(000029 SHENSHENFANG A 200029 SHENSHENFANG B)
Shenzhen Special Economic Zone Real Estate & Properties
(Group) Co., Ltd.
Annual Report 2010
(A share)
April 27, 2011
0
Section I Important Notes and Contents
The Board of Directors, the Supervisory Committee as well as directors, supervisors
and senior executives of Shenzhen Special Economic Zone Real Estate & Properties
(Group) Co., Ltd (hereinafter referred to as “the Company”) hereby ensure that there
are no false records, misleading statements, or significant omissions in the materials
of this report, and will assume individual and joint responsibilities concerning the
authenticity, accuracy and integrity of its contents.
None of Directors, Supervisors or Senior Executives can’t confirm the authenticity,
accuracy and integrity of annual reports’ contents or had any objections. All Directors
of the Company attended the Board Meeting.
Chairman of the Board Zhou Jianguo, person in charge of accounting work Chen
Maozheng and person in charge of accounting firm Chen Jincai hereby ensure the
authenticity and integrity of the Financial Report enclosed in the Annual Report.
1
Contents
Section II Company Profile-------------------------------------------------------------------03
Section III Summary of Accounting Highlights and Business Highlights--------------04
Section IV Change of Share Capital and Particulars about Shareholders---------------06
Section V Directors, Supervisors, Senior Executives and Employees-------------------09
Section VI Corporate Governance Structure------------------------------------------------15
Section VII Brief introduction to the Shareholders’ General Meeting------------------27
Section VIII Report of the Board of Directors----------------------------------------------28
Section IX Report of the Supervisory Committee-----------------------------------------44
Section X Significant Events------------------------------------------------------------------46
Section XI Financial Report-------------------------------------------------------------------50
Section XII Documents Available for Reference-------------------------------------------50
2
Section II Company Profile
(I) Legal Name of the Company:
In Chinese: 深圳经济特区房地产（集团）股份有限公司
In English: Shenzhen Special Economic Zone Real Estate & Properties (Group)
Co., Ltd.
Abbreviation in Chinese: 深房集团
Abbreviation in English: SPG
(II) Legal Representative: Zhou Jianguo
(III) Secretary to the Board: Chen Ji
Securities Affairs Representative: Luo Yi
Contact Address: 47/F, SPG Plaza, Renmin South Road, Shenzhen
Tel: (0755) 82293000-4718, 4715
Fax: (0755) 82294024
E-mail: spg@163.net
(IV) Registered Address: 47/F, SPG Plaza, Renmin South Road, Shenzhen
Office Address: 46/F-48/F, SPG Plaza, Renmin South Road, Shenzhen
Postal Code: 518001
E-mail: spg@163.net
Website: http://www.sfjt.com.cn
(V) Newspapers for Information Disclosure Designated by the Company:
Domestic: China Securities Journal
Overseas: Ta Kung Pao
Internet Website Designated by CSRC for Publishing the Annual Report:
http://www.cninfo.com.cn
The Place Where the Annual Report is Prepared and Placed: 47/F, SPG
Plaza, Renmin South Road, Shenzhen
(VI) Stock Exchange Listed with: Shenzhen Stock Exchange
Short Forms of the Stock: SHENSHENFANG A (Stock Code: 000029)
SHENSHENFANG B (Stock Code: 200029)
(VII) Other Information of the Company
Initial Registration Date: Jan. 8, 1980
Registration Place: Shenzhen Administration Bureau for Industry and
Commerce
Registration Code of Corporate Business License: 440301103225878
Registration Code of Taxation: 440301192179585
Accounting Firms Engaged by the Company:
Name: China Audit International Certified Public Accountants LTD.
Address: 8F-C, Shidai Keji Plaza, No.7028, Shennan Av., Futian District,
Shenzhen, China
3
Section III Summary of Accounting Highlights and Business
Highlights
I. Main accounting data of current year
Unit: (RMB) Yuan
Increase
/decrease
2010 2009 2008
year-on-year
(%)
Subsequent to Subsequent to Subsequent to
Before adjustment Before adjustment
adjustment adjustment adjustment
Operating revenue
1,021,055,699.61 750,182,202.47 750,182,202.47 36.11% 706,005,324.41 706,005,324.41
(Yuan)
Net profit (Yuan) 111,916,706.81 36,180,282.30 36,180,282.30 209.33% 41,034,343.76 41,034,343.76
Net profit attributable to
shareholders of listed 84,760,162.75 20,217,383.62 20,199,162.08 319.62% 19,123,787.11 19,128,824.43
company (Yuan)
Net profit attributable to
shareholders of listed
company after deducting 73,404,299.20 13,119,244.63 13,101,023.09 460.29% 21,340,998.68 21,346,036.00
non-recurring gains and
losses (Yuan)
Net cash flow arising
from operating activities -179,051,561.17 -412,125,880.54 -412,125,880.54 56.55% -82,529,495.72 -82,529,495.72
(Yuan)
Increase
/decrease
31 Dec. 2010 31 Dec. 2009 31 Dec. 2008
year-on-year
(%)
Subsequent to Subsequent to Subsequent to
Before adjustment Before adjustment
adjustment adjustment adjustment
Total assets (Yuan) 3,379,090,178.02 3,361,110,324.04 3,361,110,324.04 0.53% 2,265,656,678.91 2,265,656,678.91
Owners’ equity
attributable to
1,427,871,870.03 1,228,651,614.41 1,343,541,177.77 6.28% 1,208,288,874.76 1,323,240,266.47
shareholders of listed
company (Yuan)
Share capital (Share) 1,011,660,000.00 1,011,660,000.00 1,011,660,000.00 0.00% 1,011,660,000.00 1,011,660,000.00
II. Main accounting data and financial indices of the Company over the past
three years
Unit: (RMB) Yuan
Increase
2010 2009 /decrease 2008
year-on-year (%)
Before Subsequent to Subsequent to Before Subsequent to
adjustment adjustment adjustment adjustment adjustment
Basic earnings per share
0.0838 0.0200 0.0200 319.00% 0.0189 0.0189
(Yuan/share)
Diluted earnings per share
0.0838 0.0200 0.0200 319.00% 0.0189 0.0189
(Yuan/share)
Basis earnings per share after
deducting non-recurring
0.0726 0.0130 0.0130 458.46% 0.0211 0.0211
gains and losses
(Yuan/share)
Weighted average return on
6.12% 1.66% 1.51% 4.61% 1.60% 1.46%
equity (%)
Weighted average return on
equity after deducting
5.30% 1.08% 0.99% 4.31% 1.78% 1.63%
non-recurring gains and
losses (%)
4
Net cash flow per share
arising from operating -0.177 -0.41 -0.41 56.83% -0.08 -0.08
activities (Yuan/share)
Increase
31 Dec. 2010 31 Dec. 2009 /decrease 31 Dec. 2008
year-on-year (%)
Before Subsequent to Subsequent to Before Subsequent to
adjustment adjustment adjustment adjustment adjustment
Net assets per share
attributable to shareholders
1.41 1.21 1.33 6.02% 1.19 1.31
of listed companies
(Yuan/share)
Items of non-recurring gains and losses
Unit: (RMB) Yuan
Items Amount Note (if applicable)
Gains and losses from disposal of non-current assets 15,274,959.40
Gains and losses from changes in fair value of transaction financial
assets and transaction financial responsibilities, and investment income
from disposal of transaction financial assets/responsibilities and 307,160.54
financial assets available for sale, excluding valid hedging business
relating to normal operation.
Other operating income and expense -776,320.25
Impact on income tax -3,449,936.14
Total 11,355,863.55 -
5
Section IV Change of Share Capital and Particulars about
Shareholders
I. Statement on changes of share capital
Unit: Share
Before the change Increase/decrease (+/-) After the change
Capitalization
Issuance of Bonus
Amount Proportion of public Others Subtotal Amount Proportion
new share shares
reserve
I. Shares subject to
trading moratorium
0 0.00% 0 0 0 0 0 0 0.00%
1. Shares held by
state
0 0.00% 0 0 0 0 0 0 0.00%
2. Shares held by
state-owned 0 0.00% 0 0 0 0 0 0 0.00%
corporation
3. Shares held by
domestic investors
0 0.00% 0 0 0 0 0 0 0.00%
Including: Shares
held by domestic
non-state-owned
0 0.00% 0 0 0 0 0 0.00%
corporation
Shares held by
domestic natural 0 0.00% 0 0 0 0 0 0 0.00%
person
4. Shares held by
foreign investors
0 0.00% 0 0 0 0 0 0.00%
Including: shares
held by foreign 0 0.00% 0 0 0 0 0 0 0.00%
corporation
Shares held by
foreign natural 0 0.00% 0 0 0 0 0 0 0.00%
person
5. Shares held by
senior executives
0 0.00% 0 0 0 0 0 0 0.00%
II. Shares not subject
1,011,660
to trading 100.00% 0 0 0 0 0 1,011,660,000 100.00%
moratorium ,000
1. RMB ordinary 891,660,0
shares
88.14% 0 0 0 0 0 891,660,000 88.14%
00
2. Domestically listed 120,000,0
foreign shares
11.86% 0 0 0 0 0 120,000,000 11.86%
00
3. Overseas listed
foreign shares
0 0.00% 0 0 0 0 0 0 0.00%
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
1,011,660
III. Total shares 100.00% 0 0 0 0 0 1,011,660,000 100.00%
,000
Change of shares subject to moratorium
Unit: Share
Shares subject to Shares subject to
Name of Shares released in Shares increased
moratorium at the moratorium at the Reason Date of release
shareholder current year in current year
year-begin year-end
Total 0 0 0 0 － －
II. Issuance and listing of shares
1. Over the past three years as at the end of the reporting period, the Company never
6
issued shares or derivative securities.
2. On Feb. 26, 2007, 50,583,000 shares subject to moratorium held by Shenzhen
Investment Holding Co., Ltd., the only shareholder holding non-tradable shares, was
freed from the trading moratorium, taking up 5% of the total share capital of the
Company, 7.52% of the total shares subject to moratorium, as well as 14.93% of total
shares not subject to moratorium; on Oct. 13, 2008, Shenzhen Investment Holding Co.,
Ltd released 50,583,000 shares subject to trading moratorium, taking up 5% of total
capital share, 8.13% of total shares subject to trading moratorium, as well as 12.99%
of total shares not subject to moratorium. On Mar. 26, 2009, all shares of the
Company were released from trading moratorium and listed for trade.
3. The Company’s inner employees’ shares were listed for trading through
approval on Aug. 26, 1994. At present, the Company has no inner employees’
shares.
III. About shareholders (As to 31 Dec. 2010)
1. Number of shareholders and shares held by shareholders
Unit: Share
Total number of shareholders 95,338
Particulars about shares held by the top ten shareholders
Nature of Propo Total Shares subject to Share pledged or
Name of shareholders
trading moratorium held frozen
shareholders rtion shares held
Shenzhen Investment Holdings
State-owned corporation 63.55% 642,884,262 0 0
Co., Ltd.
China Power Investment
State-owned corporation 0.33% 3,336,701 0 0
Corporation
Wang Zhongming Domestic natural person 0.11% 1,095,808 0 0
Wu Haoyuan Domestic natural person 0.11% 1,092,100 0 0
Guan Jinfeng Domestic natural person 0.10% 1,062,220 0 0
Xue Haoyuan Domestic natural person 0.08% 809,856 0 0
Xu Taiying Domestic natural person 0.08% 780,000 0 0
Zhang Rui Domestic natural person 0.07% 730,700 0 0
CHU KOON YUK Domestic natural person 0.07% 720,000 0 0
Xia Jin Domestic natural person 0.07% 718,700 0 0
Particulars about shares held by the top ten shareholders holding tradable shares
Number of shares not subject to
Name of shareholders Type of share
trading moratorium held
Shenzhen Investment Holdings Co., Ltd. 642,884,262 RMB ordinary share
China Power Investment Corporation 3,336,701 RMB ordinary share
Wang Zhongming 1,095,808 Domestically listed foreign share
Wu Haoyuan 1,092,100 Domestically listed foreign share
Guan Jinfeng 1,062,220 RMB ordinary share
Xue Haoyuan 809,856 RMB ordinary share
Xu Taiying 780,000 RMB ordinary share
Zhang Rui 730,700 RMB ordinary share
CHU KOON YUK 720,000 Domestically listed foreign share
Xia Jin 718,700 RMB ordinary share
Explanation on associated
relationship or
Unknown
action-in-concert among the
above shareholders
2. Controlling shareholder of the Company: Shenzhen Investment Holdings Co., Ltd
is a sole state-funded company limited, who was founded on Oct. 13, 2004 with a
registered capital of RMB 5.6 billion as well as legal representative Fan Mingchun. Its
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business scope included: providing guarantees for municipal state-owned enterprises,
management of state-owned equity, and assets restructure reformation, capital
operation and equity investment of enterprises etc. The ultimate controller of the
Company was Shenzhen State-owned Assets Supervision and Administration Bureau,
which was located at Investment Building, Shennan Av., Futian District, Shenzhen, as
well as the post code 518029.
The property right and controlling relationship between the Company and the actual
controller are as follows:
Shenzhen State-owned Assets Supervision
and Administration Bureau
Shenzhen Investment Holdings Co., Ltd.
The Company
8
Section V Directors, Supervisors, Senior Executives and Employees
I. Basic information of directors, supervisors and senior executives
Whether
draw
Payment
payment
drawn from
Number of Number of from
Beginning Reason the Company
Ending date shares shares sharehold
Name Title Sex Age date of office for in the
of office term held at the held at the er
term change Report
year-begin year-end company
period
or other
(RMB’0000)
related
units
Zhou Chairman of
Male 56 11 Feb. 2009 10 Feb. 2012 0 0 0.00 Yes
Jianguo the Board
Director and
Chen
General Male 47 20 Oct. 2009 19 Oct. 2012 0 0 46.08 No
Maozheng
Manager
Chairman of
Xu the
Male 59 11 Feb. 2009 10 Feb. 2012 0 0 27.90 No
Zhenhan Supervisory
Committee
Deng
Director Male 45 11 Feb. 2009 10 Feb. 2012 0 0 38.44 No
Kangcheng
Wen Li Director Female 41 18 Sep. 2006 17 Sep. 2012 0 0 0.00 Yes
Jiang Lihua Director Female 47 11 Feb. 2009 10 Feb. 2012 0 0 0.00 Yes
Zhang Lei Director Male 43 15 Oct. 2010 14 Oct. 2013 0 0 4.20 No
Zhou Independent
Male 41 26 Feb. 2008 25 Feb. 2014 0 0 3.60 No
Hanjun director
Liu Independent
Male 47 15 Oct. 2010 14 Oct. 2013 0 0 0.90 No
Quanmin director
Song Independent
Make 43 15 Oct. 2010 14 Oct. 2013 0 0 0.90 No
Botong director
Wang
Supervisor Female 49 11 Feb.2009 10 Feb. 2012 0 0 0.00 Yes
Xiuyan
Xiong
Supervisor Male 53 28 Jun. 2004 27 Jun. 2013 0 0 21.58 No
Xingnong
Shi
Supervisor Male 55 11 Feb. 2009 10 Feb. 2012 0 0 28.63 No
Chunrong
Feng
Supervisor Male 40 22 Jul. 2010 21 Jul. 2013 0 0 25.51 No
Hongwei
Deputy
Yang
General Male 38 21 Aug. 2006 10 Feb. 2012 0 0 38.44 No
Jiayong
Manager
Deputy
Teng
General Male 54 1 Dec. 2009 10 Feb. 2012 0 0 38.44 No
Xianyou
Manager
Deputy
Nie Liming General Male 40 1 Dec. 2009 10 Feb. 2012 0 0 38.44 No
Manager
Secretary to
Chen Ji Male 39 28 Jan. 2009 10 Feb. 2012 0 0 28.63 No
the Board
Xia
Director Female 48 11 Feb. 2009 15 Oct. 2012 0 0 0.00 Yes
Guiying
Zong Independent
Male 69 28 Jun. 2004 15 Oct. 2010 0 0 2.70 No
Dechun director
Independent
Hou Liying Female 56 28 Jun. 2004 15 Oct. 2010 0 0 2.70 No
director
Zhang Xuxi Supervisor Male 34 11 Apr. 2006 22 Jul. 2010d 0 0 8.55 No
Total - - - - - 0 0 - 355.64 -
Note: Director Jiang Lihua, Wen Li, and Supervisor Wang Xiuyan held positions in
shareholding units. For their positions and office term, please refer to following text.
9
II. Main experiences of current directors, supervisors and senior executives
1. Zhou Jianguo was once: Person-in-charge of the Financial Teaching and Research
Office, Vice Director of the Accounting Division and Chief of the Adult Education
Division of Jiangxi University of Finance and Economics; Vice GM of Shenzhen
Zhonglvxin Industry Co., Ltd.; Chief of the Auditing Department, Chief of the
Planning and Finance Department and President Assistant of Shenzhen Trading
Investment Holding Co., Ltd., doubling as Chairman of the Board and Secretary of
the Party Committee of Shenzhen Commercial-control Industries Co., Ltd.; Chief of
the Planning and Finance Department and Vice GM of Shenzhen Investment Holdings
Co., Ltd.. He is now Vice GM of Shenzhen Investment Holdings Co., Ltd., as well as
Secretary of the Party Committee and Chairman of the Board of Shenzhen Special
Economic Zone Real Estate & Properties (Group) Co., Ltd.
2. Mr. Chen Maozheng once was: Manager Assistant of Shenzhen Guanghua Hollow
Glass Engineering Co., Ltd..; GM of Special Economic Zone Department of
Shenzhen SDG Information Co., Ltd.; Chairman of the Board of Directors of
Shenzhen Special Economic Zone Xinhua Town Co., Ltd.; Vice Manager of Shenzhen
Residence Project Development Co., Ltd.; Manager of Shenzhen Chengjian Industrial
Development Co., Ltd.; Vice GM of Shenzhen Aokangde Petroleum Trading Group
Co., Ltd.; Vice GM, Vice Secretary of the Party Committee, Director GM of Shenzhen
City Construction Development (Group) Co.. And he is now Vice Secretary of the
Party Committee and director as well as GM of Shenzhen Special Economic Zone
Real Estate & Properties (Group) Co., Ltd.
3. Xu Zhenhan: once had been commander-level secretary in charge, 802 Regiment,
Capital Construction Engineer Corps; clerk, Vice Secretary of Discipline Inspection
Committee, director of the CPC Office, Vice Secretary of Discipline Inspection
Committee, Chairman of Supervisory Committee in Shenzhen Mechanical Equipment
Installation Company; Vice Secretary of Discipline Inspection Committee, Director of
Supervision Office of Shenzhen Jianan (Group) Co., Ltd.. Vice Secretary in Discipline
Inspection Committee of Shenzhen Investment Holdings Co., Ltd. From Jan. 2003 to
Feb. 2009, he was director of the Company and has been Chairman of the Supervisory
Committee since Feb. 2009.
4. Deng Kangcheng: he was once technician of Shenzhen Luohu Material Trading
Center; Assistant Engineer, deputy section chief and section chief in Shenzhen
Construction Earthwork Mechanical Engineering Company; supervisor, vice director
and director in Discipline Inspection and Supervision Office of Shenzhen
Construction Investment Holdings Corporation; he acted as deputy director, director
of the Office of Shenzhen Investment Holdings Co., Ltd. From Jun. 2004 to Feb. 2009,
he acted as supervisor of the Company and acts as director, Vice Secretary of CPC
and Secretary in Discipline Inspection Committee of the Company since Feb. 2009.
5. Zhang Lei: he was once Vice Chief of CNAO's Shenzhen Resident Office, Vice
GM and GM of Guotou SAST Laser Co., Ltd., Deputy Chairman of Shenzhen Shenfei
Technology Co., Ltd., and CFO and Secretary to the Board of SDIC ZHONGLU
FRUIT Co., Ltd. In Feb. 2010, he was engaged as Director and CFO of the Company.
6. Zhou Hanjun is a certified public accountant and certified tax agent. He once
10
worked as accountant and Deputy Section Chief of Financial Section in the Second
People’s Hospital of Neijiang, Sichuan; Chief accountant in Chongqing Metro Group
Co., Ltd; auditor in Shenzhen East Sea Certified Public Accountants. Now he was
partner of Shenzhen Guangxin Certified Public Accountants and Shenzhen Junxin
Certified Tax Agent Co., Ltd. He has been independent director of the Company since
Feb. 2008.
7. Liu Quanmin: Second-grade lawyer, Bachelor of Law, Master of Science. He ever
been Vice Department GM, Department GM of Shaanxi China Travel Service,
full-time lawyer of Shaanxi Hengda Law Firm, a special contributor of Construction
and Architecture under Ministry of Construction of the People's Republic of China,
special lawyer on real property for Shenzhen Business Newspaper Office, committee
member of Securities & futures law service committee of Shenzhen Lawyers’
Association, partner and licensed lawyer of Guangdong Shenyatai Law Firm. He has
acting as Independent Director of the Company in Oct. 2010.
8. Song Botong: associate professor majored in city planning, lecturer of
constructional engineering, masters’ tutor on management science and engineering
major. He ever took posts of Deputy Chief of Civil Engineering Department in
College of Architecture and Civil Engineering and Chairman of Labor Union of
Shenzhen University, PhD candidate of Management Science and Engineering in
School of Economics management of Tongji University, conducted in-service research
in postdoctoral research institute on management science and engineering Now he
acts as Secretary of CPC in College of Architecture and Civil Engineering of
Shenzhen University, Standing Deputy Director of Research Center for Real Estate of
Shenzhen University. He has been acting as Independent Director of the Company
since Oct. 2010.
9. Wen Li once was: an engineer in the Real Estate Development Department of
Shenzhen Zhenye (Group) Co., Ltd.; GM Assistant, Project Manager and Manager of
the Market Planning Department of Fantasia Investment Development Co., Ltd.; Vice
Chief of the Investment Department of Shenzhen Investment Holdings Co., Ltd. She
has been acting as director of the Company since Feb. 2009.
10. Jiang Lihua once was: an accountant of Zhejiang Lanxi Textile Machinery Factory;
an accountant of Shenzhen Construction Machinery Power Company; Assistant
Accountant of the Finance Department of Shenzhen Construction Group Company; an
accountant, senior accountant and Manager Assistant of the Finance Department of
Shenzhen Construction Investment Holdings Company; Vice Manager, Manager and
Vice Chief of the Finance Department of Shenzhen Investment Holdings Co., Ltd. She
has been acting as director of the Company since Feb. 2009.
11. Wang Xiuyan once was: Deputy Chief of Property Rights Representative Business
Department, Deputy Office Chief and Chief of the Supervisory Committee, Business
Manager and Senior Business Manager of the Audit Department of Shenzhen
Investment Management Company; Audit Project Manager of the Audit Department
of Shenzhen Investment Holdings Co., Ltd. She has been acting as director of the
Company since Feb. 2009.
12. Xiong Xingnong: trainee in Party school of Guangzhou Railway Administration;
11
office secretary, consultant, section chief in office of Guangzhou Railway
Administration; office director; Director of Office, Secretary of the Supervisory
Committee and Deputy Manager of Audit Supervisory Department of Shenzhen
Special Economic Zone Real Estate & Properties (Group) Co., Ltd.. Since Jun. 2004,
he has been taking the post of Supervisor of the Company.
13. Shi Chunrong ever took the posts of clerk, vice secretary and secretary of Youth
League Committee in Liannan County Science and Technology Commission, director
to Office for Economic Restructuring of Liannan County, director to foreign economic
and trade commission of Liannan County; secretary of CPC General Branch of
Liannan County, of director to executive office and assistant GM in Shenzhen
Non-Staple Foods Corporation; of vice secretary and secretary of CPC General
Branch, deputy GM and director in Shenzhen Lianhua Enterprise Co., Ltd.; of vice
secretary of discipline inspection commission, director to Office for Discipline
Supervision & Investigation, manager of Property Operation Department; of director
to work departments of the Party Committee and discipline inspection commission in
SPG. Now he acts as vice secretary of the discipline inspection commission, member
of CPC Committee, director to Party-Masses Work Department and vice chairman of
Labor Union in the Company. He was elected as staff supervisor in 2009.
14. Feng Hongwei, senior accountant. He ever took posts of Vice Director of
Secretary Section of the Board of Directors, representative for securities affairs, and
now he acts as manager of Audit Supervisory Department of the Company. Since Jun.
2010, he has been acting as Supervisor of the Company.
15. Yang Jiayong ever took the posts of Assistant Economist, Assistant of Manager of
HR Dept. in Shenzhen Tonge (Group) Co., Ltd.; Director of the Office, Secretary of
Party General Branch, Manager of HR Dept. and Assistant GM in Shenzhen Cities
Construction Investment Development Corporation; Director of the Office and
Assistant GM in SPG; GM and Secretary of Party General Branch in Shenzhen SPG
Tariff Free Trade Co., Ltd. Since Jul. 2006, he has been acting as the post of Deputy
GM of the Company.
16. Teng Xianyou once was: Section Chief and Deputy Head of the No.2 Construction
Brigade of Shenzhen Municipal Engineering Corp.; Vice Manager and Manager of the
No.2 branch company of Shenzhen Municipal Engineering Corp.; GM Assistant and
Vice GM of Shenzhen Tonge Group Co., Ltd., doubling as GM of Shenzhen
Municipal Engineering Corp. And he has been Vice GM of the Company since Dec.
2009.
17. Nie Liming once was: an assistant engineer, an engineer, a vice division manager,
a division manager, a branch company manager and a factory chief of Shenzhen
Kingon (Group) Co., Ltd.; Chief of GM Office (Compliant Letter and Request
Handling Office), Office Chief for the Board of Directors of Shenzhen City
Construction Development (Group) Co.; and Office Chief and Manager of the Project
Department of Shenzhen Special Economic Zone Real Estate & Properties (Group)
Co., Ltd.. And he has been Vice GM of the Company since Dec. 2009.
18. Chen Ji once was clerk of the Comprehensive Office in Tonge Truck
Transportation Company, secretary of the CPC Office in Shenzhen Construction
12
Investment Holdings Corporation and director of the CPC Office of Shenzhen Urban
Construction Investment Development Company; since Dec. 2002, he takes the posts
of Secretary to the Board, Director of the Board Office of the Company.
III. Annual remuneration
Annual payment system had been introduced into the rewards for the proprietors,
whose annual remuneration level and distribution regulation was implemented as
follows: the basic payment for Chairman of the Board, GM and Chairman of
Supervisory Committee was RMB 20,000 per month, the basic payment of the
remuneration level and distribution regulation of deputy leaders of the Group
Company was RMB 15,000 per month and performance annual remuneration and
encourage annual remuneration would be distributed after appraisal.
Chairman of the Board of Directors Zhou Jianguo, directors Xia Guiying, Jiang Lihua
and Wen Li, as well the supervisor of the Company Wang Xiuyan didn’t draw their
payment from the Company.
Allowance for each independent director for the year 2010 was RMB 36,000 (before
tax), Independent Directors with changes in the reporting period would draw
allowance monthly and they received no other rewards besides this from the
Company.
IV. About resign, engagement and dismissal
1. As office term of Independent Directors Ms. Hou Liying, Mr. Zhong Dechun came
to expiration of six years that through review and approval on Shareholders’ General
Meeting for Y2009 on 28 Jun. 2010, the Company approved for the resignation of Ms.
Hou Liying and Mr. Zhong Dechun from Independent Directors; while the resignation
of them would lead to the proportion of Independent Directors in the Company lower
than the lowest legal requirements, then their resignation report come into effective
after new Independent Directors are elected. On Provisional Shareholders’ General
Meeting held on 15 Oct. 2010, Mr. Liu Quanming and Mr. Song Botong were elected
as Independent Directors of the Company.
2. As Director Ms. Xia Guiying resigned from her post as Director of the Company
due to job change, with review and approval by the Provisional Shareholders’ General
Meeting held on 15 Oct. 2010, the Company approved to elect Mr. Zhang Lei as
Director of the Company.
3. With review and approval by Special Board Meeting held on 28 Oct. 2010, the
Company approved to elect Mr. Zhang Lei as CFO of the Company.
4. Supervisor Mr. Zhang Xuxi of the Company applied to resign from his post as
Supervisor of the Company due to job change. With review and approval by the Staff
Congress held on 22 Jul. 2010, the Company elected Mr. Feng Hongwei as Worker
Supervisor of the Company.
V. Number of employees, professional composition, education background and
retired employees
At the 31 Dec. 2010, the Company had totally 1,862 employees, of which 1,175
13
production personnel, 509 technicians, 56 sales personnel, 55 financial personnel and
67 administrative personnel. Among them, 161 personnel are undergraduates or above,
214 personnel are holder of associate degree, 198 graduated from technical secondary
school, 1289 from senior high school or below. The Company had 371 retirees.
14
Section VI Corporate Governance Structure
I. Actuality of governance corporate structure of the Company
In the reporting period, the Company strictly accorded with requirements of Company
Law, Securities Law, Administrative Rules for Listed Companies and other laws and
statutes, continuously perfected its corporate governance, and standardized its
operation. The actual situation of corporate governance was in line with the
requirements of the relevant normative documents. The operating mechanism, of
which the Board of Directors made decisions scientifically, the management team
took powerful execution, and the Supervisory Committee implemented effective
powerful supervision, was formed.
(I) Preparations and holding of the shareholders’ general meeting and disclosure of
resolution of the meetings were normatively in line with Articles of Association and
Rules for Procedure of the Shareholders’ General Meeting; all shareholders were on
an equal position and could fully exercise their legal rights.
(II) Directors and the Board of Directors: power of decision-making was exercised
normally, preparations, holding and disclosure of resolution of the Board sessions
were normatively in line with the Articles of Association and Rules of Procedure for
the Board of Directors; Special committees concerning strategy, audit, nomination,
remuneration and appraisal under the Board can operate positively and effectively; All
directors performed their obligations in an honest and diligence manner. In 2010, the
post alteration of two independent directors, of whom the office terms expired, was
finished. The new independent directors are professionals respectively in the field of
real estates and law. They perfected professional knowledge structure of independent
directors and provided powerful guarantee for scientific decision-making of the
Board.
(III) Supervisors and the Supervisory Committee: structure of the Supervisory
Committee was reasonable. The Supervisory Committee conducted the supervision
and inspection for the significant events of the Company strictly in accordance with
the Rules for Procedure of the Supervisory Committee, and exercised its supervision
right effectively and brought its supervision function into full play.
(IV) Manager level: the manager level of the Company was fully responsible for the
production and management of the Company, other Senior Executives performed their
obligations in an honest and diligence manner. The manager level of the Company
implemented the resolution of the Board with efficient supervision and control. The
selection and engagement of the CFO was finished in 2010.
(V) Information disclosures and transparency: the Board of Directors authentically,
correctly, completely, timely, and fairly developed information disclosure strictly
according to relevant laws and statutes as well as the Articles of Association of the
Company. There was neither correction on serious accounting mistake, nor
supplement of serious omissions or correction of performance forecast.
II. Duty performance of independent directors
(I) Presence of independent director at the Board Sessions:
15
Times of Times of absent
Times of sessions Times of attendance in Times of
Name attendance in from on-the-spot
should attended person entrusted voting
communication meeting
Zhou Hanjun 11 6 5 0 0
Liu Quanmin 3 2 1 0 0
Song Botong 3 2 1 0 0
(II) Duty performance of independent directors
In the report period, independent directors of the Company was in line with
requirements in laws and statutes as well as Articles of Association, earnestly
performed duties, analyzed professionally and expressed independent opinion
cautiously when the Company made significant decision-making, and played an
important role in normative operation. In 2010, independent directors took part in
inspection on development projects of the Company, executed field learning and
inquiry on Guangming and Longgang projects of the Company, and proposed plenty
of beneficial suggestions for project development.
III. The Company was independent from the controlling shareholders in business,
personnel, assets, organization and financing of the Company, possessed
independent operation capabilities facing market.
(I) In respect of business, the Company possessed independent production, supply and
sales system;
(II) In respect of personnel, the Company was absolutely independent in management
of labor, personnel and salaries from the controlling shareholders. All the senior
executives of the Company took no office title concurrently and drew no
remunerations from the Shareholder Company.
(III) In respect of assets, the Company possessed independent and integrated assets
and the property of the Company is transparent.
(IV) In respect of organization, the Board of Directors and the Supervisory Committee
operated independently. There existed no superior-inferior relationship between the
controlling shareholder and its function department and the Company.
(V) In respect of finance, the Company has independent financial department,
independently accounted and paid taxes according to the law. The Company
established a complete accounting system, finacial accountng system and financial
administrative systems. The Company opened independent bank accounts.
IV. Establishment and perfecting of internal control
(I) Summary on internal control
In 2010, according to provisions in the Company Law, Securities Law, Rules for
Listing Shares in Shenzhen Stock Exchange and Articles of Association, the Company
basically set up a set of completed internal control system covering governance level
to all business process, strengthened management on internal control and risks, and
formulated programming and work plan on overall risks management system. The
Company stuck to being guided by risks. The internal system covered regulation and
control over headquarters of the Company, the subordinate local enterprises, and the
subordinate enterprises in different places. The Shareholders’ Meeting, the Board of
Directors, the Supervisory Committee, and the Management Team of the Company
16
were under normal operation. In the reporting period, the Company adjusted and
perfected work institutions such as the strategy committee, the nomination committee,
the remuneration committee, and the audit committee under the Board. Management
staff of the Company formed decision-making mechanism of “reasonable division of
labor, definite authorization, clear responsibility and right and scientific management”
with proper decision-making, execution, and supervision. The Company started the
foundation of information integration concerning real estates, cleared up and perfected
regulation and control system, as well as the business process, and implemented
overall standardization and optimization over processes of production and operation,
investment management, risk control, and information disclosure. The internal control
was effectively executed.
(II) Internal control
1. Corporate governance
In accordance with the Company Law, the Articles of Association as well as other
regulations on normative operation for listed companies, the Shareholders’ Meeting,
the Board of Directors and the Supervisory Committee as well as the management
team set up relevant systems and operating process in decision-making,
implementation and supervision. There are 9 members of the Board of Directors, of
which 3 ones are independent directors operating according to Rules for Procedure of
the Board of Directors and responsible for the Shareholders’ Meeting; there are 5
supervisors, who operates according to Rules for Procedure of the Supervisory
Committee and are responsible for shareholders’ meeting; 4 managers executes
resolution of the Board Session and operates according to Work Rules for General
Manager. There are Strategy Committee, Nomination Committee, Remuneration &
Appraisal Committee and the Audit Committee under the Board of Directors, and all
committees formulated and executed special rules and supported decision-making of
the Board of Directors; of which the Audit Committee was responsible for execution
and supervision on internal control. In 2010, the Company seriously carried out Rules
for Procedure of the Board of Directors, Rules for Procedure of the Supervisory
Committee, and Work Rules for General Manager. The Company prepared and
finished Collection of Governance Systems of the Company, collected and cleared up
20 systems concerning standard governance of listed companies, strictly executed
those systems, further cleared accountability boundary among the Board of Directors,
the Supervisory Committee, and the Management team, formed operating mechanism
of “the Board of Directors makes decision, the Management Team executes and the
Supervisory Committee supervises”, and realized democratic discussion, independent
responsibility, normative operation and harmonious cooperation.
