DEEPEN AMASS CULTIVATE FORGE
NETWORK TRANSFORMATIVE ASIAN HOMELAND GREATNESS AS
INTEGRATION MOMENTUM WITH FINESSE THE ONE AND ONLY
深化融通 蓄力变革 精耕亚洲 铸就唯一Chapter 1Important Information Table of Contents and Definitions
The Company’s Board of Directors Supervisory Committee Directors Supervisors and
Senior Officers guarantee the authenticity accuracy and completeness of the Annual
Report without any false records misleading statements or significant missions and
shall bear individual and joint legal responsibilities.Wang Wei the Company’s legal representative Ho Chit Chief Financial Officer (the
person in charge of finance) and Hu Xiaofei the accounting director hereby declare
that they guarantee the authenticity accuracy and completeness of the financial report
in this Annual Report.All directors have attended the Board meeting to review this Annual Report.Forward-looking statements such as future development plans contained herein do not
constitute any undertaking made by the Company to investors. Investors are advised to
invest rationally and to take into account possible investment risks.The Company is required to comply with the disclosure requirements about express
delivery service industries presented in the Self-Regulatory Guidelines for Companies
Listed on the Shenzhen Stock Exchange No. 3 – Industrial Information Disclosure.In this Annual Report the Company details the risk factors and countermeasuresthat may occur in the future. For more information refer to “Company risks andcountermeasures” in “Section XIII. Prospects of the Company” of “Chapter 3.Management Discussion and Analysis”. Investors shall refer to this information.The Company’s profit distribution plan reviewed and approved by the Board of
Directors is as follows: based on the total share capital at the registration date on
which the 2023 annual profit distribution plan is to be implemented less the shares in
special repurchase securities account a cash dividend of RMB6.0 (including tax) will be
distributed for every 10 shares. There will be no bonus shares or conversion of equity
reserve into share capital of the Company.This report is prepared in both Chinese and English versions. If there is any ambiguity in
understanding the report the Chinese version shall prevail.
002Chapter 1Important Information Table of Contents and Definitions
Table of Contents
Chapter 1 Important Information Table of Contents and Definitions . . 002
Chapter 2 Company Profile and Key Financial Indicators. . . . . . . . . . . . 006
Chapter 3 Management Discussion and Analysis . . . . . . . . . . . . . . . . . 016
Chapter 4 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 087
Chapter 5 Environment and Social Responsibilities . . . . . . . . . . . . . . . . 110
Chapter 6 Significant Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Chapter 7 Share Changes and Shareholder Details . . . . . . . . . . . . . . . . 130
Chapter 8 Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Chapter 9 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Chapter 10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
003Chapter 1Important Information Table of Contents and Definitions
List of Documents Available for Inspection
(1) Financial statements signed and sealed by the legal representative Chief Financial Officer and the
accounting director of the Company.
(2) The original copy of audit report containing the seal of the accounting firm and the signature and seal of
the certified public accountant.
(3) The original copies of all documents and announcements of the Company which have been publicly
disclosed in newspapers designated by the China Securities Regulatory Commission during the Reporting
Period.
(4) The original text of the 2023 annual report signed by the chairman of the Board of Directors.
(5) The place where the above documents are maintained: the office of the Company’s Board of Directors.
004Chapter 1Important Information Table of Contents and Definitions
Definitions
Term Description
Reporting period January 1 2023 to December 31 2023
The same period of previous
January 1 2022 to December 31 2022
year
The Company the listed
S.F. Holding Co. Ltd.Company SF Holding SF
RMB Renminbi
Ma’anshan Dingtai Rare Earth and New Materials Co. Ltd. the predecessor of S.F. Holding Co. Ltd.Dingtai New Materials
was renamed to S.F. Holding Co. Ltd. in February 2017.Taisen Holding Shenzhen S.F. Taisen Holding (Group) Co. Ltd. a wholly-owned subsidiary of S.F. Holding Co. Ltd..In December 2016 all assets and liabilities (exchange-out assets) of the Company’s predecessor
Dingtai New Materials were replaced with the equivalent 100% equity (exchange-in assets) of Taisen
Holding held by all shareholders of Taisen Holding as of December 31 2015 the valuation benchmark
Major asset restructuring
date. The difference between the exchange-in assets and the exchange-out assets was purchased by
Dingtai New Materials the Company’s predecessor from all shareholders of Taisen Holding in the
form of issuing shares.Mingde Holding Shenzhen Mingde Holding Development Co. Ltd. the controlling shareholder of S.F. Holding Co. Ltd.Kerry Logistics Network Limited a company listed on the Main Board of the Stock Exchange of Hong
Kerry Logistics
Kong Limited (00636.HK) is a holding subsidiary of S.F. Holdings Co. Ltd.SF INTRA-CITY Intra-city Hangzhou SF Intra-city Industrial Co. Ltd. a company listed on the Main Board of the Stock Exchange
Industrial of Hong Kong Limited (09699.HK) is a holding subsidiary of S.F. Holdings Co. Ltd.SF Real Estate Investment Trust listed on the Main Board of the Stock Exchange of Hong Kong Limited
SF REIT
(02191.HK) is an associate of S.F. Holding Co. Ltd.
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
HK Stock Exchange The Stock Exchange of Hong Kong Limited
HK SFC The Securities and Futures Commission of Hong Kong
005Chapter 2Company Profile and Key Financial Indicators
I. Company Information
Company Information
Stock Abbreviation SF Holding Stock Code 002352
Stock Exchange Shenzhen Stock Exchange
Chinese Name of the Company 順豐控股股份有限公司
Chinese Name Abbreviation of the順豐控股
Company
English Name of the Company
S.F. Holding Co. Ltd.(If Any)
English Name Abbreviation of the
SF Holding
Company (If Any)
Legal Representative of the Company Wang Wei
Registered address Room 101 Huaide Road No. 46 Huaide Community Fuyong Street Bao’an District Shenzhen
Zip Code of Registered Address 518103
In January 2018 the registered address of the Company was changed from "Dangtu Industrial
Park Ma’anshan City Anhui Province" to "Room 801 Floor 8 Wanfu Building No. 303 Fuyong
Historical Changes of the Registered Avenue Bao’an District Shenzhen
Address of the Company In February 2023 the registered address of the Company was changed from "Room 801 8/
F Wanfu Building No. 303 Fuyong Avenue Baoan District Shenzhen" to "Room 101 No. 46
Huaide South Road Huaide Community Fuyong Street Baoan District Shenzhen"
Block B TK Chuangzhi Tiandi Building Keji South 1st Road Nanshan District Shenzhen
Office Address
Guangdong Province China
Zip Code of Office Address 518057
Company Website www.sf-express.com
Email sfir@sf-express.com
Contacts and Contact Methods
Board Secretary Securities Affairs Representative
Name Ling Gan Jing Zeng
Block B TK Chuangzhi Tiandi Building Keji South Block B TK Chuangzhi Tiandi Building Keji South
Address 1st Road Nanshan District Shenzhen Guangdong 1st Road Nanshan District Shenzhen Guangdong
Province China Province China
Tel No. 0755-36395338 0755-36395338
Fax 0755-36646688 0755-36646688
Email sfir@sf-express.com sfir@sf-express.com
006Chapter 2Company Profile and Key Financial Indicators
Information Disclosure and Location of Annual Report
Stock Exchange Website for the Annual Report
Shenzhen Stock Exchange
Disclosed by the Company
Name and Website of Media for the Securities Times Shanghai Securities News China Securities Journal Securities
Annual Report Disclosed by the Company Daily and CNINFO (www.cninfo.com.cn)
Place Where the Annual Report is Available
Office of the Board
for Inspection
Registration Changes
Organization Code 91340500150660397M
Changes in Main Business Since Listing of
There was no change during the Reporting Period.the Company (If any)
Historical Changes in Controlling Shareholders (If any) There was no change during the Reporting Period.Other Relevant Information
Accounting firm engaged by the Company
Accounting Firm Name PriceWaterhouseCoopers Zhongtian LLP.Floor 11 PricewaterhouseCoopers Center Tower 2 of Link Reit Corporate Plaza
Office Address of the Accounting Firm
No. 202 Hubin Road Huangpu District Shanghai China
Signing Accountants' Names Lin Chongyun Liu Yufeng
Sponsor institution engaged by the Company to perform continuous supervision duties during the Reporting Period
□ Applicable√ Not applicable
Financial adviser engaged by the Company to perform continuous supervision duties during the Reporting Period
□ Applicable√ Not applicable
007Chapter 2Company Profile and Key Financial Indicators“SF Holding is the largest integrated logistics service providerin China and Asia and the fourth largest in the world. ”
With the logistics ecosystem as a focal point the Company has continually developed its portfolio of product
and service capabilities and has expanded to cover time-definite express economy express freight cold
chain and pharmaceuticals logistics intra-city on-demand delivery international express international freight
and freight forwarding and supply chain to provide customers with domestic and international end-to-end
one-stop supply chain services. Meanwhile through leveraging leading technology and research and
development capabilities the Company strives to create a digital supply chain ecosystem and become a front
runner in global intelligent supply chain.With the aim of sustainable and healthy development through visionary and forward-looking strategic
planning for the past 31 years the Company has accurately seized opportunities to expand its scale maintain
industry leadership and has become the leading logistics company in China and Asia. The Company was
ranked 377th on the Fortune Global 500. The Company's flagship product time-definite express has dominant
market leadership in China and through leveraging the network resources and capabilities for its time-definite
express the Company has rapidly and efficiently expanded into new logistics service sub-segments covering
from small parcels to bulk and heavy cargoes from standardized express delivery to customized supply chain
services and from China to Asia and further to the world. The Company is the market leader in China 1 across
five logistics sub-segments including express freight cold chain intra-city on-demand delivery 2 and supply
chain 3 and the market leader in Asia 1 across four logistics sub-segments including express freight intra-city
on-demand delivery 2 and international business 4 in Asia.Looking ahead the Company is committed to becoming the leading global logistics company connecting Asia
and the world. The Company will solidify its market leadership in China and continue to expand its presence in
Asia and globally; rapidly replicate its proven domestic know-how to overseas networks and expand globally
by leveraging its well-recognized brand leading cost advantages and integrated logistics service capabilities
to drive the sustainable and healthy growth of the Company so as to become the go-to logistics partner of
global business customers and retail customers to foster shared-growth and co-create enduring value.
1
Extensive Scale Undisputed Leadership Premium Brand
Largest in Asia No. 1 in Asia No. 1
Express LTL Freight Intra-city On-demand Customer satisfaction for express
International services in China
4th Largest Globally No. 1 in China
Integrated logistics service provider 1 Express LTL Freight Cold Chain Intra-city 14 years in a row
On-demand 2 Supply Chain 4
1 According to Frost & Sullivan Report in terms of revenue in 2022
2 Among third-party intra-city on-demand delivery service providers
3 Among non-state-owned independent third-party supply chain solution providers
4 Among the integrated logistics service providers in Asia
008Chapter 2Company Profile and Key Financial Indicators
Business Segments
Express Logistics
Provide time-definite and high-quality door-to-door delivery service for consumers enterprises and
mid- to high-end brand merchants
Options of half-day delivery same-day delivery next morning/next day delivery taking into account on shipping route and distance;
Time-definite addressing time-efficient and door-to-door delivery demands such as personal pieces industrial and commercial pieces mid- to high-end
brand order fulfillment parcel return services for e-commerce platforms immediate response in JIT mode of production and distribution
Express and other scenarios.Provide cost-effective and quality-guaranteed delivery services mainly for e-commerce platforms
and merchants
We focus on serving e-commerce platforms and merchants with stringent requirement on user experience by virtue of our high-quality fulfillment capabilities
Economy standing out in the market attributable to timeliness and door-to-door delivery;
Integrated warehousing and distribution service to serve warehousing needs arising from differentiated service offering and pricing level with nationwide
Express sub-warehouses smart cloud-based warehouses and integrated warehousing and distribution service.Mainly for customers in manufacturing and commercial distribution sectors with demand for
large parcel distribution and bulk transport
Large parcel land transport: Provide large parcels B2C delivery for e-commerce platforms and merchants B2C store transport and allocation less-than-truck-load
freight transport and full-truck-load transport;
Extended services: large parcel warehousing and distribution moving store distribution delivery and installation integration and other scenarios;
Freight SF Freight carried out through directly-operated network to serve mid- to high-end customers while SX Freight carried out through franchising network to serve a
broad-based economy market.Mainly for customers from three sectors: seasonal and fresh frozen food and pharmaceutical
Seasonal and fresh food logistics: deliver seasonal agricultural products across China directly from place of origin to consumers;
Cold Chain and Cold chain food logistics: Provide high-standard B2B2C end-to-end temperature-controlled cold chain logistics services;
Pharmaceutical Pharmaceutical logistics: Serve clients throughout the entire pharmaceutical value chain capable of conducting multi-temperature zone
Logistics control and transportation (from -80°C to 25°) and GSP certified pharmaceutical cold storage service.Provide on-demand distribution service mainly for restaurants retail/e-commerce merchants
individuals and enterprises;Intra-City Provide exclusive concessionary and value-added To B services and To C service offering matrix integrating features of “Fetch for MeOn-demand Deliver for Me Purchase for Me Solve for Me” and city-wide on -demand delivery services within average 1 hour.Delivery
Supply Chain and International
Provide domestic and foreign manufacturers trading enterprises cross-border e-commerce
merchants and consumers with international express delivery overseas local express
cross-border e-commerce parcel delivery and overseas warehousing services;
Cross-border standard express: Standard services with high timeliness that meet the needs of cross-border expedite delivery including high-quality
international standard express and cost-effective international special-offer products;
International Cross-border e-commerce delivery: Cost-effective and economical services that meet the needs of cross-border e-commerce platforms and merchants
Express including efficient international e-commerce express and economical international small parcels delivery;
Overseas local express: Offered in Southeast Asian countries such as Thailand Vietnam Malaysia Singapore Indonesia.Provide customers with air sea railway land and multi-modal freight transport solutions;
Air transport: provide air transport services such as pick-up at departure point multiple integration customs clearance delivery to end customer;
International Sea freight: provide sea freight service including all kinds of traditional freight FCL freight and LCL freight;
Freight and Land transport: provide innovative and economical road and railway transport services across Europe and Asia.Freight Forwarding
Provide customers in various industries with domestic and international end-to-end supply
chain solutions;
Empowering customers with technology leveraging SF’s big data loT technology and software and hardware system integration capabilities to help customers
establish the smart supply chain;
Supply Chain Fenghao Supply Chain and New HAVI mainly provide local supply chain solutions in China; while Kerry Logistics mainly provide global integrated logistics services
and supply chain solutions.
009Chapter 2Company Profile and Key Financial Indicators
II. Key Operating and Financial Data
Results Overview for 2023
Revenue Total assets
RMB258.4 billion 3.39% RMB221.5 billion 2.14%
Net assets attributable to the
Gross profit parent company 3
RMB33.1 billion 0.85% RMB92.8 billion 7.57%
Net profit attributable to the
parent company 1 Basic earnings per share
RMB8.23 billion 33.4% RMB1.70/share 33.9%
Net profit attributable to the parent
company after deducting
non-recurring profit or loss 2 Cash dividend per share 4
RMB7.13 billion 33.7% RMB0.6/share 140%
Return on net asset 5
9.19%1.85%
Notes:
1. N et profit attributable to the parent company refers to net profit attributable to shareholders of the listed company
2. N et profit attributable to the parent company after deducting non-recurring profit or loss refers to the net profit attributable to shareholders of the
listed company after deducting non-recurring profit or loss
3. Net assets attributable to the parent company refers to net assets attributable to shareholders of the listed company
4. The Company’s 2023 annual profit distribution plan need to be approved by the general meeting of the shareholders
5. Return on net assets refers to the weighted average return on net assets
010Chapter 2Company Profile and Key Financial Indicators
Total Volume 1 Total Revenue
Unit: 100 million parcels Unit：RMB100 million
1403000
+5.5%+7.5%226752584
1202500
119.71
100111.42072+9.7%
2000
80105.5
1500
60
1000
40
500
20
00
202120222023202120222023
1 Neither include the express volume of Kerry Logistics nor include the Revenue from Revenue from supply chain Revenue from other
business volume of international freight forwarding and supply chain express logistics business and international business non-logistics business
2 Excluding Fengwang business the volume of parcels increased 1 This is the year-on-year growth rate of revenue from express logistics business.
Excluding Fengwang business the revenue increased by 11.3% year-on-year
by 16.2% year-on-year
Revenue Breakdown by Segment
2.0%2.8%
23.2%
Time-definite Express
32.8% Economy Express
39.5% Freight
Cold Chain and
2022 44.7%Pharmaceutical Logistics 2023 2.8%
Intra-city On-demand Delivery 4.0%
Supply Chain and
2.4% International Business
3.2% Other Non-logistics Business 12.8%
9.6%10.4%9.7%
20222023
Unit: RMB100 million
1400
12009.2%
1154.6
10001057.031.7%
878.7
800
600599.8
400118.5%2.0%
330.8
279.2
255.5250.5
20019.712.6%34.6%%
64.472.5
103.154.1
72.8
86.1
0
Time-definite Economy Express Freight Cold Chain and Intra-city Supply Chain and Other Non-logistics
Express Pharmaceutical Logistics On-demand Delivery International Business Business
1 Excluding Fengwang business the revenue of Economy Express increased by 8.6% year-on-year
011Chapter 2Company Profile and Key Financial Indicators
Gross profit EBITDA
Units：RMB100 million Gross profit Gross profit margin Units：RMB100 million EBITDA EBITDA margin
12.8%
40040011.4%
12.4%12.5%
10.2%10.8%
300
334331300
289.9294.4
200256200
210.6
100100
00
202120222023202120222023
Net profit attributable to the Quarterly net profit attributable
parent company to the parent company
Units：RMB100 million Units：RMB100 million
Net profit attributable to the parent company Net profit attributable to the parent company of 2022
Net profit margin attributable to the parent company Net profit attributable to the parent company of 2023
Net profit margin attributable to the parent company of 2023
3.2%
9030
2.3%3.9%2.1%3.2%
82.325
24.62.8%
60202.8%20.9
19.619.7
61.71517.217.0
14.9
3042.710
10.2
5
00
2021 2022 2023 First Second Third Fourth
Quarter Quarter Quarter Quarter
Assets Net cash flow
Units：RMB100 million Units：RMB100 million 2022 2023
Total assets Net assets attributable Debt/asset ratio
to the parent company
53.4%54.7%
250053.4%400
200021682215
300327.0
2099265.7
200
1500
100
1000
9280
829863
500(100)-120.9-135.1-129.9-160.2
0(200)
2021 2022 2023 Net cash flow from Net cash flow from Net cash flow from
operating activities investing activities financing activities
012Chapter 2Company Profile and Key Financial Indicators
Financial summary
Major accounting data and financial indicators
Changes in
(RMB’000) 2023 2022 this year over the 2021
previous year
Revenue 258409403 267490414 -3.39% 207186647
Cost of revenue 225273833 234072360 -3.76% 181548507
Gross profit 33135570 33418054 -0.85% 25638140
Net profit attributable to shareholders
8234493617376433.38%4269098
of the parent company
Net profit attributable to shareholders
of the parent company after deducting 7133730 5336924 33.67% 1834199
non-recurring profit or loss
Net cash flow generated from
2656981932702947-18.75%15357605
operating activities
Note: The Company does not need to retrospectively adjust or restate the accounting data of previous years; the lowest annual net profit before and
after the deduction of non-recurring profit or loss in the most recent three fiscal years is positive and the audit report of the most recent year
shows that there is no uncertainty as to the Company’s ability to continue as a going concern.Changes at this year-
end as compared
(RMB’000) End of 2023 End of 2022 End of 2021
with the end of the
previous year
Total assets 221490655 216842707 2.14% 209899982
Total liabilities 118206995 118556658 -0.29% 111984735
Net assets 103283660 98286049 5.08% 97915247
Net assets attributable to shareholders
92790344862637417.57%82943226
of the parent company
A decrease by 1.30
Gearing ratio (%) 53.37% 54.67% 53.35%
percentage points
Changes in
(RMB) 2023 2022 this year over the 2021
previous year
Basic earnings per share 1.70 1.27 33.86% 0.93
Diluted earnings per share 1.70 1.27 33.86% 0.93
Weighted average return on net assets An increase by 1.85
9.19%7.34%6.81%
(%) percentage points
013Chapter 2Company Profile and Key Financial Indicators
Major financial data by quarter
(RMB’000) First quarter Second quarter Third quarter Fourth quarter
Revenue 61048078 63317520 64646001 69397804
Cost of revenue 52588410 54966870 56903738 60814815
Gross profit 8459668 8350650 7742263 8582989
Net profit attributable to shareholders of the
1720058245622420881761970035
parent company
Net profit attributable to shareholders of the
parent company after deducting non-recurring 1517130 2188179 1840603 1587818
profit or loss
Net cash flow generated from operating
4305202951962571512675593725
activities
There is no difference between the above-mentioned financial indicators or their total amount and the relevant financial indicators in the
quarterly and interim reports disclosed by the Company.Major financial data of operating segments
External income
(RMB’000) 2023 2022 Year-on-year change
Express and freight delivery segment 186890137 169764860 10.09%
Intra-city on-demand delivery segment 7371250 6567057 12.25%
Supply chain and international segment 62859302 89916599 -30.09%
Undistributed units 1288714 1241898 3.77%
Total 258409403 267490414 -3.39%
Net profit
(RMB’000) 2023 2022 Year-on-year change
Express and freight delivery segment 8452862 5466724 54.62%
Intra-city on-demand delivery segment 50595 -286903 117.63%
Supply chain and international segment -534501 1945862 -127.47%
Undistributed units -86037 -122737 29.90%
Inter-segment elimination 28690 674 4156.68%
Total 7911609 7003620 12.96%
Note:
(1) As the Company promoted business integration and adjusted its internal organisational structure accordingly it adjusted the composition of its
operating segments based on the changes in its business and merged the former express segment and the freight segment into the express and
freight delivery segment and restated the figures for the same period of previous year.
(2) T he corresponding relationship between the operating segments and the Company's principal business segments was: the express and freight
delivery segment mainly includes time-definite express economic express freight cold chain and pharmaceutical logistics and other non-logistics
business running by this segment; the intra-city on-demand delivery segment mainly includes intra-city on-demand delivery and other non-logistics
business running by this segment; the supply chain and international segment mainly includes international express international freight and
freight forwarding supply chain business and other non-logistics business running by this segment; the undistributed units is mainly the segment
that is not primarily engaged in logistics and freight forwarding such as investment industrial parks and other functional segments of the
headquarters.
014Chapter 2Company Profile and Key Financial Indicators
Non-recurring profit or loss items and amounts
(RMB’000) 2023 2022 2021 Description
Please refer to Note 5(2) of
Investment income from disposal of subsidiaries 268204 32314 1808638 Chapter 10 Financial Statements
for details.Non-current asset disposal gains and losses (including the
46668374595105502
write-off part of the provision for impairment of assets)
Government subsidies included in the current profit and loss
It mainly represents tax refund
(except for government subsidies that are closely related to the
fiscal subsidies for the logistics
Company’s normal business operations in line with national 1094790 826447 857458
industry transport capacity
policies and in accordance with defined criteria and that have
subsidy etc.a sustained impact on the Company's profit or loss)
Gain arises when the investment cost of an enterprise to
obtain subsidiaries associates and joint ventures is less than
––2375
the fair value of the investee’s identifiable net assets when it
obtains the investment
Except for the effective hedging business related to the
Company’s normal business operations the profit or loss
arising from changes in the fair value of financial assets and
4551547500151606
liabilities held by non-financial corporations as well as profit or
loss arising from the disposal of financial assets and financial
liabilities
Reversal of provisions for impairment of receivables that have
616089429746264
been separately tested for impairment
Other non-operating income and expenses other than the
18213-73330-136453
above
Less: Income tax impact 276330 235481 381549
Impact on minority shareholders' equity (after tax) 157905 229502 18942
Total 1100763 836840 2434899
Note: T he Company does not have other profit and loss items that meet the definition of non-recurring profit or loss; the Company does not define
the non-recurring profit or loss listed in the Explanatory Announcement No. 1 on Information Disclosure of Companies Offering Securities to the
Public Non-Recurring Profit or Loss as recurring profit or loss.Differences in accounting data under domestic and foreign accounting standards
1. Difference in the net profit and net assets in the financial reports disclosed in accordance with the International Accounting Standards
and the Chinese Accounting Standards.□ Applicable√ Not applicable
2. Difference in the net profit and net assets in the financial reports disclosed in accordance with overseas accounting standards and the
Chinese Accounting Standards.□ Applicable√ Not applicable
3. Explanation of reasons for differences in accounting data between domestic and foreign accounting standards.
□ Applicable√ Not applicable
015Chapter 3Management Discussion and Analysis
I. Industry Review in 2023
I. Macro Environment and Industry import and export remained stable in general. According to
Growth the PRC General Administration of Customs the total value of
China’s imports and exports in 2023 amounted to RMB41.8
trillion increased by 0.2% over the previous year. The operation
I) China’s macro-economy has rebounded and of foreign trade was stable in general and showed a quarterly
the revival of production and consumption improvement with structural highlights. The import and export of
has driven the express and logistics industry private enterprises has grown rapidly with trade expanding with
into a favorable growth diverse trading partners. China’s trade with economies involved
in the Belt and Road Initiative experienced better growth than the
In 2023 China’s economy has achieved a rebound with overall growth. Besides the export of emerging industries such as
manufacturing and consumption activities posting a recovery new energy and consumer goods including household appliances
trend supply chain operations returning to normal and overall has expanded reflecting the step from “Made in China” to
macro-economic growth remaining solid throughout the year. “Created in China”.According to the data published by National Bureau of Statistics
China’s GDP exceeded RMB126 trillion in 2023 representing Influenced by the global macro-economy and trade obstacles the
an increase of 5.2% over the previous year and China remains overall demand for international logistics is slowing down to a
important and a stable force to the world economic growth. certain extent. Experiencing a decline from the historical peak in
The total retail sales of consumer goods were RMB47.1 trillion 2022 to 2019 levels the price for international air and sea freight
representing an increase of 7.2% over the previous year. The remained relatively stable during 2023. At the end of fourth
online retail sales of physical goods were RMB13.0 trillion quarter of 2023 the impact of unstable international relations
representing an increase of 8.4% over the previous year and on the transportation capacity supply led to routes shrinkage
contributing 31.9% to the total growth of consumer goods retail and suspension and the price for some of the sea freight routes
sales. rapidly rebounded. Benefiting from the robust cross-border
e-commerce during peak season China’s emerging e-commerce
The consumption recovery and the steady demand for online platforms are vigorously exploring overseas markets with
shopping have led to continued growth in the domestic logistics increased demand for cross-border logistics and air transportation
and express industry. According to the data published by China driving the growth of international logistics and express services.Federation of Logistics & Purchasing the average Logistics Furthermore along with the in-depth trade cooperation between
Prosperity Index of 2023 was 51.8% increased by 3.2% over China and ASEAN RCEP (Regional Comprehensive Economic
the previous year. The total cost of social logistics in 2023 Partnership) member countries and countries involved in the Belt
was RMB18.2 trillion representing an increase of 2.2% over and Road Initiative the industrial and supply chain were deeply
the previous year and accounting for 14.4 % of the GDP. The interconnected with a smoother customs clearance of goods
market size of logistics continued to expand showing the unique spurring the development of international logistics and supply
advantages and resilience of China as a supersize economy chain in China and across Asia.among which the express market maintains the vitality and
potential. According to the data published by the State Post
I I . I n d u s t r y d e v e l o p m e n t a n d
Bureau 132.07 billion deliveries were made in China in 2023
representing an increase of 19.4% over the previous year. In competition landscape
terms of parcel volume China has ranked first in the world for
ten consecutive years. The revenue of China’s express delivery Domestic Market
business of 2023 was RMB1.2 trillion representing an increase
of 14.3% over the previous year. The Average Selling Price (ASP) I) The domestic logistics market is huge yet fragmented
slightly decreased over the previous year. with enormous room for leading companies to integrate and
expand
I I ) International trade albeit s luggish
China’s logistics industry is highly competitive yet fragmented.shows structural highlights and emerging Apart from the comparatively concentrated express sector the
opportunities exist amidst the ups and downs industry concentration in other logistics sectors including the LTL
of the international logistics market freight cold chain logistics integrated logistics and cross-border
logistics was still low. The Matthew effect in the logistics industry
In 2023 the global economy faced continued challenges
remained with the strong getting stronger. According to the data
persistent inflation in developed countries and low global trade
published by the State Post Bureau the CR8 of express delivery
growth due to the U.S. interest rates hike yet China’s trade
016Chapter 3Management Discussion and Analysis
service brands of 2023 was 84%. China’s overall logistics market II I) E-commerce experiencing ecological renewal while
is still fragmented but it is also showing a trend of increasing independent third-party and integrated logistics become
concentration. According to the list of China’s Top 50 logistics corresponding competitive advantages
Enterprises for the Year 2023 (2023年度中国物流企业50强 )
The surge of emerging e-commerce platforms and the diversified
published by China Federation of Logistics & Purchasing the total
traffic further derived a huge demand for independent third-party
revenue of the top 50 logistics enterprises on the list increased by
and integrated logistics services. Commercial ly emerging
3% over the previous year accounting for approximately 18% of
e-commerce enterprises would favor cooperation with third-party
the revenue of the entire logistics market. International logistics
logistics enterprises without conflict of interest and independent
giants all expanded their network coverage and business domains
of any e-commerce platform or merchant. Meanwhile as the
through continuous mergers acquisitions and integration. The
logistics demand of merchants and platforms has become
size of China’s logistics market has the potential to cultivate the
increasingly complicated in terms of efficiency products (e.g.world’s leading logistics players and render enormous room for
cold chain) flow (e.g. returned parcels) and geography (e.g.their potential future integration and expansion.cross-border) clients would prefer an integrated logistics service
platform capable of in-depth cooperation multi-channel one-stop
II) The rise of new consumption scenarios and business
inventory management and delivery for better efficiency and
models drives the transformation of “logistics as express” and
lower management costs. As a result independent third-party
digital supply chain
integrated logistics enterprises possess natural competitiveness
The surge of emerging social live e-commerce and local life to better seize the opportunities from the emerging social
services and the rapid growth of new economy industries and e-commerce and cross-border e-commerce.consumption scenarios contributed to the demand for a highly
responsive and flexible supply chain leading a notable trend of Overseas Market
“logistics as express”. On the consumer end express delivery
services are penetrating into more daily life scenarios with instant I) China’s cross-border e-commerce and enterprises step into
response and efficient delivery service becoming a necessity for the international market bringing overseas opportunities for
e-commerce platforms and merchants to improve consumer domestic logistics service providers
satisfaction and adhesiveness. On the production end the C2M
With the increasingly urgent demand for Made in China going
(Customer to Manufacturer) model has been widely practiced
overseas the global logistics network and operation capability
in the manufacturing industry evolving from scale production
play an important role to the internalization. China’s cross-border
and distribution to JIT (Just in Time) instant production and
e-commerce has flourished with potential further unleashed.channel-flattening. Production and supply have shifted to a small
According to the data published by the National Bureau of
scale with delivery in batches to the terminal causing more
Statistics the import and export values of China’s cross-border
end-to-end time-sensitive service demands for enterprises such as
e-commerce totalled RMB2.4 trillion in 2023 representing an
fast fashion industry customers requiring finished products to be
increase of 15.6% over the previous year. The total value of
laid out from the factory to the nationwide within 12 hours.exports was RMB1.8 trillion increased by 19.6% over the previous
Along with business customers the Company continuously year. In the long run the improvement of the capacity and brand
iterated and innovated the supply chain system design integrated competitiveness of China’s industrial chains and the expansion
the whole chain of production channels fulfillment and delivery of overseas e-commerce platforms and e-commerce websites in
to achieve effective coverage of target users digital perception the global consumer market will create a favorable environment
of demand rapid production and accurate delivery; accordingly and opportunities for China’s logistics enterprises to go abroad.logistics service providers shall proactively build integrated supply In recent years China’s logistics enterprises have been expanding
chain service capabilities adapting to the Omni-channel digital new routes for international freight integrating sea land air
inventory management. Leading express companies have actively rail and multimodal transportation resources expediting overseas
transformed to supply chain service providers implemented digital access continuously consummating the layout of overseas
transformation in all aspects including internal network operations hubs ground networks and overseas warehouses and further
and external customer services innovated digital application enhancing end-to-end cross-border services thereby contributing
scenarios cultivated digital service capabilities and continuously to the proliferation and expansion of China’s international
promoted the application of intelligent automated and visual logistics network.technical equipment improving logistics service efficiency. In the
long run the time-sensitive nature of express delivery enterprises II) Global Supply Chain Renovated with Vibrant Economic
will penetrate into more production and life scenarios gradually Development in the Asia-Pacific Area and a Huge and
into the entire logistics market and continuously innovate and Fast-Growing Potential Logistics Market
iterate the application of logistics technology promote the
In the global logistics market of over USD10 trillion logistics
transformation and upgrade of the digital supply chain and
expenditure in Asia accounts for 45.4%. With Asia’s strategic
realize cost reduction and efficiency.position as a global manufacturing center and in the global supply
017Chapter 3Management Discussion and Analysis
chain further enhanced the introduction of trade agreements from production to sales from home to abroad for clients. The
including RCEP to support the rapid penetration of cross-border efficient and reliable logistics infrastructure network continuously
and local e-commerce trade within Asia and between Asia and built the Company’s competitive barriers. The company’s services
the world has been strengthened driving the demand for logistics covered 100% of China’s cities and 202 countries and regions
and supply chains to expand and bringing more opportunities around the world and it was the largest shipper of air cargo in
for logistics enterprises rooted in Asia. According to Frost & China with the largest cargo aircraft fleet. As of the end of 2023
Sullivan the total intra-Asia logistics expenditure of the major the company owned and leased a total of 103 all-cargo aircraft
trade lanes is expected to reach USD249.5 billion in 2023 and operating on 152 domestic and international routes connecting
USD328.4 billion in 2027 respectively. Among other things 65 international airports. Additionally the company has built and
China-Southeast Asia is the fastest growing trade lane in Asia put into operation the first dedicated air cargo hub in Asia the
with logistics expenditure expected to grow at a CAGR of 11% Ezhou cargo hub which will help extend the Company’s network
from 2023 to 2027. The integrated China-Southeast Asia supply from China to the world and further improve the competitiveness
chain will become a key issue in Asia bringing more international of the company’s delivery timeliness. Meanwhile the Company
opportunities for China’s logistics enterprises. Moreover the operates a wealth of land rail and sea transportation resources
Southeast Asia domestic logistics market hold great potential and routes to provide clients with domestic and cross-border
and represents a major and one of the fastest growing logistics LTL and bulk cargo multimodal transport services and operates
markets outside of China with e-commerce express being the over 1900 warehousing resources 396 logistics complex and
primary growth driver. According to Frost & Sullivan Southeast more than 44000 self-operated outlets and agency service points
Asia domestic logistics expenditure is expected to reach USD489.0 around the globe. Especially after the acquisition and integration
billion in 2023 and further increase to USD640.3 billion in of Kerry Logistics the Company has enhanced its coverage in
2027 representing a CAGR of 7%. E-commerce penetration the Southeast Asia domestic market and its international freight
has increased in Southeast Asia from 3.5% in 2017 to 15.4% in forwarding capacity connecting Asia with the world. With a
2022 and is expected to further reach 29.8% in 2027 bringing diversified logistics network and high-quality services SF can
considerable local logistics demand. Therefore China’s logistics work with customers from all walks of life to create an efficient
enterprises with an advanced layout of Southeast Asian networks domestic and international supply chain system.and capable of providing logistics and freight forwarding services
from Asia to the world would better manage the in-depth II) Leading Position in Multiple Logistics
integration of the Asia-Pacific industrial supply chain the rapid Sub-Segments in China and Asia
growth of domestic and multinational trade gradually expand
networks improve end-to-end international supply chain service Leveraging the time-definite and high-density network with
capabilities and thereby achieve a global layout. the “1-to-n” expansion strategy the Company has quickly
transformed from China’s leading time-definite express operator
into a leading global integrated logistics service provider. As
III. Positioning and Competitive Edge
to the time-definite express services the Company occupied
of the Company in the Logistics a clear leading share in the domestic market with its efficient
Industry time-definite and safe door-to-door delivery and is the market
leader in China in terms of most logistics sub-segments including
The Company’s revenue amounted to RMB258.4 billion in 2023 LTL freight cold chain logistics third-party intra-city on-demand
marking the largest integrated logistics service provider in China delivery and non-state-owned independent third-party supply
and Asia and the fourth largest player globally. The Company chain solutions. The Company ranked first in terms of revenue
adheres to long-term sustainable and healthy development from LTL transportation for four consecutive years (2020 to 2023)
and foresight strategy. Amidst the ever-changing market the in the List of LTL Transport Enterprises in China* (中国零担企
Company is capable of promptly seizing opportunities pursuing 业排行榜) issued by Wetuc Think Tank* (运联智库) and rankedcontinuous innovation and reform reinforcing service capabilities first for five consecutive years (2019 to 2023) in the “Chinaand navigating through business cycles together with its clients. Top 100 Cold Chain Logistics List” * (中国冷链物流百强企业榜)
issued by the cold chain logistics professional committee of China
I) Diversified Logistics Network Connecting Federation of Logistics and Purchasing. According to the data
Asia and the World published by iResearch* (艾瑞咨询) SF Intra-city was China’s
largest independent third-party instant delivery service platform.Through organic growth and expansion through mergers
According to Frost & Sullivan the Company was also Asia’s
and acquisitions the Company continuously built a one-stop
largest provider of overall express delivery LTL freight delivery
integrated logistics service landscape with a more complete
intra-city on-demand and had the largest international operation
product system a more comprehensive coverage network and
among Asia-based integrated logistics service.more diversified services covering the end-to-end supply chain
018Chapter 3Management Discussion and Analysis
I I I ) Winning Business Model – Direct ly intelligently and continuously drive operational efficiency.Operated Integrated and Independent Moreover years of precipitated technological capabilities and
digital solutions allow for the Company’s in-depth collaboration
The Company directly operates the entire end-to-end delivery with customers of varied industries on optimal supply chain
process from first-mile pickup to last-mile delivery ensuring a strategic decision and operational eff iciency. Continuous
highly unified top-down strategy and rapid business execution for commitment in technology and innovation grants the Company its
a swift adaption to market changes and successfully incubates technological capabilities evidenced by international awards such
more new business formats within a short period of time. In as “World Internet of Things Ranking List”* (世界物联网排行榜)
addition the Company has strong operational control agile by World Internet of Things Convention in 2022 and 2023 andresource allocation and full-cycle standardization capabilities “Fortune Magazine’s Most Influential IoT Innovation List”* 《( 财backing the Company’s first ranking of delivery timeliness and 富》最具影响力物联创新榜) by Fortune Magazine.overall customer satisfaction over the years.Second the Company’s integrated capabilities enable it to offer a V) Quality Services for Unparalleled Brand
full-spectrum of services standardized or customized to address Value
a full range of customers’ logistics demand capture greater
“Let me SF this to you” has become synonymous with “Let meshare in the customers’ supply chain service and achieve rapidexpress mail this to you.” In China our household brand name
growth by continually cultivating a deeply collaborative group
has become a commonly used verb for time-definite express.of key customers. Third the Company is the only integrated
The Company’s name has become associated with premium
logistics service provider of scale in China that is independent of
services. Many business customers actively advertise their use of
major e-commerce platforms allowing for its impartial services
SF delivery for consumers’ impression and trust on their service
to customers with over 1.95 million customers with active credit
quality. As published by the State Post Bureau the Company has
accounts and over 663 million retail customers as of the end of
been ranked first for 14 consecutive years (2009 to 2022) and the
2023 and is capable of grasping emerging opportunities and
first three quarters of 2023 (annual results not yet released) for
build long-term sustainable relationships with customers under
overall customer satisfaction; Due to the peer-leading track record
the evolving market of new retail platforms and businesses.in providing premium services the Company has accumulated
the most extensive customer base across varied industry
IV) Advanced Technologies for an Efficient sub-segments with high customer loyalty and stickiness and
and Intelligent Supply Chain served as a reliable logistics partner for customers.With logist ics appear ing as the express and customers ’ For details of the Company’s core competitiveness please refer to
increasingly pursuing the supply chain of swift response flexibility “3. Core competitiveness” in “Chapter 3 Management Discussionand elasticity technology has become an indispensable part of the and Analysis”.digitalized automated and intelligent supply chain. The Company
has consistently striven to technology capability advancement Overall both China and Asia have an enormous logistics market.research and development and innovation for more digitalized Though securing a leading position across industry verticals the
and intelligent logistics services and a both internal and external Company still has tremendous promise for future integration
digital supply chain transformation. As of the end of 2023 the and expansion under the huge and fragmented potential
Company had approximately 4600 research and development logistics market. The strategic vision prospective business layout
staff and over 4093 patents and patent applications. Empowered high-quality service and strong technology capabilities will
’
by its proprietary technologies the Company is able to forecast contribute to the Company s excelling and everlasting success
demand accurately allocate resources optimally make decisions from the competition.
019Chapter 3Management Discussion and Analysis
II. Business development of the Company
1. Customer Operation1 the KAs into core KA key KA and potential KA and adopted
customized customer management in terms of multi-dimensionalBy adhering to the strategy of “Deepen industry penetration customer relationship building resource support service teamexpand business scenarios and product offerings” the Company matching differentiated guarantee solutions to realize the full
continues to improve its customer management system based supply chain coverage with customers at the core. * Business
on customer stratification to enhance its differentiated service Expansion: Focusing on nine major industry sub-segments of
competitiveness and operational efficiency. high growth and potential the Company integrated all kinds of
internal resources according to the supply chain demand and
I) Customers with active credit accounts promoted business development capabilities of supply chain
solutions to achieve positioning. During the business execution
As of December 2023 the number of customers with active
of supply chain solutions the Company accumulated the logistics
credit accounts2 amounted to 1.95 million an increase of 7.7%
scenarios and successful cases from upstream and downstream of
year-on-year over approximately 140000 as compared with
the supply chain and applied the same to similar customers in the
December 2022.industry.
(1) SKA (strategic key accounts): Integrating the intracompany’s
(3) SME (small and medium-sized enterprises): The Company
advantages in well-established operational coverage across the
put the strategy of professional solutions for revenue
supply chain solutions continuously enhancing the Company’s
growth and fine services for customer satisfaction at the
ability to provide solutions with competitive edges in line with
core to improve service quality provided to the SME. * Existing
the strategy of and business plan to SKA extending solutions
Customer Management: Leveraging its market insights the
coverage towards core logistics scenarios from the supply chain
Company seized the real-time opportunities in heated industries
of top customers in the industry fostering steady growth of the
to promote the realization of closed-loop end-to-end customer
Company’s customer wallet share and supply chain solutions the
management. * New Business Expansion: The Company
revenue from SKA grew significantly faster than that of customers
explored growth opportunities by developing new business
with active credit accounts in general and the profitability
scenarios while integrating internal and external resources to offer
continued to optimize.a mixed portfolio of multiple products. * Customer Satisfaction
(2) KA (key accounts): * Customer Focus: The Company Enhancement: With customers at the core the Company focused
focused on top customers in industry segments based on layered on the response within 24 hours and timely resolution to
Customer Relationship Management through continuously customer opinions from the business end to enhance the overall
improving customer portrait. Meanwhile the Company subdivided customer satisfaction.
1 The statistics in this sub-section exclude the customer data of Fenghao Supply Chain New HAVI and Kerry Logistics
2 The number of active credit account clients refers to the customers that entered into business agreements with the Company and still transacted
with the Company as of December 2023
020Chapter 3Management Discussion and Analysis
(4) Key Industries initiative and achievements: warehouse distribution based on the Company’s high-frequency
transit and multi-shift distribution advantages. The Company also
* E-commerce and distribution: a. Developing e-commerce
provided benefits such as door-to-door services time-definite
parcel return services: The Company continuously expanded
delivery and rapid delivery of forward warehouses. Through
cooperation with major e-commerce platforms for parcel return
exclusive products and service capabilities the Company improved
services ensuring wallet share from the existing platform
its wallet share on e-commerce platforms and further reduced the
customers while developing business with emerging platforms
logistics CCR (Consumer Complaint Rate). c. Facilitating cross-
and promoted the rapid growth of e-commerce parcel return
border e-commerce: The Company speeded up the expansion of
orders. In addition the Company provided differentiated
cross-border e-commerce services optimized and replicated the
services including door-to-door pickup within 1 hour night
experience of the first-mile pickup to form scale effects enriched
pickup and value-added services such as goods inspection for
international aviation resources to grasp key advantageous flight
more competitive services and larger business scale. b. Serving
schedule enhancing the end-to-end efficiency and dynamic
new e-commerce industry trends: Seizing the opportunity of
monitoring capabilities for the direct delivery from home to
emerging e-commerce platforms the Company built warehouse
abroad. The Company contributed to the business development
networks in varied modes and provided platforms with integrated
of cross-border services and in turn intensified the Company’s
warehousing and distribution services including warehouse
international express aviation network and efficiency.operations delivery of orders from online shops and bonded
Boost the Efficient Global End-To-End Delivery of Cross-border E-Commerce Platforms
Domestic Air/Ground Domestic Export Cross-border air Import customs Transportation/
factories transportation distribution customs transportation clearance Delivery
warehouse clearance
Overseas
consumers
Overseas warehouse
Domestic goods Cross-border Overseas
collection transit distribution
High-
frequency Import and All-cargo Overseas local Reverse logistics
pickup and Air express LTL freight FTL On-site service export customs international routes
clearance delivery (returns)delivery
Dense networks + various transportation modes Dedicated aircraft resources + professional customs Delivery/Collection in cooperation with overseas self-operated or local high-quality
for rapid shipment consolidation clearance capabilities for efficient cross-border transit logistics partners
021Chapter 3Management Discussion and Analysis
* Communication and Advanced Technology: a. Building ecosystem of upstream raw material supply midstream device
smart warehousing: Focusing on development of top industry manufacturing and downstream finished product distribution
customers the Company has successfully built intelligent providing integrated services of warehousing line-haul and
automated and visualized warehouses for top customers from distribution. c. Supporting International Supply Chain Layout:
site selection automated three-dimensional warehouse design In collaboration with customers the Company contributed to
and construction customized warehouse management system overseas supply chain projects in some countries of Southeast
development and overall integration of automated equipment Asia and provided integrated supply chain services of overseas
and systems. In 2023 several cooperation projects including warehouses as well as local and cross-border distribution helping
central warehouses for raw materials/products/imported bonded with customers’ overseas supply chain coverage. By establishing
goods have been implemented both domestically and overseas. efficient and flexible domestic and international supply chains
b. Developing the upstream and downstream supply for customers the Company further expanded and stabilized
chain: Focusing on the warehousing of top customers the its wallet share of global logistics among key accounts in the
Company developed the logistics demand from the supply chain industry.Focusing on leading 3C advanced technology customers to cultivate a domestic
and international F2B2B2C supply chain
Domestic
Overseas Central Domestic Domestic warehouse for factory multi-level
Offline distributors/
consumers
suppliers raw materials warehouse stores
network
Domestic Bonded/Duty- Overseas Overseas Online e-commerce Overseas
suppliers paid warehouse factory warehouse platform
consumers
Raw Material Production
Logistics Logistics Sales Logistics
Import and Integrated
export Raw Supply-side Inbound Intelligent 2B2C automated Forward/Overseas warehousing Omnichannel
logistics of raw
material/Bonded
logistics operation warehouse warehouse line-haul and delivery
materials warehouse center distribution
Raw material warehouse + import and export for Digitalized and Intelligent technology + smart supply Warehousing line-haul and distribution + extreme
domestic and international raw material supply chain for empowering intelligent manufacturing time-definiteness for omnichannel delivery as well as domestic and international delivery
* Apparel Footwear and Hats: Following the trend of “Carbon Neutrality Acceleration Project” achieving the first
green and low-carbon environmental protection the Company waybill-level carbon calculation making it a global benchmarking
actively explored with top luxury brands in the green supply enterprise for carbon peaking and carbon neutrality. Together
chain providing new services products and models under the with its customers the Company built a green and sustainable
green supply chain for transportation while reaching the green supply chain ecosystem further consolidating the strategic
and low-carbon strategic cooperation with customers under partnership between global top brands and the Company laying
technology empowerment on logistics carbon footprint system the foundation for more customers to likewise become green
and management covering the whole chain. The Company benchmarking enterprises in the future.officially launched the green and low-carbon supply chain of
022Chapter 3Management Discussion and Analysis
* Consumer Goods: The Company assisted customers in supply * New Energy: The Company integrated internal supply
chain transformation based on its smart supply chain capabilities chain resources and achieved breakthroughs in many new
such as warehouse network planning sales forecasting and business scenarios of new energy lithium battery industry with
intelligent replenishment. Based on the cooperation with leading advantages on automotive industry supply chain hazardous
fast-moving consumer goods customers’ online channels the chemicals transportation qualifications aviation and cross-
Company has achieved breakthroughs on the construction of border capabilities. The Company completed supply chain services
large-scale offline automated warehouse parks gradually realizing including raw ore import raw material incoming logistics VMI
the transition from online inventory to omnichannel management warehouse and transportation of lithium spare parts battery
of online and offline inventory helping with the integration of transportation and waste battery recycling transportation and
customers’ supply chains under business to business and business air/sea/land battery export and charging pile warehousing.to customers. For new business in the fast-moving consumer Particularly the Company fully integrated resources from SF
goods industry and better customer stickiness the Company Airlines and the Ezhou hub and successfully completed the
targeted integrated warehousing and distribution as well as air export of large-scale power lithium batteries under the
warehouse operation services as the priority integrated internal collaboration of various organizations and in cooperation with
and external distribution resources provided differentiated leading new energy vehicle manufacturers. This not only helped
services to match the varied customer demand on service quality with the internalization of China’s new energy industry but also
and cost pricing and continued to penetrate into customer signified the Company’s active participation in the construction
groups from top high-end brands to mid-waist brand. of China’s new energy industry supply chain system which is
expected to bring more business opportunities in the future.Develop multi-scenario logistics services for the new energy supply chain of
lithium battery
Spare parts Warehouse of Domestic automobile Automobile
transportation Charging pile spare parts/battery sales service shop manufacturersTransportation/ Lithium battery manufacturers
Delivery reverse transportation
Transportation
Overseas Overseas VMI Ore import Lithium battery Domestic
factory warehouse sea/river collection and automobile Waste battery manufacturers recyclers
transportation distribution
Equipment
warehouse
Domestic battery Port warehouse Sea export of Overseas
automobile Deliverymanufacturers of lithium battery lithium battery manufacturers
Domestic Lithium battery Ezhou cargo hub Air export of First domestic Residence/
material material lithium battery airline to obtain Supermarkets/
manufacturers transportation the A99 approval Parks
Raw Material Production and Consumption/
Procurement Logistics Manufacturing Logistics After-sales Logistics
Warehousing and Charging
Raw ore import/lithium battery Domestic/Export transportation transportation of spare pile logistics
material inbound of lithium battery parts and battery services
Overseas Overseas VMI Customs Sea-river Transit collection LTL freight FTL freight Spare parts Warehousing and Smart
pickup warehouse clearance transportation and distribution delivery delivery import transportation warehousing
Cold chain logistics of Integrated
Line-haul transportation Port warehouse Export customs Air/Sea Construction of Battery reverse
hazardous chemical warehousing
of bulky and heavy items operation clearance transportation recycling network logistics
substance and distribution
023Chapter 3Management Discussion and Analysis
II) Retail customer decreased by 8.2 km. At the same time the Company also built
regional brands in cooperation with local governments and
As of December 2023 the number of retail customers customers and developed platforms for selling with top internet
amounted to 663 million representing an increase of 13.5% celebrities and MCN organizations contributing to the distribution
year-on-year approximately 79 million as compared with of agriculture products and rural revitalization.December 2022. The Company increased touchpoints with
retail customers through multiple channels online and offline to
ensure the growth of retail business.
(1) Online: * Multi Channels: The new customers of SF 2. Business development
APP registered on external platforms including WeChat/Alipay/
Baidu was approximately 54 million during 2023. The total I) Time-definite express
number of members of SF APP on private domains exceeded
In 2023 the Company’s time-definite express business
100 million with daily active users increased by 20.9% over
achieved tax-exclusive revenue of RMB115.46 billion
the same period in 2022. In 2023 the Company innovatively
representing a year-on-year increase of 9.2%. With the steady
launched the live broadcast function to facilitate the sales of
recovery of domestic economy in 2023 the Company provided
characteristic products of locality and customer product sales
customers and consumers with stable and efficient delivery by
dug into users’ personalized delivery demand with more lifestyle
taking advantages of its direct-operated network and dispatching
scenarios services such as snow gear delivery luggage storage
capabilities and promoted the healthy growth of time-definite
laundry and recycling of used items and released the “SF ID”
express business.function through which users can set up exclusive ID codes
for comprehensive privacy protection of personal information The Company continues to expand its top-notch time-definite
such as user addresses and phone numbers. * Membership services improve service capabilities and cover more service
Benefits: The Company enriched the benefits enjoyed by varied scenarios:
membership levels for better user stickiness. The number of users
(1) Continuous improvement of the competitiveness of the
with prime and above level memberships continued to increaseSF speedy Express products: With “upgrading time-definitecontributing freight charges of over 70% of the overall revenue
capabilities enhancing customer experience and improving
for membership business. * Prepaid Cards: In 2023 the numberclaims related service” as the three core focuses the Company
of prepaid card recharges increased by 45.8% over the same
continues to enhance the product capabilities and service quality
period in 2022 and the amount of freight charges paid with
of SF speedy express refines product timeliness standards and
prepaid cards increased by 29.2% over the same period in 2022
drives market competitiveness through a combination of various
representing the rapid growth of prepaid business scale.resource modes. The average time of the product has been
(2) Offline: Focusing on the customers’ demands the Company further reduced in 2023.
continuously deepened expanded and increased the density
(2) Building an Intra-city Express Delivery Service Network
of the offline channels actively explored and improved the
for Extreme Fulfilment: Based on scenarios under the trend of
terminal delivery services to enhance its competitiveness in the
life services leveraging SF’s high-frequency transit and multiple
last 100-meter service. * At the urban end the Company
delivery capabilities through the integration of internal high-
emphasized differentiated expansion and refined operation of
quality resources a more competitive intra-city express half-day
channel management and established a channel operation system
delivery product is launched achieving same-day delivery for
of classification grading and layers through diversified channels
afternoon shipments. By the end of 2023 the service has covered
of store and cabinet to identify and meet the differentiatedmore than 200 cities; the “upper-layer warehouse lower-layerdelivery demand of customers in residential areas schoolstransit” front warehouse + distribution series products have been
CBDs transportation hubs scenic spots and other scenarios. *
launched and the service has covered more than 100 cities by
At the rural end through self-built town-level collection and
the end of 2023. The company has been built an open logistics
distribution hubs and rural post stations the Company established
service network around intra-large-city living circle delivery service
an intensive mode for express parcels to rural areas for better
and independent third parties cutting into the intra-large-city
terminal services and speeded up the construction of rural three-
delivery business scenarios that require a fulfillment time of 6-12
level logistics co-distribution service network to form the service
hours between instant delivery and economic circle cross-city
scale and advantage of to-station to-door and to-rural areas
delivery optimizing the structure of SF’s time-sensitive products
parcel delivery. With high-density and high-permeability stations
and obtaining new market increments.in villages and towns the average customer pickup distance
024Chapter 3Management Discussion and Analysis
(3) Optimising Model and Energetically Expanding the Bulk II) Economy expressExpress Air Transportation: With the principle of “resource’integration and independent mode” a direct receiving and In 2023 the Company s economy express achieved tax-
bulk dispatching mode between customers and airports is exclusive revenue of RMB25.05 billion representing a year-
implemented at both collection and delivery ends creating an on-year decrease of 2.0%. Adhering to the healthy operation
independent transit mode with less transit and instant dispatch the Company completed the sale delivery of the franchise model
and continuously improving the product capabilities and service Fengwang Express in June 2023 and revenue of economy
quality of bulk express air transportation. In 2023 the number express excluding Fengwang Express increased by 8.6% year-on-
of core cities with direct receiving and dispatching services has year. The Company strategically focuses on the mid-to-high-end
increased to 73 the next-day timeliness completion rate has e-commerce market providing differentiated and high-quality
increased by 18 percentage points year-on-year and at the same fulfilment services to e-commerce platforms and e-commerce
time the business end has continuously expanded and broken merchants.through business scenarios such as extra-large and heavy items (1) Improve product efficiency by selectively expanding
and seasonal fresh achieving a rapid growth in cargo volume. E-commerce standard express business: In 2023 in relation
(4) Differentiated Services helps to Expand E-commerce to the e-commerce express segment the Company sticked to the
“”
parcel return business: Leveraging the Company’s competitive strategy of Focus on core market and scale up and promoted
edge of door-to-door collection by continuously creating the e-commerce standard express products to maintain steady
differentiated service experiences and continuously expanding growth and achieve proven benefits through selecting preferred
cooperation with various emerging e-commerce platforms the business regions developing customers of good quality refined
volume of parcel return services for e-commerce platforms in 2023 management and cost reduction in all segments. The Company
has increased significantly year-on-year helping the Company to strengthened cooperation with each of e-commerce platforms
increase its market share in the consumer online shopping return and actively expanded new business scenarios. In 2023 the
and exchange scenario. Company cooperated with many major influential platforms in
new business scenarios with time-definite and stable services
(5) The commissioning operation of the Ezhou hub boosted contributing to the development of their e-commerce segment
time efficiency and business growth: In addition the Company and traffic monetization. In addition the Company fully leveraged
has initially completed the switch of domestic aviation hub routes its market positioning as an independent third party anchored
to the Ezhou hub in the third quarter of 2023 and by the end mid-to-high-end e-commerce merchants and private platforms
of 2023 the Ezhou hub has opened 45 domestic routes and 10 provided high-quality warehousing and distribution services in
international routes. Leveraging the advantages of professional all rounds for customers’ business development and expanded
aviation cargo hub and advanced automated transit center the the Company’s business scale of e-commerce express in a steady
on-time rate of flights at the Ezhou hub averages over 92% and approach. In terms of product efficiency through initiatives
the efficiency of cargo entry and exit sorting and transit and including strengthened internal refined management and cost
international parcel customs clearance has been greatly improved. saving throughout the chain to enhance product competitiveness
The timeliness stability and service quality of the express delivery and proven benefits the e-commerce standard express achieved
flow covered have been significantly improved. At the same time a decrease in unit operating costs as well as profitability also
some leading companies in the fields of 3C high-tech intelligent improved.manufacturing and biomedicine have successively settled in SF
hub transit center. The Company relies on the hub warehousing + (2) Consolidating warehouse networks driving expansion of
automated sorting + air transport capabilities to provide customers warehousing and distribution integration services: By virtue
with efficient 2B2C warehousing and distribution integrated of the nationwide warehouse network resources standardized
services that can reach the whole country. With more industries warehousing and distribution products and solutions professional
settling in the vicinity of the hub in the future it is expected to operational team and end-to-end whole-chain systematic service
drive the development of SF domestic and international air cargo capabilities the Company provided customers with cost-effective
business and increase the scale of time-sensitive business. integrated warehousing and distribution services. In 2023 the
Company continued to enhance standardized streamlined and
025Chapter 3Management Discussion and Analysis
digitalized management and optimized the foundation capability (1) Leading in high-value services. With leading timeliness
for better quality efficiency and business expansion. * Service as a core competitiveness the Company further improved the
Coverage: The Company’s warehousing and distr ibution timeliness of contract fulfilment and stability of delivery. Through
integration services covered all scenarios of the production measures such as speeding up short-haul routes within provinces/
consumption and cross-border supply chain of which the economic regions strengthening investment in long-haul routes
warehouse network composed of self-operated franchised and optimizing dynamic timeliness commitments the average
and managed warehouses and with strategic layout across the service handle time for directly-managed products network was
country is of efficiency flexibility and complementarity. * Cost- guaranteed to be steadily ahead of the industry. At the same
Efficiency Improvement: With scenario-based warehouse time the Company fully utilized the empty warehouse resources
intelligent equipment and lean operation the Company improved of the route to introduce cargo volume filling at targeted
the efficiency in warehouse pickup by 20% packaging by 30% prices improved business scale and cost efficiency. In addition
and parcel return by 16% and strived for further cost efficiency through measures such as operation difficulty stratification and
integration of warehouse network and inventory for better the introduction of auxiliary tools the collection and delivery
warehouse utilization reducing the idle warehouse area by 62%. efficiency of freight increased by 11% the transit efficiency
* Quality Assurance: With a focus on better customer services increased by 10% the proportion of automated sites increased
and experience the Company drove a significant increase in the to 45% and the rapid growth of scale and profit has been
fulfillment rate of KAs reduced the complaint rate by 71% over promoted.the same period and steadily improved customer satisfaction for
(2) Industry innovation breakthrough. In the furniture
higher customer stickiness.industry the Company used recyclable packaging materials to
solve customers’ pain of high damage and high cost and lowered
III) Freight the damage rate by 14%. In the household appliance industry
In 2023 the Company’s freight business achieved a the Company used the warehouse distribution model to increase
tax-exclusive operating income of RMB33.08 bil l ion efficiency and service quality and lowered the damage rate
representing a year-on-year increase of 18.5%. by 13% forming a benchmark solution for shipping damages
commonly seen in the home appliance industry. In the field of
In 2023 the domestic economy showed signs of steady recovery.industrial manufacturing in production scenarios the Company
The growth rate of traditional manufacturing industries relatively
innovated its cost reduction method through adopting flexible
slowed down but the growth potential of technology industry
operation modes of combining external resources. Under the new
such as smart home appliances medical equipment new energy
mode the cost was lower meeting the needs of production-
vehicles and electronic communication equipment is large
type enterprises who attach great value to cost-effectiveness.which put forward higher requirements for the timeliness quality
The Company accumulated excellent and comprehensive freight
and cost-effectiveness of freight delivery services accelerated
delivery solutions in segmented industries.the transformation and upgrading of the logistics industry and
brought new momentum to the industry growth. (3) Strengthen integration and reduce costs. The Company
continued to promote the full integration of its logistics networks
The Company’s freight delivery services adhere to the customer-
direct and franchise networks in various links such as transit
centric and market-oriented principle and insists on the pursuit
transportation outlets personnel and cargo loading to achieve
of sustainable development under the keynote of steady
unified planning of network layout line layout site collaboration
development and professional refinement. With the product
and resource investment improve the coverage of freight delivery
concepts of leading timeliness quality assurance professional
network capabilities and achieve cost reduction and efficiency
service and cost-effectiveness the market competitiveness is
increase.driven to promote the healthy growth of business scale benefits
customer reputation and recommendation rate. The daily less- SX Freight under the franchise model has continuously improved
than-truckload cargo peak volume of the direct-operated network its chassis capabilities and business scale. In 2023 the number
exceeded 59000 tons and the daily peak less-than-truckload of franchise outlets exceeded 17000 the cargo volume scale
cargo peak volume of the franchise network exceeded 26000 increased by more than 30% year-on-year and the growth
tons. The overall scale of freight delivery services remained rate ranked first among all freight delivery franchises for six
industry-leading; and the business growth rate was higher than consecutive years. SX Freight adhered to the customer-centric
the industry average. principle focused on user experience through investments in
service stations routes etc. continuously improved product
competitiveness. It co-created and co-existed with the franchisees
shared and won with users and won wide recognition and choice
from the franchisees and users.
026Chapter 3Management Discussion and Analysis
IV) Cold chain and pharmaceutical logistics funds for subsidies to cooperate with the government of the place
of origin to jointly build 28 local agricultural product brands to
In 2023 the Company’s cold chain and pharmaceutical help local brands expand national footprint and coverage; * Fresh
logistics service achieved a tax-exclusive revenue of food export: With the Company’s international express network
RMB10.31 billion representing a year-on-year increase of capabilities combined with professional packaging cold chain
19.7%. logistics transportation and full-process visualized monitoring
According to China Federation of Logistics and Purchasing the the Company is able to export products such as flowers and fruits
market size of cold chain and pharmaceuticals logistics in China to Southeast Asia and European countries at a faster pace. The
reached RMB517.0 billion in 2023 representing a year-on-year Company is the first in China to export fresh fruits by individuals
increase of approximately 5.2%. On the supply side China has helping Chinese fresh food brands go overseas and meet the
strengthened the construction of backbone cold chain logistics demand of overseas users for Chinese agricultural products.infrastructure and promoted the flattening of cold chain logistics
channels through resource intensification. On the demand (2) Food Cold Chain Logistics Services
side the rapid development of live-streaming e-commerce In 2023 the Company’s food cold chain logistics services grew
the accelerated diversification and localization of fresh food faster than the average industry pace increased the Company’s
consumption the industrial trend of high-quality supermarkets profitability and continued to improve customer experience.restaurant chains and channels expanding to lower-tier markets * Improve end-to-end timeliness: The Company responded to
all contributed to the highlighted market’s demand for integrated the trend of local e-commerce with intelligent warehousing and
cold chain logistics services promoting the development of multi-warehouse collaborative solution. At the warehousing end
the cold chain logistics industry towards networking and the Company focused on improving operational capabilities by
standardization. optimizing the duration of in-warehouse production operations.At the transportation end the Company matched the best
(1) Fresh and Seasonal Food Logistics Services shipping shifts with the production shifts and integrated multiple
The service network for the Company to facilitate production shifts at the end to create an efficient cold chain logistics service
and sales of agricultural products has covered more than 2700 with capabilities to fulfil orders within hours half-day and before
county-level cities nationwide and 226 categories covering more next morning. * Enhance service and solution capabilities:
than 6000 agricultural products. In 2023 the fresh and seasonal In the ice cream field the Company solidified the ice cream
food logistics services expanded mainly in the following aspects: cold chain logistics operation system through measures such as
* Refined services: With the integration of self-operated aircraft compressing the time of warehousing strictly controlling storage
cold chain warehousing and other external cooperative resources temperature customizing personalized packaging materials and
the Company addressed needs for agricultural products with delivery requirements to achieve differentiated service experience;
different value hierarchy and time-definite needs and formulated In the field of low-temperature milk by relying on the national
differentiated operation modes and refined pricing hierarchy to cold storage layout the Company established the JIT production
improve business efficiency and served the lower-tier agricultural model greatly reducing inventory backlog and extending the sales
product market with a more cost-effective mode; * Innovation time of customer goods; In the field of supermarkets adhering
in business operation model: The Company overcame regional to the service requirements of strict temperature control and
intervals built larger-scale cross-regional agricultural product timed delivery of supermarket stores the Company formulated
sorting centers around industrial clusters reduced transit nodes personalized SOPs and built a professional supermarket agreement
to improve transportation efficiency and served the lower-tier fulfilment team. Currently the Company’s services have covered
market of agricultural products with a more optimal cost model; all core cities in China. * Innovate operating models: For
* Production and sales promotion: the Company actively line-haul transportation the Company researched and put into
expanded live-streaming marketing and segmented scenarios operation large-scale cold transportation vehicles equipped
promoted production and sales matchmaking through live- with “freezing + refrigeration + normal temperature” three-
streaming at the place of production used rich agricultural temperature functions to maximize the use of transportation
product resources and experience accumulated over many years resource and rapidly expand the cold chain logistics network.to select products for live-streaming platforms in order to drive * Create high-quality benchmarks: SF Cold Chain has
the e-commerce sales of agricultural products and bolster revenue been ranked first in Top 100 Cold Chain Logistics Enterprises
increase. In the segmented scenarios such as pre-made meals in China*(中国冷链物流百强企业) for five years in a row and
lychees cherries and bayberries the Company closely cooperated has been approved by the ISO22000 food safety management
with local governments associations and leading brands jointly system certification. It has obtained the qualification of the pilotheld industry press conferences and connected SF Airlines + enterprise of the national standard GB/T40956 “Specification forwarehousing + cold chain logistics + technology capabilities to Handover of Food Cold Chain Logistics”* (食品冷链物流交接规
formulate industry supply chain solutions and promote industry 范). The Company will continue to improve service standards and
development; * Brand building: The Company invested special establish high-quality cold chain logistics service benchmarks.
027Chapter 3Management Discussion and Analysis
(3) Pharmaceutical Logistics Services During the Reporting Period the Company's revenue achieved
healthy growth and profitability continued to improve
In 2023 the Company’s pharmaceutical logistics services
significantly marking the first year of annual profitability.focused on “product upgrade network upgrade ensuringThis underscores our strong business quality and operationalquality compliance” providing multi-scenario services centred
resilience.on customers. * Expand multi-scenario business: In the
field of Class II vaccines the Company expanded its domestic
(1) Sustainable optimization of business structure to drive
warehousing for HPV vaccine and vaccine reverse recovery
high-quality growth
scenario services; In the field of IVD reagents the Company
continued to expand the business with the top customers in SF Intra-city empowers merchants with an open and inclusive
the industry which in turn achieved proven Scaling effect on-demand delivery network and professional efficient and
through replication. The Company focused on F2B services comprehensive delivery solutions and maintains extensive
in the pharmaceutical e-commerce field and temperature- cooperation: * deepening cooperation with existing KA brands
controlled medicine B2C business to improve comprehensive broadening channels for introducing quality merchants expanding
service capabilities and quality through mode adjustment; the coverage continuously and quickly accommodating new stores
Company incubated professional service capabilities for biological to meet merchant coverage needs with the scale of annual
samples and expanded the customer base. * Upgrade products: active merchants reaching 470000 during the Reporting Period;
Through product refinement scenario segmentation and * refining products based on key industries festivals holidays
standard solidification the Company improved the standards of and new scenarios to enhance capabilities to offer differentiated
temperature-controlled boxes and less-than-truckload services service with high double-digit year-on-year growth in revenue
gradually solidified operational capabil it ies and incubated of retail categories such as pharmaceuticals beauty maternity
scattered collection and dispatch service capabilities. * Upgrade and baby products pets and jewellery; * strengthening network
networks: Through improving timeliness expanding network construction in lower-tier markets to provide more convenient on-
coverage increasing flight frequency and improving carrying demand delivery services for differentiated local lifestyle scenarios
capacity the Company strengthened the operational capabilities in counties the revenue from such areas in 2023 expanded by
of the pharmaceuticals cold chain logistics network; the Company 147% from the corresponding period of the previous year; *
increased the frequency of the use of thermal insulation boxes as one of the most widely and deeply connected third-party on-
introduced constant temperature cabins and other temperature- demand delivery service providers on the access platform of
controlled containers and combined various transportation collaborating local lifestyle service vendors the Company actively
resources for flexible operation to meet the demand for small grasp the trend of diversified traffic sources by promoting the
batch less-than-truckload transportation with a better optimized co-construction of ecosystems with various major local lifestyle
operating model. In 2023 the timeliness of pharmaceutical less- service platforms; and * closely cooperating with various
than-truckload deliveries shortened by 17 hours the cost per ton- business lines of the SF Network to provide customers with
kilometer decreased and the network covered more than 300 integrated logistics solutions giving full play to the advantages of
cities. * Develop industry standards: The Company is heavily SF Intra-city’s delivery speedy fulfilment and helping the Group to
involved in the development of six industry standards such as generate revenue and enhance customer viscosity.“Network Retail Drug Distribution Service Specification”*(网络零
For consumers SF Intra-city is committed to creating an industry-售药品配送服务规范) and “Pharmaceutical Cold Chain Logisticsleading and professional on-demand fulfillment service. OurDelivery Service Specification”*(医药冷链寄递服务规范); in order“Deliver for Me Fetch for Me Purchase for Me and Solve forto implement and respond to national standard and industryMe” services cover daily life and work scenarios such as errand
standard management requirements the Company arranged
running medical healthcare and business agency. During the
employees to study for and obtain qualifications in dangerous
year the Company strengthened its rider management and
goods operation and biosafety to strengthen our compliance
focused on building up its service capabilities in urban business
and operation standards; in 2023 we applied to become a pilot
districts and office areas to create full-chain performanceunit of the national standard “Medical Test Biological Samplecapability for high-value goods; increased touch points with intra-Cold Chain Logistics Operation Specification”*(医学检验生物样
city express delivery users and meet the need for accelerating本冷链物流运作规范) and “Drug Cold Chain Logistics Operationtimeliness through channel partnerships; and improved serviceSpecification”*(药品冷链物流运作规范).quality optimised the membership system to effectively realize
growth both in customer acquisition efficiency and new user
V) Intra-city on-demand delivery conversion rates improving the retention and repurchase rates
In 2023 the Company’s intra-city on-demand delivery of core individual users and continuously strengthening thebusiness achieved operating revenue (excluding taxation) of consumer mindset that “SF Intra-city the first choice for urgentRMB7.25 billion with a year-on-year increase of 12.6%. delivery of valuable items”. The scale of annual active consumers
continued to expand Reaching approximately 20.5 million by the
end of 2023.
