HAINAN PEARL RIVER HOLDINGS CO., LTD.
SEMI-ANNUAL REPORT 2010
§1 Important Notice
1.1 The Board of Directors, the Supervisory Committee as well as directors,
supervisors and senior management staffs of HaiNan Pearl River Holdings Co., Ltd.
(hereinafter referred to as the Company) individually and collectively accept
responsibility for the correctness, accuracy and completeness of the contents of
this report and confirm that there are no material omissions or errors which would
render any statement misleading.
1.2 The semi-annual financial report of the Company has not been audited.
1.3 Mr. Zheng Qing, Chairman of the Board as well as General Manager, Mr. Chen
Binglian, Executive Deputy General Manager as well as Chief Financial Officer, and
Mr. Yang D aoliang, Manager of Financial Department hereby confirm that the Financial
Report enclosed in the Semi-annual Report is true and complete.
§2 Company Profile
2.1 Basic information
Short form of the stock ST Pearl River, ST Pearl River B
Stock code 000505、200505
Stock exchange listed with Shenzhen Stock Exchange
Secretary to the Board Securities Affairs Representative
Name Yu Cuihong He Yan
Contact address
29/F, Royal Empire Building, Pearl River
Plaza, Binhai Avenue, Haikou
29/F, Royal Empire Building, Pearl River
Plaza, Binhai Avenue, Haikou
Tel. 0898-68581888 ext. 0898-68581888 ext.
Fax. 0898-68583021 0898-68583021
E-mail hnpearlriver@21cn.net hnpearlriver@21cn.net2.2 Major financial data and indexes
2.2.1 Major accounting data and financial indexes
Unit: RMB Yuan
At the end of the
report period
At the period-end
of last year
Increase/decrease compared
with the period-end of last
year (%)
Total assets 1,491,639,839.96 2,033,695,297.92 -26.65%
Owners’ equity attributable to shareholders of list
companies
536,085,938.10 653,104,424.27 -17.92%
Share capital 426,745,404.00 426,745,404.00 0.00%
Net asset per share attributable to shareholders of list
companies (Yuan/share)
1.2562 1.5304 -17.92%
In the report
period (Jan.-Jun.)
The same period of
last year
Increase/decrease compared
with the same period of last
year (%)
Operating revenue 544,036,572.15 48,037,860.58 1,032.52%
Operating profit 69,209,013.89 83,656,958.37 -17.27%
Total profit 70,805,496.99 83,591,061.49 -15.30%
Net profit attributable to shareholders of listed
companies
50,911,704.50 84,803,402.31 -39.97%
Net profit attributable to shareholders of listed
companies after deducting non-recurring gains and
losses
40,581,004.88 -46,260,675.51 187.72%
Basic earnings per share (Yuan/share) 0.12 0.20 -40.00%
Diluted earnings per share (Yuan/share) 0.12 0.20 -40.00%
Net return on equity (%) 8.56% 23.02% -14.46%
Net cash flow from operating activities 142,650,825.02 36,604,404.48 289.71%
Net cash flow from operating activities per share
(Yuan/share)
0.3343 0.0858 289.63%
2.2.2 Items of non-recurring gains and losses
√Applicable □Inapplicable
Unit: RMB Yuan
Items of non-recurring gains and losses Amount
Gains and losses from disposal of non-current assets 1,677,640.69
Capital occupation fee received from non-financial enterprises and
recorded into current gains and losses
8,870,206.76
Other non-operating incomes and expenses besides the items above -81,157.59
Effect on income tax -106,046.72
Effect on minority interest income -29,943.52
Total 10,330,699.622.2.3 Difference between PRC GAAP and IFRS
√Applicable □Inapplicable
Unit: RMB Yuan
Net profit attributable to shareholders
of listed company
Owners’ equity attributable to
shareholders of listed company
Amount of this
period
Amount of the same
period of last year
Closing amount Opening amount
Based on IFRS 50,911,704.50 84,803,402.31 534,748,938.00 651,767,424.00
Based on CAS 50,911,704.50 84,803,402.31 536,085,938.10 653,104,424.27
Adjustment based on IFRS:
-Adjustment on amortization of land use right 0.00 0.00 -1,337,000.10 -1,337,000.27
Total difference based on CAS and IFRS 0.00 0.00 -1,337,000.10 -1,337,000.27
Explanation on difference based on CAS and IFRS
Before execution of the CAS 2006, original land use right in the item of
construction in process was amortized according to the IFRS.
§3 Changes in Share Capital and Particulars about Shareholders
3.1 Changes in share capital
√Applicable □Inapplicable
Unit: Share
Before the change Increase/decrease in this time (+, - ) After the change
Number Proportion
New shares
issued
Bonus
shares
Capitalizatio
n of public
reserves
Others Subtotal Number Proportion
I. Shares subject to trading
moratorium
3,924,131 0.92% -2,599,000 -2,599,000 1,325,131 0.31%
1. Shares held by the state
2. Shares held by
state-owned corporation
0 0.00% 0 0 0 0.00%
3. Shares held by other
domestic investor
3,898,500 0.91% -2,599,000 -2,599,000 1,299,500 0.30%
Including: shares held by
non-state-owned domestic
corporation
3,898,500 0.91% -2,599,000 -2,599,000 1,299,500 0.30%
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
25,631 0.01% 25,631 0.01%
II. Shares not subject to
trading moratorium
422,821,273 99.08% 2,599,000 2,599,000 425,420,273 99.69%
1. RMB ordinary shares 357,846,273 83.85% 2,599,000 2,599,000 360,445,273 84.46%
2. Domestically listed
foreign shares
64,975,000 15.23% 64,975,000 15.23%
3. Foreign shares listed in
domestic
4. Others
III. Total shares 426,745,404 100.00% 426,745,404 100.00%3.2 Shares held by the top ten shareholders and top ten shareholders holding shares
not subject to trading moratorium
Unit: Share
Total shareholders 51,152
Particulars about shares held by the top ten shareholders
Name of shareholders
Nature of
shareholders
Shareholding
ratio
Total shares
held
Number of shares held
subject to trading
moratorium
Shares pledged or
frozen
Beijing Wanfa Real Estate
Development Co., Ltd.
State-owned
corporation
26.36% 112,479,478 0 0
Wang Shuai
Domestic natural
person
0.54% 2,300,000 0 0
Hebei Securities Co., Ltd.
State-owned
corporation
0.48% 2,060,000 0 0
Zhang Xiaoxia
Domestic natural
person
0.46% 1,949,250 0 0
Wang Shuxia
Domestic natural
person
0.46% 1,947,641 0 0
Chen Yunxuan
Domestic natural
person
0.44% 1,898,822 0 0
Nanhua Finance Co., Ltd.
Domestic
non-state-owned
corporation
0.30% 1,299,500 1,299,500 0
He Yuhong
Domestic natural
person
0.27% 1,155,381 0 0
Guangzhou Pearl River
Industrial Group Co., Ltd.
State-owned
corporation
0.27% 1,150,000 0 0
Xu Daotian
Domestic natural
person
0.24% 1,043,431 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
Beijing Wanfa Real Estate Development Co., Ltd. 112,479,478 RMB ordinary shares
Wang Shuai 2,300,000 RMB ordinary shares
Hebei Securities Co., Ltd. 2,060,000 RMB ordinary shares
Zhang Xiaoxia 1,949,250 Domestically listed foreign shares
Wang Shuxia 1,947,641 RMB ordinary shares
Chen Yunxuan 1,898,822 RMB ordinary shares
He Yuhong 1,155,381 RMB ordinary shares
Guangzhou Pearl River Industrial Group Co., Ltd. 1,150,000 RMB ordinary shares
Xu Daotian 1,043,431 RMB ordinary shares
Chen Zaiyan 1,039,910 RMB ordinary shares
Related-party relationship
or concerted action among
shareholders above
Among shareholders above, there exists no related-party relationship between the principal
shareholder and other shareholders of the Company. Nor they are parties with concerted action
as prescribed in the Information Disclosure Administrative Methods for Changes in Shareholding
of Shareholders of Listed Companies. And it is unknown whether there exists related-party
relationship among other shareholders and whether they are prescribed parties with concerted
action.3.3 Changes in controlling shareholder and actual controller
□Applicable √Inapplicable
§4 Directors, Supervisors and Senior Management Staff
4.1 Changes in shares held by directors, supervisors and senior management staff
□Applicable √Inapplicable
§5 Report of the Board of Directors
5.1 Main operations classified according to industries or products
Unit: RMB’0000 Yuan
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
(%)
Sale of real estate 48,908.00 32,741.00 33.06% 11.00% 7.00% 30.74%
Property management
and service
3,463.00 2,992.00 13.60% 4.93% 2.38% 2.15%
Travel and hotels
service
1,949.00 884.00 54.64% 36.10% 3.71% 14.17%
5.2 Main businesses classified according to regions
Unit: RMB’0000 Yuan
Region Operating income Increase/decrease of operating income over last year (%)
Hainan 13,535.00 189.90%
Hubei 40,786.00 13.00%
Shanghai 0.00 -100.00%
5.3 Explanation on reasons for changes in main operation and its structure
□Applicable √Inapplicable
5.4 Reasons for significant changes in profitability (gross profit margin) of core
business compared with the previous year
√Applicable □Inapplicable
Gross profit margin of real estate increased due to influence on confirm of i ncome
from Wuhan Project, and sales amount of real estate was small year-on-year, there
was no comparable; gross profit margin of travel and hotels service increased mainly
because operating income from Sanya Wanjia Operating income increased year-on-year.5.5 Analysis to reasons of significant changes in profit breakdown compared with
the previous year
√Applicable □Inapplicable
Profit of the current period was mainly from income of settlement of Wuhan Real Estate
Project, while profit of the same period of last was from investment income arising
transfer of 20,000,000 shares of Southwest Securities.
5.6 Utilization of the raised proceeds
5.6.1 Utilization of the raised proceeds
□Applicable √Inapplicable
5.6.2 Change of projects
□Applicable √Inapplicable
5.7 Business plan revised by the Board of Directors for the second half year of 2010
□Applicable √Inapplicable
5.8 Estimation on accumulative net profit from the beginning of the year to the end
of next report period to be loss probably or the warning of its significant change
compared with the corresponding period of the last year and explanation on reason
□Applicable √Inapplicable
5.9 Explanation of the Board of Directors on “Non-standard Auditors’ Report” from
the Certified Public Accountants in the report period
□Applicable √Inapplicable
5.10 Explanation of the Board of Directors on changes and solutions of the issues
involved in “Non-standard Auditors’ Report” from the Certified Public
Accountants in the last year
□Applicable √Inapplicable
§6 Significant Events
6.1 Acquisition and sales of assets and assets restructure
6.1.1 Assets acquired
□Applicable √Inapplicable6.1.2 Assets sold
□Applicable √Inapplicable
6.1.3 Progress of these events and its influence on the operating results and
financial status in the report period after the report on assets restructure or
public notice on acquisition and sales of assets being published
□Applicable √Inapplicable
6.2 Guarantees
□Applicable √Inapplicable
6.3 Non-operating current related credits and liabilities
√Applicable □Inapplicable
Unit: RMB Yuan
Items Related party
Closing
balance
Opening balance
Other accounts
payable
Beijing Xinxing Real Estate Development
General Company
152,540,447.0
0
152,540,447.00
Beijing Wanfa Real Estate Development Co.,
Ltd.
81,725,000.00 81,725,000.00
Beijing Yulong Jisheng Real Estate Co., Ltd. 1,500,000.00 1,500,000.00
Interest
payable
Beijing Xinxing Real Estate Development
General Company
44,269,015.64 40,114,903.69
Beijing Wanfa Real Estate Development Co.,
Ltd.
22,042,765.43 19,934,761.80
Including: Amount occurred and balance that the Company provided funds to the controlling
shareholder and its subsidiaries was RMB 0.00 and RMB 0.00 respectively in the reporting period.
6.4 Material lawsuits and arbitrations
□Applicable √Inapplicable
6.5 Other significant events and explanation on analysis to their influences and
solutions
□Applicable √Inapplicable
6.5.1 Securities investment
□Applicable √Inapplicable
6.5.2 Equity of other listed companies held by the Company
√Applicable □Inapplicable
Unit: RMB Yuan
Securities
code
Short form
Initial
investment
amount
Proportion of
equity of the
Company
Book value at the
period-end
Changes in owner’s
equity in the report
period
Subject of
accounting
calculation
Source
600369
Southwest
securities
150,000,000.00 1.75% 405,317,500.00 -226,100,000.00
Long-term equity
investment
Buy shares
directly
Total 150,000,000.00 - 405,317,500.00 -226,100,000.00 - -6.5.3 Non-operating capital occupation by principal shareholders and i ts affiliated
enterprises and progress of debt repayment
□Applicable √Inapplicable
6.5.4 Implementation of commitments made by the Company, as well as its shareholders
and actual controller
□Applicable √Inapplicable
6.5.5 Pre-plan of the Board of Directors for profit distribution or turning capital
reserves into share capital
√Applicable □Inapplicable
Neither the Company will execute profit distribution, nor will transfer public
reserves to share capital.
6.5.6 Items of other comprehensive income
Unit: RMB Yuan
Items
Occurred amount in
this period
Occurred amount in the
last period
1. Profits/(losses) from available-for-sale financial assets -226,100,000.00 534,759,623.99
Less: Effects on income tax generating from available-for-sale financial assets -56,525,000.00 120,863,750.00
Net amount transferred into profit and loss in the current period that recognized into
other comprehensive income in prior period
Subtotal -169,575,000.00 413,895,873.99
2. Interests in the investee entities’ other comprehensive income as per equity method
Less: Effects on income tax generating from the interests in the investee entities’ other
comprehensive income as per equity method
Net amount transferred into profit and loss in the current period that recognized into
other comprehensive income in prior period
Subtotal
3. Profits/(losses) from cash flow hedging instrument
Less: Effects on income tax generating from cash flow hedging instrument
Net amount transferred into profit and loss in the current period that recognized into
other comprehensive income in prior period
The adjustment value that is the converted initial recognition amount of arbitrage project
Subtotal
4. Converted amount of foreign currency financial statements
Less: Net value of disposal of oversea operations that recognized into current profit
and loss
Subtotal
5. Other 1,644,809.33
Less: Effects on income tax generating from the others that included into other
comprehensive income
Net amount transferred into profit and loss in the current period that recognized into
other comprehensive income in prior period
Subtotal 1,644,809.33
Total -167,930,190.67 413,895,873.99
6.6 Particulars about reception of research, communication and interview in this
report period
There was no reception of field research, telephone communication or inquiry in
written.
§7 Financial Report
7.1 Auditing opinions
Financial Report √Un-audited □Audited7.2 Financial statements(attached)
7.3 Notes to financial statement
7.3.1 Should there be any changes in accounting policies, accounting estimates and
accounting errors, give the relevant contents, reasons and the amount influenced.
□Applicable √Inapplicable
7.3.2 Should there be any changes in consolidation scope of the financial statements,
explain the reasons and amount influenced.
□Applicable √Inapplicable
7.3.3 If the financial report of the Company is produced as “Non-standard Opinion”,
the Company should make the relevant matters and notes.
