang||
|Investment,||
|Construction,||
|Management and||
|Development Co, Ltd.|30.00|
|Greenland Heavylift||
|(Hong Kong)Limited|50.00|

||
|-|
|39,217,954|
|16,811,568|
|(413,193|

||
|-|
|2,562,277|
|-|
|-|

||
|-|
|603,423,242|
|319,814,122|
|308,992,742|

 2016
Minority Minority Interest Provision of Accumulated shareholder shareholder income to special minoritys’ s’ minority reserves for shareholders shareholdincontributions shareholder minority ’ equity at g ratio% of capital s shareholders the end of year
|||
|-|-|
|CCCC Tianhe||
|Mechanical||
|Equipment||
|Manufacturing Co.,||
|Ltd.|67.49|
|CCCC Zhenjiang||
|Investment,||
|Construction,||
|Management and||
|Development Co, Ltd.|30.00|

||
|-|
|57,388,211|
|2,554|

||
|-|
|-|
|-|

||
|-|
|561,643,011|
|243,002,554|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidies (continued)
The information of theCompany’s subsidies is as follows (continued):
The table below lists the main financial information of above subsidiaries, which is the amount before mutual offset between enterprises of the Group:
2017
Current assets Non-current Total assets C urrent liabilities Non-current Total liabilities assets liabilities
|||
|-|-|
|CCCC Tianhe||
|Mechanical||
|Equipment||
|Manufacturing Co.,||
|Ltd.|2,313,171,638|
|CCCC Zhenjiang||
|Investment||
|Construction,||
|Management and||
|Development Co., Ltd|13,909,597|
|Greenland Heavylift||
|(Hong Kong)Limited|47,188,656|

||
|-|
|1,869,127,907|
|1,074,783,059|
|790,083,887|

||
|-|
|4,182,299,545|
|1,088,692,656|
|837,272,543|

||
|-|
|(2,460,195,680|
|(22,645,579|
|(218,380,034|

||
|-|
|(828,278,015|
|-|
|-|

||
|-|
|(3,288,473,695|
|(22,645,579|
|(218,380,034|

 2017
Operating Net profit Total Net cash inflows revenue comprehensive from operating income activities
||
|-|
|CCCC Tianhe Mechanical Equipment|
|Manufacturing Co., Ltd.|
|CCCC Zhenjiang Investment|
|Construction, Management and|
|Development Co., Ltd|
|Greenland Heavylift|
|(Hong Kong) Limited|

||
|-|
|1,152,898,050|
|5,241,278|
|85,079,934|

||
|-|
|58,140,097|
|56,038,562|
|17,523,291|

||
|-|
|58,140,097|
|56,038,562|
|(2,977,632|

||
|-|
|49,468,222|
|-|
|31,723,925|

 2016
Current assets Non-current Total assets Current liabilities Non-current Total liabilities assets liabilities
|||
|-|-|
|CCCC Tianhe||
|Mechanical||
|Equipment||
|Manufacturing Co.,||
|Ltd.|1,498,862,582|
|CCCC Zhenjiang||
|Investment||
|Construction,||
|Management and||
|Development Co., Ltd|10,145,273|

||
|-|
|1,224,395,571|
|800,097,533|

||
|-|
|2,723,258,153|
|810,242,806|

||
|-|
|(1,660,805,166|
|(234,292|

||
|-|
|(230,591,014|
|-|

||
|-|
|(1,891,396,180|
|(234,292|

 2016
Operating Net profit Total Net cash inflows revenue comprehensive from operating income activities
||
|-|
|CCCC Tianhe Mechanical Equipment|
|Manufacturing Co., Ltd.|
|CCCC Zhenjiang Investment|
|Construction, Management and|
|Development Co., Ltd|

||
|-|
|1,101,425,520|
|7,226,075|

||
|-|
|85,197,056|
|8,515|

||
|-|
|85,197,056|
|8,515|

||
|-|
|35,261,157|
|949,212|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises
Main business location Registered in Business nature Registered capital Shareholding ratio Accounting treatment Direct Indirect
Joint venture
Jiangsu Longyuan Zhenhua Nantong, Jiangsu Nantong, Jiangsu Ocean Engineering RMB 260,000,000 50% -Equity method Ocean Engineering Co., Ltd. construction Yuan
ZPMC Mediterranean Istanbul, Turkey Istanbul, Turkey Port equipment 50,000 50% -Equity method Liman Makinalari technical services TRL
Ticaret Anonim Sirketi
Zhenhua Ocean Energy (Hong Kong)Hong Kong Hong Kong Shipping 5,969,998 -51% Equity method Co., Ltd. (Note 1) USD
Cranetech Global Malaysia Malaysia Port equipment 1,000,000 -49.99%Equity method Sdn. Bhd. technical services MYR
ZPMC– OTL Marine Hong Kong Hong Kong Shipping 2,000,000 - 50%Equity method Construction Co., Ltd. USD
CCCC TianheXi’an EquipmentXi’an ShaanxiXi’an Shaanxi Machinery manufacture RMB 300,000,000 - 50%Equity method Manufacturing Co., Ltd. Yuan
Associated enterprise
CCCC Ocean Engineering Vessel Pudong, Pudong, Ship technology RMB 60,000,000 25% -Equity method Technology Research Centre Co., Ltd Shanghai Shanghaidevelopment and consutancy Yuan
CCCC Real Estate Yixing Co., Ltd. Quxi, Wuxi, Real estate development RMB 900,000,000 20% -Equity method Jiangsu Jiangsu Yuan
Shanghai Zhenhua Heavy IndustriesChangzhou, Changzhou, Paint production RMB 3,000,000 20% -Equity method (Group) Changzhou Paint Co., Ltd. Jiangsu Jiangsu Yuan
CCCC Financial Leasing Co., Ltd. Pudong, pudong, Financial leasing RMB 5,000,000,000 30% -Equity method Shanghai Shanghai Yuan
China Communications USA USA Port, water way, highway 50,000,000 24% -Equity method Construction USA Inc. and bridge construction USD
CCCC South American USA USA Port, water way, highway 103,000,000 16% -Equity method Regional Company SARL and bridge construction USD
(Note 2)
ZPMC Southeast Asia Singapore Singapore Trade& sales 787,760 - 40%Equity method Pte. Ltd USD
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises (continued)
Note 1: On May 5, 2014, the subsidiary of the Company and the partner invested to establish Zhenhua Ocean Energy (Hong Kong) Co., Ltd. The registered capital was 5,969,998 USD and 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. Therefore, the Group has no control rights but controls the company jointly with the partner.
Note 2: On Dec. 15, 2016, the Company invested 16,480,000 USD (in RMB 114,321,760 Yuan) to buy shares of CCCC South American Regional Company SARL. The registration capital was 103,000,000 USD (in RMB 114,321,760 Yuan) and the shareholding ratio of the Company was16%. 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.
Main financial information of significant associated enterprises:
The amount in the consolidated financial statements of the associated enterprise has taken into account the impacts of fair value of the recognizable assets and liabilities of associated enterprise in the acquisition of investments and the impact of unifying accounting policies.
CCCC Financial Leasing Co., Ltd. 2017 2016
|||
|-|-|
|14,519,134,477|9,420,615,029|
|12,061,010,402|13,727,208,395|
|26,580,144,879|23,147,823,424|
||(10,051,593,07|
|(8,365,784,476|4|
|(11,116,733,773|(7,249,806,724|
||(17,301,399,79|
|(19,482,518,249|8|
|1,502,458,020|495,607,449|

Shareholders’ equity attributable to parent
company 5,595,168,610 5,350,816,177
|||
|-|-|
|1,678,550,583|1,605,244,853|
|1,678,550,583|1,605,244,853|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises (continued)
CCCC Financial Leasing Co., 2017 2016 Ltd.
||
|-|
|1,173,817,052|
|11,277,025|
|23,808,003|
|89,532,048|
|272,052,060|

||
|-|
|780,323,172|
|5,790,545|
|8,495,925|
|85,261,887|
|251,014,262|

 Net amount of other
comprehensive income after tax (848,960 ) 580,861 Total comprehensive income 271,097,816 258,329,639 Total comprehensive income
attributable to parent company 244,352,430 252,162,817 Dividends received - 32,400,000 Insignificant information summary of joint ventures and associated
enterprises:
Joint venture
2017 2016
||
|-|
|268,510,756|
|35,324,167|
|-|
|35,324,167|

||
|-|
|200,209,849|
|24,822,653|
|-|
|24,822,653|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises (continued)
Insignificant information summary of joint ventures and associated
enterprises (continued):
Associated enterprise
2017 2016
||
|-|
|373,409,182|
|(14,386,647|
|(8,418,578|
|(22,805,225|

||
|-|
|395,966,751|
|(1,075,546|
|4,546,680|
|(3,471,134|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments
1. Classification of financial instruments
The book values of various financial instruments on balance sheet date are as follows:
Dec. 31, 2017
Financial assets
Financial assets
Available-for-sal
measured at fair Loan and e
value with Total changes included Financial asset
in current profits Accounts s
and losses receivable
|||
|-|-|
|Monetary fund|-|
|Financial assets||
|measured at fair||
|value with changes||
|included in current||
|profits and losses|8,438,278|
|Notes receivable|-|
|Accounts|-|
|receivable||
|Other receivables|-|
|Non-current assets|-|
|due within 1 yeas||
|Financial assets|-|
|available-for-sale||
|Long-term|-|
|receivables||

||
|-|
|5,770,227,369|
|-|
|420,786,012|
|3,980,017,611|
|627,877,201|
|1,896,475,472|
|4,238,704,827|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|1,304,203,905|
|-|

||
|-|
|5,770,227,369|
|8,438,278|
|420,786,012|
|3,980,017,611|
|627,877,201|
|1,896,475,472|
|1,304,203,905|
|4,238,704,827|

 8,438,278 16,934,088,492 1,304,203,905 18,246,730,675 Financial liabilities
Other Financial liabilities
||
|-|
|Short-term loans|
|Notes payable|
|Accounts payable|
|Interest payable|
|Dividend payable|
|Other payables|
|Non-current liabilities due within one year|
|Long-term loans|
|Long-term payables|

||
|-|
|25,468,980,401|
|1,893,227,482|
|6,887,598,171|
|118,825,582|
|31,701,965|
|692,680,129|
|2,198,931,219|
|6,664,914,383|
|1,884,986,333|

45,841,845,665
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
1. Classification of financial instruments (continued)
Dec. 31, 2016
Financial assets
Financial assets
Loan and Available-for-sal
measured at fair e
value with Accounts Financial asset Total changes included receivable s
in current profits
and losses
||
|-|
|Monetary fund|
|Financial assets|
|measured at fair|
|value with changes|
|included in current|
|profits and losses|
|Notes receivable|
|Accounts receivable|
|Other receivables|
|Non-current assets|
|due within 1 year|
|Financial assets|
|available-for-sale|
|Long-term|
|receivables|

||
|-|
|-|
|4,615,775|
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|3,597,044,199|
|-|
|296,920,781|
|4,230,746,458|
|433,130,407|
|1,384,438,569|
|-|
|3,791,218,020|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|1,313,572,506|
|-|

||
|-|
|3,597,044,199|
|4,615,775|
|296,920,781|
|4,230,746,458|
|433,130,407|
|1,384,438,569|
|1,313,572,506|
|3,791,218,020|

 4,615,775 13,733,498,434 1,313,572,506 15,051,686,715
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
1. Classification of financial instruments (continued)
Dec. 31, 2016(continued)
Financial liabilities
Other Financial liabilities
||
|-|
|Short-term loans|
|Notes payable|
|Accounts payable|
|Interest payable|
|Dividend payable|
|Other payables|
|Non-current liabilities due within one year|
|Other current liabilities|
|Long-term loans|
|Long-term payables|

||
|-|
|21,485,919,393|
|1,905,121,706|
|5,103,018,897|
|140,195,803|
|31,701,965|
|1,225,135,428|
|799,574,356|
|3,996,025,335|
|3,925,335,497|
|1,618,361,164|