028Chapter 3Management Discussion and Analysis
(2) Leveraging integrated capabilities in logistics infrastructure VI) Supply chain and international business
to provide multi-scenario services
In 2023 the Company registered tax-exclusive revenue of
SF Intra-city has formed a flexible nationwide hourly/minutely RMB59.98 billion from the supply chain and international
delivery network which effectively accommodates the needs of business representing a decrease of 31.7% over the same
different types of customers such as expanding the number of period mainly due to sharp fall of the international air and sea
stores enlarging the reach of delivery of stores and extending freight demand and freight charges from the first half of 2022
operating hours. In 2023 SF Intra-city optimized and innovated to the level under the normalization of the market in 2019 from
its operating model and strengthened operational efficiency in the historic highs thus affecting the revenue growth rate of the
business districts around the stores of our top customers. SF Intra- Company’s international freight and freight forwarding business
city launched the Store Manager Tool that allows merchants to in 2023 but it has progressively stabilized with the quarterly
reach the Company swiftly to solve problems in a closed loop. recovery of demand and freight charges.During special circumstances such as e-commerce festivals peak
With the indust r ia l upgrade and the increas ing brand
periods during holidays and adverse weather conditions SF Intra-
competitiveness of Made in China the demand of China’s
city is able to fulfil its commitment to service quality and stability.manufacturing enterprises for overseas expansion is increasing. As
Fluctuations in the fulfillment in-time rate during holidays and
a result China’s emerging e-commerce platforms also expedited
adverse weather are narrowed to less than two percentage points
their cross-border e-commerce services across overseas markets
and three percentage points respectively.driving the rapid growth of China’s cross-border e-commerce
At the same time the Company’s flexible delivery network can logistics international express delivery and supply chain services.cater to the multi-dimensional needs of customers to bolster their Furthermore along with the remodeling in supply chain of
supply chain capabilities and accelerate intra-city logistics as well global enterprises Asia’s strategic position as the center of the
as intra-city courier service. The Company can give full play to its global supply chain is on the rise prompting it to become theunique time and cost advantages in scenarios such as “parcels fastest-growing logistics market in the world. The Companycollection” “delivery within half a day” and “delivery within through continuous expansion in its international networkan hour” thus making it possible to speed up and personalize and the integration of Kerry Logistics’ international services
services in all aspects of logistics. particularly Kerry Logistics’ competitive strength in Asia has
established a diverse and wide portfolio of services encompassing
(3) Intelligent upgrading of technology systems to support international express delivery international supply chain cross-
lean operations border e-commerce logistics international freight forwarding
SF Intra-city’s City Logistics System (“CLS”) has three core and Southeast Asia domestic logistics to serve a more globalized
functions including intelligent business planning and marketing customer base with increased presence in customers from the
management integrated rider dispatch and intelligent order Asia-Pacific regions other than China. Compared with China’s
distribution and intelligent operational optimization. Based on other express logistics service providers the Company is on the
data analysis and algorithms CLS can effectively predict order leading edge of the international network with integrated service
fluctuations and comprehensively coordinate factors such as rider capabilities throughout the whole chain covering a wider range
distribution and dispatch route planning and store waiting times of customers worldwide as well as mastering the core logistics
to optimally match orders with riders in different industries resources in every key aspect. Compared with other international
scenarios and complex delivery networks. express logistics service providers the Company provides services
at a favorable cost and better cost performance. Leveraging
For riders the System fully considers the availability of riders its continuously enhanced end-to-end cross-border service
to take orders optimizes the rationality of rider dispatch and capabilities the Company will be better equipped and capable
route planning to help riders effectively increase productivity and of satisfying the growing logistics demands of both China and
personal income. The System also enhances rider experiences overseas customers in an all-round manner in the future and seize
in combination with rider incentive systems considering rider the opportunities of the burgeoning China’s cross-border logistics
delivery experiences adverse weather conditions night shifts and market and the logistics market in Asia.peak times offering personalized dispatch support to enhance the
platform’s care with technological backing. (1) International express:
The Company is also actively exploring the application of smart * Focus on Asia. The Company actively responded to China’s
logistics and unmanned delivery technology hoping to make it an “Belt and Road Initiative” and focused on its Asian network
effective supplement to the existing rider network and providing layout. The Company carried out the transformation and upgrade
users with a different interactive experience. In 2023 the of its express networks in key Asian countries improved the
Company tested and achieved significant progress in the delivery coverage of overseas self-operated service outlets and cooperative
schemes and operational models of unmanned vehicles in urban service points continuously optimized and iterated various
business districts campuses industrial parks and other areas. information systems from order placement to delivery added
029Chapter 3Management Discussion and Analysis
multiple collections and scattered flights and steadily improved Company also combined sales of domestic logistics products
service capabilities and qualities. Meanwhile the planning of with the international freight forwarding services to provide
the aviation network and the acquisition of airside sites and customers with cross-border solutions for China’s imports and
customs clearance capabilities in key countries and regions have exports. Meanwhile the commissioning of the Ezhou hub and the
been strengthened. In many Asian countries such as Singapore encryption of international routes will enhance the Company’s
Malaysia Thailand and Japan the Company achieved 6 to 7 international aviation transportation capacity which will help
round-trip flights per week. The mutual delivery time between provide customers with more reliable and efficient international
China and Southeast Asian countries has been improved within freight forwarding solutions
1 to 3 days. * Expand cross-border e-commerce service
capabilities. To serve the rapidly growing business needs of (3) Supply chain:
emerging cross-border e-commerce platforms the Company
Fenghao Supply Chain: Focusing on the three major industries
facilitated the growth of cross-border e-commerce logistics
namely advanced technology industry automobile and fast-
business by continuously consolidating the coverage of express
moving retail committed to continuous cost control and improve
networks in Europe and the Americas opening new major city
cost-effectiveness Fenghao Supply Chain has been dedicated to
ports in Europe increasing our self-operated all-cargo flights
reinforcing the existing customer relationships while exploring
in the Americas to 4 to 5 flights per week and improving the
new ones. * Business Development: In terms of the advanced
cost of time by 1 to 2 working days. * Consolidate network
technology industry Fenghao Supply Chain developed the wallet
capabilities. The Company built a domestic and international
share of foreign customers and that of domestic customers
air-to-air transport network around the Ezhou hub connecting
together with the Group consolidated the advantages of
Europe South Asia the United States the Middle East and other
supply chain services for production and supported for the
regions to expand product coverage. The Company purchased
consumption. In terms of the automobile industry aside from
the high-quality international cargo flight slot resources to
securing the market share for traditional fuel vehicles Fenghao
achieve multi-port direct flights overseas for China’s exports and
Supply Chain has been actively involved in electrification with
improve product timeliness. The Company continuously enhanced
specification on the EV industry for high growth opportunities
customs clearance service capabilities. As of the end of the
and vigorously developing the customer base of first-tier suppliers
reporting period there have been about 70 self-operated and
and commercial vehicles. In terms of the fast-moving retail
agent customs clearance ports worldwide investing resources
industry through close cooperation with the express network
to improve key national port sites in Southeast Asia Europe and
Fenghao Supply Chain penetrated into the supply chain from
America and enhance customs clearance service capabilities.production to consumption with new customers in advantageous
The number of our domestic AEO advanced certification licenses
categories including chocolate candy foreign wine and pet food.increased to nine and the import and export customs clearance * Technology Empowerment: Adhering to the technology
and end-to-end service capabilities were improved. Through in-
empowerment on smart supply chains with a wealth of intelligent
depth research on the business scenarios of the entire life cycle
hardware and software Fenghao Supply Chain customized
of international trade the Company refined its operations
special deployment solutions for industry customers based on
improved the key procedures in cross-border logistics promoted
their differentiated demand. In 2023 Fenghao Supply Chain
international express service contract fulfilment capabilities into
successfully customized automatic intelligent flagship warehouses
the first echelon.for an industry leading customer which have been deployed the
intelligent warehouse construction to achieve cost efficiency.
(2) International freight forwarding:
New Havi: Adhering to the diversified development strategy
The excessive de-inventory and weak demand have led to
New Havi consistently increased market share with high-quality
pressure on international logistics market growth in 2023. Upon
services and realized cost efficiency with initiatives including
the resumption of normal capacity supply the air and sea freight
technology empowerment and resource integration. In 2023 New
rates fell significantly from the highs in the first half of 2022
Havi achieved healthy growth in both revenue and profitability.affecting the revenue growth of the Company’s international
* Business Development: New Havi supported customers’
freight forwarding services in 2023. Nevertheless as the market
business development and transformation with the expansion
gradually returned to a normal level both freight rates and cargo
of operation capabilities in various aspects including the store
volume slightly rebounded. The Company’s overall revenue from
expansion in low-tier markets transformation to franchising
the international freight forwarding services steadily recovered
model and digitalization to match customers’ demand. In terms of
quarter by quarter.business development New Havi provided diversified services to
In 2023 with continued service integration and by leveraging accurately satisfy customers’ demand such as the enrichment of
the advantages of domestic network the Company tapped into service categories support for internalization and empowerment
the opportunities of international freight forwarding services for prime customers and rapidly expanded its business scale.for customers in various industries for better sales results. The * Capability Building: In line with the business development
030Chapter 3Management Discussion and Analysis
New Havi further established the logistic network for low- I) Multi-Network Integration
tier markets across the country. As of the end of the reporting
period 62 logistics centers with high turnover frequency have Overall direction: In 2023 the Company has further strengthened
been established in over 30 core cities nationwide with the and refined its regular network integration initiatives and
transportation network penetrated deeply into low-tier cities. explored opportunities for new business resource integration
* Technology Empowerment: With continuous iteration and which enhanced resource efficiency spared additional investment
upgrade of core system and integration of software to hardware and expanded service coverage. Compared to previous years the
New Havi realized systemic management and improved operation multi-network synergies in 2023 have realized a further increase
efficiency. In addition New Havi has explored the upstream and in cost reduction and revenue generation benefits.downstream capabilities around leading industries to provide top (1) Network Integration Between Small Parcel and Large
customers with system delivery and value-added services such Parcel: The Company has strengthened the collaborative
as supply chain middle office smart stores and supply chain operat ion between network resources on weekdays and
information planning. New Havi offers technologies as products operational peaks and valleys to optimize resource efficiency
to provide special technology solutions for internal and external while enhancing service capabilities of the large parcel network.business including food and beverage advanced technology and * Large Parcel Network Capabilities Improvement: a. As to
manufacturing. distribution the Company deepened the final-leg operation of
Kerry Logistics: The integrated logistics business achieved small and large parcels with around 77% of large parcels handled
favorable growth in mainland China and other markets in Asia. by the large parcel transshipment network which fully releasing
The Company continuously strengthened the integration of the production capacity of parcels at small sites and relieving
internal supply chain solutions for achieving complementary the pressure of small parcels sorting. b. As to transportation the
advantages. Leveraging Kerry Logistics’ numerous chemical Company integrated large and small parcel truck line resources for
warehouses in China and extensive transportation capabilities of dispatch to increase the transportation frequency of large parcels
dangerous goods the Company established a special team for and to straighten routes for less transits increasing the large
the new energy segment to jointly develop logistics solutions parcel loading rate of truck lines by 6.2ppts from 2022. c. As to
for lithium battery of the new energy industry achieving the terminal the company increased the number of integrated
breakthroughs in logistics services of multiple supply chain outlets capable of collecting and dispatching small and large
scenarios extending service capabilities to the upstream and parcels to 746 realising unified operation management at the
downstream of the new energy industry as well as achieving raw terminal. By promoting the mode optimization of sorting at the
material imports and finished product exports. In addition with sorting center + goods directly delivered to customers we reduced
the successful execution of a series of cost management measures the investment of terminal outlets resources in the coverage area
throughout China for streamlined operations Kerry Logistics of sorting centers with the average daily direct dispatch volume
improved the operation efficiency and reduced costs by applying reaching more than 8500 tons. * Site Integration on Holidays:
robotics and artificial intelligence. When the business was in the trough on holidays sites for small
parcels were utilized intensively and some directly operated sites
for large parcels were shut down temporarily. For example all the
directly operated sites for large parcels were shut down during the
3. Operation Optimization Spring Festival and the proportion of sites for large parcels closed
during the May Day and National Day holidays also increased
In 2023 the Company has continuously adhered to fined compared to 2022 in facilitating the integration of over 1000
management and further its integration and innovation capability lines which effectively reduced the manpower and transportation
with a focus on the optimization of end-to-end operation process. capacity invested to improve business efficiency during holidays.Through multi-network synergies the Company has fully improved * Terminal Collection and Dispatch Collaboration: The
the resource efficiency to achieve stronger network coverage and Company integrated the terminal resources and businesses of
service capabilities under a more optimal cost modal. Through small and large parcels by means of having small-parcel couriers
the operating mode revolution promotion the Company has for taking orders and large-parcel couriers for collection and by
enhanced distribution and parcel sorting capabilities streamlined the implementation of team collaboration models the Company
terminal operation reduced labor intensity and improved the improved large parcel collection capabilities and reduced small-
service quality. Through technology empowerment on a more parcel couriers of labor intensity. With integrated and small parcel
refined and intelligent planning and control in each end-to-end outlets to supplement large parcel operation capabilities the
link of the receipt transit transportation and delivery process Company increased its coverage of service outlets that can deliver
the Company has replaced manual judgment with systems large parcel to 98.4% and an average of 91.2% of the daily
to realize more precise and efficient resource investment and large parcel volume across the entire network were delivered by
allocation. With refined management taking a new step forward large-parcel couriers to strengthen the terminal service capabilities
the Company’s resource efficiency has been improved and cost for large parcels.benefits continue to emerge.
031Chapter 3Management Discussion and Analysis
(2) Integration Between Direct Model and Franchise (4) Warehouse Network : To upgrade the in tegra ted
Model Network: The Company’s LTL freight brand using the warehousing and distribution capabilities support the highly time-
franchise model “SX Freight” complementarily integrated with sensitive scenarios of intra-city delivery services the Company
direct operations network considering their varied demands for focused on an integrated construction of sorting centers and
transportation timeliness and cost. * Site Integration: In line warehousing resources to reduce the transit nodes built the
with the Group’s unified site planning 46 SX Freight sorting forward warehouse network to extend the cut-off time for in-
centers and directly operated sites were constructed under warehouse operations and developed a warehouse network that
“the same site the same park the same region” principle in is capable of satisfying future needs of the pre-positioned intra-
2023 which was adhered to for saturated site’s relocation and city delivery services to facilitate the extraordinary experience of
expansion hence paving the way for operation coordination and integrated warehousing and distribution service for the platform
transportation integration. * Ground transport Lines filling: and customers. By the end of 2023 the Company has realized
Taking the SX Freight network into account cargoes from SX the integration of 130 warehouses and sorting centers with the
Freight could be properly stocked and matched with the empty warehousing area that integrated construction increased by 26%
space resources of the same ground transport line of directly on a year-on-year basis.operated network thus filling the empty space for and improving
the loading rate of directly operated lines while saving costs of SX II) Operation Management
Freight. In 2023 the Company realized lines filling of SX Freight
(1) Enhance Transit Efficiency: Focusing on strengthening
cargoes with an average daily volume of over 2800 tons and the
and expanding the functions of sorting centers in 2023 the
cost reduction benefits continue to expand.Company further developed the sorting capabilities and invested
(3) Integration Between Small Parcel and Cold Chain & in automation equipment to power a model transformation
Pharmaceutical Logistics Networks: In 2023 the Company realizing the efficient operation of express containers within
has explored the network integration opportunities between the site. In 2023 with the commission on or upgrade of up
small parcel express and cold chain and pharmaceutical logistics to over 630 sets of automation equipment in over 100 sorting
to promote the cold chain capabilities and network coverage centers and distribution hubs the Company realized the fully or
and to drive the revenue generation under a more cost-effective highly automated transit operations to ease labor intensity and
model. * Transportation: In terms of vehicles the Company personnel input contributing to an increase in the small-parcel
developed and commissioned 30-ton trucks featuring dual- hourly transit capacity by 11.4% and an increase in the large-
temperature functions of cold and room temperature storage parcel hourly transit capacity by 15.9%. The Company refined the
for pharmaceuticals and triple-temperature functions of frozen sorting process to enable a direct sorting by courier collection and
cold and room temperature storage for food enabling the co- delivery areas with independent containers for direct distribution
loading of food pharmaceuticals and express parcels to ensure to the terminal delivery streamlining the operation of traditional
the loading rate a higher dispatch frequency of cold chain and outlets for lightweight outlet functions. Meanwhile through the
pharmaceutical logistics lines deliver efficiency of LTL services and lean management including site diagnosis process optimization
revenue growth. * Container: For the transportation of small- resource integration and other lean management measures the
volume cold chain and pharmaceutical goods the Company has Company’s per capita efficiency of small-parcel transit increased
developed thermostatic containers of various volumes to integrate by 8.5% and the per capita efficiency of large-parcel transit
with the ground network enhancing the efficiency and network increase by 10% on a yearly basis.coverage of cold chain logistics services. * End Delivery:
(2) Ground Network Management: * Network Optimization:
Integrated outlets have been equipped with cold chain operation
Through the optimization of ground network and investment
capabilities switching the direct dispatch of cold chain and
in competitive routes the Company continuously strengthened
pharmaceutical logistics services in some areas to delivery through
the competitiveness of ground transportation and introduced
integrated outlets with thermostatic containers thereby saving
over 1300 line-haul routes and over 1800 frequency-increased
the terminal resources of cold chain logistics with better delivery
routes in conjunction with the business structure and scale
efficiency. In a word the integration of small parcel express and
growth; adopted a fast loading and unloading model for
cold chain and pharmaceutical logistics rapidly improved the cold
containers and introduced bus routes for the ground network
chain and pharmaceutical network capacity at a reduced cost of
to improve transit efficiency; integrated line-haul and short-
establishing a separate network.haul resources with continuous improvement of time efficiency
032Chapter 3Management Discussion and Analysis
for better utilization optimizing over 5000 routes. * Resource (4) Courier Management: * Enhancing Couriers’ Benefits:
Management: By adjusting the procurement strategy on With the time consumption and pricing model of collection and
outsourced transportation capacity and promoting standard delivery areas the Company continuously improved the average
pricing the Company continuously optimized the resource income of couriers in areas with small business volumes and
structure of ground transportation and reduce transportation high delivery difficulties for courier satisfaction and reduced
capacity costs. With more accurate parcel volume forecasting turnover rates. The Company also established and enriched a
and route planning the Company prioritized using its own diversified courier benefits system. The higher the courier’s overall
vehicle resources and outsourced resources on transportation performance and level the more benefits to enjoy including
capacity with fixed annual prices minimizing the procurement exemption scheduling priority life welfare and educational
of temporary or short-term outsourced resources established a advancement. * Incentive Mechanisms: In 2023 the Company
price model on routes promoted the standardized pricing for introduced the “Fengdou” mechanism for rewarding the couriers’
outsourced resource of short-haul transportation capacity across behavior. The Fengdou rewards received for good behavior can
over 100 cities. For abnormally over-priced routes the Company be exchanged for benefits such as service scores or welfares
applied a circuit breaker mechanism for prompt restrictions on driving couriers’ active maintenance of customer information
relevant transactions and the switching to better transportation and service standard improvement as well as the transformation
capacity resources. The Company generally contributed to a more of service quality management from negative assessment to
systematic standardized and transparent resource management of positive incentives. The Company also promoted the linking of
ground transportation improved the carrying ratio of controllable service quality scores with personal provision income compelling
resources for line-haul and short-haul transportation capacity couriers’ self-management and continuous service quality
prices to effectively control the costs of transportation capacity improvement. * Intelligent Tools: The Company adopted
reducing the Company’s per kilogram cost of line-haul and industry-leading large language models combined with actual
short-haul transportation with the average efficiency of drivers scenarios to create an intelligent service center for couriers which
increasing by 20% on average. conducts real-time human-machine dialogues with couriers
responds to their questions and helps with mastering various
(3) Outlet Optimization: In conjunction with the operation
delivery knowledge and operation methods enhancing courier
optimization of direct sorting at sorting centers assembled by
work capabilities. In 2023 such tools have been promoted across
containers with direct delivery to the terminal courier collection
the entire network with over 12000 questions per day one-time
and delivery areas the Company simplified traditional outlet
resolution rate of over 90% and courier satisfaction rate of over
procedures reduced outlet area and functions and transformed
98%. * Courier Experience: The Company established a full-
to build more customer-facing terminal stations shortening the
process management system from the collection to the resolution
tune for courier’s round-trip to outlets with better customer
of courier opinions with clarified standards including classification
service capabilities. By the end of 2023 the model transformation
time for processing and close-loop solutions and built an
of over 3000 outlets have been completed achieving direct
online dashboard for courier opinion storage. The Company also
sorting and dispatch of express parcels to over 10000 terminal
upgraded the middle platform capabilities to handle hot-spot
stations helping to improve terminal delivery timeliness reduce
issues from couriers optimize couriers’ work with continuous
outlet personnel input packaging material loss and parcel
solutions improve the Company’s operation management and
damages while also improving courier and customer satisfaction
enhance frontline employee satisfaction.and terminal outlets efficiency.
033Chapter 3Management Discussion and Analysis
III. Core competitiveness
1. The Company has an efficient and reliable global logistics infrastructure
network based in China radiating to Asia and connecting the world
Note: The data below are all as of December 31 2023
Global service network coverage
Domestic
Prefecture-level divisions County-level divisions
covered in China covered in China
3392789
Prefecture-level
divisions coverage County-level divisions coverage
100%98.1%
Overseas
International express delivery
freight forwarding and International small
supply chain business parcels business
97 countries and 202 countries and regions covered regions covered
034Chapter 3Management Discussion and Analysis
We are operating a cargo airline that is the largest in China and maintains leading
position in the world and we are also the largest shipper of air cargo in China
Note: For the data below the time points are all as of December 31 2023 and the periods are all from January 1 2023 to
December 31 2023.SF’s global air cargo volume exceeds
2100000 tons
SF’s domestic cargo volume accounted for
33.8% of the national air cargo and mail traffic
All-cargo aircraft SF’s global average daily flights
103 4800 times
all-cargo 754 340pilots in service pairs of flight rights
aircraft in operation 65 domestic destinations
86 aircraft self-operated 48 international and regional
destinations covered
152 1030000 tons
routes operated of cargo
worldwide of which more than 220000 tons
52500 flights were shipped internationally
73 international
routes in operation
Over 7600 flights
Bulk resources
290014000
domestic routes international routes
1720000 1070000 tons
flights in shipments
of which over 330000 tons
were shipped internationally
Ezhou cargo hub which is largest hub transit center in Asia built automatic sorting system giving international express parcels
by the Company became fully operational in the third quarter of the same efficiency as ordinary parcels. The international express
2023. After months of operation and testing during the business parcels take only 15-20 minutes from going online customs
peak periods the overall operation was stable and the cargo clearance falling into the grid to boarding.volume steadily increased. By the end of 2023 SF Express had
opened 45 domestic cargo routes and 10 international cargo SF Express builds the Ezhou cargo hub not only into a global
routes at the Ezhou cargo hub covering 40 city sites nationwide supply chain center but also a high-end processing and
and connecting 13 international flight points. The Ezhou cargo circulation center. At present many leading companies in 3C
hub has about 90 inbound and outbound cargo flights per day beauty makeup and cold chain medicine have settled there.and the volume of cargo flights ranks among the top three in the The Company will continue to operate with safety efficiency
country. The logistics complex in the Ezhou cargo hub covering intelligence and green as its guidelines optimizing and improving
an area of 750000 square meters has an intelligent sorting line the air network layout achieving seamless connections in
with a total length of 52 kilometers which can handle 280000 domestic and international air networks and gradually achievingexpress parcels at peak hours per hour. At the same time 14 the goal of “reaching domestic cities overnight and overseas thecustoms intelligent inspection lines cooperate with the fully next day”.
035Chapter 3Management Discussion and Analysis
Our extensive resources of transportation mode allow us to provide domestic and
cross-border multi-modal transportation services for our customers
Note: For the data below the time points are all as of December 31 2023 and the periods are all from January 1 2023 to
December 31 2023.Ground transport Railway transport
100000 High-speed rail express products with 4 pairs with 8 columns
trunk and feeder trucks under
management worldwide 1325 of special express trains flows
170000 General railway trains International trains 35
domestic transport routes 298 lines 416 lines countries and
regions covered
100000 Total volume of rail shipments
vehicles for termination’s 2510000 tons
collection and distribution
Sea freight
Sea freight shipments
18000 1260000 TEU
maritime routes
036Chapter 3Management Discussion and Analysis
The global presence of our outlets has been a contributor to our international and
localized operations
Note: The data below are all as of December 31 2023
Service outlets
360008000430000
domestic service outlets and overseas self-operated & network-wide couriers
other service stations joint-operated outlets
11000040000
cooperative service points cooperative service points
(including city stations and rural distribution shops)
Transit depots
Express depots Freight depots
239157
transit depots transit depots
in operation in operation
Warehouses
operational warehouses covering franchised warehouses
1900 10 million sqm 79
118 1245 covering
food cold-warehouses 18pharmaceutical overseas warehouses
covering warehouses covering covering 1.22 million sqm
0.760.152.90
million sqm million sqm million sqm
037Chapter 3Management Discussion and Analysis
We possess numerous key site resources such as logistics parks and centers in
countries including China and Southeast Asian both through our direct ownership
or via REITs
Note: The data below are all as of December 31 2023
Total land area Total building area of
16696mu 10.91 million sqm
Completed operational projects Projects to be completed in 2024 and beyond
Land area Building area of Land area Building area of
13683 mu 8.27 million sqm 3013 mu 2.64million sqm
Changchun
Shenyang
Urumqi Beijing Weihai
ea
Tianjin Bo
hai S Qingdao
Shijiazhuang
Weifang
Yellow
Sea
Hebi
Nanjing
Zhengzhou Lianyungang Yancheng
Nantong Changzhou
Luoyang Huai’an
a Sea Wuxi
Xi’an st ChinHefei Ea
Maanshan Suzhou
Xiaogan Yiwu KunshanWuhu
Wuhan Shanghai
Chengdu Quzhou u
JiaxingChi
wei Y
Nanchang
Yiyang
Lhasa Jinhua sChongqing Wenzhou aoyu Islan
d Ningbo
Di
Changsha Quanzhou Hangzhou
Ganzhou
Guiyang Xiamen Zhangjiagang
Guangzhou
aiwan Ezhou
Liuzhou TFoshan Dongguan
Mundra Huizhou
Nanning Zhongshan
Zhuhai Shenzhen
Hong Kong
Islands
Dongsh
a
Haikou
Mumbai Island
Hainan
d
Bay of Bengal s gyan Island
Xisha Is
lan Huan
China
Sea
Yangon Region South Rayong
Da Nang City
sha Isla
nds
Zhong
Tamilnadu
l
Phnom Penh James Shoa
Completed operational projects Mandalay Region
Projects to be completed in 2024 and beyond
Binh Duong Province
Tampines
Note 1: Where there are multiple legends preceding the name of a single city it
indicates that the projects in that city are being constructed in phases or there Chonburi Province Map scale
are multiple projects in that city and their completion dates fall in different
intervals. Samutprakan Province
Note 2: The above data includes industrial park projects that have been placed into the
real estate investment trusts and the logistics real estate development fund
which are operated and managed by the Company.
038
Yan Yg et llz oe w R Riv ie vr er
Nansha IslandsChapter 3Management Discussion and Analysis
2. Based on the end-to-end directly operated model with strong control
and third-party independence positioning we provide customers with more
comprehensive end-to-end one-stop integrated logistics service.The end-to-end directly operated model has strong control Positioned as an independent third-party logistics service
over the logistics network and guarantees premium service. provider the Company serves a broader customer base
The Company adopts a business model with strong control over and facilitates customers’ omni-channels expansion. Among
the entire network which contributes to Company-wide top- the leading integrated logistics service providers in China
down highly unified development strategy and facilitates the the Company is the only player that is independent of any of
rapid implementation of business plans enabling the Company the e-commerce platforms and merchants. The Company’s
to incubate more new business in the mature network within independence ensures that it is able to serve a broader
a short period of time and rapidly become the market leader customer base in a fair and impartial manner while enabling its
in respective markets and adapt to the ever-changing market customers to operate through multiple channels including online
and meet the diversified needs of customers. At the same time e-commerce platforms its own private platforms and offline
leveraging our strong control over the entire end-to-end delivery shops and providing customers with inventory management
process from first-mile pickup to last-mile delivery we enhance and distribution fulfillment. As a result utilizing its smart supply
the standardization of the Company’s overall service chain and chain technologies the Company further helps customers connect
operational planning and efficiency utilizing leading digital omni-channels inventory data and provide one-stop smart supply
and intelligent logistics technologies so as to ensure that the chain solutions to reduce costs and increase efficiency thereby
Company is able to provide customers with consistently premium enhancing customer stickiness.services.
039Chapter 3Management Discussion and Analysis
We provide end-to-end one-stop integrated logistics services Our services have penetrated into a wide variety of industry
for customers in various industries with our comprehensive verticals such as industrial manufacturing commercial circulation
service offerings and integrated capabilities. Adhering to online sales of agricultural products food and pharmaceutical
the diversification-oriented strategic planning and leveraging cold chain local life international trade etc. covering all
the well-established and efficient logistics network through aspects of social production and people’s livelihood. Leveraging
“internal incubation + external mergers and acquisitions” the efficient express logistics services lean supply chain management
Company horizontally branched out into new businesses and experience and a powerful logistics network that penetrates
acquired high-quality industry partners to gradually grow into into rural counties towns and villages in China and covers 97largest integrated logistics service provider in China and Asia and countries and regions overseas we actively respond to the “gothe fourth largest in the world with its service offerings covering to the countryside go to factories and go global” campaign
time-definite express economy express freight cold chain and launched by the government for the development of modern
pharmaceuticals intra-city on-demand delivery international service industry and express delivery support rural economy
express international freight and freight forwarding and supply revitalisation intelligent manufacturing and industrial upgrading
chain focusing on logistics ecosystem development as the top and enhance our support capabilities for international supply
priority. At the same time we also vertically improved the product chain; furthermore we actively embrace new patterns and trends
matrix through direct operation external cooperation and other in the industry to help clients innovate business models enhance
models; in each market segment of every business sector we consumer perception experience and practice the delivery and
have launched high-quality services targeting medium to high-end protection of a better life.consumers as well as cost-effective services for markets in lower-
tier cities. Through effective product stratification and organic
combination among different products we cater to the diverse
needs of clients and developed comprehensive end-to-end one-
stop integrated logistics solutions.
040Chapter 3Management Discussion and Analysis
Industries
Industrial Automobile Communication Healthcare Public service Government and Furnitures and Apparel Consumer Fresh food E-commerce Finance and
manufacturing and high technologies enterprises e-affairs appliances shoes and hats goods and movement insurance
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Supply Procurement Production Circulation Consumption
chain service Production planning management | Supplier management | Global Central Warehouse for raw materials | Bonded warehouse | FDC 2B warehouse | 2C warehouse | temperature sensitive cold chain warehouse | GSP Time-definite express services with precise delivery time commitment:
one-stop sourcing | Import and export customs clearance | Bond warehouse | Warehouse for finished goods | Warehouse for spare pharmaceutical warehouse | Bonded warehouse | Overseas warehouse | FDC Specified minutes delivery | Specified hours delivery | Half-day delivery |
management | Vehicles for trunks | Less-than-truckload transport | parts; Warehouse network planning | Intelligent warehouse Warehouse network planning | Intelligent warehouse construction | B2B2C+online and offline Same-day delivery | Next morning delivery | Next day delivery...International freight (air-sea-land-rail multi-modal transport) construction | VMI inventory management | Warehouse operation | omni-channel inventory management | Intelligent warehouse allocation | Integrated Return and exchange | Delivery to outlets | Delivery and installation | After-sales
Value-added services (supply chain finance packaging and warehousing and distribution | Value-added services | Import and export customs clearance maintenance
processing); Inbound logistics | JIT production logistics | Cycle pickup Vehicles for trunks | Less-than-truckload transport | International freight (air-sea-land-rail International express | Cross-border e-commerce delivery | Overseas
multi-modal transport) warehousing and distribution
Empowered Supply chain base Smart park development Smart transport Smart warehousing Omni-channel operations
by digital
Intelligent operation center | Vehicle traffic scheduling | OMS | TMS | WMS | BMS | Route planning | Vehicle scheduling Automated warehouse construction | Omni-channel Big data analytics | User profiling | Demand forecast |
intelligence Video surveillance | Real-time data sensing 2B2C shared warehouse operation Full-cycle visible multi-modal transport inventory management | Online omni-channel store operations | Blockchain traceability
Intelligent warehouse allocation | Integrated warehousing
and distribution | Recommended packaging
041Chapter 3Management Discussion and Analysis
3. Cutting-edge digitalized visualized and intelligent technologies to promote
the development of smart supply chain
The Company is committed to establishing a smart supply chain process of filing respectively with invention patents accounting
ecosystem in the digital era and becoming a leader in the smart for 59.3% of all patents obtained. The Company actively
supply chain market. The Company combines the massive data cooperates with social organizations such as enterprises in the
and industry solution experience gained in its comprehensive logistics and supply chain industry and universities to enhance
service offerings with leading digital ized visualized and the social influence of SF Technology. The Company has wonintelligent logistics technologies to promote full-link supply chain numerous awards such as the “SSCL – Outstanding Supply Chaintechnology innovation and help clients in various industries create Innovation Award” *(SSCL金链奖 优秀供应链创新奖) in 2023a modern supply chain system with efficient and prompt response. the International Organization Award “World Internet of ThingsRanking List”*(世界物联网排行榜) and the renowned award
As of the end of the Reporting Period the Company had 4093 “Fortune’s Most Influential IoT Innovation List”*(财富最具影响力
patents and 2490 software copyrights in effect and in the 物联创新榜).
(1) Solid digital and intelligent foundation: the construction of interoperable database
Data middle platform: Guided by its strategy starting from and security system effectively improving the technology
its business operations and driven by the operating data the and research and development resource efficiency reducing
Company continued to strengthen the shared trustworthy timely redundant construction and ensuring data security. Meanwhile
integrated and efficient data middle platform system to ensure the Company continuously align with the business to broaden
a sustainable and healthy business operations. The Company the depth and scope of data support facilitating the operational
reconstructed and optimized data mid-platform’s technical improvements with speedy and precise data-based decision-
data and application framework as well as the operation making.
(2) Upgrading the digital intelligence of the logistics network to create a SF smart Brain
The Company is committed to improving its overall digitalization dynamic resources matching and mapping and flat and efficient
and intelligent level of the logistics network. Through the management. Leveraging the IoT technologies automation
whole-chain digitalization throughout its end-to-end operations and investments in unmanned technologies the Company has
from first-mile pickup to last-mile delivery together with data improved network operation efficiency with secure delivery
forecast visualized monitoring and early warning the Company guaranteed at the same time thus enabling the Company to
has achieved the universal intelligent planning and dispatching reduce costs with increased efficiency.
042Chapter 3Management Discussion and Analysis
Replace Experience with Data and Let Algorithms Verify the
Future – Logistics Digital Twin Technology
Digital twin technology refers to building a twin body in the virtual digital world
that is highly similar to the real world from appearance internal mechanism and
behavior. Through this simulation technology it is possible to verify and optimize
various strategies in the real world in the virtual world at a very low cost and trial
and error cost.The Company deeply integrates digital intelligence with its business to create a logistics digital twin system with high realism and fast
algorithm verification efficiency. In the sorting scenario for the situation where the sorting plan needs to be adjusted at a high frequency
parameter adjustment in the virtual world can quickly verify feasibility and effectiveness and can verify thousands of times a day achieving
almost zero cost and high-quality sorting plan switching. It has been deployed and applied in more than 60 transit centers across the
country with the highest realism of the twin body reaching 99% and the highest capacity of the site can be increased by 20% in practice;
in the network planning scenario through integration with the business system it can fully simulate outlets stations transit centers
vehicles and other real physical entities restore key information of parcels and operating results at various logistics nodes and routes
adjust line opening standards network planning design and other parameters on the digital twin body and can evaluate the impact of the
overall strategy output the best decision-making plan improve resource utilization and operational efficiency and reduce transportation
cost input. In the Ezhou cargo hub the Company’s self-developed cargo hub digital twin platform can simulate the apron operation transit
center operation and land transport operation. From the design plan evaluation of the hub construction to the data prediction of the hub
operation route pre-arrangement and other key links it provides efficient comprehensive and all-round digital quantitative evaluation
support for the business.
043Chapter 3Management Discussion and Analysis
Digital intelligence of forecast & scheduling
Utilizing data operational research and intelligence the Company created a universal intelligent decision-making system
covering “forecast → early warning → scheduling → feedback”.Forecast in advance
In order to ensure optimal and accurate resource scheduling and dispatching the Company’s cargo
volume flow forecast has achieved multi-dimensional extension from the overall cargo volume to
province-to-province city-to-city and other flow dimensions enabling various forecasts regardless
of long-term short-term or dynamic as the case may be. Synchronized with these forecast
results the Company’s system can then adjust the pre-planning and on-going planning of various
resources thus ensure service quality and enhance resource utilization and allocation efficiency.Network planning
The Company has been continuously improving the aviation and ground transportation network
planning capabilities by establishing and consolidating its intelligent network planning system
tools. By utilizing the digitalization capabilities the Company has visualized the data of customer
demand and market dynamics to guide the utilization and adjustment of various types of sites
under multi-network integration. With various product standards bearing in mind the Company
also accurately match aviation transportation resources according to the dynamic changes in
volume demand of seasonal fresh food and other types of goods. Leveraging algorithm-backed
dynamically adjusted strategies and programs the Company built an integrated multi-network
ground transportation system to support various service scenarios such as new modes of ground
transportation ground-air resource coordination and flexible routing and loading of oversized
goods for air transportation to maximize the efficiency of resources allocation and enhance the
timeliness and competitiveness of the air and ground transportation products.Real-time scheduling
Utilizing the universal operation monitoring system the Company has achieved real-time
monitoring automated data capture and intelligence warnings of abnormal scenarios such as
weather anomalies flight delays and traffic control as well as the monitoring of our real-time
operation status. Therefore the Company would further recommend optimal adjustment plans
intelligently and notify the frontier staff to intervene for safeguarding the service performance in a
timely manner ensuring consistent delivery of product and proactive customer services.Digitalized and intelligent sorting
The Company is committed to establishing automated visualized and intelligent sorting centers creating an efficient
and intelligent.Automation Intelligence Visualization
In 2023 automation construction or B u i l d u p d i g i t a l i z e d p r o d u c t i o n Leveraging image recognition and video
upgrade projects in over 100 sites have management capab i l i t y f o r ma jo r recognition technology the combination
been completed thus further improved processes on-s i te . The sys tem can of technical defense and human defense
the transit and sorting capacity and provide cargo forecast information and guarantees the transportation safety
efficiency of the whole network. site capacity estimation about every of express in the production process as
10-minute and provide early warning of well as the personal safety of personnel
overcapacity on-site. Site managers can in the business process provides a safe
use the system to capture the potential production and working environment
risks of each process in advance and for parcels and personnel thus solving
take measures to avoid them make problems of quality management and
more refined deployment of equipment safety risk control in sorting centers.personnel vehicles and other resources
improve the t ime l iness o f express
delivery and ensure the smooth and
orderly operation of the site during peak
hours. 044Chapter 3Management Discussion and Analysis
Building a Digital International Air Cargo Hub
– The Ezhou Cargo Hub
The Ezhou cargo hub comprehensively uses technologies such as building
information modeling to consolidate the hub database and adopts operations
optimization computer vision and other algorithms to refine hub operation
management and effectively ensure the time-definite parcels.Dispatch collaboration
To ensure the time-definite transit of parcels at the hub from takeoff to landing the full-link has been perceived and deducted and the
operation process and resource efficiency will be collaborative optimized. The self-developed parking position allocation algorithm takes
timeliness transit efficiency aircraft taxiing efficiency and dozens of business operations into consideration to automatically form a pre-allocation
plan and adjusts in real-time according to flight dynamics effectively reducing the complexity of the work of air traffic control personnel and
improving operational efficiency. Automatically collect aircraft stand guarantee nodes monitor in real-time through cameras efficiently identify
with intelligent algorithms and accurately collect real-time node data information such as aircraft positioning and aircraft push-out.Sorting management
Automated equipment and intelligent algorithms help the transit center increase capacity. The Ezhou cargo hub has an automated sorting
equipment line with a total length of 52 kilometers with a peak sorting volume of 280000 pieces per hour. The parcel follows the optimal
parcel walking path obtained by the algorithm and smoothly and accurately falls into the boarding or loading mouth. Monitor the status
of all automated equipment in the field warn of sub-health equipment maintain during idle time effectively reduce equipment failure rate
and failure recovery time.Computer room network
Multiple computer rooms back up each other 5G WIFI signal covers the whole area and the signal is strengthened in key operation areas
such as loading and unloading vehicle areas and dismantling and boarding areas improving the reliability of the transit center and ensuring
the stable operation of basic IT infrastructure and intelligent mobile terminals.
045Chapter 3Management Discussion and Analysis
Digitalized and intelligent transportation
The Company continuously improved the full-stack end-to-end digitalized and intelligent management across various
transportation modes such as air ground and rail transportation.Air transportation
In terms of all-cargo aircraft based on the Ezhou cargo hub the Company built up the capability related to abnormal
scheduling and timeliness guarantee in hub scenarios; in terms of bulk flights the Company improved the efficiency
of procurement and the matching of resources and demand through the refinement of numerical and intellectual
management tools to segregate procurement of demand and use so as to guarantee the consistent availability of
resources and meet the demand for timeliness.Ground transportation
Through intelligent route combination and resource structure design the Company schedules resource reserves
for a more optimal cost structure. In terms of transportation resource matching based on machine learning
and other technologies the Company predicts data in terms of dimension including cost task and volume
of each route flow and outputs the expected structure of different transport resources (controllability and
elasticity); at the same time through intelligent algorithms routes are packaged in combination according to
various strategies and matched with the most suitable transport resources to effectively control costs. During
transportation through the digital system the Company swifts from manual dispatch to automatic dispatch.If there is a temporary increase in transportation demand the system will prioritize the assignment of idle
controllable transport resources to undertake maximizing the reduction of temporary resource dependence.In terms of transport resource outsourcing and pricing the Company has built basic price for routes to
calculate the corresponding route’s price according to the market average price mileage and other factors
in the industry through intelligent algorithms; on this basis it further builds a digital transportation resource
outsourcing system and a series of processes such as bidding contract signing and settlement are completed
in one-stop through the online platform. At the same time this system can output procurement strategies
based on the intelligent route price base and pre-planning data of transport resources and intelligently judge
the rationality of contracts or transactions ensuring the rationality transparency and health of transportation
resource outsourcing.Rail transportation
Through digital upgrading the standardization of end-to-end railway operations has been improved
supporting the application of diversified resources based on high-speed rail freight high-speed rail scheduled
trains express trains and ordinary trains providing customers with differentiated transportation services
improving transportation performance timeliness and customer satisfaction.Digitalized and intelligent service outlet management
The Company further refined comprehensive digital operation and online management of collection and delivery at
service outlets.Last-mile network End transportation
Collection and dispatching service capacity construction applications
provide intelligent resource planning and dynamic scheduling suggestions at service T h e C o m p a n y i n t e g r a t e d T h e e n d c o l l e c t i o n a n d
outlets by combining factors such as forecasted parcel volume operational difficulty and upgraded the l a s t -m i le de l ivery operat ion has been
courier professional ability and couriers’ willingness to rest so as to reasonably allocate capacity scheduling system and c o m b i n e d w i t h a u t o m a t e d
collection and dispatch tasks and improve courier service ability thus guaranteeing operational tools to achieve the t r a n s p o r t a t i o n a n d A I t o
customer experience. The Company provided differentiated subsidies based on the integration of large and small enhance de l i ve ry e f f i c iency .difficulty of collection and delivery tasks mode of operation and scenario specificity so parcel collectors and dispatchers I n o f f i ce s cena r io s such a s
that the couriers can get more reasonable compensation. The Company optimized the effect ively strengthening the industrial parks transportation
online delivery SOP so that the system will quickly formulate personalized operational f l e x i b i l i t y o f t h e l a s t - m i l e through automated collection
requirements and operational guidelines based on customer preferences consignment collection and delivery capacity. and delivery vehicle and door-
characteristics etc. and dynamically push them to the cell phones or handheld terminal At the same time The Company to -doo r t r an spo r t a t i on and
devices of the couriers to enhance their operational standardization. Meanwhile the AI upgraded its system capacity to delivery through robots improved
“Courier Service Center” has been launched to support couriers’ questions at any time further enhance the synergistic transportat ion eff ic iency and
providing couriers with intelligent accurate and easy-to-understand comprehensive c a p a b i l i t y o f v a r i o u s e n d r e d u c e d t h e p r e s s u r e f o r
information Q&A services quickly with the accuracy rate reaching 90%. The Company channels such as service outlets couriers. Terminal transportation
has built packaging recommendation tools to accurately recommend corresponding eco- HIVE Boxes and post stations to applications have been promoted
friendly packaging solutions and materials according to different consignments to improve meet the differentiated needs i n va r i ous p l a ce s i n c lud ing
packaging quality to protect the safety of customers’ shipments and to avoid over- of customers for receiving and Bei j ing Shanghai Shenzhen
packaging and waste. delivering parcels and to improve Suzhou Wuxi and Hefei etc.the customer experience while
optimizing the resource utilization
of the entire last-mile network. 046Chapter 3Management Discussion and Analysis
Digitalized and intelligent delivery safety
Technologies such algorithm was applied to intelligently capture security risks and improve delivery safety.The Company used IoT algorithms and abnormal parcel data performance to
identify abnormal nodes such as illegal throwing abnormal falling and illegal
unpacking and established a database taking scenarios positions personnel
risk levels into consideration. The Company constructed an early warning
dashboard site SOP control and differentiated security control for high-risk
parcels as well as a “3-layer firewall” security control system to reduce the
risk of express shipments.The Company utilized IoT intelligent hardware to realize the whole-process
of tracking and monitoring of express shipments and guarantee their safe
arrival. The Company’s self-developed intelligent security inspection platform
can be combined with automation equipment to realize the synchronization
of security screening and sorting during transition; Intelligent algorithms can
identify 99% of parcels. In addition the Company has introduced the cloud
security inspection. Through the Sharp-eyed Cloud System (慧眼神瞳云端系
统) security inspectors can remotely and simultaneously identify the suspected
contraband X-ray images of multiple sites ensuring the accuracy of security
inspections and improving personnel efficiency. The self-developed integrated
high-speed photographic apparatus is equipped with functions such as video tracing of express status at the receiving and dispatching end which combined with the
tracking data of express in other parts of the process realizes the whole process of tracking and monitoring of express and allows us to quickly locate and analyze any
blind spot in the process to ensure the safety of delivery.Digitalized and intelligent cost management and control
Applying the digital solution of “full-stack integration” the Company opened a system base and set up a digital business analytics system covering “pre-testing –monitoring – post-analysis”. During pre-testing intelligent algorithms have been used to create digital tools such as production estimation providing basis for front-
end decision-making; during monitoring the Company generates multi-dimensional in-depth analysis boards based on multiple perspectives to meet the diversified
monitoring and analysis needs of various organizations; during post-analysis the Company intelligently locates potential cost reduction profitability and efficiency
scenarios exploiting multiple efficiency improvement models and potential benefit points to the business promoting business optimization and operation. Through the
large language model integrating excellent closed-loop measures and employee experience the system can achieve human-computer dialogue when monitoring similar
potential benefit scenarios and intelligently recommend solutions and efficiency improvement courses for the business. The digital system promotes the improvement
of benefit management and control by means of on-line modeling or system linkage helps the Group to refine cost management and input allocation visualizes
process analysis achieves close-loop of post – analysis and escorts the Company’s sustainable and healthy operation.Digitalized international business
Cross-border Overseas domestic
express network express network
Focusing on links including express products customer experience cross-border transportation the Company built a Using the mature and advanced domestic
digital cross-border express network and provided overseas customers with a more convenient and friendly ordering network sy s tem as a templa te the
experience through the establishment of overseas payment capacity and the upgrading of overseas customer service Company f lex ib ly adapted to var ied
tools. Through the construction of overseas value-added service system the Company provided customers with domestic scenarios in different regions
more personalized demand scenario services. An overseas review center has been added to support overseas formal provide end-to-end network planning
customs pre-review and personal parcel sorting strengthening the timeliness of customs brokerage. Moreover based collection and delivery air and ground
on advanced large language models the Company built an intelligent consulting system for delivery standards and transportat ion f lex ib le d ispatch and
customs clearance to automatically organize interpret translate analyze and refine the latest customs rules helping other system support backing the rapid
couriers and customs clearance personnel to quickly access the latest and most comprehensive international delivery establishment expansion and integration
and customs rules improving the efficiency and quality of international business. Through digital technology the of express networks in overseas countries
Company provided real-time shipment tracking fast collection and customs clearance services and realized efficient and improving the quality of overseas
cross-border transportation based on the “one global network” routing system formed by integrating with the domestic express services.domestic network guaranteeing timely and smooth information flow and orderly coordination of agency services.
047Chapter 3Management Discussion and Analysis
(3) Application of smart supply chain technologies to boost the transformation and upgrade of
clients’ supply chain
Through technologies including operations planning block chain integrating the leading technology capabilities and industry experience
the Company embedded digital capabilities into the customer value chain providing customers with production and sales full-scenario
fully visible one-stop traceable smart supply chain services. Through the integration of production and logistics and the integration of
marketing and logistics the Company helps various industries create a responsive flexible and smart sustainable supply chain system that
responds efficiently to facilitate industrial upgrading cost reduction and efficiency enhancement.Smart supply chain integration products
The Company integrates the whole set of technological capabilities to form intelligent supply chain products – Feng Zhi Cloud Chain*(丰智云链) Feng Zhi Cloud Strategy*
(丰智云策) Feng Zhi Cloud Tower*(丰智云塔) Feng Zhi Cloud Data*(丰智云数) and Feng Zhi Cloud Marketing*(丰智云商) - for different levels of customer demands.Feng Zhi Cloud Chain Feng Zhi Cloud Strategy
A supply chain operation execution system. Through modules such as An intelligent planning/decision-making system for supply chain. It meets the
ordering warehousing transportation and settlement it assists enterprises to intelligent decision-making needs of enterprise supply chain in different stages
achieve the interrogation of warehousing and distribution and provide a full- of preparing planning and execution through the capabilities of warehouse
spectrum supply chain solution including intelligent storage and intelligent network planning intelligent site selection commodity layout demand
transportation. forecast sales planning plan coordination inventory strategy optimization/
simulation intelligent replenishment route optimization capacity optimization
execution monitoring indicator system root cause analysis etc.Feng Zhi Cloud Tower Feng Zhi Cloud Data
A supply chain intelligent control system. It achieves visualized the entire A cloud native-hybrid data management platform. On cloud-native real-time
process from order placement warehousing transportation settlement and scenarios it realizes a centralized storage repository with a single storage of all
other data indicators; it achieves risk early warning efficiency optimization data. The product is divided into four parts including the elastic storage layer
based on the core node data exploring and analysis; it helps business decision- the integrated computing layer the data insight layer and the data application
making and generates work order tasks drives business collaboration through layer. In addition it is equipped with member data platforms member
the macro perspective insight into the whole business. management and marketing capabilities.Feng Zhi Cloud Marketing
A commercial supply chain operation system. Through shop management order
center inventory center etc. Feng Zhi Cloud Marketing provides enterprises
with lightweight multi-mode shop solutions provides a unified inventory full-
channel middle platform solutions and smart logistics solutions realizing full-
domain inventory sharing online and offline integration and other supply
chain model changes.
048Chapter 3Management Discussion and Analysis
Smart supply chain case studies
The Company leverages its comprehensive smart supply chain products and customer demand on business sub-segments deeply reached
dozens of industries including cosmetics 3C and fast-fashion consumer goods with in-depth empowerment on over 4000 enterprises.Smart Stores for Chain Food and Beverages
Collaborating with a leading global chain coffee and food and beverage customer the Company constructed an intelligent IoT-
based smart store management system and an intelligent on-demand dynamic forecast replenishment system for 1) automatic
inventory: the introduction of RFID gravity visual IoT equipment and platforms realized automatic inventory reducing store
inventory by 30%; 2) intelligent replenishment: through intelligent demand forecast the use of operation optimization
algorithms and rule engines to achieve automatic order replenishment and reducing store losses; 3) supply chain control
tower: visualize the entire process of order fulfillment and inventory management generate automatic reports support
business analysis and decision-making; 4) supply network optimization: realize the network planning and promotion of
forward warehouses help customers fulfill orders in all channels and multiple scenarios online and offline and share inventory
prompting customers’ warehouse network distribution costs to decrease by 15%. Through technology empowerment the
Company deeply collaborated with customers becomes the largest integrated service provider for the customer and maintains a
long-term stable cooperative relationship. Also through the benchmark case experience the Company has gradually promoted
the smart stores to other high-end chain store service cooperations.International Cosmetics B2B2C Inventory
Cooperated with an international cosmetics customer to assist in the sharing and unified inventory allocation across all channels
for inventory management. Through Feng Zhi Cloud Tower for product fulfillment monitoring inventory and freight bill
management etc. the Company helped the brand track product inventory and distribution improved inventory turnover rate
by 30% with speeded fulfillment. Meanwhile through a series of early warning management such as risk monitoring and early
warning push the Company improved service quality and enhanced control efficiency over the entire link.Full-Link Supply Chain of Lighting Brand
Through continuous optimization of supply chain operations data analysis and application of algorithm strategies the Company
provided a lighting brand with warehousing network planning and intelligent replenishment strategy services. Integrating
algorithm strategies according to business conditions the Company output scientific and reasonable daily replenishment and
allocation plans and developed visual and automated replenishment monitoring dashboards to allocate daily output and
inspection results improving the brand’s express fulfillment timeliness with reduced warehouse cross rate. On this basis the
Company provided promotion strategies and packaging transportation optimization services at the same time controlled the
allocation execution rate and followed up on abnormal problems helping the brand reduce unsalable inventory with improved
packaging utilization rate.
049Chapter 3Management Discussion and Analysis
SF Intelligent Supply Chain Products and Services
Forecasting Planning Strategy Warning Collaboration
Consumer Feng Zhi Feng Zhi Cyclic
Insights Cloud Strategy Cloud Tower Pickup Scheme
End-user portrait Inbound logistics line-up
profiling and and loading optimization
behavior analysis at sourcing stage
Supplier
Integration of Store SelectionProposals Integration of
product strategies Smart procurement planning
and logistics activities Store recommendation Park Solutionbased on historical and logistics activities
data and forecasts End-user Factory Park-operation screen
Logistics Fund vehicle schedulingflow and 3D map
Forward
Warehouse
Solution
Shorten order-to-delivery In-warehouse
Integration of pricing time and enhance Integration of
user experience Optimization
strategies and Offline Solution scheduling plansstores
logistics activities and logistics activitiesOptimization of
One Bucket General in-warehouse picking-up
Solution warehouse spot optimization replenishment
Solve inventory
fragmentation problem Business Information
in different channels Forward flowwarehouse flow Network
Integration of Optimization Integration of delivery
promotional strategies Middle-end SolutionWarehouse site planning and
and logistics activities Business Solution selection routing logistics activities
Distributors optimization
Omnichannel Order transportation scheduling
Integration Regional
Management
E-commerce warehouses
Multi-level
Online Store Solution Replenishment/
Allocation Scheme
Customized O2O B2C Solve inventory turnover
B2B and other and out-of-stock problems
multi-mode online stores in multi-level warehouses
Feng Zhi Feng Zhi
Cloud Marketing Cloud Chain
Omnichannel Smart Smart
Business Platform Warehousing Transportation Smart Park Smart Shop
Feng Zhi Cloud Data
Cross-Cloud Multi-Cloud Real-time Separation Between
Computing Management Data Warehouse Storage and Computation Auto Scaling
050
ons for production
so
luti and lo
ted gis
teg
ra tics
In
Integrat se cd s ogi
sti
olut lions f ng an
d
or marketiChapter 3Management Discussion and Analysis
4. Build brand value with excellent service experience
SF has become the go-to brand for logistics and established itself as a well-recognised and reputable express delivery service provider
through its 31 years of development. It has built a brand image of “fast” “reliable” and “customer-centric” created great brand value
through premium service and is widely recognised by clients the industry and the community.On August 2 2023 according to the 2023 Fortune 500 list released by the Fortune Magazine the Company ranked 377th representing a
raise of 64 positions from the previous year on the list for two consecutive years and is the first and only Chinese private express delivery
company that listed in the world’s top 500 companies.State Post Bureau
1 1 for 14 consecutive yearsNo. No.
in Overall Customer Satisfaction in in Overall Customer Satisfaction in 2022
three quarters of 2023 (As of the
disclosure date of the annual report
the data of express satisfaction survey
for 2023 has not been released)
Fortune
377 up 64 places 2 selected for 7 consecutive years selected for last 2 yearsth nd China ESG Impact List
among “2023 World Top 500 Companies” among “Most Admired ChineseCompanies” in 2023
Brand Finance
263 selected for 4 consecutive years 6 selected for 5 consecutive yearsrd th
among “World’s Top 500 Most Valuable Brands” among “World’s Top 25 Most Valuable Logistics Brands”
in 2023 in 2023
051Chapter 3Management Discussion and Analysis
IV. Analysis of Principal Business
1. Overview diversified demand for a healthy development. (2) Supply chain
and international business segment revenue amounted to
As the domestic economy in China had wide recovery in 2023 RMB59.98 billion representing a decrease of 31.7% over the
as a result of normalization gradual improvement in industrial same period which as mentioned earlier was due a period-to-
production and social consumption levels and as a result period decrease of international air and sea freight demands
the express logistics industry exhibited recovery momentum and charges and the international freight forwarding business
and witnessed steady growth. Nevertheless due to global experienced significant decline in both revenue and profitability
macroeconomic uncertainties the international trade demand and over the same period in 2022. However this has progressively
international air and sea freight prices significantly decreased from stabilized on a year-on-year basis with the recovery of demand
the second half of 2022 to 2019 levels leading to a significant and freight charges. Meanwhile the Company has continued
decline of international freight market size in 2023 over 2022 to incubate international express products with competitive
but it has progressively stabilized on a year-on-year basis with the timeliness and value and vigorously expand the cross-border
recovery of demand and freight charges. e-commerce logistics on emerging platforms achieving rapid
growth in the international express. For details of each business
Despite the complicated external circumstances the Company has
development please refer to “2. Business Development” in the
always adhered to the operating policy of sustainable and healthy
“II. Business development of the Company” section.development in pursuit of high-quality growth. In China the
Company effectively secured the delivery demand of enterprises II) Profit: The Company’s profit attributable to owners of the
and residents accompanied with the economic recovery Company amounted to RMB8.23 billion in 2023 representing
facilitating the steady growth of express logistics services. an increase of 33.4% over the same period and the Company’s
Globally with the focus in Asia the Company strengthened profit attributable to owners of the Company after deducting
the customs clearance and local network capacity in major non-recurring gains and losses amounted to RMB7.13 billion
Southeast Asian countries and increased aviation routes for cross- representing an increase of 33.7% over the same period.border e-commerce to continuously improve the competitiveness
The Company witnessed a rapid period-to-period growth in
of international services. Moreover the Company deepened
business performance in 2023 with high-quality growth on the
the multi-network synergies for operation with promotion of
revenue end and multi-network integration on the cost end.operation mode transformation and adhered to lean resource
By expanding the scope and scenarios of business integration
investment and cost control while enhancing network service
with a focus on the cost-efficiency of end-to-end operation and
capabilities facilitating the further improvement of the Company’s
more accurate resource planning and allocation and further
profitability in 2023.optimizing the cost structure according to business patterns the
I) Revenue: In 2023 the Company’s total revenue reached operation efficiency has been further improved. Meanwhile the
RMB258.4 bi l l ion parcel volume1 reached 11.97 bi l l ion Company took advantage of technology empowerment to further
representing an increase of 7.5% over the same period. In digitalize operations and management for streamlined operations
particular the Company has been focused on the mid-to-high- achieving systemic intelligent analysis and decision-making in all
end market for e-commerce express hence completed the rounds with resource investment in advance flexible scheduling
disposal of Fengwang Express* (丰网速运) at the end of June during the process and efficiency analysis at the post stage under
2023 which utilized a franchising model. Excluding Fengwang algorithmic modeling technologies. For details of the specific
Express the total parcel volume of the Company increased 16.2% measures adopted for operation optimization and technology
in 2023 over the same period. (1) Express logistics business empowerment please refer to “3. Operation optimization” under
segment revenue amounted to RMB191.1 billion representing the section headed “II. Business development of the Company”an increase of 9.7% over the same period. Excluding Fengwang and “3. Cutting-edge digitalized visualized and intelligentExpress the revenue of the express logistics segment increased technologies to promote the development of smart supply chain”
by 11.3% and the parcel volume of the express logistics segment under the section headed “III. Core competitiveness”.increased by 16.2% over the same period. The Company pursued
III) Capital structure: As of the end of the reporting period
high-quality business and revenue growth with customer-centric
total assets of the Company amounted to RMB221.5 billion; the
and sustainable improvements in product competitiveness to
net assets attributable to owners of the Company amounted to
build deeper relationships with customers and satisfy their
RMB92.8 billion; the gearing ratio was 53.37% representing a
decrease of 1.30 percentage points from 54.67% at the end of
1 Neither including Kerry Logistics’ parcel volume nor the volume previous year. The Company’s operating cash flow and capital
of the international freight and freight forwarding and supply chain of
structure remain solid and stable and the net cash flow from
the Company
operating activities amounted to RMB26.6 billion achieving
healthy cash flows.
052Chapter 3Management Discussion and Analysis
The Company insists on streamlining resource planning and strengthening the control of resource effectiveness in management. In 2023
the Company invested RMB13.5 billion in fixed assets and other items (excluding equity investment) representing a decrease of 10.6%
compared to 2022 and accounted for 5.2% of total operating income representing a decrease of 0.4 percentage point compared to 2022.Going forward the Company will focus on resource contribution for its core competitiveness and deploy resources appropriately in building
the efficient and leading logistics network at home and abroad as well as in the operation transformation. In the meantime the Company
will continue to promote network integration to achieve better resource utilization and efficiency and maintaining the Capital expenditure
as percentage of revenue continues to remain within a reasonable level.
2. Revenue and cost of revenue
I) Composition of operating revenue
20232022
Amount change over
(RMB’000)
Proportion of Proportion of the previous year
Amount Amount
revenue revenue
Total revenue 258409403 100.00% 267490414 100.00% -3.39%
Categorized by industry
Logistics and freight forwarding 251127665 97.18% 262079740 97.98% -4.18%
Sales of goods1 5626072 2.18% 3899692 1.46% 44.27%
Others 1655666 0.64% 1510982 0.56% 9.58%
Categorized by business
Time-definite express 115456067 44.68% 105696512 39.51% 9.23%
Economy express 25051548 9.69% 25551306 9.55% -1.96%
Freight 33078821 12.80% 27917012 10.44% 18.49%
Cold chain and pharmaceutical
103129883.99%86126653.22%19.74%
logistics
Intra-city on-demand delivery 7249500 2.81% 6436102 2.41% 12.64%
Supply chain and international 59978741 23.21% 87866143 32.85% -31.74%
Other non-logistics businesses 7281738 2.82% 5410674 2.02% 34.58%
Categorized by region
Mainland China 223510607 86.49% 208562879 77.97% 7.17%
Hong Kong Macao and Taiwan
91348503.54%103897823.88%-12.08%
China
Overseas 25763946 9.97% 48537753 18.15% -46.92%
Notes:
(1) Sales of goods mainly comprise the purchase and sale business involved in the process of providing end-to-end supply chain services for customers.
The company’s revenue from physical sales did not exceed its revenue from labour.
(2) Any discrepancies between totals and sums of the numbers are due to rounding.
053Chapter 3Management Discussion and Analysis
Business volume and average revenue per shipment of the express & logistics business
Increase/Decrease
Current reporting The same period of
over the same period
period Previous year
of previous year
Parcels (100 million) 119.0 110.7 7.5%
Average revenue per shipment (RMB) 16.06 15.73 2.1%
Explanation:
(1) The express & logistics business mainly included time-definite express economy express freight cold chain and pharmaceutical logistics and intra-
city on-demand delivery business. The statistics of business volume and average revenue per shipment of the express & logistics segment did not
include the data of the supply chain and the international business as well as other non-logistics business.
(2) The business volume of the express & logistics segment grew by 7.5% year-on-year and the average revenue per parcel increased by 2.1% year-
on-year. This was mainly due to the Company has always adhered to the operating policy of sustainable and healthy development pursuit of high-
quality business growth and the completion of the sale delivery of the franchise model Fengwang Express in June 2023. Excluding Fengwang
Express the growth rate of the business volume of the express & logistics segment was 16.2%. With the steady recovery of domestic industrial
production and social consumption the Company continued to provide customers with timely and high-quality services by virtue of the stable
service guarantee capability of its directly-operated network which contributed to a healthy growth of the business
II) Composition of cost of revenue
20232022
Amount change
(RMB’000) Cost item over the previous
Proportion to Proportion to
Amount Amount year
cost of revenue cost of revenue
Total cost of revenue 225273833 100.00% 234072360 100.00% -3.76%
Categorized by industry
Labor cost⑵ 102785140 45.63% 91585902 39.13% 12.23%
Transport capacity
8293020836.81%10684496145.65%-22.38%
⑵
Logistics and freight cost
forwarding Other operating
3340525614.83%3107820713.28%7.49%
costs
Total 219120604 97.27% 229509070 98.06% -4.53%
Sales of goods Cost of goods 5015518 2.23% 3426513 1.46% 46.37%
Other businesses Cost of services 1137711 0.50% 1136777 0.48% 0.08%
Notes:
(1) The logistics and freight forwarding business of the Company demonstrates distinctive feature of network-based businesses – that is high degree
of cross-sharing of each item of resources between different business segments within the network and relatively more internal settlements within
each business segment and product so we are unable to further provide the cost classified by product and region in the logistics and freight
forwarding business in a fair manner.
(2) The Company calculated the costs and expenses accurately according to the nature of resources in accordance with relevant provisions of the
accounting standards. For details please refer to “(48) Expenses by Nature” in “IV Notes to the Consolidated Financial Statements” in Chapter 10
Financial Statements. As outsourced resources were used in some parts of the logistics network operation of the Company in order to effectively
analyze the composition of the operating costs of the logistics and freight forwarding business the Company mainly divided its outsourcing costs
into labor outsourcing cost and transportation outsourcing cost and added up them with the employee benefit expenses and transportation
expenses respectively to show the whole labor cost and transport capacity cost.
054Chapter 3Management Discussion and Analysis
III) Details on main industries – Logistics and freight forwarding
The industries accounting for more than 10% of the Company’s revenue or operating profit is analysed as follows:
Operating revenue Operating cost Gross profit margin
(RMB’000) Change over the Change over the Change over the
Amount same period of Amount same period of Percentage same period of
previous year previous year previous year
Logistics and freight An increase by 0.32
251127665-4.18%219120604-4.53%12.75%
forwarding percentage points
Note: The Company’s statistical criteria for core business data was not adjusted during the Reporting Period.The operating costs breakdown and gross profit of logistics and freight forwarding business are analysed as follows:
2023 2022 Change over the previous year
Proportion of labour cost to revenue 40.93% 34.95% An increase by 5.98 percentage points
Proportion of transport capacity cost to revenue 33.02% 40.77% A decrease by 7.75 percentage points
Proportion of other operating costs to revenue 13.30% 11.85% An increase by 1.45 percentage points
Gross profit margin 12.75% 12.43% An increase by 0.32 percentage points
Reason for changes:
(1) Gross profit margin of the Company’s logistics and freight forwarding services was 12.75% in 2023 increasing by 0.32 percentage point over
the same period of the previous year. The cost structure of Kerry Logistics’ international freight and freight forwarding services significantly
differs from that of the Company’s overall express logistics services and such significantly dropped revenue compared with the same period of
the previous year due to market influence primarily contributed to the large change of the Company’s various costs to revenue. If excluding Kerry
Logistics the Company’s gross profit margin for main logistics services in 2023 was 13.72% increasing by 0.20 percentage point over the same
period of the previous year and the change of major costs to revenue is analyzed in (2) to (4) below.
(2) Labor cost as a percentage to revenue increased by 5.98 percentage point over the same period of the previous year if excluding Kerry Logistics
increasing by 1.56 percentage point over the same period of the previous year mainly due to: the Company took initiatives to improve the
competitiveness of frontline employee salaries secure employee benefits and encourage service quality promotion with comprehensive incentive
mechanism to drive customer satisfaction through employee satisfaction. In the meanwhile in 2023 the Company improved its operational
efficiency and mitigated the rise in labor costs by continued promotion of multi-network integration investments in automation and mode
optimization.
(3) Transport capacity cost as a percentage to revenue decreased by 7.75 percentage point over the same period of the previous year if excluding
Kerry Logistics decreasing by 1.84 percentage point over the same period of the previous year. This is mainly attributable to: * the Company’s
continued optimization of transportation resource to improve the utilization efficiency of owned vehicles and external transportation resources
of controllable price; * the optimization of the procurement mechanism for outsourced transportation to standardize pricing for short-haul
transportation capabilities for effective price control of capacity costs; * continual push in multi-network synergies integrated and centralized
route-planning for different business lines and streamlined routing by consolidating shipment deliveries to achieve economies of scale; * the
period-to-period decrease in fuel price.
(4) Other operating costs as a percentage to revenue increased by 1.45 percentage point over the same period of the previous year if excluding Kerry
Logistics increasing by 0.08 percentage point over the same period of the previous year. This is primarily achieved by the increase in depreciation
and amortization as a result of the operation of the Ezhou hub and the transfer of transit sites and equipment to fixed assets. In addition the
Company further enhanced the effective resource deployment maintained a healthy level of capital expenditure to revenue intensified the site
integration and collaboration for better site resource efficiency.
055Chapter 3Management Discussion and Analysis
IV) Major customers and major suppliers
Major customers
Total sales revenue from the top five customer (RMB’000) 23654369
Total sales revenue from the top five customers in proportion of total annual
9.16%
sales revenue
Total sales revenue from affiliated parties in the top five customers in proportion
0.00%
of total annual sales revenue
Information about the top five customer
Proportion of total annual
SN Customer Revenue (RMB’000)
sales revenue
1 Customer 1 7518398 2.91%
2 Customer 2 5602542 2.17%
3 Customer 3 5543871 2.15%
4 Customer 4 2595266 1.00%
5 Customer 5 2394292 0.93%
Total – 23654369 9.16%
Other information regarding major customers
The top five customers had no associated relationship with the Company and the Company’s directors supervisors senior management
core technical personnel shareholders who held more than 5% of the shares actual controller and other related parties did not directly or
indirectly hold any interest in major customers.Major suppliers
Total purchase amount from the top five suppliers (RMB’000) 57401171
Total purchase amount from the top five suppliers in proportion of total annual
22.00%
purchase amount
Total purchase amount from affiliated parties of the top five suppliers in
0.00%
proportion of total annual purchase amount
Information about the top five suppliers
Proportion of total annual
SN Supplier Purchase amount (RMB’000)
purchase amount
1 Supplier 1 38725577 14.84%
2 Supplier 2 8308070 3.18%
3 Supplier 3 5388798 2.07%
4 Supplier 4 2793373 1.07%
5 Supplier 5 2185353 0.84%
Total – 57401171 22.00%
056Chapter 3Management Discussion and Analysis
Other information regarding major suppliers
The top five suppliers had no associated relationship with the Company and the Company’s directors supervisors senior management
core technical personnel shareholders who held more than 5% of the shares actual controller and other affiliated parties did not directly or
indirectly hold any interest in major suppliers.V) Other information
(1) During the Reporting Period the Company did not enter into any material sales or purchase contract.
(2) For details of the changes in the scope of consolidation during the Reporting Period please refer to “V. Changes in the ConsolidationScope” of “Chapter 10 Financial Statements”.
(3) During the Reporting Period there was no major change or adjustment to the businesses products or services of the Company.
