Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
1
SHENZHEN INTERNATIONAL ENTERPRISE CO., LTD.
INTERIM REPORT 2010
Disclosure Date: 20 August 2010Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
2
Contents
Section I Important Statement and Paraphrase……………………………..3
Section II Company Profile…………………………………………………………..4
Section III Changes in Share Capital and Shares Held by Principal Shareholders…..5
Section IV Particulars about Directors, Supervisors and Senior Executives………7
Section V Report of the Board of Directors………………………………….………7
Section VI Significant Events………………………………………………………10
Section VII Financial Report (Un-audited)…………………………………………..14
Section VIII Documents Available for Reference…………………………………....14Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
3
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.
Principal of the Company Li Jinquan, Person-in-charge of the accounting work Chen
Xiaohai and Person-in-charge of the accounting organization (Person-in-charge of
accounting) Zhou Xiaoliang 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 there be 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.
Multi Profit Asia Pacific: Multi Profit Asia Pacific Investment Ltd.
Maoye Emporium: Shenzhen Maoye Emporium Ltd
SDG: Shenzhen Special Economic Zone Development (Group) Co., Ltd.
Rongfa Company: Shenzhen Rongfa Investment Co., Ltd.Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
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
Main office address: 44/F, Rongchao Economic and Trading Center, No.4028 Jintian
Road, Futian District, Shenzhen
Post code: 518035
Company’s Internet Website: http://www.china-ia.com
E-mail: sgs000056@163.com
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., 44/F, Rongchao Economic and
Trading Center, No.4028 Jintian Road, Futian District, 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, BeijingShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
5
II. Main financial data and indices
Unit: RMB Yuan
Note 1: 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, including the offset
amount for which asset impairment provisions have been withdrawn
2,816,468.43
Other non-operating incomes and expenses besides the items above -5,065,356.57
Effect on minority interest income 2,029,043.59 .
Total -219,844.55 -
Note 2: Difference between PRC GAAP and IFRS is inapplicable.
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 1,434,990,062.55 1,451,667,225.56 -1.15%
Owners’ equity attributable to shareholders of list
companies
204,037,277.23 225,778,093.67 -9.63%
Share capital 220,901,184.00 220,901,184.00 0.00%
Net asset per share attributable to shareholders of
list companies (Yuan/share)
0.92 1.02 -9.80%
In the report period
(Jan.-Jun.)
The same period of last
year
Increase/decrease compared with
the same period of last year (%)
Operating revenue 6,003,596.33 9,235,803.11 -35.00%
Operating profit -37,605,701.21 -9,479,005.49
Total profit -39,774,544.55 6,132,420.86 -748.59%
Net profit attributable to shareholders of listed
companies
-21,740,816.44 11,022,189.39 -297.25%
Net profit attributable to shareholders of listed
companies after deducting non-recurring gains and
losses
-21,520,971.89 -5,237,409.15
Basic earnings per share (Yuan/share) -0.0984 0.0499 -297.19%
Diluted earnings per share (Yuan/share) -0.0984 0.0499 -297.19%
Net return on equity (%) -10.12% 4.79% -14.91%
Net cash flow from operating activities 14,066,656.87 -21,169,359.11
Net cash flow from operating activities per share
(Yuan/share)
0.06 -0.10Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
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 Proportion New shares
Bonus
shares
Capitalizatio
n of public
reserves
Others
Subtota
l
Number Proportion
I. Shares subject to
trading moratorium
320,760 0.15% 320,760 0.15%
1. Shares held by the state
2. Shares held by
state-owned corporation
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
220,580,424 99.85% 220,580,424 99.85%
1. RMB ordinary shares 118,892,232 53.82% 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%
III. Particulars about shares held by principal shareholders
Total shareholders 18,235Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
7
Particulars about shares held by the top ten shareholders
Name of shareholders
Nature of
shareholders
Shareholdi
ng ratio
Total shares
held
Number of shares held
subject to trading
moratorium
Shares pledged or
frozen
Multi Profit Asia Pacific Investment
Ltd
Foreign corporation 13.70% 30,264,192 0 0
Shenzhen Special Economic Zone
Development (Group) Co., Ltd.
State-owned
corporation
9.76% 21,566,857 0 10,780,000
UOB Investment (China) Limited Foreign corporation 7.03% 15,528,941 0 0
Shenzhen Maoye Emporium Ltd
Domestic
non-state-owned
corporation
6.15% 13,577,548 0 0
Zhong Zhiqiang
Foreign natural
person
3.72% 8,215,594 0 0
Shenzhen Taitian Industrial
Development Co., Ltd.
Domestic
non-state-owned
corporation
2.63% 5,816,012 0 0
Chen Qiaoling
Domestic natural
person
1.41% 3,109,255 0 0
Fang Ruiping
Domestic natural
person
1.15% 2,534,800 0 0
Chen Shaolan
Domestic natural
person
1.14% 2,528,341 0 0
Chen Shu
Domestic natural
person
0.97% 2,149,327 0 0
Particulars about shares held by the top ten shareholders not subject to trading moratorium
Name of shareholder
Number of shares held subject to trading
moratorium
Type of shares
Multi Profit Asia Pacific Investment Ltd 30,264,192 Domestically listed foreign shares
Shenzhen Special Economic Zone Development
(Group) Co., Ltd.
21,566,857 RMB ordinary shares
UOB Investment (China) Limited 15,528,941 Domestically listed foreign shares
Shenzhen Maoye Emporium Ltd 13,577,548 RMB ordinary shares
Zhong Zhiqiang 8,215,594 Domestically listed foreign shares
Shenzhen Taitian Industrial Development Co., Ltd. 5,816,012 RMB ordinary shares
Chen Qiaoling 3,109,255 RMB ordinary shares
Fang Ruiping 2,534,800 RMB ordinary shares
Chen Shaolan 2,528,341 RMB ordinary shares
Chen Shu 2,149,327 Domestically listed foreign shares
Explanation on associated
relationship or
action-in-concert among the
above shareholders
Inquired by the Company with letter, there was no related relationship between Multi Profit Asia Pacific,
SDG and other shareholders in the above table; 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. And 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.Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
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[Note]: (1) Shenzhen Special Economic Zone Development (Group) Co., Ltd held shares
of the Company on behalf of the State.
Ⅳ. Controlling shareholder and actual controller of the Company during the report period
The equity structure of the Company is decentralized and shareholding ratios of the top
three principal shareholders are so close that the Company is unable to judge which its
actual controller is. Shareholders holding over 5% of the Company’s shares are Multi
Profit Asia Pacific Investment Ltd. (holding 13.7% shares), Shenzhen Maoye Emporium
Ltd. and its acting-in-concert party UOB Investment (China) Limited (holding 13.18%
shares) and Shenzhen Special Economic Zone Development (Group) Co., Ltd. (holding
9.76% shares. For more details, please refer to Section Ⅳ Changes in Share Capital and
Particulars about Shareholders in the 2009 Annual Report.
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.Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
9
Section V Report of the Board Directors
I. Operation of the Company in the first half year of 2010
1. Analysis and discussion of management
For the report period, the Company achieved an operating income of RMB 6,003,596.33,
down by 35% year on year; an operating profit amounting to RMB -37,605,701.21, down
by 296.73%，year on year; a net profit of RMB -39,774,544.55, down by 748.59% year on
year; and a net profit attributable to the parent company of RMB -21,740,816.44,
representing a year-on-year decrease of 297.25%.
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.
The Company worked hard to push forward the financing for Rongfa Company in the
report period. Up until the disclosure date of this report, a financing of RMB 1.3 billion
has been obtained, which eases the Company’s short-term liability pressure, basically
removes various obstacles to housing property certificate handling for the IA Mall Project,
and greatly accelerates the project progress in various aspects.
During the report period, preparation for main construction settlement, completion and
acceptance of the IA Mall Project was basically accomplished. Currently, relevant work
such as the housing property ownership certificate handling, fine decoration and business
invitation is in progress.
For the first half of 2010, various forestry bases of the Company already obtained
ownership certificates for 83,558-mu woods that the Company had grown, and 512-mu
woods were re-seeded. Meanwhile, various preparations for cultivating and fertilizing
29,094-mu woods that needed to be cultivated and fertilized in the year 2010 were
already finished. The cultivation and fertilization would start soon. The 15,000-mu woods
grown by the Wengyuan and Wuhua bases in the year 2005 entered the mature period and
were ready to be cut down. At present, the Company has completed the investigation and
assessment on the woods to be cut down, confirmation of the method to turn woods into
capital, relevant market researches, negotiations with customers, woods cutting approval
and other relevant work. And the cutting work is about to start.
In terms of the forestry business, it was the key task for the Company to manage and
protect forestry resources in the first half of 2010. The Company paid ceaseless effort to
work on management and protection of woods. To be specific, it formulated the Pre-plan
for Forest Fire Prevention and Fighting, implemented a wood and land protection
responsibility mechanism, and strengthened patrol, examination and supervision on the
woods.
Analysis on main financial data:Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
10
Notes:
(1) Operating income decreased mainly due to the operating income decrease of the
Company’s subsidiary—Rongfa Company.
(2) Financial expenses increased mainly because capitalization of interest of IA Mall
borrowings terminated in the report period.
(3) Operating profit increased mainly because income decreased and expenses increased.
(4) Net profit attributable to the parent company decreased mainly because fewer assets
were activated and interest of IA Mall borrowings ceased to be capitalized in the report
period.
2. Operation status of the Company in the report period
(1) Main businesses classified according to industries
Unit: RMB Ten thousand
Main businesses classified according to industries
Industry or product
Operating
income
Operating cost
Gross profit ratio
(%)
Increase/decreas
e of operating
income
year-on-year (%)
Increase/decreas
e of operating
cost
year-on-year (%)
Increase/decrease
of gross profit
ratio year-on-year
(%)
Income from property
management
581.68 544.83 6.34% -22.43% -26.65% 5.40%
(2) Main businesses classified according to regions
Unit: RMB Ten thousand
Region Operating income Increase/decrease of operating income over last year (%)
Shenzhen 581.68 -26.99%
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 a registered capital of USD 5 million.
In the report period, total assets of Rongfa Company stood at RMB 1,408,512,442.21 and
it achieved an operating income of RMB 15,000.00, with its total profit standing at RMB
-45,048,791.02.
(2) Shenzhen International Arcade Forestry Development Co., Ltd is the wholly-owned
subsidiary of Shenzhen Rongfa Investment Co., Ltd, which is the subsidiary of the
The report period
(Jan.-Jun.)
The same period of
last year
Increase/decrease (%)
Total operating income 6003596.33 9,235,803.11 -35%
Financial expenses 23,228,909.22 1,345,681.54 1626.18%
Operating profit -37,605,701.21 -9,479,005.49 -
Net profit attributable to owners of the parent
company
-21,740,816.44
11,022,189.39 -297.25%Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
11
Company. It has registered capital of RMB 10,000,000, and mainly engages in farming
and forestry projects. During the reporting period, total assets of the enterprise stood at
RMB 163,184,480.28 and it achieved an operating income of RMB 0, with its total profit
standing at RMB -120,349.52.
(3) Shenzhen International Commercial Property Management Co., Ltd., whose 61%
equity is held by the Company, is mainly engaged in property management with a
registered capital of RMB 7 million. During the reporting period, total assets of the
enterprise stood at RMB 27,680,983.26 and it achieved an operating income of RMB
5,816,796.33, with its total profit standing at RMB -1,425,521.59.
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. Business plan for the second half
The Company will continue to work on the IA Mall Project and the woods project
according to the annual work plan.
The Company will try to obtain housing property ownership certificates for the IA Mall
Project, start the second fine decoration and at the same time invite business in an
all-round manner so as to open business for the IA Mall Project as soon as possible.
The forestry subsidiaries will focus on selling woods planted in 2005 and turning them
into capital according to the annual work plan.
8. Statement given by the Board of Directors about the progress in handling matters
mentioned in the “Non-standard Audit Report” issued by the CPA firm last year
In the 2009 Annual Audit Report, Reanda Certified Public Accountants Co., Ltd. issued
the Statement on Issuing Unqualified Audit Opinion with Pinpointed Matters for 2009
Annual Financial Report to Shenzhen International Enterprise Co., Ltd., pointing out that
the Company’s ability to pay was weak and its going-concern capability for the future
was uncertain.
In order to solve the aforesaid problems, the Company focused on pushing forward
financing in the first half of this year. In Jul. 2010, Rongfa Company obtained a financing
of RMB 1.3 billion from Bohai International Trust Co., Ltd.. (For more details, please
refer to the public notice published on Securities Times, Ta Kung Pao (HK) and
http://www.cninfo.com.cn dated 3 Jul. 2010.) Such a move greatly eased the Company’s
short-term liability pressure. Upon arrival of the financing, the Company quickly paid off
mature loans creating a comparatively higher pressure, and removed various obstacles to
the housing property ownership certificates handling for the IA Mall Project. At present,
housing property ownership certificates for the IA Mall Project are in the handling
process. After obtaining those certificates, the Company will start the next round of
financing.
It is expected that along with completion of various subsequent work of the IA Mall
Project, the normal operation of the project will generate enough capital for the Company
to repay liabilities step by step. Meanwhile, the woods projects will enter the mature
period this year. All these will basically solve the pressure from mature loans on the
Company.
II. Investment of the Company
1. In the report period, the Company had no raised proceeds or raised proceeds in theShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
12
previous periods carried over to the report period.
2. Other significant investment projects with non-raised proceeds.
In the report 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. At present, the project has basically been completed and accepted upon
check-up and is in the process of housing property ownership certificate handling,
business invitation and a second refined decoration.
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 Apr. 2010, according to relevant requirements of Document No. (2009) 34 from
CSRC-Proper Handling the 2009 Annual Report of Listed Companies and Relevant Work,
the 3rd Provisional Meeting of the 5th Board of Directors of Company 2010 reviewed and
approved the Administrative System on External Information User, which enhanced
management on external information user during the period of preparation, review and
approve and disclose of periodic report and interim report.
In May 2010, In accordance with requirements of Notice on General and Deepened
Developing a Special Campaign on Standardization of Basic Work of Finance and
Accounting by Listed Companies in Shenzhen from CSRC Shenzhen Bureau, the
Company set up specific work team for standardization of basic work of finance and
accounting, formulated work scheme on carrying out special campaign, and conducted
self-examination and self-correction on financial officer & set up, foundation of financial
accounting, management on assets and management on tax, as well as establishment and
execution of financial administrative system, setup and use of financial information
system, and finished self-examination report in setting time.
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 norShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
13
capitalization of pubic reserves will be implemented in the interim of 2010.
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:
(I) The case on house-leasing dispute between subsidiary of the Company-Shenzhen
Rongfa Investment Co., Ltd. (hereinafter called “Rongfa Investment”) and Shenzhen
Baotian Investment Co., Ltd. (hereinafter called “Baotian Investment”)
On 31 Jan. 2007, Rongfa Investment entered into the Contract on Transfer of Use Right
of Housing with Baotian Investment. Due to dispute in the execution of the contract,
Baotian Investment has not yet paid the fees for use right of housing to Rongfa
Investment by now. Shenzhen Municipal Intermediate People’s Court of Guangdong
Province made the civil ruling paper with (2008) SZFMWZ Zi No. 2867, which has took
effect on 11 Sep. 2009. (For details, please refer to the public notice with serial number
2009-039 disclosed in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn on
29 Oct. 2009).
Up till now, Baotian Investment failed to pay the fees for use right of housing to Rongfa
Investment according to the clauses of the ruling. Presently, the case is being executed.
(II)The case on Construction Contract for Construction Project between Rongfa
Company and Shenzhen Fanhua Engineering Group Co., Ltd. (hereinafter called “Fanhua
Company”)
Rongfa Company entered into the Construction Contract for Construction Project with
Fanhua Company on 12 Jan. 2005, in which Fanhua Company contracted to build the IA
Mall Project developed by Rongfa Company. Rongfa Company paid the part of
construction costs, and the rest costs failed to be paid to Fanhua Company. In Dec. 2009,
Fanhua Company brought an action against Rongfa Company to ask for paying unpaid
construction costs, overdue interests and other expenses. In Feb. 2010, through mediation
of Higher People’s Court of Guangdong Province, the both parties negotiated a settlement,
and the Higher People’s Court of Guangdong Province issued the paper of civil mediation
with (2009) YGFMYC Zi No. 7 (For more details, please refer to public notice published
on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 12 Feb. 2012).
Since the paper of civil mediation became effective, Rongfa Investment actively raised
money to repay the debt. On 12 Jun. 2010, the Company published public notice that due
to fund arrangement, repayment as stated in Clause (3) has been overdue. On 2 Aug. 2010,
Rongfa Investment signed Agreement with Fanhua Company, which adjusted part of
repayment term as stated in the paper of civil mediation. It was agreed to adjust
repayment term stated in Clause 4,5 of Article VI in the paper of civil mediation to repay
RMB 150 million before 15 Aug. 2010; pay off the balance (excluding quality guarantee
deposit with rate of 3%) before 26 Aug. 2010. Up to the disclose date of the Interim
Report 2010, Rongfa Investment has been return engineering fund as stated in agreement.
After negotiation, Fanhua Company agreed that they would not charge double interest of
non-payment of accounts payable or penalty calculated from 14 Nov. 2009 to 25 Jan.
2010 as stated in Article VII of the paper of civil mediation.
IV. There were no significant purchases or sales of assets in the report period.Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
14
V. The Company has no material related transactions in the report period.
VI. Significant contracts in report period and their implementation
1. No trusteeship, contract, and tenancy of the Company’s assets by other companies
happened or vice versa during the reporting period.
