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JINHUI SHIPPING
AND TRANSPORTATION LIMITED
ANNUAL REPORT
2023
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
65 RESPONSIBILITY STATEMENT
66 INDEPENDENT AUDITOR’S REPORT
73 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
74 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
76 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
77 CONSOLIDATED STATEMENT OF CASH FLOWS
78 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
150 GLOSSARY
JINHUI SHIPPING AND TRANSPORTATION LIMITED
1
ANNUAL REPORT 2023
2
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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: info@jinhuiship.com
WEBSITE
www.jinhuiship.com
JINHUI SHIPPING AND TRANSPORTATION LIMITED
3
ANNUAL REPORT 2023
Chairman’s Statement
The Board is pleased to present the annual report of Jinhui Shipping and Transportation Limited for the financial
year 2023.
Dry bulk shipping market faced challenges in 2023. The market freight rates were weak in most of 2023 due to the
lacklustre demand for dry bulk commodities amid an increasingly challenging macroeconomic backdrop. The market
sentiment gradually changed in the fourth quarter of 2023, with the market freight rates inching upwards driven by
increasing demand for dry bulk commodities.
Revenue for the year 2023 decreased 46% to US$81,868,000, comparing to US$152,466,000 for the year 2022 due to
the market freight rates were weak in most of 2023 amid the volatile macroeconomic environment as compared to the
remarkable rebound of market freight rates driven by robust demand for dry bulk commodities worldwide in 2022.
The average daily time charter equivalent rate earned by the Group’s fleet decreased 52% to US$9,063 for the year
2023 as compared to US$18,813 for the year 2022. The Company recorded a consolidated net loss of US$55,055,000
for the year 2023, which included a net impairment loss of US$14,011,000 on owned vessels and an impairment loss
of US$5,693,000 on right-of-use assets, as compared to the consolidated net loss of US$7,113,000 which included
a net impairment loss of US$49,326,000 on owned vessels for the year 2022. Basic loss per share for the year was
US$0.504 as compared to basic loss per share of US$0.065 for the year 2022.
In order to remain competitive in the market, the Group continues to seek to fine tune the quality of our fleet, in
particularly in terms of seeking to lower the overall age profile of our fleet. During the year, the Group entered into
agreements to acquire one Supramax, and dispose of three Supramaxes and two of which were delivered to their
respective purchasers in the year. In addition, the Group entered into a charterparty with a third party during the year
in respect of leasing of a Panamax for a term of minimum twenty-two months, commencing on the date of delivery
of the vessel to the Group. The vessel was delivered to the Group in January 2024. 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 of smaller and older vessels and replace with newer vessels with
larger carrying capacity and longer asset lives or charter-in of vessels. We will make such decisions on an ad hoc
basis to maintain high financial flexibility and operational competitiveness. As at 31 December 2023, the Group had
twenty three grabs fitted Supramaxes and one chartered-in Panamax.
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.
4
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Chairman’s Statement
On behalf of the Board of Directors of the Company, I would like to first express our heartfelt appreciation to our
seafarers who have continued to remain professional under 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
12 March 2024
JINHUI SHIPPING AND TRANSPORTATION LIMITED
5
ANNUAL REPORT 2023
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 operates a diverse fleet of dry bulk carriers, encompassing a wide range of sizes from Supramax to
Capesize. The Group believes that operating a versatile and diverse fleet could bring significant economic benefits
to the Group. The Group will focus on taking decisive actions when opportunities arise, while maintaining a strong
financial position and moderate leverage, as well as adjusting our fleet profile and size in a flexible and responsive
manner. We will focus further 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.
6
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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. With the increasing attention towards environmental issues in the shipping industry, we are
committed to operate our business in an environmentally and socially responsible manner, heading to the target of
decarbonization.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
7
ANNUAL REPORT 2023
Strategies and Business Profile
SHIPPING BUSINESS (Continued)
Owned Vessels
As at 31 December 2023, the Group had twenty three owned vessels and 544 crew employed on board.
Name Built Builder Size (dwt)
JIN HENG 2014 Jiangsu Hantong 63,518
JIN PING 2014 Jiangsu Hantong 63,485
JIN CHAO 2014 Jiangsu Hantong 63,469
JIN RUI 2014 Jiangsu Hantong 63,435
JIN XIANG 2012 Oshima 61,414
JIN HONG 2011 Oshima 61,414
JIN RONG 2008 Tsuneishi 58,729
JIN SUI 2008 Shanghai Shipyard 56,968
JIN TONG 2008 Shanghai Shipyard 56,952
JIN YUE 2010 Shanghai Shipyard 56,934
JIN GANG 2009 Shanghai Shipyard 56,927
JIN AO 2010 Shanghai Shipyard 56,920
JIN JI 2009 Shanghai Shipyard 56,913
JIN WAN 2009 Shanghai Shipyard 56,897
JIN JUN 2009 Shanghai Shipyard 56,887
JIN MAO 2012 Jiangsu Hantong 56,469
JIN BI 2012 Jiangsu Hantong 56,361
JIN AN 2007 Kawasaki 55,866
JIN XING 2007 Oshima 55,496
JIN YI 2007 Oshima 55,496
JIN YUAN 2007 Oshima 55,496
JIN SHUN 2007 Shanghai Shipyard 53,350
JIN SHENG * 2006 IHI 52,050
1,331,446
* The vessel was disposed and delivered to the purchaser in January 2024.
Chartered-in Vessels
As at 31 December 2023, the Group had one chartered-in vessel.
Name Built Size (dwt) Charter-in date Expiry
TAHO CIRCULAR 2022 84,484 Jun 2022 Feb 2029
EVER SHINING ** 2021 81,842 Jan 2024 Oct 2025
** The chartered-in vessel was delivered to the Group in January 2024.
8
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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
2023 2022
(Expressed as a percentage of revenue) % %
Asia excluding China 64.4 83.2
China 15.0 7.0
South America 9.3 –
North America 3.6 1.0
Africa 3.0 –
Europe 2.8 1.0
Australia 1.1 7.8
Others 0.8 –
100.0 100.0
Discharging Ports Analysis
2023 2022
(Expressed as a percentage of revenue) % %
China 70.4 79.9
Asia excluding China 21.5 20.1
South America 2.8 –
Africa 2.7 –
Europe 1.3 –
Others 1.3 –
100.0 100.0
Types of Cargoes carried by the Group’s Fleet
2023 2022
Metric Tons Metric Tons
(in ’000) % (in ’000) %
Minerals 11,063 72.0 12,047 81.1
Steel products 2,008 13.1 940 6.3
Coal 1,785 11.6 1,768 11.9
Agricultural products 329 2.1 97 0.7
Others 183 1.2 – –
15,368 100.0 14,852 100.0
JINHUI SHIPPING AND TRANSPORTATION LIMITED
9
ANNUAL REPORT 2023
Highlights
KEY PERFORMANCE INDICATORS FOR SHIPPING BUSINESS
2023 2022
US$ US$
Average daily time charter equivalent rate
1
9,063 18,813
Daily vessel running cost
2
5,569 5,656
Daily vessel depreciation
3
3,486 4,074
Daily vessel finance cost
4
157 155
9,212 9,885
Average utilization rate
5
99% 96%
As at 31 December 2023, the Group had twenty three owned vessels and one chartered-in vessel. Revenue for the
year 2023 decreased 46% to US$81,868,000, comparing to US$152,466,000 for the year 2022 due to the market freight
rates were weak in most of 2023 amid the volatile macroeconomic environment as compared to the remarkable
rebound of market freight rates driven by robust demand for dry bulk commodities worldwide in 2022. The average
daily time charter equivalent rate earned by the Group’s fleet decreased 52% to US$9,063 for the year 2023 as
compared to US$18,813 for the year 2022. Daily vessel running cost decreased from US$5,656 for the year 2022 to
US$5,569 for the year 2023 mainly due to the drop in crew cost and continue reduction in pandemic related manning
expenses as a result of lifting Covid related restrictions. Daily vessel depreciation decreased from US$4,074 for the
year 2022 to US$3,486 for the year 2023. The decrease was mainly attributable to the decrease in depreciation on
owned vessels due to the reduction in carrying amounts of owned vessels after the recognition of impairment loss on
owned vessels by end of 2022. Daily vessel finance cost slightly increased from US$155 for the year 2022 to US$157
for the year 2023 due to the rising interest rate as compared with that of the year 2022. Fleet utilization rate increased
from 96% for the year 2022 to 99% for the year 2023. We will continue with our cost reduction effort, striving to
maintain a highly competitive cost structure when stacked against other market participants.
Notes:
1. Average daily time charter equivalent rate is calculated as the time charter revenue, and voyage revenue less voyage expenses
divided by the number of available days in the year.
2. Daily vessel running cost is calculated as the aggregate of crew expenses, insurance, consumable stores, spare parts, repairs
and maintenance and other vessels’ miscellaneous expenses divided by ownership days in the year.
3. Daily vessel depreciation is calculated as the aggregate of vessels’ depreciation charge divided by ownership days in the year.
4.
Daily vessel finance cost is calculated as the aggregate of vessels’ finance costs divided by ownership days in the year.
5. Average utilization rate is calculated as the number of operating days divided by the number of available days in the year.
10
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Highlights
FIVE-YEAR FINANCIAL SUMMARY
2023 2022 2021 2020 2019
US$’000 US$’000 US$’000 US$’000 US$’000
Key Items in the Consolidated
Statement of Profit or Loss and
Other Comprehensive Income
Revenue 81,868 152,466 131,069 47,118 63,160
Operating profit (loss) (48,822) (3,655) 196,136 (11,902) 8,818
Finance costs (6,234) (3,438) (1,749) (3,117) (4,323)
Profit (Loss) before taxation (55,056) (7,093) 194,387 (15,019) 4,495
Taxation 1 (20) (190) (233) –
Net profit (loss) for the year (55,055) (7,113) 194,197 (15,252) 4,495
Other comprehensive income (loss) (1,782) (2,899) 1,996 1,710 (233)
Total comprehensive income (loss)
for the year attributable to
shareholders of the Company (56,837) (10,012) 196,193 (13,542) 4,262
Earnings (Loss) per share
– Basic and diluted US$(0.504) US$(0.065) US$1.777 US$(0.140) US$0.041
Key Items in the Consolidated
Statement of Financial Position
Non-current assets 389,035 450,708 434,131 262,446 283,113
Current assets 94,598 87,604 113,594 103,718 123,320
Total assets 483,633 538,312 547,725 366,164 406,433
Total equity 349,930 411,137 432,075 239,160 252,702
Non-current liabilities 79,748 73,724 39,943 51,789 64,869
Current liabilities 53,955 53,451 75,707 75,215 88,862
Total equity and liabilities 483,633 538,312 547,725 366,164 406,433
Other Financial Information
Gearing ratio 7% 5% 4% 15% 14%
JINHUI SHIPPING AND TRANSPORTATION LIMITED
11
ANNUAL REPORT 2023
Shareholders’ Diary
Annual general meeting 24 May 2024
Announcement for the first quarter results 2024 31 May 2024*
Announcement for the second quarter results 2024 30 August 2024*
Announcement for the third quarter results 2024 29 November 2024*
Announcement for the fourth quarter results 2024 28 February 2025*
* Subject to change
12
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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
13
ANNUAL REPORT 2023
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 professionals.
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.
14
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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 24 May 2023 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
15
ANNUAL REPORT 2023
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 2023 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 60 to 62.
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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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 2023, the Group’s total equity was US$349,930,000, accounting for 72% 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 not to recommend the payment of any interim / final dividend for the year. The dividend
policy will be regularly assessed by the Board and will depend, among other things, on the Group’s financial
obligations, leverage, liquidity and capital resources, and the market conditions. During the year, there was no
proposal for the Board to be given any mandate to approve the distribution of dividends.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Section 3 Equity and dividends (Continued)
Increase in share capital
At the 2023 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 2023.
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 2023.
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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 2023.
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 authorization
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)
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 vote 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 2024 Annual General Meeting is
scheduled on 24 May 2024. Notice of 2024 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 2024.
Chairman of the general meetings
According to Bye-Law 27 of the Company, every general meeting of the Company should be chaired by the president
of the Company or the Chairman, or in his absence, another Director.
This constitutes a deviation from the Norwegian Code of Practice which states that the general meeting should be
chaired by an independent chairman.
The Board considers that as the leader of the Group and having sufficient experience and knowledge, the Chairman is
the most suitable person to chair a general meeting.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
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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JINHUI SHIPPING AND TRANSPORTATION LIMITED
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NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
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
2023, the Board held eleven meetings. The attendance record of each member of the Board is set out below:
Executive Directors Attendance
Ng Siu Fai 11
Ng Kam Wah Thomas 11
Ng Ki Hung Frankie 11
Ho Suk Lin Cathy 11
Non-executive Directors
Tsui Che Yin Frank 11
William Yau 11
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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, professionals
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 2023 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, two meetings were held by the Audit Committee. Among these meetings, the annual consolidated
financial statements for the year ended 31 December 2022, the half-yearly report for the period ended 30 June 2023
and the risk management and internal control systems have been reviewed.
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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JINHUI SHIPPING AND TRANSPORTATION LIMITED
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NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE (Continued)
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 2023, 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 performed by Prism Advisory Limited and are reviewed
by the Audit Committee on an ongoing basis so that the practical and effective systems are implemented. The review
also includes identification weaknesses of the risk management and internal control systems and proposals for
improvement. 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 60 to 62 and note 41 to the consolidated financial statements on pages 133 to 141.
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 2024 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
29
ANNUAL REPORT 2023
Corporate Governance Report
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 27 February 2024, 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 2023, and made recommendations to the Board on the remuneration
packages of the individual executive directors and executive personnel for the year 2024 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 2023 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 material accounting policies are set out in note 4 to the consolidated
financial statements.
30
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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 2023
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. 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 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 and issuance of special audit reports for tax or other non-assurance 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 2023, 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$4,000 respectively. Fees paid for other services included fees for tax compliance services 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 2023
Board of Directors and Executive Personnel
BOARD OF DIRECTORS
Mr. Ng Siu Fai, Chairman
Aged 67. 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 61. 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 70. 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 60. 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 2023
Board of Directors and Executive Personnel
BOARD OF DIRECTORS (Continued)
Mr. Tsui Che Yin Frank, Non-executive Director
Aged 66. 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 56. 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 is a member of the Gansu
Provincial Committee of the Chinese People’s Political Consultative Conference. 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 49. 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 71. 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 2023
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 2023.
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 2023 are set out in the “Consolidated Statement of Profit or Loss and Other
Comprehensive Income” on page 73.
The Board has resolved not to recommend the payment of any final dividend for the year ended 31 December 2023.
As there is no interim dividend payable during the year, there will be no dividend distribution for the whole year of
2023.
ALLOCATION OF NET LOSS
The Board has proposed the net loss of the Group for the year 2023 amounting to US$55,055,000 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 76.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
35
ANNUAL REPORT 2023
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
Market freight rates in dry bulk shipping market were weak for most of 2023 due to a number of factors: (i) slowing
global economic growth; (ii) easing of port congestions that led to release of tonnage capacity; (iii) poor sentiment
due to higher inflation and interest rates; and (iv) unresolved multiple geo-political issues. However, the freight rates
moved upwards in the fourth quarter of 2023, particularly in December of 2023, due to the increase in demand for
the dry bulk commodities, especially coal, steel, iron ore and other agricultural commodities across different regions.
Baltic Dry Index opened at 1,515 points in January, then continued to decline and hit to the lowest of the year at
530 points in mid-February. Thereafter, Baltic Dry Index rose gradually and reached the peak of the year at 3,346
points in early December, and closed at 2,094 points by the end of December 2023. The average of Baltic Dry Index
for the year 2023 was 1,378 points, which compares to 1,934 points in 2022.
Baltic Dry Index & Baltic Supramax Index
Jan
2024
Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul OctJan
2019
Jan
2020
Jan
2021
Jan
2022
Jan
2023
Baltic Dry Index
Baltic Supramax Index
0
1,000
2,000
3,000
4,000
5,000
6,000
Source: Bloomberg
36
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Directors’ Report
BUSINESS REVIEW (Continued)
Average daily time charter equivalent rates 2023 2022
US$ US$
Post-Panamax / Panamax fleet 13,126 20,180
Supramax fleet 8,892 18,681
In average 9,063 18,813
As at 31 December 2023, the Group had twenty three 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 2023 decreased 46% to US$81,868,000, comparing to US$152,466,000 for the year 2022 due to
the market freight rates were weak in most of 2023 amid the volatile macroeconomic environment as compared to the
remarkable rebound of market freight rates driven by robust demand for dry bulk commodities worldwide in 2022.
The average daily time charter equivalent rate earned by the Group’s fleet decreased 52% to US$9,063 for the year
2023 as compared to US$18,813 for the year 2022. The Company recorded a consolidated net loss of US$55,055,000
for the year 2023, which included a net impairment loss of US$14,011,000 on owned vessels and an impairment loss
of US$5,693,000 on right-of-use assets, as compared to the consolidated net loss of US$7,113,000 which included a
net impairment loss of US$49,326,000 on owned vessels, was reported in 2022. Basic loss per share for the year was
US$0.504 as compared to basic loss per share of US$0.065 for the year 2022.
Revenue of US$16,024,000, US$15,543,000 and US$13,145,000 were derived from three charterers that contributed
20%, 19% and 16% respectively to the Group’s revenue for the year 2023. Management has a credit policy in place
for approving the credit limits to charterers and the exposures to credit risk are monitored such that any outstanding
trade receivables are reviewed and followed up on an ongoing basis. For trade receivables from customers, credit
evaluations including assessing the customer’s creditworthiness and financial standing are performed on customers
requiring a credit over certain amount. The management consider that the credit risks inherent in the Group’s
outstanding trade receivables within one year past due was immaterial.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
37
ANNUAL REPORT 2023
Directors’ Report
BUSINESS REVIEW (Continued)
Key Performance Indicators for Shipping Business 2023 2022
US$ US$
Average daily time charter equivalent rate 9,063 18,813
Daily vessel running cost 5,569 5,656
Daily vessel depreciation 3,486 4,074
Daily vessel finance cost 157 155
9,212 9,885
Average utilization rate 99% 96%
Daily vessel running cost decreased from US$5,656 for the year 2022 to US$5,569 for the year 2023 mainly due to the
drop in crew cost and continue reduction in pandemic related manning expenses as a result of lifting Covid related
restrictions. Daily vessel depreciation decreased from US$4,074 for the year 2022 to US$3,486 for the year 2023. The
decrease was mainly attributable to the decrease in depreciation on owned vessels due to the reduction in carrying
amounts of owned vessels after the recognition of impairment loss on owned vessels by end of 2022. Daily vessel
finance cost slightly increased from US$155 for the year 2022 to US$157 for the year 2023 due to the rising interest
rate as compared with that of the year 2022. Fleet utilization rate increased from 96% for the year 2022 to 99% for
the year 2023. 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 2023, the Group had twenty three owned vessels and one chartered-in vessel as follows:
Number of vessels
Owned Chartered-in Total
Panamax fleet – 1 1
Supramax fleet 23 – 23
Total fleet 23 1 24
38
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Directors’ Report
BUSINESS REVIEW (Continued)
In order to remain competitive in the market, the Group continues to seek to fine tune the quality of our fleet, in
particularly in terms of seeking to lower the overall age profile of our fleet. During the year, the Group entered
into agreements to acquire, dispose and charter-in vessels with a view to maintaining high financial flexibility and
operational competitiveness.
Acquisition and disposal of vessels
On 20 September 2023, the Group entered into an agreement for the disposal of a Supramax of deadweight
52,686 metric tons, built in year 2004, at a consideration of US$8,080,000. The vessel was delivered to the purchaser
in November 2023.
On 27 September 2023, the Group entered into an agreement for the acquisition of a Supramax of deadweight
63,435 metric tons, built in year 2014, at a purchase price of US$20,433,000. The vessel was delivered to the Group at
end of October 2023.
On 29 November 2023, the Group entered into an agreement for the disposal of a Supramax of deadweight
52,525 metric tons, built in year 2006, at a consideration of US$9,650,000. The vessel was delivered to the purchaser
at end of December 2023.
