SINOTRANS LIMITED
(A joint stock limited company incorporated in the People’s Republic of China with limited liability)
ANNOUNCEMENT OF THE INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
I.
GROUP RESULTS
The board of directors of Sinotrans Limited (the ‘‘Company’’) is pleased to announce the unaudited
condensed consolidated results of the Company and its subsidiaries (collectively the ‘‘Group’’) for the
six months ended 30 June 2005 together with the comparative figures in 2004, which have been
prepared in accordance with International Financial Reporting Standards (‘‘IFRS’’), as follows:
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2005
Note
Continuing operations
Turnover
Other revenues
3
Transportation and related charges
Staff costs
Depreciation and amortisation
Repairs and maintenance
Fuel
Travel and promotional expenses
Office and communication expenses
Rental expenses
Other operating expenses
Operating profit
Finance income, net
4
5
Share of profit of associates
Profit before taxation
Taxation
6
1
For the six months
ended 30 June
2005
2004
RMB’000
RMB’000
(Unaudited
(Unaudited)
and restated)
Note 2
13,073,975
46,926
9,754,412
29,318
13,120,901
(9,969,126)
(802,802)
(128,982)
(55,477)
(332,695)
(144,916)
(80,718)
(734,453)
(217,450)
9,783,730
(7,356,410)
(645,843)
(107,681)
(41,999)
(205,838)
(108,513)
(78,097)
(549,730)
(156,419)
654,282
12,596
533,200
22,567
666,878
6,565
555,767
6,579
673,443
(176,084)
562,346
(153,727)
Note
For the six months
ended 30 June
2005
2004
RMB’000
RMB’000
(Unaudited
(Unaudited)
and restated)
Note 2
Profit for the period from continuing operations
497,359
408,619
104,302
41,749
Profit for the period
601,661
450,368
Attributable to:
Equity holders of the Company
Minority interests
498,670
102,991
376,251
74,117
601,661
450,368
(161,462)
(127,470)
Discontinued operations
Profit for the period from discontinued operations
Proposed interim dividend
9
7(b)
Earnings per share for continuing operations,
basic and diluted
8
RMB0.10
RMB0.08
Earnings per share for discontinued operations,
basic and diluted
8
RMB0.02
RMB0.01
30 June
2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Restated)
Note 2
2,198,010
104,211
311,001
69,450
179,759
66,212
25,903
259,818
1,896,728
100,133
283,711
64,442
165,078
66,212
27,992
251,641
3,214,364
2,855,937
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2005
Note
ASSETS
Non-current assets
Property, plant and equipment
Prepayments for acquisition of land use rights
Land use rights
Intangible assets
Investments in associates
Held-to-maturity investments
Other non-current assets
Deferred tax assets
2
30 June
2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Restated)
Note 2
519,421
18,630
5,005,385
542
89,462
1,013,640
4,962,532
381,071
18,094
4,073,589
542
97,430
924,869
4,722,702
11,609,612
10,218,297
9,024
9,024
14,833,000
13,083,258
EQUITY AND LIABILITIES
Capital and reserves attributable to the Company’s
equity holders
Share capital
Reserves
Proposed dividend
4,249,002
2,712,263
161,462
4,249,002
2,375,055
144,466
Shareholders’ equity
Minority interests
7,122,727
1,114,455
6,768,523
1,035,106
Total equity
8,237,182
7,803,629
4,400
6,746
78,389
13,750
1,526
60,583
362,104
9,223
—
8,720
460,862
84,579
Note
Current assets
Prepayments, deposits and other current assets
Inventories
Trade and other receivables
Financial assets at fair value through profit or loss
Restricted cash
Term deposits with initial term of over three months
Cash and cash equivalents
Non-current assets classified as held for sale
10
9
Total assets
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Deferred income arising from transfer of business and
provision of related and transition services
Other liabilities
3
9
Note
Current liabilities
Trade payables
Other payables, accruals and other current liabilities
Receipts in advance from customers
Current tax liabilities
Borrowings
Salary and welfare payable
11
Total liabilities
Total equity and liabilities
30 June
2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Restated)
Note 2
3,896,060
830,068
612,721
227,353
136,899
431,855
3,074,557
723,632
598,268
196,633
194,540
407,420
6,134,956
5,195,050
6,595,818
5,279,629
14,833,000
13,083,258
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2005
As at 1 January 2005, as
previously reported as equity
As at 1 January 2005, as
previously separately
reported as minority interests
Opening adjustment for the
adoption of IFRS 2 and
IFRS 3 (Note 2)
As at 1 January 2005, as
restated
Profit for the period
2004 final dividend
Capital injection from minority
shareholders of subsidiaries
Disposal of a wholly-owned
subsidiary
Acquisitions of subsidiaries
Dividends declared to minority
shareholders
Transfer to statutory reserves
(Note 7(a))
As at 30 June 2005
For the six months ended 30 June 2005 (unaudited)
Attributable to equity holders of the Company
Statutory
Statutory
Retained
Minority
surplus public welfare
Share
Capital
fund
profits
interests
reserve
capital
reserve
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000 RMB’000
Total
RMB’000
4,249,002
1,295,248
144,906
72,453
1,019,320
—
6,780,929
—
—
—
—
—
1,035,106
1,035,106
—
—
—
—
(12,406)
—
(12,406)
4,249,002
—
—
1,295,248
—
—
144,906
—
—
72,453
—
—
1,006,914
498,670
(144,466)
1,035,106
102,991
—
7,803,629
601,661
(144,466)
—
—
—
—
—
—
—
—
—
—
47,612
23,806
4,249,002
1,295,248
192,518
96,259
4
—
—
(71,418)
1,289,700
44,100
44,100
5,132
9,722
5,132
9,722
(82,596)
(82,596)
—
—
1,114,455
8,237,182
For the six months ended 30 June 2005 (unaudited)
Attributable to equity holders of the Company
Statutory
Statutory
Share
Capital
surplus public welfare
Retained
Minority
capital
reserve
reserve
fund
profits
interests
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000 RMB’000
Total
RMB’000
Representing:
Share capital and reserves
2005 proposed interim dividend
4,249,002
—
1,295,248
—
192,518
—
96,259
—
1,128,238
161,462
1,114,455
—
8,075,720
161,462
As at 30 June 2005
4,249,002
1,295,248
192,518
96,259
1,289,700
1,114,455
8,237,182
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2005
For the six months ended 30 June 2004 (unaudited and restated)
Attributable to equity holders of the Company
Statutory
Statutory
Retained
Minority
surplus public welfare
Share
Capital
fund
profits
interests
reserve
capital
reserve
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
Total
RMB’000
4,249,002
1,295,248
68,935
34,468
585,397
—
6,233,050
—
—
—
—
—
776,487
776,487
—
—
—
—
(15,697)
—
(15,697)
4,249,002
—
—
1,295,248
—
—
68,935
—
—
34,468
—
—
569,700
376,251
(127,470)
776,487
74,117
—
6,993,840
450,368
(127,470)
—
—
—
—
—
—
35,584
17,792
(53,376)
As at 30 June 2004
4,249,002
1,295,248
104,519
52,260
Representing:
Share capital and reserves
2004 proposed interim dividend
4,249,002
—
1,295,248
—
104,519
—
As at 30 June 2004
4,249,002
1,295,248
104,519
As at 1 January 2004, as
previously reported as equity
As at 1 January 2004, as
previously separately
reported as minority interests
Opening adjustment for the
adoption of IFRS 2 (Note 2)
As at 1 January 2004, as
restated
Profit for the period
2003 final dividend
Dividends declared to minority
shareholders
Transfer to statutory reserves
(Note 7(a))
—
(24,289)
(24,289)
—
—
765,105
826,315
7,292,449
52,260
—
637,635
127,470
826,315
—
7,164,979
127,470
52,260
765,105
826,315
7,292,449
Notes:
1.