2. Important guarantee contracts of the Company in the reporting period
Guarantees provided for external parties (excluding guarantees provided for subsidiaries)
Name of the
guaranteed
Date and No. of
Relevant public
notice
Guarantee
line
Date of
occurrence
(Date of
signing
agreement)
Actual
amount of
guarantee
Type of
guarantee
Term of
guarantee
Implementat
ion
accomplishe
d or not
Guarantee for
related parties
or not
Shum Kong
Industry & Trade
The Annual
Report 2009
600.00 1 Jan. 1999 600.00
Security of
guarantee
Has been
executed
Yes No
Guarantee for
Sales of Rongfa
Investment
The Annual
Report 2009
1,233.84 1 Dec. 1999 1,233.84
Security of
guarantee
Till the
property
owner return
the loan
No No
Guarantee for
Sales of Rongfa
Investment
The Annual
Report 2009
603.69 1 May 2004 603.69
Security of
guarantee
Till the
property
owner return
the loan
No No
Total external guarantees lines
examined and approved in the
reporting period (A1)
0.00
Total external guarantees
occurred in the reporting period
(A2)
0.00
Total external guarantee lines
examined and approved at the period
end (A3)
1,837.53
Balance of actual guarantees at
the period end (A4)
1,837.53
Guarantees provided for subsidiary companies
Name of the
guaranteed
Date and No, of
Relevant public
notice
Guarantee
line
Date of
occurrence (Date
of signing
agreement)
Actual
amount of
guarantee
Type of
guarantee
Term of
guarantee
Implementat
ion
accomplishe
d or not
Guarantee for
related parties
or not
Shenzhen Rongfa
Investment Co.,
Ltd
Public Notice
No. 2008-41 on
27 Aug. 2008
22,500.00 15 Feb. 2010 22,500.00 Pledge One year No No
Shenzhen Rongfa
Investment Co.,
Ltd
Public Notice
No. 2010-09 on
24 Feb. 2010
15,000.00 10 Sep. 2008 15,000.00 Pledge Two years No No
Total guarantees lines for subsidiaries
examined and approved in the
reporting period (B1)
22,500.00
Total guarantees for subsidiaries
occurred in the reporting period
(B2)
0.00
Total guarantee lines for subsidiaries
examined and approved at the period
37,500.00
Balance of actual guarantees at
the period end (B4)
37,500.00Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
15
end (B3)
Total guarantees of the Company (Total of the two above)
Total guarantees lines examined and
approved in the reporting period
(A1+B1)
22,500.00
Total guarantees occurred in the
reporting period (A2+B2)
0.00
Total guarantees lines examined and
approved at the report period
(A3+B3)
39,337.53
Total balance of actual
guarantees at the period end
(A4+B4)
39,337.53
Proportion of total actual guarantee amount (A4+B4) in net assets of the
Company
192.80%
Among which:
Amount of guarantees provided for shareholders, actual controller and other
related parties (C)
0.00
Amount of debt guarantees provided directly or indirectly for parties with
asset-liability ratio exceeding 70% (D)
39,337.53
Proportion of total guarantee amount exceeding 50% of the Company’s net
assets (E)
29,135.67
Total amount of the above three guarantees (C+D+E) 39,337.53
Explanation on possibility of taking several and joint liability involving
immature guarantees
-
(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. 2010, the
balance of the mortgage guarantees provided by Rongfa Company stood at RMB
20,564,192.10.
(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. 2010, the balance of the
mortgage guarantees provided by Huizhou Rongfa was RMB 9,330,530.49.
(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 the first half year of 2010, Resolution on Approval of Loan Extension of Shenzhen
Rongfa Investment Co., Ltd and Offering Guarantee was reviewed and approved at the 1st
Shareholders’ General Meeting of the Company. Rongfa Company, subordinate company
of the Company, borrowed RMB 225,000,000 from China Construction Bank Shenzhen
Branch, which will be extended 1 more year when it was due. Ronghua Company
pledged with title deed of IA Mall Project for guarantee, and the Company will provide
guarantee with irrevocable joint responsibility for the loan.
The borrowing had been returned when Rongfa Company financed to Bohai International
Trust Co., Ltd in Jul. 2010.
3. In the report period, the Company did not entrust other parties to manage its cash andShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
16
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
For the purpose of supplementary financing for development of IA Mall Project (i.e.
Futian CBD Project), in Mar. 2005, the Company entered into the Subscription
Agreement of in IA Mall Shops with its employees in accordance with the market
condition at that time and internal subscription mode, the employees subscribed a few
shops in IA Mall Project at the price of RMB 15000 – 16000 per square meter at that time,
raising capital of RMB 34,400,984.61 in total (for details, please refer to “Item 2 under
VIII. Other major events of the Annual Report 2008). Due to involving the major
employees and capitals in such events, the Company is researching and working out a
feasible scheme in accordance with the actual operation conditions, then shall submit
relevant decision-making procedure to review and approve. In accordance with the
principle of prudence, the Company shall withdraw interest of RMB 9,462,606.00 in the
light of the higher of bank lending benchmark interest rates for the same period of 5.85%
or 20% of contractual premium, and record it into the financial expense of current year.
X. Index for information disclosed in report period
No. Information disclosed Date
2010-01 Public Notice on Rectification of Shareholders of the Company 14 Jan. 2010
2010-02 Public Notice on Changes in Shareholders of Powerland Holdings Limited 21 Jan. 2010
2010-03 Public Notice on Reelection of the Board of Directors of the Company 26 Jan. 2010
2010-04 Public Notice on Reelection of the Supervisory Committee 26 Jan. 2010
2010-05 Public Notice on Achievement Estimation 26 Jan. 2010
2010-06 Public Notice on Clarify 27 Jan. 2010
2010-07 Public Notice on the Progress of Rectification of Shareholders of the Company 3 Feb. 2010
2010-08 Public Notice on the Progress of Significant Lawsuit 12 Feb. 2010
2010-09 Public on Guarantee for Significant Loan 24 Feb. 2010
2010-10
Public Notice on Resolutions of the 2nd Provisional Meeting 2010 of the 5th
Board of Directors of the Company
16 Mar. 2010
2010-11
Public Notice on Resolutions of the 1st Provisional Shareholders’ General
Meeting 2010 of the Company
1 Apr. 2010
2010-12 Public Notice on the Progress of Significant Lawsuit 24 Apr. 2010
2010-13
Public Notice on Resolutions of the 3rd Meeting 2010 of the 5th Board of
Directors of the Company
28 Apr. 2010Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
17
2010-14 Summary Report 2009 28 Apr. 2010
2010-15
Public Notice on the 1st Meeting of the 5th Supervisory Committee of the
Company 2010
28 Apr. 2010
2010-16 The 1st Quarterly Report 2010 28 Apr. 2010
2010-17
Public Notice on Selling Property located the 23rd Floor of Shenzhen
Development Centre
6 May 2010
2010-18
Public Notice on Resolutions of the 5th Provisional Shareholders’ General
Meeting 2010 of the Company
2 Jun. 2010
2010-19
Notice on Holding the Annual Shareholders’ General Meeting 2009 by the 5th
Board of Directors of the Company
2 Jun. 2010
2010-20 Public Notice on the Progress of Significant Lawsuit 12 Jun. 2010
2010-21 Public Notice on Resolutions of the Annual Shareholders’ General Meeting 2009 23 Jun. 2010
Section VII Financial Report (Un-audited)
The Interim Financial Report 2010 of the Company has not been audited, with details
attached below.
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.
the aforesaid documents are placed in the Investment Administration Department of the
Company.
Chairman of the Board of Directors: Li Jinquan
Board of Directors
Shenzhen International Enterprise Co., Ltd
20 Aug. 2010Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
18
Consolidated Balance Sheet
As at June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Assets Notes 30.06.2010 31.12.2009
Current Assets:
Monetary funds Ⅴ.1 13,057,613.33 18,673,470.06
Held for trading financial assets
Notes receivable
Accounts receivable Ⅴ.2 821,338.70 1,399,439.55
Advances to suppliers Ⅴ.3 480,825.00 381,095.00
Interests receivable
Dividend receivable
Other accounts receivable Ⅴ.4 5,729,396.89 8,271,682.45
Inventories Ⅴ.5 1,352,560,720.73 1,347,795,365.80
Non-current assets due within one year
Other current assets
Total Current Assets 1,372,649,894.65 1,376,521,052.86
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term account receivables
Long-term equity investments Ⅴ.6 6,570,262.84 6,570,262.84
Investment properties Ⅴ.7 1,206,984.91 1,445,567.83
Fixed assets Ⅴ.8 54,412,920.15 66,950,342.03
Construction in progress
Construction materials
Liquidation of fixed assets
Productive biology assets
Oil and gas assets
Intangible assets
Development expenses
Goodwill
Long-term deferred assets Ⅴ.9 150,000.00 180,000.00
Deferred income tax assets
Other non-current assets
Total non-current assets 62,340,167.90 75,146,172.70
Total assets 1,434,990,062.55 1,451,667,225.56
Legal Representative: Li Jinquan
Person in charge of accounting work: Chen Xiaohai
Person in charge of accounting department: Zhou XiaoliangShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
19
Consolidated Balance Sheet（Continued）
As at June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Liabilities and Shareholders' equity Notes 30.06.2010 31.12.2009
Current liabilities:
Short-term loans Ⅴ.12 6,000,000.00
Held for trading financial liabilities
Notes payable
Accounts payable Ⅴ.13 495,872,460.15 570,599,631.60
Advance from customers Ⅴ.14 46,073,971.75 46,073,971.75
Payroll payables Ⅴ.15 3,442,608.10 4,034,257.43
Tax payable Ⅴ.16 -424,803.21 4,782.62
Interest payables 665,041.67 768,248.25
Dividend payables Ⅴ.17 5,127,701.36 5,127,701.36
Other accounts payable Ⅴ.18 361,090,251.10 238,935,399.95
Non-current liabilities due within one year Ⅴ.19 383,000,000.00 184,000,000.00
Other current liabilities
Total current liabilities 1,294,847,230.92 1,055,543,992.96
Non-current liabilities:
Long-term borrowings Ⅴ.20 44,000,000.00 254,000,000.00
Bonds payable
Long-term accounts payable
Grants&Subsidies received
Accrued liabilities Ⅴ.21 6,000,000.00
Deferred income tax liabilities
Deferred income Ⅴ.22 823,425.69 1,029,282.11
Total non-current liabilities 44,823,425.69 261,029,282.11
Total liabilities 1,339,670,656.61 1,316,573,275.07
Shareholders' equity:
Share capital Ⅴ.23 220,901,184.00 220,901,184.00
Capital reserve Ⅴ.24 72,315,347.06 72,315,347.06
Less: inventory shares
Surplus reserve Ⅴ.25 125,929,834.48 125,929,834.48
Undistributed profits Ⅴ.26 -215,109,088.31 -193,368,271.87
Exchange difference of foreign currency
financial statements translation
Equity attributable to the shareholders of
parent company 204,037,277.23 225,778,093.67
Minority interests -108,717,871.29 -90,684,143.18
Total shareholders’ equity 95,319,405.94 135,093,950.49
Total liabilities and shareholders’ equity 1,434,990,062.55 1,451,667,225.56
Legal Representative: Li Jinquan
Person in charge of accounting work: Chen XiaohaiShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
20
Person in charge of accounting department: Zhou Xiaoliang
Balance Sheet
As at June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Assets Notes 30.06.2010 31.12.2009
Current Assets:
Monetary funds 211,543.41 252,948.06
Held for trading financial assets
Notes receivable
Accounts receivable
Advances to suppliers 180,000.00 180,000.00
Interests receivable
Dividend receivable
Other accounts receivable XI.1 142,021,484.61 175,779,689.75
Inventories
Non-current assets due within one year
Other current assets
Total Current Assets 142,413,028.02 176,212,637.81
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term account receivables
Long-term equity investments XI.2 65,944,253.87 65,944,253.87
Investment properties 860,975.69 1,084,763.51
Fixed assets 5,137,363.99 16,311,714.31
Construction in progress
Construction materials
Liquidation of fixed assets
Production biology assets
Oil and gas assets
Intangible assets
Development expenses
Goodwill
Long-term deferred assets 150,000.00 180,000.00
Deferred income tax assets
Other non-current assets
Total non-current assets 72,092,593.55 83,520,731.69
Total assets 214,505,621.57 259,733,369.50
Legal Representative: Li Jinquan
Person in charge of accounting work: Chen XiaohaiShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
21
Person in charge of accounting department: Zhou Xiaoliang
Balance Sheet（Continued）
As at June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Liabilities and Shareholders' equity Notes 30.06.2010 31.12.2009
Current liabilities:
Short-term loans
Held for trading financial liabilities
Notes payable
Accounts payable
Advance from customers 80,000.00 80,000.00
Payroll payables 1,044,723.33 1,385,993.95
Tax payable 2,401,138.86 2,497,675.52
Interest payables
Dividend payables 5,127,701.36 5,127,701.36
Other accounts payable 68,296,056.25 68,613,377.28
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 76,949,619.80 77,704,748.11
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term accounts payable
Grants&Subsidies received
Accrued liabilities 6,000,000.00
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 6,000,000.00
Total liabilities 76,949,619.80 83,704,748.11
Shareholders' equity:
Share capital 220,901,184.00 220,901,184.00
Capital reserve 64,951,444.59 64,951,444.59
Less: inventory shares
Surplus reserve 96,841,026.39 96,841,026.39
Undistributed profits -245,137,653.21 -206,665,033.59
Total shareholders’ equity 137,556,001.77 176,028,621.39
Total liabilities and shareholders’ equity 214,505,621.57 259,733,369.50
Legal Representative: Li JinquanShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
22
Person in charge of accounting work: Chen Xiaohai
Person in charge of accounting department: Zhou Xiaoliang
Consolidated Income Statement
For the year ended June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Notes Jan-Jun 2010 Jan-Jun 2009
I. Total operating income Ⅴ.27 6,003,596.33 9,235,803.11
Less: Operating costs Ⅴ.27 5,655,724.21 7,987,664.00
Business taxes and surtax Ⅴ.28 380,643.65 398,564.21
Selling expenses 661,010.17 661,010.65
Administrative expenses 13,703,388.45 9,212,821.37
Financial costs Ⅴ.29 23,228,909.22 1,345,681.54
Impairment loss of assets Ⅴ.30 -20,378.16 -140,933.17
Add: gains from the fair value changes (The loss is listed
beginning with “-“)
Investment income (The loss is listed beginning with “-“) Ⅴ.31 750,000.00
Including: the investment income from associated and joint
ventures enterprises
II. Operating profit(The loss is listed beginning with “-“) -37,605,701.21 -9,479,005.49
Add: non-operating income Ⅴ.32 2,999,252.66 15,678,607.55
Less: non-operating expense Ⅴ.33 5,168,096.00 67,181.20
Including: loss from disposal of non-current assets
III. Total profits (The net loss is listed beginning with
“-”) -39,774,544.55 6,132,420.86
Less: income tax expenses Ⅴ.34 -9,427.98
IV. Net profits (the net loss is listed beginning with “-”) -39,774,544.55 6,141,848.84
Net profits attributable to shareholders of the parent company -21,740,816.44 11,022,189.39
Minority interests -18,033,728.11 -4,880,340.55
V. Earnings per share:
(ⅰ) Basic earnings per share XIII -0.0984 0.0499
(ⅱ) Diluted earnings per share XIII -0.0984 0.0499
VI. Other comprehensive gains
VII.Total comprehensive gains -39,774,544.55 6,141,848.84
Total comprehensive gains attributable to shareholders
of the parent company -21,740,816.44 11,022,189.39
Total comprehensive gains attributable to minority -18,033,728.11 -4,880,340.55Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
23
shareholders
Legal Representative: Li Jinquan
Person in charge of accounting work: Chen Xiaohai
Person in charge of accounting department: Zhou Xiaoliang
Income Statement
For the year ended June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Notes Jan-Jun 2010 Jan-Jun 2009
I. Total operating income XI.3
171,800.00 967,010.00
Less: Operating costs XI.3
202,743.58 223,280.42
Business taxes and surtax
Selling expenses
Administrative expenses 5,752,504.28 4,209,538.02
Financial costs -8,412,757.07 -6,999,890.60
Impairment loss of assets 44,005,982.58 -1,405,382.59
Add: gains from the fair value changes (The loss is
listed beginning with “-“)
Investment income (The loss is listed beginning with
“-“)
XI.4
750,000.00
Including: the investment income from associated and
joint ventures enterprises
II. Operating profit(The loss is listed beginning with “-“) -41,376,673.37 5,689,464.75
Add: non-operating income 2,910,912.64 15,589,639.29
Less: non-operating expense 6,858.89 4,235.95
Including: loss from disposal of non-current assets
III. Total profits (The net loss is listed beginning with
“-”) -38,472,619.62 21,274,868.09
Less: income tax expenses
IV. Net profits (the net loss is listed beginning with “-”)
-38,472,619.62 21,274,868.09
Legal Representative: Li Jinquan
Person in charge of accounting work: Chen XiaohaiShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
24
Person in charge of accounting department: Zhou Xiaoliang
Consolidated Cash Flow Statement
For the year ended June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Notes Jan-Jun 2010 Jan-Jun 2009
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of services 6,544,612.36 9,208,211.97
Refund of taxes and levies
Cash received related to other operating activities 115,259,513.46 13,835,929.87
Subtotal of cash inflow from operating activities 121,804,125.82 23,044,141.84
Cash paid for goods and services 78,459,700.62 21,501,234.75
Cash paid to and on behalf of employees 9,035,961.49 7,706,262.02
Payments of taxes and levies 1,067,337.33 2,629,593.89
Cash paid related to other operating activities 19,174,469.51 12,376,410.29
Subtotal of cash outflow from operating activities 107,737,468.95 44,213,500.95
Net cash flow arising from operating activities Ⅴ.35 14,066,656.87 -21,169,359.11
II. Cash flows from investment activities:
Cash received from investments 20,000.00
Cash dividends received from investment
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 13,696,125.00 7,737,798.60
Net cash received from disposal of subsidiaries and other business units
Cash received related to other investing activities
Subtotal of cash inflow from investing activities 13,696,125.00 7,757,798.60
Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets 68,832.00 43,110.00
Cash paid to acquire investments
Net cash paid to acquire subsidiaries and other business units
Cash paid related to other investing activities
Subtotal of Cash outflow from investing activities 68,832.00 43,110.00
Net cash flow arising from investing activities 13,627,293.00 7,714,688.60
Ⅲ、Cash flows from financing activities：
Cash received from investments
Cash received from loans 35,000,000.00 26,000,000.00
Cash received related to other financing activities 270,000.00
Subtotal of cash inflow from financing activities 35,270,000.00 26,000,000.00
Repayment of loans or debts 52,000,000.00 8,000,000.00
Cash payments for interest expenses and distribution of dividends or profits 16,579,806.60 17,249,302.61
Cash paid related to other financing activities 3,760,000.00
Subtotal of cash outflow from financing activities 68,579,806.60 29,009,302.61Shenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
25
Net cash flow arising from financing activities -33,309,806.60 -3,009,302.61
IV. Effects on cash and cash equivalents for the change of foreign exchange rates
V. Net increase in cash and cash equivalents Ⅴ.36 -5,615,856.73 -16,463,973.12
Add: beginning balance of cash and cash equivalents 18,673,470.06 68,414,884.06
VI .Ending balance of cash and cash equivalents 13,057,613.33 51,950,910.94
Legal Representative: Li Jinquan Person in charge of accounting work: Chen Xiaohai
Person in charge of accounting department: Zhou Xiaoliang
Cash Flow Statement
For the year ended June 30, 2010
Name of the company: Shenzhen International Enterprise Co., Ltd Monetary unit : ( RMB) Yuan
Items Notes Jan-Jun 2010 Jan-Jun 2009
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of services 51,800.00 967,010.00
Refund of taxes and levies
Cash received related to other operating activities 22,518,052.99 4,149,503.66
Subtotal of cash inflow from operating activities 22,569,852.99 5,116,513.66
Cash paid for goods and services
Cash paid to and on behalf of employees 3,292,130.53 2,194,835.41
Payments of taxes and levies 173,200.48 1,080,941.29
Cash paid related to other operating activities 32,800,277.63 34,374,585.35
Subtotal of cash outflow from operating activities 36,265,608.64 37,650,362.05
Net cash flow arising from operating activities -13,695,755.65 -32,533,848.39
II. Cash flow from investment activities:
Cash received from investments 20,000.00
Cash dividends received from investment
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 13,693,825.00 7,737,798.60
Net cash received from disposal of subsidiaries and other business units
Cash received related to other investing activities
Subtotal of cash inflow from investing activities 13,693,825.00 7,757,798.60
Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets 39,474.00 9,750.00
Cash paid to acquire investments
Net cash paid to acquire subsidiaries and other business units
Cash paid related to other investing activities
Subtotal of Cash outflow from investing activities 39,474.00 9,750.00
Net cash flow arising from investing activities 13,654,351.00 7,748,048.60
III. Cash flow from financing activities:
Cash received from investments
Cash received from loans 5,000,000.00
Cash received related to other financing activities
Subtotal of cash inflow from financing activities 5,000,000.00
Repayment of loans or debts 5,000,000.00
Cash payments for interest expenses and distribution of dividends or profits 444,332.76
Cash paid related to other financing activitiesShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
26
Subtotal of cash outflow from financing activities 5,000,000.00 444,332.76
Net cash flow arising from financing activities -444,332.76
IV. Effects on cash and cash equivalents for the change of foreign exchange rates
V. Net increase in cash and cash equivalents -41,404.65 -25,230,132.55
Add: beginning balance of cash and cash equivalents 252,948.06 26,129,141.95
VI .Ending balance of cash and cash equivalents 211,543.41 899,009.40
Legal Representative: Li Jinquan Person in charge of accounting work: Chen Xiaohai
Person in charge of accounting department: Zhou XiaoliangShenzhen International Enterprise Co., Ltd. INTERIM REPORT 2010
27Shenzhen International Enterprise Co., Ltd.
