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深深房B:2019年半年度报告(英文版)2019-08-21  

						ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




     SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE &
              PROPERTIES (GROUP) CO., LTD.

                                       INTERIM REPORT 2019

                                                      2019-060




                                                   August 2019


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.        Interim Report 2019




             Part I Important Notes, Table of Contents and Definitions

The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of ShenZhen Special Economic Zone Real Estate &
Properties (Group) Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee the
factuality, accuracy and completeness of the contents of this Report and its summary, and
shall be jointly and severally liable for any misrepresentations, misleading statements or
material omissions therein.
Zhou Jianguo, chairman of the Company’s Board, Chen Maozheng, the Company’s General
Manager, Tang Xiaoping, the Company’s head for financial affairs, and Qiao Yanjun, head of
the Company’s financial department (equivalent to financial manager) hereby guarantee that
the Financial Statements carried in this Report are factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
The Company discusses the “risks facing the Company and countermeasures” under the same
heading in item X under “Part IV Operating Performance Discussion and Analysis” of this
Report.
The Company has no interim dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.




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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                              Interim Report 2019




                                                  Table of Contents




Part I Important Notes, Table of Contents and Definitions ........................................................... 2

Part II Corporate Information and Key Financial Information ................................................... 5

Part III Business Summary ............................................................................................................... 8

Part IV Operating Performance Discussion and Analysis ........................................................... 10

Part V Significant Events ................................................................................................................ 20

Part VI Share Changes and Shareholder Information ................................................................. 27

Part VII Preferred Shares ............................................................................................................... 32

Part VIII Directors, Supervisors and Senior Management.......................................................... 33

Part IX Corporate Bonds ................................................................................................................ 34

Part X Financial Statements ........................................................................................................... 35

Part XI Documents Available for Reference ................................................................................ 173




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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                       Interim Report 2019




                                                       Definitions


                         Term                                                          Definition

                                                    ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
“SPG”, the “Company”, the “Group” or “we”
                                                    and its consolidated subsidiaries, except where the context otherwise requires

Holding Company                                     Shenzhen Investment Holdings Co., Ltd.




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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                      Interim Report 2019




          Part II Corporate Information and Key Financial Information

I Corporate Information

Stock name                         SPG, SPG-B                           Stock code                   000029, 200029

Changed stock name (if any)        ---

Stock     exchange   for   stock
                                   Shenzhen Stock Exchange
listing

Company name in Chinese            深圳经济特区房地产(集团)股份有限公司

Abbr. (if any)                     深房集团

Company name in English (if
                                   ShenZhen Special Economic Zone Real Estate&Properties (Group).Co.,Ltd.
any)

Abbr. (if any)                     SPG

Legal representative               Zhou Jianguo


II Contact Information

                                                          Board Secretary                       Securities Representative

Name                                          Tang Xiaoping                            Luo Yi

                                              47/F, SPG Plaza, Renmin South Road, 47/F, SPG Plaza, Renmin South Road,
Address
                                              Shenzhen, Guangdong, P.R.China      Shenzhen, Guangdong, P.R.China
Tel.                                          (86 755)82293000-4638                  (86 755)82293000-4715

Fax                                           (86 755)82294024                       (86 755)82294024

Email address                                 tangxiaoping0086@126.com                 spg@163.net


III Other Information

1. Contact Information of the Company


Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address and

email address of the Company in the Reporting Period.

□ Applicable √ Not applicable

No change occurred to the said information in the Reporting Period, which can be found in the 2018 Annual Report.


2. Media for Information Disclosure and Place where this Report is Kept


Indicate by tick mark whether any change occurred to the information disclosure media and the place for keeping the Company’s

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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                      Interim Report 2019



periodic reports in the Reporting Period.

□ Applicable √ Not applicable

The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the

Company’s periodic reports and the place for keeping such reports did not change in the Reporting Period. The said information can

be found in the 2018 Annual Report.


IV Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.

□ Yes √ No

                                                       H1 2019                       H1 2018                 Change (%)

Operating revenue (RMB)                                 1,251,337,802.57              1,317,541,631.35                    -5.02%

Net   profit   attributable   to   the   listed
                                                          333,155,843.41                329,066,084.53                     1.24%
company’s shareholders (RMB)

Net   profit   attributable   to   the   listed
company’s shareholders before exceptional                322,865,954.53                329,143,873.10                    -1.91%
gains and losses (RMB)

Net cash generated from/used in operating
                                                          685,675,245.10                594,728,129.67                    15.29%
activities (RMB)

Basic earnings per share (RMB/share)                                0.3293                      0.3253                     1.23%

Diluted earnings per share (RMB/share)                              0.3293                      0.3253                     1.23%

Weighted average return on equity (%)                               9.81%                       11.00%                    -1.19%

                                                     30 June 2019               31 December 2018             Change (%)

Total assets (RMB)                                      5,069,809,256.04              4,665,891,514.25                     8.66%

Equity attributable to the listed company’s
                                                        3,463,168,724.16              3,332,259,641.39                     3.93%
shareholders (RMB)


V Accounting Data Differences under Chinese Accounting Standards (CAS) and
International Financial Reporting Standards (IFRS) and Foreign Accounting Standards

1. Net Profit and Equity Differences under CAS and IFRS

□ Applicable √ Not applicable

No such differences for the Reporting Period.


2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                           Interim Report 2019


No such differences for the Reporting Period.


XI Exceptional Gains and Losses

√ Applicable □ Not applicable

                                                                                                                             Unit: RMB

                                  Item                                     Reporting Period                        Note

Gain or loss on disposal of non-current assets (inclusive of
                                                                                         -3,605.82
impairment allowance write-offs)

Gain or loss on assets entrusted to other entities for investment or                                 Gains on investments in
                                                                                    13,359,898.55
management                                                                                           structured deposits at bank

                                                                                                     Down payments from home
Non-operating income and expense other than above                                      363,559.11
                                                                                                     buyers

Less: Income tax effects                                                             3,429,962.96

Total                                                                               10,289,888.88                    --

Explanation of why the Company classifies a gain/loss item as exceptional according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items, or reclassifies any exceptional item listed in the said explanatory announcement as recurrent:
□ Applicable √ Not applicable
No such cases for the Reporting Period.




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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                        Interim Report 2019




                                        Part III Business Summary

I Principal Activity of the Company in the Reporting Period

Is the Company subject to any industry-specific disclosure requirements?

No.
Focused on residential property development, the Company has been seeing increasing brand
effects with great effort spent on project quality and progress, as well as on premium projects.
During the Reporting Period, the Company primarily developed and sold residential properties in
two cities, Shenzhen and Shantou. In Shenzhen, the Chuanqi Jingyuan project has successfully
completed fine decoration and has been almost sold out; the Chuanqi Donghu Mingyuan project has
wrapped up construction and is going through acceptance, of which approximately 10% has been
sold; and the Cuilinyuan project has finished the initial registration and has been sold around 80%.
In Shantou, the Tianyuewan Phase II project has completed the pile foundation and the pit support
structure and is progressing as scheduled; and the Tianyuewan Phase I project has seen about 35%
of its residential units sold.

II Material Changes in Major Assets

1. Material Changes in Major Assets


                Major assets                                               Reason for material changes


Equity assets                             No material change

Fixed assets                              No material change

Intangible assets                         No material change

Construction in progress                  No material change

                                          The ending amount (as at 30 June 2019) was down by RMB808,041,542.78 (or 39.45%)
                                          from the beginning amount (as at 31 December 2018), primarily driven by the investment
Monetary capital
                                          in structured deposits of RMB1.3 billion in total at China Citic Bank with a maturity of
                                          180 days.

                                          The ending amount (as at 30 June 2019) was up by RMB21,254,979.88 (or 117%) from
Accounts receivable                       the beginning amount (as at 31 December 2018), primarily driven by the house
                                          mortgages which went through the mortgage formalities and remained unpaid.

                                          The ending amount (as at 30 June 2019) was up by RMB6,074,601.73 (or 39.81%) from
Financings backed by accounts
                                          the beginning amount (as at 31 December 2018), primarily driven by the factoring
receivable
                                          business between subsidiary Zhentong Engineering and bank.

                                          The ending amount (as at 30 June 2019) was up by RMB1,359,437,064.03 (or
Other current assets
                                          20047.74%) from the beginning amount (as at 31 December 2018), primarily driven by


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                       Interim Report 2019


                                          the investment in two structured deposits of RMB1.3 billion in total at China Citic Bank
                                          with a maturity of 180 days.

                                          The ending amount (as at 30 June 2019) was down by RMB76,658,406.02 (or 35.37%)
Accounts payable                          from the beginning amount (as at 31 December 2018), primarily driven by the payments
                                          made for construction.

                                          The ending amount (as at 30 June 2019) was up by RMB185,952,497.18 (or 241.21%)
Taxes payable                             from the beginning amount (as at 31 December 2018), primarily driven by the provisions
                                          for corporate income tax and land VAT.

                                          The ending amount (as at 30 June 2019) was up by RMB232,901,528.46 (or 148.89%)
Advances from customers                   from the beginning amount (as at 31 December 2018), primarily driven by more
                                          advances from home buyers.


2. Major Assets Overseas

□ Applicable √ Not applicable


III Core Competitiveness Analysis

Is the Company subject to any industry-specific disclosure requirements?

No.
As one of the earliest real estate listed companies in Shenzhen, the Company has a history over 30
years in real estate development in Shenzhen and rich experience in the main business of real estate
development. In recent years, thanks to the experience learned from the Shenzhen-located
Chuanqishan project, Chuanqi Shanglin project, Cuilinyuan project, Chuanqi Jingyuan project and
Chuanqi Donghu Mingyuan project, as well as from the Shantou-located projects, the Company
accelerates the establishment of a modern enterprise HR management system and works hard in
building a professional and high-quality development team. It also keeps improving the
management mechanism and processes for project development. As a result, the professionalism
and management capability of the Company have improved significantly; planning, construction,
cost control, marketing capability and brand image have been effectively enhanced; and the
operational capability in the main business of real estate keeps increasing, along with the core
competitiveness. As of the Reporting Period (inclusive), the Company has been honored jointly by
the Guangdong Provincial Enterprise Confederation and the Guangdong Provincial Association of
Entrepreneurs as a “Most Honest Enterprise in Guangdong Province” for eight years in a row. It has
also won accolades from the Shenzhen Real Estate Association, namely, the “Real Estate Developer
in Shenzhen with the Highest Brand Value” and the “Honest (Quality) Real Estate Developer in
Shenzhen”, for the past two years.




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           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                Interim Report 2019




              Part IV Operating Performance Discussion and Analysis

I Overview

(I) Operating Results of the Reporting Period

In face of the complicated and changeable economic conditions at home and abroad in 2019,
China’s economy continued to see progress amid overall stability. Major macro-economic
indicators remained at reasonable levels, the supply-side structural reform carried forward, and
high-quality development promotion continued. Regarding the domestic real estate market, it was
still under great pressure due to the restrictive measures. Under such circumstances, in addition to
carrying forward its major assets restructuring programme, the Company adhered to the thinking of
“Carefully Draw up Development Strategies, Particularly Focus on Core Business, Strictly Control
Costs and Continuously Improve Management Capability” and put greater efforts into promoting
project construction and marketing, so as to achieve continual and stable development.
In the Reporting Period, the Company made a concerted effort to steadily promote project
construction. As a result, for this period, the Company achieved operating revenue of RMB1,251
million, down 5.02% compared to the same period of last year; a profit before taxation of RMB446
million, representing a year-on-year growth of 1.28%; and a net profit attributable to the listed
company’s shareholders of RMB333 million, increasing 1.24% from a year earlier. As at 30 June
2019, equity attributable to the listed company’s shareholders amounted to RMB3,463 million, a
3.93% rise compared to the end of last year.
1. Focused on residential property development, the Company has been building a professional and
high-quality development team, as well as improving the management mechanism and processes for
project development. As a result, the operational capability in the core business of real estate keeps
increasing, along with the core competitiveness. During the Reporting Period, the key projects of
the Company were mostly located in Shenzhen and Shantou. The Company paid close attention to
product quality and progress, and adjusted marketing strategies in a timely manner. As a result,
project development and sales progress basically met expectations, and the core business was in
good order and health.
2. The Company’s main real estate projects under construction or available for sale during the
Reporting Period included the Shenzhen-based Chuanqi Jingyuan, Cuilinyuan and Chuanqi Donghu
Mingyuan projects, as well as the Shantou-located Tianyuewan project, etc., with details as follows:
                                                The
                                                                           Floor area                     Expected total Accumulated
                  Locati                        Comp                                       Completed
    Project                Usage   Status                Site area(㎡)with plot ratio                    investment      investment
                      on                        any’s                                    floor area(㎡)
                                                                            (㎡)                        (RMB’0,000)    (RMB’0,000)
                                                stake

Chuanqi          Shenzh Rental     Availab       49%           4,243.34         43,156           43,156          24,865          20,023
Jingyuan         en                le     for
                                   sale



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           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                            Interim Report 2019


Cuilinyuan        Shenzh Residenti Availab 100%          16,424.29           60,450            60,450       57,000           51,634
                  en     al         le      for
                                    sale

Tianyuewan        Shanto Residenti Availab 100%          31,167.50          153,470           153,470       79,801           68,983
Phase I           u      al         le      for
                                    sale

Tianyuewan        Shanto Residenti Under          100%   33,361.70          127,661                0        65,485           20,802
Phase II          u      al         constru
                                    ction

Chuanqi           Shenzh Residenti Under          100%    5,889.70           34,073                0        51,000           36,723
Donghu            en     al         constru
Mingyuan                            ction

3. Land bank for future development by the end of the Reporting Period:
             Project              Location               Land area(㎡)                       Floor area with plot ratio (㎡)

Xinfeng Building              Shantou                                                 5,920                                  26,640

     Total                                                                            5,920                                  26,640

Note: The Company's real estate projects do not involve primary land development.




(II) Operation Review for H1 2019
1. The Company’s fundamentals remain positive with sufficient cash flows and a healthy financial
condition. In late May 2019, the Company implemented its final cash dividend plan of 2018.
2. The major property developments proceed smoothly. The Company has further improved the
development and management system, attached importance to construction safety and tightened
cost control. During the Reporting Period, the overall progress of the Company’s property
developments was in line with the schedule. In Shenzhen, the Cuilinyuan project has finished the
initial registration; the Chuanqi Jingyuan project has successfully completed fine decoration; and
the Chuanqi Donghu Mingyuan project has wrapped up construction and is going through
acceptance. In Shantou, the Tianyuewan Phase II project has completed the pile foundation and the
pit support structure and is progressing as scheduled.
3. Property sales were generally good. The Company kept a close eye on policy and market
dynamics, and adjusted marketing strategies accordingly in a timely manner. Sales by project were
basically satisfying. The Chuanqi Jingyuan project has been almost sold out; the Chuanqi Donghu
Mingyuan project has been sold approximately 10%; the Cuilinyuan project has been sold around
80%; and the Tianyuewan Phase I project has seen about 35% of its residential units sold.
(1) Sales of major real estate projects carried forward to the Reporting Period:
                                                                                                                     Unit: RMB’0,000

                                            Operating                                                       Gross profit margin
                       Location                             Cost of sales        Gross profit margin
                                             revenue                                                                 (%)



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             ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                              Interim Report 2019


Chuanqi Jingyuan           Shenzhen                79,580             11,268                         68,312                     85.84

   Cuilinyuan              Shenzhen                11,185              3,078                          8,107                    72.48

Tianyuewan Phase           Shenzhen                 6,783              5,348                          1,435                    21.16
         I

Yuejing Dongfang            Shantou                  182                135                              47                    25.82

    Jinyedao                Shantou                  599                234                             365                    60.93

                  Total                            98,329              20,063                         78,266                   79.60



(2) Real Estate sales during the Reporting Period:
                                                                                                                       Unit: square meters

                                                                                Floor area
                                                       The                                        Area actually
                                 Time of opening                               available for                        Settled area in
   No.            Project                          Company’s   Location                          sold in Current
                                       for sale                                   sale at                           Current Period
                                                     interest                                         Period
                                                                           year-beginning
    1         Chuanqi             October 2018         49%      Shenzhen              18,011             16,125              12,006
              Jingyuan
    2         Cuilinyuan              June 2017       100%                            12,733              4,026                3,256
                                                                Shenzhen
    3         Chuanqi            December 2018        100%      Shenzhen              32,762              2,772
              Donghu
              Mingyuan
    4         Tianyuewan          October 2016        100%      Shantou             122,085              11,566              12,203
              Phase I

    5         The remaining      December 2013        100%      Shantou                     944                                 211
              units of Yuejing
              Dongfang

    6         The remaining           July 1996       100%      Shantou                3,408                  916               526
              units of
              Jinyedao

                                       Total                                          189,943             35,405             28,202



4. Corporate management keeps improving and internal potentials are tapped to help improve
corporate performance. Subsidiaries have enhanced strategic synergy with the core business of the
Company and generally achieved over half of the expected profit in H1 2019. Meanwhile, the
purchase of structured deposits at bank with idle funds has effectively increased the efficiency of
capital utilization. Moreover, the six expenses under intense monitoring went down 9.2% in H1
2019 compared to a year ago.
5. Property rental is stable with steadily rising rental prices as well as good occupancy rates and rent
collection rates. The major properties for rental are as follows:


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           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                Interim Report 2019


                                                                                                                       Unit: square meters

                                                                       Occupancy                                     The Company’s
 Location Name of building Rentable area            Rented area                      Usage       Land ownership
                                                                         rate                                            interest

Shenzhen Real              Estate        3,413.88           3,413.88        100% Commercial The Company                         100%
            Mansion

Shenzhen North         Block      of     4,819.71           4,819.71        100% Commercial The Company                         100%
            Guoshang
            Mansion

Shenzhen        Petrel Building         22,475.47          22,475.47        100% Commercial The Company                         100%

 Shenzhen SPG Plaza                     61,005.94          49,750.84      81.55%     Office      The Company                    100%

            SPG             Plaza       19,903.30          19,825.30      99.61% Commercial The Company                         100%
            Podium

Shenzhen Wenjin Garden                   3,531.60           3,531.60        100% Commercial The Company                         100%

             Total                     115,159.90         103,816.80

6. The assets restructuring programme has been carried forward.
The Company’s major assets restructuring plan is subject to further communications and
improvements with the regulators. Due diligence material update, additional audit and assessment,
etc. are underway.

II Analysis of Core Businesses

See “I Overview” above.
Year-on-year changes in key financial data:
                                                                                                                               Unit: RMB

                                          H1 2019              H1 2018          Change (%)                 Main reason for change

Operating revenue                      1,251,337,802.57     1,317,541,631.35        -5.02% Decrease in property sales carryforwards

Cost of sales                                                                                 Decrease in carryforwards of property sales by
                                         437,127,976.25       540,417,491.41       -19.11%
                                                                                              floor area

                                                                                              Decreases in property sales commissions and
Selling expense                           18,474,060.33        37,167,133.77       -50.29%
                                                                                              advertising expense

Administrative expense                    30,812,771.33        31,736,200.85        -2.91%

                                                                                              Decrease in interest income due to less term
Finance costs                             -6,626,259.12         -8,611,669.10       23.05%
                                                                                              deposits

Income tax expense                       112,729,793.86       111,169,717.28         1.40% A rise in profits

Net cash generated from/used in                                                               Increase in cash proceeds from sale of
                                         685,675,245.10       594,728,129.67        15.29%
operating activities                                                                          commodities and rendering of services

                                                                                              Due to structured deposits at bank (a purchase of
Net cash generated from/used in
                                        -388,696,596.57      -599,344,168.71        35.15% RMB600 million in H1 2018 compared to a
investing activities
                                                                                              withdrawal of RMB900 million upon maturity

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           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                 Interim Report 2019


                                                                                                and another purchase of RMB1,300 million in
                                                                                                H1 2019)

Net cash generated from/used in                                                                 Repayment of bank loan in H1 2018 and cash
                                          -204,332,000.00      -133,528,938.06        -53.02%
financing activities                                                                            dividend distribution in H1 2019

                                                                                                Joint effects of cash from sale of commodities,
Net increase in cash and cash
                                           91,958,457.22       -138,128,390.84        166.57% purchases of structured deposits at bank,
equivalents
                                                                                                repayment of loan and cash dividend distribution

                                                                                                Income receivable from structured deposits at
Return on investment                       14,288,098.55            827,100.00      1,627.49%
                                                                                                bank is calculated by time period

Major changes in the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Breakdown of main business:
                                                                                                                                 Unit: RMB

                                                                                    Year-on-year                            Year-on-year
                                                                                                        Year-on-year
                          Operating                                               increase/decrease                       increase/decrease
                                            Cost of sales     Gross profit rate                       increase/decrease
                           revenue                                                  of operating                           of gross profit
                                                                                                       of cost of sales
                                                                                      revenue                                   rate

By business segment

Real estate             983,278,946.94      200,636,695.31             79.60%               -6.02%             -33.74%                 8.54%

Construction
                        149,651,610.68      144,088,214.48                3.72%             -0.66%               0.19%              -0.81%
service

Rental service           32,096,693.65       13,639,174.54             57.51%                8.19%               0.73%                 3.15%

Property
management               77,686,206.46       71,075,899.35                8.51%             -4.63%              -7.22%                 2.55%
service

Other                    25,797,028.12       21,071,227.42             18.32%              40.99%              105.76%             -25.71%

Subtotal               1,268,510,485.85     450,511,211.10             64.49%               -4.36%             -17.64%                 5.73%

Less:       internal
                         -17,172,683.28      -13,383,234.85            22.07%              94.94%              102.72%              -2.99%
offset

Total                  1,251,337,802.57     437,127,976.25             65.07%               -5.02%             -19.11%                 6.08%

By product

Housing units           182,142,033.38       84,262,841.13             53.74%              -82.55%             -72.06%             -17.37%

Apartments              795,797,573.30      112,683,722.85             85.84%

Shops and
                          6,456,714.32        2,572,757.27             60.15%             168.85%              105.03%              60.15%
parking place

Other                   284,114,164.85      250,991,889.85              11.66%               0.58%               2.25%              -1.44%

Subtotal               1,268,510,485.85     450,511,211.10             64.49%               -4.53%             -17.83%                 5.75%


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           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                      Interim Report 2019


Offset       internal
                          -17,172,683.28      -13,383,234.85             22.07%               94.94%              102.72%              -2.99%
transactions

Total                   1,251,337,802.57     437,127,976.25              65.07%                -5.20%             -19.30%                6.10%

By geographic segment

Guangdong
                        1,159,203,610.43     345,789,647.14              70.17%                -9.53%             -31.28%                9.44%
Province

Other regions in
                          108,983,973.87     104,721,563.96                 3.91%             131.23%             132.27%              -0.43%
China

Overseas                      322,901.55                                100.00%               12.20%                                     0.00%

Subtotal                1,268,510,485.85     450,511,211.10              64.49%                -4.53%             -17.83%                5.75%

Less:        internal
                          -17,172,683.28      -13,383,234.85             22.07%               94.94%              102.72%              -2.99%
offset

Total                   1,251,337,802.57     437,127,976.25              65.07%                -5.20%             -19.30%                6.10%


III Non-Core Business Analysis

□ Applicable √ Not applicable


IV Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

                                                                                                                                    Unit: RMB

                          End of Reporting Period       End of the same period of last year

                                           Proportion                                          Increase/decreas       Notes to significant
                                                                             Proportion to
                            Amount          to total        Amount                             e in proportion               changes
                                                                              total assets
                                             assets

Monetary capital 1,240,480,893.15            24.47% 1,068,660,665.62                23.66%              0.81%

                                                                                                                  Caused by receipt of
Accounts
                          39,421,868.07        0.78%      336,114,447.24              7.44%             -6.66% mortgage payment from
receivable
                                                                                                                  banks

                                                                                                                  Caused by carry-over of
Inventories             1,602,436,237.11     31.61% 1,677,853,797.04                37.15%              -5.54%
                                                                                                                  real estate

Investment
                         611,746,542.66      12.07%       635,361,225.57            14.07%              -2.00%
property

Long-term equity
                          12,561,107.24        0.25%       29,888,661.65              0.66%             -0.41%
investments

Fixed assets              31,903,409.26        0.63%       35,921,711.70              0.80%             -0.17%

Short-term                21,334,705.19        0.42%       51,374,540.56              1.14%             -0.72%


                                                                       15
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                       Interim Report 2019


borrowings

Long-term
                                         0.00%     17,783,500.00          0.39%            -0.39%
borrowings

Other current                                                                                       Caused by the purchase of
                    1,366,218,063.59     26.95%   604,214,106.70         13.38%           13.57%
assets                                                                                              bank structured deposits


2. Assets and Liabilities Measured at Fair Value

□ Applicable √ Not applicable


3. Assets with Restricted Rights as of the End of the Reporting Period


                Item                        Ending carrying value                         Reason for restriction

Accounts receivable                                           21,334,705.19 As pledges for short-term borrowings
Total                                                         21,334,705.19                          --


V Investment Analysis

1. Total Investments Made

□ Applicable √ Not applicable


2. Significant Equity Investments Made in the Reporting Period

□ Applicable √ Not applicable


3. Significant Non-equity Investments Ongoing in the Reporting Period

□ Applicable √ Not applicable


4. Financial Investments

(1) Securities Investments

□ Applicable √ Not applicable
No such cases in this Reporting Period


(2) Investment in Derivative Financial Instruments

□ Applicable √ Not applicable
No such cases in this Reporting Period




                                                             16
           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                      Interim Report 2019


VI Sale of Major Assets and Equity Interests

1. Sale of Major Assets

□ Applicable √ Not applicable
No such cases in this Reporting Period


2. Sale of Major Equity Interests

□ Applicable √ Not applicable


VII Analysis on Majority-owned and Joint Stock Companies

√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
                                                                                                                                       Unit: RMB

                      Relationsh        Main
                                                       Registered                                    Operating        Operating
   Company name       ip with the     business                      Total assets   Net assets                                         Net profit
                                                        capital                                       revenue           profit
                       Company         scope

Shenzhen SPG
                                    Developmen
Longgang                                           30,000,000.0 535,642,496. 84,588,017.8 112,185,340. 50,772,634.3 38,124,475.7
                      Subsidiary t of real
Development Co.,                                   0                          46                1               95                3                5
                                    estate
Ltd.

Shantou SEZ,
Wellam FTY,                         Developmen
                                                   91,226,120.4 207,170,746. 100,603,966.
Building              Subsidiary t of real                                                          5,968,142.89       90,062.60       67,546.96
                                                   4                          48            14
Development, Co.,                   estate
Ltd.

Shantou Huafeng
                                    Developmen
Real Estate                                        80,000,000.0 854,456,185. 26,134,921.7 67,830,745.9 -7,436,466.1 -5,577,349.6
                      Subsidiary t of real
Development Co.,                                   0                          14                5                9                9                3
                                    estate
Ltd.

Great Wall Estate                                                   19,244,284.8 -87,159,436.
                      Subsidiary Lease             2,051,146.00                                      322,901.55        -59,435.04     -59,435.04
Co., Inc. (U.S.)                                                               0            14

Shenzhen Zhentong                   Installation
                                                   10,000,000.0 168,555,859. 27,569,075.3 150,312,096.
Engineering Co.,      Subsidiary and                                                                                  440,467.94      440,467.94
                                                   0                          55                3               59
Ltd.                                construction

Shenzhen Property
                                    Property                        106,956,005. 29,173,301.0 80,509,528.3
Management Co.,       Subsidiary                   7,250,000.00                                                      3,274,259.95 2,677,980.81
                                    management                                66                0                8
Ltd.

Shenzhen       Petrel Subsidiary Hotel             30,000,000.0 52,464,060.1 45,612,768.8 13,025,431.1 4,009,718.82 3,794,881.45



                                                                       17
            ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                        Interim Report 2019


Hotel Co., Ltd.                    Service        0                      0            1              6

Shenzhen Huazhan
Construction                       Construction
                      Subsidiary                  8,000,000.00 8,848,922.15 8,656,183.13    909,540.63 -164,549.83 -164,549.83
Supervision Co.,                   supervision
Ltd.

                                   Investment
Xin Feng Enterprise                                            123,158,784. -449,236,940
                      Subsidiary and              502,335.00                               2,572,569.79   343,349.56   62,664.44
Co., Ltd.                                                               99           .16
                                   management

Subsidiaries obtained or disposed in the Reporting Period:
□ Applicable √ Not applicable
Information about major majority- and minority-owned subsidiaries:

1. Except the Company, the subordinate subsidiaries engaged in real estate development mainly
include: Shenzhen SPG Longgang Development Co., Ltd., Shantou SEZ, Wellam FTY, Building
Development, Co., Ltd., Shantou Huafeng Real Estate Development Co., Ltd. The Cuilinyuan
project developed by Shenzhen SPG Longgang Development Co., Ltd. brought forward RMB0.112
billion in H1 of 2019, accounting for 11% of the Company's real estate sector income, and 11% of
the Group's combined profits. Jinyedao and YuejingDongfang developed by Shantou SEZ, Wellam
FTY, Building Development, Co., Ltd. were sold as remaining buildings with relatively small
percentages of sales volume and carry-over amount. And Shantou Huafeng Real Estate
Development Co., Ltd. was responsible for the development of Tianyuewan project (divided into
Phase I and Phase II). Tianyuewan Phase I was opened for sale in October 2016, and Phase II
started construction in November 2018. The sales rate of the Phase I as of now is 40%. The main
reasons for the loss in H1 of 2019 were: the sales progress was not up to expectations, and another
was the payment of interest on internal loans.
2. Shenzhen Zhentong Engineering Co., Ltd. was engaged in the business of building installation
and maintenance with the operating revenues of RMB150.31 million for H1 of 2019 and of 12% to
the operating revenues of the Company.
3. Shenzhen Property Management Co., Ltd was engaged in the industry of property management,
and the business was steady. The operating revenues were of RMB80.51 million for H1 of 2019 that
was of 6% to the operating revenues of the Company.

VIII Structured Entities Controlled by the Company

□ Applicable √ Not applicable


IX Performance Forecast for January-September 2019

Warning of possible loss or considerable year-on-year change in the accumulative net profit made during the period-beginning to the
end of the next Reporting Period, as well as the reasons:
□ Applicable √ Not applicable




                                                                  18
       ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.    Interim Report 2019


X Risks Facing the Company and Countermeasures

1. Risks Facing the Company:
(1) Risks from macroeconomic environment. Since this year, Chinese government has been
adhering to the general principle of seeking progress while maintaining stability, the domestic
economy runs within a reasonable range. However, given that the Sino-US trading dispute is still
going on, and that the global economic situation remains complicated and severe, the downward
pressure on the economy is difficult to relieve in a short term.
(2) Risks from policy on real estate industry. Against the convening of the 19th National Congress
of the Communist Party of China, the Chinese government shows a clear attitude that “Houses are
for living in, not for speculating on”. The continuous implementation of real estate macro-control
policy curbs people’s investment demands at a large degree, and potential customers are
increasingly taking a wait-and-see attitude, which generates a certain impact on the development
and sales of main business of the Company.
(3) Risks from development and operation of main business. The Company does not increase its
land reserve, influenced by the major assets restructuring and the land reserve at present is limited.
Moreover, there is a lag in the sales progress of Shantou Tianyuewan Phase I.
(4) Potential risks from assets restructuring. The major assets restructuring of the Company is a
significant and unprecedented event with complex trading structure for involved in the Shenzhen
State-owned Enterprise Reform and with large-scale assets since the underlying assets it plans to
purchase are industrial leading assets. Thus, the trading of its shares has been suspended for almost
three years since its start of trading on 14 September 2016. At present, matters such as the renewal
of diligence materials in restructuring and supplementary audit as well as evaluation are carried out
simultaneously. For the uncertainty of related events, investors are reminded of the investment
risks.
2. Countermeasures
Firstly, the Company will unremittingly pay attention to international and domestic macroeconomic
situation and the industrial trend, and then formulate flexible coping strategies.
Secondly, the Company will further strengthen its ability to develop main business, raise its
management level and make efforts to reinforce the marketing of projects so as to stabilize the
fundamental of the Company.
Thirdly, the Company will increase its land reserve timely and in an appropriate way to maintain
the sustainable development of the Company in the future.
Fourthly, the Company will enhance the communication with regulators together with parties
involved in the restructuring and make full efforts to promote the process of major assets
restructuring.




                                                          19
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                         Interim Report 2019




                                           Part V Significant Events

I Annual and Extraordinary General Meeting Convened during the Reporting Period

1. General Meeting Convened during the Reporting Period


                                           Investor
                                                                       Disclosure
       Meeting              Type         participation Convened date                       Index to disclosed information
                                                                          date
                                            ratio

  The 2018 Annual      Annual General                                               Resolutions of 2018 Annual General Meeting
                                             63.61% 18 April 2019 19 April 2019
  General Meeting          Meeting                                                  disclosed on www.cninfo.com.cn


2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed Voting
Rights

□ Applicable √ Not applicable


II Interim Dividend Plan for the Reporting Period

□ Applicable √ Not applicable
The Company has no interim dividend plan.


III Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting
Period or still Ongoing at Period-End

□ Applicable √ Not applicable
No such cases in the Reporting Period.


IV Engagement and Disengagement of CPAs Firm

Has the interim financial report been audited?
□Yes √ No
This interim Report is unaudited.


V Explanations Given by Board of Directors and Supervisory Committee Regarding
“Modified Auditor’s Report” Issued by CPAs Firm for the Reporting Period

□ Applicable √ Not applicable




                                                                 20
             ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                             Interim Report 2019


VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued
for Last Year

□ Applicable √ Not applicable


VII Bankruptcy and Restructuring

□ Applicable √ Not applicable
No such cases in the Reporting Period.


VIII Legal Matters

Significant lawsuits or arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Other legal matters:
√Applicable □ Not applicable

                 Amount
                            Estimated                                                                                                       Index to
Lawsuit/arbi involved                                                                             Execution of             Disclosure
                            liabilities     Progress          Decision and influence                                                        disclosed
   tration      (RMB’0,0                                                                            decision                    date
                              or not                                                                                                       information
                    00)

                                                       ①      Business                 Tourism
                                                       Company had to pay for the
                                                       compensation                 RMB36.62 The           applicant
                                                       million and the relevant interest has                received
                                                       (from 14 September 1998 to the RMB15.20
                                                       payment day) to Xi’an Fresh million.                      Now
                                                       Peak     Company          within      one Business
                                                       month      after       the      judgment Tourism
                                                       entering    into       force.    If   the Company           has                   Annual
Xi’an                                                 Business     Tourism            Company no      executable                        Report 2018
                                                                                                                          29 March
Project              2,100 No             In execution failed to pay in time, it had to properties                 and                   (full text) on
                                                                                                                          2019
Lawsuit                                                pay double debt interests to Xi’an                        Joint                  www.cninfo.c
                                                       Xi’an Fresh Peak Company for Commission on                                       om.cn
                                                       the overdue period; ② Xi’an Commerce has
                                                       Joint Commission on Commerce been refusing to
                                                       had     jointly        and      severally execute           the
                                                       obligation of the interests of the ruling.            It      is
                                                       compensation; . ③              Business difficult           to
                                                       Tourism Company shall bear recover the rest.
                                                       RMB227,500 of the acceptance
                                                       fee and the security fee.




