ANNUAL REPORT
2021
JINHUI SHIPPING
AND TRANSPORTATION LIMITED
Contents
2 CORPORATE INFORMATION
3 CHAIRMAN’S STATEMENT
5 STRATEGIES AND BUSINESS PROFILE
8 HIGHLIGHTS
11 SHAREHOLDERS’ DIARY
12 CORPORATE GOVERNANCE REPORT
33 BOARD OF DIRECTORS AND EXECUTIVE PERSONNEL
35 DIRECTORS’ REPORT
61 RESPONSIBILITY STATEMENT
62 INDEPENDENT AUDITOR’S REPORT
67 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
68 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
70 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
71 CONSOLIDATED STATEMENT OF CASH FLOWS
72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
138 GLOSSARY
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Corporate Information
BOARD OF DIRECTORS
Executive Directors
Ng Siu Fai, Chairman
Ng Kam Wah Thomas, Managing Director and
Deputy Chairman
Ng Ki Hung Frankie
Ho Suk Lin Cathy
Non-executive Directors
Tsui Che Yin Frank
William Yau
AUDIT COMMITTEE
Tsui Che Yin Frank, Chairman
William Yau
REMUNERATION COMMITTEE
Tsui Che Yin Frank, Chairman
William Yau
COMPANY SECRETARY
Ho Suk Lin Cathy
AUDITOR
Grant Thornton Hong Kong Limited
Certified Public Accountants
SHARE LISTING
The Company’s shares are listed on the
Oslo Stock Exchange (Oslo Børs)
(stock code: JIN)
SHARE REGISTRARS
Conyers Corporate Services (Bermuda) Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Nordea Bank Abp, Filial i Norge
P.O. Box 1166 Sentrum
0107 Oslo, Norway
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
CORRESPONDENCE ADDRESS
26th Floor
Yardley Commercial Building
1-6 Connaught Road West
Hong Kong, PRC
CONTACTS
Tel: (852) 2545 0951
Fax: (852) 2541 9794
E-mail: [email protected]
WEBSITE
www.jinhuiship.com
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Chairman’s Statement
The Board is pleased to present the annual report of Jinhui Shipping and Transportation Limited for the financial
year 2021.
Dry bulk shipping market had gained remarkable momentum in 2021. The market is characterized by robust freight
rates driven by a general increase in demand for commodities worldwide. Both Baltic Dry Index and charter rates
across all vessel classes had been showing encouraging improvements when comparing year 2020, where market
sentiment had been subdued by the uncertain demand prospects due to the outbreak of COVID-19 global pandemic
and various national lockdowns. We see increasing seaborne trading activities as business confidence recovered in
2021 upon relaxation of national lockdowns, availability of vaccines and other measures to contain the spread of the
virus began in many countries. China continues to be the biggest importer of raw materials by far given its important
role in the global manufacturing supply chain, which is evident in the outbound container throughputs statistics of
Chinese ports that pushed market freight rates upward throughout the year 2021.
The Group’s revenue for the year 2021 increased 178% to US$131,069,000, comparing to US$47,118,000 for the year
2020 due to the increase in number of owned vessels and the improved revenue earned from the average daily time
charter equivalent rate earned by the Group’s owned vessels, improving 165% to US$19,233 for the year 2021 as
compared to US$7,269 for the year 2020. The Company recorded a consolidated net profit of US$194,197,000 for the
year 2021, while a consolidated net loss of US$15,252,000 was reported in 2020. Basic earnings per share for the year
was US$1.777 while basic loss per share was US$0.140 for the year 2020.
During the year 2021, the Group entered into agreements to acquire eight vessels and took delivery of six vessels.
We considered acquiring additional vessels could allow the Group to generate more operating income and cashflow
from the core shipping business and increase the returns of the Company in the future. We will continuously monitor
the market as well as our operations going forward and look out for opportunities to maintain a reasonably modern
and competitive fleet, not ruling out any future disposal or acquisition of vessels, and will make such decisions on an
ad hoc basis to maintain high financial flexibility and operational competitiveness. At the same time, we remain alert
to the increasingly frequent economic, geo-political, or other unforeseen surprises that can trigger volatility to our
business performance, as well as the carrying value of our shipping assets and financial assets. We currently have
no capital expenditure commitment in relation to newbuilding contracts, and will continue to focus on taking sensible
and decisive actions to maintain a strong financial position.
With the Company operating against an encouraging operating environment and robust financial health, the
Company has reinitiated the distribution of dividends this year. The Board of the Company will continuously review
the dividend policy going forward, with the aim of returning steady capital to shareholders should the Company’s
financial position and future strategy allow.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Chairman’s Statement
On behalf of the Board of Directors of the Company, I would like to first express our heartfelt appreciation to our
seafarers who have continued to remain professional under the current extremely challenging operating environment,
as well as all customers and stakeholders for their ongoing support. Going forward, we will continue to operate with
a conservative yet nimble mindset, and be ready to act in the best interest of our shareholders under all kinds of
scenarios. We will continue to exercise our best efforts to be a trustworthy business partner. I would also like to take
this opportunity to express my gratitude to my colleagues on the Board for their valuable contribution and to the
staff for their hard work, commitment and dedication throughout the year.
Ng Siu Fai
Chairman
15 March 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Strategies and Business Profile
Jinhui Shipping is one of the major focused grabs fitted Supramax owners offering high quality marine transportation
services. It expands its modern and high quality fleet of dry bulk carriers through well-planned and timely acquisition
and chartering of vessels.
Jinhui Shipping was incorporated with limited liability in Bermuda on 16 May 1994. Following a reorganization in
June 1994, the Company became the immediate holding company of the shipping and investment group. Since 1994,
Jinhui Shipping’s shares have been trading under a full listing on the Oslo Stock Exchange (Oslo Børs) (stock code:
JIN).
As at date of this annual report, the major shareholder of the Company is Jinhui Holdings Company Limited which
holds approximately 55.69% interests in the Company.
STRATEGIES
The Group’s fleet comprise principally of Supramax class vessels, a larger and more efficient Handymax design that
enjoys increasing demand from customers around the world. The Group will focus on taking sensible and decisive
actions, maintaining a strong financial position and moderate leverage, not ruling out a reduction in fleet size in order
to sail through the current storm by placing further emphasis on prudence and stability as our core objectives going
forward and seek to be a preferred vessel provider for customers.
On the commercial side, our strategy is to maintain a flexible chartering policy to achieve an optimal balance between
longer term time charterparties which generate a robust cash inflow, and spot exposure which allows the Group to
take advantage of any upside in future charter rates. We will also further boost up our risk management efforts with
the objective to minimize potential counterparty risks.
SHIPPING BUSINESS
The Group’s shipping activities began in the mid 1980’s, principally in the form of chartering dry bulk carriers
worldwide. The Group masterminds a meticulous and complex shipping operation linking suppliers with end users
around the world. Its chief task is to identify the exact requirements of customers and use suitable vessels to carry
bulk cargoes for specific voyages or periods of time.
The Group operates a modern fleet of dry bulk carriers which are either used for carrying cargoes or time chartered-
out to other shipping operators whichever is expected to bring a higher economic benefit to the Group.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Strategies and Business Profile
SHIPPING BUSINESS (Continued)
The key success factors in the ship chartering business are timing, performance and relationship. Ship charterers
have to know their customers and suppliers well, building up mutual trust and respect. It is in this important area
that the Group has always excelled, helping to cement contracts and maintain reasonable business flow even during
difficult periods when the economy is weak.
It is the Group’s policy to comply with all applicable environmental rules and regulations in its shipping operations
as well as in its daily working environment to avoid the emission of noxious liquids into the environment. The
Group’s owned vessels are well maintained and we place great emphasis on the operation in compliance with safety
and environmental laws and regulations including but not limited to ISM Code, ISPS Code, MARPOL and other
applicable rules regulated by IMO. We ensure all crew on board are trained and certificated in accordance with STCW
Convention. Our owned vessels are also subject to the laws, regulations and rules of each country and port they
visit. Starting from 2019, our vessels adopted IMO Data Collection System on fuel consumption and we switched to
compliant low sulfur content bunker fuel in order to meet the IMO 2020 Sulphur Cap requirement. We have developed
policies and procedures intended to ensure our compliance with these laws, regulations and rules.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Strategies and Business Profile
SHIPPING BUSINESS (Continued)
Owned Vessels
As at 31 December 2021, the Group had twenty four owned vessels and 554 crew employed on board.
Name Type Built Builder Size (dwt)
JIN LANG Post-Panamax 2010 Jiangsu New Yangzi 93,279
JIN MEI Post-Panamax 2010 Jiangsu New Yangzi 93,204
JIN XIANG Supramax 2012 Oshima 61,414
JIN HONG Supramax 2011 Oshima 61,414
JIN RONG Supramax 2008 Tsuneishi 58,729
JIN SUI Supramax 2008 Shanghai Shipyard 56,968
JIN TONG Supramax 2008 Shanghai Shipyard 56,952
JIN YUE Supramax 2010 Shanghai Shipyard 56,934
JIN GANG Supramax 2009 Shanghai Shipyard 56,927
JIN AO Supramax 2010 Shanghai Shipyard 56,920
JIN JI Supramax 2009 Shanghai Shipyard 56,913
JIN WAN Supramax 2009 Shanghai Shipyard 56,897
JIN JUN Supramax 2009 Shanghai Shipyard 56,887
JIN AN Supramax 2007 Kawasaki 55,866
JIN XING Supramax 2007 Oshima 55,496
JIN YI Supramax 2007 Oshima 55,496
JIN YUAN Supramax 2007 Oshima 55,496
JIN CHENG Supramax 2004 New Century 53,806
JIN SHUN Supramax 2007 Shanghai Shipyard 53,350
JIN FENG Supramax 2004 Oshima 52,686
JIN QUAN Supramax 2006 Tsuneishi 52,525
JIN SHENG Supramax 2006 IHI 52,050
JIN YAO Supramax 2004 IHI 52,050
ATLANTICA Supramax 2001 Shanghai Shipyard 50,259
1,412,518
Note:
In December 2021, the Group entered into two agreements in respect of the acquisition of two Supramaxes each at a consideration
of US$17,250,000 and the total consideration of the two vessels is US$34,500,000. The first vessel is deadweight 56,361 metric tons
and the second vessel is deadweight 56,469 metric tons. The first vessel was delivered to the Group in February 2022 and the second
vessel will be delivered to the Group on or before 30 March 2022.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Highlights
While the Group’s expertise remains in Asia, by deploying a flexible and responsive sales strategy as well as an
efficient fleet of vessels, the Group managed to serve a balancing portfolio of customers geographically during the
year.
Loading Ports Analysis
2021 2020
(Expressed as a percentage of revenue) % %
Asia excluding China 89.0 84.4
Australia 5.8 12.3
North America 3.1 –
China 1.5 2.2
Europe 0.6 –
Africa – 1.1
100.0 100.0
Discharging Ports Analysis
2021 2020
(Expressed as a percentage of revenue) % %
China 87.5 94.1
Asia excluding China 10.9 5.9
North America 1.6 –
100.0 100.0
Types of Cargoes carried by the Group’s Fleet
2021 2020
Metric Tons
(in ’000) %
Metric Tons
(in ’000) %
Minerals 8,971 86.1 6,927 70.1
Coal 1,083 10.4 1,971 20.0
Steel products 364 3.5 427 4.3
Cement – – 548 5.6
10,418 100.0 9,873 100.0
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Highlights
KEY PERFORMANCE INDICATORS FOR SHIPPING BUSINESS
2021 2020
US$ US$
Average daily time charter equivalent rate
1
19,233 7,269
Daily vessel running cost
2
4,624 3,851
Daily vessel depreciation
3
2,587 2,141
Daily vessel finance cost
4
161 242
7,372 6,234
Average utilization rate
5
96% 98%
As at 31 December 2021, the Group had twenty-four owned vessels. Revenue for the year 2021 increased 178% to
US$131,069,000, comparing to US$47,118,000 for the year 2020 due to the increase in number of owned vessels
and the improved revenue earned from the average daily time charter equivalent rate earned by the Group’s owned
vessels, improving 165% to US$19,233 for the year 2021 as compared to US$7,269 for the year 2020. The Group’s
daily vessel running cost increased to US$4,624 for the year 2021 as compared to US$3,851 for the year 2020 due to
the increased crew costs. Daily vessel finance cost decreased 33% from US$242 for the year 2020 to US$161 for the
year 2021 due to the decrease in interest rate and the reduction in secured bank loans as compared with that of the
year 2020. Fleet utilization rate decreased from 98% for the year 2020 to 96% for the year 2021. We will continue with
our cost reduction effort, striving to maintain a highly competitive cost structure when stacked against other market
participants.
Notes:
1.
Average daily time charter equivalent rate
is calculated as the time charter revenue, and voyage revenue less voyage expenses
divided by the number of available days in the year.
2. Daily vessel running cost is calculated as the aggregate of crew expenses, insurance, consumable stores, spare parts, repairs
and maintenance and other vessels’ miscellaneous expenses divided by ownership days in the year.
3. Daily vessel depreciation is calculated as the aggregate of vessels’ depreciation charge divided by ownership days in the year.
4.
Daily vessel finance cost is calculated as the aggregate of vessels’ finance costs divided by ownership days in the year.
5. Average utilization rate is calculated as the number of operating days divided by the number of available days in the year.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Highlights
FIVE-YEAR FINANCIAL SUMMARY
2021 2020 2019 2018 2017
US$’000 US$’000 US$’000 US$’000 US$’000
Key Items in the Consolidated
Statement of Profit or Loss
and Other Comprehensive Income
Revenue 131,069 47,118 63,160 76,113 73,547
Operating profit (loss) 196,136 (11,902) 8,818 11,874 1,146
Finance costs (1,749) (3,117) (4,323) (3,161) (5,177)
Profit (Loss) before taxation 194,387 (15,019) 4,495 8,713 (4,031)
Taxation (190) (233) – – –
Net profit (loss) for the year 194,197 (15,252) 4,495 8,713 (4,031)
Other comprehensive income (loss) 1,996 1,710 (233) (281) 13
Total comprehensive income (loss) for the year
attributable to shareholders of the Company 196,193 (13,542) 4,262 8,432 (4,018)
Earnings (Loss) per share
– Basic and diluted US$1.777 US$(0.140) US$0.041 US$0.080 US$(0.043)
Key Items in the Consolidated
Statement of Financial Position
Non-current assets 434,131 262,446 283,113 247,458 279,967
Current assets 113,594 103,718 123,320 114,179 125,502
Total assets 547,725 366,164 406,433 361,637 405,469
Total equity 432,075 239,160 252,702 250,953 245,034
Non-current liabilities 39,943 51,789 64,869 65,677 76,900
Current liabilities 75,707 75,215 88,862 45,007 83,535
Total equity and liabilities 547,725 366,164 406,433 361,637 405,469
Other Financial Information
Gearing ratio 4% 15% 14% 0.65% 15%
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Shareholders’ Diary
Annual general meeting 20 May 2022
Announcement for the first quarter results 2022 31 May 2022*
Announcement for the second quarter results 2022 31 August 2022*
Announcement for the third quarter results 2022 30 November 2022*
Announcement for the fourth quarter results 2022 28 February 2023*
* Subject to change
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Corporate Governance Report
Jinhui Shipping recognizes the importance of good corporate governance to the Company’s value creation and has
devoted considerable efforts to identify and formulate corporate governance practices appropriate to the Company in
terms of practicality and suitability. The Board has the overall responsibility for the Company’s corporate governance
and ensures the Company implements sound corporate governance practice.
SECTION 3-3B OF THE NORWEGIAN ACCOUNTING ACT
The following specifies the items or information that must be disclosed under Section 3-3b of the Norwegian
Accounting Act:
1. A statement of the code of practice and regulatory framework for corporate governance
Pursuant to Section 4.4 of the Oslo Rule Book II - Issuer Rules, companies listed on the Oslo Stock Exchange
(Oslo Børs) must publish a comprehensive report on the company’s corporate governance in the directors’
report or in a document that is referred to in the directors’ report. The report must cover every section of the
Norwegian Code of Practice for Corporate Governance (the “Norwegian Code of Practice”) and must include
the required report contents as set out in Section 3-3b of the Norwegian Accounting Act.
Jinhui Shipping has applied the principles as set out in the Norwegian Code of Practice as its corporate
governance structure. The Company gives an annual review of the corporate governance report which covers
every section for its compliance with the Norwegian Code of Practice, and explains the deviations with
selected alternative approaches on pages 15 to 32 with the numbers refer to the section’s numerical order of
the Norwegian Code of Practice.
2. Information on where the code of practice and regulatory framework is publicly
available
The Norwegian Code of Practice, which was revised and published on 14 October 2021 is available on the
Norwegian Corporate Governance Board website (www.nues.no) and the Oslo Rule Book II – Issuer Rules is
available on Oslo Børs Euronext website (www.euronext.com/en/markets/oslo).
Jinhui Shipping adhered to the Norwegian Code of Practice throughout the year except for certain deviations.
We report our conformance and provide explanation of the reasons for the deviations and what solution we
have selected in below fifteen separate sections as described in the Norwegian Code of Practice.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Corporate Governance Report
SECTION 3-3B OF THE NORWEGIAN ACCOUNTING ACT (Continued)
3. Description of the main elements of the Group’s internal control and risk management
systems associated with the financial reporting process
The Board is responsible for ensuring financial reporting process is subject to adequate control and has laid
down instructions and guidelines on its own works as well as for the executive personnel on day-to-day
operations and ongoing financial monitoring. The Board carries out a review of the Group’s most significant
risk areas in every six months and performs an annual review of its internal control systems. The Audit
Committee assists the Board relating to the efficiencies of the Group’s internal control over the financial
reporting process; the effectiveness of the Group’s risk management policies; and the qualifications and
independence of the external auditor.
The Group adopts a uniform generally accepted accounting practice in the preparation of financial statements
of the Company and its subsidiaries. The internal control systems identified in the financial reporting process
are primarily designed to mitigate the risks including financial reporting risk, compliance-related risk, fraud
risk, and risk on financial-accounting-related IT systems. The control procedures mainly include authorizations,
segregation of duties, reconciliations, management review and IT controls over financial-accounting-related
IT systems. To ensure adequate and effective internal control on financial reporting process is adopted and
implemented, key control procedures are ongoing monitored by the executive personnel, regularly assessed
by the Board and the Audit Committee and annually reviewed by the external auditor.
4. Provision in the Company’s Memorandum of Association governing general meetings
The Company’s Memorandum of Association and Bye-Laws laid down the shareholders’ right proceedings
at general meetings, voting rights, proxies, transfer of shares, and also the rules governing the alteration or
amendment to bye-laws and memorandum of association. Both do not extend or depart from the general
rules laid down in Chapter 5 of the Norwegian Public Limited Liability Companies Act, which governs general
meetings. The Company’s Memorandum of Association and Bye-Laws have been publicly disclosed in the
website of the Company.
5. Composition of the Board and the main elements in the prevailing board instructions
and guidelines
The Board adopted the Company’s Bye-Laws 36 to 52 as its prevailing board instructions of procedures which
laid down general powers, proceedings and administrative procedures of the directors of the Company.
The Board Committees, which include the Audit Committee and the Remuneration Committee, are
appointed by the Board under respective terms of reference that specified their authorities, duties, reporting
responsibilities and reporting procedures. The respective terms of reference of the Audit Committee and the
Remuneration Committee have been publicly disclosed in the website of the Company. The composition of the
Board and the board committee functions are further discussed below in Section 8 and Section 9 under the
Norwegian Code of Practice.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Corporate Governance Report
SECTION 3-3B OF THE NORWEGIAN ACCOUNTING ACT (Continued)
6. Provision in the Company’s Bye-Laws that regulates the appointment and replacement
of members of the Board
Pursuant to the Company’s Bye-Law 36, the Directors shall be elected or appointed in the first place at the
statutory meeting of members and thereafter in accordance with Bye-Law 38 and shall hold office until the
next appointment of Directors or until their successors are elected or appointed.
Bye-Law 38 stipulates that notwithstanding any other provisions in the Company’s Bye-Laws, at each annual
general meeting one-third of the Directors for the time being (or, if their number is not a multiple of three,
the number nearest to but not greater than one-third) shall retire from office by rotation provided that
notwithstanding anything herein, the Chairman and / or the Managing Director shall not, whilst holding such
office, be subject to retirement by rotation or be taken into account in determining the number of Directors to
retire in each year.
There are also provisions in Bye-Law 40 and Bye-Law 41 in relation to the removal of Directors and the
disqualification of Directors.
7. Mandate that gives the Board the right to issue new shares and provision in the
Company’s Bye-Laws that gives the Board the right to decide on share repurchases
There is an existing general mandate in place that gives the Board the power to issue, allot and dispose of
shares of the Company not exceeding the aggregate of 30% of the issued share capital of the Company on
the date of the resolution. This general mandate was granted to the Board in the Company’s annual general
meeting held on 20 May 2021 and is valid until the earlier of the date of the next annual general meeting or
otherwise revoked or determined by shareholders at a general meeting of the Company. The provision in the
Company’s Bye-Law 2 giving the Board the right to issue new shares.
The provision in the Company’s Bye-Law 3 giving the Board the right to purchase its shares as the Board shall
think fit. In view of the increasingly volatile nature of today’s financial markets, the Board shall make timely
decision on the purchase of its shares according to the then prevailing market conditions to generate the most
value for shareholders of the Company.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Corporate Governance Report
NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE
The section numbers mentioned below refer to the fifteen sections under the Norwegian Code of Practice.
Section 1 Implementation and reporting on corporate governance
Jinhui Shipping has applied and followed the principles as set out in the Norwegian Code of Practice. The corporate
governance report of 2021 covered every section of Norwegian Code of Practice with the description of our
conformance throughout the year and the explanation of the reasons for the deviations.
Section 2 Business
The objects of Jinhui Shipping are set out in its Memorandum of Association, which include the businesses of, inter
alia:
• acting and performing all the functions of a holding company;
• acting as ship owners, managers, operators and agents; and
• acquiring, owning, selling, chartering, repairing or dealing in ships.
The Group’s main objectives, strategies and risk profiles for our businesses are discussed in “Strategies and Business
Profile” on pages 5 to 7 and in the section of Risk Management in “Directors’ Report” on pages 55 to 57.
The Company has promulgated a set of Company Code, which sets out the corporate standards and practices used by
the Group to direct and manage its business affairs. The Company Code also includes corporate social responsibility
guidelines and ethical guidelines, and is prepared and updated by referencing to the principles set out in the
Norwegian Code of Practice and other applicable rules and regulations. In addition to formalizing existing corporate
governance principles and practices, the Company Code also serves the purpose of assimilating existing practices
with benchmarks prescribed by the Norwegian Code of Practice and ultimately ensuring high transparency and
accountability to the Company’s shareholders. The directors and employees of Jinhui Shipping are subject to a range
of rules laid down by legislation and regulations, as well as the Company Code and rules and ethical values and
guidelines described in the staff handbooks. Section 3-3c of the Norwegian Accounting Act is relevant for Norwegian
companies and also for third country issuers that have taxable operations in Norway. The Company did not present
social responsibility statement as required under Section 3-3c of the Norwegian Accounting Act as the Company
is incorporated in Bermuda and does not have any taxable operations in Norway. Nevertheless, we include the
Company’s principles on material social responsibility matters related to external environment, working environment,
and employees’ right and equal treatment in the Directors’ report. We also commit to conduct our business in a
responsible, ethical and lawful manner and complied applicable rules and regulations in our business practices.
Jinhui Shipping shall maximize shareholders’ values in a sustainable manner by increasing the Company’s equity
value and distributing dividends to shareholders and the Board evaluates the objectives, strategies and risk profiles
annually.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Corporate Governance Report
NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
Section 3 Equity and dividends
Equity
Jinhui Shipping’s capital adequacy is kept under constant review in relation to its objectives, strategies and risk
profile. As at 31 December 2021, the Group’s total equity was US$432,075,000, accounting for 79% of its consolidated
total assets. The Board considers the present equity structure to be satisfactory.
Dividend policy
The amount and timing of any dividend distributions in the future will depend, among other things, on our
compliance with covenants in our credit facilities, earnings, financial condition, cash position, Bermuda law affecting
the dividend distributions, restrictions in our financing agreements and other factors. In addition, the declaration and
payment of dividend distributions is subject at all times to the discretion of our Board.
The Board has resolved to recommend the payment of a final dividend of US$0.07 per share for the year ended
31 December 2021 and such dividend, if approved by the shareholders at the forthcoming annual general meeting
scheduled on 20 May 2022, will be paid to the beneficial owners of the shares of the Company whose names are
registered in the VPS (now known as Euronext Securities Oslo, the Norwegian Central Securities Depository) at the
close of business on 24 May 2022. The Company’s shares listed on the Oslo Stock Exchange will be traded including
dividend up until and including 20 May 2022. The ex dividend date is 23 May 2022 and the dividend will be paid on
or about 14 June 2022. On 17 August 2021, the Board resolved to pay an interim dividend of US$0.03 per share to the
shareholders of the Company. The interim dividend was paid to the shareholders of the Company on 17 September
2021. The proposed final dividend as mentioned above, if approved, will bring the total dividends for 2021 to US$0.10
per share.
Increase in share capital
According to the Company’s Bye-Law 4.3, the shareholders shall have the first and preferential right to subscribe
for and be allotted any shares of the Company proposed to be issued in proportion to the number of shares held by
them, unless the Company by special resolution otherwise decides to waive the shareholders’ preferential rights in
respect of a particular issue of shares or generally for any period not exceeding five years.
At the 2021 Annual General Meeting of the Company, a general mandate had been granted to the directors of the
Company to increase not exceeding the aggregate of 30% of the issued share capital of the Company which would
be valid until the earlier of the date of the next annual general meeting or otherwise revoked or determined by
shareholders at a general meeting of the Company. No shares were being issued under this authorization in 2021.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Corporate Governance Report
NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
Section 3 Equity and dividends (Continued)
Increase in share capital (Continued)
According to the Norwegian Code of Practice, the mandate granted to the board of directors to increase the
company’s share capital should be restricted to defined purposes.