GROUP REORGANISATION AND PRINCIPAL ACTIVITIES
The Company was established in the People’s Republic of China (‘‘PRC’’) on 20 November 2002 as a joint stock company with
limited liability as a result of a group reorganisation of China National Foreign Trade Transportation (Group) Corporation
(‘‘Sinotrans Group Company’’) in preparation for a listing of the Company’s H shares on the Main Board of The Stock Exchange
of Hong Kong Limited. The initial registered capital of the Company is RMB2,624,087,200, consisting of 2,624,087,200 shares of
par value of RMB1.00 per share. The Company and its subsidiaries are hereinafter referred to as the ‘‘Group’’.
5
In February 2003, the Company completed its global initial public offering. 1,787,406,000 H shares were offered to the public
which comprise 1,624,915,000 new shares issued by the Company and 162,491,000 shares offered by the ultimate holding
company. As a result, the issued share capital of the Company increased from 2,624,087,200 shares to 4,249,002,200 shares,
comprising 2,461,596,200 domestic shares and 1,787,406,000 H shares, representing 57.9% and 42.1% of the issued capital
respectively.
The principal activities of the Group include freight forwarding, shipping agency, express services, marine transportation, storage
and terminal services and trucking and other services.
2.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited condensed consolidated interim financial statements have been prepared in accordance with International
Accounting Standards (‘‘IAS’’) 34 ‘‘Interim Financial Reporting’’ promulgated by the International Accounting Standards Board
and Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
These unaudited condensed consolidated interim financial statements should be read in conjunction with the 2004 annual financial
statements.
The accounting policies and methods of computation used in the preparation of the unaudited condensed consolidated financial
statements as at and for the six months ended 30 June 2005 are consistent with those adopted for the preparation of the financial
statements as at and for the year ended 31 December 2004 except that the Group has changed certain of its accounting policies
following its adoption of new/revised International Financial Reporting Standards (‘‘IFRS’’) which are effective for accounting
periods commencing on or after 1 January 2005.
In 2005, the Group adopted the new/revised IFRS below, which are relevant to its operations. The 2004 comparatives have been
amended as required, in accordance with the relevant requirements.
IAS 1
IAS 2
IAS 8
IAS 10
IAS 16
IAS 17
IAS 21
IAS 24
IAS 27
IAS 28
IAS 32
IAS 33
IAS 36
IAS 38
IAS 39
IFRS 2
IFRS 3
IFRS 5
Presentation of Financial Statements
Inventories
Accounting Policies, Changes in Accounting Estimates and Errors
Events after the Balance Sheet Date
Property, Plant and Equipment
Leases
The Effects of Changes in Foreign Exchange Rates
Related Party Disclosures
Consolidated and Separate Financial Statements
Investments in Associates
Financial Instruments: Disclosure and Presentation
Earnings per Share
Impairment of Assets
Intangible Assets
Financial Instruments: Recognition and Measurement
Share-based Payments
Business Combinations
Non-Current Assets Held for Sale and Discontinued Operations
The adoption of IAS 1, 2, 8, 10, 16, 17, 21, 24, 27, 28, 32, 33, 38, 39 and IFRS 5 did not result in substantial changes to the
Group’s accounting policies. In summary:
—
IAS 1 has affected the presentation of minority interest and other disclosures.
—
IAS 2, 8, 10, 16, 17, 21, 27, 28, 32, 33, 38 and 39 had no material effect on the Group’s policies.
—
IAS 24 has affected the identification of related parties and some other related-party disclosures.
—
IFRS 5 has affected the presentation of discontinued operations and other disclosures.
All changes in the accounting policies have been made in accordance with the transition provisions in the respective standards. All
of the new/revised standards adopted by the Group require retrospective application other than IFRS 3 (prospectively after 31
March 2004).
6
3.
TURNOVER AND SEGMENT INFORMATION
(a)
Primary reporting format — business segments
The Group has five main business segments: freight forwarding, shipping agency, express services, marine transportation
and storage and terminal services. Other operations of the Group mainly comprise trucking and other related support
services. None of them is of a sufficient size to be reported separately.