                                                                         21
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.       Interim Report 2019


IX Punishments and Rectifications

□ Applicable √ Not applicable
No such cases in the Reporting Period.


X Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller

□ Applicable √ Not applicable


XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XII Major Related-Party Transactions

1. Continuing Related-Party Transactions

□ Applicable √ Not applicable
No such cases in the Reporting Period.


2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests

□ Applicable √ Not applicable
No such cases in the Reporting Period.


3. Related Transactions Regarding Joint Investments in Third Parties

□ Applicable √ Not applicable
No such cases in the Reporting Period.


4. Credits and Liabilities with Related Parties

□ Applicable √ Not applicable
No such cases in the Reporting Period.


5. Other Major Related-Party Transactions

□ Applicable √ Not applicable
No such cases in the Reporting Period.




                                                             22
           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                              Interim Report 2019


XIII. Particulars about the Non-operating Occupation of Funds by the Controlling
Shareholder and Other Related Parties of the Company

□ Applicable √ Not applicable
No such cases in the Reporting Period


XIV. Major Contracts and Execution thereof

1. Entrustment, Contracting and Leases

(1) Entrustment

□ Applicable √ Not applicable
No such cases in the Reporting Period.


(2) Contracting

□ Applicable √ Not applicable
No such cases in the Reporting Period.


(3) Leases

□ Applicable √ Not applicable
No such cases in the Reporting Period.


2. Significant Guarantees


□Applicable √ Not applicable

No such cases in the Reporting Period.


3. Other Significant Contracts


√Applicable □Not applicable

                                       Carrying Assesse
                                                             Name
           Name                        value of d value                                                                 Executio
 Name                                                             of     Base   Prici               Relate
           of the                        the      of the                                Transact              Relate n as of
     of                                                      evalu date of       ng                   d                            Disclo    Index to
           other               Signing involved involved                                ion price               d       the end
contrac               Target                                 ative evaluati prin                    transac                         sure     disclosed
          party of              date    assets    assets                                (RMB’0               relatio    of the
  ting                                                       agenc on (if ciple                      tions                          date information
               the                     (RMB’0 (RMB’0                                   ,000)                nship Reportin
 party                                                           y (if   any)     s                 or not
          contract                     ,000) (if ,000) (if                                                              g Period
                                                                 any)
                                         any)      any)

ShenZh Shenzh Structur                                                          Mar                           No        Impleme 9           Announce
                               7 May   100,000               -                          100,000 No
en        en         al                                                         ket                           related nting in May          ment on

                                                                          23
           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                              Interim Report 2019


Special Branch deposit 2019                                            com                     relatio a normal 2019      Progress of
Econo of           s (term                                             paris                   nship way                  Using
mic       China    of 180                                              on                                                 Self-owned
Zone      Citic    days)                                                                                                  Funds to
Real      Bank                                                                                                            Invest into
Estate    Co.,                                                                                                            Structural
&         Ltd                                                                                                             Deposits on
Propert                                                                                                                   www.cninf
ies                                                                                                                       o.com.cn
(Group
) Co.,
Ltd.

ShenZh
en
                                                                                                                          Announce
Special
          Shenzh                                                                                                          ment on
Econo
          en                                                                                                              Progress of
mic                Structur
          Branch                                                       Mar                                                Using
Zone               al                                                                          No      Impleme
          of                                                           ket                                         19     Self-owned
Real               deposit 14 June                                                             related nting in
          China                       30,000           -               com     30,000 No                           June   Funds to
Estate             s (term 2019                                                                relatio a normal
          Citic                                                        paris                                       2019   Invest into
&                  of 180                                                                      nship way
          Bank                                                         on                                                 Structural
Propert            days)
          Co.,                                                                                                            Deposits on
ies
          Ltd                                                                                                             www.cninf
(Group
                                                                                                                          o.com.cn
) Co.,
Ltd.


XV. Social Responsibilities

1. Significant Environment Protection

Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
protection authorities of China
No
Not applicable.




                                                                 24
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.        Interim Report 2019


2. Targeted Measures Taken to Help People Lift Themselves Out of Poverty

(1) Plan for Targeted Measures

(2) Outline of Targeted Measures in the Reporting Period

(3) Effects of Targeted Measures


                                                                        Measurement
                                  Indicator                                           Number/Progress
                                                                             unit

I. General condition                                                        ——           ——

II. Itemized investment                                                     ——           ——

1. Out of poverty by industrial development                                 ——           ——

2. Out of poverty by transferring employment                                ——           ——

3. Out of poverty by relocating                                             ——           ——

4. Out of poverty by education                                              ——           ——

5. Out of poverty by improving health                                       ——           ——

6. Out of poverty by protecting ecological environment                      ——           ——

7. Subsidy for the poorest                                                  ——           ——

8. Social poverty alleviation                                               ——           ——

9. Other items                                                              ——           ——

III. Received awards(contents and rank)                                     ——           ——


(4) Subsequent Targeted Measure Plans

XVI. Other Significant Events

√Applicable□ Not applicable

Since the controlling shareholder of the Company is planning a significant event that involves the
Company, upon the application to the Shenzhen Stock Exchange, trading in the stocks of the
Company (A-stock under the name of “SPG A” and the symbol of “000029”; B-stock under the
name of “SPG B” and the symbol of “200029”) was suspended starting from the opening of 14
September 2016. The Company disclosed the Announcement on Share Trading Suspension due to
Planning of Significant Event (No. 2016-022), the Announcement on Continued Share Trading
Suspension due to Planning of Significant Event (No. 2016-023) and the Announcement on
Continued Share Trading Suspension due to Planning of Significant Event (No. 2016-024) on 14
September 2016, 22 September 2016 and 29 September 2016, respectively. Upon ascertainment, the
event constituted a material asset restructuring. The Company disclosed the Announcement on
Share Trading Suspension due to Planning of Major Assets Restructuring (No. 2016-025) on 30
September 2016 and the Announcement on Signing Cooperation Agreement on Restructuring and
Listing (No. 2016-027) on 10 October 2016.

                                                             25
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019


The Company convened the 33rd Meeting of the 7th Board of the Directors on 11 November 2016,
which the Proposal on Continued Share Trading Suspension due to Planning of Major Assets
Restructuring was reviewed and approved. For details, see the Announcement on Continued Share
Trading Suspension after Expiration of Period of Share Trading Suspension due to Planning of
Major Assets Restructuring (No. 2016-039) disclosed on 14 November 2016.
The Company convened the 1st Extraordinary General Meeting of 2016 on 12 December 2016, on
which the Proposal on Continued Share Trading Suspension due to Planning of Major Assets
Restructuring was reviewed and approved. For details, see the Announcement on Application for
Continued Share Trading Suspension after Expiration of Period of Share Trading Suspension due
to Planning of Major Assets Restructuring (No. 2016-047) disclosed on 13 December 2016.
The Company held an online illustration meeting to investors on 10 March 2017, communicating
this major assets restructuring with them and answering questions that they were generally
concerned about with the information allowed to be disclosed. For details, see the Announcement on
Online Illustration Meeting to Investors (No. 2017-012) disclosed on 11 March 2017.
To ensure the smooth progress of this major assets restructuring, prevent abnormal fluctuations in
the prices of its stocks and protect the rights and interests of its non-controlling interests, the
Company has applied to the Shenzhen Stock Exchange for continued share trading suspension for
no more than 1 month as of 14 August 2019 and expects to disclose the major assets restructuring
plan or report according to the requirements of the Standards for the Contents and Formats of
Information Disclosure by Companies Offering Securities to the Public No. 26—Major Assets
Restructuring of Listed Companies prior to 14 September 2019. For details, see the Announcement
on Delay of Share Trading Resumption and Progress of Planning of Major Assets Restructuring
(No. 2019-054) disclosed on 14 August 2019.
During the share trading suspension period, the Company shall disclose the progress of this major
assets restructuring at least every five trading days in strict accordance with the requirements of
applicable laws and regulations. At present, this major assets restructuring is proceeding smoothly.
This major assets restructuring is subject to great uncertainty. Therefore, investors are kindly
reminded to pay attention to possible investment risk.

XVII. Significant Events of Subsidiaries

□ Applicable √ Not applicable




                                                             26
           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                  Interim Report 2019




                    Part VI Share Changes and Shareholder Information

I. Share Changes

1. Share Changes

                                                                                                                                     Unit: share

                                Before the change                       Increase/decrease (+/-)                         After the change

                                                                                                                                      Newly
                                                       Newly                                 Newly                    Proportio
                              Amount Proportion                    Amount Proportion                     Amount                       issue
                                                     issue share                           issue share                    n
                                                                                                                                      share

I. Restricted shares                  0      0.00%             0           0           0             0            0             0       0.00%

1.Shares held by the state            0      0.00%             0           0           0             0            0             0       0.00%

2.Shares held by state-own
                                      0      0.00%             0           0           0             0            0             0       0.00%
Legal-person

3.Shares held by other
                                      0      0.00%             0           0           0             0            0             0       0.00%
domestic investors

Among which: shares held
                                      0      0.00%                         0           0             0            0             0       0.00%
by domestic legal person

Shares held by domestic
                                      0      0.00%             0           0           0             0            0             0       0.00%
natural person

4.Oversea shareholdings               0      0.00%             0           0           0             0            0                     0.00%

Among which: shares held
                                      0      0.00%             0           0           0             0            0             0       0.00%
by oversea legal person

Shares held by oversea
                                      0      0.00%             0           0           0             0            0             0       0.00%
natural person

                             1,011,660,                                                                               1,011,660
II. Unrestricted shares                   100.00%              0           0           0             0            0                  100.00%
                                    000                                                                                       ,000

                             891,660,0                                                                                891,660,0
1. RMB ordinary shares                     88.14%              0           0           0             0            0                   88.14%
                                     00                                                                                        00

2.Domestically         listed 120,000,0                                                                               120,000,0
                                            11.86%             0           0           0             0            0                    11.86%
foreign shares                       00                                                                                        00

3.Oversea listed foreign
                                      0      0.00%             0           0           0             0            0             0       0.00%
shares

4. Other                              0      0.00%             0           0           0             0            0             0       0.00%

                             1,011,660,                                                                               1,011,660
III. Total shares                         100.00%              0           0           0             0            0                  100.00%
                                    000                                                                                       ,000

Reasons for the share changes

                                                                   27
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                   Interim Report 2019



□ Applicable √ Not applicable

Approval of share changes

□ Applicable √ Not applicable

Transfer of share ownership:

□ Applicable √ Not applicable

Progress on any share repurchase:

□ Applicable √ Not applicable

Progress on reducing the repurchased shares by means of centralized bidding:

□ Applicable √ Not applicable

Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary

shareholders and other financial indicators of the prior year and the prior accounting period, respectively:

□ Applicable √ Not applicable

Other information that the Company considers necessary or is required by the securities regulator to be disclosed:

□ Applicable √ Not applicable


2. Changes in Restricted Shares

□ Applicable √ Not applicable


II. Issuance and Listing of Securities

□ Applicable √ Not applicable


III. Total Number of Shareholders and Their Shareholdings

                                                                                                                                 Unit: share

                                                                      Total number of preference
Total number of ordinary                                              shareholders with resumed
                                                             76,443                                                                      0
shareholders at the period-end                                        voting rights at the period-end
                                                                      (if any) (see Note 8)

              Shareholding of ordinary shareholders holding more than 5% shares or the top 10 of ordinary shareholders

                                                     Number       Increase      Number                       Pledged or frozen shares
                                                                                              Number of
                                                        of             and      of shares
                                        Holding                                               shares held
    Name of            Nature of                    shareholdi decrease of        held
                                       percentage                                             subject to    Status of
  shareholder         shareholder                    ng at the        shares    subject to                                   Amount
                                           (%)                                                  trading      shares
                                                    end of the    during         trading
                                                                                              moratorium
                                                    Reporting Reporting moratoriu


                                                                      28
             ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                     Interim Report 2019


                                                               Period       Period   m

Shenzhen
Investment            State-owned legal                       642,884,2                  642,884,26
                                                  63.55%
Holdings       Co., person                                          62                           2
Ltd

Shandong Gold
Financial
Holding Capital
Management
                      Domestic
Co.,      Ltd. -                                             10,300,00
                      non-state-owned                 1.02%                              10,300,000
Shandong Gold                                                           0
                      legal person
Financial
Holding
Sustaining Fund
1

                      Domestic       natural
Lu Zhigao                                             0.32% 3,246,949                     3,246,949
                      person

                      Domestic natural
Tan Shiqing                                           0.13% 1,286,701                     1,286,701
                      person

                      Domestic natural
Yang Shuilian                                         0.13% 1,273,700                     1,273,700
                      person

                      Domestic natural
Yang Jianxiong                                        0.12% 1,255,750                     1,255,750
                      person

Central      Huijin
Asset                 State-owned legal
                                                      0.12% 1,165,500                     1,165,500
Management            person
Co., Ltd.

                      Domestic natural
Peng Wei                                              0.11% 1,129,082                     1,129,082
                      person

                      Foreign natural
Wu Haoyuan                                            0.11% 1,109,300                     1,109,300
                      person

Guotai Junan
Securities            Foreign legal
                                                      0.10% 1,015,683                     1,015,683
(Hong Kong)           person
Limited

Strategic investor or general legal
person becoming a top-10 ordinary
                                               None
shareholder due to rights issue (if
any) (see note 3)

Related or acting-in-concert parties The Company has found no related parties or acting-in-concert parties as defined in the
among the shareholders above                   Administrative Measures for Shareholding Changes in Listed Companies among the


                                                                            29
              ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                           Interim Report 2019


                                        shareholders above.

                                                   Top 10 unrestricted shareholders

                                                                                                              Shares by type
         Name of shareholder                  Unrestricted shares held at the period-end
                                                                                                           Type           Shares

Shenzhen Investment Holdings Co.,                                                                 RMB        ordinary
                                                                                  642,884,262                              642,884,262
Ltd                                                                                               shares

Shandong Gold Financial Holding
Capital Management Co., Ltd. -                                                                   RMB        ordinary
                                                                                   10,300,000                                  10,300,000
Shandong Gold Financial Holding                                                                   shares
Sustaining Fund 1

                                                                                                  RMB        ordinary
Lu Zhigao                                                                             3,246,949                                 3,246,949
                                                                                                  shares

                                                                                                  RMB        ordinary
Tan Shiqing                                                                           1,286,701                                 1,286,701
                                                                                                  shares

                                                                                                  RMB        ordinary
Yang Shuilian                                                                         1,273,700                                 1,273,700
                                                                                                  shares

                                                                                                  Domestically
Yang Jianxiong                                                                        1,255,750 listed foreign                  1,255,750
                                                                                                  share

Central Huijin Asset Management                                                                   RMB        ordinary
                                                                                      1,165,500                                 1,165,500
Co., Ltd.                                                                                         shares

                                                                                                  RMB        ordinary
Peng Wei                                                                              1,129,082                                 1,129,082
                                                                                                  shares

                                                                                                  Domestically
Wu Haoyuan                                                                            1,109,300 listed foreign                  1,109,300
                                                                                                  share

                                                                                                  Domestically
Guotai      Junan Securities (Hong
                                                                                      1,015,683 listed foreign                  1,015,683
Kong) Limited
                                                                                                  share

Related or acting-in-concert parties
among top 10 unrestricted public The Company has found no related parties or acting-in-concert parties as defined in the
shareholders, as well as between top Administrative Measures for Shareholding Changes in Listed Companies among the
10 unrestricted public shareholders shareholders above.
and top 10 shareholders

Top      10     ordinary   shareholders The fourth shareholder holds all his shares in the Company in his accounts of collateral
involved       in   securities   margin securities for margin trading. And the third shareholder holds some of his shares in the
trading (if any) (see note 4)           Company in such accounts.

Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the

Company conducted any promissory repo during the Reporting Period.


                                                                    30
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.              Interim Report 2019



□ Yea √ No

No such cases in the Reporting Period.


IV. Change of the Controlling Shareholder or the Actual Controller

Change of the controlling shareholder in the Reporting Period

□ Applicable √ Not applicable

There was no any change of the controlling shareholder of the Company in the Reporting Period.

Change of the actual controller in the Reporting Period

□ Applicable √ Not applicable

There was no any change of the actual controller of the Company in the Reporting Period.




                                                                31
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




                                         Part VII Preferred Shares

□ Applicable √ Not applicable
No preferred shares in the Reporting Period.




                                                             32
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




      Part VIII Directors, Supervisors, Senior Management and Staff

I. Changes in Shareholdings of Directors, Supervisors and Senior Management

□ Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.


II. Changes in Directors, Supervisors and Senior Management

□ Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.




                                                                33
          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                          Interim Report 2019




                                          Part IX Corporate Bonds

Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this
Report or were due but could not be redeemed in full?
No




                                                                 34
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.            Interim Report 2019




                                        Part X Financial Statements

I Auditor’s Report
Whether the semi-annual report has been audited?
□ Yes √ No
The semi-annual report of the Company has not been audited.
II Financial Statements
The unit of the financial statements attached: RMB
1.Consolidated Balance Sheet
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE &
PROPERTIES (GROUP) Co., Ltd
                                                June 30 2019
                                                                                             Unit: RMB

                       Item                        Closing balance              Opening balance

Current Assets:

Monetary Funds                                               1,240,480,893.15               2,048,522,435.93

Account Receivables                                            39,421,868.07                      18,166,888.19

Receivable Financing                                           21,334,705.19                      15,260,103.46

Prepayments                                                      3,629,355.62                      4,177,767.88

Other receivables                                              50,591,319.62                      45,018,027.61

  Including: Interest receivable                                 6,591,780.82                      2,453,067.78

              Dividends receivable                               1,052,192.76                      1,052,192.76

Inventories                                                  1,602,436,237.11               1,685,152,051.26

Other current assets                                         1,366,218,063.59                      6,780,999.56

Total current assets                                         4,324,112,442.35               3,823,078,273.89

Non-current assets

Available- for- sale financial assets                          17,464,240.74                      17,464,240.74

Long-term equity investments                                   12,561,107.24                      12,561,107.24




                                                        35
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.              Interim Report 2019



                            Item                   Closing balance                Opening balance

Investment properties                                         611,746,542.66                   623,930,838.15

Fixed assets                                                   31,903,409.26                        33,926,198.52

Long-term deferred assets                                            287,424.99                       387,066.91

Deferred tax assets                                            71,734,088.80                   154,543,788.80

Total non-current assets                                      745,696,813.69                   842,813,240.36

TOTAL ASSETS                                                 5,069,809,256.04                 4,665,891,514.25

Current liabilities:

Short-term loans                                               21,334,705.19                        17,260,103.46

Accounts payable                                              140,100,500.69                   216,758,906.71

Advances from customers                                       389,327,681.32                   156,426,152.86

Payroll payable                                                49,649,453.21                        45,836,830.05

Taxes payable                                                 486,499,870.16                   300,547,372.98

Other payables                                                643,636,409.61                   721,819,898.48

   Including: Interest payable                                 16,535,277.94                        16,535,277.94

                Dividends payable                                            --                                --

Total current liabilities                                    1,730,548,620.18                 1,458,649,264.54

Non-current liabilities::

Long-term loans                                                              --                                --

Long-term payables                                               7,597,741.94                        6,507,139.20

Total non-current liabilities                                    7,597,741.94                        6,507,139.20

Total liabilities                                            1,738,146,362.12                 1,465,156,403.74

Owners' equity:

Share capital                                                1,011,660,000.00                 1,011,660,000.00

Capital reserve                                               978,244,910.11                    978,244,910.11

Less: treasury shares

Other comprehensive income                                     10,649,625.33                        10,564,385.97

Surplus reserve                                                95,906,222.59                        95,906,222.59




                                                        36
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.              Interim Report 2019



                        Item                       Closing balance                Opening balance

Retained earnings                                            1,366,707,966.13                 1,235,884,122.72

Total owners' equity attributable to parent                  3,463,168,724.16                 3,332,259,641.39

company

Minority interests                                            -131,505,830.24                  -131,524,530.88

Total owners’ equity                                        3,331,662,893.92                 3,200,735,110.51

Total liabilities and owners’ equity                        5,069,809,256.04                 4,665,891,514.25

Legal representative:Zhou Jianguo
Person in charge of accounting:Tang Xiaoping
Person in charge of accounting organ:Qiao Yanjun
2、Balance Sheet of the Company as the Parent
                                                                                               Unit: RMB

                        Item                       Closing balance                Opening balance

Current Assets:

Monetary Funds                                                856,969,485.98                  1,344,486,378.53

Account Receivables                                              4,498,088.57                        5,164,795.67

Receivable Financing                                                         --                                --

Prepayments                                                          200,000.00                       200,000.00

Other receivables                                             777,693,901.25                   770,374,849.84

   Including: Interest receivable                                6,591,780.82                        2,380,301.11

               Dividends receivable

Inventories                                                   495,765,771.81                   543,912,100.37

Other current assets                                         1,300,391,148.06                         215,745.41

Total current assets                                         3,435,518,395.67                 2,664,353,869.82

Non-current assets

Available- for- sale financial assets                          12,000,000.00                        12,000,000.00

Long-term equity investments                                  235,284,776.57                   235,284,776.57

Investment properties                                         500,353,447.17                    511,040,299.65




                                                        37
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.              Interim Report 2019



                            Item                   Closing balance                Opening balance

Fixed assets                                                   20,694,594.60                        21,942,842.11

Long-term deferred assets                                            254,070.82                       346,015.72

Deferred tax assets                                            16,699,980.23                        16,699,980.23

Total non-current assets                                      785,286,869.39                   797,313,914.28

TOTAL ASSETS                                                 4,220,805,265.06                 3,461,667,784.10

Current liabilities:

Short-term loans                                                             --                                --

Accounts payable                                               12,199,890.76                        16,743,360.96

Advances from customers                                       232,187,547.25                        22,035,608.45

Payroll payable                                                27,607,379.41                        19,687,728.50

Taxes payable                                                 467,681,696.28                   144,621,616.85

Other payables                                                198,023,198.65                   594,392,900.98

   Including: Interest payable                                 16,535,277.94                        16,535,277.94

                Dividends payable                                            --                                --

Total current liabilities                                     937,699,712.35                   797,481,215.74

Non-current liabilities::

Long-term loans                                                              --                                --

Long-term payables                                                           --                                --

Total non-current liabilities                                                --                                --

Total liabilities                                             937,699,712.35                   797,481,215.74

Owners' equity:

Share capital                                                1,011,660,000.00                 1,011,660,000.00

Capital reserve                                               964,711,931.13                    964,711,931.13

Less: treasury shares                                                        --                                --

Other comprehensive income                                                   --                                --

Surplus reserve                                                72,776,609.18                        72,776,609.18

Retained earnings                                            1,233,957,012.40                  615,038,028.05




                                                        38
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                             Interim Report 2019



                        Item                              Closing balance                      Opening balance

Total owners’ equity                                               3,283,105,552.71                         2,664,186,568.36

Total liabilities and owners’ equity                               4,220,805,265.06                         3,461,667,784.10

3、Consolidated Income Statement
                                                                                                               Unit: RMB

                            Item                          Amount for the current period        Amount for the prior period

Ⅰ. Total operating income                                                  1,251,337,802.57                 1,317,541,631.35

Including: Operating income                                                 1,251,337,802.57                 1,317,541,631.35

Ⅱ. Total operating Costs                                                    820,118,047.65                    878,049,647.69

Including: Operating costs                                                   437,127,976.25                    540,417,491.41

             Tax and surcharge                                               340,329,498.86                    277,340,490.76

             Selling expenses                                                 18,474,060.33                      37,167,133.77

             Administrative expense                                           30,812,771.33                      31,736,200.85

             R&D expense                                                                  --                                 --

             Financial expense                                                 -6,626,259.12                     -8,611,669.10

                    Including:
                                                                                  38,742.51                       3,017,331.10
                    Interest expense

                    Interest income                                             7,623,553.05                     11,769,366.46

Add: Other income                                                                         --                                 --

    Return on investment (“-” for loss)                                     14,288,098.55                         827,100.00

         Including: Share of profit or loss of joint
                                                                                          --                                 --
ventures and associates

         Income from the derecognition of financial
                                                                                          --                                 --
assets at amortized cost (“-” for loss)

         Foreign exchange gain (“-” for loss)                                           --                                 --

         Net gain on exposure hedges (“-” for loss)                                     --                                 --

         Gain on changes in fair value (“-” for loss)                                   --                                 --

         Credit impairment loss (“-” for loss)                                          --                                 --

         Asset impairment loss (“-” for loss)                                           --                                 --



                                                               39
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                               Interim Report 2019



                           Item                             Amount for the current period        Amount for the prior period

         Asset disposal income (“-” for loss)                                             --                                 --

Ⅲ. Operating profit ("-" means loss)                                          445,507,853.47                    440,319,083.66

Add: Non-operating income                                                          363,709.11                          95,835.23

Less: Non-operating expenses                                                         3,755.82                         199,553.33

Ⅳ .Total profit ("-" means loss)                                              445,867,806.76                    440,215,365.56

Less: Income tax expenses                                                      112,729,793.86                     111,169,717.28

Ⅴ    Net profit ("-" means loss)                                              333,138,012.90                    329,045,648.28

   5.1.Net income from continuing operations (“-” for
                                                                               333,138,012.90                    329,045,648.28
net loss)

   5.2. Net income from discontinued operations (“-”

for net loss)

Net attributable to owners of parent company                                   333,155,843.41                    329,066,084.53

Minority interests                                                                 -17,830.51                         -20,436.25

Ⅵ . After-tax net of other comprehensive incomes                                  121,770.51                        -694,697.10

After-tax net of other comprehensive incomes owned
                                                                                    85,239.36                        -486,287.97
by owner of the parent company

6.1 Items that will not be reclassified to profit or loss                                   --                                 --

6.2Items that will be reclassified to profit or loss                                85,239.36                        -486,287.97

6.2.1.Other comprehensive income that will be
                                                                                            --                                 --
reclassified to profit or loss under the equity method

6.2.2. Gains/Losses on changes in fair value of
                                                                                            --                                 --
available-for-sale financial assets

6.2.3. Gains/Losses arising from reclassification of

held-to-maturity investments to available-for-sale                                          --                                 --

financial assets

6.2.4 Other comprehensive income arising from the
                                                                                            --                                 --
reclassification of financial assets

6.2.5 Gain/Loss arising from the reclassification of

held-to-maturity investments to available-for-sale                                          --                                 --

financial assets



                                                                40
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                               Interim Report 2019



                            Item                            Amount for the current period        Amount for the prior period

6.2.6 Allowance for credit impairments in investments
                                                                                            --                                 --
in other debt obligations

6.2.7 Reserve for cash flow hedges                                                          --                                 --

6.2.8 Differences arising from the translation of foreign
                                                                                    85,239.36                        -486,287.97
currency-denominated financial statements

6.2.9. Other                                                                                --                                 --

After-tax net of other comprehensive incomes owned
                                                                                    36,531.15                        -208,409.13
by minority stockholders

Ⅶ. Total comprehensive income                                                 333,259,783.41                    328,350,951.18

Total comprehensive income attributable to owners of
                                                                               333,241,082.77                    328,579,796.56
parent company

Total comprehensive income attributable to minority
                                                                                    18,700.64                        -228,845.38
interests

Ⅷ .Earnings per share

8.1 Basic Earnings per share                                                           0.3293                             0.3253

8.2 Diluted Earnings per share                                                         0.3293                             0.3253




The net profit realized by the merged party before the merger is 0.00 yuan, and the
net profit realized by the merged party in the previous period is 0.00 yuan.
Legal representative:Zhou Jianguo
Person in charge of accounting: Tang Xiaoping
Person in charge of accounting organ:Qiao Yanjun
4.Income Statement of the Company as the Parent
                                                                                                                 Unit: RMB

                            Item                            Amount for the current period        Amount for the prior period

Ⅰ. Total operating income                                                     828,403,076.11                      29,987,467.51

Less: Cost of sales                                                            125,366,701.31                      12,583,669.74

     Tax and surcharge                                                         305,591,891.73                       3,654,804.11

     Selling expenses                                                           12,219,149.43                         908,158.92




                                                                41
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                             Interim Report 2019



                            Item                          Amount for the current period        Amount for the prior period

      Administrative expense                                                  12,993,667.10                      10,894,513.21

      R&D expense                                                                         --                                 --

      Financial expense                                                      -16,493,119.65                     -23,494,559.62

         Including: Interest expense                                                      --                      1,728,453.04

                       Interest income                                        17,457,395.53                      24,327,095.66

Add: Other income                                                                         --                                 --

     Return on investment (“-” for loss)                                   532,988,230.19                         827,100.00

         Including: Share of profit or loss of joint
                                                                                          --                                 --
ventures and associates

         Income from the derecognition of financial
                                                                                          --                                 --
assets at amortized cost (“-” for loss)

         Foreign exchange gain (“-” for loss)                                           --                                 --

         Net gain on exposure hedges (“-” for loss)                                     --                                 --

         Gain on changes in fair value (“-” for loss)                                   --                                 --

         Credit impairment loss (“-” for loss)                                          --                                 --

         Asset impairment loss (“-” for loss)                                           --                                 --

         Asset disposal income (“-” for loss)                                           --                                 --

II. Operating profit ("-" means loss)                                        921,713,016.38                      26,267,981.15

Add: Non-operating income                                                        129,179.14                          34,352.59

Less: Non-operating expenses                                                              --                        143,299.25

Ⅲ .Total profit ("-" means loss)                                            921,842,195.52                      26,159,034.49

Less: Income tax expenses                                                    100,591,211.17                       6,338,686.76

Ⅳ    Net profit ("-" means loss)                                            821,250,984.35                      19,820,347.73

   4.1.Net income from continuing operations (“-” for
                                                                             821,250,984.35                      19,820,347.73
net loss)

   4.2. Net income from discontinued operations (“-”
                                                                                          --                                 --
for net loss)

Ⅴ . After-tax net of other comprehensive incomes                                         --                                 --



                                                              42
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                               Interim Report 2019



                            Item                            Amount for the current period        Amount for the prior period

5.1 Items that will not be reclassified to profit or loss                                   --                                 --

5.2Items that will be reclassified to profit or loss                                        --                                 --

Ⅵ. Total comprehensive income                                                 821,250,984.35                      19,820,347.73

Ⅶ. Earnings per share

7.1 Basic Earnings per share                                                           0.8119                             0.0196

7.2 Diluted Earnings per share                                                         0.8119                             0.0196

5.Consolidated Cash Flow Statement
                                                                                                               Unit:RMB

                           Items                            Amount for the current period        Amount for the prior period

Ⅰ. Cash Flow from Operating Activities:

Cash received from sales of goods or rendering of                            1,551,108,627.63                  1,082,569,145.05

services

Cash received relating to other operating activities                            36,673,219.30                      86,785,897.61

Sub-total of Cash Inflows                                                    1,587,781,846.93                  1,169,355,042.66

Cash paid for goods and services                                               325,301,988.40                    359,603,259.50

Cash paid to and on behalf of employees                                         75,087,594.73                      67,569,589.85

Cash paid on taxes and levies                                                  372,824,861.97                      89,393,534.10

Cash paid relating to other operating activities                               128,892,156.73                      58,060,529.54

Sub-total of Cash Outflows                                                     902,106,601.83                    574,626,912.99

Net Cash Flows from Operating Activities                                       685,675,245.10                    594,728,129.67

Ⅱ. Cash Flows from Investing Activities:

Cash received from return of investments                                       900,000,000.00

Cash received investing income                                                  11,365,734.25                         827,100.00

Sub-total of Cash Inflows                                                      911,365,734.25                         827,100.00

Cash paid to acquire fixed assets, intangible assets
                                                                                    62,330.82                         171,268.71
and other long assets

Cash paid on other investing activities                                      1,300,000,000.00                    600,000,000.00

Sub-total of Cash Outflows                                                   1,300,062,330.82                    600,171,268.71




                                                                43
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                            Interim Report 2019



                         Items                           Amount for the current period        Amount for the prior period

Net Cash Flows from Investing Activities                                   -388,696,596.57                    -599,344,168.71

Ⅲ. Cash flow from Financing Activities

Cash received from borrowing                                                             --                                 --

Sub-total of Cash Inflows                                                                --                                 --

Cash repayments on borrowed amounts                                           2,000,000.00                    131,343,300.00

Cash payments for distribution of dividends or profits                      202,332,000.00                       2,185,638.06

Sub-total of cash Outflows                                                  204,332,000.00                    133,528,938.06

Net cash flows from financing activities                                   -204,332,000.00                    -133,528,938.06

Ⅳ. Effect of foreign exchange rate on cash                                    -688,191.31                          16,586.26

Ⅴ. Net increase in cash and cash equivalents                                91,958,457.22                    -138,128,390.84

Add: cash equivalents at the beginning of the period                      1,148,522,435.93                  1,206,789,056.46

Ⅵ. Cash equivalents at the end of the period                             1,240,480,893.15                  1,068,660,665.62




6.Cash Flow Statement of the Company as the Parent
                                                                                                            Unit:RMB

                         Items                           Amount for the current period        Amount for the prior period

Ⅰ. Cash Flow from Operating Activities:

Cash received from sales of goods or rendering of
                                                                          1,082,309,354.32                      34,592,057.81
services

Cash received relating to other operating activities                         25,673,942.66                    387,291,082.03

Sub-total of Cash Inflows                                                 1,107,983,296.98                    421,883,139.84

Cash paid for goods and services                                             54,302,822.21                      53,951,198.75

Cash paid to and on behalf of employees                                      19,289,743.31                      15,556,181.04

Cash paid on taxes and levies                                               135,622,840.23                      13,609,736.21

Cash paid relating to other operating activities                             26,108,489.89                      45,617,416.07

Sub-total of Cash Outflows                                                  235,323,895.64                    128,734,532.07

Net Cash Flows from Operating Activities                                    872,659,401.34                    293,148,607.77




                                                             44
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                            Interim Report 2019



                         Items                           Amount for the current period        Amount for the prior period

Ⅱ. Cash Flows from Investing Activities:

Cash received from return of investments                                    900,000,000.00                                  --

Cash received investing income                                              142,838,563.97                    170,221,052.18

Sub-total of Cash Inflows                                                 1,042,838,563.97                    170,221,052.18

Cash paid to acquire fixed assets, intangible assets
                                                                                  6,050.00                          20,888.00
and other long assets

Cash paid on other investing activities                                   1,300,000,000.00                    600,000,000.00

Sub-total of Cash Outflows                                                1,300,006,050.00                    600,020,888.00

Net Cash Flows from Investing Activities                                   -257,167,486.03                    -429,799,835.82

Ⅲ. Cash flow from Financing Activities

Cash received from borrowing                                                             --                                 --

Sub-total of Cash Inflows                                                                --                                 --

Cash repayments on borrowed amounts                                                                           110,443,300.00

Cash payments for distribution of dividends or profits                      202,332,000.00                       1,728,453.04

Sub-total of cash Outflows                                                  202,332,000.00                    112,171,753.04

Net cash flows from financing activities                                   -202,332,000.00                    -112,171,753.04

Ⅳ. Effect of foreign exchange rate on cash                                    -676,807.86                         -13,487.07

