ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE &
PROPERTIES (GROUP) CO., LTD.
INTERIM REPORT 2019
2019-060
August 2019
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of ShenZhen Special Economic Zone Real Estate &
Properties (Group) Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee the
factuality, accuracy and completeness of the contents of this Report and its summary, and
shall be jointly and severally liable for any misrepresentations, misleading statements or
material omissions therein.
Zhou Jianguo, chairman of the Company’s Board, Chen Maozheng, the Company’s General
Manager, Tang Xiaoping, the Company’s head for financial affairs, and Qiao Yanjun, head of
the Company’s financial department (equivalent to financial manager) hereby guarantee that
the Financial Statements carried in this Report are factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
The Company discusses the “risks facing the Company and countermeasures” under the same
heading in item X under “Part IV Operating Performance Discussion and Analysis” of this
Report.
The Company has no interim dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2
Part II Corporate Information and Key Financial Information ................................................... 5
Part III Business Summary ............................................................................................................... 8
Part IV Operating Performance Discussion and Analysis ........................................................... 10
Part V Significant Events ................................................................................................................ 20
Part VI Share Changes and Shareholder Information ................................................................. 27
Part VII Preferred Shares ............................................................................................................... 32
Part VIII Directors, Supervisors and Senior Management.......................................................... 33
Part IX Corporate Bonds ................................................................................................................ 34
Part X Financial Statements ........................................................................................................... 35
Part XI Documents Available for Reference ................................................................................ 173
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Definitions
Term Definition
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
“SPG”, the “Company”, the “Group” or “we”
and its consolidated subsidiaries, except where the context otherwise requires
Holding Company Shenzhen Investment Holdings Co., Ltd.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name SPG, SPG-B Stock code 000029, 200029
Changed stock name (if any) ---
Stock exchange for stock
Shenzhen Stock Exchange
listing
Company name in Chinese 深圳经济特区房地产(集团)股份有限公司
Abbr. (if any) 深房集团
Company name in English (if
ShenZhen Special Economic Zone Real Estate&Properties (Group).Co.，Ltd．
any)
Abbr. (if any) SPG
Legal representative Zhou Jianguo
II Contact Information
Board Secretary Securities Representative
Name Tang Xiaoping Luo Yi
47/F, SPG Plaza, Renmin South Road, 47/F, SPG Plaza, Renmin South Road,
Address
Shenzhen, Guangdong, P.R.China Shenzhen, Guangdong, P.R.China
Tel. （86 755）82293000-4638 （86 755）82293000-4715
Fax （86 755）82294024 （86 755）82294024
Email address tangxiaoping0086@126.com spg@163.net
III Other Information
1. Contact Information of the Company
Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address and
email address of the Company in the Reporting Period.
□ Applicable √ Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2018 Annual Report.
2. Media for Information Disclosure and Place where this Report is Kept
Indicate by tick mark whether any change occurred to the information disclosure media and the place for keeping the Company’s
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
periodic reports in the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the
Company’s periodic reports and the place for keeping such reports did not change in the Reporting Period. The said information can
be found in the 2018 Annual Report.
IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
H1 2019 H1 2018 Change (%)
Operating revenue (RMB) 1,251,337,802.57 1,317,541,631.35 -5.02%
Net profit attributable to the listed
333,155,843.41 329,066,084.53 1.24%
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before exceptional 322,865,954.53 329,143,873.10 -1.91%
gains and losses (RMB)
Net cash generated from/used in operating
685,675,245.10 594,728,129.67 15.29%
activities (RMB)
Basic earnings per share (RMB/share) 0.3293 0.3253 1.23%
Diluted earnings per share (RMB/share) 0.3293 0.3253 1.23%
Weighted average return on equity (%) 9.81% 11.00% -1.19%
30 June 2019 31 December 2018 Change (%)
Total assets (RMB) 5,069,809,256.04 4,665,891,514.25 8.66%
Equity attributable to the listed company’s
3,463,168,724.16 3,332,259,641.39 3.93%
shareholders (RMB)
V Accounting Data Differences under Chinese Accounting Standards (CAS) and
International Financial Reporting Standards (IFRS) and Foreign Accounting Standards
1. Net Profit and Equity Differences under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.
2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
No such differences for the Reporting Period.
XI Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item Reporting Period Note
Gain or loss on disposal of non-current assets (inclusive of
-3,605.82
impairment allowance write-offs)
Gain or loss on assets entrusted to other entities for investment or Gains on investments in
13,359,898.55
management structured deposits at bank
Down payments from home
Non-operating income and expense other than above 363,559.11
buyers
Less: Income tax effects 3,429,962.96
Total 10,289,888.88 --
Explanation of why the Company classifies a gain/loss item as exceptional according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items, or reclassifies any exceptional item listed in the said explanatory announcement as recurrent:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
Is the Company subject to any industry-specific disclosure requirements?
No.
Focused on residential property development, the Company has been seeing increasing brand
effects with great effort spent on project quality and progress, as well as on premium projects.
During the Reporting Period, the Company primarily developed and sold residential properties in
two cities, Shenzhen and Shantou. In Shenzhen, the Chuanqi Jingyuan project has successfully
completed fine decoration and has been almost sold out; the Chuanqi Donghu Mingyuan project has
wrapped up construction and is going through acceptance, of which approximately 10% has been
sold; and the Cuilinyuan project has finished the initial registration and has been sold around 80%.
In Shantou, the Tianyuewan Phase II project has completed the pile foundation and the pit support
structure and is progressing as scheduled; and the Tianyuewan Phase I project has seen about 35%
of its residential units sold.
II Material Changes in Major Assets
1. Material Changes in Major Assets
Major assets Reason for material changes
Equity assets No material change
Fixed assets No material change
Intangible assets No material change
Construction in progress No material change
The ending amount (as at 30 June 2019) was down by RMB808,041,542.78 (or 39.45%)
from the beginning amount (as at 31 December 2018), primarily driven by the investment
Monetary capital
in structured deposits of RMB1.3 billion in total at China Citic Bank with a maturity of
180 days.
The ending amount (as at 30 June 2019) was up by RMB21,254,979.88 (or 117%) from
Accounts receivable the beginning amount (as at 31 December 2018), primarily driven by the house
mortgages which went through the mortgage formalities and remained unpaid.
The ending amount (as at 30 June 2019) was up by RMB6,074,601.73 (or 39.81%) from
Financings backed by accounts
the beginning amount (as at 31 December 2018), primarily driven by the factoring
receivable
business between subsidiary Zhentong Engineering and bank.
The ending amount (as at 30 June 2019) was up by RMB1,359,437,064.03 (or
Other current assets
20047.74%) from the beginning amount (as at 31 December 2018), primarily driven by
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
the investment in two structured deposits of RMB1.3 billion in total at China Citic Bank
with a maturity of 180 days.
The ending amount (as at 30 June 2019) was down by RMB76,658,406.02 (or 35.37%)
Accounts payable from the beginning amount (as at 31 December 2018), primarily driven by the payments
made for construction.
The ending amount (as at 30 June 2019) was up by RMB185,952,497.18 (or 241.21%)
Taxes payable from the beginning amount (as at 31 December 2018), primarily driven by the provisions
for corporate income tax and land VAT.
The ending amount (as at 30 June 2019) was up by RMB232,901,528.46 (or 148.89%)
Advances from customers from the beginning amount (as at 31 December 2018), primarily driven by more
advances from home buyers.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
Is the Company subject to any industry-specific disclosure requirements?
No.
As one of the earliest real estate listed companies in Shenzhen, the Company has a history over 30
years in real estate development in Shenzhen and rich experience in the main business of real estate
development. In recent years, thanks to the experience learned from the Shenzhen-located
Chuanqishan project, Chuanqi Shanglin project, Cuilinyuan project, Chuanqi Jingyuan project and
Chuanqi Donghu Mingyuan project, as well as from the Shantou-located projects, the Company
accelerates the establishment of a modern enterprise HR management system and works hard in
building a professional and high-quality development team. It also keeps improving the
management mechanism and processes for project development. As a result, the professionalism
and management capability of the Company have improved significantly; planning, construction,
cost control, marketing capability and brand image have been effectively enhanced; and the
operational capability in the main business of real estate keeps increasing, along with the core
competitiveness. As of the Reporting Period (inclusive), the Company has been honored jointly by
the Guangdong Provincial Enterprise Confederation and the Guangdong Provincial Association of
Entrepreneurs as a “Most Honest Enterprise in Guangdong Province” for eight years in a row. It has
also won accolades from the Shenzhen Real Estate Association, namely, the “Real Estate Developer
in Shenzhen with the Highest Brand Value” and the “Honest (Quality) Real Estate Developer in
Shenzhen”, for the past two years.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part IV Operating Performance Discussion and Analysis
I Overview
(I) Operating Results of the Reporting Period
In face of the complicated and changeable economic conditions at home and abroad in 2019,
China’s economy continued to see progress amid overall stability. Major macro-economic
indicators remained at reasonable levels, the supply-side structural reform carried forward, and
high-quality development promotion continued. Regarding the domestic real estate market, it was
still under great pressure due to the restrictive measures. Under such circumstances, in addition to
carrying forward its major assets restructuring programme, the Company adhered to the thinking of
“Carefully Draw up Development Strategies, Particularly Focus on Core Business, Strictly Control
Costs and Continuously Improve Management Capability” and put greater efforts into promoting
project construction and marketing, so as to achieve continual and stable development.
In the Reporting Period, the Company made a concerted effort to steadily promote project
construction. As a result, for this period, the Company achieved operating revenue of RMB1,251
million, down 5.02% compared to the same period of last year; a profit before taxation of RMB446
million, representing a year-on-year growth of 1.28%; and a net profit attributable to the listed
company’s shareholders of RMB333 million, increasing 1.24% from a year earlier. As at 30 June
2019, equity attributable to the listed company’s shareholders amounted to RMB3,463 million, a
3.93% rise compared to the end of last year.
1. Focused on residential property development, the Company has been building a professional and
high-quality development team, as well as improving the management mechanism and processes for
project development. As a result, the operational capability in the core business of real estate keeps
increasing, along with the core competitiveness. During the Reporting Period, the key projects of
the Company were mostly located in Shenzhen and Shantou. The Company paid close attention to
product quality and progress, and adjusted marketing strategies in a timely manner. As a result,
project development and sales progress basically met expectations, and the core business was in
good order and health.
2. The Company’s main real estate projects under construction or available for sale during the
Reporting Period included the Shenzhen-based Chuanqi Jingyuan, Cuilinyuan and Chuanqi Donghu
Mingyuan projects, as well as the Shantou-located Tianyuewan project, etc., with details as follows:
The
Floor area Expected total Accumulated
Locati Comp Completed
Project Usage Status Site area（㎡）with plot ratio investment investment
on any’s floor area（㎡）
（㎡） (RMB’0,000) (RMB’0,000)
stake
Chuanqi Shenzh Rental Availab 49% 4,243.34 43,156 43,156 24,865 20,023
Jingyuan en le for
sale
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Cuilinyuan Shenzh Residenti Availab 100% 16,424.29 60,450 60,450 57,000 51,634
en al le for
sale
Tianyuewan Shanto Residenti Availab 100% 31,167.50 153,470 153,470 79,801 68,983
Phase I u al le for
sale
Tianyuewan Shanto Residenti Under 100% 33,361.70 127,661 0 65,485 20,802
Phase II u al constru
ction
Chuanqi Shenzh Residenti Under 100% 5,889.70 34,073 0 51,000 36,723
Donghu en al constru
Mingyuan ction
3. Land bank for future development by the end of the Reporting Period:
Project Location Land area（㎡） Floor area with plot ratio （㎡）
Xinfeng Building Shantou 5,920 26,640
Total 5,920 26,640
Note: The Company's real estate projects do not involve primary land development.
(II) Operation Review for H1 2019
1. The Company’s fundamentals remain positive with sufficient cash flows and a healthy financial
condition. In late May 2019, the Company implemented its final cash dividend plan of 2018.
2. The major property developments proceed smoothly. The Company has further improved the
development and management system, attached importance to construction safety and tightened
cost control. During the Reporting Period, the overall progress of the Company’s property
developments was in line with the schedule. In Shenzhen, the Cuilinyuan project has finished the
initial registration; the Chuanqi Jingyuan project has successfully completed fine decoration; and
the Chuanqi Donghu Mingyuan project has wrapped up construction and is going through
acceptance. In Shantou, the Tianyuewan Phase II project has completed the pile foundation and the
pit support structure and is progressing as scheduled.
3. Property sales were generally good. The Company kept a close eye on policy and market
dynamics, and adjusted marketing strategies accordingly in a timely manner. Sales by project were
basically satisfying. The Chuanqi Jingyuan project has been almost sold out; the Chuanqi Donghu
Mingyuan project has been sold approximately 10%; the Cuilinyuan project has been sold around
80%; and the Tianyuewan Phase I project has seen about 35% of its residential units sold.
(1) Sales of major real estate projects carried forward to the Reporting Period:
Unit: RMB’0,000
Operating Gross profit margin
Location Cost of sales Gross profit margin
revenue (%)
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Chuanqi Jingyuan Shenzhen 79,580 11,268 68,312 85.84
Cuilinyuan Shenzhen 11,185 3,078 8,107 72.48
Tianyuewan Phase Shenzhen 6,783 5,348 1,435 21.16
I
Yuejing Dongfang Shantou 182 135 47 25.82
Jinyedao Shantou 599 234 365 60.93
Total 98,329 20,063 78,266 79.60
(2) Real Estate sales during the Reporting Period:
Unit: square meters
Floor area
The Area actually
Time of opening available for Settled area in
No. Project Company’s Location sold in Current
for sale sale at Current Period
interest Period
year-beginning
1 Chuanqi October 2018 49% Shenzhen 18,011 16,125 12,006
Jingyuan
2 Cuilinyuan June 2017 100% 12,733 4,026 3,256
Shenzhen
3 Chuanqi December 2018 100% Shenzhen 32,762 2,772
Donghu
Mingyuan
4 Tianyuewan October 2016 100% Shantou 122,085 11,566 12,203
Phase I
5 The remaining December 2013 100% Shantou 944 211
units of Yuejing
Dongfang
6 The remaining July 1996 100% Shantou 3,408 916 526
units of
Jinyedao
Total 189,943 35,405 28,202
4. Corporate management keeps improving and internal potentials are tapped to help improve
corporate performance. Subsidiaries have enhanced strategic synergy with the core business of the
Company and generally achieved over half of the expected profit in H1 2019. Meanwhile, the
purchase of structured deposits at bank with idle funds has effectively increased the efficiency of
capital utilization. Moreover, the six expenses under intense monitoring went down 9.2% in H1
2019 compared to a year ago.
5. Property rental is stable with steadily rising rental prices as well as good occupancy rates and rent
collection rates. The major properties for rental are as follows:
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Unit: square meters
Occupancy The Company’s
Location Name of building Rentable area Rented area Usage Land ownership
rate interest
Shenzhen Real Estate 3,413.88 3,413.88 100% Commercial The Company 100%
Mansion
Shenzhen North Block of 4,819.71 4,819.71 100% Commercial The Company 100%
Guoshang
Mansion
Shenzhen Petrel Building 22,475.47 22,475.47 100% Commercial The Company 100%
Shenzhen SPG Plaza 61,005.94 49,750.84 81.55% Office The Company 100%
SPG Plaza 19,903.30 19,825.30 99.61% Commercial The Company 100%
Podium
Shenzhen Wenjin Garden 3,531.60 3,531.60 100% Commercial The Company 100%
Total 115,159.90 103,816.80
6. The assets restructuring programme has been carried forward.
The Company’s major assets restructuring plan is subject to further communications and
improvements with the regulators. Due diligence material update, additional audit and assessment,
etc. are underway.
II Analysis of Core Businesses
See “I Overview” above.
Year-on-year changes in key financial data:
Unit: RMB
H1 2019 H1 2018 Change (%) Main reason for change
Operating revenue 1,251,337,802.57 1,317,541,631.35 -5.02% Decrease in property sales carryforwards
Cost of sales Decrease in carryforwards of property sales by
437,127,976.25 540,417,491.41 -19.11%
floor area
Decreases in property sales commissions and
Selling expense 18,474,060.33 37,167,133.77 -50.29%
advertising expense
Administrative expense 30,812,771.33 31,736,200.85 -2.91%
Decrease in interest income due to less term
Finance costs -6,626,259.12 -8,611,669.10 23.05%
deposits
Income tax expense 112,729,793.86 111,169,717.28 1.40% A rise in profits
Net cash generated from/used in Increase in cash proceeds from sale of
685,675,245.10 594,728,129.67 15.29%
operating activities commodities and rendering of services
Due to structured deposits at bank (a purchase of
Net cash generated from/used in
-388,696,596.57 -599,344,168.71 35.15% RMB600 million in H1 2018 compared to a
investing activities
withdrawal of RMB900 million upon maturity
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
and another purchase of RMB1,300 million in
H1 2019)
Net cash generated from/used in Repayment of bank loan in H1 2018 and cash
-204,332,000.00 -133,528,938.06 -53.02%
financing activities dividend distribution in H1 2019
Joint effects of cash from sale of commodities,
Net increase in cash and cash
91,958,457.22 -138,128,390.84 166.57% purchases of structured deposits at bank,
equivalents
repayment of loan and cash dividend distribution
Income receivable from structured deposits at
Return on investment 14,288,098.55 827,100.00 1,627.49%
bank is calculated by time period
Major changes in the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Breakdown of main business:
Unit: RMB
Year-on-year Year-on-year
Year-on-year
Operating increase/decrease increase/decrease
Cost of sales Gross profit rate increase/decrease
revenue of operating of gross profit
of cost of sales
revenue rate
By business segment
Real estate 983,278,946.94 200,636,695.31 79.60% -6.02% -33.74% 8.54%
Construction
149,651,610.68 144,088,214.48 3.72% -0.66% 0.19% -0.81%
service
Rental service 32,096,693.65 13,639,174.54 57.51% 8.19% 0.73% 3.15%
Property
management 77,686,206.46 71,075,899.35 8.51% -4.63% -7.22% 2.55%
service
Other 25,797,028.12 21,071,227.42 18.32% 40.99% 105.76% -25.71%
Subtotal 1,268,510,485.85 450,511,211.10 64.49% -4.36% -17.64% 5.73%
Less: internal
-17,172,683.28 -13,383,234.85 22.07% 94.94% 102.72% -2.99%
offset
Total 1,251,337,802.57 437,127,976.25 65.07% -5.02% -19.11% 6.08%
By product
Housing units 182,142,033.38 84,262,841.13 53.74% -82.55% -72.06% -17.37%
Apartments 795,797,573.30 112,683,722.85 85.84%
Shops and
6,456,714.32 2,572,757.27 60.15% 168.85% 105.03% 60.15%
parking place
Other 284,114,164.85 250,991,889.85 11.66% 0.58% 2.25% -1.44%
Subtotal 1,268,510,485.85 450,511,211.10 64.49% -4.53% -17.83% 5.75%
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Offset internal
-17,172,683.28 -13,383,234.85 22.07% 94.94% 102.72% -2.99%
transactions
Total 1,251,337,802.57 437,127,976.25 65.07% -5.20% -19.30% 6.10%
By geographic segment
Guangdong
1,159,203,610.43 345,789,647.14 70.17% -9.53% -31.28% 9.44%
Province
Other regions in
108,983,973.87 104,721,563.96 3.91% 131.23% 132.27% -0.43%
China
Overseas 322,901.55 100.00% 12.20% 0.00%
Subtotal 1,268,510,485.85 450,511,211.10 64.49% -4.53% -17.83% 5.75%
Less: internal
-17,172,683.28 -13,383,234.85 22.07% 94.94% 102.72% -2.99%
offset
Total 1,251,337,802.57 437,127,976.25 65.07% -5.20% -19.30% 6.10%
III Non-Core Business Analysis
□ Applicable √ Not applicable
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
End of Reporting Period End of the same period of last year
Proportion Increase/decreas Notes to significant
Proportion to
Amount to total Amount e in proportion changes
total assets
assets
Monetary capital 1,240,480,893.15 24.47% 1,068,660,665.62 23.66% 0.81%
Caused by receipt of
Accounts
39,421,868.07 0.78% 336,114,447.24 7.44% -6.66% mortgage payment from
receivable
banks
Caused by carry-over of
Inventories 1,602,436,237.11 31.61% 1,677,853,797.04 37.15% -5.54%
real estate
Investment
611,746,542.66 12.07% 635,361,225.57 14.07% -2.00%
property
Long-term equity
12,561,107.24 0.25% 29,888,661.65 0.66% -0.41%
investments
Fixed assets 31,903,409.26 0.63% 35,921,711.70 0.80% -0.17%
Short-term 21,334,705.19 0.42% 51,374,540.56 1.14% -0.72%
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
borrowings
Long-term
0.00% 17,783,500.00 0.39% -0.39%
borrowings
Other current Caused by the purchase of
1,366,218,063.59 26.95% 604,214,106.70 13.38% 13.57%
assets bank structured deposits
2. Assets and Liabilities Measured at Fair Value
□ Applicable √ Not applicable
3. Assets with Restricted Rights as of the End of the Reporting Period
Item Ending carrying value Reason for restriction
Accounts receivable 21,334,705.19 As pledges for short-term borrowings
Total 21,334,705.19 --
V Investment Analysis
1. Total Investments Made
□ Applicable √ Not applicable
2. Significant Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in this Reporting Period
(2) Investment in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in this Reporting Period
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in this Reporting Period
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Analysis on Majority-owned and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Unit: RMB
Relationsh Main
Registered Operating Operating
Company name ip with the business Total assets Net assets Net profit
capital revenue profit
Company scope
Shenzhen SPG
Developmen
Longgang 30,000,000.0 535,642,496. 84,588,017.8 112,185,340. 50,772,634.3 38,124,475.7
Subsidiary t of real
Development Co., 0 46 1 95 3 5
estate
Ltd.
Shantou SEZ,
Wellam FTY, Developmen
91,226,120.4 207,170,746. 100,603,966.
Building Subsidiary t of real 5,968,142.89 90,062.60 67,546.96
4 48 14
Development, Co., estate
Ltd.
Shantou Huafeng
Developmen
Real Estate 80,000,000.0 854,456,185. 26,134,921.7 67,830,745.9 -7,436,466.1 -5,577,349.6
Subsidiary t of real
Development Co., 0 14 5 9 9 3
estate
Ltd.
Great Wall Estate 19,244,284.8 -87,159,436.
Subsidiary Lease 2,051,146.00 322,901.55 -59,435.04 -59,435.04
Co., Inc. (U.S.) 0 14
Shenzhen Zhentong Installation
10,000,000.0 168,555,859. 27,569,075.3 150,312,096.
Engineering Co., Subsidiary and 440,467.94 440,467.94
0 55 3 59
Ltd. construction
Shenzhen Property
Property 106,956,005. 29,173,301.0 80,509,528.3
Management Co., Subsidiary 7,250,000.00 3,274,259.95 2,677,980.81
management 66 0 8
Ltd.
Shenzhen Petrel Subsidiary Hotel 30,000,000.0 52,464,060.1 45,612,768.8 13,025,431.1 4,009,718.82 3,794,881.45
17
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Hotel Co., Ltd. Service 0 0 1 6
Shenzhen Huazhan
Construction Construction
Subsidiary 8,000,000.00 8,848,922.15 8,656,183.13 909,540.63 -164,549.83 -164,549.83
Supervision Co., supervision
Ltd.
Investment
Xin Feng Enterprise 123,158,784. -449,236,940
Subsidiary and 502,335.00 2,572,569.79 343,349.56 62,664.44
Co., Ltd. 99 .16
management
Subsidiaries obtained or disposed in the Reporting Period:
□ Applicable √ Not applicable
Information about major majority- and minority-owned subsidiaries:
1. Except the Company, the subordinate subsidiaries engaged in real estate development mainly
include: Shenzhen SPG Longgang Development Co., Ltd., Shantou SEZ, Wellam FTY, Building
Development, Co., Ltd., Shantou Huafeng Real Estate Development Co., Ltd. The Cuilinyuan
project developed by Shenzhen SPG Longgang Development Co., Ltd. brought forward RMB0.112
billion in H1 of 2019, accounting for 11% of the Company's real estate sector income, and 11% of
the Group's combined profits. Jinyedao and YuejingDongfang developed by Shantou SEZ, Wellam
FTY, Building Development, Co., Ltd. were sold as remaining buildings with relatively small
percentages of sales volume and carry-over amount. And Shantou Huafeng Real Estate
Development Co., Ltd. was responsible for the development of Tianyuewan project (divided into
Phase I and Phase II). Tianyuewan Phase I was opened for sale in October 2016, and Phase II
started construction in November 2018. The sales rate of the Phase I as of now is 40%. The main
reasons for the loss in H1 of 2019 were: the sales progress was not up to expectations, and another
was the payment of interest on internal loans.
2. Shenzhen Zhentong Engineering Co., Ltd. was engaged in the business of building installation
and maintenance with the operating revenues of RMB150.31 million for H1 of 2019 and of 12% to
the operating revenues of the Company.
3. Shenzhen Property Management Co., Ltd was engaged in the industry of property management,
and the business was steady. The operating revenues were of RMB80.51 million for H1 of 2019 that
was of 6% to the operating revenues of the Company.
VIII Structured Entities Controlled by the Company
□ Applicable √ Not applicable
IX Performance Forecast for January-September 2019
Warning of possible loss or considerable year-on-year change in the accumulative net profit made during the period-beginning to the
end of the next Reporting Period, as well as the reasons:
□ Applicable √ Not applicable
18
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
X Risks Facing the Company and Countermeasures
1. Risks Facing the Company:
(1) Risks from macroeconomic environment. Since this year, Chinese government has been
adhering to the general principle of seeking progress while maintaining stability, the domestic
economy runs within a reasonable range. However, given that the Sino-US trading dispute is still
going on, and that the global economic situation remains complicated and severe, the downward
pressure on the economy is difficult to relieve in a short term.
(2) Risks from policy on real estate industry. Against the convening of the 19th National Congress
of the Communist Party of China, the Chinese government shows a clear attitude that “Houses are
for living in, not for speculating on”. The continuous implementation of real estate macro-control
policy curbs people’s investment demands at a large degree, and potential customers are
increasingly taking a wait-and-see attitude, which generates a certain impact on the development
and sales of main business of the Company.
(3) Risks from development and operation of main business. The Company does not increase its
land reserve, influenced by the major assets restructuring and the land reserve at present is limited.
Moreover, there is a lag in the sales progress of Shantou Tianyuewan Phase I.
(4) Potential risks from assets restructuring. The major assets restructuring of the Company is a
significant and unprecedented event with complex trading structure for involved in the Shenzhen
State-owned Enterprise Reform and with large-scale assets since the underlying assets it plans to
purchase are industrial leading assets. Thus, the trading of its shares has been suspended for almost
three years since its start of trading on 14 September 2016. At present, matters such as the renewal
of diligence materials in restructuring and supplementary audit as well as evaluation are carried out
simultaneously. For the uncertainty of related events, investors are reminded of the investment
risks.
2. Countermeasures
Firstly, the Company will unremittingly pay attention to international and domestic macroeconomic
situation and the industrial trend, and then formulate flexible coping strategies.
Secondly, the Company will further strengthen its ability to develop main business, raise its
management level and make efforts to reinforce the marketing of projects so as to stabilize the
fundamental of the Company.
Thirdly, the Company will increase its land reserve timely and in an appropriate way to maintain
the sustainable development of the Company in the future.
Fourthly, the Company will enhance the communication with regulators together with parties
involved in the restructuring and make full efforts to promote the process of major assets
restructuring.
19
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part V Significant Events
I Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor
Disclosure
Meeting Type participation Convened date Index to disclosed information
date
ratio
The 2018 Annual Annual General Resolutions of 2018 Annual General Meeting
63.61% 18 April 2019 19 April 2019
General Meeting Meeting disclosed on www.cninfo.com.cn
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
II Interim Dividend Plan for the Reporting Period
□ Applicable √ Not applicable
The Company has no interim dividend plan.
III Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting
Period or still Ongoing at Period-End
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Engagement and Disengagement of CPAs Firm
Has the interim financial report been audited?
□Yes √ No
This interim Report is unaudited.
V Explanations Given by Board of Directors and Supervisory Committee Regarding
“Modified Auditor’s Report” Issued by CPAs Firm for the Reporting Period
□ Applicable √ Not applicable
20
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued
for Last Year
□ Applicable √ Not applicable
VII Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits or arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Other legal matters:
√Applicable □ Not applicable
Amount
Estimated Index to
Lawsuit/arbi involved Execution of Disclosure
liabilities Progress Decision and influence disclosed
tration (RMB’0,0 decision date
or not information
00)
① Business Tourism
Company had to pay for the
compensation RMB36.62 The applicant
million and the relevant interest has received
(from 14 September 1998 to the RMB15.20
payment day) to Xi’an Fresh million. Now
Peak Company within one Business
month after the judgment Tourism
entering into force. If the Company has Annual
Xi’an Business Tourism Company no executable Report 2018
29 March
Project 2,100 No In execution failed to pay in time, it had to properties and (full text) on
2019
Lawsuit pay double debt interests to Xi’an Joint www.cninfo.c
Xi’an Fresh Peak Company for Commission on om.cn
the overdue period; ② Xi’an Commerce has
Joint Commission on Commerce been refusing to
had jointly and severally execute the
obligation of the interests of the ruling. It is
compensation; . ③ Business difficult to
Tourism Company shall bear recover the rest.
RMB227,500 of the acceptance
fee and the security fee.
21
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
X Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
22
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
XIII. Particulars about the Non-operating Occupation of Funds by the Controlling
Shareholder and Other Related Parties of the Company
□ Applicable √ Not applicable
No such cases in the Reporting Period
XIV. Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
□Applicable √ Not applicable
No such cases in the Reporting Period.
3. Other Significant Contracts
√Applicable □Not applicable
Carrying Assesse
Name
Name value of d value Executio
Name of Base Prici Relate
of the the of the Transact Relate n as of
of evalu date of ng d Disclo Index to
other Signing involved involved ion price d the end
contrac Target ative evaluati prin transac sure disclosed
party of date assets assets (RMB’0 relatio of the
ting agenc on (if ciple tions date information
the (RMB’0 (RMB’0 ,000) nship Reportin
party y (if any) s or not
contract ,000) (if ,000) (if g Period
any)
any) any)
ShenZh Shenzh Structur Mar No Impleme 9 Announce
7 May 100,000 - 100,000 No
en en al ket related nting in May ment on
23
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Special Branch deposit 2019 com relatio a normal 2019 Progress of
Econo of s (term paris nship way Using
mic China of 180 on Self-owned
Zone Citic days) Funds to
Real Bank Invest into
Estate Co., Structural
& Ltd Deposits on
Propert www.cninf
ies o.com.cn
(Group
) Co.,
Ltd.
