Shenzhen International Holdings Limited BUILDING VALUE SHARING FUTURE ANNUAL REPORT 2019 Annual Report 2 0 1 9 (Incorporated in Bermuda with limited liability) Stock Code BUILDING VALUE SHARING FUTURE 00E200110126InsideFront.indd 2 26/3/2020 20:34 CONTENTS 2 Corporate Profile 4 Corporate Information 5 Financial Highlights 8 Key Events in 2019 10 Chairman’s Statement Management Discussion and Analysis 14 Overall Review 17 Logistics Business 26 Toll Road Business 32 Other Investments 34 Human Resources 36 Financial Position 39 Outlook for 2020 41 Biographies of Directors and Senior Management 47 Report of the Directors 54 Corporate Governance Report 74 Disclosure of Interests Financial Report 76 Independent Auditor’s Report 82 Consolidated Balance Sheet 84 Consolidated Income Statement 85 Consolidated Statement of Comprehensive Income 86 Consolidated Statement of Changes in Equity 88 Consolidated Statement of Cash Flows 90 Notes to the Consolidated Financial Statements CORPORATE PROFILE CORPORATE PROFILE Shenzhen International Holdings Limited, a company incorporated in Bermuda, is a company listed on the main board of the Stock Exchange of Hong Kong. The Group is indirectly held as to approximately 44.04%* equity interest by the State-owned Assets Supervision and Administration Commission of the People’s Government of Shenzhen Municipal through Shenzhen Investment Holdings Company Limited. The Group is principally engaged in logistics and toll road business. The Group defines the Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Delta and the Pan-Bohai Rim as strategic regions, endeavours to invest in, construct and operate logistic infrastructure projects including integrated logistics hubs and toll roads, and provides high-end and value-added logistic services to customers based on these infrastructures, through expansion, mergers and acquisitions, restructuring and consolidation while expanding into various business segments such as comprehensive development of lands related to the logistics industry as well as investment in and operation of environmental protection business with the aim of creating greater value for its shareholders. * As at 31 December 2019 2 SHENZHEN INTERNATIONAL HOLDINGS LIMITED / Annual Report 2019 CORPORATE PROFILE Below is a simplified corporate structure of the Group as at 31 December 2019 and does not include intermediate holding entities, and the percentages of interests shown represent the percentages for which the Group has acquired effective control. LOGISTICS BUSINESS 100% Shenzhen South China Logistics Park 100% Shenzhen Western Logistics Park 50% SZ Airport Express Center 70% Shenzhen International Kanghuai E-commerce Center 85.30% Shenzhen International Shenyang Integrated Logistics Hub 100% Shenzhen International Kunshan Integrated Logistics Hub 100% Shenzhen International Wuhan Dongxihu Integrated Logistics Hub 90% Shenzhen International Hefei Integrated Logistics Hub 100% Shenzhen International Nanchang Integrated Logistics Hub Logistics 25% Shenzhen International Shijiazhuang Integrated Logistics Hub Parks(3) 100% Shenzhen International Wuxi Integrated Logistics Hub 100% Shenzhen International Hangzhou Integrated Logistics Hub 100% Shenzhen International Guizhou Integrated Logistics Hub 100% Shenzhen International Ningbo Integrated Logistics Hub 100% Shenzhen International Changsha Integrated Logistics Hub 100% Tianjin Zhonglong Project 100% Shenzhen International Chongqing Integrated Logistics Hub 100% Shanghai Qingpu Integrated Logistics Hub 100% Zhongshan Torch Integrated Logistics Hub 55.39% Shandong Booming Total Logistics Park Third Party Logistics Service SHENZHEN (100% – Shenzhen International Supply Chain Management Co., Ltd.) INTERNATIONAL (51% – Shenzhen Total Logistics Service Co., Ltd.) HOLDINGS LIMITED(1) Logistics Information Service Logistics (79.87% – Shenzhen EDI Co., Ltd.) Services Logistics Financial Service (100% – Shenzhen International Modern Logistics Micronance Co., Ltd) (48% – Shenzhen International Financial Leasing Co., Ltd.) Investments and Management of Logistics Equity (38% – Shenzhen International Huazhang Logistics Industry Private Equity Funds Management Co., Ltd) 70% Nanjing Xiba Wharf Co. Ltd. (Phase 1 of Nanjing Xiba Port) Port 70% Nanjing Xiba Port Co., Ltd. (Phase 2 of Nanjing Xiba Port) Supply Chain Management Services of Port (100% – Shenzhen International Supply Chain Management Nanjing Co., Ltd.) Logistics Park 53.39% Meilin Checkpoint Project Transformation % and Upgrading 100 Qianhai Project (4) TOLL ROAD BUSINESS 51.56% Shenzhen Expressway Company Limited (1)(2) 89.93% Longda Expressway in Shenzhen (5) OTHER INVESTMENTS 49% Shenzhen Airlines Company Limited 1.26% CSG Holding Co., Ltd. (2) (1) Listed company in Hong Kong (2) Listed