SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.
ANNUAL REPORT 2010
26 April 2011
Section I. Important Notes and Contents
The Board of Directors, Supervisory Committee as well as directors, supervisors and
senior executives of Shenzhen Properties & Resources Development (Group) Ltd.
(hereinafter referred to as the Company) warrant that this report does not contain any
false or misleading statements or omit any material facts and hereby accept,
individually and collectively, responsibility for the truth, accuracy and completeness
of the contents of this report.
None of the directors, supervisors or senior executives has objection to the factuality,
accuracy or completeness of this Report.
All directors of the Company personally attended the Board Meeting.
BDO Wuhan Zhonghuan Certified Public Accountants Ltd. issued audit report with
standard unqualified opinion for the Company.
Mr. Chen Yugang, Chairman of the Board of the Company, Mr. Wang Hangjun,
Person in Charge of Accounting Work, CFO Mr. Gong Sixin and Ms. Shen Xueying,
Manager of Financial Management Department, hereby confirm that the Financial
Report enclosed in the Annual Report 2010 is true and complete.
This report has been prepared in Chinese version and English version respectively. In
the event of difference in interpretation between the two versions, the Chinese version
shall prevail.
Content
Section I Important Notes and Content………………………………………………..1
Section II Company Profile……………………………………………………………2
Section III Summary of Accounting Highlights and Business Highlights...…………..3
Section IV Changes in Share Capital and Particulars about Shareholders………….....6
Section V Directors, Supervisors and Senior Executives and Employee………….…14
Section VI Corporate Governance Structure…………………………………….…...22
Section VII Brief Introduction to the Shareholders’ General Meeting………………35
Section VIII Report of the Board of Directors……………………………………….36
Section IX Report of the Supervisory Committee……………………………………54
Section X Significant Events…………………………………………………………56
Section XI Financial Report………………………………………………………….75
Section XII Documents Available for Reference……………………………………75
1
Section II. Company Profile
I. Legal Name of the Company
In Chinese: 深圳市物业（发展）集团股份有限公司
Abbr. in Chinese: 物业集团
In English: Shenzhen Properties & Resources Development (Group) Ltd. (PRD)
II. Legal Representative: Chen Yugang
III. Secretary to the Board of Directors and Securities Affairs Representative:
Secretary to the Board of Directors Securities Affairs Representative
Name Fan Weiping Liu Gang
nd
Contract 42 Floor, International Trade 42nd Floor, International Trade
Address Center, Renmin South Road, Shenzhen 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
th nd
IV. Registered Address and Office Address: 39 and 42 Floor, International Trade
Center, Renmin South Road, Shenzhen
Post Code: 518014
Internet Website of the Company: www.szwuye.com.cn
V. Media Designated for Information Disclosure of the Company:
Securities Times for A-Share, Ta Kung Pao for B-Share
Internet Website Designated by CSRC for Publishing the Annual Report:
http://www.cninfo.com.cn
Place Where the Annual Report is Prepared and Placed: Office of Board of
Directors, on 42nd Floor, International Trade Center, Renmin South Road,
Shenzhen
VI. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of Stock and Stock Code: Shen Wuye A (000011)
Shen Wuye B (200011)
VII. Registration date: Jan. 17, 1983
Address: Industrial and Commercial Administration Bureau of Shenzhen
Municipal Government
Registration Code of Enterprise Business License: 440301103570124
Registered number of taxation: 440301192174135
Organization code: 19217413-5
Name and address of engaged by the Company:
Domestic Accounting Firm: BDO Wuhan Zhonghuan Certified Public
Accountants Ltd.
Address: 16th - 18th Floor, Tower B, Wuhan International Mansion
2
Section III. Summary of Accounting Highlights and
Business Highlights
I. Accounting data as of the year 2010
Unit: RMB Yuan
Items Amount
Operating profit 194,879,101.67
Total profit 207,159,741.70
Net profit attributable to shareholders of the listed companies 174,998,534.79
Net profit attributable to shareholders of the listed companies after deducting
160,273,095.99
non-recurring gains and losses
Net cash flow arising from operating activities -101,778,470.64
Items of extraordinary gains and losses deducted and the relevant amount:
Unit: RMB Yuan
Items Amount
1. Gains and losses on disposal of non-current assets, including provision for
3,666,926.49
asset impairment write-off
2. Corporate restructuring cost, such as employee resettlement expense,
-87,077.70
integration costs etc.
3. Gains and losses on contingencies not relating to routine operation 3,533,281.90
4. Gains or losses arising from a change in the fair value of a financial asset or
financial liability and investment income from disposal of tradable financial
39,900.00
assets and liabilities as well as available-for-sale financial assets that is not part
of a hedging relationship related to ordinary operation of the Company
5. Recovery of accounts receivable that independently make provision for
1,478,071.21
impairment
6. Other non-operating income and expense apart from the above items 6,620,338.00
Subtotal 15,251,439.90
7. Income tax influence excluding extraordinary gains and losses -526,001.10
Total 14,725,438.80
Note 1: In 2010, the term “gains and losses on disposal of non-current assets,
including provision for asset impairment write-off” is gains and losses on disposal of
fixed assets, investment real assets and long-term equity investment.
Note 2: The term “gains and losses on contingencies not relating to routine operation”
is accrued liabilities withdrawn in 2010, please refer to Note (V) 24 and (VII) 2, 3 for
details.
Note 3: The term “other non-operating income and expense apart from the above
items” is earnings from fines and confiscation and payments that need not be paid.
Difference in PRC GAAP and IFRS
Unit: RMB Yuan
3
Net profit attributable to owners of Owner’s equity attributable to parent
Item parent company company
（Jan.-Dec.2010） （as at 31 Dec. 2010）
As per PRC GAAP 174,998,534.79 874,185,621.88
As per IFRS 174,998,534.79 874,185,621.88
Explanation for difference No difference
II. Major accounting data and financial indexes of the Company over the last
three years
1. Main accounting data
Unit: RMB Yuan
Increase/decrease
2010 2009 2008
year-on-year (%)
Operating revenue 993,175,350.38 845,366,939.69 17.48 623,465,139.63
Total profit 207,159,741.70 127,297,762.81 62.74 29,940,463.73
Net profit attributable
to shareholders of the 174,998,534.79 96,933,951.02 80.53 9,829,397.29
company
Net profit attributable
to shareholders of the
company after
160,273,095.99 109,832,961.93 45.92 22,741,788.35
deducting
non-recurring gains
and losses
Net cash flow arising
from operating -101,778,470.64 759,650,626.69 -113.40 -23,702,977.51
activities
Increase/decrease
At the end of 2010 At the end of 2009 At the end of 2008
year-on-year (%)
Total assets 2,913,281,353.84 2,834,417,954.60 2.78 2,110,845,898.28
Owners’ equity (or
874,185,621.88 661,442,553.12 32.16 570,615,365.41
shareholders’ equity)
2. Main financial indices Unit: RMB Yuan
Increase/decrease
2010 2009 2008
year-on-year (%)
Basic earnings per share 0.2936 0.1626 80.57 0.0165
Diluted earnings per share 0.2936 0.1626 80.57 0.0165
Basis earnings per share
after deducting
0.2689 0.1843 45.90 0.0382
non-recurring gains and
losses
4
Fully diluted return on net
20.02% 14.65% 5.37 1.72%
assets
Weighted average return on
23.27% 15.67% 7.60 1.72%
net assets
Fully diluted return on net
assets after deducting
18.33% 16.61% 1.72 3.99%
non-recurring gains and
losses
Weighted average return on
net assets after deducting
21.31% 17.76% 3.55 3.98%
non-recurring gains and
losses
Net cash flow per share
arising from operating -0.1708 1.2746 -113.40 -0.0398
activities
At the end of At the end of Increase/decrease
At the end of 2008
2010 2009 year-on-year (%)
Net assets per share
attributable to shareholders 1.4668 1.1098 32.17 0.9574
of the company
5
Section IV. Changes in Share Capital and Particulars about
Shareholders
I. Changes in share capital of the Company in 2010
(I) Changes in shares
Unit: Share
Before the change Increase/decrease for this accounting period (+, - ) After the change
Capitaliza
tion of
Propor- Issuance of Bonus Propor-
Amount public Other Subtotal Amount
tion new shares shares tion
reserve
fund
I. Shares
subject to
388,640,594 65.21% 388,640,594 65.21%
trading
moratorium
1. Shares held
by the State
2. Share held
by state-owned 382,509,385 64.18% 382,509,385 64.18%
corporation
3. Shares held
by other
6,127,167 1.03% 6,127,167 1.03%
domestic
investors
Among which:
Shares held by
domestic
5,599,167 0.94% 5,599,167 0.94%
non-state-owne
d corporation
Shares held by
domestic 528,000 0.09% 528,000 0.09%
natural persons
4. Shares held
by foreign
investors
Among which:
Shares held by
foreign
corporation
Shares held by
foreign natural
6
persons
5. Frozen stock
on senior 4,042 0.0007% 4,042 0.0007%
executive
II. Shares not
subject to
207,338,498 34.79% 207,338,498 34.79%
trading
moratorium
1. RMB
139,737,297 23.45% 139,737,297 23.45%
ordinary shares
2. Domestically
listed foreign 67,601,201 11.34% 67,601,201 11.34%
shares
3. Overseas
listed foreign
shares
4. Others
III. Total
595,979,092 595,979,092
shares
Note: “Frozen stock on senior executives” in “hares subject to trading moratorium” is
154 shares of A-share and 5390 shares of B-share held by Guo Lusi, supervisor of the
Company. In accordance with Rules on Management of Stock and of Which Changes
of Directors, Supervisors and Senior Executives of the Company, 5390 shares of
B-share held by Guo Lusi is locked at a ratio of 75%, while A-share held by Guo Lusi
is less than 1,000 shares that not need to lock.
Statement of Change in Shares Subject to Trading Moratorium
Unit: Share
Increase of
Shares
Shares subject to shares subject to Shares subject
released from
Name of trading trading to trading Date of
trading Reason
Shareholder moratorium at moratorium moratorium at releasing
moratorium
the year-begin subscription in the year-end
in this year
this year
Shenzhen
Construction
Restr 4
Investment 323,158,332 0 0 323,158,332
iction sale Nov. 2012
Holdings
Corporation
Shenzhen
Investment Restr 4
56,582,573 0 0 56,582,573
Management iction sale Nov. 2012
Corporation
7
Other
shareholder
8,895,64 Restriction
of 8,895,647 0 0 Unknown
7 sale
non-tradable
shares
Shares held
Guo Lusi 4,042 0 0 4,042 by Unknown
supervisor
Total 388,640,594 0 0 388,640,594
Note: From the end of the reporting period to the reporting date, among other
shareholder of non-tradable shares, shares subject to trading moratorium held by four
shareholders with trading moratorium has released for trading, details please refer to
Suggested Notice on Releasing Shares Subject to Trading Moratorium disclosed on
Securities Time and Ta Kung Pao, as well as website http://www.cninfo.com.cn
respectively on 13 April, 2011.
(II) Issuance and listing of shares
1. Particulars on securities issuance and stock changes of the latest three years
① Proposal on share merger reform of the Company was passed in Shareholders’
General Meeting on 21 Oct. 2009. The reform is base on 91,391,300 shares of
A-share of Shen Wuye, non-tradable shareholders paid shares to A-share tradable
shareholders at the rate of 3.9 shares for 10 every share, and the non-tradable
shareholders paid 35,642,607 shares to tradable shareholders in total.
② On 23 Nov. 2009, the Company performed the bonus shares to all shareholders
with retained profits at the rate of 1 share for every 10 shares, and 54,179,917 bonus
shares were distributed in total.
③Over the previous three years as at end of the report period, the Company failed to
issue shares on sale, convertible corporate bond, separate-transaction convertible bond,
corporate bonds and other derivative securities.
2. During the reporting period, total shares and share structure remained unchanged.
II. About shareholders
1. Number of shareholders and shares held by shareholders
In accordance with the name list for registration provided by China Securities
Depository & Clearing Corporation Limited Shenzhen Branch to the Company, shares
held by the top ten shareholders and the top ten shareholders not subject to trading
moratorium as at 31 Dec. 2010 are as below:
Unit: Share
By the end of the reporting period, the Company has 47320 shareholders in
Total number of shareholders
total, including 37463 ones of A-share and 9857 ones of B-share.
Particulars about shares held by the top ten shareholders
Number of
Type of Proportion Total number Share pledged
Full name of Shareholder shares subject
shareholders (%) of shares held or frozen
to trading
8
moratorium
SHENZHEN
CONSTRUCTION State-owned
54.22 323,158,332 323，158，332 0
INVESTMENT HOLDINGS corporation
CORPORATION
SHENZHEN INVESTMENT
State-owned
MANAGEMENT 9.50 56,582,573 56，582，573 0
corporation
CORPORATION
Domestic
ZENG YING 0.56 3,350,000 0 0
nature person
LABOR UNION OF
SHENZHEN
INTERNATIONAL TRADE State-owned
0.46 2,768,480 2，768，480 0
PROPERTY corporation
MANAGERMENT
COMPANY
SHENZHEN SPECIAL
State-owned
ZONE DUTY-FREE 0.29 1,730,300 1，730，300 0
corporation
COMMODITY CO.
Shenzhen Jinniuhong Trading
0.25 1,500,000 0 0
Co., Ltd.
SHANGHAI ZHAODA
INVESTMENT 0.19 1，111，000 1，111，000 0
CONSULTANT CO., LTD.
Hainan Weibang Investment
and Development Co., Ltd. 0.15 865，150 865，150 0
(Note)
SHANGHAI KUNLING
INDUSTRIAL & TRADE 0.12 692,120 692,120 0
CO., LTD.
LIU LIAOYUAN 0.11 641,900 0 0
The first and second principal shareholders of the Company are managed by Shenzhen
Explanation on associated Investment Holding Corporation, the actual controlling shareholder of the Company.
relationship among the above The forth shareholder is labor union of wholly-owned subsidiary company indirectly
shareholders or consistent controlled by the Company. Except for these, the Company is not aware of whether
action there exists associated relationship or consistent action among the top ten shareholders
holding trade shares or not.
Shares held by the top ten shareholder not subject to trading moratorium
Name of shareholders Numbers of shares not subject to Type of share
trading moratorium
ZENG YING 3,350,000 Domestically listed foreign shares
9
Shenzhen Jinniuhong Trading Co.,
1,500,000 RMB ordinary shares
Ltd.
LIU LIAOYUAN 641,900 Domestically listed foreign shares
CAO ZHIQIN 616，325 RMB ordinary shares
LIU YUN DE 613，200 RMB ordinary shares
SUN HUNG KAI INVESTMENT
SERVICES LTD-CUSTOMERS 560，000 Domestically listed foreign shares
A/C
ZHANG YAN 524，310 RMB ordinary shares
ZHANG LIN 523，000 RMB ordinary shares
DENG WEICHAO 480，100 RMB ordinary shares
CAO YONGHUI 455，300 RMB ordinary shares
Explanation on associated The Company is not aware of whether there exists associated relationship or
relationship among the above consistent action among the top ten shareholders not subject to trading
shareholders or consistent action moratorium or not.
Note: Shen Wuye shares held by Hainan Weibang Investment and Development Co.,
Ltd. is originally held by CHINA EAGLE SECURITIES CO., LTD., when the later
bankrupt, shares of Shen Wuye held transferred to Hainan Weibang Investment and
Development Co., Ltd.
(II) Number of shares held by the top ten shareholder holding shares subject to trading
moratorium and conditions
Number of Number of
shares subject Date that shares additional Trading
No. Name of shareholders
to trading can be listed marketable moratorium
moratorium shares
SHENZHEN 323,158,332 1. Original
4 Nov. 2012 29,798,954
CONSTRUCTION (including non-tradable shares
1
INVESTMENT HOLDINGS 741,075 shares 4 Nov. 2013 29,798,954 held by Shenzhen
CORPORATION paid in advance) 4 Nov. 2014 Residual shares Construction
SHENZHEN INVESTMENT Investment Holdings
MANAGEMENT 4 Nov. 2012 29,798,954 Corporation and
CORPORATION Shenzhen Investment
Management
2 56,582,573
Corporation would not
4 Nov. 2013 Residual shares be traded or transferred
within 36 months since
the date when the share
10
merger reform plan is
implemented.
2. After the expiration
of the aforesaid
commitment, the
proportion in total
shares capital of Shen
Wuye taken up by the
original non-tradable
shares could be sold
through listing and
trading in Shenzhen
Stock exchange would
not exceed 5 percent
within 12 months, as
well as not exceed 10
percent within 24
months.
LABOR UNION OF
SHENZHEN
INTERNATIONAL TRADE
3 2,768,480 Unknown 2,768,480
PROPERTY
MANAGERMENT
COMPANY Original non-tradable
SHENZHEN SPECIAL shares held by such
4 ZONE DUTY-FREE 1,730,300 Unknown 1,730,300 eight shareholders
COMMODITY CO. would not be traded or
SHANGHAI ZHAODA transferred within 12
5 INVESTMENT 1,111,000 Unknown 1,111,000 months since the date
CONSULTANT CO., LTD. when the share merger
HAINAN WEIBNAG reform plan is
6 INVESTMENT AND 865,150 Unknown 865,150 implemented.
DEVELOPMENT CO., LTD. The shares held by the
SHANGHAI KUNLING non-tradable
7 INDUSTRY & TRADE 692,120 Unknown 692,120 shareholders would not
CO.,LTD be listed for trading for
8 GENG QUN YING (Note 1) 528,000 Unknown 528,000 failing to perform
CHINA SHENZHEN consideration
INTERNATIONAL
9 441,400 Unknown 441,400
COOPERATION(GROUP)
CO.,LTD.
SHENZHEN TONGSHENG
10 268,057 Unknown 268,057
INDUSTRIAL CO., LTD.
Note: The trading moratorium of shares held by shareholders not subject to trading
11
moratorium from No. three to No. ten came to expire on 4 Nov. 2010. Of which,
shares held by Shanghai Zhaoda Investment Consultant Co., Ltd., Hainan Weibang
Investment and Development Co., Ltd. Shanghai Kunling Industry & Trade Co., Ltd.
and Shenzhen Tongsheng Industrial Co., Ltd. were released. For details please refer to
Suggested Notice on Releasing Trading Moratorium disclosed on Securities Time and
Ta Kung Pao, as well as website http://www.cninfo.com.cn respectively on 13 April,
2011. For those shareholders not subject to trading moratorium, advance shall be clear
and proceeding releasing procedure before public listing.
(III) About the controlling shareholder and actual controller of the Company
1. By the end of reporting period, the controlling shareholder of the Company is still
Shenzhen Construction Investment Holdings Corporation (“the holding company”) in
register book. In 2004, Shenzhen Municipal Government incorporated Shenzhen
Construction Investment Holdings Corporation with the other two municipal assets
operation and management companies, namely Shenzhen Investment Management
Corporation and Shenzhen Trade and Business Holdings Corporation to establish
Shenzhen Investment Holdings Co., Ltd.. Therefore, the Company’s actual controlling
shareholder is Shenzhen Investment Holdings Co., Ltd., a sole state-funded limited
company, who was established in Oct. 13, 2004 with the registered capital of RMB 4
billion and Mr. Chen Hongbo as its legal representative. Main business scope:
providing guarantee to municipal state-owned enterprises, management of
state-owned equity, assets reorganization and reformation of enterprises, assets
operation and equity investment and etc.. As a government department, State-owned
Assets Supervision and Administration Commission of Shenzhen implemented
management for Shenzhen Investment Holdings Co., Ltd. on behalf of Shenzhen
municipal government. Thus, the final controller of the Company is State-owned
Assets Supervision and Administration Commission of Shenzhen with locating at
Investment Bldg., Shen Nan Av., Futian District, Shenzhen and postcode of “518026”.
2. Change in the controlling shareholder and actual controller
During the reporting period, the controlling shareholder and actual controller
remained unchanged.
3. The controlling relationship between the Company and the actual controller is as
below:
State-owned Assets Supervision and
Administration Commission of Shenzhen 100%
Shenzhen Investment Holdings Co., Ltd. 63.72%
The Company
12
The second principal shareholder of the Company is Shenzhen Investment
Management Corporation (holding 10.45% equity of the Company), who was
established in Feb. 1988 with the registered capital of RMB 2 billion, as well as Mr.
Li Heihu as its legal representative. It is an assets operation management company
owned by the whole people. In accordance with the document of SGZW 【2004】No.
223 “Decision on Establishing Shenzhen Investment Holdings Co., Ltd.”, in 2004,
Shenzhen Investment Management Corporation incorporated with Shenzhen
Construction Investment Holdings Corporation and Shenzhen Trade and Business
Holdings Corporation. The corporate shares of the Company held by the aforesaid
three companies were managed by new company after incorporation — Shenzhen
Investment Holdings Co., Ltd.
4. About other shareholders holding over 10% (including 10%) shares of the
Company
During the reporting period, the Company has no other corporation shareholders
holding over 10% (including 10%) shares of the Company.
13
Section V. Directors, Supervisors and Senior Executives and
Employee
I. About directors, supervisors and senior executives
(I) Basic information
Holding
Holding Reasons
shares at
Name Office title Sex Age Office term shares at the +/- of
the
year-begin change
year-end
Chen Chairman of
Male 53 Dec. 2007-Dec. 2010 0 0 0
Yugang the Board
Director,
Wei Zhi General Male 53 Dec. 2007-Dec. 2010 0 0 0
Manger
Director,
Liu
Chairman of Male 52 Dec. 2007-Dec. 2010 0 0 0
Guangxin
Labor Union
Wen Li Director Female 41 Dec. 2007-Dec. 2010 0 0 0
Guo Liwei Director Male 38 Dec. 2007-Dec. 2010 0 0 0
Independent
Li Xiaofan Male 58 Dec. 2007-Dec. 2010 0 0 0
Director
Zha Independent
Male 55 Dec. 2007-Dec. 2010 0 0 0
Zhenxiang Director
Dong Independent
Male 54 Dec. 2007-Dec. 2010 0 0 0
Zhiguang Director
Chairman of
Cao the
Male 60 Dec. 2007-Dec. 2010 0 0 0
Ziyang Supervisory
Committee
Wang
Supervisor Female 48 Sep. 2008-Dec. 2010 0 0 0
Xiuyan
Supervisor,
Manger of
Wang Developmen
Female 41 Dec. 2007-Dec. 2010 0 0 0
Qiuping t
Managemen
t Dept.
Supervisor,
Zhang Manager of
Male 35 Dec. 2007-Dec. 2010 0 0 0
Gejian Auditing
Dept.
101 A shares 101 A
Guo Lusi Supervisor Female 47 Dec. 2007-Dec. 2010 0
4900 B shares shares
14
4900 B
shares
Deputy
Wang
General Male 44 Dec. 2007-Dec. 2010 0 0 0
Hangjun
Manager
Wang Deputy
Female 43 Jul. 2010-Dec. 2010 0 0 0
huimin general
Gong Deputy
Male 43 Sep. 2010–Dec. 2010 0 0 0
Sixin general
Deputy
Li Zipeng General Male 44 Dec. 2007-Dec. 2010 0 0 0
Manager
Secretary to
the Board of
Fan
Directors, Male 46 Jan. 2009-Dec. 2010 0 0 0
Weiping
Chief legal
consultant
Note: The 6th Board of Directors, supervisory committee and operation and
management authorities came to expired in Dec. 2010 that the Company shall hurry
for re-electing new members for the above group. Before the re-election, former
directors, supervisors as well as senior executives shall continue to execute their
posts.
Changes in shares of former directors, senior executives in the reporting period
Holding
Holding Reasons
shares at
Name Office title Sex Age Office term shares at the +/- of
the
year-begin change
year-end
Wang Former
Male 42 Dec. 2007-Sep. 2010 0 0 0
Peng Director
Former
Liu Deputy
Male 50 Dec. 2007-Jul. 2010 0 0 0
Yinghua General
Manager
(II) Work experience of current directors, supervisors and senior executives, post or
concurrent posts in other companies excluding shareholder companies
Members of the Board of Directors:
Mr. Chen Yugang, was born in September 1957, Postgraduate degree, is senior
Political Worker. He gains rich experience in government administrative management
and enterprise management over 20 years. He held some important posts in many
municipal departments. He served as GM and Secretary of the CPC in Shenzhen
Shenhua Group Company. Also, he served as GM and Vice Secretary of the CPC in
Shenzhen Xianke Enterprise Group, and Deputy General Manager of Shenzhen
15
Investment Holdings Co., Ltd. From May 2006, he has served as Secretary of CPC in
the Company. And in June 2006, he was elected as Chairman of the Board of the
Company. Now he acts as Secretary of CPC and Chairman of the Board in the
Company.
Mr. Wei Zhi, was born in November 1957, Bachelor Degree, holds the title of
interpretation. He gains rich experience in enterprise management over 20 years. He
ever worked in Shenzhen International Engineering Co., Ltd. as Deputy Manager of
Overseas Department, in Shenzhen Zhongshen Overseas Development Company as
Manage of Labor Affairs Department and Deputy General Manager, in China
Shenzhen International Cooperation (Group) Co., Ltd. Hong Kong Liyuan Company
as Director and General Manager, in Shenzhen Construction Investment Holdings
Corporation as Deputy Manager of Overseas Department, in Shenzhen Construction
Investment Holdings Corporation as Deputy Manager of Contract Department, in
Shenzhen Tonge (Group) Co., Ltd. as Assistant General Manager and Deputy General
Manager, in Tonge Real Estates Development Company as Chairman of the Board
and General Manager. Since October 2007, he took the posts of the Vice Secretary of
CPC and Standing Deputy General Manager in the Company. Since 20 Dec. 2007, he
held the posts of Director of the Company. Since 15 Jul. 2008 to present, he acts as
Vice Secretary of CPC, Director and General Manger of the Company.
Mr. Liu Guangxin, was born in May 1958, College Diploma, is an Economist. He
gains experience in enterprise management over 10 years. Since May 1989, he held a
job in the Company as Director of the Office in Properties Engineering Development
Company, General Manager of International Trade Industrial Development Company,
General Manager of International Trade Food Company, Deputy Director and
Director of the GM Office of the Company, as well as Manager of Operation and
Management Department of the Company. Since October 2007, he took the posts of
Vice Secretary of CPC and Secretary of Discipline Inspection Committee in the
Company. Since November 2007, he was appointed as Chairman of the Labor Union
of the Company. Now he acts as Vice Secretary of CPC, Director, Secretary of
Discipline Inspection Committee as well as Chairman of Labor Union in the
Company.
Ms. Wen Li, born in December 1969, Postgraduate Degree, Master Degree, is an
Economist as well as Engineer. She gains experience in enterprise management over
10 years. She ever worked in Shenzhen Fantasia Investment Development as
Assistant of Standing Deputy General Manger, Manager of Project Department, as
well as Manager of Market Planning Department. Since July 2005, she was appointed
as Deputy Department Director of Investment Department of Shenzhen Investment
Holdings Co., Ltd. Now she acts as Director of Shenzhen Special Economic Zone
Real Estate & Properties (Group) Co., Ltd., as well as Director of the Company.
Mr. Guo Liwei, was born in 1973, Postgraduate Degree, is a master of Law. He once
successively held the posts in General Department of Ping An Insurance (Group)
Company of China as legal consultant, and Shenzhen Investment Management
Corporation as Business Manager of Legal Affairs Department. Since October 2004,
he worked in Shenzhen Investment Holdings Co., Ltd as Deputy GM of Legal Affairs
16
Department. He now acts as Manager of the First Enterprise Management in
Shenzhen Investment Holdings Co., Ltd. and Director of the Company.
Members of Independent Directors:
Mr. Li Xiaofan, was born in 1953, holder of Master-degree of economics with
register management consultant and research scholar. He once successively held posts
in Economic Research Institute of the Gansu Provincial Academy of Social Sciences
as Vice Director, in Shenzhen System Restructuring Office as Chief Division, as well
as Chief Division of Market System Office; and Director of Investment Promotion
Liaison Office of Shenzhen Municipal Government in European office, inspector of
Original Foreign Economic & Trade Bureau of Shenzhen. From 2006 to now, he has
held posts in Shenzhen Urban Development Research Center as a research scholar; in
China Productive Power Commission as Administrative Syndic and Vice
Secretary-general. Now he is the Independent Director of the Company.
Mr. Zha Zhenxiang, was born in November 1955, Doctor Degree, holds title of
Professor, and enjoys special allowance from Government of the State Council. Mr.
Zha has profound theoretical basis in business management. He ever held the posts of
Vice Dean in College of Economics and Management of China Agricultural
University, Director of Development and Research Center of China Bao’an Group Co.,
Ltd., Chief Economist of Nanhai Nengxing Development Group Co., Ltd. Now he
took the posts of Dean in College of Economics and Management of Shenzhen
Polytechnic and concurrently Director of Social Development Research Center, as
well as Independent Director of the Company.
Mr. Dong Zhiguang, was born in February 1957, Bachelor Degree, is an Senior
Accountant aw well as CPA. He gains experience in enterprise management over 20
years. He ever took the posts of Deputy Division Chief and Division Chief of China
Construction Bank Heilongjiang Branch, General Manager of Planning & Financial
Department, Chief Accountant and Director in Southern Securities Co., Ltd., and
President of China Antai Group Co., Ltd. Now he acts as Chairman of the Board in
Shenzhen Osgate Trading Co., Ltd., Independent Director of the Company.
Members of the Supervisory Committee:
Mr. Cao Ziyang, was born in March 1951, Diploma, is a Senior Political Worker. He
gains experience in enterprise management over 30 years. He’s experienced in serving
in the army. He once acted as clerk of Publicity Section of Politics Ministry in
Shenzhen Special Economic Zone, Section Chief of Organization Section and
Secretary of Youth League Committee in Shenzhen Construction Group Co., Ltd.,
Department Director of HR Department, Secretary of CPC and Chairman of Labor
Union in Shenzhen Eastern Development Group Corporation, as well as Director of
CPC Office in Shenzhen Construction Investment Holding Corporation. He was
transferred to the Company in Apr. 1998 and ever took the posts of Director and
Deputy General Manager of the Company. He now acts as Chairman of the
Supervisory Committee of the Company.
17
Ms. Wang Xiuyan, was born in Aug. 1962, MBA degree, is an accountant. From
May 1997 to Sep. 2004, she worked in Shenzhen Investment Management
Corporation, once acted as secretary of the Supervisory Committee Office, Business
Manager of Audit Department, Director of Women’s Labor Union, Senior Business
Manager of Audit Department and Supervision Department; from Oct. 2004 to Dec.
2007, she acted as manager of Supervision and Inspection Department in Shenzhen
Investment Holding Co., Ltd.; from Dec. 2007 to present, she is manager of Audit
Department (the Supervisory Committee Office) in Shenzhen Investment Holding Co.,
Ltd., now she is supervisor of the Company.
Ms. Wang Qiuping, was born in January 1970, Bachelor Degree, is a Senior
Economist. She worked in the Company since from 1992, and was engaged in
integrated operation management and planning management in GM Office, Planning
and Financial Department and Operation Management Department. Now she was
appointed as Supervisor of the Company and Manager of Development Management
Department.