2 8
Consolidated Statement of Changes in Owners’ Equity
For the first half year of 2010
Prepared by Shenzhen International Enterprise Co., Ltd Unit: RMB Yuan
Amount for the current period Amount of last year
Owners’ equity attributable to parent company Owners’ equity attributable to parent company
Items
Paid-in
capital
(or share
capital)
Capital
reserve
Less:
treas
ury
stock
Spec
ific
reser
ves
Surplus
public
reserve
General
risk
reserve
Retained
profits
Oth
ers
Minority
interest
Total
owners’
equity
Paid-in
capital
(or share
capital)
Capital
reserve
Less:
treasu
ry
stock
Spec
ific
reser
ves
Surplus
public
reserve
Gener
al risk
reserv
e
Retained
profits
Oth
ers
Minorit
y
interest
Total
owners’
equity
I. Balance at the end of last year
220,901,
184.00
72,315,
347.06
125,929
,834.48
-193,368
,271.87
-90,684,
143.18
135,09
3,950.4
9
220,901,
184.00
72,315,
347.06
125,929
,834.48
-200,284
,817.12
-70,232
,951.83
148,628
,596.59
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year
220,901,
184.00
72,315,
347.06
125,929
,834.48
-193,368
,271.87
-90,684,
143.18
135,09
3,950.4
9
220,901,
184.00
72,315,
347.06
125,929
,834.48
-200,284
,817.12
-70,232
,951.83
148,628
,596.59
III. Increase/ decrease of amount in this year (“-”
means decrease)
-21,740,
816.44
-18,033,
728.11
-39,774
,544.55
11,022,1
89.39
-4,880,
340.55
6,141,8
48.84
(I) Net profit
-21,740,
816.44
-18,033,
728.11
-39,774
,544.55
11,022,1
89.39
-4,880,
340.55
6,141,8
48.84
(II) Other composite income
Subtotal of (I) and (II)
-21,740,
816.44
-18,033,
728.11
-39,774
,544.55
11,022,1
89.39
-4,880,
340.55
6,141,8
48.84
(III) Capital input and reduction by ownersShenzhen International Enterprise Co., Ltd.
2 9
1. Capital input of owners
2. Amount of stock payment included in owners’
equity
3. Others
(IV) Profit distribution
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserve
3. Distribution to owners (or shareholders)
4. Others
(V) Internal carrying forward of owners’ equity
1. New increase of capital (or share capital) from
capital reserves
2. Converting surplus reserves to capital (or share
capital)
3. Surplus reserves make up losses
4. Others
(VI) Specific reserves
1. Appropriated in current period
2. Used in current period
IV. Balance at the end of this period
220,901,
184.00
72,315,
347.06
125,929
,834.48
-215,109
,088.31
-108,717
,871.29
95,319,
405.94
220,901,
184.00
72,315,
347.06
125,929
,834.48
-189,262
,627.73
-75,113
,292.38
154,770
,445.43
Legal Representative: Li Jinquan
Person in charge of accounting work: Chen Xiaohai
Person in charge of accounting department: Zhou Xiaoliang
Statement of Change in Owners’ Equity of Parent Company
For the first half year of 2010Shenzhen International Enterprise Co., Ltd.
3 0
Prepared by Shenzhen International Enterprise Co., Ltd Unit: RMB Yuan
Amount for the current period Amount of last year
Items
Paid-in
capital
(or share
capital)
Capital
reserve
Less:
treasury
stock
Specific
reserves
Surplus
public
reserve
General
risk
reserve
Retained
profit
Total
owners’
equity
Paid-in
capital
(or share
capital)
Capital
reserve
Less:
treasury
stock
Specific
reserves
Surplus
public
reserve
General
risk
reserve
Retained
profit
Total
owners’
equity
I. Balance at the end of last year
220,901,
184.00
64,951,
444.59
96,841,
026.39
-206,665
,033.59
176,028
,621.39
220,901,
184.00
64,951,
444.59
96,841,
026.39
-199,809,
084.10
182,884
,570.88
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year
220,901,
184.00
64,951,
444.59
96,841,
026.39
-206,665
,033.59
176,028
,621.39
220,901,
184.00
64,951,
444.59
96,841,
026.39
-199,809,
084.10
182,884
,570.88
III. Increase/ decrease of amount in this year (“-” means
decrease)
-38,472,
619.62
-38,472,
619.62
21,274,86
8.09
21,274,
868.09
(I) Net profit
-38,472,
619.62
-38,472,
619.62
21,274,86
8.09
21,274,
868.09
(II) Other composite income
Subtotal of (I) and (II)
-38,472,
619.62
-38,472,
619.62
21,274,86
8.09
21,274,
868.09
(III) Capital input and reduction by owners
1. Capital input of owners
2. Amount of stock payment included in owners’ equity
3. Others
(IV) Profit distribution
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserveShenzhen International Enterprise Co., Ltd.
3 1
3. Distribution to owners (or shareholders)
4. Others
(V) Internal carrying forward of owners’ equity
1. New increase of capital (or share capital) from capital
reserves
2. Converting surplus reserves to capital (or share
capital)
3. Surplus reserves make up losses
4. Others
(VI) Specific reserves
1. Appropriated in current period
2. Used in current period
IV. Balance at the end of this period
220,901,
184.00
64,951,
444.59
96,841,
026.39
-245,137
,653.21
137,556
,001.77
220,901,
184.00
64,951,
444.59
96,841,
026.39
-178,534,
216.01
204,159
,438.97
Legal Representative: Li Jinquan
Person in charge of accounting work: Chen Xiaohai
Person in charge of accounting department: Zhou XiaoliangShenzhen International Enterprise Co., Ltd.
13
Shenzhen International Enterprise Co., Ltd.
Notes to Financial Statements
For the year ended June 30, 2010
(All amounts are expressed in RMB yuan unless otherwise stated)
English translation for reference only, should there be any inconsistency between the Chinese and English versions, the Chinese version shall
prevail.
Ⅰ. General Information
1. History of the company
Shenzhen International Enterprise Co., Ltd. (“the Company”) on the approval of People's
Government of Shenzhen and issued Shenfubanfu [1992]No. 1867 document to restructured as a stock
limited company in March 1993 and directional issued 41,701,800 shares. The Company on the
approval of Securities Administration Office Shenzhen the Company issued 41,701,800 bonus shares
by the ratio 10:10 in 1994. The Company 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 1995.
The Compnay on the approval of Document No. 99 [1996] Zhengjianfashen zi which issued by China
Securities Regulatory Commission the company issued 20,000,000 A shares and lisited in the
Shenzhen Stock Exchange in 1996. The Company on the approval of board of directors and Securities
Administration Office Shenzhen’s Document No. 38 [1997] Shenzhengbanfu 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’s Document No. 45 [1998] Shenzhengbanfu that the share capital of
company increased 36,816,864 shares by the transfer of the capital fund by the ratio 10:2 in May 1998,
by now the shares of the company are increased to 220,901,184 shares. The company has acquired the
Qiguyuezong business license with No.110114, that issued by Shenzhen Administration for Iudustry
and Commerce, the total registered share capital of the compnay is RMB 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. Summary of Significant Accounting Policies 、 Accounting Estimates and
Correct Previous Accounting Period Errors
1. Basis for preparation
The Company maintain its accounting records and prepare its statutory financial statement based
on the assumption of going concern, recognition and measurement in accordance with the fact and
substance of transactions, and in accordance with the China Enterprise Accounting Standards issuedShenzhen International Enterprise Co., Ltd.
14
by the Ministry of Finance on 15th February 2006, as well as based on those accounting policies and
accounting estimates that described as below.
2. Declaration of Compliance with the Enterprise Accounting Standards
The Company’s financial statements prepared follow the requirements of the Enterprises
Accounting Standard promulgated by the Ministry of Finance; fairly and completely present the
financial position, operation result and cash flows, and other relevant information of the
Company.
3. Accounting Year
The Company employs a period of calendar days from January 1 to December 31 each year as
accounting year.
4. Reporting currency
The Company’s reporting currency is Renminbi (“RMB”).
5. Accounting treatment of the business combination that is under the common control and
not under the common control.
(1) Accounting treatment of the business combination that is under the common control
Those assets and liabilities obtained by the Company during the business combination should be
recognized in the carrying value of the shareholder’s equity of the subsidiary on the merger date. The
difference between the carrying amount of the net assets obtained and carrying amount of the merger
consideration shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the
difference, any excess shall be adjusted against retained earnings.
(2) Accounting treatment of the business combination that is not under the common control
The consideration paid for the business combination exceeds the acquirer’s interest in the fair
value of the bargainor’s identifiable net assets, the difference shall be recognized as goodwill; Where
the cost of combination is less than the acquirer’s interest in the fair value of the bargainor’s
identifiable net assets, should be review the fair value of bargainor’s identifiable assets、 liabilities
and contingency liabilities , as well as the computation of combination cost, after reassessment, the
difference shall be recognized in profit or loss to the current period.
6. Basis of Consolidated Financial Statement
(1) Consolidation Scope
The consolidated financial statements prepared are in accordance with the No. 33 Enterprise
Accounting Standards – Consolidated Financial Statement issued in February, 2006. The consolidated
financial statements incorporate the financial statements of the Company and enterprises direct
controlled or indirect controlled by the Company (“its subsidiaries”). Control is refer to the Company
has the power to govern the financial and operating policies of an investee enterprise so as to obtain
benefits from its operating activities.
If there is evidence provide that the invested company can not controlled by holding company,
the invested company shall not include in consolidation scope.
(2) Buy and sale the shares of subsidiaries
The effective purchase day and sales day recognized, should has transferred the material risk and
reward of ownership of share of subsidiaries. The consolidated income statement and consolidated
cash flow statement has included the results of operation and cash flow of subsidiaries(not under the
same control) before disposal or after acquired the share; for the subsidiaries under the same controlShenzhen International Enterprise Co., Ltd.
15
from business combination, the operation results and cash flow has been included in the consolidated
income statement and consolidated cash flow statement from beginning of combination period to
consolidation date and disclosed in statement individual, the comparative amount in consolidation
statement has been adjusted correspond to it.
If the Company acquires minority equity shares of subsidiaries, thus hold the long-term equity
investment, on the date of prepare consolidation statement, the difference between the value of the
new long-term equity investment and the value of subsidiary’s net assets enjoyed by proportion of
shareholdings(begin with acquired date or combination date), shall be adjusted to capital reserve, if
the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against
retained earnings
(3) Adjusted the subsidiaries’financial statement, when the subsidiaries have different
accounting policy and reporting period.
If the subsidiaries has different accounting policy and reporting period with the parent company,
the consolidated financial statement prepared according to the parent company’s accounting
policy ,and adjusted the subsidiaries’ financial statement; For those subsidiaries acquired not under the
same control, according to the fair value of identifiable assets、liabilities and contingency liabilities of
the subusidiary on the acquisition date, to adjusted subsidiaries’ financial statement.
(4) Consolidation method
All significant intercompany transaction and balances between group enterprises are eliminated
on consolidation.
The minority interest should disclose in consolidation statement alone. Decrease minority interest
if the minority shareholders should afford to the loss of the subsidiaries that allocate to minorities,
otherwise, the Company would bear the loss of exceed.
7. Standards of cash equivalents
Cash equivalents of the company refers to 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.
8. Foreign currency translation and convertion of foreign currency financial statement
（1）Foreign currency transactions
The Company’s foreign currency transactions are convered into presentation currency (RMB) at
spot exchange rates (Usually refers to the middle rate of the exchange price quotation that announced
by the People's bank of China) prevailing on the day in which the transactions take place.
On the balance sheet date, those foreign currency monetary items within the financial statement
should be convered at the spot rates prevailing on the balance sheet date. The exchange difference
caused by the change in the exchange rate from the initial recognized date and the current balance
sheet date, included in profit and loss for the year. With historical cost measurement of foreign
currency non-monetary items, the transaction is convered at the spot exchange rate of transaction day,
without changing its presentation currency amount. In the fair value measurement of foreign currency
non-monetary items, convered at the spot exchange rate at that day when the fair value can be
determined, the difference between amount after converted into presentation currency and the original
presentation currency amount, as the changes in the fair value, recognized in the current profits and
losses.Shenzhen International Enterprise Co., Ltd.
16
（2）Conversion of foreign currency financial statement
① Assets and liability items in balance sheet are converted at the spot rates prevailing on the
balance sheet date; items in shareholders’ equity are converted at the spot rates prevailing on date of
transaction except undistributed profit.
② Revenue and expense in income statement are converted at the approximate rates of spot rates
prevailing on the transaction date.
The exchange differences caused by above method are disclosure in the shareholders’ equity
individually.
③ Cash flow statement items converted at the spot rates prevailing on the cash flow date. The
exchange differences should disclosure individually in the cash flow statement.
9. Financial Instruments: Recognition and Measurement
(1) Classification of financial assets and financial liabilities
The Company in accordance with the investment purpose and economic substance of the
ownership of financial assets are divided into four category, which is fair value through profit or loss;
Held-to-maturity investments; Loans and receivables; Available-for-sale financial assets.
According to the economic substance those financial liabilities are divided into fair value through
profit or loss and others.
①Financial assets or financial liabilities at fair value through profit or loss: including held for
trading financial assets or financial liabilities and designated by the Company as at fair value through
profit or loss.
A financial asset or financial liability is classified as held for trading if it is:
a、Acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
or
b、Part of a portfolio of identified financial instruments that are managed together and for which
there is evidence of a recent actual pattern of short-term profit-taking; or
c、A derivative (except for a derivative that is a designated and effective hedging instrument, a
derivative of financial guarantee contract, a derivative that settle by equity instrument, which the price
of instrument could not be quoted in active market and the fair value could not measure reasonably).
A financial asset or financial liability is classified as designated fair value through profit or loss if
it is:
a、The designation can be eliminated or significantly reduced the inconsistent situation or relate
profit and loss cause by different measurement basis of financial assets and financial liabilities;
b、Company risk management or investment strategy has been enshrined in a formal written
document that the financial assets portfolio, the financial liabilities portfolio, or the financial assets
and financial liabilities portfolio are management in fair value-based and evaluation and report to key
management person.
②Held-to-maturity investments: are non-derivative financial assets with fixed or determinable
payments and fixed maturity that company has the positive intention and ability to hold to maturity.
Mainly include the Company's management has a clear intention and ability to hold to maturity of
fixed-rate national bonds, floating-rate corporate bonds.
③Receivables: are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Receivables of the Company mainly refer to the Company's sales ofShenzhen International Enterprise Co., Ltd.
17
goods or rendering of services to form the accounts receivable and other receivables.
④Available-for-sale financial assets: are those non-derivative financial assets that are designated
as available for sale at initial recognized, or those financial assets are not measured in fair value based
and through to profit and loss, or loans and receivables, or held-to-maturity investments.
⑤Other financial liabilities: financial liabilities not divided into measurement in fair value base
and through into profit and loss account.
(2) Measurement of financial assets and financial liabilities
The Company’s financial asset or financial liability is recognized at its fair value initially. For
financial assets or financial liabilities at fair value through profit or loss, relevant transaction costs that
are directly attributable to current profit and loss; for other types of financial assets or financial
liabilities, transaction costs related to the amount included in the initial confirmation cost.
Subsequent measurement of financial assets and financial liabilities:
① Financial assets or financial liabilities at fair value through profit or loss measured at its fair
value, at balance sheet date, the changed difference of fair value are accounted for profit and loss in
current period.
② Held-to-maturity investments, which shall be measured at amortized cost using the effective
interest method, the profit or loss of termination confirmation, impairment or amortization included in
the profit and loss account.
③ Loans and receivables, which shall be measured at amortized cost using the effective interest
method, the profit or loss from termination confirmation, impairment or amortization included in the
profit and loss account.
