CHINAMERCHANTSPORTGROUPCO.,LTD.

INTERIMREPORT2025

DateofDisclosure:30August2025

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartIImportantNotes,TableofContentsandDefinitions

TheBoardofDirectors(orthe“Board”),theSupervisoryCommitteeaswellasthedirectors,supervisorsandseniormanagersofChinaMerchantsPortGroupCo.,Ltd.(hereinafterreferredtoasthe“Company”)herebyguaranteethefactuality,accuracyandcompletenessofthecontentsofthisReportanditssummary,andshallbejointlyandseverallyliableforanymisrepresentations,misleadingstatementsormaterialomissionstherein.XuSong,theCompany’slegalrepresentative,HuangZhenzhou,theCompany’sChiefFinancialOfficer,andLiuShixia,theperson-in-chargeoftheaccountingorganherebyguaranteethatthefinancialstatementscarriedinthisReportarefactual,accurateandcomplete.AlltheCompany’sdirectorshaveattendedtheBoardmeetingforthereviewofthisReportanditssummary.Anyforward-lookingstatementssuchasfutureplansordevelopmentstrategiesmentionedhereinshallnotbeconsideredastheCompany’spromisestoinvestors.Andinvestorsareremindedtoexercisecautionwhenmakinginvestmentdecisions.RisksfacedbytheCompanyandsolutionshavebeenexplainedinItemXin“PartIIIManagementDiscussionandAnalysis”herein,whichinvestorsarekindlyremindedtopayattentionto.SecuritiesTimes,ChinaSecuritiesJournal,ShanghaiSecuritiesNews,andwww.cninfo.com.cnhavebeendesignatedbytheCompanyforinformationdisclosure.AndallinformationabouttheCompanyshallbesubjecttowhat’sdisclosedontheaforesaidmedia.Investorsarekindlyremindedtopayattentiontothesemedia.TheCompanyisnotsubjecttoanyindustry-specificdisclosurerequirements.TheCompanyhasnointerimdividendplan,eitherintheformofcashorstock.ThisReportanditssummaryhavebeenpreparedinbothChineseandEnglish.Shouldtherebeanydiscrepanciesormisunderstandingsbetweenthetwoversions,theChineseversionsshallprevail.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

TableofContents

PartIImportantNotes,TableofContentsandDefinitions ...... 1

PartIICorporateInformationandKeyFinancialInformation ...... 6

PartIIIManagementDiscussionandAnalysis ...... 10

PartIVEnvironmental,SocialandGovernanceInformation ...... 39

PartVSignificantEvents ...... 45

PartVIShareChangesandShareholderInformation ...... 59

PartVIIBonds ...... 65

PartVIIIFinancialStatements ...... 69

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

DocumentsAvailableforReference

I.FinancialStatementscarryingthesignaturesandstampsoftheCompanyPrincipal,theChiefFinancialOfficerandthepersoninchargeofaccountingfirm;andII.Originalcopiesofalldocumentsandtheannouncementsthereofdisclosedinthereportingperiodon“SecuritiesTimes”,“ChinaSecuritiesJournal”,and“ShanghaiSecuritiesNews”.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Definitions

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Note:InthisReport,certaintotalnumbersmaynotbeexactlyequaltothesummationoftheirsub-itemnumbersasaresultofroundoff.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartIICorporateInformationandKeyFinancialInformation

ICorporateInformation

IIContactInformation

IIIOtherInformation

1.ContactInformationoftheCompanyIndicatebytickmarkwhetheranychangeoccurredtotheregisteredaddress,officeaddressandtheirzipcodes,websiteaddress,emailaddressandothercontactinformationoftheCompanyintheReportingPeriod.

□Applicable√NotapplicableNochangeoccurredtothesaidinformationintheReportingPeriod,whichcanbefoundinthe2024AnnualReport.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

2.MediaforInformationDisclosureandPlacewherethisReportisLodgedIndicatebytickmarkwhetheranychangeoccurredtotheinformationdisclosuremediaandtheplaceforlodgingtheCompany’speriodicreportsintheReportingPeriod.

□Applicable√NotapplicableThewebsiteofthestockexchange,mediaandotherwebsiteswheretheCompany’speriodicreportsaredisclosed,aswellastheplaceforlodgingsuchreportsdidnotchangeintheReportingPeriod.Thesaidinformationcanbefoundinthe2024AnnualReport.

3.OtherRelevantInformationIndicatebytickmarkwhetheranychangeoccurredtotheotherrelevantinformationintheReportingPeriod.

□Applicable√NotapplicableIVKeyFinancialInformationIndicatebytickmarkwhetherthereisanyretrospectiveadjustmentsorrestatementstoprior-yearfinancialstatements.

□Yes√No

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

ThetotalsharecapitalattheendofthelasttradingsessionbeforethedisclosureofthisReport:

Dilutedearningspersharebasedonthelatesttotalsharecapitalabove:

VAccountingDataDifferencesunderChina’sAccountingStandardsforBusinessEnterprises(CAS)andInternationalFinancialReportingStandards(IFRS)andForeignAccountingStandards

1.NetProfitandEquityunderCASandIFRS

□Applicable√NotapplicableNodifferencefortheReportingPeriod.

2.NetProfitandEquityunderCASandForeignAccountingStandards

□Applicable√NotapplicableNodifferencefortheReportingPeriod.

3.ReasonsforAccountingDataDifferencesbetweenDomesticsandForeignAccountingPrinciple

□Applicable√NotapplicableVINon-recurringGainsandLosses

Unit:RMB

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Otheritemsthatmeetthedefinitionofexceptionalgain/loss:

□Applicable√NotapplicableNosuchcases.Explanationofthesituationwherethenon-recurringgainsandlossesitemslistedinInterpretativeAnnouncementNo.1ofCompaniesIssuingPubliclyTradedSecurities-Non-RecurringGainsandLossesaredefinedasrecurringgainsandlossesitems:

□Applicable√NotapplicableNosuchcases.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartIIIManagementDiscussionandAnalysis

IPrincipalActivitiesoftheCompanyduringtheReportingPeriod

1.PrincipalactivitiesandbusinessmodelsTheCompany’scorebusinessincludesportinvestment,portoperation,portlogisticsandsmarttechnology.TheCompanyisaworld-leadingportserviceprovider.TheCompanyoperatesacomprehensiveportnetworkacrossmajorcoastalhubsinChina,includingShenzhen,Ningbo,Shanghai,Qingdao,Tianjin,Dalian,Zhangzhou,Zhanjiang,Shantou,HongKongandTaiwan.Globally,ithasstrategicallyinvestedinand/oroperatesterminalsspanningsixcontinents:Asia,Africa,Europe,Oceania,SouthandNorthAmerica,amongstothers.Portinvestmentencompassesoverseaanddomesticopportunities.TheCompanystrategicallytargetsglobalmajorhubports,gatewayportsandregionscharacterizedbysignificantmarketpotential,rapideconomicgrowth,andpromisingdevelopmentprospects.Thisfocusaimstocaptureinvestmentopportunitiesinports,logistics,andrelatedinfrastructure,therebyfurtherenhancingtheglobalportnetwork.Portoperationprimarilyinvolvescontainersandbulkcargohandlingandwarehousingservices.TheCompanyiscommittedtobuildingandmanagingleadingportswhilecontinuouslyimprovingservicequality,deliveringsuperiorportservicestoitsclients.Intermsofportlogistics,theCompanyleveragesinnovativeparkbusinessmodelsandservicestodeeplyexplorethesynergisticvaluebetweenportsandparks.Itprovidescustomerswithdiversifiedvalue-addedserviceswithinkeyzonessuchastheShenzhenQianhaiComprehensiveBondedZone,QingdaoQianwanComprehensiveBondedZone,TianjinDongjiangComprehensiveBondedZone,DjiboutiInternationalFreeTradeZone,HambantotaIndustrialPark.Theseservicesincludewarehousingleasing,customsclearance,divisionormergerofcargoes,documentationservices,andmore.TheCompanyisdrivinggrowthinporttugboatservice,tallyingoperations,andengineeringsupervisionandmanagementbusiness.Italsofocusesonport-relatedbusinessinnovationand

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

supplychainlogistics.Byintegratingportecosystemserviceresourcesandfosteringcollaborationacrosstheupstreamanddownstreamoftheportlogisticsvaluechain,theCompanyprioritizesresourceopennessandsharing.Thisintegratedapproachfacilitatessmoothertradeflowsandenhancestheefficiencyoflogistics,information,andcapitalflowswithintheportservicechain,ultimatelyhelpingcustomersreducecostsandimproveefficiency.Thesmarttechnologybusinessfocusesontheapplicationofanewgenerationofinformationtechnologies,suchasbigdata,InternetofThings(IoT)andartificialintelligence.Itdrives“digitalandintelligenttransformation”and“greeninginitiatives”,drivingcontinuousinnovationacrosstheport’scorefunctions,includingproduction,management,servicesandecologyoftheport.Smarttechnologyservesasakeydriver,propellingtransformationandgrowthacrossportsoperation.ThemainbusinesssegmentsoftheCompanyareasfollows:

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

2.DevelopmentstageandcyclicalcharacteristicoftheindustryinwhichtheCompanyoperatesanditsindustrypositionduringthereportingperiod

(1)MacroeconomicandtradelandscapeInthefirsthalfof2025,theglobaleconomicgrowthoverallmaintainedcertainresilience,however,theeconomicprospectshavebeenaffectedbyescalatingtradefrictions,intensifyingpolicyuncertainties,financialmarketadjustments,andaccumulatingdownsiderisks.Thegrowthofdevelopedeconomieswasunderstrain.UndertheuncertaintiesofUSaggressivetariffpolicy,theeconomicgrowthofEUwasfacingcomplicatedchallengeandUSeconomywasalsodraggingdown.EurostatdatashowedthattheEU’sGDPgrewby1.6%year-on-yearand0.6%quarter-on-quarterinthefirstquarterof2025.ThelatestUS’sCommerceDepartmentdataindicatedthatUSGDPisexpectedtohavecontractedby0.5%quarter-on-quarterinthefirstquarterof2025.Emergingeconomiesexhibitedgrowthresilience,withSoutheastAsianmarketsdemonstratedprominence.Inthefirstquarterof2025,Vietnam'sGDPgrewby6.9%year-on-year,hittingarecordhighforthepastsixyears,Indonesia'sGDPgrewby4.9%year-on-year,Malaysia'sGDPgrewby4.4%year-on-year.Nevertheless,escalatingtradewarsandintensifyingtradepolicyuncertaintieswouldhindereconomicgrowthprospects,whilediminishedinternationalcooperationcoulderodeglobalresilience.Withrespecttotrade,UStariffmeasureshavesignificantlydisruptedglobalsupplychains,damagedtradeenvironments,anddelayedglobaleconomicrecovery.IMF

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

projectedglobaltradevolume(goodsandservices)growthat2.6%in2025,representinga0.9percentagepointdeclineyear-on-year.Inthefirsthalfof2025,underthebackgroundofacomplexinternationalenvironmentcharacterizedbyescalatingglobaltradepolicyuncertaintiesandpersistentgeopoliticalconflicts,Chinaadheredtothegeneralprincipleofseekingprogresswhilemaintainingstability,andacceleratedtheimplementationofmoreproactiveandeffectivemacroeconomicpolicies,focusingonstabilizingemployment,supportingbusinesses,safeguardingmarkets,andmanagingexpectations.Thenationaleconomyforgedaheadagainstheadwindsandoperatedinastablemanner,whilehigh-qualitydevelopmentwasadvancedinconcreteterms.Overall,China'seconomymaintainedstablegrowthwithqualityimprovements.AccordingtodatafromNationalBureauofStatisticsofthePeople'sRepublicofChina,China'sGDPgrewby5.3%year-on-yearinthefirsthalfof2025,showingsteadyupwardmomentum.Intermsoftrade,China'sforeigntradewithstoodexternalpressureswhilemaintainingdynamismandvitality.Tradevolumesgrewsteadily,withexportsdemonstratingnotableresilience.Importgrowthrates,however,wereaffectedbymultiplefactors,includingtradepolicyuncertaintiesandfluctuationsinglobalcommodityprices.TheNationalBureauofStatisticsofthePeople'sRepublicofChinareportedthatinthefirsthalfof2025,totalvalueofimportandexportgoodsreachedRMB21.79trillion,representingayear-on-yearincreaseof2.9%,settinganewhistoricalrecordfortheperiod,amongwhichexportsamountedtoRMB13.00trillion,upby7.2%year-on-year;importsamountedtoRMB8.79trillion,downby

2.7%year-on-year.Totalvalueofimportandexportvolumewith“BeltandRoadInitiative”partnercountriesreachedRMB11.29trillion,upby4.7%year-on-year,accountingfor51.8%oftotalforeigntrade.Lookingaheadtothesecondhalfof2025,thedownsideriskwillbeposedbytheuncertaintiesfromthepotentialraisingoftariffsaswellasgeopoliticaltensionswillpersist,resultinginthelimitedgrowthofinternationaltrade,andmoderatingglobaleconomicgrowth.IMFestimatesthattheglobaleconomywillgrowby3.0%in2025.Thegrowthofdevelopedeconomieswilldropfrom

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

1.8%in2024to1.5%in2025,ofwhich,U.S.willfallfrom2.8%in2024to1.9%in2025,whileEurozonewillincreasefrom0.9%in2024to1.0%in2025.Theeconomicgrowthofemergingmarketsanddevelopingeconomiesisexpectedtobe4.1%in2025,downby0.2percentagepointyear-on-year,ofwhich,thegrowthofemergingmarketsanddevelopingeconomiesinAsiaisexpectedtobe5.1%,downby0.2percentagepointyear-on-year.Inthesecondhalfof2025,allnationalmacropolicieswillworktogetherandplayapivotalroleinachievingeconomicstability.Meanwhile,consumptionwillcontinuetoserveasthe“cornerstone”foreconomicgrowth.Thecountrywillfurtheradvancediversifiedopening-upwithnewindustries,newformsandnewpatternsgrowingrapidly.China’seconomywilldemonstrateadevelopmentmomentumofsteadyprogressandsteadyimprovement.However,thecurrentexternalenvironmentremainscomplexandvolatile,theinternalstructuralimbalanceshaveyettobefundamentallyalleviated,andthefoundationforeconomicstabilitystillrequiresreinforcement.Inthenextphaseofeconomicdevelopment,thegovernmentofChinawillstrengthenandexpanditsdomesticeconomicflows,forgeaheadinfullconfidence,andcopewithshiftingexternaluncertaintiesbystickingtoafundamentalprincipleofhigh-qualityeconomicdevelopmenttoworktoachievesteadyandlong-termeconomicgrowth.

(2)TrendanalysisoftheportandshippingindustryThecontainershippingmarketfacedheighteneduncertaintiesinthefirsthalfof2025,withpersistentexcesssupplyconditions.Internationalfreightrates,aftersustaineddeclines,showedsignsofcyclicalrebound.Onthesupplyside,accordingtothemaritimeconsultancyAlphaliner,asofthefirsthalfof2025,theglobaloperationalcontainervesselcapacityinaggregatereached32.70millionTEUs,andthenetcapacityincreasedby1.18millionTEUs,representingapproximately

3.6%oftotalfleetcapacityduringthefirsthalfoftheyear.Thecontainervesselcapacitywasexpectedtogrowby6.3%in2025.Onthedemandside,globalportcontainerthroughputwaspredictedtogrowby2.0%in2025.Thisfundamentalsupply-demandmismatchindicatedthecontainershippingmarketwouldremainoversuppliedthroughouttheyear.Intermsoffreightrates,

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

itwitnessedsustaineddeclineduetocapacityoversupplyanddemandcontractioninearly2025,andafterMay,acyclicalreboundwastriggeredbytheUS-Chinatariffnegotiationsexceedingmarketexpectationsandcreatingafrontloadingwindow.Withpersistenttradetensionsandsalientstructuralsupply-demandproblems,freightrateswereexpectedtoremainunderpressureinthesecondhalfof2025.Thefreightratesofthecontainershippingmarketwereprojectedtoseeanoveralldeclinefortheyear,withtradepolicyuncertaintiescontinuingtocausesignificantvolatility.Moreover,majorshippingcompanieswereactivelytransformingcommercialstrategiestomeetincreasinglydiversifiedcustomerdemands,focusingonlogisticssupplychainextension,shippingfinance,digitalizationandintelligenttechnologies,andgreenandlow-carboninitiatives,andgivingrisetogreatershippingservices.Affectedbymarketuncertaintiesintheglobaltradelandscape,cargoownersacceleratedtheirshippingschedulestomitigatepotentialrisks.Thisphenomenonof"frontloading"hassignificantlyboostedthedemandforcontainertransportation.Againstthisbackdrop,containerthroughputatmajorhubportsacrossregionsworldwidegenerallyshowedpositivegrowthtrends.AccordingtotheforecastofDrewry,portsacrossregionsworldwideshowedvaryingdegreesofgrowthinthefirsthalfof2025.Amongwhich,theportsinAsiahandledathroughputof261millionTEUs,representinganincreaseof3.9%year-on-year;theportsinGreaterChinaachievedathroughputof159millionTEUs,representinganincreaseof4.1%year-on-year;theportsinSoutheastAsiaachievedathroughputof66.95millionTEUs,representinganincreaseof5.0%year-on-year.TheportsintheMiddleEastachievedathroughputof21.91millionTEUs,representinganincreaseof

7.6%year-on-year.TheportsinEuropeandNorthAmericaachievedthroughputof72.13millionTEUsand41.13millionTEUsrespectively,representingincreasesof2.9%and10.5%year-on-year;theportsinAfricaandLatinAmericaachievedthroughputof21.65millionTEUsand29.12millionTEUsrespectively,representingincreasesof5.9%and1.3%year-on-year.ThankstothestablegrowthofChina’sforeigntradescale,thecontainerthroughputgrowthrateoftheportsinChinamaintainedatarelativelyhighlevel.AccordingtothedatapublishedbytheMinistryofTransport

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

ofChina,theaccumulatedcontainerthroughputhandledbyportsinChinaachieved172.98millionTEUsinthefirsthalfof2025,representinganincreaseof6.9%year-on-year.Ofthese,theaccumulatedcontainerthroughputhandledbycoastalportsachieved152.77millionTEUs,representingayear-on-yearincreaseof7.1%.

(3)TheCompany’sindustrypositionTheCompanyisaworld-leadingportserviceprovider,asoneofthetopportoperatorsintheworld.Intermsofscale,theCompanyhasestablishedarelativelycompleteportnetworkatmajorhublocationsalongcoastalChina,withitspresencein51portsin26countriesandregionsincludingAsia,Africa,Europe,Oceania,SouthandNorthAmerica.AccordingtothestatisticsofDrewry,in2024,theCompany'sequitythroughputofcontainersreached61.20millionTEUs,rankingamongthetopglobalportoperators.Intermsofquality,themasterterminalscontrolledbytheCompanyhasoccupiedvariousmarketandregionalleadingpositions,continuedtopromoteESGconstruction,andstrivedtocreateanESGportbenchmarkintheindustry.Inaddition,leveragingonthegoodgroundofporttechnologyandbasedontheTOSsystemself-developedbyCMPort;TheCompanyhasworkedouttheworldwidefirstfull-case,full-time,all-regimeandmultifactortraditionalcontainerterminalupgradingsolution,andhasbuiltthetradefacilitationplatformfortheGuangdong-HongKong-MacaoGreaterBayAreathroughblockchaintechnology,whichhasbeenextendedto32terminalstohelpenhancethetradefacilitationlevelintheGreaterBayArea.Intermsofperformance,theCompanyhascontinuallypromotedhigh-qualitydevelopmentandhasbeenanindustryleaderintermsofnetprofitmargin,overalllabourproductivity,andotherindicators.IICoreCompetitivenessAnalysis

1.Soundshareholderbackgroundandresourceintegrationcapability

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

CMG,thedefactocontrolleroftheCompany,wastheHundredYears’centralState-ownedenterprisestartingwithportshippinglogisticsbusinessthatownsexcellentreputationandresourcesavailableintheindustry.Foundedin1872,CMGisakeyenterpriseunderthedirectadministrationofthePRCcentralgovernment,alsooneoftheearliestChineseenterprisestobeestablishedandoperatedinHongKong,aswellasaHundredYears’centralState-ownedenterprise,acomprehensivecentralState-ownedenterprise,andacentralState-ownedenterprisestationedinHongKong.Itmainlyfocusesontransportationandlogistics,integratedfinance,realestateparks,andscienceandtechnologyinnovationindustries.Atpresent,CMGisfirmlycommittedtobecomingaworld-leading,innovation-drivenandinternationalisedconglomerate.Tothisend,itisacceleratingtheimplementationofits“thethirdventure”strategy,strivingtodevelop“twocurves”,vigorouslypromotingthetransformationandupgradingoftraditionalindustries,andproactivelycultivatingstrategicemergingindustries.CMG’sTransportation&LogisticsBusinessDepartmentincludesport,shipping,logistics,highwayandtradingbusinesses,andhasawiderangeofcoordinatedspaceforindustrialchainservice.AccelerationofinternationaldevelopmentandimprovementonlogisticsnetworklayoutwilleffectivelybolsterCMPort’scapabilitiesrelatedtocreateaworld-leadingportinvestmentandoperationplatformwhichcangiveaglobalpushaswellasaninterconnectedinternationalportcomprehensiveservicesystem.

2.Professionalandhigh-efficiencyglobalportinvestmentcapabilityTheCompanyfocusesonportinvestment,graspsglobaltrendandseizesopportunitiesinregiontoachievefull-processandfull-cyclemanagementoninvestments.AsanimportantcarrierfordomesticandoverseasportinvestmentandoperationofCMG,CMPorthasover20yearsofexperienceforportinvestmentandover10yearsthereofforoverseasinvestment.Ascientificandprofessionalinvestmentmanagementsystemhasbeensetupwitha

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

researchteamspecializedininvestmentglobalwhichownsawealthofexperienceinpolicyresearch,industryanalysis,riskcontrol,fundraising,post-investmentmanagement.TheCompanycontinuestoworkindevelopmentofglobalindustrialsupplychain,andkeepsupwithmajorstrategicopportunitiesindomesticanddynamicinvestmentopportunitiesinoverseas.TheCompanyputsemphasisonitspresenceinglobalmajorhublocations,gatewayportsandregionswithhugemarketpotential,rapideconomicgrowthandpromisingdevelopment,inordertocaptureinvestmentopportunitiesinports,logisticsandrelatedinfrastructure,andfurtherimprovetheglobalportnetwork.TheCompanystrivestobalanceitsinvestmentportfoliowithintheregionalandlifecycleofports.Adheringtotheprincipleof“extensiveconsultation,jointdevelopmentandsharedbenefits”,itsoverseasbusinesshasdevelopedlocal-basedbusinessoperationandformedacommunityofsharedfuturebasedontheconsolidationofconnectivityandcooperationandexpandednewinternationalcooperation,tothegreaterextentthatcapabilitystrengthenedincopingwithvariousriskssuchasindustryfluctuations,tradeconflictsandemergencies.

3.FleshingouttheportcomprehensivemanagementcapabilityTheCompanyhascommittedtoportoperationandcontinuestoenhanceitscomprehensivemanagementcapabilitiesthroughtheimplementationofaleanmanagementstrategy.TheCompanycontinuouslyimprovestheoperationandmanagementofportbusinessbyestablishingamulti-dimensionalprofitcontributionassessmentsystemandacost-and-expense“valuetree”undertheleanmanagementframework.Theseeffortshavedeepenedtheintegrationoffinanceandoperations,andenabledustooptimisecostcontrolsystemsthroughacost-leadershipmechanism,improveresourceallocationprecision,andenhancethevalue-creatingcapacityofourresources,achievingtangiblecostreductionandefficiencyenhancement.TheCOEworkingmechanismisusedtopromotetheoptimalallocationofresourcesandimprovemanagementlevels;italsousesqualityandefficiencyimprovementasatooltoimplementhigh-qualitymeasuresandenhanceprofitability.Asaresult,wehaveestablishedanindustry-leadingportoperationalmanagementsystem.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

4.ContinuouslyoptimizedsupplychaincomprehensiveservicecapabilityTheCompanyadherestocreatingvaluesontheport-centeredblockchainaswellastheport-linkedlogisticschain.Withtheobjectiveofbecominga“world-leadingportserviceprovider”,theCompanykeepsenhancingcorporatevalueandpossessesmoderncomprehensivelogisticsservicecapability.Inviewthattheshippingandportsectorsgraduallyshiftedtoformalliances,theCompanyisactivelyintegratingitsdomesticandoverseasportassetsandcapitalisesonitsrelativelycompleteglobalportnetworktoprovidecustomerswithcomprehensiveportlogisticsservicesolutions,formingitsuniquecompetitivestrengthbasedonresourcessuchasmaritimelogistics,landtransportation,storage,logisticsandtradingfromCMG.

5.Self-innovativeintelligentportconstructioncapabilityTheCompanyrisestothecalloftheindustry,pushingfortraditionalindustrialupgrading,anditsprogresssetsthedirectionofintelligentportconstruction.TheCompanyacceleratesdigitalandintelligenttransformation,promotestheintegrateddevelopmentoftechnologicalandindustrialinnovation,andreleasesoverallsolutionsforsmartportsfeaturingCMPort’scharacteristics.Intermsoftheproductionsystemoftheport,CMIT,ahigh-techenterpriseundertheCompany,independentlydevelopsanewgenerationofCTOSproductswithcorecompetitivenessintheglobalmarket,andiscommittedtoleadingthewayintermsofintelligence,businessflexibilityanduserexperience.Intermsofindustrialnetworkplatformconstruction,theCompanyhasupdatedthecomprehensiveserviceplatform“CMePort”toprovidetheportshippinglogisticsindustrywiththeone-stopportintegratingservices.MawanSmartPortoftheCompanyisthefirst5GintelligentportinGuangdong-HongKong-MacaoGreaterBayAreainChina,whichcanrealizeahorizontaltransportationsolutionofmixingself-drivingvehiclesandmannedvehicles.Ithasgreatlyimprovedproductivity,greeningdegreeandmanagementleveloftheport.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

IIICoreBusinessAnalysis

1.Portbusinessreview

(1)OverviewofportbusinessInthefirsthalfof2025,theCompany’scontainerbusinesscontinuedtogrow,whileitsbulkcargobusinessmaintainedstableperformancedespitetheheadwindsofsubduedmarketdemand.TheCompany’sportshandledatotalcontainerthroughputof101.207millionTEUs,upby5.7%year-on-year.BulkcargovolumehandledbytheCompany’sportsdecreasedby0.7%year-on-yearto630milliontonnes.Forcontainerbusiness,theCompany’sportsinMainlandChinahandledacontainerthroughputof79.189millionTEUs,representingayear-on-yearincreaseof6.2%,portsinHongKongandTaiwanregionscontributedatotalcontainerthroughputof2.809millionTEUs,representingayear-on-yeardecreaseof3.9%,andthetotalcontainerthroughputhandledbytheCompany’soverseasportsgrewby5.0%year-on-yearto19.209millionTEUs.Intermsofbulkcargobusiness,theCompany’sportsinMainlandChinahandledabulkcargovolumeof630milliontonnes,downby0.8%year-on-year,andoverseasportshandledabulkcargovolumeof

4.802milliontonnes,upby2.3%year-on-year.

Table3-1ThroughputoftheCompanyandchangesin1H2025

Note:Thestatisticsrepresentedthetotalthroughputoftheholdingsubsidiaries,associatesandjointventuresoftheCompany.