Mr. Zhang Gejian, was born in September 1975, Bachelor Degree, is an Accountant
as well as Auditor. He was engaged in internal auditing work in Audit Department of
the Company since July 1997. Now he acts as Supervisor of the Company and
concurrently Manager of Audit Department.
Ms. Guo Lusi, was born in August 1963, Bachelor Degree, is a Senior Political Worker. She
worked in the Company since 1988, and once served as positions in business department and
discipline inspection office of sub-companies and of group company, and CPC Office of the
Company since 2000. She successively held the posts of Secretary of Youth League Committee
and was concurrently commissary of the First Party general branch of Government Office. She
now acts as Chairman of Labor Union in Shenzhen Huangcheng Properties Co., Ltd. and
Supervisor of the Company.
Senior executives:
Mr. Wang Hangjun, was born in Nov. 1966, Postgraduate Students from Zhongnan
University of Economics and Law, is a Master of Economics and Senior Auditor. He
gains experience in enterprise management over 20 years. He ever took the posts of
Deputy Section Chief of Audit Bureau of Nanshan District, Shenzhen, Deputy
Department Director and Department Director of Audit Department in Shenzhen
Investment Management Corporation; Deputy Department Director and Department
Director of Supervision Department in Shenzhen Investment Management
Corporation; as well as Department Director of Audit Supervision Department in
Shenzhen Investment Holdings Co., Ltd. From October 2007, he is working as
Deputy General Manager of the Company.
Mr. Li Zipeng, was born in May 1966, Bachelor Degree from Civil Department of
Huazhong University of Science and Technology. He successfully held the posts of
Section Chief of Engineering, Field Manager of Real Estate Project, Principal of
Housing Sale Department, Assistant General Manager, Deputy General Manager as
well as General Manager in Shenzhen Huangcheng Properties Co., Ltd. (shareholding
subsidiary company of the Company). From October 2007, he was appointed as
18
Deputy General Manager of the Company and concurrently General Manger of
Shenzhen Huangcheng Properties Co., Ltd, shareholding subsidiary company of the
Company.
Ms. Wang Huimin, was born in Oct. 1967, Postgraduate, Economist. She has
abundant experiences in enterprise management. She ever took posts of legal advisor
in Legal Consultant Office of Shenzhen Construction Group Co., Ltd., General
Manager of Shenzhen Construction Investment Holdings Corporation, and
Department Director of HR Department in Shenzhen Investment Holding Co., Ltd.
Since July 2010, she is working as Deputy General Manager of the Company.
Mr. Gong Sixin, was born in Feb. 1968, Master of Economics, Senior Accountant.
He has profound experiences in financial accounting management. He ever took posts
of CFO of Shandong Weigao Medical Polymer Company Limited, of CFO of
Shenzhen 3Nod Technology Co., Ltd. as well as CFO of Shenzhen Jiehe Technology
Co., Ltd. Since Sep. 2010, he is acting as CFO of the Company.
Mr. Fan Weiping, was born in Apr. 1965, graduated from Southwest University of
Political Science & Law in 1988 and holder of postgraduate degree. He worked in
Shenzhen Shenhua Group Company in 2003, successively acted as section chief of
Law section of Supervisory and Audit Department; Vice Secretary and Secretary of
Law Department; Assistant to General Manager; Chief Legal adviser; from Jan. 2009
to present, he acts as Secretary to the Board of Directors and chief legal consultant in
the Company.
(III) Particulars about annual remuneration of the Company’s directors, supervisors
and senior executives
Remuneration drawn by the Company’s directors, supervisors and senior executives
for the year 2010 are as follows (tax included):
Annual remuneration
No. Name Office title Remark
(RMB’0000)
1 Chen Yu Gang Chairman of the Board 74.37
2 Wei Zhi Director, General Manger 74.37
Director, Chairman of Labor
3 Liu Guangxin 49.11
Union
Drawing salary from
4 Guo Liwei Director 0 controlling
shareholder
Drawing salary from
5 Wen Li Director 0 controlling
shareholder
Allowance for
6 Li Xiaofan Independent Director 8.00
independent director
Allowance for
7 Zha Zhenxiang Independent Director 8.00
independent director
Allowance for
8 Dong Zhiguang Independent Director 8.00
independent director
19
Chairman of the Supervisory
9 Cao Ziyang 64.54
Committee
Drawing salary from
10 Wang Xiuyan Supervisor 0 controlling
shareholder
Supervisor, Deputy Manger
11 Wang Qiuping of Development 27.96
Management Dept.
Supervisor, Deputy Manager
12 Zhang Gejian 27.91
of Auditing Dept.
13 Guo Lusi Supervisor 22.95
14 Wang Hangjun Deputy General Manager 49.11
15 Li Zipeng Deputy General Manger 49.11
Took office on Jun.
16 Wang Huimin Deputy General Manger 9.91
2010
Took office on Sep.
17 Gong Sixin CFO 8.58
2010
18 Fan Weiping Secretary to the Board 47.13
Drawing salary from
controlling
19 Wang Peng Former Director 0
shareholder, left post
in Sep. 2010
Former Deputy General
20 Liu Yinghua 37.39 Left post in Jul. 2010
Manager
Total 566.44
(IV) Changes and reason for changes on Supervisors, Senior Executives
1. In July 2010, Liu Yinghua, former Deputy General Manager of the Company
applied to resign from his post in the Company due to job change. Details please refer
to Public Notice on Resolution of the Board of Directors on Securities Times, Ta
Kung Pao and http://cninfo.com.cn dated 21 July 2010.
2. On 30 July 2010, the Company convened the 25th Session of the 6th Board of
Directors, of which Ms. Wang Huimin was engaged as Deputy General Manger of the
Company. Details please refer to Public Notice on Resolution of the Board of
Directors on Securities Times, Ta Kung Pao and http://cninfo.com.cn dated 31 July
2010.
3. In Sep. 2010, Wang Peng, former Director of the Company resigned from his post
in the Company, for details please refer to Public Notice on Resignation of Director
on Securities Times, Ta Kung Pao and http://cninfo.com.cn dated 11 Sep. 2010.
4. On 17 Sep. 2010, the Company convened the 27th Session of the 6th Board of
Directors, of which the Company engaged Mr. Gong Sixin as CFO of the Company.
Details please refer to Public Notice on Resolutions of the Board of Directors on
20
Securities Times, Ta Kung Pao and http://cninfo.com.cn dated 18 Sep. 2010.
II. About employees
The Company has totally 2752 employees in office at present, including 1808
production personnel, 119 salespersons, 539 technicians, 96 financial personnel and
190 administrative personnel. 1169 persons graduated from technical secondary
school and college or above. Presently, the Company needs to bear the expenses of
180 retirees.
21
Section VI Corporate Governance Structure
I. Actual status of corporate governance
During the reporting period, in accordance with the requirement of the Company Law,
Securities Law, Code of Corporate Governance for Listed Companies in China and
Stock Listing Rules of Shenzhen Stock Exchange as well as relevant laws and statutes
of CSRC, the Company continuously regulated and perfected corporate governance
structure, established and perfected internal management and control system and
investigated in management activities of the Company, which promoted the
Company’s standard management level.
In the reporting period, the Company implemented Working Rules on Annual Report,
Working Rules on Legal Consultant, Management Rules on Contract, revised and
implemented Rules of Accountabilities for Significant Mistakes in Annual Report
Information Disclosure. As from the end of the reporting period to the reporting date,
the Company drew up Management Rules on Person in Charge of Financial
Accounting, revised Working Rules on General Manager. In the process, the internal
control system of the Company is more perfected.
As to the end of the reporting period, the internal control system of the Company is
complete, accomplished and defined that in accordance with Company Law, Articles
of Association and other laws and regulations as well as requirements of regulatory
documents. The convene of Shareholders’ General Meeting, the Board of Directors
and Supervisory Committees are strictly in accordance with relevant rules and
regulations, all directors and supervisors earnestly and diligently commit their
responsibilities. Corporate structure of the Company is complete and the operation of
the Company is standardized.
1. Shareholders and the Shareholders’ General Meeting
Convening, holding and resolution procedure of the Shareholders’ General Meeting
are in line with the regulations stipulated in the Rules for Shareholders’ General
Meeting of Listed Companies, Articles of Association, and Rules of Procedure for
Shareholders’ General Meeting of the Company. Shareholders’ Genera Meeting was
presided over by Chairman of the Board, and invited lawyers to witness on the spot.
The Company equally treated all shareholders, no matter minority shareholders or
principal shareholders, and ensured all the shareholders especially minority
shareholders to exercise the power of right to know and right to participate fully
through various means. Meanwhile, associated shareholders avoided voting for related
transactions for the purpose of ensuring that decision-making procedure of the related
transactions are legal and are conducted openly, honestly and fairly. There was no
controlling shareholder who has done harm to interests of the Company and of
minority shareholders.
2. Directors and the Board of Directors
Member and composition of the Board of Directors are in line with laws and statutes
as well as requirement of Articles of Association, and all the directors of the Company
22
are qualified. The Company held the Board meetings and shaped the resolutions
strictly in accordance with regulations in the Articles of Association and Rules of
Procedure for the Board of Directors. All Directors attended the Board Meetings
earnestly and responsibly, made decisions carefully and expressed clear opinion on
matters discussed. In a word, directors faithfully performed obligations of diligence
and credibility, and protected interest of minority shareholders.
The Board of Company divides into Strategic Development and Investment
Committee under the Board, Audit Committee under the Board, Nomination
Committee under the Board and Remuneration and Appraisal Committee under the
Board that all specific committees completed relevant working rules. All committees
earnestly carry on operation in accordance with working rules and provide support for
making scientific decision and regulating management.
3. Supervisors and the Supervisory Committee
Member and composition of the Supervisory Committee are in line with laws and
statutes as well as requirement of Articles of Association. Supervisors of the
Company seriously performed their duties according to requirements of the Articles of
Association and of Rules of Procedure for the Supervisory Committee, and made
effective supervision to every aspect of the Company’s production and operation
management, as well as the legitimacy of directors and senior management
personnel’s performance of duties, and earnestly protected interest of the Company
and shareholders.
4. Information disclosure and transparency
During the reporting period, the Company strengthened Management System on
Information Disclosure of the Company and performed obligation of information
disclosure strictly in accordance with provisions of relevant laws and statutes and. The
Company discloses the information authentically, accurately, timely and completely
to ensure all investors have equal opportunity to acquire information, which enhanced
transparency and played important role in protection of knowing right of minority
investors.
5. Managements team
Managements team of the Company is engaged by the Board, which is responsible for
convene of Shareholders’ General Meeting and disposals passed on the Board,
decision-making on daily operation issues of the Company, as well as carrying on and
implementing major decisions. Management team of the Company is working with
cautions, functioning regularly, operating honestly and strictly in accordance with
regulations of Articles of Association. There are no act in excess of authority, no tend
of “inside control”, no commitment of responsibilities in dishonest or in violation of
responsibilities.
6. Performance appraisal and incentive mechanism
The Remuneration and Appraisal Committee established under the Board of Directors
23
is in charge of the performance appraisal to the directors, supervisors and senior
management staffs of the Company, meanwhile, the committee formulated reasonable
performance appraisal system. The Company’s existing performance appraisal and
incentive mechanism is in accord with development of the Company that both
motivate staff work enthusiastic and subjective initiative and effectively promote
regular operation and health development of the Company.
The Company has not yet established an equity incentive system.
7. About stakeholders
The Company adequately respected and protected legitimated rights of stakeholders,
realized harmony and equality of interest of sociality, shareholders, banks, other
creditors, the Company, employees and consumers, and jointly advanced the
Company’s sustained, healthy and durative development through active cooperation,
mutual benefit and honesty faith with its stakeholders.
8. Relationship between controlling shareholder and listed company
Behavior of controlling shareholder of the Company was normative, and exercised
right of provider through the Shareholders’ General Meeting in line with the laws,
never directly or indirectly intervene decision-making and operation over the
Shareholders’ General Meeting. The Company is independent in personnel, assets,
finance, organization and operations from its controlling shareholder. The Company’s
Board of Directors, Supervisory Committee and Internal Operating Units can operate
independently. Related transactions between the Company and controlling
shareholder are reasonable and fair, and decision-making procedures comply with the
Rules. Neither capital occupied by controlling shareholder, nor harms done to
interests of the Company and of minority shareholders by controlling shareholder.
There was no guarantees provided by the Company for the controlling shareholder
and its subsidiary companies existed in the Company.
II. Particulars on corporate governance and specific activities
(I) Specific activity on normalizing financial accounting basis
In accordance with deployment and requirements of Circular on Overall Carrying on
Specific Activity for Regulating Basic Work of Financial Accounting of Listed
Company in Area Under Control of Shenzhen (SZJF[2010] No.109) issued by
Shenzhen Securities Regulatory Bureau, the Company organized and carried on
specific activity for regulating basic work of financial accounting.
In accordance with relevant laws and regulations such as Accounting Law of PRC,
Basic Rules for Enterprise Internal Control etc., the Company conducted through self-
examination to all content involving in basic work of financial accounting and came
out with self-examination report. In the reporting period, the above said reform wok
was completely finished. On 22 Oct. 2010, Report on Rectifying and Improvement for
Overall Carrying on Specific Activity for Regulating Basic Work of Financial
Accounting was reviewed and approved on the 28th Session of the 6th Board of
Directors and submitted to Shenzhen CSRC Bureau.
24
Through the above activities, the Company intensified standardized consciousness on
basic work of financial accounting, promoted efficiency and safety of financial
information system, and developed truthfulness, accuracy and completeness of
financial information of the Company.
(II) Self-examination activity on particulars on the establishment and accomplishment
of permanent mechanism on preventing capital occupation by substantial shareholders
and related parties
In accordance with requirements of Circular on Carrying on Self-examination for the
Establishment and Accomplishment of Permanent Mechanism on Preventing Capital
Occupation (SZJG Zi[2010] No.59) issued by Shenzhen Securities Regulatory Bureau
and relevant laws and regulations, the Company organized and carried on
self-examination for the establishment and accomplishment of permanent mechanism
on preventing capital occupation. Through collecting relevant materials on internal
control and in accordance with relevant laws and administrative regulations as well as
internal regulation system, the Company thoroughly combed out particulars on the
establishment and accomplishment of permanent mechanism on preventing capital
occupation.
Through serious check conducted by self-examination team and relevant business
departments, there were no capital occupied by shareholders and the regulation
system on preventing capital occupation was faithfully and efficiently implemented in
the Company.
Through the self-examination activity, Directors, Supervisors, Senior Executives and
relevant liable person promoted their consciousness on preventing capital occupation.
Base on this activity, the Company shall perfect permanent mechanism on preventing
capital occupation by strictly in accordance with policies and laws issued by CSRC
organizations, regulate overall financial management of the Company, prevent capital
occupation by substantial shareholders and related parties, earnestly protect rights of
the Company and majority investors.
(III) Self-examination activities on horizontal operation of the Company and
substantial shareholders
In accordance with requirements of Circular on Carrying on Baseline Survey for
Particulars about Horizontal Operation of Listed Companies and Controlling
Shareholders, Actual Controllers and their adhering Corporations (SZJG Zi[2010]No.
61) issued by Shenzhen Securities Regulatory Bureau, the Company earnestly carried
on self-examination activity for particulars on horizontal operation between the
Company and controlling shareholders, actual controllers and their adhering
corporations, combed out particulars on horizontal operation between the Company
and substantial shareholders thoroughly and systematically, and finally forward report
to Shenzhen CSRC Bureau.
Through self-examination, there was neither horizontal operation nor horizontal
competence between the Company and its holding shareholders or its actual
controllers. The Company and Shenzhen S.E.Z. Real Estate & Properties (Group) Co.,
25
Ltd., subordinated corporation of the Company’s controlling shareholder Shenzhen
Investment Holding Co., Ltd. mainly engaged in “real estate development and
operation”, which was horizontal operation. While according to regulations stipulated
in Principles for Listing Shares in Shenzhen Stock Exchange, those companies
subordinated to the same state-owned assets organization would not have related
relationship, then the relationship between the Company and Shenzhen S.E.Z. Real
Estate & Properties (Group) Co., Ltd. wasn’t horizontal operation between its
controlling shareholders, actual controllers or its subordinated corporations.
The Company shall firmly in accordance with requirements of listed companies on
regulating governance, regulating corporate governance, promote more standard and
efficient operation.
III. Duty performance of Directors, Chairman of the Board and Independent
Directors
(I) Duty performance of directors
In the reporting period, all the directors of the Company performed their
responsibilities honestly, credibly, diligently and independently, actively attended
relevant meetings, carefully reviewed resolutions of the Board Meeting, made
decision-making deliberately, expressed clear opinion to matters discussed, so as to
stick to interest of the Company and shareholders and protect legitimated interest of
minority shareholders.
Times of
Times of Times of
meetings Times of Objection
Name Title attendance in commission
should be absence proposed
person attendance
attended
Chen Chairman of
7 7 0 0 0
Yugang the Board
Directo
Wei Zhi 7 7 0 0 0
r
Liu Directo
7 7 0 0 0
Guangxin r
Directo
Guo Liwei 7 7 0 0 0
r
Directo
Wen Li 7 7 0 0 0
r
Directo
Wang Peng 5 4 1 0 0
r
Indepe
Zha
ndent 7 7 0 0 0
Zhenxiang
Director
Indepe
Dong
ndent 7 7 0 0 0
Zhiguang
Director
Li Xiaofan Indepe 7 7 0 0 0
26
ndent
Director
(II) Duty performance of Chairman of the Board
Chairman of the Board of the Company actively advanced formulation and perfection
of all internal systems, strengthened construction of the Board, convening and
presiding the Board Meetings and Shareholders’ General Meeting in line with laws,
which ensured all previous Board Meetings were held in line with laws and supervise
execution of resolutions; meanwhile, Chairman of the Board created good condition
for duty performance, adequately ensured knowing right of all directors; reported
operation of the Board of Directors to all directors. Also, Board Chairman supervised
high- and middle-level executives to seriously study relevant laws and statutes and
improve consciousness that duties performance was in line with laws.
(III) Duty performance of Independent Directors
With attitude of credibility and diligence to the Company and all shareholders,
independent directors was diligent and responsible, reviewed all resolutions, and in
line with their professional knowledge and capability, made independent, objective
and fair judgment away from influence from the Company and principal shareholders
of the Company. Also, independent directors expressed independent, objective and
fair opinion on relevant events, which made practical efforts to safeguard interests of
the Company and minority shareholders.
Within one year, Independent Directors issued independent opinions to the following
issues:
①Issued independent opinions on continuously engaging BDO Wuhan Zhonghuan
Certified Public Accountants Ltd. to responsible for financial accounting report 2010
of the Company;
② Issued independent opinions on self-appraisal report on internal control 2009 of the
Company;
③ Issued independent opinions on external guaranty 2009 of the Company;
④ Issued independent opinions on Fulfilling Commitment on Share Merger Reform
by Completing Assets Replacement and Significant Related Transactions (Drafted) of
the Company;
⑤ Issued independent opinions on the Company engaging Ms. Wang Huimin as
Deputy General Manager of the Company;
⑥ Issued independent opinions on Fulfilling Commitment on Share Merger Reform
by Completing Assets Replacement and Significant Related Transactions (Scheme) of
the Company;
⑦ Issued independent opinions on the Company engaging Mr. Gong Sixin as CFO of
27
the Company.
IV. The Company’s five separations from the controlling shareholder
The Company was independent from the controlling shareholder in business,
personnel, assets, organization and finance to realize that independent personnel,
independent finance, complete assets, independent organization and independent
business.
(I) In aspect of business: The Company was independent from the controlling
shareholder with independent and complete business and independent operation
capability. There was no business which was same or competitive with the controlling
shareholder.
(II) In aspect of personnel: The Company was complete independent from the
controlling shareholder in terms of labor and personnel, management on remuneration.
All Senior Executives drew the remuneration from the Company, and none held a post
concurrently in shareholders’ company. Personnel of the Company are independent,
all ones signed labor contract with the Company. The Company was independent
from the shareholders or other related parties in personnel management, social
security, salary etc.
(III) In aspect of asset: The Company’s assets were complete and independent, the
property relationship was clear. There was no capital occupation by controlling
shareholder, and assets of the Company was completely independent from controlling
shareholder.
(IV) In aspect of organization: The Company’s organization was independent, and the
Company implemented rules and regulations as well as responsibilities for all
departments, formed independent responsibilities and rights, scientific and rational
internal control system. Independence of the Company on operation and management
is free from impact from controlling shareholders and other subordinated units. There
were no controlling shareholders intervene organization of the Company.
(V) In aspect of finance: The Company’s finance was independent with independent
finance department. The Company established the independent finance settling system
and financial management system, had its own finance account and paid the tax in line
with laws, run finance decision-making independently.
The controlling shareholder of the Company performed normatively with no conduct
that intervened with the operation decision-making and operation activities directly or
indirectly over the shareholders’ general meeting, however, the controlling
shareholder could influence on the significant decision-making through the shares
holding.
V. Key control activities
1. Proportion of shares held by the controlling subsidiaries of the Company
No. Full name of the company Proportion of
28
shares held
1 Shenzhen Huangcheng Real Estate Co., Ltd. 100%
Shenzhen Property and Real Estate Development
2 100%
Co., Ltd.
3 Shenzhen ITC Vehicles Industry Co., Ltd. 100%
Xuzhou Dapeng Real Estate Development Co.,
4 100%
Ltd.
Dongguan ITC Changsheng Real Estate
5 100%
Development Co., Ltd.
6 Shenzhen ITC Property Management Co., Ltd. 100%
7 Hainan Xinda Development Co., Ltd. 100%
Shenzhen Property Construction Supervision Co.,
8 100%
Ltd.
9 Shenzhen ITC Food Co., Ltd. 100%
10 Shenzhen Real Estate Exchange 100%
11 Shum Yip Properties Development Co., Ltd. 100%
12 Shenzhen International Trade Plaza 100%
Zhanjiang Shenzhen Real Estate Development
13 100%
Co., Ltd.
Note: Shenzhen Real Estate Exchange was managed by Shenzhen ITC Property
Management Co., Ltd. in trust.
(2) Internal control on controlling subsidiaries
The Company brought finance, significant investment, personnel and information
disclosure into unified management system and formulated unified management rules
by appoint senior executives to concurrently hold the post of Chairman of the Board
of Directors and control joint stock company through appointed directors and
supervisors; if significant event happen to controlling subsidy that in accordance with
standards stipulated in Rules on Managing Information Disclosure, it shall be
recorded as corporate actions, the Board of the Company shall account for disclosure
and public notice for the event in accordance with regulations; controlling subsidies
shall carry on financial accounting system of the Company in accord, and draw up
individual accounting measurement system and internal control system accordingly;
person in charge of finance in controlling subsidies shall be assigned by the Company
and engaged by the controlling subsidy; the Company carried on internal audit system
to controlling subsidies, conducted various audit and examination in controlling
subsidies regularly and irregularly.
In accordance with regulations of Guidelines on Internal Control issued by Shenzhen
Stock Exchange, internal control to subsidies conducted by the Company was serious,
adequate, and valid that there was no violation of Guidelines on Internal Control
occurred.
(3) Internal control on related transactions
The Company put much importance on internal management of related transactions.
In order to regulate related transactions of the Company, ensure the fairness of related
29
transactions, the Company implemented and carried on Method for Managing Related
Transactions, thoroughly defined the definition principle of related transactions,
involving events of related transactions, deliberation and implementation of related
transactions, method on avoiding voting of related parties etc. In the reporting period,
all related transactions occurred in the Company were strictly implemented in
accordance with regulations stipulated in Articles of Association, Method for
Managing Related Transactions, adopted principle of honest, credit, equality,
voluntary, fairness, public, justice and performed information disclosure responsibility
for related transactions. Related directors and shareholders withdrew from the voting
when the Company implemented procedure of decision-making of the Board Meeting
and the Shareholders’ General Meeting, independent directors performed their
responsibilities in processing of decision-making of related transactions and
information disclosure. Decision-making procedure and information disclosure were
in line with requirements of Rules for Listing Shares in Shenzhen Stock Exchange and
Guidelines on Internal Control of Listed Companies.
(4) The Company confirmed examination and approval authority, examination and
approval procedures of the Shareholders’ General Meeting and the Board of Directors
on external guarantees. Meanwhile, the Company formulated relating internal control
system for external guarantees, which regulated in approval of authority, estimation
and control on guarantees, control on implementation of guarantees and information
disclosure of guarantees. Internal control on external guarantee was in line with
principle of legitimate, fair, willing and mutual benefit, and strictly control risk from
guarantees.
(5) Internal control on use of raised proceeds
The Company clearly defined use, examination and approval procedure of raised
proceeds so as to ensure earmarking of funds.
In the reporting period, the Company neither conducted proceeds-raising in stock
market, nor had former raised proceeds reserving to this reporting period.
(6) Internal control on significant investment
Examination and approval authority and procedures on significant investment were
clearly regulated in Articles of Association, Rules of Procedure for the Board of
Directors. In the reporting period, the Company carried out strict procedures such as
review in earlier stage, research on feasibility, internal evaluation and
decision-making of investment, and all decision-making of significant investment was
in compliant with examination and approval procedure by the Board Meetings or the
Shareholders’ General Meeting in accordance with relevant statutes.
(7) Internal control on bulk purchase business
The Company implemented and strictly carried on Administrative Rules for Biding
Business, of which clearly defined that bulk purchase business shall public operate in
accordance with operation procedure and control method on biding business, clearly
30
realize responsibility authority and division of work on biding body, supervision
department and departments participated in decision-making, earnestly ensure
transparency on business procedure, properly and efficiently control purchase cost.
(8) Internal control on information disclosure
The Company implemented Administrative Rules for Information Disclosure Affairs,
Administrative Measures for Extend and Reception, Specific System on Avoiding
Capital Occupation on Controlling Shareholders and Related Parties and
Administrative Rules on Senior Executives Holding, Buying and Selling Stock of the
Company, regulated overall control and general procedure control on information
disclosure, defined regulations for information disclosure agency, personnel,
documents, affairs management, disclosure procedure, information report etc.
Establishment, publishing and effective implementation of system exerted important
impact on behaviors such as enforcing information quality, improving information
secrecy, restricting act of information insider, supervisors and senior executives
buying and selling stock of the Company etc.
The Company reinforced communication platform for investors on various channels,
strived to promote standardization of information disclosure of the Company,
improved information disclosure quality, protected legal equity of investors, so as to
ensured truthfulness, accuracy, complete, timeliness and fair on work of information
disclosure.
Information disclosure of the Company strictly followed relevant laws and statutes,
Rules for Listing Shares in Shenzhen Stock Exchange and Rules for Information
Disclosure Affairs of the Company, and there was no information disclosure violating
regulations.
VI. Problems existing and rectification plan
(I) Problems existing in key control activities in the internal control of the Company
1. Providing undisclosed information to the first principal shareholder and the actual
controller
(1) In the reporting period, the Company, in accordance with the notice from financial
budget department of Shenzhen Investment Holdings Co., Ltd., regularly submitted
the financial express of the preceding month to Shenzhen Investment Holdings Co.,
Ltd. (the controlling shareholder, the actual controller of the Company) during the
first ten days of every month through State-owned Assets Management Information
System of Shenzhen Municipal SASAC.
(2) At the end of the reporting period, in accordance with Notice on Preparation for
Overall Budget Administration Work for Corporations in 2010, the Company
submitted annual budget of 2011 to controlling shareholder of the Company, actual
controller Shenzhen Investment Holdings Co., Ltd.
In accordance with regulations of Notice on Reinforcing Supervision on Listed
Companies Providing Private Information to Substantial Shareholders and Supporting
Notice on Reinforcing Supervision on Act of Listed Companies Providing Private
31
Information to Substantial Shareholders and Other Irregular Act issued by Shenzhen
Securities Regulatory Bureau, the Company has already reported private information
and list of insiders to Shenzhen Securities Regulatory Bureau. In the reporting period,
there was no insiders use private information buying or selling stock of the Company
violated to regulations.
The above acts are common behavior of state controlling listed companies that they
are estimated to be unchanged within short-term. The Company shall continue to
submit and report particulars on private information insiders, preventing insiders from
revealing and use private information to buy and sell stock of the Company violated
to the regulations.
2. In view of unceasing amendment and perfection of internal control system along
with change in inside and outside environment, rapid growth of businesses and
advancement of management requirements, the Company still need to enhance how to
grasp keystone of the internal control in changing environment, so as to advance
innovation of management and system and promote persistence and effectiveness of
internal control.
(II) To further strengthen and perfect internal control plan
1. Deep improving the implementation of Basic Standards for Enterprise Internal
Control. The Company shall carry on and realize Basic Standards for Enterprise
Internal Control and relevant supporting guidelines, advance the construction process
of enterprise internal control system, improve administration standards on corporate
operation and standards on risk prevention, and finally promote the sustainable
development of the corporate. Now the Company has formed leading team on
construction of enterprise internal control system, of which divided an office and
equipped with corresponding officers. Meanwhile, the Company planed to engage
professional consultant agency to lend guidance for the Company to undertake check
for internal control operation system in accordance with Basic Standards for
Enterprise Internal Control. Up to the recent, this work is still in progress;
2. Further strengthen sense of operation according to laws, enhance force of law of
internal control, reinforce training and study to directors, supervisors and senior
executives of the Company, set up consciousness of risk prevention, and cultivate
good spirit of enterprise and internal control culture;
3. Further intensify executive force of internal control system and audit work, give
full play to supervision function of audit committee for the effective implementation
of all systems;
4. Further perfect corporate governance, enhance level of corporate governance
standardization, strengthen construction and operation of each special committee
under the Board of Directors, better play the role of each special committee within the
professional field, so as to further upgrade the Company’s scientific decision-making
32
capacity and risk prevention capacity.
VII. Establishment and implementation of performance appraisement and
incentive mechanisms for senior executives
In the reporting period, the annual operating target plan 2010 was went forth to the
management team by the Board of Directors, of which the Company adopted
appraisal method by the score combination of operation index, category index and
administrative goal. At the end of the fiscal year, the Board of Directors examined the
final score. For senior executives of the Company, the Company adopted annual
salary system in accordance with Management Measure for Annual Salary System of
Directors, Supervisors and Senior Executives, which shall be implemented after the
Board of Directors completing fiscal examination.
VIII. Opinions on self-evaluation of internal control of the Company
In accordance with public document of [2010] No. 37 issued by CSRC and laws and
regulations of Guidelines on Internal Control of Listed Companies, Basic Standards
for Enterprise Internal Control, Rules for Internal Accounting Control issued by
Shenzhen Stock Exchange as well as actual conditions of the Company, the Company
combed, completed and supplemented business procedure and standardization
management of the Company. In the reporting period, the Company carried out
Specific Activity on Normalizing Financial Accounting Basis, Self-examination
Activity on Particulars on the Establishment and Accomplishment of Permanent
Mechanism on Preventing Capital Occupation by Substantial Shareholders and
Related Parties, Self-examination Activities on Horizontal Operation of The Company
and Substantial Shareholders, continuing established, completed and perfected
internal control system, promoted governance and standard operation level of the
Company, ensured effective implementation of internal control management.
