SHENZHEN INTERNATIONAL ENTERPRISE CO., LTD.
INTERIM REPORT 2009
Disclosure Date: 26 Aug. 20092
Content
Section I Important Statement, Paraphrase and Content……………………………..1
Section II Company Profile…………………………………………………………..3
Section III Changes in Share Capital and Shares Held by Principal Shareholders…..4
Section IV Particulars about Directors, Supervisors and Senior Executives…………6
Section V Report of the Board of Directors………………………………….……….6
Section VI Significant Events…………………………………………………………8
Section VII Financial Report (Un-audited)…………………………………………..11
Section VIII Documents Available for Reference…………………………………....113
Section I Important Statement and Paraphrase
I. Important Notice
The Board of Directors and directors of Shenzhen International Enterprise Co., Ltd.
(hereinafter referred to as the Company) guarantee that there are no any omissions,
fictitious or serious misleading statements carried in the report and will take all
responsibilities, individual and/or joint for the authenticity, accuracy and
completeness of the whole contents.
Mr. Li Jinquan, Chairman of the Board, Mr. Tang Dajin, General Manager, and Mr.
Zhou Xiaoliang, person in charge of financial affairs, hereby confirm that the
financial report enclosed in the interim report is authentic and complete.
This report was prepared in both Chinese and English. Should be there any difference
in interpretation between the two versions, the Chinese version shall prevail.
II. Paraphrase
Meanings of shortened forms in this report were as follows unless otherwise stated:
The Company, Company: Shenzhen International Enterprise Co., Ltd.
Maoye Emporium: Shenzhen Maoye Emporium Ltd
SDG: Shenzhen Special Economic Zone Development (Group) Co., Ltd.
Foh Chong & Sons: Malaysia Foh Chong & Sons Limited
Rongfa Company: Shenzhen Rongfa Investment Co., Ltd.4
Section II Company Profile
I. Basic information
1. Legal Chinese Name: 深圳市国际企业股份有限公司
Legal English Name: SHENZHEN INTERNATIONAL ENTERPRISE CO., LTD.
2. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: SZIEC, SZIEC-B
Stock Code: 000056, 200056
3. Registered Address/Office Address: 23/F, Development Center Bldg., Renmin
South Road, Shenzhen
Post Code: 518001
Company’s Internet Website: http://www.china-ia.com
E-mail: sgs000056@163.net
4. Legal representative of the Company: Li Jinquan
5. Secretary of the BOD: Cao Jian
Securities Affairs Representative: Wu Xiaoshuang
Tel: 0755-82281888, 82285565
Contact Address: Investment & Management Dept., 23/F of Development Center
Bldg., Renmin South Road, Shenzhen
Fax: 0755-82285573
E-mail: cj000056@21cn.com
6. Newspapers Chosen by the Company for Disclosing the Information: Securities
Times and Hong Kong Ta Kung Pao
Internet Website Designated by CSRC for Publishing the Interim Report:
http://www.cninfo.com.cn
The Place Where the Interim Report is Prepared and Placed: Investment &
Management Dept. of the Company
7. Other relevant information
Initial Registration Date: March 1993;
Place: Shenzhen, Guangdong
Registration Code of Enterprise Legal Person’s Business License: 4403011016891
Registration Code of Tax: 440303192179083
Domestic Accounting Firm Engaged by the Company:
Name: Reanda Certified Public Accountants Co., Ltd.
Office Address: Room 808, Xin Dong’an Market, No. 138, Wangfujing Av.,
Dongcheng District, Beijing5
II. Main financial data and indices
Unit: Yuan
At the end of the
report period
At the period-end
of last year
Increase/decrease
compared with the
period-end of last year
(%)
Total assets 1,131,576,582.42 1,126,126,509.48 0.48%
Owners’ equity attributable to shareholders of list companies 229,883,737.82 218,861,548.42 5.04%
Share capital 220,901,184.00 220,901,184.00 0.00%
Net asset per share attributable to shareholders of list
companies (Yuan/share)
1.04 0.99 5.05%
In the report
period (Jan.-Jun.
2009)
The same period
of last year
Increase/decrease
compared with the same
period of last year (%)
Operating revenue 9,235,803.11 7,161,847.46 28.96%
Operating profit -9,479,005.49 -10,138,813.09 6.51%
Total profit 6,132,420.86 -1,591,651.37 485.29%
Net profit attributable to shareholders of listed companies 11,022,189.39 715,170.19 1,441.20%
Net profit attributable to shareholders of listed companies after
deducting non-recurring gains and losses
-5,237,409.15 -4,612,486.85 -13.55%
Basic earnings per share (Yuan/share) 0.0499 0.0032 1,459.38%
Diluted earnings per share (Yuan/share) 0.0499 0.0032 1,459.38%
Net return on equity (%) 4.79% 0.29% 4.50%
Net cash flow from operating activities -21,169,359.11 -44,619,595.20 52.56%
Net cash flow from operating activities per share (Yuan/share) -0.10 -0.20 50%
Note: Items and amount of non-recurring gains and losses deducted
Items of non-recurring gains and losses Amount Notes (if applicable)
Gain/loss from disposal of non-current assets 16,237,962.59
Impact on minority interest -10,948.77
Other net non-operating income and expenditure 32,584.72
Total 16,259,598.54 -6
Section III Changes in Share Capital and Shares Held by Principle
Shareholders
I. Particulars about changes in share capital
Share capital of the Company remained unchanged in the report period.
II. Statement of changes in share capital of the Company in the report period
Unit: Share
Before the change Increase/decrease in this time (+, - ) After the change
Number
Proporti
on
Issuance
new stock
Bonus
shares
Capitalizati
on of
public
reserves
Others Subtotal Number
Proporti
on
I. Shares subject to trading
moratorium
7,569,593 3.43% -7,248,833 -7,248,833 320,760 0.15%
1. Shares held by the state
2. Shares held by
state-owned corporation
7,248,833 3.28% -7,248,833 -7,248,833
3. Shares held by other
domestic investor
Including: shares held by
non-state-owned domestic
corporation
Shares held by
domestic natural person
4. Shares held by foreign
investors
Including: Shares held by
foreign corporation
Shares held by foreign
natural person
5. Shares held by senior
executives
320,760 0.15% 320,760 0.15%
II. Shares not subject to
trading moratorium
213,331,591 96.57% 7,248,833 7,248,833 220,580,424 99.85%
1. RMB ordinary shares 111,643,399 50.54% 7,248,833 7,248,833 118,892,232 53.82%
2. Domestically listed
foreign shares
101,688,192 46.03% 101,688,192 46.03%
3. Foreign shares listed in
domestic
4. Others
III. Total shares 220,901,184 100.00% 220,901,184 100.00%7
III. Particulars about shares held by principal shareholders
Total shareholders 23,244
Particulars about shares held by the top ten shareholders
Full name of shareholders Nature of shareholders Proportion
Total shares
held
Number of shares
held subject to
trading moratorium
Shares pledged or
frozen
FOH CHONG & SONS SDN.
BHD.
Foreign corporation 13.70% 30,264,192
Shenzhen SDG Co., Ltd. State-owned corporation 9.76% 21,566,857
First Shanghai Securities Limited Foreign corporation 7.49% 16,546,541
Shenzhen Maoye Emporium Ltd
Domestic non-state-owned
corporation
6.15% 13,577,548
F.C. (ASIA) HOLDINGS SDN.
BHD.
Foreign corporation 3.72% 8,215,594
Shenzhen Taitian Industrial
Development Co., Ltd
Domestic non-state-owned
corporation
3.08% 6,793,047
Hong Kong Mengxing Industrial
Co., Ltd.
Foreign corporation 0.98% 2,170,200
LETSCON HOLDINGS SDN.
BHD.
Foreign corporation 0.68% 1,497,172
CREDIT SUISSE SINGAPORE Foreign corporation 0.63% 1,399,673
Yang Jun Domestic natural person 0.56% 1,232,100
Particulars about shares held by the top ten shareholders not subject to trading moratorium
Full name of shareholders
Number of shares held subject to
trading moratorium
Type of shares
FOH CHONG & SONS SDN. BHD. 30,264,192 Domestically listed foreign shares
Shenzhen SDG Co., Ltd. 21,566,857 RMB ordinary shares
First Shanghai Securities Limited 16,546,541 Domestically listed foreign shares
Shenzhen Maoye Emporium Ltd 13,577,548 RMB ordinary shares
F.C. (ASIA) HOLDINGS SDN. BHD. 8,215,594 Domestically listed foreign shares
Shenzhen Taitian Industrial Development Co., Ltd 6,793,047 RMB ordinary shares
Hong Kong Mengxing Industrial Co., Ltd. 2,170,200 Domestically listed foreign shares
LETSCON HOLDINGS SDN. BHD. 1,497,172 Domestically listed foreign shares
CREDIT SUISSE SINGAPORE 1,399,673 Domestically listed foreign shares
Yang Jun 1,232,100 RMB ordinary shares
Explanation on associated
relationship or action-in-concert
among the above shareholders
Shenzhen Maoye Emporium Ltd and UOB investment (China) Limited was person acting in concert,
they totally held 29,106,489 A shares and B shares of the Company, tanking up 13.18% of total share
capital; As of 31 Dec. 2009, UOB investment (China) Limited acquired 15,528,941 shares by entrust
of First Shanghai Securities Limited. Besides, it is unknown whether there were other related
relations or action-in-concert regulated in Administrative Measures for Takeover of Listed
Companies among the above shareholders.
IV. In the report period, changes in the controlling shareholders or actual controller of8
the Company
In the report period, controlling shareholders and actual controlled of the Company
remained unchanged; Malaysia Foh Chong & Sons Limited, namely the first principal
shareholder of the Company, signed Agreement on Transfer of Tradable B-share of
Shenzhen International Enterprise Co., Ltd with Multi Profit Asia Pacific Investment
Limited on 27 Apr. 2009, and Foh Chong & Sons would transfer B shares amounting
to 30,264,192 to Multi Profit Asia Pacific Investment Limited. Ownership of the
above shares had been transferred on 7 Jul. 2009. Now Multi Profit Asia Pacific
Investment Limited is the first principal shareholder of the Company with equity of
13.70%.9
Section IV Particulars about Directors, Supervisors and Senior Executives
I. Changes in shares held by directors, supervisors and senior executives in the report
period
In the report period, shares held by directors, supervisors and senior executives of the
Company remained unchanged.
II. Changes in engagement of directors, supervisors and senior executives in the report
period
In the report period, engagement of directors, supervisors and senior executives of the
Company remained unchanged.10
Section V Report of the Board Directors
I. Operation of the Company in the first half year of 2009
1. Analysis and discussion of management
In the report period, the Company realized operating income RMB 9,235,803.11, up
by 28.96% compared with the same period last year; realized operating profit RMB
-9,479,005.49, with an increase of 6.51% year-on-year; realized net profit amounting
to RMB 6,141,848,84, up by 70.09% over the same period last year. Net profit
attributable to parent company amounted to RMB 11,022,189.39, with an increased of
1,441.20% year-on-year.
In the report period, the Company adhered to primary target of benefit and
development strategy of “Commercial real estate and Forestry Industry” as principal
guideline, stably pushed construction of IA Mall and accelerated development of
forestry industry project.
In the report period, main structure of IA Mall has been completed, and heck before
acceptance and refined decoration was in progress; in respect of invitation of
investment, the Company negotiated with international and domestic famous brand,
actively introduced international famous brand and would build IA Mall as the unique
shopping center in Shenzhen.
In the report period, forestry companies has actualized target of land compulsory
expropriation as scheduled at the year-begin, which laid a solid foundation of forestry
reserve for planting plan with 100,000 mu during 2009 to 2010.The Company also
actively promoted informationization of forestry, strived to improve forestry
management, and benefit from management; meanwhile, the Company researched
sales plan in many ways, and prepared for promotion of additional value of plants
being in fell. With development of some years, forestry companies realized
intensification, scientization and informationization in planting and management.
Analysis on main operating performance:
The report period
(Jan.-Jun.)
The same period of
last year
Increase/decrease
(%)
Operating revenue 9,235,803.11 7,161,847.46 28.96%
Operating cost 7,987,664.00 5,056,020.46 57.98%
Operating cost -9,479,005.49 -10,138,813.09 6.51%
Total profit 6,132,420.86 -1,591,651.37 485.29%
Business tax and surcharges 398,564.21 290,327.04 37.28%
Sales expense 661,010.65 5,267,775.75 -87.45%
Administrative expense 9,212,821.37 9,227,364.76 -0.16%
Financial expense 1,345,681.54 -1,576,524.57 185.36%
Net profit 6,141,848.84 -1,825,831.94 436.39%
Net profit attributable to owners of parent company 11,022,189.39 715,170.19 1441.12%
Note:
(1) Increase of operating income was because operating income of property
management company-subsidiary of the Company increased.
(2) Cost increase was mainly due to increase of operating cost of property11
management company-subsidiary of the Company
(3) Total profit increased because the Company strengthened disposal of fixed assets
and income arose increased.
(4) Sales expenses decreased because decoration expense has been amortized in 2008
and there was no amortization in this report period.
(5) Financial expense increased mainly due to interest of loan increased in current
period.
(6) Net profit increased due to the above reason.
(7) Net profit attributable to parent company was mainly because parent company
directly disposed properties owned and received capital occupation from subsidiary
companies.
2. Operation status of the Company in the report period
(1) Scope of main business and its operation status
Main business of the Company engaged in commerce, development of real estates,
properties management and forest planting. In the report period, the Company realized
operating income RMB 9,235,803.11 and operating cost amounting to RMB
7,987,664.00.
(2) Main business classified according to industries
Unit: RMB’0000 Yuan
Main business classified according to industries
Industries or products
Operating
income
Operatin
g cost
Gross profit
ratio (%)
Increase/decrease of
operating income
year-on-year (%)
Increase/decrease of
operating cost
year-on-year (%)
Increase/decrease of
gross profit ratio
year-on-year (%)
Income from sales of real estate 46.82 28.53 39.06%
Operating income was
RMB 0 at the same
period of last year
Operating income was
RMB 0 at the same
period of last year
Operating income was
RMB 0 at the same
period of last year
Income from property management 749.86 742.79 0.94% 19.71% 50.12% 26.24%
(3) Main business classified according to regions
Region Operating income Increase/decrease of operating income over last year (%)
Shenzhen 796.68 -42.70
3. In the report period, profit composing, main business and its composing remained
unchanged.
4. In the report period, there was no other operating business that greatly impacted the
Company’s net profit.
5. Holding companies and share-holding companies that greatly influenced net profit
of the Company
(1) Shenzhen Rongfa Investment Co., Ltd, whose 60% equity is held by the Company,
is mainly engaged in development of real estate with registered capital of USD 5
million. In the report period, the Company realized operating income amounting to
RMB 770,190.35 and operating profit amounting to RMB -12,192,512.78.
(2) Shenzhen International Arcade Forestry Development Co., Ltd is the
wholly-owned subsidiary of Shenzhen Rongfa Investment Co., Ltd, which is the12
subsidiary of the Company. It has registered capital of RMB 10,000,000, and mainly
engages in farming and forestry projects. During the reporting period, the Company
realized operating income of RMB 0, and total profit amounting to RMB -152,850.01.
6. Problems and difficulties in the operation in the report period
The Company developed IA Project and forestry project in full sail, which both was in
period of investment input and has not benefit yet.
7. Development plan at the second half year
The Company will adhere to strengthen IA Project and forestry project according to
annual plan.
Along with completion of IA Project, the Company will search for suitable
commercial property projects in metropolis and make effort to enlarge and enhance
commercial property.
II. Investment of the Company
1. In the report period, the Company had no raised proceeds or raised proceeds in the
previous periods carried over to the report period.
2. Other significant investment projects with non-raised proceeds.
In the reporting period, the non-raised proceeds of the Company were mainly used to
invest in the construction of Shenzhen CDB IA Mall. The Company formally obtained
the land use right of the project in 2002. Based on that, the Company engaged RTKL
International Co., Ltd. of America to conduct architectural design, as well as a design
company of Japan to conduct landscape design. A foundation was formally laid for the
project on Jan. 17, 2005, and the main structure of the project has been already
accomplished, now is in progress of check for acceptance and the second refine
decoration.13
Section VI Significant Events
I. Corporate Governance
During the report period, , the Company continuously perfected corporate governance
structure, further improved operation of the Company according to requirements of
the Company Law, Securities Law and relevant laws and regulations. Corporate
governance organ of the Company was perfected and the efficiency was high.
Responsibilities of Shareholders’ General Meeting, the Board of Directors, the
Supervisory Committee and other internal organ were definite, which was operated in
accordance with relevant provisions and rules.
In the report period, the Company perfected relevant rules and management system in
accordance with relevant laws and statutes and actively made work scheme according
to problems discovered when examined corporate governance. Proposal on Revising
Articles of Association was examined and reviewed at the Annual Shareholders’
General Meeting 2008, and the Company perfected cash dividend system in line with
relevant regulations in Decision on Revising Some Regulations about Cash Dividend
of Listed Companies, namely Ordinance No. 53 issued by CSRC.
The Company was independent in operation. The principal shareholders neither
violate the rights of listed company nor served illegal external guarantee. The
Company perfected modification of the Articles of Association, financial management
system and internal decision-making mechanism which exerted favorable effect on
preventing violation of rights in listed company by principal shareholder.
II. The Company has not carried out any profit distribution, capitalization of public
reserves or issuance of new shares in the report period. Neither profit distribution nor
capitalization of pubic reserves will be implemented in the interim of 2009.
III. Significant lawsuits and arbitrations
No new lawsuits or arbitrations occurred in the report period. Progress of the lawsuits
and arbitrations that happened in previous periods is as follows:
The case that the Company was involved as the guarantee provider, Shangbu
Sub-Branch subordinate to Shenzhen Branch of Bank of China (Shangbu BOC) as the
lender and Shum Kong Industry & Trade Co., Ltd as the borrower
In Sept. 2009, Shenzhen Intermediate People’s Court issued the Civil Final Judgment
(2005) SZFMEZ Zi No. 22 concerning the retrial case where the Company was
involved as the guarantee provider, Shangbu BOC as the lender and Shum Kong
Industry & Trade as the borrower; According to the judgment, the Company should
shoulder joint liabilities for the loan of Shum Kong Industry & Trade in 1999
(principal RMB 6 million and overdue interest). Later, the loan was listed by the bank
as a non-performing loan, China Orient Asset Management Corp. was appointed to
execute the creditor’s right. Now the case has been transferred to Yangxi Court
designated by Guangdong Higher People’s Court. And the Company is currently in
negotiation with China Orient Asset Management Corp.14
IV. There were no significant purchases or sales of assets in the report period.
V. The Company has no material related transactions in the report period.
VI. Significant contracts in report period and their implementation
1. Shenzhen Rongfa Investment Co., Ltd. (Rongfa Investment) and Shenzhen
International Shopping Mall Co., Ltd. signed the Contract of Share Transfer with
Shenzhen Baotian Investment and Development Co., Ltd. (Baotian Investment) on 31
Jan. 2007. According to the contract, the 85% and 10% shares of Shenzhen Gangyi
Oriental Club Industrial Co., Ltd. (Gangyi Oriental Club) respectively held by Rongfa
Investment and Shenzhen International Shopping Mall were to be transferred to
Baotian Investment. After the share transfer, Baotian Investment and Rongfa
Investment respectively held 95% and 5% stocks of Gangyi Oriental Club. Upon the
acceptance of the transferred 95% shares, Baotian Investment should, within a 6-year
term of operation, transfer the said shares at the price of RMB 1 million to Rongfa
Investment or a party designated by Rongfa Investment. Later, Rongfa Investment and
Baotian Investment signed the Supplementary Agreement to the Contract of Share
Transfer. As stated in the agreement, Rongfa Investment agreed to give up the profits
which were brought or would be brought by its 5% shares of Gangyi Oriental Club, i.e.
after the share transfer, Rongfa Investment would not share, within a 6-year term of
operation, the profits and losses of Gangyi Oriental Club.