2. Organizational structure
17
Audit Committee
Shareholders’ General Meeting
Strategy Committee
The Supervisory Committee The Board of Directors
Nomination Committee
Management Team
Remuneration & Appraisal Committee
Expert review Team
Secretariat of the Board
Office
Party-masses Work Department
Human Resource Department
Planning Finance Department
Audit Supervisor Department
Enterprise Investment Management Dept
Planning and Marketing Department
Cost Control Department
Engineering Technology Department
Property Management Department
Guangming Project Department
Shenzhen Petrel Hotel Co., Ltd. (100%)
Shenzhen Property Management Co., Ltd. (100%)
Shenzhen Zhentong Engineering Co., Ltd. (100%)
Shenzhen Huazhan Construction Supervision Co., Ltd. (100%)
Shenzhen SPG Mini-bus Rent Co., Ltd. (100%)
Shenzhen SPG Longgang Development Co., Ltd (100%)
Shenzhen Special Economic Zone Real Estate (Group) Guangzhou Real Estate Co., Ltd (100%)
Xin Feng Property Co., Ltd (100%)
Great Wall Estate Co., Inc (70%)
Xin Feng Enterprise Co., Ltd. (100%)
Joint Stock Enterprises
The Board of the Company accounts for establishment and implementation of internal.
The separation of decision-making, execution, and supervision forms checks and
balances among them. The Audit Committee under the Board accounts for auditing
18
internal control and supervising the implementation and self-assessment of internal
control. Main business management modes are headquarters, functional departments,
business department, project department and subsidiaries. Business development of
headquarter of the Company is supported by planning and marketing department, cost
control department and project management department, charged by project
department and subsidiaries, and project departments in other places operate with
combination of independent corporation.
3. Internal audit
In 2010, the Company revised Provisional Rules of Internal Audit, further perfecting
the systems. The Company set special internal audit institution – the audit and
supervision department, accounting for supervision audit, job qualification audit, the t
of annual operation indexes, as well as the audit of decision-making management and
operation. There are 4 working staffs in the audit and supervision department, and 3 of
them are professional auditors with abundant experience in audit of finance and
engineering. In the reporting period, the internal audit institution strengthened the
audit supervision, finished the audit and verification on business budget, performance
appraisal, and remuneration management of Y2009 of 8 units of the Company in 2010,
finished the audit for subordinate companies, namely the audit on incomes and
expenses of Shenzhen Property Management Co., Ltd., the audit on overall operation
of Shenzhen Zhentong Engineering Co., Ltd. and Shenzhen Huazhan Construction
Supervision Co., Ltd., finished the post-project assessment on Xinghu No.3 Building,
as well as the checkup and inspection on social insurance and annuity of Y2009 of the
subordinate enterprises, executed powerful inspection on the performance of
resolutions implemented by departments and enterprises, and promoted the
standardization of work on all parts.
4. Human resource
The Company valued the establishment and accumulation of human resources. In the
reporting period, the Company revised Provisional Method of Human Resource
Management, focused on building professional organizations and teams, reformed and
perfected the performance appraisal system, and promoted the performance culture. In
order to further optimize the remuneration structure, fully play the incentive role of
remuneration, the Company, in accordance with the current remuneration
management system and with combination of implementation experience, reviewed
and approved the Plan on Remuneration Adjustment for Employees in the Group’s
Headquarters, making the employee remuneration more reasonable, reviewed and
approved the Remuneration Management Method of Subordinate Enterprises, further
perfecting the remuneration management system of subordinate enterprises, and at the
same time revised and perfected the Management Method of Performance Appraisal
for Staffs in Functional and Development Management Departments in the
Company’s Headquarters and the Management Method of Performance Appraisal for
Staffs in Business and Development Departments of the Company’s Headquarters
according to the actual implementation of performance appraisal. The Company built
teams of professional talents by combing talent introduction and training. In April, the
Company carried out open recruitment in and out of the system for job vacancies.
19
After series of written tests and interviews, the Company finally selected 9 technical
professional in electric, civil engineering, marketing and planning, water treatment,
and law from more than 600 candidates for related departments, and the structure of
talent teams was optimized as a result. In November, the Company set up a new round
of talents introduction with larger scale, and powerful motivation would be thus
injected to the establishment of professionalization of talent teams. While
strengthening the force of talents introduction, the Company sustainably enhanced
professional knowledge training for working staffs, which, to some extent, renovated
the knowledge reserve of employees and optimized knowledge structure. The
Company also engaged experts in real estate industry as project consultants, who
separately gave targeted guidance to each development project and regularly provided
professional training for development management staffs, engineering technical staffs,
and other relevant auxiliary staffs.
5. Enterprise culture
The Company proposed consciousness of “Professional, Dedication, Unity and
probity”, made the establishment of enterprise culture involve in routine operation
management and activity carriers, carried forward performance culture and excellent
culture of keeping improving, and paid attention to education on concept and
professional training; the Company improved performance management, organized to
revise measures for performance appraisal, perfected estimation index, optimized
appraisal process, focused on cooperation among departments staffs, as well as team
spirit, harmonize interests among individual, team and the Company, appraisal
performance with key events and operating index, linked performance and
remuneration up with engagement of staff, proposed excellent staff with good
performance, and encouraged to do more useful things successfully; the Company
paid attention to introduction, training and engagement of talents, clearly stipulated
principle of both ability and moral integrity, diligent and honest & upright, recognized
by mass, paying attention to actuality and choosing excellent staff, insisted public
engagement.
6. Important activities of internal control
(1) Sustainably promoting the establishment of internal regulation and control system
of the Company. In 2010, the Company revised and perfected 21 rules and systems for
all departments, promulgated and implemented 16 rules and systems, and finished the
preparation of Collection of Rules and Systems of Shenzhen Special Economic Zone
Real Estate & Properties (Group) Co., Ltd. (II), which initially formed a relatively
perfect system with Collection of Rules and Systems of Shenzhen Special Economic
Zone Real Estate & Properties (Group) Co., Ltd. (I). The Company implemented
management and control on financial management, internal audit, human resource,
supervision and management on property right, overall budget, investment and
actualization of projects, strengthened management, inspection, guidance, and
supervision on subsidiary companies, and took overall appraisal in line with the
document of target-liability. At the same time, in terms of the implementation of the
systems, the Company regularly took overall inspection on execution of the systems,
combined the rules and systems with the Office Automation System, made all systems
20
settled in daily work process, and implemented whole-process regulation and control
without any gap.
(2) Control on authorization. The Company executed authorization of operating and
managing business according to grade, strictly carried out 179 key businesses listed in
the Statement on Authority of Examination and Approval, defined decision-making
procedures, handling process and authority of examination and approval, confirmed
responsibilities and rights of sponsors, checker and authorizer for each business,
prepared with tables to make management staffs and employees be clear at a glance,
and standardized and streamlined it by upgrade of information system, which was not
only good for improvement of efficiency, but also public and transparence, so was
easy to supervise and account responsibility.
(3) Risk control and management. In 2010, the Company concentrated on establishing
the organized functional system of overall risk control of the Company, and built an
organized functional system of overall risk control anticipated by all management
teams under the leadership of the Company Board. The Company prepared
Programming and Work Plan on Establishment of Overall Risk Management System
of and Special Management Method of the Warning System for Finance Risks, and
prepared work plan of risk management of Y2010. The Company organized,
coordinated, and guided all departments of the Company’s headquarters to conduct
risk identification and assessment, and prepared risk assessment report. The enterprise
investment management department took the lead in executing strategies and solution
plans of risk management, and supervised and inspected all departments to implement
and execute relevant solutions; The enterprise investment management department
and the audit and supervision department took the lead in uniformly guiding the
conduction of overall risk management of subordinate enterprises, concerning system
establishment, risk assessment, as well as preparation of risk management strategy
and risk management solutions, and organized relevant risk management staffs to take
part in risk management training classes. The leading group of risk management, of
which members included management staffs of the Company, led its members to
conduct overall risk management work. People respectively in charge of enterprise
investment management department, audit and supervision department, finance
planning department, cost control department, engineering management department,
planning and marketing department, property management department, and the
project department implemented all work concerning overall risk management of the
Company in accordance with relevant rules and measures stipulated by the leading
group of risk management. Specific duties included: ①Implementing preparation of
systems and documents related to risk management of the Company according to the
spirit of establishment plan of overall risk management of the Company and the
arrangement thereof; ②Conducting risk identification and assessment in their
dominated departments, preparing risk assessment report, drafting risk management
strategies and risk management solutions, implementing and executing solutions;
③Under the guidance of the leading group of risk management, conducting overall
risk management, which included system establishment, risk assessment, as well as
the preparation of risk management strategies and solutions. The functional
21
department of risk management was in the charge of the enterprise investment
management department and the audit and supervision department, both of which
accounted for specified operating events of overall risk management of the Company,
urged departments and subordinate enterprises to execute risk assessment, prepare risk
management strategies and solutions, and collected, preliminarily audited, and
recorded solutions of significant risk management. Other departments of the
Company were responsible for assisting the enterprise investment department and the
audit and supervision department to implement preparation of rules and documents
related to risk management of the Company and execute the annual work plan of risk
management of the Company.
(4) Audit supervision and examination. The Company emphasized on “supervision on
10 aspects and audit on 6 aspects”. In the reporting period, the Company strengthened
supervision on management of the Company, conducted audit on operation of the
subsidiary in Shantou for the year starting from its establishment; reinforced
supervision on enterprise operation, audited on performance of subordinate
enterprises of Y2009; intensified supervision in engineering field, audited on two
subordinate companies, Shenzhen Zhentong Engineering Co., Ltd. and Shenzhen
Huazhan Construction Supervision Co., Ltd.; strengthened supervision on cost control,
implemented post-audit on the completed Xinghu No.3 Building; strengthened
supervision on property right and asset, conducted liquidation of property right, asset,
and bank accounts; took precautions against law risks, cleared up law suits from 2006
to 2010; strengthened finance supervision, took precautions against finance risks,
conducted audit on capital incomes and expenses; reinforced overall budget
management, cut down operating cost, strictly control audit on expenses; and took
inspection on execution of resolutions in order to coordinating the implementation of
operating target of the Company.
(5) Tender and bidding control. The Company set up special leader team and
supervisor team for tender and biding, formulated process of execution of
Administrative Measures on Tender and Bidding Projects and Administrative
Measures on Engagement of Agency, as well as relevant authority of review and
examination and business progress, strictly implemented system and process of
preview on qualification of contractor, choose of biding units, assessment on technical
bidding and commercial bidding, as well as execution of contract, engaged agency
with principle of public and transparency, and supervisor leader supervised all process
of tender and bidding.
(6) Information communication. The Company paid attention to communication of
internal and external information, formulated and implemented Administrative
Measures of Informatization, System on Report of Significant Information, Rules for
Archives Management, and Rules for Confidentiality Management. The Company
kept all staffs of the Company knowing trends of the Company and ensured successful
execution of the order with the help of the Management Council, the GM’s Meeting,
and the System on Specific Meeting. The Company valued the establishment of
informatization, continually and sustainably enhanced informatization of enterprise
management, and improved efficiency of regulation and control of the enterprise.
22
(III) Key activities on business control
1. Management on development of real estate project
In 2010, the Company revised Management Method of Project Company (Project
Department (Trial), perfected relevant business process, introduced establishment of
information system of integrated management in real estate, and further improved
proprietor management of real estates of the Company. Control system and business
progress of the Company clearly defined purchase of land resources and project
exploitation, that was, business development was discussed by real estate deliberation
team, programming and development team, tender and bidding team, cost team and
marketing programming and deliberation team, work rules and process were
coordinated by functional departments, implemented by project department and
supervised by project management department, which ensured successful
development of projects. In respect of real estate project, considering factors such as
project operation, balance of tax bearing, risk prevention, regulation, control, and
supervision, the Company separately set up subsidiaries and project departments, that
was, Shenzhen SPG Longgang Development Co., Ltd. accounted for developing
Longgang Project, Guangming Project Department accounted for developing
Guangming Project; and Shantou Branch was authorized for taking overall
accountability on development of Shantou Project, as well as operation and
management of real estate development and other business in east of Guangdong
according to Management Method of Shantou Branch and Management Rules of
Organization Structure and Human Resource Management of Shantou Branch. As
such, the Company defined authority of duties of the Company’s headquarters and
departments in other places, made good cooperation between functional departments
of the Company and departments in other places and improved work quality and
efficiency.
2. Significant investment
In 2010, the Company revised Provision Method of Investment Management, further
clearly defining events of investment projects, such as basic requirements, feasibility
research and demonstration, decision-making authority and procedures, regulation and
post-assessment, rewards and accountability investigation. In the reporting period, the
Company kept its prior investment on the Project in No.10 District, Jinye Island,
Shantou, Shenzhen Guangming Project, and Longgang Project. There’s no newly
increased significant investment of the Company in the reporting period.
3. Lease business
The Company revised Provisional Management Method of Lease and Operation and
business procedures, defined events and process such as preparation, checkup and
approval of leasing price, signing of contracts, contract management, as well as
management of lease and operation, cleared up control links, namely lease, contract
management, rental collection, and customer service of office buildings, shops, and
residences in the charge of the Company, and ensured operation of leasing business.
In 2010, the Company thoroughly intensified accountability appraisal, strictly
executed checkup and approval on authority, strictly controlled execution and
implementation of contract provisions, laid emphasis on research and analysis on
23
market, strengthened customer service, enlarged leasing strategies, effectively took
advantage of intermediary services, strengthened communication with government
departments and industry associations such as administrative offices, leasing stations,
street offices, all of which located in jurisdiction areas where the leased properties
belonged, timely solved and completed leasing disputes, lease registration, property
maintenance, and equipment operation during the process of leasing out houses, and
properly dealt with customer complaints and other events. Property leasing of the
whole year rose in a firm way. Leasing ratio and price registered a year-on-year
increase. Targets of annual lease and operation were well accomplished, which
provided powerful cash flow support for the Company.
4. Cost control
The Company valued cost control, carried out the spirit of “careful calculation, strict
budgeting, and intensified cost control”, strictly implemented operating processes
including Preparation Process of Target Cost, Process of Project Budget and
Settlement, Process on Management of Project Cost and Resolution Chart on Target
Cost, as well as measures including Administrative Measure on Target Cost,
Administrative Measures on project site visa, Administrative Measures on Project
Contract, Administrative Measures on Project Budget and Settlement and
Administrative Measures on Project Tender and Bidding. Cost control activities
carried through the whole process of project development and ensured effective
implementation of cost regulation and control system.
5. Management of safety production
The Company set up Safety Management Production, of which the primary person in
charge is the Chairman of the Board. It was in the overall charge of operating teams
and led by the General Deputy Manager who headed safety production. Project
Management Department was responsible for safety production of all projects and
other businesses, formulated systems and process concerning Measures for Safety
Management, Process on Audit of Project, Assessment Table on Safety Image and
Assessment Table on Control of Quality of Project, and assured safety production. In
2010, the Company strictly executed Production Safety Law of the People’s Republic
of China, Regulations on Safety Management of Shenzhen Special Economic Zone,
as well as Provisional Method of Safety Management of Shenzhen Special Economic
Zone Real Estate & Properties (Group) Co., Ltd., and regularly conducted significant
inspections on safety production. On every important holiday, leader heading
production safety would take the lead in organizing people in charge of engineering
management, supervision on discipline inspection, and all project departments
(enterprises) to go to fields and important departments to conduct significant
inspections on safety, timely track inspected potential safety hazards, rigorously
execute investigation, timely took rectification and reform, and handle re-check and
acceptance inspection to prevent crisis from occurring in the first place. During the
whole year, there was no accident of any size in safety production occurring to the
Company.
6. Financial management
The Company strictly executed accounting standards uniformed by the state,
24
thoroughly implemented standardization of accounting basis, valued regulation on
finance management, and controlled finance risks. In the reporting period, the
Company prepared Provisional Method of Finance Management, Management
Method of Related People in Charge of Finance and Accounting, as well as
Management Method of Warning System for Finance Risks, clearly defined events
and processes including system of finance management, management of finance and
accounting, management of finance budget, asset management, management of
liabilities and guarantees, incomes, cost expenses, profit management, finance and
accounting report, handover of accounting work, and management of accounting files.
The Company attached importance to control of finance risks, revised and perfected
Management Method of Overall Budget, and strictly executed overall budget
management. All investment and expenditures were controlled within budget. The
Company paid attention to business development and balance between bank loans and
ability of payment, so as to keep reasonable proportion of assets liabilities and make
financial risks under control.
7. Related transaction
The Company fulfilled decision-making procedures on related transactions strictly in
accordance with Rules for Listing Shares in Shenzhen Stock Exchange, Articles of
Association as well as other regulations concerning related transaction. In 2010,
there’s no newly increased related transaction of the Company.
8. External guarantee
The Company paid attention to risk control and decision-making procedures of
external guarantee, and implemented procedures of decision-making according to
Circular on Regulating External Guarantee of Listed Companies, Rules for Listing
Shares in Shenzhen Stock Exchange and Articles of Association. In the reporting
period, there’s no newly increased external guarantee of the Company.
9. Capital occupation by principal shareholder
The Company focused on protection of interests of its own and all shareholders, and
there was no capital occupation by principal shareholder.
10. Information disclosure
The Company implemented information disclosure strictly in line with Rules for
Listing Shares in Shenzhen Stock Exchange and Articles of Association, and
formulated System on Internal Report of Significant Information and Administrative
System for Information Disclosure Affairs. There are no false records, misleading
statements, or significant omissions in the materials of this report, and the information
disclosed are authentic, accurate and complete.
(IV) Shortage of internal control and perfection plan
In 2009, information report to Shenzhen State-owned Assets Supervision and
Administration Bureau and Shenzhen Investment Holdings Co., Ltd didn’t follow
regulatory requirements, and was criticized by Shenzhen Securities Regulatory
Bureau in Shen-Zheng-Ju-Fa [2010] No.38 Document on 29 Jan. 2010. Therefore, the
Company timely adopted powerful measures, perfected procedures of information
disclosure, so as to ensure compliance with requirements of related regulatory rules.
25
In 2011, the Company will, in line with requirements of Basic Standard for Enterprise
Internal Control jointly issued by 5 ministries and commissions including Ministry of
Finance and CSRC, as well as relevant 18 indexes, engage professional consultative
agency, mobilize all staffs of the Company to thoroughly conduct establishment of
internal control, seriously carry out Programming on Establishing Overall Risk
Management System and Work Plan of Shenzhen Special Economic Zone Real Estate
& Properties (Group) Co., Ltd., accomplish establishment of internal control system
before Jun. 2012, enhance capability of internal control and risk precaution, raise the
efficiency of regulation and control, and sustainably improve corporate governance
level..
(V) Self-appraisal of the Board of Directors on internal control
The Board of Directors of the Company believed that, in the reporting period, the
Company established perfect internal control system in decision-making, execution
and supervision as well as all key links. The systems were reasonable and effective
without significant defect. Internal control and risk prevention were suitably applied.
Internal control and management system needed continuous improvement and
enhancement due to uncertainty of macro economy and industry development, as well
as the fact that the internal parts of the enterprise developed in different stages.
Therefore, the Company will, under the guidance of risks, seriously carry out trial
work of establishment of internal control, thoroughly establish internal control system
of the enterprise, and sustainably improve corporate governance and enterprise
management.
(VI) Independent opinion of independent directors concerning self-appraisal on
internal control
We reviewed self-appraisal report on internal control 2010 issued by the Board of
Directors and believed that: In 2010, the Company, under the guidance of risks and
with the mission of strengthening internal control, further perfected management
systems and business process. Key activities of internal control of the Company were
conducted at regular intervals. At the same time, with the assistance of system
establishment and application of information integration in real estates, the Company
timely prevented, discovered, and rectified the deviation which was possible to
happen in the process of operation, promoted the overall and effective execution of
internal control system, ensured standard governance, effective management, and
controllable risks of the Company, assured the authenticity, accuracy, and timeliness
of accounting records and accounting information, and protected equity of all
shareholders of the Company. Self-appraisal report on internal control of the
Company reflected the actual condition of the Company’s internal control in thorough,
objective, and authentic way.
26
Section VII Brief introduction to the Shareholders’ General Meeting
The 18th Shareholders’ General Meeting (namely the Annual Shareholders’ General
Meeting for the year 2009) was held at the meeting room of the Company at 9:30 on
28 Jun. 2010, at which examined and approved the Working Report of the Board of
Directors 2009, Working Report of the Supervisory Committee 2009, Profit
Distribution Plan 2009, Annual Report 2009, Financial Budget Plan for 2010,
Proposal on Reengagement of the Accounting Firm, Proposal on Resignation of
Independent Directors of the Company, and formed relevant resolutions. Resolutions
at the meeting were published in China Securities Journal, Ta Kung Pao and website
http://www.cninfo.com.cn designated by CSRC on 29 Jun. 2010, and the Board of
Directors implemented the resolutions strictly with the authority under the
shareholders’ general meeting. In the report period, there was neither profit
distribution plan or capitalization plan, nor allotments or issuance of new shares.
The 1st Provisional Shareholders’ General Meeting 2010 was held at the meeting room
of the Company at 9:30 on 15 Oct. 2010, which reviewed and approved Proposal on
Electing Directors of the Company and Proposal on Electing Independent Directors,
and formed relevant resolutions. Resolutions of the meeting was published in China
Securities Journal, Ta Kung Pao and website http://www.cninfo.com.cn designated by
CSRC on 16 Oct. 2010, and the Board of Directors implemented the resolutions
strictly with the authority under the shareholders’ general meeting.
27
Section VIII Report of the Board of Directors
I. Retrospect on overall operation during the report period
(I) Discussion and Analysis of the management staff
In 2010, the Company focused on work idea of “intensively cultivating to do well in
operation in main business, carefully calculating and budgeting to intensify cost
control, and refining on improvement of regulation and control”, strived to overcome
negative factors, put all efforts into work, and thoroughly outperformed task indexes
issued by the Board. Achievements in 2010 were mainly reflected as follows: Firstly,
corporate profitability was raised to a large extent, which meant that fundamental
aspects were largely improved. Secondly, core projects of main business made
effective progress. It’s especially worth noting that land problem of Longgang Project
having restricted development of the enterprise was successfully solved. As such,
basis of development was consolidated. Thirdly, cohesion of the enterprise was further
enhanced, and the atmosphere where general staffs were aggressive and working
positively expanded. The acquisition of those achievements founded a solid basis for
sustainable development of the Company.
(II) Overall operation
In 2010, the Company achieved a total profit of RMB 111,916,700, representing a
year-on-year decrease of 209.33%; and a net profit attributable to shareholders of the
listed Company reaching RMB 84,760,200, up by 319.62% as compared with that of
last year. The operating income totaled to RMB 1,021,060,000, representing a
year-on-year increase of 36.11%. The comprehensive gross profit rate registered a
year-on-year increase of 5.34%. In the reporting period, sales of real estates increased
to a large extent, which proved to be the main factor of profit growth of the year.
Ⅱ. Scope and status of main businesses
The Company belongs to the real estate industry and is engaged in development of
real estate and sale of commercial houses, lease and management of properties, house
decoration, retail and trade of commodities and hotel and catering service.
(I) Incomes and profits of main businesses classified according to industries
Unit: (RMB) Ten thousand
Main businesses classified according to industries
Increase/decreas Increase/decreas
Increase/decrease
Classified according to Operating Operating gross e of operating e of operating
Operating cost of operating gross
industries or products income profit rate (%) income over last cost over last
profit rate (%)
year (%) year (%)
Real estate 56,008.00 28,422.00 49.25% 74.37% 68.60% 1.73%
Construction 27,234.00 25,684.00 5.69% 6.38% 5.54% 0.74%
Lease 7,066.00 2,771.00 60.78% 12.35% -23.55% 18.41%
Property management 9,375.00 8,495.00 9.39% 10.35% 22.59% -9.05%
Hotel and other services 2,423.00 1,902.00 21.50% -3.51% 12.75% -11.32%
Main business classified according to products
Residential houses 42,841.00 22,681.00 47.06% 67.69% 62.63% 1.65%
Office buildings 231.00 114.00 50.65% -96.49% -96.08% -5.07%
Parking lots 12,936.00 5,627.00 56.50%
(II) Incomes and profits of main businesses classified according to regions
Unit: (RMB) Ten thousand
28
Operating income Operating cost Operating gross profit
Region
2010 2009 2010 2009 2010 2009
Domestic:
Guangdong 102,041 72,782 67,274 52,677 34,767 20,105
Province
Overseas: 65 2,236 756 65 1,480
Total 102,106 75,018 67,274 53,433 34,832 21,585
Ⅲ . Business performance of main wholly-owned affiliated enterprises and
controlling enterprises
Balance of
net actual
Registered Operating
Business investment Total assets Net assets Net profit
Registered capital income
Name of subsidiary nature and in Equity (RMB Ten (RMB Ten (RMB Ten
place (RMB Ten (RMB Ten
scope subsidiary thousand) thousand) thousand)
thousand) thousand)
(RMB Ten
thousand)
Shenzhen Petrel Hotel Hotel
Shenzhen 3,000 3,000 100% 4,153.67 3,699.87 2,349.71 2.39
Co., Ltd. Service
Shenzhen Property Property
Shenzhen 725 725 100% 6,429.49 1,038.84 10,176.17 -184.05
Management Co., Ltd. management
Fixing and
Shenzhen Zhentong
Shenzhen 1,000 maintenance 1,000 100% 9,665.15 1,048.16 28,319.38 111.56
Engineering Co., Ltd.
of projects
Shenzhen Huazhan
Construction
Construction Supervision Shenzhen 800 800 100% 798.64 746.12 372.12 2.15
supervision
Co., Ltd.
Shenzhen SPG Mini-bus
Shenzhen 1,029 Rent of 1,029 100% 1,804.19 1,472.39 449.62 61.84
Rent Co., Ltd. mini-bus
Shantou Hualin Real Estate Development
US$600 3,421 100% 85,670.25 14,216.23 40,347.95 7,508.28
Development Co., Ltd. Shantou of real estate
.Great Wall Estate Co., Development
USD50 11,122 70% 1,885.63 -8,368.58 64.73 5.44
Inc. USA of real estate
Investment
Xin Feng Enterprise Co.,
HKD100 and 66,358 100% 20,295.85 -30，106.45 15.25 819.11
Ltd.
Hong Kong management
Ⅳ. Main suppliers and customers
Unit: (RMB) Ten thousand
2010 2009
Item
Sales Proportion in total sales Sales Proportion in total sales
Total sales to top five
20,435 20.01% 8,486 12.02%
customers
V. Investment
(I) There was no raised proceed in the report period, nor was there any proceeds
raised in previous periods yet still used in the report period.
(II) Significant Investment Projects with Non-Raised Proceeds
Unit: RMB Ten thousand
29
Investment in
Name of project Progress of project Project earnings
project
Shui Yun Tian Ya Garden and Ming
407.00 In the progress of project design No earnings by now.
Garden
Shantou Jinye Island International An income of RMB 403,480,000 was
35,000.00 In a certain state of development
Garden carried down for the report period.
In the progress of designing
Guangming New District Project 1,546.00 No earnings by now.
construction drawing
Total 36,953.00 - -
VI. Execution of Management System of Insiders Knowing Inside Information
In line with requirements of regulatory departments including Shenzhen Stock
Exchange and Shenzhen Securities Regulatory Bureau, the Company has established
Management System of Insiders Knowing Inside Information, and strictly executed
management of insiders knowing inside information according to the aforesaid
systems and relevant rules. In the reporting period, the Company didn’t find any
insider trade the Company’s stocks by taking advantage of inside information before
disclosure of significant and sensitive information that can influence stock price of the
Company.
VII. Promotion of special activities concerning corporate governance
The Company actively implemented requirements related to special activities
concerning corporate governance and has accomplished all rectification measures.
Corporate governance became more and more standard.
In the reporting period, in light of Circular on Thoroughly Conducting Special
Activity for Standardizing Basic Finance and Accounting Work of Listed Companies
in Shenzhen Administration Area, the Company deeply conducted activity for
standardizing basic finance and accounting work, rectified and reformed existing
problems, and reported and recorded Self-inspection Report of Shenzhen Special
Economic Zone Real Estate & Properties (Group) Co., Ltd. on Conducting Special
Activity for Standardizing Basic Finance and Accounting Work, as well as Report on
Rectification of Special Activity of Basic Finance and Accounting Work. In the
reporting period, problems discovered by self-inspection have been rectified.
VII. Analysis on Financial Status and Operating Results in the report period
(I) Analysis on Financial Status
As at 31 Dec. 2010, total assets of the Company stood at RMB 3,379,090,000,
representing a year-on-year growth of 0.53%. The asset structure of the Company
became more rational with a larger land reserve and better asset quality. The
proportion of operating assets such as monetary funds, inventory and investing
property in total assets reached 92.77% at the year-end. Asset-liability ratio amounted
to 61.53% with a year-on-year decrease of 2.3%, current ratio amounted to 2.66 with
a year-on-year increase of 102%, and quick ratio amounted to 0.47 with a
year-on-year increase of 17%. Sustainably strengthened capability of paying
long-term and short-term liabilities indicated a sound financial status.
1. Comparison of main financial indexes with those of last year
30
Unit: (RMB) Ten thousand
Increase/decrease
Items 31 Dec. 2010 31 Dec. 2009 Notes
rate (%)
Total assets 337,909 336,111 0.53
Increase of prepaid engineering
Prepayments 2,689 1,802 49.22
accounts.
Long-term
6,343 11,131 -43.02 Equity transfer and liquidation.
investment
Long-term
Amortization of decoration
deferred 20 36 -44.44
expenses.
expenses
Short-term
1,480 10,000 -85.20 Return of short-term borrowings.
borrowings
Return of remaining land accounts
Accounts
22,858 73,094 -68.73 of Guangming New District in this
payable
year.
Increase of real estate accounts
Accounts
which were received in advance and
received in 39,533 15,712 151.61
didn’t meet the standard of income
advance
recognition
Withdrawal of housing provident
Employee
fund according to policies of
compensation 3,934 2,450 60.57
housing provident fund in
payable
Shenzhen, as well as merit pay.
In the advance sale of the Shantou
Jinye Island Project, 5% of the
Taxes payable -1,333 -878 -51.82
house prepayment was prepaid as
business tax.
Return of interest payable arising
Interest payable 1,654 2,469 -33.01 from unsettled land payment for the
Guangming New District Project
Non-current
Return of long-term borrowings due
liabilities due 2,942 22,961 -87.19
in 2010.
within 1 year
Expansion of business scale and
new increase in long-term
Long-term
105,670 58,199 81.57 borrowings from Bank of Shanghai,
borrowings
Industrial and Commercial Bank of
China, and Rural Commercial Bank
Owners’ equity
attributable to 142,787 134,354 6.28 Increase of net profit in this year.
parent company
Other indexes 31 Dec. 2010 31 Dec. 2009 Ratio of variation
Asset-liability
61.53 63.83 -2.3% Decrease of accounts payable.
ratio (%)
Current ratio 2.66 1.64 1.02 Decrease of accounts payable.
Quick ratio 0.47 0.30 0.17 Decrease of accounts payable.
2. Structure comparison of main financial indexes with those of last year
Unit: (RMB) Ten thousand
Increased
31 Dec. 2010 31 Dec. 2009
percentage
of
Items Proportion in Proportion proportion
Amount total assets Amount in total in total
(%) assets (%) assets
Monetary capital 37,972.06 11.24 38,610.25 11.49 -0.25
Transactional financial assets 9.77 0.003 8.63 0.003 0.00
Accounts receivable 1,715.25 0.51 1,473.24 0.44 0.07
31
Prepayments 2,689.06 0.80 1,802.03 0.54 0.26
Other receivables 4,753.49 1.41 4,929.83 1.47 -0.06
Inventories 222,493.87 65.84 208,829.89 62.13 3.71
Of which: completed
58,279.22 17.25 37,355.24 11.11 6.14
developed products
Developed products under
38,275.53 11.33 49,507.05 14.73 -3.4
construction
Products to be developed 121,563.21 35.98 120,017.07 35.71 0.27
Total current assets 269,633.50 79.79 255,653.87 76.06 3.73
Long-term equity investment 6,342.68 1.88 11,130.53 3.31 -1.43
Investment real estate 53,010.95 15.69 60,415.35 17.97 -2.29
Fixed assets 6,452.65 1.91 6,628.34 1.97 -0.06
Constructions in progress 52.00 0.02 0.02
Intangible assets 621.33 0.18 623.24 0.19 -0.01
Long-term deferred expenses 20.25 0.01 36.49 0.01 -0.00
Deferred income tax assets 1,775.66 0.53 1,623.21 0.48 0.04
Total non-current assets 68,275.51 20.21 80,457.16 23.94 -3.73
Total assets 337,909.02 100.00 336,111.03 100.00 0.00
Short-term borrowings 1,480.00 0.44 10,000.00 2.98 -2.54
Accounts payable 22,858.08 6.76 73,094.44 21.75 -14.98
Accounts received in
39,533.23 11.70 15,711.61 4.67 7.02
advance
Employee compensation
3,933.88 1.16 2,449.95 0.73 0.44
payable
Taxes payable -1,333.35 -0.39 -878.28 -0.26 -0.13
Interest payable 1,653.53 0.49 2,468.77 0.73 -0.25
Other payables 30,214.44 8.94 29,723.72 8.84 0.10
Non-current liabilities due
2,942.34 0.87 22,960.72 6.83 -5.96
within 1 year
Total current liabilities 101,282.15 29.97 155,530.92 46.27 -16.30
Long-term borrowings 105,670.31 31.27 58,198.65 17.32 13.96
Long-term payables 977.91 0.29 818.59 0.24 0.05
Total non-current
106,648.22 31.56 17.56 14.00
liabilities 59,017.25
Total liabilities 207,930.37 61.53 214,548.17 63.83 -2.30
(II) Analysis on Operating Results
1. In the reporting period, the Company achieved an operating income of RMB
1,021,060,000, up by 36.11% as compared with that of last year, which was mainly
due to the year-on-year growth of 74.37% of income from real estate sale.
Increase/decrease of the Company’s main businesses:
① A sales income of RMB 56,0080,000 from the Company’s dominant business of
real estate was carried down, up by 74.37% as compared with that of last year, which
was mainly because Youyi Multi-storey Parking Lot was sold by the Group’s
headquarters, and residential houses in No.10 District of Jinye Island International
32
Garden were sold by Shantou Hualin Real Estate Development Co., Ltd, the
subordinate company;
② Income from construction stood at RMB 272,340,000, representing a year-on-year
growth of 6.38%, which was mainly because the subsidiary Shenzhen Zhentong
Engineering Co., Ltd. undertook more construction projects from outside and
implemented more construction projects through out the year;
③ Lease income stood at RMB 70,660,000, up by 12.35% from that of last year,
which was mainly because the Company put more strength on recalling arrears of
rent;
④ Property management income stood at RMB 93,750,000, up by 10.35% from that
of last year, which was mainly because the Company put more strength on recalling
arrears;
⑤ Income from hotel and other services stood at RMB 24,230,000, representing a
year-on-year decrease of 3.51%, which was mainly due to decrease of the occupancy
rate.
2. Taxes and expenses during report period:
Unit: RMB Yuan
Items 2010 2009
Business tax 45,833,329.45 32,269,250.54
Urban maintenance and construction tax 563,749.15 228,353.26
Educational surcharges 767,741.25 626,116.15
Business tax
and surcharges House property tax 6,578,991.44 7,554,415.54
Land value increment tax 66,958,667.01 32,871,737.39
Embankment maintenance fee and others 450,957.06 250,894.54
Subtotal 121,153,435.36 73,800,767.42
Employee compensation 3,950,899.58 2,410,502.20
Advertising expenses 6,920,236.79 2,559,975.80
Sales expenses Business expenses 749,244.59 654,421.50
Others 1,473,608.01 3,154,411.09
Subtotal 13,093,988.97 8,779,310.59
Employee compensation 36,447,448.71 32,339,066.96
Depreciation and amortization 5,526,432.97 5,795,990.07
Administration
expenses Business funds 4,744,292.35 4,437,517.12
Others 23,275,018.17 27,643,979.38
Subtotal 69,993,192.20 70,216,553.53
Finance
expenses Interest expenses 70,668,526.13 48,557,467.79
Less: expenses with capitalized interest 15,644,555.07 6,806,525.39
Less: interest income 1,050,178.53 2,213,229.24
Exchange loss 6,126,187.86 39,356.82
33
Less: exchange income 5,003,945.06 196,661.97
Others 3,163,917.71 316,855.72
Subtotal 58,259,953.04 39,697,263.73
Total 262,500,569.57 192,493,895.27
① Business tax and surcharges stood at RMB 121,150,000, up by 64.16% from that
of last year, which was mainly due to the increase of operating income. Among them,
land value increment tax of this year increased by RMB 34,086,900 over last year
with a growth of 103.70%, which was mainly due to the sales increase of commodity
houses.
