Chapter 1 Important Information Content and Definition
Sustainable and robust growth
Service and efficiency enhancement Lean operations
Network integration and optimization Long-term and steady progress
002 003Chapter 1 Important Information Table of Content and Definition
Important Information Table of Contents
The Company’s Board of Directors Supervisory Committee directors supervisors and senior
management hereby guarantee that the contents of the Annual Report are true accurate and Chapter 1 Important Information Table of Contents and Definitions . . . . . . . . 002
complete and that there are no misrepresentations misleading statements or material omissions
and shall assume individual and joint legal liabilities.Chapter 2 Company Profile and Key Financial Indicators. . . . . . . . . . . . . . . . . . 006
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 and warrant that the financial Chapter 3 Management Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . 014
report contained herein is true accurate and complete.All directors have attended the Board meeting at which the Annual Report was considered. Chapter 4 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 073
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 Chapter 5 Environment and Social Responsibilities . . . . . . . . . . . . . . . . . . . . . . 097
into account possible investment risks.The Company is required to comply with the disclosure requirements about express delivery service Chapter 6 Significant Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
industries presented in the Self-Regulatory Guidelines for Companies Listed on the Shenzhen Stock
Exchange No. 3 – Industrial Information Disclosure. Chapter 7 Share Changes and Shareholder Details . . . . . . . . . . . . . . . . . . . . . . 121
In this Annual Report the Company details the risk factors and countermeasures that may occur
in the future. For more information refer to “Risk and Responses” in “Section XIII. Prospects of Chapter 8 Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129the Company” of “Chapter 3. Management Discussion and Analysis”. Investors shall refer to this
information. Chapter 9 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
The profit distribution proposal reviewed and approved by the Company’s Board of Directors is as
follows: on the basis of the total share capital at the registration date on which the 2022 annual Chapter 10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
profit distribution plan is to be implemented less the special shares repurchased by the Company a
cash dividend of RMB2.50 (including tax) will be distributed for every 10 shares held. There will be no
bonus shares or conversion of equity reserve into share capital of the Company.
002 003Chapter 1 Important Information Table of Content and Definition
List of Documents Available for Inspection Definitions
Term Description
(1) Financial statements signed and sealed by the legal representative Chief Financial Officer and the accounting director of
the Company. Reporting period January 1 2022 to December 31 2022
(2) The original copy of audit report containing the seal of the accounting firm and the signature and seal of the certified The same period of January 1 2021 to December 31 2021
public accountant. previous year
(3) The original copies of all documents and announcements of the Company which have been publicly disclosed in newspapers The Company the listed S.F. Holding Co. Ltd.
designated by the China Securities Regulatory Commission during the Reporting Period. Company SF Holding SF
(4) The original text of the 2022 annual report signed by the chairman of the Board of Directors. RMB Renminbi
(5) The place where the above documents are maintained: the office of the Company’s Board of Directors. Ma’anshan Dingtai Rare Earth and New Materials Co. Ltd. the predecessor of S.F. Holding Co. Ltd. was
Dingtai New Materials
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 date. The
Major asset restructuring
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 Kong
Kerry Logistics
Limited (00636.HK) is a holding subsidiary of S.F. Holding 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 of
Industrial Hong Kong Limited (09699.HK) is a holding subsidiary of S.F. Holding 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
004 005Chapter 2 Company Profile and Key Financial Indicators
I. Company Information Information Disclosure and Location of Annual Report
Stock Exchange Website for the Annual Report Disclosed by
Shenzhen Stock Exchange
the Company
Company Information
Name and Website of Media for the Annual Report Securities Times Shanghai Securities News China Securities Journal
Stock Abbreviation SF Holding Stock Code 002352 Disclosed by the Company Securities Daily and CNINFO ( www.cninfo.com.cn)
Stock Exchange Shenzhen Stock Exchange Place Where the Annual Report is Available for Inspection Office of the Board
Chinese Name of the Company 顺丰控股股份有限公司
Chinese Name Abbreviation of the
顺丰控股 Registration Changes
Company
English Name of the Company (If Any) S.F. Holding Co. Ltd. Organization Code 91340500150660397M
English Name Abbreviation of the Changes in Main Business Since Listing of the Company
SF Holding There was no change during the Reporting Period.Company (If Any) (If any)
Legal Representative of the Company Wang Wei Historical Changes in Controlling Shareholders (If any) There was no change during the Reporting Period.Registered address Room 101 Huaide Road No. 46 Huaide Community Fuyong Street Bao’an District Shenzhen
Zip Code of Registered Address 518103 Other Relevant InformationIn January 2018 the registered address of the Company was changed from “Dangtu Industrial Accounting firm engaged by the CompanyPark Ma’anshan City Anhui Province” to “Room 801 Floor 8 Wanfu Building No. 303 FuyongHistorical Changes of the Registered Avenue Bao’an District Shenzhen Accounting Firm Name PricewaterhouseCoopers Zhong Tian LLPAddress of the Company In February 2023 the registered address of the Company was changed from “Room 801 8/FWanfu Building No. 303 Fuyong Avenue Bao’an District Shenzhen” to “Room 101 No. 46 Floor 11 PricewaterhouseCoopers Center Tower 2 of Link Reit Corporate Office Address of the Accounting FirmHuaide South Road Huaide Community Fuyong Street Baoan District Shenzhen” Plaza No.202 Hubin Road Huangpu District Shanghai China
Block B TK Chuangzhi Tiandi Building Keji South 1st Road Nanshan District Shenzhen Signing Accountants’ Names Chen Anqiang Liu Jingping
Office Address
Guangdong Province China
Sponsor institution engaged by the Company to perform continuous supervision duties during the Reporting Period
Zip Code of Office Address 518057
Name of
Company Website www.sf-express.com Name of Sponsor Continuous Office Address of Sponsor Institution Sponsor
Institution Supervision Period
Representative
Email sfir@sf-express.com
Huatai United Securities Co. Floor 27 and Floor 28 Fund Building No. 5999 Yitian Long Wei Ning N o v e m b e r 1 9 2 0 2 1 t o
Ltd. Road Futian District Shenzhen Xiaobo December 31 2022
Contacts and Contact Methods China International Capital Floor 27 and Floor 28 China World Tower 2 No. 1 T ian Dan Long N o v e m b e r 1 9 2 0 2 1 t o
Corporation Limited Jianguomenwai Avenue Beijing Hai December 31 2022
Board Secretary Securities Affairs Representative
Financial adviser engaged by the Company to perform continuous supervision duties during the Reporting Period
Name Ling Gan Jing Zeng □ Applicable √ Not applicable
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
006 007Chapter 2 Company Profile and Key Financial Indicators
II. Key Operating and Financial Data Volume Revenue
Volume Revenue
Results Overview for 2022 Unit: 100 million parcels Unit: RMB100 million
Unit: 100 million parcels Unit: RMB100 million
120+5.5%3000
1203000+29+.57.%5%111.4+29.1%100+29.7%2500111.4+29.1%2675100105.52500+34.5%2675
Revenue Total assets 105.5 80 2000+34.5% 2072
Revenue Total assets 80 81.4 2000 2072
81.46015001540
6015001540
401000
2R6MB72.657.5billion RMB216.8
401000
20500
billion 20 500
RMB billion 29.1%29.1R%MB216.8billion 3.31%3.31% 0 0
02020202120220202020212022
202020212022202020212022
The volume does neither include the volume of Kerry Logistics express
Net assets attributable to the parent The volume does snheipitmheern itnsc lundoer dthoee sv oitl uinmcleu doef Ktheerr by uLsoingeisstsic vso eluxpmrees os f the Company's
Gross profit Net assets attribut3able to the parent shipments nor doinetse irtn iantciolundael ftrheeig bhuts ainneds sa gvoelnucmye a onfd tshuep Cploym chpaainny's Gross profit c3ompany international freight and agency and supply chaincompany
RMB3R3MB.343.4billion30.4%30.4% 86RM.B386.3billionbillion RMB billion 4.00%4.00% Revenue by Business Segment and Its Share in Total RevenueRevenue by Business Segment and Its Share in Total Revenue
Net profit attributable to the parent 1.7% 2.0%
Net profict
1.7%2.0%
oamttpriabnuyta1 ble to the parent Basic earnings per share 18.9%
company1 Basic earnings per share 18.9% Time-definite express
Time-definite expEcreosnsomy express
Economy express 32.8%6.17 2.4% Freight 39.5%6.17 Frei4gh7t.8%
32.8%39.5%
44.6% 1.271.27 36.6% 2.4% 3.8% 2021 47.8% Cold chain and pharmaceuticalsRMB billion RMB /share 3.8% Cold chain and pharmaceuticals 2022RMB billion 44.6% RMB /share 36.6% 2021 Intra-city on-demand delivery 2022Intra-city on-deSmupanpdly d cehlaivine raynd international business
13.2% Supply chain anOdth inetre nronna-tlioogniaslt ibcus sbinuessinsess
13.2% Other non-logistics business 2.4%
Net profit attributable to the parent 2.4%
Net profi 3.2%ct oamttpriabnuyta abfltee rt od ethdeu cptainregn nt on-recurring 12.3% 3.2% 9.6%
companyp aroftfietr de
10.4%
or ldoussc2ting non-recurring Return on n4et assets
412.3%10.4%9.6%
profit or loss2 Return on net assets
5. Unit: 100 million parcels 2021 2022Unit: 100 million parcels 2021 2022RMB5.34billion 7.34%RMB 34billion 191%1917%.34% 0.53%0.53% 12001200 6.8%
6.180%001057.0
10001057.0989.6124.1%
989.6124.1%878.7
800878.7
800
600
600
4002.3%
4000.5%2.3%392.0
0.5%279.2272.9392.0
200254.3227525..95
279.210.4%28.6%
200254.3255.510.4%862.18.654.7%78.0%
86.150.064.454.7%78.035.054.1
Notes: 0 50.0 64.4 35.0 54.1
Notes: 1. Net profit attributable to the parent refers to the net profit attributable to the shareholders of the listed company 0 Time-definite Economy express Freight Cold chain and Intra-city Supply chain and Other non-logistics
1. Net profit attributable to the parent refers to the net profit attributable to the shareholders of the listed company Time-definite exEpcroensosmy express Freight Cold chain and pharmaceIunttirca-lcsity on-demaSnudp pdleyl icvhearyin an idnternaOtitohnear ln bouns-ilnoegsistics business2. 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 express pharmaceuticals on-demand delivery international business business
2. Profit attribut3a.b le toTh teh en epta aresnset tcso amttrpibanuyta abfltee rt od ethdeu cptainregn nt orenf-erersc utorr tinhge pnreot fiats soert lso asstt rreibfuertsa btole t thoe tnheet sphraorfieth aotldtreibrsu toafb tlhee t olis sthedar ceohmoldpearnsy of the listed company after deducting non-recurring profit or loss
3. The net asset4s .a ttribRuettaubrnle otno ntheet apsasreetnst r reepfreersse tnot st hwee nigeht taesdse atvs eartatgrieb uretatubrlen toon t hnee ts ahsasreethsolders of the listed company
4. Return on net assets represents weighted average return on net assets
008 009Chapter 2 Company Profile and Key Financial Indicators
Financial summary
Gross profit Quarterly gross profit
Major accounting data and financial indicators
Units: RMB100 million Gross profit Gross profit margin Units: RMB100 million Gross profit Gross profit Gross profit Changes in this
in 2021 in 2022 margin in 2022 (RMB’000) 2022 2021 year over the 2020
previous year
16.4%
350 12.4% 12.5% 120 12.7%12.8% 12.2% Revenue 267490414 207186647 29.11% 153986870
30033410012.3%103.2
250 256 Cost of revenue 234072360 181548507 28.93% 128810033252 80 85.7 84.5 86.9
20077.2
60 64.0 Gross profit 33418054 25638140 30.35% 25176837
15058.7
40
100 Net profit attributable to shareholders of the parent company 6173764 4269098 44.62% 7326079
20 30.550 Net profit attributable to shareholders of the parent company
53369241834199190.97%6132337
0 0 after deducting non-recurring profit or loss
2020 2021 2022 First Quarter Second Quarter Third Quarter Fourth Quarter
Net cash flow generated from operating activities 32702947 15357605 112.94% 11323919
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
Net profit attributable to the parent company Quarterly net profit attributable to the parent uncertainty as to the Company’s ability to continue as a going concern.& Net profit attributable to the parent company company after deducting non-recurring profit
after deducting non-recurring profit or loss or loss
Changes at this
Units: RMB100 million Units: RMB100 million
Net profit attributable Net profit attributable to the parent Net profit attributable to the parent Net margin attributable to the year-end as
to the parent company company after deducting non-recurring company after deducting non-recurring parent company after deducting (RMB’000) End of 2022 End of 2021 compared with End of 2020
profit or loss profit or loss 2021 non-recurring profit or loss 2022
Net margin attributable Net margin attributable to the parent Net profit attributable to the parent the end of the
to the parent company company after deducting non-recurring company after deducting non-recurring previous year
profit or loss profit or loss 2022
4.8%
Total assets 216842707 209899982 3.31% 111160042
902.1%2.3%304.0%25
2.5% 2.2% Total liabilities 118556658 111984735 5.87% 54400343
73.30.9%2.0%201.5%1.8%
60 15 17.2 Net assets 98286049 97915247 0.38% 5675969961.3 61.7 15.0 14.7
53.41012.4
5 9.1 8.1 Net assets attributable to shareholders of the parent company 86263741 82943226 4.00% 56443048
42.76.6
300
-11.3 Increase by 1.32
-5
Gearing ratio (%) 54.67% 53.35% percentage 48.94%
18.3-10
points
2020 2021 2022 First Quarter Second Quarter Third Quarter Fourth Quarter
Changes in this
(RMB) 2022 2021 year over the 2020
Assets Net cash flow previous year
Units: RMB100 million
Units: RMB100 million 2021 2022 Basic earnings per share 1.27 0.93 36.56% 1.64
Total assets Net assets attributable Debt/asset ratio
to the parent company
Diluted earnings per share 1.27 0.93 36.56% 1.64
48.9% 53.4% 54.7% Increase by 0.53
2500400
Weighted average return on net assets (%) 7.34% 6.81% percentage 15.20%
2000 2168 300 327.0 points2099
200
1500212.2
100153.6
10001112
829863
0
500564-100-120.9
-171.3-160.2
2020 2021 2022 Net cash flow from Net cash flow from Net cash flow from
operating activities investing activities financing activities
010 011Chapter 2 Company Profile and Key Financial Indicators
Major financial data by quarter Non-recurring profit or loss items and amounts
(RMB’000) First quarter Second quarter Third quarter Fourth quarter (RMB’000) 2022 2021 2020 Description
Revenue 62984185 67079948 69083218 68343063 Please refer to Note
5(2) of Chapter 10
Cost of revenue 55263558 58514752 60637225 59656825 Investment income from disposal of subsidiaries 32314 1808638 443625 Financial Statements
for details.Gross profit 7720627 8565196 8445993 8686238
It mainly represents
Net profit attributable to shareholders of the parent company 1022140 1490257 1959559 1701808 Non-current asset disposal gains and losses (including the
374595 105502 -52899 the gains arising from
write-off part of the provision for impairment of assets)
Net profit attributable to shareholders of the parent company disposal of associates.
911818123603817155491473519
after deducting non-recurring profit or loss
It mainly represents
Net cash flow generated from operating activities 4807300 11905514 7663876 8326257 government subsidies
Government subsidies included in the current profit and arising from fiscal
There is no difference between the above-mentioned financial indicators or their total amount and the relevant financial indicators in the loss (except for government subsidies that are closely appropriation tax
quarterly and interim reports disclosed by the Company. related to the Company’s normal business operations 826447 857458 1032230 refund grants
and are in line with national policies and are continuously for employment
granted on a certain standard or quantitative basis) stabilization and
transportation capacity
Major financial data of operating segments
subsidies etc.External income
Gain arises when the investment cost of an enterprise to
(RMB’000) 2022 2021 Year-on-year change obtain subsidiaries associates and joint ventures is less – 2375 –
than the fair value of the investee’s identifiable net assets
Express segment 138410580 132319106 4.60% when it obtains the investment
Freight segment 31354280 28356404 10.57% In addition to the effective hedging business related to
the Company’s normal business operations the profit or
Intra-city segment 6567057 5117905 28.32% loss from fair value changes in holding held-for-trading
financial assets and held-for-trading financial liabilities as 47500 151606 139467
Supply chain and international segment 89916599 39979632 124.91%
well as the investment income from the disposal of held-
Undistributed units 1241898 1413600 -12.15% for-trading financial assets and held-for-trading financial
liabilities
Total 267490414 207186647 29.11%
Reversal of provisions for impairment of accounts
receivable that have been separately tested for 94297 46264 –
impairment
Net profit
Other non-operating income and expenses other than the
-73330-136453-153227
(RMB’000) 2022 2021 Year-on-year change above
Express segment 5459146 3832187 42.46% Less: Income tax impact 235481 381549 196455
Freight segment 27677 -582308 104.75% Impact on minority shareholders’ equity (after tax) 229502 18942 18999
Intra-city segment -286903 -898851 68.08% Total 836840 2434899 1193742
Supply chain and international segment 1945862 615252 216.27% Note: The 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-
Undistributed units -122737 965462 -112.71% recurring Profit or Loss as recurring profit or loss.Inter-segment elimination -19425 -12529 -55.04%
Total 7003620 3919213 78.70% Differences in accounting data under domestic and foreign accounting standards
Note: 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:
(1) The Company carried out multi-network coordination continuously so that the large parcel (generally those are heavier than 20KG with restricted flow
direction and distance) business of time-definite express and economy express business (which are under operation by express segment) were included in the □ Applicable √ Not applicable
responsibility of the freight organization step by step. Therefore the data on “large parcel express” was included in the segment data of freight.
(2) The corresponding relationship between the operating segments and the Company’s principal business segments was: the express segment included time- 2. Difference in the net profit and net assets in the financial reports disclosed in accordance with overseas accounting standards and in
definite express and economy express businesses other than large parcel express business included in the responsibility of the large parcel organization accordance with the Chinese Accounting Standards:
mentioned in item (1) as well as cold shipping and pharmaceutical businesses; the freight segment included the large parcel express business and freight
business; the intra-city segment was mainly intra-city on-demand delivery business; the supply chain and international segment mainly was international □ Applicable √ Not applicable
express business international freight and freight forwarding business and supply chain business; the undistributed units mainly included segments of non-
principal logistics and freight forwarding including investment industrial parks and other functional segments of the headquarters.
012 013Chapter 3 Management Discussion and Analysis
I. Industry Review in 2022 of a long-term and stable relation between production and of the express delivery market as well as the legitimate rights marketing expanding the networks of cold chain logistics in rural and interests of couriers. The “price war” trend of the express
areas and promoting the construction of the infrastructure for delivery market was promptly curbed. (2) In terms of market
the warehousing and storage in the growing areas of different demand the consumer market growth was slowing down while
1. Environment and Growth of the Logistics 2. Industry planning and policy directions agricultural products preservation and cold chain logistics in the marketing channels and traffic were more diversified. As
Industry counties. (2) In terms of connecting with manufacturers the new e-commerce platforms (e.g. live streaming and short
I) Chinese government is dedicated to expanding domestic the State Post Bureau carried out the “5312” project program video clips) were rapidly emerging in the last two years the
I) China’s macro-economy has achieved a steady growth demand and promote economic development which is of serving the advanced manufacturing industry with express large platforms and corporate customers paid more attention
and its economic operation is more resilient than ever conducive to the recovery of the logistics industry. In delivery service and the typical project of in-depth integration of to consumer service experience than ever before and therefore
December 2022 the Central Economic Work Conference made
before. In the era of VUCA the external environment is national express delivery service and the advanced manufacturing asked for shorter delivery time and better service quality. Expressclear that “putting forth effort to expand domestic demand andincreasingly uncertain. Inflation in Europe and the United States industry. The State Post Bureau was taking the establishment delivery enterprises were given impetus to change the waysrecover and expand consumption” should be prioritized for the “ ”
rising energy prices the sluggish consumer spending geopolitical and development of pilot zones to a higher level. The following how they compete from same quality with a lower price to
macro-control of 2023. According to the Outline of the Strategic “ ”
risks and other factors are affecting the normal development of actions shall be taken: improving the coverage of express delivery diversities in quality and customer bases . (3) In terms of thePlan to Expand Domestic Demand (2022-2035)* 《( 扩大内需战 facilities and services in manufacturing parks; establishing direct supply of the logistics industry “the Matthew effect” remained.global economy and trade. Even though being confronted with 略规划纲要(2022－2035 年)》) issued by the Central Committee links between production and marketing for key express delivery According to the data published by the State Post Bureau the
numerous difficulties China’s economic operation is generally
of the Chinese Community Party and the State Council and the enterprises and key manufacturers to establish mutually beneficial CR8 of express delivery service brands of 2022 was 84.5% higher
stable highlighting its development resilience. According to
Implementation Plan for Expanding Domestic Demand During the all win long-term and stable strategic cooperative relations. than 80.5% of 2021 and the concentration ratio was further
the data published by National Bureau of Statistics the annual “14th Five-Year Plan” Period* 《( “十四五”扩大内需战略实施方案》) (3) In terms of going overseas express delivery enterprises improved. However in the context of the slowdown of upstream
GDP of China totaled RMB121.02 trillion in 2022 representing issued by the National Development and Reform Commission and advanced manufacturers are encouraged to cooperate with incremental demand and the limited space for cutting costs
an increase of 3.0% over the previous year at constant prices. expanding domestic demand has become an important part each other to set up an independent controllable safe and the competition among leading express delivery enterprises was
China has the world’s second largest economy by GDP. China’s of China’s policies. Expanding domestic demand will bring reliable international postal and delivery logistics supply chain intensifying. Express delivery enterprises actively promoted service
total import & export values totaled RMB42.07 trillion in 2022 opportunities to the development of the logistics industry as support express delivery enterprises to actively develop overseas and products stratification enhanced networks capabilities and
representing an increase of 7.7% over the previous year. The total consumption and manufacturing recover. businesses improve the capacity of domestic and international improved outlets service. The competition in the logistics industry
value of exports showed a year-on-year increase of 10.5%. postal and delivery hubs develop multi-modal transport featuring has gradually shifted from the price war to the competition for
II) China vigorously promotes the construction of modern
II) The size of the consumer market in 2022 was flat land transport water transport and air transport improve the service quality differentiation and diversities in services and the logistics. In May 2022 the State Council issued the Plan for
compared to that in 2021 and online shopping penetration “ ” international comprehensive transport capacity and enhance the stability of networks.Modern Logistics Development During the 14th Five-Year Plan
rate increased in 2022. The demands for domestic consumer stability of the industrial chain.Period which is the first national five-year plan in the field of II) Industry integration through mergers and acquisitions
market are yet to recover. According to the data published by the modern logistics making clear that promoting the modernization IV) The logistics industry development focuses on intelligent continued in China. Concentration ratio of express delivery
National Bureau of Statistics the total retail sales of consumer of the logistics industry has national strategic significance. and green logistics. (1) According to the Plan for Modern industry remained high in 2022 whereas that of other logistics
goods of 2022 was RMB43.97 trillion representing a decrease of (1) The logistics infrastructure has been comprehensively Logistics Development During the “14th Five-Year Plan” Period sectors in China (e.g. less-than-truck-load transport cold chains
0.2% over the previous year. The retail sales of goods increased improved and China will vigorously support the construction the following actions shall be taken: accelerating the digital integrated logistics and cross-border logistics) were still low.
by 0.5% and the catering revenue decreased by 6.3%. The online of national logistics hubs international transit hubs air cargo transformation of logistics promoting the transformation According to the list of China’s Top 50 logistics Enterprises for
retail sales of physical goods of 2022 in China were RMB11.96 hubs high-speed rail freight cold chain logistics and other and upgradation of logistics infrastructure by classification the Year 2022*(2022 年度中国物流企业50强 ) published by
trillion representing a year-on-year increase of 6.2%. The infrastructure. (2) Industry standards have been improved and the accelerating the construction of relevant faci l it ies of the China Federation of Logistics & Purchasing the total revenue
percentage of the online retail sales of physical goods in the total logistics standard specification system has been further improved. internet of things (IoT) developing new logistics infrastructure of the top 50 logistics enterprises on the list for the year 2022
retail sales of consumer goods in 2022 was 27.2% representing Standardized containerized and modular logistics loading tools (e.g. intel l igent logistics hubs intel l igent logistics parks was RMB1.94 trillion accounting for approximately 15% of the
a year-on-year increase of 2.7%. The penetration rate of online and packaging basic modules have been widely used. (3) The intelligent warehouse logistics bases intelligent ports and revenue of the entire logistics market which indicated that the
shopping further increased. innovation ability and competitiveness of enterprises have been digital warehouses) expanding the commercial application concentration ratio of China’s logistics market was relatively low
significantly enhanced encouraging the digital transformation scenarios of intelligent logistics promoting the application of thus huge potential for industry integration. International logistics
III) The logistics market was under short-term pressure and of the logistics industry promoting the integrated development automation unmanned and intelligent logistics technologies and giants all expand through continuous mergers acquisitions and
China’s express delivery sector was still growing. Logistics is of the logistics industry and manufacturing industry cultivating equipment automatic perception automatic control intelligent integration. The size of China’s logistics market has the potential
the weatherglass of the economy. In 2022 the domestic logistics backbone logistics enterprises and well-known service brands with decision-making technologies and other technologies. (2) Relevant to cultivate the world’s leading logistics players. With the
industry was under pressures from limited demand and rising international competitiveness and supporting the development policies laid stress on the importance of green logistics. The State gradual macroeconomic recovery it is expected that the logistics
costs which disturbed both the demand and supply of the logistic of “specialized proficient special and new” modern logistics Post Bureau launched the “9917” program of green development industry’s domestic and foreign investment and financing as well
supply chain but the overall operation was stable. According to enterprises. focusing on promoting logistics enterprises to strengthen green as the integration through M&As will become more active than
the data published by China Federation of Logistics & Purchasing energy conservation and low-carbon management strengthen ever before.the average Logistics Prosperity Index of 2022 was 48.5% III) Encouraging the express delivery enterprises to “cover the research and development and application of new greendown by 4.9 percentage points as compared to last year. The rural areas connect with manufacturers and go overseas” III) Continuous transformation of logistics services towards logistics technologies and equipment promote the use of recycled
total cost of social logistics was RMB17.8 trillion representing has become the long-term development plan of the country digital supply chains. The digital era features more diversified packaging reduce excessive packaging and secondary packaging
a year-on-year increase of 4.4%. The percentage of the total for the express delivery industry. (1) In terms of covering business models and channels with less middlemen than ever and accelerate the standardization of the logistics industry. The
cost of social logistics in GDP was 14.7%. According to the data rural areas some of the proposals of the Opinions on Effectively before. The production and supply model has shifted from Company saw effective improvement in green express packaging
published by the State Post Bureau 110.58 billion deliveries were Completing the Key Work of Comprehensively Promoting producing on a large scale to a small scale and delivering in 2022. Nearly 15 million recyclable express boxes were placed
made in China in 2022 representing a year-on-year increase of Rural Revitalization in 2022 (Document No. 1 of the Central in batches. Therefore an increasing number of enterprise and 700 million corrugated boxes were recycled and reused
Government for 2022) are as follows: To speed up the network
2.1%. In terms of parcel volume China has ranked first in the customers have begun to build a consumer-centric flexible respectively by delivery companies throughout the year.
’ development of express delivery service networks in rural areas to world for nine years in a row. The revenue of China s express agile and responsive digital supply chain system to adapt tocarry out the program of “express delivery covering rural areas*delivery business of 2022 was RMB1.06 trillion representing a 3. Industry landscape competition and the current market competition environment. Logistics players(快递进村)” encouraging the development of integrated stations
year-on-year increase of 2.3%. The Average Selling Price (ASP) pay more attention to their own digital construction to improve
featuring passenger transport freight transport and postal service development service efficiency and network flexibility. The application of
increased steadily indicating that the express delivery industry in
in villages and towns and integrated stations of postal and delivery advanced logistics technology and in-depth cooperation with
China was heading for high-quality development. I) Express delivery industry focuses on service quality
enterprises and logistics enterprises in rural areas promoting the
competition. (1) In terms of industry supervision the government industry customers help to promote the digital transformation
unified delivery for counties townships and villages speeding up
strengthens the guidance and supervision of the express industry of customers’ supply chains and reduce costs and increase
the program of the transport of agricultural products from rural
to intensify protection of the sound and positive development efficiency which has become a new important competitive
areas to cities with “Internet Plus” promoting the establishment advantage trying to be built by logistics enterprises.
014 015Chapter 3 Management Discussion and Analysis
IV) Map out their global service networks and build stable officially in 2022 and SF Terminal Forwarding center* (顺丰枢纽
international supply chains. II. Business development of the Company It is increasingly urgent to regain 转运中心) will go into operation officially in 2023 center they will
the vitality of taking the place of “Made in China” on the become an important strategic infrastructure for the Company
international market. The global networks and operation capacity to follow the dual circulation strategy build a central land-sea
of logistics industry give strong backing to the establishment corridor and an air transport corridor and help the Company SF Holding is the largest integrated logistics service provider in China and the fourth largest in the world. Focusing on the logistics
of the “external (international) circulation”. As the “Made in develop logistics networks with international competitiveness ecosystem the Company has consistently built on its service capabilities and has diversified into eight segments namely time-definiteChina” and Chinese brands are embedded in the global value connecting China with the rest of the world. express economy express freight cold chain and pharmaceutical intra-city on-demand delivery supply chain and international business
chains with increasingly prominent positions and they need (including international express international freight and freight forwarding and supply chain) which can provide customers with domestic
II) The Company stays ahead of its competitors in multiple
to be supported by services of logistics networks with a global and international end-to-end one-stop supply chain services. Meanwhile leveraging our leading technology research and development
logistics segments. Relying on the fast punctual and safe
coverage. Cross-border e-commerce has developed rapidly and capabilities we will strive to create a digital supply chain ecosystem and become a front runner in the global smart supply chain.door-to-door service capability the Company’s time-definite
its potentialities are further brought into play. According to the
express business holds a safe lead in the domestic market. After
data published by the National Bureau of Statistics the import Business Segments
years of incubation and M&A integration the Company also
and export values of China’s cross-border e-commerce totaled
leads the competition in other business segments. According to
RMB2.11 trillion in 2022 representing a year-on-year increase Express Logistics
the List of Less-than-truck-load Transport Enterprises in China for
of 9.8%. The total value of exports was RMB1.55 trillion Provide time-definite and fast door-to-door delivery service for consumers enterprises
the Year 2022* (2022 中国零担企业排行榜) published by Wetuc
representing a year-on-year increase of 11.7%. In the long run and mid- to high-end brand merchants etc.Think Tank* (运联智库) SF Freight ranked first for three years in
the improvement of the capacity and brand competitiveness Options of half-day delivery same-day delivery next morning/next day delivery etc. dependent on shipping route and distance;
a row in terms of the revenue from less-than-truck-load transport Time-definite Satisfying time-ef cient and door-to-door delivery demands such as personal pieces industrial and commercial pieces mid- to high-end brandof China’s industrial chains and the expansion of overseas order ful llment reverse returns from e-commerce platforms immediate response in JIT mode of production and distribution and other scenarios.and the volume of goods transported. According to the list of Top Express
e-commerce platforms and e-commerce websites in the global
100 Cold Chain Logistics Enterprises in China* (中国冷链物流百
consumer market will create a favorable environment and
强企业) published by China Federation of Logistics & Purchasing
opportunities for Chinese logistics enterprises to go abroad. Provide cost-effective and quality-guaranteed delivery services mainly for
at the “14th Global Cold Chain Summit 2022” SF Cold Chain
e-commerce platforms and merchants
V) The importance of green logistics continues to increase. Logistics ranked first for four years in a row. According to the “SF Express” operates a self-operated network to serve e-commerce platforms and merchants calling for excellent user experience and
The logistics industry pays more attention to sustainable and data published by iResearch SF INTRA-CITY is China’s largest stable time ef ciency with door-to-door delivery;
healthy development than ever before. Logistics enterprises independent third-party instant delivery service platform. “Fengwang Express” has a franchise network to serve lower-tier e-commerce market players with affordable pricing adopted;Economy Express Integrated warehousing and distribution service to serve warehousing needs with several service and pricing levels
keep on strengthening the green logistics transformation and According to the List of Top 50 Enterprises in Cross-border with nationwide sub-warehouses smart cloud-based warehouses etc.increasing the investment in technology automation equipment E-commerce Logistics for the Year of 2022* (2022 跨境电商物
and green low-carbon consumables. China’s Dual-Carbon strategy 流 50 强榜单) published by Wetuc Think Tank* (运联智库) SF Mainly for customers in manufacturing and commercial distribution sectors with demand for
encourages logistics enterprises to explore green and low-carbon international Express ranked fourth. According to the list of Top large parcel distribution and bulk transport
development modes e.g. dispensing and using new energy 50 Global Freight Forwarders for the Year 2022* (2022 年度全球 Large parcel by land: Provide large parcels for B2C e-commerce with allocation from B2C store/ less-than-carload freight for large parcel/transportation
in vehicles;
transport vehicles green packaging research and development 货代 50 强榜单) jointly published by Armstrong & Associates (an
Extended services: large parcel warehousing and distribution moving store distribution delivery and installation integration and other scenarios;
and green warehouse construction. Corporate customers’ American logistics consulting agency) and Transport Topics Kerry Freight SF Freight operates a self-operated network to serve high-end customers while SX Freight franchise network is oriented to lower-tier e-commerce markets.demand for carbon reduction has become increasingly prominent. Logistics ranked ninth on the list of water transport and twelfth
Customers need low-carbon green supply chains and logistics on the list of air transport.Mainly for customers from three sectors: seasonal fresh food frozen food and pharmaceutical
services to reduce their carbon emissions. Therefore low-carbon
III) Relying on industry－leading technology the Company Fresh food speedy distribution: Distribute over 4000 types of farm produce across the country from place of origin to consumers;
and green services are becoming an important competitiveness of
promotes supply chains digitalization within the company Cold chain food transport: Provide high-standard end-to-end temperature-controlled cold chain services in eluding multi-temperature section
logistics enterprises. Cold Chain and controlled storage less-than-truck load/special truck transport distribution to stores and consumers;and for the customers. The Company aims to link up internal
Pharmaceutical Pharmaceutical logistics: Serve clients throughout the pharmaceutical industrial chain capable of conducting multi-temperature section control transportation (from -80°C to 25°) and GSP certi ed pharmaceutical cold storage service.
4. Position and competitive edge of SF in the complex business scenarios and rich logistics resources with
logistics industry technology empowerment . The Company promotes the
transformation of its operation with end-to-end digitalization Provide on-demand distribution service mainly for restaurants retail/e-commerce merchants
individuals and enterprises;SF Holding with an operating revenue of RMB267.5 billion achieving a better network layout and resource planning and Intra-City Provide exclusive concessionary and value-added To B services and To C product system integrating features of “Fetch for Me Deliver for Mein 2022 is the largest integrated service provider in the field improving the Company’s operational efficiency and service On-demand Purchase for Me Solve for Me” and city-wide on -demand delivery services within average 1 hour.of express delivery logistics in China and the fourth largest in competitiveness. By leveraging the application of advanced Delivery
the world. By adhering to long-term sustainable and healthy logistics technology to offer digital supply chain solutions SF
development and forward-looking long-term strategic plans the was enabled to work with more industry customers to renovate Supply Chain and International
Company seized lots of opportunities expanded its scale and led supply chains and improve digitalization and intelligence of the
supply chains in various industries. Technological empowerment Provide domestic and foreign manufacturers trading enterprises cross-border e-commerce merchantsthe industry in a sustained way in the past three decades since
+ supply chain planning has become unique competitive edge of and consumers with international express delivery overseas local express cross-border e-commerceestablishment. parcel and overseas warehouse services
the Company making it stands out from the rest of the market
I) The Company has a diversified logistics network with a International express: High timeliness standard services that meet the needs of cross-border expedite delivery including high-quality international players who provide logistics services or technical services only. International standard express and economical international special products;
domestic and global coverage and the Company is capable Express International e-commerce: Cost-effective and economical services that meet the needs of cross-border e-commerce including ef cient internationalof offering domestic and international end-to-end supply For details of our core competitiveness please refer to “3. Core e-commerce express and economical international small parcels;Overseas local express: covering Thailand Vietnam Malaysia Cambodia Indonesia and other Southeast Asian countries.chain services. Through endogenous development and M&A the competitiveness” in “Chapter 3 Management Discussion andCompany has developed one-stop comprehensive logistics service Analysis”.Provide customers with air sea railway land and multi-modal freight transport solutions
networks with a better product matrix an improved coverage In general China’s logistics market is huge. Although SF leads Air transport: provide air transport services such as pick-up at departure point multiple integration customs clearance delivery to end customer;
and more service scenarios. The Company serves the end-to-end the competition in every business segment SF can still increase International Sea freight: provide air transport services such as pick-up at departure point multiple integration customs clearance delivery to end customer;
supply chain for customers covering production and sale at home its market share substantially. The long-term strategic vision Freight and Land transport: provide innovative and economic road and railway transport services across Europe and Asia.and abroad. As Ezhou Huahu Airport the first cargo-focused hub forward-looking business layout innovative product capabilities Freight Forwarding
airport in Asia and the fourth in the world went into operation high-quality services and strong scientific and technological
Provide customers in various industries with domestic and international end-to-end supply chain solutions
strengths will help SF break through the competition and realize
long-term development with a solid foundation. Empowering with technology relying on SF’s big data AloT technology and software and hardware system integration capabilities to help
customers build a smart supply chain;
Supply Chain SF Supply Chain and New HAVI to provide local supply chain service; while Kerry Logistics mainly to provide global integrated logistics.
016 017Chapter 3 Management Discussion and Analysis
1. Customer operation1 building so as to realize the two-way empowerment of SF brand (1) Online: The operation is based on SF APP and WeChat The Company continues to expand the ultimate time-definite
and high-end brand. This model is promoted and replicated in mini-programs etc. In 2022 we focused on promoting the service improve product capabilities and cover more service
The Company continues to improve its customer management many high-end brands which can achieve business growth. experience and maintenance of users in core channels and scenarios. Through the integration of express network and
system based on customer strat i f icat ion to enhance i ts improving online functions to promote the efficiency of users’ intra-city couriers resources the operation mode is further
* Consumer goods industry: We help customers realize the
differentiated service competitiveness and operation efficiency. order placement. A new “WeCom” on WeChat channel was optimized and the Company launched the new product of
supply chain reform. Relying on the warehouse network planning
built to efficiently respond to users’ questions and continuously “intra-city delivery within half a day” which provides fast service
I) Credit account clients (corporate clients) sales forecasting and smart replenishment of the intelligent improve user stickiness. The membership scale of WeChat of collect in the morning and deliver in the afternoon or collect
supply chain of SF we break through the automatic park
As of the end of 2022 the number of active credit account clients channel increased by 25.6% and the daily active users reached in the afternoon and delivery in the afternoon arriving on the cooperation of offline large warehouses based on online channel
amounted to approximately 1.81 million an increase of 10% over 18 million representing a year-on-year increase of 41%. At the same day to meet the long-distance half-day delivery needs of cooperation with a key account gradually realize the transition
170000 compared with the same period of the previous year. same time we focused on building the core channel of SF APP various scenarios such as business parcel delivery fresh food from online inventory to online and offline inventory and help
and introduced various service capabilities such as moving mobile supermarkets community group buying and local e-commerce. It
(1) SKA (strategic key accounts): We aggregate the superior customers to integrate to B & to C to reshape the supply chain. phone maintenance mobile phone replacement and used clothing has been promoted in more than 20 cities in 2022. SF launched
capabilities of the Group’s supply chain organizations focus on (2) KA (key accounts) : * In respect of mechanism recycling to meet the needs of diversified users. The number an ultimate time-definite product “exclusive expedite delivery”
building and improving the overall solution capabilities of SF improvement we promote the implementation of CRM of members of SF APP channel increased by 55.7% and the has been comprehensively promoted and air transportation and
Express combine the strategic development and layout of SKA mechanism standardize the customer decision review mechanism daily active users reached 3 million representing a year-on-year high-speed rail roads have been utilized to achieve the fastest
accounts and continuously break through and deepen customer and gradual ly promote the standardizat ion of bus iness increase of 50%. cross-city delivery as fast as 4 hours. Currently such service has
supply chain links and core business scenarios through key opportunity management and healthy delivery; improve the been rolled out in 138 cities. At the same time by continuously
accounts plan to promote the Company’s supply chain business (2) Offline: * Broaden the scenarios: We provide a diverse range KA customer demand management channel and collaboration consolidating the service capacity of bulk air transportation
share and capability improvement. of services based on the needs of customers’ daily consumption mechanism integrate the Group’s resource capabilities and emphasize flexibility and speed the Company achieves the
scenarios including return service for online shopping home
* E-commerce and circulation industry: a . In-depth effectively support the business development in complex fastest cross-provincial door-to-door delivery within seven delivery service luggage delivery family delivery public welfare
explorat ion of e-commerce goods return scenar ios : we scenarios of KA. * As regards business expansion we focus hours. The Company builds a customer-airport direct receiving delivery airport/high-speed railway station self-service and Hive
continuously improve the integrated service solution for goods on large Internet platforms semiconductor new energy new and dispatching mode to reduce the transshipment links and Box laundry etc. * Expand Channels: We expand offline channels
return and exchange focus on improving consumer service consumption IVD (In Vitro Diagnosis) and other opportunistic improve the efficiency and adopts independent operation in the such as self-owned outlets urban stations rural stations and
experience while upgrading personalized service capabilities and industries. We focus on major customer bases and identify transshipment links to avoid the separation of the same batch regional agents to improve the density of terminal channels. As
gain market share in return business cooperation with multiple customer needs based on the multi-dimensional customer review of goods so as to improve the customer experience and meet of the end of 2022 the aggregate number of courier stations and
e-commerce platforms. As of the end of 2022 the average model and KA customer business planning tools. We quickly build the immediate response needs of the supply chain under the JIT cooperation stations in other external channels of SF within China
daily order volume doubled compared with the same period an iron triangle team for business operation and maintenance production and circulation mode of the industrial chain.increased by 10% over the previous year.of the previous year. b. Breakthrough of cross-border supply and solutions integrate the Group’s resources and capabilities Ezhou Huahu Airport was put into operation in July 2022.chain scenario: We integrate advantageous resources such as and provide targeted solutions for customers to effectively Through online and offline management system we reach In terms of freight transport two air routes namely Ezhou –
warehousing express delivery freight international special expand the industry share; * In respect of management customers through online channels in a well-targeted fashion Shenzhen and Ezhou – Shanghai were launched in the first
planes and logistics partners through technology empowerment improvement we continue to build on our four primary and strengthen the attraction of new customers and the phase. It is expected that the transshipment hub centers willso as to improve the end-to-end efficiency and dynamic capabilities – “customer needs solutions customer operation and retention of returned customers enlarging our member pool; be put into operation successively in the third quarter of 2023.monitoring capability from domestic concentrated transportation maintenance and team management” to effectively support the in offline channels we segment business scenarios and expand The Company gradually built a hub-and-spoke air transportation
to cross-border direct delivery and help e-commerce platforms implementation of the overall work and improve the ability of KA offline channels to stimulate individual user activity and increase network with wide coverage low cost and high efficiency so as
expand overseas business under the concentrated transportation teams to generate revenue and profit. package-delivery frequency. to achieve the optimization and layout change of the Company’s
and direct delivery mode. (3) SME (small and medium-sized enterprises): * In respect 2. Business development full-link network mode bringing more time-definite business
* Communication and high-tech industry: By integrating the of improvement of sales capability based on the talent growth.capabilities of Kerry Logistics and SF Supply Chain we extend portrait formed by big data we continuously strengthen intensive I) Time-definite express
to the front-end production logistics supply chain scenario management of sales carry out differentiated training and
II) Economy express
improve the comprehensive capabilities of customer managers to In 2022 the Company’s time-definite express business achieved successfully win the bid for the central warehouse business of raw In 2022 the Company’s economy express business achieved
tax-exclusive revenue of RMB105.7 bil l ion representing a
materials in the core production link of a customer’s supply chain realize the improvement of per capita revenue and profit; * In tax-exclusive revenue of RMB25.55 billion representing a slight
and deeply participate in the future planning and implementation respect of business expansion we seize the market opportunity
year-on-year increase of 6.8%. With the reopening and recovery
year-on-year increase of 0.5% maintaining almost the same as
of economic activities SF Express quickly resumed its operation
of the customer’s supply chain; extend to the overseas retail to achieve a significant revenue increase in new businesses hot the corresponding period of previous year. The main reason was
warehousing and distribution performance scenario and provide industries opportunity scenarios etc. We have acquired 96000
guarantee by taking advantages of self-operated network
that the Company adhered to differentiated competition and has
new contractual SME customers. We also conduct in-depth resources and strong control ability providing efficient and stable warehousing operation and distribution performance services for taken the initiative to optimize the product structure and reduce
research on the supply chain scenarios of existing customers sort delivery for customers and consumers.a customer to implement an overseas warehousing project. By the number of low gross profit margin products since the second
enhancing the Company’s comprehensive solution capability we out business opportunities identify potential business opportunity Based on the competitive advantage of SF Express in bulk half of 2021. After the optimization the service and pricing
further consolidate the domestic business share of key accounts focus on the solutions to opinions of B-end customers guarantee cargo collection scenario the time-definite express business tier of the products and the distinction of the operating model
while expanding the expansion of international transportation and stable service during peak hours and provide customized was expanded to cover reverse logistics and e-commerce goods are clearer significantly promoting the profitability of economy
overseas supply chain business. solutions to continuously improve customer experience. returns. The Company actively expanded cooperation with major express.* Clothing footwear and hats industry: In order to achieve II) Retail customers (individual customers) mainstream and emerging e-commerce platforms continuously (1) Directly operated brand service
improved the satisfaction of return business services and
innovative breakthroughs in the luxury industry and address the
As of the end of 2022 the number of individual members expanded the Company’s share in return business on various W e c o n t i n u o u s l y o p t i m i z e t h e p r o d u c t s t r u c t u r e o f
pain points that the luxury industry cannot extend the offline
amounted to 585 million representing a year-on-year increase platforms. In particular the cooperation with emerging platforms direct-commerce express service. As of the fourth quarter of
ultimate service experience to online we create end-to-end
尚派服务 of 19%. We increased touchpoints with retail customers through has developed rapidly. 2022 the concessionary special delivery business with a low standardized products “Shangpai Service ( )” through
multiple channels online and offline to ensure the growth of our gross profit margin has been fully phased out and the main
technology empowerment and terminal delivery capabil ity
retail business: “e-commerce standard express” products has maintained steady
growth promoting the positive year-on-year growth of direct
e-commerce express business.
1 T he data statistics involved in this sub-section do not include the customer data of SF Express New HAVI and Kerry Logistics
acquired by the Company.
018 019Chapter 3 Management Discussion and Analysis
Affected by objective factors such as the slowdown of online retail performance revenue per shipment; * Warehouse network distribution mode. In the future we will continue to develop the cold chain market by virtue of high-standard service full network
consumption year by year the competition in the e-commerce coordination: We integrated multi-network to promote site ability to deliver large pieces to home and install for customers coverage and integrated supply chain capability.express sector has intensified. The Company partnered up with coordination and reduced empty warehouse area by 47000m2 focus on consolidating the foundation by delivering and installing
(1) Shipment of fresh food:
major e-commerce platforms in warehousing and distribution improving the utilization rate of warehouse network resources; furniture and household appliances and build up service barriers
by segmenting business scenarios using multi-level e-commerce * Efficiency improvement: We improved the connection of through operation model innovation so as to increase income by The upstream service network for the Company to facilitate sales
warehous ing resources combined with the h igh-qual i ty ex-warehouse and delivery links of warehousing and distribution reducing costs. of agricultural products has covered more than 2800 county-level
performance and independent third-party market positioning. In services from system functions operation procedures and process cities and more than 4000 fresh products across the country. In
In terms of To B scenarios we formed flexible solutions
particular the e-commerce emerging platforms has grown rapidly equipment opened up all-link operation data of warehousing 2022 we focused on the following aspects: * Service hierarchy:
based on customer needs through a combination of various
steadily improving the scale of the Company’s e-commerce and distribution with the supply chain system as the core and We integrated self-owned special planes cold chain warehousing
products and resources to quickly respond to the low-cost and
parcel standard express business. In terms of product efficiency achieved smart sorting packaging interception and other
* and other external cooperation resources matched agricultural high-efficiency needs of enterprises. Consolidate professional
based on high-quality services the unit price of e-commerce functions in combination with delivery equipment so as to products with different value hierarchy and time-definite needs
capabilities. The collection terminal set up night collection and
standard express remained stable. Through internal intensive enhance the sorting capacity in the warehouse and improve formulated differentiated operation modes and refined pricing
* night delivery services based on the needs of delivery in the management the Company maintained the healthy development the delivery efficiency; Mode optimization: Based on the hierarchy improved business efficiency and served a broader
industrial zone and expanded the coverage of wooden packaging
of the e-commerce express business and continuously improved warehouse sorting capacity and business forecasting direct agricultural product market with a more cost-effective mode;
such as wooden pallets and wooden frames to reduce damage to
the gross profit of its e-commerce express products improving delivery from the warehouse to destination helped reduce the * Business innovation: We actively expanded emerging
goods ensuring the safety of goods transportation. The delivery
profitability significantly year-on-year. pressure from departure sorting hubs. categories and subdivision scenarios including prepared meal
terminal used electronic receipts to replace paper receipts to
live delivery fishing scenes etc. in which the field of prepared
(2) Franchise brand service III) Freight improve customer convenience and reduce customers’ costs; * meal has integrated warehousing + cold chain + scientific and
Improve delivery flexibility by mode innovation. In short-distance
In 2022 Fengwang Express continued to expand the coverage In 2022 the Company recorded tax-exclusive revenue of technological capabilities formulated industry supply chain markets dominated by economic circles goods were collected
of the national service network improve the self-dispatch ability RMB27.92 bi l l ion f rom fre ight bus iness represent ing a solutions cooperated closely with the government associations and delivered directly at the collection terminal to reduce costs
of express delivery and promote the integration of network year-on-year increase of 2.3%. and leading brands and jointly held a number of industry press and improve delivery speed. In traditional markets dominated
resources so as to ensure the orderly growth of business scale conferences to promote the development of the industry; *
In 2022 affected by economic downturn and the increase in raw by industrial zones with the help of third-party dedicated line and improve business efficiency. The self-dispatch ability of Technology empowerment: Convenient technology tools such
material and energy prices production and consumption were resources we improved the delivery quality and price performance Fengwang franchise outlets has been significantly improved as Xiaoguoguo management system Fengshou and drop shipping
inhibited resulting in reduced logistics orders and general decline of high-kilogram goods. In the future we will continue to focus reducing the dependence on the self-operated network of SF were researched and invested to help farmers sell deliver and
in the growth rate of cargo volume of major players in the express on industrial and commercial deliveries innovate multi-mode Express and reducing the operating cost. At the same time settle; * Brand building: The Company invested special funds
synergetic self-operated network promoted the integration industry. However with the introduction of national policies to
delivery to reduce costs and comprehensively enhance the
and subsidies to cooperate with the government of the place of
competitiveness of large products in industrial areas and
of branch lines and reused the resources of direct branch expand domestic demand and boost the economy and the rush origin to jointly build 16 regional brands of agricultural products
high-kilogram sections.lines to increase the bulk cargo shifts of Fengwang Express. of charter flights to catch up with overseas markets the markets to help agricultural products “go global”.The franchisees also could pick up the goods at the nearest of manufacturing and services will be recovered. SX Freight franchise network continued to expand its business
(2) Food cold chain:direct outlets improving the bulk cargo capacity of Fengwang SF Express adhered to the philosophy of “faster and more scale and the market share of cargo volume scale ranks top fourExpress. In addition hubs of Fengwang Express were piloted at stable efficiency wider and deeper scope and more specialized in the franchise express industry. The number of franchised outlets In 2022 the Company’s food cold transportation businessthe concentrated collection terminal to help the concentrated and stronger capabilities” for large parcels service to provide increased to 15000+. SX Freight further improved network remained steady growth and the profitability of the business
collection and packaging of self-operated network and improve better service guarantee for customers against the backdrop coverage operation efficiency and service quality by building its continued to improve. * Product optimization and upgrading:
the utilization rate of transit resources of Fengwang Express. of numerous externa l cha l lenges. The overa l l NPS (net own backbone network in core areas and integrating remote We optimized the original cold chain LTL products and newly
We built a comprehensive credit index system of outlets deeply recommendation score by users) remained a leading position areas with self-operated network sites and vehicle coordination launched the “cold chain large-size parcel standard express” and
engaged in the digital construction of outlets to achieve the and the peak daily freight volume of the self-operated network so as to achieve double growth in scale and efficiency. “cold chain large-size parcel to the port of destination” matched
online operation monitoring; and built a portrait system of reached 54000 tons. The peak daily freight volume of the the targeted business strategy combination around the customer
couriers carried out refined employment management and IV) Cold chain and pharmaceuticalsfranchise network reached 24000 tons and the overall scale of needs refined management and operation turning losses into
launched the function of courier’s wallet to achieve the special the large cargo business remained the leading position in the In 2022 the Company recorded tax-exclusive revenue of profits for cold chain large-size goods; * Improve service
rewards being paid directly to couriers and lay a solid foundation industry; At the same time we optimized the product structure RMB8.61 billion from the cold chain and pharmaceutical business capability: Focusing on the online and offline omni-channel
for the delivery fee being paid directly. integrated internal resources to promote cost reduction and representing a year-on-year increase of 10.4%. service needs of merchants we enhanced the capacity of 2B
efficiency improvement. warehousing + trunk transportation and formed an all-scenario (3) Integrated warehousing and distribution service According to China Federation of Logistics & Purchasing the solution of cold chain circulation covering 2B (large-size) + 2C
S F p r o v i d e s m u l t i - l e v e l n a t i o n a l w a r e h o u s i n g a n d In terms of To C scenarios we consolidate the barriers to market size of China’s cold chain logistics is expected to exceed (express delivery) + instant orders (delivered in 2 hours) with
warehous ing-d is t r ibut ion serv ices inc luding customized terminal service capabilities focus on providing more professional RMB490 billion in 2022 representing a year-on-year increase of the national warehouse division mode and the large-network
warehouses standard warehouses and economic warehouses. services around the furniture and household appliance industry approximately 7.2%. The total revenue of the top 100 enterprises distributed mini warehouse + instant delivery service capability
Combined with self-operated distr ibution and third-party and strengthen the terminal delivery capability so as to specialize of China’s cold chain logistics amounted to RMB92.7 billion in providing the best solution of time-definite and cost for various
distribution different services and pricing combinations cover and refined our business. * Furniture industry: expand the 2021 accounting for 20.3% of the total industry size with the different needs of customers and obtaining more business shares
different levels of customer needs. In 2022 focusing on improving service categories at the collection terminal increase the coverage concentration increasing year by year. With the implementation of from customers; * Improve the efficiency in the storage: All
the business health and operation refinement we enhanced to ultra-long and ultra-wide furniture and gradually invest in the blueprint guidance and planning of the “14th Five-Year Plan” SF cold storages have completed the switching of self-developed
the integrated warehousing and distribution service capability the delivery terminal with two full-time couriers to improve cold chain logistics development plan many national ministries cold chain storage management systems and the vast majority of
and profitability. * Business optimization: We sorted out and the installation capacity at home; * Household appliance and commissions have issued cold chain logistics support policies cold storages have realized paperless operation in the warehouses.returned low-efficiency warehouses optimized the customer industry: a large appliance production warehouse with a total to help the high-quality development of cold chain logistics. At Combined with automation construction process optimization
structure improved the business health and paid attention area of 130000m2 has been put into operation covering the core the same time with the rise of the prepared meal fresh food and the increase in the proportion of self-owned employees the
to operating efficiency to continuously improve the average production areas of household appliances and improving the live streaming and other business forms the demand for cold storage service capacity and operational efficiency have been
quality assurance of order delivery through the warehousing and chains in the fresh food retail market has grown rapidly and the significantly improved and the production capacity level has
trend of online and offline channel integration multi-batch and reached a stable support for the peak of e-commerce promotion
small-batch transportation has become increasingly prominent. business. * Strengthen quality management: In 2022 SF Cold
SF Cold Chain remains its leading competitive advantage in the Chain once again passed the national five-star cold chain logistics
020 021Chapter 3 Management Discussion and Analysis
enterprise certification and continued to expand the scope of (1) Explore “new consumption” service scenarios to in business hours and help customers expand operations while (2) International freight and freight forwarding
ISO22000 food safety management system certification. At maintain a stable business growth achieving growth of SF Intra-City business. The Company has
“ ” The international freight and freight forwarding business faced present six cold storages for food have passed the international powered its delivery capacity of two-wheeled + four-wheeled
As for merchants SF Intra-City continues to help customers a relatively volatile external environment in 2022. In the first
standard certification. At the same time the industry service vehicles to meet the needs of non-standard delivery scenario
in various industries establish professional and differentiated half of the year the business continued to maintain a good
standards in various segments are continuously improved to services such as long distance large weight multi-point delivery
performance standards and serv ice exper ience improve growth momentum. However in the second half of the year due
establish a high-quality benchmark for cold chain services. and errands. During the reporting period with the percentage of
advantageous experience and delivery capabilities and develop to the weakened global economy beyond expectation shrank
orders for medium and long distance over 3 km increased the
(3) Pharmaceutical logistics: mature solutions in various industries such as cakes and flowers expenditure from consumers and excessive inventory caused by average delivery time and the on-time delivery rate remained at
supermarket fresh food pharmaceuticals and special ized excessive orders in the previous period the trade demand for
In 2022 SF Pharmaceutical Logistics focused on operation a high level. Furthermore fluctuations in peak-season the on-markets. For diversified traffic platforms SF Intra-City actively international goods and the number of production orders dropped
optimization to create a benchmark case of pharmaceutical time delivery rate remained below 2.5% during public holidays promotes ecological co-construction with major platforms seeks significantly. Meanwhile the freight rates dropped rapidly from
logistics services: * Product incubation capability: We and the number of cities with night (24-hour) delivery services the convergence of live-streaming e-commerce and on-demand the historical high level in a short period of time due to the
focused on the incubation of logistics product systems in five increased.delivery service and builds cooperation with short-form video and recovery of air and marine resources and the substantial changes
major segments: vaccines IVD (in vitro diagnostic products) live-streaming e-commerce platforms so as to provide users with VI) Supply chain and international business in the supply and demand sides put significant pressure on thepharmaceutical e-commerce hospital samples and pharmaceutical the consumption experience of “instant viewing purchasing and international freight and freight forwarding business.circulation and continuously breakthrough new scenarios/ delivery” and “stock up first and send later”. In 2022 the annual In 2022 the Company recorded tax-exclusive revenue of
capabil it ies to obtain business opportunit ies; * Vaccine RMB87.87 bill ion from the supply chain and international Although facing greater challenges the Company actively looked paying merchants reached 330000 representing a year-on-year
transportation: SF Pharmaceutical has established a vaccine business representing a year-on-year increase of 124.1%. Since for new business opportunities further optimized the incentive increase of 27.7%.transportation solution and a one-stop guarantee system the merger of Kerry Logistics in the fourth quarter of 2021 the mechanism for business opportunity reported and contracted that
including a series of software and hardware resource systems As for retail consumers SF Intra-City provides diversified and Company has scaled up its supply chain and international business has been piloted in some cities by virtue of its domestic network
such as GSP vehicle transportation vaccine safety and quality high-quality on-demand order fulfillment services covering operations. coverage advantages in an effort to incentivize such business
scenarios such as life assistance health care and commercial divisions to seize opportunities in the international freight and
standards operation SOPs and information management systemsagents. Thus the consumer’s mind of “prefer SF Intra-City to (1) International express freight forwarding business striving to secure new contracts withthat meet national vaccine transportation standards; Since themake important on-demand deliveries” can be shaped. We have * Put more efforts into improving services in Southeast certain customers. The Company provided customers with end-to-launch of the business the total number of vaccines delivered
* launched a new and upgraded service
“worry-free delivery” Asian countries: We aim to create benchmark products targeting end solutions through combination of multiple logistic business amounted to 967 million including 281 million in 2022; Build
centering on valuables to secure full-process monitoring and Southeast Asian countries. By increasing the number of direct capabilities to improve competitiveness of the international freight IVD and biological sample scenario service capability: We
full-amount speedy claims for insured products. We have created flights of international cargo scheduled routes to Singapore and freight forwarding business. In addition the Company has actively expanded the upstream and downstream ecosystem
a team of “pioneer deliverymen” to ensure high-quality order achieved the integration of demands for international express
service modes of the medical laboratory industry built a Malaysia Thailand Vietnam and other countries with all-cargo
fulfillment delivery facing a substantial increase in individual flights and leveraging Kerry Logistics’ resources and capabilities and international freight businesses on international routes door-to-door temperature control transportation service solution
orders as well as the increased demand for medium and long and the unified planning and evaluation of their route opening
for multi-temperature zone and a full life cycle supervision in Southeast Asia the Company broadens the scope of services distance and non-standard services. In 2022 the active consumers improves service timeliness and achieves rapid business growth; and frequency increase to improve the operational efficiency of and traceability platform around the IVD and biological testing reached 15.6 million representing a year-on-year increase of * Improve the international network layout: we have international route operations.sample fields realized a breakthrough in the scenario of 24-hour 47.5%.express delivery to the dry ice temperature zone of biological launched the routes from China to India Egypt and Kenya (3) Supply chain: SF DSC and New Havi provide local supply
samples and preliminarily built a national 72-hour temperature (2) Continue to improve science and technology systems routes from Nepal Bangladesh Pakistan to other overseas chain services in China while Kerry Logistics mainly provides
control service network for IVD; Through the establishment of to achieve efficient scheduling in multiple scenarios countries and strengthened the layout of routes to Europe global integrated logistics services.Yilushunxin platform system the single window enquiry of full and the United States. We have also increased the number of SF Intra-City continued to improve the three core functions in our routes of Hangzhou-New York and Wuhan-Frankfurt and added In 2022 the domestic supply chain cycle was blocked temporarily. order management of medical customers could be realized and CLS system including intelligent business planning and marketing Wuhan-Liège route to cover the Asia-Pacific region bridge The Company’s block chain business was exposed to more
the customer service experience could be improved. management deliverymen integration scheduling and intelligent Europe and the United States so as to continue to improve the challenges and business growth was impeded. Against the
order distribution and intell igent operation optimization.V) Intra-city on-demand delivery global express network layout. * Enhance customs clearance
background of the uncertain environment the Company improved
By continuously optimizing the logic and algorithm of order capabilities: We continue to integrate self-operated and agency the flexibility and resilience of its supply chain services and
In 2022 the Company recorded tax-exclusive revenue of RMB6.44 recommendation and deliverymen scheduling we have achieved customs clearance resources. As of the end of 2022 we have guaranteed the continuous and stable operation of customers’
billion from Intra-city on-demand delivery business representing a optimal matching of orders and deliverymen which improves licenses or resources for clearances in approximate 70 customs supply chains through cross-warehouse resource integration
year-on-year increase of 28.6%. unit fulfillment costs per shipment while supporting efficient clearance ports in the world and the services radiate to major multi-point layout and coordination in key cities and surrounding
fulfillment. regions such as the Americas Japan South Korea Southeast areas.Facing uncertainties in the external environment SF Intra-City
adhered to sustainable high-quality and healthy development At the same time based on our accumulation and improvement
Asia and Europe. The number of domestic AEO advanced In terms of business development * SF DSC analyzed and
of smart logistics technology capabilities SF Intra-City launched certifications increased to eight and the import and export and achieved signif icant improvement in its profit while optimized the industrial system it serves forming four cornerstone
maintaining sound business growth. In terms of revenue the “SF Delivery Cloud” (丰配云) SaaS instant logistics system
customs clearance and end-to-end service capabilities were industries including automobiles fast-moving retail high-tech
business models and income structures were more diversified to provide one-stop intra-city logistics solutions for brand
improved. * Refine operation with technology: We leverage and industrial manufacturing and three industries with high
and professional and differentiated services drove the growth owners with self-delivery business covering all processes of
intelligent technologies and means such as big data blockchain potential including pharmaceutical and health fashion boutiques
intra-city instant delivery. Thus we enabled merchants to realize and intelligent algorithms to achieve accurate planning and of high-value orders. Personal service non-catering scenarios and energy. We have also launched three major product services
omni-channel order access and efficient management of the fine management of end-to-end routing. Furthermore we have
and the continuous expansion of lower-tier cities and counties in transportation customs and 4PL thus providing personalized
entire process increasing efficiency and cutting costs. realized visualization and closed-loop management and control
became the main driving forces. In terms of costs economies and customized services for customers in various industries; of abnormal events and deep optimization of elements in each
of scale are further released technology-driven comprehensive (3) Consolidate the diversified transportation capacity * new Havi adopted a flexible market strategy and focused process. Thus the average time consumed by international
overall planning and scheduling achieved better transport capacity network ensuring high-quality and stable delivery its expansion of new customers on the advantageous business express products in the entire process was shortened by two of western cuisine chains and coffee and tea drinks. We dug
and efficiency the continuously refined management improved
SF Intra-City has formed a nationwide comprehensive capacity days effectively improving product competitiveness and customer deeper into the existing business potential thus winning more
operational quality and increased input-output ratio of resources
scheduling network covering approximate 2000 cities and experience. service content and market coverage with high-quality services
and achieved operating efficiency enhancement and cost
counties to meet customer needs such as the expansion of
reduction.stores the extension of store delivery scope and the increase
022 023Chapter 3 Management Discussion and Analysis
and integrated solutions. We extended the product line into dispatch points and warehouses in various business networks loading rate of trunk lines increased by 7 percentage points the (3) Optimization of terminal networks: By promoting the
the upstream and downstream of the supply chain such as and planned for new site demands in a unified manner. loading rate of branch lines increased by 11 percentage points mode optimization of direct sorting at the transit depots + goods
production and processing trade capability enhancement Among others 65% of the new demand realized merit-based and the large-size parcel loading rate of trunk lines increased by directly distributed to the smallest collecting and dispatching unitetc.; and * a synergy has been created between domestic and arrangement and construction based on three types namely “the 3 percentage points. To a certain extent the pressure from the area at the terminal the process of terminal outlet was simplifiedinternational supply chain service capabilities. We have been able same site the same park the same region”. As for the existing rising oil price and the rising capacity price was eased. the demands for outlet area and equipment were saved and the
to provide customers from various industries with comprehensive sites with a surplus usable area we increased the utilization increment of traditional outlet was effectively restrained under
(3) Terminal: We integrated the outlets resources collection
supply chain services covering all scenarios from domestic to rate of the existing sites through internal demand coordination the background of business growth. Meanwhile we leveraged a
and distribution resources and branch lines resources of various
international from the front-end procurement and production external subletting or timely eviction. As of the end of 2022 the variety of modes to build more terminal sites to receive customers
businesses at the terminal and improved the terminal service
supply chain to the back-end sales supply chain as well as number of sites achieved a net decrease of 49 as compared with saving the round-trip time the deliverymen need and enhancing
capabil it ies and resource efficiency of various businesses.technological solutions. In 2022 we successfully won bids for the beginning of the year. At the same time when the business the customer receiving service capacity. As of the end of 2022
* Construction of integrated networks: We built a total of
and delivered a number of projects to major customers involving was in the trough on holidays we planned for the site operation more than 4800 traditional outlets implemented the above
407 integrated networks capable of collecting and dispatching
domestic and overseas warehouse construction and operation in a unified manner. The small sites were utilized intensively and model optimization adding 9800 terminal stations to receive
small and large-size parcels and realized unified operation
and transportation and distribution services. some sites for large-size parcels were shut down temporarily. The customers. At the same time through the LEAN operation 1045
management at the terminal of small and large-size parcels. Some
average daily number of suspended transit depots for large-size low-efficiency outlets were improved in 2022 and the proportion
In terms of technology empowerment the Company realized networks promoted the collaborative operation of small-parcel
parcels was 40 times during holidays and the average daily of low-efficiency outlets among all networks dropped from 11.2%
online business and digital management internally by building and large-parcel couriers to give full play to the connecting
number of suspended collection and distribution stations was at the beginning of the year to 5.4% at the end of the year.a digital medium office for the overall supply chain. Externally ability of large-parcel couriers and reduce the round-trip distance
301 which effectively reduced the corresponding manpower and Among others 312 low-efficiency outlets were evicted saving
the Company improved its technology product application and between small-parcel couriers and networks. * Transit for
transportation capacity invested to improve business efficiency costs of the corresponding site manpower and branch line.technology service output and strengthened the integration of * direct dispatch: By promoting the mode optimization of during holidays. Operation integration: The Company
existing customer data ends. Furthermore the Company carried sorting at the transit depots + goods distributed to the smallest ⑷ Optimization of deliverymen management: * Protecting
realized flexible coordination in the distribution of small and
out cooperation in automation applications gradually promoted collecting and dispatching unit area at the terminal or directly deliverymen’s rights and interests: through machine learning
large-size parcels and strengthened the final-leg operation of
the automation transformation of operation scenarios and delivered to customers we reduced the investment of terminal we quantified the difficulty level of deliverymen’s operations as
small and large-size parcels on weekdays and during business
improved the digitalization and intelligence level of supply chain. outlets resources in the coverage area of the transit depots. The time consumed and defined the pricing standard for deliverymen
peak seasons among which 78% of large-size parcels and 65%
average daily direct dispatch volume reached more than 6800 collection and distribution unit areas in combination with the
3. Operation optimization of non-standard parcels (large-size parcels weighing 10-15KG) tons. * Fengwang self-delivery: The proportion of Fengwang city’s hourly wage which objectively reflected the difficulty level
were handled by the large-size transshipment network during
express delivery completed by franchisees independently increased of labor and realized a better matching of deliverymen’s labor
In 2022 the Company continued to strengthen its integration peak seasons thus releasing the production capacity of 1270000 by 48 percentage points year-on-year fully releasing the dispatch and the income. Furthermore the accuracy and online level of
and innovation capability driving a shift in business perception parcels at small sites on a daily average basis and relieving the capacity of self-operated network terminal. Combining the above the income distribution was improved. In 2022 a time-consuming
away from “operation” toward “management”. To promote the pressure of small-scale parcels sorting. When the business was in measures in 2022 717 large-parcel collection and distribution pricing model was established for more than 4 million collection
revolution of the entire network operating mode we focused the trough on festivals and weekends the Company enhanced stations were integrated and reduced with an area of 130000 and distribution areas giving priority to improving the per capita
on the optimization of the end-to-end operation process. In the the coordination in operation by handling nearly half of the square meters saving the corresponding cost of sites manpower income of deliverymen in some areas in difficulties achieving a
pre-planning link focusing on coordination between operation large-size parcels in the small-size parcel transshipment network and branch lines. 12% increase. * Digital management: The Company is the
and planning across the network we integrated the resources thus increasing the utilization rate of small-size parcel sites and first to create a new digital evaluation mechanism in which
of multiple business networks horizontally to implement unified supporting manpower and transportation capacity resources. II) Operating management the service quality is connected with the income and rights of
planning and arranged the end-to-end resources of operation (2) Transportation: We made an overall arrangement for lines ⑴ the deliverymen so as to drive the self-management of the collection transportation and delivery vertically from a global Enhancement of transit capacity: In order to cooperate with in the same flow direction for various types of products gave deliverymen and effectively improve the service quality. As of
perspective to achieve more scientific network planning and the transformation of business models such as transit for direct full play to the economies of scale realized the straightening the end of 2022 a total of more than 90000 person-times of
accurate resource input. In the operation link we promoted dispatch we improved bins-sorting accuracy and sorting efficiency of routes increased the number of flights and increased the deliverymen achieved income increase through this evaluation
the integration of multiple networks to strengthen the integration in transit depots and continued to develop innovations in transit resource utilization rate of low-load lines on the basis of meeting system. In 2022 the customer complaint rate decreased by
of transit transportation and terminal resources of multiple equipment. In 2022 the automation equipment was upgraded in the timeliness requirements of various products. * Lines 33% year-on-year and the negative review rate decreased by
business networks. As a part of the integration business 47 transit depots which enhanced the daily handling capability integration: We planned accurate investment in transportation 34% year-on-year in the regions where this function had been
was interconnected with finance for close control to monitor of small-parcel transit depots by 12.1% reduced the manpower capacity in accordance with the business conditions reduced piloted. * Tool support: We explored and innovated an online
resource effectiveness on a daily basis and quickly make dynamic input in transit and improved operational efficiency by 7.8%.low-load lines integrated 570 trunk lines by the end of 2022 management platform suitable for the Standard Operation
adjustments and responses to anomalies. In post-action link further reduced the proportion of low-load trunk routes (loading ⑵ Land transportation resource management: * In terms Procedure (SOP) for collection and distribution in the logistics
we reviewed the effect of reform and the efficiency of resource rate below 30%) from 6% to 2% and integrated 839 branch of controllable transportation capacity we increased the industry and realized real-time query and agile iteration of
utilization strengthened the LEAN management and endeavored lines. * Warehouse filling on lines: We adjusted the line investment in self-owned and leased vehicles and the proportion operating standards. At the same time the SF Collection and
to improve the timeliness and quality of related services while integration method of the self-owned direct network and the of controllable transportation capacity of branch lines increased Distribution APP was restructured and optimized according to
ensuring optimal business performance. franchised network for large-size parcels. According to the two by 11 percentage points year-on-year. Meanwhile we supported the delivery standard making SF deliverymen’s collection and
different demands for transportation timeliness and cost the the reform of the driver accrual model. Through the reasonable distribution more efficient and convenient and the service more I) Multi-network coordination
franchised network can properly store goods and match the empty distribution of income and optimization of driver scheduling standardized. The satisfaction rate of deliverymen’s operations
Overall direction: Based on the needs of various types of products warehouse resource of the same line used by the self-owned we achieved “More pay for more work” and increased the increased to 92% and the operation efficiency increased by
in resources we implemented the all-inclusive end-to-end unified direct network thus filling the warehouses and shortening the human resources efficiency of self-owned vehicle drivers by 16% 16%. * Improving skill training: The Company improved the
planning of the logistics network to avoid repeated investment empty warehouse cycle of the early input line of the large-size year-on-year. Through the “drop and pull” mode we separated whole life cycle training system for deliverymen by establishing
in resources and integrated the network operations of multiple self-owned direct network. In 2022 the Company realized the truck and the trailer to save vehicle allocation and increase the course system composed of pre-service training (0-15 days)
businesses to achieve economies of scale efficiency enhancement warehouse filling of cargoes with an average daily volume of vehicle efficiency. * As for outsourced transportation strengthening period (16 days-3 months) consolidation period
and cost reduction. more than 2200 tons in the franchised network effectively saving capacity centralized procurement of conventional transportation (4-6 months) development period (6 months or more). We also
the cost of transportation capacity. * Routes optimization: was directly managed by the headquarters. By optimizing the upgraded the mentor-apprentice management model by adding
⑴ Distribution: The Company integrated its existing site
In combination with lines integration and intensive delivery of bidding and settlement model of outsourced lines we promoted more than 2000 mentors on the cloud-based platform which
resources to increase the utilization rate of site and support
cargoes we continued to optimize the land network planning the outsourcing suppliers to join a community of interests. Thus broke the restraints of time and space and created intelligent
manpower and transportation capacity. We made uniform
added 265 new direct trunk lines increased transportation we effectively guaranteed the demand for vehicles during peak mentors for man-machine conversation. We launched the new
plans for incremental site demand and prevented redundant
frequencies for 258 transport lines among our existing lines periods further reduced temporary transportation capacity input learning platform “Deliverymen School”. 170000 new workers
construction. We coordinated operation between sites to enhance
and enhanced the timeliness and competitiveness of land and saved transportation capacity costs. received pre-service training. 30000 workers received intensive
risk resistance capacity. * Site integration: We promoted
transportation. Combining the above measures the small parcel training. Courses were offered to 1155 courses were offered for
the coordination construction of transit depots collection and
on-job training. There were more than 61.41 million person-times
of trainees in total.