④ Available-for-sale financial assets, are measured with fair value, any changes of fair value of
available-for-sale financial assets at the end of period are accounted for capital reserve (other capital
reserve). Disposal of available-for-sale financial assets, the difference between consideration received
and carrying value of the financial assets included into investment profit or loss account; at the same
time, turn out the original cumulative amount of fair value change of corresponding part within the
equity, included into investment profit or loss account. The impairment losses and exchange
differences of foreign monetary financial assets including into current profit and loss. Interest received
and cash dividends received during the hold period are recognized as investment income.
⑤ Other financial liabilities, together with the equity instrument that price not be quoted in
active market and the fair value could not measure reasonably measured, as well as the subsequent
measurement should according to the cost of derivative financial liabilities.
The financial guarantee contract is not belong to financial liabilities designated by the Company
as at fair value through profit or loss, as well as the loan commitment is not belong to financial
liabilities designated by the Company as at fair value through profit or loss and belower than market
rate, After initial recognition, measured higher of: (a)Amount confirmed by < Enterprise Accounting
Standard 13-- Provisions, Contingent Liabilities and Contingent Assets>；(b)Balance of initial
recognition amount minus the accumulated amortization refer to .
Other financial liabilities adopt the effective interest method, subsequent measured by
amortization cost, recognized the profits and losses by termination confirmation or amortization to
current profit and loss account.Shenzhen International Enterprise Co., Ltd.
18
⑥ Fair value：It’s the amount for which an asset could be exchanged or a liability settled,
between knowledgeable, willing parties in an arm’s length transaction. In a fair deal, the transaction
should the two sides are continuing operations enterprises, do not intend to carry out the liquidation or
a major reduction in scale of operation, or under adverse conditions is still trading. The existence of an
active market of financial assets or financial liabilities, the quotation within the active market should
be used to determine its fair value. If there is no active market, company should adopt valuation
techniques to determine the fair value.
⑦ The amortized cost of a financial asset or financial liability： it’s the amount at which the
financial asset or financial liability is measured at initial recognition minus principal repayments, plus
or minus the cumulative amortization using the effective interest method of any difference between
that initial recognized amount and the maturity date amount, and minus any reduction for impairment
or unrecoverable.
⑧The effective interest method: It’s a method of using effective interest calculating the
amortized cost of a financial asset or a financial liability (or group of financial assets or financial
liabilities) and of allocating the interest income or interest expense over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash flows through the
expected life of the financial instrument or, when appropriate, a shorter period to the net carrying
amount of the financial asset or financial liability. Then calculating the effective interest rate,
company shall estimate cash flows considering all contractual terms of the financial instrument (for
example, prepayment, call and similar options) but shall not consider future credit losses.
(3) Transfers and derecognize of financial assets
① Derecognize financial asset if, and only if, meets one of the following three conditions:
a. terminate the contractual rights of cash flows from the financial asset;
b. the financial assets have been transferred, and the ownership of the risks and rewards of
financial assets transfered to other party;
c. The financial assets have been transferred, but the Company neither transfered the ownership
of the risks and rewards of financial assets, nor retained, and gives up control of the financial assets.
② When termination conditions of entire transferred assets have been satisfied, the differences
between the amounts of following items shall be recognised in the current period profits and losses
account:
a. The carrying value of transferred financial assets;
b. The consideration received from the transfer, and the accumulative amount of the changes of
the fair value originally recorded in the shareholders’ equities.
③ If the transfer of partial financial assets satisfies the conditions of derecognize, the entire book
value of the transferred financial asset shall apportion, 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 of carrying value derecognized;
b. The consideration received from the transfer, and the accumulative amount of the changes
of the fair value originally recorded in the shareholders’ equities.Shenzhen International Enterprise Co., Ltd.
19
④ If the Company fails to satisfy the conditions of derecognize 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. For those financial assets transfer adopt continuing
involvement method, the Company should recognize one financial asset and one financial liability,
according to the extent of the transferred financial assets of continuing involvement.
(4) Impairment of financial assets
① If the Company have the following evidence to prove the impairment of financial assets,
should recognize the provision of impairment:
a. significant financial difficulty of the issuer or obligor;
b. a breach of contract, such as a default or delinquency in interest or principal payments;
c. the lender, for economic or legal reasons relating to the borrower’s financial difficulty,
granting to the borrower a concession that the lender would not otherwise consider;
d. it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
e. the disappearance of an active market for that financial asset because of financial difficulties;
f. observable data indicating that there is a measurable decrease in the estimated future cash
flows from a group of financial assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial assets in the group;
g. adverse changes in the payment status of borrowers in the group, let the lender may cannot
recover the investment cost;
h. the fair value of financial instrument investment incur serious or non-temporary decline;
i. other objective evidence that prove impairment of financial assets.
② On the balance sheet date, the Company should adopt different impairment test method for
different type financial assets, and recognize provision of impairment:
a. Held-to-maturity investments: on the balance sheet date, if there are objective evidence of
impairment for the investment, the Company has recognized the impairment loss by the asset’s
carrying amount and the present value of estimated future cash flows.
b. Available-for-sale financial assets: on the balance sheet date, the Company analyse the
impairment evidences of the financial assets, experienced judgement whether continuing decline in the
fair value. Generally, if the fair value of financial assets incurred serious decline, after consideration of
all relevant factors, anticipate this is non-temporary, therefore can identified the available-for-sale
financial assets has impaired, should recognize the impairment loss. When a decline in the fair value
of an available-for-sale financial asset has been recognised directly in equity and there is objective
evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity
shall be removed from equity and recognised in impairment loss account of income statement.
10. Accounts receivable
（1）Method of provision for bad debts for individual accounts receivable with significant
amounts:
At the end of the period, the balance of accounts receivable and other accounts receivable more
than RMB 1 million (including RMB 1 million) should classified as individual significant accounts
receivable, 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.Shenzhen International Enterprise Co., Ltd.
20
（2）Method of provision for bad debts for individual accounts receivable with non- significant
amounts, but in according to the characteristics of credit risk portfolio, the risk of the portfolio is high:
For other non-significant receivables, classification primarily on the basis of account age, those
accounts receivable’s account age more than three year and individual account balance less than RMB
1 million, that shall be classified as non-significant in amount but in accordance with the
characteristics of credit risk portfolio, the risk of the portfolio is high.
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.
(3) The Company adopt age analysis method to estimate the following percentage of provision
for bad debts:
Age Percentage of accounts
receivable
Percentage of other
accounts receivable %
Within 1 year (including 1 year) 5% 5%
1-2 years (including 2 years) 10% 10%
2-3 years (including 3 years) 15% 15%
3-4 years (including 4 years) 20% 20%
4-5 years (including 5 years) 25% 25%
More than 5 years 30%-100% 30%-100%
11. Inventory: Recognition and Measurement
（1）Inventory of the Company refers to enterprises in the day-to-day activities of the holder for
the sale of finished goods, product that in the production process, and materials consumed in the
production process or provision of services. Including inventory 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
The Company adopts the perpetual stocktaking system.
（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 theShenzhen International Enterprise Co., Ltd.
21
public facilities, then those public facilities are accounted for lease development products or finished
development products by individually.
The inventory output valued in weighted average cost.
（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）Mothod of provision for inventory impairment loss
At the balance sheet date, the evaluation criteria should base on the lower value between costs
and net realizable value. When net realizable values are lower than costs, provision for impairment
loss of inventories shall be made. Under normal circumstances, the Company provision impairment
loss in according to individual inventory items, but for large quantity and low-unit-price inventories,
provision for impairment loss of inventories shall be made based on the category of inventories; for
those inventories that relating to the same product line that have similar purposes or end uses, are
produced and marketed in the same geographical area, and cannot be practicably evaluated separately
from other items in that product line, their impairment loss provision shall be consolidated.
When the circumstances that previously caused inventories to be written off below cost no longer
exist or when there is clear evidence of an increase in net realizable value because of changed
economic circumstances, the amount of the write-off is reversed (i.e. the reversal is limited to the
amount of the original write-off) so that the new carrying amount is the lower of the cost and the
revised net realizable value. The amount reversed recording into current profit and loss.
Estimates of net realizable value: For those stocks used for directly sale, the net realizable value
is referred to the estimated selling price minus the estimated selling expenses and related tax and fees
in normal operating process. Those stocks need to process; the net realizable value is referred to the
estimated selling price minus the estimated finished cost and estimated selling expenses and related
tax and fees in normal operating process; the net realizable value of the quantity of inventory held to
satisfy firm sales or service contracts is based on the contract price. If the sales contracts are for less
than the inventory quantities held, the net realisable value of the excess is based on general selling
prices.
12．Biological Assets
（1）The biological assets of the Company refer to the consumable forest 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
self-planting consumable forest assets consists of the necessary expenses for forestation, forest
tending, forest operating facilities, testing of good species, investigation and design, indirect
apportionment.
The subsequent expenses for the management and protection or for the breeding of a biological
asset after closure or after the accomplishment of the expected objective of production and operation
shall be included in the current profits and losses.Shenzhen International Enterprise Co., Ltd.
22
The Company’s crown density of forest assets is 0.8.
For the consumable forest assets, when harvesting, carry down to costs by their carrying value,
the month of carry down including weighted average method.
（3）At the end of each year, the company examines the consumable forest assets. If any well
established evidence indicates that the net realizable value of any consumable forest assets is lower
than its book value as a result of natural disaster, plant diseases and insect pests, animal disease or
change of market demand, the Company shall,based on the difference between the net realizable
value and the book value, make provision for the loss on decline in value of or for the impairment of
the biological asset and shall include it into the current profits and losses.
If the factors causing any provision for impairment of a consumable forest asset have
disappeared, the write-down value shall be resumed and shall be reversed from the provision for the
loss on decline in value of the consumable forest asset that has been made. The reversed amount shall
be included in the current profits and losses.
13. 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
The Company separates the following two cases of long-term equity investment in the initial
measurement:
① Long-term equity investment obtained through business combinations:
a. For obtaining subsidiary under common control, the consideration cost can be cash payment,
non-monetary assets transfer or taking over the subsidiary’s liability. Under this situation, the initial
investment cost is carrying amount of shareholder’s equity of the subsidiary on the merger date. The
difference between the carrying amount of the net assets obtained and initial investment cost of
long-term equity investment shall be adjusted to capital reserve. If the capital reserve is not sufficient
to absorb the difference, any excess shall be adjusted against retained earnings. In the case of
company issues equity securities as the consideration, the initial investment cost is carrying amount of
shareholder’s equity of the subsidiary on the merger date. If the book value amount of the issued
shares is deemed as the capital, the difference between the carrying amount of the issued shares and
initial investment cost of long-term equity investment shall be adjusted to capital reserve. If the
capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained
earnings All direct expenses related to the merger, including the auditor fee, evaluation
expense, legal service expense, etc will be accrued to the current profit and loss.
b. For obtaining subsidiary not under common control, the cost of long-term equity investment is
fair value of assets paid, liabilities undertaken by the Company, or the fair value of equity bonds
issued. Where the cost of a business combination exceeds the acquirer’s interest in the fair value of
the bargainor’s identifiable net assets, the difference shall be recognized as goodwill, Where the cost
of combination is less than the acquirer’s interest in the fair value of the bargainor’s identifiable net
assets, after reassessment, the difference shall be recognized in profit or loss for the current periodShenzhen International Enterprise Co., Ltd.
23
(non-operating income). The costs directly related to business combinations shall be included in the
cost of business combinations (except issuing expenses of bonds and equity instruments).
② Other types of long-term equity investment, accordance with the following principles to
determine their initial investment costs:
a. Long-term equity investment, which is acquired by cash consideration, the actual cash
payment amount will be deemed as the initial investment cost. The initial investment cost includes the
direct expenses related to the long-term equity investment, taxes and other necessary expenses. But if
the actual payment contains cash dividend that has not been received but has been announced, that
should be accounted separately.
b. Long-term equity investment, which is acquired by issuing equity securities, the fair value of
the issued equity will be deemed as the initial investment cost.
c. For the long-term equity investment made by the investors, the values agreed in the
investment contracts or agreements will be deemed as the initial investment cost, except that the
contracts or agreements provide that the values are not fair.
d. Long-term equity investment is acquired by exchange of non-monetary assets, if this
transaction has commercial substance or the fair values of exchange assets can be reliably measured,
the fair values of these assets and relevant taxes will be deemed as the initial investment cost; the
difference between the fair values of the assets and book values will be record into the current profit
and loss; if the non-currency asset exchange does not satisfy these two conditions mention above, the
book values of the assets and relevant taxes will be deemed as the initial investment cost.
e. Long-term equity investment, which is acquired by the debt restructuring, the fair values of the
obtained equities will be deemed as the initial investment cost; the difference between the initial
investment cost and book values of credit will be record into the current profit and loss.
（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 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.
The Company uses equity method for the following conditions: a long-term equity investment
where the investing enterprise has joint control or significant influence over the investee.
a、When using cost method, increase or recovery of investment need to adjust the cost of long
term equity investment. Cash dividends or profit distributions declared by the investee shall be
recognized as investment income in the current period. However, investment income recognized by
the investing enterprise shall be limited to the amount distributed to it out of accumulated net profits
of the investee arising after the investment was made. Any cash dividends or distributions received in
excess of this amount shall be treated as a recovery of initial investment cost.
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.Shenzhen International Enterprise Co., Ltd.
24
The Company shall recognize current period investment profits or losses following its share of
the net profits or losses made by the investee. Base on the investee’s book value of net profit, if the
investee used inconsistent accounting policies with the Company, the Company shall adjust the net
profits by the balances of the depreciation or amortization of the investee’s fixed assets and intangible
assets measured by fair value on the investment acquired date, as well as adjust the net profits by the
balance of the impairment losses of investee’s assets measured by fair value on the investment
acquired date. Set off the internal transaction profit and loss between the Company and the joint
enterprises or the jointly-run enterprises, and then recognize the investment profit or loss on this basis.
The internal transaction profit and loss between the Company and the joint enterprises or the
jointly-run enterprises, refer to the < Enterprise Accounting Standard 8: Impairment of assets>,
belong to asset impairment loss is recognized in full.
If an investor’s share of losses of an associate equals or exceeds its interest in the associate, the
investor discontinues recognizing its share of further losses, after the investor’s interest is reduced to
zero, additional losses are provided for, and a liability is recognized, only to the extent that the
investor has incurred legal or constructive obligations or made payments on behalf of the associate; If
the associate subsequently reports profits, the investor resumes recognizing its share of those profits
only after its share of the profits equals the share of losses not recognized, recover investment
interests, and in the book value of the long-term equity investment successively.
Those long term equity for affiliated company and joint company, hold before first executive
date, if ther is relevant investment debit difference, according to residual time to amortize in straight
line method, the amortization amount recognized in current profit and loss account.
（3）Scope of common control and significant influence for investee
①The existence of jointly control by an investor is usually evidenced in one or more of the
following ways: a.any venturer cannot control the jointly controlled company’s operation alone; b. the
strategy decision of the jointly controlled company, should be agreed by each venture parties; c. the
venturers may appoint one of them to manange the jointly controlled company, through control or
agreement, but the management must follow all venturers ‘s financial and operation strategies. When
the jointly controlled company during legal reconstruction or bankrupt, or the transfer funds to
investors strictly restricted in long time, the venturers cannot exercise joint control to the investee.
However, if the joint control is really exsit can be certified, the venturers still adopt equity method of
long term equity investment principle to account.
②The existence of significant influence by an investor is usually evidenced in one or more of the
following ways: a. representation on the board of directors or equivalent governing body of the
investee; b. participation in policy-making processes, including participation in decisions about
dividends or other distributions; c. material transactions between the investor and the investee; d.
dispatch of managerial personnel; or e. provision of essential technical information.
（4）Method of impairment test of long term equity investment and provision for impairment:
On the balance sheet date, the Company shall assess the long term equity investment one by
one ,according to the investee’s operation strategy、legal environment、market demand、industry and
profitability etc, to decide whether there are impairment indicators. The long term equity investment is
impaired when its carrying amount exceeds its recoverable amount, the differences should be
recognized as provision for impairment. If the impairment loss has recognized, never carry back inShenzhen International Enterprise Co., Ltd.
25
future accounting periods.
14. Investment property
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.
（1） Depreciation or amortization method of property investment is measured by cost model:
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. 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 Annual depreciation rate
Buildings、structures 10% 30 years 3%
（2）Basis of impairment of property investment is measured by cost model
At the balance sheet date, the evaluation criteria should base on the lower value between costs
and net realizable value. When net realizable values are lower than costs, provision for impairment
loss of property investment shall be made. If the value of the impaired investment property recovered,
the provided impairment loss in prior period cannot be carry back.
15. Fixed Assets
（1）Recognition of fixed assets:
Fixed assets are tangible assets, held for use in production or supply of goods or services, for
rental to others, or for administrative purpose, and have high unit price, as well as useful lives more
than one accounting year. Fixed assets shall be recognized by actual costs incurred, if they meet the
following conditions:
① The economic benefits related to fixed asset probably flows to the enterprise;
② The cost of fixed asset may be reliably measured.
The expenses relate meet above condition to fixed asset would be capitalized in the cost of asset,
if not, it would be recognized as expense in profit and loss account of that period.
（2）The depreciation method of fixed assets:
Straight-line method is in used to calculate the depreciation of fixed assets.
The estimated useful lives, expected residual value and annual depreciation rate of different kinds
of fixed assets are listed as follows:
Categories of fixed assets Estimated useful life
Estimated residual value
rate
Estimated annual
depreciation rate
Buildings and structures 30 years 10% 3%
Vehicles 5 years 10% 18%
Electronic device and other equipments 5 years 10% 18%
（3）Method of impairment test and provision for impairment loss of fixed assets:
At the balance sheet date, the Company assess all types of fixed assets whether there is any
indication that an asset may be impaired, if any such indication exists, the entity shall estimate the
recoverable amount of the asset, reducing the carrying value to the estimated recoverable amount, the
difference recognized into the current profit and loss account, simultaneous recognize the provision
for impairment. Once the impairment loss has recognized, never carry back in future acoounting
period. In assessing whether there is any indication that an asset may be impaired, an entity shall
consider, as a minimum, the following indications:Shenzhen International Enterprise Co., Ltd.