 40,230,389,544 2. Transfer of Financial Assets
Transferred financial assets derecognized as a whole but involved
continuously
As of December 31, 2017, the book value of the bank acceptance bill that the Group had endorsed to the supplier for clearing the accounts payable was RMB 1,519,002,534 Yuan (Dec. 31, 2016: RMB 471,132,348 Yuan), with the maturity term of1~12 months. In accordance with the relevant provisions of the Negotiable Instruments 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 book value of its settled accounts payable in connection with it. The maximum losses and undiscounted cash flows that continue to be involved are equal to their book value. The Group
considers that continuous involvement of fair value is not important.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
2. Transfer of Financial Assets (continued)
Transferred financial assets derecognized as a whole but involved
continuously (continued)
In 2017, the Group failed to recognize any gain or loss (2016: none) on above-mentioned transfer date of financial assets. The Group had no income or expense recognized in current year or accumulatively due to overall termination of recognition but continuous involvement. The endorsement of bank acceptance bill was roughly balanced in current year.
3. Risks of financial instruments
Major financial instruments of the Group include bank loans, mortgage loan formed from sale and lease-back, other interest-bearing borrowings and monetary fund, and the like. The main purpose of these financial instruments is to finance for the operation of the Group. The Group has various other financial assets and liabilities directly arising from operations, such as accounts receivable, long-term receivables and accounts payable, etc.
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 risk
The Group manages the credit risks by category based on portfolio. 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 monetary fund, available-for-sale financial assets and other receivables, whose credit risks arise from that the counterparty default and the maximum exposure is equal to the carrying amount of these instruments. The Group also
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
faces credit risk for providing financial security, as disclosed in Note XI 2 (3).
Since the Group is trading only with a recognized and credibility third party, no collateral is required. The credit risks shall be managed in centralized manner according to the customer/counterparty, geographic region and industry. Since theGroup’s customers of accounts receivable and long-term receivables 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 and long-term receivables.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Credit risk (continued)
Bank deposits of the Group in 2017 and 2016 are mainly saved in state-owned banks and other large or medium-sized listed banks. The Group holds that there is no significant credit risk and no great loss caused by the default of counterparty.
In addition, as for the notes receivable, accounts receivable, long-term receivables and other receivables, the Group has established related policies to control the credit risks exposure. The Group evaluates theclients’ 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 theGroup’s overall credit risks within the range of control.
On December 31, 2017, the term analysis of financial assets with maturity due to no impairment of either individual or combination was analyzed as follows:
2017
Not overdue
Overdue
||
|-|
|2~3 years|

 Monetary
fund 5,770,227,369 5,770,227,369 - - - -
|||
|-|-|
|Notes||
|receivable|420,786,012|
|Receivables|2,524,100,099|
|Other||
|receivables|981,986,979|
|Non-current||
|assets due||
|within 1 year|1,896,475,472|
|Long-term||
|receivables|4,238,704,827|

||
|-|
|420,786,012|
|2,229,191,240|
|981,986,979|
|1,896,475,472|
|4,238,704,827|

||
|-|
|-|
|17,223,670|
|-|
|-|
|-|

||
|-|
|-|
|139,468,191|
|-|
|-|
|-|

||
|-|
|-|
|12,056,612|
|-|
|-|
|-|

||
|-|
|-|
|126,160,386|
|-|
|-|
|-|

2016
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Not overdue
Overdue
Total No Within 1 1~2 years 2~3 years 3 years and depreciation year above Monetary
fund 3,597,044,199 3,597,044,199 - - - -
|||
|-|-|
|Notes||
|receivable|296,920,781|
|Receivables|2,695,273,967|
|Other||
|receivables|703,913,820|
|Non-current||
|assets due||
|within 1 year|1,384,438,569|
|Long-term||
|receivables|3,791,218,020|

||
|-|
|296,920,781|
|2,405,484,653|
|703,913,820|
|1,384,438,569|
|3,791,218,020|

||
|-|
|-|
|70,487,107|
|-|
|-|
|-|

||
|-|
|-|
|18,329,699|
|-|
|-|
|-|

||
|-|
|-|
|58,173,966|
|-|
|-|
|-|

||
|-|
|-|
|142,798,542|
|-|
|-|
|-|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Credit risk (continued)
As of December 31, 2017, accounts receivable nor overdue or impaired were related to a large number of decentralized customers who had no default record recently.
As of December 31, 2017, the accounts receivable overdue but not impaired were related to a large number of independent customers bearing good transaction records with the Group. Based on past experiences, the Group considered that no provision for impairment was required since the credit quality had not changed significantly and was still considered recoverable.
Liquidity risk
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.
As of Dec. 31, 2017, the various financial liabilities of the Group are listed as follows by due dates in undiscounted contracted cash flow (principal and interest included):
2017
Within 1 year 1~2 years 2-5 years 5 years and Total above
||||||
|-|-|-|-|-|
||25,899,118,58|-|-|-|
|Short-term loans|0||||
|Notes payable|1,893,227,482|-|-|-|
|Accounts payable|6,890,814,503|-|-|-|
|Interest payable|118,825,582|-|-|-|

||
|-|
|25,899,118,580|
|1,893,227,482|
|6,890,814,503|
|118,825,582|

 Dividend payable 31,701,965 - - - 31,701,965
||||||
|-|-|-|-|-|
|Other payables|693,597,496|-|-|-|
|Non-current liabilities due|||||
|within 1 year|2,607,918,346|-|-|-|
|Long-term loans|-|3,068,866,936|3,639,532,692|410,067,125|
|Long-term payables|-|969,702,730|962,927,475|-|

||
|-|
|693,597,496|
|2,607,918,346|
|7,118,466,753|
|1,932,630,205|

|||||
|-|-|-|-|
|38,135,203,95||||
|4|4,038,569,666|4,602,460,167|410,067,125|

||
|-|
|47,186,300,912|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Liquidity risk (continued)
As of Dec. 31, 2016, the various financial liabilities of the Group are listed as follows by due dates in undiscounted contracted cash flow (principal and interest included):
Within 1 year 1~2 years 2-5 years 5 years and Total above
|||
|-|-|
|Short-term||
|loans|21,839,991,371|
|Notes payable|1,905,121,706|
|Accounts||
|payable|5,103,018,897|
|Interest||
|payable|140,195,803|
|Dividend||
|payable|31,701,965|
|Other||
|payables|1,244,199,969|
|Non-current||
|liabilities due||
|within 1 year|835,619,032|
|Other current||
|liabilities|4,123,027,778|
|Long-term||
|loans|-|
|Long-term||
|payables|-|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|1,869,935,509|
|543,599,402|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|2,202,260,025|
|1,219,108,721|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|58,345,000|
|-|

||
|-|
|21,839,991,371|
|1,905,121,706|
|5,103,018,897|
|140,195,803|
|31,701,965|
|1,244,199,969|
|835,619,032|
|4,123,027,778|
|4,130,540,534|
|1,762,708,123|

 35,222,876,521 2,413,534,911 3,421,368,746 58,345,000 41,116,125,178 Market risk
Interest rate risk
The interest rate risks of the Group mainly originate from long-term interest-bearing liabilities 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, 2017, theGroup’s
long-term interest-bearing liabilities mainly included the contracts with
flexible rates priced in USD and contracts with fixed rates priced in RMB.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Market risk (continued)
Interest rate risk (continued)
The risk of market interest rate changes which the Group faces is mainly related to the long-term liabilities bearing the interest at floating rate.
The financial division of the Group keeps close watch over the interest rates level of the Group. Since the rise in 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 and adversely impact the financial results of the Group, so the management will control the rate risks via swap contracts based on the latest market status. In 2016 and 2017, the Group had no such swap arrangements. 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 profits and losses (through the impact on loan with floating rate) and the net amount of other comprehensive income after tax.
2017
Base point Net profit and loss Net amount of Total other shareholders’ comprehensive equity income after tax
Increase/(decreas Increase/(decreas Increase/(decreas Increase/(decreas e) e) e) e)
||
|-|
|100|
|(100|

||
|-|
|(40,838,071|
|40,838,071|

||
|-|
|-|
|-|

||
|-|
|(40,838,071|
|40,838,071|

 2016
Base point Net profit and loss Net amount of Total other shareholders’ comprehensive equity income after tax
Increase/(decreas Increase/(decreas Increase/(decreas Increase/(decrea e) e) e) se)
||
|-|
|100|
|(100|

||
|-|
|(19,483,309|
|19,483,309|

||
|-|
|-|
|-|

||
|-|
|(19,483,309|
|19,483,309|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Exchange rate risk
The Group is exposed to transactional exchange rate 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.
The following table shows the sensitivity analysis of the exchange rate risk, reflecting the impact of reasonable and possible changed in USD exchange rate on net profit and loss (due to changes in the fair value of monetary assets and monetary liabilities) and net amount of other comprehensive income after tax (due to changes in the fair value of forward exchange contracts) based on the assumption of no change in other variables.
2017
USD Exchange Net profit and Net amount of Totalshareholders’ rate loss other equity comprehensive
income after tax
Increase/(decrease Increase/(decrea Increase/(decreas Increase/(decrease)% se) e) )
|||
|-|-|
|Appreciation of RMB||
|against USD|1|
|Depreciation of RMB||
|against USD|(1|

||
|-|
|32,343,556|
|(32,343,556|

||
|-|
|-|
|-|

||
|-|
|32,343,556|
|(32,343,556|

 2016
USD Exchange Net profit and loss Net amount of Total rate other shareholders’ comprehensive equity income after tax
Increase/(decrease Increase/(decrea Increase/(decreas Increase/(decreas)% se) e) e)
|||
|-|-|
|Appreciation of RMB||
|against USD|1|
|Depreciation of RMB||
|against USD|(1|

||
|-|
|26,232,074|
|(26,232,074|

||
|-|
|-|
|-|

||
|-|
|26,232,074|
|(26,232,074|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
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 the 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 theshareholders’ equity 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. The net debt is the total borrowing (including short-term loans included in the consolidated balance sheet, other non-current liabilities due within one year, other current liabilities, long-term loans, other payable and interest-bearing liabilities in long-term payables) minus cash and cash equivalents. The total capital is the totalshareholders’ equity plus net debt.
On Dec. 31, 2017 and Dec. 31, 2016, the debt ratio of the Group was listed below:
Dec. 31, 2017 Dec. 31, 2016 Debt ratio 65% 64% IX. Disclosure of Fair Value
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: unadjusted quotation of the same kind of assets or liabilities on activate 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
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IX. Disclosure of Fair Value (continued)
1. Assets and liabilities measured at fair value
On Dec. 31, 2017, the assets continuously measured at fair value are listed as follows based on above 3 tiers:
Input value used for fair value measurement
Quotation on Important Important
active market observable unobservabl
input value e input value
(Tire one) (Tire two) (Tire three) Total
|||
|-|-|
|Financial assets||
|Financial assets measured||
|at fair value with changed||
|included in current profits||
|and losses||
|Equity instrument||
|investment|-|
|Financial assets||
|available-for-sale||
|Available-for-sale equity||
|instruments|1,261,209,745|

||
|-|
|-|
|-|

||
|-|
|8,438,278|
|-|

||
|-|
|8,438,278|
|1,261,209,745|

 1,261,209,745 - 8,438,278 1,269,648,023 On Dec. 31, 2016, the assets continuously measured at fair value are listed as follows based on above 3 tiers:
Input value used for fair value measurement
Quotation on Important Important
active market observable unobservabl
input value e input value
(Tire one) (Tire two) (Tire three) Total
|||
|-|-|
|Financial assets||
|Financial assets measured||
|at fair value with changed||
|included in current profits||
|and losses||
|Forward exchange||
|contract|-|
|Financial assets||
|available-for-sale||
|Available-for-sale equity||
|instruments|1,270,578,346|

||
|-|
|4,615,775|
|-|

||
|-|
|-|
|-|

||
|-|
|4,615,775|
|1,270,578,346|

1,270,578,346 4,615,775 - 1,275,194,121
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IX. Disclosure of Fair Value (continued)
1. Assets and liabilities measured at fair value (continued)
The Group regards the event occurring date transferring between the tires as the time point for confirmation. There is no transfer between the tires this year.
As for the financial instrument traded on active market, the Group will confirm the fair value with the quotation on 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 risk-free interest rate and long exchange rate.
Information on the fair value measurement at tire two is as follows:
Dec. 31, 2016 Observable input value
Fair value Valuation Name Scope techniqu
e
||
|-|
|Financial assets measured|
|at fair value with changed|
|included current profits|
|and losses|

||
|-|
|4,615,775|

||
|-|
|Cash|
|flow|
|Discount|
|model|

||
|-|
|1,145.45|
|1,145.50|

 The important unobservable input values measured at fair vale at tire three are as follows:
Dec. 31, 2017 Unobservable input value Fair value Valuation Name Weighted techniqu average e
||
|-|
|Financial assets measured|
|at fair value with changed|
|included current profits|
|and losses|

