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
32 BOARD OF DIRECTORS AND EXECUTIVE PERSONNEL
34 DIRECTORS’ REPORT
62 RESPONSIBILITY STATEMENT
63 INDEPENDENT AUDITOR’S REPORT
69 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
70 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
72 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
73 CONSOLIDATED STATEMENT OF CASH FLOWS
74 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
146 GLOSSARY
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
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
Postboks 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 2022
Chairman’s Statement
The Board is pleased to present the annual report of Jinhui Shipping and Transportation Limited for the financial
year 2022.
2022 was overall a good year for shipping, with the freight environment being steadily driven by a general robust
demand for commodities worldwide. Dry bulk shipping market showed a strong sign of rebound amid global
economic recovery. With the recovery of the pandemic across different countries around the world and the gradual
release from lock-downs, there was a strong rebound of market freight rates driven by robust demand for dry bulk
commodities, limited supply of vessels and COVID-19 related congestion, despite the simultaneous occurrence of
multiple geo-political issues. However, market freight rates were under pressure during second half of 2022, primarily
driven by the interest rate outlook which translates to increasing borrowing costs and correction of risk assets values,
as well as a general expectation of a slower global economic growth going forward given geopolitical conflicts at
multi frontiers.
Revenue for the year 2022 increased 16% to US$152,466,000, comparing to US$131,069,000 for the year 2021 due
to the remarkable rebound of market freight rates driven by robust demand for dry bulk commodities worldwide
and the increase in number of owned and chartered-in vessels as compared to the year 2021. However, there was a
downward correction in market freight rates during the second half of 2022. The average daily time charter equivalent
rate earned by the Group’s fleet decreased to US$18,813 for the year 2022 as compared to US$19,233 for the year
2021. The Company recorded a consolidated net loss of US$7,113,000 for the year 2022, which included a net
impairment loss of US$49,326,000 on owned vessels, as compared to the consolidated net profit of US$194,197,000
which included a reversal of impairment loss of US$133,606,000 on owned vessels for the year 2021. Basic loss per
share for the year was US$0.065 as compared to basic earnings per share of US$1.777 for the year 2021.
During the year, the Group entered into agreements to acquire three vessels and took delivery of five vessels
including two vessels which were committed to acquire in December 2021. 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. In addition, the Group entered into a charterparty with a
third party during the year in respect of leasing of a vessel for a term of seven years. The Group also entered into
agreements to dispose of five vessels during the year. 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 increasing 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. In face of the increasing uncertainties from
the external environment, the Group will continue to stay alert to any unforeseen changes to the market and carry
out any investment decisions cautiously, with a view to create sustainable return to shareholders in long term. As at
31 December 2022, the Group owned twenty four grabs fitted Supramaxes and had one chartered-in Panamax.
The Board recommended the payment of a final dividend of US$0.04 per share for the year ended 31 December
2022 subject to the approval by the shareholders of the Company at the forthcoming annual general meeting of the
Company.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Chairman’s Statement
We continue to maintain a healthy financial position under the existing challenging environment. The Board 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.
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 an extremely challenging 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
17 March 2023
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
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.
The objectives of the Company 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.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Strategies and Business Profile
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.
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.
We have developed policies and procedures intended to ensure our compliance with these laws, regulations and
rules. CII has already come into force 1 January 2023. CII is an annual carbon rating for every vessel, measuring the
efficiency in terms of grams of carbon dioxide emitted per cargo-carrying capacity and nautical mile. From 1 January
2023 onwards, the Group will choose to use AER to replace EEOI for carbon intensity reporting. Jinhui Shipping is
well prepared and ready for all changes, heading to the target of decarbonization.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
Strategies and Business Profile
SHIPPING BUSINESS (Continued)
Owned Vessels
As at 31 December 2022, the Group had twenty four owned vessels and 553 crew employed on board.
Name Type Built Builder Size (dwt)
JIN HENG Supramax 2014 Jiangsu Hantong 63,518
JIN PING Supramax 2014 Jiangsu Hantong 63,485
JIN CHAO Supramax 2014 Jiangsu Hantong 63,469
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 MAO Supramax 2012 Jiangsu Hantong 56,469
JIN BI Supramax 2012 Jiangsu Hantong 56,361
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 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
1,373,222
Chartered-in Vessel
As at 31 December 2022, the Group had one chartered-in vessel.
Name Type Built Size (dwt) Charter-in date Expiry
TAHO CIRCULAR * Panamax 2022 84,484 Jun 2022 Feb 2029
* Industry called this new design as Kamsarmax
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
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
2022 2021
(Expressed as a percentage of revenue) % %
Asia excluding China 83.2 89.0
Australia 7.8 5.8
China 7.0 1.5
North America 1.0 3.1
Europe 1.0 0.6
100.0 100.0
Discharging Ports Analysis
2022 2021
(Expressed as a percentage of revenue) % %
China 79.9 87.5
Asia excluding China 20.1 10.9
North America – 1.6
100.0 100.0
Types of Cargoes carried by the Group’s Fleet
2022 2021
Metric Tons Metric Tons
(in ’000) % (in ’000) %
Minerals 12,047 81.1 8,971 86.1
Coal 1,768 11.9 1,083 10.4
Steel products 940 6.3 364 3.5
Agricultural products 97 0.7 – –
14,852 100.0 10,418 100.0
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
Highlights
KEY PERFORMANCE INDICATORS FOR SHIPPING BUSINESS
2022 2021
US$ US$
Average daily time charter equivalent rate
1
18,813 19,233
Daily vessel running cost
2
5,656 4,624
Daily vessel depreciation
3
4,074 2,587
Daily vessel finance cost
4
155 161
9,885 7,372
Average utilization rate
5
96% 96%
As at 31 December 2022, the Group had twenty-four owned vessels and one chartered-in vessel. Revenue for the
year 2022 increased 16% to US$152,466,000, comparing to US$131,069,000 for the year 2021 due to the remarkable
rebound of market freight rates driven by robust demand for dry bulk commodities worldwide and the increase in
number of owned and chartered-in vessels as compared to the year 2021. However, there was a downward correction
in market freight rates during the second half of 2022. The average daily time charter equivalent rate earned by
the Group’s fleet decreased 2% to US$18,813 for the year 2022 as compared to US$19,233 for the year 2021. Daily
vessel running cost increased to US$5,656 for the year 2022 as compared to US$4,624 for the year 2021 due to the
increased crew costs and other pandemic related manning expenses. Daily vessel depreciation increased to US$4,074
for the year 2022 as compared to US$2,587 for the year 2021 mainly due to the combination effects on the increase
in carrying amounts of the owned vessels after the recognition of the reversal of impairment loss on owned vessels
in 2021, the delivery of acquired owned vessels and the increment in capitalized drydocking costs incurred under the
regular drydocking schedule. Daily vessel finance cost decreased 4% from US$161 for the year 2021 to US$155 for
the year 2022 due to the repayment of vessel mortgage loans as compared with that of the year 2021. Fleet utilization
rate was 96% for both years of 2022 and 2021. We will continue with our cost reduction effort, striving to maintain a
highly competitive cost structure when stacked against other market participants.
Notes:
1. Average daily time charter equivalent rate is calculated as the time charter revenue, and voyage revenue less voyage expenses
divided by the number of available days in the year.
2. Daily vessel running cost is calculated as the aggregate of crew expenses, insurance, consumable stores, spare parts, repairs
and maintenance and other vessels’ miscellaneous expenses divided by ownership days in the year.
3. Daily vessel depreciation is calculated as the aggregate of vessels’ depreciation charge divided by ownership days in the year.
4.
Daily vessel finance cost is calculated as the aggregate of vessels’ finance costs divided by ownership days in the year.
