SHENZHEN WHARF HOLDINGS LIMITED

2012 Annual Report

27 March 2013

2012 Annual Report

I. Important Notes, Contents & Explanation

The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of Chiwan Wharf Holdings Limited (hereinafter referred to as “the Company”) warrant that this report does not contain any false or misleading statements or omit any material facts and hereby accept, individually and collectively, responsibility for the factuality, accuracy and completeness of the contents carried in this report. Chairman of the Board Mr. Zheng Shaoping, Chief Financial Officer Mr. Zhang Fang and Financial Manager Ms. Ma Zhihong hereby confirm that the Financial Report in the Annual Report is true, accurate and complete. This report has been reviewed and approved at the 5th Session of the 7th Board of Directors. 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. The Company’s profit distribution preplan upon review and approval of this board session: Based on the total shares of the Company (644,763,730 shares) as at 31 Dec. 2012, a cash dividend of RMB 3.63 (tax included) will be distributed for every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be turned into share capital. This report involves future plans, development strategies and some other forward-looking statements, which shall not be considered as virtual promises of the Company to investors. And investors are kindly reminded to pay attention to possible risks.

 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.

1 2012 Annual Report

Contents

I. Important Notes, Contents & Explanation...... 1

II. Company Profile...... 5

III. Accounting & Business Highlights ...... 7

IV. Report of the Board of Directors ...... 8

V. Significant Events ...... 20

VI. Changes in Share Capital and Particulars about Shareholders ...... 25

VII. Directors, Supervisors, Senior Management Staff and Employees ...... 29

VIII. Corporate Governance ...... 38

IX. Internal Control ...... 48

X. Auditor's Report (See attached) ...... 52

XI. Documents for Reference ...... 52

2 2012 Annual Report

Explanation

Term Contents

Company, the Company or Chiwan Refers to Shenzhen Chiwan Wharf Holdings Limited Wharf

China Merchants Group Refers to China Merchants Group Limited

CMHI Refers to China Merchants Holdings (International) Company Limited

CND Refers to China Nanshan Development (Group) Inc.

Malai Storage Refers to Shenzhen Malai Storage Co., Ltd.

Keen Field Refers to Keen Field Enterprises Limited

State-Owned Assets Supervision and Administration SASAC of the State Council Refers to Commission of the State Council

CSRC Refers to China Securities Regulatory Commission

Shenzhen Bureau of China Securities Regulatory Shenzhen CSRC Refers to Commission

SZSE Refers to

“the Company Law” Refers to “the Company Law of the People’s Republic of China”

“the Securities Law” Refers to “the Securities Law of the People’s Republic of China”

“the Articles of Association of Shenzhen Chiwan Wharf “the Articles of Association” Refers to Holdings Limited”

“the Stock Listing Rules” Refers to “the Stock Listing Rules of Shenzhen Stock Exchange”

3 2012 Annual Report

Warning of Significant Risks

1. Risk concerning the industry situation

With American and European economies recovering at a rate lower than expected and the international shipping market staying weak, the foreign-trade container business of the Company slides obviously. Considering the poor performance of the American and European shipping routes, the Company has been devoting itself to expansion of the Asian and African routes, as well as the local cargo sources while trying to maintain basic stability of its key clients and market share through improving its services.

2. Risk concerning market competition

Along with the gradual release of the capacity of new wharfs in the Delta, competition among wharfs in the region will heat up, with some business irreversibly flowing to these new wharfs. Base on its rich experiences in wharf operation, stable clients and good services, the Company is still a strong competitor. In the future, the Company will focus on cooperation with other competitors in the region, trying to realize positive interaction and avoid vicious competition.

3. Risk concerning rising cost

The price rise of production elements under inflation is affecting the Company’s profit. In particular, the rising labor cost will impose great pressure on operation of the Company. The Company carries on with lean management and R&D innovation, as well as putting more effort in the study and application of new technologies and skills, which relieve the pressure of continually rising cost to some degree.

Securities Times, Ta Kung Pao and www.cninfo.com.cn were designated by the Company as the media for information disclosure for 2012. All information of the Company shall be subject to what is released by the Company on the said media. And Investors are kindly reminded to pay attention to possible investment risks.

4 2012 Annual Report

II. Company Profile

I. Basic information of the Company

Stock abbreviation Chiwan Wharf A, Chiwan Wharf B Stock code 000022, 200022 Stock exchange listed with Shenzhen Stock Exchange

Chinese name of the Company 深圳赤湾港航股份有限公司

Abbr. of the Chinese name of the Company 深赤湾

English name of the Company Shenzhen Chiwan Wharf Holdings Limited Abbr. of the English name of the Company Chiwan Wharf Legal representative of the Company Mr. Zheng Shaoping, chairman Registered address Chiwan, Shenzhen, PRC Postal code for the registered address 518067 Office address 8/F, Chiwan Petroleum Building, Shenzhen, PRC Postal code for the office address 518067 Internet website of the Company http://www.szcwh.com Email address [email protected]

II. For Contact

Company Secretary Securities Affairs Representative Name Ms. Bu Dan Ms. Hu Jingjing Contact address 8/F, Chiwan Petroleum Building, Shenzhen, PRC Tel. +86 755 26694222 +86 755 26694222 Fax +86 755 26684117 +86 755 26684117 E-mail [email protected] [email protected]

III. About information disclosure and where this report is placed

Newspapers designated by the Company for information disclosure "Securities Times" and "Ta Kung Pao” Internet website designated by CSRC for disclosing this report http://www.cninfo.com.cn Where this report is placed Secretariat of the Board of Directors

5 2012 Annual Report

IV. Change of the registered information

Registration Registration Business Registration code of Organizational Query index date place license No. taxation code Market Supervision Administration of Initial Chiwan, 440301501 SSDZ No. 19 Jul. 1990 61883296-8 Shenzhen registration Shenzhen 124494 440301618832968 Municipality (http://www.szaic. gov.cn) CND holds 370,878,000 shares of the Company, representing a shareholding percentage of 57.52%. On 17 Sept. 2012, CMHI and CND signed the “Agreement of China Merchants Holdings (International) Co., Ltd. and China Nanshan Development (Group) Inc. Concerning Custody of Shares of Shenzhen Chiwan Wharf Holdings Limited”. According to the Agreement, CND would entrust the management of 370,878,000 A- shares in the Company (representing a shareholding percentage of 57.52%) to CMHI. The custody announcement (No. 2012-035) was released on 20 Sept. 2012 on Securities Times, Ta Kung Pao and www.cninfo.com.cn. Meanwhile, CMHI indirectly holds 55,314,200 B-shares of the Company (representing a shareholding percentage of 8.58%) via its wholly-funded subsidiary Keen Field, thereby, China Changes of the controlling Merchants Holdings (International) controls 66.10% equity interests of the Company. shareholder On 1 Nov. 2012, China Securities Regulatory Commission issued the ZJXK [2012] No. 1428 Document—“Reply on Approving China Merchants Holdings (International) Co., Ltd. to Disclose the Acquisition Report on Shenzhen Chiwan Wharf Holdings Limited and Exempting It from the Tender Offer Duty”, exempting its tender offer duty due to the entrusted management of 370,878,000 shares of the Company, which made it the controller of the Company’s 426,192,200 shares in all, accounting for 66.10% of the Company’s total shares. The relevant announcement (No. 2012-044) was released on 3 Nov. 2012 on Securities Times, Ta Kung Pao and www.cninfo.com.cn. The actual controller of the Company—China Merchants Group—is unchanged after the said entrustment with share management.

V. Other information

The CPAs firm hired by the Company:

Name Deloitte Touche Tohmatsu Certified Public Accountants LLP Office address 30/F Bund Center, 222 Yan An Road East, Shanghai Signing accountants Li Weihua, Su Min

6 2012 Annual Report

III. Accounting & Business Highlights

I. Major accounting data and financial indicators Unit: RMB Increase or decrease 2012 2011 of this year over last 2010 year Total operating income 1,783,846,135 1,708,136,899 4.43% 1,740,417,668 Net profit attributable to shareholders 467,103,270 505,645,137 -7.62% 596,680,156 of the parent Net profit attributable to shareholders of the parent after extraordinary gains 464,592,323 505,629,810 -8.12% 595,310,399 and losses Net cash flow from operating activities 698,472,452 746,190,596 -6.39% 926,845,569 Basic EPS (RMB Yuan/share) 0.724 0.784 -7.65% 0.925 Diluted EPS (RMB Yuan/share) 0.724 0.784 -7.65% 0.925 ROE (%) 13.15% 15.19% -2.04% 19.70% Increase or decrease As at 31 Dec. As at 31 Dec. As at 31 Dec. of this year-end than 2012 2011 2010 last year-end Total assets 6,781,130,450 6,540,228,435 3.68% 6,202,184,742 Total shareholder’s equity attributable 3,678,032,083 3,467,796,751 6.06% 3,239,549,058 to equity holders of the parent

II. Differences between accounting data under domestic and overseas accounting standards Unit: RMB Net profit attributable to Net assets attributable to shareholders shareholders of the parent of the parent 2012 2011 Closing amount Opening amount According to Chinese accounting 467,103,270 505,645,137 3,678,032,083 3,467,796,751 standards According to international and overseas accounting standards N/A

III. Items and amounts of extraordinary gains and losses Unit: RMB Items 2012 2011 2010 Profit or loss on disposal of non-current assets (1,749,511) (1,889,222) (672,955) Government grants recognized in profit or loss 494,730 - 1,200,000 Other non-operating income or expenses other than above 5,064,433 1,731,897 1,448,435 Tax effects (251,327) 33,863 (350,605) Effects of minority interest (after tax) (1,047,378) 138,789 (255,118) Total 2,510,947 15,327 1,369,757

7 2012 Annual Report

IV. Report of the Board of Directors

I. Overview

The Company is principally engaged in the handling, warehousing and transportation of containers and bulk cargoes, as well as the provision of related services. In 2012, the global economy lingered on a low growth rate with a slow recovery. Amid the disturbance of the sovereign debt crisis, the European economy kept going down. The US economy saw a recovery, but it’s weak. Japan still suffered from a depressed economy and growth of emerging economies slowed down. As predicted by WTO, growth of global trade for 2012 was 2.5%, lower than half of the average growth 20 years ago, and the total volume of import and export of China for 2012 grew 6.2% over last year, down 16.3 percentage points. Liner companies as a whole gave a lackluster performance. And the container business of the Company of the year was considerably affected by factors such as the integration and deepening of the shipping capacity, adjustments to the shipping routes and relocation and transformation of the manufacture companies in the area around the Company. Restructuring of the Chiwan area led to a decrease of the container yard resources for bulk cargoes in the Chiwan port area. In view of that, the Company proactively made use of its internal and external resources, optimized its business structure and effectively brought up the port operation rates while trying to maintain the stability of clients. The Company paid attention to and kept improving services for its clients. It continuously improved the information system, operation process and production technique. Meanwhile, it was energetic in promoting R&D innovation, cost reduction and efficiency increase. As a result, some success was achieved. Due to its effort in utilizing resources in a better way, the overall efficiency of resource utilization of the Company for 2012 improved. For the reporting year, the Company achieved a container throughput of 5,311 thousand TEU, down 8.3% as compared with last year. For the same period, the overall container throughput of Shenzhen grew 1.7%. The container throughput of the Company represented a 23.2% market share of Shenzhen, down 250 basic points on a year-on-year basis. Chiwan port achieved a throughput of 3,946 thousand TEU, a 4.3% decrease over last year. Throughout the year, the bulk cargo throughput achieved by the Company was 10,699 thousand tons, up 15.7% over last year. The bulk cargo throughput achieved by Chiwan port for the year was almost the same with the previous year, accounting for a 19.5% market share among the three main bulk cargo wharfs in Shenzhen, down 30 basic points over 2011. And the efforts to expand business for Machong Port produced a good result. With the input of new resources greatly easing the stress brought by limited resources, Machong Port achieved an annual throughput of 4,165 thousand tons, representing a considerable growth of 53.2% on the year-on-year basis. For the year 2012, the Company achieved a total throughput of 61,533 thousand tons, representing a decrease of 3.6% over 2011, of which Chiwan Port achieved 57,368 thousand tons, down 6.1% over 2011, accounting for 25.2% of the overall throughput at Shenzhen ports, down by 220 basic points as compared with 2011. Business highlights of the Company for the past three years are set out as follows:

8 2012 Annual Report Business Data 2012 2011 2010

Total throughput (thousand tons) 61,533 63,840 64,174 Among which: Container throughput (thousand TEU) 5,311 5,793 6,147

Chiwan Port 3,946 4,122 4,164 Mawan Port 1,365 1,671 1,958 Throughput of bulk cargo (thousand tons) 10,699 9,251 10,214 Chiwan Port 6,534 6,532 7,987 Machong Port 4,165 2,719 2,227 Hours charged for tow trucks (thousand hours) 1,179 1,231 1,300 Hours charged for tugboats (hour) 31,707 32,121 34,447

In 2012, the Company focused on cost reduction & efficiency increase and lean management. Through upgrading the container operation system and improving the financial and material management systems, it provided management tools and technical support for improving management and promoting lean management. It also effectively controlled growth of the controllable costs by working on labor cost, operation cost, etc. one by one. At the same time, it carried out some R&D innovation projects to increase the efficiency and reduce consumption. Considering changes of the business volume and the revenues, the change of costs of the year was under effective control.

II. Main business analysis

1. Overview

Unit: RMB Items 2012 2011 YoY +/- Total operating income 1,783,846,135 1,708,136,899 4% Operating profit 737,084,906 816,494,626 -10% Net profits attributable to shareholders 467,103,270 505,645,137 -8% of the parent

No significant change occurred to the structures of the main business and profit during the reporting period. Operating income increased 4% over last year mainly due to an increased business revenue of bulk cargoes. Operating profits and net profits attributable to shareholders of the parent decreased 10% and 8% respectively mainly because ① labor cost and prices of many raw materials went up considerably from last year; and ② affected by the macro market environment, profits of joint ventures and associates decreased from last year and the relevant investment income on them decreased 27% on a year-on-year basis.

9 2012 Annual Report 2. Income

Unit: RMB Operating Operating Core business Industry Proportion Proportion income profit Load and Load and unload services unload 1,664,268,714 91% 684,117,661 93% services Supporting service for Load and Related road 57,769,316 3% 8,977,801 1% unload services transportation Related Tugboat services 83,351,860 5% 27,768,672 4% shipping Agency and others services Agency 19,371,601 1% 16,220,772 2% Subtotal 1,824,761,491 100% 737,084,906 100% Elimination (40,915,356) Total 1,783,846,135 100% 737,084,906 100%

Major customers:

Total sales to the top five customers (RMB Yuan) 1,031,820,012 Ratio of the total sales to the top five customers to the annual total sales (%) 58%

3. Costs Unit: RMB 2012 2011 Proportion in Proportion in Industry Item YoY +/- Amount operating Amount operating costs costs Load and unload Load and unload 792,177,702 94% 722,754,928 94% 10% services services Supporting service Related road for Load and unload transportation and 50,589,618 6% 44,151,804 6% 15% services shipping Agency and others Agency 1,834,099 0% 1,133,511 0% 62% services Total 844,601,419 100% 768,040,243 100% 10%

4. Expense Unit: RMB Item 2012 2011 YoY +/- Financial expenses 70,763,164 12,370,981 472% Impairment losses of assets 331,339 251,074 32%

Financial expenses went up mainly because the average interest rate increased and last year, the exchange earnings had increased due to a Renminbi appreciation of 5% while there was no such an event this year.

10 2012 Annual Report Impairment losses of assets increased mainly because provisions for the accounts receivable of this year increased according to the bad-debt provision policy.

5. Cash flows

Unit: RMB Item 2012 2011 YoY +/-

Subtotal of cash inflows from operating activities 1,754,822,863 1,681,255,994 4.38%

Subtotal of cash outflows from operating activities 1,056,350,411 935,065,398 12.97%

Net cash flow from operating activities 698,472,452 746,190,596 -6.39%

Subtotal of cash inflows from investing activities 77,630,142 96,963,732 -19.94%

Subtotal of cash outflows from investing activities 592,432,594 806,179,035 -26.51%

Net cash flow from investing activities (514,802,452) (709,215,303) 27.41%

Subtotal of cash inflows from financing activities 2,216,960,000 1,540,990,000 43.87%

Subtotal of cash outflows from financing activities 2,564,602,357 1,871,736,958 37.02%

Net cash flow from financing activities (347,642,357) (330,746,958) 5.11%

Net increase in cash and cash equivalents (163,933,375) (302,931,140) -45.88%

Subtotal of cash inflows from financing activities increased mainly because the Company issued corporate bonds of RMB 500 million on 26 Apr. 2012 while there had been no such an event last year. Subtotal of cash outflows from financing activities increased because mature loans for this year increased over last year.

III. Breakdown of main business

Unit: RMB Operating YoY +/- of YoY +/- of YoY +/- of Business Operating income Operating costs profit operating profit income operating costs margin margin Load and 1,664,268,714 792,177,702 52.40% 4.45% 9.61% -2.24% unload services

IV. Asset and liability analysis

1. Major changes of asset items

11 2012 Annual Report Unit: RMB As at 31 Dec. 2012 As at 31 Dec. 2011 Proportion

Proportion in Proportion in Amount Amount change total assets total assets

Currency funds 314,855,568 4.64% 478,788,943 7.32% -2.68%

Accounts receivable 251,420,961 3.71% 230,797,003 3.53% 0.18%

Inventories 21,325,571 0.31% 23,500,358 0.36% -0.05%

Investment property 33,463,476 0.49% 34,679,229 0.53% -0.04%

Long-term equity 1,544,951,108 22.78% 1,436,856,420 21.97% 0.81% investments

Fixed assets 2,701,093,453 39.83% 2,482,077,688 37.95% 1.88%

Construction in progress 609,932,609 8.99% 517,818,144 7.92% 1.07%

Currency funds decreased mainly because this year, subsidiaries distributed dividends for the previous year while there had been no such an event last year. Construction in progress increased mainly because the Company input funds for Machong projects as scheduled this year.

2. Major changes of liability items

Unit: RMB 2012 2011 Proportion change Proportion in total Proportion in Amount Amount assets total assets

Short-term 1,180,929,700 17.41% 1,418,830,000 21.69% -4.28% borrowings

Long-term 150,000,000 2.21% 90,000,000 1.38% 0.83% borrowings

Bonds payable 496,545,753 7.32% - - 7.32%

The liability items changed mainly because the Company adjusted its loan structure based on its capital needs and changes of the financial market to rationally arrange financing.

3. Assets and liabilities measured at fair value

12 2012 Annual Report Unit: RMB Accumulate Gain/loss on Sold d fair value Impairment Purchased Opening fair value amount Closing Item changes provided in amount in balance change in the in the balance included in the period the period period period equity Financial assets 1. Financial Assets at Fair

Value through Profit or Loss 2. Derivative financial assets 3. Available-for-sale financial 5,690,000 (360,000) 5,210,000 assets Subtotal of financial assets 5,690,000 (360,000) 5,210,000 Investment property Bearer biological assets Other Total 5,690,000 (360,000) 5,210,000 Financial liabilities

V. Core competitiveness analysis

Upon 30 years of development, the Company has gathered a group of experienced professionals and an excellent managerial team, with its business management highly recognized by shareholders and clients. With stable client sources, the Company is considered a leader in the sector in terms of its business process and operating efficiency. As a mature listed port company in China, the Company owns an excellent brand and reputation in the market. Major changes of the Company’s core competitiveness during the reporting period: At the beginning of 2012, a new tugboat of 5,000 horsepower was put into use, improving the tugboat service. The Jetty 13# extension project was completed and put into use in Aug. 2012, extending the deep-water berth line of Chiwan Port by 319 meters and effectively increasing its berthing capacity for large container ships. Meanwhile, a bonded warehouse—the first phase of the Machong project was also completed and put into use in Aug. 2012, which partly eased the pressure imposed by limited warehousing resources and strengthened the regional competitiveness of the wharf.

VI. Investment analysis

1. Investments in equities of external parties

(1) Investments in external parties

Unit: RMB’000 Investments in external parties Investment amount in 2012 Investment amount in 2011 +/-% 100,000 220,293 -54.61% Particulars about investees

13 2012 Annual Report Proportion of the Company’s Name of investee Main business investment in the investee’s total equity interests

China Development Finance Co., Providing clearing, financing and other 20% Ltd financial services for member units.

(2) Securities investments

Book value Gain/loss Initial at the end for Number of Shareholding Number of Shareholding Variety of Code of Name of investment of the reporting Accounting Source of shares held at percentage at shares held at percentage at securities securities securities cost (RMB period period item stock period-begin period-begin period-end period-end Yuan) (RMB (RMB Yuan) Yuan)

Shenzhen Petro- chemical Long-term Shares held Stock 400032 Industry 3,500,000 780,000 0.26% 780,000 0.26% 382,200 - equity by legal (Group) investment entity Company Limited

Guangdong Guang Jian Long-term Shares held Stock 400009 Group 27,500 20,000 0.02% 20,000 0.02% 17,000 - equity by legal Company investment entity Limited

Shares held by legal Available- entity, Jiang Su for-sale which is Stock 600377 Ninghu 1,120,000 1,000,000 0.02% 1,000,000 0.02% 5,210,000 - financial allowed for Expressway assets circulation after share reform

Total 4,647,500 1,800,000 -- 1,800,000 -- 5,609,200 - -- --

2. Use of raised funds

Unit: RMB’000 Total raised funds 500,000 Raised funds input in the reporting period 500,000 Accumulative input raised funds 500,000 Raised funds with changed use in the reporting period 0 Accumulative raised funds with changed use 0 Proportion of accumulative raised funds with changed use (%) 0% General utilization of the raised funds The Company issued corporate bonds of RMB 500 million in Apr. 2012 and the raised funds have been used to repay bank loans and supplement the working capital.

14 2012 Annual Report 3. Situations to main subsidiaries and joint stock companies

Unit: RMB Total Company Main Registered Company name Industry shareholders’e Net assets Net profit variety products/services capital quity Non- Handling and Harbor Division independent Transportation warehousing of N/A 314,282,024 291,496,124 17,274,113 legal entity imported fertilizers Shenzhen Handling and RMB 50 Chiwan Terminal Subsidiary Transportation 132,022,293 100,772,441 45,605,009 storage of grains million Co., Ltd Shenzhen Loading and Chiwan Trans- unloading, RMB 45 Subsidiary Transportation 108,218,199 65,591,969 33,400,566 Grains Terminal warehousing and million Limited packaging of grains Dongguan Handling and Chiwan Wharf RMB 450 Subsidiary Transportation storage of bulk 958,587,470 466,363,165 15,847,348 Company million cargos Limited Shenzhen Tow truck services Chiwan RMB 15 Subsidiary Transportation for containers in the 67,442,955 33,654,004 6,609,375 Transportation million port Co., Ltd. Shenzhen Chiwan Shipping RMB 24 Subsidiary Transportation Tugboat services 155,561,464 51,002,798 20,890,640 & Transportation million Co., Ltd. Handling and China Overseas Stock- warehousing of Harbour Affairs USD participating Transportation petroleum, liquefied 2,181,632,582 1,870,724,051 61,444,116 (Laizhou) Co., 176,407,700 subsidiary products and bulk Ltd. cargos

Subsidiaries and joint stock companies affecting the net profit of the Company by 10% or above Unit: RMB Main Total Company Company Registered Operating Operating Industry products/servi Total assets shareholders’eq Net profit name variety capital income profit ces uity Chiwan Container Container USD 95.3 Subsidiary Transportation 2,385,775,164 1,263,552,924 1,024,113,811 390,602,582 325,086,973 Terminal handling million Co., Ltd. Shenzhen Chiwan Container RMB 288.2 Harbor Subsidiary Transportation 715,860,447 446,993,104 262,605,732 155,787,737 133,924,682 handling million Container Co. ,Ltd. Chiwan Wharf Investment Investment HKD 1 Subsidiary 1,309,550,556 1,145,826,948 - 86,394,298 79,318,918 (Hong holding holding million Kong) Ltd.

15 2012 Annual Report VII. Outlook of the Company’s future development

1. Development trend and competition status of the industry in which the Company is engaged

In 2013, macro-economy will still be complicated and recovery of global economy is full of challenges and uncertainties. Economy, trade and shipping will keep lingering on a low level, but the overall situation is expected to be better than 2012. Rise of prices of production factors under inflation will still impose some pressure on operation of the Company, competition among ports in the area will be the biggest challenge from the market, and bigger and bigger ships and limited storage resources will still be a problem in 2013. Shenzhen ports mainly handle containers for foreign trade. Restricted by a weak foreign demand and the market share bottleneck, the foreign-trade container business will enter a stable period. Relocation of companies of the and industrial upgrading resulted in a slow growth of cargo sources in the area, but it still has the regional advantage, so its market share will remain stable. In the long run, along with the berth expansion and upgrading, the overall berth capacity of the Company’s container business will increase, together with the throughput. As for the bulk cargo handling business, Machong Port grows more and more mature, the fertilizer and grain handling business 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 market changes, laying a foundation for the sustained development of the Company’s bulk cargo handling business in the future.

2. Business Plan for 2013

The Company will pay close attention to market changes, analyze trends of the industry and improve its analysis and judgment. Keeping an open mind, it will proactively deal with the complex and changeable market environment, take the initiative to alter its strategies so as to seize market opportunities, and keep an eye on influence of state policy amendments on imported cargos, as well as increasing the throughput of near-sea lines 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 service it provides, focus on its core competitive edge, and maintain stability in core business and with major clients. The Company is well positioned to push forward cost reduction & efficiency increase and lean management more deeply and widely. Meanwhile, it will also proceed with cost control, energy saving & emission reduction, the green port project, etc.. In 2013, the company will pay constant attention on investment orientations for resource and business integration, continuously improve the investment management capability and monitor well the investments in the investees to strengthen its ability of risk control. In 2013, the Company will mainly work on the following construction projects: the first phase of the Machong Port Project—bulk grain warehouses; and the second phase of the Machong Port Project—the wharf project. The Company will proceed with the said projects as planned.

16 2012 Annual Report 3. Capital requirements and expenditure plan for 2013

To implement our future development strategies and achieve business goals we have set, a capital expenditure of RMB 643.75 million is planned for 2013, of which RMB 549.82 million will be invested in wharf warehouses, RMB 70.77 million in equipments and ships, RMB 6.40 million in IT and RMB 16.76 million in administration and offices. The above capital expenditures will be mainly funded by cash inflows from operating activities of the Company and bank borrowings.

VIII. Profit allocation and dividend distribution

1. Formulation, execution or adjustment of the Company’s profit distribution policy, especially the cash dividend policy

Pursuant to the guiding spirit of the Notice of CSRC on Further Implementing Matters Related to Cash Dividends of Listed Companies, the Notice of CSRC Shenzhen Bureau on Fully Implementing the Notice of CSRC on Further Implementing Matters Related to Cash Dividends of Listed Companies (Shen-Zheng-Ju-Gong-Si-Zi (2012) No. 43), the Company has revised some articles in its Articles of Association in relation to the profit distribution policy, which involves the specific policy, the decision-making procedure and mechanism, the adjustment and implementation of the profit distribution policy, profit distributed to foreign shareholders and other aspects (for the revised Articles of Association of the Company, see www.cninfo.com.cn). The dividend policy of the Company is in line with its Articles of Association and the relevant resolution of the Shareholders’ General Meeting, with a clear minimum dividend standard and proportion, as well as a complete decision-making procedure and mechanism. Independent directors have fulfilled their duty to express their special opinion that the Company has fully taken into account the requests and opinion of minority shareholders when it formulates the dividend policy, which has fully protected the legal interests of minority shareholders. If the Company wants to adjust or alter its dividend policy in the future, the Board of Directors shall make a special demonstration, explain the reasons for adjustment in detail and form a written demonstration report. Then independent directors shall express their opinion. After the adjustment proposal is reviewed and approved by the Board of Directors, it shall be submitted to the Shareholders’ General Meeting for review. Only with over 2/3 of the voting rights held by shareholders (including proxies) attending the general meeting can the adjustment proposal be approved. In the whole process, the conditions and procedure will be in compliance with laws and regulations and transparent. (For details, see the announcement on resolutions of the 1st special shareholders’ general meeting for 2012 disclosed on 22 Aug. 2012, with the announcement No. being 2012-031.)

2. Profit distribution plan of the Company for the recent three years (including the reporting year)

(1) Profit allocation and dividend distribution plan for 2010 As audited by PricewaterhouseCoopers Zhong Tian Certified Public Accountants Co., Ltd., the net profit of the Company (without subsidiaries) for 2010 stood at RMB 381,220,010 and the cumulative distributable profit at RMB 574,774,541. 1) According to the Company Law and the Articles of Association of the Company, RMB 38,122,001, 10% of the audited net profit of the Company (without subsidiaries) for 2010 was taken out as statutory surplus reserve.

17 2012 Annual Report 2) Based on the total 644,763,730 shares as at the end of 2010, a cash dividend of RMB 4.63 (tax included) was to be distributed for every 10 shares, with a total of RMB 298,525,607 being distributed. After the aforesaid allocations, the retained profit of the Company (without subsidiaries) stood at RMB 238,126,933.

(2) Profit allocation and dividend distribution plan for 2011 As audited by PricewaterhouseCoopers Zhong Tian Certified Public Accountants Co., Ltd., the net profit of the Company (without subsidiaries) for 2011 stood at RMB 430,118,633 and the cumulative distributable profit at RMB 668,245,566. 1) According to the Company Law and the Articles of Association of the Company, RMB 43,011,863, 10% of the audited net profit of the Company (without subsidiaries) for 2011 was taken out as statutory surplus reserve. 2) Based on the total 644,763,730 shares as at the end of 2011, a cash dividend of RMB 4.00 (tax included) was to be distributed for every 10 shares, with a total of RMB 257,905,492 being distributed. After the aforesaid allocations, the retained profit of the Company (without subsidiaries) stood at RMB 367,328,211.

(3) Profit allocation and dividend distribution pre- plan for 2012 As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the net profit of the Company (without subsidiaries) for 2012 stood at RMB 189,814,396 and the cumulative distributable profit at RMB 557,142,607. 1) According to the Company Law and the Articles of Association of the Company, RMB 18,981,440, 10% of the audited net profit of the Company (without subsidiaries) for 2012 was taken out as statutory surplus reserve. 2) As planned, based on the total 644,763,730 shares as at the end of 2012, a cash dividend of RMB 3.63 (tax included) was to be distributed for every 10 shares, with a total of RMB 234,049,234 being distributed. After the aforesaid allocations, the retained profit of the Company (without subsidiaries) stood at RMB 304,111,933. The above-mentioned allocation plan shall be submitted to the Shareholders’ General Meeting for review and approval.

3. Cash dividend distribution of the Company over the recent three years Unit: RMB Ratio the amount of cash Net profit attributable to dividend to the net profit Amount of cash dividend shareholders of the parent in Year attributable to shareholders the consolidated statement for (tax included) of the parent in the the year consolidated statement 2012 234,049,234 467,103,270 50.11% 2011 257,905,492 505,645,137 51.01% 2010 298,525,607 596,680,156 50.03%

18 2012 Annual Report IX. Social responsibilities

Always keeping fulfillment of its social responsibilities in mind, the Company has been devoting itself to achieve healthy and harmonious development between the Company and its employees, between the Company and society and between the Company and environment. The Company has built up a scientific management system of safty production, strict operation rules and sound emergency plans. Meanwhile, it also has a safety committee to perfect the examination and supervision mechanism. In 2012, no grievous bodily harm or worse or group event occurred to the Company, with all goals of safe production being achieved, representing the best record in the Company’s history. The Company has also set up a R&D innovation team, which has produced some positive results in terms of process improvement, technique innovation, energy saving & emission reduction, etc.. Meanwhile, working on becoming resource-saving green ports, it encourages employees to save resources and protect the environment. It protects various legal rights and interests of its employees, cares for them and tries to promote harmonious labor relations.

X. Particulars about researches, visits and interviews received in this reporting period

Main discussion Time of Place of Way of and materials Visitor type Visitor reception reception reception provided by the Company 30 Jan. 2012 Merrill Lynch (Asia Pacific) Ltd. China International Fund Management Co., Ltd., Alliance Bernstein Holding L.P., Cambiar Investors, Samsung Asset 17 May 2012 Basic Shenzhen Management () Limited, Harvest information of Global Investments Ltd., CLSA Asia-Pacific operations and Markets investments of One-on-one Standard Chartered Bank (Hong Kong) the Company 18 May 2012 meeting Limited, Alliance bernstein (Singapore) ltd. and the financial Institution status of the First State Investments, H.R.L. Morrison & Company Co Capital Management, Graeme Thomson

Merricks Capital, Nuveen Asset Management, 11 Jun. 2012 Hong Kong BEA Union Investment Management Information Limited , Daiwa Asset Management Hong provided: Kong Limited, Turiya Advisors Asia, Heqi Brochure of the Investment, Janchor Partners Limited Company Shanghai Simpleway Asset Management Co., 10 Sept. 2012 Shenzhen Phone talk Changjiang Securities, CLSA Asia-Pacific Markets, CICC

19 2012 Annual Report

V. Significant Events

I. Significant lawsuit or arbitration

There was no significant lawsuit, arbitration or general query from media during the reporting period.

II. Capital occupation by the controlling shareholder or its related parties for non-operating purposes

During the reporting period, the controlling shareholder or its related parties did not occupy capital for non-operating purposes or repay such capital. Deloitte Touche Tohmatsu Certified Public Accountants LLP issued the “Special Report on Capital Occupation by the Controlling Shareholder and Other Related Parties of Shenzhen Chiwan Wharf Holdings Limited. For the detailed report, see www.cninfo.com.cn.