||
|-|
|8,438,278|

||
|-|
|Cash|
|flow|
|discount|
|model|

||
|-|
|7.8%|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IX. Disclosure of Fair Value (continued)
2. Assets and liabilities disclosed at fair value
The financial assets and liabilities measured at amortized cost of the Group mainly include monetary fund, notes receivable, receivables, long-term receivables, non-current assets due within one year, short-term loans, notes payable, payables, long-term loans, non-current liabilities due within one year and bond payables.
The long-term receivables of the Group are the receivables with floating rate, and the difference between the book value and fair value is small. The management has evaluated the monetary fund, notes receivable, accounts receivables, notes payable and accounts payable, and the fair value is equal to the book value due to short remaining term.
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:
2017 2016
Book value Fair value Book value Fair value
||
|-|
|6,664,914,383|
|1,884,986,333|

||
|-|
|6,631,970,361|
|1,911,741,919|

||
|-|
|3,925,335,497|
|1,618,361,164|

||
|-|
|3,905,480,658|
|1,638,536,115|

||
|-|
|-Long-term|
|loans|
|-Long-term|
|payables|

 8,549,900,716 8,543,712,280 5,543,696,661 5,544,016,773 As for the long-term loans and long-term payables, the fair value shall be confirmed by the future cash flow specified in the contract according to the present value after discount based on the interest rate with comparable credit level and the almost same cash flow rate provided in the same conditions on market.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions
1. Parent company
Registered Business nature Registered Shareholding ratio in Voting proportion in in capital the Company(%) the Company(%) Port project contracting 5,855,423,8
CCCC Beijing and related business 30 46.229 46.229
|||
|-|-|
|China Communications||
|Construction Company||
|Ltd.|Beijing|

|||
|-|-|
|Port project contracting|16,174,735,|
|and related business|425|

|||
|-|-|
|46.229|46.229|

 On July 18, 2017, the board of directors of China Communications Construction Company Ltd. approved through discussion Proposal for Transfer of Some Shares of Shanghai Zhenhua Heavy Industries Co., Ltd through Agreement and Associated Transaction and agreed to transfer totally 1,316,649,346 shares of this Company held by it to CCCC and CCCG (HK) HOLDING LIMITED (hereinafter referred to as “CCCG Hong Kong”), accounting for29.990% of the total shares of this Company, after that, China Communications Construction Company Ltd. held16.239% of the stock equity of this Company. The transfer and registration of shares was accomplished on Dec. 27, 2017. As of the date of the transfer of shares, CCCC directly held 552,686,146 A-shares of this Company (accounting for12.589% of the total shares of this Company), indirectly held 763,963,200 B-shares of this Company through CCCG (Hong Kong) (accounting for17.401% of the total shares of this Company) and held 712,951,703 A-shares of this Company through China Communications Construction Company Ltd. (accounting for16.239% of the total shares of this Company), as a result, it became the holding shareholder of this Company.
The final controlling party of the Company in both 2017 and 2016 is China Communications Construction Company Ltd.
2. Subsidiary
Please refer to Note VII.1 for details of subsidiaries.
3. Joint venture and associated enterprise
Please refer to Note VII.2 for details of joint venture and associated
enterprises.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
4. Other related parties
Related party relationship Friede& Goldman, LLC. Controlled by the same final controlling party
|||
|-|-|
|Zhenhua Harbour Construction Co., Ltd.|Controlled by the same final|
||controlling party|
|Hainan CCCC Fourth Harbor Construction Co., Ltd|Controlled by the same final|
||controlling party|
|Road & Bridge International Construction Co., Ltd.|Controlled by the same final|
||controlling party|
|Nanjing CCCC Weisanlu River Tunnel Co., Ltd|Controlled by the same final|
||controlling party|
|Shanghai Jiangtian Industrial Co., Ltd|Controlled by the same final|
||controlling party|
|Shanghai Communications Construction Co. Ltd.|Controlled by the same final|
||controlling party|
|Zhenhua (Hong Kong) Engineering Co., Ltd,|Controlled by the same final|
||controlling party|
|Yueyang Chenglingji New Port Co., Ltd.|Controlled by the same final|
||controlling party|
|China Harbor Engineering Co., Ltd|Controlled by the same final|
||controlling party|
|China Communications Materials & Equipment Co., Ltd|Controlled by the same final|
||controlling party|
|China Road & Bridge Corporation|Controlled by the same final|
||controlling party|
|Chuwa Bussan Co. Ltd.|Controlled by the same final|
||controlling party|

 CCCC Finance Co., Ltd Controlled by the same final controlling party
|||
|-|-|
|CCCC Second Highway Engineering Co., Ltd.|Controlled by the same final|
||controlling party|
|CCCC Second Highway Consultants Co. Ltd.|Controlled by the same final|
||controlling party|
|CCCC Second Harbor Engineering Co., Ltd.|Controlled by the same final|
||controlling party|
|CCCC Third Highway Engineering Co. Ltd.|Controlled by the same final|
||controlling party|
|CCCC Third Harbor Engineering Co., Ltd.|Controlled by the same final|
||controlling party|

 CCCC Third Harbor Consultants Co. Ltd. Controlled by the same final controlling party
||
|-|
|(To be continued)|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
4. Other related parties (continued)
Related party relationship (Continued)
CCCC Fourth Highway Engineering Co. Ltd. Controlled by the same final controlling party CCCC Fourth Harbor Engineering Co., Ltd Controlled by the same final controlling party CCCC-FHDI Engineering Co., Ltd Controlled by the same final controlling party CCCC First Highway Engineering Co. Ltd. Controlled by the same final controlling party CCCC First Harbor Engineering Co., Ltd. Controlled by the same final controlling party CCCC First Harbor Consultants Co., Ltd. Controlled by the same final controlling party CCCC-SHEC Second Engineering Co. Ltd. Controlled by the same final controlling party CCCC-SHEC Third Highway Engineering Co. Controlled by the same final Ltd. controlling party CCCC-SHEC No.4 Engineering Co., Ltd. Controlled by the same final controlling party CCCC-SHEC No.1 Engineering Co., Ltd. Controlled by the same final controlling party CCCC-SHEC Railway Engineering Co., Ltd. Controlled by the same final controlling party China Communications Second Navigational Controlled by the same final Bureau Second Engineering Co., Ltd. controlling party No.3 Engineering Co., Ltd. of CCCC Second Controlled by the same final Harbor Engineering Co., Ltd. controlling party No.4 Engineering Co., Ltd. of CCCC Second Controlled by the same final Harbor Engineering Co., Ltd. controlling party No.1 Engineering Co., Ltd. of CCCC Second Controlled by the same final Harbor Engineering Co., Ltd. controlling party CCCC Highway Bridges National Engineering Controlled by the same final Research Centre CO., Ltd. controlling party CCCC Guangzhou Dredging Co. Ltd. Controlled by the same final controlling party CCCC International Shipping Co., Ltd. Controlled by the same final controlling party CCCC Marine Construction& Development Co., Controlled by the same final Ltd. controlling party CTTIC Shanghai Co., Ltd. Controlled by the same final controlling party
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
CCCC East China Investment Co., Ltd. Controlled by the same final controlling party CCCC Electrical and Mechanical Engineering Controlled by the same final Bureau Co., Ltd. controlling party Road& Bridge South China Engineering Co., Ltd. Controlled by the same final controlling party Road& Bridge International Co., Ltd. Controlled by the same final controlling party CCCC Nanjing Traffic Engineering Management Controlled by the same final Co., Ltd. controlling party (To be continued)
X. Related Party Relationships and
Transactions (continued)
4. Other related parties (continued)
Related party relationship (Continued)
No.2 Engineering Co., Ltd. of CCCC Third Harbor Controlled by the same final Engineering Co., Ltd. controlling party No.3 Engineering Co., Ltd. of CCCC Third Harbor Controlled by the same final Engineering Co., Ltd. controlling party XING AN JI Engineering Co., Ltd. of CCCC Third Controlled by the same final Harbor Engineering Co., Ltd. controlling party CCCC Shanghai Dredging Co. Ltd. Controlled by the same final controlling party CCCC Shanghai Equipment Engineering Co., Controlled by the same final Ltd. controlling party CCCC Dredging (Group) Co., Ltd. Controlled by the same final controlling party CCCC Water Transportation Planning and Controlled by the same final Design Institute Co., Ltd. controlling party CCCC Fourth Harbor Engineering Institute Co., Controlled by the same final Ltd. controlling party The Second Engineering Company of CCCC Controlled by the same final Fourth Harbor Engineering Co., Ltd. controlling party CCCC Tunnel Engineering Co., Ltd. Controlled by the same final controlling party CCCC Tianjin Dredging - Binhai Environmental Controlled by the same final Protection Engineering Co., Ltd. controlling party CCCC Tianjin Port Waterway Prospection& Controlled by the same final Design Research Institute Co., Ltd. controlling party CCCC Tianjin Industry and Trade Co., Ltd. Controlled by the same final controlling party CCCC Tianjin Dredging Co., Ltd. Controlled by the same final
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
controlling party CCCC Wuhan Harbour Engineering Design and Controlled by the same final Research Co. Ltd controlling party The Sixth Engineering Co., Ltd. of CCCC First Controlled by the same final Highway Engineering Co., Ltd. controlling party Installation Engineering Company of CCCC First Controlled by the same final Highway Engineering Co. Ltd. controlling party CCCC-FHEC Urban Traffic Engineering Co., Ltd. Controlled by the same final controlling party No.1 Engineering Co., Ltd. of CCCC First Harbor Controlled by the same final Engineering Co., Ltd. controlling party Second Engineering Co., Ltd. of CCCC First Controlled by the same final Harbor Engineering Co., Ltd. controlling party CCCC Leasing JIA HUA ER Co., Ltd. Controlled by the same final controlling party CCCC Leasing JIA HUA YI Co., Ltd. Controlled by the same final controlling party
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party
The transaction price between the Group and the related party is based on mutual agreement and with reference to market price.
(1) Goods and service transaction with related party
Selling goods/providing service to related party
2017 2016 CCCC Financial Leasing Co., Ltd. 728,945,754 20,652,755 CCCC Tianjin Dredging Co., Ltd. 471,642,717 155,198,269 Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 439,726,261 16,648,649 CCCC First Harbor Engineering Co., Ltd. 311,673,509 8,219,845 China Harbor Engineering Co., Ltd 232,091,723 147,800,178 China Communications Construction
Company Ltd. 221,713,310 11,627,327 Road& Bridge International Co., Ltd. 97,734,474 81,639,431 CCCC Tunnel Engineering Co., Ltd. 96,474,819 144,526,777 CCCC Second Harbor Engineering Co., Ltd. 62,392,577 389,557,043 No.1 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 57,742,023 - CCCC Electrical and Mechanical
Engineering Bureau Co., Ltd. 56,423,470 - CCCC Second Highway Engineering Co.,
Ltd. 51,535,600 11,802,499
|||
|-|-|
|Road & Bridge South China Engineering||
|Co., Ltd.|44,066,592|

||
|-|
|-|

 No.4 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 36,707,819 -
|||
|-|-|
|No.3 Engineering Co., Ltd. of CCCC||
|Second Harbor Engineering Co., Ltd.|28,130,115|
|CCCC First Harbor Consultants Co., Ltd.|27,435,897|
|CCCC Third Harbor Engineering Co., Ltd.|23,994,666|
|China Road & Bridge Corporation|23,045,665|
|Chuwa Bussan Co. Ltd.|20,992,826|
|CCCC-SHEC Third Highway Engineering||
|Co. Ltd.|15,152,103|
|Hainan CCCC Fourth Harbor Construction||
|Co., Ltd|7,710,256|
|CCCC Fourth Harbor Engineering Co., Ltd|5,805,005|
|(To be continued)||

||
|-|
|69,043,050|
|-|
|81,407,370|
|179,013,839|
|193,053,287|
|-|
|19,279,683|
|17,389,362|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
(1) Goods and service transaction with related party (continued)
Selling goods/providing service to related party (continued)
||
|-|
|(Continued)|
|CCCC-FHDI Engineering Co., Ltd.|

||
|-|
|2017|
|5,058,462|

||
|-|
|2016|
|121,403,077|

 ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
Sirketi 4,167,390 - CCCC Third Highway Engineering
Co. Ltd. 2,752,482 22,068,890
||
|-|
|CCCC Guangzhou Dredging Co. Ltd.|
|CCCC-SHEC Second Engineering|
|Co. Ltd.|
|No.1 Engineering Co., Ltd. of CCCC|
|First Harbor Engineering Co., Ltd.|
|CCCC International Shipping Co.,|
|Ltd.|
|CCCC Third Harbor Consultants Co.,|
|Ltd.|
|China Communications Second|
|Navigational Bureau Second|
|Engineering Co., Ltd.|
|Second Engineering Co., Ltd. of|
|CCCC First Harbor Engineering Co.,|
|Ltd.|
|Friede & Goldman, LLC.|

||
|-|
|1,949,573|
|1,729,907|
|14,151|
|-|
|-|
|-|
|-|
|-|

||
|-|
|-|
|37,101,137|
|-|
|233,003,192|
|175,876,344|
|62,720,000|
|42,279,112|
|26,755,168|

