SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.
INTERIM REPORT 2010
Date of disclosure: 31 Jul. 2010
Section I Important Notice & Contents
The Board of Directors, the Supervisory Committee as well as directors, supervisors and
senior executives of the Company guarantee that there are no any omissions, fictitious or
serious misleading statements carried in the report and will take all responsibilities,
individual and/or joint for the authenticity, accuracy and integrality of the whole contents.
No directors, supervisors and senior managers have objections to the report of the true,
accurate and complete.
Chairman of the Board of the Company Mr. Chen Yugang, Person in Charge of
Accounting Work Mr. Wang Hangjun and Manager of Financial Department Ms. Shen
Xueying hereby guarantee that the Financial Statements in this report are true and
complete.
The interim financial report of the Company has not been audited.
Contents
Section I Important Notice & Contents………………………………………………..1
Section II Company Profile……………………………………………………………2
Section III Changes in Share Capital and Shares Held by Principal Shareholders……42
Section IV Particulars about Directors, Supervisors and Senior Executives……….....7
Section V Report of the Board of Directors…………………………………………...7
Section VI Significant Events…………………………………………………………14
Section VII Financial Report………………………………………………………… 28
Section VIII Documents for Reference……………………………………………….29
Section II Company Profile
(I) Company Profile
1. Name of the Company in Chinese: 深圳市物业发展（集团）股份有限公司
Abbreviation: 物业集团
In English: Shenzhen Properties & Resources Development (Group) Ltd. (PRD)
2. Legal Representative: Chen Yugang
3. Secretary of the Board of Directors and Securities Affairs Representative
Secretary of the Board of Directors Securities Affairs Representative
Name Fan Weiping Liu Gang
Contact
address
42/F, International Trade Center,
Renmin South Road, Shenzhen
42/F, International Trade Center,
Renmin South Road, Shenzhen
Tel 0755-82211020 0755-82211020
Fax 0755-82210610、82212043 0755-82210610、82212043
E-mail 000011touzizhe@163.com 000011touzizhe@163.com
4. Registered/Office Address: 39/F and 42/F, International Trade Center, Renmin South
Road, Shenzhen
Post Code: 518014
5. Media Designated for Disclosing Information
A share: Securities Times; B Share: Ta Kung Pao
Internet Website Designated by CSRC for Publishing Annual Report:
http://www.cninfo.com.cn
The Place Where the Interim Report is Prepared and Placed: Office of the Board of
Directors, 42/F, International Trade Center, Renmin South Road, Shenzhen3
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of Stock: Shenwuye A, Shenwuye B
Stock Code: 000011, 200011
(II) Main financial data and indices
1. Main accounting data and financial indices
Unit: RMB Yuan
Items At the end of the report
period At the end of last year
Increase/decrease
compared with the end of
last year (%)
Total assets 2,769,294,105.41 2,834,417,954.60 -2.30
Owners’ equity (or shareholders’
equity) 787,950,222.28 661,442,553.12 19.13
Net assets per share 1.3221 1.1098 19.13
Items In the report period
(from Jan. to Jun.)
The same period of last
year
Increase/decrease
year-on-year (%)
Operating profit 146,552,962.57 134,711,728.40 8.79
Total profit 152,910,566.41 136,457,608.54 12.06
Net profit 126,752,423.52 106,297,227.83 19.24
Net profit after deducting
non-recurring gain/loss 117,563,897.99 106,062,901.26 10.84
Basic earnings per share 0.2127 0.1784 19.23
Diluted earnings per share 0.2127 0.1784 19.23
Net return on equity 16.09% 15.70% 0.39
Net cash flow from operating
activities 49,327,311.75 457,299,337.02 -89.21
Net cash flow from operating activities
per share 0.0828 0.7673 -89.21
2. Items of non-recurring gains and loss
Unit: RMB Yuan
Items Amount
Profit and loss from disposal of non-current assets, including the offset part
of the impaired assets; 3,639,394.41
Enterprises ’ reorganization fees, such as staffing expenses and integration
fees -302,693.00
Profit and loss from contingent events not relating to the Company’s normal
business 279,047.46
Profit or loss from change in fair value by holding tradable financial assets
and liabilities, and investment income from disposal of tradable financial
assets and liabilities as well as salable financial assets, excluding the
effective hedging businesses related with the normal operations of the
company 39,900.00
Other non-operating income and expenses besides the above items 5,809,760.87
Other items that conform to the definition of extraordinary profit and loss -276,884.21
Total 9,188,525.53
Note 1: Gains and losses from disposal of non-current assets, including offset that has
been withdrew as impairment reserve of assets in current period were gains and losses
from disposal of long-term equity investments and investing properties.
Note 2: Enterprises ’ reorganization fees, such as staffing expenses and integration fees in
this period was projected welfare amount for dismissal of employees as formulated
formerly. The event implemented in accordance with relevant document on state-owned
enterprise of Shenzhen, which was in line with definition of non-recurring gains and
losses in Explanation Public Notice on Information Disclosure of Public Offering Shares
Companies No. 1-Non-recurring Gains and Losses [2008] : “Gains and losses from4
transactions and events that influenced correct judgment on operating achievements and
profitability of the Company according to financial statements owing to its special nature
and chance”.
Note 3: Profit and loss from contingent events not relating to the Company’s normal
business in the current period was the recovered amount of estimated liabilities originally
withdrawn for investigations from CSRC. For more details, please refer to Note (Ⅴ) 23
and (Ⅸ) 6 to the Financial Statements
Note 4: Profit or loss from change in fair value by holding tradable financial assets and
liabilities, and investment income from disposal of tradable financial assets and liabilities
as well as salable financial assets, excluding the effective hedging businesses related with
the normal operations of the company was gains and losses from change of fair value of
transaction financial assets.
Note 5: Other non-operating income and expenses in current period were mainly house
rent deposit income from breach of contracts and sums that need not to be paid.
3. Difference due to CAS and IFRS
Unit: RMB
Items
Net profit attributable to owners of
parent company (Jan.-Jun. 2010)
Equities attributable to owners of parent
company (as at 30 Jun. 2010)
According to CAS 126,752,423.52 787,950,222.28
According to IFRS 126,752,423.52 787,950,222.28
Notes to the difference No difference
4. Net return on equity, earnings per share and diluted earnings per share was accounted in
accordance with requirement in Compilation Rules for Information Disclosures by
Companies That Offer Securities to the Public (No. 9)-Calculation and Disclosure of Net
Return on equity and earnings per share issued by CSRC (Revised in 2007)
Unit: RMB
Net return on equity Earnings per share
Jan.-Jun. 2010 Fully diluted Weighted
average
Basic earnings
per share
Diluted earnings
per share
Net profit attributable to
shareholders holding ordinary
shares of the Company
16.09% 17.49% 0.2127 0.2127
Net profit attributable to
shareholders holding ordinary
shares of the Company after
deducting non-recurring profit
and loss
14.92% 16.22% 0.1973 0.1973
Section III Changes in Share Capital and Shares Held by Principal
Shareholders
(I) In the report period, the Company’s total shares and its structure of share capital
remained unchanged.
(II) Number of total shareholders, shareholding of top ten shareholders and top ten
shareholders holding shares not subject to trading moratorium as at 30 Jun. 2010
according to the registration book from the Shenzhen branch of China Securities
Depository and Clearing Co., Ltd.:
Total shareholders at the end of report
period
By the end of the report period, the Company has 45,030 shareholders in total,
including 35,584 ones of A-share and 9,446 ones of B-share.5
Shareholding of top ten shareholders
Name of shareholder Nature of
shareholder
Shareholdi
ng ratio
(%)
Number of
shares held
Shares subject to
trading
moratorium
Shares pledged or
frozen
Shenzhen
Construction
Investment Holdings
Co., Ltd.
State-owned legal
person 54.22 323,158,332 323,158,332 30,000,000
Shenzhen Investment
& Management Co.,
Ltd.
State-owned legal
person 9.5 56,582,573 56,582,573 0
ZENG YING Domestic natural
person 0.8 4,800,000 0 0
Labor Union of
Shenzhen
International Trade
Property
Management
Company
State-owned legal
person 0.46 2,768,480 2,768,480 0
Shenzhen Jinniuhong
Trade Co., Ltd Unknown 0.3 1,791,500 0 0
Shenzhen Special
Zone Duty-Free
Commodity Co., Ltd
Ordinary domestic
legal person 0.29 1,730,300 1,730,300 0
Huang Qianqian Domestic natural
person 0.19 1,151,200 0 0
Shanghai Zhaoda
Investment
Consultant Co., Ltd
Ordinary domestic
legal person 0.19 1,111,000 1,111,000 0
Dong Bingyu Domestic natural
person 0.18 1,046,300 0 0
Li Ting Domestic natural
person 0.16 965,880 0 0
Shareholding of top ten shareholders holding shares not subject to trading moratorium
Name of shareholders Amount of tradable shares held at the period-end
(share) Type of share
Zeng Ying 4,800,000 Domestically listed foreign
shares
Shenzhen Jinniuhong Trade Co.,
Ltd 1,791,500 RMB ordinary shares
Huang Qianqian 1,151,200 RMB ordinary shares
Dong Bingyu 1,046,300 RMB ordinary shares
Li Ting 965,880
142,200 RMB ordinary
shares and 823,680 domestically
listed foreign shares
Liu Bin 862,548 RMB ordinary shares
Hu Pingsheng 727,000 RMB ordinary shares
GUOTAI JUNAN
SECURITIES(HONGKONG)
LIMITED
721560 Domestically listed foreign
shares
Liu Yude 683,000 RMB ordinary shares
Wang Liang 676,913 RMB ordinary shares
Explanation on associated
relationship among the
aforesaid shareholders or
acting-in-concert
It was unknown whether there exists associated relationship among the shareholders
mentioned above.6
Explanation on holding term of
placing shares by strategic
investor and ordinary legal
person
There was no situation as this.
(Ⅲ) Shareholding of top ten shareholders holding shares subject to trading moratorium,
as well as trading moratoriums
Serial
No.
Name of shareholder
holding shares subject to
trading moratorium
Number of shares
subject to trading
moratorium held by
the shareholder
Date when available
for trading
New shares available
for trading
Trading moratorium
4 Nov. 2012 29,798,954
4 Nov. 2013 29,798,954
1
Shenzhen Construction
Investment Holdings
Co., Ltd.
323,158,332
(excluding prepaid
shares) (Note 1)
4 Nov. 2014
Remaining
shares
4 Nov. 2012 29,798,954
2
Shenzhen Investment
& Management Co.,
Ltd.
56,582,573
4 Nov. 2013
Remaining
shares
1. The originally
non-tradable shares
held by the
shareholder shall not
be listed for trading
or transferred within
36 months since
implementation of
the share reform;
2. Upon expiration
of the moratorium
above, the
proportion of
originally
non-tradable shares
sold via the stock
exchange in the total
Shenwuye shares
shall not exceed 5%
within 12 months
and 10% within 24
months.
3
Labor Union of
Shenzhen International
Trade Property
Management Company
2,768,480 4 Nov. 2010 2,768,480
4
Shenzhen Special Zone
Duty-Free Commodity
Co., Ltd 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
Industrial & Trading
Co., Ltd. 692,120 4 Nov. 2010 692,120
8 Geng Qunying 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
The originally
non-tradable shares
held by the
shareholder shall not
be listed for trading
or transferred within
12 months since
implementation of
the share reform;
non-tradable shares
held by the
shareholder where
considerations have
not been executed
shall not be listed7
for trading.
Note 1: During the stock right splitting reform, Shenzhen Construction Investment
Holdings Co., Ltd. had prepaid for 741,075 shares for some non-tradable share holders. In
Nov. 2009, the 2009 interim equity distribution was executed on the said prepaid
shares—one share and RMB 0.112 in cash for every 10 shares. If the said prepaid
non-tradable shares are to be listed for trading, shareholders holding those shares shall
repay the shares prepaid by Shenzhen Construction Investment Holdings Co., Ltd., obtain
a written consent from the company and repay to the company the shares and cash gains
from the prepaid shares due to the equity distribution.
(Ⅳ) Changes of controlling shareholder and actual controller
The controlling shareholder and actual controller of the Company remained unchanged
during the report period.
Section IV Particulars about Directors, Supervisors and Senior Executives
(I) Shareholding changes of directors, supervisors and senior executives during report
period
Supervisor Guo Lusi holds a small number of Shenwuye shares (see the table below for
more details). And no other directors, supervisors or senior executives hold Shenwuye
shares.
Name Office
term
Shares held
at
year-begin
Shareholding
increase for
report period
Shareholding
decrease for
report period
Shares held
at
period-end
Of which:
restricted
shares held
Reasons
for
change
Guo
Lusi Supervisor
A-share:
154
B-share:
5390
0 0
A-share:
154
B-share:
5390
A-share:
154
B-share:
5390
--------
(II) Particulars about changes of directors, supervisors and senior executives in the report
period:
1、Due to a job transfer, Vice GM of the Company Mr. Liu Yinhua applied on 20 Jul. 2010
to the Board of Directors to resign from the position of vice GM. Upon review and
approval of the 25th Meeting of the 6th Board of Directors, Mr. Liu Yinhua was agreed to
resign from the said position. The Company has disclosed the relevant information on this
matter. For more details, please refer to the interim public notice published on Securities
Times, Ta Kung Pao and http://www.cninfo.com.cn dated 21 Jul. 2010.
2、Due to the Company’s operation and management needs, as reviewed and approved at
the 26th Meeting of the 6th Board of Directors, it was decided to engage Ms. Wang Huimin
as Vice GM of the Company.
Section V Report of the Board of Directors
(I) Review of operation during the report period
Before announcement of the new policy in Apr. 2010, real estate markets in most cities of
the country continued to grow from the second half of 2009, with active trading and rising
prices. However, along with the Notice on Firmly Preventing Property Prices from
Increasing Too Fast in Some Cities issued by the State Council (“the Ten New Real Estate
Policies”) and some local implementation rules, the government control on the property
market was getting stricter. The increase of initial payments and mortgage interest for8
second homes, as well as other property policies, gave a direct hit to the purchasing and
investing desire in the real estate market. As such, starting from the second quarter of
2010, property markets in most domestic cities saw more hesitation, a sharp drop in
trading volumes and price decrease.
The management of the Company believes that the real estate macro-control policies
mentioned above may affect, to some degree, the Company’s main business of real estate
development in the future. At the very beginning of the year, we expected 2010 to be a
year for policy change and adjustment in the real estate sector. We thus made good use of
the first quarter of short but strong sales, strengthening advertising for our houses, which
guaranteed realization of our business objectives for the first half of the year. Looking
back into the real estate market in the first half of the year, we hope that the market can
maintain a rational, long-term, stable and healthy development, which needs not only
long-term and stable policies, but also the government’s clear planning, orientation and
sound regulations for the real estate sector in the urbanization drive, as well as the
government’s efforts to promote a stable, rational, highly professional and healthy
development in the sector. Only these can provide a stable market environment and basis
for realization of the “Twelfth Five-year Planning for Enterprises”.
(II) Operation during the report period
1. General operation
For the report period, the Company achieved an operating income of RMB 697,428,600,
up by RMB 160,690,000 year on year, representing a growth of 29.94%; a net profit
reaching RMB 126,752,400, up by RMB 20,455,200 year on year, representing a growth
of 19.24%; a net profit attributable to shareholders of the parent company amounting to
RMB 126,752,400, representing a year-on-year increase of 19.24%. The sharp growth of
the operating income and net profit was mainly because the Company pushed its sales in
the first half of the year, which greatly increased its transferable incomes from the real
estate business as compared with the same period of last year.
(1) Changes in operating income, operating profit, net profit, net increase of cash and cash
equivalents over the same period of last year and analysis on reasons of change:
Unit: RMB Yuan
Items Jan.- Jun. 2010 Jan.-Jun. 2009 Increase/decrease %
Operating income 697,428,583.67 536,738,584.88 29.94
Operating profit 146,552,962.57 134,711,728.40 8.79
Net profit 126,752,423.52 106,297,227.83 19.24
Net increase of cash and
cash equivalents -124,292,904.66 342,601,749.42 -136.28
Explanation on reasons of change:
① Operating income increased 29.94% year on year, mainly because property sales in the
report period were carried forward into incomes.
② Operating profit and net profit increased 8.79% and 19.24% year-on-year respectively,
mainly because property sales in the report period were carried forward into incomes.
③ Net increase of cash and cash equivalents decreased 136.28% year on year, which was
mainly due to the year-on-year decrease of funds collected from project sales and the
increase of land purchases and taxes in the report period.
(2) Analysis on increase/decrease of total assets, shareholders’ equity and other items
compared with that at the report-begin and reasons of change:
Unit: RMB Yuan
Items 30 Jun. 2010 31 Dec. 2009 Increase/decrease %9
Total assets 2,769,294,105.41 2,834,417,954.60 -2.30
Account receivable 71,102,235.73 66,938,998.94 6.22
Other account receivable 48,907,592.88 54,030,054.90 -9.48
Inventories 1,319,061,182.89 1,255,676,772.24 5.05
Long-term equity
investment 80,319,891.38 79,697,503.62 0.78
Fixed assets 84,700,358.91 76,985,792.12 10.02
Intangible assets 109,639,345.22 112,893,677.12 -2.88
Shareholders’ equity
(excluding minority
interests)
787,950,222.28 661,442,553.12 19.13
Reason for change:
① Total assets decreased over the period-begin mainly due to repayment of bank loans;
② Account receivable increased over the period-begin mainly due to increase of
receivables from the property management business;
③ Other account receivable decreased over the period-begin mainly because subsidiaries
collected some debts;
④ Inventories increased over the period-begin mainly due to increase of payments for
construction in process;
⑤ Long-term equity investment increased over the period-begin mainly because profits
from investees increased according to the equity method;
⑥ Fixed assets increased over the period-begin mainly because subsidiaries renewed
their taxies;
⑦ Intangible assets decreased over the period-begin mainly due to amortization in the
report period;
⑧ Shareholders’ equity increased over the period-begin due to profits during the report
period.
(3) Particulars about measuring significant assets, liabilities, income and expenses with
the fair value mode.
Accounting calculation of the Company based on accrual basis. Other assets calculated on
basis of historical cost when transaction financial assets and financial assets calculated
with fair value method. For assets calculated with methods of replacement cost, net
realizable value, present value and fair value, based on obtain and credit of the confirmed
accounting elements.
① Items measured at fair value
Unit: RMB Ten thousand
Items
Amount at
period-begin
Gain and
loss from fair
value
changes in
report period
Accumulative
fair value
changes
recorded into
equity
Impairment
withdrawn in
report period
Amount at
period-end
Financial assets
Of which: 1. financial assets
measured at fair value and
23.22 3.99 27.2110
of which changes are
recorded into current gains
and losses
Including: derivative
financial assets
2. Available-for-sale
financial assets
Subtotal of financial assets 23.22 3.99 27.21
Financial liabilities
Investing properties
Production biological assets
Others
Total 23.22 3.99 27.21
Note: Financial assets measured at fair value and of which changes are recorded into
current gains and losses were tradable shares brought in from the secondary market, with
closing prices announced by the stock exchange as fair value.
② Financial assets and liabilities held in foreign currencies
The Company did not hold any financial assets or liabilities in foreign currency during the
report period.
2. Scope and operating situation of the main operations:
The Company mainly engaged in real estate development, property management and lease,
with by-lines of taxi passenger transportation and caterings. In the report period, the
Company realized incomes from main operations amounting to RMB 690,390,300 and
comprehensive gross profit amounting to RMB 196,397,400. Breakdowns of incomes
from main operations and gross profit were as follows:
(1) Classified by industries
Income from real estate development was RMB 552,327,400 and gross profit was RMB
157,742,400;
Income from property management and lease was RMB 98,313,800 and gross profit was
RMB 21,130,000;
Income from taxi passenger transportation was RMB 24,623,300 and gross profit was
RMB 12,502,400;
Income from caterings was RMB 7,873,700 and gross profit was RMB 1,731,900.
(2) Classified by regions:
Income in Shenzhen was RMB 653,655,300, taking up 94.7% of total incomes;
Income in other regions was RMB 36,735,000, taking up 5.3% of total incomes.
For the first half of 2010, the Company’s real estate income mainly came from Shenzhen
and most operating income and main profits came from the real estate business in
Shenzhen. Real estate income accounted for 78.3% of total incomes.
(3) As for major products taking up great proportions in incomes from main operations or
of total profits from main operations, details for sales revenues, costs and gross profits are
as follows:
Unit: RMB’000 Yuan
Industry
Operating income Operating cost Gross profit rate11
Amount
Increase/decrease
over the last year
(%)
Amount
Increase/decrease
over the last year
(%)
Gross profit
ratio (%)
Increase/decrease
over the last year
(%)
Real estate
development 552,327 32.45 394,585 140.94 28.56 -32.17
Property
Management and
lease
98，3l4 19.94 77,183 5.3% 21.49 5.29
taxi passenger
transport 24,623 4.18 12,121 6.94 50.77 -1.27
3. Particulars about suppliers and customers
When the Company engaged in the business of real estate development, the developed real
estate projects would be contracted to the bid winning companies be means of bid of
projects, of construction materials were purchased by the construction enterprises with
responsibility. There existed no big purchases during the report period.
Commercial houses of the Company were mainly sold to individual customers. Sales to
the top five customers accounted for 2.40% of the Company’s total sales.
4. Explanation on great changes in composing of profit, main operations or its structure
and profit capacity of main operations in the report period.
There was no great change in composing of profit, main operations or its structure and
profit capacity of main operations in the report period. Sales income and net profit
increased by a large margin because the Company pushed its sales and achieved a
year-on-year increase of incomes transferred from the real estate business in the first half
of the year.
5. Other operating activities greatly influenced profit in the report period
There were no other operating activities that greatly influenced profit during the report
period.
6. Operation and analysis on achievements of main subsidiaries and share-holding
companies
Unit: RMB’000 Yuan
Total assets Net assets Operating profit Net profit
Company
name Main products Registered
capital Amount
Increase/decrea
se compared to
last year (%)
Amount
Increase/
decrease
compared
to last
year (%)
Amount
Increase/decr
ease
compared to
last year (%)
Amount
Increase/dec
rease
compared
to last year
(%)
Shenzhen
Huangchen
g Real
Estate Co.,
Ltd
Development,
construction,
operation, and
management
of supporting
commercial
service
facilities at
Huanggang
Port
30000 1830763 21.71 183576 -72.45 3034 -97.91 2881 -97.55
Shenzhen
Wuye Real
Estate
Development
Co., Ltd.
Real estate
development
30950 659634 9.79 23831 - 101363 - 79690 -
Shenzhen
Guomao
Automobile
Industry
Transportation
of
passengers,
and lease of
29850 298298 12.29 53471 20.97 7279 41.70 5269 28.3612
Company automobiles
Net assets of Shenzhen Huangcheng Real Estate Co., Ltd. registered a steep drop as
compared with the same period of last year because it handed in profit to the parent
company in the second half of 2009; its profit also saw a considerable drop because for the
first half of this year, only a handful of unpopular houses were sold and generated some
income and there were no new projects to generate more income. Profit of Shenzhen
Wuye Real Estate Development Co., Ltd. increased significantly because projects
developed by it were eligible to be carried forward into income this June while there were
no real estate projects to be carried forward into income at the same period of last year.
7. Problems and difficulties in operation and countermeasure of the managements.
(1) Risk the Company faced and countermeasure
① Risk from policy and market
In the first half of 2010, along with announcement of the “Ten New Real Estate Policies”
and some local implementation rules, the sold housing floor space showed a drop in major
cities in China from the same period of last year. The new property macro-control policies
had, within a short period of time, slowed down the real estate investment growth, brought
down the trading volume rapidly and caused more and more hesitation in the market.
Affected by the uncertainties mentioned above, there appeared a complex hesitation
period of the macro-control policies. Upon an objective analysis to the nature of this real
estate adjustment, we believed that the government’s purpose was not just to adjust the
high property prices, but also to reduce financial and other system risks behind the real
estate market and eventually to bring the economy to the right path and improve the
economic structure. As for the second half of this year, it was generally believed that the
adjustment in the property market would continue under the macro-control pressure.
Urbanization has brought unprecedented opportunities and a wide space for the real estate
sector. Meanwhile, some cities are working on support housing planning. Under such
circumstances, the Company is cautiously optimistic about the future real estate market as
it holds the principles of being prudent and steady, controlling risks and grabbing proper
development opportunities. We will avoid regions and cities with a high risk for
investment and try to enter cities and core zones with high value. Holding the idea of
“quality properties make for quality lives” and the objective of “building classic and
beautiful homes”, we will strengthen advertising for our projects, maximize value of
projects and build a quality land reserve for development of the Company.
② Project development and risk control: Considering characteristics of real estate
development projects, the Company adopts risk control in the entire process of a
development project. A risk pre-warning mechanism and handling pre-plan mechanism
has been established in all phases of a project, including investment decision-making,
preparation, construction, marketing for sale and lease, and after-sale service. Thus, a
necessary risk control mechanism has been established. And the Company will continue to
improve its rules, make its operation flows more scientific and strengthen management.
(2) Work focuses for the second half and countermeasures for possible risks
In the second half of this year, property demand would be one of the key elements
essential to property sales, as well as to the realization of business objectives set by the
Company. Most real estate companies will probably meet a changeable market demand
and economic environment, macro-control policy risks and other difficulties. The
Company will try to understand better the rules governing rising and falling of market
prices, adopt an active attitude in coping with difficulties and grab opportunities so as to13
maximize project profits. In spite of problems, difficulties and risks ahead, with
expectation and trust from shareholders, all of us will work with a stronger sense of
responsibility, urgency and motivation. We will tap and integrate internal and external
resources and make sure accomplishment of targets set at the year-begin by taking the
following measures.
① To make sure timely arrival of money supply and proceeding as scheduled of
construction in process; to reserve capital for realization of development objectives; to get
financing through multiple channels and methods, and minimize financing cost and risk,
etc.;
② To accurately predict new policies through scientific analysis and judgment, spot
investable cities and regions, reduce expenses for obtaining land use right and other costs,
and make rational arrangements of development cycles so as to keep pace with
development and adjustment in the real estate sector.
③ To adjust marketing strategies and promotion efforts for projects according to changes
in the real estate market, collect funds as soon as possible and reduce operation risks.
④ To improve rules, increase efficiency, strengthen cost control, ensure project quality,
strengthen re-training and re-education for employees, and build a highly professional
team with strong executive force.
⑤ To try to exchange for land and other resources available for development by grabbing
opportunities provided by the share reform, so as to solidify the foundation for the
Company’s development.
(III) Investment during the report period
1. There were no raised proceeds of the Company in the report period, neither was the
continuous usage of the early raised proceeds.
2. Significant investment projects from funds from non-financial activities, and their
progress and benefit.
Unit: RMB’000 Yuan
Name of Project
Estimated total
investment in
the project
Investment in
2010
Project progress Sales
B section in C block of
Huangyuyuan
(Shen’gang No.1)
388400 65061.5
Interior and external
decoration
44.6% has been sold in
advance.
D block of
Huangyuyuan
(Langqiaogongguan)
414120 50660.4
Construction of the
main part
—
E block of Huangyuyuan
(Golden-collar Holiday
Hotel)
Uncertain 448 Planning —
Fengherili Tiankuoyuan
(Xinhua Town) 585000 46890
Acceptance checks
have been finished
and residents have
moved in.
74% has been sold.
Caitianyise
160000
6450
Foundation pit and
piles driving
--
Total 1174812 169509.9 — —14
(Ⅳ) Completion progress of targets set for 2010
The Company disclosed in the 2009 Annual Report a planned operating income for the
year 2010 reaching RMB 990 million and a planned cost of 810 million. Up until 30 Jun.
2010, an operating income of RMB 697,428,583.67 has been achieved, which is mainly
because the Company strengthened its real estate sales, which generated a much greater
income.
(V) About revising on operation plan in 2010
During the report period, the Company never revised operation plan in 2010 disclosed in
Annual Report 2009.
Section VI Significant Events
(I) Particulars about corporate governance
During the report period, in strict compliance with the Company Law, the Securities Law,
the Stock Listing Rules of Shenzhen Stock Exchange, the Code for Corporate Governance
of Listed Companies and other laws and regulations, the Company continued to improve
corporate governance, better management capability, strengthen information disclosure
and regulate operation. The actual governance of the Company was basically in line with
requirements of relevant documents issued by CSRC.
In the report period, in order to further clarify work assignment for annual report
disclosure, the Company formulated and later revised the Rules for Responsibility
Locating for Major Errors in Annual Report Disclosure. And the Work Rules for Annual
Report Disclosure was formulated to further clarify the work procedure for annual report
disclosure. Meanwhile, the Work Rules for Legal Advisors and the Contract Management
Rules were formulated to reinforce legal risk prevention and improve the risk control
capability.
(Ⅱ) Formulation and execution of internal control rules
The Company has formulated a system of legal, rational and effective internal control
rules based on its own operation characteristics.
In the report period, the Company conducted careful examinations on the internal control
of the Company in 2009 and disclosed the Self-evaluation Report on Internal Control. All
internal control rules of the Company have been effectively implemented, which firmly
guarantees normal operation of the Company. The Company will continue to improve and
regulate its corporate governance, increase management capability, regulate operation and
effectively prevent risks, so as to lay a good foundation for long-term and healthy
development of the Company.
(Ⅲ) Profit distribution and implementation
1. In accordance with resolutions of the Shareholders’ General Meeting 2009, the
Company would not distribute profit or turn capital reserves into share capital for the year
2009.
2. For the first half of 2010 ended 30 Jun. 2010, the Company achieved a consolidated net
profit attributable to the parent company reaching RMB 126,752,423.52, with the parent
company achieving a net profit of RMB 27,077,925.00. As at 30 Jun. 2010, the
consolidated undistributed profit of the Company stood at RMB 100,715,553.13, with the
undistributed profit of the parent company standing at RMB -4,754,258.52.
Since the parent company is the main body of profit distribution, the Company intends not
to distribute profits or turn capital reserves into share capital for the first half of 2010.
3. During the report period, the Company did not implement or draw up any equity15
incentive plans.
(Ⅳ) Significant lawsuits and arbitrations and equity of other listed companied held
1. In the report period, no new significant lawsuit or arbitration events occurred during the
report period.
2. In the report period, the progress of the significant lawsuits and arbitrations disclosed in
the previous years:
(1) Concerning the cases of “Haiyi Company” disclosed by the Company in the annual
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, the interim public notice on 19 Oct. 2009, the
2009 Annual Report and the interim public notice on 19 Jul. 2010
Concerning the 34 cases over housing property purchase and sale contract disputes
between eight companies, including Haiyi Industrial (Shenzhen) Co., Ltd., and the
Company, the Company was of the opinion that there existed unclear facts, errors in
application of laws and violation of legal procedures concerning the second-instance
judgments for the said 34 cases. Therefore, the Company filed an appeal to the Supreme
People’s Court (hereinafter referred to as “the Supreme Court”) according to the justice
supervision procedure.Concerning the Case (1998) YFMZ Zi No.298 and (1998) YFMZ
Zi No.311 between the Company and First Commerce Co., Ltd. and Jinhaijing Industry
(Shenzhen) Co., Ltd. respectively, the Supreme Court respectively issued the Civil
Judgment (2003) MYJ Zi No.403-1 and (2003) MYJ Zi No.443-1, which declared that the
said cases should be sent back to the Guangdong Higher People’s Court (hereinafter
referred to as “the Guangdong Higher Court”) for retrial and that execution of the original
judgments should be suspended. At present, the said two cases have entered the retrial
process. And the Company disclosed the relevant information in the 2008 Annual Report
and the interim public notice dated 19 Oct. 2009.
On 15 Jul. 2010, the Supreme Court issued another 32 civil judgments to the Company.
Upon retrial examination on the 32 civil judgments (1998) YFMZ Zi No.284-297,
299-310 and 312-317, which were part of the 34 cases of “Haiyi Company”, the Supreme
Court believed that the Company’s appeal met legal standards for retrial. Pursuant to the
Law of Civil Procedure of the People’s Republic of China, the Supreme Court decided to
command the Guangdong Higher Court to retry the said cases and that execution of the
original judgments should be suspended during the retrial period.
So far, concerning the 34 cases of “Haiyi Company”, the Supreme Court has overruled all the
second-instance judgments for those cases and commanded the Guangdong Higher Court to retry the
said cases. Up until the report date, all the 34 cases have entered the retrial process.
Due to the application of Haiyi Company and other seven companies to the Shenzhen
Intermediate People’s Court (hereinafter referred to as “the Shenzhen Intermediate Court”)
to resume execution of the 34 cases, the Shenzhen Intermediate Court froze some of the
Company’s properties. (The Company has disclosed interim public notices on this matter
respectively on 9 Apr. 2009, 4 Jun. 2009 and 29 Jun. 2009.) The Company has applied to
the Shenzhen Intermediate Court for suspending execution of the said 34 cases according
to relevant laws. And the Company will keep a close eye on the progress of the cases and
perform its duty of information disclosure in a timely way.
(2) Regarding the case against Guomao Jewel & Gold Co., Ltd. (hereinafter referred to as
“GMJG”) located in Shengfeng Road, Shenzhen as disclosed in the annual reports from
2005 to 2009
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, Lin16
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. Due to the reason that GMJG and Lin
Ruohua have been found with no assets available for execution for now, the Court has
now terminated execution of the case.
(3) Regarding the contract dispute with Duokuai Elevator as disclosed in the annual
reports from 2006 to 2009
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,
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.
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,17
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 Elevator
and its related parties and guarantee parties, an impairment provision test was run in the
book value of the accounts receivable and RMB 1,478,071.21 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.
In Mar. 2010, upon mediation of Shenzhen Intermediate People’s Court, the two parties
reached a settlement agreement on the aforesaid case, which was signed on and executed.
At present, the executed assets are being transferred.
(4) With regard to the case of “Meisi Company Lawsuit” disclosed continuously by the
Company in the annual reports from 2004 to 2009
Concerning the civil lawsuit, On 2 Jul. 2009, Shenzhen Intermediate People’s Court heard
the case and no verdict has been issued for now. 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.
Concerning the administrative lawsuit, 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’s 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 for18
information disclosure dated 23 Dec. 2009.
(5) For the case of “Hubei Foreign Economic Trade” disclosed in the Annual Reports
during 2000 to 2006, Semi-annual Report 2007 and Semi-Annual Report 2008. The
Supreme Court of People's Republic of China sent a paper of retrial civil judgment with
(2004) MEJ Zi No. 146-3 in Oct. 2007, which ordered retrial of the case by the Supreme
Court of People's Republic of China. At present, the case hasn’t opened a court session.
After the Company repaid housing fund of Jiabin Building RMB 24.4029999 million,
Hubei Foreign Economic Trade Shenzhen Office sent 14/F and 15/F of Jiabin Building to
the Company in line with law. In order to resolve ownership of the property and after
investigation, the Company found that 14/F and 15/F of Jiabin Building was registered
under the name of Zhuhai West Yinzhu Industrial Development Co., Ltd with method of
file registration. In Jun. 2008, the Company sued Zhuhai West Yinzhu Industrial
Development Co., Ltd to the Court of Luohu District, appealed the court confirm the
Company was obligee of 14/F and 15/F of Jiabin Building and judge to transfer
registration under the name of the Company. The Court of Luohu District accepted the
case with (2008) SLFMSC Zi No. 1442. On 21 Jul. 2008, the Court opened a court session
and presided to intermediation. The Company and Zhuhai West Yinzhu Industrial
Development Co., Ltd came to Civil Mediation Agreement, in which both parties
unanimously agreed that the 14/F and 15/F of Jinlihua Commercial Plaza (the former
Jiabin Building) located in Bao’an Road South, Luohu District , Shenzhen City owned by
the Company; Zhuhai West Yinzhu Industrial Development Co., Ltd cooperated with the
Company to handle relevant transfer procedure of the aforesaid property within three days
when the Civil Mediation Agreement came to effect. The mediation agreement now is
effective complied with law. The Company will actively handle transfer procedure. 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.
(6) Regarding the “China Orient Asset Management Company Lawsuit” disclosed by the
Company in the provisional public notice on 30 Dec. 2009 and the 2009 Annual Report.
Case No.: (2009) SZFMECZ No.77
In this case, the Shenzhen office of China Orient Asset Management Co., Ltd. (hereinafter
referred to as “Orient Asset Management Co., Ltd.”) 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. On 23 Jul. 2009, 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.
The case was heard on 11 Jun. 2010. And no verdict has been issued by the Shenzhen
Intermediate People’s Court.
(7) Regarding the “China Orient Asset Management Company Lawsuit” disclosed by the19
Company in the provisional public notice on 30 Dec. 2009 and the 2009 Annual Report.
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. On 23 Jul. 2009, 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.
On 1 Jun. 2010, China Orient Asset Management withdrew the accusation against the
Company.
(7) Regarding the Huaxi Company Lawsuit as disclosed in the annual reports of 2008 and
2009
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”). Later, Jiyong Company refused to pay for the
construction. And Huaxi Company filed a lawsuit to the People’s Court in Luohu District,
Shenzhen (hereinafter referred to as “the Luohu Court”), asking Jiyong Company,
Shenzhen Zongli Investment Co., Ltd. and the Company to pay for the construction and its
loss over RMB 5.87 million. On 28 Oct. 2009, the Luohu Court issued the Civil Judgment
(2003) SLFMEC Zi No.240, which ruled that Jiyong Company should, within 10 days
after the judgment took effect, pay RMB 2,132,521.62 and corresponding interest to
Huaxi Company for construction. And the Company took no responsibility in the
first-instance judgment.
The second trial for the case opened on 13 May 2010. And no verdict was reached by the
court for the second trial during the report period. The Company believes, based on facts
and legal grounds, that since it is not the principal party of the contract, the case would not
cause loss to the Company.
3. Equity of other listed companies the Company held
(1) Securities investment
No
.
Securities
variety
Securitie
s code
Short form of
securities
Initial
investment
amount (RMB)
Number
of shares
held
Book value
at
period-end
Proportio
n in total
securities
investmen
t (%)
Profits or losses
in the report
period (RMB)
1 Shenzhen
A stock 000030 ST Sunrise 268,735.50 30,000 272,100.00 100.00 39,900.00
Other securities investment held at the
period-end
Profits or losses of securities sold in the report
period ---- ---- ---- ---- 0.00
Total 268,735.50 ---- 272,100.00 100.00 39,900.00
(2) Equity of other listed companies the Company held
Securitie
s code
Short
form of
Initial
investment
Proportio
n in
Book value at
period-end
Profits or
losses in
Changes of
owners’
Accounting
subject Resource20
securities amount equity of
the
Company
the report
period
equity in
the report
period
000509 S*ST
HASU 2,962,500.00 0.33% 802,199.55 0.00 0.00
Long-term
equity
investment
Directional
purchase of
corporate
shares
Total 2,962,500.00 - 802,199.55 0.00 0.00
(V) Briefing and progress of the Company’s significant asset acquisition, sale and mergers
1. In the report period, the Company did not conduct any significant asset 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 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 meters (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. On Jun. 9, 2010,
the Company formally received payment of RMB 5,274,080.00 for transferring “Sihui
Land” and confirmed as income, and the net profit was RMB 1.83 million after carried
forward cost and deducting relevant taxes.
(VI) Related transactions
(1) Related transaction incurred in report period
① On Oct. 16, 2009, the Company’s actual controlling shareholder—Shenzhen
Investment Holdings Co., Ltd entrusted the Shenzhen Jingtian Sub-branch of China
Everbright Bank to grant loan of RMB 150 million to the Company’s
subsidiary—Shenzhen Huangcheng Real Estate Co., Ltd. On Mar. 25, 2010, the Company
repaid entrusted loan of RMB 150 million to controlling shareholder. Up to the
announcement day, balance of related transactions between controlling shareholder and
the Company was RMB 50 million, with nature being entrusted loan from the controlling
shareholder to the Company.
② From Janunary to June 2010, the Company paid interest of entrusted loan totaling
RMB 4.9583 million to the Company’s actual controlling shareholder—Shenzhen
Investment Holdings Co., Ltd.
2. For the credits and liabilities between the Company and its related parties, please refer
to the Note VI. 3. Balance of accounts receivable from and payable to related parties under
the Notes to the financial statements.
(VII) Significant contracts and their implementation
1. Significant contracts
① The Company got state-owned construction land use right of Block 2010-001 located
in Tongshan County, Xuzhou City on Feb. 10, 2010. The Company disclosed the above
event on Feb. 11, 2010, and public notice published in Securities Times, Ta Kung Pao and
http://www.cninfo.com.cn.
The Company afterwards signed Contract on Transfer of State-owned Land Use Right
with Tongshan State-owned Land and Resources Bureau, contract amount was RMB21
192.3 million and with area of 96,869 square meters. Usage of the land is residence and
land use right term is seventy years. For details, please refer to the First Quarterly Report
2010 disclosed on Apr. 26, 2010.
② During the reporting period, there was no other significant transaction, trust, contract or
lease of assets.
2. 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 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 248 million.
(3) The Company provided a joint-liability guarantee for the long-term loan of RMB 90
million borrowed by Shenzhen ITC Vehicles Services Company from the Shenzhen
Branch of China Ping An Bank. The closing balance of the loan stood at RMB 12 millio.
(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.
3. Special explanation and independent opinion from independent directors on capital
occupation by related parties and provision of external guarantees by the Company
Li Xiaofan, Dong Zhiguang and Zha Zhenxiang, all independent directors of the Company,
issued their independent opinion concerning the capital occupation by the Company’s
related parties and the provision of external guarantees by the Company.
In accordance with the Guiding Opinion of CSRC on Establishing Independent Director
System in Listed Companies, the Circular of Shenzhen Stock Exchange on Disclosure of
Interim Reports 2010 of Listed Companies (SZS[2010] No. 211) and other laws and
regulations, as well as the Company’s Articles of Association and its Rules for
Independent Directors, we, as the independent directors of Shenzhen Properties &
Resources Development (Group) Ltd., conducted careful examinations on the significant
guarantees provided by the Company and the capital occupation by the Company’s
holding shareholder and other related parties in the first half of 2010. Upon the
examinations, we hereby expressed our independent opinions as follows:
(1) No capital of the Company had been occupied by principal shareholders or other
related parties.
(2) The Company earnestly carried out regulations of Circular on Regulating External
Guarantee of Listed Companies, strictly controlled risks from guarantees and the specialist
tracked in real time. The Company assured that procedure of decision-making was
legitimate, reasonable and fair and never damaged interest of shareholders and the
Company. Up to 30 Jun. 2010, all guarantees of the Company were under controller. Total
guarantee amount of the Company was RMB 460 million, all of which were for
wholly-owned subsidiaries and were demand of routine business of the Company.22
4. Significant cash assets management the Company trusted other parties
There was no significant event of trusteeship of cash assets management in the reporting
period.
(VIII) 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.
Implementation: Up to the date of public notice, Construction Holdings and Investment
Management Company never sold shares of 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 Construction Holdings and Investment Management
Company, which was controlled by Investment Holdings, would not be traded or
transferred within 36 months since they acquired right of trade. After expiration of the23
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.
Implementation: Up to the date of public notice, Investment Holdings never sold shares of
the Company actually controlled.
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.
Implementation: Investment Holdings applied to China Securities Depository and
Clearing Corporation Limited Shenzhen Branch to freeze 30,000,000 shares of the
Company under name of Construction Holdings but actually controlled by Investment
Holdings in Nov. 2009; Investment Holdings and the Company had planned
reorganization committed, and suspension stock trade of the Company started since Jun.
22, 2010; according to regulations, the Company disclosed progress of the significant
event respectively on Jun. 29, Jul. 6 , Jul. 13 and Jul. 20, 2010, for details please referred
to provisional public notice published in Securities Times, Ta Kung Pao and
http://www.cninfo.com.cn on those days; On 21 Jul. 2010, the Company held the 25th
Meeting of the 6th Board of Directors, at which Resolution on Implementation of
Commitment of Share Merger Reform on Assets Replacement and Significant Related
Transaction (Draft), and on that day, the Company disclosed Suggestive Public Notice on
Implementation of Commitment of Share Merger Reform on Assets Replacement and
Significant Related Transaction. Stocks of the Company relisted again on Jul. 22, 2010.
The Company will closely focused assets replacement and disclose relevant information in
time strictly according to relevant requirements of laws and statutes.
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 when24
non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen
Construction Investment Holdings and Shenzhen Investment Co., Ltd acquired right to
trade.
Implementation: Up to the date of public notice, Investment Holdings entrusted bank to
loan RMB 50 million to the Company, which both occurred before the list date of
non-tradable shares. On Mar. 18, 2010, the Company held the Annual Shareholders’
General Meeting 2009, at which reviewed and approved Proposal on Application to
Controlling Shareholder to Entrust Loan. The Shareholders’ General Meeting authorized
the Board of Directors of the Company to deal with signature of entrusted loan agreement,
renewal of loan, borrow a new loan to repay old within RMB 500 million according to
actual need of operation and based on negotiation with Investment Holdings and relevant
banks. The Company disclosed the above on Mar. 19, 2010, and the public notice
published in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
The Board of Directors of the Company will decide to apply entrust loan to Investment
Holdings in proper time.
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.
Implementation: whether the commitment will be implemented is according to net profit
of 2010.
(VIII) The Financial Report for the first half of 2010 has not been audited.
(IX) In the report period, punishment to the Company and its management from securities
regulatory authorities.
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.
On May 10, 2010, CSRC send Written Decision of Administrative Punishments (CF Zi No.
[2010] 12) to the Company, and the punishment were as follows: ① The original Advance
Notification of Administrative Punishments planned to impose a penalty of RMB
250,849.80 on the Company, which would not be executed after review; ② 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. The
Company disclosed the relevant provisional public notice on Securities Times, Ta Kung
Pao and http://cninfo.com.cn designated for information disclosure dated May 12, 2010.
On May 18, 2010, the Company paid RMB 250,849.80 and HKD 8,544,744,97 from sales25
of B shares (which equal to RMB 7,500,577.13 according to exchange rate when received
Written Decision of Administrative Punishments on May 10, 2010).
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 report period, no shareholder holding over 5% shares of the Company made
such commitments as voluntarily extending the trading moratorium term, and setting or
raising the lowest price for reducing shareholding.
(XI) Researches, interviews and visits received by the Company in report period
1. In the report period, the Company received no field visits from institutional investors.
Instead, it received phone calls for consultation from a great number of individual
investors and some institutional investors.
Reception time Reception place Reception
way Visitor Main discussion and materials
provided
5 Jan.. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about status of the
Company and inquired sales of
Shengang No. 1 Project
27 Jan. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about status of the
Company and inquired that when the
principal shareholder start assets
reorganization as committed.
2 Feb. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about status of the
Company and inquired when the
Company disclosed the Annual Report
10 Mar. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about basic status of the
Company and inquired progress of
reorganization of share merger reform
25 Mar. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about basic status of the
Company and inquired whether
Xinhua Town be carried forward
7 Apr. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about basic status of the
Company and public notice on
clarification of relevant report
12 Apr. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about basic status of the
Company and asked about the progress
of the Haiyi Company Lawsuit
19 Apr. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted why the stock price was
low and inquired about progress of
share merger reform
28 Apr. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted when the share merger
reform started and ended with one year
5 May 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted whether reorganization of
share merger reform had progress;
20 May 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about achievement of the
first half year of 2010 of the Company;
27 May 2010 Office of the Board of
Directors By phone Individual
investor
Whether there were some programs for
share merger reform
9 Jun. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted whether punishment from
CSRC would influence achievement of
the Company;
28 Jun. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about land reserves of the
Company;
8 Jul.. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about progress of assets
replacement;26
12 Jul. 2010 Office of the Board of
Directors By phone Individual
investor
Acquainted about when stock of the
Company relisted.
22 Jul. 2010 Office of the Board of
Directors By phone Individual
investor
Inquired whether business of Shenxin
Taxi Co., Ltd has relationship with the
Company in progress of assets
replacement.
22 Jul. 2010 Office of the Board of
Directors By phone Individual
investor
Inquired when the title deed for land
located moon bay would be
completed;
22 Jul. 2010 Office of the Board of
Directors By phone Individual
investor
Inquired when the Company held the
Shareholders’ General Meeting to
review and approve assets replacement
scheme?
The Company answered the aforesaid phone calls for consultation in strict compliance
with requirements and principles of the Guide on Fair Information Disclosure for Listed
Companies, and protected the investors’ right to get the information equally. All the
investors were treated fairly and no undisclosed information was leaked to the investors.
2. Index for information disclosed
Date of disclosure Serial No. Name
14 Jan. 2010 2010-01 Preliminary Earnings Estimate
8 Feb. 2010 2010-02 Public Notice on Disclose Annual Report 2009 in Advance
9 Feb. 2010 2010-03 Public Notice on Resolutions of the 13th Meeting of the 6th
Supervisory Committee
9 Feb. 2010 2010-04 Summary of Annual Report 2009
9 Feb. 2010 2010-05 Public Notice on Resolution of the Board Meeting
9 Feb. 2010 2010-06 Notice on Holding the Annual Shareholders’ General
Meeting 2009
11 Feb. 2010 2010-07 Public Notice on Acquisition of Land Use Right
19 Mar. 2010 2010-08 Public Notice on Resolutions of the Annual Shareholders’
General Meeting 2009
24 Mar. 2010 2010-09 Clarification Public Notice
12 Apr. 2010 2010-10 Public Notice on Setting up Wholly-owned Subsidiary
Company in Xuzhou
26 Apr. 2010 2010-11 The 1st Quarterly Report 2010
26 Apr. 2010 2010-12 Public Notice on Resolutions of the Board Meeting
26 Apr. 2010 2010-13 Public Notice on Resolutions of the 14th Meeting of the 6th
Supervisory Committee
12 May 2010 2010-14 Public Notice on Receiving Written Decision of
Administrative Punishment from CSRC
22 Jun. 2010 2010-15
Public Notice on Stock Suspension for Assets
Reorganization
29 Jun. 2010 2010-16 Public Notice on Progress of the Significant Assets
Reorganization
6 Jul. 2010 2010-17 Public Notice on Progress of the Significant Assets
Reorganization
13 Jul. 2010 2010-18 Public Notice on Progress of Implementation of the
Significant Assets Reorganization in share merger reform
19 Jul. 2010 2010-19 Public Notice on Acquisition of Use Right of Land Located
in Dalang Town, Dongguan
19 Jul. 2010 2010-20 Public Notice on Progress of Haiyi Case
20 Jul. 2010 2010-19 Public Notice on Progress of Implementation of the
Significant Assets Reorganization in share merger reform
20 Jul. 2010 2010-21 Public Notice on Implementation of Commitment of Share
Merger Reform on Assets Reorganization
21 Jul. 2010 2010-22 Public Notice on Resolution of the Board Meeting
21 Jul. 2010 2010-23
Suggestive Public Notice on Implementation of
Commitment of Share Merger Reform on Assets
Replacement and Significant Related Transaction.
21 Jul. 2010 2010-24 Public Notice on Reactivating stock trading of the
Company
21 Jul. 2010 2010-25 Public Notice on Resolutions of the 15th Meeting of the 6th
Supervisory Committee27
(XII) Other matters that had significant influence on the Company
1. On 15 Jun. 2010, the Company acquired use right of state-owned land No. 2010G048
located in Dalang Town, Dongguan City by tendering on the spot with price of RMB 214
million. The Company disclosed the above on 19 Jul. 2010, and relevant public notice was
published in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
2. In order to be convenient for development of land in Xuzhou and build up and
generalize brand of “Property of Shenwuye”, the Company set up Xuzhou Dapeng Real
Estate Development Co., Ltd, which is responsible for development and operation of real
estate projects of the Company in Xuzhou. The Company disclosed the above on Apr. 12,
2010, and public notice was published in Securities Times, Ta Kung Pao and
http://www.cninfo.com.cn.
3. On 14 Jan. 2009, the proposal on transferring all the equity of Hainan Xinda
Development Co., Ltd. held by the Company through public listing upon price assessment
was approved at the 10th Meeting of the 6th Board of Directors of the Company. According
to resolutions of the Board Meeting, the Company entrusted BDO China Shu Lun Pan
CPAs Shenzhen Branch and Shenzhen Dezhengxin Asset Valuation Co., Ltd to audit and
value Hainan Company. The audit and valuation result would confirmed by the Board of
the Company, then submitted to Shenzhen Investment Holdings Co., Ltd and State-owned
Assets Supervision and Administration Commission of the State Council for record. The
Company will continue to push the whole transfer of Hainan Company based on
assessment. Up to the date of the report, the transfer had not been finished yet.
4. In Nov. 2009, Shenzhen municipal government issue Renewal Measures of Shenzhen,
which was officially executed from Dec. 1, 2009. As the Company leaned from the above
document, the Company considered that property qualified to be renewed was industrial
land located at Shangmeilin, Shenzhen (Property title No.: SFD Zi 0103142 and 0103139
with use land right of 1150 square meters). The use right of industrial land registered with
name of the Company, but there are some controversy about the existence right, and it is
in the progress of litigation. In view that the use right of the above industrial land was still
in progress of litigation, it is uncertain whether relevant regulations of Renewal Measures
of Shenzhen was applicable, and it isn’t able to assess at present.
In Jun. 2010, Guideline on Application of Unit Plan and Programming for Renewal
Measures of Shenzhen was issues. Combined with relevant regulations in Renewal
Measures of Shenzhen, the original projects of the Company were unqualified with
application (qualification includes: total area of renewal unit is not less than three hectares,
and rebuilding area is not less than 70% of the total renewal land; the construction are
over 20 years and so on.) The Company planned to conduct investigation and estimate
economic value of renewal of part projects, then started the relevant work with proper
chance. The Company will continuous focused on policy guideline and detailed rules. At
present, issuance of Renewal Measures of Shenzhen caused no material influence on the
Company temporarily.
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 98,611,328.0528
that the Company should receive from Shenzhen Jiyong Properties Development Co., Ltd.,
a bad debt of RMB 42,611,328.05 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
12,628,724.00 and RMB 25,459,471.33 was paid respectively in 2008 and 2009. In order
to safeguard operation stability, the dismissal plan was executed step by step on
subsidiaries in the report period. Some subsidiary companies put off the dismissal plan,
the accomplishment date of the dismissal plan was extended and the final payment date to
31 Dec. 2010. 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 Company revised the dismissal
compensation plan and withdrew another dismissal compensation of RMB 12,700,956.90
in the report period. The above dismissal plan had been reviewed and approved at the 22nd
Meeting of the 6th Board of Directors. Up to Jun. 30, 2010, balance of compensation for
dismissal was RMB 6,499,336.07.
7. In accordance with document SFB No. 【2006】79 and relevant documents and according
to statistics, as shown by the statistics, the Company and its subsidiaries had such
community facilities and public service houses with the total building area of 36,000
square meters, which had been handed over to relevant governmental departments. It is
estimated to gain government compensation with cost price. Among these accessories of
subsidiaries to be relegated, cost of Huangyuyuan Kindergarten and Yuhuangyuan School
had been audited by relevant authority; in recent months, Futian District Property
Management Center answered that “Huangyuyuan Kindergarten was out of relegation”
and whether Huangyuyuan School to be relegated stilling waiting for answer from
competent authority, therefore, relevant accessories failed to relegate to governance and
gained compensation; public accessory facilities of headquarters to be relegated was
projects developed many years ago, and Futian District Property Management Center
asked to relegated entirely, but other public facilities were unqualified except the
kindergarten and school, therefore, the Company failed to handle to the government or
gained compensation. At present, it is uncertain whether the government approve and the
time and amount of cost callback is not able to measure, so the Company didn’t recognize
the above contingent assets in financial statement. The Company is actively in the
progress of negotiating.
Section VII Financial Report
I. Financial report of the report period had not been audited.29
II. Financial statement
1. Balance sheet (attached)
2. Income statement (attached)
3. Cash flow statement (attached)
4. Statement of Changes in Owners’ Equity
III. Notes to the financial statements (attached)
Section VIII Documents Available for Reference
I. Text of the Semi-Annual Report 2010 with the signature of Chairman of the Board of
Directors;
II. Financial statement with the signatures and stamps of legal representative, the person in
charge of accounting and manager of financial department;
III. Texts of all the public notices disclosed in the report period on Securities Times and
Ta Kung Pao;
The aforesaid documents are prepared and placed in Office of the Board of Directors, 42/F,
International Trade Center, Renmin South Road, Shenzhen.
Board of Directors
Shenzhen Properties & Resources Development (Group) Ltd
Jul. 31, 201030
Balance Sheet
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
30 Jun. 2010 Unit: (RMB) Yuan
Items ConsolidAamtioonu n t at periPoadr-eenntd c o mpany ConsoAlmidoatuinotn at perioPda-rbeengti cno mpany
Current Assets:
Monetary funds 705,762,683.59 2,548,532.38 830,055,588.25 2,539,358.76
Transactional financial
assets 272,100.00 272,100.00 232,200.00 232,200.00
Notes receivable
Accounts receivable 71,102,235.73 59,367,364.31 66,938,998.94 61,464,246.43
Prepayments 61,566,126.82 46,862,874.11 500,000.00
Dividend receivable 325,739,041.74 325,739,041.74
Other receivables 48,907,592.88 307,034,788.79 54,030,054.90
89,557,866.50
Financial assets purchased
under agreement to resell
Inventories 1,319,061,182.89 93,171,981.20 1,255,676,772.24
66,446,135.31
Non-current assets due
within 1 year
Other current assets
Total current assets 2,206,671,921.91 788,133,808.42 2,253,796,488.44
546,478,848.74
Non-current assets：
Loans granted and accounts
disbursed on others’ behalf
Available-for-sale financial
assets
Investment held to maturity
Long-term receivables
Long-term equity investment 80,319,891.38 229,499,891.38 79,697,503.62
178,877,503.62
Investment properties 243,704,328.85 168,724,195.21 257,105,965.94
173,874,690.52
Fixed assets 84,700,358.91 40,744,720.89 76,985,792.12
39,860,661.03
Construction in progress
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil-gas assets
Intangible assets 109,639,345.22 112,893,677.12
Development expenses
Goodwill
Long-term deferred
expenses
2,248,690.95 2,248,690.95 2,243,026.34
2,243,026.34
Deferred income tax assets 42,009,568.19 51,695,501.02
Other non-current assets
Total non-current assets 562,622,183.50 441,217,498.43 580,621,466.16
394,855,881.51
Total assets 2,769,294,105.41 1,229,351,306.85 2,834,417,954.60
941,334,730.25
Current Liabilities:31
Short-term borrowings 50,000,000.00 50,000,000.00 200,000,000.00
50,000,000.00
Transactional financial
liabilities
Notes payable
Accounts payable 139,948,109.34 33,930,056.60 112,470,139.39
37,032,127.61
Accounts received in
advance
708,793,267.09 122,312.00 745,527,226.22
1,026,694.63
Financial assets sold under
agreement to repurchase
Service charge and
commission payables
Payroll payable 27,470,385.55 6,378,716.75 51,982,204.97
9,345,999.43
Taxes payable 176,282,950.90 1,508,353.68 205,331,877.94
2,912,148.33
Dividends payable
Interest payable
Other payables 222,655,008.32 402,678,556.22 208,240,882.65
125,331,899.26
Non-current liabilities due
within 1 year
200,000,000.00
Other current liabilities
Total current liabilities 1,325,149,721.20 494,617,995.25 1,723,552,331.17
225,648,869.26
Non-current Liabilities:
Long-term borrowings 470,720,000.00 263,480,000.00
Bonds payable
Long-term payables
Special payables
Estimated liabilities 61,254,234.44 61,254,234.44 69,284,708.83
69,284,708.83
Deferred income tax
liabilities
Other non-current liabilities 123,357,840.43 12,315,309.38 115,796,274.42
12,315,309.38
Total Non-current Liabilities 655,332,074.87 73,569,543.82 448,560,983.25
81,600,018.21
TOTAL LIABILITIES 1,980,481,796.07 568,187,539.07 2,172,113,314.42
307,248,887.47
Owners’ equity (or
shareholders’ equity):
Paid-in capital (or share
capital)
595,979,092.00 595,979,092.00 595,979,092.00
595,979,092.00
Capital reserves 25,332,931.52 226,883.79 25,332,931.52
226,883.79
Less: Treasury stock
Surplus reserves 69,712,050.51 69,712,050.51 69,712,050.51
69,712,050.51
General risk provision
Retained earnings 100,715,553.13 -4,754,258.52 -26,036,870.39
-31,832,183.52
Foreign exchange difference -3,789,404.88 -3,544,650.52
Total shareholders' equity
attributable to parent company
787,950,222.28 661,163,767.78 661,442,553.12
634,085,842.78
Minority interests 862,087.06 862,087.06
Total owner’s equity 788,812,309.34 661,163,767.78 662,304,640.18
634,085,842.78
Total liabilities and owner’s
equity
2,769,294,105.41 1,229,351,306.85 2,834,417,954.60
941,334,730.2532
Income Statement
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
Jan.-Jun. 2010 Unit: (RMB) Yuan
Items ConsolidaCtiounrr e nt pePriaorden t company ConsSolaimdaet ipoenr io d oPf alarestn yt ecaorm pany
I. Total sales 697,428,583.67 17,749,203.17 536,738,584.88 13,680,918.93
Including: Sales 697,428,583.67 17,749,203.17 536,738,584.88 13,680,918.93
II. Total cost of sales 553,077,908.86 -4,258,704.82 406,296,629.50 28,562,271.97
Including: Cost of sales 484,094,910.86 6,724,019.13 251,443,084.02 5,075,317.74
Taxes and associate charges 55,987,291.87 1,044,046.92 97,185,166.54 713,127.58
Selling and distribution
expenses 5,750,823.99 9,657,906.01
Administrative expenses 33,364,276.21 13,809,239.79 37,914,659.32 15,859,164.75
Financial expense -112,265.18 1,584,483.40 9,395,168.40 2,624,905.30
Impairment loss -26,007,128.89 -27,420,494.06 700,645.20 4,289,756.60
Add: gain/(loss) from change in
fair value (“-” means loss) 39,900.00 39,900.00 2,182,553.30 89,100.00
Investment income (“-” means
loss) 2,162,387.76 2,162,387.76 2,087,219.72 1,866,234.08
Including: income form
investment on affiliated enterprise
and jointly enterprise
622,481.40 622,481.40 1,866,234.08 1,866,234.08
Foreign exchange difference
(“-” means loss)
III. Business profit (“-” means loss) 146,552,962.57 24,210,195.75 134,711,728.40 -12,926,018.96
Plus: non-operation income 6,584,473.90 2,592,417.93 2,003,580.52 386,193.53
Less: non- operation expense 226,870.06 -275,311.32 257,700.38 104,079.53
Including: loss from non-current
asset disposal
47,253.80 1,173.62 134,079.53 54,079.53
IV. Total profit (“-” means loss) 152,910,566.41 27,077,925.00 136,457,608.54 -12,643,904.96
Less: Tax expense 26,158,142.89 30,160,380.71
V. Net profit (“-” means loss) 126,752,423.52 27,077,925.00 106,297,227.83 -12,643,904.96
Attributable to parent company 126,752,423.52 27,077,925.00 106,297,227.83 -12,643,904.96
Minority interest
VI. Earnings per share
(I) basic earnings per share 0.2127 0.0454 0.1784 -0.0212
(II) diluted earnings per share 0.2127 0.0454 0.1784 -0.0212
VII. Other composite income -244,754.36 36,336.87
VIII. Total composite income 126,507,669.16 27,077,925.00 106,333,564.70 -12,643,904.96
Attributable to owners of
parent company 126,507,669.16 27,077,925.00 106,333,564.70 -12,643,904.96
Minority interest33
Cash Flow Statement
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
Jan.-Jun. 2010 Unit: (RMB) Yuan
Items ConsolidaCtiounrr ent pPerairoedn t company ConsSolaimdaet ipoenr io d oPf alarestn yt ecaorm pany
Ⅰ.Cash flows from operating
activities:
Cash received from sale of
commodities and rendering of
service
714,318,827.68 360,650.31 887,319,881.83 8,348,212.61
Net increase of disposal of
tradable financial assets
Tax refunds received
Other cash received relating to
operating activities
21,789,909.96 10,548,995.85 54,653,344.05 170,423,938.07
Subtotal of cash inflows from
operating activities
736,108,737.64 10,909,646.16 941,973,225.88 178,772,150.68
Cash paid for purchase of
commodities and reception of
service
425,507,670.13 47,420.36 227,219,945.13 277,690.32
Cash paid to and for employees 91,922,579.85 151,646.50 103,676,738.28 6,626,025.09
Various taxes paid 134,131,780.63 59,001.14 81,506,570.58 3,198,250.51
Other cash paid relating to
operating activities
35,219,395.28 10,490,126.04 72,270,634.87 51,776,591.76
Subtotal of cash outflows from
operating activities
686,781,425.89 10,748,194.04 484,673,888.86 61,878,557.68
Net cash flows from operating
activities
49,327,311.75 161,452.12 457,299,337.02 116,893,593.00
Ⅱ. Cash flows from investment
activities:
Cash received from disposal of
investments
1,550,000.00 1,054,529.64
Investment income
Net cash received from disposal
of fixed assets, intangible assets
and other long-term assets
903,120.00 960,351.26 890,741.54
Net cash received from disposal
of subsidiaries or other operating
business units
Other cash received relating to
investment activities 16,972.86
Subtotal of cash inflows from
investment activities
2,453,120.00 2,031,853.76 890,741.54
Cash paid to acquire fixed
assets, intangible assets and other
long-term assets
17,056,128.48 152,154.58 2,263,086.72 1,212,039.46
Cash paid for investment 57,169.68
Net increase of pledged loans
Net cash paid by subsidiaries
and other operating units
Other cash paid relating to
investment activities
Subtotal of cash outflows from
investment activities
17,056,128.48 152,154.58 2,320,256.40 1,212,039.46
Net cash flows from investment
activities
-14,603,008.48 -152,154.58 -288,402.64 -321,297.9234
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 212,000,000.00 319,000,000.00 119,000,000.00
Cash received from issuance of
bonds
Other cash received relating to
financing activities
Subtotal of cash flows from
financing activities
212,000,000.00 319,000,000.00 119,000,000.00
Cash paid for repaying
liabilities
354,760,000.00 405,682,881.55 235,000,000.00
Cash paid for interest expenses
and distribution of dividends or
profit
15,051,190.87 25,594,733.03 6,215,639.50
Of which: stock dividends
and profits paid to minority
shareholders by subsidiaries.
Other cash paid relating to
financing activities
1,162,500.00 2,131,000.00
Subtotal of cash outflows from
financing activities
370,973,690.87 433,408,614.58 241,215,639.50
Net cash flows from financing
activities
-158,973,690.87 -114,408,614.58 -122,215,639.50
Ⅳ. Effect of foreign exchange
changes on cash and cash
equivalents
-43,517.06 -123.92 -570.38
Ⅴ. Net increase of cash and cash
equivalents
-124,292,904.66 9,173.62 342,601,749.42 -5,643,344.42
Plus: beginning balance of cash
and cash equivalents
830,055,588.25 2,539,358.76 271,708,727.86 7,802,612.88
Ⅵ. Closing balance of cash and
cash equivalents
705,762,683.59 2,548,532.38 614,310,477.28 2,159,268.46
Notes to Cash Flow Statement
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd.
30 Jun. 2010 Unit: (RMB) Yuan
Supplementary items ConAsomlioduantito fno r curPraernetn pte croiomdp any ConsolAidmatoiounn t for laPsat ryeenatr c ompany
1. Transferring net profit into cash
flows of operating activities:
Net profit 126,752,423.52 27,077,925.00 106,297,227.83 -12,643,904.96
Add: Reserve for impairment of
assets
-26,007,128.89 -27,420,494.06 700,645.20 4,289,756.60
Depreciation of fixed
assets, oil and gas assets and
productive biological assets
14,151,383.67 7,235,231.07 12,658,511.15 5,997,519.11
Amortization of
intangible assets
3,254,331.90 3,254,331.90
Amortization of long-term
deferred expenses
110,249.27 85,775.39 135,576.54 83,075.04
Loss on disposal of fixed
assets, intangible assets and other
long-term assets (“-” for gains)
-2,126,627.73 -326,049.31 30,365.63 30,365.63
Loss on scrapping fixed
assets (“-” for gains)
27,139.68 1,154.18 92,713.90 12,713.9035
Loss on changes in fair
value (“-” for gains)
-39,900.00 -39,900.00 -2,182,553.30 -89,100.00
Financial expenses (“-”
for gains)
2,056,720.96 1,946,846.03 9,930,573.32 2,517,002.00
Loss on investments (“-”
for gains)
-2,162,387.76 -2,162,387.76 -2,087,219.72 1,866,234.08
Decrease of deferred
income tax assets (“-” for
increase)
9,685,932.83 -23,663,301.53
Increase of deferred
income tax liabilities (“-” for
decrease)
Decrease of inventories
(“-” for increase)
-21,265,374.02 -770,267.00 8,209,866.65 -76,600.00
Decrease in operating
receivables (“-” for increase)
-13,621,245.49 -214,922,302.05 -4,062,700.41 212,483,311.23
Increase in operating
payables (“-” for decrease)
-40,841,043.95 209,455,920.63 349,261,570.27 -93,900,211.99
Others -647,162.24 -1,276,270.41 55,900.52
Net cash flows arising
from operating activities
49,327,311.75 161,452.12 457,299,337.02 116,893,593.00
2. Significant investing and
financing activities that involve
no cash income or expenses
Conversion of debt into
capital
Convertible corporate
bonds due within one year
Fixed assets leased by
financing
3. Net change in cash and cash
equivalents
Cash balance at
period-end
705,762,683.59 2,548,532.38 614,310,477.28 2,159,268.46
Less: beginning cash
balance
830,055,588.25 2,539,358.76 271,708,727.86 7,802,612.88
Add: closing balance of
cash equivalents
Less: beginning balance of
cash equivalents
Net increase of cash and
cash equivalents -124,292,904.66 9,173.62 342,601,749.42 -5,643,344.42
Cash and cash equivalents
Items ConAsomlioduantito fno r curPraernetn pte croiomdp any ConsolAidmatoiounn t for laPsat ryeenatr c ompany
I. Cash 705,762,683.59 2,548,532.38 614,310,477.28 2,159,286.46
Of which: cash on hand 403,656.61 17,104.64 325,780.68 55,612.61
Bank deposits immediately
available for payment 699,876,568.17 1,106,344.56 605,927,627.06 1,440,682.32
Other monetary funds
immediately available for payment 4,057,964.27 588.64 7,034,664.51 586.50
II. Cash equivalents
Of which: bonds investment due
within three months
III. Balance of cash and cash equivalents at
period-end 705,762,683.59 2,548,532.38 614,310,477.28 2,519,286.46
Of which: cash and cash equivalents
concerning whose use the parent company 1,424,494.54 1,424,494.54 1,022,405.03 1,022,405.0336
and subsidiaries in the Group are restricted
Consolidated Statement of Changes in Owners’ Equity
Jun. 2010
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd. Unit: (RMB) Yuan
Amount for current period (Jun. 2010)
Owners’ equity attributable to parent company
Items Paid-up
capital (or
share capital)
Capital
reserve
Less:
treasur
y
stock
Surplus
reserve
Retained
profit Other
Minority
interests
Total owners’
equity
I. Balance at the
end of last year 595,979,092.00 25,332,931.52 69,712,050.51 -26,036,870.39 -3,544,650.52 862,087.06 662,304,640.18
Add: Change of
accounting policy
Correction of
errors in previous
period
II. Balance at the
beginning of this
year
595,979,092.00 25,332,931.52 69,712,050.51 -26,036,870.39 -3,544,650.52 862,087.06 - 662,304,640.18
III. Increase/
decrease of amount
in this year (“-”
means decrease)
-126,752,423.52 -244,754.36 126,507,669.16
(I) Net profit -126,752,423.52 126,752,423.52
(II) Other
composite income -244,754.36 -244,754.36
Subtotal of (I) and
(II) 126,752,423.52 -244,754.36 126,507,669.16
(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 595,979,092.00 25,332,931.52 69,712,050.51 100,715,553.13 -3,789,404.88 862,087,06 788,812,309.3437
Consolidated Statement of Changes in Owners’ Equity (Con.)
Jun. 2010
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd. Unit: (RMB) Yuan
Amount for the last year (Jun. 2009)
Owners’ equity attributable to parent company Minority
interests
Total owners’
equity
Items Paid-up capital
(or share
capital)
Capital
reserve
Less:
treas
ury
stock
Surplus
reserve Retained profit Other
I. Balance at the
end of last year 541,799,175.00 25,332,931.52 62,919,127.11 -55,930,192.11 -3,505,676.11 861,751.06 571,477,116.47
Add: Change of
accounting policy
Correction of
errors in previous
period
II. Balance at the
beginning of this
year
541,799,175.00 25,332,931.52
62,919,127.11 -55,930,192.11 -3,505,676.11 861,751.06 571,477,116.47
III. Increase/
decrease of amount
in this year (“-”
means decrease)
106,297,227.83 36,336.87
106,333,564.70
(I) Net profit 106,297,227.83 106,297,227.83
(II) Other
composite income 36,336.87 36,336.87
Subtotal of (I) and
(II) 106,297,227.83 36,336.87 106,333,564.70
(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 25,332,931.52 62,919,127.11 50,367,035.72 -3,469,339.24 861,751.06 677,810,681.1738
Statement of Changes in Owners’ Equity
Jun. 2010
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd. (parent company) Unit: (RMB) Yuan
Amount for current period (Jun. 2010)
Owners’ equity attributable to parent company
Items Paid-up
capital (or
share capital)
Capital reserve
Less:
treas
ury
stock
Surplus
reserve Retained profit Other
Minority
interests
Total owners’
equity
I. Balance at the
end of last year 595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
Add: Change of
accounting policy
Correction of
errors in previous
period
II. Balance at the
beginning of this
year
595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
III. Increase/
decrease of amount
in this year (“-”
means decrease)
27,077,925.00 27,077,925.00
(I) Net profit 27,077,925.00 27,077,925.00
(II) Other
composite income
Subtotal of (I) and
(II) 27,077,925.00 27,077,925.00
(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 595,979,092.00 226,883.79 69,712,050.51 -4,754,258.52 661,163,767.7839
Statement of Changes in Owners’ Equity (Con.)
Jun. 2010
Prepared by: Shenzhen Properties & Resources Development (Group) Ltd. (parent company) Unit: (RMB) Yuan
Amount for the last year (Jun. 2009)
Owners’ equity attributable to parent company
Items
Paid-up
capital (or
share capital)
Capital reserve
Less:
treas
ury
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
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)
-12,643,904.96
-12,643,904.96
(I) Net profit
-12,643,904.96
-12,643,904.96
(II) Other
composite income
Subtotal of (I) and
(II) -12,643,904.96 -12,643,904.96
(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 losses40
4. Others
IV. Balance at the
end of this period 541,799,175.00 226,883.79 62,919,127.11 -440,372,655.09 164,572,530.8141
NOTES TO THE FINANCIAL STATEMENTS
As of June 30, 2010
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
SQFZ No. 440301103570124.
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.42
Chen Hongbo and the registered capital is RMB 4 billion. Its main business scope is providing
guarantee to municipal state-owned enterprises, management of state-owned equity, assets
reorganization, reformation, capital operation, and equity investment of enterprises and etc. As a
government department, Shenzhen State-owned Assets Supervision and Administration Commission
manage Shenzhen Investment Holdings Co., Ltd. on behalf of People’s Government of Shenzhen
Municipality. Thus, the final controller of the Company is Shenzhen State-owned Assets Supervision
and Administration Commission.
5. Authorization and date of issuing the financial statements
The financial statements were approved and authorised for issue by the 26th session of the sixth
conference of the Company’s board of directors on July 30, 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 control43
(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 parent 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 assumed44
by an enterprise for a business combination in light of their fair value, and shall record the balances
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;45
B. power to govern the financial and operating policies of the entity under a statute or an agreement;
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.46
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 in47
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 financial 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 assets48
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.
B. The objective evidences that the Company uses to determine the impairment are as follows:49
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
assets 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 for50
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
and 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 recognised51
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;
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).52
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 and collectively provide them for provision of impairment according to certain53
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 accordance 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 inventories54
(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.55
②The Company generally provides provision for impairment of inventory individually. For large
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 the56
premium of equity securities. If the premium is not sufficient for deducting, retained earning is adjusted
respectively.
B. If the business combination is not under the common control, the acquirer recognizes the initial cost
of combination under the following principles.
a) When business combination is achieved through a single exchange transaction, the cost of a business
combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the
acquiree;
b) For the business combination involved more than one exchange transaction, the cost of the
combination is the aggregate cost of the individual transactions;
c) The costs directly attributed to business combination are included in the cost of combination;
d) Where a business combination contract or agreement provides for a future event which may adjust
the cost of combination, the Company shall include the amount of the adjustment in the cost of the
combination at the acquisition date if the future event leading to the adjustment is probable and the
amount of the adjustment can be measured reliably.
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.57
D. For the long-term equity investment acquired through non-monetary asset exchange, the initial
cost is recognized according to “Accounting Standards for Business Enterprises No. 7-Non-monetary
transactions”.
E. For the long-term equity investment acquired through debt restructuring, the initial cost is
recognized according to “Accounting Standards for Business Enterprises No. 12-Debt restructuring”.
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 shall58
be recognized as impairment loss, and a provision for impairment loss should be made.
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;59
③All Joint ventures parties may appoint one of them to manage the operating activities of Joint
ventures, 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 “Impairment 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:60
①It is probable that the future economic benefits that are associated with the investment property will
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 for61
capitalization shall be recognized as an expense for the current period.
The depreciation method adopted by the Company is straight-line method.
The estimated useful lives, residual value and annual depreciation rate of fixed assets are shown as
follows:
The categories
Estimated
Useful Lives
(years)
Residual value
(%)
Annual
Depreciation Rate
(%)
Property and buildings 20-25 5-10 3.8-4.5
Machineries 10 5 9.5
Vehicles 5 5 19
Electronic and other equipments 5 5 19
Decoration 5 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 shorter62
of the useful life of the leased asset and the lease term.
(4) Impairment of fixed asset refers to accounting policy “Impairment of assets” of the Company.
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. Capitalization 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 outstanding63
during the period, other than borrowings made specifically for the purpose of acquiring or constructing
a qualifying 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;
⑤Its 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. The64
Company does not amortize intangible asset with infinite useful life.
B. Impairment of intangible assets refers to accounting policy “Impairment of assets” of the Company.
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 be65
determined according to the average of the lower and upper limit of the range. In other cases, the best
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 vested66
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.
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 date67
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
predicted 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) and68
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.
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.69
(4) Revenue from rendering of services (excluding long-term contract) is by reference to the percentage
of completion of the service at closing date when the outcome of transaction can be reliably estimated.
The outcome of transaction can be reliably estimated when a) the total revenue and cost can be reliably
measured, b) the percentage of completion can be determined reliably and c) the economic benefit
pertaining to the service will flow to the Company. If the outcome of transaction cannot be reliably
estimated, the Company shall recognize revenue to the extent of costs incurred that are expected to be
recoverable and charge an equivalent amount of cost to profit or loss.
(5)Revenue arising from the Company’s assets used by others is recognized when (a) it is probable that
the economic benefits associated with the transaction will flow to the Company and (b) the amount of
the revenue can be measured reliably. Interest revenue should be measured based on the length of time
for which the Company's cash is used by others and the applicable interest rate. Royalty revenue should
be measured in accordance with the period and method of charging as stipulated in the relevant contract
or agreement.
(6)Recognition of construction contract revenue
1) When the outcome of a construction contract can be reliably estimated, construction contract
revenue is recognized by reference to the percentage of completion of the contract activity at closing
date. The outcome of a construction contract can be reliably estimated when a) total contract revenue
and contract costs incurred can be measured reliably, b) both the contract costs to complete the contract
and the percentage of completion can 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 grants70
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.
(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.71
2) At the balance sheet date, where there is strong evidence showing that sufficient taxable profit will
be available against which the deductible temporary difference can be utilized, the deferred tax asset
unrecognized in prior period shall be recognized.
3) The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s
probable that sufficient taxable profit will not be available against which the deductible temporary
difference can be utilized, the Company shall write down the carrying amount of deferred tax asset, or
reverse the amount written down later when it’s probable that sufficient taxable profit will be available.
(2) Deferred tax liability
A deferred tax liability shall be recognized for all taxable temporary differences, which are differences
between the carrying amount of an asset or liability in the balance sheet and its tax base, and measured
at the tax rates that are expected to apply to the period when the asset is realized or the liability is
settled.
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 activities72
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 can
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 sales73
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 its 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 the74
previously expected date;
(6) evidence is available from internal reporting that indicates that the economic performance of an
asset is, or will be, worse than expected, for example, the net cash flow generated from assets or the
operating profit (or loss) realized by assets is lower (higher) than the excepted amount, etc.; and
(7) Other evidence indicates that assets may be impaired.
The Company assesses long-term equity investment, fixed assets, construction materials, constructions
in progress and intangible assets (except for those with uncertain useful life) that apply Accounting
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.75
2. The business tax rate is 3% or 5% of operating revenue.
3. Urban maintenance and construction tax is 1% or 7% of turnover tax payable.
4. Education surtax is 3% of turnover tax payable.
5. Levee fee is 0.01% of operating revenue.
6. Land value appreciation tax is levied in four progressive levels with the tax rate ranging from 30% to
60%.
7. Income tax expense
(1) According to Notification of the State Council on Carrying out the Transitional Preferential Policies
concerning Corporate income tax (Guo Fa [2007] No.39), from January 1, 2008, enterprises which
enjoy the preferential policies of low tax rates in the past shall gradually transit to apply the statutory
tax rate within 5 years after the Corporate Income Tax Law of the People's Republic of China is put
into force. Among them, the enterprises which enjoy the corporate income tax rate of 15% shall be
subject to the corporate income tax rate of 18% in 2008, 20% in 2009, 22% in 2010, 24% in 2011 and
25% in 2012. The applicable income tax rate of the Company and the subsidiaries located in Shenzhen
special economic zone is 20%。
(2) Corporate Income Tax Law of the People's Republic of China is put into force from January 1, 2008.
According to this tax law, the applicable income tax rate of the subsidiaries located outside Shenzhen
special economic zone is 25%.
Note 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 port
Sichuan Tianhe
Industry Co., Ltd
Wholly-owned
subsidiary
Chengdu Trading 800 Wholesale in domestic
market76
Subsidiaries Categories Registered
address
Business
nature
Registered
capital
(0’000)
Business scope
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
Construction
Supervision Co., Ltd.
Wholly-owned
subsidiary
Shenzhen Construction
Supervision
300 Supervision of general
industrial and civil
construction 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.,
Wholly-owned
subsidiary
Hongkong Real estate
development
HKD2,000 Property agency and
investment77
Subsidiaries Categories Registered
address
Business
nature
Registered
capital
(0’000)
Business scope
Ltd.
Wayhang
Development Co.,
Ltd.
Wholly-owned
subsidiary
Hongkong Real estate
development
HKD0.0002 Property development
Chief Link Properties
Co., Ltd.
Wholly-owned
subsidiary
Hongkong Real estate
development
HKD0.01 Property agency and
investment
Syndis Investment
Co., Ltd.
Wholly-owned
subsidiary
Hongkong Real estate
development
HKD0.0004 Property investment
PRD Group Xuzhou
Dapeng Real Estate
Development Co.,
Ltd.
Wholly-owned
subsidiary
Xuzhou Real estate
development
5,000 Development and sale of
real estate, construction
management, commodity
sales
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 2,000 100 100 Yes
Shenzhen ITC Food Co., Ltd. 200 45.66 100 100 Yes
Shenzhen Property and Real Estate
Development Co., Ltd. 3,095 19,706.64 100 100 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 Yes
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 (Note 1)
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 Yes78
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
Shenzhen Property Construction
Supervision Co., Ltd. 300 115.01 100 100 Yes
Shenzhen International Trade Plaza 1,200 100 100 Yes
Shenzhen Real Estate Exchange 138 38.55 100 100 Yes
Shum Yip Properties Development Co.,
Ltd. HKD2,000 3,108.19 100 100 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
( Note 2)
70
Yes
PRD Group Xuzhou Dapeng Real Estate
Development Co., Ltd. 5000 100 100 Yes
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.
Note 2: Syndis Investment Co., Ltd is a wholly-owned subsidiary of Chief Link Properties Limited.
(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 Scope79
(1) The new subsidiaries which are included in consolidation scope
Reason of
change
Date of change Net profit for
current period
Net assets at
the end of
period
PRD Group Xuzhou Dapeng Real
Estate Development Co., Ltd.
New founded
Company March 2010 -512,448.88 49,487,551.12
(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 (1:0.8724)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 average exchange rate of RMB against HKD (1:0.8765) when
trade occurred.80
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
June 30, 2010 and December 31, 2009 respectively; the current period refers to January to June 2010,
and the last period refers to January to June 2009; all amounts are presented in RMB.)
1．Cash and cash equivalents
Item Closing balance Opening balance
Cash on hand 403,656.61 227,928.12
Bank deposit 701,301,062.71 822,829,335.90
Other cash and cash equivalents 4,057,964.27 6,998,324.23
Total 705,762,683.59 830,055,588.25
Note 1: Other cash and cash equivalents refer to other margin account in Securities Companies.
Note 2: In closing balance of bank deposit, RMB 1,424,494.54 is frozen by the courthouse, due to
pending action of Haiyi case, details refers to Note VII-1(1), Note V- 14.
Closing balance
Item
Currency Original currency Exchange rate RMB
Cash on hand RMB 363,746.57 1.0000 363,746.57
USD 863.58 6.7909 5,864.49
HKD 39,025.16 0.8724 34,045.55
Sub-Total -- -- 403,656.61
Bank deposit RMB 696,587,118.18 1.0000 696,587,118.18
USD 184.16 6.7909 1,250.61
HKD 5,401,987.53 0.8724 4,712,693.92
Sub-Total -- -- 701,301,062.71
Other cash and RMB 4,057,964.27 1.0000 4,057,964.27
cash equivalents HKD 6.7909 0.00
Sub-Total —— —— 0.00
Total —— —— 705,762,683.59
Opening balance
Item
Currency Original currency Exchange rate RMB
Cash on hand RMB 176,999.03 1.0000 176,999.0381
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 —— —— 6,998,324.23
Total —— —— 830,055,588.25
2. Trading financial assets
Item Closing balance (fair value) Opening balance (fair
value)
Held-for-trading equity instrument 272,100.00 232,200.00
Total 272,100.00 232,200.00
Note 1: The market price at the end of period was determined according to the closing price at June 30,
2010 declared by Stock Exchange;
Note 2: The investment refers to 30,000 shares of ST stock “Sunrise”, fair value of closing balance is
RMB 272,100.00, which is frozen by the courthouse, due to pending action of Haiyi case, details refers
to Note VII-1(1), Note V- 14.
3. 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 107,633,538.20 87.64% 48,266,173.89 93.34%82
Individually insignificant receivables
with high credit risk in group
assessment 3,269,913.65 2.66% 3,258,115.65 6.30%
Other insignificant amount 11,910,917.22 9.70% 187,843.80 0.36%
Total 122,814,369.07 100.00% 51,712,133.34 100.00%
Opening 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
（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 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 the
voting shares of the Company.
（4）At end of the year, details of significant accounts receivable (top five) at the year end are as83
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
80.29%
Rainbow Plaza Co., Ltd Non-related
parties 3,367,364.31 1-2years 2.74%
Shenzhen Tewei Industry Co.,Ltd. Non-related
parties 2,836,561.00
Over 3 years
2.31%
Shenzhen Lunan Industry
Development Co., Ltd.
Non-related
parties 2,818,284.84
Over 3 years
2.29%
Chongqing Xinqiao Hospital
Non-related
parties 1,554,455.46
Within 1year
1.27%
Total 109,187,993.66 88.90%
4. Other receivables
（1）Other receivables by categories are as follows:
Closing balance
Categories Balance Provision for bad debt
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 132,082,233.97 86.20% 95,596,667.61 91.63%
Individually insignificant receivables
with high credit risk in group
assessment 12,304,397.04 8.03% 8,679,356.01 8.32%
Other insignificant amount 8,849,802.39 5.78% 52,816.90 0.05%
Total 153,236,433.40 100.00% 104,328,840.52 100.00%
Opening balance
Categories Balance Provision for bad debt
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 139,151,685.65 87.80% 95,719,449.61 91.37%84
Individually insignificant receivables
with high credit risk in group
assessment 11,722,999.09 7.40% 8,679,356.01 8.30%
Other insignificant amount 7,606,992.68 4.80% 52,816.90 0.33%
Total 158,481,677.42 100.00% 104,451,622.52 100.00%
（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
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
Anhui Nanpeng
Papermaking Co., Ltd 8,618,528.00 8,618,528.00 Over 3 years Uncollectible for a
long period
Shenzhen
Shengfenglu, ITC
Jewel & Gold Co.,
Ltd
6,481,353.60 6,481,353.60 Over 3 years
There is no asset to
execute the verdict,
thus lead to
uncollectibility
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
Duokuai Elevator
(Far East) Co., Ltd. 5,446,693.00 1,478,071.21 Over 3 years
Receivables cannot be
offset by executable
property, referring to
Note VII- 1(3)
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 project
Elevated Train
Project 2,542,332.43 2,542,332.43 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 100,915,164.93 96,946,543.1485
（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 (%)
Gintian Industry (Group) Co., Ltd Non-related
parties
56,600,000.00
2-3years
& over 3
years 36.94%
Shenzhen ITC Tian’an Properties
Co., Ltd
Joint ventures
19,705,931.45
Over 3
years
12.86%
Anhui Nanpeng Papermaking Co.,
Ltd
Interests in
associates 8,618,528.00
Over 3
years 5.62%
Shenzhen Shengfenglu, ITC Jewel
& Gold Co., Ltd
Non-related
parties 6,481,353.60
Over 3
years 4.23%
Shanghai Yutong Real estate
development Co., Ltd
Non-related
parties
5,676,000.00
Over 3
years
3.70%
Total 97,081,813.05 63.35%
(5) Details of other receivables refer to Note VI-3 (3).
5. Prepayment
(1) Aging analysis
Aging Closing balance Opening balance
Balance Proportion (%) Balance Proportion (%)
Within 1 year (including
1 year) 61,035,193.34 99.14% 46,717,982.28 99.69
1-2 years (including 2
years) 488,143.06 0.79% 134.03 0.00
2-3 years (including 3
years) 26,911.62 0.04% 129,879.00 0.28
Over 3 years 15,878.80 0.03% 14,878.80 0.03
Total 61,566,126.82 100.00% 46,862,874.11 100.00
（2）The significant prepayments are as following:
Company Relationship Amount Aging Notice
Prepayment of taxes Non-related 53,845,488.54 Within Note86
parties 1year
Jinan Sanxiang Properties Co.,
Ltd.
Non-related
parties 1,622,506.00 Within 1
year
Prepayment
for building
purchase
Shenzhen Great Wall Intelligent
System Engineering Co., Ltd.
Non-related
parties 347,942.06 1-2 years
Prepayment
for projects
Finance Bureau of Tongshan
County
Non-related
parties 154,990.00 Within 1
year
Special fund
paid in
advance
Chongqing Xinqiao Hospital
Non-related
parties 100,000.00 Within 1
year
Deposit paid
in advance for
risk
Total 56,070,926.60
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 advance), 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 1,549,985.45 1,997,186.27 1,728,197.16 1,818,974.56 0.02%
Finished
products 118,193.99 100,849.10 92,662.70 126,380.39
Low-value
consumption
goods
163,872.46 272,272.50 172,909.70 263,235.26
Land use
right held for
real estate
development
145,055,247.84 198,445,333.49 462,164.97 343,038,416.36 7.58%
Properties
under
946,488,448.65 229,015,258.64 553,906,471.12 621,597,236.17 57,014,384.9287
Categories Opening balance Increase Decrease Closing balance
Including:
Capitalized
borrowing cost
Proportion of
reversal of
provision for
impairment of
inventories to
closing
balance
development
Completed
properties for
sale
260,264,084.20 553,906,471.12 390,222,382.68 423,948,172.64 12,492,035.65
Total 1,353,639,832.59 983,737,371.12 946,584,788.33 1,390,792,415.38 69,506,420.57 7.60%
Note: Details of ownership restricted stock refer to Note.V-14.
(2) Provision for impairment of inventories
Decrease
Categories Opening
balance Increase
Reversal Written off
Currency
translation
effects
Closing
balance
Raw
materials 436,509.19 384.00 436,125.19
Land use
right held for
real estate
development
68,407,654.35 46,550.00 26,002,128.89 275,864.97 42,176,210.49
Completed
properties for
sale 29,118,896.81
29,118,896.81
Total
97,963,060.35 46,550.00 26,002,512.89 275,864.97 71,731,232.49
Note 1: Provision for “Land use right held for real estate development” is carried forward to provision
for failing price of project “Shenhui Garden”, referring to Note V-6 (3) A.
Note 2: 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
Closing balance Opening balance
Items Amount Provision for
impairment of
inventories
Amount Provision for
impairment of
inventories
Huanggang Port Land 46,823,373.98 46,823,373.98
Pinghu Land88
Hainan Qiongshan
Land 6,648,404.13 6,648,404.13 6,648,404.13 6,648,404.13
Shenhui Garden 35,729,014.89 35,574,848.40 26,002,128.89
Fuchang Second Term
Land 5,816,127.11 5,816,127.11 5,769,577.11 5,769,577.11
Hong Kong Tingjiu
Land 49,776,879.25 29,711,679.25 50,239,044.22 29,987,544.22
Xuzhou Tongshan
County Land 198,244,617.00
Total 343,038,416.36 42,176,210.49 145,055,247.84 68,407,654.35
Note 1: During the reporting period, the Company eliminated barriers in land use of Shenhui Garden.
Such project has acquired exploitative condition. The management team has drawn up the development
plan. Up to the end of reporting period, it is estimated that the net realizable value of Shenhui Garden
Land is more than carrying value. Therefore, the accrued provision for falling price of inventories was
switched back.
Note 2: 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
388,000,000.00 321,865,736.06 256,171,231.97
Shenwuye -Langqiao
Residence (original
HuangYu Garden District
D)
2008.3 2012.2
420,000,000.00 240,015,933.55 201,623,511.09
Shenwuye – Xinhua City
(original FHRL Group B)
2005.9 2010.6
422,280,000.00 436,180,001.02
Cai Tian Yi Se 2009.7 2011.6 110,000,000.00 59,715,566.56 52,513,704.57
Sundry project
Total 621,597,236.17 946,488,448.65
C. Completed properties for sale89
Item Completion
time
Opening
balance
Increase Decrease Closing
balance
Provision for
impairment of
inventories
ITC Plaza
1995.12 46,366,867.68 46,366,867.68
Huangyu Garden
District A 2001.06 2,617,557.11 2,617,557.11
Huangyu Garden
District B 2003.12 15,346,340.13 15,346,340.13
Imperial Garden
(original HuangYu
Garden District C-A) 2008.11 5,863,700.42 3,923,785.85 1,939,914.57
Huangcheng Plaza
1997.05 165,983,041.16 165,983,041.16 29,118,896.81
Xinda Building
2001.10
Fenrun Garden
1998.02 169,771.18 169,771.18
Haikou Waterfront of
Blue Island 2008.12
12,840,707.89 4,453,843.69 8,386,864.20
Rihao Garden
4,654,651.00 4,654,651.00
Fuchang
Comprehensive
Building
6,421,447.63 6,421,447.63
Shenwuye – Xinhua
City (original FHRL
Group B)
2010.06 553,906,471.12 381,844,753.14 172,061,717.98
Total 260,264,084.20 553,906,471.12 390,222,382.68 423,948,172.64 29,118,896.81
Note: The decreased balance of Imperial Garden, Haikou Waterfront of Blue Island and Xinhua City,
which was mainly resulted from carrying down cost by the Company.
7. Joint ventures, 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; laundry90
Name of company Business
nature
Registered
capital
(0’000)
Business scope
Anhui Nanpeng Papermaking
Co., Ltd
Industry USD800 Production and sales of copperplate
paper, culture paper, and wrapping
paper
Shenzhen Wufang Pottery &
Porcelain Industrial Co., Ltd
Industry USD12,500 Production and export of top grade
construction tile, sale of building
materials and architectural ceramic
products
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 Properties Management
Co., Ltd 150 50%
Shenzhen Jifa Warehouse Co., Ltd 3,064.51 50%
Shenzhen ITC Industrial Development Co., Ltd 2,015.48 38.33%
Anhui Nanpeng Papermaking Co., Ltd 1,382.40 30%
Shenzhen Wufang Pottery & Porcelain
Industrial Co., Ltd 1,898.36 26%
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.
8. Long-term equity investment
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholding
(%)
Proportions
of voting
rights (%)
I. Investment
under equity
method
Shenzhen ITC
Tian’an 23,186,124.00 36,571,572.82 51,531.49 36,623,104.31 50 5091
Properties
Co., Ltd
Shenzhen Jifa
Warehouse
Company
Limited 30,645,056.04 26,016,589.45 267,080.33 26,283,669.78 50 50
Shenzhen
Tian’an
International
Building
Property
Management
Co., Ltd 1,500,000.00 1,807,048.16 303,869.58 2,110,917.74 50 50
II. Investment
under cost
method
East Land
Properties
Limited 93.64 93.64 -93.64
Shenzhen
Huajing Glass
Bottle Company
Limited 7,600,000.00 7,600,000.00 -7,600,000.00
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 persons 1,350,000.00 1,350,000.00 1,350,000.00 0.28 0.2892
shares
Shensan Co.,
Ltd. 17,695.09 17,695.09 17,695.09
Macao Huashen
Enterprise Co.,
Ltd. 85,485.44 85,485.44 -786.41 84,699.03 10 10
Chongqing
Guangfa Real
estate
development
Co., Ltd. 2,593,937.15 2,593,937.15 -23,862.45 2,570,074.70 27.25 27.25
Saipan Project 1,932,111.97 1,932,111.97 -17,774.12 1,914,337.85 30 30
Total 144,173,265.61 -7,020,035.22 137,153,230.39
Company
Note for difference
between proportions of
voting rights and
shareholding hold
Provision for
impairment
Provision
increased 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
Shenzhen ITC Petroleum Company
Limited
Guangzhou Shilifeng Automobile Co.,
Ltd.
Sanya East Travel Co., Ltd. Legal
persons shares 1,350,000.00
Shensan Co., Ltd. 17,695.0993
Macao Huashen Enterprise Co., Ltd. 84,699.03 -786.41
Chongqing Guangfa Real estate
development Co., Ltd. 2,570,074.70 -23,862.45
Saipan Project 1,914,337.85 -17,774.12
Total 56,833,339.01 -7,642,422.98
Note 1: The details of significant Joint ventures, associates refer to Note V. -7.
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 VII.-1(1), Note V.- 14.
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.
Note 4: The decreased balance of long-term equity investment of East Land Properties Limited, which
was due to completion of liquidation, and cancellation of industrial and commercial registration and tax
registration.
Note 5: The decreased balance of investment and impairment provision of Shenzhen Huajing Glass
Bottle Company Limited, which was because the Company transferred equity of this company.
9. Investment property
(1) Details are as following:
Item Opening balance Increase Decrease Closing balance
1. Cost 390,329,319.59 340,272.76 6,370,984.51 384,298,607.84
Including: Property and building 379,359,365.19 340,272.76 3,370,984.51 376,328,653.44
Land use right 10,969,954.40 0.00 3,000,000.00 7,969,954.40
2. Accumulated depreciation and
amortization 133,223,353.65
7,619,372.15 248,446.81 140,594,278.99
Including: Property and building 130,752,892.34 7,343,123.29 70,701.15 138,025,314.48
Land use right 2,470,461.31 276,248.86 177,745.66 2,568,964.51
3.The net book value 257,105,965.94 —— ——
243,704,328.85
Including: Property and building 248,606,472.85 —— ——
238,303,338.96
Land use right 8,499,493.09 —— ——
5,400,989.89
4. Provision for impairment loss94
Item Opening balance Increase Decrease Closing balance
Including: Property and building
Land use right
5. Carrying amount 257,105,965.94 —— ——
243,704,328.85
Including: Property and building 248,606,472.85 —— ——
238,303,338.96
Land use right 8,499,493.09 —— ——
5,400,989.89
Note: Amount of accumulated depreciation and amortization is RMB 7,619,372.15 in current period.
Note 2: The investment properties with restricted ownership, referring to Note V.-14.
Note 3: The reason for decreased balance of investment real estate: 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 5,274,080.00. On June 9, 2010, the Company
obtained the repurchase fund of RMB 5,274,080.00, which was recognized as revenue. Meanwhile, the
carry book of “Sihui Land” was carried down.
10. Fixed assets
(1) Details:
Item Opening balance Increase Decrease Closing balance
1. Cost 173,582,555.83 15,516,373.59 18,563,118.73 170,535,810.69
Including: Property and buildings 113,702,741.43 2,891,549.17 754,950.86 115,839,339.74
Machineries 39,889.00 0.00 0.00 39,889.00
Vehicles 44,725,152.17 12,110,736.00 17,585,726.52 39,250,161.65
Electronic and other
equipment 10,866,362.64 514,088.42 222,441.35 11,158,009.71
Decoration 4,248,410.59 0.00 0.00 4,248,410.59
2. Depreciation 96,521,046.55 6,532,011.52 17,293,323.45 85,759,734.62
Including: Property and buildings 56,846,066.61 2,116,163.73 377,589.94 58,584,640.40
Machineries 26,471.91 3,505.44 0.00 29,977.3595
Item Opening balance Increase Decrease Closing balance
Vehicles 28,462,605.94 3,871,679.70 16,703,548.40 15,630,737.24
Electronic and other
equipment 7,337,620.21 493,716.85 212,185.11 7,619,151.95
Decoration 3,848,281.88 46,945.80 0.00 3,895,227.68
3. Total impairment provision 75,717.16 75,717.16
Including: Property and buildings
Machineries
Vehicles
Electronic and other
equipment 75,717.16 75,717.16
Decoration
4. The net book value 76,985,792.12 —— —— 84,700,358.91
Including: Property and buildings 56,856,674.82 —— —— 57,254,699.34
Machineries 13,417.09 —— —— 9,911.65
Vehicles 16,262,546.23 —— —— 23,619,424.41
Electronic and other
equipment 3,453,025.27 —— —— 3,463,140.60
Decoration 400,128.71 —— —— 353,182.91
Note 1: Amount of accumulated depreciation is RMB 6,532,011.52 in current period.