Ⅴ. Net increase in cash and cash equivalents                               412,483,107.45                    -248,836,468.16

Add: cash equivalents at the beginning of the period                        444,486,378.53                    726,801,673.89

Ⅵ. Cash equivalents at the end of the period                               856,969,485.98                    477,965,205.73




                                                             45
                                                                                         ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                        Interim Report 2019



     7.CONSOLIDATED STATEMENT OF CHANGE IN OWNER'S EQUITY
     January-June 2019
                                                                                                                                                                                                                    Unit: RMB

                                                                                                                    The amount in current year

                                                                                          Attribute to the equity of parent company

                                                       Other equity
         Items                                                                                     Less:         Other                                  Generic                                         Minority         Total owners'
                                                       instruments                                                             Special   Surplus                      Retained
                        Share capital                                             Capital reserve Treasury comprehensive                                 risk                          Subtotal         interests           equity
                                             Preference Perpetual                                                              reserve   reserve                      earnings
                                                                         Other                     shares       income                                  reserve
                                              shares        bonds

I.    Balance at the
                       1,011,660,000.00                --           --       -- 978,244,910.11             -- 10,564,385.97         -- 95,906,222.59            -- 1,235,884,122.72 3,332,259,641.39 -131,524,530.88 3,200,735,110.51
end of last period

Add: Changes of
                                        --             --           --       --               --           --             --        --             --           --               --               --                --                   --
accounting policies

Prior year
                                        --             --           --       --               --           --             --        --             --           --               --               --                --                   --
adjustments

Corporate

combination under                       --             --           --       --               --           --             --        --             --           --               --               --                --                   --

common control

Others                                  --             --           --       --               --           --             --        --             --           --               --               --                --                   --



                                                                                                                     46
                                                                                              ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                        Interim Report 2019




                                                                                                                         The amount in current year

                                                                                               Attribute to the equity of parent company

                                                            Other equity
            Items                                                                                       Less:         Other                                  Generic                                         Minority         Total owners'
                                                            instruments                                                             Special   Surplus                      Retained
                             Share capital                                             Capital reserve Treasury comprehensive                                 risk                          Subtotal         interests           equity
                                                  Preference Perpetual                                                              reserve   reserve                      earnings
                                                                              Other                     shares       income                                  reserve
                                                   shares        bonds

II. Balance at the
                            1,011,660,000.00                --           --       -- 978,244,910.11             -- 10,564,385.97         -- 95,906,222.59            -- 1,235,884,122.72 3,332,259,641.39 -131,524,530.88 3,200,735,110.51
Beginning of the Year

III.Increase/Decrease

movements in this                            --             --           --       --               --           --    85,239.36          --             --           -- 130,823,843.41 130,909,082.77          18,700.64 130,927,783.41

Year ("-" means loss)

(I) Total

comprehensive                                --             --           --       --               --           --    85,239.36          --             --           -- 333,155,843.41 333,241,082.77          18,700.64 333,259,783.41

income

(II) Capital paid in

and reduced by the                           --             --           --       --               --           --             --        --             --           --               --               --                --                   --

shareholders

(III) Profit distribution                    --             --           --       --               --           --             --        --             --           --               --               --                --                   --

1.Draw statutory
                                             --             --           --       --               --           --             --        --             --           --               --               --                --                   --
surplus reserve


                                                                                                                          47
                                                                                          ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                           Interim Report 2019




                                                                                                                     The amount in current year

                                                                                           Attribute to the equity of parent company

                                                        Other equity
          Items                                                                                     Less:         Other                                     Generic                                         Minority         Total owners'
                                                        instruments                                                             Special      Surplus                      Retained
                         Share capital                                             Capital reserve Treasury comprehensive                                    risk                          Subtotal         interests           equity
                                              Preference Perpetual                                                              reserve      reserve                      earnings
                                                                          Other                     shares       income                                     reserve
                                               shares        bonds

2.Draw generic risk
                                         --             --           --       --               --           --             --        --                --           --               --               --                --                   --
reserve

3.Distribution to
                                         --             --           --       --               --           --             --        --                --           --               --               --                --                   --
shareholders

4.Others                                 --             --           --       --               --           --             --        --                --           --               --               --                --                   --

(IV)Internal

carry-forward of                         --             --           --       --               --           --             --        --                --           -- -202,332,000.00 -202,332,000.00                  -- -202,332,000.00

shareholders’ equity

(V) Special Reserve                      --             --           --       --               --           --             --        --                --           --               --               --                --                   --

(VI) Others                              --             --           --       --               --           --             --        --                --           --               --               --                --                   --

IV. Balance at the
                        1,011,660,000.00                --           --       -- 978,244,910.11             -- 10,649,625.33              95,906,222.59             -- 1,366,707,966.13 3,463,168,724.16 -131,505,830.24 3,331,662,893.92
end of the period




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                                                                                           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                                Interim Report 2019



     January-June 2018
                                                                                                                                                                                                                             Unit: RMB

                                                                                                                       The amount in current year

                                                                                             Attribute to the equity of parent company

                                                      Other equity
         Items                                                                                                                                                                                                  Minority         Total owners'
                                                                                                    Less:         Other                                         Generic
                                                      instruments                                                                   Special      Surplus                       Retained
                          Share capital                                            Capital reserve Treasury comprehensive                                        risk                           Subtotal        interests           equity
                                               Preference Perpetual                                                                 reserve      reserve                       earnings
                                                                           Other                    shares       income                                         reserve
                                                shares        bonds

I.     Balance at the
                         1,011,660,000.00                --           --      -- 978,244,910.11             -- 10,045,697.16                  85,666,668.00             --   742,624,845.71 2,828,242,120.98 -128,219,559.44 2,700,022,561.54
end of last period

Add: Changes of
                                          --             --           --      --               --           --                 --        --                --           --                --               --               --                   --
accounting policies

Prior year adjustments                    --             --           --      --               --           --                 --        --                --           --                --               --               --                   --

Corporate

combination under                         --             --           --      --               --           --                 --        --                --           --                --               --               --                   --

common control

Others                                    --             --           --      --               --           --                 --        --                --           --                --               --               --                   --

II. Balance at the
                         1,011,660,000.00                --           --      -- 978,244,910.11             -- 10,045,697.16                  85,666,668.00             --   742,624,845.71 2,828,242,120.98 -128,219,559.44 2,700,022,561.54
Beginning of the Year



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                                                                                             ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                            Interim Report 2019




                                                                                                                         The amount in current year

                                                                                               Attribute to the equity of parent company

                                                        Other equity
            Items                                                                                     Less:         Other                                      Generic                                        Minority         Total owners'
                                                        instruments                                                                   Special   Surplus                       Retained
                            Share capital                                            Capital reserve Treasury comprehensive                                     risk                          Subtotal        interests           equity
                                                 Preference Perpetual                                                                 reserve   reserve                       earnings
                                                                             Other                    shares       income                                      reserve
                                                  shares        bonds

III.Increase/Decrease

movements in this                           --             --           --      --               --           --   -486,287.97             --             --           --   329,066,084.53 328,579,796.56     -228,845.38      328,350,951.18

Year ("-" means loss)

(I) Total

comprehensive                               --             --           --      --               --           --   -486,287.97             --             --           --   329,066,084.53 328,579,796.56     -228,845.38      328,350,951.18

income

(II) Capital paid in and

reduced by the                              --             --           --      --               --           --                 --        --             --           --                --              --               --                   --

shareholders

(III) Profit distribution                   --             --           --      --               --           --                 --        --             --           --                --              --               --                   --

1.Draw statutory
                                            --             --           --      --               --           --                 --        --             --           --                --              --               --                   --
surplus reserve

2.Draw generic risk
                                            --             --           --      --               --           --                 --        --             --           --                --              --               --                   --
reserve



                                                                                                                            50
                                                                                           ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                              Interim Report 2019




                                                                                                                        The amount in current year

                                                                                             Attribute to the equity of parent company

                                                      Other equity
         Items                                                                                      Less:          Other                                      Generic                                         Minority         Total owners'
                                                      instruments                                                                    Special   Surplus                      Retained
                          Share capital                                            Capital reserve Treasury comprehensive                                      risk                          Subtotal         interests           equity
                                               Preference Perpetual                                                                  reserve   reserve                      earnings
                                                                           Other                    shares        income                                      reserve
                                                shares        bonds

3.Distribution to
                                          --             --           --      --               --           --                  --        --             --           --               --               --                --                   --
shareholders

4.Others                                  --             --           --      --               --           --                  --        --             --           --               --               --                --                   --

(IV)Internal

carry-forward of                          --             --           --      --               --           --                  --        --             --           --               --               --                --                   --

shareholders’ equity

(V) Special Reserve                       --             --           --      --               --           --                  --        --             --           --               --               --                --                   --

(VI) Others                               --             --           --      --               --           --                  --        --             --           --               --               --                --                   --

IV. Balance at the end
                         1,011,660,000.00                --           --      -- 978,244,910.11             --   9,559,409.19             -- 85,666,668.00            -- 1,071,690,930.24 3,156,821,917.54 -128,448,404.82 3,028,373,512.72
of the period




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                                                                                   ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                                 Interim Report 2019



8.Statement of Changes in Owners’ Equity of the Company as the Parent
January-June 2019
                                                                                                                                                                                                                      Unit: RMB

                                                                                                                               The amount in current year

                                                                        Other equity

                  Items                                                 instruments                                    Less: Treasury Other comprehensive        Surplus        Generic risk          Retained        Total owners'
                                            Share capital                                            Capital reserve
                                                                 Preference Perpetual                                       shares           income              reserve          reserve             earnings           equity
                                                                                             Other
                                                                  shares        bonds

ⅠBalance at the End of Last Period        1,011,660,000.00                --           --      -- 964,711,931.13                    --                     --             --   72,776,609.18       615,038,028.05 2,664,186,568.36

Add: Changes of accounting policies                         --             --           --      --                --                 --                     --             --                  --                --                   --

Prior year adjustments                                      --             --           --      --                --                 --                     --             --                  --                --                   --

Others                                                      --             --           --      --                --                 --                     --             --                  --                --                   --

II. Balance at the Beginning of the Year   1,011,660,000.00                --           --      -- 964,711,931.13                    --                     --             --   72,776,609.18       615,038,028.05 2,664,186,568.36

III. Increase/Decrease movements in this
                                                            --             --           --      --                --                 --                     --             --                  --   618,918,984.35    618,918,984.35
Year ("-" means loss)

(I) Total comprehensive income                              --             --           --      --                --                 --                     --             --                  --   821,250,984.35    821,250,984.35

(II) Capital paid in and reduced by the
                                                            --             --           --      --                --                 --                     --             --                  --                --                   --
shareholders




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                                                                                ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                                Interim Report 2019




                                                                                                                            The amount in current year

                                                                     Other equity

                     Items                                           instruments                                    Less: Treasury Other comprehensive        Surplus        Generic risk        Retained         Total owners'
                                         Share capital                                            Capital reserve
                                                              Preference Perpetual                                       shares           income              reserve          reserve            earnings           equity
                                                                                          Other
                                                               shares        bonds

3.2.1 Capital increased and reduced by
                                                         --             --           --      --                --                 --                     --             --                  --               --                   --
owners

3.2.2 Capital increased by holders
                                                         --             --           --      --                --                 --                     --             --                  --               --                   --
of other equity instruments

3.2.3 Amounts of share-based                             --             --           --      --                --                 --                     --             --                  --               --                   --

3.2.4 Other                                              --             --           --      --                --                 --                     --             --                  --               --                   --

(III) Profit distribution                                --             --           --      --                --                 --                     --             --                  -- -202,332,000.00    -202,332,000.00

1.Draw statutory surplus reserve                         --             --           --      --                --                 --                     --             --                  --               --                   --

2.Distribution to shareholders                           --             --           --      --                --                 --                     --             --                  -- -202,332,000.00    -202,332,000.00

3.Others                                                 --             --           --      --                --                 --                     --             --                  --               --                   --

(IV)Internal carry-forward of                            --             --           --      --                --                 --                     --             --                  --               --                   --
shareholders’ equity

3.4.1 New increase of capital (or                        --             --           --      --                --                 --                     --             --                  --               --                   --

share capital) from capital reserve


                                                                                                                    53
                                                                               ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                               Interim Report 2019




                                                                                                                           The amount in current year

                                                                    Other equity

                  Items                                             instruments                                    Less: Treasury Other comprehensive        Surplus        Generic risk        Retained        Total owners'
                                        Share capital                                            Capital reserve
                                                             Preference Perpetual                                       shares           income              reserve          reserve           earnings           equity
                                                                                         Other
                                                              shares        bonds

3.4.2 New increase of capital (or                       --             --           --      --                --                 --                     --             --                  --              --                   --

share capital) from surplus reserve

3.4.3 Surplus reserve for making                        --             --           --      --                --                 --                     --             --                  --              --                   --

up loss

3.4.4 Other                                             --             --           --      --                --                 --                     --             --                  --              --                   --

(V) Special Reserve                                     --             --           --      --                --                 --                     --             --                  --              --                   --

3.5.1Withdrawn for the period                           --             --           --      --                --                 --                     --             --                  --              --                   --

3.5.2 Used in the period                                --             --           --      --                --                 --                     --             --                  --              --                   --

(VI) Others                                             --             --           --      --                --                 --                     --             --                  --              --                   --

IV. Balance at the end of the period   1,011,660,000.00                --           --      -- 964,711,931.13                    --                     --             --   72,776,609.18 1,233,957,012.40 3,283,105,552.71

January-June 2018
                                                                                                                                                                                                                Unit: RMB

                  Items                                                                                            The amount brought from the previous year



                                                                                                                   54
                                                                                   ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                                 Interim Report 2019




                                                                        Other equity

                                                                        instruments                                    Less: Treasury Other comprehensive    Surplus        Generic risk        Undistributed        Total owners'
                                            Share capital                                            Capital reserve
                                                                 Preference Perpetual                                       shares          income           reserve          reserve               profit              equity
                                                                                             Other
                                                                  shares        bonds

ⅠBalance at the End of Last Period        1,011,660,000.00                --           --      -- 978,244,910.11                    --                 --             --   62,537,054.59 522,882,036.78 2,575,324,001.48

Add: Changes of accounting policies                         --             --           --      --                --                 --                 --             --                  --                   --                   --

 Prior year adjustments                                     --             --           --      --                --                 --                 --             --                  --                   --                   --

Others                                                      --             --           --      --                --                 --                 --             --                  --                   --                   --

II. Balance at the Beginning of the Year   1,011,660,000.00                --           --      -- 978,244,910.11                    --                 --             --   62,537,054.59 522,882,036.78 2,575,324,001.48

III. Increase/Decrease movements in this
                                                            --             --           --      --                --                 --                 --             --                  --   19,820,347.73         19,820,347.73
Year ("-" means loss)

(I) Total comprehensive income                              --             --           --      --                --                 --                 --             --                  --   19,820,347.73         19,820,347.73

(II) Capital paid in and reduced by the
                                                            --             --           --      --                --                 --                 --             --                  --                   --                   --
shareholders

3.2.1 Capital increased and reduced by
                                                            --             --           --      --                --                 --                 --             --                  --                   --                   --
owners

3.2.2 Capital increased by holders
                                                            --             --           --      --                --                 --                 --             --                  --                   --                   --
of other equity instruments




                                                                                                                       55
                                                                             ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                                   Interim Report 2019




                                                                                                                 The amount brought from the previous year

                                                                  Other equity

                     Items                                        instruments                                    Less: Treasury Other comprehensive      Surplus        Generic risk        Undistributed        Total owners'
                                      Share capital                                            Capital reserve
                                                           Preference Perpetual                                       shares           income            reserve          reserve               profit              equity
                                                                                       Other
                                                            shares        bonds

3.2.3 Amounts of share-based                          --             --           --      --                --                 --                   --             --                  --                   --                   --

3.2.4 Other                                           --             --           --      --                --                 --                   --             --                  --                   --                   --

(III) Profit distribution                             --             --           --      --                --                 --                   --             --                  --                   --                   --

1.Draw statutory surplus reserve                      --             --           --      --                --                 --                   --             --                  --                   --                   --

2.Draw generic risk reserve                           --             --           --      --                --                 --                   --             --                  --                   --                   --

3.Distribution to shareholders                        --             --           --      --                --                 --                   --             --                  --                   --                   --

4.Others                                              --             --           --      --                --                 --                   --             --                  --                   --                   --

(IV)Internal carry-forward of
                                                      --             --           --      --                --                 --                   --             --                  --                   --                   --
shareholders’ equity

3.4.1 New increase of capital (or
                                                      --             --           --      --                --                 --                   --             --                  --                   --                   --
share capital) from capital reserve

3.4.2 New increase of capital (or
                                                      --             --           --      --                --                 --                   --             --                  --                   --                   --
share capital) from surplus reserve



                                                                                                                 56
                                                                               ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                                   Interim Report 2019




                                                                                                                   The amount brought from the previous year

                                                                    Other equity

                  Items                                             instruments                                    Less: Treasury Other comprehensive      Surplus        Generic risk        Undistributed        Total owners'
                                        Share capital                                            Capital reserve
                                                             Preference Perpetual                                       shares           income            reserve          reserve               profit              equity
                                                                                         Other
                                                              shares        bonds

3.4.3 Surplus reserve for making
                                                        --             --           --      --                --                 --                   --             --                  --                   --                   --
up loss

3.4.4 Other                                             --             --           --      --                --                 --                   --             --                  --                   --                   --

(V) Special Reserve                                     --             --           --      --                --                 --                   --             --                  --                   --                   --

3.5.1Withdrawn for the period                           --             --           --      --                --                 --                   --             --                  --                   --                   --

3.5.2 Used in the period                                --             --           --      --                --                 --                   --             --                  --                   --                   --

(VI) Others                            1,011,660,000.00                --           --      -- 978,244,910.11                    --                   --             --   62,537,054.59 542,702,384.51 2,595,144,349.21

IV. Balance at the end of the period   1,011,660,000.00                --           --      -- 978,244,910.11                    --                   --             --   36,265,054.83 541,064,217.62 2,567,234,182.56




                                                                                                                   57
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




III   General information
Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd. (the
“Group” or “the Company”) was established in July 1993, as approved by the
Shenzhen Municipal Government with document SFBF (1993) 724. The Company
issued A shares on 15th September, 1993 and issued B shares on 10 January 1994.
On 31 August 1994, B shares issued were listed in New York Exchange market as
class A recommendation. The total share capital are 1,011,660,000 shares, of which,
A shares are 891,660,000 shares, and the B shares are 120, 000,000 shares. The
company business license registration number is 440301103225878, and the
registered capital is RMB 1,011,660,000.00.
On 13 October 2004,according to the document No.(2004) 223 “Decision on
establishing Shenzhen investment Holding Co., Ltd.” issued by State-Owned Assets
Supervision and Administration Commission of Shenzhen Municipal Government,
former major shareholder – Shenzhen Construction Investment Holding Company
with two other assets management companies merged to form the Shenzhen
Investment Holding Co., Ltd. By the State-owned Assets Supervision and
Administration Commission of the state council,and quasi-exempt obligations
tender offer as approved by China Security Regulatory Committee with document
No.(2005)116, this issue of consolidated has been authorized and the registration
changing had been done on 15 February 2006. As at the end of the reporting period,
Shenzhen Investment Holding Limited holds 642,884,262 shares of the Company
(63.55% of the total share capital). The shares are all selling unrestricted shares.
Business scope: mainly engaged in real estate development and sales, property
leasing and management, retail merchandising and trade, hotel, equipment
installation and maintenance, construction, interior decoration and so on.
The main products or services provided: commodity housing, property leasing and
management, hotel service, construction and installation service, renovation service.
The parent of the Company is Shenzhen Investment Holdings Co., Ltd.
The Financial statement published on Aug 20th, 2019, which approved by Group’s
Board of Directors.
25 units were consolidated into the Group in first half of 2019 for the detail in Note 9
"Equities in other entities". The company did not change the range of consolidation
in this period compared with last year.




                                                        58
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                Interim Report 2019




IV   The Basis of Preparation of Financial Statements
4.1 The financial statements of the Group have been prepared on the basis of going
concern in conformity with the Chinese Accounting Standards for Business
Enterprises –The basic standards(Issued by order No.33 of the Ministry of Finance,
Revised by order No.76 of the Ministry of Finance), the 42 specified Accounting
Standards for Business Enterprise issued and revised by the Ministry of Finance of
People’s Republic of China on 15 February, 2006 and thereafter, the guidance for
the application of the Accounting Standards for Business Enterprise, the explanation
for the Accounting Standards for Business Enterprise and other relevant
regulations(       thereinafter       referred      as        “Accounting   Standards    for    Business
Enterprises”) and Compilation Rules for Information Disclosure by Companies
Offering Securities to the Public No.15—General Provisions on Financial Reports
(2014 Revision) issued by the China Securities Regulatory Commission (CSRC).
According to the relevant accounting regulations of Chinese Accounting Standards
for Business Enterprises, the Group has adopted the accrual basis of accounting.
The Group adopts the historical cost as the principle of measurement in the financial
statements except some financial instruments and Investment properties.
Non-current assets held for sale are based on lower price between the fair value
less estimated expenses and the original book value when they meet the conditions
for holding the sale. Provision will be made if any assets impair in accordance with
relevant requirements.
4.2 Going concern
No significant suspected event or circumstances about the going concern for the
past 12 months from the end of the reporting period.


V Important accounting policies and estimations
The company and its subsidiaries are engaged in real estate development business,
property leasing and management services, hotel room services, as well as building
installation and decoration services. The company and its subsidiaries have
formulated a number of specific accounting policies and accounting estimates for
transactions and events such as revenue recognition in accordance with the
characteristics of actual production and operation and the relevant accounting
standards for enterprises. For the details, please refer to each description of Notes 5.
39 “Revenues”.


5.1 Basis of Preparation


                                                         59
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




The financial statements of the Group are recognized and measured in accordance
with the regulations of the Chinese Accounting Standards for Business Enterprises
and they give a true and fair view of the financial position, business result and cash
flow of the Group as of 30 June 2019. In addition, the financial statements of the
Group comply, in all material respects, with the revised disclosure requirements for
financial statements and the notes of Compilation Rules for Information Disclosure
by Companies Offering Securities to the Public No.15—General Provisions on
Financial Reports (2014 Revision) issued by China Securities Regulatory
Commission (CSRC).
5.2 Accounting period
The accounting period of the Group is classified as interim period and annual period.
Interim period refers to the reporting period shorter than a complete annual period.
The accounting period of the Group is the calendar year from January 1 to
December 31.
5.3 Operating cycle
The normal operating cycle refers to period from Group’s buying assets for
manufacturing to realizing the cash or cash equivalent .The Group chooses 12
months as an operating cycle. The assets and liabilities are classified as current and
non-current according to the operating cycle standards.
5.4 Monetary Unit
Renminbi (RMB) is the currency of the primary economic environment in either
Group & its domestic subsidiaries or foreign subsidiary in HK. Therefore, the Group,
the domestic subsidiaries and foreign subsidiary in HK choose RMB as their
functional currency. While the Group’s foreign subsidiary in U.S.A. chooses USD
dollar as its functional currency on the basis of the primary economic environment it
operates. The Group adopts RMB to prepare its functional statements.
5.5 Accounting Treatment Under Common/Non-common control
A business combination is a transaction or event that brings together two or more
separate entities into one reporting entity. Business combinations involve
enterprises under common control and non-common control.
(1) Business combination involving entities under common control
A business combination involving enterprises under common control is a business
combination in which all of the combining enterprises are ultimately controlled by the
same party or parties both before and after the combination, and that control is not
transitory.



                                                        60
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




For a business combination involving enterprises under common control, the party
that, on the combination date, obtains control of another enterprise participating in
the combination is the absorbing party, while that other enterprise participating in the
combination is a party being absorbed. Combination date is the date on which the
absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as
recorded by the enterprise being absorbed at the combination date. The difference
between the carrying amount of the net assets obtained and the carrying amount of
consideration paid for the combination (or the total face value of shares issued) is
adjusted to the capital premium (or share premium) in the capital reserve. If the
balance of the capital premium (or share premium) is insufficient, any excess is
adjusted to retained earnings.
The cost of a combination incurred by the absorbing party, including any costs
directly attributable to the combination, shall be recognized as an expense through
profit or loss for the current period when incurred.
 (2) Business combination involving entities under non common control
A business combination involving enterprises under non common control happens if
the combining enterprises are not ultimately controlled by the same party or parties
both before and after the business combination.
For a business combination not involving enterprises under common control, the
party that, on the acquisition date, obtains control of another enterprise participating
in the combination is the acquirer, while the other enterprise participating in the
combination is the acquiree. Acquisition date is the date on which the acquirer
effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the
combination cost including the sum of fair value, on the acquisition date, of the
assets given, liabilities incurred or assumed, and equity securities issued by the
acquirer. The intermediary expenses incurred by the acquirer in respect of auditing,
legal services, valuation and consultancy services etc. and other associated
administrative expenses attributable to the business combination are recognized in
profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities
should be initially recognized as cost of equity securities or liability securities.
The contingent consideration related to the combination shall be booked as


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.       Interim Report 2019




combination cost at the fair value on the acquisition date. If, within the 12 months
after acquisition, new or additional information can prove the existence of related
information on acquisition date and the contingent consideration need to be adjusted
by relatively adjusting the combination goodwill.
Acquirer ‘s combination cost and the obtained identifiable net assets are measured
with the fair value on the acquisition date. The excess of the combination cost over
the fair value of identifiable net assets on the acquisition date is recorded as goodwill.
When the fair value of identifiable assets exceeds the combination cost , first of all,
the fair value of items of               obtained acquiree’s identifiable assets, liabilities or
contingent liabilities and combination cost need to be reassessed. And then, when
the combination cost is still less than the fair value of identifiable net assets on the
acquisition date after reassess, the difference should be recorded in the current
year’s profit and loss.
The deductible temporary differences obtained from the acquiree which cannot be
recognized as deferred tax assets ,on the acquisition date, because some
conditions are not met. Within 12 months after the acquisition ,if new or additional
information indicate that the relevant information exist on the acquisition date and
the economic benefits related with the deductible temporary difference can be
realized, the deferred tax assets should be recognized. The goodwill should be
reduced and if the goodwill is less than the deferred tax assets recognized, the rest
part should be recorded in the current year profit and loss.
For a business combination achieved in stages that involves multiple exchange
transactions, according to the “No.5 Inform of Printing and Distributing the
Explanation of Accounting Standards issued by the Finance of Ministry (Caikuai
[2012] No.19)”and Article 51of “Chinese Accounting Standards for Business
Enterprises No.33- Consolidated financial statement”, relating with the judgment
standards of package deal( refer to note 5.6(2)), a judgment about whether it is
package deal or not should be made. If it is package deal, please refer to the note
5.22 - Long-term equity investment for accounting treatment; if it is not package deal,
distinguish them as individual financial statement and consolidated financial
statement for accounting treatment.


For the individual financial statements, the book value of the long-term equity
investment held before the acquisition date plus the newly added equity investment



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.             Interim Report 2019




on the acquisition date, and then sum should be recorded as the original investment
cost; the long-term equity investment involved with other comprehensive income
held before the acquisition date, the way to deal with the investment will be the same
with the way the acquiree directly dispose the related assets and liabilities (i.e.,
under the equity method, beside the portion caused by the acquiree’s recalculated
defined benefit plan’s net assets and net liabilities, the rest are transferred into
investment income).
For the consolidated financial statements, for the shares in acquiree held before the
acquisition date, the shares are recalculated according to the fair value on the
acquisition date. The difference between the fair value and book value should be
recorded in the current year investment income; For the shares in the acquiree held
before the acquisition date involving other comprehensive income. The way to deal
with the other comprehensive income should be the same with the way the acquiree
directly dispose the relevant assets and                     liabilities(i.e., under the equity method,
beside the portion of changes caused by the acquiree’s                          recalculated defined
benefit plan’s net assets and net liabilities, the rest are transferred into investment
income ).
5.6 Preparation of consolidated financial statements
(1)The standards of determining the scope of consolidation
The scope of consolidation in the consolidated financial statements is determined on
the basis of control. Control is the power to govern the financial and operating
policies of an enterprise so as to obtain benefits from its operating activities. The
scope of consolidation includes the Group and all of the subsidiaries. Subsidiary is
an enterprise or entity under the control of the Group.
Once the changes of relevant facts and conditions result in the factors involving with
the above definition of the control, the Group will proceed to reassess.
(2)The method of preparing the consolidated financial statements
The subsidiary of the Group is included in the consolidated financial statements from
the date when the control over the net assets and business decisions of the
subsidiary is effectively obtained, and excluded from the date when the control
ceases.
For a subsidiary being disposed of by the Group, the operating results and cash
flows before the date of disposal (the date when control is lost) are included in the
consolidated income statement and consolidated statement of cash flows, as


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




appropriate. For a subsidiary disposed during the period, no adjustment is made to
the opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common
control, the operating results and cash flows from the acquisition date (the date
when the control is obtained) are included in the consolidated income statement and
consolidated statement of cash flows, as appropriate; no adjustment is made to the
opening balance and comparative figures in the consolidated financial statements.
Where a subsidiary was acquired during the reporting period, through a business
combination involving enterprises under common control, the financial statements of
the subsidiary are included in the consolidated financial statements. The results of
operations and its cash flow are appropriately included in the consolidated balance
sheet and the consolidated income statement, respectively, from the beginning of
the year to the date of acquisition and the comparative figures of the consolidated
financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from
those of the Group, the Group makes necessary adjustments to the financial
statements of the subsidiary based on the Group’s accounting period or accounting
policies. For the subsidiaries acquired through combination involving enterprises
under non common control, the financial statements should be adjusted based on
the fair value of the indentified net assets on the acquisition date.
Intra-group balances and transactions, and any unrealized profit or loss arising from
intra-group transactions, are eliminated when preparing the consolidated financial
statements.
Minority interest and the portion in the net profit or loss not attributable to the Group
are presented separately in the consolidated balance sheet within shareholders’/
owners’ equity. Net profit or loss attributable to minority shareholders in the
subsidiaries is presented separately as minority interest in the consolidated income
statement below the net profit line item.
When the amount of loss for the current period attributable to the minority
shareholders of a subsidiary exceeds the minority shareholders’ portion of the
opening balance of [shareholders’] [owners’] equity of the subsidiary, the excess is
still allocated against the minority interests.
When the Group loses control of a subsidiary due to the disposal of a portion of an
equity investment or other reasons, the remaining equity investment is re-measured



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.             Interim Report 2019




at its fair value on the date when control is lost. The difference between 1) the total
amount of consideration received from the transaction that resulted in the loss of
control and the fair value of the remaining equity investment and 2) the carrying
amounts of the interest in the former subsidiary’s net assets immediately before the
loss of the control is recognized as investment income for the current period when
control is lost. The amount recognized in other comprehensive income in relation to
the former subsidiary’s equity investment is reclassified as investment income for
the current period when control is lost. The retained interest is subsequently
measured according to the rules stipulated in the “Chinese Accounting Standards for
Business Enterprises No.2—Long-term equity investment” or “Chinese Accounting
Standards for Business Enterprises No.22—Determination and measurement of
financial     instruments”        (see      note     5.22-Long-term        equity   investment       and
5.10-Financial instruments).
The Group’s losing control of subsidiaries through multistep transactions of
disposing of the long-term equity investment, need to indentify whether every
transaction, involving with disposing of the investment in subsidiary until losing the
control, is belonging to package deal. Several transactions should be accounted for
as a package deal if conditions and the economic impact of disposal of investments
in subsidiaries are in compliance with one or more of the following circumstances:
① These transactions are considered simultaneously or ② these transactions as
a whole in order to reach a complete business results; another case of the
occurrence of the impact of entering into a transaction depends ③ had at least one
other transaction; ④ see a transaction alone is not economical, but, it is
economical when other transactions are taken into account. If it is not package deal,
every transaction of the non-package deals is treated according to the applicable
accounting standards of “partly disposing of the long-term equity investment without
losing control ”( refer to 5.22(2) ④ for detail) and “losing the control to subsidiary
due to partly disposing the equity investment or other reasons ” (see the former
paragraph for details). When every transaction involving with disposing of equity
investment in subsidiary until losing control is a package deal, they will be treated as
a single deal of disposing of the investment in subsidiary until losing control for
accounting treatment. But, before the control are lost, the difference between each
receipt of every transaction and the related shared proportion of indentified net
assets are recognized as other comprehensive income. The other comprehensive




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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




income will be transferred into profit and loss in the period when losing control.
5.7 Joint venture arrangement classification& mutual office account treatment
Joint venture arrangement is referred to the arrangement that are under common
control of two or more participating parties. The Group classifies the joint venture
arrangement into mutual office and joint venture, according to the rights shared and
obligation undertaken in the joint venture arrangement. Mutual office represents the
joint venture arrangement that the Group shares the assets related with
arrangement and undertakes the obligations related with the arrangement. Joint
venture is referred to the joint venture arrangement that the Group only have the
right to the net assets of the arrangement.
The Group measures the joint venture investment using the equity method. Please
refer to accounting policies listed on note 5.22 (2) ②-long-term equity investment
measured using the equity method.
As one party of the mutual office, the Group recognizes the separately owned assets
and separately assumed obligations, and the proportionate commonly held assets
and commonly assumed obligations per the company’s percentage of share interest;
recognize the revenue from the selling of the Group’s shared output of the mutual
office; recognize the common revenue generated from the selling of the common
output of the mutual office according to the Group’s share percentage; recognize the
expense separately incurred by the Group and the proportionate expense incurred
by the mutual office according to the Group’s share percentage.
When the Group sells invest or sell assets to the mutual office as one of the mutual
office party (the assets do not constitute a business, the same to below), or buys
assets from the mutual office, before the assets are sold to the third party, the Group
only recognizes the portion of profit and loss attributable to the other participating
parties. According to requirements of Chinese Accounting Standards for Business
Enterprises No.8- Asset impairment, when the assets are impaired, for the assets
invested or sold to the mutual office by the Group, the Group fully recognizes the
impairment loss; for assets that the Group bought from the mutual office, the
impairment loss is recognized according to the share percentage by the Group.
5.8 Cash and cash equivalent
Cash and cash equivalents of the Group include cash on hand, ready usable
deposits and investments having short holding term (normally will be due within
three months from the day of purchase), with strong liquidity and easy to be



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




exchanged into certain amount of cash that can be measured reliably and have low
risks of change.
5.9 Foreign exchange
(1) Translation in foreign exchange transactions
The Group’s initial recognition of the foreign currency transactions is recorded by the
functional currency translated by the spot rate (commonly refer to the middle rate of
the daily foreign currency rate publicly released by the People’s Bank of China)on
the transaction date. But the Group’s foreign currency exchange and foreign
currency exchange relevant transactions, is recorded by the functional currency
translated by the exchange rate actually used.
(2)Translation method for foreign currency monetary items and non-monetary items.
On the balance sheet date, foreign currency monetary items are translated using the
spot exchange rate at the balance sheet date. All the exchange differences thus
resulted are taken into profit or loss, except for ①those relating to foreign currency
borrowings specifically for construction and acquisition of qualifying assets, which
are capitalized in accordance with the principle of capitalization of borrowing costs;
②The exchange difference from changes of other account balance of foreign
currency monetary items available-for-trade is recorded into other comprehensive
income except for amortization cost.
When preparing the consolidated financial statements involving with oversea
operation, the foreign currency difference caused by the foreign exchange rate
changes should be recorded in other comprehensive income, if it substantially
constitutes the monetary items related to net investment to the oversea operation.
When the oversea operation are disposed, the other comprehensive income should
be transferred into current year profit and loss.
Non-monetary foreign currency items measured at historical cost shall still be
translated at the spot exchange rate prevailing on the transaction date, and the
amount denominated in the functional currency is not changed. Non-monetary
foreign currency items measured at fair value are translated at the spot exchange
rate prevailing at the date when the fair values are determined. The exchange
difference thus resulted are recognized in profit or loss for the current period or as
other comprehensive income.