(2)Operationconditionofportbusinessbyregion

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Table3-2ContainerthroughputoftheCompanyandchangesin1H2025(in’0,000TEU)

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Table3-3BulkcargovolumehandledbytheCompanyandchangesin1H2025(in’0,000tonnes)

PearlRiverDeltaregionTheWestShenzhenPortZonehandledacontainerthroughputof8.39millionTEUsinthefirsthalfoftheyear,upby11.0%year-on-year,whichmainlywasbenefittedfromtheoptimizedbusinessstructureandnewlyaddedshippingroutes;andhandledabulkcargovolumeof7.499milliontonnes,downby10.0%year-on-year,mainlyduetodecreaseinthevolumeofimportedgrain.ShundeNewPorthandledacontainerthroughputof0.186millionTEUs,downby27.6%year-on-year;andhandledabulkcargovolumeof2.473milliontonnes,downby22.1%year-on-year.DongguanMachonghandledabulkcargovolumeof8.679milliontonnes,upby8.6%year-on-year,

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whichwasmainlybenefittedfrombusinessstructureoptimization.ChuKongRiverTerminalhandledatotalcontainerthroughputof391,000TEUs,downby1.5%year-on-year;andhandledabulkcargovolumeof2.175milliontonnes,downby23.0%year-on-year,mainlyduetolowerdemandforconstructionmaterials.YangtzeRiverDeltaregionSIPGhandledacontainerthroughputof27.013millionTEUs,upby5.9%year-on-year,whichwasmainlybenefittedfromhigherforeigntradeunits;andhandledabulkcargovolumeof39.57milliontonnes,downby7.7%year-on-year.NingboPorthandledacontainerthroughputof25.45millionTEUs,upby10.0%year-on-year,whichwasmainlybenefittedfromgrowthofininternationalcargoes;andhandledabulkcargovolumeof345.74milliontonnes,upby2.0%year-on-year.BohaiRimregionLiaoningPortCo.,Ltd.handledacontainerthroughputof5.475millionTEUs,downby9.2%year-on-year;andhandledabulkcargovolumeof116.613milliontonnes,downby2.5%year-on-year.LaizhouHarbourAffairshandledacontainerthroughputof7.978milliontonnes,upby7%year-on-year.QQCTUhandledacontainerthroughputof6.351millionTEUs,upby9.2%year-on-year,whichwasmainlybenefittedfromgrowthofinternationalcargoes.QQTUhandledabulkcargovolumeof6.405milliontonnes,downby11.1%year-on-year,mainlyduetoregionalbusinessstructureadjustment.QingdaoDongjiakouhandledabulkcargovolumeof41.387milliontonnes,upby3.9%year-on-year.TianjinPortContainerTerminalhandledacontainerthroughputof4.305millionTEUs,upby0.9%year-on-year.SoutheastregionofMainlandChinaShantouPorthandledacontainerthroughputof845,000TEUs,upby7.8%year-on-year,whichwasmainlybenefittedfromgrowthofinternationalcargoes;andhandledabulkcargovolumeof

2.075milliontonnes,upby4.6%year-on-year.ZhangzhouPorthandledacontainerthroughputof207,000TEUs,upby6.7%year-on-year,andhandledabulkcargovolumeof5.613milliontonnes,

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

upby37.8%year-on-year.XiaMenBayTerminalshandledabulkcargovolumeof2.651milliontonnes,upby10.3%year-on-year,whichwasmainlybenefittedfromtheoptimizedbusinessstructureinXiamenandZhangzhou.SouthwestregionofMainlandChinaZhanjiangPorthandledacontainerthroughputof576,000TEUs,downby7.8%year-on-year;andhandledabulkcargovolumeof37.582milliontonnes,downby15.4%year-on-year,mainlyduetodeclineinthecargovolumeofpetrochemical.HongKongandTaiwanregionsCMCSinHongKongandMTLdeliveredanaggregatecontainerthroughputof2.095millionTEUs,upby0.7%year-on-year.KaoMingTerminalinTaiwanhandledatotalcontainerthroughputof714,000TEUs,downby15.4%year-on-year,mainlyduetotheimpactoftariffpolicies.OverseasoperationInthefirsthalfof2025,CICTinSriLankahandledacontainerthroughputof1.677millionTEUs,downby2.8%year-on-year.HIPGinSriLanka,whichlauncheditscontainerbusinessessincethefirsthalfof2024,achieved180,000TEUsduringthereportingperiod,upby542.9%year-on-year;andhandledabulkcargovolumeof1.216milliontons,downby6.0%year-on-year.TCPinBrazilhandledacontainerthroughputof803,000TEUs,upby2.9%year-on-year.LCTinTogorecordedacontainerthroughputof957,000TEUs,upby19.3%year-on-year,whichwasmainlybenefittedfromoptimizedshippingroutesstructure.TheoperatingdataofNPHinIndonesiawasincludedsinceJuly2024,anditcontributed387,000TEUsduringthereportingperiod.TICTinNigeriahandledacontainerthroughputof172,000TEUs,upby24.6%year-on-year,whichwasmainlybenefittedfromoperationalstrategyenhancements.PDSAinDjiboutihandledacontainerthroughputof573,000TEUs,downby11.6%year-on-year,mainlyduetodeclineintransshipmentcargoes;andhandledabulkcargovolumeof2.449milliontonnes,upby8.6%year-on-year,whichwasmainlybenefittedfromvolumegrowthofgrainandfertilizer.KumportinTurkeyhandleda

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

containerthroughputof725,000TEUs,upby16.9%year-on-year,whichwasmainlybenefittedfromshippingroutesoptimization.TerminalLinkhandledacontainerthroughputof13.735millionTEUs,upby1.4%year-on-year;andhandledabulkcargovolumeof989,000tonnesofbulkcargo,upby4.1%year-on-year.

2.ImplementationSituationofOperationSchemeDuringtheReportingPeriodDuringthereportingperiod,theCompanycommittedtoitsstrategicgoalofbecominga"world-leadingportserviceprovider",firmlypromotingthethree-drivermodelof“GlobalPresence”,“LeanManagement”and“InnovativeTransformation”.Significantprogresswasachievedinvariousareas,includinghomebaseportdevelopment,operationalmanagement,technologicalinnovation,overseasexpansion,state-ownedenterprisesreformandESGinitiatives,withkeyoperationalandfinancialindicatorssecuringsoundgrowth.

(1)Asforhomebaseportconstruction,theCompanymaintaineditsregionalstrengthandenhanceditscorecompetitiveness.TheWestShenzhenPortZonemaintainedanupwardtrendinthecontainerbusiness,withitsmarketshareofcontainerbusinessintheforeigntrademarketofShenzhenPortexceeding50%.Itsbulkcargobusinesscontinuedtomaintainanadvantageouspositionwithmultipletypesofcargo.Inoverseashomebaseports,CICTinSriLankaactivelyrespondedtoregionalcompetitionbyconsistentlyoptimizingshippingroutes,expandingitscustomerbase,andcapitalizingonmarketopportunitiestostabilizeitscorebusinesses.HIPGcontinuedtoenhanceitsbusinessstructure,withcoordinatedgrowthacrossthecontainerandRORObusinesssegments.Itscontainerbusinessmadebreakthroughsanddeliveredincrementalvalue,whileclosercollaborationwithshippingcompanieshelpedsecurekeyroutes.Additionally,itsinfrastructureupgradesfurtherimprovednavigationcapacity.

(2)Inrespectofoperationsmanagement,theCompanydeepeneditsleanmanagementtoenhanceoperationalefficiency.TheCompanysustaineditseffortstostrengthentheCOEmechanism,implementedacostleadershipstrategyandleveragedcostanalysistoconduct

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

systematicdiagnosistotheoperationsofprimarilycontrolledentities.TheCompanydevelopedoperationaloptimizationplans,improvedresourceallocation,refinedproductionprocesses,elevatedoperationalindicatorimprovements,andtrackedimplementationofoptimizationmeasures,thusestablishingaclosed-loopmanagementsystemandboostingoveralloperationalefficiency.

(3)Asregardstechnologicalinnovation,theCompanyadvanceditssmartportdevelopmentandgreentransformation.Focusingontech-driveninnovation,theCompanyexploredapplicationsofartificialintelligenceandothertechnologiestoenableindustrialupgrading.Inthefirsthalfof2025,theCompanysuccessfullydeployeditsself-developedCTOSsystematTCPinBrazilanddeliveredatestversionoftheCTOSsystematKumportinTurkey,replacingforeignsystems.ThekeyprojectoftheMinistryofTransportwascompletedonschedule,whilethenext-generationCTOSplatformwasalsoimplementedatShantouPort.Thepilottaskof“ContainerTerminalIntelligenceUpgrading”undertakenbytheCompanyaspartofthenationalinitiativetobuildastrongtransportationnetworkinChina,haspassedtheon-siteacceptanceinspectionorganizedbytheMinistryofTransport.Endeavoringtopromoteartificialintelligenceinnovationapplications,theCompanyachievedsignificantresultsinvariousscenarios,includingsmartyardandmultimodallargelanguagemodels,whilelaunchingits"Piercept"artificialintelligencemodelandintelligentagentbrand.Atthesametime,theCompanycommittedtoadvancinggreenportconstruction,2newpowerswapstationswentintooperationandover270electrictrailersandelectric-retrofittedtrailerswerenewlyadded.

(4)Regardingoverseasexpansion,theCompanyexpandedqualityprojectsandunlockedexistingpotential.Byprioritizingbothincrementalexpansionandoptimizationofexistingadvantages,theCompanyactivelyadvanceditsglobalstrategytoenhanceitsworldwidefootprint.On28February2025,ChinaMerchantsPort,aholdingsubsidiaryoftheCompany,signedanagreementtoacquireequityinterestinVast,acrudeoilterminalinBrazil,whichhelpedtheCompanycontinueexpandingthemarketinLatinAmerica.Concurrently,theCompanydroveintegratedoperationsatitsoverseashomebaseportsinSriLanka,promotingportcapabilitiesto

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

achieveefficientresourcesharingandcomplementaryadvantages.InBrazil,byenhancingnavigationcapacity,boostingoperationalefficiency,andoptimizingcontainermix,TCPrankedamongtheregion’stopperformersinvesselwaittimesandotherefficiencymetrics.LCTinTogoincreaseditscapacityandefficiencytocontinuouslyimproveitscorecustomer’ssatisfaction.Inthefirsthalfoftheyear,LCTsuccessfullyhandledtheworld’slargest24,000TEUvessel,drivingeconomicgrowth.Meanwhile,NPHinIndonesiacompletedasmoothtransition,graduallyalignedmanagementsystems,andsteadilyimprovedoperatingperformance.

(5)Withregardtothereformofstate-ownedenterprises,theCompanycontinuedtodeepenthereformandenhanceitscorecompetitiveness.TheCompanyhascontinuedtodiligentlyadvancethe"DoubleHundredActions"tofurtherdeepenandimplementreformefforts.Intermsoftalentselectionandappointment,theCompanyexpandeditsinnovativeoperationresponsibilitysystemandpromotedyouthleadershiptounleashorganizationalvitality.Intermsofcorporategovernance,theCompanypromotedtheoversightandevaluationofdispatcheddirectorstofurtheremphasizetheBoard’sfunctioninsubsidiarygovernance.Intermsofinstitutionalinnovation,theCompanyestablishedplatformsandimprovedmechanismstodeepenintegrationbetweentechnologicalinnovationandindustrialupgrading,helpingdevelopnewqualityproductiveforces.Inthefirsthalfof2025,theCompanyachievedthehighestratingof"Benchmark"inthe2024SASACperformanceevaluation,signifyingrecognitionforitsreformworkbythecompetentauthorities.

(6)IntermsofESGconstruction,theCompanyimplementedsustainabledevelopmentprinciplesandtooktheleadinESGrating.ByconsistentlyintegratingESGconceptsintodailyoperations,theCompanyactivelymonitoredevolvingESGregulations,strengthenedexchangeswithexcellententerprises,andcontinuouslyenhanceditsESGmanagementframeworktooptimizemanagementpractices.TheCompanysustaineddistinctiveport-themedcommunityinitiatives,suchasinternationalporttalentcultivationprogramsandadvancedtheimplementationof"smallyetbeautiful"livelihoodinitiativesinoverseasprojectstobuildlocalizedandaccountableESGbrand

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

recognition,conveyingthepowerofacentralstate-ownedenterprisefulfillingitsdutiestowardssharedprosperity.On18August2025,theCompanyreceivedan"AAA"ESGratingfromWINDintheTransportationInfrastructurecategory,thehighestratingindustrywide.

3.Year-on-yearChangesinKeyFinancialData

Unit:RMB

SignificantchangestotheprofitstructureorsourcesoftheCompanyintheReportingPeriod:

□Applicable√NotapplicableNosuchchangesintheReportingPeriod.Breakdownofoperatingincome:

Unit:RMB

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Operatingdivision,productcategoryoroperatingsegmentcontributingover10%ofoperatingincomeoroperatingprofit:

Unit:RMB

CorebusinessdatarestatedaccordingtothechangedmethodsofmeasurementthatoccurredintheReportingPeriod:

□Applicable√NotapplicableIVAnalysisofNon-CoreBusinesses

Unit:RMB

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

VAnalysisofAssetsandLiabilities

1.SignificantChangesinAssetComposition

Unit:RMB

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

2.MajorAssetsOverseas

3.AssetsandLiabilitiesatFairValue

Unit:RMB

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Otherchanges:

None.SignificantchangestothemeasurementattributesofthemajorassetsintheReportingPeriod:

□Yes√No

4.RestrictedAssetRightsasatthePeriod-EndTherestrictedcashandbankbalanceswereRMB91,732,148.41intotal,includinginterestreceivable,performancebond,frozenfunds,etc.ThecarryingvalueoffixedassetsascollateralforbankloanswasRMB627,351,310.21.ThecarryingvalueofintangibleassetsascollateralforbankloanswasRMB611,776,115.79.VIInvestmentsMade

1.TotalInvestmentAmount

2.MajorEquityInvestmentsMadeintheReportingPeriod

□Applicable√Notapplicable

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

3.MajorNon-EquityInvestmentsOngoingintheReportingPeriod

□Applicable√Notapplicable

4.FinancialInvestments

(1)SecuritiesInvestments

Unit:RMB

(2)InvestmentsinDerivativeFinancialInstruments

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

5.UseofFundsRaised

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.VIISaleofMajorAssetsandEquityInvestments

1.SaleofMajorAssets

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

2.SaleofMajorEquityInvestments

□Applicable√Notapplicable

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

VIIIPrincipalSubsidiariesandJointStockCompaniesPrincipalsubsidiariesandjointstockcompanieswithanover10%effectontheCompany’snetprofit:

Unit:RMB

Note:NingboZhoushanPortfinancialdataaccuratetoRMB’000.

SubsidiariesobtainedordisposedofintheReportingPeriod:

Otherinformationonprincipalsubsidiariesandjointstockcompanies:

ThereisnootherinformationrelatedtotheCompany’sprincipalsubsidiariesandjointstockcompaniesintheReportingPeriodthatisrequiredtobedisclosed.IXStructuredEntitiesControlledbytheCompany

□Applicable√NotapplicableXRisksFacedbytheCompanyandSolutions

1.MarketuncertaintyriskMacroeconomicandenvironmentalfactors,suchasglobaleconomicconditions,geopoliticaltensionsandtradeprotectionistpolicies,maytriggermarketrestructuring,demandcontractionandintensifiedindustrycompetition,leadingtoalossofexistingbusinessandfailureinnewbusinessexpansion,therebyaffectinginvestmentreturnsandoperationalprofitability.Theheightened

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

internationalgeopoliticalinstability,particularlytheIran-IsraelconflictraisingtheriskofaclosureoftheStraitofHormuz,hassignificantlyimpactedglobalsupplychainsandthecontainershippingindustry.Tomitigatemarketrisks,theCompanyadheredtothe"ThreeDrivers"strategy,focusingintentlyonoverseasdevelopmentobjectives,whileadvancingleanmanagementandinnovationcapabilities,aimingtoachievesubstantivebreakthroughsandhigh-qualitydevelopment.(1)Globallayoutdriver.Leverageportcapabilitiestoensurethestabilityofinternationaltradesupplychainsandactivelypursuehigh-qualitydevelopment.(2)Leanmanagementdriver.Adapttoslowingindustrygrowthandfrequentriskeventsbysustainingorganicgrowth,optimizingoperationalmodels,andestablishingacomprehensiveleanmanagementsystemcoveringtheentirelifecycle.(3)Innovation-drivenupgradedriver.Activelytrackindustryinitiativesinsmartandgreentransformation,convertingnewtechnologyapplicationsandsustainabledevelopmentintodrivingforcesfor"upgrading"coreportsoperation.

2.PolicyrisksInternationally,risingtradeprotectionism,theupgradingofenvironmentalprotectionregulationsandcarbonemissionrestrictionpoliciesinvariouscountries,andtheuncertaintyoftheregionaleconomicintegrationprocessmayputpressureontheglobalsupplychainlayout,overseasinvestmentreturnsandoperationalcompliance.MeasuressuchasU.S.tariffincreases,rulesoforiginverificationandSection301investigationshavehadapronouncedimpactontheglobalcontainershippingmarket,transshipmenttrade,aswellasChineseshippingandshipbuildingcompaniesengagedinU.S.-relatedbusiness.Domestically,adjustmentstothenationaleconomicstructure,requirementsforcostreductionandefficiencyimprovementinthelogisticsindustry,andadjustmentstoimportandexportpoliciesmayhaveanimpactonoperatingcosts,businessmodelsandinvestmentplansoftheport.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Inordertodealwithpolicyrisks,theCompanywill(1)improvetheabilitytoanalyzeandjudgemacropolicychanges,buildarelativelycompletemacropolicyanalysissystem,anddynamicallyadjuststrategicplanning;(2)continuetooptimizetheglobalinvestmentportfolioanddiversifytheimpactofpolicyrisks;(3)strengthenESGmanagement,improvecorporategovernancelevels,enhancesustainabledevelopmentcapabilities,andmaintaincompliantoperationsamidstchangesintheglobalpolicyenvironment;(4)strengthenitscompliancemanagementsystem,enhanceenterprise-widecapabilitiesforcomplianceriskidentification,andpromptlyrespondtoandimplementevolvingregulatoryrequirements;(5)maintaintheimplementationofsafeguardingmeasures,includingoverseascommercialpoliticalinsurance,tocoverkeyriskareasofoverseasassets.

3.OperationmanagementrisksTheCompanyactivelyseeksinvestmentopportunitiesindomesticandoverseasports,expandingitsnetworktoseveralregionsandcountriesaroundtheworldthroughmergersandacquisitions,investmentsandotherwaystoprovidecomprehensiveservicesforglobalcustomers.Withthedeepeningoftheglobalizationprocessandtheadversechangesinthemacroenvironment,theCompanyisfacingnegativeconditionssuchasincreaseddifficultiesintheoperationandmanagementofportsinsomeregionsandlowerreturnsoninvestmentandoperationalefficiency.InviewoftheCompany’sbusinessmanagementrisks,theCompanywill(1)enhancemarketcompetitivenessbasedonthreeelements,namely“market,resourcesandservices”,promoteinitiativessuchasjointmarketingwithkeyaccountswithinthesystem,portclustersynergies,businessmodelinnovationandePort3.0platformserviceupgrades,increaseexistingcustomerloyalty,taketheinitiativetoidentifynewcustomers,andgraspmarketopportunities;(2)establishacomprehensiveriskcontrolandcomplianceframework,strengthenlegal-businessintegrationcapabilities,refineriskmonitoringmetrics,enhanceearlywarningsystemsanddisposalproceduresforkeyrisks,digitallyupgraderiskmanagementcapabilities,andconductdrill-downriskassessmentstoeliminatepotentialhazards;(3)exploretheimplementationoffull-cycleproject

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

managementcontrols,drivecomprehensivecoverageofinvestmentpromotioncompliancerequirementsacrossalloperationalprojects,implementpost-auditandpost-investmentevaluations,andconductperiodicoperationalsummariestooptimizemanagementpractices.XIImplementationoftheMarketValueManagementSystemandValuationEnhancementPlanIndicatewhethertheCompanyhasamarketvaluemanagementsystem.

√Yes□NoIndicatewhethertheCompanyhasdisclosedavaluationenhancementplan.

√Yes□NoToeffectivelypromotetheenhancementofthelistedcompany'sinvestmentvalue,increaseinvestorreturns,andprotectthelegitimaterightsandinterestsoftheCompany,investors,andotherstakeholders,theCompanyactivelyrespondstoandimplementsregulatoryrequirements.BasedontheCompany’sspecificsituation,avaluationenhancementplanhasbeendeveloped.TheCompanywillfocusonimprovingthequalityofthelistedcompany,enhancingoperationalefficiencyandprofitability,andlegallyandcompliantlyusingmethodssuchassharerepurchasesandcashdividendstopromotetheincreaseoftheCompany’sinvestmentvalue.InaccordancewithrelevantprovisionssuchastheCompanyLawofthePeople'sRepublicofChina,theSecuritiesLawofthePeople'sRepublicofChina,theSeveralOpinionsoftheStateCouncilonStrengtheningSupervision,PreventingRisks,andPromotingtheHigh-QualityDevelopmentoftheCapitalMarket,theAdministrativeMeasuresforInformationDisclosureofListedCompanies,theGuidanceNo.10onMarketValueManagementforListedCompanies,theArticlesofAssociation,etc.,theCompanyheldtheFirstExtraordinaryMeetingofthe11thBoardofDirectorsin2025on27February2025,andpassedtheproposalontheValuationEnhancementPlan.Forspecificdetails,pleaserefertotheValuationEnhancementPlandisclosedonwww.cninfo.com.cnon28February2025(AnnouncementNo.:2025-007).

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

XIIImplementationoftheActionPlanfor"DualEnhancementofDevelopmentQualityandInvestorReturns"IndicatewhethertheCompanyhasdiscloseditsActionPlanfor“DualEnhancementofDevelopmentQualityandInvestorReturns”.

√Yes□NoInordertoimplementtherequirementsoftheStateCouncil’sOpinionsonStrengtheningSupervisionandPreventingRisksandPromotingHigh-QualityDevelopmentoftheCapitalMarketandOpinionsonFurtherImprovingtheQualityofListedCompanies,theCompanyhasformulatedtheActionPlanfor“DualEnhancementofDevelopmentQualityandInvestorReturns”,withaviewtocontinuouslyimprovingthequalityoftheCompany,enhancingthereturnstoinvestors,ensuringthatrelevantstakeholderssharethefruitsoftheCompany’sdevelopment,andachievingsustainabledevelopment.Fordetails,pleaserefertotheAnnouncementontheInitiationoftheActionPlanfor“DualEnhancementofDevelopmentQualityandInvestorReturns”(AnnouncementNo.:2024-068)disclosedonwww.cninfo.com.cn.DuringtheReportingPeriod,theCompanyoperatedinastablemanner,adheredtostandardisedoperations,andensuredproperinformationdisclosure,insiderinformationmanagement,andinvestorrelationsmanagement.TheCompanyestablishedagoodcorporateimageandmaintainedastabledividendpolicywhiledeeplyimplementingESGprinciples.TheActionPlanfor“DualEnhancementofDevelopmentQualityandInvestorReturns”hasbeeneffectivelyimplemented.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartIVEnvironmental,SocialandGovernanceInformationIChangeofDirectors,SupervisorsandSeniorManagement

IIInterimDividendPlan

□Applicable√NotapplicableTheCompanyhasnointerimdividendplan,eitherintheformofcashorstock.IIIEquityIncentivePlans,EmployeeStockOwnershipPlansorOtherIncentiveMeasuresforEmployees

1.EquityincentivesTheStockOptionIncentivePlan(PhaseI):

On6February2024,theCompanydisclosedtheReminderAnnouncementontheAdoptionofIndependentExerciseModefortheThirdExerciseScheduleoftheStockOptions(FirstBatchtobeGranted)undertheStockOptionIncentivePlan(PhaseI)oftheCompany(AnnouncementNo.2024-013)andtheReminderAnnouncementontheAdoptionofanIndependentExerciseModefortheSecondExerciseScheduleoftheStockOptions(ReservedBatchtobeGranted)undertheStockOptionIncentivePlan(PhaseI)oftheCompany(AnnouncementNo.2024-014).UponthereviewandconfirmationofShenzhenBranchofChinaSecuritiesDepositoryandClearingCorporationLimited,theexerciseconditionsweremetforthethirdexercisescheduleofthestockoptions(firstbatchtobegranted)andthesecondexercisescheduleofthestockoptions(reservedbatchtobegranted)undertheStockOptionIncentivePlan(PhaseI).AsoftheendoftheReportingPeriod,thecumulativenumberofstockoptionsexercisedundertheCompany’sStockOptionIncentivePlan(PhaseI)was2,433,720shares;andduringtheReporting

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Period,thenumberofstockoptionsexercisedundertheCompany’sStockOptionIncentivePlan(PhaseI)was199,900shares.

2.EmployeeStockOwnershipPlans

□Applicable√Notapplicable

3.OtherIncentiveMeasuresforEmployees

□Applicable√NotapplicableIVEnvironmentalInformationDisclosureIndicatewhetherthelistedcompanyoranyofitsmajorsubsidiariesisincludedinthelistofcompaniesthatarerequiredbylawtodiscloseenvironmentalinformation.

√Yes□No

VCorporateSocialResponsibility(CSR)TheCompanyhighlightsandpracticescorporatesocialresponsibilities.Whileimprovingbusinessperformanceandcreatingbenefitsforshareholders,theCompanysteadilyadvancesaseriesofsocialresponsibilityinitiativesinkeyareassuchastalentdevelopment,ruralrevitalization,

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

ecologicalconservation,andpublicwelfaresupport.TheCompanyearnestlyperformsitssocialresponsibilitiesforemployees,societyandenvironment,andpromotesthesustainabledevelopmentoftheenterpriseandsociety.Themainresultsoftheworkinthefirsthalfof2025areasfollows:

1.Theimplementationofthe“CBlueTrainingProgram”wasdeepened.InMay2025,theCompanysuccessfullyheldthe14thChinaMerchantsCBlueTrainingProgram(InceptionSession),themed“NationalProsperitythroughPortsandShipping,andaDeepCommitmenttoEcologicalCivilization”,withafocusontheintegrationoftechnologyandecology.Atotalof28participantsfrom19countriesvisitedChongqing,Yichang,andShenzhen.ThroughexplorationofthedevelopmentachievementsoftheYangtzeThreeGorgesandfieldstudiesonenterprisesandtransportationinfrastructureprojects,theparticipantstransformedtheirexperiencesintechnologicalinnovation,culturalexchange,andgreendevelopmentintoyouthstoriesthatare“communicable,interactive,andco-creatable”.TheseeffortshavehelpedinternationalyouthgaindeeperinsightsintoChina’sdevelopmentmodelandinnovativepathsintheportandshippingindustry.

2.Publicwelfaregrowthcampsflourishedacrossregions.TheCMPortvolunteerteam,togetherwiththe"ZhanjiangPortBlue"volunteerteamofZhanjiangPortGroup,broughtactsofkindnessacrossvastdistances.Theyorganizedfourpublicwelfaregrowthcampsunderthe2025CMPortRuralEducationCharityProgrammeatKongmuPrimarySchoolandLian’anPrimarySchoolinQilingTown,WuhuaCounty,PanshiPrimarySchoolinDahuTownofLianpingCounty,andBaomanCampusofZhanjiangNo.1PrimarySchoolinGuangdongProvince.TheseactivitiesdeliveredChildren’sDaycareandDragonBoatFestivalblessingstonearly800ruralchildren.Throughpublicwelfarecoursesdeliveredbyvolunteers,interactivegames,culturalperformances,andthemedpaintingandessayactivities,theprogramempoweredruralchildrenintheirgrowthanddevelopment.

3.Campuspublicwelfarewaspromotedonanongoingbasis.ShantouChinaMerchantsPortGrouplaunchedthe“HandinHand,PaintingtheBlueprintofDreams”campaignseries.FromApriltoJune,theprogramincludedvisitstounderprivilegedstudentfamilies,travelsafetylectures,“New

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

EnergyDIYActivities”,andaSunshineSportsDayandMentalHealthLecture.AtotalofRMB479,900wasdonatedtosupporteducation,povertyalleviation,andthedevelopmentofgreenandbeautifulvillages,effectivelycontributingtocampuseducationandstudentdevelopment.

4.Initialachievementsweremadeinoverseasecologicalcooperation.HIPGinSriLankalaunchedthe“CoralReefConservationProject”incollaborationwiththeFacultyofFisheriesandOceanSciencesofOceanUniversityofSriLanka,aimingtosystematicallystudythegrowthandprotectionstatusofcoralreefsnearHambantotaPort.Theobjectiveistopreservemarinebiodiversityandbuildanecologicalbarrierfortheport.Theprojectteamconductedfiveactivitieswithatotalof19participants.ThestudyrevealedthatthelivecoralcoveragerateonthebreakwaterofHambantotaPortreached35%,significantlyhigherthanthecoverageratesoflessthan20%foundinmanyotherreefsacrossSriLanka.Thisnotableoutcomepositionedthesiteasamodelofbiodiversity,withtheresultsreportedbymainstreammediainSriLankaandXinhuaNewsAgency,highlightingtheinfluenceofinternationalecologicalcooperation.