On 12 December 2023, the Group entered into an agreement for the disposal of a Supramax of deadweight
52,050 metric tons, built in year 2006, at a consideration of US$10,430,000. The vessel was delivered to the purchaser
in January 2024. For financial reporting purposes, the vessel was reclassified to “Assets held for sale” in accordance
with IFRS 5 and HKFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” at the reporting date, with
an impairment loss on assets held for sale (disposed vessel) of US$1,288,000 was recognized for the year and was
included in other operating expenses.
Lease of vessel
On 8 December 2023, the Group entered into a charterparty with a third party in respect of leasing of a Panamax of
deadweight 81,842 metric tons, built in year 2021, for a term of minimum twenty-two months, commencing on the
date of delivery of the vessel to the Group. The vessel was delivered to the Group in January 2024. In accordance
with IFRS 16 and HKFRS 16 Leases, the Group will recognize the unaudited value of the right-of-use assets which
is the present value of total minimum hire payment at the inception of the lease terms of the charterparty and
corresponding lease liabilities will also be recognized in the consolidated statement of financial position upon the
delivery of the vessel. The Directors consider that the lease of a Panamax represents an opportunity for the Group to
increase the carrying capacity with a modern ship 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 2023, the Group owned twenty-three grabs fitted Supramaxes, and had one chartered-in Panamax.
The total carrying capacity of the Group’s fleet was 1,415,930 metric tons as at 31 December 2023.
As at 31 December 2023, the carrying amount of the motor vessels and capitalized drydocking costs was
US$324,947,000 (2022: US$375,335,000).
JINHUI SHIPPING AND TRANSPORTATION LIMITED
39
ANNUAL REPORT 2023
Directors’ Report
BUSINESS REVIEW (Continued)
The Group has recognized the right-of-use assets since June 2022 as the Group entered into a charterparty with a
third party in respect of leasing of a Panamax for a term of seven years commencing on the date of delivery of the
vessel to the Group. As at 31 December 2023, the carrying amounts of the right-of-use assets and the lease liabilities
were US$21,095,000 (2022: US$28,997,000) and US$29,139,000 (2022: US$29,337,000) respectively.
Subsequent to the reporting date, the Group entered into an agreement on 2 February 2024 for the acquisition of
a Capesize of deadweight 181,279 metric tons, built in year 2012, at a purchase price of US$30,950,000. The vessel
will be delivered to the Group between 1 July 2024 and 15 September 2024. In addition, the Group entered into an
agreement on 21 February 2024 for the acquisition of a Panamax of deadweight 81,567 metric tons, built in year 2019,
at a purchase price of US$31,122,450. The vessel will be delivered to the Group between 1 April 2024 and 15 June
2024.
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 of smaller and older vessels
and replace with newer vessels with larger carrying capacity and longer asset lives or charter-in of vessels. We will
make such decisions on an ad hoc basis to maintain high financial flexibility and operational competitiveness.
FINANCIAL REVIEW
Revenue and operating loss. Revenue for the year 2023 decreased 46% to US$81,868,000, comparing to
US$152,466,000 for the year 2022 due to the market freight rates were weak in most of 2023 amid the volatile
macroeconomic environment as compared to the remarkable rebound of market freight rates driven by robust
demand for dry bulk commodities worldwide in 2022. The average daily time charter equivalent rate earned by the
Group’s fleet decreased 52% to US$9,063 for the year 2023 as compared to US$18,813 for the year 2022.
The Company recorded a consolidated net loss of US$55,055,000 for the year 2023, which included a net impairment
loss of US$14,011,000 on owned vessels and an impairment loss of US$5,693,000 on right-of-use assets, as compared
to the consolidated net loss of US$7,113,000 which included a net impairment loss of US$49,326,000 on owned
vessels for the year 2022. Basic loss per share for the year was US$0.504 as compared to basic loss per share of
US$0.065 for the year 2022.
Net gain / loss on disposal of owned vessels. During the year, the Group entered into three agreements to dispose
of three Supramaxes at total consideration of US$28,160,000 and two of which were delivered to their respective
purchasers in the year. Total net loss of US$880,000 was recognized on completion of the disposal of these vessels in
the year. The remaining one was classified as assets held for sale as at 31 December 2023 as the vessel was delivered
to the purchaser in January 2024. An impairment loss of US$1,288,000 on assets held for sale (disposed vessel) was
recognized and included in other operating expenses for the year.
During the year 2022, the Group entered into five agreements to dispose of two Post-Panamaxes and three
Supramaxes at total consideration of US$65,550,000, with total net gain of US$5,636,000 being recognized on
completion of the disposal of these vessels in 2022.
40
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Directors’ Report
FINANCIAL REVIEW (Continued)
Other operating income. Other operating income decreased from US$15,419,000 for the year 2022 to US$7,643,000
for the current year. The decrease was mainly due to a net gain of US$2,352,000 on bunker arising from shipping
operations was recognized for the year 2022 whereas a net loss of US$1,250,000 on bunker arising from shipping
operations was recognized for the current year and was included in shipping related expenses. During the year
2022, the Group also recognized a write-back of other payables of US$5,167,000 upon the termination of business
relationship with a crew agent.
Impairment loss on owned vessels and right-of-use assets. Dry bulk shipping market was sluggish due to the volatile
macroeconomic and financial environment. The market freight rates were weak in most of 2023. 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 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 2023.
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 less than their respective carrying amounts
at end of 2023. Accordingly, a net impairment loss of US$14,011,000 (2022: US$49,326,000) on owned vessels
classified in property, plant and equipment was recognized at 31 December 2023 to reflect the Group’s change in the
expectation of the 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 Group also
performed an impairment review on the recoverable amounts of the right-of-use assets based on the value-in-use
approach using discounted cash flow method by comparing the carrying value and the recoverable amounts of the
right-of-use assets. Accordingly, an impairment loss of US$5,693,000 (2022: nil) was recognized and allocated to right-
of-use assets at 31 December 2023. The impairment loss on owned vessels and right-of-use assets are non-cash in
nature and do not have impact on the operating cash flows of the Group.
Shipping related expenses. Shipping related expenses mainly comprised of crew expenses, insurance, consumable
stores, spare parts, repairs and maintenance and other vessels’ expenses. Shipping related expenses decreased from
US$66,793,000 for the year 2022 to US$58,490,000 for the current year mainly attributable to the decline in vessel
running cost, in particular the drop in crew cost and continue reduction in pandemic related manning expenses as a
result of lifting Covid related restrictions. The Group’s daily vessel running cost decreased to US$5,569 for the year
2023 as compared to US$5,656 for the year 2022. We will continue with our cost reduction effort, striving to maintain
a highly competitive cost structure when stacked against other market participants.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
41
ANNUAL REPORT 2023
Directors’ Report
FINANCIAL REVIEW (Continued)
Other operating expenses. Other operating expenses for the year 2023 increased to US$9,748,000, comparing to
US$8,583,000 for the year 2022 mainly due to the Group recording a fair value loss of US$2,334,000 on investment
properties for the current year while a fair value loss of US$935,000 on investment properties was recorded for the
year 2022. Other operating expenses for the year also included an impairment loss of US$1,288,000 on assets held
for sale (disposed vessel). In contrast, the Group recognized a net loss of US$827,000 on financial assets at fair value
through profit or loss for the current year while a net loss of US$2,510,000 on financial assets at fair value through
profit or loss was recognized for the year 2022. Other operating expenses for the year 2023 also included directors’
fee of US$777,000, professional fee of US$651,000, auditor’s remuneration related to audit services of US$210,000
and remaining are various office administrative expenses.
Depreciation and amortization. Depreciation and amortization decreased from US$39,870,000 for the year 2022 to
US$36,994,000 for the year 2023. The Group’s daily vessel depreciation decreased to US$3,486 for the year 2023 as
compared to US$4,074 for the year 2022. The decrease was mainly attributable to the decrease in depreciation on
owned vessels due to the reduction in carrying amounts of owned vessels after the recognition of impairment loss
on owned vessels by end of 2022. Depreciation and amortization for the current year also included the recognition of
depreciation on right-of-use assets of US$5,466,000 as compared to US$2,743,000 for the year 2022.
Finance costs. Finance costs increased from US$3,438,000 for the year 2022 to US$6,234,000 for the year 2023. The
increase was mainly attributable to the rising interest rate as compared with that of the year 2022. Finance costs for
the current year also included the interest expenses on lease liabilities of US$1,424,000 as compared to US$703,000
for the year 2022.
Financial assets at fair value through profit or loss. As at 31 December 2023, the Group’s portfolio of investment in
financial assets at fair value through profit or loss was US$24,094,000 (2022: US$29,227,000), in which US$21,491,000
(2022: US$26,812,000) was investment in listed equity securities, US$872,000 (2022: US$1,339,000) was investment in
listed and unlisted debt securities and US$1,731,000 (2022: US$1,076,000) 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$827,000 (2022:
US$2,510,000), comprised of a realized gain of US$701,000 (2022: US$1,493,000) upon disposal of certain equity and
debt securities during the year, and an unrealized fair value loss of US$1,528,000 (2022: US$4,003,000) 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$1,990,000 (2022: US$3,688,000).
42
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Directors’ Report
FINANCIAL REVIEW (Continued)
Investment properties. As at 31 December 2023, the Group’s investment properties were stated at fair value of
US$25,259,000 (2022: US$27,210,000) 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. The Group entered into a charterparty with a third party on 20 May 2022
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 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.
As at 31 December 2023, the carrying amounts of the right-of-use assets and the lease liabilities were US$21,095,000
(2022: US$28,997,000) and US$29,139,000 (2022: US$29,337,000) respectively. During the year, the total cash outflow
for the lease was US$4,879,000 (2022: US$3,106,000).
Loan receivables. As at 31 December 2023, the Group’s loan receivables of US$1,577,000 (2022: US$1,342,000) arise
from Co-investment, are unsecured and denominated in United States Dollars and has no fixed repayment terms. At
the reporting date, these 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 2023, the Group’s trade and other payables was US$16,221,000 (2022:
US$14,833,000), including trade payables of US$133,000 (2022: US$171,000), accrued charges of US$2,830,000 (2022:
US$1,662,000) and other payables of US$13,258,000 (2022: US$13,000,000). Other payables mainly included payables
related to vessel running cost and ship operating expenses of US$9,104,000 (2022: US$10,078,000) for owned vessels,
hire receipt in advance of US$2,607,000 (2022: US$874,000) from charterers, loan interest payables of US$166,000 (2022:
US$172,000) and accrued employee benefits payables of US$1,203,000 (2022: US$1,710,000).
Liquidity, financial resources and capital structure. As at 31 December 2023, the Group maintained positive working
capital position of US$40,643,000 (2022: US$34,153,000) and the total of the Group’s equity and debt securities,
bank balances and cash increased to US$62,613,000 (2022: US$61,504,000). During the year, cash generated from
operations before changes in working capital was US$9,117,000 (2022: US$75,567,000) and the net cash generated
from operating activities after working capital changes was US$15,944,000 (2022: US$88,339,000). The changes in
working capital are mainly attributable to the decrease in equity and debt securities.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Directors’ Report
FINANCIAL REVIEW (Continued)
The Group’s total secured bank loans increased from US$82,838,000 as at 31 December 2022 to US$88,167,000
as at 31 December 2023, of which 37% and 63% are repayable respectively within one year and in the second
year. During the year, the Group had drawn new secured bank loans of US$57,696,000 (2022: US$66,859,000)
and repaid US$52,367,000 (2022: US$76,599,000). The bank borrowings represented vessel mortgage loans that
were denominated in United States Dollars, revolving loans, term loans and property mortgage loans that were
denominated in Hong Kong Dollars and United States Dollars. All bank borrowings were committed on floating rate
basis.
The gearing ratio, as calculated on the basis of net debts (total interest-bearing debts net of equity and debt
securities, bank balances and cash) over total equity, was 7% (2022: 5%) as at 31 December 2023. 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 2023, 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$15,944,000 (2022:
US$88,339,000). 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.
44
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Directors’ Report
FINANCIAL REVIEW (Continued)
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$5,212,000 (2022: US$72,405,000). Net cash used in investing activities mainly included interest received, dividend
income received, cash payments or receipts in acquisition or disposal of property, plant and equipment 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$3,835,000 (2022: US$15,909,000). 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 drawdown of new secured
bank loans 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$40,250,000 (2022: US$33,353,000).
Pledge of assets. As at 31 December 2023, the Group’s property, plant and equipment with an aggregate net book
value of US$220,591,000 (2022: US$218,172,000), investment properties with an aggregate carrying amount of
US$20,653,000 (2022: US$22,064,000), financial assets at fair value through profit or loss of US$12,564,000 (2022:
US$16,845,000) and deposits of US$359,000 (2022: US$444,000) placed with banks were pledged together with the
assignment of fourteen (2022: fourteen) subsidiaries’ income to secure credit facilities utilized by the Group. In
addition, shares of six (2022: eight) 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$24,220,000 (2022: US$140,482,000) and on other property, plant and equipment
was US$113,000 (2022: US$121,000).
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 “Co-investment”), 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. As at the reporting date, the capital expenditure commitments contracted by the Group but not
provided for was US$372,000 (2022: US$372,000).
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Directors’ Report
FINANCIAL REVIEW (Continued)
Phoenix Property Investors Limited (the “Investment Manager”) reported a loss of US$2,137,000 (2022: US$2,861,000)
on the Co-investment for the year. The reported loss on the Co-investment was recognized by the Group as a
change in fair value of financial assets at fair value through OCI and was included in other comprehensive loss
in the consolidated statement of profit or loss and other comprehensive income. As at the reporting date, the
carrying amount of the unlisted equity investments, co-investment in a property project, was US$7,259,000 (2022:
US$9,396,000) whereas the loan receivable arise from Co-investment, together with the interest accrued thereon was
US$2,138,000 (2022: US$1,593,000). The Group will closely monitor the performance of the Co-investment and will
assess impairment allowances where appropriate.
As at the reporting date, the total amount of capital expenditure commitments contracted by the Group but not
provided for was US$372,000 (2022: US$372,000).
Save as disclosed above, there were no other significant capital expenditure commitments contracted by the Group
but not provided for as at the reporting date.
PROPERTY, PLANT AND EQUIPMENT
Details of movements in property, plant and equipment of the Group during the year are set out in note 19 to the
consolidated financial statements.
SUBSIDIARIES
Details of the Company’s principal subsidiaries are set out in note 44 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 39 to the consolidated financial statements.
46
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Directors’ Report
EVENTS AFTER THE REPORTING DATE
Subsequent to the reporting date, the Group entered into an agreement on 2 February 2024 for the acquisition of a
Capesize of deadweight 181,279 metric tons, built in year 2012, at a purchase price of US$30,950,000. The vessel will
be delivered to the Group between 1 July 2024 and 15 September 2024.
In addition, the Group entered into an agreement on 21 February 2024 for the acquisition of a Panamax of deadweight
81,567 metric tons, built in year 2019, at a purchase price of US$31,122,450. The vessel will be delivered to the Group
between 1 April 2024 and 15 June 2024.
Save as disclosed above, there were no other significant events occurred after the reporting date and up to the date
of this report.
GOING CONCERN
We confirm that the consolidated financial statements have been prepared under the assumption of going concern.
This assumption is based on sound financial positions backed by cash generated from operation before changes
in working capital, cash and marketable equity and debt securities, existing and available credit facilities and the
Group’s long term strategic and income forecasts. There exists good basis for the continued operations of the Group.
AUDITOR
The consolidated financial statements for the year ended 31 December 2023 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.
The Group pursues a policy of gender equality. Workload and working hours depend on positions while promotion
and recruitment depend on performance and experience. At 31 December 2023, the Group had 66 (2022: 65)
full-time employees, of whom 37 (2022: 35) employees were male and 29 (2022: 30) employees were female. As at
31 December 2023, the Board consists of six members, of whom five members are male and one member is female.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Directors’ Report
EMPLOYEES (Continued)
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 whistleblowing 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.
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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 2023 and 2022,
there were no work-related fatalities.
During the year, absence due to sickness was 1.1% (2022: 0.6%) of the total hours worked by employees. Work-
related injuries or accidents was 0.5% (2022: 0.6%) 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.
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 job duties to enrich their knowledge and perspective in discharging their
duties.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Directors’ Report
WORKING ENVIRONMENT (Continued)
Development and training (Continued)
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 accidents on vessels, we arrange emergency drills
for seafarers to deal with unexpected situations. We also hold emergency personnel training. Anti-piracy drills are
also performed periodically for our seafarers for the proper procedures when there is a pirate attack.
EXTERNAL ENVIRONMENT ISSUES
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 its stakeholders, as well as contribution to
the environment and the community growing.
We are committed to operate our business in an environmentally and socially responsible manner. 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 Group’s businesses and functional departments also help to formulate relevant strategies in their respective
areas and monitor the effectiveness of the implementation in accordance with the sustainable development strategies
and objectives suggested by the Board. Reviews are also arranged regularly to evaluate the effectiveness of current
policies and procedures and develop appropriate solutions to improve the overall performance of environmental,
social and governance policies.
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.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Directors’ Report
EXTERNAL ENVIRONMENT ISSUES (Continued)
Carbon dioxide (“CO
2
”) and greenhouse gas (“GHG”) emissions
Target 70% Reduction On Carbon Intensity Emission
Target 50% Reduction On GHG Emission
Both By 2050 Compared 2008
The International Maritime Organization (“IMO”) adopted an Initial Strategy on the reduction of emissions, both CO
2
emission and GHG emission from ships. The strategy represents a framework for the industry, setting out a vision for
international shipping, the levels of ambitions to reduce emissions and guiding principles.
In July 2023, IMO adopted a revised 2023 IMO GHG Strategy on reducing emissions, identifying levels of ambitions
for the sector including the reduction of CO
2
emissions per transport work, as an average across the industry, by at
least 40% by 2030, compared to 2008. The 2023 IMO GHG Strategy also includes a new level of ambition relating
to the uptake of zero or near-zero GHG emission technologies, fuels or energy sources which represent at least 5%
to 10% of the energy used by international shipping by 2030. The strategy also identifies the reduction of the total
annual GHG emissions from international shipping by at least 20% to 30% by 2030, and by at least 70% to 80% by
2040, compared to 2008.
We support the IMO’s targets as our short term and long term targets of decarbonization.
Starting from January 2024, the European Union’s (“EU”) Emissions Trading System (“ETS”) extended to cover
CO
2
emissions from maritime transport entering EU ports. Shipping companies have to purchase and use EU ETS
emission allowances for each tonne of reported CO
2
emissions. We believe ETS inclusion of maritime transport
will drive a faster reduction of emissions among the industry. The Group will strive as much as possible to reduce
emissions to enjoy the lowest carbon price.
Acting as a participant in the marine market, the Group always concerns the issue of increasing GHG and
consumption of fossil fuels. We own a modern and high-quality fleet of dry bulk carriers and as at 31 December 2023,
the Group had twenty three owned vessels. We ensure our owned fleet be equipped with proven green and energy
efficient equipment and technologies to minimize the emission of toxic pollutants.
Annual efficiency ratio (“AER”) and energy efficiency operational indicator (“EEOI”)
Target Minimum 2% Reduction On EEOI
Compared With Previous Year
AER is a vessel carbon intensity ratio which is approved as mandatory by IMO. In the short term, we aim at a 15%
reduction
of AER by 2026 and a 30% reduction by 2030. AER for the year 2023 is being assessed and the results will
be available in the second quarter of 2024. Below shows the estimated EEOI and related index of the Group for the
years 2023 and 2022:
EEOI is an index showing the amount of CO
2
emission per tonne of cargo carried per mile of sea voyage.
2023: the average EEOI of the fleet is about 10.0 grammes CO
2
/ MT.Mile
2022: the average EEOI of the fleet is about 12.8 grammes CO
2
/ MT.Mile
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
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EXTERNAL ENVIRONMENT ISSUES (Continued)
The EEOI of 2023 decreased about 2.8 grammes from the EEOI of 2022, representing a decrease of 22% as compared
to 2022. The decrease was mainly due to fewer ballast voyages arranged in 2023 as compared to the year 2022.
The fuel oil consumption and the corresponding CO
2
emission of the fleet are as follows:
Fuel oil consumption:
2023: Fuel oil consumption – 112,375 tonnes
2022: Fuel oil consumption – 105,910 tonnes
Corresponding CO
2
emission:
2023: CO
2
emission – 350,179 tonnes
2022: CO
2
emission – 330,551 tonnes
As the Group continued to seek to fine tune the quality of our fleet during the year, fuel oil consumption increased
slightly under the fleet changes.