5. Average utilization rate is calculated as the number of operating days divided by the number of available days in the year.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Highlights
FIVE-YEAR FINANCIAL SUMMARY
2022 2021 2020 2019 2018
US$’000 US$’000 US$’000 US$’000 US$’000
Key Items in the Consolidated
Statement of Profit or Loss and
Other Comprehensive Income
Revenue 152,466 131,069 47,118 63,160 76,113
Operating profit (loss) (3,655) 196,136 (11,902) 8,818 11,874
Finance costs (3,438) (1,749) (3,117) (4,323) (3,161)
Profit (Loss) before taxation (7,093) 194,387 (15,019) 4,495 8,713
Taxation (20) (190) (233) – –
Net profit (loss) for the year (7,113) 194,197 (15,252) 4,495 8,713
Other comprehensive income (loss) (2,899) 1,996 1,710 (233) (281)
Total comprehensive income (loss)
for the year attributable to
shareholders of the Company (10,012) 196,193 (13,542) 4,262 8,432
Earnings (Loss) per share
– Basic and diluted US$(0.065) US$1.777 US$(0.140) US$0.041 US$0.080
Key Items in the Consolidated
Statement of Financial Position
Non-current assets 450,708 434,131 262,446 283,113 247,458
Current assets 87,604 113,594 103,718 123,320 114,179
Total assets 538,312 547,725 366,164 406,433 361,637
Total equity 411,137 432,075 239,160 252,702 250,953
Non-current liabilities 73,724 39,943 51,789 64,869 65,677
Current liabilities 53,451 75,707 75,215 88,862 45,007
Total equity and liabilities 538,312 547,725 366,164 406,433 361,637
Other Financial Information
Gearing ratio 5% 4% 15% 14% 0.65%
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
Shareholders’ Diary
Annual general meeting 24 May 2023
Ex dividend date for final dividend 2022 25 May 2023
Payment of final dividend 2022 On or about 16 June 2023
Announcement for the first quarter results 2023 31 May 2023*
Announcement for the second quarter results 2023 31 August 2023*
Announcement for the third quarter results 2023 30 November 2023*
Announcement for the fourth quarter results 2023 29 February 2024*
* Subject to change
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
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 31 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 2022
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 2022
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 2022 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 2022
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 2022 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 objectives 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 57 to 59.
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 2022
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 2022, the Group’s total equity was US$411,137,000, accounting for 76% of its consolidated
total assets. The Board considers the present equity structure to be satisfactory.
Dividend policy
The Company may declare and distribute dividends to the shareholders of the Company. Our policy aims to provide
stable and consistent dividends with steady growth when supported by our earnings whilst ensuring that sufficient
financial resources can be maintained to fund our business growth. In addition, 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. As dry bulk shipping market is cyclic and volatile, it’s particularly
challenging to establish a clear and predictable dividend policy. There can be no assurance that a dividend will be
proposed or declared in any given year.
The Board has resolved to recommend the payment of a final dividend of US$0.04 per share for the year ended
31 December 2022 and such dividend, if approved by the shareholders at the forthcoming annual general meeting
scheduled on 24 May 2023, will be paid to the beneficial owners of the shares of the Company whose names are
registered in the Euronext Securities Oslo, the Norwegian Central Securities Depository, at the close of business on
26 May 2023. The Company’s shares listed on the Oslo Stock Exchange will be traded including dividend up until and
including 24 May 2023. The ex dividend date is 25 May 2023 and the dividend will be paid on or about 16 June 2023.
On 24 August 2022, 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 20 September 2022. The proposed
final dividend as mentioned above, if approved, will bring the total dividends for 2022 to US$0.07 per share.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
Corporate Governance Report
NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
Section 3 Equity and dividends (Continued)
Increase in share capital
At the 2022 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 2022.
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
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.
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 2022.
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NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
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 2022.
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
The Company provides detailed procedures and comprehensive information are distributed to shareholders to allow
shareholders to form the view on all matters to be considered at the general meeting. Shareholders of the Company
are entitled to attend shareholders’ meeting in person or by proxy. Electronic meeting is not applicable as it would
be contrary to the Bye-Laws of the Company. All shareholders who are registered in the Euronext Securities Oslo,
the Norwegian Central Securities Depository, will receive notification of the general meeting. The notice of calling
general meeting and the supporting information, including the procedures for representation at the meeting through
a proxy, the deadline for registering the intention to attend the general meeting, 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.
The annual general meeting approves the annual financial statements, the Directors’ report and the Independent
Auditor’s report and any dividend proposed by the Board. The annual general meeting also approves the
remuneration of members of the Board and consider the guideline for the renumeration of the executive personnel
of the Company, as well as fix the remuneration of the auditor. The meeting agenda may also include authorisation
to purchase own shares, increase the share capital, or any other matters listed in the notice of the general meeting.
Minutes from annual general meetings will be made available on Company’s website immediately after the annual
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 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 dispatch to each
beneficial owner of the shares registered in the Euronext Securities Oslo (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 Euronext Securities Oslo. In order to vote through Nordea Bank at annual or special
general meetings, shareholders must have registered their shareholdings in the Euronext Securities Oslo (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.
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NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
Section 6 General meetings (Continued)
Attendance by shareholders (Continued)
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 in
September 2022, the Company has updated the primary registration of ordinary shares from Nordea Bank to the
beneficial holders thereof, and appointed the Euronext Securities Oslo as a branch register of the Company for the
purposes of the Companies Act 1981 of Bermuda, the Company is compliant with the new CSDR regime.
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. At the meeting, votes shall be cast separately on each subject and for each office / candidate in the
elections. 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 the general
meetings, and the external auditor is present at the annual general meeting. The 2023 Annual General Meeting is
scheduled on 24 May 2023. Notice of 2023 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 dispatched to shareholders of the Company in
late April 2023.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 6 General meetings (Continued)
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.
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, business 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 directors,
including the non-executive directors, have brought a wide spectrum of valuable business experience, knowledge and
professionalism to the Board for its efficient and effective delivery of the Board functions. The biographical details of
the directors of the Company are set out in “Board of Directors and Executive Personnel” on pages 32 and 33.
Board meetings attendance
The Board meets at least quarterly and on other occasions when a Board decision is required on major issues. In
2022, the Board held twelve meetings. The attendance record of each member of the Board is set out below:
Executive Directors Attendance
Ng Siu Fai 12
Ng Kam Wah Thomas 12
Ng Ki Hung Frankie 12
Ho Suk Lin Cathy 12
Non-executive Directors
Tsui Che Yin Frank 12
William Yau 12
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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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 9 The work of the Board of Directors (Continued)
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 review and monitor the Group’s financial reporting, compliance with
legal and regulatory requirements, the nature and scope of audit review as well as the effectiveness of the systems
of risk management and internal control. 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.
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 2022 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.
During the year, five meetings were held by the Audit Committee. Among these meetings, it had reviewed the annual
results of 2021 with external auditor and also the activities of the Group’s risk management and internal control
functions and the interim results of 2022.
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-caliber 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 programs 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 extent 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 2022, 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 findings are reported subsequently at Board meetings to enable the Board
to assess the Group’s risk management and internal control system and 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. Details of the Group’s risk management policies are set out in “Directors’ Report” on
pages 57 to 59 and note 39 to the consolidated financial statements on pages 129 to 137.
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 2023 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.
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
Section 11 & 12 Remuneration of the Board of Directors and executive personnel (Continued)
(b) Variable remuneration component (Continued)
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 2023, 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 2022, and made recommendations to the Board on the remuneration
packages of the individual executive directors and executive personnel for the year 2023 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 2022 are set out in note 13 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.
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.
30
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Corporate Governance Report
NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
Section 13 Information and communications (Continued)
Other market information
Jinhui Shipping maintains the company’s website to disseminate information electronically on a timely basis and
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 conference call, dividend payment and other material transactions through
website of the Company at www.jinhuiship.com and the NewsWeb of the Oslo Stock Exchange (Oslo Børs) at
www.newsweb.no.
In addition, only Directors and delegated officers can act as the Group’s spokesperson and respond to external
enquiries about the Group’s affairs.
Section 14 Take-overs
According to the Norwegian Code of Practice, the board of directors should establish guiding principles for how the
Company 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
the 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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
31
ANNUAL REPORT 2022
Corporate Governance Report
NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
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.
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 2022, 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$210,000 and US$8,000 respectively. Fees paid for other services mainly included fees for tax compliance services
of US$4,000 and review of internal control systems of US$4,000. The auditor’s remuneration excluded VAT as the
external auditor performed its services in Hong Kong, where no VAT being imposed.
32
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Board of Directors and Executive Personnel
BOARD OF DIRECTORS
Mr. Ng Siu Fai, Chairman
Aged 66. 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 60. 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 69. 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 59. 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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
33
ANNUAL REPORT 2022
Board of Directors and Executive Personnel
BOARD OF DIRECTORS (Continued)
Mr. Tsui Che Yin Frank, Non-executive Director
Aged 65. 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. William Yau, Non-executive Director
Aged 55. 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 and Forum Restaurant (1977)
Limited, and a supervisor of Fujian Shishi Rural Commercial Bank Co., Ltd. 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 48. 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 70. 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.
34
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
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 2022.
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 2022 are set out in the “Consolidated Statement of Profit or Loss and Other
Comprehensive Income” on page 69.
The Board has resolved to recommend the payment of a final dividend of US$0.04 per share for the year ended
31 December 2022 and such dividend, if approved by the shareholders at the forthcoming annual general meeting
scheduled on 24 May 2023, will be paid to the beneficial owners of the shares of the Company whose names are
registered in the Euronext Securities Oslo, the Norwegian Central Securities Depository, at the close of business on
26 May 2023. The Company’s shares listed on the Oslo Stock Exchange will be traded including dividend up until and
including 24 May 2023. The ex dividend date is 25 May 2023 and the dividend will be paid on or about 16 June 2023.