5.Significantresultswereachievedindomesticecologicalrestoration.ZhanjiangPortfulfilleditsecologicalprotectionresponsibilitiesbycarryingoutfourroundsoffishstockingactivitiesduringthePhaseIexpansionprojectoftheBaomanPortAreaContainerTerminal.Atotalof25.60millionblackseabream,74.55milliongianttigerprawns,37.62millionarkclams,and67.62millionundulatevenuseswerereleased,significantlyimprovingthesurroundingmarineecosystem.Inresponsetothe“ProjectofPromotingtheHigh-qualityDevelopmentofVillages,Towns,andCounties”,ShantouChinaMerchantsPortGrouporganized43PartymemberstoparticipateinhabitatimprovementeffortsinGuang’aoSubdistrict,supportingtheenhancementoflocalecosystemsandcommunityenvironments.

6.Targetedruralrevitalizationwasimplemented.ZhanjiangPortactivelyrespondedtothe“OneThousandEnterprisesSupportOneThousandVillages”initiativebyutilizing“6·30”earmarkedfundstoimplementarangeofassistanceprojects.Theseincludedtheupgradeofthefarmers’marketinMachengVillage,HaianTown,XuwenCounty;theconstructionofaculturalparkin

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

BaoxiVillage,JiaoweiTownship,XuwenCounty;andthebuildingofabasketballcourtattheBaomanCampusofZhanjiangNo.1PrimarySchool—allinsupportofgreenandbeautifulruraldevelopment.AtotalofRMB390,400wasallocatedtoprovidemedicalassistance,livingsupport,springtermeducationalaid,andfestive“WarmthDelivery”activities,benefitingatotalof378individuals.Volunteerswerealsoorganizedtoregularlyprovidecommunityservices,visitdisadvantagedchildren,andparticipateintheconstructionoftheBaomanVillageHistoryMuseum,makingholisticcontributionstoruralrevitalization.

7.Collaborationwasenhancedincommunityservices.ThevolunteerteamofSouthChinaOperationCenterpartneredwiththePartyServiceCenterofTaoyuanVillagetolaunchthe“ContinuingtheRevolutionaryLegacy,WarmingtheHeartsofthePeople”modelvolunteerserviceproject.Along-termsupportmechanismwasbuilt,with120volunteersengagedandatotalof249servicehoursinthefirsthalfoftheyear(withcumulativevolunteerhoursreaching19,406).Meanwhile,theSouthChinaBulkCargoOperationCenterorganizedavisitforstudentsfromDongwanPrimarySchoolinNanshanDistricttotheportanddonatedconvertibledesksandchairstoimprovestudents’conditionsformiddayrest,fulfillingtheCompany’scommunityserviceresponsibilitiesinatangibleway.

8.Overseaspublicwelfareandlivelihoodassistancewerewidelyrecognized.CICTinSriLankacontinuedtosupportlocalwheelchairtennis,which,afternearlyadecadeoftraining,hasseenitsathletesriseinworldrankingsfromobscuritytothe44thposition,becomingakeylinkintheChina–SriLankasportsexchange.HIPGinSriLankacarriedoutdiversifiedpublicwelfareactivitiesbasedonlocalneeds,includingfreeicecreamdistributionandbeachcleanuponPosonFullMoonPoyaDay,providingrefreshmentsforstudentsofDahamSchool,andassistingtheGDBuddhistAssociationindonatingdailysuppliestotheLoveVillage.Theseeffortscombinedlivelihoodassistancewithculturalintegration,furtherdeepeningpeople-to-peoplefriendshipbetweenChinaandSriLanka.Inthesecondhalfoftheyear,theCompanywillcontinuetofocusoncoreareasofsocial

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

responsibility,deepeninternationalexchange,educationsupport,ecologicalprotection,andruralrevitalization,andputthemissionofacentralstate-ownedenterpriseintopracticethroughconcreteactions.TheCompanyaimstofurtherintegratesocialresponsibilitywithbusinessdevelopmentandcontributemoretosustainableeconomicandsocialdevelopment.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartVSignificantEventsICommitmentsoftheCompany’sActualController,Shareholders,RelatedPartiesandAcquirers,aswellastheCompanyItselfandOtherEntitiesFulfilledintheReportingPeriodorOverdueatthePeriod-End

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.IIOccupationoftheCompany’sCapitalbytheControllingShareholderoranyofotherRelatedPartiesforNon-OperatingPurposes

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.IIIIrregularitiesintheProvisionofGuarantees

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.IVEngagementandDisengagementofIndependentAuditorAretheinterimfinancialstatementsaudited?

□Yes√NoTheinterimfinancialstatementsareunaudited.VExplanationsGivenbytheBoardofDirectorsandtheSupervisoryCommitteeRegardingtheIndependentAuditor’s“ModifiedOpinion”ontheFinancialStatementsoftheReportingPeriod

□Applicable√NotapplicableVIExplanationsGivenbytheBoardofDirectorsRegardingtheIndependentAuditor’s“ModifiedOpinion”ontheFinancialStatementsofLastYear

□Applicable√NotapplicableVIIInsolvencyandReorganization

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

VIIILegalMattersMajorlawsuitsandarbitrations:

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.Otherlegalmatters:

Note:refertoNotestoFinancialStatements-CommitmentsorContingencyfordetailsofBrazilTCPcases.

IXPunishmentsandRectifications

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.XCreditQualityoftheCompanyaswellasItsControllingShareholderandActualController

□Applicable√NotapplicableXIMajorRelated-PartyTransactions

1.ContinuingRelated-PartyTransactions

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Note:Thesmallaggregateamountofotherrelatedpartiesmentionedabovemainlycoversthelaborandleasingservices,etc.,providedbyChinaMerchantsIndustryHoldingsCompanyLimited,ChinaMerchantsEnergyShippingCo.,Ltd.,ChinaMerchantsHoiTungTradingCompanyLimited,etc.,totheCompany,orreceivedbythesaidcompaniesfromtheCompany.Theabovesinglerelatedpartiesdonothavetransactionamountsexceeding0.5%oftheCompany'sauditedequityforthemostrecentperiod,whicharepresentedhereinonaconsolidatedbasisduetothesmallamountandlargenumberofsuchparties.

2.Related-PartyTransactionsRegardingPurchaseorSalesofAssetsorEquityInterests

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

3.RelatedTransactionsRegardingJointInvestmentsinThirdParties

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

4.CreditsandLiabilitieswithRelatedPartiesCreditsreceivablewithrelatedparties

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Liabilitiespayablewithrelatedparties:

5.TransactionswithRelatedFinanceCompaniesDepositbusiness

Loanbusiness

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Creditorotherfinancebusiness

6.TransactionswithRelatedPartiesbyFinanceCompanyControlledbytheCompany

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

7.OtherMajorRelated-PartyTransactions

(1)On12March2025,theCompanydisclosedtheAnnouncementonProgressoftheRelated-PartyTransactionsregardingEstablishingJointVentureviaInvestmentandSellingAssetsbytheWholly-ownedSubsidiary(AnnouncementNo.:2025-010).

(2)TheCompanyheldthe4thMeetingofthe11thBoardofDirectorson1April2025,andreviewedandapprovedtheProposalontheRelated-PartyTransactionsRegardingMakingDepositsinandObtainingLoansfromChinaMerchantsBankin2025,whichwassubmittedtothe2024AnnualGeneralMeetingoftheCompanyfordeliberation.TheCompanyheldthe2024AnnualGeneralMeetingon23May2025,anddeliberatedandapprovedtheProposalontheRelated-PartyTransactionsRegardingMakingDepositsinandObtainingLoansfromChinaMerchantsBankin2025,agreeingtheCompanyanditssubsidiariesinthescopeofconsolidatedfinancialstatementstoopenbankaccountswithChinaMerchantsBank.In2025,themaximumdepositbalanceoftheCompanyanditssubsidiariesinthescopeofconsolidatedfinancialstatementswithChinaMerchantsBankshallnotexceedRMB10billion,andthemaximumcreditbalanceshallnotexceedRMB15billion.Fordetails,pleaserefertotheAnnouncementontheRelated-PartyTransactionsRegardingMakingDepositsinandObtainingLoansfromChinaMerchantsBankin2025(AnnouncementNo.2025-021)disclosedbytheCompanyon3April2025,theAnnouncementontheResolutionsofthe2024AnnualGeneralMeeting(AnnouncementNo.2025-039)disclosedbytheCompanyon24May2025andotherrelevantannouncements.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

(3)TheCompanyheldthe4thMeetingofthe11thBoardofDirectorson1April2025,andreviewedandapprovedtheProposalforDevelopmentofFinancialLeasingBusinessandRelated-PartyTransactionswithRelatedPartiesin2025,whichwassubmittedtothe2024AnnualGeneralMeetingoftheCompanyfordeliberation.TheCompanyheldits2024AnnualGeneralMeetingon23May2025,andreviewedandapprovedtheProposalonDevelopmentofFinancialLeasingBusinessandRelated-PartyTransactionswithRelatedPartiesin2025.Fordetails,pleaserefertotheAnnouncementonDevelopmentofFinancialLeasingBusinessandRelated-PartyTransactionswithRelatedPartiesin2025(AnnouncementNo.2025-022)disclosedbytheCompanyon3April2025,theAnnouncementontheResolutionsofthe2024AnnualGeneralMeeting(AnnouncementNo.2025-039)disclosedbytheCompanyon24May2025,andotherrelevantannouncements.

(4)TheCompanyheldthe4thMeetingofthe11thBoardofDirectorson1April2025,andreviewedandapprovedtheProposalonRenewaloftheFinancialServicesAgreementandRelated-PartyTransactionwithChinaMerchantsGroupFinanceCo.,Ltd.,whichwassubmittedtothe2024AnnualGeneralMeetingoftheCompanyfordeliberation.TheCompanyheldits2024AnnualGeneralMeetingon23May2025,andreviewedandapprovedtheProposalonRenewaloftheFinancialServicesAgreementandRelated-PartyTransactionwithChinaMerchantsGroupFinanceCo.,Ltd.Fordetails,pleaserefertotheAnnouncementonRenewaloftheFinancialServicesAgreementandRelated-PartyTransactionwithChinaMerchantsGroupFinanceCo.,Ltd.(AnnouncementNo.2025-023)disclosedbytheCompanyon3April2025,theAnnouncementontheResolutionsofthe2024AnnualGeneralMeeting(AnnouncementNo.2025-039)disclosedbytheCompanyon24May2025,andotherrelevantannouncements.

(5)TheCompanyheldthe4thMeetingofthe11thBoardofDirectorson1April2025,andreviewedandapprovedtheProposalonRelated-PartyTransactionsPossiblyIncurredinFinancialDerivativesTradingin2025,whichwassubmittedtothe2024AnnualGeneralMeetingoftheCompanyfordeliberation.TheCompanyheldits2024AnnualGeneralMeetingon23May2025,andreviewedandapprovedtheProposalonRelated-PartyTransactionsPossiblyIncurredin

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

FinancialDerivativesTradingin2025.Fordetails,pleaserefertotheAnnouncementonRelated-PartyTransactionsPossiblyIncurredinFinancialDerivativesTradingin2025(AnnouncementNo.2025-026)disclosedbytheCompanyon3April2025,theAnnouncementontheResolutionsofthe2024AnnualGeneralMeeting(AnnouncementNo.2025-039)disclosedbytheCompanyon24May2025,andotherrelevantannouncements.Informationonthedisclosurewebsiteforcurrentannouncementsonsignificantrelated-partytransactions:

XIIMajorContractsandExecutionthereof

1.Entrustment,ContractingandLeases

(1)Entrustment

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

(2)Contracting

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

(3)Leases

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

2.MajorGuarantees

Unit:RMB'0,000

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Note1:TheCompanyconvenedaBoardmeetingon29March2024,andapprovedtheProposalontheExternalGuaranteeProgressoftheCompanyin2023andtheExpectedNewExternalGuaranteeLineintheNext12Months.Fordetails,pleaserefertotheAnnouncementontheExternalGuaranteeProgressoftheCompanyin2023andtheExpectedNewExternalGuaranteeLineintheNext12Months(AnnouncementNo.2024-029),disclosedonhttp://www.cninfo.com.cndated2April2024.ThisproposalwasapprovedattheCompany’s2023AnnualGeneralMeetingandwaseffectiveuntilMay31,2025.AsofthedateofthisReport,nosuchguaranteehasactuallybeenincurred.Note2:TomeettheexternalinvestmentanddailyoperationandmanagementneedsoftheCompanyanditsmajority-andminority-ownedsubsidiaries,theCompanyconvenedaBoardmeetingon1April2025,andapprovedtheProposalontheExternalGuaranteeProgressoftheCompanyin2024andtheExpectedNewExternalGuaranteeLineintheNext12Months.Fordetails,pleaserefertotheAnnouncementontheExternalGuaranteeProgressoftheCompanyin2024andtheExpectedNewExternalGuaranteeLineintheNext12Months(AnnouncementNo.2025-024),disclosedonhttp://www.cninfo.com.cndated3April2025.ThisproposalwasapprovedattheCompany’s2024AnnualGeneralMeeting.AsofthedateofthisReport,nosuchguaranteehasactuallybeen

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

incurred.

3.CashEntrustedforWealthManagement

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

4.OtherMajorContracts

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.XIIIOtherSignificantEvents

1.IndextoDisclosedInformationThesignificanteventsdisclosedbytheCompanyonSecuritiesTimes,ChinaSecuritiesJournal,ShanghaiSecuritiesNewsandwww.cninfo.com.cnduringtheReportingPeriodareasfollows:

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

2.ProgressoftheInternalControlWorkAccordingtotherequirementsofBasicRulesforEnterpriseInternalControlandrelevantregulations,theinternalcontrolworkcarriedoutbytheCompanyduringtheReportingPeriodisas

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

follows:

(1)Thedevelopmentoftheinternalcontrolsystem.TheCompanycompletedthefullcoverageofthedevelopmentoftheinternalcontrolsystembystandardsofcontrolentityandlegalentity,andcarriedoutinternalcontrolsystemevaluationandinternalcontrolauthoritylistreviewasplanned.TheCompany'sheadquartersandsubordinateunitsimprovedtheirownbusinessproceduresinatimelymanner,andaquarterlynotificationmechanismwasestablishedtopromotetheimprovementintheinternalcontrolsystem.DuringtheReportingPeriod,theCompanycarriedoutasecondroundofinternalcontrolsupervisionandinspectionfeaturing"fullcoverageintwoyears".Theon-sitesupervisionandinspectionofinternalcontrolhasbeencompletedforZhangzhouPortandNPHinIndonesia,andthelistsofissuesandthepreparationofreportsarecurrentlyunderway.

(2)Comprehensiveriskmanagement.TheCompanyadheredtotheintegratedandcoordinated"six-in-one"riskcontrolsystem,continuouslydevelopingriskcontrolsystemsandmanagementprocessstandards,optimizingriskmanagementandworkappraisalplans,andregularlyimplementingclosed-loopriskmanagementthroughouttheentireprocess.Throughtheannualmajorriskassessment,monitoringandearlywarningofkeyriskindicators,andtrackingandmanagingoperationalriskevents,includingfollow-uponspecialriskworkrelatedtogovernmentcooperation,theCompanystrictlymanagedallriskexposuresthrough"eliminatingexistingrisksandcontrollingincrementalrisks".

3.CommunicationswiththeInvestmentCommunitysuchasResearches,InquiriesandInterviews

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

7April2025

XIVSignificantEventsofSubsidiaries

□Applicable√Notapplicable

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartVIShareChangesandShareholderInformationIShareChanges

1.ShareChanges

Unit:share

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Reasonsforthesharechanges:

DuringtheReportingPeriod,theCompanyincreaseditssharecapitalbyatotalof199,900sharesasaresultoftheindependentexerciseofoptionsundertheStockOptionIncentivePlan,andthetotalsharecapitaloftheCompanyincreasedfrom2,501,308,481sharesto2,501,508,381shares.Approvalofthesharechanges:

□Applicable√NotapplicableTransferofshareownership:

□Applicable√NotapplicableProgressonanysharerepurchase:

TheCompanyheldthe7thExtraordinaryMeetingofthe11thBoardofDirectorsin2024andthe3rdExtraordinaryGeneralMeetingofShareholdersin2024respectivelyon18October2024and29October2024,atwhichtheProposalonRepurchaseoftheCompany’sSharesviaCentralizedBiddingTradingwasreviewedandapproved,andtheCompanywasallowedtorepurchasedsharesofitviacentralizedbiddingtradingontheShenzhenStockExchangewithitsownfundsorself-financingfunds.Allrepurchasedsharesshallbecancelledwiththecorrespondingreductionoftheregisteredcapital.TherepurchasepriceshallnotexceedRMB31.50/share;thetotalamountfundforrepurchaseshallnotbelessthanRMB195million(inclusive)andnotmorethanRMB389million(inclusive);andtheperiodfortheimplementationoftherepurchaseshallbe12monthsfromthedateonwhichthissharerepurchaseplanwasapprovedbythegeneralmeetingoftheCompany.Fordetails,pleaserefertotheAnnouncementontheResolutionsofthe7thExtraordinaryMeetingofthe11thBoardofDirectorsin2024(AnnouncementNo.2024-078)andtheAnnouncementonRepurchaseoftheCompany’sSharesviaCentralizedBiddingTrading(AnnouncementNo.2024-079)disclosedbytheCompanyonwww.cninfo.com.cnon20October2024,andtheAnnouncementontheResolutionsofthe3rdExtraordinaryGeneralMeetingin2024(AnnouncementNo.2024-084)

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

disclosedbytheCompanyonwww.cninfo.com.cnon30October2024.InaccordancewiththeGuidelinesforSelf-RegulationofListedCompaniesofShenzhenStockExchangeNo.9-ShareRepurchaseandotherrelevantregulations,theCompanyhasopenedaspecialsecuritiesaccountforsharerepurchasewithShenzhenBranchofChinaSecuritiesDepositoryandClearingCorporationLimited,whichissolelyforthepurposeofrepurchasingtheCompany’sshares.Fordetails,pleaserefertotheRepurchaseReport(AnnouncementNo.2024-092)disclosedbytheCompanyon5December2024onwww.cninfo.com.cn.Asat31July2025,thecumulativenumberofsharesrepurchasedbytheCompanywiththespecialsecuritiesaccountforrepurchaseviacentralizedbiddingtradingamountedto17,276,275,accountingfor0.691%ofthetotalsharecapitaloftheCompany,withthehighesttradedpriceatRMB20.99pershareandthelowesttradedpriceatRMB17.95pershare,andthetotalamountoffundspaidamountedtoRMB336,554,009.61(inclusiveoftransactioncostssuchasstampdutyandtransactioncommission).Progressonreducingtherepurchasedsharesbymeansofcentralizedbidding:

□Applicable√NotapplicableEffectsofthesharechangesonthebasicanddilutedearningspershare,equitypershareattributabletotheCompany’sordinaryshareholdersandotherfinancialindicatorsoftheprioryearandtheprioraccountingperiod,respectively:

TheCompanyreportedbasicearningspershareofRMB1.05anddilutedearningspershareofRMB1.05forthefirsthalfof2025,andequitypershareattributabletotheCompany'sordinaryshareholdersofRMB25.00.DuringtheReportingPeriod,theCompanyincreaseditssharecapitalbyatotalof199,900sharesasaresultoftheindependentexerciseofoptionsundertheStockOptionIncentivePlan,andthetotalsharecapitaloftheCompanyincreasedfrom2,501,308,481sharesto2,501,508,381shares.BythemeasurementoftheCompany'stotalsharecapitalasattheendof2024,irrespectiveoftheeffectoftheindependentexerciseoftheStockOptionIncentivePlan,theCompany'sbasicearningspershareinH12025wasRMB1.05,thedilutedearningspersharewasRMB1.05,andtheequitypershareattributabletotheCompany'sordinaryshareholderswasRMB25.01.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

OtherinformationthattheCompanyconsidersnecessaryorisrequiredbythesecuritiesregulatortobedisclosed:

□Applicable√Notapplicable

2.ChangesinRestrictedShares

□Applicable√NotapplicableIIIssuanceandListingofSecurities

□Applicable√NotapplicableIIIShareholdersandTheirHoldingsasatthePeriod-End

Unit:share

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

5%orgreatershareholders,top10shareholdersandTop10unrestrictedshareholdersinvolvedinrefinancingshareslending

□Applicable√NotapplicableChangesintop10shareholdersandtop10unrestrictedshareholdersduetorefinancingshareslending/returncomparedwiththepriorperiod

□Applicable√NotapplicableIndicatebytickmarkwhetheranyofthetop10ordinaryshareholdersorthetop10unrestrictedordinaryshareholdersoftheCompanyconductedanypromissoryrepoduringtheReportingPeriod.

□Yes√NoNosuchcasesintheReportingPeriod.IVChangeinShareholdingsofDirectors,SupervisorsandSeniorManagement

□Applicable√NotapplicableNochangesoccurredtotheshareholdingsofthedirectors,supervisorsandseniormanagementintheReportingPeriod.Seethe2024AnnualReportformoredetails.VChangeoftheControllingShareholderortheDeFactoControllerChangeofthecontrollingshareholderintheReportingPeriod

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.ChangeofthedefactocontrollerintheReportingPeriod

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.VIPreferenceShares

□Applicable√NotapplicableNopreferencesharesintheReportingPeriod.

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartVIIBonds

IEnterpriseBonds

□Applicable√NotapplicableNoenterprisebondsintheReportingPeriod.IICorporateBonds

1.BasicInformationoftheCorporateBonds

Unit:RMB’0,000

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Overduebonds

□Applicable√Notapplicable

2.TheTriggerandExecutionoftheOptionClauseoftheIssuersorInvestorsandtheInvestorProtectionClause

□Applicable√Notapplicable

3.AdjustmentofCreditRatingResultsduringtheReportingPeriod

□Applicable√Notapplicable

4.ExecutionandChangesofGuarantee,RepaymentPlanandOtherRepaymentGuaranteeMeasuresaswellasInfluenceonEquityofBondInvestorsduringtheReportingPeriod

□Applicable√NotapplicableIIIDebtFinancingInstrumentsofNon-financialEnterprises

1.BasicInformationofDebtFinancingInstrumentsofaNon-financialEnterprise

Unit:RMB’0,000

transactions(ifany)andcountermeasures

Name

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

Overduebonds

□Applicable√Notapplicable

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

2.TriggeringandImplementationofIssuerorInvestorOptionClausesandInvestorProtectionClauses

□Applicable√Notapplicable

3.CreditRatingAdjustmentsduringtheReportingPeriod

□Applicable√Notapplicable

4.ImplementationandChangesofGuarantees,RepaymentPlanandOtherRepaymentGuaranteeMeasuresduringtheReportingPeriod,andtheirImpactontheEquityOwnershipofbondholders

□Applicable√NotapplicableIVConvertibleCorporateBonds

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.VLossesofScopeofConsolidatedFinancialStatementsduringtheReportingPeriodExceeding10%ofEquityupthePeriod-endofLastYear

□Applicable√NotapplicableVITheMajorAccountingDataandtheFinancialIndicatorsoftheRecent2YearsoftheCompanyupthePeriod-end

ChinaMerchantsPortGroupCo.,Ltd.InterimReport2025

PartVIIIFinancialStatements

IIndependentAuditor’sReportTheseinterimfinancialstatementshavenotbeenauditedbyanindependentauditor.IIFinancialStatementsSeeattached.

ChinaMerchantsPortGroupCo.,Ltd.

BoardofDirectorsDated30August2025

CHINAMERCHANTSPORTGROUPCO.,LTD.FINANCIALSTATEMENTSFORTHEPERIODFROM1JANUARYTO30JUNE2025

FINANCIALSTATEMENTSFORTHEPERIODFROM1JANUARYTO30JUNE2025

CONTENTSPAGE(S)

CONSOLIDATEDBALANCESHEET1-3BALANCESHEETOFTHECOMPANY4-6CONSOLIDATEDINCOMESTATEMENT7–8INCOMESTATEMENTOFTHECOMPANY9CONSOLIDATEDCASHFLOWSTATEMENT10CASHFLOWSTATEMENTOFTHECOMPANY11CONSOLIDATEDSTATEMENTOFCHANGESINSHAREHOLDERS'EQUITY12-13THECOMPANY'SSTATEMENTOFCHANGESINSHAREHOLDERS'EQUITY14-15NOTESTOTHEFINANCIALSTATEMENTS16-202

-1-

AT30JUNE2025

ConsolidatedBalanceSheet

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.Item

Theaccompanyingnotesformpartofthefinancialstatements.

-2-

AT30JUNE2025

ConsolidatedBalanceSheet-continued

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.Item

Theaccompanyingnotesformpartofthefinancialstatements.

-3-

AT30JUNE2025

ConsolidatedBalanceSheet-continued

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.Item

Theaccompanyingnotesformpartofthefinancialstatements.Thefinancialstatementsweresignedbythefollowing:

XuSongHuangZhenzhouLiuShixia_________________________________________________________________________

LegalRepresentativeChiefFinancialOfficerHeadofAccountingDepartment

-4-

AT30JUNE2025

BalanceSheetoftheCompany

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.Item

Theaccompanyingnotesformpartofthefinancialstatements.

-5-

AT30JUNE2025

BalanceSheetoftheCompany-continued

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.Item

Theaccompanyingnotesformpartofthefinancialstatements.

-6-

AT30JUNE2025

BalanceSheetoftheCompany-continued

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.Item

Theaccompanyingnotesformpartofthefinancialstatements.

-7-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

ConsolidatedIncomeStatement

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

Theaccompanyingnotesformpartofthefinancialstatements.

-8-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

ConsolidatedIncomeStatement-continued

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

Theaccompanyingnotesformpartofthefinancialstatements.

-9-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

IncomeStatementoftheCompany

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

Theaccompanyingnotesformpartofthefinancialstatements.

-10-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

ConsolidatedCashFlowStatement

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

Theaccompanyingnotesformpartofthefinancialstatements.

-11-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

CashFlowStatementoftheCompany

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

Theaccompanyingnotesformpartofthefinancialstatements.

-12-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

ConsolidatedStatementofChangesinShareholders'Equity

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

-13-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

ConsolidatedStatementofChangesinShareholders'Equity-continued

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

Theaccompanyingnotesformpartofthefinancialstatements.

-14-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

TheCompany'sStatementofChangesinShareholders'Equity

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

-15-

FORTHEPERIODFROM1JANUARYTO30JUNE2025

TheCompany'sStatementofChangesinShareholders'Equity-continued

RMB

CHINAMERCHANTSPORTGROUPCO.,LTD.

Item

Theaccompanyingnotesformpartofthefinancialstatements.

-16-

(I)GENERALINFORMATIONOFTHECOMPANY

ChinaMerchantsPortGroupCo.,Ltd.(hereinafterreferredtoasthe"Company")isajoint-stockcompanyincorporatedinShenzhen,GuangdongProvince,on16January1993.TheheadquartersoftheCompanyislocatedinShenzhen,GuangdongProvince.TheCompanyanditssubsidiaries(collectivelythe"Group")areactuallyengagedintheprincipaloperatingactivitiesofportservices,bondedlogisticsservicesandotherbusinessessuchaspropertydevelopmentandinvestment.TheCompany'sandconsolidatedfinancialstatementswereapprovedbytheBoardofDirectorson28August2025.(II)BASISOFPREPARATIONOFFINANCIALSTATEMENTS

BasisofpreparationoffinancialstatementsTheGrouphasadoptedtheAccountingStandardsforBusinessEnterprises(hereinafterreferredtoas"ASBE")issuedbytheMinistryofFinance.Inaddition,theGrouphasdisclosedrelevantfinancialinformationinaccordancewithInformationDisclosureandPresentationRulesforCompaniesOfferingSecuritiestothePublicNo.15--GeneralProvisionsonFinancialReporting(Revisedin2023).GoingconcernAsat30June2025,theGrouphadtotalcurrentliabilitiesinexcessoftotalcurrentassetsbyRMB6,909,487,536.70.Asat30June2025,theGrouphadavailableandunusedcreditfacilitiesandbondsamountingtoRMB67,193,291,009.55,whichisgreaterthanthebalanceofthenetcurrentliabilities,areexpectedtobeaccessiblebeyondtwelvemonthsfromthedateofthebalancesheet.TheGroupcanobtainfinancialsupportfromtheavailablelineofcreditandbondswhenneeded.Therefore,thefinancialstatementshavebeenpreparedonagoingconcernbasis.(III)STATEMENTOFCOMPLIANCEWITHTHEASBE

ThefinancialstatementspreparedbytheCompanycomplywiththerequirementsoftheAccountingStandardsforBusinessEnterprises,andtrulyandcompletelyreflecttheconsolidatedandCompany'sfinancialpositionasat30June2025,andtheconsolidatedandCompany'soperatingresults,shareholders’equity,andcashflowfortheperiodfrom1Januaryto30June2025.(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES

1.AccountingyearThefinancialyearoftheGroupisfrom1Januaryto31DecemberoftheGregoriancalendaryear.