Continuing
operations
Turnover — external
Turnover — intersegment
Segment results
Unallocated costs
For the six months ended 30 June 2005 (unaudited)
Storage and
terminal
Express
Marine
services
Other
services transportation
RMB’000
RMB’000
RMB’000
RMB’000
Intersegment
elimination
RMB’000
Group
RMB’000
—
13,073,975
Freight
forwarding
RMB’000
Shipping
agency
RMB’000
9,503,457
255,691
1,081,301
1,730,646
380,612
122,268
33,751
13,950
2,067
147,679
53,565
29,852
(280,864)
—
9,537,208
269,641
1,083,368
1,878,325
434,177
152,120
(280,864)
13,073,975
204,947
124,617
172,768
124,627
97,787
4,035
Operating profit
Finance income, net
—
728,781
(74,499)
654,282
12,596
666,878
Share of profit of
associates
6,565
Profit before
taxation
Taxation
673,443
(176,084)
Profit for the period
from continuing
operations
Discontinued
operations
Profit for the period
from discontinued
operations
497,359
104,302
104,302
Profit for the period
601,661
7
Freight
forwarding
RMB’000
Continuing
operations
Turnover — external
Turnover — intersegment
Segment results
Unallocated costs
For the six months ended 30 June 2004 (unaudited and restated)
InterStorage and
segment
terminal
Shipping
Express
Marine
services
Other elimination
agency
services
transportation
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
7,106,984
215,367
816,530
1,273,047
281,428
61,056
51,518
16,195
2,339
107,865
23,205
5,615
(206,737)
—
7,158,502
231,562
818,869
1,380,912
304,633
66,671
(206,737)
9,754,412
155,303
110,901
166,585
87,490
59,469
Operating profit
Finance income, net
(715)
—
Group
RMB’000
—
9,754,412
579,033
(45,833)
533,200
22,567
555,767
Share of profit of
associates
6,579
Profit before
taxation
Taxation
562,346
(153,727)
Profit for the period
from continuing
operations
Discontinued
operations
Profit for the period
from discontinued
operations
408,619
41,749
41,749
Profit for the period
(b)
450,368
Secondary reporting format — geographical segments
The Group’s businesses operate in four main geographical areas within the PRC:
(i)
Northern China — Including core strategic locations in Liaoning, Tianjin as well as the operations of Sinotrans Air
Transportation Development Co., Ltd. (‘‘Sinoair’’), a subsidiary of the Company, in Beijing, Tianjin, Hebei, Shanxi,
Inner Mongolia and Henan.
(ii)
Eastern China — Including core strategic locations in Jiangsu, Shanghai, Zhejiang, Fujian and Shandong, as well as
the operations of Sinoair in Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi and Shandong.
(iii)
Southern China — Including core strategic locations in Guangdong and Hubei, as well as the operations of Sinoair in
Hubei, Hunan, Guangdong, Guangxi, Hainan, Guizhou and Yunnan.
(iv)
Other locations — Including primarily the air freight forwarding and express services operated by Sinoair and certain
of the jointly controlled entities of the Group in locations other than the above.
8
For the six months ended 30 June 2005 (unaudited)
Turnover
Turnover
— interTotal
Segment
— external
segment
turnover
results
RMB’000
RMB’000
RMB’000
RMB’000
Continuing operations
Northern China
Eastern China
Southern China
Other locations
Inter-segment elimination
1,349,527
9,687,775
1,719,910
316,763
—
13,073,975
2,183
50,172
19,018
6,131
(77,504)
—
1,351,710
9,737,947
1,738,928
322,894
(77,504)
13,073,975
63,562
562,199
94,957
8,063
—
728,781
Unallocated costs
(74,499)
Operating profit
654,282
Discontinued operations
Northern China
Eastern China
Southern China
Other locations
6,858
105,783
60,179
5,539
—
—
—
—
6,858
105,783
60,179
5,539
1,780
27,460
15,622
1,438
178,359
—
178,359
46,300
Unallocated costs
—
Operating profit
46,300
For the six months ended 30 June 2004
(unaudited and restated)
Turnover —
Turnover —
InterTotal
Segment
external
segment
turnover
results
RMB’000
RMB’000
RMB’000
RMB’000
Continuing operations
Northern China
Eastern China
Southern China
Other locations
Inter-segment elimination
1,106,486
7,130,811
1,390,636
126,479
—
9,754,412
14,709
41,733
14,209
72
(70,723)
—
1,121,195
7,172,544
1,404,845
126,551
(70,723)
53,825
417,706
104,003
3,499
—
9,754,412
579,033
Unallocated costs
(45,833)
Operating profit
533,200
Discontinued operations
Northern China
Eastern China
Southern China
Other locations
Unallocated costs
12,110
67,094
70,633
4,956
—
—
—
—
12,110
67,094
70,633
4,956
3,865
21,410
22,541
1,580
154,793
—
154,793
49,396
—
Operating profit
49,396
9
4.
OPERATING PROFIT
Operating profit is stated after crediting and charging the following:
For the six months
ended 30 June
2005
2004
RMB’000
RMB’000
(Unaudited and
(Unaudited)
restated)
Crediting
Rental income from
— land and buildings
— plant and machinery
Gain on disposal of property, plant and equipment
6,290
849
1,995
3,829
95
2,227
116,967
97,080
3,826
536
12,832
2,383
775
9,044
83,453
651,000
8,189
76,549
473,181
8,218
Charging
Depreciation
— owned property, plant and equipment
— owned property, plant and equipment leased out under
operating leases
Loss on disposal of property, plant and equipment
Provision for impairment of receivables and bad debts written off
Operating leases
— land and buildings
— plant and equipment
Amortisation of intangible assets
5.
FINANCE INCOME, NET
For the six months
ended 30 June
2005
2004
RMB’000
RMB’000
(Unaudited)
(Unaudited)
Interest income on bank balances
Interest income on held-to-maturity investments
Interest expenses on bank loans
Exchange losses, net
Bank charges
Representing:
Finance income, net, from continuing operations
Finance income, net, from discontinued operations
10
33,948
1,920
(5,886)
(9,902)
(4,052)
33,026
3,236
(5,000)
(2,189)
(2,844)
16,028
26,229
12,596
3,432
22,567
3,662
6.
TAXATION
Taxation in the unaudited condensed consolidated income statement represents:
For the six months
ended 30 June
2005
2004
RMB’000
RMB’000
(Unaudited)
(Unaudited)
Provision for PRC income tax
— current
— deferred taxation charge
Representing:
Provision for PRC income tax, from continuing operations
Provision for PRC income tax, from discontinued operations
229,505
(9,632)
162,025
3,483
219,873
165,508
176,084
43,789
153,727
11,781
No provision for Hong Kong profits tax has been made as there were no estimated Hong Kong assessable profits for the period
ended 30 June 2005 and 2004.
Taxation has been provided on the tax laws and regulations applicable to the PRC enterprises.
The provision for PRC current income tax is based on the statutory rate of 33% (2004 : 33%) of the assessable income of each of
the companies comprising the Group as determined in accordance with the relevant PRC income tax rules and regulations, except
for certain subsidiaries or jointly controlled entities which are taxed at preferential rates ranging from 0% to 30% (2004 : 0% to
30%) based on the relevant PRC tax laws and regulations.