ShenZh
en
Announce
Special
Shenzh ment on
Econo
en Progress of
mic Structur
Branch Mar Using
Zone al No Impleme
of ket 19 Self-owned
Real deposit 14 June related nting in
China 30,000 - com 30,000 No June Funds to
Estate s (term 2019 relatio a normal
Citic paris 2019 Invest into
& of 180 nship way
Bank on Structural
Propert days)
Co., Deposits on
ies
Ltd www.cninf
(Group
o.com.cn
) Co.,
Ltd.
XV. Social Responsibilities
1. Significant Environment Protection
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
protection authorities of China
No
Not applicable.
24
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
2. Targeted Measures Taken to Help People Lift Themselves Out of Poverty
(1) Plan for Targeted Measures
(2) Outline of Targeted Measures in the Reporting Period
(3) Effects of Targeted Measures
Measurement
Indicator Number/Progress
unit
I. General condition —— ——
II. Itemized investment —— ——
1. Out of poverty by industrial development —— ——
2. Out of poverty by transferring employment —— ——
3. Out of poverty by relocating —— ——
4. Out of poverty by education —— ——
5. Out of poverty by improving health —— ——
6. Out of poverty by protecting ecological environment —— ——
7. Subsidy for the poorest —— ——
8. Social poverty alleviation —— ——
9. Other items —— ——
III. Received awards(contents and rank) —— ——
(4) Subsequent Targeted Measure Plans
XVI. Other Significant Events
√Applicable□ Not applicable
Since the controlling shareholder of the Company is planning a significant event that involves the
Company, upon the application to the Shenzhen Stock Exchange, trading in the stocks of the
Company (A-stock under the name of “SPG A” and the symbol of “000029”; B-stock under the
name of “SPG B” and the symbol of “200029”) was suspended starting from the opening of 14
September 2016. The Company disclosed the Announcement on Share Trading Suspension due to
Planning of Significant Event (No. 2016-022), the Announcement on Continued Share Trading
Suspension due to Planning of Significant Event (No. 2016-023) and the Announcement on
Continued Share Trading Suspension due to Planning of Significant Event (No. 2016-024) on 14
September 2016, 22 September 2016 and 29 September 2016, respectively. Upon ascertainment, the
event constituted a material asset restructuring. The Company disclosed the Announcement on
Share Trading Suspension due to Planning of Major Assets Restructuring (No. 2016-025) on 30
September 2016 and the Announcement on Signing Cooperation Agreement on Restructuring and
Listing (No. 2016-027) on 10 October 2016.
25
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The Company convened the 33rd Meeting of the 7th Board of the Directors on 11 November 2016,
which the Proposal on Continued Share Trading Suspension due to Planning of Major Assets
Restructuring was reviewed and approved. For details, see the Announcement on Continued Share
Trading Suspension after Expiration of Period of Share Trading Suspension due to Planning of
Major Assets Restructuring (No. 2016-039) disclosed on 14 November 2016.
The Company convened the 1st Extraordinary General Meeting of 2016 on 12 December 2016, on
which the Proposal on Continued Share Trading Suspension due to Planning of Major Assets
Restructuring was reviewed and approved. For details, see the Announcement on Application for
Continued Share Trading Suspension after Expiration of Period of Share Trading Suspension due
to Planning of Major Assets Restructuring (No. 2016-047) disclosed on 13 December 2016.
The Company held an online illustration meeting to investors on 10 March 2017, communicating
this major assets restructuring with them and answering questions that they were generally
concerned about with the information allowed to be disclosed. For details, see the Announcement on
Online Illustration Meeting to Investors (No. 2017-012) disclosed on 11 March 2017.
To ensure the smooth progress of this major assets restructuring, prevent abnormal fluctuations in
the prices of its stocks and protect the rights and interests of its non-controlling interests, the
Company has applied to the Shenzhen Stock Exchange for continued share trading suspension for
no more than 1 month as of 14 August 2019 and expects to disclose the major assets restructuring
plan or report according to the requirements of the Standards for the Contents and Formats of
Information Disclosure by Companies Offering Securities to the Public No. 26—Major Assets
Restructuring of Listed Companies prior to 14 September 2019. For details, see the Announcement
on Delay of Share Trading Resumption and Progress of Planning of Major Assets Restructuring
(No. 2019-054) disclosed on 14 August 2019.
During the share trading suspension period, the Company shall disclose the progress of this major
assets restructuring at least every five trading days in strict accordance with the requirements of
applicable laws and regulations. At present, this major assets restructuring is proceeding smoothly.
This major assets restructuring is subject to great uncertainty. Therefore, investors are kindly
reminded to pay attention to possible investment risk.
XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
26
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before the change Increase/decrease (+/-) After the change
Newly
Newly Newly Proportio
Amount Proportion Amount Proportion Amount issue
issue share issue share n
share
I. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%
1.Shares held by the state 0 0.00% 0 0 0 0 0 0 0.00%
2.Shares held by state-own
0 0.00% 0 0 0 0 0 0 0.00%
Legal-person
3.Shares held by other
0 0.00% 0 0 0 0 0 0 0.00%
domestic investors
Among which: shares held
0 0.00% 0 0 0 0 0 0.00%
by domestic legal person
Shares held by domestic
0 0.00% 0 0 0 0 0 0 0.00%
natural person
4.Oversea shareholdings 0 0.00% 0 0 0 0 0 0.00%
Among which: shares held
0 0.00% 0 0 0 0 0 0 0.00%
by oversea legal person
Shares held by oversea
0 0.00% 0 0 0 0 0 0 0.00%
natural person
1,011,660, 1,011,660
II. Unrestricted shares 100.00% 0 0 0 0 0 100.00%
000 ,000
891,660,0 891,660,0
1. RMB ordinary shares 88.14% 0 0 0 0 0 88.14%
00 00
2.Domestically listed 120,000,0 120,000,0
11.86% 0 0 0 0 0 11.86%
foreign shares 00 00
3.Oversea listed foreign
0 0.00% 0 0 0 0 0 0 0.00%
shares
4. Other 0 0.00% 0 0 0 0 0 0 0.00%
1,011,660, 1,011,660
III. Total shares 100.00% 0 0 0 0 0 100.00%
000 ,000
Reasons for the share changes
27
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
□ Applicable √ Not applicable
Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchase:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
III. Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of preference
Total number of ordinary shareholders with resumed
76,443 0
shareholders at the period-end voting rights at the period-end
(if any) (see Note 8)
Shareholding of ordinary shareholders holding more than 5% shares or the top 10 of ordinary shareholders
Number Increase Number Pledged or frozen shares
Number of
of and of shares
Holding shares held
Name of Nature of shareholdi decrease of held
percentage subject to Status of
shareholder shareholder ng at the shares subject to Amount
(%) trading shares
end of the during trading
moratorium
Reporting Reporting moratoriu
28
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Period Period m
Shenzhen
Investment State-owned legal 642,884,2 642,884,26
63.55%
Holdings Co., person 62 2
Ltd
Shandong Gold
Financial
Holding Capital
Management
Domestic
Co., Ltd. － 10,300,00
non-state-owned 1.02% 10,300,000
Shandong Gold 0
legal person
Financial
Holding
Sustaining Fund
1
Domestic natural
Lu Zhigao 0.32% 3,246,949 3,246,949
person
Domestic natural
Tan Shiqing 0.13% 1,286,701 1,286,701
person
Domestic natural
Yang Shuilian 0.13% 1,273,700 1,273,700
person
Domestic natural
Yang Jianxiong 0.12% 1,255,750 1,255,750
person
Central Huijin
Asset State-owned legal
0.12% 1,165,500 1,165,500
Management person
Co., Ltd.
Domestic natural
Peng Wei 0.11% 1,129,082 1,129,082
person
Foreign natural
Wu Haoyuan 0.11% 1,109,300 1,109,300
person
Guotai Junan
Securities Foreign legal
0.10% 1,015,683 1,015,683
(Hong Kong) person
Limited
Strategic investor or general legal
person becoming a top-10 ordinary
None
shareholder due to rights issue (if
any) (see note 3)
Related or acting-in-concert parties The Company has found no related parties or acting-in-concert parties as defined in the
among the shareholders above Administrative Measures for Shareholding Changes in Listed Companies among the
29
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
shareholders above.
Top 10 unrestricted shareholders
Shares by type
Name of shareholder Unrestricted shares held at the period-end
Type Shares
Shenzhen Investment Holdings Co., RMB ordinary
642,884,262 642,884,262
Ltd shares
Shandong Gold Financial Holding
Capital Management Co., Ltd. － RMB ordinary
10,300,000 10,300,000
Shandong Gold Financial Holding shares
Sustaining Fund 1
RMB ordinary
Lu Zhigao 3,246,949 3,246,949
shares
RMB ordinary
Tan Shiqing 1,286,701 1,286,701
shares
RMB ordinary
Yang Shuilian 1,273,700 1,273,700
shares
Domestically
Yang Jianxiong 1,255,750 listed foreign 1,255,750
share
Central Huijin Asset Management RMB ordinary
1,165,500 1,165,500
Co., Ltd. shares
RMB ordinary
Peng Wei 1,129,082 1,129,082
shares
Domestically
Wu Haoyuan 1,109,300 listed foreign 1,109,300
share
Domestically
Guotai Junan Securities (Hong
1,015,683 listed foreign 1,015,683
Kong) Limited
share
Related or acting-in-concert parties
among top 10 unrestricted public The Company has found no related parties or acting-in-concert parties as defined in the
shareholders, as well as between top Administrative Measures for Shareholding Changes in Listed Companies among the
10 unrestricted public shareholders shareholders above.
and top 10 shareholders
Top 10 ordinary shareholders The fourth shareholder holds all his shares in the Company in his accounts of collateral
involved in securities margin securities for margin trading. And the third shareholder holds some of his shares in the
trading (if any) (see note 4) Company in such accounts.
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
30
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
□ Yea √ No
No such cases in the Reporting Period.
IV. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the controlling shareholder of the Company in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the actual controller of the Company in the Reporting Period.
31
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
32
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part VIII Directors, Supervisors, Senior Management and Staff
I. Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.
II. Changes in Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.
33
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this
Report or were due but could not be redeemed in full?
No
34
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part X Financial Statements
I Auditor’s Report
Whether the semi-annual report has been audited?
□ Yes √ No
The semi-annual report of the Company has not been audited.
II Financial Statements
The unit of the financial statements attached: RMB
1.Consolidated Balance Sheet
Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE &
PROPERTIES (GROUP) Co., Ltd
June 30 2019
Unit: RMB
Item Closing balance Opening balance
Current Assets：
Monetary Funds 1,240,480,893.15 2,048,522,435.93
Account Receivables 39,421,868.07 18,166,888.19
Receivable Financing 21,334,705.19 15,260,103.46
Prepayments 3,629,355.62 4,177,767.88
Other receivables 50,591,319.62 45,018,027.61
Including: Interest receivable 6,591,780.82 2,453,067.78
Dividends receivable 1,052,192.76 1,052,192.76
Inventories 1,602,436,237.11 1,685,152,051.26
Other current assets 1,366,218,063.59 6,780,999.56
Total current assets 4,324,112,442.35 3,823,078,273.89
Non-current assets
Available- for- sale financial assets 17,464,240.74 17,464,240.74
Long-term equity investments 12,561,107.24 12,561,107.24
35
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Investment properties 611,746,542.66 623,930,838.15
Fixed assets 31,903,409.26 33,926,198.52
Long-term deferred assets 287,424.99 387,066.91
Deferred tax assets 71,734,088.80 154,543,788.80
Total non-current assets 745,696,813.69 842,813,240.36
TOTAL ASSETS 5,069,809,256.04 4,665,891,514.25
Current liabilities:
Short-term loans 21,334,705.19 17,260,103.46
Accounts payable 140,100,500.69 216,758,906.71
Advances from customers 389,327,681.32 156,426,152.86
Payroll payable 49,649,453.21 45,836,830.05
Taxes payable 486,499,870.16 300,547,372.98
Other payables 643,636,409.61 721,819,898.48
Including: Interest payable 16,535,277.94 16,535,277.94
Dividends payable -- --
Total current liabilities 1,730,548,620.18 1,458,649,264.54
Non-current liabilities:：
Long-term loans -- --
Long-term payables 7,597,741.94 6,507,139.20
Total non-current liabilities 7,597,741.94 6,507,139.20
Total liabilities 1,738,146,362.12 1,465,156,403.74
Owners' equity：
Share capital 1,011,660,000.00 1,011,660,000.00
Capital reserve 978,244,910.11 978,244,910.11
Less: treasury shares
Other comprehensive income 10,649,625.33 10,564,385.97
Surplus reserve 95,906,222.59 95,906,222.59
36
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Retained earnings 1,366,707,966.13 1,235,884,122.72
Total owners' equity attributable to parent 3,463,168,724.16 3,332,259,641.39
company
Minority interests -131,505,830.24 -131,524,530.88
Total owners’ equity 3,331,662,893.92 3,200,735,110.51
Total liabilities and owners’ equity 5,069,809,256.04 4,665,891,514.25
Legal representative：Zhou Jianguo
Person in charge of accounting：Tang Xiaoping
Person in charge of accounting organ：Qiao Yanjun
2、Balance Sheet of the Company as the Parent
Unit: RMB
Item Closing balance Opening balance
Current Assets：
Monetary Funds 856,969,485.98 1,344,486,378.53
Account Receivables 4,498,088.57 5,164,795.67
Receivable Financing -- --
Prepayments 200,000.00 200,000.00
Other receivables 777,693,901.25 770,374,849.84
Including: Interest receivable 6,591,780.82 2,380,301.11
Dividends receivable
Inventories 495,765,771.81 543,912,100.37
Other current assets 1,300,391,148.06 215,745.41
Total current assets 3,435,518,395.67 2,664,353,869.82
Non-current assets
Available- for- sale financial assets 12,000,000.00 12,000,000.00
Long-term equity investments 235,284,776.57 235,284,776.57
Investment properties 500,353,447.17 511,040,299.65
37
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Fixed assets 20,694,594.60 21,942,842.11
Long-term deferred assets 254,070.82 346,015.72
Deferred tax assets 16,699,980.23 16,699,980.23
Total non-current assets 785,286,869.39 797,313,914.28
TOTAL ASSETS 4,220,805,265.06 3,461,667,784.10
Current liabilities:
Short-term loans -- --
Accounts payable 12,199,890.76 16,743,360.96
Advances from customers 232,187,547.25 22,035,608.45
Payroll payable 27,607,379.41 19,687,728.50
Taxes payable 467,681,696.28 144,621,616.85
Other payables 198,023,198.65 594,392,900.98
Including: Interest payable 16,535,277.94 16,535,277.94
Dividends payable -- --
Total current liabilities 937,699,712.35 797,481,215.74
Non-current liabilities:：
Long-term loans -- --
Long-term payables -- --
Total non-current liabilities -- --
Total liabilities 937,699,712.35 797,481,215.74
Owners' equity：
Share capital 1,011,660,000.00 1,011,660,000.00
Capital reserve 964,711,931.13 964,711,931.13
Less: treasury shares -- --
Other comprehensive income -- --
Surplus reserve 72,776,609.18 72,776,609.18
Retained earnings 1,233,957,012.40 615,038,028.05
38
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Total owners’ equity 3,283,105,552.71 2,664,186,568.36
Total liabilities and owners’ equity 4,220,805,265.06 3,461,667,784.10
3、Consolidated Income Statement
Unit: RMB
Item Amount for the current period Amount for the prior period
Ⅰ. Total operating income 1,251,337,802.57 1,317,541,631.35
Including: Operating income 1,251,337,802.57 1,317,541,631.35
Ⅱ. Total operating Costs 820,118,047.65 878,049,647.69
Including: Operating costs 437,127,976.25 540,417,491.41
Tax and surcharge 340,329,498.86 277,340,490.76
Selling expenses 18,474,060.33 37,167,133.77
Administrative expense 30,812,771.33 31,736,200.85
R&D expense -- --
Financial expense -6,626,259.12 -8,611,669.10
Including:
38,742.51 3,017,331.10
Interest expense
Interest income 7,623,553.05 11,769,366.46
Add: Other income -- --
Return on investment (“-” for loss) 14,288,098.55 827,100.00
Including: Share of profit or loss of joint
-- --
ventures and associates
Income from the derecognition of financial
-- --
assets at amortized cost (“-” for loss)
Foreign exchange gain (“-” for loss) -- --
Net gain on exposure hedges (“-” for loss) -- --
Gain on changes in fair value (“-” for loss) -- --
Credit impairment loss (“-” for loss) -- --
Asset impairment loss (“-” for loss) -- --
39
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Amount for the current period Amount for the prior period
Asset disposal income (“-” for loss) -- --
Ⅲ. Operating profit ("-" means loss) 445,507,853.47 440,319,083.66
Add: Non-operating income 363,709.11 95,835.23
Less: Non-operating expenses 3,755.82 199,553.33
Ⅳ .Total profit ("-" means loss) 445,867,806.76 440,215,365.56
Less: Income tax expenses 112,729,793.86 111,169,717.28
Ⅴ Net profit ("-" means loss) 333,138,012.90 329,045,648.28
5.1.Net income from continuing operations (“-” for
333,138,012.90 329,045,648.28
net loss)
5.2. Net income from discontinued operations (“-”
for net loss)
Net attributable to owners of parent company 333,155,843.41 329,066,084.53
Minority interests -17,830.51 -20,436.25
Ⅵ . After-tax net of other comprehensive incomes 121,770.51 -694,697.10
After-tax net of other comprehensive incomes owned
85,239.36 -486,287.97
by owner of the parent company
6.1 Items that will not be reclassified to profit or loss -- --
6.2Items that will be reclassified to profit or loss 85,239.36 -486,287.97
6.2.1.Other comprehensive income that will be
-- --
reclassified to profit or loss under the equity method
6.2.2. Gains/Losses on changes in fair value of
-- --
available-for-sale financial assets
6.2.3. Gains/Losses arising from reclassification of
held-to-maturity investments to available-for-sale -- --
financial assets
6.2.4 Other comprehensive income arising from the
-- --
reclassification of financial assets
6.2.5 Gain/Loss arising from the reclassification of
held-to-maturity investments to available-for-sale -- --
financial assets
40
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Amount for the current period Amount for the prior period
6.2.6 Allowance for credit impairments in investments
-- --
in other debt obligations
6.2.7 Reserve for cash flow hedges -- --
6.2.8 Differences arising from the translation of foreign
85,239.36 -486,287.97
currency-denominated financial statements
6.2.9. Other -- --
After-tax net of other comprehensive incomes owned
36,531.15 -208,409.13
by minority stockholders
Ⅶ. Total comprehensive income 333,259,783.41 328,350,951.18
Total comprehensive income attributable to owners of
333,241,082.77 328,579,796.56
parent company
Total comprehensive income attributable to minority
18,700.64 -228,845.38
interests
Ⅷ .Earnings per share
8.1 Basic Earnings per share 0.3293 0.3253
8.2 Diluted Earnings per share 0.3293 0.3253
The net profit realized by the merged party before the merger is 0.00 yuan, and the
net profit realized by the merged party in the previous period is 0.00 yuan.
Legal representative:Zhou Jianguo
Person in charge of accounting: Tang Xiaoping
Person in charge of accounting organ：Qiao Yanjun
4．Income Statement of the Company as the Parent
Unit: RMB
Item Amount for the current period Amount for the prior period
Ⅰ. Total operating income 828,403,076.11 29,987,467.51
Less: Cost of sales 125,366,701.31 12,583,669.74
Tax and surcharge 305,591,891.73 3,654,804.11
Selling expenses 12,219,149.43 908,158.92
41
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Amount for the current period Amount for the prior period
Administrative expense 12,993,667.10 10,894,513.21
R&D expense -- --
Financial expense -16,493,119.65 -23,494,559.62
Including: Interest expense -- 1,728,453.04
Interest income 17,457,395.53 24,327,095.66
Add: Other income -- --
Return on investment (“-” for loss) 532,988,230.19 827,100.00
Including: Share of profit or loss of joint
-- --
ventures and associates
Income from the derecognition of financial
-- --
assets at amortized cost (“-” for loss)
Foreign exchange gain (“-” for loss) -- --
Net gain on exposure hedges (“-” for loss) -- --
Gain on changes in fair value (“-” for loss) -- --
Credit impairment loss (“-” for loss) -- --
Asset impairment loss (“-” for loss) -- --
Asset disposal income (“-” for loss) -- --
II. Operating profit ("-" means loss) 921,713,016.38 26,267,981.15
Add: Non-operating income 129,179.14 34,352.59
Less: Non-operating expenses -- 143,299.25
Ⅲ .Total profit ("-" means loss) 921,842,195.52 26,159,034.49
Less: Income tax expenses 100,591,211.17 6,338,686.76
Ⅳ Net profit ("-" means loss) 821,250,984.35 19,820,347.73
4.1.Net income from continuing operations (“-” for
821,250,984.35 19,820,347.73
net loss)
4.2. Net income from discontinued operations (“-”
-- --
for net loss)
Ⅴ . After-tax net of other comprehensive incomes -- --
42
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Amount for the current period Amount for the prior period
5.1 Items that will not be reclassified to profit or loss -- --
5.2Items that will be reclassified to profit or loss -- --
Ⅵ. Total comprehensive income 821,250,984.35 19,820,347.73
Ⅶ. Earnings per share
7.1 Basic Earnings per share 0.8119 0.0196
7.2 Diluted Earnings per share 0.8119 0.0196
5．Consolidated Cash Flow Statement
Unit：RMB
Items Amount for the current period Amount for the prior period
Ⅰ. Cash Flow from Operating Activities：
Cash received from sales of goods or rendering of 1,551,108,627.63 1,082,569,145.05
services
Cash received relating to other operating activities 36,673,219.30 86,785,897.61
Sub-total of Cash Inflows 1,587,781,846.93 1,169,355,042.66
Cash paid for goods and services 325,301,988.40 359,603,259.50
Cash paid to and on behalf of employees 75,087,594.73 67,569,589.85
Cash paid on taxes and levies 372,824,861.97 89,393,534.10
Cash paid relating to other operating activities 128,892,156.73 58,060,529.54
Sub-total of Cash Outflows 902,106,601.83 574,626,912.99
Net Cash Flows from Operating Activities 685,675,245.10 594,728,129.67
Ⅱ. Cash Flows from Investing Activities:
Cash received from return of investments 900,000,000.00
Cash received investing income 11,365,734.25 827,100.00
Sub-total of Cash Inflows 911,365,734.25 827,100.00
Cash paid to acquire fixed assets, intangible assets
62,330.82 171,268.71
and other long assets
Cash paid on other investing activities 1,300,000,000.00 600,000,000.00
Sub-total of Cash Outflows 1,300,062,330.82 600,171,268.71
43
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Items Amount for the current period Amount for the prior period
Net Cash Flows from Investing Activities -388,696,596.57 -599,344,168.71
Ⅲ. Cash flow from Financing Activities
Cash received from borrowing -- --
Sub-total of Cash Inflows -- --
Cash repayments on borrowed amounts 2,000,000.00 131,343,300.00
Cash payments for distribution of dividends or profits 202,332,000.00 2,185,638.06
Sub-total of cash Outflows 204,332,000.00 133,528,938.06
Net cash flows from financing activities -204,332,000.00 -133,528,938.06
Ⅳ. Effect of foreign exchange rate on cash -688,191.31 16,586.26
Ⅴ. Net increase in cash and cash equivalents 91,958,457.22 -138,128,390.84
Add: cash equivalents at the beginning of the period 1,148,522,435.93 1,206,789,056.46
Ⅵ. Cash equivalents at the end of the period 1,240,480,893.15 1,068,660,665.62
6．Cash Flow Statement of the Company as the Parent
Unit：RMB
Items Amount for the current period Amount for the prior period
Ⅰ. Cash Flow from Operating Activities：
Cash received from sales of goods or rendering of
1,082,309,354.32 34,592,057.81
services
Cash received relating to other operating activities 25,673,942.66 387,291,082.03
Sub-total of Cash Inflows 1,107,983,296.98 421,883,139.84
Cash paid for goods and services 54,302,822.21 53,951,198.75
Cash paid to and on behalf of employees 19,289,743.31 15,556,181.04
Cash paid on taxes and levies 135,622,840.23 13,609,736.21
Cash paid relating to other operating activities 26,108,489.89 45,617,416.07
Sub-total of Cash Outflows 235,323,895.64 128,734,532.07
Net Cash Flows from Operating Activities 872,659,401.34 293,148,607.77
44
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Items Amount for the current period Amount for the prior period
Ⅱ. Cash Flows from Investing Activities:
Cash received from return of investments 900,000,000.00 --
Cash received investing income 142,838,563.97 170,221,052.18
Sub-total of Cash Inflows 1,042,838,563.97 170,221,052.18
Cash paid to acquire fixed assets, intangible assets
6,050.00 20,888.00
and other long assets
Cash paid on other investing activities 1,300,000,000.00 600,000,000.00
Sub-total of Cash Outflows 1,300,006,050.00 600,020,888.00
Net Cash Flows from Investing Activities -257,167,486.03 -429,799,835.82
Ⅲ. Cash flow from Financing Activities
Cash received from borrowing -- --
Sub-total of Cash Inflows -- --
Cash repayments on borrowed amounts 110,443,300.00
Cash payments for distribution of dividends or profits 202,332,000.00 1,728,453.04
Sub-total of cash Outflows 202,332,000.00 112,171,753.04
Net cash flows from financing activities -202,332,000.00 -112,171,753.04
Ⅳ. Effect of foreign exchange rate on cash -676,807.86 -13,487.07
Ⅴ. Net increase in cash and cash equivalents 412,483,107.45 -248,836,468.16
Add: cash equivalents at the beginning of the period 444,486,378.53 726,801,673.89
Ⅵ. Cash equivalents at the end of the period 856,969,485.98 477,965,205.73
45
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
7．CONSOLIDATED STATEMENT OF CHANGE IN OWNER'S EQUITY
January-June 2019
Unit: RMB
The amount in current year
Attribute to the equity of parent company
Other equity
Items Less: Other Generic Minority Total owners'
instruments Special Surplus Retained
Share capital Capital reserve Treasury comprehensive risk Subtotal interests equity
Preference Perpetual reserve reserve earnings
Other shares income reserve
shares bonds
I. Balance at the
1,011,660,000.00 -- -- -- 978,244,910.11 -- 10,564,385.97 -- 95,906,222.59 -- 1,235,884,122.72 3,332,259,641.39 -131,524,530.88 3,200,735,110.51
end of last period
Add: Changes of
-- -- -- -- -- -- -- -- -- -- -- -- -- --
accounting policies
Prior year
-- -- -- -- -- -- -- -- -- -- -- -- -- --
adjustments
Corporate
combination under -- -- -- -- -- -- -- -- -- -- -- -- -- --
common control
Others -- -- -- -- -- -- -- -- -- -- -- -- -- --
46
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount in current year
Attribute to the equity of parent company
Other equity
Items Less: Other Generic Minority Total owners'
instruments Special Surplus Retained
Share capital Capital reserve Treasury comprehensive risk Subtotal interests equity
Preference Perpetual reserve reserve earnings
Other shares income reserve
shares bonds
II. Balance at the
1,011,660,000.00 -- -- -- 978,244,910.11 -- 10,564,385.97 -- 95,906,222.59 -- 1,235,884,122.72 3,332,259,641.39 -131,524,530.88 3,200,735,110.51
Beginning of the Year
III.Increase/Decrease
movements in this -- -- -- -- -- -- 85,239.36 -- -- -- 130,823,843.41 130,909,082.77 18,700.64 130,927,783.41
Year ("-" means loss)
(I) Total
comprehensive -- -- -- -- -- -- 85,239.36 -- -- -- 333,155,843.41 333,241,082.77 18,700.64 333,259,783.41
income
(II) Capital paid in
and reduced by the -- -- -- -- -- -- -- -- -- -- -- -- -- --
shareholders
(III) Profit distribution -- -- -- -- -- -- -- -- -- -- -- -- -- --
1.Draw statutory
-- -- -- -- -- -- -- -- -- -- -- -- -- --
surplus reserve
47
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount in current year
Attribute to the equity of parent company
Other equity
Items Less: Other Generic Minority Total owners'
instruments Special Surplus Retained
Share capital Capital reserve Treasury comprehensive risk Subtotal interests equity
Preference Perpetual reserve reserve earnings
Other shares income reserve
shares bonds
2.Draw generic risk
-- -- -- -- -- -- -- -- -- -- -- -- -- --
reserve
3.Distribution to
-- -- -- -- -- -- -- -- -- -- -- -- -- --
shareholders
4.Others -- -- -- -- -- -- -- -- -- -- -- -- -- --
(IV)Internal
carry-forward of -- -- -- -- -- -- -- -- -- -- -202,332,000.00 -202,332,000.00 -- -202,332,000.00
shareholders’ equity
(V) Special Reserve -- -- -- -- -- -- -- -- -- -- -- -- -- --
(VI) Others -- -- -- -- -- -- -- -- -- -- -- -- -- --
IV. Balance at the
1,011,660,000.00 -- -- -- 978,244,910.11 -- 10,649,625.33 95,906,222.59 -- 1,366,707,966.13 3,463,168,724.16 -131,505,830.24 3,331,662,893.92
end of the period
48
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
January-June 2018
Unit: RMB
The amount in current year
Attribute to the equity of parent company
Other equity
Items Minority Total owners'
Less: Other Generic
instruments Special Surplus Retained
Share capital Capital reserve Treasury comprehensive risk Subtotal interests equity
Preference Perpetual reserve reserve earnings
Other shares income reserve
shares bonds
I. Balance at the
1,011,660,000.00 -- -- -- 978,244,910.11 -- 10,045,697.16 85,666,668.00 -- 742,624,845.71 2,828,242,120.98 -128,219,559.44 2,700,022,561.54
end of last period
Add: Changes of
-- -- -- -- -- -- -- -- -- -- -- -- -- --
accounting policies
Prior year adjustments -- -- -- -- -- -- -- -- -- -- -- -- -- --
Corporate
combination under -- -- -- -- -- -- -- -- -- -- -- -- -- --
common control
Others -- -- -- -- -- -- -- -- -- -- -- -- -- --
II. Balance at the
1,011,660,000.00 -- -- -- 978,244,910.11 -- 10,045,697.16 85,666,668.00 -- 742,624,845.71 2,828,242,120.98 -128,219,559.44 2,700,022,561.54
Beginning of the Year
49
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount in current year
Attribute to the equity of parent company
Other equity
Items Less: Other Generic Minority Total owners'
instruments Special Surplus Retained
Share capital Capital reserve Treasury comprehensive risk Subtotal interests equity
Preference Perpetual reserve reserve earnings
Other shares income reserve
shares bonds
III.Increase/Decrease
movements in this -- -- -- -- -- -- -486,287.97 -- -- -- 329,066,084.53 328,579,796.56 -228,845.38 328,350,951.18
Year ("-" means loss)
(I) Total
comprehensive -- -- -- -- -- -- -486,287.97 -- -- -- 329,066,084.53 328,579,796.56 -228,845.38 328,350,951.18
income
(II) Capital paid in and
reduced by the -- -- -- -- -- -- -- -- -- -- -- -- -- --
shareholders
(III) Profit distribution -- -- -- -- -- -- -- -- -- -- -- -- -- --
1.Draw statutory
-- -- -- -- -- -- -- -- -- -- -- -- -- --
surplus reserve
2.Draw generic risk
-- -- -- -- -- -- -- -- -- -- -- -- -- --
reserve
50
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount in current year
Attribute to the equity of parent company
Other equity
Items Less: Other Generic Minority Total owners'
instruments Special Surplus Retained
Share capital Capital reserve Treasury comprehensive risk Subtotal interests equity
Preference Perpetual reserve reserve earnings
Other shares income reserve
shares bonds
3.Distribution to
-- -- -- -- -- -- -- -- -- -- -- -- -- --
shareholders
4.Others -- -- -- -- -- -- -- -- -- -- -- -- -- --
(IV)Internal
carry-forward of -- -- -- -- -- -- -- -- -- -- -- -- -- --
shareholders’ equity
(V) Special Reserve -- -- -- -- -- -- -- -- -- -- -- -- -- --
(VI) Others -- -- -- -- -- -- -- -- -- -- -- -- -- --
IV. Balance at the end
1,011,660,000.00 -- -- -- 978,244,910.11 -- 9,559,409.19 -- 85,666,668.00 -- 1,071,690,930.24 3,156,821,917.54 -128,448,404.82 3,028,373,512.72
of the period
51
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
8．Statement of Changes in Owners’ Equity of the Company as the Parent
January-June 2019
Unit: RMB
The amount in current year
Other equity
Items instruments Less: Treasury Other comprehensive Surplus Generic risk Retained Total owners'
Share capital Capital reserve
Preference Perpetual shares income reserve reserve earnings equity
Other
shares bonds
ⅠBalance at the End of Last Period 1,011,660,000.00 -- -- -- 964,711,931.13 -- -- -- 72,776,609.18 615,038,028.05 2,664,186,568.36
Add: Changes of accounting policies -- -- -- -- -- -- -- -- -- -- --
Prior year adjustments -- -- -- -- -- -- -- -- -- -- --
Others -- -- -- -- -- -- -- -- -- -- --
II. Balance at the Beginning of the Year 1,011,660,000.00 -- -- -- 964,711,931.13 -- -- -- 72,776,609.18 615,038,028.05 2,664,186,568.36
III. Increase/Decrease movements in this
-- -- -- -- -- -- -- -- -- 618,918,984.35 618,918,984.35
Year ("-" means loss)
(I) Total comprehensive income -- -- -- -- -- -- -- -- -- 821,250,984.35 821,250,984.35
(II) Capital paid in and reduced by the
-- -- -- -- -- -- -- -- -- -- --
shareholders
52
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount in current year
Other equity
Items instruments Less: Treasury Other comprehensive Surplus Generic risk Retained Total owners'
Share capital Capital reserve
Preference Perpetual shares income reserve reserve earnings equity
Other
shares bonds
3.2.1 Capital increased and reduced by
-- -- -- -- -- -- -- -- -- -- --
owners
3.2.2 Capital increased by holders
-- -- -- -- -- -- -- -- -- -- --
of other equity instruments
3.2.3 Amounts of share-based -- -- -- -- -- -- -- -- -- -- --
3.2.4 Other -- -- -- -- -- -- -- -- -- -- --
(III) Profit distribution -- -- -- -- -- -- -- -- -- -202,332,000.00 -202,332,000.00
1.Draw statutory surplus reserve -- -- -- -- -- -- -- -- -- -- --
2.Distribution to shareholders -- -- -- -- -- -- -- -- -- -202,332,000.00 -202,332,000.00
3.Others -- -- -- -- -- -- -- -- -- -- --
(IV)Internal carry-forward of -- -- -- -- -- -- -- -- -- -- --
shareholders’ equity
3.4.1 New increase of capital (or -- -- -- -- -- -- -- -- -- -- --
share capital) from capital reserve
53
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount in current year
Other equity
Items instruments Less: Treasury Other comprehensive Surplus Generic risk Retained Total owners'
Share capital Capital reserve
Preference Perpetual shares income reserve reserve earnings equity
Other
shares bonds
3.4.2 New increase of capital (or -- -- -- -- -- -- -- -- -- -- --
share capital) from surplus reserve
3.4.3 Surplus reserve for making -- -- -- -- -- -- -- -- -- -- --
up loss
3.4.4 Other -- -- -- -- -- -- -- -- -- -- --
(V) Special Reserve -- -- -- -- -- -- -- -- -- -- --
3.5.1Withdrawn for the period -- -- -- -- -- -- -- -- -- -- --
3.5.2 Used in the period -- -- -- -- -- -- -- -- -- -- --
(VI) Others -- -- -- -- -- -- -- -- -- -- --
IV. Balance at the end of the period 1,011,660,000.00 -- -- -- 964,711,931.13 -- -- -- 72,776,609.18 1,233,957,012.40 3,283,105,552.71
January-June 2018
Unit: RMB
Items The amount brought from the previous year
54
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Other equity
instruments Less: Treasury Other comprehensive Surplus Generic risk Undistributed Total owners'
Share capital Capital reserve
Preference Perpetual shares income reserve reserve profit equity
Other
shares bonds
ⅠBalance at the End of Last Period 1,011,660,000.00 -- -- -- 978,244,910.11 -- -- -- 62,537,054.59 522,882,036.78 2,575,324,001.48
Add: Changes of accounting policies -- -- -- -- -- -- -- -- -- -- --
Prior year adjustments -- -- -- -- -- -- -- -- -- -- --
Others -- -- -- -- -- -- -- -- -- -- --
II. Balance at the Beginning of the Year 1,011,660,000.00 -- -- -- 978,244,910.11 -- -- -- 62,537,054.59 522,882,036.78 2,575,324,001.48
III. Increase/Decrease movements in this
-- -- -- -- -- -- -- -- -- 19,820,347.73 19,820,347.73
Year ("-" means loss)
(I) Total comprehensive income -- -- -- -- -- -- -- -- -- 19,820,347.73 19,820,347.73
(II) Capital paid in and reduced by the
-- -- -- -- -- -- -- -- -- -- --
shareholders
3.2.1 Capital increased and reduced by
-- -- -- -- -- -- -- -- -- -- --
owners
3.2.2 Capital increased by holders
-- -- -- -- -- -- -- -- -- -- --
of other equity instruments
55
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount brought from the previous year
Other equity
Items instruments Less: Treasury Other comprehensive Surplus Generic risk Undistributed Total owners'
Share capital Capital reserve
Preference Perpetual shares income reserve reserve profit equity
Other
shares bonds
3.2.3 Amounts of share-based -- -- -- -- -- -- -- -- -- -- --
3.2.4 Other -- -- -- -- -- -- -- -- -- -- --
(III) Profit distribution -- -- -- -- -- -- -- -- -- -- --
1.Draw statutory surplus reserve -- -- -- -- -- -- -- -- -- -- --
2.Draw generic risk reserve -- -- -- -- -- -- -- -- -- -- --
3.Distribution to shareholders -- -- -- -- -- -- -- -- -- -- --
4.Others -- -- -- -- -- -- -- -- -- -- --
(IV)Internal carry-forward of
-- -- -- -- -- -- -- -- -- -- --
shareholders’ equity
3.4.1 New increase of capital (or
-- -- -- -- -- -- -- -- -- -- --
share capital) from capital reserve
3.4.2 New increase of capital (or
-- -- -- -- -- -- -- -- -- -- --
share capital) from surplus reserve
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The amount brought from the previous year
Other equity
Items instruments Less: Treasury Other comprehensive Surplus Generic risk Undistributed Total owners'
Share capital Capital reserve
Preference Perpetual shares income reserve reserve profit equity
Other
shares bonds
3.4.3 Surplus reserve for making
-- -- -- -- -- -- -- -- -- -- --
up loss
3.4.4 Other -- -- -- -- -- -- -- -- -- -- --
(V) Special Reserve -- -- -- -- -- -- -- -- -- -- --
3.5.1Withdrawn for the period -- -- -- -- -- -- -- -- -- -- --
3.5.2 Used in the period -- -- -- -- -- -- -- -- -- -- --
(VI) Others 1,011,660,000.00 -- -- -- 978,244,910.11 -- -- -- 62,537,054.59 542,702,384.51 2,595,144,349.21
IV. Balance at the end of the period 1,011,660,000.00 -- -- -- 978,244,910.11 -- -- -- 36,265,054.83 541,064,217.62 2,567,234,182.56
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
III General information
Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd. (the
“Group” or “the Company”) was established in July 1993, as approved by the
Shenzhen Municipal Government with document SFBF (1993) 724. The Company
issued A shares on 15th September, 1993 and issued B shares on 10 January 1994.