2. On 31 Jan. 2007, Rongfa Investment and Baotian Investment signed the Transfer
Contract of the Use Right of Housing Properties. According to the contract, Rongfa
Investment transferred to Baotian Investment the use right of the 1st -4th floors of its
Gangyi Haoting Building, as well as the use right of all the auxiliary decoration and
facilities (i.e. the operation site of Gangyi Oriental Club, the warehouse, the staff
canteen, etc.) for a 6-year term from 1 Mar. 2007 to 28 Feb. 2013. And the transfer fee
should be paid according to the schedule of RMB 600,000 per month for the fist year,
RMB 700,000 per month for the second and third year, RMB 800,000 per month for
the fourth and fifth year, and RMB 850,000 per month for the sixth year. Meanwhile,
both parties agreed and promised that with the moment of the actual handover of the
building as a dividing point, Rongfa Investment should be responsible for the
liabilities incurred before the moment, while Baotian Investment should be
responsible for the liabilities, creditor’s rights and operation expenses incurred after
the moment. The registration procedure of the stock transfer was already
accomplished in 2007. And Rongfa Investment had received the stock transfer fee and
guarantee deposit from Baotian Investment. However, due to dispute in the execution
of the contract, Baotian Investment has not yet paid the rents to Rongfa Investment by
now. As for the relevant lawsuit, the judgment and ruling of the first trial have been
made, but Baotian Investment lodged an appeal against the judgment and the case is
now in the second instance trial.15
2. Significant guarantee contracts in report period
(1) According to the conventions of the sales of commercial housing through
mortgage among real estate companies, the subsidiary Rongfa Company provided
guarantees for the mortgages for the sales of the properties developed by itself. By 30
Jun. 2009, the balance of the mortgage guarantees provided by Rongfa Company
stood at RMB 35,606,500.
(2) According to the conventions of the sales of commercial housing through
mortgage among real estate companies, the subsidiary Huizhou Rongfa Industrial
Investment Co., Ltd (hereinafter referred to as Huizhou Rongfa) provided guarantees
for the mortgages for the sales of the properties developed by itself. By 30 Jun. 2009,
the balance of the mortgage guarantees provided by Huizhou Rongfa was RMB
9,535,100.
(3) In the reporting period, according to the decision-making procedure as prescribed
in the Articles of Association, the Company provided new guarantees for its
subsidiaries as follows:
In 2009, Shenzhen International Enterprise Forestry Development Co., Ltd. and
Guomao Sub-branch subordinate to Shenzhen Branch of the Agricultural Bank of
China signed a one-year contract involving a loan of RMB 6 million from the bank.
The Company provided a guarantee for the said subsidiary company with the pledge
of its own property—the 23rd floor of the Development Center Building.
3. In the report period, the Company did not entrust other parties to manage its cash
and assets, or to get loans.
4. The Company had no other significant contracts in the report period.
Ⅶ. In the report period, the Company or shareholders holding over 5% shares of the
Company did not make any other commitments and disclose them on the designated
newspapers and website.
Ⅷ. In the report period, the Company’s Board of Directors, Supervisory Committee,
directors, supervisors and senior management staff received no investigations,
administrative punishments or criticism by circular from CSRC, as well as no open
criticism from Shenzhen Stock Exchange.
Ⅸ. Other significant events
Please refer to Note ⅩⅣ of the Financial Statements for details.
Ⅹ. Index for information disclosed in report period16
No. Information disclosed Date
2009—1 Suggestive Public Notice on Some Shares Released from Trading Moratorium 16 Jan. 2009
2009—2 Public Notice on Estimated Deficit 23 Jan. 2009
2009—3 Public Notice on Name Change of CPA Firm 7 Feb. 2009
2009—4
Public Notice on Resolutions Made at the 1st Provisional Meeting of the 5th Board
of Directors in 2009
18 Feb. 2009
2009—5 Public Notice on Shareholding Decrease of Shareholder 27 Mar. 2009
2009—6
Public Notice on Resolutions Made at the 2nd Meeting of the 5th Board of Directors
in 2009
17 Apr. 2009
2009—7
Public Notice on Resolutions Made at the 3rd Meeting of the 5th Supervisory
Committee in 2009
17 Apr. 2009
2009—8 Independent Opinion of Independent Directors on Relevant Issues 17 Apr. 2009
2009—9 Public Notice on Summary of 2008 Annual Report 17 Apr. 2009
2009—10 Public Notice on Summary of 2008 Annual Report (English Version) 17 Apr. 2009
2009—11 Public Notice on the 1st Quarterly Report in 2009 17 Apr. 2009
2009—12
Public Notice on Corrections of 2008 Annual Report and Its Summary, as well as
Full Text and Text of the 1st Quarterly Report in 2009
22 Apr. 2009
2009—13 Public Notice on Trade Suspension 28 Apr. 2009
2009—14
Suggestive Public Notice on Intended Change of Principal Shareholder of the
Company
30 Apr. 2009
2009—15
Supplementary Public Notice on Intended Change of Principal Shareholder of the
Company
4 May 2009
2009—16 Suggestive Public Notice on Intended Change of Shareholders of Rongfa Company 5 May 2009
2009—17
Public Notice on Selling House Property of Building No.38 in Mutoulong
Community
6 May 2009
2009—18
Public Notice on Resolutions Made at the 4th Provisional Meeting of the 5th Board
of Directors in 2009
2 Jun. 2009
2009—19
Public Notice on Convening 2008 Annual Shareholders’ General Meeting by the 5th
Board of Directors
6 Jun. 2009
2009—20 Public Notice on Resolutions Made at 2008 Annual Shareholders’ General Meeting 27 Jun. 2009
2009—21 Public Notice on Change of Principal Shareholder 10 Jul. 2009
2009—22 Public Notice on Earnings Estimate 15 Jul. 2009
2009—23
Public Notice on Resolutions Made at the 6th Provisional Meeting of the 5th Board
of Directors in 2009
13 Aug. 2009
Section VII. Financial Report (Un-audited)
The Interim Financial Report 2009 of the Company has not been audited, with details
attached behind.17
Section VIII. Documents Available for Reference
The following documents are available for reference:
(Ⅰ) Text of the Interim Report with the signature of the Chairman of the Board of
Directors;
(Ⅱ) Accounting Statements with the signatures and seals of the legal representative,
the financial chief and the person in charge of accounting work;
(Ⅲ) Originals of all documents and public notices ever disclosed on Securities Times
and Hong Kong Ta Kung Pao in the report period;
(Ⅳ) Articles of Association of the Company;
(Ⅴ) Other relevant materials.
And the aforesaid documents are placed in the Investment Administration Department
of the Company.
Chairman of the Board of Directors (Signature):
Board of Directors
Shenzhen International Enterprise Co., Ltd
26 August 200918
Consolidated Balance Sheet
June 30st, 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Assets Note 30/06/2009 31/12/2008
Current assets:
Monetary funds Ⅷ、1 51,950,910.94 68,414,884.06
Tradable financial assets
Note receivable
Accounts receivable Ⅷ、2 1,250,626.74 1,287,719.72
Advance to suppliers Ⅷ、3 435,187.00 816,795.00
Interests receivable
Dividend receivable
Other accounts receivables Ⅷ、4
5,985,724.54 5,898,179.41
Inventories Ⅷ、5 995,488,280.85 965,170,729.88
Non-current assets due within one year
Other current assets
Total current assets 1,055,110,730.07 1,041,588,308.07
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term accounts receivable
Long-term equity investment Ⅷ、6 6,570,262.84 6,570,262.84
Investment property Ⅷ、7 1,485,555.55 1,755,450.46
Fixed assets Ⅷ、8 68,200,033.96 75,972,488.11
Construction in process
Construction materials
Liquidation of fixed assets
Production biology assets
Oil and gas assets
Intangible assets
Development expenses
Goodwill
Long-term deferred assets Ⅷ、9 210,000.00 240,000.00
Deferred income tax assets
Other non-current assets
Total non-current assets 76,465,852.35 84,538,201.41
Total assets 1,131,576,582.42 1,126,126,509.48
Legal representative： Chief accountant of accounting department： Manager of accounting department：19
Consolidated Balance Sheet
June 30st, 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Liabilities and Shareholders' equities Note 30/06/2009 31/12/2008
Current liabilities:
Short-term loan Ⅷ、12 6,000,000.00 8,000,000.00
Tradable financial liabilities
Notes payable
Accounts payable Ⅷ、13 230,164,332.91 243,472,627.76
Advance from customers Ⅷ、14 48,155,767.75 59,411,157.15
Payroll payable Ⅷ、15 2,711,831.37 3,357,743.19
Tax payable Ⅷ、16 -87,077.73 17,096.76
Interests payable 671,962.50 1,002,787.50
Dividend payable Ⅷ、17 5,127,701.36 5,127,701.36
Other accounts payable Ⅷ、18 218,038,561.15 210,873,595.06
Non-current liabilities due within one year Ⅷ、19 14,986,010.00 14,992,300.00
Other current liabilities
Total current liabilities 525,769,089.31 546,255,008.78
Non-current liabilities:
Long-term borrowings Ⅷ、20 438,000,000.00 418,000,000.00
Bonds payable
Long-term accounts payable
Grants & Subsidies received
Accrued liabilties Ⅷ、21 11,801,909.16 11,801,909.16
Deferred income tax liabilities
Deferred income Ⅷ、22 1,235,138.52 1,440,994.95
Total non-current liabilities 451,037,047.68 431,242,904.11
Total liabilities 976,806,136.99 977,497,912.89
Shareholders' equity:
Share capital Ⅷ、23 220,901,184.00 220,901,184.00
Capital reserve Ⅷ、24 72,315,347.06 72,315,347.06
Less: inventory shares
Surplus reserve Ⅷ、25 125,929,834.48 125,929,834.48
Retained earnings Ⅷ、26 -189,262,627.73 -200,284,817.12
Exchange difference of foreign currency
financial statements translation
Shareholders' equity attributable to
parent company: 229,883,737.81 218,861,548.42
Minority interests Ⅷ、27 -75,113,292.38 -70,232,951.8320
Total shareholders’ equities 154,770,445.43 148,628,596.59
Total liabilities and shareholders’
equities 1,131,576,582.42 1,126,126,509.48
Legal representative： Chief accountant of accounting department： Manager of accounting department：
Balance Sheet
June 30st, 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Assets Note 30/06/2009 31/12/2008
Current assets:
Monetary funds 899,009.40 26,129,141.95
Tradable financial assets
Note receivable
Accounts receivable
Advance to suppliers 180,000.00 180,000.00
Interests receivable
Dividend receivable
Other accounts receivables Ⅸ、1 197,871,451.81 158,069,588.23
Inventories
Non-current assets due within one year
Other current assets
Total current assets 198,950,461.21 184,378,730.18
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term accounts receivable
Long-term equity investment Ⅸ、2 65,944,253.87 65,944,253.87
Investment property 1,109,956.13 1,365,055.94
Fixed assets 18,299,650.73 24,754,990.04
Construction in process
Construction materials
Liquidation of fixed assets
Production biology assets
Oil and gas assets
Intangible assets
Development expenses
Goodwill21
Long-term deferred assets 210,000.00 240,000.00
Deferred income tax assets
Other non-current assets
Total non-current assets 85,563,860.73 92,304,299.85
Total assets 284,514,321.94 276,683,030.03
Legal representative： Chief accountant of accounting department： Manager of accounting department：
Balance Sheet
June 30st, 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Liabilities and Shareholders' equities Note 30/06/2009 31/12/2008
Current liability:
Short-term loan
Tradable financial liabilities
Notes payable
Accounts payable
Advance from customers 1,376,796.00 13,412,185.40
Payroll payable 1,050,996.99 1,318,426.30
Tax payable 2,439,888.80 2,453,401.54
Interests payable
Dividend payable 5,127,701.36 5,127,701.36
Other accounts payable 43,571,580.66 44,692,535.39
Non-current liabilities due within one year 14,986,010.00 14,992,300.00
Other current liabilities
Total current liabilities 68,552,973.81 81,996,549.99
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term accounts payable
Grants & Subsidies received
Accrued liabilties 11,801,909.16 11,801,909.16
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 11,801,909.16 11,801,909.16
Total liabilities 80,354,882.97 93,798,459.15
Shareholders' equity:
Share capital 220,901,184.00 220,901,184.0022
Capital reserve 64,951,444.59 64,951,444.59
Less: inventory shares
Surplus reserve 96,841,026.39 96,841,026.39
Retained earnings -178,534,216.01 -199,809,084.10
Total shareholders’ equities 204,159,438.97 182,884,570.88
Total liabilities and shareholders’ equities 284,514,321.94 276,683,030.03
Legal representative： Chief accountant of accounting department： Manager of accounting department：
Consolidated Income Statement
Jan-Jun 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Note Jan-Jun 2009 Jan-Jun 2008
1. Total operating income Ⅷ、28
9,235,803.11
7,161,847.46
Minus: operating cost Ⅷ、28 7,987,664.00 5,056,020.46
Business taxes and surtax 398,564.21 290,327.04
Selling expenses 661,010.65 5,267,775.75
Administration expenses 9,212,821.37 9,227,364.76
Financial expenses Ⅷ、29 1,345,681.54 -1,576,524.57
Impairment loss of assets Ⅷ、30 -140,933.17 -964,302.89
Add: profits from the fair value changes (The
loss is listed beginning with “-“)
Investment income (The loss is listed beginning
with “-“) Ⅷ、31
750,000.00
Including: the investment income from
associated and joint ventures enterprises
II. Operating profit (The loss is listed
beginning with “-“) -9,479,005.49 -10,138,813.09
Add: non-operating income Ⅷ、32 15,678,607.55 8,666,678.59
Less: non-operating expense Ⅷ、33 67,181.20 119,516.87
Including: loss from disposal of non-current
assets
III. Total profits (The loss is listed beginning
with “-“)
6,132,420.86
-1,591,651.37
Less: income tax expense Ⅷ、34 -9,427.98 234,180.57
IV. Net profits (the net loss is listed
beginning with “-”)
6,141,848.84
-1,825,831.94
Net profits attributable to parent company 11,022,189.39 715,170.1923
Minority interests -4,880,340.55 -2,541,002.13
V. Earnings per share
(1)Basic earnings per share ⅩⅥ、2、(1) 0.0499 0.0032
(2)Diluted earnings per share ⅩⅥ、2、(2) 0.0499 0.0032
Ⅵ、Other composite income ⅩⅦ、1
Ⅶ、Total composite income ⅩⅦ、2 6,141,848.84 -1,825,831.94
Belongs to the parent company’s shareholders 11,022,189.39 715,170.19
Belongs to the minority shareholders -4,880,340.55 -2,541,002.13
Legal representative： Chief accountant of accounting department： Manager of accounting department：
Income Statement
Jan-Jun 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Note Jan-Jun 2009 Jan-Jun 2008
1. Total operating income Ⅸ、3 967,010.00 275,830.00
Minus: operating cost Ⅸ、3 223,280.42 24,471.21
Business taxes and surtax
Selling expense
Administration expense 4,209,538.02 4,193,435.27
Financial expenses -6,999,890.60 -11,513,956.18
Impairment loss of assets -1,405,382.59 20,307,461.97
Add: profits from the fair value changes (The
loss is listed beginning with “-“)
Investment income (The loss is listed beginning
with “-“)
750,000.00
Including: the investment income from
associated and joint ventures enterprises
II. Operating profit 5,689,464.75 -12,735,582.27
Add: non-operating income 15,589,639.29 493,179.33
Less: non-operating expense 4,235.95 103,700.00
Including: loss from disposal of non-current
assets
III. Total profits (The loss is listed beginning
with “-“)
21,274,868.09
-12,346,102.94
Less: income tax expense
IV. Net profits (the net loss is listed
beginning with “-”)
21,274,868.09
-12,346,102.94
Legal representative： Chief accountant of accounting department： Manager of accounting department：24
Consolidated Cash Flow Statement
Jan-Jun 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Note Jan-Jun 2009 Jan-Jun 2008
I. Cash flows from operating activities
Cash received from sales of goods or rendering of services 9,208,211.97 7,231,673.44
Tax refund
Cash received related to other operating activities 13,835,929.87 20,552,485.85
Subtotal of cash inflow from operating activities 23,044,141.84 27,784,159.29
Cash received from sales of goods or rendering of services 21,501,234.75 23,585,823.81
Cash paid to and on behalf of employees 7,706,262.02 7,550,419.40
Tax payments 2,629,593.89 1,668,752.21
Other cashes paid to operating activities 12,376,410.29 39,598,759.07
Subtotal of Cash outflow from operating activities 44,213,500.95 72,403,754.49
Net cash flow from operating activities Ⅷ、36 -21,169,359.11 -44,619,595.20
II. Cash flow from investment activities:
Cash received from investments 20,000.00
Cash dividents received from investment
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets
7,737,798.60
6,195,221.44
Net cash amount received from the disposal of
subsidiaries an other business units
16,000,000.00
Cash received related to other investment activities
Subtotal of cash inflow from the investment activities 7,757,798.60 22,195,221.44
Cash paid to acquire and construct fixed assets, intangible
assets and other long-term assets
43,110.00
194,053.00
Cash paid to acquire investments
Net cash amount paid to acquire the subsidiaries and other
business units
Cash paid related to other investment activities
Subtotal of Cash outflow from investment activities 43,110.00 194,053.00
Net cash flow from investment activities 7,714,688.60 22,001,168.44
III. Cash flow from financing activities:
Cash received from investors
Cash received from loans 26,000,000.00 8,000,000.00
Cash received related to other financing activities
Subtotal of cash inflow from the financing activities 26,000,000.00 8,000,000.00
repayment of loans 8,000,000.00 16,823,322.57
Cash dividends, profits and interests paid 17,249,302.61 10,106,084.14
Cash payments related to other financing activities 3,760,000.0025
Sub-total of cash outflow from the financing activities 29,009,302.61 26,929,406.71
Net cash flow from finacing activities -3,009,302.61 -18,929,406.71
IV. Effect of Foreign Exchange Rate Changes on Cash
and cash equivalents
V. Net increase in cash and cash equivalents -16,463,973.12 -41,547,833.47
Add: beginning balance of cash and cash equivalents 68,414,884.06 61,342,998.09
VI ending balance of cash and cash equivalents 51,950,910.94 19,795,164.62
Legal representative： Chief accountant of accounting department： Manager of accounting department：
Cash Flow Statement
Jan-Jun 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Note Jan-Jun 2009 Jan-Jun 2008
I. Cash flows from operating activities
Cash received from sales of goods or rendering of services 967,010.00 275,830.00
Tax refund
Cash received related to other operating activities 4,149,503.66 39,825,693.73
Subtotal of cash inflow from operating activities 5,116,513.66 40,101,523.73
Cash received from sales of goods or rendering of services
Cash paid to and on behalf of employees 2,194,835.41 2,498,181.10
Tax payments 1,080,941.29 596,714.78
Other cashes paid to operating activities 34,374,585.35 51,145,730.54
Subtotal of Cash outflow from operating activities 37,650,362.05 54,240,626.42
Net cash flow from operating activities -32,533,848.39 -14,139,102.69
II. Cash flow from investment activities:
Cash received from investments 20,000.00
Cash dividents received from investment
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets
7,737,798.60
6,194,041.44
Net cash amount received from the disposal of
subsidiaries an other business units
16,000,000.00
Cash received related to other investment activities
Subtotal of cash inflow from the investment activities 7,757,798.60 22,194,041.44
Cash paid to acquire and construct fixed assets, intangible
assets and other long-term assets
9,750.00 86,064.00
Cash paid to acquire investments
Net cash amount paid to acquire the subsidiaries and other
business units26
Cash paid related to other investment activities
Subtotal of Cash outflow from investment activities 9,750.00 86,064.00
Net cash flow from investment activities 7,748,048.60 22,107,977.44
III. Cash flow from financing activities:
Cash received from investors
Cash received from loans
Cash received related to other financing activities
Subtotal of cash inflow from the financing activities
repayment of loans 16,823,322.57
Cash dividends, profits and interests paid 444,332.76 774,945.13
Cash payments related to other financing activities
Sub-total of cash outflow from the financing activities 444,332.76 17,598,267.70
Net cash flow from finacing activities -444,332.76 -17,598,267.70
IV. Effect of Foreign Exchange Rate Changes on Cash
and cash equivalents
V. Net increase in cash and cash equivalents -25,230,132.55 -9,629,392.95
Add: beginning balance of cash and cash equivalents 26,129,141.95 11,369,551.37
VI ending balance of cash and cash equivalents 899,009.40 1,740,158.42
Legal representative： Chief accountant of accounting department： Manager of accounting department：27
Consolidated statement of changes in the shareholders' equity
Jan-Jun 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Amount in current period Amount in last year
shareholders' equity belongs to parent company shareholders' equity belongs to parent company
Item
Share
capital
Capital
reserve
minus:
Shares
at stock
Capital
surplus
General
risk
reserve
Undistributed
Profit Others
Minorit
y
interest
Toatl of
shareho
lder's
equity
Share
capital
Capital
reserve
minus:
Shares
at stock
Capital
surplus
General risk
reserve
Undistr
ibuted
Profit
Others
Minorit
y
interest
Toatl of
shareho
lder's
equity
I. Balance at the end of
previous year
220,901,1
84.00
72,315,
347.06 125,929,8
34.48 -200,284,817.