Deferred income taxes are calculated in respect of temporary differences under the liability method using the tax rates which are
enacted or substantively enacted by the balance sheet date.
7.
PROFIT APPROPRIATIONS
(a)
Statutory surplus reserve and statutory public welfare fund
In accordance with the relevant PRC regulations and the Articles of Association of the Company, every year the Company
is required to transfer 10% of the profit after taxation determined in accordance with the PRC accounting standards to a
statutory surplus reserve until the balance reaches 50% of the registered share capital. Such reserve can be used to reduce
any losses incurred and to increase share capital. Except for the reduction of losses incurred, any other usage should not
result in this reserve balance falling below 25% of the registered share capital.
In accordance with the relevant PRC regulations and the Articles of Association of the Company, every year the Company
is required to transfer between 5% to 10% of the profit after taxation determined in accordance with the PRC accounting
standards to a statutory public welfare fund. The use of this fund is restricted to capital expenditure for employees’
collective welfare facilities, the ownership in respect of which belongs to the Group. The statutory public welfare fund is
not available for distribution to shareholders except under liquidation. Once the capital expenditure on staff welfare
facilities has been made, an equivalent amount must be transferred from the statutory public welfare fund to the
discretionary surplus reserve, a reserve which can be used to reduce any losses incurred or to increase share capital.
For the six months ended 30 June 2005, approximately RMB47,612,000 and RMB23,806,000 (corresponding period in
2004 : RMB35,584,000 and RMB17,792,000), representing 10% and 5% of profit after tax (corresponding period in 2004 :
10% and 5%) respectively determined under the PRC accounting standards, have been appropriated to the statutory surplus
reserve fund and the statutory public welfare fund.
In accordance with the Articles of Association of the Company, retained profits available for distribution by the Company
will be deemed to be the lower of the amounts determined in accordance with the PRC accounting standards and the amount
determined in accordance with IFRS. As at 30 June 2005, the amount of retained profits available for distribution was
approximately RMB1,126,523,000 (30 June 2004 : RMB650,469,000), being the amount determined in accordance with the
PRC accounting standards.
11
(b)
Dividend
At the Board of Directors’ meeting held on 26 August 2005, the directors declared an interim dividend of RMB0.038 per
ordinary share for the six months ended 30 June 2005. The total dividend declared is approximately RMB161,462,000 for
4,249,002,200 shares, being the number of ordinary shares issued and outstanding on 30 June 2005. This declared dividend
is not reflected as a dividend payable in these unaudited condensed consolidated financial statements, but will be reflected
as an appropriation of retained profits for the year ending 31 December 2005.
8.
EARNINGS PER SHARE
Basic and diluted earnings per share is calculated by dividing the net profit by the number of ordinary shares in issue during the
six months period.
For the six months
ended 30 June
2005
2004
(Unaudited and
(Unaudited)
restated)
Continuing operations
Profit attributable to equity holders of the Company (RMB ’000)
Number of ordinary shares in issue (thousands)
Basic and diluted earnings per share (RMB per share)
425,288
4,249,002
0.10
346,878
4,249,002
0.08
Discontinued operations
Profit attributable to equity holders of the Company (RMB ’000)
Number of ordinary shares in issue (thousands)
Basic and diluted earnings per share (RMB per share)
73,382
4,249,002
0.02
29,373
4,249,002
0.01
As there are no potentially dilutive securities, there is no difference between basic and diluted earnings per share.
9.
DISCONTINUED OPERATIONS
A distinguishable component of the Group’s express services business has been conducted by the Group through an agreement for
international express package delivery services with UPS World Forwarding Inc. (‘‘UPS’’) and its affiliates, as well as the
operation of a jointly controlled entity with UPS (collectively referred to as ‘‘UPS Express Business’’). On 1 December 2004 and
12 January 2005, the Group entered into a framework agreement and a transition services agreement, respectively, with UPS to
transfer the UPS Express Business to UPS over a period until 31 December 2007. The base consideration for this business transfer
is US$100,000,000, subject to certain adjustments depending primarily on the achievement of certain revenue targets of the UPS
Express Business and fulfillment of the Group’s performance obligations during the transition period. Moreover, additional
consideration may be payable depending on the timing of completion of transfer of identified locations and whether certain
property and equipment are to be acquired by UPS. The base consideration covers the following matters:
.
Agreement by the Group not to permit or cause the customers of UPS Express Business to terminate or materially reduce its
business with UPS, as well as other locations of UPS Express Business operated by the Group for a period until 31
December 2007;
.
Transfer of customer lists and the Group’s interest in the jointly controlled entity with UPS to UPS;
.
Provision by the Group of customer data transition, regulatory assistance, non-solicitation of employees and employment
services to facilitate the transition of the UPS Express Business to UPS;
.
Transfer of locations and other assets and rights related to the UPS Express Business to UPS.
The above-mentioned UPS Express Business was conducted by a non wholly-owned subsidiary, Sinoair, as well as certain whollyowned subsidiaries of the Company. Accordingly, the Company and Sinoair entered into an agreement on 21 December 2004
which provides for the payment of US$12,090,000 from the above-mentioned base consideration of US$100,000,000 to those
wholly-owned subsidiaries of the Company which have conducted the UPS Express Business. Sinoair will retain the remaining
amount.
On 1 February 2005, the Group transferred 5 major locations and customer lists to UPS and began to provide related and transition
services to UPS. In accordance with the terms of framework agreement, the Group has received US$40,000,000 as the initial
payment out of the total base consideration of US$100,000,000. The remaining installments of US$10,000,000 and
US$50,000,000 are due on 31 December 2005 and 31 December 2006 respectively, subject to certain conditions and
adjustments. In addition, the Group has received US$16,000,000 as part of an additional consideration based on the timing of the
completion of transfer of the identified locations.
12
10.
TRADE AND OTHER RECEIVABLES
30 June 2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Audited)
4,733,989
21,047
250,349
3,813,886
31,867
227,836
5,005,385
4,073,589
30 June 2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Audited)
Trade receivables, net
Bills receivable
Other receivables, net
Trade receivables
Less: Provision for impairment of receivables
4,836,626
(102,637)
3,891,726
(77,840)
Trade receivables, net
4,733,989
3,813,886
30 June 2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Audited)
4,651,343
78,645
69,233
14,216
23,189
3,629,790
170,658
53,511
11,511
26,256
4,836,626
3,891,726
30 June 2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Audited)
As at 30 June 2005 and 31 December 2004, the aging analysis of trade receivables is as follows:
Within 6 months
Between 6 and 12 months
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
The credit period of the Group’s trade receivables generally ranges from 3 to 6 months.
