2011 ANNUAL REPORT WHARF HOLDINGS LIMITED

28 Mar. 2012

2011 Annual Report

PART Ⅰ IMPORTANT NOTES AND CONTENTS

Important Notes

The Board of Directors, the Supervisory Committee as well as the directors, supervisors and senior management staff of Shenzhen Chiwan Wharf Holdings Limited (hereinafter referred to as “the Company”) hereby confirm that there exists no misstatement, misleading information or material omission in this report, and accept, individually and collectively, the responsibility for the factuality, accuracy and completeness of the contents of this report.

This Annual Report has been reviewed and approved at the Third Session of the Seventh Board of Directors of the Company. Independent director Zhang Jianjun did not attend the meeting due to business reason and appointed Independent director Hao Zhujiang, as his proxy to attend and speak at the meeting on his behalf. Independent director Zhang Jianjun has given his consents to the full contents of this report.

Chairman of the Board Mr. Zheng Shaoping, Chief Financial Officer Mr. Zhang Jianguo and Financial Manager Ms. Ma Zhihong hereby confirm that the Financial Report in the Annual Report is true, accurate and complete.

 The Annual Report is written in both English and Chinese. In case of any discrepancy between the two versions, Chinese version prevails.  According to certain regulations issued by Securities Regulatory Commission, the Company needn't to prepare Financial Statements under International Financial Reporting Standards, and thus all the financial data disclosed in this report were prepared under Chinese Accounting Standards.

Table of Contents

PART Ⅰ IMPORTANT NOTES AND CONTENTS ...... 1 PART Ⅱ COMPANY PROFILE...... 2 PART Ⅲ FINANCIAL AND BUSINESS HIGHLIGHTS ...... 3 PART IV CHANGES IN SHARE CAPITAL AND SHAREHOLDERS...... 4 PART V DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT STAFF & EMPLOYEES...... 10 PART VI CORPORATE GOVERNANCE ...... 18 PART VII INTERNAL CONTROL ...... 22 PART VIII GENERAL MEETING...... 26 PART IX REPORT OF THE BOARD OF DIRECTORS...... 27 PART X REPORT OF THE SUPERVISORY COMMITTEE...... 45 PART XI SIGNIFICANT EVENTS ...... 46 PART XII FINANCIAL STATEMENTS (See attached) ...... 53 PART XIII DOCUMENTS FOR REFERENCE...... 53

1 2011 Annual Report

PART Ⅱ COMPANY PROFILE

A. Company's Name in Chinese 深圳赤湾港航股份有限公司（深赤湾） Company's Name in English Shenzhen Chiwan Wharf Holdings Limited (Chiwan Wharf)

B. Legal Representative Mr. Zheng Shaoping, Chairman

C. Company Secretary Ms. Bu Dan Authorized Representative Ms. Hu Jingjing Address 13/F., Chiwan Petroleum Building, Shenzhen, PRC Tel +86 755 26694222 Fax +86 755 26684117 E-mail [email protected]

D. Place of Registration .Chiwan, Shenzhen, PRC Office Address 13/F., Chiwan Petroleum Building, Chiwan, Shenzhen, PRC Postal Code 518067 E-mail Address [email protected] Internet Website http://www.szcwh.com

E. Newspaper for Information "Securities Times" and "Ta Kung Pao" Disclosure Website for Annual Report http://www.cninfo.com.cn Annual Report Preparation Secretariat of the Board of Directors

F. Stock Exchange . Stock Short Name Chiwan Wharf A/Chiwan Wharf B Stock Code 000022/200022

G. Other Information Date of Original Registration 19 Jul. 1990 Place of Registration Chiwan, Shenzhen Business Registration Number 440301501124494 Tax Registration Number Shen-Guo-Shui-Deng-Zi No. 440300618832968 Shen-Di-Shui-Deng-Zi No. 440301618832968 Organization Code 61883296-8 Accounting Firm PricewaterhouseCoopers Zhong Tian Certified Public Accountants Work office 35/F, Tower A, Kingkey 100, No. 5016, East, Shenzhen, China Signature of accountants Kong Yu, Yang Hua

2 2011 Annual Report

PART Ⅲ FINANCIAL AND BUSINESS HIGHLIGHTS

A. Main accounting data (unit: RMB) Increase or decrease of 2011 2010 2009 this year than last year Revenue 1,708,136,899 1,740,417,668 -1.85% 1,465,434,512 Operating profit 816,494,626 962,439,501 -15.16% 673,649,986 Total profit 816,337,301 964,414,981 -15.35% 679,900,108 Net profit attributable to equity holders of the 505,645,137 596,680,156 -15.26% 418,864,844 Company Net profit attributable to equity holders of the 505,629,810 595,310,399 -15.06% 412,521,386 Company after extraordinary gains and losses Net cash flows from operating 746,190,596 926,845,569 -19.49% 726,501,993 activities Increase or decrease of As at 31 Dec. 2011 As at 31 Dec. 2010 this year-end than last As at 31 Dec. 2009 year-end Total assets 6,540,228,435 6,202,184,742 5.45% 5,527,873,569 Total liabilities 2,434,164,364 2,395,026,910 1.63% 2,107,282,039 Total equity attributable to 3,467,796,751 3,239,549,058 7.05% 2,852,982,756 equity holders of the Company Share capital 644,763,730 644,763,730 0.00% 644,763,730

B. Main financial index (unit: RMB) Increase or 2011 2010 decrease of this 2009 year than last year Basic earnings per share 0.784 0.925 -15.24% 0.650 Diluted earnings per share 0.784 0.925 -15.24% 0.650 Basic earnings per share after 0.784 0.923 -15.06% 0.640 extraordinary gains and losses Weighted average return on net assets 15.19% 19.70% -4.51% 15.08% Weighted average return on net assets 15.19% 19.65% -4.46% 14.85% after extraordinary gains and losses Net cash flow per share arising from 1.157 1.437 -19.49% 1.127 operating activities Increase or decrease of this As at 31 Dec. 2011 As at 31 Dec. 2010 As at 31 Dec. 2009 year-end than last year-end Net assets per share attributable to equity 5.378 5.024 7.05% 4.425 holders of the Company Asset-liability ratio 37.22% 38.62% -1.40% 38.12%

3 2011 Annual Report

C. Extraordinary gains and losses

Items 2011 2010 2009 Net gains on disposal of non-current assets (1,889,222) (672,955) 8,218,321 Government grants in current year profit - 1,200,000 1,450,000 Receivables impairment reversal by individual - - 1,815,259 assessment Other non-operating income/ (expense), net 1,731,897 1,448,435 (3,418,198) Tax effects 33,863 (350,605) (1,572,070) Minority interests effects (after tax) 138,789 (255,118) (149,854) Total 15,327 1,369,757 6,343,458

PART IV CHANGES IN SHARE CAPITAL AND SHAREHOLDERS

A. Changes in Share Capital 1. Changes in the stock of shares of the Company Unit: share

Before the change Increase (+)/decrease (-) After the change

Issue of Bonus Reserves Number Percentage additional Other Subtotal Number Percentage issue to stocks shares 1. Shares subject to trading moratorium 673,252 0.104% 117,677 117,677 790,929 0.123% a. State-owned shares b. State-owned legal person shares c. Other domestic shares Among which: Shares held by domestic non-state-owned

corporations Shares held by domestic individuals d. Shares held by overseas shareholders Among which: Shares held by overseas corporations Shares held by overseas individuals e. Shares held by senior management staff 673,252 0.104% 117,677 117,677 790,929 0.123% 2. Shares not subject to trading moratorium 644,090,478 99.896% -117,677 -117,677 643,972,801 99.877% a. Ordinary shares denominated in RMB 464,789,805 72.087% 0 0 464,789,805 72.087% b. Domestically listed foreign shares 179,300,673 27.809% -117,677 -117,677 179,182,996 27.790% c. Overseas listed foreign shares d. Others 3. Total shares 644,763,730 100% 644,763,730 100% ※ Shares held by senior executives were changed by shares mainly subject to trading moratorium held by newly-appointed senior management.

4 2011 Annual Report

2. Changes in shares subject to trading moratorium Shares subject Increased Shares subject to trading Shares shares subject Name of to trading Time of moratorium at released in to trading Reason shareholder moratorium at releasing the year 2011 moratorium in the year end beginning 2011 Zheng Shaoping 186,018 26,529 0 159,489 January 2011 Wang Fen 61,974 0 0 61,974 January 2011 Fan Zhaoping 40,407 0 0 40,407 January 2011 Yuan Yuhui 10,530 0 0 10,530 The January 2011 Zhang Ning 134,020 23,777 0 110,243 Company January 2011 Zhao Chaoxiong 58,758 10,042 0 48,716 Law and January 2011 other Ni Keqin 34,803 5,724 0 29,079 relevant January 2011 Qu Jiandong 0 0 84,199 84,199 laws and February 2011 Zhao Qiang 0 0 63,711 63,711 regulations February 2011 Zhang Jianguo 89,547 15,460 0 74,087 January 2011 Xiong Haiming 0 0 70,355 70,355 February 2011 Pei Jiangyuan 46,704 8,565 0 38,139 January 2011 Total 662,761 90,097 218,265 790,929

3. Issuance and listing of shares a. The Company was approved to issue 310,470,000 ordinary shares at a par value of RMB1.00 per share in February 1993, with 224,470,000 being the promoter's shares; 46,000,000 shares (the "A shares”) being issued to PRC investors (of which 6,000,000 shares were allotted to the employees of the Company), and 40,000,000 shares (the "B shares”) being issued to overseas investors. The A shares were issued at RMB3.10 per share and the B shares at RMB3.18 per share, which were payable at HKD2.83 per share. On 5 May 1993, the Company's A and B shares were listed and traded on Shenzhen Stock Exchange. b. In June 1994, bonus shares were issued in a proportion of “one bonus share for every ten shares”. On 16 June and 21 June 1994, respectively, 4,600,000 bonus A shares and 4,000,000 bonus B shares were listed and traded on Shenzhen Stock Exchange. As a result, the total number of the Company's shares rose to 341,517,000. c. On 22 June 1995, the Company's promoter, China Nanshan Development (Group) Inc. (hereinafter referred to as “CND”) converted all of its 22,447,000 bonus shares to B shares, which were sold to overseas investors at an average price of HKD3.54 per share, and then listed and traded on Shenzhen Stock Exchange. d. In December 1995, the Company issued 40,000,000 B shares to overseas investors at HKD2.90 per share, which were listed on Shenzhen Stock Exchange on 15 December 1995. Consequently, the total number of the Company's shares rose to 381,517,000. e. In June 2004, the plan about transfer of capital reserves into share capital for 2003 was carried out on a basis of 3 shares for every 10 shares based on the total 381,517,000 shares as at the

5 2011 Annual Report close of trading on the Company’s record date (last trading day) 21 June 2004. After the transfer, the total number of the shares of the Company was increased from 381,517,000 to 495,972,100.

f. In July 2005, the plan about transfer of capital reserves into share capital for 2004 was carried out on a basis of 3 shares for every 10 shares based on the total 495,972,100 shares as at the close of trading on the Company’s record date (last trading day) 5 July 2005. After the transfer, the total number of the shares of the Company was increased from 495,972,100 to 644,763,730.

g. In May 2006, the Company implemented its share reform proposal, pursuant to which each shareholder holding circulating A shares whose name appeared on the register kept by the Shenzhen Branch of China Securities Depository & Clearing Corporation Limited as at the close of trading on Shenzhen Stock Exchange on 29 May 2006 was allotted one share, paid RMB11.5 in cash and granted eight put options by CND for every ten A Shares held (equivalent to 2.98 shares for every ten shares held). Upon the implementation of the share reform proposal, the shareholding percentage of CND in the Company was 57.51%.

h. 23,243,415 A shares held by CND was released for circulation on 3 July 2007.

i. 23,243,415 A shares held by CND was released for circulation on 6 June 2008.

j. 324,316,070 A shares held by CND was released for circulation on 19 June 2009.

k. The Company was approved to issue 6,000,000 Employees’ Shares at an issue price of RMB3.10 per share in February 1993. The shares were put in trust with Shenzhen Branch of China Securities Depository & Clearing Corporation Limited in March 1993. After bonus shares were issued in June 1994, the number of Employees’ Shares rose to 6,600,000, among which 600,000 bonus shares were allowed to be traded on 16 June 1994. On 1 August 1994, the Company's Employees’ Shares totaling 6,000,000 were allowed to become tradable, except those held by the Directors, supervisors and senior management staff in accordance with relevant rules.

B. Particulars about Shareholders 1. Number of shareholders and particulars about shares held Total number of Total number of 38,502, with 29,466 being A-share 38,558, with 29,728 being A-share shareholders as at 31 shareholders as at 29 holders, and 9,036 being B-share holders holders, and 8,830 being B-share holders Dec. 2011 Feb. 2012 Shareholdings of top ten shareholders (all being shareholders holding shares not subject to trading moratorium) Shares Type of Shares Percentage of subject to shares (A, Nature of Total shares pledged or Name of shareholders shareholding trading B, H or shareholders held (share) frozen (%) moratorium other (share) (share) shares) CHINA NANSHAN DEVELOPMENT 57.52% 370,878,000 0 0 A shares (GROUP) INC.

KEEN FIELD ENTERPRISES LIMITED Holder of B shares 8.02% 51,708,881 0 N/A B shares

6 2011 Annual Report CMBLSA RE FTIF TEMPLETON Holder of B shares 7.43% 47,914,954 0 N/A B shares ASIAN GRW FD GTI 5496

GOVERNMENT OF SINGAPORE INV. Holder of B shares 0.94% 6,071,192 0 N/A B shares CORP.- A/C "C"

EMPLOYEES PROVIDENT FUND Holder of B shares 0.55% 3,545,534 0 N/A B shares

OMERS ADMINISTRATION Holder of B shares 0.5% 3,238,309 0 N/A B shares CORPORATION(SC03)

TEMPLETON CANADA EMERGING Holder of B shares 0.41% 2,671,924 0 N/A B shares MKTS FUND

FTIF-TEMPLETON EMERGING MKT Holder of B shares 0.39% 2,522,279 0 N/A B shares SMALLER COMPANIES FUND

CHINA MERCHANTS SECURITIES Holder of B shares 0.38% 2,470,046 0 N/A B shares (HK) CO., LTD

TEMPLETON EMERGING MKTS Holder of B shares 0.33% 2,126,967 0 N/A B shares FUND INC CND does not have any relations with other shareholders holding shares not subject to Explanation on associated relationship among the trading moratorium. The Company does not know if there are any inter-relations among top ten shareholders: other shareholders holding shares not subject to trading moratorium.

2. Information about the controlling shareholder of the Company

Company name: China Nanshan Development (Group) Incorporation Legal representative: Fu Yuning Registration Date: 28 September 1982 Organization code: 618832976 Business scope: Land development, port transportation and related industry, commerce, property and tourism as well as bonded warehousing. Registered capital: RMB900,000,000

3. Within the reporting year, the controlling shareholder of the Company remained unchanged, while shares held by the controlling shareholder increasing to 370,878,000 shares (a stake of 57.52%) from 370,802,900 shares (a stake of 57.51%). Shares held by CND were not pledged or frozen.

7 2011 Annual Report

4. Shareholding structure of the Company

State-Owned Assets Supervision and Administration Commission of the State Council 100％

China Merchants State-Owned State-Owned China Group Assets Assets National 55.14％ Supervision and Supervision and Offshore Administration Administration Oil Commission of Commission of Corporation Shenzhen the People’s China Merchants Municipal Government of Holdings Government (International) Province Company Limited 100％ 100％ 100％ 100％

China Silverflow Shenzhen Guangdong China China HK Merchants Co., Ltd. Investment Guangye National Ocean Clifford (Nanshan) Holdings Investment Offshore Oilfields Wong Holdings Co., Ltd. Holdings Oil Services Investme Ltd Limited Investme (Hong nt Co., nt Co., Kong) Ltd Ltd Limited (COOS)

36.52% 0.50% 26.10% 23.49% 7.83% 1.64% 3.92%

China Nanshan Development (Group) Incorporation

57.52% 14.58% 27.90% Public A Shares Shenzhen Chiwan Wharf Holdings Limited Public B Shares

8 2011 Annual Report

5. Shareholders of CND holding more than 5% of equity interests

Shareholder I: China Merchants Holdings (International) Company Limited Legal representative: Fu Yuning Date of establishment: 28 May 1991 Business scope: Investment holding and listing Registered capital: HK$500 million

Shareholder II: Shenzhen Investment Holdings Co., Ltd. Legal representative: Fan Mingchun Date of establishment: 13 October 2004 Business scope: 1. Provision of guarantees to state-owned enterprises in Shenzhen; 2. Management of equity interests in state-owned enterprises other than those directly supervised and managed by the State-owned Assets Supervision and Administration Commission of Shenzhen; 3. Asset restructuring, transformation and capital operation of the relevant enterprises; 4. Investment; 5. Other activities authorized by the State-owned Assets Supervision and Administration Commission of Shenzhen. Registered capital: RMB5.6 billion

Shareholder III: Guangdong Guangye Investment Holdings Limited Legal representative: Zeng Ruijun Date of establishment: 17 February 2009 Business scope: Project investment, investment management, investment consulting; Commerce and trade information consulting. Registered capital: RMB80,057,848

Shareholder IV: China National Offshore Oil Corporation Legal representative: Wang Yilin Date of establishment: 7 September 1993 Business scope: Cooperation with foreign partners for oil and gas exploitation in China's offshore areas Registered capital: RMB94.9 billion

9 2011 Annual Report

PART V DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT STAFF & EMPLOYEES

A. General Information Total Amount Receiving Shares Shares Reasons of remuneration payments from held at the held at the and received from shareholding Name Title Sex Age Term of office beginning end of the quantity the Company units or other of the year year for the during the year associated (share) (share) change (RMB’000) units or not Chairman Zheng of the Male 49 2011.5-2014.5 212,652 212,652 0 Yes Shaoping Board

Tian Junyan Director Male 50 2011.5-2014.5 0 0 0 Yes

Wang Fen Director Female 57 2011.5-2014.5 82,632 82,632 0 Yes

Fan Zhaoping Director Male 57 2011.5-2014.5 53,877 53,877 0 Yes

Yuan Yuhui Director Male 61 2011.5-2014.5 14,040 14,040 0 Yes

Director, Executive Zhang Ning Deputy Male 51 2011.5-2014.5 146,991 146,991 162.6 No General Manager Independent Li Wuzhou Male 72 2011.5-2014.5 0 0 10 No Director Independent Hao Zhujiang Male 59 2011.5-2014.5 0 0 10 No Director Independent Zhang Jianjun Male 47 2011.5-2014.5 0 0 10 No Director

Chairman of the Yu Liming Male 49 2011.5-2014.5 0 0 0 Yes Supervisory Committee Mary-Jean Supervisor Female 55 2011.5-2014.5 0 0 0 Yes Wong

Guo Songhua Supervisor Female 53 2011.5-2014.5 0 0 0 Yes

Zhao Supervisor Male 46 2011.5-2014.5 64,954 64,954 91.7 No Chaoxiong

Ni Keqin Supervisor Female 47 2011.5-2014.5 38,772 38,772 71.3 No

10 2011 Annual Report

Deputy Qu Jiandong General Male 47 2011.5-2014.5 112,265 112,265 122.3 No Manager Deputy Zhao Qiang General Male 49 2011.5-2014.5 84,948 84,948 125.5 No Manager Deputy General Zhang Jianguo Male 47 2011.5-2014.5 98,782 98,782 132 No Manager, CFO Deputy General Xiong Manager, Male 48 2011.5-2014.5 93,807 93,807 129.9 No Haiming Chief Engineer Company Bu Dan Female 34 2012.1-2014.5 0 0 N/A No Secretary

Former Han Guimao Male 61 2008.5-2011.5 13,988 13,988 0 Yes director Former Pei Jiangyuan Company Female 39 2011.5-2011.12 50,852 50,852 73.6 No Secretary

Total 1,068,560 1,068,560 938.9 Note: The total remuneration received by directors, supervisors and senior executives from the Company in 2011 includes some medium-and long-term incentive rewards that have not yet been paid.

B. Profiles of the Directors, Supervisors and Senior Executives

Chairman of the Board, Mr. Zheng Shaoping, graduated from Dalian Maritime Univercity with postgraduate Diploma in International Maritime Law, and obtained MBA from of Wales. He was Chairman of the Board of Shenzhen Chiwan Harbour Container Co., Ltd., Deputy GM, GM and Vice Chairman of the Board of the Company. Presently, he is Deputy GM of CND and Executive Director of China Merchants Holdings (International) Company Limited, Vice Chairman of China Merchants Bonded Logistics Co., Ltd. (CMBL), Chairman of the Board of Container Terminals Ltd. and Chiwan Container Terminal Co., Ltd. (“CCT”). Director of the Company since May 1999. GM of the Company from Sept. 2004 to Jan. 2011. He was elected as Vice Chairman of the Company in Apr. 2010, and has been Chairman of the Board of the Company since Jan. 2011.

Director, Mr. Tian Junyan, graduated from Huazhong University of Science and Technology, and obtained a Master Degree in MBA. He ever took posts of lecturer, Associate Professor in school of management in Huazhong University of Science and Technology；GM of R&D Department of CND, and GM of Chixiao Enterprise Co., Ltd. Presently, he is GM of CND and has been Director of the Company since May 2011.

11 2011 Annual Report

Dirctor, Ms. Wang Fen, master. Previously, Chief of the GM Office, Manager of Business Department, GM of Chiwan Warehousing Company, Assistant GM, Deputy GM and GM of CND. Presently, Director of CND. Director of the Company since Mar. 1993. SHe was elected as Vice Chairman of the Company in Dec. 1998 and elected as Chairman of the Company in Aug. 2000. Due to work change, she resigned as Chairman of the Company in Jan. 2011. Now she is Director of the Company.

Director, Mr. Fan Zhaoping, got a Bachelor’s Degree in Economics from the State’s Finance University and a Master’s Degree in Economics from the Research Institute of Finance Ministry of China. Previously, Manager of the Finance Department, Manager of the Financial Investment Department and Assistant GM of CND since 1991. Now Vice President of CND. CFO of the Company from Mar. 1993 to Sept. 1999. And Director of the Company since Apr. 1995.

Director, Mr. Yuan Yuhui, MBA. Worked in the Business Department of CND since 1989. Previously, Chief of the GM Office and Vice President of CND. Now Vice Director of CND. Company Secretary of the Company from Mar. 1993 to Dec. 2000. And Director of the Company since April 1995.

Director and Executive Deputy General Manager, Mr. Zhang Ning, got a Master’s Degree in Engineering from Wuhan University of Technology. Previously, Deputy Manager and Manager of the Operation Department, Assistant GM and Deputy GM of CCT since Oct. 1995. Supervisor of the Company from May 1999 to Dec. 2004. Deputy GM of the Company from Dec. 2004 to Jan. 2011. Executive Deputy GM of the Company since Jan. 2011. And Director of the Company since May 2005.

Independent Director, Mr. Li Wuzhou, got Bachelor's Degree in Tianjin University. Previously, Deputy Director of Construction Department, Deputy Director of Water Transportation Department of the Ministry of Transport, Head of the Preparation Team and President of China Water Transportation Construction Association. Currently, Senior Adviser of China Water Transportation Construction Association, and Independent Director of the Company since May 2008.

Independent Director, Mr. Hao Zhujiang, got Bachelor's Degree in Southwest University of Political Science and Law. Previously, Director and Secretary of Party Committee of the Bureau of Legislative Affairs of Shenzhen Municipality, Director of the Administrative Reconsideration Office of Shenzhen Municipal Government, Director of the Legal Advice Office of Shenzhen Municipal Government. He retired in 2001. Currently, he is a partner and lawyer of Horizon Law Firm, Shenzhen Office. And Independent Director of the Company since May 2008.

Independent Director, Mr. Zhang Jianjun, got Doctoral Degree in Shanghai University of Finance and Economics. Previously, Deputy Dean and professor of the Accounting School of Jiangxi University of Finance and Economics, Vice President of Pengyuan Credit Rating Co., Ltd. (formerly, Sino-Hawk Credit Rating Co., Ltd.), Dean and professor of Business School of . Currently, he is the Director and a professor of Accounting & Finance Institute of Shenzhen University. And Independent Director of the Company since May 2008.

12 2011 Annual Report

Chairman of the Supervisory Committee, Mr. Yu Liming, got Doctoral Degree in Management from Fudan University. He graduated from South China University of Technology in 1982 and studied in Rotterdam, Netherlands and the IHE Institute, Delft from 1987 to 1988. He joined China Merchants Group in 1984 and has extensive experiences in strategic management, asset acquisition and business combination, port management and architecture. Currently, Chief Economist of China Merchants Group. And Supervisor of the Company since Oct. 2009.

Supervisor, Ms. Mary-Jean Wong, is a university graduate and a member of the 10th Shandong Committee of the Chinese People's Political Consultative Conference. Currently, Director of Lucliff (Canada) Company and Fairland Resources Limited, Executive Director of HK Clifford Wong Investment Co., Ltd. and Director of CND. And Supervisor of the Company since May 1996.

Supervisor, Ms. Guo Songhua, got a Master’s Degree from University of Manchester in U.K. Senior Economist, Registered Financial Planner. Previously, Assistant Manager, Deputy General Manager, Executive Deputy General Manager and General Manager of the Finance Department of CND since 1994. Currently, Chief Financial Officer of CND. And Supervisor of the Company since May 2008.

Supervisor, Mr. Zhao Chaoxiong, is a university graduate, Previously, Deputy Manager and Manager of the Business Department of the Company since Dec. 1999. Currently, Deputy GM of the Harbour Division of the Company. And Supervisor of the Company since Aug. 2009.

Supervisor, Ms. Ni Keqin, joined CCT in May 1993 and took the positions of Manager Assistant, Deputy Manager as well as Manager of the Operation Department and GM Assistant of CCT successively. Currently, Deputy GM of CCT. And Supervisor of the Company since May 2008.

Deputy General Manager, Mr. Qu Jiandong, graduated from The Hong Kong Polytechnic University with a Master Degree in Shipping and Logistics. Previously, GM Assistant, Deputy GM, Executive GM and GM of Shenzhen Chiwan Harbour Container Co., Ltd., Deputy GM of CCT and GM Assistant of the Company. And Deputy GM of the Company since Feb. 2012.

Deputy General Manager Mr. Zhao Qiang, got a Bachelor’s Degree of Land and Chemistry from Jilin Agricultural University. Previously, he took posts of GM of Harbour Division of the Company, Deputy GM of Chiwan Shipping (H.K.) Company Limited and GM Assistant of the Company. Presently, he is GM of Harbour Division of the Company and Deputy GM of Chiwan Shipping (H.K.) Company Limited. And Deputy GM of the Company since Feb. 2012.

Deputy GM and Chief Financial Officer, Mr. Zhang Jianguo, majored in Accounting and got a Bachelor’s Degree from Shanxi Finance & Economics Institute. Financial Manager of the Company since Oct. 1997 and Chief Financial Officer of the Company since Sept. 1999. And Deputy GM of the Company since Feb. 2012.

Deputy GM and Chief Engineer Mr. Xiong Haiming, graduated from South China University of Technology with a Bachelors’ Degree of Naval Architecture Engineering. Previously, Deputy GM,

13 2011 Annual Report

GM of Engineering Technology Division and GM Assistant of CCT. Presently, he is Chief Engineer of the Company. And Deputy GM of the Company since Feb. 2012.

Company Secretary Ms. Bu Dan, got a Bachelor Degree of Accounting and a Master Degree of Enterprise Management from Liaoning Technical University. She had been as Securities Affairs Representative of the Company from Sept. 2003 to Aug. 2008, and Manager of Enterprise Risk Services Department of Deloitte Touche Tohmatsu CPA Ltd. from Sept. 2008 to Oct. 2011. As being Company Secretary of the Board since Jan. 2012.

C. Directors and Supervisors Taking Positions in CND

Name Position in the Company Position in CND Office Term in CND

Zheng Shaoping Chairman of the Board Deputy GM Jan. 2011 till present

Tian Junyan Director GM Jan. 2011 till present Director and party Wang Fen Director Jan. 2011 till present secretary Fan Zhaoping Director Deputy GM Dec. 1998 till present

Yuan Yuhui Director Vice Director Jan. 2011 till present

Mary-Jean Wong Supervisor Director Apr. 1995 till present

Guo Songhua Supervisor CFO Sept. 2007 till present

Other Positions

Name Company Position

Chiwan Container Terminal Co., Ltd. Chairman

Shenzhen Mawan Terminals Co., Ltd. Chairman

Shenzhen Mawan Port Services Co., Ltd. Chairman Zheng Shenzhen Mawan Wharf Co., Ltd. Chairman Shaoping Shekou Container Terminals Ltd. Chairman

China Merchants Bonded Logistics Co., Ltd. Vice Chairman

China Merchants Holdings (International) Company Limited Executive Director

Tian Junyan Chiwan Oriental Logistics Co., Ltd. Chairman

14 2011 Annual Report

Shenzhen Nanshan Real Estate Development Co., Ltd. Chairman

YAHGEE Modular House Co., Ltd Chairman

Chixiao Enterprise Co., Ltd. Chairman

Shenzhen Chiwan Petroleum Supply Base Co., Ltd. Director

Chiwan Wharf (Hong Kong) Limited Chairman

Dongguan Chiwan Harbour Company Limited Chairman

Wang Fen Dongguan Chiwan Wharf Company Limited Chairman

Sullair Asia Ltd. Vice Chairman

Shenzhen Pingnan Railway Co., Ltd Vice Chairman

Shenzhen Chiwan Petroleum Supply Base Co., Ltd. Chairman Fan Zhaoping Chiwan Container Terminal Co., Ltd. Director

Yuan Yuhui Chiwan Development (Singapore) Ltd. Director

Lucliff (Canada) Company Director Mary-Jean Hong Kong Fairland Resources Limited Director Wong HK Clifford Wong Investment Co., Ltd. Executive Director

Shenzhen Southseas Grains Industries Limited Vice Chairman

Shenzhen Nantian Oil Dregs Industry Co., Ltd. Vice Chairman

Chixiao Enterprise Co., Ltd Director

Shenzhen Haiqin Engineering. Management Co., Ltd. Director Guo Songhua Changsha Nanshan Real Estate Development Co., Ltd. Director

Chiwan Development (Singapore) Company Limited Director

Chiwan Development (Hong Kong) Co., Ltd. Director

Shenzhen Chiwan Petroleum Supply Base Co., Ltd. Supervisor

15 2011 Annual Report

D. Annual Salary

1. Except for Independent Directors, the Company’s other members of the Board of Directors and the Supervisory Committee did not draw any remuneration, commission and others from the Company for taking the position of director or supervisor of the Company. Among which, Chairman Zheng Shaoping, Director Tian Junyan, Director Wang Fen, Director Fan Zahoping, Director Yuan Yuhui and Supervisor Guo Songhua received their salaries from CND, while Yu Liming, Chairman of the Supervisory Committee, and Supervisor Mary-Jean Wong drew their salaries from shareholders of CND.

2. Allowance for Independent Directors is RMB100,000/year (tax included), which has been approved at the 2010 Annual General Meeting with effect from 1 Jun. 2011.

3. All senior management staff of the Company are appointed by the Board of Directors. The Board sets up the Company’s business objectives and financial budget for each year and signs KPI contracts accordingly with senior management staff. The Board then grants rewards and punishment to senior management staff according to their respective performance during the year.

E. Changes in Directors, Supervisors and Senior Management Staff during the reporting period

1. Ms. Wang Fen, the former Chairman of the Board, submitted her resignation letter in Jan. 2011 and resigned from the position of the Chairman of the Board due to work change.

2. On 12 Jan. 2011, the First Special Session of the Sixth Board of Directors for 2011 was held, at which the Report on Electing Chairman for Sixth Board of Directors, the Report on GM Resignation and the Report on Appointing Executive Deputy GM were reviewed and approved. Mr. Zheng Shaoping was elected as the chairman of the Board and was agreed to resign as the GM of the Company. Mr. Zhang Ning was appointed as the executive Deputy GM, with his term of office until May 2011.

3. On 28 Feb. 2011, the Second Special Session in 2011 of the Sixth Board of Directors was held, at which the Report on Appointing Deputy GM of the Company was reviewed and approved. Mr. Qu Jiandong, Mr. Zhao Qiang, Mr. Zhang Jianguo and Mr. Xiong Haiming were appointed as Deputy GMs of the Company, with their term of office until May 2011.

4. The office terms of the Sixth Board of Directors and the Sixth Supervisory Committee as well as senior management staff all came to expiration in May 2011.

5. The 2010 Annual General Meeting held on 27 May 2011, re-elected members for the Board of Directors and the Supervisory Committee. At the meeting, the Report on Re-election of the Board of Directors, the Report on Re-election of Independent Directors and the Report on Re-election of the Supervisory Committee were reviewed and approved, electing Zheng Shaoping, Tian Junyan, Wang Fen, Fan Zhaoping, Yuan Yuhui and Zhang Ning as directors for the Seventh

16 2011 Annual Report

Board of Directors; Li Wuzhou, Hao Zhujiang and Zhang Jianjun as independent directors for the Seventh Board of Directors; and Yu Liming, Mary-Jean Wong and Guo Songhua as supervisors for the Seventh Supervisory Committee. Meanwhile, the Workers’ Representative Assembly on 4 Mar. 2011 elected Mr. Zhao Chaoxiong and Ms. Ni Keqin as staff-representative supervisors for the Seventh Supervisory Committee. The new office term of directors and supervisors mentioned above will last till May 2014.

6. The First Session of the Seventh Board of Directors was held on 27 May 2011, electing Mr. Zheng Shaoping as the Chairman for the Seventh Board of Directors; Mr. Zhang Ning as the Executive Deputy General Manager; Mr. Qu Jiandong, Mr. Zhao Qiang, Mr. Zhang Jianguo and Mr. Xiong Haiming as deputy general managers; Mr. Zhang Jianguo as CFO; and Ms. Pei Jiangyuan as the Company Secretary for the Seventh Board of Directors. The new office term of senior management staff mentioned above will also last till May 2014.

7. The First Session of the Seventh Supervisory Committee was held on 27 May 2011, at which Mr. Yu Liming was elected as the Chairman for the Seventh Supervisory Committee.

8. In Dec. 2011, former Company Secretary of the Board submitted resignation to the Board of Directors due to work change. She resigned from post of Secretary of the Board of Directors. Then the Company held the Sixth Special Meeting of the Seventh Board of Directors for 2011, of which reviewed and approved Proposal on Electing Secretary of the Board of Directors and approved to engage Ms. Bu Dan as Company Secretary of the Board. Her term of office until May 2014.