The Company has established comparatively completed and relatively proper internal
control system that there aren’t major faults in completeness, regularity, efficiency etc.
The existing internal control system is mainly in accordance with requirements of
relevant state regulations and securities supervisory departments, in line with the
demand of actual production and operation conditions of the Company. Internal
control of the Company is of completeness, rationality and validity.
(I) Self-appraisal of the Board of Directors on internal control
Corporate governance structure of the Company is complete and operation with norm.
Internal control system of the Company is comparatively complete and rational,
totally in accordance with requirements of CSRC, Shenzhen Stock Exchange on
internal control of listed companies. Design and operation of internal control of the
Company properly ensured rationality of operation management of the Company,
guarded safety of assets of the Company; able to ensure faithful and complete draft of
accounting statement; able to disclosure information faithfully, accurately, timely,
fairly and in line with requirements of laws and regulations as well as supervision
departments. The Company shall further perfect construction of internal control
system, and make it always in line with requirements of laws and regulations as well
33
as supervision departments.
Self-appraisal Report of Internal Control of the Company was published on
http://www.cninfo.com.cn dated 16 Apr. 2011.
(II) Opinions on self-evaluation on internal control of the Company expressed by the
Independent Directors
After independent director of the Company seriously verified Report on Self-appraisal
of Internal Control of Shenzhen Properties & Resources Development (Group) Ltd for
the year 2010, they considered that the Company has established complete and
rigorous internal control system, which was in line with requirements of relevant laws
and statutes of the state and was legitimate, reasonable and effective. Activities such
as corporate governance, production and operation, information disclosure, substantial
event etc. of the Company were strictly in accordance with regulations of all internal
control system of the Company, insider and outsider risk that may exist in all process
of operation activities has been properly controlled that now they were in line with
requirements of relevant laws and regulations of the state. The existing internal
control of the Company is of legality, rationality and validity. Report on self-appraisal
of internal control 2010 of the Company faithfully and objectively reflected actuality
of corporate governance and internal control. The Company shall further strengthen
internal control of the Company, continue normative operation, endlessly amend and
improve each internal control system in time according business development of the
Company and the provisions of relevant laws and regulations, so as to further improve
and perfect internal control system;
(III) Opinions on self-evaluation on internal control of the Company expressed by the
Supervisory Committee
After conducted the comprehension, test and appraisal of rationality of design and
validity of implementation on internal control, the Supervisory Committee of the
Company considered that: Report on Self-appraisal of Internal Control of Shenzhen
Properties & Resources Development (Group) Ltd for the year 2010 was truthfully
and objectively reflected the actuality of establish and perfect of internal control
system as well as its efficient accomplishment that there isn’t any misleading
information to investors on all major issues. Meanwhile, the Supervisory Committee
was of the opinion that, in accordance with Basic Standards for Enterprise Internal
Control, Guidelines on Internal Control of Listed Companies, other relevant laws and
regulations, as well as the Company’s operation characteristics and its circumstances,
the Company has set up comparatively complete and verified internal control system;
the Supervisory Committee and internal audit departments all perform their
supervision independently and objectively, earnestly ensure implementation of
keystone activities of internal control of the Company and fully and valid of
supervision.
34
Section VII. Brief Introduction to the Shareholders’ General Meeting
Up till the publication date, the Company held 2 shareholders’ general meetings,
which are, the Annual Shareholders’ General Meeting 2009 and the 1st Special
Shareholders’ General Meeting 2010. Procedure of convening, holding and voting
was in line with the requirement of Company Law, Articles of Association and
relevant laws and regulations.
I. The Annual Shareholders’ General Meeting 2009
The Annual Shareholders’ General Meeting 2009 was held at the conference room on
39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 18 Mar. 2010. Following proposals were reviewed and approved at the
meeting:
（1）Work Report 2009 of the Board of Directors;
（2）Work Report 2009 of the Supervisory Committee;
（3）Financial Statements Report 2009;
（4）Financial Budget Report 2010;
（5）Annual Report 2009;
（6）Preplan for Profit Distribution of Y2009
（7）Proposal on Applying Entrusted Loans from Controlling Shareholders;
（8）Proposal on Reengaging the CPAs Firm
Resolutions made by the Annual Shareholders’ General Meeting 2009 were published
in Securities Times, Ta Kung Pao and website http://www.cninfo.com.cn on 19 Mar.
2010.
II. The 1st Special Shareholders’ General Meeting 2010
The 1st Special Shareholders’ General Meeting 2010 was held at the conference room
on 39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 13 Oct. 2010. The Proposal on Executing Commitments Concerning
Shareholding Reform and Implementing Asset Replacement (Significant Related
Transaction) was reviewed and approved at the meeting.
Resolutions of the 1st Special Shareholders’ General Meeting 2010 were published in
Securities Times, Ta Kung Pao and website http://www.cninfo.com.cn on 14 Oct.
2010.
35
Section VIII. Report of Board of Directors
I. Review of the Company’s operation in the reporting period
1. Analysis of market environment
In 2010, although the global economy kept progressing, a sustainable recovery still called
for long-term efforts. Inflation and deflation coexisted globally, bringing different currency
policies in different countries. Facing the complicated and changeable environment and
challenges in home and abroad, China propelled the transformation of economy
development pattern and the adjustment of economy structure. In order to reinforce
liquidity management, restrain rising prices, improve macroeconomic regulatory, and
promote structure adjustment, the Central Bank hiked the interest rate for the first time in
Oct. 2010 since 2008, when it dealt with the financial crisis. It is worth noting that although
CPI data remained high and the inflation pressure was great, which restrained consumption
need and raised investment cost to some extent, the State has taken regulatory and control
measures.
Under the pressure from the State’s policy of sustainable regulation, enterprises got harder
to enter into the real estate industry, competitions intensified, cyclical adjustment of the
industry became more frequent, and risks of fluctuation increased. Short-term policy
effects were to influence the market confidence. In particular, policies with strong
pertinence such as interest-raising, purchase restriction decree, higher down payment and
loan restriction, might result in industry fluctuations like wait-and-see mood and price
adjustment in real estate market in a certain period. However, long-term existing factors,
such as accumulated rigid demand, sustained urbanization, expected appreciation of
Renminbi, scarcity of urban land to be developed, as well as the gradually increasing
removal cost, would support middle and long-term development of real estates.
(1) Regulation has become the main factor currently influencing the short-term trend in the
market
① From the “11 national provisions” and “10 new national provisions” in Jan. 2010 to “8
new national provisions” in Jan. 2011, regulatory policies such as reducing fund supply for
individual housing loan, directionally hiking interest of housing loans, and strictly
executing the purchase restriction decree were put into all-around and concentrated
promotion successively. All information about housing property tax was confirmed in a
short term. A series of currency credit policies have also restrained purchase prices of
commodity houses and increased investment cost. Polarization on that part would result in
lower turnover and prices of commodity houses in some regions.
② Considering the current condition where no substantial change occurred to the
unbalanced relation between supply and demand in the market of domestic residential
houses, the State started by increasing effective supply, accelerated and expanded the
construction scale of indemnificatory housing, which would offset some rigid demand in
future, and cause certain pressure and impact on house prices of commodity houses around
indemnificatory houses.
③ The State strengthened comprehensive regulation over development funds of real estate
enterprises, restricted the scale of loans for real estate development, restrained usage of
presale funds, and controlled refinance and capital operation of real estate enterprises. As
the real estate industry is a capital-intensive industry, it is much harder for enterprises to
finance and the cost thereof is raised in current policy environment.
(2) Comprehension on major changes in market environment
① Market status of secondary cities, third-level cities, and cities under the third level rose
Being comprehensively influenced by resource restriction, fierce market competitions, and
36
regulatory policies in primary cities, the trend for real estate investment to transfer into
secondary cities, third-level cities, and cities under the third level has been more and more
evident. Currently, pressure of market competitions in secondary cities, third-level cities,
and cities under the third level is lower than that in primary cities, and the market growth
space is vast, as a result, the Company will grab the opportunity to positively arrange its
layout of targeted regions in non-primary cities.
② Development strategy of real estate enterprises polarized
Due to the gradually matured development of real estate industry and the fierce market
competition, more and more enterprises got rid of single development strategy of
residential housing and focused on untraditional housing businesses such as commercial
estate, tourism estate, and finance of real estates. The Company believes that it is the result
of mature industrial development and the important opportunity for a new round of
industrial development in future. The Company will still devote itself to the development
of middle and high class residential housing, build highly qualified houses, and set up a
reputed brand.
③ New changes in land market
Land resources became scarcer day bay day. The State reinforced the control over the land
supply for increasing commodity housing. Transformation of old cities and renewal of
cities have become one of the important methods for enterprises to acquire lands. Land
bidding, auction, and listing also underwent new changes. New ways of land transfer such
as “restricting house price and competing for land price” and “building auxiliary
indemnificatory houses on lands where commodity houses locate” came up. The Company
shall deeply research on means of land transfer and the changed thoughts thereof,
strengthen cost control and fund raising force, positively take part in the industry, and
choose to expand land reserve in proper time.
(3) Comprehension on development prospect of future industry
Under the current regulation which has lasted more than 1 year, the fluctuation in real
estate industry has been large. However, the Company believes that the substantial causes
supporting healthy, steady, and fast development of the industry haven’t changed. Basis for
long-term development of real estate industry still exists, and the trend for progressing still
keeps unchanged. As controlled by lots of factors such as control, policies and the system,
the fast developed pace of the Company in recent years will be pressured. The development
of real estate industry and enterprises urgently needs an environment with healthy, steady,
and positive policies, economy, and operation.
2. Overall performance of the Company
In the reporting period, the Company achieved an operation income of RMB
993,175,350.38, up by 17.48% over last year; a total profit of RMB 207,159,741.70,
an increase of 62.74% from last year; and a net profit of RMB 174,998,534.79,
increasing by 80.53% compared to last year. Operating income increased mainly
because income from real estates increased by 18.75% than last year. Total profit and
net profit increased mainly because financial expenses decreased by about RMB 18
million and impairment of assets was offset by value recovery of assets.
3. Operation of main businesses
(1) Operation and scope of main businesses
The Company specialized in the real estate development as its main business, with
taxi transportation service, catering business, etc. as its sideline. In 2010, the revenue
generated from the main business reached RMB 966,145,989.88, with the gross profit
37
from the main business amounting to RMB 297,303,228.27. And the composition of
the revenue and gross profit generated from the main business was specified as
follows:
Classified according to industries:
In terms of the business of real estate development, the income generated stood at
RMB 690,303,822.33, with a gross profit of RMB 243,764,866.79;
In terms of the business of property management and leasing, the income generated
stood at RMB 190,707,764.42, with a gross profit of RMB 17,380,112.49;
In terms of the business of taxi transportation service, the income generated stood at
RMB 50,748,337.82, with a gross profit of RMB 23,869,326.96;
In terms of the catering business, the income generated stood at RMB 20,146,558.50,
with a gross profit of RMB 1,942,039.55;
In terms of other businesses, the income generated stood at RMB 14,239,506.81, with
a gross profit of RMB 10,346,882.48.
Classified according to regions:
In terms of the business in Shenzhen, the income generated stood at RMB
884,189,065.90;
In terms of the business in other areas, the income generated stood at RMB
81,956,923.98.
As could be seen from the above classification according to industries and regions, the
Company’s business income mainly came from Shenzhen and the real estate
development business contributed a large proportion of the business income.
(2) Composition of the Company’s main business
Main businesses classified according to industries and products:
Unit: RMB’000
Business income Business cost Gross profit rate
Industry Change over last Change over last Profit rate Change over last
Amount Amount
year (%) year (%) (%) year (%)
Real estate
690,304 18.75 446,539 90.57 35.31 -24.38
development
Property
management and 190.708 21.76 173,328 15.36 9.11 5.04
leasing
Taxi passenger
transportation 50,748 6.72 26,879 17.34 47.03 -4.79
service
Catering service 20,147 19.31 18,204 26.49 9.64 -5.13
Other businesses 14,240 -22.95 3,893 -18.49 72.66 -1.50
Explanation on the strengthened profitability of the Company in the reporting period
compared with that of last year:
In 2010, in terms of its main businesses, the Company achieved an income of RMB
966,150,000, of which the year-on-year increase was mainly due to the increase of
income carried forward in the business of real estate development; the Company
achieved a gross profit of RMB 297,300,000, of which the year-on-year decrease was
mainly because the gross margin of real estate projects carried forward in this year
decreased by 24.38% over last year. Nevertheless, because of large reduction in land
VAT, profit in real estate industry didn’t vary much.
(3) Suppliers and customers
In its business of real estate development, the Company transferred, by means of bid
invitation, its real estate projects to the company which won the bid. And the building
38
contractor was responsible for the purchase of construction materials. The Company
made no bulk purchases this year; The Company’s commercial houses were sold to
individual customers. And the sales amount to the top five customers took up 1.98%
of the Company’s total sales.
4. Changes of the Company’s asset composition in the reporting period compared to
that of last year, as well as the main reasons for changes
(1) Changes of asset composition compared to that of last year
Increase or Asset
31 Dec. 2010 31 Dec. 2009
decrease of increase or
Item the decrease
Proportion Proportion proportion in
Amount Amount over last
in total in total total assets
(RMB, Yuan) (RMB, Yuan) year (%)
assets (%) assets (%) (%)
Monetary
534,418,695.36 18.34 830,055,588.25 29.28 -10.94 -35.62
capital
Prepayment 49,360,431.87 1.69 46,862,874.11 1.65 0.04 5.33
Other
37,787,880.10 1.30 54,030,054.90 1.91 -0.61 -30.06
receivables
Inventory 1,576,183,305.38 54.10 1,255,676,772.24 44.30 9.80 25.52
Investment real
295,584,704.09 10.15 257,105,965.94 9.07 1.08 14.97
estates
Intangible assets 106,563,665.92 3.66 112,893,677.12 3.98 -0.33 -5.61
Deferred income
83,209,649.31 2.86 51,695,501.02 1.82 1.03 60.96
tax assets
Short-term
10,000,000.00 0.34 200,000,000.00 7.06 -6.71 -95.00
borrowings
Payables 105,465,038.93 3.62 112,470,139.39 3.97 -0.35 -6.23
Accounts
received in 878,660,737.46 30.16 745,527,226.22 26.30 3.86 17.86
advance
Non-current
liabilities due 250,960,000.00 8.61 200,000,000.00 7.06 1.56% 25.48
within one year
Long-term
212,000,000.00 7.28 263,480,000.00 9.30 -2.02 -19.54
borrowings
Estimated
0.00 0.00 69,284,708.83 2.44 -2.44 -100.00
liabilities
Total assets 2,913,281,353.84 2,834,417,954.60 2.78
1) The monetary capital decreased by 35.62% over last year, mainly because the
Company increased its land reserve in the reporting period;
2) The prepayment increased by 5.33% over last year, mainly because of the increase
of taxes which the Company pre-paid for real estate projects according to the law of
tax in the reporting period;
3) Other receivables decreased by 30.06% over last year, mainly because the
Company recovered dividends of Shenzhen Guomao Tian’an Property Co., Ltd. and
recovered accounts involved in the case concerning Duokuai Elevator Manufacturing
Co., Ltd in the reporting period;
4) The inventory registered a rise of 25.52% from that of last year, mainly because the
Company paid for the normal progress of the projects under construction and added
land in the reporting period;
5) The investment real estates registered a year-on-year increase of 14.97%, mainly
because the inventories and fixed assets used for leasing were transferred into the item
39
of investment real estates in the reporting period;
6) The intangible assets decreased by 5.61% over last year, mainly because the
intangible assets were amortized;
7) The deferred income tax assets registered a year-on-year rise of 60.96%, mainly
because the estimated profit calculated from the estimated presales revenue of real
estates of the Company increased at the end of the reporting period and the increase of
deferred tax assets was thus recognized;
8) The short-term borrowings were down by 95% compared with last year, mainly
because the Company returned some borrowings at the maturity dates in the reporting
period;
9) The payables were down by 6.23% compared with last year, mainly because the
Company paid construction fee;
10) The accounts received in advance were up by 17.86% over last year, mainly
because the Company received more income from selling buildings of Shengang No.1
Project in the reporting period;
11) The non-current liabilities due within one year registered a year-on-year increase
of 25.48%, mainly because the loans that became due soon were transferred from the
item of long-term borrowings to this item in the reporting period;
12) The long-term borrowings registered a year-on-year decrease of 19.54%, mainly
because the Company accounted items of non-current liabilities returned at the
maturity dates and non-current liabilities transferred to liabilities due within 1 year;
13) The estimated liabilities were down by 100.00% from last year, mainly because
the case concerning Haiyi Industry Co., Ltd. and the Company was settled, and items
inspected by CSRC were finished in the reporting period. For details, please refer to
Note (VII) 2 (1), (VII) 3;
14) The total assets increased by 2.78% over last year, mainly because the Company
received more income from selling buildings in the reporting period.
(2) Changes in operating expenses, management expenses, financial expanses and
income tax expenses over last year, as well as main reasons for the changes
Year-on-year
Jan. 2009-Dec. 2010 (RMB, Jan. 2008-Dec. 2009 (RMB,
Items Increase / decrease
Yuan) Yuan)
（±%）
Operating expenses 14,956,309.36 21,209,571.81 -29.48
Management
92,642,838.43 102,009,696.27 -9.18
expenses
Financial expenses -2,813,250.22 16,054,025.03 -117.52
Income tax
32,161,206.91 30,363,475.79 5.92
expenses
Notes:
① The decrease of the operating expenses was mainly due to the decrease of expenses
paid by the Company to sales agents in the reporting period;
② The decrease of the management expenses was mainly due to that the Company
withdrew dismissal welfares at the same period of last year;
③ The decrease of financial expenses was mainly due to that the Company
strengthened its capital management and optimized its loan structure. Meanwhile, the
scale-downsizing of current capital loans and the decrease of interests paid also
helped;
④ The increase of income tax expenses was mainly due to the Company’s increased
total profit in the reporting period.
5. Items measured by fair value, as well as the held foreign-currency financial assets
40
and financial liabilities
The Company’s financial accounting was conducted on the accrued basis. Except that
the transaction financial assets and the available-for-sale financial assets were
measured by fair value, other assets were usually measured on the basis of the
historical costs. Where the replacement cost, net realizable, capitalized value or fair
value was adopted as the measurement basis, it was made sure that the amount of the
determined accounting elements could be obtained and reliably measured.
(1) Items measured by fair value
Unit: RMB’0000
Gains or
Accumulative
losses due to Impairment
Amount at changes of fair Amount at
Items fair value withdrawn in
period-begin value recorded period-end
changes in this period
in the equity
this period
Financial assets
Of which: 1. Financial
assets measured by fair
value and the changes 23.22 3.99 27.21
were included in the
current gains or losses
Of which: derivative
financial assets
2. Available-for-sale
financial assets
Subtotal of financial
23.22 3.99 27.21
assets
Financial liabilities
Investment real estate
Productive biological
assets
Others
Total 23.22 3.99 27.21
Notes: The financial assets measured by fair value and of which the changes were
included in the current gains or losses referred to the tradable shares of ST Shengrun
A purchased in the secondary market. And the aforesaid financial assets were
measured at the closing price of the stock exchange as the fair value. As ST Shengrun
A was under bankruptcy and reorganization, stocks of the company have been
delisted since 18 May 2010.
(2) Foreign-currency financial assets and financial liabilities held
In the reporting period, the Company didn’t hold any foreign-currency financial asset
or financial liability.
6. Changes in main items of cash flow statement in the reporting period over last year,
as well as the reasons for changes
Increase or
Items 2010 (RMB, Yuan) 2009 (RMB, Yuan)
decrease (%)
Ⅰ. Cash flow arising from operating
activities
Sub-total of cash inflows 1,191,281,389.97 1,570,201,197.23 -24.13
Sub-total of cash outflows 1,293,059,860.61 810,550,570.54 59.53
Net cash flows arising from operating
-101,778,470.64 759,650,626.69 -113.40
activities
Ⅱ. Cash flow arising from investing
activities
Sub-total of cash inflows 12,057,679.84 11,462,203.20 5.20
Sub-total of cash outflows 19,488,536.34 2,828,808.73 588.93
41
Net cash flows arising from investing
-7,430,856.50 8,633,394.47 -186.07
activities
Ⅲ. Cash flows arising flow financing
activities
Sub-total of cash inflows 260,687,344.20 569,000,000.00 -54.19
Sub-total of cash outflows 446,954,370.52 778,929,456.34 -42.62
Net cash flows arising from financing
-186,267,026.32 -209,929,456.34 -11.27
activities
Note:
① The net cash flows arising from operating activities decreased from that of last
year because: A. In line with its strategic development target, the Company increased
its land reserve and paid RMB 410 million for land purchase in the reporting period;
B. The Company didn’t add new sales projects in the reporting period and only sold
opening projects of previous years, which resulted in the decrease of income from
selling buildings as compared with the same period of last year.
② The net cash flows arising from investing activities decreased compared to last
year, mainly because taxies updated to maturity of subsidiaries increased in the
reporting period.
③ The net cash flows (negative value, meaning net outflows) arising from financing
activities decreased over last year, mainly because the Company strengthened the
management of the group’s capital, reduced the loan scale according to the actual
capital need of the Company, and optimized its bank loan structure in the year 2010.
The year-on-year decrease of interests paid by the Company in the reporting period
also helped.
7. Operation and performance analysis of the Company’s main subsidiaries and joint
stock companies
Unit: RMB’000
Total assets Net assets Operation profit Net profit
Increase/ Increase/ Increase/ Increase/
Company Main Registered
decrease decrease decrease decrease
name products capital Amount Amount Amount Amount
over last over last over last over last
year (%) year (%) year (%) year (%)
Development,
construction,
operation and
Shenzhen management
Huangcheng supporting
30,000 1,803,056 10.30 214,523 18.72 27,347 -85.29 33,828 -78.05
Real Estate commercial
Co., Ltd. service
facilities at
Huangcheng
Port
Shenzhen
Properties &
Resources Development
30,950 623,812 -31.32 56,604 201.33 142,770 1474.51 112,462 1564.34
Real Estates of real estates
Development
Co., Ltd.
Shenzhen Automobile
ITC Vehicles transportation
Services of passengers 29,850 30,9160 36.89 56,679 17.59 10,780 6.60 8,477 4.58
Company and leasing of
automobiles
8. Changes of the main sales and technical personnel, as well as other information
relevant to the Company’s operation
In the reporting period, there existed no major changes concerning the sales and
42
technical personnel of the Company.
9. Special-purpose entities controlled by the Company
There existed no special-purpose entities controlled by the Company.
Ⅱ. Prospect of the future development of the Company
1. Risks faced by the Company, as well as the countermeasures
(1) Risks concerning policies
Macro control over real estates mainly concerning currency credit, tax and purchase
restriction will be normalized. It is expected that, in the coming year, the central and
local government and financial institutions will execute regulatory measures such as
tightening credit scale and executing the purchase restriction decree, which, to some
extent, will result in much pressure on aspects of turnover of commodity housing,
newly developed housing, as well as falling sales prices.
The Company highly concentrates, analyzes, and researches on policy trends and
influences thereof. Currently, projects available for sale of the Company all locate in
core regions in cities, surrounding by no indemnificatory housing supply and few
commodity housing inventories, which makes the projects barely influenced by
policies of regulation and control, customer groups, as well as market supply and
competitions. In future, the Company will rationally assure the development schedule
of constructions in progress, strengthen marketing and promotion, stick to creating
development idea of “quality property and wonderful life”, strictly assure construction
quality, improve property service level, and further raise the added value of products.
(2) Risks concerning finance
Along with the duration and deepening of industry control, reduction in sales of
commodity housing, slow-down collection of sales income, as well as the slower
speed of fund capital turnover, some cities have put trial implementation of regulation
in fund-use, which will, to a large degree, increase difficulties for enterprises to
reinvest with presale accounts. Relevant government departments strictly control the
amount of loans for real estates development issued by financial institutions like
banks and clearly restrict enterprises concerning real estates development to refinance
by means of additional issuance of bonds and stocks, etc. A series of policies have
narrowed financing channels for real estate enterprises, raised financing cost, and put
much pressure on funds of enterprises.
The Company will still insist on solid operating thoughts, create the idea of
“sustainable operation, positive development; and cash is king”, ensure security of
finance and fund chain, rationally assure the tempo of investment and collection of
sales accounts, and cut down fund cost; The Company will properly develop auxiliary
industries, liquidize idle assets, and increase firm resources of cash flows; The
Company will also operate capital and acquire financing investment with the help of
abundant capital from principle shareholders, control liability level, deal with contract
management and bid management, strictly control cost expense, and raise the
efficiency of fund-use.
(3) Risks concerning operation
① Market risks
Under the condition of scarcer and scarcer urban land resources, competition between
enterprises intensifies and the large-scale development of indemnificatory housing
replaces some demand for commodity housing, extending the market atmosphere
43
where customers prefer waiting and seeing. The change in demand will bring market
risks to enterprises.
As a development enterprise with solid historical heritage, the Company owns
abundant development experience, and has suffered pains and undergone tests from
every regulation and control of the industry for nearly 30 years since its establishment.
The Company will still focus on development of middle and high class commodity
housing with auxiliary property service of high quality, enhance internal value of
products, believe in the product idea of “quality property, creating lasting classic;
wonderful life, constructing ecological homeland”, discover the maximum value of
current resources, provide splendid settlement for customers, supply cities with high
quality and classic products, and bring positive return to shareholders.
② Management risks
All basic management work of the Company is relatively perfect. However, with the
increasing projects in other places, the focus of management work of the Company in
future and the improvement thereof will be the establishment of management and
control system, recruitment of talents, as well as optimization of management process
for subsidiaries in other places, which will ensure effective control of the Company
over quality, security, and progress of all items.
③Operation risks
In 2010 and 2011, the Company increased land reserve in cities such as Dongguan,
Xuzhou, Shenzhen, and Yangzhou. As at 31 Mar. 2011, the newly increased building
area (calculated by plot ratio) totaled to about 250,000 square meters. But land reserve
area still seems to be insufficient while considering about the annual sustainable
increase of development speed and scale of the Company. In order to keep sustainable
development, the Company will keep on researching policy trends, closely tracking
land market, grasping market opportunities under regulation and control, and
choosing to expand land reserve area in target regions in proper time.
The dual impacts of policy factors and expected inflation of the macro-economy cause
an overall rise of operating cost. Scarcer and scarcer resources of newly increased
land, as well as land transfer means of bidding, auction, and listing further push up the
land price and increase of land acquisition cost; Cost of raw materials and labor
continually rises, bringing about more risks concerning contract performance to
builders and more cost of project construction; Construction standard for quality
projects is always on the rise, resulting in an overall ascending cost of project
development. For the purpose of relieving pressures to the maximum extent, the
Company will, under the premise of ensuring product quality, seek for lands which
are suitable for the Company’s development and have room for profit growth,
enhance cost control, improve contract management level, perfect internal
management and reduce management expenses.
2. Competitive advantage and potential of the Company
2011 is the beginning year of the Company’s Twelfth-Five-Year Plan. The Company
will, around the topic of development, propel the strategy of quality products and
realize fast growth in business performance and development scale, stabilize
operation of auxiliary industries, carry on consolidation and deepening of reforms,
intensify basic management, construct risk management and control system, and
promote sustainable and healthy development of the enterprise.
The original land reserve of the Company all locates in core regions of Shenzhen with
features of high quality and value. Most newly increased lands are in central zones of
cities and regions of high quality resources or high growth. Over recent years, the
44
economy of those regions has witnessed fast growth, and the value appreciation of
those cities sees great potential. Those regions and cities, of which the housing
demand is rising and the land area is suitable for scale-development, have their own
characteristics and advantages and can meet congenital conditions such as complete
auxiliary facility, pleasant environment, and good quality, all of which complies with
the Company’s need for developing quality products and the strategy of stable and
sustainable development. Meanwhile, the Company also notes that, in those regions
where large, middle, and small real estate enterprises are crowding into, market
competition intensifies and customer demand keeps high and rising. The Company
will apply tight group management, devote great efforts on product, management, and
cost, so as to win customers, take hold, and strive for more development.
Having weathered every storm of regulation and control over real estate industry in
China, as well as adjustment and shuffle in the industry, the Company has strong risk
awareness and control capability, and has formed its work style of stable development.
In recent years, the Company has been focusing on improving its core
competitiveness, promoting refine management, standardizing management process,
reinforce system establishment, and enhance management standards, so as to make
sure that it will win better opportunities for existence and development in future
market competitions and fluctuations.
3. Plan for the year 2011
In the year 2011, the Company plans to create a main business income of RMB 1,340
million, with the expenses and cost standing at RMB 630 million. 2011 is the
beginning year of the Company’s Twelfth-Five-Year Plan. The Company will be
guided by strategic development plan of the group, closely focus on the subject of
development, expand resource reserve of land, propel the strategy of quality products,
realize stable growth of development scale, stabilize operation of auxiliary industries,
and strengthen construction of enterprise culture. In order to realize the aforesaid
various objectives of the Company in the key year for development, the Company will
focus on the following tasks:
(1) The Company will put full efforts into development of constructions in progress
and constructions proposed. Based on the mission of constructing quality products,
the Company will rationally assure development and investment progress, ensure
engineering quality, reinforce marketing and promotion, and deepen the market value
of current constructions. The Company will also keep increasing land reserve
complying with the development strategy of the Company, improving development
quality of real estates, gradually enlarge development scale, and supplement asset
capability of the Company.
(2) The Company will deepen reforms, introduce the idea of refine management, and
make overall improvement on basic management. The Company will construct and
perfect the establishment of overall risk management system, and enhance the coping
ability against policy risks, market risks, and operation risks. The Company will
perfect the institutional establishment, increase and revise internal management rules
in light of the actual management situation of the enterprise, routinize and standardize
the internal business procedures. The Company will also deepen the benchmarking
management and learn management experience from advanced enterprises.
(3) The Company will actively coordinate with principle shareholders to execute
commitments of shareholding reform, implement subsequent events after asset
45
replacement, further improve asset quality of the Company, and strengthen market
competitiveness and future profitability of the Company.
4. Particulars about demand for capital, plan for capital use and capital source
In the year 2011, it is expected that over RMB 1.06 billion is needed for the
construction in-progress of the Company. In order to ensure the capital supply and
satisfy the need of the business development, the Company intends to solve the capital
issue by more bank loans, the payment by customers for the real estate sold, etc.
III. Investment in the report period
1. There were no raised proceeds of the Company in the report period, neither was
there any continuous usage of the previously raised proceeds.
2. Significant investment with non-raised funds, as well as their progress and
profitability
Unit: RMB’ 000
Increase/decrease
of investment
Name of Project Input in 2010 Progress Profit
compared to last
year (%)
PRDShengang No.1
(Section B in Block C Final acceptance of
99,551 -5 ——
of former Huangyu construction
Garden)
PRDLangqiao Garden
Interior and exterior
(Section D in Block C
96,215 -6 decoration of the main ——
of former Huangyu
body
Garden)
Final acceptance of
PRDXinhua Town
construction has been
(Complex B of former 120,410 -28 ——
finished and residents
Fengherili Residence)
have moved in.