In view of the increasingly volatile nature of today’s financial markets, the Board believes having a general mandate
in place enables the Company to respond swiftly to the then prevailing market conditions should an equity fund
raising exercise be determined to be the appropriate funding channel and proposes this general mandate at the
forthcoming annual general meeting.
Purchase of own shares
The provision in the Company’s Bye-Law 3 giving the Board the right to purchase its shares as the Board shall think
fit. In view of the increasingly volatile nature of today’s financial markets, the Board shall make timely decision on the
purchase of its shares according to the then prevailing market conditions to generate the most value for shareholders
of the Company.
Section 4 Equal treatment of shareholders
Equal treatment of shareholders
Jinhui Shipping has one class of shares in issue. All shares have equal voting rights. There are provisions in the
Company’s Bye-Law 4 in relation to shareholder’s voting rights.
Share issues
In the event of an increase in share capital where the Board resolves to carry out an increase in share capital on the
basis of a mandate granted to the Board that waives the pre-emption rights of existing shareholders, the justification
will be publicly disclosed in a stock exchange announcement issued in connection with the increase in share capital.
No shares were being issued in 2021.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Corporate Governance Report
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Section 4 Equal treatment of shareholders (Continued)
Transactions in its own shares
Jinhui Shipping’s shares are liquid. In the event the Company carries out transactions in its own shares, it would only
carry out such transactions either through the stock exchange or at prevailing stock exchange prices if carried out
in any other way. If there is limited liquidity in the Company’s shares, the Company would consider other ways to
ensure equal treatment of all shareholders. No transactions in shares were being carried out by the Company in 2021.
Section 5 Shares and negotiability
Jinhui Shipping’s shares are freely traded in the Oslo Stock Exchange (Oslo Børs). The Company’s shares are
registered shares with its shareholders register located at Bermuda. Shareholders of the Company may transfer their
shares by an instrument of transfer in the usual common form or in such form as decided by the Board.
In general, all shares are freely negotiable. However, the Board may deny the transfer of shares according to the
Bye-Law 11 of the Company. The Board has the option to decline to register the transfer of any share if the
registration of such transfer would be likely to result in 50% or more of the aggregate issued share capital and the
votes of the Company being held or owned directly or indirectly by a person or persons resident for tax purposes in
Norway.
The Board considers that it is appropriate to impose such restriction which protects the existing Norwegian
shareholders from unexpected tax changes in Norway for the common interest of the Company and the shareholders.
This type of restriction is common for Bermuda and other low-tax jurisdiction companies listed on the Oslo Stock
Exchange (Oslo Børs).
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 6 General meetings
Attendance by shareholders
Shareholders of the Company are entitled to attend shareholders’ meeting in person or by proxy. The notice of
calling general meeting and the supporting information, including the procedures for representation at the meeting
through a proxy, the information for each resolution to be considered at the general meeting and for each of the
candidates nominated for election, are published on the Company’s website no later than 21 days prior to the date of
the general meeting.
As a general rule, decisions which shareholders are entitled to make pursuant to Bermuda law may be made by
a simple majority of votes cast at a general meeting. However, the Bye-Laws of the Company provides that any
decision to, inter alia, amend Bye-Laws of the Company or alter the share capital of the Company requires the
approval of at least two-thirds of votes cast by those members present in person or by proxy at a general meeting.
In order to comply with the requirements of the Registration Agreement dated 30 September 1994 between the
Company and Nordea Bank, and Bermuda law, all of the shares of the Company registered in the VPS (now known as
Euronext Securities Oslo) are registered on the register of shareholders of the Company in the name of Nordea Bank.
Nordea Bank alone will be entitled to attend and vote at general meetings in respect of shares so held. Nordea Bank
has agreed that whenever it receives a notice that a shareholders’ meeting of the Company is called, it shall despatch
to each beneficial owner of the shares registered in the VPS (or its nominee), a copy of the notice. Nordea Bank
has also agreed not to attend or vote at any such meeting other than in accordance with proxies from shareholders
registered in the VPS. In order to vote through Nordea Bank at annual or special general meetings, shareholders
must have registered their shareholdings in the VPS (usually registration of shares takes 2 business days) and have
deposited a valid proxy form at Nordea Bank not less than 48 hours before the time appointed for holding the general
meeting.
Effective from 1 March 2022, the European Central Securities Depository Regulation (“CSDR”) has been implemented
into Norwegian law through provisions in the Norwegian Central Securities Depository Act, whereas there is a
transitional period for companies to become compliant with the new CSDR regime which ends on 31 December 2022.
The Company takes advantage of the transitional period to update its register of members to reflect that Nordea Bank
continues to hold the Company’s ordinary shares as nominees on behalf of Euronext Securities Oslo; and before the
end of the transition period, the Company will update the primary registration of ordinary shares from Nordea Bank
to the beneficial holders thereof, and for the Company to appoint the VPS as a branch register of the Company for
the purposes of the Companies Act 1981 of Bermuda, whereupon the Company would be compliant with the new
CSDR regime.
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ANNUAL REPORT 2021
Corporate Governance Report
NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
Section 6 General meetings (Continued)
Participation by shareholders in absentia
Shareholders are given information on the procedures for representation at the general meeting through a proxy.
As an alternative to voting in person in the general meetings, shareholders may appoint the chairman of the general
meeting or to appoint another person as their proxies to attend and vote at the general meeting according to the
procedures and instructions as shown in the notice of general meetings.
The proxy form of the Company is drawn up with separate voting instructions for each matter to be considered by
the meeting. For directors who are subject to retirement by rotation at the annual general meeting, shareholders are
given the opportunity to vote separately for each candidate nominated for election or re-election as director of the
Company.
Attendance by the board of directors and auditor
The Chairman attends and chairs the general meetings. Other members of the Board are entitled to attend and the
external auditor is present at the annual general meeting. The 2022 Annual General Meeting is scheduled on 20 May
2022. Notice of 2022 Annual General Meeting will be published on the website of the Company and the NewsWeb of
the Oslo Stock Exchange (Oslo Børs) and will be despatched to shareholders of the Company in mid April 2022.
Chairman of the general meetings
According to Bye-Law 27 of the Company, every general meeting of the Company should be chaired by the president
of the Company or the Chairman, or in his absence, another Director.
This constitutes a deviation from the Norwegian Code of Practice which states that the general meeting should be
chaired by an independent chairman.
The Board considers that as the leader of the Group and having sufficient experience and knowledge, the Chairman is
the most suitable person to chair a general meeting.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 7 Nomination committee
The Company has not established a nomination committee and there is no provision for establishing such committee
in its Bye-Laws. This constitutes a deviation from the Norwegian Code of Practice.
The Board considers that it could monitor the need for any changes in the composition of its members and to
maintain contacts with shareholders, board committee members and executive personnel. The Board believes that
the current board composition is sufficient to represent the interests of all shareholders.
The Board will undertake adequate due diligence in respect of such individual and consider a variety of factors
including without limitation the following in assessing the suitability of the proposed candidate:
(a) Reputation for integrity;
(b) Accomplishment, experience and reputation in the shipping industry and other relevant sectors;
(c) Commitment in respect of sufficient time, interest and attention to the Company’s business;
(d) Diversity in all aspects, including but not limited to gender, age, cultural / educational and professional
background, skills, knowledge and experience;
(e) The ability to assist and support management and make significant contributions to the Company’s success;
and
(f) Any other relevant factors as may be determined by the Board from time to time.
The appointment of any proposed candidate to the Board or re-appointment of any existing member(s) of the Board
shall be made in accordance with the Company’s Bye-Laws and other applicable rules and regulations.
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Section 8 Board of Directors: composition and independence
The Board has the ultimate responsibility for the management and administration of the affairs of the Company and
for supervising day-to-day management and activities in general; it also has the overall responsibility for the Group’s
good corporate governance practices, internal control and risk management.
During the year, the Board comprised of four executive directors, including the Chairman and the Managing Director,
and two non-executive directors. The Chairman is responsible for overseeing the functioning of the Board whilst
the Managing Director, supported by the executive directors, is responsible for managing the Group’s business,
including the implementation of major strategies and initiatives adopted by the Board. All non-executive directors,
who are shareholder-elected members and independent of executive personnel, material business contacts and main
shareholders of the Company, serve the important function of advising the management on strategies development
and ensure that the Group maintains high standards of financial and other mandatory reporting as well as providing
adequate checks and balances for safeguarding the interests of shareholders and the Company as a whole.
All directors of the Company are kept informed on a timely basis of major changes that may affect the Group’s
business, including relevant rules and regulations. The Board meets regularly and approves the Group’s overall
strategies, major acquisitions and disposals, annual and quarterly results and any other significant operational
and financial matters. Members of the Board are encouraged to own shares in the Company. The directors will
seek independent professional advice in performing their duties where appropriate. Executive personnel have the
responsibility for implementation of the Group’s strategic planning and decision made by the Board and monitoring
day-to-day operation of the Company.
Bye-Law 38 stipulates that notwithstanding any other provisions in the Company’s Bye-Laws, at each annual general
meeting one-third of the Directors for the time being (or, if their number is not a multiple of three, the number
nearest to but not greater than one-third) shall retire from office by rotation provided that notwithstanding anything
herein, the Chairman and / or the Managing Director shall not, whilst holding such office, be subject to retirement
by rotation or be taken into account in determining the number of Directors to retire in each year. As at date of this
annual report, directors who hold office of the Company are listed below:
Executive Directors
Ng Siu Fai
1
, Chairman
Ng Kam Wah Thomas
1
, Managing Director and Deputy Chairman
Ng Ki Hung Frankie
1
Ho Suk Lin Cathy
1
Non-executive Directors
Tsui Che Yin Frank
2
William Yau
2
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 8 Board of Directors: composition and independence (Continued)
Notes:
1.
Mr. Ng Siu Fai, Mr. Ng Kam Wah Thomas, Mr. Ng Ki Hung Frankie and Ms. Ho Suk Lin Cathy are executive directors of Jinhui
Holdings Company Limited, the Company’s holding company.
2.
Mr. Tsui Che Yin Frank and Mr. William Yau are independent non-executive directors of Jinhui Holdings Company Limited.
There are departures from the Norwegian Code of Practice which states that general meeting should elect the
chairman of the board of directors; the board of directors should not include executive personnel; and the term of
office for members of the board of directors should not be longer than two years at a time.
Dry bulk shipping is a highly specialized industry, and requires executives with substantial amount of industry
experience to fully comprehend and to monitor the performance of the Group. The Chairman and the Managing
Director have extensive experience and knowledge in dry bulk shipping business and their duties for overseeing
the functioning of the Board and all aspects of the Group’s operations are clearly beneficial to the Group. Despite
the executive directors being executive personnel of the Group and performing executive management function in
day-to-day operations, the leadership of the Chairman and the Managing Director is vital to the Group’s business
continuity and stability and the other two executive directors are with extensive experiences in shipping business and
management. In addition, members of the Board are obliged to disqualify themselves from participation in handling
of individual matters in which the board member, or its close associates, has a particular interest. The Company
believes the current board composition is sufficient to represent the interests of all shareholders and this will not
impair the balance of power and authority between the Board and the management of the Company. The biographical
details of the directors of the Company are set out in “Board of Directors and Executive Personnel” on pages 33 and
34.
Board meetings attendance
The Board meets at least quarterly and on other occasions when a Board decision is required on major issues. In
2021, the Board held seven meetings. The attendance record of each member of the Board is set out below:
Executive Directors Attendance
Ng Siu Fai 7
Ng Kam Wah Thomas 7
Ng Ki Hung Frankie 7
Ho Suk Lin Cathy 7
Non-executive Directors
Tsui Che Yin Frank 7
William Yau 7
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Section 9 The work of the Board of Directors
The Board deals with matters of strategic and major financial importance to the Company on a regular basis. At least
one Board meeting per annum is set aside for discussion of the Group’s strategies. During such meetings, the Board
reviews the expectation of the Group’s business outlook and financial forecast perspective and discusses the overall
strategies going forward. In any material event that the Chairman has an active involvement, the Board meeting will
be chaired by other members of the Board. In addition, the Company has established guidelines to make sure the
directors of the Company and executive personnel would notify the Board if they have any material direct or indirect
interest in any transaction entered into by the Company and its subsidiaries and would pay particular attention to
obtain independent valuations for any material transactions between the Group and its close associates. According
to the Company Code, members of the Board are obliged to disqualify themselves from participation in handling of
individual matters in which the board members, or its close associates, have a particular interest. These practices
would ensure independence of matters to be considered by the Board. The Board has guidelines on its own works
as well as for the executive personnel with clear internal allocation of responsibilities and duties and instruction in
handling the agreements with related parties, if any.
Transactions with close associates
Jinhui Shipping is a listed issuer on the Oslo Stock Exchange (Oslo Børs) and is a subsidiary of Jinhui Holdings
Company Limited, whose shares are listed on the Hong Kong Stock Exchange. The directors of the Company and
executive personnel have the obligations to follow rules, regulations and guidelines in relation to transactions with
close associates as set out by the Financial Supervisory Authority of Norway, the Stock Exchange of Hong Kong
Limited, the International Accounting Standards Board and the Hong Kong Institute of Certified Public Accountants.
Board committees
The Board is assisted by two board committees which are Audit Committee and Remuneration Committee. Their
existence does not reduce the responsibility of the Board as a whole. Board committee meetings are convened to
prepare matters for consideration and final decision by the Board as a whole. Material information that comes to the
attention of board committees are also communicated to other members of the Board.
As a general principle, the board committees have an advisory role to the Board and members of such committees
are restricted to members of the Board who are independent of executive personnel. They assist the Board in specific
areas and make recommendations to the Board. However, only the Board has the power to make final decisions.
Audit Committee
The Audit Committee was established on 17 March 2006. The members of Audit Committee comprised of two
non-executive directors, namely Mr. Tsui Che Yin Frank (chairman of Audit Committee) and Mr. William Yau. The
primary duties of the Audit Committee include the review of the Group’s financial reporting, the nature and scope
of audit review as well as the effectiveness of the systems of risk management and internal control and compliance.
The Audit Committee is also responsible for making recommendations in relation to the appointment, re-appointment
and removal of the auditor, and reviewing and monitoring the auditor’s independence and objectivity. In addition,
the Audit Committee discusses matters raised by the auditor and regulatory bodies to ensure that appropriate
recommendations are implemented.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 9 The work of the Board of Directors (Continued)
Audit Committee (Continued)
The Audit Committee has reviewed with the management, the accounting principles and practices adopted by the
Group and discussed auditing, risk management, internal control and financial reporting matters including the review
of the Company’s half-yearly and annual reports before submission to the Board. The Group’s annual consolidated
financial statements for the year ended 31 December 2021 have been reviewed by the Audit Committee, which is
of the opinion that such statements comply with applicable accounting standards and legal requirements, and that
adequate disclosures have been made.
Remuneration Committee
The Remuneration Committee was established on 17 March 2006. The members of Remuneration Committee
comprised of two non-executive directors, namely Mr. Tsui Che Yin Frank (chairman of Remuneration Committee)
and Mr. William Yau. The role and function of the Remuneration Committee include the determination of the
specific remuneration packages of all executive directors and executive personnel, including salaries, bonuses,
benefits in kind, pension rights and compensation payments, and make recommendations to the Board on the fees
for the non-executive directors. The Remuneration Committee should consider factors such as the performance of
executive directors and executive personnel, the profitability of the Group, salaries paid by comparable companies,
time commitment and responsibilities of the executive directors and executive personnel, employment conditions
elsewhere in the Group and desirability of performance-based remuneration. The Remuneration Committee has to
ensure that the Group is able to attract, retain and motivate a high-calibre team which is essential to the success of
the Group.
As a matter of principle, no loans or advances are granted to any director. Presently, no share options are granted to
any director by the Company.
The Remuneration Committee holds a meeting annually to review the remuneration to directors of the Company and
executive personnel of the Group and makes recommendations to the Board.
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Section 10 Risk management and internal control
It is the Board’s responsibility for evaluating and determining the nature and extent of the risks it is willing to take
in achieving the Group’s strategic objectives, and ensuring that the Group establishes and maintains appropriate
and effective risk management and internal control systems. The Board also oversees management in the design,
implementation and monitoring of the risk management and internal control systems on an ongoing basis, and
management shall confirm to the Board on the effectiveness of these systems at least annually.
The Board, through the assistance of Audit Committee, has conducted an annual review of the effectiveness of the
Group’s risk management and internal control systems, covering all material financial, operational and compliance
controls. In particular, the adequacy of resources, qualifications and experience of staff, training programmes and
budget of the Group’s accounting and financial reporting functions are reviewed. The annual review also covered
the Group’s significant and emerging risks in shipping business; the quality of management’s ongoing monitoring
of risks and of the internal control systems; the extend and frequency of communication of monitoring results to the
Audit Committee and the Board; whether there is any significant control failings or weaknesses identified and the
effectiveness of the Group’s processes for financial reporting and relevant legislation and regulations compliance.
For the year 2021, the review of the effectiveness of the Group’s risk management and internal control systems has
been conducted and certain key internal control systems have been independently reviewed by Grant Thornton Hong
Kong Limited during the year and are reviewed by the Audit Committee on an ongoing basis so that the practical
and effective systems are implemented. The Board is satisfied that such systems are effective and adequate and
appropriate actions have been taken.
The risk management and internal control systems and accounting system of the Group are designed to identify and
evaluate the Group’s risk and formulate risk mitigation strategies, and to provide reasonable assurance that assets
are safeguarded against unauthorized use or disposition, transactions are executed in accordance with management’s
authorization, and the accounting records are reliable for preparing financial information used within the business
for publication, maintaining accountability for assets and liabilities and ensuring the business operations are in
accordance with relevant legislation, regulations and internal guidelines, including guidelines for corporate social
responsibility.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 10 Risk management and internal control (Continued)
The Group has a defined organizational structure with clearly defined lines of responsibility and authority. Each
business unit / department is accountable for its daily operations and is required to report to executive directors
on a regular basis. Policies and procedures are set for each business unit / department, which includes approvals,
authorization, verification, recommendations, performance reviews, assets security and segregation of duties. The
key control procedures include establishing and maintaining effective policies to ensure proper management of
risks to which the Group are exposed and taking appropriate and timely action to manage such risks, establishing a
structure with defined authorities and proper segregation of duties; monitoring the strategic plan and performance;
designing an effective accounting and information system; controlling price sensitive information; and ensuring
swift actions and timely communication with our stakeholders. At least twice a year, the management will report to
the Audit Committee on the effectiveness of risk management and internal control systems. The Audit Committee
review how management designs, implements and monitors risk management and internal control procedures,
findings and recommendations and follow-up procedures on the annual assessment; and the Audit Committee will
report on the overall effectiveness of the risk management and internal control systems to the Board annually. The
Group’s risk management and internal control systems can only provide reasonable and not absolute assurance
against material misstatement or loss, as they are designed to manage, rather than eliminate the risk of failure to
achieve business objectives. With respect to the procedures and internal controls for the handling and dissemination
of inside information, the Group has internal policy and procedures which strictly prohibit unauthorized use of
inside information and has communicated to all staff; the Board is aware of its obligations to announce any inside
information in accordance with the relevant legislation and regulations. Based on the size and simple operating
structure of the Group as well as the existing internal control processes, the Board has decided not to set up an
internal audit department for the time being, when necessary, the Audit Committee under the Board would carry out
the internal audit function and for reviewing the adequacy and effectiveness of the risk management and internal
control systems of the Group. In addition, only Directors and delegated officers can act as the Group’s spokesperson
and respond to external enquiries about the Group’s affairs. Details of the Group’s risk management policies are
setout in “Directors’ Report” on pages 55 to 57 and note 39 to the consolidated financial statements on pages 124 to
131.
Section 11 & 12 Remuneration of the Board of Directors and executive personnel
Directors’ fees represent remuneration to members for holding capacity as directors of the Company and are
determined based on the responsibility and expertise of the members, time commitment and the complexity of
the Company’s activities and do not link to the Company’s performance. Directors’ other emoluments represent
remuneration to executive directors for being executive personnel of the Group and performing executive
management functions in day-to-day operations and their other emoluments are determined based on guideline for
the remuneration of the executive personnel. The remuneration guideline contributes to the business strategy, long-
term interests and sustainability of the Company. The guideline is also included in the Company’s upcoming Notice
of 2022 Annual General Meeting for shareholders’ consideration.
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Section 11 & 12 Remuneration of the Board of Directors and executive personnel (Continued)
The guideline for the remuneration of executive personnel, which is considered an advisory guideline (non-binding) is
as follows:
(a) Fixed remuneration component
For fixed elements which include non-performance-based fixed base salary and allowances, and contributions
to retirement benefits schemes, these are assessed and determined by the complexity and responsibility
of the position, with a view to attract, retain and motivate high performing individuals and in line with the
prevailing market conditions and local market practice. No individual should determine his or her own fixed
remuneration. Fixed remuneration to individual executive directors and executive personnel are reviewed
annually by the Remuneration Committee and subject to the Board’s approval.
(b)
Variable remuneration component
For
variable elements which include performance-based discretionary bonus, these are assessed and
determined by the overall performance of the individual and contribution to the business strategy and
objectives, as well as shareholders’ values of the Company. No individual should determine his or her own
variable remuneration. Variable remuneration to individual executive directors and executive personnel are
reviewed annually by the Remuneration Committee and subject to the Board’s approval.
Since the dry bulk shipping industry is highly volatile and heavily influenced by external forces, it is
inappropriate to link the performance-based variable remuneration solely to any financial measurable
targets over a particular period or set an absolute limit to each remuneration component as it may generate
meaningless results. The Board seeks to ensure appropriate balance amongst all performance factors in
determination of variable remuneration component to executive personnel.
This constitutes deviations from the Norwegian Code of Practice which states that members of the board
of directors should not take on specific assignments for the company in addition to their appointment
as a member of the board; remuneration of the board of directors should not be linked to the company’s
performance; and performance-based remuneration to executive personnel should be based upon measurable
targets and quantifiable factors over which the employee in question can have influence and the performance
related remuneration should be subject to an absolute limit.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 11 & 12 Remuneration of the Board of Directors and executive personnel (Continued)
(b) Variable remuneration component (Continued)
Currently, the Company has not adopted any share option scheme and no equity-based compensation
arrangement is granted to any directors and executive personnel. For any special equity-based compensation
arrangement that will be granted to eligible executive personnel in future, these compensation arrangements
will be determined by the individual’s contribution to the promotion of and enhancement of the long term
value of the Company. This equity-based remuneration will be considered by the Board and be included as a
separate binding resolution in the general meeting subject to the shareholders’ approval.
As mentioned in section 8, executive directors are performing executive personnel function, they received
remuneration for additional duties as member of the Board. The Remuneration Committee has been
established to assist the Board in developing and administering a fair procedure for determining on the
specific remuneration packages of all executive directors and executive personnel of the Company. At the
meeting held on 28 February 2022, the Remuneration Committee reviewed and made recommendations
to the Board on the fees of the executive directors, other emoluments of the individual executive directors
and executive personnel for the year 2021, and made recommendations to the Board on the remuneration
packages of the individual executive directors and executive personnel for the year 2022 as well as fees for
non-executive directors. Each component of remuneration to members of the Board are disclosed to the full
board and approved by the Remuneration Committee and the Board. Details of the fees and other emoluments
of the directors of the Company for the year 2021 are set out in note 12 to the consolidated financial
statements.
Section 13 Information and communications
Jinhui Shipping strives to promote efficient and non-discriminatory communication of information to market
participants. In order to further promote effective communication, the Company maintains a website to disseminate
information electronically on a timely basis.
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Section 13 Information and communications (Continued)
Financial reporting
The Board is responsible for the accounts and the presentation of the financial results to shareholders in general
meetings. The Board reviews the Group’s financial position and exposure in the Board meetings with the
management every quarter. In such Board meetings, the management presents the Group’s financial performance
and the market situation to the Board where key profitability and financial ratios and any changes to the Group’s
strategies in response to changing market situation are discussed.
The quarterly results announcements are released by the Company for each quarter of a financial year within
two months subsequent to each quarter end. Annual report together with audited consolidated financial statements
are usually adopted by the Board within four months subsequent to each financial year end and are distributed to
shareholders of the Company no later than 21 days prior to the annual general meeting.
The consolidated financial statements have been prepared in accordance with IFRS, which collective term includes
all applicable individual International Financial Reporting Standards, International Accounting Standards and
Interpretations issued by IASB, and HKFRS which collective term includes all applicable individual Hong Kong
Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the HKICPA. The
Company emphasizes the production of accounts and financial reporting in which shareholders and other investors
alike can have confidence. Details of the Group’s significant accounting policies are set out in note 4 to the
consolidated financial statements.
Other market information
Jinhui Shipping has established guidelines for open communication of market information to market participants
other than through general meeting. The Company also publishes major events such as annual general meeting,
annual and quarterly reports, financial calendar, public presentations, and other material transactions through
website of the Company at www.jinhuiship.com and the NewsWeb of the Oslo Stock Exchange (Oslo Børs) at
https://newsweb.oslobors.no.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 14 Take-overs
According to the Norwegian Code of Practice, the board of directors should establish guiding principles for how it
will act in the event of a take-over bid. However, there is no provision in the Bye-Laws of the Company regulating
the Board’s competence in the event of a take-over bid.
Nevertheless, the Board will adopt the provisions in the Norwegian Code of Practice as the guiding principles for how
Company will act in the event of a take-over bid and will not attempt to influence, hinder or obstruct take-over bids
for the Company’s activities or shares.
In potential take-over situations, the Board will evaluate any offers that are commercially and financially beneficial
to all shareholders of the Company, consider and arrange an independent valuation where the bidder is a major
shareholder, and commit to act with extensive concern regarding representing the interest of all shareholders. The
Board will follow the relevant rules and regulations as set out in the Norwegian Code of Practice in due course.