On 24 August 2022, 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 20 September 2022. The proposed
final dividend as mentioned above, if approved, will bring the total dividends for 2022 to US$0.07 per share.
ALLOCATION OF NET LOSS
The Board has proposed the net loss of the Group for the year 2022 amounting to US$7,113,000 to be allocated as a
deduction from 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 72.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
35
ANNUAL REPORT 2022
Directors’ Report
DIVIDEND POLICY
The Company may declare and distribute dividends to the shareholders of the Company. Our policy aims to provide
stable and consistent dividends with steady growth when supported by our earnings whilst ensuring that sufficient
financial resources can be maintained to fund our business growth. In addition, 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. As dry bulk shipping market is cyclic and volatile, it’s particularly
challenging to establish a clear and predictable dividend policy. There can be no assurance that a dividend will be
proposed or declared in any given year.
BUSINESS REVIEW
Year 2022 was a challenging year for dry bulk shipping market. In the first half of 2022, dry bulk shipping market
showed strong sign of rebound amid global economic recovery. With the recovery of the pandemic across different
countries around the world and the gradual release from lock-downs, there was a strong rebound of market freight
rates driven by robust demand for dry bulk commodities, limited supply of vessels and COVID-19 related congestion,
despite the simultaneous occurrence of multiple geo-political issues. Dry bulk shipping market sentiment was
changed during the second half of 2022. The freight rates had been softened gradually since the third quarter of
2022 due to the increase in interest rates imposed by various central banks, higher inflation, congestion related to
COVID-19 ease globally, ongoing of multiple geo-political issues. Dry bulk shipping market endured a slump during
the fourth quarter of 2022. The demand for dry bulk commodities was weak due to the slowdown of global economic
growth as a result of high inflation and increase in interest rates, the COVID-19 related issues as well as multiple
geo-political issues that dampened economic activities globally. A further downward correction in the market freight
rates was continued in the fourth quarter of 2022. Baltic Dry Index opened at 2,217 points in January and rose to the
peak at 3,369 points in May and closed at 1,515 points by the end of December 2022. The average of Baltic Dry Index
for the year 2022 was 1,934 points, which compares to 2,943 points in 2021.
Baltic Dry Index & Baltic Supramax Index
Jan
2023
Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul OctJan
2018
Jan
2019
Jan
2020
Jan
2021
Jan
2022
0
1,000
2,000
3,000
4,000
5,000
6,000
Baltic Dry Index
Baltic Supramax Index
Source: Bloomberg
36
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Directors’ Report
BUSINESS REVIEW (Continued)
Average daily time charter equivalent rates 2022 2021
US$ US$
Post-Panamax / Panamax fleet 20,180 19,116
Supramax fleet 18,681 19,247
In average 18,813 19,233
As at 31 December 2022, the Group had twenty four owned vessels and one chartered-in vessel. The Group’s
revenue represents chartering freight and hire income arising from the Group’s owned and chartered-in 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. Revenue for the year 2022 increased 16% to US$152,466,000, comparing to
US$131,069,000 for the year 2021 due to the remarkable rebound of market freight rates driven by robust demand
for dry bulk commodities worldwide and the increase in number of owned and chartered-in vessels as compared to
the year 2021. However, there was a downward correction in market freight rates during the second half of 2022.
The average daily time charter equivalent rate earned by the Group’s fleet decreased 2% to US$18,813 for the year
2022 as compared to US$19,233 for the year 2021. The Company recorded a consolidated net loss of US$7,113,000
for the year 2022, which included a net impairment loss of US$49,326,000 on owned vessels, as compared to the
consolidated net profit of US$194,197,000 which included a reversal of impairment loss of US$133,606,000 on owned
vessels for the year 2021. Basic loss per share for the year was US$0.065 as compared to basic earnings per share of
US$1.777 for the year 2021.
Revenue of US$58,439,000, US$38,867,000 and US$21,929,000 were derived from three charterers that contributed
38%, 25% and 14% respectively to the Group’s revenue for the year 2022. Management has a credit policy in place
for approving the credit limits to charterers and the exposures to credit risk are monitored such that any outstanding
trade receivables are reviewed and followed up on an ongoing basis. For trade receivables from customers, credit
evaluations including assessing the customer’s creditworthiness and financial standing are performed on customers
requiring a credit over certain amount. The management consider that the credit risks inherent in the Group’s
outstanding trade receivables within one year past due was immaterial.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
37
ANNUAL REPORT 2022
Directors’ Report
BUSINESS REVIEW (Continued)
Key Performance Indicators for Shipping Business 2022 2021
US$ US$
Average daily time charter equivalent rate 18,813 19,233
Daily vessel running cost 5,656 4,624
Daily vessel depreciation 4,074 2,587
Daily vessel finance cost 155 161
9,885 7,372
Average utilization rate 96% 96%
Daily vessel running cost increased to US$5,656 for the year 2022 as compared to US$4,624 for the year 2021 due
to the increased crew costs and other pandemic related manning expenses. Daily vessel depreciation increased to
US$4,074 for the year 2022 as compared to US$2,587 for the year 2021 mainly due to the combination effects on the
increase in carrying amounts of the owned vessels after the recognition of the reversal of impairment loss on owned
vessels in 2021, the delivery of acquired owned vessels and the increment in capitalized drydocking costs incurred
under the regular drydocking schedule. Daily vessel finance cost decreased 4% from US$161 for the year 2021 to
US$155 for the year 2022 due to the repayment of vessel mortgage loans as compared with that of the year 2021.
Fleet utilization rate was 96% for both the years of 2022 and 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 2022, the Group had twenty four owned vessels and one chartered-in vessel as follows:
Number of vessels
Owned Chartered-in Total
Panamax fleet – 1 1
Supramax fleet 24 – 24
Total fleet 24 1 25
38
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Directors’ Report
BUSINESS REVIEW (Continued)
In order to remain competitive in the market, the management considered to fine tune the quality of the Group’s
fleet. During the year, the Group entered into agreements to dispose, acquire and charter-in vessels with a view to
maintain a high financial flexibility and operational competitiveness.
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. Both vessels were delivered
to the Group during the first quarter of 2022.
During the first quarter of 2022, the Group entered into two agreements to dispose of two Supramaxes of deadweight
53,806 and 50,259 metric tons respectively at total consideration of US$17,750,000. Both vessels were delivered to the
purchasers at end of March 2022.
On 28 March 2022, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight
63,485 metric tons at a purchase price of US$25,500,000, which was delivered to the Group at end of July 2022.
On 20 May 2022, the Group entered into a charterparty with a third party in respect of leasing of a Panamax of
deadweight 84,484 metric tons, built in year 2022 for a term of seven years commencing on the date of delivery of
the vessel to the Group. The vessel was delivered to the Group in June 2022.
On 9 September 2022, the Group entered into two agreements in respect of the acquisition of two Supramaxes,
each at a purchase price of US$25,375,000 and the total purchase price of the two vessels is US$50,750,000. The first
vessel is deadweight 63,518 metric tons and the second vessel is deadweight 63,469 metric tons. Both vessels were
delivered to the Group during the fourth quarter of 2022.
During the fourth quarter of 2022, the Group entered into three agreements to dispose of two Post-Panamaxes of
deadweight 93,204 and 93,279 metric tons respectively and one Supramax of deadweight 52,050 metric tons at total
consideration of US$47,800,000. These vessels were delivered to the purchasers during the quarter.
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, acquisition or charter-
in of vessels and will make such decisions on an ad hoc basis to maintain a high financial flexibility and operational
competitiveness.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
39
ANNUAL REPORT 2022
Directors’ Report
FINANCIAL REVIEW
Revenue and operating loss. Revenue for the year 2022 increased 16% to US$152,466,000, comparing to
US$131,069,000 for the year 2021 due to the remarkable rebound of market freight rates driven by robust demand
for dry bulk commodities worldwide and the increase in number of owned and chartered-in vessels as compared to
the year 2021. However, there was a downward correction in market freight rates during the second half of 2022. The
average daily time charter equivalent rate earned by the Group’s fleet decreased 2% to US$18,813 for the year 2022
as compared to US$19,233 for the year 2021.