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 (i) to (v):
(i) Calculation and verification energy efficiency existing ship index (“EEXI”)
(ii) Compliance of energy efficiency design index (“EEDI”) for newbuilding ship energy efficiency
Target All Vessels Comply EEXI
Target 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 2021, the attained EEXI is required to be
calculated and verified by Class American Bureau of Shipping for every vessel and the requirement has been in force
since the start of 2023. Ships are required to meet a specific required EEXI, which is based on a required reduction
factor expressed as a percentage relative to the EEDI baseline.
The process of evaluation of our fleet by Class American Bureau of Shipping has started. Although the result is yet
to be released, a gap between the existing EEXI and the required EEXI is expected. In order to fill this gap, a series of
modifications and improvements are scheduled for our fleet to meet the EEXI requirement accordingly.
The Group believes our fleet could achieve CO
2
and GHG vessel emissions reduction by implementing a combination
of hardware improvements and operational performance techniques.
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EXTERNAL ENVIRONMENT ISSUES (Continued)
We have implemented the Engine Power Limitation for those vessels which have not met the EEXI requirement. We
believe that it is the first step and the fastest way to lower the emissions. We try to make our vessels more efficient
by reducing the amount of energy needed to propel it through the water. Propeller boss cap fins and propeller duct
have been installed on our vessels. We also switch to using silicon anti-fouling paints and deploy de-rated main
engines to our vessels in order to maintain the speeds of our vessels but with less fuel consumption.
Implementing operational performance techniques brings significant advantages to our fleet by combining tiny
improvements. Propeller polishing and hull cleaning are scheduled periodically for our vessels for a smoother
propel in the water. We optimize our fleet engine by implementing weather routing, optimization of ballast and trim,
optimized voyage planning, usage of fuel oil additives, and optimum settings of fuel oil purifiers. We believe small
improvements can add up to substantial fuel savings.
In 2023, the Group acquired a vessel which is already in compliance with EEDI.
(iii) Carbon intensity indicator (“CII”)
Target Rated C Or Above For All Vessels
CII gives vessels an annual rating on scale of A to E, with A being the least carbon intensive. 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. A vessel rated D for three consecutive years, or rated E for a particular year, will need to develop a
work plan of corrective actions.
On 1 January 2023, it became mandatory for vessels to establish their CII rating. Our fleet has joined the Data
Collection and Reporting System since 2019 which enables data to be analyzed and verified by American Bureau
of Shipping. The official evaluation results of our fleet were yet to be released, however, under our estimation, a
number of our vessels will be getting rated D or below on CII. These vessels will be put through a series of planned
works as mentioned to improve the CII rating. We aim to achieve rating C or above for all of our vessels on CII.
(iv) Ship energy efficiency management plan (“SEEMP”)
The vessels’ SEEMP plans are approved by American Bureau of Shipping and certified in compliance with
IMO Resolutions.
CO
2
emission reduction – since February 2013, the Group has adopted the SEEMP, a plan that individual vessel can
follow and improve each vessel’s energy efficiency and reduction in fuel consumption through a series of procedures
and efforts.
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 of initial SEEMP in 2013, adopted SEEMP Part II in 2021
and SEEMP Part III in 2022.
(v) For newbuilding projects, we may choose the most energy efficient design and will include the possibility of
using dual fuel engines.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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EXTERNAL ENVIRONMENT ISSUES (Continued)
Low sulphur oil
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.
Fuel oil consumption:
2023:
0.5% low sulphur content heavy fuel oil consumption – 109,748 tonnes
2022:
0.5% low sulphur content heavy fuel oil consumption – 98,197 tonnes
2023:
0.1% ultra-low sulphur content fuel oil consumption – 2,627 tonnes
2022:
0.1% ultra-low sulphur content fuel oil consumption – 7,713 tonnes
As our vessels traded less in the ECA, our consumption of 0.1% ultra-low sulphur content fuel oil dropped in 2023.
Hazardous and non-hazardous waste produced Target Zero Hazardous & Non-Hazardous Waste Discharge
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 The International Convention for the
Prevention of Pollution from Ships (“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 2023 and 2022.
Garbage and waste management plan
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 reaches that port when 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 the consumption of natural water. Potable water is consumed for drinking, cooking and
other domestic purposes.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Directors’ Report
EXTERNAL ENVIRONMENT ISSUES (Continued)
Water consumption (Continued)
Water consumption remained approximately 6 tonnes per vessel per day in both 2023 and 2022.
2023: Water consumption – 55,000 tonnes
2022: Water consumption – 66,000 tonnes
In order to reduce the use of water resources, we keep good maintenance on boilers and other equipment that use
fresh water and also ensure that there is no leakage of water. Water log has been used for recording the usage
of
daily fresh water and locating leakage when abnormal consumption was found. On the other hand, we also
educate seafarers to use water in a frugal way. We encourage seafarers to efficiently use washing machines. We use
appliances, shower heads and equipment that conserve water. In the future, vacuum toilet systems will be considered
when planning to acquire the newbuild vessels.
Ballast water management
Target All Vessels Installed BWTS
Target Zero Failure In The Ballast Water Record Book
Ballast
water is essential for safe and efficient modern shipping operations, but 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 transferred species may survive
to establish a reproductive population in the host environment, becoming invasive, out-competing native species and
multiplying into pest proportions.
The Group started the investment project and installing the Ballast Water Treatment System (“BWTS”) in our fleet
in 2021 and will complete the project in 2024. 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. We prohibit unnecessary discharge of ballast water. Vessels need to
replace the ballast water at least 50 nautical miles from the nearest shore and at least 200 meters deep when facing
abnormal or special situations. Ballast Water Record Book must be kept on each vessel to record the discharge.
Climate change
The Group understands 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 and combine them with our business development. The climate-related risks that
are likely to have corresponding business and financial impacts on the Group are discussed as below.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Directors’ Report
EXTERNAL ENVIRONMENT ISSUES (Continued)
Climate change (Continued)
Physical risks
Acute risk – long term The increased frequency and severity of extreme weather such as typhoons, floods, sea
level rise and tropical cyclones can disrupt the Group’s operations by damaging the fleet, ports and communication
infrastructures, causing power failure and injuring employees during their work, leading to reduced capacity and
decrease 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 reputational damage, direct loss of revenue
and increase operating cost.
Transition risks
Laws and regulation 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 commits to environmental protection and strives to comply with disclosure requirements, however, this
may increase the risk of higher operating costs and maintenance costs.
Market and reputational risk – short to medium term The shipping market is constantly changing, and the
increasing attention by the public towards environmental protection led to the change in customer behavior and
preference. This change in market pattern led to a change in the demand of the shipping industry – increased
demand for green transportation represents an increase in demand for low-sulphur oil with constant performance
thus resulting a higher running cost.
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 that 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.
In response to policy and legal risk and market and reputational risk, the Group will closely monitor any change in
environmental regulations and policies, and respond in a timely manner.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Directors’ Report
EXTERNAL ENVIRONMENT ISSUES (Continued)
Supply chain management
The Group realizes the importance of the role of suppliers to our operations and prosperity. We pay great attention
to the supplier relationship, particularly actively and regularly listening to them in order to improve, innovate and
co-construct.
Standard procedures were developed for purchase management and vendor management by the Group. The
procedures define the responsibilities and activities of procurement to ensure that goods and services are purchased
from suppliers of approved reputation and capability, regulate the process for evaluation, selection and monitoring of
suppliers under certain criteria and control the purchase and verification.
We believe our selection of suppliers affects the performance of the Group. We carefully choose our suppliers that
align with our requirements, thus enabling us to maintain our quality. We assess potential suppliers carefully before
confirming any engagement. The procedures give guidelines for selecting suppliers according to their ability to
provide quality goods and services, their conformity to all relevant legislation and their ability to deliver on time
and at the right price. The Group sets up guidelines on the assessment to ensure the suppliers are committed to
the environment, social and human rights and good ethical practices, including those dealing with human rights,
environmental protection, sustainable development, corruption and child protection.
Identified potential suppliers will be included in an approved suppliers list which is maintained within the Group’s
purchasing system. Key suppliers are monitored based on historical and current performance and records are
updated accordingly.
For the year ended 31 December 2023, number of suppliers by geographical region as below:
Geographical region Number of supplier
Africa 4
Asia excluding China 55
China 184
Europe 24
Middle East 2
North America 14
South America 7
Total 290
JINHUI SHIPPING AND TRANSPORTATION LIMITED
57
ANNUAL REPORT 2023
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. Ng Ki Hung Frankie 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.
58
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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 2023, 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
Note 1
5,628,884
Ng Kam Wah Thomas 864,900 – 260,000
Note 2
1,124,900
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, Mr. Ng Chi Lam Michael, 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 1,483,831 shares of the Company as at
31 December 2023.
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
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 2023.
Number of shares in Jinhui Holdings
held and capacity
Name
Beneficial
owner
Interest of
spouse
Interest in
corporation Total
Ng Siu Fai 25,203,000 15,140,000 205,325,568
Note 1
245,668,568
Ng Kam Wah Thomas 5,909,000 – 136,883,712
Note 2
142,792,712
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 2023 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.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
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Directors’ Report
CORPORATE GOVERNANCE
Jinhui Shipping recognizes the importance of good corporate governance to the Company’s value creation. The
corporate governance report of 2023 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 Group continues to seek to fine tune the quality of our fleet, in
particularly in terms of seeking to lower the overall age profile of our fleet. During the year, the Group entered
into agreements to acquire, dispose and charter-in vessels with a view to maintaining high financial flexibility and
operational competitiveness.
On 20 September 2023, the Group entered into an agreement for the disposal of a Supramax at a consideration of
US$8,080,000. The vessel was delivered to the purchaser in November 2023.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Directors’ Report
RISK MANAGEMENT (Continued)
On 27 September 2023, the Group entered into an agreement for the acquisition of a Supramax at a purchase price of
US$20,433,000. The vessel was delivered to the Group at end of October 2023.
On 29 November 2023, the Group entered into an agreement for the disposal of a Supramax at a consideration of
US$9,650,000. The vessel was delivered to the purchaser at end of December 2023.
On 12 December 2023, the Group entered into an agreement for the disposal of a Supramax at a consideration of
US$10,430,000. The vessel was delivered to the purchaser in January 2024. For financial reporting purposes, the
vessel was reclassified to “Assets held for sale” in accordance with IFRS 5 and HKFRS 5 “Non-current Assets Held for
Sale and Discontinued Operations” at the reporting date, with an impairment loss on assets held for sale (disposed
vessel) of US$1,288,000 was recognized for the year and was included in other operating expenses.
As at 31 December 2023, the Group owned twenty-three grabs fitted Supramaxes, and had one chartered-in Panamax.
The total carrying capacity of the Group’s fleet was 1,415,930 metric tons as at 31 December 2023.
On 8 December 2023, the Group entered into a charterparty with a third party in respect of leasing of a Panamax of
deadweight 81,842 metric tons, built in year 2021, for a term of minimum twenty-two months, commencing on the
date of delivery of the vessel to the Group. The vessel was delivered to the Group in January 2024. In accordance
with IFRS 16 and HKFRS 16 Leases, the Group will recognize the unaudited value of the right-of-use assets which
is the present value of total minimum hire payment at the inception of the lease terms of the charterparty and
corresponding lease liabilities will also be recognized in the consolidated statement of financial position upon the
delivery of the vessel. The Directors consider that the lease of a Panamax represents an opportunity for the Group to
increase the carrying capacity with a modern ship 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.
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 of smaller and older vessels
and replace with newer vessels with larger carrying capacity and longer asset lives or charter-in of vessels. We will
make such decisions on an ad hoc basis to maintain 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 41 to the consolidated financial statements.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Directors’ Report
OUTLOOK
2023 has been a rocky year, with slowing global growth and inflationary pressure which led to a tight monetary
environment. Going forward, we expect the global economic growth to regain stability and gain momentum. We
expect freight rates of dry bulk shipping to improve subject to the absence of black swan events in the economic and
geopolitical front. We have seen some improvement in the last quarter of 2023, with increasing activities in recent
months.
Transportation of commodities continues to be affected by complex variables that range from industry specific,
economical, as well as geopolitically driven factors. Supply and demand remain to be balanced, with the supply
of new vessels remaining low providing a solid base case scenario. With cost of borrowing remaining high and no
consensus in the shipping community with regards to the next generation engine design to satisfy new regulations,
new vessel orders are expected to be few. Looking ahead, should economic recovery gain pace at a rate that is
beyond market expectations, our fleet will be well positioned to benefit from these supportive industry specific
fundamentals. We also continue to look for fleet renewal opportunities that will meet the needs of the market and our
customers.
We continue to stay alert to the increasingly frequent economic, geo-political, or other unforeseen surprises
that can trigger volatility to our business performance, as well as the carrying value of our shipping assets and
financial assets. We currently have no newbuilding contracts, and likely to focus on suitable second hand tonnages
opportunities. We will continue to focus on taking sensible and decisive actions to achieve growth without sacrificing
the maintenance of 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.
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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.
12 March 2024
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
65
ANNUAL REPORT 2023
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 2023 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.
12 March 2024
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
66
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Independent Auditor’s Report
To the members of
Jinhui Shipping and Transportation Limited
(Incorporated in Bermuda with limited liability)
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
OPINION
We have audited the consolidated financial statements of Jinhui Shipping and Transportation Limited (the “Company”)
and its subsidiaries (together, the “Group”) set out on pages 73 to 149, which comprise the consolidated statement of
financial position as at 31 December 2023, 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 material accounting policy information.
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 2023, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International
Accounting Standards Board (“IASB”) and Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong
Kong Institute of Certified Public Accountants (“HKICPA”).
BASIS FOR OPINION
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the
HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
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ANNUAL REPORT 2023
Independent Auditor’s Report
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Carrying value of owned vessels and leased vessel (right-of-use assets)
The Key Audit Matters How the matter was addressed in our audit
Refer to notes 4.11, 5, 19 and 20 to the consolidated financial
statements.
The Group’s carrying amount of motor vessels and capitalized
drydocking costs included in property, plant and equipment
and leased vessel included in right-of-use assets amounted
to US$324,947,000 and US$21,095,000 respectively as at 31
December 2023 and impairment loss of US$19,704,000 was
recognized in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income for 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.
Our audit procedures included:
•
evaluating the process of identifying indicators of
potential impairment or reversal of impairment on
owned and leased vessels;
•
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 discount rate and hire
rates;
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JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Independent Auditor’s Report
KEY AUDIT MATTERS (Continued)
Carrying value of owned vessels and leased vessel (right-of-use assets) (Continued)
The Key Audit Matters How the matter was addressed in our audit
The recoverable amounts of owned 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 and the
recoverable amounts of leased vessel was determined based
on the VIU calculation. Independent qualified appraisal firms
were engaged by management to appraise the fair value of
owned vessels and 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 utilization rate of the owned and
leased vessels.
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
69
ANNUAL REPORT 2023
Independent Auditor’s Report
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises all the information in the 2023
annual report, 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.
70
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
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.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
71
ANNUAL REPORT 2023
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.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
OPINION
As part of the audit of the financial statements of Jinhui Shipping and Transportation Limited, we have performed an
assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual
report, with the file name “jinhui-2023-12-31-en.zip”, have been prepared, in all material respects, in compliance with
the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format
(ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes
requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated
financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in
compliance with the ESEF regulation.
DIRECTORS’ RESPONSIBILITIES
The directors are responsible for the preparation of the annual report in compliance with the ESEF regulation. This
responsibility comprises an adequate process and such internal control as the directors determine is necessary.
AUDITORS’ RESPONSIBILITIES
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material respects, the
financial statements included in the annual report have been prepared in compliance with ESEF Regulation. We conducted
our work in accordance with the Hong Kong Standard on Assurance Engagements (HKSAE) 3000 (Revised) “Assurance
engagements other than audits or reviews of historical financial information” issued by the HKICPA. The standard requires
us to plan and perform procedures to obtain reasonable assurance about whether the financial statements included in
the annual report have been prepared in compliance with the ESEF Regulation.
72
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Independent Auditor’s Report
AUDITORS’ RESPONSIBILITIES (Continued)
As part of our work, we have performed procedures to obtain an understanding of the Company’s processes for preparing
the financial statements in accordance with the ESEF Regulation. We examine whether the financial statements are
presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL tagging of the consolidated
financial statements and assess directors’ use of judgement. Our procedures include reconciliation of the iXBRL tagged
data with the audited financial statements in human-readable format. We believe that the evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Hong Kong Limited
Certified Public Accountants
11th Floor
Lee Garden Two
28 Yun Ping Road
Causeway Bay
Hong Kong SAR
12 March 2024
Chi-Kit Shaw
Practising Certificate No.: P04834
JINHUI SHIPPING AND TRANSPORTATION LIMITED
73
ANNUAL REPORT 2023
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Year ended 31 December 2023
2023
2022
Note
US$’000
US$’000
Revenue
81,868
152,466
Net gain (loss) on disposal of owned vessels
(880)
5,636
Other operating income
7,643
15,419
Interest income
10
819
1,064
Impairment loss on owned vessels and right-of-use assets
11
(19,704)
(49,326)
Shipping related expenses
(58,490)
(66,793)
Staff costs
12
(13,336)
(13,668)
Other operating expenses
(9,748)
(8,583)
Operating profit (loss) before depreciation and amortization
(11,828)
36,215
Depreciation and amortization
(36,994)
(39,870)
Operating loss
(48,822)
(3,655)
Finance costs
(6,234)
(3,438)
Loss before taxation
(55,056)
(7,093)
Taxation
16
(20)
Net loss for the year
(55,055)
(7,113)
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss:
Change in fair value of financial assets at
fair value through OCI (non-recycling)
(2,137)
(2,861)
Change in fair value arisen from reclassification from leasehold land
and buildings to investment properties (non-recycling)
367
–
Items that may be reclassified subsequently to profit or loss:
Change in fair value of financial assets at
fair value through OCI (recycling)
(12)
(38)
Total comprehensive loss for the year
attributable to shareholders of the Company
(56,837)
(10,012)
Loss per share
17
– Basic and diluted
US$(0.504)
US$(0.065)
74
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Consolidated Statement of Financial Position
As at 31 December 2023
2023
2022
Note
US$’000
US$’000
ASSETS
Non-current assets
Property, plant and equipment
19
333,413
384,661
Right-of-use assets
20(a)
21,095
28,997
Investment properties
21
25,259
27,210
Financial assets at fair value through OCI
22
7,691
9,840
Loan receivables
24
1,577
–
389,035
450,708
Current assets
Inventories
1,383
2,993
Loan receivables
24
–
1,342
Trade and other receivables
25
18,089
20,245
Financial assets at fair value through profit or loss
26
24,094
29,227
Pledged deposits
37(c)
359
444
Bank balances and cash
40,250
33,353
84,175
87,604
Assets held for sale
10,423
–
94,598
87,604
Total assets
483,633
538,312
EQUITY AND LIABILITIES
Capital and reserves
Issued capital
29
5,463
5,463
Reserves
344,467
405,674
Total equity
349,930
411,137
JINHUI SHIPPING AND TRANSPORTATION LIMITED
75
ANNUAL REPORT 2023
Consolidated Statement of Financial Position
As at 31 December 2023
2023
2022
Note
US$’000
US$’000
Non-current liabilities
Secured bank loans
31
55,670
48,560
Lease liabilities
20(b)
24,078
25,164
79,748
73,724
Current liabilities
Trade and other payables
32
16,221
14,833
Amount due to holding company
176
167
Secured bank loans
31
32,497
34,278
Lease liabilities
20(b)
5,061
4,173
53,955
53,451
Total equity and liabilities
483,633
538,312
Approved and authorized for issue on 12 March 2024
Ng Siu Fai Ng Kam Wah Thomas Ng Ki Hung Frankie
Chairman Managing Director and
Deputy Chairman
Executive Director
Ho Suk Lin Cathy Tsui Che Yin Frank William Yau
Executive Director Non-executive Director Non-executive Director
76
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Consolidated Statement of Changes in Equity
Year ended 31 December 2023
Reserve for
financial
assets at
Capital fair value
Issued Share redemption Contributed Revaluation through Retained Total
capitalpremiumreservesurplusreserveOCIprofitsequity
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
At 1 January 2022
5,463
95,585
719
16,297
476
2,754
310,781
432,075
Comprehensive loss
Net loss for the year
–
–
–
–
–
–
(7,113)
(7,113)
Other comprehensive loss
Change in fair value of financial
assets at fair value through OCI
–
–
–
–
–
(2,899)
–
(2,899)
Total comprehensive loss for the year
–
–
–
–
–
(2,899)
(7,113)
(10,012)
2021 final dividend paid
–
–
–
–
–
–
(7,648)
(7,648)
2022 interim dividend paid
–
–
–
–
–
–
(3,278)
(3,278)
Total dividend paid
–
–
–
–
–
–
(10,926)
(10,926)
At 31 December 2022
5,463
95,585
719
16,297
476
(145)
292,742
411,137
At 1 January 2023
5,463
95,585
719
16,297
476
(145)
292,742
411,137
Comprehensive loss
Net loss for the year
–
–
–
–
–
–
(55,055)
(55,055)
Other comprehensive income (loss)
Change in fair value of financial
assets at fair value through OCI
–
–
–
–
–
(2,149)
–
(2,149)
Change in fair value arisen from
reclassification from leasehold land
and buildings to investment properties
–
–
–
–
367
–
–
367
Total comprehensive loss for the year
–
–
–
–
367
(2,149)
(55,055)
(56,837)
2022 final dividend paid
–
–
–
–
–
–
(4,370)
(4,370)
At 31 December 2023
5,463
95,585
719
16,297
843
(2,294)
233,317
349,930
JINHUI SHIPPING AND TRANSPORTATION LIMITED
77
ANNUAL REPORT 2023
Consolidated Statement of Cash Flows
Year ended 31 December 2023
2023
2022
Note
US$’000
US$’000
OPERATING ACTIVITIES
Cash generated from operations
33
20,611
91,249
Interest paid
(4,817)
(2,690)
Hong Kong Profits Tax refunded (paid)
150
(220)
Net cash from operating activities
15,944
88,339
INVESTING ACTIVITIES
Interest received
518
906
Dividend income received
1,171
2,624
Purchase of property, plant and equipment
(24,333)
(140,603)
Proceeds from disposal of property, plant and equipment, net
17,432
64,668
Net cash used in investing activities
(5,212)
(72,405)
FINANCING ACTIVITIES
New secured bank loans
57,696
66,859
Repayment of secured bank loans
(52,367)
(76,599)
Decrease in pledged deposits
85
7,863
Payment of lease liabilities
(3,455)
(2,403)
Interest paid on lease liabilities
(1,424)
(703)
Dividends paid to shareholders of the Company
(4,370)
(10,926)
Net cash used in financing activities
(3,835)
(15,909)
Net increase in cash and cash equivalents
6,897
25
Cash and cash equivalents at 1 January
33,353
33,328
Cash and cash equivalents at 31 December
40,250
33,353
78
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
1. GENERAL INFORMATION
Jinhui Shipping and Transportation Limited was incorporated on 16 May 1994 and registered as an exempted
company with limited liability in Bermuda. The registered office of the Company is at Clarendon House, 2 Church
Street, Hamilton HM 11, Bermuda. The Company’s shares are listed on the Oslo Stock Exchange (Oslo Børs).