② Selling expenses stood at RMB 13,090,000, up by 49.15% from that of last year,
which was mainly due to increase of advertising expenses.
③ Administrative expenses stood at RMB 69,990,000 with a year-on-year decrease
of 0.32%, which was basically unchanged as compared with that of last year.
④ Financial expenses stood at RMB 58,260,000, representing a year-on-year
increase of 46.76%, which was mainly due to increase of interest expenses arising
from increased bank borrowings and interest paid for the remaining land payment for
the Guangming New District Project of this year.
3. Investment income
Unit: RMB Yuan
Resources generating investment income 2010 2009
Long-term equity investment income accounted by cost
method 11,327,948.39 7,583,812.56
Long-term equity investment income accounted by
equity method -36,587.15 -1,904,596.98
Investment income arising from disposal of long-term
equity investment 15,588,205.14 --
Investment income arising from disposal of transactional
financial assets 322,484.04 114,301.68
Total 27,202,050.42 5,793,517.26
In the reporting period, investment income of RMB 27,200,000 registered a
year-on-year increase of 369.53%, which was mainly due to investment income
arising from disposal of long-term equity investment, including the income of RMB
9,640,000 arising from transferring 50% equity of Shatoujiao Nantian Shopping Mall,
the income of RMB 4,980,000 arising from transferring 50% equity of Zhaoqing
Guifeng Cement Co., Ltd., and the income of RMB 976,015 arising from liquation of
Kunshan Diaofeng Electric Power Co., Ltd.
4. Income tax expenses
Unit: RMB Yuan
Item 2010 2009
Income tax expenses for this year
28,669,817.61 13,715,040.27
Deferred income tax expenses
-1,524,469.31 2,247,858.41
Total
27,145,348.30 15,962,898.68
34
5. Effect of items measured at fair value on profit
Unit: RMB Yuan
Changes in
Item Opening amount Closing amount Effect on profit of report period
report period
Transactional
86,269.75 97,726.25 11,456.50 307,160.54
financial assets
6. Changes of financial data in cash flows of the Company in the reporting period
Unit: RMB Yuan
Increase/decrease
Item 2010 2009 Note
rate (%)
Net cash flows from The increase of cash received from sales of
-17,905 -41,213 56.55
operating activities houses.
Net cash flows from The increase of cash received from disposal
6,955 659 955.39
investing activities of long-term equity investment.
Net cash flows from
10,662 48,119 -77.84 Less financing from banks.
financing activities
IX. Problems, difficulties and solutions in operation
(I) Problems and difficulties in operation
In 2011, the real estate industry will be in tough situation. Firstly, in order to restrain
inflation, the State implements firm currency policies and positive finance policies,
and has adjusted the deposit reserve ratio and hiked interest rate for many times since
2010, which results in tightened funds in the industry. Secondly, policies of regulation
and control over the real industry, mainly including building taxes and the purchase
restriction decree, have been constantly promoted, which causes highly tensed
pressure on real estate industry. Turnover of houses in major cities such as Beijing,
Shanghai, Guangzhou, and Shenzhen has fallen since this year. Thirdly, in real estate
market, the sentiment of wait-and-see becomes stronger, and customers are more
cautious. As for Shenzhen Special Economic Zone Real Estate & Properties (Group)
Co., Ltd., which is now in the recovery in its main businesses, the external
environment is full of uncertainty
There are also plenty of difficulties for internal enterprise. Firstly, the accumulated
losses from the past are so huge that the function of financing in capital market of the
listed company can’t be implemented in short term, which impacts on long-term
development of the enterprise. Secondly, land to be developed is still insufficient.
Thirdly, the brand image is weak, and capability and experience of professional
development call for accumulation and improvement. Construction of Guangming and
Longgang Projects in 2011 will be a big test for the Company in terms of project
management capability, regulation and control capability, marketing capability, as
well as brand building capability.
(II) Solutions of the Company to deal with the aforesaid problems and difficulties are
as follows:
I. To strength research on macro economy situation, timely get to know changes in
real estate market, size up the situation, and flexibly deal with uncertainties brought
by macro regulation and control.
II. To strength strategy research, take precautions, make the layout in advance, and
prepare for the expansion of resource storage in the coming two years.
35
III. To constantly improve the development capability in its main businesses and
rebuild the enterprise brand.
IV. To try hard to create conditions for the Company to regain its financing function in
capital market.
X. Outlook for future development of the Company
General guidelines for operation in 2011: To focus on key points and concentrate on
development of main businesses under the guidance of scientific development
perspective; To deal with difficulties and thoroughly improve regulation and control,
as well as professional capability; To cultivate highlights and put efforts to build
brand image of the enterprise; To practically strength party building and culture
establishment of the enterprise, and strive to raise the establishment of “two
civilizations” to a new grade.
In 2011, the Company will work on the five central tasks as follows:
(I) To focus on key points and concentrate on development and operation of main
businesses. Firstly, the Company will thoroughly propel the development of main
business items and assure quality, progress, as well as safety. Secondly, the Company
will keep promoting sales in real estates and raise leasing benefits of properties.
(II) To deal with difficulties and realize overall promotion in regulation and control, as
well as professional capability. Firstly, the Company will take the opportunity of
establishment of internal control system of the enterprise and further strength
enterprise management and risk control based on establishment of informatization.
Secondly, the Company will further optimize performance appraisal and build
professional management teams, Thirdly, the Company will enhance finance
management and improve efficiency of fund operation. Fourthly, the Company will
reinforce audit and supervision, and improve standardized operation. Fifthly, the
Company will intensify cost control of development projects and ensure maximized
benefits. Sixthly, the Company will strive to improve engineering management level
and assure quality, progress, as well as safety.
(III) To cultivate highlights and put efforts to build brand image of the enterprise.
(IV) To put all efforts on solving historic problems.
(V) To insist on simultaneously cultivating new enterprise culture and strengthening
enterprise cohesion.
XI. Routing Work of Board of Directors
(I) Sessions convened by Board of Directors during the reporting period and
resolutions made
Details of board sessions convened in 2010 were as follows:
1. The 1st session was convened by telecommunication on 23 Mar. 2010 with 8
directors present, at which reviewed and approved Proposal on Adjusting Accounts
for Parts of Properties in Stock (with no public notices on this proposal).
2. The 2nd session was convened at Sheraton Hotels of Huidong dated from 19 Apr.
2010 to 20 Apr. 2010 with 9 directors present, at which reviewed and approved
Proposal on the 2009 Annual Report and Its Summary, the 2009 Annual Work Report
36
of the Board of Directors, the 2009 Annual Profit Distribution Preplan, the Proposal
on 2010 Annual Financial Budget, Self-appraisal Report on Internal Control of
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd., the
Proposal on Adjusting the Strategy Committee under the Board of Dirctors, the
Proposal on Accountability System on Material Errors for Information Disclosure of
Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group)
Co., Ltd., the Proposal on Selling 50% Equities of Guifeng Cement Co., Ltd. (with no
public notice on this proposal), the Proposal on Financing from CICB (with no public
notice on this proposal).
The public notice on relevant resolutions was disclosed on China Securities Journal,
Ta Kung Pao and http://www.cninfo.com.cn dated 21 Apr. 2010.
3. The 3rd session was convened at the Conference Room of the Company on 26 Apr.
2010 with 9 directors present, at which reviewed and approved Proposal on the First
Quarterly Report 2010 of the Company.
The public notice on relevant resolutions was disclosed on China Securities Journal,
Ta Kung Pao and http://www.cninfo.com.cn dated 27 Apr. 2010.
4. The 4th session was convened by telecommunication on 26 May 2010 with 9
directors present, at which reviewed and approved Proposal on Increasing Investment
on Shantou Hualin Real Estate Development Co., Ltd.( with no public notice on this
proposal), which has submitted to Shenzhen Stock Exchange for records.
5. The 5th session was convened at the Conference Room of the Company on 7 Jun.
2010 with 9 directors present, at which reviewed and approved Proposal on the Duty
Report of Independent Directors for Y2009, the Proposal on Engagement of CPAs
Firm, the Proposal on Resignation from Independent Directors, the Self-inspection
Report on Carrying out the Standardization of Basic Work of Financial & Accounting
in Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. and
the Proposal on Convening the Shareholders’ General Meeting.
The public notice on relevant resolutions was disclosed on China Securities Journal,
Ta Kung Pao and http://www.cninfo.com.cn dated 8 Jun. 2010.
6. The 6th session was convened by telecommunication on 21 Jun. 2010 with 7
directors present, at which reviewed and approved Proposal on Refinance for the
Original Loan from Rural Commercial Bank (with no public notice on this proposal).
7. The 7th session was convened at the Conference Room of the Company on 23 Aug.
2010 with 7 directors present and 2 entrusting proxies for voting, at which reviewed
and approved Proposal on the 2010 Semi-annual Report and Its Summary, the
Proposal on Engagement of Securities Affairs Representative, the Proposal on
Revising the Internal Management System (with no public notice on this proposal).
The public notice on relevant resolutions was disclosed on China Securities Journal,
Ta Kung Pao and http://www.cninfo.com.cn dated 24 Aug. 2010.
37
8. The 8th session was convened at the Conference Room of the Company on 29 Sep.
2010 with 7 directors present and 1 entrusting a proxy for voting, at which reviewed
and approved Proposal on the Change of Directors, the Proposal on Convening the
First Provisional Shareholders’ General Meeting for Y2010, the Proposal on
Refinance for the Original Loan from Shangbu Branch of Rural Commercial Bank
(with no public notice on this proposal).
The public notice on relevant resolutions was disclosed on China Securities Journal,
Ta Kung Pao and http://www.cninfo.com.cn dated 30 Sep. 2010.
9. The 9th session was convened at the Conference Room of the Company on 15 Oct.
2010 with 9 directors present, at which reviewed and approved Proposal on Adjusting
Committees under the Board.
The public notice on relevant resolutions was disclosed on China Securities Journal,
Ta Kung Pao and http://www.cninfo.com.cn dated 16 Oct. 2010.
10. The 10th session was convened by telecommunication on 28 Oct. 2010 with 9
directors present, at which reviewed and approved Proposal on the Third Quarterly
Report 2010 of the Company, the Proposal on Engagement of CFO, the Rectification
Report on Standardization of the Basic Work of Financial & Accounting (with no
public notice on this proposal), Self-inspection Report on the Establishment and
Implementation of Long-term Mechanism for Preventing Capital Occupation (with no
public notice on this proposal).
The public notice on relevant resolutions was disclosed on China Securities Journal,
Ta Kung Pao and http://www.cninfo.com.cn dated 29 Oct. 2010.
11. The 11th session was convened at the Conference Room of the Company on 16
Dec. 2010 with 9 directors present, at which reviewed and approved Proposal on
Provisional Measures for Administration on the Finance of Shenzhen Special
Economic Zone Real Estate & Properties (Group) Co., Ltd., Administration on the
Relevant Principals for Financial Affairs of Shenzhen Special Economic Zone Real
Estate & Properties (Group) Co., Ltd., Administration on the Financial Risk
Forewarning System of Shenzhen Special Economic Zone Real Estate & Properties
(Group) Co., Ltd., and there was no public notice on the resolutions of the session.
(II) Execution on resolutions made at Shareholders’ General Meeting by the Board of
Directors
During the reporting period, the Company convened one Shareholders’ General
Meeting and one Provisional Shareholders’ General Meeting respectively, and the
relevant resolutions made at the two sessions were disclosed on designated medias. As
authorized by the Shareholders’ General Meeting, the Board of Directors faithfully
executed the resolutions above. In the report period, the Company did not have any
plan for profit distribution or capitalization of capital reserves, nor any rationed shares
or additionally issued shares.
38
(III) Duty fulfillment of Audit Committee under the Board of Directors
On 15 Oct. 2010, due to adjustment on part of directors, the Company made relevant
adjustment on the members of Audit Committee under the Board through the approval
by the Board of Directors. And after the adjustment, Zhou Hanjun ( Independent
Director), Song Botong (Independent Director), Jiang Lihua were the members of
Audit Committee under the Board with Zhou Hanjun as Chief of the Committee.
During the reporting period, the Audit Committee reviewed on the Company’s
following issues: Arrangement on the Annual Audit Work, Periodic Financial Report,
Profit Distribution Plan, Engagement of CPAs Firm, Written Submission of the
Administration on CPAs Firm, Withdrawal and Offset of Impairment Provision,
Guarantee Events, Construction of Internal Control, Special Campaign on
Standardization of Basic Work of Finance and Accounting, etc..
Upon the start of the audit for the 2010 Annual Report, the Audit Committee actively
promoted the progress of the audit work and conducted communication with the CPAs
firm to determine the arrangements for the audit. Since the period-end, the Audit
Committee has convened two sessions, reviewing the Company’s 2010 financial
statements and issuing their opinions after the review. The Audit Committee made the
summary for the 2010 annual audit work as followings:
1. Two review opinions issued concerning the Company’s 2010 Annual Financial
Report
Based on their professional knowledge and experience, the members of Audit
Committee reviewed the 2010 Annual Financial Report prepared by the Company. In
the report period, according to relevant regulations of CSRC, the Audit Committee
issued two review opinions on the annual report.
Before the presence of the registered accountants for the 2010 annual audit, the Audit
Committee reviewed the annual financial report prepared by the Company. And the
Audit Committee was of the opinion that: According to the New Accounting
Standards for Business Enterprises, the Company chose and applied a proper
accounting policy, with reasonable accounting estimates. The Company always
adopted a prudent attitude towards the changes of the accounting policy and estimates,
with no such cases as manipulating the changes of the accounting policy and
estimates to adjust the profits. And the financial report prepared by the Company was
factual and reliable with complete contents.
After the preliminary audit opinion had been issued by the registered accountants on
the Company’s 2010 Financial Report, the Audit Committee reviewed, for a second
time, the financial report and conducted discussions with the registered accountants.
And they were of the same opinion that the 2010 Financial Report prepared by China
Audit International for the Company was in accordance with the requirements of the
accounting standards for business enterprises, factually and completely presenting the
39
Company’s operating results and cash flows in 2010 and its financial position as at 31
Dec. 2010 in all major aspects.
2. The Committee’s supervising and urging the audit work of the CPAs firm
Before the audit, the Audit Committee formulated a comprehensive plan for the
annual audit by discussing and determining the scope and the schedule for the audit
report with the existing CPAs firm. Upon the presence of the audit team, the
Committee communicated with the person in charge of the audit project, learnt about
the audit progress and the accountant’s concerns, and timely offered the feedback to
relevant departments of the Company, so as to make sure the progress of the annual
audit and information disclosure in accordance with the set plan.
3. Summary report on the 2010 annual audit conducted by China Audit International
Certified Public Accountants LTD.
In accordance with stipulations on relevant work for 2010 annual report by CSRC and
Shenzhen Stock Exchange, the Company’s Audit Committee summarized the 2010
annual audit conducted by China Audit International Certified Public Accountants
LTD. (hereinafter referred to as “China Audit International”) as follows:
(1) Preparation before the audit
① Formulation of the audit plan
The 2010 annual audit lasted from 14 Dec. 2010 to 31 Mar. 2011 as schedule.
Of which, the pre-audit and internal test lasted from 14 Dec. 2010 to 31 Dec. 2010;
the substantial test lasted from 3 Jan. 2011 to 15 Mar. 2011; the compilation of audit
report, its re-check in CPAs firm and formulation of first draft lasted from 16 Mar.
2011 to 31 Mar. 2011.
② Review of the financial statements
Before the presence of the registered accountants for the annual audit, the Audit
Committee carefully reviewed the financial statements prepared by the Company and
formed the relevant written opinion.
(2) Audit process
From 14 Dec. 2010, the audit team from China Audit International conducted a
thorough audit on the Company and its subsidiaries. During the audit process, the
Audit Committee, for several times, urged China Audit International to closely follow
the audit schedule and finish the audit on time. China Audit International submitted to
the Audit Committee the first draft of the Audit Report of the 2010 Annual Report on
31 Mar. 2011, and its final version on 27 Apr. 2010. And this marked the end of the
site audit conducted by China Audit International on the Company’s 2010 financial
report.
(3) Audit results
China Audit International issued the standard unqualified 2010 Annual Audit Report
to the Company. And the Audit Committee was of the opinion that China Audit
40
International excellently accomplished the audit of the Company’s 2010 Annual
Financial Report.
(IV) Duty fulfillment of Remuneration and Appraisal Committee under Board of
Directors
On 15 Oct. 2010, due to adjustment on part of directors, the Company made relevant
adjustment on the members of Remuneration and Appraisal Committee under the
Board through the approval by the Board of Directors. And after the adjustment, Song
Botong (Independent Director), Zhou Hanjun (Independent Director) and Zhang Lei
were the members of Remuneration and Appraisal Committee under the Board with
Song Botong as Chief of the Committee. The Remuneration and Appraisal Committee
under the Board carefully examined the annual remuneration of the Company’s
directors, supervisors and other senior management personnel disclosed in the 2010
Annual Report. And it was of the opinion that: the decision-making procedure
concerning the remuneration of the directors, supervisors and other senior
management personnel was in line with relevant regulations; the standards for
remuneration paid to the Company’s directors, supervisors and other senior
management personnel complied with the remuneration system; and the remuneration
disclosed in the 2010 Annual Report was factual and accurate.
(V) Duty fulfillment of Nomination Committee under the Board of Directors
On 15 Oct. 2010, due to adjustment on part of directors, the Company made relevant
adjustment on the members of Nomination Committee under the Board through the
approval by the Board of Directors. And after the adjustment, Liu Quanmin
(Independent Director), Zhou Hanjun (Independent Director), Deng Kangcheng were
the members of Nomination Committee with Liu Quanmin as Chief of the Committee.
The Nomination Committee performed their duties according to the Specific
Implementation Rules for Nomination Committee. On 28 May 2010, the Nomination
Committee issued the Opinion on Resignation of Independent Director for the
resignation of two independent directors due to the expiry of office term; on 21 Sep.
2010, the Nomination Committee formed the Resolutions on Engagement of Directors
and Independent Directors for the engagement of one director and two independent
directors; on 28 Oct. 2010, the Nomination Committee formed the Resolutions on
Engagement of CFO for the Company’s engagement of CFO.
(VI) Duty fulfillment of Strategy Committee under the Board of Directors
On 15 Oct. 2010, due to adjustment on part of directors, the Company made relevant
adjustment on the members of Strategy Committee under the Board through the
approval by the Board of Directors. And after the adjustment, Zhou Jianguo, Chen
Maozheng, Wen Li, Liu Xuanmin (Independent Director), Song Botong (Independent
Director) were the members of the Strategy Committee with Zhou Jianguo as the
Chief of the Committee.
XII. Profit distribution preplan for Y2010
41
As audited by China Audit International Certified Public Accountants, the Company
achieved, in 2010, a net profit of RMB 84,760,162.75. According to relevant laws and
regulations, as well as the Articles of Association of the Company, the net profit in
2010 will be used for covering the deficit of the previous years. And thus no profit
distribution or capitalization of capital reserves will be conducted. After the loss
make-up, the Company’s retained profit will stand at RMB -577,169,009.54.
XIII. Cash dividends in the previous three years
Unit: RMB
Proportion in the
Consolidated net profit
consolidated net profit
Amount of cash dividends attributable to Annual profit available for
Year attributable to
(including tax) shareholders of the distribution
shareholders of the
Company
Company
2009 0.00 20,217,383.62 0.00% -781,357,778.86
2008 0.00 19,123,787.11 0.00% -915,511,458.27
2007 0.00 39,007,992.54 0.00% -934,635,245.38
The proportion of the accumulative cash dividends over the previous three
0.00%
years in the average net profit over the previous three years (%)
XIV. The newspapers designated by the Company for information disclosure
remained unchanged, namely, China Securities Journal for the domestic
investors and Ta Kung Pao for those overseas.
XV. Statement and independent opinions of independent directors on the
Company’s provision of guarantees, as well as the Company’s execution of the
Circular on Relevant Issues Concerning Standardization of Fund Transfer
Between Listed Companies and Associated Parties and Provision of External
Guaranty
We have reviewed information about the Company’s provision of external guarantees
and the capital occupation by related parties stated in the 2010 Annual Report and
financial report of Shenzhen Special Economic Zone Real Estate & Properties (Group)
Co., Ltd. and other materials. And we hereby make the statement concerning the
Company’s provision of external guarantees and the capital occupation by related
parties as follows:
1. The Company provided no new guarantees for external parties in the reporting
period. In the reporting period, the unsettled balance of property mortgage guarantee
provided by the Company for house buyers stood at RMB 8.46 million. Such a kind
of guarantee is a common phenomenon in the real estate industry. Within the
guarantee period (from the date when the sum is set out by the mortgage banker to the
date when the Certificate of Real Estate of the property purchaser is handled by the
mortgage banker), if the property purchaser does not perform the debtor’s duties, the
Company has the right to take back the properties sold. Therefore, the said guarantee
will not cause actual losses to the Company, with slim possibility of the Company’s
taking the several and joint liability.
2. There existed no occupation of the Company’s capital by its substantial
shareholders. A certain amount of receivables from the related parties was mainly
resulted from the Company’s borrowings to its subsidiaries in the previous years.
42
Thereupon, we are of the opinion that the Company well executed the Circular
on Relevant Issues Concerning Standardization of Fund Transfer Between Listed
Companies and Associated Parties and Provision of External Guaranty.
43
Section IX Report of Supervisory Committee
In 2010, according to the Securities Law, the Company Law and the Company’s
Articles of Association, with great support from the Company’s Board of Directors, its
management team and shareholders, the Supervisory Committee, bearing the rights and
interests of all the shareholders in mind, faithfully performed its duty of supervision by
effectively exercising its rights of supervision at all important decision-making
meetings. Keeping its supervision focus on the compliant operation of the Company’s
core assets and major capital as well as significant projects, the Supervisory Committee
managed to improve the supervisory and disciplinary mechanism and internal control
system. As a result, expenses and asset risks were effectively controlled. The
Supervisory Committee carried forward transparent corporate operation and
democratic decision-making, continued emphasizing and implementing the principle of
transparent corporate operation in the daily work, and supervising major operation
activities. Meanwhile, it conducted various specific supervisions and examinations,
settled various assets and equities, launched the check and settlement of enterprise
funds account, strengthened the attention and settlement on lawsuit cases, carried out
the checks on execution of various resolutions made by the Company. It also gave play
to its function of internal audit and supervision by performing audit on performance
appraisal, operation management, capital management, financial incomes, construction
project earnings and cost control. It enhanced supervision on information disclosure
and faithfully executed the Rules of Shenzhen Stock Exchange for Share Listing and
other laws and regulations. According to the prescribed procedure, the Supervisory
Committee conducted examinations on the reports disclosed by the Company and its
Board of Directors, so as to ensure the factuality, accuracy, completeness and
timeliness of the information disclosed.
Sessions held by Supervisory Committee in the reporting period:
(I) The 1st session was convened on 19 Apr. 2010, at which reviewed and approved the
2009 Annual Report and Its Summary, Profit Distribution preplan for Y2009 and 2009
Annual Report of Supervisory Committee.
(II) The 2nd Session was convened on 26 Apr. 2010 by telecommunication, at which
reviewed and approved the First Quarterly Report for Y2010.
(III) The 3rd session was convened on 23 Aug. 2010, at which reviewed and approved
the Semi-annual Report 2010 and Its Summary.
(IV)The 4th session was convened on by telecommunication on 28 Oct. 2010, at which
reviewed and approved the Third Quarterly Report 2010.
Independent opinions and brief remarks on relevant matters by Supervisory Committee
(I) About the Company’s operation according to laws: In 2010, members of the
Supervisory Committee sat in on all the board sessions. Chairman of the Supervisory
Committee Xu Zhenhan sat in on deliberative sessions of the Company’s management,
sessions of GM and other important sessions. And the Supervisory Committee was of
the opinion that the Company made decisions in accordance with relevant laws and
regulations, as well as the Company’s Articles of Association, with no behaviors
harmful to shareholder interests; that the internal management mechanism and the
control system were further improved; and that the directors and other management
personnel diligently and responsibly performed their duties.
(II) Opinion about the Company’s self-appraisal on its internal control: In 2010, the
Company continued enhancing risk control and management mechanism. Various
internal control rules, work flows and approval rules were revised and improved,
44
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., LTD
For the year ended 31 December 2008
which enabled the internal control system to cover basically all aspects and links of the
Company’s operation. And the Company handled possible problems arising from
operation in time. Key internal control activities were conducted according to the
Company’s rules on internal control. And the Company’s self-appraisal report on its
internal control was in line with the actual condition of the Company.
(III) About the Company’s financial status: The Supervisory Committee was of the
opinion that the audit opinion issued by China Audit International Certified Public
Accountants LTD. was objective, with the financial report in line with the actual
situation and factually presenting the Company’s financial and operational position.
(IV) In the report period, the Company did not raise any funds.
(V) In the report period, there existed no newly increased related-party transaction. The
related-party transaction between the Company and its substantial shareholder
Shenzhen Investment Holdings Co., Ltd. occurred in 2009 was arising from that the
Company borrowed RMB 400 million from Shenzhen Investment Holdings Co., Ltd.
after winning the bidding for use rights of two land plots in the New Guangming
District in Shenzhen in 2009 due to tensive financial strain, which was returned during
the reporting period. The said related-party transaction was helpful to the Company
and the Company disclosed a public notice on the said related-party transaction
according to facts.
45
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., LTD
For the year ended 31 December 2008
Section X Significant Events
I. Significant lawsuits and arbitrations
For details of significant lawsuits and arbitrations where the Company was
involved in the report period, please refer to Note X to the Financial Report.
II. The Company did not conduct any major purchases or sales of assets in the
report period.
III. For details of related parties and related transactions in the report period,
please refer to Note VI to the Financial Report.
IV. The Company did not sign any major contracts concerning entrustment,
contracting or leasing in the report period. Nor did it entrust other parties with
assets management.
V. Particulars about guarantees provided by the Company
Unit: (RMB) Ten thousand
Guarantees provided for external parties (excluding guarantees provided for subsidiaries)
Date of
Implementat
Date and No. occurrence Actual Guarantee for
Name of the Guarantee Type of Term of ion
of Relevant (Date of amount of related parties
guaranteed line guarantee guarantee accomplishe
public notice signing guarantee or not
d or not
agreement)
Total external guarantees lines Total external guarantees
examined and approved in the 0.00 occurred in the reporting period 0.00
reporting period (A1) (A2)
Total external guarantee lines
Balance of actual guarantees at
examined and approved at the 0.00 0.00
the period end (A4)
period end (A3)
Guarantees provided for subsidiary companies
Date of
Implementat
Date and No. occurrence Actual Guarantee for
Name of the Guarantee Type of Term of ion
of Relevant (Date of amount of related parties
guaranteed line guarantee guarantee accomplishe
public notice signing guarantee or not
d or not
agreement)
Shantou Hualin 15 Aug. 2009 Credit
Real Estate (Public guarantee
30,000.00 31 Aug. 2009 20,000.00 Three years No No
Development Notice No. with joint
Co., Ltd. 2009-20) responsibility
Total guarantees lines for Total guarantees for subsidiaries
subsidiaries examined and approved 0.00 occurred in the reporting period 0.00
in the reporting period (B1) (B2)
Total guarantee lines for subsidiaries
Balance of actual guarantees at
examined and approved at the 20,000.00 20,000.00
the period end (B4)
period end (B3)
Total guarantees of the Company (Total of the two above)
Total guarantees lines examined and
Total guarantees occurred in the
approved in the reporting period 0.00 0.00
reporting period (A2+B2)
(A1+B1)
Total guarantees lines examined and Total balance of actual
approved at the report period 20,000.00 guarantees at the period end 20,000.00
(A3+B3) (A4+B4)
Proportion of total actual guarantee amount (A4+B4) in net assets of
14.01%
the Company
Among which:
Amount of guarantees provided for shareholders, actual controller and
0.00
other related parties (C)
Amount of debt guarantees provided directly or indirectly for parties
0.00
with asset-liability ratio exceeding 70% (D)
Proportion of total guarantee amount exceeding 50% of the Company’s
0.00
net assets (E)
Total amount of the above three guarantees (C+D+E) 0.00
Explanation on possibility of taking several and joint liability At the end of report period, balance of guarantees for property
involving immature guarantees buyers has not settled totaling RMB 8.46 million.
46
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., LTD
For the year ended 31 December 2008
In the report period, the unsettled balance of property mortgage guarantee provided by
the Company for house buyers stood at RMB 8.46 million. Such a kind of guarantee is
a common phenomenon in the real estate industry. Within the guarantee period (from
the date when the sum is set out by the mortgage banker to the date when the
Certificate of Real Estate of the property purchaser is handled by the mortgage banker),
if the property purchaser does not perform the debtor’s duties, the Company has the
right to take back the properties sold. Therefore, the said guarantee will not cause
actual losses to the Company, with slim possibility of the Company’s taking the several
and joint liability.
VI. Commitments made by controlling shareholder and actual controller, as well
as execution thereof
(I) Shenzhen Investment Holding Co., Ltd. made the following commitments
concerning the relevant matters of the share merger reform of SPG: “ 1. The Company
shall abide by the relevant laws, regulations and rules, and fulfill the legal
commitments; 2. The Company hereby declares that: The promisor shall faithfully
fulfill its commitments and shoulder corresponding responsibilities; Unless the
transferee agrees to and is able to fulfill the commitments, the promisor shall not
transfer the held shares. 3. The Company hereby declares that: Should the promisor fail
to fulfill its commitments prescribed in the relevant documents, it shall compensate the
other shareholders for their losses caused thereupon.” The commitments have been
fulfilled;
(II) Shenzhen Investment Holding Co., Ltd. made the following commitments
concerning the conditional sales of its held shares: The shares shall not be listed or
transferred within 12 months from the date when the reform plan is implemented;
When the aforesaid provision reaches its mature term, the originally non-tradable
shares may be listed for trading at securities exchanges, with the proportion of the sold
amount in the Company’s total shares not exceeding 5% within 12 months, as well as
not exceeding 10% within 24 months.” And the said commitments have been fulfilled;
(III) In the share merger reform, Shenzhen Investment Holding Co., Ltd. promised to
implement a share incentive plan, where the company was to sell its held shares (not
exceeding 10% of SPG’s total shares) to the SPG’s management on three years’
amortization. On 30 Sept. 2006, the State-Owned Assets Supervision and
Administration Commission of the State Council issued the Trial Measures for
Implementing Equity Incentive Plans by State Holding Listed Companies (Domestic)
(GZFFP【2006】No. 175). The Item 9 of the Trail Measures stipulates that the source of
the subject shares for implementing the equity incentive plan of a listed company shall
not be paid by a single state shareholder and that the state equity shall not be
gratuitously quantized either. Therefore, the equity incentive plan was unable to be
implemented. Nor the concerned commitment of Shenzhen Investment Holding Co.,
Ltd. was able to be fulfilled.
(IV) The Shenzhen Sate-owned Assets Supervision and Administration Commission
issued the Letter on Relevant Matters Concerning Information Disclosure of SPG to
Shenzhen Investment Holdings Co., Ltd. in Oct. 2009, making a commitment that it
would not conduct transfer of SPG share rights through agreements, asset
reorganization or other matters (not including shareholding reduction in the secondary
market) that have significant influence on SPG in this year or the next year. The said
commitment is currently in the process of execution.
VII. Particulars about share rights incentive
47
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., LTD
For the year ended 31 December 2008
When implementing the share merger reform, it was set forth that: the controlling
holder would sell its held shares (not exceeding 10% of the Company’s total shares) to
the Company’s management on three years’ amortization, with the price determined
according to the net asset value per share as most recently audited during the
implementation. However, the policies concerning the implementation of equity
incentive plan by state holding enterprises had not been introduced by the State-owned
Assets Supervision and Administration Commission of the State Council at that time.
Therefore, the Company did not execute the equity incentive plan which was stated in
the share merger reform plan. On 30 Sept. 2006, the State-Owned Assets Supervision
and Administration Commission of the State Council issued the Trial Measures for
Implementing Equity Incentive Plans by State Holding Listed Companies (Domestic).
As clearly stated in the Trial Measures, the granting price of equity of a listed company
shall not be lower than the closing price of the subject shares of the company on the
trading day before the promulgation of the equity incentive plan, or lower than the
average closing price of the subject shares of the company within 30 trading days
before the promulgation of the equity incentive plan. As a result, the concerned
commitment of the controlling shareholder was unable to be fulfilled. Nor the equity
incentive plan was able to be implemented. On 17 Mar. 2008, the State-owned Assets
Supervision and Administration Commission of Shenzhen introduced the Interim
Measures of Shenzhen on Establishment of Long-term Efficiency Incentive
Mechanism by State-owned Enterprises. According to the range of the aforesaid policy,
the Company would explore the mechanism for equity incentive.
VIII. Particulars in change of CPAs Firm
In 2010, the Company’s original audit organ “Shenzhen Nanfang Minhe Certified
Public Accountants Co., Ltd.” was combined with “China Audit International Certified
Public Accountants”, whose name was changed as “China Audit International Certified
Public Accountants LTD.” after the combination; the statutory business of certified
public accountants such as auditing and checking of capital, etc., as well as other
business by the original Shenzhen Nanfang Minhe were taken over by China Audit
International after the combination; meanwhile, Shenzhen Nanfang Minhe promised
that the personnel providing the audit service for the Company would keep stable to
ensure the quality of audit service for the Company. The affairs on changing the
engagement of CPAs firm was reviewed and approved by the 6th Session of the 6th
Board of Directors dated 7 Jun. 2010 and Shareholders’ General Meeting dated 28 Jun.
2010, which was disclosed at designated medias in accordance with relevant
stipulations. The Company would pay RMB 580,000 of audit fee to China Audit
International in accordance the contract between them.
IX. The Company didn’t follow the relevant stipulations to put on records when it
reported and submitted information to State-owned Assets Supervision and
Administration Commission of Shenzhen Municipal and its controlling
shareholder Shenzhen Investment Holdings Co., Ltd., for which the Company
received the public criticism with SZJF [2010] No. 38 document from Shenzhen
Securities Regulatory Commission on 29 Jan. 2010.
X. Reception of surveys, interviews and visits by the Company in the reporting
period
Way of
Time Place Visitor or caller Main discussion and materials provided by the Company
reception
48
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., LTD
For the year ended 31 December 2008
The
Inquired about operating of the Company in 2009, with
8 Jan. 2010 Company’s By telephone Individual investor
no materials provided by the Company
office
The
Inquired about influence of the policy on the Company,
26 Jan. 2010 Company’s By telephone Individual investor
with no materials provided by the Company
office
The
Inquired about the Company’s sales, with no materials
12 Feb. 2010 Company’s By telephone Individual investor
provided by the Company
office
The
Inquired about plan on development projects of the
5 Mar. 2010 Company’s By telephone Individual investor
Company, with no materials provided by the Company
office
The
Inquired about Annual Report 2009 of the Company,
23 Apr. 2010 Company’s By telephone Individual investor
with no materials provided by the Company
office
The
Inquired about land reserves of the Company, with no
10 May 2010 Company’s By telephone Individual investor
materials provided by the Company
office
The Inquired with time of holding shareholders’ general
18 May 2010 Company’s By telephone Individual investor meeting of the Company, with no materials provided by
office the Company
The Inquired about reasons for the Company’s shares
9 Jun. 2010 Company’s By telephone Individual investor reaching upper trading limit, with no materials provided
office by the Company
The
Standard Chartered Inquiring date of record of the Company, with no
17 Jun. 2010 Company’s By telephone
Bank materials provided by the Company
office
Six Medias including
Nanfang Daily, Business
The
Field Report in 21st Century, Acknowledge of renewal and rebuild of the city, with no
22 Jun. 2010 Company’s
research Ta Kung Pao and materials provided by the Company
office
Shenzhen Jing Bao and
etc.