Construction of
PRDCaitianyise 15,760 —— ——
underground
Total 331,936 -11 ——
IV. Reasons for and influences by the changes in accounting policies, accounting
estimation and correction of significant accounting errors
1. In the reporting period, there were no changes in the accounting policies in the
Company.
2. In the reporting period, there were no changes in the accounting estimations in the
Company.
3. In the reporting period, there were significant accounting errors in the Company.
V. Routine Work of the Board of Directors
(I)Board sessions convened in the report period
During the report period, the Board of Directors convened 7 sessions in total
(1) On 5 Feb. 2010, the 22nd Session of the 6th Board of Directors was convened, and
the public notice on the resolutions made at the session was published at Securities
Times, Ta Kung Pao and http://cninfo.com.cn designated for information disclosure
dated 9 Feb. 2010.
46
(2) On 22 Apr. 2010, the 23rd Session of the 6th Board of Directors was convened, at
which reviewed and approved the following proposals: The First Quarterly Report of
the Company for Y2010, Proposal on Revising Accountability System for Material
Errors on Information Disclosure of Annual Report, Proposal on Promulgating Work
Rules for Annual Report, Proposal on Revising Work Rules for Legal Counsel,
Proposal on Revising Management Rules for Contract, and the public notice on the
resolutions made at the session was published at Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure dated 26 Apr. 2010.
(3) On 31 May 2010, the 24th Session of the 6th Board of Directors was convened, at
which reviewed and approved the Proposal on Self-inspection Report on Generally
and Deeply Carrying out a Special Campaign on Standardization of Basic Work of
Finance & Accounting, and the resolutions made have been submitted by the
Company to Shenzhen Stock Exchange for records, and submitted the Self-inspection
Report to Shenzhen Securities Regulatory Commission for records
(4) On 21 Jul. 2010, the 25th Session of the 6th Board of Directors was convened, at
which reviewed and approved the following proposals: Proposal on Implementation
of Commitment of Share Merger Reform on Assets Replacement and Significant
Related Transaction (Draft) and Proposal on the Resignation from Vice General
Manager of Liu Yinhua, and the public notice on the resolutions made at the session
was published at Securities Times, Ta Kung Pao and http://cninfo.com.cn designated
for information disclosure dated 21 Jul. 2010.
(5) On 30 Jul. 2010, the 26th Session of the 6th Board of Directors was convened, at
which reviewed and approved the following proposals: The Semi-annual Report for
Y2010 and Proposal on Engagement of Vice General Manager, and the public notice
on the resolutions made at the session was published at Securities Times, Ta Kung
Pao and http://cninfo.com.cn designated for information disclosure dated 31 Jul. 2010.
(6) On 17 Sep. 2010, the 27th Session of the 6th Board of Directors was convened, at
which reviewed and approved the following proposals: Proposal on Implementation
of Commitment of Share Merger Reform on Assets Replacement and Significant
Related Transaction (Preplan), Proposal on Engagement of CFO and Proposal on
Convening the First Special Shareholders’ General Meeting for 2010, and the public
notice on the resolutions made at the session was published at Securities Times, Ta
Kung Pao and http://cninfo.com.cn designated for information disclosure dated 18
Sep. 2010.
(7) On 22 Oct. 2010, the 28th Session of the 6th Board of Directors was convened,
which reviewed and approved the following proposals: The Third Quarterly Report
for Y2010, Proposal on Rectification Report on Generally and Deeply Carrying out a
Special Campaign on Standardization of Basic Work of Finance & Accounting and
Self-inspection Report on Establishment and Implementation of Long-term
Mechanism for Preventing Capital Occupation, and the public notice on the
resolutions made at the session was published at Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure dated 25 Oct. 2010.
(II) Implementation of the Resolutions Made at the Shareholders’ General Meeting by
the Board
In the reporting period, the resolutions of the Shareholders’ General Meeting were
47
implemented effectively.
1. Proposals reviewed and approved at the 2009 Annual Shareholders’ General
Meeting:
The 2009 Annual Work Report of Board of Directors, the 2009 Annual Work Report
of Supervisory Committee, the 2009 Annual Final Financial Report, the 2010 Annual
Financial Budget Report, the 2009 Annual Report, the Pre-plan for 2009 Annual
Profit Distribution, the Proposal on Application of Entrust Loans from Controlling
Shareholders and the Proposal on Renewing Engagement of CPAs Firm.
The relevant matters mentioned in the proposals at this Shareholders’ General
Meeting have all been executed. During the report period, the controlling
shareholder-- Shenzhen Investment Holdings Co., Ltd. (hereinafter referred to as
“Investment Holdings”) provided entrust loans of RMB 10 million to Shenzhen ITC
Vehicles Services Company; from the end of the report period to the date of this
publication, Investment Holdings has provided entrust loans of RMB 490 million for
the Company; BDO Wuhan Zhonghuan Certified Public Accountants Co., Ltd.
continued to provide the audit service for the Company.
2. The First Special Shareholders’ General Meeting for Y2010 reviewed and approved
the Proposal on Implementation of Commitment of Share Merger Reform on Assets
Replacement and Significant Related Transaction
Now delivery formalities of relevant assets is in progress, Investment Holdings has
compensated RMB 38,687,344.20 in cash to the Company for the difference between
the replaced assets in the Plan and that under the commitment of share merger reform,
for details, please refer to Public Notice on Progress on Implementation of
Commitment of Share Merger Reform on Assets Replacement and Significant Related
Transaction published at Securities Times, Ta Kung Pao and http://cninfo.com.cn
dated 18 Nov. 2010.
(III) Duty performance of the Audit Committee under the Board
The Audit Committee under the Board of the Company consists of 3 Directors,
including 2 Independent Directors, with the post of Chairman of the Committee held
by Independent Director Mr. Dong Zhiguang. In the reporting period, according to the
requirement of CSRC and Shenzhen Stock Exchange as well as the Work Rules for
the Audit Committee under the Board, the Audit Committee fulfilled the following
duties with diligence and responsibility, mainly reviewed the Company’s Periodic
Financial Report, the Annual Appraisal on Duty Performance of Audit Organ and Its
Renew Engagement, Plan for the Company’s Basic Work of Finance & Accounting,
the Self-inspection Report and Rectification Report of the Company’s Basic Work of
Finance & Accounting, etc.
1. Duty performance of the 2010 Annual Auditing Work
① On 31 Dec. 2010, the Audit Committee under the Board fully communicated with
the principal for the annual auditing work, negotiated to decide the date for the entry
of the CPAs and the work plan for annual auditing of financial report.
On 21 Feb. 2011, the CPAs firm came to the Company and officially started the audit.
② After the entry of the CPAs, the Audit Committee under the Board communicated
with the CPAs responsible for the Company’s annual audit on the problems occurring
in the auditing process. On 17 Mar. 2011, the CPAs firm issued the preliminary audit
48
opinion and reported to the Audit Committee on some issues arising in the audit
process. And the Audit Committee expressed their first opinion as follows after
reviewing the financial statements prepared by the Company: the Financial
Statements 2010 of the Company had been complied according to the provision of
Accounting Standard for Business Enterprises, and the statements had reflected the
actual operating situation and cash flow of the Company as at Dec. 31, 2010, which
were in line with relevant requirements of CSRC. And the Audit Committee therefore
agreed to submit the financial statements (un-audited) prepared by the Company and
relevant materials to the CPAs firm for auditing. Meanwhile, the Committee also
expressed their wish for the management of the Company to cooperate closely with
BDO Wuhan Zhonghuan Certified Public Accountants Co., Ltd. to carry out the
auditing of the financial statements in 2010.
③ On 7 Apr. 2011, the Audit Committee expressed their second opinion as follows
after reviewing the financial statements prepared by the Company: the Financial
Statements 2010 of the Company was complied strictly according to the provision of
Accounting Standard for Business Enterprises and Accounting System for Business
Enterprises, as well as in compliance with the New Accounting Standards and
relevant documents issued by the Ministry of Finance; the notes to the financial
statements were complied in line with relevant regulations issued by CSRC. The
financial statements and the notes to financial statements objectively and fairly
reflected the financial status, business achievement and cash flow of the Company as
at Dec. 31, 2010; the audit conclusion was in line with the actual situation of the
Company and the Committee thus agreed to submit the 2010 Annual Financial Report
to the Board of Directors for review.
④ The Audit Committee believes that during the process on providing the audit
service for the Company, BDO Wuhan Zhonghuan Certified Public Accountants Co.,
Ltd. scrupulously abided by the duty, follow the independent, objective and fair code
of ethics, successively finished the auditing work for the 2010 Annual Report. The
audited financial statements were a fair presentation of the Company’s financial
position as at 31 Dec. 2010, as well as the operating results and cash flows as of the
year 2010. And the audit conclusion issued was in line with the actual situation of the
Company. In light that BDO Wuhan Zhonghuan Certified Public Accountants Co.,
Ltd. had strictly executed the Auditing Rules and Quality Control System of CPAs
Firm in compliance with the new auditing standards for CPAs, the CPAs firm is good
in practice, scrupulously abide by the duty and familiar with the Company’s situation,
it was decided to submitted the Proposal on Renewing Engagement of BDO Wuhan
Zhonghuan Certified Public Accountants Co., Ltd. as the Audit Organ for Y2011 to
the Board of Directors for review.
In the auditing work for 2010 Annual Report, the Audit Committee has faithfully
fulfilled its duty with responsibility, brought its supervisory function into due plan,
and ensured the independence of auditing, which safeguarded the legal interests and
rights of the Company and the minor interests.
2. Duty performance of Special Campaign on the Basic Work of Finance &
Accounting
In accordance with Accounting Law of PRC, Basic Rules for Internal Control of Enterprise
and other laws and rules, the Company made the overall self-inspection on every issues
involved in the basic work of financial & accounting, the Audit Committee under the Board
49
successively reviewed the Plan for the Company’s Basic Work of Financial &
Accounting, Self-inspection Report on the Special Campaign on Standardization of
Basic Work of Finance & Accounting and Rectification Report on Generally and
Deeply Carrying out a Special Campaign on Standardization of Basic Work of
Finance & Accounting, wishing the Company seriously pay attention to the execution
of the rectification measurements, as well as continuously perfect the Company’s
basic work of financial & accounting.
(IV) Duty Performance of the Remuneration and Appraisal Committee under the
Board
The Remuneration and Appraisal Committee under the Board consisted of 3 Directors,
including 2 Independent Directors, and the post of Chairman of the Committee is held
by Independent Director Mr. Li Xiaofan. In the report period, according to
requirements of CSRC and Shenzhen Stock Exchange, as well as the Company’s
Work Rules for Remuneration and Appraisal Committee under the Board, the
Committee conscientiously fulfilled its duties, examining the remunerations for
directors, supervisors and senior executives in accordance with the Company’s
Management Rules for Remuneration and Performance Appraisal. And the
Committee was of the opinion that the annual salary mechanism for directors,
supervisors and senior executives connected their remuneration with the annual
business performance of the Company, which was in line with the actual situation of
the Company. And there existed no violation of or inconsistency with the
remuneration rules.
(V) Duty performance of the Strategic Development and Investment Committee under
the Board
The Strategic Development and Investment Committee under the Board consists of 5
directors, with Chairman of the Board Mr. Chen Yugang as Chairman of the
Committee. In the report period, the Committee fully played its professional
advantage to give scientific and reasonable advice for significant events, strengthen
democracy, science and accuracy for group decision-making of the Board of Directors,
further ensure the healthy development of the Company.
During the report period, the Strategy Committee under the Board focused on
researching to make the strategic development plan of the Company and other
relevant affairs.
(VI) Duty performance of the Nomination Committee under the Board
The Nomination Committee under the Board consists of 3 directors, including 2
independent directors, with Independent Director Mr. Zha Zhenxiang as Chairman of
the Committee. In the report period, in accordance with the Work Rules for
Nomination Committee under the Board, the Nomination Committee nominated Ms.
Wang Huimin as Vice General Manager of the Company and Mr. Gong Sixin as the
CFO of the Company, which was reviewed and approved by the Board of Directors as
well as approved by Shenzhen Stock Exchange, Ms. Wang Huimin has come into
office since Jul. 2010, and Mr. Gong Sixin has come into office since Sep. 2010.
In the report period, the Committee nominated for Secretary of the Board of Directors.
As reviewed and passed by the Board of Directors and approved by Shenzhen Stock
Exchange, Mr. Fan Weiping has held the post of Board Secretary of the Company
since Jan. 2009.
50
VI. Profit Distribution Preplan or Preplan on Capitalization of Capital Reserves
for the year 2010
1. Profit Distribution Preplan for 2010
As audited by BDO Wuhan Zhonghuan Certified Public Accountants Co., Ltd., the
Company achieved, in the year 2010, a consolidated net profit attributable to owners
of the Company (as the parent company) reaching RMB 174,998,534.79 and a
consolidated profit available for distribution for the year standing at RMB
148,961,664.40; In the year 2010, the Company (as the parent company) achieved a
net profit of RMB 18,982,840.06, plus the retained profit at the beginning of 2010
amounting to RMB-31,832,183.52, the actual profit available for distribution of the
Company (as the parent company) for the year 2010 stood at RMB -12,849,343.46.
Considering that the Company (as the parent company) acted as the main body in the
profit distribution of the Company, the Company would not conduct profit
distribution for the end of 2010 or capitalize capital reserves.
2. Cash dividends in the previous three years
Percentage
Consolidated
Net profit in the net Percentage in the
net profit
Amount of belonging to profit consolidated net profit
belonging to
Year cash shareholders of belonging to belonging to
shareholders of
dividends the parent shareholders shareholders of the
the parent
company of the parent parent company
company
company
2009 6,067,788.90 462,937,195.91 96,933,951.02 1.31% 6.26%
2008 0.00 -26,155,872.73 9,829,397.29 0.00 0.00
2007 0.00 -27,611,609.45 -27,377,663.77 0.00 0.00
VII. The Execution of Management Rules for Insiders and Self-inspection on
Inside Dealings
The Company always pays attention to standardize the management for inside
information, such as promulgating the Management Rules for Insiders, making clear
about the contents of inside information, making the scope of insiders and
accountability system for inside dealings. After reporting and submitting
non-published information to the controlling shareholders, the Company all registered
the relevant information of insiders and then submitted to securities regulatory
authorities, as well as strictly controlled the transmission scope of inside information,
further strengthened the security work of inside information. In 2010, the Company
further strengthened the awareness of preventing inside dealings and standardizing
inside information management through the activity of educational propaganda of
Opinion on Striking, Preventing and Controlling Inside Dealings in Capital Market.
Upon Self-inspection, during the report period, there were no particulars about
insiders took advantages of inside information to purchase or sell shares of the
Company before the disclosure of major sensitive information that shall have an
impact on the share price of the Company, nor any investigation and punishment as
well as rectification from the regulatory authority. From now on, the Company will
continuously strengthen to learn relevant rules and laws, scrupulously execute the
Management Rules for Insider Information and Insiders, standardize the corporate
governance of the Company, do well the work of preventing inside dealings.
51
VIII. Statement on the Responsibility for Internal Control from the Board of
Directors
The Board of Directors will earnestly bear the overall responsibility for establishing
and perfecting the Company’s internal control and its effective operation, take in
charge for the promulgation of the Company’s internal control and its effective
execution, continue to establish and perfect the procedure of the Company’s internal
control in accordance with Code of Enterprise’s Internal Control, Guideline for
Enterprise’s Internal Control and other rules and laws; the Supervisory Committee
will be responsible for supervising the establishment and execution of internal control
by the Board of Directors; the management team of the Company will be responsible
for organizing and leading the routine operation of the Company’s internal control;
the Audit Committee under the Board of Directors will be responsible for guiding and
supervising the effectiveness of the appraisal for internal control by the Company’s
internal institution.
The goals of the Company’s internal control: reasonably guarantee the legality and
compliance of the Company’s operating management, safety of assets, authenticity
and completeness of financial report and relevant information; enhance the level of
operating management and ability of risk prevention, improve the operating efficiency
and result, promote the Company’s sustainable development, protect the legal interest
of the Company, shareholders and stakeholders, as well as maintain the market order
and interests of the general public. The internal control has its own limitation, so the
Company can only provide the reasonable guarantee for the above goals, the
effectiveness of the internal control may change with the change in the Company’s
internal and external environment and operating situation, for which, the Company
has established the inspection and supervision mechanism of internal control,
including measurement for risks identification and prevention. Once the deficit of
internal control were found, the Company would take the relevant rectification
measurement.
IX. Other Events
1. Special explanation and independent opinion of Independent Directors on external
guarantee of the Company
Based on the provisions in the Articles of Association and Notice on Regulating the
Capital Transaction Between Listed Companies and the Affiliated Parties, as well as
Some Problems in External Guarantee of Listed Companies (ZJF [2003] No. 56), we
checked over the external guarantee of the Company with serious and responsible
attitude, and explanation on relevant situation is as follows: the amount of external
guarantee in the reporting period was RMB 0, the balance of external guarantee at the
end of the reporting period was RMB 0; the guarantee for the controlled subsidiaries
in the reporting period was RMB 212 million and the balance of guarantee for the
controlled subsidiaries at the end of the reporting period was RMB 455 million.
We believe that the Company has strictly followed the provisions in the Articles of
Association and Notice on Regulating the Capital Transaction Between Listed
Companies and the Affiliated Parties, as well as Some Problems in External
Guarantee of Listed Companies (ZJF [2003] No. 56), regulated the behavior of
external guarantee, and controlled the risk of external guarantee. In the reporting
period, there was no illegal guarantee.
52
2. In the reporting period, the Company designated Securities Times and Ta Kung Pao
as the newspapers for information disclosure, and no change has been made.
53
Section IX Report of the Supervisory Committee
I. Work of the Supervisory Committee
(I) Sessions held by the Supervisory Committee
In the report period, the Supervisory Committee convened six sessions:
1. The first session was convened at the conference room of the Company’s office
building on 5 Feb. 2010, at which the 2009 Annual Report of Shenzhen Properties &
Resources Development (Group) Ltd. and Its Summary, the 2009 Annual Profit
Distribution Preplan, the Proposal on Withdrawal Events for Y2009, the Self-evaluation
Report on Internal Control and Work Report for Supervisory Committee in 2009 were
reviewed and approved.
2. The second session was convened on 22 Apr. 2010 by telecommunication, at which the
First Quarterly Report in 2010 of Shenzhen Properties & Resources Development (Group)
Ltd. was reviewed and approved.
3. The third session was convened at the conference room of the Company’s office
building on 21 Jul. 2010, at which the Proposal on Implementation of Commitment of
Share Merger Reform on Assets Replacement and Significant Related Transaction (Draft)
was reviewed and approved.
4. The fourth session was convened on 30 Jul. 2010 by telecommunication, at which the
Semi-annual Report in 2010 of Shenzhen Properties & Resources Development (Group)
Ltd. was reviewed and approved.
5. The fifth session was convened at the conference room of the Company’s office
building on 17 Sep. 2010, at which the Proposal on Implementation of Commitment of
Share Merger Reform on Assets Replacement and Significant Related Transaction
(Preplan) was reviewed and approved.
6. The sixth session was convened on 22 Oct. 2010 by telecommunication, at which the
Third Quarterly Report in 2010 of Shenzhen Properties & Resources Development (Group)
Ltd. and Self-inspection on Establishment and Implementation of Long-term Mechanism
for Preventing Capital Occupation of Shenzhen Properties & Resources Development
(Group) Ltd. was reviewed and approved.
(II) During the report period, the supervisors scrupulous fulfilled their duties, sat on every
Board sessions and Shareholders’ General Meeting, so as to reasonably ensure the
effective operation on corporate governance of the Company.
(III) In the reporting period, by paying close attention to the management and operation of
the Company and seriously supervising the Company’s financing and capital operation, as
well as inspecting official acts of the Board and management team, the Supervisory
Committee safeguarded normal behaviors of the Company’s operation and management.
II. Independent opinions given by the Supervisory Committee on relevant issues of
the Company
(I) Operation in line with the law:
In strict accordance with Company Law and Articles of Association, etc., the Supervisory
Committee scrupulously fulfilled the duties, actively attended the Shareholders’ General
Meeting, sat on Board sessions, overall supervised and inspected on the procedures for
convening and holding Shareholders’ General Meeting and the Board of Directors as well
as the resolutions, the execution of resolutions of the Shareholders’ General Meeting by
the Board of Directors, the particulars on duty performance of Directors and Senior
Executives. The supervisors believed that the Company operated in accordance with
Company Law, Securities Law, Listing Rules and Articles of Association as well as other
rules and laws with every decision-making procedure being legal, which also established
and perfected every internal control system in accordance with requirements from relevant
regulatory authorities; the directors, managers and other senior executives performed their
duties without any behavior in violation of the laws, regulations and the Articles of
Association of the Company or doing harm to the interests of the Company when.
(II) Inspection of financial status:
Through the Company’s Internal Audit Department and other ways, the Supervisory
Committee took out periodic inspection on the Company’s financial system and financial
status as well as specified events. The Supervisory Committee believed that the Company
had set up sound financial system, perfect internal control system, standard financial
operation and good financial status. And the audit report for Y2010 has given a true,
objective and complete reflection of the Company's financial status and business
performance.
(III) Review of internal control
The Supervisory Committee believed that the Company’s current internal control system
and rules had played a good controlling and prevention role on very key links, significant
investment, significant risk and other aspects, which had been carried out effectively. The
self-appraisal report for Y2010 on internal control has given a true and objective reflection
of the establishment and operation of the Company's internal control system.
(IV) Input of raised funds
In the reporting period, no funds were raised from the public during the reporting period.
(V) Related transaction
The Supervisory Committee inspected on the Company’s related transactions for Y2010,
and believed that the Company’s decision-making procedure for related transactions was
in compliance with the provisions stipulated in the laws, regulations and the Articles of
Association, of which the pricing principles of making compensation for equal value and
fair market price didn’t violate the principles of openness, fairness and justice as well as
without any harm to interests of the Company and its shareholders.
(VI) Disposal of assets
In the reporting period, the business of assets disposal was standard, which was in line
with the legal procedure. The said transaction was objective, just and fair without insider
dealing, and didn’t do harm to interests of the Company and the shareholders.
Section X. Significant Events
I. The significant lawsuits or arbitrations
1. In the report period, no new significant lawsuit or arbitration events occurred.
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 2009
Due to the reason that there existed unclear facts, errors in application of laws and
violation of the legal lawsuit procedure in the second instance of the 34 cases between
eight companies including Haiyi Industry (Shenzhen) Co., Ltd. and the Company over
housing property purchase and sale contract disputes, the Company appealed to the
Supreme People’s Court (hereinafter referred to as “the Supreme Court”) according to the
justice supervision procedure.
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. At present, concerning
the 34 cases of “Haiyi Company”, the Supreme Court overruled all the second-instance
judgments for those cases and commanded the Guangdong Higher Court to retry the said
cases, and that execution of the original judgments should be suspended during the retrial
period.
In Oct. 2010, the Company signed Settlement Agreement with Haiyi Company and other
seven companies after mediation of Shenzhen Intermediate People’s Court (hereinafter
referred to as “the Shenzhen Intermediate Court”), the Company compensate RMB 58
million for Haiyi Company and other seven companies, who gave up the application of
lawsuit towards the Company, thus the 34 cases could be solved by settlement. On 21 Oct.
2010, the Shenzhen Intermediate Court relieved the seizure of the Company’s property.
The Company paid all the indemnity payment in accordance with the Settlement
Agreement.
And the Company disclosed the relevant information, for details, please refer to the
interim public notices published on 19 Jul. 2010, 6 Aug. 2010, 14 Oct. 2010 and 25 Oct.
2010.
(2) Concerning the case of “Jiyong Company” disclosed in the annual reports from 2000
to 2009
Because Jiyong Company had no properties available for execution, the Higher People’s
Court of Guangdong Province ruled to terminate the execution procedure of Case
(2002)YGFZZ No. 1. The Company will actively conduct researches and apply to the
Court for execution resumption when it finds that the executed party has properties for
execution.
(3) Regarding the case against Guomao Jewel & Gold Co., Ltd. (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, Lin
Ruohua, legal representative of Guomao Jewel & Gold Co., Ltd, would undertake joint
discharge responsibility within the scope of RMB 10,053,000.00. The judgment has come
into force.
Guomao Jewel & Gold Co., Ltd. and Lin Ruohua failed to execute the judgment, and 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.
(4) Concerning 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 Huangyu
Garden 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.
B. On 3 Aug. 2006, Hainan Duokuai Elevator Service (Far-East) Co., Ltd. Shenzhen
Branch (hereinafter referred to as “Duokuai Shenzhen Branch”) initiated litigation to The
People’s Court of Futian District of Shenzhen, appealed Shenzhen Huangcheng Property
Management Co., Ltd. (hereinafter referred to as “Huangcheng Property Management
Company”), subsidiary of the Company, to pay the service expense. In the process of trial,
Duokuai Shenzhen Branch applied to sue Huangcheng Real Estate as the second
defendant and appealed Huangcheng Real Estate bearing joint discharge responsibility for
the aforesaid debt. On 26 Jan. 2007, the People’s Court of Futian District of Shenzhen sent
civil judgment paper with (2006) SFFMEC Zi No. 1977, which ordered Huangcheng Real
Estate and Huangcheng Property Management Company would pay service expense RMB
925,500.00 and RMB 1,105,130.00 to Duokuai Shenzhen Branch respectively and paid for
loss of interest. Huangcheng Real Estate and Huangcheng Property Management
Company sued appeal with reasons of ambiguity of facts and violation of legal procedures.
On 28 Jan. 2008, Shenzhen Intermediate People’s Court made a civil judgment with (2007)
SZFMEZ Zi No. 827: Huangcheng Real Estate and Huangcheng Property Management
Company would pay service expense RMB 893,100.00 and RMB 1,102,730.00 to
Duokuai Shenzhen Branch respectively and paid for loss of interest. Huangcheng Real
Estate and Huangcheng Property Management Company confirmed the relevant
expenditure in financial statement.
On 15 Mar. 2010, the parties for the above two lawsuits as Huangcheng Real Estate,
Huangcheng Property Management Company, Tao Boming, Duokuai Elevator and
Duokuai Shenzhen Branch reached the Settlement Agreement for the Cases Between
Huangcheng Real Estate and Ta Boming as well as His Own Company (hereinafter
referred as “Settlement Agreement”), for details of the Settlement Agreement, please refer
to (VII) Contingent events, 2. Settled lawsuit, (3) Duokuai Elevator Series Cases, item B
in the Notes to the Financial Statements. In accordance with the settlement agreement,
Huangcheng Real Estate received the execution payment of RMB 3.28 million transferred
from Shenzhen Intermediate Court on 11 May 2010; up to the end of report period, the
formalities for transferring the properties belonging to Huangcheng Real Estate had been
completed.
On 11 May 2010, Huangcheng Real Estate received 6 Closing Letters for the above case
from Shenzhen Intermediate Court.
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:
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.
The Settlement Agreement which was reached on 15 Mar. 2010 included the settlement
for this case, for details, please refer to (VII) Contingent events, 2. Settled lawsuit, (3)
Duokuai Elevator Series Cases, item B in the Notes to the Financial Statements.
During the reporting period, the above Duokuai Elevator Series Lawsuits have all reached
and signed the Settlement Agreement, which were all executed.
(5) With regard to the case of “Meisi Company Lawsuit” disclosed continuously by the
Company in the Annual Reports from 2004 to 2009
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 at Securities Times, Ta Kung
Pao and http://cninfo.com.cn designated for information disclosure dated 23 Dec. 2009.
(6) Regarding the case of “Guarantee for Jintian” as disclosed in Annual Report from
2007 to 2009
The Company withdrew RMB 56.6 million at full amount for the case; meanwhile, the
Company would recourse against Jintian Company in line with laws.
(7) Concerning the case of Shenzhen Office of Hubei Foreign Economic Trade
Cooperation Department suing against the Company disclosed in the Annual Reports from
2005 to 2006
Not satisfied with the decision of the second retrial for the case, the Company applied to
the Supreme Court of Guangdong Province, however, which rejected the Company’s such
application in May 2006. The Company believed that the rejection decision of the retrial
application from the Supreme Court of Guangdong Province had the errors on the
recognition of facts and application of laws , thus applied to the Supreme Court of
Guangdong Province for retrial. In Oct. 2007, the Supreme Court of Guangdong Province
decided to retry the case. However, the Company withdrew the application of retrial after
comprehensive consideration, and the Supreme Court of Guangdong Province approved
for the Company’s withdrawal of lawsuit.
After the Company repaid housing fund of Jiabin Building and interest totaled RMB 25.50
million to Shenzhen Office of Hubei Foreign Economic Trade Cooperation Department
(hereinafter referred as “Hubei Foreign Economic Trade Shenzhen Office” ), the returned
14/F and 15/F of Jiabin Building from Hubei Foreign Economic Trade Shenzhen Office
should be belong 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.
(Zhuhai Yinzhu Company) 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 to confirm the Company as 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. On 21 Jul. 2008, the Court opened a court session and
presided to intermediation. The Company and Zhuhai Yinzhu Company came to Civil
Mediation Agreement with (2008) SLFMSC Zi No. 1442, in which: 1) 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; 2) Zhuhai Yinzhu Company 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.
In order to vitalize Jinlihua Business Square and maintain the interest of the Company and
its shareholders, in accordance with the minutes of session held by Shenzhen Municipal
Government, the Company, together with Shenzhen Longyuan Kaili Hengfeng Real Estate
Co., Ltd. (hereinafter referred as “ Longyuan Kaili”) and Shenzhen Huaneng Jindi Real
Estate Co., Ltd. (hereinafter referred as “ Huaneng Real Estate”) signed the Supplemented
Agreement for Grant Contract of Land Use Right with Urban Planning Land and
Resources Commission of Shenzhen Municipality, at which 14/F and 15/F of Jiabin
Building were recognized as commodity house, which should be constructed and
decorated in accordance with the united building standards for the project by Longyuan
Kaili and Huaneng Real Estate; the use term of the land was adjusted as 50 years from 21
Feb. 2011 to 20 Feb. 2061. The Company disclosed the relevant information, for details,
please refer to the interim public notice at Securities Times, Ta Kung Pao and
http://cninfo.com.cn dated on 9 Mar. 2011.
(8) Concerning the Huaxi Company Lawsuit as disclosed in the 2009 Annual Reports
On 25 Oct. 2010, the Shenzhen Intermediate Court maintained its original decision on the
Company for the case, and rejected the claims of the litigant of Huaxi Company towards
the Company. The Company disclosed the relevant information, for details, please refer to
the interim public notice at Securities Times, Ta Kung Pao and http://cninfo.com.cn dated
on 27 Oct. 2010.
(9) Concerning the “China Orient Asset Management Company Lawsuit” disclosed by the
Company in the 2009 Annual Report.
A. Case No.: (2009) SZFMECZ No. 77
In this case, China 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 Shenzhen Intermediate Court, 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. For details, please refer to the interim
public notice at Securities Times, Ta Kung Pao and http://cninfo.com.cn dated on 30 Dec.
2009.
On 11 Jun. 2010, the Shenzhen Intermediate Court opened a court session for the case, but
with no decision up to now.
B. 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. For
details, please refer to the interim public notice at Securities Times, Ta Kung Pao and
http://cninfo.com.cn dated on 30 Dec. 2009.
In Jun. 2010, China Orient Asset Management withdrew the accusation against the
Company.
II. Equity of other listed companies held and traded by the Company
1. Securities investment
Percentage
Profits and
to total
Type of Initial Number of losses in
Stock Short form Book value at securities
No. securitie investment (RMB shares the
code of Stock year-end investment
s Yuan) held reporting
at the
period
year-end (%)
Shenzhen
1 000030 ST Sunrise 268,735.50 30,000 272,100.00 100.00 39,900.00
A-share
Profit and loss from selling securities — — — —
0
investment in the report period
Total 268,735.50 30,000 272,100.00 100.00 39,900.00
2. Equity of other listed companies held by the Company
Change in
Equity
Profit and the owners’
Short Initial proportion
Stock Book value at loss in the equity in Accounting Source of
form of investment in that of
code the year-end reporting the item shares
stock amount this
period reporting
company
period
Purchasing
Long-term
S*ST legal person
000509 2,962,500.00 0.33% 802,199.55 0.00 0.00 equity
T.H. shares
investment
directionally
Total 2,962,500.00 - 802,199.55 0.00 0.00
3. Equity of other listed companies bought and sold by the Company
Naught
III. Purchases, sales of assets, or mergers of the Company in the reporting period
1. In the report period, the Company had no significant asset acquisition or mergers.
2. Sale of assets
(1) Disposal of land in Sihui City
On 9 Feb. 2009, a resolution regarding disposal of use right of a land located in Sihui City
is approved by the 12th session of the 6th Board of Directors. Shenzhen Huangcheng Real
Estate Co., Ltd. (hereinafter referred to as “Huangcheng Real Estate”), a wholly-owned
subsidiary of the Company, ownd use right of an industrial land located in Sihui City
Guangdong Province (with an expiration date of 11 Aug. 2044, hereinafter referred to as
“Sihui Land”) with an usable area of 31,394.49 square meter (equivalent to 47.09 Mu). To
protect right of the company from government expropriation, Huangcheng Real Estate
plans to negotiate with the People’s Government of Sihui City to repurchase use right of
Sihui Land. Huangcheng Real Estate signed the Land Purchase Contract with Sihui Land
Storage Centre by EMS. On 6 Jul. 2009, the Company received the original copy of the
said contract signed and sealed between two parties at the purchase price of RMB
112,000.00 per acre, with the total purchase price of RMB 5,274,080.00. For details,
please refer to the interim public notice disclosed on 8 Jul. 2009. During the reporting
period, Huangcheng Real Estate had received such payment and recognized the income of
RMB 1.83 million.
(2) Transferring 15.83% equities of Huajing Glass Bottle Co., Ltd.
For details, please refer V. Significant related transactions (I) Significant related
transactions under in this Chapter.
IV. Equity incentive plan
In the report period, the Company conducted no equity incentive plan.
V. Significant related transactions
(I) Significant related transactions
1. On 16 Oct. 2009, the Company’s subsidiary—Shenzhen Huangcheng Real Estate Co.,
Ltd., the Company’s actual controlling shareholder—Shenzhen Investment Holdings Co.,
Ltd., and the Shenzhen Jingtian Sub-branch of China Everbright Bank signed the Entrust
Loan Contract in Shenzhen. Shenzhen Investment Holdings Co., Ltd. entrusted the
Shenzhen Jingtian Sub-branch of China Everbright Bank with its own capital to grant an
entrust loan of RMB 150 million to the Company, with a term of 12 months, the mature
date at 16 Oct. 2010 and the annual interest rate at 5.0523%. And the said loan would be
used to repay old loans. For details, please refer to the Public Notice on Signing the
Entrust Loan Contract published on 20 Oct. 2009; the said entrust loan has been returned
and paid the interest of RMB 2 million during the report period.
2. The 21st Session of the 6th Board of Directors was convened on 22 Dec. 2009, at which
the Proposal on Applying to Controlling Shareholder for a Loan of RMB 50 Million was
reviewed and approved. And the Company released the relevant public notice, for details,
please refer to the Public Notice on Resolutions of the Board published on 24 Dec. 2009.
On 30 Dec. 2009, with the Shenzhen Branch of the Agricultural Bank of China as the
trustee, the Company applied to its actual controlling shareholder Shenzhen Investment
Holdings Co., Ltd. for an entrust loan of RMB 50 million with a term of 12 months, an
annual interest rate of 5.31% and the mature date at 29 Dec. 2010, which was used for
repaying the old loans.
The entrusted loan has been returned and paid the interest of RMB 2.38 million during the
report period.
3. On Mar. 18, 2010, the Company held the Annual Shareholders’ General Meeting 2009,
at which reviewed and approved Proposal on Application of Entrust Loan from
Controlling Shareholder. For details, please refer to Public Notice on Resolutions of
Annual Shareholders’ General Meeting 2009 published on 19 Mar. 2010.
On 28 Dec. 2010, Investment Holdings entrusted Shenzhen Jingtian Sub-branch of China
Everbright Bank to provide entrust loan of RMB 10 million for the Company’s subsidiary
Shenzhen ITC Vehicles Services Company with the expiry date as 28 Dec. 2011 and
annual interest rate as 5.5439%.
4. The Company’s wholly owned subsidiary Shum Yip Properties Development Co., Ltd.
(hereinafter referred as “Shum Yip Properties”) held 15.83% equities of Huajing Glass
Bottle Co., Ltd. (hereinafter referred as “Huajing”), the aforesaid equities were evaluated
by China United Assets Appraisal Co., Ltd. on the base date as 31 Mar. 2009 with the
evaluation value of RMB -9,600,895.00, and issued the Appraisal Report with Document
ZLPBZi [2009] No. 258.
On 6 Nov. 2009, the 20th Session of the 6th Board of Directors was convened, at which the
Proposal on Transferring Equities of Huajing Glass Bottle Co., Ltd., deciding to transfer
15.83% equities of Huajing held by Shum Yip Properties to Shenzhen Tongchan
Packaging (Group) Co., Ltd. with price as RMB 1.55 million. For details, please refer to
Public Notice on Resolutions of Annual Shareholders’ General Meeting 2009 published
on 9 Nov. 2009.
On 26 Feb. 2010, the Company signed the Equity Transfer Agreement, which agreed to
transfer 15.83% equities of Huajing held to to Shenzhen Tongchan Packaging (Group) Co.,
Ltd. with price as RMB 1.55 million. After the identification by Shenzhen United Property
and Share Rights Exchange, the transaction was in line with the legal procedure. The
Company has completed the formalities of equity transfer and received the total transfer
payment.
5. On 13 Oct. 2010, the Company convened the First Special Shareholders’ General
Meeting for Y2010, at which reviewed and approved the Proposal on Implementation of
Commitment of Share Merger Reform on Assets Replacement and Significant Related
Transaction. The Company planned to swap No. T102-0237 land in Moon Bay held by the
controlling shareholder Shenzhen Investment Holdings Co., Ltd. and 100% equities of
Shenxin Taxi Co., Ltd. with part of properties held by the Company and its wholly-owned
subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. (hereinafter referred as
“Investment Holdings” ), and the difference between the swap-out assets and swap-in
assets should be compensated by cash. In accordance with the Appraisal Report, the
evaluation value of the swap-out assets was RMB 306,563,279.00, while the evaluation
value of the swap-in assets was RMB 304,090,432.77, the corresponding balance of RMB
2,472,846.23 shall be covered in cash by Investment Holdings (Meanwhile, Investment
Holdings expressed that it shall strictly abide by the commitment made the share merger
reform, and compensated cash to the Company with 20% of the balance performed in this
time and in commitment). For details, please refer to the Public Notice on Implementation
of Commitment of Share Merger Reform on Assets Replacement published on 17 Sep.
2010 and Resolutions on the First Special Shareholders’ General Meeting for Y2010
published on 14 Oct. 2010.
The evaluation value of the swap-out assets was RMB 306,563,279.00 in total by adopting
different evaluation methods on relevant assets, of which: ① for Real Estate Town in
Danshui, it could not adopt Market Comparison Approach due to that there were not
enough similar real estate transaction cases around, but adopt Income Capitalization
Approach due to active leasing market there, and the evaluation value of Real Estate Town
in Danshui was RMB 26,079,250.00; ② for shops in Huangyu Garden, it could adopt
Market Comparison Approach for shops in the ground floor due to many similar shops on
the same floor reached deals, while adopt Income Capitalization Approach for the shops in
first to third floor due to there were not enough similar shops reached deals but the leasing
market was active, and the evaluation value of shops in Huangyu Garden was RMB
280,484,029.00
The evaluation value of the swap-in assets was RMB 304,090,432.77 in total by adopting
different evaluation methods on relevant assets, of which: ① for the land T102-0237 in
Moon Bay, evaluated by adopting Correction Factor of Benchmark Land Price Approach
and Hypothesis Development Approach, and used the weighted average value of the
results of the above two approaches as the result for the evaluation. Integrating the
experience of appraisal personnel, the evaluation value of land T102-0237 in Moon Bay
was RMB 270,894,484.00 calculated by 90% of the result of Hypothesis Development
Approach and 10% of the result of Correction Factor of Benchmark Land Price Approach;
② for the 100% equities of Shenxin Taxi Co., Ltd., evaluated by adopting Assets-based
Approach with the evaluation value as RMB 33,195,948.77.
Both parties have signed the Assets Replacement Agreement, by which, the difference
between swap-in assets and swap-out assets is RMB 2,472,846.23, and Investment
Holdings will pay the difference to the Company within one month after the delivery of
the swap-in assets and swap-out assets. Now the formalities for assets transfer are under
the handling.
6. In accordance with the Specification for Share Merger Reform, Investment Holdings
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, Investment Holdings will compensate 20% of reorganization capital
failing to start to the Company.
In accordance with the signed Assets Replacement Agreement, the value of swap-in assets
is RMB 306,563,279.00, Investment Holdings has paid the Company 20% of the
difference between the value of swap-in assets and that of swap-out assets on 17 Nov.
2010, i.e. RMB 38,687,344.20. For details, please refer to Public Notice on Progress of
Implementation of Commitment of Share Merger Reform on Assets Replacement and
Significant Related Transaction published on 18 Nov. 2010.
(II) Credits, liabilities and guarantees between the Company and related parties
For the credits and liabilities between the Company and its related parties, please refer to
the Note VI. 6. (2) Entrust loans and 7 Balance of accounts receivable from and payable to
related parties under the Notes to the financial statements. For details of the guarantees,
please refer to the Note (Ⅶ) 4 to the financial statements.
VI. Significant contracts and implementation
(I) Significant transaction, trusteeship, contract or lease of assets
1. Significant contracts
(1) In order to implement the Commitment of Share Merger Reform, the Company signed
the Assets Replacement Agreement with controlling shareholder Investment Holdings, for
details, please refer to “Chapter X. V. (I). “Significant transaction”, Item 5;
(2) In Oct. 2010, the Company reached a Settlement Agreement with eight companies
including Haiyi Industry (Shenzhen) Co., Ltd. on Haiyi Lawsuit, for details, please refer
Chapter X. I. “Significant lawsuit and arbitration” 2. (1).
2. During the reporting period, the Company did not hold a trust, contract or lease assets
of the other companies and the other companies did not hold a trust and contract the
Company’s assets.
3. In the report period, there were no such significant events where the Company leased its
assets.
(II) Significant guarantees
1. The Company provided a joint-liability guarantee for the long-term loan of RMB 240
million borrowed by its subsidiary 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 243 million, the loan will be due within one
year.
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 Shenzhen
Sub-branch of Ping An Bank, Shenzhen ITC Vehicles Services Company mortgaged the
land in Caitian Road West, Donggua Ling with Property Certificate: SFDZi No.
3000412119, and the closing balance of the loan stood at RMB 12 million.
4. The Company’s subsidiary Shenzhen ITC Vehicles Services Company gained a
long-term loan of RMB 19 million by pledging 80 operating licenses of Shenzhen ITC
Motor Rent Co., Ltd., and the closing balance of the loan stood at RMB 7.96 million, the
loan will be due within one year.
5. Guarantee for the proprietors: The Company and its subsidiaries provided the
commodity houses purchasers with mortgage guarantee to the bank. Up to 31 Dec. 2010,
the guarantee amount unsettled was RMB 854.965 million. The guarantee is that the real
estate developer provides petty proprietor with guarantee for purchasing of commodity
houses of the Company, which is a common phenomenon in this business.
(III) Cash assets management the Company trusted other parties
There was no event of trusteeship of cash assets management in the reporting period.
VII. Commitment made by the Company or shareholders holding over 5% of shares
of the Company
Shenzhen Construction Investment Holdings Co., Ltd. (hereinafter referred to as
“Construction Holdings”) and Shenzhen Investment Management Co., Ltd. (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.,
Ltd. 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 shareholders 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.
Up to the date of public notice, Construction Holdings and Investment Holdings 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 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.
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.
In order to implement the commitment, the Company prepared to start the relevant affairs
together with Investment Holdings, and disclosed the Public Notice on Implementation of
Commitment of Share Merger Reform on Assets Replacement and Significant Related
Transaction, which was reviewed and approved at the First Special Shareholders’ General
Meeting for 2010, for details, please refer to Public Notice on Resolutions of the First
Special Shareholders’ General Meeting for 2010; Investment Holdings has applied to
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited for
freezing its actual controlled 30 million shares of the Company under the name of
Construction Holdings, now the frozen period is due and the frozen shares has been
released.
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.
On Mar. 18, 2010, the Company held the Annual Shareholders’ General Meeting 2009, at
which reviewed and approved Proposal on Application of Entrust Loan from Controlling
Shareholder. 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. For details, please
refer to Public Notice on the Resolutions of Annual Shareholders’ General Meeting on 19
Mar. 2010. On 28 Dec. 2010, Investment Holdings entrusted Shenzhen Jingtian
Sub-branch of China Everbright Bank to provide entrust loan of RMB 10 million for the
Company’s subsidiary Shenzhen ITC Vehicles Services Company; from the end of report
period to the date of the public notice, Investment Holdings has provided entrust loan of
RMB 490 million for the Company.
④ In case that net profit of the Company in any year of 2010, 2011 and 2012 was less
than 2009, Shenzhen Investment Holdings Co., Ltd. will make up balance of net profit
between the year and 2009 with cash.
Whether the commitment will be implemented is according to net profit of 2011.
VIII. Engagement and disengagement of CPAs firm
In the reporting period, the Company still engaged BDO Wuhan Zhonghuan Certified
Public Accountants Co., Ltd. to do the auditing work for the year 2011. Since the first
agreement on the auditing work signed by the auditor, BDO Wuhan Zhonghuan Certified
Public Accountants Co., Ltd. has been providing auditing service for 9 reporting years for
the Company in succession. The annual auditing fees for 2010 totaled RMB 520,000
(including business trip expenses).
IX. Punishment to the Company, its Directors, Supervisors and Senior Executives
and rectification in the reporting period
1. On 10 Sept. 2008, the Company received the Investigation Letter (2008 SJLT Zi No.
001) issued by the Shenzhen Investigation Bureau of CSRC, which investigated on the
Company by putting on record. For details, please refer to Public Notice on Receiving
Investigation Letter published on 11 Sep. 2008.
On 3 Dec. 2009, the Company received the Advance Notification of Administrative
Punishments (CF Zi 【2009】No. 54) issued by CSRC. For details, please refer to Public
Notice on Progress of Investigation by CSRC published on 7 Dec. 2009.
On 10 May 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. For
details, please refer to Public Notice on Receiving the Written Decision of Administrative
Punishments from CSRC published on 12 May 2010.
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). For details, please
refer to VI. “Significant Events” in the 2010 Semi-annual Report published on 31 Jul.
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. Other Significant Events
1. On 14 Jan. 2009, a Resolution on Transferring the Entire Stakeholders’ Equity of
Hainan Xinda Development Co., Ltd. Held by the Company Based on Appraisal Value
through Public Listing was approved by the 10th Session of the 6th Board of Directors.
Up to the end of report period, the audit and appraisal work has been completed, but
relevant transfer plan has not been approved by Shenzhen State-owned Assets Supervision
and Administration Commission. The Company would find other way to solve the
relevant problems from Hainan Xinda Development Co., Ltd..
2. In Nov. 2009, the Shenzhen Municipal Government released the Shenzhen City
Renewal Methods, which was officially implemented on 1 Dec. 2009. The Company
thinks that the property meeting the renewing condition may be the industrial land in
Shangmeilin, Shenzhen (Property Certificate No. SFD Zi 0103142 and 0103139), its land
use right is registered under the name of the Company, while there has been dispute over
the possession of its existence right. And now the case is in the lawsuit process. For details,
please refer to Chapter X. I. “Significant lawsuit and arbitration” 2. (5)
Considering the land use right of the said industrial land is still in the lawsuit process, it is
uncertain to decide whether the relevant provisions of the Shenzhen City Renewal
Methods is applicable to the Company. The relevant evaluation is therefore unable to be
done. The Company will further follow the issue, which has no substantial affect on the
Company at present.
3. The Company gained the use right of state-owned construction land located Block
2010-001, Tongshan County, Xuzhou City on 10 Feb. 2010, for which, the Company
disclosed the relevant interim public notice at Securities Times, Ta Kung Pao and
http://cninfo.com.cn dated on 11 Feb. 2010.
Then the Company signed the Grant Contract for Use Right of State-owned Land with
Tongzhou District Bureau of Land and Resources with contract price as RMB 192.3
million, floor area as 96,869 ㎡，land function as residence house and the use term as 70
years. For details, please refer to 3.5.6 “Significant Contract” in the First Quarterly Report
for Y2010 disclosed on 26 Apr. 2010.
In order to be convenient for development of land in Xuzhou and build up and promote
brand of “ Shenzhen Properties and Resources”, 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. For details, please refer to the Public Notice on
Investment for Establishing Xuzhou Wholly-owned Subsidiary on 12 Apr. 2010,
4. On 15 Jul. 2010, the Company acquired use right of state-owned land No. 2010G048
located in Dalang Town, Dongguan City, the Company has disclosed the interim public
notice at Securities Times, Ta Kung Pao and http://cninfo.com.cn dated on 19 Jul. 2010.
In order to be convenient for development of land in Dongguan, the Company set up
Dongguan ITC Changsheng Real Estate Development Co., Ltd. to be responsible for the
development and operation of the project in Dalang Town, Dongguan City. For details,
please refer to Public Notice on Investment for Establishing Dongguan Wholly-owned
Subsidiary disclosed by the Company on 12 Apr. 2010.
5. The Company’s income from real estate business in 2009 accounted for 69.54% of total
operating income. In accordance with relevant stipulations for Changing the Industrial
Classification of Listed Companies by Shenzhen Stock Exchange, the Company applied
for its change in industrial category, which was approved by Shenzhen Stock Exchange.
Then the Company started this new industrial category since 16 Aug. 2010, changing from
“M Comprehensive Business” to “J01 Real Estate Development & Operation Business”.
For details, please refer to Public Notice on Changing the Company’s Industrial Category
disclosed by the Company on 14 Aug. 2010.
6. 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 98,611,300
that the Company should receive from Shenzhen Jiyong Properties Development Co., Ltd.,
a bad debt of RMB 42,611,300 had been withdrawn with the net amount standing at RMB
56 million.
7. 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 Session of the 6th Board of
Directors of the Company. According to the plan and relevant accounting standards, the
Company made a provision in 2008 on dismissal compensation of RMB 36,643,309.50. In
2009, because the Company put off the dismissal plan, 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, the
Company increased the withdrawal of dismissal welfare by RMB 12,700,956.90, which
was reviewed and approved by the 22nd Session of the 6th Board of Directors. Up to the
end of report period, the plan of dismissal welfare had been completed basically, the
accumulative withdrawal of dismissal welfare totaled RMB 50,886,233.6, of which RMB
45,839,717.80 was paid accumulatively with the closing balance as RMB 5,046,515.80,
which was expected to complete the payment at the end of 2011.
XI. Researches, interviews and visits received by the Company in the reporting
period
1. In the reporting period, the Company received no field visits from institutional
investors.
2. In the reporting period, the Company received field visits from individual investors.
Reception time Reception place Reception way Visitor Main discussion and materials provided
Office of the Acquainted about status of the Company and
Communication Individual
5 Jan. 2010 Board of inquired sales of Shengang No. 1 Project
by Telephone investor
Directors
Acquainted about status of the Company and
Office of the
Communication Individual inquired that when the principal
27 Jan. 2010 Board of
by Telephone investor shareholder start assets reorganization
Directors
as committed.
Office of the Acquainted about status of the Company and
Communication Individual
2 Feb. 2010 Board of inquired when the Company disclosed the
by Telephone investor
Directors Annual Report
Office of the Acquainted about basic status of the
Communication Individual
10 Mar. 2010 Board of Company and inquired progress of
by Telephone investor
Directors reorganization of share merger reform
Office of the Acquainted about basic status of the
Communication Individual
25 Mar. 2010 Board of Company and inquired whether Xinhua Town
by Telephone investor
Directors be carried forward
Office of the Acquainted about basic status of the
Communication Individual
7 Apr. 2010 Board of Company and public notice on
by Telephone investor
Directors clarification of relevant report
Office of the Acquainted about basic status of the
Communication Individual
12 Apr. 2010 Board of Company and asked about the progress of
by Telephone investor
Directors the Haiyi Company Lawsuit
Office of the Acquainted why the stock price was low and
Communication Individual
19 Apr. 2010 Board of inquired about progress of share merger
by Telephone investor
Directors reform
Office of the Acquainted when the share merger reform
Communication Individual
28 Apr. 2010 Board of started and ended with one year
by Telephone investor
Directors
5 May 2010 Office of the Communication Individual Acquainted whether reorganization of
Board of by Telephone investor share merger reform had progress;
Directors
Office of the
Communication Individual Acquainted about achievement of the first
20 May 2010 Board of
by Telephone investor half year of 2010 of the Company;
Directors
Office of the Whether there were some programs for share
Communication Individual
27 May 2010 Board of merger reform
by Telephone investor
Directors
Office of the Acquainted whether punishment from CSRC
Communication Individual
9 Jun. 2010 Board of would influence achievement of the
by Telephone investor
Directors Company;
Office of the
Communication Individual Acquainted about land reserves of the
28 Jun. 2010 Board of
by Telephone investor Company;
Directors
Office of the Acquainted about progress of assets
Communication Individual
8 Jul. 2010 Board of replacement;
by Telephone investor
Directors
Office of the
Communication Individual Acquainted about when stock of the Company
12 Jul. 2010 Board of
by Telephone investor relisted.
Directors
Office of the Inquired whether business of Shenxin Taxi
Communication Individual
22 Jul. 2010 Board of Co., Ltd has relationship with the Company
by Telephone investor
Directors in progress of assets replacement.
Office of the
Communication Individual Inquired when the title deed for land
23 Jul. 2010 Board of
by Telephone investor located Moon Bay would be completed;
Directors
Office of the Inquired when the Company held the
Communication Individual
24 Jul. 2010 Board of Shareholders’ General Meeting to review
by Telephone investor
Directors and approve assets replacement scheme?
21st Century Business Herald considered
that the assets swapped out from the
Company were undervalued, while the
Communication Individual
17 Aug. 2010 The Office of BOD assets swapped in to the company were
by Telephone investor
overvalued, whether the principle
shareholders encroach upon the interests
of the company.
In the semi-annual report, the profit was
Communication Individual
3 Sep. 2010 The Office of BOD mainly from main business or investment
by Telephone investor
income?
There is no difference between scheme on
assets replacement disclosed in this
Communication Individual
21 Sep. 2010 The Office of BOD public notice and that in the suggestive
by Telephone investor
notice on 21 Jul., why does the Company
held the Board meeting again?
Inquired when the Company held the
Communication Individual
8 Oct. 2010 The Office of BOD Shareholders’ General Meeting to take a
by Telephone investor
vote on assets replacement scheme?
Whether the performance in the third
Communication Individual
11 Oct. 2010 The Office of BOD quarterly report increased by a big margin
by Telephone investor
than that of the semi-annual report?
Communication Individual Acquainted about network voting procedure
13 Oct. 2010 The Office of BOD
by Telephone investor by trading system
Whether the shareholders of B-share have
Communication Individual
14Oct. 2010 The Office of BOD a right to take a vote on assets
by Telephone investor
replacement scheme?
Whether there existed an associative
Communication Individual relationship between the reconciliation
15 Oct. 2010 The Office of BOD
by Telephone investor of “Haiyi” lawsuit and assets replacement
scheme?
Communication Individual Whether the “Haiyi” Lawsuit is fully
20 Oct. 2010 The Office of BOD
by Telephone investor closed or not?
The Share Merger Reform committed to carry
out RMB 500 million of assets replacement,
Communication Individual but the assets was less than RMB 500
9 Nov. 2010 The Office of BOD
by Telephone investor million in the public notice, whether the
principle shareholders would compensated
for the Company with the difference?
Communication Individual Inquired about the progress of the assets
21 Dec. 2010 The Office of BOD
by Telephone investor replacement scheme
Events after
balance sheet
date
Communication Individual Whether the Company’s earnings in 2010 is
27 Jan. 2011 The Office of BOD
by Telephone investor better than 2009?
Communication Individual Whether the formalities of transferring
11 Feb. 2011 The Office of BOD
by Telephone investor the land of Moon Bay has been completed?
The Company’s stock trade suddenly
increased at the first 10 minutes of early
Communication Individual
23 Feb. 2011 The Office of BOD quotation, whether the Company existed
by Telephone investor
any non-published significant
information?
The price of the Company’ share surged to
Communication Individual trade limit at the afternoon, whether the
10 Mar. 2011 The Office of BOD
by Telephone investor Company existed any non-published bull
information?
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 equally and no undisclosed information was leaked to the investors.
XII. Index for significant information disclosed
In the report period, the public notices have been published at Securities Times, Ta Kung
Pao and http://cninfo.com.cn designated for information with details as follows:
Date of Serial
Name
disclosure No.
14 Jan. 2010 2010-01 Earnings Prediction for Y2009
8 Feb. 2010 2010-02 Public Notice on Disclose Annual Report 2009 in Advance
Public Notice on Resolutions of the 13th Session of the 6th Supervisory
9 Feb. 2010 2010-03
Committee
9 Feb. 2010 2010-04 Summary of Annual Report 2009
9 Feb. 2010 2010-05 Public Notice on Resolution of the Board of Directors
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
Public Notice on Resolutions of the Annual Shareholders’ General
19 Mar. 2010 2010-08
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 First Quarterly Report 2010
26 Apr. 2010 2010-12 Public Notice on Resolutions of the Board of Directors
Public Notice on Resolutions of the 14th Session of the 6th Supervisory
26 Apr. 2010 2010-13
Committee
Public Notice on Receiving Written Decision of Administrative
12 May 2010 2010-14
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
Public Notice on Progress of Implementation of the Significant Assets
13 Jul. 2010 2010-18
Reorganization in share merger reform
Public Notice on Acquisition of Use Right of Land Located in Dalang Town,
19 Jul. 2010 2010-19
Dongguan
19 Jul. 2010 2010-20 Public Notice on Progress of Haiyi Case
Public Notice on Progress of Implementation of the Significant Assets
20 Jul. 2010 2010-19
Reorganization in share merger reform
Public Notice on Implementation of Commitment of Share Merger Reform
20 Jul. 2010 2010-21
on Assets Reorganization
21 Jul. 2010 2010-22 Public Notice on Resolution of the Board of Directors
Suggestive Public Notice on Implementation of Commitment of Share
21 Jul. 2010 2010-23 Merger Reform on Assets Replacement and Significant Related
Transaction.
21 Jul. 2010 2010-24 Public Notice on Reactivating stock trading of the Company
31 Jul. 2010 2010-26 Public Notice on Resolutions of the Board of Directors
31 Jul. 2010 2010-27 Summary of the Semi-annual Report for Y2010
31 Jul. 2010 2010-28 Public Notice on the 16th Session of the 6th Supervisory Committee
6 Aug. 2010 2010-29 Public Notice on the Progress of Haiyi Company Lawsuit
14 Aug. 2010 2010-30 Public Notice on Changing the Company’s Industrial Category
11 Sep. 2010 2010-31 Public Notice on Resignation of Director
18 Sep. 2010 2010-32 Public Notice on Resolutions of the Board of Directors
Public Notice on Implementation of Commitment of Share Merger Reform
18 Sep. 2010 2010-33
on Assets Replacement and Significant Related Transaction
Circular on Convening the First Special Shareholders’ General Meeting
18 Sep. 2010 2010-34
for Y2010
Solicitation Letter for Voting Entrust on the First Special
18 Sep. 2010 2010-35
Shareholders’ General Meeting for Y2010
Public Notice on the Resolutions of the 17th Session of the 6th Supervisory
18 Sep. 2010 2010-36
Committee
The First Suggestive Public Notice on Convening the First Special
29 Sep. 2010 2010-37
Shareholders’ General Meeting for Y2010
Public Notice on Investment for Establishing Wholly-owned Subsidiary
30 Sep. 2010 2010-38
Company in Dongguan
The Second Suggestive Public Notice on Convening the First Special
11 Oct. 2010 2010-39
Shareholders’ General Meeting for Y2010
Public Notice on the Resolutions of the First Special Shareholders’
14 Oct. 2010 2010-40
General Meeting for Y2010
14 Oct. 2010 2010-41 Public Notice on the Progress of Haiyi Company Lawsuit
25 Oct. 2010 2010-42 Public Notice on the Resolutions of the Board of Directors
25 Oct. 2010 2010-43 Text of the Third Quarterly Report for Y2010
25 Oct. 2010 2010-44 Public Notice on the 18th Session of the 6th Supervisory Committee
25 Oct. 2010 2010-45 Public Notice on the Progress of Haiyi Company Lawsuit
27 Oct. 2010 2010-46 Public Notice on the Progress of Huaxi Company Lawsuit
Public Notice on Progress of Implementation of Commitment of Share
18 Nov. 2010 2010-47
Merger Reform on Assets Replacement and Significant Related Transaction
Events after
balance sheet date
24 Jan. 2011 2011-01 Public Notice on the Resolutions of the Board of Directors
Public Notice on Acquiring the Use Right of Land Located at Weiyang
31 Jan. 2011 2011-02
District, Yangzhou City
Public Notice on Signing the Supplemented Agreement for Grant Contract on
9 Mar. 2011 2011-03
Use Right of Land of Jinlihua Square
13 Apr. 2011 2011-04 Public Notice on Forecast of Earning Growth in the First Quarter of 2011
13 Apr. 2011 2011-05 Earnings Prediction for Y2010
Suggestive Public Notice on Releasing the Shares Subject to Trading
13 Apr. 2011 2011-06
Moratorium
XIII. Specific Explanation on Capital Currents with Related Parties
Specific Explanation on Capital Occupation by Controlling Shareholders and Other
Related Parties of Shenzhen Properties & Resources Development (Group) Ltd.
issued by BDO Wuhan Zhong Huan Certified Public Accounts Co., Ltd.
Shenzhen Properties & Resources Development (Group) Ltd.
Specific Explanation on Capital Occupation by Controlling Shareholder and Other
Related Parties in 2010
ZHZ Zi (2011) No. 097
Board of Directors of Shenzhen Properties & Resources Development (Group) Ltd.:
As entrusted by Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter
referred to as “the Company”), we, according to the Accounting Standards for Chinese
Registered Accountants, have audited the Company’s balance sheet and consolidated
balance sheet as at 31 Dec. 2010, income statement and consolidated income statement as
of the year 2010, statement of owners’ equity and consolidated statement of owners’
equity as of the year 2010, cash flow statement and consolidated cash flow statements as
of the year 2010, and the notes to the financial statements. And we issued the Auditor’s
Report ZHS Zi (2011) No. 357 on 22 Apr. 2011.
According to the Circular on Regulating Capital Currents Between Listed Companies and
Their Related Parties and Several Issues Concerning External Guarantees of Listed
Companies (ZJF [2003] No.56) issued by the China Securities Regulatory Commission,
the Company has produced the Statement of Capital Occupation by Controlling
Shareholders and Other Related Parties of Shenzhen Properties & Resources Development
(Group) Ltd. in 2010 (Up to 31 Dec. 2010).
It is the responsibility of the Company’s management to prepare the Capital Occupation
Statement and ensure its factuality, legitimacy and completeness. We have checked the
Capital Occupation Statement against the audited 2010 financial statements of the
Company and other relevant information, and no discrepancy has been found in all
significant information. Except for the relevant auditing procedures conducted by us on
the related transactions while auditing the 2010 financial statements for the Company, we
have not conducted any extraordinary auditing procedure or other procedures to the
information carried by the Capital Occupation Statement.
In order to better understand the capital occupation by the controlling shareholder and
other related parties of the Company in 2010, the Capital Occupation Statement is
suggested to be read together with the audited financial statements.
This specific explanation is for the purpose of being submitted by the Company to the
China Securities Regulatory Commission and the Shenzhen Stock Exchange, and it shall
not be used for any other purposes.
Attached: the Statement of Capital Occupation by Controlling Shareholder and Other
Related Parties of Shenzhen Properties & Resources Development (Group) Ltd. in 2010.
Wuhan Zhong Huan Certified Public Accounts Co., Ltd.
Chinese registered accountant: Min Chao
Chinese registered accountant: Fan Guiming
Wuhan, China 22 Apr. 2011
Section XI Financial Report (Attached)
Section XII Documents for Reference
(Ⅰ) Accounting Statements with the signatures and seals of the Legal Representative and
the Manager of the Finance Department.
(Ⅱ) Originals of the Auditors’ Reports with the seals of the auditing agencies, and the
signatures and seals of the CPAs.
(Ⅲ) Texts and originals of the public notices disclosed in the designated media within the
reporting period.
Board of Directors of
Shenzhen Properties & Resources Development (Group) Ltd
26 Apr. 2011
Balance Sheet
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. As at 31 Dec. 2010 Unit: RMB Yuan
Closing balance Beginning balance
Items Notes
Consolidation The Company Consolidation The Company
Current Assets:
Monetary fund （V）1 534,418,695.36 78,920,447.75 830,055,588.25 2,539,358.76
Trading financial assets （V）2 272,100.00 272,100.00 232,200.00 232,200.00
Notes receivable （V）3 300,000.00
Accounts receivable （V）4 67,935,785.29 59,680,032.75 66,938,998.94 61,464,246.43
Prepayment （V）6 49,360,431.87 46,862,874.11 500,000.00
Dividends receivable 325,739,041.74
Other receivables （V）5 37,787,880.10 558,839,822.28 54,030,054.90 89,557,866.50
Financial assets purchased under
agreement to resell
Inventories （V）7 1,576,183,305.38 56,594,638.32 1,255,676,772.24 66,446,135.31
Non-current assets due within 1
year
Other current assets
Total current assets 2,266,258,198.00 754,307,041.10 2,253,796,488.44 546,478,848.74
Non-current assets:
Loan and payment on other's
behalf disbursed
Available-for-sale financial assets
Investment held to maturity
Long-term receivables
Long-term equity investment （V）9 81,390,188.20 250,800,688.20 79,697,503.62 178,877,503.62
Investment property （V）10 295,584,704.09 205,439,020.58 257,105,965.94 173,874,690.52
Fixed assets （V）11 78,112,745.51 35,645,685.39 76,985,792.12 39,860,661.03
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets （V）12 106,563,665.92 112,893,677.12
R&D expenses
Goodwill
Long-term deferred expenses 2,162,202.81 2,162,202.81 2,243,026.34 2,243,026.34
Deferred tax assets （V）13 83,209,649.31 51,695,501.02
Other non-current assets
Total non-current assets 647,023,155.84 494,047,596.98 580,621,466.16 394,855,881.51
Total assets 2,913,281,353.84 1,248,354,638.08 2,834,417,954.60 941,334,730.25
Current Liabilities:
Short-term borrowings （V）16 10,000,000.00 200,000,000.00 50,000,000.00
Tradable financial liabilities
Notes payable
Accounts payable （V）17 105,465,038.93 34,423,717.04 112,470,139.39 37,032,127.61
Advance from customers （V）18 878,660,737.46 79,725.48 745,527,226.22 1,026,694.63
Financial assets sold under
agreements to repurchase
Service charge and commission
payables
Payroll payable （V）19 53,817,405.36 9,636,557.03 51,982,204.97 9,345,999.43
Taxes payable （V）20 195,585,180.87 1,264,740.40 205,331,877.94 2,912,148.33
Dividends payable
Interests payable
Other payables （V）21 229,549,997.54 508,763,899.07 208,240,882.65 125,331,899.26
Non-current liabilities due within
（V）22 250,960,000.00 200,000,000.00
1 year
Other current liabilities
Total Current Liabilities 1,724,038,360.16 554,168,639.02 1,723,552,331.17 225,648,869.26
Non-current Liabilities:
Long-term borrowings （V）23 212,000,000.00 263,480,000.00
Bonds payable
Long-term payables
Specific purpose account
payables
Provision for contingent
（V）24 69,284,708.83 69,284,708.83
liabilities
Deferred tax liabilities （V）13 807.48 807.48
Other non-current liabilities （V）25 102,194,477.26 2,429,164.54 115,796,274.42 12,315,309.38
Total Non-current Liabilities 314,195,284.74 2,429,972.02 448,560,983.25 81,600,018.21
TOTAL LIABILITIES 2,038,233,644.90 556,598,611.04 2,172,113,314.42 307,248,887.47
Owners’ equity (or Shareholders’
Equity):
Paid-in capital （V）26 595,979,092.00 595,979,092.00 595,979,092.00 595,979,092.00
Capital reserve （V）27 64,020,275.72 38,914,227.99 25,332,931.52 226,883.79
Less: Treasury stock
Surpluses reserve （V）28 69,712,050.51 69,712,050.51 69,712,050.51 69,712,050.51
General risk provision
Retained earnings （V）29 148,961,664.40 -12,849,343.46 -26,036,870.39 -31,832,183.52
Foreign exchange difference -4,487,460.75 -3,544,650.52
Total owners’ equity attributable
874,185,621.88 691,756,027.04 661,442,553.12 634,085,842.78
to parent company
Minority interest 862,087.06 862,087.06
Total owner’s equity 875,047,708.94 691,756,027.04 662,304,640.18 634,085,842.78
Total liabilities and owner’s equity 2,913,281,353.84 1,248,354,638.08 2,834,417,954.60 941,334,730.25
Income Statement
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Jan.-Dec. 2010 Unit: RMB Yuan
2010 2009
Items Notes
Consolidation The Company Consolidation The Company
I. Total sales 993,175,350.38 35,828,118.43 845,366,939.69 27,284,202.73
Including: Sales （V）30 993,175,350.38 35,828,118.43 845,366,939.69 27,284,202.73
II. Total cost of sales 801,568,833.29 26,282,012.51 716,121,309.48 80,310,850.83
Including: Cost of sales （V）30 673,496,987.55 16,789,454.03 431,856,954.60 18,575,069.16
Taxes and associate charges （V）31 82,649,517.32 1,866,079.35 146,024,553.22 1,422,224.20
Selling and distribution
（V）32 14,956,309.36 21,209,571.81
expenses
Administrative expenses （V）33 92,642,838.43 43,351,688.19 102,009,696.27 39,021,307.37
Financial expense （V）34 -2,813,250.22 1,551,183.42 16,054,025.03 4,150,234.21
Impairment loss （V）35 -59,363,569.15 -37,276,392.48 -1,033,491.45 17,142,015.89
Add: gain/(loss) from change in
（V）36 39,900.00 39,900.00 -705,776.78 168,300.00
fair value (“-” means loss)
Investment income (“-” means
（V）37 3,232,684.58 3,232,684.58 2,381,688.25 521,204,917.92
loss)
Including: income form
investment on affiliated enterprise 1,692,778.22 1,692,778.22 -795,082.08 -795,082.08
and jointly enterprise
Foreign exchange difference
(“-” means loss)
III. Business profit (“-” means loss) 194,879,101.67 12,818,690.50 130,921,541.68 468,346,569.82
Plus: non-operation income （V）38 9,301,597.49 2,643,526.20 5,052,211.85 2,760,611.89
Less: non- operation expense （V）39 -2,979,042.54 -3,521,430.84 8,675,990.72 8,169,985.80
Including: loss from non-current
54,321.72 10,241.54 401,097.48 83,011.41
asset disposal
IV. Total profit (“-” means loss) 207,159,741.70 18,983,647.54 127,297,762.81 462,937,195.91
Less: Tax expense （V）40 32,161,206.91 807.48 30,363,475.79
V. Net profit (“-” means loss) 174,998,534.79 18,982,840.06 96,934,287.02 462,937,195.91
Attributable to parent company 174,998,534.79 18,982,840.06 96,933,951.02 462,937,195.91
Minority interest 336.00
VI. Earnings per share
(I) basic earnings per share （V）41 0.2936 0.0319 0.1626 0.7768
(II) diluted earnings per share （V）41 0.2936 0.0319 0.1626 0.7768
VII. Other composite income （V）42 -942,810.23 -38,974.41
VIII. Total composite income 174,055,724.56 18,982,840.06 96,895,312.61 462,937,195.91
Attributable to owners of
174,055,724.56 18,982,840.06 96,894,976.61 462,937,195.91
parent company
Minority interest 336.00
Cash Flow Statement
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Jan.-Dec. 2010 Unit: RMB Yuan
2010 2009
Items Notes
Consolidation The Company Consolidation The Company
Ⅰ.Cash flows from operating
activities:
Cash received from sale of
commodities and rendering of 1,131,466,203.13 3,823,346.28 1,531,740,152.74 9,660,606.19
service
Net increase of disposal of tradable
financial assets
Tax refunds received
Other cash received relating to
（V）43 59,815,186.84 111,410,661.94 38,461,044.49 141,663,744.56
operating activities
Subtotal of cash inflows from
1,191,281,389.97 115,234,008.22 1,570,201,197.23 151,324,350.75
operating activities
Cash paid for purchase of
commodities and reception of 820,344,512.15 12,104,251.58 434,523,512.76 5,388,321.58
service
Cash paid to and for employees 182,972,116.90 1,729,974.36 178,247,426.70 6,746,838.49
Various taxes paid 169,895,167.87 676,447.84 147,518,572.72 3,270,561.27
Other cash paid relating to operating
（V）43 119,848,063.69 149,964,390.89 50,261,058.36 26,022,181.44
activities
Subtotal of cash outflows from
1,293,059,860.61 164,475,064.67 810,550,570.54 41,427,902.78
operating activities
Net cash flows from operating
-101,778,470.64 -49,241,056.45 759,650,626.69 109,896,447.97
activities
Ⅱ. Cash flows from investing
activities:
Cash received from disposal of
1,540,000.00 4,927,524.66
investments
Cash received from obtaining
5,000,000.00 157,180,496.74 5,000,000.00 4,275,643.40
investment income
Net cash received from disposal of
fixed assets, intangible assets and 5,517,679.84 1,534,678.54 890,741.54
other long-term assets
Net cash received from disposal of
subsidiary or other operating
business units
Other cash received relating to
investing activities
Subtotal of cash inflows from
12,057,679.84 157,180,496.74 11,462,203.20 5,166,384.94
investing activities
Cash paid to acquire fixed assets,
intangible assets and other 19,488,536.34 245,261.58 2,771,658.50 1,109,913.46
long-term assets
Cash paid for investment 20,000,000.00 57,150.23
Net increase of pledged loans
Net cash paid by subsidiaries and
other operating units
Other cash paid relating to other
investment activities
Subtotal of cash outflows from
19,488,536.34 20,245,261.58 2,828,808.73 1,109,913.46
investment activities
Net cash flows from investing
-7,430,856.50 136,935,235.16 8,633,394.47 4,056,471.48
activities
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 222,000,000.00 569,000,000.00 169,000,000.00
Cash received from issuance of
bonds
Other cash received relating to （V）43
38,687,344.20 38,687,344.20
financing activities
Subtotal of cash inflows from
260,687,344.20 38,687,344.20 569,000,000.00 169,000,000.00
financing activities
Cash repayments of amounts
413,009,500.00 50,000,000.00 722,749,343.34 285,000,000.00
borrowed
Cash paid interest expenses and
29,659,944.52 53,945,113.00 3,216,143.98
distribution of dividends or profit
Of which: stock dividends and
profits paid to minority shareholders
by subsidiaries.
Payment of cash relating to other
（V）43 4,284,926.00 2,235,000.00
financing activities
Subtotal of cash outflows from
446,954,370.52 50,000,000.00 778,929,456.34 288,216,143.98
financing activities
Net cash flows from financing
-186,267,026.32 -11,312,655.80 -209,929,456.34 -119,216,143.98
activities
Ⅳ. Effect of foreign exchanges on
-160,539.43 -433.92 -7,704.43 -29.59
cash and cash equivalents
Ⅴ. Net increase of cash and cash
-295,636,892.89 76,381,088.99 558,346,860.39 -5,263,254.12
equivalents
Plus: Beginning balance of cash and
（V）43 830,055,588.25 2,539,358.76 271,708,727.86 7,802,612.88
cash equivalents
Ⅵ. Closing balance of cash and
（V）43 534,418,695.36 78,920,447.75 830,055,588.25 2,539,358.76
cash equivalents
Consolidated Statement of Changes in Owners’ Equity
December 2010
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amounts for 2010
Equity attributable to owners of the Company
Total
Items Paid-up Minority
Less: owners’
capital Capital Surplus Retained Others interests
treasury equity
(or share reserve reserve profit (note)
stock
capital)
I. Balance at
the end of the 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
previous year
Add: change of
accounting
policy
Correction of
errors in
previous
periods
Other
II. Balance at
the beginning 595,979,092.00 25,332,931.52 -26,036,870.39 -3,544,650.52 862,087.06 662,304,640.18
69,712,050.51
of the year
III. Increase/
decrease of
amount in the
38,687,344.20 174,998,534.79 -942,810.23 212,743,068.76
year (“-”
means
decrease)
(I) Net profit 174,998,534.79 174,998,534.79
(II) Other
comprehensive -942,810.23 -942,810.23
incomes
Subtotal of (I)
174,998,534.79 -942,810.23 174,055,724.56
and (II)
(III) Capital
paid in and
38,687,344.20 38,687,344.20
reduced by
owners
1. Capital paid
in by owners
2. Amounts of
share-based
payments
recognized in
owners’ equity
3. Others 38,687,344.20 38,687,344.20
(IV) Profit
distribution
1.
Appropriations
to surplus
reserves
2.
Appropriations
to owners (or
shareholders)
3. Others
(V) Internal
carry-forward
of owners’
equity
1. New increase
of capital (or
share capital)
from capital
public
reserves
2. New increase
of capital (or
share capital)
from surplus
reserves
3. Surplus
reserves for
making up
losses
4. Other
IV. Closing
595,979,092.00 64,020,275.72 69,712,050.51 148,961,664.40 -4,487,460.75 862,087.06 875,047,708.94
balance
Note: Item “Other” is foreign exchange difference.
Consolidated Statement of Changes in Owners’ Equity
(Continued)
December 2010
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amounts for 2009
Equity attributable to owners of the Company
Paid-up Total
Items Less: Minority
capital (or Capital Surplus Retained Others owners’
treasury interests
share reserve reserve profit (note) equity
stock
capital)
I. Balance at
the end of the 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
previous year
Add: change of
accounting
policy
Correction of
errors in
previous
periods
Other
II. Balance at
the beginning 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
of the year
III. Increase/
decrease of
amount in the
54,179,917.00 6,792,923.40 29,893,321.72 -38,974.41 336.00 90,827,523.71
year (“-”
means
decrease)
(I) Net profit 96,933,951.02 336.00 96,934,287.02
(II) Other
comprehensive -38,974.41 -38,974.41
incomes
Subtotal of (I)
96,933,951.02 -38,974.41 336.00 96,895,312.61
and (II)
(III) Capital
paid in and
reduced by
owners
1. Capital
paid in by
owners
2. Amounts of
share-based
payments
recognized in
owners’ equity
3. Others
(IV) Profit 54,179,917.00
6,792,923.40 -67,040,629.30 -6,067,788.90
distribution
1.
Appropriations
6,792,923.40 -6,792,923.40
to surplus
reserves
2. 54,179,917.00
Appropriations
to owners (or -60,247,705.90 -6,067,788.90
shareholders)
3. Others
(V) Internal
carry-forward
of owners’
equity
1. New increase
of capital (or
share capital)
from capital
public
reserves
2. New increase
of capital (or
share capital)
from surplus
reserves
3. Surplus
reserves for
making up
losses
4. Other
IV. Closing
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
balance
Note: Item “Other” is foreign exchange difference.
Statement of Changes in Owners’ Equity
December 2010
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. (the Company) Unit: RMB
Yuan
Amounts for 2010
Equity attributable to owners of the Company
Items Total
Paid-up Minority
Less: owners’
capital (or Capital Surplus Retained interests
treasury Others equity
share reserve reserve profit
stock
capital)
I. Balance at
the end of the 595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
previous year
Add: change of
accounting
policy
Correction of
errors in
previous
periods
Other
II. Balance at
the beginning 595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
of the year
III. Increase/
decrease of
amount in the
38,687,344.20 18,982,840.06 57,670,184.26
year (“-”
means
decrease)
(I) Net profit 18,982,840.06 18,982,840.06
(II) Other
comprehensive
incomes
Subtotal of (I)
18,982,840.06 18,982,840.06
and (II)
(III) Capital
paid in and
reduced by
owners 38,687,344.20 38,687,344.20
1. Capital
paid in by
owners
2. Amounts of
share-based
payments
recognized in
owners’ equity
3. Others 38,687,344.20 38,687,344.20
(IV) Profit
distribution
1.
Appropriations
to surplus
reserves
2.
Appropriations
to owners (or
shareholders)
3. Others
(V) Internal
carry-forward
of owners’
equity
1. New increase
of capital (or
share capital)
from capital
public
reserves
2. New increase
of capital (or
share capital)
from surplus
reserves
3. Surplus
reserves for
making up
losses
4. Other
IV. Closing
595,979,092.00 38,914,227.99 69,712,050.51 -12,849,343.46 691,756,027.04
balance
Statement of Changes in Owners’ Equity (Continued)
December 2010
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. (the Company) Unit: RMB
Yuan
Amounts for 2009
Items Equity attributable to owners of the Company Total
Minority
owners’
Paid-up Capital Less: Surplus Retained interests
Others equity
capital (or reserve treasury reserve profit
share capital) stock
I. Balance at
the end of the 541,799,175.00 226,883.79 62,919,127.11 -427,728,750.13 177,216,435.77
previous year
Add: change of
accounting
policy
Correction of
errors in
previous
periods
Other
II. Balance at
the beginning 541,799,175.00 226,883.79 62,919,127.11 -427,728,750.13 177,216,435.77
of the year
III. Increase/
decrease of
amount in the
54,179,917.00 6,792,923.40 395,896,566.61 456,869,407.01
year (“-”
means
decrease)
(I) Net profit 462,937,195.91 462,937,195.91
(II) Other
comprehensive
incomes
Subtotal of (I)
462,937,195.91 462,937,195.91
and (II)
(III) Capital
paid in and
reduced by
owners
1. Capital paid
in by owners
2. Amounts of
share-based
payments
recognized in
owners’ equity
3. Others
(IV) Profit 54,179,917.00
6,792,923.40 -67,040,629.30 -6,067,788.90
distribution
1.
Appropriations 6,792,923.40 -6,792,923.40
to surplus
reserves
2. 54,179,917.00
Appropriations
-6,067,788.90
to owners (or -60,247,705.90
shareholders)
3. Others
(V) Internal
carry-forward
of owners’
equity
1. New increase
of capital (or
share capital)
from capital
public
reserves
2. New increase
of capital (or
share capital)
from surplus
reserves
3. Surplus
reserves for
making up
losses
4. Other
IV. Closing
595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
balance
Auditor's Report
ZHSZ (2011) NO.357
TO THE SHAREHOLDERS OF SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.：
We have audited the accompanying financial statements of Shenzhen Properties & Resources
Development (Group) Ltd. (hereinafter referred to as “Company”or “the Company”), which comprise
the balance sheet and the consolidated balance sheet as at December 31, 2010, the income statement
and the consolidated income statement, the statement of change in equity and the consolidated
statement of change in equity, the cash flow statement and the consolidated cash flow statement for the
year then ended, and a summary of significant accounting policies and other explanatory notes.
Management's responsibility for the financial statements
Preparing financial statements in compliance with Accounting Standards for Business Enterprises is the
responsibility of the Company’s management. This responsibility includes (1) designing, implementing
and maintaining internal controls pertaining to the preparation of these financial statements to prevent
these financial statements from material misstatement arising from frauds and errors; (2) selecting and
applying proper accounting policies; and (3) making reasonable accounting estimates.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audit in accordance with China’s Independent Auditing Standards. Those Standards
require that we comply with relevant ethical requirements and plan and perform the audit to obtain
reasonable assurance as to whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The audit procedures selected depend on our judgement, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, we consider internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles
used and the reasonableness of accounting estimates made by the management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidences we have obtained are sufficient and effective, providing a
reasonable basis for our opinion.
Opinion
In our opinion, the financial statements comply with Accounting Standards for Business Enterprises,
and present fairly the financial position of the Company as of December 31, 2010 and the results of its
operations and its cash flows for the year then ended.
Wuhan Zhonghuan CPAs Co., Ltd CPA Min Chao
CPA Fan Guiming
Wuhan, China Apr 22, 2011
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 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
ZQFZ 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. Chen
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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 Bureau 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
Bureau.
5. Authorization and date of issuing the financial statements
The financial statements were approved and authorised for issue by the 30th session of the 6th
conference of the Company’s board of directors on Apr 22, 2011.
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 control
(1) The Company adopts equity method for business combination under common control. The assets
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and liabilities that the combining party obtained in a business combination shall be measured on their
carrying amount in the combined party on the combining date. The difference between the carrying
amount of net assets acquired by the combining party and the carrying amount of the consideration paid
by it (or the total par value of the shares issued) shall be adjusted to capital surplus. If the capital surplus
is not sufficient for adjustment, retained earning is adjusted respectively. The business combination costs
that are directly attributable to the combination, such as audit fees, valuation fees, legal service fees and
so on are recognized in profit or loss during the current period when they occurred. The bonds issued for
a business combination or the handling fees, commissions and other expenses for bearing other liabilities
shall be recorded in the amount of initial measurement of the bonds or other debts. The handling fees,
commissions and other expenses for the issuance of equity securities for the business combination shall
be credited against the surplus of equity securities; if the surplus is not sufficient, the retained earnings
shall be offset. Where a relationship between a parent company and a subsidiary company is formed due
to a business combination, the parernt company shall, on the combining date, prepare consolidated
financial statements according to the accounting policy of the Company.
(2) The Company adopts acquisition method for business combination not under common control. The
acquirer shall recognize the initial cost of combination under the following principles:
①When 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;
②For the business combination involved more than one exchange transaction, accounting treatments
will be carried out separately on individual and consolidated financial statements as the followings:
A. In the individual financial statements, the initial investment cost of the particular project will be the
sum of book value of equity in the entity before the date of acquisition and the newly added investment
cost; When the share equity before the date of acquisition involves with other integrated gains, such
gains (such as the part of fair value of the sellable financial assets accounted into capital reserves, same
for the followings) are transferred into current investment income account.
B. In the consolidated financial statements, the share equity in the acquired entity before the date of
acquisition is recalculated upon the fair value of the equity at the date of acquisition. The balance
between the fair value and book value shall be accounted into current investment income account; when
the share equity before the date of acquisition involves with other integrated gains, such gains are
transferred into investment income account of the period when it occurred. Within the notes of financial
statement, the acquirer shall be disclosed the fair value (on the merger date) of the shareholdings of the
bargainor hold and profits or losses recognized by the revaluation.
③Agency expenses and other administrative expenses such as auditing, legal consulting, or appraisal
services occurred relating to the merger of entities are accounted into current income account when
occurred; the transaction fees of equity certificates or liability certificates issued by the purchaser for
payment for the acquisition are accounted at the initial amount of the certificates.
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④Where a business combination contract or agreement provides for a future event which may adjust the
cost of combination, the Company shall include the amount of the adjustment in the cost of the
combination at the acquisition date if the future event leading to the adjustment is probable and the
amount of the adjustment can be measured reliably.
The acquirer shall, on the acquisition date, measure the assets given and liabilities incurred or assumed
by an enterprise for a business combination in light of their fair value, and shall record the 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
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the investee company, the investee company is regarding as subsidiary and included in the consolidated
financial statements. If the parent owns half or less of the voting power of an entity when there is any
following condition incurred, the investee company is regarding as subsidiary and included consolidated
financial statements.
A. power over more than half of the voting rights by virtue of an agreement with other investors;
B. power to govern the financial and operating policies of the entity under a statute or an agreement;
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
When the share of losses attributable to the minor shareholders has exceeded their shares in the
shareholders’ equity at the beginning of term, the shareholders’ equity shall be deducted thereof.
（5）Increase or decrease of the subsidiaries
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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.
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
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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 in
foreign currencies as follows: a) monetary items denominated in foreign currencies are translated at the
foreign exchange rates ruling at the balance sheet date. Foreign exchange gains and losses arising from
the difference between the balance sheet date exchange rate and the exchange rate ruling at the time of
initial recognition or the exchange rate ruling at the last balance sheet date are recognized in income
statement; b) Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the current exchange rates ruling at the transaction dates. Non-monetary items
denominated in foreign currencies that are stated at fair value are translated using the current exchange
rates ruling at the dates the fair value was determined, the difference between the amount of functional
currency after translation and the original amount of functional currency is treated as part of change in
fair value (including change in exchange rate) and recognized in income statement. During the
capitalization period, exchange differences arising from foreign currency borrowings are capitalized as
part of the cost of the capitalized assets.
(2) Translations of financial statements in foreign currencies
The Company translates the financial statements of its foreign operation in accordance with the
following provisions: a) the asset and liability items in the balance sheets shall be translated at a spot
exchange rate ruling at the balance sheet date. Among the owner's equity items, except the ones as
"retained earnings", others shall be translated at the spot exchange rate ruling at the time when they
occurred; b) The income and expense items in the income statements shall be translated at an exchange
rate which is determined in a systematic and reasonable way and is approximate to the spot exchange
rate (calculated by the average of starting rate and closing rate on the reporting period) ruling at the
transaction date. The foreign exchange difference arisen from the translation of foreign currency
financial statements shall be presented separately under the owner's equity in the balance sheet. The
translation of comparative financial statements shall be subject to the aforesaid provisions.
9. Recognition and measurement of financial instrument
(1) Recognition of financial assets
The Company recognises a financial asset or fiancial liability on its balance sheet when, and only when,
the Company becomes a party to the contractual provisions of the instrument.
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(2) Classification and measurement of financial assets
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
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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:
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
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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 for
an individually assessed financial asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively assesses them for impairment.
Assets that are individually assessed for impairment and for which an impairment loss is or continues to
be recognised are not included in a collective assessment of impairment.
The Company performs impairment test for receivables and provide bad debt provisions at the balance
sheet date. For the individually significant receivables and not individually significant receivables, the
impairment tests are both carried on individually. If there is objective evidence that an impairment loss
on loans and receivables, the Company provides provision for impairment loss for the amount which is
measured as the difference between the asset's carrying amount and the present value of estimated future
cash flows.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss of financial asset measured at amortised cost is be reversed. The amount of the reversal
is recognised in profit or loss of the current period.
b）Available-for-sale financial assets
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in
equity, the cumulative loss that had been recognised directly in equity is removed from equity and
recognised in profit or loss even though the financial asset has not been derecognised.
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a
derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument,
the amount of the impairment loss is measured as the difference between the carrying amount of the
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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 recognised in profit or loss
of the current period.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as
available for sale is not reversed through profit or loss. For impairment loss has been incurred on an
unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably
measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted
equity instrument, the impairment loss is not reversed through profit or loss.
(3) Classification and measurement of financial liabilities
①The Company's financial liabilities are classified as financial liabilities at fair value through profit or
loss, and other financial liabilities.
②Financial liabilities are initially measured at fair value. For the financial liability at fair value through
profit or loss at its fair value, relevant transaction costs are recognised as expense when it incurred. For
the other financial liabilities, relevant transaction costs are recongnised as costs.
③Subsequent measurement of financial liabilities
A. Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial assets designated by the Company as at fair value through profit or loss. The Company
recognises a financial liability at fair value through profit or loss at its fair value. A gain or loss of
change in fair value is recognised in the profit or loss of the current period.
B. Other financial liabilities are measured by amortised cost using effective interest rate.
(4) Fair value measurement consideration
If there is an active market for the financial instrument, the fair value is quoted prices in the active
market.
If the market for a financial instrument is not active, the Company establishes fair value by using a
valuation technique.
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(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).
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) Receivables that are individually significant and provided for provision separately:
Standards of the individually significant Amount of individual receivable is greater than RMB
receivables 2 millions (and including 2 millions)
The method of provision for impairment of the On balance sheet day, the impairment test is carried on
individually significant receivables individually for the individually significant
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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.
(2) Receivables that are provided for provision on a basis of portfolio:
Basis on determine the portfolio:
Receivables portfolio of similarity or with similar
credit risk characteristics for the subsidiaries engage
Portfolio 1 in property management business, except receivables
which have provided for provision separately with
obviously high credit risk.
Receivables portfolio for the subsidiaries beside the
ones which engage in property management business,
Portfolio 2
except receivables which have provided for provision
separately with obviously high credit risk.
The method of provision for impairment according to portfolio:
Portfolio 1 Percentage of balance method
On balance sheet day, the impairment test is carried
on individually according significance; the Company
provides provision for impairment loss for the amount
Portfolio 2
which is measured as the difference between the
asset's carrying amount and the present value of
estimated future cash flows.
The percentage of provision for the portfolio：
Portfolio Name Percentage of provision for Percentage of provision for other
accounts receivable (%) receivables (%)
Portfolio 1 3.00 3.00
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（3）Receivables that are not individually significant but provided for provision separately:
The receivable which is individually
Reasons for impairment separately insignificant but the credit risk is high, objective
evidence to indicate impairment.
The impairment test is carried on individually,the
Company provides provision for impairment loss
for the amount which is measured as the
The method of provision for impairment
difference between the asset's carrying amount
and the present value of estimated future cash
flows.
11. Classification and measurement of inventories
(1) Inventories of the Company include raw materials, finished goods, low-value consumption goods,
land use right held for real estate development, properties under development, completed properties for
sale, properties for rent and owner-occupied properties.
(2) Recognition of inventories:
The Company recognizes inventories when the following conditions are satisfied:
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
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Estimates of net realisable value are based on the most reliable evidence available at the time the
estimates are made, of the amount the inventories are expected to realize. These estimates take into
consideration the purpose for which the inventory is held and the influence of post balance sheet events.
Materials and other supplies held for use in the production are measured at cost if the net realizable
value of the finished goods in which they will be incorporated is higher than their cost. However, when a
decline in the price of materials indicates that the cost of the finished products will exceed their net
realisable value, the materials are measured at net realisable value.
The net realisable value of inventories held to satisfy sales or service contracts is generally based on the
contract price.
If the quantity specified in sales contracts is less than the inventory quantities held by the Company, the
net realisable value of the excess shall be based on general selling prices.
②The Company generally provides provision for impairment of inventory individually. For 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.
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If the acquirer issuing equity securities as consideration, the initial cost is the carrying amount of the
proportion of the acquiree’s owner’s equity at the acquisition date. Amount of share capital equal to the
par value of the shares issued. The difference between initial cost of the long-term equity investment and
the par value of shares issued is adjusted to capital surplus. If the capital surplus is not sufficient for
adjustment, retained earning is adjusted respectively. The costs of issuing equity securities occurred in
business combination such as charges of security issuing and commissions are deducted from the
premium of equity securities. If the premium is not sufficient for deducting, retained earning is adjusted
respectively.
B.If the business combination is not under the common control, the acquirer recognizes the initial cost of
combination under the following principles.
a) When business combination is achieved through a single exchange transaction, the cost of a business
combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the
acquiree;
b) For the business combination involved more than one exchange transaction, the cost of the
combination is the aggregate cost of the individual transactions;
c) The fees incurred for audit, legal consultation, valuation services and other management expenses are
to be recognized in profit or loss at the time such costs incurred. The transaction costs incurred by the
acquirer for issuing equity securities or debt securities as the consideration of the acquisition are to be
recognized as the initial amount of such equity security or debt security.
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
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charges and commissions paid to securities underwriting agencies are deducted from premium of equity
securities. If the premium is not sufficient for deduction, reserved fund and retained earnings is adjusted
respectively.
C. For the long-term equity investment invested by investors, the initial cost is the agreed value
prescribed in the investment contract or agreement unless the agreed value is not fair.
D. For the long-term equity investment acquired through non-monetary asset exchange, the initial cost
is recognized according to “Accounting Standards for Business Enterprises No. 7-Non-monetary
transactions”.
E. For the long-term equity investment acquired through debt restructuring, the initial cost is
recognized according to “Accounting Standards for Business Enterprises No. 12-Debt restructuring”.
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
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performed according to “Chinese Accounting Standard No.8 - Impairment of assets”, Where the carrying
amount of long-term equity investment exceeds the recoverable amount, the difference shall be
recognized as impairment loss, and a provision for impairment loss should be made.
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;
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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 “Impirment of assets” of the Company.
13. Recognition and measurement of investment properties
(1) Investment properties of the Company are properties held to earn rentals or for capital appreciation
or both, mainly comprising:
①Land use right which has already been rented;
②Land use right which is held for transfer out after appreciation;
③Property which has already been rented.
(2) Investment property shall be recognized as an asset when the following conditions are satisfied:
①It is probable that the future economic benefits that are associated with the investment property will
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flow to the Company;
②The cost of the investment property can be measured reliably.
(3) Initial measurement
An investment property is measured initially at its cost.
①The cost of a purchased investment property comprises its purchase price, related tax expenses and
any directly attributable expenditure.
②The cost of a self-constructed investment property comprises all necessary construction expenditures
incurred before the property is ready for its intended use.
③The cost of a property acquired by other means shall be recognized according to relevant accounting
standards.
(4) Subsequent measurement
After initial recognition, the Company adopts the cost model to measure its investment properties.
The Company amortizes or depreciates its investment properties measured using cost model in the same
way as fixed assets and intangible assets.
The Company values the investment property measured using cost model at the lower of its cost and its
recoverable amount at the end of the period. Where the cost exceeds the recoverable amount, the
difference shall be recognized as impairment loss. Once a provision for impairment loss is made, it
cannot be reversed.
14. Recognition and measurement of fixed assets
Fixed assets are tangible assets that: 1) are held for use in the production or supply of goods or services,
for rental to others, or for administrative purposes; and 2) have useful life more than one year.
(1) A fixed asset shall be initially recognized at cost when the following condition are satisfied:
① It is probable that future economic benefits associated with the assets will flow to the Company;
② The cost of the assets can be measured reliably.
(2) Depreciation
Subsequent expenditure relating to a fixed asset shall be added to the carrying amount of the asset when
the expenditure qualifies for capitalization. Subsequent expenditure that does not qualify for
capitalization shall be recognized as an expense for the current period.
The depreciation method adopted by the Company is straight-line method.
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The estimated useful lives, residual value and annual depreciation rate of fixed assets are shown as
follows:
Estimated Useful Annual Depreciation
The categories Residual value (%)
Lives (years) Rate (%)
Property and buildings 20-25 5-10 3.8-4.5
Machineries 10 5 9.5
Vehicles 5 5 19
Electronic and other equipments 5 5 19
Decoration 5 20
The Company reviews the useful life, estimated residual value and depreciation method of a fixed asset
at the end of each financial year. If expectations are significantly different from previous estimates, the
useful life shall be revised accordingly. If expectations are significantly different from previous
estimates, the estimated residual value also shall be revised accordingly. If there has been a significant
change in the expected realization pattern of economic benefits from those assets, the depreciation
method shall be changed accordingly. The changes in useful life, estimated residual value and
depreciation method shall be treated as change in accounting estimates.
(3) Fixed assets acquired under finance lease
The Company identifies a lease of asset as finance lease when substantially all the risks and rewards
incidental to legal ownership of the asset are transferred.
A fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased
asset and the present value of the minimum lease payments at the inception of lease.
The depreciation method of fixed assets acquired under finance lease is consistent with that for
depreciable assets owned by the Company. If the Company can reasonably confirm that it will obtain the
ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the useful
life of the leased asset. If the Company cannot reasonably confirm that it will obtain the ownership of
leased asset at the end of lease term, the leased asset shall be depreciated during shorter of the useful life
of the leased asset and the lease term.
(4) Impairment of fixed asset refers to accounting policy “Impairment of assets” of the Company.
15. Recognition and measurement of borrowing cost
(1) Capitalization and capitalization period of borrowing costs
The costs of borrowings designated for acquisition or construction of qualifying assets should be
capitalized as part of the cost of the assets. Capitalisation of borrowing costs starts when
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① The capital expenditures have incurred;
② The borrowing costs have incurred;
③ The acquisition and construction activities that are necessary to bring the asset to its expected
usable condition have commenced.
Other borrowing costs that do not qualify for capitalization should be expensed off during current
period.
Capitalization of borrowing costs should be suspended during periods in which the acquisition or
construction is interrupted abnormally, and the interruption period is three months or longer. These
borrowing costs should be recognized directly in profit or loss during the current period. However,
capitalization of borrowing costs during the suspended periods should continue when the interruption is
a necessary part of the process of bringing the asset to working condition for its intended use.
Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed is
substantially ready for its intended use. Subsequent borrowing costs should be expensed off during the
period in which they are incurred.
(2) Calculation method of capitalization for borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a
qualifying asset, the amount of borrowing costs eligible for capitalization on that asset is determined as
the actual borrowing costs incurred on that borrowing during the period less any investment income on
the temporary investment of the borrowing.
To the extent that funds are borrowed generally and used for the purpose of acquiring or constructing a
qualifying asset, the amount of borrowing costs eligible for capitalization shall be determined by
applying a capitalization rate to the weighted average of excess of accumulated expenditures on
qualifying asset over that on specific purpose borrowing. The capitalization rate is the weighted average
of the borrowing costs applicable to the borrowings of the Company that are outstanding during the
period, other than borrowings made specifically for the purpose of acquiring or constructing a 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
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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. The
Company does not amortize intangible asset with infinite useful life.
B. Impairment of intangible assets refers to accounting policy “Impairment of assets” of the Company.
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
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deferred expenses. The Company amortizes long-term deferred expenses using straight-line method
according to relevant beneficial periods.
18. Accounting methods for the property transfer with buy-back conditions:
Buy-back after the sale: It is a sale means which the seller during selling goods agrees to buy back the
same or similar goods at the later date. Under such mode, the seller shall make judgment in whether
selling goods satisfies the recognition of revenue in accordance to the contract or agreement. Normally,
the transaction of repurchase after sale belongs to a financial transaction, the main risk and rewards of
the goods ownership has not been transferred. The enterprise shall not recognize the revenue. For the
amount which the repurchase price greater than the original sale price, the enterprise shall accrue the
interest fees to the financial fees within the repurchase period.
For the property transfer with repurchase conditions, in consideration of the economic substance of
transactions, the accounting method shall be disclosed.
19. Recognition and measurement of provision for liabilities
(1) Recognition of provision for liabilities
The company should recognize the related obligation as a provision for liability when the obligation
meets the following conditions:
①That obligation is a present obligation of the enterprise;
②It is probable that an outflow of economic benefits from the enterprise will be required to settle the
obligation;
③A reliable estimate can be made of the amount of the obligation.
(2) Measurement of provision for liabilities
To fulfill the present obligations, which initially measured by the best estimate of the expenditure
required to settle the liability. Where there is a continuous range of possible amounts of the expenditure
required to settle the liability, as all kinds of possibilities are at same level, the best estimate should be
determined according to the average of the lower and upper limit of the range. In other cases, the 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;
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②Where the contingency involves several items; the best estimate should be determined by weighting
all possible outcomes by their associated probabilities of occurrence.
To determine the best estimate, it should be considered with factors such as: related contingency risks,
uncertain matters and time value of currency. If time value of currency has a significant impact, the best
estimate should be measured at its converted present value through the relevant future cash outflows.
Where some or all of the expenditures are expected to be reimbursed by a third party, the reimbursement
should be separately recognized as an asset only when it is virtually received. The amount of the
reimbursement should not exceed the carrying amount of the liability recognized.
At balance sheet date, the Company should review book value of provision for liabilities. If there is
strong evidence that the book value does not truly indicate the current best estimate, it should be
adjusted in accordance with the current best estimate.
20. Recognition and measurement share-based payment
Recognition and measurement of share-based payment are based on true, complete and valid share-based
payment agreement. Share-based payment transaction comprises equity-settled share-based payment
transactions and cash-settled share-based payment transactions.
(1) Equity-settled share-based payment transactions
Equity-settled share-based payment transactions in which the Company receives employee’s services as
consideration for equity instruments of the Company are measured as fair value of the equity instrument
granted to the employees. As to an equity-settled share-based payment in return for services of
employees, if the right may be exercised immediately after the grant, the fair value of the equity
instruments shall, on the date of the grant, be included in the relevant cost or expense and the capital
surplus shall be increased accordingly. As to a equity-settled share-based payment in return for
employee services, if the right cannot be exercised until the vesting period comes to an end or until the
prescribed performance conditions are met, then on each balance sheet date within the vesting period,
the services obtained during the current period shall, based on the best estimate of the number of vested
equity instruments, be included in the relevant costs or expenses and capital surplus at the fair value of
the equity instruments on the date of the grant.
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
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market price of the entity stocks, and at the same time it shall make adjustment in the consideration
of the relative terms and conditions which the stocks are granted (excluding the vesting conditions
besides the market conditions). If the entity is not traded publically, it should be measured in
accordance to the estimated market prices and it shall make adjustment in the consideration of the
relative terms and conditions which the stocks are granted
② For the stock options granted to the employees, if there is no similar terms and conditions for the
option trade, it shall estimate the fair value of the granted option through option pricing model.
When the enterprise determines the fair value on the granting date of the equity instruments, it shall
consider the influence by the market conditions of the vesting conditions and the non vesting
condition in the share-based payment agreement. For the share-based payment containing non
vesting conditions, as long as the employees or other party satisfy all the non-marketing conditions
of the vesting conditions (such as service period, etc.), the enterprise shall confirm the relevant costs
of the received service.
(2) Cash-settled share-based payment transactions
Cash-settled share-based payment is measured in accordance with the fair value of liability undertaken
by the Company that is calculated based on the shares or other equity instruments. As to a cash-settled
share-based payment, if the right may be exercised immediately after the grant, the fair value of the
liability undertaken by the Company, on the date of the grant, is included in the relevant costs or
expenses, and the liabilities shall be increased accordingly. As to a cash-settled share-based payment, if
the right may not be exercised until the vesting period comes to an end or until the specified
performance conditions are met, on each balance sheet date within the vesting period, the services
obtained during the current period shall, based on the best estimate of the information about the
exercisable right, be included in the relevant costs or expenses and the corresponding liabilities at the
fair value of the liability undertaken by the enterprise.
（3）Confirmation of the best estimate of the vested equity instruments: On the balance sheet date during
the waiting period, the company shall make the best estimate based on the subsequence information
regarding the number of employees who newly obtains the vest; revise the quantity of the predicted
vested equity instruments in order to make the best estimate of vested equity instruments.
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（4）Modifications and cancellation to equity-settled share-based payment arrangements
If the modification increases the fair value of the equity instruments granted, the entity shall include the
incremental fair value granted in the measurement of the amount recognized for services received as
consideration for the equity instruments granted; similarly, if the modification increases the number of
equity instruments granted, the entity shall include the fair value of the additional equity instruments
granted, measured at the date of the modification, in the measurement of the amount recognised for
services received as consideration for the equity instruments granted; if the entity modifies the vesting
conditions in a manner that is beneficial to the employee, the entity shall take the modified vesting
conditions into account when applying the requirements of a vesting condition.
If the modification reduces the fair value of the equity instruments granted, the entity shall not take into
account that decrease in fair value and shall continue to measure the amount recognised for services
received as consideration for the equity instruments based on the grant date fair value of the equity
instruments granted; if the modification reduces the number of equity instruments granted to an
employee, that reduction shall be accounted for as a cancellation of that portion of the grant; if the entity
modifies the vesting conditions in a manner that is not beneficial to the employee, the entity shall not
take the modified vesting conditions into account when applying the requirements of a vesting condition.
If a grant of equity instruments is cancelled or settled during the vesting period (other than a grant
cancelled by forfeiture when the vesting conditions are not satisfied): as an acceleration of vesting, and
shall therefore recognise immediately the amount that otherwise would have been recognised for
services received over the remainder of the vesting period.
21. Shares repurchase
As repurchasing shares of the Company, the cost of corresponding treasury shares is recognized in
accordance with the cost method.
Following the legally approved procedures, the company reduces its capital by repurchasing the
company’s stocks. The owners’ equity shall be adjusted by the difference between the total of the
cancelled share equity and capital stock, the cost to repurchase the stocks (including trading fees) and
stock equity. For the amount exceed the total of the par value of shares, it shall reduce the capital reserve,
surplus reserve, and undistributed profits; for the amount less than the total of the par value of shares, the
capital reserve should be increased for the amount less than corresponding equity cost.
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The repurchasing shares shall be managed as treasury shares before they are cancelled or transferred.
The total cost to repurchase shares shall be transferred to the cost of the treasury shares.
During the transfer of the treasury shares, when the transfer income is greater than the cost of treasury
shares, the capital reserve should be increased; when the transfer income is less than the cost of treasury
shares, capital reserve, surplus reserve, and undistributed profits should be written-down in turns.
Repurchasing stocks in purpose of equity incentives, the value of treasury stocks is measured at all the
actual cost relating to repurchasing stocks, and the details should be taken reference to the registration.
22. Revenue recognition
（1） Revenue from the sale of goods is recognized when all of the following conditions have been
satisfied:
The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
The Company retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
The economic benefits associated with the transaction will flow to the Company; and
The relevant amount of revenue and costs can be measured reliably.
(2) Revenue from the sale of properties is recognized upon a) final acceptance of the construction of
property is completed and the property is transferred to buyer, b) buyer receives and accepts the
settlement billing and c) the Company receives all considerations of sale of property (down payment and
mortgage received from bank for property purchasing by installments) and the conditions for obtaining
certificate of title to house property are satisfied.
(3)Revenue from leasing of property is recognized when a) the economic benefits associated with
leasing of property will flow to the Company and b) the amount of revenue can be measured reliably. If
lessor provides rent-free period, lessor shall allocate total rental by straight-line method or other
reasonable method during entire lease term without deducting rent-free period. Lessor shall recognize
rental income during rent-free period.
(4)Revenue from rendering of services (excluding long-term contract) is by reference to the percentage
of completion of the service at closing date when the outcome of transaction can be reliably estimated.
The outcome of transaction can be reliably estimated when a) the total revenue and cost can be reliably
measured, b) the percentage of completion can be determined reliably and c) the economic benefit
pertaining to the service will flow to the Company. If the outcome of transaction cannot be reliably
40
estimated, the Company shall recognize revenue to the extent of costs incurred that are expected to be
recoverable and charge an equivalent amount of cost to profit or loss.
(5)Revenue arising from the Company’s assets used by others is recognized when (a) it is probable that
the economic benefits associated with the transaction will flow to the Company and (b) the amount of
the revenue can be measured reliably. Interest revenue should be measured based on the length of time
for which the Company's cash is used by others and the applicable interest rate. Royalty revenue should
be measured in accordance with the period and method of charging as stipulated in the relevant contract
or agreement.
(6)Recognition of construction contract revenue
1) When the outcome of a construction contract can be reliably estimated, construction contract
revenue is recognized by reference to the percentage of completion of the contract activity at closing
date. The outcome of a construction contract can be reliably estimated when a) total contract revenue
and contract costs incurred can be measured reliably, b) both the contract costs to complete the contract
and the percentage of completion can be measured reliably and c) it is probable that the economic
benefits associated with the contract will flow to the Company. The percentage of completion of a
contract is determined as the proportion that actual contract costs incurred to date bears to the estimated
total contract costs.
2) When the outcome of a construction contract cannot be estimated reliably, contract revenue should
be recognized to the extent of contract costs that can be recovered and contract costs should be
recognized as expense in the period in which they are incurred.
3) If total estimated contract costs will exceed total contract revenue, the estimated loss should be
recognized immediately as an expense during the current period.
23. Government grant
(1) Recognition of government grants
The Company’s government grants which including monetary assistance or non-monetary grants at fair
value, shall not be recognized until there is reasonable assurance that:
①The entity will comply with the condition attaching to them;
②The grants will be received from government.
(2) Measurement of government grants
①If 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.
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②The Capital approach for government grants, the grant is recognized as deferred income when it is
acquired. Since the related assets achieve its intended using status, the deferred income is amortized and
recognized in profit and loss during asset’s using period. If related assets were disposed before using
period ended, undistributed deferred income shall be shift to current profit and loss at once.
The Income approach for government grants, to retrieve expense or loss of the Company in further
period, the government grants is recognized as deferred income, and shall be recorded in profit and loss
when that expense or loss occurred. To retrieve expense or loss of the Company in current period, the
government grants shall be recorded directly in current profit and loss.
③ Confirmed repayment of government grants
A. When deferred income exists, the repayment write-downs closing balane of deferred income, and the
exceed part shall be recognized in current profit and loss;
B. When no deferred income exists, the repayment shall be recognized directly in current profit and loss.
24. Income tax
The Company adopts the balance sheet liability method for income tax expenses.
(1) Deferred tax asset
1) Where there are deductible temporary differences between the carrying amount of assets or
liabilities in the balance sheet and their tax bases, a deferred tax asset shall be recognized for all those
deductible temporary differences to the extent that it is probable that taxable profit will be available
against which the deductible temporary difference can be utilized. Deferred tax assets arising from
deductible temporary differences should be measured at the tax rates that are expected to apply to the
period when the asset is realized or the liability is settled.
2) At the balance sheet date, where there is strong evidence showing that sufficient taxable profit will
be available against which the deductible temporary difference can be utilized, the deferred tax asset
unrecognized in prior period shall be recognized.
3) The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s
probable that sufficient taxable profit will not be available against which the deductible 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
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A deferred tax liability shall be recognized for all taxable temporary differences, which are differences
between the carrying amount of an asset or liability in the balance sheet and its tax base, and measured at
the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
25. Operating lease and financial lease
（1）Operating leases
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset
cost or the current profit or loss on a straight-line basis over the lease term. The initial direct costs
incurred shall be recognized as the current profit or loss; Contingent rents shall be charged as expenses
in the periods in which they are incurred. .
Lessors in an operating lease shall present the assets subject to operating leases in the relevant items of
their balance sheet according to the nature of the asset. Lease income from operating leases shall be
recognized as the current profit or loss on a straight-line basis over the lease term; Initial direct costs
incurred by lessors shall be recognized as the current profit or loss; Lessors shall apply the depreciation
policy for the similar assets to depreciate the fixed assets in the operating lease; For other assets in the
operating lease , lessors shall adopt a reasonable systematical method to amortize; Contingent rents shall
be charged as expenses in the periods in which they are incurred.
（2）Finance lease
For the lessee, a fixed asset acquired under finance lease shall be valued at the lower of the fair value of
the leased asset and the present value of the minimum lease payments at the inception of lease. The
minimum lease payments as the entering value in long-term account payable, the difference as
unrecognized financing charges; The initial direct costs identified as directly attributable to activities
performed by the lessee during the negotiation and signing of the finance lease such as handling fees,
legal fees, travel expenses, stamp tax shall be counted as lease asset value; the unrecognized financing
charges shall be apportioned at each period during the lease term and adopt the effective interest rate
method to calculate and confirm the current financing charge; Contingent rents shall be charged as
expenses in the periods in which they are incurred.
When the lessee calculates the present value of the minimum lease payments, for that lessee who 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
43
not get the interest rate implicit in the lease and there is no specified interest rate in the lease agreement,
the discount rate shall adopt the current bank loan interest rate.
Lessees shall depreciate the leased assets with the depreciation policy which is consistent with the
normal depreciation policy for similar assets. If there is reasonable certainty that the lessee will obtain
ownership by the end of the lease term, the depreciation shall be allocated to the useful life of the asset.
If there is no reasonably certainty that the lessee will obtain ownership by the end of the lease term, the
asset shall be depreciated over the shorter of the lease term and its useful life.
On the initial date of financial lease, lessee of the financial lease shall record the sum of the minimum
lease payments and initial direct costs as the financing lease accounts receivable, and also record the
unguaranteed residual value; recognize the difference between the total minimum lease payments , initial
direct costs ,unguaranteed residual value and sum of the present value as the unrealized financing
income; the unrealized financing income shall be distributed to each period over the lease term; adopt
the actual interest rate to calculate the currect financial income; Contingent rents shall be charged as
expenses in the periods in which they are incurred.
26． Assets held for sales:
(1) Recognition criteria of the assets held for sale
The Non-Current Assets which meet the following conditions will be classified as assets held for sales
by the company:
①The entity has made the resolution in disposing the non-current assets.
②The entity has signed the irrevocable transfer agreement with the assignee.
③The sale transaction is highly probable to be completed within one year.
(2) Accounting treatments of assets held for sales
For the fixed assets held for sales, the entity shall adjust the predicted net residual value of this fixed
asset to make the predicted net residual value of this fixed asset to reflect the amount of its fair value less
costs to sell, but it shall not exceed the original book value of fixed assets at the time when it meets the
conditions of held for sales. The difference between the original book value and the adjusted predicted
net residual value shall be treated as loss in assets and presented in profit or loss of current period. The
fixed assets held for sales shall not count the depreciation but shall be measured at the lower of 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
44
be treated in accordance to the above principles.
27. Changes in accounting policies and estimates,
1. Changes in accounting policies
There is no change in accounting policies during the financial year.
2. Changes in accounting estimates
There is no change in accounting estimate during the financial year.
28. Correction of the accounting errors from previous term
There is no correction of the accounting error from previous term in this report period.
29. Impairment of assets
It suggests that an asset may be impaired if there are any of the following indications
(1) during the period, an asset's market value has declined significantly more than it would be expected
as a result of the passage of time or normal use during the current period;
(2) significant changes with an adverse effect on the Company have taken place during the period, or
will take place in the near future, in the technological, market, economic or legal environment in which
the Company operates or in the market to which an asset is dedicated;
(3) market interest rates or other market rates of return on investments have increased during the period,
and those increases are likely to affect the discount rate used in calculating an asset's value in use and
decrease the asset's recoverable amount materially;
(4) evidence is available of obsolescence or physical damage of an asset;
(5) the asset becomes idle, or the Company plans to discontinue or to dispose of an asset before the
previously expected date;
(6) evidence is available from internal reporting that indicates that the economic performance of an
asset is, or will be, worse than expected, for example, the net cash flow generated from assets or the
operating profit (or loss) realized by assets is lower (higher) than the excepted amount, etc.; and
(7) Other evidence indicates that assets may be impaired.
The Company assesses long-term equity investment, fixed assets, construction materials, 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
45
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 6% or 17%, paid by deducting value added input tax.
2. The business tax rate is 3% or 5% of operating revenue.
3. Urban maintenance and construction tax is 1% or 7% of turnover tax payable.
4. Education surtax is 3% of turnover tax payable.
5. Levee fee is 0.01% of operating revenue.
6. Land value appreciation tax is levied in four progressive levels with the tax rate ranging from 30% to
60%.
7. Income tax expense
46
(1) The Company and the subsidiaries located in Shenzhen
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 is 22%.
（2）The subsidiaries located outside Shenzhen
The applicable income tax rate of the subsidiaries located outside Shenzhen is 25%.
（3）The subsidiaries located in Hongkong
The applicable income tax rate of the subsidiaries located in Hongkong is 17%.
Note IV. Business combination and consolidated financial statements
1. Subsidiaries
（1）The subsidiaries obtained through the establishment of or investment subsidiary
Serial Legal Registered
Type of Registere Organizatio Business Business
number Subsidiaries Categories representativ capital
business d address n Code nature scope
. e (0’000)
Limited Li Zipeng 192184835
1 Shenzhen Wholly-owne Shenzhen Real estate 3,000 Developmen
Compan
Huangchen d subsidiary developme t,
y
g Real nt construction,
Estate Co., operation
Ltd. and
management
of
commercial
service
facilities
relevant to
Huanggang
47
Serial Legal Registered
Type of Registere Organizatio Business Business
number Subsidiaries Categories representativ capital
business d address n Code nature scope
. e (0’000)
port
Limited 192174565
2 Shenzhen Wholly-owne Shenzhen Wei Zhi Real estate 3,095 Land
Compan
Property d subsidiary developme development
y
and Real nt , real estate
Estate management
Developme ;
nt Co., Ltd. construction
supervision;
property
management
PRD Group Wholly-owne Limited Xuzhou Li Zipeng 552525454 Real estate 5,000 Developmen
3
Xuzhou d Compan developme t and sale of
Dapeng subsidiary y nt real estate,
Real Estate construction
Developme management
nt Co.,Ltd , lease of
properties,
commodity
sales
Dongguan Wholly-owne Limited Donggua Li Zipeng 562562654 Real estate 2,000 Developmen
4
Guomao d Compan n developme t and sale of
Changsheng subsidiary y nt real estate,
Real Estate lease of
Developme properties,
nt Co., Ltd.
Limited Liu Yinhua 201264619
5 Hainan Wholly-owne Haikou Real estate 2,000 Real estate
Compan
Xinda d subsidiary developme development
y
Developme nt , decoration
nt Co., Ltd engineering,;
planting;
import &
export
48
Serial Legal Registered
Type of Registere Organizatio Business Business
number Subsidiaries Categories representativ capital
business d address n Code nature scope
. e (0’000)
practice
Limited Wang 192174549
6 Shenzhen Wholly-owne Shenzhen Property 2,000 Property rent
Compan Hangjun
ITC d subsidiary manageme and
y
Property nt management
Managemen
t Co., Ltd.
Limited Li Zipeng 757601334
7 Shenzhen Wholly-owne Shenzhen Property 500 Property
Compan
Huangchen d subsidiary manageme management
y
g Real nt ; court
Estate virescence
Managemen and
t Co., Ltd. cleansing
services
Limited Li Dongfeng 684815947
8 Shandong Wholly-owne Jinan Property 500 Property
Compan
Shenzhen d subsidiary manageme management
y
ITC nt and agency
Property
Managemen
t Co., Ltd.
Limited Zeng 202853028
9 Chongqing Wholly-owne Chongqin Property 500 Property
Compan Xiangrong
Shenzhen d subsidiary g manageme management
y
ITC nt and agency
Property
Managemen
t Co., Ltd.
Limited Zeng 66085719X
10 Chongqing Wholly-owne Chongqin Service 200 Installing,
Compan Xiangrong
Ao’bo d subsidiary g reconstructin
y
Elevator g and
Co., Ltd. repairing the
elevator;
sales of
elevator and
49
Serial Legal Registered
Type of Registere Organizatio Business Business
number Subsidiaries Categories representativ capital
business d address n Code nature scope
. e (0’000)
accessories
Limited Wang 192277759
11 Shenzhen Wholly-owne Shenzhen Service 500 Maintenance
Compan Zhiyong
Tianque d subsidiary of elevator
y
Elevator and air
Technology condition
Co., Ltd.
Limited Bao Gang 192332519
12 Shenzhen Wholly-owne Shenzhen Service 120 Domestic
Compan
ITC d subsidiary commerce;
y
Property material
Managemen supply;
t maintenance
Engineering and repair of
Equipment electric
Co., Ltd. equipment
Limited Liu Yinhua 738842749
13 Shenzhen Wholly-owne Shenzhen Restaurant 200 Retail sales
Compan
ITC Food d subsidiary operations of Chinese
y
Co., Ltd. meal,
western-styl
e food and
wine
Limited Liu Yinhua 279383351
14 Shenzhen Wholly-owne Shenzhen Constructio 300 Supervision
Compan
Property d subsidiary n of general
y
Constructio Supervision industrial
n and civil
Supervision construction
Co., Ltd. engineering
Limited Yao 192177790
15 Shenzhen Wholly-owne Shenzhen Service 138 Providing
Compan Chengxin
Real Estate d subsidiary property
y
Exchange information,
property
agency and
50
Serial Legal Registered
Type of Registere Organizatio Business Business
number Subsidiaries Categories representativ capital
business d address n Code nature scope
. e (0’000)
evaluation
Limited Wei Zhi 19217731X
16 Shenzhen Wholly-owne Shenzhen Service 2,985 Motor
Compan
ITC d subsidiary transport and
y
Vehicles motor rent
Industry
Co., Ltd.
Limited Li Laogen 192267331 Motor
17 Shenzhen Wholly-owne Shenzhen Service 1,600
Compan transport and
ITC Motor d subsidiary
y motor rent
Rent Co.,
Ltd.