The principal activity of the Company is investment holding. Its subsidiaries are principally engaged in the
businesses of ship chartering and ship owning which are carried out internationally.
The Group is controlled by Jinhui Holdings Company Limited, a company incorporated in Hong Kong which
holds approximately 55.69% of the Company’s shares at the reporting date. The registered office of Jinhui
Holdings, where its consolidated accounts can be obtained, locates at 26th Floor, Yardley Commercial Building,
1-6 Connaught Road West, Hong Kong, PRC.
The consolidated financial statements for the year ended 31 December 2023 were approved for issue by the
Board on 12 March 2024.
2. STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards, which collective term includes all applicable individual International Financial Reporting Standards,
International Accounting Standards and Interpretations issued by the International Accounting Standards Board,
and Hong Kong Financial Reporting Standards, which collective term includes all applicable individual Hong Kong
Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong
Institute of Certified Public Accountants.
3. ADOPTION OF NEW AND AMENDED IFRSs AND HKFRSs
In current year, the Group has applied for the first time, the following new and amendments to IFRSs and HKFRSs
issued by the IASB and the HKICPA, which are relevant to and effective for the Group’s consolidated financial
statements for the accounting period beginning on 1 January 2023.
IFRS 17 and HKFRS 17 Insurance Contracts and related amendments
Amendments to IAS 1 and HKAS 1, and
IFRS Practice Statement 2 and
HKFRS Practice Statement 2
Disclosure of Accounting Policies
Amendments to IAS 8 and HKAS 8 Definition of Accounting Estimates
Amendments to IAS 12 and HKAS 12 Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
Amendments to IAS 12 and HKAS 12 International Tax Reform – Pillar Two Model Rules
The adoption of the new and amended IFRSs and HKFRSs does not have material impact on the Group’s financial
performance and financial position for the current and prior periods have been prepared and presented.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
79
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
3. ADOPTION OF NEW AND AMENDED IFRSs AND HKFRSs (Continued)
At the date of authorization of these consolidated financial statements, certain other new or amended IFRSs
and HKFRSs have been published but are not yet effective, and have not been early adopted by the Group.
The management anticipated that all pronouncements will be adopted in the Group’s accounting policy for the
first accounting period beginning after the effective dates of the pronouncements. Information on these new
pronouncements that are expected to be relevant to the Group’s consolidated financial statements is provided
below.
Amendments to IFRS 16 and HKFRS 16 Lease Liability in a Sale and Leaseback
1
Amendments to IFRS 10 and HKFRS 10, and
IAS 28 and HKAS 28
Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture
3
Amendments to IAS 1 and HKAS 1 Classification of Liabilities as Current or Non-current and
related amendments to Hong Kong Interpretation 5
1
Amendments to IAS 1 and HKAS 1 Non-current Liabilities with Covenants
1
Amendments to IAS 7, HKAS 7,
IFRS 7 and HKFRS 7
Supplier Finance Arrangements
1
Amendments to IAS 21 and HKAS 21 Lack of Exchangeability
2
Notes:
1.
Effective for annual periods beginning on or after 1 January 2024
2.
Effective for annual periods beginning on or after 1 January 2025
3.
Effective date not yet determined
The management is currently assessing the possible impact of the new or amended standards and interpretations
on the Group’s results and financial position in the first year of application.
80
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
3. ADOPTION OF NEW AND AMENDED IFRSs AND HKFRSs (Continued)
New HKICPA guidance on the accounting implication of the mandatory provident fund (“MPF”) – long service
payment (“LSP”) offsetting mechanism
The Government of the HKSAR (the “Government”) gazetted the Hong Kong Employment and Retirement Schemes
Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022 (the “Amendment Ordinance”) in June 2022,
which will take effect on 1 May 2025 (the “Transition Date”). The Amendment Ordinance abolishes the use of
the accrued benefits derived from employers’ mandatory MPF contributions to offset severance payment (“SP“)
and LSP in respect of the employment period after the Transition Date (the “Abolition”). In addition, under the
Amendment Ordinance, the last month’s salary immediately preceding the Transition Date is used to calculate
the portion of the SP / LSP in respect of the employment period before the Transition Date. In July 2023, the
HKICPA published “Accounting implications of the abolition of the MPF-LSP offsetting mechanism in Hong Kong”
(the “Guidance”) that provides the accounting guidance relating to the offsetting mechanism and impact arising
from the Abolition of the mechanism in Hong Kong.
By following the Guidance, the Group has changed its accounting policy in connection with its LSP obligations
to reflect the substance of the abolition of the offsetting mechanism. Therefore, the Group ceased to apply the
practical expedient and reattribute the deemed employee contributions to periods of service in the same manner
as the gross LSP benefit by applying paragraph 93(a) of IAS 19 / HKAS 19 Employee Benefits. This change in
accounting policy upon the cessation in applying the Practical Expedient has resulted in a catch-up adjustment
in profit or loss in June 2022 for the service cost up to that date and consequential impacts on current service
cost, interest expense and remeasurement effects from changes in actuarial assumptions for the period ended
31 December 2023, with the corresponding adjustment to the comparative carrying amount of LSP liability.
However, the amount of the catch-up profit or loss adjustment was immaterial and did not have any impact on
the consolidated financial statements for the prior periods have been prepared and presented.
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES
4.1 Basis of preparation
The material accounting policies that have been used in the preparation of these consolidated financial statements
are summarized below. These policies have been consistently applied to all the years presented unless otherwise
stated.
The consolidated financial statements have been prepared on the historical cost basis except for: investment
properties, financial assets at fair value through profit or loss and financial assets at fair value through OCI that
are stated at fair values. The measurement bases are fully described in the accounting policies below.
It should be noted that accounting estimates and assumptions are used in preparation of the consolidated
financial statements. Although these estimates are based on management’s best knowledge and judgement of
current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are material to the consolidated
financial statements, are disclosed in note 5.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
81
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries
made up to 31 December each year.
Intra-group transactions, balances and unrealized gains on transactions between group companies are eliminated
in preparing the consolidated financial statements. Unrealized losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are excluded
from consolidation from the date that control ceases.
4.3 Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights,
to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. When assessing whether the Group has power, only substantive rights (held by the Group
and other parties) are considered.
In the Company’s statement of financial position, investments in subsidiaries are carried at cost less any
impairment loss. The results of subsidiaries are accounted for by the Company on the basis of dividends received
and receivable at the reporting date.
4.4 Foreign currency translation
The consolidated financial statements are presented in United States Dollars which is the functional and
presentation currency of the Company. The functional and presentation currencies of the Company’s subsidiaries
are either in United States Dollars or Hong Kong Dollars.
In the individual financial statements of the consolidated entities, foreign currency transactions are translated into
the functional currency of the individual entity using the exchange rates ruling at the dates of the transactions.
At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated at the
foreign exchange rates ruling at that date. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the reporting date retranslation of monetary assets and liabilities are recognized in
profit or loss.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated (i.e.
only translated using the exchange rates at the transaction date). When a fair value gain or loss on a non-monetary
item is recognized in profit or loss, any exchange component of that gain or loss is also recognized in profit or
loss. When a fair value gain or loss on a non-monetary item is recognized in other comprehensive income, any
exchange component of that gain or loss is also recognized in other comprehensive income.
82
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.4 Foreign currency translation (Continued)
In the consolidated financial statements, all individual financial statements of foreign operations, originally
presented in a currency different from the Group’s presentation currency, have been converted into United States
Dollars. Assets and liabilities have been translated into United States Dollars at the closing rates at the reporting
date. Income and expenses have been converted into United States Dollars at the exchange rates ruling at the
transaction dates, or at the average rates over the reporting period provided that the exchange rates do not
fluctuate significantly. Any significant differences arising from this translation procedure are recognized in other
comprehensive income and accumulated separately in the translation reserve in equity.
4.5
Revenue recognition
Revenue
mainly arises from the operations of ship chartering or owning business comprises chartering freight
and hire income.
To determine whether to recognize revenue, the Group follows a five-step process:
(a)
Identify contracts with customers
(b)
Identify the separate performance obligations in the contract
(c) Determine the transaction price of the contract
(d) Allocate the transaction price to each of the separate performance obligation in the contract
(e) Recognize the revenue as each performance obligation is satisfied
In all cases, the total transaction price for a contract is allocated amongst the various performance obligations
based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts
collected on behalf of third parties.
Revenue is recognized over time, when (or as) the Group satisfies performance obligations by transferring the
promised services to its customers. Further details of the Group’s revenue recognition policies are as follows:
(a) Hire income under time charter is accounted for as operating lease and is recognized on a straight-line
basis over the period of each time charter contract. Crewing service income classified as non-lease
component is included in hire income and recognized over the period of each time charter contract.
(b)
Freight income under voyage charter is accrued over the period from the date of loading of charterer’s
cargo to the date of discharging the cargo and is recognized on percentage of completion basis measured
by time proportion of each voyage charter contract. The existing practice reflects the performance obligation
to provide transportation services which is satisfied over time from when transport of the goods begins
from loading port through delivery to discharging port and freight income is recognized over the period
of performance.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
83
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.6 Borrowing costs
Borrowing costs incurred for the acquisition or construction of any qualifying asset are capitalized during the
period of time that is required to complete or prepare the asset for its intended use. A qualifying asset is an asset
which necessarily takes a substantial period of time to get ready for its intended use or sale. Other borrowing
costs are expensed as incurred.
The capitalization of borrowing costs as part of the qualifying assets commences when borrowing costs are
being incurred and the activities that are necessary to prepare the asset for its intended use are in progress.
Capitalization of borrowing costs is suspended or ceased when substantially all activities necessary to prepare
the qualifying assets for its intended use are interrupted or completed.
4.7
Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions. Government grants are deferred
and recognized in profit or loss over the period necessary to match them with the costs that the grants are
intended to compensate.
Government grants relating to income is presented in gross under “Other operating income” in the consolidated
statement of profit or loss and other comprehensive income.
4.8 Income tax
Income tax comprises current tax and deferred tax.
Current income tax assets and / or liabilities comprise those obligations to, or claims from, fiscal authorities relating
to the current or prior reporting periods, that are unpaid at the reporting date. They are calculated according to
the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the
year. All changes to current tax assets or liabilities are recognized as a component of tax expense in profit or loss.
Deferred tax is provided using the liability method on temporary differences at the reporting date between the
carrying amounts of assets and liabilities in the consolidated financial statements and their respective tax bases.
It is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or
the asset is realized, provided these tax rates have been enacted or substantively enacted at the reporting date.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
recognized for all deductible temporary differences and tax losses available to be carried forward to the extent
that it is probable that taxable profit will be available against which the deductible temporary differences and
unused tax losses can be utilized.
For investment properties measured using the fair value model in accordance with the accounting policy below,
the measurement of the related deferred tax asset or liability reflects the tax consequences of recovering the
carrying amount of the investment properties entirely through sale, unless the investment property is depreciable
and is held within a business model whose objective is to consume substantially all of the economic benefits
embodied in the investment property over time, rather than through sale.
84
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.8 Income tax (Continued)
Deferred tax assets or liabilities are not recognized if the temporary differences arise from goodwill or from initial
recognition (other than in a business combination) of assets or liabilities in a transaction that affects neither
taxable nor accounting profit or loss and does not give rise to equal taxable and deductible temporary differences.
Changes in deferred tax assets or liabilities are recognized in profit or loss, or in other comprehensive income or
directly in equity if they relate to items that are charged or credited to other comprehensive income or directly
to equity.
When different tax rates apply to different levels of taxable income, deferred tax assets and liabilities are
measured using the average tax rates that are expected to apply to the taxable income of the periods in which
the temporary differences are expected to reverse.
The determination of the average tax rates requires an estimation of (i) when the existing temporary difference will
reverse and (ii) the amount of future taxable profit in those years. The estimate of future taxable profit includes:
–
income or loss excluding reversals of temporary differences; and
– reversals of existing temporary differences.
Current tax assets and current tax liabilities are presented in net if, and only if,
(a) the Group has the legally enforceable right to set off the recognized amounts; and
(b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
The Group presents deferred tax assets and deferred tax liabilities in net if, and only if,
(a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
(b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation
authority on either:
(i)
the same taxable entity; or
(ii)
different
taxable entities which intend either to settle current tax liabilities and assets on a net
basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which
significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
85
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.9 Property, plant and equipment
The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable
costs of bringing the asset to its working condition and location for its intended use. Improvements are capitalized
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. Expenditures incurred in restoring assets to their normal working
conditions and other repairs and maintenance are charged to profit or loss during the financial period in which
they are incurred.
Motor vessels are stated at cost less accumulated depreciation and impairment loss.
Drydocking and special survey costs are capitalized and depreciated over the drydocking cycle of two to three
years on a straight-line basis. Upon disposal of vessels, any relevant carrying amounts not yet written off are
transferred to profit or loss. Vessel repairs and survey costs are expensed during the financial period in which
they are incurred.
Leasehold land and buildings (where the fair values of the leasehold interest in the land and buildings cannot be
measured separately at the inception of the lease and the building is not clearly held under an operating lease)
are stated at cost less accumulated depreciation and impairment loss.
All other property, plant and equipment are stated at cost less accumulated depreciation and impairment loss.
Depreciation is provided to write-off the cost of motor vessels over their estimated useful lives, after taking into
account their estimated residual values, using the straight-line method of 25 years from the date of the initial
delivery from the shipyards.
Depreciation is provided to write-off the cost of other property, plant and equipment as specified below over their
estimated useful lives, after taking into account their estimated residual values, using the straight-line method,
at the following rates per annum:
Leasehold land and buildings over the shorter of unexpired term of lease or 3% per annum
Leasehold improvement 20% – 30% per annum
Utility vessels, furniture and equipment 6% – 25% per annum
Accounting policy for depreciation of right-of-use assets is set out in note 4.20.
Estimated residual value is the estimated amount that the Group would currently obtain from disposal of the
asset, after deducting the estimated costs of disposal, as if the asset was already of the age and in the conditions
expected at the end of its useful life. The Group estimates the residual values of motor vessels based on the
light-weight tonnes of each vessel multiply by market demolition metal price per ton. Estimate of residual value
and useful life are reviewed and adjusted if appropriate, at each reporting date.
The gain or loss arising on retirement or disposal is determined as the difference between the net sale proceeds
and the carrying amount of the asset and is recognized in profit or loss.
86
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.10 Investment properties
Investment properties are land and / or buildings which are owned or held under a leasehold interest to earn
rental income and / or for capital appreciation.
On initial recognition, investment property is measured at cost, including any directly attributable expenditure.
Subsequent to initial recognition, investment property is stated at fair value which is determined by external
professional valuers with sufficient experience with respect to both the location and category of the investment
property and it reflects the prevailing market conditions at the reporting date.
Gain or loss arising from either change in the fair value or the sale of an investment property is recognized in
profit or loss in the period in which they arise.
The change in fair value arisen from reclassification from leasehold land and buildings to investment properties
will be credited to revaluation reserve. Upon disposal of such properties, the amount previously recognized in
revaluation reserve will be transferred to retained profits.
4.11
Impairment of non-financial assets
Property, plant and equipment, right-of-use assets and the Company’s interests in subsidiaries are subject to
impairment testing whenever there are indications that the assets’ carrying amounts may not be recoverable.
An impairment loss is recognized as an expense immediately for the amount by which the asset’s carrying amount
exceeds its recoverable amount. Recoverable amount is the higher of fair value, reflecting market conditions, less
costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessment of time value of money
and the risk specific to the asset.
For the purpose of assessing impairment, where an asset does not generate cash inflows that are largely
independent of the cash flows from other assets, the recoverable amount is determined for the smallest group
of assets that generate cash inflows independently (i.e. a cash generating unit). As a result, some assets are
tested individually for impairment and some are tested at cash generating unit level.
Impairment loss recognized for cash generating unit is allocated to reduce the carrying amounts of the assets
in the cash generating unit on pro rata basis. In allocating the impairment loss, the carrying amount of an asset
will not be reduced below its fair value less costs of disposal, value in use or zero.
An impairment loss is reversed if there has been a favorable change in the estimates used to determine the
asset’s recoverable amount and only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortization, if no impairment loss had been
recognized in prior years.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
87
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.12 Inventories
Inventories are carried at the lower of cost and net realizable value. Cost, which comprises all costs of purchase
and, where applicable, other costs that have been incurred in bringing the inventories to their present location
and condition, and is determined using the first-in, first-out method. Net realizable value is the estimated selling
price in the ordinary course of business less the estimated cost of completion and applicable selling expenses.
4.13 Financial assets
Financial assets are recognized when the Group becomes a party to the contractual provisions of the financial
instrument.
Financial assets are derecognized when the contractual rights to receive the cash flows from the financial assets
expire, or when the financial asset and substantially all of its risks and rewards of ownership are transferred.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at
the transaction price in accordance with IFRS 15 and HKFRS 15, all financial assets are initially measured at fair
value, in case of a financial asset not at fair value through profit or loss, plus transaction costs that are directly
attributable to the acquisition of the financial asset.
Financial assets are classified into the following categories:
– amortized cost;
– fair value through profit or loss; or
– fair value through OCI.
The classification is determined by both:
– the entity’s business model for managing the financial asset; and
– the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognized in profit or loss are presented within
other operating income, interest income, other operating expenses and finance costs, except for ECL of trade
receivables which is presented in other operating expenses.
88
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Subsequent measurement of financial assets
Debt investments
Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated
as fair value through profit or loss):
– they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows; and
–
the contractual terms of the financial assets give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortized cost using the effective interest method. Interest income
from these financial assets is included in profit or loss. Discounting is omitted where the effect of discounting
is immaterial. The Group’s bank balances and cash, pledged deposits, loan receivables and trade and other
receivables fall into this category of financial instruments.
Financial assets at fair value through OCI – recycling
If the contractual cash flows of the investment comprise solely payments of principal and interest and the
investment is held within a business model whose objective is achieved by both the collection of contractual cash
flows and sale, changes in fair value are recognized in other comprehensive income, except for the recognition
in profit or loss of ECL, interest income (calculated using the effective interest method) and foreign exchange
gains and losses. When the investment is derecognized, the amount accumulated in other comprehensive income
is recycled from equity to profit or loss.
Financial assets at fair value through profit or loss
Financial assets that are held within a different business model other than “hold to collect” or “hold to collect
and sell” are categorized at fair value through profit or loss. Further, irrespective of business model, financial
assets whose contractual cash flows are not solely payments of principal and interest are accounted for at fair
value through profit or loss.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
89
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Subsequent measurement of financial assets (Continued)
Equity investments
An investment in equity securities is classified as fair value through profit or loss unless the equity investment
is not held for trading purposes and on initial recognition of the investment, the Group elects to designate the
investment at fair value through OCI (non-recycling) such that subsequent changes in fair value are recognized
in other comprehensive income and accumulated in “Reserve for financial assets at fair value through OCI” in
equity. Such elections are made on an instrument-by-instrument basis, but only be made if the investment meets
the definition of equity from the issuer’s perspective.
The equity instruments at fair value through OCI are not subject to impairment assessment. The cumulative gain
or loss in “Reserve for financial assets at fair value through OCI” will not be reclassified to profit or loss upon
disposal of the equity investments.
Dividends from these investments in equity instruments are recognized in profit or loss when the Group’s right to
receive the dividends is established. Dividend income are included in “other operating income” in profit or loss.
Impairment of financial assets
IFRS 9 and HKFRS 9’s impairment requirements use more forward-looking information to recognize ECL – the
“ECL model”. Instruments within the scope included loans and other debt-type financial assets measured at
amortized cost or fair value through OCI and trade receivables.
The Group considers a broader range of information when assessing credit risk and measuring ECL, including
past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of
the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
Stage 1: financial instruments that have not deteriorated significantly in credit quality since their initial
recognition or that have low credit risk.
Stage 2:
financial instruments that have deteriorated significantly in credit quality since their initial recognition
and whose credit risk is not low.
Stage 3:
financial instruments that have objective evidence of impairment at the reporting date.
90
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Impairment of financial assets (Continued)
For Stage 1 category, loss allowance is recognized at the present value of expected credit losses that will result if a
default occurs in the 12 months after the reporting date (“12-month ECL”). For Stage 2 and Stage 3 category, loss
allowance is recognized at the present value of expected credit shortfalls over their remaining life (“lifetime ECL”).
Measurement of the ECL is determined by a probability-weighted estimate of credit losses over the expected
life of the financial instrument.
For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes a loss allowance
based on lifetime ECL at each reporting date. These are the expected shortfalls in contractual cash flows,
considering the potential for default at any point during the life of the financial assets. In calculating the ECL,
the Group has established a provision matrix that is based on its historical credit loss experience and external
indicators, adjusted for forward-looking factors specific to the debtors and the economic environment.
To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics and the
days past due.
For loan receivables, the Group measures the loss allowance for these financial assets equal to 12-month ECL
with taking those collaterals into accounts (which is recognized at Stage 1), unless when there has been a
significant increase in credit risk since initial recognition or classified as credit-impaired, the Group recognizes
lifetime ECL (which is recognized at Stage 2). The assessment of whether lifetime ECL should be recognized is
based on significant increase in the likelihood or risk of default occurring since initial recognition or classified as
credit-impaired. The loan receivables are reviewed at the reporting date to assess impairment allowance which
are based on the evaluation of current creditworthiness, collection statistic and market values of the collaterals
which were appraised by independent qualified appraisal firms or the net asset value of the co-investment.
For other financial assets measured at amortized cost and fair value through OCI, the Group measures the loss
allowance for these financial assets equal to 12-month ECL (which is recognized at Stage 1), unless when there
has been a significant increase in credit risk since initial recognition, the Group recognizes lifetime ECL (which is
recognized at the Stage 2). The assessment of whether lifetime ECL should be recognized is based on significant
increase in the likelihood or risk of default occurring since initial recognition.
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares
the risk of a default occurring on the financial assets at the reporting date with the risk of default occurring
on the financial assets at the date of initial recognition. In making this assessment, the Group considers both
quantitative and qualitative information that is reasonable and supportable, including historical experience and
forward-looking information that is available without undue cost or effort.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
91
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.13 Financial assets (Continued)
Impairment of financial assets (Continued)
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly:
– an actual or expected significant deterioration in the financial instrument’s external (if available) or internal
credit rating;
–
significant deterioration in external market indicators of credit risk;
– existing or forecast adverse changes in regulatory, business, financial, economic conditions, or technological
environment of debtor that are expected to cause a significant decrease in the debtor’s ability to meet its
debt obligations; and
–
an actual or expected significant deterioration in the operating results of the debtor.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased
significantly since initial recognition when contractual payments are more than 30 days past due, unless the
Group has reasonable and supportable information that demonstrates otherwise.
Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has not increased significantly
since initial recognition if the debt instrument is determined to have low credit risk at the end of each reporting
period. A debt instrument is determined to have low credit risk if it has a low risk of default, the borrower has
strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic
and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to
fulfill its contractual cash flow obligations.
The Group considers the default has occurred when: (1) information developed internally or obtained from
external sources indicates that the debtor is unlikely to pay its credit obligations to the Group in full, without
recourse by the Group to actions such as realizing security (if any is held); (2) a financial asset is more than 90
days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging
default criterion is more appropriate.
The Group writes off trade and other receivables in whole or in part, when it has exhausted all practical recovery
efforts and concluded there is no reasonable expectation of recovery.
Detailed analysis of the ECL assessment of trade receivables, other financial assets measured at amortized cost
and debt investments at fair value through OCI are set out in note 41(e).
92
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.14 Assets held for sale
Non-current assets are classified as held for sale when:
(a) they are available for immediate sale;
(b) management is committed to a plan to sell;
(c) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;
(d) an active programme to locate a buyer has been initiated;
(e) the asset is being marketed at a reasonable price in relation to its fair value; and
(f)
a sale is expected to complete within 12 months from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount immediately
prior to being classified as held for sale and fair value less costs of disposal. Following their classification as
held for sale, the assets are not depreciated. An impairment loss is recognized as an expense immediately for the
amount by which the asset’s carrying amount prior to being classified as held for sale exceeds its fair value less
costs of disposal. The gain or loss of assets being disposed of during the year are included in the consolidated
statement of profit or loss and other comprehensive income up to the date of disposal.
4.15 Financial liabilities
Financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial
instrument. A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expired.
The Group classifies its financial liabilities into the following categories:
Trade and other payables
Trade and other payables are recognized initially at fair values and subsequently measured at amortized costs,
using the effective interest method.
Borrowings
Borrowings are recognized initially at fair values, net of transaction costs incurred. Borrowings are subsequently
stated at amortized costs. Any difference between the proceeds (net of transaction costs) and the redemption
value is recognized in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liabilities for at least twelve months after the reporting date.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
93
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.16 Fair value measurement
For financial reporting purposes, fair value measurement is categorized into Level 1, 2 and 3 of the three-level
fair value hierarchy as defined under IFRS 13 and HKFRS 13. The level into which a fair value measurement is
classified is determined with reference to the observability and significance of the inputs used in the valuation
technique as follows:
Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level
2:
fair values measured using valuation techniques in which all significant inputs other than quoted
prices included within Level 1 are directly or indirectly based on observable market data.
Level 3:
fair values measured using valuation techniques in which any significant input is not based on
observable market data.
4.17
Cash and cash equivalents
Cash and cash
equivalents include cash at banks and in hand, demand deposits with banks and short term
highly liquid investments that are readily convertible into known amounts of cash and which are subject to
an insignificant risk of changes in value, with original maturities of three months or less. For the purpose of
consolidated statement of cash flows presentation, cash and cash equivalents include bank overdrafts which are
repayable on demand and form an integral part of the Group’s cash management.
4.18 Share capital
Share capital is determined using the nominal value of shares that have been issued.
Any transaction costs associated with the issuing of shares are deducted from share premium to the extent they
are incremental costs directly attributable to the equity transaction.
4.19 Employee benefits
Retirement benefits schemes
The Group operates a defined contribution provident fund scheme and a mandatory provident fund scheme.
The assets of the schemes are held separately from those of the Group in their respective schemes managed
by an independent trustee. The contributions to retirement benefits schemes charged to profit or loss represent
contributions payable to the funds by the Group at the rates specific in the rules of the schemes.
The contributions to the defined contribution provident fund scheme vest in employees according to the vesting
percentage set out in the scheme. When employees leave the defined contribution provident fund scheme prior
to being vested fully in the contributions, the contributions payable by the Group are reduced by the amount
of forfeited contributions. On the other hand, the contributions to the mandatory provident fund scheme vest
immediately and fully in employees once the contributions are payable by the Group. There is no forfeited
contribution when employees leave the mandatory provident fund scheme.
In addition, the employees employed under the Hong Kong Employment Ordinance are also entitled to LSP if
the eligibility criteria are met. The LSP are defined benefits plans.
94
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.19 Employee benefits (Continued)
Defined benefit plans
The amount of long service benefit that an employee will receive on cessation of employment in certain
circumstances is defined by reference to the employee’s length of service and corresponding salary. The legal
obligations for any benefits remain with the Group.
Management estimates the LSP obligations annually and the LSP obligations are measured at the present value
at the end of each reporting period. This is based on the discount rate, the salary growth rate, turnover rate and
the expected investment return on offsetable MPF accrued benefits. Discount factors are determined close to the
end of each annual reporting period.
Short term employee benefits
Employee entitlements to annual leave are recognized when they accrue to employees. A provision is made for
the estimated liability for annual leave as a result of services rendered by employees up to the reporting date.
Non-accumulating compensated absences such as sick leave and maternity leave are not recognized until the
time of leave.
4.20 Leases
A lease is defined as a contract, or part of a contract, that conveys the right to use an identified asset (the
underlying asset) for a period of time in exchange for consideration. To apply this definition, the Group assesses
whether the contract meets three key evaluations which are whether:
– the contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group;
– the Group has the right to obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract; and
–
the Group has the right to direct the use of the identified asset throughout the period of use. The Group
assess whether it has the right to direct how and for what purpose the asset is used throughout the period
of use.
For contracts that contains a lease component and one or more additional lease or non-lease components, the
Group allocates the consideration in the contract to each lease and non-lease component on the basis of their
relative stand-alone prices.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
95
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.20 Leases (Continued)
(a) Group as a Lessee
At the lease commencement date, the Group recognizes the right-of-use asset and the lease liability on the
consolidated statement of financial position, except for short-term leases that have a lease term of 12 months
or less (“short-term lease”) and leases of low-value assets. Lease payments on short-term leases and leases of
low-value assets are recognized as an expense on a straight-line basis over the lease term.
Right-of-use assets
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the underlying
asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net
of any lease incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to
the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicator exists, as for owned vessels in accordance
with the Group’s accounting policies.
Lease liabilities
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable payments based on an index or rate,
and amounts expected to be payable under a residual value guarantee.
Subsequent to the commencement date, the Company measures the lease liability by: (i) increasing the carrying
amount to reflect the accretion of interest on the lease liability; (ii) reducing the carrying amount to reflect the lease
payments made; and (iii) remeasuring the carrying amount to reflect any reassessment or lease modifications,
e.g. a change in future lease payments arising from change in an index or rate, a change in the lease term, a
change in the in-substance fixed lease payments or a change in assessment to purchase the underlying asset.
For lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability
based on the lease term of the modified lease by discounting the revised lease payments using a revised discount
rate at the effective date of modification.
For lease remeasurement that the lease payments change due to changes in market rental rates following a market
rent review / expected payment under a guaranteed residual value, in which cases the related lease liability is
remeasured by discounting the revised lease payments using the initial discount rate.
When the lease is remeasured, the corresponding adjustment is reflected in the carrying amount of the right-of-use
asset, or is recorded in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.
96
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.20 Leases (Continued)
(b) Group as a lessor (Assets leased out under operating leases)
As a lessor, the Group classifies its leases as operating leases. Where the Group as a lessor leases out assets
under operating leases, such assets are measured and presented according to the nature of the asset.
Rental income receivable from operating leases is recognized in profit or loss on a straight-line basis over the
lease terms.
Hire income applicable to operating leases in respect of time charters are recognized as revenue on time basis
over the period of each lease.
Lease incentives granted are recognized in profit or loss as an integral part of the aggregate net income receivable
from the lease.
4.21
Provisions and contingent liabilities
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event,
and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable
estimate of the amount of the obligation can be made. Where the time value of money is material, provisions
are stated at the present value of the expenditure expected to settle the obligation. All provisions are reviewed
at each reporting date and adjusted to reflect the current best estimate.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits
is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of
one or more uncertain future events are also disclosed as contingent liabilities unless the probability of outflow
of economic benefits is remote.
Contingent liabilities are not recognized but are disclosed in the notes to the consolidated financial statements.
When a change in the probability of an outflow of economic benefits occurs, and an outflow is probable, it will
then be recognized as a provision.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
97
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
4.22 Related parties
For the purposes of these consolidated financial statements, a party is considered to be related to the Group if:
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Group’s parent.
(b)
An entity is related to the Group if any of the following conditions applies:
(
i)
The entity and the Group are members of the same group (which means that each parent, subsidiary
and fellow subsidiary is related to the others).
(ii)
One entity is an associate or joint venture of the other entity (or an associate or joint venture of
a member of a group of which the other entity is a member).
(iii)
Both entities are joint venture of the same third entity.
(iv)
One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel
services to the Group or to the parent of the Group.
Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.
4.23 Segment reporting
The Group identifies operating segments and prepares segment information based on the regular internal financial
information reported to the chief operating decision maker for their decisions about resources allocation to the
Group’s business components and for their review of the performance of those components.
The Group has regarded the business of ship chartering and ship owning as the only dominant reportable
operating segment to be reported to the chief operating decision maker. Thus, no analysis of segment revenue,
segment results, segment assets and segment liabilities are presented in the consolidated financial statements
for the years 2023 and 2022.
98
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors
including expectations of future events that are believed to be reasonable under the circumstances. The significant
estimates and judgements made in the process of applying the Group’s accounting policies are discussed below.
Impairment loss on owned vessels and right-of-use assets
Dry bulk shipping market was sluggish due to the volatile macroeconomic and financial environment. The
market freight rates were weak in most of 2023. 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 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 2023.
Key assumptions applied in calculation of impairment assessment of owned vessels and right-of-use assets
(a) Impairment loss on owned vessels, net
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 less than their
respective carrying amounts at end of 2023. Those vessels with carrying amount of US$139,954,000 is
estimated based on the value in use under discounted cash flow method, using estimated future cash
flows projections from the continuous use of such vessels. Key assumptions applied in value in use
calculation mainly included discount rate and hire rates earned by each vessel as the value in use is most
sensitive to the changes in these two factors. Other assumptions applied in the estimated future cash
flows projections included the first five-year period from the continuous use of such vessels and cash
flows beyond the five-year period are extrapolated using the zero growth rate.
The hire rates applied in the impairment test on owned vessels were based on management’s best
estimation, taking into consideration of historical performances, market research data and market
expectation. The hire rates would have an average of 1% (2022: 1%) growth for the first five-year period
and cash flows beyond the five-year period are extrapolated using the zero growth rate. The discount rate
applied to the value in use calculation on owned vessels was 10.5% (2022: 10.5%), which was a pre-tax rate
that reflected current market assessments of time value of money and the risks specific to the assets. It is
based on weighted average cost of capital in which the cost of equity, cost of debt and capital structure
are the key parameters. Other assumptions included utilization rate which is assumed to be 95% (2022:
95%) in all subsequent years; and vessels are expected to have useful life of 25 (2022: 25) years from the
date of the initial delivery from the shipyards. The net cash flow also reflected the estimated drydocking
and special surveys costs and vessels operating expense.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
99
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
Impairment loss on owned vessels and right-of-use assets (Continued)
Key assumptions applied in calculation of impairment assessment of owned vessels and right-of-use assets
(Continued)
(a) Impairment loss on owned vessels, net (Continued)
Certain owned vessels with carrying amount of US$27,225,000 are determined based on fair value less cost
of disposal. The fair value less cost of disposal is based on valuation performed by independent valuer
and the valuation is under market comparison approach and such measurement of these owned vessels
was categorized as Level 2 of the three-level fair value hierarchy as defined under IFRS 13 and HKFRS 13.
Key assumptions applied in fair value less cost of disposal mainly included quoted recent transactions of
similar vessels. Other assumptions included estimated cost of disposal of these vessels which are based
on the Group’s historical acquisition and disposal transactions of its vessels.
Accordingly, a net impairment loss of US$14,011,000 (2022: US$49,326,000) on owned vessels classified
in property, plant and equipment was recognized at 31 December 2023 to reflect the Group’s change
in the expectation of the 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.
(b) Impairment loss on right-of-use assets
With reference to the impairment test performed, the Group carried out a review of the recoverable
amounts of the right-of-use assets based on the value-in-use approach using discounted cash flow
method by comparing the carrying value and the recoverable amounts of the right-of-use assets. The
key assumptions for the discounted cash flow method are those regarding the discount rates, hire rates,
growth rate and utilization rate during the lease term of the charterparty.
The hire rates applied in the impairment test on right-of-use assets were based on management’s
best estimation, taking into consideration of historical performances, market research data and market
expectation. The hire rates would have an average of 1% decline (2022: 2% growth) during the lease term
of the charterparty. The discount rate applied to the value in use calculation on right-of-use assets was
10% (2022: 10.5%), which was a pre-tax rate that reflected current market assessments of time value of
money and the risks specific to the assets. It is based on weighted average cost of capital in which the
cost of equity, cost of debt and capital structure are the key parameters. Utilization rate of 95% (2022:
95%) is assumed during the lease term of the charterparty.
Based on the impairment test performed, the carrying amount of the right-of-use assets exceeds the
recoverable amounts and accordingly, an impairment loss of US$5,693,000 (2022: nil) was recognized
and allocated to right-of-use assets at 31 December 2023.
The impairment loss on owned vessels and right-of-use assets of US$19,704,000 (2022: US$49,326,000) are
non-cash in nature and do not have impact on the operating cash flows of the Group.
100
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
Impairment loss on owned vessels and right-of-use assets (Continued)
Sensitivity in calculation of impairment assessment of owned vessels and right-of-use assets
Value in use
With all other variables remaining constant, it was estimated that a decrease of 5% in hire rates applied in the
impairment test at the reporting date, the impairment loss on owned vessels recognized and net loss for the
year would increase by approximately US$13,315,000 and the carrying amount of the Group’s owned vessels
would decrease by 4.10%.
With all other variables remaining constant, it was estimated that a decrease of 5% in hire rates applied in the
impairment test at the reporting date, the impairment loss on right-of-use assets recognized and net loss for
the year would increase by approximately US$807,000 and the carrying amount of the right-of-use assets would
decrease by 3.83%.
With all other variables remaining constant, it was estimated that an increase of 75 basis points in discount rate
applied in the impairment test at the reporting date, the impairment loss on owned vessels recognized and net
loss for the year would increase by approximately US$4,944,000 and the carrying amount of the Group’s owned
vessels would decrease by 1.52%.
With all other variables remaining constant, it was estimated that an increase of 75 basis points in discount rate
applied in the impairment test at the reporting date, the impairment loss on right-of-use assets recognized and
net loss for the year would increase by approximately US$326,000 and the carrying amount of the right-of-use
assets would decrease by 1.55%.
Fair value less cost of disposal
With all other variables remaining constant, it was estimated that a decrease of 5% in selling price quoted from
the transactions of similar vessels applied in the impairment test at the reporting date, the impairment loss on
owned vessels recognized and net loss for the year would increase by approximately US$7,313,000 and the
carrying amount of the Group’s owned vessels would decrease by 2.25%.
