SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.
ANNUAL REPORT 2009
11 February 20102
Section I. Important Notes and Contents
The Board of Directors, Supervisory Committee as well as directors, supervisors and
senior executives of Shenzhen Properties & Resources Development (Group) Ltd.
(hereinafter referred to as the Company) warrant that this report does not contain any false
or misleading statements or omit any material facts and hereby accept, individually and
collectively, responsibility for the truth, accuracy and completeness of the contents of this
report.
None of the directors, supervisors or senior executives has objection to the factuality,
accuracy or completeness of this Report.
All directors of the Company personally attended the Board Meeting.
Wuhan Zhonghuan Certified Public Accountants Ltd issued audit report with standard
unqualified opinion for the Company.
Mr. Chen Yugang, Chairman of the Board of the Company, Mr. Wang Hangjun, Person in
Charge of Accounting Work and Ms. Shen Xueying, Manager of Financial Management
Department, hereby confirm that the Financial Report enclosed in the Annual Report 2009
is true and complete.
This report has been prepared in Chinese version and English version respectively. In the
event of difference in interpretation between the two versions, the Chinese version shall
prevail.
Content
Section I Important Notes and Content…………………………………………………2
Section II Company Profile……………………………………………………………..2
Section III Summary of Accounting Highlights and Business Highlights...……………4
Section IV Changes in Share Capital and Particulars about Shareholders…………….. 7
Section V Directors, Supervisors and Senior Executives and Employee………….……15
Section VI Corporate Governance Structure……………………………………..……..20
Section VII Brief Introduction to the Shareholders’ General Meeting…………………29
Section VIII Report of the Board of Directors…………………………………………31
Section IX Report of the Supervisory Committee………………………………………51
Section X Significant Events……………………………………………………………54
Section XI Financial Report…………………………………………………………….
Section XII Documents Available for Reference……………………………………….
Section II. Company Profile
I. Legal Name of the Company3
In Chinese: 深圳市物业（发展）集团股份有限公司
Abbr. in Chinese: 物业集团
In English: Shenzhen Properties & Resources Development (Group) Ltd. (PRD)
II. Legal Representative: Chen Yugang
III. Secretary to the Board of Directors and Securities Affairs Representative:
Secretary to the Board of Directors Securities Affairs Representative
Name Fan Weiping Liu Gang
Contract Address 42nd Floor, International Trade Center,
Renmin South Road, Shenzhen
42nd Floor, International Trade Center,
Renmin South Road, Shenzhen
Tel 0755-82211020 0755-82213742
Fax 0755-82210610 0755-82210610
E-mail 000011touzizhe@163.com 000011touzizhe@163.com
IV. Registered Address and Office Address: 39th and 42nd Floor, International Trade
Center, Renmin South Road, Shenzhen
Post Code: 518014
Internet Website of the Company: www.szwuye.com.cn
V. Media Designated for Information Disclosure of the Company:
Securities Times for A-Share, Ta Kung Pao for B-Share
Internet Website Designated by CSRC for Publishing the Annual Report:
http://www.cninfo.com.cn
Place Where the Annual Report is Prepared and Placed: Office of Board of Directors,
on 42nd Floor, International Trade Center, Renmin South Road, Shenzhen
VI. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of Stock and Stock Code: Shen Wuye A (000011)
Shen Wuye B (200011)
VII. Registration data: Jan. 17, 1983
Address: Industrial and Commercial Administration Bureau of Shenzhen Municipal
Government
Registration Code of Enterprise Business License: 440301103570124
Registered number of taxation: 440301192174135
Organization code: 19217413-5
Name and address of engaged by the Company:
Domestic Accounting Frim: Wuhan Zhonghuan Certified Public Accountants Ltd.
Address: 16th - 18th Floor, Tower B, Wuhan International Mansion4
Section III. Summary of Accounting Highlights and
Business Highlights
I. Accounting data as of the year 2009
Unit: Yuan
Items Amount
Operating profit 130,921,541.68
Total profit 127,297,762.81
Net profit attributable to shareholders of the listed companies 96,933,951.02
Net profit attributable to shareholders of the listed companies after deducting
non-recurring gains and losses 109,832,961.93
Net cash flow arising from operating activities 759,650,626.69
Items of extraordinary gains and losses deducted and the relevant amount:
Unit: Yuan
Note 1: The item “Gains and losses on disposal of non-current assets, including provision
for asset impairment write-off” for year 2009 is the gains and losses from disposal of fixed
assets.
Note 2: “Corporate restructuring cost, such as employee resettlement expense, integration
costs etc.” of this accounting period is the employee redundancy compensation in
accordance with 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: Gains and losses on contingencies not relating to routine operation includes
accrued liabilities withdrawn in 2009, please refer to Note (V) 24 and (VII) 2 for details.
Items Amount
1. Gains and losses on disposal of non-current assets, including provision for
asset impairment write-off
58,710.32
2. Corporate restructuring cost, such as employee resettlement expense,
integration costs etc.
-12,700,956.90
3. Gains and losses on contingencies not relating to routine operation -8,031,974.39
4. A gains or losses arising from a change in the fair value of a financial asset or
financial liability and investment income from disposal of tradable financial
assets and liabilities as well as available-for-sale financial assets that is not part
of a hedging relationship related to ordinary operation of the Company
2,473,993.55
5. Other non-operating income and expense apart from the above items 4,346,485.20
Subtotal -13,853,742.22
6. Income tax influence excluding extraordinary gains and losses 954,731.31
Total -12,899,010.915
Note 4: A gains or losses arising from a change in the fair value of a tradable financial
asset or tradable financial liability and investment income from disposal of tradable
financial assets and liabilities as well as available-for-sale financial assets that is not part
of a hedging relationship related to ordinary operation of the Company includes gains and
losses arising from the change in fair value of the tradable financial assets and investment
income from disposal of tradable financial assets.
Note 5: Other non-operating income and expense apart from the above items is earnings
from fines and confiscation and payments that need not be paid.
Difference in PRC GAAP and IFRS
Unit: RMB Yuan
Item
Net profit attributable to owners of
parent company
（Jan.-Dec.2009）
Owner’s equity attributable to parent
company
（as at 31 Dec. 2009）
As per PRC GAAP 96,933,951.02 661,442,553.12
As per IFRS 96,933,951.02 661,442,553.12
Explanation for difference No difference
II. Major accounting data and financial indexes of the Company over the last three years
1. Main accounting data
Unit: RMB Yuan
2009 2008 Increase/decrease
year-on-year (％) 2007
Operating revenue 845,366,939.69 623,465,139.63 35.59 332,985,105.29
Total profit 127,297,762.81 29,940,463.73 325.17 -29,055,405.80
Net profit attributable to shareholders of the company 96,933,951.02 9,829,397.29 886.16 -27,377,663.77
Net profit attributable to shareholders of the company
after deducting non-recurring gains and losses 109,832,961.93 22,741,788.35 382.96 -88,533,913.11
Net cash flow arising from operating activities 759,650,626.69 -23,702,977.51 3304.87 -121,568,768.77
At the end of 2009 At the end of
2008
Increase/decrease
year-on-year (％)
At the end of
2007
Total assets 2,834,417,954.60 2,110,845,898.28 34.28 1,885,257,743.24
Owners’ equity (or shareholders’ equity) 661,442,553.12 570,615,365.41 15.92 565,896,202.38
2. Main financial indices
Unit: RMB Yuan
2009 2008 Increase/decrease
year-on-year (％) 2007
Basic earnings per share 0.1626 0.0165 885.45 -0.0459
Diluted earnings per share 0.1626 0.0165 885.45 -0.0459
Basis earnings per share after deducting non-recurring gains and losses 0.1843 0.0382 382.46 -0.1486
Fully diluted return on net assets 14.65% 1.72% 12.93 -4.84%
Weighted average return on net assets 15.67% 1.72% 13.95 -4.75%
Fully diluted return on net assets after deducting non-recurring gains
and losses 16.61% 3.99% 12.62 -15.64%
Weighted average return on net assets after deducting non-recurring
gains and losses 17.76% 3.98% 13.78 -15.35%6
Net cash flow per share arising from operating activities 1.2746 -0.0398 3302.51 -0.2040
At the end
of 2009
At the end
of 2008
Increase/decrease
year-on-year (％)
At the end
of 2007
Net assets per share attributable to shareholders of the company 1.1098 0.9574 15.92 0.94957
Section IV. Changes in Share Capital and Particulars about
Shareholders
I. Changes in share capital of the Company in 2009
1. Changes in shares
Unit: Share
Before the change Increase/decrease for this accounting period (+, - ) After the change
Amount Proportion
Issuance
of new
shares
Bonus
shares
Capitalizati
on of public
reserve fund
Other Subtotal Amount Proportion
I. Shares subject to trading
moratorium 388,948,563 71.79% 388,636,551 65.21%
1. Shares held by the State
2. Share held by state-owned
corporation
383,378,412
70.76% 34,773,580 -35,642,607 382,509,385 64.18%
3. Shares held by other
domestic investors
5,570,151
1.03% 557,015 6,127,166 1.03%
Among which: Shares held
by domestic non-state-owned
corporation
5,570,151 1.03% 509,015 -480,000 5,599,166 0.94%
Shares held by domestic
natural persons 0 48,000 480,000 528,000 0.09%
4. Shares held by foreign
investors
Among which: Shares held
by foreign corporation
Shares held by foreign
natural persons
II. Shares not subject to
trading moratorium 152,850,612 28.21% 54,491,929 207,342,541 34.79%
1. RMB ordinary shares
91,391,199 16.87% 48,345,945 139,737,144 23.44%
2. Domestically listed
foreign shares 61,454,412 11.34% 6,145,441 67,599,853 11.34%
3. Overseas listed foreign
shares
4. Others 5,001 0.001% 543 5,544 0.01%
III. Total shares 541,799,175 595,979,092
Note: Details for change in share capital of the Company:
(I) Explanation on change in “Increase/decrease for this accounting period” under “I.
Shares subject to trading moratorium”:
① The reasons why share held by state-owned corporation decreased by 869,027 shares
are as follows:
a. due to implementation of the share merger reform, the state-owned corporations paid
35,642,607 bonus shares to shareholders of tradable A shares;8
b. during the reporting period, the state-owned corporations got 34,773,580 shares from
the interim equity distribution 2009.
② The reasons why shares held by domestic non-state-owned corporation increased by
29,015 shares are as follows:
a. Shanghai Zhizhen Investment Consulting Corporation, an original corporation
shareholder, held 480,000 non-tradable shares of the Company, due to disqualification of
corporation, non-transaction of its shares were transferred to Geng Qunying, a natural
person
b. during the reporting period, the domestic non-state-owned corporation got 509,015
shares from the interim equity distribution 2009.
③ The reasons are as follows why shares held by domestic natural persons increased by
528,000 shares:
a. Shanghai Zhizhen Investment Consulting Corporation, an original corporation
shareholder, held 480,000 non-tradable shares of the Company, due to disqualification of
corporation, non-transaction of its shares were transferred to Geng Qunying, a natural
person;
b. during the reporting period, the said 480,000 shares got 48,000 shares from the interim
equity distribution 2009.
(II) Explanation on change in “Increase/decrease for this accounting period” under “II.
Shares not subject to trading moratorium”:
① The reasons why RMB ordinary shares increased by 48,345,945 shares are as follows:
a. due to implementation of the share merger reform, 35,642,568 bonus shares were
obtained from shareholders of non-tradable shares;
b. during the reporting period, 12,703,377 shares were gotten from the interim equity
distribution 2009.
② The reasons why domestically listed foreign shares increased by 6,145,441 shares are
as follows:
During the reporting period, 6,145,441 shares were gotten from the interim equity
distribution 2009.
③ The reasons why item “Other” increased by 543 shares are as follows:
a. A shares subject to trading moratorium held by Supervisor Guo Lusi increased by 53
shares, of which 39 shares is from shareholders of non-tradable shares due to the share
merger reform, and 14 shares is from the interim equity distribution 2009.
b. B shares subject to trading moratorium held by Supervisor Guo Lusi increased by 490
shares, which is from the interim equity distribution 2009.
For details, please refer to the statement of change in shares subject to trading moratorium.
Statement of Change in Shares Subject to Trading Moratorium
Name of
Shareholder
Shares subject
to trading
moratorium at
the year-begin
Shares released
from trading
moratorium in
this year
Increase of shares
subject to trading
moratorium
subscription in this year
Shares subject
to trading
moratorium at
the year-end
Reason Date of
releasing9
Shenzhen
Construction
Investment
Holdings
Corporation
324,233,612 30,453,310 29,378,030 323,158,332 Restriction sale 4 Nov. 2012
Shenzhen
Investment
Management
Corporation
56,628,000 5,189,297 5,143,870 56,582,573 Restriction sale 4 Nov. 2012
Other
shareholder of
non-tradable
shares
8,086,951 0 808,695 8,895,646 Restriction sale 4 Nov. 2012
Guo Lusi A-share: 101
B-share: 4900 0 A-share: 53
B-share: 490
A-share: 154
B-share: 5390
Shares held by
supervisor
Total 388,953,564 35,642,607 35,331,138 388,642,095
Notes: Details for change in shares subject to trading moratorium as below:
① In 2009, shares released from restriction sale by Shenzhen Construction Investment
Holdings Corporation are 30,453,310 shares, which was because it paid 29,712,235 bonus
shares to tradable shareholders due to implementation of share merger reform, in addition,
it paid 741,075 shares in advance in stead of other non-tradable shareholders.
② In 2009, shares subject to trading moratorium held by Shenzhen Construction
Investment Holdings Corporation increased by 29,378,030 shares, as result of it obtaining
29,378,030 shares from the interim equity distribution 2009.
③ Shenzhen Investment Holding Corporation, the actual controller of the Company,
voluntarily entrusted China Securities Depository and Clearing Corporation Limited
Shenzhen Branch to froze 30 million shares of Shen Wuye under the name of Shenzhen
Construction Investment Holdings Corporation, which are controlled by Shenzhen
Investment Holding Corporation actually.
④ In 2009, shares released from restriction sale by Shenzhen Investment Management
Corporation are 5,189,297 shares, which was because it gave 5,189,297 bonus shares to
tradable shareholders due to implementation of share merger reform.
⑤ In 2009, shares subject to trading moratorium held by Shenzhen Investment
Management Corporation increased by 5,143,870 shares, as result of this company getting
5,143,870 shares from the interim equity distribution 2009.
⑥ Other non-tradable shareholders should repay the shares paid by Shenzhen
Construction Investment Holdings Corporation in advance, apart from this, they also
refund shares and cash earnings distributed on equity obtained due to advancement to
Shenzhen Construction Investment Holdings Corporation after obtaining written consent
from Shenzhen Investment Holdings Corporation.
⑦ In 2009, A shares subject to trading moratorium held by Supervisor Guo Lusi
increased by 53 shares, as result of he getting 39 shares from non-tradable shareholders10
due to the share merger reform and 14 shares from the interim equity distribution 2009.
⑧ In 2009, B shares subject to trading moratorium held by Supervisor Guo Lusi
increased by 490 shares, as result of he getting 490 shares from the interim equity
distribution 2009.
2. Issuance and listing of shares
① During the reporting period, the Company made the share merger reform. On 3 Nov.
2009, the share merger reform has been implemented, the non-tradable shareholders paid
35,642,607 shares to the tradable shareholders in total.
② During the reporting period, the Company performed the bonus shares to all
shareholder with retained profits at the rate of 1 share for every 10 shares, and 54,179,917
bonus shares were distributed in total.
③ Over the previous three years as at end of the report period, the Company failed to
issue shares on sale, separate-transaction convertible bond, corporate bonds and other
derivative securities.
Based upon the above-mentioned reasons, the Company’s share structure changed. For the
detailed change, please refer to the statement of change in shares.
II. About shareholders
1. Number of shareholders and shares held by shareholders
In accordance with the name list for registration provided by China Securities Depository
& Clearing Corporation Limited Shenzhen Branch to the Company, shares held by the top
ten shareholders and the top ten shareholders not subject to trading moratorium as at 31
Dec. 2009 are as below:
Unit: Share
Total number of shareholders By the end of the report period, the Company has 55,615 shareholders
in total, including 45,927 ones of A-share, 9,688 ones of B-share
Particulars about shares held by the top ten shareholders
Full name of Shareholder
Type of
shareholders
Proportion
(%)
Total number
of shares held
Number of
shares subject
to trading
moratorium
Share
pledged or
frozen
SHENZHEN CONSTRUCTION
INVESTMENT HOLDINGS CORPORATION
State-owned
corporation 54.22 323,158,332 323,158,332 30,000,000
SHENZHEN INVESTMENT MANAGEMENT
CORPORATION
State-owned
corporation 9.50 56,582,573 56,582,573 0
ZENG YING Domestic nature
person 0.97 5,766,974 0 0
WANG ZHI HAI Domestic nature
person 0.54 3,195,151 0 0
LABOR UNION OF SHENZHEN
INTERNATIONAL TRADE PROPERTY
MANAGERMENT COMPANY
State-owned
corporation 0.46 2,768,480 2,768,480 0
SHENZHEN SPECIAL ZONE DUTY-FREE
COMMODITY CO.
State-owned
corporation 0.29 1,730,300 1,730,300 0
Shenzhen Jinniuhong Trading Co., Ltd. 0.29 1,724,559 0 0
SHEN LING Domestic nature
person 0.27 1,600,000 0 011
SHANGHAI ZHAODA INVESTMENT
CONSULTANT CO., LTD. 0.19 1,111,000 1,111,000 0
CHINA EAGLE SECURITIES CO., LTD. 0.15 865，150 865,150 0
Explanation on associated relationship among
the above shareholders or consistent action
The first and second principal shareholders of the Company are managed by
Shenzhen Investment Holding Corporation, the actual controlling shareholder of the
Company. The fifth shareholder is labor union of wholly-owned subsidiary
company indirectly controlled by the Company. Except for these, the Company is
not aware of whether there exists associated relationship or consistent action among
the top ten shareholders holding trade shares or not.
Shares held by the top ten shareholder not subject to trading moratorium
Name of shareholders Numbers of shares not subject to
trading moratorium
Type of share
ZENG YING 5,766,974 Domestically listed foreign shares
WANG ZHI HAI 3,195,151 RMB ordinary shares
Shenzhen Jinniuhong Trading Co., Ltd. 1,724,559 RMB ordinary shares
SHEN LING 1,600,000 RMB ordinary shares
LI HONG MAO 666,820 RMB ordinary shares
LIU YUN DE 567,310 RMB ordinary shares
YUE ZHI YU 566,500 RMB ordinary shares
SUN HUNG KAI INVESTMENT SERVICES
LTD-CUSTOMERS A/C 560,000 Domestically listed foreign shares
HAO SA 500,000 RMB ordinary shares
CHEN CHU JIA 433,620 Domestically listed foreign shares
Explanation on associated relationship among the above
shareholders or consistent action
The Company is not aware of whether there exists associated relationship
or consistent action among the top ten shareholders not subject to trading
moratorium or not.
Note: In accordance with the commitment made in the share merger reform, Shenzhen
Investment Holding Corporation, the actual controller of the Company, voluntarily
entrusted China Securities Depository and Clearing Corporation Limited Shenzhen
Branch to froze 30 million shares of Shen Wuye under the name of Shenzhen
Construction Investment Holdings Corporation, which are controlled by Shenzhen
Investment Holding Corporation actually.
2. Number of shares held by the top ten shareholder holding shares subject to trading
moratorium and conditions
No. Name of shareholders
Number of
shares subject to
trading
moratorium
Date that
shares can be
listed
Number of
additional
marketable
shares
Trading moratorium
4 Nov. 2012 29,798,954
1 4 Nov. 2013 29,798,954
SHENZHEN
CONSTRUCTION
INVESTMENT HOLDINGS
CORPORATION
323,158,332
(including
741,075 shares
paid in advance) 4 Nov. 2014 Residual shares
4 Nov. 2012 29,798,954
2
SHENZHEN INVESTMENT
MANAGEMENT
CORPORATION
56,582,573
4 Nov. 2013 Residual shares
1. Original non-tradable
shares held by Shenzhen
construction Investment
Holdings Corporation and
Shenzhen Investment
Management Corporation
would not be traded or
transferred within 36
months since the date when
the share merger reform
plan is implemented.
2. After the expiration of
the aforesaid commitment,
the proportion in total
shares capital of Shen
Wuye taken up by the12
original non-tradable shares
could be sold through
listing and trading in
Shenzhen Stock exchange
would not exceed 5 percent
within 12 months, as well
as not exceed 10 percent
within 24 months.
3
LABOR UNION OF
SHENZHEN
INTERNATIONAL TRADE
PROPERTY
MANAGERMENT
COMPANY
2,768,480 4 Nov. 2010 2,768,480
4
SHENZHEN SPECIAL
ZONE DUTY-FREE
COMMODITY CO. 1,730,300 4 Nov. 2010 1,730,300
5
SHANGHAI ZHAODA
INVESTMENT
CONSULTANT CO., LTD.
1,111,000 4 Nov. 2010 1,111,000
6
CHINA EAGLE
SECURITIES CO., LTD. 865,150 4 Nov. 2010 865,150
7
SHANGHAI KUNLING
INDUSTRY & TRADE
CO.,LTD
692,120 4 Nov. 2010 692,120
8 GENG QUN YING (Note 1)
528,000 4 Nov. 2010 528,000
9
CHINA SHENZHEN
INTERNATIONAL
COOPERATION(GROUP)
CO.,LTD.
441,400 4 Nov. 2010 441,400
10
SHENZHEN TONGSHENG
INDUSTRIAL CO., LTD. 268,057 4 Nov. 2010 268,057
Original non-tradable
shares held by such eight
shareholders would not be
traded or transferred within
12 months since the date
when the share merger
reform plan is implemented.
The shares held by the
non-tradable shareholders
would not be listed for
trading for failing to
perform consideration
3. About the controlling shareholder and actual controller of the Company
(1) By the end of reporting period, the controlling shareholder of the Company is still
Shenzhen Construction Investment Holdings Corporation (“the holding company”) in
register book. In 2004, Shenzhen Municipal Government incorporated Shenzhen
Construction Investment Holdings Corporation with the other two municipal assets
operation and management companies, namely Shenzhen Investment Management
Corporation and Shenzhen Trade and Business Holdings Corporation to establish
Shenzhen Investment Holdings Co., Ltd.. Therefore, 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 with the registered capital of RMB 4
billion and Mr. Chen Hongbo as its legal representative. Main business scope: providing
guarantee to municipal state-owned enterprises, management of state-owned equity, assets
reorganization and reformation of enterprises, assets operation and equity investment and
etc.. As a government department, State-owned Assets Supervision and Administration
Commission of Shenzhen implemented management for Shenzhen Investment Holdings
Co., Ltd. on behalf of Shenzhen municipal government. Thus, the final controller of the
Company is State-owned Assets Supervision and Administration Commission of Shenzhen
with locating at Investment Bldg., Shen Nan Av., Futian District, Shenzhen and postcode13
of “518026”.14
(2) Change in the controlling shareholder and actual controller
During the reporting period, the controlling shareholder and actual controller remained
unchanged.
(3) The controlling relationship between the Company and the actual controller is as
below:
The second principal shareholder of the Company is Shenzhen Investment Management
Corporation (holding 10.45% equity of the Company), who was established in Feb. 1988
with the registered capital of RMB 2 billion, as well as Mr. Li Heihu as its legal
representative. It is an assets operation management company owned by the whole people.
In accordance with the document of SGZW [2004] No. 223 “Decision on Establishing
Shenzhen Investment Holdings Co., Ltd.”, in 2004, Shenzhen Investment Management
Corporation incorporated with Shenzhen Construction Investment Holdings Corporation
and Shenzhen Trade and Business Holdings Corporation. The corporate shares of the
Company held by the aforesaid three companies were managed by new company after
incorporation — Shenzhen Investment Holdings Co., Ltd.
(4) About other shareholders holding over 10% (including 10%) shares of the Company
During the reporting period, the Company has no other corporation shareholders holding
over 10% (including 10%) shares of the Company.
State-owned Assets Supervision and
Administration Commission of Shenzhen 100%
Shenzhen Investment Holdings Co., Ltd. 63.72%
The Company15
Section V. Directors, Supervisors and Senior Executives and Employee
I. About directors, supervisors and senior executives
1. Basic information
Name Office title Sex Age Office term
Holding
shares at the
year-begin
Holding
shares at the
year-end
+/-
Reasons
of
change
Chen Yugang Chairman of the Board Male 52 Dec. 2007-Dec. 2010 0 0 0
Wei Zhi Director, General Manger Male 52 Dec. 2007-Dec. 2010 0 0 0
Liu Guangxin Director, Chairman of Labor
Union Male 51 Dec. 2007-Dec. 2010 0 0 0
Wang Peng Director Male 41 Dec. 2007-Dec. 2010 0 0 0
Wen Li Director Female 40 Dec. 2007-Dec. 2010 0 0 0
Guo Liwei Director Male 37 Dec. 2007-Dec. 2010 0 0 0
Li Xiaofan Independent Director Male 57 Dec. 2007-Dec. 2010 0 0 0
Zha Zhenxiang Independent Director Male 54 Dec. 2007-Dec. 2010 0 0 0
Dong Zhiguang Independent Director Male 53 Dec. 2007-Dec. 2010 0 0 0
Cao Ziyang Chairman of the Supervisory
Committee Male 59 Dec. 2007-Dec. 2010 0 0 0
Wang Qiuping
Supervisor, Deputy Manger
of Development
Management Dept.
Female 40 Dec. 2007-Dec. 2010 0 0 0
Guo Lusi Supervisor Female 46 Dec. 2007-Dec. 2010 101 A shares
4900 B shares
154 A shares
5390 B shares 0
Zhang Gejian Supervisor, Deputy Manager
of Auditing Dept. Male 34 Dec. 2007-Dec. 2010 0 0 0
Wang Xiuyan Supervisor Female 47 Sep. 2008-Dec. 2010 0 0 0
Wang Hangjun Deputy General Manager Male 43 Dec. 2007-Dec. 2010 0 0 0
Liu Yinghua Deputy General Manager Male 49 Dec. 2007-Dec. 2010 0 0 0
Li Zipeng Deputy General Manager Male 43 Dec. 2007-Dec. 2010 0 0 0
Fan Weiping Secretary to the Board of
Directors Male 45 Jan. 2009-Dec. 2010 0 0 0
2. Work experience of current directors, supervisors and senior executives in the last
five years and post or concurrent posts in other companies excluding shareholder
companies
Members of the Board of Directors:
Mr. Chen Yugang, was born in September 1957, Postgraduate degree, is senior Political
Worker. He gains rich experience in government administrative management and
enterprise management over 20 years. He held some important posts in many municipal
departments. He served as GM and Secretary of the CPC in Shenzhen Shenhua Group
Company. Also, he served as GM and Vice Secretary of the CPC in Shenzhen Xianke
Enterprise Group, and Deputy General Manager of Shenzhen Investment Holdings Co.,
Ltd.. From May 2006, he has served as Secretary of CPC in the Company. And in June
2006, he was elected as Chairman of the Board of the Company. Now he acts as Secretary
of CPC and Chairman of the Board in the Company.
Mr. Wei Zhi, was born in November 1957, Bachelor Degree, holds the title of
interpretation. He gains rich experience in enterprise management over 20 years. He ever
worked in Shenzhen International Engineering Co., Ltd. as Deputy Manager of Overseas
Department, in Shenzhen Zhongshen Overseas Development Company as Manage of
Labor Affairs Department and Deputy General Manager, in China Shenzhen International
Cooperation (Group) Co., Ltd. Hong Kong Liyuan Company as Director and General
Manager, in Shenzhen Construction Investment Holdings Corporation as Deputy Manager
of Overseas Department, in Shenzhen Construction Investment Holdings Corporation as16
Deputy Manager of Contract Department, in Shenzhen Tonge (Group) Co., Ltd as
Assistant General Manager and Deputy General Manager, in Tonge Real Estates
Development Company as Chairman of the Board and General Manager. Since October
2007, he took the posts of the Vice Secretary of CPC and Standing Deputy General
Manager in the Company. Since 20 Dec. 2007, he held the posts of Director of the
Company. Since 15 Jul. 2008 to present, he acts as Vice Secretary of CPC, Director and
General Manger of the Company.
Mr. Liu Guangxin, was born in May 1958, Diploma, is an Economist. He gains
experience in enterprise management over 10 years. Since May 1989, he held a job in the
Company as Director of the Office in Properties Engineering Development Company,
General Manager of International Trade Industrial Development Company, General
Manager of International Trade Food Company, Deputy Director and Director of the GM
Office of the Company, as well as Manager of Operation and Management Department of
the Company. Since October 2007, he took the posts of Vice Secretary of CPC and
Secretary of Discipline Inspection Committee in the Company. Since November 2007, he
was appointed as Chairman of the Labor Union of the Company. Now he acts as Vice
Secretary of CPC, Director, Secretary of Discipline Inspection Committee as well as
Chairman of Labor Union in the Company.
Mr. Wang Peng, was born in 1969, holds master degree. He once held posts in Shenzhen
Construction Investment Holdings Corporation as Economist of Investment Department
and Manager Assistant of Assets Operation Department. Also, he served as Deputy GM of
Enterprise Reform Department in Shenzhen Investment Holdings Co., Ltd.. From Oct.
2004, he has taken a job in Shenzhen Investment Holdings Co., Ltd. as Deputy
Department Director of Property Right Management Department as well as Deputy
Director of BOD Office. Now, he holds posts as Vice Secretary of the Second Enterprise
Department in Shenzhen Investment Holdings Co., Ltd. and Director of the Company.
Ms. Wen Li, born in December 1969, Postgraduate Degree, Master Degree, is an
Economist as well as Engineer. She gains experience in enterprise management over 10
years. She ever worked in Shenzhen Fantasia Investment Development as Assistant of
Standing Deputy General Manger, Manager of Project Department, as well as Manager of
Market Planning Department. Now she acts as Deputy Department Director of Investment
Department of Shenzhen Investment Holdings Co., Ltd., Director of Shenzhen Special
Economic Zone Real Estate & Properties (Group) Co., Ltd., as well as Director of the
Company.
Mr. Guo Liwei, was born in 1973, Postgraduate Degree, is a master of Law. He once
successively held the posts in General Department of Ping An Insurance (Group)
Company of China as legal consultant, and Shenzhen Investment Management
Corporation as Business Manager of Legal Affairs Department. Since October 2004, he
worked in Shenzhen Investment Holdings Co., Ltd as Deputy GM of Legal Affairs
Department. He now acts as Manager of the First Enterprise Management in Shenzhen
Investment Holdings Co., Ltd. and Director of the Company.
Members of Independent Directors:
Mr. Li Xiaofan, was born in 1953, holder of Master-degree of economics with register
management consultant and research scholar. He once successively held posts in
Economic Research Institute of the Gansu Provincial Academy of Social Sciences as Vice17
Director, in Shenzhen System Restructuring Office as Chief Division, as well as Chief
Division of Market System Office; and Director of Investment Promotion Liaison Office
of Shenzhen Municipal Government in European office, inspector of Original Foreign
Economic & Trade Bureau of Shenzhen. From 2006 to now, he has held posts in
Shenzhen Urban Development Research Center as a research scholar; in China Productive
Power Commission as Administrative Syndic and Vice Secretary-general. Now he is the
Independent Director of the Company.
Mr. Zha Zhenxiang, was born in November 1955, Doctor Degree, holds title of Professor,
and enjoys special allowance from Government of the State Council. Mr. Zha has
profound theoretical basis in business management. He ever held the posts of Vice Dean
in College of Economics and Management of China Agricultural University, Director of
Development and Research Center of China Bao’an Group Co., Ltd., Chief Economist of
Nanhai Nengxing Development Group Co., Ltd.. Now he took the posts of Dean in
College of Economics and Management of Shenzhen Polytechnic and concurrently
Director of Social Development Research Center, as well as Independent Director of the
Company.
Mr. Dong Zhiguang, was born in February 1957, Bachelor Degree, is an Senior
Accountant aw well as CPA. He gains experience in enterprise management over 20 years.
He ever took the posts of Deputy Division Chief and Division Chief of China
Construction Bank Heilongjiang Branch, General Manager of Planning & Financial
Department, Chief Accountant and Director in Southern Securities Co., Ltd., and
President of China Antai Group Co., Ltd.. Now he acts as Chairman of the Board in
Shenzhen Osgate Trading Co., Ltd., Independent Director of Zhongti Industrial Group Co.,
Ltd. and of the Company.
Members of the Supervisory Committee:
Mr. Cao Ziyang, was born in Mar. 1951, Diploma, is a Senior Political Worker. He gains
experience in enterprise management over 30 years. He’s experienced in serving in the
army. He once acted as clerk of Publicity Section of Politics Ministry in Shenzhen Special
Economic Zone, Section Chief of Organization Section and Secretary of Youth League
Committee in Shenzhen Construction Group Co., Ltd, Department Director of HR
Department, Secretary of CPC and Chairman of Labor Union in Shenzhen Eastern
Development Group Corporation, as well as Director of CPC Office in Shenzhen
Construction Investment Holding Corporation. He was transferred to the Company in Apr.
1998 and ever took the posts of Director and Deputy General Manager of the Company.
He now acts as Chairman of the Supervisory Committee of the Company.
Ms. Wang Qiuping, was born in January 1970, Bachelor Degree, is a Senior Economist.
She worked in the Company since from 1992, and was engaged in integrated operation
management and planning management in GM Office, Planning and Financial Department
and Operation Management Department. Now she was appointed as Supervisor of the
Company and Deputy Manager of Development Management Department.
Ms. Guo Lusi, was born in August 1963, Bachelor Degree, is a Senior Political Worker.
She worked in the Company since 1988, and once served as positions in business
department and discipline inspection office of sub-companies and of group company, and
CPC Office of the Company since 2000. She successively held the posts of Secretary of
Youth League Committee and was concurrently commissary of the First Party general
branch of Government Office. She now acts as Chairman of Labor Union in Shenzhen
Huangcheng Properties Co., Ltd and Supervisor of the Company.18
Mr. Zhang Gejian, was born in September 1975, Bachelor Degree, is an Accountant as
well as Auditor. He was engaged in internal auditing work in Audit Department of the
Company since July 1997. Now he acts as Supervisor of the Company and concurrently
Deputy Manager of Audit Department.
Ms. Wang Xiuyan, was born in Aug. 1962, MBA degree, is an accountant. From May
1997 to Sep. 2004, she worked in Shenzhen Investment Management Corporation, once
acres as secretary of the Supervisory Committee Office, Business Manager of Audit
Department, Director of Women’s Labor Union, Senior Business Manager of Audit
Department and Supervision Department; from Oct. 2004 to Dec. 2007, she acted as
manager of Supervision and Inspection Department in Shenzhen Investment Holding Co.,
Ltd.; from Dec. 2007 to present, she is manager of Audit Department (the Supervisory
Committee Office) in Shenzhen Investment Holding Co., Ltd., now she is supervisor of
the Company.
Senior executives:
Mr. Wang Hangjun, was born in Nov. 1966, Postgraduate Students from Zhongnan
University of Economics and Law, is a Master of Economics and Senior Auditor. He gains
experience in enterprise management over 20 years. He ever took the posts of Deputy
Section Chief of Audit Bureau of Nanshan District, Shenzhen, Deputy Department
Director and Department Director of Audit Department in Shenzhen Investment
Management Corporation; Deputy Department Director and Department Director of
Supervision Department in Shenzhen Investment Management Corporation; as well as
Department Director of Audit Supervision Department in Shenzhen Investment Holdings
Co., Ltd. From October 2007, he is working as Deputy General Manager of the Company.
Mr. Liu Yinhua, was born in May 1960, Doctor Degree of Tongji University, is a Senior
Engineer. He has experience over 20 years in technology and administration in the field of
construction. He was transferred to the Company in Sep. 1996 and took the posts of
Deputy Head of Engineering Dept., General Manager of Property Management Company
and Vice-Chief Engineer, as well as Chief Engineer of the Company early and late. From
October 2007, he was appointed as Deputy General Manager of the Company.
Mr. Li Zipeng, was born in May 1966, Bachelor Degree from Civil Department of
Huzhong University of Science and Technology. He successfully held the posts of Section
Chief of Engineering, Field Manager of Real Estate Project, Principal of Housing Sale
Department, Assistant General Manager, Deputy General Manager as well as General
Manager in Shenzhen Huangcheng Properties Co., Ltd. (shareholding subsidiary company
of the Company). From October 2007, he was appointed as Deputy General Manager of
the Company and concurrently General Manger of Shenzhen Huangcheng Properties Co.,
Ltd, shareholding subsidiary company of the Company.
Mr. Fan Weiping, was born in Apr. 1965, graduated from Southwest University of
Political Science & Law and holder of postgraduate degree. He worked in Shenzhen
Shenhua Group Company in 2003, successively acted as section chief of Law section of
Supervisory and Audit Department; Vice Secretary and Secretary of Law Department;
Assistant to General Manager; Chief Legal adviser; from Jan. 2009 to present, he acts as
Secretary to the Board of Directors in the Company.
3. Particulars about annual remuneration of the Company’s directors, supervisors and
senior executives
Remuneration drawn by the Company’s directors, supervisors and senior executives for
the year 2009 are as follows (tax included):
No. Name Office title Annual Remark19
remuneration
(RMB’0000)
1 Chen Yu Gang Chairman of the Board 71.85
2 Wei Zhi Director, General Manger 71.89
3 Liu Guangxin Director, Chairman of Labor
Union 59.12
4 Wang Peng Director 0
Drawing salary from controlling
shareholder
5 Guo Liwei Director 0
Drawing salary from controlling
shareholder
6 Wen Li Director 0
Drawing salary from controlling
shareholder
7 Li Xiaofan Independent Director 8 Allowance for independent director
8 Zha Zhenxiang Independent Director 8 Allowance for independent director
9 Dong Zhiguang Independent Director 8 Allowance for independent director
10 Cao Ziyang Chairman of the
Supervisory Committee 71.7
11 Wang Qiuping
Supervisor, Deputy Manger
of Development
Management Dept.
34.74
12 Guo Lusi Supervisor 29.33
13 Zhang Gejian Supervisor, Deputy
Manager of Auditing Dept. 34.73
14 Wang Xiuyan Supervisor 0
Drawing salary from controlling
shareholder
15 Wang Hangjun Deputy General Manger 59.37
16 Liu Yinghua Deputy General Manger 59.25
17 Li Zipeng Deputy General Manger 59.17
18 Fan Weiping Secretary to the Board 26.14 Taking his post in Jan. 2009
Total 601.29
4. Changes in directors, supervisors and senior executives in the reporting period and
reason for change
At the 10th Session of the 6th Board of Directors held by the Company on 14 Jan. 2009, Mr.
Fan Weiping was engaged as the Secretary to the Board of the Company. For details,
please refer to the provisional public notice disclosed on Securities Time and Ta Kung Pao,
as well as website http://www.cninfo.com.cn respectively on 15 Jan. 2009.
II. About employees
The Company has totally 2679 employees in office at present, including 1787 production
personnel, 107 salespersons, 532 technicians, 94 financial personnel and 181
administrative personnel. 1147 persons graduated from technical secondary school and
college or above. Presently, the Company needs to bear the expenses of 175 retirees.20
Section VI Corporate Governance Structure
I. Actual status of corporate governance
During the reporting period, in accordance with the requirement of the Company Law,
Securities Law, Code of Corporate Governance for Listed Companies in China and Stock
Listing Rules of Shenzhen Stock Exchange as well as relevant laws and statutes of CSRC,
and on the basis of accomplishing the special campaign for corporate governance of listed
companies, such campaign was also pushed ahead further, that is, the Company
continuously regulated and perfected corporate governance structure, established and
perfected internal management and control system and investigated in depth normative
operation of the Company, which made the corporate governance system of the Company
more perfect and promoted the Company’s decision-making and management level.
During the reporting period, the Company formulated and approved Election System for
CPA Firm, Management System for Information Insider and Working System for Law
Adviser, amended Cash Dividends System in the Articles of Association of the Company,
and worked out Accountability System for Major Errors in Information Disclosure of
Annual Report, which had been submitted to the 22nd meeting of the 6th Board of Directors
for examination, so as to further perfect the internal control system of the Company.
As at the end of reporting period, the actual status of corporate governance was basically
consistent with the provisions and requirements of normative documents such as Code of
Corporate Governance for Listed Companies in China, the corporate governance structure
is perfect, as well as the normative company operation.
1. Shareholders and the Shareholders’ General Meeting
Convening, holding and resolution procedure of the Shareholders’ General Meeting are in
line with the regulations stipulated in the Rules for Shareholders’ General Meeting of
Listed Companies, Articles of Association, and Rules of Procedure for Shareholders’
General Meeting of the Company. Shareholders’ Genera Meeting was presided by
Chairman of the Board, and invited lawyers to witness on the spot. The Company equally
treated all shareholders, no matter minority shareholders or principal shareholders, and
ensured all the shareholders especially minority shareholders to exercise the power of
right to know and right to participate fully through various means. Meanwhile, associated
shareholders avoided voting for related transactions for the purpose of ensuring that
decision-making procedure of the related transactions are legal and are conducted openly,
honestly and fairly. There was no controlling shareholder who done harm to interests of
the Company and of minority shareholders.
2. Directors and the Board of Directors
Member and composition of the Board of Directors are in line with laws and statutes as
well as requirement of Articles of Association, and all the directors of the Company are
qualified. The Company drew up the Rules of Procedure for the Board of Directors,
Working System for Independent Directors and work rules for each special committee of
the Board of Directors, and effective implementation of the systems ensured the Board of
Director’s high effective operation and rational decisions. The Company held the Board
meetings and shaped the resolutions strictly in accordance with the regulation in the
Articles of Association and Rules of Procedure for the Board of Directors. All Directors21
attended the Board Meetings earnestly and responsibly, made decisions carefully and
expressed clear opinion on matters discussed. In a word, directors faithfully performed
obligations of diligence and credibility, and protected interest of minority shareholders.
The Company established Strategy Development and Investment Committee, Auditing
Committee, Nomination Committee and Remuneration and Appraisal Committee under
the Board of Directors. All special committees have formulated relevant work rules.
Meanwhile, the Company has also drew up Working Rules for Independent Directors and
Annual Report Working System for Independent Directors.
3. Supervisors and the Supervisory Committee
Member and composition of the Supervisory Committee are in line with laws and statutes
as well as requirement of Articles of Association. Supervisors of the Company seriously
performed their duties according to requirements of the Articles of Association and of
Rules of Procedure for the Supervisory Committee, and made effective supervision to
every aspect of the Company’s production and operation management, as well as the
legitimacy of directors and senior management personnel’s performance of duties, and
earnestly protected interest of the Company and small and medium investors.
4. Information disclosure and transparency
There are keepers who are responsible for information disclosure and investor relations
management, including reception of visits and consultations from investors. In the
reporting period, the Company performed obligation of information disclosure strictly in
accordance with provisions of relevant laws and statutes and Management System on
Information Disclosure of the Company. The Company discloses the information
authentically, accurately, timely and completely without any false or misleading
statements or omit any material facts to ensure all investors have equal opportunity to
acquire information, which enhanced transparency and played important role in protection
of knowing right of minority investors.
5. Managements team
Managements team performed duties according to provisions in Articles of Association
and strictly executed resolutions made by the Board of Directors, there was no behavior
exceed the power. As for events that exceed limited power, the Company will submit to
the Board of Directors for review. There was no trendy to control by inner personnel.
Managements team of the Company was cautious and conscientious, strengthened
normative operation in progress of routine operation. None violated obligation of
credibility, or faithfully performed duties.
6. Performance appraisal and incentive mechanism
The remuneration and appraisal committee established under the Board of Directors is in
charge of the performance appraisal to the directors, supervisors and senior management
staffs of the Company, meanwhile, the committee formulated reasonable performance
appraisal system, as result of forming a work team with high efficiency and stimulating
activity and creativity of the staffs. The Company’s existing performance appraisal and
incentive mechanism is in accord with development of the Company. The Company has
not yet establish an equity incentive system.
7. About stakeholders22
The Company adequately respected and protected legitimated rights of stakeholders,
realized harmony and equality of interest of sociality, shareholders, banks, other creditors,
the Company, employees and consumers, and jointly advanced the Company’s sustained,
healthy and durative development through active cooperation, mutual benefit and honesty
faith with its stakeholders.
8. Relationship between controlling shareholder and listed company
Behavior of controlling shareholder of the Company was normative, and exercised right of
provider through the Shareholders’ General Meeting in line with the laws, never directly
or indirectly intervene decision-making and operation over the Shareholders’ General
Meeting. The Company is independent in personnel, assets, finance, organization and
operations from its controlling shareholder. The Company’s Board of Directors,
Supervisory Committee and Internal Operating Units can operate independently. Related
transactions between the Company and controlling shareholder are reasonable and fair,
and decision-making procedures comply with the Rules. Neither capital occupied by
controlling shareholder, nor guarantees provided by the Company for the controlling
shareholder and its subsidiary companies existed in the Company. There was no
controlling shareholder who done harm to interests of the Company and of minority
shareholders.
II. Duty performance of directors, Chairman of the Board and independent directors
In the reporting period, all the directors of the Company performed their responsibilities
honestly, credibly, diligently and independently, actively attended relevant meetings,
carefully reviewed resolutions of the Board Meeting, made decision-making deliberately,
expressed clear opinion to matters discussed, so as to stick to interest of the Company and
shareholders and protect legitimated interest of minority shareholders.
Board Chairman of the Company actively advanced formulation and perfection of all
internal systems, strengthened construction of the Board, convening and presiding the
Board Meetings and Shareholders’ General Meeting in line with laws, which ensured all
previous Board Meetings were held in line with laws and supervise execution of
resolutions; meanwhile, Chairman of the Board created good condition for duty
performance, adequately ensured knowing right of all directors; reported operation of the
Board of Directors to all directors. Also, Board Chairman supervised high- and
middle-level executives to seriously study relevant laws and statutes and improve
consciousness that duties performance was in line with laws.
With attitude of credibility and diligence to the Company and all shareholders,
independent directors was diligent and responsible, reviewed all resolutions, and in line
with their professional knowledge and capability, made independent, objective and fair
judgment away from influence from the Company and principal shareholders of the
Company. Also, independent directors expressed independent, objective and fair opinion
on relevant events, which made practical efforts to safeguard interests of the Company and
minority shareholders.
Presence of independent directors at meetings
Name Title Times of meetings
should be attended
Times of attendance
in person
Times of commission
attendance
Times of
absence
Objection
proposed23
Zha Zhenxiang Independent director 12 11 1 1
Dong Zhiguang Independent director 12 11 1 1
Li Xiaofan Independent director 12 12 0 0
III. The Company’s five separations from the controlling shareholder
The Company was independent from the controlling shareholder in business, personnel,
assets, organization and finance to realize that independent personnel, independent finance,
complete assets, independent organization and independent business.
(I) In aspect of business: The Company was independent from the controlling
shareholder with independent and complete business and independent operation capability.
There was no business which was same or competitive with the controlling shareholder.
(II) In aspect of personnel: The Company was complete independent from the
controlling shareholder in terms of labor and personnel, management on remuneration. All
Senior Executives drew the remuneration from the Company, and none held a post
concurrently in shareholders company. Personnel of the Company are independent, all
ones signed labor contract with the Company. The Company was independent from the
shareholders or other related parties in personnel management, social security and salary.
(III) In aspect of asset: The Company’s assets were complete and independent, the
property relationship was clear. There was no capital occupation by controlling
shareholder, and assets of the Company was completely independent from controlling
shareholder.
(IV) ) In aspect of organization: The Company’s organization was independent, the
shareholders’ general meeting, the Board of Director, the Supervisory Committee operated
independently. The controlling shareholder never intervened organization of the
Company.
(V) In aspect of finance: The Company’s finance was independent with independent
finance department. The Company established the independent finance settling system and
financial management system, had its own finance account and paid the tax in line with
laws, run finance decision-making independently.
The controlling shareholder of the Company performed normatively with no conduct that
intervened with the operation decision-making and operation activities directly or
indirectly over the shareholders’ general meeting, however, the controlling shareholder
could influence on the significant decision-making through the shares holding.
IV. Key control activities
1. Proportion of shares held by the controlling subsidiaries of the Company
No. Full name of the company Proportion of shares
held
1 Shenzhen Huangcheng Real Estate Co., Ltd. 100%
2 Shenzhen Property and Real Estate Development Co., Ltd. 100%
3 Shenzhen ITC Vehicles Industry Co., Ltd. 100%
4 Shenzhen ITC Property Management Co., Ltd. 100%
5 Hainan Xinda Development Co., Ltd. 100%
6 Shenzhen Property Construction Supervision Co., Ltd. 100%
7 Shenzhen ITC Food Co., Ltd. 100%
8 Shenzhen Real Estate Exchange 100%
9 Shum Yip Properties Development Co., Ltd. 100%
10 Shenzhen International Trade Plaza 100%
11 Zhanjiang Shenzhen Real Estate Development Co., Ltd. 100%24
Note: Shenzhen Real Estate Exchange was managed by Shenzhen ITC Property
Management Co., Ltd. in trust.
2. Internal control on controlling subsidiaries
The Company brought finance, significant investment, personnel and information
disclosure into unified management system and formulated unified management rules by
appoint senior executives to concurrently hold the post of Chairman of the Board of
Directors and control joint stock company through appointed directors and supervisors;
the Company got monthly, quarterly, semi-annual and annual financial reports
periodically, and function departments of the Company guided, served and supervised
relevant business and management of joint stock companies; in the report period, the
Company strengthened supervision on progress of operation through general budget
management system and operating plan report system; strictly executed report system on
significant operating events, and supervised related transactions, external guarantees, use
of raised capital, significant investment and information disclosure.
3. Internal control on related transaction
The Company formulated and implemented Administrative Measures for Related
Transactions, ensured that contract on related transactions signed by the Company and
related parties was line with principle of fair, public and open, and performed obligation
of information disclosure timely. Related directors and shareholders withdrew from the
voting when the Company implemented procedure of decision-making of the Board
Meeting and the Shareholders’ General Meeting, independent directors performed their
responsibilities in processing of decision-making of related transactions and information
disclosure. Decision-making procedure and information disclosure were in line with
requirements of Rules for Listing Shares in Shenzhen Stock Exchange and Guidelines for
Internal Control of Listed Companies.
4. Internal control on external guarantee
Internal control on external guarantee was in line with principle of legitimate, fair, willing
and mutual benefit, and strictly control risk from guarantees. The Company confirmed
examination and approval authority of the Shareholders’ General Meeting and the Board
of Directors on external guarantees and responsibility mechanism on violating
examination and approval authority or examination procedure. Meanwhile, the Company
formulated relating internal control system for external guarantees, which regulated in
approval of authority, estimation and control on guarantees, control on implementation of
guarantees and information disclosure of guarantees.
5. Internal control on use of raised proceeds
After the allotment of shares in 1993, the Company didn’t financing through the
secondary market till now. In the reporting period, the Company didn’t disobey the
regulation on use of raised proceed of Guidelines on Internal Control issued by Shenzhen
Stock Exchange.
6. Internal control on significant investment
The Company set up Development Management Department, which was responsible for
special research and evaluation on feasibility of significant projects, risk from investment
and investment return.25
In the fiscal year, the Company carried out strict procedures such as review in earlier stage,
research on feasibility, internal evaluation and decision-making of investment, and all
decision-making of significant investment was in compliant with examination and
approval procedure by the Board Meetings or the Shareholders’ General Meeting in
accordance with relevant statutes.
7. Internal control on information disclosure
The Company strengthened communication with investors through various channels,
made effort to enhanced standardization of information disclosure, improved quality of
information disclosure and protected legitimate interests of investors. The Company
perfected rules for information disclosure and formulated Administrative Rules for
Information Disclosure Affairs and Administrative Measures for Extend and Reception,
which ensured the information disclosure was authentic, accurate, timely and fair.
Information disclosure of the Company strictly followed relevant laws and statutes, Rules
for Listing Shares in Shenzhen Stock Exchange and Rules for Information Disclosure
Affairs of the Company, and there was no information disclosure violating regulations.
V. Problems existing and rectification plan
1. Problems existing in key control activities in the internal control of the Company
(1) Providing undisclosed information to the first principal shareholder and the actual
controller
In the reporting period, the Company, in accordance with the notice from Financial
Budget Department of Shenzhen Investment Holdings Co., Ltd., regularly submitted the
financial express of the preceding month to Shenzhen Investment Holdings Co., Ltd. (the
controlling shareholder, the actual controller of the Company) during the first ten days of
every month through State-owned Assets Management Information System of Shenzhen
Municipal SASAC.
As for the aforesaid undisclosed information, the Company reported in time to Shenzhen
Securities Regulatory Bureau for filing. In the reporting period, there was no circumstance
that the information insider illegally bought and sold the Company’s shares with the
undisclosed information.
These are common behaviors of listed companies in the sector of the state-owned assets,
which are expected to remain unchangeable in a short time. Therefore, the Company had
disclosed the 2009 Preliminary Earnings Estimate before it provided the 2009 Preliminary
Financial Estimate to its principal shareholder. The Company will continue to submit
particulars about the insiders of undisclosed information to the CSRC Shenzhen Bureau
for reference, and prevent those insiders from leaking and taking advantage of the
undisclosed information for the purpose of trading the Company’s shares in an irregular
way.
(2) In view of unceasing amendment and perfection of internal control system along with
change in inside and outside environment, rapid growth of businesses and advancement of
management requirements, the Company still need to enhance how to grasp keystone of
the internal control in changing environment, so as to advance innovation of management
and system and promote persistence and effectiveness of internal control.
2. To further strengthen and perfect internal control plan
For the purpose of ensuring long-term effectiveness and completeness of the Company’s26
internal system, the Company reinforced the construction of internal control system
strictly in accordance with relevant provisions of China Securities Regulatory
Commission (CSRC), requirements of Fundamental Code for Enterprise Internal Control
jointly by promulgated Ministry of Finance and CSRC and of Guidelines on Internal
Control issued by Shenzhen Stock Exchange, as well as taking risk management as the
main line.
(1) To strengthen sense of operation according to laws, enhance force of law of internal
control, reinforce training and study to directors, supervisors and senior executives of the
Company, set up consciousness of risk prevention, and cultivate good spirit of enterprise
and internal control culture;
(2) To enhance internal control of the Company, optimize process of business and
management, continue normative operation, endlessly amend and improve each internal
control system in time according the provisions of relevant laws and regulations, so as to
further improve and perfect internal control system;
(3) To intensify executive force of internal control system and audit work, give full play to
supervision function of audit committee, carry out examination to each internal control
system regularly or irregularly for the effective implementation of all systems;
(4) To further perfect corporate governance, enhance level of corporate governance
standardization, strengthen construction and operation of each special committees under
the Board of Directors, better play the role of each special committees within the
professional field, so as to further upgrade the Company’s scientific decision-making
capacity and risk prevention capacity.
VI. . Establishment and implementation of performance appraisement and incentive
mechanisms for senior executives
In the reporting period, the annual operating target plan 2009 was went forth to the
management team by the Board of Directors. At the end of the fiscal year, the
Remuneration and Appraisal Committee under the Board of Directors examined profit
achievement of the management team, and determined incentive salary distribution
proposal in accordance with Management Measure for Annual Salary System of Directors,
Supervisors and Senior Executives, which shall be implemented after submitting to the
Board of Directors for approval.
VII. Opinions on self-evaluation of internal control of the Company
The Company made self-inspection, rectification and improvement through continuously
establishing, perfecting and implementing each internal control system and carrying out
“special campaign of corporate governance of listed companies”, and the existing internal
control system is better sound, reasonable and effective. The current internal control
system of the Company is basically in compliance with Chinese laws and regulations and
requirements of securities supervision departments, as well as current actual needs of the
Company’s production and operation, plays major control and prevention roles in aspects
of each process and each key link of enterprise management, significant investment and
risk and so on. All the facts have proven that the Company’s internal control has
completeness, reasonableness and effectivity.27
1. Self-appraisal of the Board of Directors on internal control
The Company established internal control system in accordance with relevant laws and
statutes as the Company Law and Securities Law and provisions in Guidelines of
Shenzhen Stock Exchange for Internal Control of Listed Companies and Basic Standard
for Enterprise Internal Control, and combined with self operating character, which
incarnated legitimacy, generality, importance, validity and applicability, was in line with
requirements on internal control work from CSRC and Shenzhen Stock Exchange. There
was no serious deficiency in design or execution of internal control.
Report on Self-appraisal of Internal Control was published in website
http://www.cninfo.com.cn on 9 Feb. 2010.
2. Opinions on self-evaluation on internal control of the Company expressed by the
Independent Directors
After independent director of the Company seriously verified Report on Self-appraisal of
Internal Control of Shenzhen Properties & Resources Development (Group) Ltd for the
year 2009, they considered that the Company has established complete and rigorous
internal control system, which was in line with requirements of relevant laws and statutes
of the state and was legitimate, reasonable and effective. Report on appraisal of internal
control faithfully and objectively reflected actuality of the establishment, execution and
supervision of internal control system. The Company should further strengthen internal
control of the Company, continue normative operation, endlessly amend and improve each
internal control system in time according business development of the Company and the
provisions of relevant laws and regulations, so as to further improve and perfect internal
control system;
3. Opinions on self-evaluation on internal control of the Company expressed by the
Supervisory Committee
The Supervisory Committee of the Company expressed opinion on self-evaluation of
internal control as follows:
In accordance with the requirements of Fundamental Code for Enterprise Internal Control
jointly by promulgated Ministry of Finance, CSRC and China Banking Regulatory
Commission (CBRC) and of Guidelines on Internal Control issued by Shenzhen Stock
Exchange, as well as such laws and rules as Company Law and Securities Law, combining
with the Company’s operation characteristics and environment, the Company set up and
improved the perfect and effective internal control system. Organization structure of
internal control was complete, which impenetrate all key parts of operating process. The
Supervisory Committee and internal audit department performed supervision functions
independently and objectively, which guaranteed execution of key activities and efficiency
of supervision. In 2009, there was no circumstance in violation of Guidelines on Internal
Control issued by Shenzhen Stock Exchange and the internal control system of the
Company.
Along with development of operating activities, efficiency of current internal control
system was able to change, the Company should further strengthen establishment of
internal control system, and put forth effort on perfecting risk management system to
enhance such capabilities as risk warning and risk prevention.2829
Section VII. Brief Introduction to the Shareholders’ General Meeting
Up till the publication date, the Company held six shareholders’ general meetings, that is,
the 1st Provisional Shareholders’ General Meeting 2009, the Annual Shareholders’
General Meeting 2008, the 2nd Provisional Shareholders’ General Meeting 2009, the 3rd
Provisional Shareholders’ General Meeting 2009, the Shareholders’ General Meeting
relating to share merger reform and the 4th Provisional Shareholders’ General Meeting
2009. Procedure of convening, holding and voting was in line with the requirement of
Company Law, Articles of Association and relevant laws and regulations.
I. The 1st Provisional Shareholders’ General Meeting 2009
The 1st Provisional Shareholders’ General Meeting 2009 was held at the conference room
on 39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 12 Mar. 2009. The resolutions of this Meeting were published in Securities
Times, Ta Kung Pao and website http://www.cninfo.com.cn on 13 Mar. 2009.
II. The Annual Shareholders’ General Meeting 2008
The Annual Shareholders’ General Meeting 2008 was held at the conference room on 39/F
of Shenzhen International Trade Building located at Renmin South Road, Shenzhen on 19
May 2009. The resolutions of this Meeting were published in Securities Times, Ta Kung
Pao and website http://www.cninfo.com.cn on 20 May 2009.
III. The 2nd Provisional Shareholders’ General Meeting 2009
The 2nd Provisional Shareholders’ General Meeting 2009 was held at the conference room
on 39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 16 Jul. 2009. The resolutions of this Meeting were published in Securities
Times, Ta Kung Pao and website http://www.cninfo.com.cn on 17 Jul. 2009.
IV. The 3rd Provisional Shareholders’ General Meeting 2009
The 3rd Provisional Shareholders’ General Meeting 2009 was held at the conference room
on 39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 31 Aug. 2009. The resolutions of this Meeting were published in Securities
Times, Ta Kung Pao and website http://www.cninfo.com.cn on 1 Sep. 2009.
V. The Shareholders’ General Meeting relating to share merger reform
The Shareholders’ General Meeting relating to share merger reform was held at the
conference room on 39/F of Shenzhen International Trade Building located at Renmin
South Road, Shenzhen on 21 Oct. 2009. The resolutions of this Meeting were published in
Securities Times, China Securities Journal, securities Daily and Shanghai Securities News,
as well as website http://www.cninfo.com.cn on 22 Oct. 2009.
VI. The 4th Provisional Shareholders’ General Meeting 2009
The 4th Provisional Shareholders’ General Meeting 2009 was held at the conference room
on 39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 6 Nov. 2009. The resolutions of this Meeting were published in Securities30
Times, Ta Kung Pao and website http://www.cninfo.com.cn on 9 Nov. 2009.31
Section VIII. Report of Board of Directors
Ⅰ. Review of the Company’s operation in the report period
1. Analysis of market environment
In order to deal with the global financial crisis, the government implemented a series of
economic stimulus policies. As a result of various positive factors such as the
accommodative monetary policy, the inflationary expectation, the RMB appreciation and
the rigid demand accumulation, the year 2009 saw a remarkable recovery of the domestic
real estate market. Prices went up rapidly, sales volumes experienced a significant
increase, development investments speeded up, developers were sufficient in capital and
many land parcels attracted high bids. Therefore, lots of real estate enterprises made a
strong recovery.
With its pulling effect on the upstream and downstream sectors, real estate investment has
become a new strong point of the investment increase in China, which acted as one of the
pillars for the national economic development in 2009.
The improvement of the national economic conditions promoted a higher anticipated
income for people. And the acceleration of the modernization process, as well as the
decision to strengthen city renewal, will bring about a high real estate demand in cities
like Shenzhen. In the near future, it will cost more to build a house, which will bring up
the house prices. Meanwhile, the lack of land resources in Shenzhen will also contribute to
maintain high house prices; However, the government is introducing a series of policies to
adjust the real estate market and those policies will, to some degree, prevent house prices
from going up too fast. To conclude, the year 2010 is expected to see house prices at a
high level in the Shenzhen real estate market, and the real estate sector will keep an
upward trend in the medium and long term.
2. Overall performance of the Company
In the report period, the Company achieved an operation income of RMB 845,366,939.69,
up by 35.59% over last year; a total profit of RMB 127,297,762.81, an increase of
325.17% from last year; and a net profit of RMB 96,934,287.03, increasing by 885.71%
compared to last year. And the operation income, total profit and net profit were all
increased because the Imperial Garden Project contributed a much larger income in 2009.
3. Operation of main businesses
(1) Operation and scope of main businesses
The Company specialized in the real estate development as its main business, with taxi
transportation service, catering business, etc. as its sideline. In 2009, the revenue32
generated from the main business reached RMB 841.59 million, with the gross profit from
the main business amounting to RMB 404.43 million. And the composition of the revenue
and gross profit generated from the main business was specified as follows:
Classified according to industries:
In terms of the business of real estate development, the income generated stood at RMB
587.83 million, with a gross profit of RMB 349.41 million;
In terms of the business of property management and leasing, the income generated stood
at RMB 166.59 million, with a gross profit of RMB 11.29 million;
In terms of the business of taxi transportation service, the income generated stood at RMB
47.55 million, with a gross profit of RMB 24.64 million;
In terms of the catering business, the income generated stood at RMB 17.75 million, with
a gross profit of RMB 2.76 million;
Classified according to regions:
In terms of the business in Shenzhen, the income generated stood at RMB 773.35 million;
In terms of the business in other areas, the income generated stood at RMB 68.24 million.
As could be seen from the above classification according to industries and regions, the
Company’s business income mainly came from Shenzhen and the real estate development
business contributed a large proportion of the business income.
(2) Composition of the Company’s main business
Main businesses classified according to industries and products:
Unit: RMB’000
Business income Business cost Gross profit rate
Industry
Amount
Change over
last year (%)
Amount
Change over
last year (%)
Profit rate
(%)
Change over
last year (%)
Real estate
development 587,838 54.03 238,425 51.90 59.44 0.57
Property
management
and leasing
166,594 3.75 155,308 5.84 6.77 -1.84
Taxi passenger
transportation
service
47,550 1.78 22,906 2.52 51.83 -0.34
Catering
service
17,753 21.45 14,989 134.09 15.57 -40.62
Explanation on the strengthened profitability of the Company in the report period33
compared with that of last year:
In 2009, the Company achieved an income of RMB 841.59 million from its main
businesses with the gross profit standing at RMB 404.43 million, with showed a
considerable increase from those of last year. And this was because the real estate
development business made a much larger contribution to the business income than it did
last year.
In its business of real estate development, the Company transferred, by means of bid
invitation, its real estate projects to the company which won the bid. And the building
contractor was responsible for the purchase of construction materials. The Company made
no bulk purchases this year; The Company’s commercial houses were sold to individual
customers. And the sales amount to the top five customers took up 3.5% of the
Company’s total sales.
4. Changes of the Company’s asset composition in the reporting period compared to that
of last year, as well as the main reasons for changes
(1) Changes of asset composition compared to that of last year
31 Dec. 2009 31 Dec. 2008
Item Amount (RMB,
Yuan)
Proportion
in total
assets (%)
Amount (RMB,
Yuan)
Proportion
in total
assets (%)
Increase or
decrease of
the
proportion
in total
assets (%)
Asset
increase
or
decrease
over last
year (%)
Monetary
capital
830,055,588.25 29.28% 271,708,727.86 12.87% 16.41% 205.49%
Prepayment 46,862,874.11 1.65% 2,305,629.53 0.11% 1.54% 1932.54%
Inventory 1,255,676,772.24 44.30% 1,153,726,292.83 54.66% -10.36% 8.84%
Investment real
estate
257,105,965.94 9.07% 224,041,978.19 10.61% -1.54% 14.76%
Fixed assets 76,985,792.12 2.72% 104,013,870.31 4.93% -2.21% -25.99%
Intangible assets 112,893,677.12 3.98% 119,402,340.92 5.66% -1.67% -5.45%
Deferred tax
assets
51,695,501.02 1.82% 13,322,857.95 0.63% 1.19% 288.02%
Short-term
borrowings
200,000,000.00 7.06% 369,000,000.00 17.48% -10.43% -45.80%
Accounts
received in
advance
745,527,226.22 26.30% 67,150,023.78 3.18% 23.12% 1010.24%
Payroll payable 51,982,204.97 1.83% 67,254,232.19 3.19% -1.35% -22.71%
Tax payable 205,331,877.94 7.24% 82,322,778.74 3.90% 3.34% 149.42%34
Long-term
borrowings
263,480,000.00 9.30% 348,229,343.34 16.50% -7.20% -24.34%
Non-current
liabilities due
within one year
200,000,000.00 7.06% 100,000,000.00 4.74% 2.32% 100.00%
Estimated
liabilities
69,284,708.83 2.44% 61,254,234.44 2.90% -0.46% 13.11%
Total assets 2,834,417,954.60 2,110,845,898.28 34.28%
Explanation on the changes:
① The monetary capital increased by 205.49% over last year, mainly because the
Company received more income from selling buildings in the report period;
② The prepayment increased by 1932.54% over last year, mainly because of the increase
of taxes in the report period which the Company pre-paid for real estate projects according
to the law of tax;
③ The inventory registered a rise of 8.84% from that of last year, mainly because the
Company paid for the normal progress of the projects under construction in the report
period;
④ The investment real estate registered a year-on-year increase of 14.76%, mainly
because the fixed assets and inventories used for leasing were transferred into the item of
investment real estate in the report period;
⑤ The fixed assets decreased by 25.99% over last year, mainly because the fixed assets
used for leasing were transferred into the item of investment real estate in the report
period;
⑥ The intangible assets decreased by 5.45% over last year, mainly because the intangible
assets were amortized;
⑦ The deferred tax assets registered a year-on-year rise of 288.02%, mainly because the
book value of taxes payable was higher than the tax computation basis at the end of the
report period and the increase of deferred tax assets was thus recognized;
⑧ The short-term borrowings were down by 45.80% compared with last year, mainly
because the Company optimized the bank loan structure and paid off some loans left over
by history in the report period;
⑨ The accounts received in advance were up by 1010.24% over last year, mainly because
the Company received more income from selling buildings of Xinhua Town Project and
Shengang No.1 Project in the report period;
⑩ The payroll payable decreased by 22.71% from last year, mainly because the
Company implemented its employee dismissal plan and paid compensation to the
employees dismissed in the report period. For further details, please refer to Note (Ⅸ) 3.
11. The taxes payable was up by 149.42% year-on-year, mainly because the income from
the Imperial Garden Project was recognized in the report period, which resulted to the
increase of corporate income tax and land value increment tax;
12. The long-term borrowings decreased by 24.34% over last year, mainly because some
mature long-term borrowings were paid off and some long-term borrowings were35
transferred into the item of non-current liabilities due within one year;
13. The non-current liabilities due within one year registered a year-on-year increase of
100%, mainly because the loans that became due soon were transferred from the item of
long-term borrowings to this item in the report period;
14. The estimated liabilities were up by 13.11% from last year, mainly because the
Company received the Notification Beforehand on Administrative Punishment from
CSRC and withdrew estimated liabilities for the investigation on the Company’s stock in
the report period. For further details, please refer to Note (Ⅶ) 2;
15. The total assets increased by 34.28% over last year, mainly because the Company
expanded its project development and received more income from selling buildings in the
report period.
(2) Changes in operating expenses, management expenses, financial expanses and income
tax expenses over last year, as well as main reasons for the changes
Items
Jan. 2009-Dec. 2009
(RMB, Yuan)
Jan. 2008-Dec. 2008
(RMB, Yuan)
Year-on-year
Increase or decrease
（±%）
Operating
expenses
21,209,571.81 19,695,986.96 7.68%
Management
expenses
102,009,696.27 139,121,028.95 -26.68%
Financial
expenses
16,054,025.03 22,355,106.10 -28.19%
Income tax
expenses
30,363,475.79 20,106,527.14 51.01%
Notes:
① The increase of the operating expenses was mainly due to the increased expenses
resulted from the Company’s strengthened sales of projects in the reporting period;
② The decrease of the management expenses was mainly due to that the Company
managed to cut expenses by strengthening its control over expenses, despite the estimated
employee dismissal expenses;
③The decrease of financial expenses was mainly due to that the Company strengthened
its capital management, optimized its loan structure and paid off some loans left over by
history. Meanwhile, the overall decrease of interest rates also helped;
④ The increase of income tax expenses was mainly due to the Company’s increased total
profit in the reporting period.
5. Items measured by fair value, as well as the held foreign-currency financial assets and
financial liabilities
The Company’s financial accounting was conducted on the accrued basis. Except that the
transaction financial assets and the available-for-sale financial assets were measured by
fair value, other assets were usually measured on the basis of the historical costs. Where36
the replacement cost, net realizable, capitalized value or fair value was adopted as the
measurement basis, it was made sure that the amount of the determined accounting
elements could be obtained and reliably measured.
(1) Items measured by fair value
Unit: RMB’0000
Items
Amount at
period-begin
Gains or
losses due
to fair
value
changes in
this period
Accumulative
changes of
fair value
recorded in
the equity
Impairment
withdrawn
in this
period
Amount at
period-end
Financial assets
Of which: 1.
Financial assets
measured by fair
value and the changes
were included in the
current gains or losses
267.07 243.57 23.22
Of which: derivative
financial assets
2. Available-for-sale
financial assets
Subtotal of financial
assets
267.07 243.57 23.22
Financial liabilities
Investment real estate
Productive biological
assets
Others
Total 267.07 243.57 23.22
Notes: The financial assets measured by fair value and of which the changes were
included in the current gains or losses referred to the tradable shares purchased in the
secondary market. And the aforesaid financial assets were measured at the closing price of
the stock exchange as the fair value.
(2) Foreign-currency financial assets and financial liabilities held37
Unit: RMB’0000
Item
Amount at
period-begin
Gains or
losses due
to fair
value
changes in
current
period
Accumulative
fair value
changes
recorded into
the equity
Impairment
withdrawn
in current
period
Amount at
period-end
Financial assets
Of which: 1. Financial
assets measured at fair
value and the changes
were included in the
gains and losses of the
current period
212.63 165.29
Of which:
derivative financial
assets
2. Loans and
accounts receivable
3. Financial
assets available-for-sale
4.
Held-to-maturity
investment
Sub-total of financial
assets
212.63 165.29
Financial liabilities
Notes: The foreign-currency financial assets held by the Company referred to the stocks
listed in Hong Kong Stock Exchange purchased by Shenye Estate Development Co., Ltd.
(one of the Company’s subsidiaries) a few years ago, which was measured with the
closing price announced by Hong Kong Stock Exchange as the fair value. And they were
all sold in the report period, with the income generated in the report period standing at
RMB 1,652,900.
6. Changes in main items of cash flow statement in the reporting period over last year, as
well as the reasons for changes
Items
2009 (RMB, Yuan) 2008 (RMB, Yuan) Increase or
decrease
(%)38
Ⅰ. Cash flow arising from
operating activities
Sub-total of cash inflows 1,570,201,197.23 603,187,096.63 160.32
Sub-total of cash outflows 810,550,570.54 626,890,074.14 29.30
Net cash flows arising from
operating activities
759,650,626.69 -23,702,977.51 3304.87
Ⅱ. Cash flow arising from
investing activities
Sub-total of cash inflows 11,462,203.20 35,019,019.26 -67.27
Sub-total of cash outflows 2,828,808.73 18,968,420.48 -85.09
Net cash flows arising from
investing activities
8,633,394.47 16,050,598.78 -46.21
Ⅲ. Cash flows arising flow
financing activities
Sub-total of cash inflows 569,000,000.00 736,080,914.01 -22.70
Sub-total of cash outflows 778,929,456.34 698,793,500.31 11.47
Net cash flows arising from
financing activities
-209,929,456.34 37,287,413.70 -663.00
① The net cash flows arising from operating activities rose significantly from that of last
year because the projects in the sale were increased in the year 2009. Seizing the market
opportunity and making a good sales performance, the Company made great efforts to
promote the inward flow of capital, which boosted the income from selling houses in the
report period.
② The net cash flows arising from investing activities decreased compared to last year,
mainly because the Company disposed the Changgang Steel stock held by it as financial
assets available for sale last year and there were no such events in the report period.
Meanwhile, the Company received less cash from disposing fixed assets in the report
period.
③ The net cash flows arising from financing activities decreased over last year, mainly
because: A. The Company applied for less new loans in the year 2009 as a result of its
efforts on strengthening the management of the group’s capital and rationally controlling
the loan scale according to the actual capital need of the Company; B. The Company
optimized its bank loan structure and paid off more loans in the report period, while
making sure that the capital needs of project development are satisfied.
7. Operation and performance analysis of the Company’s main subsidiaries and joint stock39
companies
Unit: RMB’000
Total assets Net assets Operation profit Net profit
Company
name
Main
products
Registered
capital
Amount
Increase/
decrease
over last
year (%)
Amount
Increase/
decrease
over last
year (%)
Amount
Increase/
decrease
over last
year (%)
Amount
Increase/
decrease
over last
year (%)
Shenzhen
Huangcheng
Real Estate
Co., Ltd.
Development,
construction,
operation and
management
supporting
commercial
service
facilities at
Huangcheng
Port
30000 1634683 37.59 180694 -67.06 185934 78 154100 77.99
Shenzhen
ITC
Vehicles
Services
Company
Automobile
transportation
of passengers
and leasing of
automobiles
29850 225838 -22.00 48201 20.21 10112 981 8105 569.28
8. Changes of the main sales and technical personnel, as well as other information relevant
to the Company’s operation
In the reporting period, there existed no major changes concerning the sales and technical
personnel of the Company.
9. Special-purpose entities controlled by the Company
There existed no special-purpose entities controlled by the Company.
Ⅱ. Prospect of the future development of the Company
1. Risks faced by the Company, as well as the countermeasures
(1) Risks concerning policies
In order to promote the steady and healthy development of the real estate market and
prevent the over-heating of the real estate market in some domestic cities, the State
Council, relevant ministries and commissions and some local governments, from the end
of 2009, has introduced a series of adjustment policies, which asked to “maintain the
continuity and stability of policies, accelerate the construction of low-income housing,
strengthen market regulation, stabilize market expectation, and prevent the house prices of
some cities from going up too fast”; Meanwhile, they have issued the Circular on Further
Strengthening Income and Expenses Management of Land Transfer, the Circular on
Adjusting Business Tax Policy for Individual House Transfer, and the Circular on
Promoting Steady and Healthy Development of Real Estate Market, as well as other
policies and measures such as the policy to increase the deposit reserve.40
It is expected that in the coming year, the monetary policy will be directed to moderately
tight money supply and more retrieval so as to deal with the expected inflation; that those
policies will be, very possibly, implemented as scheduled and take effect to prevent the
house prices from rising too fast.
(2) Financial Risk
The real estate market went from a low level to a high level in the year 2009. And an
irrational over-heat emerged in the fourth quarter of 2009. At the beginning of 2010, the
Office of the State Council promulgated the Circular on Promoting Steady and Healthy
Development in Real Estate Market, adjusting the real estate market in terms of market
supply, market demand, market regulation, social security housing, local government
responsibility and credit. And the Circular expressly stated that the first payment for a
second house paid by loans must not be lower than 40% of the total payment. The market
was responsive to those macro-control policies. Turnover went down quickly, a lot of
houses remained unsold, and buyers became hesitant.
Real Estate is the pillar business of the Company. In order to prevent market risks, we
have formulated rules for capital management, i.e. “Control total loans, adjust the capital
and inventory ratio, optimize capital structure and improve capital use efficiency”,
ensuring enough capital for development projects while at the same time enough capital
for routine operation of the Company. With a harsher financing environment, the
Company’s own capital becomes especially crucial. Therefore, the Company will continue
to adopt a stable financial policy, make use of the brand effect and strengthen cost
management. Meanwhile, we will monitor the sales progress of developed projects, make
prices in a scientifical and rational way, improve management and marketing, and stick to
the philosophy of “sales as the basis and cash as the dominant”. The Company will also
make great efforts to make sure the sales of the finished projects and the quick payment by
the house buyers, so as to minimize the financial risk.
(3) Operation risk
At the beginning of 2010, the international financial crisis is still haunting the market. In
order to prevent a partially over-heated real estate market, the government has adopted
some strong macro-control measures in terms of credit, tax, land, etc. in a short period of
time; those measures will bring an impact on the Company’s future development, people’s
desire to buy houses, the hesitant atmosphere in the market, etc.. The management of the
Company believes that in the short run, the macro-control of the government will take
certain effect to reduce or prevent speculative house purchases; in the long run, the
regulation and adjustment of the real estate market will be helpful to the stable and healthy
development of the market.
① The real estate macro-control policies promulgated recently will restrain the41
investment desire of some house buyers, which may affect the sales of the Company’s
projects to some degree.
By building quality houses and improving house quality, the Company will continue to
provide safe, comfortable, convenient and green houses for customers. At the same time, it
will accelerate the inward flow of capital and improve the capital use efficiency, and
realize the quality principle of “A quality property, an ever-lasting classic; A green home,
a beautiful life.”
② Risk concerning the lack of land resources
For a real estate developer, land is the first production element, which determines the
development direction of an enterprise. At the present time, the Company is lack of land
reserves available for development, which will do harm to the development of the
Company’s main business—the real estate business, the expansion of the development
scale and the performance of the main business; With the present development speed, the
land reserves of the Company are only enough for the coming three years or so. And this
will directly do harm to the future development of the Company. Therefore, the Company
must acquire more land to maintain its sustainable development.
With the opportunities brought by the government’s macro-control on the real estate
market, the Company is, on one hand, planning business layout and expanding market in
second-level and third-level cities and important areas, and acquiring land resources by
attending bidding, auctions and listing; On the other hand, the Company is urging the
principal shareholder to conduct selective land resources transfer in its existing land
reserves under the framework of the consideration arrangement of the share reform.
③ Risk concerning increasing development cost
First of all, as a scarce resource, land is showing a rising price in the bidding, auction and
listing market. And the market competition is fierce, which will bring up the development
cost of the Company; Meanwhile, the decision of the government to increase the first
payment ratio of a land transfer transaction and charge for the idle land reserves will also
increase the cost of the Company on land transfer and land reserves. Secondly, the prices
for construction materials such as steel and cement, as well as the staff cost, are on the rise,
too. There may be a bigger risk concerning the contracts with constructors. What’s worse,
the adjustment of the financial policies will lead to the rise of the Company’s capital cost.
Thirdly, buyers is looking for self-inhabited and improved houses with higher and higher
construction standards, which will force the Company to increase its design input and
improve projects. Development cost is thus increased.
On the premise that the product quality is ensured, the Company will continue to
strengthen its cost control and take every measure to search for profitable and suitable
land for development; to improve internal management and strengthen the control and42
confirmation of the construction cost of real estate development projects; to make good
use of capital, minimize capital occupation or idle capital, and effectively reduce financial
expenses; to further optimize designs, effectively reduce the cost and cut expenses in
various ways.
2. Competitive edge and potential of the Company
In the year 2009, under the leadership of the Board of Directors and the management team
of the Company, we carried forward the fine product strategies and gave a remarkable
performance concerning the sales of the Imperial Garden Project, the PRD·Xinhua Town
Project, the PRD·Shengang No.1 Project and other projects; The Company focused its
efforts on improving project quality while speeding up the construction progress. It also
focused on pre-planning and planning of a project. And the construction of every project
was basically in smooth progress. The PRD·Caitianyise Project has begun construction
after going through a lot of difficulties; The Company actively conducted market
researches and controlled the pace of the land resources reserve. Meanwhile, we kept a
close eye on the land markets of Yangzhou, Xuzhou, Shaoxing and Changzhou and took
part in the auction of land in Yangzhou; The Company made greater efforts in activating
idle properties, properly handling problems left over by history and upgrading the asset
quality, which helped the Company realize a good performance and the stable operation of
the sideline businesses; The share reform of the Company was approved by an
overwhelming majority of votes and the corporate governance was further improved; The
Company standardized its management process and rules formulating process, and raised
the management standards.
In the coming year, in terms of its main business of real estate, the Company will continue
to stick to the operation philosophy of “A quality property, a quality life”, and gradually
formulate a perfect corporate operation philosophy, so as to lay a foundation for the
development of the Company. The principal shareholder of the Company—Shenzhen
Investment Holdings Co., Ltd. owned by the Shenzhen Bureau of State Assets
Management—has tremendous strength. And it intends to, as expressly stated in the
strategic planning of the Company, make the Company a leader in the real estate sector
which is characteristic of flexible mechanism, good brand image and high competitiveness.
And the share reform to be gradually carried out will also create some potential resources
and advantages.
3. Plan for the year 2010
In the year 2010, the Company plans to create a main business income of RMB 990
million, with the expenses and cost standing at RMB 810 million. And the year 2010 will
be a key period for the Company to continue the good development situation in 2009,
gradually increase the ability of continuous operation and boost its development;
Meanwhile, the Company will improve its internal management, focus on its development,
actively deal with the macro-control risk, constantly improve its performance and solidify43
the management basis, for the purpose of a greater development. In order to realize the
aforesaid various objectives of the Company in the key year for development, the
Company will focus on the following tasks:
(1) To further strengthen the development of the existing real estate projects and study the
project value in depth; actively expand the real estate development scale, focus on the
development of the main business of real estate and the increase of land reserves, acquire
new land resources and make it a new growth point of the Company’s future income and
profit.
(2) To implement the share reform step by step with the great support form the
Company’s controlling shareholder—Shenzhen Investment Holdings Co., Ltd., so as to
lay a solid foundation for the improvement of the main business of real estate
development and the increase of land reserves.
(3) To improve the Company’s ability against changes in the real estate market, and
strengthen control over the cost of development projects; accelerate the sales of the
existing house units available for sale, quicken the payment for the properties sold, and
upgrade the Company’s ability and strengthen against risks, so as to make sure the
realization of the Company’s annual plan; and lay a solid foundation for the
materialization of the Company’s development strategic planning and striking
development.
4. Particulars about demand for capital, plan for capital use and capital source
In the year 2010, it is expected that over RMB 480 million is needed for the construction
in-progress of the Company. In order to ensure the capital supply and satisfy the need of
the business development, the Company intends to solve the capital issue by more bank
loans, the payment by customers for the real estate sold, etc..
III. Investment in the report period
1. There were no raised proceeds of the Company in the report period, neither was there
any continuous usage of the previously raised proceeds.
2. Significant investment with non-raised funds, as well as their progress and profitability
Unit: RMB’ 000
Name of Project Input in 2009
Increase/decrease
of investment
compared to last
year (%)
Progress Profit
PRD·Shengang
No.1 (Section B
in Block C of
104824 52
Interior and
exterior
decoration of the
—44
former Huangyu
Garden)
main body
PRD·Langqiao
Residence
(Section D in
Block C of former
Huangyu Garden)
102218 78
Construction of
the basement
—
PRD·Xinhua
Town (Complex
B of former
Fengherili
Residence)
167750 33
Exterior
construction
—
Total 374792 -4.67 — —
IV. Reasons for and Influences by the Changes in Accounting Policies, Accounting
Estimation and Correction of Significant Accounting Errors
1. In the reporting period, there were no changes in the accounting policies in the
Company.
2. In the reporting period, there were no changes in the accounting estimations in the
Company.
3. In the reporting period, there were significant accounting errors in the Company.
V. Routine Work of the Board of Directors
(Ⅰ) Board meetings convened in the report period
The Board of Directors convened 12 meetings in total during the period from the report
period to the date of this publication.
(1) On 14 Jan. 2009, the 10th Meeting of the 6th Board of Directors was convened, and the
public notice on the resolutions made at the meeting was published on Securities Times,
Ta Kung Pao and http://cninfo.com.cn designated for information disclosure dated 15 Jan.
2009;
(2) On 23 Jan. 2009, the 11th Meeting of the 6th Board of Directors was convened, where
the Proposal on Applying to Shenzhen Investment Holdings Co., Ltd. for an Entrusted
Loan of RMB 50 million was reviewed and approved. And the public notice on the
resolutions made at the meeting was published on Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure dated 24 Jan. 2009;45
(3) On 9 Feb. 2009, the 12th Meeting of the 6th Board of Directors was convened, and the
public notice on the resolutions made at the meeting was published on Securities Times,
Ta Kung Pao and http://cninfo.com.cn designated for information disclosure dated 10 Feb.
2009;
(4) On 7 Apr. 2009, the 13th Meeting of the 6th Board of Directors was convened, where
the Proposal on Purchasing Some Shops in 2nd-Phase of ITC Plaza and in Podium
Building of ITC Commercial Building and the Proposal on Attending Auction for
Properties at Huangcheng Plaza were reviewed and approved. And the resolutions made
have been submitted by the Company to Shenzhen Stock Exchange for records;
(5) On 23 Apr. 2009, the 14th Meeting of the 6th Board of Directors was convened, and the
public notice on the resolutions made at the meeting was published on Securities Times,
Ta Kung Pao and http://cninfo.com.cn designated for information disclosure dated 27 Apr.
2009;
(6) On 28 Apr. 2009, the 15th Meeting of the 6th Board of Directors was convened, where
the First Quarterly Report in 2009 of the Company was reviewed and approved. And the
quarterly report was published on Securities Times, Ta Kung Pao and http://cninfo.com.cn
designated for information disclosure dated 29 Apr. 2009;
(7) On 29 Jun. 2009, the 16th Meeting of the 6th Board of Directors was convened, where
the Proposal on Applying to Financial Institution for a Loan of RMB 250 million, the
Proposal on Amending Articles of Association of the Company and the Proposal on
Convening the 2nd Provisional Shareholders’ General Meeting in 2009 were reviewed and
approved. And the public notice on the resolutions made at the meeting was published on
Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for information
disclosure dated 30 Jun. 2009;
(8) On 12 Aug. 2009, the 17th Meeting of the 6th Board of Directors was convened, where
the 2009 Semi-annual Report, the Rules for Engaging CPAs Firm, the Proposal on Asking
Shareholders’ General Meeting to Authorize Board of Directors to Make Investments and
the Proposal on Convening the 3rd Provisional Shareholders’ General Meeting in 2009
were reviewed and approved. And the public notice on the resolutions made at the meeting
was published on Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 13 Aug. 2009;
(9) On 21 Sept. 2009, the 18th Meeting of the 6th Board of Directors was convened, where
the Proposal on Solving Pinghu Land Issue Left by History was reviewed and approved.
And the public notice on the resolutions made at the meeting was published on Securities
Times, Ta Kung Pao and http://cninfo.com.cn designated for information disclosure dated
22 Sept. 2009;
(10) On 11 Oct. 2009, the 19th Meeting of the 6th Board of Directors was convened, where
the Third Quarterly Report in 2009, the Pre-plan for Profit Distribution for Mid 2009 and
the Proposal on Convening the 4th Provisional Shareholders’ General Meeting in 2009
were reviewed and approved. And the public notice on the resolutions made at the meeting
was published on Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 12 Oct. 2009;
(11) On 6 Nov. 2009, the 20th Meeting of the 6th Board of Directors was convened, where
the Proposal on Transferring Equities of Huajing Glass Bottle Co., Ltd. and the Rules of46
Shenzhen Properties & Resources Development (Group) Ltd. for Managing Insider
Information and Insiders were reviewed and approved. And the public notice on the
resolutions made at the meeting was published on Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure dated 9 Nov. 2009;
(12) On 22 Dec. 2009, the 21st Meeting of the 6th Board of Directors was convened, where
the Proposal on Taking Part in Bidding for Land in Yangzhou, the Proposal on Applying
to Controlling Shareholder for a Loan of RMB 50 million and the Proposal on Authorizing
Management Team to Acquire 1% Equities of Jifa Warehousing at Its Discretion were
reviewed and approved. And the public notice on the resolutions made at the meeting was
published on Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 24 Dec. 2009;
(II) Implementation of the Resolutions Made at the Shareholders’ General Meeting by the
Board
In the reporting period, the resolutions of the Shareholders’ General Meeting were
implemented effectively.
(1) Proposals reviewed and approved at the 1st Provisional Shareholders’ General Meeting
in 2009: the Proposal on Applying to Financial Institution for a Loan of RMB 480 million.
The resolution made at this Shareholders’ General Meeting was effectively executed. The
Company had planned to apply for a RMB 30 million loan for working capital. Then the
plan was canceled due to the bettering of the Company’s cash flows. Planned project loans:
① A loan of RMB 250 million was planned for the Langqiao Garden Project, of which
RMB 240 million has been executed; ② The loan of RMB 100 million for the
Caitianyise Project was in the process; and ③ The loan of RMB 100 million for the
Xinhua Town Project has not been executed.
(2) Proposals reviewed and approved at the 2008 Annual Shareholders’ General Meeting:
The 2008 Annual Work Report of Board of Directors, the 2008 Annual Work Report of
Supervisory Committee, the 2008 Annual Final Financial Report, the 2009 Annual
Financial Budget Report, the 2008 Annual Report, the Pre-plan for 2008 Annual Profit
Distribution, the Provisional Measures on Administration of Annual Remuneration of
Directors, Supervisors and Senior Executives, the Proposal on Adjusting Remuneration
Plan for Independent Directors and the Proposal on Renewing Engagement of CPAs Firm.
The relevant matters mentioned in the proposals at this Shareholders’ General Meeting
have all been executed. The Provisional Measures on Administration of Annual
Remuneration of Directors, Supervisors and Senior Executives has been adopted; The
remuneration for independent directors has been paid according to the new standard.
(3) Proposals reviewed and approved at the 2nd Provisional Shareholders’ General
Meeting in 2009: The Proposal on Applying to Financial Institutions for a Loan of RMB
250 Million and the Proposal on Amending Articles of Association of the Company.47
In order to implement the Proposal on Applying to Financial Institutions for a Loan of
RMB 250 Million, the subsidiary of the Company—Shenzhen Huangcheng Real Estate
Co., Ltd.—has signed a loan agreement with East Shenzhen Sub-branch of China
Agricultural Bank for the Shengang No.1 Project. And a loan of RMB 50 million has been
granted to the Company;
The cash dividend policy was amended in the new Articles of Association of the Company,
and the amended policy has been implemented.
To sum up, the resolutions made at this Shareholders’ General Meeting were effectively
executed.
(4) Proposals reviewed and approved at the 3rd Provisional Shareholders’ General Meeting:
The Rules of Shenzhen Properties & Resources Development (Group) Ltd. on Engaging
CPAs Firm and the Proposal on Asking Shareholders’ General Meeting to Authorize
Board of Directors to Make Investments
The formulation of the Rules of Shenzhen Properties & Resources Development (Group)
Ltd. on Engaging CPAs Firm further improved the internal control mechanism of the
Company;
With authorization from the Shareholders’ General Meeting, the Board of Directors took
part in the bidding for land in Yangzhou and executed the Proposal on Asking
Shareholders’ General Meeting to Authorize Board of Directors to Make Investments.
Later the Company gave up bidding because the land price was too high and concerning
further details of this matter, the Company has released a provisional public notice dated
30 Dec. 2009.
To sum up, the resolutions made at this Shareholders’ General Meeting were effectively
executed.
(5) The Stock Right Dividing Plan was reviewed and approved at the relevant
Shareholders’ General Meeting.
The Company released the Public Notice on Implementing Stock Right Dividing Plan and
the Amended Public Notice on Implementing Stock Right Dividing Plan respectively on
28 Oct. 2009 and 30 Oct. 2009. Then the Company implemented the Stock Right Dividing
Plan on 3 Nov. 2009 and executed the resolution made at this Shareholders’ General
Meeting.
(6) The Proposal on Profit Distribution In the Interim of 2009 was reviewed and approved
at the 4th Provisional Shareholders’ General Meeting in 2009.
The Public Notice on Implementing Equity Distribution in the Interim of 2009 was
disclosed by the Company on 16 Nov. 2009. And the Company carried out the dividend
distribution for A-share and B-share holders respectively on 23 Nov. 2009 and 25 Nov.
2009, and thus executed the resolution made at this Shareholders’ General Meeting.
(III) Duty performance of the Audit Committee under the Board
The Audit Committee under the Board of the Company consists of 3 Directors, including48
2 Independent Directors, with the post of Chairman of the Committee held by Independent
Director Mr. Dong Zhiguang. According to the requirement of CSRC and Shenzhen Stock
Exchange as well as the Work Rules for the Audit Committee under the Board, the Audit
Committee had launched a series work for 2009 annual auditing and fulfilled the
following duties with diligence and responsibility:
1. On 4 Jan. 2010, the Audit Committee listened to the operation report by the
management of the Company, consulted with the CPAs Firm to determine the work plan
for annual auditing of financial report, and urged the CPAs to submit the auditors’ report
as scheduled.
On 5 Jan. 2010, the CPAs firm came to the Company and officially started the audit.
2. After the entry of the CPAs, the Audit Committee under the Board communicated with
the CPAs responsible for the Company’s annual audit on the problems occurring in the
auditing process. On 21 Jan. 2010, the CPAs firm issued the preliminary audit opinion and
reported to the Audit Committee on some issues arising in the audit process. And the
Audit Committee expressed their first opinion as follows after reviewing the financial
statements prepared by the Company: the Financial Statements 2009 of the Company had
been complied according to the provision of Accounting Standard for Business
Enterprises, and the statements had reflected the actual operating situation and cash flow
of the Company as at Dec. 31, 2009, which were in line with relevant requirements of
CSRC. And the Audit Committee therefore agreed to submit the financial statements
(un-audited) prepared by the Company and relevant materials to the CPAs firm for
auditing. Meanwhile, the Committee also expressed their wish for the management of the
Company to cooperate closely with Wuhan Zhonghuan Certified Public Accountants to
carry out the auditing of the financial statements in 2009.
3. On 25 Jan. 2010, the Audit Committee expressed their second opinion as follows after
reviewing the financial statements prepared by the Company: the Financial Statements
2009 of the Company was complied strictly according to the provision of Accounting
Standard for Business Enterprises and Accounting System for Business Enterprises, as
well as in compliance with the New Accounting Standards and relevant documents issued
by the Ministry of Finance; The notes to the financial statements were complied in line
with relevant regulations issued by CSRC. The financial statements and the notes to
financial statements objectively and fairly reflected the financial status, business
achievement and cash flow of the Company as at Dec. 31, 2009; The audit conclusion was
in line with the actual situation of the Company and the Committee thus agreed to submit
the 2009 Annual Financial Report to the Board of Directors for review.
4. The Audit Committee approved the summary of the auditing work in 2009 done by
Wuhan Zhonghuan Certified Public Accountants; The Audit Committee was of the
opinion that: The CPAs for the annual audit had conducted the audit work in compliance
with the auditing standards for Chinese registered accountants. The audited financial
statements were a fair presentation of the Company’s financial position as at 31 Dec. 2009,49
as well as the operating results and cash flows as of the year 2009. And the audit
conclusion issued was in line with the actual situation of the Company. Meanwhile, the
Audit Committee expressed their opinion on whether the Company should continue to
engage Wuhan Zhonghuan Certified Public Accountants as the auditing agency for the
Company in the year 2010.
The Audit Committee has faithfully fulfilled its duty with responsibility, brought its
supervisory function into due plan, and ensured the independence of auditing, which
safeguarded the legal interests and rights of the Company and the minor interests.
(IV) Performance of the Remuneration and Appraisal Committee under the Board
The Remuneration and Appraisal Committee under the Board consisted of 3 Directors,
including 2 Independent Directors, and the post of Chairman of the Committee is held by
Independent Director Mr. Li Xiaofan. In the report period, according to requirements of
CSRC and Shenzhen Stock Exchange, as well as the Company’s Work Rules for
Remuneration and Appraisal Committee under the Board, the Committee conscientiously
fulfilled its duties by examining the remunerations for directors, supervisors and senior
executives. And the Committee was of the opinion that the annual salary mechanism for
directors, supervisors and senior executives connected their remuneration with the annual
business performance of the Company, which was in line with the actual situation of the
Company. And there existed no violation of or inconsistency with the remuneration rules.
(Ⅴ) Duty performance of the Strategy and Development Committee under the Board
The Strategy and Development Committee under the Board consists of 5 directors, with
Chairman of the Board Mr. Chen Yugang as Chairman of the Committee. In the report
period, the Committee conscientiously fulfilled its duties according to the specific work
rules for the Committee by planning the future development of the Company and
significant investments. In 2009, the Committee cooperated with the Institute for
Comprehensive Development Study (China·Shenzhen) and worked out a strategic
planning for the Company in the coming five years, which indicated the direction for the
future development of the Company, put forward clear long-term objectives for the future
development and investments of the Company, and at the same time improved the
scientificity, efficiency and quality of significant investment decisions.
(Ⅵ) Duty performance of the Nomination Committee under the Board
The Nomination Committee under the Board consists of three directors, including two
independent directors, with Independent Director Mr. Zha Zhenxiang as Chairman of the
Committee. In the report period, the Committee nominated for Secretary of the Board of
Directors. As reviewed and passed by the Board of Directors and approved by Shenzhen
Stock Exchange, Mr. Fan Weiping has held the post of Board Secretary of the Company
since Jan. 2009.
VI. Profit Distribution Preplan or Preplan of Turning the Capital Reserve into Share
Capital for the year 2009
1. Profit Distribution Preplan for 200950
As audited by Wuhan Zhonghuan Certified Public Accountants Co., Ltd, the Company
achieved, in the year 2009, a consolidated net profit attributable to owners of the parent
company reaching RMB 96,933,951.02 and a consolidated profit available for distribution
for the year standing at RMB -26,036,870.39; In the year 2009, the parent company
achieved a net profit of RMB 462,937,195.91, plus the retained profit at the beginning of
2009 amounting to RMB -427,728,750.13, minus the statutory surplus reserve withdrawn
in the Profit Distribution Plan for the Interim of 2009 standing at RMB 6,792,923.40 and
the paid dividend for ordinary share holders standing at RMB 60,247,705.90, and the
parent company’s actual profit available for distribution for the year 2009 stood at RMB
-31,832,183.52.
Considering that the parent company acted as the main body in the profit distribution of
the Company, the Company would not conduct profit distribution for the end of 2009 or
turn the capital reserve into share capital.
2. Cash dividends in the previous three years
Year
Amount of
cash
dividends
Net profit
belonging to
shareholders of
the parent
company
Consolidated
net profit
belonging to
shareholders of
the parent
company
Percentage
in the net
profit
belonging to
shareholders
of the parent
company
Percentage in the
consolidated net
profit belonging to
shareholders of the
parent company
2008 0.00 -26,155,872.73 9,829,397.29 0.00 0.00
2007 0.00 -27,611,609.45 -27,377,663.77 0.00 0.00
2006 0.00 -24,688,983.24 -45,092,615.78 0.00 0.00
VII. Establishment and perfection of system for information insider and self-inspection
concerning carrying out securities trading by using the inside information
The Company formulated Management Measure for Inside Information and Insider, which
was examined and approved at the 20th session of the 6th Board of Directors. Via
self-inspection, the Company’s directors, supervisors, senior executives and other
information insiders did not sell and buy the Company’s shares during the sensitive period
such as 30 days before disclosure of periodic reports, 10 days before disclosure of
performance warning and performance express and during the disclosure period of other
significant events.
VIII. Other Events
1. Special explanation and independent opinion of Independent Directors on external
guarantee of the Company
Based on the provisions in the Articles of Association and Notice on Regulating the
Capital Transaction Between Listed Companies and the Affiliated Parties, as well as Some
Problems in External Guarantee of Listed Companies (ZJF [2003] No. 56), we checked
over the external guarantee of the Company with serious and responsible attitude, and51
explanation on relevant situation is as follows: the amount of external guarantee in the
reporting period was RMB 0, the balance of external guarantee at the end of the reporting
period was RMB 0; the guarantee for the controlled subsidiaries in the reporting period
was RMB 250 million and the balance of guarantee for the controlled subsidiaries at the
end of the reporting period was RMB 450 million.
We believe that the Company has strictly followed the provisions in the Articles of
Association and Notice on Regulating the Capital Transaction Between Listed Companies
and the Affiliated Parties, as well as Some Problems in External Guarantee of Listed
Companies (ZJF [2003] No. 56), regulated the behavior of external guarantee, and
controlled the risk of external guarantee. In the reporting period, there was no illegal
guarantee.
2. In the reporting period, the Company designated Securities Times and Ta Kung Pao as
the newspapers for information disclosure, and no change has been made.
Section IX Report of the Supervisory Committee
I. Work of the Supervisory Committee
(Ⅰ) Meetings held by the Supervisory Committee
In the report period, the Supervisory Committee convened five meetings:
1. The first meeting was convened on 26 Mar. 2009, at which the Work Plan for
Supervisory Committee in 2009 was reviewed and approved.
2. The second meeting was convened on 23 Apr. 2009, at which the 2008 Annual Report
of Shenzhen Properties & Resources Development (Group) Ltd., the Summary of 2008
Annual Report of Shenzhen Properties & Resources Development (Group) Ltd., the 2008
Annual Profit Distribution Preplan, the Proposal on Withdrawing Various Reserves and
Estimated Liabilities, the Proposal on Reducing Asset Impairment Provision and the
Self-evaluation Report on Internal Control were reviewed and approved.
3. The third meeting was convened on 28 Apr. 2009, at which the First Quarterly Report
in 2009 of Shenzhen Properties & Resources Development (Group) Ltd. was reviewed
and approved.
4. The fourth meeting was convened on 12 Aug. 2009, at which the 2009 Semi-annual
Report of Shenzhen Properties & Resources Development (Group) Ltd., the Rules for
Engaging CPAs Firm, the Proposal on Authorizing Board of Directors to Make
Investments and the Proposal on Convening the 3rd Provisional Shareholders’ General
Meeting in 2009 and other proposals were reviewed and approved.
5. The fifth meeting was convened on 11 Oct. 2009, at which the Third Quarterly Report
in 2009 of Shenzhen Properties & Resources Development (Group) Ltd. and the Profit
Distribution Preplan in the Interim of 2009 were reviewed and approved.
(Ⅱ) In the reporting period, by attending all sessions of the Board and the shareholders’
general meetings as non-voting delegate, all members of the Supervisory Committee52
participated in the discussion on significant decision-making and conducted supervision
over the proposals reviewed by the Board of Director and the shareholders’ general
meeting, as well as holding procedure of the meetings in accordance with the law.
(III) In the reporting period, by paying close attention to the management and operation of
the Company and seriously supervising the Company’s financing and capital operation, as
well as inspecting the Board’s and management team’s official acts, the Supervisory
Committee safeguarded normal behaviors of the Company’s operation and management.
II. Independent opinions given by the Supervisory Committee on relevant issues of the
Company
(Ⅰ) Operation in line with the law:
In the reporting period, by being legal and valid decision-making procedure, doing a nice
job of implementing the shareholders’ general meeting’s and the Board’s resolutions, and
improving and perfecting internal control system, the Company set up quite perfect
check-and-balance system among operating body, decision-making body and supervision
body. The directors, managers and other senior management staffs devoted to their duty
with clean and diligent manner without finding any behavior in violation of the laws,
regulations and the Articles of Association of the Company or doing harm to the interests
of the Company’s shareholders when performing their duties.
(Ⅱ) Inspection of financial status:
As effectively supervised, inspected and reviewed the financial status and business
performance for 2009, the Supervisory Committee believed that the Company set up
sound financial system, perfect internal control system, standard financial operation and
good financial status. And the audit report for the reporting period has given a true,
objective and complete reflection of the Company's financial status and business
performance.
(Ⅲ) Review of internal control
The quite perfect internal control system had been set up by the Company and has been
carried out effectively. The self-appraisal report 2009 on internal control has given a true
and objective reflection of the establishment and operation of the Company's internal
control system.
(Ⅳ) Input of raised funds
In the reporting period, no funds were raised from the public during the reporting year.
(Ⅴ) Related transaction
The decision-making procedure of the Company was in compliance with the provisions
stipulated in the laws, regulations and the Articles of Association, of which justification
was conducted based on the pricing principles of making compensation for equal value
and fair market price without violating the principles of openness, fairness and justice, and
have not do harm to interests of the Company and minority shareholders.53
(Ⅵ) Disposal of assets
In the reporting period, the business of assets disposal was standard, which was in
conformity with the legal procedure. The said transaction was objective, just and fair
without insider dealing, and failed to do harm to interests of the Company and the
shareholders.
(Ⅶ) External investments
In the report period, in compliance with the Company Law, the Articles of Association of
the Company, the Rules of Procedure for Board of Directors and other requirements of
investment management, the Company adopted a serious attitude when conducting the
project feasibility analysis and researches, as well as executing the investment approval
procedure, with no irregular investment behaviors or events.54
Section X. Significant Events
I. The significant lawsuits or arbitrations
1. In the report period, a new significant lawsuit arose: the lawsuit case of China Orient
Asset Management Co..
(1) Case No.: (2009) SZFMECZ No.77
In this case, China Orient Asset Management filed a lawsuit against Shenzhen Felicity
Industrial Co., Ltd. (hereinafter referred to as “Felicity Industrial”) and Best Western
Shenzhen Felicity Hotel (hereinafter referred to as “Felicity Hotel”) over loan disputes.
China Orient Asset Management submitted the Application for Altering Litigant Request
to the Intermediate People’s Court of Shenzhen, asking the Court to add ten entities
including the Company to the defending parties of the application.
China Orient Asset Management altered its litigant request to: ① rule that Felicity
Industrial should pay off the loan principal of RMB 115 million and interest of RMB
65,837,282.11 (interest as at 20 Dec. 2008, and the interest will be recalculated according
to the date of repayment); ② to rule that Felicity Hotel and the ten entities added to the
defending parties should bear the joint liability for the loan; ③ to rule that all the
defending parties should shoulder the legal fare, the security fare and other legal expenses
caused by the case.
(2) Case No.: (2009) SZFMECZ No.78
In this case, China Orient Asset Management filed a lawsuit against Felicity Industrial and
Felicity Hotel over loan disputes.
China Orient Asset Management submitted the Application for Altering Litigant Request
to the Intermediate People’s Court of Shenzhen, asking the Court to add ten entities
including the Company to the defending parties of the application.
China Orient Asset Management altered its litigant request to: ① rule that Felicity Hotel
should pay off the loan principal of RMB 100 million and interest of RMB 56,961,347.27
(interest as at 20 Dec. 2008, and the interest will be recalculated according to the date of
repayment); ② to rule that Felicity Industrial and the ten entities added to the defending
parties should bear the joint liability for the loan; ③ to rule that China Orient Asset
Management should be entitled to dispose the mortgaged objects in the Mortgage Contract
and have the priority of compensation according to laws; and ④ to rule that all the
defending parties should shoulder the legal fare, the security fare and other legal expenses
caused by the case.
The Company has disclosed the said cases in the interim public notices published on
Securities Times, Ta Kung Pao and http://www.cninfo.com.cn designated for information
disclosure dated 30 Dec. 2009.
2. During the reporting period, progress of the significant lawsuits or arbitrations disclosed
over the previous years is detailed as follows:
(1) Concerning the case of “Haiyi Company” disclosed by the Company in the annual55
reports from 1999 to 2008, the interim public notices on 9 Apr. 2009, 4 Jun. 2009 and 29
Jun. 2009, the 2009 Semi-annual Report and the interim public notice on 19 Oct. 2009, the
Company is continuing to file an appeal to the Supreme People’s Court.
The Company held the opinion that: The 2 judgments of remand made by the Supreme
People’s Court were the same with or similar to the other 32 judgments that had issues
such as unclear facts, errors in the application of laws and violation of the legal lawsuit
procedure. And this ruling of the Supreme People’s Court would help the Company with
the Company’s attempt to repeal for the other 32 judgments. But the ruling of the remand
of the two judgments would not become a legal basis for the stop of the execution of the
other 32 judgments. And the Company will keep a close eye on the progress of the case
and perform its duty of information disclosure in a timely way.
(2) Regarding the case of “Jiyong Company” disclosed in the annual reports from 2000 to
2008, the 2009 Semi-annual Report, and the interim public notices on 14 Sept. 2009 and
26 Oct. 2009
Because Jiyong Company had no properties available for execution, the Higher People’s
Court of Guangdong Province ruled to terminate the execution procedure of Case
(2002)YGFZZ No.1. The Company will actively conduct researches and apply to the
Court for execution resumption when it finds that the executed party has properties for
execution.
(3) Regarding the case against Guomao Jewel & Gold Co., Ltd. located in Shengfeng
Road, Shenzhen as disclosed in the annual reports from 2005 to 2008 and the 2009
Semi-annual Report
Shenzhen Intermediate People’s Court has made the trial of first instance in Sep. 2007,
which Guomao Jewel & Gold Co., Ltd would bear debts of RMB 32,524,650.45, Lin
Ruohua, legal representative of Guomao Jewel & Gold Co., Ltd, would undertake joint
discharge responsibility within the scope of RMB 10,053,000. The judgment has come
into force.
Guomao Jewel & Gold Co., Ltd and Lin Ruohua failed to execute the judgment, and there
were no property of Guomao Jewel & Gold Co., Ltd available for execution. The
Company withdrew bad debt reserve for payable administrative expense and substitutive
expenses of water and electricity amounting RMB 6,532,519.60 after deducting receivable
deposit. The Company applied for enforcement.
(4) Regarding the contract dispute with Duokuai Elevator as disclosed in the annual
reports of 2006 and 2007 and the 2008 Semi-annual Report
A. On 11 Jul. 2002, Shenzhen Huangcheng Real Estate Co., Ltd (hereinafter referred to as
“Huangcheng Real Estate”), subsidiary of the Company, signed and concluded Contract
on Elevator Equipment and Agreement on Real Estate Mortgage and Purchase with
Duokuai Elevator (Far-East) Co., Ltd (hereinafter referred to as “Duokuai Elevator”),
which prescribed Duokuai Elevator provided elevators demanded for B block of
Huangyuyuan to Huangcheng Real Estate, and Tao Boming was willing to guarantee with
mortgage of real estate under his name to Huangcheng Real Estate. On 6 Sep. 2004,
Huangcheng Real Estate applied for arbitration to Shenzhen Arbitration Commission,56
appealed for termination of Contract on Elevator Equipment signed with Duokuai
Elevator with the reason that Duokuai Elevator failed to provide elevators, double return
paid deposit amounting RMB 7,539,000, payment for elevators amounting RMB
15,904,000 and compensation for loss amounting RMB 277,268.51. On 24 Nov. 2005,
Shenzhen Arbitration Commission made a judgment that Duokuai Elevator would pay for
deposit RMB 7,539,000, payment for elevators RMB 15,904,000 and Tao Boming
undertook compensation responsibility within the scope of value of mortgage.
Not satisfied with the decision, Duokuai Elevator and Tao Boming appealed to the
Intermediate People’s Court of Shenzhen (hereinafter referred to as “Intermediate Court”)
for cancellation of the decision on 7 Dec. 2005. In 2006, the Intermediate Court issued the
two civil judgments of (2006) SZFMSCZ No.18 and No.19, which decided to refuse the
request of Duokuai Elevator and Tao Boming to cancel the Verdict [2005] SZCZ No.1227
made by Shenzhen Arbitration Commission. On 16 Nov. 2006, Huangcheng Real Estate
reported the execution progress to the Intermediate Court and asked the Court to start the
evaluation and auctioning procedure of the mortgaged properties.
Progress in the first half of 2009: ① Two house properties under the name of Duokuai
Elevator totaling 957.31 ㎡ at the podium building of Huangcheng Plaza and ITC Plaza
have been auctioned by the Intermediate Court, with the auction price of RMB 4.28
million. In Apr. 2009, Huangcheng Real Estate received RMB three million from the
Intermediate Court and the other amount of RMB 1.28 million still remains in the account
of the Intermediate Court. ② According to the Notification (2006) SZFZZ No.516 issued
by the Intermediate Court, five house properties were auctioned on 24 Apr. 2009 with the
auction price of RMB 5.14 million, of which one third, i.e. RMB 1,713,333.00, could be
used, according to laws, as executable properties for the case to pay off the debt owed to
Huangcheng Real Estate.
B. On 3 Aug. 2006, Hainan Duokuai Elevator Service (Far-East) Co., Ltd Shenzhen
Branch (hereinafter referred to as “Duokuai Shenzhen Branch”) initiated litigation to The
People’s Court of Futian District of Shenzhen, appealed Shenzhen Huangcheng Property
Management Co., Ltd (hereinafter referred to as “Huangcheng Property Management
Company”), subsidiary of the Company, to pay the service expense. In the process of trial,
Duokuai Shenzhen Branch applied to sue Huangcheng Real Estate as the second
defendant and appealed Huangcheng Real Estate bearing joint discharge responsibility for
the aforesaid debt. On 26 Jan. 2007, the People’s Court of Futian District of Shenzhen sent
civil judgment paper with (2006) SFFMEC Zi No. 1977, which ordered Huangcheng Real
Estate and Huangcheng Property Management Company would pay service expense RMB
925,500.00 and RMB 1,105,130.00 to Duokuai Shenzhen Branch respectively and paid for
loss of interest. Huangcheng Real Estate and Huangcheng Property Management
Company sued appeal with reasons of ambiguity of facts and violation of legal procedures.
On 28 Jan. 2008, Shenzhen Intermediate People’s Court made a civil judgment with (2007)
SZFMEZ Zi No. 827: Huangcheng Real Estate and Huangcheng Property Management
Company would pay service expense RMB 893,100.00 and RMB 1,102,730.00 to
Duokuai Shenzhen Branch respectively and paid for loss of interest. Huangcheng Real
Estate and Huangcheng Property Management Company confirmed the relevant
expenditure in financial statement.
The closing balance of amount receivable from Duokuai Elevator to Huangcheng Real
Estate stood at RMB 8,726,693.00. Considering the accounts payable to Duokuai Elevator57
and its related parties and guarantee parties, an impairment provision test was run in the
book value of the accounts receivable and RMB 3,978,423.60 has been withdrawn as bad
debt provision.
C. In Jul. 2002 and Jan. 2003, Huangcheng Real Estate signed and concluded Agreement
for Sale and Purchase of the Property in Shenzhen City on 4-2901, 6-2901 of A block
respectively, Tao Boming paid the initial payment and applied to loan of the balance from
Industrial & Commercial Bank of China Futian Branch. Lawsuit which was sued
Huangcheng Real Estate to handle House Ownership Certificate for eight real estates
including the aforesaid real estate by Tao Boming, was objected by the court. Tao Boming
initiated litigation to the court for unable to enjoy substantive rights, and appealed: (1)
terminate Agreement for Sale and Purchase of the Property in Shenzhen City signed and
concluded with Huangcheng Real Estate and Loan Contract for Individual Housing signed
with Industrial & Commercial Bank of China Futian Branch, and appealed Huangcheng
Real Estate returned all housing fund, insurance expense and expense for public
notarization.
On 20 Nov. 2007, Shenzhen Intermediate People’s Court made a judgment of final
instance with (2007) SZFMWC Zi No. 79. This judgment was still in the process of
execution, Huangcheng Real Estate returned the aforesaid confirmed income, cost and tax
in the report period according to the judgment and withdrawn relevant loss.
(5) With regard to case of “Meisi Company Lawsuit” disclosed continuously by the
Company in Annual Report between 2004 and 2007, interim public notices 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, and the 2009 Semi-annual Report
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 District 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. The
Company disclosed the above in Significant Litigation and Arbitration, (I), Section X
Significant in Annual Report 2008.
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 forecasted that the above events would not cause significant
influence on financial status of the Company.
On 22 Dec. 2009, the Higher People’s Court of Guangdong decided to terminate the
Administrative Judgment (2008) SZFXZ Zi No.223 made by the Intermediate People’s58
Court of Shenzhen and bring the case to trial. And the Company disclosed the relevant
progress of the case in the interim public notices published on Securities Times, Ta Kung
Pao and http://cninfo.com.cn designated for information disclosure dated 23 Dec. 2009.
(6) Regarding the case of “Guarantee for Gintian” as disclosed in Annual Report 2007,
Annual Report 2008 and the 2009 Semi-annual Report. The Company withdrew RMB
56.6 million at full amount for the case; meanwhile, the Company would recourse against
Gintian Company in line with laws.
(7) Regarding the Huaxi Company Lawsuit as disclosed in the Note (Ⅻ) Contingent
Matters 1. Unsettled lawsuits to the financial statements of the 2008 Annual Report
In July 1996, China Huaxi Enterprise Limited (hereinafter referred to as “Huaxi
Company”) signed the Jinlihua Commercial Plaza Granite Outside Decoration
Construction Contract with Shenzhen Jiyong Property Management Co., Ltd. (hereinafter
referred to as “Jiyong Company”). Jinlihua Commercial Plaza had been jointly built by the
Company and Jiyong Company. In May 1993, the Company transferred all its equities of
Jinlihua Commercial Plaza to Jiyong Company. Later, Jiyong Company refused to pay for
the construction. And Huaxi Company filed a lawsuit to the People’s Court in Luohu
District, Shenzhen, asking Jiyong Company, Shenzhen Zongli Investment Co., Ltd. and
the Company to pay for the construction and its loss over RMB 5.87 million. And the case
was brought to trial for the first time in 2003.
In Apr. 2009, the People’s Court of Luohu District, Shenzhen re-opened the case. And the
plaintiff put forward a new litigant request of a compensation of overdue interest
amounting to RMB 1.5 million besides the original litigant application.
On 1 Dec. 2009, the People’s Court of Luohu District, Shenzhen delivered the Civil
Judgment (2003) SLFMEC Zi No.240 to the Company, deciding to refuse the litigant
application of the plaintiff Huaxi Company against the Company. The Company disclosed
this matter in the interim public notice published on Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure dated 3 Dec. 2009.
II. Equity of other listed companies held and traded by the Company
1. Securities investment
No.
Type of
securities
Stock
code
Short form of
Stock
Initial
investment
(RMB Yuan)
Number
of shares
held
Book value at
year-end
Percentage
to total
securities
investment
at the
year-end
(%)
Profits and
losses in the
reporting period
1
Shenzhen
A-share
000030 ST Sunrise 268,735.50 30,000 232,200.00 100.00 168,300.00
Profit and loss from selling securities investment
in the report period
— — — —
2,267,351.33
Total 268,735.50 — 232,200.00 100.00 2,435,651.33
2. Equity of other listed companies held by the Company59
Stock code
Short form
of stock
Initial
investment
amount
Equity
proportion
in that of
this
company
Book value at
the year-end
Profit and loss
in the
reporting
period
Change in the
owners’
equity in the
reporting
period
Accounting
item
Source of
shares
000509 S*ST T.H. 2,962,500.00 0.33% 802,199.55 0.00 0.00
Long-term
equity
investment
Purchasing
legal person
shares
directionally
Total 2,962,500.00 - 802,199.55 0.00 0.00
3. Equity of other listed companies bought and sold by the Company
Items Name of stock
Number of
shares at the
period-begin
Number of
shares
bought
and sold in
the
reporting
period
Number of
shares at
the
period-end
Funds
used
Investment
income
Buy-in
CHINA
OVERSEAS
202,500 8,100 57,104.83
Total 202,500 8,100 57,104.83
Sell-out
Shenzhen
Development A
47,190 47,190 198,943.61
China Shipping
Container Lines
1,000 1,000 179.70
CHINA COAL
ENERGY
1,000 1,000 734.98
HEFEI URBAN
CONSTRUCTION
750 750 1,929.00
CRCC 1,000 1,000 249.76
Jin Mu Gu Fen 1,200 1,200 1,971.88
CHINA
OVERSEAS
202,500 210,600 2,746,475.35
Merchants
International
4,000 4,000 25,423.78
HYSAN DEV 6,000 6,000 24,393.13
CHINA STATE
CON
48,000 48,000 105,027.73
YUNNAN 50,000 50,000 37,268.9260
ENTER
HKR INT'L 4,400 4,400 -1,419.92
Xingye
Chuangjian
860 860 250.19
Total 367,900 376,000 3,141,428.11
III. Purchases, sales of assets, or mergers of the Company in the reporting period
1. In the report period, the Company had no significant asset acquisition or mergers.
2. Sale of assets
(1) On February 9, 2009, a resolution regarding disposal of use right of a land located in
Sihui City is approved by the twelfth session of the sixth conference of the Company’s
board of directors. The details of the resolution are described as follows. Shenzhen
Huangcheng Real Estate Co., Ltd (hereinafter referred to as “Huangcheng Real Estate”), a
wholly-owned subsidiary of the Company, owns use right of an industrial land located in
Sihui City Guangdong Province (with an expiration date of August 11, 2044, hereinafter
referred to as “Sihui Land”) with an usable area of 31,394.49 square meter (equivalent to
47.09 Mu). To protect right of the company from government expropriation, Huangcheng
Real Estate plans to negotiate with the People’s Government of Sihui City to repurchase
use right of Sihui Land. Huangcheng Real Estate signed the Land Purchase Contract with
Sihui Land Storage Centre by EMS. On 6 Jul. 2009, the Company received the original
copy of the said contract signed and sealed between two parties at the purchase price of
RMB 112,000.00 per Mu, as well as total purchase price of RMB 5,274,080.00. Please
refer to the temporary public notice disclosed on 8 July 2009. Up to reporting date,
Huangcheng Real Estate failed to receive such payment.
(2) Concerning Land in Pinghu (for more details, please refer to the Note (Ⅸ) Notes to
Main Items of Consolidated Financial Statements in the 2008 Annual Report.)
On 21 Sept. 2009, the Proposal on Solving Issue of Land in Pinghu Left by History was
reviewed and approved at the 18th Meeting of the 6th Board of Directors of the Company.
On 29 Sept. 2009, the Company and Shenzhen Pinghu Stock Co., Ltd. (formerly known as
Pinghu Villagers’ Committee) signed a contract. According to the contract, Pinghu
Village should pay compensation to the Company for the remaining land of 3,582.78
square meters based on the government standard of RMB 554 per square meter. When
receiving all the compensation (government compensation of RMB 3,555,100 and
compensation from Pinghu Village of RMB 1,984,900), the Company will no longer
enjoy the said land use right and should transfer it to Pinghu Village; the Company will
bear expenses such as the land use expanses and transfer expenses less than RMB 0.9
million.
In Oct. 2009, the Company received the compensation of RMB 1,984,900 from Shenzhen
Pinghu Stock Co., Ltd., while the government compensation has not been received so far.
Because of its only enjoying the compensation right, the Company wrote off the book61
value of the said land (The original book value to be written off stood at RMB 40,642,200,
while the inventory impairment provision after writing off stood at RMB 38,242,200.).
This transaction generated an income of RMB 2.24 million in the year 2009.
The aforesaid sales of assets were non-related transactions, which had no impact on the
business consistency and management stability of the Company.
IV. Equity incentive plan
In the report period, the Company conducted no equity incentive plan.
V. Significant related transactions
(I) Significant related transactions
1. On 19 Jan. 2009, the 11th Meeting of the 6th Board of Directors was convened, at which
the Proposal on Applying to Shenzhen Investment Holdings Co., Ltd. for an Entrustment
Loan of RMB 50 Million was reviewed and approved. The Company disclosed on 24 Jan.
2009 this loan transaction in its interim public notice on the designated media—Securities
Times, Ta Kung Pao and http://www.cninfo.com.cn.
With the Shenzhen Branch of the Agricultural Bank of China as the trustee, the Company
applied to its actual controlling shareholder Shenzhen Investment Holdings Co., Ltd. for
an entrustment loan of RMB 50 million with a term of 12 months and the mature date at
23 Jan. 2010, which was used for repaying the old loans.
2. 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.
3. On 16 Oct. 2009, the Company’s subsidiary—Shenzhen Huangcheng Real Estate Co.,
Ltd., the Company’s actual controlling shareholder—Shenzhen Investment Holdings Co.,
Ltd., and the Shenzhen Jingtian Sub-branch of China Everbright Bank signed the
Entrustment Loan Contract in Shenzhen. Shenzhen Investment Holdings Co., Ltd.
entrusted the Shenzhen Jingtian Sub-branch of China Everbright Bank with its own capital
to grant an entrustment loan of RMB 150 million to the Company, with a term of 12
months, the mature date at 16 Oct. 2010 and the annual interest rate at 5.0523%. And the
said loan would be used to repay old loans. The Company released the interim public
notice No.2009-81 concerning this matter, which was published on Securities Times, Ta
Kung Pao and http://cninfo.com.cn designated for information disclosure dated 20 Oct.
2009.
4. The 21st Meeting of the 6th Board of Directors was convened on 22 Dec. 2009, at which
the Proposal on Applying to Controlling Shareholder for a Loan of RMB 50 Million was
reviewed and approved. And the Company released the relevant interim public notice on
Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for information
disclosure dated 24 Dec. 2009.
On 30 Dec. 2009, with the Shenzhen Branch of the Agricultural Bank of China as the
trustee, the Company applied to its actual controlling shareholder Shenzhen Investment62
Holdings Co., Ltd. for an entrustment loan of RMB 50 million with a term of 12 months,
an annual interest rate of 5.31% and the mature date at 29 Dec. 2010, which was used for
repaying the old loans.
The aforesaid capital support eased the financial strain of the Company and made sure the
normal operation of the Company.
(II) Credits, liabilities and guarantees between the Company and related parties
For the credits and liabilities between the Company and its related parties, please refer to
the Note XI. 3. (3) Entrustment loans and (4) Balance of accounts receivable from and
payable to related parties under the Notes to the financial statements. For details of the
guarantees, please refer to the Note (Ⅶ) 3 to the financial statements.
VI. Significant contracts and implementation
(I) Significant transaction, trusteeship, contract or lease of assets
1. During the reporting period, the Company did not hold a trust, contract or lease assets
of the other companies and the other companies did not hold a trust and contract the
Company’s assets.
2. In the report period, there were no such significant events where the Company leased its
assets.
(Ⅱ) Significant guarantees
1. The Company provided a joint-liability guarantee for the long-term loan of RMB 240
million borrowed by Shenzhen Huangcheng Real Estate Co., Ltd. from the East Shenzhen
Sub-branch of China Agricultural Bank, and mortgaged the loan with its properties on
No.4-01 and 3/F, Block A of Shenzhen International Trade Center Plaza. The closing
balance of the loan stood at RMB 200 million.
2. The Company provided a joint-liability guarantee for the long-term loan of RMB 250
million borrowed by Shenzhen Huangcheng Real Estate Co., Ltd. from the Shenzhen
Branch of China Construction Bank. The closing balance of the loan stood at RMB 200
million and the loan would be due within one year.
3. The Company and its subsidiaries Shenzhen Property & Real Estate Development Co.,
Ltd. and Shenzhen ITC Vehicles Services Company provided a joint-liability guarantee
for the long-term loan of RMB 250 million borrowed by Shenzhen Huangcheng Real
Estate Co., Ltd. from the East Shenzhen Sub-branch of China Agricultural Bank. The
closing balance of the loan stood at RMB 50 million.
4. Guarantee for the proprietors: The Company and its subsidiaries provided the
commodity houses purchasers with mortgage guarantee to the bank. Up to 31 Dec. 2009,
the guarantee amount unsettled was RMB 190.79 million. The guarantee is that the real
estate developer provides petty proprietor with guarantee for purchasing of commodity
houses of the Company, which is a common phenomenon in this business.
(III) Cash assets management the Company trusted other parties
There was no event of trusteeship of cash assets management in the reporting period.63
VII. Commitment made by the Company or shareholders holding over 5% of shares of the
Company
Shenzhen Construction Investment Holdings Co. (hereinafter referred to as “Construction
Holdings”) and Shenzhen Investment Management Co. (hereinafter referred to as
“Investment Management Company”) were nominal shareholders of the Company (Shares
of the Company are registered under the name of these two companies.). Later, these two
companies and Shenzhen Trade & Commerce Investment Holdings Co. combined on a
legal basis and became one company known as Shenzhen Investment Holdings Co., Ltd.
(hereinafter referred to as “Investment Holdings”). However, due to various reasons, the
Company’s shares held by Construction Holdings and Investment Management Company
has not been transferred to Investment Holdings, which is the actual controller of the
Company.
1. Investment Holdings stated that it would establish and perfect the internal control over
undisclosed information of the listed company known by it, urge relevant insiders not to
trade the shares of the Company by making use of the undisclosed information, not
suggest other buying and selling shares of the Company, nor leak any undisclosed
information of the Company. Meanwhile, it would provide an insider name list to the
Company in a timely, factual, accurate and complete way so that the Company could
submit the name list to the Shenzhen Bureau of CSRC and the Stock Exchange for
records.
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. Commitments made by non-tradable share holders in the share merger reform
(1) The Company’s non-tradable share holders Construction Holdings and Investment
Management Company made a common commitment to abide by laws, regulations and
rules and perform prescribed commitment duties. And they also made special
commitments as follows:
Non-tradable shares held by Construction Holdings and Investment Management
Company would not be traded or transferred within 36 months since they acquired right of
trade. After expiration of the aforesaid commitment, originally non-tradable shares sold
through the listing and trading system on the Shenzhen Stock Exchange should 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
and sold shares of the Company, the income from sales of the shares would belong to the
Company.
(2) Investment Holdings made a commitment to abide by laws, regulations and rules and
perform prescribed commitment duties. And it also made special commitments as follows:
① Non-tradable shares held by Investment Holdings would not be traded or transferred64
within 36 months since they acquired right of trade. After expiration of the aforesaid
commitment, originally non-tradable shares sold through the listing and trading system on
the Shenzhen Stock Exchange should 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 and sold shares of the Company, the
income from sales of the shares would belong to the Company.
② Within one year since the non-tradable shares held by Construction Holdings and
Investment Management Company controlled by Investment Holdings acquired the right
of trading, 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 compensate 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.
According to the commitments of the share merger reform, Investment Holdings applied
to the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. in Nov.
2009 for freezing the 30 million shares of the Company held by Construction Holdings
and actually controlled by Investment Holdings.65
VIII. Engagement and disengagement of CPAs firm
In the reporting period, the Company still engaged Wuhan Zhonghuan Certified Public
Accountants Ltd to do the auditing work for the year 2009. Since the first agreement on
the auditing work signed by the auditor, Wuhan Zhonghuan Certified Public Accountants
has been providing auditing service for 8 reporting years for the Company in succession.
The annual auditing fees for 2009 totaled RMB 520,000 (including business trip
expenses).
IX. Punishment to the Company, its Directors, Supervisors and Senior Management and
rectification in the reporting period
1. On 10 Sept. 2008, the Company received the Investigation Letter (2008 SJLT Zi
No.001) issued by the Shenzhen Investigation Bureau of CSRC. And the Company
released the relevant interim public notice on Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure dated 11 Sept. 2008.
On 3 Dec. 2009, the Company received the Advance Notification of Administrative
Punishments (CF Zi 【2009】No.54) issued by CSRC, which administered the following
punishments on the Company for its irregular securities behaviors before the year 2007: to
confiscate the illegal income of RMB 250,849.80 obtained by the Company through
trading securities via personal accounts, confiscate the illegal income of HKD
8,544,744.97 obtained by the Company through trading B shares via other corporate
accounts, and impose a penalty of RMB 250,849.80 on the Company. Meanwhile, CSRC
also planned to issue warnings and impose penalties on relevant responsible persons (all
left their posts before Dec. 2008.). And the Company disclosed the relevant interim public
notice on Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 7 Dec. 2008.
The Company has presented the statements and pleadings to CSRC according to laws, and
now waits for the examination of CSRC. Up until the report date, the Company has not yet
received the official notification of investigation results. Despite that the statements and
pleadings have been presented, the Company estimates that the punishments mentioned in
the Advance Notification of Administrative Punishments are likely to happen, and
withdraws therefore a relevant estimated liability of RMB 8,030,474.39.
2. In the report period, the Company’s present directors, supervisors, senior executives,
shareholders and actual controller received no investigations by competent authorities,
enforcement measures by judicial and regulatory authorities, transferring to judicial
departments or prosecution for criminal liability, inspection or administrative punishment
by CSRC, non-admission to securities market, or punishment by other administrative
departments or public condemnation by the Shenzhen Stock Exchange as a result of being
identified as an inappropriate entity.
X. In the reporting period, significant events listed in Article 67 of Securities Law and
Article 17 in Detailed Rules for Implementation of Information Disclosure by Companies
Publicly Issuing Stock (Trial)66
In Nov. 2009, the Shenzhen Municipal Government released the Shenzhen City Renewal
Methods, which was officially implemented on 1 Dec. 2009. Concerning the industrial
land in Shangmeilin, Shenzhen (Property Certificate No.SFD Zi 0103142 and 0103139, its
land use right is registered under the name of the Company, while there has been dispute
over the possession of its existence right. And now the case is in the lawsuit process.
The Company disclosed the relevant interim public notice on Securities Times, Ta Kung
Pao and http://cninfo.com.cn designated for information disclosure dated 27 Nov. 2009.
Considering the land use right of the said industrial land is still in the lawsuit process, it is
uncertain to decide whether the relevant provisions of the Shenzhen City Renewal
Methods is applicable to the Company. The relevant evaluation is therefore unable to be
done. And the Company will follow up the matter when the specific rules for
implementing the Methods is released and the specific plan is worked out.
XI. Other Significant Events
1. On 14 Jan. 2009, the proposal on transferring the whole equities of Hainan Xinda
Development General Corporation held by the Company by public listing on the base of
evaluation price was reviewed and approved at the 10th Meeting of the 6th Board of
Directors. Up to the report date, the evaluation has not been finished.
2. In Sept. 2009, the actual controller of the Company—Shenzhen Investment Holdings
Co., Ltd. put forward the motion of share merger reform. And the Company released the
Suggestive Public Notice on Share Merger Reform on 3 Sept. 2009, which marked the
start of the Company’s share merger reform.
On 9 Sept. 2009, the Company released the Notice on Convening Shareholders’ General
Meeting for Share Merger Reform, the Explanatory Memo of Share Merger Reform and
other relevant documents.
On 18 Sept. 2009, the Company disclosed the Explanatory Memo of Share Merger
Reform (Revised) and other relevant documents, as well as the Suggestive Public Notice
on Convening Shareholders’ General Meeting for Share Merger Reform respectively on
14 Nov. 2009 and 19 Oct. 2009.
On 21 Oct. 2009, the Company convened the Shareholders’ General Meeting for the share
merger reform, at which the reform plan was approved. On 22 Oct. 2009, the Company
disclosed the relevant interim public notice on Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure.
On 28 Oct. 2009, the Company disclosed the Public Notice on Implementing Share
Merger Reform Plan. And it disclosed the Revised Public Notice on Implementing Share
Merger Reform Plan on the next day.
On 3 Nov. 2009, the stock consideration in the plan of share merger reform was delivered
to the accounts of the tradable A-share holders.
3. It was approved by the Shenzhen Stock Exchange to cancel the delisting risk warning
and other special treatment on the stock of the Company. And the Company disclosed the
Public Notice on Canceling Delisting Risk Warning and Other Special Treatment on Share
Trading on Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 15 Sept. 2009.67
4. The 4th Provisional Shareholders’ General Meeting in 2009 was convened on 6 Nov.
2009, at which the Proposal on Conducting Interests Distribution in the Interim of 2009
was reviewed and approved. And the Company disclosed the relevant interim public
notice on Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 9 Nov. 2009.
On 16 Nov. 2009, the Company disclosed the Public Notice on Implementing Interests
Distribution in the Interim of 2009.
On 23 Nov. 2009, the cash and stock dividends were delivered to the accounts of A-share
holders.
On 25 Nov. 2009, the cash and stock dividends were delivered to the accounts of B-share
holders.
5. The Company had withdrawn in advance in the previous years the land value
appreciation fee of Jinlihua Building amounting to RMB 56,303,627.40. According to the
Document SGT [2001] No.314, the land value appreciation fee unpaid or owed would be
exempted. However, the relevant land use right had not been transferred. Therefore, the
Company would actively handle the procedures relating to exempting the land value
appreciation fee of Jinlihua Building amounting to RMB 56,303,627.40. Upon the arrival
of the relevant approval document, the Company would cancel the land value appreciation
fee withdrawn in advance after verification.
Concerning the sum for real estate of Jinlihua Building amounting to RMB 100,014,300
that the Company should receive from Shenzhen Jiyong Properties Development Co., Ltd.,
a bad debt of RMB 44,014,300 had been withdrawn with the net amount standing at RMB
56 million.
6. Based on the Labor Law and the Labor Contract Law, as well as the Opinion on Further
Regulating Labor Relation of Municipal SOE and the Circular on Deepening the Reform
of Human Resource Allocation in Municipal SOE issued by State-owned Assets
Supervision and Administration Commission of Shenzhen on 18 Aug. 2006, and some
other relevant documents, the Company formulated the Compensation Methods for
Human Resource Allocation Reform of Shenzhen Properties & Resources Development
(Group) Ltd. (hereinafter referred to as “Compensation Methods”). And the Compensation
Methods had been approved by the Company’s employee representative conference on 10
Oct. 2008. In accordance with the Compensation Methods, the Company worked out an
employee dismissal plan, which was approved at the 14th Meeting of the 6th Board of
Directors of the Company. And all the employees had been informed of the said dismissal
plan. The Company was unable and not going to unilaterally cancel the plan. According to
the plan and relevant accounting standards, the Company made a provision in 2008 on
dismissal compensation of RMB 36,643,309.50. And the dismissal compensation of RMB
12,169,019.50 and RMB 25,459,471.33 was paid respectively in 2008 and 2009. In the
report period, the Company worked out the plan of post allocation and staff remuneration.68
In order to safeguard operation stability, the dismissal plan was executed step by step on
subsidiaries in the report period. And some subsidiaries put off the dismissal plan. As
approved by the Board of Directors, the accomplishment date of the dismissal plan was
extended to 30 Jun. 2010, and the final payment date to 31 Dec. 2010. In the year 2009,
the dismissal plan was implemented on subsidiaries step by step or put off. The
macro-economic environment and employment situation became better after the economic
stimulus package of the government. And the plan of post allocation and remuneration
was further confirmed. Therefore, the total employee who actually accepted the dismissal
plan in the report period and was expected to accept the plan would be more than the
expectation last year. Up to the report date, according to the progress of the dismissal plan,
information from the Shenzhen Human Resources Market and the newest plan of post
allocation and remuneration adjustment of the Company, it was expected that there would
still be some employees who would accept the dismissal plan and leave their posts in the
year 2010. And the Company revised the dismissal compensation plan and withdrew
another dismissal compensation of RMB 12,700,956.90 in the report period.
XII. Particulars about researches and visits received in the report period
1. Particulars about visits by institutional investors received in the report period
On 19 Aug. 2009, the Company received a visit from researchers of Shenyin & Wanguo
Securities Co., Ltd. and talks over the operation status of the Company were conducted.
And the Company strictly abided by the principle of fair information disclosure,
conducting no differential treatment or leak of the undisclosed information.
2. In the report period, the Company received individual investors mainly through
telephone, fax and E-mail. As the calls from investors were numerous, it is difficult to list
them one by one. Questions concerned by investors were summarized as follows:
(1) Learned about progress of share merger reform of the Company, asked about when to
restart share merger reform;
(2) Hoped that the Company would start the share reform as soon as possible, and that the
principal shareholder would increase the consideration of the share reform and conduct
asset injection and reorganization;
(3) Expected the Company to clearly define the assets which were to be reorganized as
promised in the scheme for share merger reform;
(4) Whether the owner of the Company will change or not after the share merger reform
was accomplished;
(5) Asked about the sale of the Imperial Garden and Xinhua Town;
(6) Asked about the progress of the Haiyi Company Lawsuit and its impact on the
Company;
(7) Asked about whether the Meisi Company Lawsuit will have significant influence on
the business performance of the Company;
(8) Learned about the land reserve of the Company, and concerned about the normal
production and operation of the Company;
(9) Asked why the Company had not canceled the delisting special risk warning;69
(10) Asked about the annual report inquiry letter from Shenzhen Stock Exchange;
(11) Asked whether the B-share holders of the Company were entitled to take part in the
share merger reform;
(12) Expressed personal opinions on the share merger reform of the Company;
(13) Asked about the specific steps and methods for on-line voting;
(14) Inquired about the tax policy on dividends;
(15) Inquired about the Company’s taking part in the auction of land in Yangzhou;
(16) Asked about the cause of the China Orient Asset Management Co., Ltd. lawsuit.
In reception of telephone consultation, the Company protected right of investors to obtain
information fairly in accordance with Guidelines for Fair Information Disclosure of Listed
Company and strictly according to principle of fair information disclosure. There was no
difference in treatment to investors or revelation of non-public information in advance.
XIII. Explanation on capital currents between the Company and its related parties
Special explanation given by Wuhan Zhonghuan Certified Public Accountants on capital
appropriation by the controlling shareholders and other related parties of Shenzhen
Properties & Resources Development (Group) Ltd:70
ShenZhen Properties & Resources Development (Group) Ltd.
Special Statement Concerning Occupation of Non-operation Capital and Other Fund
Transfers Between Listed Companies and Associated Parties for Year 2009
ZHZ Zi (2010) No. 036
To the Board of Directors of Shenzhen Properties & Resources Development
(Group) Ltd.:
We have accepted the commission to audit the financial statement of Shenzhen
Properties & Resources Development (Group) Ltd. (hereinafter referred to as “the
Company” or “PRD”) in accordance with Auditing Standards for CPAs of China,
which comprise the balance sheet and the consolidated balance sheet as at 31
December 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 year then ended,
as well as the notes to the financial statement, and issued the Auditor’s Report with
ZHS Zi (2010) No. 049 on 5 Feb. 2010.
Pursuant to Notice of China Securities Regulatory Commission and the State-owned
Assets Supervision and Administration Commission of the State Council Concerning
Some Issues on Regulating the Fund Transfers between Listed Companies and
Associated Parties and Listed Companies’ Provision of Guaranty to Other Parties (ZJF
[2003] No. 56 document) and Requirements of Shenzhen Stock Exchange Concerning
Work Memorandum for Information Disclosure No. 2, 2006 (Revised) – Disclosure
and Report on Occupation of Extraordinary Capital and Other Fund Transfers Between
Listed Companies and Associated Parties, the Company prepared the accompanying
Summary Sheet Concerning Occupation of Non-operation Capital and Other Fund
Transfers Between Listed Companies and Associated Parties for Year 2009
(hereinafter referred to as “Summary Sheet of Capital Occupation”).
In accordance with the Summary Sheet of Capital Occupation, as at 31 Dec. 2009, the
Company’s major shareholders and subsidiary enterprises did not occupy capital of the
Company for non-operating purposes. Up to 31 Dec. 2009, the funds of the Company,
which were possessed by other associated parties and subsidiary enterprises for
non-operating transfer purposes, totaled RMB 32,575,000.
Faithfully preparing Summary Sheet of Capital Occupation and ensuring its truth,
validity and completeness is the responsibility of the Company’s management. We
conducted our check to the information recorded in Summary Sheet of Capital
Occupation against the audited financial statement 2009 of the Company and other
relevant information, and no discrepancy was found in all material information. Except
for the relevant auditing procedures implemented by us on the related transactions
while auditing the 2009 financial statements for the Company, we have not conducted
any extraordinary auditing procedure or other to the information carried by the
Summary Sheet of Capital Occupation.
For the purpose of better understanding the capital occupation by the controlling
shareholder and other related parties of the Company in 2009, the Summary Sheet of
Capital Occupation is suggested to be read together with the audited financial
statements.
This Statement is for the purpose of being submitted by the Company to the Shenzhen
Securities Regulatory Bureau of CSRC and the Shenzhen Stock Exchange, and it shall
not be used for any other purposes.
Attached: the Summary Sheet Concerning Occupation of Non-operation Capital and
Other Fund Transfers Between Listed Companies and Associated Parties for Year 2009
prepared by Shenzhen Properties & Resources Development (Group) Ltd.
Wuhan Zhonghuan Certified Public Accounts Co., Ltd.
Chinese registered accountant: Min Chao
Chinese registered accountant: Wang Yu
Wuhan, China 5 Feb. 201071
Section XI Financial Report (Attached)
Section XII Documents for Reference
(Ⅰ) Accounting Statements with the signatures and seals of the Legal Representative and
the Manager of the Finance Department.
(Ⅱ) Originals of the Auditors’ Reports with the seals of the auditing agencies, and the
signatures and seals of the CPAs.
(Ⅲ) Texts and originals of the public notices disclosed in the designated media within the
report period.
Board of Directors of
Shenzhen Properties & Resources Development (Group) Ltd
5 Feb. 2010
Balance Sheet
Prepared by Shenzhen Properties & Resources Development (Group) Ltd.
As at 31 Dec. 2009 Unit: RMB Yuan
Closing balance Beginning balance
Items Notes
Consolidation Parent company Consolidation Parent company
Current Assets:
Monetary fund （V）1 830,055,588.25 2,539,358.76 271,708,727.86 7,802,612.88
Trading financial assets （V）2 232,200.00 232,200.00 2,670,729.47 63,900.00
Notes receivable
Accounts receivable （V）3 66,938,998.94 61,464,246.43 68,605,911.80 60,405,970.89
Prepayment （V）5 46,862,874.11 500,000.00 2,305,629.53
Dividends receivable 325,739,041.74
Other receivables （V）4 54,030,054.90 89,557,866.50 67,222,142.10 441,309,610.51
Financial assets purchased
under agreement to resell
Inventories （V）6 1,255,676,772.24 66,446,135.31 1,153,726,292.83 106,048,264.34
Non-current assets due
within 1 year
Other current assets
Total current assets 2,253,796,488.44 546,478,848.74 1,566,239,433.59 615,630,358.62
Non-current assets:
Loan and payment on other's72
behalf disbursed
Available-for-sale financial
assets
Investment held to maturity （V）7 3,000.00
Long-term receivables
Long-term equity
investment
（V）9 79,697,503.62 178,877,503.62 81,273,230.90 183,908,863.53
Investment property （V）10 257,105,965.94 173,874,690.52 224,041,978.19 133,384,070.84
Fixed assets （V）11 76,985,792.12 39,860,661.03 104,013,870.31 46,337,392.67
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets （V）12 112,893,677.12 119,402,340.92
R&D expenses
Goodwill
Long-term deferred
expenses
2,243,026.34 2,243,026.34 2,549,186.42 2,409,176.42
Deferred tax assets （V）13 51,695,501.02 13,322,857.95
Other non-current assets
Total non-current assets 580,621,466.16 394,855,881.51 544,606,464.69 366,039,503.46
Total assets 2,834,417,954.60 941,334,730.25 2,110,845,898.28 981,669,862.08
Current Liabilities:
Short-term borrowings （V）16 200,000,000.00 50,000,000.00 369,000,000.00 164,000,000.00
Tradable financial liabilities
Notes payable
Accounts payable （V）17 112,470,139.39 37,032,127.61 137,040,777.65 36,748,755.23
Advance from customers （V）18 745,527,226.22 1,026,694.63 67,150,023.78 122,312.00
Financial assets sold under
agreements to repurchase
Service charge and
commission payables
Payroll payable （V）19 51,982,204.97 9,345,999.43 67,254,232.19 16,228,231.70
Taxes payable （V）20 205,331,877.94 2,912,148.33 82,322,778.74 1,198,324.42
Dividends payable
Interests payable 620,737.50 620,737.50
Other payables （V）21 208,240,882.65 125,331,899.26 187,732,899.73 384,394,686.18
Non-current liabilities due
within 1 year
（V）22 200,000,000.00 100,000,000.00 90,000,000.00
Other current liabilities
Total Current Liabilities 1,723,552,331.17 225,648,869.26 1,011,121,449.59 693,313,047.03
Non-current Liabilities:73
Long-term borrowings （V）23 263,480,000.00 348,229,343.34 40,000,000.00
Bonds payable
Long-term payables
Specific purpose account
payables
Provision for contingent
liabilities
（V）24 69,284,708.83 69,284,708.83 61,254,234.44 61,254,234.44
Deferred tax liabilities
Other non-current liabilities （V）25 115,796,274.42 12,315,309.38 118,763,754.44 9,886,144.84
Total Non-current Liabilities 448,560,983.25 81,600,018.21 528,247,332.22 111,140,379.28
TOTAL LIABILITIES 2,172,113,314.42 307,248,887.47 1,539,368,781.81 804,453,426.31
Owners’ equity (or
Shareholders’ Equity):
Paid-in capital （V）26 595,979,092.00 595,979,092.00 541,799,175.00 541,799,175.00
Capital reserve （V）27 25,332,931.52 226,883.79 25,332,931.52 226,883.79
Less: Treasury stock
Surpluses reserve （V）28 69,712,050.51 69,712,050.51 62,919,127.11 62,919,127.11
General risk provision
Retained earnings （V）29 -26,036,870.39 -31,832,183.52 -55,930,192.11 -427,728,750.13
Foreign exchange difference -3,544,650.52 -3,505,676.11
Total owners’ equity
attributable to parent company
661,442,553.12 634,085,842.78 570,615,365.41 177,216,435.77
Minority interest 862,087.06 861,751.06
Total owner’s equity 662,304,640.18 634,085,842.78 571,477,116.47 177,216,435.77
Total liabilities and owner’s
equity
2,834,417,954.60 941,334,730.25 2,110,845,898.28 981,669,862.08
Income Statement
Prepared by Shenzhen Properties & Resources Development (Group) Ltd.
As from Jan. to Dec. 2009 Unit: RMB Yuan
2009 2008
Items Notes
Consolidation Parent company Consolidation Parent company
I. Total sales 845,366,939.69 27,284,202.73 623,465,139.63 26,154,776.18
Including: Sales （V）30 845,366,939.69 27,284,202.73 623,465,139.63 26,154,776.18
II. Total cost of sales 716,121,309.48 80,310,850.83 617,322,969.87 83,164,117.78
Including: Cost of sales （V）30 431,856,954.60 18,575,069.16 339,569,377.34 12,501,071.24
Taxes and associate
charges
（V）31 146,024,553.22 1,422,224.20 90,044,123.93 1,351,107.98
Selling and distribution
expenses
21,209,571.81 19,695,986.96
Administrative expenses 102,009,696.27 39,021,307.37 139,121,028.95 62,336,820.7374
Financial expense （V）32 16,054,025.03 4,150,234.21 22,355,106.10 12,922,682.47
Impairment loss （V）33 -1,033,491.45 17,142,015.89 6,537,346.59 -5,947,564.64
Add: gain/(loss) from
change in fair value (“-” means
loss)
（V）34 -705,776.78 168,300.00 -2,383,995.78 5,500.00
Investment income (“-”
means loss)
（V）35 2,381,688.25 521,204,917.92 37,435,024.74 44,448,102.67
Including: income form
investment on affiliated
enterprise and jointly
enterprise
-795,082.08 -795,082.08 1,699,715.19 1,699,715.19
Foreign exchange
difference (“-” means loss)
III. Business profit (“-” means
loss)
130,921,541.68 468,346,569.82 41,193,198.72 -12,555,738.93
Plus: non-operation income （V）36 5,052,211.85 2,760,611.89 9,830,770.09 6,718,663.32
Less: non- operation
expense
（V）37 8,675,990.72 8,169,985.80 21,083,505.08 20,318,797.12
Including: loss from
non-current asset disposal
401,097.48 83,011.41 490,444.60 20,619.65
IV. Total profit (“-” means
loss)
127,297,762.81 462,937,195.91 29,940,463.73 -26,155,872.73
Less: Tax expense （V）38 30,363,475.79 20,106,527.14
V. Net profit (“-” means
loss)
96,934,287.02 462,937,195.91 9,833,936.59 -26,155,872.73
Attributable to parent
company
96,933,951.02 462,937,195.91 9,829,397.29 -26,155,872.73
Minority interest 336.00 4,539.30
VI. Earnings per share
(I) basic earnings per share （V）39 0.1626 0.7768 0.0165 -0.0483
(II) diluted earnings per
share
（V）39 0.1626 0.7768 0.0165 -0.0483
VII. Other composite income （V）40 -38,974.41 -6,548,464.59 -2,524,201.15
VIII. Total composite income 96,895,312.61 462,937,195.91 3,285,472.00 -28,680,073.88
Attributable to owners of
parent company
96,894,976.61 462,937,195.91 3,280,932.70 -28,680,073.88
Minority interest 336.00 4,539.30
Cash Flow Statement
Prepared by Shenzhen Properties & Resources Development (Group) Ltd.
As from Jan. to Dec. 2009 Unit: RMB Yuan
Items Notes 2009 200875
Consolidation Parent company Consolidation Parent company
Ⅰ.Cash flows from operating
activities:
Cash received from sale of
commodities and rendering of
service
1,531,740,152.74 9,660,606.19 584,847,068.44 22,403,953.44
Net increase of disposal of
tradable financial assets
Tax refunds received
Other cash received relating to
operating activities
（V）41 38,461,044.49 141,663,744.56 18,340,028.19 208,300,649.89
Subtotal of cash inflows from
operating activities
1,570,201,197.23 151,324,350.75 603,187,096.63 230,704,603.33
Cash paid for purchase of
commodities and reception of
service
434,523,512.76 5,388,321.58 357,078,474.18 3,528,685.86
Cash paid to and for
employees
178,247,426.70 6,746,838.49 175,300,925.87 21,161,806.56
Various taxes paid 147,518,572.72 3,270,561.27 57,968,663.34 8,172,946.56
Other cash paid relating to
operating activities
（V）41 50,261,058.36 26,022,181.44 36,542,010.75 90,797,214.57
Subtotal of cash outflows from
operating activities
810,550,570.54 41,427,902.78 626,890,074.14 123,660,653.55
Net cash flows from operating
activities
759,650,626.69 109,896,447.97 -23,702,977.51 107,043,949.78
Ⅱ. Cash flows from investing
activities:
Cash received from disposal of
investments
4,927,524.66 16,439,362.19 16,235,835.16
Cash received from obtaining
investment income
5,000,000.00 4,275,643.40 5,000,000.00 5,000,000.00
Net cash received from
disposal of fixed assets,
intangible assets and other
long-term assets
1,534,678.54 890,741.54 13,579,657.07 12,126,378.83
Net cash received from
disposal of subsidiary or other
operating business units
Other cash received relating to
investing activities
Subtotal of cash inflows from
investing activities
11,462,203.20 5,166,384.94 35,019,019.26 33,362,213.99
Cash paid to acquire fixed
assets, intangible assets and
2,771,658.50 1,109,913.46 17,393,724.80 1,244,016.0076
other long-term assets
Cash paid for investment 57,150.23 228,834.02
Net increase of pledged loans
Net cash paid by subsidiaries
and other operating units
Other cash paid relating to
other investment activities
1,345,861.66 35,800.00
Subtotal of cash outflows from
investment activities
2,828,808.73 1,109,913.46 18,968,420.48 1,279,816.00
Net cash flows from investing
activities
8,633,394.47 4,056,471.48 16,050,598.78 32,082,397.99
Ⅲ.Cash flows from financing
activities
Cash received from capital
contribution
Of which: cash received from
capital contribution to
subsidiaries by minority
shareholders
Cash received from
borrowings
569,000,000.00 169,000,000.00 734,000,000.00 200,000,000.00
Cash received from issuance of
bonds
Other cash received relating to
financing activities
2,080,914.01
Subtotal of cash inflows from
financing activities
569,000,000.00 169,000,000.00 736,080,914.01 200,000,000.00
Cash repayments of amounts
borrowed
722,749,343.34 285,000,000.00 631,196,001.81 314,450,000.00
Cash paid interest expenses
and distribution of dividends
or profit
53,945,113.00 3,216,143.98 64,757,498.50 27,236,444.05
Of which: stock dividends
and profits paid to minority
shareholders by subsidiaries.
Payment of cash relating to
other financing activities
（V）41 2,235,000.00 2,840,000.00
Subtotal of cash outflows from
financing activities
778,929,456.34 288,216,143.98 698,793,500.31 341,686,444.05
Net cash flows from financing
activities
-209,929,456.34 -119,216,143.98 37,287,413.70 -141,686,444.05
Ⅳ. Effect of foreign exchanges
on cash and cash equivalents
-7,704.43 -29.59 -87,994.45 -1,003.25
Ⅴ. Net increase of cash and 558,346,860.39 -5,263,254.12 29,547,040.52 -2,561,099.5377
cash equivalents
Plus: Beginning balance of
cash and cash equivalents
（V）41 271,708,727.86 7,802,612.88 242,161,687.34 10,363,712.41
Ⅵ. Closing balance of cash
and cash equivalents
（V）41 830,055,588.25 2,539,358.76 271,708,727.86 7,802,612.88
Consolidated Statement of Change in Owners’ Equity
December 2009
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amount for the current period (2009)
Owners’ equity attributable to parent company
Items Paid-up capital
(or share
capital)
Capital reserve
Less:
treasury
stock
Surplus reserve Retained profit Other (Note)
Minority
interests
Total owners’
equity
I. Balance at the end
of last year
541,799,175.00 25,332,931.52 62,919,127.11 -55,930,192.11
-3,505,676.1
1
861,751.0
6
571,477,116.47
Add: Change of
accounting policy
Correction of errors in
previous period
Other
II. Balance at the
beginning of this year
541,799,175.00 25,332,931.52 62,919,127.11 -55,930,192.11
-3,505,676.1
1
861,751.0
6
571,477,116.47
III. Increase/ decrease
of amount in this year
(“-” means decrease)
54,179,917.00 6,792,923.40 29,893,321.72 -38,974.41 336.00 90,827,523.71
(I) Net profit
96,933,951.02 336.00 96,934,287.02
(II) Other composite
income
-38,974.41 -38,974.41
Subtotal of (I)and (II) 96,933,951.02 -38,974.41 336.00 96,895,312.61
(III) Input an reduced
capital of owners
1. Capital input by
owners
2. Amount of share
payment included in
the owners’ equity78
3. Others
(IV) Profit distribution 54,179,917
.00
6,792,923.40 -67,040,629.30
-6,067,788.90
1. Withdrawing
surplus reserve
6,792,923.40 -6,792,923.40
2. Distribution to
owners (shareholders)
54,179,917
.00
-60,247,705.90
-6,067,788.90
3. Other
(V)Internal carrying
forward of owners’
equity
1. New increase of
capital (share capital)
from capital reserves
2. Convert surplus
reserves to
capital(share capital)
3. Surplus reserves
make up losses
4. Others
IV. Balance at the end
of this period
595,979,092.00 25,332,931.52
69,712,050.51
-26,036,870.39
-3,544,650.5
2
862,087.0
6
662,304,640.18
Note: Item “Other” is foreign exchange difference.
Consolidated Statement of Change in Owners’ Equity (Con.)
December 2009
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amount for the last year (2008)
Owners’ equity attributable to parent company
Items Paid-up capital
(or share
capital)
Capital reserve
Less:
treasury
stock
Surplus reserve Retained profit Other (Note)
Minority
interests
Total owners’
equity
I. Balance at the end
of last year
541,799,175.00 30,279,476.08 62,919,127.11 -67,197,819.73 -1,903,756.08 857,211.76 566,753,414.14
Add: Change of
accounting policy
Correction of errors in
previous period79
Other
II. Balance at the
beginning of this
year
541,799,175.00 30,279,476.08 62,919,127.11 -67,197,819.73 -1,903,756.08 857,211.76 566,753,414.14
III. Increase/
decrease of
amount in this year
(“-” means
decrease)
-4,946,544.56
11,267,627.62 -1,601,920.03 4,539.30 4,723,702.33
(I) Net profit
9,829,397.29 4,539.30 9,833,936.59
(II) Other
composite income
-4,946,544.56
-1,601,920.03 -6,548,464.59
Subtotal of (I)and
(II)
-4,946,544.56
9,829,397.29 -1,601,920.03 4,539.30 3,285,472.00
(III) Input an
reduced capital of
owners
1,438,230.
33
1,438,230.
33
1. Capital input by
owners
2. Amount of share
payment included in
the owners’ equity
3. Others 1,438,230.33 1,438,230.
33
(IV) Profit distribution
1. Withdrawing surplus
reserve
2. Distribution to
owners (shareholders)
3. Other
(V)Internal carrying
forward of owners’
equity
1. New increase of
capital (share capital)
from capital reserves
2. Convert surplus
reserves to
capital(share capital)
3. Surplus reserves
make up losses
4. Others80
IV. Balance at the end
of this period
541,799,175.00 25,332,931.52 62,919,127.11 -55,930,192.11 -3,505,676.11 861,751.06 571,477,116.47
Note: Item “Other” is foreign exchange difference.
Statement of Change in Owners’ Equity
December 2009
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amount for the current period (2009)
Owners’ equity attributable to parent company
Items Paid-up capital
(or share
capital)
Capital reserve
Less:
treasury
stock
Surplus reserve Retained profit Other
Minority
interests
Total owners’
equity
I. Balance at the end
of last year
541,799,175.00 226,883.79 62,919,127.11 -427,728,750.13
177,216,435.77
Add: Change of
accounting policy
Correction of errors
in previous period
Other
II. Balance at the
beginning of this year
541,799,175.00 226,883.79 62,919,127.11 -427,728,750.13
177,216,435.77
III. Increase/
decrease of amount
in this year (“-”
means decrease)
54,179,917.00 6,792,923.40 395,896,566.61 456,869,407.01
(I) Net profit 462,937,195.91 462,937,195.91
(II) Other composite
income
Subtotal of (I)and (II) 462,937,195.91 462,937,195.91
(III) Input an reduced
capital of owners
1. Capital input by
owners
2. Amount of share
payment included in
the owners’ equity
3. Others81
(IV) Profit distribution 54,179,917
.00
6,792,923.40 -67,040,629.30
-6,067,788.90
1. Withdrawing
surplus reserve
6,792,923.40 -6,792,923.40
2. Distribution to
owners
(shareholders)
54,179,917
.00
-60,247,705.90
-6,067,788.90
3. Other
(V)Internal carrying
forward of owners’
equity
1. New increase of
capital (share capital)
from capital reserves
2. Convert surplus
reserves to
capital(share capital)
3. Surplus reserves
make up losses
4. Others
IV. Balance at the
end of this period
595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
Statement of Change in Owners’ Equity (Con.)
December 2009
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amount for the last year (2008)
Owners’ equity attributable to parent company
Items Paid-up capital
(or share
capital)
Capital reserve
Less:
treasury
stock
Surplus reserve Retained profit Other
Minority
interests
Total owners’
equity
I. Balance at the end
of last year
541,799,175.00 2,751,084.94 62,919,127.11 -401,572,877.40
205,896,509.65
Add: Change of
accounting policy
Correction of errors
in previous period
Other82
II. Balance at the
beginning of this year
541,799,175.00 2,751,084.94 62,919,127.11 -401,572,877.40
205,896,509.65
III. Increase/
decrease of amount
in this year (“-”
means decrease)
-2,524,201.15 -26,155,872.73
-28,680,073.88
(I) Net profit -26,155,872.73 -26,155,872.73
(II) Other composite
income
-2,524,201.15
-2,524,201.15
Subtotal of (I)and (II) -2,524,201.15 -26,155,872.73 -28,680,073.88
(III) Input an reduced
capital of owners
1. Capital input by
owners
2. Amount of share
payment included in
the owners’ equity
3. Others
(IV) Profit distribution
1. Withdrawing
surplus reserve
2. Distribution to
owners
(shareholders)
3. Other
(V)Internal carrying
forward of owners’
equity
1. New increase of
capital (share capital)
from capital reserves
2. Convert surplus
reserves to
capital(share capital)
3. Surplus reserves
make up losses
4. Others
IV. Balance at the
end of this period
541,799,175.00 226,883.79 62,919,127.11 -427,728,750.13 177,216,435.7783
Office: 16-18/F, Wuhan International Building
Postcode:430022 Tel：(86)(27)85426261 Fax：(86)(27) 85424329
Auditor's Report
ZHSZ (2010) NO.049
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 “Company”or “the Company”), which comprise
the balance sheet and the consolidated balance sheet as at December 31, 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
year 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 preparation84
and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting 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 December 31, 2009 and the results of its
operations and its cash flows for the year then ended.
Wuhan Zhonghuan CPAs Co., Ltd CPA Min Chao
CPA Wang Yu
Wuhan, China Feb 5, 201015
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009
Note I Corporate information
Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter referred to as “company ” or
“the Company”) was incorporated based on the reconstruction of Shenzhen Properties & Resources
Development Co., Ltd. after obtaining approval of ZFBF [1991] No. 831 from People’s Government of
Shenzhen Municipality. The registration number of Business License for Enterprises as Legal Person is
ZQFZ No. 00166.
1. Registered capital of the Company
The registered capital of the Company was 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 and it
changes to RMB 595,979,092 after bonus issue of shares on the basis of one share for every existing 10
shares based on previous paid-in capital of RMB 541,799,175 in 2009.
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 commodity
premises, 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. Chen16
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 22nd session of the sixth
conference of the Company’s board of directors on Feb 5, 2010.
Note II Summary of Main Accounting Policies and Accounting Estimation
1. Basis of preparation of the financial statements
The company recognizes and measures transactions occurred according to Chinese Accounting
Standards – Basic standard and other related accounting standards, prepares the financial statements
based on accrual accounting and the underlying assumption of going concern.
2. Statement of compliance with Enterprise accounting standards
The company's financial statements comply with the requirements of Accounting Standards; the
company's financial position, operating results, changes in shareholder's equity and cash flow, and other
relevant information are truly and completely disclosed in financial statements.
3. Fiscal year
The Company adopts the Gregorian calendar for its accounting period, starting on January 1 and ending
on December 31 of the year.
4. Recording currency
Renminbi (RMB) is used as the recording currency.
5. Accounting method of business combination under the common control and not under the
common control17
(1) The Company adopts equity method for business combination under common control. The assets
and liabilities that the combining party obtained in a business combination shall be measured on their
carrying amount in the combined party on the combining date. The difference between the carrying
amount of net assets acquired by the combining party and the carrying amount of the consideration paid
by it (or the total par value of the shares issued) shall 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. The bonds issued for
a business combination or the handling fees, commissions and other expenses for bearing other liabilities
shall be recorded in the amount of initial measurement of the bonds or other debts. The handling fees,
commissions and other expenses for the issuance of equity securities for the business combination shall
be credited against the surplus of equity securities; if the surplus is not sufficient, the retained earnings
shall be offset. Where a relationship between a parent company and a subsidiary company is formed due
to a business combination, the parernt company shall, on the combining date, prepare consolidated
financial statements according to the accounting policy of the Company.
(2) The Company adopts acquisition method for business combination not under common control. The
acquirer shall recognize 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.
The acquirer shall, on the acquisition date, measure the assets given and liabilities incurred or assumed
by an enterprise for a business combination in light of their fair value, and shall record the balances18
between them and their carrying amounts into the profits and losses at the current period.
The acquirer shall distribute the combination costs on the acquisition date, and shall recognize all
identifiable assets, liabilities and contingent liabilities it obtains from the acquiree. (1) the acquirer shall
recognize the difference that the combination costs are over the fair value of the identifiable net assets
obtained from acquiree as goodwill; (2) if the combination costs are less than the fair value of the
identifiable net assets obtained from acquiree, the acquirer shall reexamine the measurement of the fair
values of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree as well as
the combination costs; and then after the reexamination, the result is still the same, the difference shall
be recorded in the profit and loss of the current period.
Where a relationship between a parent company and a subsidiary company is formed due to a business
combination, the parent company shall prepare accounting books for future reference, which shall record
the fair value of the identifiable assets, liabilities and contingent liabilities obtained from the subsidiary
company on the acquisition date. When preparing consolidated financial statements, it shall adjust the
financial statements of the subsidiary company on the basis of the fair values of the identifiable assets,
liabilities and contingent liabilities determined on the acquisition date according to the Company’s
accounting policy of “Consolidated financial statement”.
6. Basis of consolidation
（1）Scope of consolidation
Consolidated financial statements are included all subsidiaries of the parent.
When the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of
the investee company, the investee company is regarding as subsidiary and included in the consolidated
financial statements. If the parent owns half or less of the voting power of an entity when there is any
following condition incurred, the investee company is regarding as subsidiary and included consolidated
financial statements.
A. power over more than half of the voting rights by virtue of an agreement with other investors;
B. power to govern the financial and operating policies of the entity under a statute or an agreement;19
C. power to appoint or remove the majority of the members of the board of directors or equivalent
governing body;
D. power to cast the majority of votes at meetings of the board of directors or equivalent governing body
and control of the entity is by that board or body.
If there is evidence suggesting that no control of the investee company exists, the investee company does
not be included in the 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 under equity method and elimination effect of intragroup transaction.
（3）Minority interests
The portion of the equity of the subsidiaries that are not owned by the parent is presented as minority
interest in the consolidated balance sheet.
The portion of the profit or loss of the subsidiaries that are not owned by the parent is presented as
minority interest in the consolidated income statement.
（4）Excess losses
The amount which losses of subsidiaries during the period exceeds the proportion of minority’s
obligation is offset minority interest as agreed in the subsidiaries’ association or agreement and
minorities have ability to bear the excess losses. Otherwise, the excess losses are offset equity of the
parent company. Profits made afterward by subsidiaries are attributable to equity of the parent company
before recovery of excess losses.
（5）Increase or decrease of the subsidiaries
For any subsidiary acquired by the Company through business combination under the 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 the amount at the beginning of the period in the consolidated balance sheet.20
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 the 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 addition 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 the common control,
when the consolidated cash flow statement for the current period are being prepared, cashflow for the
period from the beginning of the consolidated period to the year end of the reporting period is included
in the consolidated cash flow statement. For addition business combination not under common control
during the reporting period, cashflow for the period from acquisition date to the year end of the reporting
period is included in the consolidated cash flow statement. When disposing subsidiary during the
reporting period, cashflow for the period from the beginning to the disposal date is included in the
consolidated cash flow statement.
7. Cash and cash equivalent
Cash equivalent is defined as the short-term (normally matured within three months after purchased
date), highly-liquid investment which is easily transferred into cash and has low risk of change of value.
8. Foreign currency translations
Any transaction is converted into the accounting standard currency according to the approximate
exchange rate of the sight rate on the occurrence date of the transaction.
The Company adopts the middle exchange rate announced by the People's Bank of China at last year end
as current exchange rate.
(1) Foreign currency exchange difference
On balance sheet date, the Company accounts for monetary and non-monetary items denominated in21
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 current exchange rates ruling at the transaction dates. Non-monetary items
denominated in foreign currencies that are stated at fair value are translated using the current exchange
rates ruling at the dates the fair value was determined, the difference between the 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) Translations of financial statements in foreign currencies
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 (calculated by the average of starting rate and closing rate on the reporting period) 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.
9. Recognition and measurement of financial instrument
(1) Recognition of financial assets
The Company recognises a financial asset or fiancial liability on its balance sheet when, and only when,
the Company becomes a party to the contractual provisions of the instrument.
(2) Classification and measurement of financial assets22
① The Company classifies the financial assets into the following four categories: a) financial assets at
fair value through profit or loss; b) held-to-maturity investments; c) loans and receivables; and d)
available-for-sale financial assets.
② The financial assets are initially recognised at fair value. Gains or losses arising from a change in
the fair value of a financial asset at fair value through profit or loss is recognised in profit or loss when it
incurred and relevant transaction costs are recognised as expense when it incurred. For other financial
assets, the transaction costs are recognised as costs of the financial assets.
③ Measurement of financial assets
A. A financial asset at fair value through profit or loss includes financial assets held for trading and
financial assets designated by the Company as at fair value through profit or loss. The Company
subsequently measures the financial asset at fair value through profit or loss at fair value and recognises
the gain or loss arising from a change in the fair value of a financial asset at fair value through profit or
loss as profit or loss in the current period.
B. Held-to-maturity investments are measured at amortised cost using the effective interest method. A
gain or loss is recognised in profit or loss during the current period when the financial asset is
derecognized or impaired and through the amortisation process.
C. Loans and receivables are measured at amortised cost using the effective interest method. A gain or
loss is recognised in profit or loss during the current period when the financial asset is derecognized or
impaired and through the amortisation process.
D. Available-for-sale financial assets are measured at fair value and the gain or loss arising from a
change in the fair value of available-for-sale financial assets is recognised as capital reserve which is
transferred into profit or loss when it is impaired or derecognised. Interests or cash dividends during the
holding period are recognised in profit or loss for the current period.
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.23
B. The objective evidences that the Company uses to determine the impairment are as follows:
a）significant financial difficulty of the issuer or obligor;
b）a breach of contract, such as a default or delinquency in interest or principal payments;
c）the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting to the
borrower a concession that the lender would not otherwise consider;
d）it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
e）the disappearance of an active market for that financial asset because of financial difficulties;
f）observable data indicating that there is a measurable decrease in the estimated future cash flows from a
group of financial assets since the initial recognition of those assets, although the decrease cannot yet be
identified with the individual financial assets in the group, 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 investment instruments;
i）other objective evidences showing the impairment of the financial assets.
C. Measurement of impairment loss of financial assets
a）held-to-maturity investments, loans and receivables
If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity
investments carried at amortised cost has been incurred, the amount of the loss is measured as the
difference between the asset's carrying amount and the present value of estimated future cash flows. The
amount of the loss is recognised in profit or loss of the current period.
The Company assesses whether objective evidence of impairment exists individually for financial assets24
that are individually significant, and individually or collectively for financial assets that are not
individually significant. 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 recognised are not included in a collective assessment of impairment.
The Company performs impairment test for receivables and provide bad debt provisions at the balance
sheet date. For the individually significant receivables and not individually significant receivables, the
impairment tests are both carried on individually. If there is objective evidence that an impairment loss
on loans and receivables, the Company provides provision for impairment loss for the amount which is
measured as the difference between the asset's carrying amount and the present value of estimated future
cash flows.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss of financial asset measured at amortised cost is be reversed. The amount of the reversal
is recognised in profit or loss of the current period.
b）Available-for-sale financial assets
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in
equity, the cumulative loss that had been recognised directly in equity is removed from equity and
recognised in profit or loss even though the financial asset has not been derecognised.
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a
derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument,
the amount of the impairment loss is measured as the difference between the carrying amount of the
financial asset and the present value of estimated future cash flows discounted at the current market rate
of return for a similar financial asset. Such impairment losses are recognised in the profit or loss of the
current period.
If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and25
the increase can be objectively related to an event occurring after the impairment loss was recognised in
profit or loss, the impairment loss is reversed, with the amount of the reversal recognised in profit or loss
of the current period.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as
available for sale is not reversed through profit or loss. For impairment loss has been incurred on an
unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably
measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted
equity instrument, the impairment loss is not reversed through profit or loss.
(3) Classification and measurement of financial liabilities
①The Company's financial liabilities are classified as financial liabilities at fair value through profit or
loss, and other financial liabilities.
②Financial liabilities are initially measured at fair value. For the financial liability at fair value through
profit or loss at its fair value, relevant transaction costs are recognised as expense when it incurred. For
the other financial liabilities, relevant transaction costs are recongnised as costs.
③Subsequent measurement of financial liabilities
A. Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial assets designated by the Company as at fair value through profit or loss. The Company
recognises a financial liability at fair value through profit or loss at its fair value. A gain or loss of
change in fair value is recognised in the profit or loss of the current period.
B. Other financial liabilities are measured by amortised cost using effective interest rate.
(4) Fair value measurement consideration
If there is an active market for the financial instrument, the fair value is quoted prices in the active
market.
If the market for a financial instrument is not active, the Company establishes fair value by using a
valuation technique.
(5) Recognition and measurement of financial assets transfer
The Company derecognises financial assets when the Company transfers substantially all the risks and
rewards of ownership of the financial assets. On derecognition of a financial asset in its entirety, the
difference between the follows is recognised in profit or loss of the current period.
①the carrying amount of transferring financial assets;26
②the sum of the consideration received and any cumulative gain or loss that had been recognised
directly in equity (including financial assets transferred to available for sale category).
If the transferred asset is part of a larger financial asset and the part transferred qualifies for
derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated
between the part that continues to be recognised and the part that is derecognised, based on the relative
fair values of those parts on the date of the transfer. The difference between the follows is recognised in
profit or loss of the current period.
①the carrying amount allocated to the part derecognised;
②the sum of the consideration received for the part derecognised and any cumulative gain or loss
allocated to it that had been recognised directly in equity (including financial assets transferred to
available for sale category).
A cumulative gain or loss that had been recognised in equity is allocated between the part that continues
to be recognised and the part that is derecognised, based on the relative fair values of those parts.
If a transfer does not qualify for derecognition, the Company continues to recognise the transferred asset
in its entirety and shall recognize a financial liability for the consideration received.
When the Company continues to recognise a financial asset to the extent of its continuing involvement,
the Company also recognises an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Company has retained.
10. Accounting method of bad debt
(1) Accounting method of bad debt provision for the individually significant receivables, the impairment
test is carried on individually.
Standards of the individually significant receivables: amount of individual receivable is greater than
RMB 2 millions (and including 2 millions).
For the individually significant receivables, the impairment test is carried on individually; the Company
provides provision for impairment loss for the amount which is measured as the difference between the
asset's carrying amount and the present value of estimated future cash flows.
For the subsidiaries engage in property management business, the receivables which are not individually
significant or the individually significant receivables which are not determined for impairment, the
Company asseses the asset in a group of financial assets with similar credit risk characteristics and27
collectively provide them for provision of impairment according to certain percentage of the total
receivables at the balance sheet date.
(2) For the receivables which are not individually significant, but which are assessed at high risk level
through credit risk combination.
Basis of credit risk characteristics’ combination: 1）amount of individual receivable is greater than RMB
2 millions (and including 2 millions), 2）the receivables (aging over 3 years) which are not individually
significant, but which are assessed at high risk level through credit risk combination.
In accordane with credit risk characteristics’ combination basis, and for the receivables which are not
individually significant, but which are assessed at high risk level through credit risk combination,
Company provides provision for impairment loss for the amount which is measured as the difference
between the asset's carrying amount and the present value of estimated future cash flows.
For the subsidiaries engage in property management business, the receivables which are not individually
significant or the individually significant receivables which are not determined for impairment, the
Company asseses the asset in a group of financial assets with similar credit risk characteristics and
collectively provide them for provision of impairment according to certain percentage of the total
receivables at the balance sheet date.
(3) For the receivables which are not individually significant
A. For the subsidiaries engage in property management business, the debtors of customers are so many.
To base on experience, the debtor's financial status and cash flow, etc., as well as other relevant
information, the Company adopts aging analysis method in accordance with credit risk characteristics of
the receviables; the provision for bad debts is recognized at 3% of the closing balance of the receivables
B. Besides point A, for the receivables which are not individually significant, the Company provides
provision for impairment loss for the amount which is measured as the difference between the asset's
carrying amount and the present value of estimated future cash flows.
11. Classification and measurement of inventories28
(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:
①It is probable that future economic benefits associated with the inventories will flow to the Company
entity;
②The 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.
①Estimation 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.
②The Company generally provides provision for impairment of inventory individually. For large29
quantity and low value items of inventories, cost and net realisable value are determined based on
categories of inventories.
Where certain items of inventory have similar purposes or end uses and relate to the same product line
producted and marketed in the same geographical area, and therefore cannot be practicably evaluated
separately from other items in that product line, costs and net realisable values of those items may be
determined on an aggregate basis.
(6) The Company adopts perpetual inventory system for its inventory taking.
12. Long-term equity investment
(1) Initial measurement
The Company initially measures long-term equity investments under two conditions:
①For 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 adjusted30
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.
②For long-term equity investment obtained in any method other than business combination, the initial
cost is recognized under the following principles.
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 cost31
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”.
③If 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.
①For the long-term equity investment under cost method, and except from cash dividends or profits
distributed are declared but unpaid included in the consideration paid, the other declared cash dividends
or profits are normally recognized as investment income for the current period when it incurred. The net
profits are no longer divided into the pre-investment profits and after-investment profits.
The Company recognizes the receivable cash dividends or profits according to above regulations, and
the impairment test is needed to be concerned. To indicate the evidence of impairments, it should be
concerned about whether the carrying amount of the long-term equity investments is greater than the
book value of net assets that have been acquired (including the related goodwill) or other similar
situations. When these situations occur, the impairment test of long-term equity investments should be
performed according to “Chinese Accounting Standard No.8 - Impairment of assets”, Where the carrying
amount of long-term equity investment exceeds the recoverable amount, the difference shall be
recognized as impairment loss, and a provision for impairment loss should be made.32
②For 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.
③The 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.
④On 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:
①Any Joint ventures party cannot control the operating activities of Joint ventures individually;
②Decisions regarding the basic operating activities of Joint ventures shall be agreed by all Joint
ventures parties;
③All Joint ventures parties may appoint one of them to manage the operating activities of Joint ventures,33
and the management over the financial and operating policies exercised by the Joint ventures party
appointed shall be limited to the extent agreed by all Joint ventures parties.
A significant influence over investee enterprise is established when the investment of the Company
satisfied the following conditions:
①The Company has representation on the board of directors or equivalent governing body of the
investee.
②The Company participates in policy-making processes, including participation in decisions about
dividends or other distributions.
③Material transactions occur between the Company and the investee enterprise.
④The Company dispatches managerial personnel to the investee enterprise.
⑤The 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.
(4) Impairment test and method of provision for impairment loss
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 quoted price in active market or there is
no reliable fair value. Impairment of long-term equity investments other than above refers to accounting
policy “Impirment of assets” of the Company.
13. 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:
①Land use right which has already been rented;
②Land use right which is held for transfer out after appreciation;
③Property which has already been rented.
(2) Investment property shall be recognized as an asset when the following conditions are satisfied:
①It is probable that the future economic benefits that are associated with the investment property will34
flow to the Company;
②The cost of the investment property can be measured reliably.
(3) Initial measurement
An investment property is measured initially at its cost.
①The cost of a purchased investment property comprises its purchase price, related tax expenses and
any directly attributable expenditure.
②The cost of a self-constructed investment property comprises all necessary construction expenditures
incurred before the property is ready for its intended use.
③The 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.
14. 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;
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.35
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 20
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.36
(4) Impairment of fixed asset refers to accounting policy “Impairment of assets” of the Company.
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 should be
capitalized as part of the cost of the assets. Capitalisation of borrowing costs starts when
① The capital expenditures have incurred;
② The borrowing costs have incurred;
③ 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 should be expensed off during current
period.
Capitalization of borrowing costs should 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 should be recognized directly in profit or loss during the current period. However,
capitalization of borrowing costs during the suspended periods should 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 should 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 capitalization 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 qualifying37
asset.
16. 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:
①It is probable that the economic benefits associated with that asset will flow to the Company; and
②The 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:
①The technical feasibility of completing the intangible asset so that it will be available for use or sale;
②Its intention to complete the intangible asset and use or sell it;
③The 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;
④The availability of adequate technical, financial and other resources to complete the development and
to use or sell the intangible asset;
⑤ Its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
(2) Measurement of intangible assets
①An intangible asset is measured initially at its cost.
②Subsequent 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.38
B. Impairment of intangible assets refers to accounting policy “Impairment of assets” of the Company.
17. Recognition and measurement of long-term deferred expenses
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.
18. Accounting methods for the property transfer with buy-back conditions:
Buy-back after the sale: It is a sale means which the seller during selling goods agrees to buy back the
same or similar goods at the later date. Under such mode, the seller shall make judgment in whether
selling goods satisfies the recognition of revenue in accordance to the contract or agreement. Normally,
the transaction of repurchase after sale belongs to a financial transaction, the main risk and rewards of
the goods ownership has not been transferred. The enterprise shall not recognize the revenue. For the
amount which the repurchase price greater than the original sale price, the enterprise shall accrue the
interest fees to the financial fees within the repurchase period.
For the property transfer with repurchase conditions, in consideration of the economic substance of
transactions, the accounting method shall be disclosed.
19. Recognition and measurement of provision for liabilities
(1) Recognition of provision for liabilities
The company should recognize the related obligation as a provision for liability when the obligation
meets the following conditions:
①That obligation is a present obligation of the enterprise;
②It is probable that an outflow of economic benefits from the enterprise will be required to settle the
obligation;
③A reliable estimate can be made of the amount of the obligation.
(2) Measurement of provision for liabilities
To fulfill the present obligations, which initially measured by the best estimate of the expenditure
required to settle the liability. Where there is a continuous range of possible amounts of the expenditure
required to settle the liability, as all kinds of possibilities are at same level, the best estimate should be
determined according to the average of the lower and upper limit of the range. In other cases, the best39
estimate should be determined in accordance with the following methods:
①Where the contingency involves a single item, the best estimate involves a singe item, the best
estimate should be determined according to the most likely outcome;
②Where the contingency involves several items; the best estimate should be determined by weighting
all possible outcomes by their associated probabilities of occurrence.
To determine the best estimate, it should be considered with factors such as: related contingency risks,
uncertain matters and time value of currency. If time value of currency has a significant impact, the best
estimate should be measured at its converted present value through the relevant future cash outflows.
Where some or all of the expenditures are expected to be reimbursed by a third party, the reimbursement
should be separately recognized as an asset only when it is virtually received. The amount of the
reimbursement should not exceed the carrying amount of the liability recognized.
At balance sheet date, the Company should review book value of provision for liabilities. If there is
strong evidence that the book value does not truly indicate the current best estimate, it should be
adjusted in accordance with the current best estimate.
20. Recognition and measurement 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.40
The fair value of the equity-settled share-based：
① For the shares granted to the employees, its fair value shall be measured in accordance to the
market price of the entity stocks, and at the same time it shall make adjustment in the consideration
of the relative terms and conditions which the stocks are granted (excluding the vesting conditions
besides the market conditions). If the entity is not traded publically, it should be measured in
accordance to the estimated market prices and it shall make adjustment in the consideration of the
relative terms and conditions which the stocks are granted
② For the stock options granted to the employees, if there is no similar terms and conditions for the
option trade, it shall estimate the fair value of the granted option through option pricing model.
When the enterprise determines the fair value on the granting date of the equity instruments, it shall
consider the influence by the market conditions of the vesting conditions and the non vesting
condition in the share-based payment agreement. For the share-based payment containing non
vesting conditions, as long as the employees or other party satisfy all the non-marketing conditions
of the vesting conditions (such as service period, etc.), the enterprise shall confirm the relevant costs
of the received service.
(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.
（3）Confirmation of the best estimate of the vested equity instruments: On the balance sheet date during
the waiting period, the company shall make the best estimate based on the subsequence information
regarding the number of employees who newly obtains the vest; revise the quantity of the predicted41
vested equity instruments in order to make the best estimate of vested equity instruments.
（4）Modifications and cancellation to equity-settled share-based payment arrangements
If the modification increases the fair value of the equity instruments granted, the entity shall include the
incremental fair value granted in the measurement of the amount recognized for services received as
consideration for the equity instruments granted; similarly, if the modification increases the number of
equity instruments granted, the entity shall include the fair value of the additional equity instruments
granted, measured at the date of the modification, in the measurement of the amount recognised for
services received as consideration for the equity instruments granted; if the entity modifies the vesting
conditions in a manner that is beneficial to the employee, the entity shall take the modified vesting
conditions into account when applying the requirements of a vesting condition.
If the modification reduces the fair value of the equity instruments granted, the entity shall not take into
account that decrease in fair value and shall continue to measure the amount recognised for services
received as consideration for the equity instruments based on the grant date fair value of the equity
instruments granted; if the modification reduces the number of equity instruments granted to an
employee, that reduction shall be accounted for as a cancellation of that portion of the grant; if the entity
modifies the vesting conditions in a manner that is not beneficial to the employee, the entity shall not
take the modified vesting conditions into account when applying the requirements of a vesting condition.
If a grant of equity instruments is cancelled or settled during the vesting period (other than a grant
cancelled by forfeiture when the vesting conditions are not satisfied): as an acceleration of vesting, and
shall therefore recognise immediately the amount that otherwise would have been recognised for
services received over the remainder of the vesting period.
21. Shares repurchase
As repurchasing shares of the Company, the cost of corresponding treasury shares is recognized in
accordance with the cost method.
Following the legally approved procedures, the company reduces its capital by repurchasing the
company’s stocks. The owners’ equity shall be adjusted by the difference between the total of the
cancelled share equity and capital stock, the cost to repurchase the stocks (including trading fees) and
stock equity. For the amount exceed the total of the par value of shares, it shall reduce the capital reserve,
surplus reserve, and undistributed profits; for the amount less than the total of the par value of shares, the
capital reserve should be increased for the amount less than corresponding equity cost.42
The repurchasing shares shall be managed as treasury shares before they are cancelled or transferred.
The total cost to repurchase shares shall be transferred to the cost of the treasury shares.
During the transfer of the treasury shares, when the transfer income is greater than the cost of treasury
shares, the capital reserve should be increased; when the transfer income is less than the cost of treasury
shares, capital reserve, surplus reserve, and undistributed profits should be written-down in turns.
Repurchasing stocks in purpose of equity incentives, the value of treasury stocks is measured at all the
actual cost relating to repurchasing stocks, and the details should be taken reference to the registration.
22. Revenue recognition
（1） Revenue from the sale of goods is recognized when all of the following conditions have been
satisfied:
The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
The Company retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
The economic benefits associated with the transaction will flow to the Company; and
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 benefit43
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 be 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.
23. Government grant
(1) Recognition of government grants
The Company’s government grants which including monetary assistance or non-monetary grants at fair
value, shall not be recognized until there is reasonable assurance that:
① The entity will comply with the condition attaching to them;
② The grants will be received from government.44
(2) Measurement of government grants
① If monetary grants are received, it recognized at actual received or receivable amount. If
non-monetary grants are received, it recognized at fair value, replacing with nominal amount while fair
value is not reliable.
②The Capital approach for government grants, the grant is recognized as deferred income when it is
acquired. Since the related assets achieve its intended using status, the deferred income is amortized and
recognized in profit and loss during asset’s using period. If related assets were disposed before using
period ended, undistributed deferred income shall be shift to current profit and loss at once.
The Income approach for government grants, to retrieve expense or loss of the Company in further
period, the government grants is recognized as deferred income, and shall be recorded in profit and loss
when that expense or loss occurred. To retrieve expense or loss of the Company in current period, the
government grants shall be recorded directly in current profit and loss.
③ Confirmed repayment of government grants
A. When deferred income exists, the repayment write-downs closing balane of deferred income, and the
exceed part shall be recognized in current profit and loss;
B. When no deferred income exists, the repayment shall be recognized directly in current profit and loss.
24. 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 temporary45
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.
25. Operating lease and financial lease
（1）Operating leases
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset
cost or the current profit or loss on a straight-line basis over the lease term. The initial direct costs
incurred shall be recognized as the current profit or loss; Contingent rents shall be charged as expenses
in the periods in which they are incurred. .
Lessors in an operating lease shall present the assets subject to operating leases in the relevant items of
their balance sheet according to the nature of the asset. Lease income from operating leases shall be
recognized as the current profit or loss on a straight-line basis over the lease term; Initial direct costs
incurred by lessors shall be recognized as the current profit or loss; Lessors shall apply the depreciation
policy for the similar assets to depreciate the fixed assets in the operating lease; For other assets in the
operating lease , lessors shall adopt a reasonable systematical method to amortize; Contingent rents shall
be charged as expenses in the periods in which they are incurred.
（2）Finance lease
For the lessee, 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
minimum lease payments as the entering value in long-term account payable, the difference as
unrecognized financing charges; The initial direct costs identified as directly attributable to activities
performed by the lessee during the negotiation and signing of the finance lease such as handling fees,
legal fees, travel expenses, stamp tax shall be counted as lease asset value; the unrecognized financing
charges shall be apportioned at each period during the lease term and adopt the effective interest rate
method to calculate and confirm the current financing charge; Contingent rents shall be charged as
expenses in the periods in which they are incurred.
When the lessee calculates the present value of the minimum lease payments, for that lessee who can46
obtain the interest rate implicit in the lease, the discount rate shall be the interest rate implicit in the lease;
otherwise the discount rate shall adopt the interest rate specified in the lease agreement. If the lessee can
not get the interest rate implicit in the lease and there is no specified interest rate in the lease agreement,
the discount rate shall adopt the current bank loan interest rate.
Lessees shall depreciate the leased assets with the depreciation policy which is consistent with the
normal depreciation policy for similar assets. If there is reasonable certainty that the lessee will obtain
ownership by the end of the lease term, the depreciation shall be allocated to the useful life of the asset.
If there is no reasonably certainty that the lessee will obtain ownership by the end of the lease term, the
asset shall be depreciated over the shorter of the lease term and its useful life.
On the initial date of financial lease, lessee of the financial lease shall record the sum of the minimum
lease payments and initial direct costs as the financing lease accounts receivable, and also record the
unguaranteed residual value; recognize the difference between the total minimum lease payments , initial
direct costs ,unguaranteed residual value and sum of the present value as the unrealized financing
income; the unrealized financing income shall be distributed to each period over the lease term; adopt
the actual interest rate to calculate the currect financial income; Contingent rents shall be charged as
expenses in the periods in which they are incurred.
26． Assets held for sales:
(1) Recognition criteria of the assets held for sale
The Non-Current Assets which meet the following conditions will be classified as assets held for sales
by the company:
①The entity has made the resolution in disposing the non-current assets.
②The entity has signed the irrevocable transfer agreement with the assignee.
③The sale transaction is highly probable to be completed within one year.
(2) Accounting treatments of assets held for sales
For the fixed assets held for sales, the entity shall adjust the predicted net residual value of this fixed
asset to make the predicted net residual value of this fixed asset to reflect the amount of its fair value less
costs to sell, but it shall not exceed the original book value of fixed assets at the time when it meets the
conditions of held for sales. The difference between the original book value and the adjusted predicted
net residual value shall be treated as loss in assets and presented in profit or loss of current period. The
fixed assets held for sales shall not count the depreciation but shall be measured at the lower of its47
carrying amount and the fair value less costs to sell.
The other non-current assets such as impairment assets which meet the conditions of held for sales shall
be treated in accordance to the above principles.
27. Changes in accounting policies and estimates,
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.
28. Correction of the accounting errors from previous term
There is no correction of the accounting error from previous term in this report period.
29. Impairment of assets
It suggests that an asset may be impaired if there are any of 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 during the current period;
(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, constructions48
in progress and intangible assets (except for those with uncertain useful life) that apply Accounting
Standard 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 should 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 its recoverable amount, the carrying amount of this asset should 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 should 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 should 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.
Note Ⅲ. 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%.49
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 IV. Business combination and consolidated financial statements
1. Subsidiaries
（1）The subsidiaries obtained through the establishment of or investment subsidiary
Subsidiaries Categories Registered
address
Business
nature
Registered
capital
(0’000)
Business scope
Hainan Xinda
Development Co.,
Ltd
Wholly-owned
subsidiary
Haikou Real estate
development
2,000 Real estate development,
decoration engineering,;
planting; import & export
practice
Shenzhen ITC
Food Co., Ltd.
Wholly-owned
subsidiary
Shenzhen Restaurant
operations
200 Retail sales of Chinese meal,
western-style food and wine
Shenzhen
Property and Real
Estate
Development Co.,
Ltd.
Wholly-owned
subsidiary
Shenzhen Real estate
development
3,095 Land development, real estate
management; construction
supervision; property
management
Shenzhen ITC
Property
Management Co.,
Ltd.
Wholly-owned
subsidiary
Shenzhen Property
management
2,000 Property rent and management
Shenzhen ITC
Vehicles Industry
Co., Ltd.
Wholly-owned
subsidiary
Shenzhen Service 2,985 Motor transport and motor rent
Shenzhen
Huangcheng Real
Estate Co., Ltd.
Wholly-owned
subsidiary
Shenzhen Real estate
development
3,000 Development, construction,
operation and management of
commercial service facilities
relevant to Huanggang port50
Subsidiaries Categories Registered
address
Business
nature
Registered
capital
(0’000)
Business scope
Sichuan Tianhe
Industry Co., Ltd
Wholly-owned
subsidiary
Chengdu Trading 800 Wholesale in domestic market
Shenzhen ITC
Property
Management
Engineering
Equipment Co.,
Ltd.
Wholly-owned
subsidiary
Shenzhen Service 120 Domestic commerce; material
supply; maintenance and repair
of electric equipment
Shenzhen Tianque
Elevator
Technology Co.,
Ltd.
Wholly-owned
subsidiary
Shenzhen Service 500 Maintenance of elevator and air
condition
Shandong
Shenzhen ITC
Property
Management Co.,
Ltd.
Wholly-owned
subsidiary
Jinan Property
management
500 Property management and
agency
Chongqing
Shenzhen ITC
Property
Management Co.,
Ltd.
Wholly-owned
subsidiary
Chongqing Property
management
500 Property management and
agency
Chongqing Ao’bo
Elevator Co., Ltd.
Wholly-owned
subsidiary
Chongqing Service 200 Installing, reconstructing and
repairing the elevator; sales of
elevator and accessories
Shenzhen ITC
Motor Rent Co.,
Ltd.
Wholly-owned
subsidiary
Shenzhen Service 1,600 Motor transport and motor rent
Shenzhen ITC
Petroleum Co.,
Ltd.
Wholly-owned
subsidiary
Shenzhen Trading 850 Sales of gasoline, diesel oil,
lube and coal oil
Shenzhen ITC
Vehicle Industry
Company Vehicle
repair shop
Wholly-owned
subsidiary
Shenzhen Service 150 Motor maintenance; sales of
auto parts and Motorcycle
Accessories
Shenzhen Tesu
Vehicle Driver
Training Center
Co., Ltd.
Wholly-owned
subsidiary
Shenzhen Service 200 Driver training
Shenzhen
Huangcheng Real
Estate
Management Co.,
Ltd.
Wholly-owned
subsidiary
Shenzhen Property
management
500 Property management; court
virescence and cleansing
services
Zhanjiang
Shenzhen Real
Estate
Development Co.,
Ltd.
Wholly-owned
subsidiary
Zhanjiang Real estate
development
253 Real estate development and
sales of commodity premises
Shenzhen
Property
Wholly-owned
subsidiary
Shenzhen Construction
Supervision
300 Supervision of general
industrial and civil construction51
Subsidiaries Categories Registered
address
Business
nature
Registered
capital
(0’000)
Business scope
Construction
Supervision Co.,
Ltd.
engineering
Shenzhen
International
Trade Plaza
Wholly-owned
subsidiary
Shenzhen Trading 1,200 Investing in commercial,
material and supplying
company
Shenzhen Real
Estate Exchange
Wholly-owned
subsidiary
Shenzhen Service 138 Providing property information,
property agency and evaluation
Shum Yip
Properties
Development Co.,
Ltd.
Wholly-owned
subsidiary
Hongkong Real estate
development
HKD2,000 Property agency and investment
Wayhang
Development Co.,
Ltd.
Wholly-owned
subsidiary
Hongkong Real estate
development
HKD0.0002 Property development
Chief Link
Properties Co.,
Ltd.
Holding
subsidiaries
Hongkong Real estate
development
HKD0.01 Property agency and investment
Syndis Investment
Co., Ltd.
Holding
subsidiaries
Hongkong Real estate
development
HKD0.0004 Property investment
East Land
Properties Limited
Wholly-owned
subsidiary
Hongkong Real estate
development
HKD0.01 Property investment
Subsidiaries
Paid-in
capital
(0’000)
Other
essential
investment
(0’000)
The
proportion
of holding
shares (%)
The
proportion
of voting
rights (%)
Included in
consolidated
statements
Hainan Xinda Development Co., Ltd 2,000 39,205.80 100 100 Yes
Shenzhen ITC Food Co., Ltd. 200 40.08 100 100 Yes
Shenzhen Property and Real Estate
Development Co., Ltd.
3,095 100 100 Yes
Shenzhen ITC Property Management Co.,
Ltd.
2,000 100 100 Yes
Shenzhen ITC Vehicles Industry Co., Ltd. 2,985 100 100 Yes
Shenzhen Huangcheng Real Estate Co., Ltd. 3,000 100 100 Yes
Sichuan Tianhe Industry Co., Ltd 800 100 100 Yes
Shenzhen ITC Property Management
Engineering Equipment Co., Ltd.
120 100 100 Yes
Shenzhen Tianque Elevator Technology Co.,
Ltd.
500 100 100 Yes
Shandong Shenzhen ITC Property
Management Co., Ltd.
500 100 100 Yes
Chongqing Shenzhen ITC Property
Management Co., Ltd.
500 100 100 Yes52
Subsidiaries
Paid-in
capital
(0’000)
Other
essential
investment
(0’000)
The
proportion
of holding
shares (%)
The
proportion
of voting
rights (%)
Included in
consolidated
statements
Chongqing Ao’bo Elevator Co., Ltd. 200 100 100 Yes
Shenzhen ITC Motor Rent Co., Ltd. 1,600 100 100 Yes
Shenzhen ITC Petroleum Co., Ltd. 850 100 100 No(note1)
Shenzhen ITC Vehicle Industry Company
Vehicle repair shop
150 100 100 Yes
Shenzhen Tesu Vehicle Driver Training
Center Co., Ltd.
200 100 100 Yes
Shenzhen Huangcheng Real Estate
Management Co., Ltd.
500 100 100 Yes
Zhanjiang Shenzhen Real Estate
Development Co., Ltd.
253 100 100 Yes
Shenzhen Property Construction Supervision
Co., Ltd.
300 58.88 100 100 Yes
Shenzhen International Trade Plaza 1,200 100 100 Yes
Shenzhen Real Estate Exchange 138 40.14 100 100 Yes
Shum Yip Properties Development Co., Ltd. HKD2,000 2,820.68 100 100 Yes
Wayhang Development Co., Ltd. HKD0.0002 100 100 Yes
Chief Link Properties Co., Ltd. HKD0.01 70 70 Yes
Syndis Investment Co., Ltd. HKD0.0004 70(note2) 70 Yes
East Land Properties Limited HKD0.01 100 100 No(note3)
Subsidiaries Minority
interest(0’000)
Deductible
minority
interest
Balance of parent company’s equity after deducting the
difference that loss of minority interests exceed equity
obtained by minority shareholders
Chief Link
Properties Co., Ltd. 86.21
Note 1: In January of 2008, Note 1. During reporting period, 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.), the lease term is 15 years. 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 financial statements of this subsidiary are excluded from consolidation scope.53
Note 2: Syndis Investment Co., Ltd is a wholly-owned subsidiary of Chief Link Properties Limited.
Note 3: East Land Properties Limited (hereinafter referred to as “East Land Company”) is in the process
of liquidation, and the liquidation group is in charge of management of East Land Company during the
report period; East Land Company may not carry out any operating activities other than liquidation
activities. In this case, the Company no 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.
（2）The subsidiaries obtained through business combination which under the common control
There is no such kind of subsidiaries in report period.
（3）The subsidiaries obtained through business combination which under the non-common control
There is no such kind of subsidiaries in report period.
2. Changing of Consolidation Scope
(1) The new subsidiaries which are included in consolidation scope
Reason of change Date of change Net profit for
current year
Net assets at
the end of year
Shandong Shenzhen ITC Property
Management Co., Ltd.
New founded
Company
January of
2009
368,010.29 5,036,801.03
(2) The companies which are excluded from consolidation scope
There is none in report period.
3. The exchange rate for main subjects of overseas economies
For Hongkong registered subsidiaries included in consolidated scope, such as Shum Yip Properties
Development Co., Ltd., Wayhang Development Co., Ltd., Chief Link Properties Co., Ltd., and Syndis
Investment Co., Ltd. The exchange rates of currencies are as follows:
(1) For assets and liabilities, using the spot exchange rate of RMB against HKD (1:0.8805.)on the
balance sheet date;
(2) For the paid-in capital, using the spot exchange rate of RMB against HKD (1：0.7917) when
obtained;
(3) For the income statement, using the the average exchange rate of RMB against HKD (1：0.8812)54
when trade occuried
Note V. Notes to the main subjects in consolidated financial statements
(Except for especially indicated, the closing balance and the opening balance refer to the balance at
December 31, 2009 and December 31, 2008 respectively; the current year refers to 2009, and the last
year refers to 2008; all amounts are presented in RMB.)
1．Cash and cash equivalents
Item Closing balance Opening balance
Cash on hand 227,928.12 340,965.83
Bank deposit 822,829,335.90 265,398,484.68
Other cash and cash equivalents 6,998,324.23 5,969,277.35
Total 830,055,588.25 271,708,727.86
Note 1: Other cash and cash equivalents refer to the closing balance of investment deposit and other
margin account in Securities Companies.
Note 2: The closing balance increased by 205.49% comparing to the opening balance, mainly due to the
increasing sales of Real estate in report period.
Note 3: In closing balance of bank deposit, RMB 1,423,898.44 is frozen by the courthouse, due to
pending action of Haiyi case, details refers to Note V-15, NoteVII- 1(1).
Closing balance
Item
Currency Original currency Exchange rate RMB
Cash on hand RMB 176,999.03 1.0000 176,999.03
USD 863.58 6.8282 5,896.69
HKD 51,144.12 0.8805 45,032.40
Sub-Total —— —— 227,928.12
Bank deposit RMB 818,032,057.28 1.0000 818,032,057.28
USD 239.66 6.8282 1,636.45
HKD 5,446,498.78 0.8805 4,795,642.17
Sub-Total —— —— 822,829,335.90
Other cash and RMB 6,997,908.55 1.0000 6,997,908.55
cash equivalents HKD 472.09 0.8805 415.68
Sub-Total —— —— 6,998,324.2355
Total —— —— 830,055,588.25
Opening 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
Sub-Total —— —— 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
Sub-Total —— —— 265,398,484.68
Other cash and RMB 5,869,611.04 1.0000 5,869,611.04
cash equivalents HKD 113,013.16 0.8819 99,666.31
Sub-Total —— —— 5,969,277.35
Total —— —— 271,708,727.86
2. Trading financial assets
Item Closing balance (fair value) Opening balance (fair value)
Held-for-trading equity instrument 232,200.00 2,670,729.47
Total 232,200.00 2,670,729.47
Note 1: The market price at the end of period was determined according to the closing price at December
31, 2009 declared by Stock Exchange;
Note 2: The investment refers to 30,000 shares of ST stock “Shengrun”, fair value of closing balance is
RMB 232,200.00, which is frozen by the courthouse, due to pending action of Haiyi case, details refers
to Note V-15, Note VII- 1(1).
3. Accounts receivable56
（1）Accounts receivable by categories are as follows:
Closing balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 109,635,474.92 92.40 48,266,173.89 93.34
Individually insignificant receivables
with high credit risk in group assessment
3,268,913.65 2.76 3,258,085.65 6.30
Other insignificant amount 5,746,743.71 4.84 187,873.80 0.36
Total 118,651,132.28 100.00 51,712,133.34 100.00
Opening balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 107,951,792.78 90.14 48,266,173.89 94.34
Individually insignificant receivables
with high credit risk in group assessment
2,807,955.19 2.34 2,680,901.99 5.24
Other insignificant amount 9,010,737.18 7.52 217,497.47 0.42
Total 119,770,485.15 100.00 51,164,573.35 100.00
（2）Individually significant receivables or insignificant receivables requiring impairment test, and
providing provision for bad debt：
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
VII-1(2), Note IX-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 48,266,173.89
（3）There was no accounts receivable due from shareholders with more than 5% (including 5%) of the57
voting shares of the Company.
（4）At end of the year, details of significant accounts receivable at the year end are as follows:
Company Relationship Amount Aging
Proportion to
total accounts
receivables(%)
Shenzhen Jiyong Properties &
Resources Development Company
Non-related
parties
98,611,328.05 Over 3 years 83.11
Rainbow Plaza Co., Ltd Non-related
parties
5,369,301.03 Within 1year&
1-2years
4.52
Shenzhen Tewei Industry Co.,Ltd. Non-related
parties
2,836,561.00 Over 3 years 2.39
Shenzhen Lunan Industry
Development Co.,Ltd.
Non-related
parties
2,818,284.84 Over 3 years 2.38
Total 109,635,474.92 92.40
4. Other receivables
（1）Other receivables by categories are as follows:
Closing balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 139,178,513.29 87.82 95,719,449.61 91.64
Individually insignificant receivables
with high credit risk in group assessment
12,982,578.92 8.19 8,679,356.01 8.31
Other insignificant amount 6,320,585.21 3.99 52,816.90 0.05
Total 158,481,677.42 100.00 104,451,622.52 100.00
Opening balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 155,438,806.94 89.30 98,201,351.88 91.92
Individually insignificant receivables
with high credit risk in group assessment
12,935,854.48 7.43 8,627,800.43 8.08
Other insignificant amount 5,679,715.57 3.27 3,082.58 0.00
Total 174,054,376.99 100.00 106,832,234.89 100.0058
（2）Individually significant other receivables or other insignificant receivables requiring impairment
test, and providing provision for bad debt：
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 2-3years &over
3 years
Payment for
discharging of
guaranty responsibility
that was difficult to be
recollected
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
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 VII- 1(4)
Anhui Nanpeng
Papermaking Co., Ltd
8,690,144.00 8,690,144.00 Over 3 years Uncollectible for a
long period
Shanghai Yutong
Real estate
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
3,271,837.78 3,271,837.78 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 107,984,613.61 97,069,325.14
（3）There was no other receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.59
（4）Details of top 5 other receivables：
Name of company Relationship Amount Aging Proportion of
the total (%)
Gintian Industry (Group) Co.,Ltd. Non-related
parties
56,600,000.00 2-3years
&over 3
years
35.71
Shenzhen ITC Tian’an Properties
Co., Ltd
Joint ventures 19,705,931.45 Over 3 years 12.43
Shenzhen Shengfenglu, ITC Jewel
& Gold Co., Ltd
Non-related
parties
10,199,186.28 Over 3 years 6.44
Duokuai Elevator (Far East) Co.,
Ltd.
Non-related
parties
8,726,693.00 Over 3 years 5.51
Anhui Nanpeng Papermaking Co.,
Ltd
Interests in
associates
8,690,144.00 Over 3 years 5.48
Total 103,921,954.73 65.57
(5) Details of other receivables refer to Note VI-3 (4).
5. Prepayment
(1)Aging analysis
Closing balance Opening balance
Aging
Closing balance Proportion (%)
Closing
balance
Proportion (%)
Within 1 year(including 1
year)
46,717,982.28 99.69 2,111,993.73 91.60
1-2 years(including 2 years) 134.03 0.00 161,517.00 7.01
2-3 years(including 3 years) 129,879.00 0.28 0 0
Over 3 years 14,878.80 0.03 32,118.80 1.39
Total 46,862,874.11 100.00 2,305,629.53 100.00
（2）The significant prepayments are as following:
Company Relationship Amount Aging Notice
Prepayment of taxes Non-related
parties
37,130,544.63 Within
1year
Note
Yutong Group Construction
Co., Ltd.
Non-related
parties
2,500,000.00 Within
1year
Prepayment
for projects
Shenzhen Zijiang Industrial Co.,
Ltd.
Non-related
parties
1,200,000.00 Within
1year
Prepayment
for projects60
Total 40,830,544.63
Note: According to “Provisional Regulations on Business Tax Business tax”, transfer of land use right or real
estate sales, using method of pre-collection (including deposit in advace), and the obligation for tax occurs on
pre-collection date. The balance of pre-paid the taxes and fees refer to the prepaid business tax, education
surtax and other tax fees, basing on pre-sale income of commercial housing sales.
（3）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) Details
Categories Opening balance Increase Decrease Closing
balance
Including：
Capitalized
borrowing
cost
Proportion
of reversal
of provision
for
impairment
of
inventories
to closing
balance
Raw materials 1,451,382.22 4,275,303.38 4,176,700.15 1,549,985.45
Finished
products
217,315.43 348,746.20 447,867.64 118,193.99
Low-value
consumption
goods
327,065.90 711,394.80 874,588.24 163,872.46
Land use right
held for real
estate
development
230,187,067.43 848,085.51 85,979,905.10 145,055,247.84
Properties
under
development
529,360,086.36 417,248,362.29 120,000.00 946,488,448.65 81,252,654.73
Completed
properties for
sale
528,429,657.47 268,165,573.27 260,264,084.20 328,152.52
Total 1,289,972,574.81 423,431,892.18 359,764,634.40 1,353,639,832.59 81,580,807.25
Note: Details of ownership restricted stock refer to Note.V-15.
(2)Provision for impairment of inventories
Decrease
Categories Opening
balance Increase
Reversal Written off
Currency
translation
effects
Closing
balance61
Decrease
Categories Opening
balance Increase
Reversal Written off
Currency
translation
effects
Closing
balance
Raw
materials
429,881.46 7,203.73 576.00 436,509.19
land use right
held for real
estate
development
106,697,503.71 38,242,168.99 47,680.37 68,407,654.35
completed
properties for
sale
29,118,896.81 29,118,896.81
Total 136,246,281.98 7,203.73 576.00 38,242,168.99 47,680.37 97,963,060.35
Note1: Provision for “Land use right held for real estate development” is carried forward to cost of
project “Pinghu Land”, referring to Note V-6(3) A;
Note2: A Currency translation effect during the current period was due to the translation of foreign
currency financial statement of the Company’s foreign subsidiary Shum Yip Properties Development
Limited.
(3)Details are as following:
A. Land use right held for real estate development
Items Closing balance Opening balance
Amount provision for
impairment of
inventories
Amount provision for
impairment of
inventories
Huanggang Port Land 46,823,373.98 46,823,373.98
Pinghu Land 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 35,574,848.40 26,002,128.89 34,726,762.89 26,002,128.89
Donggua Ridge Land 45,257,855.74
Fuchang Second Term Land 5,769,577.11 5,769,577.11 5,769,577.11 5,769,577.11
Hong Kong Tingjiu Land 50,239,044.22 29,987,544.22 50,318,924.59 30,035,224.59
Total 145,055,247.84 68,407,654.35 230,187,067.43 106,697,503.71
Note 1: 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.62
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 the year of 2008, the 10,000 square meters owned ground 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. It takes time to obtain the approval of related government
departments. At beginning of 2009, The Company received the reply from Shenzhen Land Resources
and Housing Management bureau Longgang Branch, in accordance with national policies, the using
right of the ground is not granted to the Company, and whom was proposed to find another way to solve.
In July of 2009, after times of negotiation, the company received a letter from Pinghu Street office of
Longgang District, which has requested the Company shall sign the agreement with Pinghu Village, for
a proper settlement of the land trading matters. The government will withdraw the occupied land of
6,417.22 quare meters, and the compensation (RMB 3,555,100) for the Company will be covered by
government. On Sep 29 of 2009, the company signed a contract with Pinghu joint-stock cooperative
company (Former Pinghu village committee): the Pinghu village adopted the exchange standarder as
RMB 554 per quare meters, and gave a land 3,582.78 quare meters to the Company as a compensation of
equity, the total equal to RMB 1,984,900. The Company beared all the expense (including land-use fee,
transfer fees, etc.) less than RMB 900,000. After obtaining all the compensations, the Company should
give up the land-use right, cooperating with Pinghu village to transfer the land-use right. In October of
2009, the Company received the compensation of RMB 1,984,900 from Pinghu joint-stock cooperative
company, but the compensation from government has not yet been received. Since only entitled to
compensatory benefits, the company written off the book value of the land (including the original book
value RMB 40,642,200, provision for impairment RMB 38,242,200), and the remaining compensation
RMB 3,555,100 is recognized as other receivables, while the transfer fee is recognized as accrued
expenses RMB 900,000.
Note2: The decrease of “Donggua Ridge Land” was due to the development of project “Cai Tian Yi Se”;63
Note3: The decrease of “Hong Kong Tingjiu Land” was due to translation of financial statements in
foreign currencies;
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 2011.1 388,000,000.00 256,171,231.97 135,803,567.97
Shenwuye -Langqiao
Residence (original
HuangYu Garden District
D)
2008.3 2012.2 420,000,000.00 201,623,511.09 121,757,512.84
Shenwuye – FHRL
(original FHRL Group B)
2005.9 2010.6 422,280,000.00 436,180,001.02 271,679,005.55
Cai Tian Yi Se 2009.7 2011.6 110,000,000.00 52,513,704.57
Sundry project 120,000.00
Total 946,488,448.65 529,360,086.36
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 33,534,859.63 46,366,867.68
Huangyu Garden District
A
2001.06 2,973,623.25 356,066.14 2,617,557.11
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)
2008.11 219,861,151.80 213,997,451.38 5,863,700.42
Huangcheng Plaza 1997.05 172,981,417.98 6,998,376.82 165,983,041.16 29,118,896.81
Xinda Building 2001.10 3,145,042.17 3,145,042.17
Fenrun Garden 1998.02 339,542.36 169,771.18 169,771.18
Haikou Waterfront of
Blue Island
2008.12 18,297,459.85 5,456,751.96 12,840,707.89
Rihao Garden 4,654,651.00 4,654,651.00
Meisi Workshop 3,885,469.40 3,885,469.40
Fuchang Comprehensive 6,421,447.63 6,421,447.6364
Item Completion
time
Opening
balance
Increase Decrease Closing
balance
Provision for
impairment of
inventories
Building
Total 528,429,657.47 268,165,573.27 260,264,084.20 29,118,896.81
Note: the closing balance of ITC Plaza, Xinda Building, and Meisi Workshop is decreased comparing to
the opening balance, which was due to purpose of own use, transfer of fixed assets or real estate
investment.
7. Investment held to maturity
Item Closing balance Opening balance
Investments on bond 3,000.00
Total 3,000.00
8. Joint venturess, associates and other invested companies
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
products65
Name of company Business
nature
Registered
capital
(0’000)
Business scope
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)
Proportion of Shareholdings
Name of company
Contributions
(0’000) Direct Indirect
Shenzhen ITC Tian’an Properties Co., Ltd 2,318.61 50%
Shenzhen ITC Tian’an Property 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%
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.
9. Long-term equity investment
（1）Details are as following:
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholding
(%)
Proportions
of voting
rights (%)
I. Investment
under equity66
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholding
(%)
Proportions
of voting
rights (%)
method
Shenzhen ITC
Tian’an Properties
Co., Ltd
23,186,124.00 37,134,170.50 -562,597.68 36,571,572.82 50 50
Shenzhen Jifa
Warehouse
Company Limited
30,645,056.04 26,297,645.27 -281,055.82 26,016,589.45 50 50
Shenzhen Tian’an
International
Building Property
Management Co.,
Ltd
1,500,000.00 1,758,476.74 48,571.42 1,807,048.16 50 50
II. Investment
under cost method
East Land
Properties Limited
93.64 93.64 93.64 100 100
Shenzhen Huajing
Glass Bottle
Company Limited
7,600,000.00 7,600,000.00 7,600,000.00 15.83 15.83
Shenzhen Wufang
Pottery &
Porcelain
Industrial Co., Ltd
18,983,614.14 18,983,614.14 18,983,614.14 26 26
Shenzhen ITC
Industrial
Development Co.,
Ltd
20,154,840.79 3,682,972.55 3,682,972.55 38.33 38.33
Anhui Nanpeng
Papermaking Co.,
Ltd
13,824,000.00 13,824,000.00 13,824,000.00 30 30
China T.H.
Co.,Ltd.
2,962,500.00 2,962,500.00 2,962,500.00 0.33 0.33
North Machinery
(Group) Co.,Ltd.
3,465,000.00 3,465,000.00 3,465,000.00 12.66 12.66
Guangdong
Huayue Real
Estate Co.,Ltd.
8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Shenzhen ITC
Petroleum
Company Limited
8,500,000.00 8,500,000.00 8,500,000.00 100 100
Guangzhou
Shilifeng
Automobile
Co.,Ltd.
6,000,000.00 6,000,000.00 6,000,000.00 30 30
Sanya East Travel
Co.,Ltd. Legal
1,350,000.00 1,350,000.00 1,350,000.00 0.28 0.2867
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholding
(%)
Proportions
of voting
rights (%)
persons shares
Shensan Co.,Ltd. 17,695.09 17,695.09 17,695.09
Macao Huashen
Enterprise
Co.,Ltd.
85,621.36 85,621.36 -135.92 85,485.44 10 10
Chongqing
Guangfa Real
estate
development
Co.,Ltd.
2,598,061.52 2,598,061.52 -4,124.37 2,593,937.15 27.25 27.25
Saipan Project 1,935,184.04 1,935,184.04 -3,072.07 1,932,111.97 30 30
Total 144,975,680.05 -802,414.44 144,173,265.61
Company
Note for difference
between proportions of
voting rights and
shareholding hold
Provision for
impairment
Provision
incresed in
current year
Cash
dividends
I. Investment under equity method
Shenzhen ITC Tian’an Properties
Co., Ltd
Shenzhen Jifa Warehouse Company
Limited
Shenzhen Tian’an International Building
Property Management Co., Ltd
II. Investment under cost method
East Land Properties Limited
Shenzhen Huajing Glass Bottle Company
Limited
7,600,000.00
Shenzhen Wufang Pottery & Porcelain
Industrial Co., Ltd
18,983,614.14
Shenzhen ITC Industrial Development
Co., Ltd
3,682,972.55
Anhui Nanpeng Papermaking Co., Ltd 13,824,000.00
China T.H. Co.,Ltd. 2,160,300.45
North Machinery (Group) Co.,Ltd. 3,465,000.00
Guangdong Huayue Real Estate Co.,Ltd. 8,780,645.20 780,645.20
Shenzhen ITC Petroleum Company
Limited
Guangzhou Shilifeng Automobile
Co.,Ltd.68
Sanya East Travel Co.,Ltd. Legal persons
shares
1,350,000.00
Shensan Co.,Ltd. 17,695.09
Macao Huashen Enterprise Co.,Ltd. 85,485.44 -135.93
Chongqing Guangfa Real estate
development Co.,Ltd.
2,593,937.15 -4,124.37
Saipan Project 1,932,111.97 -3,072.07
Total 64,475,761.99 773,312.83
Note 1: The details of significant Joint venturess, associates refer to Note V. -8.
Note 2: Directional shares of SST Huasu Holdings Co., Ltd (as 825,000 shares）is frozen by the
courthouse, due to pending action of Haiyi case, details refers to Note V.-15, NoteVII.- 1(1).
Note 3: The decreased balance of investment and impairment provision of Macao Huashen Enterprise
Co., Ltd., Saipan Project,
Chongqing Guangfa Real estate development Co.,Ltd., which was due to translation of financial
statements in foreign currencies
10. Investment property
(1) Details are as following:
Item Opening balance Increase Decrease Closing balance
1.Cost 337,388,599.87 58,264,246.76 5,323,527.04 390,329,319.59
Including: Property and building 334,388,599.87 50,294,292.36 5,323,527.04 379,359,365.19
Land use right 3,000,000.00 7,969,954.40 10,969,954.40
2.Accumulated depreciation and amortization 113,346,621.68 20,495,825.01 619,093.04 133,223,353.65
Including: Property and building 113,242,575.44 18,129,409.94 619,093.04 130,752,892.34
Land use right 104,046.24 2,366,415.07 2,470,461.31
3.The net book value 224,041,978.19 —— —— 257,105,965.94
Including: Property and building 221,146,024.43 —— —— 248,606,472.85
Land use right 2,895,953.76 —— —— 8,499,493.09
4. Provision for impairment loss
Including: Property and building
Land use right
5.Carrying amount 224,041,978.19 —— —— 257,105,965.9469
Item Opening balance Increase Decrease Closing balance
Including: Property and building 221,146,024.43 —— —— 248,606,472.85
Land use right 2,895,953.76 —— —— 8,499,493.09
Note: Amount of accumulated depreciation and amortization is RMB 14,520,604.33 in current fiscal
year.
(2)The increased cost of property and building during the current period was due to the investment
property transferred from inventories under leasing and fixed assets.
(3) The investment properties with restricted ownership, referring to Note V.-15.
(4)The real estate held for sales:
Item
Carrying
amount
Fair value
Estimated disposal
cost
Disposal
time
Disposal
method
Land use right 2,843,930.64 5,274,080.00 860,000.00 April 2010 Agreements
On May 25, 2009, Shenzhen Huangcheng Real Estate Co., Ltd (hereinafter referred to as “Huangcheng
Real Estate”), a wholly-owned subsidiary of the Company, made a land repurchase agreement with Land
Reserve department of Sihui City; the department will repurchase the use right of the land owned by
Huangcheng Real Estate; the land is a 31,394.46 square meters (equivalent to 47.09 Mu) industrial land,
the price is RMB 112,000.00 per Mu, and total is RMB 5,274,080. Till the report date, the Huangcheng
Real Estate has not yeat obtained the repurchase fund.
11. Fixed assets
(1) Details:
Item Opening balance Increase Decrease Closing balance
1.Cost 193,412,746.09 5,477,178.29 25,307,368.55 173,582,555.83
Including: Property and buildings 132,897,197.66 2,728,772.13 21,923,228.36 113,702,741.43
Machineries 81,941.80 42,052.80 39,889.00
Vehicles 45,568,495.17 596,257.00 1,439,600.00 44,725,152.17
Electronic and other equipment 10,616,700.87 2,152,149.16 1,902,487.39 10,866,362.64
Decoration 4,248,410.59 4,248,410.59
2.Depreciation 89,323,158.62 14,127,452.09 6,929,564.16 96,521,046.55
Including: Property and buildings 56,075,479.43 4,748,729.51 3,978,142.33 56,846,066.6170
Item Opening balance Increase Decrease Closing balance
Machineries 48,857.70 18,967.01 41,352.80 26,471.91
Vehicles 21,669,729.19 7,913,876.75 1,121,000.00 28,462,605.94
Electronic and other
equipment
7,952,708.12 1,173,981.12 1,789,069.03 7,337,620.21
Decoration 3,576,384.18 271,897.70 3,848,281.88
3.The net book value 104,089,587.47 —— —— 77,061,509.28
Including: Property and buildings 76,821,718.23 —— —— 56,856,674.82
Machineries 33,084.10 —— —— 13,417.09
Vehicles 23,898,765.98 —— —— 16,262,546.23
Electronic and other
equipment
2,663,992.75 —— —— 3,528,742.43
Decoration 672,026.41 —— —— 400,128.71
4. Provision for mpairment loss 75,717.16 75,717.16
Including: Property and buildings
Machineries
Vehicles
Electronic and other
equipment
75,717.16 75,717.16
Decoration
5.Carrying amount 104,013,870.31 —— —— 76,985,792.12
Including: Property and buildings 76,821,718.23 —— —— 56,856,674.82
Machineries 33,084.10 —— —— 13,417.09
Vehicles 23,898,765.98 —— —— 16,262,546.23
Electronic and other
equipment
2,588,275.59 —— —— 3,453,025.27
Decoration 672,026.41 —— —— 400,128.71
Note: Amount of accumulated depreciation is RMB 13,780,939.44 in current fiscal year.
(2) Details of temporarily idle fixed assets are as follows:71
Categories Cost Accumulated
depreciation
Impairment
loss
Carrying
amount
Expected date for
put into usage
Property and
buildings 18,657,141.45 5,079,701.28 13,577,440.17
Total 18,657,141.45 5,079,701.28 13,577,440.17
(3)The fixed assets with restricted ownership, is referring to Note V.-15.
12. Intangible assets
Item Opening
balance
Increase Decrease Closing
balance
1.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
2.Accumulated amortization 27,396,156.39 6,508,663.80 33,904,820.19
-Operating license plate 27,016,274.07 6,449,561.97 33,465,836.04
-Repurchased operating right of
taxi’s operating license plate 379,882.32 59,101.83 438,984.15
3.The net book value 119,402,340.92 —— —— 112,893,677.12
-Operating license plate 117,834,869.63 —— —— 111,385,307.66
-Repurchased operating right of
taxi’s operating license plate 1,567,471.29 —— —— 1,508,369.46
4. Provision for mpairment loss
-Operating license plate
-Repurchased operating right of
taxi’s operating license plate
5.Carrying amount 119,402,340.92 —— —— 112,893,677.12
-Operating license plate 117,834,869.63 —— —— 111,385,307.66
-Repurchased operating right of
taxi’s operating license plate 1,567,471.29 —— —— 1,508,369.46
Note 1: Accumulated amortization is RMB 6,508,663.80 in current year.72
Note 2: The intangible assets with restricted ownership, referring to Note V.-15.
13. Deferred tax assets and liabilities
（1）Recognized deferred tax assets and liabilities
Item Closing balance Opening balance
I. Deferred tax assets
1.Carrying amount of other receivables less than its tax base 330,715.82 795,684.72
2.Carrying amount of inventories less than its tax base 10,306,489.74 5,823,779.36
3.Carrying amount of taxes payable greater than its tax base 32,844,451.12
4.Carrying amount of payroll payable greater than its tax base 686,097.78 1,880,000.00
5.Losses on taxable income to be recovered 7,527,746.56 4,823,393.87
Sub-total 51,695,501.02 13,322,857.95
II. Deferred tax liabilities
None
Sub-total
（2）Assets and liabilities giving rise to temporary difference
Item Temporary difference
1.Carrying amount of other receivables less than its tax base 1,503,253.74
2.Carrying amount of inventories less than its tax base 46,599,902.56
3.Carrying amount of taxes payable greater than its tax base 149,292,959.65
4.Carrying amount of payroll payable greater than its tax base 3,118,626.28
5.Losses on taxable income to be recovered 34,217,029.82
Total 234,731,772.05
14. Provision for impairment loss
Decrease
Item Opening
balance Increase
Reversal Written off
Foreign
currencies
effects
Closing balance
I. Provision for
bad debt
157,996,808.24 759,588.01 2,580,352.39 12,288.00 156,163,755.86
Including:
Accounts
receivable
51,164,573.35 547,559.99 51,712,133.3473
Decrease
Item Opening
balance Increase
Reversal Written off
Foreign
currencies
effects
Closing balance
Other
receivables
106,832,234.89 212,028.02 2,580,352.39 12,288.00 104,451,622.52
II. Provision for
impairment of
inventories
136,246,281.98 7,203.73 576.00 38,242,168.99 47,680.37 97,963,060.35
III. Provision
for impairment
of long-term
equity
investments
63,702,449.15 780,645.20 7,332.36 64,475,761.99
VI. Provision
for impairment
of fixed assets
75,717.16 75,717.16
Total 358,021,256.53 1,547,436.94 2,580,928.39 38,242,168.99 67,300.73 318,678,295.36
Note: Written-off of provision for inventories impairment, is referring to Note.V-6 (3) A.
15. 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 at the end of the financial year was RMB 0., up to December 31,
2009, the collateral guaranty has not been released; and mortgaged 80 property certificates of operating
vehicle plate for a long-term bank loan RMB 19,000,000.00, and the closing balance is RMB
13,480,000.00.
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; It uses Loyal Garden District D (LangQiao Garden project), three floors of District A
of Shenzhen ITC Building and Building 4-01 as collateral to receive a 240,000,000 RMB long-term
bank loan, and the closing balance was RMB 200,000,000.00
C. The Company mortgaged District A and B of ITC, IT Commercial Building, Heping shops, 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 to74
RMB 250,000,000.00, and the closing balance of the year was RMB 0.00. Up to December 31, 2009, the
collateral guaranty has not been released
D. The Company uses 2nd Floor of ITC Building District A , ITC Commercial Building and parts of ITC
Plaza (second phase), total of 81 properties as collateral to receive a 69,000,000 RMB short-term bank
loan, and the closing balance is RMB 0.00.. Up to December 31, 2009, the collateral guaranty has not
been released.
E. As stated in Note( ) 1 (1), the following asse Ⅶ ts have been sealed up or frozen by the court during the
reporting period of the pending action of Haiyi case: seal up total 133 real estate properties, 66,581.11
square meter owned by the company which includes ITC Building, IT Commercial Building, ITC Plaza
(second phase),RiHao Garden, IT Commercial & Residential Building, Heping Road Chuanbu Street
etc.; freeze 95% shares of Shenzhen Huangcheng Real Estate Company Limited held by the company;
freeze 825000 directional shares of SST Huansu Holdings Co., Ltd.; A30000 shares of circulation shares
of *ST (specially treatment) Guangdong Sunrise Holdings Co., Ltd.;58720 shares of circulation stocks
of PanZhiHua New Steel & Vanadium Company Limited (held by the company on behalf of the
company union); freeze the bank accounts under the company’s parent company name with total of
879,011.82 RMB bank deposit in China Construction Bank Ltd. Shenzhen Branch, China Industrial &
Commercial Bank Ltd Shenzhen Branch, Bank of China Shenzhen Branch, China Agricultural Bank
Shenzhen Branch (The total deposit in these accounts are RMB 1,423,898.44 by the end of the reporting
year.) Among the above sealed up real estate properties, the estate area which has been mortgaged to the
banks is 35,090.12 square meter, the year-end book value is RMB 74,676,808.33.
(2)Details of the assets with restriction on ownership area as follows:
Categories Opening
balance Increase Decrease Closing
balance
Assets used in guarantee
Fixed asset- property and building 28,319,771.58 4,051,676.00 21,460,235.77 10,911,211.81
Investment property -property and building 87,104,912.14 84,988,714.14 65,251,318.43 106,842,307.85
Inventories-costs 175,007,383.76 175,007,383.76
- developments 185,829,097.42 6,542,787.52 156,671,526.54 35,700,358.40
Intangible asset - operating license plate 62,553,119.84 26,386,453.18 36,166,666.66
Subtotal 363,806,900.98 270,590,561.42 269,769,533.92 364,627,928.48
The assets sealed up or frozen due to lawsuit
cash and cash equivalents 1,423,898.44 1,423,898.4475
Categories Opening
balance Increase Decrease Closing
balance
Trading financial assets 232,200.00 232,200.00
Long-term equity investment 29,302,199.55 29,302,199.55
including：Huangcheng Real Estate Company
Limited equity（note）
28,500,000.00
28,500,000.00
SST Huasu Holdings Co.,Ltd directional
shares
802,199.55 802,199.55
Fixed asset- property and building 11,881,191.46 11,881,191.46
Investment property -property and
building
86,475,296.75 86,475,296.75
Inventories- property and building 47,836,352.35 47,836,352.35
Subtotal 177,151,138.55 177,151,138.55
less： Assets used for collateral and sealed up,
frozen
74,676,808.33 74,676,808.33
Total 363,806,900.98 373,064,891.64 269,769,533.92 467,102,258.70
Note: 95% shares of Shenzhen Huangcheng Real Estate Company Limited held by the company have
been frozen. Up to December 31, 2009, the ending balance in long-term equity investment of the
company is RMB 28,500,000.00. The net asset in the company’s consolidated financial statement is
RMB 180,444,300.00
16. Short -term borrowings
Categories Closing balance Opening balance
Credit loan 200,000,000.00 215,000,000.00
Mortgaged loan 154,000,000.00
Total 200,000,000.00 369,000,000.00
Note 1: Unpaid amount after balance sheet date
Note 2: The year-end credit loan is the loan made by the company and its subsidiary Shenzhen
Huangcheng Real Estate Co., Ltd. through the bank to Shenzhen Investment Holding Co., Ltd. See Note
(VI) 3 (3).
17. Trade payable
（1）Trade payable details76
Item Closing balance Opening balance
Amount 112,470,139.39 137,040,777.65
（2）There was no amount due to shareholders with more than 5% (including 5%) of the voting shares of
the Company in trade payables.
18. Advance from customers
（1）Advance from customers details
Item Closing balance Opening balance
Amount 745,527,226.22 67,150,023.78
Note 1：The closing balance increased by 1010.24% comparing to the opening balance.The increase
reflects mainly the increase in real estate sales during the reporting period of Xinhua City Project and
Shengang No 1 Project.
（2) Details of advance from customers on main projects of properties for sale are as follows:
Item Aging Closing balance
Opening
balance
Estimated date of
completion
Loyal Garden Within 1 year 3,040,791.00 11,800,710.00 Completion
Huangcheng Plaza 1-2years 2,176,421.15 3,866,804.24 Completion
Huangyu Garden District A 1-4years 846,495.63 2,407,528.93 Completion
Huangyu Garden District B 1-4years 218,413.26 1,236,719.26 Completion
Fengrun Garden 3-4years 70,638.00 128,254.00 Completion
Xinhua City Within 2 year 488,378,752.00 44,950,101.00 June 2010
Shengang No.1 Within 1 year 246,228,024.00 January 2011
Total 740,959,535.04 64,390,117.43
Advances from customers with the aging over 1 year is due to the terms of revenue reorganization
having not been satisfied.
Note 3: There was no amount due to shareholders with more than 5% (including 5%) of the voting
shares of the Company in advance from customers.
19. Payroll payable77
Categories Opening balance Increase Decrease Closing
balance
I. Salary, bonus, allowance, subsid 38,781,860.13 130,440,922.31 133,477,968.58 35,744,813.86
II. Employee welfare 1,500.00 9,032,716.95 9,034,216.95
III. Social insurance 15,243,765.03 14,804,885.39 438,879.64
Including: 1.Medical insurance 3,115,017.76 3,104,770.42 10,247.34
2.Basic retirement insurance 8,353,676.43 8,325,891.79 27,784.64
3.Annuity fee 3,090,427.14 2,695,507.14 394,920.00
4.Unemployment insurance 187,437.60 184,050.36 3,387.24
5.Injury insurance 249,179.90 247,825.01 1,354.89
6.Pregnancy insurance 234,293.67 233,108.14 1,185.53
7.Labor cooperation medical care 7,305.25 7,305.25
8.Other social insurance 6,427.28 6,427.28
IV. Public housing fund 73,754.34 108,090.00 107,400.00 74,444.34
V. Labour union fee and employee
education fee
2,467,938.22 3,767,347.24 3,681,883.40 2,553,402.06
VI. Non-monetary welfare 145,267.00 145,267.00
Ⅶ.Redemption for termination s of
labor contract
25,929,179.50 12,700,956.90 25,459,471.33 13,170,665.07
Total 67,254,232.19 171,439,065.43 186,711,092.65 51,982,204.97
Note: The employee payroll balance at the end of the year drops 22.71% in comparison to the balance at
the beginning of the year. It is mainly resulted from paying the dismissal welfare in accordance to the
employee dismissal plan made this year. Details refer to Note Ⅸ 3
20. Taxes payable
Categories Closing balance Opening balance
1.VAT 24,686.83 41,461.01
2.Business tax 9,551,059.52 2,652,094.93
3.Income tax 33,444,737.01 15,604,575.75
4.Stamp tax 47,309.79 191,350.6478
5.Education surtax 287,991.28 75,151.48
6.Land value appreciation tax 158,676,881.17 62,342,634.21
7.Urban maintenance and construction tax 201,419.84 39,833.23
8.Property tax 845,667.42 741,777.42
9.Land use tax 0.10
10.Individual income tax 2,236,551.30 627,227.15
11.Embankment maintenance fee 14,789.69 5,127.41
12.Others 784.09 1,545.41
Totals 205,331,877.94 82,322,778.74
Note: The closing balance of taxes payable increased by 149.42% than opening balance, mainly due to
increased income tax and land value appreciation tax generated from the recognized revenue of Loyal
Garden project.
21. Other payables
（1）Other payables details
Item Closing balance Opening balance
Totals 208,240,882.65 187,732,899.73
（2）There was no amount due to shareholders with more than 5% (including 5%) of the voting shares of
the Company in other payables.
（3）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 deposits 31,392,223.30 Deposits
HaiNan Yirun Real Estate Co., Ltd 28,511,784.91 Receipts under custody
Guangzhou Lishifeng Motor Company Limited 15,344,017.08 Current account
Shenzhen Guanghong Investment Co., Ltd 18,670,000.00 Current account
Shenzhen Fulin Industrial Co., Ltd. 9,528,506.00 Current account
Total 159,750,158.69
Note: The details of the account payables to other related party in other account payables of this
reporting period refer to Note Ⅵ3（4）79
22. Non-current liabilities due within 1 year
(1) Details
Item Closing balance Opening 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 balance Opening balance
Guarantee borrowings 200,000,000.00
Mortgage borrowings 100,000,000.00
Total 200,000,000.00 100,000,000.00
Details
Closing balance Opening balance
Loan
Loan
starting
date
Loan
ending
date
currency Interest
rate Foreign
currency
Home
Currency
Foreign
currency Home Currency
China
construction
bank, ltd.,
shenzhen
branch
1,
April
2008
30,March
2010 RMB 5.67% —— 200,000,000.00 —— 250,000,000.00
Total —— 200,000,000.00 —— 250,000,000.00
Note: The details of significant repayment after the balance sheet date refer to Note Ⅷ
23. Long-term borrowings
（1）classification
Borrowing terms Closing balance Opening balance
Mortgage borrowings 55,000,000.00
Pledge borrowings 13,480,000.00 43,229,343.34
Guarantee borrowings 250,000,000.00 250,000,000.00
Total 263,480,000.00 348,229,343.34
（2）Details:
Loan starting maturity currency Interest Closing balance Opening balance80
date date rate Foreign
currency
Home
Currency
Foreign
currency
Home
Currency
Shenzhen
east branch
of
agricultural
bank of
China
20March
2009
19March
2012
RMB 4.86% —— 200,000,000.00 ——
Shenzhen
east branch
of
agricultural
bank of
China
26Octob
er 2009
25Octobe
r 2011
RMB 4.86% —— 50,000,000.00 ——
Central
Commercial
branch of
pinga n bank
8Decem
ber 2008
8Novem
ber 2011
RMB 5.67% —— 13,480,000.00 —— 19,000,000.00
Total —— 263,480,000.00 —— 19,000,000.00
Note: The details of significant loan after the balance sheet date refer to Note Ⅷ
24. Provision for contingent liabilities
Item Opening balance Increase Decrease Closing balance
Pending action of Haiyi case 61,254,234.44 61,254,234.44
Inspection matter 8,030,474.39 8,030,474.39
Total 61,254,234.44 8,030,474.39 69,284,708.83
Note 1: Details of Haiyi case refer to Note XII.1 (1).
Note 2: The details of inspection matter of provision for contingent liabilities refer to Note XII. 2
25. Other non-current liabilities
Item Closing balance Opening balance
1.Utility specific fund 20,588,927.64 21,571,868.62
2.Housing principle fund 9,596,210.03 7,837,285.22
3.House warming deposit 8,403,367.49 7,812,947.26
4.Electric Equipment Maintenance fund 4,019,415.44 4,019,415.44
5.Deputed Maintenance fund 25,928,572.02 25,978,097.69
6.Taxi Deposit 28,080,000.00 28,617,800.00
7.Lease income of taxi license to be written off 16,732,781.41 18,039,340.21
8.Others 2,447,000.39 4,887,000.0081
Item Closing balance Opening balance
Total 115,796,274.42 118,763,754.44
Note: “Others” is borrowing of Shenzhen ITC Automobile Industry Co., Ltd, Shenzhen ITC Industry car
rental Co., LTD due to the drivers.
26. Paid-in capital
Unit: (0’000) shares
Before Increase/Decrease (+/-) After
Item Quantity
(0’000)
Proportion
(%)
Issuing
new
shares
Bonus
shares
(0’000)
Reserves
transferred
to shares
Others
(0’000)
Subtota
(0’000)l
Quantity
(0’000)
Proportion
(%)
A. Unlisted shares 38,894.86 71.79 3,533.06 -3,564.26 -31.20 38,863.66 65.21
1、 State owned shares
2.State-owned corporate
shares
38,337.84 70.76 3,477.36 -3,564.26 -86.90 38,250.94 64.18
3Other domestic owned
shares
557.02 1.03 55.70 55.70 612.72 1.03
Including
Shares held by domestic
legal persons
509.02 0.94 50.90 50.90 559.92 0.94
Shares held by domestic
natural person
48.00 0.09 4.80 4.80 52.80 0.09
4 、Shares held by
overseas legal persons
Including
Shares held by overseas
legal persons
Shares held by overseas
natural person
B. Listed shares 15,285.06 28.21 1,884.93 3,564.26 5,449.19 20,734.25 34.79
1 ． RMB-denominated
ordinary shares
9,139.13 16.87 1,270.34 3,564.26 4,834.60 13,973.73 23.45
2、Domestically listed
foreign shares
6,145.93 11.34 614.59 614.59 6,760.52 11.34
3 、 Overseas listed
foreign shares
4、Others
Total 54,179.92 100.00 5,417.99 5,417.99 59,597.91 100.00
Unlisted shares trading time
Unit: (0’000) shares82
Time Increased
The balance of
Unlisted shares
The balance of
listed shares
Explanation
3 November 2010 808.05 38,055.61 21,542.30
3 November 2012 38,055.61 59,597.91
Note1: The Company implemented the reform of non-tradable shares in October, 2009. The details refer
to Note Ⅸ. 1
Note2: According to the resolution of the company's fourth temporary shareholders meeting in 2009, the
registers date to transfer to share capital from company’s retained earning (10 send 1) and to transfer the
increased equity from A Share is November 20, 2009. The registers date to transfer the increased equity
from B Share is November 25, 2009. The registered capital is RMB 595,979,092 after the changes. The
above changes in share capital have been verified by Wuhan Zhongjuan Certified Public Accountants
Co., Ltd. and ZHYZ (2009) 068 Capital Verification Report was issued.
27. Capital surplus
Item Opening
balance
Increase Decrease Closing
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
28. Surplus reserves
Item Opening balance Increase Decrease Closing balance
Legal reserve 62,919,127.11 6,792,923.40 69,712,050.51
Total 62,919,127.11 6,792,923.40 69,712,050.51
Note: The increase in reserved fund is resulted from withdraw of 10% retained earning on September 30,
2009 in accordance to the company’s 2009 mid-term profit distribution plan.
29. Retained earnings83
Item Amounts Extraction or allocation
proportion
Before beginning retained earnings -55,930,192.11
plus：Retained earnings at the beginning of the year
Adjusted retained earnings at the beginning of the
year
-55,930,192.11
Plus: Net profit attributable to parent company
transferred in
96,933,951.02
Less: the statutory reserved fund 6,792,923.40 10% of the retained earning
on September 30, 2009
Ordinary stock dividends payable 6,067,788.90 note
Ordinary dividend from shares transferred to share
capital
54,179,917.00 note
Retained earnings at the end of the year -26,036,870.39
Note: In November 2009, According to the company’s 2009 mid-term profit share plan, based on the
retained earning on 30 September 2009, 541,799,175 original company’s total shares, for every 10
shares, the company will give all shareholders one share and 0.112 RMB cash. According to the articles
of association, cash dividend of B Share shall be paid in Hong Kong dollars with the exchange rate
published by Bank of China ( 1 Hong Kong dollar = 0.8809 RMB) on the first working day after the
conclusion date of the company’s shareholders meeting (November 9, 2009).
30. Revenue and Cost of Sales
(1) Revenue
Item 2009 2008
1．Sales 820,863,345.37 600,397,693.56
2．Other operating income 24,503,594.32 23,067,446.07
Total 845,366,939.69 623,465,139.63
(2) Cost of sales
Item 2009 2008
1．Cost of sales 426,640,525.77 333,683,066.31
2．Other operating cost 5,216,428.83 5,886,311.03
Total 431,856,954.60 339,569,377.34
Note: Revenue in 2009 increased by 35.59% than that in 2008, mainly due to the revenue of Royal
Garden project recognized in this period. Cost of sales in 2009 increased 27.18% than that in 2008,84
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 17,753,352.86 14,989,586.20 2,763,766.66
Sale of properties 587,838,309.08 238,425,451.03 349,412,858.05
Transportation services 47,550,926.15 22,906,029.46 24,644,896.69
Property rental and management services income 166,594,498.71 155,308,279.42 11,286,219.29
Others 21,855,784.96 5,516,285.40 16,339,499.56
Elimination -20,729,526.39 -10,505,105.74 -10,224,420.65
Total 820,863,345.37 426,640,525.77 394,222,819.60
Categories Other operating income Other operating cost Other operating margin profit
Parking lots 21,834,101.64 4,795,275.18 17,038,826.46
Rentals 1,668,640.00 1,668,640.00
Others 3,105,452.68 1,972,961.72 1,132,490.96
Elimination -2,104,600.00 -1,551,808.07 -552,791.93
Total 24,503,594.32 5,216,428.83 19,287,165.49
(4) Details of revenue
Business segment 2009 2008
Hotel and restaurant operations 17,753,352.86 14,617,529.80
Sale of properties 587,838,309.08 381,640,502.27
Transportation services 47,550,926.15 46,718,748.92
Sale of goods 2,559,188.26
Property rental and management services income 166,594,498.71 160,569,601.52
Others 21,855,784.96 15,117,735.74
Subtotal 841,592,871.76 621,223,306.51
Elimination -20,729,526.39 -20,825,612.95
Total 820,863,345.37 600,397,693.56
(5) Details of cost of sales85
Business segment 2009 2008
Hotel and restaurant operations 14,989,586.20 6,403,802.95
Sale of properties 238,425,451.03 156,965,705.40
Transportation services 22,906,029.46 22,343,817.34
Sale of goods 2,117,172.87
Property rental and management services income 155,308,279.42 146,744,324.61
Others 5,516,285.40 6,040,573.26
Subtotal 437,145,631.51 340,615,396.43
Elimination -10,505,105.74 -6,932,330.12
Total 426,640,525.77 333,683,066.31
31. Business taxes and surcharges
Item 2009 2008 Base of payment
Business tax 42,686,850.27 31,267,337.28 3% or 5% of taxable income
Urban maintenance and
construction tax
627,685.37 485,751.36 1% or 7% of VAT and Business tax
Additional education Fees 1,297,578.03 957,733.16 3% of VAT and Business tax
Land appreciation tax 101,297,169.97 57,282,175.73 30%－60% four level progressive rates
Levee fee 101,854.59 0.01% of operating revenue.
Others 13,414.99 51,126.40
Total 146,024,553.22 90,044,123.93
Note: Business taxes and surcharges in 2009 increased by 62.17% than that in 2008, mainly due to the
increase of revenue and the related turnover tax payable, additional tax and accrued land appreciation tax
32. Financial costs
Item 2009 2008
Interest expense 18,013,330.40 23,874,394.25
Less: Interest income 3,046,279.32 1,371,061.53
Exchange loss, net 119,130.81 -587,532.7386
Others 967,843.14 439,306.11
Total 16,054,025.03 22,355,106.10
33. Impairment loss
Item 2009 2008
Bad debt -1,820,764.38 5,572,788.17
Depreciation of inventory 6,627.73 -27,302.58
Depreciation of long-term equity investment 780,645.20 991,861.00
Total -1,033,491.45 6,537,346.59
34. Gain/loss on change in fair value
Source 2009 2008
Trading financial assets -705,776.78 -2,383,995.78
Total -705,776.78 -2,383,995.78
35. Gain/loss on investment
(1) The source of gain/loss on investment:
Source 2009 2008
1.Gain on investment under equity method -795,082.08 1,699,715.19
2.Gain on investment from disposal of long-term equity investment 30,854,470.32
3. Gain on investment from disposal of trading financial assets 3,141,428.11 45,039.52
4.Gain on investment from holding financial assets 38,342.22
5 Gain on investment from disposal of available-for-sale financial assets 4,835,799.71
6.Gain on investment from disposal of helding-to-maturity investment -3,000.00
Total 2,381,688.25 37,435,024.74
Note: as note Ⅶ 1（1）, There is no significant restriction on the remittance of gain on investment except
the 95% shares of Shenzhen Huangcheng Real Estate Company Limited being frozen which may have
impact in the remittance of gain on investment.87
36. Non-operating income
Item 2009 2008
1. Income from disposal of non-current assets 462,807.80 7,128,822.92
Including: Disposal of fixed assets 462,807.80 7,128,822.92
2．Others 4,589,404.05 2,701,947.17
including: Debts unable to pay 1,792,622.87
Penalty of House rental deposit 426,370.70
Income from Forfeit 2,063,390.43 149,157.04
Income from compensation 2,240,000.00
Total 5,052,211.85 9,830,770.09
37. Non-operating expense
Item 2009 2008
1. Loss on disposal of non-current assets 401,097.48 490,444.60
Including: Disposal of fixed assets 401,097.48 490,444.60
2、Public welfare donations 95,000.00
3、Litigation indemnity 49,611.50
4、Tax late fee and forfeit 19,492.78 596,551.65
5、Compensation 136,798.80
6、Estimated liability 8,031,974.39 19,481,328.37
7、.Others 128,426.07 328,770.16
Total 8,675,990.72 21,083,505.08
38. Income tax expense
Item 2009 2008
Income tax for the current period 68,736,118.86 22,986,229.94
Plus: Deferred tax expense ( "-"for gain) -38,372,643.07 -2,879,702.80
Income tax expense 30,363,475.79 20,106,527.1488
39. Earnings per share
Item 2009 2008
Basic Earnings Per Share 0.16 0.02
Diluted Earnings Per Share 0.16 0.02
Calculation of earnings per share is as following:
Basic Earnings Per Share＝96,933,951.02÷(541,799,175+54,179,917)＝0.16
Diluted Earnings Per Share＝96,933,951.02÷(541,799,175+54,179,917)＝0.16
Recalculation of earnings per share of last year is as following
Basic Earnings Per Share＝9,829,397.29÷(541,799,175+54,179,917)＝0.02
Diluted Earnings Per Share＝9,829,397.29÷(541,799,175+54,179,917)＝0.02
Note: The method of basic earnings per share and diluted earnings per share calculation
A．Basic Earnings Per Share =P0÷S
S= S0＋S1＋Si×Mi÷M0-Sj×Mj÷M0-Sk
P0 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.
S0 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. S1represents 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 =P1/(S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+ The weighted average
number of incremental ordinary shares on warrants, options, convertible debt and so on）
P1represents 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 loss89
attributable to the Company, adjust according to the accounting standards for enterprises and other
relevant provisions. The Company considered in sequence from dilutive potential ordinary shares to get
the lowest earnings per share.
40. Other comprehensive income
Item 2009 2008
1．Gain/loss on investment from disposal of available-for-sale financial
assets
less： income tax from disposal of available-for-sale financial asset
The other comprehensive income from previous year transfer into the
current net profits and losses
2,524,201.15
Sub-total -2,524,201.15
2. Other comprehensive income from investment under equity method
Less: income tax from investment under equity method
The other comprehensive income from previous year transfer into the
current net profits and losses
2,422,343.41
Sub-total -2,422,343.41
3．Foreign exchange difference -38,974.41 -1,601,920.03
Less: net amount transfer into net profit and losses from oversea business
Subtotal -38,974.41 -1,601,920.03
Total -38,974.41 -6,548,464.59
41. Relevant information about cash flow statement
(1) Other cash received from operating activities
Item Amount
Other cash received from operating activities 38,461,044.49
Including ： Receipts under custody of Hainan yirun real estate Co., ltd 11,106,784.38
Current account from Guangzhou Lishifeng automobile company 5,000,000.00
Collect debts from Duokuai Elevator 3,000,000.00
Compensation from Pinghu land 1,984,860.12
Net increase principle fund 1,849,345.0490
Increased guarantee money; 5,848,390.71
Cash flow generation from Liquidated damages, late payment penalty 2,063,390.43
(2) Other cash paid relating to operating activities
Item Amount
Other cash paid relating to operating activities 50,261,058.36
Including: Administrative expenses 26,939,561.70
Sales expenses 17,454,653.91
(3). Other cash paid relating to financing activities
Item Amount
Other cash paid relating to financing activities 2,235,000.00
Including: Significant borrowing charges 2,235,000.00
(4). Supplementary information of cash flow statement
Supplementary information 2009 2008
1.Adjustment from net profit to cash flows from operating
activities
Net profit 96,934,287.02 9,833,936.59
Plus: Provision for impairment of assets -1,033,491.45 6,537,346.59
Depreciation of fixed assets, Oil-gas assets and Productive
biological assets
28,301,543.77 29,067,729.92
Amortization of intangible assets 6,508,663.80 6,622,113.79
Amortization of long-term deferred expense 306,160.08 202,018.81
Loss on disposal of fixed assets, intangible assets and other
non-current assets(“-” for gain)
-58,710.32 -6,638,378.32
Loss on fixed assets retirement (“-” for gain) 0.00
Loss on change in fair value(“-” for gain) 705,776.78 2,383,995.78
Financial costs(“-” for gain) 18,304,330.40 23,874,394.2591
Supplementary information 2009 2008
Loss on investment(“-” for gain) -2,381,688.25 -37,435,024.74
Decrease of deferred tax assets(“-” for increase) -38,372,643.07 -2,878,720.88
Increase of deferred tax liabilities(“-” for decrease) -656,914.31
Decrease of inventory(“-” for increase) -100,469,254.00 -197,223,039.90
Decrease in operating receivables(“-” for increase) -31,773,227.76 -82,097,623.29
Increase in operating payables(“-” for decrease) 782,678,879.69 224,705,188.19
Others
Net cash flow from operating activities 759,650,626.69 -23,702,977.52
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
Cash at the end of the period 830,055,588.25 271,708,727.86
Less: Cash at the beginning of the period 271,708,727.86 242,161,687.34
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Increase in cash and cash equivalents 558,346,860.39 29,547,040.52
(5) Cash and cash equivalents
Item 2009 2008
Cash 830,055,588.25 271,708,727.86
Including: Cash on hand 227,928.12 340,965.83
Bank deposit on demand 821,405,437.46 265,398,484.68
Other monetary assets on demand 6,998,324.23 5,969,277.35
Cash and cash equivalents at the end of the period 830,055,588.25 271,708,727.8692
Item 2009 2008
including: Restricted Cash and cash equivalents held by parent
company or subsidiaries
1,423,898.4493
42. Segment part
Sale of properties Property rental and management
services
Item Transportation Sale of goods
2009 2008 2009 2008 2009 2008 2009 2008
I. Revenue 587,838,309.08 381,640,502.27 166,594,498.71 160,569,601.52 47,550,926.15 46,718,748.92 2,559,188.26
Including: External revenue 581,318,329.08 381,640,502.27 156,628,206.23 149,316,946.20 47,550,926.15 46,718,748.92 2,559,188.26
Revenue from segments 6,519,980.00 9,966,292.48 11,252,655.32
II. Cost 414,339,392.22 254,571,501.39 234,732,516.55 266,415,996.27 38,741,414.21 46,316,889.26 2,762,276.74
III. Operating profit (“-”for loss) 173,498,916.86 127,069,000.88 -68,138,017.84 -105,846,394.75 8,809,511.94 401,859.66 -203,088.48
IV. Total assets 2,126,337,426.54 1,469,622,956.86 554,363,198.60 456,438,529.12 159,191,196.30 204,115,420.11 -
V. Total liabilities 1,732,941,201.16 1,019,040,751.15 303,106,940.80 226,704,190.07 95,377,198.35 179,360,661.11 -
VI. Supplementary information
1. Depreciation and amortization 823,538.56 4,231,944.81 18,956,755.73 16,729,990.32 14,609,598.62 14,029,994.31 -
2. Capital expenditure
3. Non-cash expense except for depreciation and
amortization94
Item Hotel and restaurant operations Others Elimination Total
2009 2008 2009 2008 2009 2008 2009 2008
I. Revenue 17,753,352.86 14,617,529.80 48,463,979.28 38,185,181.81 -22,834,126.39 -20,825,612.95 845,366,939.69 623,465,139.63
Including: External revenue 16,885,322.86 13,168,487.20 42,984,155.37 30,061,266.78 845,366,939.69 623,465,139.63
Revenue from segments 868,030.00 1,449,042.60 5,479,823.91 8,123,915.03 -22,834,126.39 -20,825,612.95 -
II. Cost 18,396,356.61 14,806,539.90 29,417,141.60 32,788,571.87 -18,472,020.26 -19,580,673.37 717,154,800.93 598,081,102.06
III. Operating profit (“-”for loss) -643,003.75 -189,010.10 19,046,837.68 5,396,609.94 -4,362,106.13 -1,244,939.58 128,212,138.76 25,384,037.57
IV. Total assets 4,691,497.12 2,717,061.62 1,072,449,130.64 887,849,679.71 -1,082,614,494.60 -909,897,749.14 2,834,417,954.60 2,110,845,898.28
V. Total liabilities 4,983,460.21 2,422,997.85 1,103,534,230.82 994,113,987.45 -1,067,829,716.92 -882,273,805.83 2,172,113,314.42 1,539,368,781.81
VI.Supplementary information
1.Depreciation and amortization 23,918.69 539,228.93 702,556.05 341,631.34 35,116,367.65 35,872,789.70
2. Capital expenditure
3. Non-cash expense except for
depreciation and amortization95
Note VI. 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 relationship
A .Information of parent company
Name Registered
address Business scope Relationship Nature Legal
person
Shenzhen
Investment
Holdings Co.,
Ltd.
Shenzhen,
China
Providing guarantee 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
Municiple 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 Municiple Government.
Parent
company
Limited
liability
company
(state-owned)
Chen
Hongbo
The registered controlling shareholders of the Company for the moment is Shenzhen Construction
Investment Holdings, the details refer to Note I.4.
B．Subsidiaries with control relationship
Information about subsidiaries of the Company refers to Note Ⅳ.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: RMB0’000)
Name Opening balance Increase Decrease Closing balance
Shenzhen Investment Holdings Co., Ltd. 400,000.00 400,000.00
B .The registered capital of subsidiaries with control relationship refers to Note Ⅳ.1.
(3) The shareholdings held by the related party with control relationship and the changes in
shareholdings (All amounts are presented in RMB, unless otherwise stated.)96
Opening balance Increase/Decrease Closing balance
Name
Amount % Amount % Amount %
Shenzhen Investment Holdings Co.,
Ltd.
324,233,612.00 59.84 -1,075,279.80 -5.62 323,158,332.20 54.22
Hainan Xinda Development Co., Ltd 20,000,000.00 100 20,000,000.00 100
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 2,000,000.00 100
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
Shenzhen Real Estate 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 7097
Opening balance Increase/Decrease Closing balance
Name
Amount % Amount % Amount %
East Land Properties Limited HKD100.00 100 HKD100.00 100
Note: Chief Link Properties Limited holds 100% shareholding 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) Receiving guarantee
Companies have not provide guarantee to other company outside consolidated financial statements,
the details about guarantee provided to the subsidiary company see Note Ⅶ.3
(2) Remuneration of key management
In this year the Company paid total RMB 6.0129million (including IIT) to key management,
(including IIT). The Company paid RMB 2.8530million (including IIT) to key management in the
previous year.
⑶Entrust loan
The details of entrust loan or direct loan made by Shenzhen Investment Holding Co., Ltd. on
behalf of the company during the reporting period are as follows: (Unit: million RMB) （unit：
0’000 RMB）：
Name of The
entrusted
party
borrowers （%）
Annual
interest
Borrowing
at the
beginning
of year
Borrowing
this year
Repaid
this year
Borrowing
at the end
of year
Interest
China
everbright
bank
JingTian
Shenzhen
Huangcheng Real
Estate Co., Ltd
5.0523 15,000.00 15,000.00 15,000.00 15,000.00 1,002.6498
shenzhen
branch
Shenzhen
diwang
branch of
agricultural
bank of
China
Shenzhen Property
and Real Estate
Development Co.,
Ltd.
6.4700 5,000.00 5,000.00 10,000.00 281.04
Shenzhen
branch of
agricultural
bank of
China
Shenzhen Property
and Real Estate
Development Co.,
Ltd.
5.3100 5,000.00 5,000.00
Direct
borrowing
Shenzhen Property
and Real Estate
Development Co.,
Ltd.
7.4700 1,500.00 1,500.00 18.59
Total 21,500.00 25,000.00 26,500.00 20,000.00 1,302.27
Note: The initial unpaid interest of RMB 620,700 from the direct loan made by Shenzhen
Investment Holding Co., Ltd. during the reporting period has been paid this period.
⑷Amount due to/from related parties
Balances %
Name 31 December
2009
31 December
2008
31 December
2009
31 December
2008
Other receivables:
Shenzhen ITC Tian’an Property Co.,
Ltd
19,705,931.45 24,705,931.45 12.43 14.19
Anhui Nanpeng Papermaking Co.,
Ltd
8,690,144.00 8,702,432.00 5.48 5.00
Shenzhen ITC Industrial
Development Co., Ltd
2,431,652.48 2,431,652.48 1.53 1.40
Shenzhen Wufang Pottery &
Porcelain Industrial Co., Ltd
1,747,264.25 1,747,264.25 1.10 1.00
Short-term borrowings:
Shenzhen Investment Holdings Co.,
Ltd.
200,000,000.00 215,000,000.00 100.00 58.27
Other payables:
Shenzhen ITC Petroleum Co., Ltd 7,196,769.67 2,603,248.77 3.46 1.22
Shenzhen Jifa Warehouse Co., Ltd 6,288,296.00 6,953,472.00 3.02 3.27
Guangzhou Lishifeng Motor Co., Ltd 15,344,017.08 10,000,000.00 7.37 5.3399
Note VII. 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 RMB 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 appeal 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 case was reopened by Guangdong Higher
Court on June 18, 2008 and is still under investigation.100
On April 6, 2009, the company received 34 copies of 《Resume Execution Notice 》 issued by
Shenzhen Intermediate Court on March 23, 2009. It claims that eight proprietors including Haiyi
Industrial (Shenzhen) Co., Ltd. Applied to Shenzhen Intermediate Court for resume execution of
the 34 copies of verdict issued by Guangdong Province Supreme Court in 1999. Shenzhen
Intermediate People’s Court accepted their applications. Because the market value of the
company’s original escrow properties has been changes, the Company has recorded RMB
19,481,328.37 of estimated losses as the provision for contingent liabilities in previous financial
year. The company received 《Seizure, frozen property notice》from Shenzhen Intermediate
People's Court on 2 June 2009 and 25 June 2009 respectively. The details of the portion of the real
estate, equity and bank accounts which are sealed or frozen refer to Note (V) 15.
In Oct, 2009, the Highest People’s Court ruled that the verdict of YGFM (1998) No. 311
(JinHaiJing company) should be retried。
Since there are 2 out of 34 cases having been into the procedure for trial supervision, the Highest
People’s Court ruled to terminate the execution and returned the cases back to Guangdong
Province High People’s Court for retrial. The Company has submitted execution objection for all
34 cases to Shenzhen Intermediate Court. Shenzhen Intermediate Court suspended the execution
of the verdicts of YGFM (1998) No. 298 and YGFM (1998) No. 311. The rest of the 32 cases still
continue to be executed.
In the company’s opinion: The 32 verdicts which were used as basis to apply for execution had
been ruled to terminate the execution by Highest People’s Court and it is the same as the verdicts
of YGFM (1998) No. 298 and of YGFM (1998) No. 311 which have been entered the retrial
process, they are all have problems such as not clear in facts, applying wrong law, violating due
process of law, etc.. The company continues to apply to Highest People’s Court for retrial. At the
same time, we are pursuing other legal means aggressively to protect the legal rights for 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, Jiyong101
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 RMB143,860,000 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 ① the Company has not yet transferred the title 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 Highest People’s Court, the properties in
Jiabin Building that have been sealed up in this case have been released automatically. On
September 2009, company received YGFZ (2002) No. 1-1 《Resume Execution Notice》from
Guangdong Province Highest People’s Court claimed to resume execution the case that the102
transfer money owed by Jiyong company about Jibin building project.
In October 2009, company received ( Verdict YGFZ (2002) No. 1-2) from Guangdong Highest
People’s Court. The verdict claimed: The resume execution of this case is according to the "The
requirements for the Highest People's Court to concentrate the implementation of accumulated
cases" Through the investigation conducted by Guangdong Province Highest People's Court to
Shenzhen department of motor vehicles, Shenzhen Securities Registration and Settlement
Organizations, Shenzhen Land resources and real estate administration and the opening bank of
the executed party, the executed party – Jiyong Company does not have any executable property.
For these, Guangdong Highest People’s Court adjudicated : Terminate ① the executive procedure
of Verdict YGFZ (2002) No. 1; ② When the execution conditions are satisfied, the applicant can
apply for resume execution.
(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, Shenzhen Zongli Investment Limited and
the company amounted RMB5.87million.
In May 2009, Shenzhen Luohu District People's Court retried this case. The plaintiff add claim to
collect the compensation of 1.5 million RMB past-due interest on top of the original claim.
On 1 December 2009, Shenzhen Luohu District People's Court made the verdict of the first trial,
and deliver the Verdict SLFM2C (2003) No. 240《Civil Ruling Paper》, Judgment reject the
plaintiff's (Huaxi Company) claim against the company. The Huaxi Company did not accept the
judgment and appeal to the Higher Court
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,103
(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 RMB7, 539,000.00, the consideration of RMB15, 904,000.00 and a
compensation of RMB277, 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.
The progress of the report period： ①. Shenzhen Intermediate People’s Court had already sold
two properties under the name of Duokuai Elevator Company by auction: Shenzhen Huangchen
Plaza and ITC Plaza with total areas of 957.31 square meters. The auction price is RMB
4,280,000., In April 2009, Shenzhen Huangcheng Real Estate Co., Ltd. received RMB
3,000,000.00 from Shenzhen Intermediate People’s Court, the remaining RMB 1,280,000 was
temporarily stayed in the Shenzhen Intermediate People’s Court account. ② According the notice
from Shenzhen Intermediate People’s Court Judgment SZFZ (2006) No. 516, five properties had104
been sold by auction on 24 April, 2009. The auction price is RMB 5,140,000. , in which 1/3
equivalent to RMB 1,713,333.00, can be compensated as debts of Shenzhen Huangcheng Real
Estate Co., Ltd.
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 asked 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.
The closing balance of the receivables of Real Estate Company due from Duokuai Company is
RMB 8,726,693 The Company performed impairment test on the receivables and provides a
provision for bad debt of RMB1,478,071.21 to closing receivables due from Duokuai Company,
considering ownership of properties which were auctioned or provided as guarantee, their
estimated realized value and unsettled payables of the Real Estate Company due to Duokuai
Company, its related parties and guarantors.
（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 Shenzhen105
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 Court 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 to106
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 to107
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 was 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 been108
transferred to Shenzhen Intermediate People’s Court for adjudication.
On 22 December 2009, company received court ruling delivered by the Guangdong Highest
People's Court. After investigated by Guangdong Highest People's Court, it is considered that the
retrial application to Shenzhen Intermediate Court Judgment SZFZ (2008) No. 223 by the
company is complied to the law, and adjudicated: Arraign by ① Guangdong Highest People's
Court ② suspended the execution of the original verdict during the retrial
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. Inspection matter
On 10 September, 2009, company received the Notice of investigation from China Securities
Regulatory Commission Shenzhen Investigation Bureau. An investigation in the company’s
violation to the securities laws and regulations has been conducted. On 3 December 2009,
company received 《Notice of the administrative punishment beforehand》, in which accused the
company violating securities laws, and intend to make punishment for the violation to the
securities laws and regulations, confiscating the illegal income RMB 250,849.80 by buying and
selling securities using personal account, illegal income HK$8,544,744. 97 by buying and selling
in B share market using other legal person’s account, and fine RMB 250,849.80. The China
securities supervision and management committee also intend to give warning and impose fine to
the responsible persons. According to the relative regulations in 《The Administrative Punishment
Law》, 《China Securities Supervision and Management Committee Administrative Hearing
Regulation》, the responsible persons have the rights to state and defend or request for hearing.
The company has completed the statement and defense. Up to the reporting date, the company has
not received the notice of the result of the investigation. Though the company has completed the
statement and defense, the company predicts that the punishments stipulated in 《 Notice of the
administrative punishment beforehand》may still occur; Therefore, the company converts the fine
to RMB with the provision of the predicted debts of RMB 8,030,474.39109
3. Guarantee
(1). The company provided joint liability for the RMB240，000，000.00 long term loan from China
Agricultural Bank Shenzhen East Branch made by Shenzhen Huangcheng Real Estate Company
Limited, and use three floors of District A of Shenzhen ITC Building and Building 4-01 as
collateral. The ending balance of the loan was RMB 200,000,000.00.
(2)The company provided joint liability for the RMB 250,000,000.00 long term loan from China
Construction Bank Shenzhen Branch made by Shenzhen Huangcheng Real Estate Company
Limited. The ending balance of the loan was RMB 200,000,000.00 and the loan expires within a
year
(3). The company and the subsidiaries Shenzhen Property and Real Estate Development Co., Ltd.
and Shenzhen ITC Vehicles Industry Co., Ltd .provided joint liability for the RMB
250,000,000.00 long term loan from China Agricultural Bank Shenzhen East Branch made by
Shenzhen Huangcheng Real Estate Company Limited. The ending balance was RMB
50,000,000.00
(4). Guarantee for the property owner: The company and the subsidiary provide mortgage
guarantee for the commercial house purchasers to the bank. Up to 31 December, 2009, the
unsettled guarantee amount was RMB 190,790,000.00. This guarantee is the real estate developers
provided for owners to purchase the company’s commercial house. It is common in the real estate
industry
4. 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 delayed 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 and110
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 in October 2007.
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 Company111
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 agreement 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 May 25, 2006, the People's Government of Shenzhen Municipality announced the Notice
on Transferrable Plan of Shenzhen Community Facilities and Public Services Houses (SFB [2006]
No.79), which stipulated the scope of the transfer covers 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). 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.
Base on the statistics, the part of 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, However, although part of the112
buildings in these community facilities has been mapped, its area and cost price has not been
confirmed by the government, hence, the final confirmation on the area and amount of
compensation could not be confirmed. The subsidiary of the Company Shenzhen Huangcheng
Real Estate Company Limited, Related facilities have not been transferred ,the final confirmation
on the area and amount of compensation could not be confirmed.，thus the Company did not
recognize the above contingent assets in the financial statements.
Note VIII. Events after balance sheet date
(1) The subsidiary of the Company, Shenzhen ITC Vehicles Services Company has paid back the
long-term loan for the amount of RMB 460, 000.00 to Bank of Pinan Central Commercial
Shenzhen Branch on 21 January 2010;
(2) The subsidiary of the Company, Shenzhen Huangcheng Real Estate Company Limited has
paid back the long-term loan for the amount of RMB 100， 000，000.00 to China Construction
Bank, Ltd., Shenzhen Branch on 27 January 2010;
(3) The subsidiary of the Company, Shenzhen Huangcheng Real Estate Company Limited has
borrowed the long-term loan for the amount of RMB 100， 000，000.00 from China Agriculture
Bank Co., LTD Shenzhen East Branch on 27 January 2010. The expiration date of the loan is 25
October 2011
(4) The subsidiary of the company, Shenzhen Huangcheng Real Estate Company Limited has paid
back the long term loan for the amount of RMB 100,000,000.00 to China Construction Bank, Ltd.,
Shenzhen Branch on 3 February 2010
(5) The subsidiary of the company, Shenzhen Huangchen Real Estate Company limited has
borrowed the long term loan for the amount of 100,000,000.00 from China Agriculture Bank Co.,
LTD, Shenzhen East Branch on 3 February 2010; the expiration date of the loan is 25 October
2011.
Note IX. Other significant events
1. Before reform of the Company’s shareholdings, 70.296％ of all the shareholdings was
controlled by Shenzhen Investment Holdings Co., Ltd. (hereinafter as “SIH”) through Shenzhen
Construction Investment Holdings (hereinafter as “SCIH”) and Shenzhen Investment Management113
Corporation (hereinafter as “SIMC”).After the reform, “SIH” controls 63.72% of all the shares (it
turns to 63.85%, after settlement of shares reimbursement). On October 21, 2009, the Company
held a shareholders’ conference about reform of shareholding, the plan provided by the above
three companies which was also approved by the conference. The main contents are as following:
For all the shareholders, every 10 shares of circulated shares of the Company in A-shares market
can earn 3.9 shares of non-tradable A-share. The shareholders of non-tradable shares paid a
consideration RMB 35,642,607 to the shareholders of circulated A-shares. On the first trading day
after the implementation of shares reform plan, the shareholders’ non-tradable shares obtain the
right of circulation.
As the Company's actual controller, “SIH” made commitments together with “SCIH” and “SIMC”,
commiting that all companies will adopt the laws, regulations and rules; apart from those, the
specific commitments are as follows:
①After obtaining the circulation right, the non-tradable shares of “SCIH” and “SIMC” are
non-tradable in the next 36 months. When the committed period is expired, the original
non-tradable shares can be sold less than 5% of the Company’s total share capital in next 12
months, and less than 10% of the total share capital in next 24 months. If the commitments were
disobeyed, the proceeds will be transferred to all listed companies
②One year after the date that obtaining circulation right for non-tradable shares of “SIH”, “SCIH”
and “SIMC”, “SIH” shall make a commitment that injection of assets will be started, which refers
to assets’ value no less than RMB 500 millions (including land resources) and obtained through
permutation or other legal means at once or by steps, increasing the Company's land reserves and
enhance future profitability.
If the assets mentioned above could not be injected within one year after obtaining circulation
right, “SIH”will make the cash compensation valued at 20% of the un-paid up assets, in 30 days
after the expired date. After the payment of such compensation, “SIH” should continue to bear the
obligation of un-completed payments that been started and no longer to bear the un-started assets
injection.
Note: Starting of assets injection depends on the programme plan, approved by the shareholders’
conference. “SIH”voluntarily accredit the China Securities Depository and Clearing Co., Ltd.
Shenzhen Branch to freeze 30 millions holdingshares under control of “SIH” and “SCIH”, as
insurance for above commitments.114
③During 24 months after obtaining the circulation right for non-tradable shares of “SIH”,
“SCIH”and “SIMC”, “SIH” shall offer a commission loan of cash that no less than RMB 500
millions under laws, administrative regulations and relevant provisions, to ease the funds’ tension.
The amount is according to accumulative occurrence during 24 months after these three
companies obtain the circulation right, each commission loan of cash can maintain no less than 12
months; the RMB 500 millions mentioned above doesn’t include the commission loans of cash
that obtained by these three companies before the date of obtaining the circulation right.
④For the Company, if net profit in either year 2010, 2011,2012, less than net profit in 2009,
“SIH”will provide a compensation of cash (equivalent to the difference ) to make up for that year.
The Company achieved the plan of shareholdings reform on October 30, 2009.
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
56,303,627.40exemption 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 a receivable house payment of Jinlinhua Plaza from Shenzhen Jiyong Property
Development Co., Ltd, amounted to RMB100.0143 millions, the provision for bad debts is
amounted to RMB 44.0143 millions and the net amount is RMB56 millions.
3. 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 was issued on August 18, 2006, and
some other related documents, the Company formulated Compensation Measures of Human
Resource Allocation Improvement Reform of Shenzhen Properties & Resources Development
(Group) Ltd. (hereinafter referred to as “Compensation Method”), The Compensation Method had
been 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 to115
unilaterally remove the plan.
According to the plan, the Company made a provision on dismisses compensation of RMB36,
643,309.50 according to relevant accounting standard in 2008, and then respectively paid RMB
12,628,724.00, RMB25, 459,471.33 in the year of 2008 and 2009. During the reporting period, the
Company completed a setting of functional works and payroll for staff; for maintenance of a
stable business operation, the subsidiaries should adopt the redundancy plan steps by steps during
the reporting period, some of the subsidiaries have already deferred the schedule. Approved by the
Company's board, the deadline of compensation for redundancy plan will extend to June 30, 2010,
and the final payment of compensation will extend to December 31, 2010. Due to redundancy plan
carried out gradually or delayed in the subsidiaries, macro-economic environment and
employment situation are getting better under economic stimulus, plan of functional works and
payroll setting are further clarified, the number of employees that accepting the redundancy plan
in current and next year will be greater than the amount of last year. Till the report date, according
to current redundancy status, the human resources market in Shenzhen, the new setting of works
and salary adjustment programs, it will be expected that more employees would join the program
in the year of 2010.
During the reporting period, the Company redesigned the plan of redundancy, and made an
additional provision for the redundancy compensation as RMB12, 700,956.90. The plan of
redundancy compensation was issued by the 22nd session of the sixth conference of the
Company’s board of directors.
4. The proposal that transfer of overall property of Hainan Xinda Development Co., Ltd through
trading with public listed companies, was approved in the 10th session of the sixth conference of
the Company’s board of directors on Jan 14, 2009.Till the report date, the evaluation has not yet
been completed.
5. In Nov 2009, government of Shenzhen issued the paper “Urban Renewal approaches for
Shenzhen”, and officially began to practice on Dec 1, 2009. After understanding the above paper,
the Company believed that the properties in line with the “Renewal standard” include the two
industrial lands (SFDZ No. 0103142 and No. 0103139, total as 11,500 square meters) in
Shangmeiling regions of Shenzhen. The use right of industrial lands land is registered under name116
of the Company, but there are some ownership disputes, is still in the litigation process. In this
case, the relevant regulations of paper “Urban Renewal approaches for Shenzhen” have uncertain
possibilities to the Company, unable to assess. As details for the urban renewal approaches have
not yet been issued, the specific program is in development, the Company will further track the
details, and there is not effect temporarily.
Note X. Notes to the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable by Categories are as follows:
Closing balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 106,817,190.08 99.86 45,447,889.05 99.88
Individually insignificant
receivables with high credit risk in
group assessment
54,380.35 0.05 54,380.35 0.12
Other insignificant amount 94,945.40 0.09
Total 106,966,515.83 100.00 45,502,269.40 100.00
Opening balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 105,133,507.94 99.27 45,447,889.05 99.88
Individually insignificant
receivables with high credit risk in
group assessment
65,495.35 0.06 54,380.35 0.12
Other insignificant amount 709,237.00 0.67
Total 105,908,240.29 100.00 45,502,269.40 100.00117
(2) Individually significant receivables or insignificant receivables requiring impairment test, and
providing provision for bad debt:
Name of company Closing
balance
Bad debt
provision
Aging Reason for provision
Shenzhen Jiyong
Property
Development Co.,
Ltd
98,611,328.05 42,611,328.05 Over 3
years
Involved in lawsuit, refer to
Note VII.1.(2) and Note
IX.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) There was no accounts receivable due from shareholders with more than 5% (including 5%) of
the voting shares of the Company.
(4) The details of significant accounts receivable are as follows:
Company Relationship Amount Aging
Proportion to
total accounts
receivables(%)
Shenzhen Jiyong Property
Development Co., Ltd
Non-related
parties
98,611,328.05 Over 3 years 92.19
Tianhong Shopping Plaza Co., Ltd. Non-related
parties
5,369,301.03 Within 1year
or 1-2 years
5.02
Shenzhen Tewei Industry Co., Ltd. Non-related
parties
2,836,561.00 Over 3 years 2.65
Total 106,817,190.08 99.86
2. Other receivables
（1）Other receivables by Categories are as follows：
Closing balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant
receivables 290,830,138.43 97.62 205,947,370.55
98.84
Individually insignificant
receivables with high credit risk
in group assessment
4,516,004.26 1.51 2,421,326.23 1.16
Other insignificant amount 2,580,420.59 0.87
Total 297,926,563.28 100.00 208,368,696.78 100.00118
Opening balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 630,630,810.67 99.02 193,216,435.21 98.79
Individually insignificant
receivables with high credit risk in
group assessment
4,042,997.79 0.63 2,367,847.46 1.21
Other insignificant amount 2,220,084.72 0.35
Total 636,893,893.18 100.00 195,584,282.67 100.00
（2）Individually significant other receivables or other insignificant receivables requiring
impairment test, and providing provision for bad debt：
Name of company Closing
balance
Bad debt
provision
Aging Reason for provision
Shum Yip Properties
Development Co., Ltd.
108,096,033.04 68,414,847.03 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 be
recollected
Hainan Xinda Development
Co., Ltd
49,211,591.54 49,211,591.54 Within 1 year to
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
Anhui Nanpeng Papermaking
Co., Ltd
8,690,144.00 8,690,144.00 Over 3 years Uncollectible for a long
period
Shanghai Yutong Real estate
development Co., Lt
5,676,000.00 5,676,000.00 Over 3 years Uncollectibility for the
reason of verdict
HongKong Yueheng
Development Co., Ltd
3,271,837.78 3,271,837.78 Over 3 years Has been liquidated
Dameisha Tourism Center 2,576,445.69 2,576,445.69 Over 3 years Suspended
Elevated Train Project 2,542,332.43 2,542,332.43 Over 3 years Suspended
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 251,042,487.49 207,694,634.80119
(3) There was no other receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
(4) Details of top 5 other receivables:
Name of company Relationship Amount Aging Proportion of
the total (%)
Shenzhen Property and Real
Estate Development Co.,
Ltd.
Wholly-owned
subsidiary
108,096,033.04 Over 3 years 37.19
Gintian Industry (Group)
Co., Ltd.
Non-related
parties
56,600,000.00 2-3years &over 3
years
19.47
Hainan Xinda Development
Co., Ltd
Wholly-owned
subsidiary
49,211,591.54 Within 1year&over 3
years
16.93
Shenzhen ITC Tian’an
Property Co., Ltd
Joint ventures 19,705,931.45 Over 3 years 6.78
Shenzhen Shengfenglu ITC
Jewel & Gold Co., Ltd
Non-related
parties
10,199,186.28 Over 3 years 3.51
Total 243,812,742.31 83.89
3. Long-term equity investment
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholdin
g (%)
Proportions
of voting
rights (%)
I. Investment
under equity
method
Shenzhen ITC
Tian’an
Properties
Co., Ltd
23,186,124.0
0
37,134,170.50 -562,597.68 36,571,572.82 50 50
Shenzhen Jifa
Warehouse
Company
Limited
30,645,056.0
4
26,297,645.27 -281,055.82 26,016,589.45 50 50
Shenzhen
Tian’an
International
Building
Property
Management
Co., Ltd
1,500,000.00 1,758,476.74 48,571.42 1,807,048.16 50 50
II. Investment
under cost
method
Shenzhen ITC
Vehicles
Industry Co.,
29,850,000.0
0
29,850,000.00 29,850,000.00 90 90120
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholdin
g (%)
Proportions
of voting
rights (%)
Ltd.
Hainan Xinda
Development
Co., Ltd
20,000,000.0
0
20,000,000.00 20,000,000.00 100 100
Shenzhen
Property and
Real Estate
Development
Co., Ltd.
30,950,000.0
0
30,950,000.00 30,950,000.00 100 100
Shenzhen
Huangcheng
Real Estate Co.,
Ltd
28,500,000.0
0
28,500,000.00 28,500,000.00 95 95
Shenzhen ITC
Property
Management
Co., Ltd.
20,000,000.0
0
20,000,000.00 20,000,000.00 95 95
Shenzhen ITC
Food Co.,Ltd.
1,600,000.00 1,600,000.00 1,600,000.00 80 80
Shenzhen
Property
Construction
Supervision
Co., Ltd
2,000,000.00 3,000,000.00 3,000,000.00 100 100
Shenzhen
International
Trade Plaza
12,000,000.0
0
12,000,000.00 12,000,000.00 100 100
Shenzhen Real
Estate
Exchange
1,380,000.00 1,380,000.00 1,380,000.00 100 100
Shensan
Co.,Ltd.
17,695.09 17,695.09 17,695.09
East Land
Properties
Limited
93.64 93.64 93.64 100 100
Zhanjiang
Shenzhen Real
Estate
Development
Co., Ltd
2,530,000.00 2,530,000.00 2,530,000.00 100 100
Hong Kong
Shum Yip
Properties
Development
Co., Ltd.
15,834,000.0
0
15,834,000.00 15,834,000.00 100 100
Shenzhen
Huajing Glass
Bottle Co., Ltd
7,600,000.00 7,600,000.00 7,600,000.00 15.83 15.83
Shenzhen 18,983,614.1 18,983,614.14 18,983,614.14 26 26121
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholdin
g (%)
Proportions
of voting
rights (%)
Wufang Pottery
& Porcelain
Industrial Co.,
Ltd
4
Shenzhen ITC
Industrial
Development
Co., Ltd
20,154,840.7
9
3,682,972.55 3,682,972.55 38.33 38.33
Anhui Nanpeng
Papermaking
Co., Ltd
13,824,000.0
0
13,824,000.00 13,824,000.00 30 30
China T.H.
Co.,Ltd.
2,962,500.00 2,962,500.00 2,962,500.00 0.33 0.33
North
Machinery
(Group)
Co.,Ltd.
3,465,000.00 3,465,000.00 3,465,000.00 12.66 12.66
Guangdong
Huayue Real
Estate Co.,Ltd.
8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Total —— 290,150,813.1
3
-795,082.08 289,355,731.0
5
—— ——
Company
Note for
difference
between
proportions of
voting rights and
shareholding hold
Provision for
impairment
Increse in
current year Cash dividends
I. Investment under equity method
Shenzhen ITC Tian’an Properties
Co., Ltd
Shenzhen Jifa Warehouse Company
Limited
Shenzhen Tian’an International
Building Property Management Co.,
Ltd
II. Investment under cost method
Shenzhen ITC Vehicles Industry Co.,
Ltd.
Hainan Xinda Development Co., Ltd 20,000,000.00
Shenzhen Property and Real Estate
Development Co., Ltd.
Shenzhen Huangcheng Real Estate
Co., Ltd
522,000,000.00122
Company
Note for
difference
between
proportions of
voting rights and
shareholding hold
Provision for
impairment
Increse in
current year Cash dividends
Shenzhen ITC Property Management
Co., Ltd.
Shenzhen ITC Food Co.,Ltd. 1,600,000.00
Shenzhen Property Construction
Supervision Co., Ltd
Shenzhen International Trade Plaza 12,000,000.00 3,455,632.63
Shenzhen Real Estate Exchange
Shensan Co.,Ltd. 17,695.09
East Land Properties Limited
Zhanjiang Shenzhen Real Estate
Development Co., Ltd
2,530,000.00
Hong Kong Shum Yip Properties
Development Co., Ltd.
15,834,000.00
Shenzhen Huajing Glass Bottle Co.,
Ltd
7,600,000.00
Shenzhen Wufang Pottery & Porcelain
Industrial Co., Ltd
18,983,614.14
Shenzhen ITC Industrial Development
Co., Ltd
3,682,972.55
Anhui Nanpeng Papermaking Co., Ltd 13,824,000.00
China T.H. Co.,Ltd. 2,160,300.45
North Machinery (Group) Co.,Ltd. 3,465,000.00
Guangdong Huayue Real Estate
Co.,Ltd.
8,780,645.20 780,645.20
Total 110,478,227.43 4,236,277.83 522,000,000.00
Note: The Company owns 95% of shareholdings of Shenzhen Huangcheng Real Estate Co., Ltd,
and these shareholdings is frozen by the courthouse, due to pending action of Haiyi case, and
details refer to NoteVII. - 1(1).
4. Revenue and cost of sales
（1）Revenue
Item 2009 2008
Sales 27,284,202.73 26,154,776.18123
Total 27,284,202.73 26,154,776.18
（2）Cost of sales
Item 2009 2008
Cost of sales 18,575,069.16 12,501,071.24
Total 18,575,069.16 12,501,071.24
（3）Listed by the categories of production or business:
Categories Revenue Cost of sales Gross profit
Property rental and management services income 27,284,202.73 18,575,069.16 8,709,133.57
Total 27,284,202.73 18,575,069.16 8,709,133.57
5. Gain/loss on investment
Source 2009 2008
1.Gain on investment under cost method 522,000,000.00
2.Gain on investment under equity method -795,082.08 1,699,715.19
3. Gain on investment from disposal of long-term equity
investment
40,266,921.14
4. Gain on investment from disposal of trading financial assets 20,128.04
5.Gain on investment from disposal of available-for-sale
financial assets
2,461,338.30
Total 521,204,917.92 44,448,102.67
Note: Apart from the frozen 95% of shareholdings of Shenzhen Huangcheng Real Estate Co., Ltd,
the return of other investments income has no significant restrictions, according to Note.VII-1 (1).
6. Supplementary information of cash flow statement
Supplementary information 2009 2008
1. Adjustment from net profit to cash flows from operating activities
Net profit 462,937,195.91 -26,155,872.73
Plus: Provision for impairment of assets 17,142,015.89 -5,947,564.64
Depreciation of fixed assets, Oil-gas assets and Productive 13,315,806.69 13,060,977.86124
Supplementary information 2009 2008
biological assets and amortisation of investment properties
Amortization of intangible assets
Amortization of long-term deferred expense 166,150.08 83,075.05
Loss on disposal of fixed assets, intangible assets and other
non-current assets(“-” for gain)
-50,019.21 -6,531,422.59
Loss on fixed assets retirement (“-” for gain)
Loss on change in fair value(“-” for gain) -168,300.00 -5,500.00
Financial costs(“-” for gain) 3,925,627.00 12,195,072.81
Loss on investment(“-” for gain) -521,204,917.92 -44,448,102.67
Decrease of deferred tax assets(“-” for increase)
Increase of deferred tax liabilities(“-” for decrease)
Decrease of inventory(“-” for increase) -218,200.00 3,203,042.66
Decrease in operating receivables(“-” for increase) 195,066,602.51 -39,894,681.26
Increase in operating payables(“-” for decrease) -61,015,512.98 201,484,925.29
Others
Net cash flow from operating activities 109,896,447.97 107,043,949.78
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
Cash at the end of the period 2,539,358.76 7,802,612.88
Less: Cash at the beginning of the period 7,802,612.88 10,363,712.41
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Increase in cash and cash equivalents -5,263,254.12 -2,561,099.53
Note XI. Supplementary information
1. Extraordinary gains and losses (negative: loss)
（1）According to the announcement (2008)No.43“Regulation on the Preparation of Information125
Disclosures of Companies Issuing Public Shares No. 1: Extraordinary gains and losses (2008)”
issued by the CSRC, Extraordinary gains and losses of the company of this reporting period are
calculated as follows:
(Positive: gains, Negative:
losses)
Items 2009 Note
Gains and Losses on disposal of non-current assets, including
provision for asset impairment write-off
58,710.32 Note 1
Corporate restructuring cost, such as employee resettlement expense,
integration costs etc.
-12,700,956.90 Note 2
Gains and losses on non-operational contingencies -8,031,974.39 Note 3
A gain or loss arising from a change in the fair value of a financial
asset or financial liability and disposal of available-for-sale financial
assets and liabilities that is not part of a hedging relationship related to
ordinary operation of the Company
2,473,993.55 Note 4
Non-operational income and expense apart from the above items 4,346,485.20 Note 5
Sub-total -13,853,742.22
Less: extraordinary gains and losses income tax influence 954,731.31
Total -12,899,010.91
Note1. “Gains and Losses on disposal of non-current assets, including provision for asset
impairment write-off” refers to gain and loss on disposal of fixed assets in 2009.
Note2. “Corporate restructuring cost, such as employee resettlement expense, integration costs
etc.” of this accounting period 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)
Note3. “Gains and losses on non-operational contingencies” refers to the provision for contingent
liabilities, details in Note V.-24, Note VII.-2
Note4. “A gain or loss arising from a change in the fair value of a financial asset or financial
liability and disposal of available-for-sale financial assets and liabilities that is not part of a126
hedging relationship related to ordinary operation of the Company” refers to investments income
on fair value of available-for-sale financial assets and its disposal.
Note5. “Non-operational income and expense apart from the above items” refers to income from
penalty.
2. According to CSRC regulations of announcement “Disclosure requirements No.9 for the public
listed companies—disclosure of ROE (%) and EPS” (edited in 2010), the calculated datas are as
following:
EPS
Profit in report period
Weighted
average ROE (%) Basic EPS Diluted EPS
Net profit attributable to ordinary
shareholders
15.67 0.16 0.16
Net profit attributable to ordinary
shareholders after deducting extraordinary
gain or loss
17.76 0.18 0.18127
Legal representative: Senior accountant Chief financial officer:
