Interim Report 2023

Management Discussion and Analysis 14 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED Bonded logistics operation In the first half of 2023, the Group’s bonded logistics business continued to uphold the development direction of enriching the integrated service ecosystem, strengthening strategic leadership, seizing market opportunities, extending the scope of business services, and enhancing synergistic development. The overall production and operation showed a positive trend. China Merchants Bonded Logistics Co., Ltd. in Shenzhen proactively expanded new customers and modes of operation, and the average utilization rate of warehouse reached 98%. China Merchants International Terminal (Qingdao) Co., Ltd, focused on the development of the rubber industry. It achieved diversified self-operated business and stabilized the operating business of the park. Accordingly, the average utilization rate of the warehouses reached 100%. Tianjin Haitian Bonded Logistics Co., Ltd., an associate of the Group, recorded an average utilization rate of 100% of its warehouse. In the Djibouti International Free Trade Zone, the average utilization rate of the bonded warehouse wholly-owned by the Group was 100%. In the first half of 2023, the total cargo volume handled at the three major air cargo terminals in Hong Kong amounted to 1.62 million tonnes, down 10.4% year-on-year. Asia Airfreight Terminal Company Limited, which is a joint venture of the Group, handled a total cargo volume of 0.30 million tonnes, representing a decrease of 19.1% year-on-year and a market share of 18.7%, down by 2 percentage points as compared with the corresponding period last year. FINANCIAL REVIEW In the first half of 2023, the operating results of the Group were affected by the translation effect arising from the depreciation of Renminbi, which was mainly reflected in items such as revenue, costs and share of profits of associates and joint ventures. Coupled with the impact of the decline in business volume of ports in Mainland China, the Group’s revenue for the six months ended 30 June 2023 amounted to HK$5,805 million, a year-on-year decrease of 10.8%. In addition, due to a year-on-year decrease in share of profits of associates and joint ventures, profit attributable to equity holders of the Company and recurrent profit Note 1 decreased to HK$3,351 million and HK$3,325 million respectively, representing year-on-year decreases of 30.5% and 33.2%. Total assets of the Group slightly increased by 0.4% from HK$172,155 million as at 31 December 2022 to HK$172,882 million as at 30 June 2023. The total liabilities of the Group increased by 1.9% from HK$49,579 million as at 31 December 2022 to HK$50,510 million as at 30 June 2023. As at 30 June 2023, net assets attributable to equity holders of the Company was HK$96,357 million, slightly down by 0.6% as compared to that as at 31 December 2022. This was mainly attributed to the losses on retranslation of financial statements denominated in foreign currencies of subsidiaries, associates and joint ventures. Note 1 Profit attributable to equity holders of the Company net of non-recurrent gains/losses after tax. Non-recurrent gains/losses include: for the first half of 2023, net change in fair value of financial assets at fair value through profit or loss and net change in fair value of investment properties; while for the first half of 2022, net change in fair value of financial assets at fair value through profit or loss, net change in fair value of investment properties and loss on deemed disposal of partial interest in an associate.