 CCCC Fourth Harbor Engineering
Institute Co., Ltd. - 26,568,685
||
|-|
|CCCC East China Investment Co.,|
|Ltd.|
|CCCC Highway Bridges National|
|Engineering Research Centre CO.,|
|Ltd.|
|Zhenhua (Hong Kong) Engineering|
|Co., Ltd,|

||
|-|
|-|
|-|
|-|

||
|-|
|10,697,446|
|4,829,060|
|134,656|

 3,076,809,146 2,310,296,131
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
(1) Goods and service transaction with related party (continued)
Related party provides service for the Group
2017 2016 CCCC Tianjin Dredging Co., Ltd. 462,492,064 331,677,108
||
|-|
|CCCC Second Harbor Engineering Co.,|
|Ltd.|

||
|-|
|161,465,657|

||
|-|
|-|

CCCC First Highway Engineering Co.
Ltd. 137,930,629 - CCCC Third Harbor Engineering Co.,
Ltd. 134,235,980 64,290,666 CCCC-SHEC Second Engineering Co.
Ltd. 112,198,187 - CCCC Fourth Highway Engineering Co.
Ltd. 96,055,525 75,048,039
||
|-|
|No.1 Engineering Co., Ltd. of CCCC|
|First Harbor Engineering Co., Ltd.|
|Shanghai Communications Construction|
|Co. Ltd.|
|CCCC Second Highway Consultants|
|Co., Ltd.|

||
|-|
|63,578,055|
|61,115,756|
|30,059,257|

||
|-|
|22,573,250|
|21,633,168|
|91,221,324|

 The Second Engineering Company of
CCCC Fourth Harbor Engineering Co.,
Ltd. 28,312,923 - CCCC First Harbor Engineering Co.,
Ltd. 26,777,335 - Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 21,662,715 14,565,939
||
|-|
|No.3 Engineering Co., Ltd. of CCCC|
|Third Harbor Engineering Co., Ltd.|
|CCCC Water Transportation Planning|
|and Design Institute Co., Ltd.|
|No.2 Engineering Co., Ltd. of CCCC|
|Third Harbor Engineering Co., Ltd.|
|Installation Engineering Company of|
|CCCC First Highway Engineering Co.|
|Ltd.|
|CCCC First Harbor Consultants Co.,|
|Ltd.|
|ZPMC Mediterranean Liman|
|Makinalari Ticaret Anonim|
|Sirketi|
|(To be continued)|

||
|-|
|17,743,903|
|12,105,094|
|10,427,350|
|5,989,401|
|5,858,503|
|3,548,020|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
(1) Goods and service transaction with related party (continued)
Related party provides service for the Group (continued)
||
|-|
|(Continued)|
|CCCC Highway Bridges National|
|Engineering Research Centre CO.,|
|Ltd.|
|CCCC Shanghai Dredging Co. Ltd.|
|CTTIC Shanghai Co., Ltd.|
|CCCC Third Harbor Consultants Co.,|
|Ltd.|
|China Communications Construction|
|Company Ltd.|
|CCCC Second Highway Engineering|
|Co., Ltd.|
|CCCC Tianjin Industry and Trade|
|Co., Ltd.|
|CCCC East China Investment Co.,|
|Ltd.|
|Shanghai Jiangtian Industrial Co.,|
|Ltd|

||
|-|
|2017|
|1,777,778|
|1,727,336|
|929,915|
|142,383|
|-|
|-|
|-|
|-|
|-|

||
|-|
|2016|
|-|
|-|
|17,094|
|56,913|
|13,661,221|
|7,079,715|
|296,154|
|247,863|
|25,173|

||
|-|
|1,396,133,76|
|6|

||
|-|
|642,393,627|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued) (1) Goods and service transaction with related party (continued)
Purchase products from related party
2017 2016
||
|-|
|CCCC Shanghai Equipment|
|Engineering Co., Ltd.|
|ZMPC Changzhou Paint Co., Ltd.|
|Chuwa Bussan Co. Ltd.|
|Shanghai Jiangtian Industrial Co., Ltd|
|China Communications Materials &|
|Equipment Co., Ltd|
|CCCC Fourth Highway Engineering|
|Co. Ltd.|
|Nanjing CCCC Weisanlu River|
|Tunnel Co., Ltd|

||
|-|
|131,400,593|
|88,611,099|
|42,752,896|
|15,435,145|
|5,989,665|
|4,868,840|
|418,291|

||
|-|
|100,037,221|
|120,664,901|
|182,477,645|
|-|
|14,248|
|2,993,504|
|72,175|

 CCCC Tianjin Industry and Trade
Co., Ltd. 22,846 -
||
|-|
|CCCC Tianjin Port & Waterway|
|Prospection & Design Research|
|Institute Co., Ltd.|

||
|-|
|-|

||
|-|
|2,169,230|

 289,499,375 408,428,924 (2) Dividend paid to related party
2017 2016 China Communications Construction
Company Ltd. 126,563,785 502,283 Zhenhua (Hong Kong) Engineering
Co., Ltd, 74,967,750 - Zhenhua Harbour Construction Co.,
Ltd. 1,428,570 - 202,960,105 502,283
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued) (3) Saving money in/(drawing money from) related party
2017 2016 China Communications
Construction Company Ltd. 20,206,089 -
||
|-|
|(185,697,167|
|(165,491,078|

||
|-|
|528,772,323|
|528,772,323|

 (4) Borrowings to related party
2017 2016
||
|-|
|CCCC Finance Co., Ltd|
|CCCC Leasing JIA HUA YI Co.,|
|Ltd.|
|CCCC Financial Leasing Co.,|
|Ltd.|

||
|-|
|1,150,000,000|
|991,005,000|
|43,000,000|

||
|-|
|300,000,000|
|-|
|2,120,845,793|

 2,184,005,000 2,420,845,793 (5) Interest collected from related party
2017 2016 CCCC Finance Co., Ltd 1,527,782 513,218 China Communications
Construction Company Ltd. 143,106 -
||
|-|
|1,670,888|

||
|-|
|513,218|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued) (6) Interest paid to related party
2017 2016
||
|-|
|CCCC Financial Leasing Co., Ltd.|
|CCCC Finance Co., Ltd|
|CCCC Leasing JIA HUA YI Co., Ltd.|
|CCCC Leasing JIA HUA ER Co., Ltd.|

||
|-|
|61,295,275|
|22,784,195|
|18,155,201|
|18,155,201|

||
|-|
|46,047,152|
|11,201,250|
|8,819,415|
|8,819,415|

 120,389,872 74,887,232 (7) Related party leasing
Rental income as lessor
Type of leasing 2017 2016 assets
||
|-|
|Zhenhua Ocean Energy (Hong|
|Kong) Co., Ltd|

||
|-|
|Vessel|

||
|-|
|158,746,932|

||
|-|
|169,580,194|

 Jiangsu Longyuan Zhenhua Ocean - Engineering Co., Ltd Vessel 27,414,329
CCCC First Navigational Bureau
Urban Traffic Engineering Co., Ltd. Shield 26,525,385 - CCCC Second Highway - Engineering Co., Ltd. Shield 6,727,590
Road& Bridge International Co.,
Ltd. Shield 3,499,733
CCCC Third Highway Engineering - Co. Ltd. Shield 2,928,360
||
|-|
|China Communications|
|Construction Company Ltd.|
|CCCC-SHEC No.4 Engineering Co.,|
|Ltd.|
|CCCC-SHEC No.1 Engineering Co.,|
|Ltd.|
|CCCC First Harbor Engineering Co.,|
|Ltd.|
|CCCC Tunnel Engineering Co., Ltd.|

||
|-|
|Shield|
|Shield|
|Shield|
|Shield|
|Shield|

||
|-|
|2,162,605|
|1,841,219|
|1,336,752|
|895,138|
|-|

||
|-|
|1,606,804|
|-|
|-|
|-|
|125,440,000|

 No.2 Engineering Co., Ltd. of CCCC
Third Harbor Engineering Co., Ltd. Shield - 501,755
232,078,043 297,128,753
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued) (8) Compensation of key executives
2017 2016 Compensation of key executives 10,855,200 14,574,800 The number of key executives of the Group in 2017 was 26 (2016: 24). The compensation of the newly added executives and the resigned executives are calculated according to the tenure. The compensation shall be calculated on a yearly basis for other employees.
6. Commitments with related parties
The following are the commitments contracted but not necessarily listed on balance sheet relating to related parties on balance sheet date:
Related parties provided labor service for the 2017 2016 Group
CCCC Tianjin Dredging Co., Ltd. 927,318,851 1,344,348,653 CCCC Fourth Highway Engineering Co. Ltd. 734,725,379 835,973,095 CCCC First Highway Engineering Co. Ltd. 590,349,313 -
||
|-|
|CCCC Third Harbor Engineering Co., Ltd.|
|No.1 Engineering Co., Ltd. of CCCC First|
|Harbor Engineering Co., Ltd.|
|CCCC Second Highway Consultants Co., Ltd.|
|CCCC Tunnel Engineering Co., Ltd.|
|Shanghai Communications Construction Co.|
|Ltd.|

||
|-|
|326,513,794|
|74,178,156|
|10,832,844|
|5,265,067|
|-|

||
|-|
|387,588,088|
|139,829,924|
|34,418,446|
|5,265,067|
|650,837|

 2,669,183,404 2,748,074,110 Leased assets to the related party 2017 2016
||
|-|
|1,363,334,924|

||
|-|
|1,522,081,855|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
6. Commitments with related parties (continued)
Selling goods/providing service to related party
2017 2016
|||
|-|-|
|CCCC Financial Leasing Co., Ltd.|558,387,580|

 CCCC Electrical and Mechanical Engineering
Bureau Co., Ltd. 210,243,196 -
|||
|-|-|
|No.3 Engineering Co., Ltd. of CCCC Second||
|Harbor Engineering Co., Ltd.|117,245,158|
|China Communications Construction Company||
|Ltd.|114,814,493|
|CCCC Second Highway Engineering Co., Ltd.|70,783,170|
|China Harbor Engineering Co., Ltd|52,196,041|
|CCCC Tunnel Engineering Co., Ltd.|50,732,292|
|CCCC Second Harbor Engineering Co., Ltd.|47,304,779|
|Jiangsu Longyuan Zhenhua Ocean Engineering||
|Co., Ltd|46,426,694|

||
|-|
|69,043,050|
|-|
|55,801,029|
|-|
|11,054,256|
|126,518,010|
|-|

 Road& Bridge International Co., Ltd. 43,462,687 74,183,233
|||
|-|-|
|No.4 Engineering Co., Ltd. of CCCC Second||
|Harbor Engineering Co., Ltd.|24,471,879|
|CCCC Tianjin Dredging Co., Ltd.|23,885,509|
|No.1 Engineering Co., Ltd. of CCCC Second||
|Harbor Engineering Co., Ltd.|19,181,054|
|Road & Bridge South China Engineering Co.,||
|Ltd.|16,531,032|
|CCCC Third Harbor Engineering Co., Ltd.|9,069,488|
|CCCC Water Transportation Planning and||
|Design Institute Co., Ltd.|6,672,629|
|No.1 Engineering Co., Ltd. of CCCC First||
|Harbor Engineering Co., Ltd.|5,264,957|
|China Road & Bridge Corporation|4,521,227|
|Chuwa Bussan Co. Ltd.|4,443,667|
|CCCC Third Harbor Consultants Co. Ltd.|4,130,393|
|CCCC-SHEC Third Highway Engineering Co.||
|Ltd.|1,060,291|

||
|-|
|-|
|495,528,226|
|-|
|-|
|11,620,766|
|6,672,629|
|5,264,957|
|28,043,324|
|13,138,761|
|-|
|-|