Section 15 Auditor
The Board strives to have close and open cooperation with Grant Thornton Hong Kong Limited, the auditor of
the Company. The Audit Committee obtains annual confirmation that the auditor satisfies the independence and
objectivity requirements. The auditor submits an annual audit plan and presents the main features and scope of the
planned work to the Audit Committee before commencement of annual audit. Also, the auditor has presented to the
Audit Committee a review of the Company’s internal control systems, including identified weaknesses and proposals
for improvement. The Board particularly assesses whether the auditor exercises an adequate control function and the
performance of the auditor has been reviewed.
The auditor participates in meetings of the Board that deal with the annual accounts. At these meetings, the auditor
reviews the material changes in the Group’s accounting principles and policies, identifies the significant risks and
exposures of the Group, and comments on the Group’s accounting and internal control systems during the course of
audit. The auditor also attends the annual general meeting of the Company.
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Section 15 Auditor (Continued)
The Board has issued guideline that regulate management’s access to use the auditor of the Company for various
services as follows:
Audit services – include audit services provided in connection with the audit of the financial statements.
Other services – include services that would normally be provided by auditor other than audit services, for example,
audit of the Group’s provident funds, tax compliance, due diligence and accounting advice related to merge and
acquisition, internal control review of systems and / or processes, and issuance of special audit reports for tax
or other purposes. The auditor is invited to undertake those services that it must or is best place to undertake in
capacity as auditor.
Other specific services – include reviews of third parties to assess compliance with contracts, risk management
diagnostics and assessments, and non-financial systems consultations. The auditor is also permitted to assist
management with internal investigations and fact-finding into alleged improprieties, where appropriate and
necessary. These services are subject to specific approval by the Audit Committee.
In the forthcoming general meeting, the Board will report the remuneration paid to auditor including the details
of the fee paid for audit services and any fees paid for other specific assignments. In 2021, the remuneration paid
and payable to the auditor of the Company for the provision of the Group’s audit services and other services were
US$200,000 and US$15,000 respectively. Fees paid for other services mainly included fees for tax compliance services
of US$3,000 and review of internal control systems of US$5,000. The auditor’s remuneration excluded VAT as the
external auditor performed its services in Hong Kong, where no VAT being imposed.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
33
ANNUAL REPORT 2021
Board of Directors and Executive Personnel
BOARD OF DIRECTORS
Mr. Ng Siu Fai, Chairman
Aged 65. Appointed as a Director of the Company since 1994. As one of the two founders of the Group in 1987,
Mr. Ng was appointed as the chairman of Jinhui Holdings, the Company’s holding company, in 1991. His
responsibility is to formulate strategic planning for the Group as well as overseeing all aspects of the Group’s
operations. Mr. Ng has extensive knowledge and working experience in the shipping industry as well as business
management and China trade.
Mr. Ng is a brother of Messrs. Ng Kam Wah Thomas and Ng Ki Hung Frankie, both are directors of the Company (as
disclosed hereinafter).
Mr. Ng Kam Wah Thomas, Managing Director and Deputy Chairman
Aged 59. Appointed as a Director of the Company since 1994. Mr. Ng is the other founder of the Group in 1987 and
was appointed as a director of Jinhui Holdings since 1991. He is responsible for the Group’s shipping activities.
Mr. Ng has extensive knowledge and working experience in the shipping industry and business management. Mr. Ng
holds a Bachelor’s Degree in Arts from the University of Guelph in Canada and a Diploma in Management Studies,
specializing in shipping, from the Plymouth Polytechnic in the United Kingdom.
Mr. Ng Ki Hung Frankie, Executive Director
Aged 68. Appointed as a Director of the Company since 1994 and a director of Jinhui Holdings since 1991. Mr. Ng is
responsible for the Group’s investments and business management. Mr. Ng has extensive working experience in the
shipping industry as well as business management and China trade.
Ms. Ho Suk Lin Cathy, Executive Director
Aged 58. Appointed as a Director and the Company Secretary of the Company since 1994 and a director of Jinhui
Holdings since 1993. Ms. Ho is responsible for the Group’s financial controls and secretarial matters. Ms. Ho has
extensive working experience in finance and management. Prior to joining the Group in 1991, she worked in an
international accounting firm. Ms. Ho is a fellow member of the Association of Chartered Certified Accountants, the
Hong Kong Institute of Certified Public Accountants and the Institute of Chartered Accountants in England and Wales.
34
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Board of Directors and Executive Personnel
BOARD OF DIRECTORS (Continued)
Mr. Tsui Che Yin Frank, Non-executive Director
Aged 64. Appointed as a Non-executive Director of the Company since 2006 and an independent non-executive
director of Jinhui Holdings since 1994. Mr. Tsui has extensive experience in investment and banking industries
and held senior management positions at various international financial institutions. Mr. Tsui is an independent
non-executive director of Melco International Development Limited listed in Hong Kong. Mr. Tsui graduated with a
Bachelor’s and a Master’s Degree in Business Administration from the Chinese University of Hong Kong and with
a Law Degree from the University of London. He holds a Doctoral Degree in Business Administration from The
University of Newcastle, Australia. Mr. Tsui is a member of the Certified General Accountants Association of Canada
and the Hong Kong Securities and Investment Institute.
Mr. William Yau, Non-executive Director
Aged 54. Appointed as a Non-executive Director of the Company since 2006 and an independent non-executive
director of Jinhui Holdings since 2004. Mr. Yau has extensive experience gained from his senior management
positions in various industries. He is at present a director of American Phil Textiles Limited, Fujian Shishi Rural
Commercial Bank Co., Ltd. and Forum Restaurant (1977) Limited. Mr. Yau graduated with a Bachelor Degree of
Computer Systems Engineering from the Carleton University in Canada.
EXECUTIVE PERSONNEL
Mr. Ching Wei Man Raymond, Vice President
Aged 47. Joined the Group in 2004 as Vice President, and is responsible for overseeing various activities for the
Group, with particular focus in shipping related investments, corporate finance matters, investor relations, and new
business development. Mr. Ching has extensive experience in shipping investments and in finance. Prior to joining
the Group, he worked for a number of years in the investment banking division for a major US bank. Mr. Ching holds
a Master of Engineering and a Master of Science (Finance), both from the Imperial College of Science, Technology
and Medicine in London.
Mr. Shum Yee Hong, Head of Management and Operation Department
Aged 69. Joined the Group in 1992 as Head of Management and Operation Department, responsible for the ship
operation activities of the Group. Mr. Shum has over 30 years of working experience in the shipping industry. Before
joining the Group, Mr. Shum was a marine superintendent for an international shipping company.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
35
ANNUAL REPORT 2021
Directors’ Report
The Directors present their report and the audited consolidated financial statements of Jinhui Shipping and its
subsidiaries for the year ended 31 December 2021.
PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of its subsidiaries are ship
chartering and ship owning which are carried out internationally. There were no significant changes in the nature of
the Group’s principal activities during the year.
REGISTERED OFFICE
The Company is an exempted company registered in Bermuda and its registered office is Clarendon House, 2 Church
Street, Hamilton HM 11, Bermuda.
RESULTS AND APPROPRIATIONS
The results of the Group for the year 2021 are set out in the “Consolidated Statement of Profit or Loss and Other
Comprehensive Income” on page 67.
The Board has resolved to recommend the payment of a final dividend of US$0.07 per share for the year ended
31 December 2021 and such dividend, if approved by the shareholders at the forthcoming annual general meeting
scheduled on 20 May 2022, will be paid to the beneficial owners of the shares of the Company whose names are
registered in the VPS (now known as Euronext Securities Oslo, the Norwegian Central Securities Depository) at the
close of business on 24 May 2022. The Company’s shares listed on the Oslo Stock Exchange will be traded including
dividend up until and including 20 May 2022. The ex dividend date is 23 May 2022 and the dividend will be paid on
or about 14 June 2022. On 17 August 2021, the Board resolved to pay an interim dividend of US$0.03 per share to the
shareholders of the Company. The interim dividend was paid to the shareholders of the Company on 17 September
2021. The proposed final dividend as mentioned above, if approved, will bring the total dividends for 2021 to US$0.10
per share.
ALLOCATION OF NET PROFIT
The Board has proposed the net profit of the Group for the year 2021 amounting to US$194,197,000 to be allocated
as an addition to retained profits.
RESERVES
Details of movements in reserves of the Group during the year are set out in the “Consolidated Statement of Changes
in Equity” on page 70.
36
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Directors’ Report
DIVIDEND POLICY
The amount and timing of any dividend distributions in the future will depend, among other things, on our
compliance with covenants in our credit facilities, earnings, financial condition, cash position, Bermuda law affecting
the dividend distributions, restrictions in our financing agreements and other factors. In addition, the declaration and
payment of dividend distributions is subject at all times to the discretion of our Board.
BUSINESS REVIEW
The freight market for most of 2021 has been favourable for the Company, with strong support in asset prices
underpinned by healthy earnings, driven by strong dry bulk commodities demands and limited tonnage growth.
Both Baltic Dry Index and charter rates across all vessel classes had been showing encouraging improvements when
comparing year 2020, where market sentiment had been subdued by the uncertain demand prospects due to the
outbreak of COVID-19 global pandemic and various national lockdowns. The market freight rate continued to surge in
2021 to multi-years highs and reached to the peak in October 2021. Baltic Dry Index opened at 1,366 points in January
and rose to the peak at 5,650 points in October and closed at 2,217 points by the end of December 2021. The average
of Baltic Dry Index for the year 2021 was 2,943 points, which compares to 1,066 points in 2020.
Baltic Dry Index & Baltic Supramax Index
Jan
2022
Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul OctJan
2017
Jan
2018
Jan
2019
Jan
2020
Jan
2021
0
1,000
2,000
3,000
4,000
5,000
6,000
Baltic Dry Index
Baltic Supramax Index
Source: Bloomberg
JINHUI SHIPPING AND TRANSPORTATION LIMITED
37
ANNUAL REPORT 2021
Directors’ Report
BUSINESS REVIEW (Continued)
Average daily time charter equivalent rates 2021 2020
US$ US$
Post-Panamax fleet 19,116 9,929
Supramax fleet 19,247 6,986
In average 19,233 7,269
As at 31 December 2021, the Group had twenty four owned vessels. The Group’s revenue represents chartering
freight and hire income arising from the Group’s owned vessels. Hire income under time charter is accounted for
as operating lease and is recognized on a straight-line basis over the period of each time charter contract. Freight
income under voyage charter is accrued over the period from the date of loading of charterer’s cargo to the date of
discharging the cargo and is recognized on percentage of completion basis measured by time proportion of each
voyage charter contract. Revenue for the year 2021 increased 178% to US$131,069,000, comparing to US$47,118,000
for the year 2020 due to the increase in number of owned vessels and the improved revenue earned from the average
daily time charter equivalent rate earned by the Group’s owned vessels, improving 165% to US$19,233 for the year
2021 as compared to US$7,269 for the year 2020.
Revenue of US$53,029,000, US$40,413,000 and US$20,459,000 were derived from three charterers that contributed
40%, 31% and 16% respectively to the Group’s revenue for the year 2021. Management has a credit policy in place for
approving the credit limits and the exposures to credit risk are monitored such that any outstanding trade receivables
are reviewed and followed up on an ongoing basis. For trade receivables from customers, credit evaluations including
assessing the customer’s creditworthiness and financial standing are performed on customers requiring a credit over
certain amount. The management consider that the credit risks inherent in the Group’s outstanding trade receivables
within one year past due was immaterial.
38
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Directors’ Report
BUSINESS REVIEW (Continued)
Key Performance Indicators for Shipping Business 2021 2020
US$ US$
Average daily time charter equivalent rate 19,233 7,269
Daily vessel running cost 4,624 3,851
Daily vessel depreciation 2,587 2,141
Daily vessel finance cost 161 242
7,372 6,234
Average utilization rate 96% 98%
Daily vessel running cost increased 20% from US$3,851 for the year 2020 to US$4,624 for the year 2021 due to the
increased crew costs. Daily vessel finance cost decreased 33% from US$242 for the year 2020 to US$161 for the year
2021 due to the decrease in interest rate and the reduction in secured bank loans as compared with that of the year
2020. Fleet utilization rate decreased from 98% for the year 2020 to 96% for the year 2021. We will continue with
our cost reduction effort, striving to maintain a highly competitive cost structure when stacked against other market
participants.
As at 31 December 2021, the Group had twenty four owned vessels as follows:
Number of owned vessels
Post-Panamax fleet 2
Supramax fleet 22
Total fleet 24
Given the remarkable rebound in dry bulk shipping market, the management considered acquiring additional vessels
could allow the Group to generate more operating income and increase the returns of the Company in the future.
During the year, the Group entered into agreements to acquire eight vessels and took delivery of six vessels.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
39
ANNUAL REPORT 2021
Directors’ Report
BUSINESS REVIEW (Continued)
On 2 March 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
53,806 metric tons at a purchase price of US$7,275,000, which was delivered to the Group in March 2021.
On 27 April 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
52,525 metric tons at a purchase price of US$9,300,000, which was delivered to the Group in June 2021.
On 20 May 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
52,686 metric tons at a purchase price of US$10,813,000, which was delivered to the Group in August 2021.
On 9 July 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
55,866 metric tons at a purchase price of US$15,180,000, which was delivered to the Group in October 2021.
On 20 August 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
58,729 metric tons at a purchase price of US$17,000,000, which was delivered to the Group in November 2021.
On 5 October 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
53,350 metric tons at a purchase price of US$15,750,000, which was delivered to the Group in November 2021.
On 22 December 2021, the Group entered into two agreements in respect of the acquisition of two Supramaxes
each at a consideration of US$17,250,000 and the total consideration of the two vessels is US$34,500,000. The first
vessel is deadweight 56,361 metric tons and the second vessel is deadweight 56,469 metric tons. The first vessel was
delivered to the Group in February 2022 and the second vessel will be delivered to the Group on or before 30 March
2022.
Subsequent to the reporting date, the Group entered into an agreement on 8 March 2022 in respect of the disposal of
a Supramax of deadweight 53,806 metric tons, built in year 2004, at a consideration of US$13,900,000. The vessel will
be delivered to the purchaser on or before 8 April 2022.
We will continuously monitor the market as well as our operations going forward and look out for opportunities to
maintain a reasonably modern and competitive fleet, not ruling out any future disposal or acquisition of vessels and
will make such decisions on an ad hoc basis to maintain high financial flexibility and operational competitiveness.
40
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Directors’ Report
FINANCIAL REVIEW
Revenue and operating profit. Revenue for the year 2021 increased 178% to US$131,069,000, comparing to
US$47,118,000 for the year 2020 due to the increase in number of owned vessels and the improved revenue earned
from the average daily time charter equivalent rate earned by the Group’s owned vessels, improving 165% to
US$19,233 for the year 2021 as compared to US$7,269 for the year 2020. The Company recorded a consolidated net
profit of US$194,197,000 for the year 2021 while a consolidated net loss of US$15,252,000 was reported in 2020. Basic
earnings per share for the year was US$1.777 while basic loss per share was US$0.140 for the year 2020.
Other operating income. Other operating income increased from US$6,753,000 for the year 2020 to US$12,616,000
for the year 2021 mainly due to the Group recognized a net gain of US$4,294,000 on bunker arising from shipping
operations.
Interest income. Interest income decreased from US$4,957,000 for the year 2020 to US$2,980,000 for the year 2021
mainly due to the drop in interest income generated from loan receivables as a result of certain borrowers chose to
early repay respective loans.
Reversal of impairment loss on owned vessels. Dry bulk shipping market had strengthened remarkedly in 2021
reflected in the upsurge of market freight rates and significant increase in the market value of dry bulk vessels as at
30 June 2021. Accordingly, a reversal of impairment loss of US$65,521,000 on owned vessels classified in property,
plant and equipment was recognized at 30 June 2021 to reflect our change in the expectation on the long term global
economic and the dry bulk shipping industry outlook which affect the assumptions applied in estimation of the value
in use of our owned vessels. The shipping market continued on an upward trend in the second half of 2021. As at
31 December 2021, the Group reviewed the dry bulk shipping market environment, the overall macro environment
and the market value of dry bulk vessels, the management considered that the reversal of impairment indication of
the Group’s fleet existed at end of 2021 and performed another review of recoverable amount of our owned vessels.
With due considerations of factors affecting the long term intrinsic values of owned dry bulk vessels, the Group’s
owned vessels’ recoverable amounts which were determined based on the higher of the fair value less costs of
disposal and value in use and were significantly higher than their respective carrying amounts at end of 2021, a
further reversal of impairment loss of US$68,085,000 on owned vessels classified in property, plant and equipment
was recognized at 31 December 2021 to reflect our change in the expectation on the long term global economic
and the dry bulk shipping industry outlook which affect the assumptions applied in estimation of the value in use
of our owned vessels. Accordingly, the total reversal of impairment loss on owned vessels recognized in 2021 was
US$133,606,000. The reversal of impairment loss on owned vessels is non-cash in nature and does not have impact
on the operating cash flows of the Group.
Shipping related expenses. Shipping related expenses mainly comprised of crew expenses, insurance, consumable
stores, spare parts, repairs and maintenance and other vessels’ expenses. Shipping related expenses increased from
US$34,493,000 for the year 2020 to US$43,524,000 for the current year mainly due to the inflation and the increase in
number of owned vessels that led to an increase in shipping related expenses for the year. The Group’s daily vessel
running cost increased to US$4,624 for the year 2021 as compared to US$3,851 for the year 2020 due to the increased
crew costs. We will continue with our cost reduction effort, striving to maintain a highly competitive cost structure
when stacked against other market participants.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
41
ANNUAL REPORT 2021
Directors’ Report
FINANCIAL REVIEW (Continued)
Other operating expenses. Other operating expenses decreased from US$9,037,000 for the year 2020 to US$8,366,000
for the year 2021. The decrease was mainly attributable to the net loss of US$2,570,000 on financial assets at fair
value through profit or loss was recognized in 2021 as compared to a net loss of US$3,900,000 was recognized in
2020. Other operating expenses for the year 2021 also included directors’ fee of US$777,000, professional fee of
US$590,000, change in fair value of investment properties of US$1,334,000, auditor’s remuneration related to audit
services of US$200,000, bad debts written off in respect of trade and other receivables of US$7,000 and remaining are
various office administrative expenses.
Finance costs. Finance costs dropped to US$1,749,000 for the year 2021 as compared to US$3,117,000 for the year
2020 mainly due to the decrease in interest rate and the constant repayment of vessel mortgage loans as compared
with that of the year 2020.
Financial assets at fair value through profit or loss. As at 31 December 2021, the Group’s portfolio of investment in
financial assets at fair value through profit or loss was US$43,387,000 (2020: US$40,033,000), in which US$40,193,000
(2020: US$34,041,000) was investment in listed equity securities, US$2,886,000 (2020: US$5,741,000) was investment
in listed debt securities and US$308,000 (2020: US$251,000) was investment in investment funds.
During the year, the Group’s net loss on financial assets at fair value through profit or loss was US$2,570,000 (2020:
US$3,900,000). The net loss of US$2,570,000 on financial assets at fair value through profit or loss comprised of a
realized gain of US$2,755,000 upon disposal of certain equity and debt securities during the year, and an unrealized
fair value loss of US$5,325,000 on financial assets at fair value through profit or loss for the year 2021. The aggregate
interest income and dividend income from financial assets for the year was US$4,521,000 (2020: US$6,206,000).
Loan receivables. As at 31 December 2021, the Group’s loan receivables were US$9,236,000 (2020: US$33,358,000)
in which US$8,668,000 (2020: US$33,358,000) arise from asset-based financing, are denominated in United States
Dollars and are secured by collaterals provided by the borrowers, bear interest and are repayable with fixed terms
agreed with the borrowers. During the year, certain borrowers chose to early repay respective loans and such
repayments led to a decrease in loan receivables as at 31 December 2021. At the reporting date, these receivables
have been reviewed by management to assess impairment allowances which are based on the evaluation of current
creditworthiness and the collection statistics, and are not considered as impaired. The carrying amount of these loan
receivables are considered to be a reasonable approximation of their fair values.
42
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Directors’ Report
FINANCIAL REVIEW (Continued)
Trade and other payables. As at 31 December 2021, the Group’s trade and other payables was US$22,923,000 (2020:
US$18,510,000), including trade payables of US$156,000 (2020: US$232,000), accrued charges of US$1,122,000
(2020: US$921,000), taxation payable of US$30,000 (2020: US$233,000) and other payables of US$21,615,000
(2020: US$17,124,000). Other payables mainly included payables related to vessel running cost and ship operating
expenses of US$18,431,000 (2020: US$15,886,000) for owned vessels, hire receipt in advance of US$1,354,000 (2020:
US$679,000) from charterers, loan interest payables of US$126,000 (2020: US$162,000) and accrued employee benefits
payables of US$1,551,000 (2020: US$237,000). The increase in hire receipt in advance was mainly attributable to the
increase in amount of prepaid hire from charterers resulting from the upsurge of market hire rates.
Liquidity, financial resources and capital structure. As at 31 December 2021, the Group maintained positive working
capital position of US$37,887,000 (2020: US$28,503,000) and the total of the Group’s equity and debt securities,
bank balances and cash increased to US$76,407,000 (2020: US$73,220,000). During the year, cash generated from
operations before changes in working capital was US$76,136,000 (2020: cash used in operations before changes in
working capital was US$3,223,000) and the net cash generated from operating activities after working capital changes
was US$91,447,000 (2020: US$27,290,000). The changes in working capital are mainly attributable to the decrease
in loan receivables due to certain borrowers chose to early repay respective loans, partially offset by the increase in
equity and debt securities.
The Group’s total secured bank loans decreased from US$108,345,000 as of 31 December 2020 to US$92,578,000 as
at 31 December 2021, of which 57%, 23% and 20% are repayable respectively within one year, one to two years and
two to five years. During the year, the Group had drawn new revolving loans and term loan of US$12,556,000 (2020:
US$19,113,000) and repaid US$28,323,000 (2020: US$44,683,000). The bank borrowings represented vessel mortgage
loans that were denominated in United States Dollars, revolving loans, term loans and property mortgage loans that
were denominated in Hong Kong Dollars and United States Dollars. All bank borrowings were committed on floating
rate basis.
The gearing ratio, as calculated on the basis of net debts (total interest-bearing debts net of equity and debt
securities, bank balances and cash) over total equity, decreased to 4% (2020: 15%) as at 31 December 2021. With
cash, marketable equity and debt securities in hand as well as available credit facilities, the Group has sufficient
financial resources to satisfy its commitments and working capital requirements. As at 31 December 2021, the Group
is able to service its debt obligations, including principal and interest payments.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
43
ANNUAL REPORT 2021
Directors’ Report
FINANCIAL REVIEW (Continued)
Cash flows. The Company’s consolidated statement of cash flows had been prepared in accordance with IAS 7 and
HKAS 7. It provided information that enables users to evaluate the changes in the Group’s inflows and outflows of
cash and cash equivalents during the year.
The consolidated statement of cash flows was classified by operating, investing and financing activities and had
been prepared under the indirect method, whereby operating profit or loss was adjusted for the effects of non-cash
transactions, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or
expense associated with investing or financing cash flows.
Operating activities – Cash flows arising from operating activities are primarily derived from the principal revenue
producing activities of the Group. The Group’s net cash from operating activities for the year was US$91,447,000 (2020:
US$27,290,000). Net cash from operating activities was determined by adjusting non-cash items such as depreciation
and amortization, provisions and impairment losses; change in fair value of non-financial assets; changes in operating
assets and liabilities consist of inventories, receivables and payables, and financial assets at fair value through profit
or loss; and all other items for which the cash effects were included in investing or financing activities, such as net
gain or loss on disposal of property, plant and equipment, investment properties and assets held for sale, dividend
income and interest income; and including interest expenses paid during the year.
Investing activities – Cash flows arising from investing activities are primarily derived from cash proceeds or cash
expenditures that result in a change in recognized assets in the consolidated statement of financial position which
are not included in cash and cash equivalents. The Group’s net cash used in investing activities for the year was
US$70,146,000 (2020: US$4,369,000). Net cash used in investing activities mainly included interest received, dividend
income received, cash payments or receipts in acquisition or disposal of property, plant and equipment, investment
properties and assets held for sale, and cash payment of unlisted equity investments.
Financing activities – Cash flows arising from financing activities are primarily derived from cash proceeds or cash
expenditures that result in changes in equity and subordinated liabilities. The Group’s net cash used in financing
activities for the year was US$21,411,000 (2020: US$23,074,000). Cash outflows from financing activities mainly due to
repayment of various secured bank loans and dividends paid to shareholders of the Company whereas cash inflows
from financing activities represented the new secured revolving bank loans and term loan during the year.
Cash and cash equivalents – Cash and cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. At the
reporting date, the Group’s cash and cash equivalents was US$33,328,000 (2020: US$33,438,000).
44
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Directors’ Report
FINANCIAL REVIEW (Continued)
Pledge of assets. As at 31 December 2021, the Group’s property, plant and equipment with an aggregate net book
value of US$308,566,000 (2020: US$189,161,000), investment properties with an aggregate carrying amount of
US$22,873,000 (2020: US$23,872,000), assets held for sale with a carrying amount of US$nil (2020: US$5,380,000),
financial assets at fair value through profit or loss of US$22,170,000 (2020: US$25,940,000) and deposits of
US$8,307,000 (2020: US$5,941,000) placed with banks were pledged together with the assignment of nineteen (2020:
twenty) subsidiaries’ income and assignment of two (2020: two) subsidiaries’ loan receivables of US$4,668,000 (2020:
US$29,358,000) to secure credit facilities utilized by the Group. In addition, shares of ten (2020: ten) ship owning
subsidiaries were pledged to banks for vessel mortgage loans.
Capital expenditures and commitments. During the year, capital expenditure on additions of property, plant and
equipment was US$81,297,000 (2020: US$8,890,000).