12 -70,232
,951.83
148,62
8,596.5
9
220,90
1,184.0
0
72,315,
347.06 125,929,
834.48
-174,79
3,080.8
8
-45,876
,809.94
198,47
6,474.7
2
plus(I): changes of
accounting policies
(II)Correction of errors
in previous years
Others
II. Balance at the
beginning of this year
220,901,1
84.00
72,315,
347.06
125,929,8
34.48
-200,284,817.
12
-70,232
,951.83
148,62
8,596.5
9
220,90
1,184.0
0
72,315,
347.06
125,929,
834.48
-174,79
3,080.8
8
-45,876
,809.94
198,47
6,474.7
2
III. Increase or
decrease of change
amount in this year(the
decrease is listed
beginning with “-”)
11,022,189.3
9
-4,880,
340.55
6,141,8
48.84
715,17
0.19
-2,541,
002.13
-1,825,
831.94
(I)Net profits in the year 11,022,189.3
9 -4,880,
340.55
6,141,8
48.84 715,17
0.19 -2,541,
002.13
-1,825,
831.94
(II)Profit and loss
directly accrued to
owners’ equities
1 ． Net amount of fair
value changes of saleable
financial assets
2．Net amount about the
change of fair values of
cash flow arbitrage tools
3 ． Income tax effect28
related to the projects
accrued to owner's euity
4. Others
Subtotal of (I)and (II) 11,022,189.3
9 -4,880,
340.55
6,141,8
48.84 715,17
0.19 -2,541,
002.13
-1,825,
831.94
(III) Capitals invested
by the owners
1.Capital investment by
owners in current period
2. Repurchase of shares at
stock in the year
3.others
(IV)Profit distribution in
the yea
Withdrawal of surplus
reserve
2．Withdrawal of general
risk preparation
3. Distribution to
shareholders
4．Others
(V) Internal settlement
and transfer of
owners’equity
1. Transfer of capital
reserve to capital
2. Transfer of surplus
reserve to capital
3. Surplus reserve makes
up for the loss
4. others
IV. Balance at the end of
this period
220,901,1
84.00
72,315,
347.06 125,929,8
34.48 -189,262,627.
73 -75,113
,292.38
154,77
0,445.4
3
220,90
1,184.0
0
72,315,
347.06 125,929,
834.48
-174,07
7,910.6
9
-48,417
,812.07
196,65
0,642.7
8
Legal representative： Chief accountant of accounting department： Manager of accounting department：29
statement of changes in the shareholders' equity
Jan-Jun 2009
Prepared by:Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Amount in current period Amount in last year
Item Share
capital
Capital
reserve
minus:
Shares at
stock
Capital
surplus
Undistributed
Profit
Toatl of
shareholde
r's equity
Share
capital
Capital
reserve
minus:
Shares at
stock
Capital
surplus
Undistributed
Profit
Toatl of
shareholde
r's equity
I. Balance at the end of
previous year
220,901,
184.00
64,951,4
44.59
96,841,026.
39
-199,809,084.10 182,884,5
70.88
220,901,
184.00
64,951,4
44.59
96,841,026.
39
-139,448,140.73 243,245,5
14.25
plus(I): changes of accounting
policies
(II)Correction of errors in
previous years
Others
II. Balance at the beginning of
this year
220,901,
184.00
64,951,4
44.59 96,841,026.
39 -199,809,084.10 182,884,5
70.88
220,901,
184.00
64,951,4
44.59 96,841,026.
39 -139,448,140.73 243,245,5
14.25
III. Increase or decrease of
change amount in this year(the
decrease is listed beginning
with “-”)
21,274,868.09 21,274,86
8.09
-12,346,102.94 -12,346,1
02.94
(I)Net profits in the year 21,274,868.09 21,274,86
8.09 -12,346,102.94 -12,346,1
02.94
(II)Profit and loss directly
accrued to owners’ equities
1 ． Net amount of fair value
changes of saleable financial
assets
2．Net amount about the change
of fair values of cash flow
arbitrage tools
3． Income tax effect related to
the projects accrued to owner's
euity
4. Others
Subtotal of (I)and (II) 21,274,868.09 21,274,86
8.09
-12,346,102.94 -12,346,1
02.94
(III) Capitals invested by the30
owners
1.Capital investment by owners
in current period
2. Repurchase of shares at stock
in the year
3.others
(IV)Profit distribution in the yea
1.Withdrawal of surplus reserve
2. Distribution to shareholders
3．Others
(V) Internal settlement and
transfer of owners’equity
1. Transfer of capital reserve to
capital
2. Transfer of surplus reserve to
capital
3. Surplus reserve makes up for
the loss
4. others
IV. Balance at the end of this
period
220,901,
184.00
64,951,4
44.59
96,841,026.
39
-178,534,216.01 204,159,4
38.97
220,901,
184.00
64,951,4
44.59
96,841,026.
39
-151,794,243.67 230,899,4
11.31
Legal representative： Chief accountant of accounting department： Manager of accounting department：31
Shenzhen International Enterprise Co., Ltd
Notes to Financial Statements
For the year of Jun 30, 2009
（All amounts are expressed in RMB yuan unless otherwise stated）
Ⅰ、Corporation Information
1、History of the company
Shenzhen International Enterprise Co., Ltd. (“the Company”) was incorporated in 1983 in the
People’s Republic of China and was restructured as a stock limited company in 1993and issued
41,701,800 shares. In 2004 on the approval of Securities Administration Office ShenZhen the
Company issued 41,701,800 bonus shares by the ratio 10:10. In 2005 on the approval of
Document No. 48 [1995] ShenFuBanHan the company issued 50,000,000 B shares and lisited in
the in the Shenzhen Stock Exchange. In 2006 on the approval of Document No. 99 [1996]
ZhengJianFaShen Zi which issued by China Securities Regulatory Commission the company the
company issued 20,000,000 A shares and lisited in the Shenzhen Stock Exchange. In May 1997 on
the approval of board of directors and Securities Administration Office ShenZhen the company
issued bonus shares by the ratio 10：1 and the capital fund transferred to share capital by the ratio
10:1, in the total of 30,680,720 shares. In May 1998 on the approval of board of directors and
Securities Administration Office ShenZhen that the share capital of company increased
36,816,864 shares by the transfer of the capital fund by the ratio 10:2, by now the shares of the
company are increased to 220,901,184. The company has acquired the QIGUYUEZONG business
license with NO 110114, the total registered share capital of the compnay is 220,901,184 Yuan.
Legal representative：Jinquan Li
Registered Address：Luohu District ShenZhen
2、The Industry
The company operates within Real estate, commercial retail, forestry industry
3、Scope of business
The approved business scop: Merchandise retail, real estate, purchasing, distribution, plant,
tree sales, import and export.
II、Basis for preparation
The company maintain their accounting record and prepare their statutory financial statement
base on the assumption of going concern, accordance to transaction and item’s substance and
economic reality, and according to the New Enterprise Accounting Standard issued by the
Ministry of Finance on 15 February 2006, and also accordance to those Accounting policy and
Accounting estimate that described in the notes.
III、 Declaration of Compliance with the Enterprise Accounting Standards
The Company’s financial statements prepared meet the requirements of the Enterprise
Accounting Standards; fairly and completely present the financial position, operation result and32
cash flow, and other relevant information of the company.
IV、Summary of Significant accounting policies and accounting estimates and
methods of preparation of consolidated financial statements
1、Accounting year
The company employs a period of calendar days from January 1 to December 31 each year as
accounting year.
2、Reporting currency
The Company’s reporting currency is Renminbi (“RMB”).
3、Measurement characters
The Company commonly measures accounting factors by historical cost method; if the
determined accounting factor amount can be obtained or reliably measured, the replacement cost, net
realizable value, net value and fair value method may be employed.
4、Standard of cash equivalents
In preparing cash flow statement, cash equivalents of the company include the investments
with short term (it usually expires within three months from the purchase date), highly liquidity,
easy to convert into known amount of cash, and low-risk of changes in value. Equity investments
shall not deem as cash equivalents.
5、Foreign currency transactions
Foreign currency (currency other than the reporting currency) transactions are translated
into reporting currency at spot exchange rates prevailing on the day in which the transactions
take place. Monetary assets and liabilities denominated in such currencies are translated at the
rates prevailing at the balance sheet date. The exchange differences between the spot exchange
rate at balance sheet date and initial recongnition rate or spot exchange rate at previous balance
sheet date are accounted for as profit and loss account for the current period.
The exchange gains and losses arising from foreign currency borrowings especially related to
the purchase or construction of fixed assets refer to Enterprise Accounting Standards –
Borrowing Costs.
6、Financial assets and financial liabilities
(1) The recognition of the financial instruments:
The company should recognize a financial asset or a financial liability on its balance sheet
when, and only when the entity becomes a party to the contractual provision of the instrument.
(2) Classification of financial assets and financial liabilities:
Financial assets and liabilities include financial assets and liabilities held for trading, and
financial asset or financial liability at fair value through profit or loss; held-to-maturity
investments; loans and accounts receivable; available-for-sale financial assets; and other financial
liabilities.
①Financial asset or financial liabilities at fair value through profit or loss which including
tradable financial assets or liability and designated financial asset or financial liability at fair
value through profit or loss.33
The tradable financial asset or liability is financial assets or liability meets one of the
following criteria:
a、The purpose of the obtaining the financial asset or liability is for sale or repurchase in the
near future.
b、Forming a part of the identifiable combination of financial instruments which are
managed in a centralized way and for which there are objective evidences proving that the
enterprise may manage the combination by way of short term profit making in the near future;
c、Being a derivative instrument, excluding the designated derivative instrument which are
effective hedging instruments, or derivative instruments to financial guarantee contracts, and the
derivative instruments which are connected with the equity instrument investments for which
there is no quoted price in the active market, whose fair value cannot be reliably measured, and
which shall be settled by delivering the said equity instruments.
The financial assets or financial liabilities meeting any of the following requirements can be
designated, when they are initially recognized, as financial assets or financial liabilities as
measured at its fair value and of which the variation is included in the current profits and losses:
a、The designation is able to eliminate or obviously reduce the discrepancies in the
recognition or measurement of relevant gains or losses arisen from the different basis of
measurement of the financial assets or financial liabilities;
b、The official written documents on risk management or investment strategies of the
enterprise concerned have recorded that the combination of said financial assets, the combination
of said financial liabilities, or the combination of said financial assets and financial liabilities will
be managed and evaluated on the basis of their fair values and be reported to the key
management personnel.
②held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of
maturity, a fixed or determinable amount of reportable price and which the enterprise holds for a
definite purpose or the enterprise is able to hold until its maturity.
③Loans and accounts receivable" refers to the non-derivative financial assets for which
there is no quoted price in the active market and of which the repo amount is fixed or
determinable.
④The "sellable financial assets" refers to the non-derivative financial assets which are
designated as sellable when they are initially recognized as well as the financial assets other than
those as described below:
(1) Loans and accounts receivables;
(2) Investments held until their maturity; and
(3) Financial assets measured at their fair values and of which the variation is recorded into
the profits and losses of the current period.
⑤Other financial liability refers to financial liability are not measured at fair value through
profit and loss.
(3) Measurement of Financial Instruments
The financial assets and financial liabilities initially recognized by an enterprise shall be
measured at their fair values. For the financial assets and liabilities measured at their fair values34
and of which the variation is recorded into the profits and losses of the current period, the
transaction expenses thereof shall be directly recorded into the profits and losses of the current
period.
The subsequent measurement of the financial assets and financial liability:
①The financial asset and liability at fair value through profit and loss are subsequently
measured at fair value, the profit and loss caused by changes in the fair value and de-recognition
of the financial asset and liability should be recorded in the profit and loss accounts.
②The investments held until their maturity, are measured on the basis of the
post-amortization costs by adopting the actual interest rate method; the profit and loss caused by
de-recognition, impairment or amortization are recorded in the profit and loss account of the
current period.
③The accounts receivable are measured on the basis of the post-amortization costs by
adopting the actual interest rate method; the profit and losses caused by de-recognition,
impairment or amortization is recorded in the profit and loss account of the current period.
④Available for sale financial asset, subsequently measured at fair value, the profit and
losses caused by changes in fair value are recorded in the Capital reserve. The differences
between purchase value and book value as disposal of available for sale financial asset should be
recognized in the profit and loss on investments. At the same time, roll out the amount of the
disposal part corresponding with the cumulative amount of the changes in the fair value
recognized in the owner’s equity into the Capital reserve. The interest and cash dividend received
during hold for available for sale financial asset, are recognized in the profit and loss on
investments.
⑤Other financial liability , the derivative instruments which are connected with the equity
instrument investments for which there is no quoted price in the active market, whose fair value
cannot be reliably measured, and which shall be settled by delivering the said equity instruments
For the financial guarantee contracts which are not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the profits and losses of the
current period, and for the commitments to grant loans which are not designated to be measured
at the fair value and of which the variation is recorded into the profits and losses of the current
period and which will enjoy an interest rate lower than that of the market, a subsequent
measurement shall be made after they are initially recognized according to the higher one of the
following:
a、 the amount as determined according to the Accounting Standards forEnterprises No. 13 -
Contingencies; or
b、 The surplus after accumulative amortization as determined according to the principles of
the Accounting Standards for Enterprises No. 14 - Revenues is subtracted from the initial
recognized amount
Other financial liabilities are measured on the basis of the post-amortization costs by
adopting the actual interest rate method; the profit and losses caused by de-recognition,
impairment or amortizations are recorded in the profit and loss account of the current period.
⑥The "fair value" refers to the amount, at which both parties to a transaction who are35
familiar with the condition exchange their assets or clear off their debts under fair conditions. In a
fair transaction, both parties to it shall be enterprises in continuous operation, and do not plan or
do not need to carry out any liquidation, significantly reduce their operational scale or carry out
transactions notwithstanding the unfavorable conditions they face.
⑦Amortized cost
Preferred term for the apportionment (charging or writing off) of the cost of an intangible
asset as an operational cost over the asset's estimated useful life. It is identical to depreciation, the
preferred term for tangible assets. The purpose of both terms is to (1) reflect reduction in the
book value of the asset due to usage and/or obsolescence, (2) spread a large expenditure
proportionately over a fixed period, and thereby (3) reduce the taxable income (not the actual or
cash income) of a firm. In effect, it is a process by which invested capital of a firm is recovered
by gradual sale of the firm's asset(s) to its customers over the years.
⑧Effective interest methods refers to a financial Asset (including a group of financial assets)
or financial liability (including a group of financial liabilities), means a method of— calculating
the amortized cost of the asset or liability, as the case may be; and allocating the interest income
and interest expense of the asset or the interest income and interest expense of the liability, as the
case may be, over the expected life of the asset or liability, as the case may be.
(4) Transfers and derecognize of financial assets
① Derecognize financial asset if, and only if, meets one of the following three conditions:
a、the contractual rights to the cash flows from the financial basset expire;
b、the financial assets have been transferred, and the ownership of financial assets of almost
all the risks and rewards transfer to other party;
c、The financial assets have been transferred, but the company neither retains the ownership
of financial assets of almost all the risks and rewards, nor gives up control of the financial assets.
② When derecognize condition of entire transferred assets has been satisfied, the differences
between the amounts of following two items shall be accounted for profits and losses of current
period.
a、The book value of transferred financial assets;
b、The sum of consideration received from the transfer, and the accumulative amount of the
changes of the fair value originally recorded in the shareholders’ equities (in the event that the
financial asset involved in the transfer is a financial asset available-for-sale)
③ If the transfer of partial financial assets satisfies the conditions of derecognize the entire
book value of the transferred financial asset shall, between the portion whose derecognize and the
recognized portion (under such circumstance, the service asset retained shall be deemed as a
portion of financial asset whose derecognize), be apportioned according to their respective relative
fair value, and the difference between the amounts of the following two items shall be accounted
for the profits and losses of the current period .
a、The portion book value derecognized;
b、The sum of consideration of the portion whose derecognize and the portion of
accumulative amount of the changes in the fair value originally recorded in the shareholders’
equity which is corresponding to the portion whose derecognized ( in the event that the financial36
assets involved in the transfer is a financial assets available-for-sale).
④ If the Company fails to satisfy the conditions of de-recognition for transferred financial
assets, it shall continue to recognize the entire financial assets to be transferred and shall
recognize the consideration it receives as a financial liability.
(5) Impairment of financial assets
The Company assesses the financial assets that carry at fair value, and those financial assets
which changes of fair value are recognized in profit and loss accounts at the balance sheet date. If
there is objective evidence that the one or several financial assets are impaired, the Company
shall determine the amount of any impairment loss.
① Accounts receivable
At the end of the period, the balance of individual accounts receivable and individual other
receivable more than 1 million Yuan (include 1million Yuan) is considered as individual
significant amounts, One by one to carry out impairment test, if there is objective evidence that
the accounts receivable have been impaired, the impairment loss shall be recognized based on the
difference of the book values higher than the present value of future cash flows.
At the end of the period, for those individual accounts receivable with not significant
amounts, if there is objective evidence that the accounts receivable have been impaired,
recognize impairment loss alone.
For other individual the amount of non-significant receivables, classification primarily on
the basis of account age, and those accounts receivable’s account age more than one year will be
classified as non-significant in amount but in accordance with the characteristics of credit risk
portfolio, the risk of the portfolio is high, others classified as other non-significant receivables.