Valuation of investment properties
As at 31 December 2023, the Group’s investment properties were stated at fair value of US$25,259,000 (2022:
US$27,210,000). Change in fair value loss of investment properties of US$2,334,000 (2022: US$935,000) was
recognized in profit or loss during the year. The fair values of the Group’s investment properties were determined
by an independent qualified professional valuer. The valuations are dependent on certain unobservable inputs,
including market unit sale rate per square feet / carpark which are determined based on comparable transactions
after applying adjusting factors such as the age, location, size, view, floor level and quality of buildings and
carparks to reflect the conditions and locations of the subject properties. Details of the valuation methodologies
and significant unobservable inputs used in the valuations are disclosed in note 21.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
101
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
Fair values of financial assets at fair value through OCI
Fair values of financial assets at fair value through OCI that are not traded in an active market is determined
by using valuation techniques. The Group determines the fair values primarily based on the recent transaction
prices, net asset value (representing the fair value of the equity instruments reported by investment manager of
the investees) and take into account of its financial results and other factors. The fair values of financial assets
at fair value through OCI that are not traded in active market are determined by using valuation techniques as
disclosed in note 22.
Impairment of trade receivables and other financial assets
As at 31 December 2023, the carrying amount of the trade receivables (note 25) was US$1,000,000 (2022:
US$1,354,000). For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes
a loss allowance based on lifetime ECL at each reporting date. These are the expected shortfalls in contractual
cash flows, considering the potential for default at any point during the life of the financial assets. To measure
the ECL, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
For other financial assets measured at amortized cost or fair value through OCI (note 41(a)), the Group measures
the loss allowance for these financial assets equal to 12-month ECL, unless when there has been a significant
increase in credit risk since initial recognition, the Group recognizes lifetime ECL. The assessment of whether
lifetime ECL should be recognized is based on significant increase in the likelihood or risk of default occurring
since initial recognition. In assessing whether the credit risk for other financial assets has increased significantly
since initial recognition, the Group compares the risk of a default occurring on the financial assets at the reporting
date with the risk of default occurring on the financial assets at the date of initial recognition. In making this
assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable,
including historical experience and forward-looking information that is available without undue cost or effort.
For loan receivables (note 24) which arise from co-investment, the Group measures the loss allowance for these
financial assets equal to 12-month ECL with taking the net asset value of the co-investment into accounts unless
when there has been a significant increase in credit risk since initial recognition or classified as credit impaired,
the Group recognizes lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on
significant increase in the likelihood or risk of default occurring since initial recognition or classified as credit-
impaired. The loan receivables are reviewed by the management at the reporting date to assess impairment
allowance which are based on the evaluation of current creditworthiness, collection statistic and the net asset
value of the co-investment.
102
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
6. SEGMENT INFORMATION
The Group is principally engaged in the business of ship chartering and ship owning and the management has
regarded this business as the only dominant reportable operating segment to be reported to the chief operating
decision maker.
While the Group’s revenue was mainly attributable to its chartering operations which are carried out internationally
and cannot be attributable to any particular geographical location, analysis of revenue from chartering freight
and hire business by geographical split of revenue by charterers’ location is presented in note 7.
The Group’s non-current assets mainly consist of property, plant and equipment, right-of-use assets and investment
properties. Property, plant and equipment and right-of-use assets mainly comprised of the Group’s owned vessels
and chartered-in vessel respectively. As the Group’s motor vessels are operated across different geographical
regions, it is meaningless to identify the specific geographical locations of the motor vessels at the reporting
date. The Group’s investment properties comprised of premises and car parks and all are located in Hong Kong.
While majority of the Group’s non-current assets other than financial instruments cannot be attributable to any
particular geographical location, no analysis of non-current assets other than financial instruments by geographical
area is presented in the consolidated financial statements.
7. REVENUE
Revenue represents chartering freight and hire income arising from the Group’s owned and chartered-in vessels.
Revenue recognized during the year is as follows:
2023
2022
US$’000
US$’000
Chartering freight and hire income:
Hire income under time charters
81,868
152,466
1
Note:
1.
Hire income under time charter is accounted for as operating lease and is recognized on a straight-line basis over the
period of each time charter contract. Hire income included a non-lease component in relation to crewing service of
US$30,463,000 (2022: US$37,914,000).
JINHUI SHIPPING AND TRANSPORTATION LIMITED
103
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
7. REVENUE (Continued)
Information about major charterers
Revenue of US$16,024,000, US$15,543,000 and US$13,145,000 (2022: US$58,439,000, US$38,867,000 and
US$21,929,000) were derived from three charterers that contributed 20%, 19% and 16% (2022: 38%, 25% and
14%) respectively to the Group’s revenue for the year 2023.
Information about geographical distribution
Revenue from external customers (charterers) is as follows:
2023
2022
US$’000
US$’000
Geographical split of revenue by charterers’ location:
China
53,657
31,071
Singapore
23,759
119,955
Japan
1,878
–
Switzerland
1,549
–
South Korea
621
–
Norway
404
–
United Kingdom
–
1,440
81,868
152,466
8. NET GAIN (LOSS) ON DISPOSAL OF OWNED VESSELS
The Group entered into two agreements in September and November 2023 respectively to dispose of two
Supramaxes of deadweight 52,686 and 52,525 metric tons at total consideration of US$17,730,000, with total net
loss of US$880,000 being recognized on completion of the disposal of these vessels in the year.
During the year 2022, the Group entered into five agreements to dispose of two Post-Panamaxes and three
Supramaxes at total consideration of US$65,550,000, with total net gain of US$5,636,000 being recognized on
completion of the disposal of these vessels in 2022.
104
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
9. OTHER OPERATING INCOME
2023
2022
US$’000
US$’000
Net gain on bunker arising from shipping operations
–
2,352
Write-back of other payables
–
5,167
Other shipping operating income
4,350
2,648
Reversal of impairment loss on trade and other receivables, net
1,274
1,620
Dividend income
1,171
2,624
Gross rental income from operating leases on investment properties
569
559
COVID-19 related government subsidies
–
194
Sundry income
279
255
7,643
15,419
10. INTEREST INCOME
2023
2022
US$’000
US$’000
Interest income in respect of:
Deposits with banks and other financial institutions
470
120
Loan receivables
310
815
Financial assets at fair value through profit or loss
39
129
819
1,064
JINHUI SHIPPING AND TRANSPORTATION LIMITED
105
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
11. IMPAIRMENT LOSS ON OWNED VESSELS AND RIGHT-OF-USE ASSETS
Dry bulk shipping market was sluggish due to the volatile macroeconomic and financial environment. The
market freight rates were weak in most of 2023. 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 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 2023.
(a) Impairment loss on owned vessels, net
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 less than their respective carrying
amounts at end of 2023. Those vessels with carrying amount of US$139,954,000 is estimated based on the value
in use under discounted cash flow method, using estimated future cash flows projections from the continuous use
of such vessels. Key assumptions applied in value in use calculation mainly included discount rate and hire rates
earned by each vessel as the value in use is most sensitive to the changes in these two factors. Other assumptions
applied in the estimated future cash flows projections included the first five-year period from the continuous
use of such vessels and cash flows beyond the five-year period are extrapolated using the zero growth rate.
The hire rates applied in the impairment test on owned vessels were based on management’s best estimation,
taking into consideration of historical performances, market research data and market expectation. The hire rates
would have an average of 1% (2022: 1%) growth for the first five-year period and cash flows beyond the five-year
period are extrapolated using the zero growth rate. The discount rate applied to the value in use calculation on
owned vessels was 10.5% (2022: 10.5%), which was a pre-tax rate that reflected current market assessments
of time value of money and the risks specific to the assets. It is based on weighted average cost of capital in
which the cost of equity, cost of debt and capital structure are the key parameters. Other assumptions included
utilization rate which is assumed to be 95% (2022: 95%) in all subsequent years; and vessels are expected to
have useful life of 25 (2022: 25) years from the date of the initial delivery from the shipyards. The net cash flow
also reflected the estimated drydocking and special surveys costs and vessels operating expense.
Certain owned vessels with carrying amount of US$27,225,000 are determined based on fair value less cost of
disposal. The fair value less cost of disposal is based on valuation performed by independent valuer and the
valuation is under market comparison approach and such measurement of these owned vessels was categorized
as Level 2 of the three-level fair value hierarchy as defined under IFRS 13 and HKFRS 13. Key assumptions applied
in fair value less cost of disposal mainly included quoted recent transactions of similar vessels. Other assumptions
included estimated cost of disposal of these vessels which are based on the Group’s historical acquisition and
disposal transactions of its vessels.
Accordingly, a net impairment loss of US$14,011,000 (2022: US$49,326,000) on owned vessels classified in property,
plant and equipment was recognized at 31 December 2023 to reflect the Group’s change in the expectation of the
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.
106
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
11. IMPAIRMENT LOSS ON OWNED VESSELS AND RIGHT-OF-USE ASSETS (Continued)
(b) Impairment loss on right-of-use assets
With reference to the impairment test performed, the Group carried out a review of the recoverable amounts of
the right-of-use assets based on the value-in-use approach using discounted cash flow method by comparing the
carrying value and the recoverable amounts of the right-of-use assets. The key assumptions for the discounted
cash flow method are those regarding the discount rates, hire rates, growth rate and utilization rate during the
lease term of the charterparty.
The hire rates applied in the impairment test on right-of-use assets were based on management’s best estimation,
taking into consideration of historical performances, market research data and market expectation. The hire rates
would have an average of 1% decline (2022: 2% growth) during the lease term of the charterparty. The discount
rate applied to the value in use calculation on right-of-use assets was 10% (2022: 10.5%), which was a pre-tax
rate that reflected current market assessments of time value of money and the risks specific to the assets. It is
based on weighted average cost of capital in which the cost of equity, cost of debt and capital structure are the
key parameters. Utilization rate of 95% (2022: 95%) is assumed during the lease term of the charterparty.
Based on the impairment test performed, the carrying amount of the right-of-use assets exceeds the recoverable
amounts and accordingly, an impairment loss of US$5,693,000 (2022: nil) was recognized and allocated to right-
of-use assets at 31 December 2023.
The impairment loss on owned vessels and right-of-use assets of US$19,704,000 (2022: US$49,326,000) are
non-cash in nature and do not have impact on the operating cash flows of the Group.
12. STAFF COSTS
2023
2022
US$’000
US$’000
Directors’ emoluments (excluding directors’ fees):
Salaries and other benefits
8,122
8,403
Contributions to retirement benefits schemes
435
434
Other staff costs:
Salaries and other benefits
4,580
4,643
Contributions to retirement benefits schemes
199
188
13,336
13,668
At the reporting date, the Group has 66 (2022: 65) full-time employees.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
107
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
13. DIRECTORS’ EMOLUMENTS
2
Contributions
to retirement
Directors’ Salaries and Discretionary benefits
fees 1
allowances
2
bonus schemes Total
US$’000
US$’000
US$’000
US$’000
US$’000
2023
Executive Directors
Ng Siu Fai
248
3,846
481
231
4,806
Ng Kam Wah Thomas
248
3,077
384
185
3,894
Ng Ki Hung Frankie
170
123
–
300
Ho Suk Lin Cathy
60
211
–
12
283
Non-executive Directors
Tsui Che Yin Frank
28
–
–
–
28
William Yau
23
–
–
–
23
777
7,257
865
435
9,334
2022
Executive Directors
Ng Siu Fai
248
3,846
641
231
4,966
Ng Kam Wah Thomas
248
3,077
513
185
4,023
Ng Ki Hung Frankie
170
123
–
300
Ho Suk Lin Cathy
60
190
13
11
274
Non-executive Directors
Tsui Che Yin Frank
28
–
–
–
28
William Yau
23
–
–
–
23
777
7,236
1,167
434
9,614
2
Notes:
1. The directors’ fees were provided by the Company. None of the Directors received directors’ fees from its subsidiaries.
2
. Directors’ other emoluments, which included salaries and allowances, discretionary bonus and contributions to retirement
benefits schemes, were provided by a subsidiary.
108
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
14. OTHER OPERATING EXPENSES
Other operating expenses for the year 2023 mainly included change in fair value of investment properties
of US$2,334,000, an impairment loss on assets held for sale (disposed vessel) of US$1,288,000, net loss on
financial assets at fair value through profit or loss of US$827,000, directors’ fee of US$777,000, professional fee
of US$651,000, auditor’s remuneration related to audit services of US$210,000 and remaining are various office
administrative expenses.
Other operating expenses for the year 2022 mainly included net loss on financial assets at fair value through
profit or loss of US$2,510,000, change in fair value of investment properties of US$935,000, directors’ fee of
US$777,000, professional fee of US$849,000, auditor’s remuneration related to audit services of US$210,000 and
remaining are various office administrative expenses.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
109
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
15. OPERATING PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
This is stated after charging / (crediting):
2023
2022
US$’000
US$’000
Auditor’s remuneration
1
:
Audit services
210
210
Other services
8
Rent and rates payments in respect of premises
94
87
Net loss on financial assets at fair value through profit or loss
Realized gain on financial assets at
fair value through profit or loss
(701)
(1,493)
Unrealized loss on financial assets at
fair value through profit or loss
1,528
4,003
Interest income in respect of:
Deposits with banks and other financial institutions
(470)
(120)
Loan receivables
(310)
(815)
Financial assets at fair value through profit or loss
(39)
(129)
Dividend income
(1,171)
(2,624)
Net loss (gain) on disposal of owned vessels
880
(5,636)
Loss on write-off of property, plant and equipment
Change in fair value of investment properties
2,334
935
Impairment loss on owned vessels and right-of-use assets
19,704
49,326
Impairment loss on assets held for sale
1,288
–
Reversal of impairment loss on trade and other receivables, net
(1,274)
(1,620)
Net exchange loss
48
384
Gross rental income from operating leases on investment properties
(569)
(559)
Outgoings in respect of investment properties
30
25
Bad debts written off in respect of trade and other receivables
–
29
Note:
1.
The auditor’s remuneration disclosed above excluded VAT and fees paid for other services mainly included fees for tax
compliance services of US$4,000 (2022: US$4,000). For the year 2022, the fees paid for other services also included a
fee of US$4,000 for the review of internal control systems.
110
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
16. TAXATION
Taxation has been provided on the estimated assessable profits arising in Hong Kong from a wholly owned
subsidiary of the Company which is a qualifying corporation in accordance with the two-tiered profits tax rates
regime in Hong Kong. Under the two-tiered profits tax rates regime, the first HK$2,000,000 (approximately
US$256,000) of assessable profits of the qualifying corporation are taxed at 8.25%, and the assessable profits
above HK$2,000,000 (approximately US$256,000) are taxed at 16.5%. Apart from the estimated assessable profits
arising in Hong Kong from that subsidiary, in the opinion of the Directors, the Group is not subject to taxation
in any other jurisdictions in which the Group operates.
There was no Bermuda income, corporation or profits tax, withholding tax, capital gains tax, capital transfer tax,
estate duty or inheritance tax payable by the Company for the years.
The Company has received from the Minister of Finance of Bermuda under The Exempted Undertakings Tax
Protection Act 1966, as amended, an assurance that, in the event of there being enacted in Bermuda any legislation
imposing tax computed on profits or income, or computed on any capital asset gain or appreciation or any tax in
the nature of estate duty or inheritance tax, the imposition of such tax shall not until 31 March 2035 be applicable
to the Company or to any of its operations, or to the shares, debentures or other obligations of the Company.
The amount of taxation charged to the consolidated statement of profit or loss and other comprehensive income
represents:
2023
2022
US$’000
US$’000
Hong Kong Profits Tax
Current year
–
21
Over provision in prior year
(1)
(1)
(1)
20
JINHUI SHIPPING AND TRANSPORTATION LIMITED
111
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
16. TAXATION (Continued)
Reconciliation between taxation charge and accounting loss at the applicable tax rates:
2023
2022
US$’000
US$’000
Loss before taxation
(55,056)
(7,093)
Income tax at the applicable tax rates in the
tax jurisdictions concerned
(3,152)
(2,701)
Non-deductible expenses
571
345
Tax exempted revenue
(262)
(629)
Unrecognized tax losses
2,879
3,036
Unrecognized temporary differences
(34)
(28)
Utilization of previously unrecognized tax losses
(2)
(2)
Over provision in prior year
(1)
(1)
Taxation charge for the year
(1)
20
The applicable tax rates are the weighted average of current rates of taxation ruling in the relevant jurisdictions.
112
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
17. LOSS PER SHARE
2023
2022
Weighted average number of ordinary shares in issue
109,258,943
109,258,943
Net loss attributable to
shareholders of the Company (US$’000)
(55,055)
(7,113)
Basic and diluted loss per share
US$(0.504)
US$(0.065)
Diluted loss per share for the years 2023 and 2022 were the same as basic loss per share as there was no
potentially dilutive ordinary shares in existence for the years 2023 and 2022.
18. DIVIDENDS
2023
2022
US$’000
US$’000
2022 interim dividend of US$0.03 per share
–
3,278
2022 final dividend of US$0.04 per share
–
4,370
–
7,648
The final dividend for the year 2022 was approved by the Company’s shareholders at the annual general meeting
held on 24 May 2023. Such dividend was paid to the shareholders of the Company in mid-June 2023.
The Board has resolved not to recommend the payment of any final dividend for the year ended 31 December 2023.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
113
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
19. PROPERTY, PLANT AND EQUIPMENT
Motor vessels
and capitalized Leasehold
drydocking land and
costs
buildings
Others
Total
US$’000
US$’000
US$’000
US$’000
Cost
At 1 January 2022
773,596
25,927
7,041
806,564
Additions
140,482
–
121
140,603
Disposals / Write-off
(175,782)
–
(42)
(175,824)
At 31 December 2022
738,296
25,927
7,120
771,343
Reclassification to assets held for sale
(42,153)
–
(3)
(42,156)
Reclassification to investment properties
–
(92)
–
(92)
Additions
24,220
–
113
24,333
Disposals / Write-off
(24,427)
–
(179)
(24,606)
At 31 December 2023
695,936
25,835
7,051
728,822
Accumulated depreciation
and impairment loss
At 1 January 2022
394,222
16,712
6,081
417,015
Impairment loss, net
49,326
–
–
49,326
Charge for the year
36,163
796
168
37,127
Eliminated on disposals / write-off
(116,750)
–
(36)
(116,786)
At 31 December 2022
362,961
17,508
6,213
386,682
Reclassification to assets held for sale
(30,442)
–
(3)
(30,445)
Reclassification to investment properties
–
(76)
–
(76)
Impairment loss, net
14,011
–
–
14,011
Charge for the year
30,574
795
159
31,528
Eliminated on disposals / write-off
(6,115)
–
(176)
(6,291)
At 31 December 2023
370,989
18,227
6,193
395,409
Net book value
At 31 December 2023
324,947
7,608
858
333,413
At 31 December 2022
375,335
8,419
907
384,661
1
2
3
4
2
3
4
114
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
19. PROPERTY, PLANT AND EQUIPMENT (Continued)
Notes:
1.
All motor vessels are held for use under operating leases.
2.
Reclassification to assets held for sale:
On 12 December 2023, the Group entered into an agreement for the disposal of a Supramax of deadweight 52,050 metric
tons at a consideration of US$10,430,000. The vessel was delivered to the purchaser in January 2024. For financial
reporting purposes, the vessel was reclassified to “Assets held for sale” in accordance with IFRS 5 and HKFRS 5
“Non-current Assets Held for Sale and Discontinued Operations” at the reporting date, with an impairment loss on assets
held for sale (disposed vessel) of US$1,288,000 was recognized for the year and was included in other operating expenses.
3. Reclassification to investment properties:
During the year, an owner-occupied leasehold land and building was reclassified to an investment property and a
revaluation surplus of US$367,000 was credited to revaluation reserve in 2023.
4.
Impairment loss, net:
A net impairment loss of US$14,011,000 (2022: US$49,326,000) on owned vessels classified in property, plant and
equipment was recognized at 31 December 2023 to reflect the Group’s change in the expectation of the 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.
Details of the events that led to the recognition of impairment loss, the impairment indicators, key assumptions applied
in the value in use calculation and fair value less cost of disposal, recoverable amounts of impaired assets and the
sensitivity analysis are provided in note 5 and note 11(a).