On 31 August 1994, B shares issued were listed in New York Exchange market as
class A recommendation. The total share capital are 1,011,660,000 shares, of which,
A shares are 891,660,000 shares, and the B shares are 120, 000,000 shares. The
company business license registration number is 440301103225878, and the
registered capital is RMB 1,011,660,000.00.
On 13 October 2004，according to the document No.(2004) 223 “Decision on
establishing Shenzhen investment Holding Co., Ltd.” issued by State-Owned Assets
Supervision and Administration Commission of Shenzhen Municipal Government,
former major shareholder – Shenzhen Construction Investment Holding Company
with two other assets management companies merged to form the Shenzhen
Investment Holding Co., Ltd. By the State-owned Assets Supervision and
Administration Commission of the state council，and quasi-exempt obligations
tender offer as approved by China Security Regulatory Committee with document
No.(2005)116, this issue of consolidated has been authorized and the registration
changing had been done on 15 February 2006. As at the end of the reporting period,
Shenzhen Investment Holding Limited holds 642,884,262 shares of the Company
(63.55% of the total share capital). The shares are all selling unrestricted shares.
Business scope: mainly engaged in real estate development and sales, property
leasing and management, retail merchandising and trade, hotel, equipment
installation and maintenance, construction, interior decoration and so on.
The main products or services provided: commodity housing, property leasing and
management, hotel service, construction and installation service, renovation service.
The parent of the Company is Shenzhen Investment Holdings Co., Ltd.
The Financial statement published on Aug 20th, 2019, which approved by Group’s
Board of Directors.
25 units were consolidated into the Group in first half of 2019 for the detail in Note 9
"Equities in other entities". The company did not change the range of consolidation
in this period compared with last year.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
IV The Basis of Preparation of Financial Statements
4.1 The financial statements of the Group have been prepared on the basis of going
concern in conformity with the Chinese Accounting Standards for Business
Enterprises –The basic standards(Issued by order No.33 of the Ministry of Finance,
Revised by order No.76 of the Ministry of Finance), the 42 specified Accounting
Standards for Business Enterprise issued and revised by the Ministry of Finance of
People’s Republic of China on 15 February, 2006 and thereafter, the guidance for
the application of the Accounting Standards for Business Enterprise, the explanation
for the Accounting Standards for Business Enterprise and other relevant
regulations( thereinafter referred as “Accounting Standards for Business
Enterprises”) and Compilation Rules for Information Disclosure by Companies
Offering Securities to the Public No.15—General Provisions on Financial Reports
(2014 Revision) issued by the China Securities Regulatory Commission (CSRC).
According to the relevant accounting regulations of Chinese Accounting Standards
for Business Enterprises, the Group has adopted the accrual basis of accounting.
The Group adopts the historical cost as the principle of measurement in the financial
statements except some financial instruments and Investment properties.
Non-current assets held for sale are based on lower price between the fair value
less estimated expenses and the original book value when they meet the conditions
for holding the sale. Provision will be made if any assets impair in accordance with
relevant requirements.
4.2 Going concern
No significant suspected event or circumstances about the going concern for the
past 12 months from the end of the reporting period.
V Important accounting policies and estimations
The company and its subsidiaries are engaged in real estate development business,
property leasing and management services, hotel room services, as well as building
installation and decoration services. The company and its subsidiaries have
formulated a number of specific accounting policies and accounting estimates for
transactions and events such as revenue recognition in accordance with the
characteristics of actual production and operation and the relevant accounting
standards for enterprises. For the details, please refer to each description of Notes 5.
39 “Revenues”.
5.1 Basis of Preparation
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
The financial statements of the Group are recognized and measured in accordance
with the regulations of the Chinese Accounting Standards for Business Enterprises
and they give a true and fair view of the financial position, business result and cash
flow of the Group as of 30 June 2019. In addition, the financial statements of the
Group comply, in all material respects, with the revised disclosure requirements for
financial statements and the notes of Compilation Rules for Information Disclosure
by Companies Offering Securities to the Public No.15—General Provisions on
Financial Reports (2014 Revision) issued by China Securities Regulatory
Commission (CSRC).
5.2 Accounting period
The accounting period of the Group is classified as interim period and annual period.
Interim period refers to the reporting period shorter than a complete annual period.
The accounting period of the Group is the calendar year from January 1 to
December 31.
5.3 Operating cycle
The normal operating cycle refers to period from Group’s buying assets for
manufacturing to realizing the cash or cash equivalent .The Group chooses 12
months as an operating cycle. The assets and liabilities are classified as current and
non-current according to the operating cycle standards.
5.4 Monetary Unit
Renminbi (RMB) is the currency of the primary economic environment in either
Group & its domestic subsidiaries or foreign subsidiary in HK. Therefore, the Group,
the domestic subsidiaries and foreign subsidiary in HK choose RMB as their
functional currency. While the Group’s foreign subsidiary in U.S.A. chooses USD
dollar as its functional currency on the basis of the primary economic environment it
operates. The Group adopts RMB to prepare its functional statements.
5.5 Accounting Treatment Under Common/Non-common control
A business combination is a transaction or event that brings together two or more
separate entities into one reporting entity. Business combinations involve
enterprises under common control and non-common control.
(1) Business combination involving entities under common control
A business combination involving enterprises under common control is a business
combination in which all of the combining enterprises are ultimately controlled by the
same party or parties both before and after the combination, and that control is not
transitory.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
For a business combination involving enterprises under common control, the party
that, on the combination date, obtains control of another enterprise participating in
the combination is the absorbing party, while that other enterprise participating in the
combination is a party being absorbed. Combination date is the date on which the
absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as
recorded by the enterprise being absorbed at the combination date. The difference
between the carrying amount of the net assets obtained and the carrying amount of
consideration paid for the combination (or the total face value of shares issued) is
adjusted to the capital premium (or share premium) in the capital reserve. If the
balance of the capital premium (or share premium) is insufficient, any excess is
adjusted to retained earnings.
The cost of a combination incurred by the absorbing party, including any costs
directly attributable to the combination, shall be recognized as an expense through
profit or loss for the current period when incurred.
(2) Business combination involving entities under non common control
A business combination involving enterprises under non common control happens if
the combining enterprises are not ultimately controlled by the same party or parties
both before and after the business combination.
For a business combination not involving enterprises under common control, the
party that, on the acquisition date, obtains control of another enterprise participating
in the combination is the acquirer, while the other enterprise participating in the
combination is the acquiree. Acquisition date is the date on which the acquirer
effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the
combination cost including the sum of fair value, on the acquisition date, of the
assets given, liabilities incurred or assumed, and equity securities issued by the
acquirer. The intermediary expenses incurred by the acquirer in respect of auditing,
legal services, valuation and consultancy services etc. and other associated
administrative expenses attributable to the business combination are recognized in
profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities
should be initially recognized as cost of equity securities or liability securities.
The contingent consideration related to the combination shall be booked as
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
combination cost at the fair value on the acquisition date. If, within the 12 months
after acquisition, new or additional information can prove the existence of related
information on acquisition date and the contingent consideration need to be adjusted
by relatively adjusting the combination goodwill.
Acquirer ‘s combination cost and the obtained identifiable net assets are measured
with the fair value on the acquisition date. The excess of the combination cost over
the fair value of identifiable net assets on the acquisition date is recorded as goodwill.
When the fair value of identifiable assets exceeds the combination cost , first of all,
the fair value of items of obtained acquiree’s identifiable assets, liabilities or
contingent liabilities and combination cost need to be reassessed. And then, when
the combination cost is still less than the fair value of identifiable net assets on the
acquisition date after reassess, the difference should be recorded in the current
year’s profit and loss.
The deductible temporary differences obtained from the acquiree which cannot be
recognized as deferred tax assets ,on the acquisition date, because some
conditions are not met. Within 12 months after the acquisition ,if new or additional
information indicate that the relevant information exist on the acquisition date and
the economic benefits related with the deductible temporary difference can be
realized, the deferred tax assets should be recognized. The goodwill should be
reduced and if the goodwill is less than the deferred tax assets recognized, the rest
part should be recorded in the current year profit and loss.
For a business combination achieved in stages that involves multiple exchange
transactions, according to the “No.5 Inform of Printing and Distributing the
Explanation of Accounting Standards issued by the Finance of Ministry (Caikuai
[2012] No.19)”and Article 51of “Chinese Accounting Standards for Business
Enterprises No.33- Consolidated financial statement”, relating with the judgment
standards of package deal( refer to note 5.6(2)), a judgment about whether it is
package deal or not should be made. If it is package deal, please refer to the note
5.22 - Long-term equity investment for accounting treatment; if it is not package deal,
distinguish them as individual financial statement and consolidated financial
statement for accounting treatment.
For the individual financial statements, the book value of the long-term equity
investment held before the acquisition date plus the newly added equity investment
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
on the acquisition date, and then sum should be recorded as the original investment
cost; the long-term equity investment involved with other comprehensive income
held before the acquisition date, the way to deal with the investment will be the same
with the way the acquiree directly dispose the related assets and liabilities (i.e.,
under the equity method, beside the portion caused by the acquiree’s recalculated
defined benefit plan’s net assets and net liabilities, the rest are transferred into
investment income).
For the consolidated financial statements, for the shares in acquiree held before the
acquisition date, the shares are recalculated according to the fair value on the
acquisition date. The difference between the fair value and book value should be
recorded in the current year investment income; For the shares in the acquiree held
before the acquisition date involving other comprehensive income. The way to deal
with the other comprehensive income should be the same with the way the acquiree
directly dispose the relevant assets and liabilities(i.e., under the equity method,
beside the portion of changes caused by the acquiree’s recalculated defined
benefit plan’s net assets and net liabilities, the rest are transferred into investment
income ).
5.6 Preparation of consolidated financial statements
(1)The standards of determining the scope of consolidation
The scope of consolidation in the consolidated financial statements is determined on
the basis of control. Control is the power to govern the financial and operating
policies of an enterprise so as to obtain benefits from its operating activities. The
scope of consolidation includes the Group and all of the subsidiaries. Subsidiary is
an enterprise or entity under the control of the Group.
Once the changes of relevant facts and conditions result in the factors involving with
the above definition of the control, the Group will proceed to reassess.
(2)The method of preparing the consolidated financial statements
The subsidiary of the Group is included in the consolidated financial statements from
the date when the control over the net assets and business decisions of the
subsidiary is effectively obtained, and excluded from the date when the control
ceases.
For a subsidiary being disposed of by the Group, the operating results and cash
flows before the date of disposal (the date when control is lost) are included in the
consolidated income statement and consolidated statement of cash flows, as
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
appropriate. For a subsidiary disposed during the period, no adjustment is made to
the opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common
control, the operating results and cash flows from the acquisition date (the date
when the control is obtained) are included in the consolidated income statement and
consolidated statement of cash flows, as appropriate; no adjustment is made to the
opening balance and comparative figures in the consolidated financial statements.
Where a subsidiary was acquired during the reporting period, through a business
combination involving enterprises under common control, the financial statements of
the subsidiary are included in the consolidated financial statements. The results of
operations and its cash flow are appropriately included in the consolidated balance
sheet and the consolidated income statement, respectively, from the beginning of
the year to the date of acquisition and the comparative figures of the consolidated
financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from
those of the Group, the Group makes necessary adjustments to the financial
statements of the subsidiary based on the Group’s accounting period or accounting
policies. For the subsidiaries acquired through combination involving enterprises
under non common control, the financial statements should be adjusted based on
the fair value of the indentified net assets on the acquisition date.
Intra-group balances and transactions, and any unrealized profit or loss arising from
intra-group transactions, are eliminated when preparing the consolidated financial
statements.
Minority interest and the portion in the net profit or loss not attributable to the Group
are presented separately in the consolidated balance sheet within shareholders’/
owners’ equity. Net profit or loss attributable to minority shareholders in the
subsidiaries is presented separately as minority interest in the consolidated income
statement below the net profit line item.
When the amount of loss for the current period attributable to the minority
shareholders of a subsidiary exceeds the minority shareholders’ portion of the
opening balance of [shareholders’] [owners’] equity of the subsidiary, the excess is
still allocated against the minority interests.
When the Group loses control of a subsidiary due to the disposal of a portion of an
equity investment or other reasons, the remaining equity investment is re-measured
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
at its fair value on the date when control is lost. The difference between 1) the total
amount of consideration received from the transaction that resulted in the loss of
control and the fair value of the remaining equity investment and 2) the carrying
amounts of the interest in the former subsidiary’s net assets immediately before the
loss of the control is recognized as investment income for the current period when
control is lost. The amount recognized in other comprehensive income in relation to
the former subsidiary’s equity investment is reclassified as investment income for
the current period when control is lost. The retained interest is subsequently
measured according to the rules stipulated in the “Chinese Accounting Standards for
Business Enterprises No.2—Long-term equity investment” or “Chinese Accounting
Standards for Business Enterprises No.22—Determination and measurement of
financial instruments” (see note 5.22-Long-term equity investment and
5.10-Financial instruments).
The Group’s losing control of subsidiaries through multistep transactions of
disposing of the long-term equity investment, need to indentify whether every
transaction, involving with disposing of the investment in subsidiary until losing the
control, is belonging to package deal. Several transactions should be accounted for
as a package deal if conditions and the economic impact of disposal of investments
in subsidiaries are in compliance with one or more of the following circumstances:
① These transactions are considered simultaneously or ② these transactions as
a whole in order to reach a complete business results; another case of the
occurrence of the impact of entering into a transaction depends ③ had at least one
other transaction; ④ see a transaction alone is not economical, but, it is
economical when other transactions are taken into account. If it is not package deal,
every transaction of the non-package deals is treated according to the applicable
accounting standards of “partly disposing of the long-term equity investment without
losing control ”( refer to 5.22(2) ④ for detail) and “losing the control to subsidiary
due to partly disposing the equity investment or other reasons ” (see the former
paragraph for details). When every transaction involving with disposing of equity
investment in subsidiary until losing control is a package deal, they will be treated as
a single deal of disposing of the investment in subsidiary until losing control for
accounting treatment. But, before the control are lost, the difference between each
receipt of every transaction and the related shared proportion of indentified net
assets are recognized as other comprehensive income. The other comprehensive
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
income will be transferred into profit and loss in the period when losing control.
5.7 Joint venture arrangement classification& mutual office account treatment
Joint venture arrangement is referred to the arrangement that are under common
control of two or more participating parties. The Group classifies the joint venture
arrangement into mutual office and joint venture, according to the rights shared and
obligation undertaken in the joint venture arrangement. Mutual office represents the
joint venture arrangement that the Group shares the assets related with
arrangement and undertakes the obligations related with the arrangement. Joint
venture is referred to the joint venture arrangement that the Group only have the
right to the net assets of the arrangement.
The Group measures the joint venture investment using the equity method. Please
refer to accounting policies listed on note 5.22 (2) ②-long-term equity investment
measured using the equity method.
As one party of the mutual office, the Group recognizes the separately owned assets
and separately assumed obligations, and the proportionate commonly held assets
and commonly assumed obligations per the company’s percentage of share interest;
recognize the revenue from the selling of the Group’s shared output of the mutual
office; recognize the common revenue generated from the selling of the common
output of the mutual office according to the Group’s share percentage; recognize the
expense separately incurred by the Group and the proportionate expense incurred
by the mutual office according to the Group’s share percentage.
When the Group sells invest or sell assets to the mutual office as one of the mutual
office party (the assets do not constitute a business, the same to below), or buys
assets from the mutual office, before the assets are sold to the third party, the Group
only recognizes the portion of profit and loss attributable to the other participating
parties. According to requirements of Chinese Accounting Standards for Business
Enterprises No.8- Asset impairment, when the assets are impaired, for the assets
invested or sold to the mutual office by the Group, the Group fully recognizes the
impairment loss; for assets that the Group bought from the mutual office, the
impairment loss is recognized according to the share percentage by the Group.
5.8 Cash and cash equivalent
Cash and cash equivalents of the Group include cash on hand, ready usable
deposits and investments having short holding term (normally will be due within
three months from the day of purchase), with strong liquidity and easy to be
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
exchanged into certain amount of cash that can be measured reliably and have low
risks of change.
5.9 Foreign exchange
(1) Translation in foreign exchange transactions
The Group’s initial recognition of the foreign currency transactions is recorded by the
functional currency translated by the spot rate (commonly refer to the middle rate of
the daily foreign currency rate publicly released by the People’s Bank of China)on
the transaction date. But the Group’s foreign currency exchange and foreign
currency exchange relevant transactions, is recorded by the functional currency
translated by the exchange rate actually used.
(2)Translation method for foreign currency monetary items and non-monetary items.
On the balance sheet date, foreign currency monetary items are translated using the
spot exchange rate at the balance sheet date. All the exchange differences thus
resulted are taken into profit or loss, except for ①those relating to foreign currency
borrowings specifically for construction and acquisition of qualifying assets, which
are capitalized in accordance with the principle of capitalization of borrowing costs;
②The exchange difference from changes of other account balance of foreign
currency monetary items available-for-trade is recorded into other comprehensive
income except for amortization cost.
When preparing the consolidated financial statements involving with oversea
operation, the foreign currency difference caused by the foreign exchange rate
changes should be recorded in other comprehensive income, if it substantially
constitutes the monetary items related to net investment to the oversea operation.
When the oversea operation are disposed, the other comprehensive income should
be transferred into current year profit and loss.
Non-monetary foreign currency items measured at historical cost shall still be
translated at the spot exchange rate prevailing on the transaction date, and the
amount denominated in the functional currency is not changed. Non-monetary
foreign currency items measured at fair value are translated at the spot exchange
rate prevailing at the date when the fair values are determined. The exchange
difference thus resulted are recognized in profit or loss for the current period or as
other comprehensive income.
(3) The translation of financial statement in foreign currency
When the consolidated financial statements include foreign operation(s), if there is a
foreign currency monetary item constituting a net investment in a foreign operation,
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
exchange difference arising from changes in exchange rates are recognized as
“exchange differences arising on translation of financial statements denominated in
foreign currencies” are recognized in other comprehensive income, and in profit or
loss for the period upon disposal of the foreign operation.
The Group translates the financial statements of its foreign operations into RMB by
following rules;
1） Assets and liabilities in the balance sheet are translated at the spot
exchange rate prevailing on the balance sheet date; All equity items except for
retained earnings are translated at the spot exchange rates at the date on which
such items occur;
2） Income and expenses in income statement are translated at the spot exchange
rates at the date of transaction.
3） The opening undistributed profit is the closing undistributed profit of last period
after translation of last year.
4） The closing balance of undistributed profit is calculates and presented in the
basis of each translated income statements and profit distribution item.
5） The difference between the assets and liabilities and shareholder’s equity shall
be booked as translation difference of translating foreign currency financial
statements, and shall be presented as other comprehensive income in the separate
component of equity in the balance sheet.
6） When losing control over Group’s oversea operation due to disposal, the
translation difference of translating foreign currency financial statements related with
the oversea operation which is separately presented under the shareholder’s equity
section as accumulated other comprehensive income, should be fully or
proportionately transferred into the current period profit and loss according to the
disposal percentage.
7）Foreign currency cash flows and cash flow of oversea subsidiaries are translated
at the spot exchange rates. The effect of exchange rate changes on cash is
separately presented as an adjustment item in the cash flow statement.
8）The opening balance and actual figures of last year are displayed as the figures
translated last year.
9）When disposing the Group’s all shareholders’ equity of oversea operation or the
Group losing control over the oversea operation due to partial disposal of the
oversea equity investment or other reasons, the translation difference caused by the
translating of foreign currency financial statement related with the oversea
operation , which is presented under the equity section on the balance sheet and is
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
attributable to the parent company’s shareholders, should be transferred to the
current period profit and loss.
10)When the partial disposal of the equity investment of oversea operation and other
reasons cause the share percentage of oversea operation to decrease without
making the power of control to disappear, the translation difference of translation
foreign currency financial statement related with the part of oversea operation
disposed should be attributable to the minority interest and do not transfer to the
current period profit and loss. When the oversea operation disposing is a jointly run
business or joint venture, the translation difference of translating foreign currency
financial statements should be transferred to the current period profit and loss
according to the percentage of oversea operation disposal.
5.10 Financial instruments
When the Company becomes a party to a financial instrument, it shall recognize a
financial asset or financial liability.
(1) Classification, recognition and measurement of financial assets
The Company classifies the financial assets into financial assets measured at
amortized cost ,financial assets measured by the fair value and the changes
recorded in other comprehensive income and financial assets at fair value through
profit or loss based on the business model for financial assets management and
characteristics of contractual cash flow of financial assets.
Financial assets initially recognized shall be measured at their fair values. For
financial assets measured at their fair values and of which the variation is recorded
into the profit or loss of the current period, the transaction expenses thereof shall be
directly included into the current profit or loss; for other financial assets, the
transaction expenses thereof shall be included into the initially recognized amount.
For accounts receivable and notes receivable generated from sales of commodities
or provision of labor services, excluding or without regard to major financing, the
expected consideration amount the Company has the right to collect will be taken by
the Company as the initially recognized amount.
① Financial assets measured by the amortized cost
The business mode of the Company to manage the financial assets targets at
collecting the
contractual cash flow. What's more, the contractual cash flow characteristics of the
financial assets are consistent with the basic lending arrangement, that is, the cash
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
flow generated in the specific date is the payment of the interest based on the
principal and outstanding principal amount. This kind of financial assets of the
Company shall be subsequently measured based on the amortized cost and
effective interest method, and the gains or losses arising from the amortization,
impairment shall be included into current profit and loss.
②Financial assets measured at the fair value with its changes included into other
comprehensive income
Business mode for managing financial assets of the Company takes contract cash
flow collected as target and selling as target and contract cash flow characteristics of
such financial assets are consistent with basic lending arrangement. The Company
calculates such financial assets as per fair value whose change is included into
corresponding comprehensive income, but impairment loss or gain, exchange gain
or loss and interest income calculated as per actual interest rate method are
included into the current profit and loss.
Furthermore, the Company designates partial non-tradable equity vehicle
investment as the financial asset measured with fair value whose change is included
into other comprehensive income. The Company includes the related dividend
income of such financial assets into the current profit and loss with the change in fair
value included into other comprehensive income. At the time of derecognition of
such financial assets, accumulated gain or loss included into other comprehensive
income before will be shifted to retained earnings from other comprehensive
incomes but not included into the current profit and loss.