F. Work Force as at 31 December 2011

As at 31 December 2011, the Company had 1,813 employees, with 818 being university graduates, 66 financial personnel, 73 sales persons, 274 technicians, 70 management personnel, and the others being staff for production. The Company needn’t to pay remuneration or any fees for retired staff. Breakdown of Posts 岗位类别比列图 4% 4%

15%

财务人员66人66 financial personnel 4% 销售人员73人73 sales persons 技术人员274人274 technicians 行政管理人员70人70 management personnel

生产人员1330人1330 staff for production 73%

17 2011 年年度报告

PART VI CORPORATE GOVERNANCE

A. Particulars about corporate governance In strict accordance with the requirements of the PRC’s Company Law, the Securities Law, the Corporate Governance Principle for Listed Company and the laws and regulations issued by China Securities Regulatory Commission (“CSRC”), the Company made efforts to improve corporate governance, promote the level of corporate governance, form modern enterprise system and standardize corporate operation. Details about corporate governance within the reporting period are set out as follows:

1. As for the development of corporate business and work’s concern, the Company made amendments to Article 124 of its Articles of Association, Which were reviewed and approved at the Seventh Session of the Sixth Board of Directors of the Company held on 25 Mar. 2011 and at the Annual General Meeting of the Company for 2010 held on 27 May 2011.

2. According to spirit of documents such as Provisions for Establishing a Registration and Administration System for Persons with Insider Information in Listed Companies (ZJHGG【2011】No. 30) issued by CSRC and Public Notice on Establishment of Registration and Management System of Insiders on Inside Information (SZJGSZ 【2011】 No. 108) issued by Shenzhen SRC and Information Disclosure Business Memo No. 34-Registration and Administration System Issues for Persons with Insider Information, the Company revised Administration System of Inside Information and Insiders. Such system has been reviewed and approved at the First Special Session of the Seventh Board of Directors for 2012 held on 27 Feb. 2012.

3. According to requirements of Announcement of【2011】No. 41 issued by CSRC and actual circumstances of the Company, the Company revised Management Rules on Information Disclosure. The new versions has been examined and approved by the First Special Session of the Seventh Board of Directors for 2012 held on 27 Feb. 2012.

4. In accordance with the requirements of the Notice【2011】No. 107-“Notice on Printing and Distribution of Mr. Zhang Yundong’ Speech on Working Conference of Governance and Practices of Shenzhen Listed Companies for 2011”, the Company established Management System on Person in Charge of Finance and CFO. The above system has been examined and approved on the First Special Session of the Seventh Board of Directors for 2012 on 27 Feb. 2012.

5. Shareholders and general meeting: the Company ensures that all the shareholders, especially minority shareholders are equal and could enjoy their full rights. The Company called and held shareholders’ general meeting strictly in compliance with the “Rules for Shareholders’ General Meeting”.

6. Relationship between the controlling shareholder and the Company: controlling shareholder of the Company acted in line with rules during the reporting period, did not

18 2011 年年度报告 intervened the decisions, productions or operations of the Company directly or indirectly in exceeding the authority of the shareholders’ general meeting, and did not appropriate any funds of the Company.

7. Directors and the Board of Directors: the Company elected directors in strict accordance with the Articles of Association. Number and composition of members of the Board were in compliance with relevant laws and regulations; all Directors attended Board meetings and general meeting in a serious and responsible manner and participated enthusiastically relevant training so as to know better about laws and regulations as well as the rights, obligations and liabilities of Directors. The Company set up the Audit Committee as approved by the First Special Shareholders’ Meeting for 2004 and the Nomination, Remuneration and Evaluation Committee and Strategy Committee of the Board as approved by the Annual General Meeting for 2005, with a view to ensuring the efficient operation and scientific decision-making of the Board of Directors.

8. Supervisors and the Supervisory Committee: number and composition of the members of the Supervisory Committee were in compliance with the requirements of laws and regulations. The supervisors diligently and seriously performed their duties and obligations, took responsible attitudes to all shareholders and supervised the financial affair as well as the performance by the Company’s Directors, managers and other senior executives of their duties in compliance with the laws and regulations.

9. Stakeholders: the Company fully respected and safeguarded the legal rights and interests of the banks and other creditors, staff, consumers and other stakeholders so as to develop the Company in a consistent and healthy way.

10. Information disclosure and transparency: the Company authorized the Company Secretary to take charge of information disclosure, and the Chairman as well as related Directors to meet with shareholders. The Company disclosed relevant information in a true, accurate, complete and timely way in strict accordance with the requirements of laws, regulations and the Articles of Association, formulated the “Management Rules on Information Disclosure”, the “Management System on Inside Information and Insiders” and the “Rules on the Management of Investors Relations”, and designated Securities Times, Ta Kung Pao and http://www.cninfo.com.cn as its newspaper and website for information disclosure, so as to ensure all shareholders have equal opportunity to obtain the information.

11. Corporate Governance Systems and laws that the Company already established: “Articles of Association of the Company”, “Rules of Procedure for General Meetings”, “Working Articles of Audit Committee of the Board of Directors”, “Working Rules of Annual Report for Audit Committee of the Board of Directors”, “Working Articles for Nomination, Remuneration and Evaluation Committee of the Board of Directors”, “Working Articles of Strategy Committee of the Board of Directors”, “Working System for Independent Directors”, “Working Rules of Annual Report for Independent Directors”, “Rules of Procedure for Supervisory Committee”, “Working Articles of General Manager”, “Management System for Company Shares held by Directors”, “Supervisors and Senior Executives and Its Changes”, “Management System of

19 2011 年年度报告 Foreign Investment”, “Decision-making Mechanism of Related Transactions”, “Management System of Fund-raising”, “Management Rules on Information Disclosure”, “Rules of Accountability for Significant Mistakes in Annual Report Information Disclosure”, “Management System on Inside Information and Insiders”, “Internal Audit System”, “Management System of Investors’ Relations”, “Specific System for Engaging Accountants”, “Management Method of Financial Tools and Management System on Person in Charge of Finance and CFO” , etc. Details for the above systems please refer to website of the Company http://www.szcwh.com. There isn’t difference between the actual circumstances of the Company and all established systems. The Company has, since its establishment, been operating in a regulated way in accordance with the requirements of the Company Law and other laws and regulations. The Company will keep on doing so in accordance with the “Corporate Governance Principle for Listed Companies” so as to safeguard the interests of the shareholders and relevant stakeholders.

12. Non-compliance of corporate governance standards by the Company

As controlling shareholder of the Company CND holds 57.52% of the shares of the Company, it is required to consolidate the Company’s financial statements in its accounts under the Enterprise Accounting Standard No. 33-Consolidated Financial Statements. Accordingly, CND requires the Company’s Financial Department to submit our monthly financial statements on or about the tenth day every month for the purpose of the preparation of its consolidated financial statements.

At the Fifth Session of the Fifth Board of Directors of the Company held on 17 April 2007, the Report Concerning the Submission of Monthly Financial Statements to the Substantial Shareholder was reviewed and approved, it was agreed that Financial Department shall provide the Company’s monthly financial statements to CND. On 25 August 2007, the Company disclosed the details of submitting the financial statements to substantial shareholders in the Self-inspection Report and Rectification Plan for Corporate Governance in 2007 of Shenzhen Chiwan Wharf Holding Co., Ltd. In compliance with the requirements of the Shenzhen Securities Regulatory Bureau, the Company delivered “Undisclosed Information Provided by the Company to its Substantial Shareholders and Actual Controllers” to the Shenzhen Securities Regulatory Bureau before the tenth day every month since September 2007, including the name list of relevant parties and relevant information. The above-mentioned matters did not affect the Company’s independence. In the future, the Company will disclose the relevant information in due course at the request of the regulatory authorities.

13. During the reporting period, the Company didn’t receive any documents on implementation of administrative supervision from regulatory authorities.

B. Performance of Independent Directors

The Company has three independent directors, representing one third of the total members of the Board, which is in compliance with the requirements of the “Guiding Opinions on Setting up Independent Director System in Listed Companies” issued by CSRC.

20 2011 年年度报告

During the reporting period, attendances by the independent directors of the Company at board sessions are as follows:

Non- attendance Sessions Attendance by Attendance Attendance Absence in person Name Title required way of in person by proxy rate for two to attend telecommunication consecutive times Li 14 4 10 0 0 No Wuzhou Independent Hao Director 14 4 10 0 0 No Zhujiang

Zhang 14 4 10 0 0 No Jianjun

During the reporting period, all independent directors of the Company honestly performed their duties and brought their roles as independent directors into full play by participating in discussions on reports reviewed at board sessions and other issues of the Company, and proposed constructive suggestions which had been adopted by the Company. They carefully reviewed and issued independent opinions in written form on significant events such as material related-party transactions in accordance with relevant requirements. In accordance with the requirements of CSRC and Shenzhen Stock Exchange, the “Working Rules for Independent Directors” and the “Working Rules for Independent Directors Concerning Annual Reports, they performed their obligations with due diligence and fully oversaw the preparation and disclosure of the Annual Report of the Company for 2010. Independent directors of the Company proactively performed their duties, monitored the Company’s business and operation, actively protected the interests of minority shareholders, and thus played significant roles in the scientific decision-making by the Board of Directors. For details of performance by independent directors of their duties, please refer to the work report of independent directors for 2011 as disclosed at http://www.cninfo.com.cn.

C. Independence from the Controlling Shareholder

The Company is absolutely independent in business, personnel, assets, organization and finance from its controlling shareholder. Details are set out as follows.

Controlling shareholder has handed its wharf-related business thoroughly to the Company to operate and does not engage in the same business as the Company does, thus has no competition with the Company.

The Company has basically separated its staff from its controlling shareholder. No senior management staff of the Company holds positions at controlling shareholder of the Company. No financial staff takes concurrent positions in associated companies.

21 2011 年年度报告 The Company possesses its own self-governed assets and independent operation system. Assets of the controlling shareholder in the Company (including land-use rights and fixed assets such as property and large equipment, etc.) were converted through assets evaluation into stock of shares at the latter half of 1992, which the Company has full rights to hold, use and dispose of.

Management of the Company on its human resources and staff salary is absolutely independent.

The Company has set up its own financial department as well as independent normative accounting system and the financial management system on its subsidiaries. The Company has its own bank accounts and does not share the same bank account with its controlling shareholder. The Company has been paying tax in accordance with the laws and regulations on its own behalf.

D. Performance Evaluation and Incentive Mechanism for Senior Management Staff (see D. 3 of Part V for details)

PART VII INTERNAL CONTROL

A. Internal control improvement and self-evaluation

Based on the Basic Norms for Internal Control of Enterprises and the mating guideline, and according to the Circular on Doing a Good Job in Pilot Internal Control Regulation in Listed Companies of Shenzhen (Shen-Zheng-Ju-Gong-Si-Zi 〔 2011 〕 No. 31), the Company formulated the Work Plan for Implementation of Internal Control Norms, which was reviewed and approved at the First Special Session of the Audit Committee under the Company’s Sixth Board of Directors for 2011 on 27 Apr. 2011 and the Fourth Special Session of the Sixth Board of Directors for 2011. The work plan was later disclosed as required by the regulator.

The Company set up internal control task groups by two level Management. At the lavel of the Company, the task group was headed by the chairman of the board, with divisional leaders and departmental leaders as the members for the internal control steering committee, and important professionals of all functional departments as the members for the task group. At the lavel of a subsidiary, the task group was headed by the general manager of the subsidiary, with important professionals in the subsidiary as the members for the task group.

According to the requirements and instructions of the CSRC and its Shenzhen bureau about internal control in relation to financial reporting, considering its own business characteristics and the importance, the Company determined the scope for the financial reporting internal control for 2011 and the corresponding self-evaluation as follows: a. Subjects included were: the Company, CCT, Shenzhen Chiwan Harbor Container Co. Ltd. (CHCC), Shenzhen Chiwan Terminal Co., Ltd., Shenzhen Chiwan Trans-Grains Terminal

22 2011 年年度报告 Limited (SCTGT), Dongguan Chiwan Wharf Company Limited (DCW) and Dongguan Chiwan Terminal Company Limited; b. Internal control processes included were: the organizational structure, capital operation, procurement, asset management, marketing, engineering projects, guarantees, outsourcing, financial reporting, the overall budget and the information system.

According to the contents and schedule of the work plan, internal control task groups, through examining processes, evaluating the existing process and system design and other measures, completed the defect-looking phase for the internal control improvement project, formulated internal control defect lists and rectification plans, and rectified internal control problems found.

The Audit Office of the Company organized and carried out the self-evaluation of internal control. Via talks and sampling tests, and according to the previously-set evaluation standards, the office evaluated the defects found, prepared a defect evaluation summary sheet, and then offered their rectification advice. It then, according to the results of its aforesaid work, prepared the 2011 annual internal control self-evaluation report, which was later approved by the board. For more details, please refer to the 2011 Annual Internal Control Self-Evaluation Report of Shenzhen Chiwan Wharf Holdings Limited, disclosed by the Company on www.cninfo.com.cn.

The Company engaged PricewaterhouseCoopers China to audit the effectiveness of its 2011 financial reporting internal control. A standard auditor’s report with unqualified opinion was issued by PwC China and later disclosed by the Company as required by the regulator.

B. Directors’ statement on their responsibility towards internal control

As required by the CSRC and Shenzhen Stock Exchange, the board made a statement on the Company’s internal control self-evaluation report as follows:

The responsibility of the Board of Directors of the Company is to set up, improve and effectively carry out internal control for financial reporting.

The objective of the financial reporting internal control is to rationally ensure the factuality, completeness and reliability of the information carried in the financial statements, and to prevent material misstatement. Due to the inherent limitations in internal control, and possible influence from changes of the internal and external environment, policies, laws and regulations, the existing internal control may no longer be applicable or may cause different results, the financial reporting internal control can only provide rational guarantee for the aforesaid objective.

The board has evaluated the financial reporting internal control according to the Basic Norms for Internal Control of Enterprises and the evaluation guideline and believes that it had no material defect on 31 Dec. 2011 (the base day).

23 2011 年年度报告 C. Financial Reporting Internal Control Audit Report issued by PricewaterhouseCoopers China

Auditors’ Report on Internal Control

PwC ZT Shen Zi (2012) No.247

To the Shareholders of Shenzhen Chiwan Wharf Holding Limited:

We have audited Shenzhen Chiwan Wharf Holdings Limited’s (the "Company") internal control over financial reporting as of December 31, 2011, based on the requirements of the Enterprise Internal Control Assurance Guidance, and the professional standards of Chinese Certified Public Accountants.

1. Company responsibilities over internal controls

According to the Basic Standard for Enterprise Internal Control, Enterprise Internal Control Practical Guidance and Enterprise Internal Control Assessment Guidance, the Company's Board of Directors is responsible for establishing and maintaining effective internal controls and for its assessment of the effectiveness of internal controls.

2．Auditors’ responsibilities

Our responsibilities are to express opinion on the effectiveness of the Company's internal control over financial reporting base on our audit and to disclose any material weakness we noted in relation to internal control over the non-financial reporting area.

3．Inherent Limitation of Internal control

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

4．Opinion on the effectiveness of internal control over financial reporting

In our opinion, the Company, based on the Basic Standard for Enterprise Internal Control and the related requirements, maintained, in all material respects, effective internal control over financial reporting as at December 31, 2011.

Pricewaterhouse Coopers Zhongtian Certified Public Accountants Shanghai, the People’s Republic of China 27 March 2012

D. Opinion from independent directors on the internal control self-evaluation

The Company held the Third Session of the Seventh Board of Directors on 27 Mar. 2012 to review the 2011 Annual Internal Control Internal Control Self-evaluation Report. As the

24 2011 年年度报告 Independent Directors of the Company, we hereby give our independent opinions as follows:

During the reporting period, the Company thoroughly and effectively improved internal control. Key internal control activities involving controlled subsidiaries, related-party transactions, external guarantees, use of raised funds, significant investments, information disclosure, etc. proceeded in compliance with relevant internal control rules. The internal control rules of the Company were in compliance with applicable laws, regulations and the regulators’ requirements, which effectively prevented risks and ensured the normal proceeding of the Company’s operation and management.

In overall, we believe that the 2011 Annual Internal Control Internal Control Self- evaluation Report gives a true picture of the actual situation of the Company’s internal control.

E. Basis for the financial reporting internal control and material internal defects of financial reporting found within the year

Based on the Company Law, the Accounting Law, the Accounting Standards for Business Enterprises, the Basic Norms for Internal Control of Enterprises & its mating guideline and the Stock Listing Rules of Shenzhen Stock Exchange, as well as applicable laws, regulations, standards and guidelines, and considering its actual situation, the Company has formulated a comparatively sound financial reporting internal control system upon years of improvement. The system is based on the financial management system, with relevant management rules as the control means and the daily management system as the control guarantee.

The financial reporting internal control system includes: the Accounting Management Rules as the basis; the Internal Control Rules for Monetary Funds, the Internal Audit Rules, the Approval Power and Process for Significant Matters, the Management Rules for Fixed Assets, the Management Rules for Outward Investments, the Bidding and Bidding Invitation Management Rules, the Overall Budget Management Rules, the Decision- making Rules for Related-party Transactions, the Management Rules for Raised Funds, the Accountability Mechanism for Material Errors in Annual Report Disclosure, the Special Rules for Engaging a CPAs Firm, the Management Methods for Financial Instruments, the Management Rules for Financial Chief and Accounting Chief and other rules, which have been executed to effectively control the financial reporting internal control system; and the ISO9001 Quality Management System, the ISO14001 Environmental Management System, the ISO28000 Supply Chain Safety Management System, the safety management rules and other daily management rules, which have formed a solid guarantee for the financial reporting internal control system.

The Company has evaluated the internal control in relation to financial reporting according to the Basic Norms for Internal Control of Enterprises and the mating guideline, with no material defects found.

25 2011 年年度报告

F. Formulation and execution of the material error accountability system

Pursuant to the Securities Law, the Administrative Methods for Information Disclosure of Listed Companies and other laws and regulations, as well as the Company’s Articles of Association, the Company has formulated the Accountability Mechanism for Material Errors in Annual Report Disclosure, which was reviewed and approved at the Fifth Session of the Sixth Board of Directors on 8 Apr. 2010. During the reporting period, the Company strictly executed the Accountability Mechanism for Material Errors in Annual Report Disclosure, with no such cases as correction of material accounting errors, supplementation due to material omissions or correction of performance forecasts.

G. Formulation and execution of other internal accountability mechanisms

The First Special Session of the Seventh Board of Directors of the Company for 2012 was held on 27 Feb. 2012, at which the Management Rules for Information Disclosure, the Management Rules for Information Insider Information & Insiders and the Management Rules for Financial Chief and Accounting Chief were formulated and revised. Internal accountability was added to further improve the internal accountability mechanism of the Company. Up to the disclosure date, the Company has strictly executed the aforesaid rules.

PART VIII GENERAL MEETING

Two shareholders’ general meetings were held during the year, i.e. the Annual General Meeting for 2010 and the First Special General Meeting for 2011.

The Annual General Meeting for 2010 was held on 27 May 2011 on 11/F, Chiwan Petroleum Building, Shenzhen. Reports were reviewed and approved at the meeting as follows: “2010 Annual Work Report of the Board of Directors”, “2010 Annual Work Report of the Supervisory Committee”, “2010 Annual Final Financial Report”, “2010 Annual Profit Distribution and Dividend Report”, “Report on Re-election of the Board of Directors”, “Report on Re-election of Independent Directors”, “Report on Allowances for and Expenditure on Independent Directors”, “Report on Re-election of the Supervisory Committee”, “Report on Engagement of a CPAs Firm for 2010”, “Report on Amendment to the Company’s Articles of Association” and “Report on Adjustment of Withdrawal Ratio for Medium and Long-term Incentive Fund”. And the announcement of the resolutions made at the meeting was disclosed in Securities Times and Ta Kung Pao on 28 May 2011 (Announcement No.: 2011-020).

The First Special General Meeting for 2011 was held in the afternoon on 22 Sept. 2011 on 11/F, Chiwan Petroleum Building, Shenzhen. Reports were reviewed and approved at the meeting as follows: “Report on the Corporate Bond Plan” and “Report on Motioning the General Meeting to Give the Board of Directors Full Authority to Handle Matters Related to the Corporate Bond Plan under Applicable Laws and Regulations”. And the announcement of the resolutions made at the meeting was disclosed in Securities Times and Ta Kung Pao on 23 Sept. 2011 (Announcement No.: 2011-034).

26 2011 年年度报告

PART IX REPORT OF THE BOARD OF DIRECTORS

A. Business review for the reporting period

1. Summary of business in the reporting period

The Company is principally engaged in the handling, warehousing and transportation of containers and bulk cargoes, as well as the provision of related services.

The economy of the world in 2011 recoved hardly. The spreading European Sovereign Debt Crisis, the Japan Earthquake, the riotous Middle East and other factors presented the world economy with serious challenges. China’s foreign trade grew in a much lower-than- expected rate. The overall of iner companies gave a lackluster performance, transport capacity was integrated and deepened, and more and more large ships kept putting pressure on facilities and equipments in ports. In the year, the Company deeply carried forward optimization of resource allocation, stepped up its efforts and looked for overall improvement of its resources. Meanwhile, it made good use of internal and external opportunities to ensure stability of clients and achieve steadily increasing rates of port operation charges. In order to upgrade its service, the Company reinforced internal management in an all-round way covering system, process, technology, training, etc., carried on with research and innovation in an orderly manner and made sure of application of research results. As a result, internal management of the Company was improved on a going basis and notable achievements in cost control. By and large, the Company managed to maintain or even slightly improve all of its performance indicators with a stricter cost control.

Duing the reporting year, the Company achieved a container throughput of 5,793,000 TEU, down 5.8% as compared with last year, pushing the Company behind the average growth rate of 0.3% in all Shenzhen ports for the same period. The said container throughput represented a 25.7% market share in the container & port business in Shenzhen, down 150 basic points on a year-on-year basis. Chiwan port achieved a throughput of 4,122,000 TEU, a 1% decrease over last year.

As for its bulk cargo handling business, the Company still handled grain and fertilizers as its two main kinds of cargo and maintained a leading position in the region in this respect. In 2011, considering a weak market demand and decreasing available resources in Chiwan Port, the Company adjusted the cargo source structure by increasing the portion of high- value cargo sources. As a result, the average unit price rose considerably. Meanwhile, the Company also adjusted retention periods to increase its income from retention charges, which was why it still achieved growth in operating revenue and profit despite a decreasing throughput. Throughout the year, the Company achieved a throughput of 9.251 million tons, representing a slight decrease of 9.4% year on year. The bulk cargo throughput achieved by Chiwan port 6.532 million tons, decreased of 18.2%, accounting for a 19.8% market share among the three main bulk cargo wharfs in Shenzhen, down 180 basic points over 2010.

27 2011 年年度报告 For the year 2011, the Company achieved a throughput of 63.84 million tons, representing a slight decrease of 0.5% over 2010 and accounting for 27.4% of the overall throughput at Shenzhen ports, down by 60 basic points as compared with 2010.

Business highlights of the Company for the past three years are set out as follows.

Business Data 2011 2010 2009 Total throughput (million tons) 63.84 64.17 51.77 Among which: Container throughput (million TEU) 5.79 6.15 4.77 Chiwan Port 4.12 4.16 3.29 Mawan Port 1.67 1.96 1.48 Machong Port 00.03 -- Throughput of bulk cargo (million tons) 9.25 10.21 8.18 Chiwan Port 6.53 7.99 8.18 Machong Port 2.72 2.23 -- Hours charged for tow trucks (million hours) 1.23 1.30 1.16 Hours charged for tugboats (hour) 32,121 34,447 30,219

In face of rising labor cost, raw material cost and fuel cost in 2011, the Company actively coped with these problems through modern management and research & innovation. It improved the system’s statistical function, monitored unit consumption of labor and man hours, and reduced cost labor according to the appraisal system. Meanwhile, it also explored the possibility of using domestic tugboat spare parts to reduce raw material cost. And in order to keep down fuel cost, it altered internal tugboats in container wharfs with LNG (liquefied natural gas). The relationship between the costs caused by all adjustments in the year and the business volume and income was under effective control.

Year-on-year changes in revenue, operating profit and net profit attributable to the shareholders of the Company (unit: RMB)

Items 2011 2010 +/- YoY Reason Revenue 1,708,136,899 1,740,417,668 -2% Decreased in cargo throughput Operating profit 816,494,626 962,439,501 -15% ① Increased in the substantial rise in prices Net profit of various raw materials, labor cost, loan attributable to interest and so on from a year earlier; and ② shareholders of in the same period of last year, income from 505,645,137 596,680,156 -15% the Company disposal of long-term investment was gained, while there was no such kind of event in the current period.

During the reporting period, no substantial change took place in the structures of core business and profit breakdown. 2. Core business and performance a. Breakdown of revenue and operating profit (unit: RMB)

28 2011 年年度报告

Operating Core business Industry Revenue Percentage(%) Percentage profit Cargo handling Cargo handling 1,593,390,668 91% 809,495,898 99% Land transportation Transportation 59,071,320 3% 12,057,173 1% Tugboat services Related Shipping 83,312,479 5% 30,110,696 4% Agency services and Agency 1% -4% others 16,176,410 (35,169,141)

Subtotal 1,751,950,877 100% 816,494,626 100% Offset among the business segments (43,813,978)

Total 1,708,136,899 100% 816,494,626 100%

b. Indicators relating to core business which accounts for more than 10% of revenue and operating profit (unit: RMB)

YoY +/- of YoY +/- of Operating YoY +/- of Business Revenue Operating cost operating Operating profit margin revenue cost profit margin Cargo handling 1,593,390,668 725,779,726 54.45% -1.81% 3.45% -4.70%

Movements: Revenue from cargo handling decreased 1.81% on a year-on-year basis, which was mainly due to decrease in the business volume of containers and bulk cargoes. Operating cost went up by 3.45% over last year mainly due to rising labor cost and material prices.

3. Major customers

Revenue from the top five customers with aggregate amount of RMB913,272,542 accounted for 53% of the Group’s total revenue in 2011.

4. Financial status for the reporting period a. Material year-on-year changes in assets composition and reasons therefore

Accounting for Accounting for YoY total assets as at total assets as at Reason change the end of 2011 the end of 2010 Increased investments and payment for Cash at bank 7.32% 12.60% -5.28% project leads to the decrease in balance of and on hand cash at bank and on hand. Extension of Berth No. 13 and the Construction 7.92% 0.24% 7.68% projects in Marchong port are unfinished in progress in the current period .

29 2011 年年度报告 The balance is dividend payable to Dividend minority interest of subsidiaries. At 31 5.58% 3.44% 2.14% payable December 2011 ,the dividends of 2011 and 2010 are declared but not paid yet.

b. Measurement models adopted for major assets Cost approach was adopted for measurement of the Company's assets, except for available- for-sale financial assets for which fair value approach was adopted.

Impact on net profit Impact on equity Balance at the Balance at of the current period holders’ equity Items beginning of the end of Changes attributable to equity attributable to the the period the period holders of the Company Company Available-for-sale 6,640,000 5,690,000 (950,000) － (767,700) financial assets (a)

(a) Available-for-sale financial asset represented 1,000,000 PRC legal person floating shares of Jiangsu Expressway Co., Ltd. held by the Company. As at 31 December 2011, the fair value of the said shares in Shanghai Stock Exchange per the closing market price of the last trading day of year 2011 was RMB5,690,000.

c. Material year-on-year changes in financial data and reasons therefore

2011 2010 +/- (%) Reason

Financial Increase in both loans and loan 12,370,981 (10,535,505) 217% cost/(income)-net interest rates

d. Breakdown of cash flows

2011 2010 +/-(%) Reason

Net cash flows from The drop of revenue and 746,190,596 926,845,569 -19% operating activities operating profit in 2011

Net cash flows from Expenses of investment project (709,215,303) (781,017,371) -9% investing activities was decrease this year.

Net cash flows from more borrowings were repaied (330,746,958) (99,147,646) 234% financing activities in the reporting period Effect of exchange rate fluctuation on cash and (9,159,475) (6,056,736) 51% cash equivalents Net increase in cash and (302,931,140) 40,623,816 -846% cash equivalents

30 2011 年年度报告

e. Differences between cash flow from operating activities and net profit of the Company for the reporting period 2011 Net profit 667,775,668 Add: Provisions for assets impairment 251,074 Depreciation of fixed assets 159,529,959 Depreciation/amortization of investment property 1,333,629 Amortization of intangible assets 38,525,927 Amortization of long-term prepaid expenses 3,389,657 Losses /(Gains) on disposal of fixed assets, intangible assets and other long-term assets 1,889,222 Finance expenses 24,358,158 Investment income (118,228,183) Decrease /(Increase) in deferred tax assets (7,167,257) Increase in inventories 388,168 Decrease/(Increase) in operating receivables (44,983,485) Increase/(decrease) in operating payables 19,128,059 Net cash flows from operating activities 746,190,596

5. Items relating to fair value measurement Unit: RMB’000 Gains or losses Balance at the Accumulated fair Impairment Balance at the on fair value Item beginning of the value changes provided in end of the changes in the period included in equity the period period period Financial assets: Including: 1. Financial assets at fair value through profit or loss of the current period Including: Derivative financial assets 2. Available-for-sale financial 6,640 (767.70) 5,690 assets Hedging instruments Subtotal of financial assets 6,640 (767.70) 5,690 Financial liabilities Investment property Productive living assets Total 6,640 (767.70) 5,690

31 2011 年年度报告 6. Financial assets and liabilities in foreign currency held by the Company

Unit: RMB’000 Accumulated Gains or Balance at the fair value Impairment Balance at the losses on fair Item beginning of changes provided in end of the value changes the period included in the period period in the period equity Financial assets: Including: 1. Financial assets at fair value through profit or loss of the - - - - - current period Including: Derivative - - - - - financial assets 2. Loans and accounts receivable 205,841.95 - - - 217,794.17 3. Available-for-sale financial assets - - - - - 4. Hold-to-maturity investment - - - - - Subtotal of financial assets 205,841.95 - - - 217,794.17 Financial liabilities 1,251,523.31 - - - 1,173,673.87

7. Operations and results of main controlled subsidiaries and joint ventures a. Chiwan Container Terminal Co., Ltd.

The Company holds 55% equity interests directly and indirectly in CCT. With a registered capital of USD95.3 million, CCT is engaged mainly in handling containers, especially in accommodating international container lines. CCT achieved a container throughput of 3.317 million TEUs, a drop of 7.6% as compared with 2010. As at 31 December 2011, total asset of CCT was RMB2,963,576,038 and net asset was RMB1,263,552,924.

b. Shenzhen Chiwan Harbor Container Co. Ltd.

The Company holds 100% equity interests directly and indirectly in CHCC. With a registered capital of RMB288.2 million, CHCC is now mainly engaged in handling containers, especially in the accommodation service for transshipment container barges for foreign trade and for medium or small sized international liners as well. During the reporting year, CHCC achieved a container throughput of 568,000 TEUs, an increase of 61.8% compared with 2010. As at 31 December 2011, total asset of CHCC was RMB659,738,776 and net asset was RMB433,600,636.

c. Harbor Division

Being an independent accounting unit controlled by the Company but not an enterprise, Harbor Division is engaged in handling and warehousing of imported fertilizers. During the reporting period, throughput reached 2.23 million tons, 4.3% down as compared with 2010, of which throughput of bulk and general cargo reached 1.68 million tons, throughput of empty containers reached 237,000 TEUs. As at 31 December 2011, total asset of Harbor Division was RMB311,214,269 and net asset was RMB273,983,797.

32 2011 年年度报告 d. Shenzhen Chiwan Terminal Co., Ltd

The Company holds 100% equity interests directly and indirectly in this company. With a registered capital of RMB50 million, the company is engaged mainly in the handling and storage of grains. During the reporting period, the company achieved a throughput of 4.85 million tons, 20.5% down compared with 2010. As at 31 December 2011, total asset of the company was RMB133,667,859 and net asset was RMB100,236,530.

e. Shenzhen Chiwan Trans-Grains Terminal Limited

The Company holds 100% equity interests in SCTGT directly and indirectly. With a registered capital of RMB45 million, SCTGT is principally engaged in the loading and unloading, warehousing and packaging of grains and provides related service for the handling and storage of grains by Shenzhen Chiwan Terminal Co., Ltd. During the reporting period, stacking volume of goods reached 41.37 million tons day, representing a decrease of 9.8% compared with that of the previous period. As at 31 December 2011, SCTGT's total asset was RMB98,837,295 and net asset was RMB61,884,143.

f. Dongguan Chiwan Wharf Company Limited (DCW)

The Company holds 85% equity interests directly and indirectly in this company. With a registered capital of RMB450 million, the company is engaged mainly in the handling and storage of bulk cargos. During the reporting period, the company achieved a throughput of 2.719 million tons, 12.4% up compared with 2010. As at 31 December 2011, total asset of the company was RMB836,380,051 and net asset was RMB450,220,756.

g. Chiwan Wharf (Hong Kong) Ltd. (CWHK)

Registered in Hong Kong with a registered capital of HKD1,000,000 and as a wholly owned subsidiary of the Company, CWHK is an investment holding company. As at 31 December 2011, total asset of CWHK was RMB1,786,640,161 and net asset was RMB1,114,832,246. Subsidiaries of the company are as follows:

Shareholding percentage of Shareholding percentage Company Chiwan Wharf (Hong Kong) Ltd. of the Company Chiwan Container Terminal Co., Ltd. 4% 51% Shenzhen Chiwan Harbor Container Co. Ltd. 15.02% 84.98% Shenzhen Chiwan Transportation Co., Ltd. 25% 75% Shenzhen Chiwan Shipping & Transportation Co., Ltd. 10% 90% Shenzhen Chiwan Trans-Grains Terminal Limited 25% 75% Chiwan Shipping (H.K.) Company Limited 100% 0 Media Port Investments Limited 50% 0 Dongguan Chiwan Wharf Company Limited 43.55% 41.45% Dongguan Chiwan Terminal Company Limited 75% 25%

33 2011 年年度报告

As approved by Shenzhen Stock Exchange, disclosure of revenue, operating profit and net profit of the above-mentioned subsidiaries for the year 2011 will be consolidated. Revenue, operating profit and net profit attributable to equity holders of the said subsidiaries for 2011 were RMB1,599,394,190, RMB758,124,597 and RMB447,642,890 respectively. h. Shenzhen Chiwan Transportation Co., Ltd. (SCTC)

The Company holds 100% equity interests in SCTC directly and indirectly. With a registered capital of RMB15 million, SCTC is principally engaged in tow-truck services. During the reporting period, 1.23 million hours of tow truck operations were recorded, representing a decrease of 5.3% compared with that of the previous period. As at 31 December 2011, SCTC's total asset was RMB65,645,763, net asset RMB33,654,004, revenue RMB59,071,319, operating profit RMB12,057,173, and net profit RMB9,010,080 respectively. j. Shenzhen Chiwan Shipping & Transportation Co., Ltd. (SCST)

The Company holds 100% equity interests in SCST directly and indirectly. With a registered capital of RMB24 million, SCST specializes in provision of tugboat services. During the reporting period, 32,121 hours were charged for tugboat services, representing a decrease of 6.8% compared with that of the previous period. As at 31 December 2011, SCST's total assets was RMB160,693,145, net assets RMB51,002,798, revenue RMB83,312,479, operating profit RMB30,110,696 and net profit RMB22,814,515 respectively. k. China Overseas Harbour Affairs (Laizhou) Co., Ltd. (COHAL)

The Company holds 40% equity interests in COHAL directly and indirectly. With a registered capital of USD176.4077 million, COHAL specializes in handling petroleum, liquefied products and bulk cargos. During the reporting period, this company achieved a throughput of 14.01 million tons, representing a decrease of 2% compared with that of the previous period. As at 31 December 2011, this company’s total assets was RMB2,021,464,420, net assets RMB1,798,653,184, revenue RMB295,054,110, operating profit RMB88,017,196 and net profit RMB81,662,641 respectively.

B. Outlook for the future development of the Company

1. Development trend and competition status of the industry in which the Company is engaged In 2012, economic recovery in American and European countries may remain faltering, causing weak demands. Affected by that, global economy will grow in a comparatively lower pace. China’s foreign trade still has a chance to rise, but the growth rate is sure to become lower. Judging from the cycle of the industry, the shipping industry may have reached the peak of this cycle in 2010, and considering bottoming freight charges and unfavorable factors concerning the macro-economy and shipping capacity supply & demand, it is hard for the industry to reach that peak again in 2012 even if it bottoms out in

34 2011 年年度报告 the year. The intrinsic growth of the port industry will slow down structurally. Meanwhile, investments that have been made in the high-speed development period will continue to produce new throughput capacity, and over-capacity in ports will heat up competition.

Shenzhen ports mainly handle containers for foreign trade, making the port industry easily susceptible to foreign demands. And the Company’s container business lies in an area where ports handling large containers are close-packed, which means fierce competition. Slowdown of growth in foreign trade and further relocation of industries from the Delta will both affect growth of container capacity in the future. At the same time, liner companies are having low freight charges and a poor performance, which will consequently put pressure on port tariffs.

Alteration in ports in West Shenzhen will be carried forward step by step. The bulk cargo handling business developed by the three ports in the western part of Shenzhen in line with their respective strengths will remain stable generally, but the business structure may change as the plan for port resources changes. In the long run, the fertilizer and grain handling business of the Company is expected to show a steady growth; and resource allocation and business assignment between Chiwan Port and Machong Port will be optimized as response to markets change, laying a foundation for the sustained development of the Company’s bulk cargo handling business in the future.

2. Business Plan for 2012

In a changeable market environment, the Company will take initiative to alter its strategies so as to seize market opportunities. Meanwhile, it will keep an eye on influence of state policy amendments on imported cargos, as well as increasing near-sea cargos stimulated by development of emerging Asian economies. It will also look for cooperation with other ports in the region so as to keep competition in a healthy condition. It will continue to improve quality of all kinds of services it provides, focus on its core competitive edge, and maintain stability in core business and with major clients.

While trying to maintain the existing clients and market share, the Company will adopt more proactive strategies to expand its business, and also attach great importance to market and brand development. It will improve the governing environment for the port, expand cargo sources by making use of the policy advantage of the bonded port, enhance its ability to utilize and integrate internal and external resources, extend the service chain, and at the same time proactively improve the operating efficiency and service quality as a way to cope with the fierce competition among ports in the region.

The Company is well positioned to push forward research and innovation more deeply and widely; improve the appraisal and incentive mechanism; upgrade management; increase its resource distribution efficiency and allocation capability; encourage technical innovations for controlling cost, saving energy & reducing CO2 emission and building green ports; constantly increase vitality and sustainability of its core competitiveness; and enhance its risk control capability as a whole.

In 2012, the Company will mainly work on the following construction projects: the Berth

35 2011 年年度报告 13 extension project in Chiwan Port to be commenced for accommodating more and more larger ships, which will greatly improve our ability to receive and handle large ships at the jetty; ancillary warehousing facilities for the first phase of the Machong Port Project, including bonded and bulk grain warehouses; and the second phase of the Machong Port Project.

Meanwhile, we will keep an eye on any possible opportunity arising from market and industry changes, as well as investment orientations for resource and business integration. Also, we will continuously enhance our ability to manage investments, assure progress of all the construction projects, and keep a watch over companies that we invest in.

3. Capital requirements and expenditure plan for 2012

To implement our future development strategies and achieve business goals we have set, a capital expenditure of RMB694 million is planned for 2012, of which RMB162 million will be invested in fixed assets at Chiwan Port and RMB532 million will be invested in Machong Port in Dongguan. The above capital expenditures will be mainly funded by cash inflows from operating activities of the Company, bank borrowings and corporate bonds.

C. Investments during the reporting period 1. Utilization of raised proceeds No funds were raised by the Company during the reporting period. Recently raised funds had been fully utilized by the end of 1996.

2. Other investments During the reporting period, capital expenditure decreased by RMB143 million to RMB806.18 million, a drop of 15% over last year, among which:

Investee Investment amount (RMB million) Chiwan Port 232.66 Machong Port 353.24 China Merchants Bonded Logistics Co., Ltd. 220.28 Total 806.18

 Investments in Chiwan Port were utilized mainly for the berth extension project in the container wharf, tugboat building and port equipment purchases;  Investments in Machong Port were utilized mainly for port equipment purchases, land payment and construction payment;  Investments in CMBL were utilized mainly for equity interest investment and capital increase in it, which enabled the Company to hold a 40% stake in CMBL directly and indirectly. CMBL is mainly engaged in warehousing service, freight delivery, cargo agent service, etc.

36 2011 年年度报告

3. During the reporting period, the Company did not launch any trust financing or investment in derivative products.

D. Daily operations of the Board 1. Board meetings and resolutions

The Board held a total of 14 meetings (including 3 periodic meetings and 11 extraordinary meetings) during the year. Details of the meetings are set out as follows:

date Session Resolutions of the session Disclosure situation Published in Securities The First Special Resolution on Report of Electing the Times and Ta Kung Pao Session of the 12 Jan. 2011 Chairman of the Sixth Board of on 13 Jan. 2011 Sixth Board of Directors, etc. (Announcement No.: Directors for 2011 2011-002). Published in Securities The Second Times and Ta Kung Pao Special Session of Resolution on Report of Engaging 28 Feb. 2011 on 1 Mar. 2011 the Sixth Board of the Vice GM of the Company (Announcement No.: Directors for 2011 2011-005). Resolution on Report of Transferring The Third Special 20% Equity Interests in China Session of the Merchants Maritime Logistics 7 Mar. 2011 Sixth Board of (Shenzhen) Ltd. to Hinwin Directors for 2011 Development Limited was reviewed and approved. Published in Securities The Seventh Times and Ta Kung Pao Session of the Resolution on Work Report of the 25 Mar. 2011 on 29 Mar. 2011 Sixth Board of Board of Directors for 2010, etc. (Announcement No.: Directors 2011-007). Published in Securities The Fourth Special Times and Ta Kung Pao Session of the Resolution on the First Quarterly 27 Apr. 2011 on 28 Apr. 2011 Sixth Board of Report for 2011 of the Company, etc. (Announcement No.: Directors for 2011 2011-014). 1. Resolution on Report of Increasing Published in Securities The Fifth Special Investment on China Merchants Times and Ta Kung Pao Session of the Maritime Logistics (Shenzhen) Ltd. 26 May 2011 on 27 May 2011 Sixth Board of 2. Resolution on Report of Applying (Announcement No.: Directors for 2011 for Comprehensive Line of Credit to 2011-018). Shenzhen Branch of Bank of Ningbo Published in Securities The First Session Resolution on Report of Electing the Times and Ta Kung Pao 27 May 2011 of the Seventh Chairman of the Seventh Board of on 28 May 2011 Board of Directors Directors, etc. (Announcement No.: 2011-021). The First Special Resolution on Report of Adjusting Session of the the Ratio of Capital Investment on 12 Jul. 2011 Seventh Board of the Berth 4# -5# Project at South Directors for 2011 Xinsha, Machong Port Area, Humen

37 2011 年年度报告 Port, Dongguan was reviewed and approved, which approved the Company and Chiwan Wharf (Hong Kong) Limited to increase the ratio of capital investment on the Berth 4# - 5# project at South Xinsha, Machong Port Area, Humen Port, Dongguan from 25% : 75% to 43.75% : 56.25%. 1. Resolution on Report of Providing The Second Published in Securities Guarantee on Bank Line of Credit for Special Session of Times and Ta Kung Pao Controlling Subsidiaries 21 Jul. 2011 the Seventh Board on 22 Jul. 2011 2. Resolution on Report of Approval of Directors for (Announcement No.: Authority and Procedures of 2011 2011-026). Significant Events of the Company Published in Securities The Second Resolution on the Full Text and Times and Ta Kung Pao Session of the Summary of the Semi-Annual 18 Aug. 2011 on 20 Aug. 2011 Seventh Board of Financial Report for 2011 of the (Announcement No.: Directors Company 2011-029). 1. Resolution on Report of the Issuance Plan of the Corporate Bond 2. Report on Motioning the General Meeting to Give the Board of Directors Full Authority to Handle Matters Related to the Corporate Published in Securities The Third Special Bond Plan under Applicable Laws Times and Ta Kung Pao Session of the and Regulations 5 Sept. 2011 on 9 Sept. 2011 Seventh Board of 3. Resolution on Report of the Date (Announcement No.: Directors for 2011 and Agenda of the First Special 2011-030). Shareholders’ General Meeting for 2011 4. Resolution on Report of Applying for Comprehensive Line of Credit to Shenzhen Wuzhou Subbranch of Shenzhen Development Bank 1. Resolution on Report of Applying for Comprehensive Line of Credit to Published in Securities The Fourth Special Shenzhen Nanshan Subbranch of Times and Ta Kung Pao Session of the Agricultural Bank of China 19 Oct. 2011 on 21 Oct. 2011 Seventh Board of 2. Resolution on Report of Providing (Announcement No.: Directors for 2011 Guarantee for Shenzhen Chiwan 2011-037). Harbour Container Co., Ltd., Wholly- owned Subsidiary of the Company 1. Resolution on the Third Quarterly Published in Securities The Fifth Special Report for 2011 of the Company Times and Ta Kung Pao Session of the 24 Oct. 2011 2. Resolution on Proposal about on 26 Oct. 2011 Seventh Board of Adjusting the Issuing Scale of (Announcement No.: Directors for 2011 Corporate Bond and Serial Issuance 2011-040). Published in Securities The Sixth Special Resolution on Proposal about Times and Ta Kung Pao Session of the 31 Dec. 2011 Engaging the Secretary to the Board on 5 Jan. 2012 Seventh Board of of Directors of the Company (Announcement No.: Directors for 2011 2012-001).

38 2011 年年度报告 2. Implementation by the Board of the resolutions passed at the Shareholders’ General Meetings

Profit Distribution Plan for 2010 was reviewed and approved at the Company's Annual Shareholders’ General Meeting for 2010 held on 27 May 2011. Based on a total share capital of 644,763,730 shares as at the end of 2010, a cash dividend before tax of RMB4.63 for every ten shares totaling RMB298,525,607 was proposed.

The Board of the Company disclosed a public notice in respect of payment of dividend for the year 2010 in Securities Times and Ta Kung Pao on 14 Jul. 2011, and completed the dividends payment for both A shares and B shares on 22 Jul. and 26 Jul. 2011 respectively.

3. Establishment, improvement and principal contents of the working rules for the Audit Committee and performance of the Audit Committee

In accordance with the Company Law of the PRC, the Corporate Governance Principle for Listed Companies, the Articles of Association and other relevant requirements, the Company established the Audit Committee under its Board of Directors and formulated the Working Rules for the Audit Committee of the Board (“Working Rules”) and the Working Practices for the Audit Committee of the Board on Annual Report (“Working Practices”). The Working Rules and the Working Practices set forth specific provisions regarding the composition, responsibility and authority, decision-making process and rules of the Audit Committee and the works that need to be done in preparing and auditing annual reports, which improved the Company’s corporate governance structure and mechanism, reinforced the construction of internal control of the Company, and brought into full play the critical role of the Audit Committee of the Board in preventing risks. a. Five meetings of the Audit Committee were held during the year, i.e. the Audit Committee of the Sixth Board of Directors of the Company held a total of two meetings during the year, and the Audit Committee of the Seventh Board of Directors of the Company held a total of three meetings during the year. Details of the meetings are set out as follows: ① On 24 Mar. 2011, the First Session of the Audit Committee of the Sixth Board of Directors for 2011 was held at 9:00 a.m., at Conference Room I, 13/F., Chiwan Petroleum Building, Shenzhen, at which the following proposals were reviewed and approved unanimously:

● “Internal Auditing Report of the Company for 2010” was reviewed and approved; ● “Internal Auditing Plan of the Company for 2011” was reviewed and approved; ● “Working Report of the Audit Committee of the Board in 2010” was reviewed and approved; ● “The Financial Statements of 2010” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “Working Report of the Accounting Firm in 2010” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “Report on the Appointment of the Accounting Firm for 2011” was reviewed and approved and was submitted to the Board of Directors of the Company for approval. The

39 2011 年年度报告 Audit Committee recommended the Board to re-appoint PricewaterhouseCoopers Zhong Tian Certified Public Accountants as the Company's accounting firm for 2011.

② On 27 Apr. 2011, the First Special Session of the Audit Committee of the Sixth Board of Directors for 2011 was held by way of telecommunication voting, at which the “Report on the Company’s Work Plan for the Construction and Implementation of the Internal Control Standards” and “Report on the Appointment of the Accounting Firm for Auditing the Company’s Internal Control in 2011” was reviewed and approved unanimously and submitted to the Board of Directors of the Company for approval.

③ On 27 May 2011, the First Session of the Audit Committee of the Seventh Board of Directors for 2011 was held at 2:30 p.m. at Conference Room IV, 11/F., Chiwan Petroleum Building, Shenzhen, at which “Report on Electing the Convener of the Audit Committee of the Seventh Board of Directors” was reviewed and approved unanimously and submitted to the Board of Directors of the Company for approval.

④ On 18 Aug. 2011, the Second Session of the Audit Committee of the Seventh Board of Directors for 2011 was held at 8:30 a.m. at Conference Room V, 11/F., Chiwan Petroleum Building, Shenzhen, at which the following proposals were reviewed and approved unanimously:

● “The Semi-Annual Financial Report for 2011 of the Company” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “The Semi-Annual Internal Auditing Report of the Company for 2011” was reviewed and approved; ● “The Report on the Construction and Implementation Scope of the Company’s Internal Control for 2011” was reviewed and approved.

⑤ On 19 Dec. 2011, the First Special Session of the Audit Committee of the Seventh Board of Directors for 2011 was held at 9:00 a.m. at Conference Room I, 13/F., Chiwan Petroleum Building, Shenzhen, at which the Report on the Company’s Auditing Work of Finance and Internal Control by PricewaterhouseCoopers Zhong Tian Certified Public Accountants for 2011 was debriefed. b. In accordance with relevant requirements of CSRC and Shenzhen Stock Exchange, the specific working rules and procedure for the Audit Committee, during the reporting period, the Audit Committee of the Board of the Company oversaw the auditing of the Annual Report of the Company for 2010 with due diligence, details of which are as follows:

① Before the auditors started their work, the Audit Committee discussed with the principal auditor of the accounting firm and determined, inter alia, the timing schedule for the auditing work of the financial statements for the year. ② The Audit Committee expressed its audit opinions two times on the annual financial statements of the Company for 2010.

40 2011 年年度报告 During the reporting period, the Audit Committee expressed its audit opinions two times on the annual financial statements of the Company for 2010 in accordance with relevant requirements from CSRC, details of which are as follows:

The Audit Committee reviewed the Financial Statements prepared by the Company and issued the following opinions before the Auditors started their work: the Company was in full compliance with relevant laws, regulations and the Articles of Association of the Company, the units and items of the Company's financial statements to be consolidated were complete, and the consolidation basis thereof was accurate and the information included in the Financial Statements submitted by the Company was objective, comprehensive and true. The Company's accounting policies were properly adopted and the accounting estimates made were reasonable. No significant mistake or omission has been identified so far. Due to the time-lag between this review of Financial Statements and the dates of the Auditors' Report, we suggest the Finance Department focus on and deal with subsequent events properly in accordance with the New Enterprises Accounting Standards to ensure the fairness, truthfulness and completeness of the Financial Statements.

After the Auditors issued their preliminary audit opinions, the Audit Committee reviewed the Financial Statements again and issued the following opinions: the Company prepared the Financial Statement in full compliance with the New Enterprise Accounting Standards and relevant provisions of the financial control system of the Company, the procedures for the preparation of the Financial Statements were reasonable and proper, which gave a true and fair view of the Company's assets, liabilities, equity interests and operation results as at 31 December 2010. Information included in the Financial Statements was objective and complete. Financial Statements for 2010 which was preliminarily audited by PricewaterhouseCoopers Zhong Tian Certified Public Accountants may be submitted for review at the Seventh Session of the Sixth Board of Directors.

③ Supervision over the Auditing Work of the Accounting firm The Audit Committee issued letters to PricewaterhouseCoopers Zhong Tian Certified Public Accountants on 19 Jan. and 18 Feb. 2011 respectively to urge them to produce their audit report in a timely manner, so as to ensure the annual audit and information disclosure proceed as scheduled.

④ Opinions on the Auditing Work Performed by the Accountants for the previous year During the auditing period, the Audit Committee of the Board focused on the problems discovered in process of audit, urged auditors to finish the preparation of their report within a prescribed period of time and ensured the truthfulness, accuracy and completeness of the annual report. The Certified Public Accountants issued a standard unqualified audit report on 25 Mar. 2011. The Audit Committee considered that the Certified Public Accountants conducted their audit in accordance with China’s Independent Auditing Standards, the audit time was sufficient, the deployment of the auditors was appropriate and their practicing capability was excellent, and that the audit report issued sufficiently reflected the Company's financial condition as at 31 Dec. 2010 and its operation results and cash flows for the year 2010 and the audit conclusion made was in line with the actual situation of the Company.

41 2011 年年度报告

⑤ During the reporting period, the Audit Committee placed great emphasis on the establishment of the internal control and supervision department of the Company and its personnel deployment. The Audit Department was required to submit its working report for the previous year and working plan for the current year to the Audit Committee and report the establishment and implementation of the internal control system, which enabled the Audit Committee to understand the implementation and effect of the internal control system. In addition, the Audit Committee advised on the improvement for the work of the Audit Department and the Company relating to internal control for the next year.

4. Performance of the Nomination, Remuneration and Evaluation Committee During the reporting period, six meetings of the Nomination, Remuneration and Evaluation Committee were held during the year, i.e. the Nomination, Remuneration and Evaluation Committee of the Sixth Board of Directors held a total of four meetings, and the Nomination, Remuneration and Evaluation Committee of the Seventh Board of Directors held a total of two meetings, details of which are as follows: a. On 12 Jan. 2011, the First Session of the Nomination, Remuneration and Evaluation Committee of the Sixth Board of Directors for 2011 was held at 9:30 a.m. at Conference Room VI, 11/F., Chiwan Petroleum Building, Shenzhen, at which “Report on the Engagement of the Company’s Executive Vice GM” was reviewed and approved and submitted to the Board of Directors of the Company for approval; b. On 25 Feb. 2011, the Second Special Session of the Nomination, Remuneration and Evaluation Committee of the Sixth Board of Directors for 2011 was held by way of telecommunication voting, at which “Report on the Engagement of the Company’s Vice GM” was reviewed and approved unanimously and submitted to the Board of Directors of the Company for approval; c. On 24 Mar. 2011, the Third Session of the Nomination, Remuneration and Evaluation Committee of the Sixth Board of Directors for 2011 was held at 2:00 p.m. at Conference Room I, 13/F., Chiwan Petroleum Building, Shenzhen, at which the “Working Report of the Nomination, Remuneration and Evaluation Committee of the Board for 2010”, the “Report on the Remuneration of the Directors, Supervisors and Senior Management Staff for 2010” and the “Report on the Examination of the Director Candidate” were reviewed and approved; d. On 27 Apr. 2011, the Fourth Special Session of the Nomination, Remuneration and Evaluation Committee of the Sixth Board of Directors for 2011 was held by way of telecommunication voting, at which the “Report on Adjusting the Withdrawal Ratio of the Medium to Long Term Incentive Fund” was reviewed and approved unanimously and submitted to the Board of Directors of the Company for approval; e. On 27 May 2011, the First Session of the Nomination, Remuneration and Evaluation Committee of the Seventh Board of Directors for 2011 was held at 2:50 p.m. at

42 2011 年年度报告 Conference Room IV, 11/F., Chiwan Petroleum Building, Shenzhen, at which the following proposals were reviewed and approved:

● “The Report on Electing the Convener of the Nomination, Remuneration and Evaluation Committee of the Seventh Board of Directors” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “The Report on the Engagement of the Company’s Executive Vice GM” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “The Report on Assuming the Post of the Company’s Vice GM” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “The Report on the Engagement of the Company’s CFO” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “The Report on the Engagement of the Secretary to the Board” was reviewed and approved and was submitted to the Board of Directors of the Company for approval. f. On 31 Dec. 2011, the Second Special Session of the Nomination, Remuneration and Evaluation Committee of the Seventh Board of Directors for 2011 was held by way of telecommunication voting, at which the Plan on the Engagement of the Secretary to the Board was reviewed and approved unanimously and was submitted to the Board of Directors of the Company for approval.

5. Performance of the Strategy Committee During the reporting period, two meetings of the Strategy Committee were held during the year, i.e. the Strategy Committee of the Sixth Board of Directors of the Company held one meeting, and the Strategy Committee of the Seventh Board of Directors of the Company held a total of two meetings during the year. Details of the meetings are set out as follows: a. On 24 Mar. 2011, the First Session of the Strategy Committee of the Sixth Board of Directors for 2011 was held at 2:30 p.m. at Conference Room I, 13/F., Chiwan Petroleum Building, Shenzhen, at which the following proposals were reviewed and approved unanimously: ● “The Report on Electing the Convener of the Strategy Committee of the Sixth Board of Directors” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “The Working Report of the Strategy Committee of the Board for 2010” was reviewed and approved; ● “The Business Development Plan for 2011 to 2015” was reviewed and approved. b. On 27 May 2011, the First Session of the Strategy Committee of the Seventh Board of Directors for 2011 was held at 2:40 p.m. at Conference Room IV, 11/F., Chiwan Petroleum Building, Shenzhen, at which the “Report on Electing the Convener of the Strategy Committee of the Seventh Board of Directors” was reviewed and approved unanimously and was submitted to the Board of Directors of the Company for approval. c. On 9 Dec. 2011, the Second Session of the Strategy Committee of the Seventh Board of Directors for 2011 was held by way of telecommunication voting, at which the “Proposal on Adding Machong Bundline” was reviewed and approved unanimously.

43 2011 年年度报告

During the reporting period, members of the Strategy Committee conducted research and advised on the investment plans and assets operation projects related to the medium to long term development strategy of the Company.

E. Profit Distribution Proposal for 2011

As audited by PricewaterhouseCoopers Zhong Tian Certified Public Accountants Co., Ltd., net profit of the Company for 2011 was RMB430,118,633 and the accumulative profits available for distribution was RMB668,245,566.

a. In accordance with the provisions of the Company Law and the Articles of Association of the Company, the Company is going to draw 10% of net profit of the Company audited for the year 2011, namely RMB43,011,863, as statutory surplus reserve.

b. The Company would plan to distribute dividend of RMB4.00 (tax included) in cash for every 10 shares based on the total share capital of 644,763,730 shares as at the end of 2011, totaling RMB257,905,492.

After the aforesaid distribution, the residual retained profit of the Company was RMB367,328,211.

The above profit distribution proposal shall be submitted to 2011 Annual General Meeting for review and approval.

F. Cash Dividends Distributed in the last three years Unit: RMB Net profit attributable to equity Amount of cash Year of holders of the Company in the Distributable profit dividends Percentage distribution consolidated financial statements for the year (Including tax) for the year of distribution 2010 298,525,607 596,680,156 50.03% 574,774,541

2009 209,548,212 418,864,844 50.03% 431,538,411

2008 322,381,865 642,891,604 50.15% 514,467,212 Percentage of aggregated cash dividends in the last three years in 150.22% the recent annual average net profit (%)

G. Establishment and Execution of the Management Rules on Insider Information and Insiders

The Company established the Management Rules on Inside Information and Insiders in accordance with the Articles of Association of the Company and other laws and regulations, which was reviewed and approved at the Seventh Special Session of the Sixth Board of Directors for 2009 held on 29 Oct. 2009, and then issued for implementation. In compliance with the document spirit of Regulation on Establishing Management Rules of

44 2011 年年度报告 Insiders Registration in Listed Company from CSRC, Notice on Establishing Management Rules of Insiders Registration from Shenzhen Securities Regulatory Bureau and Memorandum of Information Disclosure No. 34— Management Issues on Insiders Registration from Shenzhen Stock Exchange, the Company revised the Management Rules on Inside Information and Insiders by connecting with the practice, which was reviewed and approved at the First Special Session of the Seventh Board of Directors for 2012 on 27 Feb. 2012 and issued for implementation.

The rules set forth specific provisions regarding the management on information submitted to external entities. The Company submitted “Undisclosed Information Provided by the Company to its Substantial Shareholders and Actual Controller” to the Shenzhen Securities Regulatory Bureau every month, including the name list and related information of parties aware of such undisclosed information and relevant information. No information insiders have been found trading the Company’s shares by taking advantage of insider information.

PART X REPORT OF THE SUPERVISORY COMMITTEE

A. Within the reporting period, in accordance with the Company Law of the PRC and the Company’s Articles of Association, the Supervisory Committee conducted examination and supervision, carried out its rights and obligations as well as delegated its representatives to attend the Board Meeting and gave its opinions upon the Company’s decision-making regarding significant issues. The Supervisory Committee held six meetings in 2011.

date Session Resolutions of the session Disclosure situation Published in Securities The First Special Resolution on Report of Rectification Times and Ta Kung Pao Session of the Sixth Plan for On-site Inspection by 12 Jan. 2011 on 13 Jan. 2011 Supervisory Shenzhen Securities Regulatory (Announcement No.: Committee for 2011 Bureau 2011-003). 1. Resolution on Working Report of the Supervisory Committee for 2010 2. Resolution on Annual Report of the Published in Securities The Seventh Session Company for 2010 and its Summary Times and Ta Kung Pao of the Sixth 25 Mar. 2011 3. Resolution on Self-evaluation on 29 Mar. 2011 Supervisory Report on Internal Control of the (Announcement No.: Committee Company for 2010 2011-008). 4. Resolution on Report of the Re- election of the Supervisory Committee The Second Special Session of the Sixth Resolution on the First Quarterly 27 Apr. 2011 Supervisory Report for 2011 Committee for 2011 Published in Securities The First Session of Resolution on Report of electing the Times and Ta Kung Pao the Seventh 27 May 2011 Chairman of the Seventh Supervisory on 28 May 2011 Supervisory Committee (Announcement No.: Committee 2011-022).

45 2011 年年度报告 The Second Session Resolution on Semi-annual Report of of the Seventh 18 Aug. 2011 the Company for 2011 and its Supervisory Summary Committee The First Special Session of the Resolution on the Third Quarterly 24 Oct. 2011 Seventh Supervisory Report for 2011 Committee

B. Opinion of the Supervisory Committee on the internal control self-evaluation . According to the Basic Norms for Internal Control of Enterprises and its mating guideline, the Company evaluated the internal control effectiveness as at 31 Dec. 2011 and formulated the 2011 Annual Internal Control Self-evaluation Report, which was reviewed and approved at the Third Session of the Seventh Board of Directors on 37 Mar. 2012. The Supervisory Committee of the Company hereby expresses its opinion on the report as follows: During the reporting period, the Company formulated and improved the financial reporting internal control rules, which were effectively executed. The internal control system was in line with the operation and development needs of the Company, which prevented risks and ensured the safety of the Company’s assets. The internal control self-evaluation report gave a factual and complete presentation of the actual situation of the Company’s internal control. In overall, we believe that the 2011 Annual Internal Control Self-evaluation Report is complete, true and accurate, and gives a true picture of the actual situation of the Company’s internal control. Therefore, we accept it to be disclosed on the websites chosen by the Company for information disclosure.

C. Establishment and Execution of the Management Rules on Insider Information and Insiders (for details, please refer to Part IX. G)

PART XI SIGNIFICANT EVENTS

A. The Company had no significant lawsuits or arbitration cases involved in the year.

B. During the reporting period, there were no non-operating appropriations or repayment of funds by the controlling shareholder and its related parties. PricewaterhouseCoopers Zhong Tian Certified Public Accountants issued Opinions on Appropriations of Funds of Shenzhen Chiwan Wharf Holdings Limited by the Controlling Shareholder and Its Related Parties, details of the report please refer to Website for Information Disclosure.

C. The Company had no significant events relevant to bankruptcy reorganization in the year.

D. Particulars about holding equities of other public companies Set out below are the equity interests the Company held in other public companies during

46 2011 年年度报告 the reporting period, which were invested in previous periods.

Changes in Gain 1 Jan. 2011 31 Dec. 2011 Book owners’ Initial during Stock Stock value at equity Accounti Source of investment the code name the end of during the ng item shares amount Propo Propor reporting Amount Amount the period reporting rtion tion period period Shares held by legal Available entity, Jiangsu -for-sale 600377 1,120,000 100000 0.02% 100000 0.02% 5,690,000 - (767,700) which is Expressway financial allowed for assets circulation after share reform ShenZhen Long- Petro- term Shares chemical 400032 3,500,000 780000 0.26% 780000 0.26% 382,200 - - equity held by Industry investme legal entity (Group) nts Co., Ltd. GuangDon Long- g Guang term Shares 400009 Jian Group 27,500 20000 0.02% 20000 0.02% 17,000 - - equity held by Limited investme legal entity Company nts

Total 4,647,500 6,089,200 - (767,700)

E. The Company had no purchase and sales of significant assets or business combination in the year.

F. During the reporting period, the Company did not formulate and implement any equity incentive schemes.

G. Significant related-party transactions 1. Related party transactions relating to daily operation Land lease payment Rental for the lease of stockyard land by the Company from related party was negotiated between the parties and settled through banks. Details of the land lease rental payable for 2011 are as follows: 2011 2010 CND 41,915,516 41,479,353

To meet the requirements of the Company’s daily operations, Harbor Division of the Company and CCT, in which the Company holds 55% equity interests directly and indirectly, lease several pieces of lands from CND for bulk cargo and container stacking each year. The transactions are the Company's recurrent operations, which were conducted in the past and will continue in the future.

Relevant rental was negotiated between the parties and was substantially the same as rental for land leases in the western port area of Shenzhen for 2011. The monthly rental was

47 2011 年年度报告 RMB4 to RMB14 for each square meter, payable on a monthly basis. In the case of overdue payment, a late payment fee equivalent to 0.5% of monthly rental shall be charged for every day overdue.

With an amount of RMB41.92 million, the above transaction accounted for 71% of the Company's rental for stockyard and offices during the reporting period. Total volume of the above transaction was expected to be RMB51 million throughout 2011, while the actual amount was 82% of the estimation.

2. Related transaction concerning purchase and sales of assets Unit: RMB’000 Net profit contributed to the Whether or Whether or Company from not all the Relationship not all the Counterparty the purchase date ownership with the related Whether or involved or ultimate Acquired or to the end of the Pricing of the party Purchase T rading price not related credits and controlling swap-in assets year (applicable principle involved (applicable for transaction liabilities party for the business assets has related have been combination not been transaction) transferred under the same transferred control) China The subsidiary Merchants Hinwin of the 4 May Fair Holdings Development 100,292.68 2,186.77 Yes Yes Yes controlling 2011 value (International) Limited shareholder of Company the Company

3. Related transaction concerning the external investment by the Company together with the related party Unit: RMB’000 Name of Progress of the Registered significant Joint investor Main business Total asset Net asset Net profit invested capital project in company construction China Merchants Holdings 90% of the Warehouse (International) warehouse rental service, Company construction distribution of Shenzhen Chiwan CMBL 700,000.00 1,463,544.74 642,392.23 8,558.37 had been goods, freight Wharf Holdings completed forwarding Limited at the end business, etc. Hinwin Development of 2011 Limited

4. Credits and liabilities between related parties and the Company a. Cash at bank and on hand

31 Dec. 2011 31 Dec. 2010

China Merchants Bank 58,812,732 123,853,303

It accounted for 12% of total cash at bank and on hand.

48 2011 年年度报告 b. Short-term borrowings

31 Dec. 2011 31 Dec. 2010

China Merchants Bank 137,700,000 50,000,000

It accounted for 10% of total short-term borrowings.

H. Significant contracts and execution 1. During the reporting period, the Company did not hold in trust, contract or lease any significant assets from other companies, nor did it put in trust, contract or lease its significant assets to other companies.

2. During the reporting period, the Company did not provide any illegal or external guarantees.

As at the end of the reporting period, the Company provided guarantees only for the bank loans granted to Shenzhen Chiwan Harbour Container Co., Ltd. and Dongguan Chiwan Wharf Company Limited (“Dongguan Wharf”), a subsidiary of the Company, details of which are as follows: Unit: RMB’000 Subsisting Amount guarantee Type of Guarantee of Term of guarantee Procedures for guarantee liability guarantee guarantee or not Shenzhen Reviewed and approved at the Chiwan Guarantee Fourth Special Session of the Harbour 32,400 2011.10.21-2012.10.20 Yes with joint Seventh Board of Directors of Container liability the Company for 2011 Co., Ltd. Reviewed and approved at the Sixth Special Session of the Sixth Board of Directors of Guarantee Dongguan the Company for 2009 and 375 2011.8.16-2012.2.16 Yes with joint Wharf then also reviewed and liability approved at the First Special Shareholders’ General Meeting for 2009 Reviewed and approved at the Guarantee Dongguan Second Special Session of the 100,000 2011.10.21-2016.10.20 Yes with joint Wharf Seventh Board of Directors of liability the Company for 2011 As at the end of the reporting period, guarantees provided by the Company (including guarantees for its subsidiaries) amounted to RMB132.78 million, accounting for 3.83% of the net assets of the Company.