III. Matters concerning bankruptcy and reorganization

The Company was not involved in any matter concerning bankruptcy or reorganization during the reporting period.

IV. Asset transactions

The Company did not conduct any significant asset acquisition, sale or business combination during the reporting period.

V. Implementation of equity incentive and influence

The Company did not work out any equity incentive plan during the reporting period.

VI. Significant related-party transactions

1. Related-party transactions concerning routine operation

Unit: RMB’000 Pricing Related Contents of Proportion Settlement Type of the principle of transact Relati the related- Transaction Transaction in same kind method of the Date of Index of related-party the related- Market price ion onship party price amount of related-party disclosure disclosure transaction party party transaction transactions transaction transaction See http://www Share Mutual Payment by 28 Mar. .cninfo.com CND Lease Land use fee 40,208.18 40,208.18 83% 40,208.18 holder negotiation month 2012 .cn for the resolution announcem

20 2012 Annual Report ent (No. 2012-009) Total -- -- 40,208.18 83% ------Details about return of large-amount sales N/A It’s needed for daily operation of the Company. The Company and Necessity and consistency of the related-party transaction, as well as the reasons why its controlled subsidiaries lease yards every year from CND for the related party is chosen over other parties in the market to deal with containers and bulk cargoes. Influence of the related-party transaction on independency of the Company The Company’s independence on the related part and the relevant solutions (if any) Where the Company classifies and estimates the total amount of routine related-party N/A transactions for the reporting period, explain the actual implementation during the reporting period (if any) Explain why the transaction price is greatly different from the market price

2. Significant related-party transactions concerning joint investment in external parties

Unit: RMB’000 Registered Total Net Net Pricing Name of Main business Joint investor Relationship capital of assets of assets of profit of principle investee of investee investee investee investee investee CND is a Providing CND, Shenzhen shareholder of financial and Chiwan Petroleum the Company※, financing China Supply Base Co., Chiwan Base is a Free will, consulting, Develop Ltd. (Chiwan controlled fairness credit ment N/A N/A N/A N/A Base), Yahgee and mutual authentification subsidiary of Finance Modular House CND and negotiation and consulting Co., Ltd Co., Yahgee is also agent services Ltd.( Yahgee) controlled by for member CND units Progress of any significant construction in N/A process of the investee

※ For details, see Section II. IV and Section VI. III. 4 of this report.

3. Credits and liabilities with related parties

Unit: RMB’000 Non-operating Amount Type of Reason for capital Opening during Closing Related party Relation credit/liability credit/liability occupation balance reporting balance (Yes/No) period A director of the China Credit Company’s actual Merchants receivable controller is also a Bank deposits No 58,813 2,208,010 50,689 Bank Co., from related director of China Ltd. party Merchants Bank.

21 2012 Annual Report VII. Particulars about significant contracts and their fulfillment

1. Custody

On 17 Sept. 2012, CMHI and CND signed the “Agreement of China Merchants Holdings (International) Co., Ltd. and China Nanshan Development (Group) Inc. Concerning Custody of Shares of Shenzhen Chiwan Wharf Holdings Limited”. According to the Agreement, CND would entrust the management of 370,878,000 A-shares in the Company (representing a shareholding percentage of 57.52%) to CMHI. The custody announcement (No. 2012-035) was released on 20 Sept. 2012 on Securities Times, Ta Kung Pao and www.cninfo.com.cn. Meanwhile, CMHI indirectly holds 55,314,200 B-shares of the Company (representing a shareholding percentage of 8.58%) via its wholly-funded subsidiary Keen Field, thereby, China Merchants Holdings (International) controls 66.10% equity interests of the Company. On 1 Nov. 2012, China Securities Regulatory Commission issued the ZJXK [2012] No. 1428 Document—“Reply on Approving China Merchants Holdings (International) Co., Ltd. to Disclose the Acquisition Report on Shenzhen Chiwan Wharf Holdings Limited and Exempting It from the Tender Offer Duty”, exempting its tender offer duty due to the entrusted management of 370,878,000 shares of the Company, which made it the controller of the Company’s 426,192,200 shares in all, accounting for 66.10% of the Company’s total shares.

2. Guarantees provided by the Company Unit: RMB’000 Guarantees provided by the Company for its subsidiaries Disclosure date of the Date of Actual Guarantee public notice occurrence Execution Amount of amount Type of Term of for a related Guaranteed party in relation to (date of completed guarantee of guarantee guarantee party or not the signing or not guarantee (Yes or No) guarantee agreement) amount Joint-liability 21 Oct. 2011 90,000 5 years No Yes Dongguan guarantee Chiwan Wharf 22 Jul. 2011 200,000 Joint-liability Company Limited 9 Feb. 2012 95,000 5 years No Yes guarantee Dongguan Chiwan Terminal 26 Apr.2012 100,000 N/A N/A N/A N/A N/A N/A Company Limited Shenzhen Chiwan Harbor Container 26 Apr.2012 100,000 N/A N/A N/A N/A N/A N/A Co., Ltd. Dongguan Joint-liability Chiwan Wharf 26 Oct. 2012 100,000 6 Dec. 2012 100,000 Half year No Yes guarantee Company Limited Shenzhen Chiwan 18 Dec. Harbor Container 140,000 N/A N/A N/A N/A N/A N/A 2012 Co., Ltd.

22 2012 Annual Report Total actual amount of Total amount of guarantees for guarantees for subsidiaries approved in the 440,000 200,000 subsidiaries in the reporting period reporting period Total actual balance of Total amount of guarantees for guarantees for subsidiaries approved by the 640,000 285,000 subsidiaries at the period-end period-end Total guarantee amount of the Company (combination of the two kinds of guarantees above) Total actual guarantee Total guarantee amount 440,000 amount in the reporting 200,000 approved in the reporting period period Total actual guarantee Total guarantee amount 640,000 balance at the period- 285,000 approved by the period-end end Proportion of the total actual guarantee balance in the 7.75% Company’s net assets If the subsidiaries use the credit line, the relevant insolvency Explanation on possibility to bear joint liability due to responsibility is born by the companies using the credit line undue guarantees actually, and the Company bears joint liability. Explanation on the external guarantees in violation of N/A stipulated procedures

VIII. Performance of commitments

Commitments made by the Company or shareholders holding over 5% of the Company’s shares in the reporting period, or such commitments carried down into the reporting period

Time of Commitment Period of Fulfillme Commitment Contents making maker commitment nt commitment

1. Commitments made by CND and CMHI It is promised about share custody; that the Commitment 2. Commitment made by CMHI about horizontal in the guaranteeing the independency of the competition acquisition Company; issue will be In the report or the CMHI 3. Commitment made by China Merchants 20 Sept. 2012 solved through process of report on Holdings (International) about horizontal ways such as execution equity competition; and asset changes 4. Commitment made by China Merchants reorganization Holdings (International) about regulating in the coming 3- related-party transactions 5 years.

※ For details of the said commitments, see the share custody announcement and the abstract of the acquisition report of Shenzhen Chiwan Wharf Holdings Limited disclosed by the Company on 20 Sept. 2012, with the announcement No. being 2012-035.

23 2012 Annual Report IX. Particulars about engagement and disengagement of CPAs firm

Name of domestic CPAs firm Deloitte Touche Tohmatsu Certified Public Accountants LLP Remuneration for domestic CPAs firm RMB 1.9 million Consecutive years of the audit services 1 year provided by domestic CPAs firm Names of the certified public accountants Li Weihua, Su Min from the CPAs firm

As approved by the 1st Session of the Audit Committee under the 7th Board of Directors for 2012, the 2nd Special Session of the 7th Board of Directors for 2012 and the Annual General Meeting for 2011, at which agreed on changing to appoint Deloitte Touche Tohmatsu Certified Public Accountants LLP as the Company’s accounting firm for 2012 to audit the annual financial report and internal control. The 2012 annual audit fees for financial report and internal control are RMB 1,600,000 and RMB 300,000 respectively, totaling RMB 1,900,000.

X. Other significant events

On 27 Dec. 2012, the Company’s shareholder CND and Malai Storage signed the “Agreement between China Nanshan Development (Group) Inc. and Shenzhen Malai Storage Co., Ltd. Concerning Transferring Shares of Shenzhen Chiwan Wharf Holdings Limited”, according to which it was agreed that CND transferred 161,190,933 circulating A-shares of the Company (representing a shareholding percentage of 25%) to Malai Storage at the agreed price of RMB 11.088 per share. The equity transfer annouoncement (No. 2012-054) was published on Securities Times, Ta Kung Pao and www.cninfo.com.cn dated 29 Dec. 2012. The said transaction was approved by SASAC of the State Council and the approval announcement (No. 2013-019) was published on Securities Times, Ta Kung Pao and www.cninfo.com.cn dated 12 Mar. 2013. Up to the disclosure day of this annual report, the equity transfer procedure is proceeding.

XI. Issue of corporate bonds

On 25 Nov. 2011, the Company was approved to publicly issue the corporate bonds with par value not more than 1 billion in accordance with CSRC Zheng-Jian-Xu-Ke [2011] No. 1889. The total issuing amount of corporate bonds for the Company in 2011 (Phase I) stood at RMB 0.5 billion with an expiration period of five years (attached with the resell rights of investors, repurchase rights of issuer and right of increasing the coupon rate at the end of the third year) and a par value of RMB100 by way of parity issuance. The coupon rate is 5.28% and the value date is 26 Apr. 2012, as well as the interest paying date is each 26 Apr. from the year of 2013 to 2017. As approved by the Shenzhen Stock Exchange Shen-Zheng-Shang [2012] No. 142, the corporate bonds has been listed for trading in Shenzhen Stock Exchange since 1 Jun. 2012 with the bond abbreviation of “11 Chiwan 01” and bond code of “112082”. (For details, please refer to the Public Notice on the Listing Report of Corporate Bonds in 2011 for Shenzhen Chiwan Wharf Holdings Limited (Phase I) on 31 May 2012, Announcement No: 2012-021).

24 2012 Annual Report

VI. Changes in Share Capital and Particulars about Shareholders

I. Changes in shares

Unit: share Before the change Increase (+)/ decrease (-) After the change Issue of Reser Bonus Number Percentage additional ves to Other Sub-total Number Percentage issue shares stocks 1.Shares subject to trading moratorium 754,504 0.117% -19,038 -19,038 735,466 0.114% a. State-owned shares b. State-owned legal person shares c. Other domestic shares Including: Shares held by domestic legal persons Shares held by domestic individuals d. Shares held by overseas 50,852 0.008% 76,402 76,402 127,254 0.020% shareholders Including: Shares held by overseas legal persons Shares held by overseas individuals 50,852 0.008% 76,402 76,402 127,254 0.020% e. Shares held by senior management 703,652 0.109% -95,440 -95,440 608,212 0.094% staff 2. Shares not subject to trading 644,009,226 99.883% 19,038 19,038 644,028,264 99.886% moratorium a. Ordinary shares denominated in 464,789,805 72.087% 0 0 464,789,805 72.087% RMB b. Domestically listed foreign shares 179,219,421 27.796% 19,038 19,038 179,238,459 27.799% c. Overseas listed foreign shares d. Others 3.Total shares 644,763,730 100% 644,763,730 100%

※ Changes in the shares were due to the shareholding changes of the Company’s senior management staff who had already departed. According to the Stock Listing Rules, the Company shares held by them should be locked up for a half year after their leaving office.

Ⅱ. Issuance and listing of securities

Securities issues in the recent three years

Name of stock Issuing price Date of Amount of the Amount approved Period for and its derivative (RMB Public date issuance issue for trading the issue securities Yuan/share) Corporate Bond 26 April 2012 100 RMB 500 million 1 Jun. 2012 RMB 500 million 3+2 years for 2011 (Phase I)

25 2012 Annual Report Ⅲ. Shareholders and actual controller

1. Total number of shareholders and their shareholdings Unit: share Total number of Total number of 35,892, with 27,402 being shareholders at the end of 34,148, with 25,666 being A-share shareholders at the A-share holders, and 8,490 the fifth trading day before holders, and 8,482 being B-share end of the reporting being B-share holders the disclosure date of the holders period annual report Shareholdings of top ten shareholders (all being shareholders holding shares not subject to trading moratorium) Nature of Type Shares not Shares shareholder Percentage of subject to Increase/decrease pledged (holder of A of shares Name of shareholder (full name) trading in reporting or shares or shareholding (A, B, moratorium period frozen holder of B (%) H or (share) (share) shares)) other) CHINA NANSHAN Holder of A A 57.52% 370,878,000 0 0 DEVELOPMENT (GROUP) INC. shares share KEEN FIELD ENTERPRISES Holder of B B 8.58% 55,314,208 3,605,327 N/A LIMITED shares share CMBLSA RE FTIF TEMPLETON Holder of B B 7.43% 47,914,954 0 N/A ASIAN GRW FD GTI 5496 shares share PING AN TRUST CO., LTD.－ Holder of A A 0.74% 4,780,000 4,780,000 N/A RUIFU NO. 2 shares share GOVERNMENT OF SINGAPORE Holder of B B 0.74% 4,745,858 -1,325,334 N/A INV. CORP.- A/C "C" shares share Holder of B B EMPLOYEES PROVIDENT FUND 0.56% 3,586,266 40,732 N/A shares share OMERS ADMINISTRATION Holder of B B 0.44% 2,849,109 -389,200 N/A CORPORATION(SC03) shares share TEMPLETON CANADA Holder of B B 0.43% 2,783,848 111,924 N/A EMERGING MKTS FUND shares share TEMPLETON ASIAN GROWTH Holder of B B 0.41% 2,657,852 1,026,137 N/A FUND shares share FTIF-TEMPLETON EMERGING Holder of B B MKT SMALLER COMPANIES 0.39% 2,522,279 0 N/A shares share FUND

Explanation on associated CMHI is a shareholder of CND and Keen Field is a wholly-funded subsidiary of relationship or persons acting in CMHI.The Company does not know if there are any inter-relations among other concert among the above-mentioned shareholders holding shares not subject to trading moratorium. shareholders:

2. Particulars about the controlling shareholder

Legal Name of controlling representative Date of Business license Registered capital Business scope shareholder / company establishment No. principal China Merchants Port services, bonded Holdings 14602056-000- logistic and cold chain Fu Yuning 28 May 1991 RMB 500 million (International) Co., 05-12-2 services, property Ltd. development and investment 26 2012 Annual Report China Merchants Holdings (International) Co., Ltd. (“CMHI”) is the largest public port operator in China, as well as a leading one in the world. It has a sound port network expanding across main coastal hub ports in China. It invests or invests and manages wharfs in Hong Basic introduction Kong, Shenzhen, Ningbo, Shanghai, Qingdao, Tianjin, Xiamen Bay, Zhangjiang and other container hub ports, with its hands also reaching out for ports in South Asia, Africa, etc. Up until now, CMHI invests in over 20 ports and more than 130 container berths and can handle nearly 60 million TEUs per year, accounting for over 30% of the China Mainland market. Shares held by the controlling shareholder in other CMHI, the controlling shareholder of the Company, held 24.49% shares of Shanghai listed companies by International Port (Group) Co., Ltd., 25.54% shares of China International Marine Containers holding or (Group) Co., Ltd. and 4.55% shares of Ningbo Port Co., Ltd.. shareholding during the reporting period

For change of the controlling shareholder during the reporting period, see Section II. IV and Section VI. III. 4 of this report.

3. Particulars about the actual controller

Legal Name of Date of representative Organization Registered the actual establis Business scope / company code capital controller hment principal lease and agency of water/land passenger-cargo transportation, water/land conveyance and facilities; investment and management of port and storage business; salvage, refloatation and tugboat; industrial production; construction, repairing, checking and marketing of shipping, offshore petroleum drilling equipment; repairing and checking of drilling platform and drilling container; overall contracting of water/land construction projects and the related offshore petroleum development projects, and their construction organization and logistic services; China procurement, supply and sale of water/land 14 Oct. RMB 10.05 Merchants Fu Yuning 10000522-0 communication and transportation equipment; export 1986 billion Group and import business of transportation; investment and management of finance, insurance, trust, securities, futures business; investment and management of tourism, hotels, catering services and relevant services; real estate development, management and consultancy of property; investment and management of petroleum and chemical industry; investment and operation of infrastructure of communication; overseas assets management. Development and management of Shenzhen Industrial Zone and Fujian Zhangzhou Development Zone. Currently, China Merchants Group focuses on three core business sectors, namely, construction, operation and services concerning transportation & related infrastructure Basic introduction (ports, roads, energy transportation and logistics); financial investment and management; and property development and management.

27 2012 Annual Report 4. Relation between the Company and its actual controller in the form of diagram

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

100%

China Merchants Group

54.80%

China Merchants Holdings (International) Company Limited

entrusted to manage 100% 37.02% 57.52% of the Company's Keen Field Enterprises China Nanshan Development shares held by Limited (Group) Incorporation CND 8.58% 57.52%

Shenzhen Chiwan Wharf Holdings Limited

Note 1: On 17 Sept. 2012, CMHI and CND signed the “Agreement of China Merchants Holdings (International) Co., Ltd. and China Nanshan Development (Group) Inc. Concerning Custody of Shares of Shenzhen Chiwan Wharf Holdings Limited”. According to the Agreement, CND would entrust the management of 370,878,000 A-shares in the Company (representing a shareholding percentage of 57.52%) to CMHI. The custody announcement (No. 2012-035) was released on 20 Sept. 2012 on Securities Times, Ta Kung Pao and www.cninfo.com.cn. Meanwhile, CMHI indirectly holds 55,314,200 B-shares of the Company (representing a shareholding percentage of 8.58%) via its wholly-funded subsidiary Keen Field, thereby, China Merchants Holdings (International) controls 66.10% equity interests of the Company. On 1 Nov. 2012, China Securities Regulatory Commission issued the ZJXK [2012] No. 1428 Document—“Reply on Approving China Merchants Holdings (International) Co., Ltd. to Disclose the Acquisition Report on Shenzhen Chiwan Wharf Holdings Limited and Exempting It from the Tender Offer Duty”, exempting its tender offer duty due to the entrusted management of 370,878,000 shares of the Company, which made it the controller of the Company’s 426,192,200 shares in all, accounting for 66.10% of the Company’s total shares. The actual controller of the Company—China Merchants Group—is unchanged after the said entrustment with share management. Note 2: On 27 Dec. 2012, the Company’s shareholder CND and Malai Storage signed the “Agreement between China Nanshan Development (Group) Inc. and Shenzhen Malai Storage Co., Ltd. Concerning Transferring Shares of Shenzhen Chiwan Wharf Holdings Limited”, according to which it was agreed that CND transferred 161,190,933 circulating A-shares of the Company 28 2012 Annual Report (representing a shareholding percentage of 25%) to Malai Storage at the agreed price of RMB 11.088 per share. The said transaction was approved by SASAC of the State Council and the approval announcement (No. 2013-019) was published on Securities Times, Ta Kung Pao and www.cninfo.com.cn dated 12 Mar. 2013. Up to the disclosure day of this annual report, the equity transfer procedure is proceeding.

VII. Directors, Supervisors, Senior Management Staff and Employees

I. Changes in shareholding of directors, supervisors and senior management staff

Number of Number of Shares held shares Current shares held Starting and ending at the year- increased/ Name Office title / Sex Age at the dates of office term begin decreased at former period-end (share) the reporting (share) period (share) Zheng Chairman of the Current Male 50 May 2011-May 2014 212,652 0 212,652 Shaoping Board Zhang Director Current Male 44 Jan. 2013-May 2014 0 0 0 Rizhong Deng Director Current Male 45 Jan. 2013-May 2014 0 0 0 Weidong Wang Director Current Male 48 Jan. 2013-May 2014 0 0 0 Zhixian Li Yubin Director Current Male 41 Jan. 2013-May 2014 0 0 0 Zhang Director Current Male 48 Jan. 2013-May 2014 98,782 0 98,782 Jianguo Independent Li Wuzhou Current Male 73 May 2011-May 2014 0 0 0 director Hao Independent Current Male 60 May 2011-May 2014 0 0 0 Zhujjiang director Zhang Independent Current Male 48 May 2011-May 2014 0 0 0 Jianjun director Chairman of the Yu Liming Supervisory Current Male 50 May 2011-May 2014 0 0 0 Committee Wen Ling Supervisor Current Female 48 Jan. 2013-May 2014 0 0 0 Zhao Jianli Supervisor Current Female 49 Jan. 2013-May 2014 0 0 0 Zhao Supervisor Current Male 47 May 2011-May 2014 64,954 0 64,954 Chaoxiong Ni Keqin Supervisor Current Female 48 May 2011-May 2014 38,772 0 38,772 Zhao Qiang GM Current Male 50 Oct. 2012-May 2014 15,103 0 15,103 Xiong Deputy GM, Current Male 49 May 2011-May 2014 83,147 0 83,147 Haiming chief

29 2012 Annual Report engineering Pan Ke Deputy GM Current Male 35 Oct. 2012-May 2014 0 0 0 Zhang Fang CFO Current Male 48 Jan. 2013-May 2014 22,111 -18,844 3,267 Company Bu Dan Current Female 35 Jan. 2012-May 2014 0 0 0 secretary Tian Junyan Director Former Male 51 May 2011-Jan. 2013 0 0 0 Wang Fen Director Former Female 58 May 2011-Jan. 2013 82,632 0 82,632 Fan Director Former Male 58 May 2011-Jan. 2013 53,877 0 53,877 Zhaoping Yuan Yuhui Director Former Male 62 May 2011-Jan. 2013 14,040 0 14,040 Executive Zhang Ning director, deputy Former Male 52 May 2011-Jan. 2013 146,991 0 146,991 GM Huang Supervisor Former Female 56 May 2011-Jan. 2013 0 0 0 Huizhen Guo Supervisor Former Female 54 May 2011-Jan. 2013 0 0 0 Songhua Qu Deputy GM Former Male 48 May 2011-Oct. 2012 127,254 0 127,254 Jiandong Zhang Deputy GM, Former Male 48 May 2011-Dec. 2012 Ditto 0 Ditto Jianguo CFO Total ------960,315 -18,844 941,471

II. Post-holding situation

1. Main working experience of current directors, supervisors and senior management staff over the past five years:

Chairman of the Board, Mr. Zheng Shaoping, majored in Maritime Law and graduated from Dalian Marine College with a Master’s Degree, received an MBA from of Wales. He ever took posts of Deputy GM of CND, 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 acts as Deputy GM & Executive Director of China Merchants Holdings (International) Company Limited, Vice Chairman of China Merchants Bonded Logistics Co., Ltd., Chairman of the Board of Shekou Container Terminals Ltd. and Chiwan Container Terminal Co., Ltd., and GM of Shenzhen Chiwan Harbour Container Co., Ltd. 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. Zhang Rizhong, graduated from The Central Finance and Economics University in the PRC and The University of Westminster of UK with a bachelor’s degree in Economics and a MBA, ACCA member. He has worked in finance and accounting for over 20 years, with rich experience in financial management. He was once a deputy GM of the Financial Department of China Merchants Group and the CFO of China Merchants Holdings (U.K.) Co., Ltd. Joining in

30 2012 Annual Report 2005, he is now deputy GM and the CFO of China Merchants Holdings (International) Company Limited. He has been a director of the Company since Jan. 2013.

Director, Mr. Deng Weidong, graduated in 1994 from Nanjing University in physical geography with a doctor’s degree and graduated in Sept. 2002 from Dalhousie University in Canada in marine stewardship with a master’s degree. With rich experience in port operation and management, he was once an employee of the Administration Bureau of Hainan Yangpu Economic Development Zone, the GM of the Development Department of CND, a deputy GM of Chiwan Container Terminal Co., Ltd., the GM of Shenzhen Mawan Port Service Co., Ltd. and the GM of Shenzhen Mawan Terminals Co., Ltd.. Joining in in Jul. 2009, he is now a deputy GM of China Merchants Holdings (International) Company Limited. He has been a director of the Company since Jan. 2013.

Director, Mr. Wang Zhixian, graduated from Tianjin University and Shanghai Jiao Tong University with a master’s degree in engineering and then graduated from the Guanghua School of Management of Peking University with an MBA degree. He has rich experience in port management. Joining China Merchants Holdings (International) Company Limited (“CMHI”) in Jul. 1992, he was once a deputy GM of the Industrial Management Department and the GM of the Company Planning Department of CMHI, a deputy GM of Shenzhen Mawan Port Service Co., Ltd., the Chairman and CEO of China Merchants International Terminals Co., Ltd. Daxie Ningbo Port.D and the Managing Director of China Merchants Port Service (Shenzhen) Co., Ltd. and Shenzhen Haixing Harbor Development Co., Ltd.. He has been a director of the Company since Jan. 2013.

Director, Mr. Li Yubin, graduated from Tianjin University with a bachelor’s degree in port engineering and a master’s degree in engineering management, and graduated in 2007 from the University of Hong Kong with a doctor’s degree in real estate and construction. He has rich experience in port construction and operation, and logistics management. Joining in CMHI in 2007, he was once an assistant to the GM of the Research and Development Department, International Division, Commercial and Strategic Planning Department of CMHI and a deputy GM of China Merchants Bonded Logistics Co., Ltd.. He is now the GM of the Commercial and Strategic Planning Department of CMHI. And he has been a director of the Company since Jan. 2013.

Director, Mr. Zhang Jianguo, graduated from Shanxi Finance & Economics Institute in accounting with a bachelor’s degree in economics. Financial Manager of the Company since 1997, Chief Financial Officer of the Company from Sept. 1999 to 31 Dec. 2012, and Deputy GM of the Company from Feb. 2011 to 31 Dec. 2012. He is now the CFO of CND. And he has been a director of the Company since Jan. 2013.

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, Honorary President of China Water Transportation Construction Association, and Independent Director of the Company since May 2008.

31 2012 Annual Report 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 Addeputy 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, Deputy 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.

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, Deputy President of China Merchants Group and Executive Director of CMHI. And Supervisor of the Company since Oct. 2009.

Supervisor, Ms. Wen Ling, graduated from Southwestern University of Finance and Economics with a postgraduate degree. She was once the Deputy Financial Manager of China Merchants Port Service (Shenzhen) Co., Ltd., the Financial Manager of Shenzhen Mawan Port Service Co., Ltd. and the Deputy Financial Manager of CMHI. Joining CMHI in 2004, she is now a senior deputy GM of the Financial Department of CMHI. And she has been a supervisor of the Company since Jan. 2013.

Supervisor, Ms. Zhao Jianli, graduated from Xi’an Highway Institute, with a bachelor’s degree in management engineering and a master’s degree in financial management. She was once the internal control and audit manager, an assistant to the GM and a deputy GM of CMHI. Joining CMHI in Sept. 2003, she is now the internal control and audit GM of CMHI. And she has been a supervisor of the Company since Jan. 2013.

Supervisor, Mr. Zhao Chaoxiong, is a university graduate, 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 Chiwan Container Terminal Co., Ltd. (“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.

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,

32 2012 Annual Report 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. He was Deputy GM of the Company from Feb. 2011 to Oct. 2012. And he has been the GM of the Company since Oct. 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, he took posts of Deputy GM, GM of Engineering Technology Division and GM Assistant of Chiwan Container Terminal Co., Ltd. Presently, he is Chief Engineer of the Company. He has been Deputy GM of the Company since Feb. 2012.

Deputy GM Mr. Pan Ke, graduated from Dongbei University of Finance and Economics with a bachelor’s degree in management information system and graduated from Dalian Maritime University with a master’s degree in logistics engineering. Joining the Company in Oct. 1999, he was once the Deputy Operation Manager of Shenzhen Chiwan Habor Container Co., Ltd.; the Deputy Container Manager of the Company’s Harbour Division; and the Logistics Manager, a GM assistant and the executive deputy GM of Chiwan Container Terminal Co., Ltd.. He has been a deputy GM of the Company since Oct. 2012.

CFO Mr. Zhang Fang, graduated from Xi’an Highway Institute with a bachelor’s degree in finance and accounting of transportation. Joining the Company in Mar. 1996, he was once the Financial Manager of Shenzhen Chiwan Transportation Co., Ltd., Shenzhen Chiwan Habor Container Co., Ltd. and Chiwan Container Terminal Co., Ltd.. He has been the CFO of the Company since Jan. 2013.

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

2. Taking Positions in shareholder units

Remuneration or Shareholder Starting and ending Name Position in shareholder unit allowance from unit dates of office term shareholder unit (Yes/No)

Zheng Executive director Feb. 2012-now CMHI Yes Shaoping Deputy GM Jan. 2013-now

Zhang Deputy GM Mar. 2012-now CMHI Yes Rizhong CFO Feb. 2009-now Deng CMHI Deputy GM Dec. 2011-now Yes Weidong Wang CMHI Deputy GM Jul. 2012-now Yes Zhixian

33 2012 Annual Report GM of Commercial and Li Yubin CMHI May. 2012-now Yes Strategic Planning Dept. Zhang CND CFO Jan. 2013-now Yes Jianguo Yu Liming CMHI Executive director Dec. 1998-now No Wen Ling CMHI Senior vice financial GM Sep. 2010-now Yes Zhao Jianli CMHI Internal control and audit GM Jun. 2010-now Yes

3. Taking positions in other units

Remuneration Position in Starting and ending or allowance Name Other unit other unit dates of office term from other unit (Yes/No) Chiwan Container Terminal Co., Ltd. Chairman Mar. 2011-now No Shenzhen Mawan Terminals Co., Ltd. Chairman Aug. 2011-now No

Zheng Shenzhen Mawan Port Service Co., Ltd. Chairman Aug. 2011-now No Shaoping Shenzhen Mawan Wharf Co., Ltd. Chairman Aug. 2011-now No Shekou Container Terminals Ltd. Chairman Apr. 2011-now No China Merchants Bonded Logistics Co., Ltd. Vice Chairman Apr. 2010-now No Shenzhen Haixing Harbor Development Co., Vice Chairman Jun. 2009-now No Ltd. China Merchants Port Service (Shenzhen) Vice Chairman Apr. 2010-now No Co., Ltd. Zhang Rizhong Shekou Container Terminals Ltd. Director May 2009-now No Shenzhen Malai Storage Co., Ltd. Director Oct. 2012-now No Apr. 2011-Apr. Shanghai International Port (Group) Co., Ltd. Supervisor No 2014 Chiwan Container Terminal Co., Ltd. Vice Chairman Sept. 2012-now No Deng China Merchants Bonded Logistics Co., Ltd. Director Dec. 2011-now No Weidong Shekou Container Terminals Ltd. Director Jul. 2010-now No Shenzhen Haiqin Engineering. Management Chairman Aug. 2012-now No Co., Ltd. China Merchants Port Service (Shenzhen) Chairman Sep. 2012-now No Co., Ltd. Shenzhen Haixing Harbor Development Co., Wang Chairman Aug. 2012-now No Zhixian Ltd. Shenzhen Malai Storage Co., Ltd. Chairman Oct. 2012-now No China Merchants International Terminals Director Jul. 2012-now No Co,Ltd. Daxie Ningbo Port.D Zhangzhou China Merchants Port Co., Ltd. Director Aug. 2012-now No Shekou Container Terminals Ltd. Director Aug. 2012-now No Li Yubin Shenzhen Mawan Wharf Co., Ltd. Director Sept. 2012-now No

34 2012 Annual Report China Merchants Holdings (International) Director Apr. 2012-now No Information Technology Company Limited China Merchants Group (HK) Director Apr. 2000-now No China Merchants Loscam International Director Jun. 2010-now No Holdings Co., Ltd. Yu Liming Modern Terminals Co., Ltd. Director Apr. 2007-now No China Merchants Finance Holdings Co., Ltd. Director Feb. 2011-now No China Merchants Capital Co., Ltd. Director Jan. 2012-now No Vice Chairmen of the Port (Group) Co., Ltd. Nov.2007-now No Supervisory Committee Wen Shenzhen Haiqin Engineering. Management Supervisor Sept. 2012-now No Ling Co., Ltd. China Merchants Port Service (Shenzhen) Supervisor Mar. 2008-now No Co., Ltd. Shenzhen Malai Storage Co., Ltd. CFO Dec. 2012-now No Zhao China Merchants Port Service (Shenzhen) Director Apr. 2010-now No Jianli Co., Ltd.

III. Remuneration for directors, supervisors and senior management

1. Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors and senior management

(1) Decision-making procedure for the remuneration of directors, supervisors and senior management: Remunerations for the Company’s directors, supervisors and senior management shall be determined upon review of the Nomination, Remuneration and Evaluation Committee. 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. (2) Determining basis for the remuneration of directors, supervisors and senior management: The remuneration modes and levels of directors, supervisors and senior executives are determined based on the market orientation, with post value, functions, etc. taken into account. (3) Actual payment for the remuneration of directors, supervisors and senior management: Salaries and independent director allowances were paid to directors, supervisors and senior executives on a monthly basis. And the other bonuses were paid all at one time according to the performance of each of them.

2. Remuneration of the directors, supervisors and senior management of the Company during the reporting period

35 2012 Annual Report Unit: RMB’000 Total remuneration gained Total remuneration gained Name Position from the Company from shareholder’s unit Zheng Shaoping Chairman of the Board N/A 1,230 Tian Junyan Director N/A 1,390 Wang Fen Director N/A 1,390 Fan Zhaoping Director N/A 1,180 Yuan Yuhui Director N/A 870 Zhang Ning Director, standing deputy GM 1,280 N/A Li Wuzhou Independent directors 100 N/A Hao Zhujiang Independent directors 100 N/A Zhang Jianjun Independent directors 100 N/A Guo Songhua Supervisor N/A 780 Zhao Chaoxiong Supervisor 740 N/A Ni Keqin Supervisor 720 N/A Zhao Qiang GM 1,110 N/A Qu Jiandong Deputy GM 1,040 N/A Zhang Jianguo Deputy GM, CFO 1,000 N/A Xiong Haiming Deputy GM, chief engineer 1,040 N/A Pan Ke Deputy GM 920 N/A Bu Dan Company Secretary 480 N/A

※ During the reporting period, the actual remunerations paid to all the directors, supervisors and senior executives of the Company stood at RMB 19.11 million.