For those account receivables classified as non-significant in amount but in accordance with the
characteristics of credit risk portfolio, the risk of the portfolio is high, as well as other individual
non-significant receivable accounts that not impaired after impairment test, these account
receivables will carry out age analysis by the company and consider the debtor’s actual business
situation and cash flow to determine the recoverable amount of receivables, a reasonable estimate
of bad debts.On the basis of the actual loss rate of receivable accounts, with same or similar
credit risk characteristics of accounts receivable package in previous year, the Company also
considers current situation and determine the percentage of bad debt provision，the provison for
the bad debt are as following:
Age Percentage
Within 1 year 5%
1-2years 10%
2-3years 15%
3-4years 20%
4-5years 25%
Over 5years 30-100%
②Held-to-maturity investment
The measurement of impairment loss of held-to-maturity investment, please refer to37
impairment loss treatment of accounts receivable.
③ Available-for-sale financial assets
If there is objective evidence that available-for-sale financial assets have significant
depreciated, or after considering various relevant factors, this downward tendency is deemed as
not temporary, the impairment loss shall be recognized based on the difference between the
expected cash inflow values and book values.
In case of impairment loss of available-for-sale financial assets recognized, it can not be
written back.
7、Inventory
（1）Inventory categories: finished goods, consigned goods, development costs, development
products, low-value consumable supplies, package materials, and consumable biology assets etc.
（2）Inventories stock physical count system：
Perpetual inventory method.
（3）Valuation methods of inventories input and output
The acquired inventory of the company to be initially measured at cost, the inventory
includes costs of purchase and processing costs and other costs.
①Retail merchandise is accounted for by purchase price..
②All direct and indirect costs incurred in development process for real estate development
enterprise are accounted for development costs, and transfer to development products when the
projects are completed. Among of them:
a、Land used in development: Land is entirely transferred to work-in-process when the
whole project is developed; Land is transferred partially to work-in-process when the project is
developed by installment, and undeveloped land is still accounted for inventory.
b、Public facilities: Public facilities are initially accounted for as development costs by
actual cost, and transferred to salable properties such as residences etc when the projects are
completed. If the public facilities own their operation values and developers own the right of profit
inflows from the public facilities, then those public facilities are accounted for lease development
products or finished development products by individually.
（4）Low consumable supplies or package materials are amortized at one time when they
are issued.
（5）Amortization method for lease development products and turnover properties: amortize
by straight-line method on predicted useful lives.
（6）Impairment loss of inventories
For inventories at balance sheet date, the evaluation criteria should base on the lower value
between costs and net values that can be converted into cash. When net values that can be
converted into cash are lower than costs, provision for impairment loss of inventories shall be
made.
Consumable forest assets are not made impairment loss provision before the trees are grown
to cut for sales. The Company assesses consumable forest assets which are available to cut for
sales at least once a year at balance sheet date for any impairment loss indications.
If the consumable forest assets are suffered by natural disasters, plant diseases, or animal38
epidemic diseases, and are resulted from the lower net values that converted into cash than costs,
then the differences between net values that converted into cash and costs are accounted for
impairment loss of inventories provision.
8、Recognition and measurement of Long-term Equity Investment
Long-term equity investment including the equity investments held by the company, who
can able to exercise control, joint control or significant influence to the invested entity, or the
company do not have control, joint control or significant influence on the invested entity, and
there is no active market quotation, the fair value measurement should not reliable.
(1)Initial measurement
①Long-term Equity Investment Including the company's investment that was able to
exercise control, joint control or equity investment which may have significant influence on the
invested company or the Company’s investment does not have control, joint control or significant
influence on the invested company, and there is no active market quotation, the fair value can not
be reliably measured.
a、 For the merger of enterprises under the same control, if the consideration of the merging
enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts, it shall, on
the date of merger, regard the share of the book value of the owner's equity of the merged
enterprise as the initial cost of the long-term equity investment. The difference between the initial
cost of the long-term equity investment and the payment in cash, non-cash assets transferred as
well as the book value of the debts borne by the merging party shall offset against the capital
reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If
the consideration of the merging enterprise is that it issues equity securities, it shall, on the date
of merger, regard the share of the book value of the owner's equity of the merged enterprise as
the initial cost of the long-term equity investment. The total face value of the stocks issued shall
be regarded as the capital stock, while the difference between the initial cost of the long-term
equity investment and total face value of the shares issued shall offset against the capital reserve.
If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
b、For obtaining subsidiary not under common control, the cost of long-term equity
investment is fair value of assets paid or liabilities undertaken by the Company. Where the cost
of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, the difference shall be recognized as goodwill, goodwill shall be measured
at cost less accumulated impairment losses. Where the cost of combination is less than the
acquirer’s interest in the fair value of the acquiree’s identifiable net assets, after reassessment, the
difference shall be recognized in profit or loss for the current period.
Other types of long-term equity investment
Besides the long-term equity investments formed by the merger of
②Enterprises, the initial cost of a long-term equity investment obtained by other means
shall be ascertained in accordance with the provisions as follows:
a、The initial cost of a long-term equity investment obtained by making payment in cash
shall be the purchase cost which is actually paid. The initial cost consists of the expenses directly
relevant to the obtainment of the long term equity investment, taxes and other necessary39
expenses.
b、The initial cost of a long-term equity investment obtained on the basis of issuing equity
securities shall be the fair value of the equity securities issued.
c、 The initial cost of a long-term equity investment of an investor shall be the value
stipulated in the investment contract or agreement except the unfair value stipulated in the
contract or agreement.
d、 The initial cost of a long-term investment obtained by the exchange of nonmonetary
assets shall be ascertained in accordance with the Accounting Standards for Enterprises No. 7
– Exchange of Non-monetary Assets.
e、 The initial cost of a long-term equity investment obtained by recombination of liabilities
shall be ascertained in accordance with Accounting Standards for Enterprises No. 12 – Debt
Restructuring.
(2) Subsequent measurement
The cost method is employed to calculate the long-term equity investment of subsidiaries
and will be adjusted in accordance with the equity method in the preparation of the consolidated
financial statements.
The Company uses cost method for the following conditions: a long-term equity investment
where the investing enterprise can exercise control over the investee, or the investing enterprise
does not have joint control or significant influence over the investee, the investment is not quoted
in an active market and its fair value can’t be reliably measured.
When an investing enterprise can exercise joint control or significant influence over the
investee, a long-term equity investment shall be treated as a recovery of initial investment cost.
a、When using cost method, additional investments or disinvestments shall adjustment of the
cost of the long-term equity investment. By using cost method of a long-term equity investment,
except the actual payment when investment obtained or those contained cash dividends or profits
that has declared but not yst paid, the company shall recognize those declared profit and loss, in
accordance with its shares in the investee.
b、When using equity method, after the investing enterprise has acquired a long-term equity
investment, it shall recognize its share of net profits or losses made by the investee as investment
income or losses, and adjust the carrying amount of the investment accordingly. The carrying
amount of the investment shall be reduced by the portion of any profit distributions or cash
dividends declared by the investee that is attributed to the investing enterprise.
The impairment of a long-term equity investment which is measured by employing the cost
method as prescribed in these Standards, for which there is no offer in the active market and of
which the fair value cannot be reliably measured, its impairment shall be disposed in accordance
with the Accounting Standards for Enterprises No. 22 – Recognition and Measurement of
Financial Instruments. The impairment of any other long-term equity investment measured in
accordance with these Standards shall be disposed in accordance with the Accounting Standards
for Enterprises No. 8 – Asset Impairment.
9、Investment property40
Investment property is held to earn rentals or for capital appreciation or for both. Investment
property includes leased or ready to transfer after capital appreciation land use rights and leased
buildings.
Property investment is measured by cost model, according to its expected useful life and net
residual rate on buildings and land-use right to calculate depreciation or amortization. The
company’s expected useful life, net residual rate and annual depreciation rate of investment
property as follow:
Categories Expected residual rate
Expected useful
life(years)
Annual depreciation
(amortization) rate
Building 10% 30 3%
At the end of the balance date, if there is any evidence indicates that the Investment property
has been impaired then the impairment provision should be provided in accordance with Note 4,
15.
10、Recognition and measurement of fixed asset
(1)Fixed assets refer to simultaneously have the following characteristics of tangible assets:
for the production of merchandise, and providing labor services, lease or operation and
management of holdings; life of more than one fiscal year.
(2)Fixed assets are tangible assets that are held for use in production or supply of goods or
services, for rental to others, or for administrative purpose, and have useful lives more than one
accounting year. Fixed assets shall be recognized if they meet the following conditions:
①The economic benefits related to fixed asset probably flows to the enterprise;
②The cost of fixed asset may be reliably measured.
If the subsequent expenditure related to fixed assets, if they meet the above conditions then
should be recognized in the cost of the fixed assets if not should be recognized in the profit
and loss.
(3) Fixed assets shall be initially measured at cost method. The cost of fixed asset comprises
purchase price, relate tax or duties, and any directly attributable cost of bringing the asset to
working condition for its intended use, such as delivery cost, insurance etc.
（4）Depreciation method of fixed assets
The estimated useful lives and annual depreciation rate of various types fixed assets are listed
as follows:
Category Expected residual rate Estimated useful lives (years) Annual depreciation rate
Building and structures 10% 30 years 3%
Vehicles 10% 5 years 18%
Electronic device and other facilities 10% 5 years 18%
(5)The fixed asset would be recognized as idle fixed assets if the fixed asset be unused in
6months (except for seasonal disable), the deprecation method of idle fixed assets is in line with
other types of fixed assets.
(6) If there is evidence provide that the value of fixed asset is imparied on each balance
sheet date, the method of provision for the imparment would be prepared according to the41
method in Note 4.15 impairment of assets.
When the depreciation provided for the fixed asset which impairment provison has been
provided the depreciation rate and depreciation amount should be remeasured according to their
book value and remaining life, if the value of the impaired fixed asset could be recovered then
the depreciation rate and depreciation amount should be remeasured in accordance with its
recovered value and remaining life, for the fixed asset that full impairment provision has been
provided then no longer be depreciated.
11、Construction in progress
(1)Construction in progress shall be calculated based on the classification of proposed
projects.
(2)Construction in progress is measured at actual cost. Construction in progress is
transferred to fixed assets when the project is substantially ready for its intended use. Borrowing
costs relating to construction in progress are measured according to borrowing costs
measurement method.
(3)At the end of period, the company makes judgment if any provision of impairment loss is
necessary. If the project has been stopped for a long time and will not be constructed within three
years, the impairment loss for such construction in progress shall be made based on the
differences between recoverable amount and book values. Once impairment loss is made, it can
not be written back.
12、Recognition and Initial Measurement of Biological Assets
（1）The biological assets of the company refer to consumable biological assets, productive
biological assets and public welfare biological assets
（2）The initial measurement shall be made to the biological asset at its cost. The cost of a
purchased biological asset consists of the purchase price, the relevant taxes, freight, insurance
premium and other expenses that may bedirectly attributable to the purchase of this asset. An
investor shall ascertain the cost of biological asset inaccordance with the value as stipulated in
the investment contract or agreement, unless the unfair value is stipulated in the contract or
agreement. The cost of consumptive biological asset and the public welfare biological assets
self-cultivating forest consists of the necessary expenses for forestation, forest tending, forest
operating facilities, testing of good species, investigation and design, indirect apportionment. The
cost of self-planting productive biological assets as forests consists of the necessary expenses for
forestation, forest tending, forest operating facilities, testing of good species, investigation and
design, indirect apportionment, etc., before accomplishing the expected objective of
productionand operation.
The subsequent expenses for the management and protection or for the breeding of a
biological asset after canopy closure or after the accomplishment 2/2 of the expected objective of
production and operation shall be included in the current profits and losses.
（3）At the end of each year, the company examines the consumptive biological assets and
productive biological assets. If any wellestablished evidence indicates that the realizable net
value of any consumptive biological asset or the recoverable amount of any productive biological
asset is lower than its book value as a result of natural disaster, plant diseases and insect pests,42
animal disease or change of market demand, the enterprise shall,based on the difference between
the realizable net value or the recoverable amount and the relevant book value, make provision
for the loss on decline in value of or for the impairment of the biological asset and shall include it
in 3/3 the current profits and losses. The aforesaid realizable net value and recoverable amount
shall be ascertained in accordance with the AccountingStandards for Enterprises No. 1 –
Inventories and Accounting Standards forEnterprises No. 8 – Asset Impairment, respectively.
If the factors causing any impairment of a consumptive biological asset have disappeared,
the amount of write-down shall be resumed and shall be reversed fromthe provision for the loss
on decline in value of the consumptive biological asset that has been made. The reversed amount
shall be included in the current profits and losses.
Once the provision for impairment of a productive biological asset is made, it shall not be
reversed.
13、 Intangible Assets
（1）Intangible asset are recognize initially at cost.
（2）Period of intangible asset that could bring future economic benefit inflow to company
could determined reasonably according to the judgment according to reason of contract right or
other legal right, condition in same industry, history experience, and demonstrate of expert would
be recognize as finite useful years asset. Otherwise, the asset would be recognizing as infinite
useful years asset.
（3）To estimate the life of finite useful year’s asset would consider factor of:
①The life cycle of the asset to produce product, and the information of similar asset;
②The development of craftwork and technology, and the estimate of future development
trend
③The demand condition in market of the product produced by the asset;
④The estimate action would be taken by competitor or potential competitor;
⑤The expense expects to maintain the asset to bring future economic benefit and the ability
of the company to pay for it.
⑥The relate law restriction on control period of the asset or other similar restriction such as
franchise, lease period.
⑦Relation with other asset holds by company.
（4）The intangible asset with finite useful years should be amortization on a systematic and
rational basic according its economic benefit achievement plan. A straight line method would be
used if the plan could not define. Intangible asset with infinite useful years would not amortize,
but would conduct impairment test every year.
（5）Conduct test to ability of the asset to bring future economic benefit on balance sheet
date, and make provision for impairment of intangible asset according to method describe in
Notes 15.
（6）Internal organizational research expenses are accounted through profit and loss in
current period; development costs which are recognized as intangible assets shall satisfy the
following conditions: It is technical feasible for use or sales upon the completion of the
intangible assets; it is intended for use or sales upon the completion of the intangible assets; the
manner to provide that expect future economic benefits that are attributable the intangible assets
including a market is exist for the asset or product of the asset or provide evidence of serviceable43
if asset are inside used; the entity should have enough technology, financial and other resources
to support the completion of development, and have ability to use or sale the intangible assets;
the cost of intangible asset can be measured reliably.
14、Long-term deferred expenses
The Long-term deferred expenses are defined as those expenses in this year but should be
allocated in flowing years. The amount transfer to the account are the amount actual paid, and
allocate equally in project period.
15、Impairment of Assets
(1)No matter whether there is any sign of possible assets impairment, the goodwill formed
by the merger of enterprises and intangible assets with uncertain service lives shall be subject to
impairment test every year. Fixed assets, construction in progress, intangible assets, the
investment properties measured by cost method and long-term equity investments, if there is any
indication for impairment at balance sheet date then impairment test need to be taken
Where any evidence shows that there is possible assets impairment, the recoverable amount
of the assets shall be estimated. The recoverable amount shall be determined in light of the higher
one of the net amount of the fair value of the assets minus the disposal expenses and the current
value of the expected future cash flow of the assets. The disposal expenses shall include the
relevant legal expenses, relevant taxes, truck age as well as the direct expenses for bringing the
assets into a marketable state. Where there is any evidence indicating a possible impairment of
assets, the enterprise shall, on the basis of single item assets, estimate the recoverable amount.
Where it is difficult to do so, it shall determine the recoverable amount of the group assets on the
basis of the asset group to which the asset belongs.
(2)The recognition of the impairment
①The current market price of assets falls, and its decrease is obviously higher than the
expected drop over time or due to the normal use;
②The economic, technological or legal environment in which the enterprise operates, or the
market where the assets is situated will have any significant change in the current period or in the
near future, which will cause adverse impact on the enterprise;
③The market interest rate or any other market investment return rate has risen in the current
period, and thus the discount rate of the enterprise for calculating the expected future cash flow
of the assets will be affected, which will result in great decline of the recoverable amount of the
assets;
④Any evidence shows that the assets have become obsolete or have been damaged
substantially;
⑤The assets have been or will be left unused, or terminated for use, or disposed ahead of
schedule;
⑥Any evidence in the internal report of the enterprise shows that the economic
performance of the assets have been or will be lower than the expected performance, for example,
the net cash flow created by assets or the operating profit (or loss) realized is lower (higher) than
the excepted amount, etc.; and Other evidence indicates that the impairment of assets has
probably occurred.44
(3)The recognition of an asset group shall base on whether the main cash inflow generated
by the asset group is independent of those generated by other assets or other group assets.
Simultaneously, when recognizing an asset group, the enterprise shall take into consideration
how its managers manage the production and business activities (for example, according to the
production lines, business varieties or according to the regions or areas), and the ways of
decision-making for the continuous use or disposal of the assets, etc
Where there is an active market for the products manufactured by (or other outputs of) a
combination of several assets, even if some or all of these products (or other outputs) are
provided for the internal use, the enterprise shall also recognize this combination of assets as an
asset group on the condition that the provisions of the preceding paragraph are accorded with
Where the cash inflow of the asset group is affected by the internal transfer price, the future
cash flow of the asset group shall be determined on the basis of the best available estimate made
by the managers of the enterprise for the future price in the fair transaction.
Once an asset group is recognized, it shall be kept consistent during different accounting
periods, and not be changed at will.
16、 Measurement and recognition of employee Compensation
(1) Employee Compensation
Employee compensation refers to all kinds of payments and other relevant expenditures
given by enterprises in exchange of the services offered by the employees. The employee
compensation shall 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;
⑤Labor union expenditure and employee education expenses;
⑥Non-monetary welfare;
⑦ Compensations for the cancellation of the labor relationship with the employees; and
⑧ Other relevant expenditures of services offered by the employees
(2) If an enterprise cancels the labor relationship with any employee prior to the expiration
of the relevant labor contract or brings forward any compensation proposal for the purpose of
encouraging the employee to accept a layoff, and the following conditions are met concurrently,
the enterprise shall recognize the expected liabilities incurred due to the compensation for the
cancellation of the labor relationship with the employee, and shall simultaneously record them
into the profit or loss for the current period:
①Where the enterprise has formulated a formal plan on the cancellation of labor
relationship or has brought forward a proposal on voluntary layoff and will execute it soon. This
plan or proposal shall include the department at which the employee to be laid off works, the post
of the employee and the number of the employees to be laid off, the amount of compensation for
the cancellation of labor relationship or for layoff as determined on the basis of the job category
or post according to the relevant provisions, and the planned time for the cancellation of labor45
relationship or layoff.
②The enterprise is unable to unilaterally withdraw the plan on the cancellation of labor
relationship or the layoff proposal.
17、The recognition and measurement of Share-based Payments
(1) Cash-settled Share-based Payments
A cash-settled share-based payment shall be measured in accordance with the fair value of
liability calculated and confirmed based on the shares or other equity instruments undertaken by
an enterprise.
As to a cash-settled share-based payment instruments, if the right may be exercised
immediately after the grant, the fair value of the liability undertaken by the enterprise shall, on
the date of the grant, be included in therelevant costs or expenses, and the liabilities shall be
increased accordingly.
As to a cash-settled share-based payment, if the right may not beexercised until the vesting
period comes to an end or until the specified performance conditions are met, on each balance
sheet date within the vesting period, the services obtained in the current period shall, based on
the best estimate of the information about the exercisable right, be included in the relevant costs
or expenses and the corresponding liabilities at the fair value of the liability undertaken by the
enterprise.
(2)Equity-settled Share-based Payments
The equity-settled share-based payment in return for employee services shall be measured at
the fair value of the equity instruments granted to the employees
As to an equity-settled share-based payment in return for services of employees, if the right
may be exercised immediately after the grant, the fair value of the equity instruments shall, on
the date of the grant; be included in the relevant cost or expense and the capital reserves shall be
increased accordingly.