The Company recorded a consolidated operating profit before depreciation and amortization of US$36,215,000 for the
year 2022, which included a net impairment loss of US$49,326,000 on owned vessels, comparing to a consolidated
operating profit before depreciation and amortization of US$214,984,000 for the year 2021, which included a
reversal of impairment loss of US$133,606,000 on owned vessels. The consolidated net loss for the year 2022 was
US$7,113,000, whereas a consolidated net profit of US$194,197,000 was reported for the year 2021. Basic loss per
share for the year was US$0.065 as compared to basic earnings per share of US$1.777 for the year 2021.
Net gain on disposal of owned vessels. During the year, the Group entered into five agreements to dispose of
two Post-Panamaxes and three Supramaxes at total consideration of US$65,550,000 with the total net gain of
US$5,636,000 was recognized on completion of the disposal of these vessels in the year.
Other operating income. Other operating income increased from US$12,616,000 for the year 2021 to US$15,419,000
for the current year mainly due to the write-back of other payables of US$5,167,000 upon the termination of business
relationship with a crew agent. The settled amount was agreed and finalized by both parties and hence, the Group
derecognized the outstanding payable amount thereon during the year. Other operating income for the year 2022 also
included dividend income of US$2,624,000 on investment in listed equity securities and a net gain of US$2,352,000
on bunker arising from shipping operations while the dividend income of US$1,541,000 on investment in listed equity
securities and a net gain of US$4,294,000 on bunker arising from shipping operations were recorded in 2021.
Interest income. Interest income decreased from US$2,980,000 for the year 2021 to US$1,064,000 for the year 2022
mainly due to a drop in interest income from loan receivables as certain borrowers chose to early repay respective
loans in 2021 and 2022.
40
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Directors’ Report
FINANCIAL REVIEW (Continued)
Impairment loss on owned vessels, net. Due to subdued macroeconomic conditions in the second half of 2022, dry
bulk shipping market suffered a slump particularly in the fourth quarter of 2022. The market freight rates continued
to decline. This inevitably introduced volatility to the Group’s business performance, as well as the carrying value of
the Group’s shipping assets. In view of the significant decrease in market value of dry bulk vessels in the market, the
management considered that impairment indication of the Group’s fleet existed at end of 2022.
With due considerations of factors affecting the long term intrinsic values of owned dry bulk vessels in the
impairment review, certain of 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 less than their respective
carrying amounts at end of 2022. Accordingly, a net impairment loss of US$49,326,000 on owned vessels classified in
property, plant and equipment was recognized at 31 December 2022 to reflect the Group’s 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 and fair value less cost of disposal of the Group’s owned vessels. The impairment
loss on owned vessels is non-cash in nature and does not have impact on the operating cash flows of the Group.
Whereas, due to dry bulk shipping market had strengthened remarkedly in 2021, the Group recognized a total reversal
of impairment loss on owned vessels of US$133,606,000.
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$43,524,000 for the year 2021 to US$66,793,000 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$5,656 for the year 2022 as compared to US$4,624 for the year 2021 due to the increased
crew costs and other pandemic related manning expenses. We will continue with our cost reduction effort, striving to
maintain a highly competitive cost structure when stacked against other market participants.
Other operating expenses. Other operating expenses increased to US$8,583,000 for the year 2022, comparing to
US$8,366,000 for the year 2021 due to the Group recorded a net loss of US$2,510,000 on financial assets at fair
value through profit or loss and a fair value loss on investment properties of US$935,000 for the current year, while
a net loss of US$2,570,000 on financial assets at fair value through profit or loss and a fair value loss on investment
properties of US$1,334,000 were recorded in 2021. Other operating expenses for the year 2022 also included directors’
fee of US$777,000, professional fee of US$849,000, auditor’s remuneration related to audit services of US$210,000
and remaining are various office administrative expenses.
Depreciation and amortization. Depreciation and amortization increased from US$18,848,000 for the year 2021 to
US$39,870,000 for the year 2022. The Group’s daily vessel depreciation increased to US$4,074 for the year 2022 as
compared to US$2,587 for the year 2021 mainly due to the combination effects on the increase in carrying amounts
of the owned vessels after the recognition of the reversal of impairment loss on owned vessels in 2021, the delivery
of acquired owned vessels and the increment in capitalized drydocking costs incurred under the regular drydocking
schedule. Depreciation and amortization for the current year also included the recognition of depreciation on right-of-
use assets of US$2,743,000.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
41
ANNUAL REPORT 2022
Directors’ Report
FINANCIAL REVIEW (Continued)
Finance costs. Finance costs increased from US$1,749,000 for the year 2021 to US$3,438,000 for the year 2022. The
increase was mainly attributable to the rising interest rate and the drawdown of new secured bank loans as compared
with that of the year 2021.
Financial assets at fair value through profit or loss. As at 31 December 2022, the Group’s portfolio of investment in
financial assets at fair value through profit or loss was US$29,227,000 (2021: US$43,387,000), in which US$26,812,000
(2021: US$40,193,000) was investment in listed equity securities, US$1,339,000 (2021: US$2,886,000) was investment
in listed and unlisted debt securities and US$1,076,000 (2021: US$308,000) 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$2,510,000 (2021:
US$2,570,000), comprised of a realized gain of US$1,493,000 (2021: US$2,755,000) upon disposal of certain equity and
debt securities during the year, and an unrealized fair value loss of US$4,003,000 (2021: US$5,325,000) on financial
assets at fair value through profit or loss for the year. The aggregate interest income and dividend income from
financial assets was US$3,688,000 (2021: US$4,521,000).
Investment properties. As at 31 December 2022, the Group’s investment properties were stated at fair value of
US$27,210,000 (2021: US$28,145,000) 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.
Right-of-use assets and lease liabilities. During the year, the Group entered into a charterparty with a third party
in respect of leasing of a Panamax of deadweight 84,484 metric tons, built in year 2022 for a term of seven years
commencing on the date of delivery of the vessel to the Group. The vessel was delivered to the Group in June
2022. In accordance with IFRS 16 and HKFRS 16 Leases, the Group recognized the value of the right-of-use assets
which is calculated with the present value of total minimum hire payment at the inception of the lease terms of
the charterparty and corresponding lease liabilities was also recognized in the consolidated statement of financial
position. The Directors consider that the lease of a Panamax newbuilding represents an opportunity for the Group to
increase the carrying capacity with a modern ship at a reasonable price via means other than outright acquisition of
vessels, improving the fleet profile of the Group with minimal immediate capital expenditure, bring chartering freight
and hire income to the Group and enhance the Group’s income and cashflow from core shipping business.
As at 31 December 2022, the carrying amounts of the right-of-use assets and the lease liabilities were US$28,997,000
(2021: nil) and US$29,337,000 (2021: nil) respectively. During the year, the total cash outflow for the lease was
US$3,106,000 (2021: nil).
42
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Directors’ Report
FINANCIAL REVIEW (Continued)
Loan receivables. As at 31 December 2022, the Group’s loan receivables of US$1,342,000 (2021: US$568,000) which
arise from co-investment, are unsecured and denominated in United States Dollars and has no fixed repayment
terms. Whereas, the loan receivables that arise from asset-based financing which are denominated in United States
Dollars and secured by collaterals provided by the borrowers, and are repayable with fixed terms agreed with the
borrowers, were early repaid in full by the borrowers during the year and such repayments led to a decrease in loan
receivables. At the reporting date, no loan receivables arise from asset-based financing (2021: US$8,668,000) was
recorded.
At the reporting date, the loan receivables have been reviewed by management to assess impairment allowances
which are based on the evaluation of current creditworthiness, collection statistics and the net asset value of the
co-investment, and are not considered as impaired. The carrying amount of the loan receivables is considered to be a
reasonable approximation of its fair value.
Trade and other payables. As at 31 December 2022, the Group’s trade and other payables was US$14,833,000 (2021:
US$22,923,000), including trade payables of US$171,000 (2021: US$156,000), accrued charges of US$1,662,000
(2021: US$1,122,000), taxation payable of US$nil (2021: US$30,000) and other payables of US$13,000,000 (2021:
US$21,615,000). Other payables mainly included payables related to vessel running cost and ship operating
expenses of US$10,078,000 (2021: US$18,431,000) for owned vessels, hire receipt in advance of US$874,000 (2021:
US$1,354,000) from charterers, loan interest payables of US$172,000 (2021: US$126,000) and accrued employee
benefits payables of US$1,710,000 (2021: US$1,551,000). The decrease in payables related to vessel running cost and
ship operating expenses was mainly due to the write-back of other payables of US$5,167,000 upon the termination of
business relationship with a crew agent. The settled amount was agreed and finalized by both parties and hence, the
Group derecognized the outstanding payable amount thereon during the year.