3. During the reporting period, the Company did not entrust others to conduct cash assets management.

49 2011 年年度报告 I. Appointment of accountings As approved by the Annual General Meeting for 2010 held on 27 May 2011, the Company appointed PricewaterhouseCoopers Zhong Tian Certified Public Accountants as the Company’s accounting firm for 2011 to audit the annual financial report and internal control. PricewaterhouseCoopers Zhong Tian Certified Public Accountants has been providing auditing service for the Company for eleven consecutive years, where Mr. Zhou Weiran, the accountant putting signature to the audit report, provides the audit service for the Company for the first year, and Ms. Kong Yu has provided the audit service for the Company for three consecutive years. Remunerations paid in the reporting year are set out as follows:

2011 PricewaterhouseCoopers Zhong Tian Certified Public Accountants Audit fees for RMB1.76 million financial report Audit fees for RMB0.85 million internal control

J. During the reporting period, none of the Company, its Directors, Supervisors, Senior Management, shareholders or actual controllers was subject to investigation by competent authorities, enforcement measures by judicial and regulatory authorities, transfer to judicial departments or prosecution for criminal liability, inspection or administrative punishment by CSRC, non-admission to securities market, or punishment by other administrative departments or public condemnation by Shenzhen Stock Exchange as a result of being identified as an inappropriate candidate.

K. Interviews and visits in the reporting year

In the reporting period, the Company handled warm-heartedly investors’ phone calls and held one-on-one meetings with investors. The Company disclosed relevant information to investors in accordance with the Company Law, the Securities Law, the Rules on the Management of Investors Relations and other laws and regulations. In 2011, the Company received in aggregate 34 visits. The Company gave visitors an introduction to the profile of the Company and the development of its business, and made reasonable disclosures regarding the operations, investments and financial status of the Company that the investors were interested in. The Company did not disclose, reveal or divulge to any specific visitors any material information not generally available to the public. Details are as follows:

Topics discussed Type Time Location Means Investor and information provided Promotional UBS Basic Jan. 2011 Shanghai Clients of UBS activities Conference information launched of operations Jun. 2011 by security Shenzhen Conference Clients of China Merchants Securities and by China

50 2011 年年度报告 firms Merchants investments Securities of the UBS Company and Hong Kong Clients of UBS Conference the financial Conference status of the by Company Shanghai Clients of Changjiang Securities Changjiang Nov. 2011 Securities Information Conference provided: Hong Kong Clients of Jefferies by Jefferies Brochure of Conference the Company Dec. 2011 Hong Kong by Clients of J.P.Morgan J.P.Morgan Tel Goldman Sachs (Asia) L.L.C. Jan. 2011 conference China Merchants Securities, UBS Changjiang Securities, Lion Fund Management Co., Ltd., Dacheng Fund Management Co., Ltd., SWS Research Co., Ltd., Bank of China Investment Management, Matthews International Capital Management LLC, One-on-one Guosen Securities, China AMC, First State meeting Cinda Fund Management Co., Ltd., Haitong Securities, E-Fund Management Co., Ltd., Feb. 2011 China Merchants Fund Management Co., Ltd., Industrial Securities Co., Ltd., Rongtong Fund, Essence Securities, SYWG BNP Paribas Asset Management Co., Ltd., Minsheng Royal Fund Management Co., Ltd., Mizuho Corporate Bank Ltd. Tel Guosen Securities conference One-on-one Mar. 2011 Theleme Partners LLP meeting Receiving Apr. 2011 Tel Templeton Emerging Markets Conference visits from conference 、 room of the Theleme Partners LLP Kelusa Capital investors Company Morgan Stanley Huaxin Funds, China Merchants Fund, Sinolink Securities, China Merchants Securities, Jefferies, SWS Research, CICC, Yuanhao Capital Management, United Innovation Capital Ltd., May 2011 CP Capital, ZENDAI Investment, Hang Seng Investment, Huaqiang Dingxin Investment, Huaqiang Investment & Guaranty, Cowin Investment, Huatai Securities, Aisawa One-on-one Securities, CSC, Macquarie, CIMC, Guosen meeting Securities, UBS Securities Company Limited, Citic Securities Jun. 2011 CMHI, CLSA Jul. 2011 Jianghai Securities Aug. 2011 Industrial Securities Magellan Financial Group, BOC International Sept. 2011 (China) Limited Nov. 2011 UBS One-on-one GF Securities, Penghua Fund Management meeting Co., Ltd. Dec. 2011 Tel Templeton Emerging Markets conference

51 2011 年年度报告 L. Other significant events

Date of No. of Newspaper and Events Website announcement announcement reference page On 26 May 2011, the Company held the Fifth Special Session of the Sixth Board of Directors for 2011, at which reviewed and approved unanimously the Report on Increasing Investment on China Merchants Maritime and Logistics (Shenzhen) Ltd., agreeing to invest RMB0.12 D17 on Securities billion to China Merchants Maritime and Logistics Times and B3 on http://www. (Shenzhen) Ltd. for holding 40% equities. Relevant Capital 2011-5-27 2011-019 Ta Kung Pao; D9 cninfo. Increase Agreement was signed in Shenzhen, Guangdong at 2011-10-13 2011-036 on Securities com.cn the afternoon of that day. The said investment formed a Times and B7 on related-party transaction in accordance with the Rules Ta Kung Pao Governing the Listing of Stocks on Shenzhen Stock Exchange. The Company already paid all the capital contribution under the agreement on 26 Aug. 2011. On 21 Jul. 2011, the Company held the Second Special Session of the Seventh Board of Directors for 2011, at which reviewed and approved unanimously the Report on Providing the Bank Credit Line Guarantee for Subsidiary, agreeing the D20 on Securities http://www. Company to provide joint liability guarantee for Dongguan 2011-7-22 2011-027 Times and B3 on cninfo. Chiwan Wharf Company Limited with credit line of RMB Ta Kung Pao com.cn 0.2 billion authorized by Shenzhen Branch of Nanyang Commercial Bank. The guarantee period were two years since Dongguan Wharf finished the loans under the Loan Contract with Nanyang Commercial Bank. On 19 Oct. 2011, the Company held the Fourth Special Session of the Seventh Board of Directors for 2011, at which reviewed and approved unanimously the Proposal on D17 on Securities http://www. Providing Guarantee for Shenzhen Chiwan Harbour 2011-10-21 2011-038 Times and B5 on cninfo. Container Co., Ltd. to Gain the Loan Granted by the Ta Kung Pao com.cn Shenzhen Nanshan Sub-branch of the Agricultural Bank of China. The said credit line was RMB100 million with a term of one year. On 28 Nov. 2011, the Company received the Reply of CSRC on Approving Shenzhen Chiwan Wharf Holdings Limited to Publicly Issue the Corporate Bonds (Zheng-Jian-Xu-Ke [2011] No. 1889), which approved the Company to publicly issue the corporate bonds with par value not more than 1 billion; the corporate bonds would be issued in phases, the par value of the first-phase bonds should not less than 50% of the total par value of the issued bonds, and it should be D25 on Securities http://www. completed within six months since the approval date; bonds 2011-11-30 2011-043 Times and A31 cninfo. issued in the other phases should be completed within 24 on Ta Kung Pao com.cn months since the approval date. The reply came to effective within 24 months since the approval date (24 Nov. 2011) The Company would handle the matters relevant to the said corporate bonds issuance in accordance with the requirements of relevant laws, regulations and the above reply, as well as the authorization of the Company’s Shareholders’ General Meeting. On 15 Nov. 2011, CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 (hereinafter referred to as “TEMPLETON”), a subsidiary of Templeton Asset Management Ltd. holding over 5% equities of the Company, D15 on Securities http://www. reduced to hold part of the Company’s shares during the 2011-12-13 2011-045 Times and C6 on cninfo. process of increasing shareholding, which formed an illegal Ta Kung Pao com.cn stock trading behavior. The Company has disclosed the matters on illegal stock trading of TEMPLETON, who has returned the gains.

52 2011 年年度报告

PART XII FINANCIAL STATEMENTS (See attached)

PART XIII DOCUMENTS FOR REFERENCE

1. Financial Statements carrying the signatures and stamps of the Company's legal representative, the Chief Financial Officer and the person in charge of accounting firm; 2. Original copy of the Auditor's Report stamped by the accounting firm and signed and stamped by registered accountants; 3. Original copies of all documents and the announcements thereof disclosed in the reporting period on “Securities Times” and “Ta Kung Pao”; and 4. Original copy of the Annual Report signed by the Chairman.

For and on behalf of the Board Zheng Shaoping Chairman Shenzhen Chiwan Wharf Holdings Limited Dated 28 March 2012

53

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

FINANCIAL STATEMENTS AND REPORT OF THE AUDITORS FOR THE YEAR ENDED 31 DECEMBER 2011

[English Translation for Reference Only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail.]

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

[English translation for reference only]

Contents Page

Financial Statements and Report of the Auditors for the year ended 31 December 2011

Report of the auditors 1 - 2

Consolidated and Company’s balance sheets 3 - 4

Consolidated and Company’s income statements 5

Consolidated and Company’s cash flow statements 6

Consolidated statement of changes in owners’ equity 7

Company’s statement of changes in owners’ equity 8

Notes to financial statements 9 - 122

Supplementary information to financial statements 123- 125

[English translation for reference only]

Report of Auditors

PwC ZT Shen Zi (2012) No.10030 (Page 1 of 2)

To the Shareholders of Shenzhen Chiwan Wharf Holdings Limited：

We have audited the accompanying financial statements of Shenzhen Chiwan Wharf Holdings Limited (hereinafter “Chiwan Wharf”), which comprise the consolidated and company balance sheets as at 31 December 2011, and the consolidated and company income statements, the consolidated and company statements of changes in shareholders’ equity and the consolidated and company cash flow statements for the year then ended, and the notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management of Chiwan Wharf is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of Accounting Standards for Business Enterprises, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the China Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

- 1 -

[English translation for reference only]

PwC ZT Shen Zi (2012) No. 10030 (Page 2 of 2)

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company’s financial position of Chiwan Wharf as of 31 December 2011, and their financial performance and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises.

PricewaterhouseCoopers Zhong Tian CPAs Limited Company

Shanghai, the People’s Republic of China

27 March 2012

- 2 -

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

CONSOLIDATED AND COMPANY BALANCE SHEETS AS AT 31 DECEMBER 2011 (All amounts in RMB Yuan unless otherwise stated) [English translation for reference only]

31 December 31 December 31 December 31 December 2011 2010 2011 2010 ASSETS Note(s) Consolidated Consolidated Company Company

Current assets Cash at bank and on hand 5(1) 478,788,943 781,720,083 187,090,694 494,364,355 Notes receivable 5(2) - 4,640,000 - 1,700,000 Accounts receivable 5(4), 14(1) 230,797,003 179,772,755 16,623,725 9,336,968 Advances to suppliers 5(6) 3,497,668 31,256,172 1,210,724 316,780 Interest receivable 5(3) 51,667 1,318,202 206,151 91,902 Dividends receivable - - 529,289,881 304,203,089 Other receivables 5(5), 14(2) 11,833,877 52,765,361 243,256,537 365,862,136 Inventories 5(7) 23,500,35823,888,526 922,921 1,099,168 Other current assets 1,003,913 - - - Total current assets 749,473,429 1,075,361,099 978,600,633 1,176,974,398

Non-current assets Available-for-sale financial assets 5(8) 5,690,000 6,640,000 5,690,000 6,640,000 Long-term receivables 7(6) - - 11,004,304 11,004,304 Long-term equity investments 5(9), 14(3) 1,436,856,420 1,149,921,886 2,002,116,574 1,589,644,572 Investment properties 5(11) 34,679,229 29,379,544 26,547,149 20,991,116 Fixed assets 5(12) 2,482,077,688 2,652,957,915 156,481,155 156,903,932 Construction in progress 5(13) 517,818,144 14,593,516 614,894 450,900 Intangible assets 5(14) 1,038,926,892 1,074,247,819 65,552,356 68,371,761 Goodwill 5(15) 10,858,89810,858,898 - - Long-term prepaid expenses 5(16) 62,488,532 63,848,189 5,770,046 5,299,666 Deferred tax assets 5(18) 59,250,919 52,083,662 29,709,461 21,221,357 Other non-current assets 5(17) 142,108,284 72,292,214 - - Total non-current assets 5,790,755,006 5,126,823,643 2,303,485,939 1,880,527,608

TOTAL ASSETS 6,540,228,435 6,202,184,742 3,282,086,572 3,057,502,006

- 3 -

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

CONSOLIDATED AND COMPANY BALANCE SHEETS AS AT 31 DECEMBER 2011 (Con’d) (All amounts in RMB Yuan unless otherwise stated) [English translation for reference only]

31 December 31 December 31 December 31 December LIABILITIES AND 2011 2010 2011 2010 OWNERS’ EQUITY Note(s) Consolidated Consolidated Company Company

Current liabilities Short-term borrowings 5(20) 1,418,830,000 1,225,550,000 584,530,000 478,550,000 Notes payable 5(21) 8,704,900 1,895,750 7,493,900 - Accounts payable 5(22) 160,112,954 214,723,251 12,225,607 16,221,238 Advances from customers 5(23) 5,045,311 4,769,320 3,907,291 3,643,835 Employee benefits payable 5(24) 55,945,867 36,929,912 31,818,160 15,275,662 Taxes payable 5(25) 121,781,050 100,583,520 1,392,629 605,756 Interests payable 5(26) 1,637,790 2,958,406 2,361,250 1,829,970 Dividends payable 5(27) 365,161,451 213,351,043 - - Other payables 5(28) 50,809,293 45,027,806 749,075,206 570,336,042 Current portion of non-current liabilities 5(29) 14,951,750 412,951,750 - 212,500,000 Total current liabilities 2,202,980,366 2,258,740,758 1,392,804,043 1,298,962,503

Non-current liabilities Long-term borrowings 5(30) 90,000,000 - - - Special payable 5(31) 81,790,541 69,119,645 - - Deferred tax liabilities 5(18) 1,142,500 1,324,800 1,142,500 1,324,800 Other non-current liabilities 5(32) 58,250,957 65,841,707 - - Total non-current liabilities 231,183,998 136,286,152 1,142,500 1,324,800

Total liabilities 2,434,164,364 2,395,026,910 1,393,946,543 1,300,287,303

Owners' equity Share capital 5(33) 644,763,730 644,763,730 644,763,730 644,763,730 Capital surplus 5(34) 166,226,055 144,909,755 153,438,328 154,106,028 Surplus reserves 5(35) 421,692,405 383,570,404 421,692,405 383,570,404 Undistributed profits 5(36) 2,248,722,001 2,079,724,472 668,245,566 574,774,541 Foreign exchange translation differences (13,607,440) (13,419,303) - - Total equity attributable to equity holders of the Company 3,467,796,751 3,239,549,058 1,888,140,029 1,757,214,703 Minority interests 5(37) 638,267,320 567,608,774 - - Total owners' equity 4,106,064,071 3,807,157,832 1,888,140,029 1,757,214,703

TOTAL LIABILITIES AND OWNERS’ EQUITY 6,540,228,435 6,202,184,742 3,282,086,572 3,057,502,006

The accompanying notes form an integral part of these financial statements.

- 4 -

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

CONSOLIDATED AND COMPANY INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB Yuan unless otherwise stated) [English translation for reference only]

2011 2010 2011 2010 Items Note(s) Consolidated Consolidated Company Company

Revenue 5(38),14(4) 1,708,136,899 1,740,417,668 189,122,522 159,991,095 Less: Cost of sales 5(38),14(4) (768,040,243) (742,312,284) (136,475,924) (134,094,813) Tax and levies on operations 5(39) (71,021,926) (63,815,927) (8,055,454) (6,211,103) General and administrative expenses 5(40) (158,186,232) (130,781,048) (62,568,055) (45,463,645) Financial (expenses) /income - net 5(41) (12,370,981) 10,535,505 (28,651,836) (940,246) Asset impairment reversals/(losses) 5(43) ( 251,074) (119,061) (38,601) (24,478) Add: Investment income 5(42),14(5) 118,228,183 148,514,648 468,021,351 407,131,078 Including: share of results of associates 5(42) 113,968,183 148,204,648 34,396,865 42,929,224

Operating profit 816,494,626 962,439,501 421,354,003 380,387,888 Add: Non-operating income 5(44) 1,878,537 5,012,970 1,718,849 833,575 Less: Non-operating expenses 5(45) ( 2,035,862) (3,037,490) (1,442,326) (765,610) Including: Loss on disposals of non- current assets (1,960,173 ) (2,834,944) (1,437,106) (687,689)

Total profit 816,337,301964,414,981 421,630,526 380,455,853 Less: Income tax (expenses)/ income 5(46) (148,561,633) (137,775,617) 8,488,107 764,157

Net profit 667,775,668 826,639,364 430,118,633 381,220,010

Attributable to equity holders of the Company 505,645,137 596,680,156 Minority interests 162,130,531 229,959,208

Earnings per share (attributable to equity holders of the Company) Basic earnings per share 5(49) 0.784 0.925 Diluted earnings per share 5(49) 0.784 0.925

Other comprehensive income (855,837) (565,642) (667,700) (500,400)

Total comprehensive income 666,919,831 826,073,722 429,450,933 380,719,610

Attributable to equity holders of the Company 504,789,300596,114,514 Minority interest 162,130,531 229,959,208

The accompanying notes form an integral part of these financial statements.

- 5 -

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB Yuan unless otherwise stated) [English translation for reference only]

2011 2010 2011 2010 Items Note(s) Consolidated Consolidated Company Company

1. Cash flows from operating activities Cash received from rendering of services 1,649,531,912 1,747,846,505 181,861,014 157,334,344 Cash received relating to other operating activities 5(51) 31,724,082 31,299,096 711,446,584 603,753,822 Sub-total of cash inflows 1,681,255,994 1,779,145,601 893,307,598 761,088,166 Cash paid for goods and services (412,465,800) (361,828,341) (98,191,799) (72,539,169) Cash paid to and on behalf of employees (218,888,671) (204,083,048) (60,366,911) (55,544,227) Payments of taxes and levies (225,859,493) (212,353,178) (9,322,699) (8,862,658) Cash paid relating to other operating activities 5(51) (77,851,434) (74,035,465) (427,548,733) (340,563,057) Sub-total of cash outflows (935,065,398) (852,300,032) (595,430,142) (477,509,111) Net cash flows from operating activities 5(52) 746,190,596 926,845,569 297,877,456 283,579,055

2. Cash flows from investing activities Cash received from disposals of investments 44,879,120 155,574,511 - 94,000,000 Cash received from returns on investments 51,044,863 310,000 210,574,000 316,109,210 Net cash received from disposals of fixed assets and intangible assets 1,039,749 12,277,696 807,083 1,383,341 Cash received relating to other investing activities -- - 12,478,235 Sub-total of cash inflows 96,963,732 168,162,207 211,381,083 423,970,786 Cash paid to purchase fixed assets, intangible assets and other long-term assets (585,894,854) (199,524,278) (13,063,802) (5,307,600) Cash paid relating to other investing activities - (749,655,300) (379,200,000) (779,655,300) Net cash paid from disposal of subsidiaries and other business units (220,284,181) - - - Sub-total of cash outflows (806,179,035) (949,179,578) (392,263,802) (784,962,900) Net cash flows from investing activities (709,215,303) (781,017,371) (180,882,719) (360,992,114)

3. Cash flows from financing activities Cash received by investors 91,940,000 - - - Include: Cash received in subsidiary by minority shareholders 91,940,000 - - - Cash received from borrowings 1,449,050,000 1,489,120,000 728,550,000 556,480,000 Sub-total of cash inflows 1,540,990,000 1,489,120,000 728,550,000 556,480,000

Cash repayments of borrowings (1,506,050,000) (1,178,320,000) (818,550,000) (216,480,000) Cash payments for interest expenses and distribution of dividends or profits (361,238,309) (408,546,358) (330,952,458) (220,050,769) Include: Distribution of dividends and profits to minority shareholders in subsidiary - (171,889,814) - - Cash paid relating to other activities (4,448,649) (1,401,288) (2,606,625) (1,101,714) Sub-total of cash outflows (1,871,736,958) (1,588,267,646) (1,152,109,083) (437,632,483) Net cash flows from financing activities (330,746,958) (99,147,646) (423,559,083) 118,847,517 4. Effect of foreign exchange rate changes on cash and cash equivalents (9,159,475) (6,056,736) (709,315) (478,061)

5. Net increase in cash and cash equivalents (302,931,140) 40,623,816 (307,273,661) 40,956,397 Add: Cash and cash equivalents at beginning of year 5(52) 781,720,083 741,096,267 494,364,355 453,407,958

6. Cash and cash equivalent at end of year 5(52) 478,788,943 781,720,083 187,090,694 494,364,355

The accompanying notes form an integral part of these financial statements.

- 6 -

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB Yuan unless otherwise stated) [English translation for reference only]

Attributable to equity holders of the Company Share Capital Surplus Undistributed Translation Minority Total owners' Items Note capital surplus reserves profits difference interest equity

Balance at 1 January 2010 644,763,730145,410,155 355,134,736 1,721,028,196 (13,354,061) 567,608,774 3,420,591,530

Movement for the year ended 31 December 2010 Net profit - - - 596,680,156 - 229,959,208 826,639,364 Other comprehensive income 5(34) - (500,400) - - (65,242) - (565,642) Profit appropriation - appropriation to surplus reserves 5(35) - - 28,435,668 (28,435,668) - - - - profit distribution to equity owners 5(36) - - - (209,548,212) - (229,959,208) (439,507,420)

Balance at 31 December 2010 644,763,730144,909,755 383,570,404 2,079,724,472 (13,419,303) 567,608,774 3,807,157,832

Balance at 1 January 2011 644,763,730144,909,755 383,570,404 2,079,724,472 (13,419,303) 567,608,774 3,807,157,832

Movement for the year ended 31 December 2011 Investment by shareholders 4(1) - 20,774,000 - - - 71,166,000 91,940,000 Net profit - - - 505,645,137 - 162,130,531 667,775,668 Other comprehensive income 5(34) - (667,700) - - (188,137) - (855,837) Profit appropriation - appropriation to surplus reserves 5(35) - - 38,122,001 (38,122,001) - - - - profit distribution to equity owners 5(36) - - - (298,525,607) - (163,627,985) (462,153,592) Others - 1,210,000 - - - 990,000 2,200,000

Balance at 31 December 2011 644,763,730 166,226,055 421,692,405 2,248,722,001 (13,607,440) 638,267,320 4,106,064,071

The accompanying notes form an integral part of these financial statements.

- 7 -

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

COMPANY STATEMENT OF CHANGES IN OWNERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB Yuan unless otherwise stated) [English translation for reference only]

Items Note Share capital Capital surplus Surplus reserves Undistributed profits Total owners' equity

Balance at 1 January 2010 644,763,730 154,606,428 355,134,736 431,538,411 1,586,043,305

Movement for the year ended 31 December 2010 Net profit - - - 381,220,010 381,220,010 Other comprehensive income 5(34) - (500,400) - - (500,400) Profit distribution - - appropriation to surplus reserves 5(35) - - 28,435,668 (28,435,668) - - profit distribution to equity owners 5(36) - - - (209,548,212) (209,548,212)

Balance at 31 December 2010 644,763,730 154,106,028 383,570,404 574,774,541 1,757,214,703

Balance at 1 January 2011 644,763,730 154,106,028 383,570,404 574,774,541 1,757,214,703

Movement for the year ended 31 December 2011 Net profit - - - 430,118,633 430,118,633 Other comprehensive income 5(34) - (667,700) - - (667,700) Profit distribution - appropriation to surplus reserves 5(35) - - 38,122,001 (38,122,001) - - profit distribution to equity owners 5(36) - - - (298,525,607) (298,525,607)

Balance at 31 December 2011 644,763,730 153,438,328 421,692,405 668,245,566 1,888,140,029

The accompanying notes form an integral part of these financial statements.

- 8 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

1 General information

Shenzhen Chiwan Wharf Holdings Limited (the “Company”) was incorporated in September 1982 in Shenzhen, the People’s Republic of China (the “PRC”), by China Nanshan Development (Group) Ltd (the “Nanshan Group”), and was registered a sino-foreign joint venture enterprise in July 1990. In January 1993, as approved by the Shenzhen municipal government with document SFBF (1993)357, the Company was reorganized into a joint stock limited company. In February 1993, the Company issued, by public offering, the domestic shares (“A shares”) of 46,000,000 shares and domestically listed foreign shares (“B shares”) of 40,000,000 shares. Both shares were listed in Shenzhen Stock Exchange in May 1993.

In June 1994, 31,047,000 bonus shares were issued in a proportion of “one bonus share for every ten shares”. In June, the bonus A shares and bonus B shares held by Nanshan Group were listed in Shenzhen Stock Exchange. In December 1995, the Company issued additional 40,000,000 B shares, consequently, the total volume of the Company’s shares rose to 381,517,000.

In June 2004, the directors of the Company resolved to increase the share capital by means of capitalization of the share premium and capital reserves of the Company to the extent that 3 additional ordinary shares were issued to each shareholder holding 10 shares of the Company. As the result, the total volume of shares was increased from 381,517,000 to 495,972,100.

In July 2005, again the directors of the Company resolved to increase the share capital by means of capitalization of the share premium and capital reserves of the Company to the extent that 3 additional ordinary shares were issued to each shareholder holding 10 shares of the Company. Consequently, the total volume of shares was increased from 495,972,100 to 644,763,700.

The Company and its subsidiaries (collectively the “Group”) are principally engaged in the provision of cargo packing, cargo handling, container terminal, warehousing, land and sea transportation services.

These consolidated financial statements have been approved for issue by the Board of Directors on 27 March 2012. .

- 9 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates

(1) Basis of preparation

The financial statements were prepared in accordance with the Basic Standard and 38 specific standards of the Accounting Standards for Business Enterprises issued by the Ministry of Finance on 15 February 2006, and the Application Guidance for Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant regulations issued thereafter (hereafter collectively referred to as “the Accounting Standards for Business Enterprises” or “CAS”) and the disclosure requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15 – General Rules on Financial Reporting (2010 revised) issued by the China Securities Regulatory Commission.

(2) Statement of compliance with the Accounting Standards for Business Enterprises

The financial statements of the Company for the year ended 31 December 2011 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the financial position of the Consolidated and the Company as of 31 December 2011 and of their financial performance, cash flows and other information for the year then ended.

(3) Accounting year

The Company’s accounting year starts on 1 January and ends on 31 December.

(4) Recording currency

The recording currency is Renminbi (RMB).

(5) Business Combinations

(a) Business combinations involving enterprises under common control

The consideration paid and net assets obtained by the absorbing party in a business combination are measured at the carrying amount. The difference between the carrying amount of the net assets obtained from the combination and the carrying amount of the consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities.

- 10 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(5) Business Combinations(Con’d)

(b) Business combinations involving enterprises not under common control

The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition date. Where the cost of the combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is recognised as goodwill; where the cost of combination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is recognised in profit or loss for the current period. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities.

(6) Preparation of consolidated financial statements

The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.

Subsidiaries are consolidated from the date on which the Group obtains control and are de- consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realised before the combination date is presented separately in the consolidated income statement.

In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.

All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The portion of subsidiaries’ equity and the portion of a subsidiaries’ net profits and losses for the period not attributable to Company are recognised as minority interests and presented separately in the consolidated financial statements under equity and net profits respectively.

- 11 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(7) Disposal of minority interest in subsidiary

In preparing the consolidated financial statements, the difference between the minority interest increased by the disposal and net assets of subsidiary calculated by the shareholding portion from the date of acquisition (or the date of consolidation) ,is adjusted to owners’ equity(capital surplus).If the capital surplus is not efficient ,then surplus reserves will be adjusted.

(8) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(9) Foreign currency translation

(a) Foreign currency transactions

Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions.

At the balance sheet date, monetary items denominated in foreign currency are translated into RMB using the spot exchange rate at the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are capitalised as part of the cost of those assets. Non- monetary items denominated in foreign currency that are measured in terms of historical cost are translated at the balance sheet date using the spot exchange rate at the date of the transaction. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

(b) Translation of foreign currency financial statements

The asset and liability items in the balance sheets for overseas businesses are translated at the spot exchange rate on the balance sheet date. Among the owner’s equity items, the items other than “undistributed profits” are translated at the spot exchange rate of the transaction date. The income and expense items in the income statements of overseas businesses are translated at the spot exchange rate of the transaction date. The differences arising from the above translation are presented separately in the owner’s equities. The cash flows of overseas businesses are translated at the spot exchange rate on the date of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

- 12 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(10) Financial instruments

(a) Financial assets

(i) Classification of financial assets

Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss, loans and receivables, available-for-sale financial assets and held- to-maturity investments. The classification of financial assets depends on the Group’s intention and ability to hold the financial assets.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for the purpose of selling in the short term, which are presented as financial assets held for trading on the balance sheet.

Receivables

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition. Available-for-sale financial assets are included in other current assets in the balance sheet if management intends to dispose of them within 12 months of the balance sheet date.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed maturity and fixed or determinable payments that management has the positive intention and ability to hold to maturity. Held-to-maturity investments with maturities over 12 months when the investments were made but are due within 12 months at the balance sheet date are included in current portion of non-current assets; held-to maturity investments with maturities no more than 12 months when the investments were made are included in other current assets.

- 13 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(10) Financial instruments (Con’d)

(a) Financial assets (Con’d)

(ii) Recognition and measurement

Financial assets are recognised at fair value on the balance sheet when the Group becomes a party to the contractual provisions of the financial instrument. In the case of financial assets at fair value through profit or loss, the related transaction costs incurred at the time of acquisition are recognised in profit or loss for the current period. For other financial assets, transaction costs that are attributable to the acquisition of the financial assets are included in their initially recognised amounts.

Financial assets at fair value through profit or loss and available-for-sale financial assets are subsequently measured at fair value. Investments in equity instruments are measured at cost when they do not have a quoted market price in an active market and whose fair value cannot be reliably measured. Receivables and held-to-maturity investments are measured at amortised cost using the effective interest method.

Gains or losses arising from change in the fair value of financial assets at fair value through profit or loss are recognised in profit or loss. Interests and cash dividends received during the period in which such financial assets are held, as well as the gains or losses arising from disposal of these assets are recognised in profit or loss for the current period.

Gains or losses arising from change in fair value of available-for-sale financial assets are recognised directly in equity, except for impairment losses and foreign exchange gains and losses arising from translation of monetary financial assets. When such financial assets are derecognised, the cumulative gains or losses previously recognised directly into equity is recycled into profit or loss for the current period. Interests on available-for-sale investments in debt instruments calculated using the effective interest method during the period in which such investments are held and cash dividends declared by the investee on available-for-sale investments in equity instruments are recognised as investment income, which is recognised in profit or loss for the period.

- 14 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(10) Financial instruments (Con’d)

(a) Financial assets (Con’d)

(iii) Impairment of financial assets

The Group assesses the carrying amounts of financial assets other than those at fair value through profit or loss at each balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided for.

When an impairment loss on a financial asset carried at amortised cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed and the amount of reversal is recognised in profit or loss.

If there is objective evidence that an impairment loss on available-for-sale financial assets incurred, the cumulative losses arising from the decline in fair value that had been recognised directly in equity are transferred out from equity and into impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognised, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the previously recognised impairment loss is reversed into profit or loss for the current period. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognised, the increase in its fair value in a subsequent period is recognised directly in equity.

(iv) Derecognition of financial assets

A financial asset is derecognised when any of the below criteria is met: (i) the contractual rights to receive the cash flows from the financial asset expire; (ii) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (iii) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognised directly in equity, is recognised in profit or loss.

- 15 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(10) Financial instruments (Con’d)

(b) Financial liabilities

Financial liabilities are classified into the following categories at initial recognition: financial liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities of the Group mainly comprise other financial liabilities, including payables, borrowings and debentures payable.

Payables, including accounts payable and other payables, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings and debentures payable are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities with maturities no more than one year are classified as current liabilities. Other financial liabilities with maturities over one year but are due within one year at the balance sheet date are classified as the current portion of non-current liabilities. Others are classified as non-current liabilities.

A financial liability is derecognised or partly derecognised when the current obligation is discharged or partly discharged. The difference between the carrying amount of the financial liability or the derecognised part of the financial liability and the consideration paid is recognised in profit or loss.

(c) Determination of fair value of financial instruments

The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. Valuation techniques include using prices of recent market transactions between knowledgeable and willing parties, reference to the current fair value of another financial asset that is substantially the same with this instrument, and discounted cash flow analysis, etc. When a valuation technique is used to establish the fair value of a financial instrument, it makes the maximum use of observable market inputs and relies as little as possible on entity-specific inputs.

- 16 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(11) Receivables

Receivables comprise accounts receivable and other receivables. Accounts receivable arising from sale of goods or rendering of services are initially recognised at fair value of the contractual payments from the buyers or service recipients.

(a) Receivables with amounts that are individually significant and subject to separate assessment for provision for bad debts

Receivables with amounts that are individually significant are subject to assessment for impairment on the individual basis. If there exists objective evidence that the Group will not be able to collect the amount under the original terms, a provision for impairment of that receivable is made.

The criterion for determining individually significant amounts is the top five individually significant amounts.

The method of providing for bad debts for those individually significant amounts is as follows: the amount of the present value of the future cash flows expected to be derived from the receivable below its carrying amount.

(b) The receivables that are grouped for providing bad debt provision

Receivables with amounts that are not individually significant and those receivables that have been individually assessed for impairment and have not been found impaired are classified into certain groupings based on their credit risk characteristics. The provision for bad debts is determined based on the historical loss experience for the groupings of receivables with similar credit risk characteristics, taking into consideration of the current circumstances.