024 025Chapter 3 Management Discussion and Analysis
3. Core competitiveness
Efficient and reliable global logistics infrastructure network
Caucasus Global service network
Europe Armenia coverage mapAzerbaijan Central Asia East Asia North America
Ireland Austria Belgium Georgia Kazakhstan
Latvia Bulgaria Czech Republic China Japan CanadaKyrgyzstan Domestic
Lithuania Cyprus Germany South Korea MexicoTajikistan Mainland China
Luxembourg Denmark Italy Mongolia United StatesTurkmenistan Hong Kong SAR
Malta Estonia Netherlands Uzbekistan Macau SAR
Romania Finland Poland
Taiwan China 335
Slovakia France Portugal
prefecture-level cities covered
Slovenia Greece Sweden
Spain Hungary Ukraine in China (Including municipalities)
Norway Switzerland UK
City coverage
Russia
99.4%
County-level cities covered in China
2813
County level coverage
97.6%
Bangladesh Overseas
India South America
Pakistan International express delivery and
Sri Lanka Argentina Uruguay supply chain business
Nepal Colombia Chile
Venezuela Panama
South Asia Suriname Brazil
Ecuador Guatemala 98
Bolivia Peru countries and regions covered
Bahrain
Oman Cambodia
UAE Indonesia Cross-border e-commerce
Saudi Arabia Laos
Uganda Mali delivery businessJordan Malaysia Australia
Egypt Congo Qatar Myanmar New Zealand
Mozambique Kenya Israel Philippines
Nigeria Morocco OceaniaTurkey Singapore 208
Republic of Congo Tanzania Thailand countries and regions covered
Senegal Cameroon Middle East Vietnam
South Africa Ghana Brunei
Togo Ethiopia
Africa Southeastern Asia
026 027Chapter 3 Management Discussion and Analysis
We are operating a cargo airline that is the largest in China and maintains leading Our extensive resources of transportation mode allow us to provide domestic
position in the world and we are also the largest shipper of air cargo in China and cross-border multi-modal transportation services for our customers
Note: For the data below the time points are all as of December 31 2022 and the periods are all from January 1 2022 to December 31 2022. Note: For the data below the time points are all as of December 31 2022 and the periods are all from January 1 2022 to December 31 2022.Total air cargo volume of exceeds SF’s domestic cargo volume accounted for Average daily ights
Land transport
1950000 tons 38.9% of the national air cargo and mail traf c 3000 times
9500012000097000
dry and feeder trucks under domestic transport routes vehicles for end-of-line collection
All-cargo aircraft management worldwide and distribution
97 731 287 138 1000000 tons
all-cargo pilots in service pairs of ight rights routes operated of cargo worldwide
aircraft in operation 327 captains 58 domestic worldwide Of which more than 190000 tons Rail
77 aircraft owned 404 co-pilots destinations covered 51400 ights were shipped internationally
Including 3 B747 44 international and 67 international
17 B767 40 B757 regional destinations routes in operation Express delivery products
17 B737 Over 6700 ights
High-speed rail products with 4 8 Total volume of shipments nearly 927 pairs (or columns) 137flows of special express trains lines of general railway trains 480000tons
Bulk resources
2854 11000 1020000 950000 International trains
385 34 Handleddomestic routes international routes ights tons of cargoOf which over 340000 tons were
shipped internationally lines in operation countries and regions covered 150000 TEU of containers by rail
SF has built Ezhou Huahu Airport with
partnership with the government. It
is the first cargo hub airport in Asia
and the fourth in the world. The
airport completed its test flight in Sea freight
March 2022 and was officially put
into operation in July. Two flight
routes namely Ezhou-Shenzhen and
Ezhou-Shanghai were launched for
cargo transportation at the first stage.Within 2023 more than 40 domestic 19000 700 179 countries and 1170000 TEU
ca rgo a i r l i ne s w i l l be opened .Fu r the rmore we w i l l p romote maritime routes in operation port terminals reached regions covered shipped by sea
the opening of more than two
international cargo airlines including
Ezhou-Osaka and Ezhou-Frankfurt by
considering the opening process of
the ports.SF’s hub transfer center is located
in the central area of the airport.The main part of the transfer center
project has been completed and hub-and-spoke air network by leveraging Ezhou hub. It is expected to further increase cities covered with
the phase I so r t ing equ ipment high time-definite services and reduce the unit cost of aviation by adding large aircraft.installation was almost finished. Now
it is entering the stage of equipment
stand-alone commissioning and the In addition as a core air freight hub the 1.5-2 hour flight from Ezhou Huahu Airport can cover an area
whole-site joint commissioning with accounting for 90% of the national economic population. The airport city is expected to introduce high-
all links of the airport system. The end manufacturing biomedicine fresh cold chain cross border e-commerce electronic spare parts
overall project is expected to be put emergency rescue and other industries combined with SF’s all-cargo routes covering the entire country
into operation in the third quarter of and radiating the world to help realize the country’s industrial upgrading and enhance the strength of
2023. The Company gradually plans the international supply chain.
and adjusts the air network to build a
028 029Chapter 3 Management Discussion and Analysis
The global presence of our outlets has been a contributor to our We boast many key site resources in China and Southeast Asia such as
international and localized operations logistics industry parks and logistics centers
Note: The data below are all as of December 31 2022 Note: The data below are all as of December 31 2022
Total land area Total building area of
Service Points 15625 mu 10.13 million sqm
2900020000300000
Completed operational projects Projects to be completed in 2023 and beyond
domestic service outlets and other overseas self-operated & HIVE BOXes
service stations cooperative points Land area Building area of Land area Building area of
million million
179000 430000 Covering 11672 mu 6.75sqm 3953 mu 3.39 sqm Changchun
domestic end-to-end cooperative service Network-wide couriers 190000 communities
points (including city stations and rural distribution shops)
Urumqi Beijing Weihai
ai S
ea
Tianjin Boh Qingdao
Weifang Seaw
Hebi Yello
Nanjing
Transit depots Zhengzhou Lianyungang YanchengNantong
Luoyang ChangzhouHuai’an
ina S
ea
Xi’an t C
h Wuxi
Hefei Eas
Suzhou
Express depots MaanshanXiaogan Yiwu Kunshan
Wuhu
Wuhan Shanghai u
Chengdu Quzhou ei
Y
379 39 36 304 Jiaxing C
hiw
Nanchang
Yiyang
Lhasa Jinhua Wenzhou s
Chongqing u Isla
nd Ningbo
r Changsha aoy
ve Quanzhou D
i Hangzhou
transit depots in operation hub-level depots air and rail sites regional depots Ri
tz
e Ganzhou
ng Guiyang Xiamen
Ya Guangzhou
Taiw
an
Freight depot Liuzhou Foshan Dongguan
Mundra Zhongshan Huizhou
Nanning
Zhuhai Shenzhen
157 25 132 Hong Kong gsha IslandsDonHaikou
operating depots hub-level depots regional depots Mumbai ainan IslandH
Bay of Bengal
nds Island
Xisha I
sla
Huang
yan
na Seahi
Yangon Region Rayong So
uth C
Da Nang City s
Warehouses ndongsha IslaZh
2071 covering 93 Tamilnadu
operational warehouses 10 million sqm franchised warehouses
Shoal
Phnom Penh James
82 20 1431 covering Mandalay RegionCompleted operational projects
food warehouses pharmaceutical overseas warehouses 1.54 million Projects to be completed in 2023 and beyond Binh Duong Provincecovering warehouses covering covering sqm
Tampines
550000 sqm 200000 sqm 2.9 million sqm Chonburi Province
Samutprakan Province
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 are
multiple projects in that city and their completion dates fall in different intervals.Note 2: The above data includes industrial park projects that have been placed into the asset-backed special scheme and the logistics real estate development fund
030 which are operated and managed by the Company. 031
Yellow River
Nansha IslandsChapter 3 Management Discussion and Analysis
2 . C o m p l e t e e n d - t o - e n d o n e - s t o p Our services have penetrated into a wide variety of businesses 3. Cutting-edge technology for a digitalized visual and intelligent supply chain
comprehensive logistics service capability such as industrial manufacturing commercial circulation online
sales of agricultural products food and pharmaceutical cold chain
Adhering to the diversification-oriented strategic planning international trade local life etc. covering all aspects of social
production and people’s livelihood. Boasting efficient express SF is committed to building a smart supply chain ecosystem in as the logistics and supply chain industry the government and and based on a fully established and efficient express network
logistics services lean supply chain management experience and the digital age and establishing itself as a leader of smart supply universities to enhance the social influence of SF Technology. The through “internal cultivation + external mergers and acquisitions”
a powerful logistics network that penetrates into rural counties chain. SF combines the massive data and industry solution Company was selected for the International Organization Award the Company horizontally branched out into new businesses
towns and villages in China and covers 98 countries and regions experience gained in diverse businesses with the application of
“2022 World Internet of Things Ranking List” the well-knownand acquired high-quality industry partners to gradually grow “ ’around the overseas market we actively respond to the “go leading digital visual and intelligent logistics technologies to media award 2022 Fortune s Most Influential IoT Innovation List”into China’s largest express logistics service provider covering promote full-link supply chain technology innovation and help and the field of artificial intelligence “BPAA Second Screeningtime-definite express economy express freight cold chain and to the countryside go to factories and go global” campaignlaunched by the government for the development of modern clients in various industries create a modern supply chain system on Practices of Applied Algorithms – Business Track Global Top pharmaceuticals intra-city on-demand delivery international with efficient response. Ten” and other honorary awards. Meanwhile the Company
express international freight and freight forwarding and supply service industry and express delivery support rural economy
revitalization intelligent manufacturing and industrial upgrading participated in the key research and development program chain focusing on logistics ecosystem development as the top As of the end of the reporting period SF had taken out 4452
and build on our capability to protect the international supply initiated by the Ministry of Science and Technology for the first priority. patents and 2490 software copyrights with invention patents ’
chain; furthermore we actively embrace new patterns and trends time demonstrating the Company s commitment to promote accounting for 64% of the total number of patents obtained.At the same time we also vertically improved the product matrix in the industry to help clients innovate business models enhance intelligence of hub-level parcel processing centers in the industry.The Company actively cooperates with social organizations such
through direct operation franchise external cooperation and consumer perception experience and practice the delivery and
other models; in each market segment of every business sector protection of a better life.we have launched high-quality services targeting medium – and
high-end consumers as well as cost-effective services for markets
in lower-tier cities. Through effective product stratification and
organic combination between different products we cater to the
diverse needs of clients and developed complete end-to-end one-
stop integrated logistics solutions. Frontier technology
Continue to explore the revolution and application of frontiers of
unmanned AI digital twin privacy computing etc. in the logistics
technology area so as to ensure the future technological competi-
tiveness of SF.Digitalized and intelligent supply chain
Technology empowers the end-to-end digitalized and intelligent
transformation of the supply chain joining hands with customers to
create an efficient and flexible supply chain and enhance the
competitiveness of SF's one-stop integrated logistics services.Smart brain
Implement the digitalized construction of full-link logistics network
and create the smart brain of SF to help the Company carry out
business model transformation and support the LEAN operation
and realize efficiency enhancement and cost reduction.Data medium office
Build a shared credible timely and global data medium office and
establish data ecosystems to lay a solid data foundation for the
digitized and intelligent upgrading of the Company as a whole.
032 033Chapter 3 Management Discussion and Analysis
Industries
Industrial Automobile Communication Healthcare Public service Enterprise and Domestic Apparel Consumer Fresh food E-commerce Finance and
manufacturing and high e-governance appliance shoes and hats goods and movement insurance
technologies
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stic factory
Supply Procurement Production Movement Consumption
chain service Production planning management | Supplier management | Global one-stop Central warehouse for raw materials | Bonded warehouse | Line warehouse | 2B warehouse | 2C warehouse |Cold warehouse with multi-temperature zone | GSP Ultimate time fulfillment: Specified minutes delivery | Specified hours delivery |
sourcing | Import and export customs clearance | Bond management | Warehouse for finished goods | Warehouse for spare parts pharmaceutical warehouse | Bonded warehouse | Overseas warehouse | FDC Half-day delivery | Same-day delivery | Next morning delivery | Next day
Vehicles for trunks | Less-than-truckload transport | International freight Warehouse network planning | Intelligent warehouse construction | VMI Warehouse network planning | Intelligent warehouse construction | B2B2C+online and delivery...(air-sea-land-rail multi-modal transport) inventory management | Warehouse operation | Value-added services offline inventory | Intelligent warehouse allocation | Integrated warehousing and Return and exchange | Delivery to outlets | Delivery and installation | After-sales
(supply chain finance packaging and processing) distribution | Value-added services | Import and export customs clearance maintenance
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 special delivery | Overseas
multi-modal transport) warehousing and distribution
Supply chain base
Empowered 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 AI-powered video surveillance | Real-time data sensing 2B2C shared warehouse operation Full-cycle visible multi-modal transport inventory management | Online omnichannel store operations | Blockchain traceabilityIntelligent warehouse allocation | Integrated warehousing
and distribution | Recommended packaging
034 035Chapter 3 Management Discussion and Analysis
⑴ Consolidate the digital and intelligent foundation: the construction of public database Digital intelligence of forecast & scheduling
Data medium office: By building a shared credible timely and global data medium office we facilitate the healthy operation of business Based on big data operational research and artificial intelligence we created a global
and the construction of data ecosystems. intelligent decision-making system covering“ forecast→early warning→scheduling→feedback”.We accumulate common and highly reusable data among various business lines on the medium platform create a shared reusable and
trustworthy Common Data Model across business lines at the Group level launch data consumption tools such as data markets to achieve
data compliance sharing help businesses conduct data analysis by themselves improve the efficiency of data retrieval and usage and cut
costs through refined operation management. At the same time we build an end-to-end DataOps one-stop data development platform to Early forecast
improve data development and delivery efficiency promote data governance and optimize quality management platform to find end-to-end
solutions to the quality problems of master data and enhance the trusted service capability of master data. We efficiently apply high-quality
data support the Company to truly rely on data to create business value and support efficient decision-making and business driving before In 2022 under the uncertain changes in the external environment where it is difficult to refer to
planning during the operation and after action. historical performance we continued to improve the meticulousness accuracy stability and timeliness
of forecasting continuously added new business scenarios for forecasting explored and applied
forecasting for more meticulous shifts at sites and supported refined operations. By accurately and
⑵ Upgrading the digital intelligence of the logistics network to create a SF smart Brain timely refreshing the forecast parcel volume during peak holidays we helped sites capacity outlets and
other links to plan and reserve resources in advance improve the accuracy of resource investment and
The overall digital and intelligent level of SF logistics network was improved. Through the digitization of the whole-chain operation of increase profitability during peak holidays. During the Double Eleven period the forecast accuracy rate
collection and distribution transit and transportation together with big data prediction visualized monitoring and early warning the of the next day’s network-wide collection and delivery reached 97% the accuracy rate of collection and
Company realized the overall intelligent planning and dispatch dynamic matching of resources and flat and efficient management. By delivery at the business area level could reach over 90%; through dynamic forecasting the forecast was
relying on AIoT automation and unmanned investment the Company improved network operation efficiency ensuring delivery safety thus refreshed every 2 hours and early warnings were made for shifts exceeding the handling capacity of
facilitating the Company to reduce costs and increase efficiency. the sites helping sites and vehicles in transit to make timely adjustments to ensure service quality.Network planning
We have created intelligent network planning system tools to support rational planning of resource
investment during operations and achieve cost reduction and efficiency improvement. In 2022 our
overall cost reduction reached RMB100 million and we successfully shortened the delivery time of
about 10 million parcels. In terms of trunk lines we used optimization tool to support direct shipping
and increase the frequency of the trunk routes making financial calculation in route investment strategy
during daily life and peak days possible to give guidance for the accurate matching and execution of
resource planning. In terms of branch lines we realized 100% of the application of digital intelligence
tools for the planning of branch lines of the network. We also launched online applications for holidays
characteristic economy and other scenarios. In terms of air transportation we pre-researched flight
scheduling/container flow/container loading model for the first time and applied them to the Double 11
peak.Real-time scheduling
Resources across the entire networks are integrated in real time including grassroots operation posts
tens of thousands of trunk and feeder vehicles thousands of air/rail routes for the construction of
online abnormality monitoring early warning and rescue from transportation distribution to delivery
to ensure the timeliness of potentially delayed express shipments realizing a closed loop of online
abnormality monitoring and scheduling for the whole chain saving an average of 260000 parcels on
weekdays and 900000 parcels on peak days. In particular when dealing with unexpected events such
as bad weather abnormal information can be quickly shared to enable timely notification and enhance
the experience of customers.Digitalized and intelligent distribution
We are committed to constructing automated visual and intelligent distribution hubs creating
an efficient and intelligent logistics hub.Automation Intelligence VisualA u t o m a t i o n e q u i p m e n t w a s A systematic foundation system of “planning-driven sorting plan W e u s e d c o m p u t e r v i s u a lupgraded in 47 transit depots and sorting plan with dynamic adjustment” has been built to technology to perform video
in 2022 boosting distr ibution bridge the gap between planning and actual sorting operations t r a c k i n g a n d o p e r a t i o n
capacity and eff ic iency. As of with digital intelligence allowing planning to better guide mon i to r ing r ea l i z ing who le
the end of the reporting period actual production. The realization of online of sorting plan with process visual traceability helping
au to ma t i c s o r t i n g h ad b een dynamic adjustment has made sorting plan adjustment faster to solve the quality management
achieved for more than 86% of and more automated. After the system launched the average and sa fe ty and r i sk cont ro l
small parcels and over 60% of time of sorting plan process was reduced from 30 minutes to problems of the transit depots.single delivery items (i.e. parcels 2 minutes with a 36.28% improvement in mis-distribution of
that do not require centralized transit destinations and a 47.42% improvement in return rates.packaging). In addition based on the calculation of site capacity and parcel
volume forecast information the system provides early warning
of over-capacity of shifts in transit depots assisting sites to avoid
explosion risks in advance and ensuring transit time efficiency.
60.2% of sites were accurately warned of over-capacity in
advance during the Double Eleven period.
036 037Chapter 3 Management Discussion and Analysis
Digitalized and intelligent transportation Digitalized and intelligent delivery safety
We continuously improved the full-stack end-to-end IT and digital management across various Technologies such as big data AI and blockchain were applied to intelligently capture
transportation modes such as air land and rail transportation. security risk factors and improve delivery safety.Air transportation
We have focused on online resource management to build a
resource pool to enable resource sharing and dynamic booking
of urgent parcels and ensure online support and performance
guarantee for multiple products and different security levels of
operation. At the same time we have launched a pilot projectwith Shenzhen Airport on “one code for freight (货运一个码)” to jointly improve the digitalization of air cargo logistics
trajectory.Automobile transportation
Through intelligent dispatching of vehicles human performance
reform of drivers and refined fuel consumption control we
realized the maximum application of self-owned resources and
improved their utilization rate. Through outsourced resource
consolidation online margin process simultaneous bidding
of multiple resources and intelligent route combination tools
we supported common procurement in various business areas
improved bilateral trunk line shipment rates and achieved Intelligent identification of parcel security risks Intelligent security check
cost reductions of RMB100 million in external transportation
capacity. Through the establishment of a regular transport
time control mechanism we achieved closed-loop control of We built security data foundation for parcels to locate specific Our large-scale application of graph code binding was an initiative
the whole chain of transport capacity and improved supplier factors of breakage and loss through big data identification to achieve data traceability throughout the chain; at the same
satisfaction and transport time efficiency. and analysis we also built a security control system combining time through AI we were able to reduce the manpower input for
business and technology covering security control scenarios. security inspectors achieving better contraband detection rate and
Rail transportation Through closed-loop tracking of relevant risk routes sites lower release error rate than traditional security checks. In addition
intelligent IoT devices and other black spot data (being acquisition without affecting the efficiency of site operations.In the express freight business we realized the online closed- of data regarding parcels in breakage and loss scenario) we were
loop of the entire process from demand to settlement for high- able to build a loss warning process locate high-risk links and
speed rail general train and liner resources; and in terms of the operations for damage.bulk transportation business we participated in the third batch
of multi-modal transportation demonstration projects of the
Ministry of Transportation supporting railway transportation
from pick-up and delivery demand to settlement.Digitalized and intelligent customer experience
Digitalized and intelligent terminal management
Applying the AOI (Area of Interest) technology (a technology for geographic areas of dynamic
digital map operation) we conducted comprehensive digital operation and online management SF has built a service capability and product platform for enterprise customers opened the general capability module of logistics scenarios
of terminal collection and delivery. to customers and provided standardized online services for the whole life cycle of enterprise logistics management from contract signing to
after-sales service. The customer online self-service rate reached 99%. SF realized the digital upgradation of logistics product management
through data and online means improved the product operation efficiency internally and helped build a moat of product competitiveness
externally. Moreover based on the one-stop claims operation platform we captured claims data built a self-service claims model and
Improve collection and delivery capabilities claims solution model to achieve unmanned and intelligent rapid claims processing and improve customer claims experience. The customer
satisfaction rate for full self-service claims is 98.7% and the processing time is 98% higher than that for manual claims. In terms of
active customer service through the AOI area customer behavior data model and AI capability iteration optimization we actively explored
We improved the problem diagnosis and resource input model for collection and delivery areas launched better intelligent solutions to new service scenarios such as pre-delivery booking abnormal parcel processing and intelligent outbound calling to achieve refined and
enhance the problem improvement rate. In problem areas using solutions recommended by system intelligence we achieved improvement differentiated customer service for different customers.rate of 22.65% for overtime collection 30.62% for overtime delivery and 52.57% for collection. A SOP standard platform was built and
improved to update the operational standards for collection and delivery in order to increase the speed of onboarding for new employees.A service quality evaluation model for deliverymen was built to realize online quality scoring and visual quality control achieving fair and
transparent management. In addition based on factors such as customer preferences parcel attributes and regional features etc. we built
an express delivery model to help express delivery match the optimal delivery channels and achieve differentiated last-mile delivery to meet Digitalized and intelligent cost management and control
customer needs and improve customer experience.Last-mile network construction
Applying the digital solution of “full-stack business-finance integration” we set up a middle-office platform of business-finance data and
an efficient one-stop intelligent cost management and control platform to realize the integration of data on revenue cost and quality and
We upgraded the operational tools and management tools in outlets which among other things reduce the overall labor intensity and help digitalize business diagnosis. In 2022 through the integration of data from various business systems and the application of algorithms
customer-facing time of deliverymen lower the damage rate of parcels and support the same-site-operation of large and small parcels in we built an operational analysis system that includes “pre-testing – monitoring – post-analysis” newly launched operational measurement
integrated outlets. Through the closed loop of online management of low-efficiency outlets we timely identified low-efficiency outlets and models efficiency point mining models and more operational analysis boards realizing intelligent cost control and operational decision
conducted rectification to achieve site cost saving. support thereby enhancing the operational efficiency and core competitiveness of our Company.
038 039Chapter 3 Management Discussion and Analysis
⑶ Application of smart supply chain technologies to boost the transformation and upgrade of
clients’ supply chain
The Company integrates SF’s exceptional technical capabilities and industrial experience develop standardized scientific and technological
products and solutions incorporate digital and intelligent capabilities into the client’s value chain; by promoting the integration of
warehouse and distribution we provide end-to-end integrated technology supply chain services solve the pain points at all levels of client
supply chain including planning management execution etc. and help various industries create a flexible and intelligent sustainable supply
chain system that responds efficiently to facilitate industrial upgrading cost reduction and efficiency enhancement.Consumer Insight Cyclic pickup scheme
End-user profiling and Inbound logistics line-up and
Smart Supply Chain Service behavior analysis loading optimizationat sourcing stage
SF has provided end-to-end technical services that revolve around clients’ raw material supply Store Selection Smart
production warehousing transportation sales operation and other processes: Proposals Campus Solution
Store recommendation Campus operation with
based on history and big screen vehicle
Raw material procurement forecastsProduction Warehousing End- Supplier scheduling and 3D map
and entry into factories user
oes and h
ats Cons
sh umer g
W e a d o p t e d p e r s o n n e l At the design and implementation arelpp
oo
A ds
we carried out intelligent management management and intelligent levels we provide warehouse network ce
of raw material supplies and through park so lut ions based on planning multi-level replenishment ianl He
pp al
c i r c u l a r p i c k u p s c h e m e s e t c . computer vision to ensure online and offline shared inventory a th
automated route setting and loading production efficiency and a n d o t h e r s o l u t i o n s ; a t t h e i n -
optimization; work safety in parks; warehouse execution level we provide
mult ip le serv ices such as s torage Offline B ig D
location optimization and warehousing atastores P Factoryautomation;
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Employing big data and algor i thm through the implementation of end- Sharp-eyed Pupil Fengxiangbiao
technologies we help c l ients gain to-end supply chain base systems Forward Supply gxun WCS
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replenishment
One bucket solution
Solve inventory fragmentation
in different channels Network
optimization solution
Forward warehouse Multi-level replenishment/ Warehouse site selection
routing optimization
solution allocation scheme transportation scheduling
Shorten order-to-delivery Solve inventory turnover and
time and improve out-of-stock problems in
user experience multi-level warehouses
040041
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FChapter 3 Management Discussion and Analysis
⑷ Vision technology capacity: continue to deploy vision technologies that of critical significance 4. Build brand value with excellent service experience
for the future development
SF has established itself as a well-recognized and reputable express delivery service provider through over 30 years of development. It has
The Company has also closely tracked the latest trends and evolution paths of cutting-edge logistics technologies actively deployed vision built a brand image of “efficiency” “punctuality” and “safety” created great brand value through high-quality service and is widely
technologies that have a major impact on the industry and future development and built a technology capability system for the long-term recognized by clients the industry and the community.development of the logistics and supply chain industry.On August 3 2022 Fortune magazine released its list of the world’s top 500 in 2022 and the Company made the list for the first time
ranking 441 which also made it the first private express company of China to be recognized as one of the top 500.State Post Bureau
1 1st for 13 consecutive years 1 1st for 9 consecutive years 1 1st for 9 consecutive yearsst st st
in Overall Satisfaction towards Express Delivery Service in end-to-end time limit (within 48 hours) in 72-hour delivery punctuality (above 90%)
and Public Satisfaction in 2021
(As of the disclosure date of the annual report
the data of express delivery satisfaction survey for
2022 has not been released)
Fortune
441 for the first time 5 for 6 consecutive years for the first timeth th China ESG Impact List
among "2022 World Top 500 Enterprises" among "Most Admired Chinese
Companies" in 2022 (2022 for the first-time
publishing)
Brand Finance 2022 for the first time
263 1st for 4 consecutive years 7 1st for 4 consecutive yearsth th
among "World’s Top 500 Most Valuable Brands" among "World’s Top 25 Most Valuable Logistics Brands"
in 2023 in 2022 for 4 consecutive years
Digital twin Blockchain
Establ ish a highly real ist ic digital twin Ased on blockchain’s ability to enhance data transparency security and trust the
platform using the description diagnosis Company builds a blockchain data collaboration platform to enable interaction of core
prediction and decision-making capabilities data on the upstream and downstream alliance chains improve audit efficiency and
in SF’s digital twin to achieve internal reduce review or third-party costs. It deeply integrates the fields of commodity anti-
appl icat ion to outlets/ l ines/networks in counterfeiting traceability manufacturing and synergy realizing the full-cycle tracking
logistics scenarios mapping offline business of commodities from production storage transportation to final reception and realizing
to digital space in a comprehensive and high- the value of quality traceability. As the first enterprise with disinfection data ledger in
quality manner realizing scientific decision- the industry we leveraged blockchain to build digital management tools for vehicle
making and achieving overall optimality. disinfection and site disinfection tasks providing customers with open and transparent
disinfection data checking capabilities thus enhancing user confidence in express mail
safety
Unmanned vehicles Privacy computing
SF has now been invested unmanned vehicles Under the premise of ensuring that data from both parties’ does not leave the domain
in 17 institutions such as Lanzhou University and user information is not leaked we built solutions for the financial and marketing
Chongqing University of Technology and sectors by way of technology linking scenarios which focus on introduction of external
Harbin Inst i tute of Technology; i t a lso data sources data source output and application of data collaboration.actively involved in the construction of
s tandard i za t ion o f unmanned veh i c l e
t e chno logy and r e l a t ed po l i c i e s and
regulations.
042 043Chapter 3 Management Discussion and AnalysisIV. Analysis of Principal customer management by levels and provided diversified and For details of the specific measures adopted for operation optimization and technology empowerment please refer to “3. Operationdifferentiated comprehensive logistics service to promote the optimization” under the section headed “II. Business development of the Company” and “3. Cutting-edge technology for a digitalizedBusiness express logistics segment as a whole to realize higher average visual and intelligent supply chain” under the section headed “III. Core competitiveness” in this chapter.revenue per parcel compared to the same period of previous year
Benefiting from the above operating initiatives the Company recorded significant improvement in profitability. As for the same period of
thus to achieve healthy growth of revenue. (2) The supply chain
previous year the consolidation of results of Kerry Logistics commenced since the fourth quarter of 2021 while the whole year results of
and international business generated revenue of RMB87.9
Kerry Logistics in 2022 was consolidated for this reporting period which also increased the overall profit of the Company.
1. Overview billion with a year-on-year increase of 124.1% which was
mainly attributable to the consolidation of Kerry Logistics by the III) In terms of capital structure as of the end of the reporting period the total assets of the Company were RMB216.8 billion; the net
In 2022 the express logistics industry faced a complex and volatile Company since the fourth quarter of 2021. In addition Kerry assets attributable to shareholders of the parent company were RMB86.3 billion; and the gearing ratio was 54.67% up 1.32 percentage
external environment with multiple factors restricting the revenue Logistics also acquired and consolidated certain business in the points from 53.35% at the end of previous year. This was mainly attributable to the increased borrowings by Kerry Logistics as a result of its
growth and profit level of the Company. (1) The macroeconomic: international freight sector in the first half of 2022 which further acquisition of subsidiaries and minority interests. However the operating cash flow and overall financial structure of the Company remain
production activities and consumption intentions have been expanded the Company’s supply chain and international business stable and the net cash flow from operating activities increased by 112.9% year on year from RMB15.4 billion for the same period of
suppressed and corporate orders and logistics demand have and thereby led to rapid year-on-year growth of revenue in 2022. previous year to RMB32.7 billion for the reporting period to develop a healthy cash flow.weakened affecting the growth of express logistics business. Meanwhile SF International integrated with the advantages of
In the meanwhile the express logistics enterprises at certain In 2022 the Company invested RMB15.1 billion in total in fixed assets and other items (excluding equity investment) representing a Kerry Logistics in local express capability in some Southeast Asian
regions in the Mainland China had to temporarily suspend their decrease of 21.6% compared with the same period of previous year; which accounted for 5.6% of total operating income representing a countries to create international express products with competitive
business outlets especially in the second and the fourth quarter. decrease of 3.7 percentage points compared with the same period of previous year and reflected the Company’s business strategy to focus timeliness and highly cost-effective in Southeast Asia and
The significant decrease in growth of collection volume not only on core logistic business streamline resource planning and improve the efficiency of resource deployment. In the future the Company will achieved rapid growth in international express business. However
affected growth of revenue but also led to failure of effective stick to the purport of long-term sustainable and healthy development and input resources to facilitate the renovation of operation models due to the aforesaid year-on-year decrease of international air
dilution of fixed costs and weakening of the scale effect thus and build differentiated core competitiveness. In the meantime we will continue to promote the multi-network integration to improve and sea freight demands and rates the international freight
affecting the profit level. (2) Fuel price: fuel price rose sharply resource utilization efficiency. Proportion of the capital expenditure will continue to maintain within the sound level.forwarding business experienced dramatic decline in both revenue
in 2022 as compared to the same period of previous year and profitability as compared with the corresponding period of 2. Revenues and costs
leading to a relatively fast growth in transport costs for express the last year.logistics companies. (3) International demand: International
trade witnessed declined demand due to the inflation in Europe For details of the business development please refer to the I) Composition of operating revenue
and the United States international relations conflict and other section headed “II. Business development of the Company” in this
factors. In addition as the supply of international transport chapter. 2022 2021 Change over the
capacity resources gradually recovered the international air and II) Profit: ’ The Company realized a net profit attributable to (RMB 000) Proportion of Proportion of Amount Amount previous year
sea freight prices continued to decline from a relatively high level shareholders of the listed company of RMB6.17 billion in 2022 revenue revenue
down significantly especially in the second half of the year. By representing a year-on-year increase of 44.6% and a net
the end of 2022 the freight rates have fallen back to a relatively Total revenue 267490414 100.00% 207186647 100.00% 29.11%profit attributable to shareholders of the listed company of
lower level in the last three years affecting the revenue scale and RMB5.34 billion after deducting non-recurring gains and losses Categorized by industry
profitability of the international freight forwarding business. representing a year-on-year increase of 191%. The non-recurring
Despite of the various external challenges in 2022 the Company gain and loss items were mainly government grants and one-off Logistics and freight forwarding 262079740 97.98% 203690237 98.31% 28.67%
has always adhered to the operating policy of sustainable and gains arising from disposal of equity.Sales of goods2 3899692 1.46% 1764253 0.85% 121.04%
healthy development and adopted a series of lean operation and The Company saw a rapid year-on-year growth in business
management initiatives to improve the structure and quality on performance in 2022 which is mainly attributable to the Others 1510982 0.56% 1732157 0.84% -12.77%
the revenue side and reduce costs and increase efficiency through improvement of revenue quality and the satisfying results in
lean management on the cost side which enabled it to deliver a the promotion of lean resource planning and cost management Categorized by business
1
satisfying performance growth and steady achievement of healthy initiatives. The Company has placed greater emphasis on
business targets in 2022. Time-definite express 105696512 39.51% 98961735 47.76% 6.81%improving the efficiency of resource investment continuing
I) Revenue: In 2022 the Company recorded a total revenue to promote multi-network integration emphasizing end-to- Economy express 25551306 9.55% 25428003 12.27% 0.48%
of RMB267.5 billion with a year-on-year increase of 29.1% end overall resource planning for operations strengthening the
Freight 27917012 10.44% 27290961 13.17% 2.29%
of which: (1) The express logistics business contributed integration of transit transportation and terminal resources of
revenue of RMB174.2 billion with a year-on-year increase of business networks as well as flexibly carrying out cross-sector
5.9%. Although the growth in business volume was affected resource synergy during different periods (i.e. low and peak
Cold chain and pharmaceuticals 8612665 3.22% 7802610 3.77% 10.38%
by the temporary closure of outlets in certain regions due to business seasons) to expand the benefits of resource sharing. Intra-city on-demand delivery 6436102 2.41% 5003156 2.41% 28.64%
external factors the Company as a logistics company assuming At the same time the Company took advantage of technology
the responsibility of ensuring sufficient supply of livelihood empowerment to enhance the deep digitalization throughout Supply chain and international 87866143 32.85% 39203772 18.92% 124.13%
materials is fully committed to satisfy the corporate demands the entire operation and management and achieve modeling
and decision-making of resource investment in advance real- Other non-logistics businesses 5410674 2.02% 3496410 1.69% 54.75%for logistics transportation and the residents’ delivery demands
for necessary materials by virtue of its stable network services time intelligent monitoring and scheduling during the process Categorized by region
and resource dispatching capability under the direct operation and data review and efficiency analysis at the post stage which
model. Besides the Company continued to improve the service helped the Company monitor costs more thoroughly and finely Logistics and freight forwarding – Mainland
20462162376.50%18600978689.78%10.01%
quality and products competitiveness by optimizing the structure and improve its ability of making prompt business adjustment to China
of product portfolio. In particular it reduced business volume respond to changes.of those products with low gross profit margin further refined Logistics and freight forwarding – Hong 8988438 3.36% 4776091 2.31% 88.20%
Kong Macao and Taiwan China
Logistics and freight forwarding – Overseas 48469679 18.12% 12904360 6.22% 275.61%
Other non-logistics businesses 5410674 2.02% 3496410 1.69% 54.75%
044 045Chapter 3 Management Discussion and Analysis
Notes: III) Details on main industries – Logistics and freight forwarding
(1) A s the Company continuously streamlined and optimized its product system the product of each business segment has been adjusted mainly including the The industries accounting for more than 10% of the Company’s revenue or operating profit is analyzed as follows:
classification of returned e-commerce products and products distributed by SF Express from the economy express business to time-definite express and freight
business respectively. According to the optimized new product classification the Company counted the revenue of time-definite express economy express and
freight business and retroactively adjusted the data of the same period in 2021. Operating revenue Operating cost Gross profit margin
(2) Sales of goods mainly comprise the purchase and sale business involved in the process of providing end-to-end supply chain services for customers. (RMB’000) Change over the Change over the Change over the
⑶ Any discrepancies between totals and sums of the numbers are due to rounding. Amount same period of Amount same period of Percentage same period of
previous year previous year previous year
Business volume and average revenue per parcel of the express & logistics business Logistics and freight Increase by 0.19 262079740 28.67% 229509070 28.39% 12.43%
forwarding percentage points
Increase/Decrease over
Current reporting The same period of Note: The Company’s statistical criteria for core business data was not adjusted during the Reporting Period.the same period of
period previous year
previous year The operating costs breakdown and gross profit of logistics and freight forwarding business are analyzed as follows:
Parcels (100 million) 110.7 105.0 5.5% Change over
20222021
the previous year
Average revenue per parcel (RMB) 15.73 15.67 0.4%
Proportion of labor cost to revenue 34.95% 41.03% -6.08%
Explanation:
(1) The express & logistics business mainly included time-definite express economy express freight cold chain and pharmaceuticals and intra-city on-demand Proportion of transport capacity cost to revenue 40.77% 34.79% 5.98%
delivery business. The statistics of business volume and average revenue per parcel 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. Proportion of other operating costs to revenue 11.85% 11.94% -0.09%
(2) The business volume of the express & logistics segment grew by 5.5%. Against the backdrop of temporary closure of outlets in certain regions due to external Gross profit margin 12.43% 12.24% 0.19%
factors as well as the Company’s initiative to optimize its product structure and reduce the business volume of low-margin products the express & logistics
segment still achieved positive growth in business volume that was higher than the overall business volume growth rate of the express industry. At the same
time thanks to the optimization of the product structure of the Company the average revenue per parcel of the express & logistics business increased by Reason for changes:
0.4% with the revenue structure remaining healthy. (1) As the Company has consolidated Kerry Logistics since the fourth quarter of 2021 and the cost structure of Kerry Logistics is different from the original
business of SF Express the changes in the breakdown of cost of sales as a percentage of revenue are mainly affected by the consolidation of Kerry Logistics.II) Operating cost Therefore the following cost-to-revenue analysis will exclude the impact of Kerry Logistics. For the profit analysis of Kerry Logistics please refer to its annual
report disclosed on the Hong Kong Stock Exchange.
2022 2021 (2) The proportion of labor cost to revenue was down by 6.08 percentage points year-on-year but if excluded the impact of acquisition of Kerry Logistics it was
Change over the
(RMB’000) Cost item up by 1.79 percentage points year-on-year. This was primarily due to: * the Company’s initiative to improve the competitiveness of remuneration of first Proportion to Proportion to
Amount Amount previous year – and second-line employees emphasizing higher compensation for more work to ensure reasonable fairness such as improving the per capita income of
operating cost operating cost deliverymen in certain difficult areas based on the regional operation pricing model. * the Company’s focus on terminal service quality which ensured the
face-to-face service quality of deliverymen by reasonably controlling the per capita collection and delivery efficiency; * the decrease in business acquisition
Total cost of revenue 234072360 100.00% 181548507 100.00% 28.93% volume in some cities during the temporary closure period of outlets in certain regions which rendered the fixed salary costs of employees unable to be
effectively amortized; In 2022 the Company will continue to promote the integration of multiple networks and invest in automated equipment so as to
Categorized by industry improve the operational efficiency of all aspects of operation and improve the per capita efficiency of transit operation posts and proprietary driver posts and
effectively control the extent of labor cost increases.Labor cost⑵ 91585902 39.13% 83576213 46.04% 9.58%
(3) T he proportion of transport cost to revenue grew by 5.98 percentage points year-on-year but if excluded the impact of the acquisition of Kerry Logistics it
was down by 4.01 percentage points year-on-year. This was primarily due to: * the Company’s continued promotion of multi-network integration and the
Transport
106844961 45.65% 70854193 39.03% 50.80% scale effect resulting from unified planning through the integration of route resources of various businesses the straightening of routes to reduce transit and
capacity cost⑵ the collaborative route filling of fast and slow products which effectively increased the vehicle loading rate of trunk and feeder routes; * the improvement
Logistics and freight forwarding of the transport capacity structure through the gradual increase in the proportion and utilization rate of self-owned vehicles the optimization of outsourced
Other operating route recruitment and the related settlement models which reasonably controlled the price per unit of transport capacity. Thanks to the above measures the
3107820713.28%2433036913.40%27.73%
costs Company’s transport capacity costs were effectively managed in 2022 despite the negative impact of the increase in outsourced transport capacity prices and
fuel costs.Total 229509070 98.06% 178760775 98.47% 28.39% (4) The proportion of other operating costs to revenue decreased by 0.09 percentage point year-on-year but if excluded the impact of acquisition of Kerry
Logistics it was increased by 1.04 percentage points year-on-year. This was primarily due to the inadequate utilization rate of production capacity during
Sales of goods Cost of goods 3426513 1.46% 1589457 0.88% 115.58% the temporary closure period of outlets in certain regions in 2022 on the growth of business volume which resulted in ineffective dilution of fixed asset costs
and weakened economies of scale as compared to the faster growth of fixed asset investment in sites and equipment in the same period last year which
Other businesses Cost of services 1136777 0.48% 1198275 0.65% -5.13% had increased depreciation and amortization expenses. However by promoting the integration and joint construction of various business sites the Company
managed the incremental demands reduced temporary site investment optimized the existing inefficient sites and enhanced the utilization rate of site
Notes: resources. 2022 saw a year-on-year decrease in the Company’s fixed asset investment expenditure which effectively moderated the growth in fixed costs.
(1) The logistics and freight forwarding business of the Company demonstrates distinctive feature of network-based businesses – that is high degree of cross- (5) Gross profit margin: the Company’s gross profit margin for the logistics and freight forwarding business improved due to the above factors up by 0.19
sharing of each item of resources between different business segments within the network and relatively more internal settlements within each business percentage points as compared to the corresponding period of previous year and up by 1.18 percentage points if the impact from consolidation of Kerry
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 Logistics was excluded.manner.
(2) T he 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 Classified 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 cost and
transport capacity cost and added up them in the totals of the payroll and transport cost respectively to show the whole labor cost and transport capacity
cost.
046 047Chapter 3 Management Discussion and Analysis
IV) Major customers and major suppliers Other information regarding major suppliers
Major customers 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
Total sales revenue from the top five customer (RMB’000) 13483051 indirectly hold any interest in major suppliers.Total sales revenue from the top five customers in proportion of total annual
5.04% V) Other information
sales revenue
(1) During the Reporting Period the Company did not enter into any major sales contract or major purchase contract.
Total sales revenue from affiliated parties in the top five customers in proportion
0.64%
of total annual sales revenue (2) F or 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”.Information about the top five customers (3) During the Reporting Period there was no major change or adjustment to the businesses products or services of the Company.Proportion of total annual
SN Customer Revenue (RMB’000)
sales revenue 3. Expenses
1 Customer 1 4696510 1.76%
20222021
2 Customer 2 4058752 1.52% Change over the (RMB’000) Proportion of Proportion of
Amount Amount previous year
3 Customer 3 1718005 0.64% revenue revenue
4 Customer 4 1640848 0.61% Selling and distribution expenses 2784114 1.04% 2837899 1.37% -1.90%
5 Customer 5 1368936 0.51% General and administrative expenses 17574490 6.57% 15029663 7.25% 16.93%
Total – 13483051 5.04% Financial costs 1711613 0.64% 1563359 0.75% 9.48%
Other information regarding major customers Research and development expenses 2222865 0.83% 2154839 1.04% 3.16%
During the Reporting Period the Company provided services for M China Management Limited (which is one of related parties of the Explanation:
Company) and its subsidiaries as well as its franchisees and obtained sales revenue of RMB1718005 thousand. Apart from that the (1) The proportion of selling and distribution expenses & general and administrative expenses to revenue: a decrease of 1.01 percentage points year-on-year.Company did not have any associated relationship with the other major customers mentioned above and the Company’s directors This was attributable to the Company’s continued implementation of lean management initiatives the technology-driven digitalization and intellectualization
supervisors senior management core technical personnel shareholders who held more than 5% of the shares actual controller and other improvement in operation and management and the improved management efficiency through streamlining and flattening the organization.related parties did not directly or indirectly hold any interest in other major customers. (2) The proportion of finance cost to revenue: a decrease of 0.11 percentage point year-on-year. This was attributable to the Company’s sound financial structure
and healthy gearing ratio.Major suppliers (3) The proportion of research and development expenses to revenue: a decrease of 0.21 percentage point year-on-year. This was attributable to the Company’s
focus on technology investment to fuel business development and model change with greater emphasis on the benefits of technology output. As explained
Total purchase amount from the top five suppliers (RMB’000) 29770818 in “4. R&D Investment” below overall R&D investment decreased slightly from the previous year.Total purchase amount from the top five suppliers in proportion of total annual
13.54%
purchase amount 4. R&D Investment
Total purchase amount from affiliated parties of the top five suppliers in
0.00% The Company
’s investment in technology research and development is focused on four major objectives: facilitating business development
proportion of total annual purchase amount 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
Information about the top five suppliers 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
Purchase amount Proportion of total annual
SN Supplier customers’ supply chains driving cost reduction and efficiency improvement in the supply chain as a whole and ultimately helping the(RMB’000) purchase amount Company 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.
1 Supplier 1 11487711 5.22%
2 Supplier 2 5972666 2.72%
3 Supplier 3 4994231 2.27%
4 Supplier 4 3963149 1.80%
5 Supplier 5 3353061 1.53%
Total － 29770818 13.54%
048 049Chapter 3 Management Discussion and Analysis
Information about R&D staff V. Non-core Business Analysis
2022 2021 Change over the previous year
Number of R&D staff (person) 5652 6271 -9.87% Proportion of total
(RMB’000) Amount Reason
profit
Proportion of R&D personnel as a
3.47%3.54%-0.07%
percentage of total staff Mainly including government grants related to daily
Other income 2249361 20.51%
Composition of R&D personnel by activities.education level Mainly including income from maturity structured
Investment income 1025385 9.35%
deposits and income from disposal of equity interests.Junior college (person) 627 786 -20.23%
Gains and losses arising from changes Mainly due to changes in fair value of financial assets or
Bachelor (person) 3982 4333 -8.10% -27938 -0.25%
in fair value liabilities
Master and above (person) 1043 1152 -9.46%
Credit impairment losses -821100 -7.49% Mainly including bad debt losses of accounts receivable.Composition of R&D personnel by age
Mainly including impairment losses of long-term equity
Asset impairment losses -131756 -1.20%
Below 30 (person) 2115 2946 -28.21% investment.
30 – 40 (person) 3349 3190 4.98% Mainly including compensation income and government Non-operating income 231487 2.11%
grants unrelated to daily activities.Above 40 (person) 188 135 39.26%
Mainly including losses on scrapping of assets and
Non-operating expenses 298616 2.72%
Note: There was no major change in the composition of R&D staff in the Company. compensation expenses.Investment in R&D Explanation on sustainability
(RMB’000) 2022 2021 Change over the previous year Except the income from structural deposits in the investment income all other items mentioned above were not sustainable.R&D investment amount 3528143 3651655 -3.38%
R&D investment as a percentage of revenue 1.32% 1.76% -0.44% VI. Profit Analysis
Amount of capitalized R&D investment 1266410 1429608 -11.42%
Capitalized R&D investment as a percentage
35.89% 39.15% -3.26% Change over the
of R&D investment (RMB’000) 2022 2021 previous year
Note: There was no significant change in the R&D investment amount as a percentage of revenue compared with the previous year; and there was no great Net profit 7003620 3919213 78.70%
change in the capitalization rate of R&D investment.Net profit margin 2.62% 1.89% 0.73%
Net profit attributable to shareholders of the parent company 6173764 4269098 44.62%
Net profit margin attributable to shareholders of the parent
2.31%2.06%0.25%
company
Net profit attributable to shareholders of the parent company
53369241834199190.97%
after deducting non-recurring profit and loss
Net profit margin attributable to shareholders of the parent
2.00%0.89%1.11%
company after deducting non-recurring profit and loss
050 051Chapter 3 Management Discussion and Analysis
Net profit by segment VII. Cash Flow
2022 2021 Amount of
(RMB’000) Net profit Net profit change over the
Net profit Net profit Change over
margin margin previous year (RMB’000) 2022 2021 the previous year
Express segment 5459146 3.52% 3832187 2.65% 42.46%
Sub-total of operating cash inflows 369188490 303261404 21.74%
Freight segment 27677 0.08% -582308 -1.87% 104.75%
Sub-total of operating cash outflows 336485543 287903799 16.87%
Intra-city segment -286903 -2.79% -898851 -11.00% 68.08%
Net cash flows from operating activities 32702947 15357605 112.94%
Supply chain and international segment 1945862 2.15% 615252 1.52% 216.27%
Sub-total of investing cash inflows 157801875 129699181 21.67%
Undistributed units -122737 -0.92% 965462 8.87% -112.71%
Sub-total of investing cash outflows 169893333 146830408 15.71%
Notes:
Net cash flows from investing activities -12091458 -17131227 29.42%
⑴ E xpress segment: In 2022 net profits from the express segment amounted to RMB5.459 billion representing an increase of 42.46% as compared with the
same period of last year mainly due to * the significant improvement in profitability of economic express products as a result of the optimization of product Sub-total of financing cash inflows 39735949 68270517 -41.80%
structure which reduced the number of low-margin products; and * lean resource planning and cost control with a focus on improving the efficiency of
resource deployment and continuing to expand the efficiency of resource sharing through multi-network integration. Sub-total of financing cash outflows 55752899 47050591 18.50%
⑵ Freight segment: In 2022 net profits from the freight segment amounted to RMB28 million representing an increase of 104.75% as compared to the
corresponding period of the last year and achieved a turnaround from loss to profit mainly due to the fact that * the product structure was optimized Net cash flows from financing activities -16016950 21219926 -175.48%
to upgrade and launch large aircraft and SF Ground Freight Express increasing the revenue per kilogram; * the transshipment trunk line and terminal
integration were improved for large pieces and small pieces direct sales network and franchise network to achieve cost reduction and efficiency enhancement. Effect of exchange rate changes on cash and cash 871640 -99020 980.27%
equivalents
⑶ Intra-city segment: In 2022 net losses from the intra-city segment amounted to RMB287 million representing an increase of 68.08% as compared with the
same period of last year and net profit margin continued to rebound which is mainly attributable to the fact that * more diversified business model and
Net increase in cash and cash equivalents 5466179 19347284 -71.75%
revenue structure and the professional and differentiated services drive the growth of high-value orders with the personal services non-meal scenarios and
focus on lower-tier cities and counties becoming new driving forces; and * better capacity efficiency as achieved through overall planning and scheduling
driven by technology management was kept refining to improve operational quality and increase the proportion of deployed resources thus further releasing 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.economies of scale. Explanation:
⑷ Supply chain and international segment: In 2022 net profits from the segment amounted to RMB1.946 billion representing an increase of 216.27% as (1) N et cash flows from operating activities: The year-on-year increase was mainly attributable to the combined effect of business expansion the optimized
compared with the same period of last year which is mainly attributable to the fact that * the results of Kerry Logistics were consolidated from the fourth management of operating cash flow and profit growth and the acquisition of Kerry Logistics.quarter of 2021 as compared with the same period of last year and the 2022 annual results of Kerry Logistics were consolidated during the Reporting Period
leading to the increase in profit of supply chain and international business; and * the end-to-end mode of international express delivery and refined cost (2) Net cash flows used in investing activities: The year-on-year decrease was mainly attributable to the combined effect of the decrease in net outflow on
control were optimized and the integration with Kerry Logistics was improved in international air freight routes enhancing resource utilization and improving acquisition of a subsidiary and on purchase and construction of long-term assets and the decrease in net inflow on disposal of a subsidiary and on structured
the profit of international express products. deposits.⑸ Undistributed units: In 2022 net losses from undistributed units amounted to RMB123 million mainly including non-logistics and freight forwarding businesses (3) N et cash flows from financing activities: The year-on-year decrease was mainly attributable to the combined effect of the decrease in investment acquired and
such as investment industrial parks and other headquarters functions. Net profits from the units decreased as compared with the corresponding period of the the increase in debt repayment.last year mainly due to the increase in investment income from the transfer of equity interests in the corresponding period of the last year and the decrease in
relevant transfers during the Reporting Period.VIII. Analysis of Assets and Liabilities
1. Major Changes in Asset Composition
As at the end of 2022 As at the beginning of 2022 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 Flows”Cash at bank and on hand 41062750 18.94% 35315051 16.82% 2.12% under “Chapter 3 Management Discussion andAnalysis”.Mainly due to the acceleration of accounts
Accounts receivables 25560433 11.79% 30441758 14.50% -2.71%
receivable collection.Contract assets 1522996 0.70% 1038247 0.49% 0.21% No major changes.Inventories 1948354 0.90% 1546821 0.74% 0.16% No major changes.Mainly due to the decrease of the input VAT
Other current assets 5612928 2.59% 7539613 3.59% -1.00%
to be offset.