Liquidity, financial resources and capital structure. As at 31 December 2022, the Group maintained positive working
capital position of US$34,153,000 (2021: US$37,887,000) and the total of the Group’s equity and debt securities,
bank balances and cash decreased to US$61,504,000 (2021: US$76,407,000). During the year, cash generated from
operations before changes in working capital was US$75,567,000 (2021: US$76,136,000) and the net cash generated
from operating activities after working capital changes was US$88,339,000 (2021: US$91,447,000). The changes in
working capital are mainly attributable to the decrease in equity and debt securities, and decrease in loan receivables
due to certain borrowers chose to early repay respective loans in full in the year.
The Group’s total secured bank loans decreased from US$92,578,000 as at 31 December 2021 to US$82,838,000 as
at 31 December 2022, of which 41%, 19% and 40% 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$66,859,000 (2021:
US$12,556,000) and repaid US$76,599,000 (2021: US$28,323,000). 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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Directors’ Report
FINANCIAL REVIEW (Continued)
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, slightly increased to 5% (2021: 4%) as at 31 December 2022.
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 2022, the Group
is able to service its debt obligations, including principal and interest payments.
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$88,339,000 (2021:
US$91,447,000). 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, 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$72,405,000 (2021: US$70,146,000). Net cash used in investing activities mainly included interest received, dividend
income received and cash payments or receipts in acquisition or disposal of property, plant and equipment during
the year.
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$15,909,000 (2021: US$21,411,000). Cash outflows from financing activities mainly due to
repayment of various secured bank loans, payment of principal and interests of lease liabilities 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$33,353,000 (2021: US$33,328,000).
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FINANCIAL REVIEW (Continued)
Pledge of assets. As at 31 December 2022, the Group’s property, plant and equipment with an aggregate net book
value of US$218,172,000 (2021: US$308,566,000), investment properties with an aggregate carrying amount of
US$22,064,000 (2021: US$22,873,000), financial assets at fair value through profit or loss of US$16,845,000 (2021:
US$22,170,000) and deposits of US$444,000 (2021: US$8,307,000) placed with banks were pledged together with
the assignment of fourteen (2021: nineteen) subsidiaries’ income to secure credit facilities utilized by the Group.
An assignment of two subsidiaries’ loan receivables of US$4,668,000 was also pledged as at 31 December 2021. In
addition, shares of eight (2021: ten) ship owning subsidiaries were pledged to banks for vessel mortgage loans.
Capital expenditures and commitments. During the year, capital expenditure on additions of motor vessels and
capitalized drydocking costs was US$140,482,000 (2021: US$81,231,000) and on other property, plant and equipment
was US$121,000 (2021: US$66,000).
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 (2021: US$372,000).
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. Both vessels were
delivered to the Group during the first quarter of 2022. As at 31 December 2021, the capital expenditure commitments
contracted by the Group but not provided for was US$34,500,000.
As at the reporting date, the total amount of capital expenditure commitments contracted by the Group but not
provided for was US$372,000 (2021: US$34,872,000).
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
Directors’ Report
PROPERTY, PLANT AND EQUIPMENT
Details of movements in property, plant and equipment of the Group during the year are set out in note 19 to the
consolidated financial statements.
SUBSIDIARIES
Details of the Company’s principal subsidiaries are set out in note 42 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 38 to the consolidated financial statements.
EVENTS AFTER THE REPORTING DATE
There was no 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 2022 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.
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.
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Directors’ Report
EMPLOYEES (Continued)
The Group pursues a policy of gender equality. Workload and working hours depend on positions while promotion
and recruitment depend on performance and experience. As at 31 December 2022, the Group had 65 (2021: 64) full-
time employees, of whom 35 (2021: 34) employees were male and 30 (2021: 30) employees were female. As at
31 December 2022, the Board consists of six members, of whom five members are male and one member is female.
Employment and labour standards. To promote a high-quality and diverse workforce, the Group provided equal
opportunities to its employees in respect of recruitment, training and development, job advancement, and
remuneration and benefits. The Group’s staff handbook is designed to communicate important laws and work ethics
surrounding employment, benefits and welfare, training and development, occupational health and safety, and code
of conduct guidelines. It is an essential tool in helping to define the expectations of both the management and the
employees, and to protect employees from unfair or inconsistent treatment and discrimination at work.
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. In addition to
basic salary, the Group offers various performance bonus, employee allowances, overtime payment to compensate
and reward performing employees. The Group maintains a good relationship with its employees and seafarers and
has not experienced any disruption of its operation as a result of industrial disputes.
The Group does not tolerate any use of child or forced labour. During recruitment, human resources department
will verify the personal information of candidates according to the requirements of the Company’s policies and
procedures and check their identity cards to verify their age in order to avoid child labour. Prior to commencement
of employment, employees are provided with key information, such as job duties and working hours of the position
concerned, and the employment conditions are in line with the terms in the employment contract to prevent any
forced labour. Furthermore, our staff undergoing unfair treatment can report through our whistle blowing policy.
We 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.
All employment of the Group is complied with particular local labour legislations and there was no reported incident
of non-compliance or grievances in relation to human rights or labour practices standards and regulations that would
have a material or significant impact on the Group during the reporting period.
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Directors’ Report
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
seafarers on board are trained and certificated in accordance with STCW Convention.
Health and safety. 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.
For the purpose 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. The Group is committed to
preventing any work-related injury to its employees, and has complied with relevant laws and regulations to provide
a safe working environment and protecting employees from occupational hazards. During the years 2022 and 2021
there were no work-related fatalities.
In order to deal with the outbreak of the COVID-19, the Group has implemented several measures including but not
limited to requiring daily health declaration to prevent the spread of virus and all staff to take body temperature
before entering the office area. In order to encourage employees to receive vaccination of COVID-19, the Group
offered vaccination leave for those Hong Kong office employees who took the vaccination of COVID-19. As the
COVID-19 situation persists in 2022, we implemented special and flexible working hours arrangements and
encouraged employees to work from home.
During the year, absence due to sickness was 0.6% (2021: 0.6%) of the total hours worked by employees. Work-
related injuries or accidents was 0.6% (2021: 0.2%) of employees of the Group. During the year, the Group was not
aware of any non-compliance to health and safety related rules and regulations.
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WORKING ENVIRONMENT (Continued)
Development and training. The Group recognizes the importance of skilled and professionally trained employees
to its business growth and future success. Hence, it is firmly believed that it is necessary to improve employees’
professional standards continuously through training. We encourage and support all employees taking training
courses and workshops that are relevant to their job duties to enrich their knowledge and perspective in discharging
their duties.
Management and senior staff had access to a variety of training activities, including attending seminars, workshops
and conferences and receiving regulatory updates relevant to their business and duties, anti-corruption practices
as well as their directors’ duties and responsibilities when acting as directors. They received sufficient internal and
external training to better equip themselves to fulfil their roles in supporting the Group.
We ensure all seafarers 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. We have developed
policies and procedures intended to ensure our compliance with these laws, regulations and rules. In order to reduce
the number of incidents that may happen or minimize the level of accident on vessel, we arranged emergency drill
for seafarers to deal with unexpected situations. We also hold emergency personnel training. Anti-piracy drill will also
be performed periodically for our seafarers for the proper procedure when there is pirate attack happened.
EXTERNAL ENVIRONMENT ISSUES
We are committed to operate our business in an environmentally and socially responsible manner. The Board has
overall responsibility for the long term sustainability and environmental, social and governance strategies which
support growth and enhance value for the business and our stakeholders, as well as contribution to the environment
and the community growing. When setting the standards, we consider the needs and requirements of the business,
our stakeholders and relevant guidelines. We discuss and review the risks and opportunities, performance, progress,
goals and targets regularly to monitor our environmental, social and governance performance, related issues and
potential risks.
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 seafarers 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. 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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2022
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EXTERNAL ENVIRONMENT ISSUES (Continued)
CO
2
and GHG Emissions Target 70% Reduction On Carbon Intensity Emission By 2050 Compared 2008
Target 50% Reduction On GHG Emission By 2050 Compared 2008
The Initial International Maritime Organization (“IMO”) Strategy on the reduction of Carbon Dioxide (“CO
2
”) and
greenhouse gas (“GHG”) emissions from ships, is the framework through which the IMO aims to reduce GHG
emissions from international maritime shipping. The strategy incorporates quantitative carbon intensity and GHG
reduction targets for the international shipping sector by at least 40% reduction in carbon intensity by 2030 and
pursuing efforts towards a 70% reduction by 2050, both compared to 2008 levels.
COP27 was held in November 2022, the message from COP27 is clear for decarbonization. A joint statement was
signed by various related marine participants, committed to the rapid adoption of green hydrogen-based fuels this
decade, to get on track for full decarbonization by 2050.
We support the IMO’s 2023 and 2050 targets as well as COP27. We aim to reduce our AER which is approved by the
IMO. In the short term, we aim at a 15% reduction of AER by 2026 and a 30% reduction by 2030, compared to 2019.
