(000029 SHENSHENFANG A 200029 SHENSHENFANG B)
Shenzhen Special Economic Zone Real Estate & Properties
(Group) Co., Ltd.
Annual Report 2011
(A share)
29 Mar. 2012
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------------------------------------------------13
Section VII Brief introduction to the Shareholders’ General Meeting------------------23
Section VIII Report of the Board of Directors----------------------------------------------23
Section IX Report of the Supervisory Committee-----------------------------------------37
Section X Significant Events------------------------------------------------------------------39
Section XI Financial Report-------------------------------------------------------------------42
Section XII Documents Available for Reference-------------------------------------------42
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-47/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
2011 2010 /decrease year-on-year 2009
(%)
Operating revenue
1,026,396,104.51 1,021,055,699.61 0.52% 750,182,202.47
(Yuan)
Operating profit
130,930,485.38 113,006,272.80 15.86% 36,264,761.30
(Yuan)
Total profit (Yuan) 133,278,815.10 111,916,706.81 19.09% 36,180,282.30
Net profit attributable
to shareholders of
101,200,060.65 84,760,162.75 19.40% 20,199,162.08
parent company
(Yuan)
Net profit excluding
non-recurring
gain/loss attributable
99,430,051.40 73,404,299.20 35.46% 13,101,023.09
to shareholders of
parent company
(Yuan)
Net cash flow from
operating activities 115,154,790.41 -179,051,561.17 -164.31% -412,125,880.54
(Yuan)
Increase/decrease
31 Dec. 2011 31 Dec. 2010 31 Dec. 2009
year-on-year (%)
Total assets (Yuan) 3,236,127,046.06 3,379,090,178.02 -4.23% 3,361,110,324.04
Total liability (Yuan) 1,835,820,425.15 2,079,303,706.46 -11.71% 2,145,481,681.72
Owners’ equity
attributable to
1,528,596,536.13 1,427,871,870.03 7.05% 1,343,541,177.77
shareholders of listed
company (Yuan)
Share capital (Share) 1,011,660,000.00 1,011,660,000.00 0.00% 1,011,660,000.00
II. Main accounting data and financial indices of the Company over the past three
years
Unit: (RMB) Yuan
Increase
2011 2010 /decrease 2009
year-on-year (%)
Basic earnings per share
0.1000 0.0838 19.33% 0.02
(Yuan/share)
Diluted earnings per share
0.1000 0.0838 19.33% 0.02
(Yuan/share)
Basis earnings per share
after deducting
0.0983 0.0726 35.40% 0.013
non-recurring gains and
losses (Yuan/share)
Weighted average return
6.84% 6.12% 0.72% 1.51%
on equity (%)
Weighted average return
on equity after deducting
6.73% 5.30% 1.43% 0.99%
non-recurring gains and
losses (%)
4
Net cash flow per share
arising from operating 0.114 -0.177 -164.41% -0.41
activities (Yuan/share)
Increase/decrease
31 Dec. 2011 31 Dec. 2010 31 Dec. 2009
year-on-year (%)
Net assets per share
attributable to shareholders
of listed companies
1.51 1.41 7.09% 1.33
(Yuan/share)
Asset-liability ratio (%) 56.73% 61.53% -4.80% 63.83%
Items of non-recurring gains and losses
Unit: (RMB) Yuan
Amount in Note (if
Items Amount in 2010 Amount in 2009
2011 applicable)
Gains and losses from disposal of
173,176.00 15,274,959.40 -5,907.20
non-current assets
Gains and losses from changes in fair value
of transaction financial assets and
transaction financial responsibilities, and
investment income from disposal of
-14,023.62 307,160.54 223,407.93
transaction financial assets/responsibilities
and financial assets available for sale,
excluding valid hedging business relating to
normal operation.
Non-operation gains and losses excluding
2,200,366.50 -776,320.25 -853,571.80
the above mentioned items
Impact on income tax -589,509.63 -3,449,936.14 -40,789.94
Gains and losses from contingencies that
are no relating to normal operation of the 0.00 0.00 775,000.00
Company
Recovery of provision for impairment of
accounts receivable that are made 0.00 0.00 7,000,000.00
individual impairment test
Total 1,770,009.25 - 11,355,863.55 7,098,138.99
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
Capitalizat
Issuance of Bonus ion of
Amount Proportion Others Subtotal Amount Proportion
new share shares public
reserve
I. Shares subject to
trading 0 0.00% 0 0 0 0 0 0 0.00%
moratorium
1. Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
state
2. Shares held by
state-owned 0 0.00% 0 0 0 0 0 0 0.00%
corporation
3. Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
domestic investors
Including: Shares
held by domestic
0 0.00% 0 0 0 0 0 0.00%
non-state-owned
corporation
Shares held
by domestic 0 0.00% 0 0 0 0 0 0 0.00%
natural person
4. Shares held by
0 0.00% 0 0 0 0 0 0.00%
foreign investors
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
0 0.00% 0 0 0 0 0 0 0.00%
senior executives
II. Shares not
subject to trading 1,011,660,000 100.00% 0 0 0 0 0 1,011,660,000 100.00%
moratorium
1. RMB ordinary
891,660,000 88.14% 0 0 0 0 0 891,660,000 88.14%
shares
2. Domestically
listed foreign 120,000,000 11.86% 0 0 0 0 0 120,000,000 11.86%
shares
3. Overseas listed
0 0.00% 0 0 0 0 0 0 0.00%
foreign shares
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
III. Total shares 1,011,660,000 100.00% 0 0 0 0 0 1,011,660,000 100.00%
Change of shares subject to moratorium
Unit: Share
Shares subject
Shares Shares subject
Name of to moratorium Shares released
increased in to moratorium Reason Date of release
shareholder at the in current year
current year at the year-end
year-begin
Total 0 0 0 0 － －
6
II. Issuance and listing of shares
1. Over the past three years as at the end of the reporting period, the Company never
issued shares or derivative securities.
2. 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. 2011)
1. Number of shareholders and shares held by shareholders
Unit: Share
Total number of shareholders as at
Total number of
86,756 one month before the reporting 87,200
shareholders
date of this report
Particulars about shares held by the top ten shareholders
Shares subject to
Nature of Proportio Total Share pledged or
Name of shareholders trading moratorium
shareholders n shares held frozen
held
Shenzhen Investment State-owned
63.55% 642,884,262 0 0
Holdings Co., Ltd. corporation
Domestic natural
Liu Yongkui 0.16% 1,590,839 0 0
person
GUOTAI JUNAN
Foreign legal
SECURITIES(HONGKO 0.15% 1,475,650 0 0
person
NG) LIMITED
Domestic natural
Jing Jianjun 0.12% 1,242,900 0 0
person
Foreign legal
Wang Zhongming 0.11% 1,095,808 0 0
person
Foreign legal
Wu Haoyuan 0.11% 1,092,100 0 0
person
Domestic natural
Xue Haoyuan 0.09% 894,956 0 0
person
GUANGGONG FUYING Domestic
ELECTRO-MECHANIC non-state-owned 0.08% 789,000 0 0
AL CO.,LTD legal person
Domestic natural
Xu Taiying 0.08% 780,000 0 0
person
Domestic natural
Zhang Rui 0.07% 730,700 0 0
person
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
Liu Yongkui 1,590,839 RMB ordinary share
GUOTAI JUNAN
1,475,650 Domestically listed foreign share
SECURITIES(HONGKONG) LIMITED
Jing Jianjun 1,242,900 RMB ordinary share
Wang Zhongming 1,095,808 Domestically listed foreign share
Wu Haoyuan 1,092,100 Domestically listed foreign share
Xue Haoyuan 894,956 RMB ordinary share
GUANGGONG FUYING
789,000 RMB ordinary share
ELECTRO-MECHANICAL CO.,LTD
Xu Taiying 780,000 RMB ordinary share
7
Zhang Rui 730,700 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
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
Company
8
Section V Directors, Supervisors, Senior Executives and Employees
I. Basic information of directors, supervisors and senior executives
Payment Whether
drawn draw
from payment
Number of the from
Number of Reason
Beginning date Ending date shares held Company sharehold
Name Title Sex Age shares held at for
of office term of office term at the in the er
the year-begin change
year-end Report company
period or other
(RMB’000 related
0) units
Zhou Chairman of
Male 57 11 Feb. 2009 10 Feb. 2012 0 0 31.57 Yes
Jianguo the Board
Chen General
Male 48 20 Oct. 2009 19 Oct. 2012 0 0 56.20 No
Maozheng Manager
Xu
Supervisor Male 60 11 Feb. 2009 10 Feb. 2012 0 0 41.00 No
Zhenhan
Deng
Director Male 46 11 Feb. 2009 10 Feb. 2012 0 0 51.40 No
Kangcheng
Wen Li Director Female 42 18 Sep. 2006 17 Sep. 2012 0 0 0.00 Yes
Jiang
Director Female 48 11 Feb. 2009 10 Feb. 2012 0 0 0.00 Yes
Lihua
Zhang Lei Director Male 44 15 Oct. 2010 14 Oct. 2013 0 0 40.00 No
Zhou
Director Male 42 26 Feb. 2008 25 Feb. 2014 0 0 5.00 Yes
Hanjun
Liu
Director Male 48 15 Oct. 2010 14 Oct. 2013 0 0 5.00 Yes
Quanmin
Song
Director Male 44 15 Oct. 2010 14 Oct. 2013 0 0 5.00 Yes
Botong
Wang
Supervisor Female 50 11 Feb.2009 10 Feb. 2012 0 0 0.00 Yes
Xiuyan
Xiong
Supervisor Male 54 28 Jun. 2004 27 Jun. 2013 0 0 27.81 No
Xingnong
Shi
Supervisor Male 56 11 Feb. 2009 10 Feb. 2012 0 0 36.93 No
Chunrong
Feng
Supervisor Male 41 22 Jul. 2010 21 Jul. 2013 0 0 35.90 No
Hongwei
Deputy
Yang
General Male 39 21 Aug. 2006 10 Feb. 2012 0 0 51.40 No
Jiayong
Manager
Deputy
Teng
General Male 55 1 Dec. 2009 10 Feb. 2012 0 0 51.40 No
Xianyou
Manager
Deputy
Nie
General Male 41 1 Dec. 2009 10 Feb. 2012 0 0 51.40 No
Liming
Manager
Secretary to
Chen Ji Male 40 28 Jan. 2009 10 Feb. 2012 0 0 36.93 No
the Board
Total - - - - - 0 0 - 526.94 -
Note: Chairman of the Board Zhou Jianguo withdrew remuneration in shareholding
units from Jan. to Jun. 2011.
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
9
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 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 Travel Agency of Special Economic Zone
Department of Shenzhen SDG 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 Oct. 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
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 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
10
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 and Development Department, Vice Director of Management
Center for Construction Project 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 Office,
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;
office secretary, consultant, section chief in office of Guangzhou Railway
Administration; 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, 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
11
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 City
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 GM and GM 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 secretary of office of the Comprehensive Office in Tonge Truck
Transportation Company, clerk of the CPC Office in Shenzhen Construction
Investment Holdings Corporation of the CPC Office in Shenzhen Construction
Investment Holdings Corporation and director of the CPC Office of Shenzhen City
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 withdrew remuneration from
shareholding units from Jan. to Jun. 2011. Directors Jiang Lihua and Wen Li, as well
the supervisor of the Company Wang Xiuyan take posts in shareholding units and
didn’t draw their payment from the Company.
Allowance for each independent director from Jan. to May of 2011 was RMB 3,000
(tax included) per month. With review and approval of the Shareholders’ General
Meeting 2010 convened on 29 Jun. 2011, allowance for each independent director was
adjusted to RMB 5,000 (tax included) per month, since Jun. 2011. Besides, they
received no other rewards from the Company.
IV. Number of employees, professional composition, education background and
retired employees
As to 31 Dec. 2011, the Company had totally 1,786 employees, of which 1,121
production personnel, 487 technicians, 57 sales personnel, 55 financial personnel and
66 administrative personnel. Among them, 159 personnel are undergraduates or above,
12
210 personnel are holder of associate degree, 195 graduated from technical secondary
school, 1,222 from senior high school or below. The Company had 393 retirees.
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, Code of Corporate Governance of 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 supervision.
There was no particular of non-standard corporate governance such as providing
private information to substantial shareholders or actual controllers, etc. in the
Company.
(I) Preparations and holding of 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
normatively; 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.
(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 fully 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.
(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, or supplement
of serious omissions or correction of performance forecast.
13
II. Duty performance of independent directors
(I) Presence of independent director at the Board Sessions:
Times of
Times of Times of Times of absent
Times of sessions attendance in
Name attendance in entrusted from on-the-spot
should attended communicatio
person voting meeting
n
Zhou Hanjun 5 4 1 0 0
Liu Quanmin 5 3 1 1 0
Song Botong 5 4 1 0 0
In the reporting period, there was no particular of independent directors’ objections to
resolutions of the Board of Directors.
(II) Presence of independent director at the shareholders’ general meeting:
The Company convened one session of shareholders’ general meeting in 2011, three
independent directors presented the meeting.
(III) Duty performance of independent directors
In the reporting 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 2011, in respect of annual audit of the
Company, independent directors had adequate and necessary communication with
certificated accountants for annual audit of the Company. In the meanwhile, they
executed field learning and inquiry on Shantou, Guangming and Longgang projects of
the Company, and proposed plenty of beneficial suggestions for project development.
The Strategy Committee, Audit, Nominating, Remuneration and Appraisal Committee
of the Company were based on independent directors, they attended each relevant work
by presence at special meetings.
1. In the reporting period, strategy committee of the Company convened one session of
meeting, audit committee convened three sessions of meeting, remuneration and
appraisal committee convened two sessions of meeting. All members presented the
said meetings and signed opinions.
2. Independent opinions issued:
(1) On 27 Apr. 2011, independent directors Mr. Zhou Hanjun, Mr. Liu Quanmin and
Mr. Song Botong issued independent opinions to changes in accounting policies and
retroactive adjustment issues of the Company, annual self-appraisal report of internal
control for Y2010, annual profit distribution plan for Y2010, particulars about the
execution of regulations of Notice on Several Issues Concerning Regulation of Cash
Flows of Related-parties of Listed Companies and Security Provided to Outside Parties
by Listed Companies;
(2) On 7 Jun. 2011, independent directors Mr. Zhou Hanjun, Mr. Liu Quanmin and Mr.
Song Botong issued independent opinions to the adjustment of remuneration of
independent directors.
(3) On 26 Aug. 2011, independent directors Mr. Zhou Hanjun, Mr. Liu Quanmin and
Mr. Song Botong issued independent opinions to the execution of regulations of Notice
on Several Issues Concerning Regulation of Cash Flows of Related-parties of Listed
Companies and Security Provided to Outside Parties by Listed Companies.
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
14
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
In accordance with requirements of Basic Standards for Corporate Internal Control,
Guidelines for Corporate Internal Control and Guidelines on Appraisal of Corporate
Internal Control jointly published by Finance Bureau, CSRC and other three ministries
and Guidelines on Internal Control of Listed Companies, the Company made a
self-appraisal of annual internal control activities for Y2011 in respect of five aspects,
they are:
(I) General internal control
In 2011, in line with regulations of Company Law, Securities Law, Rules for Listing
Shares in Shenzhen Stock Exchange, the Company carried out a completed
construction of corporate internal control, continued programming and work plan on
overall risks management system. The Company stuck to being guided by risks. The
internal control 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 were under normal operation;
Decision-making, execution and supervision were proper; information integration
concerning real estates was started up in an overall way; regulation and control system
were further improved and 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 completed systems and conducted standardized operation in
decision-making, implementation and supervision. 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.
The Management Level of the Company realized democratic discussion, independent
responsibility, normative operation and harmonious cooperation.
2. Organizational structure
The Board of the Company accounts for establishment and implementation of internal.
The separation of decision-making, execution, and supervision forms checks and
15
balances among them. The Audit Committee under the Board accounts for auditing
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
The Company drew up and implemented Provisional Rules of Internal Audit, and set
up special internal audit institution – the audit and supervision department, accounting
for supervision audit, job qualification audit, the audit 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 based on key work and points of the Company of Y 2011,
tightly combined development and reform facts of the Company, comprehensively
implemented duty of internal audit with a line of “leading by risks, weaving by control
and targeting added-value”. In terms of reinforcement and improvement of operation
and management, standardizing accounting etc., the internal audit institution made
full use of its function of audit, supervision and service. The internal audit institution
finished the audit and verification on business budget, performance appraisal, and
remuneration management of 8 units of the Company in 2011, executed powerful
inspection on the performance of fixed goals, target work and each resolution
implemented by departments and enterprises in Y2011, and promoted the
standardization of work on all parts.
4. Human resource
The Company focused on building professional organizations and teams, promoted
performance culture, with an aim to conducting “elite and excellent team”, targeting at
the establishment of standardizing human resource management, made concerted effort,
practical work with innovation, earnestly carried out each work of annul establishment
of human resource step by step in plan, thereof realized new development of human
resource management and powerfully support operation strategy of the Company. The
Company made arrangement of structure and optimized team which provided security
of organization; made arrangement of department of property management of original
headquarter, formed a centre for assets operation, thereof reinforced capability of
management and control; engaged elite, opened the doors for talents so as to meet the
requirements of development on main business; changed method of appraisal, made
revise of method for performance, advanced function of performance appraisal and
made amendment of Management Method for Performance Appraisal of the
Company’s Headquarters Staff. The Company carefully made plans and forwarded
steadily, promoted professional ability of staff by establishing annual plan, reinforced
induction training, standardizing daily training; the Company gradually carried out
each training by plentiful training content and adopted flexible training method. The
Company gathered each training with a topic of building excellent team by means of
the combination of video lecture, teaching by experts and outward-bound; strengthened
establishment of management team of subordinated enterprises, and optimized
equipment of the team.
5. Corporate culture
The Company proposed consciousness of “Professional, Dedication, Unity and
16
Probity”, made the establishment of enterprise culture involve in routine operation
management and activity carriers; vigorously developed system culture of obeying
codes and rules, developed probity culture of honest devotion, and carried forward
performance culture and excellent culture of keeping improving. The Company
promoted a notion of healthy life and happy work that formed a fine circumstance of
harmonious, smooth and integrity.
6. Important activities of internal control
(I) Establishment of internal control: In accordance of Announcement on Conducting
Work Affairs Related to Experimental Projects of Internal Control Standards of Listed
Companies in Shenzhen Administration Area (Shen-Zheng-Ju-Gong-Si-Zi [2011]
No.31), of requirements of Basic Rules for Corporate Internal Control and Application
Guideline on Corporate Internal Control, aiming at further reinforced internal control
and improved overall risk management level, the Board of Directors of the Company
approved internal control establishment program on 27 Apr., engaged Deloitte Touche
Tohmatsu Limited as consultant agency to carry out establishment of internal control.
The Company fulfilled the establishment of internal control in 2011 smoothly,
accomplished the first stage and the second stage of arrangement of procedure,
establishment of control matrix etc..
(2) Control on authorization: The Company executed authorization of operating and
managing business according to grade, defined decision-making procedures, handling
procedures and authority of examination and approval, confirmed responsibilities and
rights of sponsors, checker and authorizer for each business, 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. In the reporting period, the Company completed an
integrity construction of property and information; all modules of information system
were run on line that the Company witnessed an obvious improvement for authorized
control to be real from virtual.
(3) Risk control and management. In 2011, the Company concentrated on risk control
and appraisal, earnestly carried out risk assessment appraisal work, systematically
arranged initial information category tables of corporate risk management, carded main
risks existing in the Company of 2011 (including operation risk, legal risk and financial
risk) and drafted relevant strategy of resolution. In respect of the operation pressure
and uncertainty on finance brought by the regulation of real estate, the Company paid
much attention to prevention and control of financial risk, formulated and implemented
Provisional Method on Management of Financial Risk Warning, of which listed
financial risk warning index on aspects of risk of paying debt, operation risk, risk of
profitability, risk of external investment and comprehensive risk etc.. The Company
conducted overall quality and quantity assessment on corporate financial risk through
preparation of risk supervision statements; promptly made research and drew up risk
management program, offered guidance and adjustment to operation behavior. The
Company reinforced finance management, budget management and capital
management then solved funding gap appropriately. The Company set up tax planning,
drafted tax planning report for Longgang project and Guangming Project, engaged tax
agency to carry out the final settlement of calculation of VAT. The Company actively
coped with regulation of real estate market, adopted solutions to eliminate policy risk
and market risk, which included policy risk and industrial risk arising from regulation
of real estate market; the Company focused on analysis of marketing risk, mainly about
the real estate market trend turning cold and price inflection point occurs that would
result in a sales risk of steep decrease of market trading volume. In that case, the
17
Company convened seminar for development of main business, made a research on
policy influence and trend of the market, then drew out strategy to avoid risk and
control risk. The Company concentrated on enforcement of the construction of
developing professional ability, strictly controlled operation risk. In accordance with
Establishment Scheme and Work Plan of Overall Risk Management System, the
Company put effort on building a project management system of “fine business,
intensive administration and control, integrated platform”. The Company focused on
prevention of risk on legal affairs, ensured project development. The Company
completed 81 pieces of examine and verify of each project contracts and documents,
completed 154 pieces of examine and verify of other kind of contracts, documents and
written reply legal opinions; attended 50 pieces of relevant meetings, offered reply to
all kind of inquiry on drafting various consultant report, documents, completed 24
pieces of statistics of various data and cases. The Company strengthened management
of strategic programming, defined development goal and business scheme of the
Company, effectively prevented strategy risk as a result.
