| 19 | Investments accounted for using the equity method |
The amounts recognised in the balance sheet are as follows:
| 2016 | 2017 | |||||||
| RMB’000 | RMB’000 | |||||||
| Associates |
||||||||
| -Share of net assets |
3,498,097 | 4,239,795 | ||||||
| Joint ventures |
||||||||
| -Share of net assets |
190,697 | 212,249 | ||||||
|
|
|
|
|
|||||
| 3,688,794 | 4,452,044 | |||||||
|
|
|
|
|
|||||
The amounts recognised in the share of profit of investments accounted for using the equity method are as follows:
| 2016 | 2017 | |||||||
| RMB’000 | RMB’000 | |||||||
| Associates |
929,315 | 1,200,141 | ||||||
| Joint ventures |
(12,561 | ) | 43,552 | |||||
|
|
|
|
|
|||||
| 916,754 | 1,243,693 | |||||||
|
|
|
|
|
|||||
Investment in associates
| 2016 | 2017 | |||||||
| RMB’000 | RMB’000 | |||||||
| As at 1 January |
3,074,156 | 3,498,097 | ||||||
| Share of profit |
929,315 | 1,200,141 | ||||||
| Other comprehensive income |
18,213 | (810 | ) | |||||
| Cash dividends distribution |
(523,587 | ) | (457,633 | ) | ||||
|
|
|
|
|
|||||
| As at 31 December |
3,498,097 | 4,239,795 | ||||||
|
|
|
|
|
|||||
Set out below are the material associates of the Group as at 31 December 2017. The associates as listed below have share capital consisting solely of ordinary shares, which are held directly by the Group; the country of incorporation or registration is also their principal place of business.
Principal activities of material associates as at 31 December 2017 and 2016.
| Name of entity | Place of business/country of incorporation |
% of ownership interest |
Nature of the relationship | Measurement method |
||||||||||||
| Shanghai Secco Petrochemical Company Limited [“Shanghai Secco”] |
PRC | 20 | |
Manufacturing and distribution of chemical products |
|
Equity | ||||||||||
| Shanghai Chemical Industry Park Development Company Limited [“Chemical Industry”] |
PRC | 38.26 | |
Planning, development and operation of the |
|
Equity | ||||||||||
| Shanghai Jinsen Hydrocarbon Resins Company Limited [“Jinsen”] |
PRC | 40 | |
Production of resins products |
|
Equity | ||||||||||
| Shanghai Azbil Automation Company Limited[“Azbil”] |
PRC | 40 | |
Service and maintenance of building automation systems and products |
|
Equity | ||||||||||
Shanghai Secco, Chemical Industry, Jinsen and Azbil are private companies and there are no quoted market prices available for their shares.
There are no contingent liabilities relating to the Group’s interest in the associates.
Summarised financial information for major associates
Set out below are the summarised financial information for the above associates.
Summarised balance sheet for material associates
| As at 31 December 2016 | Shanghai Secco RMB’000 |
Chemical Industry RMB’000 |
Jinsen RMB’000 |
Azbil RMB’000 |
||||||||||||
| Current |
||||||||||||||||
| -Current assets |
5,596,573 | 4,265,139 | 110,499 | 153,980 | ||||||||||||
| -Current liabilities |
(1,982,932 | ) | (1,299,046 | ) | (10,324 | ) | (46,532 | ) | ||||||||
| Non-current |
||||||||||||||||
| -Non-current assets |
6,582,633 | 3,001,112 | 83,077 | 3,145 | ||||||||||||
| -Non-current liabilities |
— | (1,655,448 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net assets |
10,196,274 | 4,311,757 | 183,252 | 110,593 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| As at 31 December 2017 | Shanghai Secco RMB’000 |
Chemical Industry RMB’000 |
Jinsen RMB’000 |
Azbil RMB’000 |
||||||||||||
| Current |
||||||||||||||||
| -Current assets |
11,601,793 | 3,615,350 | 105,178 | 168,675 | ||||||||||||
| -Current liabilities |
(4,173,984 | ) | (1,358,611 | ) | (12,618 | ) | (51,729 | ) | ||||||||
| Non-current |
||||||||||||||||
| -Non-current assets |
5,842,119 | 3,098,107 | 73,623 | 2,829 | ||||||||||||
| -Non-current liabilities |
— | (690,497 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net assets |
13,269,928 | 4,664,349 | 166,183 | 119,775 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Summarised statement of comprehensive income for material associates
| 2015 | Shanghai Secco RMB’000 |
Chemical Industry RMB’000 |
Jinsen RMB’000 |
Azbil RMB’000 |
||||||||||||
| Revenue |
23,848,576 | 1,032 | 245,060 | 186,657 | ||||||||||||
| Post-tax profit from continuing operations |