052 053Chapter 3 Management Discussion and Analysis
2. Assets and liabilities measured at fair value
As at the end of 2022 As at the beginning of 2022 Increase/
(RMB’000) Proportion of Proportion of Decrease in Major Changes Changes in Fair
Amount Amount Proportion Accumulated Fair Provision for Amount of Total Assets Total Assets Value Gains and Amount of Sales
(RMB’000) Opening Balance Value Changes Impairment in Purchase in Other Changes Closing Balance
Losses in Current in Current Period
Investment properties 4875366 2.25% 4850233 2.31% -0.06% No major changes. Included In Equity Current Period Current PeriodPeriod
Long-term equity investments 7858000 3.62% 7260087 3.46% 0.16% No major changes. Financial assets
Fixed assets 43657404 20.13% 36925990 17.59% 2.54% Mainly due to the increase in buildings. 1. Financial assets held for trading
(excluding derivative financial 11262517 -18850 – – 462910 4006429 697440 8397588
Mainly due to increased investment in the
assets)note 1
Construction in progress 11149860 5.14% 8571203 4.08% 1.06% industrial park project and the relocation of
the transit depot renovation project. 2. Investments in other equity
6810771–-58183–5120995661256671227365684
instruments
Right-of-use assets 15429775 7.12% 17297085 8.24% -1.12% Mainly due to amortization.Subtotal financial assets 18073288 -18850 -58183 – 975009 4572554 1364562 15763272
Short-term borrowings 12837870 5.92% 18397204 8.76% -2.84% Mainly due to repayment of borrowings.Others – – – – – – – –
Contract liabilities 1244418 0.57% 1675836 0.80% -0.23% No major changes.Total 18073288 -18850 -58183 – 975009 4572554 1364562 15763272
Current portion of non-current Mainly due to the increase in the current
111736505.15%83358033.97%1.18%
liabilities portion of debentures payable. Financial liabilities 7658 – 5821 – 75718 – 7450 96647
Long-term borrowings 7472010 3.45% 3510829 1.67% 1.78% Mainly due to new borrowings. 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.Mainly due to the issuance of US dollar
Debentures payable 18927508 8.73% 15656370 7.46% 1.27%
debentures. (1) Other changes:
Other changes in financial assets held for trading are mainly investment income realized by matured structured deposits and other changes in investments in
Lease liabilities 8582372 3.96% 10941938 5.21% -1.25% Mainly due to the rent payment. other equity instruments are mainly due to exchange differences on translation of foreign currency financial statements.Mainly due to the acquisition of minority (2) None of any significant changes occur for the Company’s major asset measurement attributes during the Reporting Period.Capital reserve 43996237 20.29% 46200598 22.01% -1.72%
interests.Mainly due to the increase in differences in
Other comprehensive income 4538027 2.09% 2617231 1.25% 0.84% 3. Limitation of asset rights as of the end of the Reporting Period
translation of foreign currency statements.At the end of the Reporting Period the Company’s assets subject to limited rights are mainly statutory reserve placed at the Central Bank
Retained earnings 33371351 15.39% 28245764 13.46% 1.93% Mainly due to the increase in profit. and the bank borrowing mortgage details of which are as follows:
M a i n l y d u e t o t h e i n t e g r a t e d i m p a c t Book Value at the end
Minority interests 12022308 5.54% 14972021 7.13% -1.59% of acquis i t ion of minor i ty interests and (RMB’000) Reasons for limitationof period
distribution of dividends.Cash at bank and on hand 874919 Mainly represents the statutory reserve placed at the Central Bank
Key Overseas Assets Fixed assets 486847 Bank borrowing mortgage
Assets
Control Measures Profiting Whether there intangible assets 247556 Bank borrowing mortgage
Formed Assets Scale Overseas/Net
Details of the Assets Location Operating Model for Ensuring Asset Status is significant
Reason (RMB’000) Assets of the Investment properties 104571 Bank borrowing mortgage
Security (RMB’000) Impairment Risk
Company
Total 1713893
Please refer to XIII. The
Integrated logistics Company’s Management
51.5% equity of Kerry Equity Hong Kong international freight and Control over Its
22999199 2838971 23.40% No
Logistics acquisition (China) forwarding and supply Subsidiaries during the
chain solutions Reporting Period in
Section IV.“Asset scale” refers to net assets of Kerry Logistics;
“Profiting status” refers to net profit contributed by Kerry Logistics in 2022 which is the net profit of Kerry Logistics after the acquisition date
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
Other information adjustments arising from adopting the same accounting policy. The net profit attributable to shareholders of the parent company was RMB1362.735
million; profit or loss attributable to minority shareholders amounted to RMB1476.236 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 RMB 1172.615 million.“Assets overseas/net assets of the Company” refers to net assets of Kerry Logistics/net assets of the Company.
054 055Chapter 3 Management Discussion and Analysis
IX. Investments Analysis 4. Investments in Financial Assets
(1) Investments in Securities
1. Overview Unit: RMB’000
Book value Gains and losses Accumulated fair Purchase
Investment amount during the Reporting Investment amount in the same period Accounting Sales amount Gains and losses Book value at
Percentage change Abbreviation Initial at the beginning from changes value changes amount during
Period (RMB’000) of last year (RMB’000) Security type Stock code measurement during the of the Reporting the end of the
of security investment cost of the reporting in fair value included in the Reporting
model Reporting Period Period Reporting Period
19343536 28895208 -33.06% period during the period equity Period
Fair value
Breakdown items of capital expenditure during the Reporting Period are indicated in the table below: Domestic and overseas stocks 6166 VAST – 118945 – 69354 – 251163 1773 –
measurement
Investment Amount During the Reporting
Item Zhilai Sci and Fair value
Period (RMB’000) Domestic and overseas stocks 300771 21377 86491 – 2353 – – 1332 88844Tech measurement
Office and buildings 600457 Fair value
Domestic and overseas stocks GB00BLH1QT30 Samarkand 26407 36500 – -25910 – – – 12170
measurement
Land 113531
Fair value
Warehouse 1563813 Domestic and overseas stocks 00500 Frontier Services 139980 – – -76502 127635 – – 57920measurement
Sorting center 7073309 Total 187764 – 241936 – -30705 127635 251163 3105 158934
Aircraft 2288891 Disclosure Date of Securities
Investment Approval Board Not applicable
Vehicle 918617
Announcement
Information technology equipment 824663
Disclosure Date of Securities
Equity investments 4291429 Investment Approval Shareholders Not applicable
Meeting Announcement (if any)
Others 1668826
Note: T he accounting items of the above domestic and foreign stocks are all “investments in other equity instruments” and the capital source is “self-ownedTotal 19343536 funds”.
(2) Investments in Derivatives
2. Significant Equity Investment Obtained During the Reporting Period 1) Derivatives investments for hedging purpose during the Reporting Period
Unit: RMB’000
□Applicable √Not applicable
Proportion of
Changes in fair investment amount
Accumulated fair Amount of purchase Number of sales Amount at the end
3. Significant Non-Equity Investment Ongoing During the Reporting Period Initial derivatives value gains and at the end of the
Investment type of derivatives value changes in the Reporting in the Reporting of the Reporting
investment amount losses in current Reporting Period
□Applicable √Not applicable included in equity Period Period Periodperiod to net assets of the
Company
Purchase of Forward Foreign Currencies
3489350 -21569 -12002 N/A N/A 3489350 3.55%
Against RMB
Total 3489350 -21569 -12002 N/A N/A 3489350 3.55%
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
the Reporting Period period and the actual losses for the period amounted to RMB5.821 million.
056 057Chapter 3 Management Discussion and Analysis
Proportion of Proportion of
Changes in fair investment amount Changes in fair investment amount
Accumulated fair Amount of purchase Number of sales Amount at the end Accumulated fair Amount of purchase Number of sales Amount at the end
Initial derivatives value gains and at the end of the Initial derivatives value gains and at the end of the
Investment type of derivatives value changes in the Reporting in the Reporting of the Reporting Investment type of derivatives value changes in the Reporting in the Reporting of the Reporting
investment amount losses in current Reporting Period investment amount losses in current Reporting Period
included in equity Period Period Period included in equity Period Period Period
period to net assets of the period to net assets of the
Company Company
Derivative investment business of the Company mainly consists of forward contracts purchased in 2020 with underlying assets in the form of exchange Changes in market price or fair value
rates and currency pairs involving USD/HKD. The main elements are: purchasing forward contracts at fixed exchange rates for the Company’s USD of invested derivatives during the
Description of hedging effects debts so that when the USD appreciates against the HKD and the USD debts incur exchange losses the forward contracts will generate gains on fair Reporting Period (the specific methods
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.value changes for the hedging purposes. The exchange rate locking function of derivative transactions effectively reduces the impact of exchange rate relevant assumptions and parameters
fluctuations on the Company’s profit. used in the analysis of the fair value
should be disclosed)
Source of funds Self-owned funds
Lawsuit (if applicable) N/A
(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 Disclosure date of derivatives investment
March 24 2020 and March 31 2022
for speculative purposes. All foreign exchange hedging transactions are derived from normal cross-border business but certain risks may exist in foreign approval board announcement (if any)
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 Disclosure date of derivatives investment
transportation fees and investment and financing activities denominated in foreign currencies related to the main business. The associated market risk approval shareholders meeting N/A
refers to losses which may arise from changes in price of foreign exchange hedging products due to fluctuations in market prices of underlying exchange announcement (if any)
rates and interest rates.The independent directors believed that the Company had established an internal control system for foreign exchange hedging and effective risk
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
control measures in accordance with the requirements stipulated by relevant laws. Under the premise of complying with national laws and regulations
banks caused by insufficient liquidity in the market. Opinions of independent directors on
and ensuring that the Company’s daily operation were not affected the Company used its own funds to carry out foreign exchange hedging when
3. Non-performance risk: The Company and its subsidiaries conduct foreign exchange hedging business mainly based on cash flow rolling forecasts for risk the Company’s derivatives investment
appropriate which was conducive to preventing interest rate and exchange rate risks reducing the impact of interest rate fluctuations on the Company
management. We are subject to the risk that the actual cash flow deviates from forecast resulting in failure to fulfill obligations under relevant hedging and risk 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
contracts when due.shareholders.
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. 2) Derivatives investments for speculative purpose during the Reporting Period
for derivatives investment during the
(II) Risk control measures
Reporting Period (including but not □Applicable √ Not applicable
1. Clarify the criteria of initiating transaction of foreign exchange hedging product: All foreign exchange hedging businesses are derived from normal
limited to market risk liquidity risk
cross-border business for the purpose of averting and preventing exchange rate and interest rate risk. No foreign exchange derivatives trading shall be There was no derivative investment for speculation during the Reporting Period.credit risk operational risk legal risk
carried out for speculative purposes.etc.)
2. Selection of products: Hedging products with simple structure strong liquidity and controllable risk are selected to carry out foreign exchange hedging
business. 5. Use of Proceeds
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. (1) Description of overall utilization of proceeds
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 Unit: RMB’000
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. Proportion of Total proceeds
5. Equipped with professional staff: The Company has maintained a team of professionals with expertise in financial derivatives responsible for the Total proceeds Accumulative Accumulative accumulative Method of with usage Total unused Use and allocation of unused Proceeds idle for
Company’s exchange rate risk management market analysis product research and the Company’s overall management policy recommendations etc. Year Total of proceeds invested in the proceeds proceeds with total proceeds fundraising altered in the proceeds proceeds over two years
6. Establishing a comprehensive risk alarm and reporting mechanism: The Company sets risk limits for foreign exchange hedging business where current year invested (Note 1) usage altered with usage Reporting Period
transactions have been made timely evaluates changes in risk exposure and derived gains and losses and provides regular risk analysis report to the altered
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. The balance of structured deposit
7. Separation of duties and personnel between the front end and back end is strictly implemented. Dealers cannot concurrently hold the position as purchased as cash management of Non-public
accounting personnel and vice versa. 2021 19907320 6308020 17106933 – – – 2842966 unused proceeds was RMB2.33 billion –offering of shares
with the remaining unused proceeds
held in a special account
Total – 19907320 6308020 17106933 – – – 2842966 – –
Description or of overall utilization of proceeds
As of December 31 2022 the accumulated Raised Funds 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 6042.579 million
RMB2117.475 million RMB2743.209 million RMB1728.335 million RMB1475.335 million and RMB3000 million.
058 059Chapter 3 Management Discussion and Analysis
(2) Investment commitment in respect of proceeds
Whether Whether Whether
Unit: RMB’000 Accumulative Investment Benefits project has Total committed Total investment Date of asset expected feasibility
Project investment commitment and allocation of Investment in the investment at the progress at the achieved in
been (or investment based after alteration ready for benefits of project
Whether Whether Whether surplus proceeds current year end of the period end of the period the current
Accumulative Investment Benefits partially) on net proceeds (1) intended use have been has changed
project has Total committed Total investment Date of asset expected feasibility (2) (%) (3)＝(2)/(1) year
Project investment commitment and allocation of Investment in the investment at the progress at the achieved in altered achieved significantly
been (or investment based after alteration ready for benefits of project
surplus proceeds current year end of the period end of the period the current
partially) on net proceeds (1) intended use have been has changed Supplementing working capital temporarily with idle
(2) (%) (3)＝(2)/(1) year Not applicable
altered achieved significantly proceeds
Project investment commitment Balances of the proceeds during the project Not applicable
implementation and the reasons
1. Express Delivery Equipment Automation Upgrade
No 6000000 6000000 2341815 6042579 100.71% 2023/12/31 Note 2 N/A No
Project The unused proceeds of the Company will be utilized 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 and the Aviation Materials
2. Center Construction Project of Hubei Ezhou Civil
No 4000000 4000000 1173011 2117475 52.94% 2023/12/31 Note 3 N/A No Purchasing and Maintenance Project under the investment commitment which are all deposited in the special account opened by the Company in the regulatory bank for
Airport Transit center the proceeds. Besides in order to improve the return of funds the Company utilized part of the unused proceeds to purchase certain wealth management products with
Usage and allocation of the unused proceeds secured principal and fixed income according to the Resolution on the Use of Part Idle Proceeds for Cash Management as considered and approved by the Company at the
3. Construction Project of Digital-intelligent Supply
No 3000000 3000000 1607589 2743209 91.44% 2023/12/31 Note 4 N/A No 19th meeting of the 5th Board of Directors and the 17th meeting of the 5th Supervisory Committee on October 28 2021. As of December 31 2022 the unused proceeds
Chain System Solution
of the Company were RMB2842.966 million together with the accumulated bank interest and wealth management income of RMB195.491 million totaling RMB3038.457
4. Land Transport Capacity Improvement Project No 2000000 2000000 621176 1728335 86.42% 2023/12/31 Note 5 N/A No million. The Company has deposited the temporarily unutilized proceeds of RMB2330 million by way of structured deposits and the remaining RMB708.457 million was
deposited as demand deposits with neither mortgage or pledge over the certificate of deposits nor subject to limited ownership or right of use.
5. Aviation Materials Purchasing and Maintenance
No 1907320 1907320 564429 1475335 77.35% 2023/12/31 Note 6 N/A No
Project Defects and other problems in utilization and disclosure Not applicable
of the proceeds
6. Replenishment of Liquidity No 3000000 3000000 – 3000000 100.00% N/A Note 7 N/A No
Subtotal of project investment commitments – 19907320 19907320 6308020 17106933 – – – – – Note 1: “ Accumulative proceeds invested” includes accumulative proceeds invested and upfront investment replace dafter the reception of proceeds of
RMB6338458000.Investment of surplus proceeds Not applicable 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 optimize customer experience and satisfaction so as to further reinforce the
Total – 19907320 19907320 6308020 17106933 – – – – – 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
Description of the failure to achieve the planned
quantifiable.progress and the expected return and the reasons by 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 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-
project (including the reasons for choosing “N/A” in it is not possible to directly quantify the benefits achieved by individual projects. See Note 2 to Note 7. stop supply chain service ability enhance customer engagement and help the Company become a technology-driven comprehensive supply chain solution
case of “achieving the expected benefit or not”). 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 kilometer” network service
Significant changes in the feasibility of projects Not applicable 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.Amount usage and use progress of surplus proceeds Not applicable Note 6: T his 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.Change in implementation location of investment
Not applicable 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
projects funded by proceeds 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 realization of long-term strategy. The benefits achieved are not directly quantifiable.Adjustment to implementation method of investment
Not applicable
projects funded by proceeds
(3) Statement of Changes in 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
In the Reporting Period there were no changes in the projects funded by proceeds.on October 28 2021 and with the explicit consent from the sponsors independent directors and the Supervisory Committee the Company replaced with the proceeds
Upfront investment and replacement of investment the self-raised funds of an aggregated amount of RMB6338458000 which was invested in advance for the Express Delivery Equipment Automation Upgrade Project the
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).
060 061Chapter 3 Management Discussion and Analysis
X. Sale of Significant Assets and Equity XIII. Prospects of the Company
1. Sale of significant assets 1. Industry development trend structural adjustment and industrial upgrade it is an unavoidable
trend that the competitiveness of Chinese brands in the global
□Applicable √Not applicable Challenges and opportunities exist in 2023. On the one hand the market will gradually improve paving the way for the Chinese
external environment is complex and volatile bringing variables express logistics enterprises to enter the global market; China
to the development of the industry; and on the other hand is actively advancing the development of international logistics
2. Sale of significant equity socio-economic activities will resume to be active and the growth network infrastructure and building an independent controllable
rate of the industry is expected to recover in 2023 under the international supply chain to enhance its global competitiveness
□Applicable √Not applicable national macro policy of stimulating domestic consumption and while logistics companies step up overseas operations to gain
promoting economic development. access to new growth markets.I) The international environment is complex and changing IV) Modernization and upgrading of the logistics industry
and China’s economy is moving steadily forward. As the to support national development strategies. The 14th
XI. Analysis of Major Holding and Participating Companies world enters the VUCA era global economic growth is still Five-Year Plan for the Development of Modern Logistics aims
not expected to be optimistic under multiple shocks such as to build a modern logistics system and expects a basically
geopolitical conflicts supply chain challenges and inflationary established modern logistics system that matches supply and
’ pressures. According to forecast of the World Bank and other Major subsidiaries and equity participation companies that affect the Company s net profit by more than 10% demand connects domestic and oversea markets and with safe
authoritative institutions the global GDP growth rate in 2023 efficient smart and green features by 2025 so as to provide
Unit: RMB’000 will be 1.9% which is 1 percentage point lower compared to strong support for building a modern industrial system forming a
2022. The development of major global economies has entered strong domestic market and promoting a high level of openness
Company a recessionary phase which has also adversely affected China’s to the outside world. Under the guidance of the national strategy
Company Name Primary Business Registered Capital Total Assets Net Assets Operating Income Operating Profit Net Profit
Type economy. China has proposed a strategy to expand domestic the head logistics enterprises will enter a stage of high-quality
demand in order to cope with external risks and strengthen its development. The level of infrastructure industry standards and
Investments in industrial own development momentum. China’s economy will be stable technological innovation will be significantly improved. At the
businesses investment consulting in 2023 and the IMF has adjusted China’s growth rate to 5.2% same time logistics enterprises are required to continuously
and other information consulting expecting China to become the “biggest driver” of global improve their innovation capabilities network coverage and
Shenzhen S.F. Taisen Holding
Subsidiary supply chain management 2020000 66877990 42029579 5276799 2413967 2347317 economic growth in 2023. resource layout while promoting the deep collaboration of the
(Group) Co. Ltd.asset management capital industry chain and supply chain. Supply chains are undergoing II) Domestic economic recovery will drive the industry back
management investment digital transformation and upgrading at an accelerating pace to good growth but overseas markets face downward
management etc. seeking to create smart supply chains through 5G big data pressure. The recovery of domestic consumption will drive
artificial intelligence AIoT sensing and other technologies
the development of the domestic express delivery and logistics
International freight forwarding shorten the supply cycle improve supply chain efficiency use
industry. According to the State Post Bureau the business
S.F. Express Co. Ltd. Subsidiary domestic and international express 150000 21935804 4856917 17076189 2264984 2163507 data to give feedback to entities promote the upgrading of the
revenue of express delivery is expected to reach RMB1.13 trillion
services etc. industry industrial chain. In this process head logistics enterprises in 2023 an increase of around 7% year-on-year. However the
will fully benefit from technological upgrade resource layout and
international logistics market is facing downward pressure in
(1) Description of Major Holding and Participating Companies product innovation to form a brand new competitive advantage.the short term and the sluggish of overseas consumer demand
The net profit realized by Shenzhen S.F. Taisen Holding (Group) Co. Ltd. and S.F. Express Co. Ltd. for the year was mainly the investment is causing a negative impact on China’s export trade not to V) Market participants have reached a consensus on green
income generated from the dividend distribution of the holding subsidiaries and the profit generated from the Company’s primary business. mention the end of boom in cross-border e-commerce compared environmentally friendly and sustainable development. The
to previous years. Along with the downturn in consumer demand State Post Bureau has made it clear that in 2023 it will continue
(2) Acquisition and Disposal of Subsidiaries During the Reporting Period and the recovery of the supply side of freight international air to carry out green packaging governance: issuing implementation
and sea freight prices have declined significantly since the second
For details please refer to Note 5 to the Chapter 10 Financial Statements. opinions on the green and low-carbon transformation and
half of 2022 falling back to a relatively lower level in the last development of the industry; further promoting the governance
three years from a historically high range which will affect the of plastic pollution and excessive packaging in the industry and
revenue and profit levels of the international freight industry. implementing the “9218” project for green development. In
XII. Structured Entities Controlled by the Company particular it endeavors to make sure 90% of the e-commerce III) Express delivery enterprises continue to seek new“ express shipments are not packaged twice and to further growth in go to the countryside go to factories and go” * “ promote the governance of excessive packaging and plastic global . Entry into the countryside”: In 2022 95% of
’ pollution through use of recyclable express packaging for 1
□ √ China s administrative villages will be covered by express services Applicable Not applicable billion parcels of shipments and recycling and reuse of 800
the coverage rate of rural e-commerce and express logistics
million corrugated boxes of good quality. It continued to promote
in administrative villages will reach 90% and the online retail
new energy and clean energy vehicles; promoted the green
sales of agricultural products will increase by 9.2%. In 2023
development of the industry by increasing publicity efforts
the shortcomings of rural logistics infrastructure for collection
making it a broad social consensus and gathering the strength of
and delivery will be further complemented and the potential of
the whole society. At the industry regulatory level all efforts willmarkets in lower-tier areas will be further unlocked. * “Entry” be made to promote green and low-carbon development propel into factories : With the ecological evolution of new type
express delivery enterprises to implement the requirements for
e-commerce trends such as consumer centricity integration
energy saving and emission reduction strengthen energy-saving
of online and offline channels have brought changes in the
and emission reduction control and improve the system to secure
channels of the manufacturing industry; the express delivery
ecology safety of the industry. Many leading express delivery
industry by virtue of efficient response nationwide coverage
enterprises have also successively set carbon emission targets;
from single points and cost-effective services connects factories
assisting carbon peaking and carbon neutrality increasing green
with consumers to shorten the supply chain and enhance the
* “ ” investment and promoting green and sustainable development circulation efficiency. Going global : With China’s economic
will become a long-term mission.
062 063Chapter 3 Management Discussion and Analysis
2. SF strategic direction III) Accelerate the pace of international development and SF strategic objectives build an efficient and reliable international supply chain.
In the future SF will focus on the three major channels of Through close integrations the Company will realize strategic“network standard products digital industry supply chain synergy so as to establish a world –leading logistics platformservices and global end-to-end supply chain services”. providing clients with global integrated logistics and international
Our Strategic Objectives for 2025 Firstly the “network standard product” focus on cost reduction freight services. The synergistic partnership in the field of air
and operational efficiency exploring new markets and securing transport will help expanding international routes together and
competit ive barr iers . At the same t ime through digita l enhancing its footprints in the international aviation network. The
transformation and global resources layout we will cultivate synergies in the field of international express delivery will drive
“digital industry supply chain services” + “global end-to-end the joint-expansion of cross-border and local express deliverysupply chain services” to build the Company’s second growth services business in the emerging markets of Southeast Asia.curve in the future. Lastly we will focus on core resources and Supply chain collaboration will open up together the end-to-end
lay out hub resources such as Ezhou hub to form a resource international supply chain and help more Chinese enterprises
foundation and moat for the long-term development of the expand overseas. In addition through self-operation joint
Company. venture investment mergers and acquisitions SF will continue to
increase the coverage and scope of international express delivery
I) Laying out new demands in the courier market tapping
and cross-border e-commerce special delivery deploy overseas
into new markets and reinforcing the competitive moat.How will SF be perceived by the society in 2025 How will SF be perceived by clients in 2025 warehouses in the core flow areas improve the efficiency of With the recovery and activation of socio-economic activities
A pacesetter that continuously creates outstanding social value The preferred partner for all clients overseas delivery and order fulfillment and provide integrated the courier industry is expected to resume rapid development.overseas and local warehousing and distribution services. By
SF commits to serving corporate clients and builds a completely new global smart SF provides convenient reliable and user-friendly express delivery services to clients However the industry’s original scale effect development model drawing on the successful experience of Chinese and foreign
supply chain system; worldwide; is weakening. The original expansion – price reduction – gaining
SF remains highly committed to green environmental protection becomes a pacesetter It constructs an open-structured digital supply chain ecosystem and collaborates with companies we will explore and optimize the operation and
for carbon neutrality and a service provider that contributes to sustainable development clients for business model innovation to achieve win-win outcomes. volume – cost reduction has contributed to the uniformity and management model and realize visualization digitalization and
of the global economy; homogenization of the industry’s services and products. With the
SF contributes to the social well-being. With its network reaching every community intelligentization to provide clients with high-quality end-to-end scale effect and marginal pulling effect of expansion gradually
every village every family and every person SF helps realizing common prosperity and cross-border supply chain solutions and assist with the new
serving the society. becoming weaker the overall profitability of the market is development pattern of “dual circulation”.being compressed in stages in this process cultivating new
products and new business growth points will become the key VI) Steadily pushing forward the construction of Ezhou hub
to future industry competition. The Company will deepen the and building a global “axis radiation” aviation network.
2B standardized scenario and form a synergy with 2C standard With Ezhou HuaHu Airport as the core SF is building a routeservices. network that “covers the whole country radiates Asia andextends to Europe and the United States” turning Ezhou Airport
II) Build a digital supply chain service ecosystem and
into a global supply chain center a national warehouse and
cooperate with customer in transformation and follow
distribution center and a high-end processing and distribution
industrial transformation. Efforts will be made to utilize the
center. After the airport transit center and other supporting
strong control of our own logistics network to continuously
projects come into operation in the future SF Airlines will
implement comprehensive digital transformation of full-link
gradually plan and adjust the layout of the air network to build
end-to-end business scenarios including collection transportationan “axis radiation “aviation network with Ezhou as the centerdistribution and delivery and build the core competencies of
What SF envisions itself to be in 2025 How will SF be perceived by its employees in 2025 and Shenzhen Hangzhou Beijing and Chengdu as regional hubs
The leader of the global smart supply chain A career platform where outstanding talents around the world can
“data supporting decision-making” “data driving business” and
further expanding the coverage area of time-definite services and
pursue excellence realize their dreams and feel a sense of pride “data empowering clients”; maintain the leading edge in logistics enhancing its competitiveness.SF will have fully completed digital transformation with the well-established core SF adheres to the “team” culture of equality mutual respect collaboration win-win science and technology and constantly improve our logistics
competencies of “decision-making supported by data” “business driven by data” and innovation and inclusiveness encouraging employees to grow through “competition” efficiency and intelligence level. Further we will penetrate into V) Fulfi l l social responsibi l it ies and persevere with
“clients empowered by data” and created a digital organizational system characterized and explore their full potential; the end-to-end links throughout clients’ supply chains thoroughly sustainable development.by “small front office large medium office flat-structured and self-driven”; An impartial and transparent appraisal system to encourage the creation of value and
It will integrate high-quality resources and accelerate the development of global the pursuit of excellence; integrate the Company with clients’ value chain improve client ⑴ Continuously advance the development of a green
businesses achieve a more balanced business mix in domestic and overseas markets The Company provides outstanding talents worldwide with development opportunities experience continuously translate the best practices of digital
accomplish a complete establishment of global smart supply chain system; through competitive remuneration and training systems allowing them to realize their logistics system. We have established a system enabling the ecological technological application into product output embrace
SF will ensure its business scale and company value to ranked 1st in Asia and top 3 in career dreams. Company to measure its own pollutant emissions and plan
global through sustainable healthy operation. digitalization to empower the industry supply chain and improve
its business development accordingly. We are involved in the
logistics modernization to become the leader of the smart supply
development of national and industry standard systems and
chain.Our Healthy Operation have introduced a company voluntary carbon reduction project
Healthy Healthy Healthy Input/ Healthy Profit and
Healthy Growth Business Portfolio Global Layout Output Ratio Cash Flows
064 065Chapter 3 Management Discussion and Analysis
research and implementation plan. We are also a champion of (1) Steady development: Consol idate the compet i t ive ⑵ KA clients: We will focus on the industry and with industrial iterate the digital operation of deliverymen create a full-process
greening waste reduction and recyclability among courier and advantages of each product in terms of timeliness and service business thinking and value & innovative thinking deepen SF’s analysis and early warning and management system from the
logistics companies. (i) Green packaging: We are committed to aggregate the capabilities of each business segment and develop industry solution capabilities focus on business scenarios and operation process to the quality result and further enhance the
developing and applying sustainable packaging products and solutions in various industries in a “combination” approach to integrate the Company’s resources and capabilities to provide headquarters’ ability to directly control the terminals.have established a packaging R&D and testing center as well build “value” competitiveness in services and improve customer end-to-end scenario-based solutions so that we can achieve
as parametric design systems which have an impact across the service satisfaction so as to maintain a healthy revenue and solid win-win results through cooperation with clients in various V) Business operation
industry. We have also set up a packaging reduction project and scale growth; businesses; (1) Strategy for time-definite express:
a sustainable packaging cycle system; (ii) Green transportation:
(2) Sound profits: Promote lean operations continuously (3) SME clients: Our operational strategies will be end-to-end
We actively promote new energy road vehicles and provide our * We consolidate our absolute leading edge in time-definite
adjust the cost structure of products adhere to lean resource management providing customers with speedy and warm
clients with green supply chain solutions while increasing energy c o m b i n e w i t h t h e e v o l u t i o n o f s e g m e n t e d c u s t o m e r
planning and cost control improve the input-output ratio of core services. At the same time we will analyze new opportunities in
efficiency and reducing energy consumption during transportation groups’ demand for time-definite (e.g. high-value high-end
resources fully integrate business with finance and play the role scenarios collaborate with relevant organizations to accelerate
through optimized operating models; (iii) Green sorting: Measures manufacturing etc.) further enhance the utilization of air and
of long-term perspective in guiding operations to ensure that the standard product coverage and enlarge our business scale;
such as the active construction of green industry parks increasing land network resources leverage our resource advantages and
Company maintains healthy profit levels;
the proportion of renewable energy utilization and the rational (4) Retail clients: Based on individual clients’ full lifecycle we improve the delivery capacity of time-definite products throughplanning of warehouse layouts have enhanced delivery efficiency (3) Foundation transformation: Insist on deepening the will adhere to the business development direction of “resource resource integration and model combination optimization; * weand reduced energy consumption. The Company has set two transformation of the operation mode continuously consolidate consolidation intensive cultivation technology empowerment” continue to promote new products strengthen the time-definite
carbon reduction targets: to achieve a 55% increase in its carbon the service foundation strengthen the end-to-end overall planning continuously gather the scale of traffic online enlarge the effect advantage of intra-city express and expand half-day service
efficiency by 2030 compared to 2021 and to achieve a 70% capability under the integration of multiple networks iterate of accumulation; provide guarantee to offline integration conduct to more cities; actively explore cooperation opportunities with
reduction in the carbon footprint of each express parcel by 2030 on differentiated service and resource investment standards refined management on areas so as to maintain long-term e-commerce and short video platforms maintain stable growth of
compared to 2021. continuously optimize the foundation capability with digital and business operation. return business and deepen its service scenarios in conjunction
intelligent technology and enhance the operation efficiency; with model innovation and business development of platforms; ⑵ Continuous improvements in employee care and staff IV) Network construction: and * for air transportation of large parcels we focus on core
benefits. The Company is committed to providing employees (4) Integration and breakthrough: Insist on organizational regions customers with industry benchmark large parcels of
with a complete range of training and development opportunities integration to achieve functional streamlining adhere to the (1) Multi-network integration: * Further expand resource fresh foods/specialized markets and other areas invest precisely
and helping them tackling personal concerns which in turn resource integration to achieve cost reduction and efficiency integration including the network planning and operation of and expand business with differentiated strategies; consolidate
gives our clients a warm sense of service. (i) Adhere to the enhancement persevere in talent integration to replicate and cold chain of food pharmaceutical logistics New HAVI and Kerry the operation foundation for air transportation of large parcels in
“team” culture of equality respect collaboration win-win promote professional capabilities and stick to the business Logistics into the scope of integration so as to give full play to key cities expand and build the ability of direct distribution and
innovation and inclusiveness to allow employees to grow integration to maintain leading service competitiveness. the value and scale effect of the overall logistics network. * In dispatch across the network maintain a high incentive mechanism
through “competition” to exert their full potential; (ii) Establish terms of distribution continuously improve the area-effectiveness to drive the front-end of the business to actively generate
an impartial and transparent appraisal system to encourage II) Product planning: and resource utilization rate of transit depots by using same revenue; invest in additional special customer service and provide
the creation of value and the pursuit of excellence; (iii) Provide transit depot for large and small parcels and creating a transit
In 2022 the Company conducts product planning at the core of proactive services to ensure service stability during peak hoursoutstanding talents worldwide with development opportunities mode of storage on upstairs and transit on downstairs. * In “one network two categories of major product lines and three and strengthen service delivery.through a competitive remuneration and training systems so terms of transportation adhere to the overall planning improveservice with different time frames” realizing full integration of
that they can realize their career dreams; (iv) Establish special the integration and allocation of transportation for large and (2) Strategy for economy express:
resources for large and small parcels foundation consolidation
organizat ions center ing around couriers cooperate with small parcels of same direction continue to promote route
cost reduction and efficiency increase. In 2023 on the basis Self-operated network products online have been progressing
multiple government agencies to cater to couriers’ catering frequency direct shipping warehouse filling and low load
of the existing product planning combined with internal and steadily with focus on key regions and high-quality large
accommodation commuting etc. employ technological means carpooling at the end of the shift so as to improve the loading
external market changes we will supply refined products improve customers. Cost structure would be further optimized and
to continuously implement flat management of couriers network- rate of routes. * In terms of terminals insist on achieving savings
competitiveness and take a more long-term strategic perspective the relative competitive advantages of the products would be
wide build a fair and transparent evaluation and training system in outlets by optimizing the operation mode reducing rigid costs
to product planning: enhanced by iteratively improving the product design cost model.to guarantee reasonable remuneration for couriers reduce their improving service coverage with the help of external resources
Marginal cost benefits will also be maximized through making full
burden and enhance their sense of happiness and belonging. (1) Clarify product positioning: Clarify the positioning of and increasing the layout of last-mile sites for customers to help
use of idle time resources to match targeted marketing strategies.various products actively carry out differentiated resource increase business revenue.
3. Business Plan for 2023 Franchise network of Fengwang Express continues to consolidate investment for different product business strategies build barriers
(2) Operational capacity: * In terms of distribution continue network construction enhance transit capabilities increase the
and further enhance overall product competitiveness by taking
to improve transit capacity through technological enhancement of proportion of autonomous collection and delivery improve the
I) Overall operational priorities: adherence to into account external market competition customer demand and
the distribution system intelligent equipment streamlined process service quality management system promote service quality
sustainable and healthy development the current situation within SF;
operation and other measures combined with the integration and ensure that the customer experience index of e-commerce
(2) Supply refined products: Insist on end-to-end product of multi-network resources. * In terms of land transportation platforms ranks in the forefront.
t n optimization promote the operation of all links (order placement continue to optimize the structure of capacity resources increase me In terms of warehousing and distribution integration: * Business
lop So – receipt – transit – transportation – delivery – after-sales) to be the proportion of self-operated and C-end capacity strengthen
ve un expansion: open up the whole chain to expand the upstream e more specialized and refined in order to offer better delivery the standardization and intelligent control of individual capacity
and downstream business scenarios of customers’ supply chains
quality for customers and comprehensively improve customer resources and establish a high-quality efficient and reliable
based on existing customers; continue to expand customers
experience. capacity resource pool that aggregates individual capacity.in advantageous industries create the market-leading service
Meanwhile rely on intell igent abil ity to realize real-time
III) Client operation: capacity of warehousing and distribution integration in industries monitoring and allocation of transport capacity resources in the
Operational priorities such as beauty 3C footwear FMCG auto parts etc; break
⑴ SKA clients: whole network guiding vehicle scheduling and utilization based Through headquarters-to-headquarters strategic through the national sub-warehouse business expand service
on the principle of one account and maximum benefit for the
cooperation we will use science and technology and supply
* scenarios of serving same products online and offline and entire network. In terms of terminals continue to optimize the
chain solutions to achieve joint innovation with clients establish replicate mature solution capabilities to more customers. * Lean
model for quantifying the difficulty of the work of deliverymen by
industrial benchmarks build brands and accumulation capabilities operation: continuously optimize operating costs promote
time to incorporate more operation scenarios and apply to more
r and coordinate the Company’s various resources to provide them resource consolidation and integration and improve service cost eak an collection and delivery unit areas in a bid to enhance the fairness th tr with differentiated services; performance; enhance service quality ensure service indicators rou tion rationality and online management level of deliverymen’s income; gh a Found outperform the industry optimize the management process.
066067
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IntegratChapter 3 Management Discussion and Analysis
(3) Strategy for freight: with optimal adjustment of shipping shifts to further improve In terms of international freight and freight forwarding the the Company cannot adjust operating strategies seize the market
order fulfillment time. * Set up a digital logistics performance Company will continue to leverage on the synergy effect and opportunities and maintain its position as the leading service
In terms of To C living scenarios we will strengthen our
monitoring and response closed-loop management system to take advantage of the Company’s large customer base to seek provider in a timely manner on the grounds of market changes it
ability to deliver and install large items upstairs to form a service
enhance the customer service experience. new market opportunities develop more specific cargo routes may face the risk of slowing revenue growth and declining market
barrier and at the same time with the help of operational model
and redesign the existing service portfolio to explore more target share.innovation reduce costs to feed the market and gain more share. In terms of pharmaceutical logistics: * Build a pharmaceutical
industries with potential. By making full use of SF’s air and
* Furniture industry: expand the coverage of double full-time logistics service platform linking production/commercial/retail Risk response: The Company keeps a close watch on the
land transportation resources the unique market position and
delivery capacity consolidate the terminal capacity expand the pharmaceutical enterprises to build a medical service ecosystem macroeconomic analyzes its impact on our main business and
multi-modal transport solution capabilities of the Company in
furniture categories served while improving the service cost helping customers to expand their product flow while accessing adjusts our operation strategies in a timely manner to minimize
Asia will be integrated to further enhance its business competitiveperformance with the help of special line logistics resources pharmaceutical logistics business with the positioning of “product the adverse impact on the Company’s business and futureadvantages.enhance the penetration rate of head customers around the flow support” services and grasping policy opportunities to development. The Company pays close attention to and studies
high-end market and expand the mainstream professional establish a “multi-warehouse synergy” system in national In terms of supply chains we will continue to strengthen industry development trends analyzes the market competition
market to improve the scale of parcel volume. * Home appliance pharmaceutical cold chain logistics creating pharmaceutical the integration of the supply chain organization with other patterns and deploys forward-looking strategic planning. The
industry: promote the warehouse distribution model solid industry’s f irst third-party logist ics with multi-warehouse business segments create high-standard customized supply chain Company adheres to the multidimensional development offoundation for professional warehousing and distribution of large synergy capability. * Deepen the business model of “unified solutions around the core needs of customers and implement business constantly improves the product matrix to achieveappliances enhance the scale of warehouses for large parcels warehouse and joint distribution” to provide customers with a them to enhance the competitiveness of the Company’s supply a differentiated service experience. The Company also deeply
in the core production area and apply pre-warehouse model in four-way service of “factory – enterprise – hospital – laboratory” chain services; deploy technology products according to the integrates the business foundation in order to achieve the
sales areas so as to improve customer experience and drive more in the field of IVD (In vitro diagnostics) & biological samples. differentiated needs of customers in the industry empower resources complementation and optimize network effectiveness.scenario-based business growth by taking warehouse as the node. * Continuously extend scenarios in pharmaceutical e-commerce customers to upgrade their digital ecology and intelligence and Meanwhile the Company attaches great importance to science
pharmaceutical companies vaccines and other areas to constantly build an end-to-end intelligent integrated and convenient supply and technology investment as it could empower product
In terms of To B production scenarios we focus on industrial
improve product service capabilities and expand market share. chain system. We will also leverage digitalization to continuously innovation improve service quality and consolidate core
parcels and commercial parcels combine multi-scenario model
improve operational efficiency create marginal effects and competition barriers thereby supporting the long-term sustainable
innovation with the consolidated standard foundation capabilities (5) Strategy for Intra-City instant delivery:
empower the entire supply chain ecology. development of the Company’s business.to enhance B-end solution capabilities. We improve the time
SF INTRA-CITY will continue to focus on high-quality growth
efficiency and speed to create a core competitive barrier; enhance
by leveraging its strength and adhering to the development 4 Company risks and countermeasures 2. Policy risk
the ability of “professional” meet the needs of niche scenarios
philosophy of “high quality efficiency and multi-scenarios”. *
and improve the level of professional delivery of large parcels; in Risk arising from changes in industry regulations and
Insist on building an ecology for providing intra-city localized life 1. Market risk
terms of short-haul parcels within the economic circle/province industrial policies: The operation of express delivery requires
services together with private brands and public traffic platforms
and industrial parcels and commercial parcels from and to the Risk of macroeconomic fluctuations: The logistics industry business l icensing and is subject to regulat ion by laws
and deeply cultivate service capabil it ies covering multiple
main economic circles we will reduce costs and improve delivery plays an important fundamental role in the development of the administrative rules and industry standards such as the Postal Law
scenarios areas time ranges and distances. * Continue to
speed through model reform to provide cost-effective land national economy but it is also significantly affected by domestic of the People’s Republic of China 《( 中华人民共和国邮政法》) the
expand self-owned traffic to provide industry-leading professional
transportation services for large parcels. and global macroeconomic conditions. In recent years China’s Administrative Measures for Express Delivery Business Licensing
real-time fulfillment services for individual consumers. * Invest macroeconomic growth slows down and China is undergoing a 《( 快递业务经营许可管理办法》) the Administrative Measures for
(4) Strategy for cold chain and pharmaceuticals: in building core capabilities for long-term operation especially period of economic structure transition and the macroeconomic Express Delivery Market 《( 快递市场管理办法》) and the Rules for
foundation capability building technological capability innovationIn terms of speedy delivery of fresh foods: * Stabilize the is expected to move into a new phase of medium-slow growth. Guiding the Operation of Express Delivery Business 《( 快递业务操作and internal operation efficiency improvement. * Continuouslylogistics market share of our traditional strengths in the fresh Meanwhile the global economy is likely to enter a recession. 指导规范》). With a view to effectively regulating the development
improve profitability and capital generation capacity.food category explore and incubate niche small categories Inf lat ion r is ing energy pr ices weak consumer demand of the express delivery industry and enhancing service quality
provide more cost-effective services and penetrate more markets (6) Strategy for supply chains and international: geopolitical conflicts and other negative factors have become competent departments at various levels successively introduced
in lower-tier cities through the transformation and optimization obstacles to the growth of international trade. However with regulatory policies to regulate industry competition and service
In terms of international express delivery we will continue
of our operation model. * Continue to expand new scenarios the recovery of international transport capacity resources and standards. Particular emphasis was placed on high-quality
to cultivate express and cross-border e-commerce logistics in
and new tracks integrate warehousing and distribution with oversupply has led to the gradual decline of international air and development of the industry calling on related parties to protect
Southeast Asia extend to the Asia-Pacific region and enhance
technological capabilities provide integrated supply chain sea transport prices from the historical high range to a relatively the legitimate rights and interests of couriers improve the social
the competitiveness of our products in Europe and the United
solutions and seize new opportunities in the market. * Build lower level in the last three years. In addition the international security level of the couriers implement the main responsibility
States lay out emerging regions around the world and expand
capacity and expand markets to promote stable business growth freight industry is highly competitive. The combination effect of of the couriers and standardize the enterprise franchise and labor
our business scale: * Focus on the construction of the three
by focusing on government-enterprise cooperation agricultural above issues and the influencing factor of domestic and foreign management. With the stronger regulation the compliance cost
core networks of “air customs and terminal” in international
product category development supply and marketing model economy may bring a certain impact on the overall development and violation risk of the express delivery industry may increase
express delivery and build a stable and efficient global network
layout fresh food import and export etc. of China’s logistics industry and the performance of the Company. which may have an impact on the development trend and market
foundation by upgrading the operation mode of air routes and competition landscape of the express delivery industry and
In terms of cold chain of food: * Continue to improve the encrypting the airline network investing in the construction Market competition risk: As the main driving force for express may affect the future business growth and performance of the
product development capabilities concerning cold warehouse of core customs resources and combining multi-channel business growth the e-commerce market has transitioned from Company.truckloads and warehousing & distribution integration and resources for terminals. * Focus on the two product segments the explosive development phase into normal-level steady growth.provide integrated supply chain solutions for large clients of international express delivery and cross-border e-commerce With the reduction in incremental space the competition of Risk response: The Company has established research teams for
focusing on ice cream low-temperature milk meat products logist ics to improve the product matrix adjust the cost leading express enterprises may be fiercer in the existing markets. state and local policies in all business units to conduct in-depth
ready-to-serve dishes and other businesses. * Build a team for structure and build advantageous service barriers in Southeast Tighter industry regulation competition returning to the normal analysis on relevant policies introduced fully capitalizing on
terminal collection and delivery to enhance the last-mile service Asia and the Asia-Pacific region. * Focus on upgrading the level and limited space for competition on prices prompted more favorable policies while avoiding policy risks and grasping industry
guarantee capacity of cold chain 2B. * Optimize customer customer experience optimizing the order placement tools and express enterprises to offer comprehensive logistics services rather policies and hence promoting business growth. Furthermore the
sub-warehouse models through warehouse network planning accurately promising the time efficiency to provide customers than homogeneous services pay more attention to product service Company has always attached importance to the guarantee of
inventory planning and other system capabil it ies to help with convenient and reliable services. * Build an standard and layering and conduct competition in more logistics segments. The rights and interests of couriers continually improved the social
customers reduce costs and improve quality in their supply chains. operation monitoring system for end-to-end service integrate Company has been forging differentiated competitive advantages security level while boosting their efficiency and reducing working
* Improve the efficiency of warehouse operations through the whole process at home and abroad improve the service and providing a complete product matrix in the diversified hours to raise their income through technology empowerment.technological empowerment combine warehouse production quality management system and provide stable protection for business scope but under the impact of more leading express
enterprises’ cross – border business. enterprises getting involved in the competition in segments if
068 069Chapter 3 Management Discussion and Analysis
Risk from relevant state polic ies on environmental is an important component of transportation cost. Fluctuation Risk response: The Company’s foreign exchange transactions are and protection in all aspects according to established policies and
protection energy conservation and emission reduction: of fuel price will have a certain impact on the profitability of mainly conducted based on the actual needs of its cross-border strategies for information security and continuously updates all
China has undertaken that it will strive to reach the peak of express delivery companies. Since this year under the influence foreign-currency businesses. To avoid and guard against risks procedures and systems for information security. It continuously
CO emissions by 2030 and achieve carbon neutrality by 2060. of geopolitics the international price of crude oil remains high 2 associated with fluctuations in exchange rates and interest rates reinforces risk awareness among staff members conducts staff
It is foreseeable that China will issue subsequent policies on making the price of domestic refined oil product hits a five-year better manage its foreign currency positions and become more training on operation standards develops internal information
environmental protection energy conservation and emission high. If the price continues to rise the Company will experience competitive the Company has established the Management circulation guidelines implements rules of strong control over
reduction. Such policies to be released may affect the service and pressure of increased costs. Policies for Foreign Exchange Risks 《( 外汇风险管理制度》) and sensitive information avoids unintentional violations and
operation pattern of express delivery companies and may lead
Risk response: The Company has improved the network conducted centralized management of foreign currency positions constructs monitoring and pre-warning and response systems for
to increased expenses in relevant aspects such as environmental
planning and integrated land transport resources through the under which it decides expenditure based on revenue implements abnormal behaviors so as to eliminate information system security
protection energy conservation and emission reduction incurred
reform of operating models so as to enhance scientific route netting maturity matching and natural hedging to avoid risks in their infancy.by express delivery companies which will pose adverse effect on
planning reduce inefficient routes and improve the loading rate foreign exchange risk in advance wherever possible. It also uses
the future performance of the Company. Meanwhile if companies Secondly according to requirements of regulatory authorities the
of self-operated vehicles; Further the Company will strengthen financial derivatives and hedging instruments with low default
fail to fulfill their green environmental obligations in accordance Company has carried out multi-level network security assessment
promotion for use of new energy vehicles to reduce the risk risks and controllable risks to lock in the costs of exchange rate
with the laws they will not only be liable to the relevant legal of information systems. Based on high standards of technology
of fuel price fluctuations to a certain extent. Meanwhile the and interest rate and avoid exchange rate and interest rate risks.obligation but also impair their social images. protection requirements it conducts continuous and regular
Company also has well-established operation and cost monitoring All the Company’s hedging transactions are conducted in strict security intervention in the business system construction phase
Risk response: The Company took into account the external mechanisms in place. When costs fluctuate significantly operation compliance with the relevant hedging principles and are based on to build on the anti-security attack capabilities of client service
environment and policy changes as well as took a keen insight plans and fuel cost control measures will be dynamically adjusted. our normal production and business activities and justified with products and our own business systems. During the operation of
into the development trend of the industry so as to steer the The Company also comprehensively evaluates and explores actual business operations. All the transactions are carried out for
the information system it has established the security capability
direction of the industry and implement the forward-looking mechanisms for charging appropriate fuel surcharges around the purpose of locking in costs and avoiding risks. The Company
baseline (measurable cyberspace security capability evaluation)
deployment and adjustment. The Company paid attention to its specific products based on oil price fluctuations thereby reducing does not trade for speculative purposes and operates within its
safe operation capability (situational awareness of privacy
own impacts on the environment and in 2021 the Company the negative impact of fuel cost fluctuations on the Company. authority to ensure effective execution and reduce the impact of
data risks MTTD and MTTR indicators based on offensive andpublished the “SF Holding’s White Paper for Carbon Emission exchange rate fluctuations on its operation and earnings. In terms《顺丰控股碳目标白皮书 》 Risk from international operation: With the development defensive confrontations) DevOps security capability (DevSecOps Target 2021” ( 2021 ) the industry’s of transaction counterparty selection the Company conducts
of the Company’s international business especially after the process and tool chain) and security ecology capability (external
first white paper for carbon emission in China. Leveraging foreign exchange hedging transactions with only large and
tie-up with Kerry Logistics the proportion of international perception and linked stop loss) to enhance the capability of
technological strength such as artificial intelligence and big established commercial banks at home and abroad and all such
business has expanded rapidly and the number of countries the IT infrastructures to discover and defend against cyber
data the Company adjusted the energy consumption structure transactions conform to the principles of legality prudence safety
covered by services has increased. International logistics service
upgraded transportation and business models implemented the security attacks. Moreover the Company has established a more and effectiveness. In addition the Company will step up efforts
relying on international trade is subject to trade relations and
reduction and recycling of express packaging and then promoted comprehensive system for prevention and control of information to study and analyze exchange rates and interest rates closely
other unpredictable factors. The global economic development
the green and low-carbon reform. risks and formulated standard processes such as the Major Eventgeopolitics national relationships international trade and tax monitor changes in the global markets issue early warnings in Management Process System for IT System 《( IT 系统重大事件管理
3. Business risk policies have experienced unpredictable changes and there are
time and take countermeasures accordingly.流程制度》) and the Management Guidelines for Emergency Plan
many uncertainties on international trade including drastic price
5. Information system risk Formulation and Implementation of IT System 《( IT 系统应急预案制Risk of possible rising costs: The express and logistics industry fluctuations of the transportation capacity of international routes 定与执行管理指引》) to implement closed-loop risk prevention and
is a labor-intensive industry. There are relatively large demands for stable operation capability in some countries and regions where Information system risk: To cope with business diversification control via pre-warning in-process control and post-recording.labor along various stages of operation such as collection sorting business has been set up and so on which bring challenges to at the Company and the complex and diverse needs of customers
transportation and delivery. With the reduction in demographic the Company’s operation. If the Company fails to take effective the Company has bui l t and appl ied var ious information Lastly with a view to eliminating privacy compliance risks
dividend in China there are certain pressures on rising labor costs measures to deal with this it may have an adverse impact on the systems and technologies. Rapid development of the industry reducing potential business loss fulfilling the responsibilities
while investments in logistics infrastructures and other aspects Company’s international business development. and the evolving marketplace also pose challenge of rapid of data processors effectively protecting the benefits of users
also increase. If the Company cannot secure enough business
Risk response: In the course of the Company’s business change in technology and services on the construction of
and employees and creating a positive image of SF’s personal
volume or effectively control costs in the future it will probably core business systems of the Company. With the wide variety information protection the Company acted in compliance
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 and rapid replacement of professional technologies in the
with the GDPR and assessed privacy compliance of its apps
implemented multiple special programs concerning publicity and
Risk response: The Company has improved its logist ics strategies for international business operation in a timely manner; Company along with emerging new technologies changes intraining on privacy compliance after the Data Security Law 《( 数据foundation innovated system tools including bringing the actively explore international transportation resources in terms of information technology and future business requirements maycause certain information system risks. Although the series of 安全法》) and Personal Information Protection Law 《( 个人信息保护entire logistics process online intellectualization improving the sea land air and rail strengthen the monitoring of operation’ 法》) were promulgated and continuously and steadily conducts transit depots automation optimizing route planning using network and make every effort to ensure stable and efficient information security management and control mechanisms have
scientif ic and technological means to enhance eff iciency been established drawing on the substantial amount of data security intervention during personal information processing and cross-border services. Meanwhile the Company increases the
and reduce manpower investment and labor costs gradually business system building activities with high standards of privacy investment in scientific and technological resources promotes accumulated over the years by the Company there still exists
achieving transformation of the express delivery industry from compliance requirements enforced so as to enhance the ability the construction of international business informatization and certain human or system caused information security risks.a labor-intensive industry to a technology intensive industry. And as the top-level laws related to data security and personal to resist security attacks on personal information protection facilitates to make operational decisions in an efficient manner.Meanwhile the Company also continues to review and optimize information protection are introduced and employees’ and users’ and business system. Additionally the Company has actively
resource invested in all business units to enhance the synergy 4. Exchange rate fluctuation risk awareness of privacy protection has enhanced the regulators cooperated with National Development and Reform Commission
and reuse of resources and enhance cost efficiency. There have set higher and stricter requirements for the standardization State Post Bureau of The People’s Republic of China and all
Exchange rate fluctuation risk: As its overseas operations
are also economies of scale in the logistics industry. In the of data processor especially personal information processing levels of public security departments to combat behaviors such
expand businesses denominated in foreign currencies are set
early process of business expansion and network building the as black production and speculation has actively participated
to account for an increasing share of our total business volume. activit ies. Therefore companies with deluge of personal
predictive investment is needed for logistics infrastructures which information are also inevitably facing privacy compliance risks. in the formulation and review of various information security Given the uncertainties in the international financial environment
is conducive to creating long-term core competitiveness of the standards of the National Information Security Standardization
and fluctuations in RMB’s exchange rates the Company’s
Company. With growing business and the in-depth integration Risk response: The Company has formulated comprehensive Technical Committee and pilot work for implementation of
foreign-currency assets foreign-currency liabilities and future
of business foundation the Company will gradually obtain response measures over information system risks. policies has regularly held security summits and security salons to
foreign-currency transactions will all be subject to fluctuations in
economies of scale. Firstly the Company continues to carry out operation and facilitate information sharing with industry leaders and industry exchange rates which will in turn affect the Company’s business
Risk from fuel price fluctuation: Transportation cost is one performance or financial statements. optimization of the ISO27001 information security management
elites; and has established alliance partnership and cooperation
of the major costs of the express delivery industry and fuel cost system and the ISO27701 privacy information management
with information security teams of well-known Internet and
system. The Company implements information security control e-commerce companies for the joint construction of a safe and
orderly cyberspace
070 071Chapter 3 Management Discussion and Analysis Chapter 4 Corporate Governance
XIV. Reception of Research Communication Interviews I. Basic Information of Corporate Governance
and Other Activities During the Reporting Period
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
√Applicable □Not applicable 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
Method of Main topics and information control regulations improved its corporate governance structure internal management and control system and set up norms for company
Date of reception Venue of reception Type of visitors Visitor Index of Basic Information of Research
reception provided behaviors. 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.
4/F Block B TK Zhu Yixuan from Baillie Gifford Wang Song from Introducing the overall “Record Form of Investor RelationsChuangzhi Tiandi Greenwoods Asset Yin Li China from Southern operation and strategic Activities Held on February 28 2022” 1. Shareholders and General Meeting
February 28 2022 Building Keji South 1st Field research Institution Asset Management Wu Yanfeng from HSBC initiatives as well as intra-city (No.: 2022-001) disclosed by the
Road Nanshan District Qianhai Securities and Sun Xiaodi from HSBC businesses of the Company for Company on CNINFO (www.cninfo. During the Reporting Period the Company standardized the gathering convening and voting procedures of shareholders ‘general meetings
Shenzhen Qianhai Securities 2021 com.cn) on March 1 2022 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
A total of 403 investors including China attend general meetings and issue legal opinions for the holding and voting procedures of the general meetings. In this way the legal rights
Universal Asset Management Springs Capital and interests of all shareholders were fully respected and safeguarded.Chongyang Investment Fullgoal Fund Harvest
20/F Block B TK Interpreting the Company’s “Record Form of Investor RelationsFund Invesco Great Wall BOCOM Schroder 2. Controlling shareholders and the CompanyChuangzhi Tiandi annual results for 2021 Activities Held on March 30 2022”
Communication Fund E Fund ICBC Credit Suisse PineBridge
March 30 2022 Building Keji South 1st Institution introducing business highlights (No.: 2022-002) disclosed by the
on phone Investments Rosefinch Fund Shenwan The Company’s controlling shareholders strictly regulated shareholder behavior in accordance with the Code of Corporate Governance
Road Nanshan District and presenting business Company on CNINFO (www.cninfo.Hongyuan Securities Guotai Junan Securities for Listed Companies in China Stock Listing Rules of Shenzhen Stock Exchange and Articles of Association. The controlling shareholders
Shenzhen outlook for 2022 com.cn) on March 31 2022
China Merchants Securities Guohai Securities exercised shareholder rights through the general meeting and there was no direct or indirect interference with the Company’s operations
Southwest Securities CITIC Securities Changjiang and decision-making beyond the general meeting and the Board of Directors.Securities Huatai Securities and other institutions 3. Directors and the Board of DirectorsInterpreting annual results “Record Form of Investor RelationsThe Company elects candidates for the Board of Directors in strict accordance with the Company Law Articles of Association and Regulatedand introducing business Activities Held on March 31 2022”
Opinions on Shareholders General Meetings of Listed Companies. The number of members and composition of the Board of Directors meet
March 31 2022 https://ir.p5w.net Other Other All investors development and operational (No.: 2022-003) disclosed by the
the requirements of laws and regulations.measures of the Company for Company on the Cninfo website (www.
2021 cninfo.com.cn) on April 1 2022 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
2/F Block B TK A total of approximately 34 investors including Interpreting the Company’s “Record Form of Investor Relations directors scrupulously attended the Board sessions seriously examined various proposals and fulfilled their duties diligently. IndependentChuangzhi Tiandi Institutions Greenwoods Assets Invesco Great Wall Mingda development outlook 2025 Activities Held on April 29 2022” (No.: directors fulfilled their duties independently safeguarded the Company’s overall interests and issued independent opinions on major and
April 29 2022 Building Keji South 1st Field research and Assets Qianhai Haiya Financial Holdings Qianhai strategy 2021 annual report 2022-004) disclosed by the Company important issues.Road Nanshan District individuals Jingzhi Assets Yuanzhi Ruixin and other and first quarterly report for on CNINFO (www.cninfo.com.cn) on
Shenzhen institutional and individual shareholders 2022 May 1 2022 4. Supervisors and Supervisory Committee
A total of 399 investors including Bosera Funds The Company elects candidates for the Supervisory Committee in strict accordance with the Company Law Articles of Association
Chongyang Investment Springs Capital Fullgoal Regulated Opinions on Shareholders General Meetings of Listed Companies and other relevant laws and regulations. The number of
20/F Block B TK Fund China Universal Asset Management “Record Form of Investor RelationsBusiness review performance members and composition of the Supervisory Committee meet the requirements of laws and regulations. The Supervisory Committee of theChuangzhi Tiandi Harvest Fund Invesco Great Wall BOCOM Activities Held on August 30 2022”
Communication interpretation and theme-based Company convened the sessions of Supervisory Committee in strict accordance with the relevant provisions of the Articles of Association
August 30 2022 Building Keji South 1st Institution Schroder Fund E Fund Y2 Capital Rosefinch (No.: 2022-005) disclosed by the
on phone sharing for the first half of Rules of Procedure for the Supervisory Committee and other related regulations. All supervisors scrupulously attended the sessions seriously
Road Nanshan District Fund Changjiang Securities Seal and Securities Company on CNINFO (www.cninfo.
2022 fulfilled their duties diligently and supervised and issued opinions for major issues related-party transactions and financial status.
Shenzhen HSBC Qianhai Securities Southwest Securities com.cn) on August 31 2022
China Industrial Securities CITIC Securities China 5. Information disclosure and transparency
Merchants Securities and other institutions
The Company duly performed information disclosure obligations in accordance with the requirements of the Articles of Association Rules
A total of 199 investors including Bosera Funds Governing the Listing of Shares on Shenzhen Stock Exchange and the relevant laws and regulations of the CSRC and the Shenzhen Stock
Lombarda China Fund Minsheng Royal Fund Exchange. The Company designated Securities Times Securities Daily Shanghai Securities News China Securities Journal and Cninfo to
ICBC Credit Suisse Invesco Great Wall Fullgoal disclose the Company’s information in a true accurate and timely manner so that all shareholders of the Company can be impartially
Fund Harvest Fund China Funds BOC Asset informed about the Company.Interpreting the estimated “Record Form of Investor RelationsManagement Nanfang Fund Dacheng Fund GFresults of the Company for Activities Held on October 14 2022”
Communication Fund BOSC Asset China Life AMP Rongtong
October 14 2022 Online meetings Institution the first three quarters of (No.: 2022-006) disclosed by the
on phone Fund CITIC-Prudential Fund Hwabao WP Fund
2022 and introducing business Company on CNINFO (www.cninfo.
Aegon-industrial Fund Penghua Fund Springs
development com.cn) on October 17 2022
Capital Greenwoods Asset China Orient Asset
Management Value Partners Schroder UBS
Changjiang Securities Huatai Securities and other
institutions
072 073Chapter 4 Corporate Governance
6. Investor relations management III. Horizontal Competition
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 □Applicable √Not applicable
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.IV. Details about the Annual General Meeting and
7. Performance appraisals and incentives
Extraordinary General Meetings Convened during the
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 Reporting Period
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. 1. Details about the shareholders’ general meeting during the Reporting Period
8. Stakeholders Investor Participation
Meeting Meeting Type Date Convened Disclosure Date Meeting Resolutions
%
The Company can fully respect and safeguard the legitimate rights and interests of relevant stakeholders coordinate and balance theinterests of shareholders employees communities and others and jointly promote the Company’s sustained and healthy development. The Extraordinary “Resolutions of the First Extraordinary GeneralFirst Extraordinary General MeetingCompany will continue to further its governance perfect its corporate governance structure disclose information to enhance the Company’s General 65.48% February 11 2022 February 12 2022 Meeting of 2022” (2022-013) disclosed by the
of Shareholders of 2022
transparency strengthen investor relations management and protect the interests of small and medium investors. Meeting Company on CNINFO (www.cninfo.com.cn)
There are no material discrepancies between the Company’s actual governance status and the laws administrative regulations and relevant “2021 Annual General Meeting Resolutions” (2022-
rules of governance on listed companies promulgated by the CSRC. Annual General 2021 Annual General Meeting 65.28% April 29 2022 April 30 2022 053) disclosed by the Company on CNINFO (www.Meeting
cninfo.com.cn)
I I . Detai ls of the Company’s Independence fromExtraordinary “Resolutions of the Second Extraordinary GeneralSecond Extraordinary Generalthe Controlling Shareholder and Actual Controller General 64.59% May 17 2022 May 18 2022 Meeting of 2022” (2022-058) disclosed by the Meeting of Shareholders of 2022
Meeting Company on CNINFO (www.cninfo.com.cn)with Respect to Assets Personnel Financial Affairs Extraordinary “Resolutions of the Third Extraordinary GeneralThird Extraordinary General MeetingGeneral 65.74% December 20 2022 December 21 2022 Meeting of 2022” (2022-138) disclosed by the
Organization and Business of Shareholders of 2022 Meeting Company on CNINFO (www.cninfo.com.cn)
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 2. Extraordinary General Meeting requested by preferred shareholders with restitution of
to strictly comply with the relevant regulations of the CSRC on the independence of listed companies and maintain the independence of voting right
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 □Applicable √Not applicable
of the Company. The Company was independent from the controlling shareholder in terms of assets personnel finance organization and
business.
074 075Chapter 4 Corporate Governance
V. Directors Supervisors and Senior Management Any director or supervisor resigned or any senior executive in office dismissed during the Reporting Period?
√Yes □No
For the specific circumstances and reasons for the resignation or dismissal of directors supervisors and senior executives during their terms
1. Basic information of office please refer to the following table “Changes of directors supervisors and senior executives of the Company”.