The
Field Donghai Securities and General interview, with no written materials provided by
15 Jul. 2010 Company’s
research Guodu Securities the Company
office
The Inquiring reasons for the Company’s stock price
28 Jul. 2010 Company’s By telephone Individual investor fluctuations, with no written materials being provided by
office the Company
The Inquiring the time for disclosure of the Company’s
13 Aug. 2010 Company’s By telephone Individual investor semi-annual report, with no written materials being
office provided by the Company
The
Inquiring about the Company’s semi-annual report, with
30 Aug. 2010 Company’s By telephone Individual investor
no written materials being provided by the Company
office
The Inquiring about the Company’s project development and
8 Sept. 2010 Company’s By telephone Individual investor the sales situation, with no written materials being
office provided by the Company
The Inquiring about the Company’s project development
19 Sept. 2010 Company’s By telephone Individual investor plans, with no written materials being provided by the
office Company
The Inquired about operating of the Company and opinions
29 Sep. 2010 Company’s By telephone Individual investor on macro-economic control, with no materials provided
office by the Company
The
Inquired about progress on development projects of the
20 Oct. 2010 Company’s By telephone Individual investor
Company, with no materials provided by the Company
office
The
Inquired about the Company’s sales, with no materials
4 Nov. 2010 Company’s By telephone Individual investor
provided by the Company
office
The
Inquired about sales and operating of the Company, with
29 Dec. 2010 Company’s By telephone Individual investor
no materials provided by the Company
office
49
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., LTD
For the year ended 31 December 2008
Section XI. Financial Report
(Please see the attached financial statements and audit report)
Section XII. Documents Available for Reference
1. The accounting statements with personal signatures and seals of Legal
Representative, Chief Accountant and the person in charge of the accounting agency.
2. The original of the Audit Report with the seals of the CPA firm, as well as the
signatures and seals of the registered accountants.
3. The originals of all the documents and public notices disclosed on China Securities
Journal and Ta Kung Pao by the Company during the report period.
Board of Directors
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
27 Apr. 2011
50
SHENZHEN SPECIAL ECONOMIC ZONE REAL
ESTATE & PROPERTIES (GROUP) CO., LTD.
AUDITORS’ REPORT
for the year ended 31 December 2010
CONTENTS PAGE(S)
AUDITORS’ REPORT 1-2
FINANCIAL STATEMENTS (AUDITED)
CONSOLIDATED BALANCE SHEET 3-4
CONSOLIDATED INCOME STATEMENT 5
CONSOLIDATED CASH FLOW STATEMENT 6-7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 8-11
BALANCE SHEET 12-13
INCOME STATEMENT 14
CASH FLOW STATEMENT 15-16
STATEMENT OF CHANGES IN EQUITY 17-20
NOTES TO THE FINANCIAL STATEMENTS 21-117
APPENDIX
3.1 COPIES OF AUDIT INSTITUTION’S BUSINESS LICENSE
AND PRACTICE LICENSE
3.2 COPIES OF AUDIT INSTITUTION’S SECURITIES RELATED
BUSINESS LICENSE &FUTURES RELATED BUSINESS
LICENSE
44
* Confidential *
AUDITORS’ REPORT
China Audit International Shen Zi [2011] 01020068
TO THE SHAREHOLDERS OF SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE &
PROPERTIES (GROUP) CO. LTD:
We have audited the accompanying consolidated financial statements of Shenzhen Special Economic
Zone Real Estate & Properties (Group) Co., Ltd. (the “Company”) and its subsidiaries (together with the
Company referred to as the “Group”), which comprise the consolidated balance sheet as of December 31 2010,
and the consolidated income statement, the consolidated cash flow statement, the consolidated statement of
changes in equity for the year then ended and notes to these financial statements.
1. Management’s responsibility for the financial statements
Management is responsible for the preparation of these financial statements in accordance with the China
Accounting Standards for Business Enterprises(2006) issued by the Ministry of Finance of the People’s
Republic of China. This responsibility includes：（1）designing, implementing and maintaining internal control
relevant to the preparation of financial statements that are free from material misstatement, whether due to
fraud or error;（2）selecting and applying appropriate accounting policies;（3）making accounting estimates that
are reasonable in the circumstances.
2. Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with the China Standards on Auditing for Certified Pbblic Accounts. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether dueto fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
1
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
3. Opinion
In our opinion, the financial statements comply with the requirements of China Accounting Standards for
Business Enterprises(2006) issued by the Ministry of Finance of the People’s Republic of China and present
fairly, in all material respects, the consolidated financial position and financial position of the Company as of
December 31, 2010, and the consolidated results of operations and results of operations and the consolidated
cash flows and cash flows of the Company for the year then ended.
China Audit International Certified Public Certified Public Accountant
Accountants LTD.
Certified Public Accountant
Beijing, China 27 April, 2011
2
CONSOLIDATED BALANCE SHEET
As at 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE&
Units:Rmb Yuan
PROPERTIES (GROUP) CO., LTD.
Note
ASSETS 2010-12-31 2009/12/31(Restated)
Ⅴ
Current assets
Cash at bank and on hand 1 379,720,636.21 386,102,533.51
Financial assets held for trading 2 97,726.25 86,269.75
Accounts receivable 3 17,152,478.36 14,732,395.84
Advances to suppliers 4 26,890,551.77 18,020,338.85
Other receivables 5 47,534,939.51 49,298,258.09
Inventories 6 2,224,938,706.49 2,088,298,946.63
Total current assets 2,696,335,038.59 2,556,538,742.67
Non-current assets
Long-term equity investments 7 63,426,810.37 111,305,288.02
Investment Property 8 530,109,494.13 604,153,453.42
Fixed assets 9 64,526,512.04 66,283,427.82
Construction in progress
10 -
520,000.00
Intangible assets 11 6,213,266.67 6,232,380.00
Long-term deferred and prepaid
12 364,901.70
expenses 202,456.50
Deferred tax assets 13 17,756,599.72 16,232,130.41
Total non-current assets 682,755,139.43 804,571,581.37
TOTAL ASSETS 3,379,090,178.02 3,361,110,324.04
3
CONSOLIDATED BALANCE SHEET（Continued）
As at 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE&
Units:Rmb Yuan
PROPERTIES (GROUP) CO., LTD.
LIABILITIES AND
Note Ⅴ 2010-12-31 2009/12/31(Restated)
SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings 16 14,800,000.00 100,000,000.00
Accountspayable 17 228,580,780.82 730,944,352.56
Advancefromcustomers 18 395,332,270.89 157,116,052.15
Employeebenefitspayable 19 39,338,801.36 24,499,493.75
Taxespayable 20 -13,333,458.44 -8,782,763.56
Interestpayable 21 16,535,277.94 24,687,711.65
Otherpayables 22 302,144,393.62 297,237,215.73
Non-currentliabilitieswithinoneyear 23 29,423,411.10 229,607,155.48
Totalofcurrentliability 1,012,821,477.29 1,555,309,217.76
Non-currentliabilities
Long-termborrowings 24 1,056,703,120.34 581,986,531.34
Long-termpayable 25 9,779,108.83 8,185,932.62
Totalnon-currentliabilities 1,066,482,229.17 590,172,463.96
Totalliabilities 2,079,303,706.46 2,145,481,681.72
Shareholders'equity
Sharecapital 26 1,011,660,000.00 1,011,660,000.00
Capitalreserve 27 978,244,858.10 978,244,858.10
Less:Sharesinstock - -
Surplusreserve 28 4,974,391.15 4,974,391.15
RetainedEarnings 29 -577,169,009.54 -661,929,172.29
Foreigncurrencytranslationdefferences 10,161,630.32 10,591,100.81
Totalequityattributabletoequityholders
1,427,871,870.03 1,343,541,177.77
oftheCompany
Minorityinterests 30 -128,085,398.47 -127,912,535.45
Totalshareholders'equity 1,299,786,471.56 1,215,628,642.32
TOTALLIABILITIESANDSHAREHO
3,379,090,178.02 3,361,110,324.04
LDERS'EQUITY
4
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE&
Units:Rmb Yuan
PROPERTIES (GROUP) CO., LTD.
Note
Items 2010 2009(Restated)
Ⅴ
1. Operating Income 31 1,021,055,699.61 750,182,202.47
Less: Cost of sales 31 672,735,584.16 534,326,169.41
Business Taxes and Surcharges 32 121,153,435.36 73,800,767.42
Selling and distribution expenses 33 13,093,988.97 8,779,310.59
General and administrative expenses 34 69,993,192.20 70,216,553.53
Finance expenses 35 58,259,953.04 39,697,263.73
Asset impairment losses - -7,000,000.00
Add: Gain from changes of fair value 36 -15,323.50 109,106.25
Investment income 37 27,202,050.42 5,793,517.26
Including： Investment income from
37 -1,904,596.98
affiliates 26,879,566.38
2. Operating profit 113,006,272.80 36,264,761.30
Add: Non-operating income 38 212,992.05 961,119.22
Less: Non-operating expenses 39 1,302,558.04 1,045,598.22
Including： Loss from disposal of
39 57,747.38
non-current assets 329,447.92
3. Profit before income tax 111,916,706.81 36,180,282.30
Less: Income tax expenses 40 27,145,348.30 15,962,898.68
4. Net profit 84,771,358.51 20,217,383.62
Attributable to equity holders of the
19,123,787.11
Company 84,760,162.75
Minority profit or loss 11,195.76 18,221.54
5. Earnings per share
（一）Basic earnings per share 41 0.0838 0.0200
（二）Diluted earnings per share 41 0.0838 0.0200
6. Other comprehensive income 42 145,356.03
-613,529.27
7. Total comprehensive income 84,157,829.24 20,362,739.65
Attributable to equity holders of the
Company 84,330,692.26 20,300,911.30
Minority comprehensive income
-172,863.02 61,828.35
5
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC
ZONE REAL ESTATE& PROPERTIES (GROUP) Units:Rmb Yuan
CO., LTD.
Note
Items 2010 2009
Ⅴ
1. Cash flows from operating activities
Cash received from sales of goods or
792,025,009.11
rendering of services 1,253,989,347.19
Refund of taxes and levies - -
Cash received relating to other
53,868,624.32
operating activities 43.(1) 57,745,567.04
Sub-total of cash inflows 1,311,734,914.23 845,893,633.43
Cash paid for goods and services 43.(3) 1,185,469,413.32 1,006,695,122.36
Cash paid to and on behalf of
88,870,596.42
employees 94,959,120.91
Payments of taxes and levies 116,943,782.96 95,716,486.83
Cash paid relating to other operating
66,737,308.36
activities 43.(2) 93,414,158.21
Sub-total of cash outflows 1,490,786,475.40 1,258,019,513.97
Net cash flows from operating
-179,051,561.17 -412,125,880.54
activities
2. Cash flows from investing activities
Cash received from investment
29,445,000.00 -
retrieving
Cash received as investment gains 12,337,041.75 7,898,114.24
Net cash received from disposal of
fixed assets, intangible assets and other 220.00
long-term assets 121,790.00
Net cash received from disposal of
subsidiaries or 33,447,253.77 -
other operational units
Cash received relating to other
- -
investing activities
Sub-total of cash inflows 75,351,085.52 7,898,334.24
Cash paid to acquire fixed assets,
intangible assets and other long-term
assets 5,610,026.56 1,308,118.28
Cash paid to acquire investments 191,640.00 -
Net cash received from subsidiaries
- -
and other operational units
Cash paid relating to other investing
- -
activities
Sub-total of cash outflows 5,801,666.56 1,308,118.28
Net cash flows from investing
69,549,418.96 6,590,215.96
activities
3. Cash flows from financing activities
Cash received as investment - -
Cash received from borrowings 43.(4) 723,800,000.00 950,000,000.00
Cash received from issuance of bonds - -
6
Cash received relating to other
- -
financing activities
Sub-total of cash inflows 723,800,000.00 950,000,000.00
Cash repayments of borrowings 43.(4) 536,378,943.85 438,411,098.72
Cash payments for interest expenses
and distribution of dividends or profits 80,004,795.06 30,401,378.52
Including： Cash payments for
dividends or profit to minority - -
shareholders of subsidiaries
Cash payments relating to other
800,000.00 -
financing activities 43.(5)
Sub-total of cash outflows 617,183,738.91 468,812,477.24
Net cash flows from financing
106,616,261.09 481,187,522.76
activities
Effect of foreign exchange rate
4. changes on cash and cash 172,739.29
equivalents -691,646.87
Net increase in cash and cash
5. -3,577,527.99 75,824,597.47
equivalents
Add: Cash and cash equivalents at the
374,836,340.37 299,011,742.90
beginning of year 43.(6)
Cash and cash equivalent at the end
6. 371,258,812.38 374,836,340.37
of year 43.(6)
7
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
For the year ended 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP) CO., LTD. Units:Rmb Yuan
Attributable to equity holders of the Company
Foreign Minority
Less: Total
Share Capital Special currency Surplus Retained interests
Shares in
capital reserve reserves exchange reserves earnings
stock
differences
1 Balance at the end of 1,011,660,000. 978,244,858 -781,357,778. -13,022,972.0
- - 15,130,144.02 4,974,391.15 1,215,628,642.32
. last year： 00 .10 86 9
Changes of 119,428,606. -114,889,563.
Add: - - - - -4,539,043.21 - -
accounting policy 57 36
Error correction
- - - - - - - - -
of the last period
2 Balance at the 1,011,660,000. 978,244,858 -661,929,172. -127,912,535.
- - 10,591,100.81 4,974,391.15 1,215,628,642.32
. beginning of the year 00 .10 29 45
3 Change in equity for 84,760,162.7
- - - - -429,470.49 - -172,863.02 84,157,829.24
. the year 5
84,760,162.7
(1) Net profit - - - - - - 11,195.76 84,771,358.51
5
Gain or loss
(2) recognized - - - - -429,470.49 - - -184,058.78 -613,529.27
directly in equity
Net changes in
fair value of
a. - - - - - - - - -
avaible-for-sale
financial assests
Effective portion
of changes in fair
b. - - - - - - - - -
value of cash
flow hedges
Deffered tax
c. - - - - - - - - -
effects
d. Others - - - - -429,470.49 - - -184,058.78 -613,529.27
84,760,162.7
Sub-total(1)&(2) - - - - -429,470.49 - -172,863.02 84,157,829.24
5
Shareholders'
(3) - - - - - - - - -
contributions and
8
decrease of
capital
Contributions by
a. - - - - - - - - -
shareholders
Equity settled
b. share-based - - - - - - - - -
payment
c. Others - - - - - - - - -
Distribution of
(4) - - - - - - - - -
profits
Withdrawal of
a. - - - - - - - - -
surplus reserves
Distributions to
b. - - - - - - - - -
shareholders
c. Others - - - - - - - - -
Transfers within
(5) equity
- - - - - - - - -
Share capital
increased by
a. - - - - - - - - -
capital reserve
transfer
Share capital
increased by
b. - - - - - - - - -
surplus reserve
transfer
Remedying loss
c. with profit - - - - - - - - -
surplus
d. Others - - - - - - - - -
(6) Special reserves - - - - - - - - -
Extracted this
a. - - - - - - - - -
year
b. Used this year - - - - - - - - -
(7) Others - - - - - - - - -
4 Balance at the end of 1,011,660,000. 978,244,858 -577,169,009. -128,085,398.
- - 10,161,630.32 4,974,391.15 1,299,786,471.56
. the yearreport period 00 .10 54 47
Note:changes of accounting policies refer to Notes II. 27
9
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
For the year ended 31 December 2009
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP) CO., LTD. Units:Rmb Yuan
Attributable to equity holders of the Company
Foreign Minority
Less: Total
Share Capital Special currency Surplus Retained interests
Shares in
capital reserve reserves exchange reserves earnings
stock
differences
1 Balance at the end of 1,011,660,000 978,244,858 118,910,686. -915,511,458.
- - 14,984,787.99 -11,161,500.40 1,197,127,374.36
. last year： .00 .10 94 27
Changes of 119,446,828.1 -114,951,391.
Add: - - - - -4,495,436.40 - -
accounting policy 1 71
Error correction of
- - - - - - - - -
the last period
2 Balance at the beginning 1,011,660,00 978,244,858 118,910,686. -796,064,630. -126,112,892.
- - 10,489,351.59 1,197,127,374.36
. of the year 0.00 .10 94 16 11
3 Change in equity for the -113,936,2 134,135,45 -1,799,643.
- - - - 101,749.22 18,501,267.96
. year 95.79 7.87 34
20,199,162
(1) Net profit - - - - - - 18,221.54 20,217,383.62
.08
Gain or loss
(2) recognized directly - - - - 101,749.22 - - 43,606.81 145,356.03
in equity
Net changes in fair
value of
a. - - - - - - - - -
avaible-for-sale
financial assests
Effective portion
of changes in fair
b. - - - - - - - - -
value of cash flow
hedges
Deffered tax
c. - - - - - - - - -
effects
d. Others - - - - 101,749.22 - - 43,606.81 145,356.03
20,199,162.0
Sub-total(1)&(2) - - - - 101,749.22 - 61,828.35 20,362,739.65
8
(3) Shareholders' - - - - - - - -1,861,471.69 -1,861,471.69
10
contributions and
decrease of capital
Contributions by
a. - - - - - - - - -
shareholders
Equity settled
b. share-based - - - - - - - - -
payment
c. Others - - - - - - - -1,861,471.69 -1,861,471.69
Distribution of
(4) - - - - - - - - -
profits
Withdrawal of
a. - - - - - - - - -
surplus reserves
Distributions to
b. - - - - - - - - -
shareholders
c. Others - - - - - - - - -
Transfers within -113,936,295 113,936,295.7
(5) equity
- - - - - - -
.79 9
Share capital
a. increased by capital - - - - - - - - -
reserve transfer
Share capital
b. increased by surplus - - - - - - - - -
reserve transfer
Remedying loss -113,936,295.7 113,936,295.7
c. - - - - - - -
with profit surplus 9 9
d. Others - - - - - - - - -
(6) Special reserves - - - - - - - - -
a. Extracted this year - - - - - - - - -
b. Used this year - - - - - - - - -
(7) Others - - - - - - - - -
4 Balance at the end of the 1,011,660,00 978,244,858 -661,929,172. -127,912,535.
- - 10,591,100.81 4,974,391.15 1,215,628,642.32
. yearreport period 0.00 .10 29 45
Note:changes of accounting policies refer to Notes II. 27
11
BALANCE SHEET
As at 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL
Units:Rmb Yuan
ESTATE& PROPERTIES (GROUP) CO., LTD.
ASSETS NoteⅫ 2010-12-31 2009-12-31
Current assets
Cash at bank and on hand 191,108,590.15 73,508,120.37
Financialassetsheldfortrading 97,726.25 86,269.75
Accountsreceivable 1 5,694,673.47 6,109,646.72
Advancestosuppliers 1,199,429.00 -
Otherreceivables 2 277,483,418.47 469,851,675.39
Inventories 3 1,413,212,628.44 1,414,914,758.68
Totalcurrentassets 1,888,796,465.78 1,964,470,470.91
Non-currentassets
Long-termequityinvestments 4 286,597,524.97 302,004,763.37
InvestmentProperty 464,169,328.80 534,718,105.50
Fixedassets 38,189,370.22 39,439,456.90
Intangibleassets 212,066.67 -
Deferredtaxassets 923,314.27 95,455.46
Totalnon-currentassets 790,091,604.93 876,257,781.23
TOTALASSETS 2,678,888,070.71 2,840,728,252.14
12
BALANCE SHEET（Continued）
As at 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE
Units:Rmb Yuan
REAL ESTATE& PROPERTIES (GROUP) CO., LTD.
Note
LIABILITIES AND OWNERS' EQUITY 2010-12-31 2009-12-31
Ⅻ
Current liabilities
Short-term borrowings - 100,000,000.00
Account payable 20,387,450.12 621,374,407.44
Advance from customers 15,424,301.60 10,696,023.60
Employee benefits payable 14,865,546.49 9,066,342.19
Taxes payable 1,444,204.58 2,915,204.83
Interest payable 16,535,277.94 24,687,711.65
Other payables 525,522,847.87 383,176,088.95
Non-current liability due in one year 29,423,411.10 206,407,155.48
Other current liability - -
Total of current liability 623,603,039.70 1,358,322,934.14
Non-current liabilities
Long-term borrowings 856,703,120.34 281,986,531.34
Accrued liabilities - -
Total non-current liabilities 856,703,120.34 281,986,531.34
Total liabilities 1,480,306,160.04 1,640,309,465.48
Owners' equity
Share capital 1,011,660,000.00 1,011,660,000.00
Capital reserve 978,244,858.10 978,244,858.10
Less: Shares in stock - -
Surplus reserve - -
Retained Earnings -791,322,947.43 -789,486,071.44
Total owners' equity 1,198,581,910.67 1,200,418,786.66
TOTAL LIABILITIES AND OWNER'S
2,678,888,070.71 2,840,728,252.14
EQUITY
13
INCOME STATEMENT
For the year ended 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE
Units:Rmb Yuan
REAL ESTATE& PROPERTIES (GROUP) CO., LTD.
Note
Items 2010 2009
Ⅻ
1. Operating Income 5 217,512,391.39 154,491,683.12
Less: Cost of sales 5 95,076,630.82 97,816,242.35
Business Taxes and Surcharges 42,255,183.95 30,956,507.51
Selling and distribution expenses 657,269.20 2,637,181.50
General and administrative expenses 34,304,983.99 30,487,484.97
Finance expenses 62,799,647.88 30,992,954.16
Asset impairment losses - -
Add: Gain from changes of fair value -15,323.50 109,106.25
Investment income 6 14,898,087.51 -1,790,295.30
Incl. Investment income from affiliates 6 14,575,603.47 -1,904,596.98
2. Operating profit -2,698,560.44 -40,079,876.42
Add: Non-operating income 90,862.40 846,597.38
Less: Non-operating expenses 57,036.76 563,068.96
Incl. Loss from disposal of non-current
57,036.76 -
assets
3. Profit before income tax -2,664,734.80 -39,796,348.00
Less: Income tax expenses -827,858.81 4,140,269.96
Net
4. -1,836,875.99 -43,936,617.96
profit
5. Other comprehensive income -
-
6. Total comprehensive income -1,836,875.99 -43,936,617.96
14
CASH FLOW STATEMENT
For the year ended 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE&
PROPERTIES (GROUP) CO., LTD. Units:Rmb Yuan
Note
Items 2010 2009
Ⅻ
1. Cash flows from operating activities
Cash received from sales of goods or
164,105,736.30
rendering of services 222,655,642.64
Refund of taxes and levies - -
Cash received relating to other operating
316,855,422.62
activities 378,782,725.79
Sub-total of cash inflows 601,438,368.43 480,961,158.92
Cash paid for goods and services 607,610,394.75 612,513,714.45
Cash paid to and on behalf of employees 31,419,845.72 23,709,934.55
Payments of taxes and levies 36,848,151.78 17,904,978.56
Cash paid relating to other operating
64,486,945.39 191,017,859.10
activities
Sub-total of cash outflows 740,365,337.64 845,146,486.66
Net cash flows from operating activities -138,926,969.21 -364,185,327.74
2. Cash flows from investing activities
Cash received from investment retrieving 29,445,000.00 -
Cash received as investment gains 922,484.04 7,698,114.24
Net cash received from disposal of fixed
assets, intangible assets and other - -
long-term assets
Net cash received from disposal of
subsidiaries or - -
other operational units
Cash received relating to other investing
- -
activities
Sub-total of cash inflows 30,367,484.04 7,698,114.24
Cash paid to acquire fixed assets,
183,909.54
intangible assets and other long-term assets 2,135,353.26
Cash paid to acquire investments 191,640.00 -
Net cash received from subsidiaries and
- -
other operational units
Cash paid relating to other investing
- -
activities
Sub-total of cash outflows 2,326,993.26 183,909.54
Net cash flows from investing activities 28,040,490.78 7,514,204.70
3. Cash flows from financing activities
Cash received as investment - -
Cash received from borrowings 709,000,000.00 650,000,000.00
Cash received from issuance of bonds - -
Cash received relating to other financing - -
15
activities
Sub-total of cash inflows 709,000,000.00 650,000,000.00
Cash repayments of borrowings 413,178,943.85 374,811,098.72
Cash payments for interest expenses and
21,719,734.34
distribution of dividends or profits 63,891,254.68
Incl. Cash payments for dividends or profit
- -
to minority shareholders of subsidiaries
Cash payments relating to other financing
800,000.00 -
activities
Sub-total of cash outflows 477,870,198.53 396,530,833.06
Net cash flows from financing activities 231,129,801.47 253,469,166.94
Effect of foreign exchange rate changes
4. 161,516.05 -
on cash and cash equivalents
Net increase in cash and cash
5. 120,404,839.09 -103,201,956.10
equivalents
Add: Cash and cash equivalents at the
62,241,927.23 165,443,883.33
beginning of year
Cash and cash equivalent at the end of
6. 182,646,766.32 62,241,927.23
year
16
CHANGES IN OWNER'S EQUITY
For the year ended 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP) CO., LTD. Units:Rmb Yuan
Less:
Special Surplus Retained
Share capital Capital reserve Shares in Total
reserves reserves earnings
stock
1. Balance at the end of last year： 1,011,660,000.00 978,244,858.10 - - - -789,486,071.44 1,200,418,786.66
Add： Changes of accounting policy - - - - - - -
Error correction of the last period - - - - - - -
2. Balance at the beginning of this year 1,011,660,000.00 978,244,858.10 - - - -789,486,071.44 1,200,418,786.66
3. Change in equity for the year - - - - - -1,836,875.99 -1,836,875.99
(1) Net profit - - - - - -1,836,875.99 -1,836,875.99
(2) Gain or loss recognized directly in - - - - - - -
equity
a. Net changes in fair value of - - - - - - -
avaible-for-sale financial assests
b. Effective portion of changes in fair - - - - - - -
value of cash flow hedges
c. Deffered tax effects - - - - - - -
d. Others - - - - - - -
Sub-total (1) & (2) - - - - - -1,836,875.99 -1,836,875.99
(3) Shareholders' contributions and - - - - - - -
decrease of capital
a. Contributions by shareholders - - - - - - -
b. Equity settled share-based payment - - - - - - -
c. Others - - - - - - -
(4) Distribution of profits - - - - - - -
a. Withdrawal of surplus reserves - - - - - - -
b. Distributions to shareholders - - - - - - -
c. Others - - - - - - -
(5) Transfers within equity - - - - - - -
a. Share capital increased by capital - - - - - - -
reserve transfer
b. Share capital increased by surplus - - - - - - -
reserve transfer
17
c. Remedying loss with profit surplus - - - - - - -
d. Others - - - - - - -
(6) Special reserves - - - - - - -
a. Extracted this year - - - - - - -
b. Used this year - - - - - - -
(7) Others - - - - - - -
4. Balance at the end of this report period 1,011,660,000.00 978,244,858.10 - - - -791,322,947.43 1,198,581,910.67
18
CHANGES IN OWNER'S EQUITY
For the year ended 31 December 2010
Prepared by:SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP) CO., LTD. Units:Rmb Yuan
Less:
Special Surplus Retained
Share capital Capital reserve Shares Total
reserves reserves earnings
in stock
1. Balance at the end of last year： 1,011,660,000.00 978,244,858.10 - - 113,936,295.79 -859,485,749.27 1,244,355,404.62
Add： Changes of accounting policy - - - - - - -
Error correction of the last period - - - - - - -
2. Balance at the beginning of this year 1,011,660,000.00 978,244,858.10 - - 113,936,295.79 -859,485,749.27 1,244,355,404.62
3. Change in equity for the year - - - - -113,936,295.79 69,999,677.83 -43,936,617.96
(1) Net profit - - - - - -43,936,617.96 -43,936,617.96
(2) Gain or loss recognized directly in
- - - - - - -
equity
a. Net changes in fair value of
- - - - - - -
avaible-for-sale financial assests
b. Effective portion of changes in fair
- - - - - - -
value of cash flow hedges
c. Deffered tax effects - - - - - - -
d. Others - - - - - - -
Sub-total (1) & (2) - - - - - -43,936,617.96 -43,936,617.96
(3) Shareholders' contributions and
- - - - - - -
decrease of capital
a. Contributions by shareholders - - - - - - -
b. Equity settled share-based payment - - - - - - -
c. Others - - - - - - -
(4) Distribution of profits - - - - - - -
a. Withdrawal of surplus reserves - - - - - - -
b. Distributions to shareholders - - - - - - -
c. Others - - - - - - -
(5) Transfers within equity - - - - -113,936,295.79 113,936,295.79 -
a. Share capital increased by capital
- - - - - - -
reserve transfer
b. Share capital increased by surplus - - - - - - -
19
reserve transfer
c. Remedying loss with profit surplus - - - - -113,936,295.79 113,936,295.79 -
d. Others - - - - - - -
(6) Special reserves - - - - - - -
a. Extracted this year - - - - - - -
b. Used this year - - - - - - -
(7) Others - - - - - - -
4. Balance at the end of this report period 1,011,660,000.00 978,244,858.10 - - - -789,486,071.44 1,200,418,786.66
20
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
I.The company's basic information
1. Company status
Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd. (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 licenses 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 assests 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 Feberary 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.
2. The company's nature/business scope/main products or services
Nature of Busines: this Company belongs to the real estate industry.
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
21
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
service, construction and installation service, renovation service.
3. Approved financial report
The financial statements were authorized for issuance by the board of directors on 27th April, 2011.
II.Summary of significant accounting policies, accounting estimates, prior period errors and
prepare the consolidated financial statements
1. Basis of preparation
The financial statements have been translated into English from the Company’s financial statementss
issued in Chinese.
2. Statement of compliance
The financial statements have been prepared in accordance with the requirements of the China
Accounting Standards for Business Enterprises (CAS (2006)) issued by the Ministry of Finance (MOF). These
financial statements present truly and completely the consolidated financial position and financial position, the
consolidated results of operations and results of operations and the consolidated cash flows and cash flows of
the Group.
The financial statements also comply with the disclosure requirements of “Regulation on the Preparation
of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for Financial
Reports and No. 9: Rate of Return (ROE) and the caluation of earning per share” revised by the China
Securities Reulatory Commission (CSRC) in 2010.
3. Accounting period
The fiscal year of the Group is from 1 January to 31 December.
4. Functional and presentation currency
22
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
The consoliated financial statements are presented in Renminbi Yuan, and subsidiaries registered in
foreign countries shall consider the local currency as functional and presentation currency.
5. Accounting basis and accounting measurement
The accounting basis of the Group is the accrual system.
Accounting measurements consist of: historical cost, replacement cost, net realizable value, present value,
fair value. An enterprise shall generally adopt historical cost as the measurement basis for accounting elements.
If the accounting elements are measured at replacement cost, net realizable value, present value or fair value,
the enterprise shall ensure such amounts can be obtained and reliably measured.
6. Foreign currency transactions
Foreign currency transactions are, on an initial recognition, translated to RMB at the spot exchange rate
on the dates of the transactions.
Monetary items denominated in foreign currencies are translated into RMB at the spot exchange rate at
the balance sheet date. The resulting exchange differences are recognised in profit or loss, except those arising
from the principals and interests on foreign currency borrowings specifically for the purpose of acquisition,
construction or productions of qualifying assests. Non-monetary items denominated in foreign currences that
are measured at historical cost are translated to RMB using the foreign exchange rate at the transaction date.
7. Business combination under common control and not under common control
A business combinations refers to a transaction or event that brings together of separate enterprises into
one reporting entity. Business combinations are classified into the business combinations involving enterprise
common control under and the business combinations not involving enterprise under common control.
（1）Business combination involing entities under common control
A business combination involving enterprises under common control is a business combination in
which all of the combining enterprises are ulimately controlled by the same party or parties both before and
after the business combination, and that control is not transitory. The assests and liabilities obtained are
measured at the carrying amounts as recorder by the enterprise being absorded at the combination date. The
23
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
differences between the carrying amount of the net assest obtained and the carrying amount of consideration
paid for the combination (or the total face value of shares issued) is adjusted for share premiun in the capital
reserve. If the balance of share primiun is insufficient, any excess is adjusted to retained earnings. The
combination date is the date on which the Group effectively obtains control of the enterprise being absord.
（2）Business combinations involing entities not under common control
A business combination involving entities not under common control is a business combination in which
all of the combining entities are not ultimately controlled by the same party or parties both before and after the
business combination. The cost of a business combination paid for the Group is the aggregate of fair value at
the acquisition date of assests given, liabilities incurred or assumed, and equity securities issued by the Group,
in exchange for control of the acquiree plus any cost directly attributable to the business combination. The
difference between the fair value and the carrying amount of the assests given is recognised in profit or loss.
The acquisition date is the date on which the Group effectively obtains control of the acquiree.
Any excess of the cost of a business combination over the Group’s interest in the fair value of the
acquiree’s identifiable net assest is recognised as goodwill.
Any excess of the Group’s interest in the fair value of the acquiree’s identificable net assest over the cost
of a business combination is recognized in profit or loss.
The Group, at the acquisition date, allocates the cost of the business combinationby recognising the
acquiree’s identificable assest, liabilities and contigent liabilities at their fari value at that date.
8. Consolidated financial statements
The consolidated financial statements comprise the company and the subisdiaries. Control is that the
company can decide the financial and operating policy, and earn the profit from the business of the
subsidiaries.
When the company combines a subsidiary during the reporting period through a business combination
involving entities under common contorl, the financial statements of the subsidiary are included in the
cosolidated financial statements as if the combination had occurred at the beginning of the earliest comparative
24
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
period presented or, if later, at the date that common control was established. Therefore the opening balances
and the prepartions of the consolidated financial statements are restated. In the preparation of the consolidated
financial statements, the subsidiary’s assests, liabilities and results of operations are included in the
consolidated balance sheet and the consolidated income statements, from the date that common control was
estabished.
Where the company acquires a subsidiary during the reporting period through a business combination
involving entities not under common control, the identifiable assests, liabilities and results of operations of the
subsidiaries are consolidated into consolidated into consolidated financial statements from the date that control
commenses, base on the fair value of those identifiable assets and liabilities at the acquisition date.
Minority interest is presented separately in the consolidated balance sheet within equity. Net profit or loss
attributable to minority shareholders is presented separately in the consolidated income statement below the
net profit line item.
Where the amount of losses attributable to the minority shareholders of a subsidiary exceeds the minority
shareholders’ portion of the equity of the subsidiary, the excess, and any further losses arrtibutable to the
minority shareholders, are allocated against the equity attributable to the Company except to the extent thar the
minority shareholders have a binding obligation under the articles of association or an agreement and are able
to make additional investment to cover the losses. If the subsidiary subsequently reports profits, such profits
are allocated to the equity attributable to the Company until the minority shareholders’ share of losses
previously absorbed by the Company has been recovered.
When the accounting period or accounting policies of a subsidiary are different from those of the
Company, the Company makes necessary adjustments to the financial statements of the subsidiary based on
the Company’s own accounting period or accounting policies. Intra-group balances and transactions, and any
unrealised profit of loss arising from intra-group transactions, are eliminated in preparing the onsolidated
financial statememts. Unrealised losses resulting from intra-group transactions are eliminated in the same way
as unrealized gains but only to the extent that there is no evidence of impairment.