(4) Audit supervision and examination: The Company enhanced supervision over audit
and examination over execution, and audit advice was put forward based on that. In
terms of execution examination, it examined the execution of all affiliated subsidiaries,
project departments and all other departments. Based on the examination results, it
appraised the possibility of affiliated subsidiaries accomplishing the annual objectives
and analyzed the progress of key projects of the examinees, providing advice
concerning how to fully accomplish all the objectives set for the year. The Company
attached importance to innovating ways of supervision and deepened the supervision
from “general” to “key points”, which further integrated the supervision force, helped
formulate effective supervision composite force and ensured safety and appreciation of
assets. Meanwhile, it integrated the supervision force and carried out thorough
supervision. It formulated the joint supervision conference mechanism of the
Supervisory Committee, the Disciplinary Inspection Committee and CFO, giving full
play to their respective supervision advantages and means and trying to supervise as
thoroughly as possible in the vertical and horizontal aspects. 6 joint supervision
conferences were held within the year. Considering the actual situation, the
Supervisory Committee, the Disciplinary Inspection Committee and CFO put forward
requirements based on their respective focuses, warning about possible risks and
drawing a supervision picture with key points pinpointed. It enhanced supervision of
“ten aspects” with significant events as the core and reinforced its advice-giving before
and supervision during any relevant event for 8 operating units and 5 affiliated
subsidiaries. In order to improve the supervision network, it also beefed up supervision
over the secondary enterprises through formulating a supervision joint-action
mechanism between the headquarters and its affiliated subsidiaries, as well as regularly
holding supervision joint conferences about appointing liaison personnel in every
secondary enterprise. Supervision liaison personnel, with supervision reporting as their
extra work, were appointed in all the 5 affiliated subsidiaries. These liaison personnel
were asked to report events in time and statements on time to enhance connection and
communication.
(5) Tender and bidding control: The Company formulated and executed the
Administrative Measures on Tender and Bidding Projects, the Administrative Measures
on Engagement of Intermediary Agencies, and relevant rules about approval power and
business processes. The tender and bidding leader team was responsible for organizing
tender and bidding activities while the tender and bidding supervision team was
18
responsible for supervising the whole process. Pursuant to the principles of
“transparency, fairness, justness and choosing the best”, the Company tightened the
tender and bidding procedures, proactively organized various tender activities and
carefully reviewed tender documents. Through out the year, 15 tender and bidding
projects were accomplished, all of which were in compliance with applicable laws and
regulations and transparent.
(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.
(III) Key activities on business control
1. Management on development of real estate project
The Company followed the 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
The Company followed the Provisional 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 continued to work on the Shenzhen Guangming project and Longgang
project. There’s no newly increased significant investment of the Company in the
reporting period.
3. Lease business
19
In order to enhance the integration of property resources and increase the gain on this
segment, the Company set up the Asset Operation Center in May 2011 to carry out
intensive management over the lease business, which boosted steady increase in the
lease rate and the rent recovery rate. The Company followed the 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 2011, 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 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 was demonstrated in the whole
process of project development. In 2011, the Company focused on building a sound
cost control system, improving all processes, improving cost control by adopting an IT
cost pattern, monitoring costs of the Guangming, Longgang and Jinhu Road projects in
their whole processes, and shifting from cost control after projects to cost control
before projects. By enhancing cost control key points such as estimation and budgets,
the Company was able to control development costs under the target costs.
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 safe production. 2011
was “the year of safe production” for the Company. The Company carried out major
safe production examinations on a quarterly basis, carefully searching for safety
hazards and preventing them from turning into reality. It successfully organized safe
production supervision before the Universiade, the Mid-Autumn’s Day, the National
Day and other significant events, festivals and holidays, which ensured safety and
20
stability during holidays. Interim brief summaries, summaries, the Emergency Rescue
Preplan and other reports concerning the “safe production year” were submitted on
time. The Company arranged safety management trainings for relevant personnel,
which produced good results. No safety accidents occurred within the Group in 2011.
6. Financial management
The Company strictly executed accounting standards uniformed by the state, continued
to enhance standardization of accounting basis, valued regulation on finance
management, and controlled finance risks. The Company followed the Provisional
Method of Finance Management and the Management Method of Related People in
Charge of Finance, which 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. Aiming to deal
with the operating pressure and financial uncertainty arising from the macro-control
over real estate, the Company attached great importance to preventing and controlling
financial risks. It followed the Provisional Management Methods for Financial Risks
Prewarning. According to the said Methods, financial risk prewarning indicators were
given in terms of debt repayment risk, operating risk, profitability risk, external
investment risk and comprehensive risk; the nature and involved amounts of financial
risks were thoroughly tested and estimated by preparing risk monitoring sheets; and
risk management plans were worked out in time to provide guidance for adjusting
operating activities. The Company attached importance to management over financial
activities, budgets and capital and properly dealt with the financing gap.
7. Related transactions
During the reporting period, 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. Related-party transactions of the Company were all conducted under the
fair market pricing principle, which fully safeguarded interests of all investors.
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
21
disclosed are authentic, accurate and complete.
(IV) Internal control defects and improvement plan
In 2011, the Company engaged Deloitte Touche Tohmatsu (DTT) as the consulting
agency and mobilized the whole staff to thoroughly carry out internal control
improvement activities, fully examine the control process and the weak links in the
internal control system. In general, the Company had a sound system, as well as good
internal control and risk prevention, with no material defects found in corporate
governance. However, due to unpredictable macro-control over the industry, the lack of
experience in identifying and assessing risks and the shortage of professionals in
internal control, there existed some objective difficulties for the Company to continue
to carry out internal control improvement. Therefore, in 2012, the Company will make
use of the internal control improvement as a great opportunity to increase its internal
control and risk prevention abilities, enhance the cultivation of internal control
professionals and continuously improve corporate governance.
(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 had no 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,
continuously improve the internal control system, and sustainably improve corporate
governance and enterprise management.
(VI) Independent opinion of independent directors concerning self-appraisal on
internal control
We have reviewed the self-appraisal report on internal control for 2011 issued by the
Board of Directors and believe that: In 2011, the Company engaged DTT to provide
consulting service for its internal control improvement. The internal control
improvement was carried out in a thorough manner. It went well and produced some
good results. The real estate information integration system went into full operation
and became an effective assisting tool for the internal control improvement campaign
of the Company. The Company ensured standard governance, effective management,
and controllable risks, as well as the authenticity, accuracy, and timeliness of
accounting records and accounting information, which protected interests of all
shareholders of the Company. The self-appraisal report on internal control of the
Company reflected the actual condition of the Company’s internal control in a
thorough, objective, and authentic way.
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Section VII Brief introduction to the Shareholders’ General Meeting
The 19th Shareholders’ General Meeting (the Annual Shareholders’ General Meeting
for the year 2010) was held at the meeting room of the Company at 9:30 a.m. on 29
Jun. 2011, at which the following proposals were examined and approved as
resolutions: the Working Report of the Board of Directors 2010, Working Report of the
Supervisory Committee 2010, Profit Distribution Plan 2010, Annual Report 2010,
Financial Budget Plan for 2011, Proposal on Reengagement of the Accounting Firm,
Proposal on Adjusting Allowances for Independent Directors of the Company, etc.
Resolutions at the meeting were published in China Securities Journal, Ta Kung Pao
and the website http://www.cninfo.com.cn designated by CSRC on 30 Jun. 2011, and
the Board of Directors implemented the resolutions in strict accordance with the
authorization from the shareholders’ general meeting. In the reporting period, there was
neither profit distribution plan or capitalization plan, nor allotments or issuance of new
shares.
Section VIII Report of the Board of Directors
I. Business review for the reporting period
(I) Discussion and Analysis of the management staff
In 2011, we united together to wisely deal with the complex situation, seizing
opportunities for development, increasing strength and boosting solidarity. Together
with all other staff of the Company, we worked hard to boost the main business,
enlarge the land reserve, enhance cost control, improve the management capability,
proactively cope with problems left from the past, build a professional high-quality
management team, enhance the building of a honest and clean management team,
create a new corporate culture and thoroughly increase the core competitiveness.
Various measures taken by the Company for development and reform produced
remarkable results. The business performance, strategic management, main business
development, management capability, management team building were all further
improved. A new picture of smooth, healthy and stable development has taken shape.
(II) Overall business performance
In 2011, the Company achieved a total profit of RMB 133,278,800, representing a
year-on-year increase of 19.09%; an operating profit of RMB 130,930,500, up 15.86%
over last year; a net profit attributable to shareholders of the listed Company reaching
RMB 101.20 million, up 19.40% as compared with that of last year; and an operating
revenue of RMB 1,026.40 million, a slight rise of 0.52% on the year-on-year basis. The
operating profit of the reporting period mainly came from real estate sales, of which
the growth was mainly because period expenses went down 34.34% as compared with
last year.
23
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
Operating Gross profit rate e of operating e of operating
Industries or products Operating cost of gross profit
revenue (%) revenue over last cost over last
rate (%)
year (%) year (%)
Real estate 51,167.65 25,089.40 50.97% -8.64% -11.72% 1.71%
Construction 32,307.86 30,677.91 5.05% 18.63% 19.44% -0.65%
Lease 6,768.49 3,054.19 54.88% -4.21% 10.21% -5.91%
Property management 9,150.29 8,392.18 8.29% -2.40% -1.21% -1.11%
Hotel and other services 3,245.32 1,409.11 56.58% 33.95% -25.89% 35.06%
Main business classified according to products
Residential houses 48,387.65 23,827.40 50.76% 12.95% 5.05% 3.70%
Office buildings 0.00 0.00 0.00%
Parking lots 0.00 0.00 0.00%
Shops 2,780.00 1,262.00 54.60%
(II) Incomes and profits of main businesses classified according to regions
Unit: (RMB) Ten thousand
Region Operating revenue YoY +/-（%）
Domestic:
100,673.69 -1.34%
Guangdong Province
Domestic:
1,899.19
Other regions
Overseas: 66.73 3.09%
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% 4,031.10 3,498.53 2,287.48 -201.34
Co., Ltd. Service
Shenzhen Property Property
Shenzhen 725 725 100% 6,093.73 1,075.24 10,076.59 36.4
Management Co., Ltd. management
Fixing and
Shenzhen Zhentong
Shenzhen 1,000 maintenance 1,000 100% 10,976.51 1,178.01 33,118.42 129.85
Engineering Co., Ltd.
of projects
Shenzhen Huazhan
Construction
Construction Supervision Shenzhen 800 800 100% 791.35 747.14 358.14 1.02
supervision
Co., Ltd.
Shenzhen SPG Mini-bus
Shenzhen 1,029 Rent of 1,029 100% 1,828.82 1,509.06 442.34 36.7
Rent Co., Ltd. mini-bus
Shantou Hualin Real
Development
Estate Development Co., US$600 3,421 100% 72,093.58 23,289.82 47,810.73 9,358.67
of real estate
Ltd. Shantou
.Great Wall Estate Co., Development
USD50 11,122 70% 1,801.43 -7,975.30 66.73 3.93
Inc. USA of real estate
Investment
Xin Feng Enterprise Co.,
HKD100 and 66,358 100% 19,522.19 -40,633.55 22.95 137.81
Ltd.
Hong Kong management
24
Ⅳ. Main suppliers and customers
Unit: (RMB) Ten thousand
2011 2010
Item
Sales Proportion in total sales Sales Proportion in total sales
Total sales to the top five 20,435
13,152 12.82% 20.01%
customers
V. Investment
(I) There was no raised proceed in the reporting period, nor was there any proceeds
raised in previous periods yet still used in the reporting period.
(II) Significant Investment Projects with Non-Raised Proceeds
Unit: RMB Ten thousand
Investment in
Name of project Progress of project Project earnings
project
Northern district: The general
contractor for the main
construction was determined
through bidding by the end of
2011; the construction drawing
SPG Shanglin Garden (Longgang application was completed; and
2,312.00 No earnings so far
Project) now the earthwork excavation is
proceeding.
Southern district: Statutory
drawing and planning adjustment
and demonstration is now
proceeding.
The project has been approved and
Shantou Jinhu Road Project 952.00 No earnings so far
initiated.
Drawing before construction,
application, budgeting and other
preparations, as well as foundation
pit excavation, earth disposal and
engineering pile trial, for the
Guangming New District Project 12,586.00 No earnings so far
eastern district were done by the
end of 2011. As for the western
district, drawing, application,
budgeting and other preparations
were done.
Total 15,850.00 - -
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. Analysis on Financial Status and Operating Results in the reporting period
(I) Analysis on Financial Status
As at 31 Dec. 2011, total assets of the Company stood at RMB 3,236.13 million,
25
representing a year-on-year decrease of 4.23%. The asset structure of the Company
became more rational with a better asset quality. The proportion of operating assets
such as monetary funds, inventory and investing property in total assets reached
91.90% at the year-end. Asset-liability ratio stood at 56.73% with a year-on-year
decrease of 4.8 percentage points, current ratio stood at 1.69 with a year-on-year
decrease of 97%, and quick ratio stood at 0.29 with a year-on-year decrease of 18%.
This was mainly due to the increase of non-current liabilities due within 1 year.
Affected by the macro-control, the short-term debt repaying ability of the Company
went down to some degree, but the financial position was still comparatively sound.
1. Comparison of main financial indexes with those of last year
Unit: (RMB) Ten thousand
Increase/decrease
Items 31 Dec. 2011 31 Dec. 2010 Notes
rate (%)
Total assets 323,612.70 337,909.02 -4.23%
More prepayments for
Prepayments 4,487.18 2,689.06 66.87%
construction projects
Long-term
59.13 20.25 192.00% More expense on decoration
deferred expenses
Short-term
2,000.00 1,480.00 35.14% Increase of short-term borrowings
borrowings
Accounts payable 10,920.25 16,667.22 34.48% Payables for construction
Some house payments received in
Accounts
advance met the conditions for
received in 25,897.61 39,533.23 -34.49%
income recognition and were
advance
restated as income.
Business tax and surtaxes and
Taxes and fares
296.96 -1,333.35 122.27% corporate income tax due to the
payable
Shantou Jinye Island Project
Non-current Long-term borrowings due in
liabilities due 69,709.57 2,942.34 2269.19% 2012 were restated as non-current
within 1 year liabilities due within 1 year.
Long-term borrowings due in
Long-term
29,962.14 105,670.31 -71.65% 2012 were restated as non-current
borrowings
liabilities due within 1 year.
Retained profit -47,596.90 -57,716.90 17.53% Increase of net profit for the year
Other indexes 31 Dec. 2011 31 Dec. 2010 Ratio of variation
Debt asset ratio -4.8 percentage p Fewer bank borrowings and
56.73 61.53
oints accounts received in advance
Current ratio More non-current liabilities due
1.69 2.66 -0.97
within 1 year
Quick ratio More non-current liabilities due
0.29 0.47 -0.18
within 1 year
2. Structure comparison of main financial indexes with those of last year
Unit: (RMB) Ten thousand
31 Dec. 2011 31 Dec. 2010
Items Proportion in total Proportion in total
Amount Amount
assets (%) assets (%)
Monetary capital 0.1030 37,972.06 0.1124
33,346.92
Transactional financial assets 9.77
Accounts receivable 0.0059 1,715.25 0.0051
1,913.98
26
Prepayments 0.0139 0.0080
4,487.18 2,689.06
Interest receivable 0.0001
34.10
Other receivables 0.0142 0.0141
4,608.79 4,753.49
Inventories 0.6590 222,493.87 0.6584
213,276.02
Total current assets 0.7962 269,633.50 0.7979
257,667.00
Long-term equity investment 0.0196 0.0188
6,334.62 6,342.68
Investment real estate 0.1570 0.1569
50,800.17 53,010.95
Fixed assets 0.0188 0.0191
6,091.86 6,452.65
Constructions in progress 52.00 0.0002
Intangible assets 0.0019 621.33 0.0018
619.61
Long-term deferred expenses 0.0002 20.25 0.0001
59.13
Deferred income tax assets 0.0063 0.0053
2,040.32 1,775.66
Total non-current assets 0.2038 0.2021
65,945.70 68,275.51
Total assets 337,909.02
323,612.70
Short-term borrowings 0.0062 0.0044
2,000.00 1,480.00
Accounts payable 0.0337 0.0493
10,920.25 16,667.22
Accounts received in advance 0.0800 0.1170
25,897.61 39,533.23
Employee compensation payable 0.0112 0.0116
3,638.99 3,933.88
Taxes payable 296.96 0.0009 -0.0039
-1,333.35
Interest payable 0.0051 0.0049
1,653.53 1,653.53
Other payables 0.1189 0.1077
38,472.12 36,405.29
Non-current liabilities due within 1
0.2154 0.0087
year 69,709.57 2,942.34
Total current liabilities 0.4715 101,282.15 0.2997
152,589.04
Long-term borrowings 0.0926 105,670.31 0.3127
29,962.14
Long-term payables 0.0032 977.91 0.0029
1,030.86
Total non-current liabilities 0.0958 106,648.22 0.3156
30,993.00
Total liabilities 0.5673 207,930.37 0.6153
183,582.04
(II) Analysis on Operating Results
1. Increase/decrease of the Company’s main businesses:
① A sales income of RMB 511,676,500 from the Company’s dominant business of
real estate was carried down, down by 8.64% as compared with that of last year, which
was mainly because the headquarters of the Group saw a sales income lower than last
year while the subsidiary Shantou Hualin Real Estate Development Co., Ltd. recorded
a residential property sales income 18.5% higher than that of last year;
② Income from construction stood at RMB 323,078,600, representing a year-on-year
27
growth of 18.63%, 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 67,684,900, down by 4.21% from that of last year,
which was mainly because the Company recalled fewer arrears of rent;
④ Property management income stood at RMB 91,502,900, down by 2.40% from that
of last year, which was mainly because some house owners defaulted on the property
management fees;
⑤ Income from hotel and other services stood at RMB 32,453,200, representing a
year-on-year increase of 33.95%; operating cost stood at RMB 14,091,100, down by
25.89% on the year-on-year basis; and the operating gross profit rate stood at 56.58%,
up 35.06% as compared with last year. This was mainly because the Company received
some amounts related to Guoxing Building.
2. Taxes and expenses during reporting period:
Unit: RMB Yuan
Items 2011 2010 YoY movement
Business tax 45,944,638.22 45,833,329.45 0.24%
Urban maintenance and
2,183,859.14 563,749.15 287.38%
construction tax
Educational surcharges 1,169,505.63 767,741.25 52.33%
Business tax and 6,304,592.55 6,578,991.44 -4.17%
House property tax
surcharges
Land value increment tax* 59,861,391.13 66,958,667.01 -10.60%
Local educational surcharges 326,825.66
Embankment maintenance fee
558,388.34 450,957.06 23.82%
and others
Subtotal 116,349,200.67 121,153,435.36 -3.97%
Employee compensation 2,853,630.01 3,950,899.58 -27.77%
Advertising expenses 6,182,679.28 6,920,236.79 -10.66%
Business expenses 622,820.90 749,244.59 -16.87%
Sales expenses
Others 1,168,798.64 1,473,608.01 -20.68%
Subtotal 10,827,928.83 13,093,988.97 -17.31%
Employee compensation 34,852,702.09 36,447,448.71 -4.38%
Depreciation and
5,295,078.38 5,526,432.97 -4.19%
amortization
Administration 4,772,142.72 4,744,292.35 0.59%
Business funds
expenses
Others 20,207,867.97 23,275,018.17 -13.18%
Subtotal 65,127,791.16 69,993,192.20 -6.95%
65,254,298.32 70,668,526.13 -7.66%
Finance expenses Interest expenses
Less: expenses with
47,230,586.82 15,644,555.07 201.90%
capitalized interest
Less: interest income 3,524,155.34 1,050,178.53 235.58%
Exchange loss 6,763,770.23 6,126,187.86 10.41%
Less: exchange income 4,688,389.81 5,003,945.06 -6.31%
Others 281,104.73 3,163,917.71 -91.12%
28
Subtotal 16,856,041.31 58,259,953.04 -71.07%
Total 209,160,961.97 262,500,569.57 -20.32
① Sales expenses stood at RMB 10.83 million, down by 17.31% from that of last year,
which was mainly due to decrease of advertising expenses, business funds and other
expenses.
② Administrative expenses stood at RMB 65,127,800 with a year-on-year decrease of
6.95%, which was mainly because other expenses decreased.
③ Financial expenses stood at RMB 16,856,000, representing a year-on-year decrease
of 71.07%, which was mainly because the interest on some borrowings was capitalized
this year.
3. Investment income
Unit: RMB Yuan
Resources generating investment income 2011 2010
Long-term equity investment income accounted by cost
11,327,948.39
method
Long-term equity investment income accounted by equity
-5,622.11 -36,587.15
method
Investment income arising from disposal of long-term
25,212.78 15,588,205.14
equity investment
Investment income arising from disposal of transactional
-34,017.37 322,484.04
financial assets
-14,426.70 27,202,050.42
Total
4. Income tax expenses
Unit: RMB Yuan
Item 2011 2010
Income tax expenses for this year
34,726,163.79 28,669,817.61
Deferred income tax expenses
-2,646,633.11 -1,524,469.31
Total 32,079,530.68 27,145,348.30
5. Changes of financial data in cash flows of the Company in the reporting period
Unit: RMB Yuan
Increase/decrease
Item 2011 2010 Note
rate (%)
Net cash flows from The decrease of payment for the
11,515.48 -17,905.16 164.31
operating activities construction in progress
The decrease of cash received from the
Net cash flows from recovery of investment, investment income
-756.00 6,954.94 -110.87
investing activities and disposal of long-term equity
investment
Net cash flows from
-15,200.95 10,661.63 -242.58 Less financing from banks.
financing activities
VIII. Problems, difficulties and solutions in operation
In 2012, the national macro control on real estate will develop in depth, and the
Company will still face difficult operation business, which is mainly reflected as
29
follows: Firstly, three main business projects of the Company start to build, causing a
certain capital pressure on the Company; under the market circumstance of restriction
in purchase, price and loan, the sale of real estate in stock will face a severe challenge;
the land available for development was insufficient, thus the bottleneck of resources
will always restrict the sustainable development of enterprise. Secondly, the ability in
the development of main business still needs to improve. Thirdly, the accumulated
losses left over by history is big, now a loss of approximate RMB 0.476 billion is to be
cover, thus the financing function in the capital market as a listed company is lack,
which will affect the long-term development of the enterprise.