Note 2: Increased and decreased balance of cost, which was due to taxi replacement.
(2) Details of temporarily idle fixed assets are as follows:
Categories Cost Accumulated
depreciation
Impairment
loss
Carrying
amount
Expected date for
put into usage
Property and
buildings 20,900,567.46 5,359,977.61 15,540,589.85
Total 20,900,567.46 5,359,977.61 15,540,589.85
(3)The fixed assets with restricted ownership, is referring to Note V.-14.
11. Intangible assets
Item
Opening
balance
Increase Decrease Closing
balance96
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 33,904,820.19 3,254,331.90 37,159,152.09
-Operating license plate 33,465,836.04 3,197,651.10 36,663,487.14
-Repurchased operating right of
taxi’s operating license plate 438,984.15
56,680.80
495,664.95
3. The net book value 112,893,677.12 —— —— 109,639,345.22
-Operating license plate 111,385,307.66 —— —— 108,187,656.56
-Repurchased operating right of
taxi’s operating license plate 1,508,369.46 —— ——
1,451,688.66
4. Provision for impairment loss
-Operating license plate
-Repurchased operating right of
taxi’s operating license plate
5. Carrying amount 112,893,677.12 —— —— 109,639,345.22
-Operating license plate 111,385,307.66 —— —— 108,187,656.56
-Repurchased operating right of
taxi’s operating license plate 1,508,369.46 —— ——
1,451,688.66
Note 1: Accumulated amortization is RMB 3,254,331.90 in current period.
Note 2: The intangible assets with restricted ownership, referring to Note V.-14.
12. Deferred tax assets and liabilities
(1) Recognized deferred tax assets and liabilities
Item Closing balance Opening balance
Deferred tax assets:
1. Carrying amount of other receivables less than its tax base 330,715.82 330,715.8297
2. Carrying amount of inventories less than its tax base 8,420,479.18 10,306,489.74
3. Carrying amount of taxes payable greater than its tax base 32,844,451.12 32,844,451.12
4. Carrying amount of payroll payable greater than its tax
base 243,105.78
686,097.78
5. Losses on taxable income to be recovered 170,816.29 7,527,746.56
Subtotal 42,009,568.19 51,695,501.02
Deferred tax liabilities:
None
Subtotal
(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 37,903,883.25
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 1,105,026.28
5. Losses on taxable income to be recovered 683,265.17
Total 190,488,388.09
13. Provision for impairment loss
Decrease
Item Opening
balance Increase
Reversal Written off
Foreign
currencies
effects
Closing balance
I. Provision for
bad debt 156,163,755.86 51,166.00 71,616.00 156,040,973.86
Including:
Accounts
receivable 51,712,133.34 51,712,133.34
Other
receivables 104,451,622.52 51,166.00
71,616.00
104,328,840.52
II. Provision
for impairment
of inventories 97,963,060.35
46,550.00
26,002,512.89
275,864.97
71,731,232.49
III. Provision
for impairment
of long-term
equity
investments 64,475,761.99 7,600,000.00 42,422.98 56,833,339.01
VI. Provision 75,717.16 75,717.1698
Decrease
Item Opening
balance Increase
Reversal Written off
Foreign
currencies
effects
Closing balance
for impairment
of fixed assets
Total 318,678,295.36 46,550.00 26,053,678.89 7,600,000.00 389,903.95 284,681,262.52
Note 1: Reversal of provision for inventories impairment, is referring to Note.V-6 (3) A.
Note 2: Written off of provision for impairment of long-term equity investment, which was because the
Company transferred the equity of Shenzhen Huajing Glass Bottle Company Limited.
14. Assets with restriction on ownership
(1)The reason for restriction on ownership
A. The subsidiary of the Company, Shenzhen ITC Vehicles Services Company, mortgaged parts of ITC
Plaza (second phase) for a short-term bank loan amounting to RMB 50,000,000.00, and the closing
balance of said short-term bank loan at the end of the financial year was RMB 0., up to June 30, 2010,
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
10,720,000.00.
B. 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. 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
to RMB 250,000,000.00, and the closing balance of the year was RMB 0.00. Up to June 30, 2010, 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 June 30, 2010, the collateral guaranty has not
been released.
E. Up to the end of reporting period, as stated in Note (Ⅶ) 1 (1), the following assets have been sealed
up or frozen by the court during the reporting period of the pending action of Haiyi case: seal up total99
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 49,096.14 square meter, the year-end book
value is RMB 78,446,819.93.
（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 10,911,211.81 625,272.96 10,285,938.85
Investment property -property and building 106,842,307.85 3,282,480.54 103,559,827.31
Inventories-costs 175,007,383.76 50,730,441.00 225,667,824.76
- developments 35,700,358.40 28,328,107.45 7,372,250.95
Intangible asset - operating license plate 36,166,666.66 1,808,333.30 34,358,333.36
Subtotal 364,627,928.48 50,730,441.00 34,044,194.25 381,314,175.23
The assets sealed up or frozen due to
lawsuit
cash and cash equivalents 1,423,898.44 596.10 1,424,494.54
Trading financial assets 232,200.00 39,900.00 272,100.00
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 802,199.55 802,199.55100
Categories Opening balance Increase Decrease Closing balance
Fixed asset- property and building 11,881,191.46 803,868.84 11,077,322.62
Investment property -property and
building 86,475,296.75 2,804,283.12 83,671,013.63
Inventories- property and building 47,836,352.35 47,836,352.35
Subtotal 177,151,138.55 40,496.10 3,608,151.96 173,583,482.69
Less: Assets used for collateral and sealed
up, frozen 81,219,595.85 2,772,775.92 78,446,819.93
Total 460,559,471.18 50,700,937.10 34,879,570.29 476,450,837.99
Note 1: 95% shares of Shenzhen Huangcheng Real Estate Company Limited held by the company have
been frozen. Up to June 30, 2010, 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
183,325,800.00.
Note 2: The decreased balance of the assets sealed up or frozen due to lawsuit, which was due to
withdrawal of depreciation.
15. Short -term borrowings
Categories Closing balance Opening balance
Credit loan 50,000,000.00 200,000,000.00
Mortgaged loan
Total 50,000,000.00 200,000,000.00
Note 1: Unpaid amount after balance sheet date
Note 2: The period-end credit loan is the loan made by the Company through the bank to Shenzhen
Investment Holding Co., Ltd. See Note (VI) 3 (2).
16. Trade payable
(1) Trade payable details
Item Closing balance Opening balance
Amount 139,948,109.34 112,470,139.39
(2) There was no amount due to shareholders with more than 5% (including 5%) of the voting shares of
the Company in trade payables.101
17. Advance from customers
(1) Advance from customers details
Item Closing balance Opening balance
Amount 708,793,267.09 745,527,226.22
(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 1,172,093.00 3,040,791.00 Completion
Huangcheng Plaza 1-2years 2,176,421.15 2,176,421.15 Completion
Huangyu Garden
District A
1-4years
846,495.63 846,495.63
Completion
Huangyu Garden
District B
1-4years
218,413.26 218,413.26
Completion
Fengrun Garden 3-4years 70,638.00 70,638.00 Completion
Xinhua City Within 2 year 51,286,006.00 488,378,752.00 June 2010
Shengang No.1 Within 1 year 645,645,672.00 246,228,024.00 January 2011
Total 701,415,739.04 740,959,535.04
Note: Advances from customers with the aging over 1 year is due to the terms of revenue
reorganization having not been satisfied.
(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.
18. Payroll payable
Categories Opening balance Increase Decrease Closing
balance
I. Salary, bonus, allowance, subsidy 35,744,813.86 58,641,476.95 76,185,744.36 18,200,546.45
II. Employee welfare 562,717.97 562,717.97
III. Social insurance 438,879.64 6,303,387.13 6,799,213.89 -56,947.12
Including: 1.Medical insurance 10,247.34 1,089,689.36 1,134,215.62 -34,278.92
2.Basic retirement insurance 27,784.64 3,120,124.95 3,174,740.88 -26,831.29102
Categories Opening balance Increase Decrease Closing
balance
3.Annuity fee 394,920.00 1,756,341.10 2,150,771.10 490.00
4.Unemployment insurance 3,387.24 94,784.46 96,072.79 2,098.91
5.Injury insurance 1,354.89 108,653.13 109,168.46 839.56
6.Pregnancy insurance 1,185.53 109,455.87 109,906.78 734.62
7.Labor cooperation medical care 23,938.26 23,938.26
8.Other social insurance 400.00 400.00
IV. Public housing fund 74,444.34 28,207.20 28,207.20 74,444.34
V. Labour union fee and employee
education fee 2,553,402.06
1,590,072.74 1,390,468.99 2,753,005.81
VI. Non-monetary welfare 1,102,829.38 1,102,829.38
Ⅶ.Redemption for termination s of
labor contract 13,170,665.07
302,693.00 6,974,022.00 6,499,336.07
Total 51,982,204.97 68,531,384.37 93,043,203.79 27,470,385.55
Note: The employee payroll balance at the end of the period drops 47.15% in comparison to the
balance at the beginning of the period. It is mainly resulted from paying the payment for performance
and the dismissal welfare in accordance to the employee dismissal plan made last year. Details refer to
Note Ⅸ 3.
19. Taxes payable
Categories Closing balance Opening balance
1.VAT 59,596.11 24,686.83
2.Business tax 6,524,986.51 9,551,059.52
3.Income tax 11,756,274.64 33,444,737.01
4.Stamp tax 211,795.00 47,309.79
5.Education surtax 200,311.44 287,991.28
6.Land value appreciation tax 155,916,485.79 158,676,881.17
7.Urban maintenance and construction tax 142,662.12 201,419.84
8.Property tax 723,967.56 845,667.42
9.Individual income tax 722,336.02 2,236,551.30103
Categories Closing balance Opening balance
10.Embankment maintenance fee 8,722.53 14,789.69
11.Others 15,813.18 784.09
Total 176,282,950.90 205,331,877.94
20. Other payables
（1）Other payables details
Item Closing balance Opening balance
Totals 222,655,008.32 208,240,882.65
（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
HaiNan Yirun Real Estate Co., Ltd 39,609,267.28 Receipts under custody
Rent deposits 23,643,658.95 Deposits
Shenzhen Guanghong Investment Co., Ltd 18,670,000.00 Current account
Guangzhou Lishifeng Motor Company Limited 15,000,000.00 Current account
Shenzhen Fulin Industrial Co., Ltd. 9,528,506.00 Current account
Certificate-making fees under custody 9,315,861.54 Receipts under custody
Shenzhen Jifa Warehouse Co., Ltd 9,262,932.00 Current account
Shenzhen ITC Petroleum Co., Ltd. 7,196,769.67 Current account
Total 188,530,622.84
(4) The details of the account payables to other related party in other account payables of this reporting
period refer to Note Ⅵ3 (4).
21. Non-current liabilities due within 1 year
(1) Details
Item Closing balance Opening balance104
Long-term borrowings 200,000,000.00
Total 200,000,000.00
(2) Long-term borrowings due within 1 year
Item Closing balance Opening balance
Guarantee borrowings 200,000,000.00
Total 200,000,000.00
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
Total —— —— 200,000,000.00
22. Long-term borrowings
(1) Classification
Borrowing terms Closing balance Opening balance
Mortgage borrowings 10,720,000.00 13,480,000.00
Guarantee borrowings 460,000,000.00 250,000,000.00
Total 470,720,000.00 263,480,000.00
（2）Details:
Closing balance Opening balance
Loan starting
date
maturity
date currency Interest
rate Foreign
currency
Home
Currency
Foreign
currency
Home
Currency
Shenzhen
East Branch
of
Agricultural
Bank of
China
20 March
2009
19 March
2012
RMB 4.86% —— 200,000,000.00 —— 200,000,000.00
Shenzhen
East Branch
of
Agricultural
Bank of
China
26 October
2009
25 October
2011
RMB 4.86% —— 248,000,000.00 —— 50,000,000.00
Central
Commercial
8
December
8
November
RMB 5.67% —— 10,720,000.00 —— 13,480,000.00105
Closing balance Opening balance
Loan starting
date
maturity
date currency Interest
rate Foreign
currency
Home
Currency
Foreign
currency
Home
Currency
branch of
Ping’an
Bank
2008 2011
Hongbao
Subbranch
of Ping’an
Bank
10 March
2010
10
February
2012
RMB 5.40% 12,000,000.00
Total —— 470,720,000.00 —— 263,480,000.00
23. 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 69,284,708.83 8,030,474.39 61,254,234.44
Note 1: Details of Haiyi case refer to Note VII.1 (1).
Note 2: The details of inspection matter of provision for contingent liabilities refer to Note IX. 6
24. Other non-current liabilities
Item Closing balance Opening balance
1.Utility specific fund 28,582,448.02 20,588,927.64
2.Housing principle fund 11,170,248.34 9,596,210.03
3.House warming deposit 7,892,825.23 8,403,367.49
4.Electric Equipment Maintenance fund 4,019,415.44 4,019,415.44
5.Deputed Maintenance fund 25,883,901.39 25,928,572.02
6.Taxi Deposit 29,240,000.00 28,080,000.00
7.Lease income of taxi license to be written off 16,079,502.01 16,732,781.41
8.Others 489,500.00 2,447,000.39
Total 123,357,840.43 115,796,274.42
Note: “Others” is borrowing of Shenzhen ITC Automobile Industry Co., Ltd, Shenzhen ITC Industry
car rental Co., Ltd. due to the drivers.106
25. Paid-in capital
Unit: (0’000) shares
Before Increase/Decrease (+/-) After
Item Quantity
(0’000)
Proportion
(%)
Issui
ng
new
shares
Bonus
shares
(0’000)
Reserve
s
transferr
ed to
shares
Others
(0’000)
Subtotal
(0’000)l
Quantity
(0’000)
Proporti
on
(%)
A. Shares subject to
trading moratorium
38,863.66 65.21 38,863.66 65.21
1、 State owned shares
2.State-owned corporate
shares 38,250.94 64.18 38,250.94 64.18
3Other domestic owned
shares 612.72 1.03 612.72 1.03
Including
Shares held by domestic
legal persons 559.92 0.94 559.92 0.94
Shares held by domestic
natural person 52.80 0.09 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. Shares not subject to
trading moratorium
20,734.25 34.79 20,734.25 34.79
1 ． RMB-denominated
ordinary shares 13,973.73 23.45 13,973.73 23.45
2、Domestically listed
foreign shares 6,760.52 11.34 6,760.52 11.34
3 、 Overseas listed
foreign shares
4、Others
Total
59,597.91 100.00 59,597.91 100.00
Unlisted shares trading time
Unit: (0’000) shares
Time Increased
The balance of
Unlisted shares
The balance of
listed shares
Explanation107
4 November 2010 808.05 38,055.61 21,542.30
4 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.
26. 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
27. Surplus reserves
Item Opening balance Increase Decrease Closing balance
Legal reserve 69,712,050.51 69,712,050.51
Total 69,712,050.51 69,712,050.51
28. Retained earnings
Item Amounts Extraction or allocation proportion
Before beginning retained earnings -26,036,870.39
plus：Retained earnings at the beginning
of the year
Adjusted retained earnings at the
beginning of the year -26,036,870.39
Plus: Net profit attributable to parent
company transferred in 126,752,423.52
Less: the statutory reserved fund
Ordinary stock dividends payable108
Item Amounts Extraction or allocation proportion
Ordinary dividend from shares transferred
to share capital
Retained earnings at the end of the year 100,715,553.13
29. Revenue and Cost of Sales
(1) Revenue
Item Jan.-Jun. 2010 Jan.-Jun. 2009
1．Sales 682,795,978.92 528,146,386.17
2．Other operating income 14,632,604.75 8,592,198.71
Total 697,428,583.67 536,738,584.88
(2) Cost of sales
Item Jan.-Jun. 2010 Jan.-Jun. 2009
1．Cost of sales 479,484,835.00 248,886,848.15
2．Other operating cost 4,610,075.86 2,556,235.87
Total 484,094,910.86 251,443,084.02
Note: Revenue for the current period increased by 29.94% than that in last period, mainly due to the
increase in revenue of project carried down than that of last year. Cost of sales for the current period
increased 92.53% than that in last period, which increase is more than that of revenue, mainly because
the margin profit of Xinhua City project carried down is less than that of Imperial Garden carried down
last period.
(3) Listed by the categories of production or business
Categories Revenue Cost of sales Margin profit
Hotel and restaurant
operations
7,873,726.48 6,141,783.73 1,731,942.75
Sale of properties 552,327,378.25 394,584,976.21 157,742,402.04
Transportation services 24,623,306.06 12,120,951.47 12,502,354.59
Property rental and
management services
income 98,313,786.24 77,183,777.77 21,130,008.47109
Others 7,252,152.42 3,961,478.55 3,290,673.87
Elimination -7,594,370.53 -14,508,132.73 6,913,762.20
Total 682,795,978.92 479,484,835.00 203,311,143.92
Categories Other operating
income
Other operating cost Other operating margin
profit
Parking lots 8,213,255.05 1,565,591.02 6,647,664.03
Revenue from disposal
of “Sihui Land”
5,274,080.00 2,822,254.34 2,451,825.66
Others 1,145,269.70 222,230.50 923,039.20
Total 14,632,604.75 4,610,075.86 10,022,528.89
(4) Details of revenue
Business segment Jan.-Jun. 2010 Jan.-Jun. 2009
Hotel and restaurant operations 7,873,726.48 6,885,893.08
Sale of properties 552,327,378.25 417,013,314.49
Transportation services 24,623,306.06 23,634,531.98
Property rental and management services income 98,313,786.24 81,972,375.93
Others 7,252,152.42 5,684,950.89
Subtotal 690,390,349.45 535,191,066.37
Elimination -7,594,370.53 -7,044,680.20
Total 682,795,978.92 528,146,386.17
(5) Details of cost of sales
Business segment Jan.-Jun. 2010 Jan.-Jun. 2009
Hotel and restaurant operations 6,141,783.73 3,042,657.95
Sale of properties 394,584,976.21 163,770,717.39
Transportation services 12,120,951.47 11,334,397.41
Property rental and management services income 77,183,777.77 68,697,983.96
Others 3,961,478.55 3,804,497.16
Subtotal 493,992,967.73 250,650,253.87
Elimination -14,508,132.73 -1,763,405.72110
Total 479,484,835.00 248,886,848.15
30. Business taxes and surcharges
Item Jan.-Jun. 2010 Jan.-Jun. 2009 Base of payment
Business tax 35,243,324.39 27,045,753.62 3% or 5% of taxable income
Urban maintenance
and construction tax 460,735.10 354,087.79
1% or 7% of VAT and Business tax
Additional education
Fees 1,057,714.57 818,936.02
3% of VAT and Business tax
Land appreciation
tax 19,121,492.51 68,920,000.00
30%－60% four level progressive rates
Levee fee 99,621.40 46,389.11 0.01% of operating revenue.
Others 4,403.90
Total 55,987,291.87 97,185,166.54
Note: Business taxes and surcharges in current period decreased by 42.39% than that in last period,
which mainly because the margin profit of Xinhua City project carried down is less than that of
Imperial Garden carried down in same period of last year, resulting in decrease of accrued land
appreciation tax.
31. Financial costs
Categories Jan.-Jun. 2010 Jan.-Jun. 2009
Interest expense 2,056,720.96 9,780,573.32
Less: Interest income 2,301,053.14 1,022,654.56
Exchange loss, net -61,672.71
Others 193,739.71 637,249.64
Total -112,265.18 9,395,168.40
Note: The decreased balance of financial expense than that of last year, which was due to decrease of
circulating fund credit and increase of interest income.
32. Impairment loss111
Items Jan.-Jun. 2010 Jan.-Jun. 2009
Bad debt -51,166.00 -80,000.00
Depreciation of inventory -25,955,962.89
Depreciation of long-term equity investment 780,645.20
Total -26,007,128.89 700,645.20
Note: The decreased balance of assets impairment loss over the same period of last year, which was
because the Company carried forward to provision for failing price of project “Shenhui Garden”,
referring to Note V-6 (3) A.
33. Gain/loss on change in fair value
Source Jan.-Jun. 2010 Jan.-Jun. 2009
Trading financial assets 39,900.00 2,182,553.30
Total 39,900.00 2,182,553.30
Note: The decrease of gain/loss on change in fair value over the same period of last year, which was
due to decrease in trading financial assets.
34. Gain/loss on investment
Source Jan.-Jun. 2010 Jan.-Jun. 2009
1.Gain on investment under equity method 622,481.40 1,866,234.08
2.Gain on investment from disposal of long-term equity
investment
1,539,906.36
3. Gain on investment from disposal of trading financial
assets
220,985.64
Total 2,162,387.76 2,087,219.72
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.
35. Non-operating income
Item Jan.-Jun. 2010 Jan.-Jun. 2009112
1. Income from disposal of non-current assets 316,049.31 11,000.00
Including: Disposal of fixed assets 316,049.31 11,000.00
2．Others 6,268,424.59 1,992,580.52
including: Debts unable to pay 3,608,476.00
Penalty of House rental deposit 2,276,368.62 58,292.63
Income from Forfeit 262,362.34 1,736,193.20
Income from compensation 65,759.35 33,171.16
Other 55,458.28 164,923.53
Total 6,584,473.90 2,003,580.52
36. Non-operating expense
Item Jan.-Jun. 2010 Jan.-Jun. 2009
1. Loss on disposal of non-current assets 47,253.80 134,079.53
Including: Disposal of fixed assets 47,253.80 134,079.53
2. Public welfare donations 25,000.00 90,000.00
3. Compensation 401,062.35
6. Estimated liability -279,047.46
7. Others 32,601.37 33,620.85
Total 226,870.06 257,700.38
37. Income tax expense
Item Jan.-Jun. 2010 Jan.-Jun. 2009
Income tax for the current period 7,181,860.70 54,965,003.63
Plus: Deferred income tax expense 19,147,098.48 440,000.00
Less: Deferred income tax income 170,816.29 25,244,622.92
Income tax expense 26,158,142.89 30,160,380.71
38. Earnings per share
Item Jan.-Jun. 2010 Jan.-Jun. 2009113
Basic Earnings Per Share 0.21 0.18
Diluted Earnings Per Share 0.21 0.18
Calculation of earnings per share is as following:
Basic Earnings Per Share＝126,752,423.52÷595,979,092＝0.21
Diluted Earnings Per Share＝126,752,423.52÷595,979,092＝0.21
Recalculation of earnings per share of last period is as following
Basic Earnings Per Share＝106,297,227.83÷(541,799,175+54,179,917)＝0.18
Diluted Earnings Per Share＝106,297,227.83÷(541,799,175+54,179,917)＝0.18
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)
P1 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, adjust according to the accounting standards for enterprises and other114
relevant provisions. The Company considered in sequence from dilutive potential ordinary shares to get
the lowest earnings per share.
39. Other comprehensive income
Items Jan.-Jun. 2010 Jan.-Jun. 2009
Foreign exchange difference -244,754.36 36,336.87
Less: net amount transfer into net profit and losses from oversea
business
Subtotal -244,754.36 36,336.87
Total -244,754.36 36,336.87
40. Relevant information about cash flow statement
a) Other cash received from operating activities
Item Amount
Other cash received from operating activities 21,789,909.96
Including: Collecting fees for getting property ownership
certificates 8,645,237.12
Duokuai Elevator 3,280,000.00
Interest income 2,301,053.14
Collecting utilities from house owners 910,046.69
Principle fund 636,046.31
b) Other cash paid relating to operating activities
Item Amount
Other cash paid relating to operating activities 35,219,395.28
Including: Hainan Yirun Real Estate Co., Ltd. 12,500,000.00
Paying CSRC penalties 7,751,426.93
Administrative expenses 7,747,126.60
Sales expenses 2,996,343.84
Paying various fees collected by taxi drivers, etc. 621,422.05
c) Other cash paid relating to financing activities115
Item Amount
Other cash paid relating to financing activities 1,162,500.00
Including: financial consulting fees 1,162,500.00
d) Supplementary information of cash flow statement
Supplementary information Jan.-Jun. 2010 Jan.-Jun. 2009
1.Adjustment from net profit to cash flows from operating
activities
Net profit 126,752,423.52 106,297,227.83
Plus: Provision for impairment of assets -26,007,128.89 700,645.20
Depreciation of fixed assets, Oil-gas assets and Productive
biological assets 14,151,383.67 12,658,511.15
Amortization of intangible assets 3,254,331.90 3,254,331.90
Amortization of long-term deferred expense 110,249.27 135,576.54
Loss on disposal of fixed assets, intangible assets and other
non-current assets(“-” for gain) -2,126,627.73 30,365.63
Loss on fixed assets retirement (“-” for gain) 27,139.68 92,713.90
Loss on change in fair value(“-” for gain) -39,900.00 -2,182,553.30
Financial costs(“-” for gain) 2,056,720.96 9,930,573.32
Loss on investment(“-” for gain) -2,162,387.76 -2,087,219.72
Decrease of deferred tax assets(“-” for increase) 9,685,932.83 -23,663,301.53
Increase of deferred tax liabilities(“-” for decrease) 0.00 0.00
Decrease of inventory(“-” for increase) -21,265,374.02 8,209,866.65
Decrease in operating receivables(“-” for increase) -13,621,245.49 -4,062,700.41
Increase in operating payables(“-” for decrease) -40,841,043.95 349,261,570.27
Others -647,162.24 -1,276,270.41
Net cash flow from operating activities 49,327,311.75 457,299,337.02
2..Significant investment and financing activities irrelevant to
cash flow
Debt transferred to capital116
Supplementary information Jan.-Jun. 2010 Jan.-Jun. 2009
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 705,762,683.59 614,310,477.28
Less: Cash at the beginning of the period 830,055,588.25 271,708,727.86
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Increase in cash and cash equivalents -124,292,904.66 342,601,749.42
e) Cash and cash equivalents:
Supplementary information Jan.-Jun. 2010 Jan.-Jun. 2009
Cash 705,762,683.59 614,310,477.28
Including: Cash on hand 403,656.61 325,780.68
Bank deposit on demand 699,876,568.17 605,927,627.06
Other monetary assets on demand 4,057,964.27 7,034,664.51
Cash and cash equivalents at the end of the period 705,762,683.59 614,310,477.28
Including: Restricted Cash and cash equivalents held by parent
company or subsidiaries 1,424,494.54 1,022,405.03117
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.
400,000.00 400,000.00118
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.)
Opening balance Increase/Decrease Closing balance
Name Amount % Amount % Amount %
Shenzhen Investment Holdings Co., Ltd.
323,158,332.20 54.22 323,158,332.20 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 100119
Opening balance Increase/Decrease Closing balance
Name Amount % Amount % Amount %
Shum Yip Properties Development Co.,
Ltd.
HKD20,000,000.00 100 HKD20,000,000.00 100
Wayhang Development Co., Ltd. HKD2.00 100 HKD2.00 100
Chief Link Properties Co., Ltd. HKD100.00 70 HKD100.00 70
Syndis Investment Co., Ltd. (Note) HKD4.00 70 HKD4.00 70
East Land Properties Limited HKD100.00 100 -HKD100.00 100
PRD Xuzhou Dapeng Real Estate
Development Co., Ltd.
50,000,000.00 100 50,000,000.00 100
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
The Company have not provide guarantee to other company outside consolidated financial
statements, the details about guarantee provided to the subsidiary company see Note Ⅶ. 2
(2) Entrust 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):120
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
Branch
Shenzhen
Huangcheng Real
Estate Co., Ltd
5.0523 15,000.00 15,000.00 197.88
Shenzhen
Branch of
Agricultural
Bank of
China
Shenzhen
Property and Real
Estate
Development Co.,
Ltd.
5.3100 5,000.00 5,000.00 127.59
Total 20,000.00 15,000.00 5,000.00 325.47
(3) Amount due to/from related parties
Balances %
Name
30 Jun. 2010 31 Dec. 2009 30 Jun. 2010 31 Dec. 2009
Other receivables:
Shenzhen ITC Tian’an Property
Co., Ltd 19,705,931.45 19,705,931.45
12.86 12.43
Anhui Nanpeng Papermaking
Co., Ltd 8,618,528.00 8,690,144.00
5.63 5.48
Shenzhen ITC Industrial
Development Co., Ltd 2,431,652.48 2,431,652.48
1.59 1.53
Shenzhen Wufang Pottery &
Porcelain Industrial Co., Ltd 1,747,264.2 1,747,264.25
1.14 1.10
Short-term borrowings:
Shenzhen Investment Holdings
Co., Ltd. 50,000,000.00 200,000,000.00 100.00 100.00
Other payables:
Shenzhen ITC Petroleum Co.,
Ltd 7,196,769.67 7,196,769.67 3.46 3.46
Shenzhen Jifa Warehouse Co.,
Ltd 9,262,932.00 6,288,296.00 4.16 3.02
Guangzhou Lishifeng Motor
Co., Ltd 15,344,017.08 15,344,017.08 7.37 7.37121
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 RMB41,772,906.07 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. Guangdong Higher Court retried the case on 18 Jun.
2008.
On 6 Apr. 2009, the Company received 34 copies of Enforcement Restore Notice issued by the
Shenzhen Intermediate Court on Match 23, 2009, claimed that the eight house owners including
Haiyi Industrial (Shenzhen) Co., Ltd. applied to the court for restoration the enforcement of the 34
copies of verdict issued at 1999. Shenzhen Intermediate People’s Court accepted this application.
In 2008, an additional prospective damage is RMB 19,481,328.37 due to change in market price
of properties drawn by the Company. The Company received, on 2 Jun. 2009 and 25 Jun. 2009
respectively, the Notice on Sealing up and Freezing Properties issued by the Shenzhen
Intermediate People’s Court. And some properties, equities and bank accounts of the Company
were frozen. See Note Ⅴ 15 for more details.
In Oct. 2009, the Supreme People’s Court decided that the (1998) YGFMZ Zi No.311 Verdict122
concerning the lawsuit filed by Jinhaijing Company should be overruled and the case should be
retried. On 3 Mar. 2010, the case was reheard. And no new verdict has been reached by now.
On 15 Jul. 2010, the Supreme Court issued another 32 civil judgments to the Company. Upon
retrial examination on the 32 civil judgments (1998) YFMZ Zi No.284-297, 299-310 and 312-317,
which were part of the 34 cases of “Haiyi Company”, the Supreme Court believed that the
Company’s appeal met legal standards for retrial. Pursuant to the Article 177 and 185 of the Law
of Civil Procedure of the People’s Republic of China, the Supreme Court decided to command the
Guangdong Higher Court to retry the said cases and that execution of the original judgments
should be suspended during the retrial period.
So far, concerning the 34 cases of “Haiyi Company”, the Supreme Court has overruled all the
second-instance judgments for those cases and commanded the Guangdong Higher Court to retry
the said cases. Up until the report date, all the 34 cases have entered the retrial process.
Due to the application of Haiyi Company and other seven companies to the Shenzhen Intermediate
People’s Court (hereinafter referred to as “the Shenzhen Intermediate Court”) to resume execution
of the 34 cases, the Shenzhen Intermediate Court froze some of the Company’s properties. The
Company has applied to the Shenzhen Intermediate Court for suspending execution of the said 34
cases according to relevant laws.
(2) 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 to RMB 5.87 million.
In May 2009, the case was reheard by the Shenzhen Luohu People’s Court. Besides the original
claims, the plaintiff added another claim for RMB 1.5 million of overdue interest.
On 1 Dec. 2009, the Shenzhen Luohu People’s Court made the verdict for the first trial of the case
and delivered the Civil Judgment Letter (2003) SLFMEC Zi No.240 to the Company, according to
which, Jiyong Company should, within 10 days after the verdict took effect, pay RMB
2,132,521.62 of construction payment and corresponding interest to Huaxi Company. As stated by
the first-instance verdict, the Company needed not to take any responsibility. Huaxi Company
later lodged an appeal. And the second instance took place on 13 May 2010. And the court has not
reached a verdict for the second instance by now.
The Company believes that since it is not the main party of the contract and it has won the first
instance, the case, based on facts and legal grounds, will not cause loss to the Company.
(3) Cases concerning Duokuai Elevator
A. On July 11, 2002, Shenzhen Huangcheng Real Estate Co., Ltd., a subsidiary of the Company,
(hereinafter referred to as Real Estate Company) and Duokuai Elevator (Far East) Co., Ltd.
(Hereinafter referred to as Duokuai Company) signed Elevator Equipment Contract and House
Mortgage and Purchasing Contract to purchase the elevators for Huang Yu Yuan District B from
Duokuai Company, Taoboming agreed to provide guaranty with the mortgage of his own
properties to Real Estate Company to ensure that Duokuai Company would supply the elevators123
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.
In 2009, two real estate under the name of Duokuai Elevator, that is podium building of
Huangcheng Plaza and Shimao Plaza with total areas of 957.31 square meters had been auctioned
through the Shenzhen Mediate People’s Court at an auction price of RMB 4,280,000. In Apr. 2009,
Huangcheng Real Estate received RMB 3 million transferred from Shenzhen Intermediate
Peoples’ Court. According to Notice (2006) SZFZ Zi No. 516, Shenzhen Intermediate Peoples’
Court auctioned five real estates with auction price of RMB 5.14 million on 24 Apr. 2009
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 Duokuai124
Shenzhen Company. Real Estate Company and Huangcheng Management Company have
recognized relevant expenses in the financial statements.
Upon multiple times of negotiation and discussion, the contesting parties reached, on 15 Mar.
2010, the Settlement Agreement Concerning Lawsuits Between Huangcheng Real Estate & Tao
Boming and His Company (hereinafter referred to as “the Settlement Agreement”), so as to finally
make clear rights and duties of parties concerned. According to the Settlement Agreement, the
Company received an execution sum of RMB 3.28 million from the Shenzhen Intermediate
People’s Court on 11 May 2010. Up until the report date, since the properties due to Huangcheng
Real Estate are being transferred, execution of the case is thus considered unfinished.
Huangcheng Real Estate Co., Ltd should receive a balance of RMB 5,446,693 at the period-end
from Duokuai Elevator. According to the Settlement Agreement, the Company conducted a
depreciation provision test on the book balance of the said receivable account and the bad debt
reserve withdrawn at the period-end was recognized at RMB 1,478,071.21.
(4) In June 2004, Shenzhen Meisi Industrial Co., Ltd. (hereinafter referred to as Meisi Company)
prosecuted Shenzhen Luohu Economic Development Co., Ltd and the Company to Shenzhen
Intermediate People’s Court for illegal use of land owned by Meisi Company and request for
ceasing the infringing act and receiving a compensation amounted RMB 8 million. In March 2005,
Shenzhen Intermediate People’s Court issued Civil Ruling Paper SZFMCZ (2004) No. 108 and
adjudicated that the Company should return the land with an area of 4,782 square meters to Meisi
Company within 3 months and other claims of Meisi Company were overruled. The Company
refused to accept the verdict and appealed to Guangdong Higher Court. On November 25, 2005,
Guangdong Higher Court adjudicated that the Civil Ruling Paper SZFMCZ (2004) No. 108 issued
by Shenzhen Intermediate People’s Court should be cancelled and the prosecution of Meisi
Company were overruled.
During the process of trial of second instance, Meisi Company applied to Registration Center for
Property of Real Estate of Shenzhen Municipality for revoking Property Ownership Certificates
SFDZ No. 3000320987 and No. 300119899 owned by the Company. On July 7, 2005, Registration
Center for Property of Real Estate of Shenzhen Municipality issued the reply of SFDH (2005) No.
84 to Meisi Company and judged that aforesaid certificates are legal and effective and should not
be revoked. Meisi Company disagreed with this judgment and applied the administrative
reconsideration to the People's Government of Shenzhen Municipality. On October 8, 2005, the
People's Government of Shenzhen Municipality issued Decision on Administrative
Reconsideration SFFJ (2005) No. 294 and judged that aforesaid 2 certificates were registered
illegally and should be revoked, reply of SFDH (2005) No. 84 was canceled accordingly.
The Company refused to accept Decision on Administrative Reconsideration SFFJ (2005) No. 294
and prosecuted an administrative litigation to Shenzhen Intermediate People’s Court on October
20, 2005. Shenzhen Intermediate People’s Court issued Administrative Judgment SZFXCZ (2005)
No. 23 and adjudicated that Decision on Administrative Reconsideration SFFJ (2005) No. 294 is
sustained. The Company disagreed with this administrative judgment and appealed to Guangdong125
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 to
revoke the Property Ownership Certificates SFDZ No. 3000320987 and No. 3000119899 of the
Company.
On May 15, 2007, Registration Center for Property of Real Estate of Shenzhen Municipality
issued Decision on Revoking the Property Ownership Certificates SFDZ No. 3000320987 and No.
3000119899 (SFZ (2007) No. 27). Registration Center for Property of Real Estate of Shenzhen
Municipality decided to revoke property ownership certificates SFDZ No. 3000320987 and No.
3000119899 owned by the Company that indicating the ownership of occupied property of Meilin
Workshop, Comprehensive Building and the land use right of 11,500 square meters and restore the
registration of the ownership of occupied property of Meilin Workshop, Comprehensive Building
and the land use right of certificates of SFDZ No. 0103142 and No. 0103139. The Company had
the ownership of occupied property of Meilin Workshop, Comprehensive Building and the land
use right of 11,500 square meters according to original property ownership certificates.
On July 9,2007, the Company applied the administrative reconsideration to the Administrative
Reconsideration Office of the People's Government of Shenzhen Municipality, which considered
that those action that Registration Center for Property and Real Estate of Shenzhen Municipality
revoked property ownership certificate SFDZ No. 3000320987 and No. 3000119899 owned by
the Company and restore the registration of Meilin Workshop, Comprehensive Building and land
use right violated the provisions of the Decision on Strengthening Land Market Management and
further Enlivening and Standardizing Real Estate Market (SF (2001) No. 94) promulgated by
People’s Government of Shenzhen Municipality, and requested People’s Government of Shenzhen
Municipality to rescind the Decision. On September 6, 2007, the People's Government of
Shenzhen Municipality issued Decision on Administrative Reconsideration SFFJ (2007) No. 255
to sustain the administrative decision of Shenzhen Municipal Bureau of Land Resources and
Housing Management.
In November 2007, Shenzhen Municipal Bureau of Land Resources and Housing Management
rejected the application of Meisi Company for revoking Property Ownership Certificates SFDZ
No. 0103142 and No. 0103139. Meisi Company prosecuted an administrative litigation to
Shenzhen Futian People’s Court to ask for revoking the administrative decision of Shenzhen
Municipal Bureau of Land Resources and Housing Management. The Company was involved as
third party. Court session started on January 8, 2008 with litigation number of (2008) SFFXCZ No.
10. On January 2008, Meisi Company prosecuted an administrative litigation to Shenzhen Futian
People’s Court for revoking the above administrative decision of Shenzhen Municipal Bureau of
Land Resources and Housing Management, revoking Property Ownership Certificates SFDZ No.
0103142 and No. 0103139, and restoring the land use right to Meisi Company with the litigation126
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
finally settled.
On February 11, 2009, the Company received the Civil Complaint from ShenZhen Futian People’s
Court; Meisi Company has made a civil prosecution against the Company and Shenzhen Luohu
Commercial Development Co., Ltd. for the confirmation of Meisi Company’s land use right and
the buildings in original Property Ownership Certificates SFDZ No., 0103142 and No., 0103139.
Furthermore, Meisi Company requests that return of related land use right and a compensation of
RMB7.5 Million. The Company has submitted an objection to jurisdiction. On March 4, 2009,
ShenZhen Futian People’s Court sent the Notice to the Company to inform that this case has been
transferred to Shenzhen Intermediate People’s Court for adjudication. On 2 Jul. 2009, Shenzhen
Intermediate People’s Court opened a court session for the case.
On 22 Dec. 2009, the Company received a written verdict from the Guangdong Higher People’s
Court. Upon investigations, the Guangdong Higher People’s Court considered that the Company’s
appeal against the Administrative Verdict (2008) SZFXZ Zi No.223 issued by the Shenzhen
Intermediate People’s Court was in compliance with relevant laws, and thus ruled that: ① The
case would be removed for trial by the Guangdong Higher People’s Court; ② Execution of the
original verdict should be suspended during the second trial.
The Company believes that the land use right and ownership of above building should be legally
confirmed to the Company. The Company will secure its own legal rights through all legal means,
and the above issues would not have significant impact on the Company’s financial position.
2. Guarantees
(1) The Company provided a joint-liability guarantee for the long-term loan of RMB 240 million
borrowed by Shenzhen Huangcheng Real Estate Co., Ltd. from the Shenzhen East branch of
China Agricultural Bank, with properties at No.4-01 and 3/F of A Block of Shenzhen International
Trade Center as pledges. And the closing balance of the said loan stood at RMB 200 million.127
(2) The Company and its subsidiaries—Shenzhen Wuye Real Estate Development Co., Ltd. and
Shenzhen Guomao Automobile Industry Co., Ltd.—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 East branch of China Agricultural Bank. And the closing balance of the said
loan stood at RMB 248 million.
(3) The Company provided a joint-liability guarantee for the long-term loan of RMB 90 million
borrowed by Shenzhen Guomao Automobile Industry Co., Ltd. from the Shenzhen Hongbao
sub-branch of China Ping’an Bank. And the closing balance of the said loan stood at RMB 12
million.
(4) Guarantee for the house owners: The Company and its subsidiaries provide mortgage
guarantee for commodity premise purchasers. The total unsettled guarantee is RMB 703.81
million as at June 30, 2010. It is common that the real estate developer provides mortgage
guarantee for small owners.
3. Contingent assets
(1) Bureau of Foreign Trade and Economic Cooperation of Hubei province Shenzhen branch
(hereinafter referred as “Hubei FTEC Shenzhen branch”) sued the Company to Shenzhen
Intermediate People’s Court on July 2000 for termination of the agreement between the Hubei
FTEC Shenzhen branch and the Company about office property of 4,000 square meters purchasing
in Jiabing Building (now known as Jinlihua Building) and asked for refund of purchase payment
of RMB10.8 million and an indemnify of RMB18.6756 million on the ground of 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 and
related interests.
The Hubei FTEC Shenzhen branch applied for execution to Guangdong Higher People’s Court.
Guangdong Railage Intermediate People’s 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 transfer128
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. And the trial has not yet been
held so far.
Ownership of the 14th and 15th floors of Jiabing Building retuned by the Hubei FTEC Shenzhen
branch belongs to the Company after indemnity of house payment and interest. The Company
investigated and found that the owner of the 14th and 15th floors of Jiabing Building was registered
as Zhuhai Western Yingzhu Industrial Development Co., Ltd. addressing the ownership of the
properties, therefore, on June, 2008 the Company sued Zhuhai Western Yingzhu Industrial
Development Co., Ltd. to the People’s Court of Luohu 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 settlement
with Zhuhai Western Yingzhu Industrial Development Co., Ltd.. And a civil mediation letter was
issued by the Luohu Court, 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) According to the Document SFB 【2006】No.79 and other relevant documents, based on
statistics, the Company and its subsidiaries have transferred to relate government department the
community facilities and public services houses of the building area of 36,000 square meters,
which complied with the said documents. And government compensation for the cost price was
expected. Among those community facilities, costs of the Huangyuyuan kindergarten and
school—community facilities that must be transferred by the Company’s subsidiary—were
already confirmed by relevant government departments. According to a reply recently issued by
the property management office of Futian District to the Company, “the Huangyuyuan129
Kindergarten is not among facilities that must be transferred”. Meanwhile, it depended on the
municipal education authority’s reply whether the Huangyuyuan School would be transferred or
not. As such, the aforesaid facilities have not been transferred to the government and no
government compensation has been awarded in this respect. The public facilities that the head
office of the Company was required to transfer were old projects developed by the Company years
ago. The Futian Property Management Office required the said facilities to be transferred as a
whole. However, except for the kindergarten and school, other facilities could not meet the
prescribed standards. Therefore, the head office of the Company cannot transfer the facilities as a
whole for now. Consequently, the relevant government compensation has not been awarded. At
present, it is uncertain or immeasurable when the government will approval the transfer, when
costs can be recovered and how much can be recovered. As such, the Company did not recognize
the aforesaid contingent assets in the financial statements. Now the Company is actively handling
the said matter.
Note VIII. Events after balance sheet date
On 15 Jul. 2010, through bidding on site, the Company acquired use right of the state-owned land
parcel No.2010G048 located in Dalang Town, Dongguan City, Guangdong Province at the total
price of RMB 214 million. The Confirmation Letter on Conclusion of Land Use Right Transaction
in Dongguan (hereinafter referred to as “the Confirmation Letter”), the Contract on Granting Use
Right of State-owned Land Used for Building and other relevant documents were signed. The
basic information and relevant planning indicators of the land are as follows: 1. Grantor:
Dongguan State-owned Land and Resources Bureau; 2. Location of the land: Dalang Town,
Dongguan; 3. Land Area: 66,881 square meters; 4. Use of land: commercial housing; 5. Main
planning indicators: plot ratio≤2.2, building density≤28%; 6. Tenure of use: 70 years; 7. Way of
acquisition: via tender invitation, auction and listing.
According to the public notice on the said land grant and other documents, the Company shall pay
50% of the transaction price within one month upon signing of the Confirmation Letter, and pay
the remaining 50% within two months. Besides the price for the land transaction, the Company
also have to pay relevant taxes and fares.
Note IX. Other significant events
1. Commitments made by non-tradable share holders in the share merger reform
(1) The Company’s non-tradable share holders Shenzhen Construction Investment Holdings
(hereinafter as “SCIH”) and Shenzhen Investment Management Corporation (hereinafter as
“SIMC”) 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 SCIH and SIMC 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 above130
commitment and sold shares of the Company, the income from sales of the shares would belong to
the Company.
Implementation: Up to the date of public notice, SCIH and SIMC never sold shares of 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 Construction Holdings and Investment Management Company,
which was controlled by Investment Holdings, 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.
Implementation: Up to the date of public notice, Investment Holdings never sold shares of the
Company actually controlled.
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.
Implementation: Investment Holdings applied to China Securities Depository and Clearing
Corporation Limited Shenzhen Branch to freeze 30,000,000 shares of the Company under name of
Construction Holdings but actually controlled by Investment Holdings in Nov. 2009; Investment
Holdings and the Company had planned reorganization committed, and suspension stock trade of
the Company started since Jun. 22, 2010; according to regulations, the Company disclosed
progress of the significant event respectively on Jun. 29, Jul. 6, Jul. 13 and Jul. 20 2010. For
details please refer to provisional public notice published in Securities Times, Ta Kung Pao and
http://www.cninfo.com.cn on that day. On 21 Jul. 2010, the Proposal on Implementing Share
Reform Commitments to Conduct Asset Exchange & Significant Related-party Transaction
(Drafted) was reviewed and approved at the 25th Meeting of the 6th Board of Directors. On the
same day, the Suggestive Public Notice on Implementing Share Reform Commitments to Conduct
Asset Exchange & Significant Related-party Transaction was disclosed. And stocks of the131
Company relisted again on Jul. 22, 2010. The Company will closely focused assets replacement
and disclose relevant information in time strictly according to relevant requirements of laws and
statutes.
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.
Implementation: Up to the date of public notice, Investment Holdings entrusted bank to loan RMB
50 million to the Company, which both occurred before the list date of non-tradable shares. On
Mar. 18, 2010, the Company held the Annual Shareholders’ General Meeting 2009, at which
reviewed and approved Proposal on Application to Controlling Shareholder to Entrust Loan. The
Shareholders’ General Meeting authorized the Board of Directors of the Company to deal with
signature of entrusted loan agreement, renewal of loan, borrow a new loan to repay old within
RMB 500 million according to actual need of operation and based on negotiation with Investment
Holdings and relevant banks. The Company disclosed the above on Mar. 19, 2010, and the public
notice published in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
The Board of Directors of the Company will decide to apply entrust loan to Investment Holdings
in proper time.
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.
Implementation: whether the commitment will be implemented is according to net profit of 2010.
2. The company has accrued expense of the Jinlihua Plaza land VAT amounted to RMB
56,303,627.40 in the previous financial year, according to the SGT (2001) No. 314, unpaid or
overdue land VAT could be exempted. However, as the land use right has not been transferred, the
company will proceed with the Jinlihua Plaza land VAT amounted to RMB 56,303,627.40
exemption related procedures, and will write off the accrued expense of Jinlihua Plaza land VAT
amounted to RMB 56,303,627.40 when the Company receives the reply.
The receivable house payment from Shenzhen Jiyong Property Development Co., Ltd Jinlinhua
Plaza to the Company amounted to RMB 98,611,328.05, the provision for bad debts is amounted
to RMB 42,611,328.05 and the net amount is RMB 56,000,000.
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 Human132
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 to
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 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 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. Up until 30 Jun. 2010, balance of the redundancy
compensation stood at RMB 6,499,336.07.
4. On January 14, 2009, a resolution regarding transferring the entire stakeholders’ equity of
Hainan Xinda Development Co., Ltd hold by the Company based on appraisal value through
public listing was approved by the tenth session of the sixth conference of the Company’s board of
directors. According to the resolution of the said board meeting, the Company has entrusted the
Shenzhen branch of BDO China Shu Lun Pan CPAs and Shenzhen Dezhengxin Asset Valuation
Co., Ltd. to conduct audit and valuation on Hainan Xinda. After the audit and valuation results are
confirmed by the Group’s board of directors and are recorded and approved by Shenzhen
Investment Holdings Co., Ltd., the Company will, based on the valuation results, continue to carry
forward the transfer of Hainan Xinda as a whole. Up until the report date, the transfer remains
unfinished.
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 name
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.
In Jun. 2010, the Guidelines for Reporting Urban Renewal Unit Planning of Shenzhen (Trial) was
promulgated. According to the Guidelines and the Urban Renewal Methods for Shenzhen, no
projects developed by the Company met the reporting standards for the report period. (reporting133
standards include: the total area of urban renewal units shall not be less than three hectares; areas
in the urban renewal unit planned for demolishing and rebuilding shall not be less than 70% of the
total renewal areas; existing buildings have been built over 20 years; etc.) The Company planned
to conduct researches in advance and make estimations on economic value for some projects that
might be renewed. And the relevant work would be started when the time was right. The Company
would closely follow new policies and specific implementation rules. At present, the Urban
Renewal Methods for Shenzhen is considered to have no substantial influence on the Company.
1. Investigations
The Company received from CSRC Shenzhen Inspection Bureau the Investigation notice on
September 10, 2008, to investigate the Company’s suspicion on the violation of Security Law and
Regulation before the year 2007. On 3 Dec. 2009, the Company received the Advance Notification
of Administrative Punishments issued by CSRC, which confirmed that the Company had violated
securities laws and regulations. As such, CSRC intended to administer the following punishments
on the Company for its irregular securities behaviors: 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. In the
year 2009, based on the sum of penalties converted into RMB, the Company withdrew an
estimated liability of RMB 8,030,474.39. According to the Law of Administrative Punishments
and the Rules of CSRC for Administrative Punishment Hearings, the relevant parties respectively
enjoy the rights of statement and defense or asking for hearing. The said irregular behaviors of the
Company all happened before the year 2007 and the Company made its statement and defense
according to laws. On 6 Apr. 2010, CSRC issued the Administrative Punishment Decision [2010]
No.12, according to which CSRC decided to: confiscate the illegal income of RMB 250,849.80
obtained by the Company through trading securities via personal accounts, and confiscate the
illegal income of HKD 8,544,744.97 obtained by the Company through trading B shares via other
corporate accounts. On May 18, 2010, the Company paid RMB 250,849.80 and HKD
8,544,744,97 from sales of B shares (which equal to RMB 7,500,577.13 according to exchange
rate when received Written Decision of Administrative Punishments on May 10, 2010).134
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 104,815,253.36 99.95 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
Total 104,869,633.71 100.00 45,502,269.40 100.00
Opening 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
(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.2135
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 Properties &
Resources Development
Company
Non-related
parties
98,611,328.05 Over 3 years 94.03
Rainbow Plaza Co., Ltd Non-related
parties
3,367,364.31 1-2 years 3.21
Shenzhen Tewei Industry Co.,
Ltd.
Non-related
parties
2,836,561.00 Over 3 years 2.70
Total 104,815,253.36 99.94
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 505,672,020.16 98.57 203,550,969.41 98.82
Individually insignificant
receivables with high credit risk
in group assessment 5,110,171.26 1.00 2,421,326.23 1.18
Other insignificant amount 2,224,893.01 0.43
Total 513,007,084.43 100.00 205,972,295.64 100.00
Opening balance
Balance Provision for bad debt
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 290,830,138.43 97.62 205,947,370.55 98.84136
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 297,926,563.28 100.00 208,368,696.78 100.00
(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. 107,130,946.02 66,568,921.55 Over 3 years
Uncollectible for a
long period
Gintian Industry (Group) Co.,
Ltd. 56,600,000.00 56,600,000.00
2-3 years & over 3
years
Payment for
discharging of
guaranty
responsibility that
was difficult to be
recollected
Hainan Xinda Development
Co., Ltd 48,783,897.88 48,783,897.88 Within 1 year &
over 3 years
Uncollectible for a
long period
Anhui Nanpeng Papermaking
Co., Ltd 8,618,528.00 8,618,528.00 Over 3 years
Uncollectible for a
long period
Shenzhen Shengfenglu ITC
Jewel & Gold Co., Ltd 6,481,353.60 6,481,353.60 Over 3 years
There is no asset to
execute the verdict,
thus lead to
uncollectibility
Shanghai Yutong Real Estate
Development Co., Ltd 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 245,860,258.13 205,298,233.66
(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:137
Name of company Relationship Amount Aging Proportion of
the total (%)
PRD Xuzhou Dapeng Real
Estate Development Co.,
Ltd.
Subsidiary
150,711,440.00
Within 1 year
29.38
Shum Yip Properties
Development Co., Ltd.
Subsidiary
107,130,946.02
Over 3 years
20.88
Gintian Industry (Group)
Co., Ltd.
Non-related
parties 56,600,000.00
2-3 years & over 3
years 11.03
Shenzhen ITC Vehicles
Industry Co., Ltd.
Subsidiary
50,000,000.00
Within 1 year
9.75
Hainan Xinda Development
Co., Ltd.
Subsidiary
48,783,897.88
Within 1 year & over 3
years 9.51
Total 413,226,283.90 80.55
3. Long-term equity investment
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholding
(%)
Proportions
of voting
rights (%)
I. Investment
under equity
method
Shenzhen ITC
Tian’an
Properties
Co., Ltd 23,186,124.00 36,571,572.82 51,531.49 36,623,104.31 50 50
Shenzhen Jifa
Warehouse
Company
Limited 30,645,056.04 26,016,589.45 267,080.33 26,283,669.78 50 50
Shenzhen
Tian’an
International
Building
Property
Management
Co., Ltd 1,500,000.00 1,807,048.16 303,869.58 2,110,917.74 50 50
II. Investment
under cost
method
Shenzhen ITC
Vehicles
Industry Co.,
Ltd. 29,850,000.00 29,850,000.00 29,850,000.00 90 90
Hainan Xinda
Development
Co., Ltd 20,000,000.00 20,000,000.00 20,000,000.00 100 100138
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholding
(%)
Proportions
of voting
rights (%)
Shenzhen
Property and
Real Estate
Development
Co., Ltd. 30,950,000.00 30,950,000.00 30,950,000.00 100 100
Shenzhen
Huangcheng
Real Estate Co.,
Ltd 28,500,000.00 28,500,000.00 28,500,000.00 95 95
Shenzhen ITC
Property
Management
Co., Ltd. 20,000,000.00 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 12,000,000.00 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 17,695.09 100 100
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
Shum Yip
Properties
Development
Co., Ltd. 15,834,000.00 15,834,000.00 15,834,000.00 100 100
PRD Xuzhou
Dapeng Real
Estate
Development
Co., Ltd. 50,000,000.00 50,000,000.00 50,000,000.00 100 100
Shenzhen
Huajing Glass
Bottle Co., Ltd 7,600,000.00 7,600,000.00 -7,600,000.00 15.83 15.83
Shenzhen 18,983,614.14 18,983,614.14 18,983,614.14 26 26139
Company
Amount of
initial
investment
Opening
balance
Increase/
Decrease
Closing
balance
Proportions
of
shareholding
(%)
Proportions
of voting
rights (%)
Wufang Pottery
& Porcelain
Industrial Co.,
Ltd
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
Sanya Oriental
Tourism Co.,
Ltd. 230,500.00 230,500.00 230,500.00 0.28 0.28
Total —— 289,355,731.05 43,252,887.76, 332,608,618.81 —— ——
Company
Note for difference
between proportions
of voting rights and
shareholding hold
Provision for
impairment
Increase 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.140
Company
Note for difference
between proportions
of voting rights and
shareholding hold
Provision for
impairment
Increase in
current year
Cash
dividends
Shenzhen Huangcheng Real Estate
Co., Ltd
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
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
Shum Yip Properties Development Co.,
Ltd. 15,834,000.00
PRD Xuzhou Dapeng Real Estate
Development Co., Ltd.
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
Sanya Oriental Tourism Co., Ltd.
230,500.00 230,500.00
Total 103,108,727.43 -7,369,500.00
Note 1The 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 Note VII. - 1(1).
Note 2: The decreased balance of investment and impairment provision of Shenzhen Huajing141
Glass Bottle Company Limited, which was because the Company transferred equity of this
company.
4. Revenue and cost of sales
（1）Revenue
Item Jan.-Jun. 2010 Jan.-Jun. 2009
Revenue from main operation 17,749,203.17 13,680,918.93
Total 17,749,203.17 13,680,918.93
（2）Cost of sales
Item Jan.-Jun. 2010 Jan.-Jun. 2009
Cost of main operation 6,724,019.13 5,075,317.74
Total 6,724,019.13 5,075,317.74
(3) Listed by the categories of production or business:
Categories Revenue Cost of sales Margin profit
Property rental and
management services
income
17,749,203.17 6,724,019.13
11,025,184.04
Total 17,749,203.17 6,724,019.13 11,025,184.04
5. Gain/loss on investment
Source Jan.-Jun. 2010 Jan.-Jun. 2009
1.Gain on investment under equity method 622,481.40 1,866,234.08
2.Gain on investment from disposal of long-term
equity investment
1,539,906.36
Total 2,162,387.76 1,866,234.08
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.142
6. Supplementary information of cash flow statement
Supplementary information Jan.-Jun. 2010 Jan.-Jun. 2009
1.Adjustment from net profit to cash flows from operating activities
Net profit 27,077,925.00 -12,643,904.96
Plus: Provision for impairment of assets -27,420,494.06 4,289,756.60
Depreciation of fixed assets, Oil-gas assets and Productive
biological assets
7,235,231.07 5,997,519.11
Amortization of intangible assets
Amortization of long-term deferred expense 85,775.39 83,075.04
Loss on disposal of fixed assets, intangible assets and other non-current
assets(“-” for gain) -326,049.31
30,365.63
Loss on fixed assets retirement (“-” for gain) 1,154.18 12,713.90
Loss on change in fair value(“-” for gain) -39,900.00 -89,100.00
Financial costs(“-” for gain) 1,946,846.03 2,517,002.00
Loss on investment(“-” for gain) -2,162,387.76 -1,866,234.08
Decrease of deferred tax assets(“-” for increase)
Increase of deferred tax liabilities(“-” for decrease)
Decrease of inventory(“-” for increase) -770,267.00 -76,600.00
Decrease in operating receivables(“-” for increase) -214,922,302.05 212.,483,311.23
Increase in operating payables(“-” for decrease) 209,455,920.63 -93,900,211.99
Others 55,900.52
Net cash flow from operating activities 161,452.12 116,893,593.00
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 2,548,532.38 2,159,268.46
Less: Cash at the beginning of the period 2,539,358.76 7,802,612.88143
Supplementary information Jan.-Jun. 2010 Jan.-Jun. 2009
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Increase in cash and cash equivalents 9,173.62 -5,643,344.42
Note XI. Supplementary information
1. Extraordinary gains and losses (negative: loss)
（1）According to the announcement (2008)No.43“Regulation on the Preparation of Information
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 Jan.-Jun. 2010 Note
Gains and Losses on disposal of non-current assets, including
provision for asset impairment write-off 3,639,394.41
Note 1
Corporate restructuring cost, such as employee resettlement expense,
integration costs etc. -302,693.00
Note 2
Gains and losses on non-operational contingencies 279,047.46 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
39,900.00
Note 4
Non-operational income and expense apart from the above items 5,809,760.87 Note 5
Sub-total 9,465,409.74
Less: extraordinary gains and losses income tax influence 276,884.21
Total 9,188,525.53
Note 1. “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.
Note 2. “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 the144
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 non-operational contingencies” refers to reversal of the estimated
liabilities withdrawn for inspection matters made by Securities Regulatory Bureau, details in Note
V.-23, Note IX.-6
Note 4. “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” refers to gains and losses from
the change in the fair value of trading financial assets.
Note 5. “Non-operational income and expense apart from the above items” refers to default
security deposit for rent and the payment that need not be paid.
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 data are as
following:
EPS
Profit in report period
Weighted
average ROE (%) Basic EPS Diluted EPS
Net profit attributable to ordinary
shareholders
17.49 0.21 0.21
Net profit attributable to ordinary
shareholders after deducting extraordinary
gain or loss
16.22 0.20 0.20
Legal representative: Chen Yugang
Senior accountant:Wang Hangjun
Chief financial officer:Shen Xueying