-17-

(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

2.OperatingcycleBusinesscyclereferstotheperiodfromthepurchaseofassetsforprocessingtotherealizationofcashorcashequivalents.TheGroupisactuallyengagedintheprincipaloperatingactivitiesofportservices,bondedlogisticsservicesandotherbusinessessuchaspropertydevelopmentandinvestment.

3.FunctionalcurrencyTheCompany’sfunctionalcurrencyisRenminbi(hereinafterreferredtoas"RMB"),andthesefinancialstatementsarepresentedinRMB.TheCompanyanditsdomesticsubsidiariesuseRMBastheirbookkeepingbasecurrency.TheCompany'soverseassubsidiariesdeterminetheirfunctionalcurrencyaccordingtothecurrencyintheprimaryeconomicenvironmentinwhichtheyoperate.TheCompanyadoptsRMBtoprepareitsfinancialstatements.

4.BasisofaccountingandprincipleofmeasurementTheGrouphasadoptedtheaccrualbasisofaccounting.Exceptforfinancialinstrumentswhicharemeasuredatfairvalue,theGroupadoptsthehistoricalcostastheprincipleofmeasurementofthefinancialstatements.Uponbeingrestructuredintoastockcompany,thefixedassetsandintangibleassetsinitiallycontributedbythestate-ownedshareholdersarerecognizedbasedonthevaluationamountsconfirmedbythestate-ownedassetsadministrationdepartment.Whereassetsareimpaired,provisionsforassetimpairmentaremadeinaccordancewiththerelevantrequirements.Wherethehistoricalcostisadoptedasthemeasurementbasis,assetsarerecordedattheamountofcashorcashequivalentspaidorthefairvalueoftheconsiderationgiventoacquirethematthetimeoftheiracquisition.Liabilitiesarerecordedattheamountofproceedsorassetsreceivedorthecontractualamountsforassumingthepresentobligation,or,attheamountsofcashorcashequivalentsexpectedtobepaidtosettletheliabilitiesinthenormalcourseofbusiness.Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate,regardlessofwhetherthatpriceisdirectlyobservableorestimatedusingvaluationtechnique.Fairvaluemeasurementanddisclosureinthefinancialstatementsaredeterminedaccordingtotheabovebasis.Inthemeasurementofnon-financialassetsatfairvalue,marketparticipants'abilitytobestutilizesuchassetstogeneratemosteconomicbenefits,ortheabilitytosellsuchassetstoothermarketparticipantswhoareabletobestutilizetheassetstogenerateeconomicbenefitsistakenintoaccount.Forfinancialassetsofwhichtransactionpricesarethefairvalueoninitialrecognition,andofwhichvaluationtechniqueinvolvingunobservableinputisusedinsubsequentmeasurement,thevaluationtechniqueinthecourseofvaluationisadjustedtoenabletheresultofinitialrecognitionbasedonthevaluationtechniqueequaltothetransactionprice.

-18-

(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

4.Basisofaccountingandprincipleofmeasurement-continuedFairvaluemeasurementsarecategorizedintoLevel1,2or3basedonthedegreetowhichtheinputstothefairvaluemeasurementsareobservableandthesignificanceoftheinputstothefairvaluemeasurementinitsentirety,whicharedescribedasfollows:

?Level1inputsareunadjustedquotedpricesinactivemarketsforidenticalassetsorliabilitiesthat

theentitycanaccessatthemeasurementdate;?Level2inputsareinputs,otherthanquotedpricesincludedwithinLevel1,thatareobservablefortheassetorliability,eitherdirectlyorindirectly;and?Level3inputsareunobservableinputsfortheassetorliability.

5.Methodfordeterminationofmaterialitycriteriaandbasisforselection

CHINAMERCHANTSPORTGROUPCO.,LTD.Item

-19-

(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

6.BusinesscombinationsBusinesscombinationsareclassifiedintobusinesscombinationsinvolvingenterprisesundercommoncontrolandbusinesscombinationsnotinvolvingenterprisesundercommoncontrol.

6.1BusinesscombinationsinvolvingenterprisesundercommoncontrolAbusinesscombinationinvolvingenterprisesundercommoncontrolisabusinesscombinationinwhichallofthecombiningenterprisesareultimatelycontrolledbythesamepartyorpartiesbothbeforeandafterthecombination,andthatcontrolisnottransitory.Assetsandliabilitiesobtainedbythecombiningpartyshallbemeasuredattheirrespectivecarryingamountsasrecordedbythefinalcontrollingpartyintheconsolidatedfinancialstatementsatthedateofthecombination.Thedifferencebetweenshareofthecarryingamountofthenetassetsobtainedandthecarryingamountoftheconsiderationpaidforthecombination(ortotalparvalueofissuedshares)isadjustedtothesharepremiumincapitalreserve.Ifthesharepremiumisnotsufficienttoabsorbthedifference,anyexcessshallbeadjustedagainstsurplusreserveandretainedearningsinturn.Coststhataredirectlyattributabletothecombinationarechargedtoprofitorlossintheperiodinwhichtheyareincurred.Themergerdateisthedateonwhichthecombiningpartyactuallyobtainscontroloverthecombinedparty.

6.2BusinesscombinationsnotinvolvingenterprisesundercommoncontrolAbusinesscombinationnotinvolvingenterprisesundercommoncontrolisabusinesscombinationinwhichallofthecombiningenterprisesarenotultimatelycontrolledbythesamepartyorpartiesbeforeandafterthecombination.Thecostofcombinationistheaggregateofthefairvalues,attheacquisitiondate,oftheassetsgiven,liabilitiesincurredorassumed,andequitysecuritiesissuedbytheacquirer,inexchangeforcontroloftheacquiree.Theintermediaryexpenses(feesinrespectofauditing,legalservices,valuationandconsultancyservices,etc.)andothergeneralandadministrativeexpensesattributabletothebusinesscombinationarerecognizedinprofitorlossintheperiodswhentheyareincurred.Theacquiree'sidentifiableassets,liabilitiesandcontingentliabilitiesacquiredbytheacquirerinabusinesscombinationthatmeettherecognitioncriteriashallbemeasuredatfairvalueattheacquisitiondate.Theacquisitiondatereferstothedateonwhichtheacquireractuallyobtainscontrolovertheacquiree.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

6.Businesscombinations-continued

6.2Businesscombinationsnotinvolvingenterprisesundercommoncontrol-continuedWherethecostofcombinationexceedstheacquirer'sinterestinthefairvalueoftheacquiree'sidentifiablenetassets,afterconsideringtheimpactofrelevantdeferredincometax,thedifferenceistreatedasanassetandrecognizedasgoodwill,whichismeasuredatcostoninitialrecognition.Wherethecostofcombinationislessthantheacquirer'sinterestinthefairvalueoftheacquiree'sidentifiablenetassets,theacquirerreassessesthemeasurementofthefairvaluesoftheacquiree'sidentifiableassets,liabilitiesandcontingentliabilitiesandmeasurementofthecostofcombination.Ifafterthatreassessment,thecostofcombinationisstilllessthantheacquirer'sinterestinthefairvalueoftheacquiree'sidentifiablenetassets,theacquirerrecognizestheremainingdifferenceimmediatelyinprofitorlossforthecurrentperiod.

7.GoodwillGoodwillarisingfromabusinesscombinationismeasuredatcostlessaccumulatedimpairmentlosses,andispresentedseparatelyintheconsolidatedfinancialstatements.Goodwillshallbesubjecttoimpairmenttestingatleastattheendofeachyear.Theimpairmenttestingofgoodwillshallbeconductedincombinationwiththerelevantassetsgrouporassetsgroupcombination.Thatis,sincethepurchasedate,thebookvalueofgoodwillisapportionedtotheassetsgrouporcombinationofassetsgroupsthatcanbenefitfromthesynergisticeffectofbusinesscombinationinareasonableway.Iftherecoverableamountoftheassetsgrouporcombinationofassetsgroupscontainingapportionedgoodwillislowerthanitsbookvalue,thecorrespondingimpairmentlossisrecognized.Theamountofimpairmentlossshallfirstoffsetthebookvalueofgoodwillapportionedtotheassetsgrouporassetsgroupportfolio,andthenoffsetthebookvalueofotherassetsinproportiontotheproportionofthebookvalueofotherassetsotherthangoodwillintheassetsgrouporassetsgroupportfolio.Therecoverableamountisthehigherofthenetamountofthefairvalueoftheassetsminusthedisposalexpensesandthepresentvalueoftheestimatedfuturecashflowoftheassets.Theimpairmentlossofgoodwillshallbeincludedinthecurrentprofitandlosswhenitoccurs,andshallnotbereversedinfutureaccountingperiods.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

8.ConsolidatedfinancialstatementsTheconsolidationscopeofconsolidatedfinancialstatementsisdeterminedonthebasisofcontrol.Controlexistswhentheinvestorhaspowerovertheinvestee;isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee;andhastheabilitytouseitspowerovertheinvesteetoaffectitsreturns.TheGroupreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangesintheaboveelementsofthedefinitionofcontrol.ConsolidationofasubsidiarybeginswhentheGroupobtainscontroloverthesubsidiaryandceaseswhentheGrouplosescontrolofthesubsidiary.ForasubsidiaryalreadydisposedofbytheGroup,theoperatingresultsandcashflowsbeforethedateofdisposal(thedatewhencontrolislost)areincludedintheconsolidatedincomestatementandconsolidatedcashflowstatement,asappropriate.Forsubsidiariesacquiredthroughabusinesscombinationinvolvingenterprisesnotundercommoncontrol,whenpreparingtheconsolidatedfinancialstatementsofthecurrentperiod,thepurchasedsubsidiarywillbeincludedintheconsolidationscopeoftheCompanyfromtheacquisitiondateonthebasisofthefairvalueoftheidentifiableassetsandliabilitiesofthepurchasedsubsidiarydeterminedontheacquisitiondate.Theoperatingresultsandcashflowsfromtheacquisitiondate(thedatewhencontrolisobtained)areincludedintheconsolidatedincomestatementandconsolidatedcashflowstatement,asappropriate.Nomatterwhenthebusinesscombinationoccursinthereportingperiod,subsidiariesacquiredthroughabusinesscombinationinvolvingenterprisesundercommoncontrol,whenpreparingtheconsolidatedfinancialstatementsofthecurrentperiod,thebookvalueofeachassetsandliabilityoftheconsolidatedsubsidiaryinthefinalcontroller'sfinancialstatementsistakenasthebasis,asiftheyhadbeenincludedinthescopeofconsolidationfromthedatewhentheyfirstcameunderthecommoncontroloftheultimatecontrollingparty.Theiroperatingresultsandcashflowsfromthedatewhentheyfirstcameunderthecommoncontroloftheultimatecontrollingpartyareincludedintheconsolidatedincomestatementandconsolidatedcashflowstatement,asappropriate.ThesignificantaccountingpoliciesandaccountingperiodsadoptedbythesubsidiariesaredeterminedbasedontheuniformaccountingpoliciesandaccountingperiodssetoutbytheCompany.WheretheaccountingpoliciesandaccountingperiodsadoptedbysubsidiariesareinconsistentwiththoseoftheCompany,appropriateadjustmentsaremadetothesubsidiaries'financialstatementsinaccordancewiththeaccountingpoliciesoftheCompany.Allsignificantintra-groupbalancesandtransactionsareeliminatedonconsolidation.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

8.Consolidatedfinancialstatements-continuedTheportionofsubsidiaries'equitythatisnotattributabletotheCompanyistreatedasnon-controllinginterestsandpresentedas"non-controllinginterests"intheconsolidatedbalancesheetunderthelineitemofshareholders'equity.Theportionofnetprofitsorlossesofsubsidiariesfortheperiodattributabletonon-controllinginterestsispresentedas"non-controllinginterests"intheconsolidatedincomestatementunderthelineitemof"netprofit".Theportionofcomprehensiveincomeofsubsidiariesfortheperiodattributabletonon-controllinginterestsispresentedas"attributabletonon-controllinginterests"intheconsolidatedincomestatementunderthelineitemof"totalcomprehensiveincome".Whentheamountoflossfortheperiodattributabletothenon-controllingshareholdersofasubsidiaryexceedsthenon-controllingshareholders'portionoftheopeningbalanceofowners'equityofthesubsidiary,theexcessamountisstillallocatedagainstnon-controllinginterests.Acquisitionofnon-controllinginterestsordisposalofinterestsinasubsidiarythatdoesnotresultinthelossofcontroloverthesubsidiaryisaccountedforasequitytransactions.ThecarryingamountsoftheCompany'sinterestsandnon-controllinginterestsareadjustedtoreflectthechangesintheirrelativeinterestsinthesubsidiary.Thedifferencebetweentheamountbywhichthenon-controllinginterestsareadjustedandthefairvalueoftheconsiderationpaidorreceivedisadjustedtocapitalreserve.Ifthecapitalreserveisnotsufficienttoabsorbthedifference,surplusreserveandretainedearningsshallbeoffsetinturn.Forthestepwiseacquisitionofequityinteresttillacquiringcontrolafterafewtransactionsandleadingtobusinesscombinationnotinvolvingenterprisesundercommoncontrol,itshallbedealtwithbasedonwhetheritbelongsto'packagedeal':ifitbelongsto'packagedeal',itwillbeaccountedforasatransactionstoacquirecontrol;ifitdoesnotbelongto'packagedeal',itwillbeaccountedforasatransactiontoacquirecontrolonacquisitiondate,andthefairvalueofacquiree'sharesheldbeforeacquisitiondatewillberevalued,andthedifferencebetweenfairvalueandcarryingamountwillberecognizedinprofitorlossofthecurrentperiod;ifacquiree'sharesheldbeforeacquisitiondateinvolvechangesinothercomprehensiveincomeandotherchangesinowners'equityunderequitymethod,itwillbetransferredtoincomeofacquisitiondate.WhentheGrouplosescontroloverasubsidiaryduetodisposalofequityinvestmentorotherreasons,anyretainedinterestisre-measuredatitsfairvalueatthedatewhencontrolislost.Thedifferencebetweenthesumoftheconsiderationobtainedfromthedisposalofequityandthefairvalueoftheremainingequity,lesstheshareofthenetassetsoftheparentcompanythatshouldbecontinuouslycalculatedfromthepurchasedatebasedontheoriginalshareholdingratio,isincludedintheinvestmentincomeofthecurrentperiodwhenthecontrolrightislost,andatthesametime,thegoodwillisoffset.Othercomprehensiveincomeassociatedwithinvestmentintheformersubsidiaryisreclassifiedtoinvestmentincomeintheperiodinwhichcontrolislost.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

8.Consolidatedfinancialstatements-continuedWhentheGrouplosescontrolofasubsidiaryintwoormorearrangements(transactions),termsandconditionsofthearrangements(transactions)andtheireconomiceffectsareconsidered.OneormoreofthefollowingindicatethattheGroupshallaccountforthemultiplearrangementsasa'packagedeal':(i)theyareenteredintoatthesametimeorincontemplationofeachother;(ii)theyformacompletetransactiondesignedtoachieveanoverallcommercialeffect;(iii)theoccurrenceofonetransactionisdependentontheoccurrenceofatleastoneothertransaction;(iv)onetransactionaloneisnoteconomicallyjustified,butitiseconomicallyjustifiedwhenconsideredtogetherwithothertransactions.Wherethetransactionsofdisposalofequityinvestmentsinasubsidiaryuntilthelossofcontrolareassessedasapackagedeal,thesetransactionsareaccountedforasonetransactionofdisposalofasubsidiarywithlossofcontrol.Beforelosingcontrol,thedifferenceofconsiderationreceivedondisposalandtheshareofnetassetsofthesubsidiarycontinuouslycalculatedfromacquisitiondateisrecognizedasothercomprehensiveincome.Whenlosingcontrol,thecumulatedothercomprehensiveincomeistransferredtoprofitorlossoftheperiodoflosingcontrol.Ifthetransactionsofdisposalofequityinvestmentsinasubsidiaryarenotassessedasapackagedeal,thesetransactionsareaccountedforasunrelatedtransactions.

9.JointarrangementsJointventurearrangementreferstoanarrangementjointlycontrolledbytwoormoreparticipants.ThejointventurearrangementoftheGrouphasthefollowingcharacteristics:(1)allparticipantsareboundbythearrangement;(2)Twoormoreparticipantsexercisejointcontroloverthearrangement.Noneoftheparticipantscancontrolthearrangementalone,andnoneoftheparticipantswithjointcontroloverthearrangementcanpreventotherparticipantsoracombinationofparticipantsfromcontrollingthearrangementalone.Jointcontrolreferstothecommoncontroloveranarrangementaccordingtorelevantagreements,andtherelevantactivitiesofthearrangementmustbeagreedbytheparticipantssharingthecontrolrightbeforemakingdecisions.Therearetwotypesofjointarrangements-jointoperationsandjointventures.Theclassificationisbasedontherightsandobligationsofthepartiesunderthejointventurearrangement,takingintoaccountfactorssuchasthestructure,legalformandcontractualtermsofthearrangement.Ajointoperationisajointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverightstotheassets,andobligationsfortheliabilities,relatingtothearrangement.Ajointventureisajointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverightstothenetassetsofthearrangement.TheGroupaccountsforinvestmentsinjointventuresusingequitymethod.RefertoNoteIV,

14.3.2Long-termequityinvestmentsaccountedforusingtheequitymethodfordetails.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

9.Jointarrangements-continuedWhenagroupentityundertakesitsactivitiesunderjointoperations,theGroupasajointoperatorrecognizesinrelationtoitsinterestinajointoperation:-itsassets,includingitsshareofanyassetsheldjointly;itsliabilities,includingitsshareofanyliabilitiesincurredjointly;itsrevenuefromthesaleofitsshareoftheoutputarisingfromthejointoperation;itsshareoftherevenuefromthesaleoftheoutputbythejointoperation,anditsexpenses,includingitsshareofanyexpensesincurredjointly.TheGroupaccountsfortheassets,liabilities,revenuesandexpensesrelatingtoitsinterestinajointoperationinaccordancewiththeaccountingstandardsapplicabletotheparticularassets,liabilities,revenuesandexpenses.

10.CashandcashequivalentsCashcomprisescashonhandanddepositsthatcanbereadilywithdrawnondemand.CashequivalentsaretheGroup'sshort-term(generallyduewithin3monthssincetheacquisitiondate),highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.

11.FinancialinstrumentsTheGrouprecognizesafinancialassetorafinancialliabilitywhenitbecomesapartytothecontractualprovisionsofthefinancialinstrument.Forfinancialassetspurchasedorsoldinregularways,assetstobereceivedandliabilitiestobeassumedarerecognizedonthetransactiondateorassetssoldarederecognizedonthatdate.Financialassetsandfinancialliabilitiesareinitiallymeasuredatfairvalue(themethodfordeterminingthefairvaluesofthefinancialassetsandfinancialliabilitiesissetoutinrelateddisclosuresunder"basisofaccountingandprincipleofmeasurement"innoteIV.4).Forfinancialassetsandfinancialliabilitiesatfairvaluethroughprofitorloss,transactioncostsareimmediatelyrecognizedinprofitorloss.Forotherfinancialassetsandfinancialliabilities,transactioncostsareincludedintheirinitialrecognizedamounts.Uponinitialrecognitionofcontractassets,billsreceivableandaccountsreceivablethatdonotcontainsignificantfinancingcomponentorwithoutconsideringthefinancingcomponentincludedinthecontractwithatermnotexceedingoneyearundertheAccountingStandardsforBusinessEnterprisesNo.14--Revenue(hereinafterreferredtoas"RevenueStandards"),theGroupadoptsthetransactionpriceasdefinedintheRevenueStandardsforinitialmeasurement.Whenthereisadifferencebetweenthefairvalueoffinancialassetsorfinancialliabilitiesinitiallyrecognizedandthetransactionprice,ifthefairvalueisnotdeterminedbasedonthequotationofthesameassetsorliabilitiesintheactivemarketorbasedonthevaluationtechnologyonlyusingobservablemarketdata,nogainsorlosseswillberecognizedwhenthefinancialassetsorfinancialliabilitiesareinitiallyrecognized.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continuedTheeffectiveinterestmethodisamethodofcalculatingtheamortizedcostofafinancialassetorafinancialliabilityandofallocatingtheinterestincomeorinterestexpensesovertherelevantaccountingperiods.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashflowsthroughtheexpectedlifeofthefinancialassetorfinancialliabilitytothebookvalueofthefinancialassetortotheamortizedcostofthefinancialliability.Whencalculatingtheeffectiveinterestrate,theGroupestimatesfuturecashflowsconsideringallcontractualtermsofthefinancialassetorfinancialliability(suchasrepaymentinadvance,extension,calloptionorothersimilaroptionsetc.)withoutconsideringtheexpectedcreditlosses.Theamortizedcostofafinancialassetorafinancialliabilityistheamountofafinancialassetorafinancialliabilityinitiallyrecognizednetofprincipalrepaid,plusorlessthecumulativeamortizedamountarisingfromamortizationofthedifferencebetweentheamountinitiallyrecognizedandtheamountatthematuritydateusingtheeffectiveinterestmethod,netofcumulativecreditlossallowance(onlyapplicabletofinancialassets).

11.1Classification,recognitionandmeasurementoffinancialassetsSubsequenttoinitialrecognition,theGroup'sfinancialassetsofvariouscategoriesaresubsequentlymeasuredatamortizedcost,atfairvaluethroughothercomprehensiveincomeoratfairvaluethroughprofitorloss.Ifthecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding,andthefinancialassetisheldwithinabusinessmodelwhoseobjectiveisachievedbycollectingcontractualcashflows,theGroupclassifiessuchfinancialassetasfinancialassetsatamortizedcost,whichincludecashandbankbalances,billsreceivable,accountsreceivable,otherreceivables,andlong-termreceivablesetc.Ifthecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding,andthefinancialassetisheldwithinabusinessmodelwhoseobjectiveisachievedbybothcollectingcontractualcashflowsandsellingthefinancialasset,theGroupclassifiessuchfinancialassetasfinancialassetsatFVTOCI.TheaccountsreceivableandbillsreceivableclassifiedasatFVTOCIuponacquisitionarepresentedunderreceivablesunderfinancing,whiletheremainingitemsduewithinoneyear(inclusive)uponacquisitionarepresentedunderothercurrentassets.Otherfinancialassetsofsuchtypearepresentedasotherdebtinvestmentsiftheyaredueafteroneyearsincetheacquisition,orpresentedundernon-currentassetsduewithinoneyeariftheyareduewithinoneyear(inclusive)sincethebalancesheetdate.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.1Classification,recognitionandmeasurementoffinancialassets-continuedOninitialrecognition,theGroupmayirrevocablydesignatenon-tradingequityinstruments,otherthancontingentconsiderationrecognizedthroughbusinesscombinationnotinvolvingenterprisesundercommoncontrol,asfinancialassetsatFVTOCIonanindividualbasis.SuchfinancialassetsatFVTOCIarepresentedasinvestmentsinotherequityinstruments.Afinancialassetisclassifiedasheldfortradingifoneofthefollowingconditionsissatisfied:

?Ithasbeenacquiredprincipallyforthepurposeofsellinginthenearterm;or?Oninitialrecognition,itispartofaportfolioofidentifiedfinancialinstrumentsthattheGroupmanagestogetherandthereisobjectiveevidencethattheGrouphasarecentactualpatternofshort-termprofit-taking;or?Relatedfinancialassetsarederivatives.However,thederivativesmeetingthedefinitionof

financialguaranteecontractandthosedesignatedaseffectivehedginginstrumentsareexcluded.Financialassetsmeasuredatfairvaluethroughprofitorloss(hereinafterreferredtoas"FVTPL")includethoseclassifiedasfinancialassetsatFVTPLandthosedesignatedasfinancialassetsatFVTPL:

?Financialassetsnotsatisfyingthecriteriaofclassificationasfinancialassetsatamortized

costandfinancialassetsatFVTOCIareclassifiedasfinancialassetsatFVTPL.?Uponinitialrecognition,theGroupmayirrevocablydesignatethefinancialassetsatFVTPLifdoingsoeliminatesorsignificantlyreducesaccountingmismatch.FinancialassetsatFVTPLotherthanderivativefinancialassetsarepresentedasfinancialassetsheldfortrading.Financialassetswithamaturityoveroneyearsincethebalancesheetdate(orwithoutafixedmaturity)andexpectedtobeheldforoveroneyeararepresentedunderothernon-currentfinancialassets.

11.1.1FinancialassetsmeasuredatamortizedcostFinancialassetsmeasuredatamortizedcostaresubsequentlymeasuredatamortizedcostusingtheeffectiveinterestmethod.Gainorlossarisingfromimpairmentorderecognitionisrecognizedinprofitorloss.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.1Classification,recognitionandmeasurementoffinancialassets-continued

11.1.1Financialassetsmeasuredatamortizedcost-continuedForfinancialassetsmeasuredatamortizedcost,theGrouprecognizesinterestincomeusingeffectiveinterestmethod.TheGroupcalculatesandrecognizesinterestincomethroughbookvalueoffinancialassetsmultiplyingeffectiveinterestrate,exceptforthefollowingcircumstances:

?Forpurchasedororiginatedcredit-impairedfinancialassets,theGroupcalculatesand

recognizestheinterestincomebasedonamortizedcostofthefinancialassetandtheeffectiveinterestratethroughcreditadjustmentsinceinitialrecognition.?Forfinancialassetsthathavenotsufferedfromcreditimpairmentbuthavebecomecredit

impairmentinsubsequentperiods,theGroupwillcalculateanddeterminetheirinterestincomeaccordingtotheamortizedcostandeffectiveinterestrateofthefinancialassetsinsubsequentperiods.Ifthefinancialinstrumentsnolongerhascreditimpairmentduetotheimprovementofitscreditriskinthesubsequentperiod,andthisimprovementcanberelatedtoaneventthatoccursaftertheapplicationoftheaboveprovisions,theGroupwillcalculateanddetermineinterestincomebymultiplyingtheactualinterestratebythebookvalueofthefinancialasset.

11.1.2FinancialassetsatFVTOCIForfinancialassetsclassifiedasatFVTOCI,exceptfortheimpairmentlossesorgainsandtheinterestincomeandexchangelossesorgainscalculatedusingtheeffectiveinterestmethodwhichareincludedinprofitorlossfortheperiod,thechangesinfairvalueareincludedinothercomprehensiveincome.Theamountsincludedinprofitorlossforeachperiodareequivalenttothatasifthefinancialassetshavebeenalwaysmeasuredatamortizedcost.Uponderecognition,theaccumulatedgainsorlossespreviouslyincludedinothercomprehensiveincomearetransferredtoprofitorlossfortheperiod.Changesinfairvalueofnon-tradingequityinstrumentinvestmentsdesignatedasfinancialassetsatFVTOCIarerecognizedinothercomprehensiveincome,andthecumulativegainsorlossespreviouslyrecognizedinothercomprehensiveincomeallocatedtothepartderecognizedaretransferredandincludedinretainedearnings.DuringtheperiodinwhichtheGroupholdsthenon-tradingequityinstruments,revenuefromdividendsisrecognizedinprofitorlossforthecurrentperiodwhen(1)theGrouphasestablishedtherightofcollectingdividends;(2)itisprobablethattheassociatedeconomicbenefitswillflowtotheGroup;and(3)theamountofdividendscanbemeasuredreliably.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.1Classification,recognitionandmeasurementoffinancialassets-continued

11.1.3FinancialassetsatFVTPLFinancialassetsatFVTPLaresubsequentlymeasuredatfairvalue.Gainorlossarisingfromchangesinfairvalueanddividendsandinterestrelatedtothefinancialassetsarerecognizedinprofitorloss.