As to a equity-settled share-based payment in return for employee services, if the right cannot
be exercised until the vesting period comes to an end or until the prescribed performance
conditions are met, then on each balance sheet date within the vesting period, the services
obtained in the current period shall, based on the best estimate of the number of vested equity
instruments, be included in the relevant costs or expenses and the capital reserves at the fair value
of the equities instruments on the date of the grant.
If canceled the equity instrument granted to employees during the waiting period, those
equity instrument treated as accelerated vesting. Value should be indentified within the remaining
waiting period shall be recognised in the current profits and losses, and recognise capital reserve
simultaneously. Employees or the other parties can choose meet the non-vesting conditions but
fails meeting within the waiting period, as the cancellation of the equity instruments granted.
18、Accrued liabilities
(1) Principle of accrued liabilities
The obligations related to some items that meet the following conditions at the same time
will be confirmed as the liabilities:
①This obligation is the current obligation of the company;46
② The performance of this obligation will probably cause the economic benefits to flow
out of the company;
③The amount of this obligation can be reliably calculated.
(2) The measurement of accrued liabilities
The accrued liabilities are initially measured in accordance with the best estimated outflow
of economic benefits to fulfill the current obligation as well as related risks regarding the
contingencies, uncertainties and time value of money. Significant impact on the time value of
money the best estimation is determined through the related discounted future cash outflows. The
increase of book value of accrued liability caused due to the passage of time is recognized as
interest.
(3)Optimum evaluation of accrued liabilities
If the necessary payments have scopes, the optimum evaluation shall be determined based
on the average amount between the upper and lower limit amount of scope ; if the necessary
payments do not have such scopes, the optimum evaluation shall be determined in the following
method:
① If the contingent event is involved in an individual project, the optimum evaluation
amount will be determined based on the possible amount;
② If the contingent event is involved in some projects, the optimum evaluation amount
shall be determined based on possible amount and occurrence probability. In case of all or part of
payments about the confirmed liquidation liabilities are expected to be compensated by the third
parties or other parties, and the compensation amounts are surely received, then such amounts
shall be separately recognized. The confirmed compensation amounts shall not exceed book
values of confirmed liabilities.
19、The recognition and measurement of transfer financial assets
(1) The Company shall derecognize financial assets when all the risks and rewards have
been transferred to other party. The company differentiates the transfer of financial assets into
entire transfer and the partial transfer of financial asset.
When derecogniziton condition of entire transferred assets has been satisfied, the differences
between the amounts of following two items shall be accounted for profits and losses of current
period.
①The book value of transferred financial assets;
②The sum of consideration received from the transfer, and the accumulative amount of the
changes of the fair value originally recorded in the shareholders’ equities (in the event that the
financial asset involved in the transfer is a financial asset available-for-sale)
20、Revenue recognition
(1) Recognition principle and method of Estate Revenue:
①The project has been completed, sale contract has been signed or any other notice of
settlement has been received, the company has completed its obligation mention in the contract,
and received payment from buyers, or the one sold under mortgage, which has satisfied with the
mortgage condition, and cost of the project can be measured reliably.
②Sales under installment payment: Revenue shall be recognized on each installment47
payment date as the contract said.
③ Construction of buildings or construction projects: Revenue shall be recognized when
the construction settlement bills are handed to consignor(s).
(2)Income from rental properties: the income is recognized by straight-line method under
the contract signed.
(3) Recognition principle and method of other business:
①Sale of goods
Revenue from the sale of goods shall be recognized when all of the following conditions are
satisfied:
a、the entity has transferred the significant risks and rewards of ownership of goods to the
buyer;
b、the entity retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over goods sold;
c、the amount of revenue can be measured reliably;
d、The associated costs incurred or to be incurred can be measured reliably.
② Rendering of services
The entity recognize revenue from rendering of service when come out of rendering of
service can be measured reliably at balance sheet date, and adopt percentage of completion
method in recognition of revenue. When the outcome of rendering of service can not be
measured reliably at balance sheet date, revenue shall be recognized to the extent of costs
incurred that are expected to be recoverable.
③ Other business: The entity recognizes revenue when the related economic benefit shall
probably flow into the company; and related income and cost can be measured reliably.
21、Government Subsidies
(1)No government subsidy may be recognized unless the following conditions are met
simultaneously as follows:
① The enterprise can meet the conditions for the government subsidies; and
②The enterprise can obtain the government subsidies.
(2) If a government subsidy is a monetary asset, it shall be measured in the light of the
received or receivable amount. If a government subsidy 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.
①The government subsidies 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 subsidies measured at their nominal amounts shall be
directly included in the current profits and losses.
②The government subsidies pertinent to incomes shall be treated respectively in accordance
with the circumstances as follows:
a、Those subsidies 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; or
b、Those subsidies used for compensating the related expenses or losses incurred to the48
enterprise shall be directly included in the current profits and losses.
(3) If it is necessary to refund any government subsidy which has been recognized, it shall
be treated respectively in accordance with the circumstances as follows:
①If there is the deferred income concerned, the book balance of the deferred income shall
be offset against, but the excessive part shall be included in the current profits and losses; and
② If there is no deferred income concerned to the government subsidy, it shall be directly
included in the current profits and losses.
22、Measurement and recognition of borrowing cost
(1)Principle of capitalization of borrowing cost
Borrowing costs may be attributable to the construction and productions of assets and
complied with the capitalization conditions, they shall be capitalized and accounted for as cost of
assets; other borrowing costs shall be recognized as expenses when incurred and accounted for
current profit and loss account. The assets complying with the capitalization conditions mean
assets such as fixed assets, investment properties and inventories etc, that require a long time of
construction and production activities before being intended for use or for sales.
The capitalization of borrowing costs shall satisfy the following conditions:
①The expenditure of assets has been incurred;
②The borrowing costs have been incurred;
③Activities relating to acquisition, construction or production that are necessary to the
assets being intended for use or sales have been launched.
Capitalization of borrowing costs shall be suspended during periods in which acquisition,
construction or production of assets is interrupted abnormally, and is interrupted for a continuous
period of three months.
(2)Capitalization period
Capitalization of borrowing costs shall be suspended during periods in which acquisition,
construction or production of assets is interrupted abnormally, and is interrupted for a continuous
period of three months.
Capitalization of borrowing costs also shall be suspended when the acquisition, construction
or production of assets are prepared being intended for use or sales.
Borrowing costs which are incurred by the acquisition, construction or production of assets,
and are satisfied with the aforesaid capitalization conditions, are recognized as cost of assets
before those assets are intended for use or sales. Any borrowing costs incurred after those assets
are intended for use or sales, are recognized as financial costs.
(3) 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. The
capitalization period shall refer to the period from the commencement to the cessation of
capitalization of the borrowing costs, excluding the period of suspension of capitalization of the
borrowing costs. During the period of capitalization, the amount of interest capitalized during49
each accounting period shall not exceed the amount of interest actually incurred to the relevant
borrowings in the current period. During the period of capitalization, the exchange balance on
foreign currency borrowings shall be capitalized, and shall be recorded into the cost of assets
eligible for capitalization. For the ancillary expense incurred to a specifically borrowed loan,
those incurred before a qualified asset under acquisition, construction or production is ready for
the intended use or sale shall be capitalized at the incurred amount when they are incurred, and
shall be recorded into the costs of the asset eligible for capitalization; those incurred after a
qualified asset under acquisition and construction or production is ready for the intended use or
sale shall be recognized as expenses on the basis of the incurred amount when they are incurred,
and shall be recorded into the profits and losses of the current period. The ancillary expenses
arising from a general borrowing shall be recognized as expenses at their incurred amount when
they are incurred, and shall be recorded into the profits and losses of the current period.
23、 Measurement and recognition of income taxes
(1)The company uses deferred income tax liability method in calculation of income taxes
(2) Where the company obtains assets or liabilities, it shall determine its tax base. Where
there is difference between the carrying amount of the assets or liabilities and its tax base, the
deferred income tax assets or the deferred income tax liabilities shall be determined.
(3) The recognition of the deferred income tax assets
① The company should recognize the deferred income tax liabilities arising from a
deductible temporary difference to the extent of the amount of the taxable income which it is
most likely to obtain and which can be deducted from the deductible temporary difference.
However, the deferred income tax assets, which are arising from the initial recognition of assets
or liabilities during a transaction which is simultaneously featured by the following, shall not be
recognized:
a、The transaction is not business combination;
b、 At the time of transaction, the accounting profits will not be affected, nor will the
taxable amount (or the deductible loss) be affected
② Where the deductible temporary difference related to the investments of the subsidiary
companies, associated enterprises and joint enterprises can meet the following requirements
simultaneously, the enterprise shall recognize the corresponding deferred income tax assets:
a、The temporary differences are likely to be reversed in the expected future; and
b、It is likely to acquire any amount of taxable income tax that may be used for making up
the deductible temporary differences.
③ As for any deductible loss or tax deduction that can be carried forward to the next year,
the corresponding deferred income tax assets shall be determined to the extent that the amount of
future taxable income to be offset by the deductible loss or tax deduction to be likely obtained
(4)Deferred income tax liabilities
Deferred tax liabilities shall be recognized for all taxable temporary differences, except to
the extent that the deferred tax liabilities arise from:
① the initial recognition of good will;
② the initial recognition of assets or liabilities arising from the following transactions50
which are simultaneously featured by the following:
a、The transaction is not business combination;
b、At the time of transaction, the accounting profits will not be affected, nor will the taxable
amount (or the deductible loss) be affected.
③The taxable temporary differences related to the investments of subsidiary companies,
associated enterprises and joint enterprises shall recognize corresponding deferred income tax
liabilities. However, those that can simultaneously meet the following conditions shall be
excluded:
a、 The investing enterprise can control the time of the reverse of temporary differences;
and
b、The temporary differences are unlikely to be reversed in the excepted future.
(5)The carrying amount of deferred income tax assets shall be reexamined on balance
sheet day. If it is unlikely to obtain sufficient taxable income taxes to offset the benefit of the
deferred income tax assets, the carrying amount of the deferred income tax assets shall be written
down.
When it is probable to obtain sufficient taxable income taxes, such write down amount
shall be subsequently reversed.
(6) The company and its subsidiary without sufficient taxable income in the foreseeable
future to offset the timing differences therefore deferred income tax assets has been recognized.
24、Basis of Consolidation
（1）The recognition scope of the consolidation
The consolidated financial statements prepared are in accordance with the No. 33 Enterprise
Accounting Standards – Consolidated Financial Statement issued in February, 2006. The
recognition of the scope of the consolidated financial statement based on control bases the
consolidation including the company, subsidiaries directly or indirectly controlled by the
company and special-purpose financial statements of the entity. Control refers to the Company
has the right to decide financial and operating policies of the invested company, and to obtain
benefits from the business activities.
Company is not included in the scope of consolidation if there is evidence shows that the
parent company can not exercise control over it.
（2）Purchase or sale of subsidiary share holding
The purchase and sale date will be confirmed with the time that major related risks and
rewards of equity ownership have been transferred. For the acquisition or sale of a subsidiary
under the different control of the consolidation, the operating results and cash flows have been
properly included in the consolidated Income Statement and Consolidated Statements of Cash
Flows before the sales day and after the purchase day. For the acquisition or sale of a subsidiary
under the same control of the consolidation the operating results and cash flows have been
properly included in the consolidated Income Statement and Consolidated Statements of Cash
Flows and shown separately. The corresponding adjustments have been made for Comparative
figures of the consolidated financial statements
（3）Where necessary, adjustments are made to the financial statements of subsidiaries to51
bring the accounting policies used into line with those used by other members of the group.
If the accounting policy and accounting period of the subsidiary are inconsistent with the
Company, financial statements of subsidiaries have been adjusted accordingly in accordance with
the Company's accounting policies as preparation consolidated financial statements, for the
subsidiary acquired under different control consolidation, financial statements of subsidiaries
have been adjusted accordingly in accordance with fair value of subsidiary's identifiable assets,
liabilities and contingent liabilities at purchase day.
（4）The method of consolidation
All significant intercompany transaction and balances between group enterprises are
eliminated on consolidation. The part of net assets of consolidated subsidiaries belongs to the
part of minority interests should be reported separately in equity of consolidated financial
statements.
V.Change in accounting policies, accounting estimates and correct previous accounting
period errors:
（1）Change in accounting policies
There are no changes in accounting in accounting period of 2008.
（2）Change in accounting estimates。
There are no changes in accounting estimates in accounting period of 2008.
（3）Correction of accounting errors
There are no accounting errors in accounting period of 2008.
VI. Taxation
Types Basis of taxation Tax rate
Value-Add-Tax(VAT) Income from sales of products 17%
land value increment tax Income from selling Estate -deductible items 30% - 60%
Business Tax Income from Estate, Leasing and Rendering of service 5%
Enterprise Income Tax Taxable Income 20%、25% (Note)
City Construction fee
VAT payable, consumption tax payable and business tax
payable
1%
Education fee
VAT payable, consumption tax payable and business tax
payable
3%
Note：（1）Shenzhen Special Economic Zone：The applicable Enterprise Income Tax rate
in Shenzhen Special Economic Zone is 18% in 2008 , 20% in 2009， 22% in 2010，24% in 2022,
25% in 2012（2）Other City： The applicable Enterprise Income Tax rate in other city is 25%.
VII. Corporate consolidate and the scope of consolidated financial statements
1. Subsidiaries were obtained through combination
Company’s name
Legal
Representative
Registration
Place
Registered
capital
Interest
held
Percentage
of voting
right
Principal activities52
Shenzhen ShenGuoShang Business
ManagementCo., Ltd.
Song, Shengjun Shenzhen 15,000,000.00 100% 100% Retail store
Shenzhen International Arcade Chain
Store
Zhou,Xiaoxing Shenzhen 10,000,000.00 100% 100% Retail store
Shenzhen International Arcade
Property Management Co., Ltd.
Zhang,Zengkuan Shenzhen 7,000,000.00 61% 61% Property management
Shenzhen Rongfa Investment Co.,
Ltd.（”Shenzhen Rongfa”）
Song, Shengjun Shenzhen USD5,000,000.00 60% 60% Real estate development
Huizhou Rongfa Industry Investment
Co., Ltd. (“Huizhou Rongfa”)
Song, Shengjun Huizhou 6,000,000.00 54.90% 100% Real estate development
Wengyuan Guoshanglinhai
Development Co., Ltd. (“Wengyuan
Guoshang”)
Long,Teng Wengyuan 7,000,000.00 60% 100% Afforestation
Wuhua Guoshanglinye Development
Co., Ltd. (“Wuhua
Guoshang”)
Zhou,Yalin Wuhua 10,000,000.00 60% 100% Afforestation
Shenzhen Guoshanglinye
Development Co., Ltd.
(“Guoshanglinye”)
Zhou,Yalin Shenzhen 10,000,000.00 60% 100%
Lumber purchase and sale,
Industrial establishment
Shenzhen Longgang International
Arcade Enterprise Co., Ltd.
Zhou,Meng Shenzhen 3,000,000.00 90% 100% Retail store
XingningGuoshanglineye
Development Co., Ltd
(“Xingning Guoshang”)
Song,Shengjun Xingning 5,000,000.00 60% 100%
Afforestation, and lumber
sales
Luoyang Rongfazhiye Co., Ltd
(“Luoyang Rongfa”)
Song,Shengjun Luoyang 10,000,000.00 60% 100%
Real estate development and sales,
property management and
rental
Note：Shenzhen ShenGuoShang Business Management Co. Ltd.was formly known as
Shenzhen Longgang International Arcade Enterprise Co., Ltd, the name has been changed in 2008
2. Subsidiaries were not obtained through combination
Company’s name
Legal
representative
Registration
Place
Registered capital
Interest
Held
Percentage of
voting right
Principal activities
Shenzhen International Arcade trading
Co., Ltd (Note 1)
Song, Shenjun Shenzhen 5,600,000.00 98.75% 100% International trade
Shenzhen Chunhua Medicine United
Co., Ltd. (Note 1)
Song, Shenjun Shenzhen 3,000,000.00 75% 75%
Medicine and medical
machineries
Shenzhen Guoshang Medicine Co.,
Ltd.
(Note 1)
Song, Shenjun Shenzhen 3,000,000.00 98% 100%
Medicine and medical
machineries
ShenZhen Royal aristocracy Co., Ltd Song, Shenjun Shenzhen 5,000,000.00 64% 5% Healthy message,53
(“Shenzhen Gangyi”) Note 2 industrial establishment
Note 1：Shenzhen International Arcade trading Co., Ltd, Shenzhen Chunhua Medicine United
Co., Ltd. and Shenzhen Guoshang Medicine Co., Ltd have suspended their business for several
years, and their registration of have been cancelled due to no renewal of registration certificates,
and not included in the scope of financial statements consolidation in current period.
Note 2: As stated in the Notes XIV.1. According to agreement signed by both parties, the
substance of this transfer is Shenzhen Baotian Investment Development Co., Ltd (“Shenzhen
Baotian”) shall lease Shenzhen Gangyi’s business qualification and business loation in future six
years, and Shenzhen Rongfa shall not control Shenzhen Gangyi’s business operation and financial
activities in the six years, so the Company accounts for it using Cost method. According to the
agreement, Shenzhen Rongfa accepted Shenzheng Gangyi’s assets and liabilities before the
transferring date.。According to agreement signed by both parties, the substance of this transfer is
Shenzhen Baotian Investment Development Co., Ltd (“Shenzhen Baotian”) shall lease Shenzhen
Gangyi’s business qualification and business loation in future six years, and Shenzhen Rongfa
shall not control Shenzhen Gangyi’s business operation and financial activities in the six years, so
the Company accounts for it using Cost method. According to the agreement, Shenzhen Rongfa
accepted Shenzheng Gangyi’s assets and liabilities before the transferring date, after the equity
transfer the Shenzhen Gangyi Oriental Club Industrial Co., Ltd was renamed as ShenZhen Royal
aristocracy Co., Ltd
3. The change of scope of consolidated financial statements
There is no change on the scope of consolidated financial statements for the current period.
VIII .Main items of consolidated financial statements
1. Monetary Funds
Items 2009.6.30 2008.12.31
Cash on hand 74,206.20 132,394.91
Bank deposit 51,786,552.59 68,142,428.15
Other monetary fund 90,152.15 140,061.00
Total 51,950,910.94 68,414,884.06
2. Account receivable
（1）Classification by credit risk characters
2009.6.30 2008.12.31
Items
Closing
balance
Proportion
Bad debt
provision
Net amount
Closing
balance
Proportion
Bad debt
provision
Net amount
Individual transaction with significant
amount 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Individual transaction with not so
significant amount but significant
recoverable risk
285,072.38 19.49% 85,521.71 199,550.67 305,072.38 19.90% 91,521.71 213,550.67
Other transaction with no significant
amount 1,177,370.65 80.51% 126,294.58 1,051,076.07 1,228,049.51 80.10% 153,880.46 1,074,169.0554
Total 1,462,443.03 100.00% 211,816.29 1,250,626.74 1,533,121.89 100.00% 245,402.17 1,287,719.72
Note: The recognition standard for Individual transaction with significant amount and
non-significant in amount but in accordance with the characteristics of credit risk portfolio, the
risk of the portfolio is high refers to note 6、（5）①
（2）Ages analysis
2009.6.30 2008.12.31
Age Closing
balance
Proportion Bad debt
provision
Net amount Closing balance
Proportion Bad debt
provision
Net amount
Within 1
year 356,627.14 24.39% 17,831.36 338,795.78 156,786.71 10.23% 7,839.34 148,947.37
1-2 years 292,966.16 20.03% 29,296.62 263,669.54 292,966.16 19.11% 29,296.62 263,669.54
2-3 years 527,777.35 36.09% 79,166.60 448,610.75 778,296.64 50.76% 116,744.50 661,552.14
3-4 years 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00
4-5 years 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00
over 5 years 285,072.38 19.49% 85,521.71 199,550.67 305,072.38 19.90% 91,521.71 213,550.67
Total 1,462,443.03 100.00% 211,816.29 1,250,626.74 1,533,121.89 100.00% 245,402.17 1,287,719.72
（3）Up to June 30,2009, there is no accounts receivable balance due from shareholders who
owns 5% or over 5% of voting right shares.