26
① during the period, an asset’s market value has declined significantly more than would be
expected as a result of the passage of time or normal use;
② significant changes with an adverse effect on the entity have taken place during the period, or
will take place in the near future, in the technological, market, economic or legal environment in
which the entity operates or in the market to which an asset is dedicated;
③ market interest rates or other market rates of return on investments have increased during the
period, and those increases are likely to affect the discount rate used in calculating an asset’s value in
use and decrease the asset’s recoverable amount materially;
④ evidence is available of obsolescence or physical damage of an asset;
⑤ significant changes with an adverse effect on the entity have taken place during the period,
These changes include the asset becoming idle, plans to discontinue or restructure the operation to
which an asset belongs, plans to dispose of an asset before the previously expected date;
⑥ evidence is available from internal reporting that indicates that the economic performance of
an asset is, or will be, worse than expected. For example: the net cash inflow or realized operating
profits( or losses) made by the assets has declined significantly more than would be expected.
⑦ Other indications that an asset may be impaired.
（4）Recognision of finance leased fixed assets
When have transfered substantially all the risks and rewards incidental to ownership, the
Company recognize the fixed assets of finance lease. At the commencement of the lease term, the
Company shall recognise finance leases as assets and liabilities in their balance sheets at amounts
equal to the fair value of the leased property or, if lower, the present value of the minimum lease
payments. The depreciation policy for depreciable leased assets shall be consistent with that for
depreciable assets that are owned. If there is reasonable certainty that the Company will obtain
ownership by the end of the lease term, the asset shall be fully depreciated over the lease term,
however, if there is no reasonable certainty that the lessee will obtain ownership by the end of the
lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.
16. Borrowing costs
（1）Recognition of capitalization of borrowing costs and capitalization period:
Borrowing costs that are direct attributable to construction, purchase and production of assets and
comply with capitalization conditions, shall be capitalized and accounted to costs of relate assets;
otherwise, borrowing costs shall be recognized as expenses when incurred and accounted through in
profit and loss in current period. The capitalization of borrowing costs shall satisfy the following
conditions:
①The capital expenditures have been incurred.
② The borrowing costs have been incurred.
③Activities relating to acquisition, construction or production that are necessary to make the
assets being intended for use or sales have been launched.
Other borrowing costs、discount or premium and difference of foreign exchange, should be
recognized in the current profit and loss account.
Capitalization of borrowing costs shall be suspended during periods in which acquisition,
construction or production of assets is interrupted abnormally, and is interrupted for over continuous
period of three months.Shenzhen International Enterprise Co., Ltd.
27
Capitalisation of borrowing costs should cease when substantially all the activities necessary to
prepare the qualifying asset for its intended use or sale are complete. Borrowing costs should be
recognised as an expense in the subsequent period
（2）Measurement of capitalized borrowing costs
For a specific purpose borrowing, the amount of interest to be capitalized shall be the actual
interest expenses incurred for the period less deposit interests of the borrowing founds or investment
income from the temporary investment.
Where funds are borrowed under general purpose, the entity shall determine the amount of
interest to be capitalized by applying capitalization rate to weighted average of the excess amount
between cumulative expenditures on the asset and the amount of specific-purpose borrowings. The
capitalization rate shall be weighted average of the interest rates applicable to the general-purpose
borrowings.
17. Intangible assets
(1) Measurement of intangible assets:
Intangible assets were recognized initially at cost.
(2) Estimate of useful life and impairment of intangible assets:
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 life assets. Otherwise, the asset would be recognize as infinite useful life assets.
① To estimate the life of finite useful years asset would consider factor of: a. The life cycle of
the product produced by the assets, and the information of similar asset; b. The development of
craftwork and technology, and the estimate of future development trend; c. The demand condition in
market of the product produced by the asset; d. The estimated action would be taken by competitor or
potential competitor; e. The expense expected to maintain the assets to bring future economic benefits
and the ability of the Company to pay for it; f. The relevant law restriction on control period of the
asset or other similar restriction such as franchise, lease period; g. Relation with other assets’ useful
life, that hold by the Company.
② 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.
(3) Method of impairment test and provision for impairment of infinite useful years asset:
Intangible asset with infinite useful years would not amortize, but would conduct impairment
test every year. the useful life of such an asset should be reviewed each reporting period to determine
whether events and circumstances continue to support an indefinite useful life assessment for that
asset., if still under uncertainty situation after the revaluation, shall conduct impairment test. When the
net recoverable amount lower than the carryng value, reducing the carrying value to the estimated
recoverable amount, the difference recognized into the current profit and loss account, simultaneous
recognize the provision for impairment. Once the impairment loss has recognized, never carry back in
future acoounting period.
Execise impairment test for intangible assets, if meet the one or more the following conditions:
a. significant changes with an adverse effect on the profitability of intangible assets have takenShenzhen International Enterprise Co., Ltd.
28
place during the period, These changes include the intangible replaced by other new
technique;
b. The market value has declined in current period, and may not rise in the future residual
period;
c. Other indication to prove that the carrying value higher than the recoverable value.
(4) The rules of divide the research stage and the development stage of internal research and
developmet project:
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:
① it is technical feasible for use or sales upon the completion of the intangible assets; ② it is intended
for use or sales upon the completion of the intangible assets; ③ the manner to provide that expect
future economic benefits that are attributable to the intangible assets including a market is exist for the
asset or product of the asset or provide evidence of serviceable if asset are inside used; ④ 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; ⑤ the cost of intangible asset can be
measured reliably.
18. Long-term deferred expenses
The Long-term deferred expenses are defined as those expenses in this year but should be
allocated in following few years (more than one year, not include one year). The amount transfer to
the account are the amount actual paid, and allocate equally in beneficial period.
19. Accrued liabilities
(1) Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute,
guarantee on quality of product, cut-down plan, loss of contract, recombine obligation, obligation on
abandon fixed asset, and meet the follow condition simultaneously would determined as liabilities:
①This obligation is current obligation of the Company; and,
②The performance of this obligation will probably cause economic benefits outflow of the
Company; and, ③The amount of this obligation can be reliably measured.
Loss contracts and restructuring obligations of the Company meet the above conditions shall be
recognized as accrued liabilities.
（2）Measurement of accrued liabilities
Accrued liabilities would be measured initial according to the optimum evaluation of outflow of
economic benefit, and the Company perform relate obligation that consider risk, incertitude, time
value of currency of contingency factor. Discount future cash flow to present value to determine the
optimum evaluation if the time value of currency has great impact. On balance sheet date, check the
carry amount of accrued liabilities, and make adjustment to carry amount to reflect the optimum
evaluation. The increase amount in carry amount of accrued liabilities cause by time process would be
determined as interest fee.
（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, then the optimum evaluation shall be determined in the following method:Shenzhen International Enterprise Co., Ltd.
29
① If the contingent event is involved in an individual project, the optimum evaluation amount
will be determined base on the most possible amount;
② If the contingent event is involved more than one project, the optimum evaluation amount
shall be determined base 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 as assets. The confirmed compensation amounts shall not exceed book values of
confirmed liabilities.
20．Revenue
Recognition and measurement of revenue:
（1）Revenue from sale of goods
Revenue from the sale of goods shall be recognized when all of the following conditions are
satisfied:
①the entity has transferred the significant risks and reward ownership of goods to the buyer;
②the entity retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over goods sold;
③the amount of revenue can be measured reliably;
④relate economic benefit is probably inflow to the enterprise;
⑤the associated costs incurred or to be incurred can be measured reliably.
（2）Contract revenue
①When the outcome of a construction contract can be estimated reliably, contract revenue and
contract costs associated with the construction contract should be recognised as revenue and expenses
respectively by reference to the stage of completion of the contract activity at the balance sheet date.
The recognition of revenue and expenses by reference to the stage of completion of a contract is often
referred to as the percentage of completion method. Under this method, contract revenue is matched
with the contract costs incurred in reaching the stage of completion, resulting in the reporting of
revenue, expenses and profit which can be attributed to the proportion of work completed.
In the case of a fixed price contract, the outcome of a construction contract can be estimated
reliably when all the following conditions are satisfied:
a. total contract revenue can be measured reliably;
b. it is probable that the economic benefits associated with the contract will flow to the
enterprise;
c. the contract costs attributable to the contract can be clearly identified and measured reliably so
that actual contract costs incurred can be compared with prior estimates; and
d. both the contract costs to complete the contract and the stage of contract completion at the
balance sheet date can be measured reliably.
In the case of a cost plus contract, the outcome of a construction contract can be estimated
reliably when all the following conditions are satisfied:
a. it is probable that the economic benefits associated with the contract will flow to the enterprise;
and
b. the contract costs attributable to the contract, can be clearly identified and measured reliably.
On the balance sheet date, under the percentage of completion method, contract revenue isShenzhen International Enterprise Co., Ltd.
30
recognised as revenue in the income statement in the accounting periods in which the work is
performed. Contract costs are usually recognised as an expense in the income statement in the
accounting periods in which the work to which they relate is performed. The Company may have
incurred contract costs, indemnity or reward, caused by the change of the contract. Such contract costs
can be recognised as revenue, if such costs represent an amount due from the customer and there is an
agreement with the customer.
② When the outcome of a construction contract cannot be estimated reliably:
a. Revenue should be recognised only to the extent of contract costs incurred that it is probable
will be recoverable; and
b. If the cost can not be recovered, contract costs should be recognised as an expense in the
period in which they are incurred.
③An expected loss on the construction contract should be recognised as an expense
immediately.
（3）Revenue from rendering of services
① 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. The method depends on schedule of complete to determined revenue and
expense.
the outcome of service can be estimated reliably when all the following conditions are satisfied:
a. the amount of revenue can be measured reliably;
b. relate economic benefit is probably inflow to the enterprise;
c. the complete of schedule could be determined reliably;
d. the associated costs incurred or to be incurred can be measured reliably.
② When the outcome of rendering of service cannot be measured reliably at balance sheet date:
a. revenue shall be recognized to the extent of costs incurred that are expected to be recoverable
if compensation are predict to be award;
b. to those cost that without compensation in predict, through to profit and loss account without
recognize revenue.
（4）Transfer of asset use rights
The revenue of transfer of asset use right including : interest income、user charges etc, recognized
when all the following conditions are satisfied:
①the economic benefits related to the transaction are probably will flow into enterprise;
②the amounts can be reliably measured.
Interest income, compute base on the funds used time by other peoples and the actual interest
rate.
User charges, compute base on the chargeable time and method arranged in the contract or
agreement.
21、Deferred income tax assets and deferred income tax liabilities
The Company uses balance sheet-liability method in calculation of income taxes.
According the difference between carry amount of asset and liability and its tax base, apply tax
rate to determine deferred income tax asset or liability according the predict period of recover asset or
discharge liability.Shenzhen International Enterprise Co., Ltd.
31
（1）Recognition of deferred income tax assets
① Deferred income tax assets shall be recognized according to deductible temporary differences
to the extent that is probable that tax profits will be available against which the deductible temporary
differences can be utilized, but deferred income tax asset arise from initial recognize of asset and
liabilities in transaction that have character listed below would not recognised:
a. The transaction is not business combination;
b. At the time of the transaction, it affects neither accounting profit nor taxable profit (or
deductible loss).
② The company and subsidiaries, associated companies and joint venture investments that can
be related to deductible temporary differences, while meeting the following conditions, to confirm the
corresponding deferred income tax assets:
a. Temporary differences in the foreseeable future is likely to switch back to; and
b. It is likely to be used for deductible temporary differences in taxable income in the future.
③ The Company can carry forward for the subsequent year's tax losses and tax credits, to very
likely be used to offset tax losses and tax credits amount of future taxable income limit, verify the
corresponding deferred income tax assets.
（2）Recognition of 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 goodwill;
② the initial recognition of assets or liabilities, when all the following conditions are satisfied:
a. the transaction is not a business combination;
b. at the time of the transaction, it affects neither accounting profit nor taxable profit (or
deductible loss).
③ Temporary differences arise from the investments in subsidiaries, associates and interests in
joint ventures, when all the following conditions are satisfied:
a. the parent, investor or venturer is able to control the timing of the reversal of the temporary
difference; and
b. it is probable that the temporary difference will not reverse in the foreseeable future.
（3）The carrying amount of a deferred tax asset should be reviewed at each balance sheet date.
The Company should reduce the carrying amount of a deferred tax asset to the extent that it is no
longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that
deferred tax asset to be utilised. Any such reduction should be reversed to the extent that it becomes
probable that sufficient taxable profit will be available.
22. Changes in accounting policies、accounting estimates
（1）Change in accounting policies
There are no changes in accounting policy during current period.
（2）Change in accounting estimates
There are no changes in accounting estimates during current period.
23. Correct previous accounting period errors
There are no items of correct previous accounting period error in current period.Shenzhen International Enterprise Co., Ltd.
32
Ⅲ.Taxation
The type of tax and tax rate for the Company are list below:
Categories of taxes Tax base Tax rate
VAT Revenue from sale of products 17%
Land Value Added Tax
Revenue from sale of real estates- amount of
deductable items
According to progressive tax rates
30% - 60%
Business Tax Revenue from sale of real estates, Leasing and
Rendering of service
5%
Corporation Tax Taxable Income 22%、25% Note
Urban Construction Tax VAT payable, consumption tax payable and
business tax payable
1%
Education Surcharge VAT payable, consumption tax payable and
business tax payable
3%
Note: （1）Shenzhen Special Economic Zone: The applicable Corporation Tax rate in Shenzhen
Special Economic Zone is 22% in 2010、24% in 2011、25% in 2012. （2）Other Cities: The applicable
Corporation Tax rate in other cities is 25%.
Ⅳ. Enterprise Consolidation and Consolidation Statement Scope
1. Information of subsidiaries
（1）Subsidiary through the establishment or investment method obtained
Subsidiaries’ name Subsidiaries’ type
Registration
location
Nature of business Registered capital Business scope
Shenzhen ShenGuoShang Business Management
Co., Ltd（Business Company）
Wholly owned
subsidiary
Shanzhen Retail store 15,000,000.00 Retail store
Shenzhen International Arcade Chain Store （Chain
Store）
Wholly owned
subsidiary
Shanzhen Retail store 10,000,000.00 Retail store
Shenzhen International Arcade Property
Management Co., Ltd. （Guoshang Property）
Holding subsidiary Shanzhen
Property
management
7,000,000.00 Property management
Shenzhen Rongfa Investment Co., Ltd (Rongfa
Investment）
Holding subsidiary Shanzhen
Real estate
development
USD5,000,000.00 Real estate development
Huizhou Rongfa Industry Investment Co., Ltd
（Huizhou Rongfa）
Holding subsidiary’s
subsidiary
Huizhou
Real estate
development
6,000,000.00 Real estate development
Wengyuan Guoshanglinhai Development Co., Ltd.
（Wengyuan Guoshang）
Holding subsidiary’s
subsidiary
Wengyuan
Afforestation、forest
management
7,000,000.00
Afforestation、forest
management
Wuhua Guoshanglinye Development Co., Ltd
（Wuhua Guoshang）
Holding subsidiary’s
subsidiary
Wuhua
Afforestation、forest
management
10,000,000.00
Afforestation、forest
management
Shenzhen Guoshanglinye Development Co., Ltd
（Guoshanglinye）
Holding subsidiary’s
subsidiary
Shanzhen
Lumber purchase
and sale, Industrial
establishment
10,000,000.00
Lumber purchase and
sale, Industrial
establishment
Shenzhen Longgang International Arcade
Enterprise Co., Ltd. （Guoshang Enterprise）
Holding subsidiary’s
subsidiary
Shanzhen Retail store 3,000,000.00 Retail store
XingningGuoshanglineye Development Co., Ltd Holding subsidiary’s Xingning Afforestation、forest 5,000,000.00 Plant、and lumber salesShenzhen International Enterprise Co., Ltd.
33
（XingningGuoshang） subsidiary management
Luoyang Rongfazhiye Co., Ltd（Rongfazhiye）
Holding subsidiary’s
subsidiary
Luoyang
Real estate
development
10,000,000.00
Real estate development
and sales, property
management and
rental
Shenzhen International Enterprise Trading Co., Ltd
（International Trade） Note1
Holding subsidiary Shanzhen International trade 5,600,000.00 International trade
Shenzhen Chunhua Medicine United Enterprise Co., Ltd
（Chunhua Medicine） Note1
Holding subsidiary Shanzhen
Drugs and medical
appliances
3,000,000.00
Drugs and medical
appliances
Shenzhen Guoshang Medicine Co., Ltd
（Guoshang Medicine） Note1
Holding subsidiary Shanzhen
Drugs and medical
treatment
3,000,000.00
Drugs and medical
treatment
Shenzhen Royal Noble Industry Co., Ltd
（Gangyi East Club） Note2
Holding subsidiary’s
subsidiary
Shanzhen Healthcare massage 5,000,000.00
Industrial establishment、
Healthcare
massage
Subsidiary through the establishment or investment method obtained（Continued）
Subsidiaries’ name
Actual
investment
amount
The balance of other project,
substantially constitute the
net investment in subsidiary.
Holding
proportion
Voting rights
proportion
Shenzhen ShenGuoShang Business Management Co.,
Ltd（Business Company）
21,427,272.93 0.00 100.00% 100.00%
Shenzhen International Arcade Chain Store
（Chain Store）
10,000,000.00 0.00 100.00% 100.00%
Shenzhen International Arcade Property Management
Co., Ltd. （Guoshang Property）
4,270,000.00 0.00 61.00% 75.00%
Shenzhen Rongfa Investment Co., Ltd
(Rongfa Investment）
35,296,718.10 0.00 60.00% 60.00%
Huizhou Rongfa Industry Investment Co., Ltd
（Huizhou Rongfa）
6,000,000.00 0.00 64.70% 100.00%
Wengyuan Guoshanglinhai Development Co., Ltd.
（Wengyuan Guoshang）
7,000,000.00 0.00 60.00% 100.00%
Wuhua Guoshanglinye Development Co., Ltd
（Wuhua Guoshang）
10,000,000.00 0.00 60.00% 100.00%
Shenzhen Guoshanglinye Development Co., Ltd
（Guoshanglinye）
10,000,000.00 0.00 60.00% 100.00%
Shenzhen Longgang International Arcade Enterprise Co.,
Ltd. （Guoshang Enterprise）
3,000,000.00 0.00 90.00% 100.00%
XingningGuoshanglineye Development Co., Ltd 5,000,000.00 0.00 60.00% 100.00%Shenzhen International Enterprise Co., Ltd.