Details of the Group’s certain owned vessels and information about the determination of the fair values less cost of
disposal of these vessels, in particular the valuation techniques, significant unobservable inputs and category of the fair
value hierarchy are disclosed as below:
Relationship of
significant unobservable
Fair value Valuation Significant Range of inputs to fair value less
hierarchy technique unobservable inputs unobservable inputs cost of disposal
2023
2022
Level 2
Direct
Selling price quoted US$14 million - US$14.7 million - An increase in percentage
comparison from the transactions US$14.2 million US$24 million of selling price quoted
method of similar vessels, after per vessel per vessel from the transactions of
taking into account the similar vessels would
individual factors such as result in an increase in
year of built, shipyards fair value measurement of
and size of vessels the vessels, and vice versa
JINHUI SHIPPING AND TRANSPORTATION LIMITED
115
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
20. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
(a) Right-of-use assets
2023
2022
US$’000
US$’000
At 1 January
28,997
–
Additions
–
43,598
Lease remeasurement
3,257
(11,858)
Depreciation
(5,466)
(2,743)
Impairment loss
(5,693)
–
At 31 December
21,095
28,997
(b) Lease liabilities
2023
2022
US$’000
US$’000
At 1 January
29,337
–
Additions
–
43,598
Lease remeasurement
3,257
(11,858)
Interest expense (included in finance costs)
1,424
703
Repayments of lease liabilities
(4,879)
(3,106)
At 31 December
29,139
29,337
116
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
20. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Continued)
(b) Lease liabilities (Continued)
The lease liabilities were repayable as follows:
2023
2022
US$’000
US$’000
Within one year
5,061
4,173
After one year but within two years
5,272
4,371
After two years but within five years
17,284
14,276
After five years
1,522
6,517
24,078
25,164
29,139
29,337
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. Hire payment is on index-linked
basis, being the Baltic Panamax Time Charter Routes published by the Baltic Exchange, with other adjusting factors.
In accordance with IFRS 16 and HKFRS 16 Leases, the Group recognized 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.
At the reporting date, an impairment assessment of right-of-use assets was performed and an impairment
loss of US$5,693,000 (2022: nil) was recognized and allocated to right-of-use assets at 31 December 2023. The
impairment loss on right-of-use assets is non-cash in nature and does not have impact on the operating cash
flows of the Group.
Details of the events that led to the recognition of impairment loss, the impairment indicators, key assumptions
applied in the value in use calculation and recoverable amounts of right-of-use assets and the sensitivity analysis
are provided in note 5 and note 11(b).
During the year, the total cash outflow for the lease was US$4,879,000 (2022: US$3,106,000).
JINHUI SHIPPING AND TRANSPORTATION LIMITED
117
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
21. INVESTMENT PROPERTIES
2023
2022
US$’000
US$’000
At 1 January
27,210
28,145
Reclassification from leasehold land and buildings
383
–
Change in fair value
(2,334)
(935)
At 31 December
25,259
27,210
The Group’s investment properties were stated at fair value and comprised of premises and car parks held under
operating leases to earn rentals or held for capital appreciation, or both. These premises and car parks are held
under long term leases.
At the reporting date, the fair values of the Group’s investment properties were determined by Centaline
Surveyors Limited, an independent qualified professional valuer, on direct comparison approach on annually
basis with reference to comparable transactions available in the relevant locality. In estimating the fair value of
investment properties, the highest and best use of the properties is their current use. The fair value measurement
of these investment properties was categorized as Level 3 of the three-level fair value hierarchy as defined under
IFRS 13 and HKFRS 13 and there was no transfer among the three levels of the fair value hierarchy during the year.
118
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
21. INVESTMENT PROPERTIES (Continued)
Details of the Group’s investment properties and information about the determination of the fair values of these
investment properties, in particular the valuation techniques, significant unobservable inputs and category of
the fair value hierarchy are disclosed as below:
Fair value Valuation Significant Range of Relationship of significant
Properties hierarchy technique unobservable inputs unobservable inputs unobservable inputs to fair value
2023
2022
Premises
Level 3
Direct
Market unit sale rate per US$2,000 – US$1,900 – An increase in percentage of market
comparison square feet, after taking US$3,500 US$3,600 unit sale rate per square feet would
method into account the age, per square feet per square feet result in an increase in fair value
location and individual measurement of the premises by
factors such as size, view, the same percentage increase, and
floor level and quality of vice versa
building
Car parks
Level 3
Direct
Market unit sale rate per US$381,000 – US$346,000 – An increase in percentage of market
comparison car park US$769,000 US$513,000 unit sale rate per car park would
method per car park per car park result in an increase in fair value
measurement of the car park by the
same percentage increase, and
vice versa
JINHUI SHIPPING AND TRANSPORTATION LIMITED
119
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
22. FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI
2023
2022
US$’000
US$’000
Unlisted equity investments
Co-investment in a property project
At 1 January
9,396
12,257
Change in fair value
(2,137)
(2,861)
7,259
9,396
Unlisted club membership
At 1 January
444
482
Change in fair value
(12)
(38)
432
444
7,691
9,840
1
2
Notes:
1.
Items that will not be reclassified to profit or loss.
2.
Items that may be reclassified subsequently to profit or loss.
3.
In March 2021, a wholly owned subsidiary of the Company (the “Co-Investor”) together with other co-investors signed
an unsecured subordinated shareholder loan agreement with Triple Smart Limited, a special purpose vehicle invested
by Dual Bliss Limited (“Dual Bliss”), for the purposes of funding the operating expenditure of Tower A of One Financial
Street Center, Jing’an Central Business District, Shanghai, the PRC (the “Co-investment”) and the Co-Investor agreed
to provide a maximum amount of advance up to US$1,577,000. At the reporting date, advance of US$1,577,000 (2022:
US$1,342,000) was drawdown and the amount was included in note 24.
120
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
22. FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI (Continued)
Pursuant to the Co-investment documents, the Co-Investor committed to acquire non-voting participating class A
shares of Dual Bliss of US$10,000,000. Dual Bliss is one of the investors of the Co-investment. As at the reporting
date, the capital expenditure commitments contracted by the Group but not provided for was US$372,000 (2022:
US$372,000).
There is no quoted market price in active market for unlisted equity investments. Transactions in such investments
do not occur on a regular basis. The Group uses its net asset value (representing the fair value of the equity
instruments reported by Phoenix Property Investors Limited, the “Investment Manager”) to determine its fair value
as the Group determined that this is the fair price at which shareholders subscribe and redeem the investments
or determined its fair value with generally accepted pricing models.
The Investment Manager reported a loss of US$2,137,000 (2022: US$2,861,000) on the Co-investment for the
year. The reported loss on the Co-investment was recognized by the Group as a change in fair value of financial
assets at fair value through OCI and was included in other comprehensive loss in the consolidated statement
of profit or loss and other comprehensive income. As at the reporting date, the carrying amount of the unlisted
equity investments, co-investment in a property project, was US$7,259,000 (2022: US$9,396,000) whereas the
loan receivable arise from Co-investment, together with the interest accrued thereon was US$2,138,000 (2022:
US$1,593,000). The Group will closely monitor the performance of the Co-investment and will assess impairment
allowances where appropriate.
The fair value measurement of unlisted equity investments was categorized as Level 3 of the three-level fair
value hierarchy as defined under IFRS 13 and HKFRS 13 and there was no transfer among the three levels of
the fair value hierarchy during the year.
Unlisted club membership stated at fair value represented investment in club membership which their fair values
can be determined directly by reference to published price quotations in active markets and were categorized as
Level 1 of the three-level fair value hierarchy as defined under IFRS 13 and HKFRS 13 and there was no transfer
among the three levels of the fair value hierarchy during the year.
23. INVENTORIES
Inventories consisted of bunker stock and ship stores on the Group’s vessels. At the reporting date, these
inventories were carried at cost.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
121
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
24. LOAN RECEIVABLES
2023
2022
US$’000
US$’000
At 1 January
1,342
9,236
Gross new loan originated
235
774
Repayment
–
(8,668)
Provision of individual impairment
–
–
Loan receivables, net of provision
1,577
1,342
Less: Amount receivable within one year
–
(1,342)
Amount receivable after one year
1,577
–
At the reporting date, the Group’s loan receivables of US$1,577,000 (2022: US$1,342,000) arise from Co-investment
(as mentioned in note 22), are unsecured and denominated in United States Dollars and has no fixed repayment
terms.
At the reporting date, the loan receivables have been reviewed by management to assess impairment allowances
which are based on the evaluation of current creditworthiness, collection statistics and the net asset value of the
Co-investment, and are not considered as impaired. The carrying amount of the loan receivables is considered
to be a reasonable approximation of its fair value.
25. TRADE AND OTHER RECEIVABLES
2023
2022
US$’000
US$’000
Trade receivables
1,000
1,354
Prepayments
2,478
2,447
Rental and other deposits
54
61
Tax recoverable
21
170
Other receivables
14,536
16,213
17,089
18,891
18,089
20,245
122
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
25. TRADE AND OTHER RECEIVABLES (Continued)
Management has a credit policy in place for approving the credit limits to charterers and the exposures to credit
risk are monitored such that any outstanding trade receivables are reviewed and followed up on an ongoing basis.
Credit evaluations including assessing the customer’s creditworthiness and financial standing are performed on
customers requiring a credit over certain amount.
The credit terms given to charterers vary from 15 to 60 days according to the types of vessels’ employment.
The carrying amounts of trade and other receivables are considered to be a reasonable approximation of their
fair values due to their short term maturities.
The aging analysis of trade receivables (net of impairment loss) that are past due at the reporting date but not
individually considered to be impaired is included in the following analysis:
2023
2022
US$’000
US$’000
Neither past due nor impaired
238
138
Past due but not impaired
Within three months past due
602
754
Over three months but within six months past due
133
141
Over six months but within twelve months past due
27
321
762
1,216
1,000
1,354
JINHUI SHIPPING AND TRANSPORTATION LIMITED
123
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
25. TRADE AND OTHER RECEIVABLES (Continued)
The movement for impairment loss on trade and other receivables is as follows:
2023
2022
US$’000
US$’000
At 1 January
5,721
7,388
Impairment loss recognized
405
59
Reversal of impairment loss
(1,679)
(1,679)
Written off as uncollectible
(85)
(47)
At 31 December
4,362
5,721
For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes a loss allowance
based on lifetime ECL at each reporting date. In calculating the ECL, the Group has established a provision matrix
that is based on its historical credit loss experience and external indicators, adjusted for forward-looking factors
specific to the debtors and the economic environment.
For other receivables, the Group measures the loss allowance for other receivables equal to 12-month ECL,
unless when there has been a significant increase in credit risk since initial recognition, the Group recognizes
lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on significant increase in
the likelihood or risk of default occurring since initial recognition.
At the reporting date, the Group had determined trade receivables of US$4,362,000 (2022: US$5,721,000) as
impaired. No impairment loss on other receivables was provided as at 31 December 2023 and 2022.
124
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
26. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2023
2022
US$’000
US$’000
Held for trading
Listed equity securities
21,491
26,812
Listed debt securities
577
1,051
Unlisted debt securities
295
288
22,363
28,151
Designated as such upon initial recognition
Investment funds
1,731
1,076
24,094
29,227
At the reporting date, the fair value measurements of listed equity securities and listed debt securities were
determined by reference to their quoted bid prices in active markets and were categorized as Level 1 and the fair
value measurements of unlisted debt securities and investment funds represented the quoted market prices on
the underlying investments provided by financial institution and were categorized as Level 2 of the three-level
fair value hierarchy as defined under IFRS 13 and HKFRS 13. There was no transfer among the three levels of
the fair value hierarchy during the year.
27. ASSETS HELD FOR SALE
On 12 December 2023, the Group entered into an agreement for the disposal of a Supramax of deadweight
52,050 metric tons at a consideration of US$10,430,000. The vessel was delivered to the purchaser in January
2024. For financial reporting purposes, the vessel was reclassified to “Assets held for sale” in accordance with
IFRS 5 and HKFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” at the reporting date, with
an impairment loss on assets held for sale (disposed vessel) of US$1,288,000 was recognized for the year and
was included in other operating expenses.
28. AMOUNT DUE TO HOLDING COMPANY
Amount due to holding company is unsecured, interest-free and repayable on demand. The carrying amount of
the amount due is considered to be a reasonable approximation of its fair value.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
125
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
29. SHARE CAPITAL
2023
2022
Number of Number of
ordinary shares ordinary shares
of US$0.05 each
Amount
of US$0.05 each
Amount
US$’000
US$’000
Authorized:
At 1 January and 31 December
800,000,000
40,000
800,000,000
40,000
Issued and fully paid:
At 1 January and 31 December
109,258,943
5,463
109,258,943
5,463
At the reporting date, the Company had 2,177 (2022: 2,334) shareholders. Pursuant to the record registered on
the Norwegian Registry of Securities, the major shareholders holding more than 1% of the outstanding shares
at the reporting date were as follows:
Shareholder’s name
Percentage of
total issued capital
Jinhui Holdings Company Limited*
40.81%
BNP Paribas Securities Services BPSS*
24.17%
Nordnet Bank AB
3.78%
JPMorgan Chase Bank, N.A., London
3.01%
Citibank, N.A.
1.96%
Willumsen Thor Inge
1.59%
75.32%
* BNP Paribas Securities Services BPSS held 16,252,990 shares of the Company in custodian for Jinhui Holdings Company
Limited as at 31 December 2023 and hence Jinhui Holdings Company Limited had approximately 55.69% beneficial
interests in the Company.
126
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
30. RESERVES
Details of movements in reserves of the Group are set out in the “Consolidated Statement of Changes in Equity”
on page 76.
Share premium
The application of the share premium account is governed by Section 40(2) of the Companies Act 1981 of Bermuda.
Capital redemption reserve
Capital redemption reserve represents the par value of the repurchased and cancelled shares.
Contributed surplus
Contributed surplus will be dealt with in accordance with Section 54 of the Companies Act 1981 of Bermuda.
Revaluation reserve
Revaluation reserve represents the revaluation surplus between the carrying amount of the leasehold land and
building which is owner-occupied and the fair value of that property at the date of reclassification to investment
properties.
Reserve for financial assets at fair value through OCI
Reserve for financial assets at fair value through OCI represents the changes in fair value of financial assets
at fair value through OCI. As at 31 December 2023, the reserve for financial assets at fair value through OCI
consists of recycling and non-recycling portion amounting to income of US$94,000 (2022: US$106,000) and loss
of US$2,388,000 (2022: US$251,000) respectively.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
127
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
31. SECURED BANK LOANS
The maturity of secured bank loans is as follows:
2023
2022
US$’000
US$’000
Within one year
32,497
34,278
In the second year
55,670
15,406
In the third to fifth year
–
33,154
Total secured bank loans
88,167
82,838
Less: Amount repayable within one year
(32,497)
(34,278)
Amount repayable after one year
55,670
48,560
During the year, the Group had drawn new secured bank loans of US$57,696,000 (2022: US$66,859,000) and
repaid US$52,367,000 (2022: US$76,599,000).
At the reporting date, secured bank loans represented vessel mortgage loans that were denominated in United
States Dollars, revolving loans, term loans and property mortgage loans that were denominated in Hong Kong
Dollars and United States Dollars. All secured bank loans were committed on floating rate basis ranging from
4.25% to 7.58% (2022: 4% to 6.42%) per annum. These loans are secured by certain of the Group’s assets as
disclosed in note 37.
The carrying amount of the secured bank loans is considered to be a reasonable approximation of its fair value.
128
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
32. TRADE AND OTHER PAYABLES
2023
2022
US$’000
US$’000
Trade payables
133
171
Accrued charges
2,830
1,662
Other payables
Payables related to vessel running cost and
ship operating expenses
9,104
10,078
Hire receipt in advance
2,607
874
Loan interest payables
166
172
Accrued employee benefits
1,203
1,710
Others
178
166
13,258
13,000
16,221
14,833
The carrying amounts of trade and other payables are considered to be a reasonable approximation of their fair
values.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
129
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
33. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
2023
2022
US$’000
US$’000
Loss before taxation
(55,056)
(7,093)
Adjustments for:
Depreciation and amortization
36,994
39,870
Interest income
(819)
(1,064)
Interest expenses
6,234
3,438
Dividend income
(1,171)
(2,624)
Net loss (gain) on disposal of owned vessels
880
(5,636)
Loss on write-off of property, plant and equipment
Change in fair value of investment properties
2,334
935
Impairment loss on owned vessels and right-of-use assets
19,704
49,326
Impairment loss on assets held for sale
1,288
–
Reversal of impairment loss on trade and other receivables, net
(1,274)
(1,620)
Bad debts written off in respect of trade and other receivables
–
29
Cash generated from operations before changes in working capital
9,117
75,567
Changes in working capital:
Inventories
1,610
420
Loan receivables
(235)
7,894
Trade and other receivables
3,582
1,296
Financial assets at fair value through profit or loss
5,133
14,160
Trade and other payables
1,395
(8,106)
Amount due to holding company
9
18
Changes in working capital
11,494
15,682
Cash generated from operations
20,611
91,249
130
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
34. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The changes in the Group’s liabilities arising from financing activities are classified as follows:
Vessel Other
mortgage secured Lease
loans bank loans
liabilities
Total
US$’000
US$’000
US$’000
US$’000
At 1 January 2022
45,912
46,666
–
92,578
Cash flows:
Drawdown of loans
–
66,859
–
66,859
Repayment of loans
(19,443)
(57,156)
–
(76,599)
Repayment of lease liabilities
–
–
(3,106)
(3,106)
Non-Cash:
New Lease
–
–
43,598
43,598
Lease remeasurement
–
–
(11,858)
(11,858)
Interest expense on lease liabilities
–
–
703
703
At 31 December 2022
26,469
56,369
29,337
112,175
At 1 January 2023
26,469
56,369
29,337
112,175
Cash flows:
Drawdown of loans
–
57,696
–
57,696
Repayment of loans
(9,964)
(42,403)
–
(52,367)
Repayment of lease liabilities
–
–
(4,879)
(4,879)
Non-cash:
Lease remeasurement
–
–
3,257
3,257
Interest expense on lease liabilities
–
–
1,424
1,424
At 31 December 2023
16,505
71,662
29,139
117,306
JINHUI SHIPPING AND TRANSPORTATION LIMITED
131
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
35. DEFERRED TAXATION
At the reporting date, deferred tax assets have not been recognized in respect of tax losses of US$341,631,000
(2022: US$324,192,000).
Deferred tax assets have not been recognized in respect of tax losses because it is not probable that future
taxable profit will be available against which the unused tax losses can be utilized. Such tax losses do not expire
under current tax legislation.
36. FUTURE OPERATING LEASE ARRANGEMENTS
At the reporting date, the Group had future minimum lease income receivables under non-cancellable operating
leases as follows:
2023
2022
US$’000
US$’000
Within one year:
Premises
51
41
Owned vessels
8,375
125
Chartered-in vessels
10,168
–
18,594
166
37. PLEDGE OF ASSETS
At the reporting date, the Group had certain credit facilities which were secured by the followings:
(a) Legal charges on the Group’s property, plant and equipment (note 19) with an aggregate net book value
of US$220,591,000 (2022: US$218,172,000) and investment properties (note 21) with an aggregate carrying
amount of US$20,653,000 (2022: US$22,064,000);
(b)
Financial assets at fair value through profit or loss of US$12,564,000 (2022: US$16,845,000);
(c)
Deposits totaling US$359,000 (2022: US$444,000) of the Group placed with banks; and
(d)
Assignment of fourteen (2022: fourteen) subsidiaries’ income in favour of banks.
In
addition, shares of six (2022: eight) ship owning subsidiaries were pledged to banks for vessel mortgage loans.
132
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
38. CAPITAL EXPENDITURE COMMITMENTS
During the year, capital expenditure on additions of motor vessels and capitalized drydocking costs was
US$24,220,000 (2022: US$140,482,000) and on other property, plant and equipment was US$113,000 (2022:
US$121,000).
Pursuant to the Co-investment documents, the Co-Investor committed to acquire non-voting participating class A
shares of Dual Bliss of US$10,000,000. Dual Bliss is one of the investors of the Co-investment. As at the reporting
date, the capital expenditure commitments contracted by the Group but not provided for was US$372,000 (2022:
US$372,000).
As at the reporting date, the total amount of capital expenditure commitments contracted by the Group but not
provided for was US$372,000 (2022: US$372,000).
Save as disclosed above, there were no other significant capital expenditure commitments contracted by the
Group but not provided for as at the reporting date.
