(000029 SHENSHENFANG A 200029 SHENSHENFANG B)
Shenzhen Special Economic Zone Real Estate & Properties
(Group) Co., Ltd.
Annual Report 2008
(A share)
April 20, 20092
Section I Important Notes and Contents
The Board of Directors, the Supervisory Committee as well as Directors, Supervisors
and Senior Executives of Shenzhen Special Economic Zone Real Estate & Properties
(Group) Co., Ltd (hereinafter referred to as “the Company”) hereby ensure that there
are no false records, misleading statements, or significant omissions in the materials
of this report, and will assume individual and joint responsibilities concerning the
authenticity, accuracy and integrity of its contents.
None of Directors, Supervisors or Senior Executives can’t confirm the authenticity,
accuracy and integrity of annual reports’ contents or had any objections. All Directors
of the Company attended the Board Meeting.
Chairman of the Board Zhou Jianguo, person in charge of accounting work Guo
Hongzhuang and person in charge of accounting firm Chen Jincai hereby ensure the
authenticity and integrity of the Financial Report enclosed in the Annual Report.
The annual Report is written in both English and Chinese. In case of any discrepancy
between the two versions, Chinese version prevails.
Contents
Section II Company Profile----------------------------------------------------------------------
Section III Summary of Accounting Highlights and Business Highlights-----------------
Section IV Change of Share Capital and Particulars about Shareholders------------------
Section V Directors, Supervisors, Senior Executives and Employees----------------------
Section VI Corporate Governance---------------------------------------------------------------
Section VII Brief introduction to the Shareholders’ General Meeting---------------------
Section VIII Report of the Board of Directors-------------------------------------------------
Section IX Report of the Supervisory Committee--------------------------------------------
Section X Significant Events---------------------------------------------------------------------
Section XI Financial Report----------------------------------------------------------------------
Section XII Documents Available for Reference----------------------------------------------3
Section II Company Profile
(I) Legal Name of the Company:
In Chinese: 深圳经济特区房地产（集团）股份有限公司
In English: Shenzhen Special Economic Zone Real Estate & Properties (Group)
Co., Ltd.
Abbreviation in Chinese: 深房集团
Abbreviation in English: SPG
(II) Legal Representative: Zhou Jianguo
(III) Secretary to the Board
Securities Affairs Representative: Feng Hongwei
Contact Address: 47/F, SPG Plaza, Renmin South Road, Shenzhen
Tel: (0755) 82293000-4718, 4715
Fax: (0755) 82294024
E-mail: spg@163.net
(IV) Registered Address: 47/F, SPG Plaza, Renmin South Road, Shenzhen
Office Address: 46/F-48/F, SPG Plaza, Renmin South Road, Shenzhen
Postal Code: 518001
E-mail: spg@163.net
Website: http://www.sfjt.com.cn
(V) Newspapers for Information Disclosure Designated by the Company:
Domestic: China Securities Journal
Overseas: Ta Kung Pao
Internet Website Designated by CSRC for Publishing the Annual Report:
http://www.cninfo.com.cn
The Place Where the Annual Report is Prepared and Placed: 47/F, SPG
Plaza, Renmin South Road, Shenzhen
(VI) Stock Exchange Listed with: Shenzhen Stock Exchange
Short Forms of the Stock: SHENSHENFANG A（Stock Code: 000029）
SHENSHENFANG B (Stock Code: 200029)
(VII) Other Information of the Company
Initial Registration Date: Jan. 8, 1980
Registration Place: Shenzhen Administration Bureau for Industry and
Commerce
Registration Code of Corporate Business License: 440301103225878
Registration Code of Taxation: 440301192179585
Accounting Firms Engaged by the Company:
Name: Shenzhen Nanfang-Minhe Certified Public Accountants
Address: 7-8/F, Electronics Tech. Bldg., No. 2007, Shennan Middle Road,
Shenzhen4
Section III Summary of Accounting Highlights and Business Highlights
Unit: RMB Yuan
(I) Profit indices of current year
Total profit realized by the Company as of the year 2008: 41,034,343.76
Net profit: 19,123,787.11
Net profit after deducting non-recurring gains and losses: 21,340,998.68
Investment income: 2,770,589.42
Net cash flows arising from operating activities: -82,529,495.72
Net increase in cash and cash equivalents: -123,038,218.98
Deducted non-recurring gains and losses was RMB-2,217,211.57, including gains and
losses from contingencies with no relationship of normal business being RMB
-4,200,000.00, gains and losses from disposal of non-current assets amounting to
3,08,259.89, gains and losses from changes in fair value of transaction financial assets
was RMB -406,051.04, other non-operating income and expense amounted to RMB
-646,826.14 and deducted influence on income tax amounting to RMB 12,954.28.
Difference between A shares and B shares:
Effect on net profit and net assets calculated under IFRS and reconciliation:
PRC GAAP IFRS
Net profit 19,123,787.11 19,123,787.11
Net assets 1,208,288,874.76 1,208,288,874.76
Explanation on difference None
(II) Main accounting data and financial indices of the Company over the past three
years
1. Main accounting data
Unit: RMB Yuan
2008 2007 Increase/decrease
than last year (%) 2006
Operating income 706,005,324.41 845,127,526.44 -16.46% 995,935,563.22
Net profit 41,034,343.76 51,658,929.76 -20.57% 21,218,544.81
Net profit attributable to shareholders of listed company 19,123,787.11 39,007,992.54 -50.97% 20,150,368.49
Net profit attributable to shareholders of listed company
after deducting non-recurring gains and losses 21,340,998.68 8,059,156.58 164.80% 59,637,104.41
Operating income 2,265,656,678.91 2,302,724,936.60 -1.61% 180,631,092.66
At the end of
2008 At the end of 2007 Increase/decrease
than last year (%) At the end of 2006
Total assets 2,248,250,005.03 2,285,318,262.72 -1.62% 2,392,948,463.16
Owners’ equity (shareholders’ equity) 1,208,288,874.76 1,188,146,644.01 1.70% 1,130,710,841.90
Share capital 1,011,660,000.00 1,011,660,000.00 0.00% 1,011,660,000.00
2. Main financial indices
Unit: RMB Yuan
2008 2007 Increase/decrease
than last year (%) 2006
Basic earnings per share (Yuan/share) 0.0189 0.0386 -51.04% 0.0199
Diluted earnings per share (Yuan/share) 0.0189 0.0386 -51.04% 0.0199
Basis earnings per share after deducting non-recurring gains and losses
(Yuan/share)
0.0211 0.0080 163.75% 0.059
Fully diluted return on equity (%) 1.58% 3.28% -1.70% 1.78%
Weighted average return on equity (%) 1.60% 3.35% -1.75% 1.89%5
Fully diluted return on equity after deducting non-recurring gains and losses (%) 1.77% 0.68% 1.09% 5.27%
Weighted average return on equity after deducting non-recurring gains and losses
(%) 1.78% 0.69% 1.09% 5.59%
Net cash flow per share arising from operating activities (Yuan/share) -0.08 -0.05 60.00% 0.18
At the end
of 2008
At the end
of 2007
Increase/decrease
than last year (%)
At the end
of 2006
Net assets per share attributable to shareholders of listed companies (Yuan/share) 1.19 1.17 1.71% 1.12
Items of non-recurring gains and losses
Unit: RMB Yuan
Items Amount Notes (if applicable)
Gains and losses from disposal of non-current assets 3,048,259.89
Gains and losses from contingencies not relating to Company’s normal business -4,200,000.00
Gains and losses from changes in fair value of transaction financial assets and transaction financial
responsibilities, and investment income from disposal of transaction financial assets/responsibilities
and financial assets available for sale, excluding valid hedging business relating to normal operation.
-406,051.04
Other operating income and expense -646,826.14
Impact on income tax -12,594.28
Total -2,217,211.57 -6
Section IV Change of Share Capital and Particulars about Shareholders
I. Change of share capital
(I) The Company has completed the share merger reform on Feb. 15, 2006. In
accordance with share merger reform plan, there were 50,583,000 shares subject to
moratorium were released from trading moratorium on Feb. 26, 2007, and then
50,583,000 shares were released on 14 Oct. 2008. The Company’s equity structure
was adjusted as follows:
Before the change Increase/decrease (+/-) After the change
Amount Proportion
Issuance
of new
share
Bonus
shares
Capitalizatio
n of public
reserve
Others Subtotal Amount Proportion
I. Shares subject to trading moratorium 622,279,350 61.51% -50,583,000 -50,583,000 571,696,350 56.51%
1. Shares held by state
2. Shares held by state-owned
corporation 622,273,800 61.51% -50,583,000 -50,583,000 571,690,800 56.51%
3. Shares held by domestic investors 5,500 5,550
Including: shares held by domestic
non-state-owned corporation 0
Shares held by domestic natural
person 5,500 5,550
4. Shares held by foreign investors 0
Including: shares held by foreign
corporation 0
Shares held by foreign natural person 0
II. Shares not subject to trading
moratorium 389,380,650 38.49% 50,583,000 50,583,000 439,963,650 43.49%
1. RMB ordinary shares 269,380,650 26.63% 50,583,000 50,583,000 319,963,650 31.63%
2. Domestically listed foreign shares 120,000,000 11.86% 120,000,000 11.86%
3. Overseas listed foreign shares
4. Others
III. Total shares 1,011,660,00
0 100.00% 1,011,660,0
00 100.00%
(II) Change of shares subject to moratorium
Unit: Share
Name of shareholder
Shares subject to
moratorium at the
year-begin
Shares released
in current year
Shares
increased in
current year
Shares subject to
moratorium at the
year-end
Reason Date of release
Shenzhen
Investment Holding
Corporation
622,273,800 50,583,000 0 571,690,800
Implementing the
commitment on releasing
from moratorium according
to share merger reform
13 Oct. 2008
Total 622,273,800 50,583,000 0 571,690,800 － －
II. Issuance and listing of shares
1. Over the past three years as at the end of the report period, the Company never
issued shares or derivative securities.
2. On Feb. 26, 2007, 50,583,000 shares subject to moratorium held by Shenzhen
Investment Holding Co., Ltd., the only shareholder holding non-tradable shares, was
freed from the trading moratorium, taking up 5% of the total share capital of the
Company, 7.52% of the total shares subject to moratorium, as well as 14.93% of total
shares not subject to moratorium; on Oct. 13, 2008, Shenzhen Investment Holding Co.,
Ltd released 50,583,000 shares subject to trading moratorium, taking up 5% of total
capital share, 8.13% of total shares subject to trading moratorium, as well as 12.99%
of total shares not subject to moratorium.
3. The Company’s inner employees’ shares were listed for trading through
approval on Aug. 26, 1994. At present, the Company has no inner employees’7
shares.
III. About shareholders
1. Number of shareholders and shares held by shareholders
Total number of shareholders 104,002
Particulars about shares held by the top ten shareholders
Name of shareholders Nature of shareholders Proportion Total shares held Shares subject to trading
moratorium held
Share pledged or
frozen
Shenzhen Investment Holding Corporation State-owned corporation 64.82% 655,800,149 571,690,800 0
Li Gang Domestic Natural person 0.08% 816,717 0 0
Zhong Yingxin Domestic Natural person 0.08% 762,500 0 0
CHU KOON YUK Other 0.07% 720,000 0 0
Chen Kangliang Domestic Natural person 0.07% 683,417 0 0
Zhan Xiaomin Domestic Natural person 0.06% 604,100 0 0
OREBURNS(AUSTRALIA) TY.LIMITED Other 0.06% 600,000 0 0
Xia Xiuzhen Domestic Natural person 0.05% 525,700 0 0
Zhu Zhikai Domestic Natural person 0.05% 476,100 0 0
KWONG,FAT MOON EDKO Other 0.05% 473,399 0 0
Particulars about shares held by the top ten shareholders holding tradable shares
Name of shareholders Number of shares not subject to
trading moratorium held Type of share
Shenzhen Investment Holding Corporation 84,109,349 RMB ordinary share
Li Gang 816,717 RMB ordinary share
Zhong Yingxin 762,500 RMB ordinary share
CHU KOON YUK 720,000 Domestically listed foreign share
Chen Kangliang 683,417 Domestically listed foreign share
Zhan Xiaomin 604,100 Domestically listed foreign share
ORE BURNS (AUSTRALIA) PTY.LIMITED 600,000 Domestically listed foreign share
Xia Xiuzhen 525,700 RMB ordinary share
Zhu Zhikai 476,100 RMB ordinary share
KWONG,FAT MOON EDKO 473,399 Domestically listed foreign share
Explanation on associated relationship or
action-in-concert among the above
shareholders
Unknown
2. Controlling shareholder of the Company: Shenzhen Investment Holdings Co., Ltd
is a sole state-funded company limited, who was founded on Oct. 13, 2004 with a
registered capital of RMB 4.6 billion as well as legal representative Chen Hongbo. Its
business scope included: providing guarantees for municipal state-owned enterprises,
management of state-owned equity, and assets restructure reformation, capital
operation and equity investment of enterprises etc. The ultimate controller of the
Company was Shenzhen State-owned Assets Supervision Administrative Committee.
SASAC of Shenzhen was located at Investment Building, Shennan Av., Futian District,
Shenzhen, as well as the post code 518029.
The property right and controlling relationship between the Company and the actual
controller are as follows:
Shenzhen Investment Holdings Co.,
Ltd.
The Company
Company
Shenzhen State-owned Assets Supervision Administrative Committee8
Section V Directors, Supervisors, Senior Executives and Employees
I. Basic information of directors, supervisors and senior executives
Starting date
of office
term
Ending
date of
office term
Equity incentive awarded in the report
period
Name Title Sex Age
Shares
held at
the
year-be
gin
Shares
held at
the
year-en
d
Reaso
n for
change
Payment
drawn
from the
Company
in the
report
period
(RMB’00
00)
Share
available
for
exercise
Shares
has been
exercise
d
Exerci
sed
price
Market price
of share at
the
period-end
Whether
draw
payment
from
shareholder
company or
other
related units
Shao Zhihe Chairman of the
Board Male 58 28 Dec.
2002
11 Feb.
2009 7,400 7,400 No 40.00 No 0 0.00 0.00 No
Guo
Zhuanghong
General
Manager
Male 50 21 Aug.
2006
11 Feb.
2012
0 0 No 40.00 No 0 0.00 0.00 No
Zhuang
Chuanghui
Chairman of the
Supervisory
Committee
Male 54 28 Jan. 2003 11 Feb.
2009 0 0 00 40.00 No 0 0.00 0.00 No
Peng
Naidian Director Male 59 28 Sep.
1996
11 Feb.
2009 0 0 00 31.71 No 0 0.00 0.00 No
Xu Zhenhan Director Male 55 28 Jan. 2003 11 Feb.
2009
0 0 0 0.00 Yes 0 0.00 0.00 Yes
Liu Ying Director Female 46 9 Sep. 2003 11 Feb.
2009 0 0 0 0.00 Yes 0 0.00 0.00 Yes
Wen Li Director Female 39 8 Sep. 2006 11 Feb.
2012 0 0 0 0.00 Yes 0 0.00 0.00 Yes
Zong
Dechun
Independent
Director
Male 67 28 Jun.
2004
28 Jun.
2010
0 0 0 3.60 No 0 0.00 0.00 No
Hou Liying Independent
Director Female 54 28 Jun.
2004
28 Jun.
2010 0 0 0 3.60 No 0 0.00 0.00 No
Zhou
Hanjun
Independent
Director Male 39 26 Feb.
2008
11 Feb.
2012 0 0 00 3.00 No 0 0.00 0.00 No
Deng
Kangcheng
Supervisor Male 41 28 Jun.
2004
11 Feb.
2009
0 0 0 0.00 Yes 0 0.00 0.00 No
Xiong
Xingnong
Supervisor Male 51 28 Jun.
2004
11 Feb.
2012 0 0 0 17.45 No 0 0.00 0.00 No
Chen Junyi Supervisor Male 51 11 Apr.
2006
11 Feb.
2009 0 0 0 22.34 No 0 0.00 0.00 No
Zhang Xuxi Supervisor Male 32 11 Apr.
2006
11 Feb.
2012
0 0 0 16.93 No 0 0.00 0.00 Yes
Luo
Kunquan
Executive
Deputy General
Manager
Male 53 28 Jan. 2003 22 Aug.
2008 0 0 0 19.20 No 0 0.00 0.00 No
Luo Zichao Deputy General
Manager Male 48 21 Aug.
2003
11 Feb.
2012 0 0 0 31.71 No 0 0.00 0.00 No
Song Gongli Deputy General
Manager Male 52 21 Aug.
2006
11 Feb.
2009 0 0 0 31.71 No 0 0.00 0.00 No
Yang
Jiayong
Deputy General
Manager Male 36 21 Aug.
2006
11 Feb.
2012 0 0 0 31.71 No 0 0.00 0.00 No
Chen Ji Secretary to the
Board Male 36 28 Jan. 2003 11 Feb.
2012 0 0 0 23.22 No 0 0.00 0.00 No
Total - - - - - 7,400 7,400 - 356.18 - 0 - - -
Note: Director Xu Zhenhan, Liu Ying and Wen Li and supervisor Deng Kangcheng
held positions in shareholding units. For their positions and office term, please refer to
following text.
II. Main experiences of current directors, supervisors and senior executives
1. Shao Zhihe: Aug. 1981 - Sep. 1983, commander, 13th company, 4th barrack, 302
regiment, Capital Construction Engineer Corps; Sep. 1983 to Oct. 1995, Manager,
Installation Branch, Shenzhen Municipal Engineering Corporation; Oct. 1995 – May
1999, Vice General Manager of Shenzhen Tonge Group; May 1999 to Dec. 2002,
General Manager and Deputy Secretary of CPC, Shenzhen Urban Construction9
Investment & Development Company; Dec. 2002-Feb. 2009, Secretary of the CPC
and Chairman of the Board of the Company.
2. Guo Hongzhuang, male, Han nationality, from Chaoyang, Guangdong, born in
Dec. 1958 from member of CPC, is a holder of on-the-job master degree and engineer.
He ever took posts of clerk in Cadre Department, the 16th regiment, Capital
Construction Engineer Corps; Director of the Office of Shenzhen Nanyang Enterprise
Corporation, clerk of Labor Union and secretary of GM in Shenzhen Construction
(Group) Corporation; Deputy GM in Shenzhen Construction Engineering General
Contract Corporation; Manager in Longgang Real Estate Company of Shenzhen
Construction (Group) Corporation, Deputy GM in Real Estate Development in
Shenzhen Construction Investment Holding Corporation; Secretary of CPC and GM
in Shenzhen Kingon (Group) Co., Ltd., Vice Secretary of CPC, GM, Secretary of CPC
and Chairman of the Board in Shenzhen Cities Construction Development (Group)
Corporation. He acted as GM, Vice Secretary of CPC and Director of the Company
since Aug. 2006.
3. Zhuang Chuanghui: From Feb. 1983 to Mar. 1986, promulgation chief, Cannon
Regiment, 42 Army; from Mar. 1986 to Dec. 1987, deputy section chief of the Cadre
Section, deputy director of the Office, Economic Work Department, Huizhou Local
CPC Committee; from Dec. 1987 to Jul. 1989, deputy director of the Office, section
chief of the Statistics Section, Huizhou local Administration for Industry &
Commerce; from Jul. 1989 to Feb. 1997, senior staff member, principal staff member,
discipline inspector of deputy section chief level, vice director of the Office (section
chief level), No. 1 Office, Shenzhen Commission for Discipline Inspection; from Feb.
1997 to May 1999, Vice Secretary of Commission for Discipline Inspection,
Shenzhen Construction Investment Holdings Corporation; from May 1999 to Jan.
2003, Vice Secretary of CPC, director in SPG. From Jan. 2003 to Feb. 2009, Chairman
of the Supervisory Committee of the Company.
4. Xu Zhenhan: once had been commander-level secretary in charge, 802 Regiment,
Capital Construction Engineer Corps; clerk, Vice Secretary of Discipline Inspection
Committee, director of the CPC Office, Secretary of Discipline Inspection Committee,
Vice Secretary of the CPC in Shenzhen Mechanical Equipment Installation Company;
Vice Secretary of Discipline Inspection Committee of Shenzhen Construction
Investment Holdings Corporation. From Oct. 2004 to 2 Feb. 2009, he held the post of
Vice Secretary in Discipline Inspection Committee of Shenzhen Investment Holdings
Co., Ltd. From Jan. 2003 to Feb. 2009, he was director of the Company and has been
Chairman of the Supervisory Committee since Feb. 2009.
5. Peng Naidian: from Jul. 1973 to Dec. 1984, he successively acted as section chief,
vice minister, and standing member of Secretary Department, Young Farmer
Department, Publicity Department, Secretariat, Communist Youth League Guangdong
Committee, and concurrently director of the Publicity Department; from Jan. 1985 to
May 1992, superintendent, and member of the CPC Organization in Guangdong
Institute of Foreign Trade & Economic Development; from Jun. 1992 to Sep. 1996, he
was Assistant to General Manager and Chairman of the Labor Union in Shenzhen
Huihua Group Co., Ltd.; from Sep. 1996to Feb. 2009, he worked as director and Vice
Secretary of the CPC and Secretary of Discipline Inspection Committee.
6. Zhou Hanjun, male, Han nationality, born in Oct. 1969, native place of Sichuan,
is certified public accountant and certified tax agent. He once worked as accountant
and Deputy Section Chief of Financial Section in the Second People’s Hospital of
Neijiang, Sichuan; Chief accountant in Chongqing Metro Group Co., Ltd; auditor in
Shenzhen East Sea Certified Public Accountants. Now he was partner of Shenzhen10
Guangxin Certified Public Accountants and Shenzhen Junxin Certified Tax Agent Co.,
Ltd. He has been independent director of the Company since Feb. 2008.
7. Zong Dechun: from Jan. 1981 to Aug. 1983, worked as director of the Political
Department, 304 Regiment, Capital Construction Engineer Corps; from Sep. 1983 to
Feb. 1986, Vice Secretary of the CPC, Shenzhen No. 5 Construction Engineering Co.,
Ltd.; from Mar. 1986 to Nov. 1996, Division Chief of the HR Department, Chairman
of the Labor Union, Chairman of the Supervisory Committee, Shenzhen Construction
Group; from Dec. 1996 to Jun. 2002, Secretary of the Discipline Inspection
Committee, Chairman of the Supervisory Committee in Shenzhen Construction
Investment Holdings Corporation; in Jul. 2002, he retired; since Jun. 2004, he was
engaged by the Company and held a position of independent director.
8. Hou Liying: from Aug. 1982 to Aug. 1984, acted as Assistant Economist,
Development & Design Research Institute, China National Offshore Oil Corp.; from
Sep. 1984 till now, associate professor, masters’ instructor, College of Management,
Shenzhen University. In Jun. 2004, she was engaged as the independent director of the
Company.
9. Liu Ying, female, Han nationality, bachelor degree, is an economist. She was born
in Changchun, Jili in Jul. 1962. She ever took the posts of clerk and Senior Staff
Member in China Power Equipment Bidding Center of State Commodities Bureau, of
Principal Staff Member and League Secretary in China Power Equipment Bidding
Center of Economic and Trade commission of the State Council, of Deputy Manager
of Security Dept., Manager and Director of GM Office in Shenzhen Hongchang
Industrial Co., Ltd., of Deputy Director of the Office and principal Head of Assets
Operation Dept. in Shenzhen Trade Investment Holding Corporation, and of senior
Head of the Assets Operation and Management Dept. and principal Head of the
Property Management Dept., Assets Management Dept., the 2nd Enterprise in
Shenzhen Investment Holdings Co., Ltd. From Sep. 2006 to Feb. 2009, she was
director of the Company.
10. Wen Li, female, Han nationality, master degree, is an engineer as well as
economist. She was born in Sichuan in Dec. 1969. She ever took the posts of Engineer
of Real Estate Development Dept. in Shenzhen Zhenye (Group) Co., Ltd., of Assistant
GM, Project Manager as well as Manager of Market Planning Dept. in Fantasia
Investment Development Co., Ltd., and of Deputy Manager in Shenzhen Investment
Holdings Co., Ltd. She is acting as director of the Company since Sep. 2006.
11. Chen Junyi, male, 49 years old, party member of CPC, bachelor degree, political
engineer. He was born in Xiangyin, Hunan. He ever took the posts of Section Chief of
Organization Department in Bureau of Mine, of Director of GM Office in Shenzhen
Xinguang Milk Union Corporation, of Director of GM Office in Shenzhen
North-South Industrial Co., Ltd., of Section Chief and Deputy Director of Shenzhen
Huihua Group Corporation, of Deputy Director of Discipline Inspection Supervisory
Office in SPG Group, of Deputy GM in Shenzhen Properties & Resources
Development (Group) Ltd., of Deputy GM and concurrently Secretary of Labor Union
in Shenzhen Petrel Hotel Co., Ltd. He now acts as Deputy Director of Work Dept. of
CPC and Discipline Inspection Commission in SPG Group. From Apr. 2006 to Feb.
2009, he acted as the employee supervisor of the Company.
12. Zhang Xuxi, male, the Han nationality. He was born in Meizhou, Guangdong in
May 1976. He ever took the posts of Enterprise Law Adviser and Deputy Manager of
Law Affair Office in the Company. From Apr., 2006, he acted as the employee
supervisor of the Company.
13. Xiong Xingnong: Jan. 1982 to Jan. 1983, trainee, Party school, Guangzhou11
Railway Administration; Jan. 1983 to Dec. 1995, office secretary, consultant, section
chief, Guangzhou Railway Administration; Jan. 1996 to Mar. 2004, office director of
SPG; Mar. 2004 till now, Vice Director of Office of the Supervisory Committee. Since
Jun. 2004, he has been taking the post of supervisor of the Company.
14. Deng Kangcheng: from Jul. 1991 to Dec. 1991, he was technician of Shenzhen
Luohu Material Trading Center; from Dec. 1991 to Mar. 1997, Assistant Engineer,
deputy section chief and section chief in Shenzhen Construction Earthwork
Mechanical Engineering Company; from Apr. 1997 to Sep. 2004, supervisor, vice
director and director in Discipline Inspection and Supervision Office of Shenzhen
Construction Investment Holdings Corporation; Oct. 2004 till now, he acted as deputy
director, director of the Office of Shenzhen Investment Holdings Co., Ltd. From Jun.
2004 to Feb. 2009, he was elected as supervisor of the Company and acts as director
since Feb. 2009.
15. Luo Kunquan: from Oct. 1987 to Sep. 1990, he was vice factory director of
Guangdong Xingning County Brewage Machinery Factory; from Sep. 1990 to Jul.
1993, he worked as Manager in Guangdong Xingning County Foreign-Invested
Enterprise Resources Company; From Aug. 1993 to Dec. 1993, General Manager of
Shenzhen Communist Youth Industrial Park Industrial Company; from Dec. 1993 to
Jun. 1994, Manager of Shenzhen Shenhua Enterprise Company; from Jun. 1994 to
Nov. 1998, Manager of Shenzhen Shenhua Property Development Company; from
Nov. 1998 to Dec. 2002, Deputy General Manager of Shenzhen Shenhua Group
Company; from Dec. 2002 to Dec. 2005, Deputy General Manager of the Company.
He took the post of Standing Deputy General Manager of the Company since Dec.
2002.
16. Luo Zichao: from Oct. 1984 to May 1993, he was assistant, office director, chief
assistant in Shenzhen Design & Decoration Engineering Company; from May 1993 to
Jul. 2003, General Manager and Vice Secretary of the CPC Committee in Shenzhen
Design & Decoration Engineering Company; from May 1999 to Jul. 2003, General
Manager, Shenzhen Construction Engineering Contractor Corporation; from May
1999 to Jul. 2002, Chairman of the Board, Shenzhen Architectonic Industrial Co., Ltd.;
he took the post of Deputy General Manager of the Company since Jul. 2003.
17. Song Gongli, male, Han nationality, party member of CPC, master degree. He
was born in Changgeng, Henan in June 1956. He ever took the posts of officer and
Senior Staff Member of budget office in Guizhou Provincial Department of Finance,
of Principal Staff Member of Economic Development Bureau of Shenzhen
Municipality Office, Deputy Manager in Shenzhen Foreign Trade Investment
Corporation, Deputy Division Chief of Travel Service and Division Chief of Planning
& Financial Division in Shenzhen Trade Development Bureau, Director General in
Shenzhen Travel Bureau Quality Supervision Institute; Principal of Financing, Head
of Enterprise Management Dept, Director of the Office and Assistant President in
Shenzhen Trade Investment Holding Corporation, Director of the Office in Shenzhen
Investment Holdings Co., Ltd. From Aug. 2006 to Feb. 2009, he acts as the post of
Deputy GM of the Company.