 CCCC Third Highway Engineering Co. Ltd. 80,867 1,127,786
|||
|-|-|
|CCCC First Harbor Engineering Co., Ltd.|25,180|
|Hainan CCCC Fourth Harbor Construction Co.,||
|Ltd|13,248|

||
|-|
|341,880|
|7,723,504|

CCCC-SHEC Second Engineering Co. Ltd. 7,727 1,541,429
CCCC International Shipping Co., Ltd. - 26,318,763
(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
6. Commitments with related parties (continued)
Selling goods/providing service to related party (continued)
2017 2016 (Continued)
Friede& Goldman, LLC. - 11,000,000 CCCC-FHDI Engineering Co., Ltd - 5,058,462 Second Engineering Co., Ltd. of
CCCC First Harbor Engineering Co.,
Ltd. - 4,528,473 CCCC Fourth Harbor Engineering
Institute Co., Ltd. - 36,103 1,430,955,238 995,666,063 Standby leasing agreement signed 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 (collectively referred to as “CCCC Jiahua”), with the rental term from March 5, 2016 to December 5, 2021.The contract will come into effect when the ship rental agreement signed by the subsidiary of the Company and CCCC Jiahuacan’t be performed normally. As of Dec. 31, 2017, the maximum payment amount of the contract was RMB 604,861,711 Yuan (Dec. 31, 2016: RMB 737,304,000 Yuan).
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
7. Balance of receivables from related parties
2017 2016
Book Provision Provision for balance for bad debt Book balance bad debt Accounts receivable
||
|-|
|CCCC First Harbor Engineering Co.,|
|Ltd.|
|CCCC Tunnel Engineering Co., Ltd.|
|No.4 Engineering Co., Ltd. of CCCC|
|Second Harbor Engineering Co., Ltd.|
|CCCC Second Harbor Engineering|
|Co., Ltd.|
|Jiangsu Longyuan Zhenhua Ocean|
|Engineering Co., Ltd|
|No.3 Engineering Co., Ltd. of CCCC|
|Second Harbor Engineering Co., Ltd.|

||
|-|
|243,038,11|
|7|
|62,548,820|
|61,000,000|
|54,546,226|
|40,731,949|
|36,245,810|

|||
|-|-|
|-|72,345,219|
|-|-|
|-|-|
|-|31,166,430|
|-|37,087,652|
|-|-|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|

 China Communications Construction
Company Ltd. 34,548,987 - 58,509,343 -
||
|-|
|CCCC Financial Leasing Co., Ltd.|
|CCCC-FHDI Engineering Co., Ltd.|
|Zhenhua Ocean Energy (Hong Kong)|
|Co., Ltd.|
|CCCC Third Harbor Engineering Co.,|
|Ltd.|
|The Second Engineering Company of|
|CCCC Fourth Harbor Engineering Co.,|
|Ltd.|

||
|-|
|33,507,250|
|29,592,000|
|27,901,034|
|27,387,519|
|24,901,085|

|||
|-|-|
|-|-|
|-|88,776,000|
|-|-|
|-|32,184,194|
|-|5,233,497|

||
|-|
|-|
|-|
|-|
|-|
|-|

 CCCC First Harbor Consultants Co.,
Ltd. 17,736,000 - - - Friede& Goldman, LLC. 16,205,750 - 16,718,142 - CCCC First Navigational Bureau
Urban Traffic Engineering Co., Ltd. 15,268,940 - - - China Communications Second
Navigational Bureau Second
Engineering Co., Ltd. 12,761,828 - 5,700,505 - CCCC Fourth Harbor Engineering Co.,
Ltd 12,000,000 - 24,670,995 - CCCC Third Highway Engineering Co.
Ltd. 11,901,177 - - - Road& Bridge International
Construction Co., Ltd. 11,429,413 - - -
||
|-|
|CCCC Second Highway Engineering|
|Co., Ltd.|
|Road & Bridge South China|
|Engineering Co., Ltd.|

||
|-|
|11,311,717|
|11,279,627|

|||
|-|-|
|-|-|
|-|-|

||
|-|
|-|
|-|

 ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
Sirketi 11,000,668 - - -
||
|-|
|CCCC-SHEC Third Highway|
|Engineering Co. Ltd.|

||
|-|
|7,422,819|

|||
|-|-|
|-|-|

||
|-|
|-|

 The Sixth Engineering Co., Ltd. of
CCCC First Highway Engineering Co.,
Ltd. 6,098,300 - 6,098,300 -
||
|-|
|Second Engineering Co., Ltd. of|
|CCCC First Harbor Engineering Co.,|
|Ltd.|
|Road & Bridge International Co., Ltd.|
|CCCC-SHEC No.4 Engineering Co.,|
|Ltd.|
|(To be continued)|

||
|-|
|5,219,557|
|4,544,688|
|4,384,226|

|||
|-|-|
|-|5,053,317|
|-|9,032,783|
|-|-|

||
|-|
|-|
|-|
|-|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
7. Balance of receivables from related parties (continued)
||
|-|
|Accounts receivable (continued)|
|(Continued)|
|CCCC-SHEC Second|
|Engineering Co. Ltd.|
|CCCC Ocean Engineering|
|Vessel Technology Research|
|Centre Co., Ltd|
|Installation Engineering|
|Company of CCCC First|
|Highway Engineering Co. Ltd.|
|CCCC Third Harbor Consultants|
|Co., Ltd.|
|CCCC Tianjin Industry and|
|Trade Co., Ltd.|
|CCCC Shanghai Equipment|
|Engineering Co., Ltd.|
|Yueyang Chenglingji New Port|
|Co., Ltd.|
|CCCC-SHEC Railway|
|Engineering Co., Ltd.|
|No.1 Engineering Co., Ltd. of|
|CCCC First Harbor Engineering|
|Co., Ltd.|
|China Harbor Engineering Co.,|
|Ltd|
|CCCC Water Transportation|
|Planning and Design Institute|
|Co., Ltd.|
|CCCC Highway Bridges|
|National Engineering Research|
|Centre CO., Ltd.|
|No.2 Engineering Co., Ltd. of|
|CCCC Third Harbor Engineering|
|Co., Ltd.|
|CCCC Tianjin Dredging - Binhai|
|Environmental Protection|
|Engineering Co., Ltd.|

|||
|-|-|
|2017||
||Provision|
|Book|for bad|
|balance|debt|
|1,438,507|-|
|1,100,000|-|
|253,297|-|
|150,000|-|
|56,700|-|
|52,777|-|
|44,900|-|
|26,297|-|
|-|-|
|-|-|
|-|-|
|-|-|
|-|-|
|-|-|

|||
|-|-|
|2016||
||Provision|
||for bad|
|Book balance|debt|
|1,438,507|-|
|1,100,000|-|
|253,297|-|
|6,000,000|-|
|140,711|-|
|45,635|-|
|48,680|-|
|-|-|
|100,793,713|-|
|33,636,903|-|
|18,382,000|-|
|5,650,000|-|
|5,008,691|-|
|2,170,000|-|

 XING AN JI Engineering Co., Ltd
of CCCC Third Harbor
Engineering Co., Ltd - - 331,860 -
||
|-|
|837,635,985|

||
|-|
|-|

||
|-|
|567,576,374|

||
|-|
|-|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
2017 2016
Provision Provision Book for bad for bad balance debt Book balance debt Monetary fund
CCCC Finance Co., Ltd 479,650,805 - 663,820,190 - China Communications
Construction Company Ltd. 20,349,195 - - - 500,000,000 - 663,820,190 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
7. Balance of receivables from related parties (continued)
2017 2016 Notes receivable
CCCC First Harbor Engineering Co., Ltd. 49,000,000 -
||
|-|
|796,000|
|49,796,000|

||
|-|
|Other receivables|
|CCCC Financial Leasing Co., Ltd.|
|Zhenhua Ocean Energy (Hong Kong)|
|Co., Ltd.|
|China Communications Construction|
|Company Ltd.|
|CCCC Nanjing Traffic Engineering|
|Management Co., Ltd.|
|Jiangsu Longyuan Zhenhua Ocean|
|Engineering Co., Ltd|
|CCCC Second Harbor Engineering Co.,|
|Ltd.|

|||
|-|-|
|2017||
||Provision for|
|Book balance|bad debt|
|176,800,000|-|
|164,124,678|164,124,678|
|62,004,518|-|
|6,500,000|-|
|-|-|
|-|-|

|||
|-|-|
|2016||
||Provision|
|Book balance|for bad debt|
|-|-|
|-|-|
|-|-|
|-|-|
|1,750,622|-|
|100,000|-|

 409,429,196 164,124,678 1,850,622 -
||
|-|
|Prepayment|
|CCCC First Harbor Engineering Co.,|
|Ltd.|
|Chuwa Bussan Co. Ltd.|
|CCCC Fourth Highway Engineering|
|Co. Ltd.|
|The Second Engineering Company of|
|CCCC Fourth Harbor Engineering|
|Co., Ltd.|
|CCCC Third Harbor Engineering Co.,|
|Ltd.|
|CCCC East China Investment Co.,|
|Ltd.|

|||
|-|-|
|2017||
||Provision for|
|Book balance|bad debt|
|10,000,000|-|
|6,680,981|-|
|6,000,003|-|
|5,000,000|-|
|5,000,000|-|
|-|-|

|||
|-|-|
|2016||
||Provision|
|Book balance|for bad debt|
|-|-|
|-|-|
|-|-|
|-|-|
|-|-|
|7,210,205|-|

 32,680,984 - 7,210,205 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties
2017 2016
Chuwa Bussan Co. Ltd. 254,526,575 358,758,413
CCCC-SHEC Second Engineering Co. Ltd. 184,712,479 -
||
|-|
|CCCC Tianjin Dredging Co., Ltd.|
|CCCC Second Harbor Engineering Co., Ltd.|
|CCCC Third Harbor Engineering Co., Ltd.|
|No.3 Engineering Co., Ltd. of CCCC Second Harbor Engineering|
|Co., Ltd.|

|||
|-|-|
|181,111,928|92,096,212|
|178,914,819|-|
|148,448,390|115,648,769|
|134,081,469||
||221,168,711|

CCCC First Highway Engineering Co. Ltd. 109,392,836 -
|||
|-|-|
|97,685,283|81,806,205|

Shanghai Communications Construction Co. Ltd. 47,138,300 9,675,865
||
|-|
|CCCC Second Highway Consultants Co. Ltd.|
|CCCC Shanghai Equipment Engineering Co., Ltd.|
|No.1 Engineering Co., Ltd. of CCCC First Harbor Engineering Co.,|
|Ltd.|
|CCCC Second Highway Engineering Co., Ltd.|
|Shanghai Zhenhua Heavy Industries (Group) Changzhou Paint Co.,|
|Ltd.|
|The Second Engineering Company of CCCC Fourth Harbor|
|Engineering Co., Ltd.|
|CCCC Tunnel Engineering Co., Ltd.|
|CCCC Water Transportation Planning and Design Institute Co., Ltd.|
|No.3 Engineering Co., Ltd. of CCCC Third Harbor Engineering Co.,|
|Ltd.|
|XING AN JI Engineering Co., Ltd. of CCCC Third Harbor|
|Engineering Co., Ltd.|
|Shanghai Jiangtian Industrial Co., Ltd|
|CCCC Ocean Engineering Vessel Technology Research Centre|
|Co., Ltd|
|Installation Engineering Company of CCCC First Highway|
|Engineering Co. Ltd.|
|No.2 Engineering Co., Ltd. of CCCC Third Harbor Engineering Co.,|
|Ltd.|
|China Communications Construction Company Ltd.|
|CCCC Tianjin Port Waterway Prospection & Design Research|
|Institute Co., Ltd.|

|||
|-|-|
|41,215,576|48,804,871|
|29,563,161|14,170,536|
|25,348,030||
||11,410,703|
|23,175,061|149,221,661|
|17,929,841||
||8,725,170|
|15,626,120||
||-|
|14,678,757|29,059,546|
|14,162,960|160,000|
|13,760,366||
||-|
|10,051,352||
||10,051,352|
|9,942,274|4,380|
|9,363,830||
||9,363,830|
|7,007,599||
||-|
|5,000,000||
||-|
|4,388,938|8,777,876|
|2,999,400||
||-|