3、Payment in advance
（1）Age analysis
Age 2009.6.30 Percentage 2008.12.31 Percentage
Within 1 year 226,112.00 51.95% 109,720.00 13.43%
1-2Years 21,092.00 4.85% 21,092.00 2.58%
2-3Years 187,983.00 43.20% 187,983.00 23.01%
3Years 0.00 0.00% 498,000.00 60.98%
Total 435,187.00 100.00% 816,795.00 100.00%
（2）The age of payment in advance more than year are mainly the advanced payment for
mountain lease.
（3）Up to June 30,2009, there is no payment in advance balance owed by shareholders who
owns 5% or over 5% of voting right shares.
4、Other accounts receivable
（1）Classification by credit risk characters
2009.6.30 2008.12.31
Item
Closing balance
Proportion Bad debt
provision
Net amount Closing balance
Proportion Bad debt
provision
Net amount
Individual transaction with
significant amount 32,204,475.27 84.67% 30,691,975.27 1,512,500.00 32,204,475.27 84.63% 30,691,975.27 1,512,500.00
Individual transaction with not
so significant amount but
significant recoverable risk
1,389,931.09 3.66% 1,002,314.43 387,616.66 1,765,998.20 4.64% 1,115,134.56 650,863.6455
Other transaction with no
significant amount 4,439,309.64 11.67% 353,701.76 4,085,607.88 4,083,044.69 10.73% 348,228.92 3,734,815.77
Total 38,033,716.00 100.00% 32,047,991.46 5,985,724.54 38,053,518.16 100.00% 32,155,338.75 5,898,179.41
Note: The recognition standard for Individual transaction with significant amount and
non-significant in amount but in accordance with the characteristics of credit risk portfolio, the risk
of the portfolio is high refers to note 6、（5）①.
（2）Other accounts receivable with significant amount
Company’s Name Amount due Proportion Age Reason
Shenzhen Yahaoyuan Investment Co.,Ltd 16,676,740.27 43.85% Over 5years Note 1
Shenzhen Shengang Gongmao Import and Export
Co.,Ltd 10,180,249.93 26.77%
Over 5years Note 2
Total 26,856,990.20 70.62%
Note 1: The Company’s subsidiary Shenzhen Rongfa Investment Co., Ltd (“Shenzhen
Rongfa”) signed an equity transfer contract with Shenzhen Yahaoyuan Investment Co., Ltd
(“Yahaoyuan”) in 2001 in relation to transfer its 75% equity interests in Shenzhen Longgang
Rongfa Investment Co., Ltd (“Longgang Rongfa”) to Yahaoyuan. The consideration for this equity
transaction was 54.19 millions, meanwhile, Yahaoyuan agreed to reimburse 133.81 millions for
Longgang Rongfa to Shenzhen Rongfa for construction prepayment. Up to December 31, 2008,
the company received 171,323,259.73f rom Yahaoyuan for equity transfer price and repayment,
the balance 16,676,740.27 Yuan has not yet been received, and the age for the unrecovered
balance is 7 years. According to the company policy and in light of the actual collection (for the
age of the receivable over 5 yeas 30% to 100% bad debt provision should be provided) full bad
debt provision has been provided for this un-receivable amount.
Note 2: the amount is due to existing historical issues between the Group and Shenzhen
Shengang Gongmao Import and Export Co., Ltd (“Gongmao”) in relation to the lender Shenzhen
Development Bank, Shennandonglu Branch (“the Bank”) sued the Group and filed a claim at the
Intermediate People's Court of Shenzhen (“the Court”) in 2000 and requested the Group shall has
joint repayment liability to a guaranteed loan with 11 millions loan principal and the overdue
interests. On February 27, 2001, the court ruled the Group has joint repayment liability to the
above-mentioned guaranteed loan.
On December 30, 2002, under the intermediation by the court, The Group and the Bank
reached reconciliation, and agreed that, the Group would repay the loan principal and interests for
Gongmao, meanwhile, the Group would claim the repayment from Gongmao. Gongmao promised
to the Group except in assistance of transfer of its ownership on the sun house in top floor of
Shengang haoyuan mingshang loft to the Group, also provided its land in Baoan Nan road in
Luohu district (4000 square meters) and jointed construction for buildings with the Group. The
joint operation was: the Group contributed capital for development, and the initial profits after
completion of development shall used for repayment of the debts. The Group accounted for the
estimated losses for the guaranteed loan which amounted to 3,403,456.00 as non-operating
expense in 2002.
In 2004, during the claim of Gongmao for repayment of debts, the Group had confirmed that
ownership of the above-mentioned property and land use right were unable to transfer, and
Gongmao had no other executive property. Therefore, the Group decided to made full bad debt56
provision for unrecognized loss of 10,180,249.93.
（3）The details of full amount of bad debt provision:
Company Amount Content Provision Amount Proportion Reason
Shenzhen Yahaoyuan
Investment Co.,Ltd 16,676,740.27 Equity transfer price 16,676,740.27 Over 5 years Probable for non-receivable
Shenzhen Shengang
Gongmao Import and Export
Co.,Ltd 10,180,249.93Guarantee for debt repayment 10,180,249.93 Over 5 years Details refer to notes VIII.4(2)-note 2
Guangzhou Sun Star Co., Ltd 900,000.00 Current account 900,000.00 Over 5 years Probable for non-receivable
Total 27,756,990.20 27,756,990.20
（4）Age analysis
2009.6.30 2008.12.31
Age Closing
balance
Proportion Bad debt
provision
Net amount
Closing
balance
Proportion Bad debt
provision
Net amount
Within1
year 2,518,653.89 6.62% 125,932.71 2,392,721.18
2,054,341.14 5.40% 102,717.06 1,951,624.08
1-2 years 1,206,585.42 3.17% 120,658.53 1,085,926.89 1,175,873.42 3.09% 117,587.34 1,058,286.08
2-3 years 1,364,070.33 3.59% 204,610.54 1,159,459.79 1,502,830.13 3.95% 225,424.52 1,277,405.61
3-4 years 1,646,649.09 4.33% 329,329.81 1,317,319.28 1,646,649.09 4.33% 329,329.82 1,317,319.27
4-5 years 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
over 5 years 31,297,757.27 82.29% 31,267,459.87 30,297.40 31,673,824.38 83.23% 31,380,280.01 293,544.37
Total 38,033,716.00 100.00% 32,047,991.46 5,985,724.54 38,053,518.16 100.00% 32,155,338.75 5,898,179.41
（5）Up to June 30,2009, there is no other accounts receivable balance due from shareholders
who owns 5% or over 5% of voting right shares.
5、Inventory
（1）Listed by category
2009.6.30 2008.12.31
Items
Closing balance
Impairment loss
provision
Net amount Closing balance
Impairment loss
provision
Net amount
Consumable forest
assets 765,681.77 0.00 765,681.77
555,524.86 0.00 555,524.86
Development costs 66,259,121.35 0.00 66,259,121.35 63,018,804.10 0.00 63,018,804.10
Development
products 858,118,092.43 16,631,692.55 841,486,399.88
830,251,397.47 16,631,692.55 813,619,704.92
Lease development
products 35,240,279.76 0.00 35,240,279.76
35,240,279.76 0.00 35,240,279.76
Total 51,736,798.09 0.00 51,736,798.09 52,736,416.24 0.00 52,736,416.2457
Finished goods 1,012,119,973.40 16,631,692.55 995,488,280.85 981,802,422.43 16,631,692.55 965,170,729.88
①?Development Costs
Items Start Date
Estimated
completed date
Estimated
investment
2009.6.30
Impairment loss
provision
2008.12.31
Impairment loss
provision
Bantian
industrial estate 47,986,610.65 16,631,692.55 47,893,568.15 16,631,692.55
Rongfu Garden
phase II 6,448,481.22 0.00 6,448,481.22 0.00
Futian Central
District Jan 2003 2009 0.9 billions 803,683,000.56 0.00 775,909,348.10 0.00
Total 858,118,092.43 16,631,692.55 830,251,397.47 16,631,692.55
②Development Products
Item Completed Date 2008.12.31
Impairment Loss
Provision
2009.6.30
Impairment Loss
Provision
Gangyihaoting December 2000 35,240,279.76 0.00 35,240,279.76 0.00
Total 35,240,279.76 0.00 35,240,279.76 0.00
③Lease development Products
Item 2008.12.31 Increment Amortization Decrement 2009.6.30 emaining amortization life
Gangyihaoting 44,803,038.05 0.00 632,807.07 285,300.09 43,884,930.89 33-43Years
Guoqi Building 2,438,325.83 0.00 34,967.79 0.00 2,403,358.04 38.5years
Huizhou Sunshine 100 5,495,052.36 0.00 46,543.20 0.00 5,448,509.16 58.5years
Total 52,736,416.24 0.00 714,318.06 285,300.09 51,736,798.09
（2）Ttal amount of cpitalization of borrowing costs this year is 20,458,167.33 yuan
（3）Inventory impairment loss provision
Item 2008.12.31 Increment Decrement 2009.6.30
Development Products 16,631,692.55 0.00 0.00 16,631,692.55
Total 16,631,692.55 0.00 0.00 16,631,692.55
Note1:The company pledged the industrial land of BanTian to the bank as guaranty for
borrowings, the book value of the land is31,354,918.10Yuan。
Note2:The company pledged some of retail shops of GangYiHaoTing to the bank as guaranty
for borrowings, the book value of the those retail shops is 10,703,912.12 Yuan。
Note3:The company pledged Futian Central District to the bank as guaranty for borrowings,
the book value of the those retail shops is 803,683,000.56Yuan
Note4:The company pledged consumptive forestry assets to the bank as guaranty for
borrowings, the book value of the those retail shops is 52,376,974.12 Yuan58
6、Long-term equity investment
（1）long-term equity investment and impairment loss provision
2009.6.30 2008.12.31
Item Balance of book
value
Impairment
loss provision
Book value
Balance of book
value
Impairment
loss provision
Book value
long-term equity
investment 15,570,000.00
8,999,737.16
6,570,262.84 25,570,000.00
18,999,737.16
6,570,262.84
Include:Investment in
subsidiary 15,570,000.00 8,999,737.16 6,570,262.84 15,570,000.00 8,999,737.16 6,570,262.84
Investment in Other
Companies
0.00 0.00 0.00 10,000,000.00 10,000,000.00 0.00
（2）Long-term equity investment measured by cost method
Investee Initial investment 2008.12.31 Increment Decrement 2009.6.30
①subsidiary
Shenzhen Chunhua Medicine United Co.,
Ltd. 2,250,000.00 2,250,000.00 0.00 0.00 2,250,000.00
Shenzhen Guoshang Medicine Co., Ltd. 3,000,000.00 3,000,000.00 0.00 0.00 3,000,000.00
Shenzhen International Enterprise Trade
Co., Ltd. 5,320,000.00 5,320,000.00 0.00 0.00 5,320,000.00
Shenzhen Grace East Union Industry Co.,
Ltd. 5,000,000.00 5,000,000.00 0.00 0.00 5,000,000.00
Subtotal 15,570,000.00 15,570,000.00 0.00 0.00 15,570,000.00
② Other company
Shenzhen Xinnuo Communication Co.,Ltd 10,000,000.00 10,000,000.00 0.00 10,000,000.00 0.00
Subtotal 10,000,000.00 10,000,000.00 0.00 10,000,000.00 0.00
Total 25,570,000.00 25,570,000.00 0.00 10,000,000.00 15,570,000.00
Notes: The registration of Shenzhen International Arcade Trading Co., Ltd, Shenzhen Chunhua Medical
Union Enterprise Co., Ltd and Shenzhen International Arcade Medical Co., Ltd have been cancelled due to no
renewal of registration certificates, and not included in the scope of financial statements consolidation in current
period. An amount of 3,999,737.16 impairment loss provision has been made for the long-term equity investment.
（3）Long-term equity investment impairment loss provision
Investee 2008.12.31 Incremen Increment 2009.6.30
Shenzhen Chunhua Medical Union
Enterprise Co., Ltd 418,949.38 0.00 0.00 418,949.38
Shenzhen Guoshang Medicine Co., Ltd. 504,857.76 0.00 0.00 504,857.76
Shenzhen International Enterprise
Trade Co., Ltd. 3,075,930.02 0.00 0.00 3,075,930.0259
Shenzhen Grace East Union Industry
Co., Ltd. 5,000,000.00 0.00 0.00 5,000,000.00
Shenzhen Xinnuo Communication
Co.,Ltd 10,000,000.00 0.00 10,000,000.00 0.00
Total 18,999,737.16 0.00 10,000,000.00 8,999,737.16
Note: The investee company Shenzhen Xinnuo TeleCom Co., Ltd (“Xinnuo”) was incurring
financial difficulties. Up to December 31, 2004, the net book value of Xinnuo was 29.16 millions,
including 2.916 million attributed to the Company. However, Xinnuo still owed huge amount of
bank loan, and cash generated from inventories and creditors was quite low, the Company
considered that the recoverable from the investment was very low, therefore, the Company
decided to make full amount of impairment loss provision for this long-term equity investment.
Up to December 31, 2007, the financial situation of Xinnuo still has no change.。In 2008 the
company has transferred the Xinnuo’s equity to Wangjun in the price of 750000 Yuan and signed
Equity Transfer Agreement, Up to Jun 30, 2009, Procedures of transfer the equity shares has been
accomplished.
7、Investment Properties
Items 2008.12.31 Increment Decrement 2009.6.30
A. Total original price 3,524,638.11 0.00 860,650.00 2,663,988.11
Buildings and structures 3,524,638.11 0.00 860,650.00 2,663,988.11
B.Total of Accumulated Depreciation
and Accumulated Amortization 1,769,187.65 50,745.87 641,500.96 1,178,432.56
Buildings and structures 1,769,187.65 50,745.87 641,500.96 1,178,432.56
C. Total impairment loss provision of
investment property 0.00 0.00 0.00 0.00
Buildings and structures 0.00 0.00 0.00 0.00
D. Total book value of investment
property 1,755,450.46 0.00 0.00 1,485,555.55
Buildings and structures 1,755,450.46 0.00 0.00 1,485,555.55
8、Fixed assets and Accumulated depreciation
（1）Details
Items 2008.12.31 Increment Decrement 2009.6.30
A. total original price of fixed assets 126,631,106.57 43,110.00 12,095,661.83 114,578,554.74
Buildings and structures 114,796,017.19 0.00 12,016,481.83 102,779,535.36
Vehicles 5,508,730.00 0.00 0.00 5,508,730.00
Electronic and other devices 6,326,359.38 43,110.00 79,180.00 6,290,289.38
B.Total Accumulated Depreciation 38,941,724.27 2,182,708.10 6,462,805.78 34,661,626.59
Buildings and structures 32,902,949.89 1,397,536.27 6,462,805.78 27,837,680.3860
Vehicles 2,260,093.22 434,317.32 0.00 2,694,410.54
Electronic and other devices 3,778,681.16 350,854.51 0.00 4,129,535.67
C. Impairment loss provision of fixed assets 11,716,894.19 0.00 0.00 11,716,894.19
Buildings and structures 11,716,894.19 0.00 0.00 11,716,894.19
Vehicles 0.00 0.00 0.00 0.00
Electronic and other devices 0.00 0.00 0.00 0.00
D. Net value of the fixed assets 75,972,488.11 0.00 0.00 68,200,033.96
Buildings and structures 70,176,173.11 0.00 0.00 63,224,960.79
Vehicles 3,248,636.78 0.00 0.00 2,814,319.46
Electronic and other devices 2,547,678.22 0.00 0.00 2,160,753.71
（2）The book value of Buildings and structures as guaranties for short-term borrowings is
10,920,335.89Yuan.
9、Long-term deferred expense
Types Original Amount 2008.12.31 Increment Amortization Transfer out
Accumulated
Amortization 2009.6.30
Other 300,000.00 240,000.00 0.00 30,000.00 0.00 90,000.00 210,000.00
Total 300,000.00 240,000.00 0.00 30,000.00 0.00 90,000.00 210,000.00
10、Impairment loss provision
Decrement
Items 2008.12.31 Increment
Reversal Reversal
2009.6.30
Bad debt provision 32,400,740.92 -140,933.17 0.00 0.00 32,259,807.75
Impairment provision for inventory 16,631,692.55 0.00 0.00 0.00 16,631,692.55
Impairment provision for long-term
investment 18,999,737.16 0.00 0.00 10,000,000.00 8,999,737.16
Impairment provision for fixed asset 11,716,894.19 0.00 0.00 0.00 11,716,894.19
Total 79,749,064.82 -140,933.17 0.00 10,000,000.00 69,608,131.65
11、Restricted assets
（1）Reason
Assets are pledged to obtain bank loans.
（2）List of restricted assets
Types of restricted assets
Book value at the
beginning of the period Increment Decrement
Book value at the end of
the period
A. Pledged assets
1.Fixed assets-buildings and structures 11,179,224.19 0.00 258,888.30 10,920,335.89
2.Inventories-Development products 10,719,041.28 0.00 15,129.16 10,703,912.12
3.Inventories-Development costs 807,171,223.70 27,866,694.96 0.00 835,037,918.6661
4.Consumable forest assets 25,215,211.99 27,161,762.13 0.00 52,376,974.12
Total 854,284,701.16 55,028,457.09 274,017.46 909,039,140.79
12、Short-term Loan
Loan condition 2009.6.30 2008.12.31
Pledge loan 6,000,000.00 8,000,000.00
Total 6,000,000.00 8,000,000.00
13、Accounts payable
（1）Age analysis
Age 2009.6.30 2008.12.31
Within one year 57,207,442.88 61,515,737.73
Over one year 172,956,890.03 181,956,890.03
Total 230,164,332.91 243,472,627.76
（2）Account payable balance which age is over one year is mainly payment for Futian central
project.
（3）There is no accounts payable balance due to shareholders who owns 5% or over 5% of
voting right shares.
14、Advance from customers
（1）Age analysis
Age 2009.06.30 2008.12.31
Within one year 2,106,796.00 13,362,185.40
Over one year 46,048,971.75 46,048,971.75
Total 48,155,767.75 59,411,157.15
（2）The year end balance of advanced from customers, which age is over one year, is mainly
due to the amount received from selling the shops in Gangyihaoting. Because of the buyer has
reselling option, and they are not satisfied with revenue recognition principle
（3）Advance from customers related to real estate projects：
Item 2009.06.30 2008.12.31 Completed date Content
Gangyihaoting 35,467,753.05 35,467,753.05 December 2000 Sales of shops
Total 35,467,753.05 35,467,753.05
（4）There is no advance from customers balance due to shareholders who owns 5% or over
5% of voting right shares.