Therefore, the Company will continue to pay attention to and strengthen research on
macro economy situation, analyze and research on the changes in real estate market,
seize up the situation, and flexibly deal with uncertainties brought by policies and
changes in market; hold the opportunity to increase the land reserves timely and
properly; actively expand the financing channel to improve the efficiency of capital
operation, so as to ensure the capital supply for the development of main business
project and gaining the land resources; improve the management and control capacity
as well as the capacity in the development of main business to create an excellent main
business project, so as to further enhance the market position and brand image for the
Company; strengthen the cost control on the project development to improve the
profitability of the Company.
IX. Outlook for future development of the Company
General guidelines for operation in 2012: To grasp the main business operations by
intensive cultivation, increase the land reserves by meticulous planning, strengthen the
cost control by careful calculation and strict budget, improve the management and
control capacity by keeping improving, actively solve the historical issues, actually
strengthen the team building and the building of the Party’s work style and clean
government, strive to make a highly competent and professional management team,
focus on building new corporate culture, so as to overall strengthen the core
competiveness of SPG. Besides, it will make every effort to create first-class
performance and strive to progress during keeping stably.
In 2012, the Company will work on the four central tasks as follows:
Firstly, it is to make every effort to make the core business stronger and better, grasp
the main business operations by intensive cultivation, create excellent projects, resume
the brand of products; increase the land reserves by meticulous planning and actively
explore the new mode for the transformation development of main business; strengthen
the cost control by careful calculation and strict budget, strengthen the overall budget
management, capital management and cooperation between banks and the Company,
as well as strengthen the contract management and cost control, so as to improve the
profitability of products.
Secondly, it is to pursue the high-quality increase and sustainable overall development
for the Company. The macro economic situation in 2012 is still severe, three main
business projects of the Company start to build, causing a certain capital pressure on
the Company, thus it’s important to ensure the stability of team, the safety of capital
and the realization of development progress and sales target.
Thirdly, it’s to make every effort to realize the Company’s vision and goal. It shall
30
strive to create the first-class work goal, work standards, professional team and attitude
as well as performance result, so as to resume the financing ability in the capital
market and further realize the goal made in the Strategic Plan for the Five-year
Development as soon as possible.
Lastly, it’s to strive to create a cultural atmosphere of happy work and health life,
increase the coherence between the Company and the staffs as well as their combat
strength, and make every effort to create a “professional, dedicated, united and honest”
corporate culture.
X. 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 2011 were as follows:
1. The 1st session was convened by telecommunication on 13 Apr. 2011 with 9
directors present, at which reviewed and approved Proposal on Providing the Payment
Guarantee for the Earthwork and Foundation Construction in East of SPG Yufu, which
was not published.
2. The 2nd session was convened at the Conference Room of the Company on 27 Apr.
2011 with 9 directors present, at which reviewed and approved Proposal on the Change
in Accounting Policy and the Retroactive Adjustment, the 2010 Annual Work Report of
the Board of Directors, the 2010 Annual Report and Its Summary, the 2010 Annual
Profit Distribution Preplan, the Proposal on 2010 Duty Performance Report of
Independent Directors, the Proposal on 2011 Annual Financial Budget, the Proposal on
2010 Annual Self-appraisal Report on Internal Control, the Proposal on the First
Quarterly Report for 2011 and Its Summary, the Proposal on the Work Plan on the
Implementation of Internal Control Rules.
The public notice on relevant resolutions was disclosed on China Securities Journal, Ta
Kung Pao and http://www.cninfo.com.cn dated 29 Apr. 2011.
3. The 3rd session was convened at the Conference Room of the Company on 7 Jun.
2011 with 9 directors present, at which reviewed and approved Proposal on the
Reengagement of CPAs Firm, the Proposal on Adjusting the Allowance for
Independent Director of the Company, the Proposal on Convening the 2010 Annual
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. 2011.
4. The 4th session was convened at the Conference Room of the Company on 26 Aug.
2011 with 9 directors present, at which reviewed and approved Proposal on the
Semi-annual Report for 2011 and Its Summary.
The public notice on relevant resolutions was disclosed on China Securities Journal, Ta
Kung Pao and http://www.cninfo.com.cn dated 27 Aug. 2011.
5. The 5th session was convened at the Conference Room of the Company on 21 Oct.
2011 with 8 directors present and 1 director entrusting other person to vote, at which
reviewed and approved Proposal on the Third Quarterly Report for 2011 and Its
Summary, the Proposal on the Strategic Planning for the Five-year Development, the
Proposal on Applying to ICBC for a Loan.
The public notice on relevant resolutions was disclosed on China Securities Journal, Ta
Kung Pao and http://www.cninfo.com.cn dated 22 Oct. 2011.
(II) Execution on resolutions made at Shareholders’ General Meeting by the Board of
31
Directors
During the reporting period, the Company convened one Shareholders’ General
Meeting, and the relevant resolutions made at the said session were disclosed on
designated media. As authorized by the Shareholders’ General Meeting, the Board of
Directors faithfully executed the resolutions above. In the reporting period, the
Company did not have any plan for profit distribution or capitalization of capital
reserves, nor any rationed shares or additionally issued shares.
(III) Duty fulfillment of Audit Committee under the Board of Directors
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, Construction of Internal Control, Fund Transfer
Between Listed Companies and Related Parties and Guarantee Events, etc.. Besides, it
also keep full and necessary communication with the annual auditors of the Company.
Upon the start of the audit for the 2011 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. During the reporting period, the Audit
Committee has convened three sessions, reviewed the Company’s 2011 financial
statements for two times and the preliminary auditing result issued by the annual
auditors of the Company, as well as issued their opinions after the review. The Audit
Committee made the summary for the 2011 annual audit work as followings:
1. Two review opinions issued concerning the Company’s 2011 Annual Financial
Report
Based on their professional knowledge and experience, the members of Audit
Committee reviewed the 2011 Annual Financial Report prepared by the Company. In
the reporting 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 2011 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 2011 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 2011 Financial Report prepared by China
Audit International Certified Public Accountants Ltd. for the Company was in
accordance with the requirements of the accounting standards for business enterprises,
factually and completely presenting the Company’s operating results and cash flows in
2011 and its financial position as at 31 Dec. 2011 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
32
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 2011 annual audit conducted by China Audit International
Certified Public Accountants Ltd.
In accordance with stipulations on relevant work for 2011 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 2011 annual audit lasted from 12 Dec. 2011 to 29 Mar. 2012 as schedule.
Of which, the pre-audit and internal test lasted from 12 Dec. 2011 to 31 Dec. 2011; the
substantial test lasted from 4 Jan. 2012 to 29 Feb. 2012; the compilation of audit report,
its re-check in CPAs firm and formulation of first draft lasted from 1 Mar. 2012 to 15
Mar. 2012.
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 12 Dec. 2011, 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 2011 Annual Report on
15 Mar. 2012, and its final version on 29 Mar. 2012. And this marked the end of the
site audit conducted by China Audit International on the Company’s 2011 financial
report.
(3) Audit results
China Audit International issued the standard unqualified 2011 Annual Audit Report to
the Company. And the Audit Committee was of the opinion that China Audit
International excellently accomplished the audit of the Company’s 2011 Annual
Financial Report.
(IV) Duty fulfillment of Remuneration and Appraisal Committee under Board of
Directors
The Remuneration and Appraisal Committee under the Board carefully examined the
annual remuneration of the Company’s directors, supervisors and senior executives
disclosed in the 2011 Annual Report. And it was of the opinion that: the
decision-making procedure concerning the remuneration of the directors, supervisors
and senior executives was in line with relevant regulations; the standards for
remuneration paid to the Company’s directors, supervisors and senior executives
complied with the remuneration system; and the remuneration disclosed in the 2011
Annual Report was factual and accurate.
33
On 7 Jun. 2011, the Remuneration and Appraisal Committee under the Board
scrupulously reviewed the Proposal on the Allowance for Independent Directors of the
Company, and it was of the opinion that: basing on checking the particulars on duty
performance, honesty, credit and responsibility as well as diligence of independent
directors, the Company also referred to the remuneration of independent directors in
similar listed companies to adjust the allowance of independent directors, which will
be favorable to bring the enthusiasm of independent directors to full play, so as to
promote the sustainable and healthy development of the Company. The
decision-making procedure is in line with the Company Law, Articles of Association
and Implementation Rules for the Remuneration and Appraisal Committee. There was
no behavior to harm the interest of minority shareholder of the Company.
(V) Duty fulfillment of Strategy Committee under the Board of Directors
On 21 Oct. 2011, the Strategy Committee under the Board formed a resolution on the
Strategic Planning for the Five-year Development, agreed on the Strategic Planning for
the Five-year Development, which was submitted to the Board of Directors for review
and approval.
XI. Profit distribution preplan for Y2011
As audited by China Audit International Certified Public Accountants, the Company
achieved, in 2011, a net profit of RMB 101,199,284.42. According to relevant laws and
regulations, as well as the Articles of Association of the Company, the net profit in
2011 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 -475,968,948.89.
XII. Cash dividends in the previous three years
Unit: RMB
Proportion in the
Consolidated net
Amount of cash consolidated net profit Annual profit
profit attributable to
Year dividends (including attributable to available for
shareholders of the
tax) shareholders of the distribution
Company
Company
2010 0.00 84,760,162.75 0.00% -577,169,009.54
2009 0.00 20,199,162.08 0.00% -781,357,778.86
2008 0.00 19,123,787.11 0.00% -915,511,458.27
The proportion of the accumulative cash dividends over the
previous three years in the average net profit over the previous three 0.00%
years (%)
XIII. 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.
XIV. 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 Related 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 2011 Annual Report and
34
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. Particulars on the fund transfer between the Company and related parties
(1) In 2011, the Company paid RMB 144,750.00 and 620,000.00 for the previous
expense for the project in Guangming New District such as environmental assessment
and design argument, etc. to Shenzhen Environment Engineering Science and Tech
Center Co., Ltd. and Shenzhen Institute of Building Research respectively.
(2) Shenzhen Jianan Group Co., Ltd., a related party of the Company, won the bid of
the public tender project (i.e. the general contracting project of the construction in the
east of Guangming New District Project) in Shenzhen Construction Engineering Trade
Center, and the contract was formally signed on 20 Jan. 2012 with a contract amount of
RMB 553.33 million.
The Company’s related transaction was fair and compliant with no harm to the interest
of the Company and its minority shareholder.
2. In 2011, the Company paid RMB 2 million for the bank loan guarantee expense to
its controlling shareholder— Shenzhen Investment Holding Co., Ltd.. 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 8.5 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.
3. There existed no occupation of the Company’s capital by its principal 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.
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 Related Parties and Provision of External Guaranty.
XV. Construction of Internal Control
In accordance with the requirements of the Basic Norms for Internal Control of
Enterprises and the mating guideline, and according to the Circular on Doing a Good
Job in Pilot Internal Control Regulation in Listed Companies of Shenzhen from
Shenzhen Securities Regulatory Bureau, the Company paid special attention to
relevant work in pilot internal control regulation. In terms of training, according to
relevant requirements, the Company attended the Video Conference on the
Mobilization and Disposition of Implementing Internal Control in Capital Market
convened by CSRC on 20 Jan. 2011. The Listing Department and Accounting
Department of CSRC held a special training on internal control from 8 Mar. 2011 to
11 Mar. 2011, the Company’s Secretary Office, Audit Department, Finance
Department, Enterprise Management and other functional departments attended the
said training; besides, the Company sent personnel to attend the Meeting on
Exchaging the Experience of Risk Management organized and convened by the unit
35
of Principal Shareholder to study the experience of brother company; Moreover, the
Company sent personnel to attend the Exchange Meeting on the Construction of
Internal Control on 11 Nov. 2011 held in Vanke.
Scope of the construction of internal control for the Company: In accordance with the
regulation of the [2011] No. 031 Document from the Listing Department of CSRC, the
internal control covers over 50% of the total assets, operating income and net profits,
so the Company’s internal control includes the headquarter, Longgang Company and
Shantou Company.
Particulars on the implementation of internal control:
The Board of Directors reviewed and approved the Work Plan for Implementing
Internal Control on 27 Apr. 2011 (please refer to the public notice on 29 Apr. 2011),
thus started the work of internal control. The Company established the Leading Team
and Internal Control Construction Office to divide the work. After the training, the
Company convened a session to make a special research on the relevant work of
internal control construction, and decided to engage a agency; the Company made a
research on 20 CPAs firm with the qualification of securities business and professional
consultative agency, and introduced DTT Certified Public Accountants as the
consultative agency to carry out the internal control construction by way of bidding.
DTT entered on 20 Sept. 2011, and finished the first-phase work (i.e. work plan) and
second-phase work (i.e. establish the internal control for the companies in the project)
as at the end of reporting period, three companies in the scope of implementing internal
control have completed the site-interview, the comb of system and procedure and the
walk-through test, thus the framework of internal control system has been built, and the
internal control matrix as well as relevant documents have been ready, which makes a
good preparation for the third-phase work (the validity evaluation for the
implementation of internal control). The Company organized a special training on
internal control construction on 23 Dec. 2011, during which basing on summing up the
previous work on internal control, the Company also explained the current internal
control matrix, and introduced the work method for the phase of validity evaluation,
gaining a good result.
Work plan in 2012: the third-phase of internal control construction (the validity
evaluation for the implementation of internal control) will be started at the late March,
which will be led by the Company’s internal control appraisal team. The team will
integrate the internal control matrix formed in the second-phase and the relevant
defects to carry out comparative examination, so as to promulgate and implement the
rectification scheme. The third-phase work is expected to be finished in early May.
From May to Jun. 2012, it’s to overall summarize the work of internal control
construction in various phases, and finish the summary report, as well as fulfill the
responsibility of information disclosure. The Company’s Self-appraisal Plan on
Internal Control will be implemented according to the Work Plan for Implementing
Internal Control Regulations.
Due to the Company hadn’t introduced the agency during the promulgation of the
Work Plan for Implementing Internal Control Regulations, the actual implementation
had some different with the work plan made by DTT for the Company in terms of time,
but with no significant change, then the Company carried out the internal control
construction as the original plan.
36
Section IX Report of Supervisory Committee
In 2011, 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 relevant 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 strengthen and improve the supervisory and disciplinary mechanism and internal
control system, create a new mode of internal supervision, and integrate the
supervisory resources, as well as carry out the supervisory joint session system. As a
result, expenses and asset risks were effectively controlled. The Supervisory
Committee carried forward transparent corporate operation and democratic
decision-making, supervised the standardization and effectiveness of the rules and
procedures for decision-making, as well as supervised daily major operation activities.
Meanwhile, it conducted various specific supervisions and examination, launched the
settlement of enterprise funds account and the surprise inspection on cash,
strengthened the attention and settlement on lawsuit cases, supervised various project
bidding activities timely, and 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 post appraisal and audit on performance appraisal, operation
management, capital management, financial incomes and construction project. It
enhanced supervision on information disclosure by faithfully executing 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 27 Apr. 2011, at which reviewed and approved the
2010 Annual Report and Its Summary, Profit Distribution preplan for Y2010 and 2010
Annual Report of Supervisory Committee, the Proposal on 2010 Annual Self-appraisal
Report on Internal Control, the Proposal on Explanation of the Supervisory Committee
on the Change in Accounting Policy and the Retroactive Adjustment, the Proposal on
the First Quarterly Report for 2011 and Its Summary. Five supervisors presented the
session, and the voting result of the session was as follows: 5 votes for, 0 against, and 0
abstention.
(II) The 2nd session was convened on 26 Aug. 2011, at which reviewed and approved
the Proposal on the Semi-annual Report for Y2011 and Its Summary. Five supervisors
presented the session, and the voting result of the session was as follows: 5 votes for, 0
against, and 0 abstention.
37
(III) The 3rd session was convened on 21 Oct. 2011, at which reviewed and approved
the Proposal on the Third Quarterly Report for Y2011 and Its Summary. Five
supervisors presented the session, and the voting result of the session was as follows: 5
votes for, 0 against, and 0 abstention.
Independent opinions and brief remarks on relevant matters by Supervisory Committee
(I) About the Company’s operation according to laws: In 2011, 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 senior executives
diligently, responsibly and compliantly performed their duties, with no behaviors in
violation of the laws, rules and Articles of Association or harmful to the interest of the
Company.
(II) 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.
(III) In the reporting period, the Company did not raise any funds.
(IV) In the reporting period, the related-party transactions of the Company were as
follows:
1. In 2011, the Company paid RMB 144,750.00 and 620,000.00 for the previous
expense for the project in Guangming New District such as environmental assessment
and design argument, etc. to Shenzhen Environment Engineering Science and Tech
Center Co., Ltd. and Shenzhen Institute of Building Research respectively.
2. In the guarantee for related parties for 2011, the Company paid RMB 2 million for
the bank loan guarantee expense to its controlling shareholder— Shenzhen Investment
Holding Co., Ltd..
Besides, Shenzhen Jianan Group Co., Ltd., a related party of the Company, won the bid
of the public tender project (i.e. the general contracting project of the construction in
the east of Guangming New District Project) in Shenzhen Construction Engineering
Trade Center, and the contract was formally signed on 20 Jan. 2012 with a contract
amount of RMB 553.33 million.
(V) During the reporting period, the Company’s related transaction was fair and
compliant with no harm to the interest of the Company.
(VI) Opinion about the Company’s self-appraisal on its internal control: In 2011, the
Company continued enhancing risk control and management mechanism. Various
internal control rules, work flows and approval rules were revised and improved,
which enabled the internal control system to cover basically all aspects and links of the
Company’s operation. 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.
38
Section X Significant Events
I. Significant lawsuits and arbitrations
For details of significant lawsuits and arbitrations where the Company was
involved in the reporting 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
reporting period.
III. For details of related parties and related transactions in the reporting period,
please refer to “Note VI” and “Note XIII. 2” to the Auditors’ Report.
IV. The Company did not sign any major contracts concerning entrustment,
contracting or leasing in the reporting 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 Credit
15 Aug. 2009
Real Estate guarantee
(Public Notice 30,000.00 31 Aug. 2009 14,000.00 Three years No No
Development with joint
No. 2009-20)
Co., Ltd. responsibility
Total guarantees lines for
Total guarantees for subsidiaries
subsidiaries examined and
0.00 occurred in the reporting period 0.00
approved in the reporting period
(B2)
(B1)
Total guarantee lines for
Balance of actual guarantees at
subsidiaries examined and 14,000.00 14,000.00
the period end (B4)
approved at the period end (B3)
Total guarantees of the Company (Total of the two above)
Total guarantees lines examined
Total guarantees occurred in the
and approved in the reporting 0.00 0.00
reporting period (A2+B2)
period (A1+B1)
Total guarantees lines examined Total balance of actual
and approved at the reporting 14,000.00 guarantees at the period end 14,000.00
period (A3+B3) (A4+B4)
Proportion of total actual guarantee amount (A4+B4) in net assets of
9.16%
the Company
39
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) 14,000.00
Explanation on possibility of taking several and joint liability At the end of reporting period, balance of guarantees for
involving immature guarantees property buyers has not settled totaling RMB 8.5 million.
VI. Commitments made by controlling shareholder and actual controller, as well
as execution thereof
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.
VII. Particulars about share rights incentive
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. The Company will continue to engage China Audit International Certified
Public Accountants Ltd. as its CPAs firm for 2012. And the Company will pay
40
RMB 580,000 of audit fee to China Audit International Certified Public
Accountants Ltd. in accordance the contract between them.
IX. During the reporting period, the Company and its Board of Directors as well
as the directors didn’t receive any criticism or reprimand.
X. Reception of surveys, interviews and visits by the Company in the reporting
period
Reception Reception Type of
Reception time Visitor Main discussion and materials provided
place way visitors
The Inquired about operating of the Company in
By Individual
21 Jan. 2011 Company’s Individual 2010 and the real estate market situation,
telephone investor
office with no materials provided by the Company
Inquired about operating of the Company in
The
By Individual 2010 and the disclosure date of annual
21 Feb. 2011 Company’s Individual
telephone investor report for Y2010, with no materials
office
provided by the Company
Inquired about operating of the Company in
The
By Individual 2010 and the disclosure date of annual
15 Mar. 2011 Company’s Individual
telephone investor report for Y2010, with no materials
office
provided by the Company
Inquired about operating of the Company in
The
By Individual 2010 and the disclosure date of annual
28 Mar. 2011 Company’s Individual
telephone investor report for Y2010, with no materials
office
provided by the Company
The Inquired about operating of the Company at
By Individual
15 Apr. 2011 Company’s Individual the first quarter of 2011, with no materials
telephone investor
office provided by the Company
The Inquired about influence of the control
By Individual
20 Apr. 2011 Company’s Individual policy on the Company’s main business,
telephone investor
office with no materials provided by the Company
The Inquired about land reserves of the
By Individual
18 May 2011 Company’s Individual Company, with no materials provided by
telephone investor
office the Company
The Inquired about operating of the Company at
By Individual
23 Jun. 2011 Company’s Individual the first half year of 2011, with no materials
telephone investor
office provided by the Company
Inquired about operating of the Company at
The the first half year of 2011 and the
By Individual
30 Jun. 2011 Company’s Individual subscribed disclosure date of semi-annual
telephone investor
office report for Y2011, with no materials
provided by the Company
Inquiring about the reason of the
The Company’s stock trading closed after
By Individual
6 Jul. 2011 Company’s Individual reaching the upper trading limit and its
telephone investor
office operating status, with no written materials
being provided by the Company
Inquiring about the Company’s land
The
By Individual reserves and the progress of relevant
9 Aug. 2011 Company’s Individual
telephone investor projects, with no written materials being
office
provided by the Company
Inquiring about the Company’s opinions on
The
By Individual macro economic situation and real estate
28 Sept. 2011 Company’s Individual
telephone investor market, with no written materials being
office
provided by the Company
Inquired about the disclosure date of the
The
By Individual Third Quarterly Report for Y2011 and the
18 Oct. 2011 Company’s Individual
telephone investor operating of the Company in 2011, with no
office
materials provided by the Company
The Inquired about the operating of the
By Individual
28 Dec. 2011 Company’s Individual Company in 2011, with no materials
telephone investor
office provided by the Company
41
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 Auditor’s 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 reporting period.