18. Yang Jiayong, male, Han nationality, party member of CPC, master degree, is
an economist. He was born in Maoming, Guangdong in Nov. 1972. He ever took the
posts of Assistant Economist, Assistant of Manager of HR Dept. in Shenzhen Tonge
(Group) Co., Ltd, Director of the Office, Secretary of Party General Branch, Manager
of HR Dept. and Assistant GM in Shenzhen Cities Construction Investment
Development Corporation, Director of the Office and Assistant GM in SPG, GM and
Secretary of Party General Branch in Shenzhen SPG Tariff Free Trade Co., Ltd. Since12
Jul. 2006, he acted as the post of Deputy GM of the Company.
19. Chen Ji: from Jul. 1995 to Jul. 1996, he was clerk of the Comprehensive Office in
Tonge Truck Transportation Company; from Jul. 1996 to Mar. 2001, secretary of the
CPC Office in Shenzhen Construction Investment Holdings Corporation; from Mar.
2001 to Dec. 2002, director of the CPC Office of Shenzhen Urban Construction
Investment Development Company; from Dec. 2002 till now, he takes the posts of
Secretary to the Board, Director of the Board Office of the Company.
III. Annual remuneration
Annual payment system had been introduced into the rewards for the proprietors,
whose annual remuneration level and distribution regulation was implemented in
compliance with the relevant regulation of the State-owned Assets Supervision and
Administration Commission and municipal investment holdings company, the basic
payment was RMB 20,000 per month and performance annual remuneration and
encourage annual remuneration would be distributed after approving by municipal
investment holdings company. The remuneration level and distribution regulation of
Chairman of the Supervisory Committee of the Group Company would be decided in
line with the remuneration level of General Manager of the Group Company that was:
the basic payment was RMB 20,000 per month. The remuneration level and
distribution regulation of deputy leaders of the Group Company was decided in line
with the remuneration level as well as the performance appraisal of the proprietors
that was: the basic payment was RMB 15,000 per month.
Xu Zhenhan, Liu Ying and Wen Li, the Director of the Company, Deng Kangcheng,
the Supervisor of the Company, drew their payment from shareholding companies, not
from the Company.
Allowance for each independent directors for the year 2007 was RMB 36,000
(before tax), and they received no other rewards besides this from the Company.
IV. About resign, engagement and Dismissal
1. The Extraordinary Shareholders’ Meeting on 26 Feb. 2008 disposed Li Qiusheng
from independent director, and elected Zhou Hanjun as independent director.
2. In the report period, there was no additional director, supervisor and senior
executives. Reelection of the Board of Directors and the Supervisory Committee has
been completed at the Extraordinary Shareholders’ Meeting on 26 Feb. 2008.
V. Number of employees, professional composition, education background and
retired employees
At the end of 2007, the Company had totally 1,926 employees, of which 1,277
production personnel, 51 sales personnel, 491 technicians, 48 financial personnel and
59 administrative personnel. Among them, 151 personnel are undergraduates or above,
221 personnel are holder of associate degree, 187 graduated from technical secondary
school, 1367 from senior high school or below. The Company had 313 retirees.13
Section VI Corporate Governance
I. Actual status of governance corporate of the Company
In the report period, the Company strictly accorded with requirements of Company
Law, Securities Law, Administrative Rules for Listed Companies and other laws and
statutes, in accordance with the requirements of the special campaign to Strengthen
the corporate governance form the CSRC and the rectification requirements after
in-process checking from the Shenzhen Securities Bureau, the Company continuously
perfected its corporate governance, standardized its operation. The actual situation of
legal person governance was in line with the requirements of the relevant normative
documents.
(I) Preparations and holding of the shareholders’ general meeting and disclosure of
resolution of the meetings were normatively in line with Articles of Association and
Rules for Procedure of the Shareholders’ General Meeting; all shareholders were on
an equal position and could fully exercise their legal rights.
(II) Directors and the Board of Directors: power of decision-making was exercised
normally, reparations and holding of the Board meeting and disclosure of resolution of
the meetings were normatively in line with the Articles of Association and Rules of
Procedure for the Board of Directors; all directors performed their obligations in an
honest and diligence manner. In order to perfect the decision-making mechanism of
the Board, the Company formulated working rules for special committees such as e
strategy committee, audit committee, nomination committee and remuneration &
appraisal committee, which guaranteed for scientific operation of the Board of
Directors.
(III) Supervisors and the Supervisory Committee: structure of the Supervisory
Committee were reasonable. The Supervisory Committee conducted the supervision
and inspection for the significant events of the Company strictly in accordance with
the Rules for Procedure of the Supervisory Committee, and exercised its supervision
right effectively and brought its supervision function into full play.
(IV) Manager level: the manager level of the Company was fully responsible for the
production and management of the Company, other Senior Executives performed their
obligations in an honest and diligence manner. The manager level of the Company
implemented the resolution of the Board with efficient supervision and control.
(V) Information disclosures and transparency: the Board of Directors seriously
performed information disclosure obligations strictly according to the relevant laws
and regulations and the Articles of Association of the Company, paid much attention
to the investors’ management, opened the Company’s communication platform,
performed the obligation of information disclosure, and could publish all significant
information in true, accurate, complete and timely manner.
II. Duty performance of Independent Directors
In the report period, the Company’s independent directors fully performed their duties
in line with the requirements of the relevant laws and the Articles of Associations,
expressed independent opinion seriously and analyzed professionally on significant
matters, played the important roles on normative operation of the Company.
Independent Directors’ attendance of Board meetings:
Name Times of Times of Times of Times of absent14
meetings should
attended
attendance in
person
entrusted
voting
from on-the-spot
meeting
Zong Dechun 7 7 0 0
Hou Liying 7 6 1 0
Zhou Hanjun 6 6 0 0
III. The Company was independent from the controlling shareholders in business,
personnel, assets, organization and financing of the Company, possessed independent
operation capabilities facing market.
(I) In respect of business, the Company possessed independent production, supply
and sales system;
(II) In respect of personnel, the Company was absolutely independent in management
of labor, personnel and salaries from the controlling shareholders. All the senior
executives of the Company took no office title concurrently and drew no
remunerations from the Shareholder Company.
(III) In respect of assets, the Company possessed independent and integrated assets
and the property of the Company is transparent.
(IV) In respect of organization, the Board of Directors and the Supervisory Committee
operated independently. There existed no superior-inferior relationship between the
controlling shareholder and its function department and the Company.
(V) In respect of finance, the Company has independent financial department,
independently accounted and paid taxes according to the law. The Company
established a complete accounting system, finacial accountng system and financial
administrative systems. The Company opened independent bank accounts.
IV. Establishment and perfecting of internal control
The Company paid great attention to the construction and improvement of the internal
control, set down the Rules Collections of Shenzhen Special Economic Zone Real
Estate & Properties (Group) Co., Ltd., totaling 32 rules covering meeting, human
resource, management on production operation, financial management, audit
management and construction of the enterprise culture. The Company produced the
management and control system and 68 business procedure in 2007, which was
implemented fully to strengthen the regulated operation and internal control, to ensure
the healthy operation of all business activities.
(I) Self-appraisal on internal control
1. General appraisal on internal control by the Board of Director
In 2008, with effort of the Board of Directors and managements and according to
provisions in the Company Law, Securities Law, Rules for Listing Shares in Shenzhen
Stock Exchange and Articles of Association, the Company set up a set of completed
internal control system. Firstly, the Company perfected corporate governance
structure, standardized work of the Shareholders’ General Meeting, the Board of
Directors, the Supervisor Committee and operating group. In 2008, based on standard
governance in the previous years and combined with inspection of CSRC, the
Company further resolved problem in system of the Shareholders’ General Meeting,
the Board of Directors and Supervisor Committee, revised Articles of Association,15
strengthened financial management and accounting calculation, set up organization
under the Board of Directors, such as Audit Committee, Strategy Committee,
Remuneration & Appraisal Committee and Nomination Committee, which formed
standard operating mechanism with core of the Board of Directors.
2. Important activities to be controlled
(1) Organizational structure
(2) Control on key business
For relationship of holding subsidiaries, the Company roundly managed and
controlled financial management, internal audit, human resource, property right
Shareholders’ General Meeting
The Board of Directors
Management Leader
The Supervisory Committee
Audit Committee
Strategy Committee
Expert review Team
Shenzhen Special Economic Zone Real Estate (Group) Guangzhou Real Estate Co., Ltd (100%)
Shenzhen Property Management Co., Ltd. (100%)
Shenzhen Petrel Hotel Co., Ltd. (100%)
Shenzhen SPG Longgang Development Co., Ltd (100%)
Shenzhen SPG Mini-bus Rent Co., Ltd. (100%)
Shenzhen Huazhan Construction Supervision Co., Ltd. (100%)
Remuneration & Appraisal Committee
Secretariat of the Board
Office
Party-masses Work Department
Human Resource Department
Planning Finance Department
Audit Supervisor Department
Enterprise Investment Management Dept
Design Department
Property Management Department
Marketing Service Department
Engineering Technology Department
Cost Control Department
Shenzhen Zhentong Engineering Co., Ltd. (100%)
Xin Feng Property Co., Ltd (100%)
Great Wall Estate Co., Inc (70%)
Stock Participant Enterprises
Xin Feng Enterprise Co., Ltd. (100%)16
supervision, general budget and project investment & implementation in accordance
with supervision system and Provisional Measures for Operation and Management of
Subsidiaries of the Company and with principal of limited self-decision management,
inspected, guided and supervised business development of subsidiaries, and verified
and appraised roundly according to Responsibility Agreement on Target. The
Company strengthened construction and execution of business all around, effectively
perfected relevant management system and all departments operated 68 business
procedures.
There were no significant related transaction, guarantee or raised proceeds.
Information disclosure was strictly in line with provisions in Rules for Listing Shares
in Shenzhen Stock Exchange and Articles of Association.
Control on business: in respect of financial management, the Company strictly
executed Provisions on Financial Management and its business procedure and
controlled risk of capital; in respect of main business, with precondition of controlling
risk, the Company executed all regulations of management on tendering and biding,
leasing management, management on Safety Production and Sales Management
formulated, and ensured that main business keep stable in the severe economic
situation.
3. Plan on perfection of internal control
The Company will accord with requirements of Basic Standard for Enterprise Internal
Control jointly issued by Ministry of Finance and other ministries and Guidelines of
Shenzhen Stock Exchange for the Internal Control of Listed Companies, revised and
perfected significant regulations and rules of the Company, importantly executed
supervision and control system and business procedure, further cleared power and
responsibilities in decision making, supervision and execution and authorization
mechanism of the Board of Directors, the Supervisory Committee and managements,
reasonably estimated and perfected running internal control system, which will
enhanced internal control of the Company when further improve operation efficiency.
4. Self-appraisal on internal control by the Board of Directors
The Board of Directors considered that the Company established perfect internal
control system in decision making, execution, supervision and every key links, and
design of system was reasonable and effective. The Company must continuously
perfect internal control system in accordance with new rules and work guideline,
ensure standard governance, effective internal control, improvement of management
efficiency and risk control.
(II) Independent opinions on self-appraisal of internal control expressed by
Independent Directors
We reviewed self-appraisal on internal control 2008 by the Board of Directors, now
the appraisal opinions are as follows: in 2007, taking the advantage of the special
campaign to further strengthen the corporate governance, the Company revised and
perfected the all kinds of rules of internal control; aiming to strengthen internal
control, the Company perfected the management and control system and business
procedure, let the internal control system covered the all operation parts and links of
the Company basically, defended, found and rectified the deviation which was
possible to happen in the process of operation, safeguarded the rights and benefits of17
all shareholders, confirmed the accounting records and accounting information’ s
trueness, accuracy and timeliness. The key activities of internal control operated in
conformity with the relevant regulations of internal control in the Company. The
self-evaluation of internal control was in line with its actual situation.
V. Regular activities of corporate governance and rectification of inspection from
Shenzhen Securities Bureau
Shenzhen Securities Regulatory Bureau inspected the Company on the spot during
Sep. 13, 2007 to Sep. 29, 2007, and issued the Circular on Demanding Shenzhen
Special Economic Zone Real Estate & Properties (Group) Co., Ltd to Rectify within a
certain time limit (SZJ [2007] Document No. 127) (hereinafter referred to as “the
Circular”), which pointed that there was some problems in independence of the
company, operation of the Board of Director, the Supervisor Committee and the
Shareholders’ General Meeting, rules, information disclosure, finance management
and accounting settlement. The management officer of the Company paid much
attention the problems showed in the Circular, organized relevant department to
rectify comprehensively.
Combined with inspection of Shenzhen Bureau at the end of 2007, in 2008, the
Company revised Articles of Association, Rules for Procedure of the Supervisory
Committee, enhanced financial management and accounting settlement, set up audit
committee, strategy committee, remuneration committee and nomination committee
under the Board of Directors, formed regular operation mechanism with core of
corporate governance. On 25 Jan. 2008, the Board of Directors reviewed and
approved Rectification Report on Problems found in inspection by CSRC Shenzhen
Bureau, confirmed person in charge of rectification and limitation of time, and all the
problems had been rectified effectively. For details, please refer to China Securities
Journal and Hong Kong Ta Kung Pao dated 26 Jan. 2008 as well as
http://www.cninfo.com.cn. In 2008, the Company formulated and perfected Work
System on Annual Report for Independent Directors, Audit Procedure of Audit
Committee for Annual Report and Work Rules for General Manager and so on.
There was no irregular corporate governance in the Company, nor proving
undisclosed information to actual controller. Original system on report of
representative of property has been cancelled.
In accordance with filling requirement of information system for state-owned assets
administration of State-owned Assets Supervision and Administration Commission of
Shenzhen Municipal Government, the Company submitted monthly financial indices
to Shenzhen Investment Holding Corporation periodically before 10th of each month,
which was submitting non-public information to principal shareholder. In accordance
with requirements of Circular on Strengthening Supervision and Administration of
Providing Non-public Information to Principal Shareholders and Actual Controller
issued by CSRC Shenzhen Bureau, the Company reported list of person who know
non-public information to Shenzhen Bureau each month.18
Section VII Brief introduction to the Shareholders’ General Meeting
The 16th Shareholders’ General Meeting (Annual Shareholders’ General Meeting for
the year 2007) was held at 9:30 on Jun. 24, 2008, in which examined and approved
the Working Report of the Board of Directors 2007, Working Report of the
Supervisory Committee 2007, Profit Distribution Plan 2007, Annual Report 2007 and
Proposal of Reengagement of Certified Public Accountant for Auditing, and shaped
relevant resolutions. Resolutions at the meeting were published in China Securities
Journal, Ta Kung Pao and website http://www.cninfo.com.cn designated by CSRC on
Jun. 25, 2007, the Board of Directors implemented the resolutions strictly with the
authority under the shareholders’ general meeting.
The 1st Extraordinary Shareholders’ General Meeting 2008 was held at Feb. 26, 2008,
at which reviewed and approved Proposal on Replacement of Independent Directors,
Proposal on Election of Independent Directors, Program on Revising Articles of
Association, Program on Revising Rules of Procedure for the Supervisory Committee
and Program on Payment of Senior Executives, and shaped relevant resolutions.
Resolutions of the meeting was published in China Securities Journal, Ta Kung Pao
and website http://www.cninfo.com.cn designated by CSRC on Feb. 27, 2008.19
Section VIII Report of the Board of Directors
I. Retrospect on overall operation during the report period
(I) Discussion and Analysis of the management
It is unusual year of 2008 regardless for the world or China. Due rapid spread of
global financial crisis, market environment was worse. As real estate industry, which
was close to finance and capital market and influenced by financial crisis most
directly, the Company faced strike and challenge.
With severe ordeal of financial crisis, we was in line with principal of “Improvement
of Management, Create of Brand, as quickly as possible and Increase of Reserves”,
deepened activity of “Year of Development and Improvement”, advanced stable
development of all work; pay attention to scientific and durative development,
decisively adjusted operating strategy, flexibly deal with market crisis; managements
were diligent and responsible, staff worked hard, and accomplished annual operating
target. In order to confront sudden outbreak of financial crisis and depression of real
estate, we properly proposed two countermeasure, that is, complete operating task and
accelerate exploitation and sales by every possible means; preserve in improvement of
management and increase of land reserve.
(II) Overall operation
In 2008, the Company realized total profit amounting to RMB 41.03 million, down
20.57 % year-on-year; net profit attributable to shareholders of listed companies
amounting to 19.120 million, down 50.97% year-on-year. Main reason for decrease of
profit was large-margin decrease of investment income in the report period
(investment income in last year from disposal of equity of Shenyang Tongxin Real
Estate Development Limited Company and Shenzhen Bafangtong Railway Storage &
Transportation Co., Ltd was RMB 11.020 million and 116.37 million respectively).
Income from change of fair value changed to negative benefit from benefit of last year,
withdrawal of reserve for falling price of inventories being RMB 1.35 million and loss
from lawsuit was RMB 6.4 million during the report period.
In 2008, the Company realized operating income RMB 706.01 million, with an
decrease of 16.46% year-on-year, which was because income from sales of real estate
decreased 37.65% year-on-year.
Income from sales of real estate, leading business of the Company, was RMB 318.34
million, with an decrease of 37.65% year-on-year, which was mainly due to influence
of macro adjustment on real estate market of 2008.
Lease income was RMB 68.16 million, up 27.48% year-on-year, which was mainly
because the Company seriously analyzed lease market, followed change of market,
enhanced consciousness of service, improved property environment, widened leasing
channel, realized “stabilization of regular customer and exploitation of new
customers”, and the rent rate increased to 93.64% from 90.01% of last year.
Income from construction fixing was RMB 198.64 million, up 18.15% year-on-year,
which was mainly because Shenzhen Zhentong Engineering Co., Ltd strengthened
contracting projects and successful bid increased.
Income from property management increased 10.01% year-on-year, income from
hotel and other service remained the same with last year.
II. Scope and status of main business
The Company belongs to real estate industry and is engaged in the development of
real estate and sales of commercial house, lease and management of property,
construction decoration and fixing, retail and trade of commodities and hotel and
dietetic service.20
1. Composing of income from main operations and profit from main operations
classified according to industry:
Industry Operating income Operating cost Gross operating profit
2008 2007 2008 2007 2008 2007
Real estate 318,341,233.41 510,543,751.94 156,884,141.75 342,581,402.58 161,457,091.66 167,962,349.36
Construction fixing 198,643,152.28 168,119,414.61 189,063,593.50 156,567,107.62 9,579,558.78 11,552,306.99
Lease 68,156,645.38 53,462,110.04 34,783,068.61 36,504,754.95 33,373,576.77 16,957,355.09
Property management 90,591,169.68 82,346,479.41 74,760,638.91 67,086,498.17 15,830,530.77 15,259,981.24
Hotel and other services 30,273,123.66 30,655,770.44 17,658,843.94 18,901,274.60 12,614,279.72
11,754,495.84
Total 706,005,324.41 845,127,526.44 473,150,286.71 621,641,037.92 232,855,037.70 223,486,488.52
2. Composing of income from main operations and profit from main operations
classified according to areas
Operating income Operating cost Gross operating profit
Area
2008 2007 2008 2007 2008 2007
Domestic:
Guangdong Province 704,312,668.41 843,585,909.43 471,333,454.43 619,793,339.53 232,979,213.98
223,792,569.90
Overseas: 1,692,656.00 1,541,617.01 1,816,832.28 1,847,698.39 -124,176.28 -306,081.38
Total 706,005,324.41 845,127,526.44 473,150,286.71 621,641,037.92 232,855,037.7 223,486,488.52
III. Operations achievements of main wholly-owned affiliated companies and
shareholding companies (the consolidated statement)
Full names of subsidiary
companies
Registered
address
Registered
capital
(RMB’0000)
Business type
and scope
Balance of net
investment
(RMB’0000)
Equity
Total
assets
(RMB’00
00)
Net assets
(RMB’0000
)
Operating
income
(RMB’0000)
Net profit
(RMB’00
00)
Shenzhen Petrel Hotel Co., Ltd. Shenzhen 3,000 Hotel Service 3,000 100% 5,649 3,663 2,537 44
Shenzhen Property Management
Co., Ltd. Shenzhen 725 Property
management 725 100% 8,135 1,011 9,396 229
Shenzhen Zhentong Engineering
Co., Ltd.
Shenzhen 1,000
Fixing and
maintenance of
projects
1,000 100% 6,381 855 21,891 27
Shenzhen Huazhan Construction
Supervision Co., Ltd. Shenzhen 800 Construction
and supervision 800 100% 811 745 304 13
Shenzhen SPG Mini-bus Rent
Co., Ltd. Shenzhen 1,029 Rent of mini-bus 1,029 100% 1,644 1,321 412 110
Shenzhen SPG Longgang
Development Co., Ltd
Shenzhen 3,000 Development of
real estate
3,000 100% 18,223 -1,946 - -773
Shenzhen Special Economic Zone
Real Estate (Group) Guangzhou
Real Estate Co., Ltd
Guangzhou 2,000 Development of
real estate 2,000 100% 2,368 2,007 - -5
Xin Feng Property Co., Ltd Hongkong HKD100 Investment and
management 9,870 100% 58,924 1,222 22,571 4,364
.Great Wall Estate Co., Inc. USA USD50 Development of
real estate 11,122 70% 1,933 -8,653 75 -1
Xin Feng Enterprise Co., Ltd. Hongkong HKD100 Investment and
management
66,358 100% 24,772 -44,445 5,909 2,760
IV. Main suppliers and customers21
Unit: RMB’0000 Yuan
2008 2007
Items
Sales amount
Proportion in
total sales income
Sales amount
Proportion in total
sales income
Total sales amount of the top five customers 8,486 12.02% 5,064 5.99%
V. Problems, difficulties, and solution plans in operation
1. Problems and difficulties
(1) Bottleneck of Resource has not broken through, and there were hidden troubles in
sustainable development. In 2008, there were no gains in land reserves, and the
Company just won the bid of 8,443 ㎡ land of Jinhu Road in Shantou.
(2) Capital market environment was worse, and financing was more difficult. Owing
to slowing of callback of sales fund, demand for financing of the Company increased.
However, the capital market was impacted by financial crisis, credit and loan from
bank was more carefully, and it was more difficult to enlarge credit line.
2. Proposed solutions for the above problem and difficulty:
(1) Increase of land reserve timely and appropriately
The Company will widely collect information on sales of land, strengthen market
research and investigation, and make effort to increase land reserves in Shenzhen,
Guangzhou, Shantou or Pearl River Delta Region.
(2) Strengthen financial management and improve use efficiency of capital
The Company will properly management of all capital, enhance cash flow
management, improve overall planning transmission, widely extend financing channel,
further strengthen cooperation with bank enterprises, accelerate callback of capital
and enhanced management of accounts receivable.
VI. Investment
1. There was no raised proceed in the report period, nor was there any proceeds raised
in previous periods yet still used in the report period.
2. Significant Investment Projects with Non-Raised Proceeds
Name of projects Project value (Unit:
RMB 0,000)
Progress of projects Income from projects
The 3# Building of Star Lake
Garden 1,644.15 The project was completed at the beginning
of 2008.
Switching back profit of RMB
22,280,000
Shui Yun Tian Ya Garden, and
Ming Garden 472.15
The Company has submitted the working
drawing to apply for building the two
gardens.
None
Shantou Jinye Island
International Garden 18,698.05 The project is in development stage by
stage.
Switching back profit of RMB
22,5710,000
North of Jinhu Road 5,353.89 It is the newly increased land, and the
project is in contemplation
None
Total 26,168.24 - -
VII. Analysis on Financial Status and Business Achievements in the reporting period
(I) Analysis on Financial Status22
1、Comparison with Major Financial Indexes Unit: RMB 0,000
Items Amount at the
period-end
Amount at the
period-begin
Increase or decrease
amount
Increase
or
decrease
range（%）
Main reasons
Total assets 226,565.68 230,272.50 -3,706.82 -1.61 There was no obvious change.
Bank and Cash
32,841.34
45,191.51
-12,350.17 -27.33
It was mainly because the Company paid to buy
the land and received less from the sale of
property in this year.
Transaction
monetary assets
18.95
64.55
-45.60 -70.64 It was because the value of shares held by the
Company reduced.
Prepayment 2,433.21 2,040.01 393.20 19.27
It was mainly because the progress payment for
subcontracted projects, which should be paid by
subsidiaries engaging in construction, had not
been settled up.
Inventory
94,559.23
82,247.51 12,311.72 14.97
It was mainly because the Company bought the
land for residence project in Shantou Jinhu
Road and increased investment in the 11th phase
Shantou Jinye Island Project in this year.
Accounts
payable
23,044.68 18,126.00 4,918.68 27.14 It was mainly because of the increase in project
funds.
Advance from
customers 13,013.45 20,699.38 - 7,685.93 - 3 7 .1 3 I t was mainly because of the decrease in
advance from customers in sale of property.
Taxes and fees
payable
225.19
-304.17
529.36 174.03
It was mainly because the project of Guangzhou
Huangpu Elegant Garden had settled the Land
Appreciation Tax, which led to the increase of
Land Appreciation Taxes payable.
Interests
payable
788.81
290.13 498.68 171.88
It was mainly because the Company had not
paid the interest of loans from Shenzhen
Investment Holdings Co., Ltd in the 2nd half
year of 2007 and in the whole year of 2008.
Provision
219.67 219.67 Withholding losses due to lawsuits
Owners’ Equity
of listed
companies
120,828.89
118,814.66 2,014.23 1.70
It was mainly because of the net profit increased
in this year and the converted difference in
Foreign Currency Statements.
Non-current
liabilities due
within one
year
1,046.18 2528.01 -1,481.83 -58.62 It was mainly because of the decrease in
long-term loans due within one year
Other
indicators
Amount at the
period-end
Amount at the
period-begin
Increase or decrease
amount
Increase
or
decrease
range（%）
Main reasons
Assets
Liabilities
Ratio (%)
47.16 48.70 -1.54 It was mainly because of the decrease in
advance from customers in sale of property.
Current Ratio 1.86 1.77 0.09 The decreasing amplitude of current assets was
smaller than that of current liabilities.
Quick Ratio 0.57 0.70 -0.13 Among the current assets, inventory increased
relatively fast.
inventory
turnover ratio
(times)
0.535 0.833 -0.298 It was mainly because the inventory increased
and the operation cost reduced.23
2、Comparison on Structure of Major Financial Indexes Unit: RMB 0,000
Dec. 31, 2008 Dec. 31, 2007
Items
Amount Percentage in
total assets (%)
Amount Percentage in
total assets (%)
Percentage
in total
assets (%)
Total assets 226,565.68 100.00 230,272.50 100.00 -
Bank and Cash 32,841.34 14.50 45,191.51 19.95 -5.45
Other payable 4,400.42 1.94 5,051.21 2.23 -0.29
Inventory 94,559.23 41.74 82,247.51 36.30 5.44
Including: accomplished product
development
42,778.61
18.88
27,054.14
11.94 6.94
Product development in
progress 48,651.08
21.47
53,036.87
23.41 -1.94
Total of current assets 135,746.87 59.92 136,134.40 60.09 -0.17
Long-term equity investment 9,283.04 4.10 8,597.84 3.79 0.31
Investment Real Estate 71,902.51 31.74 74,951.10 33.08 -1.34
Fixed assets 7,089.45 3.13 7,632.45 3.37 -0.24
Total of non-current assets 90,818.80 40.08 94,138.10 41.55 -1.47
Accounts payable 23,044.68 10.17 18,126.00 8.00 2.17
Advance from customers 13,013.45 5.74 20,699.38 9.14 -3.40
Other payable 26,291.41 11.60 27,761.56 12.25 -0.65
Non-current liabilities due within
one year
1,046.18 0.46 2,528.01
1.12 -0.66
Short-term loans 5,920.00 2.61 4,700.00 2.07 0.54
Long-term loans 33,034.30 14.58 34,221.43 15.10 -0.52
Total of liabilities 106,852.93 47.16 112,135.30 49.49 -2.33
(II) Analysis on Business Achievements
In the report period, the Management Team of the Company fulfilled its duties with
diligence and faced up to the sever challenge of the financial crisis, under the
leadership of the Board. They actively responded to the crisis, made efforts to tap the
potential and improve the level of refined management, accomplished the annual
business target, as well as increased its land resources at appropriate opportunity.
1. In 2008, the total profit of the Company was RMB 41,030,000, down by 20.57%;
Net income attributed to shareholders of listed companies was RMB 19,120,000,
down by 50.97%. The major influencing factor that caused the decrease of profit was
the sharp decrease in return on investment (in the last year, the Company acquired
return on investment of RMB 11,020,000 and RMB 16,370,000, by disposing equity
of Shenyang Tongxin Real Estate Development Limited Company and Shenzhen
Bafangtong Railway Storage & Transportation Co., Ltd). It was also because the
income from changes in fair value was shifted from profit to negative profit in this
year, the Company withdrew provision for inventory of RMB 1,350,000 and there
was a loss of RMB 6,400,000 due to lawsuits.
2. In 2008, the total business income of the Company was RMB 706,010,000, down
by 16.46%, including the major decrease in income from property sales by 37.65%.