Other receivables
Less: Provision for impairment of receivables
273,049
(22,700)
246,503
(18,667)
Other receivables, net
250,349
227,836
13
11.
TRADE PAYABLES
The normal credit period for trade payables generally ranges from 1 to 3 months. Aging analysis of trade payables at the
respective balance sheet dates is as follows:
Within 6 months
Between 6 and 12 months
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
12.
30 June 2005
RMB’000
(Unaudited)
31 December
2004
RMB’000
(Audited)
3,296,974
332,421
199,299
43,590
23,776
2,722,551
130,995
181,848
15,743
23,420
3,896,060
3,074,557
ADDITIONAL FINANCIAL INFORMATION ON BALANCE SHEET
As at 30 June 2005, the net current assets of the Group amounted to RMB5,474,656,000 (31 December 2004 :
RMB5,023,247,000), and the total assets less current liabilities of the Group were RMB8,698,044,000 (31 December 2004 :
RMB7,888,208,000).
II. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
Review of Operating Results
In the first six months of 2005, the Group faced intense market competition. With its high quality and
efficient service network, sizable operations and brand name advantage, the Group adopted active
marketing strategies to continuously increase customers’ satisfaction; actively launched new service
products to advance the extended value-added services of traditional industries in order to strengthen
service capabilities that differentiate services from others; and continued the optimization and
transformation of workflow to raise service operation efficiency. These efforts enabled the Group to
maintain a faster pace of growth in operating revenue; its financial position was robust and its
competitive edge further enhanced.
For the six months ended 30 June 2005, the Group achieved turnover of approximately RMB13.25
billion, representing a 33.7% increase compared with the same period in 2004. Profit for the period
attributable to equity holders of the Company amounted to RMB498.7 million, representing a growth
of 32.5% when compared with the same period in 2004. Earnings per share were RMB0.12
(corresponding period in 2004 : RMB0.09).
14
Operating Statistics
The table below sets forth certain Group’s operating statistics by business segments for the periods
indicated:
For the six months
ended 30 June
2005
2004
Freight forwarding
Sea freight forwarding
Bulk cargo (in millions of tonnes)
Container cargo (in ten thousands of TEUs)
Air freight forwarding (in millions of kg)
Rail freight forwarding
Bulk Cargo (in millions of tonnes)
Container cargo (in ten thousands of TEUs)
Road freight forwarding
Bulk cargo (in millions of tonnes)
Container cargo (in ten thousands of TEUs)
Express services
Packages — continuing operations (in millions of units)
Shipping agency
Net registered tonnes (in millions of tonnes)
Vessel calls (number of times)
Containers (in millions of TEUs)
Storage and terminal services
Warehouses operating capacity
Bulk cargo (in millions of tonnes)
Terminal containers (in millions of TEUs)
Terminal throughput
Bulk cargo (in millions of tonnes)
Terminal containers (in ten thousands of TEUs)
Marine transportation
TEUs (number of units)
Other services
Trucking of bulk cargo (in ten thousands of tonnes)
Trucking of terminal containers (in ten thousands of TEUs)
2.3
219
154.4
2.0
163
118.4
1.7
4.6
1.6
4.4
0.4
17.0
0.3
16.0
5.36
4.43
153.8
31,331
4.33
130.6
30,550
3.45
3.8
2.1
3.7
1.7
1.2
65.2
1.2
49.6
636,800
542,773
6.5
25.0
3.2
17.1
Note:
To accurately reflect the Group’s business operations, the units of calculation of the statistics of following business operations’ have
been adjusted. The adjustment does not affect past information on business operations:
1.
The business information under storage and terminal services has been changed from a storage capacity indicator to a business
volume indicator and is divided into bulk cargo and terminal containers operating capacity;
2.
The business information under the trucking business has been changed from the total quantity of cargo to the trucking capacity of
bulk cargo and terminal containers.
15
Comparison and Analysis of Operating Results and Financial Position
CONTINUING OPERATIONS
Turnover
For the six months ended 30 June 2005, the Group’s turnover amounted to RMB13,074.0 million, up
34.0% from RMB9,754.4 million for the same period in 2004. The increase was primarily attributable
to the Group’s vigorous efforts in restructuring business resources and developing new products,
centralising marketing activities and enhancing service networks, as well as economies of scale
achieved through proactive market development strategies. Moreover, rising international marine
freight rates also contributed to the growth in the Group’s turnover.
Freight forwarding
For the six months ended 30 June 2005, turnover from our freight forwarding services grew 33.2% to
RMB9,537.2 million, from RMB7,158.5 million for the same period in 2004.
Turnover from freight forwarding mainly comprised of revenue from containers sea freight forwarding
services and air freight forwarding services. The number of containers handled in sea freight
forwarding services increased 34.4% to 2.19 million TEUs in the first half of 2005 from 1.63 million
TEUs for the corresponding period in 2004; while the amount of cargo handled in air freight
forwarding services rose 30.4% to 154,400 tonnes in the first half of 2005 from 118,400 tonnes in the
first half of 2004.
Revenue growth in freight forwarding in the first half of 2005 was driven by the Group’s ability to
maintain a relatively fast business development pace during the time of economic growth.
Express services
For the six months ended 2005, the continuing operations of the Group’s express services achieved a
turnover of RMB1,083.4 million, representing an increase of 32.3% from RMB818.9 million for the
same period in 2004.
The number of documents and packages handled in the first half of 2005 were 5.36 million pieces, an
increase of 21.0% compared with 4.43 million pieces for the same period in 2004.
The growth was mainly attributable to enhanced marketing efforts, maintaining a faster pace of
business development during the time of economic growth. Turnover of the business was higher than
its increase in business volume due to a higher average weight per unit.
Shipping agency
For the six months ended 30 June 2005, turnover from our shipping agency services reached
RMB269.6 million, representing an increase of 16.4% from RMB231.6 million for the same period in
2004.
For the first half of 2005, the number of containers handled were 4.33 million TEUs, an increase of
25.5% from 3.45 million TEUs in 2004. Net registered tonnage of vessels handled by the Group’s
shipping agency services reached 153.8 million tonnes, a 17.8% increase from 130.6 million tonnes
for the same period in 2004. The number of vessel calls managed also grew 2.6% to 31,331 compared
with 30,550 for the same period in 2004.
The Group continued to record turnover and volume growth for shipping agency services as fast
growth in business volume was maintained with the support of enhanced customer service and
marketing efforts.
16
Storage and terminal services
For the six months ended 30 June 2005, the aggregate turnover from storage and terminal services
amounted to RMB434.2 million, representing a 42.5% growth from RMB304.6 million for the same
period in 2004.
For the first half of 2005, the Group’s warehouses handled 3.8 million tonnes of cargo, representing a
2.7% increase from 3.7 million tonnes for the same period in 2004; cargo tonnage handled grew to 2.1
million TEUs from 1.7 million TEUs for the same period in 2004, an increase of 23.5%; cargo tonnage
handled in terminals grew to 652,000 TEUs from 496,000 TEUs for the same period in 2004, an
increase of 31.5%. The volume of bulk cargo handled at terminals did not change significantly from
the prior year corresponding period.
Turnover and business volume growth of storage and terminal services was mainly attributable to the
enhancement of overall operating capability through the addition of some warehouses and container
terminal depots and the revamping of existing terminals by the Group during the period.
Marine transportation
For the six months ended 30 June 2005, turnover from the Group’s marine transportation services
grew 36.0% to RMB1.8783 billion from RMB1.3809 billion for the same period in 2004.
The number of containers shipped by the Group rose to 636,800 TEUs during the first half of 2005, up
17.3% from 542,773 TEUs for the same period in 2004.
Such growth was primarily attributable to the steady growth in turnover and transport volume backed
by the Group’s efforts to enhance utilisation of its own vessel space while improving under-capacities
for certain routes by entering into swap arrangements with shipping companies, in a move to capture
favourable opportunities presented by the market. In addition, the business volume of the Japanese’s
route, one of the Group’s main shipping routes, recorded a year-on-year growth of 52.4% this year,
while the shipping price index for container export grew 16.6% year-on-year, resulting in an overall
revenue growth that is faster than business growth. At the same time, the year-on-year revenue growth
in various surcharge and the Terminal Handling Charges (‘‘THC’’) collected together with shipping
charges also contributed to revenue growth.
Other services
For the six months ended 30 June 2005, turnover from other services, mainly trucking services, rose
128.4% to RMB152.1 million from RMB66.6 million for the same period in 2004.
The bulk cargo trucking volume of the Company in the first half of 2005 was 65,000 tonnages, 103.1%
increase from the number of the same period of 2004, 32,000 tonnages; container volume increased
from 171,000 TEUs for the same period of 2004 to 250,000 TEUs, achieved a growth of 46.2%. The
growth was mainly due to the increase in the container volume capacity.
Transportation and Related Charges
For the six months ended 30 June 2005, transportation and related charges grew 35.5% to RMB9.9691
billion, compared with RMB7.3564 billion for the same period in 2004.
The increase in transportation and related charges was mainly attributed to the growth in business
volume. The rise in international marine freight rates also contributed to the growth in the Group’s
transportation costs.
17
Depreciation and Amortisation
Depreciation and amortisation expenses for the six months ended 30 June 2005 amounted to
RMB129.0 million, representing an increase of 19.8% from RMB107.7 million for the same period in
2004, primarily as a result of increased property, plant and equipment due to network and business
expansion. In addition, the Group’s acquisitions of new companies have caused the depreciation and
amortization expenses for the first half of 2005 to increase accordingly.
Operating Costs, Excluding Depreciation and Amortisation
For the six months ended 30 June 2005, the Group’s operating costs, excluding depreciation and
amortisation, were RMB2,368.5 million, a 32.6% increase from RMB1,786.4 million in 2004.
The increase in operating costs, excluding depreciation and amortisation, was primarily due to
increased expenditure on staff costs, lease payments, fuel costs, travel and promotional expenses.
The increase in staff costs was primarily due to salary adjustments in accordance with the Group’s
remuneration system and incentive schemes. In addition, the increase in staff due to business
expansion and the new acquisitions also resulted in an increase in staff costs. The increase in lease
payments was mainly attributed to the Group’s increased shipping capacity since the second half of
2004 and the rise in ship leasing rates; the increased shipping capacity and the rise in international
crude oil prices resulted in fuel costs increase of 61.6% in the interim period of 2005. Travel and
promotional expenses also increased due to business expansion.
Operating Profit
For the six months ended 30 June 2005, the Group’s operating profit was RMB654.3 million,
representing an increase of 22.7% from RMB533.2 million in the same period in 2004, mainly as a
result of business volume growth. Operating profit as a percentage of total revenue decreased to 4.99%
for the six months ended 30 June 2005 from 5.45% for the six months ended 30 June 2004; net profit
as a percentage of total revenue (total revenue less transportation and related expenses) decreased to
20.76% for the six months ended 30 June 2005 from 21.97% for the six months ended 30 June 2004,
primarily as a result of the increase in the Group’s transportation and related charges and various
operating expenses.
Taxation
Taxation of the Group for the six months ended 30 June 2005 amounted to RMB176.1 million, up
14.5% from RMB153.7 million for the same period in 2004, primarily as a result of the increase in
profit before taxation. Taxation as a percentage of profit before tax decreased to 26.1% for the six
months ended 30 June 2005 from 27.3% for the six months ended 30 June 2004.
DISCONTINUED OPERATIONS
The revenue of discontinued business of the Group (UPS express business) in the six months ended 30
June 2005 was RMB178.4 million (corresponding period of 2004 was RMB154.8 million),
representing an increase of 15.2%; the operating profit for the discontinued business of the Group
in the six months ended 30 June 2005 was RMB46.3 million (that of corresponding period of 2004 was
RMB49.4 million), representing a decrease of 6.3%; the income from transferring the UPS express
business and the provision of related and transition services in the six months ended 30 June 2005 was
RMB98.4 million.
MINORITY INTERESTS
Minority interests for the six months ended 30 June 2005 amounted to RMB103.0 million, up 39.0%
from RMB74.1 million for the same period in 2004 and, primarily as a result of the increase in net
profit of air freight of a non-wholly owned subsidiary of the Group and the inclusion in the interim
results of 2005 of the increase in minority interests resulted from the new acquisitions.
18
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
The profit for the period from the Group’s continuing operations for the six months ended 30 June
2005 amounted to RMB497.4 million, representing an increase of 21.7% from RMB408.6 million of
same period of 2004.