Board of Directors
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
29 Mar. 2012
42
SHENZHEN SPECIAL ECONOMIC ZONE REAL
ESTATE & PROPERTIES (GROUP) CO., LTD.
AUDITORS’ REPORT
for the year ended 31 December 2011
CONTENTS PAGE(S)
AUDITORS’ REPORT 1-2
FINANCIAL STATEMENTS (AUDITED)
CONSOLIDATED BALANCE SHEET 3-4
CONSOLIDATED INCOME STATEMENT 5
CONSOLIDATED CASH FLOW STATEMENT 6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 7-8
BALANCE SHEET 9-10
INCOME STATEMENT 11
CASH FLOW STATEMENT 12
STATEMENT OF CHANGES IN EQUITY 13-14
NOTES TO THE FINANCIAL STATEMENTS 15-109
APPENDIX
COPIES OF AUDIT INSTITUTION’S BUSINESS LICENSE AND
PRACTICE LICENSE
COPIES OF AUDIT INSTITUTION’S SECURITIES RELATED
BUSINESS LICENSE &FUTURES RELATED BUSINESS
LICENSE
* Confidential *
AUDITORS’ REPORT
China Audit International Shen Zi [2012]01020054
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, 2011, 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
It is the responsibility of the Company’s management to prepare and present the financial statements
fairly. And the responsibilities include: (1)Prepare the financial statements in conformity with “ the
China Accounting Standards for Business Enterprises”, and presented them faily; (2) Design, conduct
and maintain the internal control related to the financial statements to prevent the material
misstatement with the reason of fraud and error.
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 Public 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 due to 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 are prepared in confomity with “China Accounting Standards
for Business Enterprises” issued by the Ministry of Finance of the People’s Republic of China and, in
all material respects, present fairly the financial position of the Company as of December 31, 2011,
and the results of its operations and cash flows for the year then ended.
China Audit International Certified Public Certified Public Accountant
Accountants LTD.
Certified Public Accountant
Beijing, China 29 March, 2012
2
CONSOLIDATED BALANCE SHEET
As at 31 December 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES
(GROUP) CO., LTD Units: Rmb Yuan
ASSETS Note Ⅴ Dec 31, 2011 Dec 31, 2010
Current assets
Cash at bank and on hand 1 333,469,243.72 379,720,636.21
Financial assets held for trading -- 97,726.25
Accounts receivable 2 19,139,800.22 17,152,478.36
Advances to suppliers 3 44,871,783.45 26,890,551.77
Interest receivable 4 341,000.00 --
Other receivables 5 46,087,935.04 47,534,939.51
Inventories 6 2,132,760,206.58 2,224,938,706.49
Total current assets 2,576,669,969.01 2,696,335,038.59
Non-current assets
Long-term equity investments 7 63,346,188.26 63,426,810.37
Investment Property 8 508,001,693.51 530,109,494.13
Fixed assets 9 60,918,611.65 64,526,512.04
Construction in progress -- 520,000.00
Intangible assets 10 6,196,086.71 6,213,266.67
Long-term deferred and
prepaid expenses 11 591,264.09 202,456.50
Deferred tax assets 12 20,403,232.83 17,756,599.72
Total non-current assets 659,457,077.05 682,755,139.43
TOTAL ASSETS 3,236,127,046.06 3,379,090,178.02
（The Notes form part of these financial statemtents）
3
CONSOLIDATED BALANCE SHEET（Continued）
As at 31 December 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES
(GROUP) CO., LTD Units: Rmb Yuan
LIABILITIES AND Note Ⅴ Dec 31, 2011 Dec 31, 2010
SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings 15 20,000,000.00 14,800,000.00
Accounts payable 16 109,202,474.18 166,672,225.43
Advance from customers 17 258,976,095.57 395,332,270.89
Employee benefits payable 18 36,389,941.35 39,338,801.36
Taxes payable 19 2,969,643.65 -13,333,458.44
Interest payable 20 16,535,277.94 16,535,277.94
Other payables 21 384,721,231.13 364,052,949.01
Non-current liabilities due
within one year 22 697,095,738.47 29,423,411.10
Total current liability 1,525,890,402.29 1,012,821,477.29
Non-current liabilities
Long-term borrowings 23 299,621,374.64 1,056,703,120.34
Long-term payable 24 10,308,648.22 9,779,108.83
Total non-current liabilities 309,930,022.86 1,066,482,229.17
Total liabilities 1,835,820,425.15 2,079,303,706.46
Shareholders' equity
Share capital 25 1,011,660,000.00 1,011,660,000.00
Capital reserve 26 978,244,858.10 978,244,858.10
Less: Shares in stock -- --
Surplus reserve 27 4,974,391.15 4,974,391.15
Retained Earnings 28 -475,968,948.89 -577,169,009.54
Foreign currency translation
defferences 9,686,235.77 10,161,630.32
Total equity attributable to
equity holders of the
Company 1,528,596,536.13 1,427,871,870.03
Minority interests 29 -128,289,915.22 -128,085,398.47
Total shareholders' equity 1,400,306,620.91 1,299,786,471.56
TOTAL LIABILITIES AND
3,236,127,046.06 3,379,090,178.02
SHAREHOLDERS' EQUITY
（The Notes form part of these financial statemtents）
4
CONSOLIDATED INCOME STATEMENT
For the year 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES
(GROUP) CO., LTD Units: Rmb Yuan
Items Note Ⅴ 2011 2010
1.Operating Income 30 1,026,396,104.51 1,021,055,699.61
Less: Cost of sales 30 686,227,987.41 672,735,584.16
Business Taxes and Surcharges 31 116,349,200.67 121,153,435.36
Selling and distribution expenses 32 10,827,928.83 13,093,988.97
General and administrative expenses 33 65,127,791.16 69,993,192.20
Finance expenses 34 16,856,041.31 58,259,953.04
Asset impairment losses 35 82,236.80 --
Add: Gain from changes of fair value 36 19,993.75 -15,323.50
Investment income 37 -14,426.70 27,202,050.42
Including: Investment income from
affiliates 37 -5,622.11 26,879,566.38
2. Operating profit 130,930,485.38 113,006,272.80
Add: Non-operating income 38 2,556,683.36 212,992.05
Less:Non-operating expenses 39 208,353.64 1,302,558.04
Including: Loss from disposal of
non-current assets 39 63,859.29 329,447.92
3. Profit before income tax 133,278,815.10 111,916,706.81
Less: Income tax expenses 40 32,079,530.68 27,145,348.30
4.Net profit 101,199,284.42 84,771,358.51
Attributable to equity holders of the Company 101,200,060.65 84,760,162.75
Minority profit or loss -776.23 11,195.76
5.Earnings per share
(1) Earnings per share 41 0.1000 0.0838
(2) Diluted earnings per share 41 0.1000 0.0838
6.Other comprehensive income 42 -679,135.07 -613,529.27
7.Total comprehensive income 100,520,149.35 84,157,829.24
Attributable to equity holders of the Company 100,724,666.10 84,330,692.26
Minority comprehensive income -204,516.75 -172,863.02
（The Notes form part of these financial statemtents）
5
CONSOLIDATED CASH FLOW STATEMENT
For the year 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES
(GROUP) CO., LTD Units: Rmb Yuan
Items Note Ⅴ 2011 2010
1.Cash flows from operating activities
Cash received from sales of goods or rendering of 872,349,021.78 1,253,989,347.19
services
Refund of taxes and levies -- --
Cash received relating to other operating activities 43.(1) 54,939,156.67 57,745,567.04
Sub-total of cash inflows 927,288,178.45 1,311,734,914.23
Cash paid for goods and services 503,631,872.84 1,185,469,413.32
Cash paid to and on behalf of employees 114,301,007.98 94,959,120.91
Payments of taxes and levies 119,601,221.83 116,943,782.96
Cash paid relating to other operating activities 43.(2) 74,599,285.39 93,414,158.21
Sub-total of cash outflows 812,133,388.04 1,490,786,475.40
Net cash flows from operating activities 115,154,790.41 -179,051,561.17
2.Cash flows from investing activities
Cash received from investment retrieving 238,502.40 29,445,000.00
Cash received as investment gains 75,000.00 12,337,041.75
Net cash received from disposal of fixed assets,
100,780.00 121,790.00
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries or other
operational units -- 33,447,253.77
Cash received relating to other investing activities -- --
Sub-total of cash inflows 414,282.40 75,351,085.52
Cash paid to acquire fixed assets, intangible assets and
7,781,085.87 5,610,026.56
other long-term assets
Cash paid to acquire investments 193,200.00 191,640.00
Net cash received from subsidiaries and other
operational -- --
Cash paid relating to other investing activities -- --
Sub-total of cash outflows 7,974,285.87 5,801,666.56
Net cash flows from investing activities -7,560,003.47 69,549,418.96
3.Cash flows from financing activities
Cash received as investment -- --
Cash received from borrowings 43.(3) 20,000,000.00 723,800,000.00
Cash received from issuance of bonds -- --
Cash received relating to other financing activities -- --
Sub-total of cash inflows 20,000,000.00 723,800,000.00
Cash repayments of borrowings 43.(3) 104,671,112.24 536,378,943.85
Cash payments for interest expenses and distribution of
dividends or profits 65,338,379.25 80,004,795.06
Including： Cash payments for dividends or profit to
minority shareholders of subsidiaries -- --
Cash payments relating to other financing activities 43.(4) 2,000,000.00 800,000.00
Sub-total of cash outflows 172,009,491.49 617,183,738.91
Net cash flows from financing activities -152,009,491.49 106,616,261.09
4.Effect of foreign exchange rate changes on cash and
cash equivalents -1,876,921.97 -691,646.87
5.Net increase in cash and cash equivalents -46,291,626.52 -3,577,527.99
Add: Cash and cash equivalents at the beginning of year 43.(5) 371,258,812.38 374,836,340.37
6.Cash and cash equivalent at the end of year 43.(5) 324,967,185.86 371,258,812.38
（The Notes form part of these financial statemtents）
6
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
For the year 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP) CO., LTD Units: Rmb Yuan
Attributable to equity holders of the Company
Foreign
Minority
Items Capital Less:shares Special Surplus Retained currency Total
Share capital interests
reserve in stock reserve reserves earnings exchange
differernces
1.Balance at the end of last year: 1,011,660,000.00 978,244,858.10 -- -- 4,974,391.15 -577,169,009.54 10,161,630.32 -128,085,398.47 1,299,786,471.56
Add: Changes of accouting policy -- -- -- -- -- -- -- -- --
Error correction of the previous period -- -- -- -- -- -- -- -- --
Others -- -- -- -- -- -- -- -- --
2.Balance at the beginning of the year 1,011,660,000.00 978,244,858.10 -- -- 4,974,391.15 -577,169,009.54 10,161,630.32 -128,085,398.47 1,299,786,471.56
3. Change in equity for the year -- -- -- -- -- 101,200,060.65 -475,394.55 -204,516.75 100,520,149.35
(1) Net profit -- -- -- -- -- 101,200,060.65 -- -776.23 101,199,284.42
(2) Others -- -- -- -- -- -- -475,394.55 -203,740.52 -679,135.07
Sub-total (1)& (2) -- -- -- -- -- 101,200,060.65 -475,394.55 -204,516.75 100,520,149.35
(3)Shareholders’ contributions and decrease
of capital -- -- -- -- -- -- -- -- --
a. Contributions by shareholders -- -- -- -- -- -- -- -- --
b. Equtiy settled share-based payment -- -- -- -- -- -- -- -- --
c. Others -- -- -- -- -- -- -- -- --
(4) Distribution of profits -- -- -- -- -- -- -- -- --
a. Withdraws 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 -- -- -- -- -- -- -- -- --
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 the year report 1,011,660,000.00 978,244,858.10 -- -- 4,974,391.15 -475,968,948.89 9,686,235.77 -128,289,915.22 1,400,306,620.91
7
period
（The Notes form part of these financial statemtents）
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
For the year 2010
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP) CO., LTD Units: Rmb Yuan
Attributable to equity holders of the Company Minority Total
Items Capital Less:shares Share Capital Less:shares in interests Less:shares in
Share capital Share capital
reserve in stock capital reserve stock Capital reserve stock
1.Balance at the end of last year: 1,011,660,000.00 978,244,858.10 -- -- 4,974,391.15 -781,357,778.86 15,130,144.02 -13,022,972.09 1,215,628,642.32
Add: Changes of accouting policy -- -- -- -- -- 119,428,606.57 -4,539,043.21 -114,889,563.36 --
Error correction of the previous period -- -- -- -- -- -- -- -- --
Other -- -- -- -- -- -- -- -- --
2.Balance at the beginning of the year 1,011,660,000.00 978,244,858.10 -- -- 4,974,391.15 -661,929,172.29 10,591,100.81 -127,912,535.45 1,215,628,642.32
3. Change in equity for the year -- -- -- -- -- 84,760,162.75 -429,470.49 -172,863.02 84,157,829.24
(1) Net profit -- -- -- -- -- 84,760,162.75 -- 11,195.76 84,771,358.51
(2) Others -- -- -- -- -- -- -429,470.49 -184,058.78 -613,529.27
Sub-total (1)& (2) -- -- -- -- -- 84,760,162.75 -429,470.49 -172,863.02 84,157,829.24
(3)Shareholders’ contributions and decrease
of capital -- -- -- -- -- -- -- -- --
a. Contributions by shareholders -- -- -- -- -- -- -- -- --
b. Equtiy settled share-based payment -- -- -- -- -- -- -- -- --
c. Others -- -- -- -- -- -- -- -- --
(4) Distribution of profits -- -- -- -- -- -- -- -- --
a. Withdraws 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 -- -- -- -- -- -- -- -- --
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 the year report 1,011,660,000.00 978,244,858.10 -- -- 4,974,391.15 -577,169,009.54 10,161,630.32 -128,085,398.47 1,299,786,471.56
8
period
（The Notes form part of these financial statemtents）
9
BALANCE SHEET
As at 31 December 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD Units: Rmb Yuan
ASSETS NoteXV Dec 31, 2011 Dec 31, 2010
Current assets
Cash at bank and on hand 153,281,158.51 191,108,590.15
Financial assets held for trading -- 97,726.25
Accounts receivable 1 4,484,384.86 5,694,673.47
Advances to suppliers 1,664,400.00 1,199,429.00
Interest receivable 341,000.00 --
Other receivables 2 305,330,386.21 277,483,418.47
Inventories 3 1,522,326,774.87 1,413,212,628.44
Total current assets 1,987,428,104.45 1,888,796,465.78
Non-current assets
Long-term equity investments 4 286,516,902.86 286,597,524.97
Investment Property 444,953,535.87 464,169,328.80
Fixed assets 36,367,166.98 38,189,370.22
Intangible assets 426,066.71 212,066.67
Long-term deferred and prepaid expenses 245,986.35 --
Deferred tax assets 6,814.20 923,314.27
Total non-current assets 768,516,472.97 790,091,604.93
TOTAL ASSETS 2,755,944,577.42 2,678,888,070.71
(The Notes form part of these financial statemtents)
10
BALANCE SHEET（Continued）
As at 31 December 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD Units: Rmb Yuan
LIABILITIES AND OWNERS'
NoteXV Dec 31, 2011 Dec 31, 2010
EQUITY
Current liabilities
Account payable 18,844,767.78 20,387,450.12
Advance from customers 12,627,059.60 15,424,301.60
Employee benefits payable 10,393,956.41 14,865,546.49
Taxes payable 1,636,872.67 1,444,204.58
Interest payable 16,535,277.94 16,535,277.94
Other payables 625,106,207.82 525,522,847.87
Non-current liability due within one
year 557,095,738.47 29,423,411.10
Other current liability -- --
Total of current liability 1,242,239,880.69 623,603,039.70
Non-current liabilities
Long-term borrowings 299,621,374.64 856,703,120.34
Total non-current liabilities 299,621,374.64 856,703,120.34
Total liabilities 1,541,861,255.33 1,480,306,160.04
Owners' equity
Share capital 1,011,660,000.00 1,011,660,000.00
Capital reserve 978,244,858.10 978,244,858.10
Retained Earnings -775,821,536.01 -791,322,947.43
Total owners' equity 1,214,083,322.09 1,198,581,910.67
TOTAL LIABILITIES AND
OWNER'S EQUITY 2,755,944,577.42 2,678,888,070.71
(The Notes form part of these financial statemtents)
11
INCOME STATEMENT
For the year 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD Units: Rmb Yuan
Items NoteXV 2011 2010
1.Operating Income 5 100,181,047.05 217,512,391.39
Less: Cost of sales 5 42,155,178.18 95,076,630.82
Business Taxes and Surcharges 15,437,336.62 42,255,183.95
Selling and distribution expenses 685,046.67 657,269.20
General and administrative expenses 29,145,728.87 34,304,983.99
Finance expenses -2,685,410.91 62,799,647.88
Asset impairment losses -- --
Add: Gain from changes of fair value 19,993.75 -15,323.50
Investment income 6 -39,639.48 14,898,087.51
Including: Investment income from
6 -5,622.11 14,575,603.47
affiliates
2. Operating profit 15,423,521.89 -2,698,560.44
Add: Non-operating income 1,043,014.10 90,862.40
Less:Non-operating expenses 48,624.50 57,036.76
Including: Loss from disposal of
17,714.50 57,036.76
non-current assets
3. Profit before income tax 16,417,911.49 -2,664,734.80
Less: Income tax expenses 916,500.07 -827,858.81
4.Net profit 15,501,411.42 -1,836,875.99
5.Other comprehensive income -- --
6.Total comprehensive income 15,501,411.42 -1,836,875.99
(The Notes form part of these financial statemtents)
12
CASH FLOW STATEMENT
For the year 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD Units: Rmb Yuan
Items NoteXV 2011 2010
1.Cash flows from operating activities
Cash received from sales of goods or rendering of
86,094,093.66 222,655,642.64
services
Refund of taxes and levies -- --
Cash received relating to other operating activities 134,590,648.46 378,782,725.79
Sub-total of cash inflows 220,684,742.12 601,438,368.43
Cash paid for goods and services 72,931,553.41 607,610,394.75
Cash paid to and on behalf of employees 29,058,869.03 31,419,845.72
Payments of taxes and levies 22,781,478.43 36,848,151.78
Cash paid relating to other operating activities 30,130,459.10 64,486,945.39
Sub-total of cash outflows 154,902,359.97 740,365,337.64
Net cash flows from operating activities 65,782,382.15 -138,926,969.21
2.Cash flows from investing activities
Cash received from investment retrieving 238,502.40 29,445,000.00
Cash received as investment gains 75,000.00 922,484.04
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 11,595,616.51 --
Sub-total of cash inflows 11,909,118.91 30,367,484.04
Cash paid to acquire fixed assets, intangible assets
1,640,777.06 2,135,353.26
and other long-term assets
Cash paid to acquire investments 29,193,200.00 191,640.00
Net cash received from subsidiaries and other
-- --
operational
Cash paid relating to other investing activities -- --
Sub-total of cash outflows 30,833,977.06 2,326,993.26
Net cash flows from investing activities -18,924,858.15 28,040,490.78
3.Cash flows from financing activities
Cash received as investment -- --
Cash received from borrowings -- 709,000,000.00
Cash received from issuance of bonds -- --
Cash received relating to other financing activities -- --
Sub-total of cash inflows -- 709,000,000.00
Cash repayments of borrowings 29,871,112.24 413,178,943.85
Cash payments for interest expenses and distribution
52,848,839.30 63,891,254.68
of dividends or profits
Including： Cash payments for dividends or profit to
-- --
minority shareholders of subsidiaries
Cash payments relating to other financing activities 2,000,000.00 800,000.00
Sub-total of cash outflows 84,719,951.54 477,870,198.53
Net cash flows from financing activities -84,719,951.54 231,129,801.47
4.Effect of foreign exchange rate changes on cash
-5,238.13 161,516.05
and cash equivalents
5.Net increase in cash and cash equivalents -37,867,665.67 120,404,839.09
Add: Cash and cash equivalents at the beginning of
182,646,766.32 62,241,927.23
year
6.Cash and cash equivalent at the end of year 144,779,100.65 182,646,766.32
(The Notes form part of these financial statemtents)
13
STATEMENT OF CHANGES IN OWNER'S EQUITY
For the year 2011
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD Units: Rmb Yuan
Less: Spec
share ial Surplus Retained
Items Share capital Capital reserve Total
s in rese reserves earnings
stock rve
1.Balance at the end
1,011,660,000.00 978,244,858.10 -- -- -- -791,322,947.43 1,198,581,910.67
of last year：：
Add: Changes of
-- -- -- -- -- -- --
accouting policy
Error correction
-- -- -- -- -- -- --
of the previous period
Others -- -- -- -- -- -- --
2.Balance at the
beginning of 1,011,660,000.00 978,244,858.10 -- -- -- -791,322,947.43 1,198,581,910.67
this year
3. Change in equity
-- -- -- -- -- 15,501,411.42 15,501,411.42
for the year
(1) Net profit -- -- -- -- -- 15,501,411.42 15,501,411.42
(2) Others -- -- -- -- -- -- --
Sub-total (1)& (2) -- -- -- -- -- 15,501,411.42 15,501,411.42
(3)Shareholders’
contributions and -- -- -- -- -- -- --
decrease of capital
a. Contributions by
-- -- -- -- -- -- --
shareholders
b. Equtiy settled
-- -- -- -- -- -- --
share-based payment
c. Others -- -- -- -- -- -- --
(4) Distribution of
-- -- -- -- -- -- --
profits
a. Withdraws 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
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 the year report 1,011,660,000.00 978,244,858.10 -- -- -- -775,821,536.01 1,214,083,322.09
period
(The Notes form part of these financial statemtents)
14
STATEMENT OF CHANGES IN OWNER'S EQUITY
For the year 2010
Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD Units: Rmb Yuan
Less:sh
Capital Special Surplus Retained
Items Share capital ares in Total
reserve reserve reserves earnings
stock
3.Balance at the end
1,011,660,000.00 -- -- 978,244,858.10 -- -789,486,071.44 1,200,418,786.66
of last year:
Add: Changes of
-- -- -- -- -- -- --
accouting policy
Error correction
-- -- -- -- -- -- --
of the previous period
Others -- -- -- -- -- -- --
4.Balance at the
beginning of the 1,011,660,000.00 -- -- 978,244,858.10 -- -789,486,071.44 1,200,418,786.66
year
3. Change in equity
-- -- -- -- -- -1,836,875.99 -1,836,875.99
for the year
(1) Net profit -- -- -- -- -- -1,836,875.99 -1,836,875.99
(2) 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. Equtiy settled
-- -- -- -- -- -- --
share-based payment
c. Others -- -- -- -- -- -- --
(4) Distribution of
-- -- -- -- -- -- --
profits
a. Withdraws 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
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 the year report 1,011,660,000.00 -- -- 978,244,858.10 -- -791,322,947.43 1,198,581,910.67
period
(The Notes form part of these financial statemtents)
15
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 service,
construction and installation service, renovation service.