The Company did not formulate and carry out any equity incentive plan during the reporting period.

IV. Resignation condition of Directors, supervisors and senior management staff

Name Position Type Date Reason Tian Junyan Director Resign 7 Jan. 2013 Change of job Wang Fen Director Resign 7 Jan. 2013 Change of job Fan Zhaoping Director Resign 7 Jan. 2013 Change of job Yuan Yuhui Director Resign 7 Jan. 2013 Change of job Standing deputy GM Resign 15 Oct. 2012 Change of job Zhang Ning Director Resign 7 Jan. 2013 Change of job Huang Huizhen Supervisor Resign 7 Jan. 2013 Change of job Guo Songhua Supervisor Resign 7 Jan. 2013 Change of job Qu Jiandong Deputy GM Resign 29 Oct. 2012 Change of job Zhang Jianguo Deputy GM, CFO Resign 31 Dec. 2012 Change of job 36 2012 Annual Report V. Particulars about work force

As at 31 December 2012, the Company had 1,795 employees, with 834 being university graduates, 61 financial personnel, 71 sales persons, 279 technicians, 70 management personnel, and the others being staff for production. The Company did not need to pay remuneration or any fees for retired staff.

37 2012 Annual Report

VIII. Corporate Governance

I. Basic information of corporate governance

(I) Strictly in line with requirements stipulated in Company Law, Securities Law, Corporate Governance Principle for Listed Company and relevant laws and regulations of CSRC, the Company made efforts to improve corporate governance, promote the level of corporate governance, form modern corporate system and standardize corporate operation. Details about corporate governance within the reporting period are set out as below:

1. 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.

2. 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.

3. 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.

4. Pursuant to relevant requirements of the “CSRC Notice on Further Implementing Matters Related to Cash Dividends of Listed Companies” and the “Shenzhen CSRC Notice on Earnestly Implementing the ‘CSRC Notice on Further Implementing Matters Related to Cash Dividends of Listed Companies’” (SZJGSZ 【2012】 No. 43), the Company revised Article 153 and Article 154 in its Articles of Association concerning profit allocation. The amendments were reviewed and approved at the 5th Special Session for 2012 of the 7th Board of Directors on 3 Aug. 2012, and then at the 1st Special Shareholders’ General Meeting for 2012 on 21 Aug. 2012.

5. According to the requirement of National Association of Financial Market Institutional Investors, there should be an information disclosure mechanism for the inter-bank market debt financing instrument when issuing bonds in the inter-bank market. Considering its need to issue short-term financing bonds in the inter-bank market, the Company formulated the “Information Disclosure Management Rules for the Inter-bank Debt Financing Instrument of Shenzhen Chiwan Wharf

38 2012 Annual Report Holdings Limited” according to relevant laws, regulations, the Company’s Management Rules for Information Disclosure, Articles of Association, etc., which was reviewed and approved at the 4th Special Session for 2013 of the 7th Board of Directors on 8 Mar. 2013.

6. Shareholders and shareholders’ 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.

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

8. 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 attend Board meetings and shareholders’ 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 Y2004 and the Nomination, Remuneration and Evaluation Committee and Strategy Committee of the Board as approved by the Annual General Meeting for Y2005, with a view to ensuring the efficient operation and scientific decision-making of the Board of Directors.

9. 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.

10. 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.

11. 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.

39 2012 Annual Report 12. Corporate governance mechanisms and rules 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 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, Management System on Person in Charge of Finance and CFO, Information Disclosure Management Rules for the Inter-bank Debt Financing Instrument, 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.

Since the foundation, the Company was consistently in strict accordance with Company Law and relevant laws and regulations to make a standard operation, continued business-running in line with relevant requirements of Corporate Governance Principle for Listed Companies and earnestly made effort to protect profit and interests of shareholders and stakeholders.

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

As the 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 5th Session of the 5th 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 from September 2007 to September 2012, 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.

40 2012 Annual Report (II) Special campaigns for corporate governance & formulation and implementation of the registration management rules for information insiders

1. Promoting investor protection

In order to further promote investor protection, help investors formulate a rational and long-term investment philosophy, help form a healthy investment culture among investors and further improve the management mechanism of returns for shareholders, pursuant to the “Notice on Doing a Good Job in Promoting Investor Protection in Listed Companies” (SZJGSZ 【2012】 No. 60, hereinafter referred to as “the Notice”) issued by Shenzhen CSRC on 28 Aug. 2012, the Company conducted a publicity campaign with the theme being “Good Returns for Shareholders”, with main details as follows:

Investor protection has always been an important task for the Company. When communicating with investors, the Company has always adhered to its “Investor Management Rules” and its disclosed periodical reports or announcements. It has never disclosed any information that should not be disclosed or over-publicized to mislead investors. The Company has set up a data base of investors, which is monitored and updated by special personnel on a regular basis. When being disclosed on designated websites, announcements of the Company will be emailed by the Company Secretary Office to investors in the data base so that they can receive the announcements in time. Having been treating all investors in an open, fair and honest way according to laws, regulations and its own rules, the Company voluntarily discloses its business volume on a monthly basis so that investors can follow up the Company’s operation situation in a timely manner, which will help them make investment judgments in a rational way. The Company adopts a serious attitude in implementing its “Management Rules for Information Disclosure Affairs” so that it can be in compliance with laws and regulations governing information disclosure during the investor protection publicity period.

A column of “Investor Relations” has been set up at the front-page of the Company’s website. So far, the Company has completed the sub-columns under the “Investor Relations” column according to the requirement of the Notice, namely, “Information Disclosure” (interim announcements and periodical reports), “Financial Highlights”, “Information about Shareholders” (share capital structure and latest information about the shareholders), “Corporate Governance” (Articles of Association, directors, supervisors and senior executives), “Shareholders’ General Meeting”, “Returns for Shareholders” (report on planning for returns for shareholders, dividend and bonus share distribution), “Investor Protection”, “Communication with Investors” (announcement subscription and email address for shareholders to contact the Company), “Visits” (materials showed to visitors and name list of visitors), “Contact us”, etc. Under the “Investor Protection” sub- column, there are investor protection publicity materials from the Investor Protection Bureau of CSRC such as “Top 50 Q&A for Investors”, “Replies to Investors’ Questions” and “Public- services Commercials for Education of Investors”. In the said sub-columns, the Company also introduces dividend distribution for previous years, its Articles of Association (the dividend policy), implementation of the CSRC notices on matters related to cash dividends of listed companies, the planning for returns for shareholders, the dividend status, etc. The Company will continue to update these columns to enable investors to know better about it.

41 2012 Annual Report

Upon this special campaign, the Company has formed a working mechanism for investor protection publicity. The Company will continue to take investor protection publicity as an important task, keep investor protection in mind in daily work, improve its activities concerning investor protection and help investors invest in a rational and long-term way as a habit.

2. “Insider Dealing Caution & Education Exhibition”

Pursuant to the requirement of the “Shenzhen CSRC Notice on the ‘Insider Dealing Caution & Education Exhibition’ Campaign”, and in order to further promote insider dealing caution and education effectively, the Company conducted, based on its actual situation, publicity and education activities concerning insider dealing warning. In order to let relevant personnel have a better understanding about the dangers of insider dealings, the Company Secretary Office organized personnel often exposed to insider information in their daily work (including personnel from the Financial Department, the Business Department, the Clearing Center, the HR Department and the Audit Office) to go to the exhibition at Shenzhen Civil Center on 25 Oct. 2012. Afterwards, in order to maximize the publicity effect of this education exhibition and promote better compliance with laws among employees, the Company Secretary Office sent the relevant education materials to directors, supervisors and senior executives and also put these materials at the show window for employees to learn.

3. 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. In compliance with the document requirement of Regulation on Establishing Management Rules of 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. 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.

42 2012 Annual Report II. Particulars about the annual shareholders’ general meeting and special shareholders’ general meetings held during the reporting period

1. Particulars about annual shareholders’ general meeting held during the reporting period

Convening Disclosure Session Name of proposal Resolution Disclosure index date date 1. 2011 Annual Work Report of the Board of Directors; 2. 2011 Annual Work Report of the For the resolution Supervisory Committee; announcement 2011 Annual 3. 2011 Annual Final Financial Reviewed 28 May 29 May (No. 2012-020), Shareholders’ Report; and 2012 2012 see General Meeting 4. 2011 Annual Preplan for Profit approved http://www.cninfo Allocation and Dividend .com.cn Distribution; 5. Proposal on Reengaging the CPAs Firm for 2012.

2. Particulars about special shareholders’ general meetings held during the reporting period

Convening Disclosure Session Name of proposal Resolution Disclosure index date date For the resolution The First Special announcement Reviewed Shareholders’ 21 Aug. Proposal on Amending the 22 Aug. (No. 2012-031), and General Meeting 2012 Company’s Articles of Association 2012 see approved for 2012 http://www.cninfo .com.cn For the resolution The Second announcement Special Proposal on the Company Planning Reviewed (No. 2012-050), Shareholders’ 5 Dec. 2012 to Issue Short-term Financing and 6 Dec. 2012 see General Meeting Bonds approved http://www.cninfo for 2012 .com.cn

III. Performance of the Independent Directors

1. Particulars about the independent directors attending the board sessions and the shareholders’ general meetings

Particulars about the independent directors attending the board sessions Sessions required to Attendance by way Number of Non-attendance in Attendance Attendance Name attend during the of times of person for two in person by proxy reporting period telecommunication absence consecutive times Li Wuzhou 11 2 9 0 0 No Hao Zhujiang 11 2 9 0 0 No Zhang Jianjun 11 1 9 1 0 No General meetings sat in on by independent directors 3

43 2012 Annual Report 2. Particulars about independent directors proposing objection on relevant events

During the reporting period, no independent directors proposed any objection on relevant events of the Company.

3. Other explanations about the duty performance of independent directors

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 2012 as disclosed at http://www.cninfo.com.cn.

IV. Performance of the Special Committees under the Board during the reporting period

(I) 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. 1. The Audit Committee of the Company held a total of three meetings during the year, with details as follows: (1) On 26 Mar. 2012, the First Session of the Audit Committee of the Seventh Board of Directors for 2012 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 2011” was reviewed and approved;

44 2012 Annual Report ● “Internal Auditing Plan of the Company for 2012” was reviewed and approved; ● “Working Report of the Audit Committee of the Board in 2011” was reviewed and approved; ● “The Financial Statements of 2011” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “Working Report of the Accounting Firm in 2011” was reviewed and approved and was submitted to the Board of Directors of the Company for approval; ● “Report on the Change of the Accounting Firm for 2012” was reviewed and approved. The Audit Committee proposed to change the CPAs firm of the Company to Deloitte Touche Tohmatsu Certified Public Accountants LLP to shoulder the audit of the annual financial statements and the internal audit for 2012. This proposal was submitted to the Board of Directors of the Company for approval. (2) On 21 Aug. 2012, the Second Session of the Audit Committee of the Seventh Board of Directors for 2012 was held at 8:30 a.m. at Conference Room I, 8/F., Chiwan Petroleum Building, Shenzhen, at which the following proposals were reviewed and approved unanimously: ● “The Semi-Annual Financial Report for 2012 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 2012” was reviewed and approved. (3) On 21 Dec. 2012, the First Special Session of the Audit Committee of the Seventh Board of Directors for 2012 was held at 9:00 a.m. at Conference Room I, 8/F., Chiwan Petroleum Building, Shenzhen, at which the Report on the Company’s Auditing Work of Finance and Internal Control by Deloitte Touche Tohmatsu Certified Public Accountants LLP for 2012 was debriefed. 2. 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 2011 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 2011. During the reporting period, the Audit Committee expressed its audit opinions two times on the annual financial statements of the Company for 2011 in accordance with relevant requirements from CSRC. 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

45 2012 Annual Report 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 2011. Information included in the Financial Statements was objective and complete. Financial Statements for 2011 which was preliminarily audited by PricewaterhouseCoopers Zhong Tian Certified Public Accountants may be submitted for review at the Third Session of the Seventh 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 17 Feb. 2012 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 27 Mar. 2012. 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. 2011 and its operation results and cash flows for the year 2011 and the audit conclusion made was in line with the actual situation of the Company. (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.

(II) Performance of the Nomination, Remuneration and Evaluation Committee

During the reporting period, the Nomination, Remuneration and Evaluation Committee under the Board of Directors held a total of three meetings, details of which are as follows: 1. On 26 Mar. 2012, the First Session of the Nomination, Remuneration and Evaluation Committee of the Seventh Board of Directors for 2012 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 2011” and the “Report on the Remuneration of the Directors, Supervisors and Senior Management Staff for 2011” were reviewed and approved;

46 2012 Annual Report 2. On 11 Oct. 2012, the Second Special Session of the Nomination, Remuneration and Evaluation Committee of the Seventh Board of Directors for 2012 was held by way of telecommunication voting, at which “Report on the Engagement of the Company’s GM” was reviewed and approved unanimously and submitted to the Board of Directors of the Company for approval; 3. On 19 Oct. 2012, the Third Special Session of the Nomination, Remuneration and Evaluation Committee of the Seventh Board of Directors for 2012 was held by way of telecommunication voting, at which “Report on the Engagement of the Company’s Deputy GM” was reviewed and approved unanimously and submitted to the Board of Directors of the Company for approval.

(III) Performance of the Strategy Committee

During the reporting period, the Strategy Committee of the Board of Directors of the Company held two meetings. Details of the meetings are set out as follows: 1. On 26 Mar. 2012, the First Session of the Strategy Committee of the Seventh Board of Directors for 2012 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: (1) “The Working Report of the Strategy Committee of the Board for 2011” was reviewed and approved; (2) “The Business Development Plan for 2012 to 2016” was reviewed and approved. 2. On 4 Jun. 2012, the Second Session of the Strategy Committee of the Seventh Board of Directors for 2012 was held by way of telecommunication voting, at which the “Proposal on the Company and a Related Party Jointly Incorporating a Finance Company” was reviewed and approved unanimously. 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.

V. Performance of the Supervisory Committee

The Supervisory Committee has no objection on the supervised events during the reporting period.

VI. Particulars about the Company’s separation from the controlling shareholder in respect of business, personnel, assets, organization and financial affairs

The Company is absolutely independent in business, personnel, assets, finance and organization from its controlling shareholder. Details are set out as follows. The Company has the assets, personnel, qualifications and capability to conduct operating activities,with the ability of independent operation in the market. 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. The Company possesses its own self- governed assets and domicile. The Company has established and improved the corporate governance structure according to laws and has an independent and complete institutional framework. 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 sharethe same bank account with its controlling shareholder. The

47 2012 Annual Report Company has been paying tax in accordance with the laws and regulations on its own behalf.

VIII. Performance Evaluation and Incentive Mechanism for Senior Management Staff

All senior management staff of the Company is 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 determines the incentive standards to senior management staff according to their respective performance during the year.

IX. Internal Control

I. Internal control progress

Based on the Basic Norms for Internal Control of Enterprises and the mating guideline, the Company worked out the “Work Plan for Internal Control of 2012”, which was reviewed and approved by the management and then reported to the supervisory authority as required for file- keeping. The Company kept the original two-tier internal control task group and changed some members. At the tier 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 tier 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. In order to solidify the previous internal control achievements, optimize the internal control system and improve the internal control capability, according to the features and significant levels of its business lines, and based on the improvements of the internal control process about financial reporting in 2011, the scope of the Company’s internal control task for 2012 was extended to cover various processes and links of its operation. 1. Subjects included in the internal control improvement and self-evaluation task for 2012 were: the Company, Chiwan Container Terminal Co., Ltd., Shenzhen Chiwan Harbor Container Co. Ltd., Shenzhen Chiwan Terminal Co., Ltd., Shenzhen Chiwan Trans-Grains Terminal Limited, Dongguan Chiwan Wharf Company Limited and Dongguan Chiwan Terminal Company Limited. The evaluated subjects accounted for 90% of the Company’s total assets. 2. Internal control processes included in the internal control improvement and self-evaluation task for 2012 were: the organizational structure, development strategy, human resources, social responsibilities, corporate culture, capital operation, procurement, asset management, marketing, R&D, engineering projects, guarantees, outsourcing, financial reporting, overall budget, contract management, internal information transmission 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 mechanism design and other measures,

48 2012 Annual Report 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 addeputy. It then, according to the results of its aforesaid work, prepared the 2012 annual internal control self-evaluation report, which was later reviewed and approved at the 5th Session of the 7th Board of Directors. The Company engaged Deloitte Touche Tohmatsu Certified Public Accountants LLP to audit the effectiveness of its 2012 financial reporting internal control. A standard auditor’s report with unqualified opinion was issued by DDT and later disclosed by the Company as required by the regulator.

II. Board statement on its 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 Board of Directors of Shenzhen Chiwan Wharf Holdings Limited (hereinafter referred to as “the Company”) and all directors herby ensure that this report does not carry any false record, misleading statement or material omission. And they are jointly and severally liable for the factuality, accuracy and completeness of the contents carried in this report. Formulating, improving and effectively executing internal control is the responsibility of the Board of Directors. The Supervisory Committee supervises the internal control formulation and execution by the board and the management organizes the daily operation of the internal control. The goal of internal control is to rationally ensure compliance of the Company’s operation with laws and regulations, asset safety, and factuality and completeness of financial statements and the relevant information; improve the operating efficiency and effects; and promote the materialization of the development strategies. Due to the inherent limitations in internal control, it can only provide rational guarantee for the aforesaid objectives.

III. Basis for the financial reporting internal control

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

49 2012 Annual Report 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.

IV. Internal control self-evaluation report

No major defect of internal control was found during the reporting period. For the whole contents of the self-evaluation report prepared by the Company, see the “2012 Annual Self-evaluation Report on Internal Control of the Company” disclosed on www.cninfo.com.cn.

V. Internal control audit report

Auditors’ Report on Internal Control

De Shi Bao (Shen) Zi (13) No. S0049

To the Shareholders of Shenzhen Chiwan Wharf Holdings Limited: We have audited Shenzhen Chiwan Wharf Holdings Limited’s (the "Company") internal control over financial reporting as of December 31, 2012, 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.

50 2012 Annual Report 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, 2012.

Deloitte Touche Tohmatsu Certified Public Accountants LLP 25 March 2013

VI. Formulation and execution of the accountability system for material mistakes in annual report preparation

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.

51 2012 Annual Report

X. Auditor's Report (See attached)

Type of audit opinion Standard unqualified audit opinion Date of signing the audit report 25 Mar. 2013 Name of the auditor Deloitte Touche Tohmatsu Certified Public Accountants LLP No. of the audit report De Shi Bao (Shen) Zi (13) No. P0348

XI. Documents for Reference

I. Financial Statements carrying the signatures and stamps of the Company Principal, the Chief Financial Officer and the person in charge of accounting firm;

II. Original copy of the Auditor's Report stamped by the accounting firm and signed and stamped by registered accountants;

III. Original copies of all documents and the announcements thereof disclosed in the reporting period on “Securities Times” and “Ta Kung Pao”; and

IV. 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 27 March 2013

52

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

AUDITORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2012

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

FINANCIAL STATEMENTS AND AUDITOR'S REPORT FOR THE YEAR ENDED 31 DECEMBER 2012

Contents Page

Auditor's Report 1 - 2

The Company and Consolidated balance sheets 3 - 4

The Company and Consolidated income statements 5 - 6

The Company and Consolidated cash flow statements 7 - 8

The Company and Consolidated statements of changes in shareholders' equity 9 - 10

Notes to the financial statements 11 - 107

AUDITOR'S REPORT

De Shi Bao (Shen) Zi (13) No. P0348

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 company and consolidated balance sheets as at 31 December 2012, and the company and consolidated income statements, the company and consolidated statements of changes in shareholders' equity and the company and consolidated cash flow statements for the year then ended, and the notes to the financial statements.

1. Management's responsibility for the financial statements

Management of Chiwan Wharf is responsible for the preparation and fair presentation of these financial statements. This responsibility includes: (1) preparing the financial statements in accordance with Accounting Standards for Business Enterprises to achieve fair presentation of the financial statements; (2) designing, implementing and maintaining internal control which is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

2. 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 China Standards on Auditing. Those standards require that we comply with the Code of Ethics for Chinese Public Accountants and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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, we consider the internal control relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. 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.

- 1 -

3. Opinion

In our opinion, the financial statements of Chiwan Wharf present fairly, in all material respects, the company's and consolidated financial position as of 31 December 2012, and the company's and consolidated results of operations and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises.

Deloitte Touche Tohmatsu Chinese Certified Public Accountant: Certified Public Accountants LLP

Shanghai, China Li Weihua

Chinese Certified Public Accountant:

Su Min

25 March 2013

The auditor's report and the accompanying financial statements are English translations of the Chinese auditor's report and financial statements prepared in accordance with Accounting Standards for Business Enterprises. These financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in other countries and jurisdictions. Where the English version does not conform to the Chinese version, the Chinese version prevails.

- 2 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Consolidated Balance Sheet Unit: RMB LIABILITIES AND ASSETS Notes Closing balance Opening balance SHAREHOLDERS' EQUITY Notes Closing balance Opening balance Current Assets: Current Liabilities: Currency funds (V)1 314,855,568 478,788,943 Short-term borrowings (V)18 1,180,929,700 1,418,830,000 Notes receivable 1,680,000 - Notes payable (V)19 826,000 8,704,900 Accounts receivable (V)2 251,420,961 230,797,003 Accounts payable (V)20 145,987,941 160,112,954 Prepayments (V)3 1,623,037 3,497,668 Advances (V)21 299,453 5,045,311 Interest receivable - 51,667 Employee benefits payable (V)22 65,535,790 55,945,867 Other receivables (V)4 15,984,053 11,833,877 Taxes payable (V)23 40,854,861 121,781,050 Inventories (V)5 21,325,571 23,500,358 Interest payable (V)24 18,541,173 1,637,790 Other current assets 8,956,589 1,003,913 Dividends payable (V)25 - 365,161,451 Total current assets 615,845,779 749,473,429 Other payables (V)26 41,574,838 50,809,293 Non-current liabilities due Non-current Assets: (V)27 39,727,207 14,951,750 within one year Available-for-sale (V)6 5,210,000 5,690,000 Total current liabilities 1,534,276,963 2,202,980,366 financial assets Long-term equity (V)7,8 1,544,951,108 1,436,856,420 Non-current Liabilities: investments Investment property (V)9 33,463,476 34,679,229 Long-term borrowings (V)28 150,000,000 90,000,000 Fixed assets (V)10 2,701,093,453 2,482,077,688 Bonds payable (V)29 496,545,753 - Construction in progress (V)11 609,932,609 517,818,144 Special payables (V)30 80,622,976 81,790,541 Intangible assets (V)12 1,007,534,028 1,038,926,892 Deferred tax liabilities (V)15 1,022,500 1,142,500 Goodwill (V)13 10,858,898 10,858,898 Other non-current liabilities (V)31 53,652,356 58,250,957 Long-term prepaid (V)14 60,962,668 62,488,532 Total non-current liabilities 781,843,585 231,183,998 expenses Deferred tax assets (V)15 67,969,034 59,250,919 TOTAL LIABILITIES 2,316,120,548 2,434,164,364 SHAREHOLDERS' Other non-current assets (V)16 123,309,397 142,108,284 EQUITY: Total non-current assets 6,165,284,671 5,790,755,006 Share capital (V)32 644,763,730 644,763,730 Capital reserve (V)33 165,866,055 166,226,055 Special reserve (V)34 1,394,832 - Surplus reserve (V)35 464,704,268 421,692,405 Unappropriated profit (V)36 2,414,907,916 2,248,722,001 Translation differences arising on translation of financial statements (13,604,718) (13,607,440) denominated in foreign currencies Total shareholders' equity attributable to equity holders of 3,678,032,083 3,467,796,751 the parent Minority interests 786,977,819 638,267,320 TOTAL SHAREHOLDERS' 4,465,009,902 4,106,064,071 EQUITY: TOTAL LIABILITIES AND TOTAL ASSETS 6,781,130,450 6,540,228,435 6,781,130,450 6,540,228,435 SHAREHOLDER' EQUITY

The accompanying notes form part of the financial statements.

The financial statements on pages 3 to 107 were signed by the following:

Legal Representative: Zheng Shaoping

Person in Charge of the Accounting Body: Zhang Fang

Chief Accountant: Ma Zhihong

- 3 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Balance Sheet of the Parent Company Unit: RMB LIABILITIES AND ASSETS Notes Closing balance Opening balance SHAREHOLDERS' EQUITY Notes Closing balance Opening balance Current Assets: Current Liabilities: Currency funds 149,792,425 187,090,694 Short-term borrowings 334,901,700 584,530,000 Notes receivable 200,000 - Notes payable - 7,493,900 Accounts receivable (XII)1 17,754,009 16,623,725 Accounts payable 13,264,803 12,225,607 Prepayments 93,006 1,210,724 Advances 246,980 3,907,291 Interest receivable 218,084 206,151 Employee benefits payable 42,214,995 31,818,160 Dividends receivable 145,359,112 529,289,881 Taxes payable 2,213,148 1,392,629 Other receivables (XII)2 358,588,904 243,256,537 Interest payable 21,204,530 2,361,250 Inventories 860,702 922,921 Other payables 369,642,044 749,075,206 Other current assets 323,406 - Total current liabilities 783,688,200 1,392,804,043 Total current assets 673,189,648 978,600,633 Non-current Liabilities: Non-current Assets: Bonds payable 496,545,753 - Available-for-sale financial 5,210,000 5,690,000 Deferred tax liabilities 1,022,500 1,142,500 assets Long-term receivables 11,004,285 11,004,304 Total non-current liabilities 497,568,253 1,142,500 Long-term equity investments (XII)3 2,131,519,862 2,002,116,574 TOTAL LIABILITIES 1,281,256,453 1,393,946,543 Investment property 25,587,744 26,547,149 SHAREHOLDERS' EQUITY Fixed assets 144,059,820 156,481,155 Share capital 644,763,730 644,763,730 Construction in progress 687,894 614,894 Capital reserve 153,078,328 153,438,328 Intangible assets 62,376,911 65,552,356 Special reserve 240,349 - Long-term prepaid expenses 7,488,719 5,770,046 Surplus reserve 464,704,268 421,692,405 Deferred tax assets 40,060,852 29,709,461 Unappropriated profit 557,142,607 668,245,566 TOTAL SHAREHOLDERS' Total non-current assets 2,427,996,087 2,303,485,939 1,819,929,282 1,888,140,029 EQUITY TOTAL LIABILITIES AND TOTAL ASSETS 3,101,185,735 3,282,086,572 3,101,185,735 3,282,086,572 SHAREHOLDERS' EQUITY

The accompanying notes form part of the financial statements.

- 4 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Consolidated Income Statement Unit: RMB Amount in the Amount in the ITEM Notes current period prior period I. Total operating income 1,783,846,135 1,708,136,899 Including: Operating income (V)37 1,783,846,135 1,708,136,899 II. Total operating costs 1,130,280,142 1,009,870,456 Including: Operating costs (V)37 844,601,419 768,040,243 Business taxes and levies (V)38 61,151,246 71,021,926 Administrative expenses 153,432,974 158,186,232 Financial expenses (V)39 70,763,164 12,370,981 Impairment losses of assets (V)40 331,339 251,074 Add: Gains from changes in fair values - - Investment income (V)41 83,518,913 118,228,183 Including: Income from investments in associates (V)41 83,158,913 113,968,183 and joint ventures III. Operating profit 737,084,906 816,494,626 Add: Non-operating income (V)42 7,638,388 1,878,537 Less: Non-operating expenses (V)43 3,828,736 2,035,862 Including: Losses from disposal of non-current assets (V)43 2,940,283 1,960,173 IV. Total Profit 740,894,558 816,337,301 Less: Income tax expenses (V)44 125,125,048 148,561,633 V. Net profit 615,769,510 667,775,668 Net profit attributable to shareholders of the parent 467,103,270 505,645,137 Profit or loss attributable to minority interests 148,666,240 162,130,531 VI. Earnings per share: (V)47 (I) Basic earnings per share 0.724 0.784 (II) Diluted earnings per share 0.724 0.784 VII. Other comprehensive income (V)48 (357,278) (855,837) VIII. Total comprehensive income attributable to: 615,412,232 666,919,831 Shareholders of the parent 466,745,992 504,789,300 Minority interests 148,666,240 162,130,531

The accompanying notes form part of the financial statements.

- 5 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Income Statement of the Parent Company Unit: RMB Amount in the Amount in the ITEM Notes current period prior period I. Total operating income (XII)4 204,419,907 189,122,522 Less: Operating costs (XII)4 144,778,846 136,475,924 Business taxes and levies 8,091,481 8,055,454 Selling and distribution expenses - - Administrative expenses 58,189,834 62,568,055 Financial expenses 37,920,457 13,970,049 Impairment loss of assets 79,777 38,601 Add: Gains from changes in fair values - - Investment income (XII)5 225,487,156 453,339,564 Including: Income from investments in associates (XII)5 34,396,865 and joint ventures 29,403,288 II. Operating profit 180,846,668 421,354,003 Add: Non-operating income 1,038,993 1,718,849 Less: Non-operating expenses 2,422,655 1,442,326 Including: Losses from disposal of non-current assets 2,416,755 1,437,106 III. Total Profit 179,463,006 421,630,526 Less: Income tax expenses (10,351,390) (8,488,107) IV. Net profit 189,814,396 430,118,633 V. Earnings per share: (I) Basic earnings per share N/A N/A (II) Diluted earnings per share N/A N/A VI. Other comprehensive income (360,000) (667,700) VII. Total comprehensive income 189,454,396 429,450,933

The accompanying notes form part of the financial statements.

- 6 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Consolidated Cash Flow Statement Unit: RMB Amount in the Amount in the ITEM Notes current period prior period I. Cash Flows from Operating Activities: Cash receipts from the sale of goods and the rendering of services 1,740,376,274 1,649,531,912 Receipts of tax refunds 1,003,913 - Other cash receipts relating to operating activities (V)49 13,442,676 31,724,082 Sub-total of cash inflows 1,754,822,863 1,681,255,994 Cash payments for goods purchased and services received 472,056,724 412,465,800 Cash payments to and on behalf of employees 234,641,704 218,888,671 Payments of all types of taxes 282,874,707 225,859,493 Other cash payments relating to operating activities (V)49 66,777,276 77,851,434 Sub-total of cash outflows 1,056,350,411 935,065,398 Net Cash Flow from Operating Activities (V)50 698,472,452 746,190,596 II. Cash Flows from Investing Activities: Cash receipts from disposals and returns of investments - 44,879,120 Cash receipts from investments income 72,263,700 51,044,863 Net cash receipts from disposals of fixed assets, intangible assets 5,366,442 1,039,749 and other long-term assets Sub-total of cash inflows 77,630,142 96,963,732 Cash payments to acquire or construct fixed assets, intangible 492,432,594 585,894,854 assets and other long-term assets Net cash payments for acquisitions of subsidiaries and other 100,000,000 220,284,181 business units Sub-total of cash outflows 592,432,594 806,179,035 Net Cash Flow from Investing Activities (514,802,452) (709,215,303) III. Cash Flows from Financing Activities: Cash receipts from investors' capital contribution - 91,940,000 Including: cash receipts from minorities' capital contribution - 91,940,000 Cash receipts from borrowings 1,720,960,000 1,449,050,000 Cash receipts from issue of bonds 496,000,000 - Sub-total of cash inflows 2,216,960,000 1,540,990,000 Cash repayments of borrowings 1,875,060,000 1,506,050,000 Cash payments for distribution of dividends or profit or interest 689,142,357 361,238,309 Including: payments for distribution of dividends or profit to 365,161,451 - minorities Other cash payments relating to financing activities (V)49 400,000 4,448,649 Sub-total of cash outflows 2,564,602,357 1,871,736,958 Net Cash Flow from Financing Activities (347,642,357) (330,746,958) IV. Effect of Foreign Exchange Rate Changes on Cash and Cash 38,982 (9,159,475) Equivalents V. Net Increase in Cash and Cash Equivalents (163,933,375) (302,931,140) Add: Opening balance of Cash and Cash Equivalents (V)50 478,788,943 781,720,083 VI. Closing Balance of Cash and Cash Equivalents (V)50 314,855,568 478,788,943

The accompanying notes form part of the financial statements.