(3) The translation of financial statement in foreign currency
When the consolidated financial statements include foreign operation(s), if there is a
foreign currency monetary item constituting a net investment in a foreign operation,



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




exchange difference arising from changes in exchange rates are recognized as
“exchange differences arising on translation of financial statements denominated in
foreign currencies” are recognized in other comprehensive income, and in profit or
loss for the period upon disposal of the foreign operation.
The Group translates the financial statements of its foreign operations into RMB by
following rules;
1)       Assets and liabilities in the balance sheet are translated at the spot
exchange rate prevailing on the balance sheet date; All equity items except for
retained earnings are translated at the spot exchange rates at the date on which
such items occur;
2) Income and expenses in income statement are translated at the spot exchange
rates at the date of transaction.
3) The opening undistributed profit is the closing undistributed profit of last period
after translation of last year.
4) The closing balance of undistributed profit is calculates and presented in the
basis of each translated income statements and profit distribution item.
5) The difference between the assets and liabilities and shareholder’s equity shall
be booked as translation difference of translating foreign currency financial
statements, and shall be presented as other comprehensive income in the separate
component of equity in the balance sheet.
6) When losing control over Group’s oversea operation due to disposal, the
translation difference of translating foreign currency financial statements related with
the oversea operation which is separately presented under the shareholder’s equity
section as accumulated other comprehensive income, should be fully or
proportionately transferred into the current period profit and loss according to the
disposal percentage.
7)Foreign currency cash flows and cash flow of oversea subsidiaries are translated
at the spot exchange rates. The effect of exchange rate changes on cash is
separately presented as an adjustment item in the cash flow statement.
8)The opening balance and actual figures of last year are displayed as the figures
translated last year.
9)When disposing the Group’s all shareholders’ equity of oversea operation or the
Group losing control over the oversea operation due to partial disposal of the
oversea equity investment or other reasons, the translation difference caused by the
translating of foreign currency financial statement related with the oversea
operation , which is presented under the equity section on the balance sheet and is



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




attributable to the parent company’s shareholders, should be transferred to the
current period profit and loss.
10)When the partial disposal of the equity investment of oversea operation and other
reasons cause the share percentage of oversea operation to decrease without
making the power of control to disappear, the translation difference of translation
foreign currency financial statement related with the part of oversea operation
disposed should be attributable to the minority interest and do not transfer to the
current period profit and loss. When the oversea operation disposing is a jointly run
business or joint venture, the translation difference of translating foreign currency
financial statements should be transferred to the current period profit and loss
according to the percentage of oversea operation disposal.
5.10     Financial instruments
When the Company becomes a party to a financial instrument, it shall recognize a
financial asset or financial liability.
(1) Classification, recognition and measurement of financial assets
The Company classifies the financial assets into financial assets measured at
amortized cost ,financial assets measured by the fair value and the changes
recorded in other comprehensive income and financial assets at fair value through
profit or loss based on the business model for financial assets management and
characteristics of contractual cash flow of financial assets.
Financial assets initially recognized shall be measured at their fair values. For
financial assets measured at their fair values and of which the variation is recorded
into the profit or loss of the current period, the transaction expenses thereof shall be
directly included into the current profit or loss; for other financial assets, the
transaction expenses thereof shall be included into the initially recognized amount.
For accounts receivable and notes receivable generated from sales of commodities
or provision of labor services, excluding or without regard to major financing, the
expected consideration amount the Company has the right to collect will be taken by
the Company as the initially recognized amount.
① Financial assets measured by the amortized cost
The business mode of the Company to manage the financial assets targets at
collecting the
contractual cash flow. What's more, the contractual cash flow characteristics of the
financial assets are consistent with the basic lending arrangement, that is, the cash



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




flow generated in the specific date is the payment of the interest based on the
principal and outstanding principal amount. This kind of financial assets of the
Company shall be subsequently measured based on the amortized cost and
effective interest method, and the gains or losses arising from the amortization,
impairment shall be included into current profit and loss.
②Financial assets measured at the fair value with its changes included into other
comprehensive income
Business mode for managing financial assets of the Company takes contract cash
flow collected as target and selling as target and contract cash flow characteristics of
such financial assets are consistent with basic lending arrangement. The Company
calculates such financial assets as per fair value whose change is included into
corresponding comprehensive income, but impairment loss or gain, exchange gain
or loss and interest income calculated as per actual interest rate method are
included into the current profit and loss.
Furthermore, the Company designates partial non-tradable equity vehicle
investment as the financial asset measured with fair value whose change is included
into other comprehensive income. The Company includes the related dividend
income of such financial assets into the current profit and loss with the change in fair
value included into other comprehensive income. At the time of derecognition of
such financial assets, accumulated gain or loss included into other comprehensive
income before will be shifted to retained earnings from other comprehensive
incomes but not included into the current profit and loss.
③ Financial assets at fair value through profit or loss
The Company classifies financial assets except for above-mentioned financial
assets measured with amortized cost and financial assets measured with fair value
whose change is included into other comprehensive income into financial assets at
fair value through profit or loss. Furthermore, at the time of the initial recognition, to
eliminate or significantly reduce the accounting mismatch, the Company specifies
partial financial assets as the financial assets at fair value through profit or loss. For
such financial assets, the Company adopts the fair value for the subsequent
measurement, and the changes in fair value are included into current profit and loss.




(2) Classification, recognition and measurement of financial liabilities
The Company’s financial liabilities are, on initial recognition, classified into financial



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.    Interim Report 2019




liabilities at fair value through profit or loss and other financial liabilities. For financial
liabilities at fair value through profit or loss, relevant transaction costs are
immediately recognized in profit or loss for the current period, and transaction costs
relating to other financial liabilities are included in the initial recognition amounts.
①    Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include trading financial
liabilities (including the derivative instruments belonging to financial liabilities) and
financial liabilities designated at the initial recognition to be measured by the fair
value and their changes are recorded in the current profit or loss.
Trading financial liabilities (including the derivative instruments belonging to financial
liabilities) are subsequently measured at fair value, and the changes of fair value
except those related to hedge accounting) shall be recorded in the current profit or
loss.
For the financial liabilities at fair value through profit or loss, the change of such
liability's fair value arising from changes in the Company's own credit risk is included
into other comprehensive income. And when the liability is derecognized, the
accumulative change amount of its fair value arising from the change of own credit
risk included into other comprehensive income is transferred to the retained
earnings. The changes of the remaining fair value are included in the current profit or
loss. If the treatment of change effects in own credit risk of such financial liability in
the above method may cause or expand the accounting mismatching in the profit or
loss, the Company will include all gains or losses (including the amount influenced
due to the changes in own credit risk of the enterprise) of such financial liability into
the current profit or loss.
②    Other financial liabilities
Other financial liabilities except for those formed due to transfer of financial assets
failing to comply with derecognition condition or continuously getting involved in
transferred financial assets and financial guarantee contract are classified into
financial liabilities measured with amortized cost and subject to subsequent
measurement based on amortized cost. Gains or losses generated from
derecognition or amortization are included into the current profit or loss.


(3) Recognition and measurement of financial assets transfer
The Company derecognizes a financial asset when one of the following conditions is


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a
third party
under a pass-through arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and
either (a)
has transferred substantially all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial
asset nor control over the asset, the asset is recognized according to the extent it
exists as financial asset, and correspondent liability is recognized. The extent of
existence refers the level of risk by the financial asset changes the enterprise is
facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition
criteria, (a). the carrying amount of the financial asset transferred; and (b) the sum of
the consideration received from the transfer and any cumulative gain or loss that
had been recognized in other comprehensive income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying
amount of the transferred financial asset is allocated between the part that continues
to be recognized and the part that is derecognized, based on the relative fair value
of those parts. The difference between (a) the carrying amount allocated to the part
derecognized; and (b) the sum of the consideration received for the part
derecognized and any cumulative gain or loss allocated to the part derecognized
which has been previously recognized in other comprehensive income, is
recognized in profit or loss.
If the Company endorses the financial assets sold by right of recourse and holding
financial assets, it needs to confirm that whether almost all risks and remuneration in
the ownership of financial assets have been transferred or not. Where an enterprise
has transferred nearly all of the risks and rewards related to the ownership of the
financial asset to the transferee, it shall stop recognizing the financial asset; If it
retained nearly all of the risks and rewards related to the ownership of the financial
asset, it shall not stop recognizing the financial asset. If the Company does not


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.    Interim Report 2019




transfer or retain nearly all of the risks and rewards related to the ownership of the
financial asset, then it continuously judges that whether the Company retain the
control of the assets, and conducts accounting treatment according to the principles
described in former paragraphs.
(4) Derecognition of financial liabilities
In case of current obligation of financial liabilities (or partial financial liabilities) being
terminated, derecognition of such financial liabilities (or partial financial liabilities) is
conducted by the Company. If the Company (borrower) concludes an agreement
with the lender to replace original financial liabilities with new ones and contact
terms of new financial liabilities are different from those of original financial liabilities,
derecognition of original financial liabilities and recognition of new financial liabilities
shall be conducted. In case of material alteration of contract terms of original
financial liabilities (partial financial liabilities) by the Company, derecognition of
original financial liabilities and recognition of
new financial liabilities as per modified terms shall be conducted.
In case of derecognition of financial liabilities (partial financial liabilities), the
Company includes the balance between its carrying value and payment
consideration (including non-cash assets transferred out or borne liabilities) into the
current profit or loss.
(5) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the
recognized financial assets and financial liabilities, and intends either to settle on a
net basis, or to realize the financial asset and settle the financial liability
simultaneously, a financial asset and a financial liability shall be offset and the net
amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance
sheet and shall not be offset.
(6) Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm’s length transaction. For a
financial instrument which has an active market, the Company uses quoted price in
the active market to establish its fair value. The quoted price in the active market
refers to the price that can be regularly obtained from exchange market, agencies,
industry associations, pricing authorities; it represents the fair market trading price in


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




the actual transaction. For a financial instrument which does not have an active
market, the Company establishes fair value by using a valuation technique.
Valuation techniques include using recent arm’s length market transactions between
knowledgeable, willing parties, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow analysis and option
pricing models. The Company measures initially and subsequently the fair value of
an
interest rate swap at the value of a competitor’s interest rate swap quoted by a
recognized financial institution as at the Company’s balance sheet date in
accordance with the principle of consistency. In valuation, the Company adopts
applicable valuation techniques supported by sufficient utilizable data and other
information in current circumstances, selects input values consistent with asset or
liability characteristics considered in relevant asset or liability transactions of market
participators and prioritizes the applying relevant observable input values.
Unobservable input values shall not be applied unless relevant observable input
values are not accessible or feasible.
(7) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets
of the Company after deducting all of its liabilities. The consideration received from
issuing equity instruments, net of transaction costs, are added to shareholders’
equity. All types of distribution (excluding stock dividends) made by the Company to
holders of equity instruments are deducted from shareholders’ equity. The Company
does not recognize any changes in the fair value of equity instruments.
An equity instrument distributing dividends during the period of continued existence
(including the “interest” generated from those classified as equity instrument) shall
be treated as profit distribution.
(8) Impairment of Financial Assets
The Company needs to confirm that the financial assets subject to the impairment
loss are the financial assets measured based on the amortized cost, the debt
instrument investment measured based on the fair value with its variations included
into other comprehensive incomes and the lease outlay receivable, mainly including
notes receivable, account receivable, other receivables, investment on creditor’s
rights, other investments on creditor’s rights and long-term receivables etc. Besides,
in respect of the contract assets and partial financial guarantee contract,



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                Interim Report 2019




corresponding impairment provisions shall be calculated and withdrawn and
corresponding credit impairment losses recognized according to various accounting
policies mentioned in this part.
① Methods for the Recognition of Impairment Provisions
For all mentioned items above, the Company shall calculate and withdraw
corresponding          impairment        provisions          and   recognize      corresponding       credit
impairment losses according to applicable expected credit loss measurement
methods (general methods or simplified methods) with the expected credit loss as
the basis.
Credit loss refers to the difference between all receivable contract cash flows and all
expected cash flows that are discounted to the present value based on the original
actual interest rate -- the present value of all cash shortfall. However, for the
purchased or original financial assets subject to the credit impairment, the Company
shall realize the discounting based on the actual interest rate subject to the credit
adjustment.
General methods applied to measure the expected credit loss can be described as:
the Company shall evaluate whether the credit risk of the financial assets (including
the contract assets and other applicable items; the same below) increases
remarkably after the initial recognition on the balance sheet day; if the credit risk
increases remarkably after the initial recognition, the Company shall measure the
provision for loss based on the specific expected credit loss amount during the entire
period of existence; if not, the Company shall measure the provision for loss based
on the specific expected credit loss amount in the following 12 months. While
evaluating the expected credit loss, the Company shall take all reasonable and
well-founded        information        into     consideration,        including    the   forward-looking
information.
For the financial instrument of lower credit risk on the balance sheet day, the
Company shall assume that its credit risk does not increase remarkably after the
initial recognition, and corresponding provision for loss shall be measured according
to the expected credit loss in the following 12 months.
② Standards for Judging Whether the Credit Risk Increases Remarkably after the
    Initial Recognition
If any financial assets’ probability of default within the expected period of existence
determined on the balance sheet day is obviously higher than that within the
expected period of existence determined during the initial recognition, it shall



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019




indicate the remarkable increase of the financial assets’ credit risk. Unless it is under
special circumstances, the Company shall adopt various variations in the default risk
in the following 12 months as the reasonable basis for estimating corresponding
variations in the default risk within the entire period of existence and determining
whether the credit risk increases remarkably after the initial recognition.
③ Combined Method for Evaluating the Expected Credit Risk based on
    Corresponding Combination
For the financial assets with remarkably different credit risk, the Company shall
separately evaluate its credit risk, including the receivables from related parties,
receivables involved in any dispute with the other party or any lawsuit and arbitration,
and receivables with obvious evidence showing that the debtor cannot fulfill the due
payment obligation etc.
Except for the financial assets whose credit risk shall be separately evaluated, the
Company shall divide these financial assets into different combinations based on the
specific risk features, on which basis, corresponding credit risks can be evaluated.
④ Accounting Treatment Methods Applied to the Impairment of Financial Assets
At the end of the period, the Company shall calculate the expected credit losses of
various financial assets. If the expected credit loss is higher than the carrying
amount of its current impairment provision, the difference shall be recognized as the
impairment loss; if lower, the difference shall be recognized as the gain from the
impairment.
5.11 Note receivables
For notes receivable, the Company shall measure the provision for loss based on
the specific
expected credit loss during the entire period of existence.
1) Portfolio-based Assessment of Expected Credit Risk
Our company evaluates the credit risk of receivables with distinct credit risks. In
addition to the financial assets, we divide the receivables into different groups based
on the common risk characteristics and evaluate the credit risk on the basis of
combination.
2) Accounting Processing Method for Devaluation of Note receivables
At the end of the period, the company calculates the anticipated credit loss of the
Note receivables. If the anticipated credit loss is larger than the book value of its
current impairment provision, the difference is recognized as impairment loss; if it is
less than the book value of the current impairment provision, the difference is


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recognized as impairment profit.
5.12 Account receivables
For receivables without significant financing components, Company measures loss
preparation according to the amount of anticipated credit loss equivalent to the
entire lifetime.
For accounts receivable with significant financing components, the company does
not choose a simplified treatment method, based on whether the credit risk has
increased significantly since the initial confirmation, but uses the expected credit
loss amount in the next 12 months or the whole life period to measure the loss
preparation.
(1) Criteria for judging whether credit risk has increased significantly since the initial
confirmation
If the default probability of accounts receivable in the expected life period
determined on the balance sheet date is significantly higher than that in the
expected life period determined on the initial confirmation, the credit risk of the
accounts receivable increases significantly. Except for special circumstances, the
company uses the change of default risk in the next 12 months as a reasonable
estimate of the change of default risk in the whole life period to determine whether
the credit risk has increased significantly since the initial confirmation.
(2) Portfolio-based Assessment of Expected Credit Risk
Our company evaluates the credit risk of receivables with distinct credit risks, such
as the related party's receivables, the receivables in dispute with the other party or
involving litigation and arbitration, and there are obvious signs that the debtor may
not be able to fulfill the obligation of repayment of the receivables, etc.
In addition to the individual accounts receivable assessing credit risk, the company
divides the accounts receivable into different groups based on the common risk
characteristics, and evaluates the credit risk on the basis of combination.
(3) Accounting treatment of impairment of accounts receivable
At the end of the period, the company calculates the anticipated credit loss of
accounts receivable. If the anticipated credit loss is greater than the book value of its
current impairment provision, the difference shall be recognized as impairment loss;
if it is less than the book value of the current impairment provision, the difference
shall be recognized as impairment profit.
5.13 Account receivables Financing




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In the daily fund management, the company sells the receivables of some specific
customers through the right of nonrecourse factoring. For the receivables of some
specific customers, the company aims at both collecting contract cash flow and
selling financial assets. Therefore, the receivables of these specific customers will
be collected by the company on and after January 1,2019. Items are reclassified as
financial assets with fair value and their changes are included in other
comprehensive income categories and reported as investments in other creditor's
rights or financing receivables.
5.14 Other Receivables
Based on whether the credit risk of other receivables has increased significantly
since the initial confirmation, the company uses the amount equivalent to the
expected credit loss in the next 12 months or the whole life period to measure the
impairment loss.
(1) Criteria for judging whether credit risk has increased significantly since the initial
confirmation
If the default probability of Other receivable in the expected life period determined on
the balance sheet date is significantly higher than that in the expected life period
determined on the initial confirmation, the credit risk of the Other receivable
increases significantly. Except for special circumstances, the company uses the
change of default risk in the next 12 months as a reasonable estimate of the change
of default risk in the whole life period to determine whether the credit risk has
increased significantly since the initial confirmation.
(2) Portfolio-based Assessment of Expected Credit Risk
Our company evaluates the credit risk of Other receivables with distinct credit risks,
such as the related party's receivables, the receivables in dispute with the other
party or involving litigation and arbitration, and there are obvious signs that the
debtor may not be able to fulfill the obligation of repayment of the receivables, etc.
In addition to the individual Other receivable assessing credit risk, the company
divides the Other receivable into different groups based on the common risk
characteristics, and evaluates the credit risk on the basis of combination.
(3) Accounting treatment of impairment of accounts receivable
At the end of the period, the company calculates the anticipated credit loss of Other
receivable. If the anticipated credit loss is greater than the book value of its current
impairment provision, the difference shall be recognized as impairment loss; if it is



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less than the book value of the current impairment provision, the difference shall be
recognized as impairment profit.


5.15 Inventories
(1) Classification of inventory
①Real estate development products
Real estate development inventory is initially measured at cost. Inventories mainly
include      inventory        materials,       development           products   under      development
(development costs), completed development products, and development products
that are temporarily leased for sale. The cost of developing products includes
land-transferring fees, expenditures on infrastructure support facility, expenditures
on construction and installation project, borrowing costs and other related costs in
the process of development before the completion of the project. When delivering
inventories, the actual cost is determined using the individual identification method.
②Build contracted inventory
The construction contract is measured at actual cost, including direct costs and
indirect costs incurred from the commencement of the contract to the completion of
the contract, and the implementation of the contract. Where travel expenses, tender
fees, etc. incurred for the purpose of entering into a contract, which can be
separately distinguished and reliably measured and the contract is likely to be
concluded, are included in the contract cost when the contract is obtained; if the
above conditions are not satisfied, it is included in the current profit or loss.
The accumulative costs incurred for the construction in progress contracts and the
cumulative gross profits (losses) that have been recognized and the settled amounts
are shown in the balance sheet as net offsets. The part of the accumulative cost of
the construction-in-progress contract and the accumulatively recognized gross profit
(loss) that exceeds the settlement price is listed as inventory; the settlement price of
the    construction-in-contract            exceeds       the     accumulative   cost     incurred       and
accumulatively recognized gross profit ( The sum of losses is shown as advance
receipts.
(2) Valuation method of inventories upon delivery
Inventories are initially carried at the actual cost. Cost of inventories comprises all
costs of purchase, costs of conversion and other costs. The actual cost of
inventories transferred out is assigned by using weighted average method, and


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development products by specific identification method.
(3) Basis for determining net realizable value of inventories and provision methods
for decline in value of inventories
Net realizable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion, the estimated costs necessary to make the
sale and relevant taxes. Net realizable value is determined on the basis of clear
evidence obtained, and takes into consideration the purpose of holding inventories
and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net
realizable value. If the net realizable value is below the cost of inventories, a
provision for decline in value of inventories is made. The provision for inventories
decline in value is determined by the difference of the cost of individual item less its
realizable value.
After the provision for decline in value of inventories is made, if the circumstances
that previously caused inventories to be written down below cost no longer exist so
that the net realizable value of inventories is higher than their cost, the original
provision for decline in value is reversed and the reversal is included in profit or loss
for the period.
    (4) Inventory count system is based on the perpetual stock system.

(5) Amortization method for low cost and short-lived consumable items and
packaging materials.
    Low cost and short-lived consumable items are amortized using immediate write-off method; packaging

    materials are amortized using immediate write-off method.

    (6) Cost of land constitutes land development costs for pure land development project.

    Together with the overall development of the property, its cost is included in housing costs generally based

    on the actual area.

    (7)Public Facilities Fee: The cost is the actual construction cost incurred. If several estate projects benefit

    from the same facility, they stay in the same category. The cost of fee should be measured according to the

    allocation of sales area. If they got benefit but in different categories, the cost was measured according to

    the allocation of the area covered.

    (8)Utility reserve funds:Utility reserve funds were received by the Group and recorded in Long-term

    payables. The funds were used to maintain and renew communal facilities.

    (9)Quality Guarantees:Quality Guarantees was put into the account of real estate developing according to

    the contract amount and also recorded in the accounts payable at the same time. The actual payment incurs



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    after the expiry of guarantee.




    5.16 Contract assets

    For contract assets that do not contain significant financing components, the company measures loss

    preparation according to the amount of anticipated credit loss equivalent to the whole life period.

    For contract assets with significant financing components, the company does not choose a simplified

    treatment method. It uses the expected credit loss amount in the next 12 months or the whole life period as

    the basis to measure the loss preparation according to whether the credit risk has increased significantly

    since the initial confirmation.

(1) Criteria for judging whether credit risk has increased significantly since the initial confirmation

    If the default probability of Contract assets in the expected life period determined on the balance sheet date

    is significantly higher than that in the expected life period determined on the initial confirmation, the credit

    risk of the Contract assets increases significantly. Except for special circumstances, the company uses the

    change of default risk in the next 12 months as a reasonable estimate of the change of default risk in the

    whole life period to determine whether the credit risk has increased significantly since the initial

    confirmation.

    (2) Portfolio-based Assessment of Expected Credit Risk

    The company evaluates the credit risk of contract assets with different credit risks. In addition to the

    accounts receivable which evaluates the credit risk individually, the company divides it into different groups

    based on the common risk characteristics and evaluates the credit risk on the basis of combination.

    (3) Accounting treatment of impairment of accounts receivable

    At the end of the period, the company calculates the anticipated credit loss of Other receivable. If the

    anticipated credit loss is greater than the book value of its current impairment provision, the difference shall

    be recognized as impairment loss; if it is less than the book value of the current impairment provision, the

    difference shall be recognized as impairment profit.

    5.17 Contract costs

    5.18 Holding assets for sale

    If a non-current asset can be sold immediately only in accordance with the usual terms for the sale of such

    assets in its current situation, the Company has made a resolution on the disposal of the non-current asset,

    signed an irrevocable transfer agreement with the transferee, and the transfer will be completed within one

    year, the non-current asset shall be held as pending. The accounting of selling non-current assets shall be




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    classified as holding for sale without depreciation or amortization, and shall be measured according to the

    book value and fair value minus the net disposal expenses. Holding non-current assets for sale includes

    individual assets and disposal groups. If the disposal group is an asset group defined in Accounting

    Standards for Enterprises No. 8 - impairment of assets, and the goodwill acquired in the merger of

    enterprises is apportioned to the asset group according to the provisions of the standard, or the disposal

    group is an operation in the asset group, the disposal group includes the goodwill formed in the merger of

    enterprises.

    It is divided into holding individual non-current assets for sale and assets in disposal group, which are

    presented separately in the current assets part of the balance sheet, and liabilities related to transfer assets

    in the disposal group which are held for sale, which are presented separately in the current liabilities part of

    the balance sheet.

    A certain asset or disposal group is classified as holding for sale, but later no longer meets the confirmation

    conditions for holding non-current assets for sale. The company ceases to classify it as holding for sale and

    measures it according to the lower of the following two amounts: (1) The asset or disposal group is classified

    as holding the book value before being sold, according to On the assumption that the amount of

    depreciation, amortization or impairment that should have been recognized should be adjusted without

    being classified as holding for sale; (2) the recoverable amount on the day of deciding not to sell any more.

    5.19 Investments in debt obligations

    Investments in debt obligations mainly accounts for bond investment measured by amortized cost, etc.

    Based on whether its credit risk has increased significantly since its initial confirmation, the company uses

    the amount equivalent to the expected credit loss in the next 12 months or the whole life period to measure

    the impairment loss.

    In addition Investments in debt obligations, which assesses the credit risk individually, it is divided into

    different portfolios based on its credit risk characteristics.

    5.20 Investments in other debt obligations

    Investments in other debt obligations are mainly measured at fair value and their changes are included in

    bond investments of other comprehensive income. Based on whether its credit risk has increased

    significantly since its initial confirmation, the company uses the amount equivalent to the expected credit

    loss in the next 12 months or the whole life period to measure the impairment loss.

    In addition to Investments in other debt obligations that evaluate credit risk individually, they are divided into

    different portfolios based on their credit risk characteristics.

    5.21 Long-term receivables




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    Based on whether its credit risk has increased significantly since its initial confirmation, the company

    measures long-term receivables impairment loss by the amount equivalent to the expected credit loss in the

    next 12 months or the whole life period. In addition to the long-term receivables, which are used to evaluate

    credit risk individually, they are divided into different combinations based on their credit risk characteristics.

5.22 Long-term equity investments
The long-term equity investment mentioned in this section is about the equity
investment           of which the Group has control, common control or significant
influences over the investee. For the investments that the Group has no control,
common control or significant influences over the investee, they will be recorded as
available-for-sale or financial instrument assets measured at fair value with its
changes into profit and loss. Please refer to note 5.10-Financial instruments for
detail.
Common control means the Group’s mutual control to the arrangement according to
the related agreement and the arrangement’s activities related decisions can be
made only after getting the mutual agreement from other parties sharing the control
power. Significant influences represent that the Group has the right to participate in
the decision of the financial and operating policies, but cannot control or control
together with other parties to make the policy related decision.
(1) Determination of investment cost
For a business combination involving enterprises under common control, the initial
investment cost of the long-term equity investment shall be carrying value of the
absorbing party’s share of the shareholder’s of the party being absorbed at the date
of combination.
For a business combination not involving enterprise under common control, the
combination cost including the sum of fair value, at the acquisition date, of the
assets given, liabilities incurred or assumed, and equity securities issued by the
acquirer. The intermediary expenses incurred by the acquirer in respect of auditing,
legal services, valuation and consultancy services etc and other associated
administrative expenses attributable to the business combination are recognized in
profit or loss when they are incurred.
The transaction cost for the equity securities or liability securities issued by the
acquirer in the business combination shall be recognized as initial amount of equity
security or liability.
The equity investments other than the long-term equity through combination shall be


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initially measured by cost. The cost shall be recognized to the difference in the way
of acquisition of long-term equity investment. Theses ways include the cash
purchase price the Group actually paid, the fair value of equity security issued by the
Group, value specified in the investment contract or agreement, the fair value or
carrying value of the asset transferred out in the transaction of non-monetary asset
exchanges, and the fair value of the long-term equity investment. Expenses, taxes
and other necessary expenditures directly attributable to the acquisition of long-term
equity investment are taken into investment cost. For the long-term equity
investments that the Group can have significant influence or common control on the
investee, but cannot control the investee, because of the added investments, the
cost of the long-term equity investment should be the sum of original fair value of the
investment and the cost of newly added investment.
(2) Subsequent measurement
Where an investing enterprise can exercise common control or significant influence
over the investee, a long-term investment shall be accounted for using the equity
method. Besides, the cost method shall be adopted in a long-term equity investment
when the Group can exercise control over the investee.
1)     Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial
investment cost. Except for cash dividends or profits declared but not yet paid that
are included in the price or consideration actually paid upon acquisition of the
long-term equity investment, investment income is recognized in the period in
accordance with the attributable share of cash dividends or profit distributions
declared by the investee.




2)    Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the
investing enterprise’s interest in the fair values of the investee’s identifiable net
assets at the time of acquisition, no adjustment shall be made to the initial
investment cost.
Where the initial investment cost of a long-term equity investment is less than the
investing enterprise’s interest in the fair values of investee’s identifiable net assets at
the time of acquisition, the difference shall be charged to profit or loss for the current


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period, and the cost of the long-term equity investment shall adjusted accordingly.
Under the equity method,the Group recognizes its share of the net profit or loss and
other comprehensive income of the investee for the period as investment income or
loss and other comprehensive income for the period and adjusts the book value of
the long-term equity investment simultaneously. The Group reduces the book value
of the long-term equity investment, according to the shared profit or cash dividends
declared by the investee. For the changes of investee’s equity beside the net profit,
other comprehensive income and profit distribution, adjust the book value of the
long-term equity investment and its capital surplus.
When determining the share percentage of investee’s net profit, it should be made
based on the fair value of investee’s identifiable assets after adjusting the investee’s
net profit on the acquisition date. When the investee’s accounting period and
accounting policies are different with the Group’s, the subsidiary’s financial
statements should be adjusted according to the Group’s and recognize the
investment income and other comprehensive income based on it. Unrealized profits
or losses resulting from the Group’s transactions with its associates and joint
ventures are recognized as investment income or loss to the extent that those
attributable to the Group’s equity interest are eliminated. However, unrealized losses
resulting from the Group’s transactions with its investees on the transferred assets,
in accordance with "Accounting Standards for Enterprises No. 8 - Impairment of
Assets", are not eliminated. When the Group’s assets invested to joint venture and
jointly run business are a deal and the Group obtains the long-term equity
investment without getting the power of control, the initial cost of the investment is
determined by fair value of the assets invested. The difference between the initial
cost and the book value of the assets invested should be fully taken into profit and
loss. When the Group’s assets sold to joint venture and jointly run business are a
deal, the differences between the consideration received and the book value are
fully taken into the profit and loss. When the Group’s buying assets from joint
venture and jointly run business are a deal, the gain and loss would be fully
recognized according to the Accounting Standards for Business Enterprises No.20
     -Enterprises combination.
When the investee is recognized net losses, reduce the carrying value of long-term
equity investments and long-term equity of net investment (in substance) in investee
to zero. In addition, the Group has the obligations on additional losses, then the



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expected obligation as estimated liabilities and included in the current investment
losses. Where the net profit from investee units, restoration confirm the amount of
revenue sharing after offset the amount of unrecognized loss sharing.
For the long-term equity investments of joint ventures and joint ventures held before
the implementation of the new accounting standards for the first time before January
1, 2019, if there is a borrowing variance of equity investments related to the
investment, the current profits and losses shall be accounted for by the straight-line
amortization of the original remaining period.
3) Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of
minority interests and portion of net asset cumulatively calculated from the
acquisition date is adjusted as capital reserve. If the capital reserve is not sufficient
to absorb the difference, the excess are adjusted against retained earnings.
4)    Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a
change in control, the difference in the net asset between the amount of disposed
long-term investment and the amount of the consideration paid or received is
adjusted to the owner’s equity. If the disposal of long-term investment in a subsidiary
involves loss of control over the subsidiary, the related accounting policies in Note
5.6(2) Accounting policies retailed on “the method of preparing consolidated
financial statements”
On disposal of a long-term equity investment, the difference between the proceeds
actually received and receivable and the carrying amount is recognized in profit or
loss for the period.
For long-term equity investment accounted for using the equity method, when the
rest of the long-term equity investment is still accounted for using the equity method
after disposal, the other comprehensive income originally recorded into the equity
should be dealt with by the same way as the investee’s directly dealing with its
assets or liabilities. The other investee equity changes caused beside the net profit,
other comprehensive income and profit distribution should be proportionately
transferred into current year profit and loss.
For long-term equity investment accounted for using the cost method, when the rest
of the long-term equity investment is still accounted for using the cost method after
disposal, other comprehensive income recognized using the equity method or the


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method of recognizing and measuring the financial instruments before obtaining the
control over the investee should be dealt with as the same way with investee’s direct
disposing of its assets and liabilities and be proportionately taken into profit and loss;
The other investee equity changes caused beside the net profit, other
comprehensive income and profit distribution should be proportionately transferred
into current year profit and loss.
When the Group loses control over the investee but still can exercise the common
control or significant influences over the investee after partial disposal of the
long-term equity investment, the equity method should be used to prepare individual
financial statements. The rest equity investment is treated as accounted using the
equity method upon the acquisition and is adjusted; If no control and significant
influences cannot be exercised, the rest equity investments should be recognized
and measured by the accounting standards to financial instruments. The difference
between the fair value and book value is taken into current profit and loss.
For the other comprehensive income recognized under the equity method or the
financial instrument related method before obtain the control over investee, it will be
treated as the same way with investee’s directly disposing its assets or liabilities
when losing the control over investee. The equity changes under equity method
caused beside the net profit, other comprehensive income and profit distribution
should be transferred into the profit and loss when losing the control over investee.
Including, other comprehensive income and other owner’s equity should be
proportionately transferred, when the rest equity investment is accounted with equity
method; Other comprehensive income and other owner’s equity should be fully
transferred, when the rest equity investment is accounted with accounting standards
of financial instruments.
The Group loses the control and significant influences over the investee, because of
disposing of part of long-term equity investment. The difference between fair value
and book value on the day when losing the control and significant influences over
the investee should be taken into profit and loss. Other comprehensive income
recognized for the original equity investments under equity method, would be dealt
with as the same way with investee’s directly disposing of its assets and liabilities
when cease using the equity method. The equity changes caused beside the net
profit, other comprehensive income and profit distribution, should be transferred into
investment income when cease using the equity method.