3. Taxes and Fees in the Report Period
(1) Sales tax and other taxes reached RMB 72,880,000, up by 11.22% compared with
RMB 65,530,000 of last year. The increase mainly lies in the increase of Land24
Appreciation Tax.
Items In 2007 (RMB) In 2006 (RMB)
Sales taxes 34,066,890.14 40,560,987.12
Tax on urban maintenance 294,453.17 362,286.05
Extra charges of education funds 570,478.34 870,312.81
Housing property tax 7,597,837.35 6,409,368.10
Land appreciation tax 29,800,780.19 16,869,744.90
other 554,758.48 456,093.61
Total 72,885,197.67 65,528,792.59
(2) Selling expense was RMB 9,304,100, down by 8.47%, which was due to the
decrease of sales income.
(3) Administration expenses was RMB 76,700,500, up by 9.70%, which was a result
of increasing the fees for property certificate handling of RMB 3,460,000 and
refunding the retained staff welfare of RMB 11,870,000 in previous years.
(4) Financial expenses decreased significantly compared with that of last year, which
was because of the decrease in exchange loss, induced by slow variation of exchange
rate.
Classification In 2008 (RMB) In 2007 (RMB)
Interest expense 37,691,766.29 42,036,666.93
Less: amount of capitalization
of interest
10,481,274.23 25,566,161.56
Less: interest revenue 4,222,677.14 4,920,817.96
Exchange loss 5,786,273.36 41,658,689.44
Less：exchange gain 129,580.24 74,905.46
Other 866,291.09 258,135.05
Total 29,510,799.13 53,391,606.44
4. Non-Operating Incomes and Non-Operating Expenses
(1) Non-Operating Incomes
Classification In 2008 (RMB) In 2007 (RMB)
1 、Total gains on disposal of
non-current
3,132,015.82 94,170.00
Including: gains on disposal of fixed
assets
3,132,015.82 94,170.00
2、Amercement income -- 66,360.09
3、Breach penalty -- 2,233,288.00
4. Other 68,056.46 47,738.39
Total 3,200,072.28 2,441,556.4825
(2) Non-Operating Expenses
Classification In 2008 (RMB) In 2007 (RMB)
1. Loss from non-current asset disposal 83,755.93 113,850.02
Of which: loss from fixed asset disposal 83,755.93 113,850.02
2. Expenditure of penalty 5,871.72 2,727,368.63
3. Donation expenditure 562,636.95 218,000.00
4. Expenditure for loss 6,785,703.66 918,156.31
5. Other 146,373.93 100,683.37
Total 7,584,342.19 4,078,058.33
5. Income Tax Expenses
Items In 2008 (RMB) In 2007 (RMB)
Income tax expense in 2008 17,928,912.10 3,460,653.51
Deferred income tax expenses 3,949,656.44 9,264,644.01
Total 21,878,568.54 12,725,297.52
6. Influence on Profit by the Items, Which Were Measured by fair value (Unit: RMB)
Name of items
Balance at
the
period-begin
Balance at the
period-end
Current change
Amount of the
current profit
under its influence
Trading financial assets
645,470.00
189,488.50 -455,981.50 -456,411.50
Total 645,470.00 189,488.50 -455,981.50 -456,411.50
7. The net cash flow from operating activities was RMB -82,530,000, decreasing by
RMB 31,750,000 compared with RMB -50,780,000 of last year. That was mainly
because: the income from development projects decreased in this year; the net cash
flow from investing activities was RMB 5,690,000 down by RMB 4,760,000, from
RMB 10,450,000 of last year, as there was an income from disposing equity of
Shenyang Tongxin Real Estate Development Limited Company and Shenzhen
Bafangtong Railway Storage & Transportation Co., Ltd last year; net cash flow from
financing activities was RMB -43,790,000, down by RMB 6,8280,000 from RMB
24,490,000 of last year, which was because of the decrease in new loans in this year.
VIII. Prospect for Future Development of the Company
General guidelines for operation in 2009: Under the guidance of Scientific Concept of
Development, the Company will focus on preventing risks, striving to survive, seizing
every opportunity, and seeking for development. The Company will insist on
promoting development on the one hand and pushing reform on the other hand, so as
to solve problems occurring in the reform through development, as well as to promote
development of the enterprise through reform. Besides, operation will be given
primary importance among priorities and vigorously developed, management will be
strengthen and plans will be made to revitalize reserves; meanwhile, the Party26
Building, leadership building, and Corporate Cultural Construction will be strengthen
comprehensively so as to provide a firm guarantee for the development and reform for
the Company.
In 2009, the Company will focus on five aspects:
(I) To make every effort to concentrate on major operation and ensure the operation
budget target will be met. 1. It will focus on property sales and property lease; 2. All
enterprises under the Company shall seriously implement the target task of overall
budget management, and ensure the target of management responsibility is fully
accomplished, through improving operation management and strengthening control
over costs. 3. The Company will attach importance to construction in progress. 4.
Adequate attention will be paid to preparation for new projects. 5. Land reserves shall
be increased adequately at appropriate opportunity.
(II) To enhance internal basic administration, and conduct Bushiness Process
Reengineering as well as management innovation, so as to achieve standardized
governance and a effective management in the Company. 1. To improve the corporate
governance structure, and regulate operation. 2. To improve the method of
performance evaluation by means of optimizing operation flow, making quantifiable
standards for performance evaluation, so as to improve management efficiency and
management level. 3. To establish an effective risk management system, based on the
actual situation and business feature of the Company. 4. To enhance finance
management, improve capital utilization efficiency, speed up capital turnover, and
expand financing channels, in order to ensure sufficient capital for management and
development of the Company. 5. To strengthen production safety management and
strictly implement the responsibility system for production safety.
(III) To make greater efforts to revitalize assets, stick to promoting separation of main
from sub, and solve problems left by history as soon as possible.
(IV) To study and make development strategy of the Company, as well as determine
the medium-and-long-term development plan of the Company.
(V) To enhance the Party Building and leadership building, as well as construct new
corporate culture.
IX. Routing Work of the Board of Directors
(I) Meetings and Resolutions of the Meetings of the Board in the reporting period
Details of the Board meetings in 2008 were as follows:
1. On Jan. 25, the 1st Board meeting was held at the meeting room of the Company,
with attendance of 8 Directors and absence of 1 Director. The meeting deliberated and
approved the Report on In-progress Quality Control and Rectification by Shenzhen
Securities Regulatory Commission, Resolution of displacing Independent Directors,
Resolution of nominating Independent Directors, Revision Scheme of the Articles of
Association, Work Rules for General Managers, Methods for Labor Contract
Management, Payroll Solutions of the Staff in 2008, Resolution of convening the 1st
Extraordinary Shareholders General Meeting in 2008.27
The relevant resolutions of the Board meeting were published on China Securities
Journal, Ta Kung Pao and http://www.cninfo.com.cn on Jan. 26.
2. On Apr. 8, the 2nd Board meeting was held at the meeting room of the Company,
with attendance of 8 Directors and entrusted voting of 1 Directors. The meeting
deliberated and approved the Independent Directors Work System about Annual
Report, Resolution of establishing special committees under the Board, Resolution of
cooperating with the large shareholder to develop Yue Liang Wan Project, Working
Regulation for annual auditing of the Audit Committee under the Board.
The relevant resolutions of the Board meeting were published on China Securities
Journal, Ta Kung Pao and http://www.cninfo.com.cn on Apr. 9.
3. On Apr. 21, the 3rd Board meeting was held at the meeting room of the Company,
with attendance of 9 Directors. The meeting deliberated and approved the Annual
Report 2007 and its Summery, Profit Distribution Preplan 2007, and Annual Report
on Work of the Board 2007.
The relevant resolutions of the Board meeting were published on China Securities
Journal, Ta Kung Pao and http://www.cninfo.com.cn on Apr. 22.
4. On Apr. 25, the 4th Board meeting was held by communication means, with
attendance of 9 Directors. The meeting deliberated and approved the First Quarterly
Report 2008, which had not been disclosed to the public.
5. On May 22, the 5th Board meeting was held at the meeting room of the Company,
with attendance of 8 Directors and absence of 1 Director. The meeting deliberated and
approved the resolution of selling the land of American Company, which had not been
disclosed to the public.
6. On May 30, the 6th Board meeting was held by communication means, with
attendance of 9 Directors. The meeting deliberated and approved the Duty Report of
Independent Directors, Proposal on Reappointment of the Certified Public
Accountants and Resolution of convening Shareholders’ General Meeting.
The relevant resolutions of the Board meeting were published on China Securities
Journal, Ta Kung Pao and http://www.cninfo.com.cn on May 31.
7. On Jun. 3, the 7th Board meeting was held by communication means, with
attendance of 9 Directors. The meeting deliberated and approved the Resolution of
donating money to build wooden houses in earthquake-stricken area of Sichuan.
The relevant resolution of the Board meeting was published on China Securities
Journal, Ta Kung Pao and http://www.cninfo.com.cn on Jun. 4.
8. On Jul. 8, the 8th Board meeting was held at the meeting room of the Company,
with attendance of 9 Directors. The meeting agreed to close down units in Kunshan
Power Plant, and sell the unit capacity. Besides, it also agreed to sell property of
Peninsula Centre of HONGKONG FRESH PEAK REAL ESTATE CONSULTANT
CO., LTD, repurchase the 1st floor of Shenfang Plaza and permit Shantou subsidiary
to bid for the Jinhu Road Project. All decisions on this meeting had not been disclosed28
to the public.
9. On Jul. 16, the 9th Board meeting was held by communication means, with
attendance of 9 Directors. The meeting deliberated and approved the Explanation on
rectification of corporate governance, Self-Check Report on Capital Appropriation by
the Big Shareholders and its Affiliated Parties.
The relevant resolution of the Board meeting was published on China Securities
Journal, Ta Kung Pao and http://www.cninfo.com.cn on Jul. 18.
10. On Jul. 30, the 10th Board meeting was held by communication means, with
attendance of 9 Directors. The meeting deliberated and approved the Proposal on
liquidation of ShenZhen Digital Port Investment Co., Ltd, which had not been
disclosed to the public.
11. On Aug. 20, the 11th Board meeting was held at the meeting room of the
Company’s Shantou subsidiary, with attendance of 9 Directors. The meeting
deliberated and approved the Semi-Annual Report 2008 and its Summery, which had
not been disclosed to the public.
12. On Aug. 20, the 11th Board meeting was held by communication means, with
attendance of 9 Directors. The meeting deliberated and permitted Deputy General
Manager of the Company to sever labor relations with the Company.
The relevant resolutions were published on China Securities Journal, Ta Kung Pao
and http://www.cninfo.com.cn dated 23 Aug. 2008.
13. The 13th Meeting was convened by means of communications on 22 Oct. 2008,
with 9 directors present. And the 3rd Quarterly Report of 2008 was reviewed and
approved at the meeting.
The relevant resolutions were published on China Securities Journal, Ta Kung Pao
and http://www.cninfo.com.cn dated 23 Oct. 2008.
(Ⅱ) Execution of resolutions made at Shareholders’ General Meeting by the Board of
Directors
The 16th Shareholders’ General Meeting (the 2007 Annual Shareholders’ General
Meeting) was convened at 9:30 a.m. on 24 Jun. 2008, at which the following
proposals were reviewed and approved: 2007 Work Report of Board of Directors,
2007 Work Report of Supervisory Board, Plan for Profit Distribution for 2007, 2007
Annual Report, Proposal on Renewing the Employment of the CPA Firm, etc.. And
the relevant resolutions were formed and published on China Securities Journal, Ta
Kung Pao and http://www.cninfo.com.cn (designated by CSRC) dated 25 Jun. 2007.
As authorized by Shareholders’ General Meeting, the Board of Directors faithfully
executed the aforesaid resolutions. In the reporting period, the Company did not put
forward plans for profit distribution or turning surplus capital to share capital, with no
share allotment or new share issuance.
The 1st Provisional Shareholders’ General Meeting in 2008 was convened on 26 Feb.29
2008, where the following proposals were reviewed and approved: Proposal on
Replacing Independent Director, Proposal on Electing Independent Director, Plan on
Revising Articles of Association, Plan on Revising Rules of Procedure for
Supervisory Board, Plan for Remuneration of Senior Management Personnel. And the
relevant resolutions were formed and published on China Securities Journal, Ta Kung
Pao and http://www.cninfo.com.cn (designated by CSRC) dated 27 Feb. 2008. As
authorized by Shareholders’ General Meeting, the Board of Directors faithfully
executed the aforesaid resolutions.
(Ⅲ) Duty fulfillment of Audit Committee of the Board
According to the Circular of CSRC on 2008 Annual Reports of Listed Companies and
Relevant Issues, as well as the No. 2 Norms for Contents and Formats of Information
Disclosure by Listed Companies That Offer Securities to the Public 〈Contents and
Format of Annual Report〉(revised in 2007), the Audit Committee conscientiously
performed its duties and formulated the Rules for Audit Committee Concerning
Annual Reports.
Upon the start of the audit for the 2008 annual report, the Audit Committee actively
conducted communication with the CPA firm to determine the arrangements for the
audit. At the period-end, the Audit Committee convened two meetings, reviewing the
Company’s 2008 financial statements and issuing their opinions after the review. It
also urged the CPA firm to follow closely the audit plan, so as to make sure the
smooth accomplishment of the audit plan. Meanwhile, it made resolutions concerning
the employment renewal of the CPA firm, as well as the fees for the annual audit.
1. Two review opinions issued concerning the Company’s 2008 financial statements
Based on their professional knowledge and experience, the members of Audit
Committee reviewed the 2008 financial and accounting report prepared by the
Company. In the reporting period, according to relevant regulations of CSRC, the
Audit Committee issued two review opinions on the annual financial and accounting
report.
Before the presence of the registered accountants for the 2008 annual audit, the Audit
Committee reviewed the annual financial report prepared by the Company. And the
Audit Committee was of the opinion that: According to the New Accounting
Standards for Business Enterprises, the Company chose and applied a proper
accounting policy, with reasonable accounting estimates. The Company always
adopted a prudent attitude towards the changes of the accounting policy and estimates,
with no such cases as manipulating the changes of the accounting policy and estimates
to adjust the profits. And the financial report prepared by the Company was factual
and reliable with complete contents.
After the preliminary audit opinion issued by the registered accountants on the
Company’s 2008 financial report, the Audit Committee reviewed, for a second time,
the financial report and conducted discussions with the registered accountants. And
they were of the same opinion that the 2008 financial report prepared by the Company
was in accordance with the requirements of the accounting standards for business
enterprises, factually and completely presenting the Company’s operating results and30
cash flows in 2008 and its financial position as at 31 Dec. 2008 in all major aspects.
2. The Committee’s supervising and urging the audit work of the CPA firm
Before the audit, the Audit Committee formulated a comprehensive plan for the
annual audit by discussing and determining the scope and the schedule for the audit
report with the existing CPA firm. Upon the presence of the audit team, the
Committee communicated with the people in charge of the audit project, learnt about
the audit progress and the accountant’s concerns, and timely offered the feedback to
relevant departments of the Company, so as to make sure the progress of the annual
audit and information disclosure in accordance with the set plan.
3. Summary report on the 2008 annual audit conducted by Shenzhen Nanfang Minhe
Certified Public Accountants Co., Ltd.
In accordance with the Public Notice 【2008】No. 48 issued by CSRC, the Audit
Committee summarized the 2008 annual audit conducted by Shenzhen Nanfang
Minhe Certified Public Accountants Co., Ltd. (hereinafter referred to as “Nanfang
Minhe”) as follows:
(1) Preparation before the audit
A. Formulation of the audit plan
The 2008 audit lasted for a period of nearly four months, with the pre-audit started at
Dec. 2008. And the schedule for the audit was detailed as follows:
Started from 10 Jan. 2009, the field audit by Nanfang Minhe on the annual report of
the Company and its holding subsidiaries was finished on 5 Mar. 2009. On 27 Mar.,
the first draft of the 2008 Annual Audit Report was submitted to the Audit Committee
for review. And on 20 Apr., the final version of the 2008 Annual Audit Report was
issued.
B. Review of the financial statements
Before the presence of the registered accountants for the annual audit, the Audit
Committee carefully reviewed the financial statements prepared by the Company and
formed the relevant written opinion.
(2) Audit process
From 10 Jan. 2009, the audit team from Nanfang Minhe conducted a thorough audit
on the Company and its subsidiaries. During the audit process, the Audit Committee,
for several times, urged Nanfang Minhe to closely follow the audit schedule and
finish the audit in time. Nanfang Minhe submitted to the Audit Committee the first
draft of the Audit Report of the 2008 Annual Report on 27 Mar. 2009, and its final
version on 20 Apr. 2009. And this marked the end of the site audit conducted by
Nanfang Minhe on the Company’s 2008 financial report.31
(3) Audit results
Nanfang Minhe issued the standard unqualified 2008 Auditor’s Report to the
Company. And the Audit Committee was of the opinion that Nanfang Minhe
excellently accomplished the audit of the Company’s financial report.
(Ⅳ) Duty fulfillment of Remuneration and Appraisal Committee of the Board
According to the Circular of CSRC on 2008 Annual Reports of Listed Companies and
Relevant Issues, the Remuneration and Appraisal Committee carefully examined the
annual salaries of the Company’s directors, supervisors and other senior management
personnel disclosed in the 2008 Annual Report. And it was of the opinion that: The
decision-making procedure concerning the remuneration of the directors, supervisors
and other senior management personnel was in line with relevant regulations; The
standards for remuneration paid to the Company’s directors, supervisors and other
senior management personnel complied with the remuneration system; And the
remuneration disclosed in the 2008 Annual Report was factual and accurate.
Ⅹ. Pre-plan for profit distribution
As audited by Nanfang Minhe Certified Public Accountants, the Company achieved,
in 2008, a net profit of RMB 19,123,787.11, with the accumulative deficit of RMB
-934,635,245.38. According to relevant laws and regulations, as well as the Articles of
Association of the Company, the net profit in 2008 will be used for covering the
deficit of the previous years. And thus no profit distribution or turning the capital
surplus to share capital will be conducted. After the recovery of the deficit, the
Company’s undistributed profit will stand at RMB -915,511,458.27.
Cash bonus of the Company over the past three years
Unit: RMB Yuan
Amount in cash dividends
(tax included)
Net profit attributable to
owners of parent company
under the consolidated
statement
Ratio in net profit
attributable to
owners of parent
company under the
consolidated
statement
2007 0.00 39,007,992.54 0.00%
2006 0.00 20,150,368.49 0.00%
2005 0.00 12,100,200.79 0.00%
Ⅺ. The newspapers designated by the Company for information disclosure
remained unchanged, namely, China Securities Journal for the domestic
investors and Ta Kung Pao for those overseas.
Ⅻ. Statement and independent opinions of independent directors on the
Company’s provision of guarantees, as well as the Company’s execution of the
Circular on Relevant Issues Concerning Standardization of Fund Transfer
Between Listed Companies and Associated Parties and Provision of External
Guaranty
We have reviewed the Company’s provision of external guarantees and the irregular32
capital occupation by associated parties in the 2008 Annual report and financial report
of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. and
other materials. And we hereby make the statement concerning the Company’s
provision of external guarantees and the irregular capital occupation by associated
parties as follows:
1. The Company provided no guarantees for external parties in the reporting period. In
the reporting period, there existed a balance of property mortgage guarantee of RMB
10.80 million to be paid by the Company. Such a kind of guarantee is a common
phenomenon in the real estate industry. Within the guarantee period (from the date
when the sum is set out by the mortgage banker to the date when the Certificate of
Real Estate of the property purchaser is handled by the mortgage banker), if the
property purchaser does not perform the debtor’s duties, the Company has the right to
take back the properties sold. Therefore, the said guarantee will not cause actual
losses to the Company, with slim possibility of the Company’s taking the several and
joint liability.
2. There existed no irregular occupation of the Company’s capital by its controlling
shareholder. A certain amount of receivables from the related parties was mainly
resulted from the Company’s borrowings to its subsidiaries in the previous years.
Thereupon, we are of the opinion that the Company well executed the Circular on
Relevant Issues Concerning Standardization of Fund Transfer Between Listed
Companies and Associated Parties and Provision of External Guaranty33
Section Ⅸ Report of the Supervisory Board
In 2008, according to Securities Law, Company Law and Articles of Association, with
the great support from the Company’s Board of Directors, its management team and
shareholders, the Supervisory Board, bearing the rights and interests of all the
shareholders in mind, faithfully performed its duty of supervision by participating in
the major operation activities and effectively exercising its right of supervision.
Keeping its focus on the Company’s standardized operation, core assets and major
capital operation, the Supervisory Board managed to keep an effective supervision on
the Company’s expenses and asset risks, as well as a normal operation of the
Company. The Supervisory Board emphasized transparent corporate operation and
democratic decision-making, strengthened its supervision on the information
disclosure and faithfully executed the Rules of Shenzhen Stock Exchange for Share
Listing and other laws and regulations. According to the prescribed procedure, the
Supervisory Board conducted examinations on the reports disclosed by the Company
and its Board of Directors, so as to ensure the factuality, accuracy, completeness and
timeliness of the information disclosed.
Ⅰ. Meetings held by Supervisory Board in the reporting period
(Ⅰ) The 1st meeting was convened on 25 Jan. 2008, at which the Report on
Rectification Following the Supervision by CSRC Shenzhen Bureau was reviewed
and approved.
(Ⅱ) The 2nd meeting was convened on 21 Apr. 2008, at which the 2007 Annual
Report and Its Summary, the Plan for Profit Distribution for 2007 and the 2007 Report
of the Supervisory Board were reviewed and approved.
(Ⅲ) The 3rd meeting was convened on 20 Aug. 2008, at which the 2008 Semi-yearly
Report and Its Summary was reviewed and approved.
Ⅱ. Independent opinions and brief remarks of relevant matters by the Supervisory
Board
(Ⅰ) About the Company’s operation according to laws: In 2008, the members of the
Supervisory Board attended all the board meetings and other important meetings. And
the Supervisory Board was of the opinion that the Company made decisions in
accordance with the Company’s Articles of Association; that the internal management
mechanism and the control system were further improved; that the directors and other
management personnel diligently and responsibly performed their duties; and that the
Company’s operation was basically in line with relevant regulations.
(Ⅱ) About the Company’s self-evaluation of its internal control
In 2008, taking the opportunity of further promoting the special campaign of
corporate governance, the Company adjusted and improved the internal control
systems, which enabled the internal control system to basically cover all the aspects of
the Company’s operation. And the Company timely corrected the errors incurred in
the operation process, with the self-assessment report on its internal control in line
with the actual situation of the Company.34
(Ⅲ) About the Company’s financial status: The Supervisory Board was of the opinion
that the audit opinion issued by Shenzhen Nanfang Minhe Certified Public
Accountants was objective, with the financial report in line with the actual situation
and factually presenting the Company’s financial and operational position.
(Ⅳ) In the reporting period, the Company did not raise any funds.
(Ⅴ) In the reporting period, the Company conducted no related transactions.35
Section Ⅹ Significant Events
Ⅰ. Significant lawsuits and arbitrations
For the details of the significant lawsuits and arbitrations where the Company was
involved in the reporting period, please refer to Note ⅩⅣ of the Financial
Statements.
Ⅱ. The Company did not conduct any major purchases or sales of assets in the
reporting period.
Ⅲ. For the details of the related parties and the related transactions in the reporting
period, please refer to Note Ⅸ of the Financial Statements.
Ⅳ. The Company did not sign any major contracts concerning entrustment,
contracting or leasing in the reporting period. Nor did it entrust other parties with
assets management.
Ⅴ. Particulars about guarantees
Unit: RMB’0000
External guarantees of the Company (excluding guarantees for holding subsidiaries)
Name of the
guaranteed
object
Date of occurring (the
date when the agreement
was signed)
Amount of
guarantee
Type of
guarantee
Term of
guarantee
Accomplished
or not
Guarantee for related
parties (yes or not)
Naught
Total guarantee amount in the reporting period
Total guarantee balance at period-end
Guarantees for holding subsidiaries of the Company
Total guarantee amount for holding subsidiaries in
the reporting period 2800
Total guarantee balance for holding subsidiaries at
period-end
2800
Total guarantee amount of the Company (including guarantees for holding subsidiaries)
Total guarantee amount 2800
The proportion of total guarantee amount in the net
assets of the Company 2.32%
Irregular guarantees of the Company
Amount of the guarantees for holding shareholder
and other related parties of which the Company held
less than 50% shares
0.00
Amount of the debt guarantees directly or indirectly
provided for guaranteed objects with an
asset-liability ratio exceeding 70%
Guarantee amount exceeding 50% of the net assets
(yes or not) Not
Total amount of irregular guarantees 0.00
In the reporting period, there existed a balance of property mortgage guarantee of
RMB 10.80 million to be paid by the Company. Such a kind of guarantee is a
common phenomenon in the real estate industry. Within the guarantee period (from
the date when the sum is set out by the mortgage banker to the date when the
Certificate of Real Estate of the property purchaser is handled by the mortgage
banker), if the property purchaser does not perform the debtor’s duties, the Company
has the right to take back the properties sold. Therefore, the said guarantee will not36
cause actual losses to the Company, with slim possibility of the Company’s taking the
several and joint liability.
Ⅵ. Commitments made by the controlling shareholder of the Company in the share
merger reform, as well as the execution of the said commitments
Shenzhen Investment Holding Co., Ltd. made the following commitments concerning
the relevant matters of the share merger reform of SPG: “ 1. The Company shall abide
by the relevant laws, regulations and rules, and fulfill the legal commitments; 2. The
Company hereby declares that: The promisor shall faithfully fulfill its commitments
and shoulder corresponding responsibilities; Unless the transferee agrees to and is
able to fulfill the commitments, the promisor shall not transfer the held shares. 3. The
Company hereby declares that: Should the promisor fail to fulfill its commitments
prescribed in the relevant documents, it shall compensate the other shareholders for
their losses caused thereupon.” The commitments are currently in the process of
execution;
Shenzhen Investment Holding Co., Ltd. made the following commitments concerning
the conditional sales of its held shares: The shares shall not be listed or transferred
within 12 months from the date when the reform plan is implemented; When the
aforesaid provision reaches its mature term, the originally non-tradable shares may be
listed for trading at securities exchanges, with the proportion of the sold amount in the
Company’s total shares not exceeding 5% within 12 months, as well as not exceeding
10% within 24 months.” And the said commitments have been fulfilled;
In the share merger reform, Shenzhen Investment Holding Co., Ltd. promised to
implement a share incentive plan, where the company was to sell its held shares (not
exceeding 10% of SPG’s total shares) to the SPG’s management on three years’
amortization. On 30 Sept. 2006, the State-Owned Assets Supervision and
Administration Commission of the State Council issued the Trial Measures for
Implementing Equity Incentive Plans by State Holding Listed Companies (Domestic)
(GZFFP【2006】No. 175). The Item 9 of the Trail Measures stipulates that the source
of the subject shares for implementing the equity incentive plan of a listed company
shall not be paid by a single state shareholder and that the state equity shall not be
gratuitously quantized either. Therefore, the equity incentive plan was unable to be
implemented. Nor the concerned commitment of Shenzhen Investment Holding Co.,
Ltd. was able to be fulfilled.
Ⅶ. Particulars about equity incentive
When implementing the share merger reform, it was set forth that: the controlling
holder would sell its held shares (not exceeding 10% of the Company’s total shares) to
the Company’s management on three years’ amortization, with the price determined
according to the net asset value per share as most recently audited during the
implementation. However, the policies concerning the implementation of equity
incentive plan by state holding enterprises had not been introduced by the
State-owned Assets Supervision and Administration Commission of the State Council
at that time. Therefore, the Company did not execute the equity incentive plan which
was stated in the share merger reform plan. On 30 Sept. 2006, the State-Owned Assets
Supervision and Administration Commission of the State Council issued the Trial37
Measures for Implementing Equity Incentive Plans by State Holding Listed
Companies (Domestic). As clearly stated in the Trial Measures, the granting price of
equity of a listed company shall not be lower than the closing price of the subject
shares of the company on the trading day before the promulgation of the equity
incentive plan, or lower than the average closing price of the subject shares of the
company within 30 trading days before the promulgation of the equity incentive plan.
As a result, the concerned commitment of the controlling shareholder was unable to
be fulfilled. Nor the equity incentive plan was able to be implemented. On 17 Mar.
2008, the State-owned Assets Supervision and Administration Commission of
Shenzhen introduced the Interim Measures of Shenzhen on Establishment of
Long-term Efficiency Incentive Mechanism by State-owned Enterprises. According to
the range of the aforesaid policy, the Company would explore the mechanism for
equity incentive.
Ⅷ. The Company engaged Shenzhen Nanfang Minhe Certified Public Accountants to
take charge of the Company’s 2008 annual audit, which had been providing annual
audit service to the Company since 2001. According to the relevant agreement, the
Company was to pay RMB 0.8 million to Shenzhen Nanfang Minhe Certified Public
Accountants as the audit fee.