Changes of directors supervisors and senior executives of the Company
Quantity of
Quantity of shares Quantity of shares
shares held at the Quantity of shares Reason for increase or
increased in the decreased in the Other increase √Applicable □Not applicable
Name Title Tenure status Gender Age Commencement Date End Date beginning of the held at the end of decrease in
current current or decrease (share)
period the period (share) shares
period (share) period (share)
(share) Name Position Type Date Reason
Wang Wei Chairman general manager Current Male 52 December 28 2016 Present 0 0 0 0 0 –
Wang Xin Director Elected December 20 2022 Appointed as non-independent director due to the election of the Board of Directors.Director November 15 2021
Ho Chit Deputy general manager Current Male 48 Present 0 0 0 0 0 – Zhang Dong Director Elected December 20 2022 Appointed as non-independent director due to the
financial head September 29 2021 election of the Board of Directors.Wang Xin Director Current Female 50 December 20 2022 Present 50000 0 0 0 50000 – Chan Charles
Sheung Wai Independent Director Elected December 20 2022
Appointed as independent director due to the election
Zhang Dong Director Current Male 42 December 20 2022 Present 0 0 0 0 0 – of the Board of Directors.CHAN Charles
Sheung Wai Independent director Current Male 69 December 20 2022 Present 0 0 0 0 0 –
Lee Carmelo
Ka Sze Independent Director Elected December 20 2022
Appointed as independent director due to the election
of the Board of Directors.Lee Ka Sze
Carmelo Independent director Current Male 62 December 20 2022 Present 38000 0 0 0 38000 – Ding Yi Independent Director Elected December 20 2022 Appointed as independent director due to the election of the Board of Directors.Ding Yi Independent director Current Female 58 December 20 2022 Present 0 0 0 0 0 –
Shum Tze Leung Chairman of the Supervisory
Employee
Current Male 57 December 27 2019 Present 0 0 0 0 0 – Zhang Shun Representative Elected December 20 2022 Appointed as employee representative supervisor due to Committee
Supervisor the election of Supervisory Committee.Wang Jia Supervisor Current Female 43 April 09 2021 Present 0 0 0 0 0 –
Zhou Deputy General Appointed December 20 2022 Appointed as deputy general manager by the Board of
Liu Jilu Supervisor Current Male 76 December 28 2016 Present 55883780 0 11160000 0 44723780 Personal capital Haiqiang Manager Directorsneed
Li Juhua Employee representative Current Female 43 December 27 2019 Present 0 0 0 0 0 – Geng Yankun
Deputy General
Manager Appointed December 20 2022
Appointed as deputy general manager by the Board of
supervisor Directors
Zhang Shun Employee representative supervisor Current Male 31 December 20 2022 Present 0 0 0 0 0 – Lin Zheying Deputy Chairman Resigned due to expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.Li Sheng Deputy general manager Current Male 56 December 28 2016 Present 0 0 0 0 0 –
Resigned due to
Zhou Haiqiang Deputy general manager Current Male 45 December 20 2022 Present 0 0 0 0 0 – Zhang Yichen Director expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.Geng Yankun Deputy general manager Current Male 37 December 20 2022 Present 0 0 0 0 0 –
Deng Resigned due to
Gan Ling Deputy general manager Weidong
Director expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.secretary of the Board Current Female 48 December 28 2016 Present 0 0 0 0 0 –
Due to recognition Liu Chengwei Director Resigned due to
of the Company’s expiry of term.December 20 2022 Resigned due to expiry of term of the Board of Directors.Lin Zheying Deputy chairman Resigned Male 58 December 28 2016 December 20 2022 0 12000000 0 0 12000000 development
strategy and
Chan Fei Director and Deputy Resigned due to investment value General Manager expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.Zhang Yichen Director Resigned Male 59 December 28 2016 December 20 2022 0 0 0 0 0 –
Lo Sai Lai Director Resigned due to
Deng Weidong Director Resigned Male 55 April 09 2019 December 20 2022 0 0 0 0 0 – expiry of term.December 20 2022 Resigned due to expiry of term of the Board of Directors.Liu Chengwei Director Resigned Male 52 December 28 2016 December 20 2022 0 0 0 0 0 – Zhou Resigned due to
Chan Fei Director Resigned Male 48 December 27 2019 December 20 2022 0 0 0 0 0 – Zhonghui
Independent Director expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.Lo Sai Lai Director Resigned Male 60 December 28 2016 December 20 2022 0 0 0 0 0 –
Jin Li Independent Director Resigned due to expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.Zhou Zhonghui Independent director Resigned Male 75 December 28 2016 December 20 2022 0 0 0 0 0 –
Jin Li Independent director Resigned Male 52 December 28 2016 December 20 2022 0 0 0 0 0 – Dicky Perter
Yip Independent Director
Resigned due to
expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.Dicky Perter Yip Independent director Resigned Male 76 February 15 2017 December 20 2022 0 0 0 0 0 –
Due to confidence Chow Wing Resigned due to
Kin Anthony Independent Director expiry of term. December 20 2022 Resigned due to expiry of term of the Board of Directors.Chow Wing Kin ’
Anthony Independent director Resigned Male 72 December 28 2016 December 20 2022 0 50000 0 0 50000
in the Company s
future development
prospects Employee
Chu Yan Representative Resigned due to December 20 2022 Resigned due to expiry of term of Supervisory
Chu Yan Supervisor Resigned Female 44 April 08 2021 December 20 2022 0 0 0 0 0 – Supervisor expiry of term. Committee.Xu Zhijun Deputy general manager Resigned Male 46 December 28 2016 December 20 2022 0 0 0 0 0 –
Deputy General Resigned due to
Total – – – – – – 55971780 12050000 11160000 0 56861780 – Xu Zhijun Manager expiry of term. December 20 2022 Resigned due to expiry of term.
076 077Chapter 4 Corporate Governance
2. Biography of Key Personnel Supervisory Committee
The professional background main working experience and their main duties in the Company of incumbent directors supervisors and Chairman of the Supervisory Committee
senior executives of the Company. 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 since 1997. He is
Board of Directors currently a Head of Hong Kong operation of the Company. He served as Supervisor of the Company from December 2019 to April 2021.Chairman Since April 2021 he has served as Chairman of the Supervisory Committee of the Company.Mr. Wang Wei male born in 1970 is the founder and de facto controller of the Company. He currently serves as Chairman and General Supervisors
Manager of the Company. He has served as the chairman of the board of directors and non-executive director of SF REIT Asset Management Ms. Wang Jia female born in 1979 holds a bachelor degree in economics from Shenzhen University. She served at Deloitte Touche
Limited since February 2021 and the chairman of the board of directors and non-executive director of Kerry Logistics (00636.HK) since Tohmatsu Certified Public Accountants LLP Shenzhen Branch from 2002 to 2007 and Ernst & Young (China) Advisory Limited Shenzhen
October 2021. Branch from 2007 to 2014 and served as Head of Internal Control of Taisen Holding from 2014 to 2016. Ms. Wang has served as Head of
Directors Internal Control of the Company from 2017 to 2022 as acting Head of Risk Control and Compliance of the Company since 2023 and as
Supervisor of the Company since April 2021.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 and the Internet sector. He Mr. Liu Jilu male born in 1947 holds a university degree and is an engineer. He is an outstanding private entrepreneur in Anhui Province
served as Senior Manager of the Audit and Consulting Department of Arthur Anderson and PriceWaterhouseCoopers from 1997 to 2005 as and President of Ma’anshan Federation of Industrial Economics. He served as General Manager of Ma’anshan Dingtai Metal Products
Senior Financial Director of Sohu.com Inc. (SOHU.US) from 2005 to 2008 as Chief Financial Officer of Changyou.Com Limited (CYOU. US) Company Chairman & General Manager of Ma’anshan Dingtai Technology Co. Ltd. and Chairman and General Manager and Party
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 Committee Secretary of Ma’anshan Dingtai Rare Earth & New Materials Co. Ltd. Mr. Liu has served as Supervisor of the Company since
Financial Head of the Company since September 2021 and as Controlling Director of the Company since November 2021 as non-executive December 2016.Director of Kerry Logistics (00636.HK) since October 2021 and as non-executive Director of SF REIT Asset Management Limited since April Ms. Li Juhua female born in 1979 graduated from Tongji University. She served as Accounting Director of Shanghai Totole Flavoring
2022. Food Co. Ltd. under Nestlé from 2002 to 2004 as Accounting Manager at Walmart’s China headquarters from 2004 to 2008 as Financial
Ms. Wang Xin female born in 1972 was graduated from CEIBS with a Master degree of Business Administration. She served as the Senior Manager of B&Q Shenzhen from 2008 to 2010 and as Financial Director of Maoye International Holdings Limited (00848.HK) from 2010 to
Project Manager and the Associate Partner of Mercer Management Consulting (now Oliver Wyman) from 2000 to 2008 as the Associate 2012. From 2012 to 2016 Ms. Li served as Deputy Accounting Director Accounting Director and Tax Director of S.F. Group. From 2017 to
Partner of AT Kearney from 2008 to 2011 as the Senior Partner of Roland Berger from 2011 to 2021 and as the Assistant CEO and the August 2021 she served as Head of Finance Sharing Center of the Company. Ms. Li has served as Head of CFO Office and Head of Business
CHO of S.F. Holding since January 2022. She has been a Director of S.F. Holding since December 2022. and Finance Management Office of the Company since August 2021 and as Employee Representative Supervisor of the Company since
December 2019.Mr. Zhang Dong male born in 1980 was graduated from Shandong University of Technology with a bachelor’s degree. From 2004 to
2020 he served as the senior technical manager planning director head of product department regional general manager and head of Mr. Zhang Shun male born in 1991 was graduated from Sun Yat-sen University with a Master’s degree in Economics. Mr. ZHANG joined
customer platform of SF Group. From September 2020 to October 2021 he served as the assistant chief marketing officer of SF Holding. He SF Group in 2015 and has been the Head of Culture and Employee Relations Section of S.F. Holding since November 2020. He has been
has been the chief marketing officer of SF Holding and the president of South China Region since November 2021. He has been a Director serving as a supervisor representing employees of S.F. Holding since December 2022.of S.F. Holding since December 2022.Senior Executives
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 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 Managing Partner of the Audit Department of Arthur Andersen Chinese Mainland/Hong Kong the Managing Partner of the Audit “the Board of Directors”.Department of PricewaterhouseCoopers China and the Senior Consultant of Protiviti China/Hong Kong (a risk management and consulting 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
firm). Mr. CHAN was also a member of the HKEX Listing Committee a member of the Election Committee of the First Legislative Council Executive at Walmart China. From 2005 to 2013 he served as Head of the Audit and Supervision Department General Manager of Hubei
of Hong Kong and the Independent Director of CITIC Securities (600030.SH 06030.HK) and Changyou (CYOU.US). Mr. CHAN is currently operation President of Central China operation and President of West China operation of S.F. Group. From 2013 to May 2021 he served
serving as the Independent Director of Maoyan Entertainment (01896.HK) Hansoh Pharmaceutical (03692.HK) Sun Art Retail (06808.HK) as President of SF Airlines. Since June 2021 he has served as Chairman of SF Airlines. Mr. Li served as Director of S.F. Group from 2013 to
and Bioheart (02185.HK). He has been an Independent Director of S.F. Holding since December 2022. 2016 and as Deputy General Manager of S.F. Group from 2015 to 2016. He has served as Deputy General Manager of the Company since
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 December 2016.a qualified lawyer in Hong Kong England and Wales Singapore and the Australian Capital Territory. Mr. LEE has rich legal experience and Mr. Zhou Haiqiang male was born in 1977. Mr. ZHOU joined SF Group in 2001 and successively held the positions of Head of General
has been a partner of Woo Kwan Lee & Lo since 1989 and its Senior Partner since 1998. Mr. LEE is also one of the Chairmen of the Listing Affairs Department of Jiangsu District and Head of General Affairs Department of East China Region of SF Group from 2001 to 2007
Review Committee of the Stock Exchange of Hong Kong a member of the InnoHK Steering Committee of the Innovation and Technology General Manager of Hangzhou District and Deputy President and Assistant CHO of E-commerce Logistics Business Unit of SF Group from
Commission of the Government of the Hong Kong Special Administrative Region the Chairman of the Appeal Tribunal Panel (Buildings) 2008 to 2016 and General Manager of Shanghai District of S.F. Holding from the end of 2016 to the end of 2020. He has been the
a member of the Campaign Committee of the Community Chest of Hong Kong and the Co-chairman of the Community Chest Corporate Assistant CEO of S.F. Holding since the end of 2020. He has been serving as the Deputy General Manager of S.F. Holding since December
Challenge. His working experience also included being an independent non-executive director of Ping An (601318.SH 02318.HK) CPIC 2022.
(601601.SH 02601.HK) and other companies. Mr. LEE is currently serving as the Independent Director of China Mobile (00941.HK) and
KWG Group (01813.HK) as the Non-executive Director of Safety Godown (00237.HK) and Playmates Holdings (00635.HK). He has been an Mr. Geng Yankun male born in 1986 was graduated from Harbin Institute of Technology and Peking University with a master’s degree.Independent Director of S.F. Holding since December 2022. 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 was also the Co-founder and CTO of Baidu Waimai from 2014 to 2017. Mr. GENG has been the
Ms. Ding Yi female born in 1964 Ph.D. Economics and Senior Economist has extensive experience in financial management and served CEO of Beijing S.F. Intra-city Technology Co. Ltd. since 2017 and the CTO of S.F. Holding and the CEO of SF Technology Co. Ltd. since
as a lecturer at the School of Finance of Renmin University of China the Deputy General Manager of PICC Investment Management 2020 being responsible for technology R&D operation management and other related business of S.F. Holding. He has been serving as the
Department the Director and President Assistant of PICC Asset Management Co. Ltd. the General Manager and Chairman of Huaneng Deputy General Manager of S.F. Holding since December 2022.Capital Services Co. Ltd. the Chairman of Great Wall Securities (002939.SZ) and the Chairman 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 Ms. Gan Ling female born in 1974 holds an MBA degree from the University of Texas at Austin US. She was an analyst at Coatue
Huaxia Bank (600015.SH) Huatai Asset Management Co. Ltd. and Zhangjiakou Yuanshi Advanced Materials Co. Ltd. She has been an Management one of the Tiger cub funds in New York from 2006 to 2010. She served as deputy general manager of Maoye International
Independent Director of S.F. Holding since December 2022. Holdings Limited from 2010 to 2015. Currently she is a member of the Appeal Review Committee at the Shenzhen Stock Exchange. Ms.Gan joined S.F. Group in 2015 and has been non-executive director of SF REIT Asset Management Limited since December 2022. She has
been serving as the Secretary of the Board of Directors and Deputy General Manager of the Company since 2016.
078 079Chapter 4 Corporate Governance
Positions held in shareholder entities
Receiving payment
√Applicable □Not applicable Name Name of the other entity Position in the other entity Commencement date End date from the other entity
or not
Receiving payment
Position in the shareholder Lee Ka Sze Carmelo Manson Commercial Limited Director May 1989 Present No
Name Name of the shareholder entity Commencement date End date from the shareholder
entity
entity or not
Lee Ka Sze Carmelo MANSON INVESTMENT AND FINANCE COMPANY LIMITED Director June 1989 Present Yes
Wang Wei Shenzhen Mingde Holding Development Co. Ltd. Executive director August 03 2004 Present No
Lee Ka Sze Carmelo Kiasu Co. Ltd. Director January 1991 Present No
Description of posts
held in shareholder N/A Lee Ka Sze Carmelo WU JIA TANG FOUNDATION LIMITED Director September 1994 Present No
entity
Lee Ka Sze Carmelo Loylee Investments Limited Director November 1994 Present No
Employment with other companies Lee Ka Sze Carmelo SAFETY GODOWN COMPANY LIMITED Non-executive director September 2004 Present Yes
√Applicable □Not applicable
Lee Ka Sze Carmelo KWG Group Holdings Limited Independent director June 2007 Present Yes
Receiving payment
Name Name of the other entity Position in the other entity Commencement date End date from the other entity Lee Ka Sze Carmelo Wise Town Limited Director November 2008 Present No
or not
Lee Ka Sze Carmelo PLAYMATES HOLDINGS LIMITED Non-executive director November 2019 Present Yes
Wang Wei Guangdong Shucheng Technology Co. Ltd. Director August 2018 Present No
Lee Ka Sze Carmelo China Mobile Limited Independent director May 2022 Present Yes
Chairman of board of
Wang Wei SF REIT Asset Management Limited directors non-executive February 2021 Present No Lee Ka Sze Carmelo W. & K. (Nominees) Limited Director May 2022 Present No
director
Ding Yi Tongwei Co. Ltd. Non-executive director May 2020 Present Yes
Ho Chit Fox Financial Technology Group Limited Director April 2014 Present No
Ding Yi HUA XIA BANK CO. Limited Independent director September 2020 Present Yes
Ho Chit Great Wall Securities Co. Ltd. Independent director August 2015 May 2022 Yes
Ding Yi Huatai Asset Management Company Limited Independent director September 2020 Present Yes
Ho Chit SF REIT Asset Management Limited Non-executive director April 2022 Present No
Ding Yi Zhangjiakou Yuanshi Advance Materials Co. Ltd Independent director November 2021 Present Yes
Chan Charles Sheung Wai SRE GROUP LIMITED Independent director July 2012 October 2022 Yes Shum Tze Leung KINGS (HK) INTERNATIONAL LIMITED Director February 2019 Present No
Chan Charles Sheung Wai Maoyan Entertainment Independent director January 2019 Present Yes Shum Tze Leung Kin Shun Information Technology Holdings Limited Director February 2019 Present No
Chan Charles Sheung Wai Hongkong Fusion Bank Independent director March 2019 Present Yes Shum Tze Leung Kin Shun Information Technology Limited Director February 2019 Present No
Chan Charles Sheung Wai Hansoh Pharmaceutical Group Company Limited Independent director May 2019 Present Yes Li Juhua Global Connect Holding Limited Director April 2022 Present No
Chan Charles Sheung Wai CITIC-Prudential Life Insurance Company Limited Non-executive director May 2019 Present Yes Li Sheng SF Foundation Director October 2016 Present No
Chan Charles Sheung Wai Shanghai Bio-heart Biological Technology Co. Ltd. Independent director November 2020 Present Yes Gan Ling Sunrise Capital Feeder Fund Ltd. Director April 2015 Present No
Chan Charles Sheung Wai SUN ART RETAIL GROUP LIMITED Independent director January 2021 Present Yes Gan Ling SF REIT Asset Management Limited Non-executive director December 2022 Present No
Chan Charles Sheung Wai Hongkong FuSure Reinsurance Company Limited Independent director April 2021 Present Yes Description of posts held in
other entity N/A
Chan Charles Sheung Wai Goldman Sachs Gao Hua Securities Company Limited Independent director October 2021 Present Yes
Penalties imposed by securities regulatory bodies on the Company’s current and dismissed directors supervisors and senior executives
Chan Charles Sheung Wai CITIC-Prudential Asset Management Company Limited Non-executive director November 2021 Present Yes during the Reporting Period in the past three years
Lee Ka Sze Carmelo Manson (Holding) Inc Director February 1981 Present No □Applicable √Not applicable
Lee Ka Sze Carmelo EVERSO COMPANY LIMITED Director March 1985 Present Yes
080 081Chapter 4 Corporate Governance
3. Remuneration for Directors Supervisors and Senior Management
Total Pre-tax Remuneration
Gained from the Company in 20221 Whether Gained
Remuneration from
Decision-making procedure basis of determination and actual payment of remuneration for directors Name Position Gender Age Tenure status the Related Parties of
Wages and
supervisors and senior management bonus etc. Other benefits the Company
With a view to further improving the remuneration management system for the Company’s directors supervisors and senior executives Shum Tze Leung Chairman of the Supervisory Committee Male 57 Current 543.30 90.39 No
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 Wang Jia Supervisor Female 43 Current 867.08 23.35 No
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 Liu Jilu Supervisor Male 76 Current – – Yes
General Meeting of Shareholder.Li Juhua Supervisor Female 43 Current 1261.31 119.08 No
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 Zhang Shun Supervisor Male 31 Current 15.67 – No
independent directors are issued from the following month after their appointment resolutions are passed at the Shareholders’ General
Li Sheng Deputy General Manager Male 56 Current 4830.80 88.22 No
Meeting.The Company does not provide separate allowances for external directors internal directors external supervisors or internal supervisors. Zhou Haiqiang Deputy General Manager Male 45 Current 66.57 – No
Internal directors and internal supervisors receive remuneration according to the corresponding remuneration for senior executive or other
Geng Yankun Deputy General Manager Male 37 Current 65.60 – No
positions concurrently held by them and appraisal management approach.The remuneration determination mechanism of the Company’s senior management: the Remuneration Management Committee under Gan Ling Deputy General Manager and Secretary of the Board Female 48 Current 2167.25 52.65 No
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 Lin Zheying Deputy Chairman Male 58 Resigned – – Yes
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 Zhang Yichen Director Male 59 Resigned – – Yes
adopts the annual salary system in which the fixed salary is determined with reference to factors including market rate and individual
Deng Weidong Director Male 55 Resigned – – Yes
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 Liu Chengwei Director Male 52 Resigned – – Yes
system.Chan Fei2 Director and Deputy General Manager Male 48 Resigned 3841.50 125.01 No
Remuneration of directors supervisors and senior executives during the Reporting Period Lo Sai Lai Director Male 60 Resigned – – No
Unit: RMB’000
Zhou Zhonghui Independent Director Male 75 Resigned 680.00 – Yes
Total Pre-tax Remuneration
Gained from the Company in 20221 Whether Gained Jin Li Independent Director Male 52 Resigned 680.00 – Yes
Name Position Gender Age Tenure status Remuneration from the Related Parties of
Wages and Other benefits the Company
Dicky Peter Yip Independent Director Male 76 Resigned 680.00 – No
bonus etc.Chow Wing Kin Anthony Independent Director Male 72 Resigned 680.00 – Yes
Wang Wei Chairman and General Manager Male 52 Current 702.00 – No
Chu Yan Supervisor Female 44 Resigned 1838.48 23.35 No
Ho Chit2 Director Deputy General Manager CFO Male 48 Current 7248.07 141.91 Yes
Xu Zhijun Deputy General Manager Male 46 Resigned 2048.43 119.08 No
Wang Xin Director Female 50 Current 84.12 – No
Total 28431.32 783.04
Zhang Dong Director Male 42 Current 65.33 – No
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
Chan Charles Sheung Wai Independent Director Male 69 Current 21.94 – Yes senior executive of the listed company SF Holding in 2022 of which Wang Xin Zhang Dong Chan Charles Sheung Wai Lee Ka Sze Carmelo Ding Yi
Zhang Shun Zhou Haiqiang and Geng Yankun had served corresponding position of the listed company since December 20 2022.Lee Ka Sze Carmelo Independent Director Male 62 Current 21.94 – Yes
Note 2: The amount of “Wages and bonus etc.” that Ho Chit and Chan Fei received from the Company during the Reporting Period included the director’s fees
Ding Yi Independent Director Female 58 Current 21.94 – Yes that they received from subsidiary Kerry Logistics.
082 083Chapter 4 Corporate Governance
VI. Performance of Duties by Directors During the 2. Details of attendance at meetings of the Board and general meetings by directors
Reporting Period Details of attendance of meetings of the Board and general meetings by director
Whether the
Number of
Required number of Number of physical Number of Number of absence director does Number of
attendance at Board
Name of director attendance during attendance at Board attendance at Board from Board not attend two attendance at
1. Board of Directors during the Reporting Period meetings by means the Reporting Period meetings meetings by a proxy meetings consecutive Board general meetings
of communication
meetings in person
Meeting Date Convened Disclosure Date Meeting Resolutions Wang Wei 11 0 11 0 0 No 4For details refer to the “Announcement of the Resolutions of the 21st Ho Chit 11 3 8 0 0 No 4
21st meeting of the 5th Board of Directors January 26 2022 January 27 2022 Session of the 5th Board of Directors” (announcement No.: 2022-007)
disclosed by the Company on Cninfo (www.cninfo.com.cn). Wang Xin 1 0 1 0 0 No 0For details refer to the “Announcement of the Resolutions of the 22nd Zhang Dong 1 0 1 0 0 No 0
22nd meeting of the 5th Board of Directors March 2 2022 March 3 2022 Session of the 5th Board of Directors” (announcement No.: 2022-018)
disclosed by the Company on Cninfo (www.cninfo.com.cn) by the Company. Chan Charles 1 0 1 0 0 No 0
Sheung WaiFor details refer to the “Announcement of the Resolutions of the 23rd
23rd meeting of the 5th Board of Directors March 30 2022 March 31 2022 Session of the 5th Board of Directors” (announcement No.: 2022-028) Lee Ka Sze Carmelo 1 0 1 0 0 No 0
disclosed by the Company on Cninfo (www.cninfo.com.cn).Ding Yi 1 0 1 0 0 No 0For details refer to the “Announcement of the Resolutions of the 24thLin Zheying 10 0 10 0 0 No 4
24th meeting of the 5th Board of Directors April 28 2022 April 29 2022 Session of the 5th Board of Directors” (announcement No.: 2022-048)
disclosed by the Company on Cninfo (www.cninfo.com.cn). Zhang Yichen 10 0 10 0 0 No 4For details refer to the “Announcement of the Resolutions of the 25th Deng Weidong 10 0 10 0 0 No 2
25th meeting of the 5th Board of Directors May 30 2022 June 1 2022 Session of the 5th Board of Directors” (announcement No.: 2022-063)
disclosed by the Company on Cninfo (www.cninfo.com.cn). Liu Chengwei 10 0 10 0 0 No 3For details refer to the “Announcement of the Resolutions of the 26th Chan Fei 10 0 10 0 0 No 4
26th meeting of the 5th Board of Directors June 2 2022 June 6 2022 Session of the 5th Board of Directors” (announcement No.: 2022-069)
disclosed by the Company on Cninfo (www.cninfo.com.cn). Lo Sai Lai 10 0 10 0 0 No 4For details refer to the “Announcement of the Resolutions of the 27th Zhou Zhonghui 10 0 10 0 0 No 3
27th meeting of the 5th Board of Directors August 30 2022 August 31 2022 Session of the 5th Board of Directors” (announcement No.: 2022-089) Jin Li 10 0 10 0 0 No 1
disclosed by the Company on Cninfo (www.cninfo.com.cn).Dicky Peter Yip 10 0 10 0 0 No 3For details refer to the “Announcement of the Resolutions of the 28th
28th meeting of the 5th Board of Directors September 22 2022 September 23 2022 Session of the 5th Board of Directors” (announcement No.: 2022-103) Chow Wing Kin
disclosed by the Company on Cninfo (www.cninfo.com.cn). 10 0 10 0 0 No 3AnthonyFor details refer to the “Announcement of the Resolutions of the 29th Information about directors who failed to attend two consecutive Board meetings in person.
29th meeting of the 5th Board of Directors October 28 2022 October 29 2022 Session of the 5th Board of Directors” (announcement No.: 2022-112)
disclosed by the Company on Cninfo (www.cninfo.com.cn). □Applicable √Not applicableFor details refer to the “Announcement of the Resolutions of the 30th
30th meeting of the 5th Board of Directors November 18 2022 November 19 2022 Session of the 5th Board of Directors” (announcement No.: 2022-120) 3. Details of directors objecting to relevant events of the Company
disclosed by the Company on Cninfo (www.cninfo.com.cn).During the Reporting Period no directors objected to relevant events of the Company.For details refer to the “Announcement of the Resolutions of the 1st
1st meeting of the 6th Board of Directors December 20 2022 December 21 2022 Session of the 6th Board of Directors” (announcement No.: 2022-139)
disclosed by the Company on Cninfo (www.cninfo.com.cn).
084 085Chapter 4 Corporate Governance
4. Other details about the performance of directors
Number of Other Objection
Name of Important opinions and suggestions
Members meetings Date of meeting Transaction performance details (if
Directors’ advice to the Company adopted or not? Committee proposed
held of duties any)
√Yes □No Consideration of the Proposal on Confirmation of the
During the Reporting Period the directors of the Company duly and diligently fulfilled their duties. The Company’s Board of Directors held a Remuneration Disclosure of Directors Supervisors and It is proposed that the Company Not
total of 11 meetings at which all directors attended in person on time and none of them attended the meetings by proxy or were absent. March 29 2022 Senior Management in the 2021 Annual Report of the should after the incentive scheme Noapplicable
The directors learned in detail the overall production and operation of the Company carefully considered the various topics of the sessions Company and the Proposal on the 2022 Remuneration comes into effect continuously
Remuneration
of the Board of Directors actively expressed their opinions and implemented the legal and effective decision-making procedures for major Dicky Peter Yip Zhou Plan for Senior Management monitor the effectiveness of the
and Appraisal 2
matters. The Company’s independent directors were able to exercise their duties and perform their duties as independent directors. They Zhonghui Lo Sai Lai
Committee Consideration of the 2022 Share Option Incentive
scheme and its effectiveness in
put forward many guiding opinions and sound suggestions on the Company’s development strategy and standardized operation and voiced Scheme of the Company (Draft) and its Summary respect to retaining outstanding
independent opinions on major matters. For details about the independent opinions of independent directors please refer to the 2022 April 25 2022 and the Appraisal Management Measures for the employees so as to provide reference 不适用 无
Independent Directors’ Debriefing Report published on CNINFO on the same day as this Annual Report. Implementation of the 2022 Share Option Incentive for subsequent follow-up adjustments
Scheme of the Company
Consideration of the Proposal on Nomination of
VII. Details of Special Committees of the Board of Chow Wing Kin Candidates for Non-independent Directors of the Sixth Nomination November 14 Not
Anthony Dicky Peter 1 Session of the Board and the Proposal on Nomination – No
Committee 2022 applicable
Directors During the Reporting Period Yip Wang Wei of Candidates for Independent Directors of the Sixth
Session of the Board
It is proposed that the budget should
Jin Li Chow Wing Consideration of the Final Account Report of the be prepared taking into account the
Number of Other Objection Strategy Not
Name of Important opinions and suggestions Kin Anthony Chan 1 March 29 2022 Company for 2021 and the Financial Budget Report of impact of exchange rate with a hope No
Members meetings Date of meeting Transaction performance details (if Committee applicable
Committee proposed Fei the Company for 2022 that the Company will maintain a
held of duties any)
healthy gearing ratio in the long run
Consideration of the 2021 Internal Audit Summary and Not
January 26 2022 No It is proposed that the Company
the 2022 Working Plan 1. It is proposed that the Company applicable should attach importance to ESG
should continue to maintain refined
Consideration of the 2021 Internal Control Audit Not Risk Wang Wei Dicky Consideration of the Risk Control Work Summary for risk management; and that the
February 23 2022 cost control and capital planning No Not
Findings and Key Audit Matter Communication applicable Management Peter Yip Zhou 1 February 23 2022 2021 and Risk Control Work Plan for 2022 of the Company should attach importance No
control and remain cautious in applicable
Consideration of the Company’s Final Account Report Committee Zhonghui Company to further improve the quality of the investment in order to maintain a
for 2021 the Company’s 2021 Annual Audit Report deliverymen as they represent the healthy financial structure and cash
and Other Special Reports Proposal of Continued flow to cope with the impact of the Not
image of the Company
March 29 2022 No
Engagement of PricewaterhouseCoopers Zhong Tian LLP complex external environment; applicable
as the Company’s auditor for 2022 and Self-appraisal 2. It is proposed that the
Zhou Zhonghui Jin Report on Internal Controls of the Company for 2021 Company should enhance the
Li Chow Wing Kin
Anthony Consideration of the Company’s 2022 First Quarterly
internal management and cultural VIII. Details of the Work of the Supervisory Committee
Not
Audit April 28 2022 Report and Company’s 2022 First Quarterly Internal development of the incubation No
7 applicable
Committee Audit Work Report companies and adopt different The Supervisory Committee raised no objection to matters under supervision during the Reporting Period.management strategies based on the
Consideration of the Company’s 2022 Semiannual
different positioning of the investee
Review Report Company’s 2022 Semiannual Financial Not
August 29 2022 companies; No
Report and Company’s 2022 Second Quarter Internal applicable
3. It is proposed that the Company
Audit Work Report
should strengthen the integration of
Consideration of the Company’s 2022 Third Quarter internal audit and internal control Not
October 27 2022 Financial Report and Company’s 2022 Third Quarterly management with Kerry Logistics Noapplicable
Internal Audit Work Report
Chan Charles
Sheung Wai Lee Ka December 20 Consideration of the Annual Audit Work Plan of S.F. Not
– No
Sze Carmelo Ding 2022 Holding for 2022 applicable
Yi
086 087Chapter 4 Corporate Governance
I X . E m p l o y e e s o f t h e 2. Remuneration policy (2) Middle-level Echelon Construction:
Company For college student training the Company optimizes the training path clarifies the training system and increases the practice of operation Upholding the remuneration concept of excellent performance activities. For example the Company optimizes the management of college students’ new induction training courses and tutors and
yielding fruitful payment SF sees value creation as a guideline
promotes the exchange and sharing of college graduates through online live streaming channels such as “SF Knowledge(丰识)” and
of incentive. For employees with high value contributions
“Knowledge Development Platform for College Graduates (大学生加油站)”.
1. Number role type and educational the Company provides a competitive remuneration system to
background of employees ensure the internal driving force for the Company’s sustainable In terms of the training of frontline managers (such as outlet managers etc.) middle-level managers (such as area managers etc.) and senior
development. Remuneration is determined by employees’ position management (such as regional leaders etc.) the Company has updated and iterated the leadership training system in different dimensions
and its level is market-oriented. At the same time through such as “Outlet Manager Training Program” “Fengyun Plan – Training Plan for Back-up Functional Department Head” “Lighthouse ActionNumber of employees of the parent company – differentiated and diversified long-term and short-term incentive at the end of the Reporting Period (person) – On-the-job Executive Training Camp” etc. which advocate the integration of training and practice and empower employees to achieve
mechanisms the Company attracts and retains core talents and rapid transformation to managers and “on-the-job learning” and “on-the-job practice” have been materialized through job rotation and
Number of employees of major subsidiaries at aligns their interests with the interests of shareholders and the project entry and built an elite management echelon to help employees sharpen their own leadership skills and business competence in
the end of the Reporting Period (person) 162823 Company more closely so as to drive the continuous growth of practice in an effort to promote the Company’s strategic transformation and support business operations.the long-term operation results of the Company.Total number of in-service employees at the (3) Professional Team Development:
end of the Reporting Period (person) 162823
The Company sets up a special committee around professionals according to professional fields mainly composed of experts which is
Total number of employees receiving a salary 3. Training plan responsible for determining professional ability planning evaluating expert ability and judging the direction of professional and technical
during the Reporting Period (person) 162823 improvement. At the same time the Company offers personalized training on professional expertise such as prospective expert trainingSF has always upheld the belief that “talent is the primary expert lectures expert forums etc and provides excellent classes and learning resources covering the general workplace ability andRole type productive force” and continues to put a premium on the professional ability to help employees make continuous progress in their fields of expertise so as to comprehensively improve their general
growth and development of employees. The 2022 overall training workplace ability and meet the needs of long-term development for service personnel.Category Number (person) plan focused on comprehensively promoting the lean operation
“ ” (4) Training of Senior Management:of talent team. For example consolidating a reservoir is to
Operations personnel 93835
improve quality from the source and strengthen the training and The Company adheres to differentiated training covering three major groups of on-the-job new entrant and back-up management. Among
Professional personnel 44678 management of college students; focusing on the “two tracks” them the activities such as Beacon Fire Training Camp Feng+ Intensive Training Fengxing Intensive Training etc. can help management
is to upgrade the management system of the management team personnel explore the foundation of leadership and the core of competition respond to changes seize opportunities enhance their will
Management personnel 24310 and the professional team; improve the “three chassis” from end- and improve literacy with calm steady and forward-looking steps; additionally it can also help executives systematically recognize SF meet
to-end to provide tools processes and system support for the challenges together face SF’s future development needs and enhance the spirit of strategy innovation change and transcendence to
Total 162823 whole process of talent management create a sustainable talent create the future together while embracing innovations.ecology and further support business development needs.Educational background 4. Labor service outsourcing
(1) Training of Frontline Staff:
Category Number (person) □Applicable √Not applicable
The Company places great emphasis on the training of service
Doctorate 45 awareness safety awareness and communication skills for
different staff groups such as couriers warehouse keepers
Master’ degree 4048 customer service staff and sales staff. While focusing on the
improvement of personnel performance the Company emphasizes
Bachelor’ degree 40121 the sustainable development of personnel helps frontline
personnel improve their academic qualifications and puts a
Associate’ degree 37769
premium on personal long-term development.High school and below 80840
Total 162823
088 089Chapter 4 Corporate Governance
X. Profit Distribution &Increase of Share Capital due to Cash dividend
If the company’s development stage is unclear but substantial capital expenditure has been arranged cash dividend shall represent at
Conversion of Capital Reserves least 20% of the profit distribution for the current year.Particulars of proposal for profit distribution or conversion of capital reserves into share capital
Information on the formulation execution or adjustments made to profit distribution policies especially the cash dividend policy during the
As per the earnings results audited by PricewaterhouseCoopers Zhong Tian LLP the parent company registered a net profit of
Reporting Period
RMB624.784 million in 2022. The Company appropriated 10% of its net profit (RMB62.478 million) for the year 2022 to the statutory
On April 29 2022 the Company held the 2021 Annual General Meeting at which the Company reviewed and approved the 2021 Profit surplus reserve. Factoring in retained earnings of RMB1885.321 million at the beginning of the year and after deducting the actual cash
Distribution Plan. The specific plan is as follows: on the basis of the total share capital at the registration date on which the 2021 annual dividend of RMB874.518 million in 2022 profit of the parent company available for distribution to the shareholders was RMB1573.109
profit distribution plan is to be implemented less the special shares repurchased by the Company the Company distributed a cash dividend million as of December 31 2022.of RMB1.80 (including tax) for every 10 shares to all shareholders. The remaining undistributed profits were carried forward to the following The Company’s proposed profit distribution plan for 2022 was as follows: on the basis of the total share capital at the registration
year. No capital reserves were converted into share capital and no bonus shares were distributed during the year. The profit distribution date on which the 2022 annual profit distribution plan is to be implemented less the special shares repurchased by the Company a
plan was fully completed on June 15 2022. cash dividend of RMB2.5 (including tax) will be distributed for every 10 shares held. The remaining undistributed profits will be carried
Special Explanation on Cash Dividend Policy 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.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 XI. Execution of Stock Incentive Plan Employee Share
Independent directors performing their duties and play their due role or not Yes Ownership Scheme or Other Employee Incentives
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
√Applicable □Not applicable
Conditions and procedures compliant and transparent or not when the cash dividend policy
N/A
was adjusted or changed or not 1. Stock Incentive
The Company made profits in the Reporting Period and the profit distributable to the shareholders of the Company was positive but the The Share Options Incentive Scheme has been formulated to improve corporate governance structure establish and improve an incentive
Company did not put forward a proposed plan for cash dividend distribution 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
□Applicable √Not applicable
during the Reporting Period. The number of share options to be granted shall not exceed 60000000 shares. The exercise price of the
Profit distribution & increase of share capital due to capitalization during the Reporting Period share options shall be RMB42.61 per share. 49859100 of those share options were granted under the first grant to no more than 1471
Participants.Number of bonus shares per 10 shares (share(s)) 0
The Company’s 25th meeting of the fifth session of Board of Directors and the 21st meeting of the fifth session of Supervisory Committee
Dividend distribution per 10 shares (RMB) (including tax) 2.5 on May 30 2022 reviewed and approved the “Proposal in relation to the Adjustment to Matters relating to the 2022 Share Option Scheme”
Conversion of capital reserves into share capital per 10 shares (share(s)) 0 “Proposal in relation to the Grant of Share Options to the Participants under the 2022 Share Option Incentive Scheme”. Due to resignation
Total share capital at the registration date on which the 2022 of nine participants the Board has changed the number of participants from 1471 individuals to 1462 individuals and adjusted the
Share base of the distribution proposal (share(s)) annual profit distribution plan is to be implemented less the number of first grant to 48955600 shares from 49859100 shares. The Board has determined May 30 2022 as the date of first grant.special shares repurchased by the Company 13 participants renounced their rights to the aggregated 1063500 share options proposed to be granted to them for resignation and other
On the basis of the total share capital at the registration personal reasons in the progress of share options registration and as a result the number of participants was adjusted to 1449 from 1462
date on which the 2022 annual profit distribution plan is to and the first grant of share options was adjusted to 47892100 share options from 48955600 shares. On July 4 2022 the Company
Cash dividend amount (RMB’000) (including tax) be implemented less the special shares repurchased by the completed the registration of the first grant of the 2022 Stock Option Incentive Plan. The abbreviation of the share options granted under
Company a cash dividend of RMB2.5 (including tax) will be the scheme is 顺丰 JLC1 and the share option code is 037259.distributed for every 10 shares held. The Company’s 29th meeting of the fifth session of Board of Directors and the 24th meeting of the fifth session of Supervisory CommitteeCash dividend amount (RMB’000) in other forms (such as share on October 28 2022 reviewed and approved the “Proposal in relation to the Adjustment of Exercise Price under the 2022 Share Option
2040120repurchase) Scheme” “Proposal on the Grant of the Reserved Share Options under the 2022 Share Option Incentive Scheme to the Participants”. In
The total amount of shares repurchased by the Company in view of the Company’s implementation of the equity distribution plan for 2021 the Board of Directors adjusted the exercise price of share
2022 was RMB 2040.120 million and on the basis of the options from RMB42.61 per share to RMB42.431 per share. In addition the Board of Directors determined to grant a total of 1608000
total share capital at the registration date on which the 2022 reserved share options to 44 incentive participants with October 28 2022 as the grant date of the reserved grant. On November 24 2022
Total cash dividends (in all forms) (RMB’000) annual profit distribution plan is to be implemented less the registration of reserve grant under the Company’s 2022 share option incentive plan was completed. The abbreviation of the share options
special shares repurchased by the Company a cash dividend of granted under the scheme is 顺丰 JLC2 and the share option code is 037315.RMB2.5 (including tax) will be distributed for every 10 shares
held.Distributable profits (RMB’000) 1573109
Total cash dividends (including other ways) as a percentage of total
100%
distributed profits (%)
090 091Chapter 4 Corporate Governance
Details related matters of this Stock Option Incentive Plan had been disclosed on CNINFO (www.cninfo.com.cn) and such disclosure Stock Incentive Received by Directors and Senior Management of the Company
websites are set out below
√Applicable □Not applicable
Announcement Disclosure Date Disclosure Website Unit: share
2022 Stock Option Incentive Plan (Draft) April 29 2022 CNINFO (www.cninfo.com.cn)
Exercise
Summary of 2022 Stock Option Incentive Plan (Draft) April 29 2022 CNINFO (www.cninfo.com.cn) Number Number Of Number of Number of price of Number of
Assessment and Management Measures for the Implementation of 2022 Stock Option Number of newly Number Market Number Of Restricted Number Of April 29 2022 CNINFO (www.cninfo.com.cn) exercisable exercised exercised restricted Grant Incentive Plan of stock granted of stock price at the Unlocked Shares Restricted
stock stock stock stock Price Of
Notification on and Review Opinions of the Supervisory Committee on the List of Partial options stock options end of the Shares Newly Shares Held
Participants for the First Grant of 2022 Stock Option Incentive Plan May 11 2022 CNINFO (www.cninfo.com.cn) Name Position options options options options Restricted held at the options held at the Reporting During The Granted At The End
during the during the during the held at the Shares
The Self-inspection Report on Insider and Participants of 2022 Stock Option Incentive Plan
of the Company May 18 2022 CNINFO (www.cninfo.com.cn)
beginning of during the end of the Period current During The Of The
Reporting Reporting Reporting beginning of (RMB/share)
the year Reporting period (RMB/share) period Reporting period
Announcement on Relevant Matters of Adjusting the Company’s 2022 Stock Option Period Period Period the periodPeriod period
Incentive Plan June 1 2022 CNINFO (www.cninfo.com.cn) (RMB/share)
Announcement on First Grant of Stock Options to Participants under 2022 Stock Option
Incentive Plan June 1 2022 CNINFO (www.cninfo.com.cn) Director deputy general
Verification Opinions of the Supervisory Committee on the List of Participants for the First Ho Chit manager and financial 0 488000 0 0 – 488000 57.76 0 0 0 – 0
Grant of 2022 Stock Option Incentive Plan (Grant Date) June 1 2022 CNINFO (www.cninfo.com.cn) head
Announcement on Completion of Registration for the First Grant of 2022 Stock Option
Incentive Plan July 5 2022 CNINFO (www.cninfo.com.cn) Wang Xin Director 0 488000 0 0 – 488000 57.76 0 0 0 – 0
Announcement on Adjusting the Exercise Price of the Company’s 2022 Stock Option Zhang Dong Director 0 488000 0 0 – 488000 57.76 0 0 0 – 0
Incentive Plan October 29 2022 CNINFO (www.cninfo.com.cn)
Announcement on Grant of Reserved Stock Options of the 2022 Stock Option Incentive Li Sheng Deputy general manager 0 488000 0 0 – 488000 57.76 0 0 0 – 0
Plan to Participants October 29 2022 CNINFO (www.cninfo.com.cn)
Zhou Haiqiang Deputy general manager 0 488000 0 0 – 488000 57.76 0 0 0 – 0
Verification Opinions of the Supervisory Committee on the List of Participants for the
Reserved Grant of 2022 Stock Option Incentive Plan October 29 2022 CNINFO (www.cninfo.com.cn) Geng Yankun Deputy general manager 0 488000 0 0 – 488000 57.76 0 0 0 – 0
Notification on and Review Opinions of the Supervisory Committee on the List of
Participants for the Reserved Grant of 2022 Stock Option Incentive Plan November 10 2022 CNINFO (www.cninfo.com.cn) Deputy general manager
Announcement on Completion of Registration for the Reserved Grant of 2022 Stock Gan Ling and secretary of the 0 272000 0 0 – 272000 57.76 0 0 0 – 0
Option Incentive Plan November 25 2022 CNINFO (www.cninfo.com.cn) Board
Total – 0 3200000 0 0 – 3200000 – 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
092 093Chapter 4 Corporate Governance
X I I . I n t e r n a l C o n t r o l S y s t e m D e v e l o p m e n t a n d XIII. The Company’ s Management and Control over its
Implementation During the Reporting Period Subsidiaries during the Reporting Period
1. Internal control development and implementation 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-
The Company has always been committed to developing and optimizing its corporate internal control system. Based on its own development Making System for Related Transactions Financial Management System Management System for Externally Providing Financial Support
needs in line with external regulatory requirements the Company has set up and continuously improved its internal control system from Major Information Internal Report System and Internal Audit System managed the standard operation investment finance personnel
such perspectives as system structure process authorization and information system development to ensure effective implementation of information disclosure and other matters of subsidiaries and managed and supervised the internal control of subsidiaries according to
the Company’s internal control initiatives. 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
In terms of institutional setup of internal control management the Company has set up the general meeting Board of Directors Supervisory
requirements with reference to the Basic Standards for Enterprise Internal Control and relevant auxiliary guidelines so as to meet the
Committee and the management board in accordance with the requirements of relevant national laws regulations and institutional norms.compliance requirements with respect to domestic and overseas listing.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 XIV. Self-appraisal Report on Internal Controls or Audit
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 Report on Internal Controls
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.
1. Self-appraisal report on internal controls
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 Disclosure date of the Appraisal Report on Internal Control March 29 2023
for the Risk Management Committee of the Board of Directors the Rules of Procedure for the Remuneration and Appraisal Committee of
Disclosure index of the Appraisal Report on Internal Control www.cninfo.com.cn
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 Proportion of total assets included in evaluation scope to total assets of the
level with regard to systems as well as the effective implementation of decision-making and independent supervision functions. At the 99%Company’s consolidated financial statement
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 Proportion of operating revenue included in evaluation scope to operating 99%
contract management asset management procurement management sales management cost and expense management and financial revenue of the Company’s consolidated financial statement
management have been formulated to standardize the Company’s routine operation and management to achieve the Company’s internal
control objectives. Deficiency Standards
In terms of the supervision and evaluation of the implementation of the internal control management system the Board of the Company Category Financial Report Non-financial Report
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 Material deficiency: A deficiency or a combination of
the completeness rationality and effectiveness of implementation of the internal control system of internal organizations and controlling deficiencies results in a failure to prevent or detect
subsidiaries of the listed company and investee companies with significant influence over the listed company and to evaluate the lawfulness and correct a material misstatement or omission in Material deficiency: A deficiency or a
compliance authenticity and completeness of accounting information and other core business process information as well as the reflected the financial report in time. Those with the following combination of deficiencies causes material
financial income and expenditure and related economic activities. The internal audit department and risk control and compliance department characteristics should be identified as Material losses or has a significant negative impact
deficiency: Identification of fraud on the part of on the Company. Those with the following
regularly report to the Audit Committee on the internal control and internal audit findings on a quarterly basis and the rectification
board of directors supervisors senior management; characteristics should be identified as Material
progress of the problems identified so as to promote the timely optimization of and improvement in internal management. Correction of previously issued financial reports; deficiency: Unreasonable decision-making
2. Details of material deficiency found in the Company’s internal control during the Reporting Identification by the certified public accountant of a process of the Company; Violation of national
material misstatement in the financial report in the laws and regulations; Frequent negative media
Period current period in circumstances that indicate that the coverage; Lack of policy for major business or
misstatement would not have been detected by the the policy operated ineffectively.□Yes √No Qualitative criteria Company’s internal control; Ineffective oversight of the Significant Deficiency: A deficiency or a
Company’s internal control by the Company’s audit combination of deficiencies results in a failure
committee and internal audit. to prevent a misstatement in time probably
Significant Deficiency: A deficiency or a combination causing losses or negative impact that is
of deficiencies results in a failure to prevent or detect less severe than a Material deficiency yet
and correct a misstatement or omission in the financial important enough to merit attention by board
report in time that is less severe than a Material of directors and senior management.deficiency yet important enough to merit attention by Control Deficiency: Other internal control
board of directors and senior management. deficiencies that do not meet the criteria of
Control Deficiency: Other internal control deficiencies Material deficiency or significant deficiency.that do not meet the criteria of Material deficiency or
significant deficiency.
094 095Chapter 4 Corporate Governance Chapter 5 Environment and Social Responsibilities
Category Financial Report Non-financial Report I. Major Environment Issues
Material deficiency: A deficiency or a
Material deficiency: A deficiency or a combination of combination of deficiencies may result The listed company and its subsidiaries are not the major pollutant discharge units announced by the Ministry of Ecology and Environment.deficiencies may result in misstatements and omission in losses that account for more than 5%
in the financial report that accounts for more than 5% (inclusive) of the Company’s pre-tax profit Measures taken to reduce carbon emissions and their effects during the Reporting Period
(inclusive) of the Company’s pre-tax profit as shown as shown in the consolidated financial
in the consolidated financial statements of the current statements of the current period. SF deeply recognizes the importance of pursuing green development. As a socially responsible enterprise the Company has always been
period. Significant deficiency: A deficiency or a committed to developing a sustainable logistics supply chain service hoping to bring positive impact to the entire industry and the whole
Significant Deficiency: A deficiency or a combination of combination of deficiencies may result in society through the optimization and upgradation of corporate operations. Based on the achievements of carbon reduction in the past the
deficiencies may result in misstatements of or omission losses accounting for 3% (inclusive) to 5% Company published a “White Paper on Carbon Goals” in 2021 which is the first publication on carbon goals in the industry. In the white
Quantitative criteria
in the financial report accounting for 3% (inclusive) to of the Company’s pre-tax profit as shown in paper the Company promised to increase its carbon efficiency by 55% in 2030 compared with 2021 and reduce carbon footprint per
5% of the Company’s pre-tax profit as shown in the the consolidated financial statements of the parcel by 70% compared with 2021. In first list of ESG influence in China released by Fortune in 2022 SF was selected into the list by virtue
consolidated financial statements of the current period. current period. of its outstanding achievements in ESG.Control Deficiency: A deficiency or a combination of Control Deficiency: A deficiency or a
deficiencies may result in misstatements of or omission combination of deficiencies that may result 1. Promoting low-carbon transportation
in the financial report accounting for less than 3% in losses accounting for less than 3% of
of the Company’s pre-tax profit as shown in the the Company’s pre-tax profit as shown in SF continuously expanded its green fleet and promoted energy conservation and emission reduction in the transportation process through
consolidated financial statements of the current period. the consolidated financial statements of the various measures such as increasing investment in new energy vehicles optimizing the selection of fuel vehicles building a system platform
current period.to monitor the energy consumption of vehicles and optimizing transportation routes by scientific and technological means.Number of Material deficiencies
0 The Company has adopted various measures so that more new energy vehicles could be used for our logistics services. We jointly explored
in the financial report 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
Number of Material deficiencies
0
of the non-financial report lines shuttling and end delivery in cities as well as first-and second-tier trunk transportation across provinces and cities. By the end of
2022 SF has utilized more than 26000 new energy vehicles for transportation covering 232 cities. For long-distance transportation and
Number of significant deficiencies transportation in cold areas in northern China the Company conducted pilot by introducing hydrogen fuel and LNG natural gas vehicles.
0
in the financial report Currently a total of 20 light trucks powered by hydrogen fuel are in operation in Shanghai and 2 LNG tractors are in operation in Beijing.Number of significant deficiencies
0 2. Building green industrial parks
of the non-financial report
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
2. Audit Report on Internal Controls generation plans. By the end of 2022 we have completed construction of roof photovoltaic power stations in 9 industrial parks with an
overall installed capacity of over 13MW and annual power generation of nearly 10 million kWh.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 2022 3. Practicing sustainable packaging
based on criteria established in C-SOX and relevant regulations.SF kept on building an express packaging cycle ecosystem and actively cooperated with upstream and downstream industry chains to jointly
promote the development of sustainable packaging. From packaging materials manufacturers to logistics enterprises and from consumers to
Particulars about Audit Report on Internal Controls Disclosure
recycling enterprises we promoted the recycling of green packaging in the whole society by connecting all links and practiced green R&D
Disclosure date of the Audit Report on Internal Controls March 29 2023 and green operation throughout the life cycle of recycled packaging.Minimum packaging: Express packaging is an important part of emission reduction along the whole logistics chain. SF continuously
Disclosure Index of the Audit Report on Internal Controls www.cninfo.com.cn
promoted the green packaging plan and provided detailed packaging operation instructions for different types of consignments to
Type of Opinion in the Audit Report on Internal Controls Unqualified Opinion 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. In 2022 a
Material deficiency in the non-financial report or not No total of approximately 47000 tons of raw paper and approximately 150000 tons of plastic were reduced.The auditor issued an Audit Report on Internal Controls with a non-standard opinion or not Recycled packaging: Through the operation and management platform of recycled packaging and load devices SF provides customers
inside and outside the industry with total recycled packaging solutions and uses well-developed products such as confidential transportation
□Yes √ No boxes airport recycling boxes recyclable transfer boxes for fragile goods food recycling boxes and solar photovoltaic panel recycling
“π”
The Audit Report on Internal Controls from the auditor consistent with the Self-appraisal Report from the Board or not packages for different scenarios. In 2022 more than 1.25 million of -boxes (a carbon neutral recycling box) were launched covering
more than 170 cities in China and achieving more than 15 million of recycling usages.√Yes □No
XV. Rectification of self-inspection problems in special
actions of listed company governance
Not applicable
096 097Chapter 5 Environment and Social Responsibilities
4. Developing green technology III. Achievements on Consolidation and Extension of
Through its forward-looking efforts in cutting-edge technologies such as artificial intelligence big data robotics Internet of Things logistics
map and smart packaging SF integrates the power of technology into the whole life cycle of each parcel based on new energy applications Poverty Alleviation and Rural Revitalization
and helps improve the quality efficiency and low-carbon emission reduction of the whole process of “collection transfer and delivery”.In the collection and delivery process SF applied its self-developed small drones expanded the scope of business delivery through intelligent SF is the first domestic logistics company to deliver fresh agricultural products directly from farmers to urban consumers in the form of
drone technology and provided efficient high-cost and low-carbon logistics services. In the transit process SF has optimized the allocation express delivery. Since then we have established a business model for delivering agricultural goods directly from “farms” to the end-
of warehousing resources based on big data and introduced a fully automatic sorting and site management system to improve the efficiency consumers. For a long time many high-quality agricultural products have encountered problems in the delivery process such as vulnerability
of warehousing and transshipment and improve the efficiency of energy use. In terms of transportation SF uses smart maps to plan the difficulty in packaging prolonged transportation process and limited economies of scale. They are also faced with marketing-related
transportation route and considering factors such as express time and distance the Company provides route optimization through smart problems such as limited number of channels available formal homogeneity limited target audience size and limited branding effect. For
algorithms. At the same time relying on big data analysis and deep learning technology SF integrated cargo routes and capacity resources many years farmers have been struggling to increase their income but found it practically impossible to achieve profitability by selling
to achieve accurate matching between vehicles and goods and improve land transportation efficiency. agricultural products. SF adhered to the concept of distributing quality agricultural products across the country and promoting better brands
While promoting green and low-carbon transformation with the power of technology SF also hopes to extend the green value to the supply of agricultural products.chain. Therefore it advocates and cooperates with upstream and downstream partners to accelerate low-carbon transformation and jointly By setting up agricultural produce collection points in farmfields developing and investing in mobile sorting vehicles suitable for small-batch
assume the responsibility of protecting the planet so as to achieve green development and build a zero-carbon future. allocation launching fresh products pretreatment centers close to the place of origin customizing design for the packaging of various fresh
products deploying specialized refrigerated vehicles during the harvest season of characteristic agricultural products exclusive all-cargo
II. Social Responsibilities aircrafts and other transportation resources the Company continuously set new records on the delivery speed of agricultural products and
innovated fresh-preserving methods in delivery processes helping farmers transport quality agricultural products from the farmfields to
kitchens in cities.As a leading express logistics integrated service provider in China SF has been assuming its responsibility for the sustainable development With a robust logistics network top-notch packaging technology and exceptional delivery capability the Company overcame the express
of the commercial society and fulfilling its social responsibilities. The Company always takes customers as the center provides customers transportation of each thorny category including hairy crabs beef and mutton live fish seafood lychee strawberry peach and matsutak
with high-quality services and helps them create value. The Company has established a win-win ecosystem with customers suppliers to establish a direct delivery model with Chinese characteristics and nationwide coverage. SF Holding persevered with the diversification of
communities and other stakeholders to achieve common development. The Company actively promotes the development of green logistics its services and business scenarios through logistics model innovation efficiency enhancement through cost reduction and market-based
and make unremitting efforts for environmental protection and sustainable development; and provides channels for employee development pricing. Besides backed by technology empowerment the Company developed and invested in various convenient technology tools such as
to effectively protect the interests of employees creating a stage for our employees to realize their dreams. We have been operating Xiaoguoguo management system Fengshou and drop shipping to assist farmers in achieving one-stop efficient operation covering sales
our business in compliance with laws and regulations for the purpose of giving back to shareholders and protecting the interests of all shipment and settlement.shareholders and stakeholders. Staying true to our original aspiration we actively participated in public welfare activities to give back to the
society through the SF Foundation. The country kept on propelling rural revitalization in 2022 in a comprehensive manner. In order to actively cooperate with the national
strategy continuously to consolidate and extend the achievements in poverty alleviation and effectively connect with rural revitalization
2022 is an important year for China to enter into a new journey towards the second centenary goal of building a modern socialist country the Company also extended to cooperate with local governments to build regional agricultural brands and help branding construction in
in an all-round way and a crucial year for the full implementation of the “14th Five-Year Plan”. In 2022 SF demonstrated its corporate addition to providing express logistics services. SF has formulated a special fund subsidy mechanism for customization of packaging materials
responsibility. In order to meet the periodic urgent needs of citizen’s livelihood and supply in certain cities SF immediately deployed for regional brands and invested RMB3.0 million as special funds thereof. In 2022 SF Holding joined hands with local governments to obtain
resources across its network relied on its strong capacity and efficient organization and deployment capabilities to support people’s brand licenses design brand packaging and co-build a total of 16 regional brands for agricultural products generating a revenue of over
livelihood and to supply and transport pandemic prevention materials. In this regard SF made every effort to ensure the smooth and RMB500 million for local farmers. Also SF adhered to perform the social responsibility by making active response to the concept of green
complete logistics service chain. In terms of supporting rural revitalization SF kept on optimizing the whole industrial chain plan for smart logistics and adopting green and environment friendly packaging materials for agricultural products which made the Company win high
agriculture assisted the government in implementing the work of supporting agriculture and helping farmers and joined hands with degree of recognition from users. In addition SF provided a series of technology services such as product traceability and pesticide residue
employees and partners in the value chain to empower new industries to stimulate industrial vitality and create a better life together. For testing to show its contribution for rural revitalization allowing more local brands of special agricultural products to be known tasted
the dual carbon goals of China SF has established a carbon emission management system formulated feasible carbon emission reduction and recognized by the nation. Up to now the upstream service network of agricultural products assisted by SF has covered more than
goals and strategic plans and deployed green solutions in all aspects of collection transfer transportation and distribution to promote the 2800 cities and more than 4000 fresh products across the country. In 2022 SF delivered 3.62 million tonnes of characteristic agricultural
achievement of goals through energy consumption structure adjustment transportation upgradation and business models and in-depth products generating an estimated income of over RMB100 billion for local farmers.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. In addition SF actively explored the model of Delivering express parcels to rural areas
” promoted the establishment of an intensive modethrough “cooperation between China Post and private couriers cooperation between private couriers cooperation between public transportFor details of SF’s fulfillment of social responsibilities please refer to the 2022 Sustainability Report of S.F. Holding published by the companies and private couriers” and supported the construction of rural three-level logistics co-distribution service network. As of the end
Company on CNINFO on 29 March 2023. of 2022 there were more than 179000 cooperation points of various external channels. The coverage rate of villages and towns increased
by 1.2 percentage points compared with the same period last year. The daily volume of parcels handled was 1.76 million pieces. With high-
density and high-permeability stations in villages and towns the average customer pickup distance decreased by 8.4 km. We also supported
the online sale of agricultural products and enabled farmers to enjoy more convenient express services within villages than ever before.
098 099Chapter 6 Significant Events
I. Fulfillment of Commitments Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period
commitment status
1. Commitments made by the Company’s actual controllers shareholders related parties purchasers the Company and others that were 1. After the completion of this restructuring in the case that the company/I has/
fulfilled during the Reporting Period and those not fulfilled as of the end of the Reporting Period 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 the√Applicable □Not applicable company/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
Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period business that poses substantial competition to the listed company’s current or future
commitment status
business.
2. After the completion of this restructuring if the company/I and the companies
1. The company/the enterprise/I and the companies enterprises or economic
controlled by the company/me may be in substantial competition with the listed
organizations under the control or ultimate control of the company/the enterprise/
company in the future or have a conflict of interest with the listed company the
me(excluding the companies controlled by the listed company) hereinafter collectively
Avoiding horizontal company/I will abandon or cause the companies controlled by the company/me to January 23
referred to as “the affiliates of the company/the enterprise/mine” will strictly execute Wang Wei Mingde Holding Long-term Normal
competition abandon any business opportunities that may pose peer competition or inject all 2017
the rights of shareholders in accordance with the provisions of laws regulations and
businesses of the company/I and the companies controlled by the company/me that
other normative documents perform the obligations of shareholders and maintain
pose peer competition to the listed company at a fair and equitable market price at
the independence of the listed company in terms of assets finances personnel
the appropriate time.operations and institutions.
3. The company/I will not use any information known or learned from the listed
2. The company/the enterprise/I or the affiliates of the company/the enterprise/I will
company to assist any third party to engage in or participate in any business activities
not use the status of the shareholders to promote the shareholders’ meeting or the
that pose substantial competition or potential competition to the listed company.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 4. If the company/I or the companies controlled by the company/me violates the
legal rights of minority shareholders.J iaq iang Shunfeng (Shenzhen) above commitments and causes the rights and interests of the listed Company to
3. The company/the enterprise/I or the affiliates of the company/the enterprise/I will
Equ i ty Inves tment Par tnersh ip be damaged the company/I will bear the corresponding liability for compensation
not appropriate the funds of the listed company by means of borrowing repaying
(Limited Partnership) Shenzhen according to laws.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 1. If an employee has recourse to Taisen Holding and its subsidiaries for social
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 insurance or housing provident funds resulting in litigation or arbitration or if Taisen
Commitments try to avoid related transactions with the listed company. For unavoidable related
Investment Company (Limited and Standardizing and Holding and its subsidiaries are subject to administrative penalties from the relevant
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 administrative authorities the company will assume the corresponding compensation
the major asset of the company/the enterprise/mine will prompt the controlled entity to conduct the 2017
Guyu Qiuchuang re lated-party transactions liabilities: If the social insurance and housing provident fund authorities request
restructuring transactions in accordance with fair reasonable and normal commercial transaction
Equ i ty Inves tment Par tnersh ip Taisen Holding and its subsidiaries to repay previous years’ employee contributions
conditions and will not require or accept conditions given by the listed company
(Limited transactions Partnership) to social insurance and housing provident fund the company will use the amount
that are more favorable than any fair market transaction and will rigorously perform
Ningbo Shunda Fengrun Investment approved by the competent authority to make up the contributions for free on
various related transaction agreements executed with the listed company in good
Management Partnership (Limited behalf of Taisen Holding and its subsidiaries; if Taisen Holding and its subsidiaries
faith.Pa r tne r sh ip ) N ingbo Shunx in bring any other expenses and economic losses due to failing to pay social insurance
5. The company/the enterprise/I or the affiliates of the company/the enterprise/
Fenghe Investment Management and housing provident fund contributions in accordance with the regulations the
I will strictly perform the related transaction decision-making procedures and the Social insurance
Partnership (Limited Partnership) company will make up the contributions for Taisen Holding and its subsidiaries for January 23
corresponding information disclosure obligations in accordance with the listed Mingde Holding housing fund and Long-term Normalfree. 2017
company’s Articles of Association and relevant laws and regulations. other related issues 2. As regards Taisen Holding and its subsidiaries’ own properties it is committed that
6. The company/the enterprise/I or the affiliates of the company/the enterprise/I will the company will bear the corresponding liability for compensation if Taisen Holding
ensure that the entity itself and the controlling entity will not seek special interests and its subsidiaries are punished by the relevant administrative authority because
beyond the above-mentioned requirements through related-party transactions Taisen Holding and its subsidiaries fail to handle the land use rights certificate and/
with the listed company and will not carry out related transactions that impair or the building owner ship certificate. If Taisen Holding cannot continue to use
the interests of the listed company and their small and medium shareholders. If the relevant land/house the company will bear all expenses and economic losses
the above commitments are violated the company/the enterprise/I will jointly and resulting from this for free.severally assume corresponding legal liabilities including but not limited to individual 3. If Taisen Holding and its subsidiaries and branch companies fail to use the rented
and joint legal liabilities for the total losses caused to the listed company and its venues and/or houses which are non-standard and the relevant enterprises need to
small and medium shareholders. relocate the company will bear any losses and expenses sustained by Taisen Holding
and its subsidiaries and branch companies.