Acting as a participant in the marine market, we always concern the issue of increasing GHG emissions and
consumption of fossil fuels. We owned a modern and high-quality fleet of dry bulk carriers and as at 31 December
2022, the Group had twenty four owned vessels which are all grabs fitted Supramaxes. We ensure our owned fleet
be equipped with proven green and energy efficient equipment and technologies to minimize the emission of toxic
pollutants.
Change to AER
From 1 January 2023 onwards, the Group will choose to use AER to replace EEOI for carbon intensity reporting.
Below showing the EEOI and related index of the Group for the years 2022 and 2021:
EEOI
EEOI is an index showing the amount of CO
2
emission per tonne of cargo carried per mile of sea voyage.
2022: the average EEOI of the fleet is about 12.8 grammes CO
2
/ MT.Mile
2021:
the average EEOI of the fleet is about 13.2 grammes CO
2
/ MT.Mile
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EXTERNAL ENVIRONMENT ISSUES (Continued)
The EEOI of 2022 is about 0.4 grammes decreased from the EEOI of 2021, representing a decrease of 3% as compared
to 2021.
The fuel oil consumption and the corresponding CO
2
emission are the index of showing GHG measurement in tonnes
and intensity of the fleet are as follows:
Fuel oil consumption:
2022: Fuel oil consumption – 105,910 tonnes
2021: Fuel oil consumption – 81,088 tonnes
Corresponding CO
2
emission:
2022: CO
2
emission – 330,551 tonnes
2021: CO
2
emission – 252,959 tonnes
The expansion of fleet size in the year 2022 resulted in increased fuel oil consumption by the fleet vessels and
correspondingly higher CO
2
emission for the year 2022.
Achieve decarbonization
In order to meet the short term and long term target of decarbonization, a mix of design, technical, operational
measures and innovative measures are through below (A) to (E):
(A) EEXI Target All Fleet Vessels Comply EEXI By 2023
(B) EEDI Target Future New Join Vessels Comply EEDI
The IMO’s Marine Environment Protection Committee (“MEPC”) has published a review on the quality of marine
fuels supplied (“MEPC 76”). Subject to the adoption of MEPC 76 in June 2022, the attained EEXI is required to be
calculated and verified by Class American Bureau of Shipping for every vessel and the requirement will enter into
force in 2023.
Our fleet have been evaluated by Class American Bureau of Shipping by end of 2022. A series of modification on the
main and auxiliary machinery will be made to meet with the EEXI requirement accordingly. In order to fill the gap
between the existing EEXI and the required EEXI, we choose to implement Engine Power Limitation. With Engine
Makers evaluation has been made to fleet vessel, engines and respective power limitation will be effective with
individually designed power limitation devices. In the year 2022, the Group acquired three vessels which are already
in compliance with EEDI which is the index for newbuilding ship energy efficiency.
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EXTERNAL ENVIRONMENT ISSUES (Continued)
(C) CII Target Rated C Or Above For All Vessels By 2023
CII is an annual carbon rating from A to E for each vessel. The rating measures how efficiently a vessel transports
goods and is given in grams of CO
2
emitted per cargo-carrying capacity and nautical mile. CII has already come into
force 1 January 2023 and our fleet has joined the Data Collection and Reporting System since 2019, data are analyzed
and verified by American Bureau of Shipping. Rating evaluation will be available by the end of 2023 and we aim at
achieve rated C or above for the fleet on the CII.
(D) SEEMP
SEEMP is a plan approved by American Bureau of Shipping certified in compliance to IMO Resolutions. Our vessels
adopted IMO Data Collection System on fuel consumption to allow us monitor and improve fuel efficiency and to
mitigate emissions. The Group implemented initial SEEMP in 2013, adopted SEEMP Part II in 2021 and SEEMP Part III
in 2022.
SEEMP improves each vessel’s energy efficiency through a series of procedures and efforts. We take below steps:
(i) Planning
(ii) Implementation
(iii) Monitoring
(iv)
Self-evaluation and Improvement
(E)
For
newbuilding projects, we may choose the most energy efficient design and will include the possibility of
using dual fuel engines.
Low sulphur oil
Target Minimum 2% Reduction Compare With Previous Year
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 on 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 more into ECA, our consumption of 0.1% ultra-low sulphur content fuel oil increased in 2022.
Fuel oil consumption:
2022:
0.5% low sulphur content heavy fuel oil consumption – 98,197 tonnes
2021:
0.5% low sulphur content heavy fuel oil consumption – 79,611 tonnes
2022:
0.1% ultra-low sulphur content fuel oil consumption – 7,713 tonnes
2021:
0.1% ultra-low sulphur content fuel oil consumption – 1,477 tonnes
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EXTERNAL ENVIRONMENT ISSUES (Continued)
Hazardous waste and non-hazardous produced Target Zero Hazardous & Non-Hazardous Waste
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 were committed to operate our vessels in compliance with MARPOL regulations pertaining to hazardous
ozone depleting substances; and there was no material marine waste discharge or environment pollution incidents
happened in the years 2022 and 2021.
Garbage and waste management plan Target <1.5m
3
Garbage Disposed Per Vessel / Month
The Group also implements garbage and waste management plan for all vessels. All vessels are equipped with
colored recycle trashes for garbage sorting. It is aimed to dispose garbage and waste in a diversified way ashore.
The purpose is not only to reduce the level of waste but also have economic benefits to the Group. The less garbage
disposed; the less wastage charged by each local port when the ship reach that port for discharge.
Water consumption
Target <3 Tonnes Per Vessel Per Day By 2030
Fresh water consumption for the use of boiler, machinery cooling and deck and hold cleaning is produced from the
vessel’s own desalination plants on board and running on waste heat of engines. This reduces the need to source
fresh water from ashore and less consume of natural water. Fresh water is consumed for drinking, cooking and other
domestic
purposes. Water consumption reduced from 7 tonnes per vessel per day in 2021 to 6 tonnes of water per
vessel per day in 2022.
2022:
Water consumption – 66,000 tonnes
2021:
Water consumption – 49,000 tonnes
The increase in water consumption of our fleet vessels for the year 2022 was mainly attributable to the expansion of
fleet size during the year.
Ballast water management
Target All Vessels Installed BWTS By 2023
Target Zero Failure In The Ballast Water Record Book
Ballast water is essential for safe and efficient modern shipping operations, it may pose serious ecological, economic
and health problems due to the multitude of marine species carried in ships’ ballast water. These include bacteria,
microbes, small invertebrates, eggs, cysts and larvae of various species. The Group started the investing project and
installing BWTS to our fleet in 2021. We implemented ballast water management with clearly stated instructions for
dealing with ballast water in different situations and ensure the ballast water management plans are carried out to
the standards set out by IMO.
Over 80% of our vessels are equipped with BWTS at the end of year 2022, and the rest
is going to finish the installation scheduled in the year of 2023.
Climate change
We understand climate change affects our business and operations, hence it is crucial for the Group to react to
prevent the risks associated with the climate change. To enable a comprehensive review of the climate risks and
opportunities, the Group conducted a climate risk assessment and scenario analysis. We diversified climate-related
risks into physical risks and transition risks.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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EXTERNAL ENVIRONMENT ISSUES (Continued)
Physical risks
Acute risk – long term The increased frequency and severity of extreme weather such as typhoons, cold waves, sea
level rise and increasing tropical cyclones can disrupt the Group’s operations by damaging the fleet, power grid, and
communication infrastructures, and injuring employees during their work, leading to reduced capacity and decreased
in productivity, or expose the Group to risks associated with non-performance and delayed performance. These risks
affect the operational ability of the organization resulting in both reputational damage and direct loss of revenue.
To minimize the potential risks and hazards, the Group has obtained typhoon-related information by applying high-
altitude, ground and global meteorological network and other high technologies. Captains were assigned as the first
responsible person of vessel safety who has the right to decide what reaction to take to avoid or facing the extreme
events. Captains shall also organize all seafarers to acquire knowledge of possible threats in order to better protect
life and vessels.
Transition risks
Policy and legal risk – short to medium term
The
Group anticipates that there will be more stringent climate
legislations and regulations to support the global vision of carbon neutrality. From a listed company’s perspective,
the Group acknowledges the increasing requirements of climate-related information disclosures.
The Group’s compliance cost may increase as a result of stricter environmental laws and regulations, and stricter
environmental laws and regulations may expose the Group to higher risks of claims and lawsuits.