The profit for the period from the Groups discontinued operations for the six months ended 30 June
2005 amounted to RMB104.3 million, representing an increase of 149.5% from RMB41.8 million of
same period of 2004.
Profit attributable to equity holders of the Company of the Group for the six months ended 30 June
2005 amounted to RMB498.7 million, representing an increase of 32.5% from RMB376.3 million for
the same period in 2004.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarises the Group’s cash flows for the periods indicated:
For the six months
ended 30 June
(unaudited)
2005
2004
(RMB in millions)
Continuing Operations
Net cash inflow from operating activities
Net cash (used in)/provided from investing activities
Net cash used in from financing activities
Net (decrease)/increase in cash and cash equivalents
Discontinued Operations
Net cash inflow from operating activities
Net cash provided from investing activities
Net cash inflow from transfer of business and provision of related
and transition services
Net increase in cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at the end of the period
367.3
(488.1)
(165.0)
(285.8)
243.0
119.7
(34.8)
327.9
59.9
3.4
52.6
0.9
462.3
525.6
—
53.5
239.8
4,962.5
381.4
5,264.3
Analysis of Cash Flow from Continuing Operations
Operating Activities
Net cash from operating activities for the six months ended 30 June 2005 amounted to RMB367.3
million, up 51.2% compared with RMB243.0 million for the corresponding period in 2004. The
increase in net cash from operating activities was primarily as a result of the profit attributable to
equity holders of the Company for the six months ended 30 June 2005 of RMB425.3 million
(corresponding period in 2004 : RMB346.9 million) as well as an increase of RMB802.2 million in
trade payables for the six months ended 30 June 2005 (corresponding period in 2004 : increase of
RMB220.0 million), which was partially offset by an increase of RMB946.9 million in trade
receivables and other receivables for the six months ended 30 June 2005 (corresponding period in
2004 : increase of RMB586.4 million) and an increase of RMB136.7 million in prepayment, deposit,
and other current assets (corresponding period in 2004 : increase of RMB38.0 million).
19
The average turnover days of trade receivables for the six months ended 30 June 2005 and 2004 were
63 days and 69 days respectively.
Investing Activities
For the six months ended 30 June 2005, net cash used in investing activities of RMB488.1 million
primarily comprised RMB367.9 million for the acquisition of property, plant and equipment,
RMB88.77 million for fixed deposits of three months or more, RMB13.68 million for the acquisition
of land use rights and intangible assets and RMB61.08 million for the acquisition of subsidiaries and
associated companies. For the six months ended 30 June 2004, net cash provided from investing
activities primarily comprised RMB42.5 million for the recoup of held-to-maturity investments and a
reduction of RMB633.3 million in term deposits, primarily offset by RMB268.7 million for the
acquisition of property, plant and equipment, RMB206.9 million for the acquisition of held-tomaturity investments, RMB82.91 million for the acquisition of land use rights and intangible assets.
Financing Activities
Net cash used in the Group’s financing activities amounted to RMB165 million for the six months
ended 30 June 2005, compared with net cash used in financing activities of RMB34.8 million for the
corresponding period in 2004. Bank loan repayments for the six months ended 30 June 2005 amounted
to RMB255.5 million, compared to RMB110.6 million for the same period in 2004, dividends paid for
the six months ended 30 June 2005 amounted to RMB138.5 million, compared to RMB77.9 million
for the corresponding period in 2004, which were offset by new bank loans secured during the six
months ended 30 June 2005 amounting to RMB176.9 million (corresponding period in 2004 :
RMB155.6 million).
Capital Expenditure
For the six months ended 30 June 2005, the Group’s capital expenditure amounted to RMB381.6
million, consisting of RMB367.9 million for the acquisition of property, plant and equipment and
RMB13.68 million for the acquisition of intangible assets and land use rights, among which
RMB250.4 million was used for the renovation and construction of docks, warehouses, logistics
centres and piling areas, RMB78.43 million for the purchase of vehicles and equipment and
RMB32.69 million for IT investment and refurbishment and purchase of office equipment.
Contingencies and Guarantees
As at 30 June 2005, the contingent liabilities of the Group amounted to approximately RMB30.232
million, comprising mainly RMB4.732 million in relation to pending litigations and outstanding loan
guarantees provided by the Group for the obligations of jointly-controlled entities in the amount of
RMB25.5 million.
Gearing Ratio
As at 30 June 2005, the gearing ratio of the Group was 52.0% (as at 31 December 2004 : 48.3%),
which was arrived at by dividing the sum of liabilities and minority interests by total assets at 30 June
2005.
Foreign Exchange Rate Risks
A substantial portion of the Group’s turnover and transportation and related charges are denominated
in US dollars, therefore the Group is subject to foreign exchange risks mainly in connection with US
dollars. The Group cannot give any assurance that any future movements in the exchange rate of the
Renminbi against the US dollars and other foreign currencies will not adversely affect its results of
operations and financial position (including the ability to pay dividends).
20
Credit Risk
The extent of our credit exposure is represented by an aggregated balance of trade receivables and
other receivables, financial assets at fair value through profit or loss, restricted cash and term deposits
with an initial term of maturity of over three months. The maximum credit exposure in the event of
counterparties’ default on obligations under these financial instruments was approximately RMB6.109
million and RMB5,096.4 million as at 30 June 2005 and 31 December 2004, respectively. In addition,
we provided certain prepayments, prepaid expenses and deposits on behalf of customers, the aggregate
amounts of which were RMB519.4 million and RMB381.1 million as at 30 June 2005 and 31
December 2004, respectively.
Acquisitions and Disposals
On 30 June 2005, the Group acquired certain equity interests in seven companies at a cash
consideration of RMB80.55 million. The name of the companies and the percentage of interest
acquired are listed as follows:
Percentage of
interest
Name of the company
Subsidiary:
China Taicang Marine Shipping Agency Co., Ltd.
100%
Jointly controlled entities:
Jiangsu Nissin Sinotrans International Transportation Co., Ltd.
Ningbo Dagang Container Co., Ltd.
Xuzhou Sinotrans Maruzen Transportation Co., Ltd.
Sinotrans Hi-Tech Logistics (Suzhou) Co., Ltd.
50%
50%
50%
30%
Associates:
Shanghai Haihui International Container Repair Co., Ltd.
Changshu Nissin Sinotrans Transportation Co., Ltd.
35%
30%
Save as disclosed above, there were no material acquisitions and disposals of subsidiaries or jointlycontrolled entities or associated companies of the Group for the six months ended 30 June 2005.