2,185,268 | 235,635 | 8,155 | 20,507 | ||||||||||||
| Other comprehensive income |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income |
2,185,268 | 235,635 | 8,155 | 20,507 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Dividends declared by associate |
780,000 | 42,000 | 7,315 | 30,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 2016 | Shanghai Secco RMB’000 |
Chemical Industry RMB’000 |
Jinsen RMB’000 |
Azbil RMB’000 |
||||||||||||
| Revenue |
23,969,408 | 2,471,027 | 167,956 | 180,108 | ||||||||||||
| Post-tax profit/(loss) from continuing operations |
3,753,476 | 513,804 | (16,394 | ) | 16,278 | |||||||||||
| Other comprehensive income |
— | 47,603 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income/(loss) |
3,753,476 | 561,407 | (16,394 | ) | 16,278 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Dividends declared by associate |
2,451,000 | 45,000 | 7,340 | 18,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 2017 | Shanghai Secco RMB’000 |
Chemical Industry RMB’000 |
Jinsen RMB’000 |
Azbil RMB’000 |
||||||||||||
| Revenue |
29,186,371 | 2,664,866 | 193,007 | 234,852 | ||||||||||||
| Post-tax profit/(loss) from continuing operations |
5,179,254 | 407,709 | (17,069 | ) | 26,182 | |||||||||||
| Other comprehensive income |
— | (2,116 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income/(loss) |
5,179,254 | 405,593 | (17,069 | ) | 26,182 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Dividends declared by associate |
2,105,600 | 53,001 | — | 17,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The information above reflects the amounts presented in the financial statements of the associates (and not the Group’s share of those amounts) adjusted for differences in accounting policies between the group and the associates.
Reconciliation of summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of its interest in material associates
Summarised financial information for material associates
| 2016 | Shanghai Secco RMB’000 |
Chemical Industry RMB’000 |
Jinsen RMB’000 |
Azbil RMB’000 |
||||||||||||
| Opening net assets 1 January |
8,893,798 | 3,795,350 | 206,986 | 112,315 | ||||||||||||
| Profit/(loss) for the year |
3,753,476 | 513,804 | (16,394 | ) | 16,278 | |||||||||||
| Other comprehensive income |
— | 47,603 | — | — | ||||||||||||
| Declared dividends |
(2,451,000 | ) | (45,000 | ) | (7,340 | ) | (18,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Closing net assets |
10,196,274 | 4,311,757 | 183,252 | 110,593 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| % of ownership interest |
20.00 | % | 38.26 | % | 40.00 | % | 40.00 | % | ||||||||
| Interest in associates |
2,039,256 | 1,649,677 | 73,301 | 44,237 | ||||||||||||
| Unrealized upstream and downstream transaction |
(7,979 | ) | — | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Unentitled portion (Note a) |
— | (348,600 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Carrying value |
2,031,277 | 1,301,077 | 73,301 | 44,237 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 2017 | Shanghai Secco RMB’000 |
Chemical Industry RMB’000 |
Jinsen RMB’000 |
Azbil RMB’000 |
||||||||||||
| Opening net assets 1 January |
10,196,274 | 4,311,757 | 183,252 | 110,593 | ||||||||||||
| Profit/(loss) for the year |
5,179,254 | 407,709 | (17,069 | ) | 26,182 | |||||||||||
| Other comprehensive income |
— | (2,116 | ) | — | — | |||||||||||
| Declared dividends |
(2,105,600 | ) | (53,001 | ) | — | (17,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Closing net assets |
13,269,928 | 4,664,349 | 166,183 | 119,775 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| % of ownership interest |
20 | % | 38.26 | % | 40.00 | % | 40.00 | % | ||||||||
| Interest in associates |
2,653,987 | 1,784,580 | 66,473 | 47,910 | ||||||||||||
| Unrealized upstream and downstream transaction |
(9,512 | ) | — | — | — | |||||||||||
| Unentitled portion (Note a) |
— | (348,346 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Carrying value |
2,644,475 | 1,436,234 | 66,473 | 47,910 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Note a: Unentitled portion represented the earnings from sales of the lands injected by Government in Chemical Industry cannot be shared by other shareholders.