The basis of similar credit risk group: the aging of receivables

Method of determining provision for bad debts by groupings –Ageing analysis method

The provision ratios used under the ageing analysis method for the above groupings are as follows:

Provision ratios used for Provision ratios used for accounts receivable (%) other receivables (%)

Within 1 year 0 0 1 to 2 years 0-10 0-10 2 to 3 years 0-30 0-30 3 to 4 years 0-60 0-60 4 to 5 years 0-60 0-60 Over 5 years 50-100 50-100

- 17 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(11) Receivables (Con’d)

(c) Receivables with amounts that are not individually significant but subject to separate assessment for provision for bad debts

The reason for making separate assessment for provision for bad debts is that there exists objective evidence that the Group will not be able to collect the amount under the original terms of the receivable.

The provision for bad debts is determined based on the amount of the present value of the future cash flows expected to be derived from the receivable below its carrying amount.

(d) When the Group transfers the accounts receivable to the financial institutions without recourse, the difference between the proceeds received from the transaction and their carrying amounts and the related taxes is recognised in profit or loss for the current period.

(12) Inventories

(a) Classification

Inventories include spare parts, fuel, and low value consumables, and are measured at the lower of cost and net realisable value.

(b) Costing of inventories

Cost of spare parts and fuel is determined on the weighted average method.

(c) Basis for determining net realisable values of inventories and method for making provision for decline in the value of inventories

Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realisable value. Net realisable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.

(d) The Group adopts the perpetual inventory system.

(e) Amortisation methods of low value consumables

Low value consumables are amortised into expenses based upon numbers of usage.

- 18 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(13) Long-term equity investments

Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries, the Group’s long-term equity investments in its joint ventures and associates, as well as the long-term equity investments where the Group does not have control, joint control or significant influence over the investees and which are not quoted in an active market and whose fair value cannot be reliably measured.

Subsidiaries are the investees over which the Company is able to exercise control. Joint ventures are the investees over which the Group is able to exercise joint control together with other venturers. Associates are the investees that the Group has significant influence on their financial and operating policies.

Investments in subsidiaries are presented in the Company’s financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in joint ventures and associates are accounted for using the equity method. Other long-term equity investments, where the Group does not have control, joint control or significant influence over the investees and which are not quoted in an active market and whose fair value cannot be reliably measured, are accounted for using the cost method.

(a) Determination of investment cost

For long-term equity investments acquired through a business combination: for long-term equity investments acquired through a business combination involving enterprises under common control, the investment cost shall be the absorbing party’s share of the carrying amount of owners’ equity of the party being absorbed at the combination date; for long-term equity investment acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination cost.

For long-term equity investments acquired not through a business combination: for long-term equity investment acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securities issued.

- 19 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(13) Long-term equity investments (Con’d)

(b) Subsequent measurement and recognition of related profit and loss

For long-term equity investments accounted for using the cost method, they are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognised as investment income in profit or loss.

For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equity investment exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly.

For long-term equity investments accounted for using the equity method, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group discontinues recognising its share of net losses of an investee after the carrying amount of the long-term equity investment together with any long-term interests that, in substance, form part of the investor’s net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognising the investment losses and the provisions. For changes in owners’ equity of the investee other than those arising from its net profit or loss, the Group records its proportionate share directly into capital surplus, provided that the Group’s proportion of shareholding in the investee remains unchanged. The carrying amount of the investment is reduced by the Group’s share of the profit distribution or cash dividends declared by an investee. The unrealised profits or losses arising from the intra-group transactions amongst the Group and its investees are eliminated in proportion to the Group’s equity interest in the investees, and then based on which the investment gains or losses are recognised. For the loss on the intra-group transaction amongst the Group and its investees attributable to asset impairment, any unrealised loss is not eliminated.

- 20 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(13) Long-term equity investments (Con’d)

(c) Basis for determing existence of control, jointly control or significant influence over investees

Control is the power to govern the financial and operating policies of the investee so as to obtain benefits from its operating activities. In determining whether the Company is able to exercise control over the investee, the effect of potential voting rights over the investee is considered, such as convertible debts and warrants currently exercisable, etc.

Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control.

Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

(d) Impairment of long-term equity investments

The carrying amounts of long-term equity investments in subsidiaries, joint ventures and associates are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2 (19)). For other long-term equity investments which are not quoted in an active market and whose fair values cannot be reliably measured, the excess of their carrying amounts over the present values of future cash flows discounted at the prevailing market yield rate for similar financial assets is recognised as impairment loss and cannot be reversed once recognised.

(14) Investment properties

Investment properties, including land use rights that have already been leased out, buildings that are held for the purpose of leasing, and buildings that are being constructed or developed for the purpose of leasing in future, are measured initially at cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are recognised in profit or loss in the period in which they are incurred.

- 21 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(14) Investment properties (Con’d)

The Group adopts the cost model for subsequent measurement of investment properties. Buildings and land use rights are depreciated or amortised to their estimated net residual values over their estimated useful lives. The estimated useful lives, the estimated net residual values that are expressed as a percentage of cost and the annual depreciation (amortisation) rates of investment properties are as follows:

Estimated Annual depreciation Estimated useful lives residual value (amortization) rate

Buildings 25 - 33 years 10% 2.7% to 3.6% Land use rights 8 - 38 years - 2.6% to 12.5%

When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying amount at the date of the transfer.

The investment property’s estimated useful life, net residual value and depreciation (amortisation) method applied are reviewed and adjusted as appropriate at each year-end.

An investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sale, transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.

The carrying amount of an investment property is reduced to the recoverable amount if the recoverable amount is below the carrying amount (Note 2 (19)).

- 22 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(15) Fixed assets

(a) Fixed assets recognition and initial measurement

Fixed assets comprise harbor facilities, warehouses, container yards and buildings, machinery and equipment, motor vehicles, cargo ships and tugboats, and other equipments.

Fixed assets are recognised when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date. The fixed assets contributed by the State shareholders at the reorganisation of the Company into a corporation entity are recognised based on the revaluated amounts approved by the state-owned assets administration department.

Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss in the period in which they are incurred.

(b) Depreciation methods of fixed assets

Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.

The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows:

Estimated Estimated Annual useful lives residual value depreciation rate

Harbor facilities 5 - 50 years 10% 1.8%-18% warehouses, container yards and buildings 5 - 40 years 10% 2.25%-18% machinery and equipments 5 - 15 years 10% 6%-18% motor vehicles, cargo ships and tugboats 5 - 20 years 10% 4.5%-18% other equipments 5 years 10% 18%

The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year-end.

(c) The carrying amount of a fixed asset is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(19)).

- 23 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(15) Fixed assets (Con’d)

(d) Disposal of fixed assets

A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.

(16) Construction in progress

Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(19)).

(17) Borrowing costs

The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that needs a substantially long period of time for its intended use commence to be capitalised and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.

For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalisation period.

- 24 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(17) Borrowing costs

For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter period are discounted to the initial amount of the borrowings.

(18) Intangible assets

Intangible assets including land use rights, coastal line use rights and computer software are measured at actual cost. Fixed assets contributed by the state-owned shareholders at the incorporation of a limited company are initially recorded at the valuation amount recognized by the state-owned assets supervision and administration department.

(a) Land use rights

Land use rights are amortised on the straight-line basis over their estimated useful lives of 20 - 50 years. If the purchase costs of land use rights and attached buildings cannot be reliably allocated between the land use rights and buildings, for the purchase costs are recognised as fixed assets.

(b) Coastal line use rights

Coastal line use rights are amortised on the straight-line basis over periods of 5 - 50 years.

(c) Computer software

Computer software is amortised on a straight-line basis over periods of 3 - 5 years.

(d) Periodical review of useful life and amortisation method

For an intangible asset with a finite useful life, review and adjustment on useful life and amortization method are performed at each year-end.

(e) Impairment of intangible assets

The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2 (19)).

- 25 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(19) Long-term prepaid expenses

Long-term prepaid expenses include the expenditure for improvements to fixed assets under operating lease and other prepayments incurred but should be borne by the current and subsequent periods and amortised over more than one year. Long-term prepaid expenses are amortised on the straight-line basis over the expected beneficial period and are presented at cost net of accumulated amortisation.

(20) Impairment of long-term assets

Fixed assets, construction in progress, intangible assets with finite useful lives, investment properties measured using the cost model and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that an asset may be impaired at the balance date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. A provision for asset Impairment is determined and recognised on an individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.

Separately recognised goodwill is tested at least annually for impairment, irrespective of whether there is any indication that the asset may be impaired. During the test, the carrying value of goodwill is allocated to the related asset group or groups of asset group which is expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or groups of asset group including the goodwill allocated is lower than its carrying amount, the corresponding impairment loss is recognized. The impairment loss is first deducted from the carrying amount of goodwill allocated to the asset group or groups of asset group, and then deducted from the carrying amount of the remaining assets of the asset group or groups of asset group pro rata with goodwill.

Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.

- 26 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(21) Employee benefits

Employee benefits mainly include wages or salaries, bonuses, allowances and subsidies, staff welfare, social security contributions, housing funds, labour union funds, employee education funds and other expenditures incurred in exchange for service rendered by employees.

The Group has established a pension scheme for employees which is a defined contribution plan. The Group pays contributions at 5.5% to 6% of employees’ salary into the plan. The Group has no further obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. The pension assets are hold by a trustee and are managed separately from the Group’s assets.

(22) Dividend distribution

Cash dividend is recognised as a liability for the period in which the dividend is approved by the shareholders’ meeting.

(23) Revenue recognition

The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group’s activities. Revenue is shown net of discounts and returns.

Revenue is recognised when the economic benefits associated with the transaction will flow to the Group, the related revenue can be reliably measured, and the specific revenue recognition criteria have been met for each type of the Group’s activities as described below:

(a) Rendering of services

The Group provides loading/unloading, transportation, logistic agency and other related harbor services to external customers. Revenue arising from provision of services is re ognised when services are completed and the amount of revenue and cost can be reliably measured.

(b) Transfer of asset use rights

Interest income is recognised on a time-proportion basis using the effective interest method.

Lease income from an operating lease is recognised on a straight-line basis over the period of the lease.

- 27 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(24) Government Grants

Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including refund of taxes and financial subsidies, etc.

A government grant is recognised when the conditions attached to it can be complied with and the government grant can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the amount received or receivable. For a government grant in the form of transfer of non-monetary assets, it is measured at fair value; if the fair value is not reliably determinable; the grant is measured at nominal amount.

A government grant related to an asset is recognised as deferred income, and evenly amortised to profit or loss over the useful life of the related asset. Government grants measured at nominal amounts are recognised immediately in profit or loss for the current period.

For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred by the Group in the subsequent periods, the grant is recognised as deferred income, and included in profit or loss over the periods in which the related costs are recognised; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognised immediately in profit or loss for the current period.

(25) Deferred revenue

Deferred revenue is the advance from customers which should be amortised on a straight-line basis over the expected beneficial period and presented at cost net of accumulated amortisation.

(26) Deferred tax assets and deferred tax liabilities

Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.

- 28 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(26) Deferred tax assets and deferred tax liabilities (Con’d)

Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilised.

Deferred tax liabilities are recognised for temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, associates and joint ventures will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilised, the corresponding deferred tax assets are recognised.

Deferred tax assets and liabilities are offset when:

 the deferred taxes are related to the same tax payer within the Group and the same taxation authority; and,  that tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities.

(27) Leases

A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. An operating lease is a lease other than a finance lease.

Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease, and are either capitalized as part of the cost of related assets, or charged as an expense for the current period.

- 29 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

2 Significant accounting policies and accounting estimates (Con’d)

(28) Held for sale and discontinuing operations

A non-current asset or a component of the Group satisfying the following conditions is classified as held for sale: (1) the Group has made a resolution for disposal of the non-current asset or the component;(2) an irrevocable contract with the transferee has been signed and;(3) the transfer will be completed within one year.

Non-current assets, except for financial assets and deferred tax assets, that meet the recognition criteria for held for sale are included in other current assets at the amount equal to the lower of the fair value less costs to sell and the carrying amount. Any excess of the original carrying amount over the fair value less costs to sell is recognised as an asset impairment loss.

Discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and can be distinguished from other components within the Group in the business operations and in the preparation of financial statements.

(29) Segment information

The Group identifies operating segments based on the internal organisation structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.

An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group’s management to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial position, operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.

(30) Critical accounting estimates and key assumptions

The Group continually evaluates the critical accounting estimates and key judgements applied based on historical experience and other factors.

There are no critical accounting estimates or key judgments of the Group in current year that will cause significant adjustments to the book value of assets and liabilities in next year.

- 30 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

3 Taxation

The types and rates of taxes applicable to the Group are set out below.

Type Taxable basis Tax rate

Enterprise income tax Taxable income 16.5%, 24% and 25%

Value added tax (“VAT”) Taxable income from vehicle maintenance and utilities supplies on 17% ships in shore (tax payable represents output VAT calculated using the taxable sales amount multiplied by the effective tax rate less deductible input VAT) Taxable income from sales of scraps 3% Taxable income from transfer of fixed asset (tax inclusive) 4% (levied by half)

Business tax Taxable loading/unloading and transportation income 3% Taxable warehousing, logistic agency and rental income 5%

Urban maintenance and VAT and Business tax paid 5% and 7% construction tax

Education surplus VAT and Business tax paid 3%

Regional education surplus VAT and Business tax paid 2%

The applicable enterprise income tax rate for the Company and the subsidiaries located in Shenzhen Special Economic Zone had been 15%. Under the new CIT Law, the CIT income tax rate applicable to the Company and these subsidiaries will increase gradually to 25% within 5 years from 2009 to 2012. The applicable income tax rate for 2011 is 24%. (2010: 22%)

The applicable enterprise income tax rate for the subsidiaries located in Dongguan city is 25%. (2010: 25%)

Chiwan Wharf Holdings (H.K.) Limited (hereinafter “WHK”) and Chiwan Shipping (H.K.) Company Limited are subject to Hong Kong CIT income tax rate at 16.5% (2010: 16.5%).

For the year ended 31 December 2011, several subsidiaries of the Company are still in the tax holiday of “5 year exemption and 5 year half reduction”. The details are set out below.

(a) The profit derived from berth #12 of Chiwan Container Terminal Company Limited (hereinafter “CCT”) is entitled to full exemption from income tax for five years commencing from its first profit making year and a 50% exemption for the following five years. 2011 is the eighth profit-making year of berth #12, CIT has been provided at a rate of 12% (2010: 11%).

- 31 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

3 Taxation (Con’d)

(b) The profit derived from berth #13 of CCT is entitled to full exemption from income tax for five years commencing from its first profit making year and a 50% exemption for the following five years when certain requirement met. 2011 is the senventh profit-making year of berth #13, CIT has been provided at a rate of 12% (2010: 11%).

- 32 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

4 Business combination and the consolidated financial statements

(1) Information of subsidiaries

(a) Subsidiaries obtained through incorporation or investment Registered capital (in ten thousand Type of Nature of Yuan unless Legal Organization Type of Full name of investees subsidiaries Place of registration business otherwise stated) Principal activities Type of enterprise representatives code audit opion Hierarchy Shenzhen Chiwan International Freight Domestically-funded Agency Company Limited Direct Shenzhen, PRC Logistics 550 Shipping agency service enterprise Qu Jiandong 61885111-4standard 1

Shenzhen Chiwan Terminal Company Direct and Shenzhen, PRC Logistics 5,000 Port services Domestically-funded Zhao Qiang 19231989-1 Limited indirect enterprise standard 1

Shenzhen Chiwan Trains-Grains Terminal Direct and Shenzhen, PRC Logistics 4,500 Warehousing of grains Chinese-Foreign Zhang Jianguo 61893398-8 Company Limited indirect equity joint venture standard 1

Chiwan Wharf Holdings (H.K.) Limited Direct Hong Kong SAR, PRC Investments HKD 1,000,000 Shipping agency service Overseas enterprise NA NA standard 1

Dongguan Chiwan Wharf Company Direct and Dongguan, PRC Logistics 45,000 Port services, Chinese-Foreign Wang Fen 79123972-X Limited indirect warehousing and other equity joint venture logistic services standard 1

Dongguan Chiwan Terminal Company Direct and Dongguan, PRC Logistics 30,000 Port services, Chinese-Foreign Wang Fen 67307267-4 Limited indirect warehousing and other equity joint venture logistic services standard 2

Grossalan Investments Limited Direct British Virgin Islands Investments USD 1 Investment holding Overseas enterprise NA NA standard 2

Hinwin Development Company Limited Indirect Hong Kong SAR, PRC Investments HKD 10,000 Investment holding Overseas enterprise NA NA standard 2

- 33 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

4 Business combination and the consolidated financial statements (Con’d)

(1) Information of subsidiaries (Con’d)

(a) Subsidiaries obtained through incorporation or investment (Con’d) Substantial net investment on the Amount of loss attributed subsidiaries recorded in other Consolidate Minority to the minority

Name of subsidiaries Year end actual investment items Share holding Voting right or not interests shareholders

Shenzhen Chiwan International Freight Agency Company Limited 5,500,000 - 100% 100% Y - -

Shenzhen Chiwan Terminal Company Limited 50,000,000 - 100% 100% Y - -

Shenzhen Chiwan Trains-Grains Terminal Company Limited 45,000,000 - 100% 100% Y - -

Chiwan Wharf Holdings (H.K.) Limited 1,070,000 11,004,285 100% 100% Y - -

Dongguan Chiwan Wharf Company Limited(i) 382,500,000 - 85% 85% Y 69,668,546 1,497,454

Dongguan Chiwan Terminal Company Limited 300,000,000 - 100% 100% V - -

Grossalan Investments Limited 8 100% 100% Y - -

Hinwin Development Company Limited(Note5(9)) 6,278,500 94,014,181 100% 100% Y - -

790,348,508 105,018,466 69,668,546 1,497,454

- 34 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

4 Business combination and the consolidated financial statements (Con’d)

(1) Information of subsidiaries (Con’d)

(a) Subsidiaries obtained through incorporation or investment (Con’d)

(i) The group previously owned 100% equity interest of Dongguan Chiwan Wharf Company Limited (hereinafter”DGW”). On 16 August 2011, the group signed an agreement with Yihai Kerry investment Ltd, the Group and Yihai Kerry agreed to inject RMB121,200,000 and RMB 91,940,000 respectively ,to Dongguan Wharf Ltd . After the capital injection, the Group and Yihai Kerry hold 85% and 15% equity of DGW, respectively. On 9 June 2011, the capital injection has been completed and the equity interest owned by the group decreased and was treated as a deemed disposal of subsidiary‘s equity to minority interests. Of the investment of RMB 91,940,000 by Yihai Kerry, RMB 67,500,000 was recorded as paid in capital, while RMB 24,440,000 was credited to the capital surplus of DGW. The corresponding portion of the net assets attributable to the group, RMB 20,774,000 is credited to capital surplus – share premium.

- 35 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

4 Business combination and the consolidated financial statements (Con’d)

(1) Information of subsidiaries (Con’d)

(b) Subsidiaries obtained through business combinations involving enterprises under common control

Full name of investees Type of Place of Nature of Registered capital Principal activities Type of enterprise Legal Organization Minority Amount of loss subsidiaries registration business (in ten thousand Yuan representatives code interests attributed to the unless otherwise stated) minority shareholders Shenzhen Chiwan Harbour Direct and Shenzhen, Logistics 28,820 Container handling and other Chinese-Foreign Zhang Ning 61881729-0 standard 1 Container Company Limited indirect PRC port services Equity joint venture

Shenzhen Chiwan Transportation Direct and Shenzhen, Logistics 1,500 container transportation, Chinese-Foreign Zhang Ning 61883349-3 standard 1 Company Limited indirect PRC vehicle and port machinery Equity joint venture maintenance

Chiwan Container Terminal Direct and Shenzhen, Logistics USD 95,300,000 Container handling and other Chinese-Foreign Zheng 61881700-4 standard 1 Company Limited indirect PRC port services Equity joint venture Shaoping

Shenzhen Chiwan Shipping and Direct and Shenzhen, Logistics 2,400 Cargo shipping Chinese-Foreign Zhang Ning 61881638-6 standard 1 Transportation Company Limited indirect PRC Equity joint venture

Chiwan Shipping (H.K.) Company Indirect Hong Kong, Logistics HKD 800,000 Shipping agency service Foreign company NA NA standard 2 Limited PRC

- 36 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

4 Business combination and the consolidated financial statements (Con’d)

(1) Information of subsidiaries (Con’d)

(b) Subsidiaries obtained through business combinations involving enterprises under common control (Con’d)

Substantial net investment on the Voting Amount of loss Year end actual subsidiaries recorded Interest right held Consolidate attributed to the Name of subsidiaries investment in other items held (%) (%) d Minority interests minority shareholders

Shenzhen Chiwan Harbour Container Company Limited 250,920,000 - 100% 100% Yes - -

Shenzhen Chiwan Transportation Company Limited 7,000,000 19 100% 100% Yes - -

Chiwan Container Terminal Company Limited 485,990,004 - 55% 55% Yes 568,598,774 -

Shenzhen Chiwan Shipping and Transportation Company Limited 24,000,000 - 100%100% Yes - -

Chiwan Shipping (H.K.) Company Limited 856,000 - 100% 100% Yes - -

768,766,004 19 568,598,774 -

All above subsidiaries and the Company had been under common control by Nanshan Group before and after the acquisition.

- 37 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

4 Business combination and the consolidated financial statements (Con’d) a) Entities newly included in or excluded from the consolidation scope in the current year

Hinwin Development Co.,Ltd is newly included in the consolidation scope in the current year.(Note5(9)(b)) b) There is no loss of subsidiary due to disposal of shares and loss of control during the year. c) Exchange rates applied to major financial statement items of the overseas operating entities

Balance Sheet Item Revenue, expense 31 December 2011 31 December 2010 and cash flow item

Chiwan Shipping (H.K.) Company Limited 1HKD = 0.81RMB 1HKD = 0.85RMB Current exchange rate of the transaction Grossalan Investments Limited 1HKD = 0.81RMB 1HKD = 0.85RMB Current exchange rate of the transaction

5 Notes to the consolidated financial statements

(1) Cash at bank and on hand

31 December 2011 31 December 2010 Original Exchange RMB Original Exchange RMB currency rate equivalent currency rate equivalent

Cash on hand- RMB - - 9,914 - - 8,829 HKD 71 6.30 447 71 6.62 470 USD 4,535 0.81 3,674 2,557 0.85 2,174 14,035 11,473 Cash at bank- RMB - - 292,000,350 - - 605,086,621 USD 3,992,510 6.30 25,152,810 1,336,616 6.62 8,848,399 HKD 197,714,953 0.81 160,149,112 196,006,858 0.85 166,605,829 477,302,272 780,540,849 Other cash balances- RMB - - 1,458,828 - - 1,066,932 USD - 6.30 - 228 6.62 1,509 HKD 17,047 0.81 13,808 116,847 0.85 99,320 1,472,636 1,167,761 478,788,943 781,720,083

- 38 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(2) Notes receivable

31 December 2011 31 December 2010

Bank acceptance notes - 4,640,000

(3) Interest receivable

31 December Current year Current year 31 December 2010 additions decreases 2011

Interest receivables 1,318,202 756,667 (2,023,202) 51,667

There was no interest overdue as at 31 December 2011 and 2010.

(4) Accounts receivable

31 December 2011 31 December 2010

Accounts receivable 230,846,394 179,822,749 Less: provision for bad debts (49,391) (49,994) 230,797,003 179,772,755

(a) The ageing of accounts receivable is analysed below:

31 December 2011 31 December 2010

Within 1 year 230,011,499 179,739,426 1 to 2 years 757,905 - 2 to 3 years - - Over 3 years 76,990 83,323 230,846,394 179,822,749

- 39 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(4) Accounts receivable (Con’d)

(b) Accounts receivable are analysed by categories as follows:

31 December 2011 31 December 2010

Book amount Provision for bad debts Book amount Provision for bad debts

% of total Provision for % of % of total Provision for % of Amount balance bad debts balance Amount balance bad debts balance

With amounts that are 180,326,499 78% - - 135,313,207 75% - - individually significant and that the related provision for bad debts is provided on the individual basis Others 50,519,895 22% (49,391) 0.1% 44,509,542 25% (49,994) 0.1%

230,846,394 100% (49,391) 0.02% 179,822,749 100% (49,994) 0.03%

The management classified the five largest accounts receivable as “with amounts that are individually significant”.

(c) As at 31 December 2011, receivables that are individually significant and impaired are analysed as follows:

Provision for % of the balance and Amount bad debt reason of impairment

Customer A 113,368,915 - Not applicable Customer B 34,286,640 - Not applicable Customer C 12,679,079 - Not applicable Customer D 12,621,655 - Not applicable Customer E 7,370,210 - Not applicable 180,326,499 -

- 40 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(4) Accounts receivable (Con’d)

(d) The aging analysis of the receivables that are grouped and impaired is as follows:

31 December 2011 31 December 2010 Book amount Provision for bad debts Book amount Provision for bad debts % of % of total Provision for % of total Provision for % of Amount balance bad debts balance Amount balance bad debts balance

Within 1 year 49,685,000 21.52% - - 44,426,219 24.71% - - 1 to 2 years 757,905 0.33% ------Over 3 years 76,990 0.03% (49,391) 64% 83,323 0.05% (49,994) 60% 50,519,895 21.88%(49,391) 0.1% 44,509,542 24.76% (49,994) 0.1%

(e) As at 31 December 2011, no balances included in above accounts receivable are due from the shareholders of the Company who hold over 5% voting rights (31 December 2010: Nil).

(f) As at 31 December 2011, the Group’s five largest accounts receivable balances are analysed as follows:

Relationship % of total accounts with the Group Amount Duration receivable balance

Customer A Third party 113,368,915 Within 1 year 49.11% Customer B Third party 34,286,640 Within 1 year 14.85% Customer C Third party 12,679,079 Within 1 year 5.49% Customer D Third party 12,621,655 Within 1 year 5.47% Customer E Third party 7,370,210 Within 1 year 3.19% 180,326,499 78.11%

- 41 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(4) Accounts receivable (Con’d)

(g) Accounts receivable due from related parties are analysed as follows:

31 December 2011 31 December 2010

Provision Provision Relationship with the % of total for bad % of total for bad Group Amount balance debts Amount balance debts

Shenzhen Southsea Grains Notes 7(4) 1,368,092 0.59% - 110,521 0.06% - Industries Limited (“Southsea Grains”) Shenzhen Mawan Port Co., Ltd. Notes 7(4) 682,266 0.30% - 998,942 0.56% - (“SMP”) China Overseas Harbor Affairs Notes 7(4) 539,724 0.23% - - - - (Laizhou) Co.Ltd China Merchant Bonded Notes 7(4) 378,384 0.16% - 344,900 0.19% - Logistics )Co.,Ltd(“CMBL”) Shenzhen Mawan Wharf Co, Notes 7(4) 335,669 0.15% - 397,090 0.22% - Ltd.(“SMW”) Shekou Container Terminals Notes 7(4) 6,500 0.00% - 907,600 0.50% Limited(“SCT”) Shenzhen Nantian Oil Dregs Notes 7(4) - - - 562,957 0.31% - Industry Co., Ltd.

3,310,635 1.43% - 3,322,010 1.84% -

(h) The following accounts receivable are denominated in foreign currencies:

31 December 2011 31 December 2010 Original Exchange RMB Original Exchange RMB currency rate equivalent currency rate equivalent

USD 4,882,828 6.30 30,761,816 4,025,498 6.62 26,648,794 HKD 936,003 0.81 758,163 1,551,068 0.85 1,318,408 31,519,979 27,967,202

- 42 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(5) Other receivables

31 December 2011 31 December 2010

Current accounts with counterparties 7,100,207 49,746,197 Deposits 2,940,003 2,427,356 Staff advances 1,554,108 1,066,432 Others 489,912 736,021 12,084,230 53,976,006 Less: Provision for bad debts (250,353) (1,210,645) 11,833,877 52,765,361

(a) The ageing of other receivables is analysed below:

31 December 2011 31 December 2010

Within 1 year 11,127,183 52,147,049 1 to 2 years 455,276 158,164 2 to 3 years 9,603 418,316 3 to 4 years 279,544 475,805 4 to 5 years 88,996 130,563 Over 5 years 123,628 646,109 12,084,230 53,976,006

(b) Other receivables are analysed by categories as follows:

31 December 2011 31 December 2010

Book amount Provision for bad debts Book amount Provision for bad debts

% of total Provision for % of % of total Provision for % of Amount balance bad debts balance Amount balance bad debts balance

With amounts that are individually significant and that the related provision for bad debts is provided on the individual basis 5,707,787 47.23% - - 47,492,149 87.99% (520,000) 1.09% Receivables that are grouped and provided for bad debt 6,376,443 52.77% (250,353) 3.93% 6,483,857 12.01% (690,645) 10.65%

12,084,230 100% (250,353) 2.07% 53,976,006 100% (1,210,645) 2.24%

- 43 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(5) Other receivables (Con’d)

(c) As at 31 December 2011, other receivables with amounts that are individually significant and that the related provision for bad debts is provided on the individual basis are analysed as follows: Provision for Book amount bad debts % of balance Reason

CMBL 2,622,178 - - N/A SMW 898,479 - - N/A Finacial Secretary of Transport Ministry 800,000 - - N/A Deposits of non-vessel carrier 797,040 - - N/A Maxtop 590,090 - - N/A 5,707,787 -

(d) Other receivables that the related provision for bad debts is provided on grouping basis using the ageing analysis method are analysed as follows:

31 December 2011 31 December 2010 Book amount Provision for bad debts Book amount Provision for bad debts % of % of total Provision for % of total Provision for % of Amount balance bad debts balance Amount balance bad debts balance

Within 1 year 5,419,396 44.85% - - 4,778,114 8.85% - - 1 to 2 years 455,276 3.77% (45,528) 10.00% 158,164 0.29% (15,816) 10.00% 2 to 3 years 9,603 0.08% (2,881) 30.00% 418,316 0.78% (83,663) 20.00% Over 3 years 492,168 4.07% (201,944) 41.03% 1,129,263 2.09% (591,166) 52.35% 6,376,443 52.77%(250,353) 3.93% 6,483,857 12.01% (690,645) 10.65%

(e) As at 31 December 2011, no balances in other receivables from shareholders holding more than 5% (including 5%) of the voting rights of the Company (31 December 2010: Nil).

- 44 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(5) Other receivables (Con’d)

(f) As at 31 December 2011, the five largest other receivables are analysed as follows:

Relationship with the % of total accounts Group Amount Duration receivable balance

CMBL Associate of the Group 2,622,178 Within 1 year 21.70% SMW Associate of the Group 898,479 Within 1 year 7.44% Finacial Secretary of Transport Ministry Third party 800,000 Within 1 year 6.62% Deposits of non-vessel carrier Third party 797,040 Within 1 year 6.60% Maxtop Third party 590,090 Within 1 year 4.87% 5,707,787 47.23%

(g) Other receivables due from related parties are analysed as follows:

31 December 2011 31 December 2010

% of total % of total

Relationship accounts Provision for accounts Provision for with the Group Amount receivables bad debt Amount receivables bad debt

CMBL Notes 7(4) 2,622,178 21.70% - 57,821 0.11% - SMW Notes 7(4) 898,4797.44% - 79,083 0.15% - Shenzhen Xuqin Industrial

Development Co., Ltd.(“Xuqin”) Notes 7(4) 320,000 2.65% (192,000) 320,000 0.59% (192,000) SMP Notes 7(4) 308,4512.55% - 20,961 0.04% - China Petroleum Supply Base Co.,

Ltd. (“CPSB”) Notes 7(4) 135,622 1.12% - 135,622 0.25% - SCT Notes 7(4) 187,1021.55% - - - - China Merchants International Cold Notes 7(4) Chain (Shenzhen) Company Limited(“CMICL”) 48,645 0.40% - - - - Media Port Investment Limited Notes 7(4) - - - 44,879,120 83.15% -

4,520,477 37.41% (192,000) 45,492,607 84.29% (192,000)

- 45 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(5) Other receivables (Con’d)

(h) The following other receivables are denominated in foreign currencies:

31 December 2011 31 December 2010 Original Exchange RMB Original Exchang RMB Foreign currency currency rate equivalent currency e rate equivalent

USD 102,836 6.30 647,867 125,650 6.62 831,801 HKD 378,355 0.81 306,468 196,519 0.85 167,041 954,335 998,842

(6) Advance to suppliers

(a) The ageing of advance to suppliers is analysed below;

31 December 2011 31 December 2010 % of total % of total Amount balance Amount balance Within 1 year 3,497,668 100% 31,256,172 100%

(b) Advances to suppliers are analysed by categories as follows:

Category 31 December 2011 31 December 2010

Insurance Fee 1,631,823 2,307,558 Decoration Fee 1,210,724 - Software Maintenance Expense 496,389 853,833 Prepayment for Equipment 142,232 539,245 Consultancy and Advisory Fee 16,500 - Prepayment for materials - 75,536 Prepayment for facility - 27,480,000 3,497,668 31,256,172

- 46 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(6) Advance to suppliers(Con’d)

(c) As at 31 December 2011, the Group’s five largest advance to suppliers balances are analysed as follows:

% of total Relationship advance to Time of with the Group Amount suppliers prepayment Unsettled reason

The People’s Insurance Company (Group) Third party 1,387,879 39.68% Year 2011 Relevant goods or services of China Limited were not provided

Shenzhen Zhong Zhuang Design and Third party 1,070,724 30.61% Year 2011 Relevant goods or services Decoration Engineering CO.,Ltd were not provided Ruechengda Information and Technology Third party 496,389 14.19% Year 2011 Relevant goods or services

Co., Ltd were not provided China Continent Property & Casualty Third party 243,945 6.97% Year 2011 Relevant goods or services Insurance Co., Ltd. Shenzhen Branch were not provided

Mettler Toledo (Changzhou) Weighting Third party 119,833 3.43% Year 2011 Relevant goods or services Equipment System Co.,Ltd were not provided

3,318,770 94.88%

(d) As at 31 December 2011, no balances of advance to shareholders holding more than 5% (including 5%) of the voting rights of the Company (31 December 2010: Nil).

(e) As at 31 December 2011, no balances of advance to suppliers were with related parties (31 December 2010: Nil).