15、Payroll payable62
Items 2008.12.31 Increment Pay out 2009.6.30
A. Salary, bonus and allowance 1,320,471.37 5,318,003.45 6,004,940.40 633,534.42
B. Employment welfare 0.00 641,364.18 641,364.18 0.00
C. Social insurance 0.00 845,810.06 845,810.06 0.00
Including：
1.Medical insurance 0.00 150,758.56 150,758.56 0.00
2．Basic retirement insurance 0.00 642,556.43 642,556.43 0.00
3．Disability employment fund 0.00 0.00 0.00 0.00
4．Unemployment insurance 0.00 19,999.43 19,999.43 0.00
5．Injury insurance 0.00 18,020.09 18,020.09 0.00
6．Pregnancy insurance 0.00 14,475.55 14,475.55 0.00
D. Housing accumulation fund 0.00 0.00 0.00 0.00
E. Labor union fee and employee education
fee 2,037,271.82 195,508.63 154,483.50 2,078,296.95
F. Non-monetary benefit 0.00 0.00 0.00 0.00
G. Redemption for termination of labor
contract 0.00 64,190.00 64,190.00 0.00
H.Other 0.00 0.00 0.00 0.00
Including：share payment by cash 0.00 0.00 0.00 0.00
Total 3,357,743.19 7,064,876.32 7,710,788.14 2,711,831.37
16、Tax payable
Types 2009.06.30 2008.12.31
Add-Value Tax(VAT) -202,340.23 -96,187.62
Business Tax -1,807,920.26 -1,833,479.92
Consumption Tax -31,516.27 -31,516.27
City maintenance construction fee 145,328.24 145,029.69
Enterprise Income Tax 1,539,460.53 1,548,888.51
Property tax 258,395.00 271,202.96
Personal income Tax
8,974.96
8,710.67
Education fee
1,790.97
1,811.29
Others 749.33 2,637.45
Total -87,077.73 17,096.76
17、Dividend Payable
Investors 2009.06.30 2008.12.3163
Legal person
shareholders 5,127,701.36 5,127,701.36
Total 5,127,701.36 5,127,701.36
18、Other accounts payable
（1）Age analysis
Age 2009.06.30 2008.12.31
Within 1 year 20,375,245.40 22,286,382.20
1-2 years 47,946,713.38 48,143,644.82
2-3 years 77,442,044.65 77,148,453.89
Over 3 years 72,274,557.72 63,295,114.15
Total 218,038,561.15 210,873,595.06
（2）Please refer to Notes X.3.(2) for the detail about the amount of other accounts payable
due to shareholders who own 5% or more than 5% voting right shares until Jun 30, 2009.
（3）Significant amount of other accounts payable：
Name of Entities Balance Age Proportion Nature or Content
Employee borrowings 42,843,711.81 Year 2005 19.65% Refers to Note 14.2
Bao Tong Wei 23,619,581.35 Year2006 10.83% Borrowings Note 1
Jian Qi Chen 31,576,838.36 Year2006 14.48% Borrowings Note 1
Wan Ying Lin 37,226,191.27 Year2006 17.07% Borrowings Note 1
Kai De Zheng 3,000,000.00 Year2007 1.38% Borrowings Note 2
Total 138,266,322.79 63.41%
Note 1：According to the agreement signed with Bao Tong Wei, Jian Qi Chen and Wan Ying
Lin, the Company shall pay interests calculating at 10‰ interest rate monthly. Company signed
the supplementary agreement with Jian Qi Chen and Wan Ying Lin, the agreement to stipulate
borrowing interest is 9‰ per month basis on the principal amount borrowed.
Note 2: No interest is involved in the borrowings from Kai De Zheng.
19、Non-current liabilities due within one year
Item 2009.06.30 2008.12.31
Long-term borrowings due within one year 14,986,010.00 14,992,300.00
Total 14,986,010.00 14,992,300.00
20、Long-term Borrowings
（1）Types
Type 2009.06.30 2008.12.31
Pledge loan 38,000,000.00 18,000,000.00
Pledge and assure loan 400,000,000.00 400,000,000.00
Total 438,000,000.00 418,000,000.00
（2）List of Creditors64
Lender Amount Annual interest rate Loan condition
Construction bank of China,Shenzhen Aihua Branch 250,000,000.00 Note:1 Pledged
Construction bank of China,Shenzhen Shangbu Branch 150,000,000.00 Note:1 Pledged
Agricultural Bank of China, Wu Hua town Subbranch 20,000,000.00 Note:2 Pledged
Wengyuan Rural Credit Cooperatives 9,000,000.00 8.0154%-8.6634% Pledged
Wengyuan Rural Credit Cooperatives 9,000,000.00 10.584% Pledged
Total 438,000,000.00
Note 1： annual interest rate for long-term borrowings is on the benchmark interest rates go
up 10%
Note 2：interest of long-term loan is 5.4%，adjustment every 3 month according to the
benchmark interest rate.
Note 3： Details of the pledged assets are referring to Notes VIII、5, VIII、8 and VIII、11.
21、Accrued liabilities
Items 2008.12.31 Increment Decrement 2009.6.30 Reason
Guarantee liabilities 11,801,909.16 0.00 0.00 11,801,909.16 Loan guarantee
Total 11,801,909.16 0.00 0.00 11,801,909.16
Note: Please refer to Note XⅠ.3 for details.
22、Deferred Income
Items 2009.06.30 2008.12.31
Unrecognized leaseback income 1,235,138.52 1,440,994.95
Total 1,235,138.52 1,440,994.95
Note: The unrecognized leaseback income is the unrecognized income from leaseback of
shops in Gangyihaoting.
23、Share Capital
Current changes （+.－） Unit: share
Items
2008.12.31
Share
Right
Bonus
Shares
Capitalization
of public
reserve
Other Sub-total
2009.6.30
①Restricted shares
Including:
shares held by states 0.00 0.00 0.00 0.00 0.00 0.00 0.00
shares held by states 7,248,833.00 0.00 0.00 0.00 -7,248,833.00 -7,248,833.00 0.00
Shares held by
overseas legal persons 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Sub-total 7,248,833.00 0.00 0.00 0.00 -7,248,833.00 -7,248,833.00 0.0065
② Unrestricted
shares
1. Ordinary shares
listed in mainland 141,652,351.00 0.00 0.00 0.00 7,248,833.00 7,248,833.00 148,901,184.00
2. Foreign shares
listed in mainland 72,000,000.00 0.00 0.00 0.00 0.00 0.00 72,000,000.00
3. Foreign shares
listed in overseas 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4. Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total listed shares 213,652,351.00 0.00 0.00 0.00 7,248,833.00 7,248,833.00 220,901,184.00
Total shares 220,901,184.00 0.00 0.00 0.00 0.00 0.00 220,901,184.00
The share capital has been verified by Zhongqing Certified Public Accountants and issued a
Capital Verification Report with Yanqianzi［1998］No.S006.
24. Capital Reserves
Types 2008.12.31 Increment Decrement 2009.6.30
Share premium 50,995,056.63 0.00 0.00 50,995,056.63
Other capital
reserves 21,320,290.43 0.00 0.00 21,320,290.43
Total 72,315,347.06 0.00 0.00 72,315,347.06
25、Retianed earning
Types 2008.12.31 Increment Decrement 2009.6.30
Statutory surplus reserves 84,526,481.13 0.00 0.00 84,526,481.13
Other surplus reserves 41,403,353.35 0.00 0.00 41,403,353.35
Total 125,929,834.48 0.00 0.00 125,929,834.48
26、Retained Earnings
Items Jan-Jun 2009 Jan-Jun 2008
Balance at the beginning of the year of 2008 -200,284,817.12 -174,793,080.88
Add：Consolidated net profit 11,022,189.39 715,170.19
Withdrawal of statuary surplus reserve 0.00 0.00
Withdrawal of employees’ reward and welfare
fund 0.00 0.00
Withdrawal of reserve fund 0.00 0.00
Withdrawal of Enterprise development fund 0.00 0.00
Reimbursement of investment 0.00 0.00
Less: dividends payable for preference shares 0.00 0.00
Withdrawal of surplus reserves 0.00 0.0066
Dividends payable for ordinary shares 0.00 0.00
Dividends for ordinary shares transfer into
capital 0.00 0.00
Balance at the end of the year 2008 -189,262,627.73 -174,077,910.69
27. Minority Interest
Name of investee
Proportion of
minority interest
Beginning balance of
Minority interest
Closing
balance of
Minority
interest
Shenzhen Guomao Property Management Co., Ltd 39.00% -3,790,945.26 -3,719,643.31
Shenzhen Rongfa Investment Co.,Ltd 40.00% -71,322,347.12 -66,513,308.52
Total -75,113,292.38 -70,232,951.83
28、Operating revenue and operating costs
（1）Operating revenue and operating costs
Jan-Jun 2009 Jan-Jun 2008
Items
Operating revenue Operating cost
Operating
profit
Operating revenue Operating cost
Operating
profit
1. Revenue from main operation 7,966,798.76 7,713,188.26 253,610.50 6,263,482.52 4,924,687.15 1,338,795.37
Income from sales of property 468,196.00 285,300.09 182,895.91 0.00 0.00 0.00
Property management income 7,498,602.76 7,427,888.17 70,714.59 6,263,482.52 4,924,687.15 1,338,795.37
2. Revenue from other operation 1,269,004.35 274,475.74 994,528.61 898,364.94 131,333.31 767,031.63
Disposal of investment property 878,270.00 219,149.04 659,120.96 0.00 0.00 0.00
Rental income 390,734.35 55,326.70 335,407.65 898,364.94 131,333.31 767,031.63
Total 9,235,803.11 7,987,664.00 1,248,139.11 7,161,847.46 5,056,020.46 2,105,827.00
（2）Listed by segments or areas
Jan-Jun 2009 Jan-Jun 2008
Items
Operating revenue Operating cost Operating profit Operating revenue Operating cost Operating profit
Shenzhen
city 9,235,803.11 7,987,664.00 1,248,139.11
7,161,847.46 5,056,020.46 2,105,827.00
Total 9,235,803.11 7,987,664.00 1,248,139.11 7,161,847.46 5,056,020.46 2,105,827.00
（3）Sales revenue from top five clients
Jan-Jun 2009 Jan-Jun 2008
Name
Sales Proportion to total sales Sales Proportion to total sales
Total sales from top five
clients 1,514,752.00 16.40% 473,080.00 6.61%67
29、Financial costs
Items Jan-Jun 2009 Jan-Jun 2008
Interest expenses 1,331,344.95 0.00
Less: interest income 4,620.84 100,553.37
Exchange losses 0.00 0.00
Less: Exchange gains 27.81 1,521,604.67
Bank charges 18,985.24 20,793.47
Others 0.00 24,840.00
Total 1,345,681.54 -1,576,524.57
30、Impairment loss for assets
Item Jan-Jun 2009 Jan-Jun 2008
Bad debts provision -140,933.17 -964,302.89
Total -140,933.17 -964,302.89
31、Investment income
Items Jan-Jun 2009 Jan-Jun 2008
Investment income from stocks, material funds, bonds 0.00 0.00
Distributed profits from associated or joint-venture company 0.00 0.00
Net increase/decrease of equity for investee companies at year
end 0.00 0.00
Gains from transfer of equity investment 750,000.00 0.00
Amortization of equity investment differences 0.00 0.00
Impaired loss provisions for investments 0.00 0.00
Gains/losses from disposals of long-term equity investments 0.00 0.00
Total 750,000.00 0.00
Note: The gains from transfer of equity investment for 750,000.00, is due from the gains from
transfer the equity shares of Shenzhen Xinnuo Communication Co.,Ltd.
32、Non-operating income
Items Jan-Jun 2009 Jan-Jun 2008
Gains from disposal of fixed assets 15,589,639.29 4,477,502.69
Income from Reimbursement 0.00 3,690,238.01
Other 88,968.26 498,937.89
Total 15,678,607.55 8,666,678.59
33、Non-operating expenses
Items Jan-Jun 2009 Jan-Jun 2008
Losses from disposal of fixed assets 10,797.66 12,716.87
Income from debts restructure 0.00 800.0068
Penalty payment 56,247.36 0.00
Other 136.18 106,000.00
Total 67,181.20 119,516.87
34、Income tax
Item Jan-Jun 2009 Jan-Jun 2008
Income tax for current period -9,427.98 234,180.57
Total -9,427.98 234,180.57
35、Operating Segments
（1）Main items of total profit of operating segments
① Major company
Items Jan-Jun 2009 Jan-Jun 2008
Operating revenue 967,010.00 275,830.00
Operating cost 223,280.42 24,471.21
Expense -2,790,352.58 -7,320,520.91
Total profit 21,274,868.09 -12,346,102.94
② Real estate operating segments
Items Jan-Jun 2009 Jan-Jun 2008
Operating revenue 770,190.35 495,580.00
Operating cost 336,495.41 27,716.83
Expense 12,740,297.07 15,253,708.06
Total profit -12,192,512.78 -10,706,555.62
Note：Real estate operating segments include：Shenzhen Rongfa,Luoyang Rongfa.
③ Property management operating segments
Items Jan-Jun 2009 Jan-Jun 2008
Operating revenue 7,498,602.76 6,390,437.46
Operating cost 7,427,888.17 5,003,832.42
Expense 431,518.47 464,986.53
Total profit -192,253.49 4,749,860.69
Note：Property management operating segments include：Shenzhen International Arcade
Property Management Co., Ltd. Huizhou Rongfa.
④ Forest operating segments
Items Jan-Jun 2009 Jan-Jun 2008
Operating revenue 0.00 0.00
Operating cost 0.00 0.0069
Expense 23,480.99 179,374.82
Total profit -152,850.01 -2,431,400.66
Note：Forest operating segments include：Guoshanglinye,Wengyuan Guoshang,Wuhua
Guoshang,Xingning Guoshang.
⑤ Other operating segments
Items Jan-Jun 2009 Jan-Jun 2008
Operating revenue 0.00 0.00
Operating cost 0.00 0.00
Expense 300.44 599.52
Total profit 8,344.57 -599.52
Note ： Other operating segments include ： Shenzhen ShenGuoShang Business
ManagementCo., Ltd.,Shenzhen International Arcade Chain Store, Shenzhen Longgang
International Arcade Enterprise Co., Ltd..
（2）Main items of total assets and total liabilities of operating segments
① Major company
Items 2009.6.30 2008.12.31
Current assets 198,950,461.21 251,021,439.43
Non-current assets 85,563,860.73 99,479,253.82
Total assets 284,514,321.94 350,500,693.25
Current liabilities 68,552,973.81 93,635,897.78
Non-current liabilities 11,801,909.16 25,965,384.16
Total liabilities 80,354,882.97 119,601,281.94
② Real estate operating segments
Items 2009.6.30 2008.12.31
Current assets 955,423,576.29 894,070,810.00
Non-current assets 74,198,919.70 87,314,767.78
Total assets 1,029,622,495.99 981,385,577.78
Current liabilities 840,698,113.79 861,480,883.89
Non-current liabilities 400,000,000.00 250,000,000.00
Total liabilities 1,240,698,113.79 1,111,480,883.89
③ Property management operating segments
Items 2009.6.30 2008.12.31
Current assets 23,352,836.75 27,781,742.08
Non-current assets 435,198.46 564,590.5270
Total assets 23,788,035.21 28,346,332.60
Current liabilities 33,508,407.66 33,116,742.77
Non-current liabilities 0.00 0.00
Total liabilities 33,508,407.66 33,116,742.77
④ Forest operating segments
Items 2009.6.30 2008.12.31
Current assets 129,878,347.09 99,454,443.75
Non-current assets 1,049,691.19 1,252,096.76
Total assets 130,928,038.28 100,706,540.51
Current liabilities 107,222,257.98 86,538,535.53
Non-current liabilities 18,000,000.00 9,000,000.00
Total liabilities 125,222,257.98 95,538,535.53
⑤Other operating segments
Items 2009.6.30 2008.12.31
Current assets 34,035,000.32 34,985,980.41
Non-current assets
0.00 0.00
Total assets 34,035,000.32 34,035,000.32
Current liabilities 20,864,989.88 20,446,507.84
Non-current liabilities 0.00 0.00
Total liabilities 20,864,989.88 20,864,989.88
(3) Oversea income of operating segments
a、Domestic income
Operating segments Jan-Jun 2009 Jan-Jun 2008
Major company 967,010.00 275,830.00
Real estate operating segments 770,190.35 495,580.00
Property management operating segments 7,498,602.76 6,390,437.46
Forest operating segments 0.00 0.00
Other operating segments 0.00 0.00
Total 9,235,803.11 7,161,847.46
b、Oversea income
Company has no oversea income.
(4) Oversea non-current assets of operating segment
a、Domestic non-current assets
Operating segments 2009.6.30 2008.12.3171
Major company 85,563,860.73 99,479,253.82
Real estate operating segments 74,198,919.70 87,314,767.78
Property management operating
segments 435,198.46
564,590.52
Forest operating segments 1,049,691.19 1,252,096.76
Other operating segments 0.00 0.00
Total 161,247,670.08 188,610,708.88
b、Oversea non-current assets
Company has no oversea non-current assets
Note：According to the relevant rules, the oversea non-current assets not contain the deferred
income tax assets.
36、Supplemental information for cash flow statement
Supplementary information Jan-Jun 2009 Jan-Jun 2008
1. Adjusting net profits into cash flows from operating activities:
Net profits 6,141,848.84 -1,825,831.94
Add: Impairment loss provision of assets -140,933.17 -964,302.89
Depreciation of fixed assets、oil and gas assets and production
biological assets 2,233,453.97 2,495,233.13
Amortization of intangible assets 0.00 0.00
Amortization of Long-term deferred expenses 30,000.00 2,482,766.97
Loss on disposal of fixed assets、intangible assets and other
long-term deferred assets（Loss/Gain +/－）
-16,237,962.59 -4,464,785.82
Loss from written off assets（Loss/Gain +/－） 0.00 0.00
Loss of fair value fluctuation on assets（Loss/Gain +/－） 0.00 0.00
Financial cost（Loss/Gain +/－） 1,331,317.14 -1,521,604.67
Loss on investment（Loss/Gain +/－） -750,000.00 0.00
Decrease of deferred income tax assets（Decrease/Increase +/-） 0.00 0.00
Increase of deferred income tax liabilities(Increase/Decrease
+/-) 0.00 0.00
Decrease of inventories（Decrease/Increase +/-）
-9,859,383.64 -22,071,161.74
Decrease of operating receivables (Decrease/Increase +/-) 469,089.02 16,236,248.53
Increase of operating payables(Increase/Decrease +/-) -4,386,788.68 -30,903,780.87
Losses on Debts restructure(Losses/Gains +/-) 0.00 -4,082,375.90
Net cash flows arising from operating activities
-21,169,359.11 -44,619,595.2072
37、Cash and cash equivalents
Items Jan-Jun 2009 Jan-Jun 2008
1. Cash 51,950,910.94 19,795,164.62
Including: Cash on hand 74,206.20 176,056.65
unrestricted bank deposits 51,786,552.59 19,499,107.97
unrestricted other monetary funds 90,152.15 120,000.00
Unrestricted central bank deposits 0.00 0.00
2.Cash equivalents 0.00 0.00
Including: Bond investment within three month 0.00 0.00
3. Ending balance of cash and cash equivalents 51,950,910.94 19,795,164.62
Including: restricted cash and cash equivalents for the parent
or subsidiaries in the Group 0.00 0.00
XI. Notes to financial statements of the Parent company
1、Other receivable
（1）Classification by credit risk
2009.6.30 2008.12.31
Item Balance Proportion Bad debts
provision
Book value Balance Proportion Bad debts
provision
Book value
Individual account with
significant amount 398,463,850.93 99.66% 201,010,120.00 197,453,730.93 360,087,001.43 99.63% 202,412,208.64 157,674,792.79
Individual transaction with
not so significant amount
but significant recoverable
risk
971,426.71 0.24% 914,285.34 57,141.37 916,702.05 0.25% 905,010.62 11,691.43
Other transaction with no
significant amount 390,669.48 0.10% 30,089.97 360,579.51 425,762.65 0.12% 42,658.64 383,104.01
Total 399,825,947.12 100.00% 201,954,495.31 197,871,451.81 361,429,466.13 100.00% 203,359,877.90 158,069,588.23
（2）Age analysis:
2009.6.30 2008.12.31
Age
Closing balance Proportion
Bad debts
provision
Book value Closing balance Proportion
Bad debts
provision
Book value
Within one year 195,846,004.26 48.98% 72,407,285.73 123,438,718.53 143,390,123.01 39.67% 73,383,023.15 70,007,099.86
1-2 years 192,941,716.15 48.26% 118,641,829.49 74,299,886.66 206,984,414.36 57.27% 119,066,464.04 87,917,950.32
2-3 years 89,065.00 0.02% 13,359.75 75,705.25 89,065.00 0.02% 13,359.75 75,705.25
3-4 years 71,426.71 0.02% 14,285.34 57,141.37 71,426.71 0.02% 14,285.34 57,141.37
4-5 years 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00
Over 5 years 10,877,735.00 2.72% 10,877,735.00 0.00 10,894,437.05 3.02% 10,882,745.62 11,691.4373
Total 399,825,947.12 100.00% 201,954,495.31 197,871,451.81 361,429,466.13 100.00% 203,359,877.90 158,069,588.23
2、Long-term equity investments
（1）Long-term equity investments and provision for impairment loss
2009.6.30 2008.12.31
Items
Closing balance
Provision for
Impairment loss
Book value Closing balance
Provision for
Impairment loss
Book value
Long-termequity investments 79,943,991.03 13,999,737.16 65,944,253.87 89,943,991.03 23,999,737.16 65,944,253.87
Including ： investment to
subsidiaries 79,943,991.03 13,999,737.16 65,944,253.87 79,943,991.03 13,999,737.16 65,944,253.87
investment to other company 0.00 0.00 0.00 10,000,000.00 10,000,000.00 0.00
（2）Accounted for by cost method
Name of investees Initial Opening balance Addition Deduction Closing balance
①Sub
Shenzhen Chunhua Medicine United Co., Ltd. 2,250,000.00 2,250,000.00 0.00 0.00 2,250,000.00
Shenzhen Guoshang Medicine Co., Ltd. 2,850,000.00 2,850,000.00 0.00 0.00 2,850,000.00
Shenzhen International trade enterprise Co., Ltd 5,320,000.00 5,320,000.00 0.00 0.00 5,320,000.00
Shenzhen International Arcade Property Management Co.,
Ltd 2,800,000.00 2,800,000.00 0.00 0.00 2,800,000.00
Shenzhen Rongfa Investment Co., Ltd. 35,296,718.10 35,296,718.10 0.00 0.00 35,296,718.10
Shenzhen Longgang International Arcade Enterprise Co.,
Ltd. 21,427,272.93 21,427,272.93 0.00 0.00 21,427,272.93
Shenzhen International Arcade Chain Store 10,000,000.00 10,000,000.00 0.00 0.00 10,000,000.00
Subtotal 79,943,991.03 79,943,991.03 0.00 0.00 79,943,991.03
② other company
Shenzhen Xinnuo Communication Co., Ltd 10,000,000.00 10,000,000.00 0.00 10,000,000.00 0.00
Subtotal 10,000,000.00 10,000,000.00 0.00 10,000,000.00 0.00
Total 89,943,991.03 89,943,991.03 0.00 10,000,000.00 79,943,991.03
（3）Provision for impairment loss of long-term equity investment
Investment project 2008.12.31 Increase Decrease 2009.6.30
Shenzhen Xinnuo Communication Co., Ltd 10,000,000.00 0.00 0.00 10,000,000.00
Shenzhen Chunhua Medicine United Co., Ltd 418,949.38 0.00 0.00 418,949.38
Shenzhen Guoshang Medicine Co., Ltd. 504,857.76 0.00 0.00 504,857.76
Shenzhen International trade enterprise Co.,
Ltd 3,075,930.02 0.00 0.00 3,075,930.02
Shenzhen International Arcade Chain Store 10,000,000.00 0.00 10,000,000.00 0.00
Total 23,999,737.16 0.00 10,000,000.00 13,999,737.1674
3、Operating revenue and operating costs
（1）Listed by items
Jan-Jun 2009 Jan-Jun 2008
Item Operating
revenue
Operating costs Operating profits
Operating
revenue
Operating costs Operating profits
rental income 88,740.00 4,131.38 84,608.62 275,830.00 24,471.21 251,358.79
Disposal of investment property 878,270.00 219,149.04 659,120.96 0.00 0.00 0.00
Total 967,010.00 223,280.42 743,729.58 275,830.00 24,471.21 251,358.79
（2）Listed by business or geography
Jan-Jun 2009 Jan-Jun 2008
Item Operating
revenue
Operating costs Operating profits
Operating
revenue
Operating costs Operating profits
Shenzhen city 967,010.00 223,280.42 743,729.58 275,830.00 24,471.21 251,358.79
Total 967,010.00 223,280.42 743,729.58 275,830.00 24,471.21 251,358.79
X. Related party and related party transactions
1、Confirmation related parties
The Company has control, jointly control or significant influence on the other party, or is
under same party’s control, jointly control or significant influence with other company, is deemed
as related parties.
2、 The relationship of related parties
Related party with non-controllable relationship
Company’s name Relationship with the Company
Malaysia Foh Chong & Sons SDN.BHD. Holding 13.70% of the Company’s equity interests
ShenzhenTeFa Group Limited Holding9.76%of the Company’s equity interests
DaHua Investment (China) Co., Ltd. Holding7.03%of the Company’s equity interests
Shenzhen MaoYeShangXia Co., Ltd. Holding6.15% of the Company’s equity interests
（1）Because the Company’s equity structure is quite decentralizing, and has no absolute
controlshareholder for the Company, the Company lists Malaysia Foh Chong & Sons
SDNBHD ,Shenzhen SDG Co., Ltd, Shenzhen MaoYeShangXia Co., Ltd. and DaHua Investment
(China) Co ., Ltd. as related parties with non-controllable relationship.
（2）Shenzhen MaoYeShangXia Co., Ltd. and DaHua Investment (China) Co., Ltd. behave in
the concerted action, totally they hold 13.18% of the Company’s equity interests.
（3）Malaysia Foh Chong & Sons SDN.BHD. and Multi Profit Asia Pacific Investment
Limited signed the 《Shenzhen international limited liability company negotiable B shares
transfer agreement》on 27th April 2009, That 30,264,192 B shares hold by Malaysia Foh Chong
& Sons SDN.BHD. transfer to Multi Profit Asia Pacific Investment Limited. The shares has
accomplished transfer procedure on 7th July 2009. Currently Multi Profit Asia Pacific
Investment Limited is our company’s biggest shareholder, holding 13.70% equity shares.75
3、 Related party transactions
（1）Related party transaction:
Up to Jun 30 2009, The company has provided guarantee for the flowing subsidiaries:
Company Type Amount Borrowing period
Shenzhen Forestry Development Co.,
Ltd.
Short term borrowing 6,000,000.00 2009.3.17to 2010.3.16
Shenzhen RongFa Investment Co.,
Ltd. Long-term borrowing 150,000,000.00 2008.9.10 to 2010.9.9
Shenzhen RongFa Investment Co.,
Ltd. Long-term borrowing 250,000,000.00 2007.4.16 to 2010.2.15
Total 406,000,000.00
（2）Balance of account receivable and payable for related parties
2009.6.30 2008.12.31
Name of enterprise
Balance Proportion Balance Proportion
Other payables:
Malaysia Foh Chong & Sons SDN.BHD. 27,084,045.25 12.42% 27,084,045.25 12.84%
Shenzhen Chunhua Medicine United Co., Ltd. 2,090,239.43 0.96% 2,090,239.43 0.99%
Shenzhen Guoshang Medicine Co., Ltd. 1,479,767.33 0.68% 1,479,767.33 0.70%
Shenzhen International trade enterprise Co., Ltd 4,160,185.75 1.91% 4,160,185.75 1.97%
Total 34,814,237.76 15.97% 34,814,237.76 16.50%
XI. Contingency
1. Guarantee
(1) According to common practices of the sale of mortgage properties in the property
investment industry, the Company’s subsidiary Shenzhen Rongfa Investment Co., Ltd. provides
guarantees for those mortgage property sales which developed by itself. Until December 31, 2008,
Shenzhen Rongfa Investment Co., Ltd. provides guarantees for mortgage property sales
for35,606,520.54Yuan.
（2）According to common practices of the sale of mortgage properties in the property
investment industry, the Company’s subsidiary Huizhou Rongfa Investment Co., Ltd. provides
guarantees for those mortgage property sales which developed by itself. Until December 31, 2008,
Huizhou Rongfa Investment Co., Ltd provides guarantees for mortgage property sales
for9,535,116.89yuan.
2. Pledge
The Company has no other pledge event except mentioned in Notes of financial statements
VIII.5. VIII. 8 and VIII, 11.
3. Litigation
In September 2005, Shenzhen Intermediate People’s Court issued Review Order [2005]
SZMFZ No.22, ruled that the Group has joint liability to a guaranteed loan (RMB6 million and76
related overdue interest) borrowed from Bank of China, Shenzhen Shangbu branch by Shenzhen
Shengang Gongmao Co., Ltd. (“Shengang Gongmao”) in 1999.
In accordance with conservative principle, the Company accounted for guaranteed loan
principal and its interest r 8,670,209.16 as accrued liabilities, and accrued interests for 782,925.00
for the year of 2005, 2006 ,2007and 2008.
XII. Commitment
Until December 31, 2008, The Company signed non-revocable operating lease contracts with
third party as follows:
Maturity Rental payable Deferred investment income
Within one year 6,638,751.38 411,712.84
1-2 years 2,515,857.67 411,712.84
2-3 years 0.00 411,712.84
Over three years 0.00 0.00
Total 9,154,609.05 1,235,138.52
XIII. Non-adjustment event after balance sheet date
The Company has no after balance sheet date event to disclose as at the reporting date.
ⅩⅣ.Other Significant events
1、Shenzhen Rongfa and International Arcade signed an repurchase equity transfer contract
with Shenzhen Baotian Investment Development Co.,Ltd (Shenzhen Baotian ) on 31 January 2007.
According to the contract, Shenzhen Rongfa and International Arcade would transfer their holding
interests of 85% and 10% respectively in Shenzhen Gangyi to Shenzhen Baotian. After the equity
transfer transaction, Shenzhen Baotian and Shenzhen Rongfa will hold 95% and 5% shares in
Shenzhen Gangyi respectively. The contract requires that Shenzhen Baotian shall transfer the
equity interests back to ShenzhenRongfa or designated party by Shenzhen Rongfa for RMB 1
million no later than six years since the contratct signed. Shenzhen Rongfa and Baotian
Investment signed a supplementary agreement of equity transfer contract late after, Shenzhen
Rongfa agreed to give up the current or future benefits from its 5% interests in Shenzhen Gangyi,
that is, Shenzhen Rongfa will not participate in any profit distribution or bear any loss from
Shenzhen Gangyi within the six years after the equity transfer.
On January 31, 2007, Shenzhen Rongfa investment Co.,Ltd(Shenzhen Rongfa ) signed
Transfer Of House Using Right Agreement with Shenzhen Baotian Investment Development
Co.,Ltd (Shenzhen Baotian ), according to the agreement Shenzhen Rongfa will transfer the
using right of 1st-4th floor and its attachment which are the place of operation of GANGYI
Dongfang , storage and Staff Cafeteria, of GangyiHaoting to Shenzhen Baotian, the total period
for 6 years from 1/3/2007 to 28/2/2007。
The installments of transfer payment: 600,000 per month in the first year, 700,000 per month
in the second and third year, 800,000 per month in the fourth and fifth year，850,000 per month in
the sixth year。Both two parties agreed that the actual time for transfer the venue to be recorded as
the cut-off point, Rongfa will be liable for the liability which incurred before the cut-off point and
Tianbao will be responsible for liability, creditor's rights and operating costs which incurred after
the cut-off point. In 2007 the procedures for the transfer of equity has been completed.77
2、shop subscribe by employee
In order to supplement the Jingdao Island project development funds, In March 2005,
according to the market situation the company signed the Subscription Agreement for the retail
shop of JingDao with employees by the way of internal subscription, in the price of 15000 Yuan
per square meter, totally raise fund 34,400,984.61 Yuan. If a company transfer or seizure of the
premises resulted in the company could not be delivered to shops, people can subscribe for 20%
return of principal and payment of compensation。The matter has been the second time in 2007 the
Board of Trustees of the fifth resolution, but not submitted to shareholders of the General
Assembly to consider。Shopping malls operated by the special needs, in addition to JingDao Island
has not yet been completed, the Board of Directors in all aspects of the comprehensive
considerations of the staff decided to give up the implementation of the incentive planIn
November 29, 2008 was held in 2008 the first provisional shareholders meeting to consider the
motion has not been adopted.。Employees for the proper settlement of the follow-up section of the
subscription, the company will be based on the actual operation of the company's research and the
development of feasible options after the relevant decision-making to be considered for adoption.
According to the principle of caution, at the end of bank loans in accordance with the same period
of 5.85 percent benchmark interest rate and the agreed compensation is higher 20% of the
principle of 7,436,498.40 yuan provision for interest, finance charges included in 2008. During
January 2009 to June 2009, provide RMB 1,006,228.80 recognised into financial expense.
ⅩⅤ、Net profits after deduction of non-recurring profits and losses
Item Jan-Jun 2009 Jan-Jun 2008
Net profit 11,022,189.39 715,170.19
Add：(1) Profit and loss from disposal of non-current assets, including the offset part of the
impaired assets; -16,237,962.59 -4,464,785.82
(2) Unauthorized examination and approval, or lack of official approval documents, or occasional
tax revenue return and abatement;
0.00 0.00
(3) Governmental subsidies counted into the current profit and loss, except for the one closely
related with the normal operation of the company and gained constantly at a fixed amount or
quantity according to certain standard based on state policies;
0.00 0.00
(4) Capital occupation fees charged to the non-financial enterprises and counted into the current
profit and loss; -
0.00 0.00
(5) Gains when the investment cost of acquiring a subsidy, an allied enterprise and a joint venture
is less than the fair value of the identifiable net assets of the invested entity;
0.00 0.00
(6) Profit and loss from non-monetary assets exchange 0.00 0.00
(7) Profit and loss from entrusting others for investment or asset management 0.00 0.00
(8) Retained asset impairment provisions resulting from force majeure such as natural disasters 0.00 0.00
(9) Profit and loss from debt restruction 0.00 0.00
(10) Enterprises ’ reorganization fees, such as staffing expenses and integration fees 0.00 0.00
(11) Profit and loss that exceeds the fair value in transaction with unfair price 0.00 0.00
(12) Current net profit and loss of the subsidies established by merger of enterprises under unified
control from the beginning of the period to the merger day
0.00 0.00
(13) Profit and loss on contingency that has no relation with the normal operation of the company 0.00 0.0078
(14) Profit or loss from change in fair value by holding tradable financial assets and liabilities, and
investment income from disposal of tradable financial assets and liabilities as well as salable
financial assets, excluding the effective hedging businesses related with the normal operations of
the company
0.00 0.00
(15) Switch -back of impairment provisions of accounts receivable that have undergone impairment
test alone;
0.00 0.00
(16) rofit and loss from outward entrusted loaning 0.00 0.00
(17) Profit and loss from the change of investment property’ s fair value by follow-up measurement
in fair value mode
0.00 0.00
(18) Impact on the current profit and loss by one-off adjustment to the current profit and loss
according to the requirements of the tax as well as accounting laws and rules
0.00 0.00
(19) Custody fees of entrusted operation; 0.00 0.00
(20) Other non-operating income and expenses besides the above items -32,584.72 -4,082,375.90
(21) Other items that conform to the definition of extraordinary profit and loss 0.00 0.00
Subtotal -16,270,547.31 -8,547,161.72
Add：Amount influenced by income tax 0.00 0.00
Add：Non-recurring profit attributable to minority interest 10,948.77 3,219,504.68
Non-recurring profit attributable to Parent company -5,237,409.15 -4,612,486.85
ⅩⅥ、Supplementary Information
1、Return on equity and earnings per share
Return on equity
earnings per share
（Yuan/Share）
Net profits of year 2008
Full
dilution
Weighted
average
Basic profit
per share
Profit per
share after
dilution
Net profits attributable to ordinary
shareholders 11,022,189.39 4.79% 4.91% 0.0499 0.0499
Net profits or net profits after
deduction of non-recurring profits
and losses attributable to ordinary
shareholders -5,237,409.15 -2.28% -2.42% -0.0237 -0.0237
2、Calculation of earning per share: ：79
（1）Basic earning per share:
Jan-Jun 2009 Jan-Jun 2008
Items calculation
Amount
After deduction of
non-recurring
Amount
after deduction
of non-recurring
Net profit attributable to ordinary shareholder
of the Company
(1) 11,022,189.39 -5,237,409.15 715,170.19 -4,612,486.85
The number of shares issued to the public at the
beginning of the period
(2) 220,901,184.00 220,901,184.00
220,901,184.0
0
220,901,184.00
The number of shares newly issued in the
current period
(3) 0.00 0.00 0.00 0.00
The number of shares repurchase in the current
period
(4) 0.00 0.00 0.00 0.00
The weighted average number of ordinary
shares issued to the public
(5)=(2)+(3)-(4
)
220,901,184.00 220,901,184.00
220,901,184.0
0
220,901,184.00
Basic earning per share (6)=(1)÷(5) 0.0499 -0.0237 0.0032 -0.0209
（2）Diluted earning per share:
Jan-Jun 2009 Jan-Jun 2008
Items calculation
Amount
After deduction
of non-recurring
Amount
After deduction
of non-recurring
Net profit attributable to ordinary shareholder
of the Company
(1)
11,022,189.39
-5,237,409.15 715,170.19 -4,612,486.85
The interest of the potential diluted ordinary
shares determined to be expenses in the
current period
(2)
0.00 0.00 0.00 0.00
The gains or expenses to be resulted from
conversion of diluted ordinary shares
(3)
0.00 0.00 0.00 0.00
Income tax rate (4) 0.00 0.00 0.00 0.00
The adjustment of the net profit attributable to
ordinary shareholder of the Company
(5)=(1)+[(2)-(3)]×[1-(4)]
11,022,189.39
-5,237,409.15 715,170.19 -4,612,486.85
Total number of ordinary shares (6) 220,901,184.00 220,901,184.00 220,901,184.00 220,901,184.00
Assumed that the dilution of potential ordinary
shares converted into ordinary shares in issue
increased the weighted average number of
ordinary shares
(7) 0.00 0.00 0.00 0.0080
Total number of diluted ordinary shares (8)=(6)+(7) 220,901,184.00 220,901,184.00 220,901,184.00 220,901,184.00
Diluted earning per share (9)=(5)÷(8) 0.0499 -0.0237 0.0032 -0.0209
ⅩⅦ、Other composite income and total composite income
According to requirements issued by The Ministry of Finance《Explanation NO.3 of
Enterprises Accounting Standards》，the company’s other composite income and total composite
income calculated as follow:
1、Other composite income
The company did not other composite income.
2、Total composite income
Items Jan-Jun 2009 Jan-Jun 2008
Total composite income
6,141,848.84
-1,825,831.94
Belongs to the parent company’s shareholders
11,022,189.39
715,170.19
Belongs to the minority shareholders
-4,880,340.55
-2,541,002.13
Note：Total composite income = Net profits + Other composite income
Shenzhen International Enterprise Co., Ltd