16
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
3. Approved financial report
The financial statements were authorized for issuance by the board of directors on 29th March, 2012.
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
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.
17
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 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
18
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 involving 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
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
19
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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
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.
20
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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.
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
21
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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.
(6) Impairment of financial assets
The end of trading on financial assets other than financial assets, there is objective evidence that the
22
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 profitbetween the book value
and the estimated cash flow in the future.
23
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(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.
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
24
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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
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
25
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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.
(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
26
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 by
other invested parties, the investment is common investment.
②The determination of significant influence investee entity
27
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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.
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.
28
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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.
(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.
29
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(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.
Subsequent expenditure of operating lease should be capitalized, as long-term prepaid expenses, which
amortize in a reasonable period.
30
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(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.
(2)Amortization of intangible assets
① Intangible assets with limited service life
31
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 averagely.
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
amount incurred, and shall be recorded into the current profits and losses.
32
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(1) Capitalization
The borrowing costs shall not be capitalized unless they simultaneously meet the following 3 requirements:
①expenditure for the asset is being incurred;
②borrowing cost is 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
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
33
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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:
34
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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
C.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
35
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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.
The 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 within the
useful lives of the relevant assets, and included in the current profits and losses. But the government grants
36
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 whole
rental period（ including the free-rental period）. The free-rental period have to recognize the rental expense.
37
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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-lease back 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.
(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
38
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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
financial income increases, it won’t be recognized. And the unfulfilment financial income 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.
39
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 a 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.
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.
40
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
27. Changes in main accounting policies and accounting estimation
(1)Changes in main accounting policies
There were no changes in main accounting policies that affected the Company during the period.
(2) Changes in main accounting eatimation
There were no changes in main accounting eatimation that affected the Company during the period.
28. Previous accounting errors correction
There was no previous accounting errors correction that affected the Company during the period.
III. Taxation
The main tax type and tax rate:
Type Taxable basis Tax rate
Business tax Proceeds from sales of properties, leasing income, property management income 5%
Business tax Construction, installation income 3%
Value added tax (“VAT”) Goods sales income 17%
Construction tax Business tax and value added tax payable 7%*
Education surcharge Business tax and value added tax payable 3%
Local Education
surcharge Business tax and value added tax payable 2%**
Land appreciation Tax Sales revenue of properties ***
Income tax Income tax payable ****
* 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.
**According to the provision (CaiZong (2010) No. 98 from the Treasury) about uniform of local educational
expenses to add, the local education surcharge is charged at 2% of the actual payment of VAT, business tax and
41
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
consumption tax. On July 4, 2011, Shenzhen City People’s government issued Interim Provision for
Administration of Shenzhen City Local education surcharge (Shen FuBan [2011] No.60). According to the
provison, these companies and individuals, including foreign-invested enterprises, foreign enterprises and
foreign individuals, should pay local education surcharge at 2% of the actual payment of VAT, business tax and
consumption tax.
***On July 23, 2010, Shenzhen Local Tax Bureau issued a notice about the adjustment of pre-charge rate of
the city land value increment tax (Shen Local Tax Report [2010] 6). According to the announcement, from
August 1, 2010, the pre-charge rate of land value-added tax has beginned to be adjusted. Tthe pre-charge rate
of standard residential is 1% of sales, while villas is 4% and other real estate is 3%. Ultra-progressive tax rate
was used when clearing the land valued added tax . 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.
* *** Enterprise income tax rate is as follows：
Items Income tax rate
Domestic Enterprises
- enterprises in Shenzhen 24%
- enterprises outside Shenzhen 25%
Enterprises in HK 17.50%
According to the Notice regarding to implementation of Transitional Preferential Policy of the China’s
Corporate Tncome Tax (“CIT”) (Guo Fa [2007] No.39), new income tax rate was in 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 2011 are as follows:
42
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(1) Subsidiaries acquired through new establishment or investment are as follows:
Net Net balance December 31,
Investment of other 2011 Whether or
Registered
in subsidiary investment not included
capital (in
Name of Registered in items to the in
Types ten Nature of business and principal activities Equity Voting
the Subsidiaries place substance subsidiaries consolidated
thousand holding rights
(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
43
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Net Net balance December 31,
Investment of other 2011 Whether or
Registered
in subsidiary investment not included
capital (in
Name of Registered in items to the in
Types ten Nature of business and principal activities Equity Voting
the Subsidiaries place substance subsidiaries consolidated
thousand holding rights
(in ten （in ten financial
Yuan) (%) (%)
thousand thousand statement
Yuan） Yuan）
subsidiary
Shenzhen Lain Hua Industry and Wholly-owned
shenzhen 1,000 Installation of mechanical and electrical equipment 1,000 -- 100 100 YES
Trading Co. Ltd. subsidiary
Wholly-owned HongKo
Fresh Peak Holding Ltd. HKD100 Investment and management HKD100 3,202 100 100 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 USD1500 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 56,498 100 100 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 USD400 Property development USD400 -- 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
Wholly-owned
Shenzhen CyberPort Co., Ltd *③ shenzhen 2,000 Information Technology Advisory 1,400 -- 70 70 No
subsidiary
44
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Net Net balance December 31,
Investment of other 2011 Whether or
Registered
in subsidiary investment not included
capital (in
Name of Registered in items to the in
Types ten Nature of business and principal activities Equity Voting
the Subsidiaries place substance subsidiaries consolidated
thousand holding rights
(in ten （in ten financial
Yuan) (%) (%)
thousand thousand statement
Yuan） Yuan）
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 Investment 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 USD20 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
Feng Cement Manufacturing Co., GuangD USD800 Manufacturing and trading in cement products 12,126 -- 90 90 No
company
Ltd *12 ong
Province
45
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 18 September 2009 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.
46
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 of 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 of
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 of 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
of 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 of failing to take part in annual inspection.
47
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 *②, *③, *④，*12, the above subsidiaries which are not includedin the company’s consolidated
financial statement had ceased operations for many years. And the entities of the corporations didn’t exist. And
the Company has no control over its subsidiaries’ businesses. According to the principle of “Enterprise
Accounting Standards No.33- the Consolidation Financial Statement”, the corporation will not be included in
the Company’s consolidated financial statement. The book value of the investment account of the Company is
zero.
(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 December 31, 2011 Whether
Registered investment Net balance of or not
Nature of
capital in subsidiary other investment Equity include in
Registered Registered business and
Types (in ten in substance items to the holding Voting the
place place principal
thousand (in ten subsidiaries（in ten Percentag power financial
activities
Yuan) thousand thousand Yuan） e (%) statement
Yuan）
Shan Tou
Wholly-
Special Economic Property
owned 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.
48
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
2 Minority interests of subsidiaries
Name Up to December 31, 2011
The amount of losses attributed to the minority
shareholders of a subsidiary exceeds the minority
Minority interests
shareholders’ portion of the equity of the
subsidiary
Fresh peak investment limited -104,543,516.57 -8,210.19
Barenie Co. Ltd. -2,033,931.94 -4,349.62
Great Wall Estate Co., Inc -21,712,466.71 11,783.58
Total -128,289,915.22 -776.23
3 Changes in the scope of combination in 2011
Skill Elite Ltd., the Wholly-owned subsidiary of the Company, was liquidated on May 27, 2011 and was not
included in the Company’s consolidated financial statement.
4 The body not included in the consolidation range this period
Name Net assets on disposal day Net profit from beginning to the disposal day
Skill Elite Ltd. 1,548,646.34 -96,504.65
V. Notes to the consolidated and the Company’s financial statements
1.Cash at bank and on hand
Dec 31, 2011 Dec 31, 2010
Original currency Exchange rate RMB Original currency Exchange rate RMB
Cash on hand
RMB 254,443.84 254,443.84 393,927.17 393,927.17
HKD 715.39 0.8122 581.06 10,255.39 0.8514 8,731.85
USD 3,333.32 6.3167 21,055.58 2,000.00 6.6252 13,250.40
276,080.48 415,909.42
Deposit with banks
RMB 284,705,859.96 284,705,859.96 324,800,743.62 324,800,743.62
HKD 48,257,549.07 0.8122 39,196,229.08 49,511,067.69 0.8514 42,155,703.47
USD 89,448.48 6.3167 565,019.22 85,077.73 6.6252 563,656.97
324,467,108.26 367,520,104.06
49
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Dec 31, 2011 Dec 31, 2010
Original currency Exchange rate RMB Original currency Exchange rate RMB
Other monetary funds
RMB 8,592,057.86 8,592,057.86 11,644,185.53 11,644,185.53
HKD 164,974.35 0.8122 133,997.12 164,940.81 0.8514 140,437.20
8,726,054.98 11,784,622.73
333,469,243.72 379,720,636.21
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. Please refer to
NoteV.14.
2. Accounts receivable
（1）The symbol of credit risk identified by customers categories
Dec 31, 2011 Dec 31, 2010
Book balance Proportion % Provision of bad debts Book balance proportion % Provision of bad debts
Category 1 -- -- -- -- -- --
Category 2 37,614,079.33 100.00 18,474,279.11 35,626,757.47 100.00 18,474,279.11
Total 37,614,079.33 100.00 18,474,279.11 35,626,757.47 100.00 18,474,279.11
Category 1: refers to accounts receivable with significant individual amount and separate impairment test.
Category 2: refers to accounts receivable which is unsignificant individually 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.
50
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 11,211,929.58 6,301,854.02 56.21 each receivales with long aging and
Engineering construction little retrievability.
12,269,954.17 597,869.09 4.87
funds and others
Total 37,614,079.33 18,474,279.11 49.12
(3) The aging of accounts receivable by categories:
Dec 31, 2011 Dec 31, 2010
Aging Provision of bad Provision of bad
Amount Proportion % Amount Proportion %
debts debts
Within 1 year 5,048,707.10 13.42 -- 3,734,648.20 10.48 --
1 and 2 year 2,387,215.72 6.35 -- 2,361,120.75 6.63 --
2 and 3 year 1,968,143.50 5.23 -- 10,632.02 0.03 --
3and 5 year 38,068.41 0.10 -- 356,744.49 1.00 --
Above 5 year 28,171,944.60 74.90 18,474,279.11 29,163,612.01 81.86 18,474,279.11
Total 37,614,079.33 100.00 18,474,279.11 35,626,757.47 100.00 18,474,279.11
(4) The informations of accounts receivables of the Company's top five debtors are as follows:
Name Relationship Amount Proportion % Aging Notes
Engineering construction
Corporate unit No.1 Un-related party 3,976,910.75 10.57 Between 1 and 2 year funds
Corporate unit No.2 Un-related party 1,934,620.68 5.14 Above 5 year *
Corporate unit No.2 Un-related party 1,852,464.00 4.92 Within 1 year *
Engineering construction
Individual No.1 Un-related party 1,333,142.04 3.54 Above 5 year funds
Individual No.2 Un-related party 1,200,000.00 3.19 Above 5 year *
Total 10,297,137.47 27.36
*The Company would call back the money when the owners of the properties finish the property right
certificates.
（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 NoteVI.3. (4) or details of the accounts receivables which are due to related parities.
（7）There were no any accont reciviables which had been accured full or large proporation provision
transferred back in this accounting year.
51
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（8）There were no any acconts receivables which had been terminated recognized.
（9）There were no any accounting receivable which had been securitization.
3. Advance to suppliers
（1）The aging of advance to suppilers by categories:
Dec 31, 2011 Dec 31, 2010
Aging
Amount Proportion % Amount Proportion %
Within 1 year 36,689,923.35 81.766 19,444,569.63 72.310
1 to 2 years 971,011.25 2.164 530.16 0.002
2 to 3 years 550.00 0.001 -- --
Above 3 years 7,210,298.85 16.069 7,445,451.98 27.688
Total 44,871,783.45 100.00 26,890,551.77 100.00
The balance of advance to suppliers increased by Rmb 17,981 thousand and has an increase of 66.87%. The
increase is due to engineering materials, fitment and EAS software.
（2）The informations of accounts receivables of the Company's top five debtors are as follows:
Name Relationship Amount Proportion % Aging Notes
Un-related
Corporate unit Within 1 year The un-settled prepayment of fitment
No.1 party 3,472,548.69 7.74
Un-related The un-settled prepayment of import
Corporate unit Above 3 years
No.2 party 1,570,000.00 3.50 and export business
Corporate unit Un-related The un-settled prepayment of import
Above 3 years
No.3 party 1,263,486.10 2.82 and export business
Corporate unit Un-related 276,000.00 0.62 Within 1 year The un-settled prepayment of software
No.4 party system
662,400.00 1.48 Between 1 and 2 year
Corporate unit Un-related The un-settled prepayment of import
Above 3 years
No.5 party 815,168.55 1.82 and export business
Total 8,059,603.34 17.98
（3）No amount due from shareholders who hold 5% or more of the voting rights of the Company are included
in the above balance of advance suppilers.
（4）No amount due from related parties is included in the above balance of advance suppilers.
52
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
4.Interest receivable
Item Dec 31, 2010 Additions Redutions Dec 31, 2011
Bank of Shanhai Shenzhen Branch (Longgang
Sub-branch)* -- 341,000.00 -- 341,000.00
Total -- 341,000.00 -- 341,000.00
* The interest comed from the fixed deposit of 90 million in Bank of Shanhai Shenzhen Branch (Longgang
Sub-branch), the deposit period is from 17 Nov, 2011 to 17 Feb, 2012 and the interest rate is 3.10%.
5.Other receivables
（1）The symbol of credit risk identified by customers categories
Dec 31, 2011 Dec 31, 2010
Book Proportion Provision of Book Proportion Provision of
balance % bad debts balance % bad debts
Category 1 162,500,901.55 72.40 148,948,710.29 154,398,267.51 68.28 149,265,573.52
Category 2 61,958,418.82 27.60 29,422,675.04 71,742,683.76 31.72 29,340,438.24
Total 224,459,320.37 100.00 178,371,385.33 226,140,951.27 100.00 178,606,011.76
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 included in the
consolidated statement.
(2) Refers to other receivable which is unsignificant individually 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 included in according to the recoverability of
the consolidated statement 1,324,136.04 1,116,316.04 84.31 each receivales with long aging and
Others 60,634,282.78 28,306,359.00 46.68 little retrievability
Total 61,958,418.82 29,422,675.04 47.49
53
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（3）The aging of accounts receivable by categories:
Dec 31, 2011 Dec 31, 2010
Aging Proportion Provision of Proportion Provision of
Amount Amount
% bad debts % bad debts
Within 1 year 5,742,193.32 2.56 -- 7,128,913.14 3.15 --
1 and 2 year 4,164,398.60 1.86 -- 6,188,309.32 2.74 --
2 and 3 year 3,276,724.27 1.46 -- 1,690,204.51 0.75 --
3and 5 year 1,855,785.35 0.83 -- 2,550,351.80 1.13 --
Above 5 year 209,420,218.83 93.29 178,371,385.33 208,583,172.50 92.23 178,606,011.76
Total 224,459,320.37 100.00 178,371,385.33 226,140,951.27 100.00 178,606,011.76
（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 39.67 Above 5 years
Paklid Limited * Subsidiary 18,946,689.75 8.44 Above 5 years
Bekaton property Limited * Subsidiary 12,559,290.58 5.60 Above 5 years
Guangdong province Huizhou Luofu Hill
Above 5 years
Mineral Water Co.,Ltd Joint venture 10,465,168.81 4.66
Luofu Hill Travelling Corporation Un- related party 9,600,000.00 4.28 Above 5 years
Total 140,606,897.21 62.65
* 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. (4) 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 provision
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.
54
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 classified by category
Dec 31, 2011 Dec 31, 2010
Amount Provision Amount Provision
Real estate developed products 330,937,275.39 -- 583,563,384.20 771,196.00
Real estate developing products 1,316,044,794.01 47,584,499.31 430,337,926.63 47,584,499.31
Real estate which are going to be developed 488,129,480.59 -- 1,215,632,063.00 --
Raw materials 456,564.13 -- 858,631.86 --
Finished products 592,570.73 278,891.91 584,324.05 278,891.91
Low-value consumable products 29,985.02 -- 44,640.76 --
Construction in progress 44,432,927.93 -- 42,552,323.21 --
Total 2,180,623,597.80 47,863,391.22 2,273,573,293.71 48,634,587.22
（2）Provision
Redutions
Dec 31, 2010 Additions Dec 31, 2011
Transferred back Written-off
Finished products 278,891.91 -- -- -- 278,891.91
Shengfang Shanglin Garden 47,584,499.31 -- -- -- 47,584,499.31
HuaMin Building 771,196.00 -- -- 771,196.00 --
Total 48,634,587.22 -- -- 771,196.00 47,863,391.22
（3）Real estate developed products
Finished time Dec 31, 2010 Additions Redutions Dec 31, 2011
Jinye Island villa No.1 1996 1,847,882.72 -- 1,245,702.00 602,180.72
Jinye Island Multi-tier villa 1997 36,637,324.65 -- 253,778.28 36,383,546.37
Jinye Island villa No.6 2007 34,471,819.41 -- 27,466,345.80 7,005,473.61
Jinye Island villa No.7 2007 7,255,236.88 -- 3,582,939.37 3,672,297.51
Jinye Island villa No.9 2009 41,011,242.53 -- 16,599,816.57 24,411,425.96
Jinye Island villa No.10 2010 364,293,126.50 -- 181,492,763.42 182,800,363.07
Jinye Island villa No.11 2008 35,416,795.47 -- 6,122,514.74 29,294,280.73
HuangPuXinChun No.1 1994 121,283.88 -- -- 121,283.88
HuangPuXinChun No.2 2007 5,283,181.34 -- 1,681,696.59 3,601,484.75
55
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Finished time Dec 31, 2010 Additions Redutions Dec 31, 2011
HuaMin Building 1,725,534.83 -- 1,725,534.83 --
HuaFeng 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
JiaoHu Roan Cyber Shop 2,045,172.56 106,748.17 -- 2,151,920.73
Wenjin warehouse 1-5 floor 13,453,649.46 54,246.15 -- 13,507,895.61
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
Total 583,563,384.20 160,994.32 252,787,103.12 330,937,275.39
（4）Real estate developing products
Starting time Finished time Dec 31, 2011 Dec 31, 2010
DongHuDiJing Building* 130,966,363.51 131,828,661.29
ShanTou JinHu Road Project 2008 63,427,856.39 53,912,169.04
Shengfang Shanglin Garden 2007 246,218,888.14 223,098,533.75
ShanTou Fresh Peak Building 22,074,672.22 21,498,562.55
GuangMing New District project East Zone** 2011 853,357,013.75 --
Total 1,316,044,794.01 430,337,926.63
The capitalisation amount of loans was Rmb 47,230,586.82 this accounting year. And last year was Rmb
15,644,555.07.
* Refer to NoteX. 3. for details of DongHu DiJing Building.
**The increase oet if the item due from Real estate which is going to be developed.
（5）Real estate which are going to be developed
Dec 31, 2010 Additions Reductions Dec 31, 2011
GuangMing New District project East Zone 746,821,961.19 106,535,052.56 853,357,013.75 --
GuangMing New District project West Zone 468,810,101.81 19,319,378.78 -- 488,129,480.59
Total 1,215,632,063.00 125,854,431.34 853,357,013.75 488,129,480.59
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
56
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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. The project of New District No.A510-0131 has been being developed since February 2011 and an
amount of RMB 853,357,013.75was transferred to Real estate developing products.