□Applicable √Inapplicable
The Board of Directors of HaiNan Pearl River Holdings Co., Ltd
Chairman of the Board: Zheng Qing
Aug. 20107.2.1 Balance Sheet
Prepared by HaiNan Pearl River Holdings Co., Ltd 30 Jun. 2010 Unit: RMB Yuan
Closing balance Opening balance
Items
Consolidation Parent company Consolidation Parent company
Current assets:
Monetary funds 238,917,598.63 128,061,969.24 291,787,132.78 161,760,970.47
Settlement fund reserve
Dismantle fund
Transaction financial asset
Notes receivable
Account receivable 4,132,441.94 1,045,671.11 2,645,699.47 1,014,754.61
Account paid in advance 12,406,780.15 164,836.95 44,285,760.93 202,040.00
Premium receivables
Receivables from reinsurers
Reinsurance contract reserve receivables
Interest receivable
Dividend receivable 260,015.00 260,015.00 260,015.00 260,015.00
Other account receivable 282,249,356.46 317,489,541.62 189,594,736.47 219,693,993.49
Financial assets purchased under agreements to resell
Inventories 179,724,687.76 12,782,893.61 538,999,748.54 84,392,446.86
Non-current assets due within 1 year
Other current assets
Total current assets 717,690,879.94 459,804,927.53 1,067,573,093.19 467,324,220.43
Non-current assets:
Loans and advance
Available for sale financial assets 405,317,500.00 405,317,500.00 631,417,500.00 631,417,500.00
Held to maturity investments
Long-term account receivable
Long-term equity investment 52,117,749.41 257,479,634.90 13,149,424.41 238,511,309.90
Investing property 20,341,312.68 20,783,662.44
Fixed asset 257,636,505.01 18,995,360.83 264,815,483.49 20,720,770.59
Project in construction 4,313,000.00 2,510,000.00
Engineering material 606,206.60 606,206.60
Fixed asset disposal
Bearer biological asset
Oil assets
Intangible assets 32,145,535.26 1,672,199.70 32,617,178.56 1,696,031.52
Development expense
Goodwill
Long-term expense to be apportioned 1,471,151.06 222,749.23
Deferred tax assets
Other non-current assets
Total of non-current assets 773,948,960.02 683,464,695.43 966,122,204.73 892,345,612.01
Total assets 1,491,639,839.96 1,143,269,622.96 2,033,695,297.92 1,359,669,832.44
Current liabilities:
Short-term borrowings 260,000,000.00 260,000,000.00 276,000,000.00 276,000,000.00Borrowing from Central Bank
Deposits and due to banks and other financial
institutions
Placements from banks and other financial institutions
Transaction financial liabilities
Notes payable
Account payable 19,628,706.76 3,802,924.14 70,793,361.64 4,135,235.24
Account received in advance 46,116,932.11 306,932,163.78
Financial assets sold under agreements to repurchase
Handling charges and commission payable
Employee’s compensation payable 3,925,405.61 365,879.54 5,055,394.37 598,915.23
Tax payable 17,825,777.16 -3,072,110.31 -16,948,131.65 -3,354,179.89
Interest payable 81,696,774.66 43,726,678.26 65,601,325.75 29,034,494.85
dividend payable 3,213,302.88 3,213,302.88 3,213,302.88 3,213,302.88
Other account payable 290,494,210.56 236,591,336.90 332,778,891.65 235,716,634.23
Due to reinsurers
Insurance contract reserve
Customer deposits
Amount payables under security underwriting
Non-current liabilities due within 1 year 29,980,110.00 79,980,110.00
Other current liabilities
Total current liabilities 752,881,219.74 544,628,011.41 1,123,406,418.42 545,344,402.54
Non-current liabilities:
Long-term borrowings 105,000,000.00 110,000,000.00
Debentures payable
Long-term payables
Specific purpose account payables
Accrued liabilities
Deferred tax liabilities 77,888,125.00 77,888,125.00 134,413,125.00 134,413,125.00
Other non-current liabilities
Total non-current liabilities 182,888,125.00 77,888,125.00 244,413,125.00 134,413,125.00
Total liabilities 935,769,344.74 622,516,136.41 1,367,819,543.42 679,757,527.54
Owner’s equity (or shareholders’ equity)
Paid-in capital (or share capital) 426,745,404.00 426,745,404.00 426,745,404.00 426,745,404.00
Capital surplus 619,229,155.97 622,245,495.51 788,804,155.97 791,820,495.51
Less: Treasury stock
Specific reserves
Reserved fund 114,177,485.88 109,487,064.39 114,177,485.88 109,487,064.39
General risk provision
Retained earnings -624,066,107.75 -637,724,477.35 -676,622,621.58 -648,140,659.00
Foreign exchange difference
Total owners’ equity attributable to holding company 536,085,938.10 520,753,486.55 653,104,424.27 679,912,304.90
Minority interest 19,784,557.12 12,771,330.23
Total owner’s equity 555,870,495.22 520,753,486.55 665,875,754.50 679,912,304.90
Total liabilities and owner’s equity 1,491,639,839.96 1,143,269,622.96 2,033,695,297.92 1,359,669,832.447.2.2 Income Statement
Prepared by HaiNan Pearl River Holdings Co., Ltd Jan.-Jun. 2010 Unit: RMB Yuan
In current period The same period of last year
Items
Consolidation Parent company Consolidation Parent company
I. Total operation income 544,036,572.15 81,930,643.20 48,037,860.58 193,955.00
Including: Sales income 544,036,572.15 81,930,643.20 48,037,860.58 193,955.00
Interest income
Premium income
Handling charges and commission income
II. Total operation cost 474,892,422.82 72,178,777.15 95,510,826.42 23,840,116.36
Including: Cost of sales 366,666,811.33 42,170,962.08 38,235,750.59 33,987.67
Interest expenses
Handling charges and commission expenses
Surrender value
Net amount of claims
Net amount of insurance contract reserve
withdrawn
Expenditure on policy dividends
Reinsurance premium expenses
Taxes and associate charges 63,804,616.18 20,124,893.20 2,404,089.65 -208,897.74
Selling expenses 6,584,871.53 24,477.00 8,524,797.64 7,309.00
Administrative expenses 29,852,762.04 8,722,821.79 23,196,749.46 5,988,699.54
Financial expenses 12,698,260.97 6,422,101.48 15,751,159.41 10,686,670.74
Impairment loss -4,714,899.23 -5,286,478.40 7,398,279.67 7,332,347.15
Add: gain from change in fair value (“-” means loss)
Gain from investment (“-” means loss) 64,864.56 64,864.56 131,129,924.21 131,129,924.21
Including: income form investment in
affiliated enterprise and joint ventures
64,864.56 64,864.56
Foreign exchange difference (“-” means loss)
III. Operation profit (“-” means loss) 69,209,013.89 9,816,730.61 83,656,958.37 107,483,762.85
Add: non-operation income 1,710,013.72 1,710,013.72 153,122.17
Less: non-business expense 113,530.62 14,023.12 219,019.05 216,032.03
Including: loss from non-current asset disposal 32,373.03 14,023.12 27,500.00 27,500.00
IV. Total profit (“-” means loss) 70,805,496.99 11,512,721.21 83,591,061.49 107,267,730.82
Less: income tax expense 12,880,565.60 52,338.18
V. Net profit (“-” means loss) 57,924,931.39 11,512,721.21 83,538,723.31 107,267,730.82
Attributable to owners of parent company 50,911,704.50 11,512,721.21 84,803,402.31 107,267,730.82
Minority interest 7,013,226.89 -1,264,679.00
VI. Earnings per share
(I) Basic earnings per share 0.12 0.20
(II) Diluted earnings per share 0.12 0.20
VII. Other composite income -167,930,190.67 -170,671,539.56 413,895,873.99 413,895,873.99
VIII. Total composite income -110,005,259.28 -159,158,818.35 497,434,597.30 521,163,604.81
Attributable to owners of parent company -117,018,486.17 -159,158,818.35 498,699,276.30 521,163,604.81
Minority interest 7,013,226.89 -1,264,679.007.2.3 Cash Flow Statement
Prepared by HaiNan Pearl River Holdings Co., Ltd Jan.-Jun. 2010 Unit: RMB Yuan
In current period The same period of last year
Items
Consolidation Parent company Consolidation Parent company
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 263,395,787.90 61,962,832.61 213,082,465.53 1,796,479.00
Net increase of deposits from customers and due from banks
Net increase of loans from the central bank
Net increase of funds borrowed from other financial institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
Net increase of savings of policy holders and investment fund
Net increase of disposal of tradable financial assets
Cash received from interest, handling charges and commission s
Net increase of borrowed inter -bank funds
Net increase of buy-back funds
Tax refunds received
Other cash received relating to operating activities 44,480,734.95 56,992,791.55 8,392,724.03 3,838,922.45
Subtotal of cash inflows from operating activities 307,876,522.85 118,955,624.16 221,475,189.56 5,635,401.45
Cash paid for purchase of commodities and reception of service 67,511,867.17 402,212.71 122,587,504.80 1,250,136.22
Net increase of customer lending and advance
Net increase of funds deposited in the central bank and amount due from banks
Cash for paying claims of the original insurance contract
Cash for paying interest, handling charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 28,516,777.02 1,734,668.08 28,255,257.03 1,840,545.41
Various taxes paid 44,302,996.97 20,816,204.78 22,536,589.32 1,821,020.66
Other cash paid relating to operating activities 24,894,056.67 18,823,289.74 11,491,433.93 9,219,631.41
Subtotal of cash outflows from operating activities 165,225,697.83 41,776,375.31 184,870,785.08 14,131,333.70
Net cash flows from operating activities 142,650,825.02 77,179,248.85 36,604,404.48 -8,495,932.25
II. Cash Flows from investment activities:
Cash received from disposal of investments 28,000,000.00 20,000,000.00
Cash received from investment income
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 3,686,573.00 3,628,173.00 71,938.50
Net cash received from disposal of subsidiary or other business units
Other cash received relating to investment activities
Subtotal of cash inflows from investment activities 31,686,573.00 23,628,173.00 71,938.50
Cash paid to acquire fixed assets, intangible assets and other long-term assets 11,297,369.53 922,747.00 1,135,077.55 35,166.00
Cash paid for investment 132,600,000.00 125,600,000.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries and other business units
Other cash paid relating to investment activities 15,401,893.30
Subtotal of cash outflows from investment activities 159,299,262.83 126,522,747.00 1,135,077.55 35,166.00
Net cash flows from investment activities -127,612,689.83 -102,894,574.00 -1,063,139.05 -35,166.00
III. Cash flows from financing activities:
Cash received from absorbing investment
Including: Cash received by subsidiaries from investment of minority interest
Cash received from borrowings 7,850,000.00 7,850,000.00
Cash received from issuance of bonds
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 7,850,000.00 7,850,000.00
Cash paid to r epay loans 71,000,000.00 16,000,000.00 6,380,000.00 2,680,000.00
Cash paid for interest expenses and distribution of dividends or profit -3,092,330.66 -8,016,323.92 5,700,951.58 878,593.46
Including: dividends or profit paid to minority shareholders by subsidiaries -3,092,330.66 -8,016,323.92
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 67,907,669.34 7,983,676.08 12,080,951.58 3,558,593.46
Net cash flows from financing activiti es -67,907,669.34 -7,983,676.08 -4,230,951.58 4,291,406.54
IV. Effect of foreign exchange rate changes on cash and cash equivalents
V. Net increase in cash and cash equivalents -52,869,534.15 -33,699,001.23 31,310,313.85 -4,239,691.71
Add: begin ning balance of cash and cash equivalents 291,787,132.78 161,760,970.47 36,655,536.17 4,869,795.27
VI. Closing balance of cash and cash equivalents 238,917,598.63 128,061,969.24 67,965,850.02 630,103.567.2.4 Consolidated Statement of Changes in Owners’ Equity
Prepared by HaiNan Pearl River Holdings Co., Ltd For the first half year of 2010 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:
treasury
stock
Specific
reserves
Surplus public
reserve
General
risk
reserve
Retained prof its Others
Minority interest Total owners’
equity
Paid-in capital
(or share
capital)
Capital reserve
Less:
treasury
stock
Specific
reserves
Surplus public
reserve
General
risk
reserve
Retained profits Others
Minority
interest
Total owners’
equity
I. Balance at
the end of
last year
426,745,404.00 788,804,155.97 114,177,485.88 -676,622,621.58 12,771,330.23 665,875,754.50 426,745,404.00 334,260,156.98 114,177,485.88 -756,096,515.01 11,319,134.39 130,405,666.24
Add: change
of accounting
policy
Correction
of errors in
previous
periods
Others
II. Balance at
the beginning
of this year
426,745,404.00 788,804,155.97 114,177,485.88 -676,622,621.58 12,771,330.23 665,875,754.50 426,745,404.00 334,260,156.98 114,177,485.88 -756,096,515.01 11,319,134.39 130,405,666.24
III.ncrease/
decrease of
amount in this
year (“-”
means
decrease)
-169,575,000.00 52,556,513.83 7,013,226.89 -110,005,259.28 413,895,873.99 84,803,402.31 -1,264,679.00 497,434,597.30
(I)Net
profit
50,911,704.50 7,013,226.89 57,924,931.39 84,803,402.31 -1,264,679.00 83,538,723.31
(II)Other
composite
income
-169,575,000.00 1,644,809.33 -167,930,190.67 413,895,873.99 413,895,873.99
Subtotal of
(I) and (II)
-169,575,000.00 52,556,513.83 7,013,226.89 -110,005,259.28 413,895,873.99 84,803,402.31 -1,264,679.00 497,434,597.30
(III) Capital
input and
reduction by
owners
1. Capital
input of
owners
2. Amount of
stock payment
included in
owners’
equity3. 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
426,745,404.00 619,229,155.97 114,177,485.88 -624,066,107.75 19,784,557.12 555,870,495.22 426,745,404.00 748,156,030.97 114,177,485.88 -671,293,112.70 10,054,455.39 627,840,263.547.2.4 Statement of Changes in Owners’ Equity of Parent Company
Prepared by HaiNan Pearl River Holdings Co., Ltd For the first half year of 2010 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:
treasur
y stock
Specif
ic
reserv
es
Surplus public
reserve
General
risk
reserve
Retained profit
Total owners’
equity
I. Balance at the end of last year 426,745,404.00 791,820,495.51 109,487,064.39 -648,140,659.00 679,912,304.90 426,745,404.00 337,276,496.52 109,487,064.39 -741,179,217.57 132,329,747.34
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 426,745,404.00 791,820,495.51 109,487,064.39 -648,140,659.00 679,912,304.90 426,745,404.00 337,276,496.52 109,487,064.39 -741,179,217.57 132,329,747.34
III. Increase/ decrease of amount in this year (“-”
means decrease)
-169,575,000.00 10,416,181.65 -159,158,818.35 413,895,873.99 107,267,730.82 521,163,604.81
(I) Net profit 11,512,721.21 11,512,721.21 107,267,730.82 107,267,730.82
(II) Other composite income -169,575,000.00 -1,096,539.56 -170,671,539.56 413,895,873.99 413,895,873.99
Subtotal of (I) and (II) -169,575,000.00 10,416,181.65 -159,158,818.35 413,895,873.99 107,267,730.82 521,163,604.81
(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 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 426,745,404.00 622,245,495.51 109,487,064.39 -637,724,477.35 520,753,486.55 426,745,404.00 751,172,370.51 109,487,064.39 -633,911,486.75 653,493,352.15Hainan Pearl River Holding Company Limited
Notes on the Financial Statements for the Year ended 30 June 2010
(All amounts are stated in RMB Yuan unless otherwise stated)
I. General information
The old name of Hainan Pearl River Holding Company Limited (the "Company") was
Hainan Pearl River Industry Company Limited. Hainan Provincial People's
Government Office approved the reorganization of the Company into a joint stock
limited company according to the document of Qiong Fu Ban [1992] No.1. The
Company was registered in Hainan Administration for Industry and Commerce in
January 1992 The Company issued 21,086,400 shares of RMB common stock to the
public and was listed on Shenzhen Stock Exchange according to the document of
securities administration office [1992] No. 83 of the People's Bank of China in
December 1992. The Company issued the domestic listing foreign capital stock
(B-share) with the approval of China Securities Regulatory Commission in June 1995.