company in the PRC (3) Only projects in operation are included (4) Excluding a residential land use project held by an associate in which the Group holds 50% equity interest (5) The Group owns 4.4 km length by toll of Longda Expressway with effect from 0:00 on 1 January 2019 In this report, the English names of the PRC entities are translations of their Chinese names and included herein for identification purpose only. In the event of any inconsistency, the Chinese names shall prevail. SHENZHEN INTERNATIONAL HOLDINGS LIMITED / Annual Report 2019 3 CORPORATE INFORMATION CORPORATE INFORMATION BOARD OF DIRECTORS SHARES Executive Directors: Hong Kong Stock Exchange: Gao Lei (Chairman) Stock Code: 00152 Li Hai Tao (Chief Executive Officer) Zhong Shan Qun SECURITIES Liu Jun Hong Kong Stock Exchange: Hu Wei USD Perpetual Securities: (Stock Code: 05042) Non-Executive Directors: Shenzhen Stock Exchange: Xie Chu Dao RMB Bonds (First Tranche) (Stock Code: 112636) Liu Xiao Dong RMB Bonds (Second Tranche) (Stock Code: 112798) Independent Non-Executive Directors: Ding Xun AUDITOR KPMG, Certified Public Accountants Nip Yun Wing Public Interest Entity Auditor Yim Fung registered in accordance with the Financial Reporting Cheng Tai Chiu, Edwin Council Ordinance Hong Kong AUDIT COMMITTEE Nip Yun Wing (Chairman) LEGAL ADVISERS Ding Xun Reed Smith Richards Butler (Hong Kong Legal Advisers) Cheng Tai Chiu, Edwin PRINCIPAL BANKERS NOMINATION COMMITTEE Agricultural Bank of China (PRC Domestic Bank) Ding Xun (Chairman) Bank of China Zhong Shan Qun Bank of Communications Nip Yun Wing China Citic Bank (PRC Domestic Bank) China Construction Bank (PRC Domestic Bank) REMUNERATION AND APPRAISAL China Development Bank (PRC Domestic Bank) COMMITTEE China Everbright Bank (PRC Domestic Bank) Ding Xun (Chairman) China Merchants Bank (PRC Domestic Bank) Gao Lei China Minsheng Bank (PRC Domestic Bank) Yim Fung DBS Bank Hang Seng Bank COMPANY SECRETARY HSBC Tam Mei Mei Industrial and Commercial Bank of China (PRC Domestic Bank) ING Bank N.V. HEAD OFFICE AND PRINCIPAL PLACE OF MUFG Bank, Ltd. BUSINESS Oversea-Chinese Banking Corporation Ltd. Rooms 2206-2208, 22nd Floor Ping An Bank Greenfield Tower, Concordia Plaza Standard Chartered Bank No. 1 Science Museum Road Tsimshatsui East PRINCIPAL SHARE REGISTRAR Kowloon, Hong Kong Conyers Corporate Services (Bermuda) Limited Clarendon House SHENZHEN OFFICE 2 Church Street Shenzhen International Building Hamilton HM 11 8045 Hongli West Road Bermuda Futian District, Shenzhen Postcode: 518000 HONG KONG BRANCH SHARE REGISTRAR REGISTERED OFFICE Tricor Tengis Limited Clarendon House Level 54, Hopewell Centre 2 Church Street 183 Queen’s Road East, Hong Kong Hamilton HM 11 Bermuda INVESTOR RELATIONS CONSULTANT Wonderful Sky Financial Group COMPANY WEBSITE 9th Floor, The Center http://www.szihl.com 99 Queen’s Road Central, Central, Hong Kong 4 SHENZHEN INTERNATIONAL HOLDINGS LIMITED / Annual Report 2019 FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS Total Assets Value Total Equity (HK$ million) (HK$ million) 47,341 91,409 44,360 84,365 78,795 37,328 68,368 30,655 66,876 30,143 INCREASED BY INCREASED BY 8% 7% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Net Asset Value per Share Revenue * * Excluding revenue from construction services for toll roads Attributable to Shareholders (HK$ million) (HK$ dollar) 14,986 14.00 13.20 11.80 10.10 10.00 10,347 9,277 8,029 INCREASED BY 7,137 INCREASED BY 6% 45% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Profit before Finance Costs and Tax Profit Attributable to Ordinary Shareholders (HK$ million) of the Company 9,785 9,885 (HK$ million) 5,021 7,160 4,213 3,817 4,631 4,876 INCREASED BY INCREASED BY 1% 2,107 2,052 19% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Earnings per Share (Basic) Dividend per Share (HK$ dollar) (HK$ dollar) 2.34 1.170 1.060 2.03 1.000 1.92 0.64 0.56 0.70 1.11 INCREASED BY INCREASED BY 1.06 0.500 15% 0.430 10% 0.44 0.36 0.53 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 SHENZHEN INTERNATIONAL HOLDINGS LIMITED / Annual Report 2019 5 FINANCIAL HIGHLIGHTS Analysis of Revenue and Profit before Finance costs and tax by principal activities Share of profit of associates Profit before Operating and joint finance costs (HK$ million) Revenue profit ventures and tax 2019 Toll roads – Revenue 7,141 2,501 616 3,117 – Construction service revenue 1,835 – – – Toll roads sub-total 8,976 2,501 616 3,117 Logistic business – Logistic parks 833 195 14 209 – Logistic services 878 53 – 53 – Port and related services 1,564 193 – 193 – Logistic park transformation and upgrading 4,569 2,820 – 2,820 Logistic business sub-total 7,844 3,261 14 3,275 Head office functions – Qianhai – 2,457 – 2,457 Head office functions – 406 630 1,036 Total 16,820 8,625