57
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 Accumulated
Name of investees Dec 31, 2010 Movement Dec 31, 2011 provisionaccrued
method cost (%) (%) in cash provision
this year
1.Associate
investment
Shenzhen Ronghua Equity
JiDian Co.,ltd method 1,250,000.00 1,604,690.04 -80,622.11 1,524,067.93 25 25 75,000.00 -- 1,076,954.64
Shenzhen Fresh Peak
property consultant Equity
Co.,Ltd method 600,000.00 -- -- -- 20 20 -- -- --
Shenzhen Runhua
Automobile Trading Equity
Co.,Ltd method 1,445,425.56 1,445,425.56 -- 1,445,425.56 50 50 -- -- 1,445,425.56
Shenzhen Dongfang
New world store Equity
Co.,Ltd method 15,000,000.00 -- -- -- 50 50 -- -- --
2.Joint venture
investment
Guangdong
province Huizhou
Luofu Hill mineral Equity
water Co.,Ltd method 9,969,206.09 9,969,206.09 -- 9,969,206.09 Cooperation Cooperation -- -- 9,969,206.09
Fengkai Xinhua Equity
Hotel method 9,455,465.38 9,455,465.38 -- 9,455,465.38 Cooperation Cooperation -- -- 9,455,465.38
Jiangmen Xinjian Real Equity
Estate Co. Ltd. method 9,037,070.89 9,037,070.89 -- 9,037,070.89 Cooperation Cooperation -- -- 912,537.16
Xian Fresh Peak Equity
Building Co. Ltd. method 32,840,729.61 32,840,729.61 -- 32,840,729.61 Cooperation Cooperation -- -- 20,673,831.77
DongYi Property Equity
Co.,Ltd method 30,376,084.89 30,376,084.89 -- 30,376,084.89 Cooperation Cooperation -- -- 21,225,715.87
58
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
The
Measured Investment Proportion Voting right Dividend Accumulated
Name of investees Dec 31, 2010 Movement Dec 31, 2011 provisionaccrued
method cost (%) (%) in cash provision
this year
3.Other equity
investment:
Shenzhen Shen Fang
Industrial
Development Co., Cost
Ltd method 4,500,000.00 4,500,000.00 -- 4,500,000.00 100 100 -- -- 4,500,000.00
Shenzhen ZhongGang
Haiyan Enterprise Cost
Ltd. method 12,940,900.00 12,940,900.00 -- 12,940,900.00 68 68 -- -- 12,940,900.00
Shenzhen Real Estate
Consolidated Service Cost
Co., Ltd. method 5,958,305.26 5,958,305.26 -- 5,958,305.26 100 100 -- -- 5,958,305.26
Cost
Paklid Limited
method 201,100.00 201,100.00 -- 201,100.00 100 100 -- -- 201,100.00
Bekaton Property Cost
Limited method 906,630.00 906,630.00 -- 906,630.00 60 60 -- -- 906,630.00
Canada Great Wall Cost
(Vancouver) Co.,Ltd method 4,526.25 -- -- -- 75 75 -- -- --
Shenzhen Tefa Real
Estate Consolidated Cost
Service Co., Ltd. method 8,180,003.63 8,180,003.63 -- 8,180,003.63 100 100 -- -- 8,180,003.63
Shenzhen Xin Cost
Dongfang Store Ltd. method 18,500,000.00 18,500,000.00 -- 18,500,000.00 100 100 -- -- 18,500,000.00
Shenzhen City
Shenfang
Construction and
Decoration Materials Cost
Ltd. method 2,680,000.00 2,680,000.00 -- 2,680,000.00 100 100 -- -- 2,680,000.00
Shenzhen Shenfang
Department Store Cost
Co. Ltd. method 10,000,000.00 10,000,000.00 -- 10,000,000.00 100 100 -- -- 10,000,000.00
Shenzhen CyberPort Cost
Co., Ltd method 14,000,000.00 7,613,507.96 -- 7,613,507.96 70 70 -- -- --
59
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
The
Measured Investment Proportion Voting right Dividend Accumulated
Name of investees Dec 31, 2010 Movement Dec 31, 2011 provisionaccrued
method cost (%) (%) in cash provision
this year
YunNan KunPeng Cost
Flight service Co.,Ltd method 5,464,240.74 5,464,240.74 -- 5,464,240.74 25 25 -- -- --
ShenZhen ShenFang
BaoAn Cost
developmentCo.,Ltd method 20,000,000.00 20,379,525.68 -- 20,379,525.68 100 100 -- -- --
Shantou Fresh Peak Cost
Building method 68,731,560.43 58,547,652.25 -- 58,547,652.25 100 100 -- -- 58,547,652.25
Guangdong Province
Fengkai Lain Feng
Cement
Manufacturing Co., Cost
Ltd. method 121,265,000.00 56,228,381.64 -- 56,228,381.64 90 90 -- -- 56,228,381.64
Total 403,306,248.73 306,828,919.62 -80,622.11 306,748,297.51 75,000.00 -- 243,402,109.25
60
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（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
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）
Dec 31, 2010 Additions Reductions Dec 31, 2011
Original cost
Buildings 749,156,283.42 -- 265,177.00 748,891,106.42
Land-use right 102,118,653.11 -- 4,755,117.50 97,363,535.61
total 851,274,936.53 -- 5,020,294.50 846,254,642.03
Accumulated depreciation
Buildings 223,223,354.26 21,148,681.76 158,428.83 244,213,607.19
Land-use right -- -- -- --
61
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
total 223,223,354.26 21,148,681.76 158,428.83 244,213,607.19
Provision for impairment losses
Buildings 14,128,544.62 -- -- 14,128,544.62
Land- use right 83,813,543.52 -- 3,902,746.81 79,910,796.71
total 97,942,088.14 -- 3,902,746.81 94,039,341.33
Book value
Buildings 511,804,384.54 490,548,954.61
Land-use right 18,305,109.59 17,452,738.90
Total 530,109,494.13 508,001,693.51
(1)The amount of current year depreciation is Rmb 21,148,681.76, compared with Rmb 21,641,553.58 last year.
There was no any provision for impairment losses accured in this accounting year.
(2)The reduction of Original cost and Accumulated depreciation of building is mainly due to reclassification
causd by the change of use.
(3) 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.
(4)Among the investment property, Rmb 427,795,719.81 of net book value of buliding was used as mortgage for
the Company’s short-term/long-term loans. Refer to Note V.14 for details.
9.Fixed assets and Accumulated depreciation
Dec 31, 2010 Additions Reductions Dec 31, 2011
Cost
Buildings 117,201,722.56 -- -- 117,201,722.56
Transport equipment 19,453,567.83 1,692,031.77 2,526,309.00 18,619,290.60
Electronic equipment and others 13,873,179.44 994,258.70 727,511.49 14,139,926.65
Total 150,528,469.83 2,686,290.47 3,253,820.49 149,960,939.81
Accumulated depreciation
Buildings 63,052,074.46 3,237,844.68 -- 66,289,919.14
Transport equipment 12,947,351.97 1,826,704.60 2,279,493.55 12,494,563.02
Electronic equipment and others 9,870,803.40 1,072,834.54 685,791.94 10,257,846.00
Total 85,870,229.83 6,137,383.82 2,965,285.49 89,042,328.16
Provision for impairment loss
62
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Electronic equipment and others 131,727.96 -- 131,727.96 --
Book value
Buildings 54,149,648.10 50,911,803.42
Transport equipment 6,506,215.86 6,124,727.58
Electronic equipment and others 3,870,648.08 3,882,080.65
Total 64,526,512.04 60,918,611.65
(1) The amount of current year depreciation is Rmb 6,137,383.82, compared with Rmb 6,145,554.40 last year.
No construction in progress was transferred to fixed assets in this accounting year.
(2)As at Dec 31, 2011, book value Rmb28, 318, 890.75 of the Buildings was used as the long-term loans’
mortgage (including the long-term loans due within one year). Refer to Note V.14 for details.
(3)There are no any temporary idle fixed assests.
(4)There are no any fixed assests acquired by financial leasing in the accounting year.
(5)There are no any fixed assets leased out through operating leasing way.
(6)There are no any fixed assests held for sale.
10.Intangible assets
Dec 31, 2010 Additions Amortization Dec 31, 2011
Original cost
Software 536,000.00 276,000.00 -- 812,000.00
Taxi license 6,368,000.00 -- -- 6,368,000.00
Total 6,904,000.00 276,000.00 -- 7,180,000.00
Accumulative amortization
Software 134,133.33 124,599.96 -- 258,733.29
Taxi license 556,600.00 168,580.00 -- 725,180.00
Total 690,733.33 293,179.96 -- 983,913.29
Net value
Software 401,866.67 -- -- 553,266.71
Taxi license 5,811,400.00 -- -- 5,642,820.00
Total 6,213,266.67 -- -- 6,196,086.71
Provision for impairment loss -- -- --
63
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Dec 31, 2010 Additions Amortization Dec 31, 2011
Book value
Software 401,866.67 553,266.71
Taxi license 5,811,400.00 5,642,820.00
Total 6,213,266.67 6,196,086.71
The amount of current year amortization is Rmb 293,179.96, compared with Rmb 237,113.33 last year.
11.Long-term deferred and prepaid expenses
Amortization Accumulative
Original cost Dec 31, 2010 Additions Dec 31, 2011
Current year amortization
Decoration costs 2,437,115.53 202,456.50 628,475.29 239,667.70 1,845,851.44 591,264.09
12.Deferred tax assets
(1)The deferred tax asset which were already recognized
Dec 31, 2011 Dec 31, 2010
Assests impairment provision 11,896,124.83 11,896,124.83
Dismiss welfare 816,350.26 834,104.90
Unused operating losses against tax 7,690,757.74 5,026,369.99
Total 20,403,232.83 17,756,599.72
（2）The detais of deferred tax asset which were un-recognized
Dec 31, 2011 Dec 31, 2010
Unused operating losses against tax 19,383,074.42 32,831,203.07
（3）The maturity year of the unused operating losses against tax which were the un-recognized deferred tax
assets:
64
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Year Dec 31, 2011
2012 Year 9,010,226.92
2013 Year 28,540,572.21
2014 Year 36,309,943.43
2015 Year 2,662,914.18
2016 Year 1,008,640.93
Total 77,532,297.67
（4）the amount of temporary difference is as follow:
Amount of temporary difference
Assests impairment provision 47,584,499.32
Dismiss welfare 3,265,401.05
Unused operating losses against tax 30,763,030.96
Total 81,612,931.33
13.Impairment provision of assets
Reductions
Dec 31, 2010 Additions Dec 31, 2011
Transferred back* Written-off
Provision for bad debts 197,080,290.87 82,236.80 316,863.23 -- 196,845,664.44
Inventories impairment provision 48,634,587.22 -- -- 771,196.00 47,863,391.22
Long-term equity investment
243,402,109.25
impairment provision -- -- -- 243,402,109.25
Investment property impairment
97,942,088.14
provision -- 3,902,746.81 -- 94,039,341.33
Fixed assets impairment provision 131,727.96 -- -- 131,727.96 --
Total 587,190,803.44 82,236.80 4,219,610.04 902,923.96 582,150,506.24
*The variation of impairment provision of assets is due to the change of rate used in translation of foreign
currencies.
65
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
14.Restrictions on the ownership of assets
Book value on Dec
Items Mortagage period
31, 2011
Deposits with bank Other monetary funds * 8,502,057.86
Inventories(work in process) Shenfang Shanglin Garden land-use right Dec 8,2009 to Dec 7,2012 121,554,148.24
Guangming Project East Zone land-use
Inventories(work in process) right Oct 14,2011 to Oct 13,2014 736,800,000.00
Investment Property Shen Fang Square Mar 30,2009 to June 1,2020 277,186,417.06
Investment Property Petrel Building June 3,2010 to June 1,2020 79,734,956.83
Investment Property GuoShang North 2 floor May 29,2007 to May 29,2017 70,874,345.92
Inventories (Real estate
Real estate Building 5-6 floor
developed products) Nov 26,2010 to Nov 26,2013 7,492,175.18
Fixed assests ShenFang Square 46-48 floor Aug 23,2010 to Nov 26,2013 28,318,890.75
Total 1,330,462,991.84
* 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.
15.Short-term borrowings
Nature Dec 31, 2011 Dec 31, 2010
Mortgage borrowings -- --
Credit borrowing 20,000,000.00 14,800,000.00
Total 20,000,000.00 14,800,000.00
(1)The short-term borrowings were credit loans by Shenzhen Zhen Tung Engineering Ltd from Shenzhen branch
of China CITIC Bank. The closing balance are as follows:
66
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Lender Loan period Currency Interest rate Condition Dec 31, 2011
10% above the withdraws day
Shenzhen branch of May 30,2011 to benchmark lending rate of the people's credit
RMB 10,000,000.00
May 30, 2012 bank of China for the same period and loans
China CITIC Bank the same class loans
20% above the withdraws day
Shenzhen branch of Sep 22,2011 to benchmark lending rate of the people's credit
RMB 10,000,000.00
Sep 22, 2012 bank of China for the same period and loans
China CITIC Bank the same class loans
Total 20,000,000.00
(2)The Company didn’t fail to repay any due short-term borrowings.
16.Accounts payable
Dec 31, 2011 Dec 31, 2010
Accounts payable 109,202,474.18 166,672,225.43
（1）The balance of accounts payable whose aging is more than 1 year is mostly the un-setting construction fee.
（2）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.
（3）No amount due to related parities is included in the above balance of AP.
17.Advance from customers
The aging analysis of the Company’s accounts receivable is as follow:
Dec 31, 2011 Dec 31, 2010
Aging
Amount Proportion% Amount Proportion %
Within 1 year 219,012,465.42 84.57 374,655,230.80 94.77
Above 1 year 39,963,630.15 15.43 20,677,040.09 5.23
Total 258,976,095.57 100.00 395,332,270.89 100.00
（1）The balance of accounts payable decreased by Rmb 136,356.20 thousand, 34.49%. The decrease is due to
recognition of income from advance from customers when the conditions for the recognition of the income were
met.
（2）The balance whose aging were more than 1 year were mostly the import and export agency business
payment which haven’t settle with the clients and advance payment from housing buyers.
67
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（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.
Up to December 31, 2011，the main items of Advances from customers are as follow:
Dec 31, 2011
Items Dec 31, 2010
Amounts Situation Aging
Guangzhou Huangpu yuan 1,588,840.00 Completed Within 1 year --
Jinye Island villa No. 6 7,200,000.00 Completed Within 1 year 11,917,000.00
Jinye Island villa No. 7 3,254,703.00 Completed Within 1 year, between 1 and 2 year 9,884,697.00
Jinye Island villa No. 9 5,694,800.00 Completed Within 1 year 18,447,800.00
Jinye Island villa No. 10 145,355,609.78 Completed Within 1 year, between 1 and 2 year 268,200,985.00
Jinye Island villa No. 11 4,030,624.00 Completed Within 1 year, between 1 and 2 year 10,502,424.00
Total 167,124,576.78 318,952,906.00
18.Employee benefits payable
Dec 31, 2010 Additions Reductions Dec 31, 2011
Wages , bonuses, allowances and subsidies 25,232,951.02 91,627,719.51 88,374,154.10 28,486,516.43
Staff welfare -- 6,155,111.23 6,155,111.23 --
Social securities 9,322,472.58 14,493,240.17 20,654,906.12 3,160,806.63
including：Pension insurance 1,486,464.08 7,920,883.14 8,003,110.77 1,404,236.45
Medical insurance 1,103,073.77 2,334,845.64 2,334,845.64 1,103,073.77
Unemployement insurance -- 211,636.58 211,636.58 --
Employement injury insurance -- 145,548.80 145,548.80 --
Maternity insurance -- 220,079.74 220,079.74 --
Housing Fund 6,732,934.73 3,660,246.27 9,739,684.59 653,496.41
Labor union and employee education funds 648,702.37 1,915,087.40 1,750,567.92 813,221.85
Compensation to employees for termination of
4,107,675.39
employment relationship 291,897.00 501,933.00 3,897,639.39
Others 27,000.00 1,362,802.29 1,358,045.24 31,757.05
Total 39,338,801.36 115,845,857.60 118,794,717.61 36,389,941.35
（1）No amount’s nature of the employee benefits payable were arrears of wage.
68
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（2）The amount of Labor union and employee education funds were Rmb 1,750,567.92. The nature was
monetary benefits. The amount of Compensation to employees for termination of employment relationship was
Rmb 501,933.00.
19.Taxes payable
Dec 31, 2011 Dec 31, 2010
Value added tax (“VAT”) -5,068,827.11 -4,293,362.47
Business tax -8,333,346.56 -15,541,233.94
Construction tax -624,580.98 -217,617.34
Education surcharge -162,452.85 -134,881.85
Local education surcharge -112,491.43 --
Embankment Protection Fee -151,734.75 -227,106.05
Property tax 1,723,069.64 1,772,048.29
Land value added tax 2,347,034.79 -2,124,986.64
Corporate Income tax 13,453,711.50 6,490,711.85
Personal income tax -100,738.60 484,123.71
Others -- 458,846.00
Total 2,969,643.65 -13,333,458.44
The balance of taxes payable increased by Rmb 16,303 thousands, 122.27%. The increase due to that the
business tax and surcharges of JinYe Island project was carried over and Corporate Income tax was accrued.
20.Interests payable
Dec 31, 2011 Dec 31, 2010
Shenzhen Investment Holdings Co.，Ltd 16,535,277.94 16,535,277.94
The balance of interests payable due to Shenzhen Investment Holdings Co.，Ltd. were accured from the loans
borrowed from 2007 to 2010.
21.Other payables
Dec 31, 2011 Dec 31, 2010
Other payables 384,721,231.13 364,052,949.01
（1）The balance of other payables due to shareholders who hold 5% or more of the voting rights of the
69
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Company are is as follows:
Dec 31, 2011 Dec 31, 2010 Nature of other payables
Shenzhen Investment Holdings Co., Ltd. 63,848,819.24 65,848,819.24 Loans
（2）Up to Dec 31,2011, accrued land value increment tax with an amount of RMB 110,716,392.57 was
included.
(3) The amount whose aging were more than 1 year are mostly loans borrowed form related parities, land value
increment tax and leasing deposit.
（4）Please refer to Note VI.3. (4) for details of the amount owed to related parties.
22.Non-current liabilities within one year
Dec 31, 2011 Dec 31, 2010
Long-term loans due within one year
Mortgage loans 57,095,738.47 29,423,411.10
Guaranteed loans 640,000,000.00 --
Total 697,095,738.47 29,423,411.10
(1) The Company didn’t fail to repay the due long-term loans in the accounting year.
（2）The lenders of long-term loans due within one year are as follows:
lender Maturity Date Currency Dec 31, 2011
Shenzhen Rural Commercial Bank Dec 20,2011 RMB 12,000,000.00
Bank of Shanghai (Shenzhen Branch) Dec 7,2012 RMB 500,000,000.00
ShangHai PuDong Development Bank
Dec 20,2011
(ShenZhen Branch) RMB 33,500,000.00
Nanyang Commercial Bank (Shenzhen Branch) Dec 20,2011 RMB 5,875,738.47
Industrial and Commercial Bank of China
Dec 20,2011
(Shenzhen Branch) RMB 5,720,000.00
Bank of Communications (Shantou Branch) Aug 3,2012 RMB 140,000,000.00
Total 697,095,738.47
The borrowing rate is above a certain percentage of the benchmark interest rate in accordance with the People's
Bank of China over the same period.
70
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
23.Long-term Borrowings
Loans conditions Dec 31, 2011 Dec 31, 2010
Mortgage loans 356,717,113.11 386,126,531.44
Guaranteed loans 640,000,000.00 700,000,000.00
Total 996,717,113.11 1,086,126,531.44
Including.：non-current liability within one year 697,095,738.47 29,423,411.10
long term loans 299,621,374.64 1,056,703,120.34
The informations for the ending balance of long-term loans owed to each lender are as follows:
Lender Currency Dec 31, 2011 Conditions Maturity Date
Shenzhen Rural Commercial Bank (Shangbu Branch) RMB 103,000,000.00 Mortgage Nov 26,2013
Shenzhen Rural Commercial Bank (Shangbu Branch) RMB 92,000,000.00 Mortgage Aug 23,2013
Nanyang Commercial Bank (Shenzhen Branch) RMB 36,797,113.11 Mortgage May 29,2017
Bank of ShangHai (Shenzhen Branch)* RMB 500,000,000.00 Guaranteed Dec 7,2012
ShangHai PuDong Development Bank (ShenZhen Branch) RMB 33,500,000.00 Mortgage Mar 29,2012
Industrial and Commercial Bank of China (Shenzhen
Branch) RMB 91,420,000.00 Mortgage June 1,2020
Bank of Communciation (ShanTou Branch) RMB 140,000,000.00 Guaranteed Aug 3,2012
Total 996,717,113.11
* The loans borrowed from ShangHai Bank Shenzhen Branch were guaranteed by the Company’s controlling
shareholder – Shenzhen Investment Holdings Co., Ltd. And the Company provided counter-guarantee mortgage
with Shen Fang Shanglin Garden land-use right. Refer to Note V.14 for details.