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For the Group’s multiple-step dealing with its long-term equity investments until
losing control, if the transactions are package deal, each transaction should be
treated as a transaction dealing with its long-term equity investments until losing
control, the difference between the consideration received and the book value of the
equity investment should be firstly recognized as other comprehensive income
before losing control over investee and then all transferred into current profit and
loss.
5.23 Investment properties
Investment property is property held to earn rental or for capital appreciation or both.
It includes a land use right that is leased out, a land use right held for transfer upon
capital appreciation, and a building that is leased out. Besides, the Group has
buildings empty for operating lease. If there is a written decision from the Board (or
similar organization) with clear indication for operating lease and intension that no
change shall be made in the near future, the buildings shall be presented as
investment properties.
An investment property is measured initially at cost. Subsequent expenditures
incurred for such investment property are included in the cost of the investment
property if it is probable that economic benefits associated with an investment
property will flow to the Group and the subsequent expenditures can be measured
reliably. Other subsequent expenditures are recognized in profit or loss in the period
in which they are incurred.
The Group uses the cost method for subsequent measurement of investment
property, and adopts a depreciation or amortization policy for the investment
property which consistent with that for building or land use rights.


Where self-occupied property or inventory converts into investment property, or
investment property converts into self-occupied property, the carrying amount before
the change shall be accounted as the value after conversion.
When an investment property changes into self-occupied property, it should be
converted into fixed asset or intangible asset on the date of conversion. When the
purpose of a self-occupied property changes into rental earning or capital increase,
fixed asset or intangible asset should be converted into an investment property from
the date of conversion. Where the cost model is used in the measurement of
investment property during the conversion, the carrying amount before the



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conversion is accounted as the value after conversion. Where the investment
property is measured by the fair value after conversion, the fair value at the
conversion date is adopted as value after conversion.
Where an investment property is disposed or no longer in use permanently and no
economic benefits shall be obtained from the disposal, derecognized the investment
property. The income from sale, transfer or disposal of the investment property is
recorded in the profit or loss after deduction of its carrying amount and related tax.
5.24 Fixed assets
(1) The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing
commodities, rendering labor service, renting or business management and their
useful life is in excess of one fiscal year. Fixed assets are only confirmed when their
related economic benefits are likely to flow into the company and its cost can be
reliably measured. Fixed assets are stated at cost and consider the impact of
expected costs of abandoning the initial measurement.
(2) The method for depreciation
From the following month of state of intended use, depreciation method of the
straight-line method is used for different categories of fixed assets to take
depreciation. The recognition of the classification, useful life and estimated residual
rate are as follows:

             Category                Expected useful life        Estimated residual value(%)    Depreciation(%)

 Building & construction                     30                               5                          3.17

 Machines & equipments                        7                               5                         13.57

 Vehicles                                     6                               5                         15.83

 Electronic appliances                        5                               5                         19.00




Expected net residual value of fixed assets is the balance of the Group currently
obtained from the disposal of the asset less the estimated costs of disposal amount,
assuming the asset is out of useful life and state the expected service life in the end.
(3) Recognition and measurement and Depreciation Method of financial lease
Finance leases which transfer substantially all the risks and rewards of
ownership .Its ownership may be transferred or not eventually .The depreciation
policy for assets held under finance leases should be consistent with that for owned
assets. If it is reasonable to determine the ownership of the leased asset at the end



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of the lease term, depreciation is provided within the useful life of the leased asset.
Otherwise, the asset should be depreciated over the shorter of the lease term or the
life of the asset
5.25 Construction in progress
Construction in process is measured at actual cost. Actual cost comprises
construction costs,borrowing costs that are eligible for capitalization before the fixed
assets being ready for their intended us and other relevant costs. Construction in
process is transferred to fixed assets when the assets are ready for their intended
use.
For details of the testing method of impairment and withdraw method of impairment
provision on construction in progress, please refer to Note 5. 31 “Long-term assets
impairment”
5.26 Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to
borrowings, ancillary costs incurred in connection with the arrangement of
borrowings, and exchange differences arising from foreign currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalized. The amounts of other borrowing
costs incurred are recognized as an expense in the period in which they are
incurred.
The period of borrowing costs capitalization is calculated from the point when
borrowing costs beginning capitalizing to the time stopping capitalizing. The period
suspending capitalizing the borrowing costs are excluded.
Capitalization of borrowing costs is suspended during periods in which the
acquisition, construction or production of a qualifying asset is interrupted by
activities other than those necessary to prepare the asset for its intended use or sale,
when the interruption is for a continuous period of more than 3 months. Borrowing
costs incurred during these periods recognized as an expense for the current period
until the acquisition, construction or production is resumed.


5.27 Productive living assets
5.28 Oil and gas assets
5.29 Right-of-use assets
5.30 Intangible assets
(1) Recognition and calculation of intangible asset



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The term “intangible asset” refers to the identifiable non-monetary assets without
physical shape, possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to
intangible assets, if the economic benefits related to intangible assets are likely to
flow into the enterprise and the cost of intangible assets can be measured reliably,
shall be recorded as cost of intangible assets. The expenses other than this shall be
booked in the profit or loss when they occur.
Land use rights that are purchased by the Group are accounted for as intangible
assets. Buildings, such as plants that are developed and constructed by the Group,
and relevant land use rights and buildings, are accounted for as intangible assets
and fixed assets, respectively. Payments for the land and buildings purchased are
allocated between the land use rights and the buildings; if they cannot be reasonably
allocated, all of the land use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original
cost less net residual value and any accumulate impairment losses is amortized
over its estimated useful life using the straight-line method. An intangible asset with
an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Group reviews the useful life
and amortization method at the end of the period, and makes adjustment when
necessary.. An additional review is also carried out for useful life of the intangible
assets with indefinite useful life. If there is evidence showing the foreseeable limit
period of economic benefits generated to the enterprise by the intangible assets,
then estimate its useful life and amortize according to the policy of intangible assets
with definite useful life.
If it is impossible to determine the period of time for intangible assets to bring
economic benefits to the company reasonably, the intangible assets shall be
regarded as intangible assets with uncertain service life.


The testing method for intangible assets impairment and the calculation of the
provision for impairment is detailed listed on the note 5.31-Long-term assets
impairment.
 (2) The accounting of expenditures of internally researched and developed project
Expenditure on the research phase of an internal research is recognized in profit &
loss in the period in which it is incurred.


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Expenditure during the development phase that meets all of the following conditions
at the same time is recognized as intangible asset. Expenditure during development
phase that does not meet the following conditions is recognized in profit or loss for
the period.
1)    it is technical feasible to complete the intangible asset so that it will be available
for use or sale;
2)    the Group has the intention to complete the intangible asset and use or sell it;
3)    the Group can demonstrate the ways in which the intangible asset will generate
economic benefits including the evidence of the existence of a market for the output
of the intangible asset or the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset;
4)    the availability of adequate technical, financial and other resources to complete
the development and the ability to use or sell the intangible asset; and
5)    the expenditure attributable to the intangible asset during its development
phase can be reliably measured.
If the expenditures cannot be distinguished between the research phase and
development phase, the Group recognizes all of them in profit or loss for the period.
5.31 Long-term assets impairment
On each balance sheet date, the Group will make judgments to determine whether
there are signs for impairment to the fixed assets ,construction in progress, definite
intangible assets, investment properties& equity investment in subsidiaries& joint
ventures& jointly run business measured using the cost method etc. non-current and
non-financial assets. If there are signs for impairment, the impairment should be
tested by estimating the recoverable amount. Goodwill, indefinite intangible assets
and intangible assets having not reached the usable condition, should be yearly
tested for impairment no matter whether there are signs for impairment.
The result of impairment test demonstrates that the recoverable amount is less than
its carrying amount, the difference will be recorded as provision for impairment and
debited as impairment loss. The recoverable amount equals to the greater of 1) fair
value less disposal expenses and 2) present value of the predicted future cash
flows.
The fair value of the assets is determined by the sale contract price of fair trade;
When there are no sale contracts but exist active market ,the fair value will be
determined with the quotation from the buyer; When there exist neither sale



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contracts nor active market, the assets fair value will be determined by the best
information available.
The disposal expenses include the legal expenses, related taxes, delivery fees and
other direct fees incurred for making the assets reach the salable condition. The
present value of the predicted future cash flows is calculated according to the
predicted future cash flows generated from the continuous use of the assets and
final disposal discounted with the applicable discounted rate. The provision for
impairment
test should be recognized based on the individual asset. If it is hard to estimate the
recoverable amount to individual asset, the recoverable amount of the assets group
of which the individual assets are included should be determined. Assets group is
the smallest unit that can independently generate the cash inflow.
For the goodwill separately displayed on the financial statement, when making the
impairment test, the carry value of the goodwill should be allocated to assets group
or the group of assets group predicted to be benefit from the synergistic effect from
the enterprises combination. When the rest result shows that the recoverable of the
assets group or the group of assets group having been allocated with the relevant
goodwill is less than the carrying amount, the related impairment loss should be
recognized. The impairment losses will firstly reduce the book value of the goodwill
allocated and then reduce the book value of each asset of the assets group or the
group of assets group according to the percentage of each asset to the assets group
or the group of assets group beside the goodwill.
The impairment loss of the above assets would not be reversed back once they are
recognized.
5.32 Long-term deferred assets
Long-term deferred assets represent expenses incurred that should be borne and
amortized over the current and subsequent period (together of more than one year).
Long-term deferred assets are amortized by using straight line method.


5.33 Contract liabilities
5.34 Employee Benefits
 (1) Accounting Treatment of Short-term Salary
The benefits of employees in the Group include short-term benefits, welfare after




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demission, demission welfare and other long-term welfare.
The short-term benefits include the employees’ salary, bonus, allowance and
compensation, employee                 welfare, medical insurance, maternity insurance,
employment injury insurance, housing fund, labor union expense and employee
education expense and non-currency welfare etc. The Group recognizes the actually
incurred short-term employee benefits as liability during the period when the
employees’ services are rendered, the expenses are recorded into the current
period profit and loss or related asset costs according to the benefit object. For the
non-currency welfare, it is recognized according to its fair value.
(2) Accounting Treatment of Welfare after demission
Welfare after demission mainly includes the defined contribution plan and the
defined benefit plan. The defined contribution plan and the defined benefit plan
mainly include the basic endowment insurance premium, unemployment insurance
expense and pension etc.
 (3) Accounting Treatment of dismissal welfare
When the Group cannot unilaterally withdraw the dismissal welfare provided for the
plan on the cancellation of labor relationship or layoff proposal, or recognize the cost
     or expense involved with the recombination of dismissal welfare or payment of
such dismissal welfare (whichever is earlier), the employee’s remuneration incurred
by dismissal welfare is recognized as the debt and included in the current profits and
losses or related assets cost. But when then dismissal is predicted not to be paid in
the following 12 months after the report date, it would be classified as other
long-term welfare.
Employee internal retirement plan is treated as the same way with dismissal welfare
mentioned above. The Group would record the relevant salaries and social
insurances provided to the employees under the plan into the profits and losses
(dismissal welfare) during the period from the day employees not providing the
services to the legal retirement day, when the conditions for recognizing the
contingency liability are met.


(4) Accounting Treatment of Other long-term welfare
Other long-term welfare provided by the Group is referred to as the welfare beside
the short-term benefits, welfare after demission, demission welfare. It would be
recognized as the requirements of defined contribution plan, when conditions are



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met. Or else, it would be recorded as defined benefit plan.
5.35 Lease Obligation
5.36 Accrued liabilities
When the obligations related to contingencies meet the following conditions, they
are recognized as expected liabilities: (1) the obligation is the current obligation of
the company; (2) the performance of the obligation may lead to the outflow of
economic benefits; (3) the amount of the obligation can be measured reliably.
On the balance sheet date, the estimated liabilities are measured according to the
best estimate of the expenditure required to fulfil the relevant current obligations,
taking into account the risk, uncertainty and time value of currency related to
contingencies.
If all or part of the expenditure required to settle the estimated liabilities is expected
to be compensated by a third party, the amount of compensation shall be recognized
separately as an asset when it is basically determined that it can be received, and
the amount of compensation recognized shall not exceed the book value of the
estimated liabilities.
(1) Loss contract
Loss contract is a contract in which the cost of fulfilling contract obligations will
inevitably exceed the expected economic benefits. Where the contract to be
executed becomes a loss contract and the obligations arising from the loss contract
satisfy the above-mentioned conditions for confirmation of the expected liabilities,
the part of the assets whose expected losses exceed the recognized impairment
losses (if any) of the underlying assets of the contract shall be recognized as the
expected liabilities.
(2) Restructuring obligations
For a restructuring plan with detailed, formal and public announcement, the amount
of the estimated liabilities shall be determined according to the direct expenditure
related to the restructuring, subject to the above conditions for confirmation of the
estimated liabilities. For the reorganization obligation of selling part of the business,
only when the company undertakes to sell part of the business (i.e. when a binding
sale agreement is signed), can the obligations related to reorganization be
confirmed.
5.37 Share-based payment
5.38 Other financial instruments such as Preferred stock and Perpetual bond,



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etc
5.39 Revenue
The real estate construction agreement is in accordance with the definition of the
construction contract, for buyers who can specify the main structural elements of
real estate design before the start of the construction project, or be able to determine
the major changes in structure during the construction process, will be confirmed by
the Company of construction services according to the Enterprise Accounting
Standards No. 15 - Construction Contract. As purchaser, whose limited ability to
influence real estate design (such as only minor changes to the basic design), the
company in accordance with the "principles and methods of income accounting
standards for Enterprises No. fourteenth - income" about commodity sales
confirmation, the relevant revenue recognition combined with the specific conditions
of the company real estate sales.
The company will confirmed the relevant income and expenses according to the
Enterprise Accounting Standards No. 15 - Construction Contract when real estate
construction agreement is in accordance with the definition of the construction
contract, for buyers who can specify the main structural elements of real estate
design before the start of the construction project, or be able to determine the major
changes in structure during the construction process. However, when purchaser’s
ability to influence real estate design is limited (such as only minor changes to the
basic design), the relevant revenue                 will be confirmed by the company combined
with the specific conditions in accordance with the principle of the Enterprise
Accounting Standards No. 14 – income
 (1) Developed products
The Group established real estate sales revenue is recognized, must satisfied the
following four conditions at the same time:
1). Real estate is completed and accepted;
2). contract of Installment selling is singed and the contractual obligations is
performed;
3). the company no longer retains the continuation management rights nor controls
normally associated with the ownership;
4). the amount of income can be reliably measured;
5) the related economic benefits are likely to flow into the company and the cost of
the house can be reliably measured


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(2) Revenue from Installment selling
The revenue is recognized by the fair vale about contract or agreement when the
selling conditions satisfied the following conditions at the same time:
1). Real estate is completed and accepted;
2). contract of Installment selling is singed and the contractual obligations is
performed;
3).the related economic benefits are likely to flow into the company and the cost of
the development product can be reliably measured.
The difference between the price and the fair value of the contract or agreement is
amortized by the actual interest rate during the period of the contract or agreement
and be taken into the profit and loss of the current period.
(3) Revenue from self-use house selling
The sales revenue is confirmed when the following conditions are met:
1) the main risks and rewards of self-use house ownership are transferred to the
purchaser;,
2) the company no longer retains the continuation management rights nor controls
normally associated with the ownership;
3) the amount of income can be reliably measured;
4) the related economic benefits are likely to flow into the company and the cost of
the house can be reliably measured
(4)Revenue from rental property
The income of rental property is confirmed when the relevant rents or receipt have
obtained according to the lease contract.
(5) Revenue from construction contracts
Where the outcome of a construction contract can be estimated reliably, contract
revenue and costs are recognized using the percentage of completion method at the
balance sheet date. The stage of completion of a contract is determined using the
proportion that actual contract costs incurred to date bears to the estimated total
contract costs.
The outcome of a construct contract can be measured reliably when the following
conditions are met:
1) The total revenue of the contract can be measured reliably;
2) It is probable that the associated economic benefits will flow to the enterprise;




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1) The actual cost of the contract incurred can be determined and measured
reliably;
2) The stage of completion of the contract and the costs to be incurred associated
with the completion of the contract can be measured reliably.
Where the outcome of a construction contract cannot be estimated reliably,4)1.if
contract costs are expected to be recoverable, contract revenue is recognized to the
extent of contract costs that are expected to be recoverable; and contract costs are
recognized as expenses in the period in which they are incurred; 4)2.if contract
costs are not expected to be recoverable, they are recognized as expenses
immediately when incurred and contract revenue is not recognized. When the
uncertainties that prevented the outcome of the construction contract from being
estimated reliably no longer exist, revenue and expenses associated with the
construction contract are recognized using the percentage of completion method.
If the estimated total contract costs exceed total contract revenue, the expected loss
is recognized immediately as an expense for the period.
(6) Royalty revenue
Revenue is confirmed according to the relevant contract or agreement on the
accrual basis.
(7) Interest income
Revenue is confirmed according to the time and actual interest rate in the use of the
company's money.
(8) Other business income recognition
The Group will confirm other business revenue while clauses of the relevant
contracts and agreements reveal that economic interests related to transactions
may flow into enterprises ,the amount of income and other related or incurred
costs can be reliably measured.
5.40 Government Grants
Government grants are transfer of monetary assets and non-monetary assets from
the government to the Group at no consideration, excluding the capital invested by
the government as equity owner. Government grant can be classified as grant
related to the assets and grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured
at the amount received or receivable. If a government grant is in the form of a
non-monetary asset, it is measured at fair value. If the fair value cannot be reliably
determined, it is measured at a nominal amount. A government grant measured at a
nominal amount is recognized immediately in profit or loss for the period.
A government grant related to an asset is recognized as deferred income, and



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evenly amortized to profit or loss over the useful life of the related asset. For a
government grant related to income, if the grant is a compensation for related
expenses or losses to be incurred in subsequent period, the grant is recognized as
deferred income, and recognized in profit or loss over the periods in which the
related costs are recognized. If the grant is a compensation for related expenses or
losses already incurred, the grant is recognized immediately in profit or loss for the
period.
Government grants, including both asset-related and income-related components at
the same time,are used to separate into different parts of the accounting process.
They are classified as income-related government subsidies while it is difficult to
distinguish.
Government grants, related to the Company's daily activities, are taken into other
income or write down related costs in accordance with the substance of the
economic business. Government subsidies that are not related to daily activities are
included in non-operating income and expenses.
For repayment of a government grant already recognized, if there is a related
deferred income, the repayment is offset against the carrying amount of the deferred
income, and any excess is recognized in profit or loss for the period. If there is no
related deferred income, the repayment is recognized immediately in profit or loss
for the period.
5.41 Deferred income tax assets and deferred income tax liabilities
(1) Current Income tax
At the balance sheet date, deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realized or the
liability is settled, according to the requirements of tax laws. The measurement of
deferred tax assets and deferred tax liabilities reflects the tax consequences that
would follow from the manner in which the Group expects at the balance sheet date,
to recover the assets or settle the liabilities.
(2) Deferred income tax assets and deferred income tax liabilities
For temporary differences between the carrying amount of certain assets or liabilities
and their tax base, or between the nil carrying amount of those items that are not
recognized as assets or liabilities and their tax base that can be determined
according to tax laws, deferred tax assets and liabilities are recognized using the
balance sheet liability method.




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For temporary differences associated with the initial recognition of goodwill and the
initial recognition of an asset or liability arising from a transaction (not a business
combination) that affects neither the accounting profit nor taxable profits (or
deductible losses) at the time of transaction, no deferred tax asset or liability is
recognized.
For taxable temporary differences associated with investments in subsidiaries and
associates, and interests in joint ventures, no deferred income tax liability related is
recognized except where the Group is able to control the timing of reversal of the
temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
All deferred income tax liabilities arising from taxable temporary differences except
the ones mentioned above are recognized.
For temporary deductible differences associated with the initial recognition of an
asset or liability arising from a transaction (not a business combination) that affects
neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction, no deferred tax asset is recognized.
For taxable temporary deductible differences associated with investments in
subsidiaries and associates, and interests in joint ventures, no deferred income tax
asset related is recognized if it is impossible to reversal the temporary difference in
the foreseeable future, or it is not probable to obtain taxable income which can be
used for the deduction of the temporary difference in the future.
Except mentioned above, the Group recognizes other deferred income tax assets
that can deduct temporary differences to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences can be
utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax
assets for deductible temporary differences are recognized to the extent that it is
probable that taxable profits will be available against which the deductible temporary
differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax
rates according to tax laws that are expected to apply in the period in which the
asset is realized or the liability is settled.
At the balance sheet date, the Group reviews the carrying amount of deferred tax
assets. If it is no longer probable that sufficient taxable profit will be available in
future periods to allow the benefits of the deferred tax assets to be used, the Group
reduces the carrying amount of deferred tax assets. The amount of such reduction is



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reversed when it becomes probable that sufficient taxable profit will be available.


(3)Income tax expense
Income tax expense includes Current Income tax and Deferred income tax assets
and deferred income tax liabilities
Except that the current income tax and deferred income tax related to transactions
and events recognized as other comprehensive gains or directly included in
shareholder's rights and interests are included in other comprehensive gains or
shareholder's rights and interests, as well as the book value of the adjusted goodwill
of deferred income tax resulting from the merger of enterprises, the other current
income tax and deferred income tax expenses or gains are accounted for Periodic
profit and loss.
(4) Setoff of Income Tax
When the company has the legal right to settle in net, and intends to settle in net or
acquire assets and pay off liabilities at the same time, the company's current income
tax assets and current income tax liabilities to offset the net presentation.
When it has the legal right to settle current income tax assets and current income tax
liabilities in net terms, and deferred income tax assets and deferred income tax
liabilities are related to the income tax levied by the same tax collection and
administration department on the same tax payer or to different tax payers, but in the
future, each deferred place is of great importance. During the period when the
taxable assets and liabilities are transferred back, when the taxpayers concerned
intend to settle the current income tax assets and liabilities in net or acquire assets
and liabilities simultaneously, the company defers the income tax assets and
deferred income tax liabilities to offset the net amount.
5.42 Leases
(1) Operating Lease
①The Group as Lessee under Operating Lease
Lease payments under an operating lease are recognized by a lessee on a
straight-line basis over the lease term, and either included in the cost of the related
asset or charged to profit or loss for the current period. The contingent rents shall be
recorded in the profit or loss of the period in which they actually arise.
②The Group as Leaser under Operating Lease




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Lease income from operating leases shall be recognized by the leaser in profit or
loss on a straight-line basis over the lease term. Initial direct cost of significance in
amount shall be capitalized when incurred. If another basis is more systematic and
rational, that basis may be used. Contingent rents are credited to profit or loss in the
period in which they actually arise.
(2)Financing Lease
①The Group as Lessee under Operating Lease
For an asset that is held under a finance lease, at the lease commencement, the
leased asset is recorded at the lower of its fair value at the lease commencement
and the present value of the minimum lease payments, and the minimum lease
payment is recorded as the carrying amount of the long-term payables; the
difference between the recorded amount of the leased asset and the recorded
amount of the payable is accounted for as unrecognized finance charge, Initial direct
costs incurred by the lessee during the process of negotiating and securing the
lease agreement shall be added to the amount recognized for the leased asset.
The net amount of minimum lease payment deducted by the unrecognized finance
shall be separated into long-term liabilities and long-term liability within one year for
presentation.
Unrecognized finance charge shall be computed by the effective interest method
during the lease term. Contingent rent shall be booked into profit or loss when
actually incurred.
②The Group as Leaser under Operating Lease
For an asset that is leased out under a finance lease, the aggregate of the minimum
lease receipts at the inception of the lease and the initial direct costs is recorded as
a finance lease receivable, and unguaranteed residual value is recorded at the same
time; the difference between the aggregate of the minimum lease receipt, initial
direct costs, and unguaranteed residual value, and the aggregate of their present
values, is recognized as unearned finance income, which is amortized using the
effective interest rate method over each period during the lease term.
Finance lease receivable less unearned finance income shall be separated into
long-term liabilities and long-term liability within one year for presentation.
Unearned finance income shall be computed by the effective interest method during
the lease term. Contingent rent shall be credited into profit or loss in which actually



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incurred.


5.43 Other Material accounting judgments and accounting estimations
Because of the inherent uncertainties of the operating activities, the Group need to
make judgments, estimations and assumptions to the financial statement items
whose carrying amount cannot be accurately measured. Those judgments,
estimations and assumptions are made based on the management’s historical
experience and taking other relevant factors into account. Those judgments,
estimations and assumptions would influence the reported amount of revenue,
expense, asset and liability and disclosure of the contingency liability on the balance
sheet date. However, the actual result caused by the uncertainty of these
estimations may be different with the present estimation made by the management,
which may cause significant adjustments to the carrying amount of the influenced
assets and liabilities            in the future.
The Group are making periodical review on the judgments, estimations and
assumptions mentioned above based on the premise of going concern. For the
changes of estimations that only influence the current period, the influenced amount
will be recognized in the current period. For the changes of estimations that not only
influence the current period ,but also affect the future periods, the influenced amount
will be recognized in the current period and future period.
As of the balance sheet date, the material areas that need to be judged ,estimated
and assumed are listed below:
(1) Income recognition - construction contract
 The Company confirm the contract income by the percentage method of
 completion on the balance sheet date when the result of the construction can be
 reliably estimated. The percentage of completion is confirmed according to the
 methods mentioned in Note 5. 39 Income, and is accumulated in the accounting
 year for each construction contract.
 Significant judgments need to be made in determining the percentage of
 completion, the cost of the contract, the total revenue and cost of the contract, and
 the recoverability of the contract. Project management’s judgments mainly relies on
 past experience and work. The change in the estimated total revenue and cost of
 the contract, as well as the estimated alteration of the execution result of the


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 contract, may affect or constitute a major impact on the business income and cost,
 profit and loss during the current or subsequent period.


(2) classification of lease
The lease are classified into operating lease and finance lease, according to the
“Accounting Standards for Business Enterprise No.21-Lease” .When making the
classification, the management need to make analysis and judgment about whether
all risk and reward related with the ownership of assets leased out have been
substantially transferred to the lessee or not ,or whether all risk and reward related
with the ownership of the assets leased have substantially assumed by the Group.
(3) The provision for allowance for bad debt
The Group applies the allowance method to estimate the bad debt, according to the
policy of accounts receivable. The impairment of accounts receivable is based on
the evaluation of accounts receivable’s possibility of collection. The difference
between the actual result and the original estimation would influence the accounts
receivable’s carrying value and cause the balance of allowance for bad debt to
increase or reverse back during the period when the estimation is changed.
(4) Provision for inventory
According to inventory accounting policy, the ending inventory is measured by the
lower of cost and net realizable value. When the cost is greater than the net
realizable value and the obsolete and unsalable inventory, the inventory falling price
reserve shall be withdrawn. Reduce the inventory to the net realizable value is
based on the evaluation the salable of the inventory and its net realizable value.
Estimates of net realizable value are based on the most reliable evidence available
at the time the estimates are made and take into consideration the purpose for which
the inventory is held and the influences of events occurring after the balance sheet
date. The difference between the actual result and original estimation will influence
the carrying amount of the inventory and cause the provision for inventory to
increase or reverse back during the period when the estimation is changed.
(5) The fair value of financial instrument
For the financial instrument lacking active trading market, the Group will use several
valuation methods to make sure the fair value. The methods include the model to
analyze the discounted cash flow etc. The Group will evaluate the following aspects,
such as the future cash flow, credit risk, market volatility and the relativity etc. and
then choose the applicable discounted rate, when making the evaluation. There are



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uncertainties for the relevant assumptions whose changes will influence the fair
value of financial instrument.


(6) Provision for non-current assets
The Group will make judgment on the non-current assets beside the financial assets
about whether there are signs for impairment on the balance sheet date. For the
intangible assets whose life is uncertain, when there are signs for impairment, it
should be tested for impairment, beside the yearly impairment test. Other
non-current assets beside the financial statement, when there are signs indicating
that the carrying value are unrecoverable, it should be tested for impairment.
When the carrying value of the asset or asset group is greater than the recoverable
amount (i.e., the net value of fair value less the cost of disposal and present value of
the predicted future cash flow whichever is higher), it indicates impairment.
The net value of fair value less the cost of disposal, is referred to the agreed sale
price of similar assets under fair trade or the observable market price, less the
incremental cost directly related with the disposal of the assets.
The Group need to make significant judgment to the output of assets (or assets
group), sale price, relevant operating cost and the discounted rate when estimating
the present value of future cash flows. The Group will make use of any relevant
     material available when estimating the recoverable amount , including the
prediction of the output, sale price and relevant operating cost according to
reasonable and supportable assumptions.
The Group will test the goodwill for impairment at least once a year, which requires
to estimate the present value of the future cash flows of the assets and assets group
allocated with the goodwill . When estimating the present value to the future cash
flow, the Group need to estimate the cash flows generating from the assets and
assets group, and choose the applicable discount rate to determine the present
value.
(7)Depreciation and amortization
The Group use the straight-line method to depreciate and amortize the investment
real estate, fixed assets and intangible assets within the useful life after taking into
the consideration of the residual value. By the way, the amount of depreciation and
amortization during the report period are determined. The useful life is determined
based on past experience and the predicted technical changes of similar assets. If


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there are significant changes of previous estimations, the depreciation and
amortization would be adjusted in the future periods.


(8)R&D expense
When determining the amount of capitalization, the company's management needs
to make assumptions about the expected future cash flow of the assets, the
applicable discount rate and the expected benefit period.
(9)Deferred tax asset
To the degree that there are sufficient taxable profit to make up the deductible
losses, the Group will recognize the deferred tax assets for the un-used deductible
losses. It requires the management to apply massive judgments to estimate the time
and amount the taxable profits will generate in the future period combining with the
strategic of tax planning to determine the amount of deferred tax asset.
(10)Income tax
There are some uncertainties for some trades’ ultimate tax treatment and calculation.
Some items need the determination from the tax authorities about whether they are
deductible before tax or not. If the ultimate tax determination are different with the
originally estimated amount, the difference will influence the current period income
tax and the deferred income tax when the tax determination are finally made.
 (11) Internal early retirement welfare and supplementary retirement welfare
Amounts of expenditures and liabilities of internal early retirement welfare and
supplementary retirement welfare should be determined according to assumption
terms. Assumption terms include discount rate, average growth rate of medical costs,
growth rate of subsidies for early retirement employees and retirees and other
factors. The differences of actual results and assumption should be confirmed
immediately and included into costs of current year. Although the management have
adopted reasonable assumption terms, changes of actual experience value and
assumption terms may affect the internal early retirement welfare, supplementary
retirement benefits and balance of liabilities.
(11) Provisions
The Company made the estimation on product quality guarantee, predicted loss of
contract and the fine for delayed delivery etc. and withdrew the relevant provision for
provisions in accordance the provisions of contract, current knowledge and
experience. Under the condition that the contingent event has formed a current duty



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and fulfilling the duty is likely to cause the economical interest outflow the Company,
the Company measures the provisions in accordance with the best estimate of the
necessary expenses for the performance of the current duty. The recognition and
measurement of provisions were heavily relied on the judgment of the management
team. During the process of making judgment, the Company needed to appraise the
relevant risks, uncertainty and the time value of money and etc. Of which, the
Company estimated the liabilities basing on the after-sale services
commitments to the customers upon the sale, repair and reform of goods. When
estimating the liabilities, the Company has fully taken the consideration of the latest
repair experience, but which may not reflect the repair situation in the future. Any
increase / decrease of the provision for estimated liabilities may affect the profits and
losses in the future periods.
(12) Measurement for fair value
Some assets and liabilities of this Company will be measured at fair value in the
financial statements. The board of directors of this Company has established the
appraisement committee (led by the CFO of this Company) to confirm appropriate
appraisement technology and input value for measurement of fair value. This
Company will apply available and observable market data during estimating the fair
value of some assets and liabilities. If the input value in Level 1 is not available, this
Company will entrust a third qualified appraiser for the estimation. The appraisement
committee will closely cooperate with the outside appraiser to determine proper
estimation technology and input values of the related models. CFO submits a report
to the discoveries of the appraisement committee to the board of directors of this
Company to explain the reasons of fluctuation of fair value of related assets and
liabilities.
5.44 Material accounting policies and accounting estimations
(1)Material accounting policies
□ applicable √ not applicable
(2)Material accounting estimations
□ applicable √ not applicable
(3)New Financial Instruments Standards, New Income Standards and New
Leasing Standards for the First Implementation of Relevant Items in Financial
Statements at the Beginning of the Year
√ applicable □not applicable




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Consolidated Balance Sheet
                                                                                                    Unit: RMB

                 Item                   2018.12.31                   2019.1.1                  Adjustment

Current Assets:

Monetary Funds                             2,048,522,435.93            2,048,522,435.93                            --

Account Receivables                           18,166,888.19                  18,166,888.19           -15,260,103.46

Receivable Financing                          15,260,103.46                  15,260,103.46           15,260,103.46

Prepayments                                    4,177,767.88                   4,177,767.88                         --

Other receivables                             45,018,027.61                  45,018,027.61                         --

   Including: Interest receivable              2,453,067.78                   2,453,067.78                         --

Dividends receivable                           1,052,192.76                   1,052,192.76                         --

Inventories                                1,685,152,051.26            1,685,152,051.26                            --

Other current assets                           6,780,999.56                   6,780,999.56                         --

Total current assets                       3,823,078,273.89            3,823,078,273.89                            --

Non-current assets

Available- for- sale financial assets         17,464,240.74                  17,464,240.74                         --

Long-term equity investments                  12,561,107.24                  12,561,107.24                         --

Investment properties                        623,930,838.15                 623,930,838.15                         --

Fixed assets                                  33,926,198.52                  33,926,198.52                         --

Long-term deferred assets                        387,066.91                     387,066.91                         --

Deferred tax assets                          154,543,788.80                 154,543,788.80                         --

Total non-current assets                     842,813,240.36                 842,813,240.36                         --

TOTAL ASSETS                               4,665,891,514.25            4,665,891,514.25                            --

Current liabilities:

Short-term loans                              17,260,103.46                  17,260,103.46                         --

Accounts payable                             216,758,906.71                 216,758,906.71                         --

Advances from customers                      156,426,152.86                 156,426,152.86                         --




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                    Item                2018.12.31                   2019.1.1                  Adjustment

Payroll payable                               45,836,830.05                  45,836,830.05                         --

Taxes payable                                300,547,372.98                 300,547,372.98                         --

Other payables                               721,819,898.48                 721,819,898.48                         --

   Including: Interest payable                16,535,277.94                  16,535,277.94                         --

Dividends payable                                        --                             --

Total current liabilities                  1,458,649,264.54            1,458,649,264.54                            --

Non-current liabilities::

Long-term loans                                          --                             --                         --

Long-term payables                             6,507,139.20                   6,507,139.20                         --

Total non-current liabilities                  6,507,139.20                   6,507,139.20                         --

Total liabilities                          1,465,156,403.74            1,465,156,403.74                            --

Owners' equity:

Share capital                              1,011,660,000.00             1,011,660,000.00                           --

Capital reserve                              978,244,910.11                 978,244,910.11                         --

Less: treasury shares                                    --                             --                         --

Other comprehensive income                    10,564,385.97                  10,564,385.97                         --

Surplus reserve                               95,906,222.59                  95,906,222.59                         --

Retained earnings                          1,235,884,122.72            1,235,884,122.72                            --