3. Expenses
20232022
Amount change
(RMB’000) over the previous
Proportion of Proportion of
Amount Amount year
revenue revenue
Selling and distribution expenses 2991589 1.16% 2784114 1.04% 7.45%
General and administrative expenses 17632556 6.82% 17574490 6.57% 0.33%
Research and development expenses 2285314 0.88% 2222865 0.83% 2.81%
Financial costs 1866201 0.72% 1711613 0.64% 9.03%
Reason for changes:
(1) The significant decrease in revenue of Kerry Logistics’ international freight and freight forwarding services over the same period of the previous
year as a result of the market influence contributed to an increase in the Company’s various costs to revenue. Excluding Kerry Logistics the
Company’s various costs to revenue showed a downward trend reflecting the Company’s improved management efficiency and the effectiveness
of lean operation.
(2) Selling and administrative expenses as a percentage to revenue (excluding Kerry Logistics) decreased by 0.46 percentage point over the same
period of the previous year mainly due to the Company’s adherence to lean operation technology empowerment to digital and intelligent
management streamlined organization and management efficiency.
(3) Research and development expenses as a percentage to revenue (excluding Kerry Logistics) decreased by 0.08 percentage point over the same
period of the previous year mainly due to the Company’s increased focus on the technology benefits to investment and production the
digitalization of logistics and the upgrade of smart supply chains. The total amount of research and development expenses slightly decreased
compared to that of the previous year. For details please refer to the explanation in “4. R&D Investment” below.
(4) Financial expenses as a percentage to revenue (excluding Kerry Logistics) decreased by 0.14 percentage point over the same period of the previous
year mainly due to the Company’s maintenance of a sound financial structure and reasonable control of liabilities.
057Chapter 3Management Discussion and Analysis
4. R&D Investment
The Company’s investment in technology research and development is focused on four major objectives: facilitating business development
promoting model change realizing technology productization and exploring cutting-edge technologies. Internally digital-intelligent
upgrading of logistic networks for the building of the SF Smart Brain aiming to improve the digitalization and intellectualization of the
entire internal end-to-end operational process; and externally promoting the application of the intelligent supply chain technology
empowering the digital-intelligent changes of customers’ supply chains by technology supporting the transformation and upgrading of
customers’ supply chains driving cost reduction and efficiency improvement in the supply chain as a whole and ultimately helping theCompany generate revenue lower costs and increase operating benefit. For details please refer to “3. Cutting-edge technology for adigitalized visual and intelligent supply chain” of “III. Core Competitiveness” of this section.Information about R&D staff
Change over the
20232022
previous year
Number of R&D staff (person) 4637 5652 -17.96%
Proportion of R&D personnel as a percentage of total staff 3.03% 3.47% -0.44%
Composition of R&D personnel by education level
Junior college (person) 347 627 -44.66%
Bachelor (person) 3297 3982 -17.20%
Master and above (person) 993 1043 -4.79%
Composition of R&D personnel by age
Below 30 (person) 1381 2115 -34.70%
30 – 40 (person) 2998 3349 -10.48%
Above 40 (person) 258 188 37.23%
Investment in R&D
Change over the
(RMB’000) 2023 2022
previous year
R&D investment amount 3363294 3528143 -4.67%
R&D investment as a percentage of revenue 1.30% 1.32% -0.02%
Amount of capitalized R&D investment 1077980 1266410 -14.88%
Capitalized R&D investment as a percentage of R&D investment 32.05% 35.89% -3.84%
Note:
(1) The number of the company’s R&D employees declined year-on-year mainly due to the company’s technology chassis capacity consolidation and
the expansion of replication in business scenarios to improve the effectiveness of science and technology production.
(2) The proportion of the Company’s total R&D investment in operating revenue did not change significantly compared with the previous year; the
capitalisation rate of R&D investment did not change significantly.
058Chapter 3Management Discussion and Analysis
V. Non-core Business Analysis
Proportion of
(RMB’000) Amount Reason
total profit
Mainly including government grants related to daily
Other income 1969535 18.78%
activities.Mainly including income from maturity structured
Investment income 800668 7.64%
deposits and income from the disposal of subsidiaries
Loss from changes in fair value 46262 0.44%
Reverse of credit impairment 33632 0.32%
Mainly including the impairment loss of long-term
Asset impairment loss 186449 1.78%
equity investment and intangible assets
Mainly including compensation income and
Non-operating income 309229 2.95%
government grants unrelated to daily activities.Mainly including losses on scrapping of assets and
Non-operating expenses 277000 2.64%
compensation expenses.Explanation on sustainability
Except the income from structural deposits in the investment income all other items mentioned above were not sustainable.VI. Profit Analysis
Change over the
(RMB’000) 2023 2022
previous year
Net profit 7911609 7003620 12.96%
An increase of
Net profit margin 3.06% 2.62%
0.44 percentage point
Net profit attributable to shareholders of the parent company 8234493 6173764 33.38%
An increase of
Net profit margin attributable to shareholders of the parent company 3.19% 2.31%
0.88 percentage point
Net profit attributable to shareholders of the parent company after
7133730533692433.67%
deducting non-recurring profit and loss
Net profit margin attributable to shareholders of the parent company An increase of
2.76%2.00%
after deducting non-recurring profit and loss 0.76 percentage point
059Chapter 3Management Discussion and Analysis
Net profit by segment
2023 2022 Amount of change
(RMB’000) over the previous
Net profit Net profit margin Net profit Net profit margin year
Express and freight delivery segment 8452862 4.25% 5466724 3.09% 54.62%
Intra-city on-demand delivery segment 50595 0.41% -286903 -2.79% 117.63%
Supply chain and international segment -534501 -0.84% 1945862 2.15% -127.47%
Undistributed units -86037 -1.50% -122737 -0.92% 29.90%
Reason for changes:
(1) The net profit of the express and freight delivery segment in 2023 was RMB8.453 billion increasing by 54.62% over the same period of the
previous year mainly due to * the continued business structure optimization with a focus on high-quality differentiated services and the disposal
of the low-margin Fengwang express in pursuit of high-quality growth; and * the lean resource planning and cost control promoting the
multi-network synergies expanding the benefits of resource sharing focusing on cost efficiency in all aspects of the end-to-end operation and
optimizing the cost structure by business models for further operating efficiency.
(2) The net profit of the intra-city on-demand delivery segment in 2023 was RMB0.051 billion increasing by 117.63% over the same period of the
previous year turning a loss into profit mainly due to * sound and steady revenue growth increased order density and further release of the
network scale economy; * the pursuit of healthy and high-quality development continued optimization of business and customer structure
increased contribution of high-quality customers and profitable business to revenue; * the operation quality and efficiency driven by technology
and lean management improved resource efficiency as well as the improvements of gross profit margins and expense ratios.
(3) The net loss of the supply chain and international segment in 2023 was RMB0.535 billion mainly due to * the international air and sea freight
demand and rates significantly fell from the second half of 2022 of historical highs to the level of 2019 leading to a substantially narrowed
profitability of the international freight forwarding services in 2023; * the supply chain services as an essential strategic business of the Company
was undergoing critical market expansion.VII. Cash Flow
Change over the
(RMB’000) 2023 2022
previous year
Sub-total of operating cash inflows 365144615 369188490 -1.10%
Sub-total of operating cash outflows 338574796 336485543 0.62%
Net cash flows from operating activities 26569819 32702947 -18.75%
Sub-total of investing cash inflows 95597385 157801875 -39.42%
Sub-total of investing cash outflows 109103002 169893333 -35.78%
Net cash flows from investing activities -13505617 -12091458 -11.70%
Sub-total of financing cash inflows 34606043 39735949 -12.91%
Sub-total of financing cash outflows 47600728 55752899 -14.62%
Net cash flows from financing activities -12994685 -16016950 18.87%
Effect of exchange rate changes on cash and cash equivalents 98844 871640 -88.66%
Net increase in cash and cash equivalents 168361 5466179 -96.92%
060Chapter 3Management Discussion and Analysis
Note: There was no major difference between the net cash flows from operating activities during the Reporting Period and the net profit of the year.Explanation:
(1) Net cash flows from operating activities: The year-on-year decrease was mainly attributable to the decrease on the refund of taxes and levies and
the increase on cash paid to and on behalf of employees.
(2) Net cash flows used in investing activities: The year-on-year increase was mainly attributable to the decrease in net inflow on equity investment
and structured deposits and the decrease in net outflow on purchase and construction of long-term assets.
(3) Net cash flows used in financing activities: The year-on-year decrease was mainly attributable to a decrease in the repurchase of the Company’s
shares and the acquisition of minority interest.VIII. Analysis of Assets and Liabilities
1. Major Changes in Asset Composition
As at the end of 2023 As at the beginning of 2023 Increase
(RMB’000) Proportion of Proportion of /Decrease in Major Changes
Amount Amount
Total Assets Total Assets Proportion
For details please refer to “VII.Cash Flow” in
Cash at bank and on hand 41974505 18.95% 41062750 18.94% 0.01%
“Chapter 3 Management Discussion and Analysis”.Accounts receivables 25133487 11.35% 25560433 11.79% -0.44% No major changes.Inventories 2440425 1.10% 1948354 0.90% 0.20% No major changes.Contract assets 1632592 0.74% 1522996 0.70% 0.04% No major changes.Long-term equity investments 7378831 3.33% 7858000 3.62% -0.29% No major changes.Investments in other equity
9489535 4.28% 7365684 3.40% 0.88% Mainly due to the increase in equity investment.
instruments
Mainly due to the transfer of industrial parks from
Investment properties 6418720 2.90% 4875366 2.25% 0.65%
“construction in progress” and assets purchase.Mainly due to the transfer from “constructionFixed assets 53929854 24.35% 43657404 20.13% 4.22% in progress” such as industrial parks and transit
depots.Mainly due to the transfer to “fixed assets” and
Construction in progress 4032884 1.82% 11149860 5.14% -3.32% “investment properties” such as industrial parks
and transit depots.Right-of-use assets 14073571 6.35% 15429775 7.12% -0.77% Mainly due to amortization.Short-term borrowings 18221977 8.23% 12837870 5.92% 2.31% Mainly due to new borrowings.Contract liabilities 1832018 0.83% 1244418 0.57% 0.26% No major changes.Mainly due to the decrease in payables for
Other payables 11494841 5.19% 13346595 6.15% -0.96%
engineering equipment and equity acquisition.Current portion of non-current Mainly due to the decrease in debentures payable
94859484.28%111736505.15%-0.87%
liabilities due within one year.Mainly due to the repayments of extra-short
Other current liabilities 167668 0.08% 5122276 2.36% -2.28% term commercial notes and short-term corporate
debentures.
061Chapter 3Management Discussion and Analysis
As at the end of 2023 As at the beginning of 2023 Increase
(RMB’000) Proportion of Proportion of /Decrease in Major Changes
Amount Amount
Total Assets Total Assets Proportion
Long-term borrowings 11355241 5.13% 7472010 3.45% 1.68% Mainly due to new borrowings.Lease liabilities 8038495 3.63% 8582372 3.96% -0.33% No major changes.Capital reserve 43164085 19.49% 43996237 20.29% -0.80% Mainly due to the acquisition of minority interest.Mainly due to the good operating performance
Retained earnings 38835999 17.53% 33371351 15.39% 2.14%
during the current period.Key Overseas Assets
Control
Assets
Measures Whether there
Assets Scale Profiting Status Overseas/Net
Details of the Assets Formed Reason Location Operating Model for Ensuring is significant
(RMB’000) (RMB’000) Assets of the
Asset Impairment Risk
Company
Security
Integrated logistics
51.52% equity of Hong Kong international freight
Equity acquisition 21799165 Note 1 227315 21.11% No
Kerry Logistics (China) forwarding and supply
chain solutions
1. “Asset scale” refers to net assets of Kerry Logistics;
2. ”Profiting status” refers to net profit contributed by Kerry Logistics in 2023 which is the net profit of Kerry Logistics taking into account the
fair value of identifiable assets and liabilities at the time of the acquisition of the equity of Kerry Logistics and the impact of adjustments arising
Other information from adopting the same accounting policy. The net profit attributable to shareholders of the parent company was RMB209.849 million; net profit
attributable to minority shareholders amounted to RMB17.466 million and net profit attributable to shareholders of the parent company after
deducting non-recurring profit or loss as contributed by Kerry Logistics amounted to RMB151.878 million.
3. ”Assets overseas/net assets of the Company” refers to net assets of Kerry Logistics/net assets of the Company.
Notes:
(1) Kerry Logistics as a company listed on the Hong Kong Stock Exchange on the basis of compliance with the A-share and H-share listing rules and
other relevant regulatory regimes the Company and Kerry Logistics have carried out integration at the levels of corporate governance disclosure
of information and business co-operation etc. Mr. Wang Wei the Chairman of the Company has been appointed as the Chairman of the Board
of Directors and a Non-Executive Director of Kerry Logistics and Mr. Ho Chi a Director has been appointed as a Non-Executive Director of Kerry
Logistics since October 2021; and in October 2023 Ms. OOI BEE TI Head of the Company’s Capital Centre was appointed as a non-executive
director of Kerry Logistics to participate in Kerry Logistics’ corporate governance and major operational decisions. Meanwhile both parties
work closely on corporate governance and information disclosure to ensure that the disclosure of information of both parties complies with the
regulatory rules for A-share and H-share listed companies. In addition both parties will continue to explore the room for collaboration in business
to fully complement each other’s strengths and to work together in expanding the global logistics market.
062Chapter 3Management Discussion and Analysis
2. Assets and liabilities measured at fair value
Changes in Fair
Accumulated Fair Provision for Amount of
Value Gains and Amount of Sales in
(RMB’000) Opening Balance Value Changes Impairment in Purchase in Other Changes Closing Balance
Losses in Current Current Period
Included In Equity Current Period Current Period
Period
Financial assets
1. Financial assets held for
trading (excluding derivative 8397588 -38264 – – 1401744 1469857 -891473 7399738
financial assets) note 1
2. Investments in other equity
7365684–484100–27603416543315291509489535
instruments
Subtotal financial assets 15763272 -38264 484100 – 1677778 1635290 637677 16889273
Others – – – – – – – –
Total 15763272 -38264 484100 – 1677778 1635290 637677 16889273
Financial liabilities 96647 6899 -12002 – – – 576 92120
Note 1: The item includes structured deposits that do not carry the characteristics of contract cash flow for principal and interest. The structured
deposits have short maturities and are highly liquid and net purchases and sales for the current period are stated in the current period.Financial assets held for trading other than structured deposits are stated separately at the amount purchased and sold during the period.
(1) Other changes:
Other changes include assets reclassification due to changes in the nature of the assets or management method. In addition to this other changes
in financial assets held for trading are mainly investment income realised by matured structured deposits and other changes in investments in other
equity instruments are mainly due to exchange differences on translation of foreign currency financial statements.
(2) None of any significant changes occur for the Company’s major asset measurement attributes during the Reporting Period.
3. Limitation of asset rights as of the end of the Reporting Period
At the end of the Reporting Period the Company’s assets subject to limited rights are mainly statutory reserve placed at the Central Bank
and the bank borrowing mortgage details of which are as follows:
Book Value at the
(RMB’000) Reasons for limitation
end of period
Cash at bank and on hand 1576496 Mainly statutory reserves in the Central Bank
Fixed assets 536746 Bank borrowing mortgage
Intangible assets 292495 Bank borrowing mortgage
Investment properties 111124 Bank borrowing mortgage
Construction in progress 272393 Bank borrowing mortgage
Total 2789254
063Chapter 3Management Discussion and Analysis
IX. Investments Analysis
1. Overview
Investment amount during the Investment amount in the
Percentage change
Reporting Period (RMB’000) same period of last year (RMB’000)
1752471019343536-9.40%
Breakdown items of capital expenditure during the Reporting Period are indicated in the table below:
Investment Amount During the
Item
Reporting Period (RMB’000)
Office and buildings 479089
Land 236563
Warehouse 1342656
Sorting center 5790976
Aircraft 1788015
Vehicle 1429862
Information technology equipment 509798
Equity investments 4060633
Others 1887118
Total 17524710
2. Significant Equity Investment Obtained During the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investment Ongoing During the Reporting Period
□ Applicable √ Not applicable
064Chapter 3Management Discussion and Analysis
4. Investments in Financial Assets
(1) Investments in Securities
Unit: RMB’000
Gains and losses Purchase Sales amount Gains and Book value
Accounting Book value at the Accumulated fair
Stock Abbreviation of Initial investment from changes in amount during during the losses of the at the end of
Security type measurement beginning of the value changes
code security cost fair value during the Reporting Reporting Reporting the Reporting
model reporting period included in equity
the period Period Period Period Period
Domestic and Fair value
01519 J&T Express 1831958 – -1218 569999 1606632 – -1218 2345581
overseas stocks measurement
Domestic and Zhilai Sci And Fair value
3007712137788844–-16450––199872394
overseas stocks Tech measurement
Domestic and Fair value
GB00BLH1QT30 Samarkand 28490 12170 – -11412 – – – 867
overseas stocks measurement
Fair value
Other portfolio investments held at the end of the period – 57920 – -25978 – 32903 – –
measurement
Total 1881825 － 158934 -1218 516159 1606632 32903 780 2418842
Disclosure Date of Board Announcement in respect of
N/A
Securities Investment Approval
Disclosure Date of Shareholders Meeting Announcement in
N/A
respect of Securities Investment Approval (if any)
Note: The accounting items of the above domestic and foreign stocks are all “investments in other equity instruments” and the capital source is
“self-owned funds”
(2) Investments in Derivatives
1) Derivatives investments for hedging purpose during the Reporting Period
Unit: RMB’000
Proportion of
investment
Amount at the Changes in fair
Initial derivatives Accumulated fair Amount of Number of sales Amount at amount at the
beginning value gains and
Investment type of derivatives investment value changes purchase in the in the Reporting the end of the end of the
of the Reporting losses in current
amount included in equity Reporting Period Period Reporting Period Reporting Period
Period period
to net assets of
the Company
Forward Exchange – 3489350 -5163 – N/A N/A – –
Total – 3489350 -5163 – N/A N/A – –
Explanation of whether the accounting
policies and accounting principles of
hedging during the Reporting Period are No
significantly changes compared with the
previous Reporting Period
Description of actual gains/losses during The actual gains/losses during the reporting period refers to the gain or loss arising from the change in fair value of derivative financial instruments for
the Reporting Period the period and the actual profit for the period amounted to RMB27.028 million.
065Chapter 3Management Discussion and Analysis
Proportion of
investment
Amount at the Changes in fair
Initial derivatives Accumulated fair Amount of Number of sales Amount at amount at the
beginning value gains and
Investment type of derivatives investment value changes purchase in the in the Reporting the end of the end of the
of the Reporting losses in current
amount included in equity Reporting Period Period Reporting Period Reporting Period
Period period
to net assets of
the Company
The Company’s derivative investment business mainly consists of forward contracts purchased in 2020 with the underlying asset being the exchange rate
and the currency involving USD/HKD which has been expired and settled. The main elements are: operation of forward forex hedging for the Company’s
Description of hedging effects US dollar bonds which generates exchange losses on the US dollar bonds and gains on changes in the fair value of the forward exchange contracts
when the USD strengthens against the HKD. By utilising the lock-in function of derivative transactions the impact of exchange rate fluctuations on the
Company’s profit was effectively reduced.source of fund for derivatives investment Self-owned funds
(I) Risk analysis
The foreign exchange hedging business is carried out by the Company based on the principles of lawfulness prudence safety and effectiveness and not
for speculative purposes. All foreign exchange hedging transactions are derived from normal cross-border business but certain risks may exist in foreign
exchange hedging transactions.
1. Market risk: The foreign exchange hedging business carried out by the Company and its subsidiaries mainly involves daily cross-border intermodal
transportation fees and investment and financing activities denominated in foreign currencies related to the main business. The associated market risk
refers to losses which may arise from changes in price of foreign exchange hedging products due to fluctuations in market prices of underlying exchange
rates and interest rates.
2. Liquidity risk: Since all foreign exchange hedging business is conducted through financial institutions we are subject to the risk of having to pay fees
to banks caused by insufficient liquidity in the market.
3. Non-performance risk: The Company and its subsidiaries conduct foreign exchange hedging business mainly based on cash flow rolling forecasts
for risk management. We are subject to the risk that the actual cash flow deviates from forecast resulting in failure to fulfil obligations under relevant
hedging contracts when due.
4. Other risks: In the course of business if the person concerned fails to report and seek approval in accordance with the prescribed procedures or fails
to make records on foreign exchange hedging business accurately timely and completely losses may be incurred or trading opportunities may be lost. At
the same time if the person concerned fails to fully understand the terms of the transaction contract and product information we are exposed to related
Risk analysis and control measures legal risks and transaction losses as a result.for derivatives investment during the (II) Risk control measures
Reporting Period (including but not limited 1. Clarify the criteria of initiating transaction of foreign exchange hedging product: All foreign exchange hedging businesses are derived from normal
to market risk liquidity risk credit risk cross-border business for the purpose of averting and preventing exchange rate and interest rate risk. No foreign exchange derivatives trading shall be
operational risk legal risk etc.) carried out for speculative purposes.
2. Selection of products: Hedging products with simple structure strong liquidity and controllable risk are selected to carry out foreign exchange hedging
business.
3. Counterparty selection: The counterparties of the Company’s foreign exchange hedging business are large state-owned commercial banks and
international banks with sound operation good credit long history of cooperation with the Company and good credit standing.
4. Determination of fair value of foreign exchange hedging products: The foreign exchange hedging products operated by the Company are mainly for
the management of foreign exchange transactions in the predictable future period with high market transparency and active trading; the transaction
price and settlement unit price of which can fully reflect their fair value. The Company determines the fair value of the hedging products in accordance
with the transaction data provided by or obtained from the public domain including banks and Reuters.
5. Equipped with professional staff: The Company has maintained a team of professionals with expertise in financial derivatives responsible for the
Company’s exchange rate risk management market analysis product research and the Company’s overall management policy recommendations etc.
6. Establishing a comprehensive risk alarm and reporting mechanism: The Company sets risk limits for foreign exchange hedging business where
transactions have been made timely evaluates changes in risk exposure and derived gains and losses and provides regular risk analysis report to the
management and the Board of Directors. Appropriate risk assessment models or monitoring systems are used to continuously monitor and report various
risks. More frequent reports are made when the market fluctuates drastically or when risks are higher. A response plan will be made promptly.
7. Separation of duties and personnel between the front end and back end is strictly implemented. Dealers cannot concurrently hold the position as
accounting personnel and vice versa.
066Chapter 3Management Discussion and Analysis
Proportion of
investment
Amount at the Changes in fair
Initial derivatives Accumulated fair Amount of Number of sales Amount at amount at the
beginning value gains and
Investment type of derivatives investment value changes purchase in the in the Reporting the end of the end of the
of the Reporting losses in current
amount included in equity Reporting Period Period Reporting Period Reporting Period
Period period
to net assets of
the Company
Changes in market price or fair value of
invested derivatives during the Reporting
Period (the specific methods relevant
The Company’s analysis of the fair value of derivatives is based on the financial market fair value valuation report provided by the bank at month end.assumptions and parameters used in
the analysis of the fair value should be
disclosed)
Lawsuit (if applicable) N/A
Disclosure date of derivatives investment
March 31 2022 and March 29 2023
approval board announcement (if any)
Disclosure date of derivatives investment
approval shareholders meeting N/A
announcement (if any)
The independent directors believed that the Company had established an internal control system for foreign exchange hedging and effective risk
control measures in accordance with the requirements stipulated by relevant laws. Under the premise of complying with national laws and regulations
Opinions of independent directors on the
and ensuring that the Company’s daily operation were not affected the Company used its own funds to carry out foreign exchange hedging when
Company’s derivatives investment and risk
appropriate which was conducive to preventing interest rate and exchange rate risks reducing the impact of interest rate fluctuations on the Company
control
in line with the interests of the Company and all shareholders and was no harm to the Company and all shareholders especially the interests of minority
shareholders.
2) Derivatives investments for speculative purpose during the Reporting Period
□ Applicable√ Not applicable
There was no derivative investment for speculation during the Reporting Period
067Chapter 3Management Discussion and Analysis
5. Use of Proceeds
(1) Description of overall utilization of proceeds
Unit: RMB’000
Proportion of
Total proceeds
Total proceeds Accumulative Accumulative accumulative Usage and
Method of with usage Total unused Proceeds idle for
Year Total of proceeds Net proceeds invested in the proceeds proceeds with total proceeds allocation of
fundraising altered in the proceeds over two years
current year invested (Note 1) usage altered with usage unused proceeds
Reporting Period
altered
Non-public
2021 20000000 19907320 2965284 20072218 1400000 1400000 7.03% – N/A –
offering of shares
Total – 20000000 19907320 2965284 20072218 1400000 1400000 7.03% – – –
Description or of overall utilization of proceeds
As at 31 December 2023 the Company had completed all the investment projects of Raised Funds the accumulated Funds Raised from Non-public offering of shares that were utilised amounted to RMB20072.218 million which
applied for the Express Delivery Equipment Automation Upgrade Project the Construction Project of Hubei Ezhou Civil Airport Transit center the Construction Project of Digital-intelligent Supply Chain System Solution the Land
Transport Capacity Improvement Project the Aviation Materials Purchasing and Maintenance Project and used as Replenishment of Liquidity were RMB6944.343 million RMB2608.828 million RMB3003.100 million RMB2005.233
million RMB1910.713 million and RMB3600.001 million. The total amount of the surplus funds was RMB127.067 million and the Company has transferred such part of the surplus funds to permanently replenish the working
capital.In order to improve the efficiency of the use of proceeds and increase the return on cash assets the Company held the Nineteenth Meeting of the 5th Session of the Board of Directors and the Seventeenth Meeting of the 5h
Session of the Board of Supervisors on 28 October 2021 and the Second Meeting of the 6h Session of the Board of Directors and the Second Meeting of the 6th Session of the Board of Supervisors on 28 March 2023 respectivelyat which it reviewed and approved the ‘’Proposal on the Use of Part of the Idle Proceeds for Cash Management” and Part of the temporarily unused proceeds were purchased as principal-protected financial products. As end of 31
December 2023 the accumulated bank interest and financial management income of RMB291.964 million was received and used in the corresponding fund-raising investment projects.
068Chapter 3Management Discussion and Analysis
(2) Investment commitment in respect of proceeds
Unit: RMB’000
Whether Accumulative Investment Whether
Total committed Total Benefits Whether
project has Investment in investment at progress at Date of asset feasibility
Project investment commitment and investment investment achieved in expected
been (or the current the end of the the end of the ready for of project
allocation of surplus proceeds based on net after alteration the current benefits have
partially) year period period (%) intended use has changed
proceeds (1) ＝ year been achievedaltered (2) (3) (2)/(1) significantly
Project investment commitment
1. Express Delivery Equipment Automation
No 6000000 6942579 901764 6944343 100.0% 2023/12/31 Note 2 N/A No
Upgrade Project
2. Center Construction Project of Hubei Ezhou
No 4000000 2600000 491352 2608828 100.3% 2023/12/31 Note 3 N/A No
Civil Airport Transit center
3. Construction Project of Digital-intelligent
No 3000000 3000000 259891 3003100 100.1% 2023/12/31 Note 4 N/A No
Supply Chain System Solution
4. Land Transport Capacity Improvement Project No 2000000 2000000 276898 2005233 100.3% 2023/12/31 Note 5 N/A No
5. Aviation Materials Purchasing and Maintenance
No 1907320 1907320 435378 1910713 100.2% 2023/12/31 Note 6 N/A No
Project
6. Replenishment of Liquidity No 3000000 3600000 600001 3600001 100.0% 2023/12/31 Note 7 N/A No
Subtotal of project investment commitments — 19907320 20049899 2965284 20072218 — — — — —
Investment of surplus proceeds N/A
Total — 19907320 20049899 2965284 20072218 — — — — —
Description of the failure to achieve the planned
progress and the expected return and the
The above projects in which the Company promises to invest are aimed at improving the service capacity and operational efficiency of the overall logistics network therefore it
reasons by project (including the reasons for
is not possible to directly quantify the benefits achieved by individual projects. See Note 2 to Note 7.choosing “N/A” in case of “achieving theexpected benefit or not”).Significant changes in the feasibility of projects N/A
Amount usage and use progress of surplus
N/A
proceeds
Change in implementation location of investment
N/A
projects funded by proceeds
Adjustment to implementation method of
N/A
investment projects funded by proceeds
After consideration and approval at the 19th meeting of the 5th Board of Directors and the 17th meeting of the 5th Supervisory Committee convened by the Company on
October 28 2021 and with the explicit consent from the sponsors independent directors and the Supervisory Committee the Company replaced with the proceeds the
Upfront investment and replacement of self-raised funds of an aggregated amount of RMB6338.458 million which was invested in advance for the Express Delivery Equipment Automation Upgrade Project the
investment projects funded by proceeds Construction Project of Hubei Ezhou Civil Airport Transit center the Construction Project of Digital-intelligent Supply Chain System Solution the Land Transport Capacity
Improvement Project and the Aviation Materials Purchasing and Maintenance Project. For details please refer to the announcement dated October 29 2021 (announcement
No.: 2021-118) disclosed by the Company on Cninfo (www.cninfo.com.cn).Supplementing working capital temporarily with
N/A
idle proceeds
As the end of 31 December 2023 the Company had completed all of its fund-raising investment projects with surplus funds (wealth management gains interest income etc.)of RMB127.067 million which was less than 1% of the net amount of fund-raising. In accordance with the “Shenzhen Stock Exchange Self-Regulatory Guidelines for ListedCompanies No. 1 – Standardised Operation of Main Board Listed Companies” (Revised in December 2023) and the “Fund Raising Management System of S.F. Holding Co.Balances of the proceeds during the projectLtd.” the Board of Directors and the General Meeting of Shareholders can be exempted from the procedure of deliberation and the above-mentioned saved funds will be used
implementation and the reasons
to supplement the liquidity on a permanent basis.As at 31 December 2023 the Company had transferred all the surplus funds of RMB127.067 million in the special account for fund raising to the Company’s own fund
account.Usage and allocation of the unused proceeds N/A
Defects and other problems in utilization and
N/A
disclosure of the proceeds
069Chapter 3Management Discussion and Analysis
(3) Statement of Changes in Projects Funded by Proceeds
Unit: RMB’000
Total amount Actual Actual Investment Whether
Whether
Corresponding of proceeds to investment cumulative progress at Date of asset Benefits feasibility of
expected
Project after change original commitment be invested in during the investment as the end of the ready for achieved in the altered project
benefits have
project the project after Reporting at the end of period intended use current period has changed
been achieved
change (1) Period the period (2) (3)=(2)/(1) significantly
Express delivery equipment automation and The construction of
6942579 901764 6944343 100% 31 December 2023 Note 2 N/A No
upgrades the Ezhou airport
transhipment centre
Supplement of working capital project in Hubei 3600000 600001 3600001 100% N/A Note 7 N/A No
Total － 10542579 1501765 10544344 － － － － －
As the end of 31 Dec 2023 the total amount of the usage-changed proceeds of the Company was RMB1400 million accounting for 7.03% of the total proceeds. In addition the
Company used RMB100 million of the accumulated wealth management returns and interest income generated through the proceeds to make additional investments in the original
investment projects. Details are as follows:Explanation of reasons for changes decision- The 2nd meeting of the 6th session of the Board of Directors of the Company and the 2022 Annual General Meeting of the Company considered and passed the “Proposal onmaking procedures and disclosure of Changing Part of the Proceeds-financed Projects” and agreed that the Company would reduce the proceeds towards the “construction of the Ezhou civil airport transit centreinformation (by specific items) project in Hubei “ and would use the above-decreased proceeds of RMB1400 million together with the wealth management returns and interest income generated through theproceeds of RMB100 million totally RMB1500 million to increase investment in the original proceeds-financed projects namely the “express delivery equipment automation andupgrades “and “supplement of working capital “. For details please refer to the announcement of the Company disclosed on cninfo (http://www.cninfo.com.cn) on 29 March 2023
(Announcement No. 2023-018).
Circumstances and reasons for not meeting
planned progress or projected benefits (by N/A
specific items)
Description of significant changes in the
N/A
feasibility of the changed project
Note 1: “Accumulative proceeds invested” includes accumulative proceeds invested and upfront investment replaced after the reception of proceeds
of RMB6338.458 million.Note 2: The project aims to improve the Company’s transhipment operation capacity and efficiency raise the storage service capacity and quality
enhance the stability of the transhipment network and storage service network and optimise customer experience and satisfaction so as to
further reinforce the Company’s core competitiveness. The benefits achieved are not directly quantifiable.Note 3: The project aims to improve the Company’s transhipment capacity and operation efficiency reduce overall operating costs and improve the
flexibility and stability of the core transhipment network to lay the foundation for the Company’s long-term business expansion. The benefits
achieved are not directly quantifiable.Note 4: The project aims to enrich the Company’s digital-intelligent supply chain system solutions for different industries effectively improve the
Company’s one-stop supply chain service ability enhance customer engagement and help the Company become a technology-driven
comprehensive supply chain solution provider. The benefits achieved are not directly quantifiable.Note 5: The project aims to improve the Company’s main and branch line transportation capacity and the efficiency of the “last kilometre” network
service enhance the security of the transportation network and strengthen the Company’s core competitiveness in express and logistics
services. The benefits achieved are not directly quantifiable.Note 6: This project aims to guarantee the transport safety and operation efficiency of the Company’s fleet and enhance the stability and security of
the air transport network in a bid to reinforce the Company’s core competitiveness in comprehensive logistics services. The benefits achieved
are not directly quantifiable.Note 7: This project aims to enhance the Company’s financial strength and meet the working capital requirement after gradual expansion of market
share and operation scale which is conducive to improving the anti-risk ability of the listed Company and serving the development of the
Company’s main business and the realisation of long-term strategy. The benefits achieved are not directly quantifiable.Note 8: Any discrepancies between totals and sums of the numbers are due to rounding.
070Chapter 3Management Discussion and Analysis
X. Sale of Significant Assets and Equity
1. Sale of significant assets
□ Applicable√ Not applicable
2. Sale of significant equity
√ Applicable□ Not applicable
Whether it
Net profit
has been
contributed
implemented
by the equity Proportion
as planned
interest to of net profit Whether the
Pricing Whether it Related party and on
transaction the listed Impact of the contributed by shareholding
Disposed Disposal principles is a related relationship schedule Date of
Counterparty price Company from disposal on the equity disposal involved has Index of disclosure
equity interest date for equity party with the and if not disclosure
(RMB000) the beginning Company to total net been fully
disposal transaction counterparty disclose the
of the period profit of listed transferred
reasons and
to the date Company
the measures
of disposal
taken by the
(RMB000)
Company
Will not have
100% equity
Shenzhen a significant
interest of Shenzhen
J&T Express 27 June impact on the fair and 13 May CNINFO
Fengwang 1183000 -551485 1.88% No No Yes Yes
Supply Chain 2023 Company’s equitable 2023 (www.cninfo.com.cn)
Information
Co. Ltd. daily operating
Technology Co. Ltd.activities
Note: Pursuant to the transaction agreement Transitional Gain or Loss the profit or loss of the disposed equity interest for the period from the
base date (31 March 2023) to the date of closing (the“ Disposal Date”) shall be enjoyed or borne by the transferor. On 28 August 2023 both
parties to the transaction confirmed the Transitional Gains or Losses. Considering the Transitional Gains or Losses the net amount actually
paid by the counterparty was approximately RMB461 million.XI. Analysis of Major Holding and Participating
Companies
Major subsidiaries and equity participation companies that affect the Company’s net profit by more than 10%
Unit: RMB’000
Company
Company Name Primary Business Registered Capital Total Assets Net Assets Operating Income Operating Profit Net Profit
Type
Investments in industrial businesses
i n v e s t m e n t c o n s u l t i n g a n d o t h e r
Shenzhen S.F. Taisen Holding (Group) Co. information consulting supply chain
Subsidiary 5000000 76426479 44043403 5744808 7338281 7438301
Ltd. management asset management capital
management investment management
etc.International freight forwarding
S.F. Express Co. Ltd. Subsidiary domestic and international express 150000 30606979 3580183 18879260 4404043 4318377
services etc.
071Chapter 3Management Discussion and Analysis
(1) Description of Major Holding and Participating Companies
The net profit realized by Shenzhen S.F. Taisen Holding (Group)
Co. Ltd. and S.F. Express Co. Ltd. for the year were mainly the
investment income generated from the dividend distribution
of the holding subsidiaries and the profit generated from the
Company’s primary business.
(2) Acquisition and Disposal of Subsidiaries During the Reporting
Period
For details please refer to Note 5 to the Chapter 10 Financial
Statements.XII. Structured Entities
C o n t r o l l e d b y t h e
Company
□ Applicable √ Not applicable
072Chapter 3Management Discussion and Analysis
XII I . Prospects of the advancement of China’s policies for economy stabilization
on a virtuous cycle of mutual promotion of consumption and
Company investment the overall expectation of domestic logistics demand
remains stable and the market growth remains moderate.Meanwhile affected by the uncertainty of the international
environment and the slowdown in global economic growth the
1. Industry Trend international logistics and freight market still faces many variables.
International air and sea freight prices gradually stabilized and
I ) The internat ional env i ronment wi l l slowly recovered in 2023. Future expectations fluctuate due to
market demand and regional relations challenging the resources
continue to confront uncertainties and
and service capabilities of international freight enterprises. Cross-
China’s economy remains resilient. border e-commerce although slowing down has structural
International relations are becoming increasingly complex and opportunities. China’s leading emerging e-commerce platforms
global economic growth may still be weak in 2024. According in the globe were under high-speed expansion and domestic
to forecasts released by the World Bank the global economy e-commerce market in Southeast Asia is booming which iswill grow by 2.4% in 2024 still being the “slowest 5 years in 30 driving Southeast Asia’s domestic express services and cross-years”. The growth of developed economies will be below the border e-commerce logistics from China to abroad. According
global average while China and some emerging countries in Asia to Frost & Sullivan logistics expenditure in Asia (excluding
will have relatively good growth rates and China’s GDP expected China) is expected to reach a CAGR of around 7% from 2023 to
to increase by 5% in 2024. Under the challenging internal and 2027 exceeding the global growth. Benefiting from the higher
external environment China continues to propose a series of economic growth of emerging markets continued urbanization
strategies for economic stabilization on expanding domestic growing consumer demand and the rising position in the global
demand emphasizing technology innovation and further opening supply chain landscape the logistics scale of China-Southeast
up and the policy effects including interest rate and reserve ratio Asia intra-Asia regions and other Asia-global markets maintain
cuts as well as tax and fee reductions are expected to further relatively faster growth.release in the next year. China is still the largest engine of global
growth contributing about one-third to global economic growth III) Express delivery further carries forwardand is the supersize market with most potential in the world. the “go to the countryside go to factoriesand go global” to improve people’s life
II) Domestic logistics market is expected to qual ity promote the industr ia l supply
maintain steady growth and Asia maintains chain upgrade and pave pathway for the
most vitality and potential in the global international trade.logistics market.(i) “Express entering into the countryside” to meet the
The domestic express industry achieved rapid growth due to the delivery demand. In 2023 China accelerated the establishmenteconomic recovery in 2023 with expectation that the industry of the county and rural transportation network with the “onegrowth rate will slow down in 2024 but steady growth will still village one station” project and built 1267 county-level public
be maintained with certain development resilience. According to transportation centers 289000 village-level integrated logistics
the State Post Bureau the business revenue of express delivery transportation stations and 190000 countryside postal stations.is expected to reach RMB1.3 trillion in 2024 representing The express delivery volume to countryside has reached 2.7 billion
an increase of around 8% over the previous year. With the pieces. In 2024 the Company will further the express delivery
073Chapter 3Management Discussion and Analysis
into the countryside give full play to the positive role of express of openness to the outside world. Under the policy guidance
delivery enterprises in promoting rural industrial development the leading logistics enterprises will enter a stage of high-quality
and improving the living standards of farmers and stimulate the development. Logistics enterprises are required to continuously
vitality of the rural delivery market. (ii) “Entry into factories” to improve their innovation capabilities network coverage and
promote the industrial supply chain efficiency. The express resource layout while promoting the deep collaboration of the
extended from the consumption to the production enriching industry chain and supply chain. Supply chains are undergoing
supply for and adhesiveness to the express delivery services while digital transformation and upgrading at an accelerating pace
embedding into the industrial supply chain with more efficient using data to give feedback to entities promoting the industrial
operation and more intelligent technology linking to the whole chain efficiency. In this process leading logistics enterprises will
supply chain and industry contributing to better resilience fully benefit from technological upgrade resource layout and
and efficiency and promoting technology innovation and cost product innovation to form a brand new competitive advantage.reduction of more profound and wider domain. (iii) “GoingV) The common goal for logistics companies and customers:global” to expand international transportation paths.working together for a green and sustainable supply chain
Domestic production and global circulation thrive as China’s
ecosystem.economy speeds up its integration into the international market
requiring greater resilience and security in the international supply Under the guidance of the national dual carbon target (carbon
chain; and to facilitate the Belt and Road Initiative channels peak and carbon neutrality) the industry continues to promote
for the international logistics shall be further extended. Future green and low-carbon transformation and development. Theindustry sustains efforts for better cross-border service capacity PRC State Post Bureau issued the “Opinions on Promoting theaccelerated “going global” strengthened overseas network Green and Low-Carbon Development of the Postal Expressconstruction better serves for cross-border e-commerce and I ndu s t r y ”*《( 关 于 推 动 邮 政 快 递 业 绿 色 低 碳 发 展 的 实 施 意 见 》)
modern trade to exert the industry’s characteristics and strengths in April 2023 specifying a number of initiatives including
for better maintaining a stable and expedite global industrial accelerating the construction of a low-carbon and efficient
chain and supply chain. delivery transportation system promoting green construction and
operation of the industry infrastructure advancing the reduction
IV) China implemented the 14th Five-Year Plan on a
standardization and recycling of mail and express packaging
continuous basis and promoted a high-quality modern
and perfecting the support and guarantee system for green and
logistics.low-carbon development of delivery. In 2023 over 95% of the
At the beginning of 2023 The Central Committee of the nationwide e-commerce express parcels were not repackagedCommunist Party of China and the State Council issued “the over 1 billion parcels used recyclable express packaging andOutlines for Building China into a Strong Nation in Quality over 820 million corrugated boxes of good quality were recycledConstruction”*《( 质量强国建设纲要》) aiming for high-quality and and reused exceeding the target plan at the year beginning. At
efficient domestic economy and industry development which the industry regulatory level all efforts will be made to promote
put forward higher requirements on professional production green and low-carbon development propel express delivery
and services. Especially in terms of the logistics Especially in enterprises to implement the requirements for energy saving
the field of logistics new demands have been proposed such and emission reduction. Meanwhile construction of a zero-
as promoting multimodal transportation smart logistics supply carbon commercial community is also a consensus from the
chain logistics better cold chain logistics service quality channel logistics demand for achieving a global carbon neutrality with
optimization for international logistics and more convenient key customers increasingly seeking the green and low-carbon
port clearance. The 14th Five-Year Plan for the Development compliance capabilities of logistics service providers. Logistics
of Modern Logistics*《( “十四五”现代物流发展规划》) expects enterprises capable of providing customers with visualized and
a basically established modern logistics system that matches quantifiable low-carbon products and services demonstrating
supply and demand connects domestic and oversea markets and customers’ commitment to the environment and creating green
with safe efficient smart and green features by 2025 so as to value for customers would further ensure customer adhesion as a
provide strong support for building a modern industrial system competitive soft power.forming a strong domestic market and promoting a high level
074Chapter 3Management Discussion and Analysis
SF strategic objectives
Our Healthy Operation
Healthy Healthy Healthy Profit and
Healthy Growth Business Portfolio Global Layout Healthy ROI Cash Flows
Our Strategic Objectives for 2025
From the perspective of the society SF in 2025 From the perspective of customers SF in 2025
will become one of the industry benchmarks that keep creating will become a preferred partner of all customers
outstanding social value
will serve the enterprises and build a brand-new global smart supply chain system; will provide global consumers with convenient reliable and caring express delivery
will serve the society commit itself to environmental protection become a carbon services;
neutral benchmark and contribute to sustainable development of the global economy; will build an open digital supply chain ecosystem by innovating new business models
will serve the public expand its network reach to every community every village every with customers to achieve win-win results.family and every person and help achieve common prosperity for all.From the perspective of companies SF in 2025 From the perspective of employees SF in 2025
will become a leader of global smart supply chain will become a career platform for global talents to pursue excellence
achieve goals and take pride in
will accomplish a comprehensive digital transformation develop its critical abilities of will adhere to the “team” culture of equality and respect collaboration and"data-supported decision-making” "data-driven business" and "data-empowered cooperation innovation and inclusion to help employees grow in competition and
customers" and establish a flattened and self-driven digital organization system with realize their own value;
concentrated front-end and large scale intermediary; will establish a fair and transparent evaluation system to encourage value creation and
will integrate quality resources accelerate international business development form a pursuit of excellence;
more balanced combination of international and domestic businesses and complete will attract global talents with competitive compensation and talent cultivation systems
the layout of global smart supply chain; and provide more opportunities to them to pursue their career prospect.will ensure Asian No. 1 and global leading logistic company in terms of business size and
company value and continue its sustainable and healthy management.
075Chapter 3Management Discussion and Analysis
2. The Company’s Strategic Vision III) Bridging Asia and the world with further
internationalization and offering one-stop
The Company will adhere to long-term sustainable and healthy solutions.development focusing on the three major channels of “networkstandard products digital industry supply chain services and Leveraging accumulated extensive resources in China and Asiaglobal end-to-end supply chain services”. Firstly the “network including extensive local networks broad connectivity strongstandard product” focus on cost reduction and operational brand recognition and talented teams to replicate our success
efficiency exploring new markets and securing competitive from China across Asia and globally. Through strong air and sea
barriers. At the same time through digital transformation and transportation capabilities as well as China-Southeast Asia’sglobal resources layout we will cultivate “digital industry supply logistics network the Company provided customers with high-chain services” + “global end-to-end supply chain services” to quality cross-border services; as to overseas integrated logistics
build the Company’s second growth curve in the future. Lastly the Company integrated SF International and Kerry Logistics’
we will focus on core resources and lay out hub resources such as overseas networks cross-regional connection capabilities multi-
Ezhou hub to form a resource foundation and moat for the long- brand advantages and operational experience to provide global
term development of the Company. customers with more competitive and cost-effective one-stop
solutions covering international express freight delivery freight
I) Improving product and services around forwarding and contract logistics services. In addition the
customer demand to identify potential Company combined diversified approaches including endogenous
growth mergers and acquis i t ions and partnersh ips to
market opportunities.continuously strengthen its logistics service capabilities between
Leveraging the global network of Ezhou Air Freight Hub the Asia and the world.Company strengthened the integration and collaboration of the
express network and Kerry Logistics together with other global IV) Steadily progress in the construction of
partners to enhance competitiveness in domestic and international Ezhou hub and building a global aviation
products build better time-definite and efficient services with network.lower price and create a diverse and healthy product system.Focused on customers’ abundant scenario demand the Company By the end of 2023 the Ezhou cargo hub has put 45 domestic
continued to create an organic combination of standardized cargo airlines and 10 international cargo airlines into operation
products provided integrated supply chain solutions for customers covering 40 cities nationwide and 13 international points.with the integrated logistics capabilities efficiently satisfied Currently there are about 90 inbound and outbound cargo flights
customer demand and expanded its market share. per day and the number of cargo flights ranking among top
three in China. The Company will continue to operate with safety
I I) Leveraging leading technologies and efficiency intelligence and green as its guidelines optimize and
innovation the Company strives to create a improve the air network for seamless connections in domestic andinternational air networks and gradually achieve the goal of “Onedigital supply chain ecosystem.night across China and another to the world”. The Company
The Company strived for further digitalization reinforce the actively responded to national initiatives connecting cities along
intelligent management of full-link end-to-end logistics scenarios the Belt and Road Initiatives through the aviation network and
including collection transportation distribution and delivery transportation hubs. To serve the Air Silk Road the Companyand build the core competencies of “data supporting decision- proactively integrated into the global industry and supply chainmaking” “data driving business” and “data empowering contributing to the interconnected network for Belt and Roadclients” to achieve accurate parcel volume prediction and Initiatives.scientific resource allocation in advance; dynamic monitor and
swift adjustments during the process; summary with continuous V) Fulfill social responsibilities and persevere
iterated business strategies and continuously upgrade the with sustainable development.Company’s logistics intelligence. The Company is also committed
to breaking through traditional supply chain models and Continuously advance the development of a green logistics
providing customers with pioneering digital supply chain solutions system and help customers a green and low-carbon supply
through technology innovation. With exploration to technology chain. As a pioneer in green and low-carbon transformation in
application such as IoT cloud computing automation blockchain the industry the Company has built a digital intelligent carbon
digital twins and various intelligent hardware in this field the management platform namely Fenghe Sustainability Platform.Company improved and iterated digital supply chain products The platform covers packaging transportation transit delivery
help customers achieve optimal decisions in global supply chain and other processes with a total of over 120 indicators in more
planning and implementation embrace digitalization to empower than 60 typical scenarios and can calculate end-to-end carbon
the industry supply chain and improve logistics modernization. emissions of enterprises in real time. Leveraging on the platform-
076Chapter 3Management Discussion and Analysis
based standard carbon management capabilities the Company including products technical systems equipment and tools
helps customers grasp GHG emissions in transportation and model optimization and value-added services. Adhering to the
logistics-related activities enhances the transparency of carbon internalization strategy and to expand the international business
emission data in supply chain logistics in a bid to achieve scale the Company fully leveraged its advantages on China’s
effective identification and control in the operation process. The cross-border business Southeast Asia flow and domestic market
Company has effectively supported many customers to build to seize the opportunities from emerging regions and realize the
a green low-carbon and sustainable supply chain ecosystem strategic goal of “the Only One in Asia”.helping to enhance customers’ brand value. In the future it will
(3) Stable Profitability: To adhere to refined cost control and
continue to replicate and expand the scale consolidating the
improve the resource efficiency the Company continued to
Company’s brand influence in the field of green logistics system
optimize the structure of revenue customers products and
construction.costs implement lean operations and management and promote
Continuous improvements in employee care and staff the full integration of resources. To fully integrate business with
benefits. The Company is committed to providing employees finance and play the role of budget guidance the Company reliedwith a complete range of training and development opportunities on the digital business analytics system covering “pre-testing –respecting employees’ rights and interests and safeguarding monitoring – post-analysis” for the high-frequency monitoring of
their personal interests. (i) Adhere to the cultural of employee operation to ensure the Company’s stable and healthy profit.achievement innovation and inclusiveness provide a platform for
diversified values help employees to achieve a win-win situation II) Product Planning:
with the Company and continuously enhance their sense ofIn 2024 further to the product planning with “one network twoachievement happiness and pride through a comprehensive
categories of major product lines and three service with different
and rich welfare system; (ii) Construct a more diversified valuetime frames” at the core the Company will continue to enrich/
evaluation system for measurement from multiple dimensions and
optimize the product portfolio of segmented scenarios on market
guide employees to achieve personal goals; (iii) Establish a market-
variation and customer demand build the service capability of
leading salary strategy to provide employees with competitive
warehouse and distribution expand air transport scenarios for
salary levels attract and retain core talents; and (iv) Through more
higher cargo volume and improve the business scale with flexible
accurate talent training demand identification and excavation
ground transport modes and pricing to provide customers with
more efficient training resource sharing and more convenient
more diverse delivery services. In the meanwhile the Company
digital learning platforms enhance employees’ professional skills
will strengthen end-to-end product management and perfect
and capabilities and help with their career ideals and self-growth.the operation support by industry and product category throughthe optimization of the SSC system of standards on “SLA (Service
3. Business Plan in 2024 Level Agreement) + SOP (Standard Operation Procedure) + Cost”.
Delving into the scenarios and services of customers and products
I) Overall operational priorities: adherence to the Company will strengthen product support including resources/
sustainable and healthy development modes technology systems pricing and settlement and intelligent
monitoring for more stable products refined management and
(1) Customer Stickiness: The Company continuously enhanced better delivery to customers.
service competitiveness in terms of customer-centric service
speed depth and breadth allowing for customers to experience III) Client Operation:
the value of the Company’s services and drove customer
satisfaction with employee satisfaction by reduced couriers’ labor (1) SKA clients: Always focusing on SKAs and their partners
intensity and improved customer meeting time guiding the the Company will focus on core business scenarios and heated
courier transition to business development with multiple incentive industries bid in coordination with internal resources and apply
mechanisms. Advancing the network transformation improving the core competence accumulated to other customer types during
network efficiency and service quality while ensuring dedicated business development. * Ecosystem Expansion: Leveraging SKAs’
professional support the Company stuck to customers’ business capabilities and business opportunity to develop business in the
development and meet their diverse and ever-changing demand upstream and downstream of the supply chain. * New Scenarios:
to enhance its differentiated service competitiveness. Sorting out the core business scenarios among industries focusing
on industry segments with low market share strengthening
(2) Healthy and Sustainable Growth: Sorting out a product business integration and incentive mechanisms and promoting
system tailored more closely to customers’ demand digging business breakthroughs; * Smart and Green Supply Chain:
deeper into the industries and business scenarios the Company Promoting the best practice of smart supply chain for SKAs
further developed its business with a more flexible service mode empowering delivery with technologies seizing the new track of
and finer pricing strategy and formed a replicable portfolio green supply chain and creating a benchmark for green supply
that is industry and scenario specific to provide standardized chain business.services through the combination of high-quality solutions
077Chapter 3Management Discussion and Analysis
(2) KA clients: * Headquarters-to-headquarters Strategic formulate integrated package solutions give full play to the
Cooperation: With a focus on the KA clients the Company will timeliness advantages of aviation large items and help provide
thoroughly review the cooperation extent and effect of the efficient supply chain services.whole chain integrate the Company’s resources and solutions to
provide customers with end-to-end digital supply chain solutions (2) Economy Express Business Strategy:
and provide tailored supply chain services that fit customers’
In relation to the e-commerce standard express the Company
business development for a comprehensive strategic cooperation.continued with the strategy of “core market of a large scale”
* Standardized Product Portfolio: The Company will offer an
optimized the cost structure with comparative competitiveness
industry and scenario based standardized product portfolio with
through refined management iteration of product design
the integration of diversified products technologies and solutions
and cost saving throughout the chain. With refined pricing
as well as a clear target responsibility mechanism for better
management the Company adopted diversified pricing strategies
market access and business scale to drive the growth of the
in consideration of factors such as seasonality and flow distance
Group.to maximize marginal cost benefits through making full use of
(3) SME clients: With end-to-end management and the focus on idle time resources to match targeted marketing strategies.
low-tier markets the Company will provide standardized product
In terms of warehousing and distr ibution integration: *
portfolio based on the industry and scenario to enlarge business
Fulfillment Capabilities: The Company will fully integrate core
scale and enhance customer stickiness.transit hubs air hubs and intra-city on-demand delivery resources
(4) Retail clients: Centered on seizing customers’ mind share and capabilities of the warehousing and express network to
the Company will adhere to the business development direction provide multi-level fulfillment services of integrated warehousingof “resource consolidation intensive cultivation technology and distribution contributing to the development of B2C businessempowerment” realizing the online traffic from digital operation of major e-commerce platforms and high-quality customers. *
and enlarging the effect of accumulation; providing guarantee Foundation Establishment: With further resource consolidation
to offline integration conducting refined management on areas and internal idle resource integration the Company will liaise with
acquiring customers with professional services so as to achieve various supply chain solutions for business expansion promote
revenue growth under coordinated operations. resource planning and lean management with scenario-based
intelligent equipment and lean operation for better effectiveness
IV) Business Operation: and efficiency. * Service Quality: Focusing on customer services
and service delivery the quality and security management system
(1) Time-Definite Express Business Strategy: will be iterated with refined foundation mechanisms to promote
customer experience and stickiness.* The Company will fully leverage the function of the Ezhou
air cargo hub to consolidate the absolute leading advantage in (3) Freight Business Strategy:
timeliness; it will refine operations by optimizing the network and
mode improving the utilization rate of air and land resources * Through steady development and professional refinement
further enhancing the competitiveness of time-sensitive products the Company will enhance the competitiveness of high-value
and making customers feel “more worth the cost”. products. In terms of timeliness the Company continues to create
a “fast and accurate” experience refine the promised cut-off
* The Company will focus on the industrial cluster effect of Intra- time and administrative district outlet dimension timeliness and
large-cities build a one-stop city service platform for business strengthen the special express transportation service in cities and
office + multi-temperature zone warehousing + transit distribution economic circles to maintain the advantage of leading timeliness.around city production and life scenarios continuously deepen In terms of quality the Company will expand the application
the multi-level fast timeliness fulfillment service capabilities of scenarios of industry-specific packaging solutions optimize
hours half-day same-day and next-day improve the service operating models broaden the types of value-added services at
network and product system from near-field to far-field and the end and promote the solution of various difficulties and pain
expand more business scenarios of City-to-City production and points in the industry. In terms of cost through the economies of
life with multiple product combination modes. scale optimization of procurement and joint allocation models
* In terms of aviation business the Company will continue the Company will continue to reduce costs in each process and
to expand the coverage of next-morning arrival service around further improve product cost performance.the Ezhou hub strengthen direct collection and distribution * Customer-centric the Company continuously deepens the
capabilities accelerate the transit speed of key cities and develop development of everyday life and production industry scenarios.upstream and downstream businesses of hub warehousing; In terms of the consumer supply chain represented by the
strengthen the aviation transportation guarantee capabilities furniture and home appliance industry SF Freight will strengthen
of extra-large and heavy items and seasonal fresh build a the competitive barriers from packaging mode service operation
professional team to provide customized solution support and other aspects end-to-end including increasing the use of
broaden the service coverage scenarios; integrate supply chain recyclable packaging materials optimizing the operating model
078Chapter 3Management Discussion and Analysis
and process of warehouse distribution integration improving that runs through the upstream and downstream of the industry
the professional service capabilities of delivery and installation chain and pave the way for “pharmaceutical six warehouses” as
and continuing to strengthen the advantages of SF Express the center and “third-party warehouses” as the extension 8-24
in the consumer supply chain. The production supply chain is hours of warehouse-to-store direct distribution network; * the
represented by industrial manufacturing and high-tech industries. Company will leverage the core advantages of the pharmaceutical
Through innovative flexible operating models meticulous product less-than-truckload network and railway and aviation resources
combination solutions efficient and differentiated operation to enhance the service capabilities and timeliness competitiveness
guarantee mechanisms the Company improved the overall cost of pharmaceutical logistics; * the Company will continuously
performance of SF Freight helping enterprise customers to reduce improve the quality compliance risk controllability and brand
production costs and promote continuous business growth. influence of SF Pharmaceutical Logistics and complete thecertification of “Comprehensive Cold Chain Logistics Star
(4) Cold Chain and Pharmaceutical Logistics Business Strategy: Enterprise”.
In terms of fresh and seasonal food logistics services * the
(5) Intra-city on-demand delivery Strategy:
Company will strive to secure its share of the market where the
Company has been historically dominating explore opportunities SF Intra-city will actively seize market opportunities in the
in the central and western areas of China and innovate fresh continuous penetrat ion of divers if ied traff ic local retai l
food transit through industrial clusters to provide more cost- development accelerated intra-city logistics and the third-party
effective service and penetrate more lower-tier markets; * the on-demand delivery services and deeply cultivate the capabilities
Company will continuously upgrade green packaging solutions of full-scenario full-coverage full-time full-distance and omni-
research and develop automated packaging equipment reduce channel services so as to continuously consolidate the scale
packaging cost while meeting fresh-keeping needs advocate effects refine its operational capabilities enhance medium- to
environmental protection integrate technology systems and long-term revenue and profit potential and form a virtuous
traceability technology and create a one-stop smart supply chain cycle of operations. The Company will also adapt to evolving
for agricultural product customers. consumer trends focusing on serving customers industries and
society creating more flexible income opportunities bringing
In terms of food cold chain logistics services * the Companybroader value creation and better fulfilling our mission of “bringwil l bui ld a warehouse-distr ibution integrated multi- levelenjoyable lifestyle to your fingertips”.contract fulfilment capability: For the multi-scenario and multi-
product service needs of fast in and out small batches and high
(6) Supply Chain and International Business Strategy:
frequency we will build a warehouse-distribution integrated
multi-level fulfilment capability through improving network For International Express the Company will continue to
elasticity and optimizing production models to help customers’ transform and upgrade overseas express networks improve service
business reach nationwide; * the Company will upgrade and quality and coverage and at the same time strengthen global
expand cold chain logistics network capabilities: The Company aviation network planning and customs clearance capabilities in
will invest cold storage resources in accordance with regional key countries and regions to deepen the global network layout
business characteristics strengthen the integration of SF Cold improve global resource integration capabilities and build a
Chain and New Havi’s line-haul resources help build a lower- comprehensive logistics service system covering the globe: * The
tier-market network and comprehensively build a wide coverage Company will focus on Asia America and Europe markets
differentiated high-elasticity network that integrates warehouse our express networks therein and build a stable and efficient
transportation and distribution; * the Company will reduce costs international network worldwide through strategies such as
and increase efficiency: Through equipment investment process upgrading aviation network layout investing in the construction
optimization network node optimization system upgrades and of customs core resources and consolidating overseas local end
other measures the Company will help customers systematically multi-channel distribution capabilities. The Asian routes will focus
reduce costs in the supply chain and provide cost-effective on exploring opportunities in high-tech machinery manufacturing
efficient and stable omni-channel delivery services. industries and expand service capabilities in the field of heavy
cargo transportation. The American routes will maintain timeliness
In terms of pharmaceuticals logistics services * the Company
advantages expand the mid-end customers and continue to
will continue to deeply explore the pharmaceutical business
reduce costs and give back to customers at the price end. The
with a focus on the eight major customer groups in this industry
European routes will continue to enlarge the scale of boutique
to increase the market share build expertise and strengthen
route business maintain stable service delivery reduce cost
resource integration capabilities and solution service capabilities
and enhance efficiency; * The Company will focus on the two
to enhance customer awareness and satisfaction; * the Company
major sets of service offerings namely international express and
will strengthen the service capabilities of the pharmaceutical
cross-border e-commerce logistics improve the product matrixsupply chain with the “warehouse-transportation-distributionoptimize the cost structure and build a competitive moat inintegration” comprehensive supply chain solution as the core
terms of service capabilities in Southeast Asia and the Asia-Pacific
build a warehouse-transportation-distribution supply chain system
region; * The Company will connect the whole process from
079Chapter 3Management Discussion and Analysis
domestic to overseas and build an end-to-end full-link service temperature and triple-temperature vehicle resources promote
standard and operation monitoring system to improve the service the use of constant temperature containers and fully utilize the
quality management system and provide stable services for the express network to enhance the terminal collection and delivery
cross-border businesses. service capabilities of cold chain and pharmaceutical businesses.* The integration with Kerry Logistics and New Havi will be
International Freight Forwarding Services continuously
extended to the entire process of all links including sites outlets
unleashing the synergy effect and leveraging its extensive
routes vehicles and cargo loading. * For mature business
domestic customer base the Company will explore new scenarios
integrations the Company will gradually pilot the management
and opportunities on freight forwarding services for imports
integration such as unified management of various types of sites
and exports freight transportation for customers. Amid the
in the same park of self-operated vehicles of varied organizations
volatile international relations on the global logistics services
deepening from opportunity integration to comprehensive
the Company will promptly seek alternative solutions for its
integration.customers. By leveraging its self-operated all-cargo aircraft
outsourced charter fl ights ground and sea transportation Operation Optimization: * In terms of the operation the
resources and the comprehensive coverage and diversified Company will further broaden the depth and scope of model
service capabilities in Asia the Company will provide customers innovation fully leverage and strengthen model transformation
with a wider range of service portfolios to further strengthen its benefits and combine the comprehensive and close-loop review
competitive advantages. of the Group’s overall product service operation and cost
standards to strengthen end-to-end product guarantees reshape
In terms of supply chains the Company will actively respond to
the SOP for operation and build a more competitive product
the pressures of economic slowdown with a continued concern
operation guarantee system. * In terms of the transit the
on cost saving and value-added services. For operations the
Company will further strengthen site standardization process
Company will improve resource efficiency through network
innovation equipment intelligence talent specialization and
integration and communication to reduce costs. For business
management refinement to solidify transit capacity efficiency
development with further integration of supply chain with other
and function integrate with various organizations and regions
segments the Company will foster the industry-standardized
to facilitate model optimization and transit benefits. * In terms
service portfol io and develop upstream and downstream
of the transportation the Company will further optimize the
businesses around the customers’ supply chain ecosystem. At the
ground transportation resource structure and resource integration
same time the Company will closely follow the industrial upgrade
increase the proportion of price-controllable resources such as
and transformation for better domestic and international supply
self-operated and outsourced individual transportation capacity
chain services and opportunities of domestic and Asia-Pacific
optimize resources and system adaption improve algorithm-based
supply chains. For technologies the Company will further upgrade
vehicle dispatch capabilities and the closed-loop management
the supply chain with digitalization and improve production
of ground transportation network through digital technologies
efficiency with technology empowerment on customer demand.and systems reducing the per kilogram cost of transportation.For green and low carbon the Company will assist in the carbon
* In terms of the end delivery the Company will further
emission management with digitalization throughout the supply
deepen model transformation implementation in eligible areas
chain life cycle for customers to compete more effectively for a
promote the improvement of terminal small station construction
green and sustainable supply chain.and enhance terminal customer service capabilities digital
management of couriers quality diagnosis and closure system
V) Network Construction
management guide couriers for better service capabilities with
Multi-Network Synergies: * The Company will continuously incentives and improve the employee benefit system. Moreover
deepen the existing integration initiatives further streamlined through measures including but not l imited to incentive
integration and amplify integration benefits alongside increasing activities provision standard optimization customer manager
transportation volumes. * The Company will expand the full- transformation bonus assessment and low-income warning
link integration of the express network with the cold chain activities the Company will guide the transformation of couriers’
and pharmaceutical network increase the investment in dual- role for better sales revenue.