- 7 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Cash Flow Statement of the Parent Company Unit: RMB Amount in the Amount in the ITEM Notes current period prior period I. Cash Flows from Operating Activities: Cash receipts from the sale of goods and the rendering of 196,415,023 181,861,014 services Other cash receipts relating to operating activities 483,754,807 726,128,371 Sub-total of cash inflows 680,169,830 907,989,385 Cash payments for goods purchased and services received 98,019,838 98,191,799 Cash payments to and on behalf of employees 64,026,116 60,366,911 Payments of all types of taxes 9,956,453 9,322,699 Other cash payments relating to operating activities 980,803,385 427,548,733 Sub-total of cash outflows 1,152,805,792 595,430,142 Net Cash Flow from Operating Activities (XII)7 (472,635,962) 312,559,243 II. Cash Flows from Investing Activities: Cash receipts from investments income 580,014,637 195,892,213 Net cash receipts from disposals of fixed assets, 208,360 807,083 intangible assets and other long-term assets Sub-total of cash inflows 580,222,997 196,699,296 Cash payments to acquire or construct fixed assets, 10,669,758 13,063,802 intangible assets and other long-term assets Cash payments to acquire investments 100,000,000 379,200,000 Sub-total of cash outflows 110,669,758 392,263,802 Net Cash Flow from Investing Activities 469,553,239 (195,564,506) III. Cash Flows from Financing Activities: Cash receipts from borrowings 719,060,000 728,550,000 Cash receipts from issue of bonds 496,000,000 - Sub-total of cash inflows 1,215,060,000 728,550,000 Cash repayments of borrowings 969,060,000 818,550,000 Cash payments for distribution of dividends or profit or 279,799,308 330,952,458 interest Other cash payments relating to financing activities 400,000 2,606,625 Sub-total of cash outflows 1,249,259,308 1,152,109,083 Net Cash Flow from Financing Activities (34,199,308) (423,559,083) IV. Effect of Foreign Exchange Rate Changes on Cash (16,238) (709,315) and Cash Equivalents V. Net Increase in Cash and Cash Equivalents (37,298,269) (307,273,661) Add: Opening balance of Cash and Cash Equivalents (XII)7 187,090,694 494,364,355 VI. Closing Balance of Cash and Cash Equivalents (XII)7 149,792,425 187,090,694

The accompanying notes form part of the financial statements.

- 8 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Consolidated Statement of Changes in Shareholders’ Equity Unit: RMB

Amount in the current period Amount of the same period of last year

Attributable to shareholders of the parent Attributable to shareholders of the parent Total Total Special Surplus Unappropriated Minority shareholders' Special Surplus Unappropriated Minority shareholders' ITEM Share capital Capital reserve reserve reserve profit Others interests equity Share capital Capital reserve reserve reserve profit Others interests equity I. Closing balance of the preceding 644,763,730 166,226,055 - 421,692,405 2,248,722,001 (13,607,440) 638,267,320 4,106,064,071 644,763,730 144,909,755 - 383,570,404 2,079,724,472 (13,419,303) 567,608,774 3,807,157,832 year

Add: Changes in accounting policies ------

Corrections of prior period errors ------

Others ------

II. Opening balance of the year 644,763,730 166,226,055 - 421,692,405 2,248,722,001 (13,607,440) 638,267,320 4,106,064,071 644,763,730 144,909,755 - 383,570,404 2,079,724,472 (13,419,303) 567,608,774 3,807,157,832

III. Changes for the year - (360,000) 1,394,832 43,011,863 166,185,915 2,722 148,710,499 358,945,831 - 21,316,300 - 38,122,001 168,997,529 (188,137) 70,658,546 298,906,239

(I) Net profit - - - - 467,103,270 - 148,666,240 615,769,510 - - - - 505,645,137 - 162,130,531 667,775,668

(II) Other comprehensive income - (360,000) - - - 2,722 - (357,278) - (667,700) - - - (188,137) - (855,837)

Subtotal of (I) and (II) - (360,000) - - 467,103,270 2,722 148,666,240 615,412,232 - (667,700) - - 505,645,137 (188,137) 162,130,531 666,919,831

(III) contributions and reduction in ------20,774,000 - - - - 71,166,000 91,940,000 capital

1. Capital contribution from ------20,774,000 - - - - 71,166,000 91,940,000 shareholders 2. Share-based payment recognised in ------shareholders' equity 3. Others ------

(IV) Profit distribution - - - 43,011,863 (300,917,355) - - (257,905,492) - - - 38,122,001 (336,647,608) - (163,627,985) (462,153,592)

1. Transfer to surplus reserve - - - 43,011,863 (43,011,863) ------38,122,001 (38,122,001) - - -

2. Transfer to general reserve ------

3. Distributions to shareholders - - - - (257,905,492) - - (257,905,492) - - - - (298,525,607) - (163,627,985) (462,153,592)

4. Others ------(V) Transfers within shareholders' ------equity 1. Capitalisation of capital reserve ------

2. Capitalisation of surplus reserve ------

3. Loss made up by surplus reserve ------

4. Others ------

(VI) Special reserve - - 1,394,832 - - - 44,259 1,439,091 ------

1. Withdrawn in the period - - 10,853,324 - - - 3,953,633 14,806,957 ------

2. Utilized in the period - - (9,458,492) - - - (3,909,374) (13,367,866) ------

(VII) Others ------1,210,000 - - - - 990,000 2,200,000

IV. Closing balance of the year 644,763,730 165,866,055 1,394,832 464,704,268 2,414,907,916 (13,604,718) 786,977,819 4,465,009,902 644,763,730 166,226,055 - 421,692,405 2,248,722,001 (13,607,440) 638,267,320 4,106,064,071

The accompanying notes form part of the financial statements. - 9 - Shenzhen Chiwan Wharf Holdings Limited

FOR THE YEAR ENDED 31 DECEMBER 2012

Statement of Changes in Shareholders' Equity of the Parent Company Unit: RMB

Amount in the current period Amount of the same period of last year Special Unappropriated Total shareholders' Special Unappropriated Total shareholders' Share capital Capital reserve reserve Surplus reserve profit equity Share capital Capital reserve reserve Surplus reserve profit equity I. Closing balance of the preceding year 644,763,730 153,438,328 - 421,692,405 668,245,566 1,888,140,029 644,763,730 154,106,028 - 383,570,404 574,774,541 1,757,214,703 Add: Changes in accounting policies ------Corrections of prior period errors ------

Others ------

II. Opening balance of the year 644,763,730 153,438,328 - 421,692,405 668,245,566 1,888,140,029 644,763,730 154,106,028 - 383,570,404 574,774,541 1,757,214,703

III. Changes for the year - (360,000) 240,349 43,011,863 (111,102,959) (68,210,747) - (667,700) - 38,122,001 93,471,025 130,925,326

(I) Net profit - - - - 189,814,396 189,814,396 - - - - 430,118,633 430,118,633

(II) Other comprehensive income - (360,000) - - - (360,000) - (667,700) - - - (667,700)

Subtotal of (I) and (II) - (360,000) - - 189,814,396 189,454,396 - (667,700) - - 430,118,633 429,450,933

(III) Shareholders' contributions and reduction ------in capital

1. Capital contribution from shareholders ------2. Share-based payment recognised in ------shareholders' equity 3. Others ------

(IV) Profit distribution - - - 43,011,863 (300,917,355) (257,905,492) - - - 38,122,001 (336,647,608) (298,525,607)

1. Transfer to surplus reserve - - - 43,011,863 (43,011,863) - - - - 38,122,001 (38,122,001) -

2. Transfer to general reserve ------

3. Distributions to shareholders - - - - (257,905,492) (257,905,492) - - - - (298,525,607) (298,525,607)

4. Others ------

(V) Transfers within shareholders' equity ------

1. Capitalisation of capital reserve ------

2. Capitalisation of surplus reserve ------

3. Loss made up by surplus reserve ------

4. Others ------

(VI) Special reserve - - 240,349 - - 240,349 ------

1. Withdrawn in the period - - 1,431,301 - - 1,431,301 ------

2. Utilized in the period - - (1,190,952) - - (1,190,952) ------

(VII) Others ------

IV. Closing balance of the year 644,763,730 153,078,328 240,349 464,704,268 557,142,607 1,819,929,282 644,763,730 153,438,328 - 421,692,405 668,245,566 1,888,140,029

The accompanying notes form part of the financial statements. - 10 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(I) GENERAL

Shenzhen Chiwan Wharf Holdings Limited (the "Company") was a joint stock limited company reorganized from Shenzhen Chiwan Wharf Co.,Ltd on 16 January 1993 as approved by General Office of Shenzhen Municipal People's Government (filed as Shen Fu Ban Fu [1993] No. 357). On 18 February 1993, under the approval released by People's Bank of China Shenzhen Branch (filed as Shen Ren Yin Fu Zi [1993] No.038), the Company issued, by public offering, the ordinary shares of 310,470,000 shares, including the domestic shares ("A shares") of 46,000,000 share, and domestically listed foreign shares ("B shares") of 40,000,000 shares. Both shares were listed on Shenzhen Stock Exchange on 5 May 1993.

As of 31 December 2005, the total shares of the Company amounted to 644,763,700, after several times of capitalization of capital reserves and additional issuances during the period between 1993 and 2005.

On 26 May 2006, the stockholders' meeting of the Company approved the spilt-share reform under which a consideration comprising of every 1 A-share, cash of RMB11.5 and 8 put warrants was granted by China Nanshan Development (Group) Incorporation ("Nanshan Group"), the non- circulating shareholder of the Company, to each circulating shareholder holding 10 A-shares of the Company. After implementation of the split-share reform, the total number of A-shares remained unchanged with 370,802,900 shares held by Nanshan Group, occupying 57.51% of the total shares.

On 13 July 2011, Nanshan Group obtained 75,100 shares of A shares in the secondary market; as a result, the number of A-shares held by Nanshan Group arrived at 370,878,000, occupying 57.52% of the total shares.

On 17 September 2012, China Merchants Holdings International Company Limited (the "CMHI") signed a shareholding entrustment agreement with Nanshan Group, subject to which Nanshan Group entrusted CMHI with its holding in Shenzhen Chiwan Wharf of A-shares of 370,878,000 shares (57.52% of the total shares). Additionally, 55,314,200 B-shares indirectly held by CMHI via Jing Feng Co., Ltd, a subsidiary of CMHI, plus the voting rights obtained via entrustment, make up of 66.10% of the voting right of the Company.

On 1 November 2012, the China Securities Regulatory Commission ("CSRC") approved the Announcement of China Merchants Holdings International Company Limited Concerning the Purchase Report of Shenzhen Chiwan Wharf Holding Limited and the Exemption of the Offer Obligation (filed as Zhen Jian Xu Ke [2012] No.1428), exempting CMHI from the offer obligation resulted from the fact of controlling Shenzhen Chiwan Wharf's 370,878,000 shares through stock custody.

On 27 December 2012, Nanshan Group signed an equity transfer agreement with Shenzhen Malai Warehouse Co., Ltd, a subsidiary of CMHI, subject to which Nanshan Group would transfer 161,190,933 A-shares of the Company to Shenzhen Malai Warehouse Co., Ltd.

- 11 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(I) BASIC INFORMATION ABOUT THE GROUP- continued

On 6 March 2013, the Company received the Reply on Certain Issues Regarding Agreed Transfer of State-owned Shares of Shenzhen Chiwan Wharf Holdings Ltd. released by the State-owned Assets Supervision and Administration Commission (filed as Guo Zi Chan Quan [2013] No. 94), which approved Nanshan Group to transfer 161,190,933 A-shares of the Company to Shenzhen Malai Warehouse Co., Ltd.

Therefore, the parent of the Company has been changed from Nanshan Group to CMHI since 1 November 2012, with the ultimate actual controller of the Company having always been China Merchants Group ("CMG").

The headquarters of the Company is located in Shenzhen Province. The Company and its subsidiaries (collectively the "Group") are principally engaged in the provision of cargo handling, warehousing, land and sea transportation services, cargo packing, agency business and the other services.

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND PRIOR PERIOD ERRORS

1. Basis of preparation of financial statements

The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance (MoF) on 15 February 2006. In addition, the Group has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15-General Provisions on Financial Reporting (Revised in 2010).

Basis of accounting and principle of measurement

The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are measured at fair value, the Group adopts the historical cost as the principle of measurement of the financial statements. Upon being restructured into a stock company, the fixed assets and intangible assets initially contributed by the state-owned shareholders are recognized based on the valuation amounts confirmed by the state-owned assets administration department. Where assets are impaired, provisions for asset impairment are made in accordance with the relevant requirements.

2. Statement of compliance with the ASBE

The financial statements of the Company have been prepared in accordance with Accounting Standards for Business Enterprises, and present truly and completely, the Company's and consolidated financial position as of 31 December 2012, and the Company's and consolidated results of operations and cash flows for the year then ended.

3. Accounting period

The Group has adopted the calendar year as its accounting year, from 1 January to 31 December.

- 12 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS – continued

4. Functional currency

Renminbi ("RMB") is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency RMB or Currency HKD as its functional currency on the basis of the primary economic environment in which it operates. The Group adopts RMB to prepare its financial statements.

5. The accounting treatment of business combinations involving enterprises under common control and business combinations not involving enterprises under common control

Business combinations are classified into business combinations involving enterprises under common control and business combinations not involving enterprises under common control.

5.1 Business combinations involving enterprises under common control

A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory.

Assets and liabilities obtained shall be measured at their respective carrying amounts as recorded by the combining entities at the date of the combination. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination is adjusted to the share premium in capital reserve. If the share premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

Costs that are directly attributable to the combination are charged to profit or loss in the period in which they are incurred.

5.2 Business combinations not involving enterprises under common control and goodwill

A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination.

The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquire, the intermediary expenses (fees in respect of auditing, legal services, valuation and consultancy services, etc.) and other administrative expenses attributable to the business combination are recognized in profit or loss in the periods when they are incurred. Where a business combination not involving enterprises under common control is achieved in stages that involves multiple transactions, the cost of combination is the sum of the consideration paid at the acquisition date and the fair value of the equity in the acquire held before the acquisition. The equity held in the acquire before the acquisition date is remeasured at its fair value at the acquisition date, with any difference between its fair value and its carrying amount being recognized as investment income, and the other comprehensive income relating to the equity held in the acquire before the acquisition date being transferred to investment income.

- 13 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

5. The accounting treatment of business combinations involving enterprises under common control and business combinations not involving enterprises under common control - continued

The acquiree's identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business combination that meet the recognition criteria shall be measured at fair value at the acquisition date. Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where the cost of combination is less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the acquirer reassesses the measurement of the fair values of the acquiree's identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination. If after that reassessment, the cost of combination is still less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the acquirer recognizes the remaining difference immediately in profit or loss for the current period.

Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presented separately in the consolidated financial statements. It is tested for impairment at least at the end of each year.

For the purpose of impairment testing, goodwill is considered together with the related assets groups, i.e., goodwill is reasonably allocated to the related assets groups or each of assets groups expected to benefit from the synergies of the combination. In testing an assets group with goodwill for impairment, an impairment loss is recognized if the recoverable amount of the assets group or sets of assets groups (including goodwill) is less than its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill allocated to such assets group or sets of assets groups, and then to the other assets of the group pro-rata basis on the basis of the carrying amount of each asset (other than goodwill) in the group.

The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. An asset's fair value is the price in a sale agreement in an arm's length transaction. If there is no sale agreement but an asset is traded in an active market, fair value is the current bid price. If there is no sale agreement or active market for an asset, fair value is assessed based on the best information available. Costs of disposal include legal costs related to the disposal of the asset, related taxes, costs of removing the asset and direct costs to bring the asset into condition for its sale. The present value of expected future cash flows of an asset shall be determined by estimating the future cash flows to be derived from continuing use of the asset and from its ultimate disposal and applying the appropriate discount rate to those future cash flows.

The impairment of goodwill is recognized in profit or loss for the period in which it is incurred and will not be reversed in any subsequent period.

- 14 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

6. Preparation of consolidated financial statements

The scope of consolidation in the consolidated financial statements is determined on the basis of control. Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating activities.

For a subsidiary already disposed of by the Group, the operating results and cash flows before the date of disposal (the date when control is lost) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate.

For subsidiaries acquired through a business combination involving enterprises not under common control, the operating results and cash flows from the acquisition date (the date when control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate, and no adjustment is made to the opening balances and comparative figures in the consolidated financial statements.

No matter when the business combination occurs in the reporting period, subsidiaries acquired through a business combination involving enterprises under common control are included in the Group's scope of consolidation as if they had been included in the scope of consolidation from the date when they first came under the common control of the ultimate controlling party. Their operating results and cash flows from the date when they first came under the common control of the ultimate controlling party are included in the consolidated income statement and consolidated statement of cash flows, as appropriate.

The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on the uniform accounting policies and accounting periods set out by the Company.

All significant intra-group balances and transactions are eliminated on consolidation.

The portion of subsidiaries' equity that is not attributable to the parent is treated as minority interests and presented as "minority interests" in the consolidated balance sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period attributable to minority interests is presented as "minority interests" in the consolidated income statement below the "net profit" line item.

When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders' portion of the opening balance of shareholders' equity of the subsidiary, the excess amount are still allocated against minority interests.

Acquisition of minority interests or disposals of interests in a subsidiary that do not result in the loss of control over the subsidiary are accounted for as equity transactions. The carrying amounts of the parent's interests and minority interests are adjusted to reflect the changes in their relative interests in the subsidiary. The difference between the amount by which the minority interests are adjusted and the fair value of the consideration paid or received is adjusted to shareholders' equity (capital reserve). If the capital reserve is not sufficient to absorb the difference, the excess are adjusted against retained earnings. - 15 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

6. Preparation of consolidated financial statements - continued

When the group loses control over a subsidiary due to disposal of equity investment or other reason, any retained interest is re-measured at its fair value at the date when control is lost. The difference between (i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii) the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according to the original proportion of ownership interests is recognized as investment income in the period in which control is lost. Other comprehensive income associated with investment in the former subsidiary is reclassified to investment income in the period in which control is lost.

7. Recognition criteria of cash and cash equivalents

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

8. Translation of transactions and financial statements denominated in foreign currencies

8.1 Transactions denominated in foreign currencies

A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange rate on the date of the transaction.

At the balance sheet date, foreign currency monetary items are translated into RMB using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss for the period, except that (1) exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period; (2) exchange differences related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting; (3) exchange differences arising from change in the carrying amounts other than the amortized cost of available-for-sale monetary items are recognized as other comprehensive income and included in capital reserve.

Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional currency at the spot exchange rates on the dates of the transactions; the amounts in functional currency remain unchanged. Foreign currency non-monetary items measured at fair value are re-translated at the spot exchange rate on the date the fair value is determined. Difference between the re-translated functional currency amount and the original functional currency amount is treated as changes in fair value including changes of exchange rate and is recognized in profit and loss or as other comprehensive income included in capital reserve.

- 16 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

8. Translation of transactions and financial statements denominated in foreign currencies - continued

8.2 Translation of financial statements denominated in foreign currencies

For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items except for retained earnings are translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting the amount of profit distributed are translated at the spot exchange rates on the dates of the transactions; the opening balance of retained earnings is the translated closing balance of the previous year's retained earnings; the closing balance of retained earnings is calculated and presented on the basis of each translated income statement and profit distribution item. The difference between the translated assets and the aggregate of liabilities and shareholders' equity items is separately presented, as the translation difference of financial statements denominated in foreign currencies, under the shareholders' equity in the balance sheet.

Cash flows arising from transaction in a foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of exchange rate changes on cash and cash equivalents is regarded as a reconciling item and presented separately in the cash flow statement as "effect of exchange rate changes on cash and cash equivalents ".

The opening balances and the comparative figures of previous year are presented at the translated amounts of previous year's financial statements.

On disposal of the Group's entire interest in a foreign operation, or disposal of certain interest or due to other reasons resulting in a loss of control over a foreign operation, the Group transfers the accumulated translation differences attributable to the shareholders' equity of the parent that relating to translation of the financial statements of that foreign operation, presented under shareholders' equity, to profit or loss in the period in which the disposal occurs.

In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, the proportionate share of accumulated translation differences are re-attributed to non- controlling interests and are not recognized in profit and loss. For partial disposals of associates or joint ventures, the proportionate share of the accumulated translation differences is reclassified to profit or loss.

- 17 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. For financial assets and financial liabilities at fair value through profit or loss, transaction costs are immediately recognized in profit or loss. For other financial assets and financial liabilities, transaction costs are included in their initial recognized amounts.

9.1 Determination of fair value

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. For a financial instrument which has an active market, the Group uses the quoted price in the active market to establish its fair value. For a financial instrument which has no active market, the Group establishes fair value by using a valuation technique. Valuation techniques include using recent arm's length market transactions between knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.

9.2 Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability (or a group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period, using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.

When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial asset or financial liability (without considering future credit losses), and also considers all fees paid or received between the parties to the contract giving rise to the financial asset and financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts etc.

9.3 Classification, recognition and measurement of financial assets

On initial recognition, the Group’s financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss ("FVTPL"), held-to-maturity investments, loans and receivables, and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.3 Classification, recognition and measurement of financial assets - continued

9.3.1 Financial Assets at Fair Value through Profit or Loss ("FVTPL")

Financial assets at fair value through profit or loss ("FVTPL") include financial assets held for trading and those designated as at fair value through profit or loss.

A financial asset is classified as held for trading if one of the following conditions is satisfied: (1) It has been acquired principally for the purpose of selling in the near term; or (2) On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking; or (3) It is a derivative that is not designated and effective as a hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured.

A financial asset may be designated as at FVTPL upon initial recognition only when one of the following conditions is satisfied: (1) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; or (2) The financial asset forms part of a group of financial assets or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis.

Financial assets at FVTPL are subsequently measured at fair value. Any gains or losses arising from changes in the fair value and any dividend or interest income earned on the financial assets are recognized in profit or loss.

9.3.2 Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group's management has the positive intention and ability to hold to maturity.

Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit or loss.

9.3.3 Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets classified as loans and receivables by the Group include notes receivable, accounts receivable, interest receivable, dividends receivable, and other receivables.

Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit or loss. - 19 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.3 Classification, recognition and measurement of financial assets - continued

9.3.4 Available-for-sale financial assets

Available-for-sale financial assets include non-derivative financial assets that are designated on initial recognition as available for sale, and financial assets that are not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.

Available-for-sale financial assets are subsequently measured at fair value, and gains or losses arising from changes in the fair value are recognized as other comprehensive income and included in the capital reserve, except that impairment losses and exchange differences related to amortized cost of financial assets are recognized in profit or loss, until the financial assets are derecognized, at which time the gains or losses are released and recognized in profit or loss.

Interests obtained and the dividends declared by the investee during the period in which the available-for-sale financial assets are held, are recognized in investment gains.

For investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, and derivative financial assets that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost.

9.4 Impairment of financial assets

The Group assesses at each balance sheet date the carrying amounts of financial assets other than those at fair value through profit or loss. If there is objective evidence that a financial asset is impaired, the Group determines the amount of any impairment loss. Objective evidence that a financial asset is impaired is evidence that, arising from one or more events that occurred after the initial recognition of the asset, the estimated future cash flows of the financial asset, which can be reliably measured, have been affected.

Objective evidence that a financial asset is impaired includes the following observable events:

(1) Significant financial difficulty of the issuer or obligor; (2) A breach of contract by the borrower, such as a default or delinquency in interest or principal payments; (3) The Group, for economic or legal reasons relating to the borrower's financial difficulty, granting a concession to the borrower; (4) It becoming probable that the borrower will enter bankruptcy or other financial reorganizations; (5) The disappearance of an active market for that financial asset because of financial difficulties of the issuer;

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.4 Impairment of financial assets - continued

(6) Upon an overall assessment of a group of financial assets, observable data indicates that there is a measurable decrease in the estimated future cash flows from the group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. Such observable data includes: - Adverse changes in the payment status of borrower in the group of assets; - Economic conditions in the country or region of the borrower which may lead to a failure to pay the group of assets; (7) Significant adverse changes in the technological, market, economic or legal environment in which the issuer of equity instruments operates, indicating that the cost of the investment in the equity instrument may not be recovered by the investor; (8) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost; (9) Other objective evidence indicating there is an impairment of a financial asset.

- Impairment of financial assets measured at amortized cost

If financial assets carried at cost or amortized cost are impaired, the carrying amounts of the financial assets are reduced to the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The amount of reduction is recognized as an impairment loss in profit or loss. If, subsequent to the recognition of an impairment loss on financial assets carried at amortized cost, there is objective evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the impairment is recognized, the previously recognized impairment loss is reversed. However, the reversal does not result in a carrying amount of the financial asset that exceeds what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed.

For a financial asset that is individually significant, the Group assesses the asset individually for impairment. For a financial asset that is not individually significant, the Group assesses the asset individually for impairment or includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset (whether significant or not), it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets for which an impairment loss is individually recognized are not included in a collective assessment of impairment.

- 21 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.4 Impairment of financial assets - continued

- Impairment of available-for-sale financial assets

When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value previously recognized directly in capital reserve is reclassified from the capital reserve to profit or loss. The amount of the cumulative loss that is reclassified from capital reserve to profit or loss is the difference between the acquisition cost (net of any principal repayment and amortization) and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss.

If, subsequent to the recognition of an impairment loss on available-for-sale financial assets, there is objective evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the impairment is recognized, the previously recognized impairment loss is reversed. The amount of reversal of impairment loss on available-for-sale equity instruments is recognized as other comprehensive income and included in the capital reserve, while the amount of reversal of impairment loss on available-for-sale debt instruments is recognized in profit or loss.

- Impairment of financial assets measured at cost

If an impairment loss has been incurred on an investment in unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, or on a derivative financial asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the carrying amount of the financial asset is reduced to the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The amount of reduction is recognized as an impairment loss in profit or loss. The impairment loss on such financial asset is not reversed once it is recognized.

9.5 Transfer of financial assets

The Group derecognizes a financial asset if one of the following conditions is satisfied: (1) the contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or (3) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.5 Transfer of financial assets - continued

If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability. The extent of the Group's continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset.

For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognized in other comprehensive income, is recognized in profit or loss.

If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset is allocated between the part that continues to be recognized and the part that is derecognized, based on the respective fair values of those parts. The difference between (1) the carrying amount allocated to the part derecognized; and (2) the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to the part derecognized which has been previously recognized in other comprehensive income, is recognized in profit or loss.

9.6 Classification and recognition of financial liabilities

Debt and equity instruments issued by the Group are classified into financial liabilities or equity on the basis of the substance of the contractual arrangements and definitions of financial liability and equity instrument.

On initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities.

9.6.1 Financial liabilities at fair value through profit or loss

Financial liabilities at FVTPL consist of financial liabilities held for trading and those designated as at FVTPL on initial recognition.

A financial liability is classified as held for trading if one of the following conditions is satisfied: (1) It has been acquired principally for the purpose of repurchasing in the near term; or (2) On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking; or (3) It is a derivative, except for a derivative that is a designated and effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.6 Classification and recognition of financial liabilities - continued

9.6.1 Financial liabilities at fair value through profit or loss - continued

A financial liability may be designated as at FVTPL upon initial recognition only when one of the following conditions is satisfied: (1) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring liabilities or recognizing the gains or losses on them on different bases; or (2) The financial liability forms part of a group of financial liabilities or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis.

Financial liabilities at FVTPL are subsequently measured at fair value, any gains or losses arising from changes in the fair value or any dividend or interest expense related with the financial liabilities are recognized in profit or loss.

9.6.2 Other financial liabilities

For a derivative liability that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, it is subsequently measured at cost. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with gain or losses arising from derecognition or amortization recognized in profit or loss.

9.6.3 Financial guarantee contracts

A financial guarantee contract is a contract by which the guarantor and the lender agree that the guarantor would settle the debts or bear obligations in accordance with terms of the contract in case the borrower fails to settle the debts. Financial guarantee contracts that are not designated as financial liabilities at fair value through profit or loss, are initially measured at their fair values less the directly attributable transaction costs. Subsequent to initial recognition, they are measured at the higher of: (i) the amount determined in accordance with "Accounting Standard for Business Enterprises No. 13 - Contingencies"; and (ii) the amount initially recognized less cumulative amortization recognized in accordance with the principles set out in "Accounting Standard for Business Enterprises No. 14 - Revenue".

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.7 Derecognition of Financial Liabilities

The Group derecognizes a financial liability (or part of it) only when the underlying present obligation (or part of it) is discharged. An agreement between the Group (an existing borrower) and an existing lender to replace the original financial liability with a new financial liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

When the Group derecognizes a financial liability or a part of it, it recognizes the difference between the carrying amount of the financial liability (or part of the financial liability) derecognized and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.

9.8 Derivatives and embedded derivatives

Derivative financial instruments include forward exchange contracts, currency swaps, interest rate swaps and foreign exchange options, etc. Derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are subsequently re-measured to fair value. The resulting gain or loss is recognized in profit or loss unless the derivative is designated and highly effective as a hedging instrument, in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial liability at fair value through profit or loss, and treated as a standalone derivative if 1) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and 2) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Group is unable to measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair value through profit or loss.

9.9 Offsetting financial assets and financial liabilities

Where the Group has a legal right that is currently enforceable to set off the recognized amounts, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount presented in the balance sheet. Except for the circumstances above, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

9. Financial instruments - continued

9.10 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The consideration received from issuing equity instruments, net of transaction costs, are added to shareholders' equity.

All types of distributions (excluding stock dividends) made by the Group to holders of equity instruments are deducted from shareholders' equity. The Group does not recognize any changes in the fair value of equity instruments.

10. Receivables

10.1 Receivables that are individually significant and for which bad debt provision is individually assessed

Basis or monetary criteria for Top five balances of receivables are deemed as determining individually individually significant receivables by the Group. significant receivables For receivables that are individually significant, the Group assesses the receivables individually for impairment; for a Provision methods for receivables financial asset that is not impaired individually, the Group that are individually significant includes the asset in a group of financial assets with and for which bad debt provision similar credit risk characteristics and collectively assesses is individually assessed them for impairment. Receivables for which an impairment loss is individually recognized are not included in a collective assessment of impairment.

10.2 Receivables for which bad debt provision is collectively assessed

Basis for determining a portfolio Portfolio 1 The portfolio primarily includes amounts due from related parties of the Group, deposits and petty cash etc. The risk characteristics of such receivables are different from those of portfolio 2. The Group individually assesses receivables in this portfolio and determines the bad debt provision. Portfolio 2 This portfolio excludes amounts due from related parties of the Group, deposits and petty cash etc. The Group collectively assesses receivables in this portfolio with aging analysis method, by taking historical experience into consideration. Bad debt provision methods for a portfolio Portfolio 1 Specific identification Method Portfolio 2 Aging Analysis Method

- 26 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

10. Receivables - continued

10.2.1 Portfolios that use aging analysis for bad debt provision:

Aging analysis Provision proportion for Provision proportion for Aging accounts receivable (%) other receivables (%) Within 1 year (inclusive) 0 0 More than 1 year but not exceeding 2 0-10 0-10 years More than 2 years but not exceeding 3 0-30 0-30 years More than 3 years but not exceeding 4 0-60 0-60 years More than 4 years but not exceeding 5 0-60 0-60 years More than 5 years 50-100 50-100

10.3 Accounts receivable that are not individually significant but for which individual bad debt provision is individually assessed:

Reasons for making individual As objective evidence indicates the Group is unable to bad debt provision collect the receivables under original terms, the company makes individual bad debt provision. Bad debt provision methods Under bad debt provision method, the provision is recognized by the differences between the expected present value of future cash flows and carrying value.

11. Inventories

11.1 Categories of inventories

Inventories include spare parts, fuel, and low value consumables. Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditures incurred in bringing the inventories to their present location and condition.

11.2 Valuation method of inventories upon delivery

The actual cost of inventories upon delivery is calculated using the weighted average method.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

11. Inventories - continued

11.3 Basis for determining net realizable value of inventories and provision methods for decline in value of inventories

At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the cost of inventories is higher than the net realizable value, a provision for decline in value of inventories is made.Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into consideration the purposes of inventories being held and effect of post balance sheet events.

Provision for decline in value of other inventories is made based on the excess of cost of inventory over its net realizable value on an item-by-item basis.

After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.

11.4 Inventory count system

The perpetual inventory system is maintained for stock system.

11.5 Amortization methods for low cost and short-lived consumable items and packaging materials

Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method.

12. Long-term equity investments

12.1 Determination of investment cost

For a long-term equity investment acquired through a business combination involving enterprises under common control, the investment cost of the long-term equity investment is the attributable share of the carrying amount of the shareholders' equity of the acquiree at the date of combination. For a long-term equity investment acquired through business combination not involving enterprises under common control, the investment cost of the long-term equity investment acquired is the cost of acquisition. The long-term equity investment acquired otherwise than through a business combination is initially measured at its cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

12. Long-term equity investments - continued

12.2 Subsequent measurement and recognition of profit or loss

12.2.1 A long-term equity investment accounted for using the cost method

For long-term equity investments over which the Group does not exercise joint control or significant influence and those without quoted prices in an active market and the fair values cannot be reliably measured, the Group accounts for such long-term equity investments using the cost method. Besides, long-term equity investments in subsidiaries are accounted for using the cost method in the Company's separate financial statements. A subsidiary is an investee that is controlled by the Group.

Under the cost method, a long-term equity investment is measured at initial investment cost. Except for cash dividends or profits already declared but not yet paid that are included in the price or consideration actually paid upon acquisition of the long-term equity investment, investment income is recognized in the period in accordance with the attributable share of cash dividends or profit distributions declared by the investee.

12.2.2 A long-term equity investment accounted for using the equity method

The Group accounts for investment in associates and joint ventures using the equity method. An associate is an entity over which the Group has significant influence and a joint venture is an entity over which the Group exercises joint control along with other investors.

Under 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 time of acquisition, no adjustment is made to 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 time of acquisition, the difference is recognized in profit or loss for the period, and the cost of the long- term equity investment is adjusted accordingly.

Under the equity method, the Group recognizes its share of the net profit or loss of the investee for the period as investment income or loss for the period. The Group recognizes its share of the investee's net profit or loss based on the fair value of the investee's individual separately identifiable assets at the acquisition date after making appropriate adjustments to conform to the Group's accounting policies and accounting period. Unrealized profits or losses resulting from the Group's transactions with its associates and joint ventures are recognized as investment income or loss to the extent that those attributable to the Group's, equity interest are eliminated. However, unrealized losses resulting from the Group's transactions with its associates and joint ventures which represent impairment losses on the transferred assets are not eliminated. Changes in shareholder's equity of the investee other than net profit or loss are correspondingly adjusted to the carrying amount of the long-term equity investment, and recognized as other comprehensive income which is included in the capital reserve.