On 20 April 2018, a wholly owned subsidiary of the Company (the “Co-Investor”) entered into the co-investment
documents to co-invest in a property project in Tower A of One Financial Street Center, Jing’an Central Business
District, Shanghai, the PRC (the “Tower A” or previously named as “T3 Property”), pursuant to which the Co-Investor
committed to acquire non-voting participating class A shares of Dual Bliss Limited (“Dual Bliss”) of US$10,000,000.
Dual Bliss is one of the investors of the co-investment in Tower A. As at the reporting date, the capital expenditure
commitments contracted by the Group but not provided for was US$372,000 (2020: US$372,000).
On 22 December 2021, the Group entered into two agreements in respect of the acquisition of two Supramaxes
each at a consideration of US$17,250,000 and the total consideration of the two vessels is US$34,500,000. The first
vessel is deadweight 56,361 metric tons and the second vessel is deadweight 56,469 metric tons. The first vessel was
delivered to the Group in February 2022 and the second vessel will be delivered to the Group on or before 30 March
2022. As at the reporting date, the capital expenditure commitments contracted by the Group but not provided for
was US$34,500,000 (2020: nil).
As at the reporting date, the total amount of capital expenditure commitments contracted by the Group but not
provided for was US$34,872,000 (2020: US$372,000).
Save as disclosed above, there was no other significant capital expenditure commitments contracted by the Group
but not provided for as at the reporting date.
PROPERTY, PLANT AND EQUIPMENT
Details of movements in property, plant and equipment of the Group during the year are set out in note 18 to the
consolidated financial statements.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
45
ANNUAL REPORT 2021
Directors’ Report
SUBSIDIARIES
Details of the Company’s principal subsidiaries are set out in note 41 to the consolidated financial statements.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
There was no purchase, sale or redemption of the Company’s listed securities by the Company or any of its
subsidiaries during the year.
RELATED PARTY TRANSACTIONS
Details of the Group’s related party transactions are set out in note 37 to the consolidated financial statements.
EVENTS AFTER THE REPORTING DATE
Subsequent to the reporting date, the Group entered into an agreement with a third party on 8 March 2022 in
respect of the disposal of a Supramax of deadweight 53,806 metric tons, built in year 2004, at a consideration of
US$13,900,000. The vessel will be delivered to the purchaser on or before 8 April 2022.
Save as disclosed above, there was no other significant events occurred after the reporting date and up to the date of
this report.
GOING CONCERN
We confirm that the consolidated financial statements have been prepared under the assumption of going concern.
This assumption is based on sound financial positions backed by cash generated from operation before changes
in working capital, cash and marketable equity and debt securities, existing and available credit facilities and the
Group’s long term strategic and income forecasts. There exists good basis for the continued operations of the Group.
AUDITOR
The consolidated financial statements for the year ended 31 December 2021 had been audited by Grant Thornton
Hong Kong Limited. A resolution for the re-appointment of Grant Thornton Hong Kong Limited as the Company’s
auditor for the ensuing year will be proposed at the forthcoming annual general meeting.
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Directors’ Report
EMPLOYEES
The employees are the Group’s most important resource and are crucial to the Group’s success in achieving its
targets for long term value creation. The Group provides various resources for staff training and development.
The Group remunerates its employees, including the Executive Directors, in accordance with their performances,
experiences and prevailing market practices and provides them with usual fringe benefits including medical insurance
and contributions to provident funds. As far as the Group is aware, it complies with all relevant applicable regulations
concerning employment, social benefits and labour safety.
The Group pursues a policy of gender equality. Workload and working hours depend on positions while promotion
and recruitment depend on performance and experience. At 31 December 2021, the Group had 64 (2020: 67) full-time
employees, of whom 34 (2020: 36) employees were male and 30 (2020: 31) employees were female. At 31 December
2021, the Board consists of six members, of whom five members are male and one member is female. Procedures
regarding recruitment, promotion and salary review are carefully reviewed with due consideration to avoid gender
discrimination. The Group aims to ensure equal opportunities and rights in workplace.
The Group maintains a good relationship with its employees and crew and has not experienced any disruption of its
operation as a result of industrial disputes.
RESEARCH AND DEVELOPMENT
Given the nature of the Group’s principal activities being ship chartering and ship owning which are carried out
internationally, the Group had no research expenditure or development costs being expensed or capitalized during
the year.
WORKING ENVIRONMENT
In order to attract and retain the best people for the sustainable growth of the Company, we place emphasis on a
healthy and safe workplace on board in our vessels and ashore at our office and support all kinds of community
activities that contribute to our community.
We put safety as our top priority in business operation. Accident preventions and efforts for improvement in working
environment are given high priority in the business management, conventions and all parts of operations. We strive
to comply with applicable safety and environmental laws and regulations to which seafarers of all ranks must be
trained and certificated in order to be able to carry out their respective duties on board in our vessels. We ensure all
crew on board are trained and certificated in accordance with STCW Convention.
During the year, absence due to sickness was 0.6% (2020: 1.0%) of the total hours worked by employees and there
were no serious injuries or accidents of any kind among the employees of the Group. We also provide fringe benefits
and welfare to our people including but not limited to medical and life insurance, pension schemes, paid leave for
various purposes, travel or meals for business-related work, and other benefits to improve employees’ well-being.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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EXTERNAL ENVIRONMENT ISSUES
We are committed to operate our business in an environmentally and socially responsible manner. To achieve this,
we strive to comply with all applicable rules and regulations with our best efforts in shipping operation as well as in
our daily working environment to minimize any adverse impact to the environment. The possible environment impact
may include air pollutants emissions, ballast water discharges and oil pollution in environmental disaster. By maintaining
operational safety and providing quality training of our crews in compliance with applicable environmental laws and
regulations, we believe that the operation of our vessels is in substantial compliance with applicable environmental
laws and regulations.
It has always been our policy to maintain high standard of environmental protection awareness and to operate our
vessels in a safe and environmentally friendly manner. We maintain our modern first-class fleet to enable maximum
environmental performance and ensure our compliance to safety and environmental laws and regulations including
The International Safety Management Code (“ISM Code”), The International Ship and Port Facility Security Code
(“ISPS Code”), and other applicable rules regulated by IMO. These conventions have been ratified by majority of
maritime nations and apply to all vessels registered in these countries or calling in the waters of these countries.
We obtain safety management certificate, document of compliance and go through annual verification and audit for
compliance with ISM Code issued by recognized organization on behalf of the flag states. Our vessels adopted IMO
Data Collection System on fuel consumption and we switched to compliant low sulfur content bunker fuel in order to
meet the IMO 2020 Sulphur Cap requirement which is in effect starting from 1 January 2020.
The IMO’s Marine Environment Protection Committee (“MEPC”) has published a review on the quality of marine fuels
supplied (“MEPC 76”). Following to the adoption of MEPC 76 in June 2021, the attained Energy Efficiency Existing
Ship Index (“EEXI”) is required to be calculated for every ship and the requirement will enter into force in 2023.
Ships are required to meet a specific required EEXI, which is based on a required reduction factor expressed as a
percentage relative to the Energy Efficiency Design Index (“EEDI”) baseline. By 2023, our fleet vessels have to comply
with the required EEXI. A series of modification on the main and auxiliary machinery will be made to meet with the
EEXI requirement according to the adopted guidelines.
As at 31 December 2021, the Group had twenty four owned vessels which comprised mainly of grabs fitted
Supramaxes. We ensure our own fleet be equipped with proven green and energy efficiency equipment and
technologies to minimize the emission of toxic pollutants, which include:
Nitrogen Oxides (NOx) – our vessels are built with the main engine and auxiliary engines that are fuel-efficient and
comply with the latest emission of pollutants limits;
Sulfur Oxides (SOx) – our vessels burn the required low sulfur content bunker fuel;
Ozone depleting substances – majority of our vessels’ equipment do not contain ozone depleting substances and
comply with all material aspects of MARPOL regulations pertaining to hazardous ozone depleting substances;
Ballast water – our vessels follow the latest requirements on ballast water exchange and operations.
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EXTERNAL ENVIRONMENT ISSUES (Continued)
Carbon Dioxide CO
2
emission reduction – since February 2013 the Group has adopted the Ship Energy Efficiency
Management Plan (“SEEMP”), a plan that individual vessel can follow and improve each vessel’s energy efficiency
through a series of procedures and efforts. Implementing of SEEMP will contribute towards reducing fuel
consumption and carbon emission which influence the global environment. We also adopted SEEMP Part II during
the year. Our vessels adopted IMO Data Collection System on fuel consumption and we switched to compliant low
sulphur content bunker fuel in order to meet the IMO 2020 Sulphur Cap requirement which is in effect starting from 1
January 2020.
Fuel oil consumption:
2021: Fuel oil consumption – 81,088 tonnes
0.5% low sulphur content heavy fuel oil consumption – 79,611 tonnes
0.1% ultra-low sulphur content fuel oil consumption – 1,477 tonnes
2020:
Fuel oil consumption – 69,621 tonnes
0.5% low sulphur content heavy fuel oil consumption – 67,911 tonnes
0.1% ultra-low sulphur content fuel oil consumption – 1,710 tonnes
Since
2020, our vessels have switched over to 0.5% low sulphur content heavy fuel oil according to IMO 2020
Sulphur Cap requirement. New requirements for China Emission Control Areas (“ECA”) in Chinese territorial waters
as announced by the Chinese Ministry of Transport came into effect from 1 January 2019. When our vessels enter
regional emission control areas, we switched to 0.1% ultra-low sulphur content fuel oil to minimize fuel consumption
and emission. As our fleet vessels trade less into ECA, our consumption of 0.1% ultra-low sulphur content fuel oil
dropped in 2021.
Corresponding CO
2
emission:
2021: CO
2
emission – 252,959 tonnes
2020: CO
2
emission – 216,682 tonnes
Fuel oil consumption and corresponding CO
2
emission in 2021 is about 16.5% and 16.7% more than that of 2020
respectively. Due to more steaming time of fleet vessels in the year 2021 as quarantine time has been relaxed
slightly in loading and discharging ports and the expansion of fleet size by six more vessels in the year 2021, fuel
consumption by the fleet vessels has increased and correspondingly more CO
2
emission for the year 2021.
The fleet vessels’ SEEMP plans are Nippon Kaiji Kyokai certified in compliance to IMO Resolutions.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Directors’ Report
EXTERNAL ENVIRONMENT ISSUES (Continued)
CO
2
emission reduction – since February 2013, the Group has adopted the SEEMP, a plan that individual vessel
can follow and improve each vessel’s energy efficiency through a series of procedures and efforts. Implementing
of SEEMP will contribute towards reducing fuel oil consumption and carbon emission which influence the global
environment. SEEMP Part II has also been adopted since 2018. Starting from 2019, our vessels adopted IMO Data
Collection System on fuel consumption to allow us monitor and improve fuel efficiency and to mitigate emissions.
Energy Efficiency Operational Indicator (“EEOI”) is an index showing the amount of CO
2
emission per tonne of cargo
carried per mile of sea voyage.
2021: the average EEOI of the fleet is about 13.2 grammes CO
2
/ MT.Mile
2020:
the average EEOI of the fleet is about 12.5 grammes CO
2
/ MT.Mile
The EEOI of 2021 is about 0.7 grammes increase from the 2020 EEOI figure, representing an increase of 5.6% as
compared to 2020.
For coming year 2022, our aim is to reduce the EEOI by 2% of the 2021 figure. The main effort will still be on better
management on fuel consumption optimization and better arrangement on cargo carriage with less ballast passage.
Hazardous and non-hazardous waste produced:
Waste from our vessels included garbage and food waste which are trivial and not hazardous. These wastes are
disposed of by incineration, shore collection and other means according to MARPOL Annex V and local requirements.
We consider the impact of disposal and these wastes are not material.
We were committed to operate our vessels in compliance with MARPOL regulations pertaining to hazardous ozone
depleting substances; and there were no material marine waste discharge or environment pollution incidents
happened in both years 2021 and 2020.
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EXTERNAL ENVIRONMENT ISSUES (Continued)
Water consumption:
Water consumption is about 7 tonnes of water per vessel per day.
2021: Water consumption – 49,000 tonnes
2020: Water consumption – 46,000 tonnes
Fresh water is produced by vessel’s own desalination plants running on waste heat of engines. Fresh water
consumption for the year had increased due to the expansion of the fleet size.
We realize the importance of environmental stewardship and share the same environmental preservation objective
with our crew and our people. In order to foster the environmentally friendly practices in our vessels, we follow an
internal safety management manual, which defines our objectives and commitments in complying with all applicable
national and international rules and regulations, code and guidelines and standards recommended by IMO, flag
states and other maritime industry organizations. These codes and guidelines and standards, together with our
safety manual have been kept ashore and on our fleet and strictly followed by our team. We will closely monitor
environmental regulations development to ensure compliance with all applicable environmental regulations in our
business operation. We obtain safety management certificate, document of compliance and go through annual
verification and audit for compliance with ISM Code issued by recognized organization on behalf of the flag states.
The Paris Agreement is a legally binding international treaty on climate change and was adopted by consensus
within the United Nations Framework Convention on Climate Change on 12 December 2015 and entered into force on
4 November 2016. The Paris Agreement central aim is to strengthen the global response to the threat of climate
change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels
and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. The Paris Agreement
on climate change does not include international shipping, but IMO, as the regulatory body for the industry, is
committed to reducing greenhouse gas emissions from international shipping.
IMO is committed to reducing Greenhouse Gas (GHG) Emissions from international shipping and, as a matter of
urgency, aims to phase them out as soon as possible in this century.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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EXTERNAL ENVIRONMENT ISSUES (Continued)
Levels of IMO ambition:
1. Carbon intensity of the ship to decline through implementation of further phases of EEDI for new ships and
EEXI for existing ships.
2. Carbon intensity of international shipping to decline. To reduce CO
2
emissions per transport work, as an
average across international shipping, by at least 40% by year 2030, pursuing efforts towards 70% by year
2050, compared to year 2008.
3. GHG emissions from international shipping to peak as soon as possible and to reduce the total annual GHG
emissions by at least 50% by year 2050 compared to year 2008 whilst pursuing efforts towards phasing them
out as called for in the vision as a point on a pathway of CO
2
emissions reduction consistent with the Paris
Agreement temperature goals.
We continue to assess the climate change phenomena and consider that there is no material and immediate threat
to our operating business in short term. In medium and long term, we will monitor main climate change hazards,
extreme weathers at seas, weather-related disruption to port and cargo loading activities across the global seaborne
hubs and route. With flexible chartering policy and experienced captains and crew, we will swiftly respond to the
climate change challenge by operating our vessels in geographical regions where are safe and practical. We will
also reinvest, equip and modify our fleet to enable maximum environmental performance and compliance to climate
change and maritime regulations.
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Directors’ Report
DIRECTORS
The Directors who held office of the Company during the year and up to the date of this report were:
Executive Directors: Mr. Ng Siu Fai
Mr. Ng Kam Wah Thomas
Mr. Ng Ki Hung Frankie
Ms. Ho Suk Lin Cathy
Non-executive Directors: Mr. Tsui Che Yin Frank
Mr. William Yau
In accordance with the Company’s Bye-Laws, Ms. Ho Suk Lin Cathy will retire from office at the forthcoming annual
general meeting and, being eligible, will offer herself for re-election.
Brief biographical details of the Directors and executive personnel are set out in “Board of Directors and Executive
Personnel”on pages 33 and 34.
DIRECTORS’ SERVICE CONTRACTS
None of the directors who are proposed for re-election at the forthcoming annual general meeting has a service
contract with the Company which is not determinable within one year without payment of compensation, other than
statutory compensation.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Directors’ Report
DIRECTORS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS
No transaction, arrangement or contract of significance to which the Company, or any of the Company’s holding
company, subsidiaries or fellow subsidiaries was a party and in which a director of the Company or a connected
entity of the director of the Company had a material interest, whether directly or indirectly, subsisted at the end of
the year or at any time during the year.
DIRECTORS’ INTERESTS IN SHARES AND RIGHTS TO ACQUIRE SHARES
(i) Directors’ interests in shares of the Company
Number of shares in the Company
held and capacity
Name
Beneficial
owner
Interest of
spouse
Interest in
corporation Total
Ng Siu Fai 4,141,830 1,079,196 407,858 5,628,884
Note 1
Ng Kam Wah Thomas 864,900 – 260,000 1,124,900
Note 2
Notes:
1.
Mr.
Ng Siu Fai is deemed to be interested in 407,858 shares of the Company through his 51% owned company,
Fairline Consultants Limited.
2. Mr. Ng Kam Wah Thomas is deemed to be interested in 260,000 shares of the Company through his wholly owned
company, Timberfield Limited.
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Directors’ Report
DIRECTORS’ INTERESTS IN SHARES AND RIGHTS TO ACQUIRE SHARES (Continued)
(ii) Directors’ interests in shares of Jinhui Holdings
Jinhui Holdings, the controlling shareholder of the Company, held 60,841,240 shares of the Company
representing approximately 55.69% of the Company’s issued shares as at 31 December 2021.
Number of shares in Jinhui Holdings
held and capacity
Name
Beneficial
owner
Interest of
spouse
Interest in
corporation Total
Ng Siu Fai 24,260,000 15,140,000 205,325,568 244,725,568
Note 1
Ng Kam Wah Thomas 5,909,000 – 136,883,712 142,792,712
Note 2
Ng Ki Hung Frankie 3,000,000 – – 3,000,000
Ho Suk Lin Cathy 3,850,000 – – 3,850,000
Tsui Che Yin Frank 1,000,000 – – 1,000,000
William Yau 441,000 – – 441,000
Notes:
1.
Mr. Ng Siu Fai is deemed to be interested in 205,325,568 shares of Jinhui Holdings held by his 51% owned company,
Fairline Consultants Limited.
2.
Mr.
Ng Kam Wah Thomas is deemed to be interested in 136,883,712 shares of Jinhui Holdings held by his wholly
owned company, Timberfield Limited.
3. The number of issued shares of Jinhui Holdings as at 31 December 2021 was 530,289,480 shares.
Save as disclosed herein, none of the Directors or their associates had any interest either beneficially or
non-beneficially in any shares of the Company, its holding company or any of its subsidiaries and associated
corporations at the reporting date.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2021
Directors’ Report
CORPORATE GOVERNANCE
Jinhui Shipping recognizes the importance of good corporate governance to the Company’s value creation. The
corporate governance report of 2021 was set out in “Corporate Governance Report” on pages 12 to 32, which
covered every section of Norwegian Code of Practice with the description of our conformance throughout the year
and provided explanation of the reasons for the deviations. It also included the required report contents as set out in
Section 3-3b of the Norwegian Accounting Act.
Restrictions in the Bye-Laws of the Company that may limit the rights to freely trade the shares. Jinhui Shipping’s
shares are freely traded in the Oslo Stock Exchange (Oslo Børs). The Company’s shares are registered shares with its
shareholders register located at Bermuda. Shareholders of the Company may transfer their shares by an instrument
of transfer in the usual common form or in such form as decided by the Board. In general, all shares are freely
negotiable. However, the Board may deny the transfer of shares according to the Bye-Law 11 of the Company. The
Board has the option to decline to register the transfer of any share if the registration of such transfer would be likely
to result in 50% or more of the aggregate issued share capital and the votes of the Company being held or owned
directly or indirectly by a person or persons resident for tax purposes in Norway. This type of restriction is common
for Bermuda and other low-tax jurisdiction companies listed on the Oslo Stock Exchange (Oslo Børs).
RISK MANAGEMENT
The Group is principally exposed to various risks and uses appropriate measures to manage risks related to its
business and operations.
Business and operational risks. The Group is exposed to the business and operational risks to the extent that certain
changes may have a negative effect on the Group’s cash flows and operations. These changes include the fluctuations
in charter rates of the shipping market; the changes in demand and supply in the dry bulk market; the drop in vessel
values which results in impairment loss of the Group’s assets; the changes in operating expenses including bunker
prices, crewing costs, drydocking and insurance costs; and the maintenance expenses which include costs of spare
parts. The dry bulk market is highly volatile and market freight rates may fluctuate significantly within a short period
of time. We will continue to adopt a flexible chartering policy and manage different business risk exposures by
diversification of counterparties, sourcing reliable charterers from a wider range of ship brokers, and maintaining a
good balance of geographical positioning of our fleet.
Given the remarkable rebound in dry bulk shipping market, the management considered acquiring additional vessels
could allow the Group to generate more operating income and increase the returns of the Company in the future.
During the year, the Group entered into agreements to acquire eight vessels and took delivery of six vessels.
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RISK MANAGEMENT (Continued)
On 2 March 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
53,806 metric tons at a purchase price of US$7,275,000, which was delivered to the Group in March 2021.
On 27 April 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
52,525 metric tons at a purchase price of US$9,300,000, which was delivered to the Group in June 2021.
On 20 May 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
52,686 metric tons at a purchase price of US$10,813,000, which was delivered to the Group in August 2021.
On 9 July 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
55,866 metric tons at a purchase price of US$15,180,000, which was delivered to the Group in October 2021.
On 20 August 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
58,729 metric tons at a purchase price of US$17,000,000, which was delivered to the Group in November 2021.
On 5 October 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
53,350 metric tons at a purchase price of US$15,750,000, which was delivered to the Group in November 2021.
On 22 December 2021, the Group entered into two agreements in respect of the acquisition of two Supramaxes
each at a consideration of US$17,250,000 and the total consideration of the two vessels is US$34,500,000. The first
vessel is deadweight 56,361 metric tons and the second vessel is deadweight 56,469 metric tons. The first vessel was
delivered to the Group in February 2022 and the second vessel will be delivered to the Group on or before 30 March
2022. Total carrying capacity of the Group’s fleet will be increased to 1,525,348 metric tons after the completion of
the acquisition of the above vessels.
The Group’s loan receivables, which mainly arise from asset-based financing are denominated in United States
Dollars and are secured by collaterals provided by the borrowers, bear interest and are repayable with fixed terms
agreed with the borrowers. As at 31 December 2021, the Group’s loan receivables arise from asset-based financing
were approximately US$8.7 million (2020: US$33.4 million). The loans are collateralized and the value of the collateral
ships were appraised by independent qualified appraisal firms. Taking into consideration of, amongst other things,
(i) the stable and recurring interest income expected to be generated from asset-based financing to the Group and
(ii) the value of the collateral ships, we consider the provision of loans represent a reasonable allocation of capital
into income generating assets that is asset-light. We believe the additional source of income from asset-based
financing would help mitigate cyclicality from core shipping business.
Looking ahead, we will continue to focus on taking sensible and decisive actions to maintain a strong financial
position. We will continuously monitor the market as well as our operations going forward and look out for
opportunities to maintain a reasonably modern and competitive fleet, not ruling out any future disposal or acquisition
of vessels and will make such decisions on an ad hoc basis to maintain a high financial flexibility and operational
competitiveness.
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RISK MANAGEMENT (Continued)
Market risk. Market risk is the risk of operational loss or financial loss due to adverse changes in the market exposure.
It also includes the adverse change of value of a financial instrument or portfolio of financial instruments when
there are changes in market factors such as underlying interest rates, exchange rates, equity securities prices, debt
securities prices or in the volatility of these factors. The Group’s major market risk exposures on financial instruments
mainly arise from bank borrowings committed on floating rate basis, and investments in equity and debt securities. In
the ordinary course of business, the Group identifies these risks and mitigates their financial impact through the use
of appropriate financial instruments in accordance with the Group’s risk management policies. Additional information
regarding the Group’s use of financial instruments is disclosed in the “Financial Risk Management and Policies” in
note 39 to the consolidated financial statements.
Credit risk. Credit risk is the risk of financial loss to the Group if the counterparty fails to discharge its contractual
obligations under the terms of the financial instrument. The Group’s exposures to credit risk principally arising from
the trade receivables from charterers, loan receivables to third parties and deposits or other financial assets placed
with financial institutions. The potential loss is generally limited to the carrying amount of receivables and liquid
assets as shown in the Group’s consolidated statement of financial position. Credit risk arising from asset-based loan
receivables are reference to the market values of the vessels which were appraised by independent qualified appraisal
firms. By reference to the value of the collateral ships without significant change in the quality, the management
believes that loan receivables arise from asset-based financing of approximately US$8.7 million as at 31 December
2021 were concluded as low credit risk without any default events, modified credit risk or other factors lead to a
significant increase in the credit risk. Credit risk also includes concentration risk of large exposures or concentrations
to certain counterparties. The Group will, wherever possible, maintain a diversified customer portfolio or only enter
into financial instruments with creditworthy counterparties. The Group regularly monitors the potential exposures to
each significant counterparty and performs ongoing credit quality assessment and does not expect to incur material
credit losses on managing the financial instruments.
Liquidity risk. Liquidity risk is the risk that the Group fails to meet its obligations associated with its financial
liabilities. The Group takes conservative treasury policies to maintain sufficient cash reserves, readily realizable
marketable equity and debt securities and obtain credit facilities from well-known financial institutions. The
management actively involves in treasury management to ensure adequate cash flows to meet the expected liquidity
requirements, working capital and capital expenditures needs. With the dry bulk market being extremely challenging,
preserving optimal liquidity is of pinnacle importance. The Group will be working closely with lenders to devise ways
to maximize liquidity position in case of the challenging freight environment will continue for longer than expected.
We will continuously review the prevailing market conditions of the shipping industry and monitor and adjust the
Group’s fleet profile as appropriate and make adjustments to its capital structure in the light of changes in economic
conditions, recent market values of the Group’s assets as well as the risk characteristics of the underlying assets.
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RISK FACTORS
This report may contain forward looking statements. These statements are based upon various assumptions, many of
which are based, in turn, upon further assumptions, including the Company’s management’s examination of historical
operating trends. Although the Company believes that these assumptions were reasonable when made, because
assumptions are inherently subject to significant uncertainties which are difficult or impossible to predict and are
beyond its control, the Company cannot give assurance that it will achieve or accomplish these expectations, beliefs
or targets.