(7) Inventories

(a) Inventories by categories are analysed as follows:

31 December 2011 31 December 2010 Provision for Provision for declines in the declines in value of Net book the value of Net book Cost inventories value Cost inventories value

Spare parts 23,198,355 (792,118) 22,406,237 26,001,106 (3,396,128) 22,604,978 Fuel 1,062,721 - 1,062,7211,281,346 - 1,281,346 Low value consumables 31,400 - 31,400 2,202 - 2,202 24,292,476 (792,118) 23,500,35827,284,654 (3,396,128) 23,888,526

- 47 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(7) Inventories(Con’d)

(b) Movement of inventories is analysed as follows:

31 December 31 December 2010 Additions Less 2011

Spare parts 26,001,106 42,244,566 (45,047,317) 23,198,355 Fuel 1,281,346 50,228,677 (50,447,302) 1,062,721 Low value consumables 2,202 29,198 - 31,400 27,284,654 92,502,441 (95,494,619) 24,292,476

(c) Book value of inventories by age are analysed as follows:

Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total

Spare parts 20,442,307 264,406 52,561 1,646,963 22,406,237 Fuel 1,062,721 - - - 1,062,721 Low value consumables 31,400 - - - 31,400 21,536,428 264,406 52,561 1,646,963 23,500,358

(d) Provision for declines in the value of inventories is analysed as follows:

31 December Current year 31 December 2010 provisions Current year decreases 2011 Reversals Written-off

Spare parts (3,396,128) (792,118) 103,512 3,292,616 (792,118)

(e) Details about provision for declines in the value of inventories is as follows:

% of current year reversals to Basis of provision Reason of current year reversals stock yearend balance

Spare parts Net realizable value lower than the book value of spare parts Net realizable value increased 14%

- 48 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(8) Available-for-sale financial assets

31 December 2011 31 December 2010

Available-for-sale equity investments 5,690,000 6,640,000

Available-for-sale financial asset represented 1,000,000 PRC legal person shares of Jiangsu Expressway (the “Jiangsu Expressway”) held by the Company. As at 31 December 2011 the market value of the stocks in Shanghai Stock Exchange per the closing market price of the last trading day of year 2011 was RMB 5,690,000. Fair value change of RMB 767,700 has been debited d to capital surplus.

(9) Long-term equity investments

31 December 2011 31 December 2010

Joint ventures (a) 795,776,215 763,011,159 Associates (b) - Without quoted price 627,171,005 373,001,527 Other long-term equity investment 17,037,500 17,037,500 1,439,984,720 1,153,050,186 Less: Provision for impairment of long-term equity investments (c) (3,128,300) (3,128,300) 1,436,856,420 1,149,921,886

As at 31 December 2011, the long-term equity investments of the Group were not subject to restriction on disposal or remittance of return on investments.

- 49 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated and the Company’s financial statements (Con’d)

(9) Long-term equity investments (Con’d)

(a) Joint venture

Current year additions / decreases

Explanation of Provision Share of net disparity between for Initial Increase/ profit using Cash Other Share Voting percentages of Provision impairment Accounting investment 31 December Decrease in the equity dividend changes in 31 holding rights share holding and for made in

method cos 2010 investment method declared equity December 2011 (%) (%) voting rights impairment current year

China Overseas Harbour Equity

Affairs (Laizhou) Co., Ltd method 749,655,300 763,011,159 - 32,665,056 - 100,000 795,776,215 40.00% 40.00% Not applicable

* According to the investment agreement with shareholders of China Overseas Harbour Affairs (Laizhou) Co., Ltd (hereinafter “COHA(Laizhou)”)and its constitutions, significant affairs in its business operation can only be effective when approved by directors of Chiwan Wharf, therefore COHA(Laizhou) is deemed to be under common control of Chiwan Wharf and its other shareholders, accordingly COHA(Laizhou) is accounted for as a joint-venture.

- 50 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated and the Company’s financial statements (Con’d)

(9) Long-term equity investments (Con’d)

(b) Associates

Current year additions / decreases Share of net Cash Reason of Provision Provision Initial profit or loss dividends Other 31 inconsistent for for impairment Accounting investmen 31 December Additional of announced equity December Interest Voting interest % and impairment made in current method t cost 2010 investment associates by associates changes 2011 % right % voting right balance year

Shenzhen Cyber- harbour Network Co., Ltd.(“Cyber Equity Network”) method 1,875,000 12,869,241 - 19,885 (1,224,863) - 11,664,263 23.16% 23.16% Not applicable - - Equity CMBL method 2 80,000,000 66,766,772 220,284,181 3,983,566 - 1,764,925 292,799,444 40.00% 40.00% Not applicable - - Equity MPIL* method 139,932 293,365,514 - 77,299,676 (47,957,892) - 322,707,298 50.00% 50.00% Not applicable - - 373,001,527 220,284,181 81,303,127 (49,182,755) 1,764,925 627,171,005 - -

* On 29 January 2010, the company signed agreement on transfer of shareholding to sell 20% shareholding of CMBL at a price of RMB94,000,000.The relevant income on disposal had been recorded in the income statement of year 2010.

In 2011,in consideration of the good development prospects of CMBL brought by develop plan of ,Shenzhen,the company decided to increase the shareholding of CMBL and later, further increase the investment in it.. As at 28 April 2011, Excel Steps Limited, WHK, a wholly owned subsidiary of the Company and the company signed an agreement of transfer in shareholding. WHK paid to Excel Steps Limited around RMB 6.27 million to obtain 100% shareholdings of Hinwin Development Co.,Ltd,and undertook advances from shareholder of Excel Steps Limited amounting around 94million.Hinwin has no other business except holding 20% shares of CMBL, and the company deemed this substance of the transaction is to buy in 20% shareholding of CMBL, so that the transaction is dealt as purchase of 20% shareholding of CMBL. After above transaction, the company has 40% equity interest of CMBL directly and indirectly.

- 51 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated and the Company’s financial statements (Con’d)

(9) Long-term equity investments (Con’d)

(b) Associates(Con’d)

In May 2011, all shareholdings of CMBL agreed add 300 million in its registered capital to RMB 700 million. The investment of the company reached 120 million by shareholding portion.

** The company has 50% equity of MPIL ,but no control power on it,so it is treated as joint –venture.

On 30 September 2002, China Merchants Holdings (International) Company Limited (the “CMHI”, a listed company in Hong Kong) and Shenzhen South Oil (Group) Company Limited (the “SSOG”) entered into an agreement called the “Agreement on Cooperation and Development of Mawan Port” (the “Development Agreement”) to incorporate three joint ventures, namely SMW, SMP and Shenzhen Mawan Terminals Co., Ltd. (“SMT”) (together referred to as “Mawan Companies”), to construct and operate the berth 0#, 5#, 6#, 7# and 8# in Mawan Port. According to the Development Agreement, CMHI and the Group will incorporate an associated corporation (Note 5 (10)) Media Port Investments Limited (the “MPIL”) first with equal percentage of equity held respectively. MPIL then incorporates the abovementioned three joint ventures together with SSOG, at 60% and 40% equity interest therein respectively. So the actual shareholdings held by the group is 30%.

- 52 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(9) Long-term equity investments (Con’d)

(c) Other long-term equity investment

Reason of Provision Initial Current year inconsistent Provision for impairment Current year Accounting investment 31 December additions / 31 December Interest Voting interest % and for impairment made in declared cash method cost 2010 decreases 2011 % right % voting right balance current year dividend

China Ocean Shipping Agency Cost (Shenzhen) Company Limited method 13,510,000 13,510,000 - 13,510,000 15% 15% Not applicable - - 3,900,000 Shenzhen Petro-chemical Industry Cost (Group) Company Limited. method 3,500,000 3,500,000 - 3,500,000 0.26% 0.26% Not applicable (3,117,800) - - Guangdong Guang Jian Group Cost Company Limited method 27,500 27,500 - 27,500 0.02% 0.02% Not applicable (10,500) - - 17,037,500 - 17,037,500 (3,128,300) - 3,900,000

(d) Provision for impairment of long-term equity investments

Current year Current year 31 December 2010 additions decreases 31 December 2011 Other long-term equity investment -Shenzhen Petro-chemical Industry (Group) Company Limited 3,117,800 --3,117,800 -Guangdong Guang Jian Group Company Limited 10,500 --10,500 3,128,300 --3,128,300

- 53 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(10) Investment in joint ventures and associates

The particular of the associates are set out as below.

Voting right Interest held held 31 December 2011 2011 Total assets Total liabilities Net assets Operating revenue Net profit / (loss)

Joint venture – China Overseas Harbour Affairs (Laizhou) Co., Ltd 40% 40% 2,021,464,420 222,811,236 1,798,653,184 295,054,110 81,662,641

Associates – China Merchants Holdings (international) information technology company Ltd 23.16% 23.16% 67,154,387 14,432,954 52,721,433 49,463,049 85,857 CMBL 40% 40% 1,463,544,741 821,152,514 642,392,227 155,265,661 8,558,366 HKD HKD HKD HKD HKD MPIL 50% 50% 2,864,082,877 2,051,524,901 812,557,976 740,675,739 294,159,648

All above summary financial information of the joint venture and associates are extracted from their statutory financial statements or management accounts. The Group has applied the accounting policy of the Group to the results of the joint venture and associates in equity accounting of the share of results of the joint venture and associates.

- 54 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(11) Investment properties

31 December Current year Current year 31 December 2010 additions decreases 2011

Cost totals 50,658,833 20,013,200 (5,643,895) 65,028,138 Buildings / properties 19,149,868 20,013,200 (5,643,895) 33,519,173 Land use right 31,508,965 - - 31,508,965

Accumulated depreciation / amortization totals 21,279,289 13,450,693 (4,381,073) 30,348,909 Buildings / properties 8,234,247 12,836,928 (4,381,073) 16,690,102 Land use right 13,045,042 613,765 - 13,658,807

Book value totals 29,379,544 34,679,229 Buildings / properties 10,915,621 - - 16,829,071 Land use right 18,463,923 - - 17,850,158

In 2011, investment properties depreciation / amortization was RMB 1,333,628 (2010: RMB907,104).

In 2011, the previously self-occupied properties with net book value RMB7,896,135 (Cost of RMB 20,013,200) was leased out in current year, and therefore, such assets were transferred from fixed assets and intangible assets to investment properties at the dates of transfers.

As at 31 December 2011 and 2010, none of the investment properties have obtained Building and Land Ownership Certificate. Please refer to Note 5(14) for the reason and measures taken by management.

- 55 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(12) Fixed assets

31 December Current year Current year 31 December 2010 additions decreases 2011

Cost totals 4,236,465,750 55,779,529 (99,746,790) 4,192,498,489 Harbor facilities 1,315,344,468 - (53,411,199) 1,261,933,269 Warehouses, container yards and buildings 700,915,560 6,052,460 (18,828,976) 688,139,044 Machinery and equipments 1,874,315,547 23,659,364 (19,836,000) 1,878,138,911 Motor vehicles, cargo ships and tugboats 254,367,036 7,766,065 (3,742,341) 258,390,760 Other equipments 91,523,139 18,301,640 (3,928,274) 105,896,505

Accumulated depreciation totals 1,522,787,834 163,911,032 (36,973,446) 1,649,725,420 Harbor facilities 227,871,832 23,808,959 (9,537,665) 242,143,126 Warehouses, container yards and buildings 199,385,996 17,880,342 (2,826,222) 214,440,116 Machinery and equipments 907,292,082 103,727,083 (17,722,680) 993,296,485 Motor vehicles, cargo ships and tugboats 120,599,575 12,841,279 (3,338,307) 130,102,547 Other equipments 67,638,349 5,653,369 (3,548,572) 69,743,146

Net book amount totals 2,713,677,916 - - 2,542,773,069 Harbor facilities 1,087,472,636 - - 1,019,790,143 Warehouses, container yards and buildings 501,529,564 - - 473,698,928 Machinery and equipments 967,023,465 - - 884,842,426 Motor vehicles, cargo ships and tugboats 133,767,461 - - 128,288,213 Other equipments 23,884,790 - - 36,153,359

Provision for impairment loss totals 60,720,001 - (24,620) 60,695,381 Harbor facilities - - - - Warehouses, container yards and buildings 60,695,381 - - 60,695,381 Machinery and equipments - - - - Motor vehicles, cargo ships and tugboats 24,620 - (24,620) - Other equipments - - - -

Net book value totals 2,652,957,915 - - 2,482,077,688 Harbor facilities 1,087,472,636 - - 1,019,790,143 Warehouses, container yards and buildings 440,834,183 - - 413,003,547 Machinery and equipments 967,023,465 - - 884,842,426 Motor vehicles, cargo ships and tugboats 133,742,841 - - 128,288,213 Other equipments 23,884,790 - - 36,153,359

- 56 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(12) Fixed assets (Con’d)

(*) In 2007, the Group planned to relocate part of the general cargo business and facilities to Dongguan Machong Port, and made certain impairment provision of certain demolition for related warehouses, container yards and buildings accordingly. As at 31 December 2011, the management of the Group considered that impairment provision against the fixed assets were sufficient.

Depreciation charge in 2011 amounted to RMB159,529,959 (2010: RMB176,972,348). In 2011, depreciation expenses of RMB152,093,367 (2010: RMB169,300,333) and RMB7,436,592 (2010: RMB7,672,015) were charged to cost of revenue and general and administrative expenses, respectively.

Fixed assets amounted to RMB28,732,683(2010: RMB618,336,145) were transferred from construction in progress in current year.

The cost of property,plant and equipment decreases 45,442,208 in the final accounts of the completed project (2010:Nil).

(a) Temporary idle fixed assets

As at 31 December 2011, buildings, machinery and equipment with a net book amount of approximately RMB880,313 (cost: RMB32,206,668) were temporary idle (31 December 2010: net book amount: RMB1,994,990 (cost: RMB28,738,184)), due to that management has not designated their usage. Details are as follows:

Accumulated Net book Cost depreciation Impairment amount

Warehouses, container yards and buildings 32,206,668 (28,050,442) (3,275,912) 880,314

Management is of the view that such idle fixed assets are expected to put into use in the future, or the recoverable amount is larger than the net book value, thus no impairment provision is needed.

(b) Fixed assets with ownership certificates to be obtained

As at 31 December 2011, ownership certificates of buildings (“Buildings and Land Ownership Certificates”) for certain buildings of the Group with net book value of approximately RMB128,884,046 (cost: RMB199,086,043) had not yet been obtained (31 December 2010: carrying amount: RMB62,095,750 (cost: RMB128,793,948). For fixed assets with which book value of RMB32,361,834 (cost: RMB94,487,309), please refer to Note 5(14) for the reason and response from management and the rest is on the process of getting ownership certificates.

- 57 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(13) Construction in progress

31 December 2011 31 December 2010 Provision for Net Provision for Net Book value impairment book value Book value impairment book value

Berth 4#-5#, Machong Port 169,264,280 - 169,264,280 7,222,455 - 7,222,455 Berth 2#-3#, Machong Port 118,802,890 - 118,802,890 - - - Berth Extension 106,442,864 - 106,442,864 1,380,600 - 1,380,600 Quay-crane Construction 65,250,000 - 65,250,000 - - - Tug Construction 33,384,070 - 33,384,070 5,060,834 - 5,037,371 Cantry Crane 16,600,000 - 16,600,000 - - - Others 8,074,040 - 8,074,040 929,627 - 953,090 517,818,144 - 517,818,144 14,593,516 - 14,593,516

- 58 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(13) Construction in progress (Con’d)

(a) Movement of significant construction in progress

Transfer to % of Percent Accumulated Borrowing

fixed assets actual age of capitalised cost Weighted

Budget 31 December Current year during the Other 31 December cost to completi borrowing capitalised average

Name of projects 2010 additions current year reduction 2011 budget on cost In 2011 interest rate Sources of fund

Berth 4#-5#, Machong Self Funding Port 816,975,300 7,222,455 162,041,825 - - 169,264,280 20.72% 20.72% - - -

Berth 2#-3#, Machong Self Funding and loan Port 331,850,000 - 118,802,890 - - 118,802,890 35.80% 35.80% 432,996 432,996 5.90%

Berth Extension Project 140,930,000 1,380,600 105,062,264 - - 106,442,864 75.53% 75.53% - - - Self Funding

Quay-crane Construction 130,500,000 - 65,250,000 - - 65,250,000 50% 50% - - - Self Funding

Tug Construction 38,000,000 5,060,834 28,323,236 - - 33,384,070 87.85% 87.85% 1,035,653 1,001,874 5.90% Self Funding and loan

CTOS System 19,049,993 - 19,049,993 16,164,993 2,885,000 - 100.00% 100.00% - - - Self Funding

Cantry Crane 135,200,000 - 24,050,000 7,450,000 - 16,600,000 12.28% 12.28% - - - Self Funding

Others 13,215,192 929,627 12,262,103 5,117,690 - 8,074,040 61.10% 61.10% - - - Self Funding

14,593,516 534,842,311 28,732,683 2,885,000 517,818,144 1,468,649 1,434,870

- 59 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(13) Construction in progress (Con’d)

(b) As at 31 December 2011, the progresses for significant constructions are analysed as below:

Progress Notes

Berth 4# - 5#, Machong Port 20.72% Progress is estimated based on actual percentage completion Berth 2# - 3#, Machong Port 35.80% Progress is estimated based on actual percentage completion Berth Extension Project 75.53% Progress is estimated based on actual percentage completion

- 60 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(14) Intangible assets

31 December Current year Current year 31 December 2010 additions reductions 2011

Original cost totals 1,531,257,503 3,205,000 - 1,534,462,503 Land use rights – prepaid under lease (a) 1,419,159,549 - - 1,419,159,549 Land use rights– purchased 19,343,189 - - 19,343,189 Computer software 19,868,628 3,205,000 - 23,073,628 Coastal line use rights 72,886,137 - - 72,886,137

Accumulated amortization totals 457,009,684 38,525,927 - 495,535,611 Land use rights – prepaid under lease (a) 436,282,005 35,762,109 - 472,044,114 Land use rights– purchased 1,456,075 386,864 - 1,842,939 Computer software 17,763,788 748,954 - 18,512,742 Coastal line use rights 1,507,816 1,628,000 - 3,135,816

Net book value totals 1,074,247,819 - - 1,038,926,892 Land use rights – prepaid under lease (a) 982,877,544 - - 947,115,435 Land use rights– purchased 17,887,114 - - 17,500,250 Computer software 2,104,840 - - 4,560,886 Coastal line use rights 71,378,321 - - 69,750,321

In 2011, the amortisation of intangible assets amounted to RMB38,525,927(2010: RMB37,797,684).

(a) Group has leased from Nanshan Group several plots of land with a total area of 779,254 sq. meters within Chiwan port for a lease term of 20 - 50 years with up-front payments of RMB 684,453,783 made. The lands were injected by Shenzhen Investment Holding Corporation in 1982 as part of the consideration in acquiring the equity interests of Nanshan Group. As the PRC laws prevailing at that time did not provide for a mechanism for the issuance of official certificates of the land use rights, Nanshan Group has not obtained the land use right certificates of the leased land so far.

In June 2003 and September 2004, CCT entered into a land use agreement with Nanshan Group and leased two plots of land, one with an area of 117,827.2 square meters for 40.5 years and the other with an area of 171,089.478 square meters for 39 years, at the consideration of RMB 271,002,558 and RMB 444,832,643 respectively. Also no official certificates for such lands were obtained by Nanshan Group. Correspondingly, the buildings located on such lands have not obtained relevant real estate certificates.

- 61 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(14) Intangible assets(Con’d)

In March 2001,June 2003 and September 2004,Nanshan Group committed on all the land use right obtained by the group from it: Nanshan Group has no right to withdraw and will agree in any condition that ,when the group suffer loss ,bear expense and liability, be claimed to compensation or run into lawsuit, caused by any actually or potentially illegal and unconductable issues generated by land use right agreements and their relevant documents, signed or will be signed by Nanshan Group,Nanshan group will guarantee that the acquiring party and its inheritor of those land use right will be fully exempted from above issues mentioned.

Based on the situations above, directors of the company believed there is no significant impairment risk will be caused by the absence of land use right certificate and no significant contingency exist.

The company learned that Nanshan Group is active in process of resolve the historical problem with relevant government department, however it cannot predict the exact time of obtaining relevant legal certificates.

(15) Goodwill

31 December Current year Current year 31 December 2010 additions decreases 2011

CCT 10,858,898 - - 10,858,898

The goodwill arose from the acquisition of the minority interests in CCT, being the difference of the additional cost of investment and the Group’s share of the fair value of the identifiable net assets in CCT.

(a) Impairment

Goodwill allocated to the asset groups or compositions of asset groups of the Group at impairment tests are summarized by operating segments as follows:

31 December 2011 31 December 2010 Loading and unloading business - Mainland China 10,858,898 10,858,898

The recoverable amount of the asset groups and compositions of asset groups was determined according to the 5-year budget approved by the management, and calculated per cash flow forecasts. Estimated growth rate in cash flow above this 5-year was calculated as follows.

- 62 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(15) Goodwill (Con’d)

Major assumptions applied in the future cash flow forecast method:

Loading and unloading business – Mainland China

Growth rate 0% Gross margin 48% Discount rate 13.2%

The weighted average growth rate that management adopted is consistent with forecasts in relevant industry analysis reports, and did not exceed the long-term average growth rate of various services. Management developed a budgeted gross profit margin according to experience and forecast in market development, as well as the pre-tax interest rate that can reflect the specific risk of relevant asset group or combination of asset group, as discount rate. Such assumptions are applied to analyse the asset group or combination of asset group within relevant operating segment.

(16) Long-term prepaid expenses

Residual

31 December Current year Current year Other 31 December useful

2010 additions amortisations decreases 2011 Original Cost Period

Construction expenditure

of Tonggu sea-route (a) 59,026,284 - (1,844,573) - 57,181,711 64,560,000 31 years

Foresea packing ground 3,624,552 - (1,208,184) - 2,416,368 5,537,510 2 years

Golf membership 710,553 1,380,000 (193,922) - 1,896,631 2,443,549 1-10 year

Building decoration 486,800 - (142,978) - 343,822 510,630 3-5 years

Others - 650,000 - 650,000 650,000 5 years

63,848,189 2,030,000 (3,389,657) - 62,488,532 73,701,689

(a) In 2007, the Shenzhen municipal government commenced the construction work of the public sea route connecting Tonggu sea route, Shekou port area, Chiwan port area, Mawan port area, Qianhaiwan port area and Dachanwan port area (“Tonggu Sea Route”). As required by a decision by the government, 60% of construction expenditure would be allocated to the port operators while the remaining 40% born by the government. The port operators in Western Shenzhen port areas were allocated 35% of the total expenditure, and subsequently agreed the portion to each operator, taking into accounts of the factors including the function, waterfront length, berthing ship of each porter etc. The total expenditure of RMB 64,560,000 were allocated to the Group and accounted for as Long term prepaid expenses, being amortized on a straight line basis over 35 years which is the expected useful live of Tonggu Sea Route starting from 2008 when the Tonggu Sea Route was ready for use.

- 63 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(17) Other non-current assets

31 December 2011 31 December 2010

Coast Line Use Right(a) 36,375,000 33,000,000 Land use right(a) 85,463,860 39,292,214 Prepayment of facility 20,269,424 - 142,108,284 72,292,214

(a) In March 2006, the Company entered into the agreement of “Frame contract for cooperation on usage of quay and land for berth 2# & 5# at Machong Port in Dongguan” and its supplement with Dongguan Humen Port Administration Commission to purchase a land with an area of 800,000 square meters and area of water with depth of 700 meters from the front of terminal, together with the use right of 1,200 meters coast line, for berth 2# to berth 5# in Dongguan Machong Port at a consideration of RMB 260,000,000. Up to 31 December 2011, the Company has paid the first four installments of the consideration. As the Group has not obtain the land use right certificate, the relevant payments were therefore recognized as other non-current assets.

(18) Deferred tax assets and deferred tax liabilities

(a) Deferred tax assets before offsetting

31 December 2011 31 December 2010 Deductible Deductible temporary temporary Deferred tax difference Deferred tax difference assets and losses assets and losses

Provision for asset impairment 15,130,592 61,677,792 15,485,248 65,587,348 Depreciation of fixed assets and amortization of intangible assets 11,836,540 47,424,834 12,495,066 50,145,172 Deductible losses 19,205,338 82,041,588 14,580,112 67,326,990 Accrued expenses 10,686,955 45,492,841 6,162,977 28,134,252 Pre-operational expenses 1,390,282 8,088,918 1,390,282 9,100,033 Others 2,114,419 9,444,637 1,969,977 8,757,878 60,364,126 254,170,610 52,083,662 229,051,673

- 64 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(18) Deferred tax assets and deferred tax liabilities(Con’d)

(b) Deferred tax liabilities before offsetting

31 December 2011 31 December 2010 Deferred tax Taxable temporary Deferred tax Taxable temporary liabilities difference liabilities difference Depreciation of property plant and equipment and amortization of intangible assets 1,113,207 4,452,828 - - Change in fair value of available for sale equity financial assets recorded in capital surplus 1,142,500 4,570,000 1,324,800 5,520,000 2,255,707 9,022,828 1,324,800 5,520,000

(c) Deferred tax assets and deferred tax liabilities after offsetting

31 December 2011 31 December 2010 Deductible Deductible Deferred tax temporary difference Deferred tax temporary difference assets and losses assets and losses

Provision for impairmen 15,130,592 61,677,792 15,485,248 65,587,348 Depreciation of property plant and equipment and amortization of intangible assets 10,723,333 42,972,006 12,495,066 50,145,172 Deductible loss 19,205,338 82,041,588 14,580,112 67,326,990 Accrual Expense 10,686,955 45,492,841 6,162,977 28,134,252 Preliminary organization costs 1,390,282 8,088,918 1,390,282 9,100,033 Others 2,114,419 9,444,637 1,969,977 8,757,878 59,250,919 249,717,782 52,083,662 229,051,673

31 December 2011 2010 年 12 月 31 日 Deductible Deductible Deferred tax temporary difference Deferred tax temporary difference liabilities and losses liabilities and losses

Change in fair value of available for sale financial asset credited in capital surplus 1,142,500 4,570,000 1,324,800 5,520,000

- 65 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(18) Deferred tax assets and deferred tax liabilities(Con’d)

(d) Analysis about deductible temporary differences and losses that the Group did not recognise deferred tax assets for is as follows:

31 December 2011 31 December 2010

Deductible losses 8,573,918 5,170,629 Deductible temporary differences - - 8,573,918 5,170,629

(e) The above deductible losses that no deferred tax assets have been provided for will expire in the following years:

31 December 2011 31 December 2010

2013 83,654 83,654 2014 379,817 379,817 2015 4,707,158 4,707,158 2016 3,403,289 - 8,573,918 5,170,629

(19) Provision for impairment of assets

31 December Current year 31 December 2010 addition Current year reduction 2011 Reverse Utilized Foreign exchange translation differences

Bad debt provisions 1,260,639 43,949 (481,481) (520,000) (3,363) 299,744 Bad debt provision for accounts receivable 49,994 1,794 - - (2,397) 49,391 Bad debt provision for other receivable 1,210,645 42,155 (481,481) (520,000) (966) 250,353 Provision for declines in the value of inventories(Note 5(7)) 3,396,128 792,118 (103,512) (3,292,616) - 792,118 Include: Spare parts 3,396,128 792,118 (103,512) (3,292,616) - 792,118 Provision for impairment of long-term equity investments (Note 5(9)) 3,128,300 - - - - 3,128,300 Provision for impairment of fixed assets (Note 5(12)) 60,720,001 - - (24,620) - 60,695,381 Include: Harbor facilities ------Warehouses, container yards and buildings 60,695,381 - - - - 60,695,381 Machinery and equipments ------Motor vehicles, cargo ships and tugboats 24,620 - - (24,620) - - Other equipments ------68,505,068 836,067 (584,993) (3,837,236) (3,363) 64,915,543

- 66 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(20) Short-term borrowings

31 December 2011 31 December 2010

Bank loans - unsecured 1,418,830,000 1,225,550,000

The above bank loans consisted of 250,000,000 denominated in RMB (31 December 2010: 390,000,000) and1,443,000,000 denominated in HKD (31 December 2010: 983,000,000), the latter is equivalent to RMB1,168,830,000 (31 December 2010: 835,550,000).

Included in short-term borrowings was loan of HKD160,000,000(RMB:129,000,000), which should be due over one year according to the loan contract, however it is reclassified as short-term borrowings on the grounds that the loan contracts contain the clause that the bank can recall the loan before the maturity at the bank’s sole discretion.

As at 31 December 2011, the weighted average interest rate of the short-term borrowings was 4.62% per annum (2010: 3.68%).

Outstanding borrowings in maturity: Nil

(21) Notes payable

31 December 2011 31 December 2010

Bank acceptance notes 8,704,900 1,895,750

As at 31 December 2011, RMB8,704,900 had an expected maturity within 1 year (31 December 2010: RMB1,895,750).

(22) Accounts payable

31 December 2011 31 December 2010

Construction amounts payable 117,153,230 160,673,611 Service amounts payable 21,681,108 20,810,343 Material purchase amounts payable 17,550,367 23,131,022 Rental payables 1,632,036 5,238,273 Machinery procurement amounts payable 2,096,213 4,870,002 160,112,954 214,723,251

(a) As at 31 December 2011, the Group did not have any accounts payable balances which were due to parties having 5% or above voting rights in the Company except for the amount due to Nanshan Group below. (31 December 2010: nil).

- 67 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(22) Accounts payable (Con’d)

(b) Accounts payable due to related parties:

31 December 2011 31 December 2010

Shenzhen Haiqin Engineering Supervision Co. Ltd. (“Haiqin Engineering”) 5,062,227 9,972,227 Nanshan Group 5,002,068 8,583,552 China Merchant Information Technology 1,302,441 - Xuqin 319,058 1,760,479 Nantian Youpo 163,201 202,361 11,848,995 20,518,619

(c) As at 31 December 2011, accounts payable with aging over 1 year amounting to RMB 32,535,258 (31 December 2010: RMB148,390,794) were mainly payable for construction and project management services. As the related construction projects have not been completed yet, the accounts have not been settled. Up to the approval date of these financial statements, RMB18,713,587 was paid.

(d) The following accounts payable balances are denominated in foreign currency:

31 December 2011 31 December 2010 Original Exchange RMB Original Exchange RMB currency rate equivalent currency rate equivalent

USD 8,072 6.30 50,8547,433 6.62 49,208 HKD 1,536,872 0.81 1,244,8661,359,449 0.85 1,155,532 1,295,720 1,204,740

- 68 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(23) Advances from customers

31 December 2011 31 December 2010

Service fee receipt in advance 5,045,311 4,769,320

(a) The ageing of accounts payable based on their recording dates is analysed as follows:

31 December 2011 31 December 2010 Amount Ratio Amount Ratio

Within 1 year 5,029,561 100% 3,668,636 77% 1-2 year - 0% 1,068,996 22% 2-3 year - 0% - 0% Over 3 years 15,750 0% 31,688 1% 5,045,311 100% 4,769,320 100%

(b) As at 31 December 2011, the Group did not have any advance from customers balances which were due to parties having 5% or above shareholdings in the Company (31 December 2010: Nil).

(c) As at 31 December 2011, no balances of advance from customers were from related parties (31 December 2010: Nil).

(d) As at 31 December 2011, advance from customers with ageing over 1 year amounting to RMB 15,750 is advances for sale of cars (31 December 2010:Service fee 1,100,684).

- 69 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(24) Employee benefits payable

31 December Current year Current year 31 December

2010 additions reductions 2011

Wages and salaries, bonuses, allowances and subsidies 27,253,030 184,667,138 (165,987,517) 45,932,651 Staff welfare - 13,177,167 (13,177,167) Social security contributions 10,256 17,209,398 (17,209,802) 9,852 Including: Medical insurance - 4,291,869 (4,291,869) - Basic pension - 11,816,176 (11,816,176) - Unemployment insurance - 275,826 (275,826) - Employment injury insurance 10,256 421,126 (421,530) 9,852 Generational insurance - 404,401 (404,401) - Defined contribution plan * 125,952 6,633,738 (6,759,690) - Housing funds 11,810 12,292,617 (12,304,427) - Labor union and employee education funds 9,528,864 7,033,389 (6,558,889) 10,003,364 Others - 174,065 (174,065) - 36,929,912 241,187,512 (222,171,557) 55,945,867

* On 3 June 2008, the Group participated in a group defined contribution plan of Nanshan Group approved by Shenzhen government. The above pension contributions were paid into the plan through Nanshan Group.

As at 31 December 2011, employee benefits payable balance did not include default items (31 December 2010: Nil).

Pursuant to the resolution of 2010 general meeting of shareholders on 27 May 2011, the management team will be granted a performance reward scheme based on the current year net profit and yearly net asset return ratio. The Company has provided RMB14,917,004 of management reward in 2011 (2010: RMB4,674,654), which was debited to general and administrative expenses.

- 70 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(25) Taxes payable

Item 31 December 2010 Provided in current year Paid in current year 31 December 2011

Enterprise income tax payable 69,788,458 147,855,729 (125,163,204) 92,480,983 Withholding tax payable 23,736,008 15,489,047 (18,652,247) 20,572,808 Business tax payable 4,834,815 62,892,685 (62,461,075) 5,266,425 Value-added-tax payable 95,738 3,579,446 (3,533,266) 141,918 Others 2,128,501 34,792,349 (33,601,934) 3,318,916 100,583,520 264,609,256 (243,411,726) 121,781,050

(26) Interest payable

31 December 2011 31 December 2010

Interest payable for long-term borrowings that interests are payable by installment and principal at maturity 1,088,956 769,567 Interest payable for short-term borrowings 548,834 2,188,839 1,637,790 2,958,406

(27) Dividends payable

31 December 2011 31 December 2010

Payable to International Enterprise Co., Ltd. 207,726,574 121,367,360 Payable to Hidoney Developments Co., Ltd. 157,434,877 91,983,683 365,161,451 213,351,043

As at 31 December 2011, the balances were payable to the minority shareholders of CCT, one of the subsidiaries of the Company, being dividends declared for 2011.