080Chapter 3Management Discussion and Analysis
4. 2024 Performance Outlook understanding of customer needs and diversified business
scenarios continuously improve its product matrix solidify its
In 2023 the Company adhered to the philosophy of healthy competitive edges and tap into market potential. In the global
management achieving not only steady and robust growth in its market the Company will leverage its local advantages in the
business scale in China but also solidifying its logistics network Asian market to accelerate the global network layout constructing
foundations overseas. Moreover leveraging its excellent lean a second growth curve for its long-term development. Leveraging
management capabilities the Company continuously implemented its proven track record of cost reduction and eff ic iency
its cost reduction and efficiency improvement achieving a improvement in first and last-mile pickup transit transportation
commendable year-on-year growth in its annual financial and and delivery over the past two years the Company will further
operational performance. deepen its strategy of multiple network integration. Additionally
in 2024 the Company will invest in improving the competitiveness
Looking forward to 2024 China’s express delivery industry is
of its operational personnel compensation operational model
transitioning from a high-speed growth phase to a high-quality
transformation the operation of the Ezhou hub and the refining
development phase with the relevant authorities expecting a
of its international networks. Although these investments may
comparatively slowdown in industry growth. Globally with the
put some pressure on the Company’s costs for 2024 in the short
international environment becoming increasingly complex and
term these measures will benefit the Company in achieving mid-
varied the uncertainty in economic growth has significantly
to-long-term structural cost optimization further enhancing
increased. However amidst many challenges the reshaping of
differentiated service capabilities improving customer experience
the global supply chain the global expansion of outstanding
and thus strengthening the Company’s long-term competitive
Chinese manufacturing brands and the rise of cross-border
edges.e-commerce will bring structural development opportunities to
the international logistics market. Based on the current external market environment and internal
business strategy the Company will strive in further enhancing
As a company committed to long-termism SF Express has
its service quality achieving steady growth in total revenue and
always been dedicated to achieving best-in-class service quality
maintaining a relatively stable net profit margin attributable to
steady business growth and superior cost efficiency. In Chinese
the parent as compared to that in 2023.market the Company will continue to deepen its root in and
081Chapter 3Management Discussion and Analysis
5 . C o m p a n y r i s k s a n d The Company also insists lean operations and deeply integrates
countermeasures the business foundation in order to achieve the resources
complementation and optimise network effectiveness. Meanwhile
the Company attaches great importance to sc ience and
I) Market risk technology investment as it could empower product innovation
Risk of macroeconomic fluctuations: The logistics industry improve service quality and is committed to providing customers
plays a fundamental role in the development of the national with digital integrated supply chain services consolidate core
economy but it is also significantly affected by domestic and competition barriers thereby supporting the long-term sustainable
global macroeconomic conditions. The macroeconomic growth development of the Company’s business.has slowed down and the macro-economy is expected to move
into a new phase of medium-slow growth; the overall economic II) Policy risk
environment still faces complicated challenges although domestic Risk arising from changes in industry regulations and
production and consumption activities recovered in 2023. industrial policies: The operation of express delivery requires
Meanwhile inflation in developed countries weak consumer business l icensing and is subject to regulat ion by laws
demand unstable international relations and other negative administrative rules and industry standards such as the Postal Law
factors have become obstacles to the growth of international of the People’s Republic of China 《( 中华人民共和国邮政法》) the
trade. However with the recovery of international transport Administrative Measures on Courier Service Operation Permits
capacity resources so that the international air and sea transport 《( 快递业务经营许可管理办法》) the Administrative Measures for
prices have fallen from the historical high range back to stabilize Express Delivery Market 《( 快递市场管理办法》) and the Rules forat the level of normalization in 2019. In addition the international Guiding the Operation of Express Business 《( 快递业务操作指导规freight industry is highly competitive with narrower profit margin. 范》). With a view to effectively regulating the development of the
The superposition of domestic and foreign economic factors may express delivery industry and enhancing service quality competent
affect the logistics industry and the performance of the Company. departments at various levels successively introduced regulatory
policies to regulate industry competition and service standards.Market competition risk: As the main driving force for express Particular emphasis was placed on high-quality development of
business growth the e-commerce market has transitioned from the industry calling on related parties to protect the legitimate
the explosive development phase into normal-level steady growth. rights and interests of couriers improve the social security level
With the reduction in incremental space the competition of of the couriers implement the main responsibility of the couriers
leading express enterprises may be fiercer in the existing markets. and standardize the enterprise franchise and labour management.Tighter industry regulation competition returning to the normal With the stronger regulation the compliance cost and violation
level and limited space for competition on prices prompted more risk of the express delivery industry may increase which may have
express enterprises to offer comprehensive logistics services rather an impact on the development trend and market competition
than homogeneous services pay more attention to product service landscape of the express delivery industry and may affect the
layering and conduct competition in more logistics segments. The future business growth and performance of the Company.Company has been forging differentiated competitive advantages
and providing a complete product matrix in the diversified Risk response: The Company has established research teams
business scope but under the impact of more leading express for state and local policies in all business units to conduct in-
enterprises getting involved in the competition in segments if depth analysis on relevant policies introduced fully capitalising
the Company cannot adjust operating strategies seize the market on favourable policies while avoiding policy risks and grasping
opportunities and maintain its position as the leading service industry pol ic ies and hence promoting business growth.provider in a timely manner on the grounds of market changes it Furthermore the Company has always attached importance to the
may face the risk of slowing revenue growth and declining market guarantee of rights and interests of couriers continually improved
share. the social security level while boosting their efficiency and
reducing working hours to raise their income through technology
Risk response: The Company keeps a close watch on the empowerment.macroeconomic analyses its impact on our main business and
adjusts our operation strategies in a timely manner to minimise Risk from relevant state polic ies on environmental
the adverse impact on the Company’s business and future protection energy conservation and emission reduction:
development. The Company pays close attention to and studies China has undertaken that it will strive to reach the peak of
industry development trends analyses the market competition CO2 emissions by 2030 and achieve carbon neutrality by 2060.patterns and deploys forward-looking strategic planning. The It is foreseeable that China will issue subsequent policies on
Company adheres to the multidimensional development of environmental protection energy conservation and emission
business constantly improves the product matrix deeply taps reduction. Such policies to be released may affect the service and
demands from customers’ supply chain and provides integrated operation pattern of express delivery companies and may lead
logistics solutions for various industries to achieve a differentiated to increased expenses in relevant aspects such as environmental
service experience and enhance customer stickiness towards us. protection energy conservation and emission reduction incurred
082Chapter 3Management Discussion and Analysis
by express delivery companies which will pose adverse effect on vehicle loading rate of trunk and feeder routes and improves the
the future performance of the Company. Meanwhile if companies efficiency of resource use; Further the Company will strengthen
fail to fulfil their green environmental obligations in accordance promotion for use of new energy vehicles to reduce the risk
with the laws they will not only be liable to the relevant legal of fuel price fluctuations to a certain extent. Meanwhile the
obligation but also impair their corporate social images. Company also has well-established operation and cost monitoring
mechanisms in place. When costs fluctuate significantly operation
Risk response: The Company took into account the external
plans and fuel cost control measures will be dynamically adjusted.environment and policy changes as well as took a keen insight
The Company also comprehensively evaluates and explores
into the development trend of the industry so as to steer the
mechanisms for charging appropriate fuel surcharges around
direction of the industry and implement the forward-looking
specific products based on oil price fluctuations thereby reducing
deployment and adjustment. The Company paid attention to its
the negative impact of fuel cost fluctuations on the Company.own impacts on the environment and in 2021 the Companypublished the “SF Holding’s White Paper for Carbon Emission Risk from international operation: With the developmentTarget” 《( 顺丰控股碳目标白皮书》) the industry’s first white paper of the Company’s international business especially after the
for carbon emission in China. Leveraging technological strength acquisition of Kerry Logistics the proportion of international
such as data and algorithm the Company adjusted the energy business has expanded rapidly and the number of countries
consumption structure upgraded transportation and business covered by services has increased. International logistics service
models implemented the reduction and recycling of express relying on international trade is subject to trade relations and
packaging and then promoted the green and low-carbon reform. other unpredictable factors. Global economic development
national relationships international trade and tax policies
III) Business risk have experienced unpredictable changes and there are many
uncertainties on international trade including significant price
Risk of possible rising costs: The express and logistics industry
fluctuations of the transportation capacity of international routes
is a labour-intensive industry. There are relatively large demands
stable operation capability for business in some countries and
for labour along various stages of operation such as collection
regions and so on which bring challenges to the Company’s
sorting transportation and delivery. With the reduction in
operation. If the Company fails to take effective measures to
demographic dividend in China there are certain pressures on
deal with this it may have an adverse impact on the Company’s
rising labour costs while investments in logistics infrastructures
international business development.and other aspects also increase. If the Company cannot secure
enough business volume or effectively control costs in the future Risk response: In the course of the Company’s business
it will probably face challenges in its earnings growth. development we continue to track and study changes in trade
policies closely monitor the market dynamics and adjust our
Risk response : The Company has improved its logist ics
strategies for international business operation in a timely manner;
infrastructure innovated system tools including bringing the
actively explore international transportation resources in terms of
entire logistics process online intellectualisation improving
the sea land air and rail strengthen the monitoring of operation
sorting centers’ automation optimising route planning applying
networks and make every effort to ensure stable and efficient
scientific and technological means to enhance efficiency and
cross-border services. Meanwhile the Company increases the
reduce manpower investment gradually achieving transformation
investment in scientific and technological resources promotes
of the express delivery industry from a labour-intensive industry
the construction of international business informatisation and
to a technology intensive industry. Meanwhile the Company also
facilitates making operational decisions in an efficient manner.continues to review and optimise resources invested in all business
units expand the synergistic reuse of resources across business
IV) Exchange rate fluctuation risk
segments by promoting multi-network integration and operation
model optimisation improve the input-output ratio of resources Exchange rate fluctuation risk: As the Company’s overseas
and enhance cost efficiency. The core logistics infrastructure operations expand businesses denominated in foreign currencies
constructed by the Company in accordance with its long-term are set to account for an increasing share of our total business
strategic direction will gradually release economies of scale along volume. Given the uncertainties in the international financial
with future business growth. environment and fluctuations in RMB’s exchange rates the
Company’s foreign-currency assets foreign-currency liabilities
Risk from fuel price fluctuation: Transportation cost is one of
and future foreign-currency transactions will all be subject to
the major costs of the express delivery industry and fuel cost is
fluctuations in exchange rates which will in turn affect the
an important component of transportation cost. Fluctuation of
Company’s business performance or financial statements.fuel price will have a certain impact on the profitability of express
delivery companies. If the price continues to rise the Company Risk response: The Company’s foreign exchange transactions
will experience pressure of increased costs. are mainly conducted based on the actual needs of its cross-
border foreign-currency businesses. To avoid and guard against
Risk response: By further optimising the layout of outlets the
risks associated with fluctuations in exchange rates and interest
Company improves the scientificity of route planning and the
rates better manage its foreign currency positions and become
083Chapter 3Management Discussion and Analysis
more competitive the Company has established the Management Firstly the Company continues to carry out operation and
Policies for Foreign Exchange Risks 《( 外汇风险管理制度》) and optimisation of the ISO27001 information security management
conducted centralised management of foreign currency positions system and the ISO27701 privacy information management
implements netting maturity matching and natural hedging system. The Company implements information security control
to avoid foreign exchange risk in advance wherever possible. It and protection in all aspects according to established policies and
also uses financial derivatives and hedging instruments with low strategies for information security and continuously updates all
default risks and controllable risks to lock in the costs of exchange procedures and systems for information security. It continuously
rate and interest rate and avoid exchange rate and interest rate reinforces risk awareness among staff members conducts staff
risks. All the Company’s hedging transactions are conducted training on operation standards develops internal information
in strict compliance with the relevant hedging principles and circulation guidelines implements rules of strong control over
are based on our normal production and business activities and sensitive information avoids unintentional violations and
justified with actual business operations. All the transactions constructs monitoring and pre-warning and response systems
are carried out for the purpose of locking in costs and avoiding for abnormal behaviours so as to eliminate information system
risks. The Company does not trade for speculative purposes and security risks in their infancy.operates within its authority to ensure effective execution and
Secondly according to requirements of regulatory authorities the
reduce the impact of exchange rate fluctuations on its operation
Company has carried out multi-level network security assessment
and earnings. In terms of transaction counterparty selection the
of information systems. Based on high standards of technology
Company conducts foreign exchange hedging transactions with
protection requirements it conducts continuous and regular
only large and established commercial banks at home and abroad
security intervention in the business system construction phase
and all such transactions conform to the principles of legality
to build on the anti-security attack capabilities of client service
prudence safety and effectiveness. In addition the Company will
products and our own business systems. During the operation
devote its efforts to study and analyse exchange rates and interest
of the information system it has established the security
rates closely monitor changes in the global markets issue early
capability baseline (measurable cyberspace security capability
warnings in time and take countermeasures accordingly.evaluation) safe operation capability DevOps security capability
and security ecology capability to enhance the capability of
V) Information system risk the IT infrastructures to discover and defend against cyber
Information system risk: To cope with business diversification security attacks. Moreover the Company has established a more
at the Company and meet the complex and diverse needs comprehensive system for prevention and control of information
of customers the Company has set up and applied various risks and formulated standard processes such as the Major Eventinformation systems and technologies. Rapid development of Management Process System for IT System 《( IT 系统重大事件管理the industry and the evolving marketplace also pose a challenge 流程制度》) and the Management Guidelines for Emergency Planof rapid change in technology and services on the construction Formulation and Implementation of IT System 《( IT 系统应急预案制of core business systems of the Company. With the wide variety 定与执行管理指引》) to implement closed-loop risk prevention and
and rapid replacement of professional technologies in the control via pre-warning in-process control and post-recording.Company along with emerging new technologies changes in Furthermore with a view to eliminating privacy compliance risks
information technology and future business requirements may reducing potential business loss fulfilling the responsibilities of
cause certain information system risks. Although the series of data processors effectively protecting the benefits of users and
information security management and control mechanisms have employees and maintaining a positive image of SF’s personal
been established drawing on the substantial amount of data information protection the Company acted in compliance
accumulated over the years by the Company there still exists with the GDPR and assessed privacy compliance of its apps
certain human or system caused information security risks. implemented multiple publicity and training on privacy compliance
And as the top-level laws related to data security and personal within the Company after the Data Security Law 《( 数据安全法》)
information protection are introduced and employees’ and users’ and Personal Information Protection Law 《( 个人信息保护法》) were
awareness of privacy protection has enhanced the regulators promulgated and continuously conducts security intervention
have set higher and stricter requirements for the standardisation during personal information processing and business system
of data processor especially personal information processing building activities with high standards of privacy compliance
activities. Therefore companies with a deluge of personal requirements enforced so as to enhance the ability to resist
information are also inevitably facing privacy compliance risks. security attacks on personal information protection and business
Risk response: The Company has formulated comprehensive system. Additionally the Company has actively participated in the
response measures over information system risks. formulation and review of various information security standards
of the National Information Security Standardisation Technical
Committee and pilot work for implementation of policies.
084Chapter 3Management Discussion and Analysis
XIV、Reception of Research Communication Interviews
and Other Activities During the Reporting Period
√ Applicable□ Not applicable
Main topics and information Index of Basic Information of
Date of reception Venue of reception Method of reception Type of visitors Visitor
provided Research
A total of 391 investors including Fullgoal Fund
China Universal Asset Management Harvest“Record Form of Investor Relations
20/F Block B TK Fund Invesco Great Wall BOCOM Schroder Interpreting the Company’s
Activities Held on March 28
Chuangzhi Tiandi Fund E Fund Bosera Funds Taikang Asset annual results for 2022Communication on 2023” (No.: 2023-001) disclosed
March 28 2023 Building Keji South 1st Institution Pacific Ocean Asset Management Wellington introducing business highlights
phone by the Company on CNINFO
Road Nanshan District Investment CITIC Securities Huatai Securities and presenting business
(www.cninfo.com.cn) on March 30
Shenzhen Changjiang Securities China Merchants outlook for 2023
2023
Securities HSBC Qianhai Securities Guohai
Securities TF Securities and other institutions“Record Form of Investor RelationsInterpreting annual resultsActivities Held on April 6 2023”
Network platform and introducing business
(No.: 2023-002) disclosed
April 6 2023 https://ir.p5w.net for online Institution All investors development and operational
by the Company on CNINFO
communication measures of the Company for
(www.cninfo.com.cn) on April 10
2022
2023“Record Form of Investor Relations
2/F Block B TKInterpreting the Company’s Activities Held on April 27 2023”
Chuangzhi Tiandi Institutions
A total of 37 investors including and other development outlook 2022 (No.: 2023-003) disclosed by the
April 27 2023 Building Keji South 1st Field research and
institutions and individual shareholders annual report and first quarterly Company on the Cninfo website
Road Nanshan District individuals
report for 2023 (www.cninfo.com.cn) on April 28
Shenzhen
2023
A total of approximately 387 investors including
Bosera Funds Chongyang Investment Springs“Record Form of Investor Relations
20/F Block B TK Capital Fullgoal Fund Fidelity International Reviewing the business
Activities Held on August 28
Chuangzhi Tiandi Institutions Holdings Franklin Templeton Investments Bank interpreting the results forCommunication on 2023” (No.: 2023-004) disclosed
August 28 2023 Building Keji South 1st and of Communications Schorder Fund Management the first half of 2023 and
phone by the Company on CNINFO
Road Nanshan District individuals Harvest Fund China Universal Asset future plans for developing
(www.cninfo.com.cn) on August
Shenzhen Management China Asset Management Omers international business etc
292023
Asia Pte and other institutional and individual
shareholders
Web-based participation: All investors
On-site participation: Hao Yue from Minmetals
International Trust Zhang Xinxin from CCB“Record Form of Investor RelationsPrincipal Capital Management Li Sisi China from
Field research Interpretation of the results Activities Held on October 25
Southern Asset Management Su Tianpeng fromShenzhen Stock Exchange + offline for the first half of 2023 and 2023” (No.: 2023-005) disclosed
October 25 2023 Institution Pingan Asset Management Yu Quan from Pingan
8th Floor Listing Hall communication on expectations for future business by the Company on CNINFO
Asset Management Guo Jing from Changjiang
web platform development (www.cninfo.com.cn) on October
Pension Ma Jun from GF Fund Management
252023
Chen Ze from E Fund Bian Wenjiao from Huatai
Securities Research Institute Wang Nianchun
from Guosen Securities
085Chapter 3Management Discussion and Analysis
XV、 Implementation of the action programme
“Quality and Returns Improve Together”Whether the company disclose the “Quality and Returns Improve Together“ action programme during the reporting period or not□ Yes√ No
The Company is committed to adhering to a sustainable and healthy development approach continuously improving its quality. At the same
time the Company actively shares its developmental achievements with its investors consistently increasing the returns to investors. (1) The
Company's per-share dividend for 2023 is RMB0.6 representing a 140% increase as compared to that in 2022; (2) According to the "Future
Five-Year (2024-2028) Shareholder Return Plan" recently formulated by the Company's board of directors the cash dividend ratio from
2024 to 2028 will steadily increase based on that for 2023; (3) Moreover the Company has changed the purpose of the share repurchase
plans for March and September 2022 and January 2024 to cancellation which will contribute to an increase in the Compony’s earnings per
share.Going forward the Company will continue to focus on its core business development enhance its core competitiveness improve corporate
governance and increase its value for investment. At the same time it will fully utilize measures such as cash dividends and repurchases to
actively maintain market stability.
086Chapter 4Corporate Governance
I. Basic Information of Corporate Governance
In strict accordance with the requirement of the Company Law Securities Law Code of Corporate Governance for Listed Companies in
China and Rules Governing the Listing of Shares on Shenzhen Stock Exchange Self-Regulatory Guidelines for Companies Listed on the
Shenzhen Stock Exchange No. 1: Standardized Operation of Companies Listed on Main Board as well as relevant laws and regulations
promulgated by the CSRC and Shenzhen Stock Exchange the Company has formulated the Articles of Association and other internal
control regulations improved its corporate governance structure internal management and control system and set up norms for company
behaviours. The actual conditions of corporate governance met the requirements of the regulatory documents with respect to the corporate
governance structure of listed companies issued by the CSRC.
1. Shareholders and General Meeting
During the Reporting Period the Company standardized the gathering convening and voting procedures of shareholders’ general meetings
in strict accordance with Securities Law Company Law and other relevant laws and regulations to effectively guarantee the rights and
interests of minority shareholders and equally treat all investors so that they can fully exercise their rights. The Company engaged lawyers to
attend general meetings and issue legal opinions for the holding and voting procedures of the general meetings. In this way the legal rights
and interests of all shareholders were fully respected and safeguarded.
2. Controlling shareholders and the Company
The Company’s controlling shareholders strictly regulated shareholder behavior in accordance with the Code of Corporate Governance
for Listed Companies in China Stock Listing Rules of Shenzhen Stock Exchange and Articles of Association. The controlling shareholders
exercised shareholder rights through the general meeting and there was no direct or indirect interference with the Company’s operations
and decision-making beyond the general meeting and the Board of Directors.
3. Directors and the Board of Directors
The Company elects candidates for the Board of Directors in strict accordance with the Company Law Articles of Association and Regulated
Opinions on Shareholders General Meetings of Listed Companies. The number of members and composition of the Board of Directors meet
the requirements of laws and regulations.The Board of Directors of the Company convened Board sessions in strict accordance with the relevant provisions of the Articles of
Association Working System for Independent Directors and Rules of Procedure for the Board of Directors and other related regulations. All
directors scrupulously attended the Board sessions seriously examined various proposals and fulfilled their duties diligently. Independent
directors fulfilled their duties independently safeguarded the Company’s overall interests and issued independent opinions on major and
important issues.
4. Supervisors and Supervisory Committee
The Company elects candidates for the Supervisory Committee in strict accordance with the Company Law Articles of Association
Regulated Opinions on Shareholders General Meetings of Listed Companies and other relevant laws and regulations. The number of
members and composition of the Supervisory Committee meet the requirements of laws and regulations. The Supervisory Committee of the
Company convened the sessions of Supervisory Committee in strict accordance with the relevant provisions of the Articles of Association
Rules of Procedure for the Supervisory Committee and other related regulations. All supervisors scrupulously attended the sessions seriously
fulfilled their duties diligently and supervised and issued opinions for major issues related-party transactions and financial status.
5. Information disclosure and transparency
The Company duly performed information disclosure obligations in accordance with the requirements of the Articles of Association Rules
Governing the Listing of Shares on Shenzhen Stock Exchange and the relevant laws and regulations of the CSRC and the Shenzhen Stock
Exchange. The Company designated Securities Times Securities Daily Shanghai Securities News China Securities Journal and Cninfo to
disclose the Company’s information in a true accurate and timely manner so that all shareholders of the Company can be impartially
informed about the Company.
087Chapter 4Corporate Governance
6. Investor relations management
During the Reporting Period the Company disclosed information strictly in accordance with relevant laws and regulations and the Rules
Governing the Listing of Shares on Shenzhen Stock Exchange to ensure that all shareholders of the Company can access information on an
equal basis. In addition the Company designated the Secretary of the Board of Directors as the head of investor relations management to
organize and implement the routine management of investor relations and promptly answer investors’ questions in the form of phone calls
email and interactions. The Company designated the Securities Affairs Department as a specialized investor relations management agency
to strengthen communications with investors and adequately safeguarded investors’ rights to know.
7. Performance appraisals and incentives
Through performance appraisals the Company effectively implemented a comprehensive assessment of each employee and further
understood each employee’s work competence and expertise thereby effectively adjusting appropriate positions for employees and
achieving the goal of performance appraisal. The Company continues to improve the performance appraisal mechanism. The remuneration
of the Company’s senior executives and middle-level management personnel is linked to the Company’s operating performance indicators.In order to further establish and improve its incentive mechanism to attract and retain outstanding talents thus continuously improving its
competitiveness the Company has implemented the share option incentive scheme to promote its sustainable and healthy development.
8. Stakeholders
The Company can fully respect and safeguard the legitimate rights and interests of relevant stakeholders coordinate and balance the
interests of shareholders employees communities and others and jointly promote the Company’s sustained and healthy development. The
Company will continue to further its governance perfect its corporate governance structure disclose information to enhance the Company’s
transparency strengthen investor relations management and protect the interests of small and medium investors.There are no material discrepancies between the Company’s actual governance status and the laws administrative regulations and relevant
rules of governance on listed companies promulgated by the CSRC.II. Details of the Company’s Independence from
the Controlling Shareholder and Actual Controller
with Respect to Assets Personnel Financial Affairs
Organization and Business
When the Company conducted significant assets restructuring Mingde Holding the controlling shareholder and Mr. Wang Wei the actual
controller of the Company made a Commitment to Maintain the Independence of the Listed Company on January 23 2017 undertaking
to strictly comply with the relevant regulations of the CSRC on the independence of listed companies and maintain the independence of
assets personnel finance organization and business of the listed Company. The commitment is permanently effective. As of the end of the
Reporting Period Mingde Holding and Mr. Wang Wei fulfilled earnestly the independence commitment and did not affect the independence
of the Company. The Company was independent from the controlling shareholder in terms of assets personnel finance organization and
business.
088Chapter 4Corporate Governance
III. Horizontal Competition
□ Applicable√ Not applicable
IV. Details about the Annual General Meeting and
Extraordinary General Meetings Convened during the
Reporting Period
1. Details about the shareholders’ general meeting during the Reporting Period
Investor
Meeting Meeting Type Date Convened Disclosure Date Meeting Resolutions
Participation %
“2022 Annual General Meeting Resolutions”
Annual General
2022 Annual General Meeting 67.29% April 27 2023 April 28 2023 (2023-035) disclosed by the Company on
Meeting
CNINFO (www.cninfo.com.cn)“Resolutions of the First Extraordinary GeneralFirst Extraordinary General Extraordinary
66.57% August 17 2023 August 18 2023 Meeting of 2023” (2023-066) disclosed by the
Meeting of Shareholders of 2023 General Meeting
Company on CNINFO (www.cninfo.com.cn)“Resolutions of the Second Extraordinary GeneralSecond Extraordinary General Extraordinary
68.94% December 28 2023 December 29 2023 Meeting of 2023” (2023-093) disclosed by the
Meeting of Shareholders of 2023 General Meeting
Company on CNINFO (www.cninfo.com.cn)
2. Extraordinary General Meeting requested by preferred shareholders with
restitution of voting right
□ Applicable√ Not applicable
089Chapter 4Corporate Governance
V. Directors Supervisors and Senior Management
1. Basic information
Quantity of Quantity Quantity
Quantity of
shares held at of shares of shares Other increase Reason for increase
shares held at
Name Title Tenure status Gender Age Commencement Date End Date the beginning increased in the decreased in or decrease or decrease in
the end of the
of the period current period the current (share) shares
period (share)
(share) (share) period (share)
Chairman of the Board
Wang Wei Current Male 53 December 28 2016 Present 0 0 0 0 0 –
general manager
Director November 15 2021
Stock Incentive
Ho Chit Deputy general manager Current Male 49 Present 0 122000 0 0 122000
September 29 2021 Exercise
financial head
Stock Incentive
Wang Xin Director Current Female 51 December 20 2022 Present 50000 122000 0 0 172000
Exercise
Stock Incentive
Zhang Dong Director Current Male 43 December 20 2022 Present 0 122000 0 0 122000
Exercise
CHAN Charles
Independent director Current Male 70 December 20 2022 Present 0 0 0 0 0 –
Sheung Wai
Lee Ka Sze
Independent director Current Male 63 December 20 2022 Present 38000 0 0 0 38000 –
Carmelo
Ding Yi Independent director Current Female 59 December 20 2022 Present 0 0 0 0 0 –
Shum Tze Chairman of the Supervisory
Current Male 58 December 27 2019 Present 0 0 0 0 0 –
Leung Committee
Wang Jia Supervisor Current Female 44 April 09 2021 Present 0 0 0 0 0 –
Personal capital
Liu Jilu Supervisor Current Male 77 December 28 2016 Present 44723780 0 8930000 0 35793780
need
Employee representative
Li Juhua Current Female 44 December 27 2019 Present 0 0 0 0 0 –
supervisor
Employee representative
Zhang Shun Current Male 32 December 20 2022 Present 0 0 0 0 0 –
supervisor
Stock Incentive
Li Sheng Deputy general manager Current Male 57 December 28 2016 Present 0 1220000 0 0 122000
Exercise
Stock Incentive
Zhou Haiqiang Deputy general manager Current Male 46 December 20 2022 Present 0 61000 0 0 61000
Exercise
Stock Incentive
Geng Yankun Deputy general manager Current Male 38 December 20 2022 Present 0 1220000 0 0 1220000
Exercise
Deputy general manager
Gan Ling Current Female 49 December 28 2016 Present 0 0 0 0 0 –
secretary of the Board
Total – – – – – – 44811780 671000 8930000 0 36552780 –
Any director or supervisor resigned or any senior executive in office dismissed during the Reporting Period
□ Yes√ No
Changes of directors supervisors and senior executives of the Company
□ Applicable√ Not applicable
090Chapter 4Corporate Governance
2. Biography of Key Personnel
The professional background main working experience and their main duties in the Company of incumbent directors supervisors and
senior executives of the Company.Board of Directors
Chairman
Mr. Wang Wei male born in 1970 is the founder and de facto controller of the Company. He currently serves as Chairman Executive
Director and General Manager of the Company. He has served as the chairman of the board of directors and non-executive director of Kerry
Logistics (00636.HK) since October 2021.Directors
Mr. Ho Chit male born in 1975 graduated from the University of Hong Kong and Tsinghua University. He is a certified public accountant
of Hong Kong and an American certified public accountant with extensive experience in financial management corporate finance auditing
and business management. He served as Senior Manager of the Audit and advisory division of Arthur Anderson and PriceWaterhouseCoopers
from 1997 to 2005 as Senior Financial Director of Sohu.com Limited (SOHU.US) from 2005 to 2008 as Chief Financial Officer of Changyou.Com Limited (CYOU. US) from 2009 to 2014 and as Chief Executive Officer of Fox Fintech Group from 2014 to 2021. He has served as
Deputy General Manager and Financial Head of the Company since September 2021 and was appointed as Director of the Company since
November 2021 and re-designated as an executive director since August 2023 as non-executive Director of Kerry Logistics (00636.HK) since
October 2021 as non-executive Director of SF REIT Asset Management Limited since April 2022 and has been the Chairman of the Board
since August 2023.Ms. Wang Xin female born in 1972 was graduated from CEIBS with a Master degree of Business Administration. She served as the Senior
Project Manager and the Associate Partner of Mercer Management Consulting (now Oliver Wyman) from 2000 to 2008 as the Associate
Partner of AT Kearney from 2008 to 2011 as the Senior Partner of Roland Berger from 2011 to 2021 as the Assistant CEO and the CHO of
S.F. Holding from January 2022 to January 2024 and as the Assistant CEO and the CSO of S.F. Holding since January 2024. She has been a
Director of S.F. Holding since December 2022.Mr. Zhang Dong male born in 1980 was graduated from Shandong University of Technology with a bachelor’s degree. From 2004
to 2021 he served as the senior technical manager planning director head of product department regional general manager head
of business customer management and assistant chief marketing officer. He has been the chief marketing officer of S.F. Holding and
the president of South China Region since November 2021. He was appointed as a Director of S.F. Holding in December 2022 and was
re-designated as our executive Director on August 2023.Mr. Chan Charles Sheung Wai male born in 1954 was graduated from the University of Manitoba Canada and is a certified public
accountant in Canada and Hong Kong. Mr. CHAN has extensive experience in auditing finance and risk management and served as
the Managing Partner of the Audit Department of Arthur Andersen Chinese Mainland/Hong Kong the Managing Partner of the Audit
Department of PricewaterhouseCoopers China and the Senior Managing Director of Protiviti China/Hong Kong (a risk management and
consulting firm). Mr. CHAN was also a member of the HKEX Listing Committee a member of the Election Committee of the First Legislative
Council of Hong Kong and the Independent Non-Executive Director of CITIC Securities (600030.SH 06030.HK) and Changyou (CYOU.US).Mr. CHAN is currently serving as the Independent non-executive Director of Maoyan Entertainment (01896.HK) Hansoh Pharmaceutical
(03692.HK) Sun Art Retail (06808.HK) and Bioheart (02185.HK). He has been an Independent non-executive Director of S.F. Holding since
December 2022.Mr. Lee Carmelo Ka Sze male born in 1960 was graduated from the University of Hong Kong with a Bachelor’s degree in Law and he is
a qualified lawyer in Hong Kong England and Wales Singapore and the Australian Capital Territory. Mr. LEE has rich legal experience and
has been a partner and senior partner of Woo Kwan Lee & Lo since 1989 and its Managing Partner since 2022. Mr. LEE is also one of the
Candidate Chairmen of the Listing Review Committee of the Stock Exchange of Hong Kong a member of the InnoHK Steering Committee
of the Innovation and Technology Commission of the Government of the Hong Kong Special Administrative Region the Chairman of the
Appeal Tribunal Panel (Buildings) a member of the Campaign Committee of the Community Chest of Hong Kong and the co-chairman of
the Charity Marathon Planning Committee. His working experience also included being an Independent non-executive Director of Ping An
(601318.SH 02318.HK) CPIC (601601.SH 02601.HK) KWG Group (01813.HK) and other companies. Mr. LEE is currently serving as the
Independent non-executive Director of China Mobile (600941.SH 00941.HK) as the Non-executive Director of Safety Godown (00237.HK)
and Playmates Holdings (00635.HK). He has been an Independent non-executive Director of S.F. Holding since December 2022.
091Chapter 4Corporate Governance
Ms. Ding Yi female born in 1964 Ph.D. Economics and Senior Economist has extensive experience in financial management and
served as a lecturer at the School of Finance of Renmin University of China the Deputy General Manager of PICC (601319.SH、01339.HK). Investment Management Department the Director and President Assistant of PICC Asset Management Company Limited the General
Manager and Chairman of Huaneng Capital Services Co. Ltd. the Chairwoman of Great Wall Securities (002939.SZ) and the Chairwoman
of Invesco Great Wall Fund Management Company Limited. Ms. DING is currently serving as the Director of Tongwei Co. Ltd. (600438.SH) and the Independent Director of Huaxia Bank (600015.SH) Huatai Asset Management Co. Ltd. and Zhangjiakou Yuanshi Advanced
Materials Co. Ltd. She has been an Independent non-executive Director of S.F. Holding since December 2022.Supervisory Committee
Chairman of the Supervisory Committee
Mr. Shum Tze Leung male born in 1965 has served as Regional General Manager Planning Director Operation Director Vice President
of Operation Department Head of Industrial Projects and Head of Procurement & Supply Chain Center of S.F. Group from 1997 to 2020.He has been Head of Hong Kong operations of the Company since 2020. He has served as Supervisor of S.F. Holding since December 2019.He has served as Chairman of the Supervisory Committee of the Company since April 2021.Supervisors
Ms. Wang Jia female born in 1979 holds a bachelor degree in economics from Shenzhen University. She served at Deloitte Touche
Tohmatsu Certified Public Accountants LLP Shenzhen Branch from 2002 to 2006 and Ernst & Young (China) Advisory Limited Shenzhen
Branch from 2007 to 2014. She joined S.F. Group in 2014 and has held various positions including financial planning expert and the head
of internal control group and is currently head of risk control and compliance. She has served as Supervisor of S.F. Holdings since April
2021.
Mr. Liu Jilu male born in 1947 was graduated from Anhui University with a specialization in economics and management. From 1994 to
2016 he served as General Manager of Ma’anshan Dingtai Metal Products Company Chairman & General Manager of Ma’anshan Dingtai
Technology Co. Ltd. and Chairman & General Manager of Ma’anshan Dingtai Rare Earth & New Materials Co. Ltd. He has served as
Supervisor of the S.F. Holdings since December 2016.Ms. Li Juhua female born in 1979 was graduated from Tongji University with a Bachelor’s degree in management. She is a Fellow of the
Chartered Management Accountants (FCMA) and the Chartered Global Management Accountant (CGMA). She served as an accountant and
finance manager of Shanghai Totole Flavoring Food Co. Ltd. under Nestlé from 2002 to 2004 as an assistant accountant and an assistant
finance manager at Walmart’s China headquarters from 2004 to 2008 as Financial Manager of B&Q Shenzhen from 2008 to 2010 and as
Financial Director of Maoye International Holdings Limited (00848.HK) from 2011 to 2012. She successively held various key positions within
S.F. Group from 2012 to December 2023 including the head of accounting department head of tax department and head of financial
shared service center and the Head of CFO Office. She served as Assistant CFO and simultaneously as the Head of CFO Office since January
2024. She served as an Employee Representative Supervisor of the S.F. Holdings since December 2019 as a non-executive director of SF REIT
Asset Management Limited (the manager of SF REIT (02191.HK)) since August 2023 and as a non-executive director of SF Intra-city limited
(09699.HK) since November 2023.
Mr. Zhang Shun male born in 1991 was graduated from Sun Yat-sen University with a Master’s degree in Economics. Mr. Zhang
successively held various positions since he joined S.F. Group in 2015 including procurement management coordinator procurement
management senior coordinator and operation management senior coordinator. He served as the Head of Culture and Employee Relations
Section of from November 2020 to February 2024 and as the Assistant Head of SF Express business region since March 2024 and as an
Employee Representative Supervisor of S.F. Holding since December 2022.Senior Executives
For the work experience positions and other posts held concurrently by Mr. Wang Wei and Mr. Ho Chit please refer to the section headed
“the Board of Directors”.Mr. Li Sheng male born in 1966 holds a bachelor’s degree in law from Sichuan Normal University. From 1997 to 2005 he served as
Senior Executive at Walmart China. He joined S.F. Group in 2005 and successively held various positions including general manager of
Hubei region general manager of Sichuan region vice president of our Group president of Central China operation president and person
in charge of SF Airlines Company Limited. He has been the chairman of SF Airlines Company Limited since June 2021 and the assistant chief
operation officer of S.F. Group since 2022. Since December 2016 he has served as Deputy General Manager of S.F. Holdings.
092Chapter 4Corporate Governance
Mr. Zhou Haiqiang male was born in 1977. Mr. Zhou joined S.F. Group in 2001 and successively held the positions of senior manager
of general affairs department of East China region operation headquarter general manager of Hangzhou region deputy president of
e-commerce logistics business unit Assistant Chief Human Resources Officer and head of Shanghai operations. He has been the Assistant
CEO of S.F. Group since November 2020 and the Deputy General Manager of S.F. Holding since December 2022.Mr. Geng Yankun male born in 1986 was graduated from Harbin Institute of Technology and Peking University with a master’s degree.After graduating in 2009 he joined Baidu and was successively responsible for the technical R&D and management of Baidu Wiki Baidu
Knows Baidu Travel and Baidu LBS etc. He joined S.F. Group in 2017 and currently holds various positions within Group including the
CEO of Beijing S.F. Intra-city Technology Co. Ltd. the CTO of S.F. Holding and the CEO & Chairman of SF Technology Co. Ltd. He has
been served as the Deputy General Manager of S.F. Holding since December 2022 and as a non-executive director of SF Intra-city limited
(09699.HK) since September 2023.
Ms. Gan Ling female born in 1974 holds a master of business administration degree from the University of Texas at Austin in the United
States of America and an Executive Master of Business Administration (EMBA) degree from PBCSF Tsinghua University. She was an analyst
at Coatue Management one of the Tiger cub funds in New York from 2006 to 2010. She served as deputy general manager of Maoye
International Holdings Limited (00848.HK) from 2010 to 2015. She is currently a member of the Appeal Review Committee at the Shenzhen
Stock Exchange. She joined S.F. Group in 2016 and has been the Secretary of the Board of Directors and Deputy General Manager of
S.F. Holding since 2016 and a non-executive director of SF REIT Asset Management Limited (the manager of SF REIT (02191.HK)) since
December 2022.Positions held in shareholder entities
√ Applicable□ Not applicable
Receiving payment
Position in the shareholder
Name Name of the shareholder entity Commencement date End date from the shareholder
entity
entity or not
Wang Wei Shenzhen Mingde Holding Development Co. Ltd. Executive director August 03 2004 Present No
Description of
posts held in N/A
shareholder entity
Employment with other companies
√ Applicable□ Not applicable
Receiving payment
Name Name of the other entity Position in the other entity Commencement date End date from the other entity
or not
Wang Wei Guangdong Shucheng Technology Co. Ltd. Director August 2018 April 2023 No
Chairman of board of
Wang Wei SF REIT Asset Management Limited directors non-executive February 2021 August 2023 No
director
Ho Chit Fox Financial Technology Group Limited Director April 2014 Present No
Non-executive director April 2022
Ho Chit SF REIT Asset Management Limited Chairman of board of Present No
August 2023
directors
Wang Xin Global Connect Holding Limited Director August 2023 Present No
Yihai SF Express (Shanghai) Supply Chain
Wang Xin Director October 2023 Present No
Technology Co. Ltd
Chan Charles Independent non-executive
Maoyan Entertainment January 2019 Present Yes
Sheung Wai director
093Chapter 4Corporate Governance
Receiving payment
Name Name of the other entity Position in the other entity Commencement date End date from the other entity
or not
Chan Charles Independent non-executive
Hongkong Fusion Bank March 2019 Present Yes
Sheung Wai director
Chan Charles Independent non-executive
Hansoh Pharmaceutical Group Company Limited May 2019 Present Yes
Sheung Wai director
Chan Charles
CITIC-Prudential Life Insurance Company Limited Non-executive director May 2019 Present Yes
Sheung Wai
Chan Charles Independent non-executive
Shanghai Bio-heart Biological Technology Co. Ltd. November 2020 Present Yes
Sheung Wai director
Chan Charles Independent non-executive
SUN ART RETAIL GROUP LIMITED January 2021 Present Yes
Sheung Wai director
Chan Charles Independent non-executive
Hongkong FuSure Reinsurance Company Limited April 2021 Present Yes
Sheung Wai director
Chan Charles Goldman Sachs Gao Hua Securities Company Independent non-executive
October 2021 Present Yes
Sheung Wai Limited director
Chan Charles CITIC-Prudential Asset Management Company
Non-executive chairman November 2021 Present Yes
Sheung Wai Limited
Lee Ka Sze
Manson (Holding) Inc Director February 1981 Present No
Carmelo
Lee Ka Sze
EVERSO COMPANY LIMITED Director March 1985 Present Yes
Carmelo
Lee Ka Sze
Manson Commercial Limited Director May 1989 Present No
Carmelo
Lee Ka Sze MANSON INVESTMENT AND FINANCE COMPANY
Director June 1989 Present Yes
Carmelo LIMITED
Lee Ka Sze
Kiasu Co. Ltd. Director January 1991 Present No
Carmelo
Lee Ka Sze
WU JIA TANG FOUNDATION LIMITED Director September 1994 Present No
Carmelo
Lee Ka Sze
Loylee Investments Limited Director November 1994 Present No
Carmelo
Lee Ka Sze
SAFETY GODOWN COMPANY LIMITED Non-executive director September 2004 Present Yes
Carmelo
Lee Ka Sze Independent non-executive
KWG Group Holdings Limited June 2007 March 2024 Yes
Carmelo director
Lee Ka Sze
Wise Town Limited Director November 2008 Present No
Carmelo
Lee Ka Sze
PLAYMATES HOLDINGS LIMITED Non-executive director November 2019 Present Yes
Carmelo
Lee Ka Sze Independent non-executive
China Mobile Limited May 2022 Present Yes
Carmelo director
094Chapter 4Corporate Governance
Receiving payment
Name Name of the other entity Position in the other entity Commencement date End date from the other entity
or not
Lee Ka Sze
W. & K. (Nominees) Limited Director May 2022 Present No
Carmelo
Ding Yi Tongwei Co. Ltd. Non-executive director May 2020 Present Yes
Ding Yi HUA XIA BANK CO. Limited Independent director September 2020 Present Yes
Ding Yi Huatai Asset Management Company Limited Independent director September 2020 Present Yes
Ding Yi Zhangjiakou Yuanshi Advance Materials Co. Ltd Independent director November 2021 Present Yes
Shum Tze Leung KINGS (HK) INTERNATIONAL LIMITED Director February 2019 Present No
Shum Tze Leung Kin Shun Information Technology Holdings Limited Director February 2019 Present No
Shum Tze Leung Kin Shun Information Technology Limited Director February 2019 Present No
Li Juhua Global Connect Holding Limited Director April 2022 August 2023 No
Li Juhua SF REIT Asset Management Limited Non-executive director August 2023 Present No
Li Sheng SF Foundation Director October 2016 Present No
Ningbo Meishan Bonded Port Zhizi Investment Chairman of board of
Geng Yankun December 2022 Present No
Management Co. Ltd directors
Gan Ling Sunrise Capital Feeder Fund Ltd. Director April 2015 January 2024 No
Gan Ling SF REIT Asset Management Limited Non-executive director December 2022 Present No
Description of
posts held in other N/A
entity
Penalties imposed by securities regulatory bodies on the Company’s current and dismissed directors supervisors and senior executives
during the Reporting Period in the past three years
□ Applicable√ Not applicable
3. Remuneration for Directors Supervisors and Senior Management
Decision-making procedure basis of determination and actual payment of remuneration for
directors supervisors and senior management
With a view to further improving the remuneration management system for the Company’s directors supervisors and senior executives
establishing an incentive and restraint mechanism compatible with modern enterprise system which helps match responsibilities with rights
and fully incentivizing the Company’s directors supervisors and senior executives the Company formulated the Management System
of Remuneration of Directors Supervisors and Senior Executives which was reviewed and approved on the Company’s 2017 Second
Extraordinary General Meeting of Shareholders and the amendment was reviewed and approved on the Company’s 2020 First Extraordinary
General Meeting of Shareholder.According to the Management System of Remuneration of Directors Supervisors and Senior Executives the Company pays allowances
to independent directors each year. The amount of the allowances is determined at the Company’s general meeting. The allowances for
independent directors are issued from the following month after their appointment resolutions are passed at the Shareholders’ General
Meeting.The Company does not provide separate allowances for external directors internal directors external supervisors or internal supervisors.Internal directors and internal supervisors receive remuneration according to the corresponding remuneration for senior executive or other
positions concurrently held by them and appraisal management approach.
095Chapter 4Corporate Governance
The remuneration determination mechanism of the Company’s senior management: the Remuneration Management Committee under
the Board of Directors of the Company formulates and reviews the appraisal method and remuneration plan for the senior management
appraises the performance and behavior of the senior management and submits appraisal results to the Board of Directors for approval. The
Company determines the annual remuneration of the senior management with reference to the income level of the industry and the region
taking into account factors such as the Company’s operating performance and their contribution. For our senior management the Company
adopts the annual salary system in which the fixed salary is determined with reference to factors including market rate and individual
contribution while the annual bonus is a floating incentive determined by the performances of both the Company and individuals.The remuneration of the Company’s internal directors internal supervisors and senior executives is paid according to the Company’s salary
system.Remuneration of directors supervisors and senior executives during the Reporting Period
Unit: RMB’000
Total Pre-tax Remuneration
Whether Gained
Gained from the Company in 20231
Remuneration from the
Name Position Gender Age Tenure status
Related Parties of the
Wages and Share-based
Emoluments Other benefits Company
bonus etc. Compensation3
Wang Wei Chairman and General Manager Male 53 Current – 1122 39 – No
Director Deputy General
Ho Chit2 Male 49 Current 426 6092 148 2945 No
Manager CFO
Wang Xin Director Female 51 Current – 2985 135 2945 No
Zhang Dong Director Male 43 Current – 2443 183 2945 No
Chan Charles Sheung
Independent Director Male 70 Current – 680 – – Yes
Wai
Lee Ka Sze Carmelo Independent Director Male 63 Current – 680 – – Yes
Ding Yi Independent Director Female 59 Current – 680 – – Yes
Chairman of the Supervisory
Shum Tze Leung Male 58 Current – 545 96 – No
Committee
Wang Jia Supervisor Female 44 Current – 1085 63 – No
Liu Jilu Supervisor Male 77 Current – – – – No
Employee representative
Li Juhua Female 44 Current – 1456 236 – No
supervisor
Employee representative
Zhang Shun Male 32 Current – 704 62 – No
supervisor
Li Sheng Deputy General Manager Male 57 Current – 3318 144 2945 No
Zhou Haiqiang Deputy General Manager Male 46 Current – 1976 241 2169 No
GengYankun Deputy General Manager Male 38 Current – 2574 106 2945 No
Deputy General Manager and
Gan Ling Female 49 Current – 2527 92 776 No
Secretary of the Board合计42628866154717670
Note 1: The total pre-tax remuneration refers to the remuneration received by the above-mentioned personnel during their tenure as a director
supervisor or deputy general manager of the listed company S.F. Holding in 2023.Note 2: The amount of “Ho Chit’s Emolument” during the reporting period consisted mainly of director’s emoluments received from Kerry Logistics
a subsidiary of the S.F. Holding.Note 3: The amount of Share-based Compensation refers to the accounting amount of stock options granted by the Company’s share incentive plan
to such persons during the period of their employment in 2023.Note 4: Any discrepancies in totals are due to rounding. 096Chapter 4Corporate Governance
Other information
□ Applicable√ Not applicable
VI. Performance of Duties by Directors During the
Reporting Period
1. Board of Directors during the Reporting Period
Meeting Date Convened Disclosure Date Meeting ResolutionsFor details refer to the “Announcement of the Resolutions of the 2nd Session
2nd meeting of the 6th Board ofMarch 28 2023 March 29 2023 of the 6th Board of Directors” (announcement No.: 2023-011) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).For details refer to the “Announcement of the Resolutions of the 3rd Session
3rd meeting of the 6th Board ofMarch 29 2023 March 29 2023 of the 6th Board of Directors” (announcement No.: 2023-026) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).
4th meeting of the 6th Board of The “Full Text and Main Text of the 2023 First Quarter Report of the Company”
April 26 2023 –
Directors was reviewed and approved.For details refer to the “Announcement of the Resolutions of the 5th Session
5th meeting of the 6th Board ofMay 12 2023 May 13 2023 of the 6th Board of Directors” (announcement No.: 2023-038) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).For details refer to the “Announcement of the Resolutions of the 6th Session
6th meeting of the 6th Board ofAugust 1 2023 August 2 2023 of the 6th Board of Directors” (announcement No.: 2023-055) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).For details refer to the “Announcement of the Resolutions of the 7th Session
7th meeting of the 6th Board ofAugust 28 2023 August 29 2023 of the 6th Board of Directors” (announcement No.: 2023-069) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).For details refer to the “Announcement of the Resolutions of the 8th Session
8th meeting of the 6th Board ofOctober 30 2023 October 31 2023 of the 6th Board of Directors” (announcement No.: 2023-080) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).For details refer to the “Announcement of the Resolutions of the 9th Session
9th meeting of the 6th Board ofDecember 12 2023 December 13 2023 of the 6th Board of Directors” (announcement No.: 2023-086) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).For details refer to the “Announcement of the Resolutions of the 10th Session
10th meeting of the 6th Board ofDecember 28 2023 December 29 2023 of the 6th Board of Directors” (announcement No.: 2023-091) disclosed by the
Directors
Company on Cninfo (www.cninfo.com.cn).
097Chapter 4Corporate Governance
2. Details of attendance at meetings of the Board and general meetings by
directors
Details of attendance of meetings of the Board and general meetings by director
Number of Whether the
Required number Number of
Number of physical attendance at Number of absence director does Number of
of attendance attendance at
Name of director attendance at Board meetings from Board not attend two attendance at
during the Board meetings by
Board meetings by means of meetings consecutive Board general meetings
Reporting Period a proxy
communication meetings in person
Wang Wei 9 5 4 0 0 No 2
Ho Chit 9 5 4 0 0 No 3
Wang Xin 9 4 5 0 0 No 3
Zhang Dong 9 5 4 0 0 No 3
Chan Charles Sheung Wai 9 1 8 0 0 No 3
Lee Ka Sze Carmelo 9 1 8 0 0 No 3
Ding Yi 9 1 8 0 0 No 3
Information about directors who failed to attend two consecutive Board meetings in person.□ Applicable√ Not applicable
3. Details of directors objecting to relevant events of the Company
During the Reporting Period no directors objected to relevant events of the Company.
4. Other details about the performance of directors
Directors’ advice to the Company adopted or not
√ Yes□ No
During the Reporting Period the directors of the Company performed their duties diligently and actively in accordance with the provisions
of the Company Law the Securities Law the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange and other laws and
regulations regulatory documents and the Articles of Association of the Company Rules of Procedure of the Board of Directors and other
systems. The Board of Directors of the Company held a total of 9 meetings at which all directors attended in person on time without
delegated attendance or absence. The directors learned in detail the overall operating conditions and financial situation of the Company
carefully considered the various topics of the sessions of the Board of Directors and implemented the legal and effective decision-making
procedures for major matters. The Directors actively put forward relevant opinions and suggestions on corporate governance and operational
decisions in accordance with the actual situation of the Company and supervised and promoted the execution and implementation of the
resolutions of the Board of Directors to ensure that the decisions were made in a scientific timely and efficient manner and to safeguard
the legitimate rights and interests of the Company and all shareholders.
098Chapter 4Corporate Governance
VII. Details of Special Committees of the Board of
Directors During the Reporting Period
Number of Other Objection
Important opinions and suggestions
Name of Committee Members meetings Date of meeting Transaction performance details (if
proposed
held of duties any)
Consideration of the 2022 Internal Audit
Summary and the 2023 Working Plan and Not
February 2 2023 No
the 2022 Internal Control Audit Findings applicable
and Key Audit Matter Communication
Consideration of the proposal to use
own funds for foreign exchange hedging
business in 2023 Self-appraisal Report
on Internal Controls of the Company
for 2022 the Company’s Final Account
Report for 2022 the Proposal on the Not
March 27 2023 1. The complicated economic No
company’s provision for asset impairment applicable
environment will bring challenges to
in 2022 the Company’s 2022 Annual
the company’s development and it
Audit Report and Other Special Reports
is recommended that the company
and Proposal of Continued Engagement of
should operate steadily maintain
PriceWaterhouseCoopers Zhongtian LLP as
a healthy cash flow and capital
the Company’s auditor for 2023
structure.Consideration of the Company’s 2023 2. The Company is promoting its
First Quarterly Report and Company’s
April 26 2023 H-share IPO due to the differences
Not
No
2023 First Quarterly Internal Audit Work in the regulatory rules of the applicable
Report and other Audit Reports capital markets of the two capital
Consideration of the Proposal for markets it is recommended that
Establishment of the Company’s the Company should pay more
Chan Charles Sheung Wai
Audit Committee Lee Ka Sze Carmelo 7
Appointment Process> and the Proposal differences in the rules and consult Not
Ding Yi July 25 2023 No
for Launching the Selection and more suggestions from professional applicable
Appointment of the Accountant Firm organizations.and Determination of the Selection and 3. The Company’s overseas
Appointment Method operations face the risk of
Consideration of the Proposal for the regulatory environment and cultural
Company to Engage Accountant Firm differences in different countries
Not
July 28 2023 for the Issuance and Listing of H Shares and it is recommended that the No
and the Report on the Utilization of the Company strengthen its overseas
applicable
Company’s Previous Proceeds audits pay attention to its own
weaknesses and learn from the
Consideration of the Company’s 2023
experience of other outstanding
Semiannual Financial Report Company’s
cases for continuous review and
2023 Semiannual Review Report and Not
August 25 2023 improvement. No
Company’s 2023 Second Quarter Internal applicable
Audit Work Report and other Audit
Reports
Consideration of the Company’s 2023
Third Quarter Financial Report Company’s
2023 Third Quarterly Internal Audit
Not
October 30 2023 Work Report the Working Plan of the No
applicable
Company’s 2023 Annual Report and
the Proposal for Change in Accounting
Estimates
099Chapter 4Corporate Governance
Number of Other Objection
Important opinions and suggestions
Name of Committee Members meetings Date of meeting Transaction performance details (if
proposed
held of duties any)
Consideration of the Proposal to Confirm
the Company’s Executive Compensation
Not
March 28 2023 and Performance for 2022 and the No
applicable
Proposal on the Senior Management
Compensation Plan for 2023
Consideration of the Proposal on It is recommended that the
Ding Yi Chan Charles Cancellation of Certain Stock Options Company continuously optimize the Remuneration and
Sheung Wai Lee Ka Sze 2
Appraisal Committee under the 2022 Stock Option Incentive
remuneration and incentive system
Carmelo Plan the Proposal on Adjustment of the to attract more outstanding talents
Exercise Price of the Company’s 2022 to join the Company. Not
July 28 2023 No
Stock Option Incentive Plan and the applicable
Proposal on the Achievement of Exercise
Conditions for the First Exercise Period of
the Initial Grant of Stock Options under
the 2022 Stock Option Incentive Plan
It is recommended that companies
need to match strategic
management talents and teams
pay attention to changes in the
Consideration of Company’s strategic
external environment and flexibly
Objectives and Annual Business Plan for
adjust their strategies to avoid
Chan Charles Sheung Wai 2023 Annual sustainability report for Not
Strategy Committee 1 March 28 2023 risks; as companies continue to No
Ding Yi Wang Wei 2022 the Final Account Report of the applicable
progress towards their 2030 carbon
Company for 2022 and the Financial
emission targets it is recommended
Budget Report of the Company for 2023
that companies focus on the ESG
development of their peers and large
international companies in order to
stay ahead of the competition.It is recommended that companies
Ho Chit Chan Charles Consideration of the Risk Control Work pay attention to the risk of the
Risk Management Not
Sheung Wai Lee Ka Sze 1 February 22 2023 Summary for 2022 and Risk Control Work impact of international relations on No
Committee applicable
Carmelo Plan for 2023 of the Company business and make timely response
plans.VIII. Details of the Work of the Supervisory Committee
The Supervisory Committee raised no objection to matters under supervision during the Reporting Period.
100Chapter 4Corporate Governance
IX . Employees of the aligns their interests with the interests of shareholders and the
Company more closely so as to drive the continuous growth of
Company the long-term operation results of the Company.
3. Training plan
1. Number role type and educationalThe Company continues to uphold the concept of “talent isbackground of employees the primary productive force” paying high attention to the
growth and development of employees. In 2023 the Company
Number of employees of the parent company
– promoted the optimization of its overall training system by
at the end of the Reporting Period (person) iterating the course and lecturer management mechanism
Number of employees of major subsidiaries at encouraging the creation of high-quality content and boosting
153125
the end of the Reporting Period (person) lecturers’ teaching enthusiasm; by establishing a demand map
around the actual business needs of key talent teams and
Total number of in-service employees at the matching course resources the Company created a full-process
153125
end of the Reporting Period (person) training mechanism; at the same time through digital platform
t ransformat ion the Company supported a c losed- loop
Total number of employees receiving a salary
153125 management of talent training work. Thus the Company achieved
during the Reporting Period (person)
“accuracy” of training needs “supply” of training content
“discovery” of training resources and “foundation” of talent
Role type
team training. In addition with the direction of “contextualized”
Category Number (person) “stratified” and “specialized” the Company continued to iterate
the training of the talent team.Operations personnel 87207
(1) Training of Basic-Level Employees:
Professional personnel 40721
For employee groups such as couriers warehouse managers
Management personnel 25197
customer service and sales staff the Company will focus on
Total 153125 the cultivation of their service awareness safety awareness
and communication skills. While paying attention to personnel
Educational background performance improvement the Company will emphasize the
sustainable development of personnel help basic-level employees
Category Number (person) to improve their education and pays attention to personal
long-term development.Doctorate 43
Master’ degree 3991 (2) Echelon Building-Up of Middle and Basic-Level Employees:
Bachelor’ degree 40302 In terms of college graduates training the Company will consider
college graduates as an important source of the group’s talent
Associate’ degree 38173 echelon thus it will independently operate special talent projectsHigh school and below 70616 for college graduates and refine the operation of the “NewEagle Internship Plan Excellent Talent Plan Management TraineeTotal 153125 Project”. By adhering to the three principles of “bold use offreshly joined talent mobility self-growth” the Company will
2. Remuneration policy spot high-potential college graduates through rotation practice
systematic course learning dual mentor coaching and other
Upholding the remuneration concept of excellent performance training measures and match them with rapid development
yielding fruitful payment SF sees value creation as a guideline mechanisms promoting college graduates to grow into core
of incentive. For employees with high value contributions professional positions/key management positions.the Company provides a competitive remuneration system to For junior managers (such as network heads) the Company will
ensure the internal driving force for the Company’s sustainable accurately identify actual business needs in various scenarios carry
development. Remuneration is determined by employees’ position out “network heads onsite special training camp” and “demandsand its level is market-oriented. At the same time through in scenarios live room” activities in multiple sessions and multiple
differentiated and diversified long-term and short-term incentive regions and provide junior managers with more effective training
mechanisms the Company attracts and retains core talents and resources through both online and offline.
101Chapter 4Corporate GovernanceFor middle- leve l managers ( such as regional funct ional For senior operational managers focusing on “setting directiondepartment heads) the Company will carry out layered training making decisions leading teams” through communication withfrom reserve to incumbent workers iterate the “Fengyun Plan – moguls in the industry visits to benchmarks cross-industryReserve Functional Department Head Training Plan” with scenario exchanges overseas study tours and other learning methods the
leadership training actual job training scenario task simulation as Company will help managers improve the ability of high-quality
the core focus to train reserve personnel improve reserve quality decis ion-making and leadership sk i l l s when confront ing
and achieve sustainable high-quality talent supply. uncertainties thus promoting and implementing the Company’s
operation mode reform and achieving sustainable and robust
(3) Professional Team Building: development of business;
The Company will focus on professional fields sort out the ability For senior functional managers based on the Company’s strategic
situation of each functional organization and improve ability orientation and business needs the Company will help each unitthrough targeted training measures. The Company continues of functional executives with “chain operation horizon expansionto carry out customized professional ability training projects capabilities improvement and overcome insufficiencies improving
such as reserve expert training expert lectures expert forums the effectiveness of supporting business services and providing
and provides learning resources on workplace general force and potential executives with differentiated learning resources and
professional ability boutique continuously improving employees practice in various scenarios;
in the professional field and benefiting employees’ long-term
For h igh- leve l back-up echelon personnel through the
development.combination of training and practice the Company will focus
on core dimensions such as role transformation in a target
(4) Senior Management Training:
position leadership improvement strategic business integration
Adhering to the guidance and principles of differentiated to customize the development of courses and learning content for
empowerment refined management and normalized operation the reserve echelon provide multiple scenarios of actual practice
covering three major groups of business managers functional positions and tasks and effectively improve reserve cadres’
department executives and reserve executives the Company will matching degree for target positions.carry out high-level cadre training projects such as beacon training
camps Fengxing plans and reserve executive training camps: 4. Labor service outsourcing
□ Applicable√ Not applicable
X. Profit Distribution &Increase of Share Capital due
to Conversion of Capital Reserves
Information on the formulation execution or adjustments made to profit distribution policies especially the cash dividend policy during the
Reporting Period
On April 27 2023 the Company held the 2022 Annual General Meeting at which the Company reviewed and approved the 2022 Profit
Distribution Plan. The specific plan is as follows: on the basis of the total share capital at the registration date on which the 2022 annual
profit distribution plan is to be implemented less the special shares repurchased by the Company the Company distributed a cash dividend
of RMB2.50 (including tax) for every 10 shares to all shareholders. No capital reserves were converted into share capital and no bonus
shares were distributed during the year. The profit distribution plan was fully completed on May 12 2023.Special Explanation on Cash Dividend Policy
Compliance with the provisions of the articles of incorporation or the resolution of the
Yes
general meeting or not
Dividend criteria and proportions specific and clear or not Yes
Relevant decision-making procedures and mechanisms complete or not Yes
Independent directors performing their duties and play their due role or not Yes
If the company has not distributed cash dividends it should disclose the specific reasons and
N/A
the next steps to be taken to enhance the level of investor returns
Minority shareholders given the opportunity to fully express their opinions and appeals or
Yes
not and their legitimate rights and interests fully protected or not
Conditions and procedures compliant and transparent or not when the cash dividend policy
N/A
was adjusted or changed or not 102Chapter 4Corporate Governance
The Company made profits in the Reporting Period and the profit distributable to the shareholders of the Company was positive but the
Company did not put forward a proposed plan for cash dividend distribution
□ Applicable√ Not applicable
Profit distribution & increase of share capital due to capitalization during the Reporting Period
Number of bonus shares per 10 shares (share(s)) 0
Dividend distribution per 10 shares (RMB) (including tax) 6.0
Conversion of capital reserves into share capital per 10 shares
0
(share(s))
Total share capital at the registration date on which the 2023 annual
Share base of the distribution proposal (share(s)) profit distribution plan is to be implemented less the special shares
repurchased by the Company
On the basis of the total share capital at the registration date on
which the 2023 annual profit distribution plan is to be implemented
Cash dividend amount (RMB’000) (including tax)
less the special shares repurchased by the Company a cash dividend
of RMB6.0 (including tax) will be distributed for every 10 shares held.Cash dividend amount (RMB’000) in other forms (such as share
959850
repurchase)
The total amount of shares repurchased by the Company in 2023
was RMB959.85 million and on the basis of the total share capital
at the registration date on which the 2023 annual profit distribution
Total cash dividends (in all forms) (RMB’000)
plan is to be implemented less the special shares repurchased by
the Company a cash dividend of RMB6.0 (including tax) will be
distributed for every 10 shares held.Distributable profits (RMB’000) 12991294
Total cash dividends (including other ways) as a percentage of
100%
total distributed profits (%)
Cash dividend
If the company’s development stage belongs to the growth period but substantial capital expenditure has been arranged cash dividend
shall represent at least 20% of the profit distribution for the current year.Particulars of proposal for profit distribution or conversion of capital reserves into share capital
As per the earnings results audited by PriceWaterhouseCoopers Zhongtian LLP the parent company registered a net profit of
RMB14035.334 million in 2023. The Company appropriated 10% of its net profit (RMB1403.533 million) for the year 2023 to the
statutory surplus reserve. Factoring in retained earnings of RMB1573.109 million at the beginning of the year and after deducting the
actual cash dividend of RMB1213.616 million in 2023 profit of the parent company available for distribution to the shareholders was
RMB12991.294 million as of December 31 2023.The Company’s proposed profit distribution plan for 2023 was as follows: basis on the total share capital at the registration date on
which the 2023 annual profit distribution plan is to be implemented less the shares in special repurchase securities account a cash
dividend of RMB6.0 (including tax) will be distributed for every 10 shares. The remaining undistributed profits will be carried forward to
the following year. The capital reserves will not be converted into share capital and no bonus shares will be distributed during the year.
103Chapter 4Corporate Governance
XI. Execution of Stock Incentive Plan Employee Share
Ownership Scheme or Other Employee Incentives
√ Applicable□ Not applicable
1. Stock Incentive
The Share Options Incentive Scheme has been formulated to improve corporate governance structure establish and improve an incentive
and restraint mechanism attract and retain outstanding employees fully motivate core personnel. Reviewed and approved on the
Company’s 2022 Second Extraordinary General Meeting of Shareholders the Company adopted the 2022 Share Option Incentive Scheme.On July 4 2022 the Company completed the registration of the first grant of the 2022 Stock Option Incentive Plan. The abbreviation of the
share options granted under the scheme is 顺丰 JLC1 and the share option code is 037259.On November 24 2022 registration of reserve grant under the Company’s 2022 share option incentive plan was completed. The
abbreviation of the share options granted under the scheme is 顺丰 JLC2 and the share option code is 037315.The Company’s 6th meeting of the sixth session of Board of Directors and the 6th meeting of the sixth session of Supervisory Committee on
August 1 2023 reviewed and approved the “Proposal in relation to the Adjustment of Exercise Price under the 2022 Share Option Scheme”“Proposal on the Fulfilment of the Exercise Conditions of the First Exercise Period of the First Grant of Stock Options under the 2022 StockOption Incentive Plan”. Pursuant to the relevant provisions of the Company’s 2022 Stock Option Incentive Plan (Draft) and the authorization
of the Company’s Second Extraordinary General Meeting of 2022 the Company adjusted the exercise price of the 2022 Stock Option
Incentive Plan by adjusting the exercise price from RMB42.431 per share to RMB42.183 per share. Meanwhile the Board of Directors agreed
that the number of stock options exercisable by the 1328 incentive recipients who have met the assessment requirements during the first
exercise period of the initial grant shall be 8964763 shares with an exercise price of RMB42.183 per share. In the process of registration of
this exercise 5 of the incentive recipients were no longer eligible for the incentive recipients due to resignation and 71 of them voluntarily
gave up their eligibility for the exercise of the right so that the total number of incentive recipients who had actually exercised the right
was 1252 and the number of shares of the exercised stock was listed and circulated was 8420193 shares. The listing and circulation
date of the exercised shares was 5 September 2023. After the completion of the exercise the total share capital of the Company remained
unchanged and the number of treasury shares reduced by 8420193 shares after the exercise. The exercise of this right has no significant
impact on the shareholding structure of the Company.Details related matters of this Stock Option Incentive Plan had been disclosed on CNINFO (www.cninfo.com.cn) and such disclosure
websites are set out below
Announcement Disclosure Date Disclosure Website
Announcement on the Fulfilment of the Exercise Conditions of the First Exercise Period
August 2 2023 CNINFO (www.cninfo.com.cn)
of the First Grant of Stock Options under the 2022 Stock Option Incentive Plan
Announcement on the Adjustment of Exercise Price under the 2022 Share Option
August 2 2023 CNINFO (www.cninfo.com.cn)
Scheme
Announcement of Cancellation of Certain Stock Options under the 2022 Stock Option
August 2 2023 CNINFO (www.cninfo.com.cn)
Incentive Plan
Verification Opinion of the Supervisory Board on the List of Viable Incentive Recipients
August 2 2023 CNINFO (www.cninfo.com.cn)
for the First Exercise Period of the 2022 Stock Option Incentive Plan
Verification Opinion of the Supervisory Board on the List of Exercisable Incentive
September 6 2023 CNINFO (www.cninfo.com.cn)
Recipients for the First Exercise Period of the 2022 Share Option Incentive Plan
104Chapter 4Corporate Governance
Stock Incentive Received by Directors and Senior Management of the Company
√ Applicable□ Not applicable
Unit: share
Number
Exercise Number of
Number Number Of Number
Number of Number of price of restricted
Number of newly Number Market Of Restricted Grant Of
exercisable exercised exercised stock
of stock granted of stock price at the Unlocked Shares Price Restricted
stock stock stock options
options stock options end of the Shares Newly Of Shares
Name Position options options options held
held at the options held at the Reporting During Granted Restricted Held
during the during the during the at the
beginning of during the end of the Period The During Shares At The
Reporting Reporting Reporting beginning of
the year Reporting period (RMB/share) current The (RMB/share) End Of
Period Period Period the
Period period Reporting The period
(RMB/share) period
period
Director deputy general
Ho Chit manager and financial 488000 0 122000 122000 42.183 366000 40.40 0 0 0 0 0
head
Wang Xin Director 488000 0 122000 122000 42.183 366000 40.40 0 0 0 0 0
Zhang Dong Director 488000 0 122000 122000 42.183 366000 40.40 0 0 0 0 0
Li Sheng Deputy general manager 488000 0 122000 122000 42.183 366000 40.40 0 0 0 0 0
Zhou Haiqiang Deputy general manager 488000 0 61000 61000 42.183 366000 40.40 0 0 0 0 0
Geng Yankun Deputy general manager 488000 0 122000 122000 42.183 366000 40.40 0 0 0 0 0
Deputy general manager
Gan Ling 272000 0 0 0 – 204000 40.40 0 0 0 0 0
and secretary of the Board
Total – 3200000 0 671000 671000 – 2400000 – 0 0 0 0 0
Note (if any) –
Appraisal and incentives of senior management
The Board of Directors set up a Remuneration and Appraisal Committee. The senior management shall be accountable to the Board of
Directors and evaluated by the Board of Directors and the Remuneration and Appraisal Committee. An incentive mechanism with unified
responsibilities and rights shall be adopted. The company’s incentive mechanism conforms to the Company’s current situation relevant laws
regulations and provisions of the Company’s Articles of Association fully enhances the company’s management team and core technical
personnel’s sense of belonging to the Company and effectively combines the interests of shareholders the Company and employees.
2. Employee Share Ownership Plan
□ Applicable√ Not applicable
3. Other Employee Incentives
□ Applicable√ Not applicable
105Chapter 4Corporate Governance
XII . Internal Control System Development and
Implementation During the Reporting Period
1. Internal control development and implementation
The Company has always been committed to developing and optimizing its corporate internal control system. Based on its own development
needs in line with external regulatory requirements the Company has set up and continuously improved its internal control system from
such perspectives as system structure process authorization and information system development to ensure effective implementation of
the Company’s internal control initiatives.In terms of institutional setup of internal control management the Company has set up the general meeting Board of Directors Supervisory
Committee and the management board in accordance with the requirements of relevant national laws regulations and institutional norms.The supreme governing body of the Company is the general meeting the Board of Directors is responsible to the general meeting and the
Supervisory Committee is responsible for supervising the work of the directors and senior executives. The Board of Directors consists of the
Strategy Committee Audit Committee Risk Management Committee Remuneration and Appraisal Committee and Nomination Committee.Based on the characteristics of the industry and the needs of its own business development the Company has set up functional departments
such as Strategic Management Investment Management Human Resource Management Sales Management Operation Management
Engineering Management Procurement Management Comprehensive Management Financial Management and Internal Audit in accordance
with the requirements of functional management. The Company’s internal control system workflow laid down clear provisions regarding the
division of responsibilities work processes and authorization and approval permissions across the departments thereby ensuring that each
functional department performs its duties with clear division of responsibilities mutual supervision and mutual restriction.In the development of the internal control management system the Company has formulated standardized governance systems such as
the Articles of Association the Rules of Procedure for the General Meeting the Rules of Procedure for the Board of Directors the Rules of
Procedure for the Supervisory Committee the Rules of Procedure for the Audit Committee of the Board of Directors the Rules of Procedure
for the Risk Management Committee of the Board of Directors the Rules of Procedure for the Remuneration and Appraisal Committee of
the Board of Directors the Rules of Procedure for the Strategy Committee of the Board of Directors and the Rules of Procedure for the
Nomination Committee of the Board of Directors to ensure the standardized operation of the organizations at the corporate governance
level with regard to systems as well as the effective implementation of decision-making and independent supervision functions. At the
operational level a set of systematic internal control systems encompassing capital management investment and financing management
human resources management information system management information disclosure related party transactions budget management
contract management asset management procurement management sales management cost and expense management and financial
management have been formulated to standardize the Company’s routine operation and management to achieve the Company’s internal
control objectives.In terms of the supervision and evaluation of the implementation of the internal control management system the Board of the Company
is responsible for the formulation and effective implementation of the internal control system of the Company and has established
independent supervision departments such as internal audit department and risk control and compliance department to check and evaluate
the completeness rationality and effectiveness of implementation of the internal control system of internal organizations and controlling
subsidiaries of the listed company and investee companies with significant influence over the listed company and to evaluate the lawfulness
compliance authenticity and completeness of accounting information and other core business process information as well as the reflected
financial income and expenditure and related economic activities. The internal audit department and risk control and compliance department
regularly report to the Audit Committee on the internal control and internal audit findings on a quarterly basis and the rectification
progress of the problems identified so as to promote the timely optimization of and improvement in internal management.