Key risk factors that could cause actual results to differ materially from those discussed in this report will include but
not limited to the way world economies, currencies and interest rate environment may evolve going forward, general
market conditions including fluctuations in charter rates and vessel values, financial market conditions including
fluctuations in marketable securities value, counterparty risk, changes in demand in the dry bulk market, changes in
operating expenses including bunker prices, crewing costs, drydocking and insurance costs, availability of financing
and refinancing, inability to obtain restructuring or rescheduling of indebtedness from lenders in liquidity trough,
changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from
pending or future litigation, general domestic and international political conditions, potential disruption of shipping
routes due to accidents, piracy or political events, and other important factors described from time to time in the
reports filed by the Company.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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OUTLOOK
2021 has been a good year for dry bulk shipping, with robust freight rates driven by a general increase in demand for
commodities worldwide, increase in logistics complexity due to procedures to battle the pandemic, as well as limited
new supply in vessels.
As we entered 2022, there has been some corrections in the freight market in recent weeks, affected by multiples
issues from seasonal trading patterns such as Chinese New Year holidays, decrease in industrial activity during
Beijing Olympics, volatility in commodity prices, to continued disruptions in global supply chain which in turn
affected industries from commodities all the way through to the export of manufactured goods. In addition, the
sentiment has turned nervous with regards to the expected global economic outlook due to potential changes in
monetary policies, and geo-political issues at multiple geographical locations of our planet. These issues will continue
to linger around, and we expected 2022 to be another volatile year.
When we look at the industry fundamentals, the supply of new vessels remains low, the industry outlook continues
to point towards a relatively strong freight market for our business operations. The latest Omicron COVID variant
have spread across a number of geographical locations. Measures to combat against the spread of virus differ from
country to country, and can be relaxed or reinforced with very little notice. Logistics of the transportation of goods
and commodities will continue to be affected and disruptions are likely to continue in the foreseeable future.
With the expected global dry bulk fleet growth at historical lows, and with no consensus in the industry with regards
to the next generation engine design to reduce carbon emission, new vessel orders are expected to be few. Looking
ahead, this potentially highly favorable demand and supply dynamics is expected to continue, where our fleet is well
positioned to benefit.
We remain alert to the increasingly frequent economic, geo-political, or other unforeseen surprises that can trigger
volatility to our business performance, as well as the carrying value of our shipping assets and financial assets. We
currently have no capital expenditure commitment in relation to newbuilding contracts, and will continue to focus on
taking sensible and decisive actions to maintain a strong financial position.
On behalf of the Board of Directors of the Company, I would like to first express our heartfelt appreciation to our
seafarers who have continued to remain professional under the current extremely challenging operating environment,
as well as all customers and stakeholders for their ongoing support.
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PUBLICATION OF FINANCIAL INFORMATION
This report is available on the website of the Company at www.jinhuiship.com and the NewsWeb of the Oslo Stock
Exchange (Oslo Børs) at https://newsweb.oslobors.no.
15 March 2022
Ng Siu Fai Ng Kam Wah Thomas Ng Ki Hung Frankie
Chairman Managing Director and
Deputy Chairman
Executive Director
Ho Suk Lin Cathy Tsui Che Yin Frank William Yau
Executive Director Non-executive Director Non-executive Director
JINHUI SHIPPING AND TRANSPORTATION LIMITED
61
ANNUAL REPORT 2021
Responsibility Statement
We confirm, to the best of our knowledge, that the audited consolidated financial statements for the year from
1 January to 31 December 2021 have been prepared in accordance with applicable accounting standards and give a
true and fair view of the assets, liabilities, financial position and results of operations of the Group and the Company,
and that the Directors’ Report includes a true and fair review of the development and performance of the business
and the position of the Group and the Company together with a description of the key principal risks and uncertainty
factors that the Group and the Company face.
15 March 2022
Ng Siu Fai Ng Kam Wah Thomas Ng Ki Hung Frankie
Chairman Managing Director and
Deputy Chairman
Executive Director
Ho Suk Lin Cathy Tsui Che Yin Frank William Yau
Executive Director Non-executive Director Non-executive Director
62
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Independent Auditor’s Report
To the members of
Jinhui Shipping and Transportation Limited
(Incorporated in Bermuda with limited liability)
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
OPINION
We have audited the consolidated financial statements of Jinhui Shipping and Transportation Limited (the “Company”)
and its subsidiaries (together, the “Group”) set out on pages 67 to 137, which comprise the consolidated statement of
financial position as at 31 December 2021, and the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 31 December 2021, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International
Accounting Standards Board (“IASB”) and Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong
Kong Institute of Certified Public Accountants (“HKICPA”).
BASIS FOR OPINION
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the
HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
63
ANNUAL REPORT 2021
Independent Auditor’s Report
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Carrying value of owned vessels
The Key Audit Matters How the matter was addressed in our audit
Refer to notes 4.11, 5 and 18 to the consolidated financial
statements.
Our audit procedures included:
The Group’s carrying amount of motor vessels and
capitalised drydocking costs amounted to US$379,374,000
as at 31 December 2021 and reversal of impairment of
HK$133,606,000 was recognised in the Consolidated
Statement of Profit or Loss and Other Comprehensive
Income during the year.
The Group assesses at each reporting date (i) whether
there are indicators of impairment and if there are such
indicators, an estimate is made of the recoverable amount
of owned vessels concerned; and (ii) whether there are
indications that an impairment loss recognised in prior
periods for owned vessels may no longer exist or may
have decreased. Management has exercised judgement
and considered that reversal of impairment indication of
the Group’s fleet existed.
The recoverable amount of owned vessels was determined
based on the value in use calculation which is estimated
based on the estimated future cash flows projections
from the continuous use of such vessels. An independent
qualified appraisal firm was employed to appraise the value
in use calculation as the calculation involves significant
judgements and estimates about the future performance,
key assumptions including discount rate, useful life, hire
rates and utilisation rate of the owned vessels.
Considering the significance of judgements and estimates
and the financial impacts of the assessments of impairment
indicators and indications of reversal of impairment in
respect of the Group’s owned vessels, we identified the
valuation of owned vessels as a key audit matter.
–
evaluating the process of assessments of impairment
indicators and indications of potential reversal
of impairment of owned vessels adopted by the
management;
–
evaluating the process of impairment assessments of
owned vessels and value in use calculation methodology
adopted by the management and approved by the
Board;
–
testing the calculation for the impairment assessment
performed by the management;
–
assessing the reasonableness of the key assumptions
including discount rate, hire rates, useful life and
utilisation rate by comparing the current year actual
performance and prior year projections and by reference
to the market and industry information;
–
involving our internal valuation specialists to assist us
when considering the appropriateness of the discount
rate and hire rates; and
–
assessing the adequacy of
management’s sensitivity
analysis of value in use calculation.
We obtained supportive evidence for the significant
judgements and estimates on the assessments of
impairment indicators and indications of reversal of
impairment in respect of owned vessels and the value
in use calculation and key assumptions applied in the
estimated future cash flow projections.
64
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Independent Auditor’s Report
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises all the information in the 2021
annual report of the Company, but does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The directors are responsible for the preparation of the consolidated financial statements that give a true and fair
view in accordance with IFRSs issued by IASB and HKFRSs issued by the HKICPA, and for such internal control as
the directors determine is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
The directors assisted by the Audit Committee are responsible for overseeing the Group’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. We report our opinion solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act
1981 and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the
contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
65
ANNUAL REPORT 2021
Independent Auditor’s Report
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional skepticism
throughout the audit. We also:
• identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
•
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
•
evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
•
conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
• evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
•
o
btain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
66
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Independent Auditor’s Report
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Audit Committee, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Grant Thornton Hong Kong Limited
Certified Public Accountants
11th Floor, Lee Garden Two
28 Yun Ping Road
Causeway Bay
Hong Kong
15 March 2022
Kwong Kam Wing Kelvin
Practising Certificate No.: P05373
JINHUI SHIPPING AND TRANSPORTATION LIMITED
67
ANNUAL REPORT 2021
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Year ended 31 December 2021
2021 2020
Note US$’000 US$’000
Revenue 7 131,069 47,118
Other operating income 8 12,616 6,753
Interest income 9 2,980 4,957
Reversal of impairment loss on owned vessels 10 133,606 –
Shipping related expenses (43,524 ) (34,493 )
Staff costs 11 (13,397 ) (12,032 )
Other operating expenses (8,366 ) (9,037 )
Operating profit before depreciation and amortization 214,984 3,266
Depreciation and amortization (18,848 ) (15,168 )
Operating profit (loss) 196,136 (11,902 )
Finance costs (1,749 ) (3,117 )
Profit (Loss) before taxation 194,387 (15,019 )
Taxation 15 (190 ) (233 )
Net profit (loss) for the year 194,197 (15,252 )
Other comprehensive income
Items that will not be reclassified to profit or loss:
Change in fair value of financial assets at
fair value through OCI (non-recycling) 1,884 1,705
Items that may be reclassified subsequently to profit or loss:
Change in fair value of financial assets at
fair value through OCI (recycling) 112 5
Total comprehensive income (loss) for the year
attributable to shareholders of the Company 196,193 (13,542 )
Earnings (Loss) per share 16
– Basic and diluted US$1.777 US$(0.140 )
68
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Consolidated Statement of Financial Position
As at 31 December 2021
2021 2020
Note US$’000 US$’000
ASSETS
Non-current assets
Property, plant and equipment 18 389,549 194,093
Investment properties 19 28,145 29,479
Financial assets at fair value through OCI 20 12,739 10,743
Loan receivables 22 3,698 28,131
Current assets
Inventories 3,413 780
Loan receivables 22 5,538 5,227
Trade and other receivables 23 19,621 12,919
Financial assets at fair value through profit or loss 24 43,387 40,033
Pledged deposits 8,307 5,941
Bank balances and cash 33,328 33,438
Assets held for sale – 5,380
Total assets 547,725 366,164
JINHUI SHIPPING AND TRANSPORTATION LIMITED
69
ANNUAL REPORT 2021
Consolidated Statement of Financial Position
As at 31 December 2021
2021 2020
Note US$’000 US$’000
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 27 5,463 5,463
Reserves 426,612 233,697
Total equity 432,075 239,160
Non-current liabilities
Secured bank loans 29 39,943 51,789
Current liabilities
Trade and other payables 30 22,923 18,510
Amount due to holding company 149 149
Secured bank loans 29 52,635 56,556
Total equity and liabilities 547,725 366,164
Approved and authorized for issue on 15 March 2022
Ng Siu Fai Ng Kam Wah Thomas Ng Ki Hung Frankie
Chairman Managing Director and
Deputy Chairman
Executive Director
Ho Suk Lin Cathy Tsui Che Yin Frank William Yau
Executive Director Non-executive Director Non-executive Director
70
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Consolidated Statement of Changes in Equity
Year ended 31 December 2021
Issued
capital
Share
premium
Capital
redemption
reserve
Contributed
surplus
Revaluation
reserve
Reserve for
financial
assets at
fair value
through OCI
Retained
profits
Total
equity
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2020 5,463 95,585 719 16,297 476 (952 ) 135,114 252,702
Comprehensive loss
Net loss for the year – – – – – – (15,252 ) (15,252 )
Other comprehensive income
Change in fair value of financial
assets at fair value through OCI – – – – – 1,710 – 1,710
Total comprehensive loss
for the year – – – – – 1,710 (15,252 ) (13,542 )
At 31 December 2020 5,463 95,585 719 16,297 476 758 119,862 239,160
At 1 January 2021 5,463 95,585 719 16,297 476 758 119,862 239,160
Comprehensive income
Net profit for the year – – – – – – 194,197 194,197
Other comprehensive income
Change in fair value of financial
assets at fair value through OCI – – – – – 1,996 – 1,996
Total comprehensive income
for the year – – – – – 1,996 194,197 196,193
2021 interim dividend paid – – – – – – (3,278 ) (3,278 )
At 31 December 2021 5,463 95,585 719 16,297 476 2,754 310,781 432,075
JINHUI SHIPPING AND TRANSPORTATION LIMITED
71
ANNUAL REPORT 2021
Consolidated Statement of Cash Flows
Year ended 31 December 2021
2021 2020
Note US$’000 US$’000
OPERATING ACTIVITIES
Cash generated from operations 31 93,625 30,589
Interest paid (1,785 ) (3,299 )
Hong Kong Profits Tax paid (393 ) –
Net cash from operating activities 91,447 27,290
INVESTING ACTIVITIES
Interest received 3,382 5,466
Dividend income received 1,514 1,178
Purchase of property, plant and equipment (81,297 ) (8,890 )
Proceeds from disposal of property, plant and equipment, net 875 –
Payment of unlisted equity investments – (2,123 )
Proceeds from disposal of assets held for sale, net 5,380 –
Net cash used in investing activities (70,146 ) (4,369 )
FINANCING ACTIVITIES
New secured bank loans 12,556 19,113
Repayment of secured bank loans (28,323 ) (44,683 )
(Increase) Decrease in pledged deposits (2,366 ) 2,496
Interim dividend paid to shareholders of the Company (3,278 ) –
Net cash used in financing activities (21,411 ) (23,074 )
Net decrease in cash and cash equivalents (110 ) (153 )
Cash and cash equivalents at 1 January 33,438 33,591
Cash and cash equivalents at 31 December 33,328 33,438
72
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
1. GENERAL INFORMATION
businesses of ship chartering and ship owning which are carried out internationally.
The Group is controlled by Jinhui Holdings Company Limited , a company incorporated in Hong Kong which
holds approximately 55.69% of the Company’s shares at the reporting date. The registered office of Jinhui
Holdings, where its consolidated accounts can be obtained, locates at 26th Floor, Yardley Commercial Building,
1-6 Connaught Road West, Hong Kong, PRC.
The consolidated financial statements for the year ended 31 December 2021 were approved for issue by the
Board on 15 March 2022.
2. STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards, which collective term includes all applicable individual International Financial Reporting Standards,
International Accounting Standards and Interpretations issued by the International Accounting Standards Board,
and Hong Kong Financial Reporting Standards, which collective term includes all applicable individual Hong Kong
Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong
Institute of Certified Public Accountants.
3. ADOPTION OF NEW OR AMENDED IFRSs AND HKFRSs
In current year, the Group has applied for the first time, the following amendments and interpretations to IFRSs
and HKFRSs issued by the IASB and the HKICPA, which are relevant to and effective for the Group’s consolidated
financial statements for the accounting period beginning on 1 January 2021.
Amendments to IFRS 16 and HKFRS 16 Covid-19-Related Rent Concessions
Amendments to IFRS 9 and HKFRS 9, IAS 39 and
HKAS 39, IFRS 7 and HKFRS 7, IFRS 4 and HKFRS 4,
and IFRS 16 and HKFRS 16
Interest Rate Benchmark Reform – Phase 2
The adoption of the amended IFRSs and HKFRSs does not have material impact on the Group’s financial
performance and financial position for the current and prior periods have been prepared and presented.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
73
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
3. ADOPTION OF NEW OR AMENDED IFRSs AND HKFRSs (Continued)
At the date of authorization of these consolidated financial statements, certain other new or amended IFRSs
and HKFRSs have been published but are not yet effective, and have not been early adopted by the Group.
The management anticipated that all pronouncements will be adopted in the Group’s accounting policy for the
first accounting period beginning after the effective dates of the pronouncements. Information on these new
pronouncements that are expected to be relevant to the Group’s consolidated financial statements is provided
below.
Amendments to IFRS 16 and HKFRS 16 Covid-19-Related Rent Concessions beyond 30 June 2021
1
IFRS 17 and HKFRS 17 Insurance Contracts and related amendments
3
Amendments to IFRS 3 and HKFRS 3 Reference to the Conceptual Framework
5
Amendments to IFRS 10 and HKFRS 10,
and IAS 28 and HKAS 28
Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
4
Amendments to IAS 1 and HKAS 1 Classification of Liabilities as Current or Non-current
and related amendments to Hong Kong
Interpretation 5 (2020)
3
Amendments to IAS 1 and HKAS 1,
and IFRS Practice Statement 2 and
HKFRS Practice Statement 2
Disclosure of Accounting Policies
3
Amendments to IAS 8 and HKAS 8 Definition of Accounting Estimates
3
Amendments to IAS 12 and HKAS 12 Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
3
Amendments to IAS 16 and HKAS 16 Property, Plant and Equipment – Proceeds before
Intended Use
2
Amendments to IAS 37 and HKAS 37 Onerous Contracts – Cost of Fulfilling a Contract
2
Amendments to IFRSs and HKFRSs Annual Improvements to IFRSs and HKFRSs 2018-2020
2
Accounting Guideline 5 (Revised) Merger Accounting for Common Control Combinations
5
Notes:
1.
Effective for annual periods beginning on or after 1 April 2021
2.
Effective for annual periods beginning on or after 1 January 2022
3.
Effective for annual periods beginning on or after 1 January 2023
4.
Effective date not yet determined
5.
Effective for common control combinations that occur on or after the beginning of the first annual period beginning on
or after 1 January 2022
The management is currently assessing the possible impact of the new or amended standards and interpretations
on the Group’s results and financial position in the first year of application. Certain other new standards and
interpretations have also been issued but are not yet effective and are not expected to have material impact on
the Group’s consolidated financial statements.
74
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1 Basis of preparation
The significant accounting policies that have been used in the preparation of these consolidated financial
statements are summarized below. These policies have been consistently applied to all the years presented
unless otherwise stated.
The consolidated financial statements have been prepared on the historical cost basis except for: investment
properties, assets held for sale, financial assets at fair value through profit or loss and financial assets at fair
value through OCI that are stated at fair values. The measurement bases are fully described in the accounting
policies below.
It should be noted that accounting estimates and assumptions are used in preparation of the consolidated
financial statements. Although these estimates are based on management’s best knowledge and judgement
of current events and actions, actual results may ultimately differ from those estimates. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements, are disclosed in note 5.
4.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries
made up to 31 December each year.
Intra-group transactions, balances and unrealized gains on transactions between group companies are eliminated
in preparing the consolidated financial statements. Unrealized losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are excluded
from consolidation from the date that control ceases.
4.3 Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights,
to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. When assessing whether the Group has power, only substantive rights (held by the Group
and other parties) are considered.
In the Company’s statement of financial position, investments in subsidiaries are carried at cost less any
impairment loss. The results of subsidiaries are accounted for by the Company on the basis of dividends received
and receivable at the reporting date.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
75
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.4 Foreign currency translation
The consolidated financial statements are presented in United States Dollars which is the functional and
presentation currency of the Company. The functional and presentation currencies of the Company’s subsidiaries
are either in United States Dollars or Hong Kong Dollars.
In the individual financial statements of the consolidated entities, foreign currency transactions are translated into
the functional currency of the individual entity using the exchange rates ruling at the dates of the transactions.
At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated at the
foreign exchange rates ruling at that date. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the reporting date retranslation of monetary assets and liabilities are recognized in
profit or loss.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated (i.e.
only translated using the exchange rates at the transaction date).
In the consolidated financial statements, all individual financial statements of foreign operations, originally
presented in a currency different from the Group’s presentation currency, have been converted into United States
Dollars. Assets and liabilities have been translated into United States Dollars at the closing rates at the reporting
date. Income and expenses have been converted into United States Dollars at the exchange rates ruling at the
transaction dates, or at the average rates over the reporting period provided that the exchange rates do not
fluctuate significantly. Any significant differences arising from this translation procedure are recognized in other
comprehensive income and accumulated separately in the translation reserve in equity.
4.5 Revenue recognition
Revenue mainly arises from the operations of ship chartering or owning business comprises chartering freight
and hire income.
To determine whether to recognize revenue, the Group follows a five-step process:
(a)
Identify contracts with customers
(b)
Identify the separate performance obligations in the contract
(c)
Determine the transaction price of the contract
(d)
Allocate the transaction price to each of the separate performance obligation in the contract
(e)
Recognize the revenue as each performance obligation is satisfied
76
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.5 Revenue recognition (Continued)
In all cases, the total transaction price for a contract is allocated amongst the various performance obligations
based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts
collected on behalf of third parties.
Revenue is recognized over time, when (or as) the Group satisfies performance obligations by transferring the
promised services to its customers. Further details of the Group’s revenue recognition policies are as follows:
(a)
Hire income under time charter is accounted for as operating lease and is recognized on a straight-line
basis over the period of each time charter contract.
(b)
Freight income under voyage charter is accrued over the period from the date of loading of charterer’s
cargo to the date of discharging the cargo and is recognized on percentage of completion basis measured
by time proportion of each voyage charter contract. The existing practice reflects the performance obligation
to provide transportation services which is satisfied over time from when transport of the goods begins
from loading port through delivery to discharging port and freight income is recognized over the period
of performance.
4.6 Borrowing costs
Borrowing costs incurred for the acquisition or construction of any qualifying asset are capitalized during the
period of time that is required to complete or prepare the asset for its intended use. A qualifying asset is an asset
which necessarily takes a substantial period of time to get ready for its intended use or sale. Other borrowing
costs are expensed as incurred.
The capitalization of borrowing costs as part of the qualifying assets commences when borrowing costs are
being incurred and the activities that are necessary to prepare the asset for its intended use are in progress.
Capitalization of borrowing costs is suspended or ceased when substantially all activities necessary to prepare
the qualifying assets for its intended use are interrupted or completed.
4.7
Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions. Government grants are deferred
and recognized in profit or loss over the period necessary to match them with the costs that the grants are
intended to compensate.
Government grants relating to income is presented in gross under “Other operating income” in the consolidated
statement of profit or loss and other comprehensive income.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
77
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.8 Income tax
Income tax comprises current tax and deferred tax.
Current income tax assets and / or liabilities comprise those obligations to, or claims from, fiscal authorities relating
to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to
the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the
year. All changes to current tax assets or liabilities are recognized as a component of tax expense in profit or loss.
Deferred tax is provided using the liability method on temporary differences at the reporting date between the
carrying amounts of assets and liabilities in the consolidated financial statements and their respective tax bases.
It is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or
the asset is realized, provided these tax rates have been enacted or substantively enacted at the reporting date.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
recognized for all deductible temporary differences and tax losses available to be carried forward to the extent
that it is probable that taxable profit will be available against which the deductible temporary differences and
unused tax losses can be utilized.
For investment properties measured using the fair value model in accordance with the accounting policy below,
the measurement of the related deferred tax asset or liability reflects the tax consequences of recovering the
carrying amount of the investment properties entirely through sale, unless the investment property is depreciable
and is held within a business model whose objective is to consume substantially all of the economic benefits
embodied in the investment property over time, rather than through sale.
Deferred tax assets or liabilities are not recognized if the temporary differences arise from goodwill or from initial
recognition (other than in a business combination) of assets or liabilities in a transaction that affects neither
taxable nor accounting profit or loss.
Changes in deferred tax assets or liabilities are recognized in profit or loss, or in other comprehensive income or
directly in equity if they relate to items that are charged or credited to other comprehensive income or directly
to equity.
When difference tax rates apply to different levels of taxable income, deferred tax assets and liabilities are
measured using the average tax rates that are expected to apply to the taxable income of the periods in which
the temporary differences are expected to reverse.
78
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.8 Income tax (Continued)
The determination of the average tax rates requires an estimation of (i) when the existing temporary difference will
reverse and (ii) the amount of future taxable profit in those years. The estimate of future taxable profit includes:
– income or loss excluding reversals of temporary differences; and
– reversals of existing temporary differences.
Current tax assets and current tax liabilities are presented in net if, and only if,
(a)
the Group has the legally enforceable right to set off the recognized amounts; and
(b)
intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
The Group presents deferred tax assets and deferred tax liabilities in net if, and only if,
(a)
the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
(b)
the
deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation
authority on either:
(i) the same taxable entity; or
(ii) different taxable entities which intend either to settle current tax liabilities and assets on a net
basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which
significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
4.9 Property, plant and equipment
The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable
costs of bringing the asset to its working condition and location for its intended use. Improvements are capitalized
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. Expenditures incurred in restoring assets to their normal working
conditions and other repairs and maintenance are charged to profit or loss during the financial period in which
they are incurred.
Motor vessels are stated at cost less accumulated depreciation and impairment loss.
Drydocking and special survey costs are capitalized and depreciated over the drydocking cycle of two to three
years on a straight-line basis. Upon disposal of vessels, any relevant carrying amounts not yet written off are
transferred to profit or loss. Vessel repairs and survey costs are expensed during the financial period in which
they are incurred.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
79
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.9 Property, plant and equipment (Continued)
Leasehold land and buildings (where the fair values of the leasehold interest in the land and buildings cannot be
measured separately at the inception of the lease and the building is not clearly held under an operating lease)
are stated at cost less accumulated depreciation and impairment loss.
All other property, plant and equipment are stated at cost less accumulated depreciation and impairment loss.
Depreciation is provided to write-off the cost of motor vessels over their estimated useful lives, after taking into
account their estimated residual values, using the straight-line method of 25 years from the date of the initial
delivery from the shipyards.
Depreciation is provided to write-off the cost of other property, plant and equipment as specified below over their
estimated useful lives, after taking into account their estimated residual values, using the straight-line method,
at the following rates per annum:
Leasehold land and buildings over the shorter of unexpired term of lease or 3% per annum
Leasehold improvement 20% – 30% per annum
Utility vessels, furniture and equipment 6% – 25% per annum
Estimated residual value is the estimated amount that the Group would currently obtain from disposal of the
asset, after deducting the estimated costs of disposal, as if the asset was already of the age and in the conditions
expected at the end of its useful life. The Group estimates the residual values of motor vessels based on the
light-weight tonnes of each vessel multiply by market demolition metal price per ton. Estimate of residual value
and useful life are reviewed and adjusted if appropriate, at each reporting date.
The gain or loss arising on retirement or disposal is determined as the difference between the net sale proceeds
and the carrying amount of the asset and is recognized in profit or loss.
80
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.10 Investment properties
Investment properties are land and / or buildings which are owned or held under a leasehold interest to earn
rental income and / or for capital appreciation.
On initial recognition, investment property is measured at cost, including any directly attributable expenditure.
Subsequent to initial recognition, investment property is stated at fair value which is determined by external
professional valuers with sufficient experience with respect to both the location and category of the investment
property and it reflects the prevailing market conditions at the reporting date.
