2016 ANNUAL REPORT SUCCESS IN SERVICE Corporate Positioning Integrator of Logistics Service, with capabilities of designing and operating comprehensive solutions which integrate flows of logistics, trade, capital and information. Corporate Mission Focusing on Clients’ Demands, continuously create business value and social value through optimal solutions and services. CONTENTS 2 Corporate Information 3 Highlights of 2016 4 Key Financial Performance 6 Chairman’s Statement 10 Management Discussion and Analysis of Results of Operations and Financial Position 24 Corporate Governance Report 41 Directors, Supervisors & Senior Management 48 Report of the Board of Directors 62 Report of the Supervisory Committee 63 Environmental, Social and Governance Report 89 Independent Auditor’s Report 93 Consolidated Statement of Profit or Loss 94 Consolidated Statement of Profit or Loss and Other Comprehensive Income 95 Consolidated Statement of Financial Position 97 Consolidated Statement of Changes in Equity 99 Consolidated Statement of Cash Flows 101 Notes to the Consolidated Financial Statements None of the forward-looking statements or opinions contained in this annual report constitutes a commitment by the Company to the investors. Investors are advised to be aware of the investment risks. 2 SINOTRANS LIMITED CORPORATE INFORMATION LEGAL NAME OF THE COMPANY: H SHARE LISTING: SINOTRANS LIMITED The Stock Exchange of Hong Kong Limited DATE OF COMMENCEMENT OF ABBREVIATION OF THE THE COMPANY’S REGISTRATION: COMPANY’S SHARES: 20 November 2002 中國外運(SINOTRANS) REGISTERED ADDRESS AND STOCK CODE: HEADQUARTERS OF THE 598 COMPANY: Sinotrans Plaza A A43, PRINCIPAL BANKER: Xizhimen Beidajie Bank of China Haidian District 1 Fuxingmennei Street Beijing 100082 Xicheng District People’s Republic of China Beijing 100818 People’s Republic of China PLACE OF BUSINESS IN HONG KONG: AUDITORS: Room F&G, 20/F., MG Tower International Auditor: 133 Hoi Bun Road, Kwun Tong Deloitte Touche Tohmatsu Kowloon 35/F, One Pacific Place Hong Kong 88 Queensway LEGAL REPRESENTATIVE OF THE Hong Kong COMPANY: PRC Auditor: Mr. Zhao Huxiang Deloitte Touche Tohmatsu Certified Public Accountants LLP JOINT COMPANY SECRETARY: 30/F, Bund Center Mr. Li Shichu and Ms. Hui Wai Man, Shirley 222 Yan An Road East Shanghai 200002 INVESTOR AND MEDIA People’s Republic of China RELATIONS: Securities and Legal Affairs Department LEGAL ADVISER: Tel: (86) 10 5229-6667 Reed Smith Richards Butler Fax: (86) 10 5229-6600 20th Floor, Alexandra House Email: [email protected] 18 Chater Road Website: www.sinotrans.com Central Hong Kong HONG KONG SHARE REGISTRAR: Computershare Hong Kong Investor Services Limited 17th Floor Hopewell Centre 183 Queen’s Road East Hong Kong ANNUAL REPORT 2016 3 HIGHLIGHTS OF 2016 Profit attributable to Sea Freight Forwarding owners of the Company Container Volume (RMB) +5.3% 1,629.5 million +9.1% Basic earnings per share (RMB yuan) 0.35 Logistics New Projects Volume related to “ONE BELT, ONE ROAD” +16.7% 169 projects Revenue Dividend (RMB) payout ratio 46,784.2 31.43% million 4 SINOTRANS LIMITED KEY FINANCIAL PERFORMANCE REVENUE PROFIT BEFORE INCOME TAX RMB’000 RMB’000 2,575,089 2,471,259 47,482,015 46,784,192 45,402,363 45,659,827 45,528,074 1,822,085 1,595,980 1,233,190 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 PROFIT ATTRIBUTABLE TO BASIC EARNINGS PER SHARE OWNERS OF THE COMPANY RMB yuan RMB’000 1,629,472 0.35 1,493,264 0.32 1,231,433 0.28 903,964 0.21 649,054 0.15 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 As at 31 December 2016 2015 2014 2013 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Total assets 37,366,945 35,084,861 32,709,339 30,950,761 30,441,757 Total liabilities 17,737,067 16,625,058 16,404,220 16,898,816 17,051,863 Non-controlling interests 3,557,621 3,337,456 2,882,626 2,515,909 2,386,022 Equity attributable to owners of the Company 16,072,257 15,122,347 13,422,493 11,536,036 11,003,872 Note 1: Basic earnings per share for the two years ended 31 December 2012 and 2013 have been computed by dividing the profit attributable to owners of the Company by, respectively, 4,249,002,200 shares, being the weighted average number of shares in issue during the year ended 31 December 2012 and 2013. In July 2014, an aggregate of 357,481,000 new H shares were allotted and issued by the Company. Upon completion, the total number of shares of the Company increased to 4,606,483,200 shares. Therefore, basic earnings per share for 2014 have been computed by dividing the profit attributable to owners of the Company by 4,405,706,200 shares, being the weighted average number of shares in issue. Basic earnings per share for 2015 and 2016 have been computed by dividing the profit attributable to owners of the Company by 4,606,483,200 shares, being the weighted average number of shares in issue. As there are no potentially dilutive securities, diluted earnings per share is not presented. Note 2: Sinotrans Air Transportation Development Company Limited (“Sinoair” stock code: 600270), one of the Company’ subsidiaries, issued shares in its initial public offering on the Shanghai Stock Exchange in 2000. Sinoair received net cash proceeds of approximately RMB955,520,000 from the issuance. Following the issuance of shares to the public, the equity interest held by the Company decreased from 94.13% to 70.36%, while the Sinotrans Group’s share of net assets of the subsidiary increased from approximately RMB385,333,000 to approximately RMB988,420,000, resulting in a gain of approximately RMB603,087,000. On 18 October 2006, Sinoair passed a share reform proposal, under which the equity interest held by the Company decreased from 70.36% to 63.46%. Note 3: During the period from April 2015 to May 2015, the Company disposed of an aggregate of 31,329,596 shares of Sinoair, representing approximately 3.46% of the total number of issued shares of Sinoair. Upon the completion of the disposal, the percentage of issued shares of Sinoair held by the Company decreased from 63.46% to 60.00%. During the period from July 2015 to September 2015, the Company increased holdings of an aggregate of 8,573,198 shares of Sinoair, representing approximately 0.95% of the total number of issued shares of Sinoair. Upon the completion of the increased holdings, the percentage of issued shares of Sinoair held by the Company increased from 60.00% to 60.95%. Note 4: The figures in 2013 and 2012 have been restated as a result of acquisition of the equity interests of various entities from Sinotrans & CSC. The acquisition was accounted for as business combinations under common control and its consolidated financial statements were prepared by applying pooling of interest method. LEADING INTEGRATED LOGISTICS PLATFORM IN THE WORLD 6 SINOTRANS LIMITED CHAIRMAN’S STATEMENT To the shareholders, I am pleased to present the annual report of Sinotrans Limited (the “Company”, collectively with its subsidiaries, the “Group”) for the financial year ended 31 December 2016 for your review. Zhao Huxiang Chairman REVIEW OF OPERATIONS In 2016, as the beginning year of the “13th Five-Year” Plan, the Group took “integration, transformation and innovation” as the main theme and all aspects of work were substantially enhanced. It was a year of “Black Swan” with intensified trade protectionism. At the same time, the economic globalization was confronting with severe challenges. The growth rate of international trade remained sluggish and the volatility of global capital flow exacerbated, which played a role to push up the prices of bulk commodities amid high vitality. As for the economy entities, the growth rates of developed economies differentiated while those of emerging markets and developing economies continued to stabilize gradually. The economic growth in China was slow but stable. In 2016, China’s GDP recorded a year-on-year growth of 6.7%; the imports and exports in China recouped quarter-on-quarter with its total value decreased by 6.8% year-on-year in US dollar, of which, exports and imports dropped by 7.7% and 5.5% respectively. From the industry perspective, key production indicators such as the annual port throughput demonstrated a trend of “constant improving”. The container throughput of nationwide ports above designated size increased by 3.9% year-on-year. China export container shipping market remained sluggish with 18.5% year-on-year decrease in the China Containerized Freight Index and 10.2% year-on-year decrease in the Shanghai Containerized Freight Index. ANNUAL REPORT 2016 7 Chairman’s Statement In response to the depressive macroeconomic situation and market environment, the Group was able to maintain a healthy development and continued to achieve growths by unremitting efforts of the management and staff. In 2016, the Group topped the list of Top 100 Logistics Companies in China, and ranked fifth and eighth on the Global Freight Forwarders List and the Global Third-Party Logistics Providers List respectively, according to the ranking of Armstrong & Associates, Inc., demonstrating a continuous improvement in its comprehensive competitive edges and brand influence. For the year ended 31 December 2016, the Group achieved revenue of approximately RMB46,784.2 million, representing an increase of 2.8% as compared 2015, profits attributable to owners of the Company amounted to approximately RMB1,629.5 million, representing an increase of 9.1% as compared with 2015. Earnings per share was RMB0.35 (2015: RMB0.32). DIVIDENDS The Board of the Company (the “Board”) has proposed to recommend the payment of a final dividend of RMB0.075 per share at the forthcoming Annual General Meeting to reward shareholders for their continuous support to the Group.