9.Cash and cash equivalents
25
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts
of cash and that are subject to an insignificant risk of changes in value.
10. Recognition and measurement of financial assets and financial liability
(1) Categories
Financial assets and financial liability are classified into the following categories: financial assets and
financial liability held for trading, held-to-maturity investments, receivables, financial assets available for sale,
and other financial liabilities.
(2) Recognization of financial assets and financial liability
Recognization of financial assets is the process that items that meet the definition and the condition for
recognition of financial assets are recognized in the balance sheet. Recognization of financial liability is the
process that items that meet the definition of financial liability are recognized in the balance sheet.
(3) Measurement of financial assets and financial liability
The initial recorganization of a financial asset or financial liability shall be measured at its fair value.
Transaction costs shall be charged to the profit or loss for the current period for financial assets and financial
liability held for trading. For other financial assets or fianacial liability, relevant transaction expenses to get
them are deemed as the initial confirmation amount.
Except loans, receivables, held-to-maturity investments and other financial liabilities, financial asset or
financial liability was measured at its fair value and other financial liability was measured at amotized cost by
effective interest.
The balance sheet date, adopt fair value for trading financial assets and financial liabilities, changes of
fair value will be included in current profit and loss.
The balance sheet date, for the sale of financial assets should be based on fair value. The changes in fair
value, not including impairment and exchange gains or losses, will be included in capital reserve. The capital
reserve will be transferred into profit or loss when the financial asset was derecognized.
26
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Exchange differences of foreign financial assets available for sale and interest from financial assets
available for sale measured by the effective interest method were recognized as profit or loss for the current
period. For the financial assets held for sale, cash dividends will be included inprofit or loss in the current
period when it was declared by the investee.
For financial assets and financial liabilities measured by amortized cost, gains or loss was recognized as
profit or loss in event of impairment, amortization or termination of recognition.
(4) Termination of financial assets and financial liability
Termination of financial assets means that the financial assets are removed from business accounts and
balance sheet. The financial assets will be derecognized when it meets these conditions: the contractual right to
receive cash flows of financial assets is terminated; financial assets have been transferred; other conditions for
derecognition of financial assets in accordance with "Accounting Standards for Enterprises No. 23 -
Transference of financial assets".
(5) Determination of the fair value of the financial assets and financial liability
①If there is an active market for a financial asset or financial liability, the quoted prices in the active
market shall be used to establish the fair value of the financial assets and financial liability.
②If there is no active financial instruments market, the valuation techniques is used to determine its fair
value.
③As for the financial assets initially obtained or produced at source and the financial liabilities assumed,
the fair value thereof shall be determined on the basis of the transaction price of the market.
④In applying discounted cash flow analysis to determine the fair value of a financial instrument, it shall
use the market returns ratio of other financial instruments with essentially the same contractual stipulations
and features as the rate of capitalization. Short-term receivable and payable with no state interest rate may be
measured at the actual transaction amount when the difference between that amount and its present value is
immaterial.
27
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(6) Impairment of financial assets
The end of trading on financial assets other than financial assets, there is objective evidence that the
impairment occurred, according to their expected future cash flows are lower than the book value of the
difference between the impairment provisions.
①Held-to-maturity investments
Has the objective evidence to indicate that has had the impairment to the due investment, that should be
calculate this investment the cash flow current value in the future, this current value is lower than the book
vale which the difference is the revaluation deficit.
②Sellable financial asset
Where a sellable financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from the decrease of the fair value of the owner’s equity which was
directly included shall be transferred out and recorded into the profits and losses of the current period. The
accumulative losses that are transferred out shall be the balance obtained from the initially obtained costs of
the sold financial asset after deducting the principals as taken back, the current fair value and the
impairment-related losses as was recorded into the profits and losses of the current period.
11. Account receivable and other receivables
Account receivable fund of the company includes accounts receivable and other receivables. The
provision adopts the Allowance method. If there are evidences proving that the ccount fund have devualtion
the company will recognize the difference between the book value and the estimated cash flow in the future.
(1) Refers to accounts receivable with significant individual amount and separate impairment test
The ending blance of Rmb 5000 thousand or above of account receivables is significant accounts
receivable. The ending blance of Rmb 5000 thousand or above of other receivables is significant other
receivable. When testing the significant account receivables or other receivables indivually, if there are
evidences proving that the ccount fund have devualtion, the company will recognize the difference as
28
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
profitbetween the book value and the estimated cash flow in the future.
(2) Refers to accounts receivable which is unsignificant indivually but according to the characteristics of
the portfolio after portfolio of risky accounts receivable and separate impairment test
The company made the credit policy according to the markets characteristics and clients’ risks for the
accounts receivable which is unsignificant. A separate provision is established according to the recoverability
of each receivales with long aging and little retrievability.
12. Inventories
(1) Categories of inventories
Inventory was classified according to real estate development and non-development of products. The real
estate development products are the real estate development products under construction development
products which have been completed, the lands to be developed, etc. The non-real estate development products
include raw materials, finished products and stocks, low-value consumable products and construction.
(2) Measurement of inventories
①Completed product development is the development of products that have been completed, pending the
sale of the property; Under construction is the development of products that have not yet completed the sale of
the property for development purposes; to develop land is acquired by means of, has decided to be developed
for sale or lease land property. To the overall development of land in the project development, all built into the
development of products; in the project development phases, it will be part of a phased development of land
into the development of products in the building, undeveloped land is still retained in the proposed land
development.
② 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.
29
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
③Utility Reserve Fund: In special administrative region, the fund is the ratio of 2% of the whole
constructive investment that included the land price of delivery of completed estate. Outside the region, the
ratio of 2% of the whole constructive investment of the estate was provided. But it all measures in the
non-development products.
④ Quality Guarantees was put into the account of real estate development according to the contract
amount and also recorded in the accounts payable at the same time. The actual payment incurs after the expiry
of guarantee.
⑤ Implement the perpetual inventory system; all kinds of inventories are recorded in the actual cost, a
weighted-average valuation for sell. The real estate development records in the measurement of identification.
As for the low value properties, implement one amortization method when used.
⑥ Inventories are written down to the lower of the cost and the revised net realizable value. On the basis
of comprehensive inventory, those destroyed, in whole or part outdated or the sales price is lower than its cost
should decline the value. And the value is the difference from the cost and net realizable value.
13. Long term equity investment
(1) Categories
Long term equity investment can be classified: investment in subsidiary; investment in associate;
investment in joint venture; other long term investment in an entity which the investor does not have jointly
control and significant influence, and also the fair value of this long term investment can not be measured
reliably in the active market.
(2) Recognition of initial investment costs
①Long term equity investments acquired through a business combination
For long-term equity investment acquired through a business combination involving enterprises under
common control, the initial investment cost shall be the absorbing party’ share of the carrying amount of
owner’s equity of the party being absorbed at the date of combination. The difference between the initial
30
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
investment cost and the carrying amount of the consideration paid shall be adjusted against capital reserve. If
the balance of capital reserve is not sufficient for such adjustment, the remaining difference shall be adjusted
against retained earnings. The direct expenses were recognized as profits or losses.
For long-term equity investmenst acquired through a business combination involving enterprises not
under common control, the initial investment cost shall be determined according to the fair value of
consideration paid.
②Long term equity investmenst acquired through other ways
For long-term equity investmenst acquired through cash, the initial investment cost shall be determined
according to the purchase price paid. The investment cost includes the direct cost, tax surcharges and other
necessary expenses relating to the acquisition. However, the dividends that are included in purchase price and
declared but unpaid are accounted as receivable items separately.
For long-term equity investments acquired by issuing equity securities, the initial investment cost shall be
the fair value of the equity securities issued.
For long-term equity investments contributed by an investor, the initial investment cost shall be the
amount stipulated in the investment contract or agreement, except when the amount stipulated in the contract
or agreement is not at fair value.
The initial investment cost of long-term equity investments acquired in exchange of non-monetary assets
shall be determined in accordance with “CAS 7-Exchange of Non-monetary Assets”. When the following
conditions are satisfied, it shall be measured at fair value: the exchange transaction has commercial substance;
and, the fair value of either the asset received or the asset given up can be reliably measured. Otherwise, it
shall be measured at the carrying amount of the assets given up.
For a long-term equity investment acquired in a debt restructuring transaction, the initial investment cost
shall be determined at its fair value.
31
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(3) Subsequent measurement
The cost method shall be used to account for the long term equity investment where the company
invested in subsidiary and other equity investment. In the preparation of the consolidated financial statement,
appropriate adjustments shall be made based on the equity method. The equity method shall be used to account
for the investment in associates and joint ventures.
(4) Measurement of gains or lossess
For long-term equity investment accounted for using the cost method, the investee companies shall
recognize investment income in accordance with its share after the declaration of dividends or profits from
investee entity other than cash dividends or profits included in the purchase price and declared but not paid.
For long-term equity investment accounted for using the equity method, appropriate adjustments shall be
made to the investee entity’s net profits or losses based on the fair values of the investee entity’ separate
identifiable assets before determing investment income or loss. Tthe carrying value of long-term equity
investement shall be decreased when the investee entity declares profit distribution and cash dividends. The
investor enterprise shall adjust the carrying amount of the long-term equity investment based on its share of
the changes in owners’ equity of the investee entity other than those arising from net profits or losses, with a
corresponding increase or decrease in owners’ equity.
When disposing of long-term equity investment, the difference between book value and the actual
purchase price is recognized as profit or loss. For long-term equity investment accounted for using equity
method, the portion of change in its appropriate interest in the investee entity that does not arise from the
investee entity’s net profit or loss, is recognized directly in the owners’ equity. Upon disposal of that
investment, the corresponding amount that was previously recognized directly in owners’ equity shall be
transferred to profit or loss.
(5) Basis of recognizing common control or significant influence
①Basis of recognizing common control
According to the contract, if the invested enterprise’s main finance and operation policy need to be agreed
32
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
by other invested parties, the investment is common investment.
②The determination of significant influence investee entity
According to the contract, if the invested enterprise’s only have participating decision rights in invested
enterprise’s main finance and operation policy but have no own control or common control with other
investing parties, the investment is investment with significant influence. Generally, if the company owns 20%
but less than 50% of voting shares of the investee entity directly or indirectly through subsidiaries, it has a
significant impact over the investee entity.
(6) Impairment examination and providing of impairment provision
If the investment in subsidiary, affiliates, and joint ventures are impaired has the indication of impairment
as at the balance sheet date, recoverable amount should be measured. If the recoverable amount is less than its
fair value, impairment loss should be provided. When impairment appears for other equity investment, the
difference between net present value of the market yield for similarity financial instrument and carrying value
of the investment should be recognized impairment loss, recorded in income statement. Impairment can not be
reversed back in the following accounting period.
14. Investment Property
(1) Recognition of investment property
Investment property shall be recognized as an assets when, and only when both of the following
conditions are satisfied: ①The held for earn rentals and/or capital appreciation, or both; ②Investment property
shall be capable of being measured and sold separately; ③The economic benefits pertinent to this investment
real estate are likely to flow into the enterprise; ④The initial measurement of the investment real estate shall
be made at its cost.
(2) Initial measurement
Investment property should be measured in cost model.
33
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
The cost of investment property from the transfer of non-monetary assets were taken into accounts of the
transfer assets and the related expenditure, if it is the real exchange with commercial and the value of assets
could be measured reliably. If not, the difference between the fair value and cost of the transfer assets should
be taken into accounts of current profit and loss.
The costs of investment property from debt restriction use the fair value as the initial investment cost. The
difference between the cost and book value includes in current profit and loss.
(3) Subsequent Measurement
An enterprise shall use the cost model for subsequent measurement of investment property at the balance
sheet date.
(4) Transference and disposal
Transfer to, or form, investment property shall be made when, and only when, there is a change in use.
An investment property shall be derecognized on disposal; the enterprise shall deduct the book value of
the investment property as well as the relevant taxes from the disposal income, and include the amount in the
current profits and losses.
15. Recognition standard of fixed assets, Classification and Depreciation
(1) Standard of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of services, for rental to
others, or for administrative purposes; they have useful lives over one fiscal year.
(2) Recognition standard of fixed assets
①it is probable that economic benefits associated with the assets will flow to the enterprise;
②the cost of the fixed assets can be measured reliably.
34
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(3) Classification of fixed assets
The Company’s fixed assets are classified as buildings and constructions, machinery equipment,
transportation equipment, other equipment and fixed assets fitment.
(4) Initial measurement of fixed assets
Fixed assets are recorded at the actual cost on acquisition. The cost of fixed assets purchased includes
purchase price, import tariffs, transport and insurance and other related costs as well as the fixed assets
reached before the intended use of the necessary expenditure. Where payment for the purchase price of a fixed
asset is deferred beyond normal credit terms, such that the arrangement is in substance of a financing nature,
the cost of the fixed asset shall be determined based on the present value of the purchase price. The difference
between the purchase price and its present value shall be recognized in profit or loss over the period of credit,
except where it is capitalized in accordance with borrowing cost principle.
(5) Depreciation method
Depreciation of fixed assets is provided for on a straight-line basis, the depreciation rate is recognized in
accordance with fix assets, estimated useful life (5% of original value) and estimated residual rate of fixed
assets. Annual depreciation rate of fixed assets by categories are as follows:
Category Estimated useful life (year) Annual depreciation rate (%)
Buildings and constructions 30 3.17
Machinery equipment 7 13.57
Transportation equipment 6 15.83
Other equipment 5 19.00
(6) Subsequent expenditure of fixed assets
Subsequent expenditure is only recognized as an asset when it meets two conditions at the same time:
Firstly, it is probable that future economic benefits associated with the expenditures will flow into the
enterprise. Secondly, the cost can be measured reliably. If it does not meet that, the expenditures should be
included in the current profit and loss.
35
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Subsequent expenditure of operating lease should be capitalized, as long-term prepaid expenses, which
amortize in a reasonable period.
(7) Impairment of fixed assets
Fixed assets should be estimated the recoverable amount if there is an indication. The recoverable amount
is according to the high one of net value of fair value minus the disposal with the present value of the future
cash flows. The estimation should be based on individual assets, if it is difficult to estimate the recoverable
amount, change into estimating the group of assets it belongs to. Once provision for impairment, it could not
be reversed in later accounting period.
16.Construction in progress
Construction in progress includes the pre-construction preparation, the under construction, installation,
technical construction, overhaul project and so on. It measures in actual cost incurred. And are taken into
accounts of fixed assets to record before used.
On the balance sheet day, estimation should be made for the impairment of the long-term suspension
project that will not be re-started in three years. The impairment estimated is book value minus the recoverable
amount. Once provision for impairment, it could not be reversed in later accounting period.
17. Intangible assets
Intangible assets include intangible assets with a finite useful life and intangible assets with an indefinite
useful life.
(1) Calculation method of intangible assets
An intangible asset shall be measured initially.
The cost of self-developed intangible assets shall include the total expenditures incurred during the period
from the time when it meets the provisions of standards to the time when the expected purposes of use are
realized.
36
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(2)Amortization of intangible assets
① Intangible assets with limited service life
Useful life in the period, with the use of intangible assets related to the economic interests of the
consistent realization of the expected amortization method, not a reliable way of determining expected to
achieve, intangible assets shall be amortized by the straight-line method.
Taxi license shall be amortized for 38 years.
②Intangible assets with uncertain service life may not be amortized.
（3）Impairment of intangible assets
On balance sheet day, make impairment test for the uncertain life of intangible assets.
If there is an indication of impairment on balance sheet day for intangible assets with the finite useful life,
estimate the recoverable amount. If the amount is lower than the book value, the carrying value of intangible
assets will be written down to its recoverable amount. And the cut amount recognized as impairment losses,
included in the current profit and loss period. Once provision for impairment, it could not be reversed in later
accounting period.
18. Long-term prepaid expenses
Long-term prepaid expenses are amortized among the benefit periods average.
19. Borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on
borrowings, ancillary expenses, and exchange balance on foreign currency borrowings.
Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the
costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual
37
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
amount incurred, and shall be recorded into the current profits and losses.
(1) Capitalization
The borrowing costs shall not be capitalized unless they simultaneously meet the following 3
requirements:
①expenditure for the asset are being incurred;
②borrowing cost are being incurred;
③the necessary construction or production activities to make the assets ready for use or sales have been
launched.
(2) Determination of the amount of capitalization
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred
of the specially borrowed loan at the present period minus the income of interests earned on the unused
borrowing loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the
general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative
asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The
capitalization rate shall be calculated and determined in light of the weighted average interest rate of the
general borrowing.
(3) Suspension of capitalization
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and
the interruption period lasts for more than three months, the capitalization of the borrowing costs shall be
suspended. The borrowing costs incurred during such period shall be recognized as expenses, and shall be
38
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
recorded into the profits and losses of the current period, till the acquisition and construction or production of
the asset restarts. If the interruption is a necessary step for making the qualified asset under acquisition and
construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall
continue.
（4）Cessation of capitalization
When the qualified asset under acquisition and construction or production is ready for the intended use or
sale, the capitalization of the borrowing costs shall be ceased after the borrowing costs incurred in the current
period expenses.
20. Employee benefits
The term “employee benefits” refers to all kinds of payments and other relevant expenditures given by
enterprises in exchange of the services offered by the employees. Employee benefits include: (1) Wages,
bonuses, allowances and subsidies for the employees; (2) Welfare expenses for the employees; (3) Medical
insurance, endowment insurance, unemployment insurance, work injury insurance, maternity insurance and
other social insurances; (4) Housing accumulation fund ;(5) Labor union expenditure and employee education
expenses; (6) Non-monetary benefits; (7) Compensations for the cancellation of the labor relationship with the
employees; and (8) Other relevant expenditures of services offered by the employees.
During the accounting period of an employee' providing services to an enterprise, the enterprise shall
recognize the compensation payable as liabilities. Except for the compensations for the cancellation of the
labor relationship with the employee, the enterprise shall, in accordance with beneficiaries of the services
offered by the employee; cost of product, cost of services, cost of fixed assets, intangible assets or profit or
loss for the current period, shall be recognized.
21. Contingent liability
The obligation pertinent to a contingency shall be recognized as a provision when the following
conditions are satisfied simultaneously:
39
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(1) the obligation is a current obligation of the enterprise;
(2) it is probable that an outflow of economic benefit will be required to settle the obligation;
(3) the amount of the obligation can be measured reliably
A provision shall be recognized when an onerous contract and obligation to restructure incurred by an
enterprise satisfies the requirements of the above conditions.
The amount of a provision recognized of expenditure required to settle a provision is expected to be
reimbursed of the best estimates of measurement.
22. Revenue
(1) Revenue from sales goods shall be recognized only when all of the following conditions are satisfied:
A.the enterprise has transferred to the buyer the significant risks and rewards of ownership of the goods;
B. the enterprise retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
C.the amount of revenue can be measured reliably;
D.it is probable that the economic benefits associated with the transaction will flow to the enterprise;
E.the associated costs incurred or to be incurred can be measured reliably:
According to the principles above, the Company established real estate sales revenue is recognized, must
satisfied the following four conditions at the same time:
A.Real estate is completed, and is completed checking and accepting;
B.Signed a contract of sale and make recording in land department
Installment, if it is deferred for receiving money with financing, the cost should be measured in present
value according to the contract price. Mortgage, has been received, and have completed the first phase of the
40
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
mortgage loan approval procedures;
D.Agreed in the contract of sale and transfer the property to buyers
（2）Rendering of service，In case on the preparation date of balance sheet the results about service
transaction can be reliably evaluated, the labor income will be confirmed by the completion percentage
method.
Company has estimated the costs of determining the proportion of the total cost of providing labor
services, determinate of the progress of the completion of transactions. In case the service transaction results
on the preparation date of balance sheet cannot be reliably evaluated. In case the service costs that have
occurred can be compensated, the service income will be confirmed based on such service costs and the same
amounts will be settled as the service costs. In case the service costs that have occurred cannot be compensated,
such service costs will be accrued to the current profit and loss and will not be confirmed as the service costs.
（3）Used by others of enterprise assets，in case the economic benefits related to the transaction will
probably flow into the enterprise and the income amounts can be reliably calculated. The interest income
amount will be calculated and determined based on the use time of currency capital from the Company by
others and actual interest rate. The income amount of use expenses will be calculated and determined subject
to the charging time and method agreed in the relevant contracts and agreements.
23. Government Grants
A government grant is transfer of monetary assets or non-monetary assets from the government to an
enterprise at no consideration, excluding the contribution from the government as the owner of the enterprise
to enterprise. The company’s government grants are classified into government grants relate to assets and
government grants relate to income.
If a government grant is a monetary asset, it shall be measured in the light of the received or receivable
amount. If a government grants is a non-monetary asset, it shall be measured at its fair value. If its fair value
cannot be obtained in a reliable way, it shall be measured at its nominal amount.
The government grant pertinent to assets shall be recognized as deferred income, equally distributed
41
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
within the useful lives of the relevant assets, and included in the current profits and losses. But the government
grants measured at their nominal amounts shall be directly included in the current profits and losses.
The government grant related to income, the grant used for compensating the related future expenses or
losses of the enterprise shall be recognized as deferred income and shall included in the current profits and
losses during the period when the relevant expenses are recognized; the grant used for compensating the
related expenses or losses incurred to the enterprise shall be directly included in the current profits and losses.
24. Deffered tax assests and deffered tax liabilities
The income tax of the company adopts the financial statement liability method. The deffered tax assests
and deffered tax liabilities are recognized of the difference of book value and tax book balance. At the balance
date, the deffered tax assests and deffered tax liabilities were calculated based on the estimated taxable income
tax rate.
Deffered tax assests are recognized not more than the amount that income tax payble of the company.
Deffered tax assests and deffered tax liabilities were recognized from the temporary difference of the
subsidiaries and joint ventures. But Deffered tax assests and deffered tax liabilities were not recognized if the
time of transferred back temporary difference can be determited and the temporary difference won’t be
transferred back in the future.
25. Operating leasing and financial leasing
(1) Operating leasing
Operating leasing are other leasing except for financial leasing.
①leaseholder
The rent will be caulated in gain or loss averagely. And the orignial expense will be counted in gain or
loss in current year. Contingent rent will be caulated in gain or loss when it happens.
If the lessor provids free-rental period, the total rent will be caulated in gain or loss averagely in the
42
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
whole rental period（ including the free-rental period）. The free-rental period have to recognize the rental
expense.
If the lessor bears some expense, the total rental expense which deductes the expense will be caulated in
gain or loss averagely in the whole rental period.
If the sale-leaseback transactions are defined as operating leasing, it will be dealt with according to the
next situations:
a．If there is some definite evidence showing that the price of sale-leaseback transactions is determined
with fair value. The difference between the prich and the book value of the assests will be caluated in gian or
loss.
b．The price of sale-leaseback transactions is not determined with fair value. If the price is less than fair
value, the difference wil be caulated in gain or loss. But if this loss will be compensated with the rent which is
less than the market price in the future, the loss should be deffered. And the loss will be caulated in the whole
rental period with the same methoud. If the price is more than fair value, the difference will be recognized in
deffered income and amortized in the whole rental period.
②lessor
The financial statements will included the operating assests.
The rent will be caulated in gain or loss averagely. The orignial expense will be caulated in gain or loss in
current year. The poperty will be depricated according to the similar assest deprications policy. Contingent rent
will be caulated in gain or loss when it happens.
If the lessor provids free-rental period, the total rent will be caulated in gain or loss averagely in the
whole rental period（ including the free-rental period） If the lessors bear some expense, the rent deducting the
orginal expense will be caulated in gain or loss in the whole rental period.
43
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(2) Financial leasing
Financial leasing is the leaseing that actually transfer the property rights to leaseholder. And the property
rights will be transferred or not in the end.
① Leaseholder
Ate the starting date of leasing, the less amount of the assest fair value and par value of rent will be the
book value of the rental assest in the financial statements. If the par value of rent as the book value of
long-term payables, the difference is recognized as financial expense. The expensed which happened during
the egotiation period due to the leasing project can be caulated as assests.
When calculating the par value of rent, the company adopts the leasing implied rate as discount rate if it
can get the leasing implied rate. Otherwise, the company adopts the rate which the agreement forth as the
discount rate. If the company can not get the leasing implied rate or the agreement rate, it will use the similar
loans’ rate as discount rate. The financial expense which had not been recognized will be caulated in the whole
rental period averagelly.
The leasing assest will apply the same deprication policy. If the leaseholder assures that it can have the
property right when the leasing period ends, the assests will be drpricated in the whole use life time. And
oterswise, the the assests will be drpricated in period of which the shorter of the leasing period and use life
time.
Contingent rent will be caulated in gain or loss when it happens.
② Lessor
At the starting date of leasing, the par value of rent and the orginal expense will be counted as long-term
receivables. And record the remained unsecured amount at the same time. The difference between the par
value of rent, orginal expenses and the remained unsecured amount will be recognized as the unfulfilment
financial income. The unfulfilment financial income will be distributed with the acual rate averagelly.
When each year ended, the company will test the the unfulfilment financial income. If the unfulfilment
44
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
financial income increases, it won’t be recognized. And the unfulfilment financial income increase decrease,
the company will caulate the leasing implied rate. And the reduaction due to leasing investment will be
caulated in gain or loss. The the income of each year will be caulated according to the revised leasing
investment. The net amount of leasing investment is the difference between the par value of rent and
unfulfilment financial income.
The amount of remain unsecured amount which had recognized as loss recover, it can be transferred back
not less than the amount. And the company habe to recaulated the leasing implied rate. he the income of each
year will be caulated according to the revised leasing investment.
Contingent rent will be caulated in gain or loss when it happens.
26. Assests held for sale
The assests held for sale must satisfy these conditions: 1, the company had made an disposal agreement; 2,
the company had signed the irrevocable transferring agreement with the transferee; 3, the transferring will be
done in 1 year.
To assests held for sale, the company will adjust the estimated net value of this assest. And make the
estimated net value can reflect the amount equalling the amount that the fair value minus the disposal expenses.
And the amount can not excess the orginal cost of the assests. If the book value is higher than the estimated net
value, the difference will be caulated in current gain or loss.
The Assests held for sale don’t depreciated. And it is counted with the less amoun of the book value and
the amount that the fair value minus the disposal expenses.
If the Assests held for sale don’t satisfy the conditions, the company stopped reclassing it as the assests
held for sale. And it will be caulated with the lower amount of the following:
① the amount which caulated under the orginal method befort the assest was reclassed to the assests held
for sale.
② the retracting amount when the Company decides not to sell.
45
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
The other uncurrent assests which satisfy the conditions will use the method mentioned above. The other
uncurrent assests don’t include defferred tax assests, the financial assests documentd in “Enterprise Principle
No.22 – Recognization and Caulation of Financial Instruments”, the properties caulated by the fair value,
biological assests, the rights of the insurance agreement.
27. Changes in main accounting policies and accounting estimation
(1) Changes in main accounting policies
Former policies: subsidiary shall be treated respectively when excess loss happened: according to
Company rules or agreement, the minority shareholders shall bear the corresponding rights and interests of the
share of losses when they the ability to cover; otherwise, there is no rules that the minority shareholders have
obligations of bearing the loss, this excess loss should be undertaken by parent company.
Present policies: according to finance accounting [2010] 15 issued by Ministry on 2010 July 14 –
Interpretation of Accounting Standards for Enterprises No. 4, in Article 6 of explanation, in consolidated
financial statements, the current losses of the subsidiary minority shareholders exceeded the share the
subsidiary initial minority shareholders in owners' equity share, the balance is the deduction of the minority
shareholders' equity.
The company made retrospective adjustment for the excess loss that should be undertaken by subsidiary
company. The influence of the issues on statements is as follows:
The contents of accounting policy Name of subsidiary Statements subjects Amounts
changes corporation affected affected
Processing of subsidiary excess Fresh Peak Investment Undistributed profit（at the beginning of
93,536,778.70
loss Ltd. the year）
Processing of subsidiary excess Fresh Peak Investment
-93,536,778.70
loss Ltd. Minority interests
Processing of subsidiary excess Undistributed profit（at the beginning of
Great Wall Estate Co., Inc 25,891,827.87
loss the year）
Processing of subsidiary excess
Great Wall Estate Co., Inc -4,539,043.21
loss Foreign currency exchange differences
Processing of subsidiary excess Great Wall Estate Co., Inc Minority interests -21,352,784.66
46
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
loss
(2) Changes in main accounting eatimation
The company has no Changes in main accounting eatimation in 2010.
28. Previous accounting errors correction
The company has no previous accounting errors correction in 2010.
III. Taxation
The main tax type and tax rate:
Type Taxable basis Tax rate
proceeds from sales of properties, leasing income, property management
Business tax 5%
income
Business tax Construction, installation income 3%
Value added tax (“VAT”) Goods sales income 17%
Construction tax Business tax and value added tax payable *1
Education surcharge Business tax and value added tax payable 3%
Land appreciation Tax Sales revenue of properties *2
Income tax Income tax payable *3
* 1. According to the noticification (guo fa [2010] No. 35) issued by the state council, which set the rules
about construction tax and education surcharge of domestic and foreign enterprises and individuals, it was
adopted that People's Republic of China construction tax tentative regulations issued in 1985 and education
surcharge tentative regulations issued in 1986 in domestic and foreign enterprises and individuals since
December 1th, 2010. That is to say, the same tax rateof construction tax and education surcharge was applied
in domestic and foreign enterprises and individuals. This company and its subordinate company adopt the
construction tax rateof 1%&7% according to the regional regulations.
* 2.According to Provisions of Shenzhen Municipal People’s Government and the local Inland Revenue
Department. From 1 November 2005, the company or individuals should pay land value-added tax if they gain
income from the real estate development or transfer in Shenzhen. “Pay in advance, settlement after, refund for
any overpayment or a supplemental payment for any deficiency. In other words, prepaid the tax on the basis of
47
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
the income from real estate transfer before the project completed (the pre-charge rate of villas, resorts,
hotel–style apartment on sales of 1%, while 0.5% of other real estate sales). Till it all completed, handle
settlement after clear the account. Clearing the land valued added tax rate of used ultra-progressive tax rate.
Valued-added ratio of 50% or less by 30 percent the proportion of value-added tax( general standard of
domestic value-added ratio of less than 20% of the land exempt tax from value-added tax). Value-added ratio
of more than 50 % did not exceed 100% of parts by 40% the proportion of the levy. Value-added tax of more
than 100% does not exceed 200% of the parts by 50% the proportion of the levy. Value-added ratio of more
than 200% of the parts is by 60% the proportion of the levy.
* 3. Enterprise income tax rate is as follows：
Items Income tax rate
Domestic Enterprises
- enterprises in Shenzhen 22%
- enterprises outside Shenzhen 25%
Enterprises in HK 17.50%
According to the China’s Corporate Tncome Tax (“CIT”) law that was passed by the Standing Committee
of the Tenth National People’s Congress (“NPC”) on 16 March 2007 and the Notice of the State Council on the
Transitional Preferential Policy regarding implementation of the CIT Law (Guo Fa [2007] No.39) issued on 26
December 2007, incomen tax rate was effect from 1 January 2008. for certain enterprises that are entitled to
preferential income tax rate of 15% before the implementation of the CIT law, the income tax rate applicable
will be 18%, 20%, 22%, 24%, 25% in 2008, 2009, 2010, 2011, 2012 and thereafter respectively.
IV. Enterprises combination and the consolidated financial statements
1.The informations of subsidiaries are as follows:
The informations of subsidiaries in 2010 are as follows :
48
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(1) Subsidiaries acquired through new establishment or investment are as follows:
Net Net balance
2009-12-31
Investment of other Whether or
Registered
in subsidiary investment not included
capital (in
Name of Registered in items to the Equity Voting in
Types ten Nature of business and principal activities
the Subsidiary place substance subsidiaries holding rights consolidated
thousand
(in ten （in ten (%) (%) financial
Yuan)
thousand thousand statement
Yuan） Yuan）
Wholly-owned
Shenzhen Petrel Hotel Co. Ltd. shenzhen 3,000 Hotel 3,000 -- 100 100 YES
subsidiary
Shenzhen City Property Wholly-owned
shenzhen 725 Property management 725 -- 100 100 YES
Management Ltd. subsidiary
Shenzhen Zhen Tung Engineering Wholly-owned
shenzhen 1,000 Fitting-out contracting and maintenance 1,000 -- 100 100 YES
Ltd subsidiary
Shenzhen City We Gen Wholly-owned
shenzhen 800 Construction project management 800 -- 100 100 YES
Construction Management Ltd. subsidiary
Wholly-owned
Shenzhen City Car Rental Ltd. shenzhen 1,029 Car rental 1,029 -- 100 100 YES
subsidiary
Wholly-owned
Shenzhen Shenfang Car Park Ltd. shenzhen 4,250 Develop and operate car park 4,250 -- 100 100 YES
subsidiary
Shenzhen City Shenfang Investment Wholly-owned
shenzhen 1,000 Investment and management 1,000 -- 100 100 YES
Ltd. subsidiary
Shenzhen City Shenfang Free Trade Wholly-owned
shenzhen 500 Trading of Import and export 500 -- 100 100 YES
Trading Ltd. subsidiary
Shenzhen City SPG Long Gang Wholly-owned
shenzhen 3,000 Property development 3,000 -- 100 100 YES
Development Ltd. subsidiary
Shenzhen Special Economic Zone
Wholly-owned GuangZh
Real Estate (Group) Guangzhou 2,000 Property development 2,000 -- 100 100 YES
subsidiary ou
Property and Estate Co., Ltd.