Gain or loss arising from either change in the fair value or the sale of an investment property is recognized in
profit or loss in the period in which they arise.
The change in fair value arisen from reclassification from leasehold land and buildings to investment properties
will be credited to revaluation reserve. Upon disposal of such properties, the amount previously recognized in
revaluation reserve will be transferred to retained profits.
4.11
Impairment of non-financial assets
Property, plant and equipment and the Company’s interests in subsidiaries are subject to impairment testing
whenever there are indications that the assets’ carrying amounts may not be recoverable.
An impairment loss is recognized as an expense immediately for the amount by which the asset’s carrying amount
exceeds its recoverable amount. Recoverable amount is the higher of fair value, reflecting market conditions, less
costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessment of time value of money
and the risk specific to the asset.
For the purpose of assessing impairment, where an asset does not generate cash inflows that are largely
independent of the cash flows from other assets, the recoverable amount is determined for the smallest group
of assets that generate cash inflows independently (i.e. a cash generating unit). As a result, some assets are
tested individually for impairment and some are tested at cash generating unit level.
Impairment loss recognized for cash generating unit is allocated to reduce the carrying amounts of the assets
in the cash generating unit on pro rata basis. In allocating the impairment loss, the carrying amount of an asset
will not be reduced below its fair value less costs of disposal, value in use or zero.
An impairment loss is reversed if there has been a favorable change in the estimates used to determine the
asset’s recoverable amount and only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortization, if no impairment loss had been
recognized in prior years.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
81
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.12 Inventories
Inventories are carried at the lower of cost and net realizable value. Cost, which comprises all costs of purchase
and, where applicable, other costs that have been incurred in bringing the inventories to their present location
and condition, and is determined using the first-in, first-out method. Net realizable value is the estimated selling
price in the ordinary course of business less the estimated cost of completion and applicable selling expenses.
4.13 Financial assets
Financial assets are recognized when the Group becomes a party to the contractual provisions of the financial
instrument.
Financial assets are derecognized when the contractual rights to receive the cash flows from the financial assets
expire, or when the financial asset and substantially all of its risks and rewards of ownership are transferred.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at
the transaction price in accordance with IFRS 15 and HKFRS 15, all financial assets are initially measured at fair
value, in case of a financial asset not at fair value through profit or loss, plus transaction costs that are directly
attributable to the acquisition of the financial asset.
Financial assets are classified into the following categories:
– amortized cost;
– fair value through profit or loss; or
– fair value through OCI.
The classification is determined by both:
– the entity’s business model for managing the financial asset; and
– the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognized in profit or loss are presented within
other operating income, interest income, other operating expenses and finance costs, except for ECL of trade
receivables which is presented in other operating expenses.
82
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Subsequent measurement of financial assets
Debt investments
Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated
as fair value through profit or loss):
– they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows; and
–
the contractual terms of the financial assets give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortized cost using the effective interest method. Interest income
from these financial assets is included in profit or loss. Discounting is omitted where the effect of discounting
is immaterial. The Group’s bank balances and cash, pledged deposits, loan receivables and trade and other
receivables fall into this category of financial instruments.
Financial assets at fair value through OCI – recycling
If the contractual cash flows of the investment comprise solely payments of principal and interest and the
investment is held within a business model whose objective is achieved by both the collection of contractual cash
flows and sale, changes in fair value are recognized in other comprehensive income, except for the recognition
in profit or loss of ECL, interest income (calculated using the effective interest method) and foreign exchange
gains and losses. When the investment is derecognized, the amount accumulated in other comprehensive income
is recycled from equity to profit or loss.
Financial assets at fair value through profit or loss
Financial assets that are held within a different business model other than “hold to collect” or “hold to collect
and sell” are categorized at fair value through profit or loss. Further, irrespective of business model, financial
assets whose contractual cash flows are not solely payments of principal and interest are accounted for at fair
value through profit or loss.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
83
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Subsequent measurement of financial assets (Continued)
Equity investments
An investment in equity securities is classified as fair value through profit or loss unless the equity investment
is not held for trading purposes and on initial recognition of the investment, the Group elects to designate the
investment at fair value through OCI (non-recycling) such that subsequent changes in fair value are recognized
in other comprehensive income and accumulated in “Reserve for financial assets at fair value through OCI” in
equity. Such elections are made on an instrument-by-instrument basis, but only be made if the investment meets
the definition of equity from the issuer’s perspective.
The equity instruments at fair value through OCI are not subject to impairment assessment. The cumulative gain
or loss in “Reserve for financial assets at fair value through OCI” will not be reclassified to profit or loss upon
disposal of the equity investments.
Dividends from these investments in equity instruments are recognized in profit or loss when the Group’s right to
receive the dividends is established. Dividend income are included in “other operating income” in profit or loss.
Impairment of financial assets
IFRS 9 and HKFRS 9’s impairment requirements use more forward-looking information to recognize ECL – the
“ECL model”. Instruments within the scope included loans and other debt-type financial assets measured at
amortized cost, fair value through OCI and trade receivables.
The Group considers a broader range of information when assessing credit risk and measuring ECL, including
past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of
the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
Stage 1: financial instruments that have not deteriorated significantly in credit quality since their initial
recognition or that have low credit risk.
Stage 2:
financial instruments that have deteriorated significantly in credit quality since their initial recognition
and whose credit risk is not low.
Stage 3:
financial instruments that have objective evidence of impairment at the reporting date.
84
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Impairment of financial assets (Continued)
For Stage 1 category, loss allowance is recognized at the present value of expected credit losses that will result if a
default occurs in the 12 months after the reporting date (“12-month ECL”). For Stage 2 and Stage 3 category, loss
allowance is recognized at the present value of expected credit shortfalls over their remaining life (“lifetime ECL”).
Measurement of the ECL is determined by a probability-weighted estimate of credit losses over the expected
life of the financial instrument.
For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes a loss allowance
based on lifetime ECL at each reporting date. These are the expected shortfalls in contractual cash flows,
considering the potential for default at any point during the life of the financial assets. In calculating the ECL,
the Group has established a provision matrix that is based on its historical credit loss experience and external
indicators, adjusted for forward-looking factors specific to the debtors and the economic environment.
To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics and the
days past due.
For loan receivables secured by collaterals provided by borrowers, the Group measures the loss allowance for
these financial assets equal to 12-month ECL with taking those collaterals into accounts (which is recognized at
Stage 1), unless when there has been a significant increase in credit risk since initial recognition or classified as
credit-impaired, the Group recognizes lifetime ECL (which is recognized at Stage 2). The assessment of whether
lifetime ECL should be recognized is based on significant increase in the likelihood or risk of default occurring
since initial recognition or classified as credit-impaired. The loan receivables are reviewed at the reporting
date to assess impairment allowance which are based on the evaluation of current creditworthiness, collection
statistic and the market values of the vessels or similar vessels which were appraised by independent qualified
appraisal firms.
For other financial assets measured at amortized cost and fair value through OCI, the Group measures the loss
allowance for these financial assets equal to 12-month ECL (which is recognized at Stage 1), unless when there
has been a significant increase in credit risk since initial recognition, the Group recognizes lifetime ECL (which is
recognized at the Stage 2). The assessment of whether lifetime ECL should be recognized is based on significant
increase in the likelihood or risk of default occurring since initial recognition.
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares
the risk of a default occurring on the financial assets at the reporting date with the risk of default occurring
on the financial assets at the date of initial recognition. In making this assessment, the Group considers both
quantitative and qualitative information that is reasonable and supportable, including historical experience and
forward-looking information that is available without undue cost or effort.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
85
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Impairment of financial assets (Continued)
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly:
– an actual or expected significant deterioration in the financial instrument’s external (if available) or internal
credit rating;
–
significant deterioration in external market indicators of credit risk;
– existing or forecast adverse changes in regulatory, business, financial, economic conditions, or technological
environment that are expected to cause a significant decrease in the debtor’s ability to meet its debt
obligations; and
–
an actual or expected significant deterioration in the operating results of the debtor.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased
significantly since initial recognition when contractual payments are more than 30 days past due, unless the
Group has reasonable and supportable information that demonstrates otherwise.
Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has not increased significantly
since initial recognition if the debt instrument is determined to have low credit risk at the end of each reporting
period. A debt instrument is determined to have low credit risk if it has a low risk of default, the borrower has
strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic
and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to
fulfill its contractual cash flow obligations.
The Group considers the default has occurred when: (1) information developed internally or obtained from
external sources indicates that the debtor is unlikely to pay its credit obligations to the Group in full, without
recourse by the Group to actions such as realizing security (if any is held); (2) a financial asset is more than 90
days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging
default criterion is more appropriate.
The Group writes off trade and other receivables in whole or in part, when it has exhausted all practical recovery
efforts and concluded there is no reasonable expectation of recovery.
Detailed analysis of the ECL assessment of trade receivables, other financial assets measured at amortized cost
and debt investments at fair value through OCI are set out in note 39(e).
86
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.14 Assets held for sale
Non-current assets are classified as held for sale when:
(a) they are available for immediate sale;
(b) management is committed to a plan to sell;
(c) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;
(d) an active programme to locate a buyer has been initiated;
(e) the asset is being marketed at a reasonable price in relation to its fair value; and
(f)
a sale is expected to complete within 12 months from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount immediately
prior to being classified as held for sale and fair value less costs of disposal. Following their classification as
held for sale, the assets are not depreciated. An impairment loss is recognized as an expense immediately for the
amount by which the asset’s carrying amount prior to being classified as held for sale exceeds its fair value less
costs of disposal. The gain or loss of assets being disposed of during the year are included in the consolidated
statement of profit or loss and other comprehensive income up to the date of disposal.
4.15 Financial liabilities
Financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial
instrument. A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expired.
The Group classifies its financial liabilities into the following categories:
Trade and other payables
Trade and other payables are recognized initially at fair values and subsequently measured at amortized costs,
using the effective interest method.
Borrowings
Borrowings are recognized initially at fair values, net of transaction costs incurred. Borrowings are subsequently
stated at amortized costs. Any difference between the proceeds (net of transaction costs) and the redemption
value is recognized in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liabilities for at least twelve months after the reporting date.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
87
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.16 Fair value measurement
For financial reporting purposes, fair value measurement is categorized into Level 1, 2 and 3 of the three-level
fair value hierarchy as defined under IFRS 13 and HKFRS 13. The level into which a fair value measurement is
classified is determined with reference to the observability and significance of the inputs used in the valuation
technique as follows:
Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level
2:
fair values measured using valuation techniques in which all significant inputs other than quoted
prices included within Level 1 are directly or indirectly based on observable market data.
Level 3:
fair values measured using valuation techniques in which any significant input is not based on
observable market data.
4.17
Cash and cash equivalents
Cash and cash
equivalents include cash at banks and in hand, demand deposits with banks and short term
highly liquid investments that are readily convertible into known amounts of cash and which are subject to
an insignificant risk of changes in value, with original maturities of three months or less. For the purpose of
consolidated statement of cash flows presentation, cash and cash equivalents include bank overdrafts which are
repayable on demand and form an integral part of the Group’s cash management.
4.18 Share capital
Share capital is determined using the nominal value of shares that have been issued.
Any transaction costs associated with the issuing of shares are deducted from share premium to the extent they
are incremental costs directly attributable to the equity transaction.
88
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.19 Employee benefits
Retirement benefits schemes
The Group operates a defined contribution provident fund scheme and a mandatory provident fund scheme.
The assets of the schemes are held separately from those of the Group in their respective schemes managed
by an independent trustee. The contributions to retirement benefits schemes charged to profit or loss represent
contributions payable to the funds by the Group at the rates specific in the rules of the schemes.
The contributions to the defined contribution provident fund scheme vest in employees according to the vesting
percentage set out in the scheme. When employees leave the defined contribution provident fund scheme prior
to being vested fully in the contributions, the contributions payable by the Group are reduced by the amount
of forfeited contributions. On the other hand, the contributions to the mandatory provident fund scheme vest
immediately and fully in employees once the contributions are payable by the Group. There is no forfeited
contribution when employees leave the mandatory provident fund scheme.
Short term employee benefits
Employee entitlements to annual leave are recognized when they accrue to employees. A provision is made for
the estimated liability for annual leave as a result of services rendered by employees up to the reporting date.
Non-accumulating compensated absences such as sick leave and maternity leave are not recognized until the
time of leave.
4.20 Leases
A lease is defined as a contract, or part of a contract, that conveys the right to use an identified asset (the
underlying asset) for a period of time in exchange for consideration. To apply this definition, the Group assesses
whether the contract meets three key evaluations which are whether:
– the contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group;
–
the Group has the right to obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract; and
–
the Group has the right to direct the use of the identified asset throughout the period of use. The Group
assess whether it has the right to direct how and for what purpose the asset is used throughout the period
of use.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
89
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.20 Leases (Continued)
Assets leased out under operating leases (as a lessor)
Where the Group as a lessor leases out assets under operating leases, such assets are measured and presented
according to the nature of the asset.
Rental income receivable from operating leases is recognized in profit or loss on a straight-line basis over the
lease terms.
Hire income applicable to operating leases in respect of time charters are recognized as revenue on time basis
over the period of each lease.
Lease incentives granted are recognized in profit or loss as an integral part of the aggregate net income receivable
from the lease.
Sale and leaseback transactions (as a buyer-lessor)
For a transfer of asset that satisfies the requirements as a sale in accordance with IFRS 15 and HKFRS 15, the
Group as a buy-lessor accounts for the purchase of the asset applying applicable standards, and for lease applying
the lessor accounting requirements in accordance with IFRS 16 and HKFRS 16.
4.21 Provisions and contingent liabilities
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event,
and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable
estimate of the amount of the obligation can be made. Where the time value of money is material, provisions
are stated at the present value of the expenditure expected to settle the obligation. All provisions are reviewed
at each reporting date and adjusted to reflect the current best estimate.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits
is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of
one or more uncertain future events are also disclosed as contingent liabilities unless the probability of outflow
of economic benefits is remote.
Contingent liabilities are not recognized but are disclosed in the notes to the consolidated financial statements.
When a change in the probability of an outflow of economic benefits occurs, and an outflow is probable, it will
then be recognized as a provision.
90
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
4.22 Related parties
For the purposes of these consolidated financial statements, a party is considered to be related to the Group if:
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Group’s parent.
(b)
An entity is related to the Group if any of the following conditions applies:
(
i)
The entity and the Group are members of the same group (which means that each parent, subsidiary
and fellow subsidiary is related to the others).
(ii)
One entity is an associate or joint venture of the other entity (or an associate or joint venture of
a member of a group of which the other entity is a member).
(iii)
Both entities are joint venture of the same third entity.
(iv)
One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel
services to the Group or to the parent of the Group.
Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.
4.23 Segment reporting
The Group identifies operating segments and prepares segment information based on the regular internal financial
information reported to the chief operating decision maker for their decisions about resources allocation to the
Group’s business components and for their review of the performance of those components.
The Group has regarded the business of ship chartering and ship owning as the only dominant reportable
operating segment to be reported to the chief operating decision maker. Thus, no analysis of segment revenue,
segment results, segment assets and segment liabilities are presented in the consolidated financial statements
for the years 2021 and 2020.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
91
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors
including expectations of future events that are believed to be reasonable under the circumstances. The significant
estimates and judgements made in the process of applying the Group’s accounting policies are discussed below.
Reversal of impairment loss on owned vessels
Dry bulk shipping market had strengthened remarkedly in 2021 reflected in the upsurge of market freight rates
and significant increase in the market value of dry bulk vessels, the Group reviewed the dry bulk shipping market
environment, the overall macro environment and the market value of dry bulk vessels at the reporting dates. The
management considered that the reversal of impairment indication of the Group’s fleet existed at both reporting
dates and performed reversal of impairment loss review on both 30 June 2021 and 31 December 2021.
With due considerations of factors affecting the long term intrinsic values of owned dry bulk vessels, the Group’s
owned vessels’ recoverable amounts which were determined based on the higher of the fair value less costs of
disposal and value in use and were significantly higher than their respective carrying amounts at both reporting
dates on 30 June 2021 and 31 December 2021. Accordingly, a reversal of impairment loss of US$65,521,000
on owned vessels classified in property, plant and equipment was recognized at 30 June 2021 and a further
reversal of impairment loss of US$68,085,000 on owned vessels was recognized at 31 December 2021 to reflect
our change in the expectation on the long term global economic and the dry bulk shipping industry outlook
which affect the assumptions applied in estimation of the value in use of our owned vessels. The total reversal
of impairment loss on owned vessels recognized in 2021 was US$133,606,000. The reversal of impairment loss
on owned vessels is non-cash in nature and does not have impact on the operating cash flows of the Group. As
at 31 December 2021, the carrying amount of the owned vessels was US$379,374,000 (2020: US$182,427,000).
Key assumptions applied in value in use calculation in reversal impairment assessment of owned vessels
The recoverable amounts of owned vessels have been determined based on the higher of the fair value less costs
of disposal and value in use. The value in use of owned vessels is estimated based on estimated future cash
flows projections from the continuous use of such vessels. Key assumptions applied in value in use calculation
mainly included discount rate and hire rates earned by each vessel as the value in use is most sensitive to the
changes in these two factors. Other assumptions included utilization rate which is assumed to be 95% in all
subsequent years; and vessels are expected to have useful life of 25 years from the date of the initial delivery
from the shipyards. The net cash flow also reflected the estimated drydocking and special surveys costs and
vessels operating expenses.
92
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
Reversal of impairment loss on owned vessels (Continued)
Key assumptions applied in value in use calculation in reversal impairment assessment of owned vessels
(Continued)
The hire rates applied in the reversal of impairment test on owned vessels were based on management’s best
estimation, taking into consideration of historical performances, market research data and market expectation.
The hire rates would have a 2% growth for the first five-year period and cash flows beyond the five-year period
are extrapolated using the zero growth rate. The discount rate applied to the value in use calculation on owned
vessels was 8.5%, which was a pre-tax rate that reflected current market assessments of time value of money
and the risks specific to the assets.
Sensitivity of value in use calculation in reversal of impairment assessment of owned vessels
With all other variables remaining constant, it was estimated that a decrease of 5% in hire rates applied in the
reversal of impairment test at the reporting date, the reversal of impairment loss on owned vessels recognized
and net profit for the year would decrease by approximately US$17,707,000 and the carrying amount of the
Group’s owned vessels would decrease by 4.77%.
With all other variables remaining constant, it was estimated that an increase of 50 basis points in discount rate
applied in the reversal of impairment test at the reporting date, the reversal of impairment loss on owned vessels
recognized and net profit for the year would decrease by approximately US$6,911,000 and the carrying amount
of the Group’s owned vessels would decrease by 1.86%.
Valuation of investment properties
As at 31 December 2021, the Group’s investment properties were stated at fair value of US$28,145,000 (2020:
US$29,479,000). As disclosed in note 19, change in fair value loss of investment properties of US$1,334,000 (2020:
US$659,000) was recognized in profit or loss during the year. The fair values of the Group’s investment properties
were determined by an independent qualified professional valuer. The valuations are dependent on certain
significant unobservable inputs, including market unit sale rate per square feet / carpark which are determined
based on comparable transactions after applying adjusting factors such as the age, location, size, view, floor level
and quality of buildings and carparks to reflect the conditions and locations of the subject properties. Details of
the valuation methodologies and significant unobservable inputs used in the valuations are disclosed in note 19.
Fair values of financial assets at fair value through OCI
Fair values of financial assets at fair value through OCI that are not traded in an active market is determined
by using valuation techniques. The Group determines the fair values primarily based on the recent transaction
prices, net asset value (representing the fair value of the equity instruments reported by investment manager of
the investees) and take into account of its financial results and other factors. The fair values of financial assets
at fair value through OCI that are not traded in active market are determined by using valuation techniques as
disclosed in note 20.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
93
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
Impairment of trade receivables and other financial assets
As at 31 December 2021, the carrying amount of the trade receivables (note 23) was US$2,195,000 (2020:
US$529,000). For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes
a loss allowance based on lifetime ECL at each reporting date. These are the expected shortfalls in contractual
cash flows, considering the potential for default at any point during the life of the financial assets. To measure
the ECL, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
For other financial assets measured at amortized cost or fair value through OCI (note 39(a)), the Group measures
the loss allowance for these financial assets equal to 12-month ECL, unless when there has been a significant
increase in credit risk since initial recognition, the Group recognizes lifetime ECL. The assessment of whether
lifetime ECL should be recognized is based on significant increase in the likelihood or risk of default occurring
since initial recognition. In assessing whether the credit risk for other financial assets has increased significantly
since initial recognition, the Group compares the risk of a default occurring on the financial assets at the reporting
date with the risk of default occurring on the financial assets at the date of initial recognition. In making this
assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable,
including historical experience and forward-looking information that is available without undue cost or effort.
For loan receivables (note 22) which arise from asset-based financing and secured by collaterals provided by
borrowers, the Group measures the loss allowance for these financial assets equal to 12-month ECL with taking
those collaterals into accounts unless when there has been a significant increase in credit risk since initial
recognition or classified as credit-impaired, the Group recognizes lifetime ECL. The assessment of whether lifetime
ECL should be recognized is based on significant increase in the likelihood or risk of default occurring since
initial recognition or classified as credit-impaired. The loan receivables are reviewed by the management at the
reporting date to assess impairment allowance which are based on the evaluation of current creditworthiness,
collection statistic and the market values of the vessels or similar vessels which were appraised by independent
qualified appraisal firms.
94
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
6. SEGMENT INFORMATION
The Group is principally engaged in the business of ship chartering and ship owning and the management has
regarded this business as the only dominant reportable operating segment to be reported to the chief operating
decision maker.
While the Group’s revenue was mainly attributable to its chartering operations which are carried out internationally
and cannot be attributable to any particular geographical location, analysis of revenue from chartering freight
and hire business by geographical split of revenue by charterers’ location is presented in note 7.
The Group’s non-current assets mainly consist of property, plant and equipment and investment properties.
Property, plant and equipment mainly comprised of the Group’s motor vessels. As the Group’s motor vessels are
operated across different geographical regions, it is meaningless to identify the specific geographical locations
of the motor vessels at the reporting date. The Group’s investment properties comprised of premises and car
parks and all are located in Hong Kong. While majority of the Group’s non-current assets other than financial
instruments cannot be attributable to any particular geographical location, no analysis of non-current assets other
than financial instruments by geographical area is presented in the consolidated financial statements.
7. REVENUE
Revenue represents chartering freight and hire income arising from the Group’s owned vessels. Revenue
recognized during the year is as follows:
2021 2020
US$’000 US$’000
Chartering freight and hire income:
Hire income under time charters
1
131,069 45,030
Freight income under voyage charters
2
– 2,088
131,069 47,118
Notes:
1. Hire income under time charter is accounted for as operating lease and is recognized on a straight-line basis over the
period of each time charter contract.
2.
Freight income under voyage charter is accrued over the period from the date of loading of charterer’s cargo to the date
of discharging the cargo and is recognized on percentage of completion basis measured by time proportion of each
voyage charter contract.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
95
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
7. REVENUE (Continued)
Information about major charterers
Revenue of US$53,029,000, US$40,413,000 and US$20,459,000 (2020: US$20,087,000, US$7,498,000 and
US$7,435,000) were derived from three charterers that contributed 40%, 31% and 16% (2020: 43%, 16% and
16%) respectively to the Group’s revenue for the year 2021.
Information about geographical distribution
Revenue from external customers (charterers) is as follows:
2021 2020
US$’000 US$’000
Geographical split of revenue by charterers’ location:
Singapore 116,099 33,704
China 10,285 12,112
Ireland 2,670 1,172
South Korea 2,015 –
Thailand – 130
131,069 47,118
96
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
8. OTHER OPERATING INCOME
2021 2020
US$’000 US$’000
Net gain on bunker arising from shipping operations 4,294 –
Other shipping operating income 3,547 2,663
Gross rental income from operating leases on investment properties 473 556
Dividend income 1,541 1,249
Net gain on disposal of property, plant and equipment 278 –
Reversal of impairment loss on trade and other receivables, net 1,786 1,351
Compensation income in relation to loan receivables 438 –
Settlement income in relation to repudiation claims – 205
COVID-19 related government subsidies – 454
Sundry income 259 275
12,616 6,753
9. INTEREST INCOME
2021 2020
US$’000 US$’000
Interest income in respect of:
Financial assets at fair value through profit or loss 1,089 1,287
Deposits with banks and other financial institutions 24 173
Loan receivables 1,867 3,497
2,980 4,957
JINHUI SHIPPING AND TRANSPORTATION LIMITED
97
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
10. REVERSAL OF IMPAIRMENT LOSS ON OWNED VESSELS
Dry bulk shipping market had strengthened remarkedly in 2021 reflected in the upsurge of market freight rates
and significant increase in the market value of dry bulk vessels, the Group reviewed the dry bulk shipping market
environment, the overall macro environment and the market value of dry bulk vessels at the reporting dates. The
management considered that the reversal of impairment indication of the Group’s fleet existed at both reporting
dates and performed reversal of impairment loss review on both 30 June 2021 and 31 December 2021.
Accordingly, a reversal of impairment loss of US$65,521,000 on owned vessels classified in property, plant and
equipment was recognized at 30 June 2021 and a further reversal of impairment loss of US$68,085,000 on owned
vessels was recognized at 31 December 2021 to reflect our change in the expectation on the long term global
economic and the dry bulk shipping industry outlook which affect the assumptions applied in estimation of the
value in use of our owned vessels.
With due considerations of factors affecting the long term intrinsic values of owned dry bulk vessels, the
Group’s owned vessels’ recoverable amounts which were determined based on the higher of the fair value less
costs of disposal and value in use and were significantly higher than their respective carrying amounts at both
reporting dates on 30 June 2021 and 31 December 2021. The value in use of owned vessels is estimated based
on estimated future cash flows projections from the continuous use of such vessels. Key assumptions applied
in value in use calculation mainly included discount rate and hire rates earned by each vessel as the value in
use is most sensitive to the changes in these two factors. Other assumptions included utilization rate which is
assumed to be 95% in all subsequent years; and vessels are expected to have useful life of 25 years from the
date of the initial delivery from the shipyards. The net cash flow also reflected the estimated drydocking and
special surveys costs and vessels operating expenses.