24.Long-term payable
Dec 31, 2011 Dec 31, 2010
Maintenance fund 10,308,648.22 9,779,108.83
25.Share capital
Dec 31, 2010 Additions Reductions Dec 31, 2011
Total shares 1,011,660,000 -- -- 1,011,660,000
71
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
26.Capital reserve
Dec 31, 2010 Additions Reductions Dec 31, 2011
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
27.Surplus reserve
Dec 31, 2010 Additions Reductions Dec 31, 2011
Reserve fund 4,974,391.15 -- -- 4,974,391.15
28.Retained Earnings
2011 2010
Retained Earnings at the end of last year -577,169,009.54 -781,357,778.86
Add: adjustment amount -- 119,428,606.57
Retained Earnings at the beginning of year -577,169,009.54 -661,929,172.29
Add: net profit for parent Company’s shareholders 101,200,060.65 84,760,162.75
less：Profit distribution -- --
Including.：withdrawal legal surplus -- --
Withdrawal special surplus -- --
Distribution to ordinary shareholders -- --
Make up for losses with surplus reserve -- --
Retained Earnings at the ending of year -475,968,948.89 -577,169,009.54
29.Minority Interest
Proportion of minority
Name of investees Dec 31, 2011 Dec 31, 2010
shareholdings %
Fresh Peak Investment Ltd. 45 -104,543,516.57 -104,535,306.38
Barenie Co. Ltd. 20 -2,033,931.94 -2,029,582.32
Great Wall Estate Co., Inc 30 -21,712,466.71 -21,520,509.77
Total -128,289,915.22 -128,085,398.47
72
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended at 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
30.Turnover and cost of sales
(1) Turnover and cost of sales
2011 2010
Core operating income 993,942,895.86 996,827,381.99
Other operating income 32,453,208.65 24,228,317.62
Gross Income 1,026,396,104.51 1,021,055,699.61
Cost of sales 686,227,987.41 672,735,584.16
(2) Operating income（classfied by industry）
Operating Income Operating Cost Operating Margin
Industry
2011 2010 2011 2010 2011 2010
Real estate 511,676,477.00 560,075,510.04 250,894,045.03 284,217,637.43 260,782,431.97 275,857,872.61
Construction 323,078,628.77 272,339,823.24 306,779,077.22 256,843,473.48 16,299,551.55 15,496,349.76
Leasing 67,684,898.43 70,659,541.52 30,541,919.34 27,711,243.53 37,142,979.09 42,948,297.99
Property
management 91,502,891.66 93,752,507.19 83,921,844.55 84,948,873.38 7,581,047.11 8,803,633.81
Hotel and others 32,453,208.65 24,228,317.62 14,091,101.27 19,014,356.34 18,362,107.38 5,213,961.28
Total 1,026,396,104.51 1,021,055,699.61 686,227,987.41 672,735,584.16 340,168,117.10 348,320,115.45
(3) Operating income（classified by district）
Operating Income Operating Cost Operating Margin
District
2011 2010 2011 2010 2011 2010
Domestic:
GuangDong
Province 1,006,736,903.97 1,020,408,417.3 668,095,432.06 672,735,584.16 338,641,471.91 347,672,833.14
Others 18,991,917.50 -- 18,132,555.35 -- 859,362.15 --
Overseas： 667,283.04 647,282.31 -- -- 667,283.04 647,282.31
Total 1,026,396,104.51 1,021,055,699.61 686,227,987.41 672,735,584.16 340,168,117.10 348,320,115.45
73
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(4)The informations of the top 5 clients are as follows:
2011
Client
Amount Proportion%
Corporation unit No.1 65,554,000.00 6.39
Corporation unit No.2 27,800,000.00 2.71
Corporation unit No.3 13,894,500.00 1.35
Corporation unit No.4 12,500,000.00 1.22
Corporation unit No.5 11,774,127.36 1.15
Total 131,522,627.36 12.82
31.Business Taxes and Surcharges
2011 2010
Business tax 45,944,638.22 45,833,329.45
City maintenance and construction tax 2,183,859.14 563,749.15
Educational surcharge 1,169,505.63 767,741.25
Property tax 6,304,592.55 6,578,991.44
Land value added tax 59,861,391.13 66,958,667.01
Local educational surcharge 326,825.66 --
Embankment Protection Fee 558,388.34 450,957.06
Total 116,349,200.67 121,153,435.36
32.Selling and distribution expenses
2011 2010
Employee benefits 2,853,630.01 3,950,899.58
Advertising expenses 6,182,679.28 6,920,236.79
Entertainment expenses 622,820.90 749,244.59
Others 1,168,798.64 1,473,608.01
Total 10,827,928.83 13,093,988.97
33.General and administrative expenses
2011 2010
Employee benefits 34,852,702.09 36,447,448.71
Depreciation and amortization 5,295,078.38 5,526,432.97
Entertainment expenses 4,772,142.72 4,744,292.35
Others 20,207,867.97 23,275,018.17
Total 65,127,791.16 69,993,192.20
74
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
34.Finance expenses
2011 2010
Interest expenses 65,254,298.32 70,668,526.13
Less：capitalization interest 47,230,586.82 15,644,555.07
Less: interest income 3,524,155.34 1,050,178.53
Exchange losses 6,763,770.23 6,126,187.86
Less: exchange gains 4,688,389.81 5,003,945.06
Others 281,104.73 3,163,917.71
Total 16,856,041.31 58,259,953.04
The financial expenses decreased by Rmb 41,404 thousand, an decrease of 71.07%. The increase is due to the
accrued interest expenses caused by capitalization of interest.
35.Asset impairment losses
Items 2011 2010
Loss on bad debts 82,236.80 --
36.Gain from changes of fair value
Source 2011 2010
Trading financial assets 19,993.75 -15,323.50
Including：gain from changes of fair value of derivative
financial instruments -- --
Trading financial liability -- --
Investment property measured at fair value -- --
Total 19,993.75 -15,323.50
37.Investment income
（1）The details of investment income are as follows:
2011 2010
The investment income yielded from the long-term equity
applied with the cost method -- 11,327,948.39
The investment income yielded from the long-term equity
applied with the equityt method -5,622.11 -36,587.15
The investment income yielded from the disposal of the
long-term equity* 25,212.78 15,588,205.14
The investment income yielded from the disposal of the
financial assest held for trading -34,017.37 322,484.04
Total -14,426.70 27,202,050.42
75
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
RMB 25,212.78 was yielded from the cancellation of Skill Elite Ltd.
（2）The investment income yielded from the long-term equity appilied with the cost method
Investee 2011 2010
KunShanDiaoFeng electrity Co.,Ltd -- 11,327,948.39
（3）The investment income yielded from the long-term equity appilied with the equity method
Investee 2011 2010
Shenzhen Ronghua JiDian Co.,ltd -5,622.11 -36,587.15
38.Non-operating income
Amount included in the current
2011 2010
irregular profit and loss
1.Total gain on disposal of non current assets 211,822.51 16,202.18 211,822.51
including：Gain on disposal of fixed assets 211,822.51 16,202.18 211,822.51
2.Penalty income 845,126.00 89,762.40 845,126.00
3.Compensation income -- 2,260.20 --
4.Others* 1,499,734.85 104,767.27 1,499,734.85
Total 2,556,683.36 212,992.05 2,556,683.36
*It mainly included RMB 1,350,740.00 of decoration deposit there was no need to pay.
39.Non-operating expenses
Amount included in the current
2011 2010
irregular profit and loss
1.Total losses on disposal of non current assets 63,859.29 329,447.92 63,859.29
including：Loss on disposal of fixed assets 63,859.29 329,447.92 63,859.29
2.Penalty expense 369.83 13,743.00 369.83
3.Donation expenses 116,765.00 122,000.00 116,765.00
4.Compensation expense 18,810.00 -- 18,810.00
5.Others 8,549.52 837,367.12 8,549.52
Total 208,353.64 1,302,558.04 208,353.64
76
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
40.Income tax expenses
2011 2010
Current year income tax expenses 34,726,163.79 28,669,817.61
Deferred income tax expenses -2,646,633.11 -1,524,469.31
Total 32,079,530.68 27,145,348.30
41.Calculation of basic earnings per share and diluted earnings per share
2011 2010
Net profit for parent Company’s shareholders 101,200,060.65 84,760,162.75
Weighted average number of ordinary shares issued 1,011,660,000.00 1,011,660,000.00
Basic earnings per share 0.1000 0.0838
Diluted earnings per share 0.1000 0.0838
42.Other comprehensive income
ITEM 2011 2010
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
Sub-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
Sub-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
Sub-total -- --
77
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
ITEM 2011 2010
4. The differencs of translation of foreign financial statement -679,135.07 -613,529.27
less：the net amount of dealing with the overseas operationg gain or loss -- --
Sub-total -679,135.07 -613,529.27
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
Sub-total -- --
Total -679,135.07 -613,529.27
43.Cash flow statements
（1）Cash received from operating activities
2011 2010
Interest income 3,183,155.34 1,050,178.53
Mortgage and deposits 17,222,594.84 27,506,997.24
Correspondent payment 13,133,466.50 7,838,484.67
Maintenance fund 649,136.70 1,604,292.21
Porperty license fee and survey fee 6,443,171.76 18,880,294.42
Implementation of GuoXing building lawsuit 12,500,000.00 --
Others 1,807,631.53 865,319.97
Total 54,939,156.67 57,745,567.04
（2）Cash paid for other operating activities
2011 2010
Cash paid to general and administrative expenses 21,916,735.83 25,290,484.00
Cash paid to operating expenses 8,688,320.66 11,176,780.76
Mortgage and guarantee 19,480,607.45 25,746,211.58
Porperty license fee and survey fee 8,202,898.68 17,375,726.53
Other correspondent payment 13,415,895.45 10,521,505.86
Others 2,894,827.32 3,303,449.48
Total 74,599,285.39 93,414,158.21
78
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（3）Cash received from borrowings
2011 2010
Cash received from short-term borrowings 20,000,000.00 114,800,000.00
Cash received from long-term borrowings -- 609,000,000.00
Total 20,000,000.00 723,800,000.00
Cash repaid the borrowings
2011 2010
Cash repaid the short-term borrowings 14,800,000.00 200,000,000.00
Cash repaid the long-term borrowings 89,871,112.24 336,378,943.85
Total 104,671,112.24 536,378,943.85
（4）Cash payments relating to other financing activities
2011 2010
Guarantee fees for bank loan 2,000,000.00 800,000.00
(5) Cash and cash equivalents
2011 2010
1. Cash 324,967,185.86 371,258,812.38
Including：cash on hand 276,080.48 415,909.42
the bank deposits for available payment* 324,691,105.38 370,842,902.96
2. Cash equivalents -- --
3. Cash and cash equivalent at the end of year** 324,967,185.86 371,258,812.38
* The differences between the bank deposits for available payment and the one at the end of monetary balances,
were caused by some other monetary funds with limited ownership.
**The differences between cash and cash equivalents, and the one at the end of monetary balance, were explained
in NotesV. 14.
79
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(6)Supplementary cash flow statement of the Company
Supplementary information 2011 2010
1. Reconciliation from the net profit to the cash flows from operating activities
Net profit 101,199,284.42 84,771,358.51
Add：Provisions for assets impairment 82,236.80 --
Depreciation of fixed assets and investment property 27,286,065.58 27,787,107.98
Amortization of intangible assets 293,179.96 237,113.33
Long-term deferred and prepaid expenses amortization 239,667.70 162,445.20
Losses on disposal of fixed assets, intangible assets and other long-term
assets（gains used“-”） -211,822.51 23,773.12
Scrapping of fixed assets losses（gains used“-”） 63,859.29 305,674.80
Exchange of fair value losses（gains used“-”） -19,993.75 15,323.50
Finance expenses 20,373,232.45 58,946,213.86
Investment losses（gains used“-”） 14,426.70 -27,202,050.42
Decrease in deferred tax assets（gains used“-”） -2,646,633.11 -1,524,469.31
Increase in deferred tax liabilities（gains used“-”） -- --
Decrease in inventories（gains used“-”） 139,409,086.73 -136,639,759.86
Decrease in operating receivables （gains used“-”） -18,862,549.07 -8,666,457.06
Increase in operating payables（gains used“-”） -152,065,250.78 -177,267,834.82
Others -- --
Net cash flows from operating activities 115,154,790.41 -179,051,561.17
2. Investment and financing activities not involving cash -- --
3. Net increase/ (decrease) in cash and cash equivalents
Cash at end of the year 324,967,185.86 371,258,812.38
Less: cash at beginning of the year 371,258,812.38 374,836,340.37
Add：cash equivalents at end of the year -- --
Less: cash equivalents at beginning of the year -- --
Net increase in cash and cash equivalents -46,291,626.52 -3,577,527.99
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.
80
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
2. Related party relationships
(1) The information of the Company’s controlling shareholder is as follows:
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
*Investment, operation and management of state-owned equity controlled by restructurings, operation of capital,
disposals of assets and other measure; Real estate development and operation on lawful land; Policy investment and
strategic investment required by SAC; Guarantees for Municipal State-owned enterprises; Other businesses
authorized by city SAC.
(2)The informations of the Company’s subsidiaries refer to Note IV.1 for details.
81
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(3)The informations of the joint venture and associate
Registered
Equity
Legal Place of capital Total Total net Total net
Name of Enterprise Nature of Registered Holding Voting Total assets Total income
represen registrati (in ten Liabilities assets profit
investees type business code proporation rights% (Dec 31,2011) ( 2011)
tative on thousand (Dec 31,2011) (Dec 31,2011) ( 2011)
%
yuan)
1. Associate
investment:
Elevator,
Shenzhen air-conditio
Llimited Zheng
Ronghua n, Shen
liability Zhong 19219691-6 500 25 25 11,325,713.59 5,632,661.08 5,693,052.51 16,365,181.76 -18,683.34
JiDian water-electr zhen
company Qing
Co.,ltd icty fixing
and sales
Shenzhen
Fresh Peak Llimited Property
Zhong Shen
Property liability sales and 19221684-1 300 20 20 7,280,683.83 13,352,136.73 -6,071,452.90 4,672,949.72 15,280.02
XinFa zhen
Consultant company rental
Co.,Ltd
Domestic
Shenzhen
car
Runhua Limited
sales( not LiXue Shenzhe
Automobile liability 19220483-2 500 50 50
includen Min n
Trading company
little car),
Co.,Ltd *①
moto
82
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Registered
Equity
Legal Place of capital Total Total net Total net
Name of Enterprise Nature of Registered Holding Voting Total assets Total income
represen registrati (in ten Liabilities assets profit
investees type business code proporation rights% (Dec 31,2011) ( 2011)
tative on thousand (Dec 31,2011) (Dec 31,2011) ( 2011)
%
yuan)
Shenzhen
Dongfang Limited Domestic
PengNai Shenzhe
New world liability trade/mater 19222948-2 3,000 50 50
Dian n
Store company ial supply
Co.,Ltd *②
2. Joint
venture
investment:
Guangdong
province
Cooperati Water and
Huizhou
ve other YangHu
Luofu Hill Boluo 602 Cooperation Cooperation
Enterprise products aiYu
mineral
s supply
water
Co.,Ltd *③
Cooperati
Fengkai
ve Tourism, Feng
Xinhua Cooperation Cooperation
Enterprise Restaurant kai
Hotel *④
s
Jiangmen Cooperati Property LuoJinX Jiangme USD660 Cooperation Cooperation
83
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Registered
Equity
Legal Place of capital Total Total net Total net
Name of Enterprise Nature of Registered Holding Voting Total assets Total income
represen registrati (in ten Liabilities assets profit
investees type business code proporation rights% (Dec 31,2011) ( 2011)
tative on thousand (Dec 31,2011) (Dec 31,2011) ( 2011)
%
yuan)
Xinjian ve developing Xing n
Real Estate Enterprise and sales
Co. Ltd.*⑤ s
Developing
Xian Fresh Cooperati and
Peak ve operating LiangW Xi’
62390802-3 HKD3,000 Cooperation Cooperation
Building Enterprise Xi’an trade eiGuo an
Co. Ltd.*⑤ s building
Private
DongYi Property
owned Hong
Property developme HKD100 Cooperation Cooperation
enterprise kong
Co.,Ltd *⑤ nt and sales
s
84
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 Dec 31, 2010, 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 Dec 31, 2010, 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 Dec 31, 2010, 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 Dec 31, 2010, the book value of the
investment account of the Company is zero. According to the joint venture agreement, the
85
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 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 Company
is still zero.
(4)The informations of other related parties
Names of related parties Relationships with the Registered code
Company
The same controlling
Shenzhen Jian'an Group Co., Ltd. shareholders 19219737X
Shenzhen Environmental Engineering Science Tech The same controlling
shareholders 668538441
Center Co., Ltd.
The same controlling
Shenzhen Institute of Building Research Co., Ltd. shareholders 665899831
3. Related parties transactions
The related party transactions included payment of Guangming New District Project, the
emoluments, and guarantee fees. The informations were as follows:
86
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
(1)Purchases of goods from related parties
In 2011, the Company paid RMB 144,750.00 to Shenzhen Environmental Engineering Science
Tech Center Co., Ltd for environmental evaluation, and paid RMB 620,000.00 to Shenzhen
Institute of Building Research Co., Ltd for argument from design.
（2）Emoluments
2011 2010
Total emoluments for key management personnel 5,269.50 thousand 3,556.20 thousand
Total amount of top 3 1,590.10 thousand 1,229.50 thousand
(3) Assurance from the relate parities
Secured
Assurance Provider Secured party Relationship Secured period
amount
Shenzhen Special Economic
Shenzhen Investment Controlling
Zone Real Estate and 200,000,000 Dec 8,2009 to Dec 7,2012
Holding Co.,Ltd subsidiary
Properties (Group) Co., Ltd
Shenzhen Special Economic
Shenzhen Iinvestment Controlling
Zone Real Estate and 100,000,000 Mar 23,2010 to Dec 7,2012
Holding Co.,Ltd subsidiary
Properties (Group) Co., Ltd
Shenzhen Special Economic
Shenzhen Investment Controlling
Zone Real Estate and 100,000,000 May 24,2010 to Dec 7,2012
Holding Co.,Ltd subsidiary
Properties (Group) Co., Ltd
Shenzhen Special Economic
Shenzhen Investment Controlling
Zone Real Estate and 100,000,000 June 30,2010 to Dec 7,2012
Holding Co.,Ltd subsidiary
Properties (Group) Co., Ltd
The Company paid RMB 2,000 thousand to its controlling shareholder, Shenzhen Investment
Holdings Limited for the bank loan guarantee fee in the period.
87
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（3）Amounts due from/ to related parties
Dec 31, 2011 Dec 31, 2010
Name of related parties
Amount Propotion% Amount Propotion%
Other
Luofu Hill Mineral Water Co.,Ltd
receivables 10,465,168.81 4.66 10,465,168.81 4.63
Shenzhen Runhua Automobile Trading Co.,Ltd 3,072,764.42 1.37 3,072,764.42 1.36
Canada GreatWall（vancouver）Co.,Ltd 89,035,748.07 39.67 89,035,748.07 39.37
Bekaton Property Limited 12,559,290.58 5.60 12,559,290.58 5.55
Paklid Limited 18,946,689.75 8.44 18,946,689.75 8.38
Shenzhen Shenfang Department Store Co. Ltd. 237,648.82 0.11 189,179.82 0.08
Shenzhen Real Estate Consolidated Service Co.,
Ltd. 1,086,487.22 0.48 927,136.22 0.41
Shenzhen City Shenfang Construction and
Decoration
Materials Ltd. 8,327,180.71 3.71 8,327,180.71 3.68
Shenzhen RongHua JiDian Co.,Ltd 475,223.46 0.21 475,223.46 0.21
Xi’an Fresh Peak property management& Trading
Co.,Ltd 8,419,205.19 3.75 8,419,205.19 3.72
Accounts
receivable Shenzhen Fresh Peak property consultant Co.,Ltd 1,112,496.40 2.96 1,155,484.87 3.24
Shenzhen Tefa Real Estate Consolidated Service
Other payables
Co., Ltd. 598,012.16 0.16 598,012.16 0.16
Shenzhen Shen Fang Industrial Development Co.,
Ltd 1,534,854.91 0.40 1,534,854.91 0.42
Shenzhen ZhongGang Haiyan Enterprise Ltd. 135,853.52 0.04 135,853.52 0.04
Shenzhen Dongfang New world store Co.,Ltd 902,974.64 0.23 902,974.64 0.25
Shenzhen Xin Dongfang Store Ltd. 1,394,704.21 0.36 1,394,704.21 0.38
Guangdong Province Fengkai Lain Feng Cement
Manufacturing Co., Ltd. 1,869,348.00 0.49 1,870,577.00 0.51
Shenzhen Cyber Port Co., Ltd 7,949,749.26 2.07 7,949,749.26 2.18
Shenzhen Shenfang Group BaoAn Developing
Co.,Ltd 20,093,445.07 5.22 19,767,689.82 5.43
Shenzhen Investment Holding Co.,Ltd 63,848,819.24 16.60 65,848,819.24 18.09
Interest payable Shenzhen Investment Holding Co.,Ltd 16,535,277.94 100.00 16,535,277.94 100.00
88
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
VII. Exchange of non-monetary assets
No informations of exchange of non-monetary assets are needed to disclose in 2011.
VIII. Share-based payment
There are no any share-based payment contracts in 2011.
IX. Debt restructurings
No informations of debt restructurings are needed to disclose in 2011.
X. Contingencies
1. Significant litigation
（1） Guoxing Building Lawsuit
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 22 Feb 2008, 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 BaoXing Company failed to carry out the agreement.
89
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
On 23 July 2008, 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
(the property developer is Great China International Group（China）Co., Ltd, hereinafter referred to
as Great China Company) of Shenzhen international exchange plaza instead. In December 2008,
the Company received Rmb 2,500 thousand. Great China Company did not handle with the house
property certificate for the Company according to the agreement. On November 15, 2011,
another "Agreement" was signed by the Company, BaoXing Company, HongMing Company and
Great China Company. They agreed that BaoXing Company would pay RMB 12,500 thousand
Yuan in cash to the Company, and the Company receive the money in full, the agreement signed
on 22 Feb, 2008 was seemed to have been fulfilled. In 2011, the company received RMB 12,500
thousand Yuan from Shenzhen Haotian Equity Investment Fund Management Co., Ltd- the
third-party equity interest commissioned by BaoXing Company.
Until 31 December, 2011, the amount of RMB 78,701,645.33 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.
In 1997, the Xi’an government withdrew the Xi'an Fresh Peak investment project compulsively
90
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 pay for the compensation Rmb 36,620 thousand to
Xi’an Fresh Peak Company after the judgment entering into force. If the Business Tourism
Company failed to pay in time, it had to pay double debt interests to Xi’an Fresh Peak Company. 2.
Xi’an Joint Commission on Commerce had jointly and severally obligation of the interests of the
compensation.
Untill 31 December 2011, the amount of RMB 15,201,000.00 had been called back. Because of
Fresh Peak Company’s application, ShanXi Province High Peoples Court resumed the execution
on September 5, 2011. Now the case is proceeding and there was no any new substantive progress
in the reporting period.
As at 31 December 2011, 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
debt 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
91
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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;
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 on 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 17 Mar 2010, 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.