Beijing fresh peak property
Wholly-owned
development management limited BeiJing US$1,000 operating of Real estate 7,671 -- 100 100 YES
subsidiary
company
Beijing SPG Property Wholly-owned
BeiJing 50 Property management 50 -- 100 100 YES
Management Limited subsidiary
Shenzhen ShenWu elebator Co.,Ltd Wholly-owned shenzhen 350 Elevator sales and service 350 -- 100 100 YES
49
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Net Net balance
2009-12-31
Investment of other Whether or
Registered
in subsidiary investment not included
capital (in
Name of Registered in items to the Equity Voting in
Types ten Nature of business and principal activities
the Subsidiary place substance subsidiaries holding rights consolidated
thousand
(in ten （in ten (%) (%) financial
Yuan)
thousand thousand statement
Yuan） Yuan）
subsidiary
Shenzhen Lain Hua Industry and Wholly-owned Trading of equipment and provision of renovation
shenzhen 1,000 1,000 -- 100 100 YES
Trading Co. Ltd. subsidiary material
Wholly-owned HongKo
Fresh Peak Holding Ltd. HKD100 Investment and management HKD100 3,134 100 100 YES
subsidiary ng
Wholly-owned HongKo
Wellam Ltd. HKD1 Investment holding HKD1 -- 100 100 YES
subsidiary ng
Shantou SEZ Wellam Fty Bldg., Wholly-owned
ShanTou US$600 Property development US$600 -- 100 100 YES
Dev. Co. subsidiary
Subsidiary of
Great Wall Estate Co., Inc USA USD50 Property development USD35 10,138 70 70 YES
holding company
Wholly-owned HongKo
Fresh Peak Holdings Ltd. HKD100 Investment and management HKD100 57,472 100 100 YES
subsidiary ng
Wholly-owned HongKo
Skill Elite Ltd. HKD1 corporate financing HKD1 -- 100 100 YES
subsidiary ng
Subsidiary of HongKo
Fresh Peak Investment Ltd. HKD100 Properties investment HKD55 -- 55 55 YES
holding company ng
Wholly-owned HongKo
Openice Ltd. HKD100 Investment and management HKD120 -- 100 100 YES
subsidiary ng
Subsidiary of HongKo
Barenie Co. Ltd. HKD1 Properties investment HKD0.8 -- 80 80 YES
holding company ng
Wholly-owned HongKo
Keyear Development Ltd. HKD100 Investment holding HKD100 -- 100 100 YES
subsidiary ng
Guangzhou Huangpu Xizun real Wholly-owned GuangZh
HKD3980 Property development HKD3980 -- 100 100 YES
estate limited company subsidiary ou
Fresh Peak Real Estate Dev. Wholly-owned
WuHan US$400 Property development US$400 -- 55 55 YES
Construction (Wuhan) Co. Ltd.*① subsidiary
Shenzhen Shenfang Department Wholly-owned
shenzhen 1,000 Commercial goods supplier 1,000 -- 100 100 No
Store Co. Ltd.*② subsidiary
50
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Net Net balance
2009-12-31
Investment of other Whether or
Registered
in subsidiary investment not included
capital (in
Name of Registered in items to the Equity Voting in
Types ten Nature of business and principal activities
the Subsidiary place substance subsidiaries holding rights consolidated
thousand
(in ten （in ten (%) (%) financial
Yuan)
thousand thousand statement
Yuan） Yuan）
Wholly-owned
Shenzhen CyberPort Co., Ltd *③ shenzhen 2,000 Information Technology Advisory 1,400 -- 70 70 No
subsidiary
Shenzhen City SPG Bao An Wholly-owned
shenzhen 2,000 Property development 2,000 -- 100 100 No
Development Ltd.*④ subsidiary
Shenzhen Real Estate Consolidated Wholly-owned
shenzhen 1,371 Construction material, consume goods 596 -- 100 100 No
Service Co., Ltd *⑤ subsidiary
Shenzhen Shen Fang Industrial Wholly-owned
shenzhen 300 Invest in industrial projects 450 -- 100 100 No
Development Co., Ltd.*⑥ subsidiary
Shenzhen Tefa Real Estate Wholly-owned
shenzhen 221 Construction and decoration 818 -- 100 100 No
Consolidated Service Co., Ltd.*⑦ subsidiary
Subsidiary of holding
Bekaton Property Limited *⑧ Australia US$20 Property Development 91 1,256 60 60 No
company
Canada Great Wall ( vancouver) Subsidiary of
Canada JOD 0.1 Property Development 0.45 8,904 75 75 No
*⑧ holding company
Wholly-owned HongKo Property construction and trading of construction
Paklid Limited *⑧ HKD50 20 1,107 100 100 No
subsidiary ng materials
Shenzhen City Shenfang
Wholly-owned
Construction and Decoration shenzhen 268 Construction materials 268 -- 100 100 No
subsidiary
Materials Ltd *⑨
Shenzhen ZhongGang Haiyan Subsidiary of
shenzhen 1,900 Tourism Restaurant 1,294 -- 68 68 No
Enterprise Ltd.*⑩ holding company
Shenzhen Xing Dongfang Store Wholly-owned
shenzhen 2,000 Domestic commercial goods supply 1,850 -- 100 100 No
Ltd.* 11 subsidiary
FengKai
Guangdong Province Fengkai Lain in
Subsidiary of holding Manufacturing and trading
Feng Cement Manufacturing Co., GuangD US$800 12,126 -- 90 90 No
company in cement products
Ltd *12 ong
Province
51
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
*① Fresh Peak Real Estate Dev. Construction (Wuhan) Co. Ltd
The company holds 100% equity of the corporation through the Subsidiary – fresh peak investment
limited which the company held 55% equity.
*② Shenzhen Shenfang Department Store Co. Ltd
The shareholders meeting held on 29 October 2007 passed the resolution to terminate business,
liquidation and formed a group to carry out the liquidation prodecures. The liquidation group issued a notice of
liquidation on 7 December 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.
*③ Shenzhen CyberPort Co., Ltd
The shareholders meeting held on 12 May 2008 passed the resolution to terminate business, liquidation
and formed a group to carry out the liquidation prodecures. The liquidation group issued a notice of liquidation
on 5 December 2008. 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.
*④ Shenzhen City SPG Bao An Development Ltd.
The shareholders meeting held on 2009-9-18 passed the resolution to terminate business, liquidation and
formed a group to carry out the liquidation prodecures. 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.
*⑤ Shenzhen Real Estate Consolidated Service Co., Ltd.
The operating period of this corporation is from 26 January 1983 to 28 August 1999. And this company
has ceased operations for many years. And the corporation had been terminated its licenses by law on 8
Febuary 2002 because of failing to take part in annual inspection.
52
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
*⑥ Shenzhen Shen Fang Industrial Development Co., Ltd.
The operating period of this corporation is from 3 October 1993 to 3 October 1998. And this company has
ceased operations for many years. And the corporation had been terminated its licenses by law on 8 Febuary
2002 because failing to take part in annual inspection.
*⑦ Shenzhen Tefa Real Estate Consolidated Service Co., Ltd
The operating period of this corporation is from 7 March 1983 to 14 April 1995. And this company has
ceased operations for many years. And the corporation had been terminated its licenses by law in 2004 because
failing to take part in annual inspection.
*⑧ Bekaton Property Limited and Paklid Limited
These 3 subsidiaries were set up overseas in early times. The board of directors passed a resoluction to
terminate the corporations’ business.
*⑨ Shenzhen City Shenfang Construction and Decoration Materials Ltd
The operating period of this corporation is from 1 January 1984 to 6 July 2004. And this company has
ceased operations for many years. And the corporation had been terminated its licenses by law on February 8,
2002 because failing to take part in annual inspection.
*⑩Shenzhen ZhongGang Haiyan Enterprise Ltd
The operating period of this corporation is from 16 October 1984 to 16 October 2004. And this company
has ceased operations for many years. And the corporation had been terminated its licenses by law in 1999
because failing to take part in annual inspection.
*11 Shenzhen Xin Dongfang Store Ltd
The operating period of this corporation is from 7 June 1983 to 7 June 1998. And this company has
ceased operations for many years. And the corporation had been terminated its licenses by law at 10 January
2001 because failing to take part in annual inspection.
53
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
*12 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, *⑩, the above subsidiaries which are not includedin the company’s cnsolidated
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.
(2) Subsidiaries acquired through combination under common control
The company has no any subsidiaries acquired through combination under common control.
(3) Subsidiaries acquired through combination under non-common control
Net 2010-12-31 Whether
Registere
investment Net balance of or not
d Nature of
in subsidiary other investment Equity include in
Registered Registered capital business and
Types in substance items to the holding Voting the
place place (in ten principal
(in ten subsidiaries（in ten Percentag power financial
thousand activities
thousand thousand Yuan） e (%) statement
Yuan)
Yuan）
Shan Tou
Wholly-own
Special Economic Property
ed ShanTou HKD3000 2,108 -- 100 100 Yes
Zone Real Estate development
subsidiary
Ltd.
(4) The company has no any entities special purpose
The company has no any controlling entities through the way of trustee or leasing.
54
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2 Minority interests of subsidiaries
Up to 2010-12-31
The amount of losses attributed to the minority
Name The amount which the minority
shareholders of a subsidiary exceeds the
Minority interests interests writed off the
minority shareholders’ portion of the equity of
minority gain or loss
the subsidiary
Fresh peak investment limited -104,535,306.38 -- -2,943.05
Barenie Co. Ltd. -2,029,582.32 -- -2,194.86
Great Wall Estate Co., Inc -21,520,509.77 16,333.67
Total -128,085,398.47 -- 11,195.76
3 Changes in the scope of combination in 2010
There are no Changes in the scope of combination in 2010.
V. Notes to the consolidated and the Company’s financial statements
1.Cash at bank and on hand
2010-12-31 2009-12-31
Original currency Exchange RMB Original currency Exchange RMB
rate rate
Cash on hand
RMB 393,927.17 393,927.17 345,780.13 345,780.13
HKD 10,255.39 0.8514 8,731.85 30,480.11 0.8805 26,839.22
USD 2,000.00 6.6252 13,250.40 2,000.00 6.8282 13,656.40
415,909.42 386,275.75
Deposit with banks
RMB 324,800,743.62 324,800,743.62 322,210,490.21 322,210,490.21
HKD 49,511,067.69 0.8514 42,155,703.47 53,146,295.26 0.8805 46,795,312.96
USD 85,077.73 6.6252 563,656.97 106,432.32 6.8282 726,741.17
CAD -- -- 197,933.41 6.4802 1,282,648.09
AUD -- -- 48,827.40 6.1294 299,282.67
367,520,104.06 371,314,475.10
Other monetary funds
55
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2010-12-31 2009-12-31
Original currency Exchange RMB Original currency Exchange RMB
rate rate
RMB 11,644,185.53 11,644,185.53 14,191,779.92 14,191,779.92
HKD 164,940.81 0.8514 140,437.20 238,507.72 0.8805 210,002.74
11,784,622.73 14,401,782.66
379,720,636.21 386,102,533.51
Other monetary funds are the deposit of mortgage loan the bank asked for the company when the
properties buyers applied for the mortgage loan from the bank to buy the company’s properities.
2. Financial assets held for trading
2010-12-31 2009-12-31
Stock investment 97,726.25 86,269.75
Including: Cost 117,720.00 90,940.00
Change in the fair value -19,993.75 -4,670.25
3. Accounts receivable
（1）The symbol of credit risk identified by customers categories
2010-12-31 2009-12-31
Book balance Proportion % Provision of bad debts Book balance proportion % Provision of bad debts
Category 1 -- -- -- -- -- --
Category 2 35,626,757.47 100.00 18,474,279.11 33,362,074.95 100.00 18,629,679.11
Total 35,626,757.47 100.00 18,474,279.11 33,362,074.95 100.00 18,629,679.11
Category 1: refers to accounts receivable with significant individual amount and separate impairment test.
Category 2: refers to accounts receivable which is unsignificant indivually but according to the
characteristics of the portfolio after portfolio of risky accounts receivable and separate impairment test.
The ending balance is mainly constituted by accounts receivables of import and export agency business,
house pay to be collected and engineering construction.
(2) Refers to accounts receivable which is unsignificant indivually but according to the characteristics of
the portfolio after portfolio of risky accounts receivable and separate impairment test.
56
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Book balance Provision of bad debts Proportion % Notes
Receivables of import
and export agency 14,132,195.58 11,574,556.00 81.90 A separate provision is established
business according to the recoverability of
House pay to be collected 12,740,573.19 6,301,854.02 49.46 each receivales with long aging and
Engineering construction little retrievability.
8,753,988.70 597,869.09 6.83
funds and others
Total 35,626,757.47 18,474,279.11 51.86
(3) The aging of accounts receivable by categories:
2010-12-31 2009-12-31
Aging Provision of bad Provision of bad
Amount Proportion % Amount Proportion %
debts debts
Within 1 year 3,734,648.20 10.48 -- 3,129,531.81 9.38 --
1 and 2 year 2,361,120.75 6.63 -- 66,946.50 0.20 --
2 and 3 year 10,632.02 0.03 -- 330,779.11 0.99 --
3and 5 year 356,744.49 1.00 -- 886,529.88 2.66 --
Above 5 year 29,163,612.01 81.86 18,474,279.11 28,948,287.65 86.77 18,629,679.11
Total 35,626,757.47 100.00 18,474,279.11 33,362,074.95 100.00 18,629,679.11
(4) Accounts receivable written-off in 2010 is as follows:
Whether related party
Name Nature Written-off amount Reason
transactions or not
Individal-Wang Yixuan Housing sales 155,400.00 Dispute was settled No
（5）On 31 December 2010，the informations of accounts receivables of the company's top five debtors
are as follows:
Name Relationship Amount Proportion % Aging Notes
ZhongHai Properties Stock Construction
Un-related party 3,306,232.93 9.28 1 and 2 year
Limited Corporation billing
Shenzhen Longfu Real Estate
Un-related party 1,934,620.68 5.43 Above 5 year
Limited Company *
Construction
Individual-Liu Zihua Un-related party 1,384,864.35 3.89 Within 1 year
billing
Individual-Liu Zihua Un-related party 1,333,142.04 3.74 Above 5 year *
Individual-Wang Weidong Un-related party 1,200,000.00 3.37 Above 5 year *
Total 9,158,860.00 25.71
57
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
*The sales price of properties hadn’t called back. The company would call back the money when the
owners of the properties finish the property right certificates.
（6）No amount due from shareholders who hold 5% or more of the voting rights of the company is
included in the above balance of accounts receivable.
（7）Refer to NoteVI.3. (5) or details of the accounts receivables which are due to related parities.
（ 8 ） There were no any accont reciviables which had been accured full or large proporation
provisiontransferred back in this accounting year.
（9）There were no any acconts receivables which had been terminated recognized.
（10）There were no any accounting receivable which had been securitization.
4. Advance to suppliers
（1）The aging of advance to suppilers by categories:
2010-12-31 2009-12-31
Aging
Amount Proportion % Amount Proportion %
Within 1 year 19,444,569.63 72.310 10,568,061.87 58.65
1 to 2 years 530.16 0.002 -- --
2 to 3 years -- -- 2,000.00 0.01
Above 3 years 7,445,451.98 27.688 7,450,276.98 41.34
Total 26,890,551.77 100.00 18,020,338.85 100.00
The balance of advance to suppliers increased by Rmb 8,870 thousand and has an increase of 49.22%.
The increase is due to engineering materials, EAS software system and purchase transportation tools.
（2）The informations of accounts receivables of the company's top five debtors are as follows:
Proportion
Name Relationship Amount Aging Notes
%
KaiPing FuLiHua Fashion Un-related Above 3 The un-settled prepayment of
1,570,000.00 5.84
Co.,Ltd party years import and export business
ShangQiu City QiuGe Mao Rong Un-related Above 3 The un-settled prepayment of
1,263,486.10 4.70
Co.,Ltd party years import and export business
Shenzhen LianHua Insulated Un-related Above 3 The un-settled prepayment of
815,168.55 3.03
Materials Trade Co.,Ltd party years import and export business
Kingdee Software (China) Co., Un-related Within 1 The un-settled prepayment of
662,400.00 2.46
Ltd. party year software system
Shenzhen Hongtong Automobile Un-related Within 1
537,029.00 2.00 The un-settled prepayment of motor
Trade Co.,Ltd party year
Total 4,848,083.65 18.03
58
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
（3）No amount due from shareholders who hold 5% or more of the voting rights of the company is
included in the above balance of advance suppilers.
（4）No amount due from related parties is inclued in the above balance of advance suppilers.
5.Other receivables
（1）The symbol of credit risk identified by customers categories
2010-12-31 2009-12-31
Book Proportion Provision of Book Proportion Provision of
balance % bad debts balance % bad debts
Category 1 154,398,267.51 68.28 149,265,573.52 154,633,577.80 67.78 149,500,412.72
Category 2 71,742,683.76 31.72 29,340,438.24 73,505,531.25 32.22 29,340,438.24
Total 226,140,951.27 100.00 178,606,011.76 228,139,109.05 100.00 178,840,850.96
Category 1: refers to other receivable with significant individual amount and separate impairment test.
Category 2: refers to other receivable which is unsignificant indivually but according to the characteristics
of the portfolio after portfolio of risky accounts receivable and separate impairment test.
The ending balance is mainly constituted by other receivables between subsidiares that are not concluded
in consolidated statement. A provision for impairment of the receivable is established at the difference between
the carrying amount of the receivable and the recoverable amount for accounts receivable with long aging and
little retrievability.
(2) Refers to other receivable which is unsignificant indivually but according to the characteristics of the
portfolio after portfolio of risky accounts receivable and separate impairment test.
Provision of Proportion
Book balance Notes
bad debts %
Other receivables between A separate provision is established
subsidiares that are not concluded in 9,391,120.50 9,375,225.50 99.83 according to the recoverability of
consolidated statement each receivales with long aging and
Others 62,351,563.26 19,965,212.74 32.02 little retrievability
Total 71,742,683.76 29,340,438.24 40.90
59
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
（3）The aging of accounts receivable by categories:
2010-12-31 2009-12-31
Aging Proportion Provision of Proportion Provision of
Amount Amount
% bad debts % bad debts
Within 1 year 7,128,913.14 3.15 -- 9,336,668.77 4.09 --
1 and 2 year 6,188,309.32 2.74 -- 3,399,443.88 1.49 --
2 and 3 year 1,690,204.51 0.75 -- 1,626,202.50 0.71 --
3and 5 year 2,550,351.80 1.13 -- 1,426,952.45 0.63 --
Above 5 year 208,583,172.50 92.23 178,606,011.76 212,349,841.45 93.08 178,840,850.96
Total 226,140,951.27 100.00 178,606,011.76 228,139,109.05 100.00 178,840,850.96
（4）The informations of accounts receivables of the company's top five debtors are as follows:
Name Relationship Amount Proportion % Aging
Canada Great Wall( Vancouver) Co.,Ltd * Subsidiary 89,035,748.07 39.37 Above 5 years
Paklid Limited * Subsidiary 18,946,689.75 8.38 Above 5 years
Bekaton property Limited * Subsidiary 12,559,290.58 5.55 Above 5 years
Guangdong province Huizhou Luofu Hill
Joint venture 10,465,168.81 4.63 Above 5 years
mineral water Co.,Ltd
Luofu Hill Travelling Corporation Un- related party 9,600,000.00 4.25 Above 5 years
Total 140,606,897.21 62.18
* The above subsidiaries were not included in the company’s consolidated financial statement. Refer to
Note IV.1. (1) for details.
（5）No amount due from shareholders who hold 5% or more of the voting rights of the company is
included in the above other receivables.
（6）Refer to NoteVI. 3. (5) for details of the other receivables which are due from related parities.
（7）There were no any accont reciviables which had been accured full or large proporation provisionl
transferred back in this accounting year.
（8）There were no any other receivables written-off in this accounting year.
（9）There were no any other receivables which had been terminated recognized in the accounting year.
60
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
（10）There were no any other receivables which had been Securitization in the accounting year.
6.Inventories
（1）Inventories classfied by category
2010-12-31 2009-12-31
Amount Provision Amount Provision
Real estate developed products 583,563,384.20 771,196.00 374,902,380.30 1,350,000.00
Real estate developing products 430,337,926.63 47,584,499.31 542,654,985.50 47,584,499.31
Real estate which are going to be developed 1,215,632,063.00 -- 1,200,170,737.09 --
Raw materials 858,631.86 -- 861,932.89 --
Finished products 584,324.05 278,891.91 608,858.82 278,891.91
Low-value consumable products 44,640.76 -- 11,478.74 --
Construction in progress 42,552,323.21 -- 18,301,964.51 --
Total 2,273,573,293.71 48,634,587.22 2,137,512,337.85 49,213,391.22
The ending balance of inventories increased by RM 136,060.96 thousands, 6.37%. The increase is due to
the additions of real estate development products- Jinye Island villa No.10.
（2）Provision
Redutions
2009-12-31 Additions 2010-12-31
Transferred back Written-off
Finished products 278,891.91 -- -- -- 278,891.91
ShuiYunTianYa, MingYuan 47,584,499.31 -- -- -- 47,584,499.31
HuaMin Building 1,350,000.00 -- -- 578,804.00 771,196.00
Total 49,213,391.22 -- -- 578,804.00 48,634,587.22
（3）Real estate developed products
Finished time 2009-12-31 Additions Redutions 2010-12-31
Jinye Island villa No.1 1996 3,141,098.72 -- 1,293,216.00 1,847,882.72
Jinye Island Multi-tier villa 1997 36,077,347.92 813,755.01 253,778.28 36,637,324.65
Jinye Island villa No.6 2007 34,471,819.41 -- -- 34,471,819.41
Jinye Island villa No.7 2007 18,424,926.88 -- 11,169,690.00 7,255,236.88
Jinye Island villa No.8 2007 6,716,371.49 -- 6,716,371.49 --
Jinye Island villa No.9 2009 56,446,237.99 9,638,459.04 25,073,454.50 41,011,242.53
61
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Finished time 2009-12-31 Additions Redutions 2010-12-31
Jinye Island villa No.10 * 2010 -- 458,405,775.54 94,112,649.04 364,293,126.50
Jinye Island villa No.11 2008 138,898,000.80 -- 103,481,205.33 35,416,795.47
HuangPuXinChun No.1 1994 121,283.88 -- -- 121,283.88
HuangPuXinChun No.2 2007 6,732,405.35 -- 1,449,224.01 5,283,181.34
HuaMin Building -- 3,020,596.68 -- 1,295,061.85 1,725,534.83
HuaMin Building 2000 1,631,743.64 -- -- 1,631,743.64
XingHu Garden Multi-tier 2003 248,384.29 -- 248,384.29
XingHu Garden No.8 2005 9,988,789.21 -- -- 9,988,789.21
BeiJing Fresh Peak Buliding 671,820.67 -- -- 671,820.67
Friendship Multi-tier Parking Lot
56,266,380.81 -- 56,266,380.81 --
**
JiaoHu Roan Cyber Shop ** 2,045,172.56 -- -- 2,045,172.56
Wenjin warehouse 1-5 floor*** -- 13,453,649.46 -- 13,453,649.46
Hujing building 2-4 floor*** -- 12,616,011.52 -- 12,616,011.52
Real Estate building *** -- 11,025,444.77 -- 11,025,444.77
Wenjing Garden *** -- 3,818,939.87 -- 3,818,939.87
Dongle Garden *** -- 9,597,909.91 9,597,909.91 --
Total 374,902,380.30 519,369,945.12 310,708,941.22 583,563,384.20
* The Jinye Island villa No.10 were transfreed in inventories from Real estate developing products in
2010 when the the Jinye Island villa No.10 was completed.
** On 2010-1-29, Friendship Multi-tier Parking Lot was sold by auction sucessfully with the pirce - Rmb
129,360,000.00 in Shenzhen Land Real Estate Trading Center.
*** Wenjin warehouse 1-5 floor, Hujing building 2-4 floor, Real Estate building, Wenjing Garden,
Dongle Garden were reclassfied to inventories from investment poperties because their use had been changed.
（4）Real estate developing products
Starting time Finished time 2009-12-31 2010-12-31
DongHuDiJing Building 129,832,800.58 131,828,661.29
Jinye Island villa No.10 2008 2010 118,848,416.49 --
ShanTou JinHu Road Project 2008 53,858,008.00 53,912,169.04
ShuiYuTianYa, MingYuan 2007 219,031,704.38 223,098,533.75
ShanTou Fresh Peak Building 21,084,056.05 21,498,562.55
Total 542,654,985.50 430,337,926.63
The capitalisation amount of loans was Rmb 15,644,555.07 this accounting year. And last year was Rmb
62
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
6,806,525.39.
（5）Real estate which are going to be developed
2009-12-31 Additions Reductions 2010-12-31
GuangMing New District project 1,200,170,737.09 15,461,325.91 -- 1,215,632,063.00
Total 1,200,170,737.09 15,461,325.91 -- 1,215,632,063.00
The company bought the land-use right of Shenzhen GuangMing New District whose number were
A510-0131, A511-0025 through the listing transferring mode. The total land remise fund is 1.2 billion. And the
company had paid 50% of the fund on 9 September 2009. And the remaining fund had be paid for in 2010. The
total area of the land is 90,737.09 square meter. FAR is 2. The total construction area is 181,470.00 square
meter. And the project is planned to be developed at the beginning of 2011 year.
63
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
7.Long-term equity investments
（1）The informations of Long-term equity investments are as follows:
The
Measured Investment Proportion Voting right Dividend in Accumulated
Name of investees 2009-12-31 Movement 2010-12-31 provisionaccrued
method cost (%) (%) cash provision
this year
1.Associate
investment
Shenzhen Shatoujiao equity
2,850,618.06 2,446,234.22 -2,446,234.22 -- 50 50 -- -- --
Nantian Store *1 method
Zhaoqing Guifeng equity
15,112,000.00 12,724,417.03 -12,724,417.03 -- 50 50 -- -- --
cement Co.,Ltd *2 method
Shenzhen Ronghua equity
1,250,000.00 1,841,277.19 -236,587.15 1,604,690.04 25 25 200,000.00 -- 1,076,954.64
JiDian Co.,ltd method
Shenzhen Fresh Peak
equity
property consultant 600,000.00 -- -- -- 20 20 -- -- --
method
Co.,Ltd
Shenzhen runhua
equity
automobile trading 1,445,425.56 1,445,425.56 -- 1,445,425.56 50 50 -- -- 1,445,425.56
method
Co.,Ltd
Shenzhen Dongfang
equity
New world store 15,000,000.00 -- -- -- 50 50 -- -- --
method
Co.,Ltd
2.joint venture
64
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
The
Measured Investment Proportion Voting right Dividend in Accumulated
Name of investees 2009-12-31 Movement 2010-12-31 provisionaccrued
method cost (%) (%) cash provision
this year
investment
Guangdong
province Huizhou equity
9,969,206.09 9,969,206.09 -- 9,969,206.09 Cooperation Cooperation -- -- 9,969,206.09
Luofu Hill mineral method
water Co.,Ltd
Fengkai Xinhua equity
9,455,465.38 9,455,465.38 -- 9,455,465.38 Cooperation Cooperation -- -- 9,455,465.38
Hotel method
Jiangmen Xinjian Real equity
9,037,070.89 9,037,070.89 -- 9,037,070.89 Cooperation Cooperation -- -- 912,537.16
Estate Co. Ltd. method
Xian Fresh Peak equity
32,840,729.61 32,840,729.61 -- 32,840,729.61 Cooperation Cooperation -- -- 20,673,831.77
Building Co. Ltd. method
DongYi Property equity
30,376,084.89 30,376,084.89 -- 30,376,084.89 Cooperation Cooperation -- -- 21,225,715.87
Co.,Ltd method
3.other equity
investment:
Shenzhen Shen Fang
Industrial Cost
4,500,000.00 4,500,000.00 -- 4,500,000.00 100 100 -- -- 4,500,000.00
Development Co., method
Ltd
Shenzhen ZhongGang Cost
12,940,900.00 12,940,900.00 -- 12,940,900.00 68 68 -- -- 12,940,900.00
Haiyan Enterprise method
65
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
The
Measured Investment Proportion Voting right Dividend in Accumulated
Name of investees 2009-12-31 Movement 2010-12-31 provisionaccrued
method cost (%) (%) cash provision
this year
Ltd.
Shenzhen Real Estate
Cost
Consolidated Service 5,958,305.26 5,958,305.26 -- 5,958,305.26 100 100 -- -- 5,958,305.26
method
Co., Ltd.
Cost
Paklid Limited 201,100.00 201,100.00 -- 201,100.00 100 100 -- -- 201,100.00
method
Bekaton Property Cost
906,630.00 906,630.00 -- 906,630.00 60 60 -- -- 906,630.00
Limited method
Canada Great Wall Cost
4,526.25 -- -- -- 75 75 -- -- --
(Vancouver) Co.,Ltd method
Shenzhen Tefa Real
Cost
Estate Consolidated 8,180,003.63 8,180,003.63 -- 8,180,003.63 100 100 -- -- 8,180,003.63
method
Service Co., Ltd.
Shenzhen Xin Cost
18,500,000.00 18,500,000.00 -- 18,500,000.00 100 100 -- -- 18,500,000.00
Dongfang Store Ltd. method
Shenzhen City
Shenfang
Cost
Construction and 2,680,000.00 2,680,000.00 -- 2,680,000.00 100 100 -- -- 2,680,000.00
method
Decoration Materials
Ltd.
Shenzhen Shenfang Cost 10,000,000.00 10,000,000.00 -- 10,000,000.00 100 100 -- -- 10,000,000.00
66
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
The
Measured Investment Proportion Voting right Dividend in Accumulated
Name of investees 2009-12-31 Movement 2010-12-31 provisionaccrued
method cost (%) (%) cash provision
this year
Department Store method
Co. Ltd.
Shenzhen CyberPort Cost
14,000,000.00 7,613,507.96 -- 7,613,507.96 70 70 -- -- --
Co., Ltd method
KunShan Electrity Cost
32,471,239.25 32,471,239.25 -32,471,239.25 -- 50 50 11,327,948.39 -- --
Co.,Ltd *3 method
YunNan KunPeng Cost
5,464,240.74 5,464,240.74 -- 5,464,240.74 25 25 -- -- --
Flight service Co.,Ltd method
ShenZhen ShenFang
Cost
BaoAn 20,000,000.00 20,379,525.68 -- 20,379,525.68 100 100 -- -- --
method
developmentCo.,Ltd
Shantou Fresh Peak Cost
68,731,560.43 58,547,652.25 -- 58,547,652.25 100 100 -- -- 58,547,652.25
Building method
Guangdong Province
Fengkai Lain Feng
Cost
Cement 121,265,000.00 56,228,381.64 -- 56,228,381.64 90 90 -- -- 56,228,381.64
method
Manufacturing Co.,
Ltd.
Total 453,740,106.04 354,707,397.27 -47,878,477.65 306,828,919.62 11,527,948.39 -- 243,402,109.25
67
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
*1 Shenzhen Shatoujiao Nantian Store
The company transferred 50% equity of Shenzhen Shatoujiao Nantian Store to Shenzhen ShaTou Jiao
Business trade Co., Ltd with a listing agreement price –Rmb 12,145 thounsand in ShenZhen United Exchange on
February2th, 2010.
*2 Zhaoqing Guifeng cement Co., Ltd
The company transferred 50% equity of Zhaoqing Guifeng cement Co., Ltd to GuangLong Group with a
listing agreement price –Rmb 17,300 thounsand in ShenZhen United Exchange on September 25th, 2010.
*3 KunShan Electrity Co., Ltd
On August 6, 2010, the liquidation group held the meeting and agreed that Fresh Peak Enterprise Ltd., one
subsidiary of the Company –obtained the remaining assets of KunShan Electrity Co., Ltd. The value of the
remaining assets is RMB 34,235,690.96 and USD 22,852.64.
（2）Impairment provision for Long-term equity investment are as follows:
Reductions
Name of investees Opening balance Additions Closing balance
Transferred back Written-off
Shenzhen ronghua JiDian Co.,ltd 1,076,954.64 -- -- -- 1,076,954.64
Shenzhen Shen Fang Industrial Development Co., Ltd 4,500,000.00 -- -- -- 4,500,000.00
Shenzhen ZhongGang Haiyan Enterprise Ltd. 12,940,900.00 -- -- -- 12,940,900.00
Shenzhen Real Estate Consolidated Service Co., Ltd. 5,958,305.26 -- -- -- 5,958,305.26
Paklid Limited 201,100.00 -- -- -- 201,100.00
Bekaton Property Limited 906,630.00 -- -- -- 906,630.00
Shenzhen Tefa Real Estate Consolidated Service Co., Ltd. 8,180,003.63 -- -- -- 8,180,003.63
Shenzhen Xin Dongfang Store Ltd. 18,500,000.00 -- -- -- 18,500,000.00
Shenzhen City Shenfang Construction and Decoration Materials 2,680,000.00 -- -- -- 2,680,000.00
Shenzhen Shenfang Department Store Co. Ltd. 10,000,000.00 -- -- -- 10,000,000.00
Guangdong Province Fengkai Lain Feng Cement Manufacturing 56,228,381.64 -- -- -- 56,228,381.64
Shenzhen Runhua automobile trading Co.,Ltd 1,445,425.56 -- -- -- 1,445,425.56
Guangdong province Huizhou Luofu Hill mineral water Co.,Ltd 9,969,206.09 -- -- -- 9,969,206.09
68
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Reductions
Name of investees Opening balance Additions Closing balance
Transferred back Written-off
Fengkai Xinhua hotel 9,455,465.38 -- -- -- 9,455,465.38
Jiangmen Xinjian Real Estate Co. Ltd. 912,537.16 -- -- -- 912,537.16
Xian Fresh Peak Property Management & Trading Co. Ltd. 20,673,831.77 -- -- -- 20,673,831.77
Tung Yick Property Co., Ltd. 21,225,715.87 -- -- -- 21,225,715.87
Shantou Fresh Peak Building 58,547,652.25 -- -- -- 58,547,652.25
Total 243,402,109.25 -- -- -- 243,402,109.25
8.Investment Property（ measured according to the cost model）
2009-12-31 Additions Reductions 2010-12-31
Original cost
Buildings 834,855,168.59 -- 85,698,885.17 749,156,283.42
Land-use right 105,247,628.32 -- 3,128,975.21 102,118,653.11
total 940,102,796.91 -- 88,827,860.38 851,274,936.53
Accumulated depreciation
Buildings 235,385,349.06 21,641,553.58 33,803,548.38 223,223,354.26
Land-use right -- -- -- --
total 235,385,349.06 21,641,553.58 33,803,548.38 223,223,354.26
Provision for impairment losses
Buildings 14,182,354.95 -- 53,810.33 14,128,544.62
Land- use right 86,381,639.48 -- 2,568,095.96 83,813,543.52
total 100,563,994.43 -- 2,621,906.29 97,942,088.14
Book value
Buildings 585,287,464.58 511,804,384.54
Land-use right 18,865,988.84 18,305,109.59
Total 604,153,453.42 530,109,494.13
The amount of current year deprication is Rmb 21,641,553.58, compared with Rmb 29,100,388.92 last year.
There was no any provision for impairment losses accured in this accounting year.
The reduaction of Original cost and Accumulated depreciation of building is due to reclassification caused
by the change of purpose and sales. The amount of building’s reductions of orginal cost is Rmb 85,698,885.17, of
69
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
which, the amount due to be sold is Rmb 2,382,275.94. And the amount due to reclassification to inventories is
Rmb 83,316,609.23 (the balance of Accumulated depreciation is Rmb 33,507,021.70).
The reductions of land use right’s orginal cost and provision for impairment losses due to the change of rate
used in translation of foreign currencies.
Among the investment property, Rmb 445,195,256.61 of net book value of buliding was used as mortgage
for the company’s short-term/long-term loans. Refer to Note V.15 for details.
9.Fixed assets and Accumulated depreciation
2009-12-31 Additions Reductions 2010-12-31
Cost
Buildings 117,069,692.56 132,030.00 -- 117,201,722.56
Transport equipment 19,784,159.53 2,374,882.30 2,705,474.00 19,453,567.83
Electronic equipment and others 16,096,615.97 2,111,645.76 4,335,082.29 13,873,179.44
Total 152,950,468.06 4,618,558.06 7,040,556.29 150,528,469.83
Accumulated depreciation
Buildings 59,463,001.85 3,589,072.61 -- 63,052,074.46
Transport equipment 13,950,692.68 1,588,171.69 2,591,512.40 12,947,351.97
Electronic equipment and others 13,121,617.75 968,310.10 4,219,124.45 9,870,803.40
Total 86,535,312.28 6,145,554.40 6,810,636.85 85,870,229.83
Provision for impairment loss
Electronic equipment and others 131,727.96 131,727.96
Net book value
Buildings 57,606,690.71 54,149,648.10
Transport equipment 5,833,466.85 6,506,215.86
Electronic equipment and others 2,843,270.26 3,870,648.08
Total 66,283,427.82 64,526,512.04
The amount of current year deprication is Rmb 6,145,554.40. There are no any constructions in progress
transferred to fixed assests.
As at 2010-12-31, net book value Rmb 29,892,669.51 of the Buildings was used as the short-term/long-term
70
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
loans’ mortgage (includin the long-term loans). Refer to Note V.15 for details.
There are no any temporary idle fixed assests.
There are no any fixed assests acquired by financial leasing in the accounting year.
There are no any fixed assets leased out through operating leasing way.
There are no any fixed assests held for sale.
10.Construction in progress
2010-12-31 2009-12-31
Book balance Provision for Net book Book Provision for Net book
impairment loss value balance impairment loss value
Elevator renovation 520,000.00 -- 520,000.00 -- -- --
The increase of Construction in progress is due to sightseeing elevator renovation of Shenzhen Petrel Hotel
Co. Ltd.