- 71 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(28) Other payables

31 December 2011 31 December 2010

Temporary receipts 19,065,981 14,143,124 Security expense payable 17,101,361 16,713,645 Audit fee payable 2,610,000 1,680,000 Deposits received 1,720,908 1,944,902 Service fees 1,407,531 951,137 Due to employees 1,225,285 819,218 Insurance indemnity 955,433 1,386,919 Due to Nanshan Group - 28,278 Others 6,722,794 7,360,583 50,809,293 45,027,806

(a) The ageing of accounts payable based on their recording dates is analysed as follows:

31 December 2011 31 December 2010 Amout Ratio Amout Ratio

Within 1 year 44,356,691 87.30% 36,592,085 81.27% 1-2 year 2,583,466 5.08% 4,959,509 11.01% 2-3 year 3,067,152 6.04% 653,201 1.45% Over 3 years 801,984 1.58% 2,823,011 6.27% 50,809,293 100% 45,027,806 100%

(b) The largest balance in other payables aging over 3 years:

Creditor Amout Reason for non-settle

China National Agricultural means of Production Co., (Shenzhen) Ltd 62,334 Business deposit Shenzhen West Lake Huayu transportation Ltd. 40,482 Business deposit Rongtai (Hongkong) Ltd 36,825 Business deposit 139,641

- 72 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(28) Other payables(Con’d)

(c) The large amount of balance in other payables:

Creditor Amount Reason for non-settle

Yaran Business Trade Co.,Ltd 3,047,323 Deposit CMBL 2,001,792 Receipts under custody SMW 945,521 Receipts under custody Beijing Yongshengfeng AMP Co.,Ltd 782,645 Receipts under custody PICC Property and Casualty Co.,Ltd 675,075 Temporary receipts 7,452,356

(d) As at 31 December 2011, the Group did not have any other payables which were due to parties having 5% or above shareholdings in the Company.

(e) Other payables due to related parties:

31 December 2011 31 December 2010

CMBL 2,001,792 49,540 SMW 945,521 2,961,451 China Merchants International Cold Chain (Shenzhen)Co.,Ltd(“CMICCL”) 64,200 253,800 SMP 31,963 20,894 COCL - 110,881 Nanshan Group - 48,304 3,043,476 3,444,870

- 73 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(28) Other payables (Con’d)

(f) As at 31 December 2011, other payables with aging over 1 year amounting to RMB6,452,602 (31 December 2010: RMB8,435,721) are mainly deposits. As the relevant business keeps running, the amounts have not been settled. Up to the approval date of these financial statements, RMB 147,075 was paid.

(g) The following other payable balances are dominated in foreign currency:

31 December 2011 31 December 2010 Original Exchange RMB Original Exchange RMB currency rate equivalent currency rate equivalent

USD 210,606 6.301,326,818 533,500 6.62 3,531,770 HKD 720,320 0.81583,459 327,518 0.85 278,390 1,910,277 3,810,160

(29) Current portion of non-current liabilities

31 December 2011 31 December 2010

Current portion of long-term borrowings (a) 10,000,000 408,000,000 Current portion of deferred revenue(Note 5(32)) 4,951,750 4,951,750 14,951,750 412,951,750

(a) Current portion of long-term borrowings

31 December 2011 31 December 2010

Bank borrowings - unsecured 10,000,000 408,000,000

As at 31 December 2011, the balance of current portion of long- term borrowings represented the borrowing of 100,000,000 by the DGW.

- 74 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(29) Current portion of non-current liabilities(Con’d)

Top five current portion of long-term borrowings:

Borrowing

beginning Borrowing ending Currency Interest rate (%) 31 December 2011 31 December 2010

Original RMB Original RMB

currency equivalent currency equivalent

Nanyang Commercial Bank 21 October 2011 21 April 2012 RMB 7.2450% - 5,000,000 - -

Nanyang Commercial Bank 21 October 2011 21 October 2012 RMB 7.2450% - 5,000,000 - -

10,000,000 -

(30) Long-term borrowings

31 December 2011 31 December 2010

Bank borrowings - unsecured(a) 90,000,000 -

(a) Top five long-term borrowing

Borrowing beginning Borrowing ending Currency Annual interest rate 31 December 2011 Original currency RMB equivalent

Nanyang

Commercial Bank 21 October 2011 21 October 2016 RMB 7.2450% - 90,000,000

(b) Long-term borrowings are repayable as follows:

31 December 2011 31 December 2010

1 to 2 years 20,000,000 - 2 to 3 years 20,000,000 - 3 to 4 years 25,000,000 - Over 4 years 25,000,000 - 90,000,000 -

The weighted average interest rate of the long-term borrowings in 2011 was 7.2450% per annum.

- 75 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(30) Long-term borrowings(Con’d)

(c) Undrawn committed borrowing facilities

The Group has the following undrawn committed borrowing facilities as at 31 December 2011:

Expiring within 1 year 2,777,520,100 Expiring in 1 to 2 years 413,700,000 Expiring in 2 to 3 years 100,000,000 Over 3 years 100,000,000 3,391,220,100

The undrawn committed borrowing facilities mentioned above would be used for the commitment capital expenditure (Note 9).

(31) Special Payables

31 December 2011 31 December 2010

Refunds of Harbor Construction Fee 81,790,541 69,119,645

The item is refunds of harbor construction fee to the company and its subsidiary CCT from Shenzhen traffic bureau. According to released by Ministry of Finance, the fund should be managed in separate account and can be only used on fundamental facilities’ construction of marine transportation.

(32) Other non-current liabilities

31 December 2011 31 December 2010 Deferred revenue - Business Contract (a) 50,250,957 57,841,707 - Government grant related to asset (b) 8,000,000 8,000,000 58,250,957 65,841,707

- 76 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(32) Other non-current liabilities(Con’d)

(a) Business Contract

31 December 2010 - the portion of current liabilities 4,951,750 - the portion of non-current liabilities 57,841,707 62,793,457

Current year reduction (7,590,750)

Less: the portion of current liabilities (4,951,750) 31 December 2011 50,250,957

Residual useful years 12-13 years

Deferred revenue is amortised on a straight-line basis over the expected beneficial period of 20 years and is presented at cost net of accumulated amortisation.

(b) Government grant related to asset

The item is government subsidies received which based on (NDRC[2010] No.1263). The total received amount is 8 million yuan. As at 31 December 2011, the assets under government grant have not reached its intended condition for use, therefore the grant has not been credit to income statement.

- 77 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(33) Share capital

31 December 2010 Current year additions / decreases 31 December 2011 Shares converted Issuance of Presented from accumulation new shares shares fund Others Sub-total

Shares with restriction on disposal - State shares - PRC legal person shares - Other domestic shares 673,252 - - - 117,677 117,677 790,929 Including: Domestic shares of legal person other than the State - Natural person shares 673,252 - - - 117,677 117,677 790,929 Foreign shares - Including: Foreign legal person shares - Natural person shares - 673,252 - - - 117,677 117,677 790,929

Shares without restriction on disposal - Common shares in RMB 464,789,805 - - - - - 464,789,805 Domestically listed foreign shares 179,300,673 - - - (117,677) (117,677) 179,182,996 644,090,478 - - -(117,677) (117,677) 643,972,801 644,763,730 - - -- - 644,763,730

Up to 31 December 2011, all the shares held by Nanshan Group have become tradable.

- 78 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(33) Share capital (Con’d)

31 December 2009 Current year additions / decreases 31 December 2010 Shares converted Issuance of Presented from accumulation new shares shares fund Others Sub-total

Shares with restriction on disposal - State shares ------PRC legal person shares ------Other domestic shares 361,942 - - - 311,310 311,310 673,252 Including: Domestic shares of legal person other than the State ------Natural person shares 361,942 - - - 311,310 311,310 673,252 Foreign shares ------Including: Foreign legal person shares ------Natural person shares ------361,942 - - - 311,310 311,310 673,252

Shares without restriction on disposal - Common shares in RMB 464,789,805 - - - - - 464,789,805 Domestically listed foreign shares 179,611,983 - - - (311,310) (311,310) 179,300,673 644,401,788 - - -(311,310) (311,310) 644,090,478 644,763,730 - - -- - 644,763,730

- 79 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(34) Capital surplus

31 December Current year Current year 31 December 2010 additions reductions 2011

Share premium 142,786,083 20,774,000 - 163,560,083 Other capital surplus— Change in fair value of available-for-sale financial assets - Total (Note 5(8)) 5,520,000 (950,000) - 4,570,000 - Deferred tax liabilities (Note 5(18)) (1,324,800) 182,300 - (1,142,500) Transfer from the balance of capital surplus - recognised under previous accounting system (a) (2,781,133) (2,781,133) Others 709,605 1,310,000 - 2,019,605 144,909,755 21,316,300 - 166,226,055

31 December Current year Current year 31 December 2009 additions reductions 2010

Share premium 142,786,083 - - 142,786,083 Other capital surplus— Change in fair value of available-for-sale financial assets - Total 6,020,000 (500,000) - 5,520,000 - Deferred tax liabilities (1,324,400) (400) - (1,324,800) Transfer from the balance of capital surplus - recognised under previous accounting system (a) (2,781,133) - (2,781,133) Others 709,605 - - 709,605 145,410,155 (500,400) - 144,909,755

(a) Balances of capital surplus recognized under previous accounting system mainly include:

- During 2003 to 2005, the Group provided shareholder’s loan of RMB 100,000,000 to Mawan companies. According to related circular CK(2001)64 regarding accounting treatment of sales of assets between related parties issued by the Ministry of Finance, that part of interest received that exceeded the market interest rate of RMB 7,124,745 was recorded in capital surplus.

- On 1 January 2006, CCT changed its recording currency from Hong Kong dollar to Renminbi yuan. According to the relevant PRC regulations, the exchange differences arising from translation of foreign capital and other equity accounts are recorded in capital surplus. The Group debited the portion of CCT’s capital and other equity accounts of RMB 10,086,842, calculated based on the proportion of equity interest the Group held in CCT, to capital surplus.

- 80 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(35) Surplus reserve

31 December Current year Current year 31 December 2010 additions reductions 2011

Statutory surplus reserve 383,570,404 38,122,001 - 421,692,405

31 December Current year Current year 31 December 2009 additions reductions 2010

Statutory surplus reserve 355,134,736 28,435,668 - 383,570,404

In accordance with the Company Law and the Company’s Articles of Association, the Company should appropriate 10% of net profit for the year to the statutory surplus reserve, the Company can cease appropriation when the statutory surplus reserve accumulated to more than 50% of the paid in capital. The statutory surplus reserve can be used to make up for the loss or increase the paid in capital after approval.

The Company appropriates discretionary surplus reserve after shareholders’ meeting approves the Board of Director’s proposal. The discretionary surplus reserve can be used to make up for the loss or increase the paid in capital after approval.

Pursuant to the board resolution, the Company appropriates 10% of net profit to statutory surplus reserve, namely RMB38,122,001 (2010: RMB28,435,668), no appropriation to discretionary reserve is provided.

(36) Retained earnings

2011 2010 Amount Appropriate or Amount Appropriate or distribution % distribution %

Opening retained earnings 2,079,724,472 1,721,028,196 - Add: Current year net profit attributable to the equity owners of the parent company 505,645,137 596,680,156 - Less: Appropriation of statutory reserves (38,122,001) 10% (28,435,668) 10% Common share dividends payable (298,525,607) 50% (209,548,212) 52% Closing retained earnings 2,248,722,001 2,079,724,472

As at 31 December 2011, included in the undistributed profits, the amount of RMB480,610,213 is subsidiaries’ surplus reserve attributable to the Company (31 December 2010: RMB466,088,790), among which RMB14,521,423 is appropriated for the current year (2010: RMB3,770,941).

- 81 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(36) Retained earnings (Con’d)

In accordance with a resolution at the Board of Directors meeting dated 27 May 2011, the Board of Directors proposed dividend of RMB 4.63 for each 10 shares of the issued shares of 644,763,730 in total, with an aggregated amount of RMB 298,525,607 (2010 proposed: RMB209,548,212).

In accordance with a resolution at the Board of Directors meeting dated 27 March 2012, the Board of Directors proposed dividend of RMB 4.00 for each 10 shares of the issued shares of 644,763,730 in total, with an aggregated amount of RMB257,905,492 (Notes10 (2)).

(37) Minority interests

31 December 2011 31 December 2010 DGW (a) 69,668,546 - CCT 568,598,774 567,608,774 638,267,320 567,608,774 (a) Disposal of minority interests in subsidiary：

The group previously owed 100% share holding of Dongguan Chiwan Wharf Company Limited (hereinafter”DGW”). On 16 August 2011, the group signed an agreement with Yihai Kerry investment Ltd on injecting RMB121,200,000 and RMB 91,940,000 respectively to Dongguan Wharf Ltd , after the capital increment ,the two companies hold 85% and 15% shares of respectively.

The adjustment of minority interest caused by the transaction:

Amount

Sale Price for disposal 91,940,000 minus：Definable Net Assets of subsidiary at date of sale in disposed shareholding portion 71,166,000 (20,774,000)

- 82 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(38) Revenue and cost of sales

2011 2010

Revenue from main operations 1,643,676,918 1,689,239,347 Revenue from other operations 64,459,981 51,178,321 1,708,136,899 1,740,417,668

2011 2010

Cost of main operations 755,262,540 733,036,517 Cost of other operations 12,777,703 9,275,767 768,040,243 742,312,284

(a) Revenue and cost from main operations

Analysis by business is as follows:

2011 2010 Revenue from Cost from main Revenue from Cost from main main operations main operations operations operations

Loading and unloading services 1,533,687,860 711,255,321 1,575,316,865 693,184,030 Transportation service 142,968,604 87,821,197 149,785,299 84,433,056 Agency and others services 10,834,432 - 8,717,752 - Elimination (43,813,978) (43,813,978) (44,580,569) (44,580,569) 1,643,676,918 755,262,540 1,689,239,347 733,036,517

Analysis by geographic area is as follows:

2011 2010 Revenue from Revenue from main Cost from main main Cost from main operations operations operations operations

Mainland China 1,638,111,180 755,262,540 1,685,000,221 733,036,517 Hong Kong 5,565,738 - 4,239,126 - 1,643,676,918 755,262,540 1,689,239,347 733,036,517

- 83 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(38) Revenue and cost of sales (Con’d)

(b) Other revenue and cost

2011 2010 Revenue from Cost from other Revenue from Cost from other other operations other operations operations operations

Lease income 26,452,734 3,654,601 15,654,965 2,673,804 Security fee 10,611,941 - 11,856,003 - Other logistic services in port 13,921,382 5,801,214 10,140,896 3,555,939 Agency fee 5,180,097 3,177,303 4,960,494 3,046,024 Sales of material 2,683,075 144,585 2,730,088 - Documentation fee 824,376 - 842,875 - Others 4,786,376 - 4,993,000 - 64,459,981 12,777,703 51,178,321 9,275,767

(c) Particulars of revenue from the top five customers of the Group

Revenue from the top 5 customers with aggregate amount of RMB913,272,542 (2010: RMB1,090,436,082) accounted for 53% (2010: 63%) of the Group’s total revenue in 2011. Details are as follows:

% of total revenue Revenue of the Group

Customer A 446,537,825 26% Customer B 285,008,042 17% Customer E 73,176,762 4% Customer D 62,447,925 4% Customer C 46,101,988 2% 913,272,542 53%

- 84 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(39) Tax and surcharges

2011 2010 Accrual basis

Business tax 62,892,685 62,374,157 See Note 3 City maintenance and construction tax 4,436,377 731,586 See Note 3 Educational surcharge 3,161,517 149,706 See Note 3 Others 531,347 560,478 71,021,926 63,815,927

(40) General and administration expenses

2011 2010

Staff cost 91,079,683 66,594,327 Utilities and property management 9,417,395 8,599,865 Depreciation and amortisation 9,643,838 8,521,716 Transportation 7,508,789 7,598,288 Rental 7,193,101 7,555,060 Entertainment 7,186,572 6,091,931 Professional service 5,702,284 4,737,435 Communication 3,527,336 3,313,128 Insurance 3,496,523 3,213,913 Decoration and maintenance 4,348,328 3,119,985 Others 9,082,383 11,435,400 158,186,232 130,781,048

(41) Financial (income)/expenses - net

2011 2010

Interest expenses - Interests on borrowings 64,084,834 30,028,539 Less:borrowing costs capitalised (1,434,870) (630,105) Less: interest income (7,893,831) (6,185,020) Exchange gains or losses (47,009,755) (36,000,167) Others 4,624,603 2,251,248 12,370,981 (10,535,505)

Exchange gains are mainly caused by borrowings in HKD.

- 85 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(42) Investment income

2011 2010

Investment income from investments under cost method accounting 3,900,000 - Investment income from investments under equity method accounting (Note 5 (9)) 113,968,183 118,437,391 Loss from disposal of long-term investment (Note 5 (10)) - 29,767,257 Income from available-for-sale financial assets 360,000 310,000 118,228,183 148,514,648

There is no significant restriction in receipt in remittance for investment income.

(a) Investment income from long-term equity investments under cost method accounting

Investment income from top five investees or individually accounted to over 5% of total profit are analysed as below:

2011 2010 Reason of fluctuation

China Ocean Shipping Agency The investee did not distribute profit to (Shenzhen) Company Limited 3,900,000 - shareholders in last year

(b) Investment income from long-term equity investments under equity method of accounting

Investment income from top five investees or individually accounted to over 5% of total profit are analysed as below:

2011 2010 Reason of fluctuation

Investee affected by economic crisis and MPIL 77,299,676 105,275,424 shrunk in performance Newly joint venture last year and investment COHA(Laizhou) 32,665,056 13,355,859 income is the portion of net profit Investee decline in performance and the Cyber Network 19,885 379,477 Group decreased the interest Investee run into operation and its CMBL 3,983,566 (573,369) circumstance turns better 113,968,183 118,437,391

- 86 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(43) Impairment (reversals) / losses

2011 2010

Impairment losses for bad debts (437,532) 119,061 Impairment losses on inventories 688,606 - 251,074 119,061

(44) Non-operating income

2011 2010

Gain on disposal of non-current assets 70,951 2,161,989 Including: disposal of intangible assets - - disposal of fixed assets 70,951 2,161,989 Government grant (a) - 1,200,000 Others 1,807,586 1,650,981 1,878,537 5,012,970

(a) Details of government grants

2011 2010

Subsidy in environmental conservancy project - 1,200,000

(45) Non-operating expenses

2011 2010

Losses on disposal of non-current assets 1,960,173 2,834,944 Including: disposal of fixed assets 1,960,173 2,834,944 Donation 52,603 41,025 Penalty 6,311 50,239 Others 16,775 111,282 2,035,862 3,037,490

- 87 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(46) Income tax expenses

2011 2010

Current income tax 155,728,890 145,570,999 Deferred income tax (7,167,257) (7,795,382) 148,561,633 137,775,617

The reconciliation from income tax calculated based on applicable tax rate and total profit presented in the consolidated financial statements to the income tax expenses is as follows:

2011 2010

Profit before income tax 816,337,301 964,414,981

Income tax calculated at the applicable tax rate of 24% (2010: 22%) 195,920,952 212,171,296 Effect of tax holidays (27,965,504) (54,492,896) Income not subject to tax (28,374,764) (26,124,426) Effect of different tax rate in other tax jurisdictions (244,303) (98,472) Tax losses for which no deferred income tax asset was recognised 1,003,459 1,021,650 Withholding tax (a) 5,475,267 3,186,747 Costs and expenses not deductible for tax purposes 2,746,526 2,111,718 Income tax expenses 148,561,633 137,775,617

(a) Withholding income tax was accrued at the rate of 5% or 10% for dividend payable to WHK for the year ended 31 December 2011, declared by those Group’s PRC subsidiaries of which WHK is a shareholder (2010: 5% or 10%).

- 88 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(47) Government grants

Year 2011 Year 2010 Government grants related to assets Grants subject to projects - 8,000,000

Government grants related to income - - others - 1,200,000

Total - 9,200,000 Less：government grants credited in deferred income - (8,000,000) Government grants credited in current year profit - 1,200,000

(48) Borrowing cost

Name of Project Capitalisation rate Capitalisation amount Berth 2#-3#, Machong Port 5.90% 432,996 Tug Construction 5.90% 1,001,874

(49) Earning per share

(a) Earnings per share - basic

Basic earning’s per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year.

2011 2010

Consolidated profit attributable to shareholders of the Company 505,645,137 596,680,156 Weighted average number of ordinary shares in issue 644,763,730 644,763,730 Basic earnings per share 0.784 0.925 Includes: - Basic earnings per share from continuing 0.784 0.925 operations:

(b) Earnings per share - diluted

The Company had not potential dilutive outstanding equity instruments issued as at 31 December 2011 and 2010, accordingly the diluted earnings per share are the same as the basic ones.

- 89 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(50) Other comprehensive income

2011 2010

Gain/(loss) arising from available-for-sale financial assets (950,000) (500,000) Less: Income tax relating to available-for-sale financial assets 182,300 (400) Subtotal (767,700) (500,400)

Other movement of investee ‘s equity 100,000 -

Exchange differences arising from translating foreign operations (188,137) (65,242) (855,837) (565,642)

(51) Notes to consolidated cash flow statements

(a) Cash received relating to other operating activities

2011 2010

Refunds of Harbour Construction Fee received 16,945,741 14,118,115 Intrest income 10,471,718 7,980,981 Government grant - 9,200,000 Others 4,306,623 - 31,724,082 31,299,096

(b) Cash paid relating to other operating activities

2011 2010

Port expenses 8,502,729 7,677,052 Asset insurance fee 4,930,868 4,069,361 Car expenses 7,186,027 4,357,001 Office expenses & utilities 5,929,709 4,291,630 Entertainment expenses 7,133,610 3,210,974 Consulting & auditing fee 5,916,908 2,111,299 Travel & accommodation 2,606,213 1,978,316 Advertisements & exhibition expense 199,798 1,073,401 Others 35,445,572 45,266,431 77,851,434 74,035,465

- 90 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

5 Notes to the consolidated financial statements (Con’d)

(52) Notes to consolidated cash flow statements

(c) Reconciliation from the net profit to the cash flows from operating activities

2011 2010

Net profit 667,775,668 826,639,364 Add: (Provisions for)/reversal of assets impairment 251,074 119,061 Depreciation of fixed assets 159,529,959 176,972,348 Depreciation/amortisation of investment property 1,333,629 907,104 Amortisation of intangible assets 38,525,927 37,797,684 Amortisation of long-term prepaid expenses 3,389,657 5,670,179 Gains on disposal of fixed assets and intangible assets 1,889,222 672,955 Finance expenses 24,358,158 35,455,170 Investment income (118,228,183) (148,514,648) Increase in deferred tax assets (7,167,257) (7,795,382) Decrease in inventories 388,168 1,727,780 Increase in operating receivables (44,983,485) (44,539,627) Increase in operating payables 19,128,059 41,733,581 Net cash flows from operating activities 746,190,596 926,845,569

Net increase/(decrease) in cash and cash equivalents

2011 2010

Cash at end of year 478,788,943 781,720,083 Less: cash at beginning of year (781,720,083) (741,096,267) Net increase/(decrease) in cash (302,931,140) 40,623,816

(d) Cash and cash equivalents

31 December 2011 31 December 2010

Cash Including: Cash on hand 14,035 11,473 Cash at bank without restriction 477,302,272 780,540,849 Other cash balance without restriction 1,472,636 1,167,761 Cash and cash equivalents at end of year 478,788,943 781,720,083

- 91 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

6 Segment information

The reportable segments of the Group are the business units that provide different products or service, or operate in the different areas. Different businesses or areas require different technologies and marketing strategies, the Group, therefore, separately manages the production and operation of each reportable segment and evaluates their operating results respectively, in order to make decisions about resources to be allocated to these segments and to assess their performance.

The Group identified 3 reportable segments namely loaded and unloaded operation, transportation and agency service and other services respectively.

The management of the Company identifies reviews the group internal reports regularly in order to assess their performance and make decisions of resources being allocated to the segment, which is the foundation of the Group identifying operation segments.

Inter-segment transfers are measured by reference to sales to third parties.

The assets are allocated based on the operations of the segment and the physical location of the asset. The liabilities are allocated based on the operations of the segment. Expenses indirectly attributable to each segment are allocated to the segments based on the proportion of each segment’s revenue.

- 92 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

6 Segment information (Con’d)

(a) Segment information as at and for the year ended 31 December 2011 is as follows:

Load and unload Agency service operation Transportation and others Unallocated Elimination Total

Revenue from external customers 1,593,390,668 98,569,821 16,176,410 - - 1,708,136,899 Inter-segment revenue 43,813,978 (43,813,978) - Interest income 2,022,624 9,659 8,483 5,853,065 7,893,831 Interest expenses (27,647,058) - - (35,002,906) (62,649,964) Share of profit of associates and joint venture 109,964,732 - 4,003,451 - - 113,968,183 Asset impairment loss (311,118) 103,511 (4,866) (38,601) (251,074) Depreciation and amortisation (190,060,623) (10,786,817) (1,931,732) - - (202,779,172) Total profit 809,488,083 42,059,094 14,305,472 (49,515,348) - 816,337,301 Income tax expenses (141,911,349) (10,234,500) (1,042,067) 4,626,283 - (148,561,633) Net profit 667,576,734 31,824,594 13,263,405 (44,889,065) - 667,775,668

Total assets 5,914,266,259 169,470,410 318,072,314 159,002,508 (20,583,056) 6,540,228,435

Total liabilities 810,813,884 141,682,106 20,103,242 1,482,148,188 (20,583,056) 2,434,164,364

Long-term equity investments in associates and joint ventures 1,118,483,513 - 304,463,707 - - 1,422,947,220

Additions to non-current assets other than long- term equity investments 527,608,220 30,148,735 125,170 736,600 - 558,618,725

- 93 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

6 Segment information (Con’d)

(b) Segment information as at and for the year ended 31 December 2010 is as follows:

Load and unload Agency service operation Transportation and others Unallocated Elimination Total

Revenue from external customers 1,622,708,221 105,204,730 12,504,717 - - 1,740,417,668 Inter-segment revenue - 44,580,569 - - (44,580,569) - Interest income 639,364 16,371 5,079 5,524,206 - 6,185,020 Interest expenses (16,294,750) - - (13,103,684) - (29,398,434) Share of profit of associates and joint venture 118,631,283 - 29,573,365 - - 148,204,648 Asset impairment loss (121,014) 26,074 357 (24,478) - (119,061) Depreciation and amortisation (205,179,714) (13,884,683) (2,282,918) - - (221,347,315) Total profit 887,726,998 54,012,318 36,876,265 (14,200,600) - 964,414,981 Income tax expenses (129,288,292) (11,670,014) 152,243 3,030,446 - (137,775,617) Net profit 758,438,706 42,342,304 37,028,508 (11,170,154) - 826,639,364

Total assets 5,910,654,715 209,352,779 100,523,714 16,112,144 (34,458,610) 6,202,184,742

Total liabilities 855,227,841 57,401,450 9,504,879 1,507,351,350 (34,458,610) 2,395,026,910

Non-cash expenses other than depreciation and amortisation ------

Long-term equity investments in associates and joint ventures 1,056,376,673 - 79,636,013 - - 1,136,012,686

Additions to non-current assets other than long-term equity investments 109,674,428 5,689,454 258,032 91,791 - 115,713,705

- 94 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

6 Segment information (Con’d)

The Group’s revenue from external customers of Mainland China and other countries or geographical areas for the year 2011, and the total non-current assets other than financial assets and deferred tax assets located in the Mainland China and other countries or geographical areas as at 31 December 2011 are as follows:

Revenue from external customers 2011 2010

Mainland PRC 1,702,381,921 1,735,981,253 Hong Kong 5,754,978 4,436,415 1,708,136,899 1,740,417,668

Total non-current assets other than financial assets and deferred tax assets 31 December 2011 31 December 2010

Mainland PRC 5,725,768,655 5,068,071,718 Hong Kong 45,432 28,263 5,725,814,087 5,068,099,981

The revenue from Load and unload operation segment of RMB 731,545,867 is derived from a single customer, accounting for 43% of the Group’s total revenue.

7 Related parties and related party transactions

(1) The parent company

(a) General information of the parent company

Entity type Place of Legal Nature of business Organisation registration representative code

Nanshan Group Sino-foreign Shenzhen Fu Yuning Land development, port service and 61883297-6 invested enterprise transportation, industry and commerce, tour, real estate and others

China Merchants (Nanshan) Holdings Ltd (an indirect subsidy of China Merchants Group Co., Ltd)，Shenzhen Investment Holdings Co.ltd and Guangdong Guangye Investment Holdings Ltd holds 36.52%，26.1% and 23.49% share of Nanshan Group respectively, there is no other shareholders’ share over 10%.

- 95 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

7 Related parties and related party transactions (Con’d)

(1) The parent company (Con’d)

(b) Registered capital and changes in registered capital of the parent company

31 December Current year Current year 31 December 2010 additions decreases 2011

Nanshan Group 500,000,000 400,000,000 - 900,000,000

(c) The proportion of interests and voting rights in the Company held by the parent company

31 December 2011 31 December 2010 % interest held % voting rights % interest held % voting rights

Nanshan Group 57.52% 57.52% 57.51% 57.51%

(2) Subsidiaries

The general background and other related information of the subsidiaries is set out in Note 4.

(3) Associates

Legal Voting Place of representat Nature of Registered Interest right Organisation Entity type incorporation ive business capital held held code

Joint venture – China Overseas Harbour Affairs Sino-foreign Shandong, Li Chuan Harbour USD176,407.7 40% 40% 61344937-X (Laizhou)Co.,Ltd invested China service thousand enterprise

Associates – China Merchants Holdings Sino-foreign Shenzhen, Luo Huilai Network 50 million 23.16% 23.16% 73207614-X (international ) Information invested China service Technology Co.,Ltd(Previous enterprise name：Shenzhen Cyber-Harbour Network Co Ltd) CMML Sino-foreign Shenzhen, Hu Jianhua Warehousi 700 million 40% 40% 75045115-0 invested China ng service enterprise MPIL Overseas British Not Investment USD10 50% 50% Not applicable enterprise Virgin Islands applicable

- 96 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

7 Related parties and related party transactions (Con’d)

(4) Other related parties

Relationship with the Group Organisation code

CPSB Controlled by the same parent company 61883389-9 Xuqin Controlled by the same parent company 70845749-5 COCL Controlled by the same parent company 72616516-2 Shenzhen Nanshan Real Estate development Controlled by the same parent company Ltd.(Nanshan Development) 75046859-3 Haiqin Engineering Common key connected person with the Company 61888000-1 Shenzhen Mawan Port Co., Ltd. (“SMP”) Indirect associates of the Company, and common 74322579-6 key management personnel with the Company Shenzhen Mawan Wharf Co, Ltd.(“SMW”) Indirect associates of the Company, and common 74322582-5 key management personnel with the Company Shenzhen Mawan Wharf Holdings Ltd Indirect associates of the Company, and common key management personnel with the Company 74322581-7 MPIL Indirect associate of the Company Not applicable Nantian Oilmills Common key connected person with the Company 61881614-0 CMML Associate of the Company 75045115-0 Shenzhen Southsea Grains Industries Limited Common key connected person with the Company (“Southsea Grains”) 61883769-7 China Merchants Port Services (Shenzhen) Co Ltd (“CMPS”) Note 19244179-0 Shekou Container Terminals Limited (“SCT”) Note 61883279X China Merchants International Cold Chain Note (Shenzhen) Company Limited (“CMCCL”) 61889222-3 Shenzhen Haixing Harbor Development Note Co.,Ltd(“Haixing”) China Merchant Bank Ltd(CMB) Note 10001686-X COHA(Laizhou) Joint venture of the company 61344937-X Excel Steps Limited Note Not applicable

Note: As at 30 June 2011, one of the Company’s parent company Nanshan Group’s indirect share holder China Merchants Group Co., Ltd(which belongs to State-owned Assets Supervision and Administration Commission of the State Council) via the arrangement of another share holder Guangdong Guangye Investment Holdings ltd, obtained 23.49% share of Nanshan Group it holds under trust, brought the Nanshan Group into the scope of the consolidation. These companies are all subsidiaries of China Merchants Group Co., Ltd except China Merchants Bank which is an associate of it.

- 97 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

7 Related parties and related party transactions (Con’d)

(5) Related party transactions

Saved for disclosed in above, other major related party transactions are as follows:

(a) Sale and purchase of goods, and rendering and receiving of services

Purchase of goods and receiving of services

Pricing Policies 2011 2010

and Amount % of same Amount % of same determination transaction transaction Related party Type of transaction Nature of transaction procedures

Haixing Service received Load and unload service Negotiation 2,609,695 0.27% - -

Haiqin Engineering Service received Project management Negotiation 1,701,180 13.31% - - SCT Service received Load and unload service Negotiation 1,647,178 0.29% 637,445 0.10% Nantian Oilmills Service received Load and unload service Negotiation 468,862 0.05% 2,883,502 0.33%

Xuqin Service received Construction Negotiation 457,830 0.05% 485,795 0.06%

Sale of goods and rendering of services Pricing Policies 2011 2010

and Amount % of same Amount % of same determination transaction transaction Related party Type of transaction Nature of transaction procedures

Nantian Oilmills Service provided Load and unload service Negotiation 14,116,894 0.77% 11,517,735 0.64%

SMP Service provided Land Transportation and Negotiation 12,477,379 21.12% 13,461,672 20.12% others SMW Service provided Land Transportation and Negotiation 4,391,167 7.43% 5,650,795 8.44% others CMML Service provided Land Transportation and Negotiation 3,280,154 5.55% 2,086,335 3.12% others CPSB Service provided Load and unload service Negotiation 1,310,041 0.07% 720,457 0.04% Southsea grains Service provided Load and unload service Negotiation 1,257,023 0.07% 1,965,821 0.11% SCT Service provided Land Transportation and Negotiation 858,000 1.45% 911,920 1.36% others

- 98 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

7 Related parties and related party transactions (Con’d)

(5) Related party transactions (Con’d)

(b) Lease

The Group as the leaser:

Lease income Lease Lessor Lessee Leased assets Start date Ending date recognition basis income

CCT Southsea Grains Office land January 2011 December 2011 Negotiation 4,265,380 CCT CMML Crane May 2006 Not applicable Negotiation 2,240,000 The Company CPSB Land and packing January 2011 December 2011 Negotiation 9,474,036 yards The Company Haiqin Engineering Building January 2011 December 2010 Negotiation 203,280 16,182,696

The Group as the lessee:

Leased assets Lease expenses Lease Lessor Lessee Start date Ending date recognition basis expenses

Nanshan Entities of the Land, Office and Various N Various Negotiation 36,631,359 Development Group others Nanshan Group Entities of the Land, buildings Various Respective Negotiation 5,284,157 Group and packing yards expiry of operation of the group companies Nantian Oilmills CGCL Packing yards January 2011 December 2011 Negotiation 2,155,137 CMPS CCT Packing yards January 2011 December 2011 Negotiation 2,400,000 CPSB The Company Land and buildings January 2011 December 2011 Negotiation 1,708,026 48,178,679

(c) Purchase of equity in an associate

As at 28 April 2011, Excel Steps Limited, WHK, a wholly owned subsidiary of the Company and the company signed an agreement of transfer in shareholding. WHK paid to Excel Steps Limited RMB 6,270,000 to obtain 100% shareholdings of Hiwin Development Co.,Ltd,and undertook advances from shareholder of Excel Steps Limited amounting RMB94,000,000.