The hire rates applied in the reversal of impairment test on owned vessels were based on management’s best
estimation, taking into consideration of historical performances, market research data and market expectation.
The hire rates would have a 2% growth for the first five-year period and cash flows beyond the five-year period
are extrapolated using the zero growth rate. The discount rate applied to the value in use calculation on owned
vessels was 8.5%, which was a pre-tax rate that reflected current market assessments of time value of money
and the risks specific to the assets.
The total reversal of impairment loss on owned vessels recognized in 2021 was US$133,606,000. The reversal
of impairment loss on owned vessels is non-cash in nature and does not have impact on the operating cash
flows of the Group.
98
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
11. STAFF COSTS
2021 2020
US$’000 US$’000
Directors’ emoluments (excluding directors’ fees):
Salaries and other benefits 8,390 7,226
Contributions to retirement benefits schemes 434 434
Other staff costs:
Salaries and other benefits 4,388 4,187
Contributions to retirement benefits schemes 185 185
13,397 12,032
At the reporting date, the Group has 64 (2020: 67) full-time employees.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
99
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
12. DIRECTORS’ EMOLUMENTS
Directors’
fees
1
Salaries and
allowances
2
Discretionary
bonus
2
Contributions
to retirement
benefits
schemes
2
Total
US$’000 US$’000 US$’000 US$’000 US$’000
2021
Executive Directors
Ng Siu Fai 248 3,846 642 231 4,967
Ng Kam Wah Thomas 248 3,077 512 185 4,022
Ng Ki Hung Frankie 170 123 – 7 300
Ho Suk Lin Cathy 60 190 – 11 261
Non-executive Directors
Tsui Che Yin Frank 28 – – – 28
William Yau 23 – – – 23
777 7,236 1,154 434 9,601
2020
Executive Directors
Ng Siu Fai 248 3,846 – 231 4,325
Ng Kam Wah Thomas 248 3,077 – 185 3,510
Ng Ki Hung Frankie 170 123 – 7 300
Ho Suk Lin Cathy 60 180 – 11 251
Non-executive Directors
Tsui Che Yin Frank 28 – – – 28
William Yau 23 – – – 23
777 7,226 – 434 8,437
Notes:
1. The directors’ fees were provided by the Company. None of the Directors received directors’ fees from its subsidiaries.
2
. Directors’ other emoluments, which included salaries and allowances, discretionary bonus and contributions to retirement
benefits schemes, were provided by a subsidiary.
100
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
13. OTHER OPERATING EXPENSES
Other operating expenses for the year 2021 mainly included net loss of US$2,570,000 on financial assets at
fair value through profit or loss, directors’ fee of US$777,000, professional fee of US$590,000, change in fair
value of investment properties of US$1,334,000, auditor’s remuneration related to audit services of US$200,000,
bad debts written off in respect of trade and other receivables of US$7,000 and remaining are various office
administrative expenses.
Other operating expenses for the year 2020 mainly included net loss of US$3,900,000 on financial assets at fair
value through profit or loss, directors’ fee of US$777,000, professional fee of US$730,000, change in fair value of
investment properties of US$659,000, impairment loss on assets held for sale (disposed vessel) of US$270,000
recognized upon reclassification to assets held for sale in December 2020, auditor’s remuneration related to audit
services of US$151,000, bad debts written off in respect of trade receivables of US$139,000 and remaining are
various office administrative expenses.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
101
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
14. OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION
This is stated after charging / (crediting):
2021 2020
US$’000 US$’000
Auditor’s remuneration
1
:
Audit services 200 151
Other services 15 13
Rent and rates payments in respect of premises 85 89
Net loss on financial assets at fair value through profit or loss
Realized gain on financial assets at
fair value through profit or loss (2,755) (1,159)
Unrealized loss on financial assets at
fair value through profit or loss 5,325 5,059
Interest income in respect of:
Financial assets at fair value through profit or loss (1,089) (1,287)
Deposits with banks and other financial institutions (24) (173)
Loan receivables (1,867) (3,497)
Dividend income (1,541) (1,249)
Net gain on disposal of property, plant and equipment (278) –
Loss on write-off of property, plant and equipment 2 –
Change in fair value of investment properties 1,334 659
Reversal of impairment loss on owned vessels (133,606) –
Reversal of impairment loss on trade and other receivables, net (1,786) (1,351)
Net exchange loss (gain) 103 (13)
Gross rental income from operating leases on investment properties (473) (556)
Outgoings in respect of investment properties 41 34
Bad debts written off in respect of trade and other receivables 7 139
Impairment loss on assets held for sale – 270
Note:
1.
The auditor’s remuneration disclosed above excluded VAT and fees paid for other services mainly included fees for tax
compliance services of US$3,000 (2020: US$2,000) and review of internal control systems of US$5,000 (2020: US$2,000).
102
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
15. TAXATION
Taxation has been provided on the estimated assessable profits arising in Hong Kong from a wholly owned
subsidiary of the Company which is a qualifying corporation in accordance with the two-tiered profits tax rates
regime in Hong Kong. Under the two-tiered profits tax rates regime, the first HK$2,000,000 (approximately
US$256,000) of assessable profits of the qualifying corporation are taxed at 8.25%, and the assessable profits
above HK$2,000,000 (approximately US$256,000) are taxed at 16.5%. Apart from the estimated assessable profits
arising in Hong Kong from that subsidiary, in the opinion of the Directors, the Group is not subject to taxation
in any other jurisdictions in which the Group operates.
There was no Bermuda income, corporation or profits tax, withholding tax, capital gains tax, capital transfer tax,
estate duty or inheritance tax payable by the Company for the years.
The Company has received from the Minister of Finance of Bermuda under The Exempted Undertakings Tax
Protection Act 1966, as amended, an assurance that, in the event of there being enacted in Bermuda any legislation
imposing tax computed on profits or income, or computed on any capital asset gain or appreciation or any tax in
the nature of estate duty or inheritance tax, the imposition of such tax shall not until 31 March 2035 be applicable
to the Company or to any of its operations, or to the shares, debentures or other obligations of the Company.
The amount of taxation charged to the consolidated statement of profit or loss and other comprehensive income
represents:
2021 2020
US$’000 US$’000
Hong Kong Profits Tax
Current year 191 233
Over provision in prior year (1) –
190 233
JINHUI SHIPPING AND TRANSPORTATION LIMITED
103
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
15. TAXATION (Continued)
Reconciliation between taxation charge and accounting profit (loss) at the applicable tax rates:
2021 2020
US$’000 US$’000
Profit (Loss) before taxation 194,387 (15,019)
Income tax at the applicable tax rates in the
tax jurisdictions concerned (2,377) (2,136)
Non-deductible expenses 482 544
Tax exempted revenue (641) (407)
Unrecognized tax losses 2,755 2,261
Unrecognized temporary differences (28) (27)
Utilization of previously unrecognized tax losses – (2)
Over provision in prior year (1) –
Taxation charge for the year 190 233
The applicable tax rates are the weighted average of current rates of taxation ruling in the relevant jurisdictions.
104
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
16. EARNINGS (LOSS) PER SHARE
2021 2020
US$’000 US$’000
Weighted average number of ordinary shares in issue 109,258,943 109,258,943
Net profit (loss) attributable to
shareholders of the Company (US$’000) 194,197 (15,252)
Basic and diluted earnings (loss) per share US$1.777 US$(0.140)
Diluted earnings (loss) per share for the years 2021 and 2020 were the same as basic earnings (loss) per share
as there was no potentially dilutive ordinary shares in existence for the years 2021 and 2020.
17. DIVIDENDS
2021 2020
US$’000 US$’000
2021 interim dividend, declared of US$0.03 per share 3,278 –
2021 final dividend, proposed of US$0.07 per share 7,648 –
10,926 –
The proposed final dividend for the year is subject to the approval of the Company’s shareholders at the
forthcoming annual general meeting scheduled on 20 May 2022.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
105
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
18. PROPERTY, PLANT AND EQUIPMENT
Motor vessels
1
and capitalized
drydocking costs
Leasehold land
and buildings Others Total
US$’000 US$’000 US$’000 US$’000
Cost
At 1 January 2020 710,626 26,768 7,027 744,421
Reclassification to assets held for sale
2
(22,335) – – (22,335)
Additions 8,883 – 7 8,890
Write-off (3,910) – (4) (3,914)
At 31 December 2020 693,264 26,768 7,030 727,062
Additions 81,231 – 66 81,297
Disposals / Write-off (899) (841) (55) (1,795)
At 31 December 2021 773,596 25,927 7,041 806,564
Accumulated depreciation
and impairment loss
At 1 January 2020 517,254 15,332 5,814 538,400
Reclassification to assets held for sale
2
(16,685) – – (16,685)
Charge for the year 14,178 821 169 15,168
Write-off (3,910) – (4) (3,914)
At 31 December 2020 510,837 16,153 5,979 532,969
Reversal of impairment loss
3
(133,606) – – (133,606)
Charge for the year 17,890 803 155 18,848
Eliminated on disposals / write-off (899) (244) (53) (1,196)
At 31 December 2021 394,222 16,712 6,081 417,015
Net book value
At 31 December 2021 379,374 9,215 960 389,549
At 31 December 2020 182,427 10,615 1,051 194,093
106
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
18. PROPERTY, PLANT AND EQUIPMENT (Continued)
Notes:
1.
All motor vessels are held for use under operating leases.
2.
Reclassification to assets held for sale:
The Group entered into an agreement on 15 December 2020 for the disposal of a Supramax of deadweight
50,777 metric tons at a consideration of US$5,500,000 which was subsequently delivered to the purchaser in January 2021.
For financial reporting purposes, the disposed vessel was reclassified to “Assets held for sale” in accordance with
IFRS 5 and HKFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, with an impairment loss on assets
held for sale (disposed vessel) of US$270,000 was recognized in 2020 upon reclassification to assets held for sale and
such impairment loss was included in other operating expenses in 2020.
3.
Reversal of impairment loss:
The reversal of impairment loss on owned vessels recognized in 2021 was US$133,606,000. Details of the events that
led to the recognition of the reversal of impairment loss, reversal of impairment indicators, key assumptions applied in
the value in use calculation, recoverable amounts of impaired assets and the sensitivity analysis are provided in note 5
and note 10.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
107
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
19. INVESTMENT PROPERTIES
2021 2020
US$’000 US$’000
At 1 January 29,479 30,138
Change in fair value (1,334) (659)
At 31 December 28,145 29,479
The Group’s investment properties were stated at fair value and comprised of premises and car parks held under
operating leases to earn rentals or held for capital appreciation, or both. These premises and car parks are held
under long term leases.
At the reporting date, the fair values of the Group’s investment properties were determined by Centaline
Surveyors Limited, an independent qualified professional valuer, on direct comparison approach on annually
basis with reference to comparable transactions available in the relevant locality. In estimating the fair value of
investment properties, the highest and best use of the properties is their current use. The fair value measurement
of these investment properties was categorized as Level 3 of the three-level fair value hierarchy as defined under
IFRS 13 and HKFRS 13 and there was no transfer among the three levels of the fair value hierarchy during the year.
108
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
19. INVESTMENT PROPERTIES (Continued)
Details of the Group’s investment properties and information about the determination of the fair values of these
investment properties, in particular the valuation techniques, significant unobservable inputs and category of
the fair value hierarchy are disclosed as below:
Properties
Fair value
hierarchy
Valuation
technique
Significant
unobservable inputs
Range of
unobservable inputs
Relationship of significant
unobservable inputs to fair value
2021 2020
Premises Level 3 Direct
comparison
method
Market unit sale rate per
square feet, after taking
into account the age,
location and individual
factors such as size, view,
floor level and quality of
building
US$2,100 –
US$3,400
per square feet
US$2,100 –
US$4,200
per square feet
An increase in percentage of market
unit sale rate per square feet would
result in an increase in fair value
measurement of the premises by
the same percentage increase, and
vice versa
Car parks Level 3 Direct
comparison
method
Market unit sale rate per
car park
US$500,000 –
US$513,000
per car park
US$323,000 –
US$430,000
per car park
An increase in percentage of market
unit sale rate per car park would
result in an increase in fair value
measurement of the car park by the
same percentage increase, and
vice versa
JINHUI SHIPPING AND TRANSPORTATION LIMITED
109
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
20. FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI
2021 2020
US$’000 US$’000
Unlisted equity investments
Co-investment in a property project
At 1 January 10,373 6,545
Additions – 2,123
Addition of investment under Special Capital Call
3
– 4,277
Disposal of investment under share repurchase scheme
4
– (4,277)
Change in fair value
1
1,884 1,705
12,257 10,373
Unlisted club membership
At 1 January 370 365
Change in fair value
2
112 5
482 370
12,739 10,743
110
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
20. FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI (Continued)
Notes:
1.
Items that will not be reclassified to profit or loss.
2.
Items that may be reclassified subsequently to profit or loss.
3.
In early February 2020, a wholly owned subsidiary of the Company (the “Co-Investor”) provided additional US$4,276,915
as co-investment supplemental capital call pursuant to a supplemental memorandum (the “Memorandum”) signed
on 31 January 2020 for acquiring 4,276,915 issued non-voting participating class A shares of Dual Bliss Limited (the
“Co-Investment Supplemental Capital Call”). This Co-Investment Supplemental Capital Call was required for all shareholders
of Dual Bliss Limited (“Dual Bliss”) and all other investors of the co-investment in Tower A of One Financial Street
Center, Jing’an Central Business District, Shanghai, the PRC (the “Tower A” or previously named as “T3 Property”) on
a pro rata basis for the purpose of temporarily funding the unwinding of intercompany loan receivable / payable of the
wholly-owned foreign-owned subsidiaries and onshore subsidiaries within the existing structure of the co-investment
vehicle by the special funding (the “Special Fund”) from this Co-Investment Supplemental Capital Call in order to obtain
banking facilities under PRC regulations for the co-investment. The unwinding exercise was a condition precedent for
the bank loan drawdown.
Subject to all applicable PRC governmental and regulatory approvals, the wholly-owned foreign-owned subsidiaries and
onshore subsidiaries within the existing structure of the co-investment vehicle used the Special Fund to unwind the
intercompany loan receivable / payable and upon the fulfilment of the condition precedent for successful drawdown of
the bank loan facilities, the Special Fund had remitted back to respective shareholders in proportion to the shareholdings
under the share repurchase scheme mechanism under the Memorandum.
4. In March 2020, the Co-Investor received a total of US$4,276,915 under the share repurchase scheme and those
4,276,915 issued non-voting participating class A shares of Dual Bliss under the Co-Investment Supplemental Capital
Call had been repurchased and cancelled.
5.
In March 2021, the Co-Investor together with other co-investors signed an unsecured subordinated shareholder loan
agreement with Triple Smart Limited, a special purpose vehicle invested by Dual Bliss, for the purposes of funding
the operating expenditure of Tower A and the Co-Investor agreed to provide a maximum amount of advance up to
US$1,577,000. As of 31 December 2021, advance of US$568,000 was drawdown and the amount was included in loan
receivables.
Pursuant to the co-investment documents, the Co-Investor committed to acquire non-voting participating
class A shares of Dual Bliss of US$10,000,000. Dual Bliss is one of the investors of the co-investment in Tower
A. As at the reporting date, the capital expenditure commitments contracted by the Group but not provided for
was US$372,000 (2020: US$372,000).
JINHUI SHIPPING AND TRANSPORTATION LIMITED
111
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
20. FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI (Continued)
There is no quoted market price in active market for unlisted equity investments. Transactions in such investments
do not occur on a regular basis. The Group uses its net asset value (representing the fair value of the equity
instruments reported by Phoenix Property Investors Limited, the Investment Manager) to determine its fair value
as the Group determined that this is the fair price at which shareholders subscribe and redeem the investments
or determined its fair value with generally accepted pricing models. The fair value measurement of unlisted
equity investments was categorized as Level 3 of the three-level fair value hierarchy as defined under IFRS 13
and HKFRS 13 and there was no transfer among the three levels of the fair value hierarchy during the year.
Unlisted club membership stated at fair value represented investment in club membership which their fair values
can be determined directly by reference to published price quotations in active markets and were categorized as
Level 1 of the three-level fair value hierarchy as defined under IFRS 13 and HKFRS 13 and there was no transfer
among the three levels of the fair value hierarchy during the year.
21. INVENTORIES
Inventories consisted of bunker stock and ship stores on the Group’s vessels. At the reporting date, these
inventories were carried at cost.
22. LOAN RECEIVABLES
2021 2020
US$’000 US$’000
At 1 January 33,358 44,935
Gross new loan originated 568 –
Repayment (24,690) (11,577)
Provision of individual impairment – –
Loan receivables, net of provision 9,236 33,358
Less: Amount receivable within one year (5,538) (5,227)
Amount receivable after one year 3,698 28,131
112
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
22. LOAN RECEIVABLES (Continued)
The maturity of loan receivables (net of impairment loss) is as follows:
2021 2020
US$’000 US$’000
Within one year 5,538 5,227
In the second year 666 8,193
In the third to fifth year 3,032 19,938
9,236 33,358
As at 31 December 2021, the Group’s loan receivables of US$8,668,000 (2020: US$33,358,000) which arise from
asset-based financing, are denominated in United States Dollars and are secured by collaterals provided by the
borrowers, and are repayable with fixed terms agreed with the borrowers; and loan receivables of US$568,000
(2020: nil) which arise from co-investment (as mentioned in note 20), are unsecured and denominated in United
States Dollars and has no fixed repayment terms. During the year, certain borrowers chose to early repay
respective loans and such repayments led to a decrease in loan receivables as at the reporting date. The directors
consider that the credit risk arising from asset-based loan receivables is significantly mitigated by the vessels
held as collateral, with reference to the market values of the vessels which were appraised by independent
qualified appraisal firms.
At the reporting date, these receivables have been reviewed by management to assess impairment allowances
which are based on the evaluation of current creditworthiness and the collection statistics, and are not considered
as impaired. The carrying amount of these loan receivables are considered to be a reasonable approximation
of their fair values.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
113
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
23. TRADE AND OTHER RECEIVABLES
2021 2020
US$’000 US$’000
Trade receivables 2,195 529
Prepayments 4,250 1,257
Rental and other deposits 51 59
Other receivables 13,125 11,074
17,426 12,390
19,621 12,919
Management has a credit policy in place for approving the credit limits and the exposures to credit risk are
monitored such that any outstanding trade receivables are reviewed and followed up on an ongoing basis.
Credit evaluations including assessing the customer’s creditworthiness and financial standing are performed on
customers requiring a credit over certain amount.
The credit terms given to charterers vary from 15 to 60 days according to the types of vessels’ employment.
The carrying amounts of trade and other receivables are considered to be a reasonable approximation of their
fair values due to their short term maturities.
The aging analysis of trade receivables (net of impairment loss) that are past due at the reporting date but not
individually considered to be impaired is included in the following analysis:
2021 2020
US$’000 US$’000
Neither past due nor impaired 258 142
Past due but not impaired
Within 3 months past due 1,937 334
Over 3 months but within 6 months past due – 46
Over 6 months but within 12 months past due – 7
1,937 387
2,195 529
114
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
23. TRADE AND OTHER RECEIVABLES (Continued)
The movement for impairment loss on trade and other receivables is as follows:
2021 2020
US$’000 US$’000
At 1 January 9,259 10,732
Impairment loss recognized 7 329
Reversal of impairment loss (1,793) (1,680)
Written off as uncollectible (85) (122)
At 31 December 7,388 9,259
For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes a loss allowance
based on lifetime ECL at each reporting date. In calculating the ECL, the Group has established a provision matrix
that is based on its historical credit loss experience and external indicators, adjusted for forward-looking factors
specific to the debtors and the economic environment.
For other receivables, the Group measures the loss allowance for other receivables equal to 12-month ECL,
unless when there has been a significant increase in credit risk since initial recognition, the Group recognizes
lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on significant increase in
the likelihood or risk of default occurring since initial recognition.
At the reporting date, the Group had determined trade receivables of US$7,388,000 (2020: US$9,259,000) as
impaired. No impairment loss on other receivables was provided as at 31 December 2021 and 2020.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
115
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
24. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2021 2020
US$’000 US$’000
Held for trading
Listed equity securities 40,193 34,041
Listed debt securities 2,886 5,741
43,079 39,782
Designated as such upon initial recognition
Investment funds 308 251
43,387 40,033
At the reporting date, the fair value measurements of listed equity securities and listed debt securities were
determined by reference to their quoted bid prices in active markets and were categorized as Level 1 and the fair
value measurements of investment funds represented the quoted market prices on the underlying investments
provided by financial institution and were categorized as Level 2 of the three-level fair value hierarchy as defined
under IFRS 13 and HKFRS 13. There was no transfer among the three levels of the fair value hierarchy during
the year.
25. ASSETS HELD FOR SALE
On 15 December 2020, the Group entered into an agreement for the disposal of a Supramax of deadweight
50,777 metric tons at a consideration of US$5,500,000 which was subsequently delivered to the purchaser in
January 2021. For financial reporting purposes, the disposed vessel was reclassified to “Assets held for sale”
in accordance with IFRS 5 and HKFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”,
with an impairment loss on assets held for sale (disposed vessel) of US$270,000 was recognized in 2020 upon
reclassification to assets held for sale and such impairment loss was included in other operating expenses in 2020.
26. AMOUNT DUE TO HOLDING COMPANY
Amount due to holding company is unsecured, interest-free and repayable on demand. The carrying amount of
the amount due is considered to be a reasonable approximation of its fair value.
116
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
27. SHARE CAPITAL
2021 2020
Number of
ordinary shares
of US$0.05 each Amount
Number of
ordinary shares
of US$0.05 each Amount
US$’000 US$’000
Authorized:
At 1 January and 31 December 800,000,000 40,000 800,000,000 40,000
Issued and fully paid:
At 1 January and 31 December 109,258,943 5,463 109,258,943 5,463
At the reporting date, the Company had 2,724 (2020: 2,201) shareholders. Pursuant to the record registered on
the Norwegian Registry of Securities, the major shareholders holding more than 1% of the outstanding shares
at the reporting date were as follows:
Shareholder’s name
Percentage of
total issued capital
Jinhui Holdings Company Limited* 40.81%
BNP Paribas Securities Services BPSS* 23.62%
Nordnet Bank AB 4.16%
JPMorgan Chase Bank, N.A., London 2.52%
Willumsen Thor Inge 1.35%
Kvam, Jan Arvid 1.16%
UBS Switzerland AG 1.04%
74.66%
* BNP Paribas Securities Services BPSS held 16,252,990 shares of the Company in custodian for Jinhui Holdings Company
Limited as at 31 December 2021 and hence Jinhui Holdings Company Limited had approximately 55.69% beneficial
interests in the Company.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
117
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
28. RESERVES
Details of movements in reserves of the Group are set out in the “Consolidated Statement of Changes in Equity”
on page 70.
Share premium
The application of the share premium account is governed by Section 40(2) of the Companies Act 1981 of Bermuda.
Capital redemption reserve
Capital redemption reserve represents the par value of the repurchased and cancelled shares.
Contributed surplus
Contributed surplus will be dealt with in accordance with Section 54 of the Companies Act 1981 of Bermuda.
Revaluation reserve
Revaluation reserve represents the revaluation surplus between the carrying amount of the leasehold land and
building which is owner-occupied and the fair value of that property at the date of reclassification to investment
properties.
Reserve for financial assets at fair value through OCI
Reserve for financial assets at fair value through OCI represents the changes in fair value of financial assets at
fair value through OCI. As at 31 December 2021, the reserve for financial assets at fair value through OCI consists
of recycling and non-recycling portion amounting to income of US$144,000 (2020: US$32,000) and income of
US$2,610,000 (2020: US$726,000) respectively.
118
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
29. SECURED BANK LOANS
The maturity of secured bank loans is as follows:
2021 2020
US$’000 US$’000
Within one year 52,635 56,556
In the second year 21,167 14,320
In the third to fifth year 18,776 37,469
Wholly repayable within five years 92,578 108,345
After the fifth year – –
Total secured bank loans 92,578 108,345
Less: Amount repayable within one year (52,635) (56,556)
Amount repayable after one year 39,943 51,789
During the year, the Group had drawn new secured bank loan of US$12,556,000 (2020: US$19,113,000) and repaid
US$28,323,000 (2020: US$44,683,000).
At the reporting date, secured bank loans represented vessel mortgage loans that were denominated in United
States Dollars, revolving loans, term loans and property mortgage loans that were denominated in Hong Kong
Dollars and United States Dollars. All secured bank loans were committed on floating rate basis ranging from
0.84% to 2.19% (2020: 0.90% to 2.18%) per annum. These loans are secured by certain of the Group’s assets as
disclosed in note 35.
The carrying amount of the secured bank loans is considered to be a reasonable approximation of its fair value.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
119
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
30. TRADE AND OTHER PAYABLES
2021 2020
US$’000 US$’000
Trade payables 156 232
Accrued charges 1,122 921
Taxation payable 30 233
Other payables
Payables related to vessel running cost and
ship operating expenses 18,431 15,886
Hire receipt in advance 1,354 679
Loan interest payables 126 162
Accrued employee benefits 1,551 237
Others 153 160
21,615 17,124
22,923 18,510
The carrying amounts of trade and other payables are considered to be a reasonable approximation of their fair
values.