Jiangsu Longyuan Zhenhua Ocean Engineering Co., Ltd 2,079,751 17,042,149
CCCC Shanghai Dredging Co. Ltd. 2,020,983 -
CCCC First Harbor Consultants Co., Ltd. 1,367,890 -
||
|-|
|CTTIC Shanghai Co., Ltd.|
|CCCC Wuhan Harbour Engineering Design and Research Co. Ltd|
|CCCC Tianjin Industry and Trade Co., Ltd.|
|CCCC East China Investment Co., Ltd.|
|China Communications Materials & Equipment Co., Ltd|

|||
|-|-|
|1,088,000|-|
|700,000|-|
|-|1,178,100|
|-|290,000|
|-|16,670|

|||
|-|-|
|1,587,481,968|1,187,431,019|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties (continued)
2017 2016
||
|-|
|Advances from customers|
|CCCC Tianjin Dredging - Binhai|
|Environmental Protection Engineering|
|Co., Ltd.|

||
|-|
|65,257,080|

||
|-|
|-|

CCCC Tunnel Engineering Co., Ltd. 45,095,030 - CCCC First Highway Engineering Co. 15,614,964 - Ltd.
CCCC-SHEC Railway Engineering Co., 9,564,373 - Ltd.
CCCC Second Highway Engineering 1,000,000 - Co., Ltd.
Cranetech Global Sdn. Bhd. 218,242 - CCCC Shanghai Dredging Co. Ltd. 13,690 - China Harbor Engineering Co., Ltd - 736,500
||
|-|
|Jiangsu Longyuan Zhenhua Ocean|
|Engineering Co., Ltd|
|CCCC Shanghai Equipment|
|Engineering Co., Ltd.|

||
|-|
|-|
|-|

||
|-|
|366,574|
|100,000|

136,763,379 1,203,074 2017 2016 Dividend payable
CCCC Tianjin Dredging Co., Ltd. 25,079,494 25,079,494 Chuwa Bussan Co. Ltd. 6,269,873 6,269,873 Zhenhua (Hong Kong) Engineering Co.,
Ltd, 346,005 346,005
||
|-|
|Zhenhua Harbour Construction Co.,|
|Ltd.|

||
|-|
|6,593|

||
|-|
|6,593|

 31,701,965 31,701,965 2017 2016 Interest payable
CCCC Finance Co., Ltd 869,396 -
||
|-|
|47,971|
|917,367|

||
|-|
|132,917|
|132,917|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties (continued)
2017 2016 Other payables
China Communications Construction
Company Ltd. 102,784,486 103,327,306
||
|-|
|CCCC Dredging (Group) Co., Ltd.|
|CCCC Financial Leasing Co., Ltd.|
|CCCC Marine Construction & Development|
|Co., Ltd.|
|CCCC Third Harbor Engineering Co., Ltd.|

||
|-|
|88,219,383|
|39,499,033|
|17,472,600|
|12,285,000|

||
|-|
|-|
|100,000,000|
|-|
|3,195,324|

 Shanghai Jiangtian Industrial Co., Ltd 4,586,085 16,754,583 China Harbor Engineering Co., Ltd 3,625,000 - CCCC Tianjin Dredging Co., Ltd. 2,861,844 2,000,000 CCCC Third Highway Engineering Co. Ltd. 1,172,612 - Nanjing CCCC Weisanlu River Tunnel Co., Ltd 306,974 -
||
|-|
|CCCC Water Transportation Planning and|
|Design Institute Co., Ltd.|
|Jiangsu Longyuan Zhenhua Ocean|
|Engineering Co., Ltd|
|Shanghai Zhenhua Heavy Industries (Group)|
|Changzhou Paint Co., Ltd.|

||
|-|
|199,812|
|143,395|
|100,000|

||
|-|
|-|
|143,395|
|99,606|

 CCCC Shanghai Equipment Engineering Co.,
Ltd. 89,000 89,000 CCCC First Harbor Engineering Co., Ltd. 87,893 - The Second Engineering Company of CCCC
Fourth Harbor Engineering Co., Ltd. 11,401 - No.3 Engineering Co., Ltd. of CCCC Second
Harbor Engineering Co., Ltd. - 7,912,758
||
|-|
|CCCC Tunnel Engineering Co., Ltd.|
|CCCC Second Highway Engineering Co., Ltd.|

||
|-|
|-|
|-|

||
|-|
|1,819,211|
|1,437,244|

 273,444,518 236,778,427
||
|-|
|Notes payable|

||
|-|
|2017|
|4,885,855|

||
|-|
|2016|
|-|

||
|-|
|Short-term loans|

||
|-|
|2017|
|350,000,000|

||
|-|
|2016|
|100,000,000|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties (continued)
||
|-|
|Long-term loans|

||
|-|
|2017|
|500,000,000|

||
|-|
|2016|
|-|

||
|-|
|Non-current liabilities due within one|
|year|
|CCCC Financial Leasing Co., Ltd.|
|CCCC Leasing JIA HUA YI Co., Ltd.|
|CCCC Leasing JIA HUA ER Co., Ltd.|

||
|-|
|2017|
|407,455,030|
|387,778,932|
|59,741,257|
|854,975,219|

||
|-|
|2016|
|407,455,030|
|61,059,663|
|61,059,663|
|529,574,356|

||
|-|
|Long-term payables|
|CCCC Leasing JIA HUA YI Co., Ltd.|
|CCCC Financial Leasing Co., Ltd.|
|CCCC Leasing JIA HUA ER Co., Ltd.|
|CCCC Tianjin Dredging Co., Ltd.|

||
|-|
|2017|
|896,118,857|
|556,387,041|
|242,698,858|
|108,466,881|

||
|-|
|2016|
|323,448,337|
|905,899,356|
|323,448,337|
|65,565,134|

 1,803,671,637 1,618,361,164
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies
1. Important commitments
(1) Capital expenditure commitments
The following is the capital expenditure commitment signed by the Group but not necessarily listed on balance sheet on the balance sheet date:
Dec. 31, 2017 Dec. 31, 2016
||
|-|
|89,659,929|

||
|-|
|225,842,432|

 (2) Operating leasing commitments
In accordance with the signed and irrevocable operating leasing contract, the minimum rental payable by the Company in the future is summarized as follows:
Dec. 31, 2017 Dec. 31, 2016
||
|-|
|59,932,787|
|58,309,091|
|23,591,704|
|37,717,614|

||
|-|
|56,483,290|
|55,894,180|
|56,409,123|
|60,507,528|

 179,551,196 229,294,121 (3) L/C commitments
The company has entrusted the bank to issue several L/C to purchase imported components and parts. As of Dec. 31, 2017, the unpaid amount under the L/Cs was about RMB 1,783,453,627 Yuan (Dec. 31, 2016: RMB 2,464,170,714 Yuan).
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies (continued)
2. Contingencies
As of Dec. 31, 2017, the major contingencies of the Group were listed below:
(1) In 2013, the Company signed the construction and sales contract on 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 was delayed and met the termination articles. 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 issued by the Company for the project 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 had 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 filed a counterclaim, and asked the Company for compensating about 182 million USD or 213 million USD under the requirements of continuing or not continuing to construct the ship. At present, the arbitration court has been organized. 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 as of the date of this financial statement, and the relative materials are still in preparation, such as evidentiary document, testimony of witnesses and expert report. Therefore, the Company is unable to reliably estimate the possible result of the case, 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.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies (continued)
2. Contingencies (continued)
(2) On Jan. 27, 2014, Lovanda offshore Ltd (hereafter referred to as “Lovanda”) and Lovansing offshore Ltd (hereafter referred to as “Lovansing” signed the construction contracts (ZP14-2125 and ZP14-2126) on two JU2000E offshore drilling platforms respectively with this Company, which were designed, built, commissioned and delivered by this Company. In the construction process, some disputes arose between Lovanda and this Company and Lovansing and the Company regarding the construction schedule of this platform, the extension of delivery time and other aspects.
Lovanda and Lovansing submitted to arbitration to London Maritime Arbitrators Association against this Company on Mar. 6, 2017 and proposed to terminate the platform construction contract and required this Company to repay USD 13,800,000 dollars under each contract (27,600,000USD in total) including the advance cost of construction, related expenses and interest. This Company attached great importance to this event and established a special working group and employed the professional domestic and foreign lawyers and experts to actively respond to action to maintain the legitimate right of this Company. On June 23, 2017, the Company submitted the written defense in arbitration and counterclaim application, and claimed the following under each contract: 1) the other party should pay the last sum of money payable under the contract and its interest arising herefrom, totaling USD 186,200,000 dollars to this party; 2) the income of this party from the sale of the platform minus the cost of sale should be used for deducting the account payable of the other party; 3) other losses, interest and other expenses that may occur in the future.
As of Dec. 31, 2017, the basic arbitration documents of the two arbitration cases have been submitted and the arbitral court has set the basic timetable for subsequent arbitration proceedings (including: disclosure,witness’ testimony and experts report), and it is tentatively scheduled to hold a court on January 7, 2019. Therefore, the Company is unable to reliably estimate the possible result of the case, 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.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies (continued)
2. Contingencies (continued)
(3) On Dec. 31, 2017, the Group provided financial guarantee for its client, Jiangsu Yanwei Port Co., Ltd with the expiry date of May 8, 2018 and the amount of RMB 10,790,000 Yuan. The above amount reflects the maximum loss to the Group due to thecompany’s default. Jiangsu Yanwei Port Co., Ltd is in good financial condition and there is no risk of significant financial default, so the Group has not recognized the predicted liabilities related to financial guarantee.
XII. Notes to items in theCompany’s financial statements
1. Accounts receivable
2017 2016
||
|-|
|Accounts receivable|
|Less: Provision for bad debt|

||
|-|
|7,854,910,710|
|1,307,045,951|

||
|-|
|7,787,866,391|
|1,311,778,695|

 6,547,864,759 6,476,087,696
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
1. Accounts receivable (continued)
Aging of accounts receivable is analyzed as follows:
2017 2016
||
|-|
|Within 6 months|
|7~12 months|
|1~2 years|
|2~3 years|
|3~4 years|
|4~5 years|
|Over 5 years|

||
|-|
|4,930,564,378|
|306,925,951|
|896,868,082|
|387,732,209|
|257,418,171|
|321,232,163|
|754,169,756|
|7,854,910,710|
|1,307,045,951|

||
|-|
|4,697,825,773|
|754,026,913|
|846,748,647|
|347,663,847|
|377,828,003|
|132,261,040|
|631,512,168|
|7,787,866,391|
|1,311,778,695|

 6,547,864,759 6,476,087,696 Changes in provision for bad debt of accounts receivable:
Opening balance Proportion in Reversal in Write-off in Closing balance current year current year current year
||
|-|
|1,311,778,695|
|1,108,321,774|

||
|-|
|240,888,409|
|203,456,921|

||
|-|
|(245,621,153|
|-|

||
|-|
|-|
|-|

||
|-|
|1,307,045,951|
|1,311,778,695|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
1. Accounts receivable (continued)
The accounts receivable is analyzed by types as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt Provisi
Provis Propor on Propo ion Amount Amount
tion proport Amount r t ion Amount p ropor(%) ion (%) tion(%)
(%)
||
|-|
|182,649,892|
|4,000,779,449|
|3,455,359,835|
|216,121,534|

||
|-|
|2|
|51|
|44|
|3|

|||
|-|-|
|182,649,892|100|
|-|-|
|908,274,525|26|
|216,121,534|100|

||
|-|
|-|
|3,350,449,306|
|3,992,180,635|
|445,236,450|

||
|-|
|-|
|43|
|51|
|6|

||
|-|
|-|
|-|
|867,510,413|
|444,268,282|

||
|-|
|-|
|-|
|22|
|100|

|||
|-|-|
|1,307,045,951|17|

 As of Dec. 31, 2017, the accounts receivable with significant single amount and for separate provision for bad debt is as follows:
Book Provision for Provision
Reason balance bad debtproportion%
|||
|-|-|
|Accounts receivable 1|182,649,892|

||
|-|
|182,649,892|

||
|-|
|100|

||
|-|
|Contrac|
|disputes|

 As of Dec. 31, 2016, there is no account receivable with significant single amount and separate provision for bad debt.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
1. Accounts receivable (continued)
TheCompany’s accounts receivable of non-related parties with provision for bad debt based on aging analysis method is as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Amount Amount Proportion(%)
Proportion(% Amount Amount )
||
|-|
|1,257,505,519|
|281,527,110|
|736,866,863|
|361,064,289|
|225,727,110|
|75,690,244|
|516,978,700|

||
|-|
|-|
|2,815,271|
|110,530,029|
|108,319,287|
|112,863,555|
|56,767,683|
|516,978,700|

||||
|-|-|-|
|-|1,638,214,661|-|
|1|669,637,393|6,696,374|
|15|649,760,167|97,704,025|
|30|293,717,341|88,115,202|
|50|95,818,058|47,909,029|
|75|71,788,934|53,841,700|
|100|573,244,081|573,244,083|

||
|-|
|1|
|15|
|30|
|50|
|75|
|100|

||
|-|
|3,455,359,835|

||
|-|
|908,274,525|

||||
|-|-|-|
|26|3,992,180,635|867,510,413|

||
|-|
|22|

 As of Dec. 31, 2017, the accounts receivable with insignificant single amount but for separate provision for bad debt is as follows:
Book balance Provision for Provision
bad debt proportion Reason%
|||
|-|-|
|Accounts||
|receivable1|107,819,500|
|Accounts receivable||
|2|50,365,000|
|Accounts receivable||
|3|26,136,865|
|Accounts receivable||
|4|10,730,715|
|Accounts receivable||
|5|7,802,300|
|Accounts receivable||
|6|6,990,320|
|Accounts receivable||
|7|3,355,177|
|Accounts receivable||
|8|2,083,103|
|Accounts receivable||
|9|838,554|