Summarised financial information for other associates
| 2016 | 2017 | |||||||
| RMB’000 | RMB’000 | |||||||
| Carrying value of investments as at 31 December |
48,205 | 44,703 | ||||||
| Profit for the year |
7,423 | 5,933 | ||||||
| Total comprehensive income |
7,423 | 5,933 | ||||||
|
|
|
|
|
|||||
| Investment in joint ventures | ||||||||
| 2016 | 2017 | |||||||
| RMB’000 | RMB’000 | |||||||
| As at 1 January |
236,983 | 190,697 | ||||||
| Share of (loss)/profit |
(12,561 | ) | 43,552 | |||||
| Cash dividends distribution |
(33,725 | ) | (22,000 | ) | ||||
|
|
|
|
|
|||||
| As at 31 December |
190,697 | 212,249 | ||||||
|
|
|
|
|
|||||
The joint venture listed below has share capital consisting solely of ordinary shares, which is held directly by the Group.
| Name of entity | Place of business/country of incorporation |
% of ownership interest |
Nature of the relationship |
Measurement method |
||||||||||||
| BOC-SPC Gases Company Limited [“BOC”] |
PRC | 50 | |
Production and sales of industrial gases |
|
Equity | ||||||||||
| Shanghai Petrochemical Yangu Gas Development Company Limited [“Yangu Gas”] |
PRC | 50 | |
Production and sales of industrial gases |
|
Equity | ||||||||||
BOC and Yangu Gas are private companies and there are no quoted market prices available for their shares.
Summarised financial information for joint ventures
Set out below are the summarised financial information for joint ventures which are accounted for using the equity method.
Summarised balance sheet
| As at 31 December 2016 | BOC RMB’000 |
Yangu Gas RMB’000 |
||||||
| Current |
||||||||
| Cash and cash equivalents |
43,356 | 27,174 | ||||||
| Other current assets (excluding cash) |
37,422 | 12,401 | ||||||
|
|
|
|
|
|||||
| Total current assets |
80,778 | 39,575 | ||||||
|
|
|
|
|
|||||
| Financial liabilities |
(29,522 | ) | (3,104 | ) | ||||
| Other current liabilities |
(12,545 | ) | (2,115 | ) | ||||
|
|
|
|
|
|||||
| Total current liabilities |
(42,067 | ) | (5,219 | ) | ||||
|
|
|
|
|
|||||
| Non-current |
||||||||
| Total non-current Assets |
273,096 | 66,757 | ||||||
| Total non-current liabilities |
— | — | ||||||
|
|
|
|
|
|||||
| Net assets |
311,807 | 101,113 | ||||||
|
|
|
|
|
|||||
| As at 31 December 2017 | BOC RMB’000 |
Yangu Gas RMB’000 |
||||||
| Current |
||||||||
| Cash and cash equivalents |
81,288 | 37,541 | ||||||
| Other current assets (excluding cash) |
66,756 | 14,712 | ||||||
|
|
|
|
|
|||||
| Total current assets |
148,044 | 52,253 | ||||||
|
|
|
|
|
|||||
| Financial liabilities |
— | — | ||||||
| Other current liabilities |
(40,291 | ) | (5,868 | ) | ||||
|
|
|
|
|
|||||
| Total current liabilities |
(40,291 | ) | (5,868 | ) | ||||
|
|
|
|
|
|||||
| Non-current |
||||||||
| Total non-current assets |
241,323 | 53,556 | ||||||
| Total non-current liabilities |
— | — | ||||||
|
|
|
|
|
|||||
| Net assets |
349,076 | 99,941 | ||||||
|
|
|
|
|
|||||
Summarised statement of comprehensive income for joint ventures
| 2015 | BOC RMB’000 |
Jinpu RMB’000 |
Yangu Gas RMB’000 |
|||||||||
| Revenue |
396,176 | 118,966 | 68,469 | |||||||||
| Depreciation and amortisation |
(44,727 | ) | (8,498 | ) | (10,952 | ) | ||||||
| Interest income |
326 | 50 | 169 | |||||||||
| Interest expense |
(4,012 | ) | (1,072 | ) | (244 | ) | ||||||
| Profit/(loss) from continuing operations |
72,778 | (24,213 | ) | 1,830 | ||||||||
| Income tax expense |
(14,392 | ) | — | — | ||||||||
| Post-tax profit/(loss) from continuing operations |
58,386 | (24,213 | ) | 1,830 | ||||||||
| Other comprehensive income |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total comprehensive income/(loss) |
58,386 | (24,213 | ) | 1,830 | ||||||||
|
|
|
|
|
|
|
|||||||
| Dividends declared by joint venture |
— | — | 1,300 | |||||||||
|
|
|
|
|
|
|
|||||||