120
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
31. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
2021 2020
US$’000 US$’000
Profit (Loss) before taxation 194,387 (15,019)
Adjustments for:
Depreciation and amortization 18,848 15,168
Interest income (2,980) (4,957)
Interest expenses 1,749 3,117
Dividend income (1,541) (1,249)
Net gain on disposal of property, plant and equipment (278) –
Loss on write off of property, plant and equipment 2 –
Change in fair value of investment properties 1,334 659
Reversal of impairment loss on owned vessels (133,606) –
Reversal of impairment loss on trade and other receivables, net (1,786) (1,351)
Bad debts written off in respect of trade and other receivables 7 139
Impairment loss on assets held for sale – 270
Cash generated from (used in) operations before
changes in working capital 76,136 (3,223)
Changes in working capital:
Inventories (2,633) 833
Loan receivables 24,122 11,577
Trade and other receivables (5,325) (1,499)
Financial assets at fair value through profit or loss (3,327) 24,109
Trade and other payables 4,652 (1,230)
Amount due to holding company – 22
Changes in working capital 17,489 33,812
Cash generated from operations 93,625 30,589
JINHUI SHIPPING AND TRANSPORTATION LIMITED
121
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
32. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The changes in the Group’s liabilities arising from financing activities are classified as follows:
Vessel
mortgage loans
Other secured
bank loans
Total secured
bank loans
US$’000 US$’000 US$’000
At 1 January 2020 62,628 71,287 133,915
Cash flows:
Drawdown of loans – 19,113 19,113
Repayment of loans (8,273) (36,410) (44,683)
At 31 December 2020 54,355 53,990 108,345
At 1 January 2021 54,355 53,990 108,345
Cash flows:
Drawdown of loans – 12,556 12,556
Repayment of loans (8,443) (19,880) (28,323)
At 31 December 2021 45,912 46,666 92,578
122
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
33. DEFERRED TAXATION
At the reporting date, deferred tax assets have not been recognized in respect of tax losses of US$305,800,000
(2020: US$289,103,000).
Deferred tax assets have not been recognized in respect of tax losses because it is not probable that future
taxable profit will be available against which the unused tax losses can be utilized. Such tax losses do not expire
under current tax legislation.
34. FUTURE OPERATING LEASE ARRANGEMENTS
At the reporting date, the Group had future minimum lease income receivables under non-cancellable operating
leases as follows:
2021 2020
US$’000 US$’000
Within one year:
Premises 47 31
Owned vessels – 33
47 64
In In the second to fifth year:
Premises – 9
47 73
JINHUI SHIPPING AND TRANSPORTATION LIMITED
123
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
35. PLEDGE OF ASSETS
At the reporting date, the Group had certain credit facilities which were secured by the followings:
(a) Legal charges on the Group’s property, plant and equipment (note 18) with an aggregate net book value
of US$308,566,000 (2020: US$189,161,000) and investment properties (note 19) with an aggregate carrying
amount of US$22,873,000 (2020: US$23,872,000);
(b) Assets held for sale with a carrying amount of US$nil (2020: US$5,380,000);
(c) Financial assets at fair value through profit or loss of US$22,170,000 (2020: US$25,940,000);
(d) Deposits totaling US$8,307,000 (2020: US$5,941,000) of the Group placed with banks;
(e) Assignment of nineteen (2020: twenty) subsidiaries’ income in favour of banks; and
(f) Assignment of two (2020: two) subsidiaries’ loan receivables of US$4,668,000 (2020: US$29,358,000) in
favour of bank.
In addition, shares of ten (2020: ten) ship owning subsidiaries were pledged to banks for vessel mortgage loans.
36. CAPITAL EXPENDITURE COMMITMENTS
During the year, capital expenditure on additions of property, plant and equipment was US$81,297,000 (2020:
US$8,890,000).
Pursuant to the co-investment documents, the Co-investor committed to acquire non-voting participating
class A shares of Dual Bliss of US$10,000,000. Dual Bliss is one of the investors of the co-investment in
Tower A. As at the reporting date, the capital expenditure commitments contracted by the Group but not provided
for was US$372,000 (2020: US$372,000).
On 22 December 2021, the Group entered into two agreements in respect of the acquisition of two Supramaxes
each at a consideration of US$17,250,000 and the total consideration of the two vessels is US$34,500,000. The
first vessel is deadweight 56,361 metric tons and the second vessel is deadweight 56,469 metric tons. The first
vessel was delivered to the Group in February 2022 and the second vessel will be delivered to the Group on or
before 30 March 2022. As at the reporting date, the capital expenditure commitments contracted by the Group
but not provided for was US$34,500,000 (2020: nil).
As at the reporting date, the total amount of capital expenditure commitments contracted by the Group but not
provided for was US$34,872,000 (2020: US$372,000).
Save as disclosed above, there was no other significant capital expenditure commitments contracted by the
Group but not provided for as at the reporting date.
124
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
37. RELATED PARTY TRANSACTIONS
Save as disclosed elsewhere in these consolidated financial statements, during the year, the Group had the
following related party transactions:
(a) Receipt of an administrative fee of US$251,000 (2020: US$248,000) from Jinhui Holdings;
(b) Lease payment of US$17,000 (2020: US$17,000) under a short term lease to a fellow subsidiary; and
(c) Compensation of key management personnel as follows:
2021 2020
US$’000 US$’000
Salaries and other benefits 8,968 7,781
Contributions to retirement benefits schemes 443 443
9,411 8,224
Other payables included accrued employee benefits payables to directors and executive personnel of
US$1,203,000 (2020: US$26,000). There is no other balance or transaction related to connected party or
any director and executive personnel and substantial shareholder of the Group.
38. EVENTS AFTER THE REPORTING DATE
Subsequent to the reporting date, the Group entered into an agreement with a third party on 8 March 2022 in
respect of the disposal of a Supramax of deadweight 53,806 metric tons, built in year 2004, at a consideration
of US$13,900,000. The vessel will be delivered to the purchaser on or before 8 April 2022.
39. FINANCIAL RISK MANAGEMENT AND POLICIES
The Group is exposed to financial risks through its use of financial instruments which arise from its business
activities. The financial risks include market risk (mainly comprise of interest rate risk, foreign currency risk and
price risk), credit risk and liquidity risk. The management manages and monitors the financial risk exposures to
ensure appropriate measures are implemented on a timely and effective manner. These policies have been in
place for years and are considered to be effective.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
125
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(a) Categories of financial instruments
At the reporting date, the carrying amounts of financial instruments presented in the consolidated statement
of financial position related to the following categories of financial assets and financial liabilities:
2021 2020
US$’000 US$’000
Financial assets
Financial assets at fair value through OCI
Unlisted equity investments 12,257 10,373
Unlisted club membership 482 370
12,739 10,743
Financial assets at fair value through profit or loss
Listed equity securities 40,193 34,041
Listed debt securities 2,886 5,741
Investment funds 308 251
43,387 40,033
Financial assets at amortized cost
Trade and other receivables 15,368 11,659
Loan receivables 9,236 33,358
Pledged deposits 8,307 5,941
Bank balances and cash 33,328 33,438
66,239 84,396
122,365 135,172
Financial liabilities
Financial liabilities at amortized cost
Trade and other payables 21,536 17,368
Amount due to holding company 149 149
Secured bank loans 92,578 108,345
114,263 125,862
126
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(b) Interest rate risk
Exposures to interest rate risk and the Group’s risk management policies
Interest rate risk relates to the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rate. The Group’s interest rate risk arises primarily from
bank borrowings that were committed on floating rate basis. The Group receives fixed interest income
from investment in debt securities and loan receivables.
The Group manages interest rate risk by monitoring its interest rate profile as set out in note 29.
Sensitivity analysis*
Based on the exposures to bank borrowings of US$92,578,000 (2020: US$108,345,000) at the reporting
date, it was estimated that an increase of 75 (2020: 25) basis points in interest rate, with all other variables
remaining constant, the Group’s net profit would decrease by approximately US$694,000 (2020: net loss
would increase by approximately US$271,000).
The sensitivity analysis above has been determined as if the change in interest rate had occurred at the
reporting date. The basis of 75 (2020: 25) points increase is considered to be reasonably possible change
based on observation of current market conditions and represents the management’s assessment of a
reasonably possible change in interest rate over the period until the next reporting date.
(c) Foreign currency risk
Exposures to foreign currency risk and the Group’s risk management policies
Foreign currency risk relates to the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. The Group’s transactions, assets and liabilities
are mainly denominated in United States Dollars, the functional currency of the Company. Certain of the
Company’s subsidiaries report in Hong Kong Dollars which is linked to United States Dollars at exchange
rate of around US$1.00 to HK$7.80. The Group believes that there will be no significant fluctuation in the
exchange rates between Hong Kong Dollars and United States Dollars.
At the reporting date, the Group was exposed to foreign currency risk primarily through holding certain
bank deposits and investment in equity securities mainly denominated in Singapore Dollars amounting
to SGD13,994,000 and SGD15,060,000, approximately US$10,348,000 and US$11,137,000 respectively
(2020: certain bank deposits and investment in equity securities mainly denominated in Singapore
Dollars amounting to SGD3,433,000 and SGD21,081,000, approximately US$2,579,000 and US$15,837,000
respectively).
* The sensitivity analysis disclosed above represents the risks inherent to the Group’s financial instruments as of each
reporting date. The result of the sensitivity analysis may differ from time to time according to the then prevailing market
conditions.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
127
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(c) Foreign currency risk (Continued)
Sensitivity analysis*
At the reporting date, based on the total exposures to the bank deposits and equity securities mainly
denominated in Singapore Dollars of SGD29,054,000, approximately US$21,485,000 (2020: bank deposits
and equity securities mainly denominated in Singapore Dollars of SGD24,514,000, approximately
US$18,416,000), it was estimated that a depreciation of 5% (2020: 5%) in exchange rate of Singapore
Dollars against United States Dollars would result in a decrease to the Group’s net profit by approximately
US$1,023,000 (2020: an increase to the Group’s net loss by approximately US$877,000) with all other
variables remain constant. The sensitivity analysis had been determined based on the assumed exchange
rate movement of Singapore Dollars (2020: Singapore Dollars) against United States Dollars taking place
at the beginning of the year and held constant throughout the year.
(d)
Price risk
Exposures to price risk and the Group’s risk management policies
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will decline
because of adverse market price movements of the financial instrument. The Group is exposed to price
risk primarily through its investments in listed equity securities and debt securities classified as financial
assets at fair value through profit or loss.
The Group’s portfolio of financial instruments that exposed to price risk at the reporting date is set out
in note 24.
Sensitivity analysis*
Based on the portfolio of listed equity securities held by the Group at the reporting date, if the quoted
prices of the listed equity securities had been decreased by 10% (2020: 10%), the Group’s net profit would
decrease by approximately US$4,019,000 (2020: net loss would increase by approximately US$3,404,000).
Based on the portfolio of listed debt securities held by the Group at the reporting date, if the quoted
prices of the listed debt securities had been decreased by 10% (2020: 10%), the Group’s net profit would
decrease by approximately US$289,000 (2020: net loss would increase by approximately US$574,000).
* The sensitivity analysis disclosed above represents the risks inherent to the Group’s financial instruments as of each
reporting date. The result of the sensitivity analysis may differ from time to time according to the then prevailing market
conditions.
128
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(e) Credit risk
Exposures to credit risk and the Group’s risk management policies
Credit risk relates to the risk that the counterparty to a financial instrument would fail to discharge its
contractual obligations under the terms of the financial instrument and cause a financial loss to the Group.
The Group’s exposures to credit risk mainly arises from granting credit to charterers in the ordinary
course of its operations, loan receivables to third parties and deposits or other financial assets placed
with financial institutions.
Management has a credit policy in place for approving the credit limits and the exposures to credit risk
are monitored such that any outstanding trade receivables are reviewed and followed up on an ongoing
basis. Credit evaluations including assessing the customer’s creditworthiness and financial standing are
performed on customers requiring a credit over certain amount. During the year, impairment loss of
US$7,000 (2020: US$329,000) was provided on the Group’s outstanding trade receivables over one year
past due and reversal of impairment loss on trade receivables of US$1,793,000 (2020: US$1,680,000)
was recognized upon recovery of outstanding trade receivables in prior years, and US$85,000 (2020:
US$122,000) was written off as uncollectible.
The credit terms given to charterers vary from 15 to 60 days according to the types of vessels’ employment.
For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes a loss
allowance based on lifetime ECL at each reporting date. These are the expected shortfalls in contractual
cash flows, considering the potential for default at any point during the life of the financial assets. In
calculating the ECL, the Group has established a provision matrix that is based on its historical credit
loss experience and external indicators, adjusted for forward-looking factors specific to the debtors and
the economic environment.
To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics
and the days past due.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
129
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(e) Credit risk (Continued)
Exposures to credit risk and the Group’s risk management policies (Continued)
On the above basis, the ECL for trade receivables as at 31 December 2021 and 2020 was determined as
follows:
Current
Within
3 months
past due
Over
3 months
but within
6 months
past due
Over
6 months
but within
12 months
past due
Over
12 months
past due Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
2021
Trade receivables
– gross carrying amount 258 1,937 – – 7,388 9,583
Lifetime ECL – – – – 7,388 7,388
ECL rate 0% 0% 0% 0% 100%
2020
Trade receivables
– gross carrying amount 142 334 46 7 9,259 9,788
Lifetime ECL – – – – 9,259 9,259
ECL rate 0% 0% 0% 0% 100%
For other receivables and loan receivables arise from co-investment, the Group measures the loss allowance
for those receivables equal to 12-month ECL, unless when there has been a significant increase in credit
risk since initial recognition, the Group recognizes lifetime ECL. The assessment of whether lifetime ECL
should be recognized is based on significant increase in the likelihood or risk of default occurring since
initial recognition. For the result of the assessment, no impairment loss on other receivables and loan
receivables arise from co-investment was provided as at 31 December 2021 and 2020. The outstanding
balance of those receivables of US$13,741,000 (2020: US$11,130,000) are considered as not deteriorated
significantly in credit quality or with low credit risk. Management believes that there was no significant
increase in credit risk inherent in the Group’s outstanding balance of those receivables.
130
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(e) Credit risk (Continued)
Exposures to credit risk and the Group’s risk management policies (Continued)
For loan receivables arise from asset-based financing, it is recognized at the stage of the financial
instruments that have not deteriorated in credit quality or not credit-impaired on initial recognition or
that have low credit risk as those receivables are with collaterals to cover or limit any potential loss. The
Group continuously monitors its credit risk and measures the loss allowance for these financial assets
equal to 12-month ECL with taking those collaterals into accounts, unless when there has been a significant
increase in credit risk since initial recognition or classified as credit-impaired, the Group recognizes lifetime
ECL. The assessment of whether lifetime ECL should be recognized is based on significant increase in the
likelihood or risk of default occurring since initial recognition or classified as credit-impaired.
The directors consider that the credit risk arising from asset-based loan receivables is significantly
mitigated by the vessels held as collateral, with reference to the market values of the vessels which were
appraised by independent qualified appraisal firms. When the market value of borrowers’ collaterals
falls below the loan-to-value ratio and the borrower is past due on its contractual repayment, the Group
considers loan receivables to have experienced an increase in credit risk. The average credit terms given
to borrowers are generally 15 days. The loan receivables arise from asset-based financing are reviewed by
the management at the reporting date to assess impairment allowance which are based on the evaluation
of current creditworthiness, collection statistic and the market values of the vessels or similar vessels
which were appraised by independent qualified appraisal firms.
For the result of the assessment, by reference to the value of the collateral ships of approximately
US$34.0 million (2020: approximately US$64.2 million) without significant change in the quality, the
management believes that loan receivables arise from asset-based financing of US$8,668,000 (2020:
US$33,358,000) as at 31 December 2021 were concluded as low credit risk without any default events,
modified credit risk or other factors lead to an significant increase in the credit risk. Therefore, no loan
receivables arise from asset-based financing was impaired or written off as at 31 December 2021 and 2020.
For the financial assets at fair value through OCI, the management believes that the credit risk inherent
in the Group is low and counterparties have the capacity to meet their contractual cash flow obligation
in the near term and the ECL recognized is based on the 12-month ECL.
The Group has no significant concentration of credit risk in respect of trade receivables, with exposure
spread over a number of charterers. At the reporting date, the Group did not hold any collateral from
charterers.
Bank deposits are only placed with creditworthy financial institutions. The management does not expect
any financial institutions fail to meet their obligations.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
131
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(f) Liquidity risk
Exposures to liquidity risk and the Group’s risk management policies
Liquidity risk relates to the risk that the Group will not be able to meet its obligations associated with
its financial liabilities. The Group is exposed to liquidity risk in respect of settlement of trade and other
payables and its financing obligations, and also in respect of its cash flow management.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of bank loans and other borrowings. The management regularly monitors the Group’s current
and expected liquidity requirements and its compliance with lending covenants, to ensure it maintains
sufficient reserves of cash and bank balances, readily realizable marketable equity and debt securities and
adequate committed lines of funding from major financial institutions to meet its liquidity requirement.
The analysis below set out the remaining contractual maturity based on undiscounted cash flow of the
Group’s financial liabilities at the reporting date.
Within
one year
In the
second year
In the third
to fifth year
Total
undiscounted
amount
Carrying
amount
US$’000 US$’000 US$’000 US$’000 US$’000
2021
Trade and other payables 21,536 – – 21,536 21,536
Amount due to holding company 149 – – 149 149
Secured bank loans 54,129 21,906 19,093 95,128 92,578
75,814 21,906 19,093 116,813 114,263
2020
Trade and other payables 17,368 – – 17,368 17,368
Amount due to holding company 149 – – 149 149
Secured bank loans 58,460 15,283 38,453 112,196 108,345
75,977 15,283 38,453 129,713 125,862
132
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
40. CAPITAL MANAGEMENT
The Group’s capital management objectives are:
(a) to ensure the Group’s ability to continue as a going concern;
(b) to provide adequate returns for shareholders;
(c) to maintain an optimal capital structure to reduce the cost of capital; and
(d) to support the Group’s stability and sustainable growth.
The Group’s capital management strategies are to rely on internal resources and interest-bearing borrowings to
finance the capital expenditures. The management may make adjustments to its capital structure in the light of
changes in economic conditions, recent market values of the Group’s assets as well as the risk characteristics
of the underlying assets through adjusting the amount of dividends paid to shareholders, issuing new shares
or selling assets to reduce debts.
The Group monitors capital structure on the basis of the gearing ratio. This ratio is calculated as net debts (total
interest-bearing debts net of equity and debt securities, bank balances and cash) over total equity. The gearing
ratio of the Group at the reporting date is calculated as follows:
2021 2020
US$’000 US$’000
Secured bank loans repayable within one year 52,635 56,556
Secured bank loans repayable after one year 39,943 51,789
Total secured bank loans 92,578 108,345
Less: Equity and debt securities (43,079) (39,782)
Less: Bank balances and cash (33,328) (33,438)
Net debts 16,171 35,125
Total equity 432,075 239,160
Gearing ratio 3.74% 14.69%
JINHUI SHIPPING AND TRANSPORTATION LIMITED
133
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
41. PRINCIPAL SUBSIDIARIES
Name
Issued and
paid-up capital /
registered capital
Attributable
equity
interest at
31/12/2021
Attributable
equity
interest at
31/12/2020
Principal
activities
Place of
operation
Incorporated in Bermuda
# Jinhui MetCoke Limited 12,000 ordinary shares
of US$1 each
100% 100% Investment
holding
Worldwide
Incorporated in the British Virgin Islands
Advance Rich Limited 1 share
of US$1 each
100% 100% Investment Worldwide
# Jin Hui Shipping Inc. 50,000 shares
of US$1 each
100% 100% Investment
holding
Worldwide
# Jinhui Investments Limited 1 share
of US$1 each
100% 100% Investment
holding
Worldwide
Incorporated in Hong Kong
Best Flame International
Limited
HK$2 divided into
2 ordinary shares
100% 100% Property
investment
Hong Kong
Fair Fait International Limited HK$2 divided into
2 ordinary shares
100% 100% Property
investment
Hong Kong
Goldbeam International Limited HK$5,000,000
divided into
5,000,000
ordinary shares
100% 100% Ship
management
services,
shipping agent
and investment
Hong Kong
Good Sunshine Limited HK$1 divided into
1 ordinary share
100% 100% Property
investment
Hong Kong
Jinhui Finance (Hong Kong)
Limited
HK$10,000 divided into
10,000 ordinary shares
100% 100% Money
lending
Hong Kong
134
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
Name
Issued and
paid-up capital /
registered capital
Attributable
equity
interest at
31/12/2021
Attributable
equity
interest at
31/12/2020
Principal
activities
Place of
operation
Incorporated in Hong Kong (Continued)
Leadford Industries Limited HK$2 divided into
2 ordinary shares
100% 100% Property
investment
Hong Kong
Monocosmic Limited HK$10,000 divided into
10,000 ordinary shares
100% 100% Property
investment
Hong Kong
Noble Talent Development
Limited
HK$1 divided into
1 ordinary share
100% 100% Property
investment
Hong Kong
Ringo Star Company Limited HK$2 divided into
2 ordinary shares
100% 100% Property
investment
Hong Kong
Union Gold Limited HK$1 divided into
1 ordinary share
100% 100% Property
investment
Hong Kong
Incorporated in the Republic of Liberia
Galsworthy Limited 1 registered share
of US$1 each
100% 100% Ship chartering Worldwide
Goldbeam Shipping Inc. 100 registered shares
of US$1 each
100% 100% Ship chartering Worldwide
Paxton Enterprises Limited 500 registered shares
of US$1 each
100% 100% Ship chartering Worldwide
Sompol Trading Limited 10 registered shares
of US$1 each
100% 100% Ship chartering Worldwide
Wonder Enterprises Ltd. 500 registered shares
of US$1 each
100% 100% Ship chartering Worldwide
41. PRINCIPAL SUBSIDIARIES (Continued)
JINHUI SHIPPING AND TRANSPORTATION LIMITED
135
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
Name
Issued and
paid-up capital /
registered capital
Attributable
equity
interest at
31/12/2021
Attributable
equity
interest at
31/12/2020
Principal
activities
Place of
operation
Incorporated in the Republic of Panama
Jinan Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinao Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jincheng Maritime Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinfeng Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jingang Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinhong Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinji Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinjun Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinlang Marine Inc. 2 registered shares
of US$1 each
100% 100% Ship owning Worldwide
Jinli Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinmei Marine Inc. 2 registered shares
of US$1 each
100% 100% Ship owning Worldwide
41. PRINCIPAL SUBSIDIARIES (Continued)
136
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
Name
Issued and
paid-up capital /
registered capital
Attributable
equity
interest at
31/12/2021
Attributable
equity
interest at
31/12/2020
Principal
activities
Place of
operation
Incorporated in the Republic of Panama (Continued)
Jinquan Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinrong Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinsheng Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinshun Shipping Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinsui Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jintong Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinwan Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinxiang Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinxing Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinyao Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
41. PRINCIPAL SUBSIDIARIES (Continued)
JINHUI SHIPPING AND TRANSPORTATION LIMITED
137
ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Year ended 31 December 2021
Name
Issued and
paid-up capital /
registered capital
Attributable
equity
interest at
31/12/2021
Attributable
equity
interest at
31/12/2020
Principal
activities
Place of
operation
Incorporated in the Republic of Panama (Continued)
Jinyi Shipping Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinyuan Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
Jinyue Marine Inc. 2 common shares
of US$1 each
100% 100% Ship owning Worldwide
# These are direct subsidiaries of the Company. All other companies are indirect subsidiaries.
41. PRINCIPAL SUBSIDIARIES (Continued)
138
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Glossary
This glossary contains the abbreviations and main terms used in the 2021 annual report.
Abbreviations / Main terms Meanings in the annual report
Board Board of Directors;
Chairman Chairman of the Board;
China / PRC The People’s Republic of China;
Company / Jinhui Shipping Jinhui Shipping and Transportation Limited, a limited liability company
incorporated in Bermuda and an approximately 55.69% owned subsidiary of
Jinhui Holdings as at 31 December 2021, whose shares are listed on the Oslo
Stock Exchange (Oslo Børs) (stock code: JIN);
Company Code A set of code adopted by the Company, which sets out the corporate standards
and practices used by the Group;
Continuing Obligations Continuing Obligations for Issuers of Shares as contained in the Oslo Rule
Book II – Issuer Rules issued by Oslo Børs Euronext;
Director(s) Director(s) of the Company;
DWT Deadweight tonnage;
ECL Expected credit loss;
Group Company and its subsidiaries;
HKAS Hong Kong Accounting Standards;
HKFRS Hong Kong Financial Reporting Standards;
JINHUI SHIPPING AND TRANSPORTATION LIMITED
139
ANNUAL REPORT 2021
Glossary
Abbreviations / Main terms Meanings in the annual report
HKICPA Hong Kong Institute of Certified Public Accountants;
Hong Kong The Hong Kong Special Administrative Region of the PRC;
IAS International Accounting Standards;
IASB The International Accounting Standards Board;
IFRS International Financial Reporting Standards;
IMO The International Maritime Organization;
ISM Code The International Safety Management Code;
ISPS Code The International Ship and Port Facility Security Code;
Jinhui Holdings Jinhui Holdings Company Limited, a company incorporated in Hong Kong, whose
shares are listed on the Hong Kong Stock Exchange (stock code: 137);
MARPOL The International Convention for the Prevention of Pollution from Ships;
Nordea Bank Nordea Bank Abp, Filial i Norge;
Norwegian Code of Practice The Norwegian Code of Practice for Corporate Governance issued by the
Norwegian Corporate Governance Board;
Post-Panamax Vessel of deadweight approximately between 90,000 metric tons to 100,000
metric tons;
Shareholder(s) Shareholder(s) of the Company;
140
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2021
Glossary
Abbreviations / Main terms Meanings in the annual report
STCW Convention The International Convention on Standards of Training, Certification and
Watchkeeping for Seafarers;
Supramax(es) Dry cargo vessel(s) of deadweight approximately 50,000 metric tons;
VAT Value added tax;
VPS Verdipapirsentralen ASA (now known as Euronext Securities Oslo, the Norwegian
Central Securities Depository);
HK$ Hong Kong Dollars, the lawful currency of Hong Kong;
SGD Singapore Dollars, the lawful currency of Singapore; and
US$ United States Dollars, the lawful currency of the United States of America.
ANNUAL REPORT
2021
JINHUI SHIPPING
AND TRANSPORTATION LIMITED