34
（XingningGuoshang）
Luoyang Rongfazhiye Co., Ltd
（Rongfazhiye）
10,000,000.00 0.00 60.00% 100.00%
Shenzhen International Enterprise Trading Co., Ltd
（International Trade） Note1
5,320,000.00 0.00 98.75% 100.00%
Shenzhen Chunhua Medicine United Enterprise Co., Ltd
（Chunhua Medicine） Note1
2,250,000.00 0.00 75.00% 75.00%
Shenzhen Guoshang Medicine Co., Ltd
（Guoshang Medicine） Note1
3,000,000.00 0.00 98.00% 100.00%
Shenzhen Royal Noble Industry Co., Ltd
（Gangyi East Club） Note2
5,000,000.00 0.00 64.00% 5.00%
Subsidiary through the establishment or investment method obtained（Continued）
Subsidiaries’ name
Whether
consolidated
statements
Minority equity
The amount of minority
equity used for
decrease the profits
and losses of minority
shareholders
The balance of parent company’s equity, that is equal
to the parent shareholders’ equity less the subsidiary’s
current loss undertaken by the minority shareholders
according their quotient of the beginning of the period
Shenzhen ShenGuoShang Business Management Co., Ltd
（Business Company）
Yes 0.00 0.00 0.00
Shenzhen International Arcade Chain Store （Chain Store） Yes 0.00 0.00 0.00
Shenzhen International Arcade Property Management Co., Ltd.
（Guoshang Property）
Yes
-5,260,548.36
0.00 0.00
Shenzhen Rongfa Investment Co., Ltd (Rongfa Investment） Yes -103,457,322.93 0.00 0.00
Huizhou Rongfa Industry Investment Co., Ltd
（Huizhou Rongfa）
Yes 0.00 0.00 0.00
Wengyuan Guoshanglinhai Development Co., Ltd.
（Wengyuan Guoshang）
Yes 0.00 0.00 0.00
Wuhua Guoshanglinye Development Co., Ltd
（Wuhua Guoshang）
Yes 0.00 0.00 0.00
Shenzhen Guoshanglinye Development Co., Ltd （Guoshanglinye） Yes 0.00 0.00 0.00
Shenzhen Longgang International Arcade Enterprise Co., Ltd.
（Guoshang Enterprise）
Yes 0.00 0.00 0.00
XingningGuoshanglineye Development Co., Ltd
（XingningGuoshang）
Yes 0.00 0.00 0.00
Luoyang Rongfazhiye Co., Ltd （Rongfazhiye） Yes 0.00 0.00 0.00
Shenzhen International Enterprise Trading Co., Ltd
（International Trade） Note1
No 0.00 0.00 0.00
Shenzhen Chunhua Medicine United Enterprise Co., Ltd No 0.00 0.00 0.00Shenzhen International Enterprise Co., Ltd.
35
（Chunhua Medicine） Note1
Shenzhen Guoshang Medicine Co., Ltd
（Guoshang Medicine） Note1
No 0.00 0.00 0.00
Shenzhen Royal Noble Industry Co., Ltd
（Gangyi East Club） Note2
No 0.00 0.00 0.00
Note 1: Shenzhen International Enterprise Trading Co., Ltd, Shenzhen Chunhua Medicine United
Enterprise 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 according to the Shenzhen Stock Exchange provisions, they were not included in the scope of financial
statements consolidation in current period.
Note 2: On January 31, 2007, Rongfa Investment and Shenzhen International Commercial Centre
Co.,Ltd(“International Commercial Centre”), with Shenzhen Baotian Investment Development Co.,
Ltd (“ Baotian Investment”), signed the < Shareholding Transfer Contract>, according to contract
signed by both parties: Rongfa Investment and International Commercial Centre transferred 85% and
10% shareholdings of Gangyi East Club respectively to Baotian Investment. After the shareholding
transfer, Baotian Investment and Rongfa Investment hold 95% and 5% shareholdings of Gangyi East
Club respectively. After accepted the 95% shareholdings, within six years of operating period, Baotian
Investment must tranferred the shareholdings to Rongfa Investment or any party designated by Rongfa
Investment, and the consideration of the transfer is must be RMB 1 million. Then, Rongfa Investment
with Baotian Investment signed < Shareholding Transfer Contract: Supplemental Agreement >,
according to agreement signed by both parties: Rongfa Investment decided to given up the gains and
future gains from the 5% shareholdings of Gangyi East Club, that is mean, after the shareholdings
transfer, Rongfa Investment within six years shall be not enjoy the distribution of incomes of Gangyi
East Club’s operation, and undertaken any operating losses.
The substance of this shareholding transfer is Shenzhen Baotian Investment Development Co.,
Ltd (“Shenzhen Baotian”) shall lease Shenzhen Royal Noble Industry Co., Ltd’s business qualification
and business loation in future six years, and Shenzhen Rongfa shall not control Shenzhen Royal Noble
Industry Co., Ltd’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 Shenzhen
Royal Noble Enterprise Co., Ltd’s assets and liabilities before the transferring date. After the
shareholding transfer the Shenzhen Gangyi Oriental Club Industrial Co., Ltd was renamed as
Shenzhen Royal Noble Industry Co., Ltd.
2. Changes in consolidation scope
There is no change on the scope of consolidated financial statements for the current period.
Ⅴ. Main Notes In The Consolidation Statement
1. Monetary Funds
Items 30.6.2010 31.12.2009
Cash on hand 202,642.75 62,560.46
Bank deposit 12,764,635.12 18,520,665.63
Other monetary funds 90,335.46 90,243.97Shenzhen International Enterprise Co., Ltd.
36
Total 13,057,613.33 18,673,470.06
2. Accounts Receivable
（1）Account receivable listed according to the categories:
Items 30.6.2010 31.12.2009
Book value Proportion
Provision for bad
debts
Carrying value Book value Proportion
Provision for bad
debts
Carrying value
Individual significant amounts 0.00 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
Non-significant in amount but
in accordance with the
characteristics of credit risk
portfolio, the risk of the
portfolio is high
328,546.13 33.59% 87,185.11 241,361.02 344,596.43 21.71% 90,395.18 254,201.25
Other non-significant
receivables 649,593.30 66.41% 69,615.62 579,977.68 1,242,338.49 78.29% 97,100.19 1,145,238.30
Total 978,139.43 100.00% 156,800.73 821,338.70 1,586,934.92 100.00% 187,495.37 1,399,439.55
（2）Account receivable listed according to the account age:
Age 30.6.2010 31.12.2009
Book value Proportion
Provision
for bad debts
Carrying value Book value Proportion
Provision for
bad debts
Carrying value
Within 1 year 199,840.43 20.43% 9,992.02 189,848.41 792,585.62 49.94% 37,476.60 755,109.02
1-2 years 156,786.71 16.03% 15,678.67 141,108.04 156,786.71 9.88% 15,678.67 141,108.04
2-3 years 292,966.16 29.95% 43,944.92 249,021.24 292,966.16 18.46% 43,944.92 249,021.24
3-4 years 113,787.21 11.63% 22,757.44 91,029.77 129,837.51 8.18% 25,967.50 103,870.01
4-5 years 0.00 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
More than 5 years 214,758.92 21.96% 64,427.68 150,331.24 214,758.92 13.54% 64,427.68 150,331.24
Total 978,139.43 100.00% 156,800.73 821,338.70 1,586,934.92 100.00% 187,495.37 1,399,439.55
（3）There is no Accounts receivable balance due from shareholders who own five or over five
percent voting rights as at June 30, 2010.
（4）Up to 30 June 2010, the total balance of top five accounts receivable balance is RMB
338,243.96, as 34.58% of total of accounts receivable.
3. Advance To Suppliers
（（1）Age analysis
Age 30.6.2010 Proportion 31.12.2009 Proportion
Within 1 year 99,730.00 20.74% 70,112.00 18.40%
1-2 years 73,112.00 15.21% 3,000.00 0.79%Shenzhen International Enterprise Co., Ltd.
37
2-3 years 20,000.00 4.16% 20,000.00 5.25%
More than 3 years 287,983.00 59.89% 287,983.00 75.56%
Total 480,825.00 100.00% 381,095.00 100.00%
（2）Up to 30 June, 2010, the total balance of the top five advance to supplier is RMB414,310.00,
account for 86.17% of advance to supplier.
（3）There is no Advance to supplier balance due from shareholders who own five or over five
percent voting rights as at June 30, 2010.
4. Other Accounts Receivable
（1）Other accounts receivable listed according to the categories:
Items 30.6.2010 31.12.2009
Book value Proportion
Provision for
bad debts
Carrying value Book value Proportion
Provision for
bad debts
Carrying value
Individual significant
amounts 14,371,194.52 80.84% 10,869,657.99 3,501,536.53 14,406,990.20 70.94% 10,610,249.93 3,796,740.27
Non-significant in amount
but in accordance with the
characteristics of credit risk
portfolio, the risk of the
portfolio is high
1,032,220.71 5.81% 933,243.69 98,977.02 1,532,018.96 7.54% 993,478.48 538,540.48
Other non-significant
receivables 2,373,418.56 13.35% 244,535.22 2,128,883.34 4,369,793.71 21.52% 433,392.01 3,936,401.70
Total 17,776,833.79 100.00% 12,047,436.90 5,729,396.89 20,308,802.87 100.00% 12,037,120.42 8,271,682.45
（2）Other accounts receivable listed according to the account age:
Age 30.6.2010 31.12.2009
Book value Proportion
Provision for
bad debts
Carrying
value
Book value Proportion
Provision for
bad debts
Carrying valueShenzhen International Enterprise Co., Ltd.
38
Within 1
year 1,157,647.35 6.51% 57,882.37 1,099,764.98 1,672,534.86 8.24% 83,626.75 1,588,908.11
1-2 years 2,120,564.57 11.93% 212,056.45 1,908,508.12 1,762,805.87 8.68% 176,280.59 1,586,525.28
2-3 years 1,130,738.02 6.36% 169,610.70 961,127.32 1,128,838.02 5.56% 169,325.70 959,512.32
3-4 years 928,702.83 5.23% 185,740.57 742,962.26 928,702.83 4.57% 185,740.57 742,962.26
4-5 years 1,315,649.09 7.40% 328,912.28 986,736.81 1,315,649.09 6.48% 328,912.28 986,736.81
More than 5
years 11,123,531.93 62.57% 11,093,234.53 30,297.40 13,500,272.20 66.47% 11,093,234.53 2,407,037.67
Total 17,776,833.79 100.00% 12,047,436.90 5,729,396.89 20,308,802.87 100.00% 12,037,120.42 8,271,682.45
（3）List the balance of top five other accounts receivable:
Company name Balance
Proportion of total
other accounts
receivable Age Reason of arrearage
Shenzhen Shengang Gongmao Import
and Export Co.,Ltd 10,180,249.93 57.27%
More than 5 years Note
Shenzhen Mantingfang Trading
Investment Co., Ltd 1,850,000.00 10.41%
3-4 years、4-5
years
Current account
Guangzhou Sun-Star Company 900,000.00 5.06% More than 5 years Current account
Shenzhen Zhengzhong Real Estate
Development Co., Ltd 560,852.00 3.15%
Within 1 year Deposit
Shenzhen Baotian Investment
Development Co., Ltd 506,272.02 2.85%
2-3 years Deposit
Total 13,997,373.95 78.74%
Note: the amount is due to existing historical issues between the Group and Shenzhen Shengang
Gongmao Import and Export Co., Ltd (“ Shenggang 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 10 millions loan principal and the overdue interests. On
February 27, 2001, the court made (2001) Shenzhongfajingyichuzi No.53 civil judgments, and ruled
the Group has jointly 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 Shenggang
Gongmao, meanwhile, the Group would claim the repayment from Shenggang Gongmao. ShenggangShenzhen International Enterprise Co., Ltd.
39
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
method of joint operation as following: the Group contributed capital for development, and the initial
profits after completion of development shall be 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 Shenggang Gongmao for repayment of debts, the Group had
confirmed that ownership of the above-mentioned properties and land use rights were unable to
transfer, and Shenggang Gongmao had no other executive property. Therefore, the Group decided to
made full bad debt provision for unrecognized loss of 10,180,249.93.
（4）The details of full amount of provision for bad debts:
Company
name Amount Content Amount of Provision Age Reason of provision
Shenzhen
Shengang
Gongmao
Import and
Export
Co.,Ltd 10,180,249.93Guarantee for debt repayment 10,180,249.93 More than 5 years Refer FS Note Ⅴ、4、(3) Note for details
Guangzhou
Sun-Star
Company 900,000.00 Current account 900,000.00
More than 5 years
Predict unable recovered
Total 11,080,249.93 11,080,249.93
（5）There is no Other accounts receivable balance due from shareholders who own five or over
five percent voting rights as at June 30, 2010.
5. Inventory
（1）Category of inventory:
Items 30.6.2010 31.12.2009
Book value
Provision for
impairment loss
Carrying value Book value
Provision for
impairment loss
Carrying value
Raw materials 290,742.27 0.00 290,742.27 290,742.27 0.00 290,742.27Shenzhen International Enterprise Co., Ltd.
40
Consumable forest
assets 91,587,308.45 0.00 91,587,308.45 88,423,146.65 0.00 88,423,146.65
Development costs 1,193,992,797.46 16,631,692.55 1,177,361,104.91 1,191,961,778.51 16,631,692.55 1,175,330,085.96
Development
products 35,240,279.76 0.00 35,240,279.76 35,240,279.76 0.00 35,240,279.76
Lease development
products 48,081,285.34 0.00 48,081,285.34 48,511,111.16 0.00 48,511,111.16
Total 1,369,192,413.28 16,631,692.55 1,352,560,720.73 1,364,427,058.35 16,631,692.55 1,347,795,365.80
① Development costs
Items Start Date Estimated
completed date
Estimated
investment
31.12.2009
Provision for
impairment loss
30.6.2010
Provision for
impairment loss
Bantian industrial estate 47,893,568.15 16,631,692.55 47,893,568.15 16,631,692.55
Rongfu Garden second
phase 6,448,481.22 0.00 6,448,481.22 0.00
Crystal Island International
Shopping Center January 2003 Year 2011 1300 million 1,137,619,729.14 0.00 1,139,650,748.09 0.00
Total 1,191,961,778.51 16,631,692.55 1,193,992,797.46 16,631,692.55
② Development products
Items Completed Date 31.12.2009
Provision for
impairment loss
30.6.2010
Provision for
impairment loss
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
③ Lease development products
Items 31.12.2009 Increment Amortization Decrement 30.6.2010
Remaining
amortization life
Gangyihaoting 42,810,646.86 0.00 379,355.01 0.00 42,431,291.85 32-42 years
Guoqi Building 298,498.33 0.00 3,927.61 0.00 294,570.72 37.5 years
Huizhou
Sunshine 100 5,401,965.97 0.00 46,543.20 0.00 5,355,422.77 57.5 years
Total 48,511,111.16 0.00 429,825.82 0.00 48,081,285.34Shenzhen International Enterprise Co., Ltd.
41
（2）The total amount of capitalization of borrowing costs for current year is RMB1,502,433.60.
（3）Provision for inventory impairment
Item 31.12.2009 Increment Decrement 30.6.2010
Development costs 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
Note 1: The Company pledged part of retail shops of Gangyihaoting to the bank as guaranty for
borrowings, the carrying value of those retail shops is RMB 42,306,260.32.
Note 2: The Company pledged Development costs-Crystal Island Project to the bank as guaranty
for borrowings, the carrying value of those retail shops is RMB 1,139,650,748.09.
Note 3: The Company pledged consumptive forestry assets to the bank as guaranty for
borrowings, the carrying value of those retail shops is RMB 73,933,275.78.
6. Long-term Equity Investment
（1）long-term equity investment and provision for impairment loss
Items 30.6.2010 31.12.2009
Book value
Provision for
impairment
loss
Carrying value Book value
Provision for
impairment
loss
Carrying value
Long-term equity
investment 15,570,000.00 8,999,737.16 6,570,262.84 15,570,000.00 8,999,737.16 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 0.00 0.00 0.00
（2）Long-term equity investment measured by cost method
Name of investee Initial
investment 31.12.2009
Increment Decrement
30.6.2010
Shenzhen Chunhua Medicine United
Enterprise 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
Trading Co., Ltd 5,320,000.00 5,320,000.00 0.00 0.00 5,320,000.00Shenzhen International Enterprise Co., Ltd.
42
Shenzhen Royal Noble Industry Co., Ltd 5,000,000.00 5,000,000.00 0.00 0.00 5,000,000.00
Total 15,570,000.00 15,570,000.00 0.00 0.00 15,570,000.00
Notes: The registration of Shenzhen Chunhua Medical Union Enterprise Co., Ltd, Shenzhen
Guoshang Medical 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）Provision for impairment loss of the long-term equity investment
Name of investee 2009.12.31 Increment Decrement 2010.6.30
Shenzhen Chunhua Medicine United
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
Trading Co., Ltd 3,075,930.02 0.00 0.00 3,075,930.02
Shenzhen Royal Noble Industry Co., Ltd 5,000,000.00 0.00 0.00 5,000,000.00
Total 8,999,737.16 0.00 0.00 8,999,737.16
7. Investment Properties
Items 31.12.2009 Increment Decrement 30.6.2010
ⅰ. Total book values: 2,663,988.11 0.00 289,920.00 2,374,068.11
1．Buildings and structures 2,663,988.11 0.00 289,920.00 2,374,068.11
ⅱ. Total accumulated depreciation and
accumulated amortization: 1,218,420.28 38,538.12 89,875.20 1,167,083.20
1．Buildings and structures 1,218,420.28 38,538.12 89,875.20 1,167,083.20
ⅲ.Total accumulated impairment loss: 0.00 0.00 0.00 0.00
1．Buildings and structures 0.00 0.00 0.00 0.00
ⅳ. Total carrying value: 1,445,567.83 0.00 0.00 1,206,984.91
1．Buildings and structures 1,445,567.83 0.00 0.00 1,206,984.91
8. Fixed Assets and Accumulated Depreciation
Items 31.12.2009 Increment Decrement 30.6.2010
ⅰ. Total book values: 116,350,344.69 138,485.00 36,141,049.56 80,347,780.13
Buildings and structures 102,894,508.85 0.00 35,851,665.67 67,042,843.18
Vehicles 7,038,571.00 0.00 0.00 7,038,571.00Shenzhen International Enterprise Co., Ltd.