Total owners' equity attributable to
                                           3,332,259,641.39            3,332,259,641.39                            --
parent company

Minority interests                          -131,524,530.88             -131,524,530.88                            --

Total owners’ equity                      3,200,735,110.51             3,200,735,110.51                           --

Total liabilities and owners’ equity      4,665,891,514.25            4,665,891,514.25                            --

Statement of adjustment
In the daily fund management, the Company sells the receivables of some specific
customers through the right of non-recourse. For the receivables of some specific
customers, the company aims at both collecting contract cash flow and selling
financial assets. Therefore, the receivables of these specific customers will be



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collected by the company on and after January 1, 2019. Items are reclassified as
financial assets with fair value and their changes are included in other
comprehensive income categories. They are reported as receivables financing. The
beginning of January 1, 2019 is adjusted. 15,260,103.46 yuan is reclassified from
receivables to receivables financing.
Balance Sheet of the Company as the Parent
                                                                                                    Unit: RMB

                 Item                            2018.12.31                       2019.1.1              Adjustment

Current Assets:

Monetary Funds                             1,344,486,378.53            1,344,486,378.53                            --

Account Receivables                            5,164,795.67                   5,164,795.67                         --

Receivable Financing                                     --                             --                         --

Prepayments                                      200,000.00                    200,000.00                          --

Other receivables                            770,374,849.84                 770,374,849.84                         --

   Including: Interest receivable              2,380,301.11                   2,380,301.11                         --

Dividends receivable

Inventories                                  543,912,100.37                 543,912,100.37                         --

Other current assets                             215,745.41                    215,745.41                          --

Total current assets                       2,664,353,869.82            2,664,353,869.82                            --

Non-current assets

Available- for- sale financial assets         12,000,000.00                  12,000,000.00                         --

Long-term equity investments                 235,284,776.57                 235,284,776.57                         --

Investment properties                        511,040,299.65                 511,040,299.65                         --

Fixed assets                                  21,942,842.11                  21,942,842.11                         --

Long-term deferred assets                        346,015.72                    346,015.72                          --

Deferred tax assets                           16,699,980.23                  16,699,980.23                         --

Total non-current assets                     797,313,914.28                 797,313,914.28                         --

TOTAL ASSETS                               3,461,667,784.10            3,461,667,784.10                            --

Current liabilities:




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                    Item                         2018.12.31                       2019.1.1              Adjustment

Short-term loans                                         --                             --                         --

Accounts payable                              16,743,360.96                  16,743,360.96                         --

Advances from customers                       22,035,608.45                  22,035,608.45                         --

Payroll payable                               19,687,728.50                  19,687,728.50                         --

Taxes payable                                144,621,616.85                 144,621,616.85                         --

Other payables                               594,392,900.98                 594,392,900.98                         --

   Including: Interest payable                16,535,277.94                  16,535,277.94                         --

Dividends payable                                        --                             --                         --

Total current liabilities                    797,481,215.74                 797,481,215.74                         --

Non-current liabilities::

Long-term loans                                          --                             --                         --

Long-term payables                                       --                             --                         --

Total non-current liabilities                            --                             --                         --

Total liabilities                            797,481,215.74                 797,481,215.74                         --

Owners' equity:

Share capital                              1,011,660,000.00             1,011,660,000.00                           --

Capital reserve                              964,711,931.13                 964,711,931.13                         --

Less: treasury shares                                    --                             --                         --

Other comprehensive income                               --                             --                         --

Surplus reserve                               72,776,609.18                  72,776,609.18                         --

Retained earnings                            615,038,028.05                 615,038,028.05                         --

Total owners’ equity                      2,664,186,568.36            2,664,186,568.36                            --

Total liabilities and owners’ equity      3,461,667,784.10            3,461,667,784.10                            --

(4) Statement of comparative data in the early period of retrospective adjustment of
new financial instrument standards and new leasing standards for the first time
□ applicable √ not applicable
5.45 Other
(1) Accounting Policy Change


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①Accounting Policy Change Caused by the Implementation of New Financial
Instrument Standards


On March 31, 2017, the Ministry of Finance promulgated Accounting Standards for
Enterprises No. 22 - Recognition and Measurement of Financial Instruments
(Revised in 2017) (Accounting [2017] 7),'Accounting Standards for Enterprises No.
23 - Transfer of Financial Assets (Revised in 2017) (Accounting [2017]
8),'Accounting Standards for Enterprises No. 24 - Set of Accounting Standards for
Enterprises'. Periodic Accounting (Revised in 2017) (Accounting [2017] 9) issued on
May 2, 2017 "Accounting Standards for Enterprises 37 - Financial Instruments
Presentation (Revised in 2017)" (Accounting [2017] 14) (collectively referred to as
"New Financial Instruments Standards"), requiring domestic listed enterprises to
implement the new standards from January 1, 2019. Guidelines for financial
instruments.
Our company will carry out the aforementioned new financial instrument guidelines
from January 1, 2019.
All recognized financial assets under the new financial instrument standards are
subsequently measured at the amortized cost or fair value. On the date of
implementation of the new financial instrument standards, the business model of
managing financial assets is evaluated on the basis of the existing facts and
circumstances of the company on that day, and the characteristics of contractual
cash flow on the financial assets are evaluated on the basis of facts and
circumstances at the time of initial confirmation of financial assets. The financial
assets are divided into three categories: measured according to the amortized cost
and measured according to the public value. Value is measured and its changes are
recorded in other comprehensive income and fair value, and its changes are
recorded in current profits and losses. Among them, when the financial asset
terminates recognition, the accumulated gains or losses previously included in other
comprehensive gains will be transferred from other comprehensive gains to retained
gains, not into current profits and losses.
Under the new financial instrument standards, based on the expected credit loss,
the company makes provision for impairment of financial assets measured by
amortized cost, investment in debt instruments measured by fair value and its
changes included in other comprehensive gains, lease receivables, contractual
assets and financial guarantee contracts, and confirms the loss of credit impairment.
The company retrospectively applies the new financial instrument standards, but for


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classification and measurement (including impairment) involving the inconsistency
between the previous comparative financial statement data and the new financial
instrument standards, the company chose not to repeat. Therefore, for the
cumulative impact of the first implementation of this standard, the company adjusted
the retained earnings or other comprehensive earnings at the beginning of 2019 and
the amount of other related items in the financial statements, which were not
restated in the financial statements of 2018.
The main changes and impacts of the implementation of the new financial
instrument guidelines on our company are as follows:
In the daily fund management, the company sells the receivables of some specific
customers through the right of non-recourse. For the receivables of some specific
customers, the company aims at both collecting contract cash flow and selling
financial assets. Therefore, the receivables of these specific customers will be
collected by the company on and after January 1, 2019. Items are reclassified as
financial assets with fair value and their changes are included in other
comprehensive income categories and reported as investments in other creditor's
rights or financing receivables.


VI Principal Taxes Applied
Taxes and their rates

             Category                                    Taxable basis                         Tax rate

      Value added tax (“VAT”)            Goods sales income, taxi operating income        5%,3%,6%

         Construction tax                                Turnover tax                            7%

            Income tax                                Income tax payable                    25% & 16.5%

Education surcharge(Local Education
                                                         Turnover tax                            5%
            surcharge)

                                                                                       Progressive rates ranging
       Land appreciation tax                      Sales revenue of properties
                                                                                            from 30%-60%

            Property tax                              The residual value                         1.2%

*The rate of domestic enterprises is 25%, and the rate of HK enterprises is 16.5%.
The company and its subsidiaries provided commodity housing, property leasing
and management, hotel service, construction and installation service as main
products and services. As the inform, No.36—pilot about business tax replacing with
VAT popularized (2016 Revision) ,is issued by Finance and Taxation Ministry , The



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categories and rates of VAT about the company and its subsidiaries are as follow .




                                                                                                       Tax rate before Business Tax
          Category of income                 The way of tax calculation            Tax rate
                                                                                                           Replacing with VAT

 Sales of properties                             Simply filling return               5%                            5%

 Construction, installation income               Simply filling return               3%                            3%

 Rental income of Property                       Simply filling return               5%                            5%

 Income of Property Management                 Filling return generally              6%                            5%




VII    Notes to the Consolidated Financial Statements
Unless otherwise noted, the following annotation project (including the main projects
annotation of the financial statement of the Company), the period-begin refers to
January 1,2019 the period-end refers to June 30, 2019 and this period refers to
January – June 2019 with the last period of January – June 2018.
7.1 Monetary funds
                               Item                                       Closing balance                   Opening balance

Cash on hand                                                                              106,258.96                       57,979.40

Cash in bank                                                                     1,240,284,634.19                   1,148,464,456.53

Other monetary funds                                                                       90,000.00                 900,000,000.00

                               Total                                             1,240,480,893.15                   2,048,522,435.93

Including amount deposited in the foreign countries                                  8,086,008.51                        8,239,667.62

Note: The closing balance of Other monetary funds that the Group’s ownership are
the deposits about letter of guarantee setting up by bank, the opening balance was
the Structured deposit which was due at March 22,2019.
7.2 Held for trading financial assets
                       Item                                 Closing balance                            Opening balance

 in                                                                                  --                                           --

7.3 Derivative financial assets
                       Item                                 Closing balance                            Opening balance




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                      Item                                  Closing balance                                      Opening balance

                     Total                                                                 --                                                --

7.4 Note receivables
(1)Note receivables by types

                      Item                                  Closing balance                                      Opening balance

 Trade acceptance                                                                          --                                                --

                     Total                                                                 --                                                --

(2) There are no Note receivables pledged at the period-end
(3) There are no Note receivables endorsed or discounted at the period-end and not
matured yet on the balance sheet date
(4)There are no situations of reclassifying the note receivables to the accounts
receivables due to the issuer dishonoring at the end of the year.
7.5 Accounts receivables
(1)          Accounts receivable by categories

                                                                                          Closing balance

                       Category                             Carrying amount                     Bad debt provision
                                                                                                                                book value
                                                           Amount              (%)              Amount             (%)

Accounts receivable of which provision for bad
                                                                     --              --                  --               --
debts is of individually significant

Accounts receivable of which provision for bad
                                                       58,665,525.58           100.00%      19,243,657.51         32.80%         39,421,868.07
debts is of individually insignificant

                           Total                       58,665,525.58           100.00%      19,243,657.51         32.80%         39,421,868.07

 (Continued)

                                                                                 Opening balance

              Category                       Carrying amount                          Bad debt provision
                                                                                                                               book value
                                           Amount              (%)                Amount                   (%)

Accounts     receivable      of    which

provision for bad debts is of                         --                  --                      --                 --                       --

individually significant

Accounts     receivable      of    which
                                           37,410,545.70      100.00%             19,243,657.51               36.54%             18,166,888.19
provision for bad debts is of




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individually insignificant

                   Total                         37,410,545.70         100.00%        19,243,657.51              36.54%           18,166,888.19

                                                                                                                                 Unit:RMB

                                                                                          Closing balance
                    Category
                                                    Carrying amount        Bad debt provision    Proportion                Reason

Acting    import     and      export     business
                                                         11,574,556.00           11,574,556.00    100.00%                    Long Account Age
accounts receivable

Accounts receivable of selling house                    18,025,559.22             6,968,694.02      38.66%          Drawing on historical sales

Construction and other                                  29,065,410.36               700,407.49       2.41%                                      —

                      Total                             58,665,525.58            19,243,657.51              --                                  —

                                                                                                                                 Unit:RMB

                                  Category                                                            Closing balance

Within 1 year(including 1year)                                                                                                  19,540,000.58

1 to 2 years                                                                                                                      20,297,050.49

2 to 3 years                                                                                                                        4,121,002.18

More than 3 years                                                                                                                 14,707,472.33

More than 5 years                                                                                                                 14,707,472.33

                                       Total                                                                                      58,665,525.58

 (2)There were no any account receivables which had been accrued fully or large
proportion provision but had been fully collected or reversed back in this accounting
year.
(3) There were no any significant account receivables which had been written off in
this accounting year.
(4) Top 5 entities with the largest balances of accounts receivable

                                                                                                                   Proportion of the amount to
         Name of entity                  Relationship with the Group             Amount               Age
                                                                                                                          the total AR (%)

Corporate unit No.1                            Un-related party                  8,147,885.22 Within 1 year                                  20.67

Corporate unit No.2                            Un-related party                  6,413,126.79 Within 1 year                                  16.27

Corporate unit No.3                            Un-related party                  6,028,986.50 Within 1 year                                  15.29




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Corporate unit No.4                Un-related party                4,985,657.23 Within 1 year                            12.65

Corporate unit No.5                Un-related party                4,151,747.72 Within 1 year                            10.53

               Total                                              29,727,403.46                                          75.41

7.6 Receivable Financing
                        Aging                         Closing balance                           Opening balance

 Factoring                                                         21,334,705.19                             15,260,103.46

                        Total                                      21,334,705.19                             15,260,103.46

As of June 30, 2019, the company declared the amount of factoring business to the
bank with accounts receivable at 21,334,705.19 yuan, and obtained cash
consideration of RMB 21,334,705.19 yuan.


7.7 Prepayments
(1) List by age of account
                                                                                                             Unit:RMB

                                                      Closing balance                           Opening balance
                       Category
                                               Amount                   (%)             Amount                    (%)

Within 1 year(including 1year)                 1,804,366.85                 49.72%      4,177,217.88                  99.99%

1 to 2 years                                     1,824,438.77                 50.27%                 --                     --

2 to 3 years                                                --                    --                 --                  0.01%

More than 3 years                                       550.00                 0.01%             550.00                  0.01%

                        Total                    3,629,355.62                     --      4,177,767.88                      --

(2) Top 5 entities with the largest balances of Prepayments
The total amount of the first five Prepayments at the end of the year is 1,804,366.85
yuan, accounting for 49.72% of the total balance of the amount at the end of the
year.
7.8            Other receivables
                        Item                          Closing balance                           Opening balance

 Interest receivable                                                6,591,780.82                              2,453,067.78

 Dividends receivables                                              1,052,192.76                              1,052,192.76




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                       Item                       Closing balance                              Opening balance

 Other receivables                                              42,947,346.04                                41,512,767.07

                       Total                                    50,591,319.62                                45,018,027.61

(1) Interest receivable
1) Classification

                       Item                       Closing balance                              Opening balance

 Time deposit                                                                 --                                 170,567.78

 Structured deposit                                              6,591,780.82                                  2,282,500.00

                       Total                                     6,591,780.82                                  2,453,067.78

(2) Dividends receivables
①Classification
           Item(Or name of investee)                 Closing balance                           Opening balance

 Yunnan KunPeng Flight service Co., Ltd                          1,052,192.76                                  1,052,192.76

                         Total                                   1,052,192.76                                  1,052,192.76




③ Dividends receivable aging over 1year
                                                                                    Reasons for       Whether the amount is

           Item(Or name of investee)       Closing balance           Aging          uncollected      impaired and the base of

                                                                                     amounts                judgment

Yunnan KunPeng Flight service Co., Ltd         1,052,192.76         Above 5 years     Delay to pay             No

                         Total                 1,052,192.76

(3) Dividends receivables
① Other receivables by categories
                       Item                       Closing balance                              Opening balance

 Interest receivable                                             6,591,780.82                                  2,453,067.78

 Dividends receivables                                           1,052,192.76                                  1,052,192.76

 Other receivables                                            217,688,105.22                                216,271,510.38

                       Total                                  225,332,078.80                                219,776,770.92

② Provision


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                                                    Stage one                 Stage two                      Stage one

                                                                       Expected Credit Loss for Expected Credit Loss for the Subtotal
                  Bad debt                    Expected credit losses
                                                                         the Whole Life Period       Whole Life Period (Credit
                                              in the next 12 months
                                                                        (No Credit Devaluation)     Devaluation Has Occurred)

Opening balance                                     174,758,743.31

Opening balance in the current period                 ——                       ——                          ——                 ——

Other                                                    -17,984.13

Closing balance                                     174,740,759.18

                                                                                                                         Unit:RMB

                              Category                                                            Closing balance

Within 1 year(including 1year)                                                                                             10,464,798.90

1 to 2 years                                                                                                                 13,255,644.93

2 to 3 years                                                                                                                  2,929,385.83

More than 3 years                                                                                                           198,682,249.14

  More than 5 years                                                                                                         198,682,249.14

                               Total                                                                                        225,332,078.80

③The allowance for withdrawing, recovering or transferring bad debts in this year is
0.00 yuan. Other changes in bad debts reserve amount - 17,984.00 yuan, is due to
exchange rate changes in the conversion of foreign currency statements.
④Other receivables by nature
⑤Top 5 entities with the largest balances of other receivables

                                                                                                   Proportion of the     Provision for bad

          Name of entity                 Nature              Amount                Age              amount to the        debt at year end

                                                                                                     total OR (%)

Canada Great Wall( Vancouver)            current
                                                             89,035,748.07 Above 5 years                    39.51%          89,035,748.07
Co.,Ltd                                  account

                                         current
 Paklid Limited                                              19,300,627.03 Above 5 years                      8.57%         19,300,627.03
                                         account

                                         current
 Bekaton property Limited *                                  12,559,290.58 Above 5 years                      5.57%         12,559,290.58
                                         account




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                                                                                        Proportion of the       Provision for bad

          Name of entity                Nature       Amount               Age            amount to the          debt at year end

                                                                                          total OR (%)

 Guangdong province Huizhou             current
                                                     10,465,168.81 Above 5 years                      4.64%        10,465,168.81
 Luofu Hill Mineral Water Co.,Ltd       account

                                        current
 Shenxi Limited                                       5,464,392.59 Above 5 years                      2.43%         5,131,698.60
                                        account

                Total                               136,825,227.08                                   60.72%       136,492,533.09

(6) There were no any other receivables about government subsidies that have been
involved.
(7) There were no any other receivables due to the transfer of financial assets that
have been derecognized.
(8) There were no any other receivables which had transferred to continued
involvement in assets or liabilities.
7.9 Inventory
(1) Categories of inventory

                                                                              Closing balance
                        Item
                                                  Carrying amount        Provision for inventories          Net carrying amount

 Non real estate development projects

Raw materials                                           873,466.16                      240,000.00                    633,466.16

Finished products                                       329,674.82                       38,891.91                    290,782.91

Low-value consumable products                                       --                               --                      0.00

Construction in progress                            104,252,848.16                                   --           104,252,848.16

 Real estate development projects

Real estate developing products                     633,806,880.00                                                633,806,880.00

Real estate developed products                      863,721,201.48                      268,941.60                863,452,259.88

Real estate which are going to be developed                         --                               --                           --

                        Total                      1,602,984,070.62                     547,833.51              1,602,436,237.11

 (Continued)

                        Item                                                  Opening balance




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                                               Carrying amount        Provision for inventories         Net carrying amount

 Non real estate development projects

Raw materials                                         882,857.81                     240,000.00                   642,857.81

Finished products                                     319,679.87                      38,891.91                   280,787.96

Low-value consumable products                                    --                               --                    0.00

Construction in progress                          102,776,837.83                                  --          102,776,837.83

 Real estate development projects

Real estate developing products                   517,451,829.98                                  --          517,451,829.98

Real estate developed products                  1,064,268,679.28                     268,941.60             1,063,999,737.68

Real estate which are going to be developed                      --                               --                          --

                       Total                    1,685,699,884.77                     547,833.51             1,685,152,051.26




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   ① Detail of Real estate developing products

                                   Time of                Estimated            Estimated               Opening                                   Closing                  Accumulative               Among them: the amount of capitalized
           Item                                                                                                              Increase
                                commencement         completion time        Total investment            balance                                  balance              capitalization Interest             interest in the current period

ChuanQi            DongHu
                                      2016.6.20             2019.11.21       510,000,000.00          309,169,276.59        57,871,674.91      367,040,951.50                       4,378,308.24                                                 --
Building

TianYue Bay No.2                       2018.9.1                2021.5.9      654,850,000.00          182,990,645.28        58,483,375.11      241,474,020.39                       6,417,603.49                                 5,059,053.93

Shenfang           Shanlin
                                                                                           --         25,291,908.11                      --    25,291,908.11                                    --                                              --
Garden

           Total                                                            1,164,850,000.00         517,451,829.98       116,355,050.02      633,806,880.00                   10,795,911.73                                    5,059,053.93

   ②Detail of Real estate developed products

                                               completion                                                                      Closing          Accumulative capitalization           Among them: the amount of capitalized interest in
                       Item                                      Opening balance      Increase           decrease
                                                   time                                                                       balance                      Interest                                    the current period

   Jinyedao           Haitian      Pavilion
                                                   1997.9.16          39,090,848.09             --                   --     39,090,848.09                                     --                                                           --
   Multi-storey Apartment

   Golden Leaf Island No.10                        2010.12.2           6,079,171.97             --                   --      5,099,036.62                                     --                                                           --

   Golden Leaf Island No.11                        2008.8.20           6,881,309.24             --      1,266,485.95         5,614,823.29                                     --                                                           --

   YueJing dongfang Project                       2014.11.18           9,789,881.19             --      1,354,292.52         8,435,588.67                         201,464.77                                                               --

   WenJin Garden                                                       3,299,040.20             --                   --      3,299,040.20                                     --                                                           --

   Real Estate Building                                                9,710,518.65             --                   --      9,710,518.65                                     --                                                           --




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                            completion                                                              Closing       Accumulative capitalization    Among them: the amount of capitalized interest in
                 Item                         Opening balance     Increase      decrease
                               time                                                                 balance                Interest                             the current period

HuaFeng Building                                  1,631,743.64           --                 --     1,631,743.64                             --                                                  --

Huangpu Estate                                     289,802.88            --                 --      289,802.88                              --                                                  --

Xinghu Garden                                      156,848.69            --                 --      156,848.69                              --                                                  --

Chuanqi Mountain               2013.1.1           8,969,652.53           --                 --     8,969,652.53                   720,530.19                                                    --

Shenfang Shanlin Garden        2014.1.1         10,206,656.46            --                 --    10,206,656.46                   443,793.86                                                    --

Beijing Xinfeng Building                           304,557.05            --                 --      304,557.05                              --                                                  --

TianYue Bay No.1             2017.12.15        618,140,958.93            --    53,484,516.67     564,656,442.26                25,409,053.33

ChuanQi JingYuan              2018.4.27        180,381,801.14            --   112,683,722.85      67,698,078.29                   253,287.70

Shengfang CuiLin Building      2018.5.8        169,335,888.62            --    30,778,324.46     138,557,564.16                 1,305,557.04                                                    --

                Total                    --   1,064,268,679.28           --   200,547,477.80     863,721,201.48                28,333,686.89                                                    --




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(2)Movement of Provision of inventories

                                                                   Increase                        Decrease
                       Item                 Opening balance                                                                      Closing balance
                                                               Provision        other        Reversals          Write-off

 Raw materials                                    240,000.00               --       --                   --                 --        240,000.00

 Inventories                                       38,891.91               --       --                   --                 --         38,891.91

 Real estate developed products                   268,941.60               --       --                   --                 --        268,941.60

                       Total                      547,833.51               --       --                   --                 --        547,833.51

(2) Capitalized borrowing cost at the period-end is RMB 39,129,598.62:
                                                                                                                                     Annual

             Item              Opening balance         Increase                 Decrease            Closing balance               capitalization

                                                                                                                                      rate

  YueJing       dongfang
                                     208,232.32                    --                   6,767.55               201,464.77                 1.49%
  Project

  Shenfang
                                     720,530.19                    --                         --               720,530.19                 5.66%
  Chuanqishan

  Shenfang           Shanlin
                                     443,793.86                    --                         --               443,793.86                 7.10%
  Garden

  Shengfang           CuiLin
                                   1,488,323.12                    --             182,766.08                  1,305,557.04                2.07%
  Building

  TianYue Bay No.1                26,993,576.25                    --           1,584,522.93             25,409,053.33                    7.78%

  ChuanQi           DongHu
                                   4,811,327.74                    --             433,019.50                  4,378,308.24                3.62%
  Building

  ChuanQi JingYuan                 1,250,186.07                    --             996,898.37                   253,287.70                 1.66%

             Total                 1,358,549.56         5,059,053.93                          --              6,417,603.49                3.51%

 (4)Completed and unsettled assets resulting from the construction contract at the
end of the period

                                          Item                                                                     Amount

 Accumulated cost incurred                                                                                                        146,420,815.68

 Accumulated gross profit                                                                                                           1,020,560.53




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         Amount already settled                                                                                     43,188,528.05

 Completed outstanding assets formed by the construction contract                                                  104,252,848.16

7.10          Contract assets
7.11Holding assets for sale
7.12Non-current assets maturing within one year
7.13Other current assets
                    Item                                  Closing balance                            Opening balance

 Value added tax                                                        14,500,771.73                                  6,336,815.15

 Business tax                                                                405,514.22                                 444,184.41

 City construction surcharge                                                 186,959.07                                          --

 Education surcharge                                                          75,770.99                                          --

 Local education surcharge                                                    44,757.84                                          --

 Embankment Protection Fee                                                       653.66                                          --

 Increment tax on land value                                                1,688,149.84                                         --

 Income tax                                                             49,315,486.24                                            --

 Bank structured deposits                                             1,300,000,000.00                                           --

                    Total                                             1,366,218,063.59                                 6,780,999.56

Instructions:
The company signed an agreement with the shenzhen branch of China Citic bank co.,
ltd. to invest 130,000 yuan of its own capital in guaranteed floating bank structured
deposits. Among them, 1 billion yuan was invested on May 7, 2019 for 180 days, and
300 million yuan was invested again on June 14, 2019 for 180 days.
7.14 Investments in debt obligations
7.15 Other investment on bonds
7.16 Long-term receivables
7.17 Long-term equity investments
(1) Long-term equity investments by types

          Invested company               Opening                              Change amount of this period




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                                             balance                                                                          Other
                                                                                              Profit and loss on                               Other
                                                           Additional        Negative                                     comprehensive
                                                                                            investments confirmed                              equity
                                                           investment investment                                              income
                                                                                             with equity method                                change
                                                                                                                           adjustment

 I.Joint ventures

 Guangdong province Huizhou Luofu
                                            9,969,206.09                --          --                               --                   --            --
 Hill Mineral Water Co.,Ltd

 Fengkai Xinhua Hotel                       9,455,465.38                --          --                               --                   --            --

 Jiangmen Xinjiang Real Estate Co.,
                                            9,037,070.89                --          --                               --                   --            --
 Ltd

 Xi’an Fresh Peak Property Trading
                                           32,840,729.61                --          --                               --                   --            --
 Co., Ltd

 Dongyi Real Estate Co., Ltd               30,376,084.89                --          --                               --                   --            --

                 Subtotal                  91,678,556.86                --          --                               --                   --            --

 II.Affiliated enterprises

 Shenzhen Ronghua JiDian Co.,ltd            1,471,164.04                --          --                                -                   --            --

 Shenzhen        Runhua       Automobile
                                            1,445,425.56                --          --                               --                   --            --
 trading Co.,Ltd

                 Subtotal                   2,969,241.26                --          --                                                    --            --

                    Total                  94,595,146.46                --              -                             -                   --            --

(Continuted)

                                                               Change amount of this period                                            Provision for
                                                                                                                     Ending
               Invested company                     Invested        Change amount of this           Ending                        impairment balance
                                                                                                                    balance
                                                   company                     period              balance                         at the period-end

 I.Joint ventures

 Guangdong province Huizhou Luofu Hill
                                                               --                            --           --       9,969,206.09           9,969,206.09
 Mineral Water Co.,Ltd

 Fengkai Xinhua Hotel                                          --                            --           --       9,455,465.38           9,455,465.38

 Jiangmen Xinjiang Real Estate Co., Ltd                        --                            --           --       9,037,070.89           9,037,070.89




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                                                                  Change amount of this period                                 Provision for
                                                                                                               Ending
               Invested company                        Invested        Change amount of this     Ending                    impairment balance
                                                                                                              balance
                                                       company                 period            balance                     at the period-end

 Xi’an Fresh Peak Property Trading Co., Ltd                      --                      --           -- 32,840,729.61         20,673,831.77

 Dongyi Real Estate Co., Ltd                                      --                      --           -- 30,376,084.89         30,376,084.89

 Subtotal                                                         --                      --           -- 91,678,556.86          79,511,659.02

 II.Affiliated enterprises

 Shenzhen Ronghua JiDian Co.,ltd                                  --                      --           --   1,471,164.04          1,076,954.64

 Shenzhen      Runhua        Automobile     trading
                                                                  --                      --           --   1,445,425.56          1,445,425.56
 Co.,Ltd

                     Subtotal                                     --                      --           --   2,969,241.26          2,522,380.20

                          Total                                   --                      --           -- 94,595,146.46         82,034,039.22

other equity investment, are as follow

                                          Accounting                                                                           Provision for
               Investee                                Investment cost Opening balance Changes Closing balance
                                           Method                                                                               impairment

 Paklid Limited                       Cost Method            201,100.00           201,100.00          --       201,100.00           201,100.00

 Bekaton Property Limited             Cost Method            906,630.00           906,630.00          --       906,630.00           906,630.00

 Shenzhen Shenfang Department
                                      Cost Method         10,000,000.00         10,000,000.00         --     10,000,000.00      10,000,000.00
 Store Co. Ltd

 Shantou Huafeng Building             Cost Method         68,731,560.43         58,547,652.25         --     58,547,652.25      58,547,652.25

 Guangdong Province Fengkai

 Lain Feng Cement Manufacturing Cost Method             121,265,000.00          56,228,381.64         --     56,228,381.64      56,228,381.64

 Co., Ltd

                  Total                      ——       201,104,290.43         125,883,763.89          -    125,883,763.89     125,883,763.89

7.18 Other equity instruments investment
7.19 Other non-current financial assets




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7.20         Investment properties
Investment properties measured at cost.

                             Item                        House& building         Land-use right             Total

I.     Original carrying value

1.Opening balance                                            1,010,636,392.81      106,115,418.00        1,116,751,810.81

2.Increase in the year                                                      --                    --                     --

(1)Outsourcing                                                            --                    --                     --

(2)Carried over from inventory                                            --                    --                     --

(3)Others                                                                 --                    --                     --

3.Decrease in the year                                                      --         151,053.98             151,053.98

(1)Disposal                                                               --                    --                     --

(2)Others                                                                 --         151,053.98             151,053.98

4.Closing balance                                            1,010,636,392.81      105,964,364.02        1,116,600,756.83

II.    Accumulative depreciation& amortization

1.Opening balance                                             391,598,553.08                      --      391,598,553.08

2.Increase in the year                                         12,157,218.56                      --       12,157,218.56

(1)Withdrawing or amortization                               12,157,218.56                      --       12,157,218.56

(2)Carried over from assets                                               --                    --                     --

3.Decrease in the year                                                      --                    --                     --

4. Closing balance                                            403,755,771.64                      --      403,755,771.64

III.   Provision for impairment

1.Opening balance                                              14,128,544.62        87,093,874.96         101,222,419.58

2.Increase in the year                                                      --                    --                     --

3.Decrease in the year                                                      --         123,977.05             123,977.05

4.Closing balance                                              14,128,544.62        86,969,897.91         101,098,442.53

IV.    Book value

1.Closing book value                                          592,752,076.55         18,994,466.11        611,746,542.66

2.Opening book value                                          604,909,295.11        19,021,543.04         623,930,838.15




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Note:(a) Current year depreciation and amortization is RMB12,157,218.56.
(b)The decrease of original carrying value and provision for impairment of land-use
right is caused by the fluctuation of foreign exchange rate when translating the
foreign currency financial statements;
(c)Among the investment properties, there were no house &building that were used
as mortgage of loans
(d)There is no new buildings in this period.
7.21 Fixed assets
                     Item                                Closing balance                                Opening balance

Fixed assets                                                              31,903,409.26                                 33,926,198.52

Total                                                                     31,903,409.26                                 33,926,198.52




                                                                                                   Electronic
                                                                           Transportation
                          Item                       Houses& Buildings                           equipment and            Total
                                                                            equipment
                                                                                                    others

I.      Original carrying value

1.Opening balance                                       107,110,751.42      12,287,244.75          14,210,579.58       133,608,575.75

2. Increase in the year                                              --                               201,295.05           201,295.05

(1)Purchasing                                                      --                               201,295.05           201,295.05

(2)Transferred from the construction in progress                   --                     --                    --                  --

3. Decrease in the year                                                                     --        130,497.39           130,497.39

(1)Disposal or discard as useless                                  --                     --        130,497.39           130,497.39

(2)Decrease of cooperation combination                             --                     --                    --                  --

(3)Transferred to investment property                              --                     --                    --                  --

4. Closing balance                                      107,110,751.42      12,287,244.75          14,281,377.24       133,679,373.41

II.     Accumulated depreciation

1.Opening balance                                        77,203,923.01       10,932,114.25          11,546,339.97       99,682,377.23

2. Increase in the year                                   1,785,224.66         135,730.36             296,973.47          2,217,928.49

Including:withdrawing                                    1,785,224.66         135,730.36             296,973.47          2,217,928.49




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                                                                                           Electronic
                                                                   Transportation
                          Item                Houses& Buildings                          equipment and            Total
                                                                    equipment
                                                                                            others

3. Decrease in the year                                       --                    --        124,341.57           124,341.57

(1)Disposal or discard as useless                           --                    --        124,341.57           124,341.57

(2)Decrease of corporate combination                        --                    --                    --                  --

(3)Transferred to investment property                       --                    --                    --                  --

4. Closing balance                                78,989,147.67      11,067,844.61          11,718,971.87      101,775,964.15

III.   Provision for Impairment

1.Opening balance                                             --                    --                    --                  --

2. Increase in the year                                       --                    --                    --                  --

Including:Withdrawing                                        --                    --                    --                  --

3. Decrease in the year                                       --                    --                    --                  --

4. Closing balance                                            --                    --                    --                  --

IV.    Book value                                             --                    --                    --                  --

1. Ending book value                              28,121,603.75       1,219,400.14           2,562,405.37       31,903,409.26

2. Beginning book value                           29,906,828.41       1,355,130.50           2,664,239.61       33,926,198.52

Note: (1)The depreciation for the current year is RMB 2,217,928.49. There were no
constructions in progress transferred to fixed assets during the period.
(2)There was no any fixed assets whose ownership are restricted.
(3)There was no any fixed assets lying idle temporary.
7.22 Construction in progress
7.23 Productive biological assets
7.24 Oil and gas assets
7.25 Right-of-use asset
7.26 Intangible assets
7.27 Development expenditure
7.28 Goodwill
7.29 Long-term deferred assets


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            Item               Opening balance           Increase           Amortization        Other reductions        Closing balance

Renovation costs                      346,015.85                       --        91,944.88                         --            254,070.97

Others                                  41,051.06                      --         7,697.04                         --             33,354.02

            Total                     387,066.91                       --        99,641.92                         --            287,424.99




7.30 Deferred tax assets
(1) Recognized deferred tax assets
                                                        Closing balance                                       Opening balance

                  Item                                              Deductible or taxable      Deferred tax         Deductible or taxable
                                      Deferred tax assets
                                                                    temporary differences         assets            temporary differences

Provision for impairment losses of
                                                    268,941.60                   67,235.40          268,941.60                    67,235.40
assets

Eliminated unrealized profit when
                                                 9,761,284.98                 2,440,321.25         4,419,308.84                 1,104,827.21
consolidating financial statement

Deductible loss                                85,290,276.04                 21,322,569.01       72,853,906.32              18,213,476.58

Provision for land appreciation tax
                                             116,873,760.12                  29,218,440.03      416,873,760.12             119,730,695.91
liquidation reserves

Expected profit for advances from
                                               24,906,265.04                  6,226,566.26       12,937,987.44                  3,234,496.86
customers

Tentative contract cost estimate               49,835,827.36                 12,458,956.85       47,474,275.32              12,193,056.84

                    Total                    286,936,355.14                  71,734,088.80      554,828,179.64             154,543,788.80

(2) Deferred income tax liabilities without offset
(3) Deferred income tax assets or liabilities shown as net offset
(4) Details of unrecognized deferred tax assets
                              Item                                          Closing balance                       Opening balance

Deductible operating losses                                                                4,332,678.37                         8,280,235.61

Bad debt provision                                                                     41,424,541.64                        42,485,814.23

Provision for impairment of long-term investments                                      48,770,235.09                        51,979,450.78

Provision for impairment of investment properties                                      24,219,856.94                        25,305,604.90




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                           Total                                          118,747,312.04                128,051,105.52

(5) Unrecognized deductible losses of deferred tax assets will be expire at the end
of following years
                   Year                           Closing balance                          Opening balance

2019                                                                1,656,431.26                              107,123.28

2020                                                                 107,123.28                              9,692,495.52

2021                                                                9,692,495.52                         11,349,323.06

2022                                                            11,349,323.06                                5,753,184.38

2023                                                                5,753,184.38                             4,085,485.24

                   Total                                        28,558,557.50                            30,987,611.48

7.31Other Non-current asset
7.32 Short-term loans
                   Item                           Closing balance                          Opening balance

Pledged Loan                                                    21,334,705.19                            17,260,103.46

                   Total                                        21,334,705.19                            17,260,103.46

Note:(1) Refer to note 7.5/Account receivable for the details of pledged loan and
note 7.81.
(2)There was no short term loan overdue which had not repaid
7.33 Transactional financial liabilities
7.34 Derivative financial liabilities
7.35 Notes payable


7.36 Accounts payable
(1) List of accounts payable
                   Item                           Closing balance                          Opening balance

accounts payable                                               140,100,500.69                           216,758,906.71

                   Total                                       140,100,500.69                           216,758,906.71

(2) Details of accounts payable
                   Item                           Closing balance                              Reason

Within 1 year                                                  127,921,716.99



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Over 1 year                                                             12,178,783.70

                    Total                                              140,100,500.69

Note: Significant accounts payable aged more than one year is for the unsettled
project at the end of the period.