100 101Chapter 6 Significant Events
Date of Fulfillment Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period Commitment Committed by Commitment Type Commitment details Commitment period
commitment status commitment status
I. Independence of the personnel of the listed company V. Independence of the business of the listed company
1. The senior management personnel of the listed company (General Manager 1. The listed company independently owns the assets personnel and qualifications
Deputy General Manager Secretary of the Board of Directors Head of Finance to carry out business activities after the completion of the restructuring and has the
etc.) work full-time for the listed company and receive remuneration from the listed ability to operate independently in the market.company. They do not hold any positions in the company other than Director and do 2. The company/I and other enterprises controlled by the company/me will avoid
not retain duties other than Director and Supervisor in other controlled failure to by engaging in businesses competing with the listed company and its holding
me or the enterprise other than Dingtai New Materials and its subsidiaries (hereinafter subsidiaries in the same industry.referred to as the “other enterprises controlled by the company/me”). 3. The company/I will not illegally occupy funds or assets of the listed company.
2. Financial officers of the listed company do not work part-time for the company/me The company/I will strictly abide by the listed company’s related-party transaction
or other enterprises controlled by the company/me. management system regulate and minimize the occurrence of related-party
3. The listed company’s personnel relations and labor relations are independent of transactions with the listed company. For unavoidable related-party transactions with
the company/me and other enterprises controlled by the company/me. the listed company the company/I will prompt the other enterprises controlled by
4. The company/I wil l only exercise shareholder r ights indirectly through the company/me to conduct the transactions in accordance with fair reasonable and
shareholders’ meetings and recommend candidates for directors supervisors and normal commercial transaction conditions and will not require or accept conditions
senior management personnel of the listed company in accordance with the laws given by the listed company that are more favorable than any fair market transaction
and regulations or the provisions of the listed company’s Articles of Association and will rigorously perform various related-party transaction agreements executed
and other rules and regulations. The company/I will not intervene in the personnel with the listed company in good faith. The company/I will strictly perform the related-
appointments or dismissals of the listed company beyond the shareholders’ meetings party transaction decision-making procedures and the corresponding information
or Board of Directors. disclosure obligations in accordance with the listed company’s Articles of Association
II. Independence of the assets of the listed company and relevant laws and regulations. The company/I will strictly abide by the relevant
1. The listed company has independent and complete assets. The assets of the provisions of the China Securities Regulatory Commission on the independence of
listed company are all under the control of the listed company and are owned and listed companies will not use the controlling shareholder/actual controller’s status to
Maintaining the operated independently by the listed company. violate the listed company’s standardized operating procedures will not overpower
2. The company/I and other enterprises controlled by the company/me will not January 23 the listed company’s and its subsidiaries’ operations and management activities
Wang Wei Mingde Holding independence of the Long-term Normal
illegally occupy the capital and assets of the listed company in any way. 2017 will not invade the interests of the listed company and its holding subsidiaries and
listed company 3. No guarantees will be provided for the debt of the company/mine and other will not harm the legitimate rights and interests of the listed company and other
enterprises controlled by the company/me using assets of the listed company. shareholders.III. Financial independence of the listed company
1. The listed company and its holding subsidiaries have independent financial 1. Regarding the listed company and its subsidiary’s own real estate Mingde Holding
accounting departments and establish independent financial accounting systems and will undertake to assume any liabilities to compensate SF Holding and its subsidiaries
financial management systems. for any loss arising from any administrative penalties which is or may be imposed by
2. The listed company and its holding subsidiaries can independently make financial the relevant administrative authorities presently and in the future arising from the Commitments
decisions. The company/I will not intervene in the use of funds of the listed company Commitments latter’s failure to obtain a land use right certificate and/or a real estate ownership undertaken by the
beyond the shareholders’ meetings or Board of Directors. relating to defects certificate for any land or property in use. Mingde Holding will also without charge Company on the Mingde Holding May 9 2019 Long-term Normal
3. The listed company and its holding subsidiaries can independently open Bank of land and property bear any other expenses and economic losses caused to SF Holding in case that SF public issuance of
accounts. The company and other enterprises controlled by the company/me will not titles Holding is unable to continue to use the relevant land/property as a result;convertible bonds
share bank accounts with the listed company and its holding subsidiaries. 2. If SF Holding and its subsidiaries and branches are affected by the nonstandard
4. The listed company and its holding subsidiaries shall pay taxes independently. rented premises and/or property which lead to suspension of the use of the same
IV. Independence of the organizations of the listed company and relocation Mingde Holding will bear any losses and expenses sustained by SF
1. The listed company has established and improved a corporate governance Holding and its subsidiaries and branches as a result.
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.
102 103Chapter 6 Significant Events
Date of Fulfillment Date of Fulfillment
Commitment Committed by Commitment Type Commitment details Commitment period Commitment Committed by Commitment Type Commitment details Commitment period
commitment status commitment status
1. I make a commitment that I will not transfer interests to other institutions or Until the proceeds
The Company undertakes not to invest more funds (including various forms of
individuals without compensation or under unfair conditions or cause damage to the Financial raised are used up or
capital injection such as capital increase loans) in quasi-financial businesses until
interests of the listed company in other ways; The listed company input-related May 11 2021 within the 36 months Being fulfilled
the proceeds raised are used up and within the 36 months after the receipt of the
2. I make a commitment that I will constrain the consumption if it is business related; commitments after the receipt of
proceeds.
3. I make a commitment that I will not invest with or spend the listed company’s the proceeds
assets outside the performance of my duties;
4. I make a commitment that I will within the scope of my duties and competence Within 6 months from the date of signing this letter of commitment the Company
Wang Wei L in Zheying Zhang do my best to ensure that the remuneration system developed by the Board Commitments will ensure that it will withdraw from the commercial factoring business by external
Y i c h e n D e n g W e i d o n g L i u Commitments on or the remuneration committee for the Company be linked to progress in the on the matters transfer of equities cancellation change of the business scope of Shenzhen August 3 August 3 2021-
Chengwei Lo Sai Lai Chan Fei the Company for the implementation of the remedial measures for the returns taken by the listed The listed company concerning the Shuncheng Lefeng Factoring Co. Ltd. and Shunyuan Commercial Factoring (Tianjin) Fulfilled2021 February 2 2022
Zhou Zhonghui Jin Li Dicky Peter due performance company; quasi-financial Co. Ltd. etc. In the process of withdrawal from the above factoring business the
February 8 February 8 2021-
Yip Chow Wing Kin Anthony of the remedial 5. I make a commitment that I will within the scope of my duties and competence Being fulfilled businesses Company will strictly comply with the requirements of the relevant laws regulations
2021 May 18 2022
Sheng Xu Zh i j un Gan L i ng measures for the do my best to ensure that the exercise condition of the stock option incentive of the and normative documents and fulfill the necessary formalities.a l l be i ng d i r e c to r s o r s en io r dilution of current Company that the Company intends to announce is linked to the implementation
Undertaking on We will not transfer the above shares we subscribe for within 6 months from the October 26 November 19 2021-
management members o f the returns status of the remedial measures for the returns taken by the listed company; Subscriber (Note 1) Fulfilled
lock-up of shares listing date of the non-publicly issued shares of S.F. Holding. 2021 May 18 2022
Company 6. I make a commitment that I will make any supplemental commitments in
accordance with the relevant requirements. if the regulator sets any other Commitments fulfilled on time or not Yes
requirements for the provisions on the remedial measures for the returns and on my
commitment and the above commitments fail to meet any requirements set by the Not
Commitments If a commitment is not fulfilled before the expiry the specific reasons for the incomplete performance and next work plan should be specified.regulator after the issue date of these commitments; applicable
on non-public 7. I undertake to strictly implement the aforementioned commitments. In case of
offering violation of these commitments I will indemnify the listed company or investors in Note 1: Subscribers are Yuanhai Investment Co. Ltd. Macquarie Bank Limited Shenwan Hongyuan Securities Co. Ltd. Shanghai Chongyang Strategic Investment
respect of any losses incurred in accordance with the law. Co. Ltd. – Chongyang Strategy Caizhi Fund Shanghai Chongyang Strategic Investment Co. Ltd. – Chongyang Strategy Yingzhi Fund Guotai Junan
Securities Co. Ltd. UBS AG Barclays Bank PLC Norges Bank Caisse de depot et placement du Quebec FullGoal Fund Management Co. Ltd. Guotai
The Company/I guarantees/guarantee that it/I shall not overstep its/my authority to Asset Management Co. Ltd. Shanghai Greenwoods Asset Management Co. Ltd. – Jinglin Jingtai Fengshou Private Securities Investment Fund Bank of
Commitments on intervene in the management activities of the listed company or encroach on the Communications Schroder Fund Management Co. Ltd. Allianz Global Investors Singapore Limited GIC Private Limited Shenzhen Yuanzhi Ruixin Mixed
the Company for the listed company’s interests. As one of the main responsible entities for the remedial Reform Equity Investment Fund Partnership (Limited Partnership) Caitong Fund Management Co. Ltd. Schroder Investment Management (Hong Kong)
due performance measures for the returns in the event that the Company/I breaches/breach or
February 8 February 8 2021- Limited Shanghai Greenwoods Asset Management Co. Ltd. – Jinglin Jiazhi Fund China Pacific Life Insurance Co. Ltd. -Dividend -Individual Dividend E
Mingde Holding Wang Wei of the remedial refuses/refuse to implement the above-mentioned commitments the Company/ Being fulfilled
2021 May 18 2022 Fund Management Co. Ltd.
measures for the I gives/give consent that the relevant penalties or relevant administrative measures
dilution of current shall be imposed by securities regulatory agencies including the CSRC and Shenzhen 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
returns Stock Exchange in accordance with the relevant regulations and rules formulated or explanation on such asset or project reaching the original profit forecast and the reasons for it
issued by them and will bear the relevant legal liabilities. □Applicable √Not applicable
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
Mingde Holding declaration document and the issuer and its subsidiaries and branches sustain the April 23 2021 Long-term Being fulfilled
the defect of the
additional economic losses or additional legal liabilities after taking various remedial
property leased
measures the Company will be responsible for the additional losses and expenses to
the issuer and its subsidiaries and branches arising therefrom.
104 105Chapter 6 Significant Events
II. Status of Capital of the Listed Company Used for Non- VII. Changes in the Scope of Consolidated Statements
operating Purposes by the Controlling Shareholder and Compared with the Financial Report of the Previous Year
Other Related Parties
√Applicable □Not applicable
□ √ For details of the changes in the Company
’s scope of consolidation in 2022 please refer to “5. Changes in the consolidation scope” of
Applicable Not applicable
“Chapter 10 Financial Statements”.In the Reporting Period no controlling shareholder or other related party used capital of the listed company for non-operating purposes.VIII. Details Regarding Engagement and Removal of
III. Illegal Provision of External Guarantees
Accountant Firm
□Applicable √Not applicable
Existing accountant firm
There was no illegal provision of external guarantees of the Company during the Reporting Period.Name of domestic accountant firm PricewaterhouseCoopers Zhong Tian LLP
IV. Explanations Provided by the Board of Directors
Remuneration for domestic accountant firm (RMB’000) 20830
Regarding the Latest “Non-standard Audit Report”
Consecutive years of audit services provided by the domestic accountant firm 7 years
Names of the certified public accountants from accountant firm Chen Anqiang Liu Jingping
□Applicable √Not applicable
Consecutive years of audit services provided by the certified public accountants of
5 years
domestic accountant firm
V. Explanations Provided by the Board of Directors The accountant firm changed or not during the Reporting Period
□Yes √No
Supervisory Committee and Independent Directors (if
Status of auditor of internal controls financial adviser or sponsor engaged:
any) Regarding the “Non-standard Audit Report” Issued √Applicable □Not applicable
by the Auditor for the Reporting Period The Company engaged PricewaterhouseCoopers Zhong Tian LLP as the Company’s internal control auditor for 2022. The remuneration for
internal control audit during the Reporting Period was included in the remuneration specified in the table above.□ Applicable √Not applicable
IX. Possibility of Delisting after Disclosure of this Annual
VI. Changes in Accounting Policy or Accounting Estimate Report
or Correction of Material Accounting Error Compared
□Applicable √Not applicable
with the Financial Report of the Previous Year
√Applicable □Not applicable
For details please refer to “(30) Significant changes in accounting policies” in “2. Summary of significant accounting policies andaccounting estimates” of “Chapter 10 Financial Statements”.
106 107Chapter 6 Significant Events
X. Bankruptcy and Reorganization XIV. Significant Related-party Transactions
□Applicable √Not applicable 1. Related-party transactions relevant to routine operations
√Applicable □Not applicable
XI. Significant Lawsuit or Arbitration Related- Proportion Approved Approved Related-party Market price Type of Pricing principle of Transaction
Details of related- party of same transaction quota transaction of similar Disclosure
Related Party Relationship related-party the related-party amount Disclosure index
party transaction transaction category of quota exceeded or settlement transactions date
transaction transaction (RMB’000)
price transactions (RMB’000) not method available
□Applicable √Not applicable
Courier service Fair pricing Settlement Announcement on the
As of December 31 2022 legal proceedings of the listed company and its subsidiaries were as follows:Provide communication based on market based on the “Proposal on Estimated RoutineMingde Controlling
1. The total amount involved in legal cases resolved during the Reporting Period was RMB595.813 million. services service prices following Contract settlement January 27 Related-party Transaction
Holding and shareholder of 101785 0.04% 280000 No N/Ato related technology the principle of price period and 2022 Amount in 2022” released by
2. Cases not yet resolved during the Reporting Period include: Cases involving the Company and its subsidiaries as defendants amounted its subsidiaries the Company
parties services agent independent terms in the the company on the Cninfo
to RMB486901000 accounting for 0.56% of audited net assets attributable to shareholders of the listed company at the end of 2022.services etc. transactions. contract website (www.cninfo.com.cn)
The above-mentioned litigation matters mainly related to a number of independent transportation contract cases and traffic accident
cases with small amounts involved. The Company and its subsidiaries have already purchased commercial insurance for operating vehicles Fair pricing Settlement Announcement on thetransportation and other business activities. Based on the historical experience the insurance purchased can essentially cover the losses Receive based on market based on the “Proposal on Estimated Routinecaused by the case. Cases involving the Company and its subsidiaries as plaintiffs amounted to RMB251601000 accounting for 0.29% of Mingde Controlling services Technology prices following Contract settlement January 27 Related-party Transactionaudited net assets attributable to shareholders of the listed company at the end of 2022. Such legal proceedings will not have a material Holding and shareholder of from services agent 428204 0.18% 500000 No N/Athe principle of price period and 2022 Amount in 2022” released by
adverse effect on the Company’s financial status and ability to continue operations. its subsidiaries the Company related services etc. independent terms in the the company on the Cninfo
parties
transactions. contract website (www.cninfo.com.cn)
Purchase Fair pricing Settlement Announcement on theXII. Punishment and Rectification of goods/ based on market based on the “Proposal on Estimated Routine Mingde Controllingequipment Purchase of prices following Contract settlement January 27 Related-party Transaction
Holding and shareholder of 255349 0.11% 330000 No N/Afrom goods/equipment the principle of price period and 2022 Amount in 2022” released by
its subsidiaries the Company
□Applicable √Not applicable related independent terms in the the company on the Cninfo
parties transactions. contract website (www.cninfo.com.cn)
There was no such situation during the Reporting Period.Other
companies
controlledXI I I . In tegr i ty o f the Company I t s Cont ro l l ing Other Fair pricing Settlement Announcement on the by the actual Receive companies based on market based on the “Proposal on Estimated Routinecontroller of services Agent ServicesShareholders and Actual Controller controlled prices following Contract settlement January 27 Related-party Transaction the Company from advertisement 158518 0.07% 250000 No N/Aby the actual the principle of price period and 2022 Amount in 2022”released by
other than related services etc.controller of independent terms in the the company on the Cninfo“Mingde partiesthe Company transactions. contract website (www.cninfo.com.cn)
□Applicable √Not applicable Holding
and itssubsidiaries”
A senior
manager of
Fair pricing Settlement Announcement on the
the CompanyCR-SF Provide based on market based on the “Proposal on Estimated Routineserves as
International services Transportation prices following Contract settlement January 27 Related-party Transaction
a director 7189 0.00% 100000 No N/AExpress Co. to related services etc. the principle of price period and 2022 Amount in 2022” released by
of CR-SF
Ltd. parties independent terms in the the company on the Cninfo
International
transactions. contract website (www.cninfo.com.cn)
Express Co.Ltd.
108 109Chapter 6 Significant Events
2. Related-party transactions relevant to purchases and sales of assets or equities
Related- Proportion Approved Approved Related-party Market price
Type of Pricing principle of Transaction
Details of related- party of same transaction quota transaction of similar Disclosure
Related Party Relationship related-party the related-party amount Disclosure index □Applicable √Not applicable
party transaction transaction category of quota exceeded or settlement transactions date
transaction transaction (RMB’000)
price transactions (RMB’000) not method available
A senior 3. Related-party transactions with joint investments
manager of
Fair pricing Settlement Announcement on the □Applicable √Not applicable
the Company ReceiveCR-SF based on market based on the “Proposal on Estimated Routineserves as services There was no related-party transaction with joint investment of the Company during the Reporting Period.International Transportation prices following Contract settlement January 27 Related-party Transaction
a director from 531495 0.23% 900000 No N/AExpress Co. services etc. the principle of price period and 2022 Amount in 2022” released by
of CR-SF related
Ltd. independent terms in the the company on the Cninfo
International parties
transactions. contract website (www.cninfo.com.cn) 4. Credits and liabilities with related parties
Express Co.Ltd. □Applicable √Not applicable
A director of There were no credits and liabilities with related parties of the Company during the Reporting Period.the Company
M China Fair pricing Settlement Announcement on the
serves as aManagement Provide Supply chain based on market based on the “Proposal on Estimated Routinedirector of
Limited and services service and prices following Contract settlement January 27 Related-party Transaction 5. Transactions between the Company and financial companies that have associated relationship
the parent 1718005 0.64% 2100000 No N/Aits subsidiaries to related distribution the principle of price period and 2022 Amount in 2022” released by
company □Applicable √Not applicable
and its parties service etc. independent terms in the the company on the Cninfo
of M China
franchisees transactions. contract website (www.cninfo.com.cn)
Management
Limited 6. Transactions between financial companies controlled by the Company and related parties
Total – – 3200545 – 4460000 – – – – – □Applicable √Not applicable
Details of
large amount
N/A
of sales 7. Other significant related-party transactions
returns
√Applicable □Not applicable
Actual
performance
in the Based on long-term business development strategy the Company aimed to further enhance the circulation of capital and to optimize the
Reporting asset and liability structure. For this purpose a subsidiary of the Company entered into a sale and purchase agreement with a subsidiary
Period versus of SF REIT in relation to the transfer of Changsha Jietai E-Commerce Industrial Park to SF REIT. The subject of this transaction is the 100%
The Company’s twenty-first meeting of the fifth Board of Directors held on January 26 2022 and the eighteenth meeting of the fifth Supervisory Committee and the First Extraordinary General Meeting of Shareholders of 2022
predicted equity interest of Changsha Industrial Park Limited a subsidiary of the Company and certain amounts payable. The total amount of this
on February 11 2022 respectively reviewed and approved the “Proposal on Estimated Routine Related-party Transaction Amount in 2022.” The amount incurred by aforementioned related-party transactions is within the
total amount transaction is approximately RMB493.2 million.estimated range.of routine
As the buyer of this transaction is a subsidiary of SF REIT and as Wang Wei and Ho Chit directors of the Company hold directorships in
related-party
REIT Manager this transaction constitutes a related-party transaction according to the Rules Governing Listing of Shares on Shenzhen Stock
transactions
Exchange and other relevant regulations.by types (if
any) On June 2 2022 the Company held the 26th meeting of the fifth session of Board of Directors and the 22nd meeting of the fifth session
of Supervisory Committee at which the Proposal on the Disposal of Assets and Related-party Transactions was reviewed and approved with
Reason for related directors abstaining from voting thereon.significant
discrepancy During the Reporting Period closing of the transaction was completed and the total adjusted final transaction amount was approximately
between the RMB502.3 million.N/A
transaction Relevant queries on the disclosure website of the report of major connected transactions
price and the
market price
(if applicable)
Announcement Date of disclosure Website for disclosure
Announcement on Sale of Assets and Related-party Transactions 2022/06/06 www.cninfo.com.cn
110 111Chapter 6 Significant Events
XV. Significant Contracts and Their Execution The Company and its subsidiaries’ guarantees to external parties (Guarantees to subsidiaries are not included)
Disclosure
Counter Guarantee
date of related Exact date of Actual guarantee Fulfilled or
1. Trusteeships Contracts and Leases Guarantee party Guaranteed quota Type of guarantee Collateral (if any) guarantee Period of guarantee for a related announcement of occurrence amount not
(if any) party or not
guarantee quota
(1) Trusteeships
Joint and several
□ √ Hubei International Logistics Airport Co. Ltd. 2020/03/24 3500000 2021/02/25 46000 Nil Nil 2021/12/03-2055/04/29 No NoApplicable Not applicable liability guarantee
(2) Contracts Joint and several
Hubei International Logistics Airport Co. Ltd. 2020/03/24 3500000 2021/02/25 276000 Nil Nil 2022/01/01-2055/04/29 No No
liability guarantee
□ Applicable √Not applicable
Joint and several
(3) Leases Hubei International Logistics Airport Co. Ltd. 2020/03/24 3500000 2021/02/25 23000 Nil Nil 2022/01/04-2055/04/29 No Noliability guarantee
□Applicable √Not applicable
Joint and several
Hubei International Logistics Airport Co. Ltd.* 2020/03/24 3500000 2021/02/25 69000 Nil Nil 2022/01/05-2055/04/29 No No
2. Significant guarantees liability guarantee
√Applicable □Not applicable Joint and several Hubei International Logistics Airport Co. Ltd. 2020/03/24 3500000 2021/02/25 46000 Nil Nil 2022/05/27-2055/04/29 No No
liability guarantee
Unit: RMB’000
Joint and several
Hubei International Logistics Airport Co. Ltd. 2020/03/24 3500000 2021/02/25 69000 Nil Nil 2022/05/30-2055/04/29 No No
liability guarantee
The Company and its subsidiaries’ guarantees to external parties (Guarantees to subsidiaries are not included) Joint and several
Hubei International Logistics Airport Co. Ltd. 2020/03/24 3500000 2021/02/25 23000 Nil Nil 2022/05/31-2055/04/29 No No
Disclosure liability guarantee
Counter Guarantee
date of related Exact date of Actual guarantee Fulfilled or
Guarantee party Guaranteed quota Type of guarantee Collateral (if any) guarantee Period of guarantee for a related Joint and several
announcement of occurrence amount not Compa?ía Auxiliar al Cargo Expres S.A. NA 41695 2020/12/29 41695 Nil Nil 2020/12/29-2022/12/29 Yes No
(if any) party or not liability guarantee
guarantee quota
Total actual amount of guarantees
DHL Weiheng (Zhuhai) Supply Chain Joint and several Zhuhai project Total guarantee quota approved for external
2020/03/24 147000 2020/12/31 113374 Yes 2021/01/15-2030/12/23 No No 200000 for external parties during the 506000
Management Co. Ltd. liability guarantee land parties during the reporting period (A1)
Reporting Period (A2)
DHL Weiheng (Zhuhai) Supply Chain Joint and several Zhuhai project
2020/03/24 147000 2020/12/31 4929 Yes 2021/01/15-2022/06/23 Yes No Total actual guarantee balance for
Management Co. Ltd. liability guarantee land Total guarantee quota approved for external
3479554 external parties at the end of the 895374
parties at the end of the Reporting Period (A3)
DHL Weiheng (Zhuhai) Supply Chain Joint and several Zhuhai project Reporting Period (A4)
2020/03/24 147000 2020/12/31 4929 Yes 2021/01/15-2022/12/23 Yes No
Management Co. Ltd. liability guarantee land
Joint and several
Hubei International Logistics Airport Co. Ltd.* 2020/03/24 3500000 2021/02/25 25300 Nil Nil 2021/09/29-2055/04/29 No No
liability guarantee
Joint and several
Hubei International Logistics Airport Co. Ltd.* 2020/03/24 3500000 2021/02/25 50600 Nil Nil 2021/11/30-2055/04/29 No No
liability guarantee
Joint and several
Hubei International Logistics Airport Co. Ltd. 2020/03/24 3500000 2021/02/25 20700 Nil Nil 2021/10/08-2055/04/29 No No
liability guarantee
Joint and several
Hubei International Logistics Airport Co. Ltd.* 2020/03/24 3500000 2021/02/25 96600 Nil Nil 2021/11/29-2055/04/29 No No
liability guarantee
Joint and several
Hubei International Logistics Airport Co. Ltd.* 2020/03/24 3500000 2021/02/25 36800 Nil Nil 2021/12/01-2055/04/29 No No
liability guarantee
112 113Chapter 6 Significant Events
The Company’s guarantees to subsidiaries Subsidiary’s guarantees to subsidiaries
Disclosure Disclosure Guarantee
date of related Actual Counter Guarantee date of related Actual Counter for a related
Guarantee Exact date of Collateral (if Fulfilled or Guarantee Exact date of Collateral (if Fulfilled or
Guarantee party announcement guarantee Type of guarantee guarantee (if Period of guarantee for a related Guarantee party announcement guarantee Type of guarantee guarantee (if Period of guarantee party or not
quota occurrence any) not quota occurrence any) not
of guarantee amount any) party or not of guarantee amount any) Subsidiaries
quota quota of SF
Joint and several
SF HOLDING INVESTMENT LIMITED 2017/12/28 3489350 2018/07/26 3489350 Nil Nil 2018/07/26-2023/07/26 No No Holding (with gearing ratio of 70% or 2018/03/14
Subject to the
Joint liability Subject to the actual Partially
liability guarantee
above) 2019/03/16
52329110 actual guarantee 17122228 Part Part No
guarantee guarantee contract fulfilled
contract
Joint and several 2020/03/24
SF HOLDING INVESTMENT LIMITED 2019/01/04 6000000 2020/02/20 4885090 Nil Nil 2020/02/20-2030/02/20 No No
liability guarantee 2021/03/18 Subject to the
Subsidiaries of SF Holding (with gearing 2022/01/07 Joint liability Subject to the actual Partially 17862110 actual guarantee 9115588 None Part No
Joint and several ratio below 70%) 2022/03/31 guarantee guarantee contract fulfilled
SF HOLDING LIMITED 2021/02/10 21486840 2021/02/09 5282182 Nil Nil 2021/09/23-2022/03/28 Yes No contract
liability guarantee
Total guarantee quota approved for Total actual amount of guarantees
Joint and several
SF HOLDING LIMITED 2021/02/10 21486840 2021/02/09 2148684 Nil Nil 2021/09/23-2022/01/28 Yes No subsidiaries during the Reporting Period 65534000 for subsidiaries during the 13883860
liability guarantee (C1) Reporting Period (C2)
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2021/11/17 2791480 Nil Nil 2021/11/17-2026/11/17 No No Total guarantee quota approved for the Total actual guarantee balance
liability guarantee subsidiaries at the end of the Reporting 65122511 for subsidiaries at the end of the 17927642
Period (C3) Reporting Period (C4)
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2021/11/17 2093610 Nil Nil 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 447643 Nil Nil 2021/11/17-2031/11/17 No No Total guarantee amount provided by the Company (namely total of the first three major items)
liability guarantee
Total actual amount of
Joint and several Total guarantee quota approved during the
SF Holding Investment 2021 Limited 2021/02/10 18000000 2022/01/18 2791480 Nil Nil 2022/01/18-2026/11/17 No No 70800000 guarantee during the Reporting 19274950
liability guarantee Reporting Period (A1+B1+C1)
Period (A2+B2+C2)
Joint and several
SF Holding Investment 2021 Limited 2021/02/10 18000000 2022/01/18 2093610 Nil Nil 2022/01/18-2031/11/17 No No Total actual guarantee balance
liability guarantee Total guarantee quota approved at the end of
92260328 at the end of the Reporting 37415279
the Reporting Period (A3+B3+C3)
Total actual amount of guarantees Period (A4+B4+C4)
Total guarantee quota approved for
5066000 for subsidiaries during the 4885090
subsidiaries during the Reporting Period (B1) Total guarantee amount (A4+B4+C4) to net assets of the Company 43.37%
Reporting Period (B2)
Of which:
Total guarantee quota approved for the Total actual guarantee balance
subsidiaries at the end of the reporting period 23658263 for subsidiaries at the end of the 18592263 Balance of guarantee for shareholders actual controller and affiliates thereof (D) –
(B3) Reporting Period (B4)
Balance of debt guarantee provided for guaranteed party whose asset-liability ratio is not less than
23109744
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) 23109744
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 (if
N/A
any)
114 115Chapter 6 Significant Events
3. Cash assets managed under trust In order to support the smooth development of the business of the investee company and meet the capital needs of its daily operation
the Company held the twenty-third meeting of the fifth session of the Board on March 30 2022 at which the Proposal on the Provision
(1) Wealth managed under trust of Financial Assistance to Investee Company by Subsidiaries was considered and approved. Pursuant to the proposal Kerry Logistics (China)
Investment Co. Ltd. (嘉里物流(中国)投资有限公司) one of subsidiaries of the Company was approved to provide financial assistance with
Entrusted finances during the Reporting Period a total amount of not more than RMB12.8 million to its investee company Beijing Inland Port Co. Ltd. (北京北建通成国际物流有限公司)
Unit: RMB’000 (“Beijing Inland Port”) for a term of not more than 6 months. The financial assistance has become matured and the principal was fully
recovered during the Reporting Period.Maximum Daily
Impairment With a view to motivating and retaining the key employees holding high-priority positions within the Company and to meeting the routine
Balance of
Funding Source Overdue Provision consumption needs of employees the Company formulated the employee welfare loan management policy in 2017 to grant up to RMB700
Such Entrusted Unexpired
Type for Entrusted Outstanding of Overdue million worth of loans to eligible employees in 2017 and 2018 and compiled the 2019 employee welfare loan management policy in
Funds During Balance
Funds Amount Outstanding 2019 to grant up to RMB300 million worth of loans to eligible employees in one year. For details refer to the Employee Welfare Loan
the Reporting
Funds Management System and the 2019 Employee Welfare Loan Management System released by the Company at www.cninfo. com on October
Period 27 2017 and December 7 2019 respectively. As of the end of the Reporting Period the unexpired balance of the employee welfare loan
was RMB117.67 million.Bank wealth management products Self-owned funds 24235000 5000000 – –
As of the end of the Reporting Period the Company’s subsidiary Shuncheng Lefeng Business (顺诚乐丰商业) Co. Ltd. (hereinafter referred
Trust products Self-owned funds 4691 – – – to as “Lefeng Business (乐丰商业)” formerly named “Shenzhen Shuncheng Lefeng Factoring Co. Ltd.”) had an overdue unrecovered
entrusted loan balance of RMB27000000. Lefeng Business has filed a lawsuit to the court and the court has ordered the auction of
Others Self-owned funds 672659 33229 – –
collateral and now the case is in the execution stage of auction of collateral by batches. The Company predicts that the collateral value is
Bank wealth management products Raised proceeds 8850000 2330000 – – sufficient to cover the unrecovered loan amount; moreover the Company made provisions for bad debts in historical years so this will not
have a material adverse impact on the Company’s financial condition for this period. The Company acquired Lefeng Business in 2018 and
Brokerage wealth management products Raised proceeds 200000 – – – this entrusted loan occurred before the acquisition. After the acquisition was completed Lefeng did not have any new entrusted loans.Total 33962350 7363229 – –
4. Other significant contracts
Note: T he 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. □Applicable √Not applicable
Details of individual items with significant amount or of low safety poor liquidity high risk wealth management products
There was no significant contract of the Company in the Reporting Period.□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 XVI. Other Significant Events
□Applicable √Not applicable
√Applicable □Not applicable
(2) Entrusted loans
Entrusted loans during the Reporting Period (I) Repurchase of shares of the Company by way of aggregate auction
Unit: RMB’000
Based on the confidence in the future development prospects of the Company and the high recognition of the Company’s value in order to
Funding Source for Overdue Outstanding further improve the Company’s long-term incentive mechanism and to fully mobilize the enthusiasm of the Company’s core personnel and
Total Amount of Entrusted Loans Unexpired Balance
Entrusted Loans Amount outstanding employees to jointly promote the long-term development of the Company after taking into account the business development
prospects operating conditions financial position future profitability and the performance of the Company’s shares in the secondary
12800 Self-owned funds 117670 28428 market the Company convened the 22nd meeting of the fifth session of the Board on March 2 2022 at which the Proposal on the Plan for
Share Repurchase by way of Centralized Bidding was considered and approved. The total amount of the share repurchase shall not be less
Details of individual items with significant amount or of low safety poor liquidity high risk entrusted loans than RMB1000 million but not more than RMB2000 million and the repurchase price shall not exceed RMB70 per share. The repurchase
□ √ period shall be within 6 months from the date of consideration and approval of the repurchase plan by the Board. As of September 1 2022 Applicable Not applicable
the share repurchase has been completed. The Company repurchased 38797055 shares at a cost of RMB1999.64 million with an average
It is expected that the principal of the entrusted loan cannot be recovered or there may be other circumstances that may result in repurchase price of RMB51.54 per share. The shares repurchased account for 0.79% of the total share capital of the Company.impairment.On the basis of the completion of the previous share repurchase the Company convened the 28th meeting of the fifth session of the Board
√Applicable □Not applicable on September 22 2022 at which another Proposal on the Plan for Share Repurchase by way of Centralized Bidding was considered and
approved was considered and approved. Under the proposal the Company was approved to further repurchase its certain shares for the
employee stock ownership plan or equity incentive with its own funds. The total amount of repurchase shall not be less than RMB1000
million but not exceed RMB2000 million and the repurchase price shall not exceed RMB70 per share. The repurchase period shall be within
12 months from the date of consideration and approval of the repurchase plan by the Board. As of December 31 2022 the Company
repurchased a total of 835200 shares at a cost of approximately RMB40480000 with an average repurchase price of RMB48.47 per
share. The shares repurchased account for 0.02% of the total share capital of the Company. In the future the Company will continue to
implement the repurchase plan within the repurchase period in light of market conditions.
116 117Chapter 6 Significant Events
(II) Issuance of domestic and overseas debt financing products by wholly-owned subsidiaries of
Interim announcement Date of disclosure Website for disclosure
the Company
Announcement on the First Repurchase of Shares of the Company March 4 2022 CNINFO (www.cninfo.com.cn)
On January 18 2022 SF Holding Investment 2021 Limited a wholly-owned subsidiary of the Company successfully issued additional bonds
of USD700 million on the basis of the bonds of USD1200 million issued in 2021. The additional bonds have been listed on the Hong Kong Announcement on Progress of Repurchase of Shares of the Company March 10 2022 CNINFO (www.cninfo.com.cn)
Stock Exchange.Announcement on the Results of the Public Issuance of Short-term
According to the Company’s development strategy the Company issued onshore and offshore debt financing products through its wholly- Corporate Bonds (First Tranche) for 2022 by Shenzhen S.F. Taisen March 12 2022 CNINFO (www.cninfo.com.cn)
owned subsidiaries in order to meet the Company’s needs of domestic and overseas business development reduce financing costs and Holdings (Group) Co. Ltd. to Professional Investors
optimize debt structure. The 2021 annual general meeting of the Company approved the Company to issue onshore and offshore debt
financing products of no more than RMB15 billion or equivalent (inclusive) through Taisen Holdings and SF Holding Investment 2023 Announcement on Progress of Repurchase of Shares of the Company March 15 2022 CNINFO (www.cninfo.com.cn)
Limited wholly-owned subsidiaries of the Company of which the offshore debt financing products are expected to be RMB5 billion or
equivalent (inclusive). Announcement on the Issuance of Onshore and Offshore Debt March 31 2022 CNINFO (www.cninfo.com.cn)
Financing Products by Wholly-owned Subsidiaries
During the Reporting Period pursuant to the Notice of Acceptance of Registration (Zhong Shi Xie Zhu [2021] No. SCP285) issued by the
National Association of Financial Market Institutional Investors Taisen Holdings issued five tranches of super & short-term commercial papers Announcement on Progress of Repurchase of Shares of the Company April 2 2022 CNINFO (www.cninfo.com.cn)
on January 7 2022 February 18 2022 May 12 2022 May 19 2022 and June 16 2022 respectively with a total issuance size of RMB3
billion. Pursuant to the Notice of Acceptance of Registration (Zhong Shi Xie Zhu [2022] No. DFI14) issued by the National Association of Announcement on Progress of Repurchase of Shares of the Company April 14 2022 CNINFO (www.cninfo.com.cn)
Financial Market Institutional Investors Taisen Holdings issued five tranches of super & short-term commercial papers on July 14 2022 July Announcement on the Results of the Public Issuance of Short-term
27 2022 August 11 2022 August 18 2022 and September 15 2022 respectively with a total issuance size of RMB3 billion. Corporate Bonds (Second Tranche) for 2022 by Shenzhen S.F. Taisen April 16 2022 CNINFO (www.cninfo.com.cn)
During the Reporting Period pursuant to the Approval on the Registration of Public Issuance of Short-term Corporate Bonds by Shenzhen Holdings (Group) Co. Ltd. to Professional Investors
S.F. Taisen Holdings (Group) Co. Ltd. to Professional Investors (Zheng Jian Xu Ke [2021] No. 3645) issued by the CSRC Taisen Holdings
Announcement on Progress of Repurchase of Shares of the Company May 6 2022 CNINFO (www.cninfo.com.cn)
completed the public issuance of two tranches of short-term corporate bonds on March 11 2022 and April 15 2022 respectively with a
total issuance size of RMB1 billion. Pursuant to the Approval on the Registration of Public Issuance of Corporate Bonds by Taisen Holdings Announcement on the Results of the Issuance of the Third Tranche of
to Professional Investors (Zheng Jian Xu Ke [2022] No. 2045) Taisen Holdings completed the public issuance of corporate bonds (Chang Super & Short-term Financing Bonds for 2022 by Shenzhen S.F. Taisen May 17 2022 CNINFO (www.cninfo.com.cn)
Tong Huo Yun Wu Liu) (first tranche) for 2022 on September 22 2022 with an issuance size of RMB500 million. Holdings (Group) Co. Ltd.Announcement on the Results of the Issuance of the Fourth Tranche
(III) Participation of subsidiaries in investment in equity investment funds of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. May 21 2022 CNINFO (www.cninfo.com.cn)
Taisen Holdings (Group) Co. Ltd.In order to promote the long-term development of the Company’s intra-city business and realize the positive interaction between industrial
operation and capital operation on December 6 2022 Shenzhen SF Intra-city Logistics Co. Ltd. (“Shenzhen Intra-city”) a wholly-owned Announcement on Progress of Repurchase of Shares of the Company June 2 2022 CNINFO (www.cninfo.com.cn)
subsidiary of SF Intra-city a listed subsidiary of the Company entered into the Partnership Agreement for Xiamen Xiaoyu Qingcheng Announcement on the Results of the Issuance of the Fifth Tranche
Venture Investment Partnership (Limited Partnership). Xiamen Xiaoyu Qingcheng Venture Investment Partnership (Limited Partnership) (the of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. June 18 2022 CNINFO (www.cninfo.com.cn)
“Fund”) mainly invests in non-listed enterprises in the field of intelligence low carbon and new local life opportunities. The target size of Taisen Holdings (Group) Co. Ltd.the Fund is RMB500 million of which the capital contribution of Shenzhen Intra-city as a limited partner shall not be higher than the lower
of RMB50 million or 45% of the total capital contribution of the Fund. As of December 31 2022 the total capital commitment of the Fund Announcement on Approval of Registration of Multiple Types of Debt
was RMB121.25 million. Financing Instruments of Shenzhen S.F. Taisen Holding (Group) Co. July 1 2022 CNINFO (www.cninfo.com.cn)
Ltd.During the Reporting Period the Fund has completed the filing of private investment funds with the Asset Management Association of
China. Announcement on Progress of Repurchase of Shares of the Company July 2 2022 CNINFO (www.cninfo.com.cn)
The disclosure index of the above significant events and other significant events is as follows:
Announcement on the Results of the Issuance of the Sixth Tranche
of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. July 16 2022 CNINFO (www.cninfo.com.cn)
Interim announcement Date of disclosure Website for disclosure
Taisen Holdings (Group) Co. Ltd.Announcement on the Results of the Issuance of the First Tranche of
Announcement on the Results of the Issuance of the Seventh Tranche
Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. January 8 2022 CNINFO (www.cninfo.com.cn)
of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. July 29 2022 CNINFO (www.cninfo.com.cn)
Taisen Holdings (Group) Co. Ltd.Taisen Holdings (Group) Co. Ltd.Announcement on Additional Issuance of Offshore USD Bonds by
January 19 2022 CNINFO (www.cninfo.com.cn) Announcement on Progress of Repurchase of Shares of the Company August 2 2022 CNINFO (www.cninfo.com.cn)
Overseas Wholly-owned Subsidiaries
Announcement on the Results of the Issuance of the Second Tranche
of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. February 22 2022 CNINFO (www.cninfo.com.cn)
Taisen Holdings (Group) Co. Ltd.Announcement on Implementation of Employee Incentive Scheme by
March 3 2022 CNINFO (www.cninfo.com.cn)
Repurchase of Shares through Centralized Bidding
Repurchase Report March 3 2022 CNINFO (www.cninfo.com.cn)
118 119Chapter 6 Significant Events Chapter 7 Share Changes and Shareholder Details
Interim announcement Date of disclosure Website for disclosure I. Changes in Shares
Announcement on the Results of the Issuance of the Eighth Tranche
of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. August 13 2022 CNINFO (www.cninfo.com.cn)
1. Changes in shares
Taisen Holdings (Group) Co. Ltd.Unit: number of shares
Announcement on the Results of the Issuance of the Ninth Tranche
of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. August 23 2022 CNINFO (www.cninfo.com.cn)
Before Change Increase or Decrease(+or-) After Change
Taisen Holdings (Group) Co. Ltd.Conversion of
Announcement on Progress and Completion of Share Repurchase by Number of
September 3 2022 CNINFO (www.cninfo.com.cn) Proportion New shares issued Bonus shares capital reserve Others Subtotal Number of shares Proportion
the Company shares into share capital
Announcement on the Results of the Issuance of the Tenth Tranche I. Shares subject to restricted sales 402695643 8.21% – – – -348745308 -348745308 53950335 1.10%
of Super & Short-term Commercial Papers for 2022 by Shenzhen S.F. September 20 2022 CNINFO (www.cninfo.com.cn)
Taisen Holdings (Group) Co. Ltd. 1. Shares held by state – – – – – – – – –
Announcement on Approval from the CSRC for Registration of Public 2. Shares held by state-owned legal
633962911.29%–––-63396291-63396291––
Issuance of Corporate Bonds to Professional Investors by Shenzhen S.F. September 20 2022 CNINFO (www.cninfo.com.cn) person
Taisen Holding (Group) Co. Ltd.
3. Other shares held by domestic capital 201751263 4.11% – – – -147800928 -147800928 53950335 1.10%
Announcement on the Results of Public Issuance of Corporate Bonds
(Chang Tong Huo Yun Wu Liu) (First Tranche) for 2022 by Shenzhen September 23 2022 CNINFO (www.cninfo.com.cn) Of which: O ther shares held by domestic 148828267 3.03% – – – -148828267 -148828267 – –
S.F. Taisen Holdings (Group) Co. Ltd. to Professional Investors legal person
Announcement on Implementation of Employee Incentive Scheme by Other shares held by domestic
September 23 2022 CNINFO (www.cninfo.com.cn) 52922996 1.08% – – – 1027339 1027339 53950335 1.10%
Repurchase of Shares through Centralized Bidding natural person
Repurchase Report September 23 2022 CNINFO (www.cninfo.com.cn) 4. Shares held by overseas capital 137548089 2.80% – – – -137548089 -137548089 – –
Announcement on Shareholdings of the Top Ten Shareholders in the Of which: O ther shares held by overseas 137548089 2.80% – – – -137548089 -137548089 – –
Repurchase and the Top Ten Shareholders Not Subject to Trading September 29 2022 CNINFO (www.cninfo.com.cn) legal person
Restrictions on Sales
Other shares held by overseas
–––––––––
Announcement on Progress of Repurchase of Shares of the Company October 11 2022 CNINFO (www.cninfo.com.cn) natural person
Announcement on the Progress of the First Repurchase of Shares of II. Shares not subject to restricted sales 4503517459 91.79% – – – 337734579 337734579 4841252038 98.90%
November 1 2022 CNINFO (www.cninfo.com.cn)
the Company
1. RMB-denominated ordinary shares 4503517459 91.79% – – – 337734579 337734579 4841252038 98.90%
Announcement on Participation of Majority-controlled Subsidiaries in
December 7 2022 CNINFO (www.cninfo.com.cn) III. Total number of shares 4906213102 100.00% – – – -11010729 -11010729 4895202373 100.00%
Investment in Equity Investment Funds
Announcement on Progress of Repurchase of Shares of the Company January 4 2023 CNINFO (www.cninfo.com.cn) Note: Any discrepancies between totals and sums of the proportions are due to rounding.Reasons of share changes Transfer of share ownership
XVII. Significant Events of Subsidiaries √Applicable □Not applicable □Applicable √Not applicable
During the Reporting Period the Company canceled 11010729 Effects of share changes on the basic EPS diluted EPS net assets
shares in the special securities account repurchased in the 2019 per share attributable to ordinary shareholders of the Company
□Applicable √Not Applicable repurchase plan. After the cancellation the total number of and other financial indicators for the last year and the last
shares of the Company was changed from 4906213102 shares Reporting Period
to 4895202373 shares.√Applicable □Not applicable
Approval of share changes
During the Reporting Period the share capital of the Company
√Applicable □Not applicable decreased by 11010729 shares which contributed to the
financial indicators such as basic EPS and diluted EPS and net
The Proposal on Cancellation of Shares in the Special Securities
assets per share attributable to ordinary shareholders of the
Account for Repurchase of the Company was approved at the first
Company
extraordinary general meeting of the Company for 2022 pursuant
to which the Company was approved to cancel the 11010729 Other information that the Company considers necessary or are
shares in the special securities account for repurchase. required by the securities regulatory authorities to disclose
□Applicable √Not applicable
120 121Chapter 7 Share Changes and Shareholder Details
2. Changes in restricted shares II. Issuance and Listing of Securities
√Applicable □Not applicable
Unit: number of shares
1. Issuance of securities (excluding preferred shares) during the Reporting Period
Restricted shares at Number of restricted Number of restricted Restricted shares □Applicable √Not applicable
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
10500000 lock-up shares of senior 2. Explanation on changes in the total shares structure of shareholders and structure of assets
lock-up shares for senior
Liu Jilu 52412835 0 10500000 41912835 management were unlocked at the
management and liabilities
beginning of 2022
√Applicable □Not applicable
lock-up shares for senior
Lin Zheying 0 12000000 0 12000000 June 20 2023
management
During the Reporting Period the first extraordinary general meeting of the Company for 2022 approved the Proposal on Cancellation of
lock-up shares for senior
Wang Xin 0 37500 0 37500 – Shares in the Special Securities Account for Repurchase of the Company pursuant to which the Company was approved to cancel the
management
11010729 shares in the special securities account for repurchase. Upon completion of the cancellation the total share capital of the
lock-up shares for non- Company was changed from 4906213102 shares to 4895202373 shares.UBS AG 53008044 0 53008044 0 May 19 2022
public offering
Shanghai Chongyang Strategic
lock-up shares for non- 3. Existing shares held by internal employees of the Company
Investment Co. Ltd.- Chongyang 39349422 0 39349422 0 May 19 2022
public offering
Strategy Caizhi Fund □Applicable √Not applicable
lock-up shares for non-
Shenwan Hongyuan Securities Co. Ltd. 28016789 0 28016789 0 May 19 2022
public offering
Shanghai Chongyang Strategic
lock-up shares for non-
Investment Co. Ltd.-Chongyang Strategy 19412381 0 19412381 0 May 19 2022
public offering
Yingzhi Fund
lock-up shares for non-
Guotai Junan Securities Co. Ltd. 17890870 0 17890870 0 May 19 2022
public offering
lock-up shares for non-
Yuanhai Investment Co. Ltd. 17488632 0 17488632 0 May 19 2022
public offering
lock-up shares for non-
BARCLAYS BANK PLC 17138859 0 17138859 0 May 19 2022
public offering
Others 157977811 0 157977811 0 – –
Total 402695643 12037500 360782808 53950335 – –
122 123Chapter 7 Share Changes and Shareholder Details
III. Details about Shareholders and Actual Controllers Top ten shareholders holding unrestricted shares
Number of unrestricted Type of shares
Name of shareholder shares held at the end of the
1. Total number of shareholders and their holdings Reporting Period Type of shares Quantity
Unit: number of shares RMB-denominated
Shenzhen Mingde Holding Development Co. Ltd. 2489927139 2489927139
ordinary 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 RMB-denominated
shareholders at the 165744 previous month before the 186169 _ _ Hong Kong Securities Clearing Company Ltd. 264418390 264418390
with voting rights restored (if any) previous month before the disclosure date of ordinary shares
end of Reporting disclosure date of the annual
the annual report (if any)
Period report Mingde Holding – Huatai United Securities – 21 Mingde EB Guarantee RMB-denominated
200000000200000000
and Trust Property Special Account ordinary shares
Shareholders holding more than 5% of shares or shares of the top ten shareholders
RMB-denominated
Shenzhen Zhaoguang Investment Co. Ltd. 193275160 193275160
Number of shares Increase or decrease Number of Pledged marked or frozen shares ordinary 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 Status of shares Amount Ningbo Shunda Fengrun Investment Management Partnership (Limited RMB-denominated reporting period reporting period shares held 102334904 102334904
Partnership) ordinary shares
Domestic non-state-
Shenzhen Mingde Holding Development Co. Ltd. 50.86% 2489927139 -12000000 – 2489927139 Pledged 778000000 Shanghai Chongyang Strategic Investment Co. Ltd.- Chongyang RMB-denominated
owned legal person 39349422 39349422Strategy Caizhi Fund ordinary shares
Hong Kong Securities Clearing Company Ltd Overseas legal person 5.40% 264418390 32538419 – 264418390 – – RMB-denominated
Norges Bank-Own Funds 28195185 28195185
Mingde Holding – Huatai United Securities – 21 Mingde EB Domestic non-state- ordinary shares
4.09% 200000000 – – 200000000 Pledged 200000000
Guarantee and Trust Property Special Account owned legal person Shanghai Chongyang Strategic Investment Co. Ltd.- Chongyang RMB-denominated
1941238119412381
State-owned legal Strategy Yingzhi Fund ordinary shares
Shenzhen Zhaoguang Investment Co. Ltd. 3.95% 193275160 -301301 – 193275160 Pledged 43449214
person RMB-denominated
Yuanhai Investment Co. Ltd. 17488632 17488632
Ningbo Shunda Fengrun Investment Management Partnership Domestic non-state- ordinary shares
2.09%102334904-9164303–102334904––
(Limited Partnership) owned legal person RMB-denominated
NSF Portfolio #112 15580464 15580464
Liu Jilu Domestic natural person 0.91% 44723780 -11160000 41912835 2810945 Pledged 5830000 ordinary shares
Shanghai Chongyang Strategic Investment Co. Ltd.- Shenzhen Mingde Holding Development Co. Ltd. holds a total of 2689927139
Other 0.80% 39349422 – – 39349422 – –
Chongyang Strategy Caizhi Fund shares in the Company accounting for 54.95% of the Company
’s total share
capital of which 2489927139 shares are directly held and 200000000 sharesNorges Bank-Own Funds Overseas legal person 0.58% 28195185 -11952737 – 28195185 – – Explanation on associated relationship or persons acting in concert are held through the “Mingde Holding – Huatai United Securities – 21 Mingde EBbetween the top ten unrestricted tradable shareholders and between Guarantee and Trust Property Special Account” a special account for guarantee
Shanghai Chongyang Strategic Investment Co. Ltd.-
Other 0.40% 19412381 – – 19412381 – – the top ten unrestricted tradable shareholders and the top ten and trust opened for the issuance of exchangeable bonds (EB).Chongyang Strategy Yingzhi Fund shareholders
The Company is not certain as to whether there is an associated relationship
State-owned legal
Yuanhai Investment Co. Ltd. 0.36% 17488632 – – 17488632 – – between the other above-mentioned shareholders and whether they are acting in
person
concert.Strategic investor or general legal person becomes the top ten shareholder due to the
N/A Explanation of the top ten common shareholders’ participation in
placement of new shares (if any) N/A
margin financing and securities lending business (if any)
Shenzhen Mingde Holding Development Co. Ltd. holds a total of 2689927139 shares in the Company accounting for 54.95% of theCompany’s total share capital of which 2489927139 shares are directly held and 200000000 shares are held through the “Mingde Any of the top ten ordinary shareholders or the top ten non-restricted common shareholders of the Company conducted any transaction ofExplanation on associated relationship or persons acting in concert between the above-Holding – Huatai United Securities – 21 Mingde EB Guarantee and Trust Property Special Account” a special account for guarantee and promissory repurchase or not during the Reporting Period?
mentioned shareholders
trust opened for the issuance of exchangeable bonds (EB). The Company is not certain as to whether there is an associated relationship □Yes √No
between the other above-mentioned shareholders and whether they are acting in concert.None of the top ten ordinary shareholder or the top ten non-restricted ordinary shareholders of the Company conducted any transaction of
Explanation on the above-mentioned shareholders’ involvement in entrustment/entrusted promissory repurchase during the Reporting Period.N/A
voting rights and abstaining from voting rights
Special explanation (if any) on the top ten shareholders with special account for repurchase at the end of the Reporting Period the
“Special Securities Account for Repurchase of S.F. Holding Co. Ltd.” held 39632255 shares not subject to trading restrictions on sales.Special explanation on the top ten shareholders having special repurchase accounts (if any)
According to relevant regulations repurchase accounts are not included in the presentation of top ten ordinary shareholders and the top
ten ordinary shareholders not subject to trading restrictions on sales.
124 125Chapter 7 Share Changes and Shareholder Details
2. Details about the controlling shareholder of the Company The ownership and controlling relationship between the actual controller of the Company and the Company is detailed as follows:
Nature of controlling shareholders: natural person holding
Type of controlling shareholders: legal person Wang Wei
Legal representative/ Date of
Name of controlling shareholder Organization code Business scope
company principal establishment 99.90％
International freight forwarders; economic and technical
consulting technical information consulting; commercial Shenzhen Mingde Holding
activities in the form of franchise; import and export Development Co. Ltd.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; 54.95%
restricted projects must obtain permissions for operations);
investment in industrial enterprises (specific projects will be
separately declared). S.F. Holding Co. Ltd.Equity interests in holdings and
participating companies listed at
N/A The actual controller controlled the Company by trust or other asset management methods
home and abroad of the controlling
shareholder in the Reporting Period □Applicable √Not applicable
Change of controlling shareholder in the Reporting Period
□ Applicable √Not applicable 4. Number of shares pledged in aggregate by the Company’s controlling shareholder or biggest
There was no change of controlling shareholder of the Company in the Reporting Period. shareholder and its persons acting in concert reaching 80% of the shares that they hold
□Applicable √Not applicable
3. Details about the Company’s actual controllers and persons acting in concert 5. Other institutional shareholders owning mover than 10% of shares
Nature of the actual controller: domestic natural person □Applicable √Not applicable
Type of the actual controller: natural person 6. Details of restrictions on reducing shareholdings of controlling shareholders actual
Right of sanctuary in other controllers restructuring parties and other commitment subjects
Relationship with the
Name of actual controller Nationality countries or regions obtained
actual controller □Applicable √Not applicable
or not
Wang Wei Himself China No
Mr. Wang Wei born in 1970 is the founder and actual controller of S.F.Major occupations and jobs
Currently he is the chairman and general manager of the Company.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.
126 127Chapter 7 Share Changes and Shareholder Details Chapter 8 Preferred Shares
IV. Details of Implementation of Share Repurchase During □ Applicable √Not applicable
There was no preferred share in the Company during the Reporting Period.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 (RMB0’000) period repurchase repurchased shares involved
(shares)
(shares) in the share
incentive scheme
(if any)
14285700- Within 6 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
March 3 2022 the basis of repurchase plan 38797055 _
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
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 835200 _
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
128 129Chapter 9 Bonds Chapter 10 Financial Statements
[English Translation for Reference Only]
□ Applicable √Not applicable
Audit Opinion Type Unqualified Opinion
During the Reporting Period the Company did not have any bond-related business.Audit Report Signing Date March 28 2023
Audit Institution Name PricewaterhouseCoopers Zhong Tian LLP
Audit Report Reference Number PwC ZT Shen Zi (2023) No. 10050
Registered Accountants’ Names Chen Anqiang Liu Jingping
Auditor’s Report
PwC ZT Shen Zi (2023) 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 2022;
* 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 2022 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.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:
* Evaluation of fair value of the identifiable net assets relating to the acquisition and recognition of goodwill
* Goodwill impairment assessment relating to Kerry Logistics and SF supply Chain Business
* Recognition of revenue from logistics and freight forwarding services
130 131Chapter 10 Financial Statements
Key audit matters How our audit addressed the key audit matter Key audit matters How our audit addressed the key audit matter
Evaluation of fair value of the identifiable In response to the key audit matter we performed procedures as follows: (2) Goodwill impairment assessment relating In response to the key audit matter we performed procedures as follows:
net assets relating to the acquisition and to Kerry Logistics Business and SF Supply
recognition of goodwill * Discussed with management and understood the purpose of the transaction Chain Business With respect to the impairment assessment of goodwill relating to Kerry Logistics
(Note 2(29)(a)(vi) Note 4(19) and Note 5(1)(a)) and the pricing basis; (Note 2(19) Note 2(29)(a)(iii) and Note 4(19)) Business and SF Supply Chain Business performed by management at the end of
the year we performed the procedures as follows:
On 19 April 2022 (“acquisition date”) S.F. * Obtained the resolutions of the Board of Directors and shareholders’ meeting As at 31 December 2022 the goodwill balance
Holding completed the acquisition of 100% related to the purchase of Topocean acquisition agreements valuation report of SF Holding in relation to the business of Kerry * Understood evaluated and tested the internal controls relating to the goodwill
equity of Topocean Consolidation Service (Los the Articles of Association and other supporting documents and examined the Logistics and SF Supply Chain Business was impairment assessment implemented by management;
Angeles) Inc. (“Topocean”) at a consideration of transaction details; approximately RMB5708 million and RMB3034
* Assessed the professional competency and objectivity of the independent
RMB1677 million thus obtained the control right million respectively.* Understood evaluated and tested the internal controls relating to the business valuer;
and included Topocean and its subsidiaries in the
combinations implemented by management;
scope of consolidation. As at the acquisition date Management engaged an independent valuer * Obtained the valuation report issued by an independent valuer engaged by
S.F. Holding recognised Topocean’ s identifiable to conduct impairment assessment of above * Assessed the professional competency and objectivity of the independent management and performed the following procedures with the involvement of
net assets at fair value and the fair value of the goodwill at the end of the year. The recoverable valuer; our internal valuation experts:
identifiable net assets exceeded carrying amount amount of Kerry Logistics Business and SF
by approximately RMB288 million due to the * Performed the following procedures with the involvement of our internal Supply Chain Business relevant asset group was (1) We reviewed whether the division of asset groups to which the goodwill
recognition of intangible assets (mainly customer valuation experts: determined by the present value of the future belonged to were reasonable;
relationships) and corresponding deferred tax cash flows expected to be derived from the asset
(1) We evaluated the appropriateness of the valuation methods adopted by
liabilities. The excess of the consideration over and no impairment loss should be recognised.
(2) We evaluated the appropriateness of the valuation methods adopted
management and the independent valuer in the process of valuation;
the fair value of the identifiable net assets During the goodwill impairment assessment the
by management and the independent valuer with reference to industry
amounting to approximately RMB1157 million forecast of the present value of future cash flows
practices;
(2) We checked the calculation of goodwill and the fair value of the
was recognised as goodwill. involved critical estimates and judgements on key identifiable assets and liabilities for accuracy; (3) We compared the actual operation performance of asset groups in 2022
assumptions including revenue growth rate EBIT
with relative estimates in 2021 and assessed the reasonability of cash
Management engaged an independent valuer to (3) We evaluated the integrity of the identifiable assets and liabilities by check and pre-tax discount rate. flows forecast prepared by management;
assist in the identification of the identifiable assets the acquisition agreement the related information of Topocean etc.;
and valuation of the fair value of intangible assets Since the balance of the above goodwill (4) We evaluated the appropriateness of key assumptions (including revenue
at the acquisition date. The assessment of the fair (4) We obtained an understanding of future business development plan was significant and the goodwill impairment growth rate profit margin and pre-tax discount rate) applied in the future
value of identifiable net assets on the acquisition developed by management to evaluate the commercial reasonableness of assessment involved critical estimates and cash flows forecast by reference to historical operating performance
date included the identification of intangible goodwill recognition; judgements from management we considered future operation plan comparable market data etc.;
assets the selection of valuation methods and the impairment assessment of above-mentioned
the forecast of future cash flows which involved (5) Through the interview with management and by reference to historical goodwill as a key audit matter. (5) We checked the calculation of future cash flows forecast for accuracy;
critical estimates and judgements about the key performance operating data and comparable market data of Topocean
assumptions including revenue growth rate we evaluated the appropriateness of key assumptions (revenue growth (6) We considered the potential impacts in case of reasonable changes in key
discount rate. rate gross profit rate and discount rate) applied by management in assumptions adopted by management in impairment assessment.evaluating the fair value and the reasonableness of management’s forecast
Due to the significant amounts of the fair value of Topocean’s future cash flows and considered the potential impact on Based on the above audit procedures performed the evaluation methods and key
evaluated of the identifiable net assets at the the valuation in case of reasonable changes in the key assumptions. assumptions adopted by management in the goodwill impairment assessment were
acquisition date and recognition of goodwill properly supported by the audit evidences we obtained.and critical estimates and judgements from Based on the above audit procedures performed the valuation methods and key
management were involved in the evaluation assumptions adopted by management in evaluation of fair value of the identifiable
of fair value of the identifiable net assets we net assets and recognition of goodwill relating to the acquisition were properly
considered the evaluation of fair value of the supported by the audit evidences we obtained.identifiable net assets and the recognition of
goodwill relating to the acquisition as a key audit
matter.
132 133Chapter 10 Financial Statements
Key audit matters How our audit addressed the key audit matter Responsibilities of Management and Those Charged with Governance for the
(3) Recognition of revenue from logistics and In response to the key audit matter we performed procedures as follows: Financial Statements
freight forwarding services
* We understood the business mode and process of logistics and freight Management of S.F. Holding is responsible for the preparation and fair presentation of these financial statements in accordance with the CASs (Note 2(25)(a) Note 4(42)(a))
forwarding services of S.F. Holding obtained contract terms relating to and for such internal control as management designs executes and maintains is necessary to enable the preparation of financial statements
Revenue from logistics and freight forwarding revenue and assessed the accounting policy of revenue recognition adopted that are free from material misstatement whether due to fraud or error.services represents the revenue from main by S.F. Holding in accordance with the Accounting Standards for Business
In preparing these financial statements management is responsible for assessing S.F. Holding’s ability to continue as a going concern disclosing
operations of S.F. Holding. For the year ended 31 Enterprises;
as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate
December 2022 the revenue from logistics and
* We understood evaluated and tested internal controls of S.F. Holding S.F. Holding or to cease operations or has no realistic alternative but to do so.freight forwarding services of S.F. Holding was
approximately RMB262100 million accounting relating to revenue recognition from logistics and freight forwarding services Those charged with governance are responsible for overseeing S.F. Holding’s financial reporting process.for about 98.10% of revenue from main including general controls and application controls on the information systems
operations. relating to revenue from logistics and freight forwarding services. With the
involvement of our internal information system audit specialists we executed
Due to the significant amount of transactions the understanding evaluation and testing of general controls and application Auditor’s Responsibilities for the Audit of the Financial Statements
from logistics and freight forwarding services controls on the information systems relating to revenue from logistics and
S.F. Holding used information systems to track freight forwarding services; Our objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from material misstatement
the rendering of logistics services on a constant 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
and real-time basis to determine relevant revenue * Using sampling to check supporting documents related to revenue recognition is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements
recognition. Therefore revenue recognition including service contracts the receipts confirmed by customer or rounting can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence
largely relied on the effectiveness of design and information recording invoices collection records or reconciliation records the economic decisions of users taken on the basis of these financial statements.operation of the internal controls relating to etc.;
information systems. As part of an audit in accordance with CSAs we exercise professional judgement and maintain professional scepticism throughout the audit.* With respect to the revenue which had not been settled on sample basis We also:
Due to the significant amount of revenue from we requested confirmations of the year-end balance of accounts receivable
logistics and freight forwarding services the large and inspected relevant supporting documents including service contracts the * Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit
number of transactions and the involvement of receipts confirmed by customer invoices and subsequent collection records; procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
complex information systems we needed to apply of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion
* With respect to the revenue from logistics and freight forwarding services
more audit effort to address them. Therefore forgery intentional omissions misrepresentations or the override of internal control.recognised before and after the balance sheet date on sample basis we
we considered the recognition of revenue from
checked the relative supporting documents so as to evaluate whether the * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
logistics and freight forwarding services as a key
revenue was recognised in the appropriate period. circumstances.audit matter.Based on the above audit procedures performed the recognition of revenue from * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
logistics and freight forwarding services was properly supported by the audit management.evidences we obtained.* 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
Other information 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
Management of S.F. Holding is responsible for the other information. The other information comprises all of the information included in 2022 report. However future events or conditions may cause S.F. Holding to cease to continue as a going concern.annual report of S.F. Holding other than the financial statements and our auditor’s report thereon.* Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. statements represent the underlying transactions and events in a manner that achieves fair presentation.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether * Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within S.F. Holding
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to to express an opinion on the financial statements. We are responsible for the direction supervision and execution of the group audit. We
be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information remain solely responsible for our audit opinion.we are required to report that fact. We have nothing to report in this regard.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.
134 135Chapter 10 Financial Statements Chapter 10 Financial Statements
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding S.F. HOLDING CO. LTD.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. CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
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 (All amounts in RMB’000 Yuan unless otherwise stated)
unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter [English translation for reference only]
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. 31 December 2022 31 December 2021
ASSETS Note
Consolidated Consolidated
Current assets
Cash at bank and on hand 4(1) 41062750 35315051
Financial assets held for trading 4(2) 7385379 10384493
Notes receivable 236244 317255
Accounts receivable 4(3) 25560433 30441758
Signing CPA
PricewaterhouseCoopers Zhong Tian LLP Chen Anqiang (Engagement Partner) Receivables financing 63310 –
Shanghai the People’s Republic of China Advances to suppliers 4(4) 3464911 2936246
Loans and advances 34212 2633
28 March 2023 Signing CPA
Liu Jingping Other receivables 4(5) 3341237 4238518
Inventories 4(6) 1948354 1546821
Contract assets 4(7) 1522996 1038247
Current portion of non-current assets 4(9) 440739 351489
Other current assets 4(8) 5612928 7539613
Total current assets 90673493 94112124
Non-current assets
Long-term receivables 4(9) 631278 876363
Long-term equity investments 4(10) 7858000 7260087
Investments in other equity instruments 4(11) 7365684 6810771
Other non-current financial assets 4(12) 1012209 878023
Investment properties 4(13) 4875366 4850233
Fixed assets 4(14) 43657404 36925990
Construction in progress 4(15) 11149860 8571203
Right-of-use assets 4(16) 15429775 17297085
Intangible assets 4(17) 19176684 18324188
Capitalised development expenditures 4(18) 311757 343236
Goodwill 4(19) 9345744 7371830
Long-term prepaid expenses 4(20) 3097621 2911094
Deferred tax assets 4(35) 1632964 1566714
Other non-current assets 4(21) 624868 1801041
Total non-current assets 126169214 115787858
TOTAL ASSETS 216842707 209899982
136 137Chapter 10 Financial Statements
S.F. HOLDING CO. LTD. S.F. HOLDING CO. LTD.CONSOLIDATED BALANCE SHEET (CONT’D) COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022 AS AT 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated) (All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only] [English translation for reference only]
31 December 2022 31 December 2021 31 December 2022 31 December 2021
LIABILITIES AND EQUITY Note ASSETS Note
Consolidated Consolidated Company Company
Current liabilities Current assets
Short-term borrowings 4(23) 12837870 18397204 Cash at bank and on hand 18(1) 812181 226112
Deposits from customers 20670 13723 Financial assets held for trading 18(2) 2335319 9200219
Financial liabilities held for trading 96647 7658
Advances to suppliers 121 1248
Notes payable 32699 –
Other receivables 18(3) 15191464 18275492
Accounts payable 4(24) 24715352 23467675
Advances from customers 49035 27385 Other current assets – 5827
Contract liabilities 4(25) 1244418 1675836 Total current assets 18339085 27708898
Employee benefits payable 4(26) 6276551 5575463 Non-current assets
Taxes payable 4(27) 2761146 2873551 Long-term equity investments 18(4) 58217914 50997088
Other payables 4(28) 13346595 11520282
Fixed assets – 9
Current portion of non-current liabilities 4(29) 11173650 8335803
Construction in progress 144726 24392
Other current liabilities 4(30) 5122276 4127049
Total current liabilities 77676909 76021629 Right-of-use assets – 2064
Non-current liabilities Intangible assets 368381 382331
Long-term borrowings 4(31) 7472010 3510829 Long-term prepaid expenses – 779
Debentures payable 4(32) 18927508 15656370
Other non-current assets 459 111
Lease liabilities 4(33) 8582372 10941938
Total non-current assets 58731480 51406774
Long-term payables 209675 361983
Long-term employee benefits payable 114024 351754 TOTAL ASSETS 77070565 79115672
Deferred income 4(34) 860791 690242
Deferred tax liabilities 4(35) 4657954 4402160
Provisions 55415 47830
Total non-current liabilities 40879749 35963106
Total liabilities 118556658 111984735
Equity
Share capital 4(36) 4895202 4906213
Capital reserve 4(37) 43996237 46200598
Less: Treasury stock 4(38) (2040377) (394993)
Other comprehensive income 4(55) 4538027 2617231
General risk reserve 493048 420638
Surplus reserve 4(40) 1010253 947775
Retained earnings 4(41) 33371351 28245764
Total equity attributable to shareholders of the Company 86263741 82943226
Minority interests 12022308 14972021
Total equity 98286049 97915247
TOTAL LIABILITIES AND EQUITY 216842707 209899982
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
138 139Chapter 10 Financial Statements
S.F. HOLDING CO. LTD. S.F. HOLDING CO. LTD.COMPANY BALANCE SHEET (CONT’D) CONSOLIDATED AND COMPANY INCOME STATEMENTS
AS AT 31 DECEMBER 2022 FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated) (All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only] [English translation for reference only]
31 December 2022 31 December 2021 2022 2021 2022 2021
LIABILITIES AND EQUITY Note Item Note
Company Company Consolidated Consolidated Company Company
Current liabilities 1. Revenue 4(42) 267490414 207186647 – –
Employee benefits payable 227 227 Less: Cost of revenue 4(42) (234072360) (181548507) – –
Other payables 29191 6884 Taxes and surcharges 4(43) (476706) (478726) (52) (5373)
Taxes payable 10804 704 Selling and distribution expenses 4(44) (2784114) (2837899) – –
Current portion of non-current liabilities – 519 General and administrative expenses 4(45) (17574490) (15029663) (15823) (23939)
Total current liabilities 40222 8334 Research and development expenses 4(46) (2222865) (2154839) – (21)
Non-current liabilities Financial (costs)/income 4(47) (1711613) (1563359) 21081 8731
Deferred tax liabilities 1253 7290 Including: Interest expenses (2054360) (1562008) (62) (98)
Lease liabilities – 1673 Interest income 345662 187794 21163 8852
Total non-current liabilities 1253 8963 Add: Other income 4(49) 2249361 1768139 – 8
Total liabilities 41475 17297 Investment income 4(50) 18(5) 1025385 2406535 686398 2022132
Equity Including: Investment income/ from associates and
754942660––
joint ventures
Share capital 4(36) 4895202 4906213
(Losses)/Gains arising from changes in fair value (27938) 98949 (24899) 29843
Capital reserve 71743948 71907104
Credit impairment losses 4(51) (821100) (578951) (7) (1)
Less: Treasury stock 4(38) (2040377) (394993)
Asset impairment losses (131756) (60390) – –
Surplus reserve 857208 794730
Gains on disposal of assets 91689 40461 198 –
Retained earnings 1573109 1885321
2. Operating profit 11033907 7248397 666896 2031380
Total equity 77029090 79098375
TOTAL LIABILITIES AND EQUITY 77070565 79115672 Add: Non-operating income 4(52)(a) 231487 289542 51 –
Less: Non-operating expenses 4(52)(b) (298616) (404258) (497) –
3. Total profit 10966778 7133681 666450 2031380
The accompanying notes form an integral part of these financial statements. Less: Income tax expenses 4(53) (3963158) (3214468) (41666) (4059)
4. Net profit 7003620 3919213 624784 2027321
Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting Manager: Hu Xiaofei
Classified by continuity of operations:
Net profit from continuing operations 7003620 3919213 624784 2027321
Net profit from discontinued operations – – – –
Classified by ownership of the equity:
Attributable to shareholders of the Company 6173764 4269098 624784 2027321
Minority interests 829856 (349885) – –
140 141Chapter 10 Financial Statements
S.F. HOLDING CO. LTD. S.F. HOLDING CO. LTD.CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONT’D) CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated) (All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only] [English translation for reference only]
20222021202220212022202120222021
Item Note Item Note
Consolidated Consolidated Company Company Consolidated Consolidated Company Company
5. Other comprehensive income net of tax 4(55) 1273054 1742921 – – 1. Cash flows from/(used in) operating activities
Attributable to shareholders of the Company net of tax 1882025 1585918 – – Cash received from sales of goods or rendering of services 282453563 212073004 – –
Net increase in deposits from customers and other financial
Other comprehensive income items which will not be 6945 10068 – –
(49083) 1873868 – – institutions
reclassified subsequently to profit or loss
Net decrease in loans to customers – 84635 – –
Including: Changes in fair value of investments in other
(47597) 1873959 – – Net decrease in balances with central bank and other banks – 461038 – –
equity instruments
Refund of taxes and levies 5649323 161859 10265 –
Other comprehensive income items which will
Cash received relating to other operating activities 4(56)(a) 81078659 90470800 26936 9791
not be transferred to profit or loss under the (1486) (91) – –
equity method Sub-total of operating cash inflows 369188490 303261404 37201 9791
Other comprehensive income items which will be Cash paid for goods and services (202633677) (156611845) – –
1931108(287950)––
reclassified subsequently to profit or loss Net increase in loans to customers (34105) – – –
Including: Cash flow hedge reserve 15392 (4536) – – Net increase in balances with central bank and other banks (296941) – – –
Cash paid to and on behalf of employees (31255839) (28341837) (8095) (3882)
Other comprehensive income items which will
be transferred subsequently to profit or loss (18740) – – – Payments of taxes and levies (8039647) (5461724) (45171) (21619)
under the equity method Cash paid relating to other operating activities 4(56)(b) (94225334) (97488393) (8629) (14796)
Exchange differences on translation of foreign Sub-total of operating cash outflows (336485543) (287903799) (61895) (40297)
1934456(283414)––
currency financial statements Net cash flows from/(used in) operating activities 4(57)(a) 32702947 15357605 (24694) (30506)
Attributable to minority interests net of tax (608971) 157003 – – 2. Cash flows (used in)/from investing activities
Cash received from disposal of investments 2559624 1238705 – –
6. Total comprehensive income 8276674 5662134 624784 2027321
Cash received from returns on investments 913099 490403 2197582 1523460
Attributable to shareholders of the Company 8055789 5855016 624784 2027321
Cash received from disposal of fixed assets and other long-term
1763311473987–
Attributable to minority interests 220885 (192882) – – assets
7. Earnings per share Net cash received from disposal of subsidiaries 4(56)(c) 313719 2337552 – –
Cash received relating to other investing activities 4(56)(e) 153839102 125485123 44200010 8272497
Basic earnings per share (RMB Yuan) 4(54) 1.27 0.93 Not applicable Not applicable
Sub-total of investing cash inflows 157801875 129699181 46397599 9795957
Diluted earnings per share (RMB Yuan) 4(54) 1.27 0.93 Not applicable Not applicable
Cash paid to acquire fixed assets and other long-term assets (14183777) (19195560) (97014) (31554)
Cash paid to acquire investments (2073948) (656070) (7000000) –
Net cash paid to acquire subsidiaries 4(56)(d) (2217481) (9043578) – –
The accompanying notes form an integral part of these financial statements.Cash paid relating to other investing activities 4(56)(e) (151418127) (117935200) (35774516) (27974434)
Sub-total of investing cash outflows (169893333) (146830408) (42871530) (28005988)
Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting Manager: Hu Xiaofei Net cash flows (used in)/from investing activities (12091458) (17131227) 3526069 (18210031)
142 143Chapter 10 Financial Statements
S.F. HOLDING CO. LTD. S.F. HOLDING CO. LTD.CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS (CONT’D) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022 FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated) (All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only] [English translation for reference only]
2022 2021 2022 2021 Equity attributable to shareholders of the Company
Item Note
Consolidated Consolidated Company Company Note Other Capital Less: Treasury General risk Special Surplus Retained Minority
Share capital comprehensive Total equity
reserve stock reserve reserve reserve earnings interests
3. Cash flows (used in)/from financing activities income
Cash received from capital contributions 162673 23794887 – 19910000 Balance at 1 January 2021 4556440 24405217 (394993) 1143969 279142 – 745043 25708230 316651 56759699
Including: Cash received from capital contributions by minority Movements for the year ended 31 December 2021
1626733884887––
interests of subsidiaries Total comprehensive income
Cash received from borrowings and issue of debentures 39568089 44468053 – – Net profit – – – – – – – 4269098 (349885) 3919213
Cash received relating to other financing activities 5187 7577 – – Other comprehensive income – – – 1585918 – – – – 157003 1742921
Sub-total of financing cash inflows 39735949 68270517 – 19910000 Total comprehensive income for the year – – – 1585918 – – – 4269098 (192882) 5662134
Cash repayments on borrowings and debentures (37421220) (27248269) – – Capital contribution and withdrawal by shareholders
Cash payments for interest expenses and distribution of dividends Capital contribution by shareholders 349773 21592292 – – – – – – 1849237 23791302
(3688182)(2379578)(874518)(1499992)
or profits Share-based payments included in equity 9(1) – 287553 – – – – – – 61755 349308
Cash paid relating to other financing activities 4(56)(f) (14643497) (17422744) (2040787) (1457) Others – (75317) – – – – – – (142626) (217943)
Sub-total of financing cash outflows (55752899) (47050591) (2915305) (1501449) Business combinations involving enterprises not under
––––––––1312649313126493
common control
Net cash flows (used in)/from financing activities (16016950) 21219926 (2915305) 18408551
Profit distribution
4. Effect of foreign exchange rate changes on cash and cash
871640(99020)(1)–
equivalents Appropriation to general risk reserve 4(41) – – – – 141496 – – (141496) – –
Appropriation to surplus reserve 4(40) – – – – – – 202732 (202732) – –
5. Net increase in cash and cash equivalents 5466179 19347284 586069 168014
Distribution to shareholders 4(41) – – – – – – – (1499992) (46607) (1546599)
Add: Cash and cash equivalents at the beginning of the year 34813768 15466484 226112 58098
6. Cash and cash equivalents at the end of the year 4(57) (b) 40279947 34813768 812181 226112 Transfer within equity
Transfer from other comprehensive income to retained
–––(112656)–––112656––
earnings
Movements in other capital reserve – (9147) – – – – – – – (9147)
The accompanying notes form an integral part of these financial statements.Safety reserve
Appropriation 4(39) – – – – – 28370 – – – 28370
Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting Manager: Hu Xiaofei
Utilisation 4(39) – – – – – (28370) – – – (28370)
Balance at 31 December 2021 4906213 46200598 (394993) 2617231 420638 – 947775 28245764 14972021 97915247
144 145Chapter 10 Financial Statements
S.F. HOLDING CO. LTD. S.F. HOLDING CO. LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONT’D) COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022 FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated) (All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only] [English translation for reference only]
Equity attributable to shareholders of the Company Share Capital Less: Treasury Surplus Retained
Note Total equity
Note Other capital reserve stock reserve earningsCapital Less: Treasury General risk Special Surplus Retained Minority
Share capital comprehensive Total equity
reserve stock reserve reserve reserve earnings interests
income Balance at 1 January 2021 4556440 52344321 (394993) 591998 1560724 58658490
Balance at 1 January 2022 4906213 46200598 (394993) 2617231 420638 – 947775 28245764 14972021 97915247 Movements for the year ended 31 December 2021
Movements for the year ended 31 December 2022 Total comprehensive income
Total comprehensive income
Net profit – – – – 2027321 2027321
Net profit – – – – – – – 6173764 829856 7003620
Other comprehensive income – – – 1882025 – – – – (608971) 1273054 Capital contribution and withdrawal by shareholders
Total comprehensive income for the year – – – 1882025 – – – 6173764 220885 8276674 Capital contribution by shareholders 4(36) 349773 19562789 – – – 19912562
Capital contribution and withdrawal by shareholders Share-based payments included in equity – (6) – – (6)
Capital contribution by shareholders – 825 – – – – – – 161848 162673
Profit distribution
Share repurchase 4(38) – – (2040377) – – – – – – (2040377)
Treasury stock cancellation 4(38) (11011) (383982) 394993 – – – – – – – Appropriation to surplus reserve 4(40) – – – 202732 (202732) –
Share-based payments included in equity 9(1) – 122999 – – – – – – (13426) 109573 Distribution to shareholders 4(41) – – – – (1499992) (1499992)
Others 4(37) – (2055007) – – – – – – (1856492) (3911499) Balance at 31 December 2021 4906213 71907104 (394993) 794730 1885321 79098375
Business combinations involving enterprises not under
––––––––5755557555
common control Balance at 1 January 2022 4906213 71907104 (394993) 794730 1885321 79098375
Profit distribution Movements for the year ended 31 December 2022
Appropriation to general risk reserve 4(41) – – – – 72410 – – (72410) – –
Total comprehensive income
Appropriation to surplus reserve 4(40) – – – – – – 62478 (62478) – –
Net profit – – – – 624784 624784
Distribution to shareholders 4(41) – – – – – – – (874518) (1524826) (2399344)
Transfer within equity Capital contribution and withdrawal by shareholders
Transfer from other comprehensive income to retained
– – – 38771 – – – (38771) – – Treasury stock cancellation 4(38) (11011) (383982) 394993 – – –
earnings
Movements in other capital reserve – 110804 – – – – – – 4743 115547 Share repurchase 4(38) – – (2040377) – – (2040377)
Safety reserve Share-based payments included in equity – 220852 – – – 220852
Appropriation 4(39) – – – – – 32214 – – – 32214
Others – (26) – – – (26)
Utilisation 4(39) – – – – – (32214) – – – (32214)
Profit distribution
Balance at 31 December 2022 4895202 43996237 (2040377) 4538027 493048 – 1010253 33371351 12022308 98286049
Appropriation to surplus reserve 4(40) – – – 62478 (62478) –
Distribution to shareholders 4(41) – – – – (874518) (874518)
The accompanying notes form an integral part of these financial statements. Balance at 31 December 2022 4895202 71743948 (2040377) 857208 1573109 77029090
Legal representative: Wang Wei Chief Financial Officer (financial officer): Ho Chit Accounting Manager: Hu Xiaofei
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
146 147Chapter 10 Financial Statements
S.F. HOLDING CO. LTD. (4) Recording currency for the current period. Costs directly attributable to the combination
NOTES TO THE FINANCIAL STATEMENTS are included in profit or loss in the period in which they are incurred.The Company’s recording currency is Renminbi (RMB). The Transaction costs associated with the issue of equity or debt securities
FOR THE YEAR ENDED 31 DECEMBER 2022 Company’s subsidiaries decide their recording currencies in line for the business combinations are included in the initially recognised
(All amounts in RMB’000 Yuan unless otherwise stated) with the economic environments in which they operate while the amounts of the equity or debt securities.
[English translation for reference only] subsidiaries in Hong Kong SAR and abroad mainly adopt currencies
including HKD and USD as their recording currencies. The financial (6) Preparation of consolidated financial
1. General information 2. Summary of significant accounting statements are presented in RMB. statementsS.F. Holding Co. Ltd. (formerly “Ma’anshan Dingtai Rare Earth policies and accounting estimates (5) Business combinations The consolidated financial statements comprise the financialand New Materials Co. Ltd.” hereinafter “S.F. Holding” or “theThe Group determines the specific accounting policies and estimates statements of the Company and all of its subsidiaries.Company”) formerly known as Ma’anshan Dingtai Science &
based on its features of production and operation primarily (a) Business combinations involving enterprises under
Technology Co. Ltd. was established by 11 natural persons including Subsidiaries are consolidated from the date on which the Group
comprising the methods of provision for expected credit losses on common control
Liu Jilu and the Labour Union of Ma’anshan Dingtai Metallic Products obtains control and are de-consolidated from the date on which
receivables and contract assets (Note 2(9)) valuation of inventories
Co. Ltd. by cash contribution on 13 May 2003. On 22 October The consideration paid and net assets obtained by the Group in a such control ceases. For a subsidiary that is acquired in a business (Note 2(10)) measurement model of investment properties (Note
2007 The officially changed to Ma’anshan Dingtai Rare Earth and
2(12)) depreciation of fixed assets and amortisation of intangible business combination are measured at the carrying amount. If the
combination involving enterprises under common control it is
New Materials Co. Ltd. and the Ma’anshan Dingtai Rare Earth and acquiree is acquired from a third party by the ultimate controlling included in the consolidated financial statements from the date assets and right-of-use assets (Note 2(13) (16) (27)) criteria for
New Materials Co. Ltd. shares were listed on the Shenzhen Stock
capitalisation of capitalised development expenditures (Note 2(17)) party in a prior year the consideration paid and net assets obtained
when it together with the Company comes under common control
Exchange on 5 February 2010. by the Group are measured based on the carrying amounts of the of the ultimate controlling party. The portion of the net profit recognition and measurement of revenue (Note 2(25)) etc.acquiree’s assets and liabilities (including the goodwill arising from realised before the combination date is presented separately in the
In December 2016 approved by the China Securities Regulatory
Details of the Group’s critical judgements critical accounting the acquisition of the acquiree by the ultimate controlling party) consolidated income statement.Commission Ma’anshan Dingtai Rare Earth and New Materials Co.estimates and key assumptions used in determining significant presented in the consolidated financial statements of the ultimate
Ltd conducted a series of major assets restructuring including major In preparing the consolidated financial statements where the
accounting policies are set forth in Note 2(29). controlling party. The difference between the carrying amount of
assets swap issuing shares to purchase assets and raising matching accounting policies and the accounting periods of the Company
the net assets obtained from the combination and the carrying
fund. Upon the completion of major asset restructuring Shenzhen and subsidiaries are inconsistent the financial statements of the (1) Basis of preparation amount of the consideration paid for the combination is treated
Mingde Holdings Development Co. Ltd. (“Mingde Holdings”) subsidiaries are adjusted in accordance with the accounting policies
as an adjustment to capital reserve (share premium). If the capital
became the parent company and ultimate controlling company of The financial statements are prepared in accordance with the and the accounting period of the Company. For subsidiaries acquired reserve (share premium) is not sufficient to absorb the difference
the Company and Wang Wei was the ultimate controlling person Accounting Standards for Business Enterprises – Basic Standard the from business combinations involving enterprises not under common the remaining balance is adjusted against retained earnings. Costs
of the Company. The place of registration and headquarters of the specific accounting standards and other relevant regulations issued control the individual financial statements of the subsidiaries are directly attributable to the business combinations are included in
Company were changed to Shenzhen Guangdong Province. by the Ministry of Finance on 15 February 2006 and in subsequent adjusted based on the fair value of the identifiable net assets at the profit or loss in the period in which they are incurred. Transactionperiods (hereafter referred to as “the Accounting Standards for acquisition date.As at 31 December 2022 the total share capital of the Company is costs associated with the issue of equity or debt securities forBusiness Enterprises” or “CASs”) and the disclosure requirements in
RMB4895202373 with a par value of RMB1 per share. the business combinations are included in the initially recognised All significant intra-group balances transactions and unrealised
the Preparation Convention of Information Disclosure by Companies amounts of the equity or debt securities. profits are eliminated in the consolidated financial statements.The approved business scope of the Company and its subsidiaries Offering Securities to the Public No. 15 – General Rules on Financial The portion of subsidiaries’ equity and the portion of subsidiaries’
(“the Group”) includes: domestic and international express services Reporting issued by the China Securities Regulatory Commission. (b) Business combinations involving enterprises not under net profit or loss and comprehensive income for the period not
(except for postal enterprises’ franchise business); general freight
The financial statements are prepared on a going concern basis. common control attributable to the Company are recognised as minority interests
services; large-scale goods transportation services; refrigerated truck minority interest income and total comprehensive income attributable
transportation services; third-party pharmaceutical modern logistics For business combinations not under common control the Group (2) Statement of compliance with the to minority shareholders and presented separately in the consolidated
business services; urban distribution services; supply chain solution chooses to use concentration test to judge whether the acquired
Accounting Standards for Business Enterprises financial statements under equity net profit and total comprehensive
consulting services; domestic and international freight agency production and operation activities or groups of assets constitutes a income respectively. Where the loss for the current period attributable
business services; air cargo transportation services; warehousing business. When the concentration test is passed the Group conducts The financial statements of the Company for the year ended 31 to the minority shareholders of the subsidiaries exceeds the share of
services; property leasing services and industrial investment. accounting treatment according to the relevant asset purchase December 2022 are in compliance with the Accounting Standards the minority interests in the opening balance of equity the excess is
principle; when the concentration test is not passed the Group
for Business Enterprises and truly and completely present the still deducted against minority interests. Unrealised profits and losses
Hangzhou SF Intra-city Industrial Co. Ltd. a subsidiary of the further judges whether the relevant combination obtained in the
consolidated and company financial position of the Company as at resulting from the sales of assets by the Company to its subsidiaries
Company is a company listed on the main board of the Stock merger has at least one input and one substantive processing process
31 December 2022 and their financial performance cash flows and are fully eliminated against net profit attributable to owners of the
Exchange of Hong Kong Limited (“HKEX”) primarily providing intra- and the combination of the two has a significant contribution to the
other information for the year then ended. parent. Unrealised profits and losses resulting from the sales of assets
city instant delivery services. output capacity and hence decide if the Group obtains a business
by a subsidiary to the Company are eliminated and allocated between
(3) Accounting year combination in such a transaction.Kerry Logistics Network Co. Ltd. (“Kerry Logistics”) a subsidiary of net profit attributable to owners of the parent and minority interest
the Company is a company listed on the main board of the HKEX The combination cost and identifiable net assets obtained by the income in accordance with the allocation proportion of the parent in
The Company’s accounting year starts on 1 January and ends on
providing services such as comprehensive logistics e-commerce Group in a business combination are measured at fair value at the the subsidiary. Unrealised profits and losses resulting from the sales
31 December.
express delivery and international freight. acquisition date. Where the combination cost exceeds the Group’s of assets by one subsidiary to another are eliminated and allocated
interest in the fair value of the acquiree’s identifiable net assets the between net profit attributable to owners of the parent and minority
First-tier and second-tier subsidiaries included in the consolidation
difference is recognised as goodwill; where the combination cost is interest income in accordance with the allocation proportion of the
scope of the financial statements are detailed in Note 6(1). The
lower than the Group’s interest in the fair value of the acquiree’s parent in the selling subsidiary.changes in the scope of consolidation for the current reporting period
identifiable net assets the difference is recognised in profit or loss
are set out in Note 5.
148 149Chapter 10 Financial Statements
If the accounting treatment of a transaction is inconsistent in the dates. The income and expense items in the income statement of Measured at fair value through other comprehensive income: For notes receivable accounts receivable receivables financing and
financial statements at the Group level and at the Company or its foreign operations are translated at the spot exchange rates of the contract assets that are formed from daily business activities such
subsidiary level adjustment will be made from the perspective of transaction dates. The differences arising from the above translation The objective of the Group’s business model is to hold the financial as providing services and selling goods the Group recognises the
the Group. are recognised in other comprehensive income. The cash flows of assets for both collection of the contractual cash flows and selling lifetime expected credit loss provision regardless of whether there
foreign operations are translated at the spot exchange rates on the such financial assets and the contractual cash flow characteristics exists a significant financing component. For lease receivables the
If the control over the subsidiary is lost due to the disposal of a dates of the cash flows. The effect of exchange rate changes on cash are consistent with a basic lending arrangement. Such financial Group also chooses to measure the loss provision based on lifetime
portion of an equity investment or other reasons the remaining is presented separately in the cash flow statement. assets are measured at fair value through other comprehensive expected credit losses.equity investment in the consolidated financial statements is income except for the impairment gains or losses foreign exchange
remeasured at its fair value at the date when the control is lost. The (9) Financial instruments gains and losses and interest income calculated using the effective Except for the above notes receivable accounts receivable receivables
sum of consideration received from the disposal of equity investment interest method which are recognised in profit or loss for the current financing contract assets and lease receivables at each balance
and the fair value of the remaining equity investment net of the A financial instrument is any contract that gives rise to a financial period. Such financial assets mainly include receivables financing. sheet date the expected credit losses of financial instruments at
sum of the share of net assets of the former subsidiary based on asset of one entity and a financial liability or equity instrument of Other debt investments that are due within one year (inclusive) as different stages are measured respectively. 12-month expected
continuous calculation since the acquisition date and goodwill is another entity. A financial asset or a financial liability is recognised from the balance sheet date are included in current portion of non- credit loss provision is recognised for financial instruments in Stage
recognised as investment income for the current period when the when the Group becomes a party to the contractual provisions of current assets; other debt investments with maturities of no more 1 that have not had a significant increase in credit risk since initial
control is lost. In addition other comprehensive income and other the instrument. than one year (inclusive) at the time of acquisition are included in recognition; lifetime expected credit loss provision is recognised for
changes in equity (excluding other comprehensive income from other current assets. financial instruments in Stage 2 that have had a significant increase
changes arising from remeasurement on net liabilities or net assets (a) Financial assets in credit risk yet without credit impairment since initial recognition;
of defined benefit plans and accumulative fair value changes of Measured at fair value through profit or loss: and lifetime expected credit loss provision is recognised for financial
investments in equity instrument not held for trading at fair value (i) Classification and measurement instruments in Stage 3 that have had credit impairment since initial
Debt instruments held by the Group that are not divided into those
through other comprehensive income) which are related with the recognition.Based on the business model for managing the financial assets and at amortised cost or those measured at fair value through other
equity investment in the former subsidiary are transferred to profit
the contractual cash flow characteristics of the financial assets comprehensive income are measured at fair value through profit
or loss for the current period when the control is lost. For the financial instruments with low credit risk as at the balance
financial assets are classified as: (1) financial assets at amortised cost; or loss. At initial recognition the Group designates a portion of sheet date the Group assumes there is no significant increase in
(2) financial assets at fair value through other comprehensive income; financial assets as at fair value through profit or loss to eliminate
(7) Cash and cash equivalents credit risk since initial recognition. The Group determines them as
(3) financial assets at fair value through profit or loss. or significantly reduce an accounting mismatch. Financial assets the financial instruments in Stage 1 and recognises the 12-month
Cash and cash equivalents comprise cash on hand deposits that measured at fair value through profit or loss that are due after one expected credit loss provision.The financial assets are measured at fair value at initial recognition.can be readily drawn on demand and short-term and highly liquid year (inclusive) as from the balance sheet date and are expected to
Related transaction costs that are attributable to the acquisition of
investments that are readily convertible to known amounts of cash be held over one year are included in other non-current financial For the financial instruments in Stage 1 and Stage 2 the Group
the financial assets are included in the initially recognised amounts
and which are subject to an insignificant risk of changes in value. assets and others are included in financial assets held for trading. calculates the interest income by applying the effective interest rate
except for the financial assets at fair value through profit or loss the to the book balance (before deduction of the impairment provision).related transaction costs of which are recognised directly in profit or Equity instruments
(8) Foreign currency translation For the financial instruments in Stage 3 the interest income is
loss for the current period. Accounts receivable or notes receivable calculated by applying the effective interest rate to the amortised cost
arising from sales of goods or rendering of services (excluding or Investments in equity instruments over which the Group has no
(a) Foreign currency transactions (after deduction of the impairment provision from the book balance).without regard to significant financing components) are initially control joint control or significant influence are measured at fair
recognised at the consideration that is entitled to be charged by the value through profit or loss under financial assets held for trading; In case the expected credit losses of an individually assessed financial Foreign currency transactions are translated into recording currency
Group as expected. investments in equity instruments expected to be held over one year asset cannot be evaluated with reasonable cost the Group divides using the spot exchange rates and approximate exchange rates as from the balance sheet date are included in other non-current the receivables into certain groups based on credit risk characteristics
prevailing at the dates of the transactions.Debt instruments financial assets. and calculates the expected credit losses for the groups. Basis for
At the balance sheet date monetary items denominated in foreign determining groups and methods for provision are presented as
The debt instruments held by the Group refer to the instruments that In addition a portion of certain investments in equity instruments
currencies are translated into recording currency using the spot follows:
meet the definition of financial liabilities from the perspective of the not held for trading are designated as financial assets at fair value
exchange rates on the balance sheet date. Exchange differences
issuer and are measured in the following ways: through other comprehensive income under other investments in
arising from these translations are recognised in profit or loss for Group of bank notes with low equity instruments. The relevant dividend income of such financial Bank acceptance notes
the current period except for those attributable to foreign currency Measured at amortised cost: credit riskassets is recognised in profit or loss for the current period.borrowings that have been taken out specifically for acquisition or
Accounts receivable other Group of receivables from
construction of qualifying assets which are capitalised as part of the The objective of the Group’s business model is to hold the financial (ii) Impairment
receivables related parties
cost of those assets. Non-monetary items denominated in foreign assets to collect the contractual cash flows and the contractual cash
currencies that are measured at historical costs are translated at flow characteristics are consistent with a basic lending arrangement The Group recognises the loss provision based on expected credit Accounts receivable other Group of receivables from
the balance sheet date using the spot exchange rates at the date which gives rise on specified dates to the contractual cash flows losses for financial assets at amortised cost investments in debt receivables and contract assets non-related parties
of the transactions. The effect of exchange rate changes on cash is that are solely payments of principal and interest on the principal instruments at fair value through other comprehensive income
Long-term receivables Group of finance leases
presented separately in the cash flow statement. amount outstanding. The interest income of such financial assets contract assets lease receivables etc.is recognised using the effective interest method. Such financial Long-term receivables Group of loans to employees
Giving consideration to reasonable and supportable information that
(b) Translation of foreign currency financial statements assets mainly comprise cash at bank and on hand notes receivable
accounts receivable loans and advances other receivables and long- is available without undue cost or effort at the balance sheet date Based on the exposure at default and the lifetime expected credit
The asset and liability items in the balance sheets for overseas term receivables. Long-term receivables that are due within one year on past events current conditions and forecasts of future economic loss rate the Group calculates the expected credit losses of
operations are translated at the spot exchange rates on the balance (inclusive) as from the balance sheet date are included in the current conditions as well as the default risk weight the Group recognises notes receivable accounts receivable receivables financing lease
sheet date. Among the equity items the items other than retained portion of non-current assets. the expected credit loss as the probability-weighted amount of the receivables and contract assets that are classified into groups with
earnings are translated at the spot exchange rates of the transaction present value of the difference between the cash flows receivable
from the contract and the cash flows expected to collect. consideration to historical credit losses experience current conditions
and forecasts of future economic conditions.
150 151Chapter 10 Financial Statements
Based on the exposure at default and the 12-month/lifetime expected (c) Equity instruments (11) Long-term equity investments For long-term equity investments that are accounted for using
credit loss rate the Group calculates the expected credit losses of the equity method the Group recognises the investment income
other receivables loans and advances and long-term receivables An equity instrument is a contract that represents a residual interest Long-term equity investments comprise the Company’s long-term according to its share of net profit or loss of the investee. The Group
(loans to employees) that are classified into groups with consideration in the assets of an entity after deducting all of its liabilities. equity investments in its subsidiaries and the Group’s long-term discontinues recognising its share of the net losses of an investee
to historical credit losses experience the current conditions and equity investments in its joint ventures and associates. after the carrying amounts of the long-term equity investment
forecasts of future economic conditions. (d) Determination of fair value of financial instruments together with any long-term interests that in substance form part
A subsidiary is an investee over which the Company is able to exercise
of the investor’s net investment in the investee are reduced to zero.The Group recognises the loss provision made or reversed into profit The fair value of a financial instrument that is traded in an active control. A joint venture is a joint arrangement which is structured However if the Group has obligations for additional losses and the
or loss for the current period. market is determined at the quoted price in the active market. The through a separate vehicle over which the Group has joint control criteria with respect to recognition of provisions are satisfied the
fair value of a financial instrument that is not traded in an active together with other parties and only has rights to the net assets of
Group continues recognising the estimated losses that it needs to
For debt instruments classified as fair value through other market is determined by using a valuation technique. In valuation the the arrangement based on legal forms contractual terms and other
bear. The changes of the Group’s share of the investee’s equity other
comprehensive income the Group recognises the impairment loss Group adopts valuation techniques applicable in the current situation facts and circumstances. An associate is an investee over which the
than those arising from the net profit or loss other comprehensive
or gain in profit or loss and meanwhile adjusts other comprehensive and supported by adequate available data and other information Group has significant influence on its financial and operating policy
income and profit distribution are recognised in the Group’s capital
income. selects inputs with the same characteristics as those of assets or decisions.reserve and the carrying amounts of the long-term equity investment
liabilities considered in relevant transactions of assets or liabilities
(iii) Derecognition Investments in subsidiaries are presented in the Company’s financial are adjusted accordingly. The carrying amount of the investment by market participants and gives priority to the use of relevant
statements using the cost method and are adjusted to the equity is reduced by the Group’s share of the profit distribution or cash
A financial asset is derecognised when any of the below criteria is observable inputs. When relevant observable inputs are not available
or feasible unobservable inputs are adopted. method when preparing the consolidated financial statements;
dividends declared by the investee. The unrealised profits or losses
met: (1) the contractual rights to receive the cash flows from the
investments in joint ventures and associates are accounted for using arising from the transactions between the Group and its investees
financial asset expire; (2) the financial asset has been transferred
the equity method. are eliminated in proportion to the Group’s equity interest in
and the Group transfers substantially all the risks and rewards of (10) Inventories the investees based on which the investment gain or losses are
ownership of the financial asset to the transferee; or (3) the financial
(a) Determination of investment cost recognised. For the loss on the intra-group transaction amongst the
asset has been transferred and the Group has not retained control (a) Classification Group and its investees attributable to asset impairment losses any
of the financial asset although the Group neither transfers nor
Inventories comprise raw materials in stock aviation consumables For long-term equity investments arising from business combinations unrealised loss is not eliminated.retains substantially all the risks and rewards of ownership of the
finished goods costs to fulfil a contract (see Note 2(25)(a)) and involving enterprises under common control the initial investment
financial asset.turnover materials and are stated at the lower of cost and net cost shall be the share of the carrying amount of equity of the (c) Basis for determining existence of control joint control
acquiree in the consolidated financial statements of the ultimate significant influence over investees
When investments in other equity instruments are derecognised realisable value.controlling party as at the combination date; for long-term equity
the difference between the carrying amount and the sum of the
(b) Valuation method for inventory delivered investments arising from business combinations involving enterprises
Control means having power over an investee enjoying variable
consideration received and the cumulative changes in fair value that
not under common control the investment cost shall be the returns through involvement in relevant activities of the investee and
are previously recognised directly in other comprehensive income
Raw materials in stock finished goods and aviation consumables are combination cost. being able to impact the amount of such variable returns by using
is recognised in retained earnings. When other financial assets are
accounted for using the weighted average method upon delivery. the power over the investee.derecognised the difference aforementioned is recognised in profit For long-term equity investments acquired not through a business
or loss for the current period.(c) Amortisation methods of low-value consumables and combination: for long-term equity investments acquired by payment
Joint control is the agreed sharing of control over an arrangement
recyclable materials in cash the initial investment cost shall be the purchase price actually
and the decision of activities relating to such arrangement requires
(b) Financial liabilities paid; for long-term equity investments acquired by issuing equity the unanimous consent of the Group and other parties sharing
Turnover materials include low-value consumables and recyclable securities the initial investment cost shall be the fair value of the control.Financial liabilities are classified as financial liabilities at amortised
materials. Recyclable materials are amortised in stages and low- equity securities issued.cost and financial liabilities at fair value through profit or loss at Significant influence is the power to participate in making the
value consumables are amortised by one-off write-off method when
initial recognition. decisions on financial and operating policies of the investee but is
they are used. (b) Subsequent measurement and recognition methods of
not control or joint control over making those policies.Financial liabilities of the Group mainly comprise financial liabilities gains and losses
at amortised cost mainly including notes and accounts payables (d) Basis for determining the net realisable value of
inventories and provision for decline in the value of Long-term equity investments accounted for using the cost method
(d) Impairment of long-term equity investments
other payables borrowings and debentures payable. Such financial
are measured at the initial investment cost. Cash dividend or profit
liabilities are initially recognised at fair value net of transaction costs inventories The carrying amounts of long-term equity investments in subsidiaries
distribution declared by an investee is recognised as investment
incurred and subsequently measured using the effective interest joint ventures and associates are reduced to the recoverable amounts
income in profit or loss for the current period.method. Financial liabilities that are due within one year (inclusive) Provision for decline in the value of inventories is determined at the when the recoverable amounts are below their carrying amounts
are classified as current liabilities; those with maturities over one year excess amount of the carrying amounts of the inventories over their For long-term equity investments that are accounted for using the (Note 2(19)).but are due within one year (inclusive) as from the balance sheet date net realisable value. Net realisable value is determined based on equity method where the initial investment cost exceeds the Group’s
are classified as current portion of non-current liabilities. Others are the estimated selling price in the ordinary course of business less share of the fair value of the investee’s identifiable net assets at
classified as non-current liabilities. the estimated costs costs to fulfil a contract and estimated costs the time of acquisition the investment is initially measured at cost.necessary to make the sale and related taxes.Where the initial investment cost is less than the Group’s share of
A financial liability is derecognised or partly derecognised when the
the fair value of the investee’s identifiable net assets at the time of
underlying present obligation is discharged or partly discharged. The (e) The Group adopts the perpetual inventory system.acquisition the difference is included in profit or loss for the current
difference between the carrying amount of the derecognised part of
period and the cost of the long-term equity investment is adjusted
the financial liability and the consideration paid is recognised in profit
upwards accordingly.or loss for the current period.
152 153Chapter 10 Financial Statements
(12) Investment properties 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:
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 Estimated net Annual
Estimated useful lives
in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic residual values depreciation rates
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. Buildings (excluding freehold land) 10 to 50 years 5% 9.50%-1.90%
Port equipment 28 to 40 years 0% 3.57%-2.50%
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 Motor vehicles (excluding electromobiles) 2 to 20 years 0%-5% 50.00%-4.75%
that are expressed as a percentage of cost and the annual depreciation rates of investment properties are presented as follows:
Motor vehicles (electromobiles) 2 years 5% 47.50%
Estimated net Annual depreciation/
Estimated useful lives Machinery and equipment (automatic sorting
residual values amortisation rates 15 years 5% 6.33%equipment imported from abroad)
Buildings 10 to 50 years 5% 9.50%-1.90% Machinery and equipment (excluding automatic
sorting equipment imported from abroad or 2 to 10 years 0%-5% 50.00%-9.50%
Land use rights 20 to 50 years 0% 5.00%-2.00%
warehouse operation equipment)
When an investment property is transferred to owner-occupied property it is reclassified to fixed asset or intangible asset at the date of the Computers and electronic equipment 2 to 5 years 0%-5% 50.00%-19.00%
transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation the fixed asset or intangible asset Office equipment and other equipment 2 to 20 years 0%-5% 50.00%-4.75%
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. Aircraft and engine bodies 10 years 5% 9.50%
High-value aircraft maintenance tools 5 years 5% 19.00%
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. Replacement parts for overhaul of aircraft fuselage 1.5 to 10 years 0% 66.67%-10.00%
An investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic Rotables 10 years 5% 9.50%
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. 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.
(13) Fixed assets
No amortisation is provided for freehold land.(a) Recognition and initial measurement of fixed assets
The estimated useful life or expected usable recurring number and the estimated net residual value of a fixed asset and the depreciation method
Fixed assets comprise buildings (including freehold land) motor vehicles computers and electronic equipment aircraft and aircraft engines applied to the asset are reviewed and adjusted as appropriate at each year-end.rotables and high-value aircraft maintenance tools machinery and equipment office equipment and other equipment.(c) The carrying amounts of fixed assets are reduced to the recoverable amounts when the recoverable amounts are below
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 their carrying amounts (Note 2(19)).measured. Fixed assets purchased or constructed are initially measured at cost at the time of acquisition.(d) Disposal of fixed assets
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 A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds
the other subsequent expenditures are recognised in profit or loss for the period in which they are incurred. 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.(b) Depreciation method for fixed assets
(14) Construction in progress
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 Construction in progress is measured at actual cost. Actual cost comprises construction costs installation costs borrowing costs that are
for impairment loss the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining eligible for capitalisation and other costs necessary to bring the construction in progress ready for their intended use. Construction in progress
useful lives. 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)).
154 155Chapter 10 Financial Statements
(15) Borrowing costs (d) Customer relationships (18) Long-term prepaid expenses (20) Employee benefits
The Group’s borrowing costs that are directly attributable to the Customer relationships refer to intangible assets recognised under Long-term prepaid expenses include settling-in allowance and Employee benefits refer to all forms of consideration or compensation
acquisition and construction of a fixed asset that needs a substantially business combinations involving enterprises not under common introduction fee for pilots the expenditure for improvements to given by the Group in exchange for service rendered by employees or
long period of time for its intended use commence to be capitalised control. Customer relationships are recorded at fair value and right-of-use assets and other expenditures that have been incurred for termination of employment relationship which include short-term
and recorded as part of the cost of the asset when expenditures for amortised on the straight-line basis over the expected beneficial but should be recognised as expenses over more than one year in employee benefits post-employment benefits termination benefits
the asset and borrowing costs have been incurred and the activities period. the current and subsequent periods. Long-term prepaid expenses and other long-term employee benefits.relating to the acquisition and construction that are necessary are amortised on a straight-line basis over the expected beneficial
to prepare the asset for its intended use have commenced. The (e) Patents period (2 to 20 years) and are presented at actual expenditure net (a) Short-term employee benefits
capitalisation of borrowing costs ceases when the asset under of accumulated amortisation.Patents are amortised on the straight-line basis over 5 to 10 years.acquisition or construction becomes ready for its intended use and Short-term employee benefits include employee wages or salaries
the borrowing costs incurred thereafter are recognised in profit (19) Impairment of long-term assets bonus allowances and subsidies staff welfare premiums or
or loss for the current period. Capitalisation of borrowing costs is (f) Periodical review of useful life and amortisation method contributions on medical insurance work injury insurance maternity
suspended during periods in which the acquisition or construction of Fixed assets construction in progress right-of-use assets intangible insurance housing funds labour union funds and employee
For an intangible asset with a finite useful life review of its useful
a fixed asset is interrupted abnormally and the interruption lasts for assets with finite useful lives investment properties measured using education funds. The employee benefit liabilities are recognised
life and amortisation method is performed at each year-end with
more than 3 months until the acquisition or construction is resumed. the cost model and long-term equity investments in subsidiaries in the accounting period in which the service is rendered by the
adjustment made as appropriate.joint ventures and associates are tested for impairment if there is any employees with a corresponding charge to the profit or loss for the
For the specific borrowings obtained for the acquisition or indication that the assets may be impaired at the balance sheet date; current period or the cost of relevant assets. Employee benefits which
construction of an asset qualifying for capitalisation the amount of (g) Impairment of intangible assets intangible assets not ready for their intended use and freehold land are non-monetary benefits are measured at fair value.borrowing costs eligible for capitalisation is determined by deducting are tested at least annually for impairment irrespective of whether
The carrying amounts of intangible assets are reduced to the
any interest income earned from depositing the unused specific there is any indication that it may be impaired. If the result of the
recoverable amounts when the recoverable amounts are below their (b) Post-employment benefits
borrowings in the banks or any investment income arising on the impairment assessment indicates that the recoverable amount of an
carrying amounts (Note 2(19)).temporary investment of those borrowings during the capitalisation asset is less than its carrying amount a provision for impairment The Group classifies post-employment benefit plans into defined
period. (17) Research and development and an asset impairment loss are recognised for the amount by
contribution plans and defined benefit plans. A defined contribution
which the asset’s carrying amount exceeds its recoverable amount. plan is a post-employment benefit plan in which the Group pays fixed
For general borrowings utilised for the acquisition and construction
The expenditure on an internal research and development project is The recoverable amount is the higher of an asset’s fair value less
fees to an independent fund without further payment obligations; a
of an asset qualifying for capitalisation the capitalised amount of
classified into expenditure on the research phase and expenditure costs to sell and the present value of the future cash flows expected
defined benefit plan is a post-employment benefit plan other than a
the general borrowings is determined by the weighted average of the to be derived from the asset. Provision for asset impairment is defined contribution plan. During the reporting period the Group’s on the development phase based on its nature and whether there
excess of accumulated capital expenditure over capital expenditure
is material uncertainty that the research and development activities determined and recognised on the individual basis. If it is not possible
post-employment benefits mainly include endowment insurance and
of the special borrowings multiplied by the weighted average unemployment insurance paid for employees which are defined
can form an intangible asset at end of the project. to estimate the recoverable amount of an individual asset the
effective interest rate of the utilised general borrowings. The effective recoverable amount of a group of assets to which the asset belongs contribution plans. Individual overseas subsidiaries set up and operate
interest rate is the interest rate at which the future cash flows of Expenditure on the research phase is recognised in profit or loss in is determined. A group of assets is the smallest group of assets that defined pension plans which are defined benefit plans and the
the borrowings over the estimated life or a shorter applicable period the period in which it is incurred. Expenditure on the development is able to generate independent cash inflows. amount is not significant.are discounted into the initial recognised amount of the borrowings. phase is capitalised only if all of the following conditions are satisfied:
Goodwill that is separately presented in the financial statements Basic pensions insurance
(16) Intangible assets * it is technically feasible to complete the intangible asset so that is tested at least annually for impairment irrespective of whether
The Group’s employees in the Chinese mainland participate in the
it will be available for use or sales; there is any indication that it may be impaired. In conducting the
Intangible assets include software land use rights trademark rights basic pension plan set up and administered by local authorities of test the carrying amount of goodwill is allocated to the related asset
customer relationships and patents which are measured at cost. * management intends to complete the intangible asset and use Ministry of Human Resource and Social Security. Monthly payments groups or sets of asset groups which are expected to benefit from
or sell it; of premiums on the pensions are calculated according to local
the synergies of the business combination. If the result of the test
(a) Software regulations for pension plan. When employees retire the local labour
* it can be demonstrated how the intangible asset will generate indicates that the recoverable amount of an asset group or a set and social security authority is obliged to pay the basic pensions to
of asset groups including the allocated goodwill is lower than its
Software is measured at actual cost and amortised on the straight- economic benefits; them. The amounts based on the above calculations are recognised
carrying amount the corresponding impairment loss is recognised.line basis over 2 to 10 years. as liabilities in the accounting period in which the service has been
* there are adequate technical financial and other resources to The impairment loss is first deducted from the carrying amount
rendered by the employees with a corresponding charge to the profit
complete the development and the ability to use or sell the of goodwill that is allocated to the asset group or the set of asset
(b) Land use rights or loss for the current period or the cost of relevant assets.intangible asset; and groups and then deducted from the carrying amounts of other assets
Land use rights are amortised on the straight-line basis over their within the asset group or the set of asset groups in proportion to the
* the expenditure attributable to the intangible asset during its
estimated useful lives. carrying amounts of assets other than goodwill.development phase can be reliably measured.Once the above asset impairment loss is recognised it will not be
(c) Trademark rights Other development expenditures that do not meet the conditions reversed for the value recovered in the subsequent periods.above are recognised in profit or loss in the period in which they are
Purchased trademark rights are measured at cost at the time of
incurred. Capitalised development expenditures previously recognised
acquisition. Trademark rights recognised under business combinations
as expenses are not recognised as an asset in a subsequent period.involving enterprises not under common control are recorded at fair
Capitalised expenditure on the development phase is presented
value. Trademark rights are amortised on the straight-line basis over
as capitalised development expenditures in the balance sheet and
5 to 20 years.
transferred to intangible assets at the date when the asset is ready
for its intended use.
156 157Chapter 10 Financial Statements
(c) Termination benefits Deferred tax liabilities are recognised for temporary differences (b) Basis for determining the best estimate of exercisable (24) Government grants
arising from investments in subsidiaries associates and joint ventures equity instruments
The Group provides compensation for terminating the employment except where the Group is able to control the timing of reversal of Government grants refer to the monetary or non-monetary assets
relationship with employees before the end of the employment the temporary differences and it is probable that the temporary At each balance sheet date in the vesting period the Group obtained by the Group from the government including tax return
contracts or as an offer to encourage employees to accept voluntary differences will not be reversed in the foreseeable future. When it would make best estimate in accordance with the newly acquired and financial subsidy.redundancy before the end of the employment contracts. The Group is probable that the temporary differences arising from investments information such as changes in the number of employees entitled
recognises a liability arising from compensation for termination of Government grants are recognised when the grants can be received in subsidiaries associates and joint ventures will be reversed in the to equity instruments and amend the number of exercisable equity
the employment relationship with employees with a corresponding foreseeable future and that the taxable profit will be available in the instruments. On the exercisable date the ultimate estimated number
and the Group can comply with all attached conditions. If a
charge to profit or loss for the current period at the earlier of the of exercisable equity instruments coincides with the actual number. government grant is a monetary asset it will be measured at the future against which the temporary differences can be utilised the
following dates: 1) when the Group cannot unilaterally withdraw an amount received or receivable. If a government grant is a non-corresponding deferred tax assets are recognised.employment termination plan or a curtailment proposal; 2) when the (c) Accounting treatment of implementation of share- monetary asset it will be measured at its fair value. If it is unable
Group recognises costs or expenses for a restructuring that involves Deferred tax assets and deferred tax liabilities are offset when: based payments to obtain its fair value reliably it will be measured at its nominal
the payment of termination benefits. amount.* the deferred tax assets and deferred tax liabilities are related (i) Equity-settled share-based payments
The termination benefits expected to be settled within one year since to the same tax payer within the Group and the same taxation Grants related to assets are government grants whose primary
the balance sheet date are classified as current liabilities. authority; and The equity-settled share-based payments where the Group grants condition is that an entity qualifying for them should purchase
shares or other equity instruments as a consideration in return for construct or otherwise acquire long-term assets. Government grants
(d) Employee incentives * that tax payer within the Group has a legally enforceable right services are measured at the fair value of the equity instruments at related to income refer to the government grants other than those
to offset current tax assets against current tax liabilities. the grant date. Where the share-based payments are not exercisable related to assets.The Group provides incentive plans for on-the-job employees who until the service in the vesting period is completed or specified
comply with certain conditions and makes payments based on the (22) Provisions Government grants related to assets are recorded as deferred performance conditions are met then at each balance sheet date
schedule. Provisions for employee incentives are initially measured income and recognised in profit or loss on a systemic basis over the within the vesting period the service obtained in the current period
Provisions are recognised when the Group has a present obligation
at the best estimate necessary to settle the present obligation and useful lives of the assets. Government grants related to income that shall be included in relevant costs or expenses and in capital reserve
it is probable that an outflow of economic benefits will be required
expensed as incurred. The Group integrates separation rate time compensate the future costs expenses or losses are recorded as at the fair value of the equity instruments at the grant date based on
to settle the obligation and the amount of the obligation can be
value of money and other factors into account at initial measurement. deferred income and recognised in profit or loss or deducted against the best estimates of the quantity of exercisable equity instruments
measured reliably.Where the effect of the time value of money is material the best related costs expenses or losses in reporting the related expenses; made by the Group in accordance with the latest changes in the
estimate is determined by discounting the related future cash government grants related to income that compensate the incurred A provision is initially measured at the best estimate of the number of exercisable employees and subsequent information.outflows. The increase in the discounted amount of the provision costs expenses or losses are recognised in profit or loss or deducted expenditure required to settle the related present obligation. Factors
arising from passage of time is expensed as incurred. The carrying Where the share-based payments cannot be exercised in the end against related costs expenses or losses directly in the current period. surrounding a contingency such as the risks uncertainties and the
amount of provisions for employee incentives is reviewed at each the Group’s costs or expenses shall not be recognised unless that The Group applies the presentation method consistently to the similar time value of money are taken into account as a whole in reaching
balance sheet date and adjusted to reflect the current best estimate. the payments are exercisable under the market conditions or non- government grants in the financial statements.the best estimate of a provision. Where the effect of the time value
exercisable conditions. In this regard whether the market conditions
of money is material the best estimate is determined by discounting Government grants related to daily activities are included in operating
(21) Deferred tax assets and deferred tax or non-exercisable conditions are satisfied or not the payments are the related future cash outflows. The increase in the discounted profit. Government grants not related to daily activities are included
liabilities deemed to be exercisable only when the non-market conditions amount of the provision arising from passage of time is recognised in non-operating income or expenses.among all of the exercisable conditions are satisfied.as interest expense.Deferred tax assets and deferred tax liabilities are calculated and
recognised based on the differences arising between the tax bases (ii) Cash-settled share-based payments (25) Revenue recognitionThe carrying amount of provisions is reviewed at each balance sheet
of assets and liabilities and their carrying amounts (temporary date and adjusted to reflect the current best estimate. The cash-settled share-based payments where the Group calculates The Group recognises revenue at the consideration that the Group
differences). Deferred tax asset is recognised for the deductible
and determines the cash payments or any other asset obligation on is entitled to charge as expected when the Group has fulfilled the
losses that can be carried forward to subsequent years for deduction The provisions expected to be settled within one year since the
the basis of shares or other equity instruments in return for services performance obligations in the contract that is the customer obtains
of the taxable profit in accordance with the tax laws. No deferred balance sheet date are classified as current liabilities.are measured at the fair value of the liabilities calculated based on control over relevant goods or services.tax liability is recognised for a temporary difference arising from the
relevant equity instruments. Where the share-based payments is not
initial recognition of goodwill. No deferred tax asset or deferred tax (23) Share-based payments
exercisable until the service in the vesting period is completed or If one of the following conditions is met the performance obligations
liability is recognised for the temporary differences resulting from the
specified performance conditions are met then at each balance sheet are satisfied over time otherwise at a point in time:
initial recognition of assets or liabilities due to a transaction other (a) Categories of share-based payments
date within the vesting period the service obtained in the current
than a business combination which affects neither accounting profit * the customer simultaneously receives and consumes the benefits
nor taxable profit (or deductible losses). At the balance sheet date A share-based payment is a transaction in which an enterprise
period shall be included in costs or expenses and in liabilities at the provided by the Group’s performance as the Group performs;
deferred tax assets and deferred tax liabilities are measured at the grants equity instruments or assumes liabilities that are determined
fair value of the Group’s liabilities based on the best estimates of
tax rates that are expected to apply to the period when the asset is based on equity instruments in exchange for services rendered by
the quantity of exercisable equity instruments made by the Group. * the Group’s performance creates or enhances an asset that the
employees or another party. Equity instruments include the equity At each balance sheet date and settlement date before relevant customer controls as the asset is created or enhanced; orrealised or the liability is settled.instruments that are linked to the enterprise the parent company of liabilities are settled the fair value of the liabilities is remeasured and
* the Group’s performance does not create an asset with an
Deferred tax assets are only recognised for deductible temporary the enterprise or another accounting entity within the same group. the changes are recognised in profit or loss.alternative use to the Group and the Group has an enforceable
differences deductible losses and tax credits to the extent that it is Share-based payments comprise equity-settled and cash-settled
right to payment for performance completed to date.probable that taxable profit will be available in the future against payments.which the deductible temporary differences deductible losses and
tax credits can be utilised.
158 159Chapter 10 Financial Statements
In respect of a contract obligation that is to be fulfilled within as the costs to obtain a contract. For the costs to obtain a contract (a) The Group as the lessee For eligible rent relief agreed on existing lease contracts the Group
a period the Group should recognise the revenue based on the with the amortisation period within one year the costs are charged applies the practical expedient and records the exemption amount in
progress of the obligation fulfilment within the period except that to profit or loss when incurred. For the costs to obtain a contract At the commencement date the Group shall recognise the right- profit or loss when the agreement is reached to dismiss the original
the progress of the obligation fulfilment fails to be reasonably with the amortisation period beyond one year the costs are charged of-use asset and measure the lease liability at the present value of payment obligation with corresponding adjustment of lease liabilities.determined; in respect of a contract obligation that is to be fulfilled in the profit or loss on the same basis as aforesaid revenue of the lease payments that are not paid at that date. Lease payments
at a point in time the Group should recognise the revenue once the rendering of services recognised under the relevant contract. If the include fixed payments the exercise price of a purchase option if the (b) The Group as the lessor
customer obtains the control over relevant goods/services. carrying amount of the contract costs is higher than the remaining lessee is reasonably certain to exercise that option and payments of
consideration expected to be obtained by rendering of the service penalties for terminating the lease if the lessee exercises an option A finance lease is a lease that transfers substantially all the risks and
In addition the Group judges whether it is acting as a principal or net of the estimated cost to be incurred the Group makes provision to terminate the lease. Variable lease payments in proportion to sales rewards incidental to ownership of an asset. An operating lease is a
an agent based on if it has the control right over goods before the for impairment on the excess portion and recognises it as asset are excluded from lease payments and recognised in profit or loss lease other than a finance lease.transfer of the goods. Provided that the Group has control over impairment losses. As at the balance sheet date based on whether as incurred. Lease liabilities that are due within one year (inclusive)
goods before the transfer of the goods it is acting as a principal as from the balance sheet date are included in the current portion (i) Operating leasesthe amortisation period of the costs to fulfil a contract is more than
and recognises relevant revenue based on consideration received one year when initially recognised the amount of the Group’s costs of non-current liabilities. Where the Group leases out self-owned buildings machinery and
or receivable by applying gross method; otherwise it is acting as to fulfil a contract net of related provision for asset impairment is equipment and motor vehicles under operating leases lease income
an agent and should recognise revenues at the amount of the Right-of-use assets of the Group comprise leased buildings presented as inventories or other non-current assets. For costs to
machinery and equipment motor vehicles etc. Right-of-use assets therefrom is recognised on a straight-line basis over the period of the commission or service fee which the Group expects to be entitled to obtain a contract with amortisation period beyond one year at the
receive which is calculated according to total consideration received are measured initially at cost which comprises the amount of the
lease. Variable rental that is linked to a certain percentage of sales is
initial recognition the amount net of related provision for asset
or receivable net of the amount due to other related parties or fixed initial measurement of lease liabilities any lease payments made at
recognised in lease income as incurred.impairment is presented as other non-current assets.commission amount or rate. or before the commencement date and any initial direct costs less For eligible rent relief agreed on existing lease contracts the Group
any lease incentives received. If there is reasonable certainty that the
(b) Sales of goods applies the practical expedient accounts for the exemptions as
(a) Rendering of logistics and freight forwarding services Group will obtain ownership of the underlying asset by the end of variable lease payments and records the exemption amount in profit
Revenue from sales of goods is recognised when the Group has the lease term the asset is depreciated over its remaining useful life; or loss in the exemption period.The Group’s revenue from logistics and freight forwarding services delivered goods to the agreed delivery location pursuant to the otherwise the asset is depreciated over the shorter of the lease term
includes domestic express service income such as time-definite contract and the customer has confirmed the acceptance of the and its remaining useful life. The carrying amount of the right-of-use Except that the above contract changes to the contract using the
express and economic express; cold transportation and medical goods and the delivery note is signed by both parties. asset is reduced to the recoverable amount when the recoverable simplified approach the Group accounts for it as a new lease from
transportation service income; freight service income; intra-city amount is below the carrying amount (Note 2(19)). the effective date of the modification and considers any lease
on-demand delivery service income; supply chain and international The credit terms granted to customers by the Group are generally payments received in advance and receivable relating to the lease
service income (including international express service international short in line with industry practice and do not have a significant For short-term leases with a term of 12 months or less and leases of before modification as receivables of the new lease.freight transport and forwarding service as well as supply chain financing component. an individual asset (when new) of low value the Group may instead
service). of recognising right-of-use assets and lease liabilities include the (ii) Finance leases
(c) Other services lease payments in the cost of the underlying assets or in profit or loss
The Group recognises revenue based on the progress of the service for the current period on a straight-line basis over the lease term. At the commencement date of the lease term the Group recognises
performed within period which is determined based on proportion The Group’s services also includes communication service the lease payments receivable under a finance lease and derecognises
of costs incurred to date to the estimated total costs or days spent maintenance service research and development and technical services The Group shall account for a lease modification as a separate lease if relevant assets. The finance lease receivables are presented as long-
to the estimated total days. As at the balance sheet date the Group and other services. both: (1) the modification increases the scope of the lease by adding term receivables; finance lease receivables due within one year
re-estimates the progress of the service performed to reflect the the right to use one or more underlying assets; (2) the consideration (inclusive) as from the balance sheet date are included in the current
actual status of contract performance. With regard to certain maintenance service research and for the lease increases by an amount commensurate with the stand- portion of non-current assets.development and technical services the Group recognises revenue alone price for the increase in scope and any appropriate adjustments
When the Group recognises revenue based on the progress of at a point in time when the services are delivered to customers. For to that stand-alone price to reflect the circumstances of the contract. (28) Segment information
the service performed the amount with unconditional right to other services the Group recognises revenue based on the progress
consideration obtained by the Group is recognised as accounts of the service performed within period which is determined based For a lease modification that is not accounted for as a separate The Group identifies operating segments based on the internal
receivable and the rest is recognised as contract assets. Meanwhile on proportion of costs incurred to date to the estimated total costs lease the Group shall redetermine the lease term at the effective organisation structure management requirements and internal
provision for accounts receivable and contract assets is recognised as at the balance sheet date. date of the lease modification and remeasure the lease liability by reporting system and discloses segment information of reportable
on the basis of expected credit losses (Note 2(9)). If the contract discounting the revised lease payments using a revised discount rate segments which is determined on the basis of operating segments.consideration received or receivable exceeds the progress of the (26) Dividend distribution except that the contract changes directly resulting from stipulated
service performed the excess portion will be recognised as contract by the Ministry of Finance for by applying the practical expedient.An operating segment is a component of the Group that satisfies
liabilities. Contract assets and contract liabilities under the same Cash dividends are recognised as liabilities in the period in which the For a lease modification which decreases the scope of the lease or
all of the following conditions: (1) the component is able to earn
revenue and incur expenses from its ordinary activities; (2) whose
contract are presented on a net basis. dividends are approved by the shareholders’ meeting. shortens the lease term the Group decreases the carrying amount
of the right-of-use asset and recognises in profit or loss any gain operating results are regularly reviewed by the Group’s management
Contract costs include costs to fulfil a contract and costs to obtain (27) Leases or loss relating to the partial or full termination of the lease. For to make decisions about resources to be allocated to the segment
a contract. Costs incurred for provision of the aforesaid services are other lease modifications which lead to the remeasurement of lease and to assess its performance; and (3) for which the information on
recognised as costs to fulfil a contract which is carried forward to A contract is or contains a lease if the contract conveys the right to liabilities the Group correspondingly adjusts the carrying amount of financial position operating results and cash flows is available to the
the cost of revenue when revenue recognised based on the progress control the use of an identified asset for a period of time in exchange the right-of-use asset. Group. If two or more operating segments have similar economic
of the service performed. Incremental costs incurred by the Group for consideration. characteristics and satisfy certain conditions they are aggregated
for the acquisition of the aforesaid service contract are recognised into one single operating segment.
160 161Chapter 10 Financial Statements
(29) Critical accounting estimates and (iii) Provision for impairment loss of goodwill (vi) Assessment of the fair value of identifiable net assets in (ii) Determination of the scope of consolidation
judgements acquisition transactions and goodwill recognition
The Group performed impairment assessment of goodwill annually. As stated in Note 2(6) the Group consolidates a subsidiary from the
The Group continually evaluates the critical accounting estimates The recoverable amount of asset groups and sets of asset groups As stated in Note 2(5)(b) identifiable net assets acquired in a business date of obtaining actual control and excludes it out of the scope
and key judgements applied based on historical experience and other is the higher of fair value less costs to sell and the present value combinations involving enterprises not under common control are of consolidation from the date of losing the actual control. Control
factors including expectations of future events that are believed to of the future cash flows expected to be derived from them. These recognised at the fair value at the acquisition date and if the exists when the Group has all three of the following elements: (1)
be reasonable. calculations require use of estimates (Note 4(19)). combination cost exceeds the Group’s interest in the fair value of the investor possesses power over the investee and the degree
the acquiree’s identifiable net assets the difference is recognised of dispersion of equity in other non-controlling interests; (2) has
(iv) Determination of fair value of financial instruments by
(a) Critical accounting estimates and key assumptions as goodwill. exposure to variable returns from its involvement with the investee’s
valuation techniques. related activities; and (3) the ability to use the power over the
(i) Measurement of expected credit losses The assessment of the fair value of identifiable assets and liabilities investee to affect the returns. Where variations in relevant facts and
The fair value of a financial instrument that is not traded in an active involves critical estimates and judgements from management in circumstances cause a change of these factors a reassessment will
For financial assets and contract assets at amortised cost the Group market is determined by valuation techniques. Valuation techniques particular the identification of intangible assets and the evaluation be made.calculates expected credit losses based on exposure at default and primarily refer to direct comparison method and income method of their fair values thereby affecting the recognition of goodwill. As
expected credit loss rates. The Group refers to internal historical including reference to the prices used in recent orderly transactions stated in Note 5(1)(a) in a business combination involving enterprises (30) Significant changes in accounting policies
information such as credit losses and considers the impact of between market participants reference to the current fair value of not under common control in 2022 the Group had acquired
historical credit loss experience according to current situation and other financial instruments that are substantially identical discounted 100% shares of Topocean Consolidation Service (Los Angeles) Inc. The Ministry of Finance released the Circular on Issuing Interpretation
forward-looking information to determine expected credit loss rates. cash flow analysis option pricing models etc. Observable market (“Topocean”). The valuation process afterwards identified intangible No. 15 of Accounting Standards for Business Enterprises (hereinafter
And management takes the customer’s credit status credit history information is applied in valuation techniques to the extent possible. assets (Mainly is customer relationships) and the corresponding “Interpretation No. 15”) in 2021 in 2022 and 2023 released the
operating status as well as collaterals the guarantee ability of the When observable market information is not available management deferred income tax liability of approximately RMB364 million and Circular on Issuing Interpretation No. 16 of Accounting Standards for
guarantor and other information into consideration. The Group will make estimate of significant unobservable information included goodwill of approximately RMB1157 million. The assessment of the Business Enterprises (hereinafter “Interpretation No. 16”) and Q&A
monitors and reviews relevant assumptions about expected credit in the valuation method. Different valuation techniques or inputs may fair value of identifiable net assets on the acquisition date includes on Implementation of Accounting Standards for Business Enterprises.losses regularly. Where there is a difference between the actual lead to significant differences between fair value estimates. the identification of intangible assets the selection of valuation The financial statements for the year ended 31 December 2022 have
bad debts and the original estimate such difference will affect the methods and the forecast of future cash flows which involves critical been prepared by the Group and the Company in accordance with
(v) Uncertain tax position and recognition of deferred tax assets
Group’s provision for bad debts of the above assets in the future estimates and judgements about the key assumptions including the above circulars and Q&A and the above amendments have no
period. The Group pays enterprise income tax in various regions. In normal revenue growth rate gross profit rate and discount rate. Different significant impacts on the financial statements of the Group and
business activities the final tax treatment of some transactions and inputs used in the key assumptions may lead to significant differences the Company.(ii) Risk of impairment on long-term assets other than goodwill
matters is uncertain. When accruing income tax expenses in various between fair value estimates.As described in Note 2(19) freehold land (fixed assets) and intangible regions the Group needs to make significant judgements. If there is
a difference between the final determination of these tax matters and (b) Critical judgements in applying the accounting policiesassets not ready for use are tested annually for impairment. Fixed
assets other than freehold land intangible assets right-of-use assets the amount originally recorded the difference will have an impact (i) Judgement on significant influence of the Group over
construction in progress investment properties and long-term on the income tax expense and the amount of deferred income tax investees
equity investments are tested for impairment whenever events or during the period when the above final determination is made.changes in circumstances indicate that the carrying amount may not The investees over which the Group has significant influence are
Deferred tax assets are recognised for the deductible tax losses
be recoverable. accounted for under the equity method. In judging the significant
and deductible temporary differences that can be carried forward
influence over an investee management considers based on
When assessing whether the above assets are impaired management to subsequent years to the extent that it is probable that taxable one or more of the following circumstances and all facts and
mainly evaluates and analyses: (1) whether events affecting asset profit in the future will be available against which the deductible circumstances: (1) the shareholding in the investee; (2) whether it
impairment occurred; (2) whether the present value of expected cash tax losses and deductible temporary differences can be utilised. appoints representative in the Board of Directors or a similar authority
flows arising from the continuing use or disposal of the asset is lower Whether to recognise the deferred tax assets arising from deductible of the investee; (3) whether it participates in making decisions on
than its carrying amount; and (3) whether the significant assumptions tax losses and deductible temporary differences largely depends on financial and operating policies of the investee; (4) whether it has
used in the calculation of the present value of the estimated cash the judgement of management on: (i) whether the accumulated significant transaction with the investee; (5) whether it assigns
flows are appropriate. deductible tax losses and deductible temporary differences in prior management personnel to the investee; (6) whether it provides key
years are still effective and (ii) whether sufficient taxable income
technical materials to the investee and all facts and circumstances
Relevant assumptions adopted by the Group to determine impairment that can be used to deduct deductible tax losses and deductible
are considered.e.g. changes in assumptions on discount rate and growth rate used temporary differences can be obtained in the future period. Where
to calculate the present value of future cash flows may have material there is a difference between the situation and the original estimate
impact on the present value used in the impairment assessment such difference will affect the Group’s deferred tax assets and income
and cause impairment in the above-mentioned long-term assets of tax expenses in the future period.the Group.
162 163Chapter 10 Financial Statements
3. Taxation The preferential enterprise income tax policies to which the Group Tax Policies for Micro and Small Enterprises and Individual Industrial
is entitled mainly include: and Commercial Households (Cai Shui [2021] No. 12) issued by the
The main categories and rates of taxes applicable to the Group are set out below: Ministry of Finance and the State Taxation Administration during
(a) Pursuant to the Notice on the Policies and Catalogue of Income the period from 1 January 2021 to 31 December 2022 the annual
Tax Preferences for Enterprises in Guangdong Hengqin New Area taxable income of a small low-profit enterprise that is not more than
Category Tax rate Tax base Fujian Pingtan Comprehensive Experimental Zone and Shenzhen RMB1 million shall be subject to one-half reduced enterprise income
Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperative
Enterprise income tax Note (1) Taxable income tax on the basis of the above preferential policies.Zone (Cai Shui [2014] No. 26) and the Notice on Continuing the
Taxable value-added amount (Tax payable is calculated using Policies of Income Tax Preferences for Enterprises in Shenzhen In accordance with the Announcement on Further Implementing
the taxable sales amount/taxable service income multiplied by Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperative the Preferential Income Tax Policies for Micro and Small Enterprises
Value-added tax (“VAT”) Note (2)
the applicable tax rate less deductible VAT input of the current Zone (Cai Shui [2021] No. 30) jointly issued by the Ministry of Finance
(Announcement [2022] No. 13) jointly issued by the Ministry of
and the State Taxation Administration Shenzhen S.F. Supply Chain Finance and the State Taxation Administration during the period
period or taxable turnover amount multiplied by the VAT rate)
Co. Ltd. and other 7 subsidiaries as below are subject to enterprise from 1 January 2022 to 31 December 2024 the annual taxable
City maintenance and construction tax 7% 5% 1% Amount of VAT paid income tax at the preferential rate of 15% from 2014 to 2025. income of a small low-profit enterprise that is more than RMB1
million but less than RMB3 million shall be recognised at 25% of
Educational surcharge 3% Amount of VAT paid (b) Pursuant to the Notice on Tax Policy Issues Concerning Further income and be subject to the enterprise income tax rate of 20%.Implementing the Western China Development Strategy (Cai
Local educational surcharge 2% Amount of VAT paid
Shui [2011] No. 58) and the Notice on Issues Concerning the Therefore the portion of annual taxable income of Ningbo
Customs dutiable value through examination and approval of the Implementation of the Tax Policies for the Development of Western Shuncheng Logistics Co. Ltd. and other 50 subsidiaries as below
Customs duty At applicable tax rate
Customs China by Ganzhou City (Cai Shui [2013] No. 4) jointly issued by the
not exceeding RMB1 million is recognised at 12.5% and they are
Ministry of Finance the General Administration of Customs and the subject to enterprise income tax at the rate of 20%; the portion of
State Taxation Administration and the Announcement on Continuing annual taxable income of the Group’s subsidiaries exceeding RMB1
In addition pursuant to the Interim Measures for the Collection Use and Management of the Civil Aviation Development Fund (Cai Zong the Enterprise Income Tax Policies for the Development of Western million but not exceeding RMB3 million is recognised at 25% and
[2012] No. 17) issued by the Ministry of Finance SF Airlines Company Limited (“SF Airlines”) pays the civil aviation development fund based on China (Announcement [2020] No. 23) jointly issued by the Ministry they are subject to the enterprise income tax rate of 20%.classification of flight routes maximum take-off weight flight mileage and applicable collection standards and includes such payment in cost. of Finance the State Taxation Administration and the National
Development and Reform Commission on 23 April 2020 Xi’an Shunlu (e) As per Article 28 of the Enterprise Income Tax Law of the People’s
The Announcement on the Cancellation of Port Construction Fees and Adjustment to Relevant Policies of the Civil Aviation Development Fund Logistics Co. Ltd. and other 27 subsidiaries as below are subject to Republic of China the high and new technology enterprises eligible
(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 enterprise income tax at the preferential rate of 15% until the end for key support from the State are entitled to a reduced tax rate
aviation development fund payable by airlines has been reduced by 20% in accordance with the Notice of the Ministry of Finance on Adjusting of 31 December 2030. of 15%. Through filing with local taxation bureaus SF Technology
the Relevant Policies of Certain Government Funds (Cai Shui [2019] No. 46) on the basis of a 50% reduction. Co. Ltd. (“SF Technology”) and other 5 subsidiaries as below are
(c) Pursuant to the Announcement on Continuing the Enterprise qualified as high and new technology enterprises and entitled to the
Income Tax Policies for the Development of Western China preferential tax rates for high and new technology enterprises eligible (1) Enterprise income tax
(Announcement [2020] No. 23) jointly issued by the Ministry for key support from the State. The subsidiaries as below are subject
to a tax rate of 15% in the reporting period (2021: 15%).According to the Enterprise Income Tax Law of the People’s Republic of China and the Regulations on the Implementation of Enterprise Income of Finance the State Taxation Administration and the National
Development and Reform Commission on 23 April 2020 Tibet
Tax Law except for some subsidiaries enjoying the preferential tax rates the Company and other subsidiaries established in the Chinese
S.F. Express Co. Ltd. (“Tibet Express”) which is registered in Tibet In addition pursuant to the provisions of the Announcement
mainland are subject to the enterprise income tax rate of 25%.Autonomous Region is subject to enterprise income tax at the on Increasing Support of Pre-tax Deductions for Scientific and
The Group’s overseas subsidiaries recognise their income taxes in accordance with the laws and regulations of the countries or regions where preferential rate of 15% from 1 January 2011 to 31 December
Technological Innovation (announcement of the Ministry of Finance
2030. Pursuant to the Notice of the People’s Government of the the State Taxation Administration and the Ministry of Science and
they operate. Specifically the subsidiaries located in Hong Kong SAR Macao SAR Singapore Japan South Korea USA and Thailand are subject
Tibet Autonomous Region on Issuing the Regulations on Preferential Technology [2022] No. 28) issued by the Ministry of Finance the
to enterprise income tax at the rates of 16.5% 12% 17% 23.2% 25% 21% and 20% respectively in the reporting period.Policies for Investment Promotion of the Tibet Autonomous Region State Taxation Administration and the Ministry of Science and
(Zang Zheng Fa [2021] No. 9) Tibet Express is temporarily exempt Technology during the period from 1 October 2022 to 31 December
Pursuant to the Announcement on Implementation of the Policy of Deduction of Relevant Enterprise Income Tax for Equipment and Appliance
the region’s share of entitlement to enterprise income tax payable. 2022 the newly purchased equipment of the above companies could
(Cai Shui [2018] No. 54) and the Announcement on Extending the Implementation Period of Certain Preferential Tax Policies (Cai Shui [2021]
In other words the region’s share of entitlement to 40% in the be fully deducted in 2022 against taxable profit and the additional
No. 6) issued by the Ministry of Finance and the State Taxation Administration for equipment newly purchased from 1 January 2018 to 31 enterprise income tax payable at the rate of 15% is exempted during deduction of 100% was approved before tax. The pre-tax deduction
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 the above period. ratio of R&D expenses of the above companies is 75% from 1 January
following month after the asset is put into use instead of being deducted annually in its useful life. 2022 to 31 September 2022; the proportion of additional pre-tax
(d) In accordance with Article 2 of the Notice on Implementing deduction will be increased to 100% from 1 October 2022 to 31
the Inclusive Tax Deduction and Exemption Policies for Micro and December 2022.Small Enterprises (Cai Shui [2019] No. 13) jointly issued by the
Ministry of Finance and the State Taxation Administration during (f) Pursuant to the Notice on the Policies of Income Tax Preferences
the period from 1 January 2019 to 31 December 2021 the annual for Enterprises in Hainan Free Trade Port (Cai Shui [2020] No. 31)
taxable income of a small low-profit enterprise that is not more jointly issued by the Ministry of Finance and the State Taxation
than RMB1 million shall be recognised at 25% of income and be Administration Hainan S.F. Express Co. Ltd. and other 3 subsidiaries
subject to the enterprise income tax rate of 20%; In accordance which are registered in Hainan Free Trade Port are subject to
with the Announcement on Implementing the Preferential Income enterprise income tax at the preferential rate of 15% from 1 January
2020 to 31 December 2024.
164 165Chapter 10 Financial Statements
(2) VAT (2) Financial assets held for trading
According to different businesses VAT rates applicable to those subsidiaries located in the Chinese mainland of the Group include: 31 December 2022 31 December 2021
Business type Applicable VAT rates Structured deposits 7351158 9730665
Sales of goods and leasing of tangible movable assets 13% Fund investments 34221 653828
Transportation service (i) Property leases 9% 7385379 10384493
Logistics supporting service (i)(ii) Research and development and
6%
technical service Information technology service (3) Accounts receivable
31 December 2022 31 December 2021
(i) Pursuant to the Announcement on Policies for Deepening the Value-Added Tax Reform (Cai Shui [2019] No. 39) the Announcement on
Clarifying the Additional Value-Added Tax Credit Policy for the Life Service Industry (Cai Shui [2019] No. 87) and the Announcement on the Accounts receivable 27120677 31476627
Value-Added Tax Policies for Promoting the Poverty-relief Development of Service Industries (Cai Shui [2022] No. 11) the enterprises in taxpayers
of productive and consumer service industry qualify for additional 10% or 15% deduction of input VAT from output VAT from 1 April 2019 Less: Provision for bad debts (1560244) (1034869)
to 31 December 2022 respectively. 25560433 30441758
(ii) Pursuant to the Announcement on the Exemption of Value-Added Tax of Express Delivery Service revenue from express delivery service of
essential living materials for residents shall be exempted from VAT from 1 May 2022 to 31 December 2022. 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:
4. Notes to the consolidated financial statements
31 December 2022 31 December 2021
(1) Cash at bank and on hand
Within 1 year (inclusive) 26162778 31027603
31 December 2022 31 December 2021 1 to 2 years (inclusive) 653524 236070
Cash on hand 18437 48513 Over 2 years 304375 212954
Cash at bank (c) 16629310 16067702 27120677 31476627
Balances with central bank from Group Finance Company 848392 548204
(b) As at 31 December 2022 the five largest accounts receivable aggregated by debtor were summarised and analysed as follows:
Including: – statutory reserve (a) 837242 540300
31 December 2022
– excess reserve (b) 11150 7904
Book balance Provision for bad debts % of total balance
Balances with other banks from Group Finance Company 23378727 18569253
Sum of the five largest accounts receivable 2281021 (3937) 8.41%
Other cash balances (c) 165126 76182
Interest receivable 22758 5197
(c) Provision for bad debts
4106275035315051
For accounts receivable the Group recognises the lifetime expected credit loss provision.Including: Overseas deposits 9471675 9330693
As at 31 December 2022 accounts receivable for which the related provision for bad debts was provided on the individual basis were analysed
(a) On 18 September 2016 the Group incorporated S.F. Holding Group Finance Co. Ltd. (“Group Finance Company”). Statutory reserve of as follows:
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 Lifetime expected Provision for Book balance Reason
Group in its daily operations which are restricted cash. credit loss rate bad debts
(b) Excess reserve of Group Finance Company deposited with the central bank represents the excess over the required statutory reserve deposited Receivables from related parties – – –
by financial institutions in the central bank and it is bank deposit that can be readily drawn on demand. The debtor encountered Receivables from non-related parties 719588 100.00% (719588)
financial distress etc.(c) As at 31 December 2022 the bank deposits of RMB11086000 (31 December 2021: RMB9600000) were deposits in commercial banks 719588 (719588)
to guarantee general bank credit (Note 4(23)(c)). Other cash balances of RMB1832000 (31 December 2021: RMB1832000) is the security
deposit for the Group to apply for a letter of guarantee from the bank; RMB24759000 (31 December 2021: RMB25194000) is the security
deposit received by the Group from a third party. According to the contract the security deposit needs to be returned after the cooperation
is completed. These funds are all restricted funds.
166 167Chapter 10 Financial Statements
As at 31 December 2021 accounts receivable for which the related provision for bad debts was provided on the individual basis were analysed (b) As at 31 December 2022 the five largest advances to suppliers aggregated by debtor were summarised and analysed as follows:
as follows:
31 December 2022
Lifetime expected Provision for
Book balance Reason Amount % of total balance
credit loss rate bad debts
Sum of the five largest advances to suppliers 798742 23.05%
Receivables from related parties – – –
The debtor encountered
Receivables from non-related parties 559591 100.00% (559591)
financial distress etc. (5) Other receivables
559591(559591)
31 December 2022 31 December 2021
As at 31 December 2022 accounts receivable for which the related provision for bad debts was provided on the grouping basis were analysed Receivables from related parties (Note 8(4)(d)) 521494 492057
as follows:
Guarantees and deposits 1532034 1413769
Lifetime expected
Book balance Provision for bad debts Cash to collect on behalf of customers 330427 689476
credit loss rate
Tax paid on behalf of others 208441 154965
Related party grouping 237028 – –
Employee borrowings and advances 106828 95564
Non-related party grouping 26164061 3.21% (840656)
Receivables from airlines subsidies and financial rebates 99389 105652
26401089(840656)
Receivables from equity transfer 77455 344662
As at 31 December 2021 accounts receivable for which the related provision for bad debts was provided on the grouping basis were analysed Prepaid social insurance premium 33519 23515
as follows:
Entrusted loan principal receivables 27000 27000
Lifetime expected Others 643773 999967
Book balance Provision for bad debts
credit loss rate
35803604346627
Related party grouping 278423 – – Less: Provision for bad debts (239123) (108109)
Non-related party grouping 30638613 1.55% (475278) 3341237 4238518
30917036(475278)
(a) The ageing of other receivables based on the point of occurrence is analysed as follows:
(d) In 2022 the Group’s provision for bad debts amounted to RMB760520000 (2021: RMB605865000) and the Group’s provision for bad
debts reversed amounted to RMB90559000 (2021: Nil) (Note 4(22)). 31 December 2022 31 December 2021
(e) In 2022 the provision for bad debts of accounts receivable that were written off amounted to RMB169984000 and no accounts receivable Within 1 year (inclusive) 2572195 3638859
with amounts that were individually significant were written off (Note 4(22)). 1 to 2 years (inclusive) 385523 297337
(4) Advances to suppliers Over 2 years 622642 410431
35803604346627
(a) The ageing of advances to suppliers is analysed below:
As at 31 December 2022 other receivables with ageing over 1 year mainly represented deposits and guarantees entrusted loans receivable
31 December 2022 31 December 2021
Ageing and receivables from equity transfer.Amount % of total balance Amount % of total balance
Within 1 year (inclusive) 3339817 96.39% 2826165 96.25%
1 to 2 years (inclusive) 94873 2.74% 73490 2.50%
Over 2 years 30221 0.87% 36591 1.25%
3464911100.00%2936246100.00%
As at 31 December 2022 advances to suppliers with ageing over one year were mainly prepaid materials transportation expenses etc. That
is because relevant business transactions were still being performed.
168 169Chapter 10 Financial Statements
(b) Provision for bad debts and changes in balance statements (iv) 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:
(i) 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 statement of changes in provisions for bad debts is as follows: Lifetime expected Provision for
Book balance Reason
credit losses bad debts
Stage 1 Stage 3 Total
Expected credit losses in Provided on the individual basis:
Lifetime expected credit Total
the following 12 months The debtor encountered
losses (credit impaired) Receivables from equity transfer 77455 100.00% (77455)
(grouping) financial distress
31 December 2021 14454 93655 108109 The debtor encountered
Guarantees and deposits 49425 76.76% (37937)
financial distress
Provision in the current year 5481 152554 158035
The debtor encountered
Write-off in the current year – (18814) (18814) Entrusted loans receivable 27000 60.00% (16200)
financial distress
Transfer to Stage 3 (730) 730 –
The debtor encountered
Others 96533 100.00% (96533)
Disposal and other reductions (8207) – (8207) financial distress
31 December 2022 10998 228125 239123 250413 (228125)
The book balance of other receivables transferred to Stage 3 is RMB145958000. (2021: Nil) As at 31 December 2021 other receivables at Stage 3 for which the related provision for bad debts was provided on the individual basis were
analysed as follows:
As at 31 December 2022 and 31 December 2021 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. Lifetime expected Provision for
Book balance Reason
credit losses bad debts
(ii) As at 31 December 2022 other receivables at Stage 1 for which the related provision for bad debts was provided on the grouping basis
were analysed as follows: Provided on the individual basis:
The debtor encountered
Expected credit loss Entrusted loans receivable 27000 60.00% (16200)
Provision for financial distress
Book balance rate in the following Reason
bad debts
12 months The debtor encountered
Receivables from equity transfer 77455 100.00% (77455)
financial distress
Provided on the grouping basis:
104455(93655)
Related party grouping 521494 – –
Expected credit loss
Non-related party grouping 2808453 0.39% (10998) method As at 31 December 2022 and 31 December 2021 the Group did not have any other receivables at Stage 3 for which the related provision for
3329947 (10998) bad debts was provided on the grouping basis.
(c) In 2022 the Group’s provision for bad debts amounted to RMB158035000 (2021: RMB7472000) and no provision for bad debts was
(iii) As at 31 December 2021 other receivables at Stage 1 for which the related provision for bad debts was provided on the grouping basis reversed (2021: RMB15000000) (Note 4(22)).were analysed as follows:
(d) In 2022 the provision for bad debts of other receivables that were written off amounted to RMB18814000 (2021: RMB12154000) (Note
Expected credit loss 4(22)) and no other receivables with amounts that were individually significant were written off (2021: Nil).Provision for
Book balance rate in the following Reason
bad debts
12 months
Provided on the grouping basis:
Related party grouping 492057 – –
Expected credit loss
Non-related party grouping 3750115 0.39% (14454) method
4242172(14454)
As at 31 December 2022 and 31 December 2021 the Group did not have any other receivables at Stage 2.
170 171Chapter 10 Financial Statements
(e) As at 31 December 2022 the five largest other receivables aggregated by debtor were summarised and analysed as follows: (7) Contract assets
31 December 2022 31 December 2022 31 December 2021
Nature of business Ageing Provision for % of total
Book balance Contract assets 1526396 1041152
bad debts balance
Less: Provision for impairment loss (3400) (2905)Shenzhen Hive Box Technology Co. Ltd. (“Hive BoxAgency collection and payment Within 1 year 405621 – 11.33%Technology”) and its subsidiaries 1522996 1038247
Goodear Development Co. Ltd. Guarantees and deposits 1 to 3 years 51607 – 1.44%
For contract assets the Group recognises the lifetime expected credit loss provision regardless of whether there exists a significant financing
Wuhan TianHe International Airport Airline subsidies and financial rebates Within 1 year 45041 – 1.26% component. As at 31 December 2022 and 31 December 2021 the Group’s contract assets are not overdue. After evaluation the Group believes
that there is no need to make individual provision for impairment.Within 1 year、
Hangzhou International Airport Airline subsidies and financial rebates 41412 – 1.16%
1 to 3 years
(8) Other current assets
Suzhou Lake District Development Co. Ltd. Guarantees and deposits 2 to 3 years 40000 – 1.12%
31 December 2022 31 December 2021
583681–16.31%
Input VAT to be offset 4840499 7299204
(6) Inventories Prepaid enterprise income tax 768131 236852
Inventories are summarised by category as follows: Others 4298 3557
56129287539613
31 December 2022
Provision for decline in
the value of inventories (9) Long-term receivables and current portion of non-current assets
Book balance Carrying amount
and impairment of
contract liabilities 31 December 2022 31 December 2021
Finished goods 706779 (2425) 704354 Finance lease receivables (a) 692204 726349
Raw materials in stock 608201 (1114) 607087 Deposits for house purchase 277904 277904
Aviation consumables 353119 – 353119 Employees loans 112662 237255
Turnover materials 227620 – 227620 Others 8860 8328
Costs to fulfil a contract 56174 – 56174 Less: Provision for bad debts (19613) (21984)
1951893 (3539) 1948354 Current portion of long-term receivables (440739) (351489)
631278876363
31 December 2021
Provision for decline in (a) Finance lease receivables
the value of inventories
Book balance Carrying amount
and impairment of costs 31 December 2022 31 December 2021
to fulfil a contract
Finance lease receivables 755431 811886
Raw materials in stock 588354 (1108) 587246
Less: Unrealised finance gains (63227) (85537)
Finished goods 497617 (6777) 490840
Amortised cost of finance lease receivables 692204 726349
Aviation consumables 268985 – 268985
Less: Provision for bad debts (18980) (20686)
Turnover materials 166153 – 166153
Current portion of finance lease receivables (376512) (249416)
Costs to fulfil a contract 33597 – 33597
296712456247
1554706(7885)1546821
172 173Chapter 10 Financial Statements
After the balance sheet date the Group’s minimum lease proceeds at undiscounted contractual cash flows (including interest calculated at the (b) Associates
contract rate (or the prevailing rate at the balance sheet date in the case of a floating rate)) are analysed as below:
Movements in the current year
31 December 2022 31 December 2021 Balance of
Carrying Exchange Carrying amount
provision for
Within 1 year (inclusive) 437214 311050 amount as at Share of net differences on Increase/ Share of other Cash dividends/ Net increase in as at
31 December profit/(loss) Other changes translation of
impairment loss
(Decrease) in comprehensive profits provision for 31 December 1 to 2 years (inclusive) 244134 288158
2021 under the equity in equity (i) foreign currency
at the end of
investments income distributed impairment loss 2022 the year
2 to 3 years (inclusive) 65863 177484 method financial
statements
Over 3 years 8220 35194
SF Real Estate Investment Trust
7554318118861151506–15679(18103)–(74673)–1092581183667–
(“SF REITs”)
(10) Long-term equity investments Chiwan Container Terminal Co. Ltd. 919872 – 73797 – – (82832) – 53481 964318 –
Giao Hang Tiet Kiem Joint Stock
335895–53830––––18885408610–
Joint ventures Associates Total Company
31 December 2021 2593932 4666155 7260087 Amass Freight International Co. Ltd. 239532 – 29882 – – (5888) – – 263526 –
Increase/(Decrease) in investments 1088841 (545494) 543347 PT. Puninar Saranaraya 255281 – (1789) – – – – (19879) 233613 –
Investment (loss)/income recognised under the Zhejiang Galaxis Technology Group
(41579)491287549188420–(271)–22817–––210966–
equity method Co. Ltd. (“Galaxis Technology”)
Other comprehensive income and changes in Others 1575649 (545494) (122000) (1489) 95981 (5313) (65673) 13263 944924 (243545)
4909920699696
equity recognised under the equity method
4666155(545494)49128(19592)118798(168706)(65673)1750084209624(243545)
Cash dividends/profits distributed (254) (168706) (168960)
Net increase in provision for impairment loss (4472) (65673) (70145) (i) Those represent changes in equity resulting from capital injections by investors other than the Group.Effect of translation of foreign currency financial
11418 175008 186426 (11) Investments in other equity instruments
statements
31 December 2022 3648376 4209624 7858000 31 December 2022 31 December 2021
Including: Balance of provision for impairment Equity of listed companies 158936 241936
4472243545248017
loss at the end of the period
Equity of unlisted companies 7206748 6568835
73656846810771
(a) Joint ventures
Movements in the current year 31 December 2022 31 December 2021
Exchange Balance of Equity of listed companies:
31 December Share of net differences on
provision for
Increase/ Cash dividends/ Net increase in 31 December – Costs 187763 272354
2021 profit/(loss) Other changes translation of
impairment loss
(Decrease) in profits provision for 2022
under the equity in equity (i) foreign currency at the end of – Accumulated changes in fair value (28827) (30418)
investments distributed impairment loss
method financial the year
158936241936
statements
Equity of unlisted companies:
Hubei International Logistics Airport Co. Ltd. 1356612 920000 (48665) – – – – 2227947 –
– Costs 3885789 3502503
Gem-shunxin Industrial Technology Co. Ltd. 500443 – (3259) 13 – – – 497197 –
– Accumulated changes in fair value 3320959 3066332
Jinfeng Borun (Xiamen) Equity Investment
14317415000023855––––317029–72067486568835
Partnership (Limited Partnership)
ZBHA Group Co. Ltd. (Limited Partnership) 238020 – (1810) – – – – 236210 – Including: the changes in cost and accumulated fair value of RMB306739000 and RMB277209000 respectively in the current year were due
CC SF China Logistics Properties Investment to differences in translation of foreign currency statements.
935686582(1352)–––9308108106–
Fund L.P.Others 262115 12259 (10348) 477 (254) (4472) 2110 261887 (4472)
25939321088841(41579)490(254)(4472)114183648376(4472)
174 175Chapter 10 Financial Statements
(12) Other non-current financial assets (14) Fixed assets
31 December 2022 31 December 2021 Aircraft aircraft
Computers Office equipment
engines rotables Machinery and
Financial assets held for trading (over 1 year): Buildings Motor vehicles and electronic and other Totaland high-value equipment
equipment equipment
Industry fund investments 770637 552130 maintenance tools
Special Scheme equity-class securities 116286 235821 Cost:
Others 125286 90072 31 December 2021 15086397 7011193 4918214 11194035 8908878 10217775 57336492
Transfer from construction in progress
101220987802332786821625312538207954417468928162377950146
(Note 4(15))
Transfer from investment properties in the
(13) Investment properties 1668838 – – – – – 1668838current year (Note 4(13))
Buildings Land use rights Total Addition in the current year 1127848 1050894 805552 140452 482359 397571 4004676
Business combinations involving enterprises not
Cost: 11082 2230 8200 – 6134 8764 36410under common control increased
31 December 2021 3893230 1126698 5019928 Transfer to investment properties in the current
(522488)–––––(522488)
Reclassification with other long-term assets in the current year year (Note 4(13))
(120371)22491(97880)
(Note 4(14) Note 4(15) Note 4(17)) Decrease due to disposal of subsidiaries in the
(279448)(172)(339)–(883)(2561)(283403)
current year
Addition in the current year 318174 31256 349430
Other decreases in the current year (13) (797371) (638286) (70253) (245140) (529045) (2280108)
Decrease due to disposal of subsidiaries in the current year (189906) (29129) (219035)
Effect of translation of foreign currency financial
Effect of translation of foreign currency financial statements 25154 10876 36030 366757 77786 39939 – 152266 56137 692885statements
31 December 2022 3926281 1162192 5088473 31 December 2022 20737655 7360813 5145818 13343778 11050506 10964878 68603448
Accumulated depreciation: Accumulated depreciation:
31 December 2021 113386 56309 169695 31 December 2021 1627826 4434592 3285335 4439275 2412679 4210795 20410502
Transfer from investment properties in the
Reclassification with other long-term assets in the current year 58541 – – – – – 58541
(34242) (7538) (41780) current year (Note 4(13))
(Note 4(14) Note 4(15) Note 4(17))
Provision in the current year 505898 1074432 705541 1170795 850448 1637702 5944816
Provision in the current year 64919 27649 92568
Business combinations involving enterprises not
–6634895–6067752519150
Decrease due to disposal of subsidiaries in the current year (7083) (2944) (10027) under common control increased
Effect of translation of foreign currency financial statements 1523 1128 2651 Transfer to investment properties in the current
(24299)–––––(24299)
year (Note 4(13))
31 December 2022 138503 74604 213107
Decrease due to disposal of subsidiaries in the
Carrying amount: (14313) (146) (157) – (196) (916) (15728)current year
31 December 2022 3787778 1087588 4875366 Other decreases in the current year (13) (708837) (428779) (33028) (141927) (411367) (1723951)
31 December 2021 3779844 1070389 4850233 Effect of translation of foreign currency financial
548184327428836–8340736311246646
statements
(i) As at 31 December 2022 the Group was still in the process of applying for certificates of ownership for certain buildings and land use 31 December 2022 2208458 4843978 3595671 5577042 3210478 5480050 24915677
rights with carrying amount of RMB815717000 (cost of RMB833551000) (31 December 2021: carrying amount of RMB2129546000 (cost
Provision for impairment loss:
of RMB2158274000)).
31 December 2021 – – – – – – –
(ii) As at 31 December 2022 investment properties with carrying amount of RMB104571000 (31 December 2021: RMB224440000) were Increase in the current year – – – – 1633 28734 30367
pledged as collateral for long-term borrowings (Note 4(31)(c)).
31 December 2022 – – – – 1633 28734 30367
(iii) As at 31 December 2022 and 31 December 2021 the Group assessed that no impairment loss should be provided for investment properties. Carrying amount:
31 December 2022 18529197 2516835 1550147 7766736 7838395 5456094 43657404
31 December 2021 13458571 2576601 1632879 6754760 6496199 6006980 36925990
(i) As at 31 December 2022 carrying amount of the freehold land with no depreciation required which was included in the buildings disclosed
above was RMB1438410000 (31 December 2021: RMB932242000).
176 177Chapter 10 Financial Statements
(ii) As at 30 August 2022 the Group exercised the right of first refusal to purchase the asset-backed special plan of Huatai Jiayue-SF Industrial
Park Phase I No. 2 to acquire Shenzhen Jiafeng Industrial Park Management Co. Ltd. (“Shenzhen Jiafeng”) Shenzhen Shunjie Industrial Park 2021
Management Co. Ltd. (“Shenzhen Shunjie”) and Shenzhen Runheng Industrial Park Management Co. Ltd. (“Shenzhen Runheng”) 100% Reason for Accumulated Provision for
Cost Carrying amount
equity (“the subject of exercise”). The exercise price is about RMB1456130000 in total for the appraisal value of the property assets of the disposal depreciation impairment loss
logistics industrial park under the special plan. After deducting the assumed liabilities the total value is approximately RMB391000000. The
total transfer price of the equity in this transaction is approximately RMB1065130000. The transaction was completed on 2 September 2022 Aircraft rotables Scrapped 2665 (1166) – 1499
(the “Purchase Date”). Aircraft rotables Sold 102 (7) – 95
The acquisition meets the concentration test and is treated in accordance with the principle of asset purchase. The fixed assets (buildings) and High-value maintenance tools Scrapped 52 (35) – 17
intangible assets (land use rights) purchased are recognised on the purchase date at total fair value of RMB1456130000.
2819(1208)–1611
(iii) In 2022 the aggregate amount of depreciation expenses charged to cost of revenue selling and distribution expenses general and
administrative expenses and research and development expenses was RMB5859984000 (2021: RMB4588519000). (15) Construction in progress
(iv) As at 31 December 2022 fixed assets with carrying amount of RMB486847000 (31 December 2021: RMB1688091000) were pledged
31 December 2022 31 December 2021
as collateral for short-term and long-term borrowings (Note 4(23)(b) and Note 4(31)(c)).Industrial Park Projects 7055896 5004254
(v) Fixed assets with pending certificates of ownership
Project of Distribution Hubs 2082661 1472333
31 December 2022 Aircraft import and refit 1106470 1051191
Accumulated Provision for
Cost Carrying amount Qianhai S.F. Headquarters Office 158959 484092
depreciation impairment loss
Others 745874 559333
Buildings 4147265 (93939) – 4053326
111498608571203
31 December 2021 Including: Balance of provision for impairment loss at the end of the period 1145 –
Accumulated Provision for
Cost Carrying amount
depreciation impairment loss
Buildings 1882361 (59224) – 1823137
In addition as at 31 December 2022 buildings with carrying amount of RMB19562000 and cost of RMB29844000 (31 December 2021:
carrying amount of RMB20968000 and cost of RMB29844000) represented public rental houses with restricted property rights purchased
by the Group for enterprise talents.(vi) Disposal of aircraft engines rotables and high-value aircraft maintenance tools
2022
Reason for Accumulated Provision for
Cost Carrying amount
disposal depreciation impairment loss
Aircraft rotables Scrapped 18191 (3835) – 14356
Aircraft rotables Sold 205 (54) – 151
High-value maintenance tools Scrapped 257 (244) – 13
18653(4133)–14520
178 179Chapter 10 Financial Statements
(16) Right-of-use assets
Machinery and
Buildings Motor vehicles equipment Total
and others
Cost:
31 December 2021 22836379 989612 45494 23871485
Increase in the current year 5989953 119666 16990 6126609
Decrease in the current year (1912153) (477048) (6846) (2396047)
Effect of translation of foreign currency financial statements 154020 39414 7479 200913
31 December 2022 27068199 671644 63117 27802960
Accumulated depreciation:
31 December 2021 6189945 367573 16882 6574400
Provision in the current year 6995888 165813 12709 7174410
Decrease in the current year (1140287) (294489) (6379) (1441155)
Effect of translation of foreign currency financial statements 48083 16485 962 65530
31 December 2022 12093629 255382 24174 12373185
Carrying amount:
31 December 2022 14974570 416262 38943 15429775
31 December 2021 16646434 622039 28612 17297085
As at 31 December 2022 and 31 December 2021 the Group considered that no impairment loss should be recognised for right-of-use assets.
180181
Including:
Transfer to other Provision for Accumulative
Other decreases % of project Borrowing costs
31 December Increase in the long-term assets impairment loss 31 December Progress of amount of Capitalisation
Name of projects Budget in the current investment in capitalised in Source of funds
2021 current year in the current in the current 2022 project capitalised rate
year budget (ii) the current year
year (iv) year borrowing costs
(Note 4(47))
Self-owned funds and loans
Industrial Park Projects 20888446 5004254 5694321 (3642679) – – 7055896 72.08% 72.08% 118507 118507 2.23%
from financial institutions
Project of Distribution Hubs 15337579 1472333 3724682 (3112841) – (1513) 2082661 84.35% 84.35% – – – Self-owned funds
Aircraft import and refit 3056379 1051191 2155328 (2100049) – – 1106470 70.52% 70.52% – – – Self-owned funds
Self-owned funds and loans
Qianhai S.F. Headquarters Office 1072639 484092 148440 (473573) – – 158959 97.07% 97.07% 91777 7078 2.52%
from financial institutions
Others 559333 687063 (455108) (1145) (44269) 745874 – – – Self-owned funds
857120312409834(9784250)(1145)(45782)11149860210284125585
(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 RMB9784250000 including RMB7950146000 transferred to fixed assets RMB1025979000 transferred to investment properties
and RMB808125000 transferred to long-term prepaid expenses.Chapter 10 Financial Statements
(17) Intangible assets (a) In 2022 the aggregate amount of amortisation expenses charged to cost of revenue selling and distribution expenses general and
administrative expenses and research and development expenses was RMB2 086019000 (2021: RMB1487797000).Purchased Self-developed Trademark Customer
Land use rights Others Total
software software rights relationships (b) As at 31 December 2022 intangible assets with carrying amount of RMB247556000 (31 December 2021: RMB232730000) were pledged
as collateral for short-term and long-term borrowings (Note 4(23)(b) and Note 4(31)(c)).Cost:
31 December 2021 7054173 636746 5220062 4461848 4976772 302094 22651695 (c) As at 31 December 2022 the Group was still in the process of applying for certificates of ownership for land use rights with carrying
amount of RMB51120000 (cost of RMB61250000) (31 December 2021: carrying amount of RMB227698000 and cost of RMB239669000).Transfer from other long-term
assets in the current year 313241 – 1256904 – – – 1570145 (d) As at 31 December 2022 the intangible assets developed by the Group accounted for 13.84% (31 December 2021: 15.12%) of the
(Note 4(13) Note 4(18)) carrying amount of intangible assets.Business combinations involving
enterprises not under common – 219 – – 422854 23414 446487 (18) Capitalised development expenditures
control increased
Addition in the current year 396913 329427 – 934 – 5607 732881 Transfer to
Increase in the intangible assets Other decreases in
Transfer to other long-term 31 December 2021 31 December 2022
current year in the current year the current year
assets in the current year (335732) – – – – – (335732)
(Note 4(17))
(Note 4(13))
Decrease due to disposal of System development 343236 1266410 (1256904) (40985) 311757
(66211)–––––(66211)
subsidiaries in the current year
Other disposal in the current As at 31 December 2022 and 31 December 2021 the Group assessed that no impairment loss should be recognised for capitalised development
–(113857)(164717)(224)–(3494)(282292)
year expenditures.Effect of translation of foreign
81421 17557 – 424792 455441 9534 988745 (19) Goodwill
currency financial statements
31 December 2022 7443805 870092 6312249 4887350 5855067 337155 25705718 Effect of translation
Increase in the
Accumulated amortisation: 31 December 2021 of foreign currency 31 December 2022
current year(a)
31 December 2021 500533 479399 2394508 310396 447031 141454 4273321 financial statements
Transfer from other long-term
Cost:
assets in the current year 25404 – – – – – 25404
(Note 4(13)) Kerry Logistics business (b) 4071759 1193154 443537 5708450
Provision in the current year 188008 183769 1288469 235963 307767 31139 2235115 SF Supply Chain Business 2768759 – 264921 3033680
Transfer to other long-term SF/HAVI China Logistics (Cayman Islands) 330462 – 31655 362117
assets in the current year (17866) – – – – – (17866)
(Note 4(13)) Guangdong Shunxin Freight Co. Ltd. 149587 – – 149587
Decrease due to disposal of Others 53698 39125 1522 94345
(6693)–––––(6693)
subsidiaries in the current year
737426512322797416359348179
Other disposal in the current
–(52664)(89043)(22)–(487)(142216)
year Less: Provision for impairment loss
Effect of translation of foreign Others (2435) – – (2435)
48469934–3802838640591697364
currency financial statements 7371830 1232279 741635 9345744
31 December 2022 694232 620438 3593934 584365 793438 178022 6464429
Provision for impairment loss: (a) Goodwill increased in the current year arose from acquisition of the equity interests in Topocean (Note 5(1)(a)).
31 December 2021 – – 54186 – – – 54186
(b) All the goodwill has been allocated by the Group to the relevant asset groups or sets of asset groups at the acquisition date.Increase in the current year – – 21476 4 – 6 21486
Decrease in the current year – – (11067) – – – (11067) As stated in Note 5(1)(a) The group has a business combinations involving enterprises not under common control acquisition of Topocean
and Pro-Med Technology Limited (“Pro-Med”) in 2022. After the completion of the acquisition Topocean’s and Pro-Med business has been
31 December 2022 – – 64595 4 – 6 64605
gradually integrated with the Kerry Logistics. Therefore the Group has merged the Kerry Logistics business and Topocean and Pro-Med’s
Carrying amount: business into one asset group (“Kerry Logistics Business”) And conduct impairment tests.
31 December 2022 6749573 249654 2653720 4302981 5061629 159127 19176684
31 December 2021 6553640 157347 2771368 4151452 4529741 160640 18324188
182 183Chapter 10 Financial Statements
(c) During the goodwill impairment assessment the Group compares the carrying amount of the relevant assets or sets of asset groups (including (22) Asset/Credit impairment and provision for losses
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. Increase in the current year Decrease in the current year
SF supply chain business and Kerry logistics business the recoverable amounts of relevant sets of asset groups are calculated based on the Business Exchange
eight-year and five-year forecast approved by management respectively. together with a long-term growth rate in the remaining forecast combinations differences on 31 December 31 December
period determined by the present value of the future cash flows. involving Disposal and translation of foreign 2021 Provision Reversal Write-off 2022
enterprises not other reductions currency financial
The Group determines revenue growth rate and profit margin based on historical experience and forecast of market development. The under common statements
perpetual annual growth rate used in the cash flow forecast after the period is used as the revenue growth rate in the stable period; The control
Group comprehensively assessments and determines the sustainable annual growth rate based on the long-term inflation rate of mainland
China Hong Kong Thailand and Southeast Asia the United States etc. The Group uses a pre-tax interest rate that reflects the specific risks Provision for bad debts 1164962 10272 918555 (92931) (188798) (8207) 15127 1818980
of the underlying asset group and asset group portfolio as the discount rate. Including: P rovision for bad debts of accounts
103486910272760520(90559)(169984)–151261560244
receivable (Note 4(3))
The major assumptions applied in cash flows projections are presented as follows:
Provision for bad debts of other
108109–158035–(18814)(8207)–239123
31 December 2022 31 December 2021 receivables (Note 4(5))
Revenue growth rates in the first six-year forecast period -16.50%~17.00% -1.90%~14.20% Provision for bad debts of long-term 21984 – – (2372) – – 1 19613
receivables (Note 4(9))
Long-term growth rate 2.00%~3.00% 3.00%
Provision for bad debts of factoring receivables 123815 – – – – – – 123815
Earnings before interest and tax -0.47%~7.16% 2.00% ~ 6.22%
Provision for bad debts of loans and advances 65748 – 847 (5371) (31018) – 6245 36451
Pre-tax discount rate 11.71%~14.10% 14.10%
Sub-total 1354525 10272 919402 (98302) (219816) (8207) 21372 1979246
(i) As at 31 December 2021 the Group’s assessment of the recoverable amount of the asset group portfolio related to Kerry Logistics business is Provision for impairment of long-term equity
determined by reference to the market price of Kerry Logistics shares held by the Group on the Hong Kong Stock Exchange.the main assumption 177872 – 72474 – – (2329) – 248017investments (Note 4(10))
of the future cash flow discount method for 2021 is only applicable to SF supply chain business.Provision for impairment of fixed assets (Note 4(14)) – – 30367 – – – – 30367
(20) Long-term prepaid expenses Provision for impairment of intangible assets
54186–21486––(11067)–64605
(Note 4(17))
Increase in the Amortisation in the Other decreases in
31 December 2021 31 December 2022
current year current year the current year Provision for decline in the value of inventories 7885 – 2214 – – (6734) 174 3539
(Note 4(6))
Improvements to right-of-use assets 2153116 958039 (994873) (19879) 2096403
Provision for impairment of contract assets (Note 4(7)) 2905 – 4070 – – (3575) – 3400
Settling-in allowance and introduction fee
632486 302680 (96477) (1733) 836956 Provision for impairment of goodwill (Note 4(19)) 2435 – – – – – – 2435
for pilots
Provision for impairment of construction in progress
Others 125492 92505 (43782) (9953) 164262 – – 1145 – – – – 1145
(Note 4(15))
29110941353224(1135132)(31565)3097621
Sub-total 245283 – 131756 – – (23705) 174 353508
1599808102721051158(98302)(219816)(31912)215462332754
(21) Other non-current assets
31 December 2022 31 December 2021 (23) Short-term borrowings
Advances for engineering equipment 617191 1651326 31 December 2022 31 December 2021
Prepayment for land use right acquisitions and Others 7677 149715
Unsecured borrowings 8512438 9811391
6248681801041
Guaranteed borrowings (a) 4224863 8388798
Secured borrowings (b) 82496 159598
Pledged borrowings (c) 18073 37417
1283787018397204
184 185Chapter 10 Financial Statements
(a) As at 31 December 2022 guaranteed borrowings of RMB4224863000 (31 December 2021: RMB8388798000) were guaranteed by SF (26) Employee benefits payable
Holdings or subsidiaries within the Group.
31 December 2022 31 December 2021
(b) As at 31 December 2022 secured borrowings of RMB82496000 was secured by the following assets respectively:
Short-term employee benefits payable (a) 6093655 5512603
Carrying amount of Including: also secured for
secured assets long-term borrowings Defined contribution plans payable (b) 182896 62860
62765515575463
Fixed assets 486847 486847
Intangible assets 113059 113059
(a) Short-term employee benefits
599906599906
31 December Increase in the Decrease in the 31 December
As at 31 December 2021 secured borrowings of RMB159598000 was secured by the following assets respectively: 2021 current year current year 2022
Wages or salaries bonus allowances and subsidies 4996455 27125898 (26639301) 5483052
Carrying amount of Including: also secured for
secured assets long-term borrowings Employee welfare 17765 295340 (260308) 52797
Fixed assets 1550383 268982 Social security contributions 27950 774657 (726483) 76124
Investment properties 91282 91282 Including: Medical insurance 25996 690462 (647570) 68888
Intangible assets 70222 70222 Work injury insurance 1400 67439 (62067) 6772
1711887 430486 Maternity insurance 554 16756 (16846) 464
Housing funds 16223 420191 (426947) 9467
(c) As at 31 December 2022 secured bank overdrafts of RMB18073000 (31 December 2021: RMB37417000) was secured by bank deposits
Labour union funds and employee education funds 386499 459901 (436707) 409693
of RMB11086000 (31 December 2021: RMB9600000) (Note 4(1)(c)).Non-monetary benefits 46071 1349866 (1347075) 48862
(d) As at 31 December 2022 the range of annual interest rate of major short-term borrowings was 2.20% to 5.39% (31 December 2021:
0.66% to 3.81%). Others 21640 536344 (544324) 13660
551260330962197(30381145)6093655
(24) Accounts payable
31 December 2022 31 December 2021 Non-monetary welfare provided by the Group for employees primarily were non-monetary subsidies in various forms which were measured
at fair value.Payables to related parties (Note 8(4)(h)) 505241 415824
(b) Defined contribution plans
Payables for services and purchases 24210111 23051851
24715352 23467675 31 December Increase in the Decrease in the 31 December
2021 current year current year 2022
As at 31 December 2022 accounts payable with ageing over 1 year amounted to RMB93260000 (31 December 2021: RMB113362000)
Basic pensions 61246 1305345 (1189126) 177465
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. Unemployment insurance 1614 38659 (34842) 5431
628601344004(1223968)182896
(25) Contract liabilities
31 December 2022 31 December 2021 (27) Taxes payable
Advances from related parties (Note 8(4)(i)) 7010 5273 31 December 2022 31 December 2021
Advances of freight charges and others 1237408 1670563
Enterprise income tax payable 1630863 2066730
12444181675836
Unpaid VAT 928371 626827
Contract liabilities of RMB1675836000 included in the carrying amount as at 31 December 2021 were transferred to revenue for the year Others 201912 179994
ended 31 December 2022. (2021: RMB1537441000) 2761146 2873551
186 187Chapter 10 Financial Statements
(28) Other payables (a) Current portion of debentures payable
31 December 2022 31 December 2021 Reclassification Exchange
Amortisation of from debentures differences on
Accounts payable to related parties (Note 8(4)(j)) 220322 476990 Repayment for the 31 December 2021 Interest accrual premium/ payable in the translation of 31 December 2022
current year
discount current year foreign currency
Engineering equipment payable 5557664 5177670
(Note 4(32)) financial statements
Deposits payable 1933887 1361142
Overseas debentures denominated in USD of 2018 57260 – – 3623328 (134816) 1971 3547743
Payables of cash collected on delivery service on behalf of other parties 1200321 1619423
Overseas debentures denominated in USD of 2020 46735 – – 135224 (131902) 1120 51177
Payable for equity acquisition 1045334 83002
Other debentures payable 726326 22531 78 331794 (1033474) 15050 62305
Bank supply chain financial products/re-factoring 992178 868330
83032122531784090346(1300192)181413661225
Warranty deposits payable 441138 228822
Recharge payable 405579 329306 (30) Other current liabilities
Dividends payable 165014 –
31 December 2022 31 December 2021
Management fees payable 137748 138941
Extra-short term commercial notes (a) 4041584 1999312
Professional service fees payable 78339 93864
Short-term corporate debentures (b) 1020773 2030624
Others 1169071 1142792
Output VAT to be recognised arising from contract liabilities 59919 97113
1334659511520282
51222764127049
As at 31 December 2022 other payables with ageing over 1 year amounted to RMB991380000 (31 December 2021: RMB657392000)
mainly the undue deposits of continuing business and the unsettled engineering equipment funds. (a) The Extra-short term commercial notes are detailed as follows:
(29) Current portion of non-current liabilities Par value
Date of issue Term Interest rate
(RMB’000)
31 December 2022 31 December 2021
The Third Phase of 2022 1000000 13 May 2022 270 days 2.40%
Current portion of lease liabilities (Note 4(33)) 6596956 5989616
The Fourth Phase of 2022 500000 30 May 2022 270 days 2.35%
Current portion of debentures payable (a) 3661225 830321
The Fifth Phase of 2022 500000 17 June 2022 270 days 2.10%
Current portion of long-term borrowings (Note 4(31)) 600680 1458374
The Sixth Phase of 2022 500000 15 July 2022 270 days 2.10%
Current portion of cash-settled share-based payments 296703 34855
The Eighth Phase of 2022 1000000 11 August 2022 270 days 1.78%
Current portion of long-term payables 18086 22637
The Ninth Phase of 2022 500000 18 August 2022 180 days 1.65%
111736508335803
(b)The short-term corporate debentures are detailed as follows:
Par value
Date of issue Term Interest rate
(RMB’000)
The First Phase of 2022 500000 11 March 2022 1 year 2.82%
The Second Phase of 2022 500000 15 April 2022 1 year 2.73%
188 189Chapter 10 Financial Statements
(31)Long-term borrowings As at 31 December 2021 secured borrowings of RMB125408000 were secured by the following assets respectively:
31 December 2022 31 December 2021 Carrying amount of Including: also secured for
secured assets short-term borrowings
Guaranteed borrowings (a) 5901392 2974052
Fixed assets 406690 268982
Pledged borrowings (b) 1487597 1343378
Intangible assets 232730 70222
Unsecured borrowings 553843 526365
Investment properties 224440 91282
Secured borrowings (c) 129858 125408
Construction in progress 47010 –
80726904969203
910870430486
Less: Current portion of long-term borrowings (Note 4(29)):
Guaranteed borrowings (50087) (1080395) Besides as at 31 December 2022 Taisen Holdings provided a full joint and several liability guarantee for RMB3000000 of the above secured
Pledged borrowings (461929) (343484) borrowings (31 December 2021: RMB86395000).Unsecured borrowings (52249) (490) (d) As at 31 December 2022 the range of annual interest rates of major long-term borrowings was 3.02% to 5.77% (31 December 2021:
0.84% to 4.90%).
Secured borrowings (36415) (34005)
(600680) (1458374) (32) Debentures payable
74720103510829
Exchange
Amortisation of differences on Current portion of
(a) As at 31 December 2022 the Group’s guaranteed borrowings of RMB5865597000 (31 December 2021: RMB2927467000) were Issued in the 31 December 2021 Issuance expenses Interest accrual premium/ translation of debentures payable 31 December 2022
guaranteed by subsidiaries within the Group and guaranteed borrowings of RMB35795000 (31 December 2021: RMB46585000) were current year discount foreign currency (Note 4(29))
guaranteed by Shenzhen S.F. Taisen Holdings (Group) Co. Ltd. (“Taisen Holdings”) and Havi Group LP (U.S.). financial statements
(b) As at 31 December 2022 the entitlement to receivables arising from aircraft financial leasing business of subsidiary SF Airlines was pledged by Overseas debentures denominated in USD
subsidiary Shunyuan Financial Leasing (Tianjin) Co. Ltd. (“Shunyuan Financial Leasing”) for the pledged bank borrowings of RMB1487597000 3175745 – – 138570 7194 301819 (3623328) –of 2018
(31 December 2021: RMB1343378000). As at 31 December 2022 balance of receivables pledged was RMB1670516000 (31 December
2021: RMB1519672000). All funds receivable from subsidiaries of the group. Overseas debentures denominated in USD 4404130 – – 135224 6620 418826 (135224) 4829576
of 2020
(c) As at 31 December 2022 secured borrowings of RMB129858000 were secured by the following assets respectively:
Overseas debentures denominated in USD
7577052––2291378972720480(229137)8306504
of 2021
Carrying amount of Including: also secured for
secured assets short-term borrowings Green Corporate Debentures of 2021 (1st
499443––18950234–(18950)499677
instalment)
Fixed assets 486847 486847
Overseas debentures denominated in USD
Intangible assets 247556 113059 – 4461170 (99114) 79847 14267 415866 (79847) 4792189of 2022
Investment properties 104571 – Smooth Freight Logistics Debentures (1st
–500000(481)386043–(3860)499562
838974 599906 instalment)
156563704961170(99595)605588373301856991(4090346)18927508
190 191Chapter 10 Financial Statements
(34) Deferred income
Amount
Par value Nominal
Issuer Currency Date of issue Term (equivalent
(thousand yuan) interest rate Amount recognised
to RMB)
31 December Increase in the in other income in Other decreases in 31 December Related to assets/
Government grants
Overseas debentures denominated SF Holding Investment 2021 current year the current year the current year 2022 income
USD 500000 27 July 2018 5 years 3482300 4.13%
in USD of 2018 Limited (Note 4(49))
Overseas debentures denominated SF Holding Investment Huanggang Baitan Lake
USD 700000 20 February 2020 10 years 4875220 2.88% 328385 91193 – – 419578 Related to assets
in USD of 2020 Limited Organising Committee Project
Overseas debentures denominated SF Holding Investment Government support funds for
USD 400000 17 November 2021 5 years 2785840 2.38% 210214 157155 (4198) (4049) 359122 Related to assets
in USD of 2021 2021 Limited industrial park
Overseas debentures denominated SF Holding Investment Grant for maintenance of aircraft
USD 300000 17 November 2021 7 years 2089380 3.00% 42989 50 (2738) (32970) 7331 Related to assets
in USD of 2021 2021 Limited engines
Overseas debentures denominated SF Holding Investment Others 108654 37587 (30479) (41002) 74760 Related to assets
USD 500000 17 November 2021 10 years 3482300 3.13%
in USD of 2021 2021 Limited 690242 285985 (37415) (78021) 860791
Green Corporate Debentures of From 23 April 2021 to 26
Taisen Holdings RMB 500000 3 years 500000 3.79%
2021 (1st instalment) April 2021 (35) Deferred tax assets and deferred tax liabilities
Overseas debentures denominated SF Holding Investment
USD 400000 28 January 2022 5 years 2785840 2.38%
in USD of 2022 2021 Limited (a) Deferred tax assets before offsetting
Overseas debentures denominated SF Holding Investment
USD 300000 28 January 2022 10 years 2089380 3.13% 31 December 2022 31 December 2021
in USD of 2022 2021 Limited
Deductible temporary Deductible temporary
Smooth Freight Logistics differences and Deferred tax assets differences and Deferred tax assets
Taisen Holdings RMB 500000 22 September 2022 3 years 500000 2.79%
Debentures (1st instalment) deductible tax losses deductible tax losses
Deductible tax losses 3090230 699863 3796937 908150
(33) Lease liabilities
Depreciation and amortisation differences 2175284 502343 1705396 387524
31 December 2022 31 December 2021 Accrued expenses 2288228 551443 1019634 230956
Lease liabilities 15179328 16931554 Unrealised profits from internal transactions 579524 144881 591359 147840
Less: Current portion of lease liabilities (Note 4(29)) (6596956) (5989616) Provision for asset impairment 700865 167412 483455 114729
8582372 10941938 The new lease standard 611881 143562 405855 97700
Others 301226 70426 278911 66397
As at 31 December 2022 payments for leases not yet commenced to which the Group was committed amounted to RMB1638701000 (31
9747238227993082815471953296
December 2021: RMB1311912000) (Note 15(3)(b)).Including:
Expected to be recovered within one year (inclusive) 834809 475005
Expected to be recovered after one year 1445121 1478291
22799301953296
(b) Deductible tax losses and deductible temporary differences that are not recognised as deferred tax assets are analysed as follows:
31 December 2022 31 December 2021
Deductible tax losses (c) 20086770 14124575
Deductible temporary differences 1133829 658298
2122059914782873
192 193Chapter 10 Financial Statements
(c) The following table shows unrecognised deductible tax losses based on its expiration date: (36) Share capital
31 December 2022 31 December 2021 Decrease in the
Increase in the
31 December 2021 current year 31 December 2022
2022 – 310912 current year Note 4(38(i))
2023793083716966
Ordinary shares denominated in RMB 4906213 (11011) 4895202
202415689411847817
2025 4764110 3696061 Increase in the Decrease in the 31 December 2020 31 December 2021
current year (i) current year
202657028955364397
Ordinary shares denominated in RMB 4556440 349773 – 4906213
2027 and subsequent years 7257741 2188422
(i) The Company issued 349772647 ordinary shares (A shares) with A par value of RMB1 each to specific subjects in A non-public offering in
2008677014124575
October 2021 increasing the share capital by RMB349772647 and the capital reserve by RMB19562789000.(d) Deferred tax liabilities before offsetting (37) Capital reserve
31 December 2022 31 December 2021 Increase in the Decrease in the
31 December 2021 31 December 2022
Taxable temporary Deferred tax Taxable temporary Deferred tax current year current year
differences liabilities differences liabilities Share premium
Appreciation in asset value arising from – Capital contribution by shareholders (i) 35362702 – (383982) 34978720
business combinations involving enterprises 12956677 3137944 11575663 2789802
– T ransfer of convertible corporate
not under common control 5758688 – – 5758688
debentures to share capital
Depreciation and amortisation differences 7153559 1691289 5960715 1429624
– Transfer of convertible corporate
Changes in fair value of financial assets 978191 244548 833810 208452 debentures issued by subsidiaries to share 1980870 – – 1980870
capital
Income from equity restructuring – – 584857 146214
– Capital reserve from transactions with
Changes in fair value upon reclassification of 2279859 825 (2055007) 225677
446796 111699 446796 111699 minority shareholders (ii)
remaining equity of Hive Box Technology
– Business combinations involving
Others 588869 119440 505726 102951 (76633) – – (76633)
enterprises under common control
221240925304920199075674788742
Other capital reserve
Including:
– S hare-based payments included in capital
Expected to be recovered within one year 552190 122999 – 675189
746908 419244 reserve
(inclusive)
– Others 342922 110804 – 453726
Expected to be recovered after one year 4558012 4369498
46200598234628(2438989)43996237
53049204788742
(e) The net balances of deferred tax assets and deferred tax liabilities after offsetting are as follows:
31 December 2022 31 December 2021
Deferred tax assets net 1632964 1566714
Deferred tax liabilities net 4657954 4402160
194 195Chapter 10 Financial Statements
(39) Special reserve
Increase in the Decrease in the
31 December 2020 31 December 2021
current year current year
Increase in the Decrease in the
31 December 2021 31 December 2022
Share premium current year current year
– Capital contribution by shareholders Safety reserve – 32214 (32214) –
1579991319562789–35362702
(Note 4(36))
– Transfer of convertible corporate Increase in the Decrease in the
5758688 – – 5758688 31 December 2020 31 December 2021
debentures to share capital current year current year
– Capital reserve from transactions with Safety reserve – 28370 (28370) –
3256731954186–2279859
minority shareholders
Pursuant to the Administrative Measures for the Collection and Utilisation of Enterprise Work Safety Funds (Cai Zi [2022] No. 136) issued by – Transfer of convertible corporatethe Ministry of Finance and the State Administration of Work Safety on 21 November 2022 1% of the income from the “Common cargodebentures issued by subsidiaries to share 1980870 – – 1980870transportation business” which is operated by certain subsidiaries of the Group is appropriated to safety reserve. The safety reserve is recognised
capital
in profit or loss as the “Special reserve” item for the current period. When the accrued safety reserve is used under the prescribed conditions
– Business combinations involving it is written off against the original amount directly.