43
Electronic device and other equipments 6,417,264.84 138,485.00 289,383.89 6,266,365.95
ⅱ. Total accumulated depreciation 37,683,108.47 2,119,185.98 13,867,434.47 25,934,859.98
Buildings and structures 29,986,355.45 1,152,430.33 13,645,916.12 17,492,869.66
Vehicles 3,149,873.10 521,387.10 0.00 3,671,260.20
Electronic device and other equipments 4,546,879.92 445,368.55 221,518.35 4,770,730.12
ⅲ. Total accumulated impairment loss: 11,716,894.19 0.00 11,716,894.19 0.00
Buildings and structures 11,716,894.19 0.00 11,716,894.19 0.00
Vehicles 0.00 0.00 0.00 0.00
Electronic device and other equipments 0.00 0.00 0.00 0.00
ⅳ. Total carrying value: 66,950,342.03 0.00 0.00 54,412,920.15
Buildings and structures 61,191,259.21 0.00 0.00 49,549,973.52
Vehicles 3,888,697.90 0.00 0.00 3,367,310.80
Electronic device and other equipments 1,870,384.92 0.00 0.00 1,495,635.83
Note: The decrease of fixed assets is mainly due to dispose of the 23th floor of Shenzhen
Development Center.
9. Long-term Deferred Expense
Type Original Amount 31.12.2009 Increment Amortization Transfer out
Accumulated
Amortization 30.6.2010
software 300,000.00 180,000.00 0.00 30,000.00 0.00 150,000.00 150,000.00
Total 300,000.00 180,000.00 0.00 30,000.00 0.00 150,000.00 150,000.00
10. Provision for Assets Impairment Loss
Items Decrement
31.12.2009 Increment
Reversal Write-off
30.6.2010
Provision for bad debts 12,224,615.79 -20,378.16 0.00 0.00 12,204,237.63
Provision for inventory
impairment loss 16,631,692.55 0.00 0.00 0.00 16,631,692.55
Provision for long-term
equity investment impairment
loss 8,999,737.16 0.00 0.00 0.00 8,999,737.16
Provision for fixed assets
impairment loss 11,716,894.19 0.00 0.00 11,716,894.19 0.00
Total 49,572,939.69 -20,378.16 0.00 11,716,894.19 37,835,667.34
11. Restricted Assets Ownership
（1）Reasons of assets’ ownership that restricted
That is due to assets are pledged to obtain bank loans.Shenzhen International Enterprise Co., Ltd.
44
（2）List of assets’ ownership that restricted
Types of restricted assets 31.12.2009 Increment Decrement 30.6.2010
1.Fixed assets-buildings and
structures 10,758,289.27 0.00 10,758,289.27 0.00
2.Investment properties 577,489.80 0.00 577,489.80 0.00
3.Inventories-Development products 9,112,926.74 33,193,333.58 0.00 42,306,260.32
4.Inventories-Development costs 1,137,619,729.14 2,031,018.95 0.00 1,139,650,748.09
5. Inventories-Consumable forest
assets 70,996,669.12 2,936,606.66 0.00 73,933,275.78
Total 1,229,065,104.07 38,160,959.19 11,335,779.07 1,255,890,284.19
12. Short-term Loan
Loan condition 30.6.2010 31.12.2009
Pledge loan 0.00 6,000,000.00
Total 0.00 6,000,000.00
13. Accounts Payable
（1）Age analysis:
Age 30.6.2010 31.12.2009
Within 1 year 330,923,031.12 355,241,325.40
More than 1 year 164,949,429.03 215,358,306.20
Total 495,872,460.15 570,599,631.60
（2）Account payable balance which age is more than one year are mainly payments for Shenzhen
Fanhua Engineering Group Co., Ltd for Crystal Island Project, refer to Note Ⅸ.3 for details.
（3）There is no Accounts payable balance due to shareholders who own five or over five percent
voting rights as at June 30, 2010.
14. Advanced From Customers
（1）Age analysis:
Age 30.6.2010 31.12.2009
Within 1 year 0.00 40,000.00
More than 1 year 46,073,971.75 46,033,971.75Shenzhen International Enterprise Co., Ltd.
45
Total 46,073,971.75 46,073,971.75
（2）The year end balance of advanced from customers, which accounts age have over one year,
is mainly due to the amount received from selling the shops in Gangyihaoting. Because of the buyer
has buy-back option, therefore the amounts not satisfied with revenue recognition principle.
（3）Balance of Advance from customers related to real estate projects:
Item 30.6.2010 31.12.2009 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 Advanced from customers balance due to shareholders who own five or over
five percent voting rights as at June 30, 2010.
15. Payroll Payable
Items 31.12.2009 Increased provision Payment 30.6.2010
1.Salary, bonus and allowance 1,793,578.03 6,093,394.41 6,669,724.56 1,217,247.88
2.Employee welfare 0.00 1,279,207.83 1,279,207.83 0.00
3.Social insurance: 88,127.30 895,266.23 983,393.53 0.00
Including:①Medical insurance 42,492.90 117,730.29 160,223.19 0.00
②Basic retirement insurance 42,344.66 728,474.11 770,818.77 0.00
③Unemployment insurance 957.28 21,511.74 22,469.02 0.00
④Injury insurance 948.35 11,240.03 12,188.38 0.00
⑤Pregnancy insurance 1,384.11 16,310.06 17,694.17 0.00
4.Housing accumulation fund 0.00 0.00 0.00 0.00
5. Labour union fee and employee education
fee 2,152,552.10 159,884.32 87,076.20 2,225,360.22
6. Non-monetary welfare 0.00 0.00 0.00 0.00
7. Redemption for termination of labor contract 0.00 19,583.00 19,583.00 0.00
8. Others: 0.00 0.00 0.00 0.00
Including: share payment by cash 0.00 0.00 0.00 0.00
Total 4,034,257.43 8,447,335.79 9,038,985.12 3,442,608.10
16. Tax Payable
Types 30.6.2010 31.12.2009
VAT -494,269.08 -431,541.96Shenzhen International Enterprise Co., Ltd.
46
Business Tax -1,813,375.18 -1,574,462.34
Consumption Tax -31,516.27 -31,516.27
Urban construction tax 145,252.68 147,641.27
Corporation Tax 1,548,328.26 1,548,888.51
Property tax 159,572.22 255,587.86
Land Add-Value Tax 45,991.56 77,700.41
Personal income Tax 12,321.36 9,297.73
Education Surcharge 1,780.24 1,795.24
Others 1,111.00 1,392.17
Total -424,803.21 4,782.62
17. Dividend Payable
Name of investor 30.6.2010 31.12.2009
Shareholder of Legal shares 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 30.6.2010 31.12.2009
Within 1 year 163,815,374.12 49,581,664.38
More than 1 year 197,274,876.98 189,353,735.57
Total 361,090,251.10 238,935,399.95
（2）As at December 31, 2009, the other accounts payable balance due to shareholders who own
five or over five percent voting rights, refer Note VI. 3. (2) for details.
（3）The details of other accounts payable, which is significant in amount:
Company name Balance Age Proportion Nature or Content
Employee borrowings 10,479,072.30 Year 2005 2.90% Refer Note X
Wei Baotong Gao Song 25,619,213.35 Year 2006 7.09% Borrowings Note1
Chen Jianqi 36,100,242.20 Year 2006 10.00% Borrowings Note1
Lin Wanyin 42,558,868.81 Year 2006 11.79% Borrowings Note1
Zheng Kanghao 76,539,900.55 Year 2009、Year2010 21.20% Current account
Shenzhen Huangting Real Estate
Group Co., Ltd 8,234,139.79 Year 2009、Year2010 2.28% Current account
Xu Chunlong 30,291,600.00 Year 2010 8.39% Borrowings Note2
Total 229,823,037.00 63.65%
Note 1: According to the agreement signed by Rongfa Investment with Wei Baotong and GaoShenzhen International Enterprise Co., Ltd.
47
Song, the Company paid 10‰ interest rate monthly for the borrowings; and according to the
agreement signed by Rongfa Investment with Chen Jianqi and Lin Wanyin, the Company paid 9‰
interest rate monthly, if not timely returned the borrowings and relevant interests, the ratio of
payments overdue is 0.40‰ per day, based on the total of outstandings, until the settlement date. Up
to 30 June 2010, the accumulated default payments provision is RMB10, 966,244.40.
Note 2: Rongfa Investment has signed Borrowing Agreement with Xu Chunlong, the borrowing
amount is RMB 30 million, the loan interest rate is four times of the loan interest rate stipulated by the
People's Bank of China, and the partly shops of the Lease development products- Gangyihaoting as
guarantees. Up to 30 June 2010, the accumulated provision of interest is RMB 291,600.00.
19. Non-current Liability Due Within One Year
（1）Category
Item 30.6.2010 31.12.2009
Long-term borrowing due within one
year 383,000,000.00 184,000,000.00
Total 383,000,000.00 184,000,000.00
（2）Long-term borrowing due within one year
①Categories of long-term borrowing due within one year
Types 30.6.2010 31.12.2009
Pledge loan 8,000,000.00 9,000,000.00
Pledge and assure loan 375,000,000.00 175,000,000.00
Total 383,000,000.00 184,000,000.00
② Circumstance of long-term borrowing due within one year:
Creditors The start date The termination date Currency Interest rate% 30.6.2010
Wengyuan County Rural Credit
Cooperatives Note
29.04.2007 29.04.2011 RMB
8.62% 8,000,000.00
Construction bank of China,Shenzhen
Shangbu Branch
10.09.2008 09.09.2010 RMB
floating interest 150,000,000.00
Construction bank of China,Shenzhen Aihua
Subbranch
16.04.2007 15.02.2011
RMB
floating interest 225,000,000.00
Total 383,000,000.00Shenzhen International Enterprise Co., Ltd.
48
Note: Wengyuan Guoshang has been borrowed RMB 9million from Wengyuan County Rural
Credit Cooperatives, the mature date is on 15 February 2010, in 2010, Wengyuan Guoshang signed <
Loan Renewal Agreement> with Wengyuan County Rural Credit Cooperatives, the renewal term is
one year, and the amount of renewal is RMB 8million.
20. Long-term Loans
（1）Types of long-term loans:
Type 30.6.2010 31.12.2009
Pledge loan 44,000,000.00 29,000,000.00
Pledge and assure loan 0.00 225,000,000.00
Total 44,000,000.00 254,000,000.00
（2）Circumstance of long-term loans
Creditors The start date
The
termination
date
Currency Interest rate%
30.6.2010
Agricultural Bank of China, Wu
Hua Town Subbranch
19.03.2010 18.03.2013
RMB
floating interest
10,000,000.00
Agricultural Bank of China, Wu
Hua Town Subbranch
03.04.2010 18.03.2013
RMB
floating interest
5,000,000.00
Wengyuan County Rural Credit
Cooperatives
07.08.2008 06.08.2011
RMB
8.820%
9,000,000.00
Agricultural Bank of China, Wu
Hua Town Subbranch
30.06.2009 29.06.2012
RMB
5.40%
20,000,000.00
Total 44,000,000.00
Note: Details of the pledged assets please refer NoteⅤ. 5 and Ⅴ. 11.
21. Accrued Liabilities
Item 31.12.2009 Increment Decrement 30.6.2010 Reason
Guarantee
liabilities 6,000,000.00 0.00 6,000,000.00 0.00 Loan guarantee
Total 6,000,000.00 0.00 6,000,000.00 0.00Shenzhen International Enterprise Co., Ltd.
49
Note: Please refers to Note VII、3、for details.
22. Deferred Income
Item 30.6.2010 31.12.2009
Unrecognized leaseback income 823,425.69 1,029,282.11
Total 823,425.69 1,029,282.11
Note: The unrecognized leaseback income is the unrecognized income from leaseback of shops in
Gangyihaoting.
23. Share Capital
Items Chang in current year（+、－）
31.12.2009
Allotment
of shares
Bonus
shares
Transfer
reserves
into shares
Others Subtotal
30.6.2010
ⅰ. Restricted shares
Including:
shares held by states 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares held by domestic
legal persons 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares held by overseas
legal persons 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Executives shares 320,760.00 0.00 0.00 0.00 0.00 0.00 320,760.00
Sub-total 320,760.00 0.00 0.00 0.00 0.00 0.00 320,760.00
ⅱ. Unrestricted shares
1. Ordinary shares listed in
mainland
118,892,232.00
0.00 0.00 0.00 0.00 0.00
118,892,232.00
2. Foreign shares listed in
mainland
101,688,192.00
0.00 0.00 0.00 0.00 0.00
101,688,192.00
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 220,580,424.00 0.00 0.00 0.00 0.00 0.00 220,580,424.00
ⅲ. Total shares 220,901,184.00 0.00 0.00 0.00 0.00 0.00 220,901,184.00
Note: The share capital has been verified by Zhongqing Certified Public Accountants and issuedShenzhen International Enterprise Co., Ltd.
50
a Capital Verification Report with Yanqianzi［1998］No.S006.
24. Capital Reserves
Type 31.12.2009 Increment Decrement 30.6.2010
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. Surplus Reserves
Type 31.12.2009 Increment Decrement 30.6.2010
Statutory surplus reserves 84,526,481.13 0.00 0.00 84,526,481.13
Discretionary surplus reserve 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. Undistributed Profits
Items Jan-Jun 2010 Jan-Jun 2009
Openning balance of undistributed profits -193,368,271.87 -200,284,817.12
Add: Net profit for current year -21,740,816.44 11,022,189.39
Appropriation of statutory surplus reserves 0.00 0.00
Appropriation of staff incentive and welfare
fund 0.00 0.00
Appropriation 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 0.00
Dividends payable for ordinary shares 0.00 0.00
Dividends for ordinary shares transfer into
capital 0.00 0.00
Closing balance of undistributed profits -215,109,088.31 -189,262,627.73
27. Operating Revenues and Operating Costs
（1）Operating revenues and operating costs listed according to the categories
Items Jan-Jun 2010 Jan-Jun 2009
Operating revenue Operating cost Operating profit Operating revenue Operating cost Operating profit
ⅰ. Main operation 5,816,796.33 5,448,294.02 368,502.31 7,966,798.76 7,713,188.26 253,610.50
Income from sales of real estat 0.00 0.00 0.00 468,196.00 285,300.09 182,895.91Shenzhen International Enterprise Co., Ltd.
51
Property management
income 5,816,796.33 5,448,294.02 368,502.31 7,498,602.76 7,427,888.17 70,714.59
ⅱ. Other operation 186,800.00 207,430.19 -20,630.19 1,269,004.35 274,475.74 994,528.61
Disposal of investment
property 120,000.00 200,044.80 -80,044.80 878,270.00 219,149.04 659,120.96
Rental income 66,800.00 7,385.39 59,414.61 390,734.35 55,326.70 335,407.65
Total 6,003,596.33 5,655,724.21 347,872.12 9,235,803.11 7,987,664.00 1,248,139.11
（2）Operating revenues and operating costs listed according to the areas
Item Jan-Jun 2010 Jan-Jun 2009
Operating revenue Operating cost Operating profit Operating revenue Operating cost Operating profit
Shenzhen
City 6,003,596.33 5,655,724.21 347,872.12 9,235,803.11 7,987,664.00 1,248,139.11
Total 6,003,596.33 5,655,724.21 347,872.12 9,235,803.11 7,987,664.00 1,248,139.11
（3）Details of operating revenues from top five clients
Clients name Operating revenues Proportion to total operating revenues
The First 694,277.93 11.56%
The Second 199,333.57 3.32%
The Third 100,000.00 1.67%
The Fourth 100,000.00 1.67%
The Fifth 72,793.06 1.21%
Total 1,166,404.56 19.43%
28. Business Tax and Surtax
Items Jan-Jun 2010 Jan-Jun 2009
Business tax 307,968.28 390,489.26
Urban construction tax 3,078.56 3,816.79
Land Value Added Tax 67,016.35 0.00
Others 2,580.46 4,258.16
Total 380,643.65 398,564.21
29. Financial Expenses
Items Jan-Jun 2010 Jan-Jun 2009
Interest expenses 23,228,199.64 1,331,344.95Shenzhen International Enterprise Co., Ltd.
52
Less: Interest Incomes 19,978.75 4,620.84
Exchange losses 5.31 0.00
Less: Exchange gains 0.00 27.81
Bank charges 20,683.02 18,985.24
Total 23,228,909.22 1,345,681.54
30. Assets Impairment Loss
Item Jan-Jun 2010 Jan-Jun 2009
Bad debts -20,378.16 -140,933.17
Total -20,378.16 -140,933.17
31. Investment Income
Item Jan-Jun 2010 Jan-Jun 2009
Gains from transfer of equity
investment 0.00 750,000.00
Total 0.00 750,000.00
32. Non-operating Income
Items Jan-Jun 2010 Jan-Jun 2009
Gains from disposal of fixed assets 2,913,212.64 15,589,639.29
Income from Reimbursement 0.00 0.00
Others 86,040.02 88,968.26
Total 2,999,252.66 15,678,607.55
Note: The Gains from disposal of fixed assets is mainly due to dispose of the 23th floor of
Shenzhen Development Center.
33. Non-operating expenses
Items Jan-Jun 2010 Jan-Jun 2009
Loss on disposal of fixed assets 16,699.41 10,797.66
default payment 5,149,396.59 0.00
Penalty payment 0.00 56,247.36Shenzhen International Enterprise Co., Ltd.
53
Others 2,000.00 136.18
Total 5,168,096.00 67,181.20
Note: The default payment is caused by borrowings with Chen Jianqi and Lin Wanying, please refer to Note 18.
(3).1 for details.
34. Income Tax Expense
Items Jan-Jun 2010 Jan-Jun 2009
Income tax for current period 0.00 -9,427.98
Total 0.00 -9,427.98
35. Supplemental Information for Cash Flow Statement
Supplemental informations Jan-Jun 2010 Jan-Jun 2009
Adjusting net profit to cash flow from operating activities:
Net profits -39,774,544.55 6,141,848.84
Add: Provision for assets impairment loss -20,378.16 -140,933.17
Depreciation of fixed assets、oil and gas assets and productbility biological assets 2,157,724.10 2,233,453.97
Amortization of intangible assets 0.00 0.00
Amortization of Long-term deferred expenses 30,000.00 30,000.00
Loss on disposal of fixed assets、intangible assets and other long-term assets (The gain is
listed beginning with “-“) -2,816,468.43 -16,237,962.59
Losses on scraped fixed assets (The gain is listed beginning with “-“) 0.00 0.00
Losses from fluctuation in fair values (The gain is listed beginning with “-“) 0.00 0.00
Financial costs (The gain is listed beginning with “-“) 23,228,204.95 1,331,317.14
Losses on investment (The gain is listed beginning with “-“) 0.00 -750,000.00
Decrease of deferred income tax assets (The increase is listed beginning with “-“) 0.00 0.00
Increase of deferred income tax liabilities (The decrease is listed beginning with “-“) 0.00 0.00
Decrease of inventories (The increase is listed beginning with “-“) -3,262,921.33 -9,859,383.64
Decrease of operating receivables (The increase is listed beginning with “-“) 3,041,034.57 469,089.02
Increase of operating payables (The decrease is listed beginning with “-“) 31,484,005.72 -4,386,788.68
Others 0.00 0.00
Net cash flow arising from operating activities 14,066,656.87 -21,169,359.11
36. Cash and Cash Equivalent
Items Jan-Jun 2010 Jan-Jun 2009Shenzhen International Enterprise Co., Ltd.