Market and reputational risk – short to medium term Corporate reputation may also decline due to failure to
meet the compliance requirements for climate change. The Group’s related capital investment and compliance
costs thus increase. In response to the policy and legal risks as well as the reputation risks, the Group regularly
monitors existing and emerging trends, policies and regulations relevant to climate and be prepared to alert the top
management where necessary to avoid cost increments, non-compliance fines or reputational risks due to delayed
response.
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 seafarers, 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, Mr. Tsui Che Yin Frank will retire from office at the forthcoming annual
general meeting and, being eligible, will offer himself for re-election.
Brief biographical details of the Directors and executive personnel are set out in “Board of Directors and Executive
Personnel”on pages 32 and 33.
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.
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55
ANNUAL REPORT 2022
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) As at 31 December 2022, directors’ interests in shares of the Company were as follows:
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% interests in Fairline
Consultants Limited.
In addition, another beneficial owner of 49% interests in Fairline Consultants Limited, being a close associate of
Mr. Ng Siu Fai, is also the beneficial owner of 1,400,389 shares of the Company as at 31 December 2022.
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.
56
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
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 2022.
Number of shares in Jinhui Holdings
held and capacity
Name
Beneficial
owner
Interest of
spouse
Interest in
corporation Total
Ng Siu Fai 24,725,000 15,140,000 205,325,568 245,190,568
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 2022 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
57
ANNUAL REPORT 2022
Directors’ Report
CORPORATE GOVERNANCE
Jinhui Shipping recognizes the importance of good corporate governance to the Company’s value creation. The
corporate governance report of 2022 was set out in “Corporate Governance Report” on pages 12 to 31, 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.
In order to remain competitive in the market, the management considered to fine tune the quality of the Group’s
fleet. During the year, the Group entered into agreements to dispose, acquire and charter-in vessels with a view to
maintain a high financial flexibility and operational competitiveness.
During the first quarter of 2022, the Group entered into two agreements to dispose of two Supramaxes at total
consideration of US$17,750,000 and the disposal of these vessels was completed in the first quarter of 2022.
58
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Directors’ Report
RISK MANAGEMENT (Continued)
On 28 March 2022, the Group entered into an agreement in respect of the acquisition of a Supramax at a purchase
price of US$25,500,000, which was delivered to the Group at end of July 2022.
On 20 May 2022, the Group entered into a charterparty with a third party in respect of leasing of a Panamax of
deadweight 84,484 metric tons, built in year 2022 for a term of seven years commencing on the date of delivery of
the vessel to the Group. The vessel was delivered to the Group in June 2022.
On 9 September 2022, the Group entered into two agreements in respect of the acquisition of two Supramaxes, each
at a purchase price of US$25,375,000 and the total purchase price of the two vessels is US$50,750,000. Both vessels
were delivered to the Group during the fourth quarter of 2022.
During the fourth quarter of 2022, the Group entered into three agreements to dispose of two Post-Panamaxes and
one Supramax at total consideration of US$47,800,000, the disposal of these vessels was completed during the fourth
quarter of 2022.
Total carrying capacity of the Group’s owned vessels is 1,373,222 metric tons after the completion of the acquisition
and disposal of the above vessels.
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, acquisition
or charter-in of vessels and will make such decisions on an ad hoc basis to maintain a high financial flexibility and
operational competitiveness.
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
59
ANNUAL REPORT 2022
Directors’ Report
RISK MANAGEMENT (Continued)
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 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.
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.
60
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Directors’ Report
OUTLOOK
2022 was overall a good year for shipping, with the freight environment being steadily driven by a general robust
demand for commodities worldwide. As discussed before, volatility is expected given any changes in monetary
policies or material geo-political issues will affect business sentiment, or in some cases business practices or trade
patterns will be affected. Shipping will not be shipping without a good dose of volatility. 2023 turns out to be very
different so far.
There has been a general slowdown in economic activities since second half of 2022, primarily driven by the interest
rate outlook which translates to increasing borrowing costs and correction of risk assets values, as well as a general
expectation of a slower global economic growth going forward given geopolitical conflicts at multi frontiers. Freight
rates of dry bulk shipping has been weakening as a result which has carried on since 2023 began.
When we look purely at the industry fundamentals, the supply of new vessels remain low. However, demand for
commodities has become increasingly uncertain where worries over the economic growth in 2023 persistently linger
over all industries. Transportation of certain commodities will undergo profound and complex changes given the
variables that affect our business are a combination of industry specific, economical, as well as geopolitically driven.
With the expected global dry bulk fleet growth at historical lows, and with no consensus in the shipping with regards
to the next generation engine design to reduce carbon emission, new vessel orders are expected to be few. Looking
ahead, should signs of economic recovery gains momentum, our fleet will be 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. In
light of the expected slowdown in global economic growth as well as a weakening freight market, we have decided
to revalue downwards the value of our fleet. 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 an extremely challenging environment, as well as all
customers and stakeholders for their ongoing support.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
61
ANNUAL REPORT 2022
Directors’ Report
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 www.newsweb.no.
17 March 2023
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 2022
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 2022 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.
17 March 2023
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
63
ANNUAL REPORT 2022
Independent Auditor’s Report
To the members of
Jinhui Shipping and Transportation Limited
(Incorporated in Bermuda with limited liability)
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 69 to 145, which comprise the consolidated statement of
financial position as at 31 December 2022, 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 2022, 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.
64
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
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 and leased vessels
The Key Audit Matters How the matter was addressed in our audit
Refer to notes 4.11, 5 and 19 to the consolidated financial
statements.
Our audit procedures included:
The Group’s carrying amount of motor vessels and
capitalised drydocking costs included in property, plant
and equipment and leased vessel included in right-of-use
assets amounted to US$375,335,000 and US$28,997,000
respectively as at 31 December 2022 and a net impairment
loss of US$49,326,000 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 and leased 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
in assessing whether there is any objective evidence of
impairment and reversal of impairment loss of such owned
and leased vessels.
–
e
valuating the process of identifying indicators of
potential impairment or reversal of impairment on
owned vessels and right-of-use assets;
–
evaluating VIU calculation prepared by the
management’s expert including the methodology and
assumptions adopted;
–
testing, on a sample basis, the mathematical accuracy
of the VIU calculation;
–
assessing the reasonableness of the key assumptions
including discount rate, hire rates, useful life and
utilization rate by comparing the current year actual
performance and prior year projections and by reference
to the market and industry information;
–
involving our valuation specialists in assessing the
appropriateness of the discount rate and hire rates;
JINHUI SHIPPING AND TRANSPORTATION LIMITED
65
ANNUAL REPORT 2022
Independent Auditor’s Report
KEY AUDIT MATTERS (Continued)
Carrying value of owned and leased vessels (Continued)
The Key Audit Matters How the matter was addressed in our audit
Refer to notes 4.11, 5 and 19 to the consolidated financial
statements.
Our audit procedures included:
The recoverable amounts of owned and leased vessels
were determined based on higher of fair value less costs
of disposal reference to market transactions, or the value
in use (“VIU”) calculation which is estimated based on the
estimated future cash flows projections from the continuous
use of such vessels. Independent qualified appraisal firms
were engaged by management to appraise VIU calculation
as the VIU 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 and leased vessels and the fair value.
We focused on this area considering the significance of
judgements and estimates and the financial impacts of the
impairment assessment in respect of the Group’s owned
and leased vessels.
– evaluating the fair values estimated by the
management’s expert including the methodology and
assumptions adopted;
–
involving our valuation specialist in assessing the
reasonableness of fair values estimated; and
–
testing, on a sample basis, the mathematical accuracy
of the impairment assessment with reference to
the estimated recoverable amounts based on VIU
calculation or fair value less costs of disposal.
We obtained supportive evidence for the significant
judgements and estimates in respect of VIU calculation
and key assumptions applied in the estimated future cash
flows projections and the estimation of fair value less cost
of disposal.
66
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Independent Auditor’s Report
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises all the information in the 2022
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
67
ANNUAL REPORT 2022
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.