2. Details of material deficiency found in the Company’s internal control during
the Reporting Period
□ Yes√ No
106Chapter 4Corporate Governance
XIII. The Company’s Management and Control over its
Subsidiaries during the Reporting Period
During the Reporting Period the Company in accordance with the requirements of standard operation of listed companies and governance
systems such as External Investment Management System External Guaranty Management System Internal Control and Decision-Making
System for Related Transactions Financial Management System Management System for Externally Providing Financial Support Major
Information Internal Report System and Internal Audit System managed the standard operation investment finance personnel
information disclosure and other matters of subsidiaries and managed and supervised the internal control of subsidiaries according to
the internal control evaluation system of listed companies. For its overseas listed subsidiaries the Company systematically supervised and
evaluate internal control of those overseas subsidiaries in accordance with the supervision requirements different from domestic supervision
requirements with reference to the Basic Standards for Enterprise Internal Control and relevant auxiliary guidelines so as to meet the
compliance requirements with respect to domestic and overseas listing.XIV. Self-appraisal Report on Internal Controls or
Audit Report on Internal Controls
1. Self-appraisal report on internal controls
Disclosure date of the Appraisal Report on Internal Control March 27 2024
Disclosure index of the Appraisal Report on Internal Control www.cninfo.com.cn
Proportion of total assets included in evaluation scope to total assets of the Company’s
99%
consolidated financial statement
Proportion of operating revenue included in evaluation scope to operating revenue of the
99%
Company’s consolidated financial statement
107Chapter 4Corporate Governance
Deficiency Standards
Category Financial Report Non-financial Report
Material deficiency: A deficiency or a combination of
deficiencies results in a failure to prevent or detect and
correct a material misstatement or omission in the financial
Material deficiency: A deficiency or a combination
report in time. Those with the following characteristics
of deficiencies causes material losses or has a
should be identified as Material deficiency: Identification of
significant negative impact on the Company.fraud on the part of board of directors supervisors senior
Those with the following characteristics should
management; Correction of previously issued financial
be identified as Material deficiency: Unreasonable
reports; Identification by the certified public accountant of a
decision-making process of the Company; Violation
material misstatement in the financial report in the current
of national laws and regulations; Frequent negative
period in circumstances that indicate that the misstatement
media coverage; Lack of policy for major business or
would not have been detected by the Company’s internal
the policy operated ineffectively.Qualitative criteria control; Ineffective oversight of the Company’s internal
Significant Deficiency: A deficiency or a combination
control by the Company’s audit committee and internal
of deficiencies results in a failure to prevent a
audit.misstatement in time probably causing losses or
Significant Deficiency: A deficiency or a combination of
negative impact that is less severe than a Material
deficiencies results in a failure to prevent or detect and
deficiency yet important enough to merit attention
correct a misstatement or omission in the financial report
by board of directors and senior management.in time that is less severe than a Material deficiency yet
Control Deficiency: Other internal control
important enough to merit attention by board of directors
deficiencies that do not meet the criteria of Material
and senior management.deficiency or significant deficiency.Control Deficiency: Other internal control deficiencies that
do not meet the criteria of Material deficiency or significant
deficiency.Material deficiency: A deficiency or a combination of Material deficiency: A deficiency or a combination
deficiencies may result in misstatements and omission of deficiencies may result in losses that account for
in the financial report that accounts for more than 5% more than 5% (inclusive) of the Company’s pre-
(inclusive) of the Company’s pre-tax profit as shown in the tax profit as shown in the consolidated financial
consolidated financial statements of the current period. statements of the current period.Significant Deficiency: A deficiency or a combination of Significant deficiency: A deficiency or a combination
deficiencies may result in misstatements of or omission in of deficiencies may result in losses accounting
Quantitative criteria the financial report accounting for 3% (inclusive) to 5% of for 3% (inclusive) to 5% of the Company’s pre-
the Company’s pre-tax profit as shown in the consolidated tax profit as shown in the consolidated financial
financial statements of the current period. statements of the current period.Control Deficiency: A deficiency or a combination of Control Deficiency: A deficiency or a combination
deficiencies may result in misstatements of or omission in of deficiencies that may result in losses accounting
the financial report accounting for less than 3% of the for less than 3% of the Company’s pre-tax profit as
Company’s pre-tax profit as shown in the consolidated shown in the consolidated financial statements of
financial statements of the current period. the current period.Number of Material
deficiencies in the 0
financial report
Number of Material
deficiencies of the non- 0
financial report
Number of significant
deficiencies in the 0
financial report
Number of significant
deficiencies of the non- 0
financial report
108Chapter 4Corporate Governance
2. Audit Report on Internal Controls
Audit Opinion in the Audit Report on Internal Controls
In our opinion SF Holding maintained in all material respects effective internal control over financial reporting as of December 31 2023
based on criteria established in C-SOX and relevant regulations.Particulars about Audit Report on Internal Controls Disclosure
Disclosure date of the Audit Report on Internal Controls March 27 2024
Disclosure Index of the Audit Report on Internal Controls www.cninfo.com.cn
Type of Opinion in the Audit Report on Internal Controls Unqualified Opinion
Material deficiency in the non-financial report or not No
The auditor issued an Audit Report on Internal Controls with a non-standard opinion or not
□ Yes√ No
The Audit Report on Internal Controls from the auditor consistent with the Self-appraisal Report from the Board or not
√ Yes□ No
XV. Rectification of self-inspection problems in special
actions of listed company governance
Not applicable
109Chapter 5Environment and Social Responsibilities
I. Major Environment Issues
The listed company and its subsidiaries are not the major pollutant discharge
units announced by the Ministry of Ecology and Environment.The administrative penalties for environmental issues during the reporting
period.The Company’s wholly-owned subsidiary S.F. Airlines Co. Ltd (顺丰航空有限公司) was subject to two administrative penalties from Beijing
Shunyi Ecology and Environment Bureau during the reporting period including * a fine of RMB5000 for unsealed and unauthorized
changes in the use of a machine/vehicle’s pollution control device which did not comply with the relevant provisions of the Regulations ofBeijing Municipality on Prevention and Control of Pollution by Emissions from Motor Vehicles and Non-road Mobile Machinery 《( 北京市机动车和非道路移动机械排放污染防治条例》); and * a fine of RMB5000 for the opacity smoke value of a machine/vehicle in use exceeding
the prescribed emission limit which did not comply with the relevant provisions of the Prevention and Control of Atmospheric Pollution
of the PRC 《( 中华人民共和国大气污染防治法》). The Bantian branch of the Company’s wholly-owned subsidiary S.F. Express Co. Ltd. (顺
丰速运有限公司) was subject to two administrative penalties from the Shenzhen Longgang Ecology and Environment Bureau during the
reporting period including * a fine of RMB30000 for alleged emitting industrial noise to the surroundings in excess of the prescribed
emission standards or technical specification limits which did not comply with the relevant provisions of the Regulations on Prevention andControl of Environmental Noise Pollution in the Shenzhen Special Economic Zone (2020 Amendments) 《( 深圳经济特区环境噪音污染防治条
例(2020 年修正版)》); * a fine of RMB500 for alleged failure of the exhaust pollution test of a motor vehicle in use at the parking place
which did not comply with the relevant provisions of the Regulations on Prevention and Control of Exhaust Pollution of Motor Vehicles of
the Shenzhen Special Economic Zone (2018 Amendments) 《( 深圳经济特区机动车排气污染防治条例(2018 修正)》). The Company’s wholly-
owned subsidiary Anhui S.F. Express Co. Ltd. (安徽顺丰速运有限公司) was subject to an administrative penalty from the Hefei Shushan
Ecology and Environment Bureau during the reporting period with a fine of RMB5750 for failure of taking effective measures to make the
boundary noise of air-conditioners at the operating sites exceed the national environmental noise emission standards which did not complywith the relevant provisions of the Regulations on Prevention and Control of Environmental Noise Pollution in Hefei City 《( 合肥市环境噪声污染防治条例》). In response to the above administrative penalties the Company has settled the fines in a timely manner and has completed
the rectification process as required which as a result will not have any impact on the Company’s business operations.Reference for other environmental information disclosed by key pollutant
discharging units
□ Applicable√ Not applicable
Measures taken to reduce carbon emissions and their effects during the
Reporting Period
SF is committed to integrating corporate value with social value. As a socially responsible enterprise SF has always upheld sustainable and
healthy development aiming to set an example and bring along positive impacts to the entire industry and society through the optimization
and upgrade of its operations. Guided by the national carbon peaking and carbon neutrality strategy and aiming to protect the environment
and reduce emissions the Company incorporates climate change response into its business management practices. It continuously improves
its environmental management system through measures such as promoting low-carbon transportation constructing green industrial parks
developing sustainable packaging and applying green technology. These initiatives covering the entire logistics lifecycle are conducive to
promoting green and sustainable logistics.Building on past achievements in carbon reduction SF has released the industry’s first “White Paper on Carbon Goals” committing to
improving its carbon efficiency by 55% by 2030 compared to 2021 and reducing the carbon footprint of each parcel by 70% compared
to 2021. In 2023 SF joined the Science Based Carbon Targets initiative (SBTi) and pledged to achieve “net-zero emissions” of greenhouse
gases in its value chain by 2050. Leveraging its standardized carbon management capabilities SF independently developed the industry’s
first waybill-level carbon emission calculation model empowering upstream and downstream partners in the industry chain.
110Chapter 5Environment and Social Responsibilities
For two consecutive years the Company has received a “B” rating from CDP (Carbon Disclosure Project) indicating that SF has reached
a management level in the governance of environmentally sustainable development and is at the forefront of international standards in
building sustainable green logistics supply chain services. With outstanding efforts in improving the environment caring for employees and
engaging in philanthropy SF has been honorably selected into the list of ESG influence in China released by Fortune for two consecutive
years making it the only privately-owned express delivery company in China to be included.
1. Promoting low-carbon transportation
SF continuously expanded its green fleet and promoted energy conservation and emission reduction in the transportation process through
various measures such as increasing investment in new energy vehicles optimizing the selection of fuel vehicles building a system platform
to monitor the energy consumption of vehicles and optimizing transportation routes by scientific and technological means.The Company has adopted various measures so that more new energy vehicles could be used for our logistics services. We jointly explored
the efficient operation mechanism of new energy logistics vehicles with partners to improve the efficiency of transportation energy use
and mitigate the impact on the environment. The transportation scenarios of new energy vehicles mainly cover short-distance branch
lines shuttling and end delivery in cities as well as first-and second-tier trunk transportation across provinces and cities. As of the end
of the reporting period SF has utilized more than 31000 new energy vehicles for transportation covering 243 cities. For long-distance
transportation and transportation in cold areas in northern China the Company conducted pilot by introducing hydrogen fuel and LNG
natural gas vehicles.
2. Building green industrial parks
SF is committed to building green industrial parks. Through the construction of photovoltaic power stations and the optimization of
warehouse space layout SF has promoted the improvement in transit efficiency and energy-saving efficiency mitigating the environmental
impact of logistics transit. The Company continuously strengthens the use of clean energy and actively develops renewable energy
generation plans. By the end of the reporting period we have completed construction of roof photovoltaic power stations in 14 industrial
parks with a total installed capacity exceeding 60 MW and an annual renewable energy generation exceeding 18 million kWh. In 2023
SF industrial parks in Changsha and Foshan have obtained the “First-Class (Three-Star) Green Warehouse” certification from the China
Association of Warehousing and Distribution (CAWD) and the Guizhou Industrial Park has been certified as “Green Logistics Park” by
Guizhou Provincial Federation of Logistics & Purchasing.
3. R&D of sustainable packaging
Express packaging plays a crucial role in reducing emissions throughout the logistics chain. In view of this SF actively responds to the
trend of green packaging implementing the “9917” green development project guidelines for the postal industry. With sustainability and
intelligence as guiding principles SF comprehensively promotes the reduction recycling harmlessness and standardization of packaging.Additionally SF continues to build a circular ecosystem for express packaging collaborating with upstream and downstream industry chains
to jointly foster the development of sustainable packaging.Minimum packaging: SF continuously promoted the green packaging plan and provided detailed packaging operation instructions
for different types of consignments to implement the green packaging requirements. The Company conducts innovative research and
development on the minimization standardization and scene-based application of eight types of materials including plastic bags
plastic papers stickers and seals. By the end of 2023 SF has reduced the use of raw paper by approximately 43000 tons and plastic by
approximately 162000 tons.Recyclable packaging: SF actively promotes the innovative R&D of recyclable packaging containers providing comprehensive solutions
for customers within and outside the industry. Depending on various industries and scenarios SF has developed and deployed recyclable
packaging containers such as medical precision temperature-controlled boxes cold chain circulating insulation boxes standard large-
scale recyclable pallet boxes and recyclable honeycomb panels. These efforts not only enhance internal operational efficiency but also
provide customers with high-quality and convenient recyclable packaging solutions. In July 2021 SF launched the carbon-neutral recyclable
packaging box “π-Box”. As of December 2023 a total of over 1.29 million of it have been deployed covering 119 cities with a cumulative
reuse exceeding 20.64 million times.Fully biodegradable packaging: SF actively engages in the research and development of biodegradable packaging materials collaborating
with external research institutions and universities to expand and deepen its knowledge of cutting-edge biodegradable packaging
technologies. By the end of 2023 SF has deployed over hundreds of million “Feng Bag” in various regions such as Beijing Hainan
Guangzhou and Northern Zhejiang.
111Chapter 5Environment and Social Responsibilities
4. Developing green technology
SF digitizes the entire operational process from pickup and delivery to transfer and transportation integrating data forecasting visualization
monitoring and early warning systems. This enables intelligent planning and scheduling dynamic resource allocation and efficient
management throughout the network. By incorporating IoT technology automation and unmanned systems SF enhances operational
efficiency and inputs the power of technology into every stage of package delivery contributing to quality enhancement efficiency
improvement and carbon reduction across the entire “pickup-transfer-delivery” process.At the terminal stage of delivery SF expands its business coverage and provides efficient cost-effective and low-carbon logistics services
through the application of intelligent technology. In the transfer stage SF optimizes warehouse resources with the aid of data introduces
fully automated sorting and site management systems to enhance efficiency and improves energy utilization. In the transportation stage
SF utilizes smart mapping for route planning in which factors such as package timeliness and distance are combined to provide the optimal
route through intelligent algorithms. Additionally leveraging data analysis and deep learning technology SF integrates freight routes and
transportation resources to achieve precise matching of vehicles and goods thereby enhancing transportation efficiency.Furthermore SF constructs a standardized carbon management system and develops the in-house data intelligence carbon management
platform “Fenghe Sustainability Platform” integrating carbon emission and reduction data across the packaging transportation transfer
and delivery processes. Building upon SF’s standardized carbon management capabilities SF has developed the industry’s first waybill-level
carbon calculation model in 2023. This model not only simulates the volume of greenhouse gas (GHG) emissions from various transportation
modes but also calculates the actual GHG emissions and reductions generated at each stage of the “pickup-transfer-delivery” process
enabling precise and automated calculation of carbon data for a large number of consignments and continuously strengthening the
capabilities of green technology.SF leverages technology to drive green and low-carbon transformation while extending green values to the supply chain. Also SF advocates
and collaborates with upstream and downstream partners to accelerate the transition to low carbon jointly fulfilling the responsibility of
protecting the Earth and achieving green development to build a zero-carbon future.II. Social Responsibilities
As a leading express logistics integrated service provider in China SF has been assuming its responsibility for the sustainable development
of the commercial society and fulfilling its social responsibilities. The Company always takes customers as priority provides customers
with high-quality services and helps them create value. The Company has established a win-win ecosystem with customers suppliers
communities and other stakeholders to achieve common development. The Company actively promotes the development of green logistics
and make unremitting efforts for environmental protection and sustainable development; and provides channels for employee development
to effectively protect the interests of employees creating a stage for our employees to realize their dreams. We have been operating our
business in compliance with laws and regulations to give back to shareholders and protect the interests of all shareholders and stakeholders.Staying true to our original aspiration we actively participated in public welfare activities to give back to society through the SF Foundation.
2023 is an important year for China to enter into a new journey towards the second centenary goal of building a modern socialist country
in an all-round way and a crucial year for the full implementation of the “14th Five-Year Plan”. In 2023 SF demonstrated its corporate
responsibility. In terms of supporting rural revitalization SF kept on optimizing the whole industrial chain plan for smart agriculture assisted
the government in implementing the work of supporting agriculture and helping farmers and joined hands with employees and partners
in the value chain to empower new industries to stimulate industrial vitality and create a better life together. For the dual carbon goals
of China SF has established a carbon emission management system formulated feasible carbon emission reduction goals and strategic
plans and deployed green solutions in all aspects of collection transfer transportation and distribution to promote the achievement of
goals through energy consumption structure adjustment transportation upgradation and business models and in-depth application of
technological means. In the future SF will take a down-to-earth approach for the long run fulfill every commitment to all stakeholders and
provide convenient reliable and warm services for consumers around the world.For details of SF’s fulfillment of social responsibilities please refer to the 2023 Sustainability Report of S.F. Holding published by the
Company on CNINFO on 27 March 2024.
112Chapter 5Environment and Social Responsibilities
III. Poverty Alleviation and Rural Revitalization
As a leading integrated logistics service provider in China the Company has always actively responded to the national strategy deeply
cultivated the field of agricultural product delivery and contribute to rural revitalization. Countless SF couriers are stationed in the first-mile
of the place of origin helping to realize the business model of agricultural products from “field” to “taste buds” winning the trust and
praise of the vast number of consumers.In response to the promotion of “agriculture rural areas and farmers” work process the Company focuses on the difficulties in the
circulation field of agricultural products. Many high-quality agricultural products in the place of origin are difficult to market due to
problems such as perishability difficult packaging multiple links and difficulty in scaling up. Good agricultural products are trapped in
the “field” and farmers’ income is very low. Despite the strong market demand agricultural products still confront many difficulties in
getting out of the mountains. The Company’s strategy of helping farmers is clear: not only to transport good agricultural products out
but also to “transport” the good agricultural brand out. The Company insists on building agricultural product collection points in the
fields investing in mobile sorting vehicles suitable for small batch sorting and building fresh pre-processing centers close to the place of
origin. For many fresh categories the Company ensured product freshness and safety through the design of exclusive packaging. During
the harvest season of characteristic agricultural products the Company integrates various transportation resources such as aviation high-
speed rail and cold chain to ensure that agricultural products are efficiently and quickly delivered to all parts of the country. To ensure
the quality of service throughout the process a special project team is set up during the “fresh season” with the help of data technology
and visualization system to monitor and warn each link of collection transfer transportation delivery and after-sales in real time. The
Company’s strong logistics network advanced packaging technology and fast delivery capabilities have overcome one after another high-
difficulty transportation of fresh categories assisting in the express transportation of products such as hairy crabs live fish seafood beef
and mutton lychees cherries bayberries strawberries and matsutake to achieve the direct delivery and direct arrival mode of agricultural
products nationwide.The Company continues to promote the coordinated development of the upstream and downstream of the agricultural industry chain
promotes farmers to increase income and helps achieve common prosperity through reasonable transportation pricing and high-quality
services. The Company actively cooperated with local governments rural cooperatives and other institutions to build regional agricultural
product brands promote brand construction and formulate regional brand packaging customization special fund subsidy mechanisms. In
2023 the Company cooperated with local governments obtained brand authorization designed brand packaging and helped to jointly
build 28 regional agricultural product brands. In addition the Company always adhered to corporate social responsibility responded to
the concept of green logistics piloted the use of green and environmentally friendly packaging materials for agricultural products and
brought users a high-quality experience. With the development of the Internet+ economy the Company leveraged its own platform to
carry out rhythmic and sound volume transmission of agricultural products. With the help of external resources the Company jointly built
the agricultural product brand and sales ecological chain and through cooperation with the government customer anchors and local fruit
farmers the Company carried out live broadcast activities to help the place of origin live broadcast with the Company’s brand marketing
power and internet celebrity. In the transformation of agricultural digitalization the Company provided a series of technology services such
as product traceability and one shop one code. At present the Company’s service network for helping agricultural products production and
sales covered more than 2700 county-level cities nationwide encompassing 226 types of more than 6000 specialty agricultural products
nationwide and about 4.58 million tons of specialty agricultural products were delivered in 2023. The Company contributed to rural
revitalization with practical actions allowing more local brand specialty agricultural products to be known tasted and recognized by the
Chinese.In addition the Company actively explored the “express delivery into the village” model through the establishment of a five-level
administrative division address library supported the decision-making of township and village resource investment accurately identified rural
parcels ensured the timeliness commitment of express delivery into the village and created “precise entry into the village” high-quality
service. As of December 31 2023 the Company had more than 100000 village-level post cooperation points gradually forming a relatively
complete rural express network. The service network’s township coverage rate exceeded 93% and the daily processing volume of township
parcels amounted to 2.26 million. Based on the high-quality logistics services the extension to the front end of the industrial chain to the
full-process service allowed farmers to enjoy more convenient and fast express services in the village.
113Chapter 6Significant Events
I. Fulfillment of Commitments
1. Commitments made by the Company’s actual controllers shareholders related parties purchasers the Company and others that were
fulfilled during the Reporting Period and those not fulfilled as of the end of the Reporting Period
√ Applicable□ Not applicable
Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period
commitment status
1、The company/the enterprise/I and the companies enterprises or economic
organizations under the control or ultimate control of the company/the enterprise/me
(excluding the companies controlled by the listed company) hereinafter collectively
referred to as “the affiliates of the company/the enterprise/mine” will strictly execute
the rights of shareholders in accordance with the provisions of laws regulations and
other normative documents perform the obligations of shareholders and maintain
the independence of the listed company in terms of assets finances personnel
operations and institutions.
2、The company/the enterprise/I or the affiliates of the company/the enterprise/I will
not use the status of the shareholders to promote the shareholders’ meeting or the
Board of Directors of the listed company to make resolutions that infringe on the
W a n g W e i M i n g d e H o l d i n g
legal rights of minority shareholders.J iaq iang Shunfeng (Shenzhen)
3、The company/the enterprise/I or the affiliates of the company/the enterprise/I will
Equ i ty Inves tment Par tnersh ip
not appropriate the funds of the listed company by means of borrowing repaying
(Limited Partnership) Shenzhen
debt or prepayment on behalf of the company/the enterprise/I or the affiliates of the
Zhaoguang Investment Co. Ltd.company/the enterprise/mine or any other way.Suzhou I ndus t r i a l P a r k O r i z a
4、The company/the enterprise/I or the affiliates of the company/the enterprise/I will
S h u n f e n g R e g u l a t i n g E q u i t y
Commitments try to avoid related transactions with the listed company. For unavoidable related
Investment Company (Limited and Standardizing and
made during transactions with the listed company the company/the enterprise/I or the affiliates January 23
reduc ing Par tnersh ip ) Suzhou reducing related Long-term Normal
the major asset of the company/the enterprise/mine will prompt the controlled entity to conduct the 2017
Guyu Qiuchuang re lated-party transactions
restructuring transactions in accordance with fair reasonable and normal commercial transaction
Equ i ty Inves tment Par tnersh ip
conditions and will not require or accept conditions given by the listed company
(Limited transactions Partnership)
that are more favorable than any fair market transaction and will rigorously perform
Ningbo Shunda Fengrun Investment
various related transaction agreements executed with the listed company in good
Management Partnership (Limited
faith.Pa r tne r sh ip ) N ingbo Shunx in
5、The company/the enterprise/I or the affiliates of the company/the enterprise/
Fenghe Investment Management
I will strictly perform the related transaction decision-making procedures and the
Partnership (Limited Partnership)
corresponding information disclosure obligations in accordance with the listed
company’s Articles of Association and relevant laws and regulations.
6、The company/the enterprise/I or the affiliates of the company/the enterprise/I will
ensure that the entity itself and the controlling entity will not seek special interests
beyond the above-mentioned requirements through related-party transactions
with the listed company and will not carry out related transactions that impair
the interests of the listed company and their small and medium shareholders. If
the above commitments are violated the company/the enterprise/I will jointly and
severally assume corresponding legal liabilities including but not limited to individual
and joint legal liabilities for the total losses caused to the listed company and its
small and medium shareholders.
114Chapter 6Significant Events
Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period
commitment status
1、After the completion of this restructuring in the case that the company/I has/
have direct or indirect control over or significant influence on the listed company
the company/I and other companies/enterprises directly or indirectly controlled by thecompany/me (hereinafter referred to as the “companies controlled by the company/me”) except for the listed company and its subsidiaries will not engage in any
business that poses substantial competition to the listed company’s current or future
business.
2、After the completion of this restructuring if the company/I and the companies
controlled by the company/me may be in substantial competition with the listed
company in the future or have a conflict of interest with the listed company the
Avoiding horizontal company/I will abandon or cause the companies controlled by the company/me to January 23
Wang Wei Mingde Holding Long-term Normal
competition abandon any business opportunities that may pose peer competition or inject all 2017
businesses of the company/I and the companies controlled by the company/me that
pose peer competition to the listed company at a fair and equitable market price at
the appropriate time.
3、The company/I will not use any information known or learned from the listed
company to assist any third party to engage in or participate in any business activities
that pose substantial competition or potential competition to the listed company.
4、If the company/I or the companies controlled by the company/me violates the
above commitments and causes the rights and interests of the listed Company to
be damaged the company/I will bear the corresponding liability for compensation
according to laws.Commitments
made during 1、If an employee has recourse to Taisen Holding and its subsidiaries for social
the major asset insurance or housing provident funds resulting in litigation or arbitration or if Taisen
restructuring Holding and its subsidiaries are subject to administrative penalties from the relevant
administrative authorities the company will assume the corresponding compensation
liabilities: If the social insurance and housing provident fund authorities request
Taisen Holding and its subsidiaries to repay previous years’ employee contributions
to social insurance and housing provident fund the company will use the amount
approved by the competent authority to make up the contributions for free on
behalf of Taisen Holding and its subsidiaries; if Taisen Holding and its subsidiaries
bring any other expenses and economic losses due to failing to pay social insurance
and housing provident fund contributions in accordance with the regulations the
Social insurance
company will make up the contributions for Taisen Holding and its subsidiaries for January 23
Mingde Holding housing fund and Long-term Normal
free. 2017
other related issues
2、As regards Taisen Holding and its subsidiaries’ own properties it is committed
that the company will bear the corresponding liability for compensation if Taisen
Holding and its subsidiaries are punished by the relevant administrative authority
because Taisen Holding and its subsidiaries fail to handle the land use rights
certificate and/or the building owner ship certificate. If Taisen Holding cannot
continue to use the relevant land/house the company will bear all expenses and
economic losses resulting from this for free.
3、If Taisen Holding and its subsidiaries and branch companies fail to use the rented
venues and/or houses which are non-standard and the relevant enterprises need to
relocate the company will bear any losses and expenses sustained by Taisen Holding
and its subsidiaries and branch companies.
115Chapter 6Significant Events
Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period
commitment status
I. Independence of the personnel of the listed company
1、The senior management personnel of the listed company (General Manager
Deputy General Manager Secretary of the Board of Directors Head of Finance
etc.) work full-time for the listed company and receive remuneration from the listed
company. They do not hold any positions in the company other than Director and do
not retain duties other than Director and Supervisor in other controlled failure to by
me or the enterprise other than Dingtai New Materials and its subsidiaries (hereinafter
referred to as the “other enterprises controlled by the company/me”)
2、Financial officers of the listed company do not work part-time for the company/
me or other enterprises controlled by the company/me.
3、The listed company’s personnel relations and labor relations are independent of
the company/me and other enterprises controlled by the company/me.
4、The company/I wil l only exercise shareholder r ights indirectly through
shareholders’ meetings and recommend candidates for directors supervisors and
senior management personnel of the listed company in accordance with the laws
and regulations or the provisions of the listed company’s Articles of Association
and other rules and regulations. The company/I will not intervene in the personnel
appointments or dismissals of the listed company beyond the shareholders’ meetings
or Board of Directors.II. Independence of the assets of the listed company
1、The listed company has independent and complete assets. The assets of the
listed company are all under the control of the listed company and are owned and
Commitments operated independently by the listed company
Maintaining the
made during 2、The company/I and other enterprises controlled by the company/me will not January 23
Wang Wei Mingde Holding independence of the Long-term Normal
the major asset illegally occupy the capital and assets of the listed company in any way. 2017
listed company
restructuring 3、No guarantees will be provided for the debt of the company/mine and other
enterprises controlled by the company/me using assets of the listed company.III. Financial independence of the listed company
1、The listed company and its holding subsidiaries have independent financial
accounting departments and establish independent financial accounting systems and
financial management systems.
2、The listed company and its holding subsidiaries can independently make financial
decisions. The company/I will not intervene in the use of funds of the listed company
beyond the shareholders’ meetings or Board of Directors.
3、The listed company and its holding subsidiaries can independently open Bank
accounts. The company and other enterprises controlled by the company/me will not
share bank accounts with the listed company and its holding subsidiaries.
4、The listed company and its holding subsidiaries shall pay taxes independently.
IV. Independence of the organizations of the listed company
1、The listed company has established and improved a corporate governance
structure in accordance with the laws established an independent and complete
organizational structure and has separated them completely from those of the
company/my organizations. The listed company will not use office organizations or
business premises together with the company/me and other enterprises controlled by
the company/me.
2、The listed company operates independently and autonomously. The company/I will
not intervene in the management of the listed company beyond the Shareholders’
General Meeting and Board of Directors.
116Chapter 6Significant Events
Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period
commitment status
V. Independence of the business of the listed company
1、The listed company independently owns the assets personnel and qualifications
to carry out business activities after the completion of the restructuring and has the
ability to operate independently in the market.
2、The company/I and other enterprises controlled by the company/me will
avoid engaging in businesses competing with the listed company and its holding
subsidiaries in the same industry
3、The company/I will not illegally occupy funds or assets of the listed company.
The company/I will strictly abide by the listed company’s related-party transaction
management system regulate and minimize the occurrence of related-party
transactions with the listed company. For unavoidable related-party transactions with
the listed company the company/I will prompt the other enterprises controlled by
Commitments
Maintaining the the company/me to conduct the transactions in accordance with fair reasonable and
made during January 23
Wang Wei Mingde Holding independence of the normal commercial transaction conditions and will not require or accept conditions Long-term Normal
the major asset 2017
listed company given by the listed company that are more favorable than any fair market transaction
restructuring
and will rigorously perform various related-party transaction agreements executed
with the listed company in good faith. The company/I will strictly perform the related-
party transaction decision-making procedures and the corresponding information
disclosure obligations in accordance with the listed company’s Articles of Association
and relevant laws and regulations. The company/I will strictly abide by the relevant
provisions of the China Securities Regulatory Commission on the independence of
listed companies will not use the controlling shareholder/actual controller’s status to
violate the listed company’s standardized operating procedures will not overpower
the listed company’s and its subsidiaries’ operations and management activities
will not invade the interests of the listed company and its holding subsidiaries and
will not harm the legitimate rights and interests of the listed company and other
shareholders.
1、Regarding the listed company and its subsidiary’s own real estate Mingde
Holding will undertake to assume any liabilities to compensate SF Holding and its
subsidiaries for any loss arising from any administrative penalties which is or may
be imposed by the relevant administrative authorities presently and in the future
Commitments arising from the latter’s failure to obtain a land use right certificate and/or a real
Commitments
undertaken by the estate ownership certificate for any land or property in use. Mingde Holding will also
relating to defects May 9
Company on the Mingde Holding without charge bear any other expenses and economic losses caused to SF Holding Long-term Normal
of land and property 2019
public issuance of in case that SF Holding is unable to continue to use the relevant land/property as a
titles
convertible bonds result;
2、If SF Holding and its subsidiaries and branches are affected by the nonstandard
rented premises and/or property which lead to suspension of the use of the same
and relocation Mingde Holding will bear any losses and expenses sustained by SF
Holding and its subsidiaries and branches as a result.
117Chapter 6Significant Events
Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period
commitment status
If the listed company and its subsidiaries and branches have to relocate before the
expiry of the lease term under the lease contract on the corresponding premises and/
Commitments on
or property leased due to the defects in such properties leased disclosed in this issued
matters concerning April 23
Mingde Holding declaration document and the issuer and its subsidiaries and branches sustain the Long-term Normal
the defect of the 2021
additional economic losses or additional legal liabilities after taking various remedial
Commitments property leased measures the Company will be responsible for the additional losses and expenses to
on non-public the issuer and its subsidiaries and branches arising therefrom.offering
Until the proceeds
The Company undertakes not to invest more funds (including various forms of
Financial raised are used up or
capital injection such as capital increase loans) in quasi-financial businesses until May 11
The listed company input-related within the 36 months Being fulfilled
the proceeds raised are used up and within the 36 months after the receipt of the 2021
commitments after the receipt of
proceeds
the proceeds
Commitments fulfilled on time or not Yes
Not
If a commitment is not fulfilled before the expiry the specific reasons for the incomplete performance and next work plan should be specified.applicable
2. Where there had been a profit forecast for an asset or project and the Reporting Period falls within the profit forecast period the
Company makes an explanation on such asset or project reaching the original profit forecast and the reasons for it
□ Applicable√ Not applicable
II. Status of Capital of the Listed Company Used
for Non-operating Purposes by the Controlling
Shareholder and Other Related Parties
□ Applicable√ Not applicable
In the Reporting Period no controlling shareholder or other related party used capital of the listed company for non-operating purposes.III. Illegal Provision of External Guarantees
□ Applicable√ Not applicable
There was no illegal provision of external guarantees of the Company during the Reporting Period.IV. Explanations Provided by the Board of Directors
Regarding the Latest “Non-standard Audit Report”
□ Applicable√ Not applicable
118Chapter 6Significant Events
V. Explanations Provided by the Board of Directors
Supervisory Committee and Independent Directors
(if any) Regarding the “Non-standard Audit Report”
Issued by the Auditor for the Reporting Period
□ Applicable√ Not applicable
VI. Changes in Accounting Policy or Accounting
Estimate or Correction of Material Accounting Error
Compared with the Financial Report of the Previous
Year
□ Applicable√ Not applicable
VII. Changes in the Scope of Consolidated Statements
Compared with the Financial Report of the Previous
Year
□ Applicable√ Not applicableFor details of the changes in the scope of consolidation of the Company in 2023 please refer to “V. Changes in the Scope ofConsolidation” in “Section X. Financial Reporting”.VIII. Details Regarding Engagement and Removal of
Accountant Firm
Existing accountant firm
Name of domestic accountant firm PriceWaterhouseCoopers Zhongtian LLP.Remuneration for domestic accountant firm (RMB’000) 18471
Consecutive years of audit services provided by the domestic accountant firm 8 years
Names of the certified public accountants from accountant firm Lin Chongyun Liu Yufeng
Consecutive years of audit services provided by the certified public accountants of
1 year
domestic accountant firm
119Chapter 6Significant Events
The accountant firm changed or not during the Reporting Period
□ Yes√ No
Status of auditor of internal controls financial adviser or sponsor engaged:
√ Applicable□ Not applicable
The Company engaged PriceWaterhouseCoopers Zhongtian LLP as the Company’s internal control auditor for 2023. The remuneration for
internal control audit during the Reporting Period was included in the remuneration specified in the table above.IX. Possibility of Delisting after Disclosure of this
Annual Report
□ Applicable√ Not applicable
X. Bankruptcy and Reorganization
□ Applicable√ Not applicable
XI. Significant Lawsuit or Arbitration
□ Applicable√ Not applicable
As of December 31 2023 legal proceedings of the listed company and its subsidiaries were as follows:
1. The total amount involved in legal cases resolved during the Reporting Period was RMB604.260 million.
2. Cases not yet resolved during the Reporting Period include: Cases involving the Company and its subsidiaries as defendants amounted
to RMB899.689 million accounting for 0.97% of audited net assets attributable to shareholders of the listed company at the end of 2023.Cases involving the Company and its subsidiaries as plaintiffs amounted to RMB931.948 million accounting for 1.00% of audited net assets
attributable to shareholders of the listed company at the end of 2023. The above-mentioned litigation matters mainly related to a number
of independent cases with small amounts involved in each single case which will not have a material adverse effect on the Company’s
financial status and ability to continue operations.XII. Punishment and Rectification
□ Applicable√ Not applicable
There was no such situation during the Reporting Period.
120Chapter 6Significant Events
XIII . Integrity of the Company Its Controlling
Shareholders and Actual Controller
□ Applicable√ Not applicable
XIV. Significant Related-party Transactions
1. Related-party transactions relevant to routine operations
√ Applicable□ Not applicable
Related-
Type of Related- Proportion Approved Approved Market price
Pricing principle of Transaction party
related- Details of related- party of same transaction quota of similar Disclosure
Related Party Relationship the related-party amount transaction Disclosure index
party party transaction transaction category of quota exceeded transactions date
transaction (RMB’000) settlement
transaction price transactions (RMB’000) or not available
method
Announcement on theFair pricing Settlement “Proposal on EstimatedCourier service
Provide based on market based on the Routine Related-party
Mingde Controlling communication
services prices following Contract settlement November Transaction Amount
Holding and its shareholder of service technology 92697 0.04% 150000 No N/Ato related the principle of price period and 19 2022 in 2023” released
subsidiaries the Company services agent
parties independent terms in the by the company on
services etc.transactions. contract the Cninfo website
(www.cninfo.com.cn)
Announcement on theFair pricing Settlement “Proposal on EstimatedReceive
based on market based on the Routine Related-party
Mingde Controlling services Technology
prices following Contract settlement November Transaction Amount
Holding and its shareholder of from services agent 501885 0.22% 500000 Yes N/Athe principle of price period and 19 2022 in 2023” released
subsidiaries the Company related services etc.independent terms in the by the company on
parties
transactions. contract the Cninfo website
(www.cninfo.com.cn)
Announcement on thePurchase Fair pricing Settlement “Proposal on Estimatedof goods/ based on market based on the Routine Related-party
Mingde Controlling
equipment Purchase of goods/ prices following Contract settlement November Transaction Amount
Holding and its shareholder of 298508 0.13% 280000 Yes N/Afrom equipment the principle of price period and 19 2022 in 2023” released
subsidiaries the Company
related independent terms in the by the company on
parties transactions. contract the Cninfo website
(www.cninfo.com.cn)
121Chapter 6Significant Events
Related-
Type of Related- Proportion Approved Approved Market price
Pricing principle of Transaction party
related- Details of related- party of same transaction quota of similar Disclosure
Related Party Relationship the related-party amount transaction Disclosure index
party party transaction transaction category of quota exceeded transactions date
transaction (RMB’000) settlement
transaction price transactions (RMB’000) or not available
method
Other
companies
Announcement on the
controlledFair pricing Settlement “Proposal on Estimatedby the actual Receive
Other companies based on market based on the Routine Related-party
controller of services Agent Services
controlled by the prices following Contract settlement November Transaction Amount
the Company from advertisement 170582 0.08% 250000 No N/Aactual controller the principle of price period and 19 2022 in 2023” released
other than related services etc.of the Company independent terms in the by the company on“Mingde partiestransactions. contract the Cninfo website
Holding
(www.cninfo.com.cn)
and itssubsidiaries”
A former
senior Announcement on themanager of Fair pricing Settlement “Proposal on EstimatedReceive
the Company based on market based on the Routine Related-party
CR-SF services
serves as Transportation prices following Contract settlement November Transaction Amount
International from 760036 0.34% 750000 Yes N/Aa director services etc. the principle of price period and 19 2022 in 2023” released
Express Co. Ltd. related
of CR-SF independent terms in the by the company on
parties
International transactions. contract the Cninfo website
Express Co. (www.cninfo.com.cn)
Ltd.A former
director of Announcement on thethe Company Fair pricing Settlement “Proposal on EstimatedM China
serves as a Provide Supply chain based on market based on the Routine Related-party
Management
director of services service and prices following Contract settlement November Transaction Amount
Limited and its 1970734 0.76% 2100000 No N/Athe parent to related distribution service the principle of price period and 19 2022 in 2023” released
subsidiaries and
company parties etc. independent terms in the by the company on
its franchisees
of M China transactions. contract the Cninfo website
Management (www.cninfo.com.cn)
Limited
Total – – 3794442 – 4030000 – – – – –
Details of large
amount of sales N/A
returns
Actual
performance in
the Reporting
Period versus The Company’s thirtieth meeting of the fifth Board of Directors held on November 18 2022 and the twenty-fifth meeting of the fifth Supervisory Committee and the third Extraordinary General Meeting of Shareholders
predicted of 2022 on December 20 2022 respectively reviewed and approved the “Proposal on Estimated Routine Related-party Transaction Amount in 2023.” The amount incurred by aforementioned related-party transactions is
total amount within the estimated range. The actual amount incurred by aforementioned related-party transactions of the individual ones exceeds the estimated amount is total RMB30.429 million but the excess doesn’t meet the amount
of routine standard for approval by the Board.related-party
transactions by
types (if any)
122Chapter 6Significant Events
Related-
Type of Related- Proportion Approved Approved Market price
Pricing principle of Transaction party
related- Details of related- party of same transaction quota of similar Disclosure
Related Party Relationship the related-party amount transaction Disclosure index
party party transaction transaction category of quota exceeded transactions date
transaction (RMB’000) settlement
transaction price transactions (RMB’000) or not available
method
Reason for
significant
discrepancy
between the
N/A
transaction
price and the
market price (if
applicable)
2. Related-party transactions relevant to purchases and sales of assets or
equities
□ Applicable√ Not applicable
3. Related-party transactions with joint investments
□ Applicable√ Not applicable
There was no related-party transaction with joint investment of the Company during the Reporting Period.
4. Credits and liabilities with related parties
□ Applicable√ Not applicable
There were no credits and liabilities with related parties of the Company during the Reporting Period.
5. Transactions between the Company and financial companies that have
associated relationship
□ Applicable√ Not applicable
6. Transactions between financial companies controlled by the Company and
related parties
□ Applicable√ Not applicable
7. Other significant related-party transactions
□ Applicable√ Not applicable
XV. Significant Contracts and Their Execution
1. Trusteeships Contracts and Leases
(1) Trusteeships
□ Applicable√ Not applicable
123Chapter 6Significant Events
(2) Contracts
□ Applicable√ Not applicable
(3) Leases
□ Applicable√ Not applicable
2. Significant guarantees
√ Applicable□ Not applicable
Unit: RMB’000
The Company and its subsidiaries’ guarantees to external parties (Guarantees to subsidiaries are not included)
Disclosure
date of related Actual Counter Guarantee
Guaranteed Exact date of Collateral Fulfilled or
Guarantee party announcement guarantee Type of guarantee guarantee Period of guarantee for a related
quota occurrence (if any) not
of guarantee amount (if any) party or not
quota
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 25300 None None 2021/09/29-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 50600 None None 2021/11/30-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 20700 None None 2021/10/08-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 96600 None None 2021/11/29-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 36800 None None 2021/12/01-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 46000 None None 2021/12/03-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 276000 None None 2022/01/01-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 23000 None None 2022/01/04-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 69000 None None 2022/01/05-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 46000 None None 2022/05/27-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 69000 None None 2022/05/30-2055/04/29 No No
Ltd. liability guarantee
Hubei International Logistics Airport Co. Joint and several
2020/03/24 3500000 2021/02/25 23000 None None 2022/05/31-2055/04/29 No No
Ltd. liability guarantee
Joint and several
SUPER WISE (HK) LIMITED 2023/03/29 210000 2023/12/08 163724 None None 2023/12/08-2026/12/08 No No
liability guarantee
Total guarantee quota approved for external parties during Total actual amount of guarantees for external parties during the
210000163724
the reporting period (A1) Reporting Period (A2)
Total guarantee quota approved for external parties at the Total actual guarantee balance for external parties at the end of the
3376180945724
end of the Reporting Period (A3) Reporting Period (A4)
124Chapter 6Significant Events
The Company’s guarantees to subsidiaries
Disclosure
date of related Actual Counter Guarantee
Guarantee Exact date of Type of Collateral Fulfilled
Guarantee party announcement guarantee guarantee Period of guarantee for a related
quota occurrence guarantee (if any) or not
of guarantee amount (if any) party or not
quota
Joint and several
SF HOLDING INVESTMENT LIMITED 2017/12/28 3554375 2018/07/26 3554375 None None 2018/07/26-2023/07/26 Yes No
liability guarantee
Joint and several
SF HOLDING INVESTMENT LIMITED 2019/01/04 6000000 2020/02/20 4976125 None None 2020/02/20-2030/02/20 No No
liability guarantee
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2021/11/17 2843500 None None 2021/11/17-2026/11/17 No No
liability guarantee
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2021/11/17 2132625 None None 2021/11/17-2028/11/17 No No
liability guarantee
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2021/11/17 454790 None None 2021/11/17-2031/11/17 No No
liability guarantee
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2022/01/18 2843500 None None 2022/01/18-2026/11/17 No No
liability guarantee
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2022/01/18 2132625 None None 2022/01/18-2031/11/17 No No
liability guarantee
Total guarantee quota approved for subsidiaries during the Total actual amount of guarantees for subsidiaries during the
1002000
Reporting Period (B1) Reporting Period (B2)
Total guarantee quota approved for the subsidiaries at the end Total actual guarantee balance for subsidiaries at the end of the
2048336515383165
of the reporting period (B3) Reporting Period (B4)
Subsidiary’s guarantees to subsidiaries
Disclosure
date of related Actual Counter Guarantee
Guarantee Exact date of Type of Collateral Fulfilled
Guarantee party announcement guarantee guarantee Period of guarantee for a related
quota occurrence guarantee (if any) or not
of guarantee amount (if any) party or not
quota
Subject to the
Subsidiaries of SF Holding (with gearing 16 March 2019 Joint and several Subject to the actual Partially
24 March 2020 64443403 actual guarantee 20547185 None Part Noratio of 70% or above) liability guarantee guarantee contract Partially fulfilled
18 March 2021 contract
7 January 2022 Subject to the
Subsidiaries of SF Holding (with gearing 31 March 2022 Joint and several Subject to the actual Partially 26208737 actual guarantee 11795392 None Part No
ratio below 70%) 29 March 2023 liability guarantee guarantee contract Partially fulfilledcontract
Total guarantee quota approved for subsidiaries during the Total actual amount of guarantees for subsidiaries during the
5468980013666299
Reporting Period (C1) Reporting Period (C2)
Total guarantee quota approved for the subsidiaries at the Total actual guarantee balance for subsidiaries at the end of the
7442371519245350
end of the Reporting Period (C3) Reporting Period (C4)
125Chapter 6Significant Events
Total guarantee amount provided by the Company (namely total of the first three major items)
Total guarantee quota approved during the Reporting Period Total actual amount of guarantee during the Reporting Period
5500000013830023
(A1+B1+C1) (A2+B2+C2)
Total guarantee quota approved at the end of the Reporting Total actual guarantee balance at the end of the Reporting Period
9828326035574239
Period (A3+B3+C3) (A4+B4+C4)
Total guarantee amount (A4+B4+C4) to net assets of the Company 38.34%
Of which:
Balance of guarantee for shareholders actual controller and affiliates thereof (D) –
Balance of debt guarantee provided for guaranteed party whose asset-liability ratio is not less than
23866775
70% directly or indirectly (E)
Amount of total guarantee in excess of 50% of net assets (F) –
Total amount of the above three guarantees (D+E+F) 23866775
Explanation on guarantee liabilities occurred or possible joint and several liabilities of repayment
N/A
with evidence during the Reporting Period (if any) for unexpired guarantee contracts
Explanation on provision of guarantees for external parties in violation of the prescribed procedure
N/A
(if any)
3. Cash assets managed under trust
(1) Wealth managed under trust
Entrusted finances during the Reporting Period
Unit: RMB’000
Maximum Daily
Impairment
Balance of Such Overdue
Funding Source for Unexpired Provision of
Type Entrusted Funds Outstanding
Entrusted Funds Balance Overdue
During the Amount
Outstanding Funds
Reporting Period
Bank wealth management products Self-owned funds 23570000 6520000 – –
Others Self-owned funds 248220 213263 – –
Bank wealth management products Raised proceeds 1830000 – – –
Total 25648220 6733263 – –
Note: The maximum single day balances for each type of entrusted wealth management in the above table occur on different dates and direct sum
totals do not represent the maximum single day balances for all of the Company’s wealth management.Details of individual items with significant amount or of low safety poor liquidity high risk wealth management products
□ Applicable√ Not applicable
It is expected that the principal of entrusted financing cannot be recovered or there may be other circumstances that may result in
impairment
□ Applicable√ Not applicable
126Chapter 6Significant Events
(2) Entrusted loans
Entrusted loans during the Reporting Period
Unit: RMB’000
Funding Source for Overdue Outstanding
Total Amount of Entrusted Loans Unexpired Balance
Entrusted Loans Amount
– Self-owned funds 41390 1750
Details of individual items with significant amount or of low safety poor liquidity high risk entrusted loans
□ Applicable√ Not applicable
It is expected that the principal of the entrusted loan cannot be recovered or there may be other circumstances that may result in
impairment.√ Applicable□ Not applicable
With a view to motivating and retaining the key employees holding high-priority positions within the Company and to meeting the routine
consumption needs of employees the Company formulated the employee welfare loan management policy in 2017 to grant up to RMB700
million worth of loans to eligible employees in 2017 and 2018 and compiled the 2019 employee welfare loan management policy in
2019 to grant up to RMB300 million worth of loans to eligible employees in one year. For details refer to the Employee Welfare Loan
Management System and the 2019 Employee Welfare Loan Management System released by the Company at www.cninfo.com on October
27 2017 and December 7 2019 respectively. As of the end of the Reporting Period the unexpired balance of the employee welfare loan
was RMB41.39 million with an overdue amount of RMB1.75 million. The company has set aside a certain percentage of bad debt provision
which was immaterial and would not have a material adverse effect on the Company’s financial position.As of the end of the Reporting Period the historical overdue uncollected entrusted loan of Shenzhen Shuncheng Lefeng Business (顺诚乐丰
商业) Co. Ltd. of the Company’s subsidiary amounting to RMB27 million had been ruled by the court to be auctioned off and the auction
had been completed and the proceeds from the auction of the mortgages obtained by the Company had covered the full amount of the
loan.
4. Other significant contracts
□ Applicable√ Not applicable
There was no significant contract of the Company in the Reporting Period.XVI. Other Significant Events
√ Applicable□ Not applicable
(I) Subscription of perpetual convertible bonds issued by Kerry Logistics
On 29 March 2023 in order to support Kerry Logistics a controlling subsidiary of the Company to expand the international express delivery
business in Southeast Asia especially to support the development of its subsidiary KerryExpress (Thailand) Public Company Limited (stock
code: KEX) SF Holding Limited (as the subscriber) a wholly-owned subsidiary of the Company entered into a Subscription and Placing
Agent Agreement with Kerry Logistics (as the issuer) and the placing agent in accordance with the development strategy of the Company
pursuant to which SF Holding Limited intends to subscribe the HK$780 million perpetual convertible bonds issued by Kerry Logistics. As
at the date of the agreement the Company indirectly held 51.52% equity interest of Kerry Logistics through its wholly-owned subsidiary.Based on the initial conversion price of HK$18.8/share and assuming full conversion of the convertible bonds in the future the Company’s
shareholding ratio in Kerry Logistics will increase to 52.61%.The third meeting of the sixth session of the Board of the Company considered and approved the Resolution on Subscription of Perpetual
Convertible Bond Issued by the Controlling Subsidiary Kerry Logistics. During the Reporting Period the Subscription Transaction has been
completed.
127Chapter 6Significant Events
(II) Issuance of domestic and overseas debt financing products by wholly-owned
subsidiaries
During the Reporting Period pursuant to the Notice of Acceptance of Registration (Zhong Shi Xie Zhu [2022] No. DFI14) issued by the
National Association of Financial Market Institutional Investors Shenzhen S.F. Taisen Holdings (Group) Co. Ltd. a wholly-owned subsidiary
of the Company issued the first and second tranche of 2023 super & short-term commercial papers on 16 February 2023 and 30 March
2023 respectively with a total issuance size of RMB1.5 billion.
(III) The Preparation for the Issue and Listing of H Shares
In order to further promote its globalization strategy build an international capital operation platform enhance its international brand
image and improve its overall competitiveness the Company plans to issue overseas listed foreign shares (H-shares) and apply for listing on
the Main Board of The Stock Exchange of Hong Kong Limited (hereinafter referred to as the “Issue and Listing”). The Company held the 6th
Meeting of the 6th Session of the Board of Directors and the First Extraordinary General Meeting of 2023 on August 1 2023 and August
17 2023 respectively and passed the “Proposal on the Issuance of H Shares and Listing of the Company on The Stock Exchange of HongKong Limited” and other relevant proposals. The Company will take into full consideration the interests of the existing shareholders and
the conditions of domestic and overseas capital markets and will select timing and window as appropriate to complete the Issuance and
Listing within the validity period of the resolution of the general meeting (i.e. 18 months from the date of consideration and approval at the
general meeting of the Company or such other period as may be agreed to be extended).The Company submitted the application for the Issue and Listing to the Hong Kong Stock Exchange on 21 August 2023 and submitted the
filing application materials for the Issue and Listing of H Shares to the CSRC in accordance with the relevant regulations and was received
by the CSRC. The Issue and Listing of the Company is subject to the approval ratification or filing by the relevant governmental authorities
regulatory authorities and stock exchanges such as the China Securities Regulatory Commission and the Hong Kong Stock Exchange and is
still subject to uncertainties. The Company will fulfill its information disclosure obligations in a timely manner according to the progress of
the aforementioned matter.(IV) The company repurchased its own shares through centralized competitive
bidding
Based on the confidence in future development prospects and high recognition of the company’s value the company further strengthened
its long-term incentive mechanism by considering comprehensive factors such as business development prospects operational conditions
financial status and future profitability. The company used its own funds to repurchase company shares through the secondary market
for employee stock ownership plans or equity incentives. The Company held the twenty-eighth meeting of the 5th session of the Boardof Directors on 22 September 2022 and reviewed and approved the “Proposal on Company’s Share Repurchase Plan through CentralizedCompetitive Bidding” with a total repurchase amount of not less than RMB1 billion and not more than RMB2 billion a repurchase price
of not more than RMB70/share and a repurchase period of 12 months from the date of consideration and approval of the repurchase
programme by the Board of Directors of the Company.As end of September 21 2023 the company completed this repurchase with a total of 20674084 shares repurchased during the buyback
period. This represents approximately 0.42% of the company’s total share capital. The average transaction price for the repurchased shares
was RMB48.39 per share resulting in a total transaction amount of approximately $1 billion (excluding transaction fees).(V) The company repurchased its own shares through centralized competitive
bidding
In order to actively respond to the call of the State support the sustainable and healthy development of logistics industrial parks build
a light-asset capital operation platform for logistics industrial parks revitalize the stock of assets and enhance the efficiency of capital
circulation the Company intended to carry out the declaration and issuance of infrastructure public REITs with the logistics industrial park
projects held by its subsidiaries located in Shenzhen Wuhan and Hefei as the underlying assets. At the 10th Meeting of the 6th Sessionof the Board of Directors held on 28 December 2023 the Company considered and passed the “Proposal on Carrying Out the Declarationand Issue Work of Infrastructure Public REITs”. The issuance of infrastructure public REITs does not constitute a connected transaction nor
does it constitute a major asset reorganization as stipulated in the Measures for the Administration of Major Asset Reorganizations of Listed
Companies.
128Chapter 6Significant Events
The disclosure index of the above significant events and other significant events is as follows:
Interim announcement Date of disclosure Website for disclosure
Announcement on Progress of Repurchase of Shares of the Company January 4 2023 CNINFO (www.cninfo.com.cn)
Announcement on Progress of Repurchase of Shares of the Company February 2 2023 CNINFO (www.cninfo.com.cn)
Announcement on the Results of the Issuance of the First Tranche of Super
& Short-term Commercial Papers for 2023 by Shenzhen S.F. Taisen Holdings February 21 2023 CNINFO (www.cninfo.com.cn)
(Group) Co. Ltd.Announcement on Progress of Repurchase of Shares of the Company March 1 2023 CNINFO (www.cninfo.com.cn)
Announcement on Subscription of Perpetual Convertible Bonds Issued by
March 29 2023 CNINFO (www.cninfo.com.cn)
Kerry Logistics a Controlling Subsidiary
Announcement on the Results of the Issuance of the Second Tranche of
Super & Short-term Commercial Papers for 2023 by Shenzhen S.F. Taisen April 4 2023 CNINFO (www.cninfo.com.cn)
Holdings (Group) Co. Ltd.Announcement on Progress of Repurchase of Shares of the Company April 4 2023 CNINFO (www.cninfo.com.cn)
Announcement on Progress of Repurchase of Shares of the Company May 5 2023 CNINFO (www.cninfo.com.cn)
Announcement on Progress of Repurchase of Shares of the Company June 2 2023 CNINFO (www.cninfo.com.cn)
Announcement on Progress of Repurchase of Shares of the Company July 5 2023 CNINFO (www.cninfo.com.cn)
Announcement on Progress of Repurchase of Shares of the Company July 13 2023 CNINFO (www.cninfo.com.cn)
Prompt Announcement on Matters Relating to the Preparation for the
August 2 2023 CNINFO (www.cninfo.com.cn)
Issuance and Listing of H Shares
Announcement on Progress of Repurchase of Shares of the Company August 2 2023 CNINFO (www.cninfo.com.cn)
Announcement on Progress of Repurchase of Shares of the Company August 11 2023 CNINFO (www.cninfo.com.cn)
Announcement on Submission of Application for Issue and Listing of
Overseas-Listed Foreign Shares (H Shares) to the Hong Kong Stock Exchange August 22 2023 CNINFO (www.cninfo.com.cn)
and Publication of Application Materials
Announcement on the Acceptance of Application Materials for Filing of
September 2 2023 CNINFO (www.cninfo.com.cn)
Issuance of Overseas-Listed Foreign Shares (H Shares) by CSRC
Announcement on Progress of Repurchase of Shares of the Company September 5 2023 CNINFO (www.cninfo.com.cn)
Announcement on Progress and Completion of Share Repurchase by the
September 22 2023 CNINFO (www.cninfo.com.cn)
Company
Announcement on Carrying Out the Declaration and Issue Work of
December 29 2023 CNINFO (www.cninfo.com.cn)
Infrastructure Public REITs
XVI. Significant Events of Subsidiaries
□ Applicable√ Not Applicable
129Chapter 7Share Changes and Shareholder Details
I. Changes in Shares
1. Changes in shares
Before Change Increase or Decrease (+ or -) After Change
Conversion of
New shares
Number of shares Proportion Bonus shares capital reserve Others Subtotal Number of shares Proportion
issued
into share capital
I. Shares subject to restricted sales 53950335 1.10% – – – -19866750 -19866750 34083585 0.70%
1. Shares held by state – – – – – – – – –
2. Shares held by state-owned legal person – – – – – – – – –
3. Other shares held by domestic capital 53950335 1.10% – – – -19958250 -19958250 33992085 0.69%
Of which: Other shares held by domestic
–––––––––
legal person
Other shares held by domestic
539503351.10%–––-19958250-19958250339920850.69%
natural person
4. Shares held by overseas capital – – – – – 91500 91500 91500 0.00%
Of which: Other shares held by overseas
–––––––––
legal person
Other shares held by overseas
–––––9150091500915000.00%
natural person
II. Shares not subject to restricted sales 4841252038 98.90% – – – 19866750 19866750 4861118788 99.30%
1. RMB-denominated ordinary shares 4841252038 98.90% – – – 19866750 19866750 4861118788 99.30%
III. Total number of shares 4895202373 100.00% – – – – – 4895202373 100.00%
Note: Any discrepancies between totals and sums of the proportions are due to rounding.Reasons of share changes Effects of share changes on the basic EPS diluted EPS net assets
√ per share attributable to ordinary shareholders of the Company □ Applicable Not applicable
and other financial indicators for the last year and the last
Approval of share changes Reporting Period
□ Applicable√ Not applicable □ Applicable√ Not applicable
Transfer of share ownership Other information that the Company considers necessary or are
□ √ required by the securities regulatory authorities to disclose Applicable Not applicable
□ Applicable√ Not applicable
130Chapter 7Share Changes and Shareholder Details
2. Changes in restricted shares
√ Applicable□ Not applicable
Unit: number of shares
Restricted shares at Number of restricted Number of restricted Restricted shares
Name of shareholder the beginning of the shares increased in shares removed in the at the end of the Reason for restriction Date of unlocking restricted shares
period the period period period
Liu Jilu 41912835 – 8370000 33542835 lock-up shares for senior management 8370000 shares unlocked in early 2023
lock-up shares within six months of
Lin Zheying 12000000 13000000 25000000 – June 20 2023
Director’s departure
Wang Xin 37500 91500 – 129000 lock-up shares for senior management –
Ho Chit – 91500 – 91500 lock-up shares for non-public offering –
Zhang Dong – 91500 – 91500 lock-up shares for non-public offering –
Li Sheng – 91500 – 91500 lock-up shares for non-public offering –
Geng Yankun – 91500 – 91500 lock-up shares for non-public offering –
Zhou Haiqiang – 45750 – 45750 lock-up shares for non-public offering –
Total 53950335 13503250 33370000 34083585 – –
II. Issuance and Listing of Securities
1. Issuance of securities (excluding preferred shares) during the Reporting
Period
□ Applicable√ Not applicable
2. Explanation on changes in the total shares structure of shareholders and
structure of assets and liabilities
□ Applicable√ Not applicable
3. Existing shares held by internal employees of the Company
□ Applicable√ Not applicable
131Chapter 7Share Changes and Shareholder Details
III. Details about Shareholders and Actual Controllers
1. Total number of shareholders and their holdings
Unit: number of shares
Total number
Total number of ordinary Total number of preferred stockholders with
of ordinary
shareholders at the end of the Total number of preferred shareholders voting rights restored at the end of the final
shareholders at the 199845 199445 _ _
final month before the disclosure with voting rights restored (if any) month before the disclosure date of the
end of Reporting
date of the annual report annual report (if any)
Period
Shareholders holding more than 5% of shares or shares of the top ten shareholders
(Excluding lending of shares through refinancing)
Number of shares Increase or decrease Number of Pledged marked or frozen shares
Shareholding Number of restricted
Name of shareholder Nature of shareholder held at the end of the of shares during the non-restricted
percentage shares held
reporting period reporting period shares held Status of shares Amount
Domestic non-state-
Shenzhen Mingde Holding Development Co. Ltd. 48.25% 2361927139 -128000000 – 2361927139 Pledged 738500000
owned legal person
Hong Kong Securities Clearing Company Ltd Overseas legal person 4.67% 228700101 -35718289 – 228700101 – –
Mingde Holding – Huatai United Securities – 21 Mingde EB Domestic non-state-
4.09% 200000000 – – 200000000 Pledged 200000000
Guarantee and Trust Property Special Account owned legal person
State-owned legal
Shenzhen Zhaoguang Investment Co. Ltd. 3.88% 189716864 -3558296 – 189716864 – –
person
Ningbo Shunda Fengrun Investment Management Partnership Domestic non-state-
2.06% 100914904 -1420000 – 100914904 Pledged 14000000
(Limited Partnership) owned legal person
Domestic non-state –
Shenzhen Weishun Enterprise Management Co. Ltd. 2.04% 100000000 100000000 – 100000000 – –
owned legal person
Lin Zheying Domestic natural person 0.82% 40021600 28021600 – 40021600 – –
Liu Jilu Domestic natural person 0.73% 35793780 -8930000 33542835 2250945 Pledged 9780000
Shanghai Chongyang Strategic Investment Co. Ltd.-
Other 0.58% 28313442 -11035980 – 28313442 – –
Chongyang Strategy Caizhi Fund
Shanghai Chongyang Strategic Investment Co. Ltd.-
Other 0.57% 28029837 24329816 – 28029837 – –
Chongyang Strategy Juzhi Fund
Strategic investor or general legal person becomes the top ten shareholder due to the
N/A
placement of new shares (if any)
Shenzhen Mingde Holding Development Co. Ltd. holds a total of 2661927139 shares in the Company accounting for 54.38% of the
Company’s total share capital of which 2361927139 shares are directly held 100000000 shares are held through its wholly-ownedsubsidiary Shenzhen Weishun Enterprise Management Co. Ltd. and 200000000 shares are held through the “Mingde Holding – HuataiExplanation on associated relationship or persons acting in concert between the above-United Securities – 21 Mingde EB Guarantee and Trust Property Special Account” a special account for guarantee and trust opened for
mentioned shareholders
the issuance of exchangeable bonds (EB).The Company is not certain as to whether there is an associated relationship between the other above-mentioned shareholders and
whether they are acting in concert.Explanation on the above-mentioned shareholders’ involvement in entrustment/entrusted
N/A
voting rights and abstaining from voting rights
At the end of the Reporting Period the “Special Securities Account for Repurchase of S.F. Holding Co. Ltd.” held 51050946 shares not
Special explanation on the top ten shareholders having special repurchase accounts (if any) subject to trading restrictions on sales. According to relevant regulations the repurchase account is not included in the presentation of
top ten ordinary shareholders and the top ten ordinary shareholders not subject to trading restrictions on sales.
132Chapter 7Share Changes and Shareholder Details
Top ten shareholders holding unrestricted shares
Number of unrestricted Type of shares
Name of shareholder shares held at the end of the
Reporting Period Type of shares Quantity
RMB-denominated ordinary
Shenzhen Mingde Holding Development Co. Ltd. 2361927139 2361927139
shares
RMB-denominated ordinary
Hong Kong Securities Clearing Company Ltd. 228700101 228700101
shares
Mingde Holding – Huatai United Securities – 21 Mingde EB Guarantee RMB-denominated ordinary
200000000200000000
and Trust Property Special Account shares
RMB-denominated ordinary
Shenzhen Zhaoguang Investment Co. Ltd. 189716864 189716864
shares
Ningbo Shunda Fengrun Investment Management Partnership (Limited RMB-denominated ordinary
100914904100914904
Partnership) shares
RMB-denominated ordinary
Shenzhen Weishun Enterprise Management Co. Ltd. 100000000 100000000
shares
RMB-denominated ordinary
Lin Zheying 40021600 40021600
shares
Shanghai Chongyang Strategic Investment Co. Ltd.- Chongyang RMB-denominated ordinary
2831344228313442
Strategy Caizhi Fund shares
Shanghai Chongyang Strategic Investment Co. Ltd.- Chongyang RMB-denominated ordinary
2802983728029837
Strategy Juzhi Fund shares
RMB-denominated ordinary
Huaxia Life Insurance Company Limited-Own Funds 23875320 23875320
shares
Shenzhen Mingde Holding Development Co. Ltd. holds a total of 2661927139
shares in the Company accounting for 54.38% of the Company’s total share
capital of which 2361927139 shares are directly held 100000000 shares
are held through its wholly-owned subsidiary Shenzhen Weishun Enterprise
Explanation on associated relationship or persons acting in concertManagement Co. Ltd. and 200000000 shares are held through the “Mingdebetween the top ten unrestricted tradable shareholders and between
Holding – Huatai United Securities – 21 Mingde EB Guarantee and Trust Property
the top ten unrestricted tradable shareholders and the top tenSpecial Account” a special account for guarantee and trust opened for the
shareholders
issuance of exchangeable bonds (EB).The Company is not certain as to whether there is an associated relationship
between the other above-mentioned shareholders and whether they are acting in
concert.In addition to 12000073 shares held through an ordinary securities account
Shanghai Chongyang Strategic Investment Co. Ltd.- Chongyang Strategy Caizhi
Fund a shareholder of the Company also held 16313369 shares through a
Customer margin securities account of China Merchants Securities Co. Ltd with
Explanation of the top ten common shareholders’ participation in
an actual total holding of 28313442 shares. In addition to 15021737 shares
margin financing and securities lending business (if any)
held through an ordinary securities account Shanghai Chongyang Strategic
Investment Co. Ltd.- Chongyang Strategy Juzhi Fund Gathering Fund also held
13008100 shares through a Customer margin securities account of China
Merchants Securities Co. Ltd with an actual total holding of 28029837 shares.
133Chapter 7Share Changes and Shareholder Details
The participation of the top ten shareholders in securities lending transactions
□ Applicable√ Not applicable
The changes in the top ten shareholders compared to the previous period
√ Applicable□ Not applicable
The changes in the top ten shareholders compared to the end of previous period
Number of shares held in shareholders'
The Number of lending shares through
ordinary accounts credit accounts and
refinancing and unreturned
Entry/Exit lending through refinancing and not yet
at the end of the period
Name of shareholder during the returned at the end of the period
reporting period
Number of Shareholding Number of Shareholding
shares percentage shares percentage
Shenzhen Weishun Enterprise Management Co. Ltd. Entry – – 100000000 2.04%
Lin Zheying Entry – – 40021600 0.82%
Shanghai Chongyang Strategic Investment Co. Ltd.Entry – – 28029837 0.57%
– Chongyang Strategy Juzhi Fund
Norges Bank – Own Funds Exit – – 0 0.00%
Shanghai Chongyang Strategic Investment Co. Ltd.Exit – – 13912381 0.28%
– Chongyang Strategy Yingzhi Fund
Yuanhai Investment Co. Ltd Exit – – 17488632 0.36%
Any of the top ten ordinary shareholders or the top ten non-restricted common shareholders of the Company conducted any transaction of
promissory repurchase or not during the Reporting Period
□ Yes√ No
None of the top ten ordinary shareholder or the top ten non-restricted ordinary shareholders of the Company conducted any transaction of
promissory repurchase during the Reporting Period.
2. Details about the controlling shareholder of the Company
Nature of controlling shareholders: natural person holding
Type of controlling shareholders: legal person
Legal
Date of
Name of controlling shareholder representative/ Organization code Business scope
establishment
company principal
International freight forwarders; economic and technical
consulting technical information consulting; commercial
activities in the form of franchise; import and export
Shenzhen Mingde Holding operations (except for projects prohibited by laws
Wang Wei November 5 1997 91440300279396064N
Development Co. Ltd. administrative regulations and State Council decisions;
restricted projects must obtain permissions for operations);
investment in industrial enterprises (specific projects will be
separately declared).Equity interests in holdings and
participating companies listed at
N/A
home and abroad of the controlling
shareholder in the Reporting Period
Change of controlling shareholder in the Reporting Period
□ Applicable√ Not applicable
There was no change of controlling shareholder of the Company in the Reporting Period.
134Chapter 7Share Changes and Shareholder Details
3. Details about the Company’s actual controllers and persons acting in concert
Nature of the actual controller: domestic natural person
Type of the actual controller: natural person
Right of sanctuary in other
Relationship with the
Name of actual controller Nationality countries or regions obtained
actual controller
or not
Wang Wei Himself China No
Mr. Wang Wei born in 1970 is the founder and de facto controller of the
Company. He currently serves as Chairman Executive Director and General
Major occupations and jobs Manager of the Company. He has served as the chairman of the board of
directors and non-executive director of Kerry Logistics (00636.HK) since October
2021.
Domestic and foreign-listed companies with shares held
N/A
by the ultimate controller in the past 10 years
Change of actual controller during the Reporting Period
□ Applicable√ Not applicable
The actual controller of the Company did not change during the Reporting Period.The ownership and controlling relationship between the actual controller and the Company is detailed as follows:
Wang Wei
99.90％
Shenzhen Mingde Holding
Development Co. Ltd.
100%
Shenzhen Weishun Enterprise 52.34%
Management Co. Ltd
2.04%
54.38%
S.F. Holding Co. Ltd.Note: Shenzhen Mingde Holding Development Co. Ltd. directly holds 2361927139 shares of the Company and 200000000 shares are held
through the “Mingde Holding – Huatai United Securities – 21 Mingde EB Guarantee and Trust Property Special Account” a special account
for guarantee and trust opened for the issuance of exchangeable bonds (EB) and 100000000 shares are held through its wholly-owned
subsidiary Shenzhen Weishun Enterprise Management Co. Ltd.The actual controller controlled the Company by trust or other asset management methods
□ Applicable√ Not applicable
135Chapter 7Share Changes and Shareholder Details
4. Number of shares pledged in aggregate by the Company’s controlling
shareholder or biggest shareholder and its persons acting in concert reaching
80% of the shares that they hold
□ Applicable√ Not applicable
5. Other institutional shareholders owning mover than 10% of shares
□ Applicable√ Not applicable
6. Details of restrictions on reducing shareholdings of controlling shareholders
actual controllers restructuring parties and other commitment subjects
□ Applicable√ Not applicable
IV. Details of Implementation of Share Repurchase
During the Reporting Period
Implementation progress of share repurchase
√ Applicable□ Not applicable
Proportion of
repurchased
Number shares to the
Number of shares
Percentage of total Proposed repurchase Proposed repurchase Purpose of of shares underlying
Disclosing date to be repurchased
share capital amount period repurchase repurchased shares involved
(shares)
(shares) in the share
incentive scheme
(if any)
14285700- Within 12 months
0.29%-0.58%
28571400 from the date
(calculated on Not less than RMB1 Employee stock
(calculated on on which the
the basis of the billion but not ownership
September 23 2022 the basis of repurchase plan 20674084 –
repurchase price more than RMB2 plan or equity
the maximum is considered and
cap of RMB70 per billion incentive plan
repurchase price of approved by the
share)
RMB70 per share) Board
Implementation of share repurchase reduction through aggregate auction
□ Applicable√ Not applicable
136Chapter 8Preferred Shares
□ Applicable√ Not applicable
There was no preferred share in the Company during the Reporting Period.
137Chapter 9Bonds
□ Applicable√ Not applicable
During the Reporting Period the Company did not have any bond-related business.
138Chapter 10Financial Statements
[English Translation for Reference Only]
Audit Opinion Type Unqualified Opinion
Audit Report Signing Date March 26 2024
Audit Institution Name PriceWaterhouseCoopers Zhongtian LLP.Audit Report Reference Number PwC ZT Shen Zi (2024) No. 10050
Registered Accountants’ Names Lin Chongyun Liu Yufeng
Auditor’s Report
PwC ZT Shen Zi (2024) No. 10050
To the shareholders of S.F. Holding Co. Ltd.Opinion
What we have audited
We have audited the accompanying financial statements of S.F. Holding Co. Ltd. (“S.F. Holding”) which comprise:
* the consolidated and company balance sheets as at 31 December 2023;
* the consolidated and company income statements for the year then ended;
* the consolidated and company cash flow statements for the year then ended;
* the consolidated and company statements of changes in equity for the year then ended; and
* notes to the financial statements.Our opinion
In our opinion the accompanying financial statements present fairly in all material respects the consolidated and company financial
position of S.F. Holding as at 31 December 2023 and their financial performance and cash flows for the year then ended in accordance
with the requirements of the Accounting Standards for Business Enterprises (“CASs”).Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.We are independent of S.F. Holding in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified
Public Accountants (“CICPA Code”) and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code.
139Chapter 10Financial Statements
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of most significance in our audit of the financial statements
of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our
opinion thereon and we do not provide a separate opinion on these matters.Key audit matters identified in our audit are summarised as follows:
* Goodwill impairment assessment relating to Kerry Logistics and SF Supply Chain Business
* Recognition of revenue from logistics and freight forwarding services
Key audit matters How our audit addressed the key audit matter
(1) Goodwill impairment assessment relating In response to the key audit matter we performed procedures as follows:
to Kerry Logistics Business and SF Supply Chain
Business With respect to the impairment assessment of goodwill relating to Kerry
Logistics Business and SF Supply Chain Business performed by management at
(Note 2(19) Note 2(29)(a)(iii) and Note 4(19)) the end of the year we performed the procedures as follows:
As at 31 December 2023 the goodwill balance of SF * Understood evaluated and tested the internal controls relating to the
Holding in relation to the business of Kerry Logistics and goodwill impairment assessment implemented by management;
SF Supply Chain Business was approximately RMB5889
million and RMB3082 million respectively. * Assessed the professional competency and objectivity of the independent
valuer;
Management engaged an independent valuer to conduct
impairment assessment of above goodwill at the end * Obtained the valuation report issued by an independent valuer engaged
of the year. The recoverable amount of Kerry Logistics by management and performed the following procedures with the
Business and SF Supply Chain Business relevant asset involvement of our internal valuation experts:
group was determined by the present value of the future
cash flows expected to be derived from the asset and no (1) We reviewed whether the division of asset groups to which the
impairment loss should be recognised at 31 December goodwill belonged to were reasonable;
2023. During the goodwill impairment assessment the
forecast of the present value of future cash flows involved (2) We evaluated the appropriateness of the valuation methods adopted
critical estimates and judgements on key assumptions by management and the independent valuer with reference to industry
including revenue growth rate EBIT and pre-tax discount practices;
rate.
(3) We compared the actual operation performance of asset groups in
Since the balance of the above goodwill was significant 2023 with relative estimates in 2022 and assessed the reasonability of
and the goodwill impairment assessment involved cash flows forecast prepared by management.critical estimates and judgements from management
we considered the impairment assessment of above- (4) We evaluated the appropriateness of key assumptions (including
mentioned goodwill as a key audit matter. revenue growth rate profit margin and pre-tax discount rate) applied
in the future cash flows forecast by reference to historical operating
performance future operation plan comparable market data etc.;
(5) We checked the calculation of future cash flows forecast for accuracy;
(6) We considered the potential impacts in case of reasonable changes in
key assumptions adopted by management in impairment assessment.Based on the above audit procedures performed the evaluation methods
and key assumptions adopted by management in the goodwill impairment
assessment were properly supported by the audit evidences we obtained.