| 2016 | BOC RMB’000 |
Jinpu RMB’000 |
Yangu Gas RMB’000 |
|||||||||
| Revenue |
370,171 | 31,794 | 59,904 | |||||||||
| Depreciation and amortisation |
(45,317 | ) | (8,463 | ) | (11,612 | ) | ||||||
| Interest income |
354 | 6 | 246 | |||||||||
| Interest expense |
(927 | ) | (775 | ) | — | |||||||
| Profit/(loss) from continuing operations |
66,855 | (82,690 | ) | (2,651 | ) | |||||||
| Income tax expense |
(16,370 | ) | — | — | ||||||||
| Post-tax profit/(loss) from continuing operations |
50,485 | (82,690 | ) | (2,651 | ) | |||||||
| Other comprehensive income |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total comprehensive income/(loss) |
50,485 | (82,690 | ) | (2,651 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Dividends declared by joint venture |
66,250 | — | 1,200 | |||||||||
|
|
|
|
|
|
|
|||||||
| 2017 | BOC RMB’000 |
Jinpu RMB’000 |
Yangu Gas RMB’000 |
|||||||||
| Revenue |
410,254 | 13,848 | 59,883 | |||||||||
| Depreciation and amortisation |
(45,680 | ) | (7,452 | ) | (9,829 | ) | ||||||
| Interest income |
503 | — | 360 | |||||||||
| Interest expense |
(190 | ) | (533 | ) | — | |||||||
| Profit/(loss) from continuing operations |
108,072 | (6,605 | ) | (1,172 | ) | |||||||
| Income tax expense |
(26,803 | ) | — | — | ||||||||
| Post-tax profit/(loss) from continuing operations |
81,269 | (6,605 | ) | (1,172 | ) | |||||||
| Other comprehensive income |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total comprehensive income/(loss) |
81,269 | (6,605 | ) | (1,172 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Dividends declared by joint venture |
44,000 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
The information above reflects the amounts presented in the financial statements of the joint ventures (and not the Group’s share of those amounts) adjusted for differences in accounting policies between the Group and the joint ventures.
Reconciliation of summarised financial information
| 2016 | BOC RMB’000 |
Jinpu RMB’000 |
Yangu Gas RMB’000 |
|||||||||
| Opening net assets 1 January |
327,572 | 79,963 | 104,964 | |||||||||
| Profit/(loss) for the year |
50,485 | (82,690 | ) | (2,651 | ) | |||||||
| Other comprehensive income |
— | — | — | |||||||||
| Declared dividends |
(66,250 | ) | — | (1,200 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Closing net assets/(deficit)(a) |
311,807 | (2,727 | ) | 101,113 | ||||||||
| % of ownership interest |
50.00 | % | 50.00 | % | 50.00 | % | ||||||
| Interest in joint ventures |
155,903 | — | 50,558 | |||||||||
| Unrealized downstream transactions |
(15,764 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Carrying value |
140,139 | — | 50,558 | |||||||||
|
|
|
|
|
|
|
|||||||
| 2017 | BOC RMB’000 |
Jinpu RMB’000 |
Yangu Gas RMB’000 |
|||||||||
| Opening net assets 1 January |
311,807 | (2,727 | ) | 101,113 | ||||||||
| Profit/(loss) for the year |
81,269 | (6,605 | ) | (1,172 | ) | |||||||
| Other comprehensive income |
— | — | — | |||||||||
| Declared dividends |
(44,000 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Closing net assets (a) |
349,076 | (9,332 | ) | 99,941 | ||||||||
| % of ownership interest |
50.00 | % | — | 50.00 | % | |||||||
| Interest in joint ventures |
174,538 | — | 49,972 | |||||||||
| Unrealized downstream transactions |
(12,261 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Carrying value |
162,277 | — | 49,972 | |||||||||
|
|
|
|
|
|
|
|||||||
| (a) | Jinpu was disposed of in August 2017 and the related profit of RMB 10,339 thousands was accounted for in other gains/(losses) - net. The Group’s share of losses in Jinpu exceeded RMB 2,727 thousands to its interest during the year ended 31 December, cumulatively exceeded RMB 2,727 thousands to its investment as at 31 December 2016 . |