68
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
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
17 March 2023
Chi-Kit Shaw
Practising Certificate No.: P04834
JINHUI SHIPPING AND TRANSPORTATION LIMITED
69
ANNUAL REPORT 2022
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Year ended 31 December 2022
2022 2021
Note US$’000 US$’000
Revenue 7 152,466 131,069
Net gain on disposal of owned vessels 8 5,636 –
Other operating income 9 15,419 12,616
Interest income 10 1,064 2,980
Reversal of impairment loss (Impairment loss) on
owned vessels, net 11 (49,326 ) 133,606
Shipping related expenses (66,793 ) (43,524 )
Staff costs 12 (13,668 ) (13,397 )
Other operating expenses (8,583 ) (8,366 )
Operating profit before depreciation and amortization 36,215 214,984
Depreciation and amortization (39,870 ) (18,848 )
Operating profit (loss) (3,655 ) 196,136
Finance costs (3,438 ) (1,749 )
Profit (Loss) before taxation (7,093 ) 194,387
Taxation 16 (20 ) (190 )
Net profit (loss) for the year (7,113 ) 194,197
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss:
Change in fair value of financial assets at
fair value through OCI (non-recycling) (2,861 ) 1,884
Items that may be reclassified subsequently to profit or loss:
Change in fair value of financial assets at
fair value through OCI (recycling) (38 ) 112
Total comprehensive income (loss) for the year
attributable to shareholders of the Company (10,012 ) 196,193
Earnings (Loss) per share 17
– Basic and diluted US$(0.065 1.777
70
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Consolidated Statement of Financial Position
As at 31 December 2022
2022 2021
Note US$’000 US$’000
ASSETS
Non-current assets
Property, plant and equipment 19 384,661 389,549
Right-of-use assets 20(a) 28,997 –
Investment properties 21 27,210 28,145
Financial assets at fair value through OCI 22 9,840 12,739
Loan receivables 24 – 3,698
Current assets
Inventories 2,993 3,413
Loan receivables 24 1,342 5,538
Trade and other receivables 25 20,245 19,621
Financial assets at fair value through profit or loss 26 29,227 43,387
Pledged deposits 36(c) 444 8,307
Bank balances and cash 33,353 33,328
Total assets 538,312 547,725
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 28 5,463 5,463
Reserves 405,674 426,612
Total equity 411,137 432,075
JINHUI SHIPPING AND TRANSPORTATION LIMITED
71
ANNUAL REPORT 2022
Consolidated Statement of Financial Position
As at 31 December 2022
2022 2021
Note US$’000 US$’000
Non-current liabilities
Secured bank loans 30 48,560 39,943
Lease liabilities 20(b) 25,164 –
Current liabilities
Trade and other payables 31 14,833 22,923
Amount due to holding company 167 149
Secured bank loans 30 34,278 52,635
Lease liabilities 20(b) 4,173 –
Total equity and liabilities 538,312 547,725
Approved and authorized for issue on 17 March 2023
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
72
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Consolidated Statement of Changes in Equity
Year ended 31 December 2022
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 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
At 1 January 2022 5,463 95,585 719 16,297 476 2,754 310,781 432,075
Comprehensive loss
Net loss for the year – – – – – – (7,113 ) (7,113 )
Other comprehensive loss
Change in fair value of financial
assets at fair value through OCI – – – – – (2,899 ) – (2,899 )
Total comprehensive loss
for the year – – – – – (2,899 ) (7,113 ) (10,012 )
2021 final dividend paid – – – – – – (7,648 ) (7,648 )
2022 interim dividend paid – – – – – – (3,278 ) (3,278 )
Total dividend paid – – – – – – (10,926 ) (10,926 )
At 31 December 2022 5,463 95,585 719 16,297 476 (145 ) 292,742 411,137
JINHUI SHIPPING AND TRANSPORTATION LIMITED
73
ANNUAL REPORT 2022
Consolidated Statement of Cash Flows
Year ended 31 December 2022
2022 2021
Note US$’000 US$’000
OPERATING ACTIVITIES
Cash generated from operations 32 91,249 93,625
Interest paid (2,690 ) (1,785 )
Hong Kong Profits Tax paid (220 ) (393 )
Net cash from operating activities 88,339 91,447
INVESTING ACTIVITIES
Interest received 906 3,382
Dividend income received 2,624 1,514
Purchase of property, plant and equipment (140,603 ) (81,297 )
Proceeds from disposal of property, plant and equipment, net 64,668 875
Proceeds from disposal of assets held for sale, net – 5,380
Net cash used in investing activities (72,405 ) (70,146 )
FINANCING ACTIVITIES
New secured bank loans 66,859 12,556
Repayment of secured bank loans (76,599 ) (28,323 )
Decrease (Increase) in pledged deposits 7,863 (2,366 )
Payment of lease liabilities (2,403 ) –
Interest paid on lease liabilities (703 ) –
Dividends paid to shareholders of the Company (10,926 ) (3,278 )
Net cash used in financing activities (15,909 ) (21,411 )
Net increase (decrease) in cash and cash equivalents 25 (110 )
Cash and cash equivalents at 1 January 33,328 33,438
Cash and cash equivalents at 31 December 33,353 33,328
74
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
75
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
76
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
77
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
78
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
79
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
80
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
81
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
82
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
83
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
84
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
85
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
86
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
87
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
88
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
89
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
90
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
91
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
92
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
93
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
94
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ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
95
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
96
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
97
ANNUAL REPORT 2022
98
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
99
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
100
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
101
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
102
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
103
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
104
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
105
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
106
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
107
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
108
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
109
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
110
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
111
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
112
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
113
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
114
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
115
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
116
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
117
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
118
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
119
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
120
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
121
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
122
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
123
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
124
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
125
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
126
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
127
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
128
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
129
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
130
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
131
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
132
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
39. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
* 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
133
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
134
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
135
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
136
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
137
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
138
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
139
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
41. STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CHANGES IN EQUITY OF
THE COMPANY
(a) Statement of financial position of the Company
2022 2021
US$’000 US$’000
ASSETS
Non-current assets
Investments in subsidiaries 8,723 8,723
Current assets
Other receivables 7 6
Amount due from subsidiaries 306,730 289,544
Bank balances and cash 91 40
306,828 289,590
Total assets 315,551 298,313
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 5,463 5,463
Reserves 309,348 292,102
Total equity 314,811 297,565
Current liabilities
Other payables 66 91
Amount due to subsidiaries 507 508
Amount due to holding company 167 149
740 748
Total equity and liabilities 315,551 298,313
140
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
41. STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CHANGES IN EQUITY OF
THE COMPANY (Continued)
(b) Statement of changes in equity of the Company
Issued
capital
Share
premium
Capital
redemption
reserve
Contributed
surplus
Retained
profits
Total
equity
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2021 5,463 95,585 719 16,297 56,446 174,510
Profit and total comprehensive income
for the year – – – – 126,333 126,333
2021 interim dividend paid – – – – (3,278) (3,278)
At 31 December 2021 5,463 95,585 719 16,297 179,501 297,565
At 1 January 2022 5,463 95,585 719 16,297 179,501 297,565
Profit and total comprehensive income
for the year – – – – 28,172 28,172
2021 final dividend paid – – – – (7,648) (7,648)
2022 interim dividend paid – – – – (3,278) (3,278)
Total dividend paid – – – – (10,926) (10,926)
At 31 December 2022 5,463 95,585 719 16,297 196,747 314,811
JINHUI SHIPPING AND TRANSPORTATION LIMITED
141
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
142
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
143
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
144
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
JINHUI SHIPPING AND TRANSPORTATION LIMITED
145
ANNUAL REPORT 2022
Notes to the Consolidated Financial Statements
Year ended 31 December 2022
146
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Glossary
This glossary contains the abbreviations and main terms used in the 2022 annual report.
Abbreviations / Main terms Meanings in the annual report
AER Annual Efficiency Ratio;
Board Board of Directors;
BWTS Ballast Water Treatment System;
Chairman Chairman of the Board;
China / PRC The People’s Republic of China;
CII Carbon Intensity Indicator;
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 2022, 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;
COP27 The 27th Conference of the United Nations Climate Change Conference;
Director(s) Director(s) of the Company;
DWT Deadweight tonnage;
ECL Expected credit loss;
EEDI Energy Efficiency Design Index;
EEOI Energy Efficiency Operational Indicator;
EEXI Energy Efficiency Existing Ship Index;
Euronext Securities Oslo the Norwegian Central Securities Depository, formerly known as Verdipapirsentralen
ASA (VPS);
JINHUI SHIPPING AND TRANSPORTATION LIMITED
147
ANNUAL REPORT 2022
Glossary
Abbreviations / Main terms Meanings in the annual report
GHG Greenhouse Gas;
Group Company and its subsidiaries;
HKAS Hong Kong Accounting Standards;
HKFRS Hong Kong Financial Reporting Standards;
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;
148
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2022
Glossary
Abbreviations / Main terms Meanings in the annual report
Norwegian Code of Practice The Norwegian Code of Practice for Corporate Governance issued by the
Norwegian Corporate Governance Board;
Panamax Vessel of deadweight approximately between 70,000 metric tons to 90,000 metric
tons;
Post-Panamax(es) Vessel(s) of deadweight approximately between 90,000 metric tons to 100,000
metric tons;
Shareholder(s) Shareholder(s) of the Company;
SEEMP Ship Energy Efficiency Management Plan;
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;
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.
JINHUI SHIPPING
AND TRANSPORTATION LIMITED