140Chapter 10Financial Statements
Key audit matters How our audit addressed the key audit matter
(2) Recognition of revenue from logistics and freight In response to the key audit matter we performed procedures as follows:
forwarding services
* We understood the business mode and process of logistics and freight
(Note 2(25)(a) Note 4(42)(a)) forwarding services of S.F. Holding obtained contract terms relating
to revenue and assessed the accounting policy of revenue recognition
Revenue from logistics and freight forwarding services adopted by S.F. Holding in accordance with the Accounting Standards for
represents the revenue from main operations of S.F. Business Enterprises;
Holding. For the year ended 31 December 2023 the
revenue from logistics and freight forwarding services * We understood evaluated and tested internal controls of S.F. Holding
of S.F. Holding was approximately RMB251100 million relating to revenue recognition from logistics and freight forwarding
accounting for about 97.34% of revenue from main services including general controls and application controls on the
operations. information systems relating to revenue from logistics and freight
forwarding services. With the involvement of our internal information
Due to the significant amount of transactions from system audit specialists we executed the understanding evaluation and
logistics and freight forwarding services S.F. Holding testing of general controls and application controls on the information
used information systems to track the rendering of systems relating to revenue from logistics and freight forwarding services;
logistics services on a constant and real-time basis to
determine relevant revenue recognition. Therefore * Using sampling to check supporting documents related to revenue
revenue recognition largely relied on the effectiveness of recognition including service contracts the receipts confirmed by
design and operation of the internal controls relating to customer or routing information recording invoices collection records or
information systems. reconciliation records etc.;
Due to the significant amount of revenue from logistics * With respect to the revenue from logistics and freight forwarding services
and freight forwarding services the large number of recognised before and after the balance sheet date on sample basis we
transactions and the involvement of complex information checked the relative supporting documents so as to evaluate whether the
systems we needed to apply more audit effort to address revenue was recognised in the appropriate period.them. Therefore we considered the recognition of
revenue from logistics and freight forwarding services as Based on the above audit procedures performed the recognition of revenue
a key audit matter. from logistics and freight forwarding services was properly supported by the
audit evidences we obtained.Other information
Management of S.F. Holding is responsible for the other information. The other information comprises all of the information included in
2023 annual report of S.F. Holding other than the financial statements and our auditor’s report thereon.
Our opinion on the 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 financial statements our responsibility is to read the other information and in doing so consider
whether the other information is materially inconsistent with the 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.
141Chapter 10Financial Statements
Responsibilities of Management and Those Charged
with Governance for the Financial Statements
Management of S.F. Holding is responsible for the preparation and fair presentation of these financial statements in accordance with the
CASs and for such internal control as management designs executes and maintains is necessary to enable the preparation of financial
statements that are free from material misstatement whether due to fraud or error.In preparing these financial statements management is responsible for assessing S.F. Holding’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 management either
intends to liquidate S.F. Holding or to cease operations or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing S.F. Holding’s financial reporting process.Auditor’s Responsibilities for the Audit of the
Financial Statements
Our objectives are to obtain reasonable assurance about whether these 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. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with CSAs 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 financial statements.As part of an audit in accordance with CSAs we exercise professional judgement and maintain professional scepticism throughout the audit.We also:
* Identify and assess the risks of material misstatement of the 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.* Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by management.* Conclude on the appropriateness of management’s use of the going concern basis of accounting based on the audit evidence obtained
whether a material uncertainty exists related to events or conditions that may cast significant doubt on S.F. Holding’s ability to continue
as a going concern. If we conclude that a material uncertainty exists we are required by the audit standards to draw attention to the
users of these financial statements in our auditor’s report to the related disclosures in these financial statements or if such disclosures
are insufficient we should issue a qualified 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 S.F. Holding to cease to continue as a going concern.* Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.* Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within S.F. Holding
to express an opinion on the financial statements. We are responsible for the direction supervision and execution of the group audit.We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding among other matters the planned scope timing of the audit and
significant audit findings including any significant deficiencies in internal control required attention that we identify during our audit.
142Chapter 10Financial Statements
We also provide those charged with governance 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 related safeguards.From the matters communicated with those charged with governance we determine those matters that were of most significance in the
audit of the 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.PricewaterhouseCoopers Zhong Tian LLP Signing CPA
Shanghai the People’s Republic of China Lin Chongyun (Engagement Partner)
Signing CPA
26 March 2024 Liu Yufeng
143Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
31 December 2023 31 December 2022
ASSETS Note
Consolidated Consolidated
Current assets
Cash at bank and on hand 4(1) 41974505 41062750
Financial assets held for trading 4(2) 6809742 7385379
Notes receivable 226946 236244
Accounts receivable 4(3) 25133487 25560433
Receivables financing 99978 63310
Advances to suppliers 4(4) 3247294 3464911
Loans and advances 326780 34212
Other receivables 4(5) 3569308 3341237
Inventories 4(6) 2440425 1948354
Contract assets 4(7) 1632592 1522996
Current portion of non-current assets 4(9) 314080 440739
Other current assets 4(8) 5215543 5612928
Total current assets 90990680 90673493
Non-current assets
Long-term receivables 4(9) 368070 631278
Long-term equity investments 4(10) 7378831 7858000
Investments in other equity instruments 4(11) 9489535 7365684
Other non-current financial assets 4(12) 589996 1012209
Investment properties 4(13) 6418720 4875366
Fixed assets 4(14) 53929854 43657404
Construction in progress 4(15) 4032884 11149860
Right-of-use assets 4(16) 14073571 15429775
Intangible assets 4(17) 18147193 19176684
Capitalised development expenditures 4(18) 129845 311757
Goodwill 4(19) 9570436 9345744
Long-term prepaid expenses 4(20) 3161404 3097621
Deferred tax assets 4(35) 2263870 1632964
Other non-current assets 4(21) 945766 624868
Total non-current assets 130499975 126169214
TOTAL ASSETS 221490655 216842707
144Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED BALANCE SHEET (CONT’D)
AS AT 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
31 December 2023 31 December 2022
LIABILITIES AND EQUITY Note
Consolidated Consolidated
Current liabilities
Short-term borrowings 4(23) 18221977 12837870
Deposits from customers 1731 20670
Financial liabilities held for trading 92120 96647
Notes payable 68165 32699
Accounts payable 4(24) 24846135 24715352
Advances from customers 40714 49035
Contract liabilities 4(25) 1832018 1244418
Employee benefits payable 4(26) 5608609 6276551
Taxes payable 4(27) 2129715 2761146
Other payables 4(28) 11494841 13346595
Current portion of non-current liabilities 4(29) 9485948 11173650
Other current liabilities 4(30) 167668 5122276
Total current liabilities 73989641 77676909
Non-current liabilities
Long-term borrowings 4(31) 11355241 7472010
Debentures payable 4(32) 18794782 18927508
Lease liabilities 4(33) 8038495 8582372
Long-term payables 247452 209675
Long-term employee benefits payable 82216 114024
Deferred income 4(34) 1090644 860791
Deferred tax liabilities 4(35) 4550974 4657954
Provisions 57550 55415
Total non-current liabilities 44217354 40879749
Total liabilities 118206995 118556658
Equity
Share capital 4(36) 4895202 4895202
Capital reserve 4(37) 43164085 43996237
Less: Treasury stock 4(38) (2575532) (2040377)
Other comprehensive income 4(55) 5532428 4538027
General risk reserve 524376 493048
Surplus reserve 4(40) 2413786 1010253
Retained earnings 4(41) 38835999 33371351
Total equity attributable to shareholders of the Company 92790344 86263741
Minority interests 10493316 12022308
Total equity 103283660 98286049
TOTAL LIABILITIES AND EQUITY 221490655 216842707
The accompanying notes form an integral part of these financial statements.Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting manager: Hu Xiaofei
145Chapter 10Financial Statements
S.F. HOLDING CO. LTD.COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
31 December 2023 31 December 2022
ASSETS Note
Company Company
Current assets
Cash at bank and on hand 18(1) 138046 812181
Financial assets held for trading 18(2) – 2335319
Advances to suppliers 26243 121
Other receivables 18(3) 21818111 15191464
Other current assets 6029 –
Total current assets 21988429 18339085
Non-current assets
Long-term equity investments 18(4) 66933038 58217914
Construction in progress 210661 144726
Intangible assets 354928 368381
Deferred tax assets 100 –
Other non-current assets – 459
Total non-current assets 67498727 58731480
TOTAL ASSETS 89487156 77070565
146Chapter 10Financial Statements
S.F. HOLDING CO. LTD.COMPANY BALANCE SHEET (CONT’D)
AS AT 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
31 December 2023 31 December 2022
LIABILITIES AND EQUITY Note
Company Company
Current liabilities
Employee benefits payable 182 227
Other payables 21337 29191
Taxes payable 3292 10804
Total current liabilities 24811 40222
Non-current liabilities
Deferred tax liabilities – 1253
Total non-current liabilities – 1253
Total liabilities 24811 41475
Equity
Share capital 4(36) 4895202 4895202
Capital reserve 71890640 71743948
Less: Treasury stock 4(38) (2575532) (2040377)
Surplus reserve 2260741 857208
Retained earnings 12991294 1573109
Total equity 89462345 77029090
TOTAL LIABILITIES AND EQUITY 89487156 77070565
The accompanying notes form an integral part of these financial statements.Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting manager: Hu Xiaofei
147Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2023202220232022
Item Note
Consolidated Consolidated Company Company
1. Revenue 4(42) 258409403 267490414 – –
Less: Cost of revenue 4(42) (225273833) (234072360) – –
Taxes and surcharges 4(43) (501845) (476706) (136) (52)
Selling and marketing expenses 4(44) (2991589) (2784114) – –
General and administrative expenses 4(45) (17632556) (17574490) (17826) (15823)
Research and development expenses 4(46) (2285314) (2222865) – –
Financial (costs)/income 4(47) (1866201) (1711613) 25725 21081
Including: Interest expenses (2269700) (2054360) – (62)
Interest income 633373 345662 25849 21163
Add: Other income 4(49) 1969535 2249361 20000 –
4(50)
Investment income 800668 1025385 14025548 686398
18(5)
Including: Investment (losses)/income from associates and
(67190)7549––
joint ventures
Losses arising from changes in fair value (46262) (27938) (5319) (24899)
Reversal of/(Losses on) credit impairment 4(51) 33632 (821100) – (7)
Asset impairment losses (186449) (131756) – –
Gains on disposal of assets 25087 91689 – 198
2. Operating profit 10454276 11033907 14047992 666896
Add: Non-operating income 4(52)(a) 309229 231487 40 51
Less: Non-operating expenses 4(52)(b) (277000) (298616) – (497)
3. Profit before income tax 10486505 10966778 14048032 666450
Less: Income tax expenses 4(53) (2574896) (3963158) (12698) (41666)
4. Net profit 7911609 7003620 14035334 624784
Classified by continuity of operations:
Net profit from continuing operations 7911609 7003620 14035334 624784
Net profit from discontinued operations – – – –
Classified by ownership of the equity:
Attributable to shareholders of the Company 8234493 6173764 14035334 624784
Minority interests (322884) 829856 – –
148Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2023202220232022
Item Note
Consolidated Consolidated Company Company
5. Other comprehensive income net of tax 4(55) 827976 1273054 – –
At tributable to shareholders of the Company net of tax 873033 1882025 – –
Ot her comprehensive income which will not be reclassified
485954(49083)––
subsequently to profit or loss
Including: Ch anges in fair value of investments in other equity
486283(47597)––
instruments
Oth er comprehensive income which will not be
transferred to profit or loss under the equity (329) (1486) – –
method
Ot her comprehensive income which will be reclassified
3870791931108––
subsequently to profit or loss
Including: Cash flow hedge reserve 12002 15392 – –
Ot her comprehensive income which will be
transferred subsequently to profit or loss under (5254) (18740) – –
the equity method
Exc hange differences on translation of foreign
3803311934456––
currency financial statements
Attributable to minority interests net of tax (45057) (608971) – –
6. Total comprehensive income 8739585 8276674 14035334 624784
Attributable to shareholders of the Company 9107526 8055789 14035334 624784
Attributable to minority interests (367941) 220885 – –
7. Earnings per share
Basic earnings per share (RMB Yuan) 4(54) 1.70 1.27 Not applicable Not applicable
Diluted earnings per share (RMB Yuan) 4(54) 1.70 1.27 Not applicable Not applicable
The accompanying notes form an integral part of these financial statements.Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting manager: Hu Xiaofei
149Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2023202220232022
Item Note
Consolidated Consolidated Company Company
1. Cash flows from/(used in) operating activities
Ca sh received from sales of goods or rendering of services 270779571 282453563 – –
Ne t increase in deposits from customers and other financial
institutions – 6945 – –
Refund of taxes and levies 1443270 5649323 – 10265
Cash received relating to other operating activities 4(56)(a) 92921774 81078659 62433 26936
Sub-total of operating cash inflows 365144615 369188490 62433 37201
Cash paid for goods and services (191024507) (202633677) – –
Net decrease in deposits from customers and other financial
institutions (18949) – – –
Net increase in loans to customers (271917) (34105) – –
Ne t increase in balances with central bank and other banks (643752) (296941) – –
Cash paid to and on behalf of employees (33280900) (31255839) (5478) (8095)
Payments of taxes and levies (6848672) (8039647) (30752) (45171)
Cash paid relating to other operating activities 4(56)(b) (106486099) (94225334) (41435) (8629)
Sub-total of operating cash outflows (338574796) (336485543) (77665) (61895)
Ne t cash flows from/(used in) operating activities 4(57)(a) 26569819 32702947 (15232) (24694)
2. Cash flows (used in)/from investing activities
Cash received from disposal of investments 4(56)(c) 802652 2559624 – –
Cash received from returns on investments 798634 913099 9028331 2197582
Cas h received from disposal of fixed assets and other long-term
assets 335828 176331 – 7
Net cash received from disposal of subsidiaries 4(56)(e) 398822 313719 – –
Cash received relating to other investing activities 4(56)(g) 93261449 153839102 7708917 44200010
Sub-total of investing cash inflows 95597385 157801875 16737248 46397599
Cas h paid to acquire fixed assets and other long-term assets (12471899) (14183777) (72199) (97014)
Cash paid to acquire investments 4(56)(d) (1863225) (2073948) (8500000) (7000000)
Net cash paid to acquire subsidiaries 4(56)(f) (2197408) (2217481) – –
Cash paid relating to other investing activities 4(56)(g) (92570470) (151418127) (7005503) (35774516)
Sub-total of investing cash outflows (109103002) (169893333) (15577702) (42871530)
Net cash flows (used in)/from investing activities (13505617) (12091458) 1159546 3526069
150Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2023202220232022
Item Note
Consolidated Consolidated Company Company
3. Cash flows used in financing activities
Cash received from capital contributions 157080 162673 – –
Including: Cash received from capital contributions by minority
157080162673––
interests of subsidiaries
Cash received from borrowings and issue of debentures 34087071 39568089 – –
Cash received relating to other financing activities 361892 5187 355189 –
Sub-total of financing cash inflows 34606043 39735949 355189 –
Cash repayments on borrowings and debentures (32414626) (37421220) – –
Cash payments for interest expenses and distribution of
(3633061)(3688182)(1213616)(874518)
dividends or profits
Cash paid relating to other financing activities 4(56)(h) (11553041) (14643497) (959956) (2040787)
Sub-total of financing cash outflows (47600728) (55752899) (2173572) (2915305)
Net cash flows used in financing activities (12994685) (16016950) (1818383) (2915305)
4. E ffect of foreign exchange rate changes on cash and cash
98844871640(66)(1)
equivalents
5. Net increase/(decrease) in cash and cash equivalents 168361 5466179 (674135) 586069
Add: Cash and cash equivalents at the beginning of the year 40279947 34813768 812181 226112
6. Cash and cash equivalents at the end of the year 4(57)(b) 40448308 40279947 138046 812181
The accompanying notes form an integral part of these financial statements.Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting manager: Hu Xiaofei
151Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Equity attributable to shareholders of the Company
Other
Share Capital Less: Treasury General risk Special Surplus Retained Minority
Note comprehensive Total equity
capital reserve stock reserve reserve reserve earnings interests
income
Balance at 1 January 2022 4906213 46200598 (394993) 2617231 420638 – 947775 28245764 14972021 97915247
Movements for the year ended 31 December 2022
Total comprehensive income
Net profit – – – – – – – 6173764 829856 7003620
Other comprehensive income – – – 1882025 – – – – (608971) 1273054
Total comprehensive income for the year – – – 1882025 – – – 6173764 220885 8276674
Capital contribution and withdrawal by shareholders
Capital contribution by shareholders – 825 – – – – – – 161848 162673
Share repurchase 4(38) – – (2040377) – – – – – – (2040377)
Treasury stock cancellation 4(38) (11011) (383982) 394993 – – – – – – –
Share-based payments included in equity 9(1) – 122999 – – – – – – (13426) 109573
Others 4(37) – (2055007) – – – – – – (1856492) (3911499)
Business combinations involving enterprises not under
––––––––5755557555
common control
Profit distribution
Appropriation to general risk reserve 4(41) – – – – 72410 – – (72410) – –
Appropriation to surplus reserve 4(40) – – – – – – 62478 (62478) – –
Distribution to shareholders 4(41) – – – – – – – (874518) (1524826) (2399344)
Transfer within equity
Transfer from other comprehensive income to
–––38771–––(38771)––
retained earnings
Movements in other capital reserve – 110804 – – – – – – 4743 115547
Safety reserve
Appropriation 4(39) – – – – – 32214 – – – 32214
Utilisation 4(39) – – – – – (32214) – – – (32214)
Balance at 31 December 2022 4895202 43996237 (2040377) 4538027 493048 – 1010253 33371351 12022308 98286049
152Chapter 10Financial Statements
S.F. HOLDING CO. LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Equity attributable to shareholders of the Company
Other
Share Capital Less: Treasury General risk Special Surplus Retained Minority
Note comprehensive Total equity
capital reserve stock reserve reserve reserve earnings interests
income
Balance at 1 January 2023 4895202 43996237 (2040377) 4538027 493048 – 1010253 33371351 12022308 98286049
Movements for the year ended 31 December 2023
Total comprehensive income
Net profit – – – – – – – 8234493 (322884) 7911609
Other comprehensive income – – – 873033 – – – – (45057) 827976
Total comprehensive income for the year – – – 873033 – – – 8234493 (367941) 8739585
Capital contribution and withdrawal by shareholders
Capital contribution by shareholders – 1207 – – – – – – 146845 148052
Share repurchase 4(38) – – (959956) – – – – – – (959956)
Share-based payments included in equity 9(1) – 271510 – – – – – – 37828 309338
Exercise of share-based payments 4(38) – (69612) 424801 – – – – – – 355189
Others 4(37) – (1037241) – – – – – – (799597) (1836838)
Business combinations involving enterprises not under
––––––––4790447904
common control
Profit distribution
Appropriation to general risk reserve 4(41) – – – – 31328 – – (31328) – –
Appropriation to surplus reserve 4(40) – – – – – – 1403533 (1403533) – –
Distribution to shareholders 4(41) – – – – – – – (1213616) (596065) (1809681)
Transfer within equity
Transfer from other comprehensive income to
–––121368–––(121368)––
retained earnings
Movements in other capital reserve – 1984 – – – – – – 2034 4018
Safety reserve
Appropriation 4(39) – – – – – 389332 – – – 389332
Utilisation 4(39) – – – – – (389332) – – – (389332)
Balance at 31 December 2023 4895202 43164085 (2575532) 5532428 524376 – 2413786 38835999 10493316 103283660
The accompanying notes form an integral part of these financial statements.Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting manager: Hu Xiaofei
153Chapter 10Financial Statements
S.F. HOLDING CO. LTD.COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Less: Treasury Retained
Note Share capital Capital reserve Surplus reserve Total equity
stock earnings
Balance at 1 January 2022 4906213 71907104 (394993) 794730 1885321 79098375
Movements for the year ended 31 December 2022
Total comprehensive income
Net profit – – – – 624784 624784
Capital contribution and withdrawal by shareholders
Treasury stock cancellation 4(38) (11011) (383982) 394993 – – –
Share repurchase 4(38) – – (2040377) – – (2040377)
Share-based payments included in equity – 220852 – – – 220852
Others – (26) – – – (26)
Profit distribution
Appropriation to surplus reserve 4(40) – – – 62478 (62478) –
Distribution to shareholders 4(41) – – – – (874518) (874518)
Balance at 31 December 2022 4895202 71743948 (2040377) 857208 1573109 77029090
Balance at 1 January 2023 4895202 71743948 (2040377) 857208 1573109 77029090
Movements for the year ended 31 December 2023
Total comprehensive income
Net profit – – – – 14035334 14035334
Capital contribution and withdrawal by shareholders
Share repurchase 4(38) – – (959956) – – (959956)
Share-based payments included in equity – 216304 – – – 216304
Exercise of share-based payments 4(38) – (69612) 424801 – – 355189
Profit distribution
Appropriation to surplus reserve 4(40) – – – 1403533 (1403533) –
Distribution to shareholders 4(41) – – – – (1213616) (1213616)
Balance at 31 December 2023 4895202 71890640 (2575532) 2260741 12991294 89462345
The accompanying notes form an integral part of these financial statements.Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting manager: Hu Xiaofei
154Chapter 10Financial Statements
S.F. HOLDING CO. LTD.NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
1 General information First-tier and second-tier subsidiaries included in the consolidation
scope of the financial statements are detailed in Note 6(1). The
changes in the scope of consolidation for the current reporting
period are set out in Note 5.S.F. Holding Co. Ltd. (formerly “Ma’anshan Dingtai Rare EarthThese financial statements were authorised for issue by the Boardand New Materials Co. Ltd.” hereinafter “S.F. Holding” or
of Directors on 26 March 2024.“the Company”) formerly known as Ma’anshan Dingtai Science
& Technology Co. Ltd. was established by 11 natural persons
including Liu Jilu and the Labour Union of Ma’anshan Dingtai
Metallic Products Co. Ltd. by cash contribution on 13 May 2003. 2 Summary of significant
On 22 October 2007 The officially changed to Ma’anshan Dingtai
Rare Earth and New Materials Co. Ltd. and the Ma’anshan Dingtai accounting policies and
Rare Earth and New Materials Co. Ltd. shares were listed on the accounting estimates
Shenzhen Stock Exchange on 5 February 2010.In December 2016 approved by the China Securities Regulatory
Commission Ma’anshan Dingtai Rare Earth and New Materials
The Group determines the specific accounting policies and
Co. Ltd conducted a series of major assets restructuring including
estimates based on its features of production and operation
major assets swap issuing shares to purchase assets and raising
primarily comprising the methods of provision for expected
matching fund. Upon the completion of major asset restructuring
credit losses on receivables and contract assets (Note 2(9))Shenzhen Mingde Holdings Development Co. Ltd. (“Mingdevaluation of inventories (Note 2(10)) measurement model ofHoldings”) became the parent company and ultimate controlling
investment properties (Note 2(12)) depreciation of fixed assets
company of the Company and Wang Wei was the ultimate
and amortisation of intangible assets and right-of-use assets
controlling person of the Company. The place of registration
(Note 2(13) (16) (27)) criteria for capitalisation of capitalised
and headquarters of the Company were changed to Shenzhen
deve lopment expenditures (Note 2(17) ) recognit ion and
Guangdong Province.measurement of revenue (Note 2(25)) etc.As at 31 December 2023 the total share capital of the Company is
Details of the Group’s critical judgements critical accounting
RMB4895202373 with a par value of RMB1 per share.estimates and key assumptions used in determining significant
The actual business operations of the Company and its subsidiaries accounting policies are set forth in Note 2(29).(“the Group”) includes: domestic and international express services
(except for postal enterprises’ franchise business); general freight (1) Basis of preparation
services; large-scale goods transportation services; refrigerated
truck transportation services; third-party pharmaceutical modern The financial statements are prepared in accordance with the
logistics business services; urban distribution services; supply Accounting Standards for Business Enterprises – Basic Standard the
chain solution consulting services; domestic and international specific accounting standards and other relevant regulations issued
freight agency business services; air cargo transportation services; by the Ministry of Finance on 15 February 2006 and in subsequentwarehousing services; property leasing services and industrial periods (hereafter referred to as “the Accounting Standards forinvestment. Business Enterprises” or “CASs”) and the disclosure requirements
in the Preparation Convention of Information Disclosure by
Hangzhou SF Intra-city Industrial Co. Ltd. a subsidiary of the
Companies Offering Securities to the Public No. 15 – General Rules
Company is a company listed on the main board of the Stock
“ on Financial Reporting issued by the China Securities Regulatory Exchange of Hong Kong Limited ( HKEX”) primarily providing
Commission.intra-city instant delivery services.The financial statements are prepared on a going concern basis.Kerry Logistics Network Co. Ltd. (“Kerry Logistics”) a subsidiary of
the Company is a company listed on the main board of the HKEX
providing services such as comprehensive logistics e-commerce
express delivery and international freight.
155Chapter 10Financial Statements
(2) Statement of compliance with the ( b ) B u s i n e s s c o m b i n a t i o n s i n v o l v i n g
Accounting Standards for Business enterprises not under common control
Enterprises For business combinations not under common control the Group
chooses to use concentration test to judge whether the acquired
The financial statements of the Company for the year ended 31
production and operation activities or groups of assets constitutes
December 2023 are in compliance with the Accounting Standards
a business. When the concentration test is passed the Group
for Business Enterprises and truly and completely present the
conducts accounting treatment according to the relevant asset
consolidated and company financial position of the Company as at
purchase principle; when the concentration test is not passed the
31 December 2023 and their financial performance cash flows and
Group further judges whether the relevant combination obtained in
other information for the year then ended.the merger has at least one input and one substantive processing
process and the combination of the two has a significant
(3) Accounting year contribution to the output capacity and hence decide if the Group
obtains a business combination in such a transaction.The Company’s accounting year starts on 1 January and ends on
31 December. The combination cost and identifiable net assets obtained by the
Group in a business combination are measured at fair value at the
(4) Recording currency acquisition date. Where the combination cost exceeds the Group’s
interest in the fair value of the acquiree’s identifiable net assets
The Company’s recording currency is Renminbi (RMB). The the difference is recognised as goodwill; where the combination
Company’s subsidiaries decide their recording currencies in line cost is lower than the Group’s interest in the fair value of the
with the economic environments in which they operate while the acquiree’s identifiable net assets the difference is recognised in
subsidiaries in Hong Kong SAR and abroad mainly adopt currencies profit or loss for the current period. Costs directly attributable
including HKD and USD as their recording currencies. The financial to the combination are included in profit or loss in the period in
statements are presented in RMB. which they are incurred. Transaction costs associated with the
issue of equity or debt securities for the business combinations are
(5) Business combinations included in the initially recognised amounts of the equity or debt
securities.(a) Business combinations involving enterprises (6 ) P reparat ion of conso l idated
under common control financial statements
The consideration paid and net assets obtained by the Group in a
business combination are measured at the carrying amount. If the The consolidated financial statements comprise the financial
acquiree is acquired from a third party by the ultimate controlling statements of the Company and all of its subsidiaries.party in a prior year the consideration paid and net assets obtained Subsidiaries are consolidated from the date on which the Group
by the Group are measured based on the carrying amounts of the obtains control and are de-consolidated from the date on which
acquiree’s assets and liabilities (including the goodwill arising from such control ceases. For a subsidiary that is acquired in a business
the acquisition of the acquiree by the ultimate controlling party) combination involving enterprises under common control it is
presented in the consolidated financial statements of the ultimate included in the consolidated financial statements from the date
controlling party. The difference between the carrying amount of when it together with the Company comes under common
the net assets obtained from the combination and the carrying control of the ultimate controlling party. The portion of the net
amount of the consideration paid for the combination is treated profit realised before the combination date is presented separately
as an adjustment to capital reserve (share premium). If the capital in the consolidated income statement.reserve (share premium) is not sufficient to absorb the difference
the remaining balance is adjusted against retained earnings. Costs In preparing the consolidated financial statements where the
directly attributable to the business combinations are included in accounting policies and the accounting periods of the Company
profit or loss in the period in which they are incurred. Transaction and subsidiaries are inconsistent the financial statements of the
costs associated with the issue of equity or debt securities for subsidiaries are adjusted in accordance with the accounting policies
the business combinations are included in the initially recognised and the accounting period of the Company. For subsidiaries
amounts of the equity or debt securities. acquired from business combinations involving enterprises not
under common control the individual financial statements of the
subsidiaries are adjusted based on the fair value of the identifiable
net assets at the acquisition date.
156Chapter 10Financial Statements
All significant intra-group balances transactions and unrealised (7) Cash and cash equivalents
profits are eliminated in the consolidated financial statements.The portion of subsidiaries’ equity and the portion of subsidiaries’ Cash and cash equivalents comprise cash on hand deposits that
net profit or loss and comprehensive income for the period not can be readily drawn on demand and short-term and highly liquid
attributable to the Company are recognised as minority interests investments that are readily convertible to known amounts of cash
minority interest income and total comprehensive income and which are subject to an insignificant risk of changes in value.attributable to minority shareholders and presented separately
in the consolidated financial statements under equity net profit (8) Foreign currency translation
and total comprehensive income respectively. Where the loss for
the current period attributable to the minority shareholders of
the subsidiaries exceeds the share of the minority interests in the (a) Foreign currency transactions
opening balance of equity the excess is still deducted against Foreign currency transactions are translated into recording currency
minority interests. Unrealised profits and losses resulting from using the spot exchange rates and approximate exchange rates
the sales of assets by the Company to its subsidiaries are fully prevailing at the dates of the transactions.eliminated against net profit attributable to owners of the parent.Unrealised profits and losses resulting from the sales of assets by a At the balance sheet date monetary items denominated in foreign
subsidiary to the Company are eliminated and allocated between currencies are translated into recording currency using the spot
net profit attributable to owners of the parent and minority interest exchange rates on the balance sheet date. Exchange differences
income in accordance with the allocation proportion of the parent arising from these translations are recognised in profit or loss for
in the subsidiary. Unrealised profits and losses resulting from the the current period except for those attributable to foreign currency
sales of assets by one subsidiary to another are eliminated and borrowings that have been taken out specifically for acquisition
allocated between net profit attributable to owners of the parent or construction of qualifying assets which are capitalised as part
and minority interest income in accordance with the allocation of the cost of those assets. Non-monetary items denominated
proportion of the parent in the selling subsidiary. in foreign currencies that are measured at historical costs are
translated at the balance sheet date using the spot exchange
If the accounting treatment of a transaction is inconsistent in the rates at the date of the transactions. The effect of exchange
financial statements at the Group level and at the Company or its rate changes on cash is presented separately in the cash flow
subsidiary level adjustment will be made from the perspective of statement.the Group.If the control over the subsidiary is lost due to the disposal of a (b) Translation of foreign currency financial
portion of an equity investment or other reasons the remaining statements
equity investment in the consolidated financial statements is
The asset and liability items in the balance sheets for overseas
remeasured at its fair value at the date when the control is lost.operations are translated at the spot exchange rates on the
The sum of consideration received from the disposal of equity
balance sheet date. Among the equity items the items other
investment and the fair value of the remaining equity investment
than retained earnings are translated at the spot exchange rates
net of the sum of the share of net assets of the former subsidiary
of the transaction dates. The income and expense items in the
based on continuous calculation since the acquisition date and
income statement of foreign operations are translated at the spot
goodwill is recognised as investment income for the current period
exchange rates of the transaction dates. The differences arising
when the control is lost. In addition other comprehensive income
from the above translation are recognised in other comprehensive
and other changes in equity (excluding other comprehensive
income. The cash flows of foreign operations are translated at the
income from changes arising from remeasurement on net liabilities
spot exchange rates on the dates of the cash flows. The effect of
or net assets of defined benefit plans and accumulative fair value
exchange rate changes on cash is presented separately in the cash
changes of investments in equity instrument not held for trading at
flow statement.fair value through other comprehensive income) which are related
with the equity investment in the former subsidiary are transferred
to profit or loss for the current period when the control is lost.
157Chapter 10Financial Statements
(9) Financial instruments Measured at fair value through other comprehensive income:
The objective of the Group’s business model is to hold the
A financial instrument is any contract that gives rise to a financial
financial assets for both collection of the contractual cash flows
asset of one entity and a financial liability or equity instrument of
and selling such financial assets and the contractual cash flow
another entity. A financial asset a financial liability or an equity
characteristics are consistent with a basic lending arrangement.instrument is recognised when the Group becomes a party to the
Such financial assets are measured at fair value through other
contractual provisions of the instrument.comprehensive income except for the impairment gains or losses
foreign exchange gains and losses and interest income calculated
(a) Financial assets using the effective interest method which are recognised in profit
or loss for the current period. Such financial assets mainly include
(i) Classification and measurement
receivables financing. Other debt investments that are due within
Based on the business model for managing the financial assets and one year (inclusive) as from the balance sheet date are included
the contractual cash flow characteristics of the financial assets in current portion of non-current assets; other debt investments
financial assets are classified as: (1) financial assets at amortised with maturities of no more than one year (inclusive) at the time of
cost; (2) financial assets at fair value through other comprehensive acquisition are included in other current assets.income; (3) financial assets at fair value through profit or loss.Measured at fair value through profit or loss:
The financial assets are measured at fair value at initial recognition.Debt instruments held by the Group that are not divided into those
Related transaction costs that are attributable to the acquisition of
at amortised cost or those measured at fair value through other
the financial assets are included in the initially recognised amounts
comprehensive income are measured at fair value through profit
except for the financial assets at fair value through profit or loss
or loss. At initial recognition the Group designates a portion of
the related transaction costs of which are recognised directly in
financial assets as at fair value through profit or loss to eliminate
profit or loss for the current period. Accounts receivable or notes
or significantly reduce an accounting mismatch. Financial assets
receivable arising from sales of goods or rendering of services
measured at fair value through profit or loss that are due after one
(excluding or without regard to significant financing components)
year (inclusive) as from the balance sheet date and are expected to
are initially recognised at the consideration that is entitled to be
be held over one year are included in other non-current financial
charged by the Group as expected.assets and others are included in financial assets held for trading.Debt instruments
Equity instruments
The debt instruments held by the Group refer to the instruments
Investments in equity instruments over which the Group has no
that meet the definition of financial liabilities from the perspective
control joint control or significant influence are measured at fair
of the issuer and are measured in the following ways:
value through profit or loss under financial assets held for trading;
Measured at amortised cost: investments in equity instruments expected to be held over one
year as from the balance sheet date are included in other non-
The objective of the Group’s business model is to hold the financial
current financial assets.assets to collect the contractual cash flows and the contractual
cash flow characteristics are consistent with a basic lending In addition a portion of certain investments in equity instruments
arrangement which gives rise on specified dates to the contractual not held for trading are designated as financial assets at fair value
cash flows that are solely payments of principal and interest on through other comprehensive income under other investments in
the principal amount outstanding. The interest income of such equity instruments. The relevant dividend income of such financial
financial assets is recognised using the effective interest method. assets is recognised in profit or loss for the current period.Such financial assets mainly comprise cash at bank and on hand
notes receivable accounts receivable loans and advances other (ii) Impairment
receivables and long-term receivables. Long-term receivables that The Group recognises the loss provision based on expected credit
are due within one year (inclusive) as from the balance sheet date losses for financial assets at amortised cost investments in debt
are included in the current portion of non-current assets. instruments at fair value through other comprehensive income
contract assets lease receivables etc.
158Chapter 10Financial Statements
Giving consideration to reasonable and supportable information The credit r isk characteristics of financial assets of which
that is available without undue cost or effort at the balance sheet expected credit losses are calculated on the individual basis differ
date on past events current conditions and forecasts of future significantly from those of other financial assets. In case the
economic conditions as well as the default risk weight the Group expected credit losses of an individually assessed financial asset
recognises the expected credit loss as the probability-weighted cannot be evaluated with reasonable cost the Group divides the
amount of the present value of the difference between the cash receivables into certain groups based on credit risk characteristics
flows receivable from the contract and the cash flows expected to and calculates the expected credit losses for the groups. Basis for
collect. determining groups and methods for provision are presented as
follows:
For notes receivable accounts receivable receivables financing and
contract assets that are formed from daily business activities such Group 1 of notes receivable Bank acceptance notes
as providing services and selling goods the Group recognises the
lifetime expected credit loss provision regardless of whether there Related party customers with the
exists a significant financing component. For lease receivables the Group 1 of accounts receivable maturity date as the starting point for
Group also chooses to measure the loss provision based on lifetime ageing calculation
expected credit losses.Non-related party customers with the
Except for the above notes receivable accounts receivable Group 2 of accounts receivable maturity date as the starting point for
receivables financing contract assets and lease receivables at ageing calculation
each balance sheet date the expected credit losses of financial
Group 1 of contract assets Non-related party customers
instruments at different stages are measured respectively.
12-month expected credit loss provision is recognised for financial Group 1 of other receivables Related parties
instruments in Stage 1 that have not had a significant increase in
credit risk since initial recognition; lifetime expected credit loss Group 2 of other receivables Others
provision is recognised for financial instruments in Stage 2 that
Group 1 of long-term receivables Finance lease receivables
have had a significant increase in credit risk yet without credit
impairment since initial recognition; and lifetime expected credit Group 2 of long-term receivables Loans to employees
loss provision is recognised for financial instruments in Stage 3 that
have had credit impairment since initial recognition. Based on the exposure at default and the lifetime expected credit
loss rate the Group calculates the expected credit losses of
For the financial instruments with low credit risk as at the balance
notes receivable accounts receivable receivables financing lease
sheet date the Group assumes there is no significant increase in
receivables and contract assets that are classified into groups
credit risk since initial recognition. The Group determines them as
with consideration to historical credit losses experience current
the financial instruments in Stage 1 and recognises the 12-month
conditions and forecasts of future economic conditions.expected credit loss provision.Based on the exposure at default and the 12-month/lifetime
For the financial instruments in Stage 1 and Stage 2 the Group
expected credit loss rate the Group calculates the expected credit
calculates the interest income by applying the effective interest
losses of other receivables loans and advances and long-term
rate to the book balance (before deduction of the impairment
receivables (loans to employees) that are classified into groups
provision). For the financial instruments in Stage 3 the interest
with consideration to historical credit losses experience the current
income is calculated by applying the effective interest rate to the
conditions and forecasts of future economic conditions.amortised cost (after deduction of the impairment provision from
the book balance). The Group recognises the loss provision made or reversed into
profit or loss for the current period.For debt instruments classified as fair value through other
comprehensive income the Group recognises the impairment
loss or gain in profit or loss and meanwhile adjusts other
comprehensive income.
159Chapter 10Financial Statements
(iii) Derecognition (d) Determination of fair value of financial
A financial asset is derecognised when any of the below criteria is instruments
met: (1) the contractual rights to receive the cash flows from the The fair value of a financial instrument that is traded in an active
financial asset expire; (2) the financial asset has been transferred market is determined at the quoted price in the active market. The
and the Group transfers substantially all the risks and rewards fair value of a financial instrument that is not traded in an active
of ownership of the financial asset to the transferee; or (3) the market is determined by using a valuation technique. In valuation
financial asset has been transferred and the Group has not retained the Group adopts valuation techniques applicable in the current
control of the financial asset although the Group neither transfers situation and supported by adequate available data and other
nor retains substantially all the risks and rewards of ownership of information selects inputs with the same characteristics as those
the financial asset. of assets or liabilities considered in relevant transactions of assets
When investments in other equity instruments are derecognised or liabilities by market participants and gives priority to the use of
the difference between the carrying amount and the sum of the relevant observable inputs. When relevant observable inputs are
consideration received and the cumulative changes in fair value that not available or feasible unobservable inputs are adopted.are previously recognised directly in other comprehensive income
is recognised in retained earnings. When other financial assets are (10) Inventories
derecognised the difference aforementioned is recognised in profit
or loss for the current period.(a) Classification
(b) Financial liabilities Inventories comprise raw materials in stock aviation consumables
finished goods costs to fulfil a contract (see Note 2(25)(a)) and
Financial liabilities are classified as financial liabilities at amortised
turnover materials and are stated at the lower of cost and net
cost and financial liabilities at fair value through profit or loss at
realisable value.initial recognition.Financial liabilities of the Group mainly comprise financial liabilities (b) Valuation method for inventory delivered
at amortised cost mainly including notes and accounts payables
Raw materials in stock finished goods and aviation consumables
other payables borrowings and debentures payable. Such financial
are accounted for using the weighted average method upon
liabilities are initially recognised at fair value net of transaction
delivery.costs incurred and subsequently measured using the effective
interest method. Financial liabilities that are due within one year
(inclusive) are classified as current liabilities; those with maturities (c ) Amort i sat ion methods of low-value
over one year but are due within one year (inclusive) as from the consumables and recyclable materials
balance sheet date are classified as current portion of non-current Turnover materials include low-value consumables and recyclable
liabilities. Others are classified as non-current liabilities. materials. Recyclable materials are amortised in stages and low-
A financial liability is derecognised or partly derecognised when the value consumables are amortised by one-off write-off method
underlying present obligation is discharged or partly discharged. when they are used.The difference between the carrying amount of the derecognised
part of the financial l iability and the consideration paid is (d) Basis for determining the net realisable
recognised in profit or loss for the current period. value of inventories and provision for decline
in the value of inventories
(c) Equity instruments
Provision for decline in the value of inventories is determined at the
An equity instrument is a contract that represents a residual excess amount of the carrying amounts of the inventories over their
interest in the assets of an entity after deducting all of its liabilities. net realisable value. Net realisable value is determined based on
the estimated selling price in the ordinary course of business less
the estimated costs costs to fulfil a contract and estimated costs
necessary to make the sale and related taxes. The Group makes
provision for decline in the value of inventories on an aggregated
basis for inventories produced and sold in the same region and
with the same or similar end uses.(e) The Group adopts the perpetual inventory system.
160Chapter 10Financial Statements
(11) Long-term equity investments For long-term equity investments that are accounted for using
the equity method the Group recognises the investment income
Long-term equity investments comprise the Company’s long-term according to its share of net profit or loss of the investee. The
equity investments in its subsidiaries and the Group’s long-term Group discontinues recognising its share of the net losses of
equity investments in its joint ventures and associates. an investee after the carrying amounts of the long-term equity
investment together with any long-term interests that in substance
A subsidiary is an investee over which the Company is able to
form part of the investor’s net investment in the investee are
exercise control. A joint venture is a joint arrangement which is
reduced to zero. However if the Group has obligations for
structured through a separate vehicle over which the Group has
additional losses and the criteria with respect to recognition of
joint control together with other parties and only has rights to the
provisions are satisfied the Group continues recognising the
net assets of the arrangement based on legal forms contractual
estimated losses that it needs to bear. The changes of the Group’s
terms and other facts and circumstances. An associate is an
share of the investee’s equity other than those arising from
investee over which the Group has significant influence on its
the net profit or loss other comprehensive income and profit
financial and operating policy decisions.distribution are recognised in the Group’s capital reserve and the
Investments in subsidiaries are presented in the Company’s financial carrying amounts of the long-term equity investment are adjusted
statements using the cost method and are adjusted to the equity accordingly. The carrying amount of the investment is reduced
method when preparing the consolidated financial statements; by the Group’s share of the profit distribution or cash dividends
investments in joint ventures and associates are accounted for declared by the investee.using the equity method.The unrealised profits or losses arising from the transactions
between the Group and its investees are eliminated in proportion
(a) Determination of investment cost
to the Group’s equity interest in the investees based on which
For long-term equ i ty investments a r i s ing f rom bus iness the investment gains or losses in the financial statements of
combinations involving enterprises under common control the the Company are recognised. When preparing the consolidated
initial investment cost shall be the share of the carrying amount financial statements for the portion of unrealised gains and losses
of equity of the acquiree in the consolidated financial statements attributable to the Group arising from downstream transactions
of the ultimate controlling party as at the combination date; for in which the Group invests or sells assets to the investees on
long-term equity investments arising from business combinations the basis of the elimination result on the Company’s financial
involving enterprises not under common control the investment statements the Group should eliminate the portion of unrealised
cost shall be the combination cost. revenue and costs or asset disposal gains and losses attributable to
the Group and adjust investment income or losses accordingly; for
For long-term equity investments acquired not through a business
the portion of unrealised gains and losses attributable to the Group
combination: for long-term equity investments acquired by
arising from the upstream transactions in which the investees invest
payment in cash the initial investment cost shall be the purchase
or sell assets to the Group on the basis of the elimination result
price actually paid; for long-term equity investments acquired by
on the Company’s financial statements the Group should eliminate
issuing equity securities the initial investment cost shall be the fair
the portion of unrealised gains and losses included in the carrying
value of the equity securities issued.amount of the relevant assets and adjust the carrying amount of
long-term equity investments accordingly. For the loss on the intra-
(b) Subsequent measurement and recognition group transaction amongst the Group and its investees attributable
methods of gains and losses to asset impairment losses any unrealised loss is not eliminated.Long-term equity investments accounted for using the cost method
are measured at the initial investment cost. Cash dividend or profit (c) Basis for determining existence of control
distribution declared by an investee is recognised as investment joint control s ignificant influence over
income in profit or loss for the current period. investees
For long-term equity investments that are accounted for using Control means having power over an investee enjoying variable
the equity method where the initial investment cost exceeds returns through involvement in relevant activities of the investee
the Group’s share of the fair value of the investee’s identifiable and being able to impact the amount of such variable returns by
net assets at the time of acquisition the investment is initially using the power over the investee.measured at cost. Where the initial investment cost is less than the
Joint control is the agreed sharing of control over an arrangement
Group’s share of the fair value of the investee’s identifiable net
and the decision of activities relating to such arrangement requires
assets at the time of acquisition the difference is included in profit
the unanimous consent of the Group and other parties sharing
or loss for the current period and the cost of the long-term equity
control.investment is adjusted upwards accordingly.Significant influence is the power to participate in making the
decisions on financial and operating policies of the investee but is
not control or joint control over making those policies.
161Chapter 10Financial Statements
(d) Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries joint ventures and associates are reduced to the recoverable amounts
when the recoverable amounts are below their carrying amounts (Note 2(19)).
(12) Investment properties
Investment properties including land use rights that have already been leased out buildings that are held for the purpose of leasing and
buildings that are being constructed or developed for future use for leasing are measured initially at cost. Subsequent expenditures incurred
in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic
benefits will flow to the Group and their costs can be reliably measured; otherwise the expenditures are recognised in profit or loss for the
period in which they are incurred.The Group adopts the cost model for subsequent measurement of investment properties. Buildings and land use rights are depreciated or
amortised to their estimated net residual values over their estimated useful lives. The estimated useful lives the estimated net residual values
that are expressed as a percentage of cost and the annal depreciation rates of investment properties are presented as follows:
Estimated net residual Annual depreciation/
Estimated useful lives
values amortisation rates
Buildings 10 to 50 years 5% 9.50% to 1.90%
Land use rights 20 to 50 years 0% 5.00% to 2.00%
When an investment property is transferred to owner-occupied property it is reclassified to fixed asset or intangible asset at the date of the
transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation the fixed asset or intangible
asset is transferred to investment properties at the date of the transfer. Upon the transfer amount is recognised at the carrying amount
prior to the transfer.The investment property’s estimated useful life net residual value and depreciation (amortisation) method applied are reviewed and adjusted
as appropriate at each year-end.An investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future
economic benefits are expected from its disposal. The amount of proceeds from sale transfer retirement or damage of an investment
property net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.
(13) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings (including freehold land) motor vehicles computers and electronic equipment aircraft and aircraft engines
rotables and high-value aircraft maintenance tools machinery and equipment office equipment and other equipment.Fixed assets are recognised when it is probable that the associated economic benefits will flow to the Group and the related cost can be
reliably measured. Fixed assets purchased or constructed are initially measured at cost at the time of acquisition.Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated
economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is
derecognised. All the other subsequent expenditures are recognised in profit or loss for the period in which they are incurred.(b) Depreciation method for fixed assets
Except for engine overhaul replacement parts and freehold land fixed assets are depreciated using the straight-line method to allocate
the recorded amount of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been
provided for impairment loss the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over
their remaining useful lives.
162Chapter 10Financial Statements
The estimated useful lives the estimated net residual values expressed as a percentage of cost and the annual depreciation rates of fixed
assets are presented as follows:
Estimated net
Estimated useful lives Annual depreciation rates
residual values
Buildings (excluding freehold land) 10 to 50 years 5% 9.50% to 1.90%
Port equipment 28 to 40 years 0% 3.57% to 2.50%
Motor vehicles 2 to 20 years 0% to 5% 50.00% to 4.75%
Machinery and equipment 2 to 15 years 0% to 5% 50.00% to 6.33%
Computers and electronic equipment 2 to 5 years 0% to 5% 50.00% to 19.00%
Office equipment and other equipment 2 to 20 years 0% to 5% 50.00% to 4.75%
Aircraft and engine bodies 10 years 5% 9.50%
High-value aircraft maintenance tools 5 years 5% 19.00%
Replacement parts for overhaul of aircraft fuselage 1.5 to 10 years 0% 66.67% to 10.00%
Rotables 10 years 5% 9.50%
Replacement parts for overhaul of engines are depreciated using the units-of-production method and taking the expected usable recurring
number as the unit of production.No amortisation is provided for freehold land.The estimated useful life or expected usable recurring number and the estimated net residual value of a fixed asset and the depreciation
method applied to the asset are reviewed and adjusted as appropriate at each year-end.(c) The carrying amounts of fixed assets are reduced to the recoverable amounts when the recoverable amounts are below their carrying
amounts (Note 2(19)).(d) Disposal of fixed assets
A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of
proceeds from disposal on sale transfer retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is
recognised in profit or loss for the current period.
(14) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs installation costs borrowing costs that are
eligible for capitalisation and other costs necessary to bring the construction in progress ready for their intended use. Construction in
progress is transferred to fixed assets when the assets are ready for their intended use and depreciation begins from the following month.The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is below its carrying
amount (Note 2(19)).
(15) Borrowing costs
The Group’s borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that needs a substantially
long period of time for its intended use commence to be capitalised and recorded as part of the cost of the asset when expenditures for
the asset and borrowing costs have been incurred and the activities relating to the acquisition and construction that are necessary to
prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or
construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current
period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted
abnormally and the interruption lasts for more than 3 months until the acquisition or construction is resumed.
163Chapter 10Financial Statements
For the specific borrowings obtained for the acquisition or (f ) Periodical review of useful l i fe and
construction of an asset qualifying for capitalisation the amount amortisation method
of borrowing costs eligible for capitalisation is determined by
deducting any interest income earned from depositing the unused For an intangible asset with a finite useful life review of its useful
specific borrowings in the banks or any investment income arising life and amortisation method is performed at each year-end with
on the temporary investment of those borrowings during the adjustment made as appropriate.capitalisation period.(g) Impairment of intangible assets
For general borrowings utilised for the acquisition and construction
of an asset qualifying for capitalisation the capitalised amount of The carrying amounts of intangible assets are reduced to the
the general borrowings is determined by the weighted average recoverable amounts when the recoverable amounts are below
of the excess of accumulated capital expenditure over capital their carrying amounts (Note 2(19)).expenditure of the special borrowings multiplied by the weighted
average effective interest rate of the utilised general borrowings. (17) Research and development
The effective interest rate is the interest rate at which the future
cash flows of the borrowings over the estimated life or a shorter The Group’s research and development expenses mainly comprise
applicable period are discounted into the initial recognised amount expenses such as materials used in research and development
of the borrowings. employee benefits in the research and development department
and depreciation and amortisation of assets such as equipment and
(16) Intangible assets software used in research and development.
Expenditure on the research phase is recognised in profit or loss in
Intangible assets include software land use rights trademark
the period in which it is incurred. Expenditure on the development
rights customer relationships and patents which are measured at
phase is capitalised only if all of the following conditions are
cost.satisfied:
(a) Software * it is technically feasible to complete the intangible asset so that
it will be available for use or sales;
Software is measured at actual cost and amortised on the straight-
line basis over 2 to 10 years. * management intends to complete the intangible asset and use
or sell it;
(b) Land use rights * it can be demonstrated how the intangible asset will generate
Land use rights are amortised on the straight-line basis over their economic benefits;
estimated useful lives. * there are adequate technical financial and other resources to
complete the development and the ability to use or sell the
(c) Trademark rights intangible asset; and
Purchased trademark rights are measured at cost at the time * the expenditure attributable to the intangible asset during its
of acquisition. Trademark rights recognised under business development phase can be reliably measured.combinations involving enterprises not under common control
Other development expenditures that do not meet the conditions
are recorded at fair value. Trademark rights are amortised on the
above are recognised in profit or loss in the period in which they
straight-line basis over 5 to 20 years.are incurred. Capitalised development expenditures previously
recognised as expenses are not recognised as an asset in a
(d) Customer relationships
subsequent period. Capitalised expenditure on the development
Customer relationships refer to intangible assets recognised under phase is presented as capitalised development expenditures in the
business combinations involving enterprises not under common balance sheet and transferred to intangible assets at the date when
control. Customer relationships are recorded at fair value and the asset is ready for its intended use.amortised on the straight-line basis over the expected beneficial
period. (18) Long-term prepaid expenses
(e) Patents Long-term prepaid expenses include settling-in allowance and
introduction fee for pilots the expenditure for improvements to
Patents are amortised on the straight-line basis over 5 to 10 years.right-of-use assets and other expenditures that have been incurred
but should be recognised as expenses over more than one year in
the current and subsequent periods. Long-term prepaid expenses
are amortised on a straight-line basis over the expected beneficial
period (2 to 20 years) and are presented at actual expenditure net
of accumulated amortisation.
164Chapter 10Financial Statements
(19) Impairment of long-term assets (a) Short-term employee benefits
Short-term employee benefits include employee wages or salaries
Fixed assets construction in progress right-of-use assets intangible
bonus allowances and subsidies staff welfare premiums or
assets with finite useful lives investment properties measured using
contributions on medical insurance work injury insurance
the cost model and long-term equity investments in subsidiaries
maternity insurance housing funds labour union funds and
joint ventures and associates are tested for impairment if there
employee education funds. The employee benefit liabilities are
is any indication that the assets may be impaired at the balance
recognised in the accounting period in which the service is
sheet date; intangible assets not ready for their intended use
rendered by the employees with a corresponding charge to the
and freehold land are tested at least annually for impairment
profit or loss for the current period or the cost of relevant assets.irrespective of whether there is any indication that it may be
Employee benefits which are non-monetary benefits are measured
impaired. If the result of the impairment assessment indicates
at fair value.that the recoverable amount of an asset is less than its carrying
amount a provision for impairment and an asset impairment
loss are recognised for the amount by which the asset’s carrying (b) Post-employment benefits
amount exceeds its recoverable amount. The recoverable amount is The Group c lass i f ies post-employment benef i t p lans into
the higher of an asset’s fair value less costs to sell and the present defined contribution plans and defined benefit plans. A defined
value of the future cash flows expected to be derived from the contribution plan is a post-employment benefit plan in which the
asset. Provision for asset impairment is determined and recognised Group pays fixed fees to an independent fund without further
on the individual basis. If it is not possible to estimate the payment obligations; a defined benefit plan is a post-employment
recoverable amount of an individual asset the recoverable amount benefit plan other than a defined contribution plan. During the
of a group of assets to which the asset belongs is determined. reporting period the Group’s post-employment benefits mainly
A group of assets is the smallest group of assets that is able to include endowment insurance and unemployment insurance paid
generate independent cash inflows. for employees which are defined contribution plans. Individual
Goodwill that is separately presented in the financial statements overseas subsidiaries set up and operate defined pension plans
is tested at least annually for impairment irrespective of whether which are defined benefit plans and the amount is not significant.there is any indication that it may be impaired. In conducting the
test the carrying amount of goodwill is allocated to the related Basic pensions insurance
asset groups or sets of asset groups which are expected to benefit The Group’s employees in the Chinese mainland participate in the
from the synergies of the business combination. If the result of basic pension plan set up and administered by local authorities of
the test indicates that the recoverable amount of an asset group Ministry of Human Resource and Social Security. Monthly payments
or a set of asset groups including the allocated goodwill is lower of premiums on the pensions are calculated according to local
than its carrying amount the corresponding impairment loss is regulations for pension plan. When employees retire the local
recognised. The impairment loss is first deducted from the carrying labour and social security authority is obliged to pay the basic
amount of goodwill that is allocated to the asset group or the set pensions to them. The amounts based on the above calculations
of asset groups and then deducted from the carrying amounts of are recognised as liabilities in the accounting period in which the
other assets within the asset group or the set of asset groups in service has been rendered by the employees with a corresponding
proportion to the carrying amounts of assets other than goodwill. charge to the profit or loss for the current period or the cost of
Once the above asset impairment loss is recognised it will not be relevant assets.reversed for the value recovered in the subsequent periods.(c) Termination benefits
(20) Employee benefits The Group provides compensation for terminating the employment
relationship with employees before the end of the employment
Employee benefits refer to al l forms of considerat ion or contracts or as an offer to encourage employees to accept
compensation given by the Group in exchange for service rendered voluntary redundancy before the end of the employment contracts.by employees or for termination of employment relationship which The Group recognises a liability arising from compensation for
include short-term employee benefits post-employment benefits termination of the employment relationship with employees
termination benefits and other long-term employee benefits. with a corresponding charge to profit or loss for the current
period at the earlier of the following dates: 1) when the Group
cannot unilaterally withdraw an employment termination plan
or a curtailment proposal; 2) when the Group recognises costs
or expenses for a restructuring that involves the payment of
termination benefits.The termination benefits expected to be settled within one year
since the balance sheet date are classified as current liabilities.
165Chapter 10Financial Statements
(d) Employee incentives Deferred tax assets and deferred tax liabilities are offset when:
The Group provides incentive plans for on-the-job employees who * the deferred tax assets and deferred tax liabilities are related
comply with certain conditions and makes payments based on the to the same tax payer within the Group and the same taxation
schedule. Provisions for employee incentives are initially measured authority; and
at the best estimate necessary to settle the present obligation * that tax payer within the Group has a legally enforceable right
and expensed as incurred. The Group integrates separation rate to offset current tax assets against current tax liabilities.time value of money and other factors into account at initial
measurement. Where the effect of the time value of money is
(22) Provisions
material the best estimate is determined by discounting the related
future cash outflows. The increase in the discounted amount of the Provisions are recognised when the Group has a present obligation
provision arising from passage of time is expensed as incurred. The it is probable that an outflow of economic benefits will be required
carrying amount of provisions for employee incentives is reviewed to settle the obligation and the amount of the obligation can be
at each balance sheet date and adjusted to reflect the current best measured reliably.estimate.A provision is initially measured at the best estimate of the
(21) Deferred tax assets and deferred expenditure required to settle the related present obligation.
Factors surrounding a contingency such as the risks uncertainties
tax liabilities and the time value of money are taken into account as a whole in
reaching the best estimate of a provision. Where the effect of the
Deferred tax assets and deferred tax liabilities are calculated and
time value of money is material the best estimate is determined by
recognised based on the differences arising between the tax bases
discounting the related future cash outflows. The increase in the
of assets and liabilities and their carrying amounts (temporary
discounted amount of the provision arising from passage of time is
differences). Deferred tax asset is recognised for the deductible
recognised as interest expense.losses that can be carried forward to subsequent years for
deduction of the taxable profit in accordance with the tax laws. No The carrying amount of provisions is reviewed at each balance
deferred tax liability is recognised for a temporary difference arising sheet date and adjusted to reflect the current best estimate.from the initial recognition of goodwill. No deferred tax asset or
The provisions expected to be settled within one year since the
deferred tax liability is recognised for the temporary differences
balance sheet date are classified as current liabilities.resulting from the initial recognition of assets or liabilities due to
a transaction other than a business combination which affects
neither accounting profit nor taxable profit (or deductible losses) (23) Share-based payments
and does not give rise to equal taxable and deductible temporary
differences. At the balance sheet date deferred tax assets and (a) Categories of share-based payments
deferred tax liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realised or the A share-based payment is a transaction in which an enterprise
liability is settled. grants equity instruments or assumes liabilities that are determined
based on equity instruments in exchange for services rendered by
Deferred tax assets are only recognised for deductible temporary employees or another party. Equity instruments include the equity
differences deductible losses and tax credits to the extent that it is instruments that are linked to the enterprise the parent company
probable that taxable profit will be available in the future against of the enterprise or another accounting entity within the same
which the deductible temporary differences deductible losses and group. Share-based payments comprise equity-settled and cash-
tax credits can be utilised. settled payments.Deferred tax liabilities are recognised for temporary differences
arising from investments in subsidiaries associates and joint (b) Basis for determining the best estimate of
ventures except where the Group is able to control the timing exercisable equity instruments
of reversal of the temporary differences and it is probable that
At each balance sheet date in the vesting period the Group
the temporary differences will not be reversed in the foreseeable
would make best estimate in accordance with the newly acquired
future. When it is probable that the temporary differences arising
information such as changes in the number of employees entitled
from investments in subsidiaries associates and joint ventures
to equity instruments and amend the number of exercisable
will be reversed in the foreseeable future and that the taxable
equity instruments. On the exercisable date the ultimate estimated
profit will be available in the future against which the temporary
number of exercisable equity instruments coincides with the actual
differences can be utilised the corresponding deferred tax assets
number.are recognised.
166Chapter 10Financial Statements
(c) Accounting treatment of implementation Grants related to assets are government grants whose primary
of share-based payments condition is that an entity qualifying for them should purchase
construct or otherwise acquire long-term assets. Government
(i) Equity-settled share-based payments grants related to income refer to the government grants other than
those related to assets.The equity-settled share-based payments where the Group grants
shares or other equity instruments as a consideration in return for Government grants related to assets are recorded as deferred
services are measured at the fair value of the equity instruments income and recognised in profit or loss on a systemic basis over
at the grant date. Where the share-based payments are not the useful lives of the assets. Government grants related to income
exercisable until the service in the vesting period is completed or that compensate the future costs expenses or losses are recorded
specified performance conditions are met then at each balance as deferred income and recognised in profit or loss or deducted
sheet date within the vesting period the service obtained in the against related costs expenses or losses in reporting the related
current period shall be included in relevant costs or expenses expenses; government grants related to income that compensate
and in capital reserve at the fair value of the equity instruments the incurred costs expenses or losses are recognised in profit or
at the grant date based on the best estimates of the quantity of loss or deducted against related costs expenses or losses directly
exercisable equity instruments made by the Group in accordance in the current period. The Group applies the presentation method
with the latest changes in the number of exercisable employees consistently to the similar government grants in the financial
and subsequent information. statements.Where the share-based payments cannot be exercised in the end Government grants related to daily activities are included in
the Group’s costs or expenses shall not be recognised unless operating profit. Government grants not related to daily activities
that the payments are exercisable under the market conditions are included in non-operating income or expenses.or non-exercisable conditions. In this regard whether the market
conditions or non-exercisable conditions are satisfied or not the (25) Revenue recognition
payments are deemed to be exercisable only when the non-market
conditions among all of the exercisable conditions are satisfied. The Group recognises revenue at the consideration that the Group
is entitled to charge as expected when the Group has fulfilled
(ii) Cash-settled share-based payments the performance obligations in the contract that is the customer
obtains control over relevant goods or services.The cash-settled share-based payments where the Group calculates
and determines the cash payments or any other asset obligation If one of the following conditions is met the performance
on the basis of shares or other equity instruments in return for obligations are satisfied over time otherwise at a point in time:
services are measured at the fair value of the liabilities calculated * the customer simultaneously receives and consumes the
based on relevant equity instruments. Where the share-based benefits provided by the Group’s performance as the Group
payments is not exercisable until the service in the vesting period performs;
is completed or specified performance conditions are met then
at each balance sheet date within the vesting period the service * the Group’s performance creates or enhances an asset that the
obtained in the current period shall be included in costs or customer controls as the asset is created or enhanced; or
expenses and in liabilities at the fair value of the Group’s liabilities * the Group’s performance does not create an asset with an
based on the best estimates of the quantity of exercisable equity alternative use to the Group and the Group has an enforceable
instruments made by the Group. At each balance sheet date and right to payment for performance completed to date.settlement date before relevant liabilities are settled the fair value
of the liabilities is remeasured and the changes are recognised in In respect of a contract obligation that is to be fulfilled within
profit or loss. a period the Group should recognise the revenue based on the
progress of the obligation fulfilment within the period except that
the progress of the obligation fulfilment fails to be reasonably
(24) Government grants determined; in respect of a contract obligation that is to be fulfilled
Government grants refer to the monetary or non-monetary assets at a point in time the Group should recognise the revenue once
obtained by the Group from the government including tax return the customer obtains the control over relevant goods/services.and financial subsidy. In addition the Group judges whether it is acting as a principal or
Government grants are recognised when the grants can be an agent based on if it has the control right over goods before the
received and the Group can comply with all attached conditions. transfer of the goods. Provided that the Group has control over
If a government grant is a monetary asset it will be measured at goods before the transfer of the goods it is acting as a principal
the amount received or receivable. If a government grant is a non- and recognises relevant revenue based on consideration received
monetary asset it will be measured at its fair value. If it is unable or receivable by applying gross method; otherwise it is acting as
to obtain its fair value reliably it will be measured at its nominal an agent and should recognise revenues at the amount of the
amount. commission or service fee which the Group expects to be entitled
to receive which is calculated according to total consideration
received or receivable net of the amount due to other related
parties or fixed commission amount or rate. 167Chapter 10Financial Statements
(a ) Render ing of log i s t i c s and f re ight (b) Sales of goods
forwarding services Revenue from sales of goods is recognised when the Group has
The Group’s revenue from providing logist ics and freight delivered goods to the agreed delivery location pursuant to the
forwarding services includes express and freight service (time- contract and the customer has confirmed the acceptance of the
definite express and economic express; cold transportation and goods and the delivery note is signed by both parties.medical transportation service; freight service); intra-city on- The credit terms granted to customers by the Group are generally
demand delivery service; supply chain and international service. short in line with industry practice and do not have a significant
The Group recognises revenue based on the progress of the service financing component.performed within period which is determined based on proportion
of costs incurred to date to the estimated total costs or days spent (c) Other services
to the estimated total days. As at the balance sheet date the
The Group’s services also includes communication service
Group re-estimates the progress of the service performed to reflect
maintenance service research and development and technical
the actual status of contract performance.services and other services.When the Group recognises revenue based on the progress of
With regard to certain maintenance service research and
the service performed the amount with unconditional right to
development and technical services the Group recognises revenue
consideration obtained by the Group is recognised as accounts
at a point in time when the services are delivered to customers. For
receivable and the rest is recognised as contract assets.other services the Group recognises revenue based on the progress
Meanwhile provision for accounts receivable and contract assets is
of the service performed within period which is determined based
recognised on the basis of expected credit losses (Note 2(9)). If the
on proportion of costs incurred to date to the estimated total costs
contract consideration received or receivable exceeds the progress
as at the balance sheet date.of the service performed the excess portion will be recognised as
contract liabilities. Contract assets and contract liabilities under the
same contract are presented on a net basis. (26) Dividend distribution
Contract costs include costs to fulfil a contract and costs to obtain Cash dividends are recognised as liabilities in the period in which
a contract. Costs incurred for provision of the aforesaid services the dividends are approved by the shareholders’ meeting.are recognised as costs to fulfil a contract which is carried forward
to the cost of revenue when revenue recognised based on the (27) Leases
progress of the service performed. Incremental costs incurred by
the Group for the acquisition of the aforesaid service contract are A contract is or contains a lease if the contract conveys the right
recognised as the costs to obtain a contract. For the costs to obtain to control the use of an identified asset for a period of time in
a contract with the amortisation period within one year the costs exchange for consideration.are charged to profit or loss when incurred. For the costs to obtain
a contract with the amortisation period beyond one year the costs (a) The Group as the lessee
are charged in the profit or loss on the same basis as aforesaid
revenue of rendering of services recognised under the relevant At the commencement date the Group shall recognise the right-
contract. If the carrying amount of the contract costs is higher of-use asset and measure the lease liability at the present value
than the remaining consideration expected to be obtained by of the lease payments that are not paid at that date. Lease
rendering of the service net of the estimated cost to be incurred payments include fixed payments the exercise price of a purchase
the Group makes provision for impairment on the excess portion option if the lessee is reasonably certain to exercise that option
and recognises it as asset impairment losses. As at the balance and payments of penalties for terminating the lease if the lessee
sheet date based on whether the amortisation period of the costs exercises an option to terminate the lease. Variable lease payments
to fulfil a contract is more than one year when initially recognised in proportion to sales are excluded from lease payments and
the amount of the Group’s costs to fulfil a contract net of related recognised in profit or loss as incurred. Lease liabilities that are
provision for asset impairment is presented as inventories or other due within one year (inclusive) as from the balance sheet date are
non-current assets. For costs to obtain a contract with amortisation included in the current portion of non-current liabilities.period beyond one year at the initial recognition the amount net
of related provision for asset impairment is presented as other non-
current assets.
168Chapter 10Financial Statements
Right-of-use assets of the Group comprise leased buildings (b) The Group as the lessor
machinery and equipment motor vehicles etc. Right-of-use assets
are measured initially at cost which comprises the amount of the A finance lease is a lease that transfers substantially all the risks
initial measurement of lease liabilities any lease payments made at and rewards incidental to ownership of an asset. An operating
or before the commencement date and any initial direct costs less lease is a lease other than a finance lease.any lease incentives received. If there is reasonable certainty that
(i) Operating leases
the Group will obtain ownership of the underlying asset by the end
of the lease term the asset is depreciated over its remaining useful Where the Group leases out self-owned buildings machinery
life; otherwise the asset is depreciated over the shorter of the and equipment and motor vehicles under operating leases lease
lease term and its remaining useful life. The carrying amount of the income therefrom is recognised on a straight-line basis over the
right-of-use asset is reduced to the recoverable amount when the period of the lease. Variable rental that is linked to a certain
recoverable amount is below the carrying amount (Note 2(19)). percentage of sales is recognised in lease income as incurred.For short-term leases with a term of 12 months or less and leases For eligible rent relief agreed on existing lease contracts the Group
of an individual asset (when new) of low value the Group may applies the practical expedient accounts for the exemptions as
instead of recognising right-of-use assets and lease liabilities variable lease payments and records the exemption amount in
include the lease payments in the cost of the underlying assets or profit or loss in the exemption period.in profit or loss for the current period on a straight-line basis over
Except that the above eligible contract changes are accounted
the lease term.for by applying the practical expedient the Group accounts for it
The Group shall account for a lease modification as a separate as a new lease from the effective date of the modification and
lease if both: (1) the modification increases the scope of the lease considers any lease payments received in advance and receivable
by adding the right to use one or more underlying assets; (2) the relating to the lease before modification as receivables of the new
consideration for the lease increases by an amount commensurate lease.with the stand-alone price for the increase in scope and any
appropriate adjustments to that stand-alone price to reflect the (ii) Finance leases
circumstances of the contract.At the commencement date of the lease term the Group
For a lease modification that is not accounted for as a separate recognises the lease payments receivable under a finance lease
lease the Group shall redetermine the lease term at the effective and derecognises relevant assets. The finance lease receivables
date of the lease modification and remeasure the lease liability by are presented as long-term receivables; finance lease receivables
discounting the revised lease payments using a revised discount due within one year (inclusive) as from the balance sheet date are
rate except that the contract changes directly resulting from included in the current portion of non-current assets.stipulated by the Ministry of Finance for by applying the practical
expedient. For a lease modification which decreases the scope (28) Segment information
of the lease or shortens the lease term the Group decreases the
carrying amount of the right-of-use asset and recognises in profit The Group identifies operating segments based on the internal
or loss any gain or loss relating to the partial or full termination organisation structure management requirements and internal
of the lease. For other lease modifications which lead to the reporting system and discloses segment information of reportable
remeasurement of lease liabilities the Group correspondingly segments which is determined on the basis of operating segments.adjusts the carrying amount of the right-of-use asset.An operating segment is a component of the Group that satisfies
For eligible rent relief agreed on existing lease contracts the Group all of the following conditions: (1) the component is able to
applies the practical expedient and records the exemption amount earn revenue and incur expenses from its ordinary activities; (2)
in profit or loss when the agreement is reached to dismiss the whose operating results are regularly reviewed by the Group’s
original payment obligation with corresponding adjustment of lease management to make decisions about resources to be allocated to
liabilities. the segment and to assess its performance and (3) for which the
information on financial position operating results and cash flows
is available to the Group. If two or more operating segments have
similar economic characteristics and satisfy certain conditions they
are aggregated into one single operating segment.