According to the relevant provisions of the Huizhou local authorities, auction of land should be
approved by local department of land and be implemented in real estate trading center set up under
Land Branch. Huizhou Intermediate Court has issued an official letter to inform Boluo Land
Bureau of its decision, and notify the relevant assistance. Boluo Land Bureau replied the Huizhou
Intermediate Court that the land for aution would be surveyed and mapped (different from
land evaluation), new planning point would be made by them as the conditions of auction. Boluo
Land Bureau have surveyed and mapped Luofu Hill Tourism site that was sealed. The cadastral
map and land red line chart were submitted to Huizhou Municipal Intermediate People's Court in
June 2011. Detailed regulation is deemed as the basis
for the development of planning points, while the preparation of detailed regulation relies
on Luofushan Administration Committee. Because the planning points were not made, the land
92
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
failed to be auctioned.
As at 31 December 2011, the book value of the Company’s creditor rights on Tourism Company
was Rmb 9,600,000.00. The provision for bad debt 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'.
2. Security for debts
Up to 31 December 2011, the balance of guarantees is as follows:：
Currency Amount(in ten thousand Yuan)
Internal guarantees in the group RMB 14,000
Guarantees for outstanding mortgage RMB 850
3. Other Contingencies
Dong Hu Di Jing Building (with Parcel No.H312-0061) is located in Luohu District. The area is
7,970.08 s.q.m., construction land area is 5,889.7 s.q.m. and area of structure 59,486 s.q.m. Its
93
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
volume fraction is 10.1. In November 2006, the Company got the land use rights of Dong Hu Di
Jing Building Project. Until the first half of 2008, the Company had
completed the land turnover housing
resettlement, environmental assessment, the transformation of the underground pipe network,
geological exploration, programs design and
planning, construction review and development design.In September and December 2008, the
Company has received a letter from the immediate branch of Shenzhen Urban
Planning and the Shenzhen Municipal Planning Bureau (Shen Gui [2008]1069, Shen
Gui [2008] 2517).The Company was told that the municipal road works may partially occupied
the red line of the parcel of land of Dong Hu Di Jing Building Project and the development of the
project was required to suspend .In 2009, the Company submitted report to the municipal
government twice, equiring to resume the project as soon as possible, but not received a clear
answer. On 13 August 2010, the first branch of the Urban Planning and Land Commission issued a
notice about idle land inspection to the Company. The Company immediately submitted relevant
report about the idle land of Dong Hu Di Jing Building on August 26, reiterating that
why development land is idle lies in the Government's changes of planning on the land. The
Company had suffered huge losses and required the government to solve the problem as soon as
possible. On 20 January 2011, Shenzhen Urban Planning and Land Resources
Committee (hereinafter referred to as the Comission) issued "decision on disposal of idle
land"Shen Gui Land Yiqu idle [2011] No. 009. According to the decision, the government will
take back land use rights by payment. The Company subsequently submitted to the administrative
reconsideration. On 2 April, 2011,the Commission issued Shen Gui
Land referendum[2011]No. 02" decision on administrative reconsideration” , insisting on the land
use rights to be took back in pay. In order to receive compensation for the land use rights as soon
as possible, the Company made response to the reconsideration on 17 May 2011, giving the
solution of replacement land. The Commision replied in Shen Gui Land Yiju [2011] No.523 and
had these decisions (Shen Gui Land Yiju [2011] 02 and Shen Gui Land referendum [2011] No. 02)
unchanged. In view of this, the Company accepted these decisions.
As of 31 December 2011, the compensation for land use rights has not yet been determined. It is
94
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
reported that the Commision has authorize relevant institutions to evaluate the land. The Company
also had intermediaries to assess the land and predict that the compensation for the land can
recover the losses.
XI.Commitments
Until 31 December, 2011, the Company had the commitments of the contracts which had been
signed but not carried out. Mostly of them were construction contracts. And the total amount of
capital item expense and investment were RMB 95,220 thousands. The money had to be paid for
until the other partner of contract carried out the responsibilities and liabilities.
XII. Post-balance sheet issues
According to the plan of the Board of Directors’s meeting On March 29, 2012, the Company will
not distribute profit or capital surplus transferred to share capital and net profit will be used
to compensate the losses of previous years. The plan still need to be submitted to the
Company's general meeting of stockholders meeting for vote.
XIII.Other significant events
1.Significant contracts of loans and mortgage
On 21 October 2011, the Company signed a real estate loan contract with the Industrial and
Commercial Bank of China (Shenzhen Guangming Branch). The loan amount is RMB 850
millions and the loan period is 36 months. The interest rates take a floating interest rate, and the
interest is computed from the withdrawal date (if graded withdrawal, since the first
time withdrawal date).
On October 21, 2011, the Company signed mortgage contract with maximum amount
with Industrial and Commercial Bank of China (Shenzhen Guangming Branch).They agreed to the
principal debt secured from October 14, 2011 to October13, 2014, with the highest balance of
RMB850 million.The Company has Guangming New District East Zone land use rights as
collateral.
95
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
As of December 31, 2011, the Ccompany has not yet withdrawn money.
2.Significant contracts with related parties
Shenzhen Jian'an Group Co., Ltd, the Company's related party, Shenzhen Co., Ltd., won the bid
for General Contracting Projects (Guangming New District East Zone Project) in Shenzhen
Construction Project Transaction Service Center. The Company and Shenzhen Jian'an Group Co.,
Ltd had the contract signed on 20 January 2012. The contract amount is RMB 553,330 thousand.
XIV.Comparative figures
According to requirement of disclosure this period, land increment tax with an amount of RMB
61,908,555.39 was reclassified as other payables from account payable.
XV.Notes to items of the parent company financial statements
1. Accounts receivable
（1）The symbol of credit risk identified by customers categories
Dec 31, 2011 Dec 31, 2010
Provision of Provision of
Book balance Book balance
bad debts bad debts
Amount Proportion % Amount Proportion % Amount Proportion % Amount Proportion %
Category
-- -- -- -- -- -- -- --
1
Category
2 10,786,238.88 100.00 6,301,854.02 100.00 11,996,527.49 100.00 6,301,854.02 100.00
Total 10,786,238.88 100.00 6,301,854.02 100.00 11,996,527.49 100.00 6,301,854.02 100.00
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.
Book balance Provision of bad Proportion % Notes
96
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
debts
A separate provision is established according
House pay to be
10,786,238.88 6,301,854.02 58.42 to the recoverability of each receivales with
collected
long aging and little retrievability.
（3）The aging of accounts receivable by categories
Dec 31, 2011 Dec 31, 2010
Aging
Book balance Proportion % Provision Book balance Proportion % Provision
Within 1 year -- -- -- -- -- --
1 to 2 year -- -- -- -- -- --
2 to 3 year -- -- -- -- -- --
Above 3 years 10,786,238.88 100.00 6,301,854.02 11,996,527.49 100.00 6,457,254.02
Total 10,786,238.88 100.00 6,301,854.02 11,996,527.49 100.00 6,457,254.02
(4)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.
(5) Refer to Note VI.3. (4) for details of the accounts receivables which is due to related parities.
(6) There were no any acconts receivables which had been terminated recognization.
(7) There were no any accounting receivable which had been securitization.
2. Other receivables
（1）The symbol of credit risk identified by customers categories
Dec 31, 2011 Dec 31, 2010
Book balance Provision of bad debts Book balance Provision of bad debts
proportion
Amount proportion % Amount proportion % Amount proportion % Amount
%
Category
1 1,151,208,160.28 98.52 849,851,353.28 98.45 1,124,799,057.84 98.61 849,851,353.28 98.45
Category
2 17,315,405.95 1.48 13,341,826.74 1.55 15,877,540.65 1.39 13,341,826.74 1.55
Total 1,168,523,566.23 100.00 863,193,180.02 100.00 1,140,676,598.49 100.00 863,193,180.02 100.00
Category 1: refers to accounts receivable with significant individual amount and separate
97
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 Proportion
Book balance Notes
bad debts %
Other receivables between A separate provision is established
subsidiares that are not included in according to the recoverability of
consolidated statement 1,324,136.04 1,116,316.04 84.31 each receivales with long aging and
Others 15,991,269.91 12,225,510.70 76.45 little retrievability
Total 17,315,405.95 13,341,826.74 77.05
（3）The aging of other receivables:
Dec 31, 2011 Dec 31, 2010
Aging
Amount Proportion % Provision Amount proportion Provision
Within 1 year 40,546,035.56 3.47 -- 7,786,529.93 0.68 --
1 to 2 year 5,016,859.43 0.43 -- 8,853,096.41 0.78 --
2 to 3 year 8,713,096.41 0.75 -- 115,288,327.28 10.11 --
Above 3 years 1,114,247,574.83 95.35 863,193,180.02 1,008,748,644.87 88.43863,193,180.02
Total 1,168,523,566.23 100.00 863,193,180.02 1,140,676,598.49 100.00863,193,180.02
（4）The informations of accounts receivables of the company's top five debtors are as follows:：
Name Relationship Amount Proportion % Aging
67,650.00 0.01 Within 1 year
1,993,416.69 0.17 1 to 2 year
Fresh Peak Enterprise Co., Ltd. Subsidiary
383,983.75 0.03 2 to 3 year
562,537,916.54 48.14 Above 3 years
36,696,547.13 3.14 Within 1 year
Shenzhen ShenFang Group LongGang 2,005,389.20 0.17 1 to 2 year
Subsidiary
Development Co.,Ltd 2,295,681.21 0.20 2 to 3 year
200,906,067.12 17.19 Above 3 years
98
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
American Great Wall Co.,Ltd Subsidiary 101,379,954.81 8.68 Above 3 years
Canada Great Wall(vancouver) Co.,Ltd Subsidiary 89,035,748.07 7.62 Above 3 years
Shenzhen City Shenfang Free Trade
Trading Ltd. Subsidiary 32,390,993.97 2.77 Above 3 years
Total 1,029,693,348.49 88.12
（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. (4) for details of the other receivables which due from related parities.
（7）There were no any other receivables which had been terminated recognization in the
accounting year.
（8）There were no any other receivables which had been securitization in the accounting year.
3. Inventories
Dec 31, 2011 Dec 31, 2010
Amount Provision for declines Amount Provision for declines
Real estate developed products 49,472,548.12 -- 66,523,100.15 771,196.00
Real estate developing products 984,724,746.16 -- 131,828,661.29 --
Real estate which are going to be developed 488,129,480.59 -- 1,215,632,063.00 --
Total 1,522,326,774.87 -- 1,413,983,824.44 771,196.00
99
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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 Dec 31, 2010 Movement Dec 31, 2011 Provision accrued in Dividend
method cost (%) (%)
2011
Subsidiaries’ investment：
Shenzhen City Property
Management Ltd. Cost method 12,821,791.52 12,821,791.52 -- 12,821,791.52 95 95 -- -- --
Shenzhen Petrel Hotel Co. Ltd. Cost method 20,605,047.50 20,605,047.50 -- 20,605,047.50 68.10 68.10 -- -- --
Shenzhen City Shenfang
Investment Ltd. Cost method 9,000,000.00 9,000,000.00 -- 9,000,000.00 90 90 -- -- --
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)
Guangzhou Property and Estate
Co., Ltd. Cost method 20,000,000.00 20,000,000.00 -- 20,000,000.00 100 100 -- -- --
Shenzhen Zhen Tung
Engineering Ltd Cost method 11,332,321.45 11,332,321.45 -- 11,332,321.45 73 73 -- -- --
American Great wall Co.,Ltd Cost method 1,435,802.00 1,435,802.00 -- 1,435,802.00 70 70 -- -- --
Shenzhen City Shenfang Free
Trade Trading Ltd. Cost method 4,750,000.00 4,750,000.00 -- 4,750,000.00 95 95 -- -- --
Shenzhen City Hua Zhan Cost method 6,000,000.00 6,000,000.00 -- 6,000,000.00 75 75 -- -- --
100
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Provision
Measured Investment Proportion Voting right
Name of investees Dec 31, 2010 Movement Dec 31, 2011 Provision accrued in Dividend
method cost (%) (%)
2011
Construction Management Ltd.
Shenzhen City Car Rental Ltd. Cost method 11,809,500.00 6,495,225.00 -- 6,495,225.00 55 55 -- -- --
QiLu Co.,Ltd Cost method 212,280.00 212,280.00 -- 212,280.00 20 20 -- -- --
Beijing Shenfang Property
Management Ltd. Cost method 500,000.00 500,000.00 -- 500,000.00 10 10 -- -- --
Shenzhen Lain Hua Industry and
Trading Co. Ltd. Cost method 13,458,217.05 13,458,217.05 -- 13,458,217.05 95 95 -- -- --
Shenzhen City SPG Long Gang
30,850,000.00 30,850,000.00 -- 30,850,000.00 95 95 -- -- --
Development Ltd. Cost method
Beijing Fresh Peak Property
Development Management 64,183,888.90 64,183,888.90 -- 64,183,888.90 75 75 -- -- --
Limited Company Cost method
Shenzhen Shenfang Car Park
29,750,000.00 29,750,000.00 -- 29,750,000.00 70 70 -- -- --
Ltd. Cost method
Joint venture investment：
Guangdong province Huizhou
Luofu Hill Mineral Water Equity 9,969,206.09 9,969,206.09 -- 9,969,206.09 Cooperation Cooperation 9,969,206.09 -- --
Co.,Ltd method
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 ： -- --
101
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Provision
Measured Investment Proportion Voting right
Name of investees Dec 31, 2010 Movement Dec 31, 2011 Provision accrued in Dividend
method cost (%) (%)
2011
Shenzhen Runhua Automobile Equity
trading Co.,Ltd method 1,445,425.56 1,445,425.56 -- 1,445,425.56 50 50 1,445,425.56 -- --
Shenzhen Ronghua JiDian Equity
Co.,ltd method 1,250,000.00 1,604,690.04 -80,622.11 1,524,067.93 25 25 1,076,954.64 -- 75,000.00
Shenzhen Fresh Peak Property Equity
Consultant Co.,Ltd method 600,000.00 -- -- -- 20 20 -- -- --
Shenzhen Dongfang New World Equity
Store Co.,Ltd method 15,000,000.00 -- -- -- 50 50 -- -- --
Other investments： -- --
Shenzhen Shen Fang Industrial
4,500,000.00 4,500,000.00 -- 4,500,000.00 100 100 4,500,000.00 -- --
Development Co., Ltd Cost method
Shenzhen ZhongGang Haiyan
Enterprise Ltd. Cost method 12,940,900.00 12,940,900.00 -- 12,940,900.00 68 68 12,940,900.00 -- --
Shenzhen Real Estate
Consolidated Service Co., Ltd. Cost method 5,958,305.26 5,958,305.26 -- 5,958,305.26 100 100 5,958,305.26 -- --
Paklid Limited Cost method 201,100.00 201,100.00 -- 201,100.00 100 100 201,100.00 -- --
Canad GreatWall (vancouver)
Co.,Ltd Cost method 4,526.25 -- -- -- 60 60 -- -- --
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., Ltd. Cost method 8,180,003.63 8,180,003.63 -- 8,180,003.63 100 100 8,180,003.63 -- --
Shenzhen Xin Dongfang Store Cost method 18,500,000.00 18,500,000.00 -- 18,500,000.00 100 100 18,500,000.00 -- --
102
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Provision
Measured Investment Proportion Voting right
Name of investees Dec 31, 2010 Movement Dec 31, 2011 Provision accrued in Dividend
method cost (%) (%)
2011
Ltd.
Shenzhen City Shenfang
Construction and Decoration
Materials Ltd. Cost method 2,680,000.00 2,680,000.00 -- 2,680,000.00 100 100 2,680,000.00 -- --
Shenzhen Shenfang Department
Store Co. Ltd. Cost method 9,500,000.00 9,500,000.00 -- 9,500,000.00 95 95 9,500,000.00 -- --
Shenzhen CyberPort Co., Ltd Cost method 14,000,000.00 12,401,018.42 -- 12,401,018.42 70 70 -- -- --
ShenZhen ShenFang BaoAn
developmentCo.,Ltd Cost method 19,000,000.00 19,000,000.00 -- 19,000,000.00 95 95 -- -- --
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 460,913,016.79 430,459,167.78 -80,622.11 430,378,545.67 143,861,642.81 -- 75,000.00
103
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
（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
104
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
5. Turnover and cost of sales
（1）Turnover and cost of sales
2011 2010
Core Operating Income 86,066,524.00 214,053,423.86
Other Operating Income 14,114,523.05 3,458,967.53
Gross Income 100,181,047.05 217,512,391.39
Cost of sales 42,155,178.18 95,076,630.82
（2）Operating income（classfied by industry）
Operating Income Operating Cost Operating margin
Industry
2011 2010 2011 2010 2011 2010
Real estate 33,569,135.00 158,904,728.43 16,440,350.35 70,587,850.44 17,128,784.65 88,316,877.99
Leasing 54,111,912.05 58,607,662.96 23,815,993.83 24,488,780.38 30,295,918.22 34,118,882.58
Others 12,500,000.00 -- 1,898,834.00 -- 10,601,166.00 --
Total 100,181,047.05 217,512,391.39 42,155,178.18 95,076,630.82 58,025,868.87 122,435,760.57
（3）Operating income（classfied by district）
Operating Income Operating Cost Operating Margin
District
2011 2010 2011 2010 2011 2010
Shenzhen 100,181,047.05 217,512,391.39 42,155,178.18 95,076,630.82 58,025,868.87 122,435,760.57
（4）The informations of the top 5 clients are as follows:
2011
Amount Proportion%
Corporation unit No.1 27,800,000.00 27.75
Corporation unit No.2 12,500,000.00 12.48
Corporation unit No.3 5,860,001.00 5.85
Corporation unit No.4 4,656,542.00 4.65
Corporation unit No.5 3,406,279.00 3.40
Total 54,222,822.00 54.13
105
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
6. Investment income
(1)The details of investment income are as follows:
2011 2010
The investment income yielded from the long-term equity appilied with the cost method -- --
The investment income yielded from the long-term equity appilied with the equity method -5,622.11 -36,587.15
The investment income yielded from the disposal of the long-term equity -- 14,612,190.62
The investment income yielded from the disposal of the financial assest held for trading -34,017.37 322,484.04
Total -39,639.48 14,898,087.51
（2）The investment income yielded from the long-term equity appilied with the equity method
Investees 2011 2010
Shenzhen Ronghua JiDian Co.,ltd -5,622.11 -36,587.15
Total -5,622.11 -36,587.15
7. Supplementary cash flow statement of the parent company
Supplementary information 2011 2010
1.Reconciliation from the net profit to the cash flows from operating
activities
Net profit 15,501,411.42 -1,836,875.99
Add：Provisions for assets impairment -- --
Depreciation of fixed assets and investment property 21,782,702.08 22,395,176.82
Amortization of intangible assets 61,999.96 --
Long-term deferred and prepaid expenses amortization 36,663.94 --
Losses on disposal of fixed assets, intangible assets and other
long-term assets（gains used“-”） -190,727.96 --
Scrapping of fixed assets losses（gains used“-”） 17,714.50 57,036.76
Exchange of fair value losses（gains used“-”） -19,993.75 15,323.50
Finance expenses （gains used“-”） -6,212,145.09 55,311,271.36
Investment losses（gains used“-”） 39,639.48 -14,898,087.51
Decrease in deferred tax assets（gains used“-”） 916,500.07 -827,858.81
Increase in deferred tax liabilities（gains used“-”） -- --
Decrease in inventories（gains used“-”） -61,883,559.61 1,702,130.24
Decrease in operating receivables（gains used“-”） 1,557,349.87 190,803,623.44
106
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Supplementary information 2011 2010
Increase in operating payables（gains used“-”） 94,174,827.24 -391,648,709.02
Others -- --
Net cash flows from operating activities 65,782,382.15 -138,926,969.21
2. Investment and financing activities not involving cash --
3.Net increase/ (decrease) in cash and cash equivalents -- --
Cash at end of the year 144,779,100.65 182,646,766.32
Less: cash at beginning of the year 182,646,766.32 62,241,927.23
Add：cash equivalents at end of the year -- --
Less: cash equivalents at beginning of the year -- --
Net increase in cash and cash equivalents -37,867,665.67 120,404,839.09
XVI. 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 2011 2010
Non-current assets disposed of profit and loss, including the written-off part of
provision for asset impairment 173,176.00 15,274,959.40
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 -- --
107
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
Items 2011 2010
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
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
trading of financial assets, trading financial liabilities and available-for-sale
financial assets investment returns achieved -14,023.62 307,160.54
A separate impairment test for impairment of receivables transferred back to
preparation -- --
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 2,200,366.50 -776,320.25
Other non-recurring gains and losses in line with the definition of profit and loss
-- --
items
Total 2,359,518.88 14,805,799.69
Less: Income tax impact of several 589,509.63 3,449,936.14
Profit and loss impact of the number of minority shareholders -- --
Deducting income tax, minority shareholders after the non-recurring profit
and loss profit and loss together 1,770,009.25 11,355,863.55
108
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(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
2011
The net profit attributable to equity holders of the
Company 101,200,060.65 6.85 0.1000 0.1000
The net profit after deducting the non-regular gian or loss
attributable to equity holders of the Company 99,430,051.40 6.73 0.0983 0.0983
2010
The net profit Attributable to equity holders of the
Company 84,760,162.75 6.12 0.0838 0.0838
The net profit after deducting the non-regular gian or loss
attributable to equity holders of the Company 73,404,299.20 5.30 0.0726 0.0726
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;
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;
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Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd
Notes to the financial statement for the year ended 31 December 2011
(All amounts are stated in RMB Yuan unless otherwise stated)
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 company of the Company 101,200,060.65 101,200,060.65
The net assests attributable to holding company of the Company 1,528,596,536.13 1,528,596,536.13
Notes No differences
English version of financial statements for the year January 1, 2011 to December 31, 2011 if there is any
conflict of meaning between the Chinese version and English version, the Chinese version will prevail.
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