The Company changed to present name in January 2000. In August 2006, the
Company increased stocks with capital surplus to all shareholders, and the registered
capital was changed to 426,745,400 Yuan from 377,650,800 Yuan.
The business license number: 4600001006830
Office address: 29/F., Dihao Building, Pearl River Plaza, Binhai Avenue, Haikou,
Hainan, the PRC.
Corporate representative: Zheng Qing
The operation scope: Industrial investment, tropical farming, aquaculture, real estate
development and management, hotel investment and management, material supply,
construction equipment purchasing, leasing, hardware, chemical, trade of household
items, decoration, vehicle parking, and high-tech investment projects, investment in
environmental protection projects, investment advice. The company mainly engaged
in real estate development and property management, which belong to real estate
aspect.
The Company's basic organizational structure: General meeting of shareholders is the
highest organ of power. Board of directors is the executing agency. Supervisory board
is the Company's internal auditing agency. General Manager is responsible for the
Company's daily operational management.
There are General Manager Office, Securities Department, Tourism Real EstateDepartment, Financial Department, Management Department, Auditing Department
and others in the Company.
II. Accounting policies, accounting estimates and error correction of previous
years
1． Preparation basis of financial statement
Preparation of the financial statements is based on going concern postulate.
Recognition and measurement comply with actual transactions or events, and the
Company prepares financial statements on these bases.
2. Announcement about compliance with Accounting Standards for Business
Enterprises
The Company’s financial statements are prepared in accordance with the
requirements of the Accounting Standards for Business Enterprises, and they fairly
and completely present the financial position, operation results, cash flow and other
relevant information of the Company.
3. Accounting year
Accounting year of the Group is the calendar year from January 1 to December 31.
4. Reporting currency
The Company’s reporting and presentation currency is the Renminbi (“RMB”).
5. Consolidation Basis
(1) Merge of the enterprises under the uniform control
As there is the merge of the enterprises under the common control, the accrual basis
shall be used. The assets, liabilities (except the adjustment caused by complying with
various accounting policies) of the merged party shall be measured as their book
value at the merging date. The difference between the price of the book value on
merge (or face value of the total issued shares) and obtained book value of net assets,
shall adjust the capital surplus, and as the capital surplus is offset, the retained
earnings shall be adjusted. The pre-merger net profit incurred by the merged party,
shall be attributed to consolidated income statement.
(2) Merge of enterprises under the non-uniform control
As there is the merge of the enterprises under the non-uniform control, the purchasing
principal to be adopted by the Company. On the purchasing date, the consolidating
cost is determined by the fair values of the assets, occurred or payable liabilities, and
the issued equity securities, which are paid for purchasing. Meanwhile, the assets,
liabilities and the contingent liabilities of the vendor are determined at their fair values.The excess amount between the consolidating cost and the fair value of the net
assets of the vendor entity shall be recognized as goodwill in the consolidated
balance sheet; the balance of the consolidating cost and the fair value of the net
assets of the vendor shall be included in the current profit and loss.
The operating result shall be consolidated from the acquisition date until the
termination of the control.
6. The standard for consolidation financial statement preparation
All subsidiaries of the company are in the scope of the consolidation.
The company prepares the consolidated financial statements in accordance with the
“Accounting standard for Business Enterprises No. 33- Consolidated financial
statement “.
7. Cash and Cash equivalents
Cash refers to cash on hand and demand deposits. “Cash equivalents” refer to
short-term, highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk on change in value.
8. Foreign currency transactions
Foreign currency (currency other than the reporting currency) transactions are
translated into reporting currency at spot exchange rates prevailing on the day in
which the transactions take place. Monetary items are adjusted according to spot
exchange rates at the balance sheet date. The exchange balance on foreign currency
shall be capitalized and recorded into the cost of relevant assets if it is eligible for
capitalization; other exchange balance on foreign currency shall be recorded into
current profit and loss. Foreign currency non-monetary items measured with history
cost are translated into reporting currency at spot exchange rates on the occurrence
date. Foreign currency non-monetary items measured with fair value are translated
into reporting currency at spot exchange rates of fair value confirming date; the
difference is recorded as the changes in the profit and loss of fair value.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet
date are restated into the reporting currency using the spot exchange rates at that
date. Among the equity items, all items are translated into reporting currency at spot
exchange rates on the occurrence date except the item of undistributed profits.
Income Statement items are translated into reporting currency at spot exchange rate
on the occurrence date. The exchange difference from translation of financial
statements denominated in foreign currency is included in the equity and presented
individually.
9. Financial Instruments
(1) Classification of financial assets and financial liabilitiesFinancial assets shall be classified into the following four categories when they are
initially recognized: the financial assets which are measured at their fair values and
the variation of which is recorded into the profits and losses of the current period,
including transactional financial assets and the financial assets which are measured
at their fair values and of which the variation is included in the current profits and
losses; held-to-maturity investments; loans and account receivables;
available-for-sale financial assets.
Financial liabilities shall be classified into the following two categories when they are
initially recognized: the financial liabilities which are measured at their fair values and
of which the variation is included in the current profits and losses, including
transactional financial liabilities and the designated financial liabilities which are
measured at their fair values and of which the variation is included in the current
profits and losses; and other financial liabilities.
(2) Recognition and measurement of financial instruments
When an enterprise becomes a party to a financial instrument, it shall recognize a
financial asset or financial liability. The financial assets and financial liabilities initially
recognized by an enterprise except loans and account receivables shall be measured
at their fair values; loans and account receivables initially recognized by an enterprise
shall be measured at price in the contract or agreement. For the financial assets and
liabilities measured at their fair values and of which the variation is recorded into the
profits and losses of the current period, the transaction expenses thereof shall be
directly recorded into the profits and losses of the current period; for other categories
of financial assets and financial liabilities, the transaction expenses thereof shall be
included into the initially recognized amount.
An enterprise shall make subsequent measurement on its financial assets according
to their fair values, and may not deduct the transaction expenses that may occur when
it disposes of the said financial asset in the future. However, those under the following
circumstances shall be excluded: a. The investments held until their maturity, loans
and accounts receivable shall be measured on the basis of the post-amortization
costs by adopting the actual interest rate method; b. The equity whose fair value
cannot be measured reliably, and the derivative financial assets which are connected
with the said equity instrument and must be settled by delivering the said equity
instrument shall be measured on the basis of their costs.
An enterprise shall make subsequent measurement on its financial liabilities on the
basis of the post-amortization costs by adopting the actual interest rate method, with
the exception of those under the following circumstances: a. For the financial liabilities
measured at their fair values and of which the variation is recorded into the profits and
losses of the current period, they shall be measured at their fair values, and none of the
transaction expenses may be deducted, which may occur when the financial liabilities
are settled in the future. b. For the derivative financial liabilities, which are connected to
the equity instrument for which there is no quotation in the active market and whose fairvalue cannot be reliably measured, and which must be settled by delivering the equity
instrument, they shall be measured on the basis of their costs. c. For the financial
guarantee contracts which are not designated as a financial liability measured at its fair
value and the variation thereof is recorded into the profits and losses of the current
period, and for the commitments to grant loans which are not designated to be
measured at the fair value and of which the variation is recorded into the profits and
losses of the current period and which will enjoy an interest rate lower than that of the
market, a subsequent measurement shall be made after they are initially recognized
according to the higher one of the following: the best estimation required to pay when
carrying out the prevailing obligations, and initially recognized amount deducting
accumulative amortization which adopts the actual interest rate method.
(3) Recognition and measurement of transfer of financial assets
Where an enterprise has transferred nearly all of the risks and rewards related to the
ownership of the financial asset to the transferee, it shall stop recognizing the financial
asset. If it retained nearly all of the risks and rewards related to the ownership of the
financial asset, it shall not stop recognizing the financial asset. Where an enterprise
does not transfer or retain nearly all of the risks and rewards related to the ownership of
a financial asset, it shall deal with it according to the circumstances as follows,
respectively: a. If it gives up its control over the financial asset, it shall stop recognizing
the financial asset; b. If it does not give up its control involvement in the transferred
financial asset, recognize the related financial asset and recognize the relevant liability
accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping
recognition, the difference between the amounts of the following 2 items shall be
recorded in the profits and losses of the current period: a. The book value of the
transferred financial asset; b. The sum of consideration received from the transfer, and
the accumulative amount of the changes of the fair value originally recorded in the
owner's equities. If the transfer of partial financial asset satisfies the conditions to stop
the recognition, the entire book value of the transferred financial asset shall, between
the portion whose recognition has been stopped and the portion whose recognition
has not been stopped, be apportioned according to their respective relative fair value,
and the difference between the amounts of the following 2 items shall be included into
the profits and losses of the current period : a. The book value of the portion whose
recognition has been stopped; b. The sum of consideration of the portion whose
recognition has been stopped, and the portion of the accumulative amount of the
changes in the fair value originally recorded in the owner's equities which is
corresponding to the portion whose recognition has been stopped.
(4) Determination of the fair value of main financial assets and financial liabilities
As for the financial assets or financial liabilities for which there is an active market, the
quoted prices in the active market shall be used to determine the fair values thereof.
Where there is no active market for a financial instrument, the enterprise concerned
shall adopt value appraisal techniques to determine its fair value. The value appraisal
techniques mainly include the prices adopted by the parties, who are familiar with thecondition, in the latest market transaction upon their own free will, the current fair value
obtained by referring to other financial instruments of the same essential nature, the
cash flow capitalization method and the option pricing model, etc. As for the financial
assets initially obtained or produced at source and the financial liabilities assumed, the
fair value thereof shall be determined on the basis of the transaction price of the
market.
(5) Impairment of financial assets
An enterprise shall carry out an inspection, on the balance sheet day, on the carrying
amount of the financial assets other than those measured at their fair values and of
which the variation is recorded into the profits and losses of the current period. An
impairment test shall be made on the financial assets with significant single amounts.
With regard to the financial assets with insignificant single amounts, they shall be
included in a combination of financial assets with similar credit risk features so as to
carry out an impairment-related test. Where, upon independent test, the financial asset
(including those financial assets with significant single amounts and those with
insignificant amounts) has not been impaired, it shall be included in a combination of
financial assets with similar risk features so as to conduct another impairment test.
Where a financial asset measured on the basis of post-amortization costs is impaired,
the carrying amount of the said financial asset shall be written down to the current
value of the predicted future cash flow (excluding the loss of future credits not yet
occurred), and the amount as written down shall be recognized as loss of the
impairment of the asset. Where there is a very small gap between the predicted future
cash flow of a short-term account receivable item and the current value thereof, the
predicted future cash flow is not required to be capitalized when determining the
relevant impairment-related losses. Where an equity instrument investment for which
there is no quoted price in the active market and whose fair value cannot be reliably
measured, or a derivative financial asset which is connected with the equity instrument
and which must be settled by delivering the equity instrument, suffers from any
impairment, the gap between the carrying amount of the equity instrument investment
or the derivative financial asset and the current value of the future cash flow of similar
financial assets capitalized according to the returns ratio of the market at the same
time shall be recognized as impairment-related losses. Where available-for-sale
financial assets are impaired due to significant drop of fair value and the drop is not
temporary, the accumulative losses arising from the decrease of the fair value of the
owner’s equity which was directly included shall be transferred out and recorded into
the profits and losses of the current period.
10. Accounts receivable and bad debts
(1) Measurement method and the percentage of bad debts
Measurement method of bad debts: accounted with allowance method.
At the end of the period, impairment test shall be made on individual accounts
receivable with significant amounts. If there is objective evidence that they have been
impaired, bad debt loss shall be recognized and provision for bad debts shall be made
base on the differences between book values and the present value of future cashflows.
For those individual accounts receivable without significant amounts at the end of the
period, along with those accounts receivable that have been tested individually but not
impaired, the Company classifies them in line with similar credit risk characteristics
into several groups, and make a specific percentage of bad debts provision on the
accounts receivable balances at balance sheet date. On the basis of the actual loss
rate of receivable accounts, with same or similar credit risk characteristics of accounts
receivable package in previous year, the Company also considers current situation
and determine the percentage of bad debt provision.
Here is the Company’s bad debts provision policy:
Ages Percentage of Accounts
Receivable (%)
Percentage of Others
Receivable (%)
Within 1 year (including 1 year, same as
following) 2 2
1 year to 2 years 5 5
2 years to 3 years 10 10
3 years to 4 years 20 20
4 years to 5 years 30 30
Over 5 years 50 50
There is strong evidence that accounts receivable can’t be recovered or little possibility
of recovery (it is unable to pay in the short term due to bankruptcy, insolvent, serious
shortage of cash flow, serious natural disasters and etc. ) as well as other evidences of
occurring loss, the Company can make full provision for the accounts receivable.
(2) The accounts receivable meeting the following criteria are recognized as bad
debts:
For accounts receivable that are surely uncollectible, such as they can be written off
as bad debts after the approval of the general meeting of shareholders or the board of
directors.
11. Inventories
(1) Inventories include: development cost (constructing development product),
development product, finished goods, low-value consumable supplies and etc. All
inventories are calculated at actual cost when acquire. The issue of inventories is
calculated according to individual cognizance method. The low–value consumable
supplies are amortized at one time. Inventories stock physical count system:
perpetual inventory method
Measurement method of land used for development: the land used for development is
included in “Inventories - development cost”.
Public facilities costs: public facilities such as schools, as well as public facilities fees
acquired by government departments, the cost is included in "development costs" andits apportionment and detailed calculation are in accordance with calculation objects
and cost items.
(2) For inventories at balance sheet date, the evaluation criteria should base on the
lower value between costs and net values that can be converted into cash. When net
values that can be converted into cash are lower than costs, provision for impairment
loss of inventories shall be made and recorded into current profit and loss.
12. Long-term equity investment
(1) The initial cost of the long-term equity investment
For the business combination under the same control, it shall, on the date of merger,
regard the share of the book value of the owner's equity of the merged enterprise as
the initial cost of the long-term equity investment. For the business combination not
under same control, the initial cost of long-term equity investment is fair value of
assets paid, liabilities undertaken, the equity securities issued by the Company, and
includes all direct expenses and future events that will influence combination cost.