39. RELATED PARTY TRANSACTIONS
Save as disclosed elsewhere in these consolidated financial statements, during the year, the Group had the
following related party transactions:
(a) Receipt of an administrative fee of US$252,000 (2022: US$242,000) from Jinhui Holdings;
(b) Lease payment of US$17,000 (2022: US$17,000) under a short term lease to a fellow subsidiary; and
(c) Compensation of key management personnel as follows:
2023
2022
US$’000
US$’000
Salaries and other benefits
8,692
8,994
Contributions to retirement benefits schemes
446
444
9,138
9,438
Other payables included accrued employee benefits payables to directors and executive personnel of
US$899,000 (2022: US$1,214,000). There is no other balance or transaction related to connected party or
any director and executive personnel and substantial shareholder of the Group.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
133
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
40. EVENTS AFTER THE REPORTING DATE
Subsequent to the reporting date, the Group entered into an agreement on 2 February 2024 for the acquisition
of a Capesize of deadweight 181,279 metric tons, built in year 2012, at a purchase price of US$30,950,000. The
vessel will be delivered to the Group between 1 July 2024 and 15 September 2024.
In addition, the Group entered into an agreement on 21 February 2024 for the acquisition of a Panamax of
deadweight 81,567 metric tons, built in year 2019, at a purchase price of US$31,122,450. The vessel will be
delivered to the Group between 1 April 2024 and 15 June 2024.
41. FINANCIAL RISK MANAGEMENT AND POLICIES
The Group is exposed to financial risks through its use of financial instruments which arise from its business
activities. The financial risks include market risk (mainly comprise of interest rate risk, foreign currency risk and
price risk), credit risk and liquidity risk. The management manages and monitors the financial risk exposures to
ensure appropriate measures are implemented on a timely and effective manner. These policies have been in
place for years and are considered to be effective.
134
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(a) Categories of financial instruments
At the reporting date, the carrying amounts of financial instruments presented in the consolidated statement
of financial position related to the following categories of financial assets and financial liabilities:
2023
2022
US$’000
US$’000
Financial assets
Financial assets at fair value through OCI
Unlisted equity investments
7,259
9,396
Unlisted club membership
432
444
7,691
9,840
Financial assets at fair value through profit or loss
Listed equity securities
21,491
26,812
Listed debt securities
577
1,051
Unlisted debt securities
295
288
Investment funds
1,731
1,076
24,094
29,227
Financial assets at amortized cost
Trade and other receivables
15,590
17,628
Loan receivables
1,577
1,342
Pledged deposits
359
444
Bank balances and cash
40,250
33,353
57,776
52,767
89,561
91,834
Financial liabilities
Financial liabilities at amortized cost
Trade and other payables
13,606
13,951
Amount due to holding company
176
167
Secured bank loans
88,167
82,838
Lease liabilities
29,139
29,337
131,088
126,293
JINHUI SHIPPING AND TRANSPORTATION LIMITED
135
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(b) Interest rate risk
Exposures to interest rate risk and the Group’s risk management policies
Interest rate risk relates to the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rate. The Group’s interest rate risk arises primarily from
bank borrowings that were committed on floating rate basis.
The Group manages interest rate risk by monitoring its interest rate profile as set out in note 31.
Interest rate benchmark reform
As at 31 December 2023, the Group had interest bearing bank borrowings denominated in United States
Dollars of US$16,504,000 (2022: US$26,469,000), carrying variable interests with reference to the London
Interbank Offered Rate (LIBOR) which has been ceased after 30 June 2023. The bank borrowings have
been repaid by January 2024. The management of the Group considers the impact of the interest rate
benchmark reform to the Group’s financial position and financial performance is not significant.
Sensitivity analysis*
Based on the exposures to bank borrowings of US$88,167,000 (2022: US$82,838,000) at the reporting date,
it was estimated that an increase of 25 (2022: 75) basis points in interest rate, with all other variables
remaining constant, the Group’s net loss would increase by approximately US$220,000 (2022: US$621,000).
The sensitivity analysis above has been determined as if the change in interest rate had occurred at the
reporting date. The basis of 25 (2022: 75) points increase is considered to be reasonably possible change
based on observation of current market conditions and represents the management’s assessment of a
reasonably possible change in interest rate over the period until the next reporting date.
* 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.
136
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(c) Foreign currency risk
Exposures to foreign currency risk and the Group’s risk management policies
Foreign currency risk relates to the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. The Group’s transactions, assets and liabilities
are mainly denominated in United States Dollars, the functional currency of the Company. Certain of the
Company’s subsidiaries report in Hong Kong Dollars which is linked to United States Dollars at exchange
rate of around US$1.00 to HK$7.80. The Group believes that there will be no significant fluctuation in the
exchange rates between Hong Kong Dollars and United States Dollars.
At the reporting date, the Group was exposed to foreign currency risk primarily through holding certain
bank deposits and investment in equity securities mainly denominated in Singapore Dollars amounting
to SGD710,000 and SGD9,890,000, approximately US$539,000 and US$7,505,000 respectively (2022:
SGD673,000 and SGD11,557,000, approximately US$503,000 and US$8,638,000 respectively).
Sensitivity analysis*
At the reporting date, based on the total exposures to the bank deposits and equity securities mainly
denominated in Singapore Dollars of SGD10,600,000, approximately US$8,044,000 (2022: SGD12,230,000,
approximately US$9,141,000), it was estimated that a depreciation of 5% (2022: 5%) in exchange rate of
Singapore Dollars against United States Dollars would result in an increase to the Group’s net loss by
approximately US$383,000 (2022: US$436,000) with all other variables remain constant. The sensitivity
analysis had been determined based on the assumed exchange rate movement of Singapore Dollars
(2022: Singapore Dollars) against United States Dollars taking place at the beginning of the year and held
constant throughout the year.
* 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
137
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(d) Price risk
Exposures to price risk and the Group’s risk management policies
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will decline
because of adverse market price movements of the financial instrument. The Group is exposed to price
risk primarily through its investments in equity securities, debt securities and investment funds classified
as financial assets at fair value through profit or loss.
The Group’s portfolio of financial instruments that exposed to price risk at the reporting date is set out
in note 26.
Sensitivity analysis*
Based on the portfolio of equity securities held by the Group at the reporting date, if the quoted prices
of the equity securities had been decreased by 10% (2022: 10%), the Group’s net loss would increase by
approximately US$2,149,000 (2022: US$2,681,000).
Based on the portfolio of debt securities held by the Group at the reporting date, if the quoted prices
of the debt securities had been decreased by 10% (2022: 10%), the Group’s net loss would increase by
approximately US$87,000 (2022: US$134,000).
Based on the portfolio of investment funds held by the Group at the reporting date, if the quoted prices
of the investment funds had been decreased by 10% (2022: 10%), the Group’s net loss would increase by
approximately US$173,000 (2022: US$108,000).
* The sensitivity analysis disclosed above represents the risks inherent to the Group’s financial instruments as of each
reporting date. The result of the sensitivity analysis may differ from time to time according to the then prevailing market
conditions.
138
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(e) Credit risk
Exposures to credit risk and the Group’s risk management policies
Credit risk relates to the risk that the counterparty to a financial instrument would fail to discharge its
contractual obligations under the terms of the financial instrument and cause a financial loss to the Group.
The Group’s exposures to credit risk mainly arises from granting credit to charterers in the ordinary
course of its operations, loan receivables to third parties and deposits or other financial assets placed
with financial institutions.
Management has a credit policy in place for approving the credit limits 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. Credit evaluations including assessing the customer’s creditworthiness and financial
standing are performed on customers requiring a credit over certain amount. During the year, impairment
loss of US$405,000 (2022: US$59,000) was provided on the Group’s outstanding trade receivables over one
year past due and reversal of impairment loss on trade receivables of US$1,679,000 (2022: US$1,679,000)
was recognized upon recovery of outstanding trade receivables in prior years, and US$85,000 (2022:
US$47,000) was written off as uncollectible.
The credit terms given to charterers vary from 15 to 60 days according to the types of vessels’ employment.
For trade receivables, the Group applies a simplified approach in calculating ECL and recognizes a loss
allowance based on lifetime ECL at each reporting date. These are the expected shortfalls in contractual
cash flows, considering the potential for default at any point during the life of the financial assets. In
calculating the ECL, the Group has established a provision matrix that is based on its historical credit
loss experience and external indicators, adjusted for forward-looking factors specific to the debtors and
the economic environment.
To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics
and the days past due.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
139
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(e) Credit risk (Continued)
Exposures to credit risk and the Group’s risk management policies (Continued)
On the above basis, the ECL for trade receivables as at 31 December 2023 and 2022 was determined as
follows:
Over Over
3 months 6 months
Within but within but within Over
3 months 6 months 12 months 12 months
Current past due past due past due
past due
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
2023
Trade receivables
– gross carrying amount
238
602
133
27
4,362
5,362
Lifetime ECL
–
–
–
–
4,362
4,362
ECL rate
0%
0%
0%
0%
100%
2022
Trade receivables
– gross carrying amount
138
754
141
321
5,721
7,075
Lifetime ECL
–
–
–
–
5,721
5,721
ECL rate
0%
0%
0%
0%
100%
140
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(e) Credit risk (Continued)
Exposures to credit risk and the Group’s risk management policies (Continued)
For other receivables and loan receivables arised from the Co-investment, the Group measures the loss
allowance for those receivables equal to 12-month ECL, unless when there has been a significant increase
in credit risk since initial recognition, the Group recognizes lifetime ECL. The assessment of whether lifetime
ECL should be recognized is based on significant increase in the likelihood or risk of default occurring since
initial recognition and the Group also considered the net asset value of the Co-investment for estimating
the ECL for loan receivables. For the result of the assessment, no impairment loss on other receivables
and loan receivables arised from Co-investment was provided as at 31 December 2023 and 2022. The
outstanding balance of those receivables of US$16,167,000 (2022: US$17,616,000) are considered as not
deteriorated significantly in credit quality or with low credit risk. Management believes that there was
no significant increase in credit risk inherent in the Group’s outstanding balance of those receivables.
For the financial assets at fair value through OCI, the management believes that the credit risk inherent
in the Group is low and counterparties have the capacity to meet their contractual cash flow obligation
in the near term and the ECL recognized is based on the 12-month ECL.
The Group has no significant concentration of credit risk in respect of trade receivables, with exposure
spread over a number of charterers. At the reporting date, the Group did not hold any collateral from
charterers.
Bank deposits are only placed with creditworthy financial institutions. The management does not expect
any financial institutions fail to meet their obligations.
JINHUI SHIPPING AND TRANSPORTATION LIMITED
141
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
41. FINANCIAL RISK MANAGEMENT AND POLICIES (Continued)
(f) Liquidity risk
Exposures to liquidity risk and the Group’s risk management policies
Liquidity risk relates to the risk that the Group will not be able to meet its obligations associated with
its financial liabilities. The Group is exposed to liquidity risk in respect of settlement of trade and other
payables, its financing obligations and lease liabilities, and also in respect of its cash flow management.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of bank loans and other borrowings. The management regularly monitors the Group’s current
and expected liquidity requirements and its compliance with lending covenants, to ensure it maintains
sufficient reserves of cash and bank balances, readily realizable marketable equity and debt securities and
adequate committed lines of funding from major financial institutions to meet its liquidity requirement.
The analysis below set out the remaining contractual maturity based on undiscounted cash flow of the
Group’s financial liabilities at the reporting date.
Total
Within In the In the third After the undiscounted Carrying
one year second year to fifth year fifth year amount amount
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
2023
Trade and other payables
13,606
–
–
–
13,606
13,606
Amount due to holding company
176
–
–
–
176
176
Secured bank loans
38,443
59,035
–
–
97,478
88,167
Lease liabilities
6,218
6,201
18,621
1,529
32,569
29,139
58,443
65,236
18,621
1,529
143,829
131,088
2022
Trade and other payables
13,951
–
–
–
13,951
13,951
Amount due to holding company
167
–
–
–
167
167
Secured bank loans
38,968
18,145
34,706
–
91,819
82,838
Lease liabilities
5,355
5,370
16,066
6,690
33,481
29,337
58,441
23,515
50,772
6,690
139,418
126,293
142
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
42. CAPITAL MANAGEMENT
The Group’s capital management objectives are:
(a) to ensure the Group’s ability to continue as a going concern;
(b) to provide adequate returns for shareholders;
(c) to maintain an optimal capital structure to reduce the cost of capital; and
(d) to support the Group’s stability and sustainable growth.
The Group’s capital management strategies are to rely on internal resources and interest-bearing borrowings to
finance the capital expenditures. The management may make adjustments to its capital structure in the light of
changes in economic conditions, recent market values of the Group’s assets as well as the risk characteristics
of the underlying assets through adjusting the amount of dividends paid to shareholders, issuing new shares
or selling assets to reduce debts.
The Group monitors capital structure on the basis of the gearing ratio. This ratio is calculated as net debts (total
interest-bearing debts net of equity and debt securities, bank balances and cash) over total equity. The gearing
ratio of the Group at the reporting date is calculated as follows:
2023
2022
US$’000
US$’000
Secured bank loans repayable within one year
32,497
34,278
Secured bank loans repayable after one year
55,670
48,560
Total secured bank loans
88,167
82,838
Less: Equity and debt securities
(22,363)
(28,151)
Less: Bank balances and cash
(40,250)
(33,353)
Net debts
25,554
21,334
Total equity
349,930
411,137
Gearing ratio
7%
5%
JINHUI SHIPPING AND TRANSPORTATION LIMITED
143
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
43. STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CHANGES IN EQUITY OF
THE COMPANY
(a) Statement of financial position of the Company
2023 2022
US$’000 US$’000
ASSETS
Non-current assets
Investments in subsidiaries 8,723 8,723
Current assets
Other receivables – 7
Amount due from subsidiaries 278,322 306,730
Bank balances and cash 50 91
278,372 306,828
Total assets 287,095 315,551
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 5,463 5,463
Reserves 280,861 309,348
Total equity 286,324 314,811
Current liabilities
Other payables 90 66
Amount due to subsidiaries 505 507
Amount due to holding company 176 167
771 740
Total equity and liabilities 287,095 315,551
144
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
43. STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CHANGES IN EQUITY OF
THE COMPANY (Continued)
(b) Statement of changes in equity of the Company
Issued
capital
Share
premium
Capital
redemption
reserve
Contributed
surplus
Retained
profits
Total
equity
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 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
At 1 January 2023 5,463 95,585 719 16,297 196,747 314,811
Loss and total comprehensive
loss for the year – – – – (24,117) (24,117)
2022 final dividend paid – – – – (4,370) (4,370)
At 31 December 2023 5,463 95,585 719 16,297 168,260 286,324
JINHUI SHIPPING AND TRANSPORTATION LIMITED
145
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
44. PRINCIPAL SUBSIDIARIES
Attributable Attributable
Issued and equity equity
paid-up capital / interest at interest at Principal Place of
Name registered capital 31/12/2023 31/12/2022 activities operation
Incorporated in Bermuda
#
Jinhui MetCoke Limited
12,000 ordinary shares
100%
100%
Investment
Worldwide
of US$1 each holding
Incorporated in the British Virgin Islands
Advance Rich Limited
1 share
100%
100%
Investment
Worldwide
of US$1 each
#
Jin Hui Shipping Inc.
50,000 shares
100%
100%
Investment
Worldwide
of US$1 each holding
#
Jinhui Investments Limited
1 share
100%
100%
Investment
Worldwide
of US$1 each holding
Incorporated in Hong Kong
Best Flame International Limited
HK$2 divided into
100%
100%
Property
Hong Kong
2 ordinary shares investment
Fair Fait International Limited
HK$2 divided into
100%
100%
Property
Hong Kong
2 ordinary shares investment
Goldbeam International Limited
HK$5,000,000
100%
100%
Ship
Hong Kong
divided into management
5,000,000 services,
ordinary shares shipping
agent and
investment
146
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
Attributable Attributable
Issued and equity equity
paid-up capital / interest at interest at Principal Place of
Name registered capital 31/12/2023 31/12/2022 activities operation
Incorporated in Hong Kong (Continued)
Good Sunshine Limited
HK$1 divided into
100%
100%
Property
Hong Kong
1 ordinary share investment
Jinhui Finance (Hong Kong) HK$10,000
100%
100%
Money
Hong Kong
Limited divided into lending
10,000 ordinary shares
Leadford Industries Limited
HK$2 divided into
100%
100%
Property
Hong Kong
2 ordinary shares investment
Monocosmic Limited
HK$10,000
100%
100%
Property
Hong Kong
divided into investment
10,000 ordinary shares
Noble Talent Development HK$1 divided into
100%
100%
Property
Hong Kong
Limited 1 ordinary share investment
Ringo Star Company Limited
HK$2 divided into
100%
100%
Property
Hong Kong
2 ordinary shares investment
Union Gold Limited
HK$1 divided into
100%
100%
Property
Hong Kong
1 ordinary share investment
44. PRINCIPAL SUBSIDIARIES (Continued)
JINHUI SHIPPING AND TRANSPORTATION LIMITED
147
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
44. PRINCIPAL SUBSIDIARIES (Continued)
Attributable Attributable
Issued and equity equity
paid-up capital / interest at interest at Principal Place of
Name registered capital 31/12/2023 31/12/2022 activities operation
Incorporated in the Republic of Liberia
Galsworthy Limited
1 registered share
100%
100%
Ship chartering
Worldwide
of US$1 each
Goldbeam Shipping Inc.
100 registered shares
100%
100%
Ship chartering
Worldwide
of US$1 each
Paxton Enterprises Limited
500 registered shares
100%
100%
Ship chartering
Worldwide
of US$1 each
Sompol Trading Limited
10 registered shares
100%
100%
Ship chartering
Worldwide
of US$1 each
Wonder Enterprises Ltd.
500 registered shares
100%
100%
Ship chartering
Worldwide
of US$1 each
Incorporated in the Republic of Panama
Jinan Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinao Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinbi Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinchao Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
148
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
Attributable Attributable
Issued and equity equity
paid-up capital / interest at interest at Principal Place of
Name registered capital 31/12/2023 31/12/2022 activities operation
Incorporated in the Republic of Panama (Continued)
Jingang Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinheng Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinhong Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinhui Marine Inc.
2 common shares
100%
100%
Ship chartering
Worldwide
of US$1 each
Jinji Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinjun Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinmao Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinping Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinrong Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinrui Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinsheng Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
44. PRINCIPAL SUBSIDIARIES (Continued)
JINHUI SHIPPING AND TRANSPORTATION LIMITED
149
ANNUAL REPORT 2023
Notes to the Consolidated Financial Statements
Year ended 31 December 2023
Attributable Attributable
Issued and equity equity
paid-up capital / interest at interest at Principal Place of
Name registered capital 31/12/2023 31/12/2022 activities operation
Incorporated in the Republic of Panama (Continued)
Jinshun Shipping Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinsui Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jintong Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinwan Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinxiang Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinxing Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinyi Shipping Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinyuan Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
Jinyue Marine Inc.
2 common shares
100%
100%
Ship owning
Worldwide
of US$1 each
# These are direct subsidiaries of the Company. All other companies are indirect subsidiaries.
44. PRINCIPAL SUBSIDIARIES (Continued)
150
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Glossary
This glossary contains the abbreviations and main terms used in the 2023 annual report.
Abbreviations / Main terms Meanings in the annual report
AER Annual Efficiency Ratio;
Board Board of Directors;
BWTS Ballast Water Treatment System;
Capesize Vessel of deadweight approximately 120,000 metric tons or above;
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 2023, 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;
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;
ETS Emissions Trading System;
Euronext Securities Oslo the Norwegian Central Securities Depository, formerly known as Verdipapirsentralen
ASA (VPS);
JINHUI SHIPPING AND TRANSPORTATION LIMITED
151
ANNUAL REPORT 2023
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);
LSP Long service payment;
MARPOL The International Convention for the Prevention of Pollution from Ships;
MPF Mandatory provident fund;
Nordea Bank Nordea Bank Abp, Filial i Norge;
Norwegian Code of Practice The Norwegian Code of Practice for Corporate Governance issued by the
Norwegian Corporate Governance Board;
Panamax Dry bulk vessel of deadweight approximately between 70,000 metric tons to
90,000 metric tons;
152
JINHUI SHIPPING AND TRANSPORTATION LIMITED
ANNUAL REPORT 2023
Glossary
Abbreviations / Main terms Meanings in the annual report
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
ANNUAL REPORT
2023