- 99 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

7 Related parties and related party transactions (Con’d)

(5) Related party transactions (Con’d)

(d) Emoluments of key management

2011 2010

Emoluments of key management 9,389,000 5,338,436

(6) Receivables from and payables to related parties

Receivables from related parties：

31 December 2011 31 December 2010 Book amount Provision for Book amount Provision for bad debt bad debt

Cash and bank China Merchants Bank 58,812,732 - 123,853,303 -

Accounts receivable Southsea Grains 1,368,092 - 110,521 - SMP 682,266 - 998,942 - COHA(Laizhou) 539,724 - - - CMML 378,384 - 344,900 - SMW 335,669 - 397,090 - SCT 6,500 - 907,600 - Nantian Oilmill - - 562,957 - 3,310,635 - 3,322,010 - Other receivables CMML 2,622,178 - 57,821 - SMW 898,479 - 79,083 - Xuqin 320,000 (192,000) 320,000 (192,000) SMP 308,451 - 20,961 - SCT 187,102 - - CPSB 135,622 - 135,622 - COCL(a) 48,645 - - MPIL - - 44,879,120 - 4,520,477 (192,000) 45,492,607 (192,000)

- 100 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

7 Related parties and related party transactions (Con’d)

(6) Receivables from and payables to related parties (Con’d)

Payables to related parties：

31 December 2011 31 December 2010

Short tem borrowings China Merchants Bank 137,700,000 50,000,000

Accounts payable Haiqin Engineering 5,062,227 9,972,227 Nanshan Group (a) 5,002,068 8,583,552 Xuqin 319,058 1,760,479 Nantian Oilmill 163,201 202,361 CMIT 1,302,441 - 11,848,995 20,518,619

Other payables SMW(b) 945,521 2,961,451 CMCCCL 64,200 253,800 COCL(c) - 110,881 SMP(b) 31,963 20,894 Nanshan Group - 48,304 CMBL 2,001,792 49,540 3,043,476 3,444,870

(a) This item mainly includes the balance which Nanshan group collects electricity fees from the group and pays to power supply bureau at almost the same price. In 2010,Nanshan Group also paid the emolument of key management on behalf of the company, and charged the company for it.

(b) The Company cooperates with Mawan companies in marketing promotion activities. Some common expenses incurred in the cooperation are allocated to both parties based on certain reasonable criteria. For those payments and receipts made on behalf, the Company and Mawan companies recorded the amounts in other receivables or other payables.

(c) COCL was a subsidiary of the Company and sold to Nanshan Group in 2009, after which it became a related party of the Company. The current account balances represented those unsettled amount relating to relevant business at the disposal of COCL at 31 December 2010.

- 101 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

7 Related parties and related party transactions (Con’d)

(7) Commitments in relation to the related parties

31 December 2011 31 December 2010

Rental - Rental expense CPSB 1,812,018 1,713,566 CMPS 2,400,000 - Nanshan Group 2,765,466 3,083,751 6,977,484 4,797,317 - Rental income CPSB 11,740,000 10,819,640 Southsea Grains 4,265,380 4,265,856 Haiqin engineering - 348,480 16,005,380 15,433,976

8 Contingencies

As at 31 December 2011, the management of the group has assessed all pending lawsuits or claims and believes that none of them will cause significant outflow of economic benefits of the group.

9 Commitments

(1) Capital commitments

Capital expenditures contracted for by the Group at the balance sheet date but not yet necessary to be recognised on the balance sheet are as follows:

31 December 2011 31 December 2010

Land and coastal line use rights 109,874,895 168,291,373 Machinery and equipments 83,887,000 33,050,780 Harbour facilities 250,404,509 159,405,361 444,166,404 360,747,514

The Group’s share of the joint ventures’ own commitments for capital expenditure at the balance sheet date are RMB 176,966,411.

- 102 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

9 Commitments (Con’d)

(2) Operating lease commitments

The future aggregate minimum lease payments due under the signed irrevocable operating leases contracts are summarized as follows:

31 December 2011 31 December 2010

Within one year 7,966,481 5,614,470 Between 1 and 2 years 830,341 1,607,499 Between 2 and 3 years 830,341 830,341 More than 3 years 2,281,452 3,111,783 11,908,615 11,164,093

(3) Fulfillment of prior period commitments

The Group has fulfilled the capital and operating lease commitments as of 31 December 2010 according to the relevant contracts.

10 Events after the balance sheet date

(1) Significant events after balance sheet date

Impact to the financial position and the financial Reason of the impact Item Nature performance could not be estimated

Repayment of the accounts payable Repayment of the Decreased both asset and (Note5(23)(c)) significant accounts liabilities of payable with the RMB18,713,587 aging over 1 year -

(2) Dividend distribution after the balance sheet date

Amount Proposed dividends 257,905,492

Pursuant to the resolution of Board at the Board of Directors’ meeting on 27 March 2012, cash dividends in respect of 2011 of RMB 257,905,492. The proposed dividend is not recognised as liability in balance sheet.

- 103 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

10 Events after the balance sheet date (Con’d)

(3) Illustration on the issue of bonds after the balance date

As set out in the announcement of resolution in the seventh board of directors’ third special meeting in year 2011, the board of directors adopted Report about the proposal on the issue of corporate bond, the total amount of corporate bond will not exceed RMB 120millons (including 120 millions),with no more than 10 years(including 10 years) expiration period. At 28 November 2011,the company received the Rescriptum on the approval of public issue of corporate bond of Shenzhen Chiwan Wharf Limited Co.,Ltd, and is approved to issue corporate bond publicly with no more than 100 million in par value. The issue of the corporate bond will be issued in several times and the par value at the first issue should be no less than 50% of the total par value and it will be accomplished within 6 months after approval. The issues in other times should be completed within 24 months after approval. The rescriptum is effective in 24 months after the date of approval(24 November 2011).

11 Financial instrument and risk

The Group's activities expose it to a variety of financial risks: market risk (primarily currency risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

(1) Market risk

(a) Foreign exchange risk

The Group’s major operational activities are carried out in Mainland China and a majority of the transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising from the recognized assets and liabilities, and future transactions denominated in foreign currencies (recognized assets and liabilities are primarily with respect to Hong Kong dollars, foreign currency transaction is mainly with respect of HK and US dollars). The Group’s finance department at its headquarters is responsible for monitoring the amount of assets and liabilities, and transactions denominated in foreign currencies.

According to current risk exposure and the trend of exchange rate fluctuation, management believed that the risk caused by the fluctuation of foreign currency exchange rate is low in the coming year.

- 104 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

11 Financial instrument and risk (Con’d)

(1) Market risk (Con’d)

(a) Foreign exchange risk (Con’d)

As at 31 December 2011 and 2010, the carrying amounts in RMB equivalent of the Group’s assets and liabilities denominated in foreign currencies are summarized below:

31 December 2011 HKD USD Total Financial assets denominated in foreign currency - Cash at bank and on hand 160,166,594 25,153,257 185,319,851 Receivables 1,064,631 31,409,683 32,474,314 161,231,225 56,562,940 217,794,165

Financial liabilities denominated in foreign currency - Short-term borrowings 1,168,830,000 - 1,168,830,000 Payables 3,466,115 1,377,672 4,843,787 1,172,296,115 1,377,672 1,173,673,787

- 105 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

11 Financial instrument and risk (Con’d)

(1) Market risk (Con’d)

(a) Foreign exchange risk (Con’d)

31 December 2010 HKD USD Total Financial assets denominated in foreign currency - Cash at bank and on hand 166,707,323 8,850,378 175,557,701 Receivables 2,803,651 27,480,595 30,284,246 169,510,974 36,330,973 205,841,947

Financial liabilities denominated in foreign currency - Short-term borrowings 835,550,000 - 835,550,000 Payables 4,392,328 3,580,977 7,973,305 Long-term borrowings 408,000,000 - 408,000,000 1,247,942,328 3,580,977 1,251,523,305

As at 31 December 2011, if the currency had strengthened by 5 % against the HKD while all other variables had been held constant, the Group’s net profit for the year would have been approximately RMB37,914,933 (2010,10%: RMB87,034,038).

(b) Interest rate risk

The Group's interest rate risk arises from bank borrowings including long-term borrowings and debentures payable. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions. As at 31 December 2011, all the Group’s interest bearing borrowings were with floating rates.

Increases in interest rates will increase the cost of new borrowing and the interest expenses with respect to the Group’s outstanding floating rate borrowings, and therefore could have a material adverse effect on the Group’s financial position. The Group’s finance department at its headquarters continuously monitors the interest rate position of the Group and makes decisions with reference to the latest market conditions including turning to fixed interest financial liabilities or adjusting the ratio of financial leverage.

For the year ended 31 December 2011, if interest rates on the floating rate borrowings had been 5% higher/lower while all other variables had been held constant, the Group’s net profit would have decreased/increased by approximately RMB 288,609 (2010: approximately RMB2,683,386).

- 106 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

11 Financial instrument and risk (Con’d)

(4) Credit risk

Credit risk is managed on a Group basis. Credit risk mainly arises from cash at bank and on hand, accounts receivable, other receivables, notes receivable etc.

The Group expects that there is no significant credit risk associated with cash at bank since they are deposited at state-owned banks and other medium or large size listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties.

In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and notes receivable. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.

(5) Liquidity risk

Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group’s finance department in its headquarters. The Group’s finance department at its headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to cash to meet operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institution so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements.

The financial assets and liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual cash flows :

- 107 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

11 Financial instrument and risk (Con’d)

(3) Liquidity risk (Con’d)

31 December 2011 Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total Financial assets denominated in foreign currency - Cash at bank and on hand 478,788,943 - - - 478,788,943 Receivables 242,930,624 - - - 242,930,624 Available-for-sale financial assets 5,690,000 - - - 5,690,000 727,409,567 -- - 727,409,567

Financial liabilities denominated in foreign currency - Short-term borrowings 1,418,830,000 - - - 1,418,830,000 Payables 581,353,690 - - - 581,353,690 Long-term borrowings 90,000,000 4,084,989 4,376,774 - 98,461,763 2,090,183,690 4,084,989 4,376,774 - 2,098,645,453

31 December 2010 Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total Financial assets denominated in foreign currency - Cash at bank and on hand 781,720,083 - - - 781,720,083 Receivables 238,496,318 - - - 238,496,318 Available-for-sale financial assets 6,640,000 - - - 6,640,000 1,026,856,401 - - - 1,026,856,401

Financial liabilities denominated in foreign currency - Short-term borrowings 1,225,550,000 - - - 1,225,550,000 Payables 507,567,419 - - - 507,567,419 Long-term borrowings 408,000,000 - - - 408,000,000 2,141,117,419 - - - 2,141,117,419

- 108 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

11 Financial instrument and risk (Con’d)

(3) Liquidity risk (Con’d)

The borrowings of the group are mainly short term bank loans and therefore the net current liability of the group was RMB 1,453,506,937 at 31 December 2011.

As at 31 December 2011, the internal undrawn bank facilities of the group are listed as below :

Within a year 2,777,520,100 1 to 2 years 413,700,000 2 to 3 years 100,000,000 Over 3 years 100,000,000 3,391,220,100

Undrawn facilities above can be used on the committed capital payment in the future (Notes 9).

Directors of the company confirmed that the group is able to extend the time limits of short term borrowings and adequate facilities including facilities over a year and other financing resources to refund existed short term borrowings, and adequate working capital for the need of operation. Therefore the 2011 financial statements have been prepared on going concern basis by directors.

(4) Fair value

(a) Financial instruments not measured at fair value

Financial assets and liabilities not measured at fair value mainly represent receivables, short-term borrowings, payables and Long-term borrowings. The difference between the book value and fair value of the financial assets and liabilities not measured at fair value is immaterial.

The fair value of long-term borrowings not quoted in an active market is the present value of the contractually determined stream of future cash flows discounted at the rate of interest applied at that time by the market to instruments of comparable credit status and providing substantially the same cash flows on the same terms.

- 109 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

11 Financial instrument and risk (Con’d)

(b) Financial instruments measured at fair value

Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair value hierarchy has the following levels:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

As at 31 December 2011 and 31 December 2010, the financial assets of the Group are all measured at Level 1.

31 December 2011 31 December 2010 Financial assets - Available- for- sale financial assets 5,690,000 6,640,000

12 Financial assets and liabilities denominated in foreign currency

Impairment Current year fair Current year fair provision 31 December value changes in value changes in made during the 31 December 2010 profit or loss equity year 2011 Financial assets - Available-for-sale financial assets 6,640,000 - (950,000) - 5,690,000

13 Financial assets and liabilities denominated in foreign currency

Impairment provided 31 December 2010 during the year 31 December 2011 Financial assets - Loans and receivables 205,841,947 - 217,794,165

Financial liabilities 1,251,523,305 Not applicable 1,173,673,787

- 110 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements

(1) Accounts receivable

31 December 2011 31 December 2010

Accounts receivable 16,623,725 9,336,968

(a) The ageing of accounts receivable is analysed below:

31 December 2011 31 December 2010

Within 1 year 16,623,725 9,336,968

(b) Accounts receivable are analysed by categories as follows:

31 December 2011 31 December 2010

Book amount Provision for bad debts Book amount Provision for bad debts

% of total Provision for % of % of total Provision for % of

Amount balance bad debts balance Amount balance bad debts balance

Receivables that are individually significant and individually provided for bad debt 12,930,685 78% - - 6,608,924 70.8% - - Receivables that are grouped and provided for bad debt 3,693,040 22% - - 2,728,044 29.2% - -

16,623,725 100% - - 9,336,968 100% --

The management classified the five largest accounts receivable as “receivables that are individually significant”. They are all aged within one year and the management considered no provision for bad debts is needed.

(c) As at 31 December 2011, no bad debt provision has been made for accounts receivable that are individually significant or individually insignificant but subject to separate impairment assessment.

(d) The aging analysis of the receivables that are grouped and impaired is as follows:

31 December 2011 31 December 2010

Book amount Provision for bad debts Book amount Provision for bad debts

% of total Provision for % of % of total Provision for % of Amount balance bad debts balance Amount balance bad debts balance

Within 1 year 3,693,040 22.2% 2,728,044 29.2% - -

- 111 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(1) Accounts receivable (Con’d)

(e) There are no receivables which are fully provided for bad debt or with significant impairment but fully received or recoverable or with significant portion of received or recoverable during the year.

(f) No accounts receivable have been written off during the year.

(g) As at 31 December 2011, no balances included in above accounts receivable are due from the shareholders of the Company who hold over 5% shares with voting rights (31 December 2010: Nil).

(h) As at 31 December 2011, the Group’s five largest accounts receivable balances are analysed as follows:

Relationship % of total accounts with the Group Amount Duration receivable balance

Customer F Third party 3,569,319 Within 1 year 21.47% Customer G Third party 3,398,212 Within 1 year 20.44% Customer H Third party 3,324,392 Within 1 year 20.00% Customer I Third party 1,398,412 Within 1 year 8.41% Customer J Third party 1,240,350 Within 1 year 7.46% 12,930,685 77.78%

(i) As at 31 December 2011, there were no balances due from related parties (31 December 2010: Nil).

- 112 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(2) Other receivables

31 December 2011 31 December 2010

Loans to subsidiaries 239,270,156 364,704,313 Others 4,128,109 1,780,950 243,398,265 366,485,263 Less: Provision for bad debts (141,728) (623,127) 243,256,537 365,862,136

(a) The ageing of other receivables is analysed below:

31 December 2011 31 December 2010

Within 1 year 242,395,966 364,164,485 1 to 2 years 486,070 150 2 to 3 years 150 108,221 Over 3 years 516,079 2,212,407 243,398,265 366,485,263

(b) Other receivables are analysed by categories as follows:

31 December 2011 31 December 2010

Book amount Provision for bad debts Book amount Provision for bad debts

% of total Provision for % of % of total Provision for % of

Amount balance bad debts balance Amount balance bad debts balance

Receivables that are individually significant and individually provided for bad debt 241,923,908 99.39% - - 365,224,313 99.66% (520,000) 0.14% Receivables that are grouped and provided for bad debt 1,474,357 0.61% (141,728) 9.61% 1,260,950 0.34% (103,127) 8.18%

243,398,265 100% (141,728) 0.06% 366,485,263 100% (623,127) 0.17%

The management classified the five largest accounts receivable as “receivables that are individually significant”.

- 113 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(2) Other receivables (Con’d)

(c) The aging analysis for other receivables that are grouped and provided for bad debt is as follows:

31 December 2011 31 December 2010

Book amount Provision for bad debts Book amount Provision for bad debts

% of total Provision for % of % of total Provision for % of Amount balance bad debts balance Amount balance bad debts balance

Within 1 year 855,515 0.35% ------1 to 2 years 486,070 0.20% (762) 0.16% 150 0.00% (15) 10.0% 2 to 3 years 150 0.00% (30) 20.00% 108,221 0.03% (21,644) 20.0%

Over 3 years 132,622 0.05% (102,590) 77.36% 1,152,579 0.31% (81,468) 7.1%

1,474,357 0.60% (103,382) 7.01% 1,260,950 0.34% (103,127) 8.2%

(d) There are no receivables which are fully provided for bad debt or with significant impairment but fully received or recoverable or with significant portion of received or recoverable during the year.

(e) Other receivables were written off during the year:

At 31 December 2010, Receivables that are individually significant and individually provided for bad debt are analysed below:

Book value Bad debt Provision rate

Beijing Tonggang Co 520,000 (520,000) 100%

Reason for written-off: at 31 December 2011, the other receivable is over 3 years and this company has bankrupted, so this other receivable was written off.

(f) As at 31 December 2011, the Company did not have any balances which were due to parties having 5% or above shareholdings in the Company (31 December 2010: Nil).

- 114 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(2) Other receivables (Con’d)

(g) At 31 December 2011, the Company’s five largest other receivable balances are analysed below:

% of total other Relationship with the Group Amount Duration receivables balance

DGW Subsidiary of the Group 206,000,000 Within 1 year 84.6% CSTC Subsidiary of the Company 32,210,156 Within 1 year 13.2% WHK Subsidiary of the Company 2,270,295 Within 1 year 0.9% CIFA Subsidiary of the Company 1,060,000 Within 1 year 0.4% Enterprise income tax payable for dividend of B share in 2008 Shareholders of the group 383,457 1 to 2 years 0.2% 241,923,908 99.4%

(h) Other receivables due from related parties are analysed as follows:

31 December 2011 31 December 2010 % of total Provision % of total Provision Relationship accounts for bad accounts for bad with the Group Amount receivables debt Amount receivables debt

DGW Subsidiary of the Group 206,000,000 84.63% - 325,800,000 88.90% - CSTC Subsidiary of the Company 32,210,156 13.23% - 36,363,777 9.92% - WHK Subsidiary of the Company 2,270,295 0.93% - 1,480,536 0.40% - CIFA Subsidiary of the Company 1,060,000 0.44% - 1,060,000 0.29% - Controlled by the same parent CPSB company 135,622 0.06% - 135,622 0.04%- 241,676,073 99.29% - 364,839,935 99.55% -

(3) Long-term equity investments

31 December 2011 31 December 2010

Subsidiaries (a) 1,052,288,200 733,088,200 Joint venture(b) 795,776,215 763,011,159 Associates (c)- without quoted price 140,142,959 79,636,013 Other long-term equity investments (d) 17,037,500 17,037,500 2,005,244,874 1,592,772,872 Less: provision for impairment loss (e) (3,128,300) (3,128,300) 2,002,116,574 1,589,644,572

The long-term equity investments of the Company are not subject to restriction on conversion into cash.

- 115 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(3) Long-term equity investments (Con’d)

(a) Subsidiaries

Provision Reason of Provision for 31 inconsistent for impairment Accounting Investment December Current year 31 December Interest Voting interest % and impairment made in Current year method costs 2010 changes 2011 % right % voting right balance current year declared cash dividend

Shenzhen Chiwan Terminal Company Limited Cost method 47,500,000 47,500,000 - 47,500,000 95% 95% Not applicable - - 39,338,688 Shenzhen Chiwan International Freight Agency Company Limited Cost method 5,500,000 5,500,000 - 5,500,000 100% 100% Not applicable - - 1,165,548 Shenzhen Chiwan Harbour Container Company Limited Cost method 250,920,000 70,920,000 180,000,000 250,920,000 84.98% 84.98% Not applicable - - 140,826,505 Shenzhen Chiwan Transportation Company Limited Cost method 7,000,000 7,000,000 - 7,000,000 75% 75% Not applicable - - 6,757,560 Chiwan Wharf Holdings (H.K.) Limited Cost method 1,070,000 1,070,000 - 1,070,000 100% 100% Not applicable - - - Shenzhen Chiwan Shipping and Transportation Company Limited Cost method 24,000,000 6,000,000 18,000,000 24,000,000 90% 90% Not applicable - - 20,533,063 Shenzhen Chiwan Trains-Grains Terminal Company Limited Cost method 33,750,000 33,750,000 - 33,750,000 75% 75% Not applicable - - 20,616,286 Chiwan Container Terminal Company Limited Cost method 421,023,200 421,023,200 - 421,023,200 51% 51% Not applicable - - 185,445,049 Dongguan Chiwan Wharf Company Limited Cost method 186,525,000 65,325,000 121,200,000 186,525,000 41.45% 41.45% Not applicable - - - Dongguan Chiwan Terminal Company Limited Cost method 75,000,000 75,000,000 - 75,000,000 25% 25% Not applicable - - - 733,088,200 319,200,000 1,052,288,200 - - 414,682,699

- 116 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(3) Long-term equity investments (Con’d)

(b) Joint venture

Current year additions / decreases Reason of Provision Provision Initial Share of net Cash dividends Other inconsistent for for impairment Accounting investment 31 December Additional profit or loss of announced by equity 31 December Interest Voting interest % and impairment made in method cos 2010 investment associates associates changes 2011 % right % voting right balance current year

China Overseas Harbour Affairs(Laizhou)Co.,Ltd Equity method 749,655,300 763,011,159 - 32,665,056 - 100,000 795,776,215 40.00% 40.00% Not applicable - -

(c) Associates

Current year additions / decreases Cash Reason of Provision Provision Initial 31 Share of net dividends Other inconsistent for for impairment Accounting investment December Additional profit or loss announced by equity 31 December Interest Voting interest % and impairment made in method cost 2010 investment of associates associates changes 2011 % right % voting right balance current year

Cyber Network Equity method 1,875,000 12,869,241 - 19,885 (1,224,863) - 11,664,263 23.16% 23.16% Not applicable - - CMML Equity method 140,000,000 66,766,772 60,000,000 1,711,924 - - 128,478,696 20.00% 20.00% Not applicable - - 79,636,013 60,000,000 1,731,809 (1,224,863) - 140,142,959 - -

- 117 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(d) Other long-term equity investment

Reason of Provision for Initial Current year inconsistent Provision for impairment Current year Accounting investment 31 December additions / 31 December Interest Voting interest % and impairment made in declared cash method cost 2010 decreases 2011 % right % voting right balance current year dividend

China Ocean Shipping Agency (Shenzhen) Company Limited Cost method 13,510,000 13,510,000 - 13,510,000 15% 15% Not applicable - - 3,900,000 Shenzhen Petro-chemical Industry - (Group) Company Limited. Cost method 3,500,000 3,500,000 - 3,500,000 0.26% 0.26% Not applicable (3,117,800) - Guangdong Guang Jian Group - - Company Limited Cost method 27,500 27,500 27,500 0.02% 0.02% Not applicable (10,500) - 17,037,500 - 17,037,500 (3,128,300) - 3,900,000

(e) Provision for impairment of long-term equity investments

31 December 2010 Current year additions Current year decreases 31 December 2011

Other long-term equity investment -Shenzhen Petro-chemical Industry (Group) Company Limited 3,117,800 - - 3,117,800 -Guangdong Guang Jian Group Company Limited 10,500 - - 10,500 3,128,300 - - 3,128,300

- 118 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(4) Operating income and operating cost

2011 2010

Revenue from main operations 165,422,103 149,806,838 Revenue from other operations 23,700,419 10,184,257 189,122,522 159,991,095

2011 2010

Cost from main operations 134,885,611 133,144,267 Cost from other operations 1,590,313 950,546 136,475,924 134,094,813

(a) Revenue and cost from main operations

2011 2010 Revenue from Cost from main Revenue from Cost from main main operations operations main operations operations

Load and unload operation 165,422,103 134,885,611 149,806,838 133,144,267

The mainly operation are in mainland of PRC.

(b) Other revenue and cost

2011 2010 Revenue from Cost from Revenue from Cost from other operations other operations other operations other operations

Other logistic services in port 7,367,988 - 4,558,967 99,430 Lease income 14,733,909 1,590,313 4,213,916 851,116 Documentation fee 611,802 - 802,864 - Sales of materials 929,306 - 479,583 - Security fee 57,414 - 87,677 - Containers management fee - - 41,250 - 23,700,419 1,590,313 10,184,257 950,546

- 119 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(4) Operating income and operating cost (Con’d)

(c) Particulars of the top five customers in revenue

Revenue from top five customers of the Company totaled RMB87,317,723 (2010: RMB73,600,944), which accounted for 46% (2010: 46%) of the total revenue from main operations. Details are showed as below:

% of total revenue from main operations Revenue of the Company

Customer K 37,649,494 20% Customer F 27,025,168 14% Customer L 10,084,805 5% Customer G 6,855,726 4% Customer H 5,702,530 3% 87,317,723 46%

(5) Investment income

2011 2010

Income from long-term equity investment under cost method(a) 418,582,699 351,413,618 Income from long-term equity investment under equity method (b) 34,396,865 13,161,967 Income from disposal of long-term equity investment - 29,767,257 Income earned during the holding period of available-for-sale financial assets 360,000 310,000 Interest income for short-term loans to subsidiaries 14,681,787 12,478,236 468,021,351 407,131,078

There is no restriction on recovery of investment income.

- 120 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(5) Investment income (Con’d)

(a) Investment income from long-term investment under cost method

Investment income from top five investees or individually accounted to over 5% of total profit are analysed as below:

2011 2010 Reason of fluctuation

CCT 185,445,049 260,620,436 Performance of investee declined CHCC 140,826,505 - Investee distributes profit of last two years and shareholding increased. CTC 39,338,688 37,886,083 Performance of investee turns better slightly CGTC 20,616,286 24,479,423 Performance of investee declined CSTC 20,533,063 16,748,145 Shareholding increased. CTC 6,757,560 10,380,293 Performance of investee declined 413,517,151 350,114,380

(b) Investment income from long-term investment under equity method of accounting

Investment income from top five investees or individually accounted to over 5% of total profit are analysed as below:

2011 2010 Reason of fluctuation

COHA(Laizhou) 32,665,056 13,355,859 Investee is the newly joint venture last year and investment income is the portion of net profit Cyber Network 19,885 379,477 Investee decline in performance and the Group decreased the interest CMBL 1,711,924 (573,369) Investee run into operation and its circumstance turns better 34,396,865 13,161,967

- 121 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

14 Notes to the Company’s financial statements (Con’d)

(6) Supplementary information to cash flow statements

(a) Reconciliation from the net profit to the cash flows from operating activities

2011 2010

Net profit 430,118,631 381,220,010 Add: Provisions for assets impairment 38,601 24,478 Depreciation of fixed assets 12,283,329 15,396,195 Depreciation/amortisation of investment property 1,077,281 650,756 Amortisation of intangible assets 3,139,405 3,038,583 Amortisation of long-term prepaid expenses 179,620 247,891 Gains on disposal of fixed assets and intangible assets 1,394,937 233,184 Finance expenses 17,883,502 11,929,443 Investment income (468,021,352) (407,131,078) Increase in deferred tax assets (8,488,104) (764,157) (Increase)/decrease in inventories 176,247 (4,287) (Increase)/decrease in operating receivables 115,970,883 (6,070,788) Increase in operating payables 191,891,312 284,808,825 Net cash flows from operating activities 297,644,292 283,579,055

(b) Net changes in cash and cash equivalents

2011 2010

Cash at end of year 187,090,694 494,364,355 Less: cash at beginning of year (494,364,355) (453,407,958) Net (decrease)/increase in cash (307,273,661) 40,956,397

- 122 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

1 Breakdown of extraordinary gains and losses

2011 2010

Net gain on disposal of non-current assets (1,889,222) (672,955) Government grants in current year profit - 1,200,000 Receivables impairment reversal by individual assessment - - Other non-operating (expenses)/income, net 1,731,897 1,448,435 (157,325) 1,975,480 cts 33,863 (350,605) Minority interests effects (after tax) 138,789 (255,118) 15,327 1,369,757

The basis of preparation of net profit before extraordinary gains and losses reconciliation

According to the Interpretation Bulletin on Information Disclosure by Public Companies No [2008] 1 – Extraordinary gains and losses, extraordinary gain and losses are the gain and losses resulted from the transactions/events which are not incurred by the operation of the entity, or, though incurred by the operation, the nature, amounts or the frequency of such transactions/events will lead to a misleading presentation of the normal performance and profitability of the operation of the entity.

2 Return on equity and earnings per share

Weighted average return Earnings per share

on equity (%) Basic earnings per share Diluted earnings per share 2011 2010 2011 2010 2011 2010

Consolidated net profit attributable to shareholders of the Company 15.19% 19.70% 0.784 0.925 0.784 0.925 Consolidated net profit excluding non- routine items attributable to shareholders of the Company 15.19% 19.65% 0.784 0.923 0.784 0.923

- 123 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

3 Notes for significant fluctuation of major accounts in financial statements

The following represents analysis to financial statements line items with a fluctuation above 30% (inclusive), or take up 5% of total assets as at balance sheet date (inclusive) or 10% of net profit for the reported period (inclusive):

31 December 31 December Increase / 2011 2010 (decrease)(%)

Cash at bank and on hand 1 478,788,943 781,720,083 -39% Notes receivable 2 - 4,640,000 -100% Advances to suppliers 3 3,497,668 31,256,172 -89% Interest receivable 4 51,667 1,318,202 -96% Other receivables 5 11,833,877 52,765,361 -78% Other current assets 6 1,003,913 - Long-term equity investments 7 1,436,856,420 1,149,921,886 25% Fixed assets 8 2,482,077,688 2,652,957,915 -6% Construction in progress 9 517,818,144 14,593,516 3448% Intangible assets 10 1,038,926,892 1,074,247,819 -3% Other non-current assets 11 142,108,284 72,292,214 97%

Short-term borrowings 12 1,418,830,000 1,225,550,000 16% Notes payable 13 8,704,900 1,895,750 359% Employee benefits payable 14 55,945,867 36,929,912 51% Interests payable 15 1,637,790 2,958,406 -45% Dividends payable 16 365,161,451 213,351,043 71% Current portion of non-current 17 -96% liabilities 14,951,750 412,951,750 Long-term borrowings 18 90,000,000 -

Year 2011 Year 2010 Revenue 19 1,708,136,899 1,740,417,668 -2% Cost of sales 20 (768,040,243) (742,312,284) 3% General and administrative 21% expenses 21 (158,186,232) (130,781,048) Financial (expenses)/income 22 (12,370,981) 10,535,505 -217% Asset impairment 111% reversals/(losses) 23 (251,074) (119,061) Investment income 24 118,228,183 148,514,648 -20% Non-operating income 25 1,878,537 5,012,970 -63% Non-operating expenses 26 (2,035,862) (3,037,490) -33% Income tax (expenses)/ income 27 (148,561,633) (137,775,617) 8%

- 124 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts in RMB unless otherwise stated) [English translation for reference only]

3 Notes for significant fluctuation of major accounts in financial statements(Con’d)

(1) Increased investments and payment for project leads to the decrease in balance of cash at bank and on hand. (2) As at 31 December 2011, no balance on notes receivable. (3) Berth 4#-5#, Machong Port project of DGW started in 2011, and prepayment for projects converts into construction in progress, which results in the decline of advance to suppliers. (4) A great fixed deposit in 31 December 2011 turns into current deposit in 2011 to pay for land and project and this generated the drop in interest receivable. (5) It is mainly due to the withdrawal of investment in joint venture,MPIL(Note 5(9)). (6) This item is the premium of prepayment for income tax by quarter over annual tax payable, and in accordance with stipulation, it should be shown in other current assets.(2010:Nil) (7) The group indirectly bought in 20% shareholding of CMBL, by buying 100% shareholdings of Hinwin,and increased investment in CMBL.Meanwhile, movement of investee’s net assets under equity method also leads to the balance of long-term equity investment. (8) The fall in net value of property, plant and equipment is mainly due to depreciation accrual ,turning into investment properties and the adjustment after final settlement in subsidiary etc. (9) Extension of berth in subsidiary, tug construction and projects in Marchong port are unfinished,which caused the remarkable increase in construction in progress. (10) Intangible assets are mainly land and shore use right. Ordinary amortization contributes to the decline in balance. (11) Other non-current assets are mainly prepayment for land with no certificates in Machong port ,advances for shore and prepayment for projects which are not yet commenced (12) The slightly increase in short-tern loan is mainly due to the repayment of lots of long-term borrowings,and the financing structure decreased. (13) Notes payable is bank acceptance notes issued for settlement in daily operation. (14) Year–end bonus and emoluments accrued in end of 2011 is higher than the same time of 2010. (15) It is mainly due to the decrease of average financing structure. (16) The balance is dividend payable to minority interest of CCT. At 31 December 2011, the dividends of 2011 and 2010 are declared but not paid yet. (17) The long-term borrowing is classified into current portion non-current liabilities according to the contract and collection plan of bank (18) It is mainly the long-term borrowing of DGW,and the group increase long-term borrowing to optimize the financing structure. (19) Macro- economic situation led to the shrink of import and export business and throughput of port and the revenue declined accordingly. (20) It is mainly due to the rise of employee cost and outsourced labor cost (21) It is mainly due to the increase of employee cost, including the long-term incentive package. (22) It is mainly due to the output of interest of borrowing in bank (23) The accrual of provision for inventories with long age led to the increase in asset impairment losses (24) The decline in investment income is mainly due to the disposal of long-term equity investment in 2010 and no such transaction in 2011. (25) It is mainly due to the decline of income from disposal of non-current assets and no government grants obtained in 2011. (26) It is in line with the loss in disposal of non-current assets. (27) Tax rates of almost subsidiaries arose from 22% to 24% and tax holiday of some berths expired, which led to the increase of income tax expense.

- 125 -