169Chapter 10Financial Statements
(29) Critical accounting estimates and Relevant assumptions adopted by the Group to determine
judgements impairment e.g. changes in assumptions on discount rate and
growth rate used to calculate the present value of future cash
The Group continually evaluates the critical accounting estimates flows may have material impact on the present value used in
and key judgements applied based on historical experience and the impairment assessment and cause impairment in the above-
other factors including expectations of future events that are mentioned long-term assets of the Group.believed to be reasonable.(iii) Provision for impairment loss of goodwill
(a) Critical accounting estimates and key The Group performed impairment assessment of goodwill at least
assumptions annually. The recoverable amount of asset groups and sets of asset
groups is the higher of fair value less costs to sell and the present
(i) Measurement of expected credit losses value of the future cash flows expected to be derived from them.These calculations require use of estimates (Note 4(19)).For financial assets and contract assets at amortised cost the Group
calculates expected credit losses based on exposure at default
(iv) Determination of fair value of financial instruments by
and expected credit loss rates and determines the expected credit
valuation techniques.loss rates based on the probability of default and the loss given
default or the ageing matrix. The Group refers to internal historical The fair value of a financial instrument that is not traded in an
information such as credit losses and considers the impact of active market is determined by valuation techniques. Valuation
historical credit loss experience according to current situation and techniques primarily refer to direct comparison method and income
forward-looking information to determine expected credit loss method including reference to the prices used in recent orderly
rates. And management takes the customer’s credit status credit transactions between market participants discounted cash flow
history operating status as well as collaterals the guarantee ability analysis etc. Observable market information is applied in valuation
of the guarantor and other information into consideration. The techniques to the extent possible. When observable market
Group monitors and reviews relevant assumptions about expected information is not available management will make estimate of
credit losses regularly. Where there is a difference between the significant unobservable information included in the valuation
actual bad debts and the original estimate such difference will method. Different valuation techniques or inputs may lead to
affect the Group’s provision for bad debts of the above assets in significant differences between fair value estimates.the future period.(v) Uncertain tax position and recognition of deferred tax
(ii) Risk of impairment on long-term assets other than goodwill assets
As described in Note 2(19) freehold land (fixed assets) and The Group pays enterprise income tax in various regions. In normal
intangible assets not ready for use are tested annually for business activities the final tax treatment of some transactions and
impairment. Fixed assets other than freehold land intangible matters is uncertain. When accruing income tax expenses in various
assets right-of-use assets construction in progress investment regions the Group needs to make significant judgements. If there
properties and long-term equity investments are tested for is a difference between the final determination of these tax matters
impairment whenever events or changes in circumstances indicate and the amount originally recorded the difference will have an
that the carrying amount may not be recoverable. impact on the income tax expense and the amount of deferred
income tax during the period when the above final determination
When assess ing whether the above assets are impaired
is made.management mainly evaluates and analyses: (1) whether events
affecting asset impairment occurred; (2) whether the present value
of expected cash flows arising from the continuing use or disposal
of the asset is lower than its carrying amount; and (3) whether the
significant assumptions used in the calculation of the present value
of the estimated cash flows are appropriate.
170Chapter 10Financial Statements
Deferred tax assets are recognised for the deductible tax losses (ii) Determination of the scope of consolidation
and deductible temporary differences that can be carried forward
As stated in Note 2(6) the Group consolidates a subsidiary from
to subsequent years to the extent that it is probable that taxable
the date of obtaining actual control and excludes it out of the
profit in the future will be available against which the deductible
scope of consolidation from the date of losing the actual control.tax losses and deductible temporary differences can be utilised.Control exists when the Group has all three of the following
Whether to recognise the deferred tax assets arising from
elements: (1) the investor possesses power over the investee
deductible tax losses and deductible temporary differences largely
and the degree of dispersion of equity in other non-controlling
depends on the judgement of management on: (i) whether the
interests; (2) has exposure to variable returns from its involvement
accumulated deductible tax losses and deductible temporary
with the investee’s related activities; and (3) the ability to use the
differences in prior years are still effective and (ii) whether
power over the investee to affect the returns. Where variations in
sufficient taxable income that can be used to deduct deductible tax
relevant facts and circumstances cause a change of these factors a
losses and deductible temporary differences can be obtained in the
reassessment will be made.future period. Where there is a difference between the situation
and the original estimate such difference will affect the Group’s
deferred tax assets and income tax expenses in the future period. (30) Significant changes in accounting
policies
(b) Crit ical judgements in applying the
The Ministry of Finance issued the Circular on Issuing Interpretation
accounting policies
No. 16 of Accounting Standards for Business Enterpr ises
(Interpretation No. 16) in 2022. The Group and the Company
(i) Judgement on significant influence of the Group over
adopted the new lease standard since 1 January 2021 and
investees
recognised deferred income taxes related to temporary differences
The investees over which the Group has significant influence are arising from lease liabilities and right-of-use assets on a net
accounted for under the equity method. In judging the significant basis. From 1 January 2023 the Group and the Company applied
influence over an investee management considers based on Interpretation No. 16 which clarifies that deferred income taxes
one or more of the following circumstances and all facts and related to assets and liabilities arising from a specific single
circumstances: (1) the shareholding in the investee; (2) whether transaction are not applicable for initial recognition exemption and
it appoints representative in the Board of Directors or a similar recognised deferred tax assets and deferred tax liabilities separately
authority of the investee; (3) whether it participates in making for equal deductible temporary differences and taxable temporary
decisions on financial and operating policies of the investee; (4) differences arising from above transactions and disclosed the
whether it has significant transaction with the investee; (5) whether related information in the notes. The relevant disclosures in the
it assigns management personnel to the investee; (6) whether it notes as at 31 December 2022 are adjusted accordingly. The
provides key technical materials to the investee and all facts and implementation of Interpretation No. 16 has no impact to the
circumstances are considered. Group and the Company’s profit or loss for the year ended 31
December 2022 as well as financial statement line items as at 1
January 2022 and 31 December 2022.
171Chapter 10Financial Statements
3 Taxation
The main categories and rates of taxes applicable to the Group are set out below:
Category Tax rate Tax base
Enterprise income tax Note (1) Taxable income
Taxable value-added amount (Tax payable is calculated using the
taxable sales amount/taxable service income multiplied by the
Value-added tax (“VAT”) Note (2)
applicable tax rate less deductible input VAT of the current period or
taxable turnover amount multiplied by the VAT rate)
City maintenance and construction tax 7% 5% 1% Amount of VAT paid
Educational surcharge 3% Amount of VAT paid
Local educational surcharge 2% Amount of VAT paid
Customs dutiable value through examination and approval of the
Customs duty At applicable tax rate
Customs
In addition pursuant to the Interim Measures for the Collection Use and Management of the Civil Aviation Development Fund (Cai Zong
[2012] No. 17) issued by the Ministry of Finance SF Airlines Company Limited (“SF Airlines”) pays the civil aviation development fund based
on classification of flight routes maximum take-off weight flight mileage and applicable collection standards and includes such payment in
cost.The Announcement on the Cancellation of Port Construction Fees and Adjustment to Relevant Policies of the Civil Aviation Development
Fund (Announcement [2021] No. 8) was issued by the Ministry of Finance on 19 March 2021. Since 1 April 2021 the collection standard for
the civil aviation development fund payable by airlines has been reduced by 20% in accordance with the Notice of the Ministry of Finance
on Adjusting the Relevant Policies of Certain Government Funds (Cai Shui [2019] No. 46) on the basis of a 50% reduction.
(1) Enterprise income tax
According to the Enterprise Income Tax Law of the People’s Republic of China and the Regulations on the Implementation of Enterprise
Income Tax Law except for some subsidiaries enjoying the preferential tax rates the Company and other subsidiaries established in the
Chinese mainland are subject to the enterprise income tax rate of 25%.The Group’s overseas subsidiaries recognise their income taxes in accordance with the laws and regulations of the countries or regions
where they operate. Specifically the subsidiaries located in Hong Kong SAR Macao SAR Singapore Japan South Korea USA and Thailand
are subject to enterprise income tax at the rates between 12% and 24%.Pursuant to the Announcement on Implementation of the Policy of Deduction of Relevant Enterprise Income Tax for Equipment and
Appliance (Cai Shui [2018] No. 54) and the Announcement on Extending the Implementation Period of Certain Preferential Tax Policies (Cai
Shui [2021] No. 6) issued by the Ministry of Finance and the State Taxation Administration for equipment newly purchased from 1 January
2018 to 31 December 2023 and with a unit value of less than RMB5 million the one-time period cost can be deducted against the taxable
income in the following month after the asset is put into use instead of being deducted annually in its useful life.
172Chapter 10Financial Statements
The preferential enterprise income tax policies to which the Group (d) In accordance wi th the Announcement on Fur ther
is entitled mainly include: Implementing the Preferential Income Tax Policies for Micro and
(a) Small Enterprises (Announcement [2022] No. 13) jointly issued by Pursuant to the Notice on the Policies and Catalogue of
the Ministry of Finance and the State Taxation Administration for
Income Tax Preferences for Enterprises in Guangdong Hengqin
the period from 1 January 2022 to 31 December 2024 small and
New Area Fujian Pingtan Comprehensive Experimental Zone and
low-profit enterprises can enjoy a 20% enterprise income rate on
Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry
25% of the taxable income amount for the proportion of taxable
Cooperative Zone (Cai Shui [2014] No. 26) and the Notice on
income exceeding RMB1 million but not more than RMB3 million.Continuing the Policies of Income Tax Preferences for Enterprises
In accordance with the Announcement on the Preferential Income
in Shenzhen Qianhai Shenzhen-Hong Kong Modern Service
Tax Policies for Micro and Small Enterprises and Individual Industrial
Industry Cooperative Zone (Cai Shui [2021] No. 30) jointly issued
and Commercial Households (Cai Shui [2023] No.6) jointly issued
by the Ministry of Finance and the State Taxation Administration
by the Ministry of Finance and the State Taxation Administration
Shenzhen S.F. Supply Chain Co. Ltd. and other 6 subsidiaries as
for the period from 1 January 2023 to 31 December 2024 small
below are subject to enterprise income tax at the preferential rate
and low-profit enterprises can enjoy a 20% enterprise income
of 15% from 2014 to 2025.rate on 25% of the taxable income amount for the proportion of
(b) Pursuant to the Notice on Tax Policy Issues Concerning taxable income not exceeding RMB1 million. In accordance with
Further Implementing the Western China Development Strategy the Announcement on the Relevant Tax and Fee Policies for Further
(Cai Shui [2011] No. 58) and the Notice on Issues Concerning the Supporting the Development of Micro and Small Enterprises and
Implementation of the Tax Policies for the Development of Western Individual Industrial and Commercial Households (Cai Shui [2023]
China by Ganzhou City (Cai Shui [2013] No. 4) jointly issued by No.12) jointly issued by the Ministry of Finance and the State
the Ministry of Finance the General Administration of Customs Taxation Administration the applicable period of the preferential
and the State Taxation Administration and the Announcement on tax policies that small and low-profit enterprises can enjoy a 20%
Continuing the Enterprise Income Tax Policies for the Development enterprise income rate on 25% of the taxable income amount has
of Western China (Announcement [2020] No. 23) jointly issued been extended to 31 December 2027.by the Ministry of Finance the State Taxation Administration and
Therefore Ningbo Shuncheng Logistics Co. Ltd. and other 23
the National Development and Reform Commission on 23 April
subsidiaries can enjoy a 20% enterprise income rate on 25% of the
2020 Xi’an Shunlu Logistics Co. Ltd. and other 24 subsidiaries are
taxable income amount during the current reporting period.subject to enterprise income tax at the preferential rate of 15%
until the end of 31 December 2030. (e) As per Article 28 of the Enterprise Income Tax Law of
the People’s Republic of China the high and new technology
(c) Pursuant to the Announcement on Continuing the Enterprise
enterprises eligible for key support from the State are entitled
Income Tax Policies for the Development of Western China
to a reduced tax rate of 15%. Through filing with local taxation
(Announcement [2020] No. 23) jointly issued by the Ministry
bureaus SF Technology Co. Ltd. (“SF Technology”) and other 4
of Finance the State Taxation Administration and the National
subsidiaries are qualified as high and new technology enterprises
Development and Reform Commission on 23 April 2020 Tibet S.F.and entitled to the preferential tax rates for high and new
Express Co. Ltd. (“Tibet Express”) which is registered in Tibet
technology enterprises eligible for key support from the State. The
Autonomous Region is subject to enterprise income tax at the
subsidiaries are subject to a tax rate of 15% in the reporting period
preferential rate of 15% from 1 January 2011 to 31 December
(2022:15%).
2030. Pursuant to the Notice of the People’s Government of
the Tibet Autonomous Region on Issuing the Regulations on (f) Pursuant to the Notice on the Policies of Income Tax
Preferential Policies for Investment Promotion of the Tibet Preferences for Enterprises in Hainan Free Trade Por t (Cai Shui
Autonomous Region (Zang Zheng Fa [2021] No. 9) Tibet Express [2020] No. 31) jointly issued by the Ministry of Finance and the
is temporarily exempt the region’s share of entitlement to State Taxation Administration Hainan S.F. Express Co. Ltd. and
enterprise income tax payable. In other words the region’s share other 3 subsidiaries which are registered in Hainan Free Trade
of entitlement to 40% in the enterprise income tax payable at the Port are subject to enterprise income tax at the preferential rate of
rate of 15% is exempted during the above period. 15% from 1 January 2020 to 31 December 2024.
173Chapter 10Financial Statements
(2) VAT
According to different businesses VAT rates applicable to those subsidiaries located in the Chinese mainland of the Group include:
Business type Applicable VAT rates
Sales of goods and leasing of tangible movable assets 13%
Transportation service (ii) Property leases 9%
Logistics supporting service (i) Research and development and
6%
technical service Information technology service
(i) Pursuant to the Announcement on Relevant Policies for Deepening the Value-added Tax Reform (Cai Shui Haiguan [2019] No. 39) jointly
issued by the Ministry of Finance the State Taxation Administration and the General Administration of Customs and the Announcement
on the Additional Deduction Policies of Value-added Tax for Consumer Service Industry (Cai Shui [2019] No. 87) the Announcement
on VAT Policies for Promoting the Bailout and Development of Vulnerable Industries in the Service Sector (Cai Shui [2022] 11) and the
Announcement on the Value-added Tax Reduction and Exemption Policies for Small-scale Value-added Tax Taxpayers (Cai Shui [2023]
No.1) jointly issued by the Ministry of Finance and the State Taxation Administration the Group’s subsidiaries engaged in consumer service
industry qualify for additional 15% deduction of input VAT from output VAT from 1 April 2019 to 31 December 2022 and additional 10%
deduction from 1 January 2023 to 31 December 2023 respectively.(ii) Pursuant to the Announcement on Relevant Policies for Deepening the Value-added Tax Reform (Cai Shui Haiguan [2019] No. 39) jointly
issued by the Ministry of Finance the State Taxation Administration and the General Administration of Customs and the Announcement
on VAT Policies for Promoting the Bailout and Development of Vulnerable Industries in the Service Sector (Cai Shui [2022] 11) and the
Announcement on the Value-added Tax Reduction and Exemption Policies for Small-scale Value-added Tax Taxpayers (Cai Shui [2023] No.1)
jointly issued by the Ministry of Finance and the State Taxation Administration the Group’s subsidiaries engaged in productive service
industry qualify for additional 10% deduction of input VAT from output VAT from 1 April 2019 to 31 December 2023 and additional 5%
deduction from 1 January 2023 to 31 December 2023 respectively.
4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
31 December 2023 31 December 2022
Cash on hand 14391 18437
Cash at bank 18641306 16629310
Balances with central bank from Group Finance Company 1490498 848392
Including: – Statutory reserve (a) 1476938 837242
– Excess reserve (b) 13560 11150
Balances with other banks from Group Finance Company 21674309 23378727
Other cash balances (c) 105684 165126
Interest receivable 48317 22758
4197450541062750
Including: Overseas deposits 5455811 9471675
174Chapter 10Financial Statements
(a) On 18 September 2016 the Group incorporated S.F. Holding Group Finance Co. Ltd. (“Group Finance Company”). Statutory reserve
of Group Finance Company deposited with the central bank represents required statutory reserve paid by Group Finance Company in the
People’s Bank of China (“PBOC”) at 5% of deposits from customers denominated in RMB. Statutory reserve deposits are not available for
use by the Group in its daily operations which are restricted cash.(b) Excess reserve of Group Finance Company deposited with the central bank represents the excess over the required statutory reserve
deposited by financial institutions in the central bank and it is bank deposit that can be readily drawn on demand.(c) As at 31 December 2023 the Group used restricted cash at bank and on hand of RMB99558000 (31 December 2022: RMB37677000).
(2) Financial assets held for trading
31 December 2023 31 December 2022
Structured deposits 6542881 7351158
Fund investments and others 266861 34221
68097427385379
(3) Accounts receivable
31 December 2023 31 December 2022
Accounts receivable 26512152 27120677
Less: Provision for bad debts (1378665) (1560244)
2513348725560433
The Group adopts regular settlement method for logistics and freight forwarding services provided to some customers. At each month-end
the outstanding part becomes accounts receivable.(a) The ageing of accounts receivable is analysed as follows:
31 December 2023 31 December 2022
Within 1 year (inclusive) 25492152 26162778
1 to 2 years (inclusive) 490411 653524
Over 2 years 529589 304375
2651215227120677
(b) As at 31 December 2023 the five largest accounts receivable and contract assets aggregated by debtor were summarised and analysed
as follows:
Balance of accounts
receivable and Provision for bad debts % of total balance
contract assets
Sum of the five largest accounts receivable and
3382615(40279)12.02%
contract assets
175Chapter 10Financial Statements
(c) Provision for bad debts
For accounts receivable the Group recognises the lifetime expected credit loss provision regardless of whether there is any significant
financing component.The provision for bad debts of accounts receivable are analysed by category as follows:
31 December 2023 31 December 2022
Book balance Provision for bad debts Book balance Provision for bad debts
% of total % of total
Amount Amount Provision ratio Amount Amount Provision ratio
balance balance
Provision for bad debts on the
6574882.48%(657488)100.00%7195882.65%(719588)100.00%
individual basis (i)
Provision for bad debts on
2585466497.52%(721177)2.79%2640108997.35%(840656)3.18%
the grouping basis (ii)
26512152100.00%(1378665)5.20%27120677100.00%(1560244)5.75%
(i) As at 31 December 2023 and 31 December 2022 there were no accounts receivable with significant amounts for which the related
provision for bad debts was provided on the individual basis.(ii) As at 31 December 2023 accounts receivable for which the related provision for bad debts was provided on the grouping basis were
analysed as follows:
Lifetime expected
Book balance Provision for bad debts
credit loss rate
Related party group 124569 19.10% (23790)
Non-related party group 25730095 2.71% (697387)
25854664(721177)
As at 31 December 2022 accounts receivable for which the related provision for bad debts was provided on the grouping basis were
analysed as follows:
Lifetime expected
Book balance Provision for bad debts
credit loss rate
Related party group 237028 – –
Non-related party group 26164061 3.21% (840656)
26401089(840656)
(d) In 2023 the total amount of bad debts of RMB42078000 were reserved after considering the provision (2022: provision for bad
debts of RMB669961000) of which RMB58386000 (2022: RMB90559000) was reversal of provision made in test for impairment on an
individual basis. (Note 4 (22)).(e) In 2023 the provision for bad debts of accounts receivable that were written off amounted to RMB158277000 and no accounts
receivable with amounts that were individually significant were written off (Note 4(22)).
176Chapter 10Financial Statements
(4) Advances to suppliers
(a) The ageing of advances to suppliers is analysed below:
31 December 2023 31 December 2022
Ageing Amount % of total balance Amount % of total balance
Within 1 year (inclusive) 3179005 97.90% 3339817 96.39%
1 to 2 years (inclusive) 42025 1.29% 94873 2.74%
Over 2 years 26264 0.81% 30221 0.87%
3247294100.00%3464911100.00%
As at 31 December 2023 advances to suppliers with ageing over one year were mainly advance payment to suppliers. That is because
relevant business transactions were still being performed.(b) As at 31 December 2023 the five largest advances to suppliers aggregated by debtor were
summarised and analysed as follows:
31 December 2023
Amount % of total balance
Sum of the five largest advances to suppliers 625967 19.28%
(5) Other receivables
31 December 2023 31 December 2022
Receivables from related parties (Note 8(4)(d)) 633373 521494
Guarantees and deposits 1523589 1532034
Goods payments collected on behalf of other parties 659441 330427
Tax paid on behalf of others 168971 208441
Employee borrowings and advances 85491 106828
Receivables from airlines subsidies and financial rebates 15371 99389
Receivables from equity transfer 76500 77455
Prepaid social insurance premium 38154 33519
Entrusted loan principal receivables – 27000
Others 592137 643773
37930273580360
Less: Provision for bad debts (223719) (239123)
35693083341237
The Group does not have deposits at other parties under a centralised management arrangement that are presented as other receivables.
177Chapter 10Financial Statements
(a) The ageing of other receivables based on the point of occurrence is analysed as follows:
31 December 2023 31 December 2022
Within 1 year (inclusive) 2841698 2572195
1 to 2 years (inclusive) 266128 385523
Over 2 years 685201 622642
37930273580360
As at 31 December 2023 other receivables with ageing over 1 year mainly represented deposits and guarantees and receivables from equity
transfer.(b) Provision for bad debts and changes in balance statements
The Group measures the loss provision for other receivables based on the expected credit losses for the next twelve months or the entire
duration.The provision for bad debts for other receivables were analysed as follows:
31 December 2023 31 December 2022
Book balance Provision for bad debts Book balance Provision for bad debts
% of total % of total
Amount Amount Provision ratio Amount Amount Provision ratio
balance balance
Provision for bad debts on the
2214585.84%(209970)94.81%2504136.99%(228125)91.10%
individual basis (i)
Provision for bad debts on
357156994.16%(13749)0.38%332994793.01%(10998)0.33%
the grouping basis (ii)
3793027100.00%(223719)5.90%3580360100.00%(239123)6.68%
Changes in balance statements are as follows:
Stage 1 Stage 3
Expected credit losses Lifetime expected
in the following 12 credit losses (credit Total
months (grouping) impaired)
31 December 2022 10998 228125 239123
Provision/(Reversal) in the current year 11797 (1000) 10797
Write-off in the current year – (26201) (26201)
Transfer to Stage 3 (9046) 9046 –
31 December 2023 13749 209970 223719
As at 31 December 2023 and 31 December 2022 the Group did not have any other receivables at Stage 2. Other receivables at Stage 1 and
Stage 3 are analysed as follows:
(i) As at 31 December 2023 and 31 December 2022 the Group did not have any other receivables at Stage 1 for which the related provision
for bad debts was provided on the individual basis.
178Chapter 10Financial Statements
As at 31 December 2023 other receivables at Stage 1 for which the related provision for bad debts was provided on the grouping basis
were analysed as follows:
Expected credit loss rate
Provision for
Book balance in the following Reason
bad debts
12 months
Provided on the grouping basis:
Confirm loss provisions
Related party group 633373 – –
based on the expected
Non-related party group 2938196 0.47% (13749) amount of credit losses in
the next 12 months
3571569(13749)
As at 31 December 2022 other receivables at Stage 1 for which the related provision for bad debts was provided on the individual basis
were analysed as follows:
Expected credit loss
Provision for
Book balance rate in the following Reason
bad debts
12 months
Provided on the grouping basis:
Confirm loss provisions
Related party group 521494 – –
based on the expected
Non-related party group 2808453 0.39% (10998) amount of credit losses
in the next 12 months
3329947(10998)
(ii) As at 31 December 2023 and 31 December 2022 the Group did not have any other receivables at Stage 3 for which the related
provision for bad debts was provided on the grouping basis.As at 31 December 2023 other receivables at Stage 3 for which the related provision for bad debts was provided on the individual basis
were analysed as follows:
Lifetime expected Provision for
Book balance Reason
credit losses bad debts
Provided on the individual basis:
The debtor encountered
Receivables from equity transfer 76500 100.00% (76500)
financial distress
The debtor encountered
Guarantees and deposits 48425 76.28% (36937)
financial distress
The debtor encountered
Others 96533 100.00% (96533)
financial distress
221458(209970)
179Chapter 10Financial Statements
As at 31 December 2022 other receivables at Stage 3 for which the related provision for bad debts was provided on the individual basis
were analysed as follows:
Lifetime expected Provision for
Book balance Reason
credit losses bad debts
Provided on the individual basis:
The debtor encountered
Receivables from equity transfer 77455 100.00% (77455)
financial distress
The debtor encountered
Guarantees and deposits 49425 76.76% (37937)
financial distress
The debtor encountered
Entrusted loans receivable 27000 60.00% (16200)
financial distress
The debtor encountered
Others 96533 100.00% (96533)
financial distress
250413(228125)
(c) In 2023 the total amount of a net provision for bad debts of RMB10797000 was made after considering the reversal (2022: provision
for bad debts of RMB158035000) of which RMB1000000 (2022: Nil) was reversal of provision made in test for impairment on an
individual basis.(d) In 2023 the provision for bad debts of other receivables that were written off amounted to RMB26201000 (2022: RMB18814000)
(Note 4(22)) and no other receivables with amounts that were individually significant were written off (2022: Nil).(e) As at 31 December 2023 the five largest other receivables aggregated by debtor were summarised and analysed as follows:
31 December 2023
Nature of business Ageing Provision for
Book balance % of total balance
bad debts
Cash to collect on behalf
Company 1 Within 1 year 561103 – 14.79%
of customers
Cash to collect on behalf
Company 2 Within 1 year 123684 – 3.26%
of customers
Cash to collect on behalf
Company 3 Within 1 year 101303 – 2.67%
of customers
Company 4 Claims receivable Within 1 year 64962 – 1.71%
Company 5 Guarantees and deposits Over 2 years 55565 – 1.46%
906617–23.89%
180Chapter 10Financial Statements
(6) Inventories
Inventories are summarised by category as follows:
31 December 2023
Provision for decline
Book balance in the value of Carrying amount
inventories
Finished goods 1040816 (1676) 1039140
Raw materials 472994 (1106) 471888
Aviation consumables 499062 – 499062
Turnover materials 365165 – 365165
Costs to fulfil a contract 65170 – 65170
2443207(2782)2440425
31 December 2022
Provision for decline
Book balance in the value of Carrying amount
inventories
Finished goods 706779 (2425) 704354
Raw materials 608201 (1114) 607087
Aviation consumables 353119 – 353119
Turnover materials 227620 – 227620
Costs to fulfil a contract 56174 – 56174
1951893(3539)1948354
(7) Contract assets
31 December 2023 31 December 2022
Contract assets 1636144 1526396
Less: Provision for impairment loss (3552) (3400)
16325921522996
For contract assets the Group recognises the lifetime expected credit loss provision regardless of whether there exists a significant financing
component. As at 31 December 2023 and 31 December 2022 the Group’s contract assets are not overdue. After evaluation the Group
believes that there is no need to make individual provision for impairment.In 2023 the Group didn’t have contract assets written off (2022: Nil).
(8) Other current assets
31 December 2023 31 December 2022
Input VAT to be offset 4641173 4840499
Prepaid enterprise income tax 551327 768131
Others 23043 4298
5215543 5612928 181Chapter 10Financial Statements
(9) Long-term receivables and current portion of non-current assets
31 December 2023 31 December 2022
Finance lease receivables 399135 755431
Less: Unrealized financing income (25021) (63227)
Amortized cost of finance lease receivables 374114 692204
Deposits for house purchase 277904 277904
Employees loans 42029 112662
Others 3281 8860
Less: Provision for bad debts (15178) (19613)
Current portion of long-term receivables (314080) (440739)
368070631278
After the balance sheet date the Group’s minimum lease proceeds at undiscounted contractual cash flows (including interest calculated at
the contract rate (or the prevailing rate at the balance sheet date in the case of a floating rate) are analysed as below:
31 December 2023 31 December 2022
Within 1 year (inclusive) 317410 437214
1 to 2 years (inclusive) 73090 244134
2 to 3 years (inclusive) 8635 65863
Over 3 years – 8220
399135755431
182Chapter 10Financial Statements
(10) Long-term equity investments
Joint ventures Associates Total
31 December 2022 3648376 4209624 7858000
(Decrease)/Increase in investments (245348) 100574 (144774)
Investment (losses)/income recognised under the
(145714)78524(67190)
equity method
Other comprehensive income in equity recognised
–(5583)(5583)
under the equity method
Changes in equity recognised under the equity method 40 13902 13942
Cash dividends/profits distributed (892) (188104) (188996)
Provision for impairment loss (614) (123293) (123907)
Effect of translation of foreign currency financial statements 2855 34484 37339
31 December 2023 3258703 4120128 7378831
Including: Balance of provision for impairment loss
(408)(345816)(346224)
at the end of the period
(a) Joint ventures
Movements in the current year Provision for impairment loss
Exchange
Share of net differences on
Cash
(Decrease)/ profit/(loss) translation of
31 December Other changes dividends/ Provision for 31 December 31 December 31 December
Increase in under the foreign
2022 in equity profits impairment 2023 2023 2022
investments equity currency
distributed
method financial
statements
Hubei International Logistics Airport Co. Ltd. 2227947 – (162409) – – – – 2065538 – –
Jinfeng Borun (Xiamen) Equity Investment
317029–(2908)––––314121––
Partnership (Limited Partnership)
ZBHA Group Co. Ltd. (Limited Partnership) 236210 – 4726 – – – – 240936 – –
Gem-shunxin Industrial Technology Co. Ltd. 497197 (291374) 4013 (1106) – – – 208730 – –
CC SF China Logistics Properties
10810613278(6609)–––2124116899––
Investment Fund L.P.Others 261887 32748 17473 1146 (892) (614) 731 312479 (408) (4472)
3648376(245348)(145714)40(892)(614)28553258703(408)(4472)
183Chapter 10Financial Statements
(b) Associates
Movements in the current year Provision for impairment loss
Exchange
differences on
Share of net
Share of other Cash dividends/ Provision for translation of
31 December Increase in profit/(loss) Other changes 31 December 31 December 31 December
comprehensive profits impairment foreign
2022 investments under the in equity 2023 2023 2022
income distributed loss currency
equity method
financial
statements
SF Real Estate Investment Trust
1183667120788161(5261)–(72079)–271241153690––
(“SF REITs”)
Chiwan Container Terminal
964318–61006––(71449)–4278958153––
Co. Ltd.Giao Hang Tiet Kiem Joint
408610–65382––(37863)–(10548)425581––
Stock Company
Amass Freight International
263526–2078–––––265604––
Co. Ltd.PT. Puninar Saranaraya 233613 – 11299 – – – – 5508 250420 – –
Zhejiang Galaxis Technology
Group Co. Ltd. 210966 – (14847) – – – – – 196119 – –
(“Galaxis Technology”)
Others 944924 88496 (54555) (322) 13902 (6713) (123293) 8122 870561 (345816) (243545)
420962410057478524(5583)13902(188104)(123293)344844120128(345816)(243545)
(11) Investments in other equity instruments
31 December 2023 31 December 2022
Equity of listed companies 2418842 158936
Equity of unlisted companies 7070693 7206748
94895357365684
31 December 2023 31 December 2022
Equity of listed companies
– Costs 1881825 187763
– Accumulated changes in fair value 537017 (28827)
2418842158936
Equity of unlisted companies:
– Costs 3666581 3885789
– Accumulated changes in fair value 3404112 3320959
70706937206748
Including: the changes in cost and accumulated fair value of RMB19301000 and RMB47740000 respectively in the current year were due
to differences in translation of foreign currency statements.
184Chapter 10Financial Statements
(12) Other non-current financial assets
31 December 2023 31 December 2022
Financial assets held for trading (over one year):
Industry fund investments 499320 770637
Special scheme equity-class securities – 116286
Equity of unlisted companies 84401 118324
Others 6275 6962
5899961012209
(13) Investment properties
Buildings Land use rights Total
Cost:
31 December 2022 3926281 1162192 5088473
Reclassification with other long-term assets in the current
764650180048944698
year (Note 4(14) Note 4(15) Note 4(17))
Addition in the current year (i) 570471 138949 709420
Decrease in the current year (1548) – (1548)
Effect of translation of foreign currency financial
1864(810)1054
statements
31 December 2023 5261718 1480379 6742097
Accumulated depreciation:
31 December 2022 138503 74604 213107
Reclassification with other long-term assets in the current
(23923)7452(16471)
year (Note 4(14) Note 4(17))
Provision in the current year 91277 34435 125712
Decrease in the current year (45) – (45)
Effect of translation of foreign currency financial
6134611074
statements
31 December 2023 206425 116952 323377
Carrying amount:
31 December 2023 5055293 1363427 6418720
31 December 2022 3787778 1087588 4875366
185Chapter 10Financial Statements
(i) As at 15 September 2023 the Group exercised the right of first refusal to purchase the asset-backed special plan of Huatai Jiayue-SF
Industrial Park Phase I No. 3 to acquire Shenzhen Fengkai Industrial Park Management Co. Ltd. (“Shenzhen Fengkai”) Shenzhen Runtai
Industrial Park Management Co. Ltd. (“Shenzhen Runtai”) Shenzhen Yutai Industrial Park Management Co. Ltd. (“Shenzhen Yutai”)
Shenzhen Xingtai Industrial Park Management Co. Ltd. (“Shenzhen Xingtai”) and Shenzhen Shengtai Industrial Park Management Co. Ltd.(“Shenzhen Shengtai”) 100% equity (“the subject of exercise”). The exercise price is about RMB1477000000 in total for the appraisal
value of the property assets of the logistics industrial park under the special plan. After deducting the assumed liabilities the total value is
approximately RMB573000000. The total transfer price of the equity in this transaction is approximately RMB904000000. The transaction
was completed on 9 October 2023 (the “Purchase Date”).The acquisition meets the concentration test and is treated in accordance with the principle of asset purchase. The fixed assets (buildings)
and intangible assets (land use rights) purchased are recognised on the purchase date at total fair value of RMB1477000000.As at 19 December 2023 the Group acquired 100% equity in Zhengzhou Fengtai E-commerce Industrial Park Management Co. Ltd.(“Zhengzhou Fengtai”). The total exercise price is based on the appraisal value of Zhengzhou Fengtai’s asset which is approximately
RMB684000000. After deducting the value of approximately RMB348557000 in liabilities the total transfer price of the equity in this
transaction is approximately RMB335443000. The transaction was completed on 28 December 2023 (the “Purchase Date”).The acquisition meets the concentration test and is treated in accordance with the principle of asset purchase. The fixed assets (buildings)
and intangible assets (land use rights) purchased are recognised on the purchase date at total fair value of RMB684000000.(ii) As at 31 December 2023 buildings and land use rights with carrying amount of RMB580127000 (cost: RMB586990000) (31 December
2022: carrying amount of RMB815717000 and cost of RMB833551000) were undergoing relevant formalities for filing property
certificates.(iii) As at 31 December 2023 investment properties with carrying amount of RMB111124000 (31 December 2022: RMB104571000) were
pledged as collateral for long-term borrowings (Note 4(31)(c)).(iv) As at 31 December 2023 and 31 December 2022 the Group assessed that no impairment loss should be recognised for investment
properties.
186Chapter 10Financial Statements
(14) Fixed assets
Aircraft aircraft
Computers Office equipment
engines rotables Machinery and
Buildings Motor vehicles and electronic and other Total
and high-value equipment
equipment equipment
maintenance tools
Cost:
31 December 2022 20737655 7360813 5145818 13343778 11050506 10964878 68603448
Transfer from construction in progress (Note 4(15)) 6868387 399 134166 2194943 3838146 69534 13105575
Transfer from investment properties in the current year (Note 4(13)) 594547 – – – – – 594547
Addition in the current year 1272496 1189776 425863 343764 346663 381899 3960461
Business combinations involving enterprises not under common control
8438438842924–155575204111953
increased
Transfer to investment properties in the current year (Note 4(13)) (366084) – – – – – (366084)
Decrease due to disposal of subsidiaries in the current year (44337) (2652) (8462) – (18218) (39382) (113051)
Other decreases in the current year (22595) (1144248) (588257) (385452) (304089) (530076) (2974717)
Effect of translation of foreign currency financial statements 60886 26979 13971 – 70881 (12604) 160113
31 December 2023 29185339 7434951 5126023 15497033 14999446 10839453 83082245
Accumulated depreciation:
31 December 2022 2208458 4843978 3595671 5577042 3210478 5480050 24915677
Transfer from investment properties in the current year (Note 4(13)) 38449 – – – – – 38449
Provision in the current year 695828 1011297 725963 1361913 1253916 1588891 6637808
Business combinations involving enterprises not under common control
1772634792749–10726438039060
increased
Transfer to investment properties in the current year (Note 4(13)) (14526) – – – – – (14526)
Decrease due to disposal of subsidiaries in the current year (6677) (2046) (6592) – (4888) (11066) (31269)
Other decreases in the current year (12780) (1061855) (549407) (295085) (145085) (415938) (2480150)
Effect of translation of foreign currency financial statements (8155) 11488 11529 – 38454 (7615) 45701
31 December 2023 2918323 4806341 3779913 6643870 4363601 6638702 29150750
Provision for impairment loss:
31 December 2022 – – – – 1633 28734 30367
Decrease in the current year – – – – – (28726) (28726)
31 December 2023 – – – – 1633 8 1641
Carrying amount:
31 December 2023 26267016 2628610 1346110 8853163 10634212 4200743 53929854
31 December 2022 18529197 2516835 1550147 7766736 7838395 5456094 43657404
187Chapter 10Financial Statements
(i) As at 31 December 2023 the buildings held by the Group include permanent ownership land that does not require depreciation.(ii) In 2023 the aggregate amount of depreciation expenses charged to cost of revenue selling and marketing expenses general and
administrative expenses and research and development expenses was RMB6611786000 (2022: RMB5859984000).(iii) As at 31 December 2023 fixed assets with carrying amount of RMB536746000 (31 December 2022: RMB486847000) were pledged
as collateral for short-term and long-term borrowings (Note 4(23)(b) and Note 4(31)(c)).(iv) Fixed assets with pending certificates of ownership
31 December 2023
Accumulated Provision for
Cost Carrying amount
depreciation impairment loss
Buildings 6230244 (154749) – 6075495
31 December 2022
Accumulated Provision for
Cost Carrying amount
depreciation impairment loss
Buildings 4147265 (93939) – 4053326
In addition as at 31 December 2023 buildings with carrying amount of RMB18155000 and (cost of RMB29844000) (31 December 2022:
carrying amount of RMB19562000 and cost of RMB29844000) represented public rental houses with restricted property rights purchased
by the Group for enterprise talents.(v) Disposal of aircraft engines rotables and high-value aircraft maintenance tools
2023
Reason for Accumulated Provision for
Cost Carrying amount
disposal depreciation impairment loss
Aircraft rotables Scrapped 8029 (3371) – 4658
High-value aircraft maintenance
Scrapped 5060 (3378) – 1682
tools
Aircraft rotables Disposals 1143 (270) – 873
14232(7019)7213
188Chapter 10Financial Statements
2022
Reason for Accumulated Provision for
Cost Carrying amount
disposal depreciation impairment loss
Aircraft rotables Scrapped 18191 (3835) – 14356
Aircraft rotables Disposals 205 (54) – 151
High-value aircraft maintenance
Scrapped 257 (244) – 13
tools
18653(4133)–14520
(vi) On October 30 2023 the Group held the 8th meeting of the 6th Board of Directors and the 6th meeting of the 6th Board of
Supervisors when reviewed and approved the Proposal on Changes in Accounting Estimates . Based on the objective evaluation of the
business technology department of the Group as well as the actual flight life and usage of the aircraft fuselage the Group believes that
the current depreciation period of the aircraft fuselage cannot accurately reflect the actual usage status of the assets. In order to more
accurately reflect the asset status and operating results of the company’s aircraft fuselage and to better match the depreciation period of
the aircraft fuselage with its actual service life the Group plans to make accounting estimates for the depreciation period of the aircraft
fuselage. The accounting estimate change will be implemented from January 1 2024 and the depreciation period for aircraft fuselage will
be changed from 10 years to 10-20 years.
(15) Construction in progress
31 December 2023 31 December 2022
Industrial Park Projects 2252284 7055896
Project of Distribution Hubs 474378 2082661
Aircraft import and refit 164643 1106470
Qianhai S.F. Headquarters Office – 158959
Others 1141579 745874
403288411149860
Including: Balance of provision for impairment loss at the end of the period (17324) (1145)
189Chapter 10Financial Statements
190
Including:
Transfer to other Accumulative
Provision for % of project Borrowing costs
Increase in the long-term assets Other decreases in 31 December amount of
Name of projects Budget 31 December 2022 impairment loss in investment in Progress of project capitalised in the Capitalisation rate Source of funds
current year in the current the current year 2023 capitalised
the current year budget current year
year (ii) borrowing costs
(Note 4(47))
Self-owned funds and
Industrial Park Projects 20730396 7055896 2361839 (7147378) (17443) (630) 2252284 81.92% 81.92% 212199 103284 2.75% loans from financial
institutions
Project of Distribution Hubs 21195051 2082661 3044887 (4652463) – (707) 474378 75.40% 75.40% – – – Self-owned funds
Aircraft import and refit 1572937 1106470 1306562 (2235410) – (12979) 164643 83.07% 83.07% – – – Self-owned funds
Se l f -owned funds and
Qianhai S.F. Headquarters Office 1029950 158959 5730 (164689) – – – 100.00% 100.00% 92017 240 3.02% l o a n s f r o m f i n a n c i a l
institutions
Others – 745874 1390482 (915457) – (79320) 1141579 – – – Self-owned funds
111498608109500(15115397)(17443)(93636)4032884304216103524
(i) For aircraft import and refit the percentage of project investment in budget is related to the investment for the current period; for the other projects the percentage of project investment in
budget is related to the accumulative investment.(ii) The construction in progress transferred to long-term assets for the current year amounted to RMB15115397000 including RMB13105575000 transferred to fixed assets RMB993113000
transferred to investment properties and RMB1016709000 transferred to long-term prepaid expenses.(iii) For self-built Industrial Park Projects Project of Distribution Hubs Qianhai S.F. Headquarters Office and the buildings of other projects the Group transferred the parts of such projects that had
passed completion acceptance and been ready their intended use by 2023 to relevant fixed assets and investment properties.(iv) For the purchased aircrafts the Group transferred the modified parts of such aircrafts that had completed commissioning acceptance and been ready for their intended use by 2023 to relevant
fix assets.(v) As at 31 December 2023 construction in progress with carrying amount of RMB272393000 (31 December 2022: Nil) were pledged as collateral for long-term borrowings (Note 4(31)(c)).(vi) The Group considers the proportion of individual project budget amount to total assets to determine whether there are significant construction in progress projects. As at December 31 2023
there were not significant construction in progress with a single amount in the Group.Chapter 10Financial Statements
(16) Right-of-use assets
Machinery and
Buildings Motor vehicles Total
equipment and others
Cost:
31 December 2022 27068199 671644 63117 27802960
Addition in the current year 6415467 104317 34010 6553794
Decrease in the current year (2935514) (236299) (18644) (3190457)
Effect of translation of foreign
7637314556120992138
currency financial statements
31 December 2023 30624525 554218 79692 31258435
Accumulated depreciation:
31 December 2022 12093629 255382 24174 12373185
Provision in the current year 6874516 126643 20309 7021468
Decrease in the current year (2049814) (167932) (12481) (2230227)
Effect of translation of foreign
13639620459520438
currency financial statements
31 December 2023 16931970 220297 32597 17184864
Carrying amount:
31 December 2023 13692555 333921 47095 14073571
31 December 2022 14974570 416262 38943 15429775
As at 31 December 2023 and 31 December 2022 the Group assessed that no impairment loss should be recognised for right-of-use assets.
191Chapter 10Financial Statements
(17) Intangible assets
Purchased Self-developed Trademark Customer
Land use rights Others Total
software software rights relationships
Cost:
31 December 2022 7443805 870092 6312249 4887350 5855067 337155 25705718
Transfer from other long-term assets in the current year (Note 4(13)
145398–1252367–––1397765
Note 4(18))
Business combinations involving enterprises not under common control
5951114–11––59536
increased
Addition in the current year 378266 99543 – 797 – 20943 499549
Transfer to other long-term assets in the current year (Note 4(13)) (325446) – – – – – (325446)
Decrease due to disposal of subsidiaries in the current year (3702) (6290) (187640) – – – (197632)
Other disposal in the current year (1463) (110482) (100376) (92) – (2284) (214697)
Effect of translation of foreign currency financial statements 6386 4670 – 77967 97023 2526 188572
31 December 2023 7702755 857547 7276600 4966033 5952090 358340 27113365
Accumulated amortisation:
31 December 2022 694232 620438 3593934 584365 793438 178022 6464429
Transfer from other long-term assets in the current year (Note 4(13)) 10942 – – – – – 10942
Business combinations involving enterprises not under common control
68988––––6906
increased
Provision in the current year 191595 109236 1671358 247462 335626 32068 2587345
Transfer to other long-term assets in the current year (Note 4(13)) (18394) – – – – – (18394)
Decrease due to disposal of subsidiaries in the current year (315) (6290) (68959) – – – (75564)
Other disposal in the current year – (46809) (97568) (22) – (567) (144966)
Effect of translation of foreign currency financial statements (4073) 2696 13 10526 21276 2204 32642
31 December 2023 880885 679279 5098778 842331 1150340 211727 8863340
Provision for impairment loss:
31 December 2022 – – 64595 4 – 6 64605
Increase in the current year 5394 – 38853 – – – 44247
Decrease in the current year – – (6020) – – – (6020)
31 December 2023 5394 – 97428 4 – 6 102832
Carrying amount:
31 December 2023 6816476 178268 2080394 4123698 4801750 146607 18147193
31 December 2022 6749573 249654 2653720 4302981 5061629 159127 19176684
192Chapter 10Financial Statements
(a) In 2023 the total amount of amortisation expenses charged to cost of revenue selling and marketing expenses general and
administrative expenses and research and development expenses was RMB2428293000 (2022: RMB2086019000).(b) As at 31 December 2023 intangible assets with carrying amount of RMB292495000 (31 December 2022: RMB247556000) were
pledged as collateral for short-term and long-term borrowings (Note 4(23)(b) and Note 4(31)(c)).(c) As at 31 December 2023 the Group was still in the process of applying for certificates of ownership for land use rights with
carrying amount of RMB157465000 (cost of RMB167949000) (31 December 2022: carrying amount of RMB51120000 and cost of
RMB61250000).(d) As at 31 December 2022 the intangible assets developed by the Group accounted for 11.46% (31 December 2022: 13.84%) of the
carrying amount of intangible assets.
(18) Capitalised development expenditures
The Group’s total expenditure on research and development activities in 2023 is presented by nature as follows:
2023
Research and Capitalised
development development Total
expenses expenditures
Employee benefits 1215989 852750 2068739
Depreciation and amortisation 889934 85420 975354
Others 179391 139810 319201
228531410779803363294
2022
Research and Capitalised
development development Total
expenses expenditures
Employee benefits 1225926 983881 2209807
Depreciation and amortisation 710291 88391 798682
Others 286648 194138 480786
222286512664103489275
The changes in the Group’s capitalised development expenditures in 2023 are analysed as follows:
Transfer to
Other decreases
Increase in the intangible assets
31 December 2022 in the current 31 December 2023
current year in the current
year
year (Note 4(17))
System development 311757 1077980 (1252367) (7525) 129845
(a) In 2023 there was no impairment of the Group’s capitalised development expenditures (2022: Nil).(b) The Group considers the proportion of the beginning or end of year balance of a single capitalised development projects to total assets
to determine whether there are significant capitalised development projects. As at December 31 2023 there were not significant capitalised
development projects with a single amount in the Group.
193Chapter 10Financial Statements
(19) Goodwill
Effect of translation
Increase/(Decrease) in
31 December 2022 of foreign currency 31 December 2023
the current year
financial statements
Cost:
Kerry Logistics business (c) 5708450 85219 95586 5889255
SF Supply Chain Business (c) 3033680 – 48439 3082119
SF/HAVI China Logistics (Cayman
362117–5779367896
islands)
Guangdong Shunxin Freight Co. Ltd. 149587 – – 149587
Others 94345 (10618) 287 84014
9348179746011500919572871
Less: Provision for impairment loss
Others (2435) – – (2435)
9345744746011500919570436
(a) During the goodwill impairment assessment the Group compares the carrying amount of the relevant assets or sets of asset groups
(including goodwill) with their recoverable amount. If the recoverable amount is lower than the carrying amount the difference shall be
included in profit or loss for the current period.(b) All the goodwill has been allocated by the Group to the relevant asset groups or sets of asset groups at the acquisition date. The Group’s
allocation of goodwill was not changed in 2023.(c) The recoverable amounts of relevant sets of asset groups of SF supply chain business and Kerry logistics business are calculated based on
the approved seven-year and five-year forecast periods a fixed income growth rate (as shown in the table below) will be used as the basis
for estimation together with a long-term growth rate in the remaining forecast period determined by the present value of the future cash
flows. The calculation of the recoverable amount of SF supply chain business using a seven-year forecast is mainly based on contractual
arrangements with suppliers.The Group determines revenue growth rate and profit margin based on historical experience and forecast of market development. The long-
term growth rate is the growth rate adopted after the forecast period; The Group comprehensively assesses and determines the sustainable
annual growth rate based on the long-term inflation rate of the Chinese Mainland Hong Kong Thailand and Southeast Asia the United
States etc. The discount rate is the pre-tax discount rate that reflects the specific risks of the relevant asset groups and sets of asset groups.
194Chapter 10Financial Statements
In 2023 the major assumptions applied in the recoverable amount of related sets of asset groups and cash flows projections were presented
as below:
2023
Revenue growth rates in the forecast period 2.50%~16.64%
Long-term growth rate 2.00%~2.50%
Earnings before interest and tax -0.2%~6.60%
Pre-tax discount rate 11.90%~14.00%
As at 31 December 2023 the recoverable amount of the asset portfolio related to SF supply chain business is expected to exceed the book
value by approximately RMB410951000.As at 31 December 2023 the recoverable amount of the asset portfolio related to Kerry logistics business is expected to exceed the book
value by approximately RMB1374911000.In 2022 the major assumptions applied in cash flows projections were presented as follows:
2022
Revenue growth rates in the forecast period -16.50%~17.00%
Long-term growth rate 2.00%~3.00%
Earnings before interest and tax -0.47%~7.16%
Pre-tax discount rate 11.71%~14.10%
(20) Long-term prepaid expenses
Increase in the Amortisation in Other decreases in
31 December 2022 31 December 2023
current year the current year the current year
Improvements to right-of-use assets 2096403 1074096 (974378) (54443) 2141678
Settling-in allowance and
83695683669(104012)(11198)805415
introduction fee for pilots
Others 164262 114343 (53458) (10836) 214311
30976211272108(1131848)(76477)3161404
(21) Other non-current assets
31 December 2023 31 December 2022
Advances for engineering equipment 823856 617191
Prepayment for land use right acquisitions and Others 121910 7677
945766624868
195Chapter 10Financial Statements
(22) Asset/Credit impairment and provision for losses
Exchange differences
on translation of
Provision/
31 December 2022 Write-off foreign currency 31 December 2023
(Reversal)
financial statements
and other
Provision for bad debts 1818980 (35716) (184478) 18776 1617562
Including: Provision for bad debts of accounts
1560244(42078)(158277)187761378665
receivable (Note 4(3))
Provision for bad debts of other
23912310797(26201)–223719
receivables (Note 4(5))
Provision for bad debts of long-term
19613(4435)––15178
receivables (Note 4(9))
Provision for bad debts of factoring receivables 123815 – – – 123815
Provision for bad debts of loans and advances 36451 2084 (30808) 977 8704
Sub-total 1979246 (33632) (215286) 19753 1750081
Provision for impairment of long-term equity
248017123907–(25700)346224
investments (Note 4(10))
Provision for impairment of fixed assets
30367––(28726)1641
(Note 4(14))
Provision for impairment of intangible assets
6460544247–(6020)102832
(Note 4(17))
Provision for decline in the value of inventories
3539700–(1457)2782
(Note 4(6))
Provision for impairment of contract assets
3400152––3552
(Note 4(7))
Provision for impairment of goodwill (Note 4(19)) 2435 – – – 2435
Provision for impairment of construction in
114517443–(1264)17324
progress (Note 4(15))
Sub-total 353508 186449 – (63167) 476790
2332754152817(215286)(43414)2226871
(23) Short-term borrowings
31 December 2023 31 December 2022
Unsecured borrowings 12959996 8512438
Guaranteed borrowings (a) 5156012 4224863
Secured borrowings (b) 105969 82496
Pledged borrowings – 18073
1822197712837870
196Chapter 10Financial Statements
(a) As at 31 December 2023 guaranteed borrowings of RMB5156012000 (31 December 2022: RMB4224863000) were guaranteed by
SF Holdings or subsidiaries within the Group.(b) As at 31 December 2023 secured borrowings of RMB105969000 were secured by the following assets respectively:
Including: those also
Carrying amount of
secured for long-term
secured assets
borrowings
Fixed assets 536746 536746
Intangible assets 144678 144678
681424681424
As at 31 December 2022 secured borrowings of RMB82496000 were secured by the following assets respectively:
Including: those also
Carrying amount of
secured for long-term
secured assets
borrowings
Fixed assets 486847 486847
Intangible assets 113059 113059
599906599906
(c) As at 31 December 2023 the Group did not have short-term borrowings that were overdue. The range of annual interest rate of major
short-term borrowings was from 2.20% to 7.47% (31 December 2022: 2.20% to 5.39%).
(24) Accounts payable
31 December 2023 31 December 2022
Payables to related parties (Note 8(4)(h)) 421194 505241
Payables for services and purchases 24424941 24210111
2484613524715352
As at 31 December 2023 accounts payable with ageing over 1 year amounted to RMB408452000 (31 December 2022: RMB93260000)
including payable outsourcing cost and transportation cost payable. The final settlement of the payment has not been made because the
Group has not received the invoice from the suppliers.
(25) Contract liabilities
31 December 2023 31 December 2022
Advances from related parties (Note 8(4)(i)) 48155 7010
Advances of freight charges and others 1783863 1237408
18320181244418
Contract liabilities of RMB1244418000 included in the carrying amount as at 31 December 2022 were transferred to revenue for the year
ended 31 December 2023 (2022: RMB1675836000).
197Chapter 10Financial Statements
(26) Employee benefits payable
31 December 2023 31 December 2022
Short-term employee benefits payable (a) 5547556 6093655
Defined contribution plans payable (b) 61053 182896
56086096276551
(a) Short-term employee benefits
31 December Increase in Decrease in 31 December
2022 current year current year 2023
Wages or salaries bonus allowances and subsidies 5483052 27207252 (27673979) 5016325
Employee welfare 101659 1680834 (1675608) 106885
Social security contributions 76124 757318 (810551) 22891
Including: Medical insurance 68888 665091 (714496) 19483
Work injury insurance 6772 75076 (79399) 2449
Maternity insurance 464 17151 (16656) 959
Housing funds 9467 436805 (435785) 10487
Labour union funds and employee education funds 409693 452758 (494741) 367710
Others 13660 481942 (472344) 23258
609365531016909(31563008)5547556
(b) Defined contribution plans
31 December Increase in current Decrease in 31 December
2022 year current year 2023
Basic pensions 177465 1313544 (1431137) 59872
Unemployment insurance 5431 41124 (45374) 1181
1828961354668(1476511)61053
198Chapter 10Financial Statements
(27) Taxes payable
31 December 2023 31 December 2022
Enterprise income tax payable 1394250 1630863
Unpaid VAT 538510 928371
Others 196955 201912
21297152761146
(28) Other payables
31 December 2023 31 December 2022
Payables to related parties (Note 8(4)(j)) 134589 220322
Engineering equipment payable 4345119 5557664
Deposits payable 1849724 1933887
Payables for goods collected on behalf of other parties 1534338 1200321
Payable for equity acquisition 267886 1045334
Bank supply chain financial products/refactoring 543389 992178
Warranty deposits payable 505725 441138
Recharge payable 1014895 405579
Dividends payable 142507 165014
Management fees payable 159211 137748
Professional service fees payable 134607 78339
Others 862851 1169071
1149484113346595
As at 31 December 2023 other payables with ageing over 1 year amounted to RMB1149236000 (31 December 2022: RMB991380000)
mainly including the undue deposits of continuing business and the unsettled engineering equipment funds.
(29) Current portion of non-current liabilities
31 December 2023 31 December 2022
Current portion of lease liabilities (Note 4(33)) 5769965 6596956
Current portion of debentures payable (a) 615295 3661225
Current portion of long-term borrowings (Note 4(31)) 2813385 600680
Current portion of cash-settled share-based payments 263732 296703
Current portion of long-term payables 23571 18086
948594811173650
199Chapter 10Financial Statements
(a) Current portion of debentures payable
Reclassification from Exchange differences
Amortisation of
debentures payable in Repayment for the on translation of
31 December 2022 Interest accrual premium/ 31 December 2023
the current year current year foreign currency
discount
(Note 4(32)) financial statements
Overseas debentures denominated in USD of 2018 3547743 93283 4349 – (3785175) 139800 –
Green Corporate Debentures of 2021 (1st instalment) 12844 – – 518972 (18950) – 512866
Others 100638 – – 531961 (531092) 922 102429
36612259328343491050933(4335217)140722615295
(30) Other current liabilities
31 December 2023 31 December 2022
Output VAT to be recognised arising from contract liabilities 129212 53779
Ultra short-term commercial notes – 4041584
Short-term corporate debentures – 1020773
Others 38456 6140
1676685122276
(31) Long-term borrowings
31 December 2023 31 December 2022
Guaranteed borrowings (a) 5633173 5901392
Pledged borrowings (b) 2150466 1487597
Unsecured borrowings 5113058 553843
Secured borrowings (c) 1271929 129858
141686268072690
Less: C urrent portion of long-term borrowings
(Note 4(29)):
Guaranteed borrowings (914982) (50087)
Pledged borrowings (668094) (461929)
Unsecured borrowings (1156039) (52249)
Secured borrowings (74270) (36415)
(2813385)(600680)
113552417472010
200Chapter 10Financial Statements
(a) As at 31 December 2023 the Group’s guaranteed borrowings of RMB5608173000 (31 December 2022: RMB5865597000) were
guaranteed by subsidiaries within the Group and guaranteed borrowings of RMB25000000 (31 December 2022: RMB35795000) were
guaranteed by Shenzhen S.F. Taisen Holdings (Group) Co. Ltd. (“Taisen Holdings”) and Havi Group LP (U.S.).(b) As at 31 December 2023 the entitlement to receivables arising from aircraft financial leasing business of subsidiary SF Airlines was
pledged by subsidiary Shunyuan Financial Leasing (Tianjin) Co. Ltd. (“Shunyuan Financial Leasing”) for the pledged bank borrowings
of RMB2150466000 (31 December 2022: RMB1487597000). As at 31 December 2023 the balance of receivables pledged was
RMB2496880000 (31 December 2022: RMB1670516000) all of which were receivables from subsidiaries within the Group.(c) As at 31 December 2023 secured borrowings of RMB1271929000 were secured by the following assets respectively:
Including: those also
Carrying amount of
secured for short-term
secured assets
borrowings
Fixed assets 536746 536746
Intangible assets 292495 144678
Investment properties 111124 –
Construction in progress 272393 –
1212758681424
As at 31 December 2022 secured borrowings of RMB129858000 were secured by the following assets respectively:
Including: those also
Carrying amount of
secured for short-term
secured assets
borrowings
Fixed assets 486847 486847
Intangible assets 247556 113059
Investment properties 104571 –
838974599906
(d) Besides as at 31 December 2023 Taisen Holdings provided a full joint and several liability guarantee for RMB1239787000 of the
above secured borrowings (31 December 2022: RMB3000000).(e) As at 31 December 2023 the Group did not have long-term borrowings that were overdue. The range of annual interest rate of major
borrowings was from 2.20% to 6.91% (31 December 2022: 3.02% to 5.77%).
201Chapter 10Financial Statements
(32) Debentures payable
Exchange
differences on Current portion
Amortisation of
31 December translation of of debentures 31 December
Interest accrual premium/
2022 foreign currency payable 2023
discount
financial (Note 4(29))
statements
Overseas debentures denominated in USD of 2020 4829576 142614 7195 89913 (142614) 4926684
Overseas debentures denominated in USD of 2021 8306504 241713 9743 154640 (241713) 8470887
Green Corporate Debentures of 2021 (1st instalment) 499677 19050 245 – (518972) –
Overseas debentures denominated in USD of 2022 4792189 133695 16243 89060 (133695) 4897492
Smooth Freight Logistics Debentures (1st instalment) 499562 13939 157 – (13939) 499719
1892750855101133583333613(1050933)18794782
Par value Amount Nominal
Issuer Currency Date of issue Term Default or not
(thousand yuan) (equivalent to RMB) interest rate
Overseas debentures denominated in USD
SF Holding Investment Limited USD 700000 20 February 2020 10 years 4957890 2.88% No
of 2020
Overseas debentures denominated in USD
SF Holding Investment 2021 Limited USD 400000 17 November 2021 5 years 2833080 2.38% No
of 2021
Overseas debentures denominated in USD
SF Holding Investment 2021 Limited USD 300000 17 November 2021 7 years 2124810 3.00% No
of 2021
Overseas debentures denominated in USD
SF Holding Investment 2021 Limited USD 500000 17 November 2021 10 years 3541350 3.13% No
of 2021
Green Corporate Debentures of 2021 From 23 April 2021 to
Taisen Holdings RMB 500000 3 years 500000 3.79% No
(1st instalment) 26 April 2021
Overseas debentures denominated in USD
SF Holding Investment 2021 Limited USD 400000 28 January 2022 5 years 2833080 2.38% No
of 2022
Overseas debentures denominated in USD
SF Holding Investment 2021 Limited USD 300000 28 January 2022 10 years 2124810 3.13% No
of 2022
Smooth Freight Logistics Debentures
Taisen Holdings RMB 500000 22 September 2022 3 years 500000 2.79% No
(1st instalment)
202Chapter 10Financial Statements
(33) Lease liabilities
31 December 2023 31 December 2022
Lease liabilities 13808460 15179328
Less: Current portion of lease liabilities (Note 4(29)) (5769965) (6596956)
80384958582372
As at 31 December 2023 payments for leases not yet commenced to which the Group was committed amounted to RMB5197548000 (31
December 2022: RMB1638701000) (Note 15(3)(b)).
(34) Deferred income
Amount recognised
Increase in the in other income in Other decreases in
Government grants 31 December 2022 31 December 2023
current year the current year the current year
(Note 4(49))
Huanggang Baitan Lake Organising Committee Project 419578 30000 (12274) – 437304
Government support funds for industrial park 359122 215951 (7344) – 567729
Others 82091 39022 (26317) (9185) 85611
860791284973(45935)(9185)1090644
The above government grants are all related to assets.
(35) Deferred tax assets and deferred tax liabilities
(a) Deferred tax assets before offsetting
31 December 2023 31 December 2022
Deductible temporary Deductible temporary
differences and Deferred tax assets differences and Deferred tax assets
deductible tax losses deductible tax losses
Lease liabilities (Note 2(30)) 12542513 2998695 13965422 3187174
Deductible tax losses 4011713 900683 3090230 699863
Depreciation and amortisation differences 3671061 849888 2175284 502343
Accrued expenses 2018943 480077 2288228 551443
Provision for asset impairment 722267 174813 700865 167412
Unrealised profits from internal transactions 449497 112374 579524 144881
Others 344204 82661 301226 70426
237601985599191231007795323542
Including:
Expected to be recovered within one year (inclusive) 2002169 2219959
Expected to be recovered after one year 3597022 3103583
55991915323542
203Chapter 10Financial Statements
(b) Deductible tax losses and deductible temporary differences that are not recognised as deferred tax assets are analysed as follows:
31 December 2023 31 December 2022
Deductible tax losses (c) 18873618 20086770
Deductible temporary differences 1113144 1133829
1998676221220599
(c) The following table shows unrecognised deductible tax losses based on its expiration date:
31 December 2023 31 December 2022
2023–793083
202412702061568941
202539549214764110
202644682345702895
202732544604334208
2028 and subsequent years 5925797 2923533
1887361820086770
(d) Deferred tax liabilities before offsetting
31 December 2023 31 December 2022
Taxable temporary Deferred tax Taxable temporary Deferred tax
differences liabilities differences liabilities
Appreciation in asset value arising from
business combinations involving 12385409 2971543 12956677 3137944
enterprises not under common control
Right-of-use assets (Note 2(30)) 11850559 2830561 13379139 3052235
Depreciation and amortisation differences 6823020 1606602 7153559 1691289
Changes in fair value of financial assets 1436715 359178 1424987 356247
Others 525038 118411 548082 110817
330207417886295354624448348532
Including:
Expected to be recovered within one year
18615072073413
(inclusive)
Expected to be recovered after one year 6024788 6275119
78862958348532
204Chapter 10Financial Statements
(e) The net balances of deferred tax assets and deferred tax liabilities after offsetting are as follows:
31 December 2023 31 December 2022
Deferred tax assets net 2263870 1632964
Deferred tax liabilities net 4550974 4657954
(36) Share capital
Increase in current Decrease in current
31 December 2022 31 December 2023
year year
Ordinary shares denominated in RMB 4895202 – – 4895202
Increase in current Decrease in current
31 December 2021 31 December 2022
year year Note 4 (38(iii))
Ordinary shares denominated in RMB 4906213 – (11011) 4895202
(37) Capital reserve
Increase in current Decrease in current
31 December 2022 31 December 2023
year year
Capital premium
– C apital contribution by
34978720––34978720
shareholders
– Transfer of convertible corporate
5758688––5758688
debentures to share capital
– Transfer of convertible corporate
debentures issued by subsidiaries 1980870 – – 1980870
to share capital
– C apital reserve from transactions
2256771207(1037241)(810357)
with minority shareholders (i)
– B usiness combinations involving
enterprises under common (76633) – – (76633)
control
– Exercise of share-based payments – 43898 – 43898
Other capital reserve
– S hare-based payments included
675189271510(113510)833189
in capital reserve
– Others 453726 1984 – 455710
43996237318599(1150751)43164085
205Chapter 10Financial Statements
31 December 2021 Increase in current year Decrease in current year 31 December 2022
Capital premium
– Capital contribution by shareholders 35362702 – (383982) 34978720
– T ransfer of convertible corporate
5758688 – – 5758688debentures to share capital
– Transfer of convertible corporate
debentures issued by subsidiaries to 1980870 – – 1980870
share capital
– C apital reserve from transactions with
2279859 825 (2055007) 225677minority shareholders
– Business combinations involving
(76633) – – (76633)enterprises under common control
Other capital reserve
– Share-based payments included in
552190 122999 – 675189capital reserve
– Others 342922 110804 – 453726
46200598234628(2438989)43996237
(i) Capital reserve from transactions with minority shareholders in the current year mainly due to the acquisition of minority shareholders’
equity.
(38) Treasury stock
Increase in current Decrease in current
31 December 2022 31 December 2023
year (i) year (ii)
Treasury stock 2040377 959956 (424801) 2575532
Increase in current Decrease in current
31 December 2021 31 December 2022
year (i) year (iii)
Treasury stock 394993 2040377 (394993) 2040377
(i) In accordance with the Proposal of Repurchasing Shares by Centralised Price Bidding approved in the 22nd session of the fifth Board of
Directors on 2 March 2022 and the 28th session of the fifth Board of Directors on 22 September 2022 the Company repurchased a portion
of issued to the public for employee stock ownership plan or share-based incentive through centralised price bidding by self-owned funds.As at 31 December 2023 the Company repurchased a total of 59471139 shares and recognised treasury stock of RMB3000333000.Among them the Company repurchased 19838884 shares and recognised treasury stock of RMB959956000 in 2023; the Company
repurchased 39632255 shares and recognised treasury stock of RMB2040377000 in 2022.(ii) On 1 August 2023 the Company held the 6th session of the sixth Board of Directors and the 4th session of the sixth Board of
Supervisors respectively at which it approved the Proposal on the Fulfilment of Conditions for Exercising Stock Options for the First Exercise
Period of Stock Options Granted for the First Time Under the 2022 Stock Option Incentive Plan. The number of exercisable stock options
during the first exercise period granted for the first time to incentive recipients who pass the performance evaluation was 8420193 and
the total capital contributions received for the exercisable stock options were RMB355189000. Among them the treasury shares were
reduced by RMB424801000 and the capital reserve was reduced by RMB69612000.(iii) On 31 January 2019 the 19th session of the fourth Board of Directors approved the Proposal of Repurchasing Shares by Centralised
Price Bidding the Company repurchased 11010729 shares issued to the public for employee stock ownership plan or share-based incentive
through centralised price bidding by self-owned funds. A total of RMB394993000 of treasury stock was recognised.According to the relevant laws and regulations and the Articles of Association the above-mentioned repurchased shares should be
transferred or cancelled within three years. Since the Company has not launched an employee stock ownership plan or equity incentive
within three years after the implementation of the above-mentioned share repurchase approved by the 21st meeting of the fifth Board
of Directors and the first extraordinary general meeting in 2022 the Company completed the fifth Board cancellation of the repurchased
11010729 shares in 2022 thereby offsetting the treasury shares of RMB394993000 of which the share capital was reduced by
RMB11011000 and capital reserve was reduced by RMB383982000. 206Chapter 10Financial Statements
(39) Special reserve
Increase in the current Decrease in current
31 December 2022 31 December 2023
year year
Safety reserve – 389332 (389332) –
Increase in the current Decrease in current
31 December 2021 31 December 2022
year year
Safety reserve – 32214 (32214) –
Pursuant to the Administrative Measures for the Collection and Utilisation of Enterprise Work Safety Funds (Cai Zi [2022] No. 136) issuedby the Ministry of Finance and the State Administration of Work Safety on 21 November 2022 1% of the income from the “Commoncargo transportation business” which is operated by certain subsidiaries of the Group is appropriated to safety reserve. The safety reserve
is recognised in profit or loss as the “Special reserve” item for the current period. When the accrued safety reserve is used under the
prescribed conditions it is written off against the original amount directly.
(40) Surplus reserve
Increase in the current Decrease in current
31 December 2022 31 December 2023
year (Note 4(41)) year
Statutory surplus reserve 1010253 1403533 – 2413786
Increase in the current Decrease in current
31 December 2021 31 December 2022
year (Note 4(41)) year
Statutory surplus reserve 947775 62478 – 1010253
According to the Company Law of the People’s Republic of China and the company’s articles of association the company shall provision
10% of the annual net profit from the statutory surplus reserve fund. When the cumulative amount of the statutory surplus reserve fund
reaches more than 50% of the registered capital it can no longer be provision. After approval the statutory surplus reserve fund can be
used to offset losses or increase share capital. In 2023 the company provisioned a statutory surplus reserve of RMB1403533000 (2022:
RMB62478000) based on 10% of net profit.
(41) Undistributed profits
20232022
Undistributed profits at the beginning of the year 33371351 28245764
Add: Net profit attributable to the shareholders of the parent company
82344936173764
for the current year
Transfer from other comprehensive income to retained earnings (121368) (38771)
Less: Ordinary share dividends payable (a) (1213616) (874518)
Appropriation to statutory surplus reserve (1403533) (62478)
Appropriation to general risk reserve (31328) (72410)
Undistributed profits at the end of the year 38835999 33371351
(a) The Company held a shareholders’ meeting on 27 April 2023. On the basis of the total share capital at the registration date on which
the 2022 profit distribution plan was implemented less the special shares repurchased by the Company a total of RMB1213616000 of
cash dividends were distributed to all shareholders at RMB2.5 (including tax) per 10 shares without bonus shares being given or capital
reserve being transferred into the share capital.
207Chapter 10Financial Statements
(42) Revenue and cost of revenue
20232022
Revenue from main operations (a) 257986580 267122766
Revenue from other operations (a) 422823 367648
Total revenue 258409403 267490414
Cost of revenue from main operations 225013777 233822858
Cost of revenue from other operations 260056 249502
Total cost of revenue 225273833 234072360
(a) The Group’s revenue is disaggregated as follows:
2023
Logistics and freight
Sales of goods Others Total
forwarding services
Revenue from main operations
Including: At a point in time – 5626072 306401 5932473
Over time 251127665 – 619037 251746702
Lease income – – 307405 307405
25112766556260721232843257986580
Revenue from other operations
Including: At a point in time – – 100907 100907
Over time – – 136465 136465
Lease income – – 185451 185451
––422823422823
Total 251127665 5626072 1655666 258409403
208Chapter 10Financial Statements
2022
Logistics and freight
Sales of goods Others Total
forwarding services
Revenue from main operations
Including: At a point in time – 3899692 351610 4251302
Over time 262079740 – 561990 262641730
Lease income – – 229734 229734
26207974038996921143334267122766
Revenue from other operations
Including: At a point in time – – 69014 69014
Over time – – 83124 83124
Lease income – – 215510 215510
––367648367648
Total 262079740 3899692 1510982 267490414
As at 31 December 2023 the Group’s performance obligations that had been entered into but had not yet been performed or not been
fully performed are part of a contract for an estimated period of not more than one year.