7.37 Advances from customers
(1) Details of advances from customers

                    Item                                 Closing balance                      Opening balance

 Within one year                                                      362,999,250.53                       143,880,207.46

 Over one year                                                         26,328,430.79                        12,545,945.40

                    Total                                             389,327,681.32                       156,426,152.86

(2) Important advances from customers that are more than one year old
(3) Completed and unsettled assets resulting from the construction contract at the
     end of the period
                                       Item                                                      Amount

Accumulated cost incurred                                                                                   146,420,815.68

Accumulated gross profit                                                                                        1,020,560.53

        Amount already settled                                                                                43,188,528.05

Completed outstanding assets formed by the construction contract                                            104,252,848.16

○Significant advances from customers aged more than one year is the import and
export agency business payment and advanced payment from housing buyers, as
such receipts have not been transferred to income at the end of the year.
○ Details of advances from customers

                    Item                      Closing balance          Opening balance     Estimated time of completion

 Jinye Island villa No.10                            2,141,508.58             688,952.39           Completed

 Jinye Island villa No.11                            2,729,123.81           1,117,261.91           Completed

 Yuejing dongfang                                    1,742,138.10           1,884,634.30           Completed

 Tianyue Bay No.1                                   31,525,134.47          32,289,512.30           Completed

 Shengfang CuiLin Building                          31,190,224.00          30,416,820.00           Completed




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                      Item                         Closing balance              Opening balance       Estimated time of completion

 Chuanqi Jingyue                                       159,189,046.25               21,742,173.45             Completed

 Chuanqi Donghu                                           72,905,066.00                200,000.00             Completed

                      Total                           301,422,241.21                88,339,354.35                  ——

7.38 Contract liability
7.39 Payroll payable
(1) Details of Payroll payable
                               Item                         Opening balance           Increase        Decrease         Closing balance

I.        Short-term remuneration                               45,693,840.70        78,978,334.29    75,211,716.73         49,460,458.26

II.       Post-employment benefit-defined benefit plans              142,989.35        7,388,692.09    7,342,686.49            188,994.95

                               Total                            45,836,830.05        86,367,026.38    82,554,403.22         49,649,453.21

(2) Details of short-term remuneration
                              Item                         Opening balance           Increase         Decrease            Closing balance

I.        Salary, bonus, allowance and subsidies              44,535,073.06          71,215,607.13     67,346,606.74        48,404,073.45

II. Employee welfare                                              39,600.00            1,232,860.00     1,234,660.00            37,800.00

III. Social insurance premium                                        1,578.57          2,281,435.66     2,281,673.26             1,340.97

       Including: Medical insurance premium                          1,503.22          2,051,225.73     2,051,225.73             1,503.22

                  Industries insurance premium                         591.04            48,440.26         48,440.26               591.04

                  Maternity insurance premium                         -515.69           181,769.67       182,007.27               -753.29

III.      Housing fund                                           628,129.71            2,999,582.92     3,044,542.60           583,170.03

IV.       Union expenses and employee education
                                                                 489,459.36            1,248,848.58     1,304,234.13           434,073.81
expenditure

                              Total                           45,693,840.70          78,978,334.29     75,211,716.73        49,460,458.26

(3) The details of defined contribution plans
                              Item                          Opening balance           Increase        Decrease         Closing balance

I.         Basic endowment insurance premium                          75,075.11        4,972,661.18    4,972,661.18             75,075.11

II. Unemployment insurance premium                                        914.12        113,314.01      113,076.41               1,151.72

III. Company annuity payment                                          67,000.12        2,302,716.90    2,256,948.90            112,768.12

                              Total                                  142,989.35        7,388,692.09    7,342,686.49            188,994.95

Note: The Group participates in the basic endowment insurance and unemployment


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plan sponsored by the government according to the regulations. Beside the monthly
payment mentioned above, the Group undertakes no further payment obligation.
The related expenses are recognized in profit and loss or the cost of relevant asset
in the current period incurred.
7. 40 Taxes payable
                           Item                              Closing balance                Opening balance

VAT                                                                     5,735,482.84                   11,361,028.95

Corporate income tax                                                   89,586,822.81                  180,717,910.92

Individual income tax                                                       684,502.70                     828,729.71

Urban maintenance & construction tax;                                       778,806.52                     385,048.81

Property tax                                                            3,717,315.47                       335,365.77

Land appreciation tax                                                 383,702,006.31                  106,254,407.65

Education surcharge                                                         518,992.20                     239,105.38

Others                                                                  1,775,941.31                       425,775.79

                           Total                                      486,499,870.16                  300,547,372.98

7.41 Other payables

                   Item                           Closing balance                        Opening balance

      Interest payable                                          16,535,277.94                          16,535,277.94

Other payables                                                 627,101,131.67                         705,284,620.54

                   Total                                       643,636,409.61                         721,819,898.48

(1) Interest payable

                   Item                           Closing balance                        Opening balance

Others                                                          16,535,277.94                          16,535,277.94

                   Total                                        16,535,277.94                          16,535,277.94

Note: The balance of “Other” interests payable due to Shenzhen Investment
Holdings Co.,Ltd., being accrued for the loans interst. Please refer refer to Ⅻ.6 (2).
(2) Dividends payable
(3) Other payable
 1)Details of other payables



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                     Item                              Closing balance                     Opening balance

Land appreciation tax accrued                                       359,726,203.04                        509,788,654.15

Payable to related parties                                           14,398,496.70                           2,770,322.64

Guarantee deposit                                                    83,126,753.11                        100,011,180.52

Others                                                              169,849,678.82                         92,714,463.23

                     Total                                          627,101,131.67                        705,284,620.54

2)Description of significant other payables aged more than one year

               Name of entity                             Amount                           Reason for overdue

Tax accrued- land appreciation tax                                  359,726,203.04            Unexpired

                     Total                                          359,726,203.04               ——

NOTICE: The Group made provision for LAT, according to Guo Shui Fa [2006] No.
187 "LAT liquidation management issues of real estate development enterprises
made by the State Administration of Taxation ". As at June 30, 2019, the closing
balance is RMB 359,726,203.04.
7.42 Holding liabilities for sale
7.43 Non-current liabilities due within one year
7.44 Other current liabilities
7.45        Long-term loans
7.46 Bonds payable
7.47 Lease liability
7.48 Long-term payables
                     Item                              Closing balance                     Opening balance

 Special payable                                                     7,597,741.94                         6,507,139.20

                     Total                                          7,597,741.94                          6,507,139.20

(1)Details of long-term payables

                     Item                              Closing balance                     Opening balance

 Maintenance fund                                                    7,597,741.94                         6,507,139.20

                     Total                                          7,597,741.94                          6,507,139.20

(2) Special payable

              Item                   Closing balance    Increase          Decrease   Opening balance         Reason




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                     Item                 Closing balance                 Increase              Decrease               Opening balance                     Reason

       Maintenance fund                         6,507,139.20             2,781,813.45          1,691,210.71               7,597,741.94

                     Total                      6,507,139.20             2,781,813.45          1,691,210.71               7,597,741.94

      7.49 Long-term payroll payable
      7.50 Estimated liabilities
      7.51 Deferred income
      7.52 Other non-current liabilities
      7.53 Share capital
                                                                         Changes for the period(+ 、-)

            Item              Opening balance      Newly issued Bonus              Capitalization of                                            Closing balance
                                                                                                           Other         Subtotal
                                                      shares            issued     surplus reserve

        Total shares           1,011,660,000.00                 --           --                      --         --                   --         1,011,660,000.00

      7.54 Other equity instruments
      7.55           Capital surplus
                 Item                 Opening balance                       Increase                           Decrease                        Closing balance

      Capital premium                        557,433,036.93                                    --                                   --                  557,433,036.93

      Other capital reserve                  420,811,873.18                                    --                                   --                  420,811,873.18

                Total                        978,244,910.11                                    --                                   --                  978,244,910.11

      7.56Treasury stock
      7.57 Other comprehensive income
                                                                                   Amount incurred this period

                                                                          Less: previous
                                                      Accrual                                                   Attributable             Attributable
                                   Opening                                  years‘ OCI         Less:                                                          Closing
            Item                                       before                                                      to parent             to minority
                                   balance                                 transferred to      income                                                          balance
                                                     income tax                                                    company           shareholders
                                                                          P&L in current.           tax
                                                     this period                                                   after tax              after tax
                                                                                 period

I. Other comprehensive

income that could not be
                                             --                    --                     --              --                   --                     --                 --
classified into profit and

loss in the future

II.     Other
                                 10,564,385.97        121,770.51                                                     85,239.36             36,531.15         10,649,625.33
comprehensive income




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                                                                                 Amount incurred this period

                                                                          Less: previous
                                                        Accrual                                               Attributable    Attributable
                                  Opening                                   years‘ OCI           Less:                                               Closing
           Item                                          before                                                to parent      to minority
                                  balance                                 transferred to      income                                                  balance
                                                   income tax                                                  company       shareholders
                                                                          P&L in current.          tax
                                                       this period                                             after tax       after tax
                                                                              period

that would be classified

into profit and loss in the

future

including:the difference

of foreign currency
                                10,564,385.97           121,770.51                                              85,239.36          36,531.15      10,649,625.33
financial statement

translation

           Total                10,564,385.97          121,770.51                                               85,239.36          36,531.15      10,649,625.33

   7.58 Special reserves
   7.59 Surplus reserve
                       Item                       Opening balance                      Increase                  Decrease               Closing balance

    Statutory surplus reserve                              95,906,222.59                                                                       95,906,222.59

                      Total                                95,906,222.59                                                                       95,906,222.59

   Note: According to the Company Law and the company's policy, the company draws
   10% of net profit for statutory surplus reserve. It will not be withdrawn if the
   accumulation amount of statutory surplus reserve exceeds 50% of the registered
   capital of the company.
   Discretionary surplus reserve could be withdrawn after the statutory surplus reserve.
   It can be made up the previous annual loss or increase the capital stock after
   approval
   7.60 Undistributed profit
                                                                                                          Amount for the current     Amount for the prior
                                                Item
                                                                                                                  period                     period

    Before adjustment: Undistributed profits at the end of prior year                                          1,235,884,122.72              742,624,845.71

    Adjustment: adjust the beginning undistributed profits           (Increase +, decrease -)                                  --                           --

    After adjustment: Undistributed profits at beginning of year                                               1,235,884,122.72              742,624,845.71



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                                                                                            Amount for the current       Amount for the prior
                                          Item
                                                                                                     period                    period

Plus: net profit attributable to the shareholders of the parent company in the period               333,155,843.41             326,066,084.53

Less: Appropriation to the statutory surplus reserve                                                                --                          --

Appropriation to discretionary surplus reserve                                                                      --                          --

Common stock dividends declared                                                                     202,332,000.00                              --

Conversion of ordinary shares’ dividends into share capital                                                        --                          --

Undistributed profit at the end of the period                                                      1,366,707,966.13          1,071,690,930.24

7.61           Operating income and costs
(1) Operating income and operating costs

                                        Amount for the current period                               Amount for the prior period
           Item
                                       Income                       Costs                      Income                          Costs

Principal operating                    1,242,185,437.00            435,833,288.18              1,313,971,314.90                538,511,001.68

Other operating                             9,152,365.57             1,294,688.07                    3,570,316.45                 1,906,489.73

          Total                        1,251,337,802.57            437,127,976.25              1,317,541,631.35                540,417,491.41

7.62           Taxes and surcharges
                        Item                               Amount for the current period                 Amount for the prior period

City construction and maintenance tax                                            4,231,214.16                                     4,283,758.49

Education surcharges                                                             1,853,152.20                                     1,894,171.09

Property tax                                                                     4,194,843.79                                     3,525,479.32

Land appreciation tax                                                                   1,777.06                                        6,815.23

vehicle and vessel tax                                                                  9,300.00                                    10,200.00

Stamp duty                                                                          634,612.37                                     457,845.20

Business tax                                                                         14,811.80                                    1,629,897.12

Land value increment tax                                                      328,213,378.55                                   264,344,713.02

Local education surcharges                                                       1,168,752.72                                     1,186,490.00

Embankment Protection Fee                                                               7,656.21                                        1,121.29

                        Total                                                 340,329,498.86                                   277,340,490.76

Note: Details of business taxes and surcharges please refer to 10.6.




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7.63 Selling expenses
                       Item                    Amount for the current period        Amount for the prior period

Employee benefits                                                    1,986,157.74                         1,968,446.05

Advertising expenses                                                 3,495,309.87                         2,795,656.99

Entertainment expenses                                                 445,386.30                           445,386.30

Sales agency fees and commissions                                   10,153,801.11                        30,118,783.25

Others                                                               2,393,405.31                         1,838,861.18

                       Total                                        18,474,060.33                        37,167,133.77

The Selling expenses incurred in this period was 18,474,060.33 yuan, which
decreased by 50.29% compared with the same period last year was due to Sales
agency fees and commissions have not yet been settled.
7.64        Administrative expenses

                     Item                    Amount for the current period          Amount for the prior period

Employee benefits                                                  21,455,353.43                         20,306,987.57

Taxes                                                                 381,863.80                            355,928.24

Depreciation                                                        1,493,957.93                          1,548,056.87

Entertainment expenses                                                855,870.94                            880,424.02

Intermediary fee                                                      748,240.08                            943,460.89

Travel expense                                                        160,955.48                            200,814.85

Administrative expenses                                               889,536.21                            565,594.94

Repair charge                                                         443,034.63                            438,716.03

Water and electricity charges                                         300,958.94                            421,746.13

Other amortization                                                    209,939.04                            357,994.59

Others                                                              3,873,060.85                          5,716,476.72

                     Total                                         30,812,771.33                         31,736,200.85

7.65        R&D expenses
7.66        Financial expenses
                       Item                    Amount for the current period        Amount for the prior period

Interest expenses                                                       38,742.51                         6,711,775.56




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                        Item                            Amount for the current period                   Amount for the prior period

Less: Interest income                                                           7,623,553.05                                 11,769,366.46

Less: capitalized interest expenses                                                         --                                3,694,420.78

Exchange differences                                                              672,254.35                                     -34,475.31

Less: Capitalized exchange differences                                                      --                                               --

Others                                                                            286,297.07                                    174,817.89

                        Total                                                   -6,626,259.12                                 -8,611,669.10

7.67 Other income
7.68 Investment income
                                                                                                 Amount for the       Amount for the prior
                                          Item
                                                                                                 current period             period

Investment income for the sale of financial assets during the holding period                          928,200.00                827,100.00

Investment income of wealth management products                                                     13,359,898.55                            --

                                          Total                                                    14,288,098.55                827,100.00

7.69 Net exposure hedge gain
7.70 Fair value change income
7.71 Credit impairment loss
7.72 Asset impairment loss
7.73Proceeds from asset disposal
7.74 Non-operating income
                                                           Amount for the       Amount for the     Amount included in non-recurring profit
                             Item
                                                           current period         prior period              or loss for the period

Indemnity                                                        180,000.00           91,835.23                                 180,000.00

Others                                                           183,709.11             4,000.00                                183,709.11

                             Total                               363,709.11           95,835.23                                 363,709.11

7.75        Non-operating expenses
                                                          Amount for the        Amount for the     Amount included in non-recurring profit
                             Item
                                                          current period         prior period               or loss for the period

Donations to third parties                                                 --         50,000.00                                              --

Penalty expense                                                    150.00             30,210.47                                       150.00




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                                                           Amount for the       Amount for the      Amount included in non-recurring profit
                          Item
                                                           current period        prior period                or loss for the period

Others                                                              3,605.82          119,342.86                                      3,605.82

                          Total                                     3,755.82          199,553.33                                      3,755.82




7.76Income tax expenses
(1) Details of income tax expenses

                          Item                                  Amount for the current period             Amount for the prior period

Current tax expense calculated according to tax laws
                                                                                  114,631,330.89                            116,979,398.73
and relevant requirements

Deferred income tax expenses                                                        -1,901,537.03                             -5,809,681.45

                          Total                                                   112,729,793.86                            111,169,717.28

(1) The process of calculating the income tax based on accounting profit
                                                         Item                                                             Incurred in the

                                                                                                                           current period

Consolidated profit this period                                                                                             445,867,806.76

Income tax calculated at legal or applicable tax rate                                                                       111,466,951.69

Impact of various tax rates applicable to subsidiaries                                                                                      --

Adjustment of impact on the income tax in the previous period                                                                               --

Impact of non-taxable income                                                                                                                --

Impact of non-deductible cost, expense and loss                                                                                3,164,379.20

Impact of deductible losses deferred income tax assets unconfirmed in the previous use period                                               --

Impact of the deductible temporary differences or deductible loss of unconfirmed deferred tax assets of this year.            -1,901,537.03

Changes of the deferred tax assets/liability caused by the adjustment of tax rate                                                           --

Income taxes                                                                                                                112,729,793.86

7.77 Other comprehensive income
Note: Please refer to note 7.58.
7.78        Notes to items in the cash flow statements


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(1) Other cash receipts relating to operating activities

                             Item                                  Amount for the current period           Amount for the prior period

Interest income                                                                         5,457,487.50                        13,061,210.22

Cash pledge and security deposits                                                       4,341,166.84                         4,323,391.76

Maintenance fund                                                                        2,806,860.02                         6,343,450.31

The collecting and paying on another's behalf                                            318,872.66                          1,651,300.01

Others                                                                                 23,748,832.28                        61,406,545.31

                             Total                                                     36,673,219.30                        86,785,897.61

(2) Other cash payments relating to operating activities

                             Item                                  Amount for the current period           Amount for the prior period

Cash paid to general and administrative expenses                                        9,012,769.52                        12,874,997.70

Cash paid to operating expenses                                                        21,249,982.55                         3,628,291.42

Cash pledge and security deposits                                                       3,827,745.89                         4,763,108.22

The collecting and paying on another's behalf                                           1,006,131.98                           161,981.18

Others                                                                                 93,795,526.79                        36,632,151.02

                             Total                                                 128,892,156.73                           58,060,529.54

(3)Cash receipts on other investing activities
(4)Cash paid on other investing activities

                     Item                              Amount for the current period                   Amount for the prior period

Six months of structured deposits                                          1,300,000,000.00                                600,000,000.00

                    Total                                                  1,300,000,000.00                                600,000,000.00

(5)Cash receipts on other financing activities
(6)Cash paid on other financing activities
     7.79 Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement

                                                                                              Amount for the current Amount for the prior
                                            Item
                                                                                                       period                period

I.     Reconciliation of net profit to cash flows from operating   activities:




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                                                                                           Amount for the current Amount for the prior
                                               Item
                                                                                                  period                 period

Net profit                                                                                       329,045,648.28       329,045,648.28

Add:Provision for asset impairment                                                                            --                   --

Depreciation of fixed assets, bio-assets, and natural gas                                         13,279,140.03         13,246,302.18

Amortization of intangible assets                                                                              --           55,200.00

Amortization of long-term deferred expense                                                           353,309.40            369,642.72

Losses on disposal of fixed assets, intangible assets and other long-term assets(deduct:
                                                                                                               --                   --
gains)

Losses on scrapping of fixed assets (deduct: gains)                                                        774.32           14,291.75

Loss of fair value variation (deduct: gains)                                                                   --                   --

Financial expenses (deduct: gains)                                                                   -143,574.86         3,060,270.68

Losses from investments (deduct: gains)                                                           -14,288,098.55          -827,100.00

Decrease in deferred tax assets (deduct: increase))                                               -1,901,537.03         1,723,550.79

Increase in deferred tax liabilities (deduct: decrease)                                                        --                   --

Decrease in inventories (deduct: increase)                                                       163,504,710.44       175,982,196.68

Decrease in operating receivables (deduct: increase)                                              53,925,974.21       -174,638,545.77

Increase in operating payables (deduct: decrease)                                                139,929,891.38       246,450,854.80

Others                                                                                             -2,123,357.14           245,817.56

Net cash flows from operating activities                                                         685,675,245.10       594,728,129.67

II.      Investing and financing activities that do not affect cash receipt and payment

Liabilities converted capital                                                                                  --                   --

Reclassify convertible bonds to be expired within one year as current liability                                --                   --

Fixed assets subject to finance leases                                                                         --                   --

III.     Net increase in cash and cash equivalents:

Cash at the end of the period                                                                  1,240,480,893.15      1,068,660,665.62

Less: cash at the beginning of the period                                                      1,148,522,435.93      1,206,789,056.46

Add: cash equivalents at the end of the period                                                                 --                   --




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                                                                                             Amount for the current Amount for the prior
                                              Item
                                                                                                       period                   period

Less: cash equivalents at the beginning of the period                                                                 --                     --

Net increase in cash and cash equivalents                                                              91,958,457.22          -138,128,390.84

     (2)Information of cash and cash equivalents

                                                                                       Amount for the current         Amount for the prior
                                          Item
                                                                                              period                          period

I.       Cash                                                                               1,240,480,893.15                 1,148,522,435.93

       Including: Cash on hand                                                                      57,189.68                      57,979.40

                 Bank deposits                                                              1,163,996,248.33                 1,148,464,456.53

                 Other monetary funds                                                                           --                           --

II.      Cash equivalents                                                                                       --                           --

       Including: Investments in debt securities due within three months                                        --                           --

III.     Closing balance of cash and cash equivalents                                       1,240,480,893.15                 1,148,522,435.93

       Including: Cash and cash equivalents using restricted of the parent company
                                                                                                                --                           --
or subsidiary




7.80 Notes on the Items of the Statement of Changes in Owner's Rights and
Interests
7.81Ownership or use-right restricted assets

                       Categories of assets                            Closing balance                   The reasons for restriction

Accounts receivable                                                               21,334,705.19          Short-term loan mortgaged

                              Total                                               21,334,705.19                       ——

7.82 The items of foreign currency
     (1) Details of items of foreign currency

                Item                  Balance of foreign currency at year end       Exchange rate           Balance of RMB converted

Monetary fund

Including:USD                                                        36,382.37                6.8739                             250,089.07

                HKD                                                8,922,124.48                0.8783                            7,835,919.44



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              Item               Balance of foreign currency at year end        Exchange rate            Balance of RMB converted

Other accounts receivable

Including:USD                                                             --                    --                                  --

             HKD                                             25,522,742.11               0.8783                          22,415,530.24

Other accounts payable

Including:USD                                                             --                    --                                  --

               HKD                                          20,095,370.62                0.8783                          17,648,902.53

(2)Oversea operating entities
The Group’s significant oversea operating entities are American Great Wall Co., Ltd
and Fresh Peak Investment Co., Ltd. American Great Wall Co., Ltd chooses the
USD as the its functional currency, for its main operating activities are in the USA;
Fresh Peak Investment Co., Ltd. chooses the RMB as its functional currency, for it is
a investment company and its main operating activities are in the mainland of China.
7.83 Hedging
7.84 Government funding
7.85 Other


VIII      The changes of the scope of consolidation
The company did not change the range of consolidation in this period compared with
last year


IX      Equities in other entities.
9.1 Equities in the subsidiaries
(1) The formation of the Group

                                    Main                                         Shareholding
                                                  Reg.         Business
       Name of the subsidiary    operating                                      proportion(%)              Method of acquiring
                                                  place          nature
                                    area                                        Direct   Indirect

                                                                                                       Acquiring through establishment
Shenzhen Petrel Hotel Co. Ltd.   Shenzhen Shenzhen          Services             68.10      31.90
                                                                                                       or investment

Shenzhen City Property                                                                                 Acquiring through establishment
                                 Shenzhen Shenzhen          Services             95.00          5.00
Management Ltd.                                                                                        or investment



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                                   Main                                  Shareholding
                                               Reg.        Business
     Name of the subsidiary      operating                              proportion(%)            Method of acquiring
                                               place        nature
                                   area                                 Direct    Indirect

Shenzhen Zhen Tung                                                                           Acquiring through establishment
                                 Shenzhen Shenzhen       Services        73.00       27.00
Engineering Ltd.                                                                             or investment

Shenzhen City We Gen                                                                         Acquiring through establishment
                                 Shenzhen Shenzhen       Services        75.00       25.00
Construction Management Ltd.                                                                 or investment

Shenzhen City Shenfang                                                                       Acquiring through establishment
                                 Shenzhen    Shenzhen     Investment     90.00    10.00
Investment Ltd.                                                                              or investment

Shenzhen City Shenfang Free                               Commecial                          Acquiring through establishment
                                 Shenzhen    Shenzhen                    95.00     5.00
Trade Trading Ltd.                                           trade                           or investment

Shenzhen City SPG Long Gang                                                                  Acquiring through establishment
                                 Shenzhen    Shenzhen     Real estate    95.00     5.00
Development Ltd.                                                                             or investment

Shenzhen Special Economic

Zone Real Estate (Group)                                                                     Acquiring through establishment
                                 Guangzhou   Guangzhou    Real estate    95.00     5.00
Guangzhou Property and Estate                                                                or investment

Co., Ltd.

Beijing fresh peak property
                                                                                             Acquiring through establishment
development management            Beijing     Beijing     Real estate    75.00    25.00
                                                                                             or investment
limited company

Beijing SPG Property                                                                         Acquiring through establishment
                                  Beijing     Beijing      Services      10.00    90.00
Management Limited                                                                           or investment

Shenzhen ShenWu Elebator                                                                     Acquiring through establishment
                                 Shenzhen    Shenzhen      Services          --   100.00
Co.,Ltd                                                                                      or investment

Shenzhen Lain Hua Industry and                                                               Acquiring through establishment
                                 Shenzhen    Shenzhen      Services      95.00     5.00
Trading Co. Ltd.                                                                             or investment

                                                          Investment
                                                                                             Acquiring through establishment
Fresh Peak Holding Ltd.          HongKong    HongKong        and        100.00       --
                                                                                             or investment
                                                         management

                                                          Investment                         Acquiring through establishment
Wellam Ltd.                      HongKong    HongKong                        --   100.00
                                                            holding                          or investment




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                                   Main                                       Shareholding
                                                 Reg.         Business
     Name of the subsidiary      operating                                  proportion(%)                        Method of acquiring
                                                place          nature
                                    area                                     Direct           Indirect

Shantou SEZ Wellam Fty Bldg.,                                                                            Acquiring through establishment
                                  ShanTou      ShanTou       Real estate            --        100.00
Dev. Co.                                                                                                 or investment

                                                                                                         Acquiring through establishment
Shantou Huafeng Estate Dev.Co.    ShanTou      ShanTou       Real estate     100.00              --
                                                                                                         or investment

                                                                                                         Acquiring through establishment
Great Wall Estate Co., Inc          USA          USA         Real estate    70.00                --
                                                                                                         or investment

                                                             Investment
                                                                                                         Acquiring through establishment
Fresh Peak Holdings Ltd.         HongKong     HongKong           and        100.00               --
                                                                                                         or investment
                                                            management

                                                                                                         Acquiring through establishment
Fresh Peak Investment Ltd.       HongKong     HongKong Investment             --              55.00
                                                                                                         or investment

                                                           Investment and                                Acquiring through establishment
Openice Ltd.                     HongKong     HongKong                      20.00             80.00
                                                           management                                    or investment

                                                                                                         Acquiring through establishment
Barenie Co. Ltd.                 HongKong     HongKong       Investment       --              80.00
                                                                                                         or investment

                                                                                                         Acquiring through establishment
Keyear Development Ltd.          HongKong     HongKong Investment             --              100.00
                                                                                                         or investment

Guangzhou Huangpu Xizun real                                                                             Acquiring through establishment
                                 GuangZhou    GuangZhou      Real estate      --              100.00
estate limited company                                                                                   or investment

Fresh Peak Real Estate Dev.                                                                              Acquiring through establishment
                                  WuHan        WuHan         Real estate      --              55.00
Construction (Wuhan) Co. Ltd.*                                                                           or investment

Shantou Special Economic Zone                                                                            Subsidiary      acquired    through

Real Estate (Group) Songshan     Shantou      Shantou        Real estate      --              100.00 emerge            under    non-common

Property and Estate Co., Ltd.                                                                            control

Shenzhen Shenfang Department                                 Commecial                                   Acquiring through establishment
                                 Shenzhen     Shenzhen                      95.00        5.00
Store Co. Ltd.* ①                                              trade                                    or investment

                                                                                                         Acquiring through establishment
Bekaton Property Limited *②      Australia    Australia     Real estate    60.00        --
                                                                                                         or investment



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                                   Main                                 Shareholding
                                               Reg.       Business
      Name of the subsidiary     operating                             proportion(%)            Method of acquiring
                                               place       nature
                                   area                                Direct    Indirect

Canada Great Wall ( Vancouver)                                                              Acquiring through establishment
                                  Canada      Canada     Real estate    --      60.00
*②                                                                                         or investment

                                                         Commecial                          Acquiring through establishment
Paklid Limited *②               HongKong    HongKong                  60.00      40.00
                                                            trade                           or investment

Guangdong Province Fengkai
                                 Guangdong   Guangdong                                      Acquiring through establishment
Lain Feng Cement Manufacturing                           Manufacture    --      90.00
                                  Fengkai     Fengkai                                       or investment
Co., Ltd *③

*① Shenzhen Shenfang Department Store Co. Ltd
The shareholders meeting held on October 29 th,2007 passed the resolution to
terminate business, liquidation and formed a group to carry out the liquidation
procedures. The liquidation group issued a notice of liquidation on December 7
th
 ,2007. According to the principle of “Enterprise Accounting Standards No.33- the
Consolidation Financial Statement”, the Store will not be included in the Company’s
consolidated financial statement. The book value of the investment account of the
Company is zero.
*② Bekaton Property Limited ,Canada Great Wall ( Vancouver)and Paklid Limited
These 3 subsidiaries were set up overseas in early times. The board of directors
passed a resolution to terminate the corporations’ business on Dec.13th, 2000.
*③ Guangdong Province Fengkai Lian Feng Cement Manufacturing Co., Ltd
The total assets (including tangible and intangible assets) of the corporation were
auctioned for debt repayment at 22 January 2006. The Company's investment in the
company's book value is zero.
Except for * ① , * ② , * ③ , the above subsidiaries which are not included the
company’s consolidated financial statement had ceased operations for many years.
And the entities of the corporations didn’t exist. And the Company has no control
over its subsidiaries’ businesses. According to the principle of “Enterprise
Accounting Standards No.33- the Consolidation Financial Statement”, the
corporation will not be included in the Company’s consolidated financial statement.
The book value of the investment account of the Company is zero. The following are
the details.


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                                           Accounting       Investment         Opening                                 Closing            Provision for
                 Investee                                                                          Changes
                                            Method        cost                 balance                                 balance             impairment

Paklid Limited                            Cost Method            201,100.00    201,100.00                      --       201,100.00           201,100.00

Bekaton Property Limited                  Cost Method            906,630.00    906,630.00                      --       906,630.00           906,630.00

Shenzhen        Shenfang     Department
                                          Cost Method      10,000,000.00 10,000,000.00                         -- 10,000,000.00 10,000,000.00
Store Co. Ltd

Shantou Huafeng Building                  Cost Method      68,731,560.43 58,547,652.25                         -- 58,547,652.25 58,547,652.25

Guangdong Province Fengkai Lain
                                          Cost Method 121,265,000.00 56,228,381.64                             -- 56,228,381.64 56,228,381.64
Feng Cement Manufacturing Co., Ltd

                   Total                     ——         201,104,290.43 125,883,763.89                           - 125,883,763.89 125,883,763.89

(2)Significant non-wholly owned subsidiary

                                     Minority interest      Current year profit and loss         Current year dividends              Minority interest

       Name of subsidiary           share proportion attributable to minority interest            distributed to minority          equity balance at the

                                            (%)                      shareholders                 interest shareholders              end of the year

Great Wall Estate Co., Inc                        30.00                        -17,830.51                                   --           -21,410,446.29

Fresh Peak Investment Ltd.                        45.00                         -6,395.09                                   --         -104,589,770.93

Barenie Co. Ltd.                                  20.00                                    --                               --            -3,871,090.12




 (3) The main financial information of significant non-wholly owned subsidiary

                                                                               Closing balance

   Name fo subsidiary                               Non-current                                                     Non-current
                               Current assets                            Total Assets       Current liabilities                         Total liabilities
                                                         assets                                                      liabilities

Great Wall Estate Co., Inc          249,818.69      18,994,466.11         19,244,284.80         106,403,720.94                          106,403,720.94

Fresh Peak Investment
                                220,030,097.71      24,793,206.35       244,823,304.06          254,765,642.93                          254,765,642.93
Ltd.