- 29 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

12. Long-term equity investments - continued

12.2 Subsequent measurement and recognition of profit or loss - continued

12.2.2 A long-term equity investment accounted for using the equity method - continued

The Group discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of its net investment in the investee are reduced to zero. Except that if the Group has incurred obligations to assume additional losses, a provision is recognized according to the obligation expected, and recorded in the investment loss for the period. Where net profits are subsequently made by the investee, the Group resumes recognizing its share of those profits only after its share of the profits exceeds the share of losses previously not recognized.

12.2.3 Disposal of long-term equity investments

On disposal of a long term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is recognized in profit or loss for the period. For a long-term equity investment accounted for using the equity method, the amount included in the shareholders' equity and attributable to the percentage interest disposed is transferred to profit or loss for the period.

12.3 Basis for determining joint control and significant influence over investee

Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating policy 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. When determining whether an investing enterprise is able to exercise control or significant influence over an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be considered.

12.4 Impairment assessment and provision method for impairment loss

The Group reviews the long-term equity investments at each balance sheet date to determine whether there is any indication that they have suffered an impairment loss. If an impairment indication exists, the recoverable amounts are estimated. If such recoverable amount is less than its carrying amount, a provision for impairment losses in respect of the deficit is recognized in profit or loss for the period.

Once an impairment loss is recognized for a long-term equity investment, it will not be reversed in any subsequent period.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

13. Investment properties

Investment property is property held to earn rentals or for capital appreciation or both. It includes a land use right that is leased out; a land use right held for transfer upon capital appreciation; and a building that is leased out.

An investment property is measured initially at cost. Subsequent expenditures incurred for such investment property are included in the cost of the investment property if it is probable that economic benefits associated with an investment property will flow to the Group and the subsequent expenditures can be measured reliably, other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.

The Group uses the cost model for subsequent measurement of investment property, and adopts a depreciation or amortization policy for the investment property which is consistent with that for buildings or land use rights.

The Group reviews the investment properties at each balance sheet date to determine whether there is any indication that they have suffered an impairment loss. If an impairment indication exists, the recoverable amounts are estimated. Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. If such recoverable amount is less than its carrying amount, a provision for impairment losses in respect of the deficit is recognized in profit or loss for the period.

Once an impairment loss is recognized for an investment property, it will not be reversed in any subsequent period.

When an investment property is sold, transferred, retired or damaged, the Group recognizes the amount of any proceeds on disposal net of the carrying amount and related taxes in profit or loss for the period.

14. Fixed assets

14.1 Recognition criteria for fixed assets

Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognized only when it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Fixed assets are initially measured at cost. Upon being restructured into a stock company, the fixed assets initially contributed by the state-owned shareholders are recognized based on the valuation amounts confirmed by the state-owned assets administration department.

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(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

14. Fixed assets - continued

14.1 Recognition criteria for fixed assets - continued

Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable that economic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the replaced part is derecognized. Other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.

14.2 Depreciation of each category of fixed assets

A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one in which it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of each category of fixed assets are as follows:

Estimated Estimated Annual Category useful lives residual value depreciation rate Harbor facilities 5 - 50 years 10% 1.8%-18% Warehouses, container 5 - 40 years 10% 2.25%-18% yards and buildings Machinery and 5 - 15 years 10% 6%-18% equipments Motor vehicles, cargo 5 - 20 years 10% 4.5%-18% ships and tugboats Other equipments 5 years 10% 18%

Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

14.3 The method of impairment test and provision for impairment losses of fixed assets

The Group assesses at the balance sheet date whether there is any indication that the fixed assets may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted for as an impairment loss and is recognized in profit or loss.

Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.

- 32 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

14. Fixed assets - continued

14.4 Other explanations

The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least once at each financial year-end, and account for any change as a change in an accounting estimate.

If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized in profit or loss for the period.

15. Construction in progress

Construction in progress is measured at its actual costs. The actual costs include various construction expenditures during the construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs. Construction in progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready for intended use.

The Group assesses at the balance sheet date whether there is any indication that construction in progress may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted for as an impairment loss and is recognized in profit or loss.

Once the impairment loss of construction in progress is recognized, it is not be reversed in any subsequent period.

16. Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally and when the interruption is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition, construction or production of the asset is resumed. Other borrowing costs are recognized as an expense in the period in which they are incurred.

- 33 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable to the general-purpose borrowings.

During the capitalization period, exchange differences related to a specific-purpose borrowing denominated in foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are recognized in profit or loss in the period in which they are incurred.

17. Intangible assets

17.1 Intangible assets

Intangible assets include land use rights, coastal line use rights and computer software.

An intangible asset is measured initially at cost. Upon being restructured into a stock company, the intangible assets initial contributed by the state-owned shareholders are recognized based on the valuation amounts confirmed by the state-owned assets administration department. When an intangible asset with a finite useful life is available for use, its original cost is amortized over its estimated useful life.

For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of the period, and makes adjustments when necessary.

17.2 The method of impairment test and provision for impairment losses of intangible assets

The Group assesses at the balance sheet date whether there is any indication that the intangible assets with a finite useful life may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted for as an impairment loss and is recognized in profit or loss.

Intangible assets with indefinite useful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether there is any indication that the assets may be impaired.

Once the impairment loss of such asset is recognized, it is not be reversed in any subsequent period. - 34 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

18. Long-term prepaid expenses

Long-term prepaid expenses represent expenses incurred that should be borne and amortized over the current and subsequent periods (together of more than one year). Long-term prepaid expenses are amortized using the straight-line method over the expected periods in which benefits are derived.

19. Revenue

19.1 Revenue from rendering of services

The Group provides load and unload services, tugboat and trailer services, logistics agency and other related harbor services to customers. Revenue from rendering of services is recognized when (1) the amount of revenue can be measured reliably; (2) it is probable that the associated economic benefits will flow to the enterprise; and (3) the associated costs incurred or to be incurred can be measured reliably.

19.2 Rental income

The operating lease income of investment property should be recognized in the lease terms at the price stated in contract and agreements with straight-line method.

19.3 Interest income

Interest income is calculated by taking it into consideration that the time occupying the Group's currency funds by external users and effective interest rate.

20. Government grants

Government grants are transfer of monetary assets or non-monetary assets from the government to the Group at no consideration. A government grant is recognized only when the Group can comply with the conditions attaching to the grant and the Group will receive the grant.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a nominal amount is recognized immediately in profit or loss for the period.

A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset.

- 35 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

20. Government grants - continued

For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.

21. Deferred tax assets/ deferred tax liabilities

The income tax expenses include current income tax and deferred income tax.

21.1 Current Income Tax

At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.

21.2 Deferred tax assets and deferred tax liabilities

For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between the nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balance sheet liability method.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. However, for temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction ( not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized.

For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

- 36 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

21. Deferred tax assets/ deferred tax liabilities - continued

21.2 Deferred tax assets and deferred tax liabilities - continued

At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates. According to tax laws, that are expected to apply in the period in which the asset is realized or the liability is settled.

Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise from transactions or events that are directly recognized in other comprehensive income or in equity, in which case they are recognized in other comprehensive income or in equity, and when they arise from business combinations, in which case they adjust the carrying amount of goodwill.

At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Any such reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.

When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.

When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.

22. Operating leases and finance leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

22.1 The Group as lessee under operating leases

Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are either included in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit or loss for the period. Contingent rents are charged to profit or loss in the period in which they are actually incurred.

- 37 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

22. Operating leases and finance leases - continued

22.2 The Group as lessor under operating leases

Rental income from operating leases is recognized in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs with more than an insignificant amount are capitalized when incurred, and are recognized in profit or loss on the same basis as rental income over the lease term. Other initial direct costs with an insignificant amount are charged in profit or loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the period in which they actually arise.

23. Safety Production Cost

According to the Administrative Rules on Provision and Use of Enterprise Safety Production Cost jointly issued by the Ministry of Finance and the State Administration of Work Safety on 14 February 2012 (filed as Cai Qi [2012] No. 16), safety production cost set aside by the Group is directly included in the cost of relevant products or recognized in profit or loss for the period, as well as the special reserve. When safety production cost set aside is utilized, if the costs incurred can be categorized as expenditure, the costs incurred should be charged against the special reserve. If the costs set aside are used to build up fixed assets, the costs should be charged to construction in progress, and reclassified to fixed assets when the safety projects reach the stage when it is ready for intended use. Meantime, expenditures in building up fixed assets are directly charged against the special reserve with the accumulated depreciation recognized at the same amount. Depreciation will not be made in the future period on such fixed assets.

24. Other significant accounting policies, accounting estimates, and preparation of financial statements

24.1 Employee benefits

In an accounting period in which an employee has rendered service to the Group, the Group recognizes the employee benefits for that service as a liability, except for compensation for termination of employment relationship with the employees.

The Group participates in the employee social security systems, such as basic pensions, medical insurance, housing funds and other social securities established by the government in accordance with relevant requirements. The related expenditures are either included in cost of related assets or charged to profit or loss for the period when they occur.

When the Group terminates the employment relationship with employees before the expiry of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, if the Group has a formal plan for termination of employment relationship or has made an offer for voluntary redundancy which will be implemented immediately, and the Group cannot unilaterally withdraw from the termination plan or the redundancy offer, a provision for the compensation payable arising from the termination of employment relationship with employees is recognized with a corresponding charge to the profit or loss for the period.

- 38 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

25. Critical judgments in applying accounting policies and key assumptions and uncertainties in accounting estimates

In the application of accounting policies as set out below, the Company is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that cannot be measured accurately, due to the internal uncertainty of the operating activities. These judgments, estimates and assumptions are based on historical experiences of the Company's management as well as other factors that are considered to be relevant. Actual results may differ from these estimates.

The company does regular review for the judgments, estimates and assumptions on a going concern basis, changes in accounting estimates which only affect the current should be recognized in current period; for those changes which not only affects the current but the future period, they should be recognized in current and future period also. At the balance sheet date, accounting estimate which is likely to lead to key assumptions and uncertainties changes relating to assets and debts book value are:

25.1 Goodwill Impairment

At 31 December 2012, the book value of goodwill is RMB10, 858,898. For the purpose of impairment testing, goodwill is considered together with the related assets group(s), the recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset.

25.2 Recognition of Deferred tax

The Group calculates and accrues the provision for deferred income tax liabilities according to the provisions of the profit distribution plan of subsidiary companies, associate companies and the joint venture company and the related law, and for retained earnings which is not allocated by the investment company, since the profits will be used to invest the company's daily operation and future development, so no deferred income tax liabilities is recognized. If the actual quota of future profits exceeds expectation, corresponding deferred income tax liabilities will be declared at the earlier periods between date of changing allocation of profits and the declaration date, and recognized in the profit and loss of current period.

Deferred tax assets are recognized based on the deductible temporary difference and the corresponding tax rate, to the extent that it has become probable that future taxable profit will be available for the deductible temporary difference. If in the future the actual taxable income does not coincide with the amount currently expected, the deferred tax assets resulting will be recognized or reversed in the period when actually incurred, and recognized in profit or loss.

- 39 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(III) TAXES

1. Major categories of taxes and tax rates

Category of tax Basis of tax computation Tax rate Enterprise income Taxable profit Note1 tax Value-add Tax Load and unload income, tugboat income, trailer income, 6%(Note 2) warehousing income, agency income and rental income Taxable income from vehicle maintenance and utilities 13% and17% supplies on ships in shore Taxable income from sales of scraps 3% Business tax Taxable load and unload income, tugboat income and 3 %( Note 2) trailer income Taxable warehousing, agency and rental income 5 %( Note 2) Urban maintenance VAT and Business tax paid 5% and 7 %( Note and construction 3) tax Education surplus VAT and Business tax paid 3% Regional education VAT and Business tax paid 2% surplus

Note 1: The income tax rate applicable to the Company and these subsidiaries for 2012 is 25%. (2011: 24%)

Chiwan Wharf Holdings (H.K.) Limited and Chiwan Shipping (H.K.) Company Limited are subject to Hong Kong CIT income tax rate at 16.5% (2011: 16.5%).

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

- 40 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

1. Major categories of taxes and tax rates - continued

On 21 February 2012, Machong Branch of National Taxation Bureau in Dongguan City approved that Dongguan Chiwan Wharf Co., Ltd (DGW), a subsidiary of the Group, was subjected to tax preference of "3 year exemption and 3 year half reduction "commencing from its first profit-making year. 2012 is its third profit-making year; hence, DGW is free of enterprise income tax.

According to Doc. [2004] No.538 issued by the Third Branch of Local Taxation Bureau in Shenzhen, the profit derived from berth #12 of Chiwan Container Terminal Company Limited which has been under construction and put into operation by stages, 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 requirements are met. 2012 is the ninth profit-making year of berth #12; hence, Chiwan Container Terminal Company Limited has calculated its income tax at a rate of 12.5% (2011: 12%).

According to Doc. [2007] No.40 issued by Shekou Local Taxation Bureau in Shenzhen, the profit derived from berth #13 of Chiwan Container Terminal Company Limited which has been under construction and put into operation by stages, 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 requirements are met. 2012 is the eighth profit-making year of berth #13; hence, Chiwan Container Terminal Company Limited has calculated its income tax at a rate of 12.5% (2011: 12%).

According to Doc. [2013] No.3 issued by Shekou Local Taxation Bureau In Shenzhen, the profits derived from berth #13A of Shenzhen Chiwan Harbour Container Company Limited, is entitled to full exemption from income tax for three years commencing from its first profit making year and 50% exemption for the following three year when certain requirements are met. 2012 is the first profit-making year of berth #13A; hence, it has been exempted from enterprise income tax.

- 41 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(II) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, AND PRIOR PERIOD ERRORS - continued

1. Major categories of taxes and tax rates - continued

Note 2: The load and unload income, tugboat income and trailer income derived from 1 January to 31 October 2012 were subject to business tax rate of 3%, and warehousing income, agency income and rental income were subject to business tax rate of 5%. According to the Notice on Pilot Transforming Business Tax to Value Added Tax in Transportation and Certain Modern Service Sectors in 8 Provinces/Municipalities issued by the Ministry of Finance and State Administration of Taxation (filed as Cai Shui [2012] No.71), the above- mentioned income of the Group is subject to VAT rate of 6% applicable in modern service industry instead of business tax, since the date of November 1st 2012.

According to the Notice on Taxable Services Subject to "VAT" Tax Rate of Zero and Exemption issued by the Ministry of Finance and State Administration of Taxation (filed as Cai Shui [2011] No.131),and approvals released by Shekou National Taxation Bureau in Shenzhen (filed as Jian Mian Bei [2012] No.0686, No.0693, No.0834 and No.0760 respectively), Container Terminal Company Limited, Shenzhen Chiwan Harbor Container Company Limited and Shenzhen Chiwan Shipping and Transportation Company Limited, the subsidiaries of the Company, are exempt from "VAT" when providing logistics support service (except for warehousing service).

Note 3: The Company and subsidiaries set up in Shenzhen are provided at an urban maintenance and construction tax rate of 7%, and those set up in Dongguan are provided at an urban maintenance and construction tax rate of 5%.

- 42 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(IV) BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS

1. Information of subsidiaries

(1) Subsidiaries established or acquired through investments Unit: RMB Registered Balance of other the amount of the Capital(in ten items substantively Proportion minority interest used thousand Yuan Actual capital constitutes net of Proportion to absorb profit or loss Type of the Place of Nature of unless otherwise Business contribution at the investments in the ownership of voting Consolida Minority attributable to minority Full name of the subsidiary subsidiary incorporation business stated) scope end of the period subsidiary Interest (%) power (%) ted or not interests interest Logistics Shenzhen Chiwan International Limited liability Shenzhen, PRC support 550 Shipping agency service 5,500,000 - 100 100 Yes N/A N/A Freight Agency Company Limited Company services Logistics Shenzhen Chiwan Terminal Company Limited liability Shenzhen, PRC support 5,000 Port services 50,000,000 - 100 100 Yes N/A N/A Limited Company services Logistics Shenzhen Chiwan Trains-Grains Limited liability Shenzhen, PRC support 4,500 Warehousing of grains 45,000,000 - 100 100 Yes N/A N/A Terminal Company Limited Company services Limited liability Hong Kong SAR, Chiwan Wharf Holdings (H.K.) Limited Investments HKD1,000,000 Shipping agency service 1,070,000 11,004,285 100 100 Yes N/A N/A Company PRC Logistics Dongguan Chiwan Wharf Company Limited liability Port services, warehousing and Dongguan, PRC support 45,000 382,500,000 - 85 85 Yes 72,089,908 - Limited Company supporting services services Logistics Dongguan Chiwan Terminal Limited liability Port services, warehousing and Dongguan, PRC support 30,000 300,000,000 - 100 100 Yes N/A N/A Company Limited Company supporting services services Limited liability British Virgin Grossalan Investments Limited Investments USD 1Investment holding 8 - 100 100 Yes N/A N/A Company Islands Hinwin Development Company Limited liability Hong Kong SAR, Investments HKD10,000 Investment holding 6,278,500 94,014,181 100 100 Yes N/A N/A Limited Company PRC

- 43 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(IV) BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS - continued

1. Information of subsidiaries - continued

(2) Subsidiaries acquired through a business combination involving enterprises under common control Unit: RMB Registered Balance of other Proportion the amount of the Capital(in ten items substantively of minority interest used to thousand Yuan Actual capital constitutes net ownership Proportion absorb profit or loss Type of the Place of Nature of unless otherwise Business contribution at the investments in the interest of voting Consolidated attributable to minority Full name of the subsidiary subsidiary incorporation business stated) scope end of the period subsidiary (%) power (%) or not Minority interests interest Logistics Shenzhen Chiwan Harbour Container Limited liability Container handling and other Shenzhen, PRC support 28,820 250,920,000 - 100 100 Yes N/A N/A Company Limited Company port services services Logistics container transportation, vehicle Shenzhen Chiwan Transportation Limited liability Shenzhen, PRC support 1,500 and port machinery 7,000,000 - 100 100 Yes N/A N/A Company Limited Company services s maintenance Logistics Chiwan Container Terminal Limited liability Container handling and other Shenzhen, PRC support USD 95,300,000 485,990,004 - 55 55 Yes 714,887,911 N/A Company Limited Company port services services Logistics Shenzhen Chiwan Shipping and Limited liability Shenzhen, PRC support 2,400 Cargo shipping 24,000,000 - 100 100 Yes N/A N/A Transportation Company Limited Company services Logistics Chiwan Shipping (H.K.) Company Limited liability Hong Kong SAR, support HKD 800,000 Shipping agency service 856,000 - 100 100 Yes N/A N/A Limited Company PRC services

- 44 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(IV) BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS - continued

2. No new entities that have been consolidated in the current period or entities that are excluded from consolidation in the current period

3. No subsidiaries reduced in the current period due to the sale of equity interest which resulting in a loss of control

4. Exchange rate for translating major financial statement items of foreign operations

Unit: RMB Currency Balance Sheet Income statement HKD 0.8109 0.8105

(V) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Currency Fund Unit: RMB Closing balance Opening balance Original Exchange Amount in Original Exchange Amount in Item currency rate RMB currency rate RMB Cash: RMB 12,058 1.0000 12,058 9,914 1.0000 9,914 USD 71 6.2855 446 71 6.3000 447 HKD 2,326 0.8109 1,886 4,535 0.8100 3,674 Subtotal 14,390 14,035 Bank deposit: RMB 182,788,276 1.0000 182,788,276 292,000,350 1.0000 292,000,350 USD 4,459,141 6.2855 28,027,932 3,992,510 6.3000 25,152,810 HKD 126,184,467 0.8109 102,322,985 197,714,953 0.8100 160,149,112 Subtotal 313,139,193 477,302,272 Other currency funds:

(Note) RMB 1,688,162 1.0000 1,688,162 1,458,828 1.0000 1,458,828 USD - 6.2855 - - 6.3000 - HKD 17,047 0.8109 13,823 17,047 0.8100 13,808 Subtotal 1,701,985 1,472,636 Total 314,855,568 478,788,943

Note: The balance of other currency funds is mainly the amount deposited in the securities settlement account.

- 45 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

2. Accounts receivable

(1) Disclosure of accounts receivable by categories: Unit: RMB Closing balance Opening balance Carrying amount Bad debt provision Carrying amount Bad debt provision Proportion Proportion Proportion Proportion Item Amount (%) Amount (%) Amount (%) Amount (%) Accounts receivable that are individually significant and for which bad debt provision ------has been assessed individually(Note) Accounts receivable for which bad debt provision has been assessed by portfolios Portfolio 1 4,854,248 1.93 - - 3,310,635 1.43 - - Portfolio 2 246,890,646 98.07 323,933 0.13 227,535,759 98.57 49,391 0.02 Subtotal of portfolios 251,744,894 100.00 323,933 0.13 230,846,394 100.00 49,391 0.02 Total 251,744,894 100.00 323,933 0.13 230,846,394 100.00 49,391 0.02

Note: Top five balances of accounts receivable are deemed as individually significant accounts receivable by the Group.

Aging analysis of accounts receivable is as follows: Unit: RMB Closing balance Opening balance Carrying Proportion Bad debt Carrying Proportion Bad debt Aging amount (%) provision Book value amount (%) provision Book value Within 1 year 251,172,094 99.77 147,781 251,024,313 230,011,499 99.64 - 230,011,499 More than 1 year 495,810 0.20 99,162 396,648 757,905 0.33 - 757,905 but not exceeding 2 years More than 2 years ------but not exceeding 3 years More than 3 years 76,990 0.03 76,990 - 76,990 0.03 49,391 27,599 Total 251,744,894 100.00323,933 251,420,961 230,846,394 100.00 49,391230,797,003

Accounts receivable portfolios for which bad debt provision has been assessed using the aging analysis approach: Unit: RMB Closing balance Opening balance Carrying Proportion Bad debt Carrying Proportion Bad debt Aging amount (%) provision Book value amount (%) provision Book value Within 1 year 246,317,846 99.77 147,781 246,170,065 226,700,864 99.64 - 226,700,864 More than 1 year 495,810 0.20 99,162 396,648 757,905 0.33 - 757,905 but not exceeding 2 years More than 2 years ------but not exceeding 3 years More than 3 years 76,990 0.03 76,990 - 76,990 0.03 49,391 27,599 Total 246,890,646 100.00323,933 246,566,713 227,535,759 100.00 49,391227,486,368

- 46 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

2. Accounts receivable - continued

(2) Top five companies with the largest balances of accounts receivable: Unit: RMB Proportion of the Relationship amount to the with the total accounts Name of customer Company Amount Aging receivable (%) Customer A Customer 113,056,893 Within 1 year 44.91 Customer B Customer 42,263,728 Within 1 year 16.79 Customer C Customer 15,633,779 Within 1 year 6.21 Customer D Customer 6,265,042 Within 1 year 2.49 Customer E Customer 5,971,459 Within 1 year 2.37 Total 183,190,901 72.77

(3) As at 31 December 2012, no balances included in above accounts receivable are due from the shareholders of the Company who hold over 5% voting right. Please see Note (VI) 6 for receivables due from related parties.

3. Prepayments

(1) Aging analysis of prepayments is as follows: Unit: RMB Closing balance Opening balance Proportion Proportion Item Amount (%) Amount (%) Within 1 year 1,623,037 100 3,497,668 100

(2) Disclosure of Prepayments by categories: Unit: RMB Item Closing balance Opening balance Insurance Fee 1,375,092 1,631,823 Prepayment for Equipment 138,439 142,232 Decoration Fee 93,006 1,210,724 Software Maintenance Expense - 496,389 Consultancy and Advisory Fee 16,500 16,500 Total 1,623,037 3,497,668

(3) As at 31 December 2012, no balances included in above prepayments are due from the shareholders of the Company who hold over 5% voting right.

- 47 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

4. Other receivables

(1) Disclosure of other receivables by categories: Unit: RMB Closing balance Opening balance Carrying amount Bad debt provision Carrying amount Bad debt provision Proportion Proportion Proportion Proportion Category Amount (%) Amount (%) Amount (%) Amount (%) Other receivables that are individually significant and for which bad debt provision ------has been assessed individually Other receivables for which bad debt provision has been assessed by portfolios Portfolio 1 9,923,060 60.91 89,569 0.90 9,619,402 79.60 89,297 0.93 Portfolio 2 6,368,240 39.09 217,678 3.42 2,464,828 20.40 161,056 6.53 Subtotal of portfolios 16,291,300 100.00 307,247 1.89 12,084,230 100.00 250,353 2.07 Total 16,291,300 100.00 307,247 1.89 12,084,230 100.00 250,353 2.07

Note: Top five balances of other receivables are deemed as individually significant other receivables by the Group.

Aging analysis of other receivables is as follows: Unit: RMB Closing balance Opening balance Carrying Proportion Bad debt Carrying Proportion Bad debt Aging amount (%) provision Book value amount (%) provision Book value Within 1 year 9,629,103 59.10 26,071 9,603,032 7,496,780 62.04 - 7,496,780 More than 1 year but not exceeding 2 years 3,743,931 22.98 55,669 3,688,262 1,627,980 13.47 141,728 1,486,252 More than 2 years but not exceeding 3 years 1,439,452 8.84 195,728 1,243,724 280,326 2.32 - 280,326 More than 3 years 1,478,814 9.08 29,779 1,449,035 2,679,144 22.17 108,625 2,570,519 Total 16,291,300 100.00 307,247 15,984,053 12,084,230 100.00 250,353 11,833,877

Other receivables portfolios for which bad debt provision has been assessed using the aging analysis Unit: RMB Closing balance Opening balance Carrying Proportion Bad debt Carrying Proportion Bad debt Aging amount (%) provision Book value amount (%) provision Book value Within 1 year 5,984,783 93.98 25,950 5,958,833 2,033,381 83.80 - 2,033,381 More than 1 year but not exceeding 2 years - - - - 399,234 16.20 141,728 257,506 More than 2 years but not exceeding 3 years 383,457 6.02 191,728 191,729 - - - - More than 3 years - - - - 32,213 - 19,328 12,885 Total 6,368,240 100.00 217,678 6,150,562 2,464,828 100.00 161,056 2,303,772

- 48 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

4. Other receivables - continued

(2) Top five companies with the largest balances of other receivables: Unit: RMB Proportion of the amount to the total Relationship with accounts receivable Name of company the Company Amount Aging (%) China National Petroleum Offshore Partner 2,535,000 Within 1 year 15.56 Engineering Co., Ltd. Financial Secretary of Transport Ministry Government Sector 1,600,000 Within 1 year 9.82 China Merchant Bonded Logistics )Co., Related party 1,427,200 Within 1 year 8.76 Ltd.("CMBL") Shenzhen Mawan Wharf Co., Related party 1,327,947 Within 1 year 8.15 Ltd.("SMW") Maxtop Shipping Ltd. Customer 692,655 Within 1 year 4.25 Total 7,582,802 46.54

(3) As at 31 December 2012, no balances included in above other receivables are due from the shareholders of the Company who hold over 5% voting right. Please see Note (VI).6 for receivables due from related parties.

5. Inventories

(1) Categories of inventories Unit: RMB Closing Balance Opening Balance Provision for Provision for Carrying decline in value Carrying decline in value Item amount of inventories Book value amount of inventories Book value Spare parts 20,457,425 792,118 19,665,307 23,198,355 792,118 22,406,237 Fuel 1,635,457 -1,635,457 1,062,721 - 1,062,721 Low value consumables24,807 - 24,807 31,400 - 31,400 Total 22,117,689 792,11821,325,571 24,292,476 792,118 23,500,358

(2) Movement of inventories is analyzed as follows: Unit: RMB Increase in the Decreased in the Item Opening balance current period current period Closing balance Spare parts 23,198,355 38,042,697 40,783,627 20,457,425 Fuel 1,062,721 50,333,800 49,761,064 1,635,457 Low value consumables 31,400 2,261,652 2,268,245 24,807 Total 24,292,476 90,638,149 92,812,936 22,117,689

(3) Provision for decline in value of inventories Unit: RMB Increase in the Decreased in the current period Item Opening balance current period Reversals Written off Closing balance Spare parts 792,118 - - - 792,118

- 49 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

6. Available-for-sale financial assets Unit: RMB Item Closing balance Opening balance Available-for-sale financial assets (Note) 5,210,000 5,690,000

Note: The value of Available-for-sale financial assets held by the company is the closing market price of last trading day in 2012 of the Jiang Su Ninghu Expressway Company Ltd.

7. Investments in joint ventures and associates Unit: RMB Proportion Proportion of voting of power in ownership the interests investee held by held by Investee's total Investee's total Total operating the entity the entity assets at the end of liabilities at the end Total net assets at income for the Net profit for the Investee (%) (%) the period of the period the end of the period period period I. Joint ventures China Overseas Harbor Affairs (Laizhou) Co., 40 40 2,181,632,582 310,908,531 1,870,724,051 267,050,832 61,444,116 Ltd.(Note 1)

II. Associates China Merchants Holdings (international) information 23.16 23.16 80,888,144 19,452,319 61,435,825 55,017,244 8,714,391 technology company Ltd. CMBL 40 40 1,571,992,558 913,671,716 658,320,842 176,515,276 15,494,851 Media Port Investments 50 50 HKD 2,829,039,917 HKD 1,996,928,636 HKD 832,111,281 HKD 634,120,631 HKD197,254,289 Limited("MPIL")(Note 2) China Development Finance 20 20 N/A N/A N/A N/A N/A Co., Ltd. (Note 3)

Note 1: The Company holds 40% equity interests in China Overseas Harbor Affairs (Laizhou) Co., Ltd. According to the investment agreement with shareholders of China Overseas Harbor 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.

Note 2: At 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 jointly set up Media Port Investments Limited (the "MPIL") with equal percentage of equity held respectively. MPIL then incorporates the abovementioned three joint ventures together with SSOG, and MPIL has 60% equity in each of the three joint ventures.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

7. Investments in joint ventures and associates - continued

The Company has 50% equity of MPIL which is the investment holding company. Thus, MPIL is accounted for as an associate and the share of equity in its consolidated financial statements is based on proportion of shareholding since the Company holds 30% voting rights in Mawan Company despite no director being sent to MPIL.

Note 3: In June 2012, the Company and Nanshan Group, China Petroleum Supply Base Co., Ltd and Yahgee Modular House Co., Ltd., entered into an agreement to jointly set up a new company named China Nanshan Development Group Finance Co., Ltd. The Company contributes RMB100, 000,000, holding 20% equity interests. On 30 October 2012, China Banking Regulatory Commission (CBRC) released approval (filed as Yin Jian Fu [2012] No.613) agreeing Nanshan Group to set up Enterprise Group Finance Company. For the year ended 31 December 2012, the abovementioned capital contribution has already finished and the establishment of China Nanshan Development Group Finance Co., Ltd is in progress.

8. Long-term equity investments

(1) Categories of Long-term equity investment Unit: RMB Increase in the Decreased in the Item Opening Balance current period current period Closing Balance Joint ventures 795,776,215 24,286,065 - 820,062,280 Associates 627,171,005 158,991,771 75,183,148 710,979,628 Other long-term equity investment 17,037,500 - - 17,037,500 Subtotal 1,439,984,720 183,277,836 75,183,148 1,548,079,408 Less: Provision for impairment of 3,128,300 - - 3,128,300 long-term equity investments Net amount 1,436,856,420 183,277,836 75,183,148 1,544,951,108

As at 31 December 2012, the long-term equity investments of the Group were not subject to restriction on disposal or remittance of return on investments.