(43) Taxes and surcharges
2023 2022 Payment criteria
Calculation of residual value of property
Property tax 200648 146993 or rental income from property and the
prescribed tax rate
The amount stated in the taxable
voucher or the number of vouchers
Stamp tax 96051 108638
and the prescribed tax rate or unit tax
calculation
1%-7% of amount of
City maintenance and construction tax 80340 91686
VAT paid
Educational surcharge 59605 66425 2%-3% of amount of VAT paid
Others 65201 62964
501845476706
209Chapter 10Financial Statements
(44) Selling and marketing expenses
20232022
Outsourcing staff expenses 976012 977788
Employee benefits 777180 833962
Depreciation and amortisation expenses 378498 342872
Others 859899 629492
29915892784114
(45) General and administrative expenses
20232022
Employee benefits 14100595 14163667
Depreciation and amortisation expenses 642562 624073
Others 2889399 2786750
1763255617574490
(46) Research and development expenses
20232022
Employee benefits 1215989 1225926
Depreciation and amortisation expenses 889934 710291
Others 179391 286648
22853142222865
(47) Financial costs
20232022
Interest expenses on borrowings 1808850 1570293
Add: Interest expenses on lease liabilities 564374 609652
Less: Interest capitalized (Note 4(15)) (103524) (125585)
Interest expenses 2269700 2054360
Less: Interest income (633373) (345662)
Net gains or losses on exchange 96381 (117314)
Commission expenses and others 133493 120229
18662011711613
210Chapter 10Financial Statements
(48) Expenses by nature
The cost of revenue selling and marketing expenses general and administrative expenses and research and development expenses in the
income statement are listed as follows by nature:
20232022
Labour outsourcing cost 88615879 77832877
Transportation outsourcing costs 38352035 38204742
Transportation expenses 44578173 68640219
Including: Aircraft maintenance costs 458091 431618
Employee benefit expenses 31776779 31445636
Depreciation and amortisation expenses 10297639 9138080
Depreciation expenses of right-of-use assets 7021468 7174410
Venue usage expenses (b) 7100757 6481654
Others 20440562 17736211
248183292256653829
(a) In 2023 the Group’s government grants which were offset against costs and expenses amounted to RMB164944000 (2022:
RMB214306000). Therein the amount that was recognised in non-recurring profit or loss amounted to RMB135824000 (2022:
RMB138620000).(b) As stated in Note 2(27) the Group directly recognises the lease payments of short-term leases and low-value leases in profit or loss. In
2023 the amount was RMB3601571000 (2022: RMB3620688000).
(49) Other income
20232022
Tax preference 1313036 1778617
Fiscal appropriation and subsidies 610564 433329
Amortisation of deferred income (Note 4(34)) 45935 37415
19695352249361
In 2023 other income of the Group that was recognised in non-recurring profit or loss amounted to RMB944950000 (2022:
RMB681625000).
211Chapter 10Financial Statements
(50) Investment income
20232022
Investment income from financial assets held for trading 491442 664145
Investment income from disposal of subsidiaries 268204 32314
Investment income from disposal of other investments 74248 307566
Investment income from dividends of financial assets not held for trading 2438 13811
Share of net gains or losses of investees under the equity method (Note 4(10)) (67190) 7549
Others 31526 –
8006681025385
In 2023 and 2022 there is no significant restriction on the repatriation of investment income of the Group.
(51) Reversal of/(Losses on) credit impairment
20232022
Reversal of/(Losses on) impairment of accounts receivable 42078 (669961)
Losses on impairment of other receivables (10797) (158035)
Reversal of impairment of long-term receivables 4435 2372
(Losses on)/Reversal of impairment of loans and advances (2084) 4524
33632(821100)
212Chapter 10Financial Statements
(52) Non-operating income and expenses
(a) Non-operating income
Amount recognised Amount recognised
2023 in non-recurring 2022 in non-recurring
profit or loss in 2023 profit or loss in 2022
Compensation income 52328 52328 50194 50194
Government grants 14016 14016 6202 6202
Others 242885 242885 175091 175091
309229309229231487231487
(b) Non-operating expenses
Amount recognised Amount recognised
2023 in non-recurring 2022 in non-recurring
profit or loss in 2023 profit or loss in 2022
Losses on scrapping of long-term assets 78978 78978 143994 143994
Compensation expenses 99460 99460 78391 78391
Donation expenses 11961 11961 13770 13770
Others 86601 86601 62461 62461
277000277000298616298616
(53) Income tax expenses
20232022
Current income tax 3340596 3948002
Deferred income tax (765700) 15156
25748963963158
213Chapter 10Financial Statements
The reconciliation from income tax calculated based on the applicable tax rates and profit before income tax presented in the income
statement to the income tax expenses is listed below:
20232022
Profit before income tax 10486505 10966778
Tax at the statutory tax rate of 25% 2621626 2741695
Tax effect of non-taxable income (109495) (215471)
Costs expenses and losses not deductible for tax purposes 296602 246471
Adjustments of prior years (32451) (38780)
Effect of different tax rates available to different jurisdictions (211891) (190484)
Tax effect of preferential tax rate (364417) (322841)
Tax losses and temporary differences not recognized 879651 1353001
Reversal of previously recognized tax losses and temporary differences 30752 518108
Utilization of previously unrecognized tax losses and temporary differences (378149) (85016)
Recognition of tax losses and temporary differences not recognized
(157332)(43525)
in prior years
Income tax expenses 2574896 3963158
(54) Earnings per share
(a) Basic earnings per share
Basic earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parent company by
the weighted average number of outstanding ordinary shares of the parent company:
20232022
Consolidated net profit attributable to ordinary shareholders of
82344936173764
the parent company
Weighted average number of outstanding ordinary shares of the Company
48504984868677
(in thousand)
Basic earnings per share (Yuan/share) 1.70 1.27
Including:
– Basic earnings per share from continuing operations (Yuan/share) 1.70 1.27
214Chapter 10Financial Statements
(b) Diluted earnings per share
Diluted earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parent company
adjusted based on the dilutive potential ordinary shares by the adjusted weighted average number of outstanding ordinary shares of the
Company. In 2023 and 2022 the Company had dilutive potential ordinary shares due to the implementation of the share option incentive
plan:
20232022
Consolidated net profit attributable to ordinary shareholders of the
82344936173764
parent company
Adjusted consolidated net profit attributable to ordinary shareholders of
82344936173764
the parent company for calculation of earnings per share
Weighted average number of outstanding ordinary shares of the Company
48504984868677
(in thousand)
Add: Effect of the share-based payments plan 4484 5063
Weighted average number of outstanding diluted ordinary shares (in thousand) 4854982 4873740
Diluted earnings per share (Yuan/share) 1.70 1.27
(55) Other comprehensive income
Other comprehensive income the related income tax effect and the reclassifications to profit or loss in 2023 and 2022 were as follows:
Other comprehensive income in the income statement
Other comprehensive income in the balance sheet
for the year ended 31 December 2023
Attributable Other
Amount incurred Attributable Attributable
to the parent comprehensive Less: Income
31 December 31 December before income to the parent to minority
company in the income tax (expenses)/
2022 2023 tax for the company – net of shareholders –
current year – net transferred into credits
current year tax net of tax
of tax retained earnings
Other comprehensive income which will not be
reclassified subsequently to profit or loss:
Changes in fair value of investments in other
296573248628312136835733834841002749486283566
equity instruments
Other comprehensive income which will not be
transferred to profit or loss under the equity (2764) (329) – (3093) (329) – (329) –
method
Other comprehensive income which will be
reclassified subsequently to profit or loss:
Cash flow hedge reserve (12002) 12002 – – 12002 – 12002 –
Other comprehensive income which will be
transferred to profit or loss under the equity (18740) (5254) – (23994) (5254) – (5254) –
method
Exchange differences on translation of foreign
1605801380331–1986132334708–380331(45623)
currency financial statements
453802787303312136855324288252272749873033(45057)
215Chapter 10Financial Statements
Other comprehensive income in the income statement for the year ended 31
Other comprehensive income in the balance sheet
December 2022
Attributable Other
Amount incurred Attributable Attributable
to the parent comprehensive Less: Income tax
31 December 31 December before income to the parent to minority
company in the income (expenses)/
2021 2022 tax for the company – net of shareholders –
current year – net transferred into credits
current year tax net of tax
of tax retained earnings
Other comprehensive income which will not be
reclassified subsequently to profit or loss:
Changes in fair value of investments in other
2974558(47597)387712965732(57876)(307)(47597)(10586)
equity instruments
Other comprehensive income which will not be
transferred to profit or loss under the equity (1278) (1486) – (2764) (1486) – (1486) –
method
Other comprehensive income which will be
reclassified subsequently to profit or loss:
Cash flow hedge reserve (27394) 15392 – (12002) 15392 – 15392 –
Other comprehensive income which will be
transferred to profit or loss under the equity – (18740) – (18740) (18740) – (18740) –
method
Exchange differences on translation of foreign
(328655)1934456–16058011336071–1934456(598385)
currency financial statements
261723118820253877145380271273361(307)1882025(608971)
(56) Notes to statement of the cash flow
The Group has no cash flows presented on a net basis and significant cash flow items are set out below:
(a) Cash received relating to other operating activities
20232022
Inflows from cash collected on delivery on behalf of other parties 87029041 77286558
Others 5892733 3792101
9292177481078659
(b) Cash paid relating to other operating activities
20232022
Outflows from goods payments collected on behalf of other parties 86864109 77323122
Others 19621990 16902212
10648609994225334
(c) Cash received from disposal of investments
20232022
Cash received from disposal of associates and joint ventures 468039 841595
Cash received from disposal of financial assets 334613 1718029
8026522559624
216Chapter 10Financial Statements
(d) Cash paid to acquire investments
20232022
Cash paid to acquire financial assets 1693960 951916
Cash paid to acquire associates and joint ventures 169265 1122032
18632252073948
(e) Net cash received from disposal of subsidiaries
20232022
Consideration for disposal of subsidiaries 607728 233639
Add: Cash received in the current year for the disposal of subsidiaries
–99751
in previous years
Less: Cash and cash equivalents held by subsidiaries on the day of
(208906)(19671)
loss of control
398822313719
(f) Net cash paid to acquire subsidiaries
20232022
Consideration for acquisition of subsidiaries by way of business combinations 141702 1952915
Add: Cash paid in the current year for acquisition of subsidiaries in prior periods 835299 108797
Less: Consideration to be paid in subsequent years – (745718)
Cash and cash equivalents held by subsidiaries at the acquisition date (4545) (125369)
Net cash paid for acquisition of subsidiaries by way of business combinations 972456 1190625
Consideration for acquisition of assets 1269444 1099465
Less: Cash and cash equivalents held by subsidiaries at the acquisition date (44492) (72609)
Net cash paid for acquisition of assets 1224952 1026856
Total net cash paid to acquire subsidiaries 2197408 2217481
(g) Cash received/paid relating to other investing activities
Cash received/paid relating to other investing activities by the Group represents cash inflows and outflows from redemption/purchase of
bank wealth management products and structural deposits.
217Chapter 10Financial Statements
(h) Cash paid relating to other financing activities
20232022
Repayments of lease liabilities (i) 7765246 7813330
Acquisition of minority interests 1833285 3914671
Repurchase of shares 959956 2040377
Long-term asset purchases paid for by bank supply chain
992178868330
financial products/refactoring
Others 2376 6789
1155304114643497
(i) In 2023 the total cash outflows relating to leases paid by the Group amounted to RMB11582911000 (2022: RMB11687763000)
except for the repayments of lease liabilities classified as cash paid relating to financing activities and the remaining was classified as cash
paid relating to operating activities.
(57) Supplementary information to the statement of cash flow
(a) Reconciliation from net profit to cash flows from operating activities
20232022
Net profit 7911609 7003620
Add: Asset impairment losses 186449 131756
(Reversal)/Loss in Credit impairment (33632) 821100
Depreciation of right-of-use assets 7021468 7174410
Depreciation and amortisation expenses 10297639 9173703
Losses on disposal of long-term assets 53891 52305
Losses arising from changes in fair value 46262 27938
Financial costs 2269700 1929262
Investment income (800668) (1025385)
Expenses recognised on equity-settled share-based payments 309338 109573
Increase in deferred tax assets (634410) (245603)
(Decrease)/Increase in deferred tax liabilities (131290) 260759
Amortisation of deferred income (45935) (37415)
Increase in inventories (491314) (397187)
(Increase)/Decrease in operating receivables (262500) 8816879
Increase/(Decrease) in operating payables 873212 (1092768)
Net cash flows from operating activities 26569819 32702947
218Chapter 10Financial Statements
(b) Cash and cash equivalents
31 December 2023 31 December 2022
Cash on hand 14391 18437
Cash at bank that can be readily drawn on demand 40329175 40008101
Other cash balances that can be readily drawn on demand 6126 138535
Other balances that can be readily drawn on demand 98616 114874
4044830840279947
(c) Significant operating investment and financing activities that do not involve cash receipts
and payments
20232022
Right-of-use assets increased in the current period 6553794 6126609
Long-term asset purchases paid for by bank supply chain
543389992178
financial products/refactoring
70971837118787
(d) Changes in liabilities from financing activities
Debentures
payable and
Bank
Ultra short- Lease liabilities
borrowings Bank supply
term commercial (including
(including chain financial
notes (including current portion Other Total
current portion products/re-
current portion of lease
of bank factoring
of ultra short- liabilities)
borrowings)
term commercial
notes)
31 December 2022 20910560 27651090 15179328 992178 314480 65047636
Net cash inflows/(outflows)
10227269(9447697)(7765246)(1025110)(889262)(8900046)
from financing activities
Accrued interest in the current
10390247323495643743293245452373224
year (Note 4(47))
Changes that do not involve
21375047433558300045433899321837993661
cash receipts and payments
31 December 2023 32390603 19410077 13808460 543389 361946 66514475
219Chapter 10Financial Statements
(58) Monetary items denominated in foreign currency
(a) As at 31 December 2023 and 31 December 2022 the Group’s companies whose recording currency is RMB held financial assets and
liabilities denominated in non-recording currencies held by companies (mainly USD HKD and EUR) excluding financial assets and liabilities
denominated in non-recording currencies held by subsidiaries within the Group of which the equivalent amounts in RMB (presentation
currency of these financial statements) are listed as below:
31 December 2023
Amount in the original
Exchange rate to RMB Equivalent to RMB
currency
Cash at bank and on hand –
USD 35917 7.0827 254389
HKD 49927 0.9062 45245
EUR 786 7.8592 6177
Receivables –
USD 91642 7.0827 649073
HKD 30787 0.9062 27900
EUR 2180 7.8592 17133
Payables –
USD 55209 7.0827 391029
HKD 62571 0.9062 56703
EUR 7216 7.8592 56712
SGD 1075 5.3772 5780
31 December 2022
Amount in the original
Exchange rate to RMB Equivalent to RMB
currency
Cash at bank and on hand –
USD 81868 6.9646 570178
HKD 35511 0.8933 31722
EUR 163 7.4229 1210
Receivables –
USD 272999 6.9646 1901329
HKD 96310 0.8933 86034
EUR 6544 7.4229 48575
Payables –
USD 140907 6.9646 981361
HKD 73704 0.8933 65840
EUR 14303 7.4229 106170
SGD 2009 5.1831 10413
220Chapter 10Financial Statements
(b) As at 31 December 2023 and 31 December 2022 the Group’s overseas subsidiaries except for those operating in Hong Kong SAR held
no significant financial assets or liabilities denominated in non-recording currencies. Those companies operating in Hong Kong with HKD
as recording currency held financial assets and liabilities denominated in non-recording currencies (mainly USD RMB and EUR) excluding
financial assets and liabilities denominated in non-recording currencies held by subsidiaries within the Group of which the equivalent
amounts in HKD (recording currency of companies operating in Hong Kong) and RMB (presentation currency of these financial statements)
are listed as below:
31 December 2023
Amount in the original Exchange rate Equivalent Equivalent
currency to HKD to HKD to RMB
Cash at bank and on hand –
RMB 98862 1.1035 109093 98862
USD 54329 7.8157 424617 384796
EUR 4420 8.6725 38332 34738
Accounts receivable –
RMB 5846 1.1035 6451 5846
USD 13417 7.8157 104863 95029
Accounts payable –
RMB 8046 1.1035 8879 8046
USD 13834 7.8157 108122 97982
EUR 655 8.6725 5680 5148
31 December 2022
Amount in the original Exchange rate Equivalent Equivalent
currency to HKD to HKD to RMB
Cash at bank and on hand –
RMB 59509 1.1195 66620 59509
USD 99358 7.7967 774665 692008
EUR 4734 8.3098 39339 35142
Accounts receivable –
RMB 251686 1.1195 281762 251686
USD 231573 7.7967 1805505 1612858
Accounts payable –
RMB 32985 1.1195 36927 32985
USD 203672 7.7967 1587969 1418533
EUR 1930 8.3098 16038 14327
221Chapter 10Financial Statements
5 Changes in the consolidation scope
(1) Business combinations involving enterprises not under common control
Main business combinations involving enterprises not under common control in 2023:
Basis for
Timing of Acquisition % of interest Method of Acquisition
Acquiree determining the
acquisition cost acquired acquisition date
acquisition date
A third-party logistics Completion of
31 January 2023 132016 51.00% By cash 31 January 2023
company equity delivery
The revenue net profit net cash flows from operating activities total net cash flows of the above company from the acquisition date to the
end of the year are RMB49098000 RMB4818000 RMB1585000 and RMB1585000 respectively.
(2) Disposal of subsidiaries
(a) Aggregated information of subsidiaries disposed in the reporting period:
Difference
between proceeds
from disposal
Basis for
after deducting
Proceeds from Disposal Method of Timing of losing judgement of
Name of subsidiary disposal costs and
disposal proportion disposal control timing of losing
corresponding
control
shares of net assets
in the consolidated
financial statements
Shenzhen Fengwang Information
Sales of Transfer ofTechnology Co. Ltd. (“Fengwang 460930 100.00% 27 June 2023 243378equity control rightInformation Technology”) (i)
Shanghai Fengzan Technology Co. Sales of Transfer of
85188 100.00% 10 May 2023 –
Ltd. (ii) equity control right
546118243378
(i) On 12 May 2023 Shenzhen Fengwang Holdings Co. Ltd. (“Fengwang Holdings”) a subsidiary indirectly held by the Company entered
into an equity transfer agreement with Shenzhen Jitu Supply Chain Co. Ltd. Fengwang Holdings transferred 100% of equity interests in
its subsidiary Fengwang Information Technology and its subsidiaries at RMB1183000000. Since the completion of the transaction the
Group no longer controls Fengwang Information Technology and its subsidiaries and no longer include them into the consolidation scope.In accordance with the equity transfer agreement profit or loss of Fengwang Information Technology and its subsidiaries from the
signing date to the settlement date of equity transfer agreement is borne by Fengwang Holdings. Therefore the adjusted proceeds from
disposal amounted to RMB461000000. The transaction was completed on 27 June 2023 and the Group recognised investment income of
RMB243378000 of which the amount attributable to shareholders of the parent company was RMB155153000.(ii) On 10 May 2023 the Group transferred 100% of equity interest in Shanghai Fengzan Technology Co. Ltd. to Shenzhen Fengxiang
Information Technology Co. Ltd. a company controlled by the ultimate controlling person of the Company with a share of net assets of
RMB85188000 from Shanghai Fengzan Technology Co. Ltd. as the transaction consideration. After the transaction the Group no longer
include Shanghai Fengzan Technology Co. Ltd. into the consolidation scope (Note 8(3)(g)).
222Chapter 10Financial Statements
(3) Other changes in the consolidation scope
(a) In 2023 the Group set up the following major subsidiaries by cash:
Chengdu FI Technology Co. Ltd.Shanghai Fengjietai Enterprise Management Co. Ltd.Wenzhou Jieyutai Enterprise Management Co. Ltd.SF Pharmaceutical Supply Chain (Tianjin) Co. Ltd.Hubei Fengxinling Supply Chain Management Co. Ltd.Ezhou Shunjia Aviation Ground Services Co. Ltd.(b) In 2023 the Group cancelled the following major subsidiaries:
Meizhou Yoududu Fruit Industry Co. Ltd.Shanghai S.F. E-commerce Co. Ltd.Shenzhen SF Customised Logistics Co. Ltd.Hefei Fengyutai Enterprise Management Co. Ltd.Hefei Jiafeng Industrial Park Management Ltd.Beijing S.F. International Network Co. Ltd.Shenzhen S.F. International Network Co. Ltd.Shenzhen Shunjie Yunda Logistics Technology Co. Ltd.Nanchang Jietai Industrial Park Management Co. Ltd.Linyi Fengyikai Industrial Park Management Co. Ltd.Shenzhen Yizhan Select Technology Co. Ltd.Shenzhen Fengchi Shuntong Information Technology Co. Ltd.Huai’an Fengtai E-commerce Industrial Park Co. Ltd.Guofeng IOT Digital Intelligence Supply Chain (Guangdong) Co. Ltd.Guangdong Fengchi Shunxing Technology Co. Ltd.Fengmeng Technology Co. Ltd.S.F. Insurance Broker (Shenzhen) Co. Ltd.Tianjin Shunfeng Import and Export Trading Co. Ltd.Ezhou S.F. Bonded Supply Chain Management Co. Ltd.Shanghai SF Multimodal Transportation Co. Ltd.Shenzhen Qianhai Huidao Asset Management Co. Ltd.
223Chapter 10Financial Statements
6 Interests in other entities
(1) Interests in subsidiaries
(a) First-tier and second-tier subsidiaries of the Group are as follows:
Place of Major business Shareholding (%)
Registered capital Nature of business Method of acquisition
registration location Direct Indirect
Taisen Holdings Shenzhen Shenzhen 5000000 Investment holding 100.00% – Reverse acquisitions
International freight forwarding Business combinations involving
S.F. Express Co. Ltd. Shenzhen Shenzhen 150000 domestic and international – 100.00% enterprises under common
express service etc. control
Technical maintenance and
SF Technology Co. Ltd. Shenzhen Shenzhen 60000 – 100.00% By new establishment
development service
Business combinations involving
Cargo transportation and
Shenzhen Shunlu Logistics Co. Ltd. Shenzhen Shenzhen 160000 – 100.00% enterprises under common
freight forwarding
control
Anhui S.F. Telecommunication Service Co. Value-added telecommunication
Anhui Province Anhui Province 50000 – 100.00% By new establishment
Ltd. service
Business combinations involving
Shenzhen Yuhui Management Consulting
Shenzhen Shenzhen 250000 Consulting service – 100.00% enterprises under common
Co. Ltd.control
Supply chain management and
Shenzhen S.F. Supply Chain Co. Ltd. Shenzhen Shenzhen 1500000 – 100.00% By new establishment
other services
Business combinations involving
Transport service of aviation
SF Airlines Co. Ltd. Shenzhen Shenzhen 1510000 – 100.00% enterprises under common
cargo
control
Business combinations involving
Shenzhen Fengtai E-Commerce Industrial E-Commerce industrial park
Shenzhen Shenzhen 9530000 – 100.00% enterprises under common
Park Asset Management Ltd. asset management
control
Shenzhen Fengtai Industrial Park
Shenzhen Shenzhen 58000 Management consulting – 100.00% By new establishment
Management Service Co. Ltd.Shenzhen S. F. Airport Investment Co. Ltd. Shenzhen Shenzhen 100000 Industrial investment – 100.00% By new establishment
Business combinations involving
SF Holding (Hong Kong) Limited Hong Kong Hong Kong HKD 8346998 Investment holding – 100.00% enterprises under common
control
Financing wealth management
S.F. Holding Group Finance Co. Ltd. Shenzhen Shenzhen 2500000 – 100.00% By new establishment
and consulting services
Shenzhen SF Chuangxing Investment Co.Shenzhen Shenzhen 330000 Industrial investment – 100.00% By new establishment
Ltd.Shenzhen Fengnong Technology Co. Ltd. Shenzhen Shenzhen 145000 Retail – 100.00% By new establishment
224Chapter 10Financial Statements
Place of Major business Shareholding (%)
Registered capital Nature of business Method of acquisition
registration location Direct Indirect
Supply chain management and
Shenzhen Fenglang Supply Chain Co. Ltd. Shenzhen Shenzhen 50000 – 70.00% By new establishment
other services
Shunyuan Financial Leasing (Tianjin) Co.Tianjin Tianjin 1500000 Leasing business – 100.00% By new establishment
Ltd.Goods delivery and other
SF Multimodal Co. Ltd. Shenzhen Shenzhen 242000 – 100.00% By new establishment
services
S.F. Duolian Technology Co. Ltd. Dongguan Dongguan 150000 Technology development – 100.00% By new establishment
Dongguan SF Taisen Enterprise
Dongguan Dongguan 30010 Property management – 100.00% By new establishment
Management Co. Ltd.SF Innovative Technology Co. Ltd. Dongguan Dongguan 450000 Information technology service – 100.00% By new establishment
Business combinations involving
Shenzhen Shunheng Rongfeng Supply
Shenzhen Shenzhen 260000 Consulting service – 100.00% enterprises under common
Chain Technology Co. Ltd.control
Business combinations involving
Shenzhen Hengyi Logistics Service Co. Ltd. Shenzhen Shenzhen 100000 Freight forwarding service – 100.00% enterprises under common
control
Business combinations involving
Shenzhen Lefeng Commercial Co. Ltd. Shenzhen Shenzhen 92500 Factoring – 100.00% enterprises under common
control
Supply chain management and
Hangzhou SF Intra-city Industrial Co. Ltd. Hangzhou Hangzhou 933458 – 56.87% By new establishment
other services
SF Sharing Precision Information
Shenzhen Shenzhen 7000 Information technology service – 100.00% By new establishment
Technology (Shenzhen) Co. Ltd.Hangzhou Shuangjie Supply Chain Co. Supply chain management and
Hangzhou Hangzhou 50000 – 100.00% By new establishment
Ltd. other services
Business and supply chain
Shenzhen S.F. Express Co. Ltd. Shenzhen Shenzhen 1695000 – 87.80% By new establishment
management
Consulting services regarding
Huanggang Xiufeng Education Investment
Huanggang Huanggang 90000 business information and – 100.00% By new establishment
Co. Ltd.business management
Junhe Information Technology (Shenzhen) Information technology and
Shenzhen Shenzhen 10000 – 100.00% By new establishment
Co. Ltd. development services
S.F. Digital Technology (Shenzhen) Services Technology and consulting
Shenzhen Shenzhen 250000 – 100.00% By new establishment
Co. Ltd. services
Shenzhen S.F. International Industry Co. Information technology and
Shenzhen Shenzhen 15000 – 100.00% By new establishment
Ltd. consulting services
Shenzhen S.F. Investment Co. Ltd. Shenzhen Shenzhen 1100000 Investment holding – 100.00% By new establishment
Cargo transportation and
SF Cold Chain Logistics Co. Ltd. Shenzhen Shenzhen 97660 – 100.00% By new establishment
freight forwarding
225Chapter 10Financial Statements
(b) Subsidiaries in which the Group has significant minority interests
The Group determines the subsidiaries with significant minority interests by considering factors such as whether the subsidiaries are listed
companies the proportion of minority interests to the Group’s consolidated shareholders’ equity and the proportion of profit or loss
attributable to minority shareholders to the Group’s consolidated net profit which are set out below:
Proportion of ownership Profit or loss attributable Dividends paid to
Minority interests as at
interest held by minority to minority shareholders minority shareholders
31 December 2023
shareholders in 2023 in 2023
Kerry Logistics and its subsidiaries 48.48% 17466 (581149) 10347858
Proportion of ownership Profit or loss attributable Dividends paid to
Minority interests as at
interest held by minority to minority shareholders minority shareholders
31 December 2022
shareholders in 2022 in 2022
Kerry Logistics and its subsidiaries 48.48% 1476236 (1524826) 11587420
The significant financial information of the significant non-fully-owned subsidiaries of the Group is listed below:
31 December 2023 31 December 2022
Current assets 18187621 21821593
Non-current assets 25760002 25615187
Total assets 43947623 47436780
Current liabilities 13130867 14196749
Non-current liabilities 9017591 10240832
Total liabilities 22148458 24437581
20232022
Revenue 45944780 74261942
Net profit (i) 227315 2838971
Total comprehensive income (i) 361076 3040177
Cash flows from operating activities 3043080 4918473
The above financial figures take into account the fair value of identifiable assets and liabilities at the point of acquisition of Kerry Logistics’
equity and the adjustment effect of uniform accounting policies.(i) In 2023 for Kerry Logistics and its subsidiaries the net profit attributable to shareholders of the Company was RMB209849000 (2022:
RMB1362735000) and the total comprehensive income attributable to shareholders of the Company was RMB390618000 (2022:
RMB2182133000).(ii) In 2023 and 2022 minority interests of the Group’s subsidiaries except Kerry Logistics had no significant influence on the Group.
(2) Interests in joint ventures and associates
The Group determines significant joint ventures and associates by considering factors such as whether the joint ventures and associates are
listed companies the proportion of their carrying amounts to the Group’s consolidated total assets and the proportion of income from
long-term equity investments accounted for under the equity method to the Group’s consolidated net profit.In 2023 and 2022 the Group’s joint ventures and associates had no significant influence on the Group. As at 31 December 2023 and 31
December 2022 the Group’s main long-term equity investments are detailed in Note 4(10).
226Chapter 10Financial Statements
7 Segment information
The reportable segments of the Group are the business units that provide different logistics and freight forwarding services. Different
businesses require different technologies and marketing strategies and the Group therefore independently manages their operations and
evaluates operating results in order to make decisions about resources allocations and performance evaluations.In 2023 the Group mainly had three reportable segments including:
– Express and freight delivery segment which provides time-define express economy express cold chain and pharmaceuticals logistics
service as well as freight service;
– Intra-city on-demand delivery segment which provides intra-city delivery for merchants and consumers and last-mile delivery services;
– Supply chain and international segment which provides supply chain services international express service and international freight
forwarding service.Due to the promotion of business integration and corresponding adjustments to the internal organizational structure the Group has
adjusted the composition of its operating divisions in conjunction with business changes and merged the two business segments previously
known as the Express segment and Freight segment into the Express and freight segment. Segment information has been restated for the
12 months ended 31 December 2022.
Inter-segment transfer prices are determined by reference to pricing policy of related party transactions.(a) Segment information as at and for the year ended 31 December 2023 was as
follows:
Express and Supply chain and Intra-city on-
Undistributed Inter-segment
freight delivery international demand delivery Total
units elimination
segment segment segment
Revenue from external customers 186890137 62859302 7371250 1288714 – 258409403
Inter-segment revenue 12231353 733174 5029453 4430069 (22424049) –
Cost of revenue 171293133 58378382 11604539 4133082 (20135303) 225273833
Profit/(Loss) before income tax 10602204 (328849) 48327 143788 21035 10486505
Income tax expenses/(credits) 2149342 205652 (2268) 229825 (7655) 2574896
Net profit/(loss) 8452862 (534501) 50595 (86037) 28690 7911609
Total assets 103171690 64308117 4038844 186550844 (136578840) 221490655
Total liabilities 72928079 53658452 1218597 84432442 (94030575) 118206995
Depreciation of right-of-use assets 5891828 1707837 27188 67026 (672411) 7021468
Depreciation and amortisation expenses 7741137 1651130 52445 874960 (22033) 10297639
(Reversal of)/Losses on credit impairment (111661) 82879 3668 67481 (75999) (33632)
In 2023 there is no situation in the Group where revenue from a single customer exceeded 10% or more of the total revenue.
227Chapter 10Financial Statements
(b) Segment information as at and for the year ended 31 December 2022 was as
follows:
Express and Supply chain and Intra-city on-
Undistributed Inter-segment
freight delivery international demand delivery Total
units elimination
segment segment segment
Revenue from external customers 169764860 89916599 6567057 1241898 – 267490414
Inter-segment revenue 7074141 700298 3698616 12070206 (23543261) –
Cost of revenue 151930210 82148435 9851834 11623492 (21481611) 234072360
Profit/(Loss) before income tax 8364007 2938917 (288847) (47669) 370 10966778
Income tax expenses/(credits) 2897283 993055 (1944) 75068 (304) 3963158
Net profit/(loss) 5466724 1945862 (286903) (122737) 674 7003620
Total assets 94676009 66235754 3956639 148072567 (96098262) 216842707
Total liabilities 66504698 53540703 1086136 79713800 (82288679) 118556658
Depreciation of right-of-use assets 5870603 1597267 21799 104578 (419837) 7174410
Depreciation and amortisation expenses 6831767 1551214 78662 688395 (11958) 9138080
Losses on/(Reversal of) credit impairment 327586 384491 1968 107231 (176) 821100
In 2022 there is no situation in the Group where revenue from a single customer exceeded 10% or more of the total revenue.
228Chapter 10Financial Statements
8 Related parties and related party transactions
(1) General information of the controlling shareholder and subsidiaries
The general information and other related information of the subsidiaries are set out in Note 6(1).(a) General information of the controlling shareholder
Place of registration Nature of business
Mingde Holdings Shenzhen Investment
The Company’s ultimate holding company is Mingde Holdings and the ultimate controlling person is Wang Wei.(b) The balances and changes of registered capital of the controlling shareholder
Increase in the Decrease in the
31 December 2022 31 December 2023
current year current year
Mingde Holdings 113406 – – 113406
(c) The percentages of shareholding and voting rights in the Company held by the controlling
shareholder
31 December 2023 31 December 2022
Shareholding (%) Voting rights (%) Shareholding (%) Voting rights (%)
Mingde Holdings 54.38% 54.38% 54.95% 54.95%
(2) Nature of related parties that do not control/are not controlled by the
Company
Major related parties are listed as follows:
Relationship with the Company
Hive Box Technology and its subsidiaries Controlled by the ultimate controlling person of the Company
Guangdong Fengxing Zhitu Technology Co. Ltd Controlled by the ultimate controlling person of the Company
Shenzhen Fengxiang Information Technology Co. Ltd. Controlled by the ultimate controlling person of the Company
Hangzhou Fengtai E-Commerce Industrial Park Management Ltd. Controlled by the ultimate controlling person of the Company
Shenzhen Shunshang Investment Co. Ltd Controlled by the ultimate controlling person of the Company
Shenzhen SF Hefeng Microfinance Co. LTD Controlled by the ultimate controlling person of the Company
Shenzhen Fengyi Technology Limited Associate of controlling shareholder
Yihai Shunfeng (Shanghai) Supply Chain Technology Co. Ltd. The Group’s associate
Shanghai Jiaxing Logistics Co. Ltd. The Group’s associate
SF Real Estate Investment Trust and its subsidiaries The Group’s associate
Shenzhen Shunjie Fengda and its subsidiaries The Group’s associate
Shenzhen Zhongwang Finance and Tax Management Co. Ltd. The Group’s associate
Wuhan Shunluo Supply Chain Management Co. Ltd The Group’s associate
KENGIC Intelligent Technology Co. Ltd. and its subsidiaries The Group’s associate
Zhejiang Galaxis Technology Group Co. Ltd. The Group’s associate
229Chapter 10Financial Statements
Relationship with the Company
Giao Hang Tiet Kiem Joint Stock Company The Group’s associate
Shanghai Tingdi Logistics Service Co. Ltd. The Group’s associate
Shenzhen Fenglian Technology Co. Ltd. The Group’s associate
Changed from a subsidiary of the Group to an associate since
Sichuan Wu Lian Yi Da Technology Co. Ltd. and its subsidiaries
August 2023
Changed from an associate of the Group to a subsidiary since
DHL Weiheng (Zhuhai) Supply Chain Management Co. Ltd.Note 1
December 2023
CC SF China Logistics Properties Investment Fund L.P. The Group’s joint venture
CR-SF International Express Co. Ltd. The Group’s joint venture
Beijing Wulian Shuntong Technology Co. Ltd. and its subsidiaries The Group’s joint venture
ZBHA and its subsidiaries The Group’s joint venture
Hubei International Logistics Airport Co. Ltd. The Group’s joint venture
Shenzhen Shenghai Information Service Co. LTD The Group’s joint venture
Organisation sponsored by controlling shareholders and the
SF Foundation Company’s subsidiaries in which senior managers of the company
serve on the Board of Management
Golden Arches (China) Co. Ltd. and its subsidiaries Significantly influenced by the key management of the Company
Note 1: It changed from an associate of the Group to a subsidiary of the Group at 31 December 2023 and the related party transactions disclosed in
the financial statements refer to the transaction volumes before the company became a subsidiary.
(3) Related party transactions
(a) Pricing policies
The pricing method of transactions and transaction price between the Group and related parties are determined following arm’s length
principle by making reference to the market price or through negotiation between both parties.
(3) Related party transactions (Cont’d)
(b) Rendering of services/Sales of goods
Nature of the
20232022
transaction
Entities significantly influenced by the key management of the
Rendering of services 1973589 1722355
Company
Entities controlled by the Company’s ultimate controlling person Rendering of services 126772 131867
Associates of the Group Rendering of services 86245 57456
Associates of controlling shareholder Rendering of services 14756 18133
Joint ventures of the Group Rendering of services 13937 15816
Controlling shareholder Rendering of services 426 346
22157251945973
Associates of the Group Sales of goods 5331 9866
Entities controlled by the Company’s ultimate controlling person Sales of goods 744 11459
Associates of controlling shareholder Sales of goods 3 30
607821355
230Chapter 10Financial Statements
(c) Receipt of services/Purchase of goods
Nature of the
20232022
transaction
Joint ventures of the Group Receipt of services 1270700 1079015
Associates of the Group Receipt of services 1231259 719712
Entities controlled by the Company’s ultimate controlling
Receipt of services 673306 590399
person
Associates of controlling shareholder Receipt of services 76 –
Entities significantly influenced by the key management of the
Receipt of services 36 103
Company
31753772389229
Associates of the Group Purchase of goods 430482 426152
Entities controlled by the Company’s ultimate controlling
Purchase of goods 299276 256301
person
Joint ventures of the Group Purchase of goods 8781 250
Associates of controlling shareholder Purchase of goods 763 1168
739302683871
(d) Interest income/Interest expenses
Nature of the
20232022
transaction
Associates of the Group Interest income 2348 743
Joint ventures of the Group Interest income 1216 –
3564743
Associates of the Group Interest expenses 169 361
(e) Leases
(i) Lease income recognised in the current year with the Group as the lessor
Type of the
20232022
leased asset
Associates of controlling shareholder Buildings 2861 2530
Entities controlled by the Company’s ultimate
Buildings 2416 1071
controlling person
Associates of the Group Buildings 2352 2796
Controlling shareholder Buildings 683 –
Joint ventures of the Group Buildings 641 686
89537083
231Chapter 10Financial Statements
(ii) Additions of right-of-use assets in the current year with the Group as the lessee
Type of the
20232022
leased asset
Entities controlled by the Company’s ultimate
Buildings 53598 43082
controlling person
Associates of the Group Buildings 32734 103867
Joint ventures of the Group Buildings 3876 –
90208146949
(iii) Depreciation and interest expenses borne in the current year by the Group as the lessee
Type of the
20232022
leased asset
Associates of the Group Buildings 229975 225826
Joint ventures of the Group Buildings 31672 –
Entities controlled by the Company’s ultimate
Buildings 12148 12333
controlling person
273795238159
(f) Guarantees provided
Whether the
Guarantee start Guarantee expiry
Guaranteed party Guaranteed amount guarantee has been
date date
fulfilled
Joint ventures of the Group 782000 29 September 2021 29 April 2055 No
(g) Sales of equity
20232022
Entities controlled by the Company’s ultimate controlling person 85188 –
Joint ventures of the Group 12827 –
Associates of the Group – 232939
98015232939
(h) Purchase of equity
20232022
Joint ventures of the Group 335443 –
232Chapter 10Financial Statements
(i) Donation expenses
20232022
Entities significantly influenced by the key management of the Company 10002 2028
(j) Key management compensation
20232022
Remuneration of key management 48509 29214
(4) Receivables from and payables to related parties
(a) Accounts receivable
31 December 2023 31 December 2022
Associates of the Group 83745 24184
Entities controlled by the Company’s ultimate controlling person 30739 27951
Joint ventures of the Group 6404 1677
Associates of controlling shareholder 3266 6527
Entities significantly influenced by the key management of the Company 358 176682
Controlling shareholder 57 7
124569237028
(b) Advances to suppliers
31 December 2023 31 December 2022
Associates of the Group 5996 12404
Joint ventures of the Group 3409 641
Entities controlled by the Company’s ultimate controlling person 2309 10913
Associates of controlling shareholder 1 3
Entities significantly influenced by the key management of the Company – 2039
1171526000
(c) Loans and advances
31 December 2023 31 December 2022
Joint ventures of the Group 329933 –
Associates of the Group 49 32920
32998232920
233Chapter 10Financial Statements
(d) Other receivables
31 December 2023 31 December 2022
Entities controlled by the Company’s ultimate controlling person 561712 406426
Associates of the Group 69647 53756
Joint ventures of the Group 1468 8747
Associates of controlling shareholder 379 645
Controlling shareholder 167 –
Entities significantly influenced by the key management of the Company – 51920
633373521494
(e) Other non-current assets – Advances for engineering and equipment
31 December 2023 31 December 2022
Associates of the Group 683 1497
Entities controlled by the Company’s ultimate controlling person 250 488
Entities significantly influenced by the key management of the Company – 120
9332105
(f) Long-term receivables (including current portion of long-term receivables)
31 December 2023 31 December 2022
Associates of the Group 57993 68429
Associates of controlling shareholder 72 260
Entities controlled by the Company’s ultimate controlling person 17 –
5808268689
(g) Deposits from customers
31 December 2023 31 December 2022
Associates of the Group 1509 20587
(h) Accounts payable
31 December 2023 31 December 2022
Associates of the Group 164244 184386
Entities controlled by the Company’s ultimate controlling person 135957 164570
Joint ventures of the Group 120900 155916
Associates of controlling shareholder 93 349
Entities significantly influenced by the key management of the Company – 20
421194505241
234Chapter 10Financial Statements
(i) Contract liabilities
31 December 2023 31 December 2022
Joint ventures of the Group 43146 74
Associates of the Group 3621 397
Associates of controlling shareholder 1210 4111
Entities controlled by the Company’s ultimate controlling person 170 250
Entities significantly influenced by the key management of the Company 8 2178
481557010
(j) Other payables
31 December 2023 31 December 2022
Associates of the Group 125672 194620
Associates of controlling shareholder 3608 2829
Entities controlled by the Company’s ultimate controlling person 2788 1039
Joint ventures of the Group 2393 978
Controlling shareholder 128 17
Entities significantly influenced by the key management of the Company – 20839
134589220322
(k) Lease liabilities (including current portion of lease liabilities)
31 December 2023 31 December 2022
Associates of the Group 598296 784767
Joint ventures of the Group 98987 –
Entities controlled by the Company’s ultimate controlling person 92060 45379
789343830146
(5) Commitments in relation to related parties
(a) As at 31 December 2023 and 31 December 2022 the Group had no significant lease-out commitments in relation to related parties
(b) Providing guarantee
31 December 2023 31 December 2022
Joint ventures of the Group 2384180 2384180
The above-mentioned guaranteed related party commitments are committed but without guarantees provided to related parties.
235Chapter 10Financial Statements
9 Share-based payments
(1) Overview of share-based payments
Expenses recognised for the year arising from share-based payments were as follows:
20232022
Equity-settled share-based payments 309338 109573
Cash-settled share-based payments 233708 48111
543046157684
(2) Information on equity-settled share-based payments
(a) Information on share-based payment of the Company
In May 2022 the Company held the 25th meeting of the 5th Board of Directors in 2022 at which proposals such as the Stock Option
Incentive Plan (“2022 Stock Option Incentive Plan”) were approved. The Company granted no more than 60000000 share options to
eligible incentive recipients and the exercise price of the share option is RMB42.61. If the Company meets the predetermined performance
conditions and the incentive recipients meet the performance evaluation indicators the four quarters of the total share options received by
the grantee will come into effect from 30 May 2022 after 12 months 24 months 36 months and 48 months respectively.In October 2022 the Company held the 29th meeting of the 5th Board of Directors at which the Motion on Adjusting the Exercise Price of
Stock Option Incentive Plan was approved. The exercise price was adjusted from RMB42.61 per share to RMB42.431 per share.On 1 August 2023 the Company held the 6th meeting of the 6th Board of Directors at which the Motion on Adjusting the Exercise Price of
Stock Option Incentive Plan was approved. The exercise price was adjusted from RMB42.431 per share to RMB42.183 per share.As at 31 December 2023 the Company has 34404000 stock options outstanding (2022: 49500000).On 1 August 2023 the Company held the 6th session of the sixth Board of Directors and the 4th session of the sixth Board of Supervisors
respectively at which it approved the Proposal on the Fulfilment of Conditions for Exercising Stock Options for the First Exercise Period of
Stock Options Granted for the First Time Under the 2022 Stock Option Incentive Plan. The number of exercisable stock options during the
first exercise period granted for the first time to incentive recipients who pass the performance evaluation was 8420193.As at 31 December 2023 the equity-settled share-based payments recognised by the Company accumulated to RMB460789000 (31
December 2022: RMB244485000) including accumulated amounts attributable to shareholders of the parent company of RMB459474000
(31 December 2022: RMB243869000). In 2023 the amount of expenses recognised by the Company for the equity-settled share-based
payments was RMB216304000 (2022: RMB220852000).
236Chapter 10Financial Statements
(b) Information on share-based payments of the Company’s subsidiaries
The Group granted some equities or share options of several subsidiaries to the senior management and other employees of the aforesaid
companies or other subsidiaries within the Group respectively.As at 31 December 2023 the equity-settled share-based payments of these companies recognised by the Group accumulated to
RMB601069000 (31 December 2022: RMB508035000) including accumulated amounts attributable to shareholders of the parent
company of RMB487225000 (31 December 2022: RMB431320000). In 2023 the amount of expenses recognised by the Group for the
equity-settled share-based payments was RMB93034000 (2022: RMB111279000 was offset against expenses). The fair value at the grant
date was recognised based on the discounted cash flow model and the binomial tree model.
(3) Information on cash-settled share-based payments
Certain subsidiaries of the Group use their shares or the Company’s shares as the calculation basis to grant cash-settled share-based
payments to eligible employees of those subsidiaries.As at 31 December 2023 liabilities arising from the cash-settled share-based payments accumulated to RMB268453000 (31 December
2022: RMB334757000). In 2023 the Group’s expenses recognised for cash-settled share-based payments amounted to RMB233708000
(2022: RMB48111000). The fair value at the balance sheet date was recognised based on the discounted cash flow model and the binomial
tree model.
10 Commitments
Capital commitments
Capital expenditures contracted for by the Group but are not yet necessary to be recognised on the balance sheet as at the balance sheet
date are as follows:
31 December 2023 31 December 2022
Buildings machinery and equipment 1858672 3571632
Investment contracts that have been signed but not fulfilled or
1318951811611
not absolutely fulfilled
Others 944 –
19915115383243
11 Contingency
As stated in Note 8(3)(f) subsidiaries of the Group provide loan guarantees to related parties. As at 31 December 2023 the total guarantees
were RMB782000000 (31 December 2022: RMB895374000).
237Chapter 10Financial Statements
12 Subsequent events
(1) Profit distribution after the balance sheet date
On 26 March 2024 the Board of Directors of the Company agreed that the Company would pay a cash dividend of RMB6.00 (including
tax) for every 10 shares to all shareholders based on the total share capital on the record date of the future implementation of the 2023
annual profit distribution plan minus the number of shares repurchased by the Company on that day. The remaining undistributed profits
are carried forward to subsequent years for distributions. This time the conversion of provident fund into share capital and the issuance of
bonus shares will not be given. The proposal is subject to approval by the General Meeting of Shareholders. Cash dividends proposed after
the balance sheet date are not recognized as liabilities at the balance sheet date.
(2) Tender offers after the balance sheet date
On 29 December 2023 Kerry Logistics announced that it will declare a special interim dividend to its eligible shareholders after meeting
certain conditions. 907200000 shares of Kerry Express (Thailand) Public Company Limited (hereinafter referred to as “KEX”) indirectly held
by Kerry Logistics (accounting for approximately 52.1% of all KEX shares issued) will be distributed in kind.As the aforesaid KEX shares to be distributed are held by KLN Logistics (Thailand) Limited (“Kerry Thailand”) a subsidiary of Kerry Logistics
Kerry Logistics and Kerry Thailand need to enter into a share sale and purchase agreement concerning the acquisition of the KEX shares to
entitle Kerry Logistics to direct the transfer of the KEX shares to the shareholders of Kerry Logistics for distribution. Notwithstanding that
Kerry Logistics is not a recipient or transferee of any of the distribution of KEX shares in kind Kerry Logistics is deemed to have acquired
the KEX shares in kind by entering into a Sale and Purchase Agreement thereby triggering the mandatory tender offer for KEX under the
Thailand Code (unless waived). Under the Thailand Code the aforesaid share distribution is subject to Kerry Logistics’ obtaining a waiver
from the Stock Exchange of Thailand (“SET”) in respect of the tender offer obligations arising from the distribution.The Company indirectly holds 51.5% of the shares of Kerry Logistics through its wholly owned subsidiary Flourish Harmony Holdings
Company Limited. If the aforesaid distribution is completed the Group will receive a total of 467373855 shares in KEX representing
approximately 26.8% of all KEX Shares issued triggering the mandatory tender offer for KEX under the Thailand Code. On 5 February 2024
Kerry Logistics announced that it has obtained a waiver from the SET in respect of the tender offer liability arising from the distribution.Therefore the conditions for the payment of the special interim dividend by way of distribution of shares in kind have been fulfilled and the
distribution has become unconditional. The Group has made a tender offer to KEX shareholders at a price of THB 5.5 per share to acquire
the KEX shares held by them.As at March 26 2024 the special interim dividend distribution and tender offer in respect of the above transactions were completed and
the Group acquired a total of 1091818327 shares in KEX representing 62.7% of KEX’s issued shares.
(3) Share repurchase after the balance sheet date
On 30 January 2024 the Group held the 11th meeting of the 6th Board of Directors and passed the Proposal on the Company’s Share
Repurchase Plan through Centralized Bidding. The total amount of funds for this repurchase shall not be less than RMB500 million and
shall not exceed RMB1 billion and the repurchase period shall be within 6 months from the date of approval of the repurchase plan by the
Group’s Board of Directors.On 31 January 2024 the Group repurchased approximately 3747000 shares of the Group through a centralized bidding method through a
dedicated securities account for share repurchases with a total repurchase amount of approximately RMB131570000 (excluding transaction
costs). On 29 February 2024 the Group repurchased approximately 3385000 shares of the Group through a centralized bidding method
through a dedicated securities account for share repurchases with a total repurchase amount of approximately RMB116280000 (excluding
transaction costs). The above-mentioned repurchase meets the requirements of relevant laws and regulations and the established repurchase
plan.
238Chapter 10Financial Statements
13 Operating lease proceeds after the balance sheet date
As the lessor the Group’s undiscounted lease proceeds receivable after the balance sheet date are as follows:
31 December 2023 31 December 2022
Within 1 year (including 1 year) 371269 228038
1 to 2 years (including 2 years) 240171 185848
2 to 3 years (including 3 years) 146234 134539
3 to 4 years (including 4 years) 90435 179036
4 to 5 years (including 5 years) 56615 60581
Over 5 years 206636 246444
11113601034486
14 Business combinations
Refer to Note 5(1).
239Chapter 10Financial Statements
15 Financial instruments and relevant risks
The Group’s activities expose it to a variety of financial risks: market risk (primarily including foreign exchange risk interest rate risk and
other price risk) credit risk and liquidity risk. The above financial risks and the Group’s risk management policies to mitigate the risks are as
follows:
The Board of Directors is responsible for planning and establishing the Group’s risk management framework formulating the Group’s risk
management policies and related guidelines and supervising the implementation of risk management measures. The Group has established
risk management policies to identify and analyse the risks faced by the Group. These risk management policies specify the risks such as
market risk credit risk and liquidity risk management. The Group regularly evaluates the market environment and changes in the Group’s
operating activities to determine whether to update the risk management policies and systems or not. The Group’s risk management is
carried out by the Risk Management Committee under policies approved by the Board of Directors. The Risk Management Committee
encourages the departments of the Group to work closely together to identify evaluate and avoid relevant risks. The internal audit
department of the Group conducts periodical audit to the controls and procedures for risk management and reports the audit results to the
Audit Committee of the Group.
(1) Market risk
(a) Foreign exchange risk
The Group’s major operational activities are carried out in mainland China and most of the transactions are denominated in RMB. Some
operational activities are carried out in regions/countries including Hong Kong SAR USA Korea and Europe and relevant transactions
are settled in HKD USD KRW and EUR. Therefore the Group is exposed to foreign exchange risk arising from the recognised financial
assets and liabilities denominated in non-recording currencies and future transactions denominated in foreign currencies. Management is
responsible for monitoring the amount of financial assets and liabilities and transactions denominated in non-recording currencies to reduce
foreign exchange risk to the greatest extent.(i) Foreign exchange risk of companies with RMB as recording currency
As at 31 December 2023 and 31 December 2022 the foreign exchange exposure of financial assets and liabilities denominated in non-
recording currencies held by the Group’s companies whose recording currency is RMB was stated in Note 4(58)(a) mainly from USD HKD
and EUR.As at 31 December 2023 for the above financial assets and financial liabilities denominated in USD if the RMB appreciates or depreciates by
5% against the USD while all other variables had been held constant the Group will reduce or increase its pre-tax profit by approximately
RMB25622000 (31 December 2022: RMB74507000).Changes in other foreign currencies have no significant impact on foreign exchange risk.(ii) Foreign exchange risk of companies with HKD as recording currency
As at 31 December 2023 and 31 December 2022 the foreign exchange exposure of financial assets and liabilities denominated in non-
recording currencies held by companies located in Hong Kong SAR with HKD being their recording currency was mainly derived from the
USD (Note 4(58)(b)). Because the HKD and the USD are linked exchange rates the foreign exchange risks faced by the above-mentioned
companies using HKD as their recording currency are not significant.(iii) As at 31 December 2023 and 31 December 2022 the Group’s overseas subsidiaries except for those operating in Hong Kong SAR held
no significant financial assets or liabilities denominated in non-recording currencies.(iv) In view of the different functional currencies of subsidiaries within the Group there is still foreign exchange risk arising even if
transactions and balances within the Group are offset. As at 31 December 2023 and 31 December 2022 such foreign exchange risks were
not material.
240Chapter 10Financial Statements
(b) Interest rate risk
The Group’s interest rate risk arises from long-term interest bearing debts including long-term bank borrowings and debentures payable.Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose
the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts
depending on the prevailing market conditions. As at 31 December 2023 the Group’s long-term interest bearing debts were mainly related
to floating rate long-term borrowings and fixed rate debentures payable. Among them floating rate long-term borrowings amounted
to RMB11355241000 (31 December 2022: RMB7472010000); the contract amount of fixed rate debentures payable denominated
in RMB was RMB500000000 (31 December 2022: RMB1000000000) and the contract amount of fixed rate debentures payable
denominated in USD was USD2600000000 equivalent to RMB18415020000 (31 December 2022: USD2600000000 equivalent to
RMB18107960000).The Group continuously monitors the interest rate position of the Group. Increases in interest rates will increase the cost of new interest
bearing borrowings and the interest expenses with respect to the Group’s outstanding floating rate borrowings and therefore could have
a material adverse effect on the Group’s financial performance. Management makes adjustments timely with reference to the latest market
conditions and may enter into interest rate swap agreements to mitigate its exposure to interest rate risk.As at 31 December 2023 if interest rates on borrowings had increased/decreased by 50 basis points while all other variables had been
held constant the Group’s profit before tax would have decreased/increased by approximately RMB56776000 (31 December 2022:
RMB37360000).(c) Other price risk
The Group’s other price risk mainly arises from movements in price of various investments in equity instruments measured at fair value that
will not be sold within 1 year.As at 31 December 2023 if the price of various investments in equity instruments had risen/fallen by 10% while all other variables had been
held constant the Group’s profit before tax and other comprehensive income before tax would have been approximately RMB59000000
(31 December 2022: approximately RMB101221000) and RMB948954000 (31 December 2022: approximately RMB736568000) higher/
lower respectively.
(2) Credit risk
The Group’s credit risk mainly arises from cash at bank and on hand notes receivable accounts receivable receivables financing loans and
advances other receivables contract assets current portion of non-current assets long-term receivables investments in debt instruments
measured at fair value through profit or loss that are not included in the assessment of impairment etc. At the balance sheet date the
Group’s maximum exposure to credit risk represents the carrying amount of the Group’s financial assets except that the maximum exposure
to credit risk of long-term receivables represents the aggregate of its undiscounted contractual cash flows.The Group expects that there is no significant credit risk associated with cash at bank and on hand since they are mainly deposits at state-
owned banks and other medium or large size listed banks with good reputation and a higher credit rating. The Group does not expect that
there will be any significant losses from non-performance by these counterparties.The Group’s notes receivable accounts receivable receivables financing other receivables contract assets current portion of non-current
assets and long-term receivables include receivables from related parties and receivables from non-related parties. In respect of receivables
from related parties the Group considers that they have low credit risk; in respect of receivables from non-related parties the Group
will develop relevant policies to control the exposure to credit risk. The Group evaluates customers’ credit quality based on their financial
position possibility of obtaining guarantees from third parties credit history and such other factors as current market conditions and
determines the credit term based on the evaluation results. The credit term of accounts receivable ranges from 30 days to 90 days. The
Group monitors customers’ credit history on a regular basis. In respect of customers with a poor credit history the Group will use payment
reminders or shorten or cancel credit terms to ensure the overall credit risk of the Group is limited to a controllable extent.
241Chapter 10Financial Statements
The Group’s notes receivable accounts receivable receivables financing and contract assets mainly arise from rendering of logistics and
freight forwarding services and other related services or sales of goods while other receivables current portion of non-current assets
and long-term receivables represent advances goods payments collected on behalf of other parties deposits and guarantees loans to
employees and finance lease receivables arising from rendering of logistics and freight forwarding services. Management maintains ongoing
evaluation on debtors’ financial position but generally does not require debtors’ mortgage for outstanding debts. The Group monitors and
reviews expected credit losses on outstanding amounts on a regular basis and takes into account important macroeconomic assumptions
and parameters in the calculation of expected credit losses including the risk of economic downturn external market conditions changes
in customer conditions gross domestic product and the consumer price index. Management makes the provision for bad debts based on
the evaluation results thereof. Where it is impossible for the Group to reasonably estimate the recoverable amount the relevant outstanding
amount shall be written off accordingly. Indicators for impossibility to reasonably estimate the recoverable amount include debtors’ failure
to make contract payments as planned or make overdue contract payments significant financial difficulties bankruptcy liquidation etc.For loans and advances the Group developed credit policies and operational implementation rules in accordance with the requirements of
relevant state regulatory authorities and implemented standardised management over the entire process of credit granting. In addition the
Group further improved the systems for credit risk monitoring and early warning and defective credit extension management. The Group
actively responded to the changes in the credit environment regularly analysed the situation and dynamic of credit risks and took risk
control measures on a forward-looking basis. The Group also established an optimisation management mechanism for defective credit and
accelerated the optimisation progress of defective credit to avoid non-performing loans.In addition financial guarantee obligations may involve risks due to the failure of counterparties. The Group has strict application and
approval requirements for financial guarantee obligations considering information including internal and external credit ratings and
continuously monitors credit risk exposures changes in the credit ratings of the counterparties and other relevant information to ensure
that the overall credit risk is within a controllable extent.As at 31 December 2023 the Group had no significant collateral or other credit enhancements held as a result of the debtor’s mortgage (31
December 2022: Nil).
242Chapter 10Financial Statements
(3) Liquidity risk
(a) Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group. The Group monitors rolling forecasts
of the Group’s short-term and long-term liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to
cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial
institutions so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and
long-term liquidity requirements.The financial liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual
cash flows:
31 December 2023
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Deposits from customers 1731 – – – 1731
Accounts payable 24846135 – – – 24846135
Other payables 11494841 – – – 11494841
Short-term borrowings 18396510 – – – 18396510
Other current liabilities – – – – –
Current portion of non-current
9660951–––9660951
liabilities
Long-term borrowings 206068 3120571 8171144 1218218 12716001
Debentures payable 562511 1058727 8739130 10754753 21115121
Long-term payables – 247452 – – 247452
Lease liabilities – 4569459 2529679 1784760 8883898
6516874789962091943995313757731107362640
31 December 2022
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Deposits from customers 20670 – – – 20670
Accounts payable 24715352 – – – 24715352
Other payables 13346595 – – – 13346595
Short-term borrowings 12963318 – – – 12963318
Other current liabilities 5118489 – – – 5118489
Current portion of non-current
11448352–––11448352
liabilities
Long-term borrowings 161001 3101351 4660180 85488 8008020
Debentures payable 581461 1068586 7373540 13179071 22202658
Long-term payables – 210501 – – 210501
Lease liabilities – 4179191 3797852 1976864 9953907
6835523885596291583157215241423107987862
243Chapter 10Financial Statements
(b) Cash flows derived from leases not yet commenced to which the Group was committed were analysed by maturity at the balance sheet
date (Note 4(33)):
31 December 2023 31 December 2022
Within 1 year (inclusive) 1344393 986197
1 to 2 years (inclusive) 458299 259841
2 to 3 years (inclusive) 560409 200248
Over 3 years 2834483 192415
51975841638701
16 Fair value estimates
The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level input that
is significant to the entire fair value measurement:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly.Level 3: Unobservable inputs for the asset or liability.
(1) Financial assets and liabilities measured at fair value on a recurring basis
As at 31 December 2023 the financial assets measured at fair value on a recurring basis by the above three levels were analysed below:
Level 1 Level 2 Level 3 Total
Financial assets held for trading:
Structural deposits – – 6542881 6542881
Fund investments and others 78 354 266429 266861
Receivables financing:
Notes receivable – 99978 – 99978
Other non-current financial assets:
Industry fund investments – – 499320 499320
Others – – 90676 90676
Investments in other equity
instruments:
Equity instruments available for sale 2418842 – 7070693 9489535
Total financial assets 2418920 100332 14469999 16989251
244Chapter 10Financial Statements
As at 31 December 2022 the financial assets measured at fair value on a recurring basis by the above three levels were analysed below:
Level 1 Level 2 Level 3 Total
Financial assets held for trading:
Structural deposits – – 7351158 7351158
Fund investments 77 34144 – 34221
Receivables financing:
Notes receivable – 63310 – 63310
Other non-current financial assets:
Industry fund investments – – 770637 770637
Special Scheme equity-class securities – – 116286 116286
Others – – 125286 125286
Investments in other equity
instruments:
Equity instruments available for sale 158936 127564 7079184 7365684
Total financial assets 159013 225018 15442551 15826582
As at 31 December 2023 the financial liabilities measured at fair value on a recurring basis by the above three levels were analysed below:
Level 1 Level 2 Level 3 Total
Derivative financial liabilities:
Others – 92120 – 92120
As at 31 December 2022 the financial liabilities measured at fair value on a recurring basis by the above three levels were analysed below:
Level 1 Level 2 Level 3 Total
Derivative financial liabilities:
Others – 96647 – 96647
The Group takes the date on which events causing the transfers between the levels take place as the timing specific for recognising the
transfers. There is transfer between Level 1 and Level 3 for the year.The fair value of financial instruments traded in an active market is determined at the quoted market price; and the fair value of those not
traded in an active market is determined by the Group using valuation technique. The valuation models used mainly comprise discounted
cash flow model and market comparable company model. The inputs of the valuation technique mainly include expected rate and lack of
liquidity discount etc.
245Chapter 10Financial Statements
The changes in Level 3 assets are analysed below:
Financial assets held Other non-current Other non-current Other equity
Financial assets held Other non-current
for trading financial assets financial assets instruments
for trading financial assets
– Fund investments – Special Scheme – Industry fund – Equity instruments
– Structural deposits – Others
and others equity-class securities investments available for sale
31 December 2022 7351158 – 116286 770637 125286 7079184
Additions in the current year 92860000 – – 16589 1384772 54174
Reclassification in the current
–209487–(209487)––
year
Transferred out to the level 1
––––(1466275)(139189)
in the current year
Decrease in the current year (94152173) (531) (116286) (22944) (4297) –
Gains/(losses) recognised in
profit or loss for the current 483896 53572 – (58405) (32494) –
period
Losses recognised in other
–––––(32059)
comprehensive income
Exchange differences on
translation of foreign
–3901–293083684108583
currency financial
statements
31 December 2023 6542881 266429 – 499320 90676 7070693
Other non-current Other non-current Other equity
Financial assets held Other non-current
financial assets financial assets instruments
for trading financial assets
– Special Scheme – Industry fund – Equity instruments
– Structural deposits – Others
equity-class securities investments available for sale
31 December 2021 9730665 235821 552130 90072 6167109
Increase in the current year 151418127 – 220144 32039 345378
Decrease in the current year (154421228) (137660) (24173) – –
Gains recognised in profit or loss for the current period 623594 18125 2705 (87) –
Gains recognised in other comprehensive income – – – – (32291)
Exchange differences on translation of foreign currency
––198313262598988
financial statements
31 December 2022 7351158 116286 770637 125286 7079184
(2) Financial assets and liabilities not measured at fair value but for which their
fair values are disclosed
The Group’s financial assets and liabilities measured at amortised cost mainly include cash at bank and on hand receivables loans and
advances current portion of non-current assets long-term receivables short-term borrowings payables lease liabilities long-term
borrowings debentures payable current portion of non-current liabilities other current liabilities and long-term payables.The carrying amount of financial assets and liabilities not measured at fair value is a reasonable approximation of their fair value. The
fair value of financial assets and liabilities over one year is the present value of the contractually determined stream of future cash flows
discounted at the rate of interest applied at that time by the market to instruments of comparable credit status and providing substantially
the same cash flows on the same terms and categorised within Level 3 of the fair value hierarchy.
246Chapter 10Financial Statements
17 Capital management
The Group’s capital management policies aim to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.In order to maintain or adjust the capital structure the Group may adjust the amount of dividends paid to shareholders refund capital to
shareholders issue new shares or sell assets to reduce debts.The Group’s total capital is calculated as “shareholders’ equity” as shown in the consolidated balance sheet. The Group is not subject to
external mandatory capital requirements.As at 31 December 2023 and 31 December 2022 the Group’s debt-to-asset ratio was as follows:
31 December 2023 31 December 2022
Debt-to-asset ratio 53.37% 54.67%
18 Notes to the Company’s financial statements
(1) Cash at bank and on hand
31 December 2023 31 December 2022
Cash at bank 138046 812181
(2) Financial assets held for trading
31 December 2023 31 December 2022
Structural deposits – 2335319
(3) Other receivables
31 December 2023 31 December 2022
Funds granted to subsidiaries 16316446 14689829
Dividends receivable from Taisen Holdings 5500000 500000
Others 1673 1643
2181811915191472
Less: Provision for bad debts (8) (8)
2181811115191464
The Company does not have deposits at other parties under a centralised management arrangement that are presented as other receivables.
247Chapter 10Financial Statements
The ageing of other receivables is analysed as follows:
31 December 2023 31 December 2022
Within 1 year (inclusive) 11219836 2753246
1 to 2 years (inclusive) 2251616 10764477
Over 2 years 8346667 1673749
2181811915191472
(4) Long-term equity investments
31 December 2023 31 December 2022
Subsidiaries (a) 66933038 58217914
Less: Provision for impairment loss of long-term equity investments – –
6693303858217914
There is no significant restriction on sales of the long-term equity investments held by the Company.(a) Subsidiaries
Movements in
Provision for impairment loss
the current year
Explanation of disparity
Cash dividends
Accounting 31 December Movements in 31 December Shareholding Voting rights between percentages of 31 December 31 December
declared in the
method 2022 the current year 2023 (%) (%) shareholding and voting 2023 2022
current year
rights
Taisen Holdings Cost method 58217914 8715124 66933038 100.00% 100.00% Not applicable – – 14000000
(5) Investment income
20232022
Income from long-term equity investments under the cost method 14000000 500000
Investment income from financial assets held for trading 25548 186398
14025548686398
248Chapter 10Financial Statements
S.F. HOLDING CO. LTD.SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
1 Statement of non-recurring profit or loss for the
year ended 31 December 2023
2023
Investment income from disposal of subsidiaries 268204
Gains on disposal of other non-current assets 46668
Government grants recognised in profit or loss except those that are closely related to normal course of
business in line with national policies entitled in accordance with defined criteria and have sustained 1094790
impact on the Company’s profit or loss
Gains or losses on changes in fair value of financial assets and financial liabilities from non-financial
enterprises and profit or loss arising from disposal of financial assets and financial liabilities except for 45515
those arising from the effective hedging activities related to the Company’s normal course of business
Reversal of impairment provision for receivables individually assessed for impairment 61608
Net amount of other non-operating income and expenses 18213
Sub-total 1534998
Less: Income tax effect (276330)
Less: Non-recurring profit or loss attributable to minority shareholders (157905)
Non-recurring profit or loss attributable to shareholders of the parent company 1100763
Including: Non-recurring profit or loss from continuing operations 1100763
(1) Basis for preparation of statement of non-recurring profit or loss for the
year ended 31 December 2023
China Securities Regulatory Commission issued the Explanatory Announcement for Information Disclosure of Companies Offering Securities
to the Public No.1 – Non-recurring Profit or Loss (Revised in 2023) (the “Explanatory Announcement No. 1 (2023)”) in 2023 which became
effective since the date of issuance. The Group prepared the statement of non-recurring profit or loss for the year ended 31 December 2023
in accordance with the Explanatory Announcement No. 1 (2023).Pursuant to the Explanatory Announcement No. 1 (2023) non-recurring profit or loss refers to profit or loss arising from transactions
and events those are not directly related to the company’s normal course of business also from transactions and events those even are
related to the company’s normal course of business but will interfere with the right judgement of users of the financial statements on the
company’s operation performance and profitability due to their special nature and occasional occurrence.
(2) Impact of implementation of Explanatory Announcement No. 1 (2023) on
non-recurring profit or loss for the year ended 31 December 2022
Pursuant to the Explanatory Announcement for Information Disclosure of Companies Offering Securities to the Public No.1 – Non-recurring
Profit or Loss (2008) (“Explanatory Announcement No. 1 (2008)” the Group does not have items that are presented as non-recurring
profit or loss in 2022 but which shall be presented as recurring profit or loss in accordance with the relevant provisions of Explanatory
Announcement No. 1.
249Chapter 10Financial Statements
2 Statement of non-recurring profit or loss for the
year ended 31 December 2022
2022
Investment income from disposal of subsidiaries 32314
Gains on disposal of other non-current assets 374595
Government grants recognised in profit or loss (Government grants included in non operating income other
826447
income and offsetting cost expenses)
Gains or losses on changes in fair value of trading financial assets and trading financial liabilities and profit
47500
or loss arising from disposal of trading financial assets and trading financial liabilities
Reversal of impairment provision for receivables individually assessed for impairment 94297
Net amount of other non-operating income and expenses (73330)
Sub-total 1301823
Less: Income tax effect (235481)
Less: Non-recurring profit or loss attributable to minority shareholders (229502)
Non-recurring profit or loss attributable to shareholders of the parent company 836840
Including: Non-recurring profit or loss from continuing operations 836840
(1) Basis for preparation of statement of non-recurring profit or loss for the
year ended 31 December 2022
The Group prepared the statement of non-recurring profit or loss for the year ended 31 December 2022 in accordance with the
Interpretative Announcement No. 1 (2008).
3 Return on net assets and earnings per share
Weighted average Earnings per share
Basic earnings per share Diluted earnings per share
Return on net asset (%)
(Yuan/share) (Yuan/share)
202320222023202220232022
Net profit attributable to ordinary
9.19%7.34%1.701.271.701.27
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company net 7.96% 6.35% 1.47 1.10 1.47 1.10
of non-recurring profit or loss
Including:
– Continuing operations
Net profit attributable to ordinary
9.19%7.34%1.701.271.701.27
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company net 7.96% 6.35% 1.47 1.10 1.47 1.10
of non-recurring profit or loss
250