③ Financial assets at fair value through profit or loss
The Company classifies financial assets except for above-mentioned financial
assets measured with amortized cost and financial assets measured with fair value
whose change is included into other comprehensive income into financial assets at
fair value through profit or loss. Furthermore, at the time of the initial recognition, to
eliminate or significantly reduce the accounting mismatch, the Company specifies
partial financial assets as the financial assets at fair value through profit or loss. For
such financial assets, the Company adopts the fair value for the subsequent
measurement, and the changes in fair value are included into current profit and loss.
(2) Classification, recognition and measurement of financial liabilities
The Company’s financial liabilities are, on initial recognition, classified into financial
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
liabilities at fair value through profit or loss and other financial liabilities. For financial
liabilities at fair value through profit or loss, relevant transaction costs are
immediately recognized in profit or loss for the current period, and transaction costs
relating to other financial liabilities are included in the initial recognition amounts.
① Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include trading financial
liabilities (including the derivative instruments belonging to financial liabilities) and
financial liabilities designated at the initial recognition to be measured by the fair
value and their changes are recorded in the current profit or loss.
Trading financial liabilities (including the derivative instruments belonging to financial
liabilities) are subsequently measured at fair value, and the changes of fair value
except those related to hedge accounting) shall be recorded in the current profit or
loss.
For the financial liabilities at fair value through profit or loss, the change of such
liability's fair value arising from changes in the Company's own credit risk is included
into other comprehensive income. And when the liability is derecognized, the
accumulative change amount of its fair value arising from the change of own credit
risk included into other comprehensive income is transferred to the retained
earnings. The changes of the remaining fair value are included in the current profit or
loss. If the treatment of change effects in own credit risk of such financial liability in
the above method may cause or expand the accounting mismatching in the profit or
loss, the Company will include all gains or losses (including the amount influenced
due to the changes in own credit risk of the enterprise) of such financial liability into
the current profit or loss.
② Other financial liabilities
Other financial liabilities except for those formed due to transfer of financial assets
failing to comply with derecognition condition or continuously getting involved in
transferred financial assets and financial guarantee contract are classified into
financial liabilities measured with amortized cost and subject to subsequent
measurement based on amortized cost. Gains or losses generated from
derecognition or amortization are included into the current profit or loss.
(3) Recognition and measurement of financial assets transfer
The Company derecognizes a financial asset when one of the following conditions is
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met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a
third party
under a pass-through arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and
either (a)
has transferred substantially all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial
asset nor control over the asset, the asset is recognized according to the extent it
exists as financial asset, and correspondent liability is recognized. The extent of
existence refers the level of risk by the financial asset changes the enterprise is
facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition
criteria, (a). the carrying amount of the financial asset transferred; and (b) the sum of
the consideration received from the transfer and any cumulative gain or loss that
had been recognized in other comprehensive income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying
amount of the transferred financial asset is allocated between the part that continues
to be recognized and the part that is derecognized, based on the relative fair value
of those parts. The difference between (a) the carrying amount allocated to the part
derecognized; and (b) the sum of the consideration received for the part
derecognized and any cumulative gain or loss allocated to the part derecognized
which has been previously recognized in other comprehensive income, is
recognized in profit or loss.
If the Company endorses the financial assets sold by right of recourse and holding
financial assets, it needs to confirm that whether almost all risks and remuneration in
the ownership of financial assets have been transferred or not. Where an enterprise
has transferred nearly all of the risks and rewards related to the ownership of the
financial asset to the transferee, it shall stop recognizing the financial asset； If it
retained nearly all of the risks and rewards related to the ownership of the financial
asset, it shall not stop recognizing the financial asset. If the Company does not
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transfer or retain nearly all of the risks and rewards related to the ownership of the
financial asset, then it continuously judges that whether the Company retain the
control of the assets, and conducts accounting treatment according to the principles
described in former paragraphs.
(4) Derecognition of financial liabilities
In case of current obligation of financial liabilities (or partial financial liabilities) being
terminated, derecognition of such financial liabilities (or partial financial liabilities) is
conducted by the Company. If the Company (borrower) concludes an agreement
with the lender to replace original financial liabilities with new ones and contact
terms of new financial liabilities are different from those of original financial liabilities,
derecognition of original financial liabilities and recognition of new financial liabilities
shall be conducted. In case of material alteration of contract terms of original
financial liabilities (partial financial liabilities) by the Company, derecognition of
original financial liabilities and recognition of
new financial liabilities as per modified terms shall be conducted.
In case of derecognition of financial liabilities (partial financial liabilities), the
Company includes the balance between its carrying value and payment
consideration (including non-cash assets transferred out or borne liabilities) into the
current profit or loss.
(5) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the
recognized financial assets and financial liabilities, and intends either to settle on a
net basis, or to realize the financial asset and settle the financial liability
simultaneously, a financial asset and a financial liability shall be offset and the net
amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance
sheet and shall not be offset.
(6) Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm’s length transaction. For a
financial instrument which has an active market, the Company uses quoted price in
the active market to establish its fair value. The quoted price in the active market
refers to the price that can be regularly obtained from exchange market, agencies,
industry associations, pricing authorities; it represents the fair market trading price in
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the actual transaction. For a financial instrument which does not have an active
market, the Company establishes fair value by using a valuation technique.
Valuation techniques include using recent arm’s length market transactions between
knowledgeable, willing parties, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow analysis and option
pricing models. The Company measures initially and subsequently the fair value of
an
interest rate swap at the value of a competitor’s interest rate swap quoted by a
recognized financial institution as at the Company’s balance sheet date in
accordance with the principle of consistency. In valuation, the Company adopts
applicable valuation techniques supported by sufficient utilizable data and other
information in current circumstances, selects input values consistent with asset or
liability characteristics considered in relevant asset or liability transactions of market
participators and prioritizes the applying relevant observable input values.
Unobservable input values shall not be applied unless relevant observable input
values are not accessible or feasible.
(7) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets
of the Company after deducting all of its liabilities. The consideration received from
issuing equity instruments, net of transaction costs, are added to shareholders’
equity. All types of distribution (excluding stock dividends) made by the Company to
holders of equity instruments are deducted from shareholders’ equity. The Company
does not recognize any changes in the fair value of equity instruments.
An equity instrument distributing dividends during the period of continued existence
(including the “interest” generated from those classified as equity instrument) shall
be treated as profit distribution.
(8) Impairment of Financial Assets
The Company needs to confirm that the financial assets subject to the impairment
loss are the financial assets measured based on the amortized cost, the debt
instrument investment measured based on the fair value with its variations included
into other comprehensive incomes and the lease outlay receivable, mainly including
notes receivable, account receivable, other receivables, investment on creditor’s
rights, other investments on creditor’s rights and long-term receivables etc. Besides,
in respect of the contract assets and partial financial guarantee contract,
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corresponding impairment provisions shall be calculated and withdrawn and
corresponding credit impairment losses recognized according to various accounting
policies mentioned in this part.
① Methods for the Recognition of Impairment Provisions
For all mentioned items above, the Company shall calculate and withdraw
corresponding impairment provisions and recognize corresponding credit
impairment losses according to applicable expected credit loss measurement
methods (general methods or simplified methods) with the expected credit loss as
the basis.
Credit loss refers to the difference between all receivable contract cash flows and all
expected cash flows that are discounted to the present value based on the original
actual interest rate -- the present value of all cash shortfall. However, for the
purchased or original financial assets subject to the credit impairment, the Company
shall realize the discounting based on the actual interest rate subject to the credit
adjustment.
General methods applied to measure the expected credit loss can be described as:
the Company shall evaluate whether the credit risk of the financial assets (including
the contract assets and other applicable items; the same below) increases
remarkably after the initial recognition on the balance sheet day; if the credit risk
increases remarkably after the initial recognition, the Company shall measure the
provision for loss based on the specific expected credit loss amount during the entire
period of existence; if not, the Company shall measure the provision for loss based
on the specific expected credit loss amount in the following 12 months. While
evaluating the expected credit loss, the Company shall take all reasonable and
well-founded information into consideration, including the forward-looking
information.
For the financial instrument of lower credit risk on the balance sheet day, the
Company shall assume that its credit risk does not increase remarkably after the
initial recognition, and corresponding provision for loss shall be measured according
to the expected credit loss in the following 12 months.
② Standards for Judging Whether the Credit Risk Increases Remarkably after the
Initial Recognition
If any financial assets’ probability of default within the expected period of existence
determined on the balance sheet day is obviously higher than that within the
expected period of existence determined during the initial recognition, it shall
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
indicate the remarkable increase of the financial assets’ credit risk. Unless it is under
special circumstances, the Company shall adopt various variations in the default risk
in the following 12 months as the reasonable basis for estimating corresponding
variations in the default risk within the entire period of existence and determining
whether the credit risk increases remarkably after the initial recognition.
③ Combined Method for Evaluating the Expected Credit Risk based on
Corresponding Combination
For the financial assets with remarkably different credit risk, the Company shall
separately evaluate its credit risk, including the receivables from related parties,
receivables involved in any dispute with the other party or any lawsuit and arbitration,
and receivables with obvious evidence showing that the debtor cannot fulfill the due
payment obligation etc.
Except for the financial assets whose credit risk shall be separately evaluated, the
Company shall divide these financial assets into different combinations based on the
specific risk features, on which basis, corresponding credit risks can be evaluated.
④ Accounting Treatment Methods Applied to the Impairment of Financial Assets
At the end of the period, the Company shall calculate the expected credit losses of
various financial assets. If the expected credit loss is higher than the carrying
amount of its current impairment provision, the difference shall be recognized as the
impairment loss; if lower, the difference shall be recognized as the gain from the
impairment.
5.11 Note receivables
For notes receivable, the Company shall measure the provision for loss based on
the specific
expected credit loss during the entire period of existence.
1） Portfolio-based Assessment of Expected Credit Risk
Our company evaluates the credit risk of receivables with distinct credit risks. In
addition to the financial assets, we divide the receivables into different groups based
on the common risk characteristics and evaluate the credit risk on the basis of
combination.
2） Accounting Processing Method for Devaluation of Note receivables
At the end of the period, the company calculates the anticipated credit loss of the
Note receivables. If the anticipated credit loss is larger than the book value of its
current impairment provision, the difference is recognized as impairment loss; if it is
less than the book value of the current impairment provision, the difference is
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
recognized as impairment profit.
5.12 Account receivables
For receivables without significant financing components, Company measures loss
preparation according to the amount of anticipated credit loss equivalent to the
entire lifetime.
For accounts receivable with significant financing components, the company does
not choose a simplified treatment method, based on whether the credit risk has
increased significantly since the initial confirmation, but uses the expected credit
loss amount in the next 12 months or the whole life period to measure the loss
preparation.
(1) Criteria for judging whether credit risk has increased significantly since the initial
confirmation
If the default probability of accounts receivable in the expected life period
determined on the balance sheet date is significantly higher than that in the
expected life period determined on the initial confirmation, the credit risk of the
accounts receivable increases significantly. Except for special circumstances, the
company uses the change of default risk in the next 12 months as a reasonable
estimate of the change of default risk in the whole life period to determine whether
the credit risk has increased significantly since the initial confirmation.
(2) Portfolio-based Assessment of Expected Credit Risk
Our company evaluates the credit risk of receivables with distinct credit risks, such
as the related party's receivables, the receivables in dispute with the other party or
involving litigation and arbitration, and there are obvious signs that the debtor may
not be able to fulfill the obligation of repayment of the receivables, etc.
In addition to the individual accounts receivable assessing credit risk, the company
divides the accounts receivable into different groups based on the common risk
characteristics, and evaluates the credit risk on the basis of combination.
(3) Accounting treatment of impairment of accounts receivable
At the end of the period, the company calculates the anticipated credit loss of
accounts receivable. If the anticipated credit loss is greater than the book value of its
current impairment provision, the difference shall be recognized as impairment loss;
if it is less than the book value of the current impairment provision, the difference
shall be recognized as impairment profit.
5.13 Account receivables Financing
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
In the daily fund management, the company sells the receivables of some specific
customers through the right of nonrecourse factoring. For the receivables of some
specific customers, the company aims at both collecting contract cash flow and
selling financial assets. Therefore, the receivables of these specific customers will
be collected by the company on and after January 1,2019. Items are reclassified as
financial assets with fair value and their changes are included in other
comprehensive income categories and reported as investments in other creditor's
rights or financing receivables.
5.14 Other Receivables
Based on whether the credit risk of other receivables has increased significantly
since the initial confirmation, the company uses the amount equivalent to the
expected credit loss in the next 12 months or the whole life period to measure the
impairment loss.
(1) Criteria for judging whether credit risk has increased significantly since the initial
confirmation
If the default probability of Other receivable in the expected life period determined on
the balance sheet date is significantly higher than that in the expected life period
determined on the initial confirmation, the credit risk of the Other receivable
increases significantly. Except for special circumstances, the company uses the
change of default risk in the next 12 months as a reasonable estimate of the change
of default risk in the whole life period to determine whether the credit risk has
increased significantly since the initial confirmation.
(2) Portfolio-based Assessment of Expected Credit Risk
Our company evaluates the credit risk of Other receivables with distinct credit risks,
such as the related party's receivables, the receivables in dispute with the other
party or involving litigation and arbitration, and there are obvious signs that the
debtor may not be able to fulfill the obligation of repayment of the receivables, etc.
In addition to the individual Other receivable assessing credit risk, the company
divides the Other receivable into different groups based on the common risk
characteristics, and evaluates the credit risk on the basis of combination.
(3) Accounting treatment of impairment of accounts receivable
At the end of the period, the company calculates the anticipated credit loss of Other
receivable. If the anticipated credit loss is greater than the book value of its current
impairment provision, the difference shall be recognized as impairment loss; if it is
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
less than the book value of the current impairment provision, the difference shall be
recognized as impairment profit.
5.15 Inventories
(1) Classification of inventory
①Real estate development products
Real estate development inventory is initially measured at cost. Inventories mainly
include inventory materials, development products under development
(development costs), completed development products, and development products
that are temporarily leased for sale. The cost of developing products includes
land-transferring fees, expenditures on infrastructure support facility, expenditures
on construction and installation project, borrowing costs and other related costs in
the process of development before the completion of the project. When delivering
inventories, the actual cost is determined using the individual identification method.
②Build contracted inventory
The construction contract is measured at actual cost, including direct costs and
indirect costs incurred from the commencement of the contract to the completion of
the contract, and the implementation of the contract. Where travel expenses, tender
fees, etc. incurred for the purpose of entering into a contract, which can be
separately distinguished and reliably measured and the contract is likely to be
concluded, are included in the contract cost when the contract is obtained; if the
above conditions are not satisfied, it is included in the current profit or loss.
The accumulative costs incurred for the construction in progress contracts and the
cumulative gross profits (losses) that have been recognized and the settled amounts
are shown in the balance sheet as net offsets. The part of the accumulative cost of
the construction-in-progress contract and the accumulatively recognized gross profit
(loss) that exceeds the settlement price is listed as inventory; the settlement price of
the construction-in-contract exceeds the accumulative cost incurred and
accumulatively recognized gross profit ( The sum of losses is shown as advance
receipts.
(2) Valuation method of inventories upon delivery
Inventories are initially carried at the actual cost. Cost of inventories comprises all
costs of purchase, costs of conversion and other costs. The actual cost of
inventories transferred out is assigned by using weighted average method, and
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
development products by specific identification method.
(3) Basis for determining net realizable value of inventories and provision methods
for decline in value of inventories
Net realizable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion, the estimated costs necessary to make the
sale and relevant taxes. Net realizable value is determined on the basis of clear
evidence obtained, and takes into consideration the purpose of holding inventories
and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net
realizable value. If the net realizable value is below the cost of inventories, a
provision for decline in value of inventories is made. The provision for inventories
decline in value is determined by the difference of the cost of individual item less its
realizable value.
After the provision for decline in value of inventories is made, if the circumstances
that previously caused inventories to be written down below cost no longer exist so
that the net realizable value of inventories is higher than their cost, the original
provision for decline in value is reversed and the reversal is included in profit or loss
for the period.
(4) Inventory count system is based on the perpetual stock system.
(5) Amortization method for low cost and short-lived consumable items and
packaging materials.
Low cost and short-lived consumable items are amortized using immediate write-off method; packaging
materials are amortized using immediate write-off method.
(6) Cost of land constitutes land development costs for pure land development project.
Together with the overall development of the property, its cost is included in housing costs generally based
on the actual area.
(7)Public Facilities Fee: The cost is the actual construction cost incurred. If several estate projects benefit
from the same facility, they stay in the same category. The cost of fee should be measured according to the
allocation of sales area. If they got benefit but in different categories, the cost was measured according to
the allocation of the area covered.
(8)Utility reserve funds：Utility reserve funds were received by the Group and recorded in Long-term
payables. The funds were used to maintain and renew communal facilities.
(9)Quality Guarantees：Quality Guarantees was put into the account of real estate developing according to
the contract amount and also recorded in the accounts payable at the same time. The actual payment incurs
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
after the expiry of guarantee.
5.16 Contract assets
For contract assets that do not contain significant financing components, the company measures loss
preparation according to the amount of anticipated credit loss equivalent to the whole life period.
For contract assets with significant financing components, the company does not choose a simplified
treatment method. It uses the expected credit loss amount in the next 12 months or the whole life period as
the basis to measure the loss preparation according to whether the credit risk has increased significantly
since the initial confirmation.
(1) Criteria for judging whether credit risk has increased significantly since the initial confirmation
If the default probability of Contract assets in the expected life period determined on the balance sheet date
is significantly higher than that in the expected life period determined on the initial confirmation, the credit
risk of the Contract assets increases significantly. Except for special circumstances, the company uses the
change of default risk in the next 12 months as a reasonable estimate of the change of default risk in the
whole life period to determine whether the credit risk has increased significantly since the initial
confirmation.
(2) Portfolio-based Assessment of Expected Credit Risk
The company evaluates the credit risk of contract assets with different credit risks. In addition to the
accounts receivable which evaluates the credit risk individually, the company divides it into different groups
based on the common risk characteristics and evaluates the credit risk on the basis of combination.
(3) Accounting treatment of impairment of accounts receivable
At the end of the period, the company calculates the anticipated credit loss of Other receivable. If the
anticipated credit loss is greater than the book value of its current impairment provision, the difference shall
be recognized as impairment loss; if it is less than the book value of the current impairment provision, the
difference shall be recognized as impairment profit.
5.17 Contract costs
5.18 Holding assets for sale
If a non-current asset can be sold immediately only in accordance with the usual terms for the sale of such
assets in its current situation, the Company has made a resolution on the disposal of the non-current asset,
signed an irrevocable transfer agreement with the transferee, and the transfer will be completed within one
year, the non-current asset shall be held as pending. The accounting of selling non-current assets shall be
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
classified as holding for sale without depreciation or amortization, and shall be measured according to the
book value and fair value minus the net disposal expenses. Holding non-current assets for sale includes
individual assets and disposal groups. If the disposal group is an asset group defined in Accounting
Standards for Enterprises No. 8 - impairment of assets, and the goodwill acquired in the merger of
enterprises is apportioned to the asset group according to the provisions of the standard, or the disposal
group is an operation in the asset group, the disposal group includes the goodwill formed in the merger of
enterprises.
It is divided into holding individual non-current assets for sale and assets in disposal group, which are
presented separately in the current assets part of the balance sheet, and liabilities related to transfer assets
in the disposal group which are held for sale, which are presented separately in the current liabilities part of
the balance sheet.
A certain asset or disposal group is classified as holding for sale, but later no longer meets the confirmation
conditions for holding non-current assets for sale. The company ceases to classify it as holding for sale and
measures it according to the lower of the following two amounts: (1) The asset or disposal group is classified
as holding the book value before being sold, according to On the assumption that the amount of
depreciation, amortization or impairment that should have been recognized should be adjusted without
being classified as holding for sale; (2) the recoverable amount on the day of deciding not to sell any more.
5.19 Investments in debt obligations
Investments in debt obligations mainly accounts for bond investment measured by amortized cost, etc.
Based on whether its credit risk has increased significantly since its initial confirmation, the company uses
the amount equivalent to the expected credit loss in the next 12 months or the whole life period to measure
the impairment loss.
In addition Investments in debt obligations, which assesses the credit risk individually, it is divided into
different portfolios based on its credit risk characteristics.
5.20 Investments in other debt obligations
Investments in other debt obligations are mainly measured at fair value and their changes are included in
bond investments of other comprehensive income. Based on whether its credit risk has increased
significantly since its initial confirmation, the company uses the amount equivalent to the expected credit
loss in the next 12 months or the whole life period to measure the impairment loss.
In addition to Investments in other debt obligations that evaluate credit risk individually, they are divided into
different portfolios based on their credit risk characteristics.
5.21 Long-term receivables
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Based on whether its credit risk has increased significantly since its initial confirmation, the company
measures long-term receivables impairment loss by the amount equivalent to the expected credit loss in the
next 12 months or the whole life period. In addition to the long-term receivables, which are used to evaluate
credit risk individually, they are divided into different combinations based on their credit risk characteristics.
5.22 Long-term equity investments
The long-term equity investment mentioned in this section is about the equity
investment of which the Group has control, common control or significant
influences over the investee. For the investments that the Group has no control,
common control or significant influences over the investee, they will be recorded as
available-for-sale or financial instrument assets measured at fair value with its
changes into profit and loss. Please refer to note 5.10-Financial instruments for
detail.
Common control means the Group’s mutual control to the arrangement according to
the related agreement and the arrangement’s activities related decisions can be
made only after getting the mutual agreement from other parties sharing the control
power. Significant influences represent that the Group has the right to participate in
the decision of the financial and operating policies, but cannot control or control
together with other parties to make the policy related decision.
(1) Determination of investment cost
For a business combination involving enterprises under common control, the initial
investment cost of the long-term equity investment shall be carrying value of the
absorbing party’s share of the shareholder’s of the party being absorbed at the date
of combination.
For a business combination not involving enterprise under common control, the
combination cost including the sum of fair value, at the acquisition date, of the
assets given, liabilities incurred or assumed, and equity securities issued by the
acquirer. The intermediary expenses incurred by the acquirer in respect of auditing,
legal services, valuation and consultancy services etc and other associated
administrative expenses attributable to the business combination are recognized in
profit or loss when they are incurred.
The transaction cost for the equity securities or liability securities issued by the
acquirer in the business combination shall be recognized as initial amount of equity
security or liability.
The equity investments other than the long-term equity through combination shall be
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
initially measured by cost. The cost shall be recognized to the difference in the way
of acquisition of long-term equity investment. Theses ways include the cash
purchase price the Group actually paid, the fair value of equity security issued by the
Group, value specified in the investment contract or agreement, the fair value or
carrying value of the asset transferred out in the transaction of non-monetary asset
exchanges, and the fair value of the long-term equity investment. Expenses, taxes
and other necessary expenditures directly attributable to the acquisition of long-term
equity investment are taken into investment cost. For the long-term equity
investments that the Group can have significant influence or common control on the
investee, but cannot control the investee, because of the added investments, the
cost of the long-term equity investment should be the sum of original fair value of the
investment and the cost of newly added investment.
(2) Subsequent measurement
Where an investing enterprise can exercise common control or significant influence
over the investee, a long-term investment shall be accounted for using the equity
method. Besides, the cost method shall be adopted in a long-term equity investment
when the Group can exercise control over the investee.
1) Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial
investment cost. Except for cash dividends or profits declared but not yet paid that
are included in the price or consideration actually paid upon acquisition of the
long-term equity investment, investment income is recognized in the period in
accordance with the attributable share of cash dividends or profit distributions
declared by the investee.
2) Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the
investing enterprise’s interest in the fair values of the investee’s identifiable net
assets at the time of acquisition, no adjustment shall be made to the initial
investment cost.
Where the initial investment cost of a long-term equity investment is less than the
investing enterprise’s interest in the fair values of investee’s identifiable net assets at
the time of acquisition, the difference shall be charged to profit or loss for the current
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
period, and the cost of the long-term equity investment shall adjusted accordingly.
Under the equity method，the Group recognizes its share of the net profit or loss and
other comprehensive income of the investee for the period as investment income or
loss and other comprehensive income for the period and adjusts the book value of
the long-term equity investment simultaneously. The Group reduces the book value
of the long-term equity investment, according to the shared profit or cash dividends
declared by the investee. For the changes of investee’s equity beside the net profit,
other comprehensive income and profit distribution, adjust the book value of the
long-term equity investment and its capital surplus.
When determining the share percentage of investee’s net profit, it should be made
based on the fair value of investee’s identifiable assets after adjusting the investee’s
net profit on the acquisition date. When the investee’s accounting period and
accounting policies are different with the Group’s, the subsidiary’s financial
statements should be adjusted according to the Group’s and recognize the
investment income and other comprehensive income based on it. Unrealized profits
or losses resulting from the Group’s transactions with its associates and joint
ventures are recognized as investment income or loss to the extent that those
attributable to the Group’s equity interest are eliminated. However, unrealized losses
resulting from the Group’s transactions with its investees on the transferred assets,
in accordance with "Accounting Standards for Enterprises No. 8 - Impairment of
Assets", are not eliminated. When the Group’s assets invested to joint venture and
jointly run business are a deal and the Group obtains the long-term equity
investment without getting the power of control, the initial cost of the investment is
determined by fair value of the assets invested. The difference between the initial
cost and the book value of the assets invested should be fully taken into profit and
loss. When the Group’s assets sold to joint venture and jointly run business are a
deal, the differences between the consideration received and the book value are
fully taken into the profit and loss. When the Group’s buying assets from joint
venture and jointly run business are a deal, the gain and loss would be fully
recognized according to the Accounting Standards for Business Enterprises No.20
-Enterprises combination.
When the investee is recognized net losses, reduce the carrying value of long-term
equity investments and long-term equity of net investment (in substance) in investee
to zero. In addition, the Group has the obligations on additional losses, then the
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
expected obligation as estimated liabilities and included in the current investment
losses. Where the net profit from investee units, restoration confirm the amount of
revenue sharing after offset the amount of unrecognized loss sharing.
For the long-term equity investments of joint ventures and joint ventures held before
the implementation of the new accounting standards for the first time before January
1, 2019, if there is a borrowing variance of equity investments related to the
investment, the current profits and losses shall be accounted for by the straight-line
amortization of the original remaining period.
3) Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of
minority interests and portion of net asset cumulatively calculated from the
acquisition date is adjusted as capital reserve. If the capital reserve is not sufficient
to absorb the difference, the excess are adjusted against retained earnings.
4) Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a
change in control, the difference in the net asset between the amount of disposed
long-term investment and the amount of the consideration paid or received is
adjusted to the owner’s equity. If the disposal of long-term investment in a subsidiary
involves loss of control over the subsidiary, the related accounting policies in Note
5.6(2) Accounting policies retailed on “the method of preparing consolidated
financial statements”
On disposal of a long-term equity investment, the difference between the proceeds
actually received and receivable and the carrying amount is recognized in profit or
loss for the period.
For long-term equity investment accounted for using the equity method, when the
rest of the long-term equity investment is still accounted for using the equity method
after disposal, the other comprehensive income originally recorded into the equity
should be dealt with by the same way as the investee’s directly dealing with its
assets or liabilities. The other investee equity changes caused beside the net profit,
other comprehensive income and profit distribution should be proportionately
transferred into current year profit and loss.
For long-term equity investment accounted for using the cost method, when the rest
of the long-term equity investment is still accounted for using the cost method after
disposal, other comprehensive income recognized using the equity method or the
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method of recognizing and measuring the financial instruments before obtaining the
control over the investee should be dealt with as the same way with investee’s direct
disposing of its assets and liabilities and be proportionately taken into profit and loss;
The other investee equity changes caused beside the net profit, other
comprehensive income and profit distribution should be proportionately transferred
into current year profit and loss.
When the Group loses control over the investee but still can exercise the common
control or significant influences over the investee after partial disposal of the
long-term equity investment, the equity method should be used to prepare individual
financial statements. The rest equity investment is treated as accounted using the
equity method upon the acquisition and is adjusted; If no control and significant
influences cannot be exercised, the rest equity investments should be recognized
and measured by the accounting standards to financial instruments. The difference
between the fair value and book value is taken into current profit and loss.
For the other comprehensive income recognized under the equity method or the
financial instrument related method before obtain the control over investee, it will be
treated as the same way with investee’s directly disposing its assets or liabilities
when losing the control over investee. The equity changes under equity method
caused beside the net profit, other comprehensive income and profit distribution
should be transferred into the profit and loss when losing the control over investee.
Including, other comprehensive income and other owner’s equity should be
proportionately transferred, when the rest equity investment is accounted with equity
method; Other comprehensive income and other owner’s equity should be fully
transferred, when the rest equity investment is accounted with accounting standards
of financial instruments.
The Group loses the control and significant influences over the investee, because of
disposing of part of long-term equity investment. The difference between fair value
and book value on the day when losing the control and significant influences over
the investee should be taken into profit and loss. Other comprehensive income
recognized for the original equity investments under equity method, would be dealt
with as the same way with investee’s directly disposing of its assets and liabilities
when cease using the equity method. The equity changes caused beside the net
profit, other comprehensive income and profit distribution, should be transferred into
investment income when cease using the equity method.
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For the Group’s multiple-step dealing with its long-term equity investments until
losing control, if the transactions are package deal, each transaction should be
treated as a transaction dealing with its long-term equity investments until losing
control, the difference between the consideration received and the book value of the
equity investment should be firstly recognized as other comprehensive income
before losing control over investee and then all transferred into current profit and
loss.
5.23 Investment properties
Investment property is property held to earn rental or for capital appreciation or both.
It includes a land use right that is leased out, a land use right held for transfer upon
capital appreciation, and a building that is leased out. Besides, the Group has
buildings empty for operating lease. If there is a written decision from the Board (or
similar organization) with clear indication for operating lease and intension that no
change shall be made in the near future, the buildings shall be presented as
investment properties.
An investment property is measured initially at cost. Subsequent expenditures
incurred for such investment property are included in the cost of the investment
property if it is probable that economic benefits associated with an investment
property will flow to the Group and the subsequent expenditures can be measured
reliably. Other subsequent expenditures are recognized in profit or loss in the period
in which they are incurred.
The Group uses the cost method for subsequent measurement of investment
property, and adopts a depreciation or amortization policy for the investment
property which consistent with that for building or land use rights.
Where self-occupied property or inventory converts into investment property, or
investment property converts into self-occupied property, the carrying amount before
the change shall be accounted as the value after conversion.
When an investment property changes into self-occupied property, it should be
converted into fixed asset or intangible asset on the date of conversion. When the
purpose of a self-occupied property changes into rental earning or capital increase,
fixed asset or intangible asset should be converted into an investment property from
the date of conversion. Where the cost model is used in the measurement of
investment property during the conversion, the carrying amount before the
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conversion is accounted as the value after conversion. Where the investment
property is measured by the fair value after conversion, the fair value at the
conversion date is adopted as value after conversion.