Barenie Co. Ltd.                      1,023.60      21,223,344.85         21,224,368.45          32,829,449.35                            32,829,449.35

 (Continued)



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                                                                                 Opening balance

    Name of subsidiary                              Non-current                                                   Non-current
                                Current assets                           Total Assets      Current liabilities                        Total liabilities
                                                       assets                                                        liabilities

 Great Wall Estate Co., Inc         312,086.57      19,021,543.04         19,333,629.61     106,555,401.23                            106,555,401.23

 Fresh Peak Investment
                                220,030,097.71      24,793,206.35        244,823,304.06     254,751,432.23                            254,751,432.23
 Ltd.

 Barenie Co. Ltd.                        975.66     30,373,713.87         30,374,689.53       32,794,671.39                             32,794,671.39

  (Continued)

                                      Incurred in current year                                          Incurred in previous year

                                                                        Cash flow                                                            Cash flow
    Name of                                          Total of                                                              Total of
                    Operating                                             from        Operating                                                 from
   subsidiary                      Net profit     comprehensive                                      Net profit       comprehensive
                     income                                             operating       income                                               operating
                                                     income                                                                income
                                                                        activities                                                           activities

Great Wall
                    322,901.55     -59,435.04          -59,435.04 -59,442.30          287,797.83        -68,120.84            -68,120.84 -68,159.28
Estate Co., Inc

Fresh Peak
                                   -14,211.32          -14,211.32                                        -9,684.86             -9,684.86
Investment Ltd.

Barenie Co. Ltd.                                                 0.00                                    -6,812.65             -6,812.65

9.2 Equities in joint ventures or associated enterprises
(1)Insignificant joint ventures or associated enterprises

                         Item                              Closing balance/Incurred this year              Opening balance/Incurred last year

 Joint ventures*①:

 Total investment book value                                                          12,166,897.84                                     12,166,897.84

 Totals of the following items calculated per

 respective shareholding proportion

 —Net profit                                                                                      --                                                     --

 —Other comprehensive income                                                                      --                                                     --

 —Total comprehensive income                                                                      --                                                     --

 Associated enterprises*②:

 Total investment book value                                                             394,209.40                                        394,209.40




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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                            Interim Report 2019



                        Item                   Closing balance/Incurred this year        Opening balance/Incurred last year

Totals of the following items calculated per

respective shareholding proportion

—Net profit                                                                        --                                        --

—Other comprehensive income                                                        --                                        --

—Total comprehensive income                                                        --                                        --

*① All of the Group’s joint ventures are insignificant. For details of the joint ventures,
please refer to 7.17, including:
1) Guangdong province Huizhou Luofu Hill Mineral Water Co.,Ltd
The operting period of the company was form June 5, 1991 to June 4, 2001. And the
company had ceased operations because of operating loss for many years. And the
Company had been terminated its licenses by law at July 6, 2001 because it failed to
pass the annual inspection. Besides, the corporation stopped preparing the financial
statement. As of the end of the year, the book value of the investment account of the
Company is zero. According to the joint venture agreement, the Company didn’t
have the obligation to bear the additional loss.
2)Fengkai Xinghua Hotel
The FengKai XingHua Hotel was announced bankruptcy by the Guangdong
Province Zhaoqing City second-middle intermediate Peoples’ court with the
document (2002) ZHFJPZ No.2. And the corporation had finished the bankruptcy
procedure. As of the end of the year, the book value of the investment account of the
Company is zero. According to the joint venture agreement, the Company didn’t
have the obligation to bear the additional loss.
3)Jiangmen Xinjian Real Estate Co. Ltd., Xi’an Fresh Peak Building Co. Ltd, DongYi
Property Co., Ltd
The above corporations were the joint ventures set up with the local partners for the
properties developing projects. Consider the projects had been stopped, and the
joint ventures had closed operating activities for many years with no preparation of
financial statements. Already the corresponding provision for the investment of
these joint ventures was accrued. Refer to Note 7.17 for details.
* ② All associated enterprises of the Group are insignificant. For details of
associated enterprises, please refer to note 7.17, including:
Shenzhen Runhua Automobile Trading Co., Ltd



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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                    Interim Report 2019



The operating period of this corporation was form Feb 24, 1992 to Feb 24, 1997, and
it had ceased operations because of operating loss for many years. Besides, it had
been terminated its licenses by law because it failed to pass the annual inspection
and no financial statement was prepared afterwards. As the end of the year, the
book value of the investment account of the company is zero. According to the
associate agreement, the company didn’t have the obligation to bear the additional
loss.
(2)The excess losses of the joint ventures or associated enterprises incurred.

                                                              Accumulated           Unrecognized losses           Accumulated

   Name of the joint ventures or associated enterprises   unrecognized losses as this year (or shared net unrecognized losses as

                                                          of the end of last year     profit this year)       of the end of this year

Shenzhen Fresh Peak property consultant Co., Ltd                      866,357.29                 75,016.96                941,374.25




X The risk associated with financial instruments
The company's major financial instruments, including equity investments, loans,
accounts receivable, accounts payable, etc., the detailed description of the financial
instruments are shown in note six. The risks which associated with these financial
instruments and the risk management policies adopted by the company to reduce
these risks are described below. The management of the company is responsible for
the management and monitoring of these exposures to ensure that these risks are in
a limited amount of scope.


The company uses sensitivity analysis techniques to analyze the impact of
reasonable and possible changes in the risk variables on current profit or loss or
shareholder equity. As risk variables rarely occur in isolation, and affect the changes
of correlation between these variables for a variable amount of risk will have a
significant effect ultimately, so the content is on the assumption that the changes in
each variable is in the condition of independence.


Ⅹ Risk management objectives and policies
The company's main financial instruments include equity investment, Debt
investment, borrowing, accounts receivable, accounts payable, convertible bonds
and so on. Detailed descriptions of various financial instruments can be found in the


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019



relevant items in Note 7. The risks associated with these financial instruments and
the risk management policies adopted by our company to reduce these risks are
described below. The company's management manages and monitors these
exposures to ensure that the above risks are within the limits.
The company uses sensitivity analysis technology to analyze the reasonable and
possible changes of risk variables which may have an impact on current profits and
losses or shareholders'rights and interests. Since any risk variable seldom changes
in isolation, and the correlation between variables will have a significant impact on
the final amount of change in a risk variable, the following is assumed to be
independent of each variable.
10.1Risk management objectives and policies
The aim that company engaged in the risk management is to achieve the right
balance between risk and return. It reduce the negative impact on the risk of the
company's operating performance to the lowest level and maximize shareholder
interests and other interests of investors. The aim that risk management based on
the basic strategy of cpmpany’s risk management is to identify and analyze various
risks faced by the company. Establishment of appropriate risk limits and risk
management, as well as to monitor all kinds of risks that control it in a limited scope
timely and reliably.
(1)Credit risk
The company's credit risk is mainly reflected in the uncollectible accounts receivable.
In order to reduce credit risk, the company set up a team wresponsible for
determining the credit limit, credit approval, and other monitoring procedures to
ensure that the necessary measures to recover overdue debt. In addition, the
company reviews the recovery of each individual account receivable on each
balance sheet date to ensure that the uncollectible accounts are fully prepared.
Therefore, the company's management believes that the company's credit risk has
been greatly reduced.
The company's liquidity is deposited in a bank with a higher credit rating, so the
liquidity of the credit risk is low.
(2)Liquidity risk
In the management of liquidity risk, the company maintains the concept of
management that adequate cash and cash equivalents, monitoring it to meet the
company's business needs and reducing the impact of cash flow fluctuations.


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10.1The transfer of financial assets
Financial assets that have been transferred but not wholly terminated
As of 30 June, 2019, the company declared factoring business 21,334,705.19 yuan
to the bank in accounts receivable, got RMB 21,334,705.19 yuan of equal value. If it
is fail to receive the corresponding accounts from the client, the bank has the right to
repay the corresponding accounts to the company.Because the company still bear
with these accounts receivable related credit risk, the company should continue to
fully recognize the carrying amount of the accounts receivable due to the transfer of
payments received and will confirm it as pledge loan.
XI Disclosure of fair value
XII Related party relationships and transactions
11.1       Parent of the Company

                                                                                                Proportion of the
                                                                                                                      Proportion of the
                                                                                                     Company’s
                               Place of                                                                               Company’s voting
   Name of the parent                             Business Nature          Registered capital   ownership interest
                             incorporation                                                                            power held by the
                                                                                                held by the parent
                                                                                                                         parent (%)
                                                                                                        (%)

                             Guangdong
Shenzhen Investment                            Investment, Real estate
                               province                                     RMB21.58billion                   63.55             63.55
Shareholding Co. Ltd                           development, Guarantee
                              Shenzhen




11.2       Subsidiaries of the Company
Please refer to Note IX.1- Equities in the subsidiaries
11.3 Associates and joint ventures of the entity
Please refer to Note IX.3 –Equities in joint venture or associated enterprises
11.4       Other related parties of the Company

            Name of other related party                        Relationship between other related parties and the Company

Shenzhen Jian'an Group Co., Ltd.                                             The same controlling shareholders

11.5       Related party transactions
(1)Contracting with related parties
List of contracting item

   Name of main           Name of contractor        Type of assets       Reception Expiration date      Basis of         Contracting



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 ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                               Interim Report 2019



 contract issuing party                                      under             date of              of            pricing of           income

                                                          contracting        contracting     contracting         contracting      recognized in the

                                                                                                                   income           current year

 Shenzhen Jian'an         Shenzhen Zhen Tung
                                                        Construction         2012-6-1                          Negotiations         3,849,090.95
 Group Co., Ltd.          Engineering Ltd

 List of outsourcing item

                                                                                                                                       Contracting
                                                        Type of assets Reception date          Expiration       Basis of pricing
Name of main contract issuing                                                                                                            income
                                   Name of contractor       under                 of             date of         of contracting
            party                                                                                                                   recognized in the
                                                         outsourcing         contracting      contracting           income
                                                                                                                                       current year

Shenzhen City SPG Long            Shenzhen Jian'an
                                                        Construction         2015-9-16                            Negotiations         28,261,187.86
Gang Development Ltd.             Group Co., Ltd.

Shantou Huafeng Estate            Shenzhen Jian'an
                                                        Construction         2018-11-16             2021-5-1      Negotiations         32,669,323.43
Dev.Co.                           Group Co., Ltd.

 (2)Borrowing from related party

             Item                   Carrying amount      Reception date        Expiration date                        Statement

 Borrowing from:

                                                                                                         The principal was repaid on December
 Shenzhen Investment
                                        16,535,277.94           2006.11.9              2016.12.22         22th, 2016. The remaining amount is
 Shareholding Co.    Ltd
                                                                                                                   interest payable.

 11.6 Amounts due from / to related parties
 (1)      Amounts due from related party
                                                                       Closing balance                               Opening balance
                           Item
                                                         Carrying amount Bad debt provision Carrying amount Bad debt provision

 Accounts receivable

 Shenzhen Fresh Peak property consultant Co.,Ltd               1,184,900.35                          --        1,185,689.73                        --

 Total                                                         1,184,900.35                          --        1,185,689.73                        --

 Other receivables

 Guangdong Province Huizhou Luofu Hill Mineral
                                                              10,465,168.81            10,465,168.81          10,465,168.81          10,465,168.81
 Water Co., Ltd




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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                  Interim Report 2019



                                                            Closing balance                         Opening balance
                        Item
                                                  Carrying amount Bad debt provision Carrying amount Bad debt provision

Shenzhen Runhua Automobile Trading Co., Ltd            3,072,764.42      3,072,764.42           3,072,764.42        3,072,764.42

Canada GreatWall(Vancouver)Co. ,Ltd                 89,035,748.07     89,035,748.07          89,035,748.07       89,035,748.07

Bekaton Property Limited                              12,559,290.58     12,559,290.58          12,559,290.58       12,559,290.58

Paklid Limited                                        19,164,730.31     19,164,730.31          19,173,003.78       19,169,123.37

Shenzhen Shenfang Department Store Co. Ltd.              237,648.82           189,179.82         237,648.82           189,179.82

Shenzhen Real Estate Consolidated Service Co.,
                                                         475,223.46                              475,223.46
Ltd.

Shenzhen City Shenfang Construction and
                                                       8,419,205.19      8,419,205.19           8,419,205.19        8,419,205.19
Decoration Materials Ltd.

                        Total                        143,429,779.66    142,906,087.20        143,438,053.13       142,910,480.26

(2) Amounts due to related party
                                       Item                                          Closing balance          Opening balance

Accounts receivable

Shenzhen Jian'an Group Co., Ltd.                                                           15,185,309.82           43,446,497.68

                                      Total                                                15,185,309.82           43,446,497.68

Other payables

Shenzhen Xin Dongfang Store Ltd.                                                             902,974.64               902,974.64

Guangdong Province Fengkai Lain Feng Cement Manufacturing Co., Ltd.                         1,867,348.00            1,867,348.00

                                      Total                                                 2,770,322.64           14,398,496.70

Interest payable:

Shenzhen Investment Holding Co.,Ltd                                                        16,535,277.94           16,535,277.94

                                      Total                                                16,535,277.94           16,535,277.94



XIII Share payment


XIV Commitments and Contingencies
14.1 Significant commitments
(1)Capital commitment

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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                                  Interim Report 2019



                             Item                              Amount for the current period        Amount for the prior period

Capital commitments that have been entered into but have not
                                                                                               --                                 --
been recognized in the financial statements

Significant outsourcing contracts                                              463,890,909.11                       368,570,701.08

                             Total                                             463,890,909.11                       368,570,701.08

(2)There is no any other commitment during this period.
14.2 Contingencies
(1)Contingencies arising from pending litigations or arbitrations and their financial
effects
Xi’an project Lawsuit
Xi’an Fresh Peak Holding limited company (hereinafter referred to as “Fresh Peak
Company”) was sino-foreign joint venture set up in Xi’an city. The shareholder of the
Fresh Peak Company – Hongkong Fresh Peak Co., Ltd was the wholly owned
subsidiary of the company. And the Hongkong Fresh Peak Co., Ltd contributed 84%
of the Fresh Peak Company’s share- capital in cash. And Xi’an trade building which
was the enterprise under the Xi’an Joint Commission on Commerce and Trade
contributed 16% of the Fresh Peak Company’s share- capital with the land-use right.
The core business was property development. And the project was Xi’an Trade
Building. The project was started on 1995-11-28. But the project had been stopped
in 1996 because of the two parties differences on the operating policy of the project.
In 1997, the Xi’an government withdrew the Xi'an Fresh Peak investment project
compulsively and assigned the project to Xi’an Business Tourism Co., Ltd
(hereinafter referred to as “Business Tourism Company”). But the two parties had
insulted a lawsuit on compensation. The ShanXi Province High Peoples Court made
a judgement “(2000) SJ-CZ No.25”. The judgement was as follows: 1. Business
Tourism Company had to pay for the compensation Rmb 36,620 thousand to Xi’an
Fresh Peak Company after the judgment entering into force. If the Business Tourism
Company failed to pay in time, it had to pay double debt interests to Xi’an Fresh
Peak Company. 2. Xi’an Joint Commission on Commerce had jointly and severally
obligation of the interests of the compensation.
Untill December 31 th, 2011, the amount of RMB 15,201,000.00 had been called
back. The company has obtained new property clues and submitted an application
for resumption of execution. The Shaanxi Provincial Higher Court held an execution


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.                  Interim Report 2019



hearing on November 16, 2018.
As at 30 June 2019, the book value of the investment of Xi’an Fresh Peak Company
was RMB 12,166,897.84. The provision for investment was Rmb 20,673,831.77.
The book balance of assets was RMB 8,419,205.19 which has been taken full
provision for impairment loss.
(2)Contingent liabilities arising from providing debt guarantees to other entities and
their financial effects
The Company provided loan guarantees for purchaser of real estate. Up to Jun
30th,2019, the amount and duration of the unsettled guarantee is as follows:

                Items                                Duration                       Unsettled amount (million)

 Cuilin Court                      From real estate license granted and mortgaged                          89,190

 Shenfang Chuanqishan              From real estate license granted and mortgaged                          10,728

 Shenfang Shanglin Garden          From real estate license granted and mortgaged                            3,583

                Total                                  ——                                               103,501

( 3 ) Contingent liabilities Related to the equity joint venture or consortium
investment
Refer to IX “Equities in other entities”.


XV Events after the balance sheet date


XVI Other material facts
16.1 Other important transactions and matters
On 14 September, 2016, the Group plan the reorganization of material assets.The
Group announced it intended to buy 100% stock equity of Evergrande real estate
group co., LTD by issue shares or cash payment on 14 October, 2016.Guangzhou
chiron real estate co., LTD will become the controlling shareholder of the company
after the acquisition
The restructuring of material assets is still in process as scheduled by the financial
report day.
16.2 Other
(1) Accounting Policy Change
①Accounting Policy Change Caused by the Implementation of New Financial


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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.   Interim Report 2019



Instrument Standards
On March 31, 2017, the Ministry of Finance promulgated Accounting Standards for
Enterprises No. 22 - Recognition and Measurement of Financial Instruments
(Revised in 2017) (Accounting [2017] 7),'Accounting Standards for Enterprises No.
23 - Transfer of Financial Assets (Revised in 2017) (Accounting [2017]
8),'Accounting Standards for Enterprises No. 24 - Set of Accounting Standards for
Enterprises'. Periodic Accounting (Revised in 2017) (Accounting [2017] 9) issued on
May 2, 2017 "Accounting Standards for Enterprises 37 - Financial Instruments
Presentation (Revised in 2017)" (Accounting [2017] 14) (collectively referred to as
"New Financial Instruments Standards"), requiring domestic listed enterprises to
implement the new standards from January 1, 2019. Guidelines for financial
instruments.Our company will carry out the aforementioned new financial instrument
guidelines from January 1, 2019.
All recognized financial assets under the new financial instrument standards are
subsequently measured at the amortized cost or fair value. On the date of
implementation of the new financial instrument standards, the business model of
managing financial assets is evaluated on the basis of the existing facts and
circumstances of the company on that day, and the characteristics of contractual
cash flow on the financial assets are evaluated on the basis of facts and
circumstances at the time of initial confirmation of financial assets. The financial
assets are divided into three categories: measured according to the amortized cost
and measured according to the public value. Value is measured and its changes are
recorded in other comprehensive income and fair value, and its changes are
recorded in current profits and losses. Among them, when the financial asset
terminates recognition, the accumulated gains or losses previously included in other
comprehensive gains will be transferred from other comprehensive gains to retained
gains, not into current profits and losses.
Under the new financial instrument standards, based on the expected credit loss,
the company makes provision for impairment of financial assets measured by
amortized cost, investment in debt instruments measured by fair value and its
changes included in other comprehensive gains, lease receivables, contractual
assets and financial guarantee contracts, and confirms the loss of credit impairment.




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XVII Notes to Items in the Financial Statements of the Company
17.1 Accounts receivable
(1)          Accounts receivable by categories

                                                                                                  Closing balance

                        Category                               Carrying amount                         Bad debt provision               Book Value

                                                             Amount                  (%)               Amount                (%)

Accounts receivable of which provision for bad
                                                                            --              --                     --              --                  --
debts is of individually significant

Accounts receivable of which provision for bad
                                                             11,466,782.59          100.00%            6,968,694.02          60.77%       4,498,088.57
debts is of individually insignificant

                         Total                               11,466,782.59          100.00%            6,968,694.02          60.77%       4,498,088.57

(Continued)

                                                                                                  Closing balance

Category                                                       Carrying amount                          Bad debt provision              Book Value

                                                              Amount                  (%)               Amount               (%)

Accounts receivable of which provision for bad
                                                                             --              --                         --         --                  --
debts is of individually significant

Accounts receivable of which provision for bad
                                                             12,133,489.69           100.00%            6,968,694.02         57.43%       5,164,795.67
debts is of individually insignificant

                         Total                               12,133,489.69           100.00%            6,968,694.02         57.43%       5,164,795.67




① Bad debt provision of accounts receivable which is of individually significant
      Content of accounts                                  Amount of bad          Proportion of
                                       Carrying amount                                                           Reasons for the provision
           receivable                                          debt                provision

House pay to be collected                  11,221,159.00     6,968,694.02               62.10% A separate provision is established according

                                                                                                       to the recoverability of each receivable with
Rental to be collected                        245,623.59                --                        --
                                                                                                            long aging and little retrievability.

             Total                         11,466,782.59    6,968,694.02                    62.93

② Disclosure by age

                     Content of accounts receivable                                                       Carrying amount



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                   Content of accounts receivable                                           Carrying amount

In 1 year(including 1 year)                                                                                                 387,105.69

1-2year                                                                                                                     140,732.69

2-3year                                                                                                                     293,033.67

More than 3 year                                                                                                         10,645,910.54

  More than 5 year                                                                                                       10,645,910.54

                                Total                                                                                    11,466,782.59

 (2) There were no any account receivables that had been fully or at a great
proportion rate accrued for bad debt but had been fully collected or reversed back in
the current period.
(3) There were no any significant accounts receivables written off in the current
period.
(4) Top 5 entities with the largest balances of accounts receivable

                               Relationship with                                    Proportion of the amount to
      Name of entity                                Amount             Age                                          Bad debt provision
                                  the Group                                              the total AR (%)

Individual No.1                  Un-related party   1,200,000.00     Within 1year                           10.47         1,200,000.00

Individual No.2                  Un-related party    876,864.11      Within 1year                            7.65           876,864.11

Individual No.3                  Un-related party    617,559.26      Within 1year                            5.39                        --

Individual No.4                  Un-related party    593,244.00      Within 1year                            5.17                        --

Corporation No.1                 Un-related party    540,000.00      Within 1year                            4.71                        --

           Total                                    3,827,667.37                                            33.38         2,076,864.11

(5)There were no any account receivables which had been derecognized.
17.2 Other receivables
                       Item                              Closing balance                               Opening balance

 Interest receivable                                                     6,591,780.82                                    2,380,301.11

 Other receivables                                                    771,102,120.43                                   767,994,548.73

                       Total                                          777,693,901.25                                   770,374,849.84

(1)Interest receivable
1) Classification



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                      Item                              Closing balance                                Opening balance

 Time deposit                                                                      --                                       97,801.11

 Structured deposit                                                     6,591,780.82                                    2,282,500.00

                      Total                                             6,591,780.82                                    2,380,301.11

(2)Dividends receivables
(4) Other receivable
①Other receivables by categories

                      Item                              Closing balance                                Opening balance

 Internal receivables                                              1,418,308,051.36                                 1,422,461,221.15

 Other receivables                                                   157,478,791.20                                  146,006,570.00

                      Total                                        1,575,786,842.56                                 1,568,467,791.15

② Provision
                                               Stage one                  Stage two                    Stage one

                                                                  Expected Credit Loss for Expected Credit Loss for the Subtotal
                  Bad debt               Expected credit losses
                                                                    the Whole Life Period       Whole Life Period (Credit
                                         in the next 12 months
                                                                   (No Credit Devaluation)     Devaluation Has Occurred)

Opening balance                                798,092,941.31

Opening balance in the current period            ——                       ——                          ——                 ——

Closing balance                                798,092,941.31

                                                                                                                    Unit:RMB

                              Category                                                       Closing balance

Within 1 year(including 1year)                                                                                      158,202,023.94

1 to 2 years                                                                                                           73,851,395.97

2 to 3 years                                                                                                          310,307,057.96

More than 3 years                                                                                                    1,033,426,364.69

  3 to 4years                                                                                                         247,106,776.63

  4 to 5 years                                                                                                        267,616,334.77

  More than 5 years                                                                                                   518,703,253.29

                               Total                                                                                 1,575,786,842.56



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  ③ Top 5 entities with the largest balances of other receivables
                                                                                                Proportion of
                                  Relationship
                                                                                                the amount to
          Name of Entity                 with the           Amount                Age                              Bad debt provision
                                                                                               the total OR (%)
                                          Group
                                                                                                   (%)

    Fresh Peak Enterprise Co.,
                                    Subsidiary              530,297,831.35      Over 3 years           33.65%          508,377,320.74
    Ltd

    Shantou Huafeng Estate
                                    Subsidiary              517,509,745.62      Over 3 years           32.84%                       --
    Development Co., Ltd

    American Great Wall Co.,
                                    Subsidiary              101,379,954.81      Over 3 years            6.43%          101,379,954.81
    Ltd

    Canada Great
                                    Subsidiary               89,035,748.07      Over 3 years            5.65%           89,035,748.07
    Wall( Vancouver ) Co., Ltd

    Xinfeng property                Subsidiary               88,290,631.63                              5.60%                       --

                Total                                  1,326,513,911.48                                84.18%          698,793,023.62

    (6) There were no any other receivables about government subsidies that have
  been involved.
  (7) There were no any other receivables due to the transfer of financial assets that
  have been derecognized.
  (8) There were no any other receivables which had transferred to continued
  involvement in assets or liabilities.




  17.3 Long-term equity investments
  (1) Long-term equity investments by types

                                          Closing balance                                           Opening balance

       Item                                 Provision for                                              Provision for
                        Book balance                              Book value       Book balance                            Book value
                                             impairment                                                 impairment

Investment in
                        304,045,949.42     69,155,382.25       234,890,567.17     304,045,949.42      69,155,382.25      234,890,567.17
subsidiaries




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                                    Closing balance                                     Opening balance

       Item                          Provision for                                        Provision for
                    Book balance                        Book value      Book balance                        Book value
                                      impairment                                          impairment

Investment in

associates and      22,341,261.07    21,947,051.67       394,209.40     22,341,261.07    21,947,051.67        394,209.40
joint ventures

       Total       326,387,210.49    91,102,433.92    235,284,776.57   326,387,210.49    91,102,433.92    235,284,776.57




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(2)investment in subsidiaries

                                                                                        Curr. year                                                 Curr. year impairment         Closing balance of
                          Name of investee                      Opening balance                         Curr. year decrease    Closing balance
                                                                                        Increase                                                         provision              impairment provision

Shenzhen City Property Management Ltd.                                  12,821,791.52              --                     --       12,821,791.52                           --

Shenzhen Petrel Hotel Co. Ltd.                                          20,605,047.50              --                     --       20,605,047.50                           --

Shenzhen City Shenfang Investment Ltd.                                   9,000,000.00              --                     --        9,000,000.00                           --

Fresh Peak Enterprise Ltd.                                                556,500.00               --                     --          556,500.00                           --

Fresh Peak Zhiye Co., Ltd.                                              22,717,697.73              --                     --       22,717,697.73                           --

Shenzhen Special Economic Zone Real Estate (Group) Guangzhou
                                                                        20,000,000.00              --                     --       20,000,000.00                           --
Property and Estate Co., Ltd.

Shenzhen Zhen Tung Engineering Ltd                                      11,332,321.45              --                     --       11,332,321.45                           --

American Great Wall Co., Ltd                                             1,435,802.00              --                     --        1,435,802.00                           --

Shenzhen City Shenfang Free Trade Trading Ltd.                           4,750,000.00              --                     --        4,750,000.00                           --

Shenzhen City Hua Zhan Construction Management Ltd.                      6,000,000.00              --                     --        6,000,000.00                           --

QiLu Co.,Ltd                                                              212,280.00               --                     --          212,280.00                           --

Beijing Shenfang Property Management Co., Ltd.                            500,000.00               --                     --          500,000.00                           --

Shenzhen Lain Hua Industry and Trading Co., Ltd.                        13,458,217.05              --                     --       13,458,217.05                           --

Shenzhen City SPG Long Gang Development Ltd.                            30,850,000.00              --                     --       30,850,000.00                           --

Beijing Fresh Peak Property Development Management Limited              64,183,888.90              --                     --       64,183,888.90                           --




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                                                                               Curr. year                                                    Curr. year impairment         Closing balance of
                           Name of investee            Opening balance                         Curr. year decrease    Closing balance
                                                                               Increase                                                            provision              impairment provision

Company

Shantou City Huafeng Real Estate Devepment Co., Ltd            16,467,021.02              --                     --       16,467,021.02                              --

Paklid Limited                                                            --              --                     --                     --                           --             201,100.00

Bekaton Property Limited                                                  --              --                     --                     --                           --             906,630.00

Shenzhen Shenfang Department Store Co. Ltd.                               --              --                     --                     --                           --            9,500,000.00

Shantou Fresh Peak Building                                               --              --                     --                     --                           --          58,547,652.25

                                Total                        234,890,567.17               --                     --      234,890,567.17                              --          69,155,382.25




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(3)Investment in associates and joint ventures

                                                                                          Changes in this period

                                                                                                                    Adjustments of
                                                                                                Investment                                Changes
           Name of investee            Opening balance         Add            Reduce                                    other
                                                                                               income under                               of other
                                                           investment        investment                             comprehensive
                                                                                               equity method                               equity
                                                                                                                       income

I.    Joint ventures

Guangdong Huizhou Luofu Hill Mineral
                                                     --                 --                --                   --                    --             --
Water Co., Ltd

Fengkai Xinghua Hotel                                --                 --                --                   --                    --             --

                 Subtotal                            --                 --                --                   --                    --             --

II.   Associates

Shenzhen Runhua Automobile Trading
                                                     --                 --                --                   --                    --             --
Co., Ltd

Shenzhen Ronghua Jidian Co., Ltd            394,209.40                  --                --                   --                    --             --

                 Subtotal                   394,209.40                  --                --                   --                    --             --

                  Total                     394,209.40                  --                --                   --                    --             --

(Continued)

                                                          Changes in this period                                                Closing balance of

             Name of investee               Cash dividend or         Provision for                       Closing balance           impairment
                                                                                           Others
                                             profit declared          impairment                                                    provision

I.    Joint ventures

Guangdong Huizhou Luofu Hill Mineral
                                                               --                    --             --                     --        9,969,206.09
Water Co., Ltd

Fengkai Xinghua Hotel                                          --                    --             --                     --        9,455,465.38

                   Subtotal                                    --                    --             --                     --       19,424,671.47

II.   Associates

Shenzhen Runhua Automobile Trading
                                                               --                    --             --                     --        1,445,425.56
Co., Ltd




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                                                             Changes in this period                                           Closing balance of

             Name of investee                   Cash dividend or         Provision for                      Closing balance      impairment
                                                                                              Others
                                                 profit declared          impairment                                              provision

I.    Joint ventures

Shenzhen Ronghua Jidian Co., Ltd                                   --                    --            --        394,209.40           1,076,954.64

                    Subtotal                                       --                    --            --        394,209.40           2,522,380.20

                     Total                                         --                    --            --        394,209.40       21,947,051.67

17.4 Operating income and costs
(1) Operating income and operating costs

                                          Amount for the current period                                 Amount for the prior period
            Item
                                       Income                       Costs                         Income                         Costs

Main business                          828,375,457.04              125,366,701.31                   229,634,645.39                48,332,118.70

Other operating income                        27,619.07                           --                         47,904.78                           --

            Total                      828,403,076.11              125,366,701.31                   229,682,550.17                48,332,118.70

17.5 Investment income
(1) Details of investment income

                               Item                                     Amount for the current period              Amount for the prior period

Investment income from long-term investments under cost
                                                                                              518,700,131.64
method

Investment income from available-for-sale financial assets
                                                                                                 928,200.00                            827,100.00
during the holding period

Investment income of Financial products                                                        13,359,898.55

                               Total                                                          532,988,230.19                           827,100.00




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XVII. Supplementary Materials
15.1 Breakdown non-recurring profit or loss
                                                                                                                                                                  Amount for the current
                                                                              Items                                                                                                          Statement
                                                                                                                                                                         period

Profit or loss on disposal of non-current assets                                                                                                                               -3,605.82                        --

Tax refunds or reductions with ultra vires approval or without official approval documents                                                                                            --                        --

Government grants recognized in profit or loss (other than grants which are closely related to the Company’s business and are either in fixed amounts or
                                                                                                                                                                                      --                        --
determined under quantitative methods in accordance with the national standard)

                                                                                                                                                                                           Bank structured deposit
Income earned from lending funds to non-financial institutions and recognized in profit or loss                                                                           13,359,898.55
                                                                                                                                                                                             management income

The excess of attributable fair value of identifiable net assets over the consideration paid for the acquisition of subsidiaries, associates and joint ventures                       --                        --

Profit or loss on exchange of non-monetary assets                                                                                                                                     --                        --

Profit or loss on entrusted investments or assets management                                                                                                                          --                        --

Impairment losses on assets due to force majeure events, e.g, natural disasters                                                                                                       --                        --

Profit or loss on debt restructuring                                                                                                                                                  --                        --

Entity restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc.                                                                                  --                        --

Profit or loss attributable to the evidently unfair portion of transaction price, being transacted price in excess of fair transaction price, of a transaction                        --                        --

Net profit or loss of subsidiaries from the beginning of the period up to the business combination date recognized as a result of business combination of
                                                                                                                                                                                      --                        --
enterprises under common control



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                                                                                                                                                                    Amount for the current
                                                                                 Items                                                                                                               Statement
                                                                                                                                                                           period

Profit or loss arising from contingencies other than those related to normal operating business                                                                                         --                             --

Profit or loss on changes in the fair value of held-for-trade financial assets, and held-for-trade financial liabilities and financial assets available-for-sale,
                                                                                                                                                                                        --                             --
other than those used in the effective hedging activities relating to normal operating business

Reversal of provision for account receivables that are tested for impairment losses individually                                                                                        --                             --

Profit or loss on entrusted loans                                                                                                                                                       --                             --

Profit or loss on changes in the fair value of investment properties that are subsequently measured using the fair value model                                                          --                             --

Effects on profit or loss of one-off adjustment to profit or loss for the period according to the period requirements of tax laws and accounting laws and
                                                                                                                                                                                        --                             --
regulations

Custodian fees earned from entrusted operation                                                                                                                                          --                             --

                                                                                                                                                                                             basically the house purchase
Other non-operating income or expenses other than the above                                                                                                                    363,559.11
                                                                                                                                                                                                                 deposit

Other profit or loss that meets the definition of non-recurring profit or loss                                                                                                          --                             --

Subtotal                                                                                                                                                                    13,719,851.84                              --

Tax effects                                                                                                                                                                  3,429,962.96                              --

Effects attributable to minority interests (after tax)                                                                                                                                  --                             --

                                                                                 Total                                                                                      10,289,888.88                              --




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Note:”+” means income or gain and “-” means loss or expense
The Group defines items as non-recurring profit or loss items according to “Information
Disclosure and Presentation Rules for Companies Making Public Offering of Securities
No.1---Non-recurring Profit or Loss”(CSRC No.[2008]43)
18.2 Return rate of net assets and earning per share

                                                           Weighted return rate of    Earning per share (yuan / stock)
                 Profit the in the reporting year
                                                               net assets(%)         Basic EPS               Diluted EPS

    Net profit attributable to common stockholders                         9.81%                 0.3293                  0.3293

   Less: Net profit attributable to common stockholders
                                                                           9.50%                 0.3191                  0.3191
   after deducting non-recurring losses

18.3 Differences between amounts prepared under foreign accounting standards and
China Accounting Standards (CAS)




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                     Part XI Documents Available for Reference

1. The financial statements with the personal signatures and stamps of the Company’s legal
representative, head for financial affairs and head of the financial department; and
2. The originals of all the documents and announcements disclosed by the Company on Securities
Times, China Securities Journal and Ta Kung Pao during the Reporting Period.




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