54
1、Cash 13,057,613.33 51,950,910.94
Including: Cash on hand 202,642.75 74,206.20
Unrestricted bank deposit 12,764,635.12 51,786,552.59
Unrestricted other monetary funds 90,335.46 90,152.15
Deposit in central bank 0.00 0.00
Placement in other banks or financial institutions 0.00 0.00
Due to other banks or financial institutions 0.00 0.00
2、Cash equivalents 0.00 0.00
Including: Bond investment due within three month 0.00 0.00
3、Ending balance of cash and cash equivalents 13,057,613.33 51,950,910.94
Including: restricted cash and cash equivalents for the parent or
subsidiaries in the Group 0.00 0.00
Ⅵ. Related Party Relationships and Transactions
1. Identification norm of related party
The Company has control, jointly control or significant influence on the other party or any party
can control, jointly control or significant influence on the Company; 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
Name of company Relationship with the Company
Baili Asia-Pacific Investment Co., Ltd Holding 13.70% equity interests of the
Company
ShenzhenTefa Group Limited Holding9.76% equity interests of the Company
Dahua Investment (China) Co., Ltd Holding7.03% equity interests of the Company
Shenzhen Maoye Shangsha Co., Ltd Holding6.15% equity interests of the Company
Note1: Because the Company’s equity structure is quite decentralizing, and has no absolute
control shareholder for the Company, therefore the Company listed Baili Asia-Pacific Investment Co.,
Ltd (The first Shareholder), ShenzhenTefa Group Limited (The second Shareholder), Dahua
Investment (China) Co., Ltd (The third Shareholder), and Shenzhen Maoye Shangsha Co., Ltd (The
fourth Shareholder)as related parties with non-controllable relationship.
Note2: Malaysia Foh Chong & Sons SDN.BHD with Baili Asia-Pacific Investment Co., Ltd
signed the 《Shenzhen international limited liability company negotiable B shares transfer agreement》,
that 30,264,192 B shares hold by Malaysia Foh Chong & Sons SDN.BHD transferred to Multi Profit
Asia Pacific Investment Limited. The above mentioned shareholding transfer have completed on 7
July 2009.Shenzhen International Enterprise Co., Ltd.
55
3. Related party transactions
（1）Details of guarantee between related parties
Up to 31 December 2009, The Company has provided guarantee for the following subsidiaries:
Company name of provide guarantee Guaranteed company Type Amount Guarantee period
Whether the
performance of the
guarantee has
finished
Shenzhen International Enterprise Co.,
Ltd
Shenzhen Guoshanglinye Development Co., Ltd Pledge guarantee 6,000,000.00 17.3.2009-16.3.2010 Yes
Shenzhen International Enterprise Co.,
Ltd
Shenzhen Guoshanglinye Development
Co., Ltd
Shenzhen Rongfa Investment Co., Ltd Credit guarantee 150,000,000.00 10.9.2008- 9.9.2010 No
Shenzhen International Enterprise Co.,
Ltd
Shenzhen Rongfa Investment Co., Ltd
Credit guarantee 225,000,000.00 16.4.2007-15.2.2011
No
（2）The balance of payables and receivables among related parties:
30.6.2010 31.12.2009
Related parties
Balance Proportion Balance Proportion
Other accounts payables:
Shenzhen Chunhua Medicine United Co., Ltd. 2,090,239.43 0.58% 2,090,239.43 0.87%
Shenzhen Guoshang Medicine Co., Ltd 1,479,767.33 0.41% 1,479,767.33 0.62%
Shenzhen International Enterprise Trading Co.,
Ltd 4,160,185.75 1.15% 4,160,185.75 1.74%
Total 7,730,192.51 2.14% 7,730,192.51 3.23%
VII. Contingency
1. Guarantee
（1）According to common practices of the sale of mortgage properties in the property
investment industry, Shenzhen Rongfa Investment Co., Ltd. provides guarantees for those mortgage
property sales which developed by itself. Until June 30, 2010, Rongfa Investment provides guarantees
for mortgage property sales for RMB 20,564,192.10.
（2）According to common practices of the sale of mortgage properties in the property
investment industry, Huizhou Rongfa Investment Co., Ltd. provides guarantees for those mortgageShenzhen International Enterprise Co., Ltd.
56
property sales which developed by itself. Until June 30, 2010, Huizhou Rongfa Investment Co., Ltd
provides guarantees for mortgage property sales for RMB 9,330,530.49.
2. Pledge
The Company has no other pledge event except mentioned in Notes Ⅴ. 5 and Ⅴ. 11.
3. Litigation
In September 2005, Shenzhen Intermediate People’s Court issued Review Order [2005]
Shenzhongfaminerzaizi No.22, ruled that the Group has joint and several liability to a guaranteed loan
(RMB6 million and related overdue interest) borrowed from Bank of China, Shenzhen Shangbu
branch ( “Shangbu branch”) Shenzhen Shengang Gongmao Co., Ltd. (“Shengang Gongmao”) in 1999.
In accordance with conservative principle, the Company accounted for guaranteed loan principal
and its interest in RMB 8,670,209.16 as accrued liabilities, and accrued interests in RMB 782,925.00
for the year of 2005, 2006, 2007, and 2008.
In the year 2004, Bank of China , Shangbu subbranch transferred all the rights of above
mentioned borrowing contract to China Orient Asset Management Corporation, Shenzhen Branch
(“Orient Asset Shenzhen Branch”), on July 19, 2009, Orient Asset Shenzhen Branch transferred the
debts to Dongxin United Asset Management Co., Ltd, then Orient Asset Shenzhen Branch accepted
the entrustment by Dongxin United Asset Management Co., Ltd, in Orient Asset Shenzhen Branch’ s
own name to deal with the aboved mentioned debts.
In the year 2009, the Company with Orient Asset Shenzhen Branch comes to a settlement
agreement, according to the agreement: if the Company can be paid RMB 6 million before June 20,
2010, exempt the duties undertaken by the Company, that is caused by the joint and several liability
for payment. On April 22, 2010, the Company has paid RMB 6 million to Orient Asset Shenzhen
Branch.
VIII. Commitment
As at the reporting date, the Company signed non-revocable operating lease contracts with third
party as follows:
Maturity date Rental payable Deferred investment income
Within one year 5,129,423.12 411,712.84
1-2 years 0.00 411,712.84
Total 5,129,423.12 823,425.68Shenzhen International Enterprise Co., Ltd.
57
IX. Events after the Balance Sheet Date
1. On July 2010, Rongfa Investment borrowed 1300 million from Bohai International Trust Ltd.
Co, the loan term is twelve months, and the annual interest rate is 9.18% within first six month, after
the half year, the annual interest rate is 15%. The Company and Shenzhen Huangting Real Estate
Group Co., Ltd (Huangting Real Estate) provide full joint and several guarantee liability. At the same
time, The POWERLAND HOLDINGS LIMITED (controlled by Zheng Kanghao) using the 40%
shareholdings of Rongfa Investment provide pledge guarantee for the 460 million loans (part of the
1300 million loan).
2. On 4 August 2010, Zheng Kanghao with Zhang Jing, who is the substantial shareholder of
Baili Asia-Pacific Investment Co., Ltd, signed < Agreement About Sold Shares of Baili Asia-Pacific
Investment Co., Ltd >, obtained 51% shareholdings of Baili Asia-Pacific Investment Co., Ltd,
simultaneously Zheng Kanghao with Xu Yuling, who is another shareholder of Baili Asia-Pacific
Investment Co., Ltd, signed the agreement, obtained 49% shareholdings of Baili Asia-Pacific
Investment Co., Ltd also. Up to the reporting date, the procedure of transfer ownership has been
completed.
3. On 30 November 2009, Shenzhen Fanhua Engineering Group Co., Ltd (Fanhua Engineering)
appealled to Guangdong Province Higher People's Court for the project construction contract dispute
that is caused by Rongfa Investment – Crystal Island Project. On 25 January 2010, hosted by
Guangdong Province Higher People's Court, an agreement has reached upon mediation, and Fanhua
Engineering with Rongfa Investment has signed < Mediation Agreement >. On 2 August 2010, Rongfa
Investment with Fanhua Engineering signed < Agreement >, adjusted partly repayment deadline that
agreed within the < Mediation Agreement >.Up to the reporting date, Rongfa Investment has
according to the repayment deadline to paid the construction costs of Crystal Island Project.
X. Other Significant Events
In order to supplement the Crystal Island project development funds, In March 2005, according
to the market situation the company signed the for the retail shop of
Crystal Island with employees by the way of internal subscription, in the price of 15000 Yuan per
square meter, totally raise fund 34,750,984.61Yuan. convention: if a
company transfer or seizure of the premises resulted in the company could not be delivered to shops,Shenzhen International Enterprise Co., Ltd.
58
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
Crystal 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 plan. On 13
November 2008, the resolution of the 《Staff on the proper handling of the motion within the
subscription shops》, to give up the implementation of employee incentive programs. On November 29,
2008 hold 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, the
Company accumulated provided interests in RMB10, 494,710.24, that is based on the higher of same
period bank loans benchmark interest rate 5.85% and agreed compensation 20%.
XI. Main Notes to Financial Statements of Parent Company
1. Other Accounts Receivable
（1）Other accounts receivable listed according to the categories
30.6.2010 31.12.2009
Items
Book value Proportion
Provision for bad
debts
Carrying value Book value Proportion
Provision for
bad debts
Carrying value
Individual significant
amounts 425,314,474.18 99.54% 284,272,091.15 141,042,383.03 414,995,048.24 99.51% 240,270,138.63 174,724,909.61
Non-significant in
amount but in
accordance with the
characteristics of credit
risk portfolio, the risk of
the portfolio is high
1,060,491.71 0.25% 935,669.67 124,822.04 1,060,491.71 0.25% 935,669.68 124,822.03
Other non-significant
receivables 914,112.67 0.21% 59,833.13 854,279.54 985,761.17 0.24% 55,803.06 929,958.11
Total 427,289,078.56 100.00% 285,267,593.95 142,021,484.61 417,041,301.12 100.00% 241,261,611.37 175,779,689.75Shenzhen International Enterprise Co., Ltd.
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（2）Other accounts receivable listed according to the age
30.6.2010 31.12.2009
Age
Book value Proportion
Provision for bad
debts
Carrying value Book value Proportion
Provision for
bad debts
Carrying value
Within 1 year 331,395,662.62 77.56% 247,660,804.58 83,734,858.04 340,732,830.57 81.70% 205,613,316.54 135,119,514.03
1-2 years 64,593,060.60 15.12% 6,459,306.06 58,133,754.54 45,008,115.21 10.79% 4,500,811.52 40,507,303.69
2-3 years 20,059,613.70 4.69% 20,031,563.70 28,050.00 20,059,613.70 4.81% 20,031,563.70 28,050.00
3-4 years 89,065.00 0.02% 17,813.00 71,252.00 89,065.00 0.02% 17,813.00 71,252.00
4-5 years 71,426.71 0.02% 17,856.68 53,570.03 71,426.71 0.02% 17,856.68 53,570.03
More than 5
years 11,080,249.93 2.59% 11,080,249.93 0.00 11,080,249.93 2.66% 11,080,249.93 0.00
Total 427,289,078.56 100.00% 285,267,593.95 142,021,484.61 417,041,301.12 100.00% 241,261,611.37 175,779,689.75
（3）List the amount of top five other accounts receivable
Company name Balance
Age
Nature
Proportion of total
other accounts
receivable
Shenzhen Rongfa Investment Co.,
Ltd 308,818,679.89 Within 1 year
Current account
72.27%
Shenzhen Guoshanglinye
Development Co., Ltd 86,288,930.66
Within 1 year,1-2
years
Current account
20.19%
Shenzhen International Arcade Chain
Store 17,122,151.90
2-3 years Current account
4.01%
Shenzhen Shengang Industrial
Trading Inport & Export Company 10,180,249.93
More than 5 years
Please refer Note V、4、(3) note
for details 2.38%
Shenzhen Royal Noble Industry Co., Ltd 2,904,461.80 2-3 years Current account 0.68%
Total 425,314,474.18 99.53%
2. Long-term Equity Investment
（1）Long-term equity investment and provision for impairment
30.6.2010 31.12.2009
Items
Book value
Provision for
impairment
Carrying value Book value
Provision for
impairment
Carrying value
Long-term equity investment 79,943,991.03 13,999,737.16 65,944,253.87 79,943,991.03 13,999,737.16 65,944,253.87
Including: Investment for 79,943,991.03 13,999,737.16 65,944,253.87 79,943,991.03 13,999,737.16 65,944,253.87Shenzhen International Enterprise Co., Ltd.
60
subsidiaries
Investment for other
companies 0.00 0.00 0.00 0.00 0.00 0.00
（2）Long-term equity investment account by cost method
Name of investees Initial investment cost 31.12.2009 Increment Decrement 30.6.2010
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
Total 79,943,991.03 79,943,991.03 0.00 0.00 79,943,991.03
（3）Provision for impairment loss of long-term equity investment
Name of investees 31.12.2009 Increment Decrement 30.6.2010
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 0.00 10,000,000.00
Total 13,999,737.16 0.00 0.00 13,999,737.16
3. Operating Revenue and Operating Costs
（1）Operating revenues and operating costs listed according to the categories
Jan-Jun 2010 Jan-Jun 2009
Items
Operating revenue Operating costs Operating profits Operating revenue Operating costs Operating profits
Rental income 51,800.00 2,698.78 49,101.22 88,740.00 4,131.38 84,608.62
Disposal of invest
property 120,000.00 200,044.80
-80,044.80
878,270.00 219,149.04 659,120.96
Total 171,800.00 202,743.58 -30,943.58 967,010.00 223,280.42 743,729.58
（2）Operating revenues and operating costs listed according to the areas
Items Jan-Jun 2010 Jan-Jun 2009Shenzhen International Enterprise Co., Ltd.
61
Operating revenue Operating costs Operating profits Operating revenue Operating costs Operating profits
Shenzhen 171,800.00 202,743.58 -30,943.58 967,010.00 223,280.42 743,729.58
Total 171,800.00 202,743.58 -30,943.58 967,010.00 223,280.42 743,729.58
4. Investment Income
Items Jan-Jun 2010 Jan-Jun 2009
Gains from disposal of lon-term equity investment 0.00 750,000.00
Total 0.00 750,000.00
XII. Details of Extraordinary Profits or Losses
Items Jan-Jun 2010
(1) Profit and loss from disposal of non-current assets, including the offset part of the impaired assets; 2,816,468.43
(2) Unauthorized examination and approval, or lack of official approval documents, or occasional tax
revenue return and abatement; 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
Items Jan-Jun 2010
(4) Capital occupation fees charged to the non-financial enterprises and counted into the current profit and
loss; - 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
(6) Profit and loss from non-monetary assets exchange 0.00
(7) Profit and loss from entrusting others for investment or asset management 0.00
(8) Retained asset impairment provisions resulting from force majeure such as natural disasters 0.00
(9) Profit and loss from debt restruction 0.00
(10) Enterprises ’ reorganization fees, such as staffing expenses and integration fees 0.00
(11) Profit and loss that exceeds the fair value in transaction with unfair price 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
(13) Profit and loss on contingency that has no relation with the normal operation of the company 0.00
(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
(15) Switch -back of impairment provisions of accounts receivable that have undergone impairment test
alone; 0.00
(16) Profit and loss from outward entrusted loaning 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
(18) Impact on the current profit and loss by one-off adjustment to the current profit and loss according to 0.00Shenzhen International Enterprise Co., Ltd.
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the requirements of the tax as well as accounting laws and rules
(19) Custody fees of entrusted operation; 0.00
(20) Other non-operating income and expenses besides the above items -5,065,356.57
(21) Other items that conform to the definition of extraordinary profit and loss 0.00
Subtotal -2,248,888.14
Less：Amount influenced by income tax 0.00
Less：Non-recurring profit attributable to minority interest -2,029,043.59
Total -219,844.55
XIII. Yield Rate of Net Assets and Earnings Per Share
Earnings Per Share
Profit in the report period
Weighted
Average Yield Rate of Net Assets Basic EPS Basic EPS
Net profits attributable to ordinary
shareholders -10.12% -0.0984 -0.0984
Net profits attributable to ordinary
shareholders that have deducted
extraordinary profits or losses.
-10.01% -0.0974 -0.0974
XIV. Reasons and details of extraordinary movement of line items of financial
statements
（1）Monetary Funds: The decrease of 30.07% from the beginning balance to closing balance, that
is mainly due to repaid borrowings and construction debts.
（2）Accounts receivable: The decrease of 38.36% from the beginning balance to closing balance,
that is mainly due to reclaimed partly mortgages from proprietor.
（3）Other accounts payable: The increase of 51.12% from the beginning balance to closing
balance, that is mainly due to increased borrowings.
（4）Non-current liabilities due within one year: The increase of 1.08 times from the beginning
balance to closing balance, that is mainly due to reclassification of long-term borrowings.
（5）Long-term borrowings: The decrease of 82.68% from the beginning balance to closing
balance, that is mainly due to reclassification as non-current liabilities due within one year and loan
repayment.
（6）Operating Revenue: The decrease of 35.00% from the previous reporting period to current
reporting period, that is mainly due to decreased in the revenues from property management.
（7）Operating Cost: The decrease of 29.19% from the previous reporting period to current
reporting period, that is mainly due to decreased in the operating revenue.
（8）Administrative expenses: The increase of 48.74% from the previous reporting period to
current reporting period, that is mainly due to rental payments increased.
（9）Financial expenses: The increase of 16.26 times from the previous reporting period to currentShenzhen International Enterprise Co., Ltd.
63
reporting period, that is mainly due suspend the interests capitalization of Crystal Island International
Shopping Center.
（10）Non-operating income: The decrease of 80.87% from the previous reporting period to
current reporting period, that is mainly due to disposal of fixed assets in last year.
（11）Non-operating expense: The increase of 75.93 times from the previous reporting period to
current reporting period, that is mainly due to provision of default payment increased.
Shenzhen International Enterprise Co., Ltd