Where an investment property is disposed or no longer in use permanently and no
economic benefits shall be obtained from the disposal, derecognized the investment
property. The income from sale, transfer or disposal of the investment property is
recorded in the profit or loss after deduction of its carrying amount and related tax.
5.24 Fixed assets
(1) The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing
commodities, rendering labor service, renting or business management and their
useful life is in excess of one fiscal year. Fixed assets are only confirmed when their
related economic benefits are likely to flow into the company and its cost can be
reliably measured. Fixed assets are stated at cost and consider the impact of
expected costs of abandoning the initial measurement.
(2) The method for depreciation
From the following month of state of intended use, depreciation method of the
straight-line method is used for different categories of fixed assets to take
depreciation. The recognition of the classification, useful life and estimated residual
rate are as follows:
Category Expected useful life Estimated residual value（%） Depreciation（%）
Building & construction 30 5 3.17
Machines & equipments 7 5 13.57
Vehicles 6 5 15.83
Electronic appliances 5 5 19.00
Expected net residual value of fixed assets is the balance of the Group currently
obtained from the disposal of the asset less the estimated costs of disposal amount,
assuming the asset is out of useful life and state the expected service life in the end.
(3) Recognition and measurement and Depreciation Method of financial lease
Finance leases which transfer substantially all the risks and rewards of
ownership .Its ownership may be transferred or not eventually .The depreciation
policy for assets held under finance leases should be consistent with that for owned
assets. If it is reasonable to determine the ownership of the leased asset at the end
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of the lease term, depreciation is provided within the useful life of the leased asset.
Otherwise, the asset should be depreciated over the shorter of the lease term or the
life of the asset
5.25 Construction in progress
Construction in process is measured at actual cost. Actual cost comprises
construction costs,borrowing costs that are eligible for capitalization before the fixed
assets being ready for their intended us and other relevant costs. Construction in
process is transferred to fixed assets when the assets are ready for their intended
use.
For details of the testing method of impairment and withdraw method of impairment
provision on construction in progress, please refer to Note 5. 31 “Long-term assets
impairment”
5.26 Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to
borrowings, ancillary costs incurred in connection with the arrangement of
borrowings, and exchange differences arising from foreign currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalized. The amounts of other borrowing
costs incurred are recognized as an expense in the period in which they are
incurred.
The period of borrowing costs capitalization is calculated from the point when
borrowing costs beginning capitalizing to the time stopping capitalizing. The period
suspending capitalizing the borrowing costs are excluded.
Capitalization of borrowing costs is suspended during periods in which the
acquisition, construction or production of a qualifying asset is interrupted by
activities other than those necessary to prepare the asset for its intended use or sale,
when the interruption is for a continuous period of more than 3 months. Borrowing
costs incurred during these periods recognized as an expense for the current period
until the acquisition, construction or production is resumed.
5.27 Productive living assets
5.28 Oil and gas assets
5.29 Right-of-use assets
5.30 Intangible assets
(1) Recognition and calculation of intangible asset
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The term “intangible asset” refers to the identifiable non-monetary assets without
physical shape, possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to
intangible assets, if the economic benefits related to intangible assets are likely to
flow into the enterprise and the cost of intangible assets can be measured reliably,
shall be recorded as cost of intangible assets. The expenses other than this shall be
booked in the profit or loss when they occur.
Land use rights that are purchased by the Group are accounted for as intangible
assets. Buildings, such as plants that are developed and constructed by the Group,
and relevant land use rights and buildings, are accounted for as intangible assets
and fixed assets, respectively. Payments for the land and buildings purchased are
allocated between the land use rights and the buildings; if they cannot be reasonably
allocated, all of the land use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original
cost less net residual value and any accumulate impairment losses is amortized
over its estimated useful life using the straight-line method. An intangible asset with
an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Group reviews the useful life
and amortization method at the end of the period, and makes adjustment when
necessary.. An additional review is also carried out for useful life of the intangible
assets with indefinite useful life. If there is evidence showing the foreseeable limit
period of economic benefits generated to the enterprise by the intangible assets,
then estimate its useful life and amortize according to the policy of intangible assets
with definite useful life.
If it is impossible to determine the period of time for intangible assets to bring
economic benefits to the company reasonably, the intangible assets shall be
regarded as intangible assets with uncertain service life.
The testing method for intangible assets impairment and the calculation of the
provision for impairment is detailed listed on the note 5.31-Long-term assets
impairment.
(2) The accounting of expenditures of internally researched and developed project
Expenditure on the research phase of an internal research is recognized in profit &
loss in the period in which it is incurred.
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Expenditure during the development phase that meets all of the following conditions
at the same time is recognized as intangible asset. Expenditure during development
phase that does not meet the following conditions is recognized in profit or loss for
the period.
1) it is technical feasible to complete the intangible asset so that it will be available
for use or sale;
2) the Group has the intention to complete the intangible asset and use or sell it;
3) the Group can demonstrate the ways in which the intangible asset will generate
economic benefits including the evidence of the existence of a market for the output
of the intangible asset or the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset;
4) the availability of adequate technical, financial and other resources to complete
the development and the ability to use or sell the intangible asset; and
5) the expenditure attributable to the intangible asset during its development
phase can be reliably measured.
If the expenditures cannot be distinguished between the research phase and
development phase, the Group recognizes all of them in profit or loss for the period.
5.31 Long-term assets impairment
On each balance sheet date, the Group will make judgments to determine whether
there are signs for impairment to the fixed assets ,construction in progress, definite
intangible assets, investment properties& equity investment in subsidiaries& joint
ventures& jointly run business measured using the cost method etc. non-current and
non-financial assets. If there are signs for impairment, the impairment should be
tested by estimating the recoverable amount. Goodwill, indefinite intangible assets
and intangible assets having not reached the usable condition, should be yearly
tested for impairment no matter whether there are signs for impairment.
The result of impairment test demonstrates that the recoverable amount is less than
its carrying amount, the difference will be recorded as provision for impairment and
debited as impairment loss. The recoverable amount equals to the greater of 1) fair
value less disposal expenses and 2) present value of the predicted future cash
flows.
The fair value of the assets is determined by the sale contract price of fair trade;
When there are no sale contracts but exist active market ,the fair value will be
determined with the quotation from the buyer; When there exist neither sale
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contracts nor active market, the assets fair value will be determined by the best
information available.
The disposal expenses include the legal expenses, related taxes, delivery fees and
other direct fees incurred for making the assets reach the salable condition. The
present value of the predicted future cash flows is calculated according to the
predicted future cash flows generated from the continuous use of the assets and
final disposal discounted with the applicable discounted rate. The provision for
impairment
test should be recognized based on the individual asset. If it is hard to estimate the
recoverable amount to individual asset, the recoverable amount of the assets group
of which the individual assets are included should be determined. Assets group is
the smallest unit that can independently generate the cash inflow.
For the goodwill separately displayed on the financial statement, when making the
impairment test, the carry value of the goodwill should be allocated to assets group
or the group of assets group predicted to be benefit from the synergistic effect from
the enterprises combination. When the rest result shows that the recoverable of the
assets group or the group of assets group having been allocated with the relevant
goodwill is less than the carrying amount, the related impairment loss should be
recognized. The impairment losses will firstly reduce the book value of the goodwill
allocated and then reduce the book value of each asset of the assets group or the
group of assets group according to the percentage of each asset to the assets group
or the group of assets group beside the goodwill.
The impairment loss of the above assets would not be reversed back once they are
recognized.
5.32 Long-term deferred assets
Long-term deferred assets represent expenses incurred that should be borne and
amortized over the current and subsequent period (together of more than one year).
Long-term deferred assets are amortized by using straight line method.
5.33 Contract liabilities
5.34 Employee Benefits
(1) Accounting Treatment of Short-term Salary
The benefits of employees in the Group include short-term benefits, welfare after
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demission, demission welfare and other long-term welfare.
The short-term benefits include the employees’ salary, bonus, allowance and
compensation, employee welfare, medical insurance, maternity insurance,
employment injury insurance, housing fund, labor union expense and employee
education expense and non-currency welfare etc. The Group recognizes the actually
incurred short-term employee benefits as liability during the period when the
employees’ services are rendered, the expenses are recorded into the current
period profit and loss or related asset costs according to the benefit object. For the
non-currency welfare, it is recognized according to its fair value.
(2) Accounting Treatment of Welfare after demission
Welfare after demission mainly includes the defined contribution plan and the
defined benefit plan. The defined contribution plan and the defined benefit plan
mainly include the basic endowment insurance premium, unemployment insurance
expense and pension etc.
(3) Accounting Treatment of dismissal welfare
When the Group cannot unilaterally withdraw the dismissal welfare provided for the
plan on the cancellation of labor relationship or layoff proposal, or recognize the cost
or expense involved with the recombination of dismissal welfare or payment of
such dismissal welfare (whichever is earlier), the employee’s remuneration incurred
by dismissal welfare is recognized as the debt and included in the current profits and
losses or related assets cost. But when then dismissal is predicted not to be paid in
the following 12 months after the report date, it would be classified as other
long-term welfare.
Employee internal retirement plan is treated as the same way with dismissal welfare
mentioned above. The Group would record the relevant salaries and social
insurances provided to the employees under the plan into the profits and losses
(dismissal welfare) during the period from the day employees not providing the
services to the legal retirement day, when the conditions for recognizing the
contingency liability are met.
(4) Accounting Treatment of Other long-term welfare
Other long-term welfare provided by the Group is referred to as the welfare beside
the short-term benefits, welfare after demission, demission welfare. It would be
recognized as the requirements of defined contribution plan, when conditions are
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met. Or else, it would be recorded as defined benefit plan.
5.35 Lease Obligation
5.36 Accrued liabilities
When the obligations related to contingencies meet the following conditions, they
are recognized as expected liabilities: (1) the obligation is the current obligation of
the company; (2) the performance of the obligation may lead to the outflow of
economic benefits; (3) the amount of the obligation can be measured reliably.
On the balance sheet date, the estimated liabilities are measured according to the
best estimate of the expenditure required to fulfil the relevant current obligations,
taking into account the risk, uncertainty and time value of currency related to
contingencies.
If all or part of the expenditure required to settle the estimated liabilities is expected
to be compensated by a third party, the amount of compensation shall be recognized
separately as an asset when it is basically determined that it can be received, and
the amount of compensation recognized shall not exceed the book value of the
estimated liabilities.
(1) Loss contract
Loss contract is a contract in which the cost of fulfilling contract obligations will
inevitably exceed the expected economic benefits. Where the contract to be
executed becomes a loss contract and the obligations arising from the loss contract
satisfy the above-mentioned conditions for confirmation of the expected liabilities,
the part of the assets whose expected losses exceed the recognized impairment
losses (if any) of the underlying assets of the contract shall be recognized as the
expected liabilities.
(2) Restructuring obligations
For a restructuring plan with detailed, formal and public announcement, the amount
of the estimated liabilities shall be determined according to the direct expenditure
related to the restructuring, subject to the above conditions for confirmation of the
estimated liabilities. For the reorganization obligation of selling part of the business,
only when the company undertakes to sell part of the business (i.e. when a binding
sale agreement is signed), can the obligations related to reorganization be
confirmed.
5.37 Share-based payment
5.38 Other financial instruments such as Preferred stock and Perpetual bond,
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etc
5.39 Revenue
The real estate construction agreement is in accordance with the definition of the
construction contract, for buyers who can specify the main structural elements of
real estate design before the start of the construction project, or be able to determine
the major changes in structure during the construction process, will be confirmed by
the Company of construction services according to the Enterprise Accounting
Standards No. 15 - Construction Contract. As purchaser, whose limited ability to
influence real estate design (such as only minor changes to the basic design), the
company in accordance with the "principles and methods of income accounting
standards for Enterprises No. fourteenth - income" about commodity sales
confirmation, the relevant revenue recognition combined with the specific conditions
of the company real estate sales.
The company will confirmed the relevant income and expenses according to the
Enterprise Accounting Standards No. 15 - Construction Contract when real estate
construction agreement is in accordance with the definition of the construction
contract, for buyers who can specify the main structural elements of real estate
design before the start of the construction project, or be able to determine the major
changes in structure during the construction process. However, when purchaser’s
ability to influence real estate design is limited (such as only minor changes to the
basic design), the relevant revenue will be confirmed by the company combined
with the specific conditions in accordance with the principle of the Enterprise
Accounting Standards No. 14 – income
(1) Developed products
The Group established real estate sales revenue is recognized, must satisfied the
following four conditions at the same time:
1). Real estate is completed and accepted;
2). contract of Installment selling is singed and the contractual obligations is
performed;
3). the company no longer retains the continuation management rights nor controls
normally associated with the ownership;
4). the amount of income can be reliably measured;
5) the related economic benefits are likely to flow into the company and the cost of
the house can be reliably measured
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(2) Revenue from Installment selling
The revenue is recognized by the fair vale about contract or agreement when the
selling conditions satisfied the following conditions at the same time:
1). Real estate is completed and accepted;
2). contract of Installment selling is singed and the contractual obligations is
performed;
3).the related economic benefits are likely to flow into the company and the cost of
the development product can be reliably measured.
The difference between the price and the fair value of the contract or agreement is
amortized by the actual interest rate during the period of the contract or agreement
and be taken into the profit and loss of the current period.
(3) Revenue from self-use house selling
The sales revenue is confirmed when the following conditions are met:
1) the main risks and rewards of self-use house ownership are transferred to the
purchaser;,
2) the company no longer retains the continuation management rights nor controls
normally associated with the ownership;
3) the amount of income can be reliably measured;
4) the related economic benefits are likely to flow into the company and the cost of
the house can be reliably measured
(4)Revenue from rental property
The income of rental property is confirmed when the relevant rents or receipt have
obtained according to the lease contract.
(5) Revenue from construction contracts
Where the outcome of a construction contract can be estimated reliably, contract
revenue and costs are recognized using the percentage of completion method at the
balance sheet date. The stage of completion of a contract is determined using the
proportion that actual contract costs incurred to date bears to the estimated total
contract costs.
The outcome of a construct contract can be measured reliably when the following
conditions are met:
1) The total revenue of the contract can be measured reliably;
2) It is probable that the associated economic benefits will flow to the enterprise;
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1) The actual cost of the contract incurred can be determined and measured
reliably;
2) The stage of completion of the contract and the costs to be incurred associated
with the completion of the contract can be measured reliably.
Where the outcome of a construction contract cannot be estimated reliably,4)1.if
contract costs are expected to be recoverable, contract revenue is recognized to the
extent of contract costs that are expected to be recoverable; and contract costs are
recognized as expenses in the period in which they are incurred; 4)2.if contract
costs are not expected to be recoverable, they are recognized as expenses
immediately when incurred and contract revenue is not recognized. When the
uncertainties that prevented the outcome of the construction contract from being
estimated reliably no longer exist, revenue and expenses associated with the
construction contract are recognized using the percentage of completion method.
If the estimated total contract costs exceed total contract revenue, the expected loss
is recognized immediately as an expense for the period.
(6) Royalty revenue
Revenue is confirmed according to the relevant contract or agreement on the
accrual basis.
(7) Interest income
Revenue is confirmed according to the time and actual interest rate in the use of the
company's money.
(8) Other business income recognition
The Group will confirm other business revenue while clauses of the relevant
contracts and agreements reveal that economic interests related to transactions
may flow into enterprises ,the amount of income and other related or incurred
costs can be reliably measured.
5.40 Government Grants
Government grants are transfer of monetary assets and non-monetary assets from
the government to the Group at no consideration, excluding the capital invested by
the government as equity owner. Government grant can be classified as grant
related to the assets and grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured
at the amount received or receivable. If a government grant is in the form of a
non-monetary asset, it is measured at fair value. If the fair value cannot be reliably
determined, it is measured at a nominal amount. A government grant measured at a
nominal amount is recognized immediately in profit or loss for the period.
A government grant related to an asset is recognized as deferred income, and
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evenly amortized to profit or loss over the useful life of the related asset. For a
government grant related to income, if the grant is a compensation for related
expenses or losses to be incurred in subsequent period, the grant is recognized as
deferred income, and recognized in profit or loss over the periods in which the
related costs are recognized. If the grant is a compensation for related expenses or
losses already incurred, the grant is recognized immediately in profit or loss for the
period.
Government grants, including both asset-related and income-related components at
the same time,are used to separate into different parts of the accounting process.
They are classified as income-related government subsidies while it is difficult to
distinguish.
Government grants, related to the Company's daily activities, are taken into other
income or write down related costs in accordance with the substance of the
economic business. Government subsidies that are not related to daily activities are
included in non-operating income and expenses.
For repayment of a government grant already recognized, if there is a related
deferred income, the repayment is offset against the carrying amount of the deferred
income, and any excess is recognized in profit or loss for the period. If there is no
related deferred income, the repayment is recognized immediately in profit or loss
for the period.
5.41 Deferred income tax assets and deferred income tax liabilities
(1) Current Income tax
At the balance sheet date, deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realized or the
liability is settled, according to the requirements of tax laws. The measurement of
deferred tax assets and deferred tax liabilities reflects the tax consequences that
would follow from the manner in which the Group expects at the balance sheet date,
to recover the assets or settle the liabilities.
(2) Deferred income tax assets and deferred income tax liabilities
For temporary differences between the carrying amount of certain assets or liabilities
and their tax base, or between the nil carrying amount of those items that are not
recognized as assets or liabilities and their tax base that can be determined
according to tax laws, deferred tax assets and liabilities are recognized using the
balance sheet liability method.
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For temporary differences associated with the initial recognition of goodwill and the
initial recognition of an asset or liability arising from a transaction (not a business
combination) that affects neither the accounting profit nor taxable profits (or
deductible losses) at the time of transaction, no deferred tax asset or liability is
recognized.
For taxable temporary differences associated with investments in subsidiaries and
associates, and interests in joint ventures, no deferred income tax liability related is
recognized except where the Group is able to control the timing of reversal of the
temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
All deferred income tax liabilities arising from taxable temporary differences except
the ones mentioned above are recognized.
For temporary deductible differences associated with the initial recognition of an
asset or liability arising from a transaction (not a business combination) that affects
neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction, no deferred tax asset is recognized.
For taxable temporary deductible differences associated with investments in
subsidiaries and associates, and interests in joint ventures, no deferred income tax
asset related is recognized if it is impossible to reversal the temporary difference in
the foreseeable future, or it is not probable to obtain taxable income which can be
used for the deduction of the temporary difference in the future.
Except mentioned above, the Group recognizes other deferred income tax assets
that can deduct temporary differences to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences can be
utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax
assets for deductible temporary differences are recognized to the extent that it is
probable that taxable profits will be available against which the deductible temporary
differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax
rates according to tax laws that are expected to apply in the period in which the
asset is realized or the liability is settled.
At the balance sheet date, the Group reviews the carrying amount of deferred tax
assets. If it is no longer probable that sufficient taxable profit will be available in
future periods to allow the benefits of the deferred tax assets to be used, the Group
reduces the carrying amount of deferred tax assets. The amount of such reduction is
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reversed when it becomes probable that sufficient taxable profit will be available.
(3)Income tax expense
Income tax expense includes Current Income tax and Deferred income tax assets
and deferred income tax liabilities
Except that the current income tax and deferred income tax related to transactions
and events recognized as other comprehensive gains or directly included in
shareholder's rights and interests are included in other comprehensive gains or
shareholder's rights and interests, as well as the book value of the adjusted goodwill
of deferred income tax resulting from the merger of enterprises, the other current
income tax and deferred income tax expenses or gains are accounted for Periodic
profit and loss.
(4) Setoff of Income Tax
When the company has the legal right to settle in net, and intends to settle in net or
acquire assets and pay off liabilities at the same time, the company's current income
tax assets and current income tax liabilities to offset the net presentation.
When it has the legal right to settle current income tax assets and current income tax
liabilities in net terms, and deferred income tax assets and deferred income tax
liabilities are related to the income tax levied by the same tax collection and
administration department on the same tax payer or to different tax payers, but in the
future, each deferred place is of great importance. During the period when the
taxable assets and liabilities are transferred back, when the taxpayers concerned
intend to settle the current income tax assets and liabilities in net or acquire assets
and liabilities simultaneously, the company defers the income tax assets and
deferred income tax liabilities to offset the net amount.
5.42 Leases
(1) Operating Lease
①The Group as Lessee under Operating Lease
Lease payments under an operating lease are recognized by a lessee on a
straight-line basis over the lease term, and either included in the cost of the related
asset or charged to profit or loss for the current period. The contingent rents shall be
recorded in the profit or loss of the period in which they actually arise.
②The Group as Leaser under Operating Lease
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Lease income from operating leases shall be recognized by the leaser in profit or
loss on a straight-line basis over the lease term. Initial direct cost of significance in
amount shall be capitalized when incurred. If another basis is more systematic and
rational, that basis may be used. Contingent rents are credited to profit or loss in the
period in which they actually arise.
(2)Financing Lease
①The Group as Lessee under Operating Lease
For an asset that is held under a finance lease, at the lease commencement, the
leased asset is recorded at the lower of its fair value at the lease commencement
and the present value of the minimum lease payments, and the minimum lease
payment is recorded as the carrying amount of the long-term payables; the
difference between the recorded amount of the leased asset and the recorded
amount of the payable is accounted for as unrecognized finance charge, Initial direct
costs incurred by the lessee during the process of negotiating and securing the
lease agreement shall be added to the amount recognized for the leased asset.
The net amount of minimum lease payment deducted by the unrecognized finance
shall be separated into long-term liabilities and long-term liability within one year for
presentation.
Unrecognized finance charge shall be computed by the effective interest method
during the lease term. Contingent rent shall be booked into profit or loss when
actually incurred.
②The Group as Leaser under Operating Lease
For an asset that is leased out under a finance lease, the aggregate of the minimum
lease receipts at the inception of the lease and the initial direct costs is recorded as
a finance lease receivable, and unguaranteed residual value is recorded at the same
time; the difference between the aggregate of the minimum lease receipt, initial
direct costs, and unguaranteed residual value, and the aggregate of their present
values, is recognized as unearned finance income, which is amortized using the
effective interest rate method over each period during the lease term.
Finance lease receivable less unearned finance income shall be separated into
long-term liabilities and long-term liability within one year for presentation.
Unearned finance income shall be computed by the effective interest method during
the lease term. Contingent rent shall be credited into profit or loss in which actually
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incurred.
5.43 Other Material accounting judgments and accounting estimations
Because of the inherent uncertainties of the operating activities, the Group need to
make judgments, estimations and assumptions to the financial statement items
whose carrying amount cannot be accurately measured. Those judgments,
estimations and assumptions are made based on the management’s historical
experience and taking other relevant factors into account. Those judgments,
estimations and assumptions would influence the reported amount of revenue,
expense, asset and liability and disclosure of the contingency liability on the balance
sheet date. However, the actual result caused by the uncertainty of these
estimations may be different with the present estimation made by the management,
which may cause significant adjustments to the carrying amount of the influenced
assets and liabilities in the future.
The Group are making periodical review on the judgments, estimations and
assumptions mentioned above based on the premise of going concern. For the
changes of estimations that only influence the current period, the influenced amount
will be recognized in the current period. For the changes of estimations that not only
influence the current period ,but also affect the future periods, the influenced amount
will be recognized in the current period and future period.
As of the balance sheet date, the material areas that need to be judged ,estimated
and assumed are listed below:
（1） Income recognition - construction contract
The Company confirm the contract income by the percentage method of
completion on the balance sheet date when the result of the construction can be
reliably estimated. The percentage of completion is confirmed according to the
methods mentioned in Note 5. 39 Income, and is accumulated in the accounting
year for each construction contract.
Significant judgments need to be made in determining the percentage of
completion, the cost of the contract, the total revenue and cost of the contract, and
the recoverability of the contract. Project management’s judgments mainly relies on
past experience and work. The change in the estimated total revenue and cost of
the contract, as well as the estimated alteration of the execution result of the
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contract, may affect or constitute a major impact on the business income and cost,
profit and loss during the current or subsequent period.
（2） classification of lease
The lease are classified into operating lease and finance lease, according to the
“Accounting Standards for Business Enterprise No.21-Lease” .When making the
classification, the management need to make analysis and judgment about whether
all risk and reward related with the ownership of assets leased out have been
substantially transferred to the lessee or not ,or whether all risk and reward related
with the ownership of the assets leased have substantially assumed by the Group.
（3） The provision for allowance for bad debt
The Group applies the allowance method to estimate the bad debt, according to the
policy of accounts receivable. The impairment of accounts receivable is based on
the evaluation of accounts receivable’s possibility of collection. The difference
between the actual result and the original estimation would influence the accounts
receivable’s carrying value and cause the balance of allowance for bad debt to
increase or reverse back during the period when the estimation is changed.
（4） Provision for inventory
According to inventory accounting policy, the ending inventory is measured by the
lower of cost and net realizable value. When the cost is greater than the net
realizable value and the obsolete and unsalable inventory, the inventory falling price
reserve shall be withdrawn. Reduce the inventory to the net realizable value is
based on the evaluation the salable of the inventory and its net realizable value.
Estimates of net realizable value are based on the most reliable evidence available
at the time the estimates are made and take into consideration the purpose for which
the inventory is held and the influences of events occurring after the balance sheet
date. The difference between the actual result and original estimation will influence
the carrying amount of the inventory and cause the provision for inventory to
increase or reverse back during the period when the estimation is changed.
（5） The fair value of financial instrument
For the financial instrument lacking active trading market, the Group will use several
valuation methods to make sure the fair value. The methods include the model to
analyze the discounted cash flow etc. The Group will evaluate the following aspects,
such as the future cash flow, credit risk, market volatility and the relativity etc. and
then choose the applicable discounted rate, when making the evaluation. There are
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uncertainties for the relevant assumptions whose changes will influence the fair
value of financial instrument.
（6） Provision for non-current assets
The Group will make judgment on the non-current assets beside the financial assets
about whether there are signs for impairment on the balance sheet date. For the
intangible assets whose life is uncertain, when there are signs for impairment, it
should be tested for impairment, beside the yearly impairment test. Other
non-current assets beside the financial statement, when there are signs indicating
that the carrying value are unrecoverable, it should be tested for impairment.
When the carrying value of the asset or asset group is greater than the recoverable
amount (i.e., the net value of fair value less the cost of disposal and present value of
the predicted future cash flow whichever is higher), it indicates impairment.
The net value of fair value less the cost of disposal, is referred to the agreed sale
price of similar assets under fair trade or the observable market price, less the
incremental cost directly related with the disposal of the assets.
The Group need to make significant judgment to the output of assets (or assets
group), sale price, relevant operating cost and the discounted rate when estimating
the present value of future cash flows. The Group will make use of any relevant
material available when estimating the recoverable amount , including the
prediction of the output, sale price and relevant operating cost according to
reasonable and supportable assumptions.
The Group will test the goodwill for impairment at least once a year, which requires
to estimate the present value of the future cash flows of the assets and assets group
allocated with the goodwill . When estimating the present value to the future cash
flow, the Group need to estimate the cash flows generating from the assets and
assets group, and choose the applicable discount rate to determine the present
value.
（7）Depreciation and amortization
The Group use the straight-line method to depreciate and amortize the investment
real estate, fixed assets and intangible assets within the useful life after taking into
the consideration of the residual value. By the way, the amount of depreciation and
amortization during the report period are determined. The useful life is determined
based on past experience and the predicted technical changes of similar assets. If
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
there are significant changes of previous estimations, the depreciation and
amortization would be adjusted in the future periods.
（8）R&D expense
When determining the amount of capitalization, the company's management needs
to make assumptions about the expected future cash flow of the assets, the
applicable discount rate and the expected benefit period.
（9）Deferred tax asset
To the degree that there are sufficient taxable profit to make up the deductible
losses, the Group will recognize the deferred tax assets for the un-used deductible
losses. It requires the management to apply massive judgments to estimate the time
and amount the taxable profits will generate in the future period combining with the
strategic of tax planning to determine the amount of deferred tax asset.
（10）Income tax
There are some uncertainties for some trades’ ultimate tax treatment and calculation.
Some items need the determination from the tax authorities about whether they are
deductible before tax or not. If the ultimate tax determination are different with the
originally estimated amount, the difference will influence the current period income
tax and the deferred income tax when the tax determination are finally made.
(11) Internal early retirement welfare and supplementary retirement welfare
Amounts of expenditures and liabilities of internal early retirement welfare and
supplementary retirement welfare should be determined according to assumption
terms. Assumption terms include discount rate, average growth rate of medical costs,
growth rate of subsidies for early retirement employees and retirees and other
factors. The differences of actual results and assumption should be confirmed
immediately and included into costs of current year. Although the management have
adopted reasonable assumption terms, changes of actual experience value and
assumption terms may affect the internal early retirement welfare, supplementary
retirement benefits and balance of liabilities.
(11) Provisions
The Company made the estimation on product quality guarantee, predicted loss of
contract and the fine for delayed delivery etc. and withdrew the relevant provision for
provisions in accordance the provisions of contract, current knowledge and
experience. Under the condition that the contingent event has formed a current duty
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and fulfilling the duty is likely to cause the economical interest outflow the Company,
the Company measures the provisions in accordance with the best estimate of the
necessary expenses for the performance of the current duty. The recognition and
measurement of provisions were heavily relied on the judgment of the management
team. During the process of making judgment, the Company needed to appraise the
relevant risks, uncertainty and the time value of money and etc. Of which, the
Company estimated the liabilities basing on the after-sale services
commitments to the customers upon the sale, repair and reform of goods. When
estimating the liabilities, the Company has fully taken the consideration of the latest
repair experience, but which may not reflect the repair situation in the future. Any
increase / decrease of the provision for estimated liabilities may affect the profits and
losses in the future periods.
(12) Measurement for fair value
Some assets and liabilities of this Company will be measured at fair value in the
financial statements. The board of directors of this Company has established the
appraisement committee (led by the CFO of this Company) to confirm appropriate
appraisement technology and input value for measurement of fair value. This
Company will apply available and observable market data during estimating the fair
value of some assets and liabilities. If the input value in Level 1 is not available, this
Company will entrust a third qualified appraiser for the estimation. The appraisement
committee will closely cooperate with the outside appraiser to determine proper
estimation technology and input values of the related models. CFO submits a report
to the discoveries of the appraisement committee to the board of directors of this
Company to explain the reasons of fluctuation of fair value of related assets and
liabilities.
