NOTES
TO THE FINANCIAL STATEMENTS OF P&I COVER
FEBRUARY
20 2011
The Association stands on a
mutual basis and is to uphold prestige and safeguard the interests of its
Members, for which the Association affords insurance cover and offers
professional services. The principal activities of the Association are the
insurance against Protecting and Indemnity risks to the Members. The liability
of the Members is to pay Calls and premiums to the Association. In the event of
the termination of the Association, any net assets of the Association are to be
returned equitably to the Members insured by it in the policy year during which
the Association is terminated in accordance with the Bye-Laws.
a
Accounting Convention
These Financial
Statements have been prepared in accordance with the material Accounting
Principles based on applicable Chinese accounting standards and Generally
Accepted Accounting Principles.
b Accounting
Year
The figures
under items as incorporated in the Financial Statements are up to February 20
2011.
c
Annual Accounting and Policy Year
Accounting
The Income and Expenditure
Account is prepared on an annual accounting basis and includes all the Calls
and premiums levied in the accounting year and the cost of claims and
co-insurance for the current year and any adjustments relating to previous
years together with operating expenses, financial expenses and investment
income. All revenue transactions appear in the Income and Expenditure Account
and are allocated to the relevant policy years or to a reserve.
Calls and
premiums, co-insurance premiums, claims and claim recoverable from co-insurers
or third parties are allocated to the policy years to which they relate. Both
the realised and unrealised
investment income and operating expenses are allocated to the current policy
year.
d
Valuation basis
The Association
adopts accrual basis in accounting unless otherwise stipulated. The values of assets are to
be recorded at historical costs at the time of acquisition.
e
Bookkeeping base currency
The United
States Dollar is the bookkeeping base currency of the Association. The
Association adopts the principle of separate accounting for similar accounts.
Balances of RMB accounts at the end of the year shall be translated into the US
Dollar at the official exchange rate prevailing on February 20, 2011.
The differences arising from the translation are stated as gains or losses in
the Income and Expenditure Account.
f
Cash Balance
Cash in hand,
bank deposits and other monetary assets which include cash in other cities,
cashier’s check，bank draft，cash for investment and advisory
funds are listed separately for their different keeping place and certain
purpose in bookkeeping. Their total amount in the name of cash balance is
showed as a current asset in the Balance Sheet.
g Short-term
investments
Short-term
investments refer to the financial
assets which include stocks, bonds, and advisory funds with the intention that
they be sold within one year.
h
Calls and Premiums Receivable
It refers to
the accumulated amount of Calls and premiums receivable due from Members. The Association
conducts the direct write-off method and the bad debts are charged to the
reserves directly under the Board decision when the Calls and premiums are
discovered to be uncollectible.
i Guarantee
It refers to cash
balance held by domestic or overseas Banks for issuing letters of guarantee.
j
Long-term investments
The equity
method is used when the Association has significant influence, control or
co-control over the operation of the invested listed company. In the equity
method, the initial or supplementary investment is firstly recorded at cost but
later is adjusted each year for changes in the equity in the invested company.
The Association recognizes the balance from the changes of the equity in the
invested company as an investment income or loss. The cost method is used for
other long-term investments.
The investment
income includes all the gains and losses. The investment income (or loss) less
the investment management cost is stated in the Income and Expenditure Account.
Since the
policy year of 1998 when the Association afforded the new cover against
k
Fixed Assets
Fixed assets
refer to the assets whose useful life is over one year, unit value is above RMB
2000.00 and where original physical form remains during the process of
utilization. The straight-line method is used in fixed assets depreciation.
l
Short-term Loans
Short-term loans are the bank
loans which mature within one year.
m
Liabilities Provision
Liabilities
provisions and co-insurance recoveries receivable for open and closed policy
years are drawn based on the best estimates of the Managers and consent of the
chief underwriter to prepare for the claims incurred in the relevant policy
years and their difference is charged to the Income and Expenditure Account.
They are also stated in the Balance Sheet separately.
n
Reserves
The reserves
are the net assets of the Association and available to meet any deterioration
in the open and closed policy years and to contribute to Overspill claims,
actual or potential investment losses or other certain purposes.
o
Calls and Premiums
Calls and
premiums include Advance Calls, Supplementary Calls, Release Calls and Fixed
premiums, less return Calls and premiums. These Calls and premiums are the
total receivables for the whole period of cover provided by the contracts
incepting during the accounting period together with any premium adjustments
relating to prior accounting periods. The amount of Calls and premiums less
co-insurance premiums is credited to the Income and Expenditure Account.
p
Co-insurance Premiums
The liabilities
of the Association are co-insured above certain levels with some International
Group Clubs. This item shows the amount of the co-insurance premiums the
Association paid to these Clubs.