Ⅸ. In the reporting period, the Company, the Board of Directors of the Company and
its directors received no criticism or condemnations.
Ⅹ. Interviews and visits received by the Company
Reception date Reception place Reception way Visitor Main contents of discussion and materials
provided
21 Jan. 2008 Office room By telephone Individual investor
The investor inquired the public notices
disclosed by the Company, with no written
materials provided by the Company.
25 Feb. 2008 Office room By telephone Individual investor
The investor inquired the Company’s
projects, with no written materials
provided by the Company.
15 Mar. 2008 Office room By telephone Individual investor
The investor inquired the disclosure date of
the Company’s 2007 Annual Report and
the Company’s financial position, with no
materials provided by the Company.
10 Apr. 2008 Office room By telephone Individual investor
The investor inquired the unlocked
non-tradable shares held by the controlling
shareholder, with the Company replying in
truth and proving no written materials.
22 Apr. 2008 Office room By telephone Individual investor
The investor inquired the Company’s stock
price, with no materials provided by the
Company.
6 May 2008 Office room By telephone Individual investor
The investor inquired the status of the real
estate industry of Shenzhen and its impact
on the Company, with no materials
provided by the Company.
4 Jun. 2008 Office room By telephone Individual investor The investor inquired the Company’s stock38
price, with no materials provided by the
Company.
30 Jun. 2008 Office room By telephone Individual investor
The investor inquired the Company’s
operation and its semi-yearly report, with
no relevant data provided by the Company.
23 Jul. 2008 Office room By telephone Individual investor
The investor inquired the Company’s
project development. And the
communication was conducted verbally,
with no materials provided by the
Company.
11 Aug. 2008 Office room By telephone Individual investor
The investor inquired the status of the real
estate industry of Shenzhen and its impact
on the Company. The Communication was
conducted verbally with no materials
provided by the Company.
17 Sept. 2008 Office room By telephone Individual investor
The investor inquired the unlocked
non-tradable shares of the Company. And
the communication was conducted verbally
with no materials provided by the
Company.
10 Oct. 2008 Office room By telephone Individual investor
The investor inquired the unlocked
non-tradable shares of the Company. And
the communication was conducted verbally
with no materials provided by the
Company.
17 Oct. 2008 Office room By telephone Individual investor
The investor inquired the Company’s
operation in the 3rd quarter, with no
materials provided by the Company.
24 Nov. 2008 Office room By telephone Individual investor
The investor inquired the Company’s stock
price, with no materials provided by the
Company.
10 Dec. 2008 Office room By telephone Individual investor
The investor inquired the real estate sales
of the Company. And the communication
was conducted verbally with no materials
provided by the Company.
Section Ⅺ. Financial Report
(Please see the attachments for the financial statements and auditor’s report.)
Section Ⅻ. Documents Available for Reference
1. The accounting statements with personal signatures and seals of Legal
Representative, Chief Accountant and the person in charge of the accounting agency.
2. The original of the Auditor’s Report with the seals of the CPA firm, as well as the
signatures and seals of the registered accountants.
3. The originals of all the documents and public notices disclosed on China Securities
Journal and Ta Kung Pao by the company during the reporting period.39
* Confidential *
REPORT OF THE AUDITORS
深南财审报字（2009）第CA358 号
TO THE SHAREHOLDERS OF SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE
& PROPERTIES (GROUP) CO. LTD:
We have audited the accompanying consolidated financial statements of Shenzhen Special
Economic Zone Real Estate & Properties (Group) Co., Ltd. (the “Company”) and its
subsidiaries (together with the Company referred to as the “Group”), which comprise the
consolidated balance sheet as at 31 December 2008, and the consolidated income statement,
the consolidated cash flow statement, the consolidated statement of changes in equity for
the year then ended and notes to these financial statements.
1、Management responsibility for the financial statements
Management is responsible for the preparation of these financial statements in accordance
with the Enterprise Accounting Standard. This responsibility includes：（1）designing,
implementing and maintaining internal control relevant to the preparation of financial
statements that are free from material misstatement, whether due to fraud or error;（2）
selecting and applying appropriate accounting policies;（3）making accounting estimates
that are reasonable in the circumstances.
2、Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the China Auditing Standards. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material misstatement.40
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor ’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
3、Opinion
In our opinion, these financial statements present fairly, in all material respects, the
financial position of the Company as of 31 December 2008, and of its financial
performance and its cash flows for the year then ended and prepared in accordance with
the Enterprise Accounting Standards.
Shenzhen Nanfang-Minhe CPAs Ltd. Certified Public Accountant
Certified Public Accountant
Shenzhen, China 20 April 200941
Units:Rmb Yuan
ASSETS Note 2008-12-31 2007-12-31
Cash at bank and on hand 7、1 328,413,393.57 451,915,145.77
Financial assets held for trading 7、2 189,488.50 645,470.00
Accounts receivable 7、3 14,937,238.37 15,396,075.35
Advances to suppliers 7、4 24,332,129.12 20,400,102.24
Other receivables 7、5 44,004,157.29 50,512,052.62
Inventories 7、6 945,592,254.25 822,475,093.91
1 ,357,468,661.10 1,361,343,939.89
Long-term equity investments 7、7 92,830,359.32 85,978,361.05
Investment Property 7、8 719,025,078.32 749,511,049.03
Fixed assets 7、9 70,894,484.45 76,324,451.29
Intangible assets 7、10 6,430,760.00 6 ,312,140.00
Long-term deferred and prepaid expenses 7、11 527,346.90 825,350.08
Deferred tax assets 7、12 18,479,988.82 22,429,645.26
9 08,188,017.81 941,380,996.71
2,265,656,678.91 2 ,302,724,936.60
CONSOLIDATED BALANCE SHEET
As at 31 December 2008
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL
ESTATE& PROPERTIES (GROUP) CO., LTD.
Current assets
TOTAL ASSETS
Total non-current assets
Total current assets
Non-current assets
The Notes on page 53 to 116 form part of these financial statemtents42
Units:Rmb Yuan
LIABILITIES AND OWNERS' EQUITY Note 2008-12-31 2007-12-31
Current liabilities
Short-term borrowings 7、15 59,200,000.00 47,000,000.00
Account payable 7、16 230,446,779.80 181,259,988.97
Prepayment received 7、17 130,134,521.89 206,993,814.01
Employee benefits payable 7、18 25,202,232.34 31,957,382.75
Tax payable 7、19 2,251,929.90 - 3,041,657.01
Interest payable 7、20 7,888,053.54 2 ,901,306.85
Other payables 7、21 262,914,117.22 277,615,580.37
Non-current liability due in one year 7、22 10,461,764.71 25,280,129.52
Total of current liability 728,499,399.40 7 69,966,545.46
Non-current liabilities
Long-term borrowings 7、22 330,343,020.83 342,214,327.80
Long-term payable 7、23 7,490,170.24 9 ,172,161.05
Accrued liabilities 7、24 2,196,714.08 -
Total non-current liabilities 340,029,905.15 3 51,386,488.85
Total liabilities 1,068,529,304.55 1 ,121,353,034.31
Owners' equity
Share capital 7、25 1 ,011,660,000.00 1,011,660,000.00
Capital surplus 7、26 978,244,858.10 978,244,858.10
Less: Shares in stock - -
Surplus reserve 7、27 118,910,686.94 118,910,686.94
Undistributed profits 7、28 -915,511,458.27 -934,635,245.38
Translation difference of foreign currency
financial statements
14,984,787.99 13,966,344.35
Total equity attributable to equity holders of
the Company
1,208,288,874.76 1 ,188,146,644.01
Minority interest 7、29 -11,161,500.40 -6,774,741.72
1 ,197,127,374.36 1 ,181,371,902.29
TOTAL LIABILITIES AND OWNER'S EQUITY 2,265,656,678.91 2 ,302,724,936.60
CONSOLIDATED BALANCE SHEET（Continued）
As at 31 December 2008
Total owners' equity
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL
ESTATE& PROPERTIES (GROUP) CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents43
Units:Rmb Yuan
Items Note 2008 2007
1、Revenue 7、30 7 06,005,324.41 845,127,526.44
Less： Cost of sales 7、30 473,150,286.71 6 21,641,037.92
Tax and levies on operations 7、31 7 2,885,197.67 6 5,528,792.59
Selling and distribution expenses 9 ,304,138.71 1 0,165,581.70
General and administrative expenses 7 6,700,466.44 69,919,988.99
Finance expenses 7、32 2 9,510,799.13 5 3,391,606.44
Asset impairment losses 7、33 1 ,350,000.00 -
Add: Income from change of fair value -456,411.50 342,635.00
Investment income 7、34 2 ,770,589.42 28,472,277.81
Including： Investment income from affiliates 7、34 2 ,720,228.96 985,946.73
2、Operating profit 4 5,418,613.67 5 3,295,431.61
Add: Non-operating income 7、35 3 ,200,072.28 2,441,556.48
Less： Non-operating expenses 7、36 7 ,584,342.19 4,078,058.33
Including： Loss from disposal of
non-current assets
7、36 83,755.93 94,170.00
3、Total profit 41,034,343.76 51,658,929.76
Less： Income tax expenses 7、37 2 1,878,568.54 1 2,725,297.52
4、Net profit 1 9,155,775.22 38,933,632.24
Attributable to equity holders of the Company 1 9,123,787.11 3 9,007,992.54
Minority profit or loss 31,988.11 -74,360.30
5、Earnings per share
（一）Basic earnings per share 7、38 0 .0189 0 .0386
（二）Diluted earnings per share 7、38 0 .0189 0 .0386
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2008
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE&
PROPERTIES (GROUP) CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents44
Items Note 2008 2007
1、Cash flows from operating activities
Cash received from sales of goods or rendering of
services
6 19,939,957.74 6 77,835,550.23
Refund of taxes and levies - -
Cash received relating to other operating activities 7、39.1 2 7,069,483.45 31,926,453.77
Sub-total of cash inflows 647,009,441.19 709,762,004.00
Cash paid for goods and services 4 84,498,771.96 5 14,082,303.62
Cash paid to and on behalf of employees 9 8,228,960.64 1 10,609,549.61
Payments of taxes and levies 7 6,718,146.38 72,483,132.26
Cash paid relating to other operating activities 7、39.2 7 0,093,057.93 63,368,814.94
Sub-total of cash outflows 7 29,538,936.91 760,543,800.43
Net cash flows from operating activities -82,529,495.72 -50,781,796.43
2、Cash flows from investing activities
Cash received from investment retrieving - 31,850,000.00
Cash received as investment gains 5 ,131,080.69 1 ,087,268.66
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets
3 ,316,643.70 3 23,220.78
Net cash received from disposal of subsidiaries or
other operational units
- -
Cash received relating to other investing activities - -
Sub-total of cash inflows 8,447,724.39 3 3,260,489.44
Cash paid to acquire fixed assets, intangible assets and
other long-term assets
2 ,752,386.21 13,898,642.52
Cash paid to acquire investments - 302,835.00
Net cash received from subsidiaries and other operational
units
- 4,440,753.40
Cash paid relating to other investing activities 7、39.3 - 4,170,000.00
Sub-total of cash outflows 2,752,386.21 22,812,230.92
Net cash flows from investing activities 5,695,338.18 10,448,258.52
3、Cash flows from financing activities
Cash received as investment - -
Including： Cash received as investment from minor
shareholders
- -
Cash received from borrowings 8 5,000,000.00 4 24,000,000.00
Cash received relating to other financing activities - -
Sub-total of cash inflows 85,000,000.00 424,000,000.00
Cash repayments of borrowings 9 9,489,671.78 3 52,930,442.68
Cash payments for interest expenses and distribution of
dividends or profits
2 9,307,608.42 46,576,290.57
Including： Cash payments for dividends or profit to
minority shareholders of subsidiaries
- -
Cash payments relating to other financing activities - -
Sub-total of cash outflows 1 28,797,280.20 399,506,733.25
Net cash flows from financing activities -43,797,280.20 24,493,266.75
4、
Effect of foreign exchange rate changes on cash and cash
equivalents
-2,406,781.24 -1,609,507.54
5、Net increase in cash and cash equivalents - 123,038,218.98 - 17,449,778.70
Add: Cash and cash equivalents at beginning of year 7、39.4 4 22,049,961.88 4 39,499,740.58
6、Cash and cash equivalent at end of year 299,011,742.90 422,049,961.88
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2008
Units:Rmb Yuan
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE&
PROPERTIES (GROUP) CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents45
For the year ended 31 December 2008
Units:Rmb Yuan
Share capital Capital surplus
Translation
difference of foreign
currency financial
statements
Surplus reserves
Undistributed
profits
1、 1,011,660,000.00 978,244,858.10 1 18,910,686.94 -934,635,245.38 13,966,344.35 - 6,774,741.72
1,181,371,902.29
Add：
Changes of
accounting policy - - - - - - -
Error correction of
the last period - - - - - - -
2、 1,011,660,000.00 978,244,858.10 1 18,910,686.94 -934,635,245.38 13,966,344.35 -6,774,741.72
1,181,371,902.29
3、 - - - 19,123,787.11 1,018,443.64 - 4,386,758.68 15,755,472.07
（1） Net profit - - - 1 9,123,787.11 - 31,988.11 19,155,775.22
（2）
Profits and losses
calculating into - - - - 1,018,443.64 -4,418,746.79 -3,400,303.15
a、
Net changing
amount of fair value
of financial assets - - - - - - -
b、
Effect of changes
of other owners'
equity of invested - - - - - - -
c、
Effect of income
tax related to - - - - - - -
4、 Others - - - - 1,018,443.64 -4,418,746.79 -3,400,303.15
sub-total（1）&（2） - - - 19,123,787.11 1,018,443.64 -4,386,758.68 15,755,472.07
（3）
Owners' devoted and
decreased capital - - - - - - -
a、
Owners' devoted
capital - - - - - -
b、
Amount calculated
into owners' equity - - - - - - -
c、 Others - - - - - - -
（4） Profit distribution - - - - - - -
a、
Withdrawal of
surplus reserves - - - - - - -
b、
Distribution to
shareholders - - - - - - -
c、 Others - - - - - - -
（5）
Carrying forward
internal owners' - - - - - - -
a、
Capital surplus
conversed to capital - - - - - - -
b、
Surplus reserves
conversed to capital - - - - - - -
c、
Remedying loss with
profit surplus - - - - - - -
d、 Others - - - - - - -
4、 1,011,660,000.00 978,244,858.10 1 18,910,686.94 - 915,511,458.27 14,984,787.99 -11,161,500.40 1
,197,127,374.36
Balance at the end of the
last year：
Balance at the beginning
of the year
Increase/ Decrease in
this year
Balance at the end of the
year
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
Attributable to equity holders of the Company
Total owners'
equity
Minority
interest
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents46
Units:Rmb Yuan
Paid-in capital Capital surplus
Translation
difference of foreign
currency financial
statements
Surplus reserves
Undistributed
profits
1、 1,011,660,000.00 978,244,858.10 118,910,686.94 -1,022,454,478.17 7,595,803.64 - 1 ,093,956,870.51
Add：
Changes of
accounting policy - - - 3 6,753,971.39 - -13,284,952.70 23,469,018.69
Error correction of
the last period - - - 1 2,057,268.86 - - 12,057,268.86
2、 1,011,660,000.00 978,244,858.10 118,910,686.94 -973,643,237.92 7,595,803.64 -13,284,952.70 1
,129,483,158.06
3、 - - - 39,007,992.54 6,370,540.71 6,510,210.98 51,888,744.23
（1） Net profit - - - 3 9,007,992.54 - -74,360.30 38,933,632.24
（2）
calculating into
owners' equity - - - - 6,370,540.71 6 ,584,571.28 12,955,111.99
a、
amount of fair value
of financial assets
available for sale - - - - - - -
b、
Effect of changes
of other owners'
equity of invested
units under equity
method - - - - - - -
c、
tax related to
owners' equity - - - - - - -
4、 Others - - - - 6,370,540.71 6 ,584,571.28 12,955,111.99
sub-total（1）&（2） - - - 39,007,992.54 6,370,540.71 6 ,510,210.98 51,888,744.23
（3）
Owners' devoted and
decreased capital - - - - - - -
a、
Owners' devoted
capital - - - - - -
b、
into owners' equity
paid in shares - - - - - - -
c、 Others - - - - - - -
（4） Profit distribution - - - - - - -
a、
Withdrawal of
surplus reserves - - - - - - -
b、
Distribution to
shareholders - - - - - - -
c、 Others - - - - - - -
（5）
internal owners'
equity - - - - - - -
a、
Capital surplus
conversed to capital - - - - - - -
b、
Surplus reserves
conversed to capital - - - - - - -
c、
Remedying loss with
profit surplus - - - - - - -
d、 Others - - - - - - -
4、 1,011,660,000.00 978,244,858.10 1 18,910,686.94 -934,635,245.38 13,966,344.35 -6,774,741.72
1,181,371,902.29
Minority
interest
Total owners'
equity
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY(Continued)
Increase/ Decrease in
this year
balance at the end of the
year
Balance at the end of the last year
Balance at the beginning
of the year
Attributable to equity holders of the Company
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP)
CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents47
Units:Rmb Yuan
ASSETS Note 2008-12-31 2007-12-31
Cash at bank and on hand 188,891,010.32 219,453,189.28
Financial assets held for trading 189,488.50 645,470.00
Accounts receivable 8、1 7 ,598,911.50 8 ,877,807.66
Advances to suppliers 478,423.65 215,537.63
Other receivables 8、2 607,212,015.51 597,447,535.25
Inventories 8、3 181,274,439.65 158,995,156.01
9 85,644,289.13 985,634,695.83
Long-term equity investments 8、4 302,909,360.35 310,584,126.62
Investment Property 641,638,730.03 668,607,908.15
Fixed assets 4 1,729,025.52 4 4,054,270.10
Deferred tax assets 4 ,235,725.42 1 0,172,116.09
990,512,841.32 1,033,418,420.96
1,976,157,130.45 2,019,053,116.79
Current assets
BALANCE SHEET
As at 31 December 2008
Total current assets
Non-current assets
Total non-current assets
TOTAL ASSETS
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL
ESTATE& PROPERTIES (GROUP) CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents48
Units:Rmb Yuan
LIABILITIES AND OWNERS' EQUITY Note 2008-12-31 2007-12-31
Current liabilities
Short-term borrowings 5 9,200,000.00 4 7,000,000.00
Account payable 3 2,708,884.80 3 2,338,787.84
Prepayment received 5,211,019.92 4,268,071.92
Employee benefits payable 1 0,720,641.23 1 5,086,558.23
Tax payable 4,250,387.71 2,877,169.33
Interest payable 7,888,053.54 2,901,306.85
Other payables 3 55,621,239.01 3 71,180,760.18
Non-current liability due in one year 1 0,461,764.71 1 0,280,129.52
Other current liability - -
Total of current liability 486,061,990.92 485,932,783.87
Non-current liabilities
Long-term borrowings 2 43,543,020.83 2 54,214,327.80
Accrued liabilities 2,196,714.08 -
Total non-current liabilities 245,739,734.91 254,214,327.80
Total liabilities 7 31,801,725.83 740,147,111.67
Owners' equity
share capital 1,011,660,000.00 1,011,660,000.00
Capital surplus 978,244,858.10 9 78,244,858.10
Less: Shares in stock - -
Surplus reserve 113,936,295.79 1 13,936,295.79
Undistributed profits -859,485,749.27 -824,935,148.77
Total owners' equity 1,244,355,404.62 1 ,278,906,005.12
TOTAL LIABILITIES AND OWNER'S EQUITY 1,976,157,130.45 2,019,053,116.79
BALANCE SHEET（Continued）
As at 31 December 2008
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE
REAL ESTATE& PROPERTIES (GROUP) CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents49
Units:Rmb Yuan
Items Note 2008 2007
1、Revenue 8、5 120,818,309.21 232,443,851.16
Less： Cost of sales 8、5 5 0,943,414.14 148,460,789.08
Tax and levies on operations 1 8,386,335.70 19,787,867.28
Selling and distribution expenses 2,476,251.00 1,429,274.76
General and administrative expenses 3 7,541,592.89 33,801,427.20
Finance expenses 2 9,781,446.46 33,552,657.45
Asset impairment losses 1,350,000.00 -
Add: Income from change of fair value -456,411.50 3 42,635.00
Investment income 8、6 -1,719,466.38 17,089,822.66
Incl. Investment income from affiliates -1,766,492.73 7 23,822.66
2、Operating profit -21,836,608.86 1 2,844,293.05
Add: Non-operating income 1 ,401.00 2,284,175.09
Less： Non-operating expenses 6,705,364.35 3,720,688.74
Incl. Loss from disposal of non-current assets - 9 4,170.00
3、Total profit -28,540,572.21 11,407,779.40
Less： Income tax expenses 6,010,028.29 1 15,615.23
4、Net profit - 34,550,600.50 1 1,292,164.17
INCOME STATEMENT
For the year ended 31 December 2008
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL
ESTATE& PROPERTIES (GROUP) CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents50
Units:Rmb Yuan
Items Note 2008 2007
1、Cash flows from operating activities
Cash received from sales of goods or rendering of services 9 0,852,938.89 5 8,321,425.86
Refund of taxes and levies - -
Cash received relating to other operating activities 4 6,692,789.14 2 75,637,326.22
Sub-total of cash inflows 137,545,728.03 333,958,752.08
Cash paid for goods and services 1 6,884,661.12 6 1,837,252.92
Cash paid to and on behalf of employees 3 3,977,923.45 3 2,346,439.16
Payments of taxes and levies 2 3,688,882.56 3 5,484,815.00
Cash paid relating to other operating activities 7 0,795,743.68 2 96,798,754.81
Sub-total of cash outflows 1 45,347,210.81 426,467,261.89
Net cash flows from operating activities -7,801,482.78 -92,508,509.81
2、Cash flows from investing activities
Cash received from investment retrieving - 3 1,850,000.00
Cash received as investment gains 4 7,026.35 723,822.66
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets
- -
Net cash received from disposal of subsidiaries or
other operational units
- -
Cash received relating to other investing activities 7 5,695.00 -
Sub-total of cash inflows 122,721.35 32,573,822.66
Cash paid to acquire fixed assets, intangible assets and
other long-term assets
1 52,029.00 2,908,301.52
Cash paid to acquire investments - 3 02,835.00
Net cash received from subsidiaries and other operational
units
- -
Cash paid relating to other investing activities 7 6,125.00 4,170,000.00
Sub-total of cash outflows 2 28,154.00 7,381,136.52
Net cash flows from investing activities -105,432.65 25,192,686.14
3、Cash flows from financing activities
Cash received as investment - -
Incl. Cash received as investment from minor shareholders - -
Cash received from borrowings 7 0,000,000.00 3 36,000,000.00
Cash received relating to other financing activities - -
Sub-total of cash inflows 7 0,000,000.00 336,000,000.00
Cash repayments of borrowings 6 8,289,671.78 2 76,930,442.68
Cash payments for interest expenses and distribution of
dividends or profits
2 4,342,687.23 3 0,279,407.01
Incl. Cash payments for dividends or profit to minority
shareholders of subsidiaries
- -
Cash payments relating to other financing activities - -
Sub-total of cash outflows 92,632,359.01 307,209,849.69
Net cash flows from financing activities - 22,632,359.01 28,790,150.31
4、
Effect of foreign exchange rate changes on cash and cash
equivalents
-120,295.60 -1,609,507.54
5、Net increase in cash and cash equivalents -30,659,570.04 -40,135,180.90
Add: Cash and cash equivalents at beginning of year 1 96,103,453.37 236,238,634.27
6、Cash and cash equivalent at end of year 165,443,883.33 1 96,103,453.37
CASH FLOW STATEMENT
For the year ended 31 December 2008
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE&
PROPERTIES (GROUP) CO., LTD.51
Units:Rmb Yuan
Share capital Capital surplus
Surplus
reserves
Undistributed
profits
Total owners' equity
1、 1 ,011,660,000.00 9 78,244,858.10 113,936,295.79 -824,935,148.77 1,278,906,005.12
Add： Changes of accounting policy - - - - -
Error correction of the last period - - - - -
2、 1 ,011,660,000.00 9 78,244,858.10 113,936,295.79 -824,935,148.77 1,278,906,005.12
3、 - - - -34,550,600.50 -34,550,600.50
（1） Net profit - - - -34,550,600.50 -34,550,600.50
（2）
Profits and losses calculating into
owners' equity - - - - -
a、
Net changing amount of fair value of
financial assets available for sale - - - - -
b、
Effect of changes of other owners'
equity of invested units under equity
method - - - - -
c、
Effect of income tax related to owners'
equity - - - - -
4、 Others - - - - -
sub-total（1）&（2） - - - -34,550,600.50 -34,550,600.50
（3） Owners' devoted and decreased capital - - - - -
a、 Owners' devoted capital - - - - -
b、
Amount calculated into owners' equity
paid in shares - - - - -
c、 Others - - - - -
（4） Profit distribution - - - - -
a、 Withdrawal of surplus reserves - - - - -
b、 Distribution to shareholders - - - - -
c、 Others - - - - -
（5）
Carrying forward internal owners'
equity - - - - -
a、 Capital surplus conversed to capital - - - - -
b、 Surplus reserves conversed to capital - - - - -
c、 Remedying loss with profit surplus - - - - -
d、 Others - - - - -
4、 1 ,011,660,000.00 9 78,244,858.10 113,936,295.79 -859,485,749.27 1,244,355,404.62
CHANGES IN OWNER'S EQUITY
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES
(GROUP) CO., LTD.
For the year ended 31 December 2008
Balance at the end of the last year：
Balance at the beginning of this year
Balance at the end of this
report period
Increase/ Decrease in this year
The Notes on page 53 to 116 form part of these financial statemtents
The Notes on page 53 to 116 form part of these financial statemtents52
Units:Rmb Yuan
Share capital Capital surplus
Surplus
reserves
Undistributed
profits
Total owners' equity
1、 1,011,660,000.00 9 78,244,858.10 113,936,295.79 -1,004,367,961.05 1,099,473,192.84
Add： Changes of accounting policy - - - 168,140,648.11 168,140,648.11
Error correction of the last period - - - - -
2、 1,011,660,000.00 9 78,244,858.10 113,936,295.79 -836,227,312.94 1,267,613,840.95
3、 - - - 11,292,164.17 1 1,292,164.17
（1） Net profit - - - 1 1,292,164.17 11,292,164.17
（2）
Profits and losses calculating into
owners' equity - - - - -
a、
Net changing amount of fair value of
financial assets available for sale - - - - -
b、
Effect of changes of other owners'
equity of invested units under equity
method - - - - -
c、
Effect of income tax related to owners'
equity - - - - -
4、 Others - - - - -
sub-total（1）&（2） - - - 1 1,292,164.17 1 1,292,164.17
（3） Owners' devoted and decreased capital - - - - -
a、 Owners' devoted capital - - - - -
b、
Amount calculated into owners' equity
paid in shares - - - - -
c、 Others - - - - -
（4） Profit distribution - - - - -
a、 Withdrawal of surplus reserves - - - - -
b、 Distribution to shareholders - - - - -
c、 Others - - - - -
（5）
Carrying forward internal owners'
equity - - - - -
a、 Capital surplus conversed to capital - - - - -
b、 Surplus reserves conversed to capital - - - - -
c、 Remedying loss with profit surplus - - - - -
d、 Others - - - - -
4、 1,011,660,000.00 9 78,244,858.10 113,936,295.79 -824,935,148.77 1,278,906,005.12
CHANGES IN OWNER'S EQUITY (Continued)
Balance at the end of this
report period
Balance at the end of the last year：
Balance at the beginning of this year
Increase/ Decrease in this year
Preparation of company：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES
(GROUP) CO., LTD.
The Notes on page 53 to 116 form part of these financial statemtents53
NOTE 1、The company's basic information
(1) General information
Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd. (the
“Company”) was in corporate in July 1993, as approved by the Shenzhen Municipal
Government with document SFBF (1993) 724. The Company issued A shares on the 15
September 1993 and issued B shares on the 10 January 1994. From 31 August 1994, the
Company issued B shares were listed ADR as a recommend in New York Exchange market.
The share capital total is 1,011,660,000 shares, of which, the A share is 891,660,000 shares,
the B share is 120, 000,000 shares. The company corporate business licenses registration
number: 440301103225878, registered capital of RMB 1,011,660,000.00.
On 13 October 2004，according to State-Owned Assets Supervision and Administration
Commission of Shenzhen Municipal Government with document No.(2004) 223 “Decision
on establishing Shenzhen investment Holding Co., Ltd.”. Former major shareholder
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 has been done at 15 Feberary 2006. As at the end of the reporting
period, Shenzhen Investment Holding Limited holds 655,800,149 shares of the company
(64.82% of the total share capital) which holds the limited sale of share conditions
622,273,800 shares, unlimited shares in circulation for sale 33,526,349 shares is real estate
industry.
