SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.
THE THIRD QUARTERLY REPORT 2009
§1. Important Notice
1.1 The Board of Directors, the Supervisory Committee as well as directors, supervisors and senior
executives of the Company guarantee that there are no any omissions, fictitious or serious
misleading statements carried in the report and will take all responsibilities, individual and/or joint
for the authenticity, accuracy and integrality of the whole contents.
1.2 No directors, supervisors and senior managers have objections to the report of the true, accurate
and complete.
1.3 All directors of the Company attended the meeting.
1.4 Wuhan Zhonghuan Certified Public Accountants Ltd has audited the Financial Report of the
Third Quarter of 2009 and issued audit report with standard unqualified opinion.
1.5 Mr. Chen Yugang, Chairman of the Board of Directors of the Company, Mr. Wang Hangjun,
Person in charge of Accounting Work and Ms. Shen Xueying, Manager of Financial Department,
hereby confirmed that the Financial Report enclosed in the Quarterly Report is true and complete.
§2. Company Profile
2.1 Main accounting data and financial indices
At the end of the
report period
At the end of the last
year
Increase/decrease at the end of the
report period compared with that at
the end of the last year (%)
Total assets 2,571,190,262.50 2,110,845,898.28 21.81%
Owners’ equity (or shareholders’ equity) 730,814,855.40 570,615,365.41 28.07%
Net assets per share 1.3489 1.0532 28.07%
From the year-beginning to the end of the
report period
Increase/decrease compared with the
same period of the last year (%)
Net cash flow from operating activities 567,648,705.42 795.95%
Net cash flow from operating activities
per share
1.0477 795.95%
In the report period
From the beginning
of the year to the end
of the report period
Increase/decrease in the report
period compared with the same
period of the last year (%)
Net profit 53,984,469.28 160,281,697.11 658.03%
Basic earnings per share 0.0996 0.2958 658.03%
Basic earnings per share deducted
non-recurring gain/loss
- 0.2956 -
Diluted earnings per share 0.0996 0.2958 658.03%2
Net profit 7.39% 21.93% 9.16%
Net profit 7.40% 21.91% 8.88%
Items of non-recurring gains and losses From the beginning of the year to the end of the report period
Profit and loss from disposal of
non-current assets, including the offset
part of the impaired assets;
-13,437.37
Enterprises’ reorganization fees, such as
staffing expenses and integration fees -4,584,088.00
Profit or loss from change in fair value by
holding tradable financial assets and
liabilities, and investment income from
disposal of tradable financial assets and
liabilities as well as salable financial
assets, excluding the effective hedging
businesses related with the normal
operations of the company
2,047,332.84
Other non-operating income and
expenses besides the above items
2,065,538.76
Other items that conform to the definition
of extraordinary profit and loss 636,999.11
Total 152,345.34
Note 1: Gains and losses from disposal of non-current assets, including offset that has been
withdrew as impairment reserve of assets from Jan. to Sep. 2009 was loss from disposal of fixed
assets.
Note 2: Enterprises’ reorganization fees, such as staffing expenses and integration fees was
projected welfare amount for dismissal of employees as formulated formerly. The event
implemented in accordance with relevant document on state-owned enterprise of Shenzhen, which
was in line with definition of non-recurring gains and losses in Explanation Public Notice on
Information Disclosure of Public Offering Shares Companies No. 1-Non-recurring Gains and
Losses [2008] : “Gains and losses from transactions and events that influenced correct judgment on
operating achievements and profitability of the Company according to financial statements owing to
its special nature and chance”.
Note 3: Profit or loss from change in fair value by holding tradable financial assets and liabilities,
and investment income from disposal of tradable financial assets and liabilities as well as salable
financial assets, excluding the effective hedging businesses related with the normal operations of
the company was gains and losses from change of fair value of transaction financial assets and
investment income from disposal of transaction financial assets.
Note 4: Other non-operating income and expenses in current period was main income from penalty
and sequestration.
2.2 Total number of shareholders as at the end of reporting period and shares held by the top ten
shareholders not subject to trading moratorium
Unit: Share3
Total number of shareholders
As at 28 Sep. 2009, the Company has 25726 shareholders in total, including
17913 ones of A-share and 7813 ones of B-share.
Shares held by the top ten tradable shareholders
Name of shareholder
Number of tradable
shares held
Type of share
ZENG YING 5242940 B share
WANG ZHI HAI 2089700 Tradable A share
SHENZHEN JIN NIU HONG TRADING CO.,
LTD.
1127900 Tradable A share
WANG GE 990000 Tradable A share
SHEN LING 901100 Tradable A share
YUE ZHI YU 703401 Tradable A share
LI HONG MAO 580000 Tradable A share
JIA WEN JUN 540489 Tradable A share
ZHANG SHU TIAN 529643 Tradable A share
YAO HUA MEI 512900 Tradable A share
Explanation on associated relationship among the
aforesaid shareholders or acting-in-concert
The Company was unknown whether there exists associated
relationship among the top ten shareholders of tradable share
Note: The Company is scheduled to disclose the third quarterly report 2009 on 12 Oct. 2009, due to that this
month comes on the National Day holiday and Mid-Autumn Festival, in additional, the trading system of T+3 is
applicable to for B-share, therefore, China Securities Depositary and Clearing Corporation Shenzhen Branch
provided only the stockholder's list of the Company as at 28 Sep. 2009. As a result, shares held by the
shareholders showed in the third quarterly report 2009 is disclosed based on the shareholder’s list as at 28 Sep.
2009.
§3. Significant events
3.1 Particular about large-margin change in main item of accounting statement and financial index
and reason for change
√Applicable □Inapplicable
1. Monetary capital at the period-end was RMB 646,910,616.69, up by 138.09% over the
year-beginning, mainly because fund from sales of real estate increased from the year-beginning to
the end of the report period;
2. Transaction financial assets at the end of period amounted to RMB 3,657,594.89, with an
increase of 36.95% over the year-beginning, mainly because the price of stock held by the
Company rose up at the end of report period;
3. Account paid in advance at the end of period amounted to RMB 16,059,850.88, up by 596.55%
over the year-beginning, mainly because relevant taxes paid in advance in line with Tax Law
increased form the year-beginning to the end of the report period;
4. Deferred tax liabilities at the end of period amounted to RMB 45,122,721.84, up by 138.69%
over the year-beginning, mainly because book value of taxes payable at the period-end was more
than tax basis;4
5. Short-term borrowings at the end of period amounted to RMB 249,000,000.00, down by 32.52%
over the year-beginning, which was mainly because the Company paid back from the
year-beginning to the end of the report period;
6. Account received in advance at the end of period amounted to RMB 459,068,614.08, up by
583.65% over the year-beginning, mainly because fund for sales of Xinhua Town from the
year-beginning to the report period increased.
7. Payroll payable at the end of period amounted to RMB 26,893,979.28, down by 60.01% over the
year-beginning, mainly because the Company paid welfare for dismiss according to dismiss plan
from the year-beginning to the report period increased.;
8. Tax payable at the end of period amounted to RMB 196,079,275.98, up by 138.18% over the
year-beginning, mainly because enterprise income tax and land value-added tax withdrawn from
Imperial Garden from the year-beginning to the report period increased.
9. Interest payable at the end of period amounted to RMB 0.00, down by 100% over the
year-beginning, mainly because the Company paid interest from the year-beginning to the end of
report period;
10. Non-current liabilities due within one year amounted to RMB 200,000,000.00, up by 100.00%
over the year-beginning, which was mainly because loan to be due transferred from long-term
borrowings to calculation;
11. Long-term borrowings amounted to RMB 214,860,000.00 at the period-end, down by 38.30%
over the year-beginning, mainly because the Company returned due borrowings and transferred part
to non-current liabilities due within one year;
12. Retained profit at the period-end was RMB 104,351,505.00, up by 286.57% over the
year-beginning, which was mainly because net profit realized by the Company from year-beginning
to the end of report period increased;
13. Operating income from Jan. to Sep. 2009 was RMB 758,785,069.84, with an increase of
279.22% year-on-year, mainly because Imperial Garden Project sold has been transferred to
income;
14. Operating cost of the Company from Jan. to Sep. 2009 was RMB 355,041,716.72, with an
increase of 153.72% year-on-year, mainly because income from real estate from the year-beginning
to the end of report period increased year-on-year;
15. Business tax and surcharge from Jan. to Sep. 2009 was RMB 136,650,044.93, with an increase
of 1199.81% year-on-year, mainly because operating income realized from the year-beginning to
the report period caused increase of turnover tax and surcharges;
16. Assets impairment loss from Jan. to Sep. 2009 was RMB -3,784,529.68, with an increase of
107.57% year-on-year, mainly because inventory falling price reserves switched back from the
year-beginning to the end of report period increased compared with the same period of last year;
17. Income from change of fair value from Jan. to Sep. 2009 amounted to RMB 1,823,215.31, with
an increase of 173.09% year-on-year, mainly because price of stocks held by the Company rose up
at the end of report period;
18. Investment income from Jan. to Sep. 2009 amounted to RMB 1,823,215.31, with a decrease of
53.57% year-on-year, mainly because the Company disposed financial assets available for sale;
19. Income form investment on affiliated enterprise and jointly enterprise from year-beginning to
period-end was RMB 2,242,065.68, with an increase of 382.11% year-on-year, mainly because
profit realized by joint enterprise-Shenzhen ITC Tian’an Properties Co., Ltd increased compared5
with the same period of last year;
20. Net non-operating income and expenditure from Jan. to Sep. 2009 amounted to RMB
2,052,101.39, up by 90.49% year-on-year, mainly because the Company disposed real estate and
arose non-operating income at the same period of last year;
21. Total profit and net profit from Jan. to Sep. 2009 was RMB 199,205,199.93 and 160,281,578.11
respectively, with an increase of 1993.58% and 1352.69% year-on-year, mainly because income
from real estate realized from year-beginning to period-end increased compared with the same
period of last year;
22. Income tax from the year-beginning to the end of report period amounted to RMB
38,923,621.82, with an increase of 1610.97%, mainly because profit realized increased compared
with the same period of last year;
23. Net cash flow arising from operating activities from the year-beginning to the end of report
period amounted to RMB 567,648,705.42, with an increase of 795.95% year-on-year, mainly
because cash from sales of goods and offering labor service (mainly was fund for sales of Imperial
Garden and Xinhua Town) increased;
24. Net cash flow arising from investment activities from the year-beginning to the end of report
period amounted to RMB -538,551.00, with a decrease of 119.05% year-on-year, mainly because
cash from investment called back by the Company (that is disposal of financial assets available for
sale) from the year-beginning to the end of report period decreased;
25. Net cash flow arising from financing activities from the year-beginning to the end of report
period amounted to RMB -191,907,584.22, with a decrease of 347.28% year-on-year, mainly
because borrowings from the year-beginning to the end of report period decreased and borrowings
returned increased compared with the same period of last year;
26. Balance of cash and cash equivalents from year-begin to period-end was RMB 375,201,888.83,
with an increase of 30576.90% year-on-year, mainly because cash from sales of Imperial Garden
and Xinhua Town and offering labor service increased.
3.2 Progress of significant events and influence as well as explanation on analysis of resolving
proposal
√Applicable □Inapplicable
1. About case of “Haiyi Company” disclosed in Annual Report between 2000 and 2008, and
Semi-annual Report 2009
On 7 Apr. 2009, the Company received 34 reply enforcement notices served by Shenzhen
Intermediate People's Court, which the eight companies such as Haiyi Industrial (Shenzhen) Co.,
Ltd. filed an application of resumption with Shenzhen Intermediate People's Court to execute
judgment made by Guangdong Higher People's Court in 1999. Hereto, the Company had disclosed
the relevant information by the extraordinary public notice on 9 Apr. 2009, which was published on
Securities Times and Ta Kung Pao, as well as http://www.cninfo.com.cn. Later, the Company
proposed objection on implementation, but Shenzhen Intermediate Peoples’ Court considered that
Judgment (1998) YFMZZ No, 298 was judged to terminate implementation by the Supreme
People’s Court, which was in accordance with condition of termination, and the other 33 judgments
didn’t in progress of judgment and should be implemented.
On 2 Jun. 2009, the Company received Notice on Sealing up and Freezing Property ( (2009) SZFZZ
No. 364-377,379-397 (-1)) (hereinafter refer to as Notice) served by Shenzhen Intermediate6
People's Court, the eight companies such as Haiyi Industrial (Shenzhen) Co., Ltd. filed an
application of resumption with Shenzhen Intermediate People's Court to execute judgment, and
Shenzhen Intermediate People’s Court accepted and heard the application, sealed up and froze part
property, equity and bank account of the Company. The Company disclosed the above information
with extraordinary public notice, which was published in Securities Times, and Ta Kung Pao dated
4 Jun. 2009 as well as http://www.cninfo.com.cn.
On 25 Jun. 2009, the Company received Notice on Sealing up Property ((2009) SZFZZ No.
364-377,379-397) (hereinafter refer to as Notice) served by Shenzhen Intermediate People's Court,
and Shenzhen Intermediate People’s Court sealed up part property of the Company. The Company
disclosed the above information with extraordinary public notice, which was published in Securities
Times, and Ta Kung Pao dated 29 Jun. 2009 as well as http://www.cninfo.com.cn.
The Company considered that: the 33 judgments as base of application for execution were the same
with Judgment (1998) YFMZZ No. 298 that has problems of unclear fact, non-applicable law to the
case and violating legal procedure. The Company is applying to rehear.
2. Regarding case of “Jiyong Company” disclosed in the Annual Report between 2000 and 2008,
and Semi-annual Report 2009
In Mar. 2006, other properties of Jiabing Mansion the Company fielded for sealing up in this case
was released from seizing automatically according to rules of the Supreme People’s Court. The
Company has applied for resumption execution. In Sep. 2009, the Company received Notice on
Resumption Execution with document No. (2002) YGZFZ 1-1 served by Supreme People’s Court
of Guangdong Province. Supreme People’s Court of Guangdong Province decided to recover
execution on case that Shenzhen Jiyong Properties & Resources Development Company was in
arrears of fund for transferring Jiabing Mansion of the Company. In accordance with Judgment
1999 YGMFMC Zi No. 3, Shenzhen Jiyong Properties & Resources Development Company need
pay RMB 140 million to the Company. The Company has disclosed the above on 14 Sep. 2009, for
details please referred to temporary public notice published in Securities Times, and Ta Kung Pao as
well as http://www.cninfo.com.cn.
3. With regard to case of “Meisi Company Lawsuit” disclosed continuously by the Company in
Annual Report between 2004 and 2008, extraordinary public notice on 15 Apr. 2006, 5 Aug. 2006,
11 Apr. 2007, 19 May 2007, 26 Feb. 2008, 3 Jun. 2008, 31 Dec. 2008 and 13 Feb. 2009, as well as
Interim Report 2009.
A civil action against the Company and Luohu Economic Development Co., Ltd. (as joint
defendants) was taken by Meisi Company to Shenzhen Municipal Futian District People’s Court,
hereafter, the Company considered that the object of action is the larger, belonging to the case with
significant influence within the area, which Shenzhen Intermediate People’s Court should have the
jurisdiction over the case. the Company, in accordance with the provisions of the Law of Civil
Procedure of the PRC, raised its objection at the time of submitting a written reply to claim for
transferring the case to Shenzhen Intermediate People’s Court for trial. As examined and checked,
Shenzhen Municipal Futian Distric People’s Court believed that the said objection is tenable and
decided to transfer the case to Shenzhen Intermediate People’s Court for trial, and provided for the
service of notice ((2009) SFFMSC Zi No. 939) to the Company in Mar. 2009.
On 2 Jul. 2009, Shenzhen Intermediate People’s Court heard the case, now is waiting for collegiate
judge. The Company believed that the Company should be considered as legitimate oblige of the
above land and building, and the Company will protect legitimated equity by law. It was forecasted7
that the above events would not cause significant influence on financial status of the Company.
4. The Proposal on Applying to Shenzhen Investment Holdings Co., Ltd. for an Entrustment Loan
of RMB 50 Million was examined and approved at the 11th Meeting of the 6th Board of Directors
held by the Company on 23 Jan. 2009. With the Shenzhen Branch of the Agricultural Bank of China
as the trustee, the Company applied to Shenzhen Investment Holdings Co., Ltd. for an entrustment
loan of RMB 50 million with a term of 12 months, which was used for the project development of
the Company’s subsidiary—Shenzhen Huangcheng Real Estate Co., Ltd.. In this transaction, the
Company was getting the new loan to repay the old.
The Company disclosed on 24 Jan. 2009 this loan transaction in its extraordinary public notice on
the designated media—Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
5. On 25 Mar. 2009, the Company repaid RMB 15 million to its controlling shareholder—Shenzhen
Investment Holdings Co., Ltd., which was borrowed directly from the latter. The Company
disclosed the above in Annual Report 2008 and Interim Report 2009.
6. The Company’s subsidiary—Shenzhen Huangcheng Real Estate Co., Ltd.—signed the Contract
of Land Purchase by post with Sihui Land Reserve Center. According to the contract, the Company
transferred its use right of the No.000050 State-owned Land in Nanjiang Industrial Park, Dasha
Town, Sihui City to Sihui Land Reserve Center at a price totaling RMB 5,274,080.00.
The Company disclosed on 8 Jul. 2009 this transaction in its interim public notice on the designated
media—Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
The Company had not received the said sum of money payable by Sihui Land Reserve Center for
land transfer by the reporting date.
7. In Sep. 2009, the Company adopted share merger reform, and disclosed Program on Share
Merger Reform of Shenzhen Properties & Resources Development (Group) Ltd on 9 Sep. 2009.
Actively communicated with investors, the Company disclosed Program on Share Merger Reform
of Shenzhen Properties & Resources Development (Group) Ltd (Revised) on 18 Sep. 2009.
8. Shenzhen Stock approved the Company to cancel warning of delisting risk and other special
disposal, and the Company published public notice on Cancel of Warning of Delisting Risk and
Other Special Disposal in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
9. The Company held the 18th Meeting of the 6th Board of Directors on 21 Sep. 2009, on which
reviewed and approved Proposal on Dealing with Historical Retained Problems of Land in Pinghu.
The Company disclosed the above on 22 Sep. 2009 in Securities Times, Ta Kung Pao and
http://www.cninfo.com.cn
According to the above resolution of the Board of Directors, the Company signed agreement on
related Land in Pinghu with Shenzhen Pinghu Holding Cooperation Company on 29 Sep. 2009.
According to the agreement, Shenzhen Pinghu Holding Cooperation Company will compensate
RMB 1,984,860.12 to the Company for land equity.
3.3 Implementation on commitments made by the Company, shareholders and the actual controller
√Applicable □Inapplicable
1. The actual controller of the Company—Shenzhen Investment Holdings Co., Ltd send
Commitment Letter on Strengthening Non-public Information Management, which stated that the
company would establish and perfect internal control system of non-public information
management, urged relating information that the insider didn’t transact the securities with
non-public information, neither suggested that others transacted or betrayed non-public information,8
and offered insider lists authentically, factually and completely, which reported to Shenzhen
Securities Regulatory Bureau and Shenzhen Exchange Stock for file. Details please referred to
extraordinary public notice published in Securities Times, Hong Kong Ta Kung Pao as well as
designated internet website for information disclosing: http://cninfo.com.cn on 18 Dec. 2007.
In the report period, it was found that no actual controller of the Company or insiders bought and
sold stocks of the Company by taking advantage of undisclosed information of the Company. And
the Company submitted monthly the particulars about the parties to which the undisclosed
information had been submitted to CSRC Shenzhen Bureau for reference.
2. The Company started up share merger reform, and the actual controller of the
Company—Shenzhen Investment Holdings Co., Ltd made commitment as follows:
① Non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen Construction
Investment Holdings and Shenzhen Investment Co., Ltd would not be traded or transferred within
36 months since they acquired right of trade. After expiration of the aforesaid commitment, original
non-tradable shares sold through listing and trading on the Shenzhen Stock Exchange shall not
exceed 5 percents of total shares of the Company within 12 months, as well as not exceed 10
percents within 24 months. In case these companies acted against the above commitment, income
from sales of the shares will belong to the Company.
② Since non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen
Construction Investment Holdings and Shenzhen Investment Co., Ltd acquired right to trade within
one year, Shenzhen Investment Holdings Co., Ltd will start up capital injection to the Company,
that is, Shenzhen Investment Holdings Co., Ltd will inject legitimate capital no less than RMB 500
million including land resource in lump sum or in batches by replace or other legitimate way, will
increase land reserves of the Company and enhance profitability in the future. In case the aforesaid
capital failed to start completely within one year, Shenzhen Investment Holdings Co., Ltd will
compensated 20% of reorganization capital failing to start to the Company within 30 days when
expiration of 1 year, and continued to implement the capital injection which had been started. As for
the capital injection failing to start, Shenzhen Investment Holdings Co., Ltd will not implement.
Note: Startup of capital injection means capital injection program has been reviewed and approved
by the Shareholders’ General Meeting of the Company. Shenzhen Investment Holdings Co., Ltd
was willing to entrust China Securities Depository and Clearing Corporation Limited Shenzhen
Branch to freeze 30 million shares of the Company, which was under name of Shenzhen
Construction Investment Holdings and actually controlled by Shenzhen Investment Holdings Co.,
Ltd, as guarantee for the above commitment.
③ Since non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen
Construction Investment Holdings and Shenzhen Investment Co., Ltd acquired right to trade within
24 months, Shenzhen Investment Holdings Co., Ltd commit that they will support balance no less
than RMB 500 million with method of entrust loan in line with relevant provisions of laws and
administrative statutes to release nervous capital of the Company. The aforesaid balance means
accumulative incurred amount within 24 months since the date when non-tradable shares held by
Shenzhen Investment Holdings Co., Ltd, Shenzhen Construction Investment Holdings and
Shenzhen Investment Co., Ltd acquired right to trade, and each entrust loan for support will not be
less than 12 months; the above cash support of RMB 500 million excluded entrust loan offered
before the date when non-tradable shares held by Shenzhen Investment Holdings Co., Ltd,
Shenzhen Construction Investment Holdings and Shenzhen Investment Co., Ltd acquired right to9
trade.
④ In case that net profit of the Company in any year of 2010, 2011 and 2012 was less than 2009,
Shenzhen Investment Holdings Co., Ltd will make up balance of net profit between the year and
2009 with cash.
Whether the share merger reform program be approved was uncertain, therefore, the whether the
above commitments will be implemented lied on approval of relevant shareholders’ general
meeting.
3.4 Warnings of possible loss or great change of the accumulated net profit made during the period
from the beginning of the year to the end of the next report period compared with the same period
of the last year according to prediction, as well as explanations on the reasons
√Applicable □Inapplicable
Performance forecast Considerable year-on-year growth
Item
Year-begin to the end of
the next report period
Same period of last
year
Increase/decrease (%)
Estimated accumulative
net profit (RMB’0000)
9,000-11,000 982 Up by 800%-1050%
Basic earnings per share
(RMB/share)
0.1661-0.2030 0.0181 Up by 800%-1050%
Notes to performance
forecast
The Imperial Garden of the Company has been completed and available for
sale by the end of 2008. Estimated as the Company’s only real estate project
available for carry-over in the year 2009, the Imperial Garden is now selling
well, with both the total sales ratio and the accumulative income carry-over ratio
over 97% as at the report date. Based on that, the Company forecasts that the net
profit is probably between RMB 90 million and RMB 110 million in the year
2009, with a year-on-year growth of 800% to 1050%.
The actual profit of the Company in 2009 is subject to the data in its 2009
annual report. Meanwhile, in order to avoid investment risks, investors are
reminded to pay attention to the Company’s public notices on the progress of the
Haiyi lawsuit (please refer to Note (Ⅻ) 1 (1) in the auditor’s report of the
Company’s Third Quarterly Report 2009 for more details).
3.5 Other significant events
3.5.1 Securities investment
√Applicable □Inapplicable10
3.5.2 Equity of other listed companies held by the Company
√Applicable □Inapplicable
Stock
code
Short
form of
stock
Initial
investment
amount
Proportion
in equity of
the
company
Book value
at
period-end
Profits or
losses in
report
period
Changes of
owners’
equity in
report
period
Accounting
entry
Source of stock
00050
9
S*ST
HASU
2,962,500.00 0.33% 802,199.55 0.00 0.00
Long-term
equity
investment
Purchase of
pre-assigned
corporate shares
Total 2,962,500.00 - 802,199.55 0.00 0.00
Serial
No.
Stock
variety
Stock
code
Short form of
stock
Initial
investment
amount
(RMB)
Number
of shares
held
Book value
at
period-end
Proportion in
total stock
investment as
at period-end
(%)
Profits or
losses in
report period
1
Hongkong
stock
688
China
overseas
674,486.46 210,600 3,109,979.90 85.03% 1,129,951.65
2
Shenzhen
A stock
000030 ST Sunrise 268,735.50 30,000 191,400.00 5.23% 127,500.00
3
Hongkong
stock
3311
China
Construction
34,186.68 48,000 128,147.18 3.50% 71,084.16
4
Hongkong
stock
014 Xi Shen 101,502.72 6,000 102,560.04 2.80% 36,388.32
5
Hongkong
stock
144 Merchant 59,209.92 4,000 90,577.08 2.48% 37,798.72
6
Hongkong
stock
455
Yunnan
Industrial
12,775.95 50,000 22,468.05 0.61% 4,407.50
7
Hongkong
stock
480 HKR 14,538.15 4,400 11,901.90 0.33% 5,352.47
8
Hongkong
stock
896
Hanison
Construction
431.92 860 560.74 0.02% 303.29
Other stock investment held at period-end
Profits or losses of securities sold in report
period
— — — — 614,438.13
Total 1,165,867.30 — 3,657,594.89 100.00% 2,027,224.2411
3.5.3 Equity of non-listed financial enterprises and companies to be listed held by the Company
□Applicable √Inapplicable
3.5.4 Whether the Company offered capital to controlling shareholder or its related parties, or
provided outward guarantees violating prescribed procedures
□Applicable √Inapplicable
3.5.5 Interviews, researches and visits received by the Company
1. Visits from institutional investors in the report period
On 19 Aug. 2009, the Company received a visit from researchers of Shenyin & Wanguo Securities
and communicated with them on the Company’s operation status, during which the Company
strictly abided by the principle of fair information disclosure and did not conduct differential
treatment or leak the undisclosed information.
2. In the report period, the Company communicated with individual investors mainly by telephone,
fax and e-mail. Due to the great number of calls and e-mails from those investors, they cannot be all
listed here and the common concerns of the investors are as follows:
(1) Asked about the progress of the Company’s share merger reform and when to restart the reform;
(2) Hoped that the Company would start the share merger reform as soon as possible and that the
main shareholder would increase the consideration in the share reform and restructure the assets;
(3) Hoped that the Company would make clear the specific assets involved in the asset restructuring
commitments in the share merger reform;
(4) Wondered whether changes would take place in the main businesses of the Company upon the
completion of the share merger reform;
(5) Inquired about the sales of Imperial Garden and Xinhua Town;
(6) Inquired about the progress of Haiyi Lawsuit and its impact on the business of the Company;
(7) Asked if the Meisi Lawsuit would have a significant impact on the business of the Company;
(8) Asked about the land reserves of the Company and whether the Company was in normal
operation;
(9) Wondered why the Company had not got the special delisting risk warning withdrawn;
(10) Asked about the Inquiry Letter on Annual Reports from Shenzhen Stock Exchange;
(11) Wondered whether the B-share holders had the right to take part in the share merger reform of
the Company;
(12) Expressed personal opinions on the plan of share merger reform;
(13) Inquired about the specific steps and methods of on-line voting.
When receiving phone calls from investors, the Company strictly abided by the principle of fair
information disclosure according to the Guide on Fair information disclosure for Listed Companies,
and protected the investors’ right to obtain information on a fair basis, without conducting
differential treatments or leaking undisclosed information.
§4 Appendix
4.1 Balance Sheet
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
30 Sept. 2009 Unit: (RMB) Yuan
Items As at period-end As at period-begin12
Consolidation Parent company Consolidation Parent company
Current Assets:
Monetary funds 646,910,616.69 2,546,911.33 271,708,727.86 7,802,612.88
Transactional financial assets 3,657,594.89 191,400.00 2,670,729.47 63,900.00
Notes receivable
Accounts receivable 74,818,686.53 60,204,429.32 68,605,911.80 60,405,970.89
Accounts paid in advance 16,059,850.88 500,000.00 2,305,629.53
Dividends receivable 522,000,000.00
Other accounts receivable 68,819,455.98 152,316,664.44 67,222,142.10 441,309,610.51
Financial assets purchased
under agreements to resell
Inventories 1,198,822,375.06 104,479,394.94 1,153,726,292.83 106,048,264.34
Non-current assets due within 1
year
Other current assets
Total current assets 2,009,088,580.03 842,238,800.03 1,566,239,433.59 615,630,358.62
Non-current assets
Loans and advances
Available-for-sale financial
assets
Held-to-maturity investments 3,000.00
Long-term accounts receivable
Long-term equity investment 82,734,651.38 181,914,651.38 81,273,230.90 183,908,863.53
Investing property 231,524,506.21 139,337,641.46 224,041,978.19 133,384,070.84
Fixed assets 85,870,611.86 34,936,203.55 104,013,870.31 46,337,392.67
Construction in progress
Engineering material
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 114,520,843.07 119,402,340.92
Development expenses
Goodwill
Long-term deferred expenses 2,328,318.11 2,284,563.86 2,549,186.42 2,409,176.42
Deferred income tax assets 45,122,751.84 13,322,857.95
Other non-current assets
Total of non-current assets 562,101,682.47 358,473,060.25 544,606,464.69 366,039,503.46
Total assets 2,571,190,262.50 1,200,711,860.28 2,110,845,898.28 981,669,862.08
Current liabilities:
Short-term borrowings 249,000,000.00 99,000,000.00 369,000,000.00 164,000,000.00
Transactional financial
liabilities
Notes payable13
Accounts payable 110,280,654.79 35,898,829.80 137,040,777.65 36,748,755.23
Advances from customers 459,068,614.08 414,657.00 67,150,023.78 122,312.00
Financial assets sold under
agreements to repurchase
Handling charges and
commission payable
Payroll payable 26,893,979.28 2,671,511.74 67,254,232.19 16,228,231.70
Taxes payable 196,079,275.98 1,335,415.47 82,322,778.74 1,198,324.42
Dividend payable
Interest payable 620,737.50 620,737.50
Other accounts payable 206,496,199.51 317,376,647.12 187,732,899.73 384,394,686.18
Non-current liabilities due
within 1 year
200,000,000.00 100,000,000.00
90,000,000.00
Other current liabilities
Total current liabilities 1,447,818,723.64 456,697,061.13 1,011,121,449.59 693,313,047.03
Non-current liabilities:
Long-term borrowings 214,860,000.00 348,229,343.34 40,000,000.00
Bonds payable
Long-term payables
Specific payables
Accrued liabilities 61,254,234.44 61,254,234.44 61,254,234.44 61,254,234.44
Deferred income tax liabilities
Other non-current liabilities 115,580,816.96 9,886,144.84 118,763,754.44 9,886,144.84
Total non-current liabilities 391,695,051.40 71,140,379.28 528,247,332.22 111,140,379.28
Total liabilities 1,839,513,775.04 527,837,440.41 1,539,368,781.81 804,453,426.31
Owners’ equity (or shareholders’
equity)
Paid-up capital (or share
capital)
541,799,175.00 541,799,175.00 541,799,175.00
541,799,175.00
Capital reserves 25,332,931.52 226,883.79 25,332,931.52 226,883.79
Less: Treasury Stock
Surplus reserves 62,919,127.11 62,919,127.11 62,919,127.11 62,919,127.11
General risk provision
Retained profits 104,351,505.00 67,929,233.97 -55,930,192.11 -427,728,750.13
Foreign exchange difference -3,587,883.23 -3,505,676.11
Total owners' equity attributable
to parent company
730,814,855.40 672,874,419.87 570,615,365.41
177,216,435.77
Minority interest 861,632.06 861,751.06
Total owners’ equity 731,676,487.46 672,874,419.87 571,477,116.47 177,216,435.77
Total liabilities and owners’
equity
2,571,190,262.50 1,200,711,860.28 2,110,845,898.28
981,669,862.08
4.2 Income Statement14
4.2.1 Income Statement as of report period
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
From Jul. 2009 to Sept. 2009 Unit: (RMB) Yuan
This report period Same period of last year
Items
Consolidation Parent company Consolidation Parent company
I. Total sales 222,046,484.96 6,415,277.36 63,637,284.99 5,433,457.45
Including: Sales 222,046,484.96 6,415,277.36 63,637,284.99 5,433,457.45
II. Total cost of sales 159,624,740.32 20,572,232.28 74,995,173.58 11,219,429.24
Including: Cost of sales 103,598,632.70 3,038,058.60 45,639,401.62 1,942,540.99
Taxes and associated
charges 39,464,878.39 334,427.45 3,244,463.33 282,314.85
Selling and distribution
expenses 4,257,141.47 3,332,533.33
Administrative
expenses 13,525,908.87 6,399,205.80 20,874,422.95 6,710,433.31
Financial expenses 3,263,353.78 604,066.69 1,904,352.35 2,284,140.09
Impairment loss -4,485,174.88 10,196,473.74
Add: gain/(loss) from changes in
fair value (“-” means loss) -359,337.99 38,400.00 -833,360.21
Gain/(loss) from investment (“-”
means loss) 378,963.49 522,375,831.60 120,874.88 115,529.48
Including: income form
investment in affiliated
enterprises and joint enterprises 375,831.60 375,831.60 135,390.99 135,391.01
Foreign exchange difference (“-”
means loss)
III. Business profit (“-” means
loss) 62,441,370.14 508,257,276.68 -12,070,373.92 -5,670,442.31
Add: non-operation income 330,917.73 46,112.38 2,630,908.31 179,632.08
Less: non-business expense 24,696.48 1,500.00 189,692.85 83,594.18
Including: loss from non-current
asset disposal -75,917.52 -33,459.88 49,098.45 3,594.18
IV. Total profit (“-” means loss) 62,747,591.39 508,301,889.06 -9,629,158.46 -5,574,404.41
Less: Income tax expense 8,763,241.11 45,027.21
V. Net profit (“-” means loss) 53,984,350.28 508,301,889.06 -9,674,185.67 -5,574,404.41
Attributable to owners of
parent company 53,984,350.28 508,301,889.06 -9,674,185.67 -5,574,404.41
Minority interest -119.00
VI. Earnings per share
(I) basic earnings per share 0.0996 0.9382 -0.0179 -0.0103
(II) diluted earnings per
share 0.0996 0.9382 -0.0179 -0.0103
Ⅶ. Other composite income15
Ⅷ. Total composite income 53,984,350.28 508,301,889.06 -9,674,185.67 -5,574,404.41
Including: attributable to owners
of parent company 53,984,469.28 508,301,889.06 -9,674,185.67 -5,574,404.41
Attributable to minority
shareholders -119.00
4.2.2 Income Statement from Year-begin to Period-end
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
From Jan. 2009 to Sept. 2009 Unit: (RMB) Yuan
This report period Same period of last year
Items
Consolidation Parent company Consolidation Parent company
I. Total sales 758,785,069.84 20,096,196.29 200,092,541.04 15,754,337.68
Including: Sales 758,785,069.84 20,096,196.29 200,092,541.04 15,754,337.68
II. Total cost of sales 565,921,369.82 8,113,376.34 235,015,478.75 48,176,602.16
Including: Cost of sales 355,041,716.72 8,113,376.34 139,933,890.54 5,639,941.95
Taxes and associated
charges
136,650,044.93 1,047,555.03 10,513,045.79 809,027.57
Selling and distribution
expenses
13,915,047.48 11,949,351.80
Administrative
expenses
51,440,568.19 22,258,370.55 62,082,671.13 29,332,962.76
Financial expenses 12,658,522.18 3,228,971.99 12,359,751.49 17,752,337.16
Impairment loss -3,784,529.68 14,486,230.34 -1,823,232.00 -5,357,667.28
Add: gain/(loss) from changes in
fair value (“-” means loss)
1,823,215.31 127,500.00 -2,494,349.06
Gain/(loss) from investment (“-”
means loss)
2,466,183.21 524,242,065.68 5,311,672.55 2,927,117.28
Including: income form
investment in affiliated
enterprises and joint enterprises
2,242,065.68 2,242,065.68 465,050.92 465,050.92
Foreign exchange difference (“-”
means loss)
III. Business profit (“-” means
loss)
197,153,098.54 495,331,257.72 -32,105,614.22 -29,495,147.20
Add: non-operation income 2,334,498.25 432,305.91 22,710,375.94 294,711.08
Less: non-business expense 282,396.86 105,579.53 1,124,810.09 790,667.78
Including: loss from non-current
asset disposal
58,162.01 20,619.65 103,183.39 7,127.38
IV. Total profit (“-” means loss) 199,205,199.93 495,657,984.10 -10,520,048.37 -29,991,103.90
Less: Income tax expenses 38,923,621.82 2,274,939.46
V. Net profit (“-” means loss) 160,281,578.11 495,657,984.10 -12,794,987.83 -29,991,103.90
Attributable to owners of
parent company
160,281,697.11 -12,794,987.83 -29,991,103.9016
Minority interest -119.00
VI. Earnings per share
(I) basic earnings per share 0.295 0.9148 -0.0236 -0.0554
(II) diluted earnings per
share
0.295 0.9148 -0.0236 -0.0554
Ⅶ. Other composite income -4,946,544.56 -2,524,201.15
Ⅷ. Total composite income 160,281,578.11 495,657,984.10 -17,741,532.39 -32,515,305.05
Including: attributable to owners
of parent company
160,281,697.11 -17,741,532.39
Attributable to minority
shareholders
-119.00
4.3 Cash Flow Statement
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
From Jan. 2009 to Sept. 2009 Unit: (RMB) Yuan
This report period 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 1,152,493,954.60 9,433,475.49 372,666,112.55 15,470,121.07
Net increase from disposal of
held-for-trading financial assets
Refund of taxes and fares
received 17,669.61
Other cash received relating to
operating activities 30,596,062.36 123,541,662.46 88,106,854.55 214,686,216.30
Sub-total of cash inflows from
operating activities 1,183,090,016.96 132,975,137.95 460,790,636.71 230,156,337.37
Cash paid for goods and services 321,051,235.62 1,086,052.30 277,536,933.48 3,277,657.95
Cash paid to and on behalf of
employees 140,065,715.71 6,718,933.04 129,667,456.94 14,473,133.27
Taxes and fares paid 120,821,212.52 3,243,068.96 42,976,140.65 7,112,044.85
Other cash paid relating to
operating activities 33,503,147.69 8,532,134.72 92,174,625.13 158,378,237.80
Sub-total of cash outflows from
operating activities 615,441,311.54 19,580,189.02 542,355,156.20 183,241,073.87
Net cash flows from operating
activities 567,648,705.42 113,394,948.93 -81,564,519.49 46,915,263.50
II. Cash Flows from investment
activities:
Cash received from disinvestment 1,054,529.64 13,924,469.09 13,756,435.1617
Cash received from investment
income 23,108.60 19,997.37
Net cash received from disposal
of fixed assets, intangible assets
and other long-term assets 892,136.54 890,741.54 846,597.48 160,100.00
Proceeds from sale of subsidiaries
and other operating units
Other cash received relating to
investment activities
Sub-total of cash inflows from
investment activities 1,969,774.78 890,741.54 14,791,063.94 13,916,535.16
Cash paid for acquiring fixed
assets, intangible assets and other
long-term assets 2,451,156.10 1,082,133.46 11,734,846.75 302,642.00
Cash paid for acquiring
investments 57,169.68 228,834.02
Net increase of pledged loans
Net cash paid for acquiring
subsidiaries and other operating
units
Other cash paid relating to
investment activities
Sub-total of cash outflows from
investment activities 2,508,325.78 1,082,133.46 11,963,680.77 302,642.00
Net cash flows from investment
activities -538,551.00 -191,391.92 2,827,383.17 13,613,893.16
III. Cash Flows from Financing
Activities:
Cash received from absorbing
investment
Including: Cash received from
investment of minority
shareholders in subsidiaries
Cash received from borrowings 319,000,000.00 119,000,000.00 485,050,000.00 200,000,000.00
Cash received from issuance of
bonds
Other proceeds relating to
financing activities 1,337,534.25
Sub-total of cash inflows from
financing activities 319,000,000.00 119,000,000.00 486,387,534.25 200,000,000.00
Cash paid for settling debts 472,369,343.34 235,000,000.00 359,080,194.24 243,450,000.00
Cash paid for distribution of
dividends or profit or reimbursing
interest 36,211,928.38 2,459,239.50 46,805,860.98 21,061,557.1318
Including: dividends or profit paid
by subsidiaries to minority
shareholders
Other cash payments relating to
financing activities 2,326,312.50 2,895,000.00
Sub-total of cash outflows from
financing activities 510,907,584.22 237,459,239.50 408,781,055.22 264,511,557.13
Net cash flows from financing
activities -191,907,584.22 -118,459,239.50 77,606,479.03 -64,511,557.13
IV. Effect of foreign exchange
rate changes on cash and cash
equivalents -681.37 -19.06 -100,445.16 -10,076.85
V. Net increase in cash and cash
equivalents 375,201,888.83 -5,255,701.55 -1,231,102.45 -3,992,477.32
Add : beginning cash and
cash equivalents 271,708,727.86 7,802,612.88 242,161,687.34 10,363,712.41
VI. Closing cash and cash
equivalents 646,910,616.69 2,546,911.33 240,930,584.89 6,371,235.0919
4.4 Auditors’ report
Office: 16-18F, Block B, Wuhan International Building, Jiefang Road, Wuhan
Postcode：430022 Tel：027 85826771 Fax：027 85424329
Auditor's Report
ZHSZ(2009) No.859
TO THE SHAREHOLDERS OF SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.：
We have audited the accompanying financial statements of Shenzhen Properties & Resources Development
(Group) Ltd. (hereinafter referred to as “the Company”), which comprise the balance sheet and the consolidated
balance sheet as at September 30, 2009, the income statement and the consolidated income statement, the
statement of change in equity and the consolidated statement of change in equity, the cash flow statement and the
consolidated cash flow statement for the period then ended, and a summary of significant accounting policies and
other explanatory notes.
Management's responsibility for the financial statements
Preparing financial statements in compliance with Accounting Standards for Business Enterprises is the
responsibility of the Company’s management. This responsibility includes (1) designing, implementing and
maintaining internal controls pertaining to the preparation of these financial statements to prevent these financial
statements from material misstatement arising from frauds and errors; (2) selecting and applying proper
accounting policies; and (3) making reasonable accounting estimates.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our
audit in accordance with China’s Independent Auditing Standards. Those Standards require that we comply with
relevant ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the
financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The audit procedures selected depend on our judgement, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of20
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting principles used and the reasonableness of accounting estimates made by the
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidences we have obtained are sufficient and effective, providing a reasonable basis for
our opinion.
Opinion
In our opinion, the financial statements comply with Accounting Standards for Business Enterprises, and present
fairly the financial position of the Company as of September 30, 2009 and the results of its operations and its cash
flows for the period then ended.
Wuhan Zhonghuan CPAs Co., Ltd CPA min chao
CPA wang yu
Wuhan, China 11 Oct., 200921
Notes to the Financial Statement
(As at 30 September 2009)
Note I Corporate information
Shenzhen Properties & Resources Development (Group) Ltd. (herein after referred to as “the Company”) was
incorporated based on the reconstruction of Shenzhen Properties & Resources Development Co., Ltd. after
obtaining approval of ZFBF [1991] No. 831from People’s Government of Shenzhen Municipality. The registration
number of Business License for Enterprises as Legal Person is SQF Zi No. 00166.
1. Registered capital of the Company
The registered capital of the Company is RMB 541,799,175 after bonus issue of shares on the basis of one share
for every existing 10 shares based on existing paid-in capital of the Company in 1996.
2. Registered office, organization form and headquarter address of the Company
Registered office: Shenzhen Municipal, Guangdong Province, PRC
Organization form: joint-stock company with limited liability
Headquarter address: 39th and 42nd Floor, International Trade Center, Renmin South Road, Shenzhen.
3. Nature of the business and main business scope of the Company
The business scope of the Company and its subsidiaries includes development and sale of property, construction
and management of buildings, lease of properties, supervision of construction, domestic trading and materials
supply and marketing (excluding exclusive dealing and monopoly sold products and commodities under special
control to purchase)
4.About the controlling shareholder of the Company and the Group
By the end of the reporting period, the controlling shareholder of the Company is still Shenzhen Construction
Investment Holdings in register book. In 2004, People’s Government of Shenzhen Municipality incorporated
Shenzhen Construction Investment Holdings with the other two municipal asset management companies, namely
Shenzhen Investment Management Corporation and Shenzhen Trade and Business Holding Company, and
established Shenzhen Investment Holdings Co., Ltd. Thus, the Company’s actual controlling shareholder is
Shenzhen Investment Holdings Co., Ltd., a sole state-funded limited company, who was established in Oct. 13,
2004; its legal representative is Mr. Chen Hongbo and the registered capital is RMB 4 billion. Its main business
scope is providing guarantee to municipal state-owned enterprises, management of state-owned equity, assets
reorganization, reformation, capital operation, and equity investment of enterprises and etc. As a government
department, Shenzhen State-owned Assets Supervision and Administration Commission manage Shenzhen
Investment Holdings Co., Ltd. on behalf of People’s Government of Shenzhen Municipality. Thus, the final
controller of the Company is Shenzhen State-owned Assets Supervision and Administration Commission.
5.Authorization and date of issuing the financial statements
The financial statements were approved and authorised for issue by the second session of the 19th conference of
the Company’s board of directors on 11 October 2009.
Note II Basis of preparation of the financial statements
The company prepares the financial statements based on the underlying assumption of going concern and22
recognition and measurement of transactions actually occurred according to Accounting Standards for Business
Enterprises – Basic standard and other related accounting standards.
Note III Declaration of following Accounting Standards for Business Enterprises
The financial statements prepared in accordance with Accounting Standards for Business Enterprises reflect truly
and completely the financial position, the results of operations, the changes in equity of shareholders and cash
flows of the Company.
Note IV Significant accounting policies and accounting estimates of the Company
1. Fiscal year
The Company adopts the Gregorian calendar for its accounting period, starting on January 1 and ending on
December 31 of the year.
2. Functional currency
The financial statements are presented in Renminbi Yuan, which is the Company’s functional currency.
3. The measurement basis of accounting elements
The measurement basis used in the preparation of the financial statements is the historical cost basis, except for
accounting elements measured using replacement cost, net realisable value, present value or fair value, which are
measured on the basis that those accounting elements can be reliably measured.
4. Cash equivalent
Cash equivalent is defined as the short-term (normally refer to mature within 3 months from the date of
acquisition); highly liquid investment that is readily convertible to known amounts of cash and are subject to an
insignificant risk of changes in value.
5. Foreign currency translation
The Company accounts for foreign currency transactions using the exchange rate which is determined in a
systematic and reasonable way and is approximate to the spot exchange rate ruling at the transaction date (opening
exchange rate).
(1) Foreign exchange difference
On balance sheet date, the Company accounts for monetary and non-monetary items denominated in foreign
currencies as follows: a) monetary items denominated in foreign currencies are translated at the foreign exchange
rates ruling at the balance sheet date. Foreign exchange gains and losses arising from the difference between the
balance sheet date exchange rate and the exchange rate ruling at the time of initial recognition or the exchange rate
ruling at the last balance sheet date are recognized in income statement; b) Non-monetary items that are measured
in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the
transaction dates. Non-monetary items denominated in foreign currencies that are stated at fair value are translated
using the foreign exchange rates ruling at the dates the fair value was determined, the difference between the23
amount of functional currency after translation and the original amount of functional currency is treated as part of
change in fair value (including change in exchange rate) and recognized in income statement. During the
capitalization period, exchange differences arising from foreign currency borrowings are capitalized as part of the
cost of the capitalized assets.
(2) Translation of foreign currency financial statements
The Company translates the financial statements of its foreign operation in accordance with the following
provisions: a) the asset and liability items in the balance sheets shall be translated at a spot exchange rate ruling at
the balance sheet date. Among the owner's equity items, except the ones as "retained earnings", others shall be
translated at the spot exchange rate ruling at the time when they occurred; b) The income and expense items in the
income statements shall be translated at an exchange rate which is determined in a systematic and reasonable way
and is approximate to the spot exchange rate ruling at the transaction date. The foreign exchange difference arisen
from the translation of foreign currency financial statements shall be presented separately under the owner's equity
in the balance sheet. The translation of comparative financial statements shall be subject to the aforesaid
provisions.
6. Recognition and measurement of financial instruments
(1) Recognition of financial instruments
When the Company becomes a party to a financial instrument contract, it shall recognize a financial asset or
financial liability.
(2) Classification and measurement of financial assets
1) The Company classifies the financial assets hold into the following four categories: a) the financial assets at
fair value through profit or loss; b) investment held to maturity; c) loans and receivables and d) available-for-sale
financial assets.
2) Upon initial recognition, financial assets are measured at fair value. For the financial assets at fair value
through profit or loss, the transaction expenses thereof shall be directly recognized in profit or loss; for other
categories of financial assets, the transaction expenses thereof shall be included in the initially recognized amount.
3) Subsequent Measurement of Financial Assets
A. Financial assets at fair value through profit or loss, including trading financial assets and the financial asset
that upon initial recognition are designated by the Company as at fair value through profit or loss, are measured at
fair value after initial recognition. Gains or losses arising from changes in the fair value of financial assets at fair
value through profit or loss, including held for trading financial assets are recognized in profit or loss during
current period.
B. Held to maturity investment are measured at amortised cost using the effective interest method after initial
recognition, gains or losses arising from derecognition, impairment and amortisation are recognized in profit or
loss during current period.
C. Loans and receivables are measured at amortised cost using the effective interest method after initial
recognition, gains or losses arising from derecognition, impairment and amortisation are recognized in profit or
loss during current period.24
D. Available-for-sale financial assets are measured at fair value after initial recognition. A gain or loss on an
available-for-sale financial asset shall be recognized directly in Capital surplus until the financial asset is impaired
or derecognized, at which time the cumulative gain or loss previously recognized in equity shall be recognized in
profit or loss. However, interest calculated using the effective interest method is recognized in profit or loss.
Dividends on an available-for-sale equity instrument are recognized in profit or loss when the entity's right to
receive payment is established.
4) Impairment of financial assets
A. The Company assesses the carrying amount of the financial assets except the financial asset at fair value
through profit or loss at each balance sheet date, if there is any objective evidence that a financial asset or group of
financial assets is impaired, the Company shall recognize impairment loss.
B. Objective evidence that a financial asset or group of assets is impaired includes the following event:
a) significant financial difficulty of the issuer or obligor;
b) a breach of contract, such as a default or delinquency in interest or principal payments;
c) the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting to the
borrower a concession that the lender would not otherwise consider;
d) it becoming probable that the borrower will enter bankruptcy or other financial reorganization;
e) the disappearance of an active market for that financial asset because of financial difficulties of issuer;
f) observable data indicating that there is a measurable decrease in the estimated future cash flows from a group
of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with
the individual financial assets in the group, including: (i) adverse changes in the payment status of borrowers in
the group or (ii) an increase in the unemployment rate in the geographical area of the borrowers, a decrease in
property prices for mortgages in the relevant area, or adverse changes in industry conditions that affect the
borrowers.
g) significant changes with an adverse effect that have taken place in the technological, market, economic or
legal environment in which the borrower operates, and indicates that the cost of the investment in the equity
instrument may not be recovered;
h) a significant or non-temporary decrease in fair value of equity instrument investment;
i) Other objective evidences showing the impairment of the financial assets.
C. Measurement of impairment loss of financial assets
a) investment held to maturity and loans and receivables
If there is objective evidence that an impairment loss on loans and receivables or investment held to maturity
carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the
financial asset's carrying amount and the present value of estimated future cash flows. The amount of the loss
shall be recognized in profit or loss.
The Company assesses whether objective evidence of impairment exists individually for financial assets that are
individually significant. For financial assets that are not individually significant, they shall be individually
assessed or be included in a group of financial assets with similar credit risk characteristics for impairment25
assessment. If the Company determines that no objective evidence of impairment exists for an individually
assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar
credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in a collective
assessment of impairment.
The Company assesses receivables for impairment and provides bad debt provisions at the balance sheet date. The
Company assesses whether objective evidence of impairment exists individually for receivables that are
individually significant, or for receivables that are not individually significant. If there is objective evidence
showing that the receivable is impaired, an impairment loss measured as the difference between the financial
asset's carrying amount and the present value of estimated future cash flows shall be recognized and a bad debt
provision shall be provided.
If, in a subsequent period, there is any objective evidence indicates that an impairment loss recognized in prior
periods for a financial assets carried at amortized cost may no longer exist or may have decreased, and the
decrease can be related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss shall be reversed. The amount of the reversal shall be recognized in profit or loss.
b) available-for-sale financial assets
When a non-temporary decline in the fair value of an available-for-sale financial asset occurs, the cumulative loss
arising from decrease in fair value of the financial asset that had been recognized directly in Capital surplus shall
be removed from equity and recognized in profit or loss even though the financial asset has not been
derecognized.
Where an available-for-sale 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
difference between the carrying amount of the equity instrument investment or the derivative financial asset and
the present value of estimated future cash flow discounted at the current market rate of return for a similar
financial asset shall be recognized as impairment loss, with the amount of the impairment loss recognized in profit
or loss.
If, in a subsequent period, there is any objective evidence indicates that an impairment loss recognized in prior
periods for a debt instrument classified as available for sale may no longer exist or may have decreased, and the
decrease can be related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss shall be reversed. The amount of the reversal shall be recognized in profit or loss.
Impairment losses for an investment in an equity instrument classified as available for sale shall not be reversed
through profit or loss. However, impairment loss of 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 said equity instrument and which shall be settled by delivering the said equity instrument,
cannot be reversed.
(3) Classification and measure of financial liabilities
1) The Company classifies financial liabilities hold as financial liabilities at fair value through profit or loss and26
other financial liabilities.
2) Upon initial recognition, financial liabilities are measured at fair value. For the financial liabilities at fair
value through profit or loss, the transaction expenses thereof shall be directly recognized in profit or loss; for other
financial liabilities, the transaction expenses thereof shall be included in the initially recognized amount.
3) Subsequent measurement of financial liabilities
A. Financial liabilities at fair value through profit or loss, including held for trading financial liabilities and the
financial liabilities that upon initial recognition are designated by the Company as at fair value through profit or
loss, are measured at fair value after initial recognition. Gains or losses arising from changes in the fair value of
financial liabilities are recognized in profit or loss.
B. Other financial liabilities are measured at amortised cost using the effective interest method after initial
recognition.
(4) Fair Value Measurement Considerations
1) Where an active market for a financial instrument exists, the published price quotation in the active market is
the fair value of said financial instrument.
2) Where an active market for a financial instrument does not exist, the Company establishes fair value by using
a valuation technique.
7. Recognition and measurement of financial assets transfer
(1) The Company derecognizes financial assets when the Company transfers substantially all the risks and
rewards of ownership of the financial assets.
If the transfer of a financial asset in its entirety qualifies for derecognition, difference between the follows is
recognized in profit or loss during the current period:
1) The carrying amount of the financial asset transferred and
2) The sum of (a) the consideration received from the transfer and (b) any cumulative fair value gain or loss that
had been recognized directly in owner’s equity (in the event that the financial asset involved in the transfer is
available for sale financial asset).
If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition, the
previous carrying amount of the larger financial asset shall be allocated between the part that continues to be
recognized and the part that is derecognized, based on the relative fair values of those parts on the date of the
transfer. Difference between the follows is recognized in profit or loss during the current period:
(a) The carrying amount allocated to the part derecognized and
(b) The sum of (i) the consideration received for the part derecognized and (ii) any cumulative fair value gain or
loss allocated to the part derecognized that had been recognized directly in owner’s equity (in the event that the
financial asset involved in the transfer is available for sale financial asset).
A cumulative fair value gain or loss allocated to the part derecognized that had been recognized directly in
owner’s equity shall be recognized by allocating the cumulative fair value gain or loss between the part
derecognized and the part continues to be recognized based on the relative fair values of those parts.27
(2) If a transfer does not qualify for derecognition, the Company shall continue to recognize the transferred asset
in its entirety and shall recognize a financial liability for the consideration received.
To a financial asset transfer under continuing involvement, the Company recognizes a financial asset and an
associated financial liability to the extent of the financial asset transfer under continuing involvement. The
transferred financial asset and the associated financial liability are measured on a basis that reflects the rights and
obligations that the Company has retained.
8. Classification and measurement of inventories
(1) Inventories of the Company include raw materials, finished goods, low-value consumption goods, land use
right held for real estate development, properties under development, completed properties for sale, properties for
rent and owner-occupied properties.
(2) Recognition of inventories:
The Company recognizes inventories when the following conditions are satisfied:
1) It is probable that future economic benefits associated with the inventories will flow to the Company entity;
and
2) The cost of the inventories can be measured reliably.
(3) Measurement of inventories: property inventories are measured at actual cost incurred, comprising the
borrowing cost designated for real estate development before completion of developing properties. Completed
saleable property inventories are measured using average unit area cost method. Other kinds of inventories are
measured at actual cost incurred, and when the inventories are transferred out or issued for use, cost of the
inventories is determined using weighted average cost method.
(4) The Company adopts equal-split amortization method for low-value consumption goods.
(5) Inventories shall be measured at the lower of cost and net realisable value at the balance sheet date. Where the
net realizable value is lower than the cost, the difference shall be recognized as provision for impairment of
inventories and charged to profit or loss.
1) Estimation of net realizable value
Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are
made, of the amount the inventories are expected to realize. These estimates take into consideration the purpose
for which the inventory is held and the influence of post balance sheet events.
Materials and other supplies held for use in the production are measured at cost if the net realizable value of the
finished goods in which they will be incorporated is higher than their cost. However, when a decline in the price
of materials indicates that the cost of the finished products will exceed their net realisable value, the materials are
measured at net realisable value.
The net realisable value of inventories held to satisfy sales or service contracts is generally based on the contract
price.
If the quantity specified in sales contracts is less than the inventory quantities held by the Company, the net
realisable value of the excess shall be based on general selling prices.
2) Provision for impairment of inventories shall be determined on an item-by-item basis. For large quantity and28
low value items of inventories, provision may be made based on classes of inventories.
(6) The Company adopts perpetual inventory system for its inventory taking.
9. Long-term equity investment
(1) Initial measurement
The Company initially measures long-term equity investments under two conditions:
1) For long-term equity investment arising from business combination, the initial cost is recognized under the
following principles.
A. If the business combination is under the common control and the acquirer obtains long-term equity
investment in the consideration of cash, non-monetary asset exchange or bearing acquiree’s liabilities, the initial
cost is the carrying amount of the proportion of the acquiree’s owner’s equity at the acquisition date. The
difference between cash paid, the carrying amount of the non-monetary asset exchanged and the acquiree’s
liabilities beard and the initial cost of the long-term equity investment should be adjusted to capital surplus. If the
capital surplus is not sufficient for adjustment, retained earning is adjusted respectively. The business combination
costs that are directly attributable to the combination, such as audit fees, valuation fees, legal service fees and so
on are recognized in profit or loss during the current period when they occurred.
If the acquirer issuing equity securities as consideration, the initial cost is the carrying amount of the proportion of
the acquiree’s owner’s equity at the acquisition date. Amount of share capital equal to the par value of the shares
issued. The difference between initial cost of the long-term equity investment and the par value of shares issued is
adjusted to capital surplus. If the capital surplus is not sufficient for adjustment, retained earning is adjusted
respectively. The costs of issuing equity securities occurred in business combination such as charges of security
issuing and commissions are deducted from the premium of equity securities. If the premium is not sufficient for
deducting, retained earning is adjusted respectively.
B. If the business combination is not under the common control, the acquirer recognizes the initial cost of
combination under the following principles.
a) When business combination is achieved through a single exchange transaction, the cost of a business
combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree;
b) For the business combination involved more than one exchange transaction, the cost of the combination is
the aggregate cost of the individual transactions;
c) The costs directly attributed to business combination are included in the cost of combination;
d) Where a business combination contract or agreement provides for a future event which may adjust the cost of
combination, the Company shall include the amount of the adjustment in the cost of the combination at the
acquisition date if the future event leading to the adjustment is probable and the amount of the adjustment can be
measured reliably.
2) For long-term equity investment obtained in any method other than business combination, the initial cost is
recognized under the following principles.29
A. If the long-term equity investment is acquired in cash consideration, the initial cost is the actual payment
which includes direct expenses paid to acquire the long-term equity investment, taxes and other necessary
expense.
B. If the long-term equity investment is acquired by issuing equity securities, the initial cost is the fair value of
the equity securities issued. However, cash dividends or profits that are declared but unpaid shall not be included
in the initial cost. Direct costs attributed to issue equity securities such as handling charges and commissions paid
to securities underwriting agencies are deducted from premium of equity securities. If the premium is not
sufficient for deduction, reserved fund and retained earnings is adjusted respectively.
C. For the long-term equity investment invested by investors, the initial cost is the agreed value prescribed in
the investment contract or agreement unless the agreed value is not fair.
D. For the long-term equity investment acquired through non-monetary asset exchange, the initial cost is
recognized according to “Accounting Standards for Business Enterprises No. 7-Non-monetary transactions”.
E. For the long-term equity investment acquired through debt restructuring, the initial cost is recognized
according to “Accounting Standards for Business Enterprises No. 12-Debt restructuring”.
3) If there are cash dividends or profits that are declared but unpaid included in the consideration paid, the cash
dividends or profits declared but unpaid shall be recognized as receivables separately rather than as part of initial
cost of long-term equity instruments no matter through which method the long-term equity investment is acquired.
(2) Subsequent measurement
The Company adopts either cost method or equity method for the long-term equity investment hold according to
the extent of influence, existence of active market and availability of fair value. The equity method is used when
the Company has joint control or significant influence over the investee enterprise. The cost method is used when
the Company has the control or does not have joint control or significant influence over the investee enterprise
and there is no quote price in active market or there is no reliable fair value.
1) For the long-term equity investment under cost method, declared cash dividends or profits are recognized as
investment income for the current period when it incurred. The amount of investment income recognized by the
Company is limited to the amount distributed out of the accumulated net profits of the investee enterprise that
arose after the investment was made. The amount of profits or cash dividends declared by the investee enterprise
in excess of the above distributed amount is treated as return of initial cost of investment.
2) For long-term equity investment under equity method, the Company adjusts carrying amount of the
long-term equity investment and recognizes investment income according to the proportion of net profit or loss
realized by the investee enterprise after acquisition. The Company reduces carrying amount of the long-term
equity investment by the proportion of declared cash dividend or profit which shall be distributed to the Company.
For long-term equity investment under equity method, the Company recognizes net losses incurred by the investee
enterprise to the extent that the carrying amount of the long-term equity investment and other long-term equities
that are in substance treated as net investment in the investee enterprise is reduced to zero except there is further
obligation of the excess losses. If the investee enterprise makes net profits in subsequent periods, the Company
shall continue to recognize investment income after using its share of net profits of the investee enterprise to cover
its unrecognized losses.30
3) The Company adopts the same manner of financial instrument for the impairment of long-term equity
investment which is measured under cost method and there is no quote price in active market or there is no
reliable fair value. Impairment of long-term equity investments other than above refers to accounting policy
“Impairment of assets” of the Company.
4) On disposal of a long-term equity investment, the difference between the carrying amount of the investment
and the sale proceeds actually received is recognized as an investment gain or loss for the current period. Where
the equity method is adopted, when a long-term equity investment is disposed, the amount of change in owner’s
equity of the investee enterprise other than net profit or loss which is previously recorded in owner’s equity of the
Company shall be transferred to profit or loss for the current period according to corresponding proportion.
(3) The basis for determination of joint control or significant influence over investee enterprise
A joint control over investee enterprise is established when the investment of the Company satisfied the following
conditions:
1) Any joint venture party cannot control the operating activities of joint venture individually.
2) Decisions regarding the basic operating activities of joint venture shall be agreed by all joint venture parties.
3) All joint venture parties may appoint one of them to manage the operating activities of joint venture, and the
management over the financial and operating policies exercised by the joint venture party appointed shall be
limited to the extent agreed by all joint venture parties.
A significant influence over investee enterprise is established when the investment of the Company satisfied the
following conditions:
1) The Company has representation on the board of directors or equivalent governing body of the investee.
2) The Company participates in policy-making processes, including participation in decisions about dividends
or other distributions.
3) Material transactions occur between the Company and the investee enterprise.
4) The Company dispatches managerial personnel to the investee enterprise.
5) The Company provides essential technical information to the investee enterprise.
If the Company holds, directly or indirectly (e.g. through subsidiaries), 20 percent or more but less than 50 percent
of the voting power of the investee enterprise, it is presumed that the Company has significant influence over the
investee enterprise.
10. Recognition and measurement of investment properties
(1) Investment properties of the Company are properties held to earn rentals or for capital appreciation or both,
mainly comprising:
1) Land use right which has already been rented;
2) Land use right which is held for transfer out after appreciation; and
3) Property which has already been rented.
(2) Investment property shall be recognized as an asset when the following conditions are satisfied:
1) It is probable that the future economic benefits that are associated with the investment property will flow to
the Company; and31
2) The cost of the investment property can be measured reliably.
(3) Initial measurement
An investment property is measured initially at its cost.
1) The cost of a purchased investment property comprises its purchase price, related tax expenses and any
directly attributable expenditure.
2) The cost of a self-constructed investment property comprises all necessary construction expenditures
incurred before the property is ready for its intended use.
3) The cost of a property acquired by other means shall be recognized according to relevant accounting
standards.
(4) Subsequent measurement
After initial recognition, the Company adopts the cost model to measure its investment properties.
The Company amortizes or depreciates its investment properties measured using cost model in the same way as
fixed assets and intangible assets.
The Company values the investment property measured using cost model at the lower of its cost and its
recoverable amount at the end of the period. Where the cost exceeds the recoverable amount, the difference shall
be recognized as impairment loss. Once a provision for impairment loss is made, it cannot be reversed.
11. Recognition and measurement of fixed assets
Fixed assets are tangible assets that: 1) are held for use in the production or supply of goods or services, for rental
to others, or for administrative purposes; and 2) have useful life more than one year.
(1) A fixed asset shall be initially recognized at cost when the following condition are satisfied:
1) It is probable that future economic benefits associated with the assets will flow to the Company; and
2) The cost of the assets can be measured reliably.
(2) Depreciation
Subsequent expenditure relating to a fixed asset shall be added to the carrying amount of the asset when the
expenditure qualifies for capitalization. Subsequent expenditure that does not qualify for capitalization shall be
recognized as an expense for the current period.
The depreciation method adopted by the Company is straight-line method.
The estimated useful lives, residual value and annual depreciation rate of fixed assets are shown as follows:
The categories
Estimated Useful Lives
(years) Residual value (%)
Annual Depreciation
Rate (%)
Property and buildings 20-25 5-10 3.8-4.5
Machineries 10 5 9.5
Vehicles 5 5 19
Electronic and other
equipments
5 5 19
Decoration 5 2032
The Company reviews the useful life, estimated residual value and depreciation method of a fixed asset at the end
of each financial year. If expectations are significantly different from previous estimates, the useful life shall be
revised accordingly. If expectations are significantly different from previous estimates, the estimated residual
value also shall be revised accordingly. If there has been a significant change in the expected realization pattern of
economic benefits from those assets, the depreciation method shall be changed accordingly. The changes in useful
life, estimated residual value and depreciation method shall be treated as change in accounting estimates.
(3) Fixed assets acquired under finance lease
The Company identifies a lease of asset as finance lease when substantially all the risks and rewards incidental to
legal ownership of the asset are transferred.
A fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased asset and the
present value of the minimum lease payments at the inception of lease.
The depreciation method of fixed assets acquired under finance lease is consistent with that for depreciable assets
owned by the Company. If the Company can reasonably confirm that it will obtain the ownership of leased asset at
the end of lease term, the leased asset shall be depreciated during the useful life of the leased asset. If the
Company cannot reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the
leased asset shall be depreciated during shorter of the useful life of the leased asset and the lease term.
(4) Impairment of fixed asset refers to accounting policy “Impairment of assets” of the Company.
12. Recognition and measurement of intangible assets
Intangible assets are identifiable non-monetary asset that are owned or controlled by the Company and are without
physical substance.
(1) Recognition of intangible assets
The Company recognizes an intangible asset when that intangible asset fulfills both of the following conditions:
1) It is probable that the economic benefits associated with that asset will flow to the Company; and
2) The cost of that asset can be measured reliably.
Expenditures incurred during the research phase of an internal project shall be recognized as expenses in the
period in which they are incurred. Expenditures incurred during the development phase of an internal project shall
be recognized as an intangible asset if, and only if, the Company can demonstrate all of the following:
1) The technical feasibility of completing the intangible asset so that it will be available for use or sale;
2) Its intention to complete the intangible asset and use or sell it;
3) The method that the intangible asset will generate probable future economic benefits. Among other things,
the Company can demonstrate the existence of a market for the output of the intangible asset or the intangible
asset itself or, if it is to be used internally, the usefulness of the intangible asset;
4) The availability of adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset; and
5) Its ability to measure reliably the expenditure attributable to the intangible asset during its development
(2) Measurement of intangible assets
1) An intangible asset is measured initially at its cost.33
2) Subsequent measurement of intangible assets
A. For an intangible asset with finite useful life, the Company estimates its useful life at the time of acquisition
and amortizes it during its useful life in a reasonable and systematic way. The amount of amortization is allocated
to relevant costs and expenses according to the nature of beneficial items. The Company does not amortize
intangible asset with infinite useful life.
B. Impairment of intangible assets refers to accounting policy “Impairment of assets” of the Company.
C. Recognition and measurement of long-term deferred expenses
13.The Company recognizes all expenses which have occurred during the period but shall be amortized beyond
one year, such as improvement expenditures of operating leased fixed assets, as long-term deferred expenses. The
Company amortizes long-term deferred expenses using straight-line method according to relevant beneficial
periods.
14.Impairment of assets
In assessing whether there is any indication that an asset may be impaired, the Company shall consider, as a
minimum, the following indications:
(1) During the period, an asset's market value has declined significantly more than it would be expected as a
result of the passage of time or normal use;
(2) Significant changes with an adverse effect on the Company have taken place during the period, or will take
place in the near future, in the technological, market, economic or legal environment in which the Company
operates or in the market to which an asset is dedicated;
(3) Market interest rates or other market rates of return on investments have increased during the period, and
those increases are likely to affect the discount rate used in calculating an asset's value in use and decrease the
asset's recoverable amount materially;
(4) Evidence is available of obsolescence or physical damage of an asset;
(5) The asset becomes idle, or the Company plans to discontinue or to dispose of an asset before the previously
expected date;
(6) Evidence is available from internal reporting that indicates that the economic performance of an asset is, or
will be, worse than expected, for example, the net cash flow generated from assets or the operating profit (or loss)
realized by assets is lower (higher) than the excepted amount, etc.; and
(7) Other evidence indicates that assets may be impaired.
The Company assesses long-term equity investment, fixed assets, construction materials, constructions in progress
and intangible assets (except for those with uncertain useful life) that apply Accounting Standards for Business
Enterprises No. 8 - Impairment of assets at the balance sheet date. If there is any indication that an asset may be
impaired, the Company shall assess the asset for impairment and estimate the recoverable amount of the impaired
asset.
Recoverable amount is measured as the higher of an asset's fair value less costs to sell and the present value of
estimated future cash flows from continuing use of the asset. If carrying amount of an asset is higher than its34
recoverable amount, the carrying amount of this asset shall be written down to its recoverable amount with the
difference recognized as impairment loss and charged to profit or loss accordingly. Simultaneously a provision for
impairment loss shall be made.
There is any indication that an asset may be impaired, the Company usually estimates its recoverable amount on
an individual item basis. However if it’s not possible to estimate recoverable amount of the individual asset, the
Company shall determine the recoverable amount of the cash-generating unit to which the asset belongs.
An asset's cash-generating unit is the smallest group of assets that includes the asset and generates cash inflows
that are largely independent of the cash inflows from other assets or groups of assets. Identification of
cash-generating unit is based on whether the cash inflows generated by the cash-generating unit are largely
independent of the cash inflows from other assets or groups of assets.
The Company assesses goodwill acquired in a business combination and intangible assets with uncertain useful
life for impairment each year no matter whether indication that an asset may be impaired exists or not. Impairment
assessment of goodwill is carried together with the impairment assessment of related cash-generating unit or
group of cash-generating units.
Once impairment loss is recognized, it cannot be reversed in subsequent financial period.
15.Recognition and measurement of borrowing cost
(1) Capitalization and capitalization period of borrowing costs
The costs of borrowings designated for acquisition or construction of qualifying assets shall be capitalized as part
of the cost of the assets. Capitalization of borrowing costs shall start when a) the capital expenditures have
incurred, b) the borrowing costs have incurred and c) the acquisition and construction activities that are necessary
to bring the asset to its expected usable condition have commenced. Other borrowing costs that do not qualify for
capitalization shall be expensed off during current period.
Capitalization of borrowing costs shall be suspended during periods in which the acquisition or construction is
interrupted abnormally, and the interruption period is three months or longer. These borrowing costs shall be
recognized directly in profit or loss during the current period till the acquisition or construction recommences.
However, capitalization of borrowing costs during the suspended periods shall continue when the interruption is a
necessary part of the process of bringing the asset to working condition for its intended use.
Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed is substantially
ready for its intended use. Subsequent borrowing costs shall be expensed off during the period in which they are
incurred.
(2) Calculation method of capitalization for borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset,
the amount of borrowing costs eligible for capitalization on that asset is determined as the actual borrowing costs
incurred on that borrowing during the period less any investment income on the temporary investment of the
borrowing.
To the extent that funds are borrowed generally and used for the purpose of acquiring or constructing a qualifying
asset, the amount of borrowing costs eligible for capitalization shall be determined by applying a capitalization35
rate to the weighted average of excess of accumulated expenditures on qualifying asset over that on specific
purpose borrowing. The capitalization rate is the weighted average of the borrowing costs applicable to the
borrowings of the Company that are outstanding during the period, other than borrowings made specifically for
the purpose of acquiring or constructing a qualifying asset.
16.Share-based payment
Recognition and measurement of share-based payment are based on true, complete and valid share-based payment
agreement. Share-based payment transaction comprises equity-settled share-based payment transactions and
cash-settled share-based payment transactions.
(1) Equity-settled share-based payment transactions
Equity-settled share-based payment transactions in which the Company receives employee’s services as
consideration for equity instruments of the Company are measured as fair value of the equity instrument granted
to the employees. As to an equity-settled share-based payment in return for services of employees, if the right may
be exercised immediately after the grant, the fair value of the equity instruments shall, on the date of the grant, be
included in the relevant cost or expense and the capital surplus shall be increased accordingly. As to a
equity-settled share-based payment in return for employee services, if the right cannot be exercised until the
vesting period comes to an end or until the prescribed performance conditions are met, then on each balance sheet
date within the vesting period, the services obtained during the current period shall, based on the best estimate of
the number of vested equity instruments, be included in the relevant costs or expenses and capital surplus at the
fair value of the equity instruments on the date of the grant.
(2) Cash-settled share-based payment transactions
Cash-settled share-based payment is measured in accordance with the fair value of liability undertaken by the
Company that is calculated based on the shares or other equity instruments. As to a cash-settled share-based
payment, if the right may be exercised immediately after the grant, the fair value of the liability undertaken by the
Company, on the date of the grant, is included in the relevant costs or expenses, and the liabilities shall be
increased accordingly. As to a cash-settled share-based payment, if the right may not be exercised until the vesting
period comes to an end or until the specified performance conditions are met, on each balance sheet date within
the vesting period, the services obtained during the current period shall, based on the best estimate of the
information about the exercisable right, be included in the relevant costs or expenses and the corresponding
liabilities at the fair value of the liability undertaken by the enterprise.
17. Revenue recognition
(1) Revenue from the sale of goods is recognized when all of the following conditions have been satisfied:
1) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;36
2) The Company retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
3) The economic benefits associated with the transaction will flow to the Company; and
4) The relevant amount of revenue and costs can be measured reliably.
(2) Revenue from the sale of properties is recognized upon a) final acceptance of the construction of property is
completed and the property is transferred to buyer, b) buyer receives and accepts the settlement billing and c) the
Company receives all considerations of sale of property (down payment and mortgage received from bank for
property purchasing by installments) and the conditions for obtaining certificate of title to house property are
satisfied.
(3) Revenue from leasing of property is recognized when a) the economic benefits associated with leasing of
property will flow to the Company and b) the amount of revenue can be measured reliably. If lessor provides
rent-free period, lessor shall allocate total rental by straight-line method or other reasonable method during entire
lease term without deducting rent-free period. Lessor shall recognize rental income during rent-free period.
(4) Revenue from rendering of services (excluding long-term contract) is by reference to the percentage of
completion of the service at closing date when the outcome of transaction can be reliably estimated. The outcome
of transaction can be reliably estimated when a) the total revenue and cost can be reliably measured, b) the
percentage of completion can be determined reliably and c) the economic benefit pertaining to the service will
flow to the Company. If the outcome of transaction cannot be reliably estimated, the Company shall recognize
revenue to the extent of costs incurred that are expected to be recoverable and charge an equivalent amount of cost
to profit or loss.
(5) Revenue arising from the Company’s assets used by others is recognized when (a) it is probable that the
economic benefits associated with the transaction will flow to the Company and (b) the amount of the revenue can
be measured reliably. Interest revenue should be measured based on the length of time for which the Company's
cash is used by others and the applicable interest rate. Royalty revenue should be measured in accordance with the
period and method of charging as stipulated in the relevant contract or agreement.
(6) Recognition of construction contract revenue
1) When the outcome of a construction contract can be reliably estimated, construction contract revenue is
recognized by reference to the percentage of completion of the contract activity at closing date. The outcome of a
construction contract can be reliably estimated when a) total contract revenue and contract costs incurred can be
measured reliably, b) both the contract costs to complete the contract and the percentage of completion can be37
measured reliably and c) it is probable that the economic benefits associated with the contract will flow to the
Company. The percentage of completion of a contract is determined as the proportion that actual contract costs
incurred to date bears to the estimated total contract costs.
2) When the outcome of a construction contract cannot be estimated reliably, contract revenue should be
recognized to the extent of contract costs that can be recovered and contract costs should be recognized as expense
in the period in which they are incurred.
3) If total estimated contract costs will exceed total contract revenue, the estimated loss should be recognized
immediately as an expense during the current period.
18. Income tax
The Company adopts the balance sheet liability method for income tax expenses.
(1) Deferred tax asset
1) Where there are deductible temporary differences between the carrying amount of assets or liabilities in the
balance sheet and their tax bases, a deferred tax asset shall be recognized for all those deductible temporary
differences to the extent that it is probable that taxable profit will be available against which the deductible
temporary difference can be utilized. Deferred tax assets arising from deductible temporary differences should be
measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is
settled.
2) At the balance sheet date, where there is strong evidence showing that sufficient taxable profit will be
available against which the deductible temporary difference can be utilized, the deferred tax asset unrecognized in
prior period shall be recognized.
3) The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable
that sufficient taxable profit will not be available against which the deductible temporary difference can be utilized,
the Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later
when it’s probable that sufficient taxable profit will be available.
(2) Deferred tax liability
A deferred tax liability shall be recognized for all taxable temporary differences, which are differences between
the carrying amount of an asset or liability in the balance sheet and its tax base, and measured at the tax rates that
are expected to apply to the period when the asset is realized or the liability is settled.38
19. Basis of consolidation
(1) Scope of consolidation
The scope of consolidated financial statements of the Company is identified based on the concept of control.
When the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of investee
company, the investee company is regarding as subsidiary and included in consolidated financial statements. If the
parent owns half or less of the voting power of an entity when there is any following condition satisfied, the
investee company is regarding as subsidiary and included in consolidated financial statements.
1) Own over more than half of the voting rights by virtue of an agreement with other investors;
2) Power to govern the financial and operating policies of the entity under a statute or an agreement;
3) Power to appoint or remove the majority of the members of the board of directors or equivalent governing
body;
4) Power to cast the majority of voting right at meetings of the board of directors or equivalent governing body
of investee company.
If there is evidence suggesting that no control over investee company exists, the investee company shall not be
included in consolidated financial statements.
(2) Principle of consolidation
The consolidated financial statements are based on the financial statements of individual subsidiaries which are
included in the consolidation scope and prepared after adjustment of long-term equity investment in subsidiaries
under equity method and elimination effects of intragroup transaction.
(3) Minority interests
Minority interest in the consolidated balance sheet is that portion of the net asset of a subsidiary attributable to
equity interests that are not owned, directly or indirectly through subsidiaries, by the parent.
Minority interest is shown separately below net profit in the consolidated income statement, which is that portion
of the profit or loss of a subsidiary attributable to equity interests that are not owned, directly or indirectly through
subsidiaries, by the parent.
(4) Excess losses
Losses applicable to the minority in a consolidated subsidiary may exceed the minority interest in the subsidiary's
equity. The excess, and any further losses applicable to the minority, are allocated against the majority interest
except to the extent that the minority has a binding obligation and is able to make an additional investment to
cover the losses. If the subsidiary subsequently reports profits, such profits are allocated to the majority interest
until the minority's share of losses previously absorbed by the majority has been recovered.39
(5) Consolidation procedures for acquisition or disposal of subsidiaries during current period
For any subsidiary acquired by the Company during the reporting period through business combination under
common control, when the consolidated balance sheet for the current period are being prepared, the amount at the
beginning of the period in the consolidated balance sheet is made corresponding modification. For addition
business combination not under common control during the reporting period, the Company makes no adjustment
for the amount at the beginning of the period in the consolidated balance sheet. When disposing subsidiary during
the reporting period, the Company makes no adjustment for the amount at the beginning of the period in the
consolidated balance sheet.
For any subsidiary acquired by the Company through business combination under common control, when the
consolidated income statement for the current period are being prepared, revenue, expense and profit for the
period from the beginning of the consolidated period to the year end of the reporting period are included in the
consolidated income statement. For any subsidiary acquired by the Company through business combination not
under common control during the reporting period, revenue, expense and profit for the period from acquisition
date to the year end of the reporting period is included in the consolidated income statement. When disposing
subsidiary during the reporting period, revenue, expense and profit for the period from the beginning to the
disposal date are included in the consolidated income statement.
For any subsidiary acquired by the Company through business combination under common control, when the
consolidated cash flow statement for the current period are being prepared, cash flow for the period from the
beginning to the end of the reporting period is included in the consolidated cash flow statement. For any
subsidiary acquired by the Company through business combination not under common control during the
reporting period, cashflow for the period from acquisition date to the end of the reporting period is included in the
consolidated cashflow statement. When disposing subsidiary during the reporting period, cash flow for the period
from the beginning to the disposal date is included in the consolidated cashflow statement.
Note IV Changes in accounting policies and estimates, and correction of errors
1. Changes in accounting policies
There is no change in accounting policies during the financial year.
2. Changes in accounting estimates
There is no change in accounting estimate during the financial year.
3. Correction of errors40
There is no event which requires errors correction during the financial year.
Note VI Taxation
1. Value Added Tax rate is 13% or 17%, paid by deducting value added input tax.
2. The business tax rate is 3% or 5% of operating revenue.
3. Urban maintenance and construction tax is 1% or 7% of turnover tax payable.
4. Education surtax is 3% of turnover tax payable.
5. Levee fee is 0.01% of operating revenue.
6. Land value appreciation tax is levied in four progressive levels with the tax rate ranging from 30% to 60%.
7. Income tax expense
(1) According to Notification of the State Council on Carrying out the Transitional Preferential Policies
concerning Corporate income tax (Guo Fa [2007] No.39), from January 1, 2008, enterprises which enjoy the
preferential policies of low tax rates in the past shall gradually transit to apply the statutory tax rate within 5 years
after the Corporate Income Tax Law of the People's Republic of China is put into force. Among them, the
enterprises which enjoy the corporate income tax rate of 15% shall be subject to the corporate income tax rate of
18% in 2008, 20% in 2009, 22% in 2010, 24% in 2011 and 25% in 2012. The applicable income tax rate of the
Company and the subsidiaries located in Shenzhen special economic zone is 20%.
(2) Corporate Income Tax Law of the People's Republic of China is put into force from January 1, 2008.
According to this tax law, the applicable income tax rate of the subsidiaries located outside Shenzhen special
economic zone is 25%.
Note VII Business combination and consolidated financial statements
1. Subsidiaries
Details of subsidiaries directly or indirectly controlled by the Company as at September 30, 2009 is shown as
below:
Subsidiaries
Business
nature
Registered
capital
(0’000)
Business scope
(1)subsidiaries acquired through
business combination
A. Business combination under
common control41
Subsidiaries
Business
nature
Registered
capital
(0’000)
Business scope
None
B. Business combination without
common control
None
(2)subsidiaries acquired through
methods other than business
combination
Hainan Xinda Development Co., Ltd Real estate
development
2,000 Real estate development, decoration
engineering,; planting; import & export
practice
Shenzhen ITC Food Co., Ltd. Restaurant
operation and
wine
merchandise
200 Retail sales of Chinese meal, western-style
food and wine
Shenzhen Property and Real Estate
Development Co., Ltd.
Real estate
development
3,095 Land development, real estate
management; construction supervision;
property management
Shenzhen ITC Property Management
Co., Ltd.
Property
management
2,000 Property rent and management
Shenzhen ITC Vehicles Industry Co.,
Ltd.
vehicles rental
service
2,985 Motor transport and motor rent
Shenzhen Huangcheng Real Estate
Co., Ltd.
Real estate
development
3,000 Development, construction, operation and
management of commercial service
facilities relevant to Huanggang port
Sichuan Tianhe Industry Co., Ltd Trading 800 Wholesale in domestic market
Shenzhen ITC Property Management
Engineering Equipment Co., Ltd.
Service 120 Domestic commerce; material supply;
maintenance and repair of electric
equipment
Shenzhen Tianque Elevator
Technology Co., Ltd.
Service 500 Maintenance of elevator and air condition
Shandong Shenzhen ITC Property
Management Co., Ltd.
Property
management
500 Property management, household service,
sale of buildings and agent, food and
beverage sevice
Chongqing Shenzhen ITC Property
Management Co., Ltd.
Property
management
500 Property management and agency
Chongqing Ao’bo Elevator Co., Ltd. Service 200 Installing, reconstructing and repairing the
elevator; sales of elevator and accessories
Shenzhen ITC Motor Rent Co., Ltd. Service 1,600 Motor transport and motor rent
Shenzhen ITC Petroleum Co., Ltd. Trading 850 Sales of gasoline, diesel oil, lube and coal
oil
Shenzhen ITC Vehicle Industry
Company Vehicle repair shop
Service 150 Motor maintenance; sales of auto parts and
Motorcycle Accessories
Shenzhen Tesu Vehicle Driver
Training Center Co., Ltd.
Service 200 Driver training42
Subsidiaries
Business
nature
Registered
capital
(0’000)
Business scope
Shenzhen Huangcheng Real Estate
Management Co., Ltd.
Property
management
500 Property management; court virescence
and cleansing services
Zhanjiang Shenzhen Real Estate
Development Co., Ltd.
Real estate
development
253 Real estate development and sales of
commodity premises
Shenzhen Property Construction
Supervision Co., Ltd.
Construction
Supervision
300 Supervision of general industrial and civil
construction engineering
Shenzhen International Trade Plaza Trading 1,200 Investing in commercial, material and
supplying company
Shenzhen Real Estate Exchange Service 138 Providing property information, property
agency and evaluation
Shum Yip Properties Development
Co., Ltd.
Real estate
development
HKD2,000 Property agency and investment
Wayhang Development Co., Ltd. Real estate
development
HKD0.0002 Property development
Chief Link Properties Co., Ltd. Real estate
development
HKD0.01 Property agency and investment
Syndis Investment Co., Ltd. Real estate
development
HKD0.0004 Property investment
East Land Properties Limited Real estate
development
HKD0.01 Property investment
Shareholding
Subsidiaries
Contribution
(0’000) Direct Indirect
Consolidated
(Y/N)
Hainan Xinda Development Co., Ltd
2,000 100%
Y
Shenzhen ITC Food Co., Ltd.
200 80% 20%
Y
Shenzhen Property and Real Estate Development Co.,
Ltd. 3,095 95% 5%
Y
Shenzhen ITC Property Management Co., Ltd.
2,000 95% 5%
Y
Shenzhen ITC Vehicles Industry Co., Ltd.
2,985 90% 10%
Y
Shenzhen Huangcheng Real Estate Co., Ltd.
3,000 95% 5%
Y
Sichuan Tianhe Industry Co., Ltd
800 100%
Y
Shenzhen ITC Property Management Engineering
Equipment Co., Ltd. 120 100%
Y
Shenzhen Tianque Elevator Technology Co., Ltd.
500 100%
Y
Shandong Shenzhen ITC Property Management Co., Ltd.
500 100%
Y
Chongqing Shenzhen ITC Property Management Co.,
Ltd. 500 100%
Y43
Shareholding
Subsidiaries
Contribution
(0’000) Direct Indirect
Consolidated
(Y/N)
Chongqing Ao’bo Elevator Co., Ltd.
200 100%
Y
Shenzhen ITC Motor Rent Co., Ltd.
1,600 100%
Y
Shenzhen ITC Petroleum Co., Ltd.
850 100% N（Note 2）
Shenzhen ITC Vehicle Industry Company Vehicle repair
shop 150 100%
Y
Shenzhen Huangcheng Real Estate Management Co.,
Ltd. 500 100%
Y
Shenzhen Property Construction Supervision Co., Ltd.
300 93% 7%
Y
Shenzhen Tesu Vehicle Driver Training Center Co., Ltd.
200 100%
Y
Zhanjiang Shenzhen Real Estate Development Co., Ltd.
253 100%
Y
Shenzhen International Trade Plaza
1,200 95% 5%
Y
Shenzhen Real Estate Exchange
138 100%
Y
Shum Yip Properties Development Co., Ltd.
HKD2,000 100%
Y
Wayhang Development Co., Ltd.
HKD0.0002 100%
Y
Chief Link Properties Co., Ltd.
HKD0.01 70%
Y
Syndis Investment Co., Ltd.
HKD0.0004 70%（Note 1）
Y
East Land Properties Limited
HKD0.01 100% N（Note 3）
Note 1. Syndis Investment Co., Ltd is a wholly-owned subsidiary of Chief Link Properties Limited.
Note 2. In Jan. 2008, Shenzhen ITC Vehicles Industry Co., Ltd. and Shenzhen Guanghong investment Co., Ltd.
signed a gas station operating lease contract, prescribing that Shenzhen Guanghong investment Co., Ltd. leases
and manage the assets such as land of gas station, gas station shed, operating buildings, accommodations,
equipments in gas station and so on, equity and management right of Shenzhen ITC Petroleum Co., Ltd (which is
wholly-owned subsidiary of Shenzhen ITC Vehicles Industry Co., Ltd.) with 15-year leasehold. Since the start of
the operating lease, the Company has no control over Shenzhen ITC Petroleum Co., Ltd. According to Accounting
Standards for Business Enterprises, the balance sheet of this subsidiary is excluded from consolidation scope from
the end of 2008.
Note 3. East Land Properties Limited (hereinafter referred to as “East Land Company”) is in liquidation, during
the reporting period, the liquidation group is in charge of management of East Land Company, East Land
Company may not carry out any operating activities other than liquidation activities. In this case, the Company no44
longer controls East Land Company, and its financial statements are no longer based on the underlying
assumption of going concern, therefore East Land Company is excluded from consolidation scope.
Note 4. There is no difference between the aforesaid proportions of voting rights and shareholding hold by the
Company.
2. Changing of Consolidation Scope
(1) In the reporting period, the new company which is included in the consolidation scope
Name of Company Reason for
change
Date of change Net profit as of the
year
Net assets as at 30
Sep. 2009
Shandong Shenzhen ITC
Property Management Co., Ltd.
New company Jan. 2009 135,151.30 5,135,151.30
(2) The companies which are excluded from consolidation scope
None
3. Information of Minority Interest (MI) of subsidiaries
Name of subsidiary MI
Amount of minority
interest in income
statement deducted
from minority interest
Balance after deduction of losses of
subsidiaries during the period exceeding
the proportion of minority shareholders
from equity of parent company
Chief Link Properties Co.,
Ltd. 861,632.06
4. Balance that is in essence treated as net investment in insolvent subsidiaries
Name of company Balance of net investment as at 30
Sep. 2009
Shenzhen Property and Real Estate Development Co., Ltd. 200,058,757.46
Shum Yip Properties Development Co., Ltd. 28,132,551.21
Hainan Xinda Development Co., Ltd 5,126,339.58
Shenzhen ITC Food Co., Ltd. 265,385.74
Shenzhen Property Construction Supervision Co., Ltd. 1,539,989.66
Shenzhen Real Estate Exchange 1,119,350.13
Note VIII Joint ventures, associates and other invested companies
Up to 30 Sep. 2009, the main joint ventures, associates and other invested companies the Company directly or45
indirectly invested are listed as follows:
Name of company Business
nature
Registered
capital
(0’000)
Business scope
Shenzhen ITC Tian’an
Properties Co., Ltd
Hotel
services
USD888 Constructing and managing Tian’an
International Building
Shenzhen ITC Tian’an
Properties Management Co.,
Ltd
Property
management
300 Property management
Shenzhen Jifa Warehouse Co.,
Ltd
Services 5,415 Warehousing; developing sea-front
industry; road transport; sales of auto
parts
Shenzhen ITC Industrial
Development Co., Ltd
Services HKD3,280 Biquan Restaurant; snooker, bowling,
karaoke; laundry
Anhui Nanpeng Papermaking
Co., Ltd
Industry USD800 Production and sales of copperplate paper,
culture paper, and wrapping paper
Shenzhen Wufang Pottery &
Porcelain Industrial Co., Ltd
Industry USD12,500 Production and export of top grade
construction tile, sale of building
materials and architectural ceramic
products
Shenzhen Huajing Glass
Bottle Co., Ltd
Industry 4,800 Producing kinds of glass bottles used in
the wrapping the medicine, beer, food and
drinks or other special glass bottles;
providing economic information and
technical consulting services
Guangzhou Lishifeng Motor
Co., Ltd
Services 2,000 Taxi transportation; domestic commerce
and materials supply (besides the goods
that the government controlled)
Shareholdings
Name of company
Contribution
(0’000) Direct Indirect
Shenzhen ITC Tian’an Properties Co., Ltd 2,318.61 50%
Shenzhen ITC Tian’an Properties Management
Co., Ltd 150 50%
Shenzhen Jifa Warehouse Co., Ltd 3,064.51 50%
Shenzhen ITC Industrial Development Co., Ltd 2,015.48 38.33%
Anhui Nanpeng Papermaking Co., Ltd 1,382.40 30%46
Shenzhen Wufang Pottery & Porcelain
Industrial Co., Ltd 1,898.36 26%
Shenzhen Huajing Glass Bottle Co., Ltd 760 15.83%
Guangzhou Lishifeng Motor Co., Ltd 600 30%
Note: There is no difference between the aforesaid proportions of voting rights and shareholding hold by the
Company.
Note IX. Notes to the main subjects in consolidated financial statements
(Unless otherwise stated, the closing book balance and the opening book balance refer to the balance at 30 Sep.
2009 and December 31, 2008 respectively. Occurred amount of the current period and occurred amount of the last
year refer to Jan.- Sep. 2009 and Jan.-Sep. 2008 respectively. All amounts are presented in RMB.)
1. Cash and cash equivalents
Item Closing book balance Opening book balance
Cash on hand 248,468.74 340,965.83
Bank deposit 639,611,230.91 265,398,484.68
Other cash and cash equivalents 7,050,917.04 5,969,277.35
Total 646,910,616.69 271,708,727.86
Note 1: Balance of other cash and cash equivalents refer to the closing balance of refundable deposits in the
securities companies and of other margin.
Note 2: Closing cash and cash equivalents has increased by 138.09% compared with the opening balance, which
was caused by increase of payment for flats on sale.
Note 3: Among closing balance of bank deposit, RMB 1,405,395.28 is frozen by the Court in the reporting period
due to pending action on “Haiyi” Case, please refer to Note XII 1 (1) and Note IX 14 for details.
Item Closing book balance
Currency Original currency Exchange rate RMB
Cash on hand RMB 196,303.66 1.0000 196,303.66
USD 863.58 6.8290 5,897.39
HKD 52,510.12 0.8811 46,267.69
Subtotal —— —— 248,468.74
Bank deposit RMB 638,619,771.70 1.0000 638,619,771.70
USD 239.57 6.8290 1,636.02
HKD 1,123,094.90 0.8811 989,823.1947
Subtotal —— —— 639,611,230.91
Other cash and cash
equivalents
RMB 6,985,802.73 1.0000 6,985,802.73
HKD 73,901.16 0.8811 65,114.31
Subtotal —— —— 7,050,917.04
Total 646,910,616.69
Opening book balance
Item
Currency Original currency Exchange rate RMB
Cash on hand RMB 256,104.11 1.0000 256,104.11
USD 863.58 6.8346 5,902.20
HKD 89,533.42 0.8819 78,959.52
Subtotal —— —— 340,965.83
Bank deposit RMB 264,160,081.58 1.0000 264,160,081.58
USD 368.81 6.8346 2,520.65
HKD 1,401,387.06 0.8819 1,235,882.45
Subtotal —— —— 265,398,484.68
Other cash and cash
equivalents
RMB
5,869,611.04 1.0000 5,869,611.04
HKD 113,013.16 0.8819 99,666.31
Subtotal —— —— 5,969,277.35
Total 271,708,727.86
2. Trading financial assets
Item Closing fair value Opening fair value
Tradable equity instrument investment 3,657,594.89 2,670,729.47
Total 3,657,594.89 2,670,729.47
Note1：The market price at the end of the financial year was determined at the closing price at 30 Sep. 2009
declared by Stock Exchange. There is no significant restriction on realization of trading financial assets.
Note 2: In such investment, 30,000 circulating shares of ST Sunrise (closing fair value: RMB 191,400) is frozen
by the Court in the reporting period due to pending action on “Haiyi” Case, please refer to Note XII 1 (1) and
Note IX 14 for details.48
3. Accounts receivables
(1) Accounts receivables by Categories are as follows:
Closing balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 106,947,075.88 84.75% 50,947,075.88 99.17%
Individually insignificant receivables with
high credit risk in group assessment
0 0
Other insignificant amount 19,247,236.41 15.25% 428,549.88 0.83%
Total 126,194,312.29 100.00% 51,375,625.76 100.00%
Opening balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 106,947,075.88 89.29% 50,947,075.88 99.57%
Individually insignificant receivables with high
credit risk in group assessment
0 0 0 0
Other insignificant amount 12,823,409.27 10.71% 217,497.47 0.43%
Total 119,770,485.15 100.00% 51,164,573.35 100.00%
(2) Details of individually significant accounts receivable or insignificant receivables but impairment test was
made individually:
Name of company Closing balance Bad debt provision Aging Reason for provision
Shenzhen Jiyong Properties
& Resources Development
Company
98,611,328.05 42,611,328.05 Over 3 years Involved in lawsuit, refer to Note
XII.1.(2) and Note (XIV) 2
Shenzhen Tewei Industry
Co., Ltd.
2,836,561.00 2,836,561.00 Over 3 years Uncollectible for a long period
Shenzhen Lunan Industry
Development Co., Ltd.
2,818,284.84 2,818,284.84 Over 3 years Poor operational status
Total 104,266,173.89 48,266,173.8949
(3) The details of significant accounts receivable are as follows (top five):
Name of company Amount Proportion to total
accounts receivables
Occurrence period
Shenzhen Jiyong Properties & Resources
Development Company
98,611,328.05
78.14%
Over 3 years
Rainbow Plaza Co., Ltd
4,261,997.32
3.38% Within 1 year
Shenzhen Tewei Industry Co., Ltd. 2,836,561.00
2.25% Over 3 years
Shenzhen Lunan Industry Development Co., Ltd. 2,818,284.84
2.23% Over 3 years
Traffic Policemen Department of Public
Security Department of Shandong Province
705,000.00 0.56%
Within 1 year
Total 109,233,171.21 86.56%
(4) There was no accounts receivable due from related parties; There was no accounts receivable due from
shareholders with more than 5% (including 5%) of the voting shares of the Company.
4. Other receivables
(1) Other receivables by categories are as follows:
Closing balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 114,766,170.31 66.30% 103,850,875.84 99.58%
Individually insignificant receivables with high
credit risk in group assessment
0 0 0 0
Other insignificant amount 58,338,541.27 33.70% 434,379.76 0.42%
Total 173,104,711.58 100.00% 104,285,255.60 100.00%
Opening balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 117,856,922.31 67.71% 106,441,980.23 99.63%
Individually insignificant receivables with high
credit risk in group assessment
0 0 0 050
Other insignificant amount 56,197,454.68 32.29% 390,254.66 0.37%
Total 174,054,376.99 100.00% 106,832,234.89 100.00%
(2) Details of individually significant accounts receivable or insignificant receivables but impairment test was
made individually:
Name of company Closing
balance
Bad debt
provision
Aging Reason for provision
Gintian Industry (Group) Co., Ltd. 56,600,000.00 56,600,000.00
2-3 years and over 3
years
Payment for discharging of
guaranty responsibility that was
difficult to be recollecte
Duokuai Elevator (Far East) Co.,
Ltd.
8,726,693.00 1,478,071.21
Over 3 years
Receivables cannot be offset by
executable property, referring to
Note XII.1.(4) for details
Anhui Nanpeng Papermaking Co.,
Ltd
8,691,680.00 8,691,680.00
Over 3 years
Uncollectible for a long period
Shenzhen Shengfenglu ITC Jewel
& Gold Co., Ltd
10,199,186.28 6,532,519.60
Over 3 years
There is no asset to execute the
verdict, thus lead to
uncollectibility
Shanghai Yutong Property
Development Co., Ltd
5,676,000.00 5,676,000.00
Over 3 years
Uncollectibility for the reason of
verdict
Wuliangye Restaurant 5,523,057.70 5,523,057.70
Over 3 years
Has been liquidated
HongKong Yueheng Development
Co., Ltd
3,271,931.42 3,271,931.42
Over 3 years
Has been liquidated
Elevated Train Project 2,542,332.43 2,542,332.43
Over 3 years
Suspended project
Dameisha Tourism Center 2,576,445.69 2,576,445.69
Over 3 years
Suspended project
Shenzhen ITC Food Enterprise
Co.,Ltd.
2,431,652.48 2,431,652.48
Over 3 years
Insolvency
Shenzhen Wufang Pottery &
Porcelain Industrial Co., Ltd
1,747,264.25 1,747,264.25
Over 3 years
Poor operation status
Total 107,986,243.25 97,070,954.78
(3) The details of significant accounts receivable are as follows (top five):
Name of company Amount Proportion to total
accounts
receivables
Nature Occurrence period
Gintian Industry (Group)
Co., Ltd.
56,600,000.00
32.70%
Holding guarantee
liability 2-3 years and over
3 years51
Shenzhen ITC Tian’an
Properties Co., Ltd
24,705,931.45
14.27%
Dividend receivable
Over 3 years
Shenzhen Municipal
Planning and Land
Resource Bureau
Longgang Breach
12,024,387.70
6.95%
Payment
receivables for land Over 3 years
Shenzhen Shengfenglu ITC
Jewel & Gold Co., Ltd
10,199,186.28
5.89%
Rent receivables
transferred in Over 3 years
Duokuai Elevator (Far
East) Co., Ltd.
8,726,693.00
5.04%
Payment for lawsuit
and dispute Over 3 years
Total 112,256,198.43 64.85%
(4) Amount due from related parties in other receivables is RMB 37,576,528.18, accounting for 21.70% of the
closing balance; There was no other receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
5. Prepayment
(1) The aging analysis of prepayment is as follows:
Aging Closing book balance Opening book balance
Amount Proportion Amount Proportion
Within 1 year(including 1
year) 15,899,532.02 99.00% 2,111,993.73 91.60%
1-2 years(including 2 years) 12,104.06 0.08% 161,517.00 7.01%
2-3 years(including 3 years) 133,336.00 0.83% 0 0
Over 3 years 14,878.80 0.09% 32,118.80 1.39%
Total 16,059,850.88 100.00% 2,305,629.53 100.00%
(2) Notes to prepayment
1） Prepayments with aging over 1 year are mainly construction payments to be settled.
2） There was no amount due from shareholders with more than 5% (including 5%) of the voting shares of the
Company in prepayment.
6. Inventories
(1) The details of inventory are as follows:52
Categories Opening book balance Increase Decrease
Closing book
balance
Including：
Capitalized
borrowing cost
The proportion
of reversal of
provision for
impairment of
inventories to
closing balance
Raw materials 1,451,382.22 2,780,416.04 2,729,789.86 1,502,008.40
Merchandise on hand 217,315.43 1,079,083.15 1,164,583.61 131,814.97
low-value
consumption goods
327,065.90
556,982.30 709,767.24 174,280.96
Land use right held
for property
development 230,187,067.43
563,432.60 45,402,460.27 185,348,039.76 1.21%
Developed products
under construction 528,550,086.36
311,354,278.73 120,000.00 839,784,365.09 73,929,996.32
Completed
developed products 529,239,657.47
0 223,379,331.54 305,860,325.93 636,712.50
Total 1,289,972,574.81 316,334,192.82 273,505,932.52 1,332,800,835.11 74,566,708.82 0.17%
Note: For Inventories that ownership rights is restricted, please refer to Note IX 14.
(2) Provision for impairment of inventories:
Categories Opening book Decrease
balance
Increase
Reversal Written off
Closing book
balance
Raw materials 429,881.46 576.00 429,305.46
Land use right held for
property development
106,697,503.71 2,240,000.00 27,245.93 104,430,257.78
Completed developed
products
29,118,896.81 29,118,896.81
Total 136,246,281.98 2,240,000.00 27,821.93 133,978,460.05
Note 1: The reversal of provision for impairment of inventories on raw materials during the current period arose
from procurement of materials
Note 2: The reversal of provision for impairment of inventories on land use right held for property development
during the current period arose from the translation of foreign currency financial statement of the Company’s
foreign subsidiary, Shum Yip Properties Development Limited.53
Note 3: The reversal of provision for impairment of inventories on land use right held for property development
during the current period arose from change in fair value of Pinghu Land.
(3) The details are as follows
A. land use right held for property development
Closing balance Opening balance
Item
Amount provision for impairment
of inventories
Amount provision for
impairment of
inventories
Huanggang Port Land 46,823,373.98 0 46,823,373.98
Pinghu Land 40,642,168.99 36,002,168.99 40,642,168.99 38,242,168.99
Hainan Qiongshan Land 6,648,404.13 6,648,404.13 6,648,404.13 6,648,404.13
Shenhui Garden 35,191,236.89 26,002,128.89 34,726,762.89 26,002,128.89
Donggua Ridge Land 0 0 45,257,855.74 0
Fuchang Second Term Land 5,769,577.11 5,769,577.11 5,769,577.11 5,769,577.11
Hong Kong Tingjiu Land 50,273,278.66 30,007,978.66 50,318,924.59 30,035,224.59
Total 185,348,039.76 104,430,257.78 230,187,067.43 106,697,503.71
Notes to Pinghu Land: In August, 1992, the Company signed the contract with HongKong Lianfahang
International Development Co., Ltd and Pinghu village to develop Pinghu village’s land. The Company paid RMB
47,100,000 to obtain the real estate certificate for 173,750 square meters, which including undeveloped land
65,714.10 square meters. Aferwards, Pinghu village took over the undeveloped land on grounds of not receiving
the full fund. On December 30, 2003, the Company signed contract with Pinghu village, which agreed that the
Company kept the use rignt of 10,000 square meters in undeveloped land 65,714.10 square meters, and the rest
55,714.10 square meters was returned to Pighu village. In 2008, owing that the 10,000 square meters was
occupied by villagers, the Company signed another supplemental contract with Pinghu village to obtain an
un-using land 9,980 square meters instead. Because the 9,980 square meters land is collective land, which can be
transferred the ownership after being changed into merchandise land. The related procedures must have
permission of the relevant department of the government. At the beginning of 2009, the Company received reply
from Shenzhen Municipal Bureau of Land Resources and Housing Management Longgang Branch, in accordance
with the policies related to transfer of land use right, the said land failed to confirm ownership to the Company,
the Company was suggested to find other way to settle. Hereafter, coordinations is made for many times between
the Company and the relevant department of government, at the beginning of July 2009, the Company received54
the letter form Pinghu Subdistrct Office of Longgang District in Shenzhen, in which the Company is given a
requirement to settled nicely matters related to such land transfer with Pinggu according to the commitment in the
Agreement signed between the Company and Pinghu. The government shall recall the part land and rest space
occupied for road-working, totaling 6417.22 aq.m., and give relevant compensation to the Company. On 29 Sep.
2009, the Company signed the agreement with Shenzhen Pinghu Holding Corporation Company (original Pinghu
Villagers Committee), Pinghu village compensated the Company for land equities of 3,582.78 sq.m. (the rest land)
based on RMB 554/sq.m. (government standard), after receiving a sum of compensation (including government’s
compensation of RMB 3,555,100 and compensation given by Pinghu Village amounting to RMB 1,984,900), the
Company no longer enjoyed the above-mentioned land use right and transferred to Pinghu village. The Company
undertook all expenses such as land use expense and transfer fee not more than RMB 900,000. In accordance with
the aforesaid signed agreement and the compensation given by the Government to the Company, in the reporting
period, the Company withdrew the provision for falling price of inventory totaling to RMB 2, 240,000.00.
B. Properties under development
Project name Starting
time
Expected
completion
time
Expected total
investment
Closing balance Opening balance
Shenwuye – Shengang No.1
(original HuangYu Garden
District C-B)
2007.1 2011.2 388,000,000.00 223,550,675.51 136,463,567.97
Shenwuye -Langqiao
Residence (original HuangYu
Garden District D)
2008.3 2012.2 420,000,000.00 162,722,443.11 121,862,512.84
Shenwuye – FHRL (original
FHRL Group B)
2005.9 2010.6 422,280,000.00 406,004,601.06 270,104,005.55
Cai Tian Yi Se 2009.7 2011.6 110,000,000.00 47,506,645.41
Sundry project 0 120,000.00
Total 839,784,365.09 528,550,086.36
C. Completed properties for sale
Item Completion
time
Opening balance Increase Decrease Closing balance provision for
impairment of
inventories
ITC Plaza 1995.12 79,901,727.31 0 79,901,727.31
Huangyu Garden District A 2001.06 2,973,623.25 356,066.14 2,617,557.1155
Item Completion
time
Opening balance Increase Decrease Closing balance provision for
impairment of
inventories
Huangyu Garden District B 2003.12 15,968,124.72 621,784.59 15,346,340.13
Imperial Garden (original
HuangYu Garden District
C-A)
2008.11 220,671,151.80 211,266,969.21 9,404,182.59
Huangcheng Plaza 1997.05 172,981,417.98 3,589,112.76 169,392,305.22 29,118,896.81
Xinda Building 2001.10 3,145,042.17 0 3,145,042.17
Fengrun Garden 1998.02 339,542.36 0 339,542.36
Haikou Landao Shore 2008.12 18,297,459.85 3,659,929.44 14,637,530.41
Rihao Garden 4,654,651.00 0 4,654,651.00
Meisi Workshop 3,885,469.40 3,885,469.40 0
Fuchang Comprehensive
Building 6,421,447.63 0 6,421,447.63
Total 529,239,657.47 223,379,331.54 305,860,325.93 29,118,896.81
7. Investment held to maturity:
Item Closing book balance Opening book balance
Investments on bond 3,000.00
Total 3,000.00
8. Long-term equity investment
Categories Closing book balance Opening book balance
Long-term equity investment accounted using
equity method 67,432,358.19 65,190,292.51
Long-term equity investment accounted using
cost method 79,781,197.62 79,785,387.54
Sub-Total 147,213,555.81 144,975,680.05
Less：Provision for impairment of long-term
equity investment 64,478,904.43 63,702,449.15
Total 82,734,651.38 81,273,230.90
(1) The details of significant joint ventures and associates refer to Note VIII.
(2) Long-term equity investment accounted using equity method
Investment Amount of Opening Increase Decrease Closing balance Cash56
initial
investment
balance dividends
received
during the
current period
Shenzhen ITC Tian’an
Properties
Co., Ltd 23,186,124.00 37,134,170.50 2,074,622.26 39,208,792.76
Shenzhen Jifa
Warehouse Company
Limited 30,645,056.04 26,297,645.27 164,815.18 26,462,460.45
Shenzhen Tian’an
International Building
Property
Management Co., Ltd 1,500,000.00 1,758,476.74 2,628.24 1,761,104.98
Total 55,331,180.04 65,190,292.51 2,242,065.68 67,432,358.19
(3) Long-term equity investment accounted using cost method
Invested entities Opening balance Increase Decrease Closing balance
Shenzhen ITC Industrial Development Co., Ltd 3,682,972.55 3,682,972.55
Anhui Nanpeng Papermaking Co., Ltd 13,824,000.00 13,824,000.00
Shenzhen Wufang Pottery & Porcelain Industrial Co., Ltd 18,983,614.14 18,983,614.14
Shenzhen Huajing Glass Bottle Company Limited 7,600,000.00 7,600,000.00
Shenshan Co., Ltd. 17,695.09 17,695.09
China T.H. Co., Ltd. 2,962,500.00 2,962,500.00
North Machinery (Group) Co.,Ltd. 3,465,000.00 3,465,000.00
Guangdong Huayue Real Estate Co.,Ltd. 8,780,645.20 8,780,645.20
Guangzhou Lishifeng Automobile Co.,Ltd. 6,000,000.00 6,000,000.00
Sanya East Travel Co., Ltd. Legal persons shares 1,350,000.00 1,350,000.00
Macao Huashen Enterprise Co., Ltd. 85,621.36 77.67 85,543.69
Saipan Project 1,935,184.04 2,356.78 2,595,704.74
Chongqing Guangfa Property Development Co., Ltd. 2,598,061.52 1,755.47 1,933,428.57
East Land Properties Limited 93.64 93.64
Shenzhen ITC Petroleum Company Limited 8,500,000.00 8,500,000.00
Total 79,785,387.54 4,189.92 79,781,197.62
Note: 825,000 directional corporate shares of China T.H. Co., Ltd. held by the Company are frozen by the Court57
in the reporting period due to pending action on “Haiyi” Case, please refer to Note XII 1 (1) and Note IX 14 for
details.
(4) Provision for impairment of long-term equity investment
Investment Opening book
balance
Increase Decrease Closing book
balance
Shenzhen ITC Industrial Development
Co., Ltd
3,682,972.55 3,682,972.55
Anhui Nanpeng Papermaking Co., Ltd 13,824,000.00 13,824,000.00
Shenzhen Wufang Pottery & Porcelain
Industrial Co., Ltd
18,983,614.14 18,983,614.14
Shenzhen Huajing Glass Bottle
Company Limited
7,600,000.00 7,600,000.00
Shenshan Co., Ltd. 17,695.09 17,695.09
China T.H. Co., Ltd. 2,160,300.45 2,160,300.45
North Machinery (Group) Co., Ltd. 3,465,000.00 3,465,000.00
Guangdong Huayue Real Estate Co.,
Ltd.
8,000,000.00 780,645.20 8,780,645.20
Sanya East Travel Co., Ltd. Legal
persons shares
1,350,000.00 1,350,000.00
Macao Huashen Enterprise Co., Ltd. 85,621.36 77.67 85,543.69
Saipan Project 1,935,184.04 2,356.78 2,595,704.74
Chongqing Guangfa Property
Development Co., Ltd. 2,598,061.52 1,755.47
1,933,428.57
Total 63,702,449.15 780,645.20 4,189.92 64,478,904.43
Note: The decrease of long-term equity investment and provision for impairment over Macao Huashen Enterprise
Co., Ltd, Saipan Project, and Chongqing Guangfa Real estate development Co., Ltd are due to the translation of
the foreign currency financial statement.
9. Investment property
(1) The details of investment properties are as follows:
Item Opening book
balance
Increase Decrease Closing book
balance58
Cost
337,388,599.87 23,813,545.20 11,044.47 361,191,100.60
Including：Property and building
334,388,599.87 15,843,590.80 11,044.47 350,221,146.20
Land use right
3,000,000.00 7,969,954.40 10,969,954.40
Accumulated depreciation and
amortisation 113,346,621.68 16,326,516.87 6,544.16 129,666,594.39
Including：Property and building
113,242,575.44 14,100,393.86 6,544.16 127,336,425.14
Land use right
104,046.24 2,226,123.01 2,330,169.25
Impairment loss
Including：Property and building
Land use right
Carrying amount
224,041,978.19 —— —— 231,524,506.21
Including：Property and building
221,146,024.43 —— —— 222,884,721.06
Land use right
2,895,953.76 —— —— 8,639,785.15
（2）The increased cost of property and building during the current period was due to the investment property
transferred from fixed assets and inventories under leasing and transformation and renovation of the part of
investment properties.
（3）The decrease of property and building during the current period was due to the translation of the foreign
currency financial statement of the Company’s subsidiaries, Shum Yip Properties Development Limited.
（4）For investment property that ownership rights is restricted, please refer to Note IX 14.
（5）Investment properties for sale
Investment
property
Book value Fair value
Estimated
disposal
expense
Estimated
disposal time Disposal way adopted
Land use right 2,896,953.76 5,274,080.00 860,000.00 Oct. 2009 Agreement
On 25 May 2009, Shenzhen Huangcheng Real Estate Co., Ltd (hereinafter referred to as “Huangcheng Real
Estate”), a wholly-owned subsidiary of the Company, signed the Land Purchase Contract with Sihui Land Storage
Centre by EMS. Sihui Land Storage Centre acquired industrial land that red line area is totaled to 31,394.46 sq.m.
(converting into 47.09 mu) owned by Huangcheng Real Estate in Sihui City Guangdong Province. The purchase
price is RMB 112,000.00 per Mu, as well as total purchase price of RMB 5,274,080.00. Up to reporting date,
Huangcheng Real Esate failed to receive such payment.59
10. Fixed assets
(1) The details of fixed assets is as follows
Categories Opening book
balance
Increase Decrease Closing book
balance
Cost
193,412,746.09 1,786,177.65 13,373,596.91 181,825,326.83
Including: Property and buildings 132,897,197.66 217,939.00 11,835,166.91 121,279,969.75
Machineries
81,941.80 81,941.80
Vehicles
45,568,495.17 336,657.00 1,180,000.00 44,725,152.17
Electronic and other equipment
10,616,700.87 1,231,581.65 358,430.00 11,489,852.52
Fixed assets decoratinon 4,248,410.59 4,248,410.59
Depreciation 89,323,158.62 10,761,383.34 4,205,544.15 95,878,997.81
Including: Property and buildings 56,075,479.43 3,624,903.36 2,751,905.53 56,948,477.26
Machineries
48,857.70 15,574.82 64,432.52
Vehicles
21,669,729.19 6,222,460.87 1,121,000.00 26,771,190.06
Electronic and other equipment
7,952,708.12 650,019.49 332,638.62 8,270,088.99
Fixed assets decoratinon 3,576,384.18 248,424.80 3,824,808.98
Impairment loss
75,717.16 75,717.16
Including: Property and buildings
Machineries
Vehicles
Electronic and other equipment
75,717.16 75,717.16
Fixed assets decoratinon
Carrying amount
104,013,870.31 —— —— 85,870,611.86
Including: Property and buildings 76,821,718.23 —— —— 64,331,492.49
Machineries
33,084.10 —— —— 17,509.28
Vehicles
23,898,765.98 —— —— 17,953,962.11
Electronic and other equipment
2,588,275.59 —— —— 3,144,046.37
Fixed assets decoratinon 672,026.41 423,601.61
(2) The details of temporarily idle fixed assets are as follows:60
Categories Cost Accumulated
depreciation
Impairment
loss
Carrying
amount
Expected date for
put into usage
Property and building 24,312,240.66 8,136,838.96 16,175,401.70
Total 24,312,240.66 8,136,838.96 16,175,401.70
Note：The temporarily idle property and buildings are properties that are neither leased out nor used for
self-occupation. No provision for impairment was made because its market price was in excess of its cost.
(3) For fixed assets that ownership rights is restricted, please refer to Note IX 14.
11. Intangible assets
Categories Opening book
balance
Increase Decrease Closing book
balance
Cost
146,798,497.31 146,798,497.31
-Operating license plate 144,851,143.70 144,851,143.70
-Repurchased operating right of taxi’s operating
license plate 1,947,353.61 1,947,353.61
Accumulated amortization
27,396,156.39 4,881,497.85 32,277,654.24
-Operating license plate 27,016,274.07 4,796,476.71 31,812,750.78
-Repurchased operating right of taxi’s operating
license plate 379,882.32 85,021.14 464,903.46
Impairment loss
-Operating license plate
-Repurchased operating right of taxi’s operating
license plate
Carrying amount
119,402,340.92 —— —— 114,520,843.07
-Operating license plate 117,834,869.63 —— —— 113,038,392.91
-Repurchased operating right of taxi’s operating
license plate 1,567,471.29 —— —— 1,482,450.16
Note: For intangible assets that ownership rights is restricted, please refer to Note IX 14.
12. Deferred tax assets and liabilities
(1) Assets and liabilities giving rise to temporary difference61
Items Temporary difference
Closing balance Opening balance
I. Deductible temporary difference giving rise to
deferred tax assets
1.Carrying amount of other receivables less than its tax base 1,478,071.21 3,978,423.60
2.Carrying amount of inventories less than its tax base 29,118,896.81 29,118,896.81
3.Carrying amount of taxes payable greater than its tax base 146,217,174.42
4.Carrying amount of payroll payable greater than its tax
base 1,482,648.28 9,200,000.00
5.Unused tax losses 26,982,874.36 21,924,517.60
Total 205,279,665.08 64,221,838.01
II. Taxable temporary difference giving rise to deferred
tax liabilities
1.Carrying amount of trading financial assets greater than
its tax base
2.Carrying amount of available-for-sale financial assets
greater than its tax base
Total
(2) Recognized deferred tax assets and liabilities
Item Closing book balance Opening book balance
I. Deferred tax assets
1.Carrying amount of other receivables less than its tax base 325,175.67 795,684.72
2.Carrying amount of inventories less than its tax base 6,406,157.30 5,823,779.36
3.Carrying amount of taxes payable greater than its tax base 32,167,778.37
4.Carrying amount of payroll payable greater than its tax base 300,965.02 1,880,000.00
5.Unused tax losses 5,922,675.48 4,823,393.87
Total 45,122,751.84 13,322,857.95
II. Deferred tax liabilities
1.Carrying amount of trading financial assets greater than its
tax base
2.Carrying amount of available-for-sale financial assets
greater than its tax base
Total62
13. Impairment loss
Item Opening book Decrease
balance
Increase
Reversal Written off
Closing book
balance
Provision for bad debt 157,996,808.24 -2,325,174.88 0 155,660,881.36
Including: Accounts receivables 51,164,573.35 211,052.41 0 51,375,625.76
Other receivables 106,832,234.89 -2,536,227.29 10,752.00 104,285,255.60
Provision for impairment of
inventories
136,246,281.98 0 2,240,000.00 27,821.93 133,978,460.05
Impairment loss of long-term
equity investment
63,702,449.15 780,645.20 4,189.92 64,478,904.43
Impairment loss of fixed assets 75,717.16 0 0 75,717.16
Total 358,021,256.53 -1,544,529.68 2,240,000.00 42,763.85 354,193,963.00
Note: The reversal of impairment loss was due to is due to the translation of the foreign currency financial
statement of the Company’s subsidiaries, Shum Yip Properties Development Limited.
14. Assets with restriction on ownership
(1) The reason for restriction on ownership
A. The subsidiary of the Company, Shenzhen ITC Vehicles Services Company, mortgaged parts of ITC Plaza
(second phase) for a short-term bank loan amounting to RMB 50,000,000.00, and the closing balance of said
short-term bank loan was zero; as at 30 Sep. 2009, the guarantee was failed to be released. The Company
mortaged 80 property certificates of operating vehicle plate under Shenzhen ITC Motor Rent Co., Ltd. for a
long-term bandk loan RMB 19,000,000.00, as well as the closing balance of RMB 14,860,000.00.
B. The subsidiary of the Company, Shenzhen Huangcheng Real Estate Company Limited, mortgaged 5-6th
building of Loyal Garden District A and parts of Loyal Garden District B for a long-term bank loan amounting to
RMB 250,000,000.00 from Construction Bank, and the closing balance was RMB 200,000,000.00, and mortgaged
Loyal Garden District D (Lang Qiao Garden Project), the 3rd floor of Block A and 4-01 property in Shenzhen
International Trade Center for the long-term loan amounting to RMB 240,000,000.00, as well as the closing
balance of RMB200,000,000.
C. The Company mortgaged District A and B of ITC, IT Commercial Building, 3-7th floors of Heping Single
Building, 7th floor of Heping Hotel, Heping Food Market, 2nd floor in Heping Xinju 54th Building, and 1st floor in
Heping Xinju Small Market for a long-term bank loan amounting to RMB 250,000,000.00, and the closing
balance was zero. Up to 30 Sep. 2009, the guarantee was failed to be released.
D. The Company jointly mortgaged the part of properties of the 2nd Floor of ITC Building District A, IT
Commercial Building and ITC Plaza (second phase), totaling to 81 suits of properties for a short-term bank loan
amounting to RMB 69,000,000.00, and the closing balance is RMB 49,000,000.00.
E. As stated Note XII 1 (1), the assets sealed and frozen by the Court in the reporting period due to “Haiyi” Case63
as follws: closing down the 133 properties located in Shenzhen International Trade Center, Shenzhen ITC
Commercial Building, 2nd phase of International Trade Plaza, famous garden of RIHAO, Shenzhen ITC Business
and Residence Building and Chuanbu Street at Heping Road, totaling 66,581.11 sq.m., freezing 95% equities of
Shenzhen Huangcheng Real Estates Co., Ltd.held by the Company, 825,000 directional corporate shares of China
T.H. Co., Ltd. held by the Company, 30,000 circulating A shares of *ST Sunrise held by the Company, 58720
circulating shares of Panzhihua New Steel &Vanadium Company Limited held by the labor union of the Company
actrually, bank deposit totaling to RMB 878,998.39 in the bank accounts opened by the Comaony and parent
company in China Construction Bank Corporation Shenzhen Branch, Industrial and Commercial Bank of China
Ltd. Shenzhen Branch, Bank of China Shenzhen Branch, Agricultural Bank of China Shenzhen Branch (30 Sep.
2009: RMB 1,405,395.28). Among the above-mentioned sealed properties, the area of properties mortgaged to the
bank is 35,090.12 sq.m., the closing book value is RMB 82,925,445.90.
(2) Details of the assets with restriction on ownership are as follows:
Categories Opening
balance
Increase Decrease Closing
balance
Assets used as mortgage in guarantee
Fixed asset - property and building 28,319,771.58 4,051,676.00 21,147,599.29 11,223,848.29
Investment real estate- property and building 87,104,912.14 51,453,854.51 66,314,662.46 72,244,104.19
Inventory－development cost 135,005,206.71 135,005,206.71
—development products 185,829,097.42 6,542,787.52 123,136,666.91 69,235,218.03
Intangible asset - operating license plate 62,553,119.84
25,482,286.52 37,070,833.32
Subtotal 363,806,900.98 197,053,524.74 236,081,215.18 324,779,210.54
Assets sealed or frozen due to lawsuit
Cash and cash equivalent 1,405,395.28 1,405,395.28
Trandable financial assets 191,400.00 191,400.00
Equity of Huangcheng Real Estate (Note) 28,500,000.00 28,500,000.00
Fixed assets-house and building 12,417,104.02 12,417,104.02
Investment property- house and building 54,662,040.77 54,662,040.77
Inventory- house and building 81,371,211.98 81,371,211.98
Subtotal 178,547,152.05 178,547,152.0564
Less: Assets used for guarantee and sealed
or frozen due to lawsuit simultaneously
82,925,445.90 82,925,445.90
Total 363,806,900.98 292,675,230.89 236,081,215.18 420,400,916.69
Note: 95% equities of Shenzhen Huangcheng Real Estate Co., Ltd held by the Company has been frozen. Up to 30
Sep. 2009, the balance of long-term equity investment held by parent company was RMB 28,500,000.00, as well
as net assets of this company in the consolidated financial statement amounting to RMB 193,341,200.
15. Short-term borrowing
Categories Closing book balance Opening book balance
Credit loan 200,000,000.00 215,000,000.00
Mortgaged loan 49,000,000.00 154,000,000.00
Total 249,000,000.00 369,000,000.00
16. Trade payable
Item Closing book balance Opening book balance
Amount 110,280,654.79 137,040,777.65
Note: There was no amount due to shareholders with more than 5% (including 5%) of the voting shares of the
Company in trade payables.
17. Advance from customers
Item Closing book balance Opening book balance
Amount 459,068,614.08 67,150,023.78
Note A: The closing balnce of advance from customers for the current period increased by 469.79% than that of
last period, which was due to increase of payment for flats on sale of Xinhua Town in the reporting period.
Note B: The details of advance from customers on main projects of properties for sale are as follows:
Items
Aging Closing balance Opening balance Estimated date of
completion
Imperial Garden Within 1 year 3,759,501.00 11,800,710.00 Completed
Huangcheng Plaza 1-2 years 2,176,421.15 3,866,804.24 Completed
District A of Huangyu Garden 1-4 years 846,495.63 2,407,528.93 Completed65
Items
Aging Closing balance Opening balance Estimated date of
completion
District B of Huangyu Garden 1-4 years 218,413.26 1,236,719.26 Completed
Fengrun Garden 3-4 years 128,254.00 128,254.00 Completed
Xinhua City Within 2 years 447,006,817.00 44,950,101.00 Jun. 2010
Total 454,135,902.04 64,390,117.43
Advances from customers with the aging over 1 year is due to the terms of revenue recognizantion having not
been satisfied.
Note C: There was no amount due to shareholders with more than 5% (including 5%) of the voting shares of the
Company in advance from customers.
18. Payroll payable
Items Opening book
balance
Increase Decrease Closing book
balance
Salary, bonus, allowance, subsidy 38,781,860.13 83,900,431.28 105,795,052.38 16,887,239.03
Employee welfare 1,500.00 5,738,427.23 5,248,604.13 491,323.10
Social insurance 0 9,973,938.09 9,776,608.69 197,329.40
Including：
1. Medical insurance 0 1,809,153.76 1,794,660.34 14,493.42
2. Basic retirement insurance 0 4,683,931.41 4,638,562.01 45,369.40
3. Annuity fee 0 2,965,492.56 2,841,371.56 124,121.00
4. Unemployment insurance 0 133,915.13 128,685.25 5,229.88
5. Injury insurance 0 187,482.61 185,390.67 2,091.94
6. Pregnancy insurance 0 170,501.53 168,671.07 1,830.46
7. Labor cooperation medical care 0 0 0 0
8. Other social insurance 0 23,461.09 19,267.79 4,193.30
Public housing fund 73,754.34 223,366.02 222,625.12 74,495.24
Labour union fee and employee
education fee 2,467,938.22 1,607,610.61 1,810,803.49 2,264,745.34
Redemption for termination of labor
contract 25,929,179.50 4,584,088.00 23,534,420.33 6,978,847.17
Total 67,254,232.19 106,027,861.23 146,388,114.14 26,893,979.28
Note: The closing balance of payroll payable of 2008 decreased by 54.13% than that of 2007, mainly due to the
estimated termination benefits generated from the employee termination sheme. Details refer to Note XIV.4.66
19. Taxes payable
Categories Closing book balance Opening book balance
1. VAT 24,395.92 41,461.01
2. Business tax 5,617,474.27 2,652,094.93
3. Income tax expense 33,738,288.74 15,604,575.75
4. Stamp tax -16,432.23 191,350.64
5. Education surtax 168,347.29 75,151.48
6. Land value appreciation tax 154,159,536.22 62,342,634.21
7. Urban maintenance and construction tax 101,048.52 39,833.23
8. Property tax 717,713.41 741,777.42
9. Land use tax 307,622.46 0.10
10. Individual income tax 1,261,250.99 627,227.15
11. Embankment maintenance fee -764.41 5,127.41
12. Others 794.80 1,545.41
Total 196,079,275.98 82,322,778.74
Note : The closing balance of taxes payable in the current period increased by 138.18% than that of last period,
mainly due to increased income tax and land value appreciation tax generated from the recognized revenue of
Loyal Garden project.
20. Other payable
Item Closing balance Opening balance
Other payables 206,496,199.51 187,732,899.73
Note A: The details of significant other payables are as follows
Item Amount Nature
Accrued Land value appreciation tax
56,303,627.40
Accrued Land value
appreciation tax
Rent deposit 25,161,549.08 Deposit
Hainan Yirun Property Co., Ltd. 26,007,455.92 Collection
Guangzhou Lishifeng Motor Company Limited 15,344,017.08 Current account
Shenzhen Guanghong Investment Co., Ltd. 16,020,000.00 Current account
Shenzhen Fulin Industrial Co., Ltd. 9,528,506.00 Current account
Total 148,365,155.4867
Note B: There was no amount due to shareholders with more than 5% (including 5%) of the voting shares of the
Company in other payables.
21. Non-current liabilities due within 1 year
(1) Details
Categories Closing book balance Opening book balance
Long-term borrowings 200,000,000.00 100,000,000.00
Total 200,000,000.00 100,000,000.00
(2) Long-term borrowings due within 1 year
Item Closing book balance Opening book balance
Guarantee borrowings 200,000,000.00
Mortgage borrowings 100,000,000.00
Total 200,000,000.00 100,000,000.00
22. Long-term borrowings
Borrowing terms Closing balance Opening balance
Mortgage borrowings 200,000,000.00 55,000,000.00
Pledge borrowings 14,860,000.00 43,229,343.34
Guarantee borrowings 250,000,000.00
Total 214,860,000.00 348,229,343.34
23. Provision for contingent liabilities
Categories Opening balance Increase Decrease Closing
balance
Pending action of Haiyi case 61,254,234.44 61,254,234.44
Total 61,254,234.44 61,254,234.44
Note: Details of Haiyi case refer to Note XII.1 (1).
24. Other non-current liabilities68
Items Closing book balance Opening book balance
1.Utility specific fund 18,628,645.62 21,571,868.62
2.Housing principle fund 9,948,846.75 7,837,285.22
3.House warming deposit 8,352,415.14 7,812,947.26
4.Electric Equipment Maintenance fund 4,019,415.44 4,019,415.44
5.Deputed Maintenance fund 25,981,072.90 25,978,097.69
6.Taxi Deposit 28,489,000.00 28,617,800.00
7.Lease income of taxi license to be written off 17,059,421.11 18,039,340.21
8.Others 3,102,000.00 4,887,000.00
Total 115,580,816.96 118,763,754.44
Note: “Others” is borrowing of Shenzhen ITC Automobile Industry Co., Ltd and Shenzhen ITC Motor Rent Co.,
Ltd. due to the drivers.
25. Share Capital
Before Increase/Decrease (+/-) After
Item Quantity
(0’000)
Proportion
(%)
Issuing new
shares
Bonus
shares
Reserves
transferred
to shares
Others Subtotal
Quantity
(0’000)
Proportion
(%)
A. Unlisted shares
1. Sponsors' shares 38,894.86 71.79 38,894.86 71.79
Including: State owned shares 32,374.77 59.76 32,374.77 59.76
Shares held by domestic
legal persons 6,520.09
12.03
6,520.09
12.03
Shares held by overseas
legal persons
Others
2. Raised shares held by legal
persons
3. Shares held by employees
4. Preference shares and others
Including: Transferred allotted
shares
Subtotal 38,894.86 71.79 38,894.86 71.7969
Before Increase/Decrease (+/-) After
Item Quantity
(0’000)
Proportion
(%)
Issuing new
shares
Bonus
shares
Reserves
transferred
to shares
Others Subtotal
Quantity
(0’000)
Proportion
(%)
B. Listed shares
1. RMB-denominated ordinary
shares 9,139.13
16.87
9,139.13
16.87
2. Domestically listed foreign
shares 6,145.93
11.34
6,145.93
11.34
3. Overseas listed foreign shares
4.Others
Subtotal 15,285.06 28.21 15,285.06 28.21
Total 54,179.92 100.00 54,179.92 100.00
26. Capital surplus
Item Opening book
balance
Increase Decrease Closing book
balance
Share premium
Others
25,332,931.52 25,332,931.52
Including: Other changes besides net gains or losses
in shareholders' equity of the investee under
equity method
25,332,931.52 25,332,931.52
Total 25,332,931.52 25,332,931.52
27. Reserved fund
Items Opening book
balance
Increase Decrease
Closing book
balance
Legal reserve 62,919,127.11 62,919,127.11
Total 62,919,127.11 62,919,127.11
28. Retained earnings70
Item Amounts
Retained earnings at the beginning of the year -55,930,192.11
Plus: Net profit attributable to parent company
transferred in 160,281,697.11
Retained earnings at the end of the period 104,351,505.00
29. Revenue and cost of sales
(1) Revenue
Item Jan. – Sep. 2009 Jan. – Sep. 2008
1. Sales 742,946,353.82 186,575,517.63
2. Other operating income 15,838,716.02 13,517,023.41
Total 758,785,069.84 200,092,541.04
(2) Cost of sales
Item Jan. – Sep. 2009 Jan. – Sep. 2008
1. Cost of sales 352,091,104.25 135,717,102.96
2. Other operating cost 2,950,612.47 4,216,787.58
Total 355,041,716.72 139,933,890.54
Note: Revenue for the current period increased by 279.22%% than that of last period, mainly due to the revenue
of Royal Garden project recognized in this period. Cost of sales for the current period increased 153.72% than that
of last period, which increase is less than that of revenue, mainly due to the increased proportion of properties
sales with higher margin profit.
(3) Listed by the categories of production or business
Categories Revenue Cost of sales Margin profit
Hotel and restaurant operations 12,136,438.34 6,220,994.25 5,915,444.09
Sale of properties 570,071,575.17 218,513,614.99 351,557,960.18
Transportation services 36,697,206.40 17,276,567.65 19,420,638.75
Property rental and management
services income 120,260,237.77 108,321,815.04 11,938,422.73
Others 16,266,868.80 6,371,845.33 9,895,023.47
Elimination -12,485,972.66 -4,613,733.01 -7,872,239.65
Total 742,946,353.82 352,091,104.25 390,855,249.5771
Categories Other operating
income
Other operating cost Other operating margin
profit
Parking lots 14,900,292.54 2,950,612.47 11,949,680.07
Other rents 159,080.00 159,080.00
Others 779,343.48 779,343.48
Total 15,838,716.02 2,950,612.47 12,888,103.55
(4) Details of revenue
Business segment Jan. – Sep. 2009 Jan. – Sep. 2008
Hotel and restaurant operations 12,136,438.34 10,528,894.24
Sale of properties 570,071,575.17 26,995,047.64
Transportation services 36,697,206.40 35,698,559.67
Property rental and management services income 120,260,237.77 113,920,651.73
Others 16,266,868.80 8,856,832.23
Subtotal 755,432,326.48 195,999,985.51
Elimination -12,485,972.66 -9,424,467.88
Total 742,946,353.82 186,575,517.63
(5) Details of cost of sales
Business segment Jan. – Sep. 2009 Jan. – Sep. 2008
Hotel and restaurant operations 6,220,994.25 4,690,427.38
Sale of properties 218,513,614.99 13,364,884.82
Transportation services 17,276,567.65 16,912,139.30
Property rental and management services income 108,321,815.04 95,590,123.05
Others 6,371,845.33 5,955,378.01
Subtotal 356,704,837.26 136,512,952.56
Elimination -4,613,733.01 -795,849.60
Total 352,091,104.25 135,717,102.96
30. Business taxes and surcharges
Item Jan. – Sep. 2009 Jan. – Sep. 2008
Base of payment
Business tax 38,137,071.55 9,830,960.28 3% or 5% of taxable income
Urban maintenance
and construction tax
504,542.74 220,672.54
1% or 7% of VAT and Business tax72
Additional education
Fees
1,153,353.02 315,381.57
3% of VAT and Business tax
Land appreciation tax 96,788,857.03 119,190.40 30%－60% four level progressive rates
Embankment
maintenance fee
60,652.50 26,841.00 0.01% of operating revenue
Other 5,568.09
Total 136,650,044.93 10,513,045.79
Note: Business taxes and surcharges for the current period increased by 1,199.81% than that of last peirod, mainly
due to the increase of revenue and the related turnover tax payable, surtax and fees, as well as land VAT.
31. Financial costs
Categories Jan. – Sep. 2009 Jan. – Sep. 2008
Interest expense 13,931,561.05 13,633,572.29
Less: Interest income 1,992,537.14 2,913,833.09
Exchange loss, net -67,640.02 1,263,731.99
Others 787,138.29 376,280.30
Total 12,658,522.18 12,359,751.49
32. Impairment loss
Items Jan. – Sep. 2009 Jan. – Sep. 2008
Loss on bad debts -2,325,174.88 -1,823,232.00
Loss on impairment of inventories -2,240,000.00
Loss on impairment of long-term equity investment 780,645.20
Total -3,784,529.68 -1,823,232.00
33. Gain/loss on change in fair value
Source Jan. – Sep. 2009 Jan. – Sep. 2008
Tradable financial assets 1,823,215.31 -2,494,349.06
Total 1,823,215.31 -2,494,349.06
34. Gain/loss on investment
Source Jan. – Sep. 2009 Jan. – Sep. 2008
1.Gain on investment under equity method 2,242,065.68 445,650.94
2. Gain on investment from disposal of trading financial assets 204,008.93 30,221.9073
3. Gain on investment during the holding period of trading
financial assets
23,108.60
4. Gain on investment from disposal of available-for-sale
financial assets
4,835,799.71
5. Gain on investment from disposal of held-to-maturity
investment
-3,000.00
Total 2,466,183.21 5,311,672.55
Note: As stated Note XII 1 (1), except for potential influence on repatriation of investment gain due to that 95%
equities of Shenzhen Huangcheng Real Estate Co., Ltd held by the Company has been frozen, no significant
restraint existed in repatriation of other investment gain.
35. Non-operating income
Item Jan. – Sep. 2009
1. Income from disposal of non-current assets 44,724.64
Including: Disposal of fixed assets 44,724.64
2. Others 2,289,773.61
Including: debts unable to pay, fine for paying late 2,039,903.50
Total 2,334,498.25
36. Non-operating expense
Item Jan. – Sep. 2009
1. Loss on disposal of non-current assets 58,162.01
Including: Disposal of fixed assets 58,162.01
2. Public welfare donation outlay 90,000.00
3.Tax late fee and forfeit 397.25
4.Others 133,837.60
Total 282,396.86
37. Income tax expense
Items Jan. – Sep. 2009 Jan. – Sep. 2008
Income tax for the current period 70,723,515.71 2,523,211.60
Plus: Deferred tax expense
Less: Deferred tax income 31,799,893.89 248,272.14
Income tax expense 38,923,621.82 2,274,939.4674
38. Earnings per share
Item EPS for this period EPS in the last period
Basic Earnings Per Share 0.30 -0.02
Diluted Earnings Per Share 0.30 -0.02
Calculation of earnings per share is as following:
Basic Earnings Per Share＝160,281,697.11÷541,799,175＝0.30
Diluted Earnings Per Share＝160,281,697.11÷541,799,175＝0.30
Note: The method of basic earnings per share and diluted earnings per share calculation
A．Basic Earnings Per Share =P÷S
S=S0+S1+Si×Mi÷MO-Sj×Mj÷MO-Sk
P represents the amounts attributable to ordinary equity holders of the Company in respect of:
(a) Profit or loss attributable to the Company; and
(b) Profit or loss after deducting extraordinary gain or loss attributable to the Company.
S represents the weighted average number of ordinary shares outstanding during the period. S0 represents the
number of ordinary shares at the beginning of the period. S1 represents the number of additional ordinary shares
issued on capital surplus transfer or share dividends appropriation; Si represents the number of ordinary shares
issued in exchange for cash or issued as a result of the conversion of a debt instrument to ordinary shares during
the period. Sj represents reduced number of ordinary shares such as shares buy back. Sk represents the number of
a reverse share split. Mo represents the months during the period. Mi represents the months from the following
month after issuing incremental shares to the end of the period. Mj represents the months from the following
month after reducing shares to the end of the period.
B. Diluted Earnings Per Share =[P+（Expensed interest of dilutive potential ordinary shares - Conversion expense）
×（1-corporate income tax rate）]/（SO+S1+Si×Mi÷MO-Sj×Mj÷MO-Sk+ The weighted average number of
incremental ordinary shares on warrants, options, convertible debt and so on）
P represents the amounts attributable to ordinary equity holders of the Company in respect of:
(a) Profit or loss attributable to the Company; and
(b) Profit or loss after deducting extraordinary gain or loss attributable to the Company. The Company considered
in sequence from dilutive potential ordinary shares to get the lowest earnings per share.
39. Other consolidated income
Jan. – Sep. 2009
Items Total Impact on
income tax
Net Original amount included in the other consolidated
income, the current gains and losses transferred in
—— —— —— —— ——
Total —— —— —— ——75
Jan. – Sep. 2008
Items
Total Impact on
income tax
Net Original amount included in the other
consolidated income, the current gains
and losses transferred in
Change in fair
value of
available-for-sale
financial assets
-3,078,294.09 554,092.94 -2,524,201.15 -2,524,201.15
Change in other
shareholders’
equity of invested
entities under
equity method
-2,422,343.41 -2,422,343.41 -2,422,343.41
Total -5,500,637.50 554,092.94 -4,946,544.56 -4,946,544.56
40. Relevant information about cash flow statement
(1) Other cash received from operating activities
Items Jan. – Sep. 2009
Other cash received from operating activities 30,596,062.36
Including: payment from Hainan Yirun Real Estate Co., Ltd. 9,042,935.95
Current payment of Guangzhou Lishifeng Motors Co., Ltd. 5,000,000.00
Receiving arrearage from Duokuai ElevatorCo., Ltd. 3,000,000.00
Net increase 2,341,702.13
Debts unable to pay, fine for paying late 2,039,903.50
(2) Other cash paid relating to operating activities
Items Jan. – Sep. 2009
Other cash paid relating to operating activities 33,503,147.69
Including: Paying administrative expense in cash 16,593,750.16
Paying sale expense in cash 12,056,919.2176
(3) Other cash paid relating to financing activities
Items Jan. – Sep. 2009
Other cash paid relating to financing activities 2,326,312.50
Including: Significant borrowing charges 2,326,312.50
(4) Supplementary information of cash flow statement
Supplementary information Jan. – Sep. 2009
1. Adjustment from net profit to cash flows from operating activities
Net profit 160,281,578.11
Plus: Provision for impairment of assets -3,784,529.68
Depreciation of fixed assets, Oil-gas assets and Productive
biological assets 20,669,760.47
Amortization of intangible assets 4,881,497.85
Amortization of long-term deferred expense 257,579.13
Loss on disposal of fixed assets, intangible assets and other
non-current assets(“-” for gain) 13,437.37
Loss on fixed assets retirement (“-” for gain)
Loss on change in fair value(“-” for gain) -1,823,215.31
Financial costs(“-” for gain) 16,257,873.55
Loss on investment(“-” for gain) -2,466,183.21
Decrease of deferred tax assets(“-” for increase) -31,799,893.89
Increase of deferred tax assets(“-” for decrease)
Decrease of inventory(“-” for increase) -25,099,745.80
Decrease in operating receivables(“-” for increase) -19,461,030.08
Increase in operating payables(“-” for decrease) 450,796,965.53
Others -1,075,388.62
Net cash flow from operating activities 567,648,705.42
2.Significant investment and financing activities irrelevant to cash flow
Debt transferred to capital
Changeable corporation bond due within 1 year
Fixed assets acquired under finance leases
3. Changing in cash and cash equivalents
Closing balance of cash 646,910,616.69
Less: Opening balance of cash 271,708,727.86
Add: Closing balance of cash equivalents77
Supplementary information Jan. – Sep. 2009
1. Adjustment from net profit to cash flows from operating activities
Less: Opening balance of cash equivalents
Increase in cash and cash equivalents 375,201,888.83
(5) Cash and cash equivalents
Items Jan. – Sep. 2009
Cash 646,910,616.69
Including: Cash on hand 248,468.74
Bank deposit on demand 638,205,835.63
Other monetary assets on demand 7,050,917.04
Cash and cash equivalents at the end of the period 646,910,616.69
Including: Restricted Cash and cash equivalents held by parent company
or subsidiaries 1,405,395.28
Note X Notes to the main subjects in consolidated financial statements of parent company
1. Accounts receivables
(1) Accounts receivables by Categories are as follows:
Closing balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 101,502,269.40 96.02% 45,502,269.40 100.00%
Individually insignificant receivables with
high credit risk in group assessment
0 0
Other insignificant amount 4,204,429.32 3.98%
Total 105,706,698.72 100.00% 45,502,269.40 100.00%78
Opening balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 101,502,269.40 95.84% 45.502.269.40 100%
Individually insignificant receivables with
high credit risk in group assessment
0 0 0 0
Other insignificant amount 4,405,970.89 4.16%
Total 105,908,240.29 100.00% 45.502.269.40 100%
(2) Details of individually significant accounts receivable or insignificant receivables but impairment test was
made individually:
Name of company Closing balance Bad debt provision Aging Reason for provision
Shenzhen Jiyong
Properties &
Resources
Development
Company
98,611,328.05 42,611,328.05 Over 3 years Involved in lawsuit,
refer to Note
XII.1.(2) and Note
(XIV) 2
Shenzhen Tewei
Industry Co., Ltd.
2,836,561.00 2,836,561.00 Over 3 years Uncollectible for a
long period
Total 101,447,889.05 45,447,889.05
(3) The details of significant accounts receivable are as follows:
Name of company Amount Proportion to total accounts
receivables
Occurrence period
Shenzhen Jiyong
Properties & Resources
Development Company
98,611,328.05
93.29%
Over 3 years
Rainbow Plaza Co.,
Ltd
4,173,997.32
3.95%
Within 1 year
Shenzhen Tewei Industry
Co., Ltd.
2,836,561.00
2.68%
Over 3 years
Total 105,621,886.37 99.92%
(4) There was no accounts receivable due from related parties; There was no accounts receivable due from
shareholders with more than 5% (including 5%) of the voting shares of the Company.79
2. Other receivables.
(1) Other receivables by categories are as follows:
Closing balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 256,253,448.67 71.12% 208,001,222.89 100.00%
Individually insignificant receivables
with high credit risk in group
assessment
0 0 0 0
Other insignificant amount 104,064,438.66 28.88%
Total 360,317,887.33 100.00% 208,001,222.89 100.00%
Opening balance
Book balance Bad debt provision
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 256,842,814.95 40.33% 195,584,282.67 100.00%
Individually insignificant receivables
with high credit risk in group assessment
0 0 0 0
Other insignificant amount 380,051,078.23 59.67%
Total 636,893,893.18 100.00% 195,584,282.67 100.00%
(2) Details of individually significant accounts receivable or insignificant receivables but impairment test was
made individually:
Name of company Closing balance Bad debt provision Aging Reason for provision
Shum Yip Properties
Development Co., Ltd.
108,167,175.01 68,690,060.36
Over 3 years Uncollectible for a long
period
Gintian Industry (Group)
Co., Ltd.
56,600,000.00 56,600,000.00
2-3 years and over 3
years
Payment for discharging
of guaranty responsibility
that was difficult to be80
recollecte
Hainan Xinda
Development Co., Ltd
53,729,291.54 48,567,368.32
Within 1 year - over
3 years
Uncollectible for a long
period
Anhui Nanpeng
Papermaking Co., Ltd
8,691,680.00 8,691,680.00 Over 3 years
Uncollectible for a long
period
Shenzhen Shengfenglu
ITC Jewel & Gold Co.,
Ltd
10,199,186.28 6,532,519.60 Over 3 years Receivables cannot be
offset by executable
property, referring to Note
XII.1.(3) for details
HongKong Yueheng
Development Co., Ltd
3,271,931.42 3,271,931.42 Over 3 years
Has been liquidated
Elevated Train Project 2,542,332.43 2,542,332.43 Over 3 years
Suspended project
Dameisha Tourism
Center
2,576,445.69 2,576,445.69 Over 3 years
Suspended project
Shenzhen ITC Food
Enterprise Co.,Ltd.
2,431,652.48 2,431,652.48 Over 3 years Insolvency
Shenzhen Wufang
Pottery & Porcelain
Industrial Co., Ltd
1,747,264.25 1,747,264.25 Over 3 years
Poor operation status
Total 249,956,959.10 201,651,254.55
(3) The details of significant accounts receivable are as follows (top five):
Name of company Amount Proportion to
total accounts
receivables
Nature Occurrence period
Shum Yip Properties
Development Co., Ltd.
108,167,175.01
30.02% Current payment Over 3 years
Gintian Industry (Group)
Co., Ltd.
56,600,000.00
15.71% Current payment 2-3 years and over 3
years
Hainan Xinda Development
Co., Ltd 53,729,291.54 14.91% Current payment Within 1 year - over 3
years
Shenzhen Property and Real
Estate Development Co.,
Ltd.
50,006,147.51 13.88%
Current payment Within 1 year - over 3
years
Shenzhen ITC Tian’an
Properties Co., Ltd
24,705,931.45 6.85%
Dividend receivable
Over 3 years
Total 293,208,545.51 81.37%81
There was no other receivable due from shareholders with more than 5% (including 5%) of the voting shares of
the Company.
3. Long-term equity investment
Categories Closing book balance Opening book balance
Long-term equity investment accounted
using equity method 67,432,358.19 65,190,292.51
Long-term equity investment accounted
using cost method 224,960,520.62 224,960,520.62
Sub-Total 292,392,878.81 290,150,813.13
Less: Provision for impairment of long-term
equity investment 110,478,227.43 106,241,949.60
Total 181,914,651.38 183,908,863.53
(1) Long-term equity investment accounted using equity method
Investment Amount of
initial
investment
Opening
balance
Increase Decrease Closing balance Cash dividends
received during
the current
period
Shenzhen ITC
Tian’an Properties
Co., Ltd
23,186,124.00 37,134,170.50
2,074,622.26 39,208,792.76
Shenzhen Jifa
Warehouse
Company Limited
30,645,056.04 26,297,645.27
164,815.18 26,462,460.45
Shenzhen Tian’an
International
Building Property
Management Co.,
Ltd
1,500,000.00 1,758,476.74
2,628.24 1,761,104.98
Total 55,331,180.04 65,190,292.51 2,242,065.68 67,432,358.19
(2) Long-term equity investment accounted using cost method
Invested entities
Amount of initial
investment
Opening
balance
Increase Decrease Closing balance
Shenzhen ITC Vehicles
Industry Co., Ltd.
29,850,000.00 29,850,000.00 29,850,000.0082
Invested entities
Amount of initial
investment
Opening
balance
Increase Decrease Closing balance
Hainan Xinda Development
Co., Ltd
20,000,000.00 20,000,000.00 20,000,000.00
Shenzhen Property and Real
Estate Development Co., Ltd.
30,950,000.00 30,950,000.00 30,950,000.00
Shenzhen Huangcheng Real
Estate Co., Ltd. (Note)
28,500,000.00 28,500,000.00 28,500,000.00
Shenzhen ITC Property
Management Co., Ltd.
20,000,000.00 20,000,000.00 20,000,000.00
Shenzhen ITC Food Co., Ltd. 1,600,000.00 1,600,000.00 1,600,000.00
Shenzhen Property
Construction Supervision Co.,
Ltd.
2,000,000.00 3,000,000.00 3,000,000.00
Shenzhen International Trade
Plaza
12,000,000.00 12,000,000.00 12,000,000.00
Shenzhen Real Estate
Exchange
1,380,000.00 1,380,000.00 1,380,000.00
Shenshan Co., Ltd. 17,695.09 17,695.09 17,695.09
Shum Yip Properties
Development Co., Ltd.
15,834,000.00 15,834,000.00 15,834,000.00
Zhanjiang Shenzhen Real
Estate Development Co., Ltd.
2,530,000.00 2,530,000.00 2,530,000.00
China T.H. Co., Ltd. 2,962,500.00 2,962,500.00 2,962,500.00
North Machinery (Group)
Co.,Ltd.
3,465,000.00 3,465,000.00 3,465,000.00
Guangdong Huayue Real
Estate Co.,Ltd.
8,780,645.20 8,780,645.20 8,780,645.20
Shenzhen Huajing Glass
Bottle Company Limited
7,600,000.00 7,600,000.00 7,600,000.00
Anhui Nanpeng Papermaking
Co., Ltd
13,824,000.00 13,824,000.00 13,824,000.00
Shenzhen Wufang Pottery &
Porcelain Industrial Co., Ltd
18,983,614.14 18,983,614.14 18,983,614.14
Shenzhen ITC Industrial
Development Co., Ltd
20,154,840.79 3,682,972.55 3,682,972.55
East Land Properties Limited 93.64 93.64 93.64
Total 240,432,388.86 224,960,520.62 224,960,520.62
Note: 95% equities of Shenzhen Huangcheng Real Estate Co., Ltd held by the Company has been frozen due to
the case of “Haiyi”, a pending action, by the Court. Please refer to Note XII 1 (1) for details.83
(3) Provision for impairment of long-term equity investment
Investment
Opening book
balance
Increase Decrease
Closing book
balance
Anhui Nanpeng Papermaking Co., Ltd
13,824,000.00 13,824,000.00
Shenzhen Wufang Pottery &
Porcelain Industrial Co., Ltd
18,983,614.14 18,983,614.14
Shenzhen Huajing Glass Bottle
Company Limited
7,600,000.00 7,600,000.00
Shenzhen ITC Industrial
Development Co., Ltd
3,682,972.55 3,682,972.55
Guangdong Huayue Real Estate Co.,
Ltd.
8,000,000.00 780,645.20 8,780,645.20
North Machinery (Group) Co., Ltd.
3,465,000.00 3,465,000.00
China T.H. Co., Ltd.
2,160,300.45 2,160,300.45
Shenshan Co., Ltd.
17,695.09 17,695.09
Shenzhen ITC Food Co., Ltd.
1,600,000.00 1,600,000.00
Hainan Xinda Development Co., Ltd
20,000,000.00 20,000,000.00
Zhanjiang Shenzhen Real Estate
Development Co., Ltd. 2,530,000.00 2,530,000.00
Shum Yip Properties Development Co., Ltd.
15,834,000.00 15,834,000.00
Shenzhen International Trade Plaza
8,544,367.37 3,455,632.63 12,000,000.00
Total 106,241,949.60 4,236,277.83 110,478,227.43
4. Revenue and cost of sales
Item Jan. – Sep. 2009 Jan. – Sep. 2008
1. Revenue from main business 20,096,196.29 15,754,337.68
Total 20,096,196.29 15,754,337.68
Item Jan. – Sep. 2009 Jan. – Sep. 2008
Cost of main business 8,113,376.34 5,639,941.95
Total 8,113,376.34 5,639,941.9584
Listed by the categories of production or business:
Categories Revenue Cost of sales Margin profit
Property rental and
management services
income
20,096,196.29 8,113,376.34 11,982,819.95
Total 20,096,196.29 8,113,376.34 11,982,819.95
5. Gain/loss on investment
Source Jan. – Sep. 2009 Jan. – Sep. 2008
1. Gain on long-term equity investment under cost
method
522,000,000.00
2. Gain on long-term equity investment under equity
method
2,242,065.68 329,659.93
3. Gain on investment from disposal of trading financial
assets
20,528.04
4. Gain on investment from disposal of available-for-sale
financial assets
2,461,399.83
Total 524,242,065.68 2,811,587.80
Note: As stated Note XII 1 (1), except for potential influence on repatriation of investment gain due to that 95%
equities of Shenzhen Huangcheng Real Estate Co., Ltd held by the Company has been frozen, no significant
restraint existed in repatriation of other investment gain.
6. Supplementary information of cash flow statement
Supplementary information Jan. – Sep. 2009
1. Adjustment from net profit to cash flows from operating activities
Net profit -28,582,326.70
Plus: Provision for impairment of assets 16,726,230.34
Depreciation of fixed assets, Oil-gas assets and Productive
biological assets 9,510,837.10
Amortization of intangible assets
Amortization of long-term deferred expense 124,612.56
Loss on disposal of fixed assets, intangible assets and other
9,354.8985
Supplementary information Jan. – Sep. 2009
non-current assets(“-” for gain)
Loss on fixed assets retirement (“-” for gain)
Loss on change in fair value(“-” for gain) -127,500.00
Financial costs(“-” for gain) 3,195,502.00
Loss on investment(“-” for gain)
-2,242,065.68
Decrease of deferred tax assets(“-” for increase)
Increase of deferred tax assets(“-” for decrease)
Decrease of inventory(“-” for increase) -76,600.00
Decrease in operating receivables(“-” for increase) 184,168,925.52
Increase in operating payables(“-” for decrease) -69,312,021.10
Others
Net cash flow from operating activities 113,394,948.93
2.Significant investment and financing activities irrelevant to cash
flow
Debt transferred to capital
Changeable corporation bond due within 1 year
Fixed assets acquired under finance leases
3. Changing in cash and cash equivalents
Closing balance of cash 2,546,911.33
Less: Opening balance of cash 7,802,612.88
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Increase in cash and cash equivalents
-5,255,701.55
Note Ⅺ Related party relationship and transactions
1. Identification of related party of the Company
According to Accounting Standards for Business Enterprises and the related regulations of China Securities
Regulatory Commission, the related party is defined as “when a party controls, jointly controls or exercises
significant influence over another party, or when two or more parties are under the common control, joint control
or significant influence of the same party, the related party relationships are constituted.”
2. Related party relationship
(1) Related party with control relationship86
A. Information of parent company
Name
Registered
address
Business scope Relationship Nature
Legal
Representative
Shenzhen
Investment
Holdings
Co., Ltd.
Shenzhen,
China
Providing guarantees for city
state-owned enterprises; Managing the
state-owned shareholdings except for
which is monitored directly by
State-owned Assets Supervision and
Administration Commission of
Shenzhen Municipal Government;
Managing the reconstruction, system
renovation and capital operation over
the affiliates; investing; other business
authorized by State-owned Assets
Supervision and Administration
Commission of Shenzhen Municipal
Government.
Parent
company
Limited
liability
company
(wholly
state-owned)
Chen Hongbo
The registered controlling shareholder of the Company for the moment is Shenzhen Construction Investment
Holdings. For more details please refer to Note I. 4.
B. Subsidiaries with control relationship
For information about subsidiaries of the Company please refer to Note VII.1.
(2) The registered capital and changes of related party with control relationship
A. The registered capital and changes of shareholder with control relationship
(Unit: RMB 0’000)
Name Opening balance Increase Decrease Closing balance
Shenzhen Investment Holdings
Co., Ltd.
400,000.00 400,000.00
B. For the registered capital of subsidiaries with control relationship please refer to Note VII.1.
（3）The shareholdings of related parties with control relationship and the changes in shareholdings (All amounts
are presented in RMB, unless otherwise stated.)
Name Opening balance Increase/Decrease Closing balance
Amount % Amount % Amount %
Shenzhen Investment
Holdings Co., Ltd.
323,747,713.00 59.75 323,747,713.00 59.75
Hainan Xinda Development
Co., Ltd
20,000,000.00 100 20,000,000.00 10087
Name Opening balance Increase/Decrease Closing balance
Amount % Amount % Amount %
Shenzhen ITC Food Co.,
Ltd.
2,000,000.00 100 2,000,000.00 100
Shenzhen Property and Real
Estate Development Co.,
Ltd.
30,950,000.00 100 30,950,000.00 100
Shenzhen ITC Property
Management Co., Ltd.
20,000,000.00 100 20,000,000.00 100
Shenzhen ITC Vehicles
Industry Co., Ltd.
29,850,000.00 100 29,850,000.00 100
Shenzhen Huangcheng Real
Estate Co., Ltd
30,000,000.00 100 30,000,000.00 100
Sichuan Tianhe Industry
Co., Ltd
8,000,000.00 100 8,000,000.00 100
Shenzhen ITC Property
Management Engineering
Equipment Co., Ltd
1,200,000.00 100 1,200,000.00 100
Shenzhen Tianque Elevator
Technology Co., Ltd
5,000,000.00 100 5,000,000.00 100
Shandong Shenzhen ITC
Property Management Co.,
Ltd.
5,000,000.00 100 5,000,000.00 100
Chongqing Shenzhen ITC
Property Management Co.,
Ltd.
5,000,000.00 100 5,000,000.00 100
Chongqing Ao’bo Elevator
Co., Ltd
2,000,000.00 100 2,000,000.00 100
Shenzhen ITC Petroleum
Co., Ltd
8,500,000.00 100 8,500,000.00 100
Shenzhen ITC Vehicle
Industry Company Vehicle
Repair Shop
1,500,000.00 100 1,500,000.00 100
Shenzhen Tesu Vehicle
Driver Training Center Co.,
Ltd.
2,000,000.00 100 2,000,000.00 10088
Name Opening balance Increase/Decrease Closing balance
Amount % Amount % Amount %
Shenzhen Huangcheng Real
Estate Management Co.,
Ltd.
5,000,000.00 100 5,000,000.00 100
Zhanjiang Shenzhen Real
Estate Development Co.,
Ltd
2,530,000.00 100 2,530,000.00 100
Shenzhen Property
Construction Supervision
Co., Ltd
3,000,000.00 100 3,000,000.00 100
Shenzhen International
Trade Plaza
12,000,000.00 100 12,000,000.00 100
Shenzhen Real Estate
Exchange
1,380,000.00 100 1,380,000.00 100
Shum Yip Properties
Development Co., Ltd.
HKD20,000,000.00 100 HKD20,000,000.00 100
Wayhang Development
Limited
HKD2.00 100 HKD2.00 100
Chief Link Properties
Limited
HKD100.00 70 HKD100.00 70
Syndis Investment Co., Ltd
(note)
HKD4.00 70 HKD4.00 70
East Land Properties
Limited
HKD100.00 100 HKD100.00 100
Note: Chief Link Properties Limited holds 100% shares of Syndis Investment Co., Ltd.
（4）Other related parties
Name Relationship
Shenzhen Jifa Warehouse Co., Ltd Joint venture
Shenzhen ITC Tian’an Property Co., Ltd Joint venture
Anhui Nanpeng Papermaking Co., Ltd 30% shareholdings held by the Company
Shenzhen Wufang Pottery & Porcelain Industrial Co., Ltd 26% shareholdings held by the Company
Shenzhen ITC Industrial Development Co., Ltd 38.33% shareholdings held by the Company
Guangzhou Lishifeng Motor Co., Ltd 30% shareholdings held by the Company
3. Related Party transactions
(1) Guarantees provided89
The Company did not provide guarantees for the related parties not included in the consolidated financial
statements and for particulars about the guarantees provided for its subsidiaries, please refer to Note Ⅻ. 2.
(2) Entrusted borrowings
The entrusted borrowings or direct borrowings from Shenzhen Investment Holdings Co., Ltd. to the Company in
the report period were specified as follows. (Unit: RMB 0’000)
Trustee party Borrower
Beginning
borrowing
Borrowings
in report
period
Repayment
in report
period
Closing
borrowing
Interest
paid in
report
period
Shenzhen
Jingtian
Sub-branch of
China
Everbright
Bank
Shenzhen
Huangcheng Real
Estate Co., Ltd.
15,000.00 15,000.00 794.14
Shenzhen
Diwang
Sub-branch of
Agricultural
Bank of China
Shenzhen Properties
& Resources
Development
(Group) Ltd.
5,000.00 5,000.00 5,000.00 5,000.00 236.55
Direct
borrowings
Shenzhen Properties
& Resources
Development
(Group) Ltd.
1,500.00 1,500.00 0.00 18.59
Note: RMB 620,700 of unpaid interest at the period-begin of the direct borrowings from Shenzhen Investment
Holdings Co., Ltd. was paid in the report period.
(3) Amounts due to/from related parties
Amount
Name of related party
30 Sept. 2009 31 Dec. 2008
Other accounts receivable:
Shenzhen ITC Tian’an Property Co., Ltd
24,705,931.45 24,705,931.45
Anhui Nanpeng Papermaking Co., Ltd
8,691,680.00 8,702,432.00
Shenzhen ITC Industrial Development Co.,
Ltd
2,431,652.48 2,431,652.48
Shenzhen Wufang Pottery & Porcelain
Industrial Co., Ltd
1,747,264.25 1,747,264.25
Short-term borrowings (entrusted
borrowings):
Shenzhen Investment Holdings Co., Ltd. 200,000,000.00 215,000,000.00
Other accounts payable:90
Shenzhen ITC Petroleum Co., Ltd. 3,400,442.77 2,603,248.77
Shenzhen Jifa Warehouse Co., Ltd 6,163,040.00 6,163,040.00
Guangzhou Lishifeng Motor Co., Ltd 15,344,017.08 10,000,000.00
Note Ⅻ Contingencies
1. Pending litigations
(1) In December 1997, eight house owners including Haiyi Industrial (Shenzhen) Co., Ltd. sued the Company and
its subsidiary, Shenzhen International Trade Plaza Property Development Co., Ltd., to Shenzhen Intermediate
People’s Court (hereinafter referred to as Shenzhen Intermediate Court) for cancellation of the Property Purchase
and Sale Contract, refund of house purchase payment and a penalty amounted to HKD 0.3 billion because of delay
in property delivery. The Company counterclaimed that the delay was due to the prosecutor’s unsettled property
consideration and Shenzhen Intermediate Court adjudicated that the Company won the lawsuit. The prosecutor
did not accept the judgment and appealed to Guangdong Higher People’s Court (hereinafter referred to as
Guangdong Higher Court). Guangdong Higher Court made the final adjudication with 34 copies verdict in April
1999. Guangdong Higher Court adjudicated that the Contract of Purchase and Sale of Real Estate of Shenzhen
City between both parties was effective. Furthermore, the prosecutor has paid off all property considerations. The
Company therefore should bear penalty, compensation and legal fare added up to HKD79.16 million to the
prosecutor. The eight companies applied to Shenzhen Intermediate Court for the execution in June 1999. Because
of unclear recognition of the truth and improperly application of the law, Guangdong Higher Court decided to
retry the case in August 1999 under the Company’s application. According to the decision of the retrial, Shenzhen
Intermediate Court ended the execution of the case after the Company provided possession’s drawing. At the end
of 2003, Guangdong Higher Court overruled the application of the Company after investigation. The Company
estimated related losses amounted to RMB 41,772,906.07 according to the carrying amount of the property drawn.
The company believes that there are problems such as unclear recognition of the truth, improper application of the
law, and violation of the legal procedures and so on. Hence the Company applied to the Highest People’s Court
for the case to be retried. In February 2008, the Highest People’s Court decided that the judgment of YGFM (1998)
No. 298 (No. 1 case of commercial company) should be retried. The said case was reopened by Guangdong
Higher Court on June 18, 2008 and other cases were still in the process of examination.
On 6 Apr. 2009, the Company received 34 copies of Enforcement Restore Notice issued by the Shenzhen
Intermediate Court on 23 Mar. 2009, claimed that the eight house owners including Haiyi Industrial (Shenzhen)
Co., Ltd. applied to the court for restore the enforcement of the 34 copies of verdict issued at 1999. Shenzhen
Intermediate People’s Court accepted and heard this application. In 2008, an additional prospective damage is
RMB 19,481,328.37 due to change in market price of properties drawn by the Company. On 2 Jun. and 25 Jun.
2009, the Company received Notices on Sealing up and Freezing Property issued by Shenzhen Intermediate
People’s Court, which sealed up and froze part of the Company’s properties, equity and bank accounts. For more
details, please refer to Note ⅩⅣ. Among the 34 cases, one case [(1998) YGFMZ Zi No. 298] has entered into
judicial proceeding, namely, execution suspension was ruled by the Supreme People's Court judgment and the
Supreme People's Court remanded the case for a new trial. Therefore, the Company raised opposition to execution
with the said 34 cases to Shenzhen Intermediate People's Court. Shenzhen Intermediate People's Court suspended91
execution of the case [(1998) YGFMZ Zi No. 298], and the other 33 cases would be continued to execute.
The Company believed that: the 33 judgments as base of application for execution were the same with Judgment
(1998) YFMZZ No. 298 that has problems of unclear fact, non-applicable law to the case and violating legal
procedure. The Company would continue to appeal to the Supreme People’s Court. Meanwhile, the Company also
tried to find other legal means to safeguard legal rights of the Company and shareholders.
(2) In 1993, the Company signed Right of Development Transfer Contract of Jiabin Building (name of Jiabin
Building has been changed to Jinlihua Building) with Shenzhen Haibin Property Development Co., Ltd. (name of
which has been changed to Shenzhen Jiyong Property Development Co., Ltd., hereinafter referred to as Jiyong
Company). In January 1999, Jiyong Company sued the company to Guangdong Higher People’s Court for
termination of the transfer contract and refund of the transfer consideration and construction payment paid on the
ground that the area of premises was in discrepancy with the contract. With respect to this, the Company
counterclaimed the opposing party to pay back the rest transfer consideration and applied for sealing up their
property with an area of 28,000 square meters.
On July 29, 2001, Guangdong Higher People’s Court issued Civil Court Judgment YGFM (1999) No. 3
(hereinafter referred to as Judgment No. 3) to judge that ① the Company should transfer the title of land use right
specified in the transfer contract to Jiyong Company within 30 days from the date the judgment taking into effect
and ②Jiyong Company should pay off the transfer consideration amounting to RMB 143,860,000 within 60 days
from the date the Company transferred the title of land use right. On November 27, 2001, the Company applied to
Guangdong Higher People’s Court for forcible execution, however Guangdong Higher People’s Court adjudicated
to release the sealing property of Jiyong Company approximately 10,000 square meters since Industrial &
Commercial Bank of China Zhejiang Branch disagree to seal the properties.
In January 2006, Guangdong Higher People’s Court issued Civil Court Judgment YGFZ (2002) No. 1 and
adjudicated because that the Company has not yet transferred the title ① of land use right specified in the transfer
contract to Jiyong Company and ② Jiyong Company cannot provide other properties available for execution and
the Company also cannot provide the property available for execution, the second judgment of the No. 3 verdict -
“Jiyong Company should pay off the transfer consideration amounted RMB143,860,000 within 60 days from the
date the Company transferred the title of land use right” is terminated for execution. When the conditions causing
termination for execution of the second judgment are eliminated, the second judgment should still be executed.
In March 2006, according to the ordain of Guangdong Higher People’s Court, the properties in Jiabin Building
that have been sealed up in this case have been leased automatically. In Sept. 2009, the Company received the
Notice on Execution Restoration (2002) YGFZZ No.1-1 issued by Guangdong Higher Court, deciding to recover
execution of the case that Shenzhen Jiyong Properties & Resources Development Company was in arrears of fund
for transferring Jiabing Mansion of the Company.
(3) On July 1996, China Huaxi enterprise Limited has signed Jinglihua Commercial Square granite outside
decoration construction Contract with Jiyong Ltd. The China Huaxi enterprise Ltd later sued to the Luohu court
for the default construction payment by Jiyong Ltd for the construction payment and related losses of Jiyong Ltd,92
Shenzhen Zongli Investment Limited and the company amounted RMB5.87million. The case has been reopened
in May 2009. In the company’s opinion, according to the truth and legal proceeding, this case would not bring
losses to the Company as the company is not the main party of the contract.
(4) The case of Duokuai Elevator
A. On July 11, 2002, Shenzhen Huangcheng Real Estate Co., Ltd., a subsidiary of the Company, (hereinafter
referred to as Real Estate Company) and Duokuai Elevator (Far East) Co., Ltd. (Hereinafter referred to as
Duokuai Company) signed Elevator Equipment Contract and House Mortgage and Purchasing Contract to
purchase the elevators for Huang Yu Yuan District B from Duokuai Company, Taoboming agreed to provide
guaranty with the mortgage of his own properties to Real Estate Company to ensure that Duokuai Company
would supply the elevators on time. On December 6, 2004, Real Estate Company applied to Shenzhen Arbitration
Committee for arbitration to cancel the contract on the ground that Duokuai Company did not supply the elevators,
and demanded from the Elevator Company to return the double amount of the deposit paid to the amount of RMB
7,539,000.00, the consideration of RMB 15,904,000.00 and a compensation of RMB 277,268.51. On November
24, 2005, Shenzhen Arbitration Committee made an arbitration that Duokuai Company should make a double
repayment of the deposit paid by Real Estate Company to the amount of RMB7,539,000.00 together with a
repayment of the consideration of RMB15,904,000.00 and Taoboming should take joint discharge liability within
the bound of the value of the properties mortgaged.
Duokuai Company and Taoboming refused to accept the arbitration and applied to Shenzhen Intermediate
People’s Court for revoking the arbitration on December 7, 2005. In 2006, Shenzhen Intermediate People’s Court
issued Civil Ruling Paper SZFMSCZ (2006) No. 18 and 19 to adjudge that the application of revoking the
Arbitration SZCZ (2005) No. 1227 made by Shenzhen Arbitration Committee from Shenzhen Arbitration
Committee was overruled. On November 16, 2006, Real Estate Company reported the condition of execution to
Shenzhen Intermediate People’s Court and applied to it for an auction of the properties mortgaged.
Progress in the report period: ① Two real estate under the name of Duokuai Elevator, that is podium building of
Huangcheng Plaza and Hsiao Plaza with total areas of 957.31 square meters had been auctioned at auction price of
RMB 4,280,000. In Apr. 2009, Huangcheng Real Estate received RMB 3 million transferred from Shenzhen
Intermediate Peoples’ Court and Balance amounting to RMB 1.28 million was still in account of Shenzhen
Intermediate Peoples’ Court. ② According to Notice (2006) SZFZ Zi No. 516, Shenzhen Intermediate Peoples’
Court auctioned five real estates with auction price of RMB 5.14 million on 24 Apr. 2009, of which one third
amounting to RMB 1,713,333.00 was the executed property to distain for debt payable to Huangcheng Real
Estate.
B. On August 3, 2006, Hainan Duokuai Elevator Maintenance (Far East) Co., Ltd. Shenzhen Branch (hereinafter
referred to as Duokuai Shenzhen Company) sued Shenzhen Huangcheng Real Estate Management Co., Ltd, a
subsidiary of the Company, (hereinafter referred to as Huangcheng Management Company) to Shenzhen Futian
People’s Court for settlement of maintenance fee by Huangcheng Management Company. In the process of
investigation, Duokuai Shenzhen Company applied for adding Real Estate Company as joint defendant and asked93
Real Estate Company to take joint discharge liability for aforesaid instance. On January 26, 2007, Shenzhen
Futian People’s Court issued the Civil Ruling Paper SFFMECZ (2006) No. 1977 and adjudicated that Real Estate
Company and Huangcheng Management Company should pay the maintenance fee amounted RMB925,500.00
and RMB1,105,130.00 respectively together with a compensation on related interest loss to Duokuai Shenzhen
Company. Real Estate Company and Huangcheng Management Company appealed on the ground of unclear
recognition of truth and violation of legal procedures. On January 28, 2008, Shenzhen Intermediate People’s Court
issued Civil Ruling Paper SZFMEZZ (2007) No. 827 and adjudicated that Real Estate Company and Huangcheng
Management Company should pay the maintenance fee amounted RMB893,100.00 and RMB1,102,730.00
respectively together with a compensation on related interest loss to Duokuai Shenzhen Company. Real Estate
Company and Huangcheng Management Company have recognized relevant expenses in the financial statements.
Huangcheng Real Estate Co., Ltd should receive balance of RMB 8,726,693.00 at the period-end from Duokuai
Elevator. In view of unsettled payables from Duokuai Elevator, its related parties and guarantee parties by
Huangcheng Real Estate Co., Ltd, the Company carried depreciation provision test and confirmed to withdraw
RMB 1,478,071.21 as bad debt reserves.
(5) In June 2004, Shenzhen Meisi Industrial Co., Ltd. (hereinafter referred to as Meisi Company) prosecuted
Shenzhen Luohu Economic Development Co., Ltd and the Company to Shenzhen Intermediate People’s Court for
illegal use of land owned by Meisi Company and request for ceasing the infringing act and receiving a
compensation amounted RMB 8 million. In March 2005, Shenzhen Intermediate People’s Court issued Civil
Ruling Paper SZFMCZ (2004) No. 108 and adjudicated that the Company should return the land with an area of
4,782 square meters to Meisi Company within 3 months and other claims of Meisi Company were overruled. The
Company refused to accept the verdict and appealed to Guangdong Higher Court. On November 25, 2005,
Guangdong Higher Court adjudicated that the Civil Ruling Paper SZFMCZ (2004) No. 108 issued by Shenzhen
Intermediate People’s Court should be cancelled and the prosecution of Meisi Company were overruled.
During the process of trial of second instance, Meisi Company applied to Registration Center for Property of Real
Estate of Shenzhen Municipality for revoking Property Ownership Certificates SFDZ No. 3000320987 and No.
300119899 owned by the Company. On July 7, 2005, Registration Center for Property of Real Estate of Shenzhen
Municipality issued the reply of SFDH (2005) No. 84 to Meisi Company and judged that aforesaid certificates are
legal and effective and should not be revoked. Meisi Company disagreed with this judgment and applied the
administrative reconsideration to the People's Government of Shenzhen Municipality. On October 8, 2005, the
People's Government of Shenzhen Municipality issued Decision on Administrative Reconsideration SFFJ (2005)
No. 294 and judged that aforesaid 2 certificates were registered illegally and should be revoked, reply of SFDH
(2005) No. 84 was canceled accordingly.
The Company refused to accept Decision on Administrative Reconsideration SFFJ (2005) No. 294 and prosecuted
an administrative litigation to Shenzhen Intermediate People’s Court on October 20, 2005. Shenzhen Intermediate
People’s Court issued Administrative Judgment SZFXCZ (2005) No. 23 and adjudicated that Decision on
Administrative Reconsideration SFFJ (2005) No. 294 is sustained. The Company disagreed with this
administrative judgment and appealed to Guangdong Higher Court on August 2, 2006. Guangdong Higher Court94
issued Administrative Judgment YGFXZZ (2006) No. 154 in which the appeal was rejected and Administrative
Judgment SZFXCZ (2005) No. 23 was sustained. According to this Judgment, Shenzhen Municipal Bureau of
Land Resources and Housing Management would reconsider the request of Meisi Company to revoke the
Property Ownership Certificates SFDZ No. 3000320987 and No. 3000119899 of the Company.
On May 15, 2007, Registration Center for Property of Real Estate of Shenzhen Municipality issued Decision on
Revoking the Property Ownership Certificates SFDZ No. 3000320987 and No. 3000119899 (SFZ (2007) No. 27).
Registration Center for Property of Real Estate of Shenzhen Municipality decided to revoke property ownership
certificates SFDZ No. 3000320987 and No. 3000119899 owned by the Company that indicating the ownership of
occupied property of Meilin Workshop, Comprehensive Building and the land use right of 11,500 square meters
and restore the registration of the ownership of occupied property of Meilin Workshop, Comprehensive Building
and the land use right of certificates of SFDZ No. 0103142 and No. 0103139. The Company had the ownership of
occupied property of Meilin Workshop, Comprehensive Building and the land use right of 11,500 square meters
according to original property ownership certificates.
On July 9,2007, the Company applied the administrative reconsideration to the Administrative Reconsideration
Office of the People's Government of Shenzhen Municipality, which considered that those action that Registration
Center for Property and Real Estate of Shenzhen Municipality revoked property ownership certificate SFDZ No.
3000320987 and No. 3000119899 owned by the Company and restore the registration of Meilin Workshop,
Comprehensive Building and land use right violated the provisions of the Decision on Strengthening Land Market
Management and further Enlivening and Standardizing Real Estate Market (SF (2001) No. 94) promulgated by
People’s Government of Shenzhen Municipality, and requested People’s Government of Shenzhen Municipality to
rescind the Decision. On September 6, 2007, the People's Government of Shenzhen Municipality issued Decision
on Administrative Reconsideration SFFJ (2007) No. 255 to sustain the administrative decision of Shenzhen
Municipal Bureau of Land Resources and Housing Management.
In November 2007, Shenzhen Municipal Bureau of Land Resources and Housing Management rejected the
application of Meisi Company for revoking Property Ownership Certificates SFDZ No. 0103142 and No.
0103139. Meisi Company prosecuted an administrative litigation to Shenzhen Futian People’s Court to ask for
revoking the administrative decision of Shenzhen Municipal Bureau of Land Resources and Housing Management.
The Company was involved as third party. Court session started on January 8, 2008 with litigation number of
(2008) SFFXCZ No. 10. On January 2008, Meisi Company prosecuted an administrative litigation to Shenzhen
Futian People’s Court for revoking the above administrative decision of Shenzhen Municipal Bureau of Land
Resources and Housing Management, revoking Property Ownership Certificates SFDZ No. 0103142 and No.
0103139, and restoring the land use right to Meisi Company with the litigation number of SFFX(2008) No. 70. On
May 2008, the Shenzhen Futian Court made adjudication to No. 70 case in which the property ownership
certificates SFDZ No. 0103142 and No. 0103139 owned by the Company were revoked and Shenzhen Municipal
Bureau of Land Resources and Housing Management were required to re-investigate the application of Meisi
Company. The company, the Shenzhen Municipal Bureau of Land Resources and Housing Management as well as
Meisi Company refused to accept the verdict and made an appeal. On July 2008, the company has received the
Administrative Ruling Paper from Futian People’s Court in which the trial of SFFX (2008) No. 10 was95
terminated.
On December 2008, Shenzhen Intermediate Court issued the Administrative Ruling Paper SZFXZZ (2008) No.
223, in which the final adjudication of appeal case SFFXCZ (2008) No. 70 was made and the original verdict was
sustained. Moreover, the final adjudication stated that the controversy over the land use right in this case between
Meisi Company and the Company should be settled through civil procedures; the Bureau of Land Resources and
Housing Management of Shenzhen Municipality should not proceed the registration procedure until the
controversy is final settled.
On February 11, 2009, the Company received the Civil Complaint from Shenzhen Futian People’s Court; Meisi
Company has made a civil prosecution against the Company and Shenzhen Luohu Commercial Development Co.,
Ltd. for the confirmation of Meisi Company’s land use right and the buildings in original Property Ownership
Certificates SFDZ No., 0103142 and No., 0103139. Furthermore, Meisi Company requests that return of related
land use right and a compensation of RMB7.5 Million. The Company has submitted an objection to jurisdiction.
On March 4, 2009, Shenzhen Futian People’s Court sent the Notice to the Company to inform that this case has
been transferred to Shenzhen Intermediate People’s Court for adjudication. On 2 Jul. 2009, Shenzhen Intermediate
Court held hearings of the case. And the Company is now waiting for the judgment of the court.
The Company believes that the land use right and ownership of above building should be legally confirmed to the
Company. The Company will secure its own legal rights through all legal means, and the above issues would not
have significant impact on the Company’s financial position.
2. Guarantees
(1) The Company provides guarantee to China Construction Bank Shenzhen branch for the long-term loan of its
subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. which the credit facility is RMB 250 million and the
closing balance is RMB 200 million.
(2) The Company provides a guarantee for the long-term loan borrowed by its subsidiary—Shenzhen Huangcheng
Real Estate Co., Ltd.—from Shenzhen Branch of China Construction Bank, with the credit line standing at RMB
250 million and the closing loan balance at RMB 200 million; the said loan will be due within one year.
(3) Guarantee for the house owners: The Company and its subsidiaries provide mortgage guarantee for
commodity premise purchasers. The total unsettled guarantee amounted to RMB 443.74 million as at 30 Sept.
2009. It is common that the real estate developer provides mortgage guarantee for small owners.
3. Contingent assets
(1) Bureau of Foreign Trade and Economic Cooperation of Hubei province Shenzhen branch (hereinafter referred
as “Hubei FTEC Shenzhen branch”) sued the Company to Shenzhen Intermediate People’s Court on July 2000 for
termination of the agreement between the Hubei FTEC Shenzhen branch and the Company about office property
of 4,000 square meters purchasing in Jiabing Building (now known as Jinlihua Building) and asked for refund of
purchase payment of RMB10.8 million and an indemnify of RMB18.6756 million on the ground of delayed96
delivery. Guangdong Higher Court issued YGFMYZZ No. 90 judgment and adjudicated that the Company should
refund the Hubei FTEC Shenzhen branch purchase payment of RMB 10.8 million and related interests.
The Hubei FTEC Shenzhen branch applied for execution to Guangdong Higher People’s Court. Guangdong
Railage Intermediate Court (hereinafter as the “Railage Court”) was appointed by the Higher Court to execute the
case at the end of January 2005. The Railage Court delivered the seal-up order to the liquidation team of Luohu
Hotel, sealing up the debt right amounted RMB 23 million allocated to the Company.
The Company rejected the adjudication and applied for retrial to the Supreme Court of the P.R.C. In August 2005,
the Supreme Court issued the Civil Judgment (2004) MEJZ No.146-1 and adjudicated that the Higher Court
should give the case second instance and the execution should be suspended during the second instance. On 12
May 2006 the Higher Court made the judgment that the original judgment should be sustained and the execution
be resumed. The Hubei FTEC Shenzhen branch applied to the Railage Court for the payment and bank interest in
the second trial period, while the Company applied for the suspension of execution. On 30 June 2006, the (2004)
GTZFZZ No. 225-4 Civil Judgment was issued by the Railage Court in which (i) The Company’s execution
suspension application was denied because it lacked for facts and legal evidence; (ii) It was legal for the Hubei
FTEC Shenzhen branch to apply and the Railage Court decided to transfer RMB23 million from the sealed
account which had been transferred to the Railage court after deduction of execution fees to t the Hubei FTEC
Shenzhen branch; (iii) The Hubei FTEC Shenzhen branch’s application of interest during the second trial was
denied; (iv) The Company’s repayment obligation ruled by the Judgment No.90 had been legally executed; (v) the
execution of Judgment No.90 was terminated. The Company recognized losses based on the above judgments, and
increased the receivables due from Jiyong Company and made provision for bad debts accordingly. The Company
considered that there is error of fact recognition and application of the law in the adjudication of the second trial
and appealed to the Supreme People's Court. The Supreme People's Court issued the Civil Ruling Paper MEJZ
(2004) No. 146-3 and adjudicated that this litigation would be retried by the Supreme People's Court. Presently
the case has not been heard in the court.
Ownership of the 14th and 15th floors of Jiabing Building retuned by the Hubei FTEC Shenzhen branch belongs to
the Company after indemnity of house payment and interest. The Company investigated and found that the owner
of the 14th and 15th floors of Jiabing Building was registered as Zhuhai Western Yingzhu Industrial Development
Co., Ltd. addressing the ownership of the properties, therefore, on June, 2008 the Company sued Zhuhai
Western Yingzhu Industrial Development Co., Ltd. to the People’s Court of Luohuo District in Shenzhen
(hereinafter referred as “Luohu Court”) for confirmation of the above properties’ ownership and adjudicating the
Company’s ownership of the 14th and 15th floors of Jiabing Building in the registration. The Luohu Court
processed the case with the litigation number of (2008) SLFMSCZ No. 1442. On July 21, 2008, the court held a
public trail and hosted the mediation; the Company reached a Civil Mediation Agreement with Zhuhai Western
Yingzhu Industrial Development Co., Ltd. in which stated ① both agree that the 14th and 15th floor of Jiabin
building belongs to the complaint company; ② the defendant should assist the complaint party (the Company)
with the procedures of transferring the property to the complaint company within 3 days since the agreement97
becomes effective. The agreement is legally valid. Up to the end of current financial period, the 14th and 15th floor
of Jiabin building has been registered under the Company’s name by China Committee of Real Estate Title. As
there is a significant uncertainty about the impact of the above property ownership on the Company’s financial
interests, the Company did not recognize the above asset in the financial statement.
(2) On 25 May, 2006, the People's Government of Shenzhen Municipality announced the Notice on Transferable
Plan of Shenzhen Community Facilities and Public Services Houses (SFB [2006] No.79), which stipulated the
scope of the transfer covers (i) the buildings built for resident committees and junior and senior schools
(excluding that the land contract clearly indicates the property right belongs to land development entity), since the
scheme of payment-transfer of land use right has been executed on January 3, 1998, and (ii) public services
building such as kindergarten that should been but not transferred to the government according to the land contract
or other agreements, since the scheme of payment-transfer of land use right has been executed on January 3,
1998. If the buildings built for resident committees and junior and senior schools were not definite in the contracts
whether the property rights belonged to the government or whether these buildings were transferred government
at cost price, the government would take the buildings back at cost price. The cost price should be based on
information price and costing index publicized in the construction costing management station at the completion
year. The auditing department should perform review on the pricing scheme.
Based on the statistics, the Company and its subsidiaries have transferred to relate government department the
community facilities and public services houses of the building area of 36,000 square meters, which complied
with the above scheme, although the buildings in these community facilities has been mapped, its area and cost
price has not been confirmed by the government, and Shenzhen Huangcheng Real Estate co., Ltd. fails to handle
turning over procedure to relevant community facilities of hence, the final confirmation on the area and amount of
compensation could not be confirmed. Therefore, the Company did not recognize the above contingent assets in
the financial statements.
Note XIII Events after balance sheet date
On 11 Oct. 2009, the Company convened the 19th Meeting of the 6th Board of Directors, at which the Interim
Profit Distribution Preplan was examined and approved. Based on the accumulative retained profit of parent
company as at 30 Sep. 2009, appropriating 10% of such accumulative retained profit amounting to RMB
6,792,923.40 as statutory surplus reserve, thereafter, based on the rest profit available for distribution, the
Company shall distribute bonus share at the rate of 1 for 10 and cash dividends of RMB 0.112 for every 10 shares
(tax included), in total, RMB 60,248,068.26 shall be distributed. The said resolutions were only effective after the
approval of the Company’s Provisional Shareholders’ General Meeting.
Note XIV Other significant events
1. Shenzhen Investment Holdings Co., Ltd. (hereinafter referred to as “Shenzhen Investment Holdings”), via
Shenzhen Construction Investment Holdings Co., Ltd. (hereinafter referred to as “Construction Holdings”) and
Shenzhen Investment Management Corporation (hereinafter referred to as “Shenzhen Investment Management”),
holds 70.296% shares of the Company. On 9 Sept. and 18 Sept. 2009, the aforesaid three companies put forward98
the plan of share merger reform again, which was specified as follows:
The tradable A-share holders of the Company would receive the consideration of 3.9 shares from the non-tradable
B-share holders for every 10 tradable A-shares held by them, with the total consideration paid by non-tradable
share holders to tradable A-share holders standing at 35,642,607 shares. And the shares held by the Company’s
non-tradable share holders would become tradable on the first trading day after the implementation of the share
merger reform.
As the actual controller of the Company, Shenzhen Investment Holdings, together with Construction Holdings and
Shenzhen Investment Management made a common commitment to abide by relevant laws, regulations and rules
and to carry out the lawfully committed duties. They also made special commitments as follows:
① Non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen Construction Investment
Holdings and Shenzhen Investment Co., Ltd would not be traded or transferred within 36 months since they
acquired right of trade. After expiration of the aforesaid commitment, original non-tradable shares sold through
listing and trading on the Shenzhen Stock Exchange shall not exceed 5 percents of total shares of the Company
within 12 months, as well as not exceed 10 percents within 24 months. In case these companies acted against the
above commitment, income from sales of the shares will belong to the Company.
② Since non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen Construction Investment
Holdings and Shenzhen Investment Co., Ltd acquired right to trade within one year, Shenzhen Investment
Holdings Co., Ltd will start up capital injection to the Company, that is, Shenzhen Investment Holdings Co., Ltd
will inject legitimate capital no less than RMB 500 million including land resource in lump sum or in batches by
replace or other legitimate way, will increase land reserves of the Company and enhance profitability in the future.
In case the aforesaid capital failed to start completely within one year, Shenzhen Investment Holdings Co., Ltd
will compensated 20% of reorganization capital failing to start to the Company within 30 days when expiration of
1 year, and continued to implement the capital injection which had been started. As for the capital injection failing
to start, Shenzhen Investment Holdings Co., Ltd will not implement. Note: Startup of capital injection means
capital injection program has been reviewed and approved by the Shareholders’ General Meeting of the Company.
Shenzhen Investment Holdings Co., Ltd was willing to entrust China Securities Depository and Clearing
Corporation Limited Shenzhen Branch to freeze 30 million shares of the Company, which was under name of
Shenzhen Construction Investment Holdings and actually controlled by Shenzhen Investment Holdings Co., Ltd,
as guarantee for the above commitment.
③ Since non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen Construction Investment
Holdings and Shenzhen Investment Co., Ltd acquired right to trade within 24 months, Shenzhen Investment
Holdings Co., Ltd commit that they will support balance no less than RMB 500 million with method of entrust
loan in line with relevant provisions of laws and administrative statutes to release nervous capital of the Company.
The aforesaid balance means accumulative incurred amount within 24 months since the date when non-tradable
shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen Construction Investment Holdings and
Shenzhen Investment Co., Ltd acquired right to trade, and each entrust loan for support will not be less than 12
months; the above cash support of RMB 500 million excluded entrust loan offered before the date when
non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen Construction Investment Holdings
and Shenzhen Investment Co., Ltd acquired right to trade.
④ In case that net profit of the Company in any year of 2010, 2011 and 2012 was less than 2009, Shenzhen
Investment Holdings Co., Ltd will make up balance of net profit between the year and 2009 with cash.99
The Company would convene an A-share market-related shareholders’ meeting on 21 Oct. 2009 to conduct a
voting on the aforesaid share merger reform.
2. The company has accrued expense of the Jinlihua Plaza land VAT amounted to RMB 56,303,627.40 in the
previous financial year, according to the SGT (2001) No. 314, unpaid or overdue land VAT could be exempted.
However, as the land use right has not been transferred, the company will proceed with the Jinlihua Plaza land
VAT amounted to RMB 56,303,627.40 exemption related procedures, and will write off the accrued expense of
Jinlihua Plaza land VAT amounted to RMB 56,303,627.40 when the Company receives the reply.
The company has receivable house payment from Shenzhen Jiyong Property Development Co., Ltd Jinlinhua
Plaza amounted to RMB100.0143 million, the provision for bad debts is amounted to RMB 44.0143 million and
the net amount is RMB 56 million.
3. The Company received from CSRC Shenzhen Inspection Bureau the Investigation notice (SJLTZ (2008) No.
001) on September 10, 2008, to investigate the Company’s suspicion on the violation of Security Law and
Regulation. Up to the date of the report, The Company has not been informed with any result of the investigation.
4. According to the Labor Legislation, the Labor Contract Law, The Opinion on Further Standardization of Labor
Relation of the Municipal SOE, The Notice to Reform the Human Resource Allocation Improvement in Municipal
SOE which is issued on August 18, 2006, and some other related document, the Company formulated
Compensation Measures of Human Resource Allocation Improvement Reform of Shenzhen Properties &
Resources Development (Group) Ltd. (Thereafter referred to as Compensation Method), The Compensation
Method has approved by the Company’s employee representative conference on October 10, 2008. The Company
formulated employee dismiss plan based on the Compensation Method which was approved by the fourteenth
session of the sixth conference of the Company’s board of directors. The employees have all been notified and the
Company is not able and does not plan to unilaterally remove the plan. According to the plan, the Company made
a provision on dismisses compensation of RMB24, 474,290.00 according to relevant accounting standard in 2008.
Till reporting date, the balance of dismisses compensation is RMB 6,978,847.17 after deducting prepaid dismisses
compensation.
5. On January 14, 2009, a resolution regarding transferring the entire stakeholders’ equity of Hainan Xinda
Development Co., Ltd hold by the Company based on appraisal value through public listing was approved by the
tenth session of the sixth conference of the Company’s board of directors. Till the reporting day, the asset
appraisal is still in progress.
Note XV Supplementary information
1. According to “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares
No. 9. Calculation and disclosure of ROE and EPS (2007 revised)” issued by the CSRC, ROE and EPS are100
calculated as follows:
ROE EPS
Jan. – Sep. 2009 Fully
diluted
Weighted
average Basic EPS
Diluted
EPS
Net profit attributable to ordinary shareholders 21.93% 24.63% 0.30 0.30
Net profit attributable to ordinary shareholders after
deducting extraordinary gain or loss 21.91% 24.61% 0.30 0.30
ROE EPS
Jan. – Sep. 2008 Fully
diluted
Weighted
average Basic EPS
Diluted
EPS
Net profit attributable to ordinary shareholders -2.35% -2.29% -0.02 -0.02
Net profit attributable to ordinary shareholders after
deducting extraordinary gain or loss -6.19% -6.03% -0.06 -0.06
Calculation process:
Item Jan. – Sep. 2009 Jan. – Sep. 2008
Net profit attributable to ordinary shareholders 160,281,697.11 -12,794,987.83
Extraordinary gain or loss (Gain: negative) -152,345.34 -20,937,410.38
Net profit attributable to ordinary shareholders after deducting
extraordinary gain or loss
160,129,351.77 -33,732,398.21
Opening balance of net asset attributable to ordinary shareholders 570,615,365.41 565,896,202.38
Increase of capital surplus (negative: decrease) -4,946,544.56
Increase/(decrease) in foreign exchange difference arisen from the
translation of foreign currency financial statements -82,207.12 -2,850,982.74
Closing balance of net assets attributable to ordinary shareholders 730,814,855.40 545,303,687.25
Opening balance of paid-in capital 541,799,175.00 541,799,175.00
Closing balance of paid-in capital 541,799,175.00 541,799,175.00
Weighted average paid-in capital 541,799,175.00 541,799,175.00
2. Extraordinary gains and losses (negative: loss)
According to “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares No.
1: Extraordinary gains and losses (2008)” issued by the CSRC Notice (2008) No. 43, Extraordinary gains and
losses of the company of this reporting period are calculated as follows:
(Positive: gains, Negative: losses)
Items Jan. – Sep. 2009 Jan. – Sep. 2008
Gains and Losses on disposal of non-current assets, including provision for
asset impairment write-off -13,437.37 5,277,217.26101
Corporate restructuring cost, such as employee resettlement expense,
integration costs etc. -4,584,088.00 -3,129,537
A gain or loss arising from a change in the fair value of a financial asset or
financial liability and available-for-sale financial assets that is not part of a
hedging relationship related to ordinary operation of the Company 2,047,332.84 -2,464,127.16
Non-operational income and expense apart from the above items 2,065,538.76 21,124,748.30
Others items in accordance with extraordinary gains and losses 138,357.05
Sub-total -484,653.77 20,946,658.45
Exclude extraordinary gains and losses income tax influence 636,999.11 -9,248.07
Total 152,345.34 20,937,410.38
Note 1: “Gains and Losses on disposal of non-current assets, including provision for asset impairment reversal”
from Jan. to Sep. 2009 is loss on disposal of fixed assets.
Note 2. “Corporate restructuring cost, such as employee resettlement expense, integration costs etc.” is the
predicted employee redundancy compensation of the employee redundancy plan, the item is based on the
Document of State-owned Enterprise Reform of Shenzhen, and in accordance with the definition of Extraordinary
gains and losses: “trading and items that could influence the judgments on the business performance and
profitability of the company by the users of financial statement, due to its special nature and occasionality” from
The Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares No. 1 –
Extraordinary gains and losses (2008).
Note 3: “A gain or loss arising from a change in the fair value of a financial asset or financial liability and
available-for-sale financial assets that is not part of a hedging relationship related to ordinary operation of the
Company” is gains and losses from change in fair value of tradable financial assets and investment income from
disposal of trandable financial assets.
Legal representative: Senior accountant Chief financial officer:
Board of Directors
Shenzhen Properties & Resources Development (Group) Ltd
12 Oct. 2009