q
Claims
The claims include
all claims paid during the year. The recoveries from co-insurers and the
recoveries from the third parties are both as the anti-items to the claims paid
and credited into the Income and Expenditure Account.
r
Claims Recoveries From the Third Party
It refers to
the amount recovered from the third party, which is credited into the Income
and Expenditure Account as the deduction of claims.
s
Co-insured Recoveries
The liabilities
of the Association are co-insured above certain levels with some International
Group Clubs. It is the anti-item to the claims paid and credited in the Income
and Expenditure Account. Accordingly the co-insurance recoveries receivable are
listed as assets in the Balance Sheet.
t
Operating Expenses
Operating expenses
include management costs and costs of the Board. The management costs include
the cost of the offices, staff, communications, travel and administration. The
costs of the Board include the cost of annual General Meetings of Members and
Board meetings, travels and other costs. It has been drawn on the ratio in
accordance with the Board’s instruction and is listed in the Income and
Expenditure Account.
u
Taxation
The Association
enforces the relevant tax policies of the People’s Republic of
v
Related Party Disclosures
The Association
has no share capital and is controlled by the Members who are also the insureds. The subsequent insurance transactions are
consequently deemed to be the transactions between the related parties, but
they are the only transactions between the Association and the Members.
|
|
2010/2011 |
2009/2010 |
|
Sundry debtors： |
|
|
|
Account with HM
Cover |
- |
- |
|
Staff housing loan |
677,872.78 |
753,727.84 |
|
Other debtors |
1,309,374.91 |
1,495,522.71 |
|
Total Sundry debtors |
1,987,247.69 |
2,249,250.55 |
|
Sundry creditors： |
|
|
|
Account with HM
Cover |
1,837,790.17 |
2,009,409.98 |
|
Other creditors |
4,197,115.91 |
3,252,692.70 |
|
Total Sundry
creditors |
6,034,906.08 |
5,262,102.68 |
|
Short-term loans |
- |
- |
The Association
holds long-term equity investments in several entities, such as China Minsheng Bank Corp., China Everbright
Bank and Hai Tong Securities Co. Ltd. etc. amounting
to USD629.20 million totally in book value, USD605.66 million of which was
listed in the Balance Sheet of P&I Cover, while USD23.53 million was
assigned to the HM Cover.
Up
to February 20 2011, the Association, as the fourth biggest shareholder of
China Minsheng Bank Corp.(hereinafter
called as “the Bank”), invested totally USD
|
Note 5-Calls &
Premiums （see note 2o/p） |
|
|||
|
|
|
|
|
|
|
|
Net Calls & Premiums |
|||
|
|
|
|
2010/2011 |
2009/2010 |
|
|
Calls & premiums
|
A |
60,012,269.51 |
51,147,667.42 |
|
|
Co-insurance
premiums |
B |
29,316,149.63 |
27,070,033.12 |
|
|
Net calls &
premiums |
A－B |
30,696,119.88 |
24,077,634.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calls & Premiums |
|||
|
|
|
|
2010/2011 |
2009/2010 |
|
|
Policy year |
|
|
|
|
|
2010 |
|
53,265,531.94 |
- |
|
|
2009 |
|
217,838.56 |
45,786,272.90 |
|
|
2008 |
|
6,528,899.01 |
166,123.77 |
|
|
2007 |
|
- |
5,293,676.31 |
|
|
2006 |
|
- |
(98,405.56) |
|
|
Total |
|
60,012,269.51 |
51,147,667.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Co-insurance
Premiums |
|||
|
|
|
|
2010/2011 |
2009/2010 |
|
|
Policy year |
|
|
|
|
|
2010 |
|
26,594,672.94 |
- |
|
|
2009 |
|
1,082,513.78 |
22,568,206.88 |
|
|
2008 |
|
1,231,576.32 |
2,043,634.73 |
|
|
2007 |
|
407,386.59 |
1,647,722.54 |
|
|
2006 |
|
- |
810,468.97 |
|
|