- 51 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

8. Long-term equity investments - continued

(2) Details of long-term equity investments are as follows: Unit: RMB Explanation of the proportion of Proportion of Proportion ownership ownership of voting interests being not Provision Provision for Changes interests in power in consistent with for impairment Accounting (increase/ the investee the investee the proportion of impairment losses for the Cash dividends Investee method Investment cost Opening balance decrease) Closing balance (%) (%) voting power losses period for the period China Overseas Harbor Affairs Equity method 749,655,300 795,776,215 24,286,065 820,062,280 40 40 N/A - - - (Laizhou) Co., Ltd China Merchants Holdings (international) information Equity method 1,875,000 11,664,263 2,018,253 13,682,516 23.16 23.16 N/A - - - technology company Ltd CMBL Equity method 280,000,000 292,799,444 6,316,864 299,116,308 40 40 N/A - - - MPIL Equity method 139,932 322,707,298 (24,526,494) 298,180,804 50 50 N/A - - 75,183,148 China Development Finance Co., Ltd Equity method 100,000,000 - 100,000,000 100,000,000 20 20 N/A - - - China Ocean Shipping Agency Cost method 13,510,000 13,510,000 - 13,510,000 15 15 N/A - - - (Shenzhen) Company Limited Shenzhen Petro-chemical Industry Cost method 3,500,000 3,500,000 - 3,500,000 0.26 0.26 N/A 3,117,800 - - (Group) Company Limited. Guangdong Guang Jian Group Cost method 27,500 27,500 - 27,500 0.02 0.02 N/A 10,500 - - Company Limited Total 1,439,984,720 108,094,688 1,548,079,408 3,128,300 - 75,183,148

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

(3) Long-term equity investment under equity method Unit: RMB

Income adjustment Changes in Accrued Other Investment Opening Investment profit and Dividends in the equity Closing Investee cost balance cost loss year changes Balance Joint ventures China Overseas Harbor Affairs 749,655,300 795,776,215 - 24,286,065 - - 820,062,280 (Laizhou) Co., Ltd Associates China Merchants Holdings (international) information 1,875,000 11,664,263 - 2,018,253 - - 13,682,516 technology company Ltd CMBL 280,000,000 292,799,444 - 6,197,941 - 118,923 299,116,308

MPIL 139,932 322,707,298 - 50,656,654 (75,183,148) -298,180,804 China Development Finance Co., 100,000,000 - 100,000,000 - - - 100,000,000 Ltd Total 1,131,670,232 1,422,947,220 100,000,000 83,158,913 (75,183,148) 118,923 1,531,041,908

(4) Long-term equity investment under cost method Unit: RMB Increase in the Decrease in the Item Accounting method Investment cost Opening balance current period current period Closing balance China Overseas Harbor Affairs (Laizhou) Cost method 13,510,000 13,510,000 - - 13,510,000 Co., Ltd Shenzhen Petro-chemical Industry (Group) Cost method 3,500,000 3,500,000 - - 3,500,000 Company Limited. Guangdong Guang Jian Group Company Cost method 27,500 27,500 - - 27,500 Limited Total 17,037,500 17,037,500 - -17,037,500

(5) Provision for impairment loss of assets Unit: RMB Increase in the Decrease in the Item Opening balance current period current period Closing balance Shenzhen Petro-chemical Industry (Group) Company Limited. 3,117,800 - - 3,117,800 Guangdong Guang Jian Group Company Limited 10,500 - - 10,500 Total 3,128,300 - - 3,128,300

- 53 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

9. Investment properties Unit: RMB Opening Closing carrying Increase in the Decrease in the carrying Item amount current period current period amount I. Total original carrying amount 65,028,138 -- 65,028,138 1. Buildings 33,519,173 -- 33,519,173 2. Land use right 31,508,965 -- 31,508,965 II. Total accumulated depreciation and 1,215,753 - amortization 30,348,909 31,564,662 1. Buildings 16,690,102 601,988 - 17,292,090 2. Land use right 13,658,807 613,765 - 14,272,572 III. Total net book value of investment

property 34,679,229 33,463,476 1. Buildings 16,829,071 16,227,083 2. Land use right 17,850,158 17,236,393 IV. Total accumulated amount of provision for impairment losses of --- - investment property 1. Buildings - - - - 2. Land use right - - - - V. Total carrying value of investment

property 34,679,229 33,463,476 1. Buildings 16,829,071 16,227,083 2. Land use right 17,850,158 17,236,393

Note 1: Depreciation and amortization for the current period is RMB1, 215,753.

Note 2: For the year ended 31 December 2012, the Group has no investment property used as mortgage.

Note 3: For the year ended 31 December 2012, the Group had not obtained any ownership certificates of investment properties. Please see the Note (V) 12 for the reasons and management countermeasures.

- 54 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

10. Fixed assets

(1) Fixed assets Unit: RMB Opening carrying Increase in the Decrease in the Closing carrying Item amount current period current period amount I. Total original carrying amount 4,192,498,489 397,212,010 49,771,114 4,539,939,385 Including: Harbor facilities 1,261,933,269 131,338,915 9,100,428 1,384,171,756 Warehouses, container yards 688,139,044 45,176,554 2,901,011 730,414,587 and buildings Machinery and equipments 1,878,138,911 175,988,629 34,297,794 2,019,829,746 Motor vehicles, cargo ships 258,390,760 41,146,444 2,276,107 297,261,097 and tugboats Other equipments 105,896,505 3,561,468 1,195,774 108,262,199 II. Total accumulated depreciation 1,649,725,420 166,466,468 38,041,337 1,778,150,551 Including: Harbor facilities 242,143,126 24,559,267 4,549,598 262,152,795 Warehouses, container yards 214,440,116 13,763,124 353,092 227,850,148 and buildings Machinery and equipments 993,296,485 107,750,035 30,024,698 1,071,021,822 Motor vehicles, cargo ships 130,102,547 12,827,620 2,038,563 140,891,604 and tugboats Other equipments 69,743,146 7,566,422 1,075,386 76,234,182 III. Total net book value of fixed assets 2,542,773,069 2,761,788,834 Including: Harbor facilities 1,019,790,143 1,122,018,961 Warehouses, container yards 473,698,928 502,564,439 and buildings Machinery and equipments 884,842,426 948,807,924 Motor vehicles, cargo ships 128,288,213 156,369,493 and tugboats Other equipments 36,153,359 32,028,017 IV. Total provision for impairment 60,695,381 - - 60,695,381 losses Including: Harbor facilities - - - - Warehouses, container yards 60,695,381 - - 60,695,381 and buildings Machinery and equipments - - - - Motor vehicles, cargo ships --- - and tugboats Other equipments - - - - V. Total carrying value of fixed assets 2,482,077,688 2,701,093,453 Including: Harbor facilities 1,019,790,143 1,122,018,961 Warehouses, container yards 413,003,547 441,869,058 and buildings Machinery and equipments 884,842,426 948,807,924 Motor vehicles, cargo ships 128,288,213 156,369,493 and tugboats Other equipments 36,153,359 32,028,017

Note 1: New acquisition of fixed assets during the period amounted to RMB16, 157,308 and construction in progress transferred to fixed assets during the period was RMB381, 054,702, which composed the total increase in original carrying amount. Disposal of fixed assets during the period amounted to RMB44, 250,140 and fixed assets transferred to construction in progress during the period was RMB5,520,974, which composed the total decrease in original carrying amount.

- 55 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

10. Fixed assets - continued

(1) Fixed assets - continued

Note 2: Of the increase in accumulated depreciation, depreciation of RMB166,466,468 was made during the period. And decrease in accumulated depreciation during the period was composed of RMB37, 636,640 and RMB404, 697, respectively, resulted from disposal of fixed assets and transfer from fixed assets to construction in progress.

Note 3: At 31 December 2012, there are no restrictions on title of fixed assets.

Note 4: At 31 December 2012, ownership certificates for certain buildings of the Group with net book value of RMB148,744,547 (cost: RMB253,036,165) have not yet been obtained. Among them, fixed assets with net book value of RMB35,463,482 (cost: RMB134,020,332) are located within the scope of Chiwan watershed, please refer to Note (V) 12 for the reasons and management countermeasures; the ownership certificate for the remainder is under the process.

(2) Other Events Unit: RMB Item Amount Note The original amounts of fixed assets fully depreciated but still 723,860,260 in use at 31 December 2012 Closing original amount of temporary idle fixed assets - Fixed assets disposed or scrapped in the current year (1)Original amount of fixed assets disposed or scrapped in 44,250,140 the current year (2)Net book value of fixed assets disposed or scrapped in 6,613,500 the current year (3)Gain or loss on disposal or scrap of fixed assets (1,749,511)

11. Construction in progress

(1) Details of construction in progress are as follows: Unit: RMB Closing Balance Opening Balance Carrying Provision for Carrying Provision for Item amount impairment Book value amount impairment Book value Berth 4#-5#, Machong Port 383,523,257 - 383,523,257 169,264,280 - 169,264,280 Berth 2#-3#, Machong Port 219,033,381 - 219,033,381 118,802,890 - 118,802,890 Berth Extension - - - 106,442,864 - 106,442,864 Quay-crane Construction - - - 65,250,000 - 65,250,000 Tug Construction - - - 33,384,070 - 33,384,070 Portal Crane and transtainer - - - 16,600,000 - 16,600,000 Others 7,375,971 - 7,375,971 8,074,040 - 8,074,040 Total 609,932,609 - 609,932,609 517,818,144 - 517,818,144

- 56 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

11. Construction in progress - continued

(2) Changes in significant construction in progress Unit: RMB Proportion of Amount of Including: Interest construction accumulated capitalised capitalisation Budget Increase in the Transfer to fixed Transfer to investment in Construction capitalised interest for the rate for the Item amount Opening balance current period assets intangible assets budget progress interest period period (%) Capital source Closing balance Self-Funding Berth 4#-5#, Machong Port 820,840,000 169,264,280 214,258,977 - - 47% 47% 4,901,070 4,901,070 4.7 383,523,257 and loan Self-Funding Berth 2#-3#, Machong Port 280,933,660 118,802,890 151,146,831 50,916,340 - 78% 78% 6,499,508 6,066,512 4.7 219,033,381 and loan Berth Extension 130,087,244 106,442,864 23,644,380 130,087,244 - 100% 100% - - - Self-Funding - Quay-crane Construction 130,500,000 65,250,000 65,250,000 130,500,000 - 100% 100% - - - Self-Funding - Self-Funding Tug Construction 35,564,030 33,384,070 2,179,960 35,564,030 - 100% 100% 1,185,055 149,402 4.7 - and loan CTOS Software 5,463,568 - 5,463,568 296,068 5,167,500 100% 100% - - - Self-Funding - Portal Crane and transtainer 33,462,022 16,600,000 16,862,022 33,462,022 - 100% 100% - - - Self-Funding - Others 8,032,526 8,074,040 919,079 228,998 1,388,150 92% 92% - - - Self-Funding 7,375,971 Total 517,818,144 479,724,817 381,054,702 6,555,650 12,585,633 11,116,984 609,932,609

- 57 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

12. Intangible assets Unit: RMB Opening carrying Increase in the Decrease in the Closing carrying Item amount current period current period amount I. Total original carrying amount 1,534,462,503 7,475,372 - 1,541,937,875 Land use rights - prepaid under - - 1,296,536,073 lease (Note 2) 1,296,536,073 Land use rights - prepaid under 122,623,476 - - 122,623,476 investment (Note 2) Land use rights - purchased 19,343,189 - - 19,343,189 Computer software 23,073,628 7,475,372 - 30,549,000 Coastal line use rights 72,886,137 - - 72,886,137 38,868,236 II. Total accumulated amortization 495,535,611 - 534,403,847 (Note 1) Land use rights - prepaid under 424,425,331 33,309,639 - 457,734,970 lease (Note 2) Land use rights - prepaid under 47,618,783 2,452,470 - 50,071,253 investment (Note 2) Land use rights - purchased 1,842,939 386,864 - 2,229,803 Computer software 18,512,742 1,091,263 - 19,604,005 Coastal line use rights 3,135,816 1,628,000 - 4,763,816 III. Total net book value of 1,038,926,892 1,007,534,028 intangible assets Land use rights - prepaid under 872,110,742 838,801,103 lease (Note 2) Land use rights - prepaid under 75,004,693 72,552,223 investment (Note 2) Land use rights - purchased 17,500,250 17,113,386 Computer software 4,560,886 10,944,995 Coastal line use rights 69,750,321 68,122,321 IV. Total provision for impairment - - - - Land use rights - prepaid under --- - lease Land use rights - prepaid under --- - investment Land use rights - purchased - - - - Computer software - - - - Coastal line use rights - - - - V. Total carrying value of 1,038,926,892 1,007,534,028 intangible assets Land use rights - prepaid under 872,110,742 838,801,103 lease (Note 2) Land use rights - prepaid under 75,004,693 72,552,223 investment (Note 2) Land use rights - purchased 17,500,250 17,113,386 Computer software 4,560,886 10,944,995 Coastal line use rights 69,750,321 68,122,321

Note 1: Amortization for the current period is RMB38,868,236.

- 58 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

12. Intangible assets - continued

Note 2: The Group has obtained the land use right from Nanshan Group in connection with several plots of land with a total area of 1,049,946 square meters within Chiwan port for a use term ranging between 20 - 50 years with original amount of RMB1,400,288,984. The lands are located within the scope of Chiwan watershed, comprising of a land of 2.2 square kilometers injected by Shenzhen Investment Holding Corporation, the parent of Nanshan Group, and a land arising from marine reclamation by Nanshan Group.

An area of 270,692 sq. meters (RMB122,623,476) was injected by Nanshan Group as capital contribution at the moment of corporate restructuring. The rest land use right was obtained from Nanshan Group by long-term leasing.

Until now, no official certificates for above lands were obtained by Nanshan Group. Correspondingly, the buildings located on such lands have not obtained relevant real estate certificates.

At 20 March 2001, 18 June 2003 and 29 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 management 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 legal certificates of land and relevant real estate certificates.

13. Goodwill Unit: RMB Opening Increase in the Decrease in the Closing Investee balance current period current period balance Chiwan Container Terminal 10,858,898 - - 10,858,898 Company Limited

- 59 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

Note: The goodwill arose from the acquisition of the minority interests in Chiwan Container Terminal Company Limited, being the difference of the additional cost of investment and the Group's share of the fair value of the identifiable net assets in Chiwan Container Terminal Company Limited. Based on past years operation relating to these assets groups and the forecast of the Company, the Management hold the opinion that these is no need to allocate impairment to goodwill arising from Chiwan Container Terminal Company Limited investment.

14. Long-term prepaid expenses Unit: RMB Residual Opening Increase in the Amortization Other Closing useful Item balance period for the period reductions balance Original Cost Period Construction expenditure of 57,181,711 - 1,844,571 - 55,337,140 64,560,000 30 years Tonggu sea-route (Note 1) Foresea packing ground 2,416,368 - 1,208,184 - 1,208,184 5,537,510 1 year Golf membership 1,896,631 - 228,425 - 1,668,206 2,443,549 1-9 years Building decoration 343,822 1,698,294 142,978 - 1,899,138 2,208,924 2-5 years Others 650,000 200,000 - - 850,000 850,000 5years Total 62,488,532 1,898,294 3,424,158 - 60,962,668 75,599,983

Note 1: 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 RMB64,560,000 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.

- 60 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

15. Deferred tax assets/deferred tax

(1) Deferred tax assets or deferred tax liabilities that are presented at the net amount after offset and correspondingly deductible or temporary differences Unit: RMB Closing balance Closing balance Opening balance Opening balance of deferred tax of deductible or of deferred tax of deductible or assets or deferred taxable temporary assets or deferred taxable temporary tax liabilities differences after tax liabilities differences after Item after offsetting offsetting after offsetting offsetting Deferred tax assets: Provision for impairment losses 15,155,785 62,012,607 15,130,592 61,677,792 of assets Depreciation of Fixed assets and Amortization of Intangible 9,479,406 37,974,765 10,723,333 42,972,006 Assets Deductible losses 25,606,726 102,426,904 19,205,338 82,041,588 Accrued expenses 13,382,167 58,360,664 10,686,955 45,492,841 Pre-operational expenses 1,390,282 7,077,804 1,390,282 8,088,918 Others 2,954,668 13,009,019 2,114,419 9,444,637 Subtotal 67,969,034 280,861,763 59,250,919 249,717,782 Deferred tax liabilities Change in fair value of available for sale equity 1,022,500 4,090,000 1,142,500 4,570,000 financial assets recorded in capital surplus Subtotal 1,022,500 4,090,000 1,142,500 4,570,000

(2) Details of offsetting deferred tax assets and deferred tax liabilities Unit: RMB Item The amount of offset Current period: Depreciation of Fixed assets and Amortization of Intangible Assets 1,794,113

Prior period: Depreciation of Fixed assets and Amortization of Intangible Assets 1,113,207

(3) Details of unrecognized deferred tax assets Unit: RMB Item Closing balance Opening balance Deductible temporary differences 3,234,372 3,237,751 Deductible losses 12,406,662 8,573,918 Total 15,641,034 11,811,669

Note: Abovementioned deductible temporary differences and deductible losses that are not recognized as deferred tax assets due to uncertainty on whether sufficient taxable profits will be available in the future shall be presented.

- 61 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

15. Deferred tax assets/deferred tax - continued

(4) Deductible losses for which no deferred tax assets are recognized and will expire in the following years Unit: RMB Year Closing balance Opening balance Note 2013 83,654 83,654 2014 379,817 379,817 2015 4,707,158 4,707,158 2016 3,403,289 3,403,289 2017 3,832,744 - Total 12,406,662 8,573,918

16. Other non-current assets Unit: RMB Item Closing balance Opening balance Coast Line Use Right (Note) 36,375,000 36,375,000 Land Use Right (Note) 86,934,397 85,463,860 Prepayment of facility - 20,269,424 Total 123,309,397 142,108,284

Note : 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 supplements 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 RMB260,000,000, respectively in March 2006, October 2006 and November 2007. Up to 31 December 2012, the Group has paid the first four installments of the coastline use right and land use right as agreed in the contracts, respectively RMB36,375,000 and RMB86,934,397. As the Group has not obtained the land use right certificate, the relevant payments were therefore recognized as other non-current assets.

- 62 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

17. Details of provision for impairment losses of assets Unit: RMB Increase Decreased in the Foreign Opening in the current period exchange Closing carrying current translation carrying Item amount period Reversals Write-off differences amount I. Bad debts provision 299,744 360,846 29,507 - 97631,180 Including: Bad debts provision of 49,391 274,470 - - 72 323,933 Account Receivable Including: Bad debts provision of 250,353 86,376 29,507 - 25 307,247 Other Receivables II.Provision for decline in value of 792,118 - - - - 792,118 inventories III.Provision for impairment losses of ------available-for-sale financial assets IV.Provision for impairment losses of ------held-to-maturity investments V. Provision for impairment losses of 3,128,300 - - - - 3,128,300 long-term equity investments VI. Provision for impairment losses of ------investment properties VII. Provision for impairment losses 60,695,381 - - - - 60,695,381 of fixed assets Total 64,915,543 360,846 29,507 - 9765,246,979

18. Short-term borrowings Unit:RMB Item Closing balance Opening balance Credit loans 1,080,929,700(Note 1) 1,418,830,000 Guarantee loans 100,000,000(Note 2) - Total 1,180,929,700 1,418,830,000

Note 1: The above bank loans consisted of 1,333,000,000 denominated in HKD (equal to RMB1,080,929,700). Included in short-term borrowings was loan of HKD130,000,000(RMB105,417,000), which should be due over one year according to the loan contracts. 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.

Note 2: Dongguan Chiwan Wharf Company Limited, a subsidiary of the Company, holds a bank loan of RMB100,000,000, the principal outstanding of which is fully guaranteed by the Company, while 15% of the principal outstanding is counter guaranteed by Yihai Kerry investment Ltd, a minority shareholder of the Company.

19. Notes payable Unit: RMB Item Closing balance Opening balance Bank acceptance notes 826,000 8,704,900

Amounts due in next accounting period is RMB826,000.

- 63 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

20. Accounts payable

(1) Details of accounts payable are as follows: Unit: RMB Item Closing balance Opening balance Construction amounts 83,690,612 117,153,230 Service amounts 29,011,736 21,681,108 Material purchase amounts 20,316,663 17,550,367 Equipment payables 12,288,707 2,096,213 Rental payables 661,119 1,632,036 Machinery procurement amounts 19,104 - Total 145,987,941 160,112,954

(2) As at 31 December 2012, 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. Payables due to Nanshan Group or other related parties refer to (VI) 6.

(3) Details of significant accounts payable aged more than one year as follows: Unit: RMB Closing Reasons for Subsequent Name of entity balance Aging unpayment Payment Fujian Hui Dong Construction Remaining 5,128,656 1-2 year - Engineering Co., Ltd construction costs China First Metallurgical Group Remaining 3,477,529 1-2 year - Co., Ltd construction costs Tonggu sea-route Construction Remaining 2,560,000 Over 3 years - Office construction costs Accrued railway Railage 1,622,650 1-2 year - freight subsides Total 12,788,835

21. Advances

(1) Details of advances are as follows: Unit: RMB Item Closing balance Opening balance Service fee receipt in advance 299,453 5,045,311

(2) As at 31 December 2012, the Group did not have any advance from customers' balances which were due to parties having 5% or above shareholdings in the Company.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

22. Employee benefits payable Unit:RMB Opening Decrease in Closing carrying Increase in the the current carrying Item amount current period period amount I. Wages and salaries, bonuses, allowances 174,690,066 164,557,533 56,065,184 and subsidies 45,932,651 II. Staff welfare - 12,801,444 12,801,444 - III. Social security contributions 9,852 27,822,518 27,829,126 3,244 Including: Medical insurance - 5,657,514 5,657,514 - Basic pension - 13,097,429 13,094,185 3,244 Supplementary pension (Note1 ) - 7,487,010 7,487,010 - Unemployment insurance - 295,560 295,560 - Employment injury insurance 9,852 829,647 839,499 - Generational insurance - 455,358 455,358 - IV. Housing funds - 12,050,350 12,049,540 810 V. Labor union and employee education 10,003,364 7,406,999 7,943,811 9,466,552 funds VI. Non-monetary benefits - - - - VII. Termination benefits - - - - VIII. Others - 9,460,250 9,460,250 - Total 55,945,867 244,231,627 234,641,704 65,535,790

Note 1: At 3 June 2008, the Group participated in a group defined contribution plan of Nanshan Group approved by Shenzhen government. The above supplementary pension contributions were paid into the plan through Nanshan Group.

Note 2: There are no amounts in arrears under the employee benefits payable.

Note3: 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 attributable to the parent and yearly net asset return ratio. The Company has provided RMB10,112,903 of management reward in 2012 (2011: RMB14,917,004).

23. Taxes payable Unit: RMB Opening carrying Increase in the Decrease in the Closing carrying Item amount current period current period amount Enterprise income tax payable 92,480,983 133,843,163 199,475,045 26,849,101 Withholding tax payable(Note) 20,572,808 - 11,468,250 9,104,558 Business tax 5,266,425 53,812,383 58,852,499 226,309 Value-added-tax payable 141,918 7,588,383 6,810,704 919,597 Others 3,318,916 31,119,504 30,683,124 3,755,296 Total 121,781,050 226,363,433 307,289,622 40,854,861

Note: Withholding tax represents the tax provided by the Group at a rate of 5% or 10% when paying out dividends to foreign shareholders.

- 65 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

24. Interest payable Unit: RMB Item Closing balance Opening balance Interest of debentures 18,009,863 - Interest payable of short-term borrowings 531,310 548,834 Interest of long-term borrowings with interest paid in - 1,088,956 installment and principal to be paid when due Total 18,541,173 1,637,790

25. Dividends payable Unit: RMB Reasons for not paying dividends for Name of entity Closing balance Opening balance more than one year Payable to International Enterprise Co., Ltd. - 207,726,574 N/A Payable to Hidoney Developments Co., Ltd. - 157,434,877 N/A Total - 365,161,451

26. Other payables

(1) Details of other payables are as follows: Unit: RMB Item Closing balance Opening balance Temporary receipts 23,025,327 19,065,981 Security expense payable 3,620,546 17,101,361 Deposits received 2,746,130 1,720,908 Professional service fee 1,910,376 2,610,000 Service fees 1,313,873 1,407,531 Due to employees 1,297,015 1,225,285 Insurance indemnity 955,033 955,433 Others 6,706,538 6,722,794 Total 41,574,838 50,809,293

(2) The aging of other payables based on their recording dates is analyzed as follows:

Unit: RMB Closing balance Opening balance Proportion Proportion Aging Amount (%) Amount (%) Within 1 year 36,254,316 87.20 44,356,691 87.30 More than 1 year 1,353,934 3.26 2,583,466 5.08 but not exceeding 2 years More than 2 years 1,300,464 3.13 3,067,152 6.04 but not exceeding 3 years More than 3 years 2,666,124 6.41 801,984 1.58 Total 41,574,838 100.00 50,809,293 100.00 - 66 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

26. Other payables - continued

(3) Significant other payables aged more than one year Unit: RMB Name of entity Amount Reason for non-settle Qingdao Yaran Trading Co., Ltd. 1,026,750 Business in progress

(4) As at 31 December 2012, the Group did not have any other payables which were due to parties having 5% or above shareholdings in the Company. Payables due to other related parties refer to (VI) 6.

27. Current portion of non-current liabilities

(1) Details of Current portion of non-current liabilities are as follows: Unit: RMB Item Closing balance Opening balance Current portion of long-term borrowings 35,000,000(Note1) 10,000,000 Current portion of deferred revenue 4,727,207(Note2) 4,951,750 Total 39,727,207 14,951,750

Note1: Please refer to (V) 28(1).

Note 2: Please refer to (V) 31.

(2) Long-term borrowings due within one year

(a) Long-term borrowings due within one year Unit: RMB Item Closing balance Opening balance Guarantee loans 35,000,000 10,000,000

(b) Long-term borrowings due within one year Unit: RMB Closing balance Opening Balance Annual Amount of Amount of Amount of Amount of interest foreign domestic foreign domestic Creditor Inception date Maturity date Currency rate (%) currency currency currency currency Financial institution I 2011.10.21 2013.10.20 RMB 6.4 20,000,000 - Financial institution II 2012.02.09 2013.08.09 RMB 6.4 15,000,000 - Total 35,000,000 -

- 67 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

28. Long-term borrowings

(1) Categories of long-term borrowings Unit: RMB Item Closing balance Opening balance Guarantee loans( Note) 150,000,000 90,000,000

Note: Dongguan Chiwan Wharf Company Limited, a subsidiary of the Company, holds a bank loan of RMB185,000,000, the principal outstanding of which is fully guaranteed by the Company, while 15% of the principal outstanding is counter guaranteed by Yihai Kerry investment Ltd, a minority shareholder of the Company. Such borrowings include RMB35,000,000 due within one year.

(2) Details of long-term borrowings are as follows: Unit: RMB Closing balance Opening Balance Amount of Amount of Amount of Amount of Interest rate foreign domestic foreign domestic Creditor Inception date Maturity date Currency (%) currency currency currency currency Financial 2011.10.21 2016.10.20 RMB 6.4 70,000,000 90,000,000 institution I Financial 2012.02.09 2017.02.09 RMB 6.4 80,000,000 - institution II Total 150,000,000 90,000,000

The interest rate of the long-term borrowings mentioned above was 6.4% per annum.

29. Bonds payable Unit: RMB Opening Interest paid Closing Par Term of interest Accrued interest during the interest Closing Name of bonds value Issue date the bond Issue amount payable for the period period payable balance

11 ChiWan 01 100 2012.6.1 Five years 500,000,000 - 18,009,863 - 18,009,863 496,545,753

Note: On 25 November 2011, the Company received the Approval from CSRC (filed as Zhen Jian Xu Ke [2011] No.1889) agreeing the Company to issue corporate bonds with no more than 100 million in par value. On 26 April 2012, the Company's actual insurance amounted to RMB500,000,000 with the term of five years. The bond interests should be calculated on simple interest basis at a nominal fixed interest rate of 5.28% on a yearly basis.

According to the bond prospectus, the Company should make an announcement on whether to exercise the redemption option on the information disclosure media designated by CSRC at the 30th trading date before the interest payment date in the third interest-bearing year. If the decision of exercising the redemption option is made, the bond would be regarded as to be matured in the third year and the payment mode of redemption would be the same as that

- 68 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

29. Bonds payable- continued

of principal and interests of bonds due in the period. If the decision of not exercising the redemption of option is made, the Company should make an announcement on whether to raise the interest rate and the extent of variation, which ranges from zero to 100 base points. If the company chooses to exercise the option of raising the stated interest rate, the stated interest rate of the portion of non-put-back bond due in two years after the remaining period equals to the stated interest rate due in three years prior to the remaining period plus the increased base point. And the stated interest rate of the bond due in two years after the remaining period would be fixed. If the company chooses not to exercise the option of raising the stated interest rate, the original stated interest rate remains the same for the portion of non-put-back bond due in two years after the remaining period.

Investors have the option to sell bonds back to the Company at the interest payment date in the third interest-bearing year at the par value wholly or in partially, after the Company makes the announcement on whether to raise the stated interest rate and the extent of variation.

If the Company abandons the redemption option and the bondholder s abandon the put back option wholly or partially, the rest of the principal would be paid back in advance. Namely, 30% proportion of the principal should be paid back at the end of the fourth year since the bond issued and the rest should be paid back at the end of the fifth year.

30. Special Payables Unit: RMB Increase in the Decrease in the Item Opening balance current period current period Closing Balance Note Refunds of Harbor 81,790,541 5,048,835 6,216,400 80,622,976 Note Construction Fee

Note: The item is refunds of harbor construction fee to the company and its subsidiary Chiwan Container Terminal Company Limited from Shenzhen traffic bureau. According to Measures of harbor construction fee management 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.

31. Other non-current liabilities

(1) Details of other non-current liabilities are as follows: Unit: RMB Closing carrying Opening carrying Item amount amount Deferred revenue Including: Berth priority right (Note 1) 50,518,693 55,202,707 Including: Government grant related to asset (Note 2) 7,860,870 8,000,000 Total 58,379,563 63,202,707 Less: Non-current liabilities due within one year 4,727,207 4,951,750 Including: Berth priority right 4,560,250 4,951,750 Including: Government grant related to asset 166,957 - Non-current liabilities due beyond one year 53,652,356 58,250,957

- 69 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

31. Other non-current liabilities- continued

Note 1: Berth priority right represents that agreed in the contract signed in 2003, which amounts to USD14,000,000. The Group should satisfy the berthing requirement of contracted customers in priority during the contract period. According to the contract, the berth priority right should be amortized within twenty years on the straight-line basis.

Note 2: The item is government grants received which is based on the Announcement Released by National Development and Reform Commission about 2010 Investment Plans within Budget of Grains and Modern Logistics Program (NDRC[2010] No.1263). The total received amount is RMB8,000,000. The asset relating to the government grants has arrived the status for its intended use in March 2012. Therefore, it shall be amortized on the straight-line basis within the useful life of the related asset.

32. Share capital Unit: RMB Changes for the period Capitalisation New issue of Bonus of surplus Opening balance share issue reserve Others Subtotal Closing balance 2012: I. Restricted tradable shares 1. State-owned shares ------2. State-owned legal person ------shares 3. Other domestic shares 790,929 - - - (55,463) (55,463) 735,466 4. Other foreign shares ------Total restricted tradable shares 790,929 - - - (55,463) (55,463) 735,466 II. Tradable shares 1. Ordinary shares 464,789,805 - - - - - 464,789,805 denominated in RMB 2. Foreign capital shares 179,182,996 - - - 55,463 55,463 179,238,459 listed domestically 3. Foreign capital shares ------listed overseas 4. Others ------Total tradable shares 643,972,801 - - - 55,463 55,463 644,028,264 III. Total shares 644,763,730 - - - - - 644,763,730 2011: I. Restricted tradable shares 1. State-owned shares ------2. State-owned legal person ------shares 3. Other domestic shares 673,252 - - - 117,677 117,677 790,929 4. Other foreign shares ------Total restricted tradable shares 673,252 - - - 117,677 117,677 790,929 II. Tradable shares 1. Ordinary shares 464,789,805 - - - - - 464,789,805 denominated in RMB 2. Foreign capital shares 179,300,673 - - - (117,677) (117,677) 179,182,996 listed domestically 3. Foreign capital shares ------listed overseas 4. Others ------Total tradable shares 644,090,478 - - - (117,677) (117,677) 643,972,801 III. Total shares 644,763,730 - - - - - 644,763,730

- 70 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

33. Capital reserve Unit: RMB Additions for the Reductions for the Opening balance period period Closing balance 2012: Capital premium 163,560,083 - - 163,560,083 Including: Capital contributed by investors 163,560,083 - - 163,560,083 Conversion option of convertible corporate --- - bonds is exercised Debt converted into capital - - - - Differences arising from business combination -- - - involving enterprises under common control Equity acquisition towards minority -- - - shareholders of subsidiaries Capital reserve converted into capital - - - - Other comprehensive income 3,527,500 - 360,000 3,167,500 Other capital reserve (861,528) - - (861,528) Including: Equity component split from convertible -- - - corporate bonds Fair value of equity-settled share-based equity -- - - instrument Surplus of compensation granted by -- - - government for relocation in the public interests Transfer from capital reserve under the previous (2,781,133) - - (2,781,133) accounting system Others 1,919,605 - - 1,919,605 Total 166,226,055 - 360,000 165,866,055 2011: Capital premium 142,786,083 20,774,000(Note) - 163,560,083 Including: Capital contributed by investors 142,786,083 20,774,000(Note) - 163,560,083 Conversion option of convertible corporate --- - bonds is exercised Debt converted into capital - - - - Differences arising from business combination --- - involving enterprises under common control Equity acquisition towards minority --- - shareholders of subsidiaries Capital reserve converted into capital - - - - Other comprehensive income 4,195,200 - 667,700 3,527,500 Other capital reserve (2,071,528) 1,210,000 (861,528) Including: Equity component split from convertible --- - corporate bonds Fair value of equity-settled share-based equity --- - instrument Surplus of compensation granted by government --- - for relocation in the public interests Transfer from capital reserve under the previous (2,781,133) - - (2,781,133) accounting system Others 709,605 1,210,000 - 1,919,605 Total 144,909,755 21,984,000 667,700 166,226,055

- 71 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

33. Capital reserve - continued

Note : The group previously owned 100% shareholding of Dongguan Chiwan Wharf Company Limited. At 16 August 2010, the group signed an agreement with Yihai Kerry investment Ltd on injecting RMB121, 200,000 and RMB91,940,000 respectively to Dongguan Wharf Ltd, after the capital increment date (9 June 2011), the groups' share of respectively was decreased from 100% to 85%. The increase of RMB20,774,000 in net assets of Dongguan Chiwan Wharf Company, attributable to the Group based on its shareholding, was recognized in "capital reserve-equity premium".

34. Special reserve Unit: RMB Opening Increase for Decrease for Closing Item balance the period the period balance 2012: Production safety fee - 10,853,324 9,458,492 1,394,832 2011: Production safety fee - - - -

35. Surplus reserve Unit: RMB Opening Increase for Decrease for Item balance the period the period Closing balance 2012: Statutory surplus reserve 421,692,405 43,011,863 - 464,704,268 2011: Statutory surplus reserve 383,570,404 38,122,001 - 421,692,405

Note: 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.

- 72 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

36. Unappropriated profit Unit: RMB Proportion of appropriation or Item Amount allocation 2012： Before adjustment: Unappropriated profit at the end of prior year 2,248,722,001 Adjustment: Total unappropriated profit at beginning of year - After adjustment: Unappropriated profit at beginning of year 2,248,722,001 Add: Net profit attributable to shareholders of the parent company for 467,103,270 the period Less: Appropriation to statutory surplus reserve 43,011,863 Note 1 Appropriation to discretionary surplus reserve - Appropriation to general risk reserve - Ordinary shares' dividends payable 257,905,492 Note 2 Ordinary shares' dividends converted into share capital - Unappropriated profit at the end of the period 2,414,907,916 2011: Before adjustment: Unappropriated profit at the end of prior year 2,079,724,472 Adjustment: Total unappropriated profit at beginning of year - After adjustment: Unappropriated profit at beginning of year 2,079,724,472 Add: Net profit attributable to shareholders of the parent company for the period 505,645,137 Less: Appropriation to statutory surplus reserve 38,122,001 Appropriation to discretionary surplus reserve - Appropriation to general risk reserve - Ordinary shares' dividends payable 298,525,607 Ordinary shares' dividends converted into share capital - Unappropriated profit at the end of the period 2,248,722,001

Note 1: Withdraw statutory surplus reserve

According to the Articles of Association, the Company is required to transfer 10% of its net profit to the statutory surplus reserve.

Note 2: Cash dividends approved by shareholders' meeting during the year

Pursuant to the board resolution at 28 May 2012, on the basis of 644,763,730 issued shares for the year ended by 31 December 2011, dividend of RMB4 for every 10 shares were distributed to all the shareholders, which amounted to RMB257,905,492.

Note 3: Profit distribution decided after the balance sheet date

According to a proposal made at the fifth session of the seventh Board of Directors held at 25 March 2013, on the basis of 644,763,730 issued shares at 31 December 2012, cash dividends of RMB234,049,234 will be distributed to all the shareholders. The above proposal regarding dividends distribution is yet to be approved by a shareholders' meeting.

- 73 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

36. Unappropriated profit - continued

Note 4: Appropriation to surplus reserve that has been made by subsidiaries

As at 31 December 2012, the balance of the Group's unappropriated profit included appropriation to surplus reserve that has been made by subsidiaries amounting to RMB497,496,804 (31 December 2011: RMB480,610,213).

37. Operating income and operating costs

(1) Operating income and operating cost Unit: RMB Amount incurred Amount incurred in the current in the prior Item period period Principal operating income 1,710,327,275 1,643,676,918 Other operating income 73,518,860 64,459,981 Total 1,783,846,135 1,708,136,899 Principal operating cost 834,345,296 755,262,540 Other operating cost 10,256,123 12,777,703 Total 844,601,419 768,040,243

(2) Principal operating activities (classified by business) Unit: RMB Amount incurred in the current period Amount incurred in the prior period Item Operating income Operating cost Operating income Operating cost Load and unload services 1,600,968,080 743,507,148 1,533,687,860 667,441,343 Port ancillary services 97,455,820 90,838,148 99,154,626 87,821,197 Agency and others services 11,903,375 - 10,834,432 - Total 1,710,327,275 834,345,296 1,643,676,918 755,262,540

(3) Principal operating activities (classified by geographical areas) Unit: RMB Amount incurred in the current period Amount incurred in the prior period Item Operating income Operating cost Operating income Operating cost Mainland China 1,703,981,350 834,345,296 1,638,111,180 755,262,540 Hong Kong 6,345,925 - 5,565,738 - Total 1,710,327,275 834,345,296 1,643,676,918 755,262,540

- 74 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

37. Operating income and operating costs - continued

(4) Other services Unit: RMB Amount incurred in the current period Amount incurred in the prior period Other operating Other operating Other operating Other operating Item income cost income cost Lease income 29,801,819 3,271,519 26,452,734 3,654,601 Security fee 10,456,055 - 10,611,941 - Port ancillary services 17,308,127 5,045,888 13,921,382 5,801,214 Agency fee 3,555,772 1,938,716 5,180,097 3,177,303 Sales of material 2,908,705 - 2,683,075 144,585 Documentation fee 938,488 - 824,376 - Others 8,549,894 - 4,786,376 - Total 73,518,860 10,256,123 64,459,981 12,777,703

(5) Operating income from the Company's top five customers Unit: RMB Proportion to total operating income of the Name of customer Operating income Company (%) Customer A 494,980,243 27.76 Customer B 336,082,313 18.84 Customer C 113,000,648 6.33 Customer F 46,462,206 2.60 Customer G 41,294,602 2.31 Total 1,031,820,012 57.84

38. Business taxes and levies Unit: RMB Amount incurred in the current Amount incurred Basis of Item period in the prior period calculation Business tax 53,812,383 62,892,685 Note Urban maintenance and construction 3,996,559 4,436,377 Note tax Education surcharges 2,866,407 3,161,517 Note Others 475,897 531,347 Total 61,151,246 71,021,926

Note: Please refer to Note (III).

- 75 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

39. Financial expenses Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Interest expense 84,667,523 64,084,834 Less: Capitalized interest expenses 11,116,984 1,434,870 Less: Interest income 6,906,511 7,893,831 Exchange differences 1,430,738 (47,009,755) Less: Capitalized exchange differences - - Others 2,688,398 4,624,603 Total 70,763,164 12,370,981

40. Impairment losses of assets Unit: RMB Amount incurred in Amount incurred in Item the current period the prior period I. Bad debt losses 331,339 (437,532) II. Written-down of inventories - 688,606 III. Impairment on available-for-sale financial assets - - IV. Impairment on held-to-maturity investments - - V. Impairment on long-term equity investments - - VI. Impairment on investment properties - - VII. Impairment on fixed assets - - VIII. Impairment on construction materials - - IX. Impairment on construction in progress - - X. Impairment on bearer biological assets - - XI. Impairment on oil and gas assets - - XII. Impairment on intangible assets - - XIII. Impairment on goodwill - - XIV. Others - - Total 331,339 251,074

41. Investment income

(1) Details of investment income Unit: RMB Amount incurred in the Amount incurred in the current period prior period Long-term equity investments income under cost method - 3,900,000 Long-term equity investments income under equity method 83,158,913 113,968,183 Investment income on disposal of long-term equity - - investment Investment income on available-for-sale financial assets, etc. 360,000 360,000 Total 83,518,913 118,228,183

- 76 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

41. Investment income - continued

(2) Long-term equity investments income under cost method Unit: RMB Reasons for increases or Amount incurred in Amount incurred in decreases in the current period Investee the current period the prior period compared to the prior period China Ocean Shipping Agency The investee distributed profit to - 3,900,000 (Shenzhen) Company Limited shareholders last year

(3) Long-term equity investments income under equity method Unit: RMB Amount Amount incurred in the incurred in the Reasons for increases or decreases in the Investee current period prior period current compared to the prior period MPIL 50,656,654 77,299,676 Net profit of investee fluctuates. China Overseas Harbor Affairs (Laizhou) Co.,Ltd 24,286,065 32,665,056 Net profit of investee fluctuates. CMBL 6,197,941 3,983,566 Net profit of investee fluctuates. China Merchants Holdings (international ) Information 2,018,253 19,885 Net profit of investee fluctuates. Technology Co.,Ltd Total 83,158,913 113,968,183

42. Non-operating income

(1) Details of non-operating income are as follows: Unit: RMB Amount recognized as non-recurring Amount incurred in Amount incurred in gain and loss in the Item the current period the prior period current period Total gains on disposal of non-current assets 1,190,772 70,951 1,190,772 Including: Gains on disposal of intangible assets - - - Gains on disposal of fixed assets 1,190,772 70,951 1,190,772 Government grants 494,730 - 494,730 Insurance compensation income 1,800,200 - 1,800,200 Income derived from settlement of the payables 2,288,283 - 2,288,283 that cannot be paid Others 1,864,403 1,807,586 1,864,403 Total 7,638,388 1,878,537 7,638,388

- 77 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

42. Non-operating income - continued

(2) Details of government grants are as follows: Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Circulation business development project funds 355,600 - Others 139,130 - Total 494,730 -

43. Non-operating expenses Unit: RMB Amount recognized as non-recurring Amount incurred in Amount incurred in gain and loss in the Item the current period the prior period current period Total losses on disposal of non-current assets 2,940,283 1,960,173 2,940,283 Including: Losses on disposal of fixed assets 2,940,283 1,960,173 2,940,283 Donations contributed 20,000 52,603 20,000 Amercement outlay 933 6,311 933 Others 867,520 16,775 867,520 Total 3,828,736 2,035,862 3,828,736

44. Income tax expenses Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Current tax expense calculated according to tax laws and relevant 133,843,163 155,728,890 requirements Deferred income tax (8,718,115) (7,167,257) Total 125,125,048 148,561,633

Reconciliation of income tax expenses to the accounting profit is as follows: Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Accounting profit 740,894,558 816,337,301 Income tax expenses calculated at 25% (the prior year: 24 %) 185,223,640 195,920,952 Effect of expenses that are not deductible for tax purposes 3,715,114 2,746,526 Effect of tax-free income (20,879,728) (28,374,764) Effect of unrecognized deductible losses and deductible temporary 957,342 1,003,459 differences for tax purposes Changes in opening balances of deferred tax assets/liabilities due to - 2,290,517 the adjustment in tax rate Effect of different tax rates of subsidiaries operating in other (302,040) (244,303) jurisdictions Effect of tax preference policy (50,664,660) (30,256,021) Withholding tax (Note) 7,075,380 5,475,267 Income tax expense 125,125,048 148,561,633

- 78 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

44. Income tax expense - continued

Note: Withholding income tax was accrued at the rate of 5% or 10% for dividend payable to Chiwan Wharf Holdings (H.K.) Limited for the year ended 31 December 2012, declared by those Group's PRC subsidiaries of which Chiwan Wharf Holdings (H.K.) Limited is a shareholder.

45. Government grants Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Government grants related to income: Circulation business development project funds 355,600 - Total 355,600 - Less: government grants credited in deferred income - - Add: Government grants in current year profit debited deferred income 139,130 - Government grants credited in current year profit 494,730 -

46. Borrowing cost Unit: RMB Amount of borrowing costs capitalised during Capitalisation Name of Project the year rate Construction in progress 11,116,984 4.7% Sub-total of borrowing costs capitalised during the year 11,116,984 4.7% Borrowing costs recognised in profit or loss during the year 73,550,539 Total of borrowing costs during the year 84,667,523

47. Earnings per share

For the purpose of calculating earnings per share, net profit for the current period attributable to ordinary shareholders is: Unit: RMB Amount incurred in Amount incurred in Item the current period the prior period Net profit for the current period attributable to ordinary shareholders 467,103,270 505,645,137 Including: Net profit from continued operations 467,103,270 505,645,137 Net profit from discontinued operations - -

- 79 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

47. Earnings per share - continued

For the purpose of calculating basic earnings per share, the denominator is the weighted average number of outstanding ordinary shares and its calculation process is as follows: Unit: RMB Amount incurred in Amount incurred in Item the current period the prior period Number of ordinary shares outstanding at the beginning of year 644,763,730 644,763,730 Add: Weighted average number of ordinary shares issued during the - - period Less: Weighted average number of ordinary shares repurchased - - during the period Number of ordinary shares outstanding at the end of year 644,763,730 644,763,730

Unit: RMB Amount incurred in Amount incurred in Item the current period the prior period Calculated based on net profit attributable to shareholders of the

parent: Basic earnings per share 0.724 0.784 Diluted earnings per share 0.724 0.784 Calculated based on net profit from continued operations attributable

to shareholders of the parent: Basic earnings per share 0.724 0.784 Diluted earnings per share 0.724 0.784 Calculated based on net profit from discontinued operations

attributable to shareholders of the parent: Basic earnings per share - - Diluted earnings per share - -

Since there are no dilutive potential ordinary shares, the diluted earnings per share equals to the basic earnings per share.

- 80 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

48. Other comprehensive income Unit: RMB Amount incurred in Amount incurred in Item the current period the prior period 1. Gains (losses) arising from available-for-sale financial assets (480,000) (950,000) Less: Tax effects arising from available-for-sale financial assets (120,000) (182,300) Net amounts included in other comprehensive income in the prior - - period that are transferred to profit or loss for the period Subtotal (360,000) (767,700) 2. Share of other comprehensive income of the investee accounted - 100,000 for using the equity method Less: Tax effects arising from the share of other comprehensive - - income of the investee accounted for using the equity method Net amounts included in other comprehensive income in the prior - - period that are transferred to profit or loss for the period Subtotal - 100,000 3. Gains (losses) arising from cash flow hedging instruments - - Less: Tax effects arising from cash flow hedging instruments - - Net amounts included in other comprehensive income in the prior - - period that are transferred to profit or loss for the period Adjustments to the initial recognition amount of hedged items - - Subtotal - - 4. Translation differences of financial statements denominated in 2,722 (188,137) foreign currencies Less: Net amounts transferred to profit or loss for the period on - - disposal of foreign operations Subtotal 2,722 (188,137) 5. Others - - Less: Tax effects arising from other items recognized in other - - comprehensive income Net amounts included in other comprehensive income in the prior - - period that are transferred to profit or loss for the period Subtotal - - Total (357,278) (855,837)

49. Notes to items in the cash flow statement

(1) Other cash receipts relating to operating activities Unit: RMB Amount incurred in Amount incurred Item the current period in the prior period Interest income 6,906,511 10,471,718 Refunds of Harbor Construction Fee received 5,048,835 16,945,741 Government grant 355,600 - Others 1,131,730 4,306,623 Total 13,442,676 31,724,082

- 81 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

49. Notes to items in the cash flow statement - continued

(2) Other cash payments relating to operating activities Unit: RMB Amount incurred in Amount incurred Item the current period in the prior period Office expenses & utilities 8,748,558 5,929,709 Port expenses 7,699,963 8,502,729 Entertainment expenses 7,575,397 7,133,610 Car expenses 5,294,285 7,186,027 Asset insurance fee 4,480,078 4,930,868 Consulting & auditing fee 4,423,779 5,916,908 Travel & accommodation 2,559,818 2,606,213 Advertisements & exhibition expense 189,179 199,798 Others 25,806,219 35,445,572 Total 66,777,276 77,851,434

(3) Other cash payments relating to financing activities Unit: RMB Amount incurred in Amount incurred Item the current period in the prior period Debt insurance costs 400,000 650,000 Handling charges - 3,798,649 Total 400,000 4,448,649

- 82 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued

50. Supplementary information to the cash flow statement

(1) Supplementary information to the cash flow statement Unit: RMB Amount incurred in the Amount incurred in the Supplementary current period prior period 1. Reconciliation of net profit to cash flow from operating activities: Net profit 615,769,510 667,775,668 Add: Provision for impairment losses of assets 331,339 251,074 Depreciation of fixed assets 166,466,468 159,529,959 Depreciation and Amortization of investment property 1,215,753 1,333,629 Amortization of intangible assets 38,868,236 38,525,927 Amortization of long-term prepaid expenses 3,424,158 3,389,657 Losses on disposal of fixed assets , intangible assets and 1,749,511 1,889,222 other long-term assets Financial expenses 74,942,296 24,358,158 Gains arising from investments (83,518,913) (118,228,183) Decrease(Increase) in deferred tax assets (8,718,115) (7,167,257) Decrease in inventories 2,174,787 388,168 Decrease(Increase) in operating receivables (32,480,512) (44,983,485) Increase(Decrease) in operating payables (81,752,066) 19,128,059 Net cash flow from operating activities 698,472,452 746,190,596 2. Significant investing and financing activities that do not involve

cash receipts and payments: Conversion of debt into capital - - Convertible bonds due within one year - - Fixed assets acquired under finance leases - - 3. Net changes in cash and cash equivalents: Closing balance of cash 314,855,568 478,788,943 Less: Opening balance of cash 478,788,943 781,720,083 Add: Closing balance of cash equivalents - - Less: Opening balance of cash equivalents - - Net increase(Decrease) in cash and cash equivalents (163,933,375) (302,931,140)

(2) Composition of cash and cash equivalents Unit: RMB Item Closing balance Opening balance I. Cash 314,855,568 478,788,943 Including: Cash on hand 14,390 14,035 Bank deposits 313,139,193 477,302,272 Other monetary funds 1,701,985 1,472,636 II. Cash equivalents - - III. Closing balance of cash and cash equivalents 314,855,568 478,788,943

- 83 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(VI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

1. Parent of the entity Unit: RMB Proportion of the entity's Proportion of ownership the entity's Ultimate interests held voting power controllin Name of the Related party Type of the Place of Legal by the parent held by the g party of Organization parent relationship entity incorporation representative Nature of business Registered capital (%) parent (%) the entity code Land development, port Sino-foreign Nanshan Controlling service and transportation, invested Shenzhen Fu Yuning RMB900,000,000 57.52% 57,52%(Note) CMG 61883297-6 Group shareholders industry and commerce, enterprise tour, real estate and others Controlling Listed in Hong CMHI Hong Kong Fu Yuning Port shipping HKD5,000,000,000 - 66.10(Note) CMG N/A shareholders Kong The ultimate controller of the Group is CMG, whose financial statements are not required to be made public.

Note: As mentioned in Note (I), Nanshan Group had 57.52% equity in the Company before 1 Novermber 2012. Since 1 November 2012, CMHI obtained 8.58% equity via its subsidiary Jing Feng Company, and obtained another 57.52% equity by entrustment of Nanshan Group's stock, accordingly holding totally 66.10% of the voting shares. Please refer to Note (I) for details.

2. Subsidiaries of the entity

The general background and other related information of the subsidiaries is set out in Note (IV).

3. Associates and joint ventures of the entity

The general background and other related information of the Associates and joint ventures is set out in Note (V) 7.

4. Other related parties of the entity

Relationships between other related Name of other related parties parties and the Company Organization code Nanshan Group Ex-controlling shareholder 61883297-6 China Petroleum Supply Base Co., Ltd. ("CPSB") The subsidiary of ex-controlling shareholder 61883389-9 Shenzhen Xuqin Industrial Development Co., Ltd.(“Xuqin”) The subsidiary of ex-controlling shareholder 70845749-5 Shenzhen Nanshan Real Estate development Ltd.(Nanshan The subsidiary of ex-controlling shareholder 75046859-3 Development) Shenzhen Chixiao Construction Technology Co., Ltd. (Chixiao The subsidiary of ex-controlling shareholder 61881595-7 Construction) Shenzhen Baowan Holding Co., Ltd. The subsidiary of ex-controlling shareholder 61885906-0 Shenzhen Chiwan Property Management Co., Ltd. The subsidiary of ex-controlling shareholder 70846415-0 COCL The subsidiary of ex-controlling shareholder 72616516-2 Haiqin Engineering Controlled by the same controlling shareholder 61888000-1 Shenzhen Mawan Port Co., Ltd. ("SMP") Controlled by the same controlling shareholder 74322579-6 SMW Controlled by the same controlling shareholder 74322582-5 China Merchants Port Services (Shenzhen) Co., Ltd ("CMPS") Controlled by the same controlling shareholder 19244179-0 Shekou Container Terminals Limited ("SCT") Controlled by the same controlling shareholder 61883279-X An Xunjie Container Terminals Limited Controlled by the same controlling shareholder 75048172-0 Shenzhen Lian Yunjie Container Terminals Limited Controlled by the same controlling shareholder 71093674-3 China Merchants International Cold Chain (Shenzhen) Company Controlled by the same controlling shareholder 61889222-3 Limited ("CMCCL") Shenzhen Haixing Harbor Development Co.,Ltd("Haixing") Controlled by the same controlling shareholder 61884362-4 Shenzhen Huxing Tug Service Co., Ltd. Controlled by the same controlling shareholder 19233962-2 Shenzhen Lianda Tug Service Co., Ltd. Controlled by the same controlling shareholder 61880378-8 China Ocean Shipping Agency (Shenzhen) Company Limited Controlled by the same controlling shareholder 19244404-3 Shenzhen China Merchants Shangzhi Investment Co., Ltd. Controlled by the same ultimate controlling shareholder 57637705-4 Shenzhen China Merchants Qianhaiwan Property Co., Ltd. Controlled by the same ultimate controlling shareholder 79386851-1 Shenzhen China Merchants International Shipping Agency Co., Ltd. Controlled by the same ultimate controlling shareholder 70840200-5 Nantian Oilmills Common key connected person with the Company 61881614-0 Shenzhen Southsea Grains Industries Limited ("Southsea Grains") Common key connected person with the Company 61883769-7 Associated company controlled by the same ultimate China Merchant Bank Co., Ltd.("CMB") 10001686-X controlling shareholder Associated company controlled by the same ultimate Shenzhen Pingnan Railway Co., Ltd. 61883248-2 controlling shareholder

- 84 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(VI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

5. Related party transactions

(1) Sales and purchase of goods, provision and receipt of services Unit: RMB Amount incurred in the current period Amount incurred in the prior period Proportion of the Proportion of the Pricing and amount of related amount of related decision-making party transactions to party transactions to procedures of that of similar that of similar Type of related party Content of related related party transactions transactions Related parties transaction party transaction transactions Amount (%) Amount (%) Purchase of goods and receiving of services: An Xunjie Container Terminals Load and unload Service received Negotiation 13,691,729 1.62 - - Limited service China Merchants Holdings Technical service (international) information Service received Negotiation 13,471,886 1.60 1,406,245 0.18 fee technology company Ltd Project Haiqin Engineering Service received Negotiation 9,111,950 1.08 1,701,180 0.22 management Shenzhen Lian Yunjie Container Load and unload Service received 4,586,447 0.54 - - Terminals Limited service Load and unload SCT Service received Negotiation 4,259,649 0.50 468,862 0.06 service Load and unload Haixing Service received Negotiation 3,997,020 0.47 2,609,695 0.34 service Xuqin Service received Construction Negotiation 2,197,5260.26 1,647,1780.21 Shenzhen Chiwan Property Property Service received Negotiation 2,094,793 0.25 1,742,666 0.23 Management Co., Ltd management fee Load and unload Nantian Oilmills Service received Negotiation 519,864 0.06 457,830 0.06 service Load and unload SMW Service received Negotiation 153,327 0.02 269,973 0.04 service Total 54,084,191 10,303,629 Rendering of services: Load and unload Nantian Oilmills Service provided Negotiation 14,695,584 0.88 14,116,894 0.77 service SMP Service provided Trailer service etc. Negotiation 9,384,718 16.25 12,477,379 21.12 CMBL Service provided Trailer service etc. Negotiation 7,792,337 13.49 3,280,154 5.55 China Ocean Shipping Agency Service provided Tugboat service Negotiation 7,272,911 9.02 10,396,823 10.55 (Shenzhen) Company Limited SMW Service provided Trailer service etc. Negotiation 3,159,123 5.47 4,391,167 7.43 China Overseas Harbour Affairs Service provided Dispatch income Negotiation 2,930,997 0.18 1,187,960 0.07 (Laizhou) Co., Ltd Shenzhen China Merchants International Shipping Agency Co., Service provided Tugboat service Negotiation 2,700,256 3.35 2,977,257 3.02 Ltd. SCT Service provided Trailer service etc. Negotiation 2,387,496 4.13 858,000 3.34 Shenzhen Lianda Tug Service Co., Service provided Tugboat service Negotiation 2,034,717 2.52 3,292,194 1.45 Ltd. Load and unload Southsea Grains Service provided Negotiation 909,167 0.05 1,257,023 0.07 service Load and unload CMCCL Service provided Negotiation 526,056 0.03 774,665 0.05 service Shenzhen Huxing Tug Service Co., 168,368 0.21 548,284 0.56 Ltd. Service provided Tugboat service Negotiation Load and unload CPSB Service provided Negotiation - - 1,310,041 0.07 service Total 53,961,730 56,867,841

- 85 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(VI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

5. Related party transactions - continued

(2) Leases with related parties

The Group as the lessee: Unit: RMB Basis of Lease income Type of leased Inception date Expiration date determining the recognised in the Name of lessor Name of lessee assets of leases of leases lease income current year Coastal line, The Company CPSB packing yards and January 2012 December 2012 Negotiation 11,748,764 road lighting Chiwan Container Terminal Company Southsea Grains Land January 2012 December 2012 Negotiation 4,265,380 Limited Chiwan Container Automatically Terminal Company CMBL Crane May 2006 Negotiation 1,910,680 renewal Limited Total 17,924,824

The Group as the lessor: Unit: RMB

Basis of Lease payment Type of Inception Expiration determining the recognised in the Name of lessor Name of lessee leased assets date of leases date of leases lease payment current year Land, Office Companies within Automatic Nanshan Group and packing January 2012 Negotiation 40,208,181 the Group renewal yard Chiwan Container Former Bay December CMPS Terminal January 2012 Negotiation 2,400,000 port lands 2012 Company Limited Land use Chiwan Container right of Shenzhen Pingnan Terminal Mawan July 2012 June 2013 Negotiation 1,975,200 Railway Co., Ltd. Company Limited railway station Packing yard December CPSB The company January 2012 Negotiation 1,647,625 and crane 2012 Shenzhen Chiwan Trains-Grains Packing December Nantian Oilmills January 2012 Negotiation 1,614,480 Terminal yards 2012 Company Limited Shenzhen China Chiwan Container Block 18# in December Merchants Shangzhi Terminal Shipping January 2012 Negotiation 954,732 2012 Investment Co., Ltd. Company Limited Centre SCT The company Crane May 2012 April 2013 Negotiation 540,000 Shenzhen Chiwan Shenzhen Baowan Shipping and December Warehouse January 2012 Negotiation 117,660 Holding Co., Ltd. Transportation 2012 Company Limited Total 49,457,878

- 86 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(VI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

5. Related party transactions - continued

(3) Assets transfer with related parties Unit: RMB Pricing principle of Pricing principle related party transactions of related party transactions Proportion of the amount of Proportion of related party the amount of transactions to related party Type of Content of Pricing principle that of similar transactions to related party related party of related party transactions that of similar Related parties transactions transactions transactions Amount (%) Amount transactions (%) COCL Sales Assets transfer Negotiation 631,320 53.02 - -

(4) Compensation for key management personnel Unit: RMB Amount incurred Amount incurred in Item in the current period the prior period Compensation for key management personnel 8,630,000 9,389,000       

- 87 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(VI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

6. Amounts due from related parties - continued Unit: RMB

Item Related parties Closing balance Opening balance Cash and bank 50,688,701 58,812,732 Accounts Nantian Oilmills 1,616,308 - receivable Southsea Grains 1,285,841 1,368,092 SCT 665,100 6,500 SMP 649,861 682,266 CMBL 432,460 378,384 SMW 193,575 335,669 China Overseas Harbor Affairs (Laizhou) - 539,724 Co., Ltd. Others 11,103 - Total 4,854,248 3,310,635 Advances Xuqin 93,006 - Other receivables CMBL 1,427,200 2,622,178 SMW 1,327,947 898,479 Shenzhen CM Qianhaiwan Property Co., 435,884 - Ltd. Xuqin 320,000 320,000 Shenzhen China Merchants Shangzhi 198,008 166,846 Investment Co., Ltd. SCT 187,102 187,102 CPSB 135,622 135,622 CMCCL 108,040 48,645 SMP 38,610 308,451 Others 119,625 75,526 Total 4,298,038 4,762,849 Short term CMB - 137,700,000 borrowings Accounts payable Haiqin Engineering 4,355,107 5,062,227 Nanshan Group 4,256,803 5,002,068 China Merchants Holdings (international) 802,290 1,302,441 information technology company Ltd Nantian Oilmills 291,764 163,201 Xuqin 239,977 319,058 Chixiao Construction 113,000 - Others 126,398 - Total 10,185,339 11,848,995 Other Payable SCT 2,801,555 - China Merchants Holdings (international) 163,300 - information technology company Ltd SMW 44,703 945,521 CMBL. 12,000 2,001,792 Others 108,028 119,298 Total 3,129,586 3,066,611

- 88 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(VII) COMMITMENTS

1. Capital commitments Unit: RMB Item Closing balance Opening balance Capital commitments that have been entered into but have not been recognised in the financial statements: Commitment for acquisition of long-term assets  

2. Operating lease commitments

As of the balance sheet date, the Group had the following commitments in respect of non- cancellable operating leases: Unit: RMB Item Closing balance Opening balance Minimum lease payments under non-cancellable operating leases: 1st year subsequent to the balance sheet date  7,966,481 2nd year subsequent to the balance sheet date 8,718,378 830,341 3rd year subsequent to the balance sheet date 8,340,011 830,341 Subsequent periods 1,588,601 2,281,452 Total 28,783,014 11,908,615

(VIII) EVENTS AFTER THE BALANCE SHEET

1. Profit appropriation after the balance sheet date Unit: RMB Item Amount Distributions of profits or dividends proposed(Note) 234,049,234 To be approved by Distributions of profits or dividends authorized and declared General meeting of shareholders

Note: Please refer to Note (V) 36.

- 89 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(IX) OTHER SIGNIFICANT EVENTS

On 6 March 2013, the Company received the Reply on Certain Issues Regarding Agreed Transfer of State-owned Shares of Shenzhen Chiwan Wharf Holdings Ltd. released by the State-owned Assets Supervision and Administration Commission (filed as Guo Zi Chan Quan [2013] No. 94), which approved Nanshan Group to transfer 161,190,933 A-shares of the Company to Shenzhen Malai Warehouse Co., Ltd.

(X) SEGMENT REPORTING

Subject to the Group's in-house infrastructure, management requirements and internal reporting system, the operation businesses of the Group are classified into three reporting segments. They are determined based on the nature of business. The Group's management periodically evaluates the operating results of these reporting segments to make decisions about resources to be allocated to the segments and assess their performance. Major products and services delivered or provided by each of the reporting segments are load and unload services, trailer and tugboat business, agency services and other segments.

Segment information is disclosed in accordance with the accounting policies and measurement standards adopted by each segment when reporting to management. The measurement basis is consistent with the accounting and measurement basis in the preparation of the financial statements.

- 90 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(X) SEGMENT REPORTING - continued

(1) Segment information Unit: RMB load and unload services trailer and tugboat business Agency services Unappropriated items Inter-segment deduction Total 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Operating income Revenue arising from external transactions 1,664,268,714 1,593,390,668 100,205,820 98,569,821 19,371,601 16,176,410 ----1,783,846,135 1,708,136,899 Revenue arising from inter-segment - - 40,915,356 43,813,978 - - - - (40,915,356) (43,813,978) - - transactions Total operating income 1,664,268,714 1,593,390,668 141,121,176 142,383,799 19,371,601 16,176,410 - - (40,915,356) (43,813,978) 1,783,846,135 1,708,136,899 Reconciling items: Operating Income in the financial statements 1,783,846,135 1,708,136,899 Operating cost 792,177,702 722,754,928 91,504,974 87,965,782 1,834,099 1,133,511 - - (40,915,356) (43,813,978) 844,601,419 768,040,243 Segment operating profits 872,091,012 870,635,740 49,616,202 54,418,017 17,537,502 15,042,899 ----939,244,716 940,096,656 Reconciling items: Business taxes and levies 55,297,994 64,859,996 4,315,273 4,832,422 1,537,979 1,329,508 ----61,151,246 71,021,926 Administrative expenses 106,539,705 107,409,383 8,684,710 8,081,840 6,663,054 6,207,568 31,545,505 36,487,441 - - 153,432,974 158,186,232 Financial expenses 25,905,413 (1,475,923) (130,254) (560,603) (530,954) (668,151) 45,518,959 15,075,658 - - 70,763,164 12,370,981 Impairment losses of assets 230,239 311,118 - (103,511) 21,323 4,866 79,777 38,601 - - 331,339 251,074 Investment Income ------616,036,204 673,932,497 (532,517,291) (555,704,314) 83,518,913 118,228,183 Operating profit 684,117,661 699,531,166 36,746,473 42,167,869 9,846,100 8,169,108 538,891,963 622,330,797 (532,517,291) (555,704,314) 737,084,906 816,494,626 Non-operating income 6,638,506 1,877,637 26,019 900 973,863 - ----7,638,388 1,878,537 Non-operating expenses 1,395,073 1,885,453 116,521 109,675 2,317,142 40,734 ----3,828,736 2,035,862 Total profit 689,361,094 699,523,350 36,655,971 42,059,094 8,502,821 8,128,374 538,891,963 622,330,797 (532,517,291) (555,704,314) 740,894,558 816,337,301 Income tax expenses 122,545,872 141,911,350 9,155,956 10,234,500 1,141,827 1,042,067 (7,718,607) (4,626,284) - - 125,125,048 148,561,633 Net profit 566,815,222 557,612,000 27,500,015 31,824,594 7,360,994 7,086,307 546,610,570 626,957,081 (532,517,291) (555,704,314) 615,769,510 667,775,668

- 91 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(X) SEGMENT REPORTING - continued

(1) Segment information - continued Unit: RMB load and unload services trailer and tugboat business Agency services Unappropriated items Inter-segment deduction Total 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Total segment assets 5,132,632,283 5,319,521,173 223,004,419 226,338,908 47,280,807 29,247,787 6,955,570,183 6,107,590,408 (5,577,357,242) (5,142,469,841) 6,781,130,450 6,540,228,435 Total assets in the financial 5,132,632,283 5,319,521,173 223,004,419 226,338,908 47,280,807 29,247,787 6,955,570,183 6,107,590,408 (5,577,357,242) (5,142,469,841) 6,781,130,450 6,540,228,435 statements Total segment liabilities 2,066,069,371 2,446,214,870 138,347,617 141,682,106 34,985,426 20,103,242 2,121,151,607 3,142,121,298 (2,044,433,473) (3,315,957,152) 2,316,120,548 2,434,164,364 Total liabilities in the financial 2,066,069,371 2,446,214,870 138,347,617 141,682,106 34,985,426 20,103,242 2,121,151,607 3,142,121,298 (2,044,433,473) (3,315,957,152) 2,316,120,548 2,434,164,364 statements Supplementary information

Depreciation 155,682,380 148,555,553 10,842,547 10,654,321 750,022 808,982 407,272 844,733 - - 167,682,221 160,863,588

Amortization 41,900,773 41,505,070 122,913 132,497 - - 268,708 278,017 - - 42,292,394 41,915,584

Interest income 2,439,078 2,022,624 4,020 9,659 7,783 8,483 4,455,630 5,853,065 - - 6,906,511 7,893,831

Interest expense 37,520,347 27,647,058 - - - - 36,030,192 35,002,906 - - 73,550,539 62,649,964 Investment income from long- term equity investment under ------83,158,913 113,968,183 - - 83,158,913 113,968,183 equity method Long-term equity investment ------1,531,041,908 1,422,947,220 - - 1,531,041,908 1,422,947,220 Non-current assets other than 4,393,365,740 4,131,236,957 147,881,497 151,993,706 18,760,311 19,396,787 218,235,583 209,180,723 (157,909,568) (157,909,587) 4,620,333,563 4,353,898,586 long-term equity investment

- 92 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(X) SEGMENT REPORTING - continued

(2) Segment revenue from external transactions by source and non-current assets by geographical location Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Revenue from external transactions with local 1,777,315,428 1,702,381,921 customers Revenue from external transactions with Hong Kong 6,530,707 5,754,978 customers Sub-total 1,783,846,135 1,708,136,899

Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Non-current assets located in local country 4,547,110,307 4,288,912,235 Non-current assets located in Hong Kong 44,222 45,432 Sub-total 4,547,154,529 4,288,957,667

(3) Degree of reliance on major customers

The revenue derived from the top two clients of the Group in load and unload services is RMB831,062,556, occupying 46.60% of the Group's total revenue.