5.44 Material accounting policies and accounting estimations
（1）Material accounting policies
□ applicable √ not applicable
（2）Material accounting estimations
□ applicable √ not applicable
（3）New Financial Instruments Standards, New Income Standards and New
Leasing Standards for the First Implementation of Relevant Items in Financial
Statements at the Beginning of the Year
√ applicable □not applicable
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Consolidated Balance Sheet
Unit: RMB
Item 2018.12.31 2019.1.1 Adjustment
Current Assets：
Monetary Funds 2,048,522,435.93 2,048,522,435.93 --
Account Receivables 18,166,888.19 18,166,888.19 -15,260,103.46
Receivable Financing 15,260,103.46 15,260,103.46 15,260,103.46
Prepayments 4,177,767.88 4,177,767.88 --
Other receivables 45,018,027.61 45,018,027.61 --
Including: Interest receivable 2,453,067.78 2,453,067.78 --
Dividends receivable 1,052,192.76 1,052,192.76 --
Inventories 1,685,152,051.26 1,685,152,051.26 --
Other current assets 6,780,999.56 6,780,999.56 --
Total current assets 3,823,078,273.89 3,823,078,273.89 --
Non-current assets
Available- for- sale financial assets 17,464,240.74 17,464,240.74 --
Long-term equity investments 12,561,107.24 12,561,107.24 --
Investment properties 623,930,838.15 623,930,838.15 --
Fixed assets 33,926,198.52 33,926,198.52 --
Long-term deferred assets 387,066.91 387,066.91 --
Deferred tax assets 154,543,788.80 154,543,788.80 --
Total non-current assets 842,813,240.36 842,813,240.36 --
TOTAL ASSETS 4,665,891,514.25 4,665,891,514.25 --
Current liabilities:
Short-term loans 17,260,103.46 17,260,103.46 --
Accounts payable 216,758,906.71 216,758,906.71 --
Advances from customers 156,426,152.86 156,426,152.86 --
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item 2018.12.31 2019.1.1 Adjustment
Payroll payable 45,836,830.05 45,836,830.05 --
Taxes payable 300,547,372.98 300,547,372.98 --
Other payables 721,819,898.48 721,819,898.48 --
Including: Interest payable 16,535,277.94 16,535,277.94 --
Dividends payable -- --
Total current liabilities 1,458,649,264.54 1,458,649,264.54 --
Non-current liabilities:：
Long-term loans -- -- --
Long-term payables 6,507,139.20 6,507,139.20 --
Total non-current liabilities 6,507,139.20 6,507,139.20 --
Total liabilities 1,465,156,403.74 1,465,156,403.74 --
Owners' equity：
Share capital 1,011,660,000.00 1,011,660,000.00 --
Capital reserve 978,244,910.11 978,244,910.11 --
Less: treasury shares -- -- --
Other comprehensive income 10,564,385.97 10,564,385.97 --
Surplus reserve 95,906,222.59 95,906,222.59 --
Retained earnings 1,235,884,122.72 1,235,884,122.72 --
Total owners' equity attributable to
3,332,259,641.39 3,332,259,641.39 --
parent company
Minority interests -131,524,530.88 -131,524,530.88 --
Total owners’ equity 3,200,735,110.51 3,200,735,110.51 --
Total liabilities and owners’ equity 4,665,891,514.25 4,665,891,514.25 --
Statement of adjustment
In the daily fund management, the Company sells the receivables of some specific
customers through the right of non-recourse. For the receivables of some specific
customers, the company aims at both collecting contract cash flow and selling
financial assets. Therefore, the receivables of these specific customers will be
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
collected by the company on and after January 1, 2019. Items are reclassified as
financial assets with fair value and their changes are included in other
comprehensive income categories. They are reported as receivables financing. The
beginning of January 1, 2019 is adjusted. 15,260,103.46 yuan is reclassified from
receivables to receivables financing.
Balance Sheet of the Company as the Parent
Unit: RMB
Item 2018.12.31 2019.1.1 Adjustment
Current Assets：
Monetary Funds 1,344,486,378.53 1,344,486,378.53 --
Account Receivables 5,164,795.67 5,164,795.67 --
Receivable Financing -- -- --
Prepayments 200,000.00 200,000.00 --
Other receivables 770,374,849.84 770,374,849.84 --
Including: Interest receivable 2,380,301.11 2,380,301.11 --
Dividends receivable
Inventories 543,912,100.37 543,912,100.37 --
Other current assets 215,745.41 215,745.41 --
Total current assets 2,664,353,869.82 2,664,353,869.82 --
Non-current assets
Available- for- sale financial assets 12,000,000.00 12,000,000.00 --
Long-term equity investments 235,284,776.57 235,284,776.57 --
Investment properties 511,040,299.65 511,040,299.65 --
Fixed assets 21,942,842.11 21,942,842.11 --
Long-term deferred assets 346,015.72 346,015.72 --
Deferred tax assets 16,699,980.23 16,699,980.23 --
Total non-current assets 797,313,914.28 797,313,914.28 --
TOTAL ASSETS 3,461,667,784.10 3,461,667,784.10 --
Current liabilities:
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item 2018.12.31 2019.1.1 Adjustment
Short-term loans -- -- --
Accounts payable 16,743,360.96 16,743,360.96 --
Advances from customers 22,035,608.45 22,035,608.45 --
Payroll payable 19,687,728.50 19,687,728.50 --
Taxes payable 144,621,616.85 144,621,616.85 --
Other payables 594,392,900.98 594,392,900.98 --
Including: Interest payable 16,535,277.94 16,535,277.94 --
Dividends payable -- -- --
Total current liabilities 797,481,215.74 797,481,215.74 --
Non-current liabilities:：
Long-term loans -- -- --
Long-term payables -- -- --
Total non-current liabilities -- -- --
Total liabilities 797,481,215.74 797,481,215.74 --
Owners' equity：
Share capital 1,011,660,000.00 1,011,660,000.00 --
Capital reserve 964,711,931.13 964,711,931.13 --
Less: treasury shares -- -- --
Other comprehensive income -- -- --
Surplus reserve 72,776,609.18 72,776,609.18 --
Retained earnings 615,038,028.05 615,038,028.05 --
Total owners’ equity 2,664,186,568.36 2,664,186,568.36 --
Total liabilities and owners’ equity 3,461,667,784.10 3,461,667,784.10 --
(4) Statement of comparative data in the early period of retrospective adjustment of
new financial instrument standards and new leasing standards for the first time
□ applicable √ not applicable
5.45 Other
(1) Accounting Policy Change
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
①Accounting Policy Change Caused by the Implementation of New Financial
Instrument Standards
On March 31, 2017, the Ministry of Finance promulgated Accounting Standards for
Enterprises No. 22 - Recognition and Measurement of Financial Instruments
(Revised in 2017) (Accounting [2017] 7),'Accounting Standards for Enterprises No.
23 - Transfer of Financial Assets (Revised in 2017) (Accounting [2017]
8),'Accounting Standards for Enterprises No. 24 - Set of Accounting Standards for
Enterprises'. Periodic Accounting (Revised in 2017) (Accounting [2017] 9) issued on
May 2, 2017 "Accounting Standards for Enterprises 37 - Financial Instruments
Presentation (Revised in 2017)" (Accounting [2017] 14) (collectively referred to as
"New Financial Instruments Standards"), requiring domestic listed enterprises to
implement the new standards from January 1, 2019. Guidelines for financial
instruments.
Our company will carry out the aforementioned new financial instrument guidelines
from January 1, 2019.
All recognized financial assets under the new financial instrument standards are
subsequently measured at the amortized cost or fair value. On the date of
implementation of the new financial instrument standards, the business model of
managing financial assets is evaluated on the basis of the existing facts and
circumstances of the company on that day, and the characteristics of contractual
cash flow on the financial assets are evaluated on the basis of facts and
circumstances at the time of initial confirmation of financial assets. The financial
assets are divided into three categories: measured according to the amortized cost
and measured according to the public value. Value is measured and its changes are
recorded in other comprehensive income and fair value, and its changes are
recorded in current profits and losses. Among them, when the financial asset
terminates recognition, the accumulated gains or losses previously included in other
comprehensive gains will be transferred from other comprehensive gains to retained
gains, not into current profits and losses.
Under the new financial instrument standards, based on the expected credit loss,
the company makes provision for impairment of financial assets measured by
amortized cost, investment in debt instruments measured by fair value and its
changes included in other comprehensive gains, lease receivables, contractual
assets and financial guarantee contracts, and confirms the loss of credit impairment.
The company retrospectively applies the new financial instrument standards, but for
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
classification and measurement (including impairment) involving the inconsistency
between the previous comparative financial statement data and the new financial
instrument standards, the company chose not to repeat. Therefore, for the
cumulative impact of the first implementation of this standard, the company adjusted
the retained earnings or other comprehensive earnings at the beginning of 2019 and
the amount of other related items in the financial statements, which were not
restated in the financial statements of 2018.
The main changes and impacts of the implementation of the new financial
instrument guidelines on our company are as follows:
In the daily fund management, the company sells the receivables of some specific
customers through the right of non-recourse. For the receivables of some specific
customers, the company aims at both collecting contract cash flow and selling
financial assets. Therefore, the receivables of these specific customers will be
collected by the company on and after January 1, 2019. Items are reclassified as
financial assets with fair value and their changes are included in other
comprehensive income categories and reported as investments in other creditor's
rights or financing receivables.
VI Principal Taxes Applied
Taxes and their rates
Category Taxable basis Tax rate
Value added tax (“VAT”) Goods sales income, taxi operating income 5%，3%，6%
Construction tax Turnover tax 7%
Income tax Income tax payable 25% & 16.5%
Education surcharge(Local Education
Turnover tax 5%
surcharge)
Progressive rates ranging
Land appreciation tax Sales revenue of properties
from 30%-60%
Property tax The residual value 1.2%
*The rate of domestic enterprises is 25%, and the rate of HK enterprises is 16.5%.
The company and its subsidiaries provided commodity housing, property leasing
and management, hotel service, construction and installation service as main
products and services. As the inform, No.36—pilot about business tax replacing with
VAT popularized (2016 Revision) ,is issued by Finance and Taxation Ministry , The
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
categories and rates of VAT about the company and its subsidiaries are as follow .
Tax rate before Business Tax
Category of income The way of tax calculation Tax rate
Replacing with VAT
Sales of properties Simply filling return 5% 5%
Construction, installation income Simply filling return 3% 3%
Rental income of Property Simply filling return 5% 5%
Income of Property Management Filling return generally 6% 5%
VII Notes to the Consolidated Financial Statements
Unless otherwise noted, the following annotation project (including the main projects
annotation of the financial statement of the Company), the period-begin refers to
January 1,2019 the period-end refers to June 30, 2019 and this period refers to
January – June 2019 with the last period of January – June 2018.
7.1 Monetary funds
Item Closing balance Opening balance
Cash on hand 106,258.96 57,979.40
Cash in bank 1,240,284,634.19 1,148,464,456.53
Other monetary funds 90,000.00 900,000,000.00
Total 1,240,480,893.15 2,048,522,435.93
Including amount deposited in the foreign countries 8,086,008.51 8,239,667.62
Note: The closing balance of Other monetary funds that the Group’s ownership are
the deposits about letter of guarantee setting up by bank, the opening balance was
the Structured deposit which was due at March 22,2019.
7.2 Held for trading financial assets
Item Closing balance Opening balance
in -- --
7.3 Derivative financial assets
Item Closing balance Opening balance
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Total -- --
7.4 Note receivables
(1)Note receivables by types
Item Closing balance Opening balance
Trade acceptance -- --
Total -- --
(2) There are no Note receivables pledged at the period-end
(3) There are no Note receivables endorsed or discounted at the period-end and not
matured yet on the balance sheet date
(4)There are no situations of reclassifying the note receivables to the accounts
receivables due to the issuer dishonoring at the end of the year.
7.5 Accounts receivables
(1) Accounts receivable by categories
Closing balance
Category Carrying amount Bad debt provision
book value
Amount (%) Amount (%)
Accounts receivable of which provision for bad
-- -- -- --
debts is of individually significant
Accounts receivable of which provision for bad
58,665,525.58 100.00% 19,243,657.51 32.80% 39,421,868.07
debts is of individually insignificant
Total 58,665,525.58 100.00% 19,243,657.51 32.80% 39,421,868.07
(Continued)
Opening balance
Category Carrying amount Bad debt provision
book value
Amount (%) Amount (%)
Accounts receivable of which
provision for bad debts is of -- -- -- -- --
individually significant
Accounts receivable of which
37,410,545.70 100.00% 19,243,657.51 36.54% 18,166,888.19
provision for bad debts is of
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
individually insignificant
Total 37,410,545.70 100.00% 19,243,657.51 36.54% 18,166,888.19
Unit:RMB
Closing balance
Category
Carrying amount Bad debt provision Proportion Reason
Acting import and export business
11,574,556.00 11,574,556.00 100.00% Long Account Age
accounts receivable
Accounts receivable of selling house 18,025,559.22 6,968,694.02 38.66% Drawing on historical sales
Construction and other 29,065,410.36 700,407.49 2.41% —
Total 58,665,525.58 19,243,657.51 -- —
Unit:RMB
Category Closing balance
Within 1 year（including 1year） 19,540,000.58
1 to 2 years 20,297,050.49
2 to 3 years 4,121,002.18
More than 3 years 14,707,472.33
More than 5 years 14,707,472.33
Total 58,665,525.58
(2)There were no any account receivables which had been accrued fully or large
proportion provision but had been fully collected or reversed back in this accounting
year.
(3) There were no any significant account receivables which had been written off in
this accounting year.
(4) Top 5 entities with the largest balances of accounts receivable
Proportion of the amount to
Name of entity Relationship with the Group Amount Age
the total AR (%)
Corporate unit No.1 Un-related party 8,147,885.22 Within 1 year 20.67
Corporate unit No.2 Un-related party 6,413,126.79 Within 1 year 16.27
Corporate unit No.3 Un-related party 6,028,986.50 Within 1 year 15.29
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Corporate unit No.4 Un-related party 4,985,657.23 Within 1 year 12.65
Corporate unit No.5 Un-related party 4,151,747.72 Within 1 year 10.53
Total 29,727,403.46 75.41
7.6 Receivable Financing
Aging Closing balance Opening balance
Factoring 21,334,705.19 15,260,103.46
Total 21,334,705.19 15,260,103.46
As of June 30, 2019, the company declared the amount of factoring business to the
bank with accounts receivable at 21,334,705.19 yuan, and obtained cash
consideration of RMB 21,334,705.19 yuan.
7.7 Prepayments
(1) List by age of account
Unit:RMB
Closing balance Opening balance
Category
Amount (%) Amount (%)
Within 1 year（including 1year） 1,804,366.85 49.72% 4,177,217.88 99.99%
1 to 2 years 1,824,438.77 50.27% -- --
2 to 3 years -- -- -- 0.01%
More than 3 years 550.00 0.01% 550.00 0.01%
Total 3,629,355.62 -- 4,177,767.88 --
(2) Top 5 entities with the largest balances of Prepayments
The total amount of the first five Prepayments at the end of the year is 1,804,366.85
yuan, accounting for 49.72% of the total balance of the amount at the end of the
year.
7.8 Other receivables
Item Closing balance Opening balance
Interest receivable 6,591,780.82 2,453,067.78
Dividends receivables 1,052,192.76 1,052,192.76
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Other receivables 42,947,346.04 41,512,767.07
Total 50,591,319.62 45,018,027.61
(1) Interest receivable
1) Classification
Item Closing balance Opening balance
Time deposit -- 170,567.78
Structured deposit 6,591,780.82 2,282,500.00
Total 6,591,780.82 2,453,067.78
(2) Dividends receivables
①Classification
Item(Or name of investee) Closing balance Opening balance
Yunnan KunPeng Flight service Co., Ltd 1,052,192.76 1,052,192.76
Total 1,052,192.76 1,052,192.76
③ Dividends receivable aging over 1year
Reasons for Whether the amount is
Item(Or name of investee) Closing balance Aging uncollected impaired and the base of
amounts judgment
Yunnan KunPeng Flight service Co., Ltd 1,052,192.76 Above 5 years Delay to pay No
Total 1,052,192.76
(3) Dividends receivables
① Other receivables by categories
Item Closing balance Opening balance
Interest receivable 6,591,780.82 2,453,067.78
Dividends receivables 1,052,192.76 1,052,192.76
Other receivables 217,688,105.22 216,271,510.38
Total 225,332,078.80 219,776,770.92
② Provision
118
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Stage one Stage two Stage one
Expected Credit Loss for Expected Credit Loss for the Subtotal
Bad debt Expected credit losses
the Whole Life Period Whole Life Period (Credit
in the next 12 months
(No Credit Devaluation) Devaluation Has Occurred)
Opening balance 174,758,743.31
Opening balance in the current period —— —— —— ——
Other -17,984.13
Closing balance 174,740,759.18
Unit：RMB
Category Closing balance
Within 1 year（including 1year） 10,464,798.90
1 to 2 years 13,255,644.93
2 to 3 years 2,929,385.83
More than 3 years 198,682,249.14
More than 5 years 198,682,249.14
Total 225,332,078.80
③The allowance for withdrawing, recovering or transferring bad debts in this year is
0.00 yuan. Other changes in bad debts reserve amount - 17,984.00 yuan, is due to
exchange rate changes in the conversion of foreign currency statements.
④Other receivables by nature
⑤Top 5 entities with the largest balances of other receivables
Proportion of the Provision for bad
Name of entity Nature Amount Age amount to the debt at year end
total OR (%)
Canada Great Wall( Vancouver) current
89,035,748.07 Above 5 years 39.51% 89,035,748.07
Co.,Ltd account
current
Paklid Limited 19,300,627.03 Above 5 years 8.57% 19,300,627.03
account
current
Bekaton property Limited * 12,559,290.58 Above 5 years 5.57% 12,559,290.58
account
119
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Proportion of the Provision for bad
Name of entity Nature Amount Age amount to the debt at year end
total OR (%)
Guangdong province Huizhou current
10,465,168.81 Above 5 years 4.64% 10,465,168.81
Luofu Hill Mineral Water Co.,Ltd account
current
Shenxi Limited 5,464,392.59 Above 5 years 2.43% 5,131,698.60
account
Total 136,825,227.08 60.72% 136,492,533.09
(6) There were no any other receivables about government subsidies that have been
involved.
(7) There were no any other receivables due to the transfer of financial assets that
have been derecognized.
(8) There were no any other receivables which had transferred to continued
involvement in assets or liabilities.
7.9 Inventory
(1) Categories of inventory
Closing balance
Item
Carrying amount Provision for inventories Net carrying amount
Non real estate development projects
Raw materials 873,466.16 240,000.00 633,466.16
Finished products 329,674.82 38,891.91 290,782.91
Low-value consumable products -- -- 0.00
Construction in progress 104,252,848.16 -- 104,252,848.16
Real estate development projects
Real estate developing products 633,806,880.00 633,806,880.00
Real estate developed products 863,721,201.48 268,941.60 863,452,259.88
Real estate which are going to be developed -- -- --
Total 1,602,984,070.62 547,833.51 1,602,436,237.11
(Continued)
Item Opening balance
120
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Carrying amount Provision for inventories Net carrying amount
Non real estate development projects
Raw materials 882,857.81 240,000.00 642,857.81
Finished products 319,679.87 38,891.91 280,787.96
Low-value consumable products -- -- 0.00
Construction in progress 102,776,837.83 -- 102,776,837.83
Real estate development projects
Real estate developing products 517,451,829.98 -- 517,451,829.98
Real estate developed products 1,064,268,679.28 268,941.60 1,063,999,737.68
Real estate which are going to be developed -- -- --
Total 1,685,699,884.77 547,833.51 1,685,152,051.26
121
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
① Detail of Real estate developing products
Time of Estimated Estimated Opening Closing Accumulative Among them: the amount of capitalized
Item Increase
commencement completion time Total investment balance balance capitalization Interest interest in the current period
ChuanQi DongHu
2016.6.20 2019.11.21 510,000,000.00 309,169,276.59 57,871,674.91 367,040,951.50 4,378,308.24 --
Building
TianYue Bay No.2 2018.9.1 2021.5.9 654,850,000.00 182,990,645.28 58,483,375.11 241,474,020.39 6,417,603.49 5,059,053.93
Shenfang Shanlin
-- 25,291,908.11 -- 25,291,908.11 -- --
Garden
Total 1,164,850,000.00 517,451,829.98 116,355,050.02 633,806,880.00 10,795,911.73 5,059,053.93
②Detail of Real estate developed products
completion Closing Accumulative capitalization Among them: the amount of capitalized interest in
Item Opening balance Increase decrease
time balance Interest the current period
Jinyedao Haitian Pavilion
1997.9.16 39,090,848.09 -- -- 39,090,848.09 -- --
Multi-storey Apartment
Golden Leaf Island No.10 2010.12.2 6,079,171.97 -- -- 5,099,036.62 -- --
Golden Leaf Island No.11 2008.8.20 6,881,309.24 -- 1,266,485.95 5,614,823.29 -- --
YueJing dongfang Project 2014.11.18 9,789,881.19 -- 1,354,292.52 8,435,588.67 201,464.77 --
WenJin Garden 3,299,040.20 -- -- 3,299,040.20 -- --
Real Estate Building 9,710,518.65 -- -- 9,710,518.65 -- --
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
completion Closing Accumulative capitalization Among them: the amount of capitalized interest in
Item Opening balance Increase decrease
time balance Interest the current period
HuaFeng Building 1,631,743.64 -- -- 1,631,743.64 -- --
Huangpu Estate 289,802.88 -- -- 289,802.88 -- --
Xinghu Garden 156,848.69 -- -- 156,848.69 -- --
Chuanqi Mountain 2013.1.1 8,969,652.53 -- -- 8,969,652.53 720,530.19 --
Shenfang Shanlin Garden 2014.1.1 10,206,656.46 -- -- 10,206,656.46 443,793.86 --
Beijing Xinfeng Building 304,557.05 -- -- 304,557.05 -- --
TianYue Bay No.1 2017.12.15 618,140,958.93 -- 53,484,516.67 564,656,442.26 25,409,053.33
ChuanQi JingYuan 2018.4.27 180,381,801.14 -- 112,683,722.85 67,698,078.29 253,287.70
Shengfang CuiLin Building 2018.5.8 169,335,888.62 -- 30,778,324.46 138,557,564.16 1,305,557.04 --
Total -- 1,064,268,679.28 -- 200,547,477.80 863,721,201.48 28,333,686.89 --
123
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
(2)Movement of Provision of inventories
Increase Decrease
Item Opening balance Closing balance
Provision other Reversals Write-off
Raw materials 240,000.00 -- -- -- -- 240,000.00
Inventories 38,891.91 -- -- -- -- 38,891.91
Real estate developed products 268,941.60 -- -- -- -- 268,941.60
Total 547,833.51 -- -- -- -- 547,833.51
(2) Capitalized borrowing cost at the period-end is RMB 39,129,598.62：
Annual
Item Opening balance Increase Decrease Closing balance capitalization
rate
YueJing dongfang
208,232.32 -- 6,767.55 201,464.77 1.49%
Project
Shenfang
720,530.19 -- -- 720,530.19 5.66%
Chuanqishan
Shenfang Shanlin
443,793.86 -- -- 443,793.86 7.10%
Garden
Shengfang CuiLin
1,488,323.12 -- 182,766.08 1,305,557.04 2.07%
Building
TianYue Bay No.1 26,993,576.25 -- 1,584,522.93 25,409,053.33 7.78%
ChuanQi DongHu
4,811,327.74 -- 433,019.50 4,378,308.24 3.62%
Building
ChuanQi JingYuan 1,250,186.07 -- 996,898.37 253,287.70 1.66%
Total 1,358,549.56 5,059,053.93 -- 6,417,603.49 3.51%
(4)Completed and unsettled assets resulting from the construction contract at the
end of the period
Item Amount
Accumulated cost incurred 146,420,815.68
Accumulated gross profit 1,020,560.53
124
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Amount already settled 43,188,528.05
Completed outstanding assets formed by the construction contract 104,252,848.16
7.10 Contract assets
7.11Holding assets for sale
7.12Non-current assets maturing within one year
7.13Other current assets
Item Closing balance Opening balance
Value added tax 14,500,771.73 6,336,815.15
Business tax 405,514.22 444,184.41
City construction surcharge 186,959.07 --
Education surcharge 75,770.99 --
Local education surcharge 44,757.84 --
Embankment Protection Fee 653.66 --
Increment tax on land value 1,688,149.84 --
Income tax 49,315,486.24 --
Bank structured deposits 1,300,000,000.00 --
Total 1,366,218,063.59 6,780,999.56
Instructions：
The company signed an agreement with the shenzhen branch of China Citic bank co.,
ltd. to invest 130,000 yuan of its own capital in guaranteed floating bank structured
deposits. Among them, 1 billion yuan was invested on May 7, 2019 for 180 days, and
300 million yuan was invested again on June 14, 2019 for 180 days.
7.14 Investments in debt obligations
7.15 Other investment on bonds
7.16 Long-term receivables
7.17 Long-term equity investments
(1) Long-term equity investments by types
Invested company Opening Change amount of this period
125
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
balance Other
Profit and loss on Other
Additional Negative comprehensive
investments confirmed equity
investment investment income
with equity method change
adjustment
I.Joint ventures
Guangdong province Huizhou Luofu
9,969,206.09 -- -- -- -- --
Hill Mineral Water Co.,Ltd
Fengkai Xinhua Hotel 9,455,465.38 -- -- -- -- --
Jiangmen Xinjiang Real Estate Co.,
9,037,070.89 -- -- -- -- --
Ltd
Xi’an Fresh Peak Property Trading
32,840,729.61 -- -- -- -- --
Co., Ltd
Dongyi Real Estate Co., Ltd 30,376,084.89 -- -- -- -- --
Subtotal 91,678,556.86 -- -- -- -- --
II.Affiliated enterprises
Shenzhen Ronghua JiDian Co.,ltd 1,471,164.04 -- -- - -- --
Shenzhen Runhua Automobile
1,445,425.56 -- -- -- -- --
trading Co.,Ltd
Subtotal 2,969,241.26 -- -- -- --
Total 94,595,146.46 -- - - -- --
(Continuted)
Change amount of this period Provision for
Ending
Invested company Invested Change amount of this Ending impairment balance
balance
company period balance at the period-end
I.Joint ventures
Guangdong province Huizhou Luofu Hill
-- -- -- 9,969,206.09 9,969,206.09
Mineral Water Co.,Ltd
Fengkai Xinhua Hotel -- -- -- 9,455,465.38 9,455,465.38
Jiangmen Xinjiang Real Estate Co., Ltd -- -- -- 9,037,070.89 9,037,070.89
126
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Change amount of this period Provision for
Ending
Invested company Invested Change amount of this Ending impairment balance
balance
company period balance at the period-end
Xi’an Fresh Peak Property Trading Co., Ltd -- -- -- 32,840,729.61 20,673,831.77
Dongyi Real Estate Co., Ltd -- -- -- 30,376,084.89 30,376,084.89
Subtotal -- -- -- 91,678,556.86 79,511,659.02
II.Affiliated enterprises
Shenzhen Ronghua JiDian Co.,ltd -- -- -- 1,471,164.04 1,076,954.64
Shenzhen Runhua Automobile trading
-- -- -- 1,445,425.56 1,445,425.56
Co.,Ltd
Subtotal -- -- -- 2,969,241.26 2,522,380.20
Total -- -- -- 94,595,146.46 82,034,039.22
other equity investment, are as follow
Accounting Provision for
Investee Investment cost Opening balance Changes Closing balance
Method impairment
Paklid Limited Cost Method 201,100.00 201,100.00 -- 201,100.00 201,100.00
Bekaton Property Limited Cost Method 906,630.00 906,630.00 -- 906,630.00 906,630.00
Shenzhen Shenfang Department
Cost Method 10,000,000.00 10,000,000.00 -- 10,000,000.00 10,000,000.00
Store Co. Ltd
Shantou Huafeng Building Cost Method 68,731,560.43 58,547,652.25 -- 58,547,652.25 58,547,652.25
Guangdong Province Fengkai
Lain Feng Cement Manufacturing Cost Method 121,265,000.00 56,228,381.64 -- 56,228,381.64 56,228,381.64
Co., Ltd
Total —— 201,104,290.43 125,883,763.89 - 125,883,763.89 125,883,763.89
7.18 Other equity instruments investment
7.19 Other non-current financial assets
127
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
7.20 Investment properties
Investment properties measured at cost.
Item House& building Land-use right Total
I. Original carrying value
1.Opening balance 1,010,636,392.81 106,115,418.00 1,116,751,810.81
2.Increase in the year -- -- --
（1）Outsourcing -- -- --
（2）Carried over from inventory -- -- --
（3）Others -- -- --
3.Decrease in the year -- 151,053.98 151,053.98
（1）Disposal -- -- --
（2）Others -- 151,053.98 151,053.98
4.Closing balance 1,010,636,392.81 105,964,364.02 1,116,600,756.83
II. Accumulative depreciation& amortization
1.Opening balance 391,598,553.08 -- 391,598,553.08
2.Increase in the year 12,157,218.56 -- 12,157,218.56
（1）Withdrawing or amortization 12,157,218.56 -- 12,157,218.56
（2）Carried over from assets -- -- --
3.Decrease in the year -- -- --
4. Closing balance 403,755,771.64 -- 403,755,771.64
III. Provision for impairment
1.Opening balance 14,128,544.62 87,093,874.96 101,222,419.58
2.Increase in the year -- -- --
3.Decrease in the year -- 123,977.05 123,977.05
4.Closing balance 14,128,544.62 86,969,897.91 101,098,442.53
IV. Book value
1.Closing book value 592,752,076.55 18,994,466.11 611,746,542.66
2.Opening book value 604,909,295.11 19,021,543.04 623,930,838.15
128
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Note:(a) Current year depreciation and amortization is RMB12,157,218.56.
(b)The decrease of original carrying value and provision for impairment of land-use
right is caused by the fluctuation of foreign exchange rate when translating the
foreign currency financial statements;
(c)Among the investment properties, there were no house &building that were used
as mortgage of loans
(d)There is no new buildings in this period.
7.21 Fixed assets
Item Closing balance Opening balance
Fixed assets 31,903,409.26 33,926,198.52
Total 31,903,409.26 33,926,198.52
Electronic
Transportation
Item Houses& Buildings equipment and Total
equipment
others
I. Original carrying value
1.Opening balance 107,110,751.42 12,287,244.75 14,210,579.58 133,608,575.75
2. Increase in the year -- 201,295.05 201,295.05
（1）Purchasing -- 201,295.05 201,295.05
（2）Transferred from the construction in progress -- -- -- --
3. Decrease in the year -- 130,497.39 130,497.39
（1）Disposal or discard as useless -- -- 130,497.39 130,497.39
（2）Decrease of cooperation combination -- -- -- --
（3）Transferred to investment property -- -- -- --
4. Closing balance 107,110,751.42 12,287,244.75 14,281,377.24 133,679,373.41
II. Accumulated depreciation
1.Opening balance 77,203,923.01 10,932,114.25 11,546,339.97 99,682,377.23
2. Increase in the year 1,785,224.66 135,730.36 296,973.47 2,217,928.49
Including：withdrawing 1,785,224.66 135,730.36 296,973.47 2,217,928.49
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Electronic
Transportation
Item Houses& Buildings equipment and Total
equipment
others
3. Decrease in the year -- -- 124,341.57 124,341.57
（1）Disposal or discard as useless -- -- 124,341.57 124,341.57
（2）Decrease of corporate combination -- -- -- --
（3）Transferred to investment property -- -- -- --
4. Closing balance 78,989,147.67 11,067,844.61 11,718,971.87 101,775,964.15
III. Provision for Impairment
1.Opening balance -- -- -- --
2. Increase in the year -- -- -- --
Including：Withdrawing -- -- -- --
3. Decrease in the year -- -- -- --
4. Closing balance -- -- -- --
IV. Book value -- -- -- --
1. Ending book value 28,121,603.75 1,219,400.14 2,562,405.37 31,903,409.26
2. Beginning book value 29,906,828.41 1,355,130.50 2,664,239.61 33,926,198.52
Note: (1)The depreciation for the current year is RMB 2,217,928.49. There were no
constructions in progress transferred to fixed assets during the period.