(76633)––(76633)
enterprises under common control
(40) Surplus reserve
Other capital reserve
– S hare-based payments included in capital Increase in the
264637 287553 – 552190 Decrease in the
reserve 31 December 2021 current year 31 December 2022
current year
(Note 4(41))– Others 352069 – (9147) 342922
Statutory surplus reserve 947775 62478 – 1010253
2440521721804528(9147)46200598
(i) The decrease in the current year is due to the cancellation of repurchased shares 4(38)(i). Increase in the Decrease in the
31 December 2020 current year 31 December 2021
current year
(ii) Capital reserve from transactions with minority shareholders in the current year mainly due to the acquisition of minority shareholders’ equity. (Note 4(41))
(38) Treasury stock Statutory surplus reserve 745043 202732 – 947775
Increase in the Decrease in the (41) Retained earnings
31 December 2021 31 December 2022
current year current year
20222021
Treasury stock 394993 2040377 (394993) 2040377
Retained earnings at the beginning of the year 28245764 25708230
Increase in the Decrease in the
31 December 2020 31 December 2021 Add: N et profit attributable to shareholders of the parent company for the
current year current year 6173764 4269098current year
Treasury stock 394993 – – 394993 ?Transfer from other comprehensive income to retained earnings (38771) 112656
Less: Ordinary share dividends payable (a) (874518) (1499992)
(i) In accordance with the Proposal of Repurchasing Shares by Centralised Price Bidding approved in the 19th session of the fourth Board of
Directors on 31 January 2019 the Company used its own funds to repurchase 11010729 shares through centralized bidding. The company’s ?Appropriation to statutory surplus reserve (62478) (202732)
shares were used for employee stock ownership plan or equity incentive and a total of RMB394993000 of Treasury shares were recognized. ?Appropriation to general risk reserve (72410) (141496)
According to the relevant laws and regulations and the Articles of Association the above-mentioned repurchased shares should be transferred Retained earnings at the end of the year 33371351 28245764
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 Board of Directors and the first
(a) The Company held a shareholders’ meeting on 29 April 2022. On the basis of the total share capital at the registration date on which
extraordinary general meeting in 2022 the Company completed the fifth Board cancellation of the repurchased 11010729 shares thereby
the 2021 profit distribution plan was implemented less the special shares repurchased by the Company a total of RMB874518000 of cash
offsetting the treasury shares of RMB394993000 of which the share capital was reduced by RMB11011000 and capital reserve was reduced
dividends were distributed to all shareholders at RMB1.8 (including tax) per 10 shares without bonus shares being given or capital reserve
by RMB383982000.being transferred into the share capital.(ii) In addition 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 2022 the Company repurchased a total of 39632255 shares and recognised treasury stock of RMB2040377000.
196 197Chapter 10 Financial Statements
(42) Revenue and cost of revenue (43) Taxes and surcharges
2022 2021 2022 2021 Payment criteria
Revenue from main operations (a) 267122766 206828368 Property tax 146993 61716
Revenue from other operations (a) 367648 358279 Stamp tax 108638 130747
Total revenue 267490414 207186647 City maintenance and construction tax 91686 149822 Refer to Note 3
Cost of revenue from main operations 233822858 181365449 Educational surcharge 66425 112184 Refer to Note 3
Cost of revenue from other operations 249502 183058 Others 62964 24257
Total cost of revenue 234072360 181548507 476706 478726
(a) The Group’s revenue is disaggregated as follows: (44) Selling and distribution expenses
202220222021
Logistics and freight
Sales of goods Others Total Outsourcing staff expenses 977788 991102
forwarding services
Employee benefits 833962 931847
Revenue from main operations
Depreciation and amortisation expenses 342872 203153
Including: At a point in time – 3899692 351610 4251302
Others 629492 711797
?Over time 262079740 – 561990 262641730
27841142837899
?Lease income – – 229734 229734
262079740 3899692 1143334 267122766 (45) General and administrative expenses
Revenue from other operations
20222021
Including: At a point in time – – 69014 69014
Employee benefits 14163667 12116458
?Over time – – 83124 83124
Depreciation and amortisation expenses 624073 567536
?Lease income – – 215510 215510
Others 2786750 2345669
––367648367648
1757449015029663
2021
(46) Research and development expenses
Logistics and freight
Sales of goods Others Total
forwarding services 2022 2021
Revenue from main operations Employee benefits 1225926 1159940
Including: At a point in time – 1764253 363090 2127343
Depreciation and amortisation expenses 710291 524202
?Over time 203690237 – 887645 204577882
Others 286648 470697
?Lease income – – 123143 123143
22228652154839
20369023717642531373878206828368
Revenue from other operations
Including: At a point in time – – 62830 62830
?Over time – – 130881 130881
?Lease income – – 164568 164568
––358279358279
As at 31 December 2022 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.
198 199Chapter 10 Financial Statements
(47) Financial costs (50) Investment income
2022202120222021
Interest on borrowings 1570293 1015357 Investment income from financial assets held for trading 664145 410291
Add: Interest expenses on lease liabilities 609652 552658 Investment income from disposal of other investments 307566 113093
Less: Capitalised interest (Note 4(15)) (125585) (6007) Investment income from disposal of subsidiaries 32314 1808638
Interest expenses 2054360 1562008 Investment income from dividends of financial assets not held for trading 13811 31853
Less: Interest income (345662) (187794) Investment income from dividends of financial assets not held for trading
754942660
(Note 4(10))
Net gains or losses on exchange (117314) 103533
10253852406535
Commission expenses and others 120229 85612
1711613 1563359 There is no significant restriction on recovery of investment income of the Group.
(48) Expenses by nature (51) Credit impairment losses
The cost of revenue selling and distribution expenses general and administrative expenses and research and development expenses in the 2022 2021
income statement are listed as follows by nature:
Losses on bad debts of accounts receivable 669961 605865
2022 2021 Losses on/(Reversal of) bad debts of other receivables 158035 (7528)
Outsourcing staff expenses 77832877 71489843 (Reversal of)/Losses on impairment of long-term receivables (2372) 7069
Outsourcing transportation costs 38204742 35965273 Reversal of impairment of loans and advances (4524) (27688)
Transportation costs 68640219 34888921 Losses on impairment of factoring receivables – 1233
Including: Aircraft maintenance costs 431618 412517 821100 578951
Employee benefits 31445636 27830922
(52) Non-operating income and expenses
Depreciation and amortisation expenses 9138080 7024360
Depreciation expenses of right-of-use assets 7174410 5527322 (a) Non-operating income
Rent and Venue usage expenses (b) 6481654 5194836
Amount recognised Amount recognised
Others 17736211 13649431 2022 in non-recurring 2021 in non-recurring
profit or loss in 2022 profit or loss in 2021
256653829201570908
Compensation income 39913 39913 65643 65643
(a) In 2022 the Group’s government grants which were offset against costs and expenses amounted to RMB214306000 (2021: Income from penalty 10281 10281 5784 5784
RMB401821000). Therein the amount that was recognised in non-recurring profit or loss amounted to RMB138620000 (2021:
RMB215386000). Government grants 6202 6202 19362 19362
(b) Others 175091 175091 198753 198753As 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
2022 the amount was RMB3620688000 (2021: RMB2737492000). 231487 231487 289542 289542
(49) Other income
(b) Non-operating expenses
2022 2021 Related to assets/income
Amount recognised Amount recognised
Tax preference 1778617 1222839 Related to income 2022 in non-recurring 2021 in non-recurring
profit or loss in 2022 profit or loss in 2021
Fiscal appropriation and subsidies 433329 508820 Related to income
Losses on scrapping of long-term assets 143994 143994 236302 236302
Amortisation of deferred income (Note 4(34)) 37415 36480 Related to assets
Compensation expenses 78391 78391 82100 82100
22493611768139
Donation expenses 13770 13770 46444 46444
In 2022 the Group was other income that was recognised in non-recurring profit or loss amounted to RMB 681625000 (2021:
Others 62461 62461 39412 39412
RMB622710000).
298616298616404258404258
200 201Chapter 10 Financial Statements
(53) Income tax expenses (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
20222021
based on the dilutive potential ordinary shares by the adjusted weighted average number of outstanding ordinary shares of the Company. In
Current income tax 3948002 2848895 2022 the Company had dilutive potential ordinary shares due to the implementation of the share option incentive plan (2021: the Company
had no dilutive potential ordinary shares).Deferred income tax 15156 365573
3963158321446820222021
Consolidated net profit attributable to ordinary shareholders of the parent
The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the income statement to the 6173764 4269098
company
income tax expenses is listed below:
Adjusted consolidated net profit attributable to ordinary shareholders of the
61737644269098
2022 2021 parent company for calculation of earnings per share
Total profit 10966778 7133681 Weighted average number of outstanding ordinary shares of the Company 4868677 4603725
Income tax expenses calculated at the standard tax rate of 25% 2741695 1783420 Add: Effect of the Group’s share-based payments plan 5063 –
Income not subject to tax (215471) (228428) Weighted average number of outstanding diluted ordinary shares 4873740 4603725
Costs expenses and losses not deductible for tax purposes 246471 217891 Diluted earnings per share (Yuan/share) 1.27 0.93
Effect of last-year tax filing differences (38780) (28965)
(55) Other comprehensive income
Effect of different tax rates among subsidiaries and branches on income tax
(190484)(161640)
expenses Other comprehensive income the related income tax effect and the reclassifications to profit or loss in 2022 and 2021:
Effect of tax preference (322841) (185747)
Other comprehensive income in the income statement
Other comprehensive income in the balance sheet
Deductible tax losses and deductible temporary differences for which no for the year ended 31 December 2022
13530011472000
deferred tax asset was recognised in the current year Other
Attributable to the Attributable
Reversal of previously recognised deductible tax losses for which deferred tax comprehensive Amount incurred Attributable to the
518108 429211 31 December parent company in 31 December Less: Income tax to minority
asset was recognised income transferred before income tax parent company – 2021 the current year – 2022 expenses shareholders – net
into retained for the current year net of tax
Utilisation of deductible tax losses and other deductible temporary differences net of tax of tax
(85016) (60088) earnings
for which no deferred tax asset was recognised in prior periods
Other comprehensive income items which will not be
Recognition of deductible tax losses and other deductible temporary differences
(43525) (23186) reclassified subsequently to profit or loss:
for which no deferred tax asset was recognised in prior periods
Changes in fair value of investments in other equity
2974558(47597)387712965732(57876)(307)(47597)(10586)
Income tax expenses 3963158 3214468 instruments
Other comprehensive income items which will not be
(1278)(1486)–(2764)(1486)–(1486)–
(54) Earnings per share transferred to profit or loss under the equity method
Other comprehensive income items which will be
(a) Basic earnings per share reclassified subsequently to profit or loss:
Cash flow hedge reserve (27394) 15392 – (12002) 15392 – 15392 –
Basic earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parent company by the
Other comprehensive income items which will be
weighted average number of outstanding ordinary shares of the parent company: – (18740) – (18740) (18740) – (18740) –
transferred to profit or loss under the equity method
Exchange differences on translation of foreign
20222021(328655)1934456–16058011336071–1934456(598385)
currency financial statements
Consolidated net profit attributable to ordinary shareholders of the parent
61737644269098261723118820253877145380271273361(307)1882025(608971)
company
Weighted average number of outstanding ordinary shares of the Company 4868677 4603725
Basic earnings per share (Yuan/share) 1.27 0.93
Including:
– Basic earnings per share from continuing operations (Yuan/share) 1.27 0.93
202 203Chapter 10 Financial Statements
(c) Net cash received from disposal of subsidiaries
Other comprehensive income in the income statement
Other comprehensive income in the balance sheet
for the year ended 31 December 2021 2022 2021
Other
Attributable to the Attributable
comprehensive Amount incurred Less: Income tax Attributable to the Consideration arising from disposal of subsidiaries 233639 4135481
31 December parent company in 31 December to minority
income transferred before income tax (expenses)/ parent company –
2020 the current year – 2021 shareholders – net Add: Cash received in the current year for the disposal of subsidiaries in
into retained for the current year credits net of tax 99751 15000
net of tax of tax previous years
earnings
Less: C ash and cash equivalents held by subsidiaries on the day of loss
Other comprehensive income items which will not be (19671) (559868)of control
reclassified subsequently to profit or loss:
Less: C ash and cash equivalents received in the subsequent periods for the
Changes in fair value of investments in other – (100534)
1213254 1873959 (112656) 2974557 1870952 9857 1873959 6850 disposal of subsidiaries
equity instruments
Less: Shares of SF REITs acquired – (1152527)Other comprehensive income items which will
not be transferred to profit or loss under the (1187) (91) – (1278) (91) – (91) – 313719 2337552
equity method
Other comprehensive income items which will be (d) Net cash paid to acquire subsidiaries
reclassified subsequently to profit or loss:
Cash flow hedge reserve (22858) (4536) – (27394) (4536) – (4536) – 2022 2021
Exchange differences on translation of foreign
(45240) (283414) – (328654) (133261) – (283414) 150153 Consideration from acquisition of subsidiaries by way of business combinations 1952915 14775405
currency financial statements
Add: Cash paid in the current year for acquisition of subsidiaries in prior periods 108797 30299
11439691585918(112656)2617231173306498571585918157003
Less: Consideration to be paid in subsequent years (i) (745718) (10100)
(56) Notes to the cash flow statement Consideration to be paid in advance – (30300)
Translation impact of foreign currency – (5821)
(a) Cash received relating to other operating activities
Cash held by subsidiaries on the day of purchase and cash equivalents (125369) (7024242)
20222021
Net cash paid from acquisition of subsidiaries by way of business
11906257735241
Inflows from cash collected on delivery service on behalf of other parties 77286558 82642080 combinations
Others 3792101 7828720 Consideration of acquisition as assets 1099465 1389990
81078659 90470800 Less: Cash held by subsidiaries on the day of purchase and cash equivalents (72609) (81653)
Net cash paid of acquisition as assets 1026856 1308337
(b) Cash paid relating to other operating activities
Total net cash paid to acquire subsidiaries 2217481 9043578
20222021
As at 31 December 2022 Consideration to paid in future periods are mainly the purchase price payables of the Topocean’s equity which will
Outflows from cash collected on delivery service on behalf of other parties 77323122 83113338 be paid within one year.Others 16902212 14375055
9422533497488393
204 205Chapter 10 Financial Statements
(e) Cash received/paid relating to other investing activities (b) Cash and cash equivalents
Cash received/paid relating to other investing activities by the Group represents cash mainly inflows and outflows from redemption/purchase 31 December 2022 31 December 2021
of bank wealth management products and structural deposits.Cash on hand 18437 48513
(f) Cash paid relating to other financing activities Cash at bank that can be readily drawn on demand 40008101 34633427
Other cash balances that can be readily drawn on demand 138535 50988
20222021
Other balances that can be readily drawn on demand 114874 80840
Repayments of lease liabilities(i) 7813330 6266239
4027994734813768
Acquisition of minority interests 3914671 109576
Repurchase of shares 2040377 –
(c) Significant operating investment and financing activities that do not involve cash receipts and payments
Long-term asset purchases paid for by bank supply chain financial products/
868330–
refactoring 2022 2021
Cash dividends paid in the current year declared by subsidiary before the Long-term asset purchases paid for by bank supply chain financial products/
–10819033992178868330
acquisition refactoring
Others 6789 227896
(58) Monetary items denominated in foreign currency
1464349717422744
(a) As at 31 December 2022 and 31 December 2021 the Group’s companies whose recording currency is RMB held financial assets and
(i) In 2022 the total cash outflows relating to leases paid by the Group amounted to RMB11687763000 (2021: RMB9226746000) except liabilities denominated in non-recording currencies (mainly USD HKD and EUR) excluding financial assets and liabilities denominated in non-
for the repayments of lease liabilities classified as cash paid relating to financing activities the remaining was classified as cash paid relating recording currencies held by subsidiaries within the Group of which the equivalent amounts in RMB (presentation currency of these financial
to operating activities. statements) are listed as below:
(57) Supplementary information to the cash flow statement 31 December 2022
Amount in the original
(a) Reconciliation from net profit to cash flows from operating activities Exchange rate to RMB Equivalent to RMBcurrency
Cash at bank and on hand –
20222021
USD 81868 6.9646 570178
Net profit 7003620 3919213
Add: Asset impairment losses 131756 60390 HKD 35511 0.8933 31722
?Credit impairment losses 821100 578951 EUR 163 7.4229 1210
?Depreciation of right-of-use assets 7174410 5527322
Receivables –
?Depreciation of fixed assets 5859984 4588519
USD 272999 6.9646 1901329
?Depreciation of investment properties 92568 60382
?Amortisation of intangible assets 2086019 1487797 HKD 96310 0.8933 86034
?Amortisation of long-term prepaid expenses 1135132 907585 EUR 6544 7.4229 48575
?Losses on disposal of long-term assets 52305 195841
Payables –
?Losses/(Gains) arising from changes in fair value 27938 (98949)
USD 140907 6.9646 981361
?Financial costs 1929262 1590849
?Investment income (1025385) (2406535) HKD 73704 0.8933 65840
?Recognised expenses on equity-settled share-based payments 109573 349308 EUR 14303 7.4229 106170
?(Increase)/Decrease in deferred tax assets (245603) 72641
SGD 2009 5.1831 10413
?Increase in deferred tax liabilities 260759 292932
?Amortisation of deferred income (37415) (36480)
?Increase in inventories (397187) (370579)
?Decrease/(Increase) in operating receivables 8816879 (6196150)
?(Increase)/Decrease in operating payables (1092768) 4834568
Net cash flows from operating activities 32702947 15357605
206 207Chapter 10 Financial Statements
31 December 2021 31 December 2021
Amount in the original Amount in the
Exchange rate to RMB Equivalent to RMB Exchange rate to HKD Equivalent to HKD Equivalent to RMB
currency original currency
Cash at bank and on hand – Cash at bank and on hand –
USD 59886 6.3757 381815 RMB 13958 1.2231 17072 13958
HKD 7202 0.8176 5889 USD 11428 7.7981 89113 72858
EUR 100 7.2197 720 EUR 1170 8.8304 10327 8444
Receivables – Accounts receivable –
USD 101020 6.3757 644070 RMB 5452 1.2231 6668 5452
HKD 46533 0.8176 38046 USD 7013 7.7981 54686 44711
EUR 472 7.2197 3408 Accounts payable –
Payables – RMB 14745 1.2231 18034 14745
USD 26740 6.3757 170486 USD 8441 7.7981 65827 53820
HKD 10266 0.8176 8393 EUR 2014 8.8304 17785 14541
EUR 784 7.2197 5663
SGD 409 4.3553 1780
5. Changes in the consolidation scope
(b) As at 31 December 2022 and 31 December 2021 the Group’s overseas subsidiaries except for those operating in Hong Kong held no
significant financial assets or liabilities denominated in non-recording currencies. Those companies operating in Hong Kong with HKD as (1) Business combinations involving enterprises not under common control
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 Main business combinations involving enterprises not under common control in 2022:
(recording currency of companies operating in Hong Kong) and RMB (presentation currency of these financial statements) are listed as below:
Basis for
Timing of Acquisition % of interest Method of
Acquiree Acquisition date determining the
31 December 2022 acquisition cost acquired acquisition
acquisition date
Amount in the
Exchange rate to HKD Equivalent to HKD Equivalent to RMB
original currency Completion of Topocean (a) 19 April 2022 1676951 100.00% By cash 19 April 2022
equity delivery
Cash at bank and on hand –
Completion of
RMB 59509 1.1195 66620 59509 Pro-Med 31 January 2022 45040 51.00% By cash 31 January 2022
equity delivery
USD 99358 7.7967 774665 692008 Suzhou Industrial Park Completion of
1 January 2022 89485 66.00% By cash 1 January 2022
EUR 4734 8.3098 39339 35142 Customs Declaration Co. Ltd. equity delivery
Accounts receivable – The total operating income net profit operating activities generated net cash flow of the above company from the purchase date to the end
RMB 251686 1.1195 281762 251686 of the year are RMB6664752000 RMB298456000 RMB102765000 and RMB92511000 respectively.USD 231573 7.7967 1805505 1612858 (a) In April 2022 the group’s subsidiary Kerry Logistics completed the acquisition of 100% equity of Topocean obtained the control of Topocean
and included Topocean in the scope of consolidation. Under the acquisition agreement the Group has paid 80% of the equity payment and
Accounts payable –
will pay the remaining 20% in installments within one year. The Group has recognized this Consideration not yet paid as payable. Topocean
RMB 32985 1.1195 36927 32985
is headquartered in the United States and its main is international freight forwarding business.USD 203672 7.7967 1587969 1418533
EUR 1930 8.3098 16038 14327
208 209Chapter 10 Financial Statements
Details of the consideration of acquisition and goodwill recognised are as follows: (3) Other changes in the consolidation scope
Topocean (a) In 2022 the Group set up the following major subsidiaries by cash:
Consideration of acquisition
Tianjin Fengpai Technology Co. Ltd. – Cash 1676951
Chongqing Fonair UAV Research Institution Co. Ltd.Less: Fair value of the identifiable net assets acquired (519644)
Sichuan Tianfu Aviation Co. Ltd.Goodwill 1157307
Beijing Shunlu Logistics Co. Ltd.As at the acquisition date the Group recognised Topocean’s identifiable net assets at fair value. The fair value of identifiable net assets
exceeded the carrying amount by RMB 287643000 The recognition of intangible assets (mainly is customer relationships) and corresponding Beijing Shunheng Logistics Co. Ltd.deferred tax liabilities. The Group has engaged an independent valuer to assist in the identification of assets of Topocean And evaluate the
Dongguan Shunlu Logistics Co. Ltd.fair value of intangible assets.SF Yingyun Supply Chain Management (Huizhou) Co. Ltd.The valuation method used for customer relationships is multi-period excess earnings methodthe key assumptions applied in the valuation
include revenue growth rate gross profit rate and discount rate. Hangzhou S.F. Smart Supply Chain Co. Ltd.(b) The assets and liabilities of Topocean as at the acquisition date and 31 December 2021 are as follows: Shenzhen Fengwang Information Technology Co. Ltd.Acquisition date Acquisition date 31 December 2021 Jiangsu Fengsu Logistics Co. Ltd.Fair value Carrying amount Carrying amount
Fujian Fengwang Express Co. Ltd.Cash at bank and on hand 129230 129230 956435
Liaoning Fengwang Express Co. Ltd.Receivables 1837033 1837033 1734390
Fengyi Technology (Hangzhou) Co. Ltd.Intangible assets 435006 219 219
Other assets 266299 255770 264124 SF INTERNATIONAL VIETNAM COMPANY LIMITED
Less: Payables (1902645) (1902645) (1929907) Guangzhou Nansha Kerry Freight Co. Ltd
Deferred tax liabilities (143199) (54384) (163638) Beijing Kerry Huanjie Supply Chain Management Co. Ltd
Other liabilities (8248) (8248) (20392)
(b) In 2022 the Group cancelled the following major subsidiaries:
Net assets 613476 256975 841231
Xuzhou Fengtai Industrial Park Management Co. Ltd.Less: Minority interests (34777)
Dalian Fengtai Industrial Park Operation and Management Co. Ltd.Fair value of the identifiable net assets acquired 578699
Jinan Hongtai Industrial Park Management Co. Ltd.
(2) Disposal of subsidiaries
Luohe Fengtai Industrial Park Management Co. Ltd.(a) Aggregated information of subsidiaries disposed in the reporting period:
Yangzhou Fengyutai Enterprise Management Co. Ltd.Difference between
Huai’an Shunheng Express Co. Ltd.proceeds from disposal
after deducting disposal SF INTERNATIONAL DEVELOPMENT PTE. LTD.Proceeds from Method of Timing of losing Basis for judgement of
Name of subsidiary Disposal proportion costs and corresponding
disposal disposal control timing of losing control
shares of net assets in
the consolidated financial
statements
Changsha Industrial Park and its subsidiaries 232939 100.00% Sales of equity 24 June 2022 Transfer of control right 31654
Yingyun Aolong Logistics (Zhanjiang) Co. Ltd. 700 60.00% Sales of equity 30 June 2022 Transfer of control right 660
23363932314
210 211Chapter 10 Financial Statements
6. Interests in other entities
Place of Major business Shareholding (%)
Nature of business Method of acquisition
registration location
(1) Interests in subsidiaries Direct Indirect
Supply chain management and
Hangzhou SF Intra-city Industrial Co. Ltd. Hangzhou Hangzhou – 56.76% By new establishment
(a) First-tier and second-tier subsidiaries of the Group are as follows: other services
Shenzhen SF Express Zhongyuan Network Technology Technology development and
Shenzhen Shenzhen – 100.00% By new establishment
Co. Ltd. consulting services
Place of Major business Shareholding (%)
Nature of business Method of acquisition SF Sharing Precision Information Technology
registration location Shenzhen Shenzhen Information technology service – 100.00% By new establishmentDirect Indirect (Shenzhen) Co. Ltd.Taisen Holdings Shenzhen Shenzhen Investment holding 100.00% – Reverse acquisitions Supply chain management and Hangzhou Shuangjie Supply Chain Co. Ltd. Hangzhou Hangzhou – 100.00% By new establishment
International freight other services
Business combinations involving
forwarding domestic and Business and supply chain
S.F. Express Co. Ltd. Shenzhen Shenzhen – 100.00% enterprises under common Shenzhen S.F. Express Co. Ltd. Shenzhen Shenzhen – 87.80% By new establishment
international express service management
control Consulting services regarding
etc.Technical maintenance and Huanggang Xiufeng Education Investment Co. Ltd. Huanggang Huanggang business information and – 100.00% By new establishment
SF Technology Shenzhen Shenzhen – 100.00% By new establishment
development service business management
Business combinations involving Information technology and
Cargo transportation and Junhe Information Technology (Shenzhen) Co. Ltd. Shenzhen Shenzhen – 100.00% By new establishment
Shenzhen Shunlu Logistics Co. Ltd. Shenzhen Shenzhen – 100.00% enterprises under common development services
freight forwarding Technology and consulting
control S.F. Digital Technology (Shenzhen) Services Co. Ltd. Shenzhen Shenzhen – 100.00% By new establishment
Value-added telecommunication services
Anhui S.F. Telecommunication Service Co. Ltd. Anhui Province Anhui Province – 100.00% By new establishment Information technology and
service Shenzhen S.F. International Industry Co. Ltd. Shenzhen Shenzhen – 100.00% By new establishment
Business combinations involving consulting services
Shenzhen S.F. Investment Co. Ltd. Shenzhen Shenzhen Investment holding – 100.00% By new establishment
Shenzhen Yuhui Management Consulting Co. Ltd. Shenzhen Shenzhen Consulting service – 100.00% enterprises under common
Cargo transportation and
control SF Cold Chain Logistics Co. Ltd. Shenzhen Shenzhen – 100.00% By new establishment
freight forwarding
Supply chain management and
Shenzhen S.F. Supply Chain Co. Ltd. Shenzhen Shenzhen – 100.00% By new establishment
other services
Business combinations involving
Transport service of aviation (b) Subsidiaries in which the Group has significant minority interests
SF Airlines Shenzhen Shenzhen – 100.00% enterprises under common
cargo
control Proportion of ownership Profit or loss attributable
Business combinations involving Dividends paid to minority Minority interests as at
E-commerce industrial park interest held by minority to minority shareholders
Fengtai Asset Shenzhen Shenzhen – 100.00% enterprises under common shareholders in 2022 31 December 2022
management shareholders in 2022
control
Shenzhen Fengtai Industrial Park Investment Ltd. Shenzhen Shenzhen Management consulting – 100.00% By new establishment Kerry Logistics and its subsidiaries 48.50% 1476236 (1524826) 11587420
Shenzhen S. F. Airport Investment Co. Ltd. Shenzhen Shenzhen Industrial investment – 100.00% By new establishment
Business combinations involving
SF Holding Limited Hong Kong SAR Hong Kong SAR Investment holding – 100.00% enterprises under common Profit or loss attributable Dividends paid to minority
control Proportion of ownership to minority shareholders shareholders for the period Minority interests as at
Financing wealth management interest held by minority for the period from 28
Group Finance Company Shenzhen Shenzhen – 100.00% By new establishment from 28 September 2021 to 31 December 2021
and consulting services shareholders September 2021 to 31
Shenzhen SF Chuangxing Investment Co. Ltd. Shenzhen Shenzhen Industrial investment – 100.00% By new establishment 31 December 2021December 2021
Shenzhen Fengnong Technology Co. Ltd. Shenzhen Shenzhen Retail – 100.00% By new establishment
Supply chain management and Kerry Logistics and its subsidiaries 48.50% 512119 (46607) 13714750
Shenzhen Fenglang Supply Chain Co. Ltd. Shenzhen Shenzhen – 100.00% By new establishment
other services
Shenzhen Shunfeng Runtai Management Consulting
Shenzhen Shenzhen Consulting service – 100.00% By new establishment The significant financial information of the significant non-fully-owned subsidiaries of the Group is listed below:
Co. Ltd.Shunyuan Financial Leasing Tianjin Tianjin Leasing business – 100.00% By new establishment
Goods delivery and other 31 December 2022 31 December 2021
SF Multimodal Co. Ltd. Shenzhen Shenzhen – 100.00% By new establishment
services Current assets 21821593 22058645
Shenzhen Shunxi Management Consulting Co. Ltd. Shenzhen Shenzhen Management consulting – 100.00% By new establishment
S.F. Insurance Broker (Shenzhen) Co. Ltd. Shenzhen Shenzhen Insurance business – 100.00% By new establishment Non-current assets 25615187 23566766
S.F. Duolian Technology Co. Ltd. Dongguan Dongguan Technology development – 100.00% By new establishment
Dongguan SF Taisen Enterprise Management Co. Ltd. Dongguan Dongguan Property management – 100.00% By new establishment Total assets 47436780 45625411
SF Innovative Technology Co. Ltd. Dongguan Dongguan Information technology service – 100.00% By new establishment
Business combinations involving Current liabilities 14196749 14795606
Shenzhen Shunheng Rongfeng Supply Chain
Shenzhen Shenzhen Consulting service – 100.00% enterprises under common
Technology Co. Ltd. Non-current liabilities 10240832 6645860
control
Business combinations involving Total liabilities 24437581 21441466
Shenzhen Hengyi Logistics Service Co. Ltd. Shenzhen Shenzhen Freight forwarding service – 100.00% enterprises under common
control
Business combinations involving
Shenzhen Lefeng Commercial Co. Ltd. Shenzhen Shenzhen Factoring – 100.00% enterprises under common
control
212 213Chapter 10 Financial Statements
(a) Segment information as at and for the year ended 31 December 2022 is as follows:
For the period from 28
2022 September 2021 to 31 Supply chain and
December 2021 Inter-segment Express segment Freight segment Intra-city segment international Undistributed units Total
elimination
Revenue 74261942 20260964 segment
Net profit (i) 2838971 883124 Revenue from external customers 138410580 31354280 6567057 89916599 1241898 – 267490414
Total comprehensive income (i) 3040177 921320 Inter-segment revenue 16577930 1593213 3698616 700298 12070206 (34640263) –
Cash flows from operating activities 4918473 2123547 Cost of revenue 131907950 31083855 9851834 82148435 11623492 (32543206) 234072360
Total profit/(loss) 7739581 644525 (288847) 2938917 (47669) (19729) 10966778
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. Income tax expenses/(credits) 2280435 616848 (1944) 993055 75068 (304) 3963158
Net profit/(loss) 5459146 27677 (286903) 1945862 (122737) (19425) 7003620
(a) In 2022 for Kerry Logistics and its subsidiaries the net profit attributable to shareholders of the Company was RMB1362735000 (for the
period from 29 September 2021 to 31 December 2021: RMB371005000) and the total comprehensive income attributable to shareholders Total assets 90082034 10026508 3956639 66235754 148072567 (101530795) 216842707
of the Company was RMB2182133000 (for the period from 29 September 2021 to 31 December 2021: RMB252516000).Total liabilities 61547088 10394188 1086136 53540703 79713800 (87725257) 118556658
(b) In 2022 and 2021 minority interests of the Group’s subsidiaries except Kerry Logistics had no significant influence on the Group. Depreciation and amortisation expenses 6544545 287222 78662 1551214 688395 (11958) 9138080
(2) Interests in joint ventures and associates Credit impairment losses 250367 77219 1968 384491 107231 (176) 821100
(a) The Group’s joint ventures and associates have no significant influence on the Group (Note 4(10)). In 2022 no revenue from a single customer exceeded 10% or more of the total revenue.(b) Segment information as at and for the year ended 31 December 2021 is as follows:
7. Segment information Supply chain and
Inter-segment
Express segment Freight segment Intra-city segment international Undistributed units Total
The reportable segments of the Group are the business units that provide different logistics and freight forwarding services. Different businesses elimination
segment
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. Revenue from external customers 132319106 28356404 5117905 39979632 1413600 – 207186647
In 2022 and 2021 the Group mainly had four reportable segments including: Inter-segment revenue 12515607 2812134 3056509 474522 9465837 (28324609) –
Cost of revenue 124054968 29990841 8079144 36164215 9337828 (26078489) 181548507
* Express segment which provides time-define express and economy express except for large-size delivery service as well as medical product
and cold chain delivery service; Total profit/(loss) 5969116 (417142) (902586) 1075223 1427145 (18075) 7133681
* Freight segment which provides large-size delivery service and freight service; Income tax expenses/(credits) 2136929 165166 (3735) 459971 461683 (5546) 3214468
* Intra-city segment which provides intra-city on-demand delivery service; Net profit/(loss) 3832187 (582308) (898851) 615252 965462 (12529) 3919213
Total assets 81086911 9544584 4064825 60901366 135934182 (81631886) 209899982
* Supply chain and international business segment which provides international express service international freight transport and forwarding
service as well as supply chain service. Total liabilities 56362138 9171525 899472 34391955 67699241 (56539596) 111984735
Inter-segment transfer prices are determined by reference to pricing policy of related party transactions. Depreciation and amortisation expenses 5180097 253747 55420 753735 792605 (11244) 7024360
Credit impairment losses 310456 110648 4477 190763 (24457) (12936) 578951
In 2021 no revenue from a single customer exceeded 10% or more of the total revenue.
214 215Chapter 10 Financial Statements
8. Related parties and related party transactions Relationship with the Company
DHL Weiheng (Zhuhai) Supply Chain Management Co. Ltd. (“DHL Weiheng Supply”) The Group’s associate
(1) General information of the controlling shareholder and subsidiaries
Shanghai Tingdi Logistics Service Co. Ltd. The Group’s associate
The general information and other related information of the subsidiaries are set out in Note 6(1). Shenzhen Fenglian Technology Co. Ltd. The Group’s associate
CR-SF International Express Co. Ltd. The Group’s joint venture
(a) General information of the controlling shareholder
Beijing Wulian Shuntong Technology Co. Ltd. (“Wulian Shuntong”) and its subsidiaries The Group’s joint venture
Place of registration Nature of business ZBHA and its subsidiaries The Group’s joint venture
Hubei International Logistics Airport Co. Ltd. The Group’s joint venture
Mingde Holdings Shenzhen Investment Shenzhen Shenghai Information Service Co. Ltd. (“Shenghai Information”) The Group’s joint ventureGolden Arches (China) Co. Ltd. (“Golden Arches“) and its subsidiaries Significantly influenced by the key management of the CompanyThe Company’s ultimate holding company is Mingde Holdings and the ultimate controlling person is Wang Wei.Organisation sponsored by controlling shareholders and the
SF Foundation Company’s subsidiaries in which senior managers of the company
(b) The balances and changes of registered capital of the controlling shareholder
serve on the Board of Management
Increase in the Decrease in the
31 December 2021 31 December 2022
current year current year (3) Related party transactions
Mingde Holdings 113406 – – 113406
(a) Pricing policies
(c) The percentages of shareholding and voting rights in the Company held by the controlling shareholder 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.
31 December 2022 31 December 2021
(b) Rendering of services/Sales of goods
Shareholding (%) Voting rights (%) Shareholding (%) Voting rights (%)
Mingde Holdings 54.95% 54.95% 55.07% 55.07% Nature of the transaction 2022 2021
Golden Arches and its subsidiaries Rendering of services 1718005 1620689
(2) Nature of related parties that do not control/are not controlled by the Company
Fengxing Zhitu Technology Rendering of services 68165 16284
Major related parties are listed as follows: Hive Box Technology and its subsidiaries Rendering of services 28970 36847
Relationship with the Company Fengyi Technology Rendering of services 18868 84227
Hive Box Technology and its subsidiaries Held by the ultimate controlling person Others Rendering of services 111965 253460
Guangdong Fengxing Zhitu Technology Co. Ltd (“Fengxing Zhitu Technology”) Controlled by the ultimate controlling person of the Company
19459732011507
Shenzhen Fengxiang Information Technology Co. Ltd. (“Fengxiang Information Technology”) 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
Nature of the transaction 2022 2021
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 Fengxiang Information Technology Sales of goods 9754 –
Shenzhen Fengyi Technology Limited (“Fengyi Technology”) Controlling shareholder’s associate Others Sales of goods 11601 9804
Yihai Shunfeng (Shanghai) Supply Chain Technology Co. Ltd. The Group’s associate from December 2021
213559804
Shanghai Jiaxing Logistics Co. Ltd. The Group’s associate
SF Real Estate Investment Trust (“SF REITs and its subsidiaries”) The Group’s associate
Shenzhen Shunjie Fengda and its subsidiaries (“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. (“KENGIC Intelligent”) and its subsidiaries The Group’s associate
Galaxis Technology and its subsidiaries The Group’s associate
Giao Hang Tiet Kiem Joint Stock Company The Group’s associate
216 217Chapter 10 Financial Statements
(c) Receipt of services/Purchase of goods (e) Leases
Nature of the transaction 2022 2021 (i) Lease income recognised in the current year with the Group as the lessor
CR-SF International Express Co. Ltd. Receipt of services 531495 613849 Type of the leased asset 2022 2021
Fengxing Zhitu Technology Receipt of services 420324 99637 Fengyi Technology Buildings 2530 1745
Wulian Shuntong and its subsidiaries Receipt of services 381791 399038 Others Buildings 4553 1479
Shunjie Fengda and its subsidiaries Receipt of services 253852 282889 7083 3224
Shanghai Jiaxing Logistics Co. Ltd. Receipt of services 238554 260351
(ii) Right-of-use assets increased in the current year with the Group as the lessee
Hive Box Technology and its subsidiaries Receipt of services 158518 181717
ZBHA and its subsidiaries Receipt of services 117301 152160 Type of the leased asset 2022 2021
Giao Hang Tiet Kiem Joint Stock Company Receipt of services 79203 – SF REITS and its subsidiaries Buildings 103867 974664
SF REITS and its subsidiaries Receipt of services 61624 29672 Hangzhou Fengtai E-Commerce Industrial Park Management
Buildings 43082 13116
Ltd.Shenghai Information Receipt of services 25619 27912
Shenzhen Shunshang Investment Co. Ltd. Buildings – 15214
Others Receipt of services 120948 268138
1469491002994
23892292315363
(iii) Depreciation and interest expenses borne in the current year by the Group as the lessee
Nature of the transaction 2022 2021
Type of the leased asset 2022 2021
KENGIC Intelligent and its subsidiaries Purchase of goods 377659 826844
Fengxiang Information Technology Purchase of goods 255349 121006 SF REITS and its subsidiaries Buildings 225826 142703
Others Purchase of goods 50863 624052 Hangzhou Fengtai E-Commerce Industrial Park Management Buildings 8512 926
Ltd.
6838711571902
Shenzhen Shunshang Investment Co. Ltd. Buildings 3821 11751
(d) Interest income/Interest expenses 238159 155380
Nature of the transaction 2022 2021 (f) The Group as the guarantor
Wuhan Shunluo Supply Chain Management Co. Ltd. Interest income – 2116
Whether the
Guarantee Guarantee
Others Interest income 743 871 Guaranteed party Guaranteed amount guarantee has been
start date expiry date
fulfilled
7432987
DHL Weiheng Supply 113374 15 January 2021 23 December 2030 No
Nature of the transaction 2022 2021 Hubei International Logistics Airport 782000 29 September 2021 29 April 2055 No
Co. Ltd. (Note)
Shenzhen Zhongwang Finance and Tax Management Co. Ltd. Interest expenses 165 57
895374
Others Interest expenses 196 168
Note: The guarantee amount of Hubei International Logistics Airport Co. Ltd. is the total guarantee amount formed by the aggregation of multiple guarantee
361 225 amounts. The earliest date of guarantee is 29 September 2021 and the latest is 29 April 2055.
218 219Chapter 10 Financial Statements
(g) Sales of equity (c) Loans and advances
2022 2021 31 December 2022 31 December 2021
SF REITS and its subsidiaries 232939 – DHL Weiheng Supply 32920 –
Others – 1071130
(d) Other receivables
2329391071130
31 December 2022 31 December 2021
In 2022 the Group earned a total of RMB31654000 in investment income from related parties from the above equity transactions.Hive Box Technology and its subsidiaries 405621 371433
(h) Donation expenses
SF REITS and its subsidiaries 51726 48898
2022 2021 Golden Arches and its subsidiaries 51873 40229
SF Foundation 2028 31851 Others 12274 31497
521494492057
(i) Remuneration of key management
(e) Other non-current assets – Advances for engineering equipment
20222021
31 December 2022 31 December 2021
Remuneration of key management 29214 28414
KENGIC Intelligent and its subsidiaries 1497 27455
(4) Receivables from and payables to related parties Others 608 26828
(a) Accounts receivable 2105 54283
31 December 2022 31 December 2021 (f) Long-term receivables (including current portion of long-term receivables)
Golden Arches and its subsidiaries 175258 206275
31 December 2022 31 December 2021
Fengxing Zhitu Technology 18854 20628
Shanghai Tingdi Logistics Service Co. Ltd. 65408 –
Yihai Shunfeng (Shanghai) Supply Chain Technology Co. Ltd. 8077 –
Others 3281 5442
Fengyi Technology 6367 23464
686895442
Others 28472 28056
237028 278423 (g) Deposits from customers
(b) Advances to suppliers 31 December 2022 31 December 2021
Shenzhen Zhongwang Finance and Tax Management Co. Ltd. 11531 6509
31 December 2022 31 December 2021
Shenzhen Fenglian Technology Co. Ltd. 8884 –
Hive Box Technology and its subsidiaries 10337 22679
Others 172 1
Galaxis Technology and its subsidiaries 8200 –
205876510
Others 7463 4612
2600027291
220 221Chapter 10 Financial Statements
(h) Accounts payable (5) Commitments in relation to related parties
31 December 2022 31 December 2021 (a) As at 31 December 2022 the Group had no significant lease-out commitments in relation to related parties (31 December 2021: Hangzhou
Fengtai E-Commerce Industrial Park Management Ltd.: RMB49970000).Fengxing Zhitu Technology 111218 72497
(b) Provide guarantee
CR-SF International Express Co. Ltd. 85092 50439
Giao Hang Tiet Kiem Joint Stock Company 80134 – 31 December 2022 31 December 2021
Wulian Shuntong and its subsidiaries 52320 98917 Hubei International Logistics Airport Co. Ltd. 2384180 2890180
Shanghai Jiaxing Logistics Co. Ltd. 43410 58979
The above-mentioned related party commitments are committed but have not yet provided the balance of guarantees to related parties.Fengxiang Information Technology 37055 25256
Shunjie Fengda and its subsidiaries 34554 41184
Hive Box Technology and its subsidiaries 16318 9936 9. Share-based payments
Galaxis Technology and its subsidiaries 13272 15561
(1) Overview of share-based payments
ZBHA and its subsidiaries 10061 8146
Expenses recognised for the year arising from share-based payments were as follows:
Others 21807 34909
50524141582420222021
Equity-settled share-based payments 109573 349308
(i) Contract liabilities
Cash-settled share-based payments 48111 199021
31 December 2022 31 December 2021 157684 548329
Fengyi Technology 4137 2689
(2) Information on equity-settled share-based payments
Others 2873 2584
7010 5273 (a) Information on share-based payments 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
(j) Other payables 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
31 December 2022 31 December 2021 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.KENGIC Intelligent and its subsidiaries 187008 240661
As at 30 May 2022 the Company granted 47892100 stock options to 1449 eligible incentive recipients for the first time at the exercise
Golden Arches and its subsidiaries 20667 24087
price of RMB42.61 per share.Others 12647 212242
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
220322 476990 Stock Option Incentive Plan was approved. The exercise price was adjusted from RMB42.61 per share to RMB42.431 per share.
As at 28 October 2022 the Company granted 1608000 reserved stock options to 44 eligible incentive recipients at an exercise price of
(k) Lease liabilities (including current portion of lease liabilities)
RMB42.431 per share.
31 December 2022 31 December 2021 As at 31 December 2022 the Company has 49500000 stock options outstanding.
SF REITS and its subsidiaries 784767 816579
Hangzhou Fengtai E-Commerce Industrial Park Management Ltd. 45379 9330
Shenzhen Shunshang Investment Co. Ltd. – 3936
830146829845
222 223Chapter 10 Financial Statements
The key parameters for determining the fair value of the share options at the grant date are as follows: 10. Commitments
Valuation method Black-Scholes Model (1) Capital commitments
The exercise price of the option on the grant date RMB 42.61 and RMB42.431
(a) Capital expenditures contracted for by the Group but are not yet necessary to be recognised on the balance sheet as at the balance sheet
The duration from the grant date
The validity period of the option date are as follows:
to the first exercise date of each period
31 December 2022 31 December 2021
The current price of the underlying shares (Closing price on grant date) RMB 51.57 and RMB49.88
Historical share price volatility 35.77%~40.39% Buildings machinery and equipment 3571632 10432197
Estimated dividend rate 0.51%~0.55% Investment contracts that have been signed but not fulfilled or not 1811611 2525587
absolutely fulfilled
The risk-free interest rate within the validity period of the option 1.50%~2.75%
Acquisition of minority shareholders’ interests – 609252
At each balance sheet date during the vesting period of the incentive plan the number of share options expected to be exercised will be revised Others – 11067
based on subsequent information such as changes in the number of employees who can exercise their share options and the completion of
vesting conditions and the services obtained in the current period will be included in relevant costs and capital reserve based on the fair value 5383243 13578103
of share options at the grant date.
(2) Other commitments
As at 31 December 2022 the equity-settled share-based payments recognised by the Company accumulated to RMB244485000 (31 December
2021: RMB23633000) including accumulated amounts attributable to shareholders of the parent company of RMB243869000 (31 December (i) In November 2020 the Group issued asset-backed securities through the Special Scheme set up by Huatai Securities (Shanghai) Asset
2021: RMB23633000) In 2022 the amount of expenses recognised by the Company for the equity-settled share-based payments was Management Co. Ltd. by using five logistics industrial parks held by it as underlying assets. Yiwu Fengyutai Enterprise Management Co.
RMB220852000 (2021: Nil). Ltd. Quanzhou Fengyutai Enterprise Management Co. Ltd. Wuxi Jietai Enterprise Management Co. Ltd. and Huai’an Fengtai Enterprise
Management Co. Ltd. (collectively “Property Operators”) wholly-owned subsidiaries of the Group worked as the property operators of the
(b) Information on share-based payments of the Company’s subsidiaries Special Scheme. In case that the actual operating income of the property assets does not reach 90% but is not lower than 80% of the target
amount the Property Operators were committed to compensate the insufficient part of the target amount with Taisen Holdings providing
The Group granted some equities or share options of several subsidiaries to the senior management and other employees of the aforesaid
guarantee for the compensation obligation.companies or other subsidiaries within the Group respectively.At the end of each three years the manager of the above Special Scheme accepts open-ended withdrawal and subscription of preferred
As at 31 December 2022 the equity-settled share-based payments of these companies recognised by the Group accumulated to RMB508035000
securities within the withdrawal registering period. If the preferred securities shares that have not completed open-ended withdrawal are less
(31 December 2021: RMB619314000) including accumulated amounts attributable to shareholders of the parent company of RMB431320000
than 20% of total undistributed principal of the preferred securities of RMB788 million at the extension operation announcement date. Taisen
(31 December 2021: RMB528557000). In 2022 expenses which were offset against the reversal of equity-settled share-based payments
Holdings will purchase such preferred securities.amounted to RMB111279000 (2021: RMB349308000). The fair value at the grant date was recognised based on the discount cash flow
model and the binomial tree model.
(3) Information on cash-settled share-based payments 11. Contingency
Certain subsidiaries of the Group use their shares or the Company’s shares as the calculation basis to grant cash-settled share-based payments As stated in Note 8(3)(g) subsidiaries of the Group provide loan guarantees to related parties. On 31 December 2022 the total guarantee
to eligible employees of those subsidiaries. amount was RMB895374000 (31 December 2021: RMB402420000).As at 31 December 2022 liabilities arising from the cash-settled share-based payments accumulated to RMB334757000 (31 December 2021:
RMB328607000). In 2022 the Group’s expenses confirmed for cash-settled share-based payments amounted to RMB48111000 (2021:
RMB199021000). The fair value at the balance sheet date was recognised based on the discount cash flow model and the binomial tree model. 12. Events after the balance sheet date
(1) Profit distribution after the balance sheet date
On 28 March 2023 the Board of Directors of the Company agreed that the Company would pay a cash dividend of RMB2.5 (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 2022 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.
224 225Chapter 10 Financial Statements
13. Operating lease proceeds after the balance sheet date (i) Foreign exchange risk of companies with RMB as recording currency
As at 31 December 2022 and 31 December 2021 the Group’s companies whose recording currency is RMB held financial assets and liabilities
As the lessor the Group’s undiscounted lease proceeds receivable after the balance sheet date are as follows:
denominated in non-recording currencies held by companies of which the equivalent amounts in RMB Foreign exchange exposure such as
(Note 4(58)(a)) mainly from USD HKD and EUR.
31 December 2022 31 December 2021
As at 31 December 2022 for the above various US dollar financial assets and US dollar financial liabilities if the RMB appreciates or depreciates
Within 1 year (inclusive) 228038 206427
by 5% against the US dollar and other factors remain unchanged the Group will reduce or increase its pre-tax profit by approximately
1 to 2 years (inclusive) 185848 157562 RMB74507000 (31 December 2020:RMB35628000). Other foreign currencies of changes have no significant impact on foreign exchange risk.
2 to 3 years (inclusive) 134539 104871 (ii) Foreign exchange risk of companies with HKD as recording currency
3 to 4 years (inclusive) 179036 46772
As at 31 December 2022 and 31 December 2021 the foreign exchange exposure of financial assets and liabilities denominated in non-recording
4 to 5 years (inclusive) 60581 32972 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
Over 5 years 246444 15104
HKD as their recording currency are not significant.
1034486563708
(iii) As at 31 December 2022 and 31 December 2021 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
14. Business combinations and balances within the Group are offset. As at 31 December 2022 and 31 December 2021 such foreign exchange risks are not material.
Refer to Note 5(1).(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.
15. Financial instruments and relevant risks 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 Group’s activities expose it to a variety of financial risks: market risk (primarily including foreign exchange risk interest rate risk and other the prevailing market conditions. As at 31 December 2022 the Group’s long-term interest bearing debts were mainly related to floating rate
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: long-term borrowings and fixed rate debentures payable. Among them floating rate long-term borrowings amounted to RMB7472010000
(31 December 2021: RMB3510829000); the contract amount of fixed rate debentures payable denominated in RMB was RMB1000000000
The Board of Directors is responsible for planning and establishing the Group’s risk management framework formulating the Group’s risk (31 December 2021: RMB500000000) and the contract amount of fixed rate debentures payable denominated in USD was USD2600000000
management policies and related guidelines and supervising the implementation of risk management measures. The Group has established equivalent to RMB18107960000 (31 December 2021: USD2400000000 equivalent to RMB15301680000).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 The Group continuously monitors the interest rate position of the Group. Increases in interest rates will increase the cost of new interest bearing
activities to determine whether to update the risk management policies and systems or not. The Group’s risk management is carried out by the borrowings and the interest expenses with respect to the Group’s outstanding floating rate borrowings and therefore could have a material
Risk Management Committee under policies approved by the Board of Directors. The Risk Management Committee encourages the departments adverse effect on the Group’s financial performance. Management makes adjustments timely with reference to the latest market conditions
of the Group to work closely together to identify evaluate and avoid relevant risks. The internal audit department of the Group conducts and may enter into interest rate swap agreements to mitigate its exposure to interest rate risk.periodical audit to the controls and procedures for risk management and reports the audit results to the Audit Committee of the Group.As at 31 December 2022 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 RMB37360000 (31 December 2021: RMB17554000).
(1) Market risk
(c) Other price risk
(a) Foreign exchange risk
The Group’s other price risk arises mainly from movements in price of various investments in equity instruments measured at fair value that
The Group’s major operational activities are carried out in the Chinese mainland and a majority of the transactions are denominated in RMB.will not be sold within 1 year.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 As at 31 December 2022 if the price of various investments in equity instruments had risen/fallen by 10% while all other variables had been
and liabilities denominated in non-recording currencies and future transactions denominated in foreign currencies. Management is responsible held constant the Group’s profit before tax and other comprehensive income before tax would have been approximately RMB101221000
for monitoring the amount of financial assets and liabilities and transactions denominated in non-recording currencies to reduce foreign (31 December 2021: approximately RMB87802000) and RMB736568000 (31 December 2021: approximately RMB681077000) higher/
exchange risk to the greatest extent. lower respectively.
226 227Chapter 10 Financial Statements
(2) Credit risk The financial liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual
cash flows:
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 31 December 2022
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 Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
maximum exposure to credit risk represents the carrying amount of the Group’s financial assets except that the maximum exposure to credit
Deposits from customers 20670 – – – 20670
risk of long-term receivables represents the aggregate of its undiscounted contractual cash flows.Accounts payable 24715352 – – – 24715352
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-
Other payables 13346595 – – – 13346595
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. Short-term borrowings 12963318 – – – 12963318
Other current liabilities 5118489 – – – 5118489
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 Current portion of non-current liabilities 11448352 – – – 11448352
related parties the Group considers that they have low credit risk; in respect of receivables from non-related parties the Group will develop Long-term borrowings 161001 3101351 4660180 85488 8008020
relevant policies to control the exposure to credit risk. The Group evaluates customers’ credit quality based on their financial position possibility
Debentures payable 581461 1068586 7373540 13179071 22202658
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 Long-term payables – 210501 – – 210501
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 Lease liabilities – 4179191 3797852 1976864 9953907
terms to ensure the overall credit risk of the Group is limited to a controllable extent.
6835523885596291583157215241423107987862
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 31 December 2021
receivables represent advances cash on delivery service deposits and guarantees loans to employees and finance lease receivables arising
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
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 Deposits from customers 13723 – – – 13723
amounts on a regular basis and takes into account important macroeconomic assumptions and parameters in the calculation of expected Accounts payable 23467675 – – – 23467675
credit losses including the risk of economic downturn external market conditions changes in customer conditions gross domestic product
Other payables 11520282 – – – 11520282
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 Short-term borrowings 18754425 – – – 18754425
impossibility to reasonably estimate the recoverable amount include debtors’ failure to make contract payments as planned or make overdue Other current liabilities 4069757 – – – 4069757
contract payments significant financial difficulties bankruptcy liquidation etc.Current portion of non-current liabilities 9018284 – – – 9018284
For loans and advances the Group developed credit policies and operational implementation rules in accordance with the requirements of Long-term borrowings 66341 1143643 2524231 4472 3738687
relevant state regulatory authorities and implemented standardised management over the entire process of credit granting. In addition the Debentures payable 500343 3674510 4098421 10640242 18913516
Group further improved the systems for credit risk monitoring and early warning and defective credit extension management. The Group
Long-term payables 2464 302162 85412 31890 421928
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 Lease liabilities – 4374170 5158881 2590999 12124050
the optimisation progress of defective credit to avoid non-performing loans. 67413294 9494485 11866945 13267603 102042327
As at 31 December 2022 the Group had no significant collateral or other credit enhancements held as a result of the debtor’s mortgage (31
December 2021: Nil). (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)):
(3) Liquidity risk
31 December 2022 31 December 2021
(a) Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group. The Group monitors rolling forecasts
Within 1 year (inclusive) 986197 888382
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 1 to 2 years (inclusive) 259841 182883
institutions so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and 2 to 3 years (inclusive) 200248 131357
long-term liquidity requirements.Over 3 years 192415 109290
16387011311912
228 229Chapter 10 Financial Statements
16. Fair value estimates As at 31 December 2022 the financial liabilities measured at fair value on a recurring basis by the above three levels were analysed below:
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 Level 1 Level 2 Level 3 Total
significant to the entire fair value measurement: Derivative financial liabilities:
Others – 96647 – 96647
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. As at 31 December 2021 the financial liabilities measured at fair value on a recurring basis by the above three levels were analysed below:
Level 3: Unobservable inputs for the asset or liability. Level 1 Level 2 Level 3 Total
(1) Financial assets and liabilities measured at fair value on a recurring basis Derivative financial liabilities:
Others – 7658 – 7658
As at 31 December 2022 the financial assets measured at fair value on a recurring basis by the above three levels were analysed below:
The Group takes the date on which events causing the transfers between the levels take place as the timing specific for recognising the transfers.Level 1 Level 2 Level 3 Total There were no transfers between different levels for the year.Financial assets held for trading: 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
Structural deposits – – 7351158 7351158 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 risk-free interest rate benchmark
Fund investments 77 34144 – 34221
rate exchange rate credit spread liquidity premium EBITDA multiplier and liquidity discount.Receivables financing:
The changes in Level 3 assets are analysed below:
Notes receivable – 63310 – 63310
Other non-current financial assets: Other non-current Other non-current Other equity
Financial assets held Other non-current
Industry fund investments – – 770637 770637 financial assets financial assets instrumentsfor trading financial assets
– Special Scheme – Industry fund – Equity instruments
Special Scheme equity-class securities – – 116286 116286 – Structural deposits – Othersequity-class securities investments available for sale
Others – – 125286 125286 31 December 2021 9730665 235821 552130 90072 6167109
Investments in other equity instruments: Increase in the current year 151418127 – 220144 32039 345378
Equity instruments available for sale 158936 127564 7079184 7365684 Decrease in the current year (154421228) (137660) (24173) – –
Total financial assets 159013 225018 15442551 15826582 Gains or losses recognised in profit for the current year 623594 18125 2705 (87) –
Gains recognised in other comprehensive income – – – – (32291)
As at 31 December 2021 the financial assets measured at fair value on a recurring basis by the above three levels were analysed below:
Exchange differences on translation of foreign
––198313262598988
currency financial statements
Level 1 Level 2 Level 3 Total
31 December 2022 7351158 116286 770637 125286 7079184
Financial assets held for trading:
Structural deposits – – 9730665 9730665
Other non-current Other non-current Other equity
Financial assets held Other non-current Fund investments 76 653752 – 653828 financial assets financial assets instruments
for trading financial assets
– Special scheme – Industry fund – Equity instruments
Other non-current financial assets: – Structural deposits – Others
equity-class securities investments available for sale
Industry fund investments – – 552130 552130
31 December 2020 6276848 390391 441135 – 4136330
Special Scheme equity-class securities – – 235821 235821
Business combination involving enterprises
– – – 4854 244045Others – – 90072 90072 not under common control
Investments in other equity instruments: Increase in the current year 117935200 – 28943 85242 –
Equity instruments available for sale 241936 401726 6167109 6810771 Decrease in the current year (114905490) (167705) (25572) – (208230)
Total financial assets 242012 1055478 16775797 18073287 Gains recognised in profit or loss for the current year 424107 13135 108635 – –
Gains recognised in other comprehensive income – – – – 2101185
Exchange differences on translation of foreign
––(1011)(24)(106221)
currency financial statements
31 December 2021 9730665 235821 552130 90072 6167109
230 231Chapter 10 Financial Statements
(2) Financial assets and liabilities not measured at fair value but disclosed (3) Other receivables
The Group’s financial assets and liabilities measured at amortised cost mainly include cash at bank and on hand receivables loans and advances 31 December 2022 31 December 2021
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. Dividends receivable from Taisen Holdings 500000 2000000
The carrying amount of financial assets and liabilities not measured at fair value is a reasonable approximation of their fair value. The fair value Funds raised by convertible corporate debentures granted to subsidiaries 3899337 5460859
of financial assets and liabilities over one year is the present value of the contractually determined stream of future cash flows discounted at Funds raised by a non-public offering of shares granted to subsidiaries 10790492 10814434
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. Others 1643 200
1519147218275493
Less: Provision for bad debts (8) (1)
17. Capital management
1519146418275492
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. The ageing of other receivables is analysed as follows:
In order to maintain or adjust the capital structure the Group may adjust the amount of dividends paid to shareholders refund capital to
31 December 2022 31 December 2021
shareholders issue new shares or sell assets to reduce debts.Within 1 year (inclusive) 2753246 12814634
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. 1 to 2 years (inclusive) 10764477 3284121
As at 31 December 2022 and 31 December 2021 the Group’s gearing ratio was as follows: Over 2 years 1673749 2176738
1519147218275493
31 December 2022 31 December 2021
Gearing ratio 54.67% 53.35% (4) Long-term equity investments
31 December 2022 31 December 2021
18. Notes to the Company’s financial statements Subsidiaries (a) 58217914 50997088
Less: Provision for impairment loss of long-term equity investments – –
(1) Cash at bank and on hand
5821791450997088
31 December 2022 31 December 2021
There is no significant restriction on sales of the long-term equity investments held by the Company.Cash at bank 812181 226112
(a) Subsidiaries
(2) Financial assets held for trading
Explanation of disparity
Movements Cash dividends
Accounting 31 December 31 December Shareholding Voting rights between percentages Provision for
31 December 2022 31 December 2021 in the current declared in the
method 2021 2022 (%) (%) of shareholding and impairment
year current year
Structural deposits 2335319 9200219 voting rights
Taisen Holdings Cost method 50997088 7220826 58217914 100.00% 100.00% Not applicable – 500000
(5) Investment income
20222021
Income from long-term equity investments under the cost method 500000 2000000
Investment income from financial assets held for trading 186398 22132
6863982022132
232 233Chapter 10 Financial Statements
1. Statement of non-recurring profit or loss
20222021
Investment income from disposal of subsidiaries 32314 1808638
Gains on disposal of other non-current assets 374595 105502
Government grants recognised in profit or loss for the current period
(government grants recognised in non-operating income other income and 826447 857458
deducted against related costs and expenses)
Gains arising from changes in fair value of financial assets and liabilities held
for trading and investment income arising from disposal of financial assets and 47500 151606
liabilities held for trading
Income generated where investment cost of enterprises’ acquisition of
subsidiaries is less than the share of the fair value of the investee’s identifiable – 2375
net assets at the time of acquisition of investment
Reversal of impairment provision for receivables individually assessed for
9429746264
impairment
Net amount of other non-operating income and expenses (73330) (136453)
Sub-total 1301823 2835390
Less: Income tax effect (235481) (381549)
Less: Non-recurring profit or loss attributable to minority shareholders (229502) (18942)
Non-recurring profit or loss attributable to shareholders of the parent company 836840 2434899
Including: Non-recurring profit or loss from continuing operations 836840 2434899
Basis for preparation of statement of non-recurring profit or loss
Pursuant to the Explanatory Announcement for Information Disclosure of Companies Offering Securities to the Public No.1 – Non-recurring Profit
or Loss (2008) issued by China Securities Regulatory Commission 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. Return on net assets and earnings per share
Weighted average Earnings per share
Return on net assets (%) Basic earnings per share (Yuan/share) Diluted earnings per share (Yuan/share)
202220212022202120222021
Net profit attributable to ordinary
7.34%6.81%1.270.931.270.93
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company 6.35% 2.93% 1.10 0.40 1.10 0.40
net of non-recurring profit or loss
Including:
– Continuing operations
Net profit attributable to ordinary
7.34%6.81%1.270.931.270.93
shareholders of the Company
N et profit attributable to ordinary
shareholders of the Company 6.35% 2.93% 1.10 0.40 1.10 0.40
net of non-recurring profit or loss
234
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