11.Intangible assets
2009-12-31 Additions Amortization 2010-12-31
Original cost
Software 318,000.00 218,000.00 -- 536,000.00
Taxi license 6,368,000.00 -- -- 6,368,000.00
Total 6,686,000.00 218,000.00 -- 6,904,000.00
Accumulative amortization
Software 63,600.00 70,533.33 -- 134,133.33
Taxi license 390,020.00 166,580.00 -- 556,600.00
Total 453,620.00 237,113.33 -- 690,733.33
Net value
Software 254,400.00 401,866.67
Taxi license 5,977,980.00 5,811,400.00
71
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2009-12-31 Additions Amortization 2010-12-31
Total 6,232,380.00 6,213,266.67
Provision for impairment loss
-- --
Book value
Software 254,400.00 401,866.67
Taxi license 5,977,980.00 5,811,400.00
Total 6,232,380.00 6,213,266.67
The amount of current year amortization is Rmb 237,113.33, compared with Rmb 230,180.00 last year.
12.Long-term deferred and prepaid expenses
Current year Accumulative
Original cost 2009-12-31 Additions 2010-12-31
amortization amortization
Decoration costs 1,808,640.24 364,901.70 -- 162,445.20 1,606,183.74 202,456.50
13.Deferred tax assets
（1）the deferred tax asset which were already recognized
2010-12-31 2009-12-31
Assests impairment provision 11,896,124.83 11,896,124.83
Employee benefits payable 834,104.90 807,847.20
Unused operating losses against tax 5,026,369.99 3,528,158.38
Total 17,756,599.72 16,232,130.41
（2）the detais of deferred tax asset which were un-recognized
2010-12-31 2009-12-31
Unused operating losses against tax 32,831,203.07 32,165,474.52
（3）the maturity year of the unused operating losses against tax which were the un-recognized deferred tax
asset:
72
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Year 2010-12-31
2011 Year 54,801,155.53
2012 Year 9,010,226.92
2013 Year 28,540,572.21
2014 Year 36,309,943.43
2015 Year 2,662,914.18
Total 131,324,812.27
（4）the amout of temporary difference is as follow:
Amout of temporary difference
Assests impairment provision 47,584,499.31
Employee benefits payable 3,475,437.05
Unused operating losses against tax 20,943,208.29
Total 72,003,144.65
14.Impairment provision of assets
Reductions
2009-12-31 Additions 2010-12-31
Transferred back Written-off
Provision for bad debts 197,470,530.07 -- 234,839.20 155,400.00 197,080,290.87
Inventories impairment provision 49,213,391.22 -- -- 578,804.00 48,634,587.22
Long-term equity investment
243,402,109.25 -- -- -- 243,402,109.25
impairment provision
Investment property impairment
100,563,994.43 -- 2,568,095.96 53,810.33 97,942,088.14
provision
Fixed assets impairment provision 131,727.96 -- -- -- 131,727.96
Total 590,781,752.93 -- 2,802,935.16 788,014.33 587,190,803.44
The variation of impairment provision of assets is due to the change of rate used in translation of foreign
currencies.
15.Restrictions on the ownership of assets
Book value on
Items Mortagage period
2010-12-31
Deposits with bank Other monetary funds * 8,461,823.83
Inventories(work in process) ShuiYunTianYa, MingYuan land-use right 2009.12.08-2012.12.07 121,416,542.78
73
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Investment Property ShenFang Square 2009.03.30-2020.06.01 287,902,578.58
Investment Property Petrel Building 2010.06.03-2020.06.01 82,688,103.43
Investment Property GuoShang North 2 floor 2007.05.29-2017.05.29 74,604,574.60
Investment Property Real estate Building 5-6 floor 2010.11.26-2013.11.26 7,492,175.18
Fixed assests ShenFang Square 46-48 floor 2010.08.23-2013.11.26 29,892,669.51
Total 612,458,467.91
* Other monetary funds of the Company is the security deposit that the company provided when properties
purchaser apply mortgage. Types consist in full security and Periodical security. Periodically to ensure security of
the guarantee period from the effective date of the contract until the buyers who purchased homes in the "real
estate license," registration process is completed and the mortgage bank completed and delivered the date of the
Executive Management; the perido of full security guarantees from the effective date until the date of expiry of
the loan contract.
The restrictions on the ownership of assets mentioned above, except for other monetary funds, were used as
mortgage when the company borrowed money form the bank and related parities.
16.Short-term borrowings
Nature 2010-12-31 2009-12-31
Mortgage borrowings -- 100,000,000.00
Credit borrowing 14,800,000.00 --
Total 14,800,000.00 100,000,000.00
The short-term borrowings were comprehensive credit loans by Shenzhen Zhen Tung Engineering Ltd from
Shenzhen branch of China CITIC Bank. The loan interest rate is 5.31%.
The company didn’t fail repaid any due short-term borrowings.
17.Accounts payable
2010-12-31 2009-12-31
Accounts payable 228,580,780.82 730,944,352.56
74
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
（1）The balance of accounts payable decreased by Rmb 502,363.57 thousand, 68.73%. The decrease due to
the paid land remise fund to Urban Planning and Resources Commission of Shenzhen Municipality of the
GuangMing New district project.
（2）The balance of accounts payable whose aging is more than 1 year is mostly the un-billing construction
fee.
（3）No amount due to shareholders who hold 5% or more of the voting rights of the comanpy is included in
the above balance of AP.
（4）No amount due to related parities is included in the above balance of AP.
18.Advance from customers
The aging analysis of the company’s accounts receivable is as follow:
2010-12-31 2009-12-31
Aging
Amount Proportion% Amount Proportion %
Within 1 year 374,655,230.80 94.77 151,606,227.42 96.49
Above 1 year 20,677,040.09 5.23 5,509,824.73 3.51
Total 395,332,270.89 100.00 157,116,052.15 100.00
（1）The balance of advances from customers increased by Rmb 238,216.22 thousand, 151.62%. The
increase is due to the advance properties sales price which havn’t reached the condition of revenue recognition.
（2）The balance whose aging were more than 1 year were mostly the import and export agency business
payment which havn’t settle with the clients.
（3）No amount due to shareholders who hold 5% or more of the voting rights of the comanpy is included in
the above balance .
（4）No amount due to related parities is included in the above balance.
At 2010-12-31，the main items of Advances from customers are as follow:
75
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Items 2009-12-31 2010-12-31 Situation Aging
Guangzhou Huangpu yuan 1,751,000.00 -- Completed Within 1 year
Jinye Island villa No. 6 -- 11,917,000.00 Completed Within 1 year
Jinye Island villa No. 7 6,173,201.00 9,884,697.00 Completed Within 1 year
Jinye Island villa No. 9 35,338,525.00 18,447,800.00 Completed Within 1 year
Jinye Island villa No. 10 -- 268,200,985.00 Completed Within 1 year
Jinye Island villa No. 11 80,487,094.60 10,502,424.00 Completed Within 1 year
Total 123,749,820.60 318,952,906.00
Jinye Island villa No. 10 was completed on 2 December, 2010.
19.Employee benefits payable
2009-12-31 Additions Reductions 2010-12-31
Wages , bonuses, allowances and subsidies 17,139,442.94 86,271,623.13 78,178,115.05 25,232,951.02
Staff welfare -- 1,252,543.49 1,252,543.49 --
Social securities 2,395,896.99 17,590,646.55 10,664,070.96 9,322,472.58
including：Pension insurance 1,426,873.82 8,459,086.66 8,399,496.40 1,486,464.08
Medical insurance 969,023.17 1,906,283.73 1,772,233.13 1,103,073.77
Unemployement insurance -- 203,667.30 203,667.30 --
Employement injury insurance -- 90,348.02 90,348.02 --
Maternity insurance -- 198,326.11 198,326.11 --
Housing Fund -- 6,732,934.73 -- 6,732,934.73
Labor union and employee education funds 632,882.76 1,381,562.83 1,365,743.22 648,702.37
Compensation to employees for termination of
4,304,271.06 27,021.50 223,617.17 4,107,675.39
employment relationship
Others 27,000.00 2,899,375.49 2,899,375.49 27,000.00
Total 24,499,493.75 109,422,772.99 94,583,465.38 39,338,801.36
（1）The balance of Employee benefits payable increased by Rmb 14,839.31 thousand, an increase of
60.57%. The increase is due to employee performance awards accrued and Housing Fund in accordance with the
policies of Shenzhen City housing fund.
76
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
（2）No amount’s nature of the employee benefits payable were arrears of wage.
（3）The amount of Labor union and employee education funds were Rmb 1,365,743.22. The nature was
monetary benefits. The amount of Compensation to employees for termination of employment relationship was
Rmb 223,617.17.
20.Taxes payable
2010-12-31 2009-12-31
Value added tax (“VAT”) -4,293,362.47 -3,356,801.84
Business tax -15,541,233.94 -8,775,058.40
Construction tax -217,617.34 -246,366.15
Education surcharge -134,881.85 -70,442.79
Embankment Protection Fee -227,106.05 -125,435.28
Property tax 1,772,048.29 2,069,192.63
Land value added tax -2,124,986.64 2,119,324.64
Corporate Income tax 6,490,711.85 -913,790.48
Personal income tax 484,123.71 498,046.04
Others 458,846.00 18,568.07
Total -13,333,458.44 -8,782,763.56
The balance of taxes payable decreased by Rmb 4,550.69 thousands, 51.81%. The decrease due to that the
business tax surcharges of JinYe Island project is prepaid in 5% and Land value added tax according to the
advance aggregated sales price.
21.Interests payable
2010-12-31 2009-12-31
Shenzhen Investment Shareholding Co.，Ltd 16,535,277.94 14,421,711.65
Urban Planning and Resources Commission of Shenzhen Municipality -- 10,266,000.00
Total 16,535,277.94 24,687,711.65
Please refer to Note VI.3. (2) for details of loans borrowed from the company’s controlling shareholder -
Shenzhen Investment Shareholding Co.，Ltd.
77
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
And the balance of interests payable due to Shenzhen Investment Shareholding Co.，Ltd. were accured from
the loans borrowed from 2007 to 2010.
22.Other payables
2010-12-31 2009-12-31
Other payables 302,144,393.62 297,237,215.73
（1）The information of other payables due to shareholders who hold 5% or more of the voting rights of the
company are is as follows:
2010-12-31 2009-12-31 Nature of other payables
Shenzhen Investment Holdings Co., Ltd. 65,848,819.24 63,848,819.24 Loans and guarantee fees
（2）The amount whose aging were more than 1 year are mostly loans borrowed form related parities,
correspondent fund and leasing deposit.
（3）Please refer to Note VI.3. (2) for details of the amount owed to related parties.
23.Non-current liabilities within one year
2010-12-31 2009-12-31
Long-term loans within one year
Mortgage loans 29,423,411.10 229,607,155.48
Total 29,423,411.10 229,607,155.48
(1) The company didn’t fail to repay the due long-term loans in the accounting year.
（2）the lenders of long-term loans are as follows:
78
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
lender Maturity Date Currency Rate（%） 2010-12-31
Shenzhen Rural Commercial Bank 2011.12.20 RMB 5.40 12,000,000.00
ShangHai PuDong Development Bank
2011.12.20 RMB 5.40 6,000,000.00
ShenZhen Branch
Nanyang Commercial Bank shenzhen
2011.12.20 RMB 5.40 5,703,411.10
Branch
Industrial and Commercial Bank of China
2011.12.20 RMB 4.86 5,720,000.00
Shenzhen Branch
Total 29,423,411.10
24.Long-term Borrowings
Loans conditions 2010-12-31 2009-12-31
Mortgage loans 386,126,531.44 811,593,686.82
Guarantee loans 700,000,000.00
Total 1,086,126,531.44 811,593,686.82
Including.：non-current liability within one year 29,423,411.10 229,607,155.48
long term loans 1,056,703,120.34 581,986,531.34
The informations for the ending balance of long-term loans owed to each lender are as follows:
Lender Currency 2010-12-31 Conditions Maturity Date
Shenzhen Rural Commercial Bank Shangbu
RMB 109,000,000.00 Mortgage 2013.11.26
Branch
Shenzhen Rural Commercial Bank Shangbu
RMB 98,000,000.00 Mortgage 2013.08.23
Branch
Nanyang Commercial Bank shenzhen branch RMB 42,486,531.44 Mortgage 2017.05.29
ShangHai Bank Shenzhen Branch* RMB 500,000,000.00 Guaranteed 2012.12.07
ShangHai PuDong Development Bank
RMB 39,500,000.00 Mortgage 2012.03.29
ShenZhen Branch
Industrial and Commercial Bank of
RMB 97,140,000.00 Mortgage 2020.06.01
China Shenzhen Branch
Bank of Communciation ShanTou Branch RMB 200,000,000.00 Guaranteed 2012.08.03
Total 1,086,126,531.44
* The loans borrowed from ShangHai Bank Shenzhen Branch were guaranteed by the company’s
79
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
controlling shareholder – Shenzhen Investment Holdings Co., Ltd. And the company provided counter-guarantee
mortgage with ShuiYunTianYa, MingYuan land-use right. Refer to Note V.15 for details.
25.Long-term payable
2010-12-31 2009-12-31
Maintenance fund 9,779,108.83 8,185,932.62
26.Share capital
2009-12-31 Additions Reductions 2010-12-31
Total shares 1,011,660,000 -- -- 1,011,660,000
27.Capital reserve
2009-12-31 Additions Reductions 2010-12-31
Share premium 557,433,036.93 -- -- 557,433,036.93
Other capital surplus 420,811,821.17 -- -- 420,811,821.17
Total 978,244,858.10 -- -- 978,244,858.10
28.Surplus reserve
2009-12-31 Additions Reductions 2010-12-31
Reserve fund 4,974,391.15 -- -- 4,974,391.15
29.Retained Earnings
2010 Year 2009 Year
Retained Earnings at the end of last year -781,357,778.86 -915,511,458.27
Add: adjustment amount 119,428,606.57 119,446,828.11
Retained Earnings at the beginning of year -661,929,172.29 -796,064,630.16
Add: net profit for parent company’s shareholders 84,760,162.75 20,199,162.08
less：Profit distribution -- --
Including.：withdrawal legal surplus -- --
80
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2010 Year 2009 Year
Withdrawal special surplus -- --
Distribution to ordinary shareholders -- --
Make up for losses with surplus reserve -- 113,936,295.79
Retained Earnings at the ending of year -577,169,009.54 -661,929,172.29
Adjustment items of retained earnings at the beginning of year refers to Notes II.27. (1).
30.Minority Interest
Proportion of minority
Name of investees 2010-12-31 2009-12-31
shareholdings %
Fresh Peak Investment Ltd. 45 -104,535,306.38 -104,532,363.33
Barenie Co. Ltd. 20 -2,029,582.32 -2,027,387.46
Great Wall Estate Co., Inc 30 -21,520,509.77 -21,352,784.66
Total -128,085,398.47 -127,912,535.45
31.Turnover and cost of sales
(1) Turnover and cost of sales
2010 Year 2009 Year
Core operating income 996,827,381.99 659,202,263.13
Other operating income 24,228,317.62 90,979,939.34
Gross Income 1,021,055,699.61 750,182,202.47
Cost of sales 672,735,584.16 534,326,169.41
(2) Core operating Income（classfied by industry）
Operating Income Operating Cost Operating Margin
Industry
2010 Year 2009 year 2010 year 2009 year 2010 year 2009 year
Real estate 560,075,510.04 321,202,863.73 284,217,637.43 168,571,340.65 275,857,872.61 152,631,523.08
Construction 272,339,823.24 256,016,976.58 256,843,473.48 243,350,066.58 15,496,349.76 12,666,910.00
Leasing 70,659,541.52 62,890,575.16 27,711,243.53 36,245,475.31 42,948,297.99 26,645,099.85
Property
management 93,752,507.19 84,961,938.04 84,948,873.38 69,295,055.43 8,803,633.81 15,666,882.61
Hotel and
others 24,228,317.62 25,109,848.96 19,014,356.34 16,864,231.44 5,213,961.28 8,245,617.52
Total 1,021,055,699.61 750,182,202.47 672,735,584.16 534,326,169.41 348,320,115.45 215,856,033.06
81
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
（3）Core business（classified by district）
Operating Income Operating Cost Operating Margin
District
2010 Year 2009 year 2010 Year 2009 year 2010 Year 2009 year
Domestic:
GuangDong
1,020,408,417.3 727,823,534.95 672,735,584.16 526,761,635.15 347,672,833.14 201,061,899.80
Province
Overseas： 647,282.31 22,358,667.52 -- 7,564,534.26 647,282.31 14,794,133.26
Total 1,021,055,699.61 750,182,202.47 672,735,584.16 534,326,169.41 348,320,115.45 215,856,033.06
（4）The informations of the top 5 clients are as follows:
2010 Year
Client
Amount Proportion%
Shenzhen Shengshi Jiachuang Investment
Corporation 129,360,000.00 12.67
Shenzhen FutianDistrict Building Works Bureau 24,758,781.26 2.42
Shenzhen Xin Huadu Trading Co.Ltd 23,010,000.00 2.25
Zhongshan Guzhen Gangnan Economics
Development Company 14,365,928.44 1.41
Shenzhen Nanshan District Building Works
Bureau 12,860,000.00 1.26
Total 204,354,709.70 20.01
32.Business Taxes and Surcharges
2010 Year 2009 Year
Business tax 45,833,329.45 32,269,250.54
City maintenance and construction tax 563,749.15 228,353.26
Educational surcharge 767,741.25 626,116.15
Property tax 6,578,991.44 7,554,415.54
Land value added tax* 66,958,667.01 32,871,737.39
Embankment Protection Fee 450,957.06 250,894.54
Total 121,153,435.36 73,800,767.42
The amount of Land value added tax increased 34 million, an increase of 103.70%.The increase was caused
by increased sales of commercial property and land VAT. The details about Land VAT rate refers to Note III.
82
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
33.Selling and distribution expenses
2010 Year 2009 Year
Employee benefits 3,950,899.58 2,410,502.20
Advertising expenses 6,920,236.79 2,559,975.80
Entertainment expenses 749,244.59 654,421.50
Others 1,473,608.01 3,154,411.09
Total 13,093,988.97 8,779,310.59
34.General and administrative expenses
2010 Year 2009 Year
Employee benefits 36,447,448.71 32,339,066.96
Depreciation and amortizaon 5,526,432.97 5,795,990.07
Entertainment expenses 4,744,292.35 4,437,517.12
Others 23,275,018.17 27,643,979.38
Total 69,993,192.20 70,216,553.53
35.Finance expenses
2010 Year 2009 Year
Interest expenses 70,668,526.13 48,557,467.79
Less：capitalization interest 15,644,555.07 6,806,525.39
Less: interest income 1,050,178.53 2,213,229.24
Exchange losses 6,126,187.86 39,356.82
Less: exchange gains 5,003,945.06 196,661.97
Others 3,163,917.71 316,855.72
Total 58,259,953.04 39,697,263.73
The financial expenses increased by Rmb 18,562.69 thousand, an increase of 46.76%. The increase is due to
the accrued interest expenses caused by the addition of the bank loans.
36.Gain from changes of fair value
Source 2010 Year 2009 Year
Trading financial assets -15,323.50 109,106.25
Including：gain from changes of fair value of derivative
financial instruments -- --
Trading financial liability -- --
Investment property measured at fair value -- --
Total -15,323.50 109,106.25
83
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
37.Investment income
（1）The details of investment income are as follows:
2010 Year 2009 Year
The investment income yielded from the long-term equity
11,327,948.39 7,583,812.56
appilied with the cost method
The investment income yielded from the long-term equity
-36,587.15 -1,904,596.98
appilied with the equityt method
The investment income yielded from the disposal of the
15,588,205.14 --
long-term equity*
The investment income yielded from the disposal of the
322,484.04 114,301.68
financial assest held for trading
Total 27,202,050.42 5,793,517.26
RMB 9,636,607.65 was yielded from the transference of 50% equity of Shenzhen Shatoujiao Nantian Store
and RMB 4,975,582.97 from the transference of 50% equity of Zhaoqing Guifeng cement Co., Ltd. The liquidation
of KunShanDiaoFeng electrity Co., Ltd brought income of RMB 976,014.52.
（2）The investment income yielded from the long-term equity appilied with the cost method
Investee 2010 Year 2009 Year Reason of the movement
KunShanDiaoFeng electrity Co.,Ltd 11,327,948.39 7,208,812.56 Increase of dividend this year
YunNan KunPeng Flight Service Co.,Ltd -- 375,000.00 No dividend in 2010
Total 11,327,948.39 7,583,812.56
（3）The investment income yielded from the long-term equity appilied with the equity method
investee 2010 Year 2009 Year Reason of the movement
Shenzhen Shatoujiao Nantian Store -- -152,851.44 The disposal of equity
Zhaoqing Guifeng cement Co.,Ltd -- -1,776,494.00 The disposal of equity
Shenzhen ronghua JiDian Co.,ltd -36,587.15 24,748.46 The decrease of the profit of investee
Total -36,587.15 -1,904,596.98
84
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
38.Non-operating income
2010 Year 2009 Year
1.Total gain on disposal of non current assets 16,202.18 51,840.18
including：Gain on disposal of fixed assets 16,202.18 51,840.18
2.Penalty income 89,762.40 116,275.48
3.Compensation income 2,260.20 775,000.00
4.Others 104,767.27 18,003.56
Total 212,992.05 961,119.22
39.Non-operating expenses
2010 Year 2009 Year
1.Total losses on disposal of non current assets 329,447.92 57,747.38
including：Loss on disposal of fixed assets 329,447.92 57,747.38
2.penalty expense 13,743.00 377,645.42
3.Donation expenses 122,000.00 38,000.00
4.compensation expense* -- 542,749.92
5.others 837,367.12 29,455.50
Total 1,302,558.04 1,045,598.22
An amount of Rmb 738,404.71of tax surcharges was included.
40.Income tax expenses
2010 Year 2009 Year
Current year income tax expenses 28,669,817.61 13,715,040.27
Deferred income tax expenses -1,524,469.31 2,247,858.41
Total 27,145,348.30 15,962,898.68
41.Calculation of basic earnings per share and diluted earnings per share
2010 Year 2009 Year
Net profit for parent company’s shareholders 84,760,162.75 20,199,162.08
Weighted average number of ordinary shares issued 1,011,660,000.00 1,011,660,000.00
Basic earnings per share 0.0838 0.0200
Diluted earnings per share 0.0838 0.0200
85
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
42.Other comprehensive income
ITEM 2010 Year 2009 Year
1. The gain/loss yeild from the disposal of financial assests avaible for sale -- --
Less：the effect of income tax of disposal of financial assests avaible for sale -- --
the amount of which had been transferred in gain and loss which had
-- --
been counted in other comprehensive income prior period
Total -- --
2. The amount of which the investee other comprehensie income applied with
-- --
the equity method
less：the effect of income tax of The amount of which the investee other
-- --
comprehensie income applied with the equity method
the amount of which had been transferred in gain and loss which had
-- --
been counted in other comprehensive income prior period
Total -- --
3. The gain or loss yiele from the cash flow hedging instrument -- --
less：the effect of the gain or loss yiele from the cash flow hedging
-- --
instrument
the amount of which had been transferred in gain and loss which had
-- --
been counted in other comprehensive income prior period
the adjustment of the first recognized amout which had been
-- --
transferred in hedging instrument
Total -- --
4. The differencs of translation of foreign financial statement -613,529.27 145,356.03
less：the net amount of dealing with the overseas operationg gain or loss -- --
Total -613,529.27 145,356.03
5. Others -- --
less：the income tax effect of other item which had been counted in other
-- --
comprehensive income
the amount of which had been transferred in gain and loss which had
-- --
been counted in other comprehensive income prior period
Total -- --
Sumtotal -613,529.27 145,356.03
86
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
43.Cash flow statements
（1）Cash received from operating activities
2010 Year 2009 Year
Interest income 1,050,178.53 2,213,229.24
Mortgage and deposits 27,506,997.24 29,982,245.17
Correspondent payment 7,838,484.67 17,870,083.10
Maintenance fund 1,604,292.21 726,676.38
Porperty license fee and survey Fee 18,880,294.42 2,942,111.39
Others 865,319.97 134,279.04
Total 57,745,567.04 53,868,624.32
（2）Cash paid for other operating activities
2010 Year 2009 Year
Cash paid to general and administrative expenses 25,290,484.00 29,301,526.79
Cash paid to operating expenses 11,176,780.76 6,052,697.77
Mortgage and guarantee 25,746,211.58 27,464,881.18
Porperty license fee and survey fee 17,375,726.53 1,802,130.48
Other correspondent payment 10,521,505.86 2,116,072.14
Others 3,303,449.48 --
Total 93,414,158.21 66,737,308.36
（3）Cash paid for goods and serveices
2010 Year 2009 Year
Cash paid for goods and serveices 1,185,469,413.32 1,006,695,122.36
The cash increased Rmb178, 774.29 thousand, 17.76%. The increase was due to construction cost paid for
Jinye Island Jian’an.
（4）Cash received from borrowings
2010 Year 2009 Year
Cash received from borrowings 723,800,000.00 950,000,000.00
87
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Cash repaid the borrowings
2010 Year 2009 Year
Cash repaid the borrowings 536,378,943.85 438,411,098.72
（5）Cash payments relating to other financing activities
2010 Year 2009 Year
Guarantee fees for bank loan 800,000.00 --
（6）Cash and cash equivalents
2010 Year 2009 Year
1. Cash 371,258,812.38 374,836,340.37
Including：cash on hand 415,909.42 386,275.75
the bank deposits for available payment 370,842,902.96 374,450,064.62
2. Cash equivalents -- --
3. Cash and cash equivalent at the end of year 371,258,812.38 374,836,340.37
The differences between cash and cash equivalents, and the one at the end of monetary balance, were
explained in NotesV. 15.
(7) Supplementary cash flow statement of the company
Supplementary information 2010 Year 2009 Year
1. Reconciliation from the net profit to the cash flows from operating activities
Net profit 84,771,358.51 20,217,383.62
Add：Provisions for assets impairment -- --
Depreciation of fixed assets and
27,787,107.98 34,272,982.02
investment property
Amortization of intangible assets 237,113.33 230,180.00
Long-term deferred and prepaid
162,445.20 162,445.20
expenses amortization
Losses on disposal of fixed assets,
intangible assets and other long-term 23,773.12 6,389.18
assets（gains used“-”）
Scrapping of fixed assets losses 305,674.80 --
88
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Supplementary information 2010 Year 2009 Year
（gains used“-”）
Exchange of fair value losses（gains used“-”） 15,323.50 -109,106.25
Finance expenses （gains used“-”） 58,946,213.86 45,929,814.53
Investment losses（gains used“-”） -27,202,050.42 -5,793,517.26
Decrease in deferred tax assets（gains used“-”） -1,524,469.31 2,247,858.41
Increase in deferred tax liabilities
-- --
（gains used“-”）
Decrease in inventories（gains used“-”） -136,639,759.86 -1,135,341,065.07
Decrease in operating receivables （gains used“-”） -8,666,457.06 21,892,271.99
Increase in operating payables（gains used“-”） -177,267,834.82 604,158,483.09
Others -- --
Net cash flows from operating activities -179,051,561.17 -412,125,880.54
2. Investment and financing activities not involving cash -- --
3. Net increase/ (decrease) in cash and cash equivalents
Cash at end of the year 371,258,812.38 374,836,340.37
Less: cash at beginning of the year 374,836,340.37 299,011,742.90
Add：cash equivalents at end of the year -- --
Less: cash equivalents at beginning of the year -- --
Net increase in cash and cash equivalents -3,577,527.99 75,824,597.47
VI. Related parties’ transactiom
1.The standards of related parties recognition
Party control, joint control or the other to exert a significant impact on the other party, as well as two or more
than two parties are of the same party control, joint control or significant influences, constitutes a related party.
2. Related party relationships
(1) The information of the company’s controlling shareholder is as follows:
89
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Nature
of Equity
Place of Legal Voting
Controlling Enterprise business Registered Registered Holding
Relationship registration represen rights
shareholder type and code capital proporat
tative %
principal ion%
activities
Shenzhen
Guangdon Fan
Investment controlling State-owned 76756642- RMB 5.60
g province Mingch * 63.55 63.55
Shareholdin shareholder Enterprises 1 billion
Shenzhen un
g Limited
* Guarantees for Municipal State-owned enterprises; stated-owned shares management excluded from the
enterprises of direct control by SAC; on assets restructurings of controlled enterprises as well as its capital
operation; investment; Other businesses authorized by city SAC.
(2) The informations of the company’s subsidiaries. Refer to Note IV.1 for details.
90
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
(3)The informations of the joint venture and Associate
Registered
Equity Voti
Legal Place of capital
Name of Enterprise Nature of Registered Holding ng The ending The ending The ending Operating
represen registrati (in ten Net profit
investees type business code proporat right total assests total liabilities net assests income
tative on thousand
ion% s%
yuan)
1. Associate
investment:
Elevator,
air-conditio
Shenzhen Llimited Zheng
n, Shen
ronghua liability Zhong 19219691-6 500 25 25 9,197,189.96 3,166,867.68 6,030,322.28 15,739,447.64 -146,348.61
water-electr zhen
JiDian Co.,ltd company Qing
icty fixing
and sales
Shenzhen
Fresh Peak Llimited Property
Zhong Shen
property liability sales and 19221684-1 300 20 20 6,683,576.99 12,770,309.91 -6,086,732.92 3,244,054.56 -2,006,437.02
XinFa zhen
consultant company rental
Co.,Ltd
Shenzhen Limited Domestic
LiXue Shenzhe
runhua liability car 19220483-2 500 50 50
Min n
automobile company sales( not
91
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Registered
Equity Voti
Legal Place of capital
Name of Enterprise Nature of Registered Holding ng The ending The ending The ending Operating
represen registrati (in ten Net profit
investees type business code proporat right total assests total liabilities net assests income
tative on thousand
ion% s%
yuan)
trading includen
Co.,Ltd *① little car),
moto
Shenzhen
Dongfang Limited Domestic
PengNai Shenzhe
New world liability trade/mater 19222948-2 3,000 50 50
Dian n
store Co.,Ltd company ial supply
*②
2. Joint
venture
investment:
Guangdong
province Water and
Coo
Huizhou Cooperative other YangHu Coopera
Boluo 602 pera
Luofu Hill Enterprises products aiYu tion
tion
mineral water supply
Co.,Ltd *③
Fengkai Cooperative Tourism, Feng Coopera Coo
92
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Registered
Equity Voti
Legal Place of capital
Name of Enterprise Nature of Registered Holding ng The ending The ending The ending Operating
represen registrati (in ten Net profit
investees type business code proporat right total assests total liabilities net assests income
tative on thousand
ion% s%
yuan)
Xinhua Hotel Enterprises Restaurant kai tion pera
*④ tion
Jiangmen
Property Coo
Xinjian Real Cooperative LuoJinX Jiangme Coopera
developing USD660 pera
Estate Co. Enterprises Xing n tion
and sales tion
Ltd.*⑤
Developing
and
Xian Fresh Coo
Cooperative operating LiangW Xi’ Coopera
Peak Building 62390802-3 HKD3,000 pera
Enterprises Xi’an trade eiGuo an tion
Co. Ltd.*⑤ tion
building
DongYi Private Property Coo
Hong Coopera
Property owned developme HKD100 pera
kong tion
Co.,Ltd *⑤ enterprises nt and sales tion
93
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
*① Shenzhen runhua automobile trading Co., Ltd
The operting period of this corporation was form 1992-2-24 to 1997-2-24, and the corporation had ceased
operations because of operating loss for many years. And the corporation had been terminated its licenses by law
because it failed to pass the annual inspection. And the corporation stopped making the financial statement. At
2010-12-31, the book value of the investment account of the company is zero. According to the assosicate agreement,
the company didn’t have the ability to bear the additional loss.
*② Shenzhen Dongfang New world store Co., Ltd
The operting period of this corporation was form 1993-6-7 to 1998-6-7, and the corporation had ceased operations
because of operating loss for many years. And the corporation had been terminated its licenses by law at 2001-1-10
because it failed to pass the annual inspection. And the corporation stopped making the financial statement. At
2010-12-31, the book value of the investment account of the company is zero. According to the assosicate agreement,
the company didn’t have the ability to bear the additional loss.
*③Guangdong province Huizhou Luofu Hill mineral water Co., Ltd
The operting period of this corporation was form 1991-6-5 to 2001-6-4. And the corporation had ceased
operations because of operating loss for many years. And the corporation had been terminated its licenses by law at
2001-7-6 because it failed to pass the annual inspection. And the corporation stopped making the financial statement.
At 2010-12-31, the book value of the investment account of the company is zero. According to the joint venture
agreement, the company didn’t have the ability to bear the additional loss.
*④Fengkai Xinghua Hotel
The FengKai XingHua Hotel was announced bankruptcy by the Guangdong Province Zhaoqing City
second-middle intermdediate Peoples’ court with the document (2002) ZHFJPZ No.2. And the corporation had finished
the bankruptcy procedure. At 2010-12-31, the book value of the investment account of the company is zero. According
to the joint venture agreement, the company didn’t have the ability to bear the additional loss.
*⑤ Jiangmen Xinjian Real Estate Co. Ltd., Xian 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.
Because the projects had been stopped, the joint ventures had stopped operating actvities for many years. And these
94
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
corporations also stopped operation for many years and didn’t prepare financial statements. The company had accrued
corresponding privision of the investment of joint ventures. Refer to NotesV.7. (2) for details.
The above joint ventures and assosicates which number were *①, *②, *③, *④, *⑤ had stopped operating
businesses and preparing financial statements. The constitution and the agreement of the above corporations didn’t
require the shareholders bearing the extra loss abilities except for contributing capital. Accoring to the principle
“Enterprise Accounting Standard – No.2 Long-Term Equity Investment”, the company had accured full provision of
the investment according to the corporations’ financial situations. And the company hadn’t transferred back any
provision. So in the accounting period, the book value of the investment account of the conpany is still zero.
3. Related parties transactions
The related parties transactions included the emoluments, borrowings from related parties and guarantee fees. The
informations were as follows:
(1)Emoluments
2010 Year 2009 Year
Total emoluments for key
3,556.20 thousand 3,096.30 thousand
management personnel
Total amount of top 3 1,229.50 thousand 1,167.50 thousand
The company did not pay any remuneration to the chairment of the board this year.
(2)Borrowings from related parties
2010-12-31 2009-12-31
Short-term loans- Shenzhen Investment Holding Co.,Ltd -- 100,000,000.00
Other payables - Shenzhen Investment Holding Co.,Ltd 63,848,819.24 63,848,819.24
Total 63,848,819.24 163,848,819.24
The company borrowed 0.1 billion from the controlling shareholder – shenzhen investment holding Co., Ltd. And
the company repaid 0.2 billion to shenzhen investment holding Co., Ltd in the accounting period.
(3)Interest paid to the related parities
2010 Year 2009 Year
Shenzhen Investment Holding Co.,Ltd -- 3,000,000.00
95
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Rate: the rate was 5.31% according to the loans agreement.