Significant subsequent event
An increase of investment in one of Sinoair’s subsidiaries amounted to RMB90 million was approved
on 24 August 2005. Sinoair’s interest in this subsidiary will be increased from 90% to 99%.
Employees
The number of employees employed by the Group and information on remuneration, remuneration
policy and employee’s development are substantially the same as disclosed in the annual report of
2004, there have not been any material changes.
21
III. OUTLOOK AND PROSPECTS
The Company will face a more complicated market environment in the second half of the year. On the
one hand, demand for logistics and transportation services in the market will continue to grow
steadily; on the other hand, the slowing down of foreign trade growth, cyclical change of the shipping
market; exchange rate mechanism reform and the full opening of the Chinese logistics market will
provide the Company with both opportunities and challenges.
We will continue to take good opportunity of market development to improve operating standard
through business integration and extension of services; continue to perfect the service network to
enhance the development of the NVOCC business; to strengthen the development of new services and
new products to increase new profit sources; to reinforce marketing and client management efforts to
optimize client structure and to strengthen fundamental management to raise the Company’s
management standard and its cost control ability.
With enhanced efforts, we believe the Company’s main businesses will continue to show significant
growth, and at the same time, we will see an improvement of operating standard, a further
enhancement of competitiveness and profitability. The Company will, on the basis of significantly
raising management standard, fully accomplish all the estimated operating objectives in order to
create greater value for our shareholders.
IV. INTERIM DIVIDEND
The Board has declared an interim dividend of RMB0.038 per share for the six month ended 30 June
2005. Shareholders at the annual general meeting of the Company for the year 2004 authorized the
directors of the Company to decide on matters relating to the declaration, payment and
recommendation of the interim dividends for the year 2005.
It is expected that the interim dividend will be paid on or before Friday, 1 November 2005 to
shareholders whose names appear on the register of members on Monday, 24 October 2005. The
register of members of the Company will be closed from Saturday 24 September 2005 to Monday, 24
October 2005 (both days inclusive), during which no transfers will be registered. To qualify for the
interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the
Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services
Limited of Rooms 1712–1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong
Kong, not later than 4 : 00 p.m. on 23 September 2005, for registration.
Pursuant to the articles of association of the Company, dividends payable to the holders of Domestic
Shares will be paid in Renminbi, while dividends payable to the holders of H Shares will be paid in
Hong Kong dollars. The exchange rate for the dividends to be paid in Hong Kong dollars is the mean
of the average exchange rate of Renminbi to Hong Kong dollars published by the People’s Bank of
China during the calendar week (19 August 2005 to 25 August 2005) prior to the date of declaration of
the dividend. During the period, the average exchange rate of Renminbi to Hong Kong dollar was
HK$1.00=RMB1.04212. Accordingly, the amount of interim dividend for each H Share of the
Company is HK$0.03646.
V. PURCHASE, SALE AND REDEMPTION OF LISTED SECURITIES OF THE
COMPANY
There was no purchase, sale or redemption of the listed securities of the Company by any members of
the Group during the six months ended 30 June 2005.
22
VI. COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE
PRACTICES
The Company is committed to high standards of corporate governance and has been taking action to
follow the code provisions set out in the Code on Corporate Governance Practices (the ‘‘Code’’)
contained in Appendix 14 of the Listing Rules. The Terms of Reference of Audit Committee and
Terms of Reference of Remuneration Committee of the Company have been modified in March 2005
to reflect the requirements of certain provisions set out in the Code.
VII. BOARD OF DIRECTORS
As at 30 June 2005, the board of directors of the Company comprised of 11 directors. The members
were as follows:
Chairman: Mr. Zhang Bin
Executive directors: Mr. Zhang Bin, Mr. Zhang Jianwei, Ms. Tao Suyun, Mr. Li Jianzhang
Non-executive directors: Mr. Yang Yuntao, Ms. Liu Jinghua, Mr. Jerry Hsu, Mr. Ken Torok, Mr. Lee
Chong Kwee
Independent non-executive directors: Mr. Sun Shuyi, Mr. Lu Zhengfei
Due to the pass away of Mr. Koo Kou Hwa, an independent director, the Company has only 2
independent non-executive directors in the Board at present, resulting in the Company failing to
comply with the requirements under Rule 3.10(1) of the Listing Rules. The board of directors of the
Company has nominated Mr. Miao Yuexin as a new independent non-executive director of the
Company. Once the proposal is approved by the extraordinary general meeting of shareholders on 30
August 2005, the number of the Company’s independent directors will increase to 3 and thereafter in
compliance with the requirements of Rule 3.10(1) of the Listing Rules.
VIII. AUDIT COMMITTEE
The principal functions of the audit committee include the appointment of external auditors, review
and supervision of the Group’s financial reporting process and internal controls as well as to offer
advice and recommendations to the Board of Directors. The current committee members are Mr. Sun
Shuyi, Mr. Lu Zhengfei and Ms. Liu Jinghua with Mr. Sun Shuyi acting as the chairman of the audit
committee.
The unaudited condensed consolidated interim financial statements have been reviewed by the audit
committee.
IX. REMUNERATION COMMITTEE
The principal functions of the remuneration committee include reviewing the remuneration policies of
the Company, assessing the performance of the directors and senior management of the Company and
determining policies in respect to their remuneration packages. The current committee members are
Mr. Lu Zhengfei, Mr. Sun Shuyi and Ms. Tao Suyun, with Mr. Lu Zhengfei acting as the chairman of
the remuneration committee.
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X. MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF
LISTED ISSUERS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers
(the ‘‘Model Code’’) contained in Appendix 10 to the Listing Rules as the code of conducting
securities transactions by Company’s directors.
The directors of the Company have confirmed, following specific enquiry by the Company, that they
have complied with the required standards set out in the Model Code throughout the period from 1
January to 30 June 2005.
By order of the Board
Sinotrans Limited
Gao Wei
Company Secretary
Beijing, 26 August 2005
As at the date of this announcement, Zhang Bin, Zhang Jianwei, Tao Suyun and Li Jianzhang are executive directors of the Company, Yang
Yuntao, Liu Jinghua, Jerry Hsu, Ken Torok and Lee Chong Kwee are non-executive directors of the Company and Lu Zhengfei and Sun Shuyi
are independent non-executive directors of the Company.
Please also refer to the published version of this announcement in (China Daily)
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