Besides the long-term equity investments formed by the business combination, the
initial cost of a long-term equity investment obtained by other means shall be
ascertained in accordance with the provisions as follows: The initial cost of a
long-term equity investment obtained by making payment in cash shall be the
purchase cost which is actually paid; the initial cost of a long-term equity investment
obtained on the basis of issuing equity securities shall be the fair value of the equity
securities issued; the initial cost of a long-term equity investment of an investor shall
be the value stipulated in the investment contract or agreement.
(2) Subsequent measurement
The Company uses cost method for the following conditions: a long-term equity
investment where the investing enterprise can exercise control over the investee, or
the investing enterprise does not have joint control or significant influence over the
investee, the investment is not quoted in an active market and its fair value can’t be
reliably measured. For a long-term equity investment where the investing enterprise
can exercise control over the investee, the investing enterprise shall make an
adjustment by employing the equity method when it works out consolidated financial
statements. When adopting cost method, the dividends or profits declared to distribute
by the invested entity shall be recognized as the current investment income. The
investment income recognized by the investing enterprise shall be limited to the
amount received from the accumulative net profits that arise after the invested entity
has accepted the investment. Where the amount of profits or cash dividends obtained
by the investing entity exceeds the aforesaid amount, it shall be regarded as recovery
of initial investment cost.
A long-term equity investment of the investing enterprise that does joint control or
significant influences over the invested entity shall be measured by employing theequity method. If the initial cost of a long-term equity investment is more than the
investing enterprise' attributable share of the fair value of the invested entity's
identifiable net assets for the investment, the initial cost of the long-term equity
investment may not be adjusted. If the initial cost of a long-term equity investment is
less than the investing enterprise' attributable share of the fair value of the invested
entity's identifiable net assets for the investment, the difference shall be included in
the current profits and losses and the cost of the long-term equity investment shall be
adjusted simultaneously. After an investing enterprise obtains a long-term equity
investment, it shall, in accordance with the attributable share of the net profits or
losses of the invested entity, recognize the investment profits or losses and adjust the
book value of the long-term equity investment. Where any change is made to the
owner's equity other than the net profits and losses of the invested entity, the book
value of the long-term equity investment shall be adjusted and be included in the
owner's equity.
The Company should have impairment test for any long-term equity investment on
very balance sheet date. When the estimated value in use is less than its book value,
it will be treated as impairment loss. And this loss should be transferred into current
profit and loss account; meanwhile, the company should set up provision for the
long-term equity investment impairment loss. To any long-term equity investments,
which are measured by cost method, there is no price or its fair value can not be
measured reliably, the impairment loss of these investments should be the difference
between the book value and the present value of the future cash flow calculated by
using current market rate of similar financial asset.
For other long-term equity investment, where any evidence shows that there is
possible assets impairment, the impairment provision is made according to relevant
regulations and methods.
(3) Recognization basis of joint control and significant influences
The term "joint control" refers to the control over an economic activity in accordance
with the contracts and agreements, which does not exist unless the investing parties
of the economic activity with one an assent on sharing the control power over the
relevant important financial and operating decisions. The term "significant influences"
refers to the power to participate in making decisions on the financial and operating
policies of an enterprise, but not to control or do joint control together with other
parties over the formulation of these policies.
(4) Disposal of long-term equity investment
When disposing of a long-term equity investment, the difference between its book
value and the actual purchase price shall be included in the current profits and losses.
If any change other than the net profits and losses of the invested entity occurs and is
included in the owner's equity, the portion previously included in the owner's equity
shall, when disposing of a long-term equity investment measured by employing the
equity method, be transferred to the current profits and losses according to a certainproportion.
13. Investment property
The term "investment property" refers to the real estates held for generating rent
and/or capital appreciation. Including: the right to use any land which has already
been rented; the right to use any land which is held and prepared for transfer after
appreciation; and the right to use any building which has already been rented. The
initial measurement of the investment property shall be made at its cost. An enterprise
shall make a follow-up measurement to the investment real estate through the cost
pattern. For buildings which have already been rented, the Company calculates
depreciation as the same method of fixed assets. For the right to use any land, it is
amortized with straight-line method according to the serviceable life. At the balance
sheet date, where any evidence shows that there is possible assets impairment, the
impairment provision is made.
14. Fixed assets
(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for use in production or supply of goods
or services, for rental to others, or for administrative purpose, and have useful lives
more than one accounting year.
The expected discard expenses should be taken into consideration in the
ascertainment of the cost of a fixed asset.
(2) The category and depreciation method of fixed assets
Fixed assets include buildings and structures, vehicles, general equipments, specific
equipments and other equipments. 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 various types fixed assets are listed as follows:
Category Estimated useful lives
(years)
Expected residual
value (%)
Annual depreciation
rate (%)
Buildings and structures 25 5 3.8
Vehicles 5 5 19.0
General equipments 10 5 9.5
Specific equipments 5 5 19.0
Other equipments 5 5 19.0
Depreciation shall be made for the fixed assets on a monthly basis. Fixed assets
increased this month shall make depreciation from next month; fixed assets
decreased this month shall stop making depreciation from next month.
The company shall, at least at the end of each year, have a check on the useful life,expected residual value and the depreciation method of the fixed assets, and adjust
them when necessary.
At the balance sheet date, where any evidence shows that there is possible assets
impairment, the impairment provision is made according to Notes II. 17.
(3) Idle fixed assets
Fixed assets that are not used for six months continuously due to underemployment
or natural disasters are identified as idle fixed assets (except for seasonal break).
The depreciation method of idle fixed assets is consistent with other fixed assets.
(4) Fixed assets under financing lease
When one or more of the following criteria are met, a lease shall be classified as a
financial lease:
a. the lease transfers ownership of the leased asset to the lessee by the end of the
lease term;
b. the lessee has the option to purchase the leased asset at a price that is expected to
be sufficiently lower than the fair value at the date the option becomes exercisable
such that, at the inception of the lease, it is reasonably certain that the option will be
exercised by the lessee;
c. the lease term is for the major part of the useful life of the leased asset even if title is
not transferred;
d. in the case of the lessee, at the inception of the lease the present value of the
minimum lease payments amounts to substantially all of the fair value of the leased
asset; in the case of lesser, at the inception of the lease the present value of the
minimum lease receipts amounts to substantially all of the fair value of the leased
asset;
e. the leased assets are of a specialized nature such that only the lessee can use
them without major modifications being made.
Fixed assets under financing lease shall be recorded at the lower one of the fair value
of the leased asset and the present value of the minimum lease payments. The
depreciation method is consistent with fixed assets of the Company.
15. Construction in progress
Construction in progress (“CIP”) includes all costs incurred during the preparation
period before commencement of construction and until the asset is ready for its
intended use. These costs include direct materials, direct labour, equipment for
installation, construction and installation charges, management fees, gain or loss on
trial run production and borrowing costs which are qualified for capitalization.
CIP is transferred to fixed assets when the asset is ready for its intended use.
At the balance sheet date, where any evidence shows that there is possible CIP
impairment, the impairment provision is made according to Notes II.17.16. Borrowing Costs
Borrowing costs are interest and other related costs incurred by the Company in
connection with the borrowing of funds, and include interest, amortization of discounts
or premiums related to borrowings, ancillary costs incurred in connection with the
arrangement of borrowings, and exchange differences arising from foreign currency
borrowings. Borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset shall be capitalized as part of the cost
of that asset. The amounts of other borrowing costs incurred shall be recognized as
an expense in the period in which they are incurred.
Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that
necessarily take a substantial period of time for acquisition, construction or production
to get ready for their intended use or sale. The capitalization of borrowing costs can
commence only when all of the following conditions are satisfied: (1) expenditures for
the asset are being incurred; (2) borrowing costs are being incurred; (3) activities
relating to the acquisition, construction or production of the asset that are necessary
to prepare the asset for its intended use or sale have commenced.
When the qualified asset under acquisition and construction or production is ready for
the intended use or sale, the capitalization of the borrowing costs shall be ceased; then
the borrowing costs incurred shall be recorded into the profits and losses of the current
period. Borrowing costs due to loans from real estate development are recorded into
development cost before the completion of the project and recorded into current profit
and loss after the completion of the project. Borrowing costs are recorded into
development cost and amortized quarterly.
Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization
of the borrowing costs shall be suspended. The borrowing costs incurred during such
period shall be recognized as expenses, and shall be recorded into the profits and
losses of the current period.
During the capitalization period, the amount of interest to be capitalized for each
accounting period shall be determined as follows:
(1) for a specific-purpose borrowing, the amount of interest to be capitalized shall be
the actual interest expense incurred for the period less temporary deposit’s interest or
investment income;
(2) where funds are borrowed under general-purpose borrowings, the Company shall
determine the amount of interest to be capitalized by applying a capitalization rate to
the weighted average of the excess amounts of cumulative expenditures on the asset
over and above the amounts of specific-purpose borrowings. The capitalization rate
shall be the weighted average of the interest rates applicable to the general-purpose
borrowings.17. Intangible assets
The term "intangible assets" refers to the identifiable non-monetary assets possessed
or controlled by enterprises which have no physical shape. If it is unable to forecast
the period when the intangible asset can bring economic benefits to the enterprise, it
shall be regarded as an intangible asset with uncertain service life. The intangible
assets shall be initially measured according to its cost. If it is unable to determine the
expected realization pattern reliably, intangible assets shall be amortized by the
straight-line method. An enterprise shall, at least at the end of each year, check the
service life and the amortization method of intangible assets with limited service life,
and adjust them when necessary. Intangible assets with uncertain service life may not
be amortized. An enterprise shall check the service life of intangible assets with
uncertain service life during each accounting period. Where any evidence shows that
there is possible assets impairment, the impairment provision is made.
18. Payroll
The term "employee compensation" refers to all kinds of payments and other relevant
expenditures given by enterprises in exchange of the services offered by the
employees. The employee compensation shall include: wages, bonuses, allowances
and subsidies for the employees, non-monetary welfare and etc.
During the accounting period of an employee' providing services to an enterprise, the
enterprise shall, in accordance with beneficiaries of the services offered by the
employee, treat the following circumstances respectively:
(1)The compensation for the employee for producing products or providing services
shall be recorded as the product costs and service costs;
(2)The compensation for the employee for any on-going construction project or for
any intangible asset shall be recorded as the costs of fixed asset or intangible assets;
(3)The compensation for the cancellation of the labor relationship with the employee
shall be recorded into general and administrative expenses of the current period.
The compensation for the employee other than those as mentioned above shall be
recorded as profit or loss for the current period.
19. Contingencies liabilities
The obligation pertinent to a Contingencies shall be recognized as accrued liabilities
when the following conditions are satisfied simultaneously: (1)That obligation is a
current obligation of the enterprise; (2)It is likely to cause any economic benefit to flow
out of the enterprise as a result of performance of the obligation; (3)The amount of the
obligation can be measured in a reliable way. The estimated debts shall be initially
measured in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
20. Share-based payments
The term "share-based payment" refers to a transaction in which an enterprise grantsequity instruments or undertakes equity-instrument-based liabilities in return for
services from employee or other parties. The share-based payments shall consist of
equity-settled share-based payments and cash-settled share-based payments. The
equity-settled share-based payment in return for employee services shall be
measured at the fair value of the equity instruments granted to the employees. An
equity-settled share-based payment in return for the service of any other party shall
be measured at the fair value of the service on the acquisition date; If the fair value of
the service of any other party can not be measured in a reliable way, it shall be
measured at the fair value of the equity instruments on the acquisition date. The fair
value of the equity instruments is recognized according to following methods:
(1) For which there is an active market, the quoted prices in the active market shall be
used to determine the fair values.
(2) Where there is no active market for equity instrument, the enterprise concerned
shall adopt value appraisal techniques to determine its fair value. The value appraisal
techniques mainly include the prices adopted by the parties, who are familiar with the
condition, in the latest market transaction upon their own free will, the current fair
value obtained by referring to other financial instruments of the same essential nature,
the cash flow capitalization method and the option pricing model, etc.
The Company makes the best estimation to the equity instruments can be exercised
rights according to subsequent information, for example, change of employees who
can exercise rights as currently obtained.
21. Revenue recognition
(1) Revenue from the sale of goods shall be recognized only when all of the following
conditions are satisfied:
a. the enterprise has transferred to the buyer the significant risks and rewards of
ownership of the goods;
b. the enterprise retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold;
c. the amount of revenue can be measured reliably;
d. it is probable that the associated economic benefits will flow to the enterprise;
e. the associated costs incurred or to be incurred can be measured reliably.
Real estate sales revenue: the Company can recognize real estate sales revenue
after the completion and acceptance of the property, signing sale contract, acquiring
payment proof from buyer and delivery. When the buyer receives written delivery
notice and has no warrant to refuse to accept it, the sales revenue is realized after
delivery limit closed of delivery notice. For the development project consigned by
other, as well as in accordance with " Accounting Standards for Business Enterprises
-Construction Contract", the revenue shall be recognized in light of the percentage-ofcompletion
method. The percentage-of- completion is determined by the proportion of
finished workload.(2) Rendering of services
When the outcome of a transaction involving the rendering of services can be
estimated reliably at the balance sheet date (including: the amount of revenue can be
measured reliably; it is probable that the associated economic benefits will flow to the
enterprise; the stage of completion of the transaction can be measured reliably; the
costs incurred and to be incurred for the transaction can be measured reliably),
revenue associated with the transaction shall be recognized using the percentage of
completion method, and the stage of completion of the transaction is recognized
according to the proportion of the cost having taken place occupied the estimated total
cost.
When the outcome of a transaction involving the rendering of services can not be
estimated reliably at the balance sheet date: when the costs incurred are expected to
be recoverable, revenue shall be recognized to the extent of costs incurred and an
equivalent amount shall be charged to profit or loss as service costs; when the costs
incurred are not expected to be recoverable, the costs incurred shall be recognized in
profit or loss for the current period and no service revenue shall be recognized.
The revenue of property management service is recognized when following conditions
are satisfied: the property management service has been offered; the associated
economic benefits will flow to the enterprise; the associated costs can be measured
reliably.
(3) Use by others of enterprise assets
Revenue arising from the use by others of enterprise assets shall be recognized only
when both of the following conditions are satisfied: it is probable that the associated
economic benefits will flow to the enterprise; the amount of the revenue can be
measured reliably. The amount of interest shall be determined according to the length
of time for which the enterprise’s currency fund is used by others and the effective
interest rate. The amount of royalties shall be determined according to the period and
method of charging as stipulated in the relevant contract or agreement.
22. Government grants
Government grants shall be recognized at fair value on the conditions that the
Company can receive the grant and comply with the conditions attaching to the grant.