Limited Zeng X19284437 Service 150
18 Shenzhen Wholly-owne Shenzhen Motor
Compan Lansheng
ITC Vehicle d subsidiary maintenance
y
Industry ; sales of
Company auto parts
Vehicle and
repair shop Motorcycle
Accessories
Limited Li Laogen 192250695 Sales of
19 Shenzhen Wholly-owne Shenzhen Trading 850
Compan gasoline,
ITC d subsidiary
y diesel oil,
Petroleum
Co., Ltd. lube and
coal oil
Limited Xiao Dejun 192325669 Driver
20 Shenzhen Wholly-owne Shenzhen Service 200
Compan training
Tesu d subsidiary
y
Vehicle
Driver
Training
Center Co.,
Ltd.
Limited Luo Junde 19218224X
21 Shenzhen Wholly-owne Shenzhen Trading 1,200 Investing in
Compan
Internationa d subsidiary commercial,
y
l Trade material and
Plaza supplying
51
Serial Legal Registered
Type of Registere Organizatio Business Business
number Subsidiaries Categories representativ capital
business d address n Code nature scope
. e (0’000)
company
Limited Li Jun 754748621
22 Sichuan Wholly-owne Chengdu Trading 800 Wholesale in
Compan
Tianhe d subsidiary domestic
y
Industry market
Co., Ltd
Limited Duan 194351406
23 Zhanjiang Wholly-owne Zhanjiang Real estate 253 Real estate
Compan Zuoping
Shenzhen d subsidiary developme development
y
Real Estate nt and sales of
Developme commodity
nt Co., Ltd. premises
Limited NA NA
24 Shum Yip Wholly-owne Hongkon Real estate HKD2,000 Property
Compan
Properties d subsidiary g developme agency and
y
Developme nt investment
nt Co., Ltd.
Limited NA NA
25 Wayhang Wholly-owne Hongkon Real estate HKD0.000 Property
Compan
Developme d subsidiary g developme 2 development
y
nt Co., Ltd. nt
Limited NA NA Real estate
26 Chief Link Holding Hongkon HKD0.01 Property
Compan developme
Properties subsidiaries g agency and
y nt
Co., Ltd. investment
Limited NA NA
27 Syndis Holding Hongkon Real estate HKD0.000 Property
Compan
Investment subsidiaries g developme 4 investment
y
Co., Ltd. nt
Se
ria Actual Losses
Other The The
l Capital Included in Minority shared by
essential proportion proportion
nu Subsidiaries amounts of consolidated interest(0’00 minority
investment of holding of voting
m the year end statements 0) equity
(0’000) shares (%) rights (%)
be (0’000) holders
r
1 Shenzhen Huangcheng 3,000 100 100 Yes
52
Se
ria Actual Losses
Other The The
l Capital Included in Minority shared by
essential proportion proportion
nu Subsidiaries amounts of consolidated interest(0’00 minority
investment of holding of voting
m the year end statements 0) equity
(0’000) shares (%) rights (%)
be (0’000) holders
r
Real Estate Co., Ltd.
2 Shenzhen Property and 3,095 100 100 Yes
Real Estate
Development Co., Ltd.
PRD Group Xuzhou 5,000 100 100 Yes
3
Dapeng Real Estate
Development Co.,Ltd
Dongguan Guomao 2,000 100 100 Yes
4
Changsheng Real Estate
Development Co., Ltd.
100 100 Yes
5 Hainan Xinda 2,000
Development Co., Ltd
100 100 Yes
6 Shenzhen ITC Property 2,000
Management Co., Ltd.
100 100 Yes
7 Shenzhen Huangcheng 500
Real Estate
Management Co., Ltd.
100 100 Yes
8 Shandong Shenzhen 500
ITC Property
Management Co., Ltd.
100 100 Yes
9 Chongqing Shenzhen 500
ITC Property
53
Se
ria Actual Losses
Other The The
l Capital Included in Minority shared by
essential proportion proportion
nu Subsidiaries amounts of consolidated interest(0’00 minority
investment of holding of voting
m the year end statements 0) equity
(0’000) shares (%) rights (%)
be (0’000) holders
r
Management Co., Ltd.
100 100 Yes
10 Chongqing Ao’bo 200
Elevator Co., Ltd.
100 100 Yes
11 Shenzhen Tianque 500
Elevator Technology
Co., Ltd.
100 100 Yes
12 Shenzhen ITC Property 120
Management
Engineering Equipment
Co., Ltd.
90.40 100 100 Yes
13 Shenzhen ITC Food 200
Co., Ltd.
98.69 100 100 Yes
14 Shenzhen Property 300
Construction
Supervision Co., Ltd.
100 100 Yes
15 Shenzhen Real Estate 138
Exchange
100 100 Yes
16 Shenzhen ITC Vehicles 2,985
Industry Co., Ltd.
100 100 Yes
17 Shenzhen ITC Motor 1,600
Rent Co., Ltd.
150 100 100 Yes
18 Shenzhen ITC Vehicle
Industry Company
Vehicle repair shop
100 100 No (Note 1)
19 Shenzhen ITC 850
54
Se
ria Actual Losses
Other The The
l Capital Included in Minority shared by
essential proportion proportion
nu Subsidiaries amounts of consolidated interest(0’00 minority
investment of holding of voting
m the year end statements 0) equity
(0’000) shares (%) rights (%)
be (0’000) holders
r
Petroleum Co., Ltd.
100 100 Yes
20 Shenzhen Tesu Vehicle 200
Driver Training Center
Co., Ltd.
100 100 Yes
21 Shenzhen International 1,200
Trade Plaza
100 100 Yes
22 Sichuan Tianhe Industry 800
Co., Ltd
100 100 Yes
23 Zhanjiang Shenzhen 253
Real Estate
Development Co., Ltd.
3,321.45 100 100 Yes
24 Shum Yip Properties HKD2,000
Development Co., Ltd.
100 100 Yes
25 Wayhang Development HKD0.0002
Co., Ltd.
70 70 Yes 86.21
26 Chief Link Properties HKD0.01
Co., Ltd.
70（Note 2） 70 Yes
27 Syndis Investment Co., HKD0.0004
Ltd.
Note 1: In January of 2008, Shenzhen ITC Vehicles Industry Co., Ltd. and Shenzhen Guanghong
investment Co., Ltd. signed a gas station operating lease contract, prescribing that Shenzhen Guanghong
investment Co., Ltd. leases and manage the assets such as land of gas station, gas station shed, operating
buildings, accommodations, equipments in gas station and so on, equity and management right of
Shenzhen ITC Petroleum Co., Ltd (which is wholly-owned subsidiary of Shenzhen ITC Vehicles
Industry Co., Ltd.), the lease term is 15 years. Since the start of the operating lease, the Company has no
55
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 Scope
(1) The new subsidiaries which are included in consolidation scope
Net assets at the Net profit for
Subsidiaries Reason of change Date of change
end of year current year
PRD Group XuzhouDapeng Real New founded March of 2010 47,944,466.17 -2,055,533.83
EstateDevelopment Co.,Ltd Company
Dongguan Guomao Changsheng New founded September of 19,577,442.87 -422,557.13
Real Estate Development Co., Ltd. Company 2010
(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 HKD against RMB (1:0.8509.)on the
balance sheet date;
(2) For the paid-in capital, using the spot exchange rate of HKD against RMB (1：0.7917) when
obtained;
(3) For the income statement, using the the average exchange rate of HKD against RMB (1：0.8657)
56
when trade occuried.
Note V. Notes to the main subjects in consolidated financial statements
(Except for especially indicated, the closing balance and the opening balance refer to the balance at
December 31, 2010 and December 31, 2009 respectively; all amounts are presented in RMB.)
1．Cash and cash equivalents
Item Closing balance Opening balance
Cash on hand 184,769.91 227,928.12
Bank deposit 529,017,318.87 822,829,335.90
Other cash and cash equivalents 5,216,606.58 6,998,324.23
Total 534,418,695.36 830,055,588.25
Note 1: Other cash and cash equivalents refer to the closing balance of investment deposit and other
margin account in Securities Companies.
Note 2: The closing balance decreased by 35.62% comparing to the opening balance, mainly due to the
increasing land purchases in report period.
Closing balance
Item
Currency Original currency Exchange rate RMB
Cash on hand RMB 180,214.38 1.0000 180,214.38
USD 3.58 6.6227 23.71
HKD 5,325.62 0.8509 4,531.82
Sub-Total —— —— 184,769.91
Bank deposit RMB 524,488,253.51 1.0000 524,488,253.51
USD 128.37 6.6227 850.16
HKD 5,321,667.56 0.8509 4,528,215.20
Sub-Total —— —— 529,017,318.87
Other cash and RMB 5,216,606.58 1.0000 5,216,606.58
cash equivalents Sub-Total —— —— 5,216,606.58
57
Total —— —— 534,418,695.36
Opening balance
Item
Currency Original currency Exchange rate RMB
Cash on hand RMB 176,999.03 1.0000 176,999.03
USD 863.58 6.8282 5,896.69
HKD 51,144.12 0.8805 45,032.40
Sub-Total —— —— 227,928.12
Bank deposit RMB 818,032,057.28 1.0000 818,032,057.28
USD 239.66 6.8282 1,636.45
HKD 5,446,498.78 0.8805 4,795,642.17
Sub-Total —— —— 822,829,335.90
Other cash and RMB 6,997,908.55 1.0000 6,997,908.55
cash equivalents HKD 472.09 0.8805 415.68
Sub-Total —— —— 6,998,324.23
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: The investment refers to 30,000 shares of “* ST Shengrun A” (stock code: 000030). The company
came into bankruptcy restructuring program and started suspension on May 18, 2010. According the
Civil Judgment Letters (2010) SZFMQCZZ No.5-5 issued by Shenzhen Intermediate People’s Court,
The restructuring plan of Guangdong Sunrise Holdings Co., Ltd has been approved, the restructuring
program was terminated. The stock still suspensed since the restructuring plan was not finished at the
end of reporting period. The fair value is 272,100.00 according to the closing price at May 17, 2010
58
declared by Stock Exchange.
3. Notes receivable
Item Closing balance Opening balance
Bank acceptance notes 300,000.00
Total 300,000.00
4. Accounts receivable
（1）Accounts receivable by categories are as follows:
Closing balance
Balance Provision for bad debt
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 104,266,173.89 86.90 48,266,173.89 46.29
debts seperately
Provided for bad debts by portfolio
Portfolio 1 8,869,994.67 7.39 266,099.84 3.00
Portfolio 2 3,036,227.93 2.53
Subtotal 11,906,222.60 9.92 266,099.84 2.23
Individually not significant but provided for bad 3,811,391.44 3.18 3,515,728.91 92.24
debts seperately
Total 119,983,787.93 100.00 52,048,002.64 43.38
Opening balance
Balance Provision for bad debt
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 104,266,173.89 87.88 48,266,173.89 46.29
debts seperately
Provided for bad debts by portfolio
Portfolio 1 6,579,918.37 5.54 197,397.55 3.00
Portfolio 2 4,556,473.45 3.84
Subtotal 11,136,391.82 9.38 197,397.55 1.77
Individually insignificant but provided for bad 3,248,566.57 2.74 3,248,561.90 100.00
debts seperately
Total 118,651,132.28 100.00 51,712,133.34 43.58
Interpretation of receivables:
59
Receivables with individually significant amount and provided for bad debt separately:
Bad debt Proportion Reason for
Name of company Amount
provision (%) provision
Shenzhen Jiyong Properties & 98,611,328.05 42,611,328.05 43.21 Involved in lawsuit,
Resources Development referring to Note
Company VII-1(1), Note IX-2
Shenzhen Tewei Industry 2,836,561.00 2,836,561.00 100.00 Uncollectible for a
Co.,Ltd. long period
Shenzhen Lunan Industry 2,818,284.84 2,818,284.84 100.00 Poor operational
Development Co.,Ltd. status
Total 104,266,173.89 48,266,173.89 ——
Among the portfolio, receivables with bad debt provision according to the proportion of balance:
Portfolio Name Amount Proportion (%) Bad debt provision
Portfolio 1 8,869,994.67 3.00 266,099.84
Total 8,869,994.67 266,099.84
Receivables with individually insignificant amount but provided for bad debt seperately:
Bad debt
Name of company Amount Proportion (%) Reason for provision
provision
Shenzhen Huangtaizi Unrecoverable
921,279.90 625,617.37 67.91
Re staurant
Shenyang Jinfeng Hotel Unrecoverable
449,590.30 449,590.30 100.00
Shenzhen Luohu Office Unrecoverable
305,039.09 305,039.09 100.00
of Construction
Shenzhen Yunpeng Unrecoverable
274,286.32 274,286.32 100.00
Hotel Co.,Ltd Vienna
Branch
Hainan Meijia Tea Skill Unrecoverable
126,318.15 126,318.15 100.00
House
Others Unrecoverable
1,734,877.68 1,734,877.68 100.00
Total 3,811,391.44 3,515,728.91 ——
(2) There is no receivable account that have been fully provided of bad debt provision, or with great
portion, and retrieved or written back in the reporting period, or such account with significant amount.
（3）No account receivables were written off during the reporting period.
（4）There was no accounts receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
（5）Details of top 5 receivable accounts:
60
Proportion to
Company Relationship Amount Aging total accounts
receivables (%)
Shenzhen Jiyong Properties & Resources Non-related 98,611,328.05 Over 3 years 82.19
Development Company parties
Rainbow Plaza Co., Ltd Non-related 3,006,543.75 1-3years 2.50
parties
Shenzhen Tewei Industry Co.,Ltd. Non-related 2,836,561.00 Over 3 years 2.36
parties
Shenzhen Lunan Industry Development Non-related 2,818,284.84 Over 5 years 2.35
Co.,Ltd. parties
Shenzhen Huangtaizi Restaurant Non-related 921,279.90 1-3years 0.77
parties
Total 108,193,997.54 90.17
(6) There was no accounts receivable due from related parties.
5. Other receivables
（1）Other receivables by categories are as follows:
Closing balance
Balance Provision for bad deb
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 93,518,263.68 66.48 93,518,263.68 100.00
debts seperately
Provided for bad debts by portfolio
Portfolio 1 5,329,966.00 3.79 159,898.98 3.00
Portfolio 2 32,617,813.08 23.18
Subtotal 37,947,779.08 26.97 159,898.98 0.42
Individually not significant but provided for 9,216,737.11 6.55 9,216,737.11 100.00
bad debts seperately
Total 140,682,779.87 100.00 102,894,899.77 73.14
61
Opening balance
Balance Balance
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 91,987,598.66 58.04 88,320,931.98 96.01
debts seperately
Provided for bad debts by portfolio
Portfolio 1 6,017,008.00 3.80 180,510.24 3.00
Portfolio 2 44,526,890.46 28.10
Subtotal 50,543,898.46 31.90 180,510.24 0.36
Individually not significant but provided for 15,950,180.30 10.06 15,950,180.30 100.00
bad debts seperately
Total 158,481,677.42 100.00 104,451,622.52 65.91
Interpretation of other receivables:
Other receivables with individually significant amount and provided for bad debt separately:
Name of company Amount Bad debt provision Proportion (%) Reason for provision
Gintian Industry (Group) 56,600,000.00 56,600,000.00 100.00 Payment for discharging
Co.,Ltd of guaranty responsibility
that was difficult to be
recollected
Anhui Nanpeng 8,295,584.00 8,295,584.00 100.00 Uncollectible for a long
Papermaking Co., Ltd period
Shenzhen Shengfenglu, 6,481,353.60 6,481,353.60 100.00 There is no asset to
ITC Jewel & Gold Co., execute the verdict, thus
Ltd lead to uncollectibility
Shanghai Yutong Real 5,676,000.00 5,676,000.00 100.00 Uncollectibility for the
estate development Co., reason of verdict
Ltd
Wuliangye Restaurant 5,523,057.70 5,523,057.70 100.00 Has been liquidated
HongKong Yueheng 3,271,837.78 3,271,837.78 100.00 Has been liquidated
Development Co., Ltd
Dameisha Tourism 2,576,445.69 2,576,445.69 100.00 Suspended project
Center
Shenzhen ITC Food 2,551,652.48 2,551,652.48 100.00 Insolvency
Enterprise Co.,Ltd.
Elevated Train Project 2,542,332.43 2,542,332.43 100.00 Suspended project
Total 93,518,263.68 93,518,263.68 ——
Among the portfolio, other receivables with bad debt provision according to the proportion of
62
balance:
Portfolio Name Amount Proportion (%) Bad debt provision
Portfolio 1 5,329,966.00 3.00 159,898.98
Total 5,329,966.00 159,898.98
Other receivables with individually insignificant amount but provided for bad debt seperately:
Name of company Amount Bad debt provision Proportion (%) Reason for provision
Shenzhen Wufang Pottery & 1,747,264.25 1,747,264.25 100.00 Poor operation status
Porcelain Industrial Co., Ltd
Liang Weimin 1,357,137.11 1,357,137.11 100.00 Unrecoverable due to
dismission of
employee
Compensation for Shidai new 601,762.21 601,762.21 100.00 Owner unable to repay the loan
residence mortgage guarantee
Chen Liangfang 500,000.00 500,000.00 100.00 Unrecoverable due to
disappearance of the debtor
Yan Kunping 496,307.77 496,307.77 100.00 Unrecoverable for a long period
Shenzhen Property 335,828.92 335,828.92 100.00 Unrecoverable
Architectural Design
Company
Others 4,178,436.85 4,178,436.85 100.00 Unrecoverable
Total 9,216,737.11 9,216,737.11 ——
（2）Interpretation of reversal or recovery in report period:
Basis to recognize Accumulated amount
Amount of
Reason for reversal the original of provision for bad
Name of company reversal or
and recovery provision for bad debts before reversal
recovery
debts or recovery
Duokuai Elevator (Far Lawsuit has Receivables cannot 1,478,071.21 8,726,693.00
East) Co., Ltd. reconciled, details be offset by
refer to Note VII- 2(3) executable property,
Total 1,478,071.21 8,726,693.00
63
（3）No other receivables were written off during the reporting period.
（4）There was no other receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
（5）Details of top 5 other receivables:
Proportion of the
Name of company Relationship Amount Aging
total (%)
Gintian Industry (Group) Co.,Ltd. Non-related 56,600,000.00 Over 3 years 40.23
parties
Shenzhen ITC Tian’an Properties Joint ventures 14,705,931.45 Over 3 years 10.45
Co., Ltd
Anhui Nanpeng Papermaking Co., Ltd Associated 8,295,584.00 Over 3 years 5.90
enterprises
Shenzhen Shengfenglu, ITC Jewel & Non-related 6,481,353.60 Over 3 years 4.61
Gold Co., Ltd parties
Shanghai Yutong Real estate Non-related 5,676,000.00 Over 3 years 4.03
development Co., Ltd parties
Total 91,758,869.05 65.22
(5) Details of other receivables refer to Note VI-7.
6. Prepayment
(1)Aging analysis:
Closing balance Opening balance
Aging
Closing balance Proportion (%) Closing balance Proportion (%)
Within 1 year(including 1 year) 33,804,247.57 68.48 46,717,982.28 99.69
1-2 years(including 2 years) 15,412,693.95 31.22 134.03 0.00
2-3 years(including 3 years) 90.00 0.00 129,879.00 0.28
Over 3 years 143,400.35 0.30 14,878.80 0.03
Total 49,360,431.87 100.00 46,862,874.11 100.00
（2）The significant prepayments are as following:
64
Company Relationship Amount Aging Notice
Prepayment of taxes 45,515,853.80 Within 2 year Note
Total 45,515,853.80
Note: According to “Provisional Regulations on Business Tax Business tax”, transfer of land use right or
real estate sales, using method of pre-collection (including deposit in advace), and the obligation for tax
occurs on pre-collection date. The balance of pre-paid the taxes and fees refer to the prepaid business tax,
education surtax and other tax fees, basing on pre-sale income of commercial housing sales.
（3）There was no amount due from shareholders with more than 5% (including 5%) of the voting
shares of the Company in prepayment.
7. Inventories
(1) Details:
Proportion
of reversal
of provision
Including：
for
Closing Capitalized
Categories Opening balance Increase Decrease impairment
balance borrowing
of
cost
inventories
to closing
balance
Raw materials 1,549,985.45 4,203,671.22 3,808,222.56 1,945,434.11
Finished 118,193.99 368,898.98 440,605.75 46,487.22
products
Low-value 163,872.46 550,253.89 427,618.19 286,508.16
consumption
goods
Land use right 145,055,247.84 455,787,291.28 36,694,197.05 564,148,342.07 1.82%
held for real
estate
development
Properties 946,488,448.65 347,391,814.30 585,460,801.68 708,419,461.27 72,404,360.82
under
development
Completed 260,264,084.20 588,158,993.13 508,633,410.08 339,789,667.25 8,473,421.84 1.80%
properties for
sale
Total 1,353,639,832.59 1,396,460,922.80 1,135,464,855.31 1,614,635,900.08 80,877,782.66 3.62%
65
Note: Details of ownership restricted stock refer to Note V-15.
(2)Provision for impairment of inventories:
Decrease
Opening Currency Closing
Categories Increase
balance Reversal Written off translation balance
effects
Raw 436,509.19 24,290.79 412,218.40
materials
land use 68,407,654.35 46,550.00 29,464,928.89 948,899.16 38,040,376.30
right held for
real estate
development
completed 29,118,896.81 29,118,896.81
properties for
sale
Total 97,963,060.35 46,550.00 58,583,825.70 24,290.79 948,899.16 38,452,594.70
Note1: Provision for “Land use right held for real estate development” is mainly about:
A. 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 fully which amount is RMB 26,002,128.89.
B. Up to the end of reporting period, it is estimated that the net realizable value of Hong Kong
Tingjiu Land is more than carrying value. Therefore, the accrued provision for falling price of
inventories, which amount is HKD 4,000,000.00(which equal to RMB 3,462,800.00), was switched
back.
Note2: Provision for “Completed properties for sale” is carried forward,which amount is RMB
29,118,896.81 because the assessed value rise of the assets of Huangcheng Real Estate Limited
Company which will be replaced according the Assest Replacement Agreement signed with Shenzhen
Investment Holdings. Details refer to Note IX-1.
66
Note3: 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 provision for provision for
Amount impairment of Amount impairment of
inventories inventories
46,823,373.98 46,823,373.98
Huanggang Port Land
6,648,404.13 6,648,404.13 6,648,404.13 6,648,404.13
Hainan Qiongshan Land
36,081,191.89 35,574,848.40 26,002,128.89
Shenhui Garden
5,816,127.11 5,816,127.11 5,769,577.11 5,769,577.11
Fuchang Second Term Land
48,550,145.06 25,575,845.06 50,239,044.22 29,987,544.22
Hong Kong Tingjiu Land
220,870,945.40
Dongguan Dalang Land
199,358,154.50
Xuzhou Dapeng Land
564,148,342.07 38,040,376.30 145,055,247.84 68,407,654.35
Total
B. Properties under development
Closing balance Opening balance
Expected
Starting Expected total
Project name completion Capitalisation Capitalisation of
time investment
time Book balance of interest Book balance interest
accumulate accumulate
Shenwuye – 2007.1 2011.1 422,860,000.00 355,000,672.49 43,529,960.53 256,171,231.97 28,956,149.53
Shengang No.1
(original HuangYu
Garden District C-B)
Shenwuye -Langqiao 2008.3 2012.6 514,170,000.00 285,614,373.55 25,691,436.49 201,623,511.09 11,994,237.12
Residence (original
HuangYu Garden
District D)
Shenwuye – FHRL 2005.9 2010.6 422,280,000.00 436,180,001.02 40,286,901.08
(original FHRL
Group B)
Cai Tian Yi Se 2009.7 2012.3 110,000,000.00 67,804,415.23 3,182,963.80 52,513,704.57 15,367.00
Total —— 708,419,461.27 72,404,360.82 946,488,448.65 81,252,654.73
67
C. Completed properties for sale
Provision for
Completion Opening Closing
Item Increase Decrease impairment of
time balance balance
inventories
ITC Plaza 1995.12 46,366,867.68 38,994,616.73 7,372,250.95
Huangyu Garden District A 2001.06 2,617,557.11 137,096.00 2,754,653.11
Huangyu Garden District B 2003.12 15,346,340.13 15,346,340.13
Imperial Garden (original 2008.11 5,863,700.42 5,431,178.14 432,522.28
HuangYu Garden District
C-A)
Huangcheng Plaza 1997.05 165,983,041.16 165,983,041.16
Haikou Waterfront of Blue 2008.12 12,840,707.89 6,023,303.27 6,817,404.62
Island
Xinhua City 2010.6 585,460,801.68 458,184,311.94 127,276,489.74
Rihao Garden 4,654,651.00 4,654,651.00
Fuchang Comprehensive 6,421,447.63 6,421,447.63
Building
Others 169,771.18 2,561,095.45 2,730,866.63
Total 260,264,084.20 588,158,993.13 508,633,410.08 339,789,667.25
8. Investment in joint and associated enterprises
Register Registered
Type of Legal Business Proportions of Proportions of
Investee ed capital
business representative nature shareholding (%) voting rights (%)
address (0’000)
I.Joint ventures
Shenzhen Jifa Limited Shenzhen Wang Services HKD5,415 50.00 50.00
Warehouse Co., Company Hangjun
Ltd
Shenzhen ITC Limited Shenzhen Chen Yugang Service USD888 50.00 50.00
Tian’an Company
Properties Co.,
Ltd
Shenzhen ITC Limited Shenzhen Zhang Property 300 50.00 50.00
Tian’an Company Changsheng management
Properties
Management
Co., Ltd
II.Associated
companies
Shenzhen ITC Limited Shenzhen Zha Service HKD3,280 38.33 38.33
Industrial Company Shengming
Development
Co., Ltd
Anhui Nanpeng Limited Huainan Wang Industry USD800 30.00 30.00
Papermaking Company Yizhong
Co., Ltd
Shenzhen Limited Shenzhen Yan Wenbo Industry USD12,500 26.00 26.00
Wufang Pottery Company
& Porcelain
Industrial Co.,
Ltd
68
Total net Total sales Total net
Total asset the Total liability Relationshi Organizatio
Name of company asset the year revenue this profit this
year end the year end p n. code
end year year
I.Joint ventures
Shenzhen Jifa 56,038,445.00 2,812,091.10 53,226,353.90 6,336,444.00 1,193,175.01 Joint 618847828
Warehouse Co., Ltd ventures
Shenzhen ITC 129,210,828.24 55,389,865.51 73,820,962.73 18,146,419.30 677,817.09 Joint 618845152
Tian’an Properties ventures
Co., Ltd
Shenzhen ITC 30,260,403.20 25,131,742.55 5,128,660.65 17,628,958.40 1,514,564.33 Joint 618930517
Tian’an Properties ventures
Management Co.,
Ltd
II.Associated
companies
Shenzhen ITC Associates
Industrial
Development Co.,
Ltd
Anhui Nanpeng Associates
Papermaking Co.,
Ltd
Shenzhen Wufang Associates
Pottery & Porcelain
Industrial Co., Ltd
69
9. Long-term equity investment
Proportions
Amount of Proportions
Opening Increase/ Closing of
Company initial of voting
balance Decrease balance shareholding
investment rights (%)
(%)
I. Investment
under equity
method
Shenzhen ITC 23,186,124.00 36,571,572.82 338,908.54 36,910,481.36 50.00 50.00
Tian’an Properties
Co., Ltd
Shenzhen Jifa 30,645,056.04 26,016,589.45 596,587.51 26,613,176.96 50.00 50.00
Warehouse
Company Limited
Shenzhen Tian’an 1,500,000.00 1,807,048.16 757,282.17 2,564,330.33 50.00 50.00
International
Building Property
Management Co.,
Ltd
II. Investment
under cost method
East Land 93.64 93.64 -93.64
Properties
Limited
Shenzhen Huajing 7,600,000.00 7,600,000.00 -7,600,000.00
Glass Bottle
Company Limited
Shenzhen Wufang 18,983,614.14 18,983,614.14 18,983,614.14 26.00 26.00
Pottery &
Porcelain
Industrial Co., Ltd
Shenzhen ITC 20,154,840.79 3,682,972.55 3,682,972.55 38.33 38.33
Industrial
Development Co.,
Ltd
70
Anhui Nanpeng 13,824,000.00 13,824,000.00 13,824,000.00 30.00 30.00
Papermaking Co.,
Ltd
China T.H. 2,962,500.00 2,962,500.00 2,962,500.00 0.33 0.33
Co.,Ltd.
North Machinery 3,465,000.00 3,465,000.00 3,465,000.00 12.66 12.66
(Group) Co.,Ltd.
Guangdong 8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Huayue Real
Estate Co.,Ltd.
Shenzhen ITC 8,500,000.00 8,500,000.00 8,500,000.00 100.00 100.00
Petroleum
Company Limited
Guangzhou 6,000,000.00 6,000,000.00 6,000,000.00 30.00 30.00
Shilifeng
Automobile
Co.,Ltd.
Sanya East Travel 1,350,000.00 1,350,000.00 1,350,000.00 0.28 0.28
Co.,Ltd.
Shensan Co.,Ltd. 17,695.09 17,695.09 17,695.09
Macao Huashen 85,621.36 85,485.44 -2,873.79 82,611.65 10.00 10.00
Enterprise
Co.,Ltd.
Chongqing 2,598,061.52 2,593,937.15 -87,201.06 2,506,736.09 27.25 27.25
Guangfa Real
estate
development
Co.,Ltd.
Saipan Project 1,935,184.04 1,932,111.97 -64,952.32 1,867,159.65 30.00 30.00
Total —— 144,173,265.61 -6,062,342.59 138,110,923.02 —— ——
71
Note for
difference
between
Provision Provision
proportions of Provision for
Company incresed in written off in Cash dividends
voting rights impairment
current year current year
and
shareholding
hold
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 7,600,000.00
Company Limited
Shenzhen Wufang
Pottery & Porcelain 18,983,614.14
Industrial Co., Ltd
Shenzhen ITC
Industrial 3,682,972.55
Development Co., Ltd
Anhui Nanpeng
13,824,000.00
Papermaking Co., Ltd
China T.H. Co.,Ltd. 2,160,300.45
72
North Machinery
3,465,000.00
(Group) Co.,Ltd.
Guangdong Huayue
8,780,645.20
Real Estate Co.,Ltd.
Shenzhen ITC
Petroleum Company
Limited
Guangzhou Shilifeng
Automobile Co.,Ltd.
Sanya East Travel
Co.,Ltd. Legal 1,350,000.00
persons shares
Shensan Co.,Ltd. 17,695.09
Macao Huashen
82,611.65 -2,873.79
Enterprise Co.,Ltd.
Chongqing Guangfa
Real estate 2,506,736.09 -87,201.06
development Co.,Ltd.
Saipan Project 1,867,159.65 -64,952.32
7,600,000.00
Total 56,720,734.82 -155,027.17
Note 1: The decision about East Land Properties Limited (hereinafter referred to as “East Land
Company”) liquidation was approved by by the 9th session of the sixth conference of the Company’s
board of directors on Nov 22, 2008. The Company received approval of East Land Company revoking
issued by Hongkong Companies