4.The Assurance of the relate parities
Secured
Assurance Provider Secured party Relationship Secured period
amount
Shenzhen Special Economic
Shenzhen Iinvestment Holding Controlling
Zone Real Estate and 100,000,000 2010.03.23to 2012.12.07
Co.,Ltd subsidiary
Properties (Group) Co., Ltd
Shenzhen Special Economic
Shenzhen Investment Holding Controlling
Zone Real Estate and 100,000,000 2010.05.24 to2012.12.07
Co.,Ltd subsidiary
Properties (Group) Co., Ltd
Shenzhen Special Economic
Shenzhen Investment Holding Controlling
Zone Real Estate and 100,000,000 2010.06.30to2012.12.07
Co.,Ltd subsidiary
Properties (Group) Co., Ltd
5.Receivables and Payables of related parties
2010-12-31 2009-12-31
Name of related parties
Amount Propotion% Amount Propotion%
Other receivables Luofu Hill Mineral Water Co.,Ltd
10,465,168.81 4.63 10,465,168.81 4.59
Shenzhen Runhua automobile trading Co.,Ltd
3,072,764.42 1.36 3,072,764.42 1.35
Canada GreatWall（vancouver）Co.,Ltd 89,035,748.07 39.37 89,035,748.07 39.03
Bekaton Property Limited
12,559,290.58 5.55 12,559,290.58 5.51
Paklid Limited 18,946,689.75 8.38 19,181,797.04 8.41
Shenzhen Shenfang Department Store Co. Ltd. 189,179.82 0.08 189,179.82 0.08
Shenzhen Real Estate
Consolidated Service Co., Ltd. 927,136.22 0.41 927,136.22 0.41
Shenzhen City Shenfang
Construction and Decoration
Materials Ltd. 8,327,180.71 3.68 8,327,180.71 3.65
Shenzhen RongHua JiDian Co.,Ltd 475,223.46 0.21 1,187,723.46 0.52
Xi’an Fresh Peak property management& Trading 8,419,205.19 3.72 8,419,205.19 3.69
96
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2010-12-31 2009-12-31
Name of related parties
Amount Propotion% Amount Propotion%
Co.,Ltd
Accounts
Shenzhen Fresh Peak property consultant Co.,Ltd
receivable 1,155,484.87 3.24 1,187,345.24 3.56
Shenzhen Tefa Real Estate
Other payables
Consolidated Service Co., Ltd. 598,012.16 0.20 598,012.16 0.20
Shenzhen Shen Fang Industrial
Development Co., Ltd 1,534,854.91 0.51 1,534,854.91 0.52
Shenzhen ZhongGang Haiyan Enterprise Ltd. 135,853.52 0.04 135,853.52 0.05
Shenzhen Dongfang New world store Co.,Ltd 902,974.64 0.30 902,974.64 0.30
Shenzhen Xin Dongfang Store Ltd. 1,394,704.21 0.46 1,394,704.21 0.47
Guangdong Province Fengkai
Lain Feng Cement Manufacturing
Co., Ltd. 1,870,577.00 0.62 1,870,577.00 0.63
Shenzhen Shatoujiao Nantian Store -- -- 1,200,000.00 0.40
Shenzhen Cyber Port Co., Ltd 7,949,749.26 2.63 7,910,026.54 2.66
Shenzhen shenfang group BaoAn developing Co.,Ltd 19,767,689.82 6.54 18,981,347.13 6.39
Shenzhen Investment Holding Co.,Ltd 65,848,819.24 21.79 63,848,819.24 21.48
Short-term loans Shenzhen Investment Holding Co.,Ltd -- -- 100,000,000.00 100.00
Interest payable Shenzhen Investment Holding Co.,Ltd 16,535,277.94 100.00 14,421,711.65 58.42
VII. Exchange of non-monetary assets
No informations of exchange of non-monetary assets are needed to disclose in 2010.
VIII. Share-based payment
There are no any share-based payment contracts in 2010.
IX. Debt restructurings
No informations of Debt restructurings are needed to disclosure in 2010.
X. Contingencies
1. Significant litigation
（1） Guoxing Building Lawsuit
97
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
On 21 March 1997, the company signed an agreement “transferring equity of GuoXing Building agreement” with
Baoxing real Estate Development (Shenzhen) Company limited (hereinafter referred to as “BaoXing”). According to
the agreement specifications, the company transferred 68% of GuoXing Building project to BaoXing with the price-
Rmb 145,000 thousand. And also, the construction cost – Rmb 15,000 thousands that the company owed to GuoXing
Building were undertaken by BaoXing. But after paying Rmb 45 million to the company, Bao Xing hadn’t paid the
remaining equity transferring fund- Rmb 100,000 thousand and the construction cost – 15,000 thousand. The company
instituted legal proceedings against BaoXing. After the trial of the Guangdong High People’s Court on 28 September
2002, Baoxing had to pay for Rmb 98,948,060.00 and interest to the company according to the paper of civil judgment
–“（2001）YueGaoFaJing – ChuZhi No.7. Upon a second sue of the case in 2003, the judgement remained unchanged.
On 2008-2-22, the company signed an agreement with BaoXing Company. According to the agreement
specifications, BaoXing Company paid for Rmb 15,000 thousand to the company. And at the same time, the company
gave up the distribution right and auction disposal right of the LongGang District BaoXing Building. But the BaoXing
Company failed to carry out the agreement. On 2008-7-23, Baoxing Company, the third party – Shenzhen HongMing
MuYe Co., Ltd (hereinafter referred to as HongMing Company) and the company signed the composition agreement.
According to the agreement specifications, the debts and other responsibilities of BaoXing Company would be
undertaken by HongMing Company. And HongMing Company had to pay for the company Rmb 2,500 thousand and
transferred the land-use right of N0. 1514 room (size: 343.95 square meters) of Shenzhen international exchange plaza
instead. In December 2008, the company received Rmb 2,500 thousand. And the property hadn’t finished the
transferring ownership procedures. Now the case is proceeding and there was no any new substantive progress in the
reporting period.
Until 31 December, 2010, the amount of RMB 66,201,645.33 had been called back on the case with the execution.
（2）Xi’an project Lawsuit
Xi’an Fresh Pead 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.
98
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
In 1997, the Xi’an government withdrew the Xi'an Fresh Peak investment project compulsively and assignned 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 paid 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 the joint and several obligation of the interests of the compensation.
Untill 31 December 2010, the amount of RMB 15,201,000.00 had been called back. Now the case is proceeding
and there was no any new substantive progress in the reporting period.
At 2010-12-31, 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. And the amount of credit was Rmb 8,419,205.19.
（3）Luofu Hill project Lawsuit
The company cooperated with Luofu Hill Tourism Company (hereinafter referred to as “Tourism Company”) on
Luofu Hill Tourism project in early years. The company instituted legal proceedings against Tourism Company because
the Tourism Company failed to carry out the agreement. The judgement which issued by GuangDong Province High
Peoples Court on 2007-12-21 was as follows:
①Tourism Company had to pay for Rmb 9,600 thousand to the company in 10 days after the judgment entering
into force.
②Tourism Company should paid the interests for the occupation of Rmb 9,600 thousands with The People's Bank
of China similar loans rate in 10 days after the judgment entering into force. Of which, the interests for the occupation
of Rmb 4,400 thousand were caluated from 1986-5-1 to the day the Tourism company paid off the debt. The interests
for the occupation of Rmb 4100 thousand were caluated from 1988-2-1 to the day the Tourism Company paid off the
debt. The interests for the occupation of Rmb 1,100 thousand were caluated from 1989-6-15 to the day the Tourism
Company paid off the debt. The interest of Rmb 8,580 thousand that the Tourism Company had paid for to the company
can be deducted from the interest payable.
③Luofushan Administration Committee had to undertake one third of the debts which Luofushan Tourism was
unable to repay;
99
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
④Interest of debts would be double if the Tourism Company and Luofushan Administration Committee failed to
fulfill their obligations within the designated period of this judgment;
⑤Tourism company undertaked all the litigation fees (RMB 167,714.00). The expense of first instance and the
second instance had to pay to the company during the duration of payment.
There was no any new substantive progress after the judgement announced. The company applied the GuangDong
Province High people’s Court to supervise implementation in December 17, 2009. The GuangDong Province High
people’s Court issued a document “(2009) YGYZDZ No. 67 to Huizhou intermediate people’s court and asked the
Huizhou intermediate people’s court to close this case in 3 months after receiving the document. Until 2010-3-17,
Huizhou intermediate people’s court had finished the evaluation of the land use right of the executor.On 13th October
2010, the land-use right was acutioned by the national resource department at the price of RMB 51,200 thousand.
Until 2010-12-31, the book value of the investment of Tourism company was Rmb 9,600,000.00 and the provision
for investment was Rmb 4,800,000.00.
（4）Shenyang Tongxin Case
Shenyang Tongxin Real Estate Development Co., Ltd. (hereinafter referred to as “TongXin Company”) was
joint-venture set up in ShenYang city. The shareholder of company – Hongkong Fresh Peak Co., Ltd was the wholly
owned subsidiary of the company. And the equity Hongkong Fresh Peak Co., Ltd held was 93.1%. The core businss of
TongXin Company was to develop Shenyang Fresh Peak Businedd Plaza. TongXin Company refinanced Rmb 13,140
thousand from China Agriculture Bank ShenYang branch. And the company provided assurance for the loan.Because
TongXin Company failed to repay the loan in time. The China Agriculture bank ShenYang branch instituted legal
proceedings in Shenyang Intermediate People's Court. So TongXin Company borrowed money from the company to
repay the loans and interests.
On 25 January, 2008, Internationl economic trade Arbitration commission HuaNam branch made a judgement.
According to the judgement, TongXin Company had to repaid Rmb 14,422,440.22 and interests to the company. Now
the case is proceeding. Untill 27 January, 2010, the company had called back Rmb 7,000 thousand.
Related Matters of the case: 93.1% shares of Shenyang Tongxin Company's shares held by fresh Peak Company
was auctioned sale by Shenzhen Intermediate People's Court on 22 January 2006. And fresh Peak Company didn’t hold
any shares of Tongxin Company'.
100
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2. Security for debts
Up to 31 December 2010, balance of guarantees is as follows:：
Amount
Currency
(in ten thousand Yuan)
Internal guarantees in the group RMB 200,000
Guarantees for outstanding mortgage RMB 8,460
XI. Commitments
Until 2010-12-31, the company had the commitments of the contracts which had been signed but not carried out.
Mostly were construction contracts. And the total amount of capital item expense and investment were RMB 126
millions. The money had to be paid for until the other partner of contract carried out the responsibilities and liabilities.
XII. Notes to items of the parent company financial statements
1. Accounts receivable
（1）The symbol of credit risk identified by customers categories
2010-12-31 2009-12-31
Provision of Provision of
Book balance Book balance
bad debts bad debts
Proportion Proportion Proportion
Amount Proportion % Amount Amount Amount
% % %
Category 1 -- -- -- -- -- -- -- --
Category 2 11,996,527.49 100.00 6,301,854.02 100.00 12,566,900.74 100.00 6,457,254.02 100.00
Total 11,996,527.49 100.00 6,301,854.02 100.00 12,566,900.74 100.00 6,457,254.02 100.00
Category 1: refers to accounts receivable with significant individual amount and separate impairment test.
Category 2: refers to accounts receivable which is unsignificant indivually but according to the characteristics of
the portfolio after portfolio of risky accounts receivable and separate impairment test.
（2）Refers to accounts receivable which is unsignificant indivually but according to the characteristics of the
portfolio after portfolio of risky accounts receivable and separate impairment test.
101
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Book balance Provision of bad debts Proportion % Notes
A separate provision is established according to the
House pay to be
11,996,527.49 6,301,854.02 49.46 recoverability of each receivales with long aging and
collected
little retrievability.
（3）The aging of accounts receivable by categories
2010-12-31 2009-12-31
Aging
Book balance Proportion % Provision Book balance Proportion % Provision
Within 1 year -- -- -- -- -- --
1 to 2 year -- -- -- 65,745.71 0.52 --
2 to 3 year -- -- -- 183,200.39 1.46 --
Above 3 years 11,996,527.49 100.00 6,457,254.02 12,317,954.64 98.02 6,457,254.02
Total 11,996,527.49 100.00 6,457,254.02 12,566,900.74 100.00 6,457,254.02
(4) Written-off accounts receivable in 2010 is as follows:
Wether related party
Name Nature Written-off amount Reason
transactions or not
Individual -Wang
Housing sales 155,400.00 Dispute was settled no
Yixuan
（5）No amount due from shareholders who hold 5% or more of the voting rights of the company is included in
the above balance of accounts receivable.
（6）Refer to Note VI.3. (5) for details of the accounts receivables which is due to related parities.
（7）There were no any acconts receivables which had been terminated recognized.
（8）There were no any accounting receivable which had been Securitization.
2. Other receivables
（1）The symbol of credit risk identified by customers categories
102
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2010-12-31 2009-12-31
Book balance Provision of bad debts Book balance Provision of bad debts
proportion proportion proportion proportion
Amount Amount Amount Amount
% % % %
Category 1 1,083,646,492.46 95.00 849,851,353.28 98.45 1,222,338,453.35 91.70 849,851,353.28 98.45
Category 2 57,030,106.03 5.00 13,341,826.74 1.55 110,706,402.06 8.30 13,341,826.74 1.55
Total 1,140,676,598.49 100.00 863,193,180.02 100.00 1,333,044,855.41 100.00 863,193,180.02 100.00
Category 1: refers to accounts receivable with significant individual amount and separate impairment test.
Category 2: refers to accounts receivable which is unsignificant indivually but according to the characteristics of
the portfolio after portfolio of risky accounts receivable and separate impairment test.
(2) Refers to other receivable which is unsignificant indivually but according to the characteristics of the portfolio
after portfolio of risky accounts receivable and separate impairment test.
Provision of bad
Book balance Proportion % Notes
debts
Other receivables between subsidiares
A separate provision is established according
that are not concluded in consolidated 9,391,120.50 9,375,225.50 99.83
to the recoverability of each receivales with
statement
long aging and little retrievability
Others 6,486,420.15 3,966,601.24 61.15
Total 15,877,540.65 13,341,826.74 84.03
（3）The aging of other receivables:
2010-12-31 2009-12-31
Aging
Amount Proportion % Provision Amount proportion % Provision
Within 1 year 7,786,529.93 0.68 -- 23,564,044.62 1.77 --
1 to 2 year 8,853,096.41 0.78 -- 115,288,327.28 8.65 --
2 to 3 year 115,288,327.28 10.11 -- 132,332,131.47 9.92 --
Above 3 years 1,008,748,644.87 88.43 863,193,180.02 1,061,860,352.04 79.66 863,193,180.02
Total 1,140,676,598.49 100.00 863,193,180.02 1,333,044,855.41 100.00 863,193,180.02
（4）The informations of accounts receivables of the company's top five debtors are as follows:：
103
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Name Relationship Amount Proportion % Aging
1,993,416.69 0.17 Within 1 year
383,983.75 0.03 1 to 2 year
Fresh Peak Enterprise Co., Ltd. Subsidiary
977,977.04 0.09 2 to 3 year
571,369,485.89 50.09 Above 3 years
4,764,281.12 0.42 Within 1 year
Shenzhen ShenFang Group LongGang 2,295,681.21 0.20 1 to 2 year
Subsidiary
Development Co.,Ltd 100,703,588.09 8.83 2 to 3 year
98,527,997.38 8.64 Above 3 years
American Great Wall Co.,Ltd Subsidiary 101,379,954.81 8.89 Above 5 years
358,028.54 0.03 Within 1 year
Fresh Peak Holdings Ltd. Subsidiary 13,606,762.15 1.19 2 to 3 year
17,373,398.68 1.52 Above 3 years
Canada Great Wall(vancouver) Co.,Ltd Subsidiary 89,035,748.07 7.81 Above 3 years
Total 1,002,770,303.42 87.91
（5）No amount due from shareholders who hold 5% or more of the voting rights of the company is included in
the above balance of other receivables.
（6）Refer to VI.3. (5) for details of the other receivables which due from related parities.
（7）There were no any other receivables which had been terminated recognized in the accounting year.
（8）There were no any other receivables which had been securitization in the accounting year.
3. Inventories
2010-12-31 2009-12-31
Amount Provision for declines Amount Provision for declines
Real estate developed products 66,523,100.15 771,196.00 86,040,542.19 1,350,000.00
Real estate developing products 131,828,661.29 -- 130,053,479.40 --
Real estate which are going to be developed 1,215,632,063.00 -- 1,200,170,737.09 --
Total 1,413,983,824.44 771,196.00 1,416,264,758.68 1,350,000.00
104
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
4. Long-term equity investments
（1）the informations of long-term equtiy investments:
Provision
Measured Investment Proportion Voting right
Name of investees 2009-12-31 Movement 2010-12-31 Provision accrued Dividend
method cost (%) (%)
in 2010
Subsidiaries’ investment：
Shenzhen City Property
Cost method 12,821,791.52 12,821,791.52 -- 12,821,791.52 95 95 -- -- --
Management Ltd.
Shenzhen Petrel Hotel Co.
Cost method 20,605,047.50 20,605,047.50 -- 20,605,047.50 68.10 68.10 -- -- --
Ltd.
Shenzhen City Shenfang
Cost method 9,000,000.00 9,000,000.00 -- 9,000,000.00 90 90 -- -- --
Investment Ltd.
Fresh Peak Enterprise Ltd. Cost method 556,500.00 556,500.00 -- 556,500.00 100 100 -- -- --
Fresh Peak Holdings Ltd. Cost method 20,824,545.77 22,717,697.73 -- 22,717,697.73 100 100 -- -- --
Shenzhen Special Economic
Zone Real Estate (Group)
Cost method 20,000,000.00 20,000,000.00 -- 20,000,000.00 100 100 -- -- --
Guangzhou Property and
Estate Co., Ltd.
Shenzhen Zhen Tung
Cost method 11,332,321.45 11,332,321.45 -- 11,332,321.45 73 73 -- -- --
Engineering Ltd
105
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Provision
Measured Investment Proportion Voting right
Name of investees 2009-12-31 Movement 2010-12-31 Provision accrued Dividend
method cost (%) (%)
in 2010
American Great wall Co.,Ltd Cost method 1,435,802.00 1,435,802.00 -- 1,435,802.00 70 70 -- -- --
Shenzhen City Shenfang
Cost method 4,750,000.00 4,750,000.00 -- 4,750,000.00 95 95 -- -- --
Free Trade Trading Ltd.
Shenzhen City Hua Zhan
Construction Management Cost method 6,000,000.00 6,000,000.00 -- 6,000,000.00 75 75 -- -- --
Ltd.
Shenzhen City Car Rental
Cost method 11,809,500.00 6,495,225.00 -- 6,495,225.00 55 55 -- -- --
Ltd.
QiLu Co.,Ltd Cost method 212,280.00 212,280.00 -- 212,280.00 20 20 -- -- --
Beijing Shenfang Property
Cost method 500,000.00 500,000.00 -- 500,000.00 10 10 -- -- --
Management Ltd.
Shenzhen Lain Hua Industry
Cost method 13,458,217.05 13,458,217.05 -- 13,458,217.05 95 95 -- -- --
and Trading Co. Ltd.
Shenzhen City SPG Long
Cost method 30,850,000.00 30,850,000.00 -- 30,850,000.00 95 95 -- -- --
Gang Development Ltd.
Beijing Fresh Peak Property
Development Management Cost method 64,183,888.90 64,183,888.90 -- 64,183,888.90 75 75 -- -- --
Limited Company
Shenzhen Shenfang Car Park Cost method 29,750,000.00 29,750,000.00 -- 29,750,000.00 70 70 -- -- --
106
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Provision
Measured Investment Proportion Voting right
Name of investees 2009-12-31 Movement 2010-12-31 Provision accrued Dividend
method cost (%) (%)
in 2010
Ltd.
Joint venture investment：
Guangdong province
Equity
Huizhou Luofu Hill mineral 9,969,206.09 9,969,206.09 -- 9,969,206.09 Cooperation Cooperation 9,969,206.09 -- --
method
water Co.,Ltd
Equity
Fengkai Xinhua Hotel 9,455,465.38 9,455,465.38 -- 9,455,465.38 Cooperation Cooperation 9,455,465.38 -- --
method
Associate investment ： -- --
Shenzhen Shatoujiao Equity
2,850,618.06 2,446,234.22 -2,446,234.22 -- 50 50 -- -- --
Nantian Store *① method
Zhaoqing Guifeng Cement Equity
15,112,000.00 12,724,417.03 -12,724,417.03 -- 50 50 -- -- --
Co.,Ltd *② method
Shenzhen Runhua Equity
1,445,425.56 1,445,425.56 -- 1,445,425.56 50 50 1,445,425.56 -- --
Automobile trading Co.,Ltd method
Shenzhen Ronghua JiDian Equity
1,250,000.00 1,841,277.19 -236,587.15 1,604,690.04 25 25 1,076,954.64 -- 200,000.00
Co.,ltd method
Shenzhen Fresh Peak Equity
600,000.00 -- -- -- 20 20 -- -- --
Property Consultant Co.,Ltd method
Shenzhen Dongfang New Equity 15,000,000.00 -- -- -- 50 50 -- -- --
107
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Provision
Measured Investment Proportion Voting right
Name of investees 2009-12-31 Movement 2010-12-31 Provision accrued Dividend
method cost (%) (%)
in 2010
World Store Co.,Ltd method
Other investments： -- --
Shenzhen Shen Fang
Industrial Development Co., Cost method 4,500,000.00 4,500,000.00 -- 4,500,000.00 100 100 4,500,000.00 -- --
Ltd
Shenzhen ZhongGang
Cost method 12,940,900.00 12,940,900.00 -- 12,940,900.00 68 68 12,940,900.00 -- --
Haiyan Enterprise Ltd.
Shenzhen Real Estate
Consolidated Service Co., Cost method 5,958,305.26 5,958,305.26 -- 5,958,305.26 100 100 5,958,305.26 -- --
Ltd.
Paklid Limited Cost method 201,100.00 201,100.00 -- 201,100.00 100 100 201,100.00 -- --
Canad GreatWall
Cost method 4,526.25 -- -- -- 60 60 -- -- --
(vancouver) Co.,Ltd
Bekaton Property Limited Cost method 906,630.00 906,630.00 -- 906,630.00 60 60 906,630.00 -- -
Shenzhen Tefa Real Estate
Consolidated Service Co., Cost method 8,180,003.63 8,180,003.63 -- 8,180,003.63 100 100 8,180,003.63 -- --
Ltd.
Shenzhen Xin Dongfang
Cost method 18,500,000.00 18,500,000.00 -- 18,500,000.00 100 100 18,500,000.00 -- --
Store Ltd.
108
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Provision
Measured Investment Proportion Voting right
Name of investees 2009-12-31 Movement 2010-12-31 Provision accrued Dividend
method cost (%) (%)
in 2010
Shenzhen City Shenfang
Construction and Decoration Cost method 2,680,000.00 2,680,000.00 -- 2,680,000.00 100 100 2,680,000.00 -- --
Materials Ltd.
Shenzhen Shenfang
Cost method 9,500,000.00 9,500,000.00 -- 9,500,000.00 95 95 9,500,000.00 -- --
Department Store Co. Ltd.
Shenzhen CyberPort Co.,
Cost method 14,000,000.00 12,401,018.42 -- 12,401,018.42 70 70 -- -- --
Ltd
ShenZhen ShenFang BaoAn
Cost method 19,000,000.00 19,000,000.00 -- 19,000,000.00 95 95 -- -- --
developmentCo.,Ltd
Shantou Fresh Peak Building Cost method 68,731,560.43 58,547,652.25 -- 58,547,652.25 100 100 58,547,652.25 -- --
Total 497,875,634.85 445,866,406.18 -15,407,238.40 430,459,167.78 143,861,642.81 -- 200,000.00
*① Shenzhen Shatoujiao Nantian Store
The company transferred 50% equity of Shenzhen Shatoujiao Nantian Store to Shenzhen ShaTou Jiao Business trade Co., Ltd with a listing agreement price
–Rmb 12,145 thounsands in ShenZhen United property Exchange.
*② Zhaoqing Guifeng cement Co., Ltd
The company transferred 50% equity of Zhaoqing Guifeng cement Co., Ltd to Guangdong GuangLong Group with a listing agreement price –Rmb 17,300
109
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
thounsands in ShenZhen United property Exchange.
（2）Provision for impairment of long-term equity investments:
Provision for impairment
Name of investees
Opening balanc Additions Reductions Closing balance Notes
Shenzhen Ronghua JiDian Co., Ltd 1,076,954.64 -- -- 1,076,954.64 operating loss
Shenzhen Shen Fang Industrial Development Co., Ltd 4,500,000.00 -- -- 4,500,000.00 cessation
Shenzhen ZhongGang Haiyan Enterprise Ltd. 12,940,900.00 -- -- 12,940,900.00 cessation
Shenzhen Real Estate Consolidated Service Co.,Ltd. 5,958,305.26 -- -- 5,958,305.26 cessation
Paklid Limited 201,100.00 -- -- 201,100.00 cessation
Bekaton Property Limited 906,630.00 -- -- 906,630.00 cessation
Shenzhen Tefa Real Estate Consolidated Service Co., Ltd 8,180,003.63 -- -- 8,180,003.63 cessation
Shenzhen Xin Dongfang Store Ltd. 18,500,000.00 -- -- 18,500,000.00 cessation
Shenzhen City Shenfang Construction and Decoration Materials Ltd. 2,680,000.00 -- -- 2,680,000.00 cessation
Shenzhen Shenfang Department Store Co. Ltd. 9,500,000.00 -- -- 9,500,000.00 liquidition
Shenzhen Runhua automobile trading Co.,Ltd 1,445,425.56 -- -- 1,445,425.56 cessation
Guangdong province Huizhou Luofu Hill Mineral Water Co.,Ltd 9,969,206.09 -- -- 9,969,206.09 cessation
Fengkai Xinhua Hotel 9,455,465.38 -- -- 9,455,465.38 cessation
Shantou Fresh Peak Building 58,547,652.25 -- -- 58,547,652.25 cessation
Total 143,861,642.81 -- -- 143,861,642.81
110
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
5. Turnover and cost of sales
（1）Turnover and cost of sales
2010 Year 2009 Year
Core Operating Income 214,053,423.86 108,312,014.30
Other Operating Income 3,458,967.53 46,179,668.82
Gross Income 217,512,391.39 154,491,683.12
Cost of sales 95,076,630.82 97,816,242.35
（2）Core operating Income（classfied by industry）
Operating Income Operating Cost Operating margin
Industry
2010 Year 2009 Year 2010 Year 2009 Year 2010 Year 2009 Year
Real estate 158,904,728.43 101,264,382.38 70,587,850.44 66,448,693.10 88,316,877.99 34,815,689.28
Leasing 58,607,662.96 53,227,300.74 24,488,780.38 31,367,549.25 34,118,882.58 21,859,751.49
Total 217,512,391.39 154,491,683.12 95,076,630.82 97,816,242.35 122,435,760.57 56,675,440.77
（3）Core business（classfied by district）
Operating Income Operating Cost Operating Margin
District
2010 Year 2009 Year 2010 Year 2009 Year 2010 Year 2009 Year
Shenzhen 217,512,391.39 154,491,683.12 95,076,630.82 97,816,242.35 122,435,760.57 56,675,440.77
（4）The informations of the top 5 clients are as follows:
2010 Year
Amount Proportion%
Shenzhen Shengshi Jiachuang Investment
129,360,000.00 59.47
Corporation
Shenzhen Xin Huadu Trading Co.Ltd 23,010,000.00 10.58
Golden Age Club Food Company 4,174,792.00 1.92
Indivual – Luo Mingzhi 1,910,000.00 0.88
Indivual – Luo Qundi 1,090,000.00 0.50
Total 159,544,792.00 73.35
111
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
6. Investment income
（1）The details of investment income are as follows:
2010 Year 2009 Year
The investment income yielded from the long-term equity
-- --
appilied with the cost method
The investment income yielded from the long-term equity
-36,587.15 -1,904,596.98
appilied with the equityt method
The investment income yielded from the disposal of the
14,612,190.62 --
long-term equity
The investment income yielded from the disposal of the financial
322,484.04 114,301.68
assest held for trading
others -- --
Total 14,898,087.51 -1,790,295.30
RMB 9,636,607.65 was yielded from the transference of 50% equity of Shenzhen Shatoujiao Nantian
Store and RMB 4,975,582.97 from the transference of 50% equity of Zhaoqing Guifeng cement Co., Ltd.
（2）The investment income yielded from the long-term equity appilied with the equity method
Investees 2010 Year 2009 Year Reason of the movement
Shenzhen Shatoujiao Nantian Store -- -152,851.44 The disposal of equity
Zhaoqing Guifeng Cement Co.,Ltd -- -1,776,494.00 The disposal of equity
The decrease of the profit of
Shenzhen Ronghua JiDian Co.,ltd -36,587.15 24,748.46
investee
Total -36,587.15 -1,904,596.98
7. Supplementary cash flow statement of the parent company
Supplementary information 2010 Year 2009 Year
1.Reconciliation from the net profit to the cash flows from operating
activities
Net profit -1,836,875.99 -43,936,617.96
Add：Provisions for assets impairment -- --
Depreciation of fixed assets and
22,395,176.82 29,008,183.42
investment property
112
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Supplementary information 2010 Year 2009 Year
Amortization of intangible assets -- --
Long-term deferred and prepaid
-- --
expenses amortization
Losses on disposal of fixed assets,
intangible assets and other long-term -- --
assets（gains used“-”）
Scrapping of fixed assets losses
57,036.76 --
（gains used“-”）
Exchange of fair value losses（gains used“-”） 15,323.50 -109,106.25
Finance expenses （gains used“-”） 55,311,271.36 38,739,392.45
Investment losses（gains used“-”） -14,898,087.51 1,904,596.98
Decrease in deferred tax assets（gains used“-”） -827,858.81 4,140,269.96
Increase in deferred tax liabilities
-- --
（gains used“-”）
Decrease in inventories（gains used“-”） 1,702,130.24 -1,233,640,319.03
Decrease in operating receivables
（gains used“-”） 190,803,623.44 325,081,928.46
Increase in operating payables（gains used“-”） -391,648,709.02 514,626,344.23
Others -- --
Net cash flows from operating activities -138,926,969.21 -364,185,327.74
2. Investment and financing activities not involving cash -- --
3.Net increase/ (decrease) in cash and cash equivalents
Cash at end of the year 182,646,766.32 62,241,927.23
Less: cash at beginning of the year 62,241,927.23 165,443,883.33
Add：cash equivalents at end of the year -- --
Less: cash equivalents at beginning of the year -- --
Net increase in cash and cash equivalents 120,404,839.09 -103,201,956.10
XIII. Post balance sheet events
According to the Profit Distribution Plan 2010 passed at the meeting of Board held on April 27, 2010,
the Company will make up prior year deficierncy with the net profit of the year without profits distributed
and capital surplus converted into share capital. The pre-plan is subject to the Shareholders’ Annual Meeting
113
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
for the approval.
XIV.Non - regular gains and losses
1．Non - regular gains and losses
According to "public offering of securities companies to disclose information interpretative bulletin No.
1 - non-recurring gains and losses (2008)", the Company non-recurring gains and losses are as follows:
Items 2010 Year 2009 Year
Non-current assets disposed of profit and loss, including the written-off part of
15,274,959.40 -5,907.20
provision for asset impairment
Authority approval or non-formally approved document or incidental tax revenue
-- --
return, relief
Gains and losses included in the current period of government subsidies, but the
company is closely related to normal business, in line with national policies and
-- --
regulations, in accordance with standard fixed or quantitative government
subsidies except
Gains and losses included in current period on non-financial enterprises occupy
-- --
fees charged by funds
Enterprises to obtain subsidiaries, joint ventures and joint venture investment is
less than the cost of investment should be enjoyed by the investment unit fair value -- --
of identifiable net assets of the revenue generated
Non-monetary assets to exchange gains and losses -- --
Commissioned the investment or management of assets, profit and loss -- --
Due to force majeure factors, such as natural disasters and the provision of the
-- --
quasi-impairment of assets
Debt restructuring, profit and loss -- --
Corporate restructuring costs, such as placement of workers spending, such as
-- --
integration charges
Significant loss of fair trading price of the transaction over the fair value of part of
-- --
the profit and loss
The same under the control of mergers resulting from the merger a subsidiary of
-- --
the opening day of the current period to the net profit or loss
Normal business with the company or have a matter arising from unrelated to the -- 775,000.00
114
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Items 2010 Year 2009 Year
profit and loss
In addition to normal business with the company effective hedging related
business, holders of tradable financial assets, transactions and financial liabilities
arising from changes in fair value gains and losses, as well as the disposal of 307,160.54 223,407.93
trading of financial assets, trading financial liabilities and available-for-sale
financial assets investment returns achieved
A separate impairment test for impairment of receivables transferred back to
preparation -- 7,000,000.00
Commissioned external loans made by the profit and loss -- --
The use of fair value measurement model of follow-up to the fair value of real
-- --
estate investment gains and losses arising from changes
According to tax, accounting and other laws and regulations the requirements of
the current profit and loss for a one-time adjustment of the current profit and loss -- --
impact
Entrusted with the operation of the trustee to obtain fee income -- --
In addition to the above other than the operating income and expenditure -776,320.25 -853,571.80
Other non-recurring gains and losses in line with the definition of profit and loss
-- --
items
Total 14,805,799.69 7,138,928.93
Less: Income tax impact of several 3,449,936.14 40,789.94
Profit and loss impact of the number of minority shareholders -- --
Deducting income tax, minority shareholders after the non-recurring profit
11,355,863.55 7,098,138.99
and loss profit and loss together
The Non - regular gains and losses increased by Rmb 4,257.72 thousand. The increase is due to the
disposal of long-term equity investment, refer to Notes V.37.
115
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
2.Rate of Return on Common Stockholders’ Equity (ROE) and Earnings per share
Earnings per
Profit during the Weighed net assets
Items share ( yuan/share)
reporting period yield (%)
basic diluted
2010 Year
The net profit attributable to equity holders of
84,760,162.75 6.12 0.0838 0.0838
the Company
The net profit after deducting the non-regular
gian or loss attributable to equity holders of 73,404,299.20 5.30 0.0726 0.0726
the Company
2009 Year
The net profit Attributable to equity holders
20,199,162.08 1.51 0.0200 0.0200
of the Company
The net profit after deducting the non-regular
gian or loss attributable to equity holders of 13,101,023.09 0.98 0.0130 0.0130
the Company
The calculation formula of weighted Rate of return is as follows:
Weighted Rate of return =P0/(E0＋NP÷2＋Ei×Mi÷M0– Ej×Mj÷M0±Ek×Mk÷M0)
Notes: P0- the net profit attributable to holding company of the Company, the net profit after deducting
the non-regular gian or loss attributable to holding company of the Company;
NP - the net profit attributable to shareholders of the Company;
E0 – the opening balance of net assests attributable to holding company;
Ei – the balance of net assests attributed to the shares issued in the reporting period or debt to equity
shares;
Ej – the balance of net assents attrictued to the shares which were repurchased or decreased by
distributing the cash dividend;
Mi – the accumulated number of the months from the next month the new additional net assests to the
end month of the reporting period;
116
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
Mj - the accumulated number of the months from the next month the net assests reducted to the end
month of the reporting period;
Ek –the movement of the net assests attributed to the shares which are due to other transaction;
Mk - the accumulated number of the months from the next month the net assests happened to the
ending month of the reporting period;
If the company happens combination under common control, when the company calculate the weighted
average return on net assets, the net assets of the combined party are calculated form the beginning of the
reporting period; when calculating the weighted average return on net assets after deducting non-recurring
gains and losses, the net assets of the combined party are calculated form the next month of combination
month.
When calculating the weighted average net assets during the return, the combined party's net profit, net
assets are caluated from the comparing beginning of the period; when Calculating the the weighted average
return on net assets after deducting non-recurring gains and losses, the merged party's net assets are not
counted in (weight is zero)
3. The diffenences of the domestic financial statements compared with the overseas financial
statement
CAS (Rmb) IFRS (Rmb)
The net profit attributable to holding
84,760,162.75 84,760,162.75
company of the Company
The net assests attributable to holding
1,427,871,870.03 1,427,871,870.03
company of the Company
Notes No differences
English version of financial statements for the year 1 January 2010 to 31 December 2010 if there is any
conflict of meaning between the Chinese version and English version, the Chinese version will prevail.
117