(XI) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Group's major financial instruments include equity and debt investments, borrowings, account receivables, account payables etc. Details of these financial instruments are disclosed in Note (V). The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure the risks are monitored at a certain level.

1. Risk management objectives and policies

The Group's risk management objectives are to achieve proper balance between risks and yield, minimize the adverse impacts of risks on the Group's operation performance, and maximize the benefits of the shareholders and other equity investors. Based on these risk management objectives, the Group's basic risk management strategy is to identify and analyze the industry's exposure to various risks, establish appropriate bottom line for risk tolerance, implement risk management, and monitors these exposures to ensure the risks are monitored at a certain level.

- 93 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XI) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued

1.1 Market risk

1.1.1. Currency risk

Currency risk is the risk that losses will occur because of changes in foreign exchange rates. The Group's exposure to the currency risk is primarily associated with USD and HKD. Several of the Group's subsidiaries have purchases and sales denominated in HKD while the Group's other principal activities are denominated and settled in RMB. As at 31 December 2012, the balance of the Group's assets and liabilities are both denominated in RMB, except that balance of assets set out below is in HKD and USD. Currency risk arising from the foreign currency balance of assets and liabilities may have impact on the Group's performance. Unit: RMB Item Closing balance Opening balance Cash and cash equivalents 130,367,072 185,319,851 Accounts receivable 37,259,520 32,474,314 Short-term borrowings 1,080,929,700 1,168,830,000 Accounts payable 2,230,235 4,843,787

The Group closely monitors the effects of changes in the foreign exchange rates on the Group's currency risk exposures, to minimize the company's currency risk. According to the current risk exposure and judgment of the exchange rate movements, management considers the probable loss resulted from foreign exchange rate fluctuation to be fairly low.

1.1.2. Interest rate risk

The Group's interest rate risk arises from debt with interests, such as bank loan. The floating interest rate of financial liability makes the Group confronted with interest rate risk of cash flows. And the fixed interest rate of financial liability makes the Group confronted with interest rate risk of fair value. The Group determines the relative proportion of fixed interest rate and floating interest rate in accordance with the circumstances.

The financial department of the Group has been responsible for monitoring the interest rate. The increase of interest rate could enhance the cost of new interest-bearing debts and that of outstanding floating interest-bearing debts, which has material adverse effect on the financial performance of the Group. The management would make prompt response towards latest market condition, including obtain fixed rate loan or adjust financial leverage ratio, etc.

1.2. Credit risk

As at 31 December 2012, the Group's maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees issued by the Group is arising from the carrying amount of the respective recognized financial assets as stated in the consolidated balance sheet. For financial instruments measured at fair value, the carrying amount reflects the exposure to risks but not the maximum exposure to risks; the maximum exposure to risks would vary according to the future changes in fair value.

- 94 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XI) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued

1.2. Credit risk - continued

In order to minimize the credit risk, the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the management of the Group considers that the Group's credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings.

The Company adopted necessary policies to make sure that all clients and customers are attributed with merit credit records.

1.3. Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group's operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

Most of the Group's bank borrowings are short-term borrowings. As at 31 December 2012, the Group has net current liabilities of RMB918,431,184 (2011: RMB1,453,506,937). The Group's management is confident that short-term borrowings will be rolled over or replaced by a new financing channel when due. In addition, the Group has available unutilized bank loan facilities of approximately RMB3,999,925,800 (2011: RMB3,391,220,100). Consequently, the management believes that the Group is not exposed to significant liquidity risks". In addition, other factors that have been taken into account in the disclosure of how to mitigate liquidity risk should also be disclosed.

The following is the maturity analysis for financial assets and financial liabilities held by the Group which is based on undiscounted remaining contractual obligations: Unit: RMB More than 5 Item Book value Total amount Within one year 1-5 years years Cash at bank and on hand 314,855,568 314,855,568 314,855,568 - - Notes receivable 1,680,000 1,680,000 1,680,000 - - Accounts receivable 251,420,961 251,420,961 251,420,961 - - Other receivable 15,984,053 15,984,053 15,984,053 - - Short-term borrowings 1,180,929,700 1,207,062,358 1,207,062,358 - - Notes payable 826,000 826,000 826,000 - - Accounts payable 145,987,941 145,987,941 145,987,941 - - Interest payable 18,541,173 18,541,173 18,541,173 - - Other payable 41,574,838 41,574,838 41,574,838 - - Long-term borrowing due with 35,000,000 36,126,575 36,126,575 - - one year Long-term borrowing 150,000,000 177,815,452 9,600,000 168,215,452 - Bonds payable 496,545,753 611,976,090 26,217,616 585,758,474 -

- 95 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XI) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued

2. Fair value

Fair values of the financial assets and financial liabilities are determined as follows:

• The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active markets are determined with reference to quoted market bid prices and ask prices respectively;

• The fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis or using prices from observable current market transactions;

• The fair value of derivative instruments are determined with reference to quoted market prices.

The management considers that the book value of financial assets and liabilities measured at amortized cost is approximately equal to the fair value of financial assets and liabilities.

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

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 (i.e. as prices) or indirectly (i.e. derived from prices); Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). Unit: RMB Closing Balance Item Level 1 Level 2 Level 3 Total Held-for-trading financial assets: - Derivative financial assets - - - - Available-for-sale financial assets: - Equity instruments 5,210,000 - - 5,210,000 Total 5,210,000 - - 5,210,000

Held-for-trading financial liabilities: - Derivative financial liabilities - - - - Total - - - -

- 96 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XI) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued

2. Fair value - continued Unit: RMB Opening Balance Item Level 1 Level 2 Level 3 Total Held-for-trading financial assets: － Derivative financial assets -- - - Available-for-sale financial assets: － Equity instruments 5,690,000 - - 5,690,000 Total 5,690,000 - - 5,690,000

Held-for-trading financial liabilities: － Derivative financial liabilities -- - - Total - - - -

There are no transfers between Level 1 and Level 2 for the fair value measurements of the Group's financial assets and financial liabilities in the current year and in the prior year.

3. Sensitivity analysis

The Group adopts sensitivity analysis techniques to analyze how the entity's profit and loss for the period and shareholders 'equity would have been affected by changes in the relevant risk variables that were reasonably possible. As it is unlikely that risk variables will change in an isolated manner, and the interdependence between risk variables will have significant effect on the amount ultimately influenced by the changes in a single risk variable, the following items are based on the assumption that each risk variable has changes on a stand-alone basis.

3.1. Currency risk

3.1.1 The assumption for the sensitivity analysis on currency risk is that all the cash flow hedges and hedges of a net investment in a foreign operation are highly effective.

3.1.2 On the basis of the above assumption, where all other variables are held constant, the reasonably possible changes in the foreign exchange rate may have the following pre-tax effect on the profit or loss for the period or equity: Unit: RMB 2012 2011 Effect on Effect on Changes in shareholders' shareholders' Item exchange rate Effect on profits equity Effect on profits equity All foreign 5% increase (45,776,667) (45,776,667) (37,914,933) (37,914,933) currencies against RMB All foreign 5% decrease 45,776,667 45,776,667 37,914,933 37,914,933 currencies against RMB

- 97 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XI) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued

3. Sensitivity analysis - continued

3.2. Sensitivity analysis on interest rate risk:

3.2.1 The sensitivity analysis on interest rate risk is based on the following assumptions:

• For fixed rate financial instruments measured at fair value, changes in the market interest rate may influence the interest income or expense of the variable rate financial instruments;

• For derivative financial instruments designated as hedging instruments, changes in the market interest rate influence their fair values, and all the hedges of interest rate risk are expected to be highly effective;

• Changes in the fair value of derivative financial instruments and other financial assets and liabilities are calculated at the market interest rate as at the balance sheet date, using the method of discounted cash flow analysis.

3.2.2 On the basis of the above assumptions, where all other variables are held constant, the reasonably possible changes in the interest rate may have the following pre-tax effect on the profit or loss for the period or equity: Unit: RMB 2012 2011 Effect on Effect on Changes in interest Effect on shareholders' Effect on shareholders' Item rate profits equity profits equity Floating rate 1% increase against (223,643) (223,643) (577,218) (577,218) loan RMB Floating rate 1% decrease against 223,643 223,643 577,218 577,218 loan RMB

(XII) NOTES TO THE FINANCIAL STATEMENTS

1. Accounts receivable

(1) Disclosure of accounts receivable by categories: Unit: RMB Closing balance Opening balance Carrying amount Bad debt provision Carrying amount Bad debt provision Proportion Proportion Proportion Proportion Item Amount (%) Amount (%) Amount (%) Amount (%) Accounts receivable that are individually significant and for which ------bad debt provision has been assessed individually(Note) Accounts receivable for which bad debt provision has been assessed by portfolios Portfolio 1 75,000 0.42 - - 6,500 0.04 - - Portfolio 2 17,679,009 99.58 - - 16,617,225 99.96 - - Subtotal of portfolios 17,754,009 100.00 - - 16,623,725 100.00 - - Total 17,754,009 100.00 - - 16,623,725 100.00 --

- 98 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

1. Accounts receivable - continued

(1) Disclosure of accounts receivable by categories - continued:

Note: Top five balances of accounts receivable are deemed as individually significant accounts receivable by the Group.

Aging analysis of accounts receivable is as follows: Unit: RMB Closing balance Opening balance Carrying Proportion Bad debt Carrying Proportion Bad debt Aging amount (%) provision Book Value amount (%) provision Book Value Within 1 year 17,754,009 100.00 - 17,754,009 16,623,725 100.00 - 16,623,725

Accounts receivable portfolios for which bad debt provision has been assessed using the aging analysis approach: Unit: RMB Closing balance Opening balance Carrying Proportion Bad debt Carrying Proportion Bad debt Aging amount (%) provision Book Value amount (%) provision Book Value Within 1 year 17,679,009 100.00 - 17,679,009 16,617,225 100.00 - 16,617,225

(2) Top five companies with the largest balances of accounts receivable: Unit: RMB Proportion of the amount to the total Relationship with accounts Name of entity the Company Amount Aging receivable (%) Customer H Customer 2,870,223 Within 1 year 16.17 Customer I Customer 1,514,992 Within 1 year 8.53 Customer J Customer 1,464,922 Within 1 year 8.25 Customer K Customer 1,358,438 Within 1 year 7.65 Customer L Customer 1,056,028 Within 1 year 5.95 Total 8,264,603 46.55

(3) As at 31 December 2012, no balances included in above accounts receivable are due from the shareholders of the Company who hold over 5% voting right. Please refer to Note (XII) 6(2) for receivables due from related parties.

- 99 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

2. Other receivables

(1) Disclosure of other receivables by categories: Unit: RMB Closing balance Opening balance Carrying amount Bad debt provision Carrying amount Bad debt provision Proportion Proportion Proportion Proportion Category Amount (%) Amount (%) Amount (%) Amount (%) Other receivables that are individually significant and for which bad debt provision ------has been assessed individually Other receivables for which bad debt provision has been assessed by portfolios Portfolio 1 358,333,720 99.87 29,779 0.01 242,985,216 99.83 - - Portfolio 2 476,691 0.13 191,728 40.22 413,049 0.17 141,728 34.31 Subtotal of portfolios 358,810,411 100.00 221,507 0.06 243,398,265 100.00 141,728 0.06 Total 358,810,411 100.00 221,507 0.06 243,398,265 100.00 141,728 0.06

Note: Top five balances of other receivables are deemed as individually significant other receivables by the Group.

Aging analysis of other receivables is as follows: Unit: RMB Closing balance Opening balance Proportion Bad debt Proportion Bad debt Aging Carrying amount (%) provision Book value Carrying amount (%) provision Book value Within 1 year 355,219,375 99.00 - 355,219,375 240,942,350 98.99 - 240,942,350 More than 1 year 1,311,074 0.36 - 1,311,074 1,662,153 0.68 141,728 1,520,425 More than 2 years but not 1,641,200 0.46 191,728 1,449,472 225,155 0.09 - 225,155 exceeding 3 years More than 3 years 638,762 0.18 29,779 608,983 568,607 0.24 - 568,607 Total 358,810,411 100.00 221,507 358,588,904 243,398,265 100.00 141,728 243,256,537

Other receivables portfolios for which bad debt provision has been assessed using the aging analysis: Unit: RMB Closing balance Opening balance Proportion Bad debt Proportion Bad debt Aging Carrying amount (%) provision Book value Carrying amount (%) provision Book value Within 1 year  19.56 - 93,234 29,592 7.16 -  More than 1 year - - - - 383,457 92.84 141,728  More than 2 years but not  80.44 191,728 191,729 - - - - exceeding 3 years More than 3 years ------Total  100.00 191,728 284,963 413,049 100.00 141,728 271,321

- 100 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

2. Other receivables - continued

(2) Top five companies with the largest balances of other receivables: Unit: RMB Proportion of the amount to the Relationship with the total accounts Name of entity Company Amount Aging receivable (%) Dongguan Chiwan Terminal Subsidiary of the 186,200,000 Within one year 51.89 Company Limited company Subsidiary of the Dongguan Chiwan Wharf Co., Ltd. 145,400,000 Within one year 40.52 company Shenzhen Chiwan Shipping and Subsidiary of the 22,000,000 Within one year 6.13 Transportation Company Limited company Chiwan Wharf Holdings (H.K.) Subsidiary of the More than 1 year not 2,640,282 0.74 Limited company exceeding 3 year Enterprise income tax payable for Shareholder of the More than 2 year not 383,457 0.11 dividend of B share in 2008 Group exceeding 3 year Total 356,623,739 99.39

(3) As at 31 December 2012, no balances included in above other receivables are due from the shareholders of the Company who hold over 5% voting right. Please refer to Note (XII) 6(2) for receivables due from related parties.

3. Long-term equity investments

(1) Categories of Long-term equity investment Unit: RMB Increase in the Decreased in the Item Opening Balance current period current period Closing Balance Investment in subsidiaries 1,052,288,200 - - 1,052,288,200 Investment in joint ventures 795,776,215 24,286,065 - 820,062,280 Investment in associates 140,142,959 105,117,223 - 245,260,182 Other long-term equity investment 17,037,500 - - 17,037,500 Subtotal 2,005,244,874 129,403,288 2,134,648,162 Less: Provision for impairment of long-term equity investments 3,128,300 - - 3,128,300 Net amount 2,002,116,574 129,403,288 - 2,131,519,862

As at 31 December 2012, the long-term equity investments of the Company were not subject to restriction on disposal or remittance of return on investments.

- 101 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

3. Long-term equity investments - continued

(2) Details of long-term equity investments are as follows: Unit: RMB Explanation of the Proportion proportion of ownership Proportion of of voting interests being not Provision for ownership power in the consistent with the Provision for impairment Changes interests in the investee proportion of voting impairment losses for the Cash dividends Investee Accounting method Investment cost Opening balance (increase/decrease) Closing balance investee (%) (%) power losses period for the period Shenzhen Chiwan Terminal Company Cost method 47,500,000 47,500,000 - 47,500,000 95 95 N/A - - 45,605,009 Limited Shenzhen Chiwan International Cost method 5,500,000 5,500,000 - 5,500,000 100 100 N/A - - 1,386,594 Freight Agency Company Limited Shenzhen Chiwan Harbor Container Cost method 250,920,000 250,920,000 - 250,920,000 84.98 84.98 N/A - - 102,428,276 Company Limited Shenzhen Chiwan Transportation Cost method 7,000,000 7,000,000 - 7,000,000 75 75 N/A - - 4,957,031 Company Limited Chiwan Wharf Holdings (H.K.) Cost method 1,070,000 1,070,000 - 1,070,000 100 100 N/A - - - Limited Shenzhen Chiwan Shipping and Cost method 24,000,000 24,000,000 - 24,000,000 90 90 N/A - - 18,801,576 Transportation Company Limited Shenzhen Chiwan Trains-Grains Cost method 33,750,000 33,750,000 - 33,750,000 75 75 N/A - - 22,545,382 Terminal Company Limited Chiwan Container Terminal Company Cost method 421,023,200 421,023,200 - 421,023,200 51 51 N/A - - - Limited Dongguan Chiwan Wharf Company Cost method 186,525,000 186,525,000 - 186,525,000 41.45 41.45 N/A - - - Limited Dongguan Chiwan Terminal Cost method 75,000,000 75,000,000 - 75,000,000 25 25 N/A - - - Company Limited China Ocean Shipping Agency Cost method 13,510,000 13,510,000 - 13,510,000 15 15 N/A - - - (Shenzhen) Company Limited Shenzhen Petro-chemical Industry Cost method 3,500,000 3,500,000 - 3,500,000 0.26 0.26 N/A 3,117,800 - - (Group) Company Limited. Guangdong Guang Jian Group Cost method 27,500 27,500 - 27,500 0.02 0.02 N/A 10,500 - - Company Limited China Merchants Holdings (international) information technology Equity method 1,875,000 11,664,263 2,018,253 13,682,516 23.16 23.16 N/A - - - company Ltd CMBL Equity method 140,000,000 128,478,696 3,098,970 131,577,666 20 20 N/A - - - China Development Finance Co., Ltd. Equity method 100,000,000 - 100,000,000 100,000,000 20 20 N/A - - - China Overseas Harbor Affairs Equity method 749,655,300 795,776,215 24,286,065 820,062,280 40 40 N/A - - - (Laizhou) Co., Ltd. Total 2,005,244,874 129,403,288 2,134,648,162 3,128,300 - 195,723,868

- 102 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

3. Long-term equity investments - continued

(3) Investments in joint ventures and associates Unit: RMB Proportion of Proportion of ownership voting power in Investee's total Investee's total Total net assets at Total operating interests in the the investee assets at the end of liabilities at the end the end of the income for the Net profit for the Investee investee (%) (%) the period of the period period period period I. Joint ventures China Overseas Harbor 40 40 2,181,632,582 310,908,531 1,870,724,051 267,050,832 61,444,116 Affairs (Laizhou) Co., Ltd. II. Associates China Merchants Holdings (international) information 23.16 23.16 80,888,144 19,452,319 61,435,825 55,017,244 8,714,391 technology company Ltd CMBL 20 20 1,571,992,558 913,671,716 658,320,842 176,515,276 15,494,851 China Development Finance 20 20 N/A N/A N/A N/A N/A Co., Ltd.

(4)Provision of long-term equity investment Unit: RMB Opening Increase in the Decrease in the Closing Investee balance current period current period balance Shenzhen Petro-chemical Industry (Group) 3,117,800 - - 3,117,800 Company Limited Guangdong Guang Jian Group Company 10,500 - - 10,500 Limited Total 3,128,300 - - 3,128,300

4. Operating income and operating costs

(1) Operating income and operating costs Unit: RMB Amount incurred in the Amount incurred in the Item current period prior period Principal operating income 177,348,589 165,422,103 Other operating income 27,071,318 23,700,419 Total 204,419,907 189,122,522 Principal operating cost 142,687,626 134,885,611 Other operating cost 2,091,220 1,590,313 Total 144,778,846 136,475,924

(2) Principal operating activities (classified by business) Unit: RMB Amount incurred Amount incurred in the current period in the prior period Item Operating income Operating cost Operating income Operating cost Load and unload services 177,348,589 142,687,626 165,422,103 134,885,611

- 103 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

4. Operating income and operating costs - continued

(3) Other activities Unit: RMB Amount incurred in the current period Amount incurred in the prior period Other operating Other operating Other operating Other operating Item income cost income cost Port ancillary services 9,296,353 - 7,367,988 - Lease 16,908,610 2,091,220 14,733,909 1,590,313 Documentation fee 578,442 - 611,802 - Sales of material 215,544 - 929,306 - Security fee 72,369 - 57,414 - Total 27,071,318 2,091,220 23,700,419 1,590,313

(4) Operating income from the Company's top five customers Unit: RMB Proportion to total operating income of Name of customer Operating income the Company (%) Customer M 28,001,213 13.70 Customer N 22,531,412 11.02 Customer H 14,027,010 6.86 Customer O 10,912,524 5.34 Customer P 9,021,901 4.41 Total 84,494,060 41.33

5. Investment income

(1) Details of investment income Unit: RMB Amount incurred in Amount incurred in Item the current period the prior period Income of long-term equity investments under cost 195,723,868 418,582,699 method Income of long-term equity investments under 29,403,288 34,396,865 equity method Income from disposal of long-term equity - - investment Investment income on available-for-sale financial 360,000 360,000 assets, etc. Total 225,487,156 453,339,564

- 104 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

5. Investment income - continued

(2) Income of long-term equity investments under cost method

Reasons for increases or Amount incurred in Amount incurred in decreases in the current Investee the current period the prior period compared to the prior period Shenzhen Chiwan Harbour Container The dividends distributed by 102,428,276 140,826,505 Company Limited investee fluctuate. Shenzhen Chiwan Terminal Company The dividends distributed by 45,605,009 39,338,688 Limited investee fluctuate. Shenzhen Chiwan Trains-Grains Terminal The dividends distributed by 22,545,382 20,616,286 Company Limited investee fluctuate. Shenzhen Chiwan Shipping and The dividends distributed by 18,801,576 20,533,063 Transportation Company Limited investee fluctuate. Shenzhen Chiwan Transportation The dividends distributed by 4,957,031 6,757,560 Company Limited investee fluctuate. Shenzhen Chiwan International Freight The dividends distributed by 1,386,594 1,165,548 Agency Company Limited investee fluctuate. Chiwan Container Terminal Company The dividends distributed by - 185,445,049 Limited investee fluctuate. Total 195,723,868 414,682,699

(3) Income of long-term equity investments under equity method

Reasons for increases or Amount incurred in Amount incurred in decreases in the current Investee the current period the prior period compared to the prior period China Overseas Harbour Affairs (Laizhou) Net income of investee 24,286,065 32,665,056 Co., Ltd fluctuates. Net income of investee CMBL 3,098,970 1,711,924 fluctuates. China Merchants Holdings (international) Net income of investee 2,018,253 19,885 information technology company Ltd fluctuates. Total 29,403,288 34,396,865

6. Related party transactions

(1) Guarantee with related parties Unit: RMB Inception date of Expiration date of Whether guarantee The guarantor The principal Guaranteed amount guarantee guarantee has been fulfilled Dongguan Chiwan Wharf Company 100,000,000 2012.12.06 2013.06.06 No Limited(Note 1) Dongguan Chiwan Wharf Company 80,000,000 2012.02.09 2017.02.08 No Limited(Note 2) Dongguan Chiwan Wharf Company The Company 70,000,000 2011.10.21 2016.10.20 No Limited(Note 2) Dongguan Chiwan Wharf Company 20,000,000 2011.10.21 2013.10.20 No Limited(Note 2) Dongguan Chiwan Wharf Company 15,000,000 2012.02.09 2013.08.09 No Limited(Note 2) Total 285,000,000

- 105 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

6. Related party transactions – continued

(1) Guarantee with related parties - continued

Note 1: Please see Note (V) 18.

Note 2: Please see Note (V) 28.

(2) Amounts due to/due from related parties Unit: RMB Item Related parties Closing balance Opening balance

Interests receivable Shenzhen Chiwan International Freight Agency Company Limited 218,084 154,484 Accounts receivable Shekou Container Terminals Limited 75,000 6,500 Other receivables Dongguan Chiwan Terminal Company Limited 186,200,000 - Dongguan Chiwan Wharf Company Limited 145,400,000 206,000,000 Shenzhen Chiwan Shipping and Transportation Company Limited 22,000,000 32,210,156 Chiwan Wharf Holdings (H.K.) Limited 2,640,283 2,269,702 CPSB 135,622 135,622 Hinwin Development Company Limited 15,907 - Shenzhen Chiwan International Freight Agency Company Limited - 1,060,000 Total 356,391,812 241,675,480 Long-term Chiwan Wharf Holdings (H.K.) Limited 11,004,285 11,004,285 receivables Advances Xuqin 93,006 - Accounts payable Xuqin 772,544 118,050 Nanshan Group 628,077 1,929,173 Shenzhen Chiwan Transportation Company Limited 381,119 370,481 Shekou Container Terminals Limited 60,000 - Total 1,841,740 2,417,704 Other payables Chiwan Container Terminal Company Limited 159,102,834 465,919,827 Shenzhen Chiwan Trains-Grains Terminal Company Limited 71,634,252 62,654,313 Shenzhen Chiwan Transportation Company Limited 48,126,286 48,400,234 Shenzhen Chiwan Harbor Container Company Limited 37,322,399 90,222,033 Shenzhen Chiwan Terminal Company Limited 30,344,683 34,334,709 Dongguan Chiwan Wharf Company Limited 10,579,342 10,222,128 Shenzhen Chiwan International Freight Agency Company Limited 2,564,560 3,948,226 Shenzhen Chiwan Shipping and Transportation Company Limited 1,527,693 8,263,263 Dongguan Chiwan Terminal Company Limited 600,130 12,665,035 Chiwan Wharf Holdings (H.K.) Limited 470,423 1,281,711 Total 362,272,602 737,911,479 Interests payable Shenzhen Chiwan Trains-Grains Terminal Company Limited 1,425,625 419,375 Shenzhen Chiwan Shipping and Transportation Company Limited 1,247,375 239,292 Shenzhen Chiwan Terminal Company Limited 307,917 100,917 Chiwan Container Terminal Company Limited 213,750 1,601,667 Total 3,194,667 2,361,251

Note: The Company collectively manages and coordinates the use of the capital within the Group. Various subsidiaries save their money with the Company, or apply for fund when needed. The Company collects fund usage expenses based on the actual financing costs incurred.

- 106 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

(XII) NOTES TO THE FINANCIAL STATEMENTS - continued

7. Supplementary information to the cash flow statement Unit: RMB Supplementary information Current period Prior period 1. Reconciliation of net profit to cash flow from operating activities: Net profit 189,814,396 430,118,633 Add: Provision for impairment losses of assets 79,779 38,601 Depreciation of fixed assets 13,388,346 12,283,329 Depreciation and Amortization of investment property 959,406 1,077,281 Amortization of intangible assets 3,175,445 3,139,405 Amortization of long-term prepaid expenses 587,328 179,620 Losses on disposal of fixed assets, intangible assets and other long-term assets 2,416,755 1,394,937 Financial expenses 58,517,939 17,883,502 Loss(Gains) arising from investments (225,487,156) (453,339,564) Decrease (Increase) in deferred tax assets (10,351,391) (8,488,104) Decrease in inventories 62,219 176,247 Decrease (Increase) in operating receivables (127,708,553) 115,970,883 Increase (Decrease) in operating payables (378,090,475) 192,124,473 Net cash flow from operating activities (472,635,962) 312,559,243 2. Net changes in cash and cash equivalents: Closing balance of cash 149,792,425 187,090,694 Less: Opening balance of cash 187,090,694 494,364,355 Net increase in cash and cash equivalents (37,298,269) (307,273,661)

- 107 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

SUPPLEMENTARY INFORMATION TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012

1. BREAKDOWN OF NON-RECURRING PROFIT OR LOSS Unit: RMB Item Amounts Description Profit or loss on disposal of non-current assets (1,749,511) Tax refunds or reductions with ultra vires approval or without official approval - documents Government grants recognized in profit or loss (except for grants which have closely related to the Company's business and are in amount and quantities fixed in 494,730 accordance with the national standard) Money lending income earned from non-financial institutions in profit or loss - The excess of attributable fair value of identifiable net assets over the consideration - paid for subsidiaries, associates and joint ventures Profit or loss on exchange of non-monetary assets - Profit or loss on entrusted investments or assets management - Impairment losses provided for each asset due to force majeure, e.g. acts of God - Profit or loss on debt restructuring - Business restructuring expenses, e.g., expenditure for layoff of employees, integration - expenses, etc. Profit or loss relating to the unfair portion in transactions with unfair transaction price - Net profit or loss of subsidiaries recognized as a result of business combination of enterprises under common control from the beginning of the period up to the business - combination date Profit or loss arising from contingencies other than those related to normal operating - business Profit or loss on changes in the fair value of financial assets and financial liabilities held for trading and investment income on disposal of held-for-trading financial - assets, held-for-trading financial liabilities and available-for-sale financial assets, other than the effective hedging activities relating to normal operating business Reversal of provision for accounts receivable that are tested for impairment losses - individually Profit or loss on entrusted loans - Profit or loss on changes in the fair value of investment properties that are - subsequently measured using the fair value model Effects on profit or loss of one-off adjustment to profit or loss for the period according - to the requirements by tax laws and accounting laws and regulations Custodian fees earned from entrusted operation - Other non-operating income or expenses other than above 5,064,433 Other profit or loss that meets the definition of non-recurring profit or loss - Tax effects (251,327) Effects of minority interest (after tax) (1,047,378) Total 2,510,947

2. RETURN ON NET ASSETS AND EARNINGS PER SHARE ("EPS")

The return on net assets and EPS has been prepared by Shenzhen Chiwan Wharf Co.,Ltd ( hereinafter "the Company") in accordance with Information Disclosure and Presentation Rules for Companies Making Public Offering No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised 2010) issued by China Securities Regulatory Commission. Unit: RMB EPS Weighted average return on net Profits incurred in the current period assets (%) Basic EPS Diluted EPS Net profit for the current period attributable to 13.15 0.724 0.724 ordinary shareholders Net profit attributable to ordinary shareholders 13.08 0.721 0.721 after extraordinary gains and losses

SHENZHEN CHIWAN WHARF HOLDINGS LIMITED

SUPPLEMENTARY INFORMATION TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012

3. ABNORMAL FINANCIAL STATEMENTS ITEMS ("F/S ITEMS") AND EXPLANATION OF REASONS Unit: RMB F/S items 2012 2011 Change by Cause for the changes 1 Currency funds 314,855,568 478,788,943 (34%) Resulted from additional progress payments Prepaid expenses transferred to long-term prepayments 2 Prepaid expenses 1,623,037 3,497,668 (54%) upon completion of decoration 3 Other receivables 15,984,053 11,833,877 35% Owing to increase in business activities 4 Other current assets 8,956,589 1,003,913 792% Due to increase in input VAT pending for verification 5 Long-term equity investments 1,544,951,108 1,436,856,420 8% Due to new investment Due to the completion of construction in progress, such as 6 Fixed assets 2,701,093,453 2,482,077,688 9% berth extension Due to the increasing engineering expenditure related to 7 Construction in progress 609,932,609 517,818,144 18% construction in progress Adjustments made to the structure of loans according to 8 Short-term borrowings 1,180,929,700 1,418,830,000 (17%) the changes in financial market 9 Notes payable 826,000 8,704,900 (91%) Due to acceptance of bills expiring in the period 10 Advances 299,453 5,045,311 (94%) Carrying forward advances for providing services 11 Taxes payable 40,854,861 121,781,050 (66%) Due to increasing tax payments in the period 12 Interest payable 18,541,173 1,637,790 1032% Due to accrued debts interest expenses 13 Dividends payable - 365,161,451 (100%) Due to decreasing dividends payments Non-current liabilities due Resulted from increased amounts of borrowings due 14 39,727,207 14,951,750 166% within one year within one year Due to increasing borrowings arising from business 15 Long-term borrowings 150,000,000 90,000,000 67% expansion 16 Bonds payable 496,545,753 - - Resulted from issuance of debts Operating income increased with the increasing volume of 17 Operating income 1,783,846,135 1,708,136,899 4% bulk businesses 18 Operating costs 844,601,419 768,040,243 10% Due to the rising fuel cost 19 Financial expenses 70,763,164 12,370,981 472% Due to the decreasing exchange gains 20 Impairment losses of assets 331,339 251,074 32% Due to new provisions for assets impairment Due to the receipts of insurance compensation and 21 Non-operating income 7,638,388 1,878,537 307% settlement of payables that cannot be paid 22 Non-operating expenses 3,828,736 2,035,862 88% Resulted from loss on disposal of fixed assets