Total |
|
29,316,149.63 |
27,070,033.12 |
Note 6-Claims（see note 2q/r/s）
|
|
Net Claims |
|||
|
|
|
|
2010/2011 |
2009/2010 |
|
|
Claims |
A |
21,370,082.64 |
17,693,593.93 |
|
|
Less: Recoveries
from 3rd party |
B |
27,138.11 |
104,859.50 |
|
|
Other P&I Association |
C |
3,510,433.13 |
3,919,903.07 |
|
|
Net claims
|
A-B-C=D |
17,832,511.40 |
13,668,831.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries From 3rd Party |
|||
|
|
|
|
2010/2011 |
2009/2010 |
|
|
Policy year |
|
|
|
|
|
2010 |
|
- |
- |
|
|
2009 |
|
- |
- |
|
|
2008 |
|
- |
- |
|
|
2007 |
|
27,138.11 |
104,859.50 |
|
|
2006 |
|
- |
- |
|
|
Total |
|
27,138.11 |
104,859.50 |
|
|
|
|
|
|
|
|
|
|||
|
|
Recoveries From
Other P&I Association |
|||
|
|
|
|
2010/2011 |
2009/2010 |
|
|
Policy year |
|
|
|
|
|
2010 |
|
137,751.24 |
- |
|
|
2009 |
|
135,479.00 |
- |
|
|
2008 |
|
345,703.22 |
307,190.81 |
|
|
2007 |
|
2,891,499.67 |
1,184,093.81 |
|
|
2006 |
|
- |
2,428,618.45 |
|
|
Total |
|
3,510,433.13 |
3,919,903.07 |
Claims
|
Policy
year Items |
2010 |
2009 |
2008 |
2007 |
合计 |
|
|
Correspondents fee |
210,107.42 |
412,722.42 |
63,804.47 |
82,898.77 |
769,533.08 |
|
|
Survey fee |
907,606.10 |
748,520.54 |
65,524.94 |
39,244.48 |
1,760,896.06 |
|
|
Lawyer's fee |
199,722.89 |
269,185.54 |
520,860.85 |
1,706,588.39 |
2,696,357.67 |
|
|
Injury illness or death of seaman |
863,054.54 |
934,563.87 |
669,121.40 |
1,533,224.15 |
3,999,963.96 |
|
|
Cargo damage |
472,746.46 |
1,571,208.07 |
986,899.26 |
1,474,937.52 |
4,505,791.31 |
|
|
Collision |
546,503.16 |
420,627.14 |
88,289.05 |
2,869,283.21 |
3,924,702.56 |
|
|
Pollution risks |
169,323.35 |
329,374.45 |
|
14,330.89 |
513,028.69 |
|
|
Wreck disposal |
323,753.00 |
244,599.76 |
|
395,000.00 |
963,352.76 |
|
|
Others |
366,742.51 |
669,655.34 |
495,405.23 |
671,889.24 |
2,203,692.32 |
|
|
P&I |
4,059,559.43 |
5,600,457.13 |
2,889,905.20 |
8,787,396.65 |
21,337,318.41 |
|
|
FDD |
17,803.99 |
|
12,072.81 |
2,887.43 |
32,764.23 |
|
|
Total
claims paid |
4,077,363.42 |
5,600,457.13 |
2,901,978.01 |
8,790,284.08 |
21,370,082.64 |
Note 7-Investment income （see note 2j）
|
|
|
2010/2011年度 |
2009/2010年度 |
|
Realised investment
income: |
|
|
|
|
Equity capital |
12,547,818.85 |
12,934,193.46 |
|
|
|
|
14,509,408.81 |
|
|
Bonds |
203,507.16 |
140,774.15 |
|
|
House Property |
44,990.40 |
9,872.01 |
|
|
Others |
6,443,494.05 |
5,519,443.20 |
|
|
|
19,239,810.46 |
33,113,691.63 |
|
|
Add: Unrealised investment income |
79,116,524.78 |
115,479,370.44 |
|
|
Less:
Investment cost |
7,868,506.82 |
11,887,444.96 |
|
|
Net
income of investments |
90,487,828.42 |
136,705,617.11 |
|
Note 8-Liabilities Provision
& Liabilities Provision Transfer （see note
|
Liabilities
Provision |
||
|
2010 |
12,551,590.00 |
|
|
2009 |
6,039,754.00 |
|
|
2008 |
6,263,693.00 |
|
|
Closed
policy years |
6,805,993.00
|
|
|
Total |
|
31,661,030.00 |
|
Liabilities
Provision Transfer |
||||
|
|
Estimated provision of liability |
|
Provision of liability |
|
|
2010/2011 |
|
12,551,590.00 |
|
|
|
2009/2010 |
|
6,039,754.00 |
|
9,456,835.00 |
|
2008/2009 |
|
6,263,693.00 |
|
9,532,882.00 |
|
2007/2008 |
|
6,805,993.00 |
|
10,370,129.00 |
|
Total |
(A) |
31,661,030.00 |
(B) |
29,359,846.00 |
|
Transfers
to liabilities provision (A)-(B) |
|
2,301,184.00 |
||
Note 9-Reserves （see note 2n）
|
|
|
2010/2011 |
|
2009/2010 |
|
Claims |
|
610,344,203.48 |
|
505,864,110.51 |
|
Investments |
|
21,242,079.00 |
|
13,548,481.65 |
|
Management |
|
54,605,118.34 |
|
44,640,318.98 |
|
Total |
|
686,191,400.82 |
|
564,052,911.14 |