||
|-|
|107,819,500|
|50,365,000|
|26,136,865|
|10,730,715|
|7,802,300|
|6,990,320|
|3,355,177|
|2,083,103|
|838,554|

||
|-|
|100|
|100|
|100|
|100|
|100|
|100|
|100|
|100|
|100|
|100|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
1. Accounts receivables (continued)
As of Dec. 31, 2016, the accounts receivable with insignificant single amount but for separate provision for bad debt is as follows:
Book balance Provision for bad Provision
Reason debt proportion%
Accounts receivable 1 159,594,037 159,594,037 100 Contract disputes
|||
|-|-|
|Accounts receivable 2|107,819,500|
|Accounts receivable 3|50,365,000|
|Accounts receivable 4|27,748,069|
|Accounts receivable 5|21,932,297|
|Accounts receivable 6|19,480,920|
|Accounts receivable 7|17,735,070|
|Accounts receivable 8|10,049,240|
|Accounts receivable 9|7,664,629|
|Accounts receivable||
|10|7,421,237|
|Accounts receivable||
|11|7,306,800|
|Accounts receivable||
|12|4,557,644|
|Accounts receivable||
|13|3,562,007|

||
|-|
|107,819,500|
|50,365,000|
|27,748,069|
|21,932,297|
|18,512,752|
|17,735,070|
|10,049,240|
|7,664,629|
|7,421,237|
|7,306,800|
|4,557,644|
|3,562,007|

||
|-|
|100|
|100|
|100|
|100|
|95|
|100|
|100|
|100|
|100|
|100|
|100|
|100|
|100|

As of Dec. 31, 2017, the accounts receivable of the top five balances collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of provision for total balance of bad debt accounts receivable
||
|-|
|Total accounts receivable of the|
|top five balances|

||
|-|
|3,125,544,790|

||
|-|
|40%|

 As of Dec. 31, 2016, the accounts receivable of the top five balances collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of provision for total balance of bad debt accounts
receivable
||
|-|
|Total accounts receivable of the|
|top five balances|

||
|-|
|2,641,634,401|

||
|-|
|34%|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
2. Other receivables
The aging analysis of other receivables is as follows:
2017 2016
||
|-|
|13,624,001,088|
|188,472,977|
|1,420,864|
|5,223,339|
|2,557,426|
|7,814,381|
|13,829,490,075|
|163,639,459|

||
|-|
|13,861,142,297|
|4,247,938|
|14,168,062|
|3,685,185|
|180,855|
|15,281,311|
|13,898,705,648|
|20,702,632|

 13,665,850,616 13,878,003,016 The changes of provision for bad debt of other receivables are as follows: Opening balance Proportion in Reversal in Write-off in Closing balance current year current year current year
||
|-|
|20,702,632|
|18,581,021|

||
|-|
|150,537,838|
|2,121,611|

||
|-|
|(7,601,011|
|-|

||
|-|
|-|
|-|

||
|-|
|163,639,459|
|20,702,632|

 The analysis of other receivables by category is as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt Propor Provision Propor Provision Amount tion Amount proportion Amount tion Amount proportion(%) (%) (%) (%)
||
|-|
|150,327,138|
|152,659,281|
|101,743,565|
|13,415,037,536|
|9,722,555|

||
|-|
|1|
|1|
|1|
|97|
|-|

||
|-|
|150,327,138|
|-|
|-|
|3,589,766|
|9,722,555|

|||
|-|-|
|100|-|
|-|99,337,723|
|-|102,865,415|
|-|13,685,062,135|
|100|11,440,375|

||
|-|
|-|
|1|
|1|
|98|
|-|

||
|-|
|-|
|-|
|-|
|9,262,257|
|11,440,375|

||
|-|
|-|
|-|
|-|
|-|
|100|

|||
|-|-|
|1|13,898,705,648|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
2. Other receivables (continued)
As of Dec. 31, 2017, the other receivables with significant single amount and separate provision for bad debt are as follows:
Book balance Provision for bad Provision
Reason debt proportion%
|||
|-|-|
|Accounts receivable 1|150,327,138|

||
|-|
|150,327,138|

||
|-|
|100|

||
|-|
|Contract|
|disputes|

 As of Dec. 31, 2016, the other receivable without significant single amount and separate provision for bad debt are as follows:
TheCompany’s other receivables with provision for bad debt based on aging analysis are as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt Amount Amount
Proportion
Amount Amount
Proportion(%) (%)
||
|-|
|13,410,431,991|
|382,748|
|41,810|
|20,847|
|100,843|
|2,145,226|
|1,914,071|

||
|-|
|-|
|3,827|
|6,272|
|6,254|
|50,422|
|1,608,920|
|1,914,071|

||
|-|
|-|
|1|
|15|
|30|
|50|
|75|
|100|

||
|-|
|13,662,394,513|
|2,834,483|
|747,938|
|11,881,104|
|3,202,985|
|180,855|
|3,820,257|

||
|-|
|-|
|28,345|
|112,191|
|3,564,331|
|1,601,492|
|135,641|
|3,820,257|

||
|-|
|-|
|1|
|15|
|30|
|50|
|75|
|100|

||
|-|
|13,415,037,536|

||
|-|
|3,589,766|

||
|-|
|-|

||
|-|
|13,685,062,135|

||
|-|
|9,262,257|

||
|-|
|-|

 As of Dec. 31, 2017, the situations of other receivables with insignificant single amount but for separate provision for bad debt are as follows:
Book balance Provision for bad Provision proportion
Reason debt (%)
|||
|-|-|
|Other receivables 1|3,037,042|
|Other receivables 2|1,692,765|
|Other receivables 3|1,170,282|

||
|-|
|3,037,042|
|1,692,765|
|1,170,282|

||
|-|
|100|
|100|
|100|

||
|-|
|Contrac|
|cancellation|
|Contrac|
|cancellation|
|Contrac|
|cancellation|

Others 3,822,466 3,822,466 100
||
|-|
|100|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
2. Other receivables (continued)
As of Dec. 31, 2016, the situations of other receivables with insignificant single amount but for separate provision for bad debt are as follows:
Book Provision for Provision
Reason balance bad debt proportion(%)
|||
|-|-|
|Other receivables 1|1,692,765|
|Other receivables 2|1,170,282|
|Other receivables 3|5,540,286|

||
|-|
|1,692,765|
|1,170,282|
|5,540,286|

||
|-|
|100|
|100|
|100|

||
|-|
|Contract|
|cancellatio|
|n|
|Contract|
|cancellatio|
|n|
|Contract|
|cancellatio|
|n|

 100 Contract cancellatio Other receivables 4 3,037,042 3,037,042 n
||
|-|
|100|

Other receivables are analyzed by nature as follows:
2017 2016
||
|-|
|Intercourse funds of subsidiaries|
|Bid and performance bond|
|Taxes on outstanding accounts|
|receivable|
|Money on call for product field|
|service|
|Staff borrowings receivable|
|Lease payment receivable|
|Customs guarantee deposit|
|Export rebates|
|Others|

||
|-|
|13,097,601,236|
|298,716,662|
|198,696,002|
|68,190,281|
|33,553,284|
|33,434,668|
|4,269,756|
|-|
|95,028,186|

||
|-|
|13,429,629,328|
|29,189,524|
|119,175,846|
|60,496,560|
|42,368,855|
|33,434,668|
|71,148,199|
|55,755,562|
|57,507,106|

13,829,490,075 13,898,705,648
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
2. Other receivables (continued)
As of Dec. 31, 2017, the top five other receivables are as follows:
Closing balance Proportion in Nature Age Closing the total balance of balance of provision other for bad receivables(%) debt
||
|-|
|Other receivables|
|1|
|Other receivables|
|2|
|Other receivables|
|3|
|Other receivables|
|4|
|Other receivables|
|5|

||
|-|
|4,454,183,823|
|2,833,394,077|
|1,682,180,082|
|1,523,899,699|
|1,362,916,621|

||
|-|
|32|
|21|
|12|
|11|
|10|

||
|-|
|Intercourse funds|
|of subsidiaries|
|Intercourse funds|
|of subsidiaries|
|Intercourse funds|
|of subsidiaries|
|Intercourse funds|
|of subsidiaries|
|Intercourse funds|
|of subsidiaries|

||
|-|
|Within one|
|year|
|Within one|
|year|
|Within one|
|year|
|Within one|
|year|
|Within one|
|year|

||
|-|
|-|
|-|
|-|
|-|
|-|

 11,856,574,302 86 - As of Dec. 31, 2016, the top 5 other receivables are as follows:
Closing balance Proportion in Nature Age Closing the total balance of balance of provision other for bad debt receivables
(%)
||
|-|
|Other receivables|
|1|
|Other receivables|
|2|
|Other receivables|
|3|
|Other receivables|
|4|
|Other receivables|
|5|

||
|-|
|4,370,239,666|
|2,518,908,707|
|2,092,489,070|
|2,077,530,443|
|1,458,611,248|

||
|-|
|31|
|18|
|15|
|15|
|10|

||
|-|
|Intercourse|
|funds of|
|subsidiaries|
|Intercourse|
|funds of|
|subsidiaries|
|Intercourse|
|funds of|
|subsidiaries|
|Intercourse|
|funds of|
|subsidiaries|
|Intercourse|
|funds of|
|subsidiaries|

||
|-|
|Within 1|
|year|
|Within 1|
|year|
|Within 1|
|year|
|Within 1|
|year|
|Within 1|
|year|

||
|-|
|-|
|-|
|-|
|-|
|-|

 12,517,779,134 89 -
3. Long-term equity investment
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
2017 2016
||
|-|
|Subsidiary|
|Joint venture|
|Associated enterprise|

||
|-|
|6,634,723,602|
|235,084,428|
|2,052,392,796|

||
|-|
|6,381,423,422|
|199,459,569|
|2,001,892,291|

||
|-|
|8,922,200,826|

||
|-|
|8,582,775,282|

 XII. Notes to items in theCompany’s financial statements (continued)
3. Long-term equity investment (continued)
(1) Subsidiary
2017
Dec. 31, 2016 Changes in current year Dec., 31, 2017 Additional or Negative investment
||
|-|
|9,964,200|
|-|
|140,260,673|
|4,518,000|
|854,936,900|
|598,110|
|579,983|
|2,201,086,744|
|600,000,000|
|50,000,000|
|207,940|

||
|-|
|-|
|-|
|-|
|-|
|-|
|(598,110|
|-|
|-|
|-|
|-|
|-|

||
|-|
|9,964,200|
|-|
|140,260,673|
|4,518,000|
|854,936,900|
|-|
|579,983|
|2,201,086,744|
|600,000,000|
|50,000,000|
|207,940|

 ZPMC Netherlands Cooperatie 15,618,079 11,044,500 26,662,579
||
|-|
|100,000,000|
|7,000,000|
|6,183,978|
|1,098,000,000|
|203,000,000|
|3,084,000|
|2,876,209|
|2,953,200|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|100,000,000|
|7,000,000|
|6,183,978|
|1,098,000,000|
|203,000,000|
|3,084,000|
|2,876,209|
|2,953,200|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
||
|-|
|2,708,500|
|18,564,520|
|3,875,949|

||
|-|
|-|
|-|
|-|

||
|-|
|2,708,500|
|18,564,520|
|3,875,949|

 (To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
3. Long-term equity investment (continued)
(1) Subsidiary (continued)
Dec. 31, 2016 Changes in current yearDec. 31, 2017 Additional or negative investment
(Continued)
ZPMC Brazil Holdings Ltda. 2,936,771 (2,936,771 ) - ZPMC BrazilServiço
Portuários LTDA - 2,936,771 2,936,771
||
|-|
|4,357,626|
|183,000,000|
|242,542,999|
|47,500,000|
|567,000,000|
|5,271,120|
|2,797,921|

||
|-|
|2,853,790|
|-|
|-|
|100,000,000|
|140,000,000|
|-|
|-|

||
|-|
|7,211,416|
|183,000,000|
|242,542,999|
|147,500,000|
|707,000,000|
|5,271,120|
|2,797,921|

 6,381,423,422 253,300,180 6,634,723,602 2016
Dec. 31, 2015 Changes in current yearDec., 31, 2016 Additional or negative investment
||
|-|
|4,950,000|
|5,014,200|
|-|
|140,260,673|
|4,518,000|
|854,936,900|
|598,110|
|579,983|
|2,201,086,744|
|300,000,000|

||
|-|
|5,014,200|
|(5,014,200|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|300,000,000|

||
|-|
|9,964,200|
|-|
|-|
|140,260,673|
|4,518,000|
|854,936,900|
|598,110|
|579,983|
|2,201,086,744|
|600,000,000|

(To be continued)
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
3. Long-term equity investment (continued)
(1) Subsidiary (continued)
Dec. 31, 2015 Changes in current yearDec. 31, 2016 Additional or negative investment
(Continued)
||
|-|
|300,000,000|
|50,000,000|
|207,940|
|2,334,799|
|100,000,000|
|7,000,000|
|6,183,978|
|1,098,000,000|
|203,000,000|
|3,084,000|
|2,876,209|
|2,953,200|
|2,708,500|
|18,564,520|
|3,875,949|
|2,985,272|
|4,357,626|
|183,000,000|
|242,542,999|
|47,500,000|
|-|
|-|
|-|

||
|-|
|(300,000,000|
|-|
|-|
|13,283,280|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|(48,501|
|-|
|-|
|-|
|-|
|567,000,000|
|5,271,120|
|2,797,921|

||
|-|
|-|
|50,000,000|
|207,940|
|15,618,079|
|100,000,000|
|7,000,000|
|6,183,978|
|1,098,000,000|
|203,000,000|
|3,084,000|
|2,876,209|
|2,953,200|
|2,708,500|
|18,564,520|
|3,875,949|
|2,936,771|
|4,357,626|
|183,000,000|
|242,542,999|
|47,500,000|
|567,000,000|
|5,271,120|
|2,797,921|

 5,793,119,602 588,303,820 6,381,423,422
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
3. Long-term equity investment (continued)
(2) Joint venture
2017
Change in current year
Opening Additional Negative Gain on Closing Depreciation balance investmen investme investment balance reserves at t nt under equity the end of method year
||
|-|
|Joint venture|
|Jiangsu Longyuan Zhenhua Ocean|
|Engineering Co., Ltd|
|ZPMC Mediterranean Liman|
|Makinalari Ticaret Anonim|
|Sirketi|

||
|-|
|196,624,211|
|2,835,358|
|199,459,569|

||
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|

||
|-|
|34,685,071|
|939,788|
|35,624,859|

||
|-|
|231,309,282|
|3,775,146|
|235,084,428|

||
|-|
|-|
|-|
|-|

 2016
Change in current year
Opening Additional Negative Gain on Closing Depreciation balance investmen investme investment balance reserves at t nt under equity the end of method year
||
|-|
|Joint venture|
|Jiangsu Longyuan Zhenhua Ocean|
|Engineering Co., Ltd|
|ZPMC Mediterranean Liman|
|Makinalari Ticaret Anonim|
|Sirketi|

||
|-|
|171,577,489|
|3,059,427|
|174,636,916|

||
|-|
|-|
|-|
|-|

||
|-|
|-|
|-|
|-|

||
|-|
|25,046,722|
|(224,069|
|24,822,653|

||
|-|
|196,624,211|
|2,835,358|
|199,459,569|

||
|-|
|-|
|-|
|-|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
3. Long-term equity investment (continued)
(3) Associated enterprise
2017
Change in current year
Opening Addition Investment Other Declaration Closing Deprecia balance al profit and comprehen of cash balance tion investme loss under sive income dividend or reserves nt equity adjustment profit at the method end of year
|||
|-|-|
|CCCC Ocean||
|Engineering Vessel||
|Technology Research||
|Centre Co., Ltd|15,645,518|
|Shanghai Zhenhua Heavy||
|Industries (Group)||
|Changzhou Paint Co.,||
|Ltd.|15,452,729|
|CCCC Real Estate Yixing||
|Co., Ltd.|175,614,528|
|CCCC Financial Leasing||
|Co., Ltd.|1,605,244,853|
|China Communications||
|Construction USA Inc.|75,612,903|
|CCCC South American||
|Regional Company SARL|114,321,760|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|

||
|-|
|204,026|
|1,014,396|
|2,485,179|
|73,336,694|
|(4,569,705|
|(13,520,543|

|||
|-|-|
|-|-|
|-|-|
|-|-|
|(30,964 )|-|
|(3,812,748 )|-|
|(4,605,830 )|-|

||
|-|
|15,849,544|
|16,467,125|
|178,099,707|
|1,678,550,583|
|67,230,450|
|96,195,387|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|

|||
|-|-|
|(8,449,542 )|-|

 2016
Change in current year
Opening Additional Investment Other Declaration Closing Deprecia balance investment profit and comprehe of cash balance tion loss under nsive dividend or reserves equity income profit at the method adjustme end of nt year
|||
|-|-|
|CCCC Ocean||
|Engineering Vessel||
|Technology Research||
|Centre Co., Ltd|15,269,200|
|Shanghai Zhenhua||
|Heavy Industries||
|(Group) Changzhou||
|Paint Co., Ltd.|15,306,843|
|CCCC Real Estate||
|Yixing Co., Ltd.|174,697,785|
|CCCC Financial||
|Leasing Co., Ltd.|1,141,740,698|
|China||
|Communications||
|Construction USA Inc.|75,413,782|
|CCCC South||
|American||
|Regional Company||
|SARL|-|

|||
|-|-|
|-|376,318|
|-|1,978,952|
|-|916,743|
|420,000,000|75,648,845|
|-|(4,347,559|
|114,321,760|-|

||
|-|
|-|
|-|
|-|
|255,310|
|4,546,680|
|-|

||
|-|
|-|
|(1,833,066|
|-|
|(32,400,000|
|-|
|-|

||
|-|
|15,645,518|
|15,452,729|
|175,614,528|
|1,605,244,853|
|75,612,903|
|114,321,760|

||
|-|
|-|
|-|
|-|
|-|
|-|
|-|

|||
|-|-|
|534,321,760|74,573,299|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
4. Operating revenue and cost
2017 2016
Income Cost Income Cost
||
|-|
|Main business|
|Other|
|business|

||
|-|
|17,846,043,724|
|1,136,241,004|

|||
|-|-|
|14,996,960,714|22,901,854,062|
|1,065,401,225|1,346,629,631|

||
|-|
|19,219,649,675|
|1,326,296,433|

|||
|-|-|
|16,062,361,939|24,248,483,693|

 2017 2016
Main business Main business Main business Main business income cost income cost
||
|-|
|Container cranes|
|Bulk machine|
|members|
|Heavy equipment|

||
|-|
|9,875,036,341|
|1,587,582,829|
|2,020,870,244|

||
|-|
|16,966,005,765|
|3,133,488,466|
|1,773,587,826|

||
|-|
|13,385,624,468|
|3,134,543,276|
|1,760,404,529|

“Construction–tran
sfer” project 50,908,132 44,850,390 - -
||
|-|
|Steel structures|
|and related income|

||
|-|
|1,468,620,910|

||
|-|
|1,028,772,005|

||
|-|
|939,077,402|

 17,846,043,724 14,996,960,714 22,901,854,062 19,219,649,675 Other business income and cost are listed below:
2017 2016
Other business Other business Other Other business income cost business cost income
||
|-|
|877,119,802|
|259,121,202|

||
|-|
|868,901,948|
|196,499,277|

||
|-|
|1,063,590,327|
|283,039,304|

||
|-|
|1,110,261,460|
|216,034,973|

 1,136,241,004 1,065,401,225 1,346,629,631 1,326,296,433
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
5. Gain on investment
2017 2016
||
|-|
|58,570,536|
|94,574,906|
|3,356,632|
|-|

||
|-|
|400,633|
|99,395,952|
|1,112,890|
|1,969,590|

 156,502,074 102,879,065 6. Supplementary information of cash flow statement
Reconciliation of net profit to cash flows from operating activities:
2017 2016
||
|-|
|154,209,887|
|619,199,093|
|499,700,815|
|53,126,664|
|(1,303,038|
|4,615,775|
|882,094,629|
|(156,502,074|
|(69,483,616|
|(613,086,964|
|(1,332,273,798|
|435,650,557|
|(434,780,054|

||
|-|
|270,221,960|
|1,208,850,889|
|510,588,106|
|53,045,981|
|2,996,936|
|(27,035,042|
|1,504,100,506|
|(102,879,065|
|(70,957,061|
|(295,457,421|
|321,427,489|
|(2,249,861,228|
|(1,200,900,147|

||
|-|
|41,167,876|

||
|-|
|(75,858,097|

Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in theCompany’s financial statements (continued)
6. Supplementary information of cash flow statement (continued)
Net alteration of cash and cash equivalents:
2017 2016
||
|-|
|3,301,302,585|
|1,872,410,585|

||
|-|
|1,872,410,585|
|1,806,066,316|

||
|-|
|1,428,892,000|

||
|-|
|66,344,269|

 XIII. Events after balance sheet date
As of the date of approval of this financial statement, this Company had no events after balance sheet date to be disclosed.
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.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XIV. Other important matters (continued)
1. Report by branches (continued)
Products and labor service
Income from external transaction
2017 2016
||
|-|
|13,120,859,480|
|3,384,886,419|
|1,615,504,267|
|1,549,820,489|
|1,520,119,032|
|451,081,492|
|58,465,010|
|158,077,811|

||
|-|
|17,082,391,036|
|1,284,872,909|
|3,154,983,915|
|1,005,087,825|
|1,035,829,290|
|580,231,787|
|81,273,472|
|123,417,694|

 21,858,814,000 24,348,087,928 Geographic information
Income from external transaction
2017 2016
||
|-|
|Chinese Mainland|
|Asia (excluding Chinese Mainland)|
|America|
|Chinese Mainland (export sales)|
|Europe|
|Other|

||
|-|
|10,358,861,169|
|5,410,267,855|
|2,548,717,321|
|1,372,828,183|
|462,606,586|
|1,705,532,886|

||
|-|
|9,261,862,587|
|8,774,618,285|
|1,660,773,333|
|1,939,957,027|
|1,694,807,875|
|1,016,068,821|

 21,858,814,000 24,348,087,928 Income from external transaction ascribes to the area where custom located.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XIV. Other important matters (continued)
1. Report by branches (continued)
Geographic information (continued)
Total non-current assets
2017 2016
||
|-|
|Chinese Mainland|
|Asia (excluding mainland|
|China)|
|Others|

||
|-|
|18,215,467,783|
|5,114,032,367|
|40,991,302|

||
|-|
|19,820,827,959|
|3,418,721,827|
|37,392,161|

 23,370,491,452 23,276,941,947 Non-current asset ascribes to the local area, excluding financial asset and deferred income tax assets.
2. Comparative data
As stated in Note III. 30, due to the change in the statement mode of the losses and gains from the assets disposal, the accounting disposal and statements for several items as well as the amount in the financial statements had been modified to meet the new requirements. Correspondingly, some comparative data had been reclassified and restated to conform to the requirements of the statements and the accounting disposal of this year.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
1. Details of non-recurring profit and loss
2017 2016
||
|-|
|13,285,984|
|83,502,544|
|20,563,270|
|(70,077,032|
|(10,351,890|
|(14,565,022|

||
|-|
|1,340,612|
|45,042,910|
|23,420,959|
|6,435,660|
|(14,557,550|
|(6,708,080|

 22,357,854 54,974,511 2. Return on net assets and earnings per share
Earnings per share
Weighted average return Basic earnings per share Diluted earnings per share on net assets yield%
2017 2016 2017 2016 2017 2016
|||
|-|-|
|Net profit attributive to holders of||
|common shares of the Company||
||1.99|
|Net profit attributive to holders of||
|common shares of the Company||
|after deducting the non-recurring||
|profit and loss|1.84|

||
|-|
|1.41|
|1.05|

||
|-|
|0.07|
|0.06|

||
|-|
|0.0|
|0.0|

||
|-|
|0.07|
|0.06|

||
|-|
|0.05|
|0.04|

Chapter XII Catalogue of Documents available for Inspection
|||
|-|-|
|InspectionDocumentsCatalogue|Financial statements signed and sealed by legal representative, responsibleperson for accounting, and chief accountant.|
|InspectionDocumentsCatalogue|Original copies of audit report sealed by accounting firm and signed and sealedby Certified Public Accountant.|
|InspectionDocumentsCatalogue|Original copies of all documents and announcements disclosed on newspaperdesignated by China Securities Regulatory Commission within report period|

Chairman of the board: Zhu Lianyu Date of submission upon approved by the Board of Directors: Mar. 28, 2018