For a government grant related to income, if the grant is a compensation for related
expenses or losses to be incurred by the Company in subsequent period, the grant
shall be recognized as deferred income, and recognized in profit or loss over the
periods in which the related costs are recognized. A government grant related to an
asset shall be recognized as deferred income, and evenly amortized to profit or loss
over the useful life of the related asset.23. Recognition of deferred income tax assets
(1) The Company shall recognize the deferred income tax assets arising from a
deductible temporary difference to the extent of the amount of the taxable income
which it is most likely to obtain and which can be deducted from the deductible
temporary difference. However, the deferred income tax assets, which are arising
from the initial recognition of assets or liabilities during a transaction which is
simultaneously featured by the following, shall not be recognized:
(i) This transaction is not business combination; and
(ii) At the time of transaction, the accounting profits will not be affected, nor will the
taxable amount (or the deductible loss) be affected.
(2) Where the deductible temporary difference related to the investments of the
subsidiary companies, associated enterprises and joint enterprises can meet the
following requirements simultaneously, the enterprise shall recognize the
corresponding deferred income tax assets:
(i) The temporary differences are likely to be reversed in the expected future; and
(ii) It is likely to acquire any amount of taxable income tax that may be used for making
up the deductible temporary differences.
(iii) As for any deductible loss or tax deduction that can be carried forward to the next
year, the corresponding deferred income tax assets shall be determined to the extent
that the amount of future taxable income to be offset by the deductible loss or tax
deduction to be likely obtained.
(3) Recognition of deferred income tax liabilities
Except for the deferred income tax liabilities arising from the following transactions,
an enterprise shall recognize the deferred income tax liabilities arising from all taxable
temporary differences:
(i) the initial recognition of business reputation;
(ii) the initial recognition of assets or liabilities arising from the following transactions
which are simultaneously featured by the following:
(a) The transaction is not business combination;
(b) At the time of transaction, the accounting profits will not be affected, nor will the
taxable amount (or the deductible loss) be affected.
(4) The income taxes of the current period and deferred income tax of an enterprise
shall be treated as income tax expenses or incomes, and shall be recorded into the
current profits and losses, excluding the income taxes incurred under the following
circumstances:
(i) the business combination; and
(ii) the transactions or events directly recognized as the owner's rights and interests.
(5) Impairment on the deferred income tax assets
On the balance sheet date, the carry amounts of the deferred income tax assets shallbe reviewed.
24. Maintenance fund
The Company’s property management company receives and manages public
maintenance fund consigned by owners, and charges to “agency fund”. The fund is
used in the maintenance and update of the common apparatus and common position
of the house and communal facilities of property management region.
25. Quality assurance reserve funds
Construction party should remain quality assurance reserve funds according to the
amount in the construction contract, and list in "accounts payable". The funds should
be paid according to the actual conditions and contract after guarantee period.
26. Changes of accounting policies and accounting estimates and error correction
(1) Changes of accounting policies
Not applicable.
(2) Changes of accounting estimates and error correction
Not applicable.
27. Notes for accounting estimates of previous period
Not applicable.
III. Taxation
The main taxes include: business tax, city construction and maintenance tax,
education fee, income tax and etc. The tax rates are as following:
Category Rate Taxable base
Business tax 5% Revenue of house property sale and lease,
property management income and etc.
City construction and maintenance tax 5%, 7% Business tax and value-added tax
Education fee 3% Business tax and value-added tax
Income tax 18%, 25% Taxable income
Note: Except that income tax of companies in Hainan District and Hainan Pearl River
Enterprises Holding Co., Ltd. Shanghai Real Estate Co. is levied at 20% of taxable
income, the income tax of other companies is levied at 25% of taxable income.
IV. Business combinations and consolidation financial statements
The Company shall include all subsidiaries within the scope of consolidation.
The consolidated financial statements shall be prepared by parent based on thefinancial statements of the parent and its subsidiaries, using other related information
and after adjusting the long-term equity investments in subsidiaries using the equity
method according to “Accounting Standard for Business Enterprises
No.33— Consolidated Financial Statements”.
1. Subsidiaries established by the Company
Subsidiary’s name Registered
address
Registered
capital
(RMB
0’000)
Principal activities Holding
proportion
Voting
rights
proportion
Amount invested
by the Company
(RMB 0’000)
Hainan Pearl River
Properties and Hotels
Management Co., Ltd.
Hainan
Haikou
500
Properties and
Hotels
Management
98% 98% 490
Hainan Pearl River
Environmental Projects Co.,
Ltd.
Hainan
Haikou
100
Gardens
engineering
construction
100% 100% 100
Hainan Pearl River Estate
Cleaning Company
Hainan
Haikou 20 Cleaning projects 100% 100% 20
Hainan Pearl River Estate
Machine Engineering
Company
Hainan
Haikou
150
Mechanical and
electrical products
sales
100% 100% 150
Hainan Pearl River Estate
Marketing Co., Ltd.
Hainan
Haikou
100
Real Estate
Marketing
Planning
100% 100% 100
Sanya Wanjia Hotel
Management Co., Ltd.
Hainan
Sanya 12,000 Hotel service 100% 100% 12,000
Hubei Pearl River Real Estate
Development Co., Ltd.
Hubei
Wuhan
6,500
Real estate
development and
management
88% 88% 5,720
Wuhan Pearl River Meilin
Hotels Management Co.,
Ltd.
Hubei
Wuhan
50 Service 100% 100% 50
Hainan Pearl River
Enterprises Holding Co.,
Ltd. Shanghai Real Estate Co. Shanghai 4,000
Real estate
development and
management
100% 100% 4,000Subsidiary’s name Registered
address
Registered
capital
(RMB
0’000)
Principal activities Holding
proportion
Voting
rights
proportion
Amount invested
by the Company
(RMB 0’000)
Beijing Jiubo Culture
Development Co., Ltd. Beijing 500
Cultural and
sports services 100% 100% 500
Mudanjiang Pearl River Hotel
Management Co., Ltd. Mudanjiang 2000
Hotel service
100% 100% 2000
V. Notes to significant items of the consolidated financial statements
1. Monetary funds
Items Jun 30, 2010 Jan 1, 2010
Cash 193,980.73 318,158.18
Bank deposit 238,697,000.71 291,454,577.87
Other monetary funds 26,617.19 14,396.73
Total 238,917,598.63 291,787,132.78
Note: The other monetary fund was the amount of credit card.
2. Accounts receivable
(1) Accounts receivable listed by categories
June 30, 2010 January 1, 2010
Amounts
Bad Debt
Provision
Amounts
Bad Debt
Categories Provision
Amounts
Ratio
(%)
Amounts
Ratio
(%)
Amounts
Ratio
(%)
Amounts
Ratio
(%)
Significant
accounts
receivable
7,761,707.60 53.92 7,761,707.60 100.00 7,761,707.60 59.89 7,761,707.60 100.00
Non-significant
but high risk
portfolio
accounts
receivable
2,690,367.44 18.69 2,340,523.73 87.00 2,764,507.43 21.34 2,331,599.02 84.34
Other
non-significant
accounts
receivable
3,943,411.46 27.39 160,813.23 4.08 2,433,083.36 18.77 220,292.30 9.05
Total 14,395,486.50 100.00 10,263,044.56 71.29 12,959,298.39 100.00 10,313,598.92 79.58
(2) Aging analysis
30 Jun 2010 1 Jan 2010
Ages
Balance Proportion
(%) Bad debts
Bad debts ratio
(%)
Balance Proportion
(%) Bad debts
Bad debts ratio
(%)
Within
1 year 3,436,911.46 23.87 68,738.23 2.00 1,815,393.94 14.01 36,307.88 2.00
1-2
years 101,500.00 0.71 5,075.00 5.00 141,500.00 1.09 7,075.00 5.00
2-3 40,000.00 0.28 4,000.00 10.00 19,200.00 0.15 1,920.00 10.00years
3-4
years 265,000.00 1.84 53,000.00 20.00 475,408.00 3.67 263,408.00 55.41
4-5
years 100,000.00 0.69 30,000.00 30.00 100,000.00 0.77 30,000.00 30.00
Over
5
years
10,452,075.04 72.61 10,102,231.33 96.65 10,407,796.45 80.31 9,974,888.04 95.84
Total 14,395,486.50 100.00 10,263,044.56 71.29 12,959,298.39 100.00 10,313,598.92 79.58
Note 1. The year end balance did not contain any debt owned by major shareholders
who own more than 5% of the Company’s share capital.
2.The Top five debtors’ ending total balance is 8,259,227.60Yuan, and is 57.37% of
accounts receivable total amount.
3. The top five debtors’ ending total balance. Details are as follows:
Name
Relationship with
the company
Owned amount Ages
Proportion of total
accounts receivable (%)
Hainan racing entertainment Co., LTD client 2,406,158.00 over 5 years 16.71
Hainan Baoping company client 2,218,494.43 over 5 years 15.41
Hainan centaline property agency client 2,090,069.77 over 5 years 14.52
Hainan dragon flim studio client 1,046,985.40 over 5 years 7.27
Haikou Peijie Clothing Company client 497,520.00 over 5 years 3.46
Total
8,259,227.60
57.37
4. The bad debts proportion and reasons for individual accounts receivable with
significant amount
Individual accounts receivable whose amount is more than 1 million and whose
ending balance is owned more than 5% (including 5%) of the total other receivables
will be recognized as individual accounts receivable with significant amount.
At the end of this year, the individual accounts receivable with significant amount that
doesn’t occur impairment loss after individual testing, shall base on actual loss rates of
accounts receivable portfolio with same ages and present situation to determine the
bad debts proportion. Among them, the balance over 5 years is 7,761,707.60 Yuan.
5. The bad debts proportion and reasons for individual accounts receivable without
significant amount, but with s ignificant credit risk according to credit risk characteristics
portfolioFor the accounts receivable over 5 years, the bad debts proportion is 50% of the
balance. For accounts receivable that are surely uncollectible, the bad debts
proportion could be increased to 100% of the balance. After deducting individual
accounts receivable with significant amount from accounts receivable satisfied with
above situations, the leavings are individual accounts receivable without significant
amount, but with significant credit risk.
3.Prepayments
(1) Aging analysis
30 Jun 2010 1 Jan 2010
Ages
Balance
Proportion
(%)
Balance
Proportion
(%)
Within 1 year 7,696,180.15 62.03 38,951,175.90 87.95
1-2 years 4,410,600.00 35.55 4,974,585.03 11.23
2-3 years 60,000.00 0.14
Over 3 years 300,000.00 2.42 300,000.00 0.68
Total 12,406,780.15 100.00 44,285,760.93 100.00
(2) Top five units of prepayments
Company’s Name Relationship Amounts Proportion
(%) Year Unsettled
reason
Guangdong
High-spirited
Technology
Development Co.,
Ltd.
client 4,410,600.00 35.55 2008
Shantou Kin Group
Hainan Branch client 3,879,434.82 31.27 2009
Beijing Mingmei
Garden Construction
Engineering Co., Ltd
client 1,544,893.80 12.45 2009
Xizi Otis Co., Ltd client 861,140.00 6.94 2009
Wuhan Yigeli
Technology
Development Co., Ltd.
client 300,000.00 2.42 2006
Pre-paid
subcontracting
project with a
long-term
construction
cycle.
Total 10,996,068.62 88.63
Note 1: The year end balance did not contain any debt owned by major shareholders
who own more than 5% of the Company’s share capital.4. Dividends receivable
(1) Details of dividends receivable
Items Jan 1, 2010 Increment Decrement Jun 30, 2010
Hainan Pearl River
Guanzhuang Co., Ltd.
260,015.00 260,015.00
Total 260,015.00 260,015.00
(2) Dividends receivable exceed one year
Invested company Age
Ending
balance
Reason
Impairment
loss
Hainan Pearl River
Guanzhuang Co., Ltd.
2-3
years
260,015.00
The invested company has
the fund tight problem
None
Total 260,015.00
5.Other receivables
(1) Others receivable listed by categories
June 30, 2010 Jan 1, 2010
Amounts
Bad Debt
Provision
Amounts
Bad Debt
Categories Provision
Amounts
Ratio
(%)
Amounts
Ratio
(%)
Amounts
Ratio
(%)
Amounts
Ratio
(%)
Significant
accounts
receivable
268,991,392.77 82.70 16,400,800.35 6.10 208,704,388.81 90.43 24,242,029.15 11.62
Non-significant
but high risk
portfolio
accounts
receivable
28,287,602.78 8.70 25,988,118.67 91.87 17,831,727.32 7.72 16,297,455.25 91.40
Other
non-significant
accounts
receivable
27,974,376.94 8.60 615,097.01 2.20 4,260,121.19 1.85 662,016.45 15.54
Total 325,253,372.49 100.00 43,004,016.03 13.22 230,796,237.32 100.00 41,201,500.85 17.85
(2) Aging analysis
30 Jun 2010 1 Jan 2010
Ages
Balance Proportion
(%) Bad debts
Bad debts ratio
(%)
Balance Proportion
(%) Bad debts
Bad debts ratio
(%)
Within
1 year 277,414,763.44 85.29 5,548,295.27 2.00 182,969,316.25 79.28 3,658,913.68 2.00
1-2
years 48,580.92 0.01 2,429.05 5.00 44,584.58 0.02 2,229.23 5.00
2-3
years 216,960.35 0.07 21,696.04 10.00 441,128.03 0.19 253,686.19 57.513-4
years 800,000.00 0.25 160,000.00 20.00 800,000.00 0.35 260,000.00 32.50
4-5
years 6,002,840.00 1.85 1,800,852.00 30.00 6,005,129.00 2.60 1,801,538.70 30.00
Over
5
years
40,770,227.78 12.53 35,470,743.67 87.00 40,536,079.46 17.56 35,225,133.05 86.90
Total 325,253,372.49 100.00 43,004,016.03 13.22 230,796,237.32 100.00 41,201,500.85 17.85
(2) Top five units of others receivable
Name
Relationship with
the company
Owned amount Ages
Proportion of total
Other receivable (%)
Mengneng International Energy Development
Co., Ltd.
The entity outside
the group
131,783,274.72 Within 1 year 40.52
Beijing Wanjiahengtai Investment Co., Ltd.
The entity outside
the group
61,000,000.00 Within 1 year 18.75
Beijing WucaixiangshiTechnology and trading
Co.ltd
The entity outside
the group
57,125,493.05 Within 1 year 17.56
YangPu Nanhua Datong investment
Co., Ltd Ministry interests party
12,600,000.00
600,000.00 Yuan between 3-4 years;
6,000,000.00 Yuan between
4-5 Years; and 6,000,000.00 Yuan over 5 years
3.88
Shenzhen impression computer Co., Ltd
The entity outside
the group
6,482,625.00 Within 1 year 1.99
Total 198,482,661.67 82.70
Note : The year end balance did not contain any debt owned by major shareholders
who own more than 5% of the Company’s share capital.
6. Inventories
(1) Inventories category
Jun 30, 2010 Jan 1, 2010
Items Ending
Balance
Provision
for
Inventory
Book value Ending
Balance
Provision
for
Inventory
Book value
Raw
materials 2,100,342.36 2,100,342.36 2,374,414.73 2,374,414.73
Low-value
consumption
goods:
17,383.70 17,383.70
Finished
goods 343,172.53 343,172.53 343,423.63 343,423.63
Constructing
development
product
39,711,170.00 39,711,170.00 155,099,116.09 41,686,535.83 113,412,580.26
Development
products 160,180,833.60 22,610,830.73 137,570,002.87 445,462,776.95 22,610,830.73 422,851,946.22
Total 202,335,518.49 22,610,830.73 179,724,687.76 603,297,115.10 64,297,366.56 538,999,748.54
(2) Inventories impairment provision
Decrement
Items 1 Jan 2010 Increment
Transfer back Write off
30 Jun 2010
Constructing
development
product
41,686,535.83 7,200,000.00 34,486,535.83 0.00
Development
product 22,610,830.73 22,610,830.73
Total 64,297,366.56 7,200,000.00 34,486,535.83 22,610,830.73(3) Constructing development product listed as follows:
Project name Commencement
date
Estimated time
for completion
Estimated total
investment
(0’000)
30 Jun 2010 1 Jan 2010
Wuhan Meilin
Qingcheng second and
third period projects
In Sep 2006 In 2011 79,929.00 39,711,170.00 41,803,027.01
Longzhu third period
project 0.00 52,124,012.28
Along No.1 road
engineering project 0.00 61,172,076.80
Total 39,711,170.00 155,099,116.09
(4) Development product is as follows:
Project name Time for
completion 1 Jan 2010 Increment Decrement 30 Jun 2010
Pearl River Plaza F3
Dijing In 1995 5,315,696.54 5,315,696.54
Pearl River Plaza F4
attaching building In 1995 8,412,701.88 8,412,701.88
Longzhu Plaza In 1992 1,598,659.60 1,598,659.60
Pearl River Plaza
underground garage In 1995 6,919,373.98 6,919,373.98
Longzhu Plaza
underground garage In 1992 2,664,000.00 2,664,000.00
Rose garden high floor
house In 2000 1,908,873.88 1,908,873.88
Rose garden
underground garage
second floor
In 2000 30,345,040.97 30,345,040.97
Bike Library 4,920,158.38 4,920,158.38
Wuhan Meilin
Qingcheng project-P1 In Aug 2006 3,497,980.75 3,497,980.75
Wuhan Meilin
Qingcheng project-P2 In Sep 2009 379,880,290.97 285,281,943.35 94,598,347.62
Total 445,462,776.95 285,281,943.35 160,180,833.60
7. Available for sales financial assets
(1) Available for sales financial assets listed by categories
Items Fair value at Jun 30,2010 Fair value at Jan 1,2009
Available for sales equity instrument 405,317,500.00
Total 405,317,500.00
(2) Details for available for sales financial assetsNames No. of shares holding Initial investment costs Fair value at Jun 30,2010
Southwest Securities 33,250,000.00 42,460,376. 01 405,317,500.00
Total 33,250,000.00 42,460,376. 01 405,317,500.00
Note 1. At the end of the year, the fair value of the available for sales financial assets
exceeded the initial invested cost, and the exceeded amount was 362,857,123.99
Yuan, which was consisted with the capital reserve of 284,968,998.99 Yuan and the
deferred income tax liability of 77,888,125.00 Yuan.
8. Joint investment and joint venture investment
(1) Joint investment
Name Nature Registration
address
legal
representative
Business
Character
Registered
capital
Percentage
of equity
interest
（%）
Percentage
of vote
right
（%）
Shanghai Sea
Pearl Property
Management
Corporation
Limited
liability Shanghai Qing Zheng Real Estate
Development1,660,460.00 50 50
Name
Ending
Balance of
Total Assets
Ending
Balance of
Total
Liabilities
Ending
Balance of
Net Assets
Operating
Income Net profit
Shanghai Sea Pearl Property
Management Corporation 3,173,842.07 2,490,302.11 683,539.96 2,419,028.10119,772.64
(2) Joint venture investment
Name Nature Registration
address
legal
representative
Business
Character
Registered
capital
Percentage
of equity
interest（%）
Percentage of
vote right
（%）
Beijing
Sunshine
Tiansheng
Property
Management
Co., Ltd.
Limited
liability Beijing Qing Zheng Property
Management5,000,000.00 30 30
Name
Total Assets on
Jun 30, 2010
(IRR）
Total Liabilities on
Jun 30, 2010
(IRR）
Net Assets on
Jun 30, 2010
(IRR）
Total Operating
Income till Jun
30, 2010 (IRR）
Net Profit till
Jun 30, 2010
(IRR）
Beijing
Sunshine
Tiansheng
Property
Management
Co., Ltd.
9,502,284.88 4,486,323.18 5,009,816.49 3,266,951.19 -324,908.58Name
Total Assets on
Jun 30, 2010
(IRR）
Total Liabilities on
Jun 30, 2010
(IRR）
Net Assets on
Jun 30, 2010
(IRR）
Total Operating
Income till Jun
30, 2010 (IRR）
Net Profit till
Jun 30, 2010
(IRR）
Name Nature Registration
address
legal
representative
Business
Character
Registered
capital
Percentage
of equity
interest（%）
Percentage of
vote right
（%）
Sanya
Wanjia
Enterprises
Holding
Co., Ltd.
Limited
liability
Hainan
Sanya Qing Zheng
Cultural and
sports
services
100,000,000 40 40
Name
Total Assets on
Jun 30, 2010
(IRR）
Total Liabilities
on Jun 30, 2010
(IRR）
Net Assets on
Jun 30, 2010
(IRR）
Total Operating
Income till Jun
30, 2010 (IRR）
Net Profit till
Jun 30, 2010
(IRR）
Sanya Wanjia
Enterprises
Holding Co.,
Ltd.
98,420,499.83 999,687.34 97,420,812.49 0.00 162,161.38
9. Long-term Equity Investment
Name Accounting
Method
Initial
investment
Cost
Beginning
Balance
Increase or
decrease
Ending
Balance
Percentage
of equity
interest
（%）
Percentage
of vote
right
（%）
Impairment
loss
provision
Current
impairment
loss
Guangzhou
Pearl River
Investment
Management
Co., Ltd
Cost
Method 18,177,240.29 18,177,240.29 18,177,240.29 9.4785 9.4785 7,352,245.39
Network
Science and
Technology
Investment
Co.
Cost
Method 10,000,000.00 10,000,000.00 10,000,000.00 10 10 10,000,000.00
China
(Hainan)
Reform and
Development
Institute
Cost
Method 8,640,000.00 8,640,000.00 8,640,000.00 8,640,000.00
Hainan
Tongsheng
Ports Co.
Cost
Method 6,000,000.00 6,000,000.00 6,000,000.00 6,000,000.00
Hainan
Nanyang
Shipping
Industrial
Company
Limited
Cost
Method 1,680,000.00 1,680,000.00 1,680,000.00 1,680,000.00
Nan Li Lake
membership
card
Cost
Method 662,400.00 662,400.00 662,400.00 662,400.00
Hainan Pearl
River
Guanzhuang
Co., Ltd
Cost
Method 618,500.00 426,315.00 426,315.00 1.33 1.33
Hainan
Chamber of
Commerce
Cost
Method 500,000.00 500,000.00 500,000.00 6.67 6.67 500,000.00
Nan Li Lake
Golf
Membership
Card
Cost
Method 249,000.00 249,000.00 249,000.00 249,000.00
Hainan
Huadi Pearl
River
Foundation
Engineering
Cost
Method 160,000.00 160,000.00 160,000.00 2 2Name Accounting
Method
Initial
investment
Cost
Beginning
Balance
Increase or
decrease
Ending
Balance
Percentage
of equity
interest
（%）
Percentage
of vote
right
（%）
Impairment
loss
provision
Current
impairment
loss
Co., Ltd.
Beijing
Sunshine
Tiansheng
Property
Management
Co., Ltd.
Equity
Method 1,500,000.00 1,571,206.89 1,571,206.89 30 30
Shanghai
Sea Pearl
Property
Management
Corporation
Equity
Method 832,000.00 498,999.62 498,999.62 50 50 332,092.00
Sanya
Wanjia
Enterprises
Holding
Co., Ltd.
Equity
Method 40,000,000.00 0.00 38,968,325.00 38,968,325.00 40 40
Total 89,019,140.29 48,565,161.80 38,968,325.00 87,533,486.80 35,415,737.39
10. Investment real estates
Items 1 Jan 2010 Increment Decrement 30 Jun 2010
I. Original value 26,260,649.34 26,260,649.34
Buildings and structures 26,260,649.34 26,260,649.34
II. Accumulated depreciation and amortization 2,497,903.02 442,349.76 2,940,252.78
Buildings and structures 2,497,903.02 442,349.76 2,940,252.78
III. Impairment provision 2,979,083.88 2,979,083.88
Buildings and structures 2,979,083.88 2,979,083.88
IV. Book value 20,783,662.44 -442,349.76 20,341,312.68
Buildings and structures 20,783,662.44 -442,349.76 20,341,312.68
Note 1. The depreciation of this year was 442,349.76 Yuan.
2. The building for mortage loan was explained “V.18”.
11. Fixed assets
Items 1 Jan 2010 Increment Decrement 30 Jun 2010
I. Original value 348,828,316.22 6,274,675.07 14,569,882.59 340,533,108.70
Buildings and structures 260,181,947.12 0.00 9,945,903.82 250,236,043.30
General equipments 39,998,515.14 3,903,432.45 127,849.62 43,774,097.97
Vehicles 16,643,922.96 1,893,024.62 4,303,578.43 14,233,369.15
Other equipments 32,003,931.00 478,218.00 192,550.72 32,289,598.28
II. Accumulated depreciation 71,901,363.41 9,443,127.58 5,947,183.22 75,397,307.77
Buildings and structures 26,693,513.68 4,623,515.35 3,758,503.63 27,558,525.40
General equipments 20,401,545.45 1,198,186.85 23,296.48 21,576,435.82Items 1 Jan 2010 Increment Decrement 30 Jun 2010
Vehicles 8,747,465.60 1,120,741.66 2,113,321.20 7,754,886.06
Other equipments 16,058,838.68 2,500,683.72 52,061.91 18,507,460.49
III. Impairment provision 12,111,469.32 0.00 4,612,173.40 7,499,295.92
Buildings and structures 12,111,469.32 0.00 4,612,173.40 7,499,295.92
General equipments
Vehicles
Other equipments
IV. Book value 264,815,483.49 6,274,675.07 13,453,653.55 257,636,505.01
Buildings and structures 221,376,964.12 0.00 6,198,742.14 215,178,221.98
General equipments 19,596,969.69 3,903,432.45 1,302,739.99 22,197,662.15
Vehicles 7,896,457.36 1,893,024.62 3,310,998.89 6,478,483.09
Other equipments 15,945,092.32 478,218.00 2,641,172.53 13,782,137.79
Note 1. The depreciation cost of this year was 9,443,127.58 Yuan.
2. The building for mortage loan was explained “Note V.18”.
3:The Buildings and structures in Wuhan Club is 6,616,310.00 Yuan; the relevant
property ownership certificate is in course of handling, which will be expectly obtained
in 2010.
12. Construction in progress
30 Jun 2010 1 Jan 2010
Project name Ending
Balance
Impairment
loss
provision
Book value Ending
Balance
Impairment
loss
provision
Book value
Lake Hotel 4,313,000.00 4,313,000.00 2,510,000.00 2,510,000.00
Total 4,313,000.00 4,313,000.00 2,510,000.00 2,510,000.00
13. Engineering Materials
Items 1 Jan 2010 Increment Decrement 30 Jun 2010
Appliance 606,206.60 606,206.60
Total 606,206.60 606,206.60
14. Intangible assets
Items 1 Jan 2009 Increment Decrement 31 Dec 2009
I. Original value 35,483,465.18 9,900.00 35,493,365.18Land use right of Sanya hotel 30,342,484.00 30,342,484.00
Sanya villa land 1,839,022.44 1,839,022.44
Wuhan club land 1,443,725.13 1,443,725.13
Shanghai house use right 695,732.00 695,732.00
Software 682,501.61 9,900.00 692,401.61
Others 480,000.00 480,000.00
II.Accumulative amortization 2,866,286.62 481,543.30 3,347,829.92
Land use right of Sanya hotel 2,286,810.58 394,224.94 2,681,035.52
Sanya villa land 142,990.92 23,831.82 166,822.74
Wuhan club land 52,807.91 10,312.32 63,120.23
Shanghai house use right 230,402.82 6,957.32 237,360.14
Software 149,858.02 35,967.77 185,825.79
Others 3,416.37 10,249.13 13,665.50
III. Total impairment loss provision
IV. Carrying amount 32,617,178.56 9,900.00 481,543.30 32,145,535.26
Land use right of Sanya hotel 28,055,673.42 394,224.94 27,661,448.48
Sanya villa land 1,696,031.52 23,831.82 1,672,199.70
Wuhan club land 1,390,917.22 10,312.32 1,380,604.90
Shanghai house use right 465,329.18 6,957.32 458,371.86
Software 532,643.59 9,900.00 35,967.77 506,575.82
Others 476,583.63 10,249.13 466,334.50
Note 1. The right to use land of 30,780.13 square meters in Sanya hotel has been
mortgaged for bank loan. Details refer to “Notes V. 18”.
2:. The Accumulative amortization of this year was 481,543.30 Yuan.
3: The carrying amount of land use right in Wuhan Club is 1,443,725.13 Yuan; the
relevant property ownership certificate is in course of handling, which will be expectly
obtained in 2010.
15. Long-term prepayments
Items 1 Jan
2010 Increment Amortization Other
decrements 30 Jun 2010
Pearl Ito supermarket
renovation costs (Zhengzhou) 71,087.33 71,087.33 0.00
Sanya staff quarters
decoration (Sanya) 151,661.90 9,958.00 14,886.84 146,733.06
South China Sea Monsoon
dormitory renovation costs
(Sanya)
1,324,418.00 1,324,418.00Items 1 Jan
2010 Increment Amortization Other
decrements 30 Jun 2010
Total 222,749.23 1,334,376.00 85,974.17 1,471,151.06
16. Deferred income tax asset and deferred income tax liability
(1) Identified deferred income tax liability
Items 30 Jun 2010 1 Jan 2010
Deferred income tax liability：
Changes on the fair value of available for sales
financial assets credited to capital reserves 77,888,125.00 134,413,125.00
Total 77,888,125.00 134,413,125.00
(3) Unrecognised deferred income tax asset
Items 30 Jun 2010 1 Jan 2010
Deductible temporary differences 121,772,008.51 171,374,151.29
Deductible loss
Total 121,772,008.51 171,374,151.29
17. Assets impairment provision
Decrement
Items 1 Jan 2010 Increment
Transfer back Write off
30 Jun 2010
Bad debt provision 51,515,099.77 2,485,100.77 733,139.95 53,267,060.59
Inventories impairment
provision 64,297,366.56 7,200,000.00 34,486,535.83 22,610,830.73
long-term equity
investment impairment
provision
35,415,737.39 35,415,737.39
Investment property
impairment provision 2,979,083.88 2,979,083.88
Fixed assets impairment
provision 12,111,469.32 4,612,173.40 7,499,295.92
Total 166,318,756.92 2,485,100.77 7,200,000.00 39,831,849.18 121,772,008.51
Note: There was the amount of 733,139.95 Yuan bad debt provision written off in this
year, which was caused by the death of the debtor.
18. Assets with restricted ownership
Items Assets name Amount Remark
1.Fixed assets
Buildings and
structures
Main Building of Days Hotel &
Suites Sanya Resort 179,127,402.35
It has been mortgaged to
the Bank of China Hainan
Yeshumeng branch for loan
110 million Yuan (ContractItems Assets name Amount Remark
No.G004-1).
Buildings and
structures Hotel Villa A, B & C 7,275,235.79
It has been mortgaged to
the Bank of China Hainan
Yeshumeng branch for loan
110 million Yuan (Contract
No.G004-1).
2.Intangible assets
Land use rights Main Building of Days Hotel &
Suites Sanya Resort
27,661,448.48
It has been mortgaged to
the Bank of China Hainan
Yeshumeng branch for loan
110 million Yuan (Contract
No.G004-2).
Land use rights Hotel Villa A, B & C
1,672,199.70
It has been mortgaged to
the Bank of China Hainan
Yeshumeng branch for loan
110 million Yuan (Contract
No.G004-2).
3. Pledged assets
Available for sales
financial assets
3.325 millions Shares of
Southwest Security
405,317,500.00
It has been mortgaged to
Jilin Province Trust Co., Ltd.
for the loan of 260 million
Yuan (Contract No.
JLXT2009A018).
Total 617,221,342.60
Note: Assets with restricted ownership are mainly used for guarantee of bank loans.
19. Short-term loans
Category 30 Jun 2010 1 Jan 2010
Guaranteed loans 260,000,000.00 276,000,000.00
Total 260,000,000.00 276,000,000.00
Note 1. The Company provides mortgage for the loan, details refer to “Notes V. 18”.
20. Accounts payable
30 Jun 2010 1 Jan 2010
Ages
Ending Balance Percentage
(%) Opening Balance Percentage
(%)
Within 1 year 10,498,876.35 53.49 57,196,672.38 80.79
1 to 2 years 530,945.54 2.70 1,864,604.39 2.63
2 to 3 years 1,709,518.17 8.71 4,842,718.17 6.85
3 years and more 6,889,366.70 35.10 6,889,366.70 9.73
Total 19,628,706.76 100.00 70,793,361.64 100.00
Note 1. The end of this reporting period did not contain debt owned by any major
shareholders who own more than 5% of the Company’s share capital.
21. Accounts received in advance30 Jun 2010 1 Jan 2010
Ages Ending Balance Percentage
(%)
Opening Balance Percentage
(%)
Within 1 year 46,116,932.11 100.00 220,582,372.38 71.87
1 to 2 years 86,349,791.40 28.13
Total 46,116,932.11 100.00 306,932,163.78 100.00
Note 1. The end of this reporting period did not contain debt owned by any major
shareholders who own more than 5% of the Company’s share capital.
22. Accrued payroll
Items 1 Jan 2010 Increment Decrement 30Jun2010
I. Salary, bonus, allowance 2,015,140.89 22,250,278.50 23,530,767.79 734,651.60
II. Employee Welfare expenses 2,372,419.91 2,521,686.62 -149,266.71
III. Social insurance 3,156,785.86 3,155,625.86 1,160.00
Where:1)Medical insurance 776,087.52 775,807.52 280.00
2) Endowment insurance 2,146,156.13 2,145,356.13 800.00
3) Unemployment insurance 143,805.17 143,765.17 40.00
4) Working accident insurance 51,388.61 51,360.61 28.00
5) Maternity insurance 39,348.43 39,336.43 12.00
IV. Housing accumulation fund 311,215.95 310,735.95 480.00
V. Labor union fees& Employee educ ation fees 3,040,253.48 768,300.08 470,172.84 3,338,380.72
VI. Non-monetary welfares
VII. Compensation for dismissal
Total 5,055,394.37 28,859,000.30 29,988,989.06 3,925,405.61
Note: There is no accrued payroll without paid on time or linking with work efficiency.
23. Taxes payable
Items 30 Jun 2010 1 Jan 2010
VAT -233,955.72 -154,744.14
Individual income tax 27,515.80 86,797.33
City construction and maintenance tax 361,024.50 -647,708.95
Corporate income tax -483,269.94 -4,521,322.61
Property tax 460,843.97 610,026.42
Business tax 4,556,877.26 -9,798,993.83Items 30 Jun 2010 1 Jan 2010
Land use tax 79,762.04 306,731.82
Education fee 93,168.90 -404,484.23
Local education fee 29,984.36 -145,039.08
Land value-added tax 12,694,809.62 -2,046,090.32
Others 239,016.37 -233,304.06
Total 17,825,777.16 -16,948,131.65
24. Interest payable
Item 30 Jun 2010 1 Jan 2010
Loan interest 81,696,774.66 65,601,325.75
Total 81,696,774.66 65,601,325.75
Note 1: The end of this year did not contain debt owned by any major shareholders
who own more than 5% of the Company’s share capital. Details refer to “Notes VI.
Related party relationship and transactions”.
25. Dividend payable
Investor 30 Jun 2010 1 Jan 2010
Dividend payable of institutional
shares
3,213,302.88 3,213,302.88
Total 3,213,302.88 3,213,302.88
26. Other payables
30 Jun 2010 1 Jan 2010
Age
Ending Balance Percentage
(%) Opening Balance Percentage
(%)
Within 1 year 152,713,866.83 52.57 206,498,548.48 62.05
1 to 2 years 34,386,639.97 11.84 22,886,639.41 6.88
2 to 3 years 64,536,965.19 22.21 68,036,965.19 20.45
3 years and more 38,856,738.57 13.38 35,356,738.57 10.62
Total 290,494,210.56 100.00 332,778,891.65 100.00
Note 1: The end of this year did not contain debt owned by any major shareholders who own more than 5% of the
Company’s share capital. Details refer to “Notes VI. Related party relationship and transactions”.
2: Other payables over 3 years are mainly caused by the loan from the shareholders.
Details refer to “Notes VI. Related party relationship and transactions”.
27. Non-current liability due within one year(1) Non-current liabilities due within 1 year listed by categories
Category 30 Jun 2010 1 Jan 2010
Long-term loan due within 1
year
29,980,110.00 79,980,110.00
Total 29,980,110.00 79,980,110.00
(2)Long-term loan due within 1year
Loan Term 30 Jun 2010 1 Jan 2010
Credit Loan 29,980,110.00 79,980,110.00
Total 29,980,110.00 79,980,110.00
28. Long-term borrowings
(1) Long-term borrowings listed by categories
Category 30 Jun 2010 1 Jan 2010
Pledge loans 105,000,000.00 110,000,000.00
Total 105,000,000.00 110,000,000.00
29. Share capital
Unit: share
1 Jan 2010 Increment or decrement (+,-) 30 Jun 2010
Items
Num. of Shares
Percentage
(%)
issued
new shares
Bonus
issue
Surplus
converted
others subtotal amount
Percentage
%
1. Unlisted shares 3,924,131 0.92 -2,599,000 -2,599,000 1,325,131 0.31
State owned shares
Other domestic shares 3,898,500 0.91 -2,599,000 -2,599,000 1,299,500 0.30
Including:Domestic corporate shares 3,898,500 0.91 -2,599,000 -2,599,000 1,299,500 0.30
Domestic natural person shares 25,631 0.01 25,631 0.01
2.Listed shares 422,821,273 99.08 2,599,000 2,599,000 425,420,273 99.69
A shares 357,846,273 83.85 2,599,000 2,599,000 360,445,273 84.46
B shares 64,975,000 15.23 64,975,000 15.23
3. Total shares 426,745,404 100.00 426,745,404 100.0030. Capital surplus
Items 1 Jan 2010 Increment Decrement 30Jun 2010
Capital reserve spill price 224,960,139.16 224,960,139.16
Others capital surplus 563,844,016.81 169,575,000.00 394,269,016.81
Including: Old capital surplus
converted into 109,300,017.82 109,300,017.82
Changes on fair value of
available for sales financial
assets
588,957,123.99 226,100,000.00 362,857,123.99
Income tax effects -134,413,125.00 -56,525,000.00 -77,888,125.00
Total 788,804,155.97 169,575,000.00 619,229,155.97
31. Surplus reserves
Items 30Jun 2010 1 Jan 2010
statutory surplus reserve 76,542,657.95 76,542,657.95
General surplus reserve 37,634,827.93 37,634,827.93
Total 114,177,485.88 114,177,485.88
32. Undistributed profits
Items Amounts allocation proportion
Non-adjusted ending balance of the year 2009 -676,622,621.58
Adjusted opening balance of the year 2009 -676,622,621.58
Add: Net profit attributed to the owners of the
parent company 50,911,704.50
Less：Statutory surplus reserve
Random surplus reserve
Common risk provision
Dividend payable of Ordinary shares
Share capital converted from dividend of
ordinary shares
Add:others 1,644,809.33
Ending balance of the year 2010 -624,066,107.75
33. Operating income and operating costs
(1) Operating income
Items Jan-Jun 2010 Jan-Jun 2009
Main operating business income 543,211,038.95 47,789,502.38
Other operating business income 825,533.20 248,358.20Items Jan-Jun 2010 Jan-Jun 2009
Total 544,036,572.15 48,037,860.58
(2) Operating costs
Items Jan-Jun 2010 Jan-Jun 2009
Main operating business costs 366,171,025.51 38,201,762.92
Other operating business costs 495,785.82 33,987.67
Total 366,666,811.33 38,235,750.59
(3) The details of main operating businesses were as follows according to products:
Jan-Jun 2010 Jan-Jun 2009
Items Main operating
business income
Main operating
business costs
Main operating
business income
Main operating
business costs
Real estate sales 489,083,485.00 327,406,426.69 460,000.00 449,307.08
Property management
services 34,632,653.97 29,919,876.36 33,005,992.65 29,223,745.48
Tourist hotel services 19,494,899.98 8,844,722.46 14,323,509.73 8,528,710.36
(4) The details of main operating businesses were as follows according to regions:
Jan-Jun 2010 Jan-Jun 2009
Location Main operating
business income
Main operating
business costs
Main operating
business income
Main operating
business costs
Hainan 135,353,262.55 80,500,200.35 47,014,572.58 37,377,537.54
Hubei 407,857,776.40 285,670,825.16 314,929.80 374,918.30
Shanghai 460,000.00 449,307.08
Note 1: The total balance of the top five customers was 89,347,518.00 Yuan, and was
16.42% of total income.
34. Operating taxes and extras
Items Jan-Jun 2010 Jan-Jun 2009
City construction and maintenance tax 1,904,128.00 141,911.22
Education fee 816,054.86 65,391.41
Business tax 27,201,828.61 2,179,713.63
Land value-added tax 32,570,104.29
Others 1,312,500.42 17,073.39
Total 63,804,616.18 2,404,089.6535. Investment income
Items Jan-Jun 2010 Jan-Jun 2009
Long-term equity investment income accounted
by Costs Method
Long-term equity investment income accounted
by Equity Method 64,864.56
Investment income of disposal Long-term
equity investment 131,129,924.21
Total 64,864.56 131,129,924.21
36. Impairment Loss of Assets
Items Jan-Jun 2010 Jan-Jun 2009
Bad debts impairment loss 2,485,100.77 7,398,279.67
Provision for obsolete stock -7,200,000.00
Total -4,714,899.23 7,398,279.67
37. Non-operating income
(1) Details of non-operating income
Items Jan-Jun 2010 Jan-Jun 2009
Gain on disposal of non-current assets 1,710,013.72 152,824.57
Demolition compensation
Gains on debt restructure
Unable to paid funds
Others 297.60
Total 1,710,013.72 153,122.17
38. Non-operating expenses
Items Jan-Jun 2010 Jan-Jun 2009
Loss on disposal of fixed assets 32,373.03 27,500.00
Donation
Penalty payout 52,257.59 139,583.58
Indemnity for breaking a contractItems Jan-Jun 2010 Jan-Jun 2009
Others 28,900.00 51,935.47
Total 113,530.62 219,019.05
39. Income tax
Items Jan-Jun 2010 Jan-Jun 2009
Income tax this year 12,880,565.60 52,338.18
Total 12,880,565.60 52,338.18
40. Information of cash flow statement
(1) Cash received relating to other operating activities
Items Jan-Jun 2010 Jan-Jun 2009
Collecting water and electricity charge of owners 5,658,235.50 3,925,070.00
Interest income
Deposit of investment 36,000,000.00
Transaction funds 556,800.00 3,218,920.97
Others 2,265,699.45 1,248,733.06
Total 44,480,734.95 8,392,724.03
(2) Cash paid relating to other operating activities
Items Jan-Jun 2010 Jan-Jun 2009
Mudanjiang Jingbo Lake
Tourism Group Co.,Ltd.
4,000,000.00
Other transaction funds 3,806,878.04 3,297,684.33
Information disclosure fee 4,425,623.80 3,211,544.43
Audit consulting fees 556,000.00 548,592.00
Advertising expenses 2,768,622.00 848,330.80
Agent and lawyer fee 3,927,646.00 595,928.62
Travel expenses
Entertainment expenses
Office expensesItems Jan-Jun 2010 Jan-Jun 2009
Wanjia Hotel expenses
Rent expenses
Vehicle expenses
Other management fees 5,409,286.83 2,989,353.75
Total 24,894,056.67 11,491,433.93
(3)Cash paid relating to other financing activities
Items Jan-Jun 2010 Jan-Jun 2009
Sanya Wanjia 15,401,893.30
Total 15,401,893.30
43.Supplementary information of cash flow statement
(1) Supplementary information
Items
Jan-Jun
2010
Jan-Jun
2009
1．Reconciliation of net profit to cash flows from operating
activities:
Net profit 57,924,931.39 83,538,723.31
Add: Provision for assets impairment -18,641,531.66 7,398,279.67
Depreciation of fixed assets , production biological assets ,
petroleum and natural gas 9,862,180.86 9,794,287.55
Amortization of intangible assets 481,543.30 463,946.51
Amortization of long-term prepayments 85,974.17 4,725.97
Losses on disposal of fixed assets, intangible assets and other
long-term assets 2,927,123.32 -125,324.57
Losses on scrapping of fixed assets 6,040.33
Losses on fair value change
Financial expenses 13,063,109.39 15,661,852.24
Investment losses -64,864.56 -131,129,924.21
Decrease in deferred income tax assets
Increase in deferred income tax liabilities
Decrease in inventories 375,789,519.81 -85,081,371.04
Decrease in operating receivables -9,161,204.93 -7,305,375.37
Increase in operating payables -289,621,996.40 143,384,584.42Items
Jan-Jun
2010
Jan-Jun
2009
Others
Net cash flows from operating activities 142,650,825.02 36,604,404.48
2．Significant investing and financing activities that non-cash
receipts and payments
Conversion of debt into capital
Convertible bonds to be expired within one year
Fixed assets under finance lease
3．Net increase in cash and cash equivalents
Cash at the end of the period 238,917,598.63 67,965,850.02
Less: Cash at the beginning of the period 291,787,132.78 36,655,536.17
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Net increase in cash and cash equivalents -52,869,534.15 31,310,313.85
(2) Cash and cash equivalents
Items Year 2010 Year 2009
1. Cash 238,917,598.63 67,965,850.02
Including: Cash on hand 193,980.73 232,710.39
Bank deposit paid at any time 238,697,000.71 67,703,139.63
Other monetary funds paid at any time 26,617.19 30,000.00
2. cash equivalents
3. Cash and cash equivalents at the end of year 238,917,598.63 67,965,850.02
VI. Related party relationship and transactions
(1) Parent company and ultimate controller:
Name
Registered
address
Organization
code
Principal
operating
Relationship with
the Company
Registered
capital
Holding
proportion
Voting rights
proportion
Beijing Wangfa Real
Estate Development
Holdings Co., Ltd
Beijing 60003715-7
Real estate
development and
operation
The first largest
shareholder
280 million
Yuan
26.36% 26.36%
Beijing Xinxing Real
Estate Development
Company
Beijing 10113538-5
Real estate
development and
operation
Controller of the
first largest
shareholder
10 million
Yuan(2) Information about subsidiaries
Details refer to “Note IV. 1. Subsidiaries established by the Company”.
(3) Information about joint venture and affiliate of the Company
Name Organization
code
Registered
address
Principal
operating
Registered
capital
Holding
proportion
Voting rights
proportion
Shanghai Bright Pearl at Sea
Property Management
Company
60732602-3 Shanghai
Property
management
service
1,660,000 50% 50%
Beijing Yangguang
Tiancheng Property
Management Co.,
Ltd
77954738-3 Beijing
Property
management
service
5,000,000 30% 30%
(4) Other related parties
Name
Relationship with
the Company
Organization code
Beijing Yulong Jisheng Real Estate Development Co.,
Ltd.
With same
controller
72266773-9
4. Balances of related party receivable and payable
Items Company Name Jun 30, 2010 Jan 1, 2010
Others payable:
Beijing Xinxing Real Estate
Development Company 152,540,447.00 152,540,447.00
Beijing Wangfa Real Estate
Development Holdings Co., Ltd. 81,725,000.00 81,725,000.00
Beijing Yulong Jisheng Real Estate
Development Co., Ltd. 1,500,000.00 1,500,000.00
Interest payable:
Beijing Xinxing Real Estate
Development Company 44,269,015.64 40,114,903.69
Beijing Wangfa Real Estate
Development Holdings Co., Ltd. 22,042,765.43 19,934,761.80
VII. Contingent events
The company's stock in the west of the Pearl River Plaza, fifth floor podium housing,
Pearl Building, 21 floor property; fixed assets of the Pearl Building, Room 22 floor
office building, Pearl Building, northeast side of real estate; investment real estate in
Shanghai Pudong Road No. 23, Alley 1097, on the 24th floor podium, two-story
underground garage floor and 104 parking spaces. 31,353,627.50 yuan book value of
total mortgage to the Bank of Communications Co., Ltd. Hainan Branch, paragraphborrowings 1,600 million, loan period: November 24, 2009 to November 24, 2010, the
loan was repaid 2010.02.01 , asset mortgage has been discharged.
The company's fixed assets in real estate Sanya Wan Jia Daisi hotel main building
and hotel Sanya Wan Jia Daisi A Building B Building C villas property, the book value
of 216,154,343.08 dollars to assess the value of 44,099.52 million mortgaged to the
Bank of China Co., Ltd. Haikou palm door Branch made 110 million yuan loan, the
repayment period from 2010 to 2019 Year 10 repayment.
The Company held 3,325 shares of Restricted Shares of Southwest Securities (stock
code: SH.600369) pledge to the Jilin Province Trust Co., Ltd., to obtain loans for 260
million yuan trust, trust loan term of 12 months.
VIII. Commitments
Not applicable.
IX. Non-adjusting events after the balance sheet date
1. Profit distribution after the balance sheet date
Profits or dividends distributed Not applicable
Profits or dividends approved to distribut Not applicable
(1) In July 5, 2010, the board of directors decided to increase the registered capital of wholly
owned subsidiary Mudanjiang City, Pearl River Hotel Management Co., Ltd.. This registered
capital was increased by 40 million Yuan in cash. After capital increase, registered capital
of Mudanjiang City, Pearl River Hotel Management Co., Ltd. is 60 million Yuan, and it is still the
wholly owned subsidiary of the company.
In August 4, 2010, the company paid 40 million Yuan to Mudanjiang City, Pearl River
Hotel Management Co., Ltd., and the capital increase is finished.
(2) In July 5, 2010, the board of directors approved a subsidiary Mudanjiang City, Pearl River Hotel Management
Co., Ltd. to sign a "Share Transfer Agreement" with natural person shareholders Deying Lin and Guanwen
Chen of Hailin City Snow Town Baroque Resort Hotel Co., Ltd. Mudanjiang City, Pearl River Hotel
Management Co., Ltd. purchased 85% and 15% equity of Hailin City Snow Town Baroque Resort Hotel Co.,
Ltd. hold by Deying Lin and Guanwen Chen with 20 million Yuan and undertook 50 million debt
(Creditors were natural person Deying Lin and Guanwen Chen). The "Share Transfer Agreement" is in the
fulfilling process.
X. Other important events
Not applicable.XI. Notes to significant items of the parent company’s financial statements
1. Accounts receivable
(1) Detailed information
30 Jun 2010 1 Jan 2010
Items
Balance
Proportion
(%) Bad debts Bad debt ratio (%) Balance
Proportion
(%) Bad debts
Bad debt ratio
(%)
Individual with significant amount 7,761,707.60 69.61 7,761,707.60 100.00 7,761,707.60 69.29 7,761,707.60 100.00
Individual without significant
amount,but with significant credit risk
2,598,378.02 23.30 2,248,534.31 86.54
2,764,507.43 24.68 2,331,599.02 84.34
Other unimportant receivables 790,380.00 7.09 94,552.60 11.96 675,640.00 6.03 93,793.80 13.88
Total 11,150,465.62 100.00 10,104,794.51 90.62 11,201,855.03 100.00 10,187,100.42 90.94
(3) Age analysis
Jun 30, 2010 January 1, 2010
Age
Amounts
Bad Debts
Provision
Amounts
Bad Debts
Provision
Within 1 year 323,880.00 6,477.60 189,940.00 3,798.80
1 to 2 years 101,500.00 5,075.00 101,500.00 5,075.00
2 to 3 years 0.00 0.00 19,200.00 1,920.00
3 to 4 year 265,000.00 53,000.00 475,408.00 263,408.00
4 to 5 years 100,000.00 30,000.00 100,000.00 30,000.00
5 years and more 10,360,085.62 10,010,241.91 10,315,807.03 9,882,898.62
Total 11,150,465.62 10,104,794.51 11,201,855.03 10,187,100.42
2. Other receivables
(1) Detailed information
30 Jun 20 10 1 Jan 2010
Items
Balance
Proportion
(%)
Bad debts Bad debt ratio (%) Balance
Proportion
(%)
Bad debts Bad debt ratio (%)
Individual with significant amount
319,749,517.82 93.10 20,267,340.40 6.34 245,181,330.83 93.10 27,344,029.73 11.15
Individual without significant amount
,but with significant credit risk
26,513,529.06 6.25 25,008,529.06 94.32 16,462,455.25 6.25 16,297,455.25 99.00
Other unimportant receivables
16,878,196.76 0.65 375,832.56 2.23 1,706,081.92 0.65 14,389.53 0.84
Total
363,141,243.64 100.00 45,651,702.02 12.57 263,349,868.00 100.00 43,655,874.51 16.58(3) Aging analysis
June 30, 2010 January 1, 2010
Amounts Amounts
Age
Amounts
Ratio
(%)
Bad Debt
Provision Amounts
Ratio
(%)
Bad Debt
Provision
Within 1 year 280,912,699.59 77.36 5,618,253.99 181,121,323.95 68.78 3,622,426.48
1 to 2 years 17,970.00 898.50 17,970.00 0.01 898.50
2 to 3 years 11,679.00 1,167.90 244,538.32 0.09 234,027.22
3 to 4 year 200,000.00 0.06 40,000.00 200,000.00 0.08 140,000.00
4 to 5 years 2,840.00 852.00 2,840.00 852.00
5 years and
more 81,996,055.05 22.58 39,990,529.63 81,763,195.73 31.04 39,657,670.31
Total 363,141,243.64 100.00 45,651,702.02 263,349,868.00 100.00 43,655,874.51
2. Long-term equity investment
Name Accounting
Method
Initial investment
Cost
Beginning
Balance
Increase or
decrease
Ending Balance
Percentage of
equity interest
（%）
Percentage of
vote right
（%）
Impairment loss
provision
Current
impairment
loss
Hainan Pearl
River
Properties and
Hotels
Management Co.,
Ltd.
Cost
Method
4,900,000.00 4,900,000.00 4,900,000.00 98.00 98.00
Sanya Wanjia
Hotel
Management Co.,
Ltd.
Cost
Method
120,000,000.00 120,000,000.00 120,000,000.00 100.00 100.00
Sanya Wanjia
Enterprises
Holding Co.,
Ltd.
Equity
Method
40,000,000.00 20,000,000.00 18,968,325.00 38,968,325.00 40.00 40.00
Hubei Pearl River
Real Estate
Development
Co., Ltd.
Cost
Method
57,200,000.00 57,200,000.00 57,200,000.00 88.00 88.00
Hainan Pearl
River
Enterprises
Holding Co.,
Ltd. Shanghai
Real Estate Co.
Cost
Method
40,000,000.00 40,000,000.00 40,000,000.00 100.00 100.00 40,000,000.00
Beijing Jiubo
Culture
Development
Co., Ltd.
Cost
Method
5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00
Mudanjiang Pearl
River Hotel
Management Co.,
Ltd.
Cost
Method
20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00
Guangzhou Pearl
River Investment
Management Co.,
Ltd
Cost
Method
18,177,240.29 18,177,240.29 18,177,240.29 9.48 9.48 7,352,245.39
Network Science
and Technology
Investment Co.
Cost
Method
10,000,000.00 10,000,000.00 10,000,000.00 10.00 10.00 10,000,000.00Name Accounting
Method
Initial investment
Cost
Beginning
Balance
Increase or
decrease
Ending Balance
Percentage of
equity interest
（%）
Percentage of
vote right
（%）
Impairment loss
provision
Current
impairment
loss
China (Hainan)
Reform and
Development
Institute
Cost
Method
8,640,000.00 8,640,000.00 8,640,000.00 8,640,000.00
Hainan
Tongsheng Ports
Co.
Cost
Method
6,000,000.00 6,000,000.00 6,000,000.00 6,000,000.00
Hainan Nanyang
Shipping
Industrial
Company Limited
Cost
Method
1,680,000.00 1,680,000.00 1,680,000.00 1,680,000.00
Nan Li Lake
membership card
Cost
Method
662,400.00 662,400.00 662,400.00 662,400.00
Hainan Pearl
River
Guanzhuang Co.,
Ltd
Cost
Method
618,500.00 426,315.00 426,315.00 1.33 1.33
Hainan Chamber
of Commerce
Cost
Method
500,000.00 500,000.00 500,000.00 500,000.00
Hainan Huadi
Pearl River
Foundation
Engineering Co.,
Ltd.
Cost
Method
160,000.00 160,000.00 160,000.00
Total 333,538,140.29 313,345,955.29 18,968,325.00 332,314,280.29 74,834,645.39
4. Operating income and operating costs
(1) Operating income
Items Jan-Jun 2010 Jan-Jun 2009
Main operating business income 81,780,389.00
Other operating business income 150,254.20 193,955.00
Total 81,930,643.20 193,955.00
(2) Operating costs
Items Jan-Jun 2010 Jan-Jun 2009
Main operating business costs 42,124,483.34
Other operating business costs 46,478.74 33,987.67
Total 42,170,962.08 33,987.67
(3) The details of main operating businesses were as follows according to products:
Items Jan-Jun 2010 Jan-Jun 2009
Main operating
business income
Main operating
business costs
Main operating
business income
Main operating
business costs
Real estate sales 81,780,389.00 42,124,483.34(4) The details of main operating businesses were as follows according to regions:
Jan-Jun 2010 Jan-Jun 2009
Location Main operating
business income
Main operating
business costs
Main operating
business income
Main operating
business costs
Hainan-Haikou 81,780,389.00 42,124,483.34
5. Investment income
Items Jan-Jun 2010 Jan-Jun 2009
Income from transferring equity investment 64,864.56 131,129,924.21
Total 64,864.56 131,129,924.21
6. Supplementary information of cash flow statement
Items
Jan-Jun
2010
Jan-Jun
2009
1．Reconciliation of net profit to cash flows from operating
activities:
Net profit 11,512,721.21 107,267,730.82
Add: Provision for assets impairment -19,213,110.83 7,332,347.15
Depreciation of fixed assets , production biological assets ,
petroleum and natural gas 1,043,522.34 990,336.93
Amortization of intangible assets 23,831.82 23,831.82
Amortization of long-term prepayments
Losses on disposal of fixed assets, intangible assets and other
long-term assets 2,916,182.80 27,500.00
Losses on scrapping of fixed assets
Losses on fair value change
Financial expenses 6,035,811.28 10,681,712.32
Investment losses -64,864.56 -131,129,924.21
Decrease in deferred income tax assets
Increase in deferred income tax liabilities
Decrease in inventories 88,124,012.28 -1,364,542.91
Decrease in operating receivables -13,790,282.95 2,798,345.39
Increase in operating payables 591,425.46 -5,123,269.56
OthersItems
Jan-Jun
2010
Jan-Jun
2009
Net cash flows from operating activities 77,179,248.85 -8,495,932.25
2．Significant investing and financing activities that non-cash
receipts and payments
Conversion of debt into capital
Convertible bonds to be expired within one year
Fixed assets under finance lease
3．Net increase in cash and cash equivalents
Cash at the end of the period 128,061,969.24 630,103.56
Less: Cash at the beginning of the period 161,760,970.47 4,869,795.27
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Net increase in cash and cash equivalents -33,699,001.23 -4,239,691.71
XII. Supplementary information
1. According to “Information disclosure requirement No.1 for the companies issuing
securities publicly – Non-recurring Profit and Loss [2008]” issued by China Securities
Regulatory Commission ([2008] No. 43), the amount of non-recurring profit and loss is
as follows (profit is “+”, loss is “-”):
Items Jan-Jun 2010
Profit and loss on disposal of non-current assets 1,677,640.69
Fund occupation fee from non-financial enterprises included in the
current profit and loss
8,870,206.76
Profit and loss of debt restructure
Investment income from disposal available for sales financial assets
Other non-operating income and costs -81,157.59
Income tax impact -106,046.72
Equity impacts of minority interests -29,943.52
Total 10,330,699.622. Earnings per share
Earnings per share
Profit of this year Basic earnings per share Diluted earnings per share
Jan-Jun 2010 Jan-Jun 2009 Jan-Jun 2010 Jan-Jun 2009
Net profit attributable to
common shareholders
0.12 0.20 0.12 0.20
Net profit excluding
non-recurring Profit and Loss
attributable to common
shareholders
0.10 -0.11 0.10 -0.11
XIII. Approval of the financial statements
The financial statements have been approved by the board of directors of the
Company in August 21, 2010.
Based on the Articles of Association, the financial statements would be submitted to
General Conference of Shareholders.
Hainan Pearl River Holding Company Limited
August 21, 2010