The company trades nature: This Company belongs to the real estate industry.
Business scope：Mainly engaged in real estate development and sales, property leasing and
management retail operations and trading, hotel operations, equipment installation and
maintenance, construction, fitting-out and others.
The main product or provides service：The company provides commodity housing is a
major product, property leasing and management services, hotel room service, and
construction and installation, renovation services.54
(2) Approved financial report
The financial statements were authorized for issue by the board of directors on 20
April 2009.
NOTE 2、Basis of preparation
The Company on a going concern basis, in accordance with actual transactions and matters,
financial statements according to the accrual system.
NOTE 3、Statement of compliance with the Accounting Standards for Business Enterprises.
The Company’s financial statements for the year ended 31 December 2008 truly and
completely present the financial position of the Company and of their financial
performance and their cash flows for the year then ended in compliance with the
Accounting Standards for Business Enterprises.
NOTE 4、 Summary of significant accounting policies, accounting estimates and prepare the
consolidated financial statements
（ 1） Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
（2） Functional and presentation currency
The consoliated financial statements are presented in Renminbi Yuan, and subsidiaries
registered in foreign country shall consider the local currency as functional and
presentation currency.
（3） Accounting basis and Accounting measurement
The accounting basis of the Group is the accrual system.
Accounting measurements consist of: historical cost, replacement cost, net realizable value,
present value, fair value. An enterprise shall generally adopt historical cost as the
measurement basis for accounting elements. If the accounting elements are measured at
replacement cost, net realizable value, present value or fair value, the enterprise shall
ensure such amounts can be obtained and reliably measured.
（4） Foreign currency transactions
Foreign currency transactions during the year are translated at the foreign exchange rates
ruling at the transaction dates. Monetary assets and liabilities denominated in foreign55
currencies are translated at the foreign exchange rates ruling at the balance sheet date.
Exchange gains and losses are recognized in profit or loss.
The results of foreign operations are translated into Renminbi Yuan at the exchange rates
approximating the foreign exchange rates ruling at the dates of the transactions. Balance
sheet items are translated into Renminbi Yuan at the foreign exchange rates ruling at the
balance sheet date. The resulting exchange differences are recognized directly in a
separate component of equity.
With the purchase or construction of production in line with the conditions of capital
assets related to exchange rate difference, accordance with the principles borrowing costs.
（5） Cash and cash equivalents
Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and that are subject to an insignificant risk of changes in value.
（6） Recognition and Measurement of financial assets and financial liability
1、Categories
Financial assets and financial liability are classified into the following categories:
financial assets and financial liability held for trading, held-to-maturity investments,
receivables, financial assets available for sale, and other financial liabilities.
2、Determination of the Fair Value of the financial assets and financial liability
（1）If there is an active market for a financial asset or financial liability, the quoted prices
in the active market shall be used to establish the fair value of the financial assets and
financial liability.
（2）There is no active financial instruments market, the valuation techniques used to
determine its fair value.
（3）As for the financial assets initially obtained or produced at source and the financial
liabilities assumed, the fair value thereof shall be determined on the basis of the
transaction price of the market.
（4）In applying discounted cashflow analysis to determine the fair value of a financial
instrument, it shall use the market returns ratio of other financial instruments with
essentially the same contractual stipulations and features as the rate of capitalization.
Short-term receivable and payable with no state interest rate may be measured at the actual56
transaction amount when the difference between that amount and its present value is
immaterial.
3、Transaction of financial assets and financial liabilities
The initial reorganization of a financial asset or financial liability held for trading shall
measure it at fair value. Transaction costs shall be charged to the profit or loss for the
current period. The payment has been including in the declared but not yet paid cash
dividends or interest paid to the period but not yet receiving interest, recognized as
receivables. Holding companies in the trading of financial assets acquired during the
interest or dividends in cash, recognized as investment income.
The balance sheet date, adopt fair value for trading financial assets and financial liabilities,
changes of fair value will be included in current profit and loss.
The disposal of financial assets or financial liabilities, its fair value and accounted for the
initial amount of the difference recognized as investment income and changes in the fair
value adjustment of profit and loss.
4、Held-to-maturity investments
The term "held-to-maturity investment" refers to a non-derivative financial asset with a
fixed date of maturity, a fixed or determinable amount of repo price and which the
enterprise holds for a definite purpose or the enterprise is able to hold until its maturity.
The following non-derivative financial assets shall not be classified as investments held to
their maturity:
(1) The designated non-derivative financial assets which, at their initial recognition, are
measured at their fair values and of which the variation is included in the current profits
and losses;
(2) The non-derivative financial assets which are designated as sellable at their initial
recognition; and
(3) Loans and account receivables.
An enterprise shall, on the balance sheet date, make an appraisal on its purpose of holding
and ability to hold. Where there is any change, it shall be dealt with according to the
present Standards.57
5、Receivables
Should be receiving amount according to the take initial confirmation amount with debtors
between the contract or the agreement.
The date of the balance sheet, the receivable amount must account to the amortized cost
measurement. Disposal or recovery of receivables, the difference between actual price and
fair value will be counted as gain or loss for the current period.
6、Sellable financial assets
Sellable financial asset should be made in accordance with the fair value of financial
assets and related transaction costs and is recognized as the initial amount. To pay the
price included in the payment period has not yet received the bonds but has not yet
declared or paid cash dividends, recognized as a separate receivables.
For the sale of financial assets held by the period of interest and cash dividends, will be
included in investment income. The balance sheet date, for the sale of financial assets
should be based on fair value, and the changes in fair value will be included in capital
reserve.
7、Other financial liabilities
Other financial liabilities at fair values and relevant transaction expenses to get them are
deemed as the initial confirmation amount. The subsequent calculation adopts the
amortized cost method.
8、Impairment of Financial Assets
The end of trading on financial assets other than financial assets, there is objective
evidence that the impairment occurred, according to their expected future cash flows are
lower than the book value of the difference between the impairment provisions.
（1）Receivables
Provide of the bad debts using the allowance method. At the end of period, if have the
objective evidence to indicate that the receivable amount reduce, then the net book value
and the estimate in the future between the cash flow current value differential computation
confirmation the impairment loss.58
The end of the period, receivables that are individually significant are subject to individual
impairment assessment, separate impairment test. If there is objective evidence that the
incidence of impairment, a provision for impairment of the receivable is established at the
difference between the carrying amount of the receivable and the present value of
estimated future cash flows.
The company based on the same or similar case which had the similar credit risk and actual
loss, to define the specific provision for bad debt.
The criterion of the bad debts: 1.the debtor goes bankrupt or the death, pay off the legally
after its bankrupt property or the inheritance, still that is unable to recover the funds; 2.
the debtor default overdue, and that is unable to recover the funds.
To the notes of the receivable and prepay credit，this company carries on the impairment
test alone, which has the objective evidence to indicate that it has had the impairment, will
be lower than its book value according to the future cashflow the current value the
difference, it is the impairment loss, the provision for bad debt.
（2）Held-to-maturity investments
Has the objective evidence to indicate that has had the impairment to the due investment,
that should be calculate this investment the cash flow current value in the future, this
current value is lower than the book vale which the difference is the revaluation deficit.
（3）Sellable financial asset
Where a sellable financial asset is impaired, even if the recognition of the financial asset
has not been terminated, the accumulative losses arising from the decrease of the fair value
of the owner ’s equity which was directly included shall be transferred out and recorded
into the profits and losses of the current period. The accumulative losses that are
transferred out shall be the balance obtained from the initially obtained costs of the sold
financial asset after deducting the principals as taken back, the current fair value and the
impairment-related losses as was recorded into the profits and losses of the current period.
As for the sellable debt instruments whose impairment-related losses have been recognized,
if, within the accounting period thereafter, the fair value has risen and are objectively
related to the subsequent events that occur after the originally impairment-related losses
were recognized, the originally recognized impairment-related losses shall be reversed and
be recorded into the profits and losses of the current period.59
The impairment-related losses incurred to a sellable equity instrument. Investment shall
not be reversed through profits and losses. However, the impairment-related losses
incurred to an equity instrument investment for which there is no quoted price in the active
market and whose fair value cannot be reliably measured, or incurred to a derivative
financial asset which is connected with the said equity instrument and which shall be
settled by delivering the said equity instrument, may not be reversed.
After an impairment of a financial asset, the interest incomes shall be recognized at the
interest rate which is used as the capitalization rate in the capitalization of the future cash
flow when the impairment-related losses are determined.
（7） Inventories
1、Categories of Inventories
Inventory classification according to real estate development and non-development of
products. The real estate development products are the real estate development products
under construction development products which have been completed, the lands to be
developed, etc. The non-real estate development products including raw materials, finished
products and stocks, low-value consumable products and construction.
2、Measurement of Inventories:
(1) Have been completed is the development of products that have been completed,
pending the sale of the property; under construction is the development of products that
have not yet completed the sale of the property for development purposes; to develop land
is acquired by means of, has decided to be developed for sale or lease land property. To the
overall development of land in the project development, all built into the development of
products; in the project development phases, it will be part of a phased development of
land into the development of products in the building, undeveloped land is still retained in
the proposed land development.
(2) Public Facilities Fee: The cost is the actual construction cost incurred. Measured in the
non-development product account. If several estate projects benefit from the same facility,
and 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 measured
according to the allocation of the area under the prorated. Until the project complete, the
cost measures in the assessment into the real estate development products.
(3) Utility Reserve Fund: In special administrative region, the fund is the ratio of 2% of
the whole constructive investment that included the land price of delivery of completed60
estate. Outside the region, the ratio of 2% of the whole constructive investment of the
estate. But it all measures in the non-development products.
(4) Quality Guarantees: According to the contract amount puts into the account of real
estate development. Also record in the accounts payable at the same time. The actual
payment incurs after the expiry of guarantee.
(5) Implement the perpetual inventory system; all kinds of inventories are recorded in the
actual cost, a weighted-average valuation for sell. The real estate development records in
the measurement of identification. As for the low value properties, implement one
amortization method when used.
(6) Inventories are written down to the lower of the cost and the revised net realizable
value. On the basis of comprehensive inventory, those destroyed, in whole or part outdated
or the sales price is lower than its cost. Should decline the value. And the value is the
difference from the cost and net realizable value. Longterm equity investments.
（8） Long term equity investment
1、 Long term equity investment can be classified: Investment in subsidiary; investment
in associate; investment in joint venture; other long term investment in an entity which the
investor does not have jointly control and significant influence, and also the fair value of
this long term investment can not measure reliably in the active market.
2、 Investment in subsidiary
For the investment in subsidiary, initially cost of investment should be accounted for at its
carrying value of the investing entity. The direct cost relating to the acquisition, are
recognized as expenses to income statement. The difference between the initially cost of
investment and the fair value paid for the investment should be adjusted to capital reserve.
If the capital reserve is not enough to deduct the difference, the surplus should be adjusted
to retained earnings.
For the investment in subsidiary, which is not under the same control, initially cost of
investment should be accounted for at its fair value paid for the investment and all the
direct cost relating to the investment. The difference between initially cost of investment
and carrying value of the investing entity at the date of acquisition are recognised as
profit/loss for the year. If the initially cost of investment is more than identifiable assets
and liabilities for the investment entity at the date of acquisition, the surplus should be
treated as long term investment in the investor/parent’s book. This surplus can be treated61
as goodwill, recorded in the consolidated accounts. If the initial cost of investment is less
than the identifiable assets and liabilities of the investing entity at the date of acquisition,
the difference should be recognized as expense for the year.
Goodwill should not be amortized, but acquirer shall test it for impairment annually
instead. Impairment test for goodwill is part of impairment testing the cash generating
units to which it related. Once the impairment loss is recognized, it cannot be reverse back.
In the investor/parent’s financial statement, costing method is used to account for the long
term equity investment. Consolidated financial statement should be included subsidiary.
If subsidiary has the indication for impairment as at the balance sheet date, recoverable
amount should be measured. If the recoverable amount is less than its fair value,
impairment loss should be provided. Provision for impairment cannot be reverse back in
the following accounting period.
For disposal of the long term investment, the difference between sales proceeds and
carrying value, recognized as profit/loss for the investment.
3、 Investment in associate and joint venture
For the investment in associate, initial cost of investment should be account for the fair
value paid for the investment and related cost for the investment.
Investment in associate is acquired by non-monetary asset, if this transaction has business
value, and the fair value of exchangeable assets can be measured reliably, therefore, initial
cost of investment should be account at fair value of the exchangeable assets and related
tax expenses. Difference of fair value and carrying value of the exchangeable assets,
should be recognized as profit and loss for the year. If the two requirements are not met,
then carrying value of the exchangeable assets and related tax expenses should be account
at initial cost of investment.
If the associate is acquired by debt restructuring, initial cost of investment should be the
market value of the shares acquired. The difference of the initial cost of investment and
carry value of the debt should be recognized as profit/loss for the year.
Equity method should be used for subsequent measurement of investment in associate.
Once measuring gain/loss for investing in associate, it should be based on the fair value of
identifiable net assets as at acquisition date. If associated company’s accounting policy62
and accounting period is difference with investing company, then it should follow
investing company’s accounting policy and accounting period, and measure the investment
profit or loss.
If associated company is making a loss, carrying value of this investment and net
investment equity can be reduce to zero, except for other responsibilities to be bear by the
investing company.
If associate company has the indication for impairment as at the balance sheet date,
recoverable amount should be measured. If the recoverable amount is less than its fair
value, impairment loss should be provided. Provision for impairment cannot be reverse
back in the following accounting period.
For disposal of the long term investment, the difference between sales proceeds and
carrying value, recognized as profit/loss for the investment. Any movements which
recorded in owner ’s equity, during the disposal, it should be reverse out, and recognized as
profit/loss for the year proportionately.
The treatment of accounting principal for investment in joint venture is the same as
investment in associate.
4、 Other long term investment (no control and significant influence for the investing
entity; no active market price; fair value can not be measured reliably)
Investment in an entity which has no control power and significant influence, no active
market value and fair value can not be measured reliably, called other long term
investment. The recognition criteria of the initial cost of investment are same as the
investment in associate.
Costing method is used for subsequent measurement for other long term investment.
When impairment appears, the difference between net present value of the market yield for
similarity financial instrument and carrying value of the investment should be recognized
impairment loss, recorded in income statement. Impairment can not be reverse back in the
following accounting period.
For disposal of the long term investment, the difference between sales proceeds and
carrying value, recognized as profit/loss for the investment.63
（9） Investment Property
1、Recognition of Investment property
Investment property shall be recognized as an assets when, and only when both of the
following conditions are satisfied: （ 1 ） The held for earn rentals and/or capital
appreciation, or both; （2）Investment property shall be capable of being measured and
sold separately; （3）The economic benefits pertinent to this investment real estate are
likely to flow into the enterprise; （4）The initial measurement of the investment real estate
shall be made at its cost.
2、Initial measurement
Investment property should be measured in cost model.
The cost of investment property from the transfer of non-monetary assets were taken into
accounts of the transfer assets and the related expenditure, if it is the real exchange with
commercial and the value of assets could be measured reliably. If not, the difference
between the fair value and cost of the transfer assets should be taken into accounts of
current profit and loss.
The costs of investment property from debt restriction use the fair value as the initial
investment cost. The difference between the cost and book value includes in current profit
and loss.
3、Subsequent Measurement
An enterprise shall use the cost model for subsequent measurement of investment property
at the balance sheet date.
4、Transfer and Disposals
Transfer to, or form, investment property shall be made when, and only when, there is a
change in use.
An investment property shall be derecognized on disposal; the enterprise shall deduct the
book value of the investment property as well as the relevant taxes from the disposal
income, and include the amount in the current profits and losses.
（10） Recognition standard of fixed assets, Classification and Depreciation
1、Standard of fixed assets64
Fixed assets are tangible assets that are held for use in the production or supply of services,
for rental to others, or for administrative purposes; they have useful lives over one fiscal
year.
2、Recognition standard of fixed assets
（1）It is probable that economic benefits associated with the assets will flow to the
enterprise;
（2）The cost of the fixed assets can be measured reliably.
3、Classification of fixed assets:
The Company’s fixed assets are classified as buildings and constructions, machinery
equipment, transportation equipment, other equipment and fixed assets fitment.
4、Initial measurement of fixed assets
Fixed assets are recorded at the actual cost on acquisition. The cost of fixed assets
purchased includes purchase price, import tariffs, transport and insurance and other related
costs as well as the fixed assets reached before the intended use of the necessary
expenditure. Where payment for the purchase price of a fixed asset is deferred beyond
normal credit terms, such that the arrangement is in substance of a financing nature, the
cost of the fixed asset shall be determined based on the present value of the purchase price.
The difference between the purchase price and its present value shall be recognized in
profit or loss over the period of credit, except where it is capitalized in accordance with
borrowing cost principle.
5、Depreciation method
Depreciation of fixed assets is provided for on a straight-line basis, the depreciation rate is
recognized in accordance with fix assets, estimated useful life (5% of original value) and
estimated residual rate of fixed assets. Annual depreciation rate of fixed assets by
categories are as follows：
Category Estimated useful life (year)
Annual depreciation
rate(％)
Buildings and constructions 30 3.17
Machinery equipment 7 13.57
Transportation equipment 6 15.83
Other equipment 5 1965
6、Subsequent expenditure of fixed assets
Subsequent expenditure is only recognized as an asset when it meets two conditions at the
same time: Firstly, it is probable that future economic benefits associated with the
expenditures will flow into the enterprise. Secondly, the cost can be measured reliably. If
not meets that, the expenditures should be included in the current profit and loss.
Subsequent expenditure of operating lease should be capitalized, as long-term prepaid
expenses, which amortize in a reasonable period.
Impairment of fixed assets
fixed assets should be estimated the recoverable amount if there is an indication. The
recoverable amount is according to the high one of net value of fair value minus the
disposal with the present value of the future cash flows. The estimation should be based on
individual assets, if it is difficult to estimate the recoverable amount, change into
estimating the group of assets it belongs to. Once provision for impairment, it could not be
reversed in later accounting period.
（11） Construction-in-progress
Construction-in-progress includes the pre-construction preparation, the under construction,
installation, technical construction, overhaul project and so on. It measures in actual cost
incurred. And are taken into accounts of fixed assets to record before used.
On the balance sheet day, estimate the impairment of that long-term suspension and will
not re-started in three years. The impairment estimation is book value minus the
recoverable amount. Once provision for impairment, it could not be reversed in later
accounting period.
（12） Intangible assets
Intangible assets including intangible assets with a finite useful life and intangible assets
with an indefinite useful life.
1、Calculation method of intangible assets
An intangible asset shall be measured initially
The cost of self-developed intangible assets shall include the total expenditures incurred
during the period from the time when it meets the provisions of standards to the time when
the expected purposes of use are realized.66
2、Amortization of intangible assets
（1）With regard to intangible assets with limited service life.
Useful life in the period, with the use of intangible assets related to the economic interests
of the consistent realization of the expected amortization method, not a reliable way of
determining expected to achieve, intangible assets shall be amortized by the straight-line
method.
Taxi license shall be amortized for 38 years.
（2）Intangible assets with uncertain service life may not be amortized.
3、Impairment of Intangible Assets
On balance sheet day, make impairment testing to the uncertain life of intangible assets.
If there is an indication of impairment on balance sheet day for intangible assets with the
finite useful life. Estimate the recoverable amount. If the amount is lower than the book
value, the carrying value of intangible assets will be written down to its recoverable
amount. And the cut amount recognized as impairment losses, included in the current
profit and loss period. Once provision for impairment, it could not be reversed in later
accounting period.
（13） Other assets accounting method
Long-term prepaid expenses amortize among the benefit periods average.
（14） Borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or
premiums on borrowings, ancillary expenses, and exchange balance on foreign currency
borrowings.
Where the borrowing costs incurred to an enterprise can be directly attributable to the
acquisition and construction or production of assets eligible for capitalization, it shall be
capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be
recognized as expenses on the basis of the actual amount incurred, and shall be recorded
into the current profits and losses.
1、Capitalized
The borrowing costs shall not be capitalized unless they simultaneously meet the following67
3 requirements:
（1）expenditure for the asset are being incurred；
（2）borrowing cost are being incurred；
（3）The necessary construction or production activities to make the assets ready for use or
sales have been launched.
2、Determination of the amount of capitalized
As for specifically borrowed loans for the acquisition and construction or production of
assets eligible for capitalization, the to-be-capitalized amount of interests shall be
determined in light of the actual cost incurred of the specially borrowed loan at the present
period minus the income of interests earned on the unused borrowing loans as a deposit in
the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of
assets eligible for capitalization, the enterprise shall calculate and determine the
to-be-capitalized amount of interests on the general borrowing by multiplying the
weighted average asset disbursement of the part of the accumulative asset disbursements
minus the general borrowing by the capitalization rate of the general borrowing used. The
capitalization rate shall be calculated and determined in light of the weighted average
interest rate of the general borrowing.
3、Capitalized of Suspension
Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than three months, the capitalization
of the borrowing costs shall be suspended. The borrowing costs incurred during such
period shall be recognized as expenses, and shall be recorded into the profits and losses of
the current period, till the acquisition and construction or production of the asset restarts.
If the interruption is a necessary step for making the qualified asset under acquisition and
construction or production ready for the intended use or sale, the capitalization of the
borrowing costs shall continue.
4、Capitalized of ceased
When the qualified asset under acquisition and construction or production is ready for the
intended use or sale, the capitalization of the borrowing costs shall be ceased. After the68
borrowing costs incurred in the current period expenses.
（15） Employee Benefits
The term “employee benefits “refers to all kinds of payments and other relevant
expenditures given by enterprises in exchange of the services offered by the employees.
Employee benefits include: (1) Wages, bonuses, allowances and subsidies for the
employees; (2) Welfare expenses for the employees; (3) Medical insurance, endowment
insurance, unemployment insurance, work injury insurance, maternity insurance and other
social insurances; (4) Housing accumulation fund ;(5) Labor union expenditure and
employee education expenses; (6) Non-monetary benefits; (7) Compensations for the
cancellation of the labor relationship with the employees; and (8) Other relevant
expenditures of services offered by the employees.
During the accounting period of an employee' providing services to an enterprise, the
enterprise shall recognize the compensation payable as liabilities. Except for the
compensations for the cancellation of the labor relationship with the employee, the
enterprise shall, in accordance with beneficiaries of the services offered by the employee;
cost of product, cost of services, cost of fixed assets, intangible assets or profit or loss for
the current period, shall be recognized.
（16） Contingent liability
The obligation pertinent to a contingency shall be recognized as a provision when the
following conditions are satisfied simultaneously:
（1）the obligation is a current obligation of the enterprise;
（2）it is probable that an outflow of economic benefit will be required to settle the
obligation;
（3）the amount of the obligation can be measured reliably
A provision shall be recognized when an onerous contract and obligation to restructure
incurred by an enterprise satisfies the requirements of the above conditions.
The amount of a provision recognized of expenditure required to settle a provision is
expected to be reimbursed of the best estimates of measurement.
（17） Revenue
（ 1） revenue from sales goods shall be recognized only when all of the following69
conditions are satisfied:
A、the enterprise has transferred to the buyer the significant risks and rewards of
ownership of the goods;
B、 the enterprise retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold;
C、the amount of revenue can be measured reliably;
D、it is probable that the economic benefits associated with the transaction will flow to the
enterprise;
E、the associated costs incurred or to be incurred can be measured reliably:
According to the principles above, the Company established real estate sales revenue is
recognized, must satisfied the following four conditions at the same time:
A、Real estate is completed, and is completed checking and accepting;
B、Signed a contract of sale and make recording in land department
Installment, if it is deferred for receiving money with financing, the cost should be
measured in present value according to the contract price. Mortgage, has been received,
and have completed the first phase of the mortgage loan approval procedures;
D、Agreed in the contract of sale and transfer the property to buyers
（2）Rendering of service，In case on the preparation date of balance sheet the results
about service transaction can be reliably evaluated, the labor income will be confirmed by
the completion percentage method.
Company has estimated the costs of determining the proportion of the total cost of
providing labor services, determinate of the progress of the completion of transactions. In
case the service transaction results on the preparation date of balance sheet cannot be
reliably evaluated. In case the service costs that have occurred can be compensated, the
service income will be confirmed based on such service costs and the same amounts will
be settled as the service costs. In case the service costs that have occurred cannot be
compensated, such service costs will be accrued to the current profit and loss and will not
be confirmed as the service costs.
（3）Use by others of enterprise assets，in case the economic benefits related to the
transaction will probably flow into the enterprise and the income amounts can be reliably70
calculated. The interest income amount will be calculated and determined based on the use
time of currency capital from the Company by others and actual interest rate. The income
amount of use expenses will be calculated and determined subject to the charging time and
method agreed in the relevant contracts and agreements.
（18） Government Grants
A government grant is transfer of monetary assets or non-monetary assets from the
government to an enterprise at no consideration, excluding the contribution from the
government as the owner of the enterprise to enterprise. The company’s government grants
are classified into government grants relate to assets and government grants relate to
income.
If a government grant is a monetary asset, it shall be measured in the light of the received
or receivable amount. If a government grants is a non-monetary asset, it shall be measured
at its fair value. If its fair value cannot be obtained in a reliable way, it shall be measured
at its nominal amount.
The government grant pertinent to assets shall be recognized as deferred income, equally
distributed within the useful lives of the relevant assets, and included in the current profits
and losses. But the government grants measured at their nominal amounts shall be directly
included in the current profits and losses.
The government grant related to income, the grant used for compensating the related future
expenses or losses of the enterprise shall be recognized as deferred income and shall
included in the current profits and losses during the period when the relevant expenses are
recognized; the grant used for compensating the related expenses or losses incurred to the
enterprise shall be directly included in the current profits and losses.
（19） Income Taxes
The enterprise implies the balance sheet liability method to measure its income tax.
Deferred tax assets and deferred tax liability arises from the temporary differences
between taxable base of an asset or liability and its carrying amount in the balance sheet.
The deferred tax assets and deferred tax liability measure in the applicable tax rates in
accordance with the expected recovery of assets or liquidation of liabilities on balance
sheet day.
The confirmation of deferred tax assets uses the probable deductions to the deductible
temporary difference as its limits in future period.71
It prohibits the recognition of such deferred tax assets and liabilities of subsidiaries and
associates to the extent that:
a. it is probable that the temporary difference will not reverse in the foreseeable future
b. the parent is able to control the timing of the reversal of the temporary difference
（20） Business Combinations
A business combinations refers to a transaction or event that brings together of separate
enterprises into one reporting entity. Business combinations are classified into the
business combinations involving enterprise common control under and the business
combinations not involving enterprise under common control.
1.For a business combination involving enterprise common control: A business
combination in which all of the combining enterprises are ultimately controlled by the
same party or the same parties both before and after the business combination and on that
control is not transitory. Assets and liabilities that are obtained by the absorbing party in a
business combination shall be measured at their carrying amounts at the combination date
as record by the party being absorbed. The different between the carrying amount of the
net assets obtained and the carrying amount of the consideration paid for combination(or
the aggregate face value of shares issued as consideration), adjust the share premium (or
capital premium) in capital surplus, if it is insufficient for reduction, adjust retained
earnings. Date of acquisition is the date on which control of the net assets and operations
of the acquire is effectively transferred to the acquirer.
2、For a business combination not involving enterprise common control: A business
combine in which all of the combining enterprises are not ultimately controlled by the
same party or parties before and after the combination. The company shall measure the
assets given and liabilities incurred or assumed as consideration of the business
combination at their fair values on the acquisition date; any difference between the fair
value and the carrying amount of an item shall be recognized in profit or loss for the
current period. Acquisition date is the date on which the group effectively obtain control
of the acquire.
（21） Preparation of Consolidated Accounting Statements
1、Preparation of consolidated accounting statements
The basis for the consolidated to the consolidated of the parent companies and72
incorporated subsidiary of the accounting statements，will be consolidated with the parent
company of the important inter-subsidiary investment, demand, inventory and procurement,
and marketing of insider trading profits to offset itemized consolidated. And calculate
interests of minority shareholders and minority shareholders of profit and loss.
2、Reported of minority interest and the profit or loss
The portion of net profits or losses of subsidiaries for the period attributable to minority
profit or loss shall be presented in the consolidated income statement below the net profit
line item as "minority profit or loss".
That portion of a subsidiary’s equity attributable to minority interests shall be presented as
"minority interest" in the consolidated balance sheet within owners’ equity.
3、Deal with the excess loss
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 owners’
equity of the subsidiary, if the minority shareholders have a binding obligation under a
statute or an agreement and are able to make an additional investment to cover the loss, the
excess amount of loss shall be allocated against minority interests. Otherwise, the excess
amount of loss shall be allocated against owners’ equity attributable to the parent, the
subsidiary subsequently reports profits, and such profits shall be allocated to owners’
equity attributable to the parent until the minority shareholders’ share of losses previously
absorbed by the parent has been recovered.