11.2ImpairmentoffinancialinstrumentsForfinancialassetsatamortizedcost,financialassetsclassifiedasatFVTOCI,leasereceivables,contractassets,loancommitmentsthatarenotfinancialliabilitiesatFVTPL,financialliabilitiesthatarenotatFVTPLandfinancialguaranteecontractsthatarenotqualifiedforderecognitionduetothetransferoffinancialassetsorfinancialliabilitiesarisingfromcontinuinginvolvementofthetransferredfinancialassets,theGroupaccountsfortheimpairmentandrecognizestheprovisionforlossesonthebasisofexpectedcreditloss(hereinafterreferredtoas"ECL").Forallcontractassets,billsreceivableandaccountsreceivablearisingfromtransactionsregulatedbyRevenueStandards,andleasereceivablesarisingfromtransactionsregulatedbytheAccountingStandardsforBusinessEnterprisesNo.21--Leases,theGrouprecognizestheprovisionforlossesatanamountequivalenttolifetimeECL.Forotherfinancialinstruments(otherthanpurchasedororiginatedcredit-impairedfinancialassets),theGroupassessesthechangesincreditrisksinceinitialrecognitionofrelevantfinancialinstrumentsateachbalancesheetdate.Ifthecreditriskhasincreasedsignificantlysinceinitialrecognitionofthefinancialinstruments,theGrouprecognizestheprovisionforlossesatanamountequivalenttolifetimeECL;ifthecreditriskhasnotincreasedsignificantlysinceinitialrecognitionofthefinancialinstruments,theGrouprecognizestheprovisionforlossesatanamountequivalentto12-monthECL.TheincreaseorreversalofcreditimpairmentforfinancialassetsotherthanthoseclassifiedasatFVTOCIisrecognizedasimpairmentlossorgainandincludedinprofitorlossfortheperiod.ForfinancialassetsclassifiedasatFVTOCI,theprovisionforbaddebtsisrecognizedinothercomprehensiveincomeandtheimpairmentlossorgainisincludedinprofitorlossfortheperiodwithoutreducingthecarryingamountofthefinancialassetsinthebalancesheet.WheretheGrouphasmeasuredtheprovisionforlossesatanamountequivalenttolifetimeECLofafinancialinstrumentinprioraccountingperiod,butthefinancialinstrumentnolongersatisfiesthecriteriaofsignificantincreaseincreditrisksinceinitialrecognitionatthecurrentbalancesheetdate,theGrouprecognizestheprovisionforlossesofthefinancialinstrumentatanamountequivalentto12-monthECLatthecurrentbalancesheetdate,withanyresultingreversalofprovisionforlossesrecognizedasimpairmentgainsinprofitorlossfortheperiod.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.2Impairmentoffinancialinstruments-continued

11.2.1SignificantincreaseofcreditriskTheGroupusesreasonableandsupportableforward-lookinginformationtoassesswhetherthecreditriskhasincreasedsignificantlysinceinitialrecognitionbycomparingtheriskofadefaultoccurringonthefinancialinstrumentatthebalancesheetdatewiththeriskofadefaultoccurringonthefinancialinstrumentatthedateofinitialrecognition.Forloancommitmentsandfinancialguaranteecontracts,thedateonwhichtheGroupbecomesapartytotheirrevocablecommitmentisconsideredtobethedateofinitialrecognitionintheapplicationofcriteriarelatedtothefinancialinstrumentforimpairment.Inparticular,thefollowinginformationistakenintoaccountwhenassessingwhethercreditriskhasincreasedsignificantly:

(1)Significantchangesininternalpriceindicatorsresultingfromchangesincreditrisk;

(2)Significantchangesintheratesorothertermsofanexistingfinancialinstrumentifthe

instrumentwasnewlyoriginatedorissuedatthebalancesheetdate(suchasmorestringentcovenants,increasedamountsofcollateralorguarantees,orhigherrateofreturn,etc.);

(3)Significantchangesintheexternalmarketindicatorsofcreditriskofthesamefinancial

instrumentorsimilarfinancialinstrumentswiththesameexpectedduration.Theseindicatorsinclude:creditspreads,creditdefaultswappricesagainstborrower,lengthoftimeandextenttowhichthefairvalueoffinancialassetsislessthantheiramortizedcost,andothermarketinformationrelatedtotheborrower(suchastheborrower'sdebtinstrumentsorchangesinthepriceofequityinstruments);

(4)Anactualorexpectedsignificantchangeinthefinancialinstrument'sexternalcreditrating;

(5)Anactualorexpecteddecreaseintheinternalcreditratingforthedebtor;

(6)Adversechangesinbusiness,financialoreconomicconditionsthatareexpectedtocausea

significantdecreaseinthedebtor'sabilitytomeetitsdebtobligations;

(7)Anactualorexpectedsignificantchangeintheoperatingresultsofthedebtor;

(8)Significantincreaseincreditriskofotherfinancialinstrumentsissuedbythesamedebtor;

(9)Significantadversechangesintheregulatory,economic,ortechnologicalenvironmentof

thedebtor;

(10)Significantchangesinthevalueofthecollateralsorthequalityofguaranteesorcredit

enhancementsprovidedbythirdparties,whichareexpectedtoreducethedebtor'seconomicmotivestorepaywithinthetimelimitspecifiedincontractoraffecttheprobabilityofdefault;

(11)Significantchangeinthedebtor'seconomicmotivestorepaywithinthetimelimit

specifiedincontract;

(12)Expectedchangestoloancontract,includingtheexemptionorrevisionofcontractual

obligations,thegrantingofinterest-freeperiods,thejumpininterestrates,therequirementforadditionalcollateralorguarantees,orotherchangesinthecontractualframeworkforfinancialinstrumentsthatmayresultfromthebreachofcontract;

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.2Impairmentoffinancialinstruments-continued

11.2.1Significantincreaseofcreditrisk-continued

(13)Significantchangeintheexpectedperformanceandrepaymentofthedebtor;

(14)SignificantchangeinthemethodusedbytheGrouptomanagethecreditoffinancial

instruments.TheGroupassumesthatthecreditriskonafinancialinstrumenthasnotincreasedsignificantlysinceinitialrecognitionifthefinancialinstrumentisdeterminedtohavelowercreditriskatthebalancesheetdate.Afinancialinstrumentisdeterminedtohavelowercreditriskif:i)ithasalowerriskofdefault,ii)theborrowerhasastrongcapacitytomeetitscontractualcashflowobligationsintheneartermandiii)adversechangesineconomicandbusinessconditionsinthelongertermmay,butwillnotnecessarily,reducetheabilityoftheborrowertofulfilitscontractualcashflowobligations.

11.2.2Credit-impairedfinancialassetsWhenaneventorseveraleventsthatareexpectedtohaveadverseimpactonthefuturecashflowsofthefinancialassetshaveoccurred,thefinancialassetsbecomecredit-impaired.Theevidencesofcreditimpairmentoffinancialassetsincludethefollowingobservableinformation:

(1)Significantfinancialdifficultyoftheissuerordebtor.

(2)Abreachofcontractbythedebtor,suchasadefaultordelinquencyininterestorprincipal

paymentsetc..

(3)Thecreditor,foreconomicorlegalreasonsrelatingtothedebtor'sfinancialdifficulty,

grantingaconcessiontothedebtor.

(4)Itbecomesprobablethatthedebtorwillenterbankruptcyorotherfinancialreorganizations.

(5)Thedisappearanceofanactivemarketforthefinancialassetbecauseoffinancial

difficultiesoftheissuerorthedebtor.

(6)Purchaseororiginationofafinancialassetwithalargescaleofdiscount,whichreflects

thefactofcreditloss.BasedontheGroup'sinternalcreditriskmanagement,theGroupconsidersaneventofdefaultoccurswheninformationdevelopedinternallyorobtainedfromexternalsourcesindicatesthatthedebtorisunlikelytopayitscreditors,includingtheGroup,infull(withouttakingintoaccountanycollateralsheldbytheGroup).

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.2Impairmentoffinancialinstruments-continued

11.2.3DeterminationofexpectedcreditlossTheGroupdeterminesthecreditlossofleasesreceivablesonthebasisofsingleassets,anddeterminesthecreditlossofrelatedfinancialinstrumentsonthebasisofcombinationofcashatbankandonhand,billsreceivable,accountsreceivable,otherreceivables,long-termreceivables,etc.withimpairmentmatrix.TheGroupdividesfinancialinstrumentsintodifferentgroupsbasedoncommonriskcharacteristics.CommoncreditriskcharacteristicsadoptedbytheGroupinclude:

typeoffinancialinstruments,creditriskrating,typeofcollateral,initialrecognitiondate,remainingcontractperiod,industryofthedebtor,geographicallocationofthedebtor,valueofcollateralrelativetofinancialassets,etc.TheGroupdeterminestheECLofrelevantfinancialinstrumentsusingthefollowingmethods:

?Forfinancialassets,thecreditlossisthepresentvalueofthedifferencebetweenthecontractualcashflowsthatareduetotheGroupunderthecontractandthecashflowsthattheGroupexpectstoreceive.?Forfinancialguaranteecontracts(refertoNoteIV.11.4.1.3forthedetailofaccounting

policies),thecreditlossisthepresentvalueoftheexpectedpaymentstoreimbursetheholderforthecreditlossincurredlessanyamountsthattheGroupexpectstoreceivefromtheholder,thedebtororanyotherparty.?Forfinancialassetscredit-impairedatthebalancesheetdate,butnotpurchasedororiginatedcredit-impaired,thecreditlossisthedifferencebetweenthebookvalueofthefinancialassetsandthepresentvalueofestimatedfuturecashflowsdiscountedattheoriginaleffectiveinterestrate.ThefactorsreflectedbytheGroup'smeasurementofECLoffinancialinstrumentsinclude:

unbiasedprobabilityweightedaverageamountrecognizedbyassessingaseriesofpossibleresults;timevalueofmoney;reasonableandsupportableinformationrelatedtohistoricalevents,currentconditionandforecastoffutureeconomicpositionthatisavailablewithoutunduecostoreffortatthebalancesheetdate.

11.2.4Write-offoffinancialassetsWhentheGroupnolongerreasonablyexpectsthatthecontractualcashflowsoffinancialassetscanbecollectedinaggregateorinpart,theGroupwilldirectlywritedownthebookvalueofthefinancialassets,whichconstitutesderecognitionofrelevantfinancialassets.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.3TransferoffinancialassetsTheGroupwillderecognizeafinancialassetifoneofthefollowingconditionsissatisfied:(i)thecontractualrightstothecashflowsfromthefinancialassetexpire;(ii)thefinancialassethasbeentransferredandsubstantiallyalltherisksandrewardsofownershipofthefinancialassetistransferredtothetransferee;or(iii)althoughthefinancialassethasbeentransferred,theGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipofthefinancialassetbuthasnotretainedcontrolofthefinancialasset.IftheGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipofafinancialasset,anditretainscontrolofthefinancialasset,theGroupwillrecognizethefinancialassettotheextentofitscontinuinginvolvementinthetransferredfinancialassetandrecognizeanassociatedliability.TheGroupwillmeasurerelevantliabilitiesasfollows:

?Fortransferredfinancialassetscarriedatamortizedcost,thecarryingamountofrelevant

liabilitiesisthecarryingamountoffinancialassetstransferredwithcontinuinginvolvementlessamortizedcostoftheGroup'sretainedrights(iftheGroupretainsrelevantrightsupontransferoffinancialassets)withadditionofamortizedcostofobligationsassumedbytheGroup(iftheGroupassumesrelevantobligationsupontransferoffinancialassets).Relevantliabilitiesarenotdesignatedasfinancialliabilitiesatfairvaluethroughprofitorloss.?Fortransferredfinancialassetscarriedatfairvalue,thecarryingamountofrelevant

liabilitiesisthecarryingamountoffinancialassetstransferredwithcontinuinginvolvementlessfairvalueoftheGroup'sretainedrights(iftheGroupretainsrelevantrightsupontransferoffinancialassets)withadditionoffairvalueofobligationsassumedbytheGroup(iftheGroupassumesrelevantobligationsupontransferoffinancialassets).Accordingly,thefairvalueofrelevantrightsandobligationsshallbemeasuredonanindividualbasis.Forthetransferofafinancialassetinitsentiretythatsatisfiesthederecognitioncriteria,thedifferencebetween(1)thecarryingamountofthefinancialassettransferredand(2)thesumoftheconsiderationreceivedfromthetransferandanycumulativegainorlossthathasbeenrecognizedinothercomprehensiveincome,isrecognizedinprofitorloss.Wherethetransferredassetsarenon-tradingequityinstrumentinvestmentsdesignatedasatFVTOCI,cumulativegainsorlossespreviouslyrecognizedinothercomprehensiveincomearetransferredoutandincludedinretainedearnings.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.3Transferoffinancialassets-continuedIfapartofthetransferredfinancialassetqualifiesforderecognition,theoverallcarryingamountofthefinancialassetpriortotransferisallocatedbetweenthepartthatcontinuestoberecognizedandthepartthatisderecognized,basedontherespectivefairvalueofthosepartsatthedateoftransfer.Thedifferencebetween(1)thecarryingamountallocatedtothepartderecognizedonthedateofderecognition;and(2)thesumoftheconsiderationreceivedforthepartderecognizedandanycumulativegainorlossallocatedtothepartderecognizedwhichhasbeenpreviouslyrecognizedinothercomprehensiveincome,isrecognizedinprofitorloss.Wherethetransferredassetsarenon-tradingequityinstrumentinvestmentsdesignatedasatFVTOCI,cumulativegainsorlossespreviouslyrecognizedinothercomprehensiveincomearetransferredoutandincludedinretainedearnings.Foratransferofafinancialassetinitsentiretythatdoesnotsatisfythederecognitioncriteria,theGroupcontinuestorecognizethetransferredfinancialassetinitsentirety.Theconsiderationreceivedfromtransferofassetsisrecognizedasafinancialliabilityuponreceipt.

11.4ClassificationoffinancialliabilitiesandequityinstrumentsFinancialinstrumentsissuedbytheGrouportheircomponentsareclassifiedintofinancialliabilitiesorequityinstrumentsonthebasisofthesubstanceofthecontractualarrangementsandtheeconomicnaturenotonlythelegalform,togetherwiththedefinitionoffinancialliabilityandequityinstrumentoninitialrecognition.

11.4.1Classification,recognitionandmeasurementoffinancialliabilitiesOninitialrecognition,financialliabilitiesareclassifiedintofinancialliabilitiesatFVTPLandotherfinancialliabilities.

11.4.1.1FinancialliabilitiesatFVTPLFinancialliabilitiesatFVTPLconsistoffinancialliabilitiesheldfortrading(includingderivativesclassifiedasfinancialliabilities)andthosedesignatedasatFVTPL.Exceptforderivativefinancialliabilitiespresentedseparately,thefinancialliabilitiesatFVTPLarepresentedasheld-for-tradingfinancialliabilities.Afinancialliabilityisclassifiedasheldfortradingifoneofthefollowingconditionsissatisfied:

?Ithasbeenacquiredprincipallyforthepurposeofrepurchasinginthenearterm;or?Oninitialrecognition,itispartofaportfolioofidentifiedfinancialinstrumentsthatthe

GroupmanagestogetherandthereisobjectiveevidencethattheGrouphasarecentactualpatternofshort-termprofit-taking;or?Itisaderivativethatisnotafinancialguaranteecontractordesignatedandeffectiveasa

hedginginstrument.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.4Classificationoffinancialliabilitiesandequityinstruments-continued

11.4.1Classification,recognitionandmeasurementoffinancialliabilities-continued

11.4.1.1FinancialliabilitiesatFVTPL-continuedAfinancialliabilitymaybedesignatedasatFVTPLoninitialrecognitionwhenoneofthefollowingconditionsissatisfied:(i)Suchdesignationeliminatesorsignificantlyreducesaccountingmismatch;or(ii)TheGroupmakesmanagementandperformanceevaluationonafairvaluebasis,inaccordancewiththeGroup'sformallydocumentedriskmanagementorinvestmentstrategy,andreportstokeymanagementpersonnelonthatbasis.(iii)Thequalifiedhybridfinancialinstrumentcombinesfinancialassetwithembeddedderivatives.Held-for-tradingfinancialliabilitiesaresubsequentlymeasuredatfairvalue.Anygainsorlossesarisingfromchangesinfairvalueandanydividendsorinterestexpensespaidonthefinancialliabilitiesarerecognizedinprofitorloss.ForafinancialliabilitydesignatedasatFVTPL,theamountofchangesinfairvalueofthefinancialliabilitythatareattributabletochangesinthecreditriskofthatliabilityshallbepresentedinothercomprehensiveincome,whileotherchangesinfairvalueareincludedinprofitorlossforthecurrentperiod.Uponthederecognitionofsuchfinancialliability,theaccumulatedamountofchangesinfairvaluethatareattributabletochangesinthecreditriskofthatliability,whichwasrecognizedinothercomprehensiveincome,istransferredtoretainedearnings.Anydividendorinterestexpenseonthefinancialliabilitiesisrecognizedinprofitorloss.Iftheaccountingtreatmentfortheimpactofthechangeincreditriskofsuchfinancialliabilityintheabovewayswouldcreateorenlargeanaccountingmismatchinprofitorloss,theGroupshallpresentallgainsorlossesonthatliability(includingtheeffectsofchangesinthecreditriskofthatliability)inprofitorlossfortheperiod.ForfinancialliabilitiesarisingfromcontingentconsiderationrecognizedbytheGroupastheacquirerinthebusinesscombinationnotinvolvingenterprisesundercommoncontrol,theGroupmeasuressuchfinancialliabilitiesatfairvaluethroughprofitorloss,andincludesthechangesinthefinancialliabilitiesinprofitorlossfortheperiod.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.4Classificationoffinancialliabilitiesandequityinstruments-continued

11.4.1Classification,recognitionandmeasurementoffinancialliabilities-continued

11.4.1.2OtherfinancialliabilitiesExceptforfinancialliabilities,financialguaranteecontractsandloancommitmentsarisingfromtransferoffinancialassetsthatdonotmeetthederecognitioncriteriaorthosearisingfromcontinuinginvolvementinthetransferredfinancialassets,otherfinancialliabilitiesaresubsequentlymeasuredatamortizedcost,withgainorlossarisingfromderecognitionoramortizationrecognizedinprofitorloss.IfthemodificationorrenegotiationforthecontractbytheGroupanditscounterpartiesdoesnotresultinderecognitionofafinancialliabilitysubsequentlymeasuredatamortizedcostbutthechangesincontractualcashflows,theGroupwillrecalculatethecarryingamountofthefinancialliability,withrelevantgainorlossrecognizedinprofitorloss.TheGroupwilldeterminethecarryingamountofthefinancialliabilitybasedonthepresentvalueofrenegotiatedormodifiedcontractualcashflowsdiscountedattheoriginaleffectiveinterestrateofthefinancialliability.Forallcostsorexpensesarisingfrommodificationorrenegotiationofthecontract,theGroupwilladjustthemodifiedcarryingamountofthefinancialliabilityandmakeamortizationduringtheremainingtermofthemodifiedfinancialliability.

11.4.1.3FinancialguaranteecontractsAfinancialguaranteecontractisacontractthatrequirestheissuertomakespecifiedpaymentstoreimbursetheholderofthecontractforalossitincursbecauseaspecifieddebtorfailstomakepaymentwhendueinaccordancewiththeoriginalormodifiedtermsofadebtinstrument.Subsequenttoinitialrecognition,financialguaranteecontractsthatarenotdesignatedasfinancialliabilitiesatfairvaluethroughprofitorlossorfinancialliabilitiesarisingfromtransferoffinancialassetsthatdonotmeetthederecognitioncriteriaorthosearisingfromcontinuinginvolvementinthetransferredfinancialassets,aremeasuredatthehigherofamountoflossprovision;andtheamountinitiallyrecognizedlesscumulativeamortizationamountdeterminedbasedontherevenuestandards.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.4Classificationoffinancialliabilitiesandequityinstruments-continued

11.4.2DerecognitionoffinancialliabilitiesTheGroupderecognizesafinancialliability(orpartofit)whentheunderlyingpresentobligation(orpartofit)isdischarged.AnagreementbetweentheGroup(thedebtor)andthecreditortoreplacetheoriginalfinancialliabilitywithanewfinancialliabilitywithsubstantiallydifferenttermsisaccountedforasanextinguishmentoftheoriginalfinancialliabilityandtherecognitionofanewfinancialliability.WhentheGroupderecognizesafinancialliabilityorapartofit,itrecognizesthedifferencebetweenthecarryingamountofthefinancialliability(orpartofthefinancialliability)derecognizedandtheconsiderationpaid(includinganynon-cashassetstransferredornewfinancialliabilitiesassumed)inprofitorloss.

11.4.3EquityinstrumentsAnequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsoftheGroupafterdeductingallofitsliabilities.Equityinstrumentsissued(includingrefinanced),repurchased,soldandcancelledbytheGrouparerecognizedaschangesinequity.TheGroup'sissuanceofequityinstrumentsisrecordedintheowner'sequityattheactualissueprice,andtherelevanttransactioncostsaredeductedfromtheowner'sequity(capitalreserve).Ifthecapitalreserveisinsufficienttooffset,thesurplusreserveandretainedearningsareoffsetinturn.TheconsiderationandtransactioncostspaidforrepurchasingtheCompany'sequityinstrumentsreducetheowner'sequity.TheGrouprecognizesthedistributiontoholdersoftheequityinstrumentsasdistributionofprofits,anddividendspaiddonotaffecttotalamountofshareholders'equity.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.5DerivativesandembeddedderivativesDerivativesincludeforwardexchangecontracts,currencyswaps,interestrateswapsandforeignexchangeoptions,etc.Derivativesareinitiallymeasuredatfairvalueatthedatewhenthederivativecontractsareenteredintoandaresubsequentlymeasuredatfairvalue.DerivativesembeddedinhybridcontractswithafinancialassethostarenotseparatedbytheGroup.Thehybridcontractshallapplytherelevantaccountingstandardsregardingtheclassificationoffinancialassetsasawhole.DerivativesembeddedinhybridcontractswithhoststhatarenotfinancialassetsareseparatedandtreatedasseparatederivativesbytheGroupwhentheymeetthefollowingconditions:

(1)theeconomiccharacteristicsandrisksoftheembeddedderivativearenotcloselyrelatedto

thoseofthehostcontract;

(2)aseparateinstrumentwiththesametermsastheembeddedderivativewouldmeetthe

definitionofaderivative;

(3)thehybridcontractsarenotmeasuredatfairvaluethroughprofitorloss.Fortheembeddedderivativeseparatedfromthehostcontracts,theGroupaccountsforthehostcontractsinthehybridcontractswithapplicableaccountingstandards.WhentheembeddedderivativeswhosefairvaluecannotbemeasuredreliablybytheGroupaccordingtothetermsandconditionsoftheembeddedderivatives,thefairvalueofsuchderivativesaremeasuredatthedifferencebetweenthefairvalueofthehybridcontractsandthefairvalueofthehostcontracts.Byadoptingtheabovemethod,iftheembeddedderivativecannotbemeasuredonastand-alonebasisatthetimewhenitisacquiredoratsubsequentbalancesheetdates,thehybridinstrumentisdesignatedasfinancialinstrumentsatfairvaluethroughprofitorlossasawhole.

11.6OffsettingfinancialassetsandfinancialliabilitiesWheretheGrouphasalegalrightthatiscurrentlyenforceabletosetofftherecognizedfinancialassetsandfinancialliabilities,andintendseithertosettleonanetbasis,ortorealizethefinancialassetandsettlethefinancialliabilitysimultaneously,afinancialassetandafinancialliabilityshallbeoffsetandthenetamountispresentedinthebalancesheet.Exceptfortheabovecircumstances,financialassetsandfinancialliabilitiesshallbepresentedseparatelyinthebalancesheetandshallnotbeoffset.

11.7CompoundinstrumentsForconvertiblebondsissuedbytheGroupthatcontainbothliabilitiesandconversionoptionthatmayconverttheliabilitiestoitsownequityinstrument,uponinitialrecognition,thebondsaresplitintoliabilitiesandconversionoptionwhichareseparatelyrecognized.Therein,theconversionoptionthatexchangesafixedamountofcashorotherfinancialassetsforafixedamountofequityinstrumentsisaccountedforasanequityinstrument.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.7Compoundinstruments-continuedUponinitialrecognition,thefairvalueofliabilityportionisdeterminedbasedontheprevailingmarketpriceofthebondscontainingnoconversionoption.Theoverallissuepriceoftheconvertiblebondsnetofthefairvalueoftheliabilityportionisconsideredasthevalueoftheconversionoptionthatenablesthebondsholdertoconvertthebondstoequityinstruments,andisincludedinotherequityinstruments.Theliabilityportionoftheconvertiblebondsissubsequentlymeasuredatamortizedcostusingeffectiveinterestmethod;thevalueoftheconversionoptionclassifiedasequityinstrumentisremainedinequityinstrument.Theexpiryorconversionofconvertiblebondswillnotresultinlossorgain.Thetransactioncostsincurredforissuanceoftheconvertiblebondsareallocatedbetweentheliabilityportionandequityinstrumentportioninproportiontotheirrespectivefairvalues.Thetransactioncostrelatingtotheequityinstrumentportionisdirectlyincludedinequityinstrument;whilethetransactioncostrelatingtotheliabilityportionisincludedinthecarryingamountoftheliability,andamortizedoverthelifetimeoftheconvertiblebondsusingeffectiveinterestmethod.

11.8ReclassificationoffinancialinstrumentsWhentheGroupchangesthebusinessmodeltomanagethefinancialassets,thefinancialassetsaffectedwillbereclassifiedandnofinancialliabilitieswillbereclassified.ThefinancialassetsarereclassifiedbytheGroupandareaccountedforprospectivelysincethedateofreclassification(i.e.,thefirstdateoftheinitialreportingperiodafterthebusinessmodelofwhichthefinancialassetsarereclassifiedbytheenterpriseischanged).Whereafinancialassetatamortizedcostisreclassifiedasafinancialassetatfairvaluethroughprofitorlossby(hereinafterreferredtoas"FVTPL")theGroup,suchfinancialassetismeasuredatfairvalueatthedateofreclassificationandthedifferencebetweentheoriginalcarryingamountandthefairvalueisrecognizedinprofitorlossfortheperiod.Whereafinancialassetatamortizedcostisreclassifiedasafinancialassetatfairvaluethroughothercomprehensiveincome(hereinafterreferredtoas"FVTOCI")bytheGroup,suchfinancialassetismeasuredatfairvalueatthedateofreclassification,andthedifferencebetweentheoriginalcarryingamountandthefairvalueisrecognizedinothercomprehensiveincome.WhereafinancialassetatFVTOCIisreclassifiedasafinancialassetatamortizedcostbytheGroup,theaccumulatedgainsorlossespreviouslyrecognizedinothercomprehensiveincomearetransferredoutandthefairvalueatthedateofreclassificationisadjusted.Theadjustedfairvalueisdeterminedasthenewcarryingamount,asifthefinancialassethasbeenalwaysmeasuredatamortizedcost.ThereclassificationofthefinancialassetshallnotaffectitseffectiveinterestrateorthemeasurementofECL.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

11.Financialinstruments-continued

11.8Reclassificationoffinancialinstruments-continuedWhereafinancialassetatFVTOCIisreclassifiedasafinancialassetatFVTPLbytheGroup,suchfinancialassetcontinuestobemeasuredatfairvalue.Atthesametime,theaccumulatedgainsorlossespreviouslyrecognizedinothercomprehensiveincomearetransferredtoprofitorlossfortheperiod.WhereafinancialassetatFVTPLisreclassifiedasafinancialassetatamortizedcostbytheGroup,thefairvalueatthedateofreclassificationisdeterminedasthenewbookvalue.WhereafinancialassetatFVTPLisreclassifiedasafinancialassetatFVTOCIbytheGroup,suchfinancialassetcontinuestobemeasuredatfairvalue.WhereafinancialassetatFVTPLisreclassified,theeffectiveinterestrateisdeterminedonthebasisofthefairvalueofthefinancialassetatthedateofreclassification.

12.Receivables

12.1DeterminationandaccountingmethodsforexpectedcreditlossesofreceivablesTheGroupassessesthecreditriskofreceivableswithsignificantlydifferentcreditrisksonanindividualbasis,anddeterminethecreditlossesofreceivablesonaportfoliobasisusinganimpairmentmatrixforotherreceivables.Theamountofincreaseinorreversalofallowanceforexpectedcreditlossesonreceivablesisincludedinprofitorlossfortheperiodascreditlossesorgains.

12.2Categoriesofportfoliosforwhichprovisionforbaddebtsisassessedonaportfoliobasis

accordingtocreditriskcharacteristicsandthebasisfordeterminationTheGroupclassifiesreceivablesintogroupsA,BandCbasedoncommonriskcharacteristics.ThecommoncreditriskcharacteristicsadoptedbytheGroupinclude:typeoffinancialinstrument,creditriskrating,initialrecognitiondate,remainingcontractualterm,industryofthedebtor,geographicallocationofthedebtor,etc.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

12.Receivables-continued

12.2Categoriesofportfoliosforwhichprovisionforbaddebtsisassessedonaportfoliobasis

accordingtocreditriskcharacteristicsandthebasisfordetermination-continuedTheGroupmakesinternalcreditratingsoncustomersanddeterminesexpectedlossrateofreceivables.Basisfordeterminingratingsandtheexpectedlossratesareasfollows:

CHINAMERCHANTSPORTGROUPCO.,LTD.Internalcreditrating

12.3Determinationcriteriaforprovisionforbaddebtsonanindividualbasis

13.Inventories

13.1Categoriesofinventories,measurementmethodofcostofinventories,inventorycount

system,amortizationmethodoflow-valueconsumablesandpackagingmaterials

13.1.1CategoriesofinventoriesTheGroup'sinventoriesmainlyincluderawmaterials,merchandiseandothers.Inventoriesareinitiallymeasuredatcost.Costofinventoriescomprisesallcostsofpurchase,costsofconversionandotherexpendituresincurredinbringingtheinventoriestotheirpresentlocationandcondition.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

13.Inventories-continued

13.1Categoriesofinventories,measurementmethodofcostofinventories,inventorycount

system,amortizationmethodoflow-valueconsumablesandpackagingmaterials-continued

13.1.2MeasurementmethodofcostofinventoriesCostofinventoriesrecognisediscalculatedusingthefirst-in-first-outandweightedaveragemethod.

13.1.3InventorycountsystemTheperpetualinventorysystemisperpetualinventorysystem.

13.1.4Amortizationmethodforlowcostandlow-valueconsumablesitemsandpackaging

materialsPackagingmaterialsandlowcostandshort-livedconsumableitemsareamortizedusingtheimmediatewrite-offmethod.

13.2RecognitioncriteriaandprovisionmethodfordeclineinvalueofinventoriesAtthebalancesheetdate,inventoriesaremeasuredatthelowerofcostandnetrealizablevalue.Ifthecostofinventoriesishigherthanthenetrealizablevalue,aprovisionfordeclineinvalueofinventoriesismade.Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcompletion,theestimatedcostsnecessarytomakethesaleandrelevanttaxes.Netrealizablevalueisdeterminedonthebasisofclearevidenceobtained,aftertakingintoconsiderationthepurposesofinventoriesbeingheldandeffectofpostbalancesheetevents.Provisionfordeclineinvalueofinventoriesismadebasedontheexcessofcostofinventoryoveritsnetrealizablevalueonanitem-by-itembasis.Aftertheprovisionfordeclineinvalueofinventoriesismade,ifthecircumstancesthatpreviouslycausedinventoriestobewrittendownbelowcostnolongerexistsothatthenetrealizablevalueofinventoriesishigherthantheircost,theoriginalprovisionfordeclineinvalueisreversedandthereversalisincludedinprofitorlossfortheperiod.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

14.Long-termequityinvestments

14.1BasisfordeterminingjointcontrolandsignificantinfluenceoverinvesteeControlmeansthattheinvestorhasthepowerovertheinvestee,enjoysvariablereturnsbyparticipatingintherelevantactivitiesoftheinvestee,andhastheabilitytousethepowerovertheinvesteetoaffectitsreturnamount.Jointcontrolreferstothecommoncontroloveranarrangementaccordingtorelevantagreements,andtherelevantactivitiesofthearrangementmustbeagreedbytheparticipantssharingthecontrolrightbeforemakingdecisions.Significantinfluencereferstohavingtherighttoparticipateinthedecision-makingoftheinvestee'sfinancialandoperatingpolicies,butnotbeingabletocontrolorjointlycontroltheformulationofthesepolicieswithotherparties.Whendeterminingwhetheritispossibletocontrolorexertsignificantinfluenceontheinvestee,theconvertiblecorporatebonds,executablewarrantsandotherpotentialvotingrightsoftheinvesteeheldbytheinvestorandotherpartieshavebeenconsidered.

14.2DeterminationofinitialinvestmentcostForalong-termequityinvestmentacquiredthroughbusinesscombinationinvolvingenterprisesundercommoncontrol,shareofcarryingamountofowners'equityoftheacquireeintheconsolidatedfinancialstatementsofultimatecontrollingpartyisrecognizedasinitialinvestmentcostoflong-termequityinvestmentatthedateofcombination.Thedifferencebetweeninitialinvestmentcostoflong-termequityinvestmentandcashpaid,non-cashassetstransferredandcarryingamountofliabilitiesassumed,isadjustedincapitalreserve.Ifthebalanceofcapitalreserveisnotsufficienttoabsorbthedifference,surplusreserveandretainedearningsshallbeoffsetinturn.Iftheconsiderationofthecombinationissatisfiedbytheissueofequitysecurities,theinitialinvestmentcostofthelong-termequityinvestmentistheshareofcarryingamountofowners'equityoftheacquireeintheconsolidatedfinancialstatementsofultimatecontrollingpartyatthedateofcombination.Theaggregatefacevalueofthesharesissuedisaccountedforassharecapital.Thedifferencebetweentheinitialinvestmentcostandtheaggregatefacevalueofthesharesissuedisadjustedtocapitalreserve.Ifthebalanceofcapitalreserveisnotsufficienttoabsorbthedifference,surplusreserveandretainedearningsshallbeoffsetinturn.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

14.Long-termequityinvestments-continued

14.2Determinationofinitialinvestmentcost-continuedForalong-termequityinvestmentacquiredthroughbusinesscombinationnotinvolvingenterprisesundercommoncontrol,theinitialinvestmentcostofthelong-termequityinvestmentacquiredisthecostofacquisition.Theexpensesincurredbytheacquirerinrespectofauditing,legalservices,valuationandconsultancyservicesandotherassociatedgeneralandadministrativeexpensesattributabletothebusinesscombinationarerecognizedinprofitorlosswhentheyareincurred.Thelong-termequityinvestmentacquiredotherwisethanthroughabusinesscombinationisinitiallymeasuredatitscost.Whentheentityisabletoexercisesignificantinfluenceorjointcontrol(butnotcontrol)overaninvesteeduetoadditionalinvestment,thecostoflong-termequityinvestmentsisthesumofthefairvalueofpreviously-heldequityinvestmentsdeterminedinaccordancewithAccountingStandardsforBusinessEnterprisesNo.22--FinancialInstruments:

RecognitionandMeasurement(ASBENo.22)andtheadditionalinvestmentcost.

14.3Subsequentmeasurementandrecognitionofprofitorloss

14.3.1Long-termequityinvestmentsaccountedforusingthecostmethodLong-termequityinvestmentsinsubsidiariesareaccountedforusingthecostmethodinCompany'sseparatefinancialstatements.AsubsidiaryisaninvesteethatiscontrolledbytheGroup.Underthecostmethod,along-termequityinvestmentismeasuredatinitialinvestmentcost.Whenadditionalinvestmentismadeortheinvestmentisrecouped,thecostofthelong-termequityinvestmentisadjustedaccordingly.Investmentincomeisrecognizedintheperiodinaccordancewiththeattributableshareofcashdividendsorprofitdistributionsdeclaredbytheinvestee.

14.3.2Long-termequityinvestmentsaccountedforusingtheequitymethodExceptforinvestmentsinassociatesandjointventuresclassifiedasheld-for-salepartlyorwholly,theGroupaccountsforinvestmentinassociatesandjointventuresusingtheequitymethod.AnassociateisanentityoverwhichtheGrouphassignificantinfluenceandajointventureisajointarrangementwherebytheGrouponlyhasrightstothenetassetsofthearrangement.Undertheequitymethod,wheretheinitialinvestmentcostofalong-termequityinvestmentexceedstheGroup'sshareofthefairvalueoftheinvestee'sidentifiablenetassetsatthetimeofacquisition,noadjustmentismadetotheinitialinvestmentcost.WheretheinitialinvestmentcostislessthantheGroup'sshareofthefairvalueoftheinvestee'sidentifiablenetassetsatthetimeofacquisition,thedifferenceisrecognizedinprofitorlossfortheperiod,andthecostofthelong-termequityinvestmentisadjustedaccordingly.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

14.Long-termequityinvestments-continued

14.3Subsequentmeasurementandrecognitionofprofitorloss-continued

14.3.2Long-termequityinvestmentsaccountedforusingtheequitymethod-continuedUndertheequitymethod,theGrouprecognizesitsshareofthenetprofitorlossandothercomprehensiveincomeoftheinvesteefortheperiodasinvestmentincomeandothercomprehensiveincomefortheperiod.Meanwhile,thecarryingamountoflong-termequityinvestmentisadjusted;thecarryingamountoflong-termequityinvestmentisdecreasedinaccordancewithitsshareoftheinvestee'sdeclaredprofitorcashdividends;otherchangesinowners'equityoftheinvesteeotherthannetprofitorloss,othercomprehensiveincomedandprofitdistributionarecorrespondinglyadjustedtothecarryingamountofthelong-termequityinvestment,andrecognizedincapitalreserve.TheGrouprecognizesitsshareoftheinvestee'snetprofitorlossbasedonthefairvalueoftheinvestee'sindividualidentifiableassets,etc.attheacquisitiondateaftermakingadjustments.Whentheinvestee'saccountingpoliciesandaccountingperiodareinconsistentwiththoseoftheGroup,theGrouprecognizesinvestmentincomeandothercomprehensiveincomeaftermakingappropriateadjustmentstoconformtotheGroup'saccountingpoliciesandaccountingperiod.However,unrealizedgainsorlossesresultingfromtheGroup'stransactionswithitsassociatesandjointventuresandassetsinvestedorsold,whichdonotconstituteabusiness,areeliminatedbasedontheproportionattributabletotheGroupandtheninvestmentgainsorlossesarerecognized.However,unrealizedlossesresultingfromtheGroup'stransactionswithitsassociatesandjointventureswhichrepresentimpairmentlossesonthetransferredassetsarenoteliminated.Whenrecognizingthenetlossoftheinvesteethatshouldbeshared,thebookvalueofthelong-termequityinvestmentsandotherlong-termintereststhatsubstantiallyconstitutethenetinvestmentintheinvesteeshouldbewrittendowntozero.Inaddition,iftheGrouphasincurredobligationstoassumeadditionallosses,aprovisionisrecognizedaccordingtotheobligationexpected,andrecordedintheinvestmentlossfortheperiod.Wherenetprofitsaresubsequentlymadebytheinvestee,theGroupresumesrecognizingitsshareofthoseprofitsonlyafteritsshareoftheprofitsexceedstheshareoflossespreviouslynotrecognized.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

14.Long-termequityinvestments-continued

14.4Disposaloflong-termequityinvestmentsOndisposalofalong-termequityinvestment,thedifferencebetweentheproceedsactuallyreceivedandreceivableandthecarryingamountisrecognizedinprofitorlossfortheperiod.Forlong-termequityinvestmentsaccountedforusingtheequitymethod,iftheremaininginterestafterdisposalisstillaccountedforusingtheequitymethod,othercomprehensiveincomepreviouslyrecognizedusingtheequitymethodisaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedofrelatedassetsorliabilities,andtransferredtoprofitorlossfortheperiodonaproratabasis;owners'equityrecognizedduetootherchangesinowners'equityoftheinvestee(otherthannetprofitorloss,othercomprehensiveincomeandprofitdistribution)istransferredtoprofitorlossfortheperiodonaproratabasis.Forlong-termequityinvestmentsaccountedforusingthecostmethod,iftheremaininginterestafterdisposalisstillaccountedforusingthecostmethod,othercomprehensiveincomepreviouslyrecognizedusingtheequitymethodorinaccordancewiththestandardsfortherecognitionandmeasurementoffinancialinstrumentsbeforeobtainingthecontrolovertheinvestee,isaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedofrelatedassetsorliabilities,andtransferredtoprofitorlossfortheperiodonaproratabasis;otherchangesinowners'equityintheinvestee'snetassetsrecognizedundertheequitymethod(otherthannetprofitorloss,othercomprehensiveincomeandprofitdistribution)istransferredtoprofitorlossfortheperiodonaproratabasis.WheretheGrouplosescontrolovertheinvesteeduetodisposalofpartofshares,andinpreparingtheseparatefinancialstatements,remainingsharesafterdisposalcanhavejointcontrolorsignificantinfluenceovertheinvestee,theequitymethodshallbeadoptedtoadjusttheremainingsharesastheyareaccountedforunderequitymethodsincetheacquisitiondate.Ifremainingsharesafterdisposalcannothavejointcontrolorsignificantinfluenceovertheinvestee,theyareaccountedforinaccordancewiththestandardsforrecognitionandmeasurementoffinancialinstruments,andthedifferencebetweenfairvalueondateoflosingcontrolandcarryingamountisrecognizedinprofitorlossfortheperiod.Othercomprehensiveincomerecognizedusingtheequitymethodorinaccordancewiththestandardsfortherecognitionandmeasurementoffinancialinstrumentsbeforelosingcontrolovertheinvestee,isaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedofrelatedassetsorliabilitieswhenthecontrolovertheinvesteeislost;otherchangesinowners'equityintheinvestee'snetassetsrecognizedundertheequitymethod(otherthannetprofitorloss,othercomprehensiveincomeandprofitdistribution)istransferredtoprofitorlossfortheperiod.Whereremainingsharesafterdisposalareaccountedforunderequitymethod,othercomprehensiveincomeandotherowners'equityaretransferredonaproratabasis.Whereremainingsharesafterdisposalareaccountedforinaccordancewiththestandardsforrecognitionandmeasurementoffinancialinstruments,othercomprehensiveincomeandotherowners'equityarealltransferred.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

14.Long-termequityinvestments-continued

14.4Disposaloflong-termequityinvestments-continuedWheretheGrouplosesjointcontrolorsignificantinfluenceovertheinvesteeafterpartdisposalofshares,remainingsharesafterdisposalareaccountedforinaccordancewiththestandardsforrecognitionandmeasurementoffinancialinstruments,andthedifferencebetweenfairvalueatthedateoflosingjointcontrolorsignificantinfluenceandcarryingamountisrecognizedinprofitorlossfortheperiod.Othercomprehensiveincomepreviouslyrecognizedundertheequitymethod,isaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedofrelatedassetsorliabilitieswhentheequitymethodisnotadopted,andotherchangesinowners'equityotherthannetprofitorloss,othercomprehensiveincomeandprofitdistributionaretransferredtoinvestmentincomefortheperiodwhentheequitymethodisnotadopted.TheGroupdisposesofitsequityinvestmentinsubsidiariesthroughmultipletransactionsstepbystepuntilitlosescontroloverthesubsidiaries.Ifthesetransactionsbelongto"packagedeal",alltransactionsaredeemedasonetransactionondisposalofequityinvestmentinsubsidiaries,andthedifferencebetweentheamountofdisposalandcarryingamountoflong-termequityinvestmentisrecognizedasothercomprehensiveincomebeforethelossofcontrol,andtransferredtoprofitorlossfortheperiodwhenthecontrolislost.

15.InvestmentpropertiesInvestmentpropertyisthepropertyheldbytheGrouptoearnrentalsorforcapitalappreciationorboth.Itincludesalanduserightthatisleasedoutandabuildingthatisleasedout.Aninvestmentpropertyismeasuredinitiallyatcost.SubsequentexpendituresincurredforsuchinvestmentpropertyareincludedinthecostoftheinvestmentpropertyifitisprobablethateconomicbenefitsassociatedwiththeinvestmentpropertywillflowtotheGroupandthesubsequentexpenditurescanbemeasuredreliably.Othersubsequentexpendituresarerecognizedinprofitorlossfortheperiodinwhichtheyareincurred.TheGroupusesthecostmodelforsubsequentmeasurementofinvestmentproperty,andtheinvestmentpropertiesaredepreciatedovertheirusefullivesusingthestraight-linemethod.Thedepreciationlife,estimatedresidualvaluerateandannualdepreciationrateofeachcategoryofinvestmentpropertiesareasfollows:

CHINAMERCHANTSPORTGROUPCO.,LTD.

Category

Aninvestmentpropertyisderecognizedupondisposalorwhentheinvestmentpropertyispermanentlywithdrawnfromuseanditisestimatedthatnoeconomicbenefitscanbeobtainedfromitsdisposal,theinvestmentpropertiesisderecognized.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

15.Investmentproperties-continuedWhenaninvestmentpropertyissold,transferred,retiredordamaged,theGrouprecognizestheamountofanyproceedsondisposalnetofthecarryingamountandrelatedtaxesinprofitorlossfortheperiod.

16.FixedassetsanddepreciationFixedassetsaretangibleassetsthatareheldforuseintheproductionorsupplyofgoodsorservices,forrentaltoothers,orforadministrativepurposes,andhaveusefullivesofmorethanoneaccountingyear.AfixedassetisrecognizedonlywhenitisprobablethateconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthecostoftheassetcanbemeasuredreliably.Fixedassetsareinitiallymeasuredatcost.Uponbeingrestructuredintoastockcompany,thefixedassetsinitiallycontributedbythestate-ownedshareholdersarerecognizedbasedonthevaluationamountsconfirmedbythestate-ownedassetsadministrationdepartment.SubsequentexpendituresincurredforthefixedassetareincludedinthecostofthefixedassetifitisprobablethateconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthesubsequentexpenditurescanbemeasuredreliably.Meanwhilethecarryingamountofthereplacedpartisderecognized.Othersubsequentexpendituresarerecognizedinprofitorlossfortheperiodinwhichtheyareincurred.Afixedassetisdepreciatedoveritsusefullifeusingthestraight-linemethodstartingfromthemonthsubsequenttotheoneinwhichitisreadyforintendeduse.Thedepreciationlife,estimatednetresidualvaluerateandannualdepreciationrateofeachcategoryoffixedassetsareasfollows:

CHINAMERCHANTSPORTGROUPCO.,LTD.

Category

EstimatednetresidualvalueofafixedassetistheestimatedamountthattheGroupwouldcurrentlyobtainfromdisposaloftheasset,afterdeductingtheestimatedcostsofdisposal,iftheassetwerealreadyoftheageandintheconditionexpectedattheendofitsusefullife.Ifafixedassetisupondisposalornofutureeconomicbenefitsareexpectedtobegeneratedfromitsuseordisposal,thefixedassetisderecognized.Whenafixedassetissold,transferred,retiredordamaged,theamountofanyproceedsondisposaloftheassetnetofthecarryingamountandrelatedtaxesisrecognizedinprofitorlossfortheperiod.TheGroupreviewstheusefullifeandestimatednetresidualvalueofafixedassetandthedepreciationmethodappliedatleastonceateachfinancialyear-end,andaccountsforanychangeasachangeinaccountingestimates.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

17.ConstructioninprogressConstructioninprogressismeasuredatitsactualcosts.Theactualcostsincludevariousconstructionexpendituresduringtheconstructionperiod,borrowingcostscapitalizedbeforeitisreadyforintendeduseandotherrelevantcosts.Constructioninprogressisnotdepreciated.Constructioninprogressisaccountedforbycategoriesofprojectsinitiated,andistransferredtoafixedassetwhenitisreadyforintendeduse.Thecriteriaforjudgingtheintendeduseshallbeoneofthefollowing:

(1)Thephysicalconstruction(includinginstallation)offixedassetshasbeenfullyor

substantiallycompleted;

(2)Thetrialproductionortrialoperationhasbeencarriedoutandtheresultsofwhich

indicatethattheassetiscapableofnormaloperationorproducingqualifiedproductsonastablebasis,ortheresultsofwhichindicatethatitiscapableofnormalfunctioningoroperation;

(3)Thefixedassetsandintangibleassetsacquiredandconstructedhavemetthedesignor

contractualrequirementsorarebasicallyincompliancewiththedesignorcontractualrequirements.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

18.Intangibleassets

18.1Usefullifeandthebasisfordetermination,estimates,amortizationmethodorreview

proceduresIntangibleassetsincludelanduserights,terminaloperatingrights,dataresourcesandothers.Anintangibleassetismeasuredinitiallyatcost.Uponbeingrestructuredintoastockcompany,theintangibleassetsinitiallycontributedbythestate-ownedshareholdersarerecognizedbasedonthevaluationamountsconfirmedbythestate-ownedassetsadministrationdepartment.Exceptforterminaloperatingrights,whenanintangibleassetwithafiniteusefullifeisavailableforuse,itsoriginalcostminustheexpectednetresidualvalueandtheaccumulatedamountofimpairmentprovisionisamortizedoveritsestimatedusefullifebyusingstraight-linemethod.Theterminaloperatingrightsundertheoutputmethodareamortizedoverperiodsaccordingtotheratiooftheestimatedminimumguaranteedthroughputtotheestimatedminimumguaranteedtotalthroughputduringtheoperationperiod.Whentheestimatedminimumguaranteedthroughputcannotbemeasuredreliably,thestraight-linemethodwillbeusedforamortization.Anintangibleassetwithindefiniteusefullifewillnotbeamortized.Theamortizationmethod,usefullifeandestimatednetresidualvaluerateofeachcategoryofintangibleassetsareasfollows:

CHINAMERCHANTSPORTGROUPCO.,LTD.Category

Foranintangibleassetwithafiniteusefullife,theGroupreviewstheusefullifeandamortizationmethodattheendoftheyear,andmakesadjustmentswhennecessary.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

18.Intangibleassets-continued

18.2ScopeofR&DexpenditureandmethodforaccountingtreatmentExpenditureduringtheresearchphaseisrecognizedinprofitorlossfortheperiodinwhichitisincurred.Expenditureduringthedevelopmentphasethatmeetsallofthefollowingconditionsatthesametimeisrecognizedasintangibleasset.Expenditureduringdevelopmentphasethatdoesnotmeetthefollowingconditionsisrecognizedinprofitorlossfortheperiod:

(1)itistechnicallyfeasibletocompletetheintangibleassetsothatitwillbeavailableforuse

orsale.

(2)theGrouphastheintentiontocompletetheintangibleassetanduseorsellit.

(3)theGroupcandemonstratethewaysinwhichtheintangibleassetwillgenerateeconomic

benefits,includingtheevidenceoftheexistenceofamarketfortheoutputoftheintangibleassetortheintangibleassetitselfor,ifitistobeusedinternally,theusefulnessoftheintangibleasset.

(4)theavailabilityofadequatetechnical,financialandotherresourcestocompletethe

developmentandtheabilitytouseorselltheintangibleasset.

(5)theexpenditureattributabletotheintangibleassetduringitsdevelopmentphasecanbe

reliablymeasured.Iftheexpenditurescannotbedistinguishedbetweentheresearchphaseanddevelopmentphase,theGrouprecognizesalloftheminprofitorlossfortheyear.Thecostsofintangibleassetsgeneratedbytheinternalresearchonlyincludethetotalexpenditureincurredfortheperiodfromthetimepointofcapitalizationtothetimepointwhentheintangibleassetsarereadyforintendeduse.Fortheidenticalintangibleasset,theexpendituresrecordedasexpensesbeforetheyqualifyforcapitalizationduringthedevelopmentprocessarenotadjusted.TheGroupclassifiestheexpendituresonaninternalresearchanddevelopmentprojectintoexpendituresintheresearchphaseandexpendituresinthedevelopmentphase.ThescopeofR&DexpendituresrefertothosedirectlyrelatedtotheR&Dactivities,includingwages,salaries,andwelfareexpensesofpersonneldirectlyengagedinR&Dactivities,materialsdirectlyconsumedinR&Dactivities,depreciationexpensesforinstrumentsandequipmentusedinR&Dactivities,travel,transportation,andcommunicationexpensesrequiredforresearchandexperimentaldevelopment,etc.Technicalfeasibilityandeconomicviabilitystudiesareadoptedasspecificcriteriaforclassifyingtheresearchanddevelopmentphasesoncesuchstudieshavebeenevaluatedandapproved.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

19.Long-termdeferredexpensesLong-termdeferredexpensesrefertovariousexpensesthathavebeenincurredbutshouldbeborneinthecurrentandsubsequentperiodswithanapportionmentperiodofmorethanoneyear.Long-termdeferredexpensesareamortizedusingthestraight-linemethodovertheexpectedperiodsinwhichbenefitsarederived.

20.Impairmentofnon-financialassetsotherthangoodwillOneachbalancesheetdate,theGroupcheckswhetherthereisanysignofpossibleimpairmentoflong-termequityinvestments,investmentpropertiesmeasuredbycostmodel,fixedassets,constructioninprogress,right-of-useassets,long-termdeferredexpenses,andintangibleassetswhoseservicelifeisdetermined.Ifthereisanyindicationthatsuchassetsmaybeimpaired,recoverableamountsareestimatedforsuchassets.Intangibleassetswithindefiniteusefullifeandintangibleassetsnotyetavailableforusearetestedforimpairmentannually,irrespectiveofwhetherthereisanyindicationthattheassetsmaybeimpaired.Recoverableamountisestimatedonanindividualbasis.Ifitisnotpracticaltoestimatetherecoverableamountofanindividualasset,therecoverableamountoftheassetgrouptowhichtheassetbelongswillbeestimated.Therecoverableamountofanassetorassetsgroupisthehigherofitsfairvaluelesscostsofdisposalandthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheasset.Thepresentvalueoftheestimatedfuturecashflowoftheassetsisdeterminedaccordingtotheestimatedfuturecashflowgeneratedduringthecontinuoususeandfinaldisposaloftheassets,andtheamountdiscountedwhichisdeterminedbyselectinganappropriatepretaxdiscountrate.Iftherecoverableamountofanassetislessthanitscarryingamount,thedeficitisaccountedforasanimpairmentlossesandisrecognizedinprofitorloss.Oncetheimpairmentlossesofabove-mentionedassetsisrecognized,itshallnotbereversedinanysubsequentperiod.Whendeterminingtheimpairmentlossesofassetsrelatedtocontractcosts,firstdeterminetheimpairmentlossesofotherassetsrelatedtocontractsthatarerecognizedinaccordancewithotherrelevantaccountingstandardsforbusinessenterprises;Then,ifthebookvalueoftheassetsrelatedtothecontractcostsishigherthanthedifferencebetweenthefollowingtwoitems,theexcesspartoftheprovisionforimpairmentshallberecognizedasimpairmentlosses:(i)theGroup'sexpectedremainingconsiderationforthetransferofgoodsorservicesrelatedtotheassets;(ii)Estimatethecosttobeincurredforthetransferoftherelevantgoodsorservices.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

20.Impairmentofnon-financialassetsotherthangoodwill-continuedExceptfortheimpairmentlossesrelatedtothecontractcosts,oncetheaboveimpairmentlossesisrecognized,itwillnotbereversedinfutureaccountingperiods.Aftertheprovisionforimpairmentofassetsrelatedtocontractcostshasbeenmade,ifthefactorsofimpairmentinpreviousperiodshavechangedresultingintheabovetwodifferencesarehigherthanthebookvalueoftheassets,theprovisionforimpairmentoftheassetsthathasbeenmadeisreversedandincludedinthecurrentprofitsandlosses,butthebookvalueoftheassetsafterreversaldoesnotexceedthebookvalueoftheassetsonthereversaldateassumingthatnoprovisionforimpairmentismade.

21.ProvisionsProvisionsarerecognizedwhentheGrouphasapresentobligationrelatedtoacontingency,itisprobableresultinanoutflowofeconomicbenefitstosettletheobligation,andtheamountoftheobligationcanbemeasuredreliably.Theamountrecognizedasaprovisionisthebestestimateoftheconsiderationrequiredtosettlethepresentobligationatthebalancesheetdate,takingintoaccountfactorspertainingtoacontingencysuchastherisks,uncertaintiesandtimevalueofmoney.Wheretheeffectofthetimevalueofmoneyismaterial,theamountoftheprovisionisdeterminedbydiscountingtherelatedfuturecashoutflows.Ifallorpartoftheexpensesrequiredtosettletheestimatedliabilitiesareexpectedtobecompensatedbyathirdparty,thecompensationamountwillbeseparatelyrecognizedasassetswhenitisbasicallydeterminedthatitcanbereceived,andtherecognizedcompensationamountwillnotexceedthebookvalueoftheestimatedliabilities.

22.Employeebenefits

22.1Short-termemployeebenefitsShort-termbenefitsrefertotheemployeebenefitsthattheGroupisrequiredtomakefullpaymentswithin12monthsaftertheannualreportingperiodduringwhichrelevantservicesareprovidedbytheemployees,exceptthepost-employmentbenefitsandterminationbenefits.Specifically,theshort-termbenefitsinclude:employeesalaries,bonuses,allowancesandsubsidies,employeebenefits,socialinsurancecontributionssuchasthemedicalinsuranceandtheworkinjuryinsurance,housingfunds,tradeunionfundsandemployeeeducationfunds,short-termpaidabsence,short-termprofitsharingplan,non-monetarywelfareandothershort-termbenefits.Short-termemployeebenefitspayablearerecognizedasliabilities,withacorrespondingchargetoprofitorlossfortheperiodorinthecostsofrelevantassetsaccordingtothebeneficiariesofservicesprovidedbyemployeesintheaccountingperiodinwhichemployeesprovideservicestotheGroup.StaffwelfareexpensesincurredbytheGrouparerecognizedinprofitorlossforthe

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periodorthecostsofrelevantassetsbasedontheactuallyoccurredamountswhentheyactuallyoccurred.Non-monetarystaffwelfareexpensesaremeasuredatfairvalue.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

22.Employeebenefits-continued

22.1Short-termemployeebenefits-continuedPaymentmadebytheGroupofsocialsecuritycontributionsforemployeessuchaspremiumsorcontributionsonmedicalinsurance,workinjuryinsuranceandmaternityinsurance,etc.andpaymentsofhousingfunds,aswellasunionrunningcostsandemployeeeducationcostsprovidedinaccordancewithrelevantrequirements,arecalculatedaccordingtoprescribedbasesandpercentagesindeterminingtheamountofemployeebenefitsandrecognizedasrelevantliabilities,withacorrespondingchargetoprofitorlossfortheperiodorthecostsofrelevantassetsintheaccountingperiodinwhichemployeesprovideservices.

22.2Post-employmentbenefitsPost-employmentbenefitsrefertotherewardsandbenefitsofvariousformsprovidedbytheGroupaftertheemployeeshaveretiredorterminatedthelaborrelationshipwiththeenterprisefortheservicesrenderedbytheemployees,excepttheshort-termbenefitsandtheterminationbenefits.Thepost-employmentbenefitsconsistofthepensioninsurance,theannuity,theunemploymentinsuranceandotherpost-employmentbenefits.Post-employmentbenefitplansareclassifiedbytheGroupintodefinedcontributionplansanddefinedbenefitplans.Thepost-employmentbenefitplanreferstotheagreementstheGroupenteredintowiththeemployeesonthepost-employmentbenefitsortheregulationsormeasuresestablishedbytheGroupforprovisionsofthepost-employeebenefits,amongwhichthedefinedcontributionplansrefertothepost-employmentbenefitplanunderwhichtheGroupshallnolongerundertakeanyobligationsofpaymentsafterpayingfixedexpensestoindependentfunds;thedefinedbenefitplansrefertothepost-employmentbenefitplansotherthanthedefinedcontributionplans.DuringtheaccountingperiodinwhichemployeesrenderservicestotheGroup,theamountspayablecalculatedbasedonthedefinedcontributionplansarerecognizedasliabilitiesandincludedinprofitorlossfortheperiodorcostsofrelatedassets.Fordefinedbenefitplans,theGroupattributesthewelfareobligationsarisingfromthedefinedbenefitplanstotheperiodinwhichemployeesprovideservicestotheGroupaccordingtotheformuladeterminedbasedontheprojectedcumulativebenefitunitmethod,andincludestheminprofitorlossfortheperiodorcostsofrelatedassets.Definedbenefitcostsarecategorizedasfollows:

?Servicecost(includingcurrentservicecost,pastservicecost,aswellasgainsandlosseson

settlements);?Netinterestofnetliabilitiesorassetsofdefinedbenefitplans(includinginterestincomeof

plannedassets,interestexpensesofdefinedbenefitplanliabilitiesandeffectofassetceiling);

and?Changesarisingfromremeasurementofnetliabilitiesornetassetsofdefinedbenefitplans.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

22.Employeebenefits-continued

22.2Post-employmentbenefits-continuedServicecostsandnetinterestofnetliabilitiesandnetassetsofdefinedbenefitplansarerecognizedinprofitorlossfortheperiodorcostsofrelatedassets.Remeasurementofthenetdefinedbenefitliabilities(assets)(includingactuarialgainsandlosses,thereturnonplannedassets,excludingamountsincludedinnetinterestonnetdefinedbenefitliabilities(assets),andanychangesintheeffectoftheassetceiling,excludingamountsincludedinnetinterestonnetdefinedbenefitliabilities(assets))arerecognizedinothercomprehensiveincome.Thedeficitorsurplusresultingfromthepresentvalueofthedefinedbenefitplanobligationslessthefairvalueofthedefinedbenefitplanassetsisrecognizedasanetdefinedbenefitplanliabilityornetasset.

22.3TerminationbenefitsTerminationbenefitsrefertothecompensationstheGrouppaytotheemployeesforterminatingtheemploymentrelationshipwithemployeesbeforetheexpiryoftheemploymentcontractsorencouragingemployeestoacceptvoluntaryredundancy.WhentheGroupprovidesterminationbenefitstoemployees,employeebenefitliabilitiesarerecognizedforterminationbenefits,withacorrespondingchargetoprofitorlossfortheperiodattheearlierof:(1)whentheGroupcannotunilaterallywithdrawtheofferofterminationbenefitsbecauseoftheterminationplanoracurtailmentproposal;and(2)whentheGrouphasadetailedandformalrestructuringplaninvolvingthepaymentofdismissalbenefit;Inaddition,therestructuringplanhasbeenimplementedorthemaincontentsoftheplanhavebeennotifiedtotheaffectedparties,sothatallpartieshaveformedareasonableexpectationthattheGroupwillimplementtherestructuring.

22.4Otherlong-termemployeebenefitsOtherlong-termemployeebenefitsrefertoallemployeebenefitsexceptforshort-termbenefits,post-employmentbenefits,andterminationbenefits.Otherlong-termemployeebenefitsthatqualifyasdefinedcontributionplansaretreatedinaccordancewiththerelevantprovisionsofthedefinedcontributionplansmentionedabove,exceptthatthenetliabilityornetassetforotherlong-termemployeebenefitsisrecognizedandmeasuredinaccordancewiththerelevantprovisionsofthedefinedbenefitplans.Attheendofthereportingperiod,employeecompensationcostsarisingfromotherlong-termemployeebenefitsarerecognizedasthreecomponents:servicecost,netinterestonnetliabilityornetassetforotherlong-termemployeebenefits,andchangesresultingfromtheremeasurementofthenetliabilityornetassetforotherlong-termemployeebenefits.Thetotalnetamountoftheseitemsisincludedinprofitorlossfortheperiodorinthecostsofrelatedassets.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

22.Employeebenefits-continued

22.4Otherlong-termemployeebenefits-continuedTheGroupprovidesinternalretirementbenefitstoemployeesacceptingtheinternalretirementarrangements.Internalretirementbenefitsrefertothepaymentsofsalariesandsocialsecuritycontributionsforemployeeswhohavenotreachedtheretirementageregulatedbythecountryandareapprovedtoquitthejobvoluntarily.Forinternalretirementbenefits,theinternalretirementbenefitstheGroupisexpectedtopayduringtheperiodfromthedatewhenemployeesstopprovidingservicestothedateofnormalretirementarerecognizedasliabilitiesatthepresentvalueandincludedinprofitorlossfortheperiodwhenrelevantrecognitionrequirementsoftheinternalretirementbenefitsaremet.

23.Share-basedpaymentsAshare-basedpaymentisatransactionwhichtheGroupgrantsequityinstruments,inreturnforservicesrenderedbyemployeesorotherparties.TheGroup'sshare-basedpaymentsincludeequity-settledshare-basedpayments.Equity-settledshare-basedpaymentsinexchangeforservicesrenderedbyemployeesaremeasuredatfairvalueoftheequityinstrumentsgrantedtoemployeesatthegrantdate.Suchamountisrecognizedasrelatedcostsorexpensesonastraight-linebasisoverthevestingperiod,basedonthebestestimateofthenumberofequityinstrumentsexpectedtovest/asrelatedcostsorexpensesatthegrantdate,iftheequityinstrumentscouldbevestedimmediately,withacorrespondingincreaseincapitalreserve.

24.BondspayableTheGroup'sbondspayablearemeasuredatfairvaluewheninitiallyrecognized,andrelevanttransactioncostsareincludedintheinitiallyrecognizedamount.Itissubsequentlymeasuredatamortizedcost.Thedifferencebetweenthebondissuepriceandthetotalfacevalueofthebondsisregardedasthebondpremiumordiscount,whichisamortizedatthetimeofinterestaccrualaccordingtotheeffectiveinterestmethodduringthedurationofthebonds,andistreatedaccordingtotheprincipleofhandlingborrowingcosts.

25.Preferenceshares,perpetualbondsandotherfinancialinstrumentsTheactualissuepricefortheissuanceofequityinstrumentsisincludedinshareholders'equityafterdeductingrelevanttransactioncostsfromshareholders’equity(capitalreserve).Ifthecapitalreserveisinsufficienttooffset,surplusreserveandretainedearningswillbeoffsetinturn.TheconsiderationandtransactioncostspaidforrepurchasingtheGroup'sequityinstrumentsreduceshareholders’equity.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

25.Preferenceshares,perpetualbondsandotherfinancialinstruments-continuedTheGroupclassifiesfinancialinstruments,ortheircomponents,asfinancialliabilitiesorequityinstrumentsatinitialrecognitionbasedonthecontractualtermsoftheissuedperpetualbondsandtheirreflectedeconomicsubstance,combinedwiththedefinitionsoffinancialliabilitiesandequityinstruments.Forfinancialinstrumentssuchasperpetualbondsclassifiedasequityinstruments,interestexpenseordividend(dividend)distributionsaretreatedasprofitdistributionsoftheGroup,andtheirrepurchases,write-offs,etc.,aretreatedaschangesinequity,andrelatedtransactioncostsaredeductedfromequity.

26.Revenuerecognition

26.1Disclosureofaccountingpoliciesadoptedforrevenuerecognitionandmeasurementby

typeofbusinessRevenuereferstothetotalinflowofeconomicbenefitsformedinthedailyactivitiesoftheGroup,whichwillleadtotheincreaseofowner'sequityandhasnothingtodowiththecapitalinvestedbyowners.TheGroup'srevenueismainlyfromportbusiness,bondedlogisticsbusinessandotherbusinesses.TheGrouprecognizesrevenuebasedonthetransactionpriceallocatedtotheperformanceobligationwhentheGroupsatisfiesaperformanceobligationinthecontract,namely,whenthecustomerobtainscontroloverrelevantgoodsorservices.AperformanceobligationisacommitmentthattheGrouptransfersadistinctgoodsorservicetoacustomerinthecontract.ThetransactionpriceistheamountofconsiderationtowhichtheGroupexpectstobeentitledinexchangefortransferringpromisedgoodsorservicestoacustomer,excludingamountscollectedonbehalfofthirdpartiesandamountsexpectedtoberefundedtoacustomer.ThetransactionpricerecognizedbytheGroupdoesnotexceedtheamountofaccumulatedrecognizedrevenuethatisunlikelytobesignificantlyreversedwhentherelevantuncertaintyiseliminated.TheGroupevaluatesthecontractonthecontractstartdate,identifieseachindividualperformanceobligationcontainedinthecontract,anddetermineswhethereachindividualperformanceobligationisperformedwithinacertainperiodoratacertaintimepoint.ItisaperformanceobligationsatisfiedduringaperiodoftimeandtheGrouprecognizesrevenueduringaperiodoftimeaccordingtotheprogressofperformanceifoneofthefollowingconditionsismet:(i)thecustomerobtainsandconsumeseconomicbenefitsatthesametimeoftheGroup'sperformance;(ii)thecustomerisabletocontrolgoodsorservicesinprogressduringtheGroup'sperformance;(iii)goodsorservicesgeneratedduringtheGroup'sperformancehaveirreplaceableutilization,andtheGroupisentitledtocollectamountsofcumulativeperformancepartwhichhavebeendoneuptonow.Otherwise,revenueisrecognizedatapointintimewhenthecustomerobtainscontrolovertherelevantgoodsorservices.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

26.Revenuerecognition-continued

26.1Disclosureofaccountingpoliciesadoptedforrevenuerecognitionandmeasurementby

typeofbusiness-continuedTheGroupadoptsoutputmethod,i.e.,thevalueofgoodsorservicestransferredtocustomerstodeterminetheappropriateprogressofperformance.Wheretheprogresscannotbedeterminedreasonably,therevenueisrecognizedbasedontheamountofcostthatisexpectedtobecompensatedbasedonthecostalreadyincurred,untiltheprogressofperformanceisreasonablydetermined.ContractassetsrefertotherightthattheGrouphastransferredgoodsorservicestocustomersandisentitledtoreceiveconsideration,andtherightdependsonotherfactorsotherthanthepassageoftime.PleaserefertoNoteIV.11fordetailsoftheaccountingpoliciesfortheimpairmentofcontractassets.TheGroup'sunconditional(thatis,onlydependingonthepassageoftime)righttocollectconsiderationfromcustomersisseparatelylistedasreceivables.ContractliabilitiesrefertotheGroup'sobligationtotransfergoodsorservicestoacustomerforconsiderationreceivedorreceivablefromthecustomer.Contractassetsandcontractliabilitiesunderthesamecontractarepresentedinnetamount.Iftherearetwoormoreofperformanceobligationsincludedinthecontract,attheinceptionofthecontract,theGroupallocatesthetransactionpricetoeachsingleperformanceobligationbasedontheproportionofstand-alonesellingpriceofgoodsorservicespromisedineachstand-aloneperformanceobligation.However,ifthereisconclusiveevidenceindicatingthatthecontractdiscountorvariableconsiderationisonlyrelativewithoneormore(notthewhole)performanceobligationsinthecontract,theGroupwillallocatethecontractdiscountorvariableconsiderationtorelativeoneormoreperformanceobligations.Stand-alonesellingpricereferstothepriceofasinglesaleofgoodsorservices.Ifthestand-alonesellingpricecannotbeobserveddirectly,theGroupestimatesthestand-alonesellingpricethroughcomprehensiveconsiderationofallrelativeinformationthatcanbereasonablyacquiredandmaximumuseofobservableinputs.Incaseoftheexistenceofvariableconsideration(suchassalesdiscount)inthecontract,theGroupshalldeterminethebestestimateofvariableconsiderationbasedontheexpectedvalueorthemostprobablyoccurredamount.Thetransactionpriceincludingvariableconsiderationshallnotexceedtheamountofthecumulativelyrecognizedrevenuewhichisunlikelytobesignificantlyreversedwhenrelevantuncertaintyiseliminated.Ateachbalancesheetdate,theGroupre-estimatestheamountofvariableconsiderationwhichshouldbeincludedintransactionprice.Ifthecustomerpaysnon-cashconsideration,theGroupdeterminesthetransactionpricebasedonthefairvalueofthenon-cashconsideration.Ifthefairvalueofnon-cashconsiderationcannotbereasonablyestimated,theGroupshalldeterminethetransactionpriceindirectlybyreferencetothestand-alonesellingpriceofthegoodsorservicespromisedtotransfertothecustomer.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

26.Revenuerecognition-continued

26.1Disclosureofaccountingpoliciesadoptedforrevenuerecognitionandmeasurementby

typeofbusiness-continuedIncaseoftheexistenceofasignificantfinancingcomponentinthecontract,theGroupshalldeterminethetransactionpriceontheassumptionthatthecustomerhaspaidtheamountpayablebycashwhenobtainingthecontroloverthegoodsorservices.Differencesbetweentransactionpriceandcontractconsiderationareamortizedusingeffectiveinterestmethodduringthecontractlife.Attheinceptionofthecontract,iftheperiodbetweenwhentheGrouptransfersapromisedgoodsorservicetoacustomerandwhenthecustomerpaysforthatgoodsorservicewillbeoneyearorless,theGroupwouldnotconsiderthesignificantcomponentinthecontract.TheGroupassesseswhetheritcontrolseachspecifiedgoodsorservicebeforethatgoodsorserviceistransferredtothecustomertodeterminewhethertheGroupisaprincipaloranagent.IftheGroupcontrolsthespecifiedgoodorservicebeforethatgoodorserviceistransferredtoacustomer,theGroupisaprincipalandrecognizesrevenueinthegrossamountofconsiderationreceivedorreceivable.Otherwise,theGroupisanagentandrecognizesrevenueintheamountofanyfeeorcommissiontowhichitexpectstobeentitled.ThefeeorcommissionisthenetamountofconsiderationthattheGroupretainsafterpayingtheotherpartytheconsiderationreceivedinexchangeforthegoodsorservicestobeprovidedbythatparty,orisdeterminedinaccordancewiththeestablishedcommissionamountorpercentage,etc.WheretheGroupreceivesreceiptsinadvancefromacustomerforsalesofgoodsorrenderingofservices,theamountisfirstrecognizedasaliabilityandthentransferredtorevenuewhentherelatedperformanceobligationhasbeensatisfied.WhentheGroup'sadvancepaymentsreceivedarenotrequiredtoberefundedanditisprobablethatthecustomerwillwaiveallorpartofitscontractualrights,theGrouprecognizesthesaidamountsasrevenueonapro-ratabasisinaccordancewiththepatternofexerciseofthecustomer'scontractualrights,iftheGroupexpectstobeentitledtotheamountsrelatingtothecontractualrightswaivedbythecustomer;otherwise,theGroupreversestherelatedbalanceofthesaidliabilitiestorevenueonlywhenitishighlyunlikelythatthecustomerwillrequireperformanceoftheremainingperformanceobligations.Forportbusiness,therevenuefromthehandlingofcontainersandbulkcargosisrecognizedovertimebasedontheprogressofcompletedservices,andtherevenuefromthestorageofcontainersandbulkcargosisrecognizedonastraight-linebasisovertheperiodofstorage.Forbondedlogisticsbusiness,therevenueisrecognizedbasedontheprogressofservicesrendered,wheretheprogressofcompletedservicesisdeterminedbasedontheproportionofdaysonservicesprovidedtotheestimatedtotalnumberofservicedays.Asatthebalancesheetdate,theGrouphasre-estimatedtheprogressofcompletedbondedlogisticsservicesothatitreflectsthechangesinperformancestatus.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

26.Revenuerecognition-continued

26.2Similaroperationsunderdifferentbusinessmodelswhichinvolvedifferentrevenue

recognitionandmeasurementmethodsTheGrouphasnosimilaroperationsunderdifferentbusinessmodelswhichinvolvedifferentrevenuerecognitionandmeasurementmethods.

26.3CostsofobtainingacontractFortheincrementalcostofobtainingthecontract(costthatwillnotoccurifthecontractisnotobtained)thatisexpectedtoberecoverable,itisrecognizedasanasset.Iftheamortizationperiodofsuchassetislessthanoneyear,itisrecognizedinprofitorlossfortheperiodwhenincurred.Otherexpensesincurredforobtainingthecontractisincludedinprofitorlossfortheperiodwhenincurred,exceptforthoseexplicitlyassumedbythecustomer.

26.4CoststofulfilacontractIfthecostsincurredinfulfillingacontractarenotwithinthescopeofanystandardsotherthanRevenueStandards,theGrouprecognizesanassetonlyifthosecostsmeetallofthefollowingcriteria:(1)thecostsrelatedirectlytoacontractortoananticipatedcontractthattheGroupcanspecificallyidentify;(2)thecostsenhanceresourcesoftheGroupthatwillbeusedinsatisfyingperformanceobligationsinthefuture;and(3)thecostsareexpectedtoberecovered.Theassetmentionedaboveshallbeamortizedonabasisthatisconsistentwiththerevenuerecognitionofthegoodsorservicestowhichtheassetrelatesandrecognizedinprofitorlossfortheperiod.

27.GovernmentgrantsGovernmentgrantsrefertomonetaryassetsandnon-monetaryassetsobtainedbytheGroupfromthegovernmentfreeofcharge.Governmentgrantsarerecognizedwhentheycanmeettheconditionsattachedtogovernmentgrantsandcanbereceived.Ifagovernmentgrantisintheformofatransferofamonetaryasset,itismeasuredattheamountreceivedorreceivable.Ifagovernmentgrantisintheformofanon-monetaryasset,itismeasuredatfairvalue.Ifthefairvaluecannotbereliablydetermined,itismeasuredatanominalamount.Agovernmentgrantmeasuredatanominalamountisrecognizedimmediatelyinprofitorlossfortheperiod.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

27.Governmentgrants-continued

27.1DeterminationbasisandaccountingtreatmentofgovernmentgrantrelatedtoassetsGovernmentgrantsoftheGroupmainlyincludegrantsforintelligentsystem,etc.,andthesegovernmentgrantsrelatetoassetsastheywillformlong-termassets.Agovernmentgrantrelatedtoanassetisrecognizedasdeferredincome,andincludedinprofitorlossbystagesovertheusefullifeoftherelatedassetinareasonableandsystematicway.Agovernmentgrantmeasuredatanominalamountisrecognizedimmediatelyinprofitorlossinthecurrentperiod.Wheretherelevantassetissold,transferred,retiredordamagedpriortotheendofitsusefullife,therelatedundistributeddeferredincomeistransferredtoprofitorlossofthedisposalperiod.

27.2DeterminationbasisandaccountingtreatmentofgovernmentgrantrelatedtoincomeGovernmentgrantsoftheGroupmainlyincludegrantsforbusinessdevelopmentandspecializedoperations,etc.,andthesegovernmentgrantsrelatetoincomeastheywillnotformlong-termassets.TheGroupclassifiesgovernmentgrantsthataredifficulttobedistinguishedasgovernmentgrantsrelatedtoincomeaggregately.Foragovernmentgrantrelatedtoincome,ifthegrantisacompensationforrelatedexpensesorlossestobeincurredinsubsequentperiods,thegrantisrecognizedasdeferredincomeandrecognizedinprofitorlossfortheperiodinwhichtherelatedcostsorlossesarerecognized;ifthegrantisacompensationforrelatedexpensesorlossesalreadyincurred,thegrantisrecognizedimmediatelyinprofitorloss.AgovernmentgrantrelatedtotheGroup'sdailyactivitiesisrecognizedinotherincome;agovernmentgrantnotrelatedtotheGroup'sdailyactivitiesisrecognizedinnon-operatingincome.

28.BorrowingcostsBorrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassetarecapitalizedwhenexpendituresforsuchassetandborrowingcostsareincurredandactivitiesrelatingtotheacquisition,constructionorproductionoftheassetthatarenecessarytopreparetheassetforitsintendeduseorsalehavecommenced.Capitalizationofborrowingcostsceaseswhenthequalifyingassetbeingacquired,constructedorproducedbecomesreadyforitsintendeduseorsale.Capitalizationofborrowingcostsissuspendedduringperiodsinwhichtheacquisition,constructionorproductionofaqualifyingassetisinterruptedabnormallyandwhentheinterruptionisforacontinuousperiodofmorethan3months.Capitalizationofborrowingcostsissuspendeduntiltheacquisition,constructionorproductionoftheassetisresumed.Otherborrowingcostsarerecognizedasanexpenseintheperiodinwhichtheyareincurred.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

28.Borrowingcosts-continuedWherefundsareborrowedunderaspecific-purposeborrowing,theamountofinteresttobecapitalizedistheactualinterestexpenseincurredonthatborrowingfortheperiodlessanybankinterestearnedfromdepositingtheborrowedfundsbeforebeingusedontheassetoranyinvestmentincomeonthetemporaryinvestmentofthosefunds.Wherefundsareborrowedundergeneral-purposeborrowings,theGroupdeterminestheamountofinteresttobecapitalizedonsuchborrowingsbyapplyingacapitalizationratetotheweightedaverageoftheexcessofcumulativeexpendituresontheassetovertheamountsofspecific-purposeborrowings.Thecapitalizationrateistheweightedaverageoftheinterestratesapplicabletothegeneral-purposeborrowings.Duringthecapitalizationperiod,exchangedifferencesrelatedtoaspecific-purposeborrowingdenominatedinforeigncurrencyareallcapitalized.Exchangedifferencesinconnectionwithgeneral-purposeborrowingsarerecognizedinprofitorlossfortheperiodinwhichtheyareincurred.

29.IncometaxTheincometaxexpensesincludecurrentincometaxanddeferredincometax.

29.1CurrentincometaxAtthebalancesheetdate,currentincometaxliabilities(orassets)forthecurrentandpriorperiodsaremeasuredattheamountexpectedtobepaid(orrecovered)accordingtotherequirementsoftaxlaws.

29.2DeferredtaxassetsanddeferredtaxliabilitiesFortemporarydifferencesbetweenthecarryingamountsofcertainassetsorliabilitiesandtheirtaxbase,orbetweenthenilcarryingamountofthoseitemsthatarenotrecognizedasassetsorliabilitiesandtheirtaxbasethatcanbedeterminedaccordingtotaxlaws,deferredtaxassetsandliabilitiesarerecognizedusingthebalancesheetliabilitymethod.Deferredincometaxaregenerallyrecognizedforalltaxabletemporarydifferences.Deferredtaxassetsfordeductibletemporarydifferencesarerecognizedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichthedeductibletemporarydifferencescanbeutilized.However,fortemporarydifferencesassociatedwiththeinitialrecognitionofgoodwillandtheinitialrecognitionofanassetorliabilityarisingfromatransaction,whichisnotabusinesscombinationthataffectsneithertheaccountingprofitnortaxableprofits(ordeductiblelosses)andwillnotresultintaxabletemporarydifferencesanddeductibletemporarydifferencesinequivalentamountsatthetimeoftransaction,nodeferredtaxassetorliabilityisrecognized.Fordeductiblelossesandtaxcreditsthatcanbecarriedforward,deferredtaxassetsarerecognizedtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthedeductiblelossesandtaxcreditscanbeutilized.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

29.Deferredtaxassets/deferredtaxliabilities-continued

29.2Deferredtaxassetsanddeferredtaxliabilities-continuedDeferredtaxliabilitiesarerecognizedfortaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandjointventures,exceptwheretheGroupisabletocontrolthetimingofthereversalofthetemporarydifferencesanditisprobablethatthetemporarydifferenceswillnotbereversedintheforeseeablefuture.Deferredtaxassetsarisingfromdeductibletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandjointventuresarerecognizedtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthedeductibletemporarydifferencescanbeutilizedandtheyareexpectedtobereversedintheforeseeablefuture.Atthebalancesheetdate,deferredtaxassetsandliabilitiesaremeasuredatthetaxratesapplicableintheperiodinwhichtheassetisrealizedortheliabilityissettledaccordingtotaxlaws.Currentanddeferredtaxexpensesorincomearerecognizedinprofitorlossfortheperiod,exceptwhentheyarisefromtransactionsoreventsthataredirectlyrecognizedinothercomprehensiveincomeorshareholders'equity,inwhichcasetheyarerecognizedinothercomprehensiveincomeorshareholders'equity,andwhentheyarisefrombusinesscombinations,inwhichcasetheyadjustthecarryingamountofgoodwill.Atthebalancesheetdate,thecarryingamountofdeferredtaxassetsisreviewedandreducedifitisnolongerprobablethatsufficienttaxableprofitswillbeavailableinthefuturetoallowthebenefitofdeferredtaxassetstobeutilized.Anysuchreductioninamountisreversedwhenitbecomesprobablethatsufficienttaxableprofitswillbeavailable.

29.3IncometaxoffsettingWhentheGrouphasalegalrighttosettleonanetbasisandintendseithertosettleonanetbasisortorealizetheassetsandsettletheliabilitiessimultaneously,currenttaxassetsandcurrenttaxliabilitiesareoffsetandpresentedonanetbasis.WhentheGrouphasalegalrighttosettlecurrenttaxassetsandliabilitiesonanetbasis,anddeferredtaxassetsanddeferredtaxliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthesametaxableentityordifferenttaxableentitieswhichintendeithertosettlecurrenttaxassetsandliabilitiesonanetbasisortorealizetheassetsandliabilitiessimultaneously,ineachfutureperiodinwhichsignificantamountsofdeferredtaxassetsorliabilitiesareexpectedtobereversed,deferredtaxassetsanddeferredtaxliabilitiesareoffsetandpresentedonanetbasis.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

30.Transactionsdenominatedinforeigncurrenciesandtranslationoffinancial

statementsdenominatedinforeigncurrencies

30.1TransactionsdenominatedinforeigncurrenciesAforeigncurrencytransactionisrecorded,oninitialrecognition,byapplyingthespotexchangerateonthedateofthetransaction.Atthebalancesheetdate,foreigncurrencymonetaryitemsaretranslatedintofunctionalcurrencyusingthespotexchangeratesatthebalancesheetdate.Exchangedifferencesarisingfromthedifferencesbetweenthespotexchangeratesprevailingatthebalancesheetdateandthoseoninitialrecognitionoratthepreviousbalancesheetdatearerecognizedinprofitorlossfortheperiod,exceptthat(1)exchangedifferencesrelatedtoaspecific-purposeborrowingdenominatedinforeigncurrencythatqualifyforcapitalizationarecapitalizedaspartofthecostofthequalifyingassetduringthecapitalizationperiod;(2)exchangedifferencesrelatedtohedginginstrumentsforthepurposeofhedgingagainstforeigncurrencyrisksareaccountedforusinghedgeaccounting;(3)exchangedifferencesarisingfromchangesinthecarryingamounts(otherthantheamortizedcost)ofmonetaryitemsatfairvaluethroughothercomprehensiveincomearerecognizedasothercomprehensiveincome.Whentheconsolidatedfinancialstatementsincludeforeignoperation(s),ifthereisforeigncurrencymonetaryitemconstitutinganetinvestmentinaforeignoperation,exchangedifferencesarisingfromchangesinexchangeratesarerecognizedas"exchangedifferencesarisingfromtranslationoffinancialstatementsdenominatedinforeigncurrencies"inothercomprehensiveincome,andinprofitorlossfortheperiodupondisposaloftheforeignoperation.Foreigncurrencynon-monetaryitemsmeasuredathistoricalcostaretranslatedtotheamountsinfunctionalcurrencyatthespotexchangeratesonthedatesofthetransactions.Foreigncurrencynon-monetaryitemsmeasuredatfairvaluearere-translatedatthespotexchangerateonthedatewhenthefairvalueisdetermined.Differencebetweenthere-translatedfunctionalcurrencyamountandtheoriginalfunctionalcurrencyamountistreatedaschangesinfairvalue(includingchangesinexchangerate)andisrecognizedinprofitorlossorasothercomprehensiveincome.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

30.Transactionsdenominatedinforeigncurrenciesandtranslationoffinancial

statementsdenominatedinforeigncurrencies-continued

30.2TranslationoffinancialstatementsdenominatedinforeigncurrenciesForthepurposeofpreparingtheconsolidatedfinancialstatements,financialstatementsofaforeignoperationaretranslatedfromtheforeigncurrencyintoRMBusingthefollowingmethod:

assetsandliabilitiesonthebalancesheetaretranslatedatthespotexchangerateprevailingatthebalancesheetdate;shareholders'equityitemsexceptfortranslationdifferencesarisingfromtranslationofforeigncurrencyfinancialstatementsitemsinretainedearningsandothercomprehensiveincomearetranslatedatthespotexchangeratesatthedatesonwhichsuchitemsarose;allitemsintheincomestatementaswellasitemsreflectingthedistributionofprofitsaretranslatedattheaverageexchangeratesoftheaccountingperiodoftheconsolidatedfinancialstatements;retainedearningsatthebeginningoftheyeararetheconvertedyear-endretainedearningsofthepreviousyear.Theyear-endretainedearningsarecalculatedandpresentedinaccordancewiththeitemsofprofitdistributionafterconversion.Thedifferencebetweenthetranslatedassetsandtheaggregateofliabilitiesandshareholders'equityitemsisrecognizedasothercomprehensiveincomeandincludedinshareholders'equity.Cashflowsarisingfromatransactioninforeigncurrencyandthecashflowsofaforeignsubsidiaryaretranslatedataverageexchangerateduringtheaccountingperiodofconsolidatedfinancialstatements.Theeffectofexchangeratechangesoncashandcashequivalentsisregardedasareconcilingitemandpresentedseparatelyinthecashflowstatementas"effectofexchangeratechangesoncashandcashequivalents".Theamountattheendoflastyearandthecomparativefiguresofpreviousyeararepresentedatthetranslatedamountsinthepreviousyear'sfinancialstatements.OndisposaloftheGroup'sentireinterestinaforeignoperation,oruponalossofcontroloveraforeignoperationduetodisposalofcertaininterestinitorotherreasons,theGrouptransferstheaccumulatedexchangedifferencesarisingfromtranslationoffinancialstatementsofthisforeignoperationattributabletotheowners'equityoftheCompanyandpresentedunderothercomprehensiveincome,toprofitorlossintheperiodinwhichthedisposaloccurs.IncaseofadisposalofpartequityinvestmentsorotherreasonleadingtolowerinterestpercentageinforeignoperationsbutdoesnotresultintheGrouplosingcontroloveraforeignoperation,theexchangedifferencesarisingfromthetranslationdifferenceoffinancialstatementsdenominatedinforeigncurrenciesrelatedtothisdisposedpartarere-attributedtonon-controllinginterestsandarenotrecognizedinprofitorloss.Forpartialdisposalsofequityinterestsinforeignoperationswhichareassociatesorjointventures,theproportionateshareoftheaccumulatedexchangedifferencesarisingfromtranslationdifferenceoffinancialstatementsdenominatedinforeigncurrenciesisreclassifiedtoprofitorloss.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

31.LeasesAleaseisacontractinwhichthelessor,foracertainperiodoftime,givesthelesseetherighttousetheassetstoobtainaconsideration.Onthecontractstartdate,theGroupassesseswhetherthecontractisaleaseorincludesalease.Ifonepartyinthecontracttransferstherighttocontroltheuseofoneormoreidentifiedassetswithinacertainperiodinexchangeforconsideration,thecontractisaleaseorincludesalease.Unlessthecontracttermsandconditionschange,theGroupwillnotre-evaluatewhetherthecontractisaleaseorincludesalease.

31.1TheGroupaslessee

31.1.1SeparatingcomponentsofaleaseForacontractthatcontainsoneormoreleasecomponentsornon-leasecomponents,theGroupseparateseachindividualleaseandnon-leasecomponentandallocatesthecontractconsiderationintherelativeproportionofthesumoftheindividualpriceofeachleasecomponentandtheindividualpriceofthenon-leasecomponent.

31.1.2Right-of-useassetsExceptforshort-termleasesandleasesoflow-valueassets,theGrouprecognizestheright-of-useassetsoftheleasesatthecommencementdate.ThecommencementdateoftheleaseisthedatefromwhichthelessorprovidestheleasedassetstomakethemavailableforusebytheGroup.Right-of-useassetsareinitiallymeasuredatcost.Thecostincludes:

?theamountoftheinitialmeasurementoftheleaseliabilities.?anyleasepaymentsmadeatorbeforethecommencementdate,lessanyleaseincentives.?anyinitialdirectcostsincurredbytheGroup.?anestimateofcoststobeincurredbytheGroupindismantlingandremovingtheunderlying

asset,restoringthesiteonwhichitislocatedorrestoringtheunderlyingassettotheconditionrequiredbythetermsandconditionsofthelease.Right-of-useassetsaredepreciatedbytheGroupinaccordancewiththeASBENo.4--FixedAssets.IftheGroupisreasonablycertain,thattheleasewilltransferownershipoftheunderlyingassettotheGroupbytheendoftheleaseterm,theright-of-useassetsaredepreciatedfromthecommencementdatetotheendoftheusefullifeoftheunderlyingasset.Otherwise,theright-of-useassetsaredepreciatedfromthecommencementdatetotheearlieroftheendoftheusefullifeoftheright-of-useassetsortheendoftheleaseterm.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

31.Leases-continued

31.1TheGroupaslessee-continued

31.1.3LeaseliabilitiesExceptforshort-termleasesandleasesoflow-valueassets,theGroupinitiallymeasuresleaseliabilitiesatthepresentvalueoftheoutstandingleasepaymentsatthecommencementdate.Incalculatingthepresentvalueoftheleasepayments,theGroupusestheimplicitinterestrateoftheleaseasthediscountrate.Ifitisnotpossibletodeterminetheimplicitinterestrateofthelease,theincrementalborrowingrateshallbeapplied.TheleasepaymentscomprisethefollowingpaymentsbytheGroupfortherighttousetheunderlyingassetduringtheleaseterm:

?fixedpayments(includingin-substancefixedpayments),lessanyleaseincentives.?variableleasepaymentsthatdependonanindexorarate.?theexercisepriceofapurchaseoptioniftheGroupisreasonablycertaintoexercisethat

option.?paymentsforterminatingthelease,iftheleasetermreflectstheGroupexercisinganoption

toterminatethelease.?amountsexpectedtobepayablebytheGroupunderresidualvalueguarantees.Variableleasepaymentsthatdependonanindexorarate,areinitiallymeasuredusingtheindexorrateasatthecommencementdate.Variableleasepaymentsnotincludedinthemeasurementoftheleaseliabilities,arerecognizedinprofitorloss,orinthecostofrelevantassets,intheperiodofthosepayments.Afterthecommencementdate,interestexpensesontheleaseliabilitiesineachperiodduringtheleasetermiscalculatedbyaconstantperiodicrateofinterestandincludedinprofitorlossorchargedtocostofrelatedassets.Afterthecommencementdate,theGroupshallremeasuretheleaseliabilitiesandmakecorrespondingadjustmentstotherelatedright-of-useassetsinthefollowingcircumstances.Ifthecarryingamountoftheright-of-useassetsisreducedtozeroandthereisafurtherreductioninthemeasurementoftheleaseliabilities,theGroupshallrecognizethedifferenceinprofitorloss:

?wherethereisachangeintheleaseterm,orintheassessmentofanoptiontopurchasethe

underlyingasset,theGroupremeasurestheleaseliabilities,onthebasisoftherevisedleases

paymentsandthereviseddiscountrate.?wherethereisachangeintheamountsexpectedtobepayableunderaresidualvalue

guarantee,orinfutureleasepaymentsresultingfromachangeinanindexorarateusedto

determinethosepayments,theGroupremeasurestheleaseliabilities,onthebasisofthe

revisedleasepaymentsandtheunchangeddiscountrate,unlessthechangeinthelease

paymentsresultsfromachangeinfloatinginterestrates,inwhichcaseareviseddiscount

rateisappliedtocalculatethepresentvalue.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

31.Leases-continued

31.1TheGroupaslessee-continued

31.1.4Short-termleasesandleasesoflow-valueassetsTheGroupelectsnottorecognizeright-of-useassetsorleaseliabilitiesforshort-termleasesandleasesoflow-valueassets,i.e.,portandterminalfacilities,buildings,machineryandequipment,furniture,fixtureandotherequipment,motorvehiclesandcargoshipsandothers.Ashort-termleaseisaleasethat,atthecommencementdate,hasaleasetermof12monthsorlessanddoesnotcontainacalloption.Aleaseoflow-valueassetsisaleasethat,thevalueoftheunderlyingassetislowerwhenitisnew.Forshort-termleasesandleasesoflow-valueassets,theGrouprecognizestheleasepaymentsinprofitorloss,orinthecostofrelatedassetsonastraight-linebasisovereachperiodwithintheleaseterm.

31.1.5LeasemodificationsAleasemodificationshouldbeaccountedforasaseparateleaseifbothofthefollowingapply:

?themodificationincreasesthescopeoftheleasebyaddingtherighttouseoneormore

underlyingassets.?theconsiderationfortheleaseincreasesbyanamountcommensuratewiththestand-alone

pricefortheincreaseinscopeandanyappropriateadjustmentstothatstand-aloneprice

accordingtothecircumstancesoftheparticularcontract.Foraleasemedicationthatisnotaccountedforasaseparatelease,attheeffectivedateoftheleasemodification,theGroupshouldallocatetheconsiderationinthemodifiedcontract,determinetheleasetermofthemodifiedleaseandremeasuretheleaseliabilitiesbasedonthepresentvalueofthechangedleasepaymentsandthereviseddiscountrate.Forleasemodificationsthatdecreasethescopeoftheleaseorshortenthetermofthelease,theGroupshoulddecreasethecarryingamountoftheright-of-useassetswithanygainorlossrelatingtothepartialorfullterminationoftheleaserecognizedinprofitorloss.Forre-measurementofleaseliabilitiesduetootherleasemodifications,acorrespondingadjustmentismadetothecarryingamountoftheright-of-useassets.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

31.Leases-continued

31.1TheGroupaslessee-continued

31.1.6SaleandleasebacktransactionsTheGroupasseller-lesseeTheGroupappliestherequirementsofRevenueStandardtodeterminewhetherthetransferofanassetisaccountedforasasaleofthatasset.Ifthetransferofanassetdoesnotconstituteasale,theGroupshallcontinuetorecognizethetransferredassets,recognizeafinancialliabilityequaltothetransferproceedsandaccountsforsuchfinancialliabilityinaccordancewiththeAccountingStandardsforBusinessEnterprisesNo.22--FinancialInstruments:RecognitionandMeasurement.Ifthetransferofanassetisasale,theGroupshallmeasuretheright-of-useassetsarisingfromtheleasebackattheproportionofthepreviouscarryingamountoftheassetthatrelatestotherightofuse,andrecognizeanygainorlossforrightstransferredtothelessoronly.

31.2TheGroupaslessor

31.2.1SeparatingcomponentsofaleaseForacontractthatcontainsleasecomponentsandnon-leasecomponents,theGroupallocatesthecontractconsiderationinaccordancewiththeRevenueStandardsonallocationoftransactionprices,basedontherespectiveindividualpricesoftheleasecomponentsandthenon-leasecomponents.

31.2.2ClassificationofleasesLeasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownership.Allotherleasesareclassifiedasoperatingleases.

31.2.2.1TheGroupaslessorunderoperatingleasesTheGrouprecognizesleasereceiptsfromoperatingleasesasrentalincomeusingastraight-linemethodovertherespectiveperiodsoftheleaseterm.TheGroup'sinitialdirectcostsincurredinconnectionwithoperatingleasesarecapitalizedwhenthecostsincurred,andareallocatedtoprofitorlossfortheperiodovertheleasetermonthesamebasisastherecognitionofrentalincome.VariableleasereceiptsacquiredbytheGroupinconnectionwithoperatingleasesthatarenotincludedintheleasereceiptsarerecognizedinprofitorlossfortheperiodwhentheyareactuallyincurred.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

31.Leases-continued

31.2TheGroupaslessor-continued

31.2.2Classificationofleases-continued

31.2.2.2TheGroupaslessorunderfinanceleasesAtthecommencementdate,theGrouprecognizesafinanceleasereceivableattheamountequaltothenetleaseinvestmentwithassetsunderfinanceleasederecognized.Thenetleaseinvestmentisthesumofanyunguaranteedresidualvalueandthepresentvalueoftheleasereceiptsovertheleasetermdiscountedattheinterestrateimplicitinlease.TheleasereceivablecomprisesthefollowingpaymentscollectedbytheGroupfromthelesseeforthetransferoftherighttousetheunderlyingassetsduringtheleaseterm:

?fixedpayments(includingin-substancefixedpayments)paidbythelessee,lessanylease

incentives.?variableleasepaymentsthatdependonanindexorarate.?theexercisepriceofapurchaseoption,providedthatitisreasonablydeterminedthatthe

lesseewillexercisetheoption.?paymentsforterminatingthelease,providedthattheleasetermreflectsthatthelesseewill

exercisetheoptiontoterminatethelease;?residualvalueofguaranteeprovidedtotheGroupbythelessee,apartyrelatedtothelessee

andanindependentthirdpartywiththefinancialabilitytofulfiltheguaranteeobligations.Variableleasereceiptsnotincludedinthenetleaseinvestmentarerecognizedinprofitorlosswhentheyareactuallyincurred.InterestincomeforeachperiodovertheleasetermiscalculatedandrecognizedbytheGroupatafixedperiodicrate.

31.2.3SubleasesAsthelessorofasublease,theGroupaccountsfortheoriginalleasecontractandthesubleasecontractonaseparatebasis.TheGroupclassifiesthesubleasesbasedontheright-of-useassetsgeneratingfromtheoriginalleaseratherthantheunderlyingassetsoftheoriginallease.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

31.Leases-continued

31.2TheGroupaslessor-continued

31.2.4LeasemodificationsTheGroupaccountsforamodificationtoanoperatingleaseasanewleasefromtheeffectivedateofthemodification,consideringanyleaseadvancesorreceivablesrelatingtotheoriginalleaseastheleasereceiptsforthenewlease.Aleasemodificationshouldbeaccountedforasaseparateleaseifthereisamodificationinafinanceleaseandbothofthefollowingsapply:

?themodificationincreasesthescopeoftheleasebyaddingtherighttouseoneormore

underlyingassets;and?theconsiderationfortheleaseincreasesbyanamountcommensuratewiththestand-alone

pricefortheincreaseinscopewithanyappropriateadjustmenttothatstand-aloneprice.Foramodificationtoafinanceleasethatisnotaccountedforasaseparatelease,theGroupaccountsforthemodificationasfollows:

?Iftheleasewouldhavebeenclassifiedasanoperatingleasehadthemodificationbeen

effectiveatthecommencementdate,theGroupshouldaccountfortheleasemodificationas

anewleasefromtheeffectivedateofthemodification,andmeasurethecarryingamountof

theunderlyingassetsattheamountequaltothenetleaseinvestmentbeforetheeffective

dateofthemodification;?Iftheleasewouldhavebeenclassifiedasafinanceleasehadthemodificationbeeneffective

atthecommencementdate,theGroupshouldaccountforitinaccordancewiththe

provisionsoncontractmodificationandrenegotiationunderAccountingStandardsfor

BusinessEnterprisesNo.22--FinancialInstruments:RecognitionandMeasurement.

31.2.5SaleandleasebacktransactionsTheGroupasthebuyer-lessorIfthetransferofanassetinasaleandleasebacktransactiondoesnotconstituteasale,theGroupdoesnotrecognizethetransferredassetbutafinancialassetatanamountequaltothetransferproceeds,andaccountsforsuchfinancialassetundertheAccountingStandardsforBusinessEnterprisesNo.22--FinancialInstruments:RecognitionandMeasurement.Ifthetransferofanassetconstitutesasale,theGroupaccountsforthepurchaseoftheassetinaccordancewithotherapplicableAccountingStandardsforBusinessEnterprisesandaccountsfortheleaseoftheasset.

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(IV)SIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-continued

32.SafetyproductioncostAccordingtotheAdministrativeMeasuresfortheCollectionandUtilizationofEnterpriseWorkSafetyFunds(CaiZi[2022]No.136)jointlyissuedbytheMinistryofFinanceandtheEmergencyDepartmenton13December2022,safetyproductioncostsetasidebytheGroupisdirectlyincludedinthecostofrelevantproductsorrecognizedinprofitorlossfortheperiod,andtransferredtospecificreservesimultaneously.Whensafetyproductioncostsetasideisutilized,ifthecostsincurredcanbecategorizedasexpenditure,thecostsincurredshouldbechargedagainstthespecificreserve.Ifthecostssetasideareusedtobuildupfixedassets,thecostsshouldbechargedtoconstructioninprogress,andreclassifiedtofixedassetswhenthesafetyprojectsarereadyforintendeduse.Meantime,expendituresinbuildingupfixedassetsaredirectlychargedagainstthespecificreservewiththeaccumulateddepreciationrecognizedatthesameamount.Depreciationwillnotbemadeinthefutureperiodonsuchfixedassets.

33.Exchangeofnon-monetaryassetsWhenthenon-monetaryassetsareofcommercialsubstanceandthefairvalueofassetsreceivedortheassetsgivenupcanbemeasuredreliably,thenon-monetarytransactionsaremeasuredatfairvalue.Fortheassetreceived,thefairvalueoftheassetgivenupandrelatedtaxespayablearerecognizedasthecostatinitialrecognition;Fortheassetgivenup,atderecognition,thedifferencebetweenthefairvalueandthecarryingamountisrecognizedinprofitorlossforthecurrentperiod.Whenthereisclearevidenceindicatingthatthefairvalueofthereceivedassetismorereliable,fortheassetreceived,thefairvalueoftheassetreceivedandrelatedtaxespayablearerecognizedasthecostatinitialrecognition;Fortheassetgivenup,atderecognition,thedifferencebetweenthefairvalueoftheassetreceivedandthecarryingamountoftheassetgivenupisrecognizedinprofitorlossforthecurrentperiod.Whenthenon-monetarytransactionsfailtomeetcriteriatobemeasuredatfairvalue,thetransactionsaremeasuredatcarryingamounts.Fortheassetreceived,thecarryingamountoftheassetgivenupandrelevanttaxespayablearerecognizedasthecostofatinitialrecognition.Fortheassetgivenup,atderecognition,noprofitorlossisrecognized.

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(V)CRITICALJUDGMENTSINAPPLYINGACCOUNTINGPOLICIESANDKEY

ASSUMPTIONSANDUNCERTAINTIESINACCOUNTINGESTIMATESIntheapplicationofaccountingpoliciesandaccountingestimatesassetoutinNoteIV,theGroupisrequiredtomakejudgments,estimatesandassumptionsaboutthecarryingamountsofitemsinthefinancialstatementsthatcannotbemeasuredaccurately,duetotheinternaluncertaintyoftheoperatingactivities.Thesejudgments,estimatesandassumptionsarebasedonhistoricalexperienceoftheGroup'smanagementaswellasotherfactorsthatareconsideredtoberelevant.Actualresultsmaydifferfromtheseestimates.TheGroupregularlyreviewsthejudgments,estimatesandassumptionsonagoingconcernbasis.Changesinaccountingestimateswhichonlyaffectthecurrentperiodshouldberecognizedinthecurrentperiod;changeswhichnotonlyaffectthecurrentbutthefutureperiodsshouldberecognizedinthecurrentandfutureperiods.

1.Keyassumptionsanduncertaintiesusedinimportantjudgmentsandaccounting

estimatesAtthebalancesheetdate,keyassumptionsanduncertaintiesincriticaljudgmentsandaccountingestimatesthatarelikelytoleadtosignificantadjustmentstothecarryingamountsofassetsandliabilitiesinthefutureareasfollows:

1.1GoodwillimpairmentThebookvalueofgoodwillon30June2025is6,233,179,553.36.TheGroupwillconductimpairmenttestingongoodwillatleastannually.Forthepurposeofimpairmenttesting,therecoverableamountofeachassetsgroupandcombinationofassetsgroupsthatgenerategoodwilloftheGroupisdeterminedbyfairvaluelessestimateddisposalexpensesandbythepresentvalueofestimatedfuturecashflows,whichinvolvethejudgmentofmanagement.

1.2RecognitionofdeferredincometaxTheGroupcalculatesandmakesprovisionfordeferredtaxliabilitiesaccordingtotheprofitdistributionplansofsubsidiaries,associatesandjointventuresandrelevantprovisionsoftaxlaw.Forretainedearningsoftheinvesteewhicharenotexpectedtobedistributed,sincetheprofitswillbeusedforthedailyoperationandfuturedevelopmentoftheinvestee,nodeferredtaxliabilitiesarerecognized.Iftheprofitstobeactuallydistributedinfutureyearsaremoreorlessthanthoseexpected,correspondingdeferredtaxliabilitieswillberecognizedorreversedinprofitorlossfortheperiodattheearlierofthedateonwhichtheprofitdistributionplanischangedandthedateonwhichtheprofitdistributionisdeclared.Deferredtaxassetsarerecognizedbasedonthedeductibletemporarydifferencesandthecorrespondingtaxrate,totheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthedeductibletemporarydifferencescanbeutilized.Iftheactualtaxableincomeinfutureyearsaremoreorlessthanthatexpected,correspondingdeferredtaxassetswillberecognizedorreversedinprofitorlossfortheperiodinwhichtheyareactuallyincurred.

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(V)CRITICALJUDGMENTSINAPPLYINGACCOUNTINGPOLICIESANDKEY

ASSUMPTIONSANDUNCERTAINTIESINACCOUNTINGESTIMATES-continued

1.Keyassumptionsanduncertaintiesusedinimportantjudgmentsandaccounting

estimates-continued

1.3EstimatedusefullivesandresidualvalueoffixedassetsandintangibleassetsTheGroupassessestheestimatedusefullivesandresidualvalueoffixedassetsandintangibleassets.Suchestimateismadebyreferencetothehistoricalexperienceofactualusefullivesandresidualvalueoffixedassetsandintangibleassetsofsimilarnatureandfunction,andissubjecttosignificantchangesduetotechnicalinnovationandfierceindustrycompetition.Wheretheestimatedusefullivesandresidualvalueoffixedassetsandintangibleassetsarelessthanthepreviousestimates,theGroupwillincreasethedepreciationandamortization,orwriteofforeliminatethetechnicallyobsoletefixedassetsorintangibleassets.(VI)CHANGESINSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

ESTIMATESTherearenosignificantaccountingpoliciesoraccountingchangesfortheperiod.

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(VII)TAXES

1.Majortaxesandtaxrates

CHINAMERCHANTSPORTGROUPCO.,LTD.Taxes

Note1:TheGroup'senterpriseincometaxiscalculatedbasedonthecurrenttaxratestipulated

bylocaltaxlaws.Amongthem,theCompanyissubjecttoanenterpriseincometaxrateof25%,thesubsidiariessetupinHongKongaresubjecttoanenterpriseincometaxrateof8.25%and16.5%,themajorityofsubsidiariessetupinChinaaresubjecttoanenterpriseincometaxrateof25%,andtheotheroverseassubsidiariesaresubjecttoenterpriseincometaxratesbetween10%and34%.TheCompanyobtainsdividendsdistributedbyoverseassubsidiariesandshouldpayenterpriseincometaxatarateof25%inaccordancewithrelevantChinesetaxlaws.TheCompanyobtainstaxableincomeoutsideofChina,andtheamountofincometaxthathasbeenpaidabroadcanbeoffsetwiththecurrenttaxableamount.ThecreditlimitisthetaxableamountcalculatedinaccordancewiththeprovisionsoftheEnterpriseIncomeTaxLaw.Note2:ForeigninvestorswhoreceivedividendsofprofitsfromChinesesubsidiariesin2008

andthereaftergenerallyshallpaywithholdingincometaxatarateof10%inaccordancewiththerelevantprovisionsonthePRCenterpriseincometax.Forcompaniesincorporatedincertainregions(includingHongKongandSingapore),ifthecompaniesmeetrelevantconditions,theywillenjoyapreferentialtaxrateof5%.Note3:TheVATamountisthebalanceoftheoutputtaxlessthedeductibleinputtax,andthe

outputtaxiscalculatedinaccordancewiththesalesincomeandthecorrespondingtaxratestipulatedintherelevanttaxlawsofChina.

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(VII)TAXES-continued