（2）There was no any fixed assets whose ownership are restricted.
（3）There was no any fixed assets lying idle temporary.
7.22 Construction in progress
7.23 Productive biological assets
7.24 Oil and gas assets
7.25 Right-of-use asset
7.26 Intangible assets
7.27 Development expenditure
7.28 Goodwill
7.29 Long-term deferred assets
130
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Item Opening balance Increase Amortization Other reductions Closing balance
Renovation costs 346,015.85 -- 91,944.88 -- 254,070.97
Others 41,051.06 -- 7,697.04 -- 33,354.02
Total 387,066.91 -- 99,641.92 -- 287,424.99
7.30 Deferred tax assets
(1) Recognized deferred tax assets
Closing balance Opening balance
Item Deductible or taxable Deferred tax Deductible or taxable
Deferred tax assets
temporary differences assets temporary differences
Provision for impairment losses of
268,941.60 67,235.40 268,941.60 67,235.40
assets
Eliminated unrealized profit when
9,761,284.98 2,440,321.25 4,419,308.84 1,104,827.21
consolidating financial statement
Deductible loss 85,290,276.04 21,322,569.01 72,853,906.32 18,213,476.58
Provision for land appreciation tax
116,873,760.12 29,218,440.03 416,873,760.12 119,730,695.91
liquidation reserves
Expected profit for advances from
24,906,265.04 6,226,566.26 12,937,987.44 3,234,496.86
customers
Tentative contract cost estimate 49,835,827.36 12,458,956.85 47,474,275.32 12,193,056.84
Total 286,936,355.14 71,734,088.80 554,828,179.64 154,543,788.80
(2) Deferred income tax liabilities without offset
(3) Deferred income tax assets or liabilities shown as net offset
(4) Details of unrecognized deferred tax assets
Item Closing balance Opening balance
Deductible operating losses 4,332,678.37 8,280,235.61
Bad debt provision 41,424,541.64 42,485,814.23
Provision for impairment of long-term investments 48,770,235.09 51,979,450.78
Provision for impairment of investment properties 24,219,856.94 25,305,604.90
131
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Total 118,747,312.04 128,051,105.52
(5) Unrecognized deductible losses of deferred tax assets will be expire at the end
of following years
Year Closing balance Opening balance
2019 1,656,431.26 107,123.28
2020 107,123.28 9,692,495.52
2021 9,692,495.52 11,349,323.06
2022 11,349,323.06 5,753,184.38
2023 5,753,184.38 4,085,485.24
Total 28,558,557.50 30,987,611.48
7.31Other Non-current asset
7.32 Short-term loans
Item Closing balance Opening balance
Pledged Loan 21,334,705.19 17,260,103.46
Total 21,334,705.19 17,260,103.46
Note:(1) Refer to note 7.5/Account receivable for the details of pledged loan and
note 7.81.
(2)There was no short term loan overdue which had not repaid
7.33 Transactional financial liabilities
7.34 Derivative financial liabilities
7.35 Notes payable
7.36 Accounts payable
(1) List of accounts payable
Item Closing balance Opening balance
accounts payable 140,100,500.69 216,758,906.71
Total 140,100,500.69 216,758,906.71
(2) Details of accounts payable
Item Closing balance Reason
Within 1 year 127,921,716.99
132
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Over 1 year 12,178,783.70
Total 140,100,500.69
Note: Significant accounts payable aged more than one year is for the unsettled
project at the end of the period.
7.37 Advances from customers
(1) Details of advances from customers
Item Closing balance Opening balance
Within one year 362,999,250.53 143,880,207.46
Over one year 26,328,430.79 12,545,945.40
Total 389,327,681.32 156,426,152.86
(2) Important advances from customers that are more than one year old
(3) Completed and unsettled assets resulting from the construction contract at the
end of the period
Item Amount
Accumulated cost incurred 146,420,815.68
Accumulated gross profit 1,020,560.53
Amount already settled 43,188,528.05
Completed outstanding assets formed by the construction contract 104,252,848.16
○Significant advances from customers aged more than one year is the import and
export agency business payment and advanced payment from housing buyers, as
such receipts have not been transferred to income at the end of the year.
○ Details of advances from customers
Item Closing balance Opening balance Estimated time of completion
Jinye Island villa No.10 2,141,508.58 688,952.39 Completed
Jinye Island villa No.11 2,729,123.81 1,117,261.91 Completed
Yuejing dongfang 1,742,138.10 1,884,634.30 Completed
Tianyue Bay No.1 31,525,134.47 32,289,512.30 Completed
Shengfang CuiLin Building 31,190,224.00 30,416,820.00 Completed
133
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance Estimated time of completion
Chuanqi Jingyue 159,189,046.25 21,742,173.45 Completed
Chuanqi Donghu 72,905,066.00 200,000.00 Completed
Total 301,422,241.21 88,339,354.35 ——
7.38 Contract liability
7.39 Payroll payable
(1) Details of Payroll payable
Item Opening balance Increase Decrease Closing balance
I. Short-term remuneration 45,693,840.70 78,978,334.29 75,211,716.73 49,460,458.26
II. Post-employment benefit-defined benefit plans 142,989.35 7,388,692.09 7,342,686.49 188,994.95
Total 45,836,830.05 86,367,026.38 82,554,403.22 49,649,453.21
(2) Details of short-term remuneration
Item Opening balance Increase Decrease Closing balance
I. Salary, bonus, allowance and subsidies 44,535,073.06 71,215,607.13 67,346,606.74 48,404,073.45
II. Employee welfare 39,600.00 1,232,860.00 1,234,660.00 37,800.00
III. Social insurance premium 1,578.57 2,281,435.66 2,281,673.26 1,340.97
Including: Medical insurance premium 1,503.22 2,051,225.73 2,051,225.73 1,503.22
Industries insurance premium 591.04 48,440.26 48,440.26 591.04
Maternity insurance premium -515.69 181,769.67 182,007.27 -753.29
III. Housing fund 628,129.71 2,999,582.92 3,044,542.60 583,170.03
IV. Union expenses and employee education
489,459.36 1,248,848.58 1,304,234.13 434,073.81
expenditure
Total 45,693,840.70 78,978,334.29 75,211,716.73 49,460,458.26
(3) The details of defined contribution plans
Item Opening balance Increase Decrease Closing balance
I. Basic endowment insurance premium 75,075.11 4,972,661.18 4,972,661.18 75,075.11
II. Unemployment insurance premium 914.12 113,314.01 113,076.41 1,151.72
III. Company annuity payment 67,000.12 2,302,716.90 2,256,948.90 112,768.12
Total 142,989.35 7,388,692.09 7,342,686.49 188,994.95
Note: The Group participates in the basic endowment insurance and unemployment
134
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
plan sponsored by the government according to the regulations. Beside the monthly
payment mentioned above, the Group undertakes no further payment obligation.
The related expenses are recognized in profit and loss or the cost of relevant asset
in the current period incurred.
7. 40 Taxes payable
Item Closing balance Opening balance
VAT 5,735,482.84 11,361,028.95
Corporate income tax 89,586,822.81 180,717,910.92
Individual income tax 684,502.70 828,729.71
Urban maintenance & construction tax; 778,806.52 385,048.81
Property tax 3,717,315.47 335,365.77
Land appreciation tax 383,702,006.31 106,254,407.65
Education surcharge 518,992.20 239,105.38
Others 1,775,941.31 425,775.79
Total 486,499,870.16 300,547,372.98
7.41 Other payables
Item Closing balance Opening balance
Interest payable 16,535,277.94 16,535,277.94
Other payables 627,101,131.67 705,284,620.54
Total 643,636,409.61 721,819,898.48
(1) Interest payable
Item Closing balance Opening balance
Others 16,535,277.94 16,535,277.94
Total 16,535,277.94 16,535,277.94
Note: The balance of “Other” interests payable due to Shenzhen Investment
Holdings Co.，Ltd., being accrued for the loans interst. Please refer refer to Ⅻ.6 (2).
(2) Dividends payable
(3) Other payable
1)Details of other payables
135
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Land appreciation tax accrued 359,726,203.04 509,788,654.15
Payable to related parties 14,398,496.70 2,770,322.64
Guarantee deposit 83,126,753.11 100,011,180.52
Others 169,849,678.82 92,714,463.23
Total 627,101,131.67 705,284,620.54
2)Description of significant other payables aged more than one year
Name of entity Amount Reason for overdue
Tax accrued- land appreciation tax 359,726,203.04 Unexpired
Total 359,726,203.04 ——
NOTICE: The Group made provision for LAT, according to Guo Shui Fa [2006] No.
187 "LAT liquidation management issues of real estate development enterprises
made by the State Administration of Taxation ". As at June 30, 2019, the closing
balance is RMB 359,726,203.04.
7.42 Holding liabilities for sale
7.43 Non-current liabilities due within one year
7.44 Other current liabilities
7.45 Long-term loans
7.46 Bonds payable
7.47 Lease liability
7.48 Long-term payables
Item Closing balance Opening balance
Special payable 7,597,741.94 6,507,139.20
Total 7,597,741.94 6,507,139.20
(1)Details of long-term payables
Item Closing balance Opening balance
Maintenance fund 7,597,741.94 6,507,139.20
Total 7,597,741.94 6,507,139.20
(2) Special payable
Item Closing balance Increase Decrease Opening balance Reason
136
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Increase Decrease Opening balance Reason
Maintenance fund 6,507,139.20 2,781,813.45 1,691,210.71 7,597,741.94
Total 6,507,139.20 2,781,813.45 1,691,210.71 7,597,741.94
7.49 Long-term payroll payable
7.50 Estimated liabilities
7.51 Deferred income
7.52 Other non-current liabilities
7.53 Share capital
Changes for the period（+ 、-）
Item Opening balance Newly issued Bonus Capitalization of Closing balance
Other Subtotal
shares issued surplus reserve
Total shares 1,011,660,000.00 -- -- -- -- -- 1,011,660,000.00
7.54 Other equity instruments
7.55 Capital surplus
Item Opening balance Increase Decrease Closing balance
Capital premium 557,433,036.93 -- -- 557,433,036.93
Other capital reserve 420,811,873.18 -- -- 420,811,873.18
Total 978,244,910.11 -- -- 978,244,910.11
7.56Treasury stock
7.57 Other comprehensive income
Amount incurred this period
Less: previous
Accrual Attributable Attributable
Opening years‘ OCI Less: Closing
Item before to parent to minority
balance transferred to income balance
income tax company shareholders
P&L in current. tax
this period after tax after tax
period
I. Other comprehensive
income that could not be
-- -- -- -- -- -- --
classified into profit and
loss in the future
II. Other
10,564,385.97 121,770.51 85,239.36 36,531.15 10,649,625.33
comprehensive income
137
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Amount incurred this period
Less: previous
Accrual Attributable Attributable
Opening years‘ OCI Less: Closing
Item before to parent to minority
balance transferred to income balance
income tax company shareholders
P&L in current. tax
this period after tax after tax
period
that would be classified
into profit and loss in the
future
including：the difference
of foreign currency
10,564,385.97 121,770.51 85,239.36 36,531.15 10,649,625.33
financial statement
translation
Total 10,564,385.97 121,770.51 85,239.36 36,531.15 10,649,625.33
7.58 Special reserves
7.59 Surplus reserve
Item Opening balance Increase Decrease Closing balance
Statutory surplus reserve 95,906,222.59 95,906,222.59
Total 95,906,222.59 95,906,222.59
Note: According to the Company Law and the company's policy, the company draws
10% of net profit for statutory surplus reserve. It will not be withdrawn if the
accumulation amount of statutory surplus reserve exceeds 50% of the registered
capital of the company.
Discretionary surplus reserve could be withdrawn after the statutory surplus reserve.
It can be made up the previous annual loss or increase the capital stock after
approval
7.60 Undistributed profit
Amount for the current Amount for the prior
Item
period period
Before adjustment: Undistributed profits at the end of prior year 1,235,884,122.72 742,624,845.71
Adjustment: adjust the beginning undistributed profits (Increase +, decrease -) -- --
After adjustment: Undistributed profits at beginning of year 1,235,884,122.72 742,624,845.71
138
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Amount for the current Amount for the prior
Item
period period
Plus: net profit attributable to the shareholders of the parent company in the period 333,155,843.41 326,066,084.53
Less: Appropriation to the statutory surplus reserve -- --
Appropriation to discretionary surplus reserve -- --
Common stock dividends declared 202,332,000.00 --
Conversion of ordinary shares’ dividends into share capital -- --
Undistributed profit at the end of the period 1,366,707,966.13 1,071,690,930.24
7.61 Operating income and costs
(1) Operating income and operating costs
Amount for the current period Amount for the prior period
Item
Income Costs Income Costs
Principal operating 1,242,185,437.00 435,833,288.18 1,313,971,314.90 538,511,001.68
Other operating 9,152,365.57 1,294,688.07 3,570,316.45 1,906,489.73
Total 1,251,337,802.57 437,127,976.25 1,317,541,631.35 540,417,491.41
7.62 Taxes and surcharges
Item Amount for the current period Amount for the prior period
City construction and maintenance tax 4,231,214.16 4,283,758.49
Education surcharges 1,853,152.20 1,894,171.09
Property tax 4,194,843.79 3,525,479.32
Land appreciation tax 1,777.06 6,815.23
vehicle and vessel tax 9,300.00 10,200.00
Stamp duty 634,612.37 457,845.20
Business tax 14,811.80 1,629,897.12
Land value increment tax 328,213,378.55 264,344,713.02
Local education surcharges 1,168,752.72 1,186,490.00
Embankment Protection Fee 7,656.21 1,121.29
Total 340,329,498.86 277,340,490.76
Note: Details of business taxes and surcharges please refer to 10.6.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
7.63 Selling expenses
Item Amount for the current period Amount for the prior period
Employee benefits 1,986,157.74 1,968,446.05
Advertising expenses 3,495,309.87 2,795,656.99
Entertainment expenses 445,386.30 445,386.30
Sales agency fees and commissions 10,153,801.11 30,118,783.25
Others 2,393,405.31 1,838,861.18
Total 18,474,060.33 37,167,133.77
The Selling expenses incurred in this period was 18,474,060.33 yuan, which
decreased by 50.29% compared with the same period last year was due to Sales
agency fees and commissions have not yet been settled.
7.64 Administrative expenses
Item Amount for the current period Amount for the prior period
Employee benefits 21,455,353.43 20,306,987.57
Taxes 381,863.80 355,928.24
Depreciation 1,493,957.93 1,548,056.87
Entertainment expenses 855,870.94 880,424.02
Intermediary fee 748,240.08 943,460.89
Travel expense 160,955.48 200,814.85
Administrative expenses 889,536.21 565,594.94
Repair charge 443,034.63 438,716.03
Water and electricity charges 300,958.94 421,746.13
Other amortization 209,939.04 357,994.59
Others 3,873,060.85 5,716,476.72
Total 30,812,771.33 31,736,200.85
7.65 R&D expenses
7.66 Financial expenses
Item Amount for the current period Amount for the prior period
Interest expenses 38,742.51 6,711,775.56
140
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Amount for the current period Amount for the prior period
Less: Interest income 7,623,553.05 11,769,366.46
Less: capitalized interest expenses -- 3,694,420.78
Exchange differences 672,254.35 -34,475.31
Less: Capitalized exchange differences -- --
Others 286,297.07 174,817.89
Total -6,626,259.12 -8,611,669.10
7.67 Other income
7.68 Investment income
Amount for the Amount for the prior
Item
current period period
Investment income for the sale of financial assets during the holding period 928,200.00 827,100.00
Investment income of wealth management products 13,359,898.55 --
Total 14,288,098.55 827,100.00
7.69 Net exposure hedge gain
7.70 Fair value change income
7.71 Credit impairment loss
7.72 Asset impairment loss
7.73Proceeds from asset disposal
7.74 Non-operating income
Amount for the Amount for the Amount included in non-recurring profit
Item
current period prior period or loss for the period
Indemnity 180,000.00 91,835.23 180,000.00
Others 183,709.11 4,000.00 183,709.11
Total 363,709.11 95,835.23 363,709.11
7.75 Non-operating expenses
Amount for the Amount for the Amount included in non-recurring profit
Item
current period prior period or loss for the period
Donations to third parties -- 50,000.00 --
Penalty expense 150.00 30,210.47 150.00
141
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Amount for the Amount for the Amount included in non-recurring profit
Item
current period prior period or loss for the period
Others 3,605.82 119,342.86 3,605.82
Total 3,755.82 199,553.33 3,755.82
7.76Income tax expenses
(1) Details of income tax expenses
Item Amount for the current period Amount for the prior period
Current tax expense calculated according to tax laws
114,631,330.89 116,979,398.73
and relevant requirements
Deferred income tax expenses -1,901,537.03 -5,809,681.45
Total 112,729,793.86 111,169,717.28
(1) The process of calculating the income tax based on accounting profit
Item Incurred in the
current period
Consolidated profit this period 445,867,806.76
Income tax calculated at legal or applicable tax rate 111,466,951.69
Impact of various tax rates applicable to subsidiaries --
Adjustment of impact on the income tax in the previous period --
Impact of non-taxable income --
Impact of non-deductible cost, expense and loss 3,164,379.20
Impact of deductible losses deferred income tax assets unconfirmed in the previous use period --
Impact of the deductible temporary differences or deductible loss of unconfirmed deferred tax assets of this year. -1,901,537.03
Changes of the deferred tax assets/liability caused by the adjustment of tax rate --
Income taxes 112,729,793.86
7.77 Other comprehensive income
Note: Please refer to note 7.58.
7.78 Notes to items in the cash flow statements
142
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
(1) Other cash receipts relating to operating activities
Item Amount for the current period Amount for the prior period
Interest income 5,457,487.50 13,061,210.22
Cash pledge and security deposits 4,341,166.84 4,323,391.76
Maintenance fund 2,806,860.02 6,343,450.31
The collecting and paying on another's behalf 318,872.66 1,651,300.01
Others 23,748,832.28 61,406,545.31
Total 36,673,219.30 86,785,897.61
(2) Other cash payments relating to operating activities
Item Amount for the current period Amount for the prior period
Cash paid to general and administrative expenses 9,012,769.52 12,874,997.70
Cash paid to operating expenses 21,249,982.55 3,628,291.42
Cash pledge and security deposits 3,827,745.89 4,763,108.22
The collecting and paying on another's behalf 1,006,131.98 161,981.18
Others 93,795,526.79 36,632,151.02
Total 128,892,156.73 58,060,529.54
（3）Cash receipts on other investing activities
（4）Cash paid on other investing activities
Item Amount for the current period Amount for the prior period
Six months of structured deposits 1,300,000,000.00 600,000,000.00
Total 1,300,000,000.00 600,000,000.00
（5）Cash receipts on other financing activities
（6）Cash paid on other financing activities
7.79 Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Amount for the current Amount for the prior
Item
period period
I. Reconciliation of net profit to cash flows from operating activities:
143
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Amount for the current Amount for the prior
Item
period period
Net profit 329,045,648.28 329,045,648.28
Add：Provision for asset impairment -- --
Depreciation of fixed assets, bio-assets, and natural gas 13,279,140.03 13,246,302.18
Amortization of intangible assets -- 55,200.00
Amortization of long-term deferred expense 353,309.40 369,642.72
Losses on disposal of fixed assets, intangible assets and other long-term assets(deduct:
-- --
gains)
Losses on scrapping of fixed assets (deduct: gains) 774.32 14,291.75
Loss of fair value variation (deduct: gains) -- --
Financial expenses (deduct: gains) -143,574.86 3,060,270.68
Losses from investments (deduct: gains) -14,288,098.55 -827,100.00
Decrease in deferred tax assets (deduct: increase)） -1,901,537.03 1,723,550.79
Increase in deferred tax liabilities (deduct: decrease) -- --
Decrease in inventories (deduct: increase) 163,504,710.44 175,982,196.68
Decrease in operating receivables (deduct: increase) 53,925,974.21 -174,638,545.77
Increase in operating payables (deduct: decrease) 139,929,891.38 246,450,854.80
Others -2,123,357.14 245,817.56
Net cash flows from operating activities 685,675,245.10 594,728,129.67
II. Investing and financing activities that do not affect cash receipt and payment
Liabilities converted capital -- --
Reclassify convertible bonds to be expired within one year as current liability -- --
Fixed assets subject to finance leases -- --
III. Net increase in cash and cash equivalents:
Cash at the end of the period 1,240,480,893.15 1,068,660,665.62
Less: cash at the beginning of the period 1,148,522,435.93 1,206,789,056.46
Add: cash equivalents at the end of the period -- --
144
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Amount for the current Amount for the prior
Item
period period
Less: cash equivalents at the beginning of the period -- --
Net increase in cash and cash equivalents 91,958,457.22 -138,128,390.84
(2)Information of cash and cash equivalents
Amount for the current Amount for the prior
Item
period period
I. Cash 1,240,480,893.15 1,148,522,435.93
Including: Cash on hand 57,189.68 57,979.40
Bank deposits 1,163,996,248.33 1,148,464,456.53
Other monetary funds -- --
II. Cash equivalents -- --
Including: Investments in debt securities due within three months -- --
III. Closing balance of cash and cash equivalents 1,240,480,893.15 1,148,522,435.93
Including: Cash and cash equivalents using restricted of the parent company
-- --
or subsidiary
7.80 Notes on the Items of the Statement of Changes in Owner's Rights and
Interests
7.81Ownership or use-right restricted assets
Categories of assets Closing balance The reasons for restriction
Accounts receivable 21,334,705.19 Short-term loan mortgaged
Total 21,334,705.19 ——
7.82 The items of foreign currency
(1) Details of items of foreign currency
Item Balance of foreign currency at year end Exchange rate Balance of RMB converted
Monetary fund
Including：USD 36,382.37 6.8739 250,089.07
HKD 8,922,124.48 0.8783 7,835,919.44
145
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Balance of foreign currency at year end Exchange rate Balance of RMB converted
Other accounts receivable
Including：USD -- -- --
HKD 25,522,742.11 0.8783 22,415,530.24
Other accounts payable
Including：USD -- -- --
HKD 20,095,370.62 0.8783 17,648,902.53
（2）Oversea operating entities
The Group’s significant oversea operating entities are American Great Wall Co., Ltd
and Fresh Peak Investment Co., Ltd. American Great Wall Co., Ltd chooses the
USD as the its functional currency, for its main operating activities are in the USA;
Fresh Peak Investment Co., Ltd. chooses the RMB as its functional currency, for it is
a investment company and its main operating activities are in the mainland of China.
7.83 Hedging
7.84 Government funding
7.85 Other
VIII The changes of the scope of consolidation
The company did not change the range of consolidation in this period compared with
last year
IX Equities in other entities.
9.1 Equities in the subsidiaries
(1) The formation of the Group
Main Shareholding
Reg. Business
Name of the subsidiary operating proportion（%） Method of acquiring
place nature
area Direct Indirect
Acquiring through establishment
Shenzhen Petrel Hotel Co. Ltd. Shenzhen Shenzhen Services 68.10 31.90
or investment
Shenzhen City Property Acquiring through establishment
Shenzhen Shenzhen Services 95.00 5.00
Management Ltd. or investment
146
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Main Shareholding
Reg. Business
Name of the subsidiary operating proportion（%） Method of acquiring
place nature
area Direct Indirect
Shenzhen Zhen Tung Acquiring through establishment
Shenzhen Shenzhen Services 73.00 27.00
Engineering Ltd. or investment
Shenzhen City We Gen Acquiring through establishment
Shenzhen Shenzhen Services 75.00 25.00
Construction Management Ltd. or investment
Shenzhen City Shenfang Acquiring through establishment
Shenzhen Shenzhen Investment 90.00 10.00
Investment Ltd. or investment
Shenzhen City Shenfang Free Commecial Acquiring through establishment
Shenzhen Shenzhen 95.00 5.00
Trade Trading Ltd. trade or investment
Shenzhen City SPG Long Gang Acquiring through establishment
Shenzhen Shenzhen Real estate 95.00 5.00
Development Ltd. or investment
Shenzhen Special Economic
Zone Real Estate (Group) Acquiring through establishment
Guangzhou Guangzhou Real estate 95.00 5.00
Guangzhou Property and Estate or investment
Co., Ltd.
Beijing fresh peak property
Acquiring through establishment
development management Beijing Beijing Real estate 75.00 25.00
or investment
limited company
Beijing SPG Property Acquiring through establishment
Beijing Beijing Services 10.00 90.00
Management Limited or investment
Shenzhen ShenWu Elebator Acquiring through establishment
Shenzhen Shenzhen Services -- 100.00
Co.,Ltd or investment
Shenzhen Lain Hua Industry and Acquiring through establishment
Shenzhen Shenzhen Services 95.00 5.00
Trading Co. Ltd. or investment
Investment
Acquiring through establishment
Fresh Peak Holding Ltd. HongKong HongKong and 100.00 --
or investment
management
Investment Acquiring through establishment
Wellam Ltd. HongKong HongKong -- 100.00
holding or investment
147
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Main Shareholding
Reg. Business
Name of the subsidiary operating proportion（%） Method of acquiring
place nature
area Direct Indirect
Shantou SEZ Wellam Fty Bldg., Acquiring through establishment
ShanTou ShanTou Real estate -- 100.00
Dev. Co. or investment
Acquiring through establishment
Shantou Huafeng Estate Dev.Co. ShanTou ShanTou Real estate 100.00 --
or investment
Acquiring through establishment
Great Wall Estate Co., Inc USA USA Real estate 70.00 --
or investment
Investment
Acquiring through establishment
Fresh Peak Holdings Ltd. HongKong HongKong and 100.00 --
or investment
management
Acquiring through establishment
Fresh Peak Investment Ltd. HongKong HongKong Investment -- 55.00
or investment
Investment and Acquiring through establishment
Openice Ltd. HongKong HongKong 20.00 80.00
management or investment
Acquiring through establishment
Barenie Co. Ltd. HongKong HongKong Investment -- 80.00
or investment
Acquiring through establishment
Keyear Development Ltd. HongKong HongKong Investment -- 100.00
or investment
Guangzhou Huangpu Xizun real Acquiring through establishment
GuangZhou GuangZhou Real estate -- 100.00
estate limited company or investment
Fresh Peak Real Estate Dev. Acquiring through establishment
WuHan WuHan Real estate -- 55.00
Construction (Wuhan) Co. Ltd.* or investment
Shantou Special Economic Zone Subsidiary acquired through
Real Estate (Group) Songshan Shantou Shantou Real estate -- 100.00 emerge under non-common
Property and Estate Co., Ltd. control
Shenzhen Shenfang Department Commecial Acquiring through establishment
Shenzhen Shenzhen 95.00 5.00
Store Co. Ltd.* ① trade or investment
Acquiring through establishment
Bekaton Property Limited *② Australia Australia Real estate 60.00 --
or investment
148
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Main Shareholding
Reg. Business
Name of the subsidiary operating proportion（%） Method of acquiring
place nature
area Direct Indirect
Canada Great Wall ( Vancouver) Acquiring through establishment
Canada Canada Real estate -- 60.00
*② or investment
Commecial Acquiring through establishment
Paklid Limited *② HongKong HongKong 60.00 40.00
trade or investment
Guangdong Province Fengkai
Guangdong Guangdong Acquiring through establishment
Lain Feng Cement Manufacturing Manufacture -- 90.00
Fengkai Fengkai or investment
Co., Ltd *③
*① Shenzhen Shenfang Department Store Co. Ltd
The shareholders meeting held on October 29 th,2007 passed the resolution to
terminate business, liquidation and formed a group to carry out the liquidation
procedures. The liquidation group issued a notice of liquidation on December 7
th
,2007. According to the principle of “Enterprise Accounting Standards No.33- the
Consolidation Financial Statement”, the Store will not be included in the Company’s
consolidated financial statement. The book value of the investment account of the
Company is zero.
*② Bekaton Property Limited ,Canada Great Wall ( Vancouver)and Paklid Limited
These 3 subsidiaries were set up overseas in early times. The board of directors
passed a resolution to terminate the corporations’ business on Dec.13th, 2000.
*③ Guangdong Province Fengkai Lian Feng Cement Manufacturing Co., Ltd
The total assets (including tangible and intangible assets) of the corporation were
auctioned for debt repayment at 22 January 2006. The Company's investment in the
company's book value is zero.
Except for * ① , * ② , * ③ , the above subsidiaries which are not included the
company’s consolidated financial statement had ceased operations for many years.
And the entities of the corporations didn’t exist. And the Company has no control
over its subsidiaries’ businesses. According to the principle of “Enterprise
Accounting Standards No.33- the Consolidation Financial Statement”, the
corporation will not be included in the Company’s consolidated financial statement.
The book value of the investment account of the Company is zero. The following are
the details.
149
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Accounting Investment Opening Closing Provision for
Investee Changes
Method cost balance balance impairment
Paklid Limited Cost Method 201,100.00 201,100.00 -- 201,100.00 201,100.00
Bekaton Property Limited Cost Method 906,630.00 906,630.00 -- 906,630.00 906,630.00
Shenzhen Shenfang Department
Cost Method 10,000,000.00 10,000,000.00 -- 10,000,000.00 10,000,000.00
Store Co. Ltd
Shantou Huafeng Building Cost Method 68,731,560.43 58,547,652.25 -- 58,547,652.25 58,547,652.25
Guangdong Province Fengkai Lain
Cost Method 121,265,000.00 56,228,381.64 -- 56,228,381.64 56,228,381.64
Feng Cement Manufacturing Co., Ltd
Total —— 201,104,290.43 125,883,763.89 - 125,883,763.89 125,883,763.89
(2)Significant non-wholly owned subsidiary
Minority interest Current year profit and loss Current year dividends Minority interest
Name of subsidiary share proportion attributable to minority interest distributed to minority equity balance at the
(%) shareholders interest shareholders end of the year
Great Wall Estate Co., Inc 30.00 -17,830.51 -- -21,410,446.29
Fresh Peak Investment Ltd. 45.00 -6,395.09 -- -104,589,770.93
Barenie Co. Ltd. 20.00 -- -- -3,871,090.12
(3) The main financial information of significant non-wholly owned subsidiary
Closing balance
Name fo subsidiary Non-current Non-current
Current assets Total Assets Current liabilities Total liabilities
assets liabilities
Great Wall Estate Co., Inc 249,818.69 18,994,466.11 19,244,284.80 106,403,720.94 106,403,720.94
Fresh Peak Investment
220,030,097.71 24,793,206.35 244,823,304.06 254,765,642.93 254,765,642.93
Ltd.
Barenie Co. Ltd. 1,023.60 21,223,344.85 21,224,368.45 32,829,449.35 32,829,449.35
(Continued)
150
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Opening balance
Name of subsidiary Non-current Non-current
Current assets Total Assets Current liabilities Total liabilities
assets liabilities
Great Wall Estate Co., Inc 312,086.57 19,021,543.04 19,333,629.61 106,555,401.23 106,555,401.23
Fresh Peak Investment
220,030,097.71 24,793,206.35 244,823,304.06 254,751,432.23 254,751,432.23
Ltd.
Barenie Co. Ltd. 975.66 30,373,713.87 30,374,689.53 32,794,671.39 32,794,671.39
(Continued)
Incurred in current year Incurred in previous year
Cash flow Cash flow
Name of Total of Total of
Operating from Operating from
subsidiary Net profit comprehensive Net profit comprehensive
income operating income operating
income income
activities activities
Great Wall
322,901.55 -59,435.04 -59,435.04 -59,442.30 287,797.83 -68,120.84 -68,120.84 -68,159.28
Estate Co., Inc
Fresh Peak
-14,211.32 -14,211.32 -9,684.86 -9,684.86
Investment Ltd.
Barenie Co. Ltd. 0.00 -6,812.65 -6,812.65
9.2 Equities in joint ventures or associated enterprises
（1）Insignificant joint ventures or associated enterprises
Item Closing balance/Incurred this year Opening balance/Incurred last year
Joint ventures*①：
Total investment book value 12,166,897.84 12,166,897.84
Totals of the following items calculated per
respective shareholding proportion
—Net profit -- --
—Other comprehensive income -- --
—Total comprehensive income -- --
Associated enterprises*②：
Total investment book value 394,209.40 394,209.40
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance/Incurred this year Opening balance/Incurred last year
Totals of the following items calculated per
respective shareholding proportion
—Net profit -- --
—Other comprehensive income -- --
—Total comprehensive income -- --
*① All of the Group’s joint ventures are insignificant. For details of the joint ventures,
please refer to 7.17, including:
1) Guangdong province Huizhou Luofu Hill Mineral Water Co.,Ltd
The operting period of the company was form June 5, 1991 to June 4, 2001. And the
company had ceased operations because of operating loss for many years. And the
Company had been terminated its licenses by law at July 6, 2001 because it failed to
pass the annual inspection. Besides, the corporation stopped preparing the financial
statement. As of the end of the year, the book value of the investment account of the
Company is zero. According to the joint venture agreement, the Company didn’t
have the obligation to bear the additional loss.
2)Fengkai Xinghua Hotel
The FengKai XingHua Hotel was announced bankruptcy by the Guangdong
Province Zhaoqing City second-middle intermediate Peoples’ court with the
document (2002) ZHFJPZ No.2. And the corporation had finished the bankruptcy
procedure. As of the end of the year, the book value of the investment account of the
Company is zero. According to the joint venture agreement, the Company didn’t
have the obligation to bear the additional loss.
3)Jiangmen Xinjian Real Estate Co. Ltd., Xi’an Fresh Peak Building Co. Ltd, DongYi
Property Co., Ltd
The above corporations were the joint ventures set up with the local partners for the
properties developing projects. Consider the projects had been stopped, and the
joint ventures had closed operating activities for many years with no preparation of
financial statements. Already the corresponding provision for the investment of
these joint ventures was accrued. Refer to Note 7.17 for details.
* ② All associated enterprises of the Group are insignificant. For details of
associated enterprises, please refer to note 7.17, including:
Shenzhen Runhua Automobile Trading Co., Ltd
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The operating period of this corporation was form Feb 24, 1992 to Feb 24, 1997, and
it had ceased operations because of operating loss for many years. Besides, it had
been terminated its licenses by law because it failed to pass the annual inspection
and no financial statement was prepared afterwards. As the end of the year, the
book value of the investment account of the company is zero. According to the
associate agreement, the company didn’t have the obligation to bear the additional
loss.
（2）The excess losses of the joint ventures or associated enterprises incurred.
Accumulated Unrecognized losses Accumulated
Name of the joint ventures or associated enterprises unrecognized losses as this year (or shared net unrecognized losses as
of the end of last year profit this year) of the end of this year
Shenzhen Fresh Peak property consultant Co., Ltd 866,357.29 75,016.96 941,374.25
X The risk associated with financial instruments
The company's major financial instruments, including equity investments, loans,
accounts receivable, accounts payable, etc., the detailed description of the financial
instruments are shown in note six. The risks which associated with these financial
instruments and the risk management policies adopted by the company to reduce
these risks are described below. The management of the company is responsible for
the management and monitoring of these exposures to ensure that these risks are in
a limited amount of scope.
The company uses sensitivity analysis techniques to analyze the impact of
reasonable and possible changes in the risk variables on current profit or loss or
shareholder equity. As risk variables rarely occur in isolation, and affect the changes
of correlation between these variables for a variable amount of risk will have a
significant effect ultimately, so the content is on the assumption that the changes in
each variable is in the condition of independence.
Ⅹ Risk management objectives and policies
The company's main financial instruments include equity investment, Debt
investment, borrowing, accounts receivable, accounts payable, convertible bonds
and so on. Detailed descriptions of various financial instruments can be found in the
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
relevant items in Note 7. The risks associated with these financial instruments and
the risk management policies adopted by our company to reduce these risks are
described below. The company's management manages and monitors these
exposures to ensure that the above risks are within the limits.
The company uses sensitivity analysis technology to analyze the reasonable and
possible changes of risk variables which may have an impact on current profits and
losses or shareholders'rights and interests. Since any risk variable seldom changes
in isolation, and the correlation between variables will have a significant impact on
the final amount of change in a risk variable, the following is assumed to be
independent of each variable.
10.1Risk management objectives and policies
The aim that company engaged in the risk management is to achieve the right
balance between risk and return. It reduce the negative impact on the risk of the
company's operating performance to the lowest level and maximize shareholder
interests and other interests of investors. The aim that risk management based on
the basic strategy of cpmpany’s risk management is to identify and analyze various
risks faced by the company. Establishment of appropriate risk limits and risk
management, as well as to monitor all kinds of risks that control it in a limited scope
timely and reliably.
(1)Credit risk
The company's credit risk is mainly reflected in the uncollectible accounts receivable.
In order to reduce credit risk, the company set up a team wresponsible for
determining the credit limit, credit approval, and other monitoring procedures to
ensure that the necessary measures to recover overdue debt. In addition, the
company reviews the recovery of each individual account receivable on each
balance sheet date to ensure that the uncollectible accounts are fully prepared.
Therefore, the company's management believes that the company's credit risk has
been greatly reduced.
The company's liquidity is deposited in a bank with a higher credit rating, so the
liquidity of the credit risk is low.
(2)Liquidity risk
In the management of liquidity risk, the company maintains the concept of
management that adequate cash and cash equivalents, monitoring it to meet the
company's business needs and reducing the impact of cash flow fluctuations.
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10.1The transfer of financial assets
Financial assets that have been transferred but not wholly terminated
As of 30 June, 2019, the company declared factoring business 21,334,705.19 yuan
to the bank in accounts receivable, got RMB 21,334,705.19 yuan of equal value. If it
is fail to receive the corresponding accounts from the client, the bank has the right to
repay the corresponding accounts to the company.Because the company still bear
with these accounts receivable related credit risk, the company should continue to
fully recognize the carrying amount of the accounts receivable due to the transfer of
payments received and will confirm it as pledge loan.
XI Disclosure of fair value
XII Related party relationships and transactions
11.1 Parent of the Company
Proportion of the
Proportion of the
Company’s
Place of Company’s voting
Name of the parent Business Nature Registered capital ownership interest
incorporation power held by the
held by the parent
parent (%)
(%)
Guangdong
Shenzhen Investment Investment, Real estate
province RMB21.58billion 63.55 63.55
Shareholding Co. Ltd development, Guarantee
Shenzhen
11.2 Subsidiaries of the Company
Please refer to Note IX.1- Equities in the subsidiaries
11.3 Associates and joint ventures of the entity
Please refer to Note IX.3 –Equities in joint venture or associated enterprises
11.4 Other related parties of the Company
Name of other related party Relationship between other related parties and the Company
Shenzhen Jian'an Group Co., Ltd. The same controlling shareholders
11.5 Related party transactions
(1)Contracting with related parties
List of contracting item
Name of main Name of contractor Type of assets Reception Expiration date Basis of Contracting
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
contract issuing party under date of of pricing of income
contracting contracting contracting contracting recognized in the
income current year
Shenzhen Jian'an Shenzhen Zhen Tung
Construction 2012-6-1 Negotiations 3,849,090.95
Group Co., Ltd. Engineering Ltd
List of outsourcing item
Contracting
Type of assets Reception date Expiration Basis of pricing
Name of main contract issuing income
Name of contractor under of date of of contracting
party recognized in the
outsourcing contracting contracting income
current year
Shenzhen City SPG Long Shenzhen Jian'an
Construction 2015-9-16 Negotiations 28,261,187.86
Gang Development Ltd. Group Co., Ltd.
Shantou Huafeng Estate Shenzhen Jian'an
Construction 2018-11-16 2021-5-1 Negotiations 32,669,323.43
Dev.Co. Group Co., Ltd.
（2）Borrowing from related party
Item Carrying amount Reception date Expiration date Statement
Borrowing from:
The principal was repaid on December
Shenzhen Investment
16,535,277.94 2006.11.9 2016.12.22 22th, 2016. The remaining amount is
Shareholding Co. Ltd
interest payable.
11.6 Amounts due from / to related parties
(1) Amounts due from related party
Closing balance Opening balance
Item
Carrying amount Bad debt provision Carrying amount Bad debt provision
Accounts receivable
Shenzhen Fresh Peak property consultant Co.,Ltd 1,184,900.35 -- 1,185,689.73 --
Total 1,184,900.35 -- 1,185,689.73 --
Other receivables
Guangdong Province Huizhou Luofu Hill Mineral
10,465,168.81 10,465,168.81 10,465,168.81 10,465,168.81
Water Co., Ltd
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Closing balance Opening balance
Item
Carrying amount Bad debt provision Carrying amount Bad debt provision
Shenzhen Runhua Automobile Trading Co., Ltd 3,072,764.42 3,072,764.42 3,072,764.42 3,072,764.42
Canada GreatWall（Vancouver）Co. ,Ltd 89,035,748.07 89,035,748.07 89,035,748.07 89,035,748.07
Bekaton Property Limited 12,559,290.58 12,559,290.58 12,559,290.58 12,559,290.58
Paklid Limited 19,164,730.31 19,164,730.31 19,173,003.78 19,169,123.37
Shenzhen Shenfang Department Store Co. Ltd. 237,648.82 189,179.82 237,648.82 189,179.82
Shenzhen Real Estate Consolidated Service Co.,
475,223.46 475,223.46
Ltd.
Shenzhen City Shenfang Construction and
8,419,205.19 8,419,205.19 8,419,205.19 8,419,205.19
Decoration Materials Ltd.
Total 143,429,779.66 142,906,087.20 143,438,053.13 142,910,480.26
(2) Amounts due to related party
Item Closing balance Opening balance
Accounts receivable
Shenzhen Jian'an Group Co., Ltd. 15,185,309.82 43,446,497.68
Total 15,185,309.82 43,446,497.68
Other payables
Shenzhen Xin Dongfang Store Ltd. 902,974.64 902,974.64
Guangdong Province Fengkai Lain Feng Cement Manufacturing Co., Ltd. 1,867,348.00 1,867,348.00
Total 2,770,322.64 14,398,496.70
Interest payable:
Shenzhen Investment Holding Co.,Ltd 16,535,277.94 16,535,277.94
Total 16,535,277.94 16,535,277.94
XIII Share payment
XIV Commitments and Contingencies
14.1 Significant commitments
（1）Capital commitment
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Amount for the current period Amount for the prior period
Capital commitments that have been entered into but have not
-- --
been recognized in the financial statements
Significant outsourcing contracts 463,890,909.11 368,570,701.08
Total 463,890,909.11 368,570,701.08
（2）There is no any other commitment during this period.
14.2 Contingencies
(1)Contingencies arising from pending litigations or arbitrations and their financial
effects
Xi’an project Lawsuit
Xi’an Fresh Peak Holding limited company (hereinafter referred to as “Fresh Peak
Company”) was sino-foreign joint venture set up in Xi’an city. The shareholder of the
Fresh Peak Company – Hongkong Fresh Peak Co., Ltd was the wholly owned
subsidiary of the company. And the Hongkong Fresh Peak Co., Ltd contributed 84%
of the Fresh Peak Company’s share- capital in cash. And Xi’an trade building which
was the enterprise under the Xi’an Joint Commission on Commerce and Trade
contributed 16% of the Fresh Peak Company’s share- capital with the land-use right.
The core business was property development. And the project was Xi’an Trade
Building. The project was started on 1995-11-28. But the project had been stopped
in 1996 because of the two parties differences on the operating policy of the project.
In 1997, the Xi’an government withdrew the Xi'an Fresh Peak investment project
compulsively and assigned the project to Xi’an Business Tourism Co., Ltd
(hereinafter referred to as “Business Tourism Company”). But the two parties had
insulted a lawsuit on compensation. The ShanXi Province High Peoples Court made
a judgement “(2000) SJ-CZ No.25”. The judgement was as follows: 1. Business
Tourism Company had to pay for the compensation Rmb 36,620 thousand to Xi’an
Fresh Peak Company after the judgment entering into force. If the Business Tourism
Company failed to pay in time, it had to pay double debt interests to Xi’an Fresh
Peak Company. 2. Xi’an Joint Commission on Commerce had jointly and severally
obligation of the interests of the compensation.
Untill December 31 th, 2011, the amount of RMB 15,201,000.00 had been called
back. The company has obtained new property clues and submitted an application
for resumption of execution. The Shaanxi Provincial Higher Court held an execution
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
hearing on November 16, 2018.
As at 30 June 2019, the book value of the investment of Xi’an Fresh Peak Company
was RMB 12,166,897.84. The provision for investment was Rmb 20,673,831.77.
The book balance of assets was RMB 8,419,205.19 which has been taken full
provision for impairment loss.
(2)Contingent liabilities arising from providing debt guarantees to other entities and
their financial effects
The Company provided loan guarantees for purchaser of real estate. Up to Jun
30th,2019, the amount and duration of the unsettled guarantee is as follows:
Items Duration Unsettled amount (million)
Cuilin Court From real estate license granted and mortgaged 89,190
Shenfang Chuanqishan From real estate license granted and mortgaged 10,728
Shenfang Shanglin Garden From real estate license granted and mortgaged 3,583
Total —— 103,501
（ 3 ） Contingent liabilities Related to the equity joint venture or consortium
investment
Refer to IX “Equities in other entities”.
XV Events after the balance sheet date
XVI Other material facts
16.1 Other important transactions and matters
On 14 September, 2016, the Group plan the reorganization of material assets.The
Group announced it intended to buy 100% stock equity of Evergrande real estate
group co., LTD by issue shares or cash payment on 14 October, 2016.Guangzhou
chiron real estate co., LTD will become the controlling shareholder of the company
after the acquisition
The restructuring of material assets is still in process as scheduled by the financial
report day.
16.2 Other
(1) Accounting Policy Change
①Accounting Policy Change Caused by the Implementation of New Financial
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Instrument Standards
On March 31, 2017, the Ministry of Finance promulgated Accounting Standards for
Enterprises No. 22 - Recognition and Measurement of Financial Instruments
(Revised in 2017) (Accounting [2017] 7),'Accounting Standards for Enterprises No.
23 - Transfer of Financial Assets (Revised in 2017) (Accounting [2017]
8),'Accounting Standards for Enterprises No. 24 - Set of Accounting Standards for
Enterprises'. Periodic Accounting (Revised in 2017) (Accounting [2017] 9) issued on
May 2, 2017 "Accounting Standards for Enterprises 37 - Financial Instruments
Presentation (Revised in 2017)" (Accounting [2017] 14) (collectively referred to as
"New Financial Instruments Standards"), requiring domestic listed enterprises to
implement the new standards from January 1, 2019. Guidelines for financial
instruments.Our company will carry out the aforementioned new financial instrument
guidelines from January 1, 2019.
All recognized financial assets under the new financial instrument standards are
subsequently measured at the amortized cost or fair value. On the date of
implementation of the new financial instrument standards, the business model of
managing financial assets is evaluated on the basis of the existing facts and
circumstances of the company on that day, and the characteristics of contractual
cash flow on the financial assets are evaluated on the basis of facts and
circumstances at the time of initial confirmation of financial assets. The financial
assets are divided into three categories: measured according to the amortized cost
and measured according to the public value. Value is measured and its changes are
recorded in other comprehensive income and fair value, and its changes are
recorded in current profits and losses. Among them, when the financial asset
terminates recognition, the accumulated gains or losses previously included in other
comprehensive gains will be transferred from other comprehensive gains to retained
gains, not into current profits and losses.
Under the new financial instrument standards, based on the expected credit loss,
the company makes provision for impairment of financial assets measured by
amortized cost, investment in debt instruments measured by fair value and its
changes included in other comprehensive gains, lease receivables, contractual
assets and financial guarantee contracts, and confirms the loss of credit impairment.
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
XVII Notes to Items in the Financial Statements of the Company
17.1 Accounts receivable
(1) Accounts receivable by categories
Closing balance
Category Carrying amount Bad debt provision Book Value
Amount (%) Amount (%)
Accounts receivable of which provision for bad
-- -- -- -- --
debts is of individually significant
Accounts receivable of which provision for bad
11,466,782.59 100.00% 6,968,694.02 60.77% 4,498,088.57
debts is of individually insignificant
Total 11,466,782.59 100.00% 6,968,694.02 60.77% 4,498,088.57
(Continued)
Closing balance
Category Carrying amount Bad debt provision Book Value
Amount (%) Amount (%)
Accounts receivable of which provision for bad
-- -- -- -- --
debts is of individually significant
Accounts receivable of which provision for bad
12,133,489.69 100.00% 6,968,694.02 57.43% 5,164,795.67
debts is of individually insignificant
Total 12,133,489.69 100.00% 6,968,694.02 57.43% 5,164,795.67
① Bad debt provision of accounts receivable which is of individually significant
Content of accounts Amount of bad Proportion of
Carrying amount Reasons for the provision
receivable debt provision
House pay to be collected 11,221,159.00 6,968,694.02 62.10% A separate provision is established according
to the recoverability of each receivable with
Rental to be collected 245,623.59 -- --
long aging and little retrievability.
Total 11,466,782.59 6,968,694.02 62.93
② Disclosure by age
Content of accounts receivable Carrying amount
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Content of accounts receivable Carrying amount
In 1 year(including 1 year) 387,105.69
1-2year 140,732.69
2-3year 293,033.67
More than 3 year 10,645,910.54
More than 5 year 10,645,910.54
Total 11,466,782.59
(2) There were no any account receivables that had been fully or at a great
proportion rate accrued for bad debt but had been fully collected or reversed back in
the current period.
(3) There were no any significant accounts receivables written off in the current
period.
(4) Top 5 entities with the largest balances of accounts receivable
Relationship with Proportion of the amount to
Name of entity Amount Age Bad debt provision
the Group the total AR (%)
Individual No.1 Un-related party 1,200,000.00 Within 1year 10.47 1,200,000.00
Individual No.2 Un-related party 876,864.11 Within 1year 7.65 876,864.11
Individual No.3 Un-related party 617,559.26 Within 1year 5.39 --
Individual No.4 Un-related party 593,244.00 Within 1year 5.17 --
Corporation No.1 Un-related party 540,000.00 Within 1year 4.71 --
Total 3,827,667.37 33.38 2,076,864.11
(5)There were no any account receivables which had been derecognized.
17.2 Other receivables
Item Closing balance Opening balance
Interest receivable 6,591,780.82 2,380,301.11
Other receivables 771,102,120.43 767,994,548.73
Total 777,693,901.25 770,374,849.84
(1)Interest receivable
1) Classification
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Item Closing balance Opening balance
Time deposit -- 97,801.11
Structured deposit 6,591,780.82 2,282,500.00
Total 6,591,780.82 2,380,301.11
(2)Dividends receivables
(4) Other receivable
①Other receivables by categories
Item Closing balance Opening balance
Internal receivables 1,418,308,051.36 1,422,461,221.15
Other receivables 157,478,791.20 146,006,570.00
Total 1,575,786,842.56 1,568,467,791.15
② Provision
Stage one Stage two Stage one
Expected Credit Loss for Expected Credit Loss for the Subtotal
Bad debt Expected credit losses
the Whole Life Period Whole Life Period (Credit
in the next 12 months
(No Credit Devaluation) Devaluation Has Occurred)
Opening balance 798,092,941.31
Opening balance in the current period —— —— —— ——
Closing balance 798,092,941.31
Unit：RMB
Category Closing balance
Within 1 year（including 1year） 158,202,023.94
1 to 2 years 73,851,395.97
2 to 3 years 310,307,057.96
More than 3 years 1,033,426,364.69
3 to 4years 247,106,776.63
4 to 5 years 267,616,334.77
More than 5 years 518,703,253.29
Total 1,575,786,842.56
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③ Top 5 entities with the largest balances of other receivables
Proportion of
Relationship
the amount to
Name of Entity with the Amount Age Bad debt provision
the total OR (%)
Group
（%）
Fresh Peak Enterprise Co.,
Subsidiary 530,297,831.35 Over 3 years 33.65% 508,377,320.74
Ltd
Shantou Huafeng Estate
Subsidiary 517,509,745.62 Over 3 years 32.84% --
Development Co., Ltd
American Great Wall Co.,
Subsidiary 101,379,954.81 Over 3 years 6.43% 101,379,954.81
Ltd
Canada Great
Subsidiary 89,035,748.07 Over 3 years 5.65% 89,035,748.07
Wall( Vancouver ) Co., Ltd
Xinfeng property Subsidiary 88,290,631.63 5.60% --
Total 1,326,513,911.48 84.18% 698,793,023.62
(6) There were no any other receivables about government subsidies that have
been involved.
(7) There were no any other receivables due to the transfer of financial assets that
have been derecognized.
(8) There were no any other receivables which had transferred to continued
involvement in assets or liabilities.
17.3 Long-term equity investments
(1) Long-term equity investments by types
Closing balance Opening balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Investment in
304,045,949.42 69,155,382.25 234,890,567.17 304,045,949.42 69,155,382.25 234,890,567.17
subsidiaries
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Closing balance Opening balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Investment in
associates and 22,341,261.07 21,947,051.67 394,209.40 22,341,261.07 21,947,051.67 394,209.40
joint ventures
Total 326,387,210.49 91,102,433.92 235,284,776.57 326,387,210.49 91,102,433.92 235,284,776.57
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(2)investment in subsidiaries
Curr. year Curr. year impairment Closing balance of
Name of investee Opening balance Curr. year decrease Closing balance
Increase provision impairment provision
Shenzhen City Property Management Ltd. 12,821,791.52 -- -- 12,821,791.52 --
Shenzhen Petrel Hotel Co. Ltd. 20,605,047.50 -- -- 20,605,047.50 --
Shenzhen City Shenfang Investment Ltd. 9,000,000.00 -- -- 9,000,000.00 --
Fresh Peak Enterprise Ltd. 556,500.00 -- -- 556,500.00 --
Fresh Peak Zhiye Co., Ltd. 22,717,697.73 -- -- 22,717,697.73 --
Shenzhen Special Economic Zone Real Estate (Group) Guangzhou
20,000,000.00 -- -- 20,000,000.00 --
Property and Estate Co., Ltd.
Shenzhen Zhen Tung Engineering Ltd 11,332,321.45 -- -- 11,332,321.45 --
American Great Wall Co., Ltd 1,435,802.00 -- -- 1,435,802.00 --
Shenzhen City Shenfang Free Trade Trading Ltd. 4,750,000.00 -- -- 4,750,000.00 --
Shenzhen City Hua Zhan Construction Management Ltd. 6,000,000.00 -- -- 6,000,000.00 --
QiLu Co.,Ltd 212,280.00 -- -- 212,280.00 --
Beijing Shenfang Property Management Co., Ltd. 500,000.00 -- -- 500,000.00 --
Shenzhen Lain Hua Industry and Trading Co., Ltd. 13,458,217.05 -- -- 13,458,217.05 --
Shenzhen City SPG Long Gang Development Ltd. 30,850,000.00 -- -- 30,850,000.00 --
Beijing Fresh Peak Property Development Management Limited 64,183,888.90 -- -- 64,183,888.90 --
166
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Curr. year Curr. year impairment Closing balance of
Name of investee Opening balance Curr. year decrease Closing balance
Increase provision impairment provision
Company
Shantou City Huafeng Real Estate Devepment Co., Ltd 16,467,021.02 -- -- 16,467,021.02 --
Paklid Limited -- -- -- -- -- 201,100.00
Bekaton Property Limited -- -- -- -- -- 906,630.00
Shenzhen Shenfang Department Store Co. Ltd. -- -- -- -- -- 9,500,000.00
Shantou Fresh Peak Building -- -- -- -- -- 58,547,652.25
Total 234,890,567.17 -- -- 234,890,567.17 -- 69,155,382.25
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
(3)Investment in associates and joint ventures
Changes in this period
Adjustments of
Investment Changes
Name of investee Opening balance Add Reduce other
income under of other
investment investment comprehensive
equity method equity
income
I. Joint ventures
Guangdong Huizhou Luofu Hill Mineral
-- -- -- -- -- --
Water Co., Ltd
Fengkai Xinghua Hotel -- -- -- -- -- --
Subtotal -- -- -- -- -- --
II. Associates
Shenzhen Runhua Automobile Trading
-- -- -- -- -- --
Co., Ltd
Shenzhen Ronghua Jidian Co., Ltd 394,209.40 -- -- -- -- --
Subtotal 394,209.40 -- -- -- -- --
Total 394,209.40 -- -- -- -- --
(Continued)
Changes in this period Closing balance of
Name of investee Cash dividend or Provision for Closing balance impairment
Others
profit declared impairment provision
I. Joint ventures
Guangdong Huizhou Luofu Hill Mineral
-- -- -- -- 9,969,206.09
Water Co., Ltd
Fengkai Xinghua Hotel -- -- -- -- 9,455,465.38
Subtotal -- -- -- -- 19,424,671.47
II. Associates
Shenzhen Runhua Automobile Trading
-- -- -- -- 1,445,425.56
Co., Ltd
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Changes in this period Closing balance of
Name of investee Cash dividend or Provision for Closing balance impairment
Others
profit declared impairment provision
I. Joint ventures
Shenzhen Ronghua Jidian Co., Ltd -- -- -- 394,209.40 1,076,954.64
Subtotal -- -- -- 394,209.40 2,522,380.20
Total -- -- -- 394,209.40 21,947,051.67
17.4 Operating income and costs
(1) Operating income and operating costs
Amount for the current period Amount for the prior period
Item
Income Costs Income Costs
Main business 828,375,457.04 125,366,701.31 229,634,645.39 48,332,118.70
Other operating income 27,619.07 -- 47,904.78 --
Total 828,403,076.11 125,366,701.31 229,682,550.17 48,332,118.70
17.5 Investment income
(1) Details of investment income
Item Amount for the current period Amount for the prior period
Investment income from long-term investments under cost
518,700,131.64
method
Investment income from available-for-sale financial assets
928,200.00 827,100.00
during the holding period
Investment income of Financial products 13,359,898.55
Total 532,988,230.19 827,100.00
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
XVII. Supplementary Materials
15.1 Breakdown non-recurring profit or loss
Amount for the current
Items Statement
period
Profit or loss on disposal of non-current assets -3,605.82 --
Tax refunds or reductions with ultra vires approval or without official approval documents -- --
Government grants recognized in profit or loss (other than grants which are closely related to the Company’s business and are either in fixed amounts or
-- --
determined under quantitative methods in accordance with the national standard)
Bank structured deposit
Income earned from lending funds to non-financial institutions and recognized in profit or loss 13,359,898.55
management income
The excess of attributable fair value of identifiable net assets over the consideration paid for the acquisition of subsidiaries, associates and joint ventures -- --
Profit or loss on exchange of non-monetary assets -- --
Profit or loss on entrusted investments or assets management -- --
Impairment losses on assets due to force majeure events, e.g, natural disasters -- --
Profit or loss on debt restructuring -- --
Entity restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc. -- --
Profit or loss attributable to the evidently unfair portion of transaction price, being transacted price in excess of fair transaction price, of a transaction -- --
Net profit or loss of subsidiaries from the beginning of the period up to the business combination date recognized as a result of business combination of
-- --
enterprises under common control
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Amount for the current
Items Statement
period
Profit or loss arising from contingencies other than those related to normal operating business -- --
Profit or loss on changes in the fair value of held-for-trade financial assets, and held-for-trade financial liabilities and financial assets available-for-sale,
-- --
other than those used in the effective hedging activities relating to normal operating business
Reversal of provision for account receivables that are tested for impairment losses individually -- --
Profit or loss on entrusted loans -- --
Profit or loss on changes in the fair value of investment properties that are subsequently measured using the fair value model -- --
Effects on profit or loss of one-off adjustment to profit or loss for the period according to the period requirements of tax laws and accounting laws and
-- --
regulations
Custodian fees earned from entrusted operation -- --
basically the house purchase
Other non-operating income or expenses other than the above 363,559.11
deposit
Other profit or loss that meets the definition of non-recurring profit or loss -- --
Subtotal 13,719,851.84 --
Tax effects 3,429,962.96 --
Effects attributable to minority interests (after tax) -- --
Total 10,289,888.88 --
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ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Note：”+” means income or gain and “-” means loss or expense
The Group defines items as non-recurring profit or loss items according to “Information
Disclosure and Presentation Rules for Companies Making Public Offering of Securities
No.1---Non-recurring Profit or Loss”(CSRC No.[2008]43)
18.2 Return rate of net assets and earning per share
Weighted return rate of Earning per share (yuan / stock)
Profit the in the reporting year
net assets(%) Basic EPS Diluted EPS
Net profit attributable to common stockholders 9.81% 0.3293 0.3293
Less： Net profit attributable to common stockholders
9.50% 0.3191 0.3191
after deducting non-recurring losses
18.3 Differences between amounts prepared under foreign accounting standards and
China Accounting Standards (CAS)
172
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Interim Report 2019
Part XI Documents Available for Reference
1. The financial statements with the personal signatures and stamps of the Company’s legal
representative, head for financial affairs and head of the financial department; and
2. The originals of all the documents and announcements disclosed by the Company on Securities
Times, China Securities Journal and Ta Kung Pao during the Reporting Period.
173