4、Current increases and decreases in consolidated statement handling of the subsidiary
Where a subsidiary has been acquired through a business combination involving
enterprises under common control, the subsidiary’s revenue, expenses and profit from the
beginning to the end of the reporting period in which the combination takes place shall be
included in the consolidated income statement. And adjust the opening number. Where a
subsidiary has been acquired through a business combination not involving enterprises
under common control, the revenue, expenses and profit of that subsidiary from the
acquisition date to the end of the reporting period shall be included in the consolidated
income statement.
During the reporting period, disposed of a subsidiary, expenses and profit of the subsidiary
from the beginning of the reporting period to the date of disposal shall be included in the
consolidated income statement.73
NOTE 5、Taxation
The main tax type and tax rate：
Type Taxable basis Tax rate
Business tax
proceeds from sales of properties, leasing income,
property management income
5%
Construction, installation of income 3%
Value added tax (“VAT”) Goods sales income 17%
Construction tax Business tax and value added tax payable 1%
Education surcharge Business tax and value added tax payable 3%
Increment tax on land value Sales revenue of properties *1
Income tax Income tax payable *2
* 1 According to Provisions of Shenzhen Municipal People’s Government and the local
Inland Revenue Department. From 1 November 2005, the company or individuals should
pay land value-added tax if they gain income from the real estate development or transfer
in Shenzhen. “Pay in advance, settlement after, refund for any overpayment or a
supplemental payment for any deficiency. In other words, prepaid the tax on the basis of
the income from real estate transfer before the project completed (the pre-charge rate of
villas, resorts, hotel–style apartment on sales of 1%, while 0.5% of other real estate sales).
Till it all completed, handle settlement after clear the account. Clearing the land valued
added tax rate of used ultra-progressive tax rate. Valued-added ratio of 50% or less by 30
percent the proportion of value-added tax( general standard of domestic value-added ratio
of less than 20% of the land exempt tax from value-added tax). Value-added ratio of more
than 50 % did not exceed 100% of parts by 40% the proportion of the levy. Value-added tax
of more than 100% does not exceed 200% of the parts by 50% the proportion of the levy.
Value-added ratio of more than 200% of the parts by 60% the proportion of the levy.
* 2、Enterprise income tax rate is as follows：
Items Income tax rate
Domestic Enterprises
- enterprises in Shenzhen 18%
- enterprises outside Shenzhen 25%
Enterprises in HK 17.50%
* According to the China's Corporate Income Tax ("CIT") Law that was passed by the Standing
Committee of the Tenth National People's Congress ("NPC") on 16 March 2007 and the Notice of the
State Council on the Transitional Preferential Policy regarding implementation of the CIT Law (Guo Fa
[2007] No.39) issued on 26 December 2007, income tax rate is revised to 25% with effect from 1
January 2008. i.e., pay the payable tax amount calculated at a tax rate of 18% for the year 2008, the74
payable tax amount calculated at a tax rate of 20% for the year 2009, the payable tax amount calculated
at a tax rate of 24% for the year 2011 and the payable tax amount calculated at a tax rate of 25 % for
years as of 2012. As at 30 June 2008, the original implementation of the corporate tax rate 24% are
calculated based on the applicable income tax rates of 25% from 1 January 2008.
NOTE 6、Enterprises combination and the consolidated financial statements
1、 Include in the scope of the consolidated of the subsidiaries
Subsidiaries included in the scope of consolidated in 2008 is as follows:
(1) Holding through the merger of the subsidiary to obtain
A、Subsidiaries has been acquired through a business combination involving business
combination under same control of the subsidiaries;
The company haven’t subsidiaries has been acquired through a business combination
involving enterprise combination under same control.
B、Subsidiaries has been acquired through a business combination not involving business
combination under same control.
31 December 2008
Equity
holding
Percentage (%)
Voting power
(%)
Name of
subsidiaries
Registered
place
Registered
capital
(in ten
thousand
Yuan)
Nature of
business and
principal
activities
Actual
investment
(in ten
thousand
Yuan）
Net
investment
in subsidiary
in substance
(in ten
thousand
Yuan）
Direct
Indirect
Direct
Indirect
Shan Tou
Special
Economic
Zone Real
Estate Ltd.
Shan Tou HKD3000 Property
development 2108 2108 -- 100 -- 100
(2) Subsidiaries has been acquired through new establishment
31 December 2008
Equity
holding
(%)
Voting power
(%)
Name of
the Subsidiary Registered
place
Registered
capital (in ten
thousand
Yuan)
Nature of
business and
principal
activities
Actual
investment
(in ten
thousand
Yuan）
Net
Investment
in subsidiary
in substance
(in ten
thousand
Yuan）
Direct Indirect Direct Indirect
Shenzhen
Petrel Hotel
Co. Ltd.
Shenzhen
￥3,000
Hotel
operations
3,000 3,000 68.10 31.90 68.10 31.90
Shenzhen City
Property
Management
Ltd.
Shenzhen
￥725
Property
management
725 725 95 5 95 5
Shenzhen Zhen
Tung
Engineering
Ltd
Shenzhen
￥1,000
Fitting-out
contracting
and
maintenance
1,000 1,000 73 27 73 27
Shenzhen City
We Gen
Construction
Management
Ltd.
Shenzhen
￥800
Construction
project
management
800 800 75 25 75 25
Shenzhen City
Car Rental Ltd.
Shenzhen
￥1,029
Car rental
1,029 1,029 55 45 55 4575
31 December 2008
Equity
holding
(%)
Voting power
(%)
Name of
the Subsidiary Registered
place
Registered
capital (in ten
thousand
Yuan)
Nature of
business and
principal
activities
Actual
investment
(in ten
thousand
Yuan）
Net
Investment
in subsidiary
in substance
(in ten
thousand
Yuan）
Direct Indirect Direct Indirect
Shenzhen
Shenfang Car
Park Ltd.
Shenzhen
￥4,250
Develop and
operate car
park
4,250 4,250 70 30 70 30
Shenzhen City
Shenfang
Investment
Ltd.
Shenzhen
￥1,000
Investment
and
management
1,000 1,000 90 10 90 10
Shenzhen City
Shenfang Free
Trade Trading
Ltd.
Shenzhen
￥500
Trading of
Import and
export
500 500 95 5 95 5
Shenzhen City
SPG Bao An
Development
Ltd.
Shenzhen
￥2,000
Property
development
2,000 2,000 95 5 95 5
Shenzhen City
SPG Long
Gang
Development
Ltd.
Shenzhen
￥3,000
Property
development
3,000 3,000 95 5 95 5
Shenzhen
Special
Economic
Zone Real
Estate (Group)
Guangzhou
Property and
Estate Co., Ltd.
Guangzhou
￥2,000
Property
development
2,000 2,000 95 5 95 5
Beijing fresh
peak property
development
management
limited
company
Beijing
US$1,000
operating of
Real estate
7,671 7,671 75 25 75 25
Beijing SPG
Property
Management
Limited
Beijing
￥50
Property
management
50 50 10 90 10 90
Shenzhen Lain
Hua Industry
and Trading
Co. Ltd.
Shenzhen
￥1,000
Trading of
equipment
and provision
of renovation
material
1,000 1,000 95 5 95 5
Fresh Peak
Enterprise Ltd.
Hong Kong
HKD100
Investment
and
management
HKD82 9,668 100 -- 100 --
Wellam Ltd.
Hong Kong
HKD1
Investment
holding
HKD1 HKD1 -- 100 -- 100
Shantou SEZ
Wellam Fty
Bldg., Dev. Co.
Shantou
US$600
Property
development
US$600 US$600 -- 100 -- 100
Great Wall
Estate Co., Inc
U.S.A
USD50
Property
development
USD35 10,376 70 -- 70 --
Fresh Peak
Holdings Ltd.
Hong Kong
HKD100
Investment
and
management
HKD100 64,479 100 -- 100 --
Skill Elite Ltd.
Hong Kong
HKD1
corporate
financing
HKD1 HKD1 -- 100 -- 100
Fresh Peak
Investment
Ltd.
Hong Kong
HKD100
Properties
investment
HKD55 HKD55 -- 55 -- 55
Openice Ltd.
Hong Kong
HKD100
Investment
and
management
HKD120 HKD120 20 80 20 80
Barenie Co.
Ltd.
Hong Kong
HKD1
Properties
investment
HKD0.8 HKD0.8 -- 80 -- 80
Keyear
Development Ltd.
Hong Kong
HKD100
Investment
holding
HKD100 HKD100 -- 100 -- 10076
31 December 2008
Equity
holding
(%)
Voting power
(%)
Name of
the Subsidiary Registered
place
Registered
capital (in ten
thousand
Yuan)
Nature of
business and
principal
activities
Actual
investment
(in ten
thousand
Yuan）
Net
Investment
in subsidiary
in substance
(in ten
thousand
Yuan）
Direct Indirect Direct Indirect
Guangzhou
Huangpu
Xizun real
estate limited
company
Guangzhou
HKD3980
Property
development
HKD3980 HKD3980 -- 100 -- 100
Fresh Peak
Real Estate
Dev.
Construction
(Wuhan) Co.
Ltd.
Wuhan
US$400
Property
developme
nt
US$400 US$400 -- 100 -- 100
2、 Companies excluded from the scope of combination
31 December 2008
Equity
holding
(%)
Voting power
(%)
Name of
the Companies
Place of
registration
Registered
capital (in
ten
thousand
Yuan)
Nature of
business and
principal
activities
Actual
investment
(in ten
thousand
Yuan）
Net
Investment
In companies
In substance
(in ten thous
and Yuan） Direct Indirect Direct Indirect
Shenzhen
Shenfang
Department Store
Co. Ltd.
Shenzhen
￥1,000
Commercial
goods supplier
1,000 1,000 95 5 95 5
Shenzhen
CyberPort Co.,
Ltd*2
Shenzhen
￥2,000
Information
Technology
Advisory
1,400 1,400 70 -- 70 --
Shenzhen Real
Estate
Consolidated
Service Co.,
Ltd.*3
Shenzhen
￥1,371
Construction
material,
consume goods
596 596 100 -- 100 --
Shenzhen Shen
Fang Industrial
Development Co.,
Ltd.*4
Shenzhen
￥300
Invest in
industrial
projects
450 450 100 -- 100 --
Shenzhen Tefa
Real Estate
Consolidated
Service Co.,
Ltd.*5
Shenzhen
￥221
Construction
and decoration
818 818 100 -- 100 --
Bekaton Property
Limited*6
Australia
US$20
Property
Development
91 1,347 60 -- 60 --
Paklid Limited*6
Hong Kong
HKD50
Property
construction
and
trading of
construction
materials
20 1,127 60 40 60 40
Shenzhen City
Shenfang
Construction and
Decoration
Materials Ltd.*7
Shenzhen
￥268
construction
materials
268 268 100 -- 100 --
Shenzhen
ZhongGang
Haiyan Enterprise
Ltd.*8
Shenzhen
￥1,900
Tourism
Restaurant
1,294 1,294 68 -- 68 --
Shenzhen Xing
Dongfang Store
Ltd.*9
Shenzhen
￥2,000
Domestic
commercial
goods supply
1,850 1,850 92.5 7.5 92.5 7.5
Guangdong
Province Fengkai
Lain Feng Cement
Manufacturing
Co., Ltd.*10
Guangdong
Fengkai
US$800
Manufacturing
and trading
in cement
products
12,126 12,126 -- 90 -- 9077
*1 Shenzhen Shenfang Department Store Co. Ltd.：
The shareholders meeting was held on 29 October 2007, the resolution to terminate
business, the write-off and formed a group to carry out the liquidation. The liquidation
group issued a notice of liquidation on 7 December 2007. According to the “Enterprise
Accounting Standards No.33- the Consolidation Financial Statement”, the Store will not be
include in the Group’s consolidation financial statement of scope of the merger. The book
value of the investment account of the Group to zero.
*2 Shenzhen CyberPort Co., Ltd
The shareholders’ meeting was held on 12 May 2008, the resolution to terminate business,
the write-off and formed a group to carry out the liquidation. The liquidation group issued
a notice of liquidation on 5 December 2008. According to the “Enterprise Accounting
Standards No.33- the Consolidation Financial Statement”, the Store will not be include in
the Group’s consolidation financial statement of scope of the merger. The book value of
the investment account of the Group to zero.
*3 Shenzhen Real Estate Consolidated Service Co., Ltd.
Operating period of 26 January 1983 to 28 August 1999, the company has ceased
operations for many years, for failing to take part in the annual inspection in 8 February
2002 in accordance with the law and revoke their licenses.
*4 Shenzhen Shen Fang Industrial Development Co., Ltd.
Operating period of 3 October 1993 to 3 October 1998, the company has ceased operations
for many years, for failing to take part in the annual inspection in February 8, 2002 in
accordance with the law and revoke their licenses.
*5 Shenzhen Tefa Real Estate Consolidated Service Co., Ltd
Operating period of 7 March 1983 to 14 April 1995, the company has ceased operations for
many years, for failing to take part in the annual inspection was in 2004 in accordance with
the law before their business licenses.
*6 Bekaton Property Limited and Paklid Limited
The Departments of the two companies of the Company were set up offshore companies at
the early years. 13 December 2000 the company held a board of directors, the two
companies decided to carry out liquidation.
*7 Shenzhen City Shenfang Construction and Decoration Materials Ltd
Operating period of 1 January 1984 to 6 July 2004, the company has ceased operations for
many years, for failing to take part in the annual inspection in February 8, 2002 was to
revoke the business license.78
*8 Shenzhen ZhongGang Haiyan Enterprise Ltd
Operating period of 16 October 1984 to 16 October 2004, the company has ceased
operations for many years, for failing to take part in the annual inspection in 1999 was to
revoke the business license.
*9 Shenzhen Xin Dongfang Store Ltd.
Operating period of 7 June 1983 to 7 June 1998, the company has ceased operations for
many years, for failing to take part in the annual inspection in 10 January 2001 in
accordance with the law and revoke their licenses.
*10 Guangdong Province Fengkai Lian Feng Cement Manufacturing Co., Ltd.
The company's total asset (including tangible and intangible assets) was auction debt at 22
January 2006, the Group's investment in the company's book value of zero.
In addition to *1、*2 、*10 of above are not included in the scope of the merge of the
investment unit was many years ago to stop operating, and the suspension of business
licenses for many years, these companies have been unable to carry out business activities,
the company has no control over its business activities. According to the “Enterprise
Accounting Standards No.33- Consolidation financial Statements”, these companies are
not included in the Group’s consolidation financial statements of the scope of the merger.
The Group’s investment above, and the constitute the company’s book value of investment
to zero.
3、 Changes in the scope of combination in 2008
New company included in the scope of combination
The company shareholders meeting were held on 12 May 2008. Resolution to terminate the
company business, write-offs and liquidation group has been formed to carry out the
liquidation. Liquidation group issued a notice of liquidation on 5 December 2008.
According to the “Enterprise Accounting Standards No.33- Consolidation financial
Statements”, these companies are not included in the Group’s consolidation financial
statements of the scope of the merger.
Shenzhen CyberPort Co., Ltd's assets and liabilities on 31 December 2008：
Acquisition date
Total assets 10,217,365.26
Total liabilities 351,961.13
Total owners' equity 9,865,404.13
Shenzhen CyberPort Co., Ltd business operating for year 2008:79
Since the date of purchase to the end of the reporting period
Revenue 36,040.00
Net Profit -3,398,033.97
Net cash flows from operating activities -387,643.74
Net cash flows from financing activities --
Net cash flows from investing activities --
4、 Conversion of foreign currency statement
Great Wall Estate Co., Inc. use U.S. dollar as the functional and presentation currency, for
foreign currency conversion, the assets and liabilities of balance sheet, the balance sheet
date using the spot exchange rate, the owner ’s equity account use spot exchange rate
except “retained earnings”. The accounts of revenue and expense in income statement used
the approximate rate of spot exchange. The translation difference should list as
“translation differences of foreign currency financial statements” in owner ’s equity of
balance sheet. The differences arising from related party transactions, offset when
consoliated.
NOTE 7 、Notes to the consolidated and the Company’s financial statements
1、 Cash at bank and on hand
31 December 2008 31 December 2007
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
Cash on hand
RMB 328,739.70 328,739.70 730,643.86 730,643.86
HKD 45,458.39 0.8825 40,118.75 84,187.39 0.9376 78,934.10
USD 2,000.00 6.8397 13,679.40 2,000.00 7.3195 14,639.00
382,537.85 824,216.96
Cash at bank
RMB 266,123,403.00 266,123,403.00 391,094,976.96 391,094,976.96
HKD 29,920,395.95 0.8825 26,405,647.07 19,025,780.27 0.9376 17,838,571.58
USD 93,200.04 6.8397 637,460.31 83,659.16 7.3195 612,343.22
CAD 196,266.82 5.5973 1,098,564.27 188,736.99 7.4468 1,405,486.62
AUD 39,089.22 4.7304 184,907.64 45,327.78 6.3893 289,612.79
294,449,982.29 411,240,991.17
Other cash
balances
RMB 33,371,352.68 33,371,352.68 33,919,833.62 33,919,833.62
HKD 237,409.21 0.8825 209,520.75 6,324,769.66 0.9376 5,930,104.02
33,580,873.43 39,849,937.64
328,413,393.57 451,915,145.7780
Other currencies, mainly the owners of funds to the bank to apply for mortgage loans to
purchase the Company's real estate development. Lending banks have asked the Company
to provide mortgage lending margin.
Cash at bank and on hand is 27.33% less than the previous year. Mainly because of this
year to buy land to pay the purchase price and received amount of selling real estate has
decreased.
2、 Financial assets held for trading
31 December 2008 31 December 2007
stock investment 189,488.50 645,470.00
Including：cost 303,265.00 302,835.00
Change in the fair value -113,776.50 342,635.00
3、 Accounts receivable
（1）The aging of accounts receivable by categories:
31 December 2008 31 December 2007
aging
Amount
Proportion
%
Provision for
bad debts
Amount
Proportion
%
Provision for
bad debts
Within 1 year 1,860,981.24 5.54 -- 852,074.60 2.37 --
1 to 2 years 387,433.51 1.15 -- 234,998.80 0.65 --
2 to 3 years 213,704.58 0.64 -- 5,974,517.01 16.60 1,533,428.95
Over 3 year 31,104,798.15 92.67 18,629,679.11 28,936,867.79 80.38 19,068,953.90
33,566,917.48 100.00 18,629,679.11 35,998,458.20 100.00 20,602,382.85
（2）The symbol of credit risk identified by customers categories
31 December 2008 31 December 2007
Book balance
Proportion
%
Provision for
bad debts Book balance
Proportion
%
Provision for
bad debts
category 1 -- -- -- -- -- --
category 2 14,132,195.58 42.10 11,574,556.00 18,441,322.87 51.23 13,566,657.46
category 3 19,434,721.90 57.90 7,055,123.11 17,557,135.33 48.77 7,035,725.39
33,566,917.48 100.00 18,629,679.11 35,998,458.20 100.00 20,602,382.85
category 1: refers to accounts receivable with significant individual amount, such
individual amount is more than 10 million yuan
category 2: individual is not a significant amount of credit risk, but according to the
characteristics of the portfolio after portfolio of risky accounts receivable, aging of such
fund in three years, and still less likely to recover the money.
category 3： Other is not significant accounts receivable81
（3）As at 31 December 2008，Top five of accounts receivable Units (Personal) as follows:
31 December 2008 31 December 2007
Amount 9,757,303.02 17,062,684.11
Proportion of total other
receivable accounts
29.07 47.40%
（4）Accounts receivable balance at the end of 5% without holders of company (including
5%) over the right to vote the shares outstanding units of shareholders.
（5）In accounts receivable at the end of the balance of account receivable related parties
sum.(see note 10（3）、4).
4、 Advance to suppliers
31 December 2008 31 December 2007
aging
Amount proportion % Amount proportion %
Within 1 year 13,646,498.46 56.08 9,708,315.71 47.59
1 to 2 years 2,000.00 0.01 1,364,450.37 6.69
2 to 3 years 27,058.00 0.11 2,414,608.72 11.84
Over 3 year 10,656,572.66 43.80 6,912,727.44 33.88
24,332,129.12 100.00 20,400,102.24 100.00
The group did not have any balances which were due to parties having 5% or above
shareholdings in the Company.
5、 Other receivables
（1）The aging of accounts receivable by categories:
31 December 2008 31 December 2007
aging
Amount
proportion
%
Provision
for bad debts
Amount
proportion
%
Provision
for bad debts
Within1year 2,525,642.20 1.13 -- 7,731,346.93 3.22 --
1to 2 years 5,911,834.18 2.65 -- 12,256,168.54 5.10 --
2to 3 years 3,576,605.94 1.60 -- 3,759,082.03 1.56 1,698,653.51
Over3 year 210,856,418.69 94.62 178,866,343.72 216,725,067.54 90.12 188,260,958.91
222,870,501.01 100.00 178,866,343.72 240,471,665.04 100.00 189,959,612.42
（2）Customers categories as follows:
customers 31 December 2008 31 December 2007
categories Book balance
Proportion
%
Provision for
bad debts Book balance
Proporti
%
Provision for
bad debts
category 1 140,857,938.22 63.20 136,057,938.22 135,125,297.28 56.19 135,125,297.28
category 2 57,157,084.50 25.65 40,820,183.82 65,487,723.11 27.23 45,934,734.58
category 3 24,855,478.29 11.15 1,988,221.68 39,858,644.65 16.58 8,899,580.56
222,870,501.01 100.00 178,866,343.72 240,471,665.04 100.00 189,959,612.4282
category 1 ： refers to accounts receivable with significant individual amount, such
individual amount is more than 10 million yuan.
category 2: individual is not a significant amount of credit risk, but according to the
characteristics of the portfolio after portfolio of risky accounts receivable, aging of such
fund in three years, and still less likely to recover the money.
category 3：Other is not significant accounts receivable.
（3）Other receivables provision for bad debts this year, ready 11,093,268.70 yuan less
than the previous year, mainly because of a liquidation of the debtor has been canceled this
year. The company will claim the money and the associated preparation for the reseller
deal with bad debts.
（4）As at 31 December 2008，top five of other receivable Units (Personal) as follows:
31 December 2008 31 December 2007
Amount 140,857,938.22 140,857,938.22
Proportion of total other receivable accounts 63.20 58.58
（5）Other accounts receivable balance of this year than last year sharply reduced, mainly
due to the company dead with Guoxin building projects corresponding to a real estate
development Baoxing (Shenzhen) Co., Ltd account receivable 166,109,047.00 yuan and its
allowance for doubtful debt account 97,388,273.67 yuan.
（6）The group did not have any balances which were due to parties having 5% or above
shareholdings in the Company.
（7）The ending balance of related parties accounts of other receivable, For particulars see
Note 10（3）、4.
6、 Inventories
31 December 2008 31 December 2007
Amount
Provision
for declines
Amount
Provision
for declines
Real estate development
products 429,136,074.84 1,350,000.00 270,541,384.78 --
Real estate
developing products 534,095,339.64 47,584,499.31 577,953,205.14 47,584,499.31
Raw materials 1,206,220.38 -- 3,450,958.41 --
finished products 296,311.43 278,891.91 440,678.84 278,891.91
low-value consumable
products 37,339.94 -- 32,883.38 --
Construction 30,034,359.24 -- 17,919,374.58 --
994,805,645.47 49,213,391.22 870,338,485.13 47,863,391.2283
(1) Real estate development products
Completion
time (year)
31 December
2007
Current year
additions
Current year
reductions
31 December
2008
Jinyedao villa 1 1996 3,141,098.72 -- -- 3,141,098.72
Jinyedao
multi-storey
apartment
1997 36,584,904.93 -- 253,778.28 36,331,126.65
Jinyedao villa 6 2007 55,717,653.52 -- 12,694,826.46 43,022,827.06
Jinyedao villa 7 2007 46,660,076.85 -- 28,235,149.97 18,424,926.88
Jinyedao villa 8 2007 80,757,916.17 -- 61,267,038.50 19,490,877.67
Jinyedao villa 11 2008 -- 297,116,369.53 34,566,445.16 262,549,924.37
Huang Pu 1 1994 1,979,320.92 1,230,235.20 3,088,272.24 121,283.88
Huang Pu 2 2007 28,479,378.24 -- 15,897,506.41 12,581,871.83
Huamin Building 2,912,786.08 107,810.60 -- 3,020,596.68
Huafeng Building 2000 1,631,743.64 -- -- 1,631,743.64
Xinhu Garden
multi-storey
2003
516,210.59 -- 134,218.39 381,992.20
Xinhu Garden 8 2005 10,633,511.17 -- 644,721.96 9,988,789.21
Xinhu Garden 3 2008 -- 30,729,629.75 13,807,397.65 16,922,232.10
Ri Yuege 854,963.28 -- -- 854,963.28
Beijing Fresh Peak
Building
671,820.67 -- -- 671,820.67
270,541,384.78 329,184,045.08 170,589,355.02 429,136,074.84
（2）Real estate developing products
Starting time
(year)
Expected
Completion
time
31 December
2007
31 December
2008
Dongle Garden 128,932,800.58 128,932,800.58
Xinhu Garden 3 2006 2008 14,288,103.95 --
Jin yedao 9 2008 2009 21,860,253.22 47,546,989.99
Jin yedao 10 2008 2009 64,937,484.29 69,666,035.43
Jin yedao 11 2007 2008 118,165,416.03 --
Shantou Jinhulu 2008 -- 53,538,914.00
Shuiyuntianya,
mingyuan 2007 208,605,091.02 213,326,543.59
Shantou fresh
peak Building 21,084,056.05 21,084,056.05
Haiyan Car Park
restrictions 80,000.00 --
577,953,205.14 534,095,339.6484
（3）Provision for declines in the value of inventories
31 December
2007
Current year
additions
Current year
reductions
31 December
2008
finished products 278,891.91 -- -- 278,891.91
Longfeng Villa 47,584,499.31 -- -- 47,584,499.31
Huamin Building -- 1,350,000.00 -- 1,350,000.00
47,863,391.22 1,350,000.00 -- 49,213,391.22
Development cost, the Jinyedao 10 period of land use rights for the book value of
61,548,064.64 yuan has been used in the company’s borrowing deposit. Mortgages until July
30, 2010.
The amount of capitalize borrowing money is RMB 10,481,274.23 (year 2007: RMB
25,566,161.56).
7、 Long-term equity investments
31 December 2008
Amount
Impairment
provision
Net value
Joint venture investment 91,678,556.86 62,236,756.27 29,441,800.59
Associate investment 58,297,430.97 2,522,380.20 55,775,050.77
Other equity investment 186,256,480.74 178,642,972.78 7,613,507.96
336,232,468.57 243,402,109.25 92,830,359.32
31 December 2007
Amount
Impairment
provision
Net value
Joint venture investment 91,678,556.86 62,236,756.27 29,441,800.59
Associate investment 59,058,940.66 2,522,380.20 56,536,560.46
Other equity investment 178,642,972.78 178,642,972.78 --
329,380,470.30 243,402,109.25 85,978,361.058 5
（1）According to equity method
Name of investees
proportion
of the
investment
Initial
investment
amount
31 Dec 2007
investment
increased(
decreased)
in this year
Equity
adjustment
in this year
Cash
dividends
declared
to be
distributed
Equity
method
Accumulated
increased
decreased in
this year
31 Dec 2008
Impairment
provision
1 、joint venture
investment：
Guangdong province
Huizhou Luofu Hill
mineral water Co.,Ltd
cooperation
9,969,206.09 9,969,206.09 -- -- -- -- 9,969,206.09 9,969,206.09
Fengkai Xinhua Hotel
cooperation
9,455,465.38 9,455,465.38 -- -- -- -- 9,455,465.38 9,455,465.38
Jiangmen Xinjian Real
Estate Co. Ltd.
cooperation
9,037,070.89 9,037,070.89 -- -- -- -- 9,037,070.89 912,537.16
Xian Fresh Peak
Building Co. Ltd.
cooperation
32,840,729.61 32,840,729.61 -- -- -- -- 32,840,729.61 20,673,831.77
Tung Yick Property
Co., Ltd.
cooperation
30,376,084.89 30,376,084.89 -- -- -- -- 30,376,084.89 21,225,715.87
91,678,556.86 91,678,556.86 -- -- -- -- 91,678,556.86 62,236,756.27
2 、Associate
investment：
Shenzhen Shatoujiao
Nantian Store
50%
2,850,618.06 2,850,618.06 -- -251,532.40 -- -251,532.40 2,599,085.66 --
Shenzhen Runhua
automobile trading
Co.,Ltd
50%
1,445,425.56 1,445,425.56 -- -- -- -- 1,445,425.56 1,445,425.56
Zhaoqing Guifeng
cement Co.,Ltd
50%
15,112,000.00 15,112,000.00 -- -611,088.97 -- -611,088.97 14,500,911.03 --
Kunshan Diao Feng
Electricity Power Co.
Ltd.*1
50%
32,471,239.25 32,471,239.25 -- -- -- -- 32,471,239.25 --8 6
Name of investees
proportion
of the
investment
Initial
investment
amount
31 Dec 2007
investment
increased(
decreased)
in this year
Equity
adjustment
in this year
Cash
dividends
declared
to be
distributed
Equity
method
Accumulated
increased
decreased in
this year
31 Dec 2008
Impairment
provision
Shenzhen Dongfang
New world store
Co.,Ltd
50%
15,000,000.00 -- -- -- -- -15,000,000.00 -- --
Shenzhen City Wing
Wah Engineering Ltd.
25%
1,250,000.00 1,715,417.05 -- 101,111.68 -- 566,528.73 1,816,528.73 1,076,954.64
Shenzhen Fresh Peak
property consultant
Co.,Ltd
20%
600,000.00 -- -- -- -- -600,000.00 -- --
Yunnan Kun Peng
Aviation Service Ltd.
25% 5,464,240.74 5,464,240.74 -- -- -- -- 5,464,240.74 --
74,193,523.61 59,058,940.66 -- -761,509.69 -- -15,896,092.64 58,297,430.97 2,522,380.20
165,872,080.47 150,737,497.52 -- -761,509.69 -- -15,896,092.64 149,975,987.83 64,759,136.47
（2）According to cost method.
Name of investees
Proportion
of the
investment
Initial
investment
amount
31 December
2007
Investment
increased/decrea
sed in this year
31 December
2008
Impairment
provision
1、Other investments：
Shenzhen Shen Fang Industrial
Development Co., Ltd
100% 4,500,000.00 4,500,000.00 -- 4,500,000.00 4,500,000.00
Shenzhen ZhongGang Haiyan
Enterprise Ltd.
68% 12,940,900.00 12,940,900.00 -- 12,940,900.00 12,940,900.00
Shenzhen Real Estate Consolidated
Service Co., Ltd.
100% 5,958,305.26 5,958,305.26 -- 5,958,305.26 5,958,305.26
Paklid Limited 100% 201,100.00 201,100.00 -- 201,100.00 201,100.00
Bekaton Property Limited 60% 906,630.00 906,630.00 -- 906,630.00 906,630.008 7
Shenzhen Tefa Real Estate Consolidated
Service Co., Ltd.
100% 8,180,003.63 8,180,003.63 -- 8,180,003.63 8,180,003.63
Shenzhen Xin Dongfang Store Ltd. 100% 18,500,000.00 18,500,000.00 -- 18,500,000.00 18,500,000.00
Shenzhen City Shenfang Construction
and Decoration Materials Ltd.
100% 2,680,000.00 2,680,000.00 -- 2,680,000.00 2,680,000.00
Shenzhen Shenfang Department Store
Co. Ltd.
100% 10,000,000.00 10,000,000.00 -- 10,000,000.00 10,000,000.00
Shenzhen CyberPort Co., Ltd *2 70% 14,000,000.00 -- 7,613,507.96 7,613,507.96 --
Guangdong Province Fengkai Lain Feng
Cement Manufacturing Co., Ltd.
90% 121,265,000.00 56,228,381.64 -- 56,228,381.64 56,228,381.64
Shantou Fresh Peak Building 68,731,560.43 58,547,652.25 -- 58,547,652.25 58,547,652.25
267,863,499.32 178,642,972.78 7,613,507.96 186,256,480.74 178,642,972.7888
*1 Kunshan Diao Feng Electricity Power Co. Ltd.
On 14 October 2008, Kunshan Diao Feng Electricity Power Co. Ltd. held board meeting.
The Board decided that 30 June 2009 is the date for the dissolution of the company and
in accordance with the liquidation procedures.
*2 Shenzhen CyberPort Co., Ltd
On 12 May 2008, Shenzhen CyberPort Co., Ltd held a meeting of shareholders,
resolution of business termination, cancellation, and the composition of the liquidation
group to carry out the liquidation, the liquidation group issued a notice of liquidation on
5 December 2008. In accordance with "Accounting Standard for Business Enterprises No.
33 - Consolidated Financial Statements", the company is not included in the Company's
consolidated financial statements of the scope of the merger. Increase investment of
7,613,507.96 of above, it is invested by Japanese company on 31 December 2008.
（3）Impairment Provision for Long-term equity investment are as follows:
Current year
reductions
Name of investees Opening balance
Current
year
addition
Transfer
back
Wright-off
Closing balance
Shenzhen City Wing Wah Engineering Ltd. 1,076,954.64 -- -- -- 1,076,954.64
Shenzhen Shen Fang Industrial Development Co., Ltd 4,500,000.00 -- -- -- 4,500,000.00
Shenzhen ZhongGang Haiyan Enterprise Ltd. 12,940,900.00 -- -- -- 12,940,900.00
Shenzhen Real Estate Consolidated Service Co., Ltd. 5,958,305.26 -- -- -- 5,958,305.26
Paklid Limited 201,100.00 -- -- -- 201,100.00
Bekaton Property Limited 906,630.00 -- -- -- 906,630.00
Shenzhen Tefa Real Estate Consolidated Service Co., Ltd. 8,180,003.63 -- -- -- 8,180,003.63
Shenzhen Xin Dongfang Store Ltd. 18,500,000.00 -- -- -- 18,500,000.00
Shenzhen City Shenfang Construction and Decoration
Materials Ltd.
2,680,000.00 -- -- -- 2,680,000.00
Shenzhen Shenfang Department Store Co. Ltd. 10,000,000.00 -- -- -- 10,000,000.00
Guangdong Province Fengkai Lain Feng Cement
Manufacturing Co., Ltd.
56,228,381.64 -- -- -- 56,228,381.64
Shenzhen Runhua automobile trading Co.,Ltd 1,445,425.56 -- -- -- 1,445,425.56
Guangdong province Huizhou Luofu Hill mineral water
Co.,Ltd
9,969,206.09 -- -- -- 9,969,206.09
Fengkai Xinhua hotel 9,455,465.38 -- -- -- 9,455,465.38
Jiangmen Xinjian Real Estate Co. Ltd. 912,537.16 -- -- -- 912,537.16
Xian Fresh Peak Property Management & Trading Co. Ltd. 20,673,831.77 -- -- -- 20,673,831.77
Tung Yick Property Co., Ltd. 21,225,715.87 -- -- -- 21,225,715.87
Shantou Fresh Peak Building 58,547,652.25 -- -- -- 58,547,652.25
243,402,109.25 -- -- -- 243,402,109.2589
8、 Investment Property
If the cost measurement model is applied
31 December
2007
Current year
additions
Current year
reductions
31 December
2008
Original cost
Buildings 961,678,279.84 -- -- 961,678,279.84
Right to the use of land 112,820,364.88 -- 7,395,479.34 105,424,885.54
Sub-total 1,074,498,644.72 -- 7,395,479.34 1,067,103,165.38
Accumulated depreciation
Buildings 217,106,811.97 29,160,306.35 -- 246,267,118.32
Right to the use of land -- -- -- --
Sub-total 217,106,811.97 29,160,306.35 -- 246,267,118.32
Investment property
provision for
impairment losses
Buildings 15,283,846.00 -- -- 15,283,846.00
Right to the use of land 92,596,937.72 -- 6,069,814.98 86,527,122.74
Sub-total 107,880,783.72 -- 6,069,814.98 101,810,968.74
Investment property
on book value
Buildings 729,287,621.87 700,127,315.52
Right to the use of land 20,223,427.16 18,897,762.80
Sub-total 749,511,049.03 719,025,078.32
Original cost and impairment of reducing this year, because of exchange rate
fluctuations when converted foreign currency.
For investment of real estate, company borrowing short-term and long-term borrowings
(including due within one year of the long-term loan) book value of the collateral is
358,144,423.64 yuan (see note 7、14).
9、 Fixed assets and Accumulated depreciation
31 December
2007
Current year
additions
Current year
reductions
31 December
2008
Cost
Buildings 118,990,582.37 -- 1,872,689.81 117,117,892.56
Transport equipment 21,850,576.12 1,189,857.00 1,968,910.93 21,071,522.19
Electronic equipment and others 16,682,128.54 1,396,899.21 2,335,022.40 15,744,005.35
157,523,287.03 2,586,756.21 6,176,623.14 153,933,420.1090
31 December
2007
Current year
additions
Current year
reductions
31 December
2008
Accumulated depreciation
Buildings 52,902,396.69 4,164,715.09 1,244,054.63 55,823,057.15
Transport equipment 14,514,535.08 1,523,267.14 1,763,053.78 14,274,748.44
electronic equipment and others 13,650,176.01 894,977.67 1,735,751.58 12,809,402.10
81,067,107.78 6,582,959.90 4,742,859.99 82,907,207.69
Net book value 76,456,179.25 71,026,212.41
less：Provision for
impairment loss 131,727.96 131,727.96
Net amount 76,324,451.29 70,894,484.45
In buildings of fixed assets, there is 33,040,094.55 yuan book value of the houses and
buildings has been used in the Company's short-term borrowings, long-term borrowings
(including due within one year of long-term borrowing) mortgage(see note7、14).
10、 Intangible assets
Manners Original cost
31
December
2007
Current year
additions
Current
year
transfer
out
Current year
amortization
Accumulative
amortization
31
December
2008
Software outsourcing 286,200.00 -- 286,200.00 --
-
-- -- 286,200.00
Taxi license outsourcing 6,368,000.00 6,312,140.00 -- -- 167,580.00 223,440.00 6,144,560.00
6,654,200.00 6,312,140.00 286,200.00 -- 167,580.00 223,440.00 6,430,760.00
less：Provision for
impairment loss -- --
Net amount 6,312,140.00 6,430,760.00
11、 Long-term deferred and prepaid expenses
Original cost
31 December
2007
Current year
additions
Current year
amortization
Accumulative
amortization
31 December
2008
Decoration costs 1,808,640.24 825,350.08 -- 298,003.18 1,281,293.34 527,346.90
1,808,640.24 825,350.08 -- 298,003.18 1,281,293.34 527,346.90
12、 Deferred tax assets
31 December 2008 31 December 2007
Inventories Impairment provision 9,516,899.86 7,137,674.90
Employee benefits payable 647,628.85 764,827.91
Unused operating losses against tax 8,315,460.11 14,527,142.45
18,479,988.82 22,429,645.2691
Deferred income tax assets recognized: the next period is likely to get used to offset the
temporary differences can be offset taxable income amount, to confirm the
above-mentioned deferred income tax assets. Because of the Company and some
subsidiaries are unlikely to receive future taxable profits that can be used to offset the
loss, the Company has not recognized the 92,351,954.66 yuan of deferred income tax
assets to offset the cumulative loss .
13、 Impairment provision of assets
Current year reductions
31 December
2007
Current
year
additions
Transfer
back
Wright-off
31 December
2008
Provision for bad debts *1 210,561,995.27 -- 11,992,989.63 1,072,982.81 197,496,022.83
Inventories impairment
provision *2 47,863,391.22
1,350,000.00
-- -- 49,213,391.22
Long-term equity investment
impairment provision *3 243,402,109.25
-- --
-- 243,402,109.25
Investment property
impairment provision *4 107,880,783.72
-- -- 6,069,814.98
101,810,968.74
Fixed assets impairment
provision 131,727.96
-- --
-- 131,727.96
609,840,007.42 1,350,000.00 11,992,989.63 7,142,797.79 592,054,220.00
* Provision of bad debts was mainly due to the Company one debtor has been liquidated
this year. The company will claim the money and the corresponding preparation for
reseller deal with bad debts. Decreasing in provision of bad debts was mainly due to the
Shenzhen Investment Ltd, Cyberport this year not included in the scope of consolidation
statement. Provision of investment impairment loss in real estate this year; prepare the
other reduced, mainly because of foreign currency when converted.
14、 Restrictions on the ownership of assets
Items Book value on 31 December 2007
Cash at bank Other currencies 29,401,650.67
Inventories(work in
process)
Land rights of Jinyedao 61,548,064.64
Investment property Shengfang square 268,239,931.31
Investment property Floor 2 of guoshan north building 81,929,380.03
Investment property Real estate Building 7,975,112.31
Fixed assets Floor 46 of Shengfang Building 33,040,094.55
482,134,233.5192
The above-mentioned restrictions on ownership of assets, both for the Company’s
short-term borrowing and long-term borrowings (including due within one year of the
long-term loan) mortgage.
15、 Short-term borrowings
Borrowing conditions 31 December 2008 31 December 2007
Mortgage borrowings* 59,200,000.00 47,000,000.00
59,200,000.00 47,000,000.00
* The mortgage details see note 7. 14.
16、 Accounts payable
（1）Accounts payable balance at the end, the Group did not less holding company 5%
(including 5%) over the right to vote, shareholders of the funds unit.
（2）Accounts payable balance at the end of non-affiliated companies to meet payments.
17、 Advances from customers
（1）Advance payment balance at the end, the Group did not less holding company 5%
(including 5%) over the right to vote, shareholders of the funds unit;
（2）At the end of the balance of accounts in advance to deal with non-affiliated
companies money；
（3）Accounts in advance of this year is 37.13% less than the previous year. Mainly due to a
decrease in advance real estate receipts.
On December 31, 2008, the Company accounts in advance of paying back the principal
in advance details：
Project names Opening balance Closing balance Completion time aging
Guangzhou H
Huangpu yuan
20,288,013.52 -- Completion
Jinyedao villa 6 20,053,064.00 -- Completion
Jinyedao villa 7 34,434,918.00 5,136,334.00 Completion Within1year
Jinyedao villa 8 91,121,134.00 5,136,334.00 Completion Within1year
Jinyedao villa 11 -- 74,520,189.83 Completion Within1year
165,897,129.52 84,792,857.8393
18、 Employee benefits payable
31 December
2007
Current year
additions
Current year
reductions
31 December
2008
Wages and salaries,
bonuses, allowances and
subsidies
19,576,031.33 72,894,613.68 75,237,186.35 17,233,458.66
Staff welfare -- 2,593,933.19 2,593,933.19 --
Social security contributions 5,631,601.55 10,050,994.69 13,822,559.40 1,860,036.84
Labor union and employee
education funds
519,602.68 1,354,372.96 1,073,746.99 800,228.65
Compensation to employees
for termination of
employment relationship
5,731,091.06 32,000.00 500,101.00 5,262,990.06
Others 499,056.13 3,315,678.29 3,769,216.29 45,518.13
31,957,382.75 90,241,592.81 96,996,743.22 25,202,232.34
19、 Taxes payable
31 December 2008 31 December 2007
Value added tax (“VAT”) -2,818,856.76 -3,866,883.58
Business tax -1,616,946.70 2,432,137.35
Construction tax -220,035.78 -70,405.32
Education surcharge -91,896.23 277,972.99
Embankment 10,927.15 69,911.04
Real estate tax 2,081,659.05 1,896,744.04
Increment tax on
land value
4,170,141.46 -1,092,935.93
Income tax 267,821.39 -3,286,758.31
Personal income tax 469,019.54 597,249.52
others 96.78 1,311.19
2,251,929.90 -3,041,657.01
Taxes payable has a substantial increase over the previous year. Mainly due to
Guangzhou Huangpu Yayuan project has been initially completed and the clearing of
land value-added tax, resulting in the increase in land value-added tax.
20、 Interests payable
Company name 31 December 2008 31 December 2007
Shenzhen Investment
Shareholding Co.，Ltd
7,888,053.54 2,901,306.85
Shenzhen Investment Holdings Co., Ltd is the holding company. The items of borrowing to see
note7, 21. The unpaid interest balance is the second half year of 2007 and the interest during
the year2008, as detailed in note 9,(3).3.94
21、 Other payables
（ 1 ） In other accounts payable balance at the end, owe the Company holds 5%
(including 5%) over the right to vote, shareholders funds units are as follows:
Shareholder company
name
31 December 2008
31 December 2007 Nature
Shenzhen Investment
Shareholding Co.，Ltd 63,848,819.24 83,848,819.24 Borrowing
（2）Other accounts payable balance at the end of the money owed to related parties see
note 9, (3) .4.
22、 Long-term borrowings
Borrowing conditions 31 December 2008 31 December 2007
Mortgage borrowings 340,804,785.54 367,494,457.32
Total 340,804,785.54 367,494,457.32
Including.：non-current liability
due in one year
10,461,764.71 25,280,129.52
long term borrowings 330,343,020.83 342,214,327.80
The ending balance of borrowings is as follows according to the enterprises’ names.
31 December
2007
Name of borrowing enterprises
currency
Borrowing
conditions
Maturity Date
Shenzhen Rural Commercial Bank 201,000,000.00 Mortgage 2010.06.21
Shenzhen Nanyang Commercial Bank 53,004,785.54 Mortgage 2017.05.29
China Commercial Bank in Shenzhen 9,400,000.00 Mortgage 2010.06.13
China Commercial Bank in Shenzhen 17,400,000.00 Mortgage 2010.7.10
Bank of Communication in Shantou 60,000,000.00 Mortgage 2010.7.30
340,804,785.54
*1Details of mortgage borrowings for particulars see note7、14.
23、 Long-term payables
31 December 2008 31 December 2007
Maintenance fund 7,490,170.24 9,172,161.05
24、 Accrued liabilities
31 December 2008 31 December 2007
Loss from lawsuit 2,196,714.08 --
For the detail of lawsuit see 14(4)95
25、 Share capital
31 December 2007
Current year
additions
Current year
reductions
31 December 2008
1、Shares with restriction on disposals
1)、State-owned shares 622,273,800 -- 50,583,000 571,690,800
2)、PRC legal person shares -- -- -- --
3)、PRC legal nature person shares -- -- -- --
4)、Others 5,550 -- 5,550 --
Total of shares with restriction on
disposals
622,279,350 -- 50,588,550 571,690,800
2、Shares without restriction on
disposals
1)、Domestically listed PRC public
shares
269,380,650 50,588,550 -- 319,969,200
2)、Domestically listed foreign shares 120,000,000 -- -- 120,000,000
3)、Overseas listed foreign shares -- -- -- --
4)、Others -- -- -- --
Total of shares without restriction on
disposals
389,380,650 50,588,550 -- 439,969,200
3、Total 1,011,660,000 1,011,660,000
Change this year, increase or decrease in equity is accordance with the Company's share reform
program. The only non-circulation of the Company shares of Shenzhen Investment Holdings Co., Ltd.
held by the conditions of limited access to the shares listed part.
26、 Capital surplus
Opening balance
Current year
additions
Current year
reductions
Closing balance
Capital premium 557,433,036.93 -- -- 557,433,036.93
Other capital surplus 420,811,821.17 -- -- 420,811,821.17
978,244,858.10 -- -- 978,244,858.10
27、 Surplus reserve
31 December 2007
Current year
additions
Current year
reductions 31 December 2008
Reserve fund 118,910,686.94 -- -- 118,910,686.94
28、 Profit distribution
2008 2007
Net profit for parent company’s shareholders 19,123,787.11 39,007,992.54
add：Undistributed profit at beginning of year -934,635,245.38 -973,643,237.92
less：Profit distribution -- --
Including.：withdrawal legal surplus -- --
withdrawal free surplus reserves -- --
Undistributed profit at ending of year -915,511,458.27 -934,635,245.3896
29、 Minority Interest and profit or loss
Name of investees
Proportion of minority
shareholdings
31 December
2008
31 December 2007
Fresh Peak Investment Ltd . 45% -10,995,584.63 -10,733,643.11
Barenie Co. Ltd. 20% -2,027,387.46 -1,920,929.04
Shenzhen Cyber Port
Co.,Ltd
30%
-- 4,050,346.85
Shenzhen City Wa Gen
Construction
Management Ltd.
25% 1,861,471.69 1,829,483.58
-11,161,500.40 -6,774,741.72
* Shenzhen CyberPort Co., Ltd is not included in the scope of the combined
statements this year (see note 6, (3)).
30、 Revenue and cost of sales
Revenue from Revenue Cost Gross profit
main operations 2008 2007 2008 2007 2008 2007
Sales of
properties 318,341,233.41 510,543,751.94 156,884,141.75 342,581,402.58 161,457,091.66 167,962,349.36
Construction 198,643,152.28 168,119,414.61 189,063,593.50 156,567,107.62 9,579,558.78 11,552,306.99
Business 68,156,645.38 53,462,110.04 34,783,068.61 36,504,754.95 33,373,576.77 16,957,355.09
Leasing and
property
mangement
90,591,169.68 82,346,479.41 74,760,638.91 67,086,498.17 15,830,530.77 15,259,981.24
Hotel and others
service
30,273,123.66 30,655,770.44 17,658,843.94 18,901,274.60 12,614,279.72 11,754,495.84
706,005,324.41 845,127,526.44 473,150,286.71 621,641,037.92 232,855,037.70 223,486,488.52
（1） The sales of top five:
2008 2007
Sales (in ten th
ousand Yuan）
Proportion of
the company’s
total sales
Sales (in ten
thousand Yuan）
Proportion of the
company’s total sales
Total sales of top five 8,486 12.02% 5,064 5.99%
（2） main operations by geographical segments as follows:
Revenue Cost Gross profit
2008 2007 2008 2007 2008 2007
PRC：
Guangdong province 704,312,668.41 843,585,909.43 471,333,454.43 619,793,339.53 232,979,213.98
223,792,569.90
Overseas： 1,692,656.00 1,541,617.01 1,816,832.28 1,847,698.39 -124,176.28 -306,081.38
706,005,324.41 845,127,526.44 473,150,286.71 621,641,037.92 232,855,037.70 223,486,488.5297
31、 Tax and levies on operations
2008 2007
Business tax 34,066,890.14 40,560,987.12
City maintenance and construction tax 294,453.17 362,286.05
Educational surcharge 570,478.34 870,312.81
Real estate tax 7,597,837.35 6,409,368.10
Increment tax on land value 29,800,780.19 16,869,744.90
others 554,758.48 456,093.61
72,885,197.67 65,528,792.59
32、 Finance expenses
2008 2007
Interest expenses 37,691,766.29 42,036,666.93
Less：expenses of capitalization interest 10,481,274.23 25,566,161.56
Less: interest income 4,222,677.14 4,920,817.96
Exchange losses 5,786,273.36 41,658,689.44
Less: exchange gains 129,580.24 74,905.46
Others 866,291.09 258,135.05
29,510,799.13 53,391,606.44
The substantial decrease is mainly due to the decrease in exchange currency losses.
33、 Assets impairment losses
2008 2007
Reverse Impairment losses for inventories 1,350,000.00 --
34、 Investment income
2008 2007
Sale income from financial assets held for trading 50,360.46 101,321.93
Long-term equity investment income 2,720,228.96 28,370,955.88
including：dividends income from investees 5,080,720.23 985,946.73
Income from disposal of subsidiaries -- 11,019,009.15
Income from disposal of other operational units -- 16,366,000.00
Change in net profit of investees according to
equity method.
-2,360,491.27 --
2,770,589.42 28,472,277.81
Long-term investment income this year, decreased significantly over the previous year.
Mainly due to the gain on disposal of Shenyang Tongxin Real Estate Development Co.,
Ltd. and Shenzhen Railway Logistics Co Ltd shares 11,019,009.15 yuan, 16,366,000.0098
yuan investment income respectively.
35、 Non-operating income
2008 2007
1、Total gain on disposal of non current assets 3,132,015.82 94,170.00
including：Gain on disposal of fixed assets 3,132,015.82 94,170.00
2、Fine income -- 66,360.09
3、Penalty income -- 2,233,288.00
4、Others 68,056.46 47,738.39
3,200,072.28 2,441,556.48
36、 Non-operating expenses
2008 2007
1、Total losses on disposal of non current assets 83,755.93 113,850.02
including：Loss on disposal of fixed assets 83,755.93 113,850.02
2、Fine expenses 5,871.72 2,727,368.63
3、Donation expenses 562,636.95 218,000.00
4、Penalty expenses 6,785,703.66 918,156.31
5、Others 146,373.93 100,683.37
7,584,342.19 4,078,058.33
37、 Income tax expenses
2008 2007
Current year income tax expenses 17,928,912.10 3,460,653.51
Deferred income tax expenses 3,949,656.44 9,264,644.01
21,878,568.54 12,725,297.52
38、 Earning per share
Calculation process of EPS
2008 2007
Net profit attributable to equity holders of the
company
19,123,787.11 39,007,992.54
Weighted average number of ordinary shares
outstanding
1,011,660,000 1,011,660,000
Basic earnings per share（per share RMB yuan） 0.0189 0.0386
Earnings per share - diluted（per share RMB yuan） 0.0189 0.0386
39、 Cash flow statements
（1）Cash received from operating activities99
2008 2007
interest income 4,222,677.14 4,920,817.96
Mortgage、Guarantee 2,418,644.77 4,094,725.16
Other debits 16,410,500.52 14,136,400.00
Maintenance fund 1,278,150.16 3,756,612.39
Others switch to cash at bank 463,533.22 2,119,773.71
Others 2,275,977.64 2,898,124.55
27,069,483.45 31,926,453.77
（2）Cash paid for other operating activities
2008 2007
Cash paid to General and
administrative expenses 35,270,916.16 30,696,161.22
Cash paid to operating expenses 7,012,640.95 5,898,497.30
Mortgage and Guarantee 1,619,530.09 3,274,198.32
Other credits 21,388,870.52 18,485,443.60
Others 4,801,100.21 5,014,514.50
70,093,057.93 63,368,814.94
（3）Cash paid for other investing activities
2008 2007
Cost of shares disposal of Bafangtong
Company
--
4,170,000.00
（4）Cash and cash equivalents
2008 2007
1、Cash 299,011,742.90 422,049,961.88
including：Cash on hand 382,537.85 824,216.96
the bank deposits for available
payment
298,629,205.05 421,225,744.92
2、Cash equivalents -- --
3、Cash and cash equivalent at end of year 299,011,742.90 422,049,961.88
The differences between cash and cash equivalents, and the one at the end of monetary
balance, mainly because of the existence of notes7, 14.
（5）Cash flow statement(continued)10 0
Supplementary information 2008 2007
1、Reconciliation from the net profit to the cash flows
from operating activities
Net profit 19,155,775.22 38,933,632.24
Add：Provisions for assets impairment
1,350,000.00 --
Depreciation of fixed assets and
investment property
35,743,266.25
38,371,200.64
Amortization of intangible assets 167,580.00 59,806.60
Long-term deferred and prepaid
expenses amortization
298,003.18
242,314.67
Losses on disposal of fixed assets,
intangible assets and other long-term
assets（gains used“-”）
-3,048,259.89
19,680.02
Scrapping of fixed assets losses
（gains used“-”）
--
--
Exchange of fair value losses（gains used“-”） 456,411.50 -342,635.00
Finance expenses （gains used“-”） 30,483,564.39 58,054,289.35
Investment losses（gains used“-”） -2,770,589.42 -28,472,277.81
Decrease in deferred tax assets（gains used“-”） 3,949,656.44 9,264,644.01
Increase in deferred tax liabilities
（gains used“-”）
--
--
Decrease in inventories（gains used“-”） -124,467,160.34 -172,243,837.43
Decrease in operating receivables
（gains used“-”）
-5,300,812.15
228,489,982.06
Increase in operating payables（gains used“-”） -39,010,464.12 -225,278,369.49
Others 463,533.22 2,119,773.71
Net cash flows from operating activities -82,529,495.72 -50,781,796.43
2、Investment and financing activities not involving cash -- --
3、Net increase/ (decrease) in cash and cash equivalents
Cash at end of the year 299,011,742.90 422,049,961.88
Less: cash at beginning of the year 422,049,961.88 439,499,740.58
Add：cash equivalents at end of the year -- --
Less: cash equivalents at beginning of the year -- --
Net increase in cash and cash equivalents -123,038,218.98 -17,449,778.7010 1
NOTE 8、Notes to the parent company financial statements
1、 Accounts receivable
Aging analysis
31 December 2008
31 December 2007
aging
Amount
proportion
%
Provision for
bad debts
Amount
proportion
%
Provision for
bad debts
Within 1 year 65,745.71 0.47 -- 278,938.00 1.82 --
1 to 2 years 183,200.39 1.30 -- -- -- --
2 to 3 years -- -- -- 4,333,055.00 28.26 --
Over 3 year 13,807,219.42 98.23 6,457,254.02 10,723,068.68 69.92 6,457,254.02
14,056,165.52 100.00 6,457,254.02 15,335,061.68 100.00 6,457,254.02
2、 Other receivables
Aging analysis
31 December 2008
31 December 2007
aging
Amount
Proportion
%
Provision for
bad debts
Amount
proportion
%
Provision for
bad debts
Within 1 year 64,567,287.58 4.39 -- 226,370,886.99 15.50 --
1 to 2 years 209,294,808.32 14.23 -- 154,315,379.41 10.56 4,001,634.89
2 to 3 years 154,786,735.85 10.53 4,001,634.89 71,859,551.18 4.92 28,201,360.84
Over 3 year 1,041,756,363.78 70.85 859,191,545.13 1,008,094,897.69 69.02 830,990,184.29
1,470,405,195.53 100.00 863,193,180.02 1,460,640,715.27 100.00 863,193,180.02
3、 Inventories
31 December 2008 31 December 2007
Amount
Provision for
declines
Amount
Provision for
declines
Real estate development
products 53,691,639.07 1,350,000.00
15,694,251.48
--
Construction development
products 128,932,800.58 --
143,300,904.53
--
182,624,439.65 1,350,000.00
158,995,156.01
--10 2
4、 Long-term equity investments
（1） Long-term equity investments
31 December 2008 31 December 2007
Amount
Impairment
provision
Net value Amount
Impairment
provision Net value
Subsidiaries investment 272,668,771.15 -- 272,668,771.15 291,983,046.15 -- 291,983,046.15
joint venture investment 19,424,671.47 19,424,671.47 -- 19,424,671.47 19,424,671.47 --
associate investment 20,361,950.98 2,522,380.20 17,839,570.78 21,123,460.67 2,522,380.20 18,601,080.47
other equity investment 134,315,609.56 121,914,591.14 12,401,018.42 121,914,591.14 121,914,591.14 --
446,771,003.16 143,861,642.81 302,909,360.35 454,445,769.43 143,861,642.81 310,584,126.6210 3
（2） According to equity method
Name of investees
proportion of
the investment
Initial
investment
amount
31 December
2007
investment
increased(de
creased)in
this year
Equity
adjustment in
this year
Cash
dividends
declared to be
distributed
Equity method
accumulated
increased/
decreased
31 December
2008
Impairment
provision
1、joint venture investment：
Guangdong province Huizhou
Luofu Hill mineral water
Co.,Ltd
cooperation
9,969,206.09 9,969,206.09 -- -- -- -- 9,969,206.09 9,969,206.09
Fengkai Xinhua Hotel
cooperation
9,455,465.38 9,455,465.38 -- -- -- -- 9,455,465.38 9,455,465.38
19,424,671.47 19,424,671.47 -- -- -- -- 19,424,671.47 19,424,671.47
2、associate investment：
Shenzhen Shatoujiao
Nantian Store
50%
2,850,618.06 2,850,618.06 -- -251,532.40 -- -251,532.40 2,599,085.66 --
Shenzhen Runhua automobile
trading Co.,Ltd
50%
1,445,425.56 1,445,425.56 -- -- -- -- 1,445,425.56 1,445,425.56
Zhaoqing guifeng cement
Co.,Ltd
50%
15,112,000.00 15,112,000.00 -- -611,088.97 -- -611,088.97 14,500,911.03 --
Shenzhen Dongfang New
world store Co.,Ltd
50%
15,000,000.00 -- -- -- -- -15,000,000.00 -- --
Shenzhen City Wing Wah
Engineering Ltd.
25%
1,250,000.00 1,715,417.05 -- 101,111.68 -- 566,528.73 1,816,528.73 1,076,954.64
Shenzhen Fresh Peak
property consultant Co.,Ltd
20%
600,000.00 -- -- -- -- -600,000.00 -- --
46,758,043.62 21,123,460.67 -- -761,509.69 -- -15,896,092.64 20,361,950.98 2,522,380.20
66,182,715.09 40,548,132.14 -- -761,509.69 -- -15,896,092.64 39,786,622.45 21,947,051.6710 4
（3） According to cost method
Name of investees
Proportion
of the
investment
Initial investment
amount 31 December
2007
Investment
increased/
decreased in
this year
31 December
2008 Impairment
provision
1、Subsidiaries investment：
Shenzhen City Property Management Ltd. 95 12,821,791.52 12,821,791.52
--
12,821,791.52 --
Shenzhen Petrel Hotel Co. Ltd. 68.10 20,605,047.50 20,605,047.50
--
20,605,047.50 --
Shenzhen City Shenfang Investment Ltd. 90 9,000,000.00 9,000,000.00
--
9,000,000.00 --
Fresh Peak Holdings Ltd. 100 556,500.00 556,500.00
--
556,500.00 --
Fresh Peak Enterprise Ltd. 100 20,824,545.77 21,717,697.73 -- 21,717,697.73 --
Shenzhen Special Economic Zone Real Estate (Group)
Guangzhou Property and Estate Co., Ltd.
100 20,000,000.00 20,000,000.00 -- 20,000,000.00 --
Shenzhen Zhen Tung Engineering Ltd. 73 11,332,321.45 11,332,321.45 -- 11,332,321.45 --
Great Wall Estate Co., Inc. 70 1,435,802.00 1,435,802.00 -- 1,435,802.00 --
Shenzhen City Shenfang Free Trade Trading Ltd. 95 4,750,000.00 4,750,000.00 -- 4,750,000.00 --
Shenzhen City Wa Gen Construction Management Ltd. 75 6,000,000.00 6,000,000.00 -- 6,000,000.00 --
Shenzhen Shengfang Car rental Ltd. 55 11,809,500.00 11,809,500.00 -5,314,275.00 6,495,225.00 --
Openice Ltd. 20 212,280.00 212,280.00 -- 212,280.00 --
Beijing SPG Property Management Limited 100 500,000.00 500,000.00 -- 500,000.00 --
Shenzhen Lain Hua Industry and Trading Co. Ltd. 95 13,458,217.05 13,458,217.05 -- 13,458,217.05 --
Shenzhen City SPG Long Gang Development Ltd. 95 30,850,000.00 30,850,000.00 -- 30,850,000.00 --
Shenzhen Cyber Port Co.,Ltd 70 14,000,000.00 14,000,000.00 -14,000,000.00 -- --
Beijing fresh peak property development management
limited company
75
64,183,888.90 64,183,888.90 -- 64,183,888.90 --10 5
Name of investees
Proportion
of the
investment
Initial investment
amount 31 December
2007
Investment
increased/
decreased in
this year
31 December
2008 Impairment
provision
Shenzhen City SPG Bao An Development Ltd. 95% 19,000,000.00 19,000,000.00 -- 19,000,000.00 --
Shenzhen Shenfang Car Park Ltd. 70% 29,750,000.00 29,750,000.00 -- 29,750,000.00 --
291,089,894.19 291,983,046.15 -19,314,275.00 272,668,771.15 --
2、Others investment：
Shenzhen Shen Fang Industrial Development Co., Ltd. 100% 4,500,000.00 4,500,000.00 -- 4,500,000.00
4,500,000.00
Shenzhen ZhongGang Haiyan Enterprise Ltd. 68% 12,940,900.00 12,940,900.00 -- 12,940,900.00 12,940,900.00
Shenzhen Real Estate Consolidated Service Co., Ltd. 100% 5,958,305.26 5,958,305.26 -- 5,958,305.26
5,958,305.26
Paklid Limited 100% 201,100.00 201,100.00 -- 201,100.00 201,100.00
Bekaton Property Limited 60% 906,630.00 906,630.00 -- 906,630.00 906,630.00
Shenzhen Tefa Real Estate Consolidated Service Co., Ltd. 100% 8,180,003.63 8,180,003.63 -- 8,180,003.63
8,180,003.63
Shenzhen Xin Dongfang Store Ltd. 100% 18,500,000.00 18,500,000.00 -- 18,500,000.00 18,500,000.00
Shenzhen City Shenfang Construction and Decoration
Materials Ltd.
100% 2,680,000.00 2,680,000.00 -- 2,680,000.00 2,680,000.00
Shenzhen Shenfang Department Store Co. Ltd. 95% 9,500,000.00 9,500,000.00 -- 9,500,000.00 9,500,000.00
Shenzhen CyberPort Co., Ltd 70% 14,000,000.00 -- 12,401,018.42 12,401,018.42 -
Shantou Fresh Peak Building 100% 68,731,560.43 58,547,652.25 -- 58,547,652.25 58,547,652.25
146,098,499.32 121,914,591.14 12,401,018.42 134,315,609.56 121,914,591.14
437,188,393.51 413,897,637.29 -6,913,256.58 406,984,380.71 121,914,591.1410 6
（4） impairment Provision of long-term equity investments
Impairment Provision
Name of investees
Opening balance
Current year
addition
Current year
reductions Closing balance
Provision for
reasons
Shenzhen City Wing Wah Engineering Ltd. 1,076,954.64 -- -- 1,076,954.64 Closed operations
Shenzhen Shen Fang Industrial Development Co., Ltd. 4,500,000.00 -- -- 4,500,000.00 Closed operations
Shenzhen ZhongGang Haiyan Enterprise Ltd. 12,940,900.00 -- -- 12,940,900.00 Closed operations
Shenzhen Real Estate Consolidated Service Co.,Ltd. 5,958,305.26 -- -- 5,958,305.26 Closed operations
Paklid Limited 201,100.00 -- -- 201,100.00 Closed operations
Bekaton Property Limited 906,630.00 -- -- 906,630.00 Closed operations
Shenzhen Tefa Real Estate Consolidated Service Co., Ltd. 8,180,003.63 -- -- 8,180,003.63 Closed operations
Shenzhen Xin Dongfang Store Ltd. 18,500,000.00 -- -- 18,500,000.00 Closed operations
Shenzhen City Shenfang Construction and
Decoration Materials Ltd.
2,680,000.00 -- -- 2,680,000.00
Closed operations
Shenzhen Shenfang Department Store Co. Ltd. 9,500,000.00 -- -- 9,500,000.00 Closed operations
and liquidation
Shenzhen Runhua automobile trading Co.,Ltd 1,445,425.56 -- -- 1,445,425.56 Closed operations
Guangdong province Huizhou Luofu Hill mineral
water Co.,Ltd
9,969,206.09 -- -- 9,969,206.09
Closed operations
Fengkai Xinhua Hotel 9,455,465.38 -- -- 9,455,465.38 Closed operations
Shantou Fresh Peak Building 58,547,652.25 -- -- 58,547,652.25 Closed operations
143,861,642.81 -- -- 143,861,642.8110 7
*1. This year reduce is due to the Company transfer 45% of its right to its subsidiary- Shenzhen
Shenfang Investment Limited.
* 2. Because of the company's liquidation has been conducted to adjust from the subsidiary to other
listed investments, the amount difference between the two adjustments is included in the profit and
loss for this year.
5、 Revenue and cost of good sold
Revenue Cost Gross profit
2008 2007 2008 2007 2008 2007
Sales ofproperties
56,391,974.81 182,933,260.47 19,238,250.46 114,294,772.82 37,153,724.35 68,638,487.65
Leasing income
64,426,334.40 49,510,590.69 31,705,163.68 34,166,016.26 32,721,170.72 15,344,574.43
120,818,309.21 232,443,851.16 50,943,414.14 148,460,789.08 69,874,895.07 83,983,062.08
Main operations by geographical segment are as follows:
Revenue Cost Gross profit
Region
2008 2007 2008 2007 2008 2007
Shenzhen 120,818,309.21 232,443,851.16 50,943,414.14 148,460,789.08 69,874,895.07 83,983,062.08
6、 Investment income
2008 2007
Sale income from available-for-sales financial assets 47,026.35 --
Long-term equity investment income -1,766,492.73 17,089,822.66
including：Dividends income from investees -- 723,822.66
Income from disposal of subsidiaries -- 16,366,000.00
Changes in net profit of investees according to
equity method
-1,766,492.73 --
others -- --
-1,719,466.38 17,089,822.66
NOTE 9、Related parties and related party transactions
（ 1）The standards of related parties recognition
Party control, joint control or the other to exert a significant impact on the other party, as
well as two or more than two parties are of the same party control, joint control or
significant influence, constitutes a related party.10 8
（ 2）Related party relationships
1、 Related parties with controlling relationship
company
Registered
code
Place of
registration
Nature of
business
and
principal
activities
Registered
capital
Equity
Holding
of the
company
Voting
power
Shenzhen Investment
Shareholding Limited
Company
Guangdong
province
Shenzhen
* RMB 4 billion 56.51% 56.51%
*Guarantees for Municipal State-owned enterprises; stated-owned shares management
excluded from the enterprises of direct control by SAC; on assets restructurings of
controlled enterprises as well as its capital operation. Other businesses authorized by city
SAC.
Company that is the ultimate controlling party of the Company under the direct control
2、 Subsidiaries
Detail information about subsidiaries for detail see note 6、1 & 2.
3、 Joint ventures, associates
Detail information about joint ventures and associates for detail see NOTE 7、7.
（ 3）Related party transactions
a) Emoluments
Items
2008
(in ten thousand Yuan）
2007
(in ten thousand Yuan）
Total emoluments for key
management personnel 356.78 359.66
Total of top 3 120.00 132.00
b) Borrowings from related party
Name 2008 2007
Shenzhen Investment Shareholding
Limited Company
63,848,819.24 83,848,819.24
c) Interest pay to the related party
Name 2008 2007
Shenzhen Investment Shareholding
Limited Company
4,986,746.69 4,954,619.2310 9
*Interest: annual interest of 6.12%, according to the borrowing agreement.
d) Receivables and Payables of related parties
31 December 2008 31 December 2007
Name of related parties
Amount
Provision for
bad debts
Amount
Provision for
bad debts
Other receivables
Guangdong province Huizhou
Luofu Hill mineral water Co.,Ltd
10,465,168.81 10,465,168.81 10,465,168.81 10,465,168.81
Shenzhen Runhua automobile
trading Co.,Ltd
3,072,764.42 3,072,764.42 3,072,764.42 3,072,764.42
Fidelity Development Limited 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 19,205,883.66 19,197,730.76 19,205,883.66 19,197,730.76
Shenzhen Shenfang Department
Store Co. Ltd.
189,179.82 189,179.82 189,179.82 139,693.51
Shenzhen Real Estate
Consolidated Service Co., Ltd.
927,136.22 927,136.22 927,136.22 901,956.22
Shenzhen City Shenfang
Construction and Decoration
Materials Ltd.
8,327,180.71 8,327,180.71 8,327,180.71 7,064,855.69
Shenzhen City Wing Wah
Engineering Ltd.
1,187,723.46 -- 1,187,723.46 --
Xi’an Fresh Peak property
management& Trading Co.,Ltd
8,419,205.19 -- 8,419,205.19 --
Account
receivable
Shenzhen Fresh Peak property
consultant Co.,Ltd
4,272,678.17 -- 4,333,055.00 --
Other payables
Shenzhen Tefa Real Estate
Consolidated Service Co., Ltd.
598,012.16 -- 598,012.16 --
Shenzhen Shen Fang Industrial
Development Co., Ltd
1,534,854.91 -- 1,534,854.91 --
Shenzhen ZhongGang Haiyan
Enterprise Ltd.
135,853.52 -- 135,853.52 --
Shenzhen Dongfang New world
store Co.,Ltd
902,974.64 -- 902,974.64 --
Shenzhen Xin Dongfang Store
Ltd.
1,394,704.21 -- 1,394,704.21 --
Guangdong Province Fengkai
Lain Feng Cement Manufacturing
Co., Ltd.
1,880,577.00 -- 1,880,577.00 --
Shenzhen Shatoujiao Nantian
Store
1,200,000.00 -- 1,200,000.00 --
Shenzhen Cyber Port Co., Ltd
6,026,357.00 -- -- --11 0
NOTE 10、Exchange of non-monetary assets
No disclosures for exchange of non-monetary assets in 2008.
NOTE 11、Share-based payment
No Share-based payment contracts.
NOTE 12、Debt restructurings
No debt restructurings disclosures this year.
NOTE 13、Segment reporting
2008
provide information in main operations reporting
Real estate and
real estate
leasing
business
Property
management
business
Construction
Hotels and other
services
counteract Total
1、Revenue 406,373,043.81 93,955,234.39 221,950,305.58 29,494,024.07 -45,767,283.44 706,005,324.41
2、operating expenses 352,480,123.62 90,966,831.58 221,500,641.04 28,039,398.32 -32,400,283.82
660,586,710.74
3、Operating profit(loss) 53,892,920.19 2,988,402.81 449,664.54 1,454,625.75 -13,366,999.62 45,418,613.67
4、Total assets 3,061,686,236.86 83,999,031.68 71,922,398.35 154,573,924.25 -1,106,524,912.23
2,265,656,678.91
5、Total liabilities 2,328,133,550.33 79,541,289.95 55,927,525.41 95,202,636.31 -1,490,275,697.45
1,068,529,304.55
2007
provide information in main operations reporting
Real estate and
real estate
leasing
business
Property
management
business
Construction
Hotels and other
services
counteract Total
1、Revenue 560,193,019.83 86,164,402.18 173,270,962.61 35,760,689.82 -10,261,548.00 845,127,526.44
2、operating expenses 512,936,223.98 79,899,919.84 172,633,573.04 34,990,478.22 -8,628,100.25
791,832,094.83
3、Operating profit(loss) 47,256,795.85 6,264,482.34 637,389.57 770,211.60 -1,633,447.75 53,295,431.61
4、Total assets 3,080,016,595.08 80,989,252.36 50,382,892.95 179,429,852.36 -1,088,093,656.15
2,302,724,936.60
5、Total liabilities 2,249,276,745.59 81,303,003.04 34,876,918.30 107,175,522.92 -1,351,279,155.54
1,121,353,034.3111 1
NOTE 14、Contingencies
1、 Significant litigation
（1）Guoxing Building Lawsuit
On 21 March 1997, the company executed an agreement with Baoxin real Estate
Development (Shenzhen) Company limited ( called Baoxin below) to sell its share of 68%
interest in Guoxin Building at a consideration of RMB145,000,000.In addition, The
company had outstanding accounts of the project 15,000,000 yuan will be paid by Baoxin
Company. After Baoxing company paid 45,000,000 yuan, 100,000,000 yuan owed money
and the transfer of the rights and interests of 15,000,000 yuan project is not paid to the
Company. So the company instituted legal proceedings. After the trial of the Guangdong
High People’s Court on 28 September 2002, Baoxin should pay the outstanding purchase
consideration of RMB 98,948,060 yuan and the interests to the company. Upon a second
sue of the case in 2003, the outcome remained unchanged and in the favor of the company.
The company has made an agreement with BaoXin on 22 Feb 2008. According to the
agreement, the company gave up the rights of disposal and arrangement of BaoXin
Building in LongGang District on the condition of BaoXin has to make a payment RMB
15,000,000.00 to the company.
Till 31 December, 2008, the amount of RMB 63,701,645.33 has been called back on the
case with the execution.
（2）Xi’an project Lawsuit
A subsidiary, Fresh Peak Holding limited company (called Fresh Peak below),entered into
a joint venture agreement with a third party to establish a contractual joint venture,
Xi’an Fresh Peak Estate Commercial limited company (called Xi’an Fresh Peak Estate
below) in Xi’an. Its principal activities are the developing and managing of commercial
buildings in Xi’an. Pursuant to the aforesaid agreement. Fresh Peak Hong Kong Limited
invested a cashflow as accounted for 84% of the shares, Shangmao Wei Xian
Xian-commerce enterprises directly under the building to the right to use land investment
accounted for 16% of the shares. Its main object is to developing Xi’an commerce building.
The project was launched on 28 November, 1995. Due to the major differences in their
co-operation in the area of running business, As the co-operation projects between the two
sides in principle on the major differences, the project forced the lay-off during 2006. In
following 1997 Xi’an Government compulsively withdraw the Xi'an Fresh Peak investment11 2
project and the Civic Commercial and Business Committee redirect this mentioned
company to its subsidiary ---Xi'an Tourism Trade Co., Ltd. (hereinafter referred to as the
"Business Tourism Company"). In addition, the two parties have insulted an lawsuit of
compensation. 1, one month after the decision entering into force, Business Tourism
Company has to reimburse Xi'an Fresh Peak RMB36, 620,000 yuan and interest as a
compensation. Overdue payment or lie over, the obligor party is liable to pay double. The
Commercial and Business Committee is jointly and severally liable with the mentioned
debts.
While the case up to 31 December, 2008, the company has been paid RMB 11,500,000.00
with a balance of RMB 21million of the non-authority credit cost and its interest
non-refund. The case is proceeding and has no actual progress currently.
Up to 31 December 2008, the written value of long-term investment to Xi’an Fresh Peak
Company is RMB 32,840,729.61(RMB20, 673,831.77 of the impairment provision), and its
credit right to claim is RMB8, 419,205.19.
（3）Luofushan project Lawsuit
The early years of the Company and Luofu Mountain Corporation Joint Ventures Luofu
Mountain tourism project, due to Luofu Mountain Corporation did not perform the contract,
the Company access to the courts. The final judgment on 21 December, 2007 on 6
January 2008 supported: 1. Luofushan Tourism Co., Ltd. should pay off RMB9.6 million
yuan to the real estate company of Shenzhen within ten days since the effective day of this
judgment; 2. Luofushan Tourism Co., Ltd. should pay off the interests of RMB9.6 million
yuan produced in the actual occupied period according to the interest rate of loan of the
People’s Bank of China in the same period within ten days since the effective day of this
judgment, among which, the interest of 4.4 million yuan shall be calculated from 1 May
1986 till it is liquidated; and the interest of 4.1 million yuan shall be calculated from 1
February 1988 till it is liquidated; and the rest interest of 1.1 million yuan shall be
calculated from 15 June 1989 till it is liquidated; RMB8.58 million yuan of paid interest
shall be deducted from the sum; 3. Luofushan Administration Committee shall undertake
one third of the debts which Luofushan Tourism is unable to pay; 4. Provided that
Luofushan Tourism Co. Ltd. and Luofushan Administration Committee fail to fulfill their
obligations within the designated period of this judgment, the interest of debts within the
delayed period will be doubled; 5. Luofushan Tourism Co., Ltd. undertakes all the
litigation fees (RMB167,714 yuan) of the first instance and the second instance, and pays11 3
them to our company during the duration of payment.
As at 31 December 2008, company Luo Fu Shan Tourism Corporation's debt balance of
book value 9600000.00 yuan, Provision for bad debts has been prepared to 4,800,000.00
million.
（4）Xianluo Yanwo Restaurant Lawsuit
On 26 March 2003, Shenzhen Xianluo Yanwo Restaurant and the Company entered into rental
contracts, rental of premises of the Company to operate restaurants Xianluo Yanwo Restaurant.
Because of the mismanagement, the restaurant was close downed on January 2006. May 2006,
Shenzhen Xianluo Yanwo Restaurant sue the Company not to the obligations of building owners
and property managers on the grounds to Shenzhen Luohu District People's Court sued the
Company for compensation for loss of their business and decoration. On 29 December 2007
Luohu District, Shenzhen People's Court (2006) Shen Luo Court Min No.3 trial of first instance
paper of civil judgment No. 808 judged that the Company shall pay the loss of 2,926,714.08 yuan
for Shenzhen City Siam Bird's Nest restaurant operators and decoration. The Company arrested
the above judgment and appealed on 26 February 2008 to the Shenzhen Intermediate People's
Court. As of 31 December 2008, the Shenzhen City Intermediate People's Court has not yet made
a final judgment on the appeal.
The Company in accordance with the Shenzhen Luohu District People's Court ruling, after
deducted the rent and property management fees which owed by Xianluo Yanwo Restaurant , the
Company is expected that a loss of litigation 2,196,714.08 yuan.
（5）Shenyang Tongxin Case
Shenyang Tongxin with Real Estate Development Co., Ltd. (hereinafter referred to as "
Shenyang Tongxin Company") is a wholly owned subsidiary of the Company in Hong Kong Fresh
Peak Enterprises Limited (hereinafter referred to as " Fresh Peak Company") established a joint
venture in Shenyang. The Fresh Peak shares holding ratio of 93.1%. Its main business is to
develop a Shenyang Fresh Peak Commercial Plaza. Shenyang Tongxin Company was provided
security by the Company under the 1994 to 2001 in order to borrow between the old to the Bank
of China Shenyang Shenhe Branch 13,140,000 yuan loans. Shenyang Tongxin Company cannot
afford to repay the loan after the expiration, Bank of China Shenyang branch suit Shenyang
Tongxin Company to the Shenyang Municipal Intermediate People's Court. Then with the signed
loan agreement, borrowings by the Company to 13.5 million yuan in Shenyang Tongxin Company
to repay the Bank of China Shenyang Shenhe Branch 13.14 million yuan loan and interest. On11 4
January 25, 2008, according to the China International Economic and Trade Arbitration
Commission South China Branch of the ruling, Shenyang Tongxin shall make a ruling within
thirty days from the date of repayment of money owed to the Company 14,422,440.22 yuan and
the corresponding interest. The deadline is December 31, 2008 the case is still ongoing, and the
Company has not yet received Shenyang Tongxin Company's repayment.
Matters associated with the case: Shenyang Tongxin Company's 93.1% shares which was held
by Fresh Peak Company, was auctioned by Shenzhen Intermediate People's Court on 22
January 2006.
2、 Security for debt
Up to 31 December 2008, balance of guarantees is as follows:
Currency
Amount
(in ten thousand Yuan)
Internal guarantees in the group RMB 2,800.00
Guarantees for outstanding
mortgage RMB 1,080.00
NOTE 15、Commitments
Supplementary information：
1. Non - regular gains and losses
According to "public offering of securities companies to disclose information
interpretative bulletin No. 1 - non-recurring gains and losses (2008)", the Company
non-recurring gains and losses are as follows:
Item Year 2008 Year 2007
Non-current assets disposed of profit and loss, including the write-off
part of provision for asset impairment
3,048,259.89 27,365,329.13
Authority approval or non-formally approved document or incidental
tax revenue return, relief
- -
Gains and losses included in the current period of government
subsidies, but the company is closely related to normal business, in
line with national policies and regulations, in accordance with
standard fixed or quantitative government subsidies except
- -
Gains and losses included in current period on non-financial
enterprises occupy fees charged by funds
- -
Enterprises to obtain subsidiaries, joint ventures and joint venture
investment is less than the cost of investment should be enjoyed by
- -11 5
Item Year 2008 Year 2007
the investment unit fair value of identifiable net assets of the revenue
generated
Non-monetary assets to exchange gains and losses - -
Commissioned the investment or management of assets, profit and
loss
- -
Due to force majeure factors, such as natural disasters and the
provision of the quasi-impairment of assets
- -
Debt restructuring, profit and loss - -
Corporate restructuring costs, such as placement of workers spending,
such as integration charges
- -
Significant loss of fair trading price of the transaction over the fair
value of part of the profit and loss
- -
The same under the control of mergers resulting from the merger a
subsidiary of the opening day of the current period to the net profit or
loss
- -
Normal business with the company or have a matter arising from
unrelated to the profit and loss
-4,200,000.00 -
In addition to normal business with the company effective hedging
related business, holders of tradable financial assets, transactions and
financial liabilities arising from changes in fair value gains and losses,
as well as the disposal of trading of financial assets, trading financial
liabilities and available-for-sale financial assets investment returns
achieved
-406,051.04 443,956.93
A separate impairment test for impairment of receivables transferred
back to preparation
- -
Commissioned external loans made by the profit and loss - -
The use of fair value measurement model of follow-up to the fair
value of real estate investment gains and losses arising from changes
- -
According to tax, accounting and other laws and regulations the
requirements of the current profit and loss for a one-time adjustment
of the current profit and loss impact
- 8,195,054.65
Entrusted with the operation of the trustee to obtain fee income - -
In addition to the above other than the operating income and
expenditure
-646,826.14 -1,616,821.83
Other non-recurring gains and losses in line with the definition of
profit and loss items
- -
Total -2,204,617.29 34,387,518.88
Less: Income tax impact of several 12,594.28 3,438,682.92
Profit and loss impact of the number of minority shareholders - -
Deducting income tax, minority shareholders after the non-recurring
profit and loss profit and loss together
-2,217,211.57 30,948,835.96
Non-recurring gains and losses this year than the previous year decreased significantly over the
previous year mainly due to the disposal of Shenyang Tongxin real estate Development Co., Ltd. and
Shenzhen Railway Logistics Co Ltd, P Plus Qualcomm shares respectively 11,019,009.15 yuan,11 6
investment income 16,366,000.00 yuan。
2. Net assets yield and Earnings per share
Net assets yield (%)
Earnings per
share ( yuan/share)
Items
Profit during the
reporting period
Fully
diluted
Weighted
average
basic diluted
2008
Net profit parent company
to common shareholders 19,123,787.11 1.58 1.60 0.0189 0.0189
Net profit parent company to
common shareholders after
deducting extraordinary gains
or losses
21,340,998.68 1.77 1.78 0.0211 0.0211
2007
Net profit parent company
to common shareholders 39,007,992.54 3.28 3.35 0.0386 0.0386
Net profit parent company to
common shareholders after
deducting extraordinary gains
or losses
8,059,156.58 0.68 0.69 0.0080 0.0080
3. Financial statements difference adjustment according to different accounting
standards
CAS IFRS
Net profit 19,123,787.11 19,123,787.11
Net assets 1,208,288,874.76 1,208,288,874.76
Difference No difference
These financial statements have been issued in Chinese. This English translation copy is prepared
for reference only. If there is any conflict of meaning between the Chinese and English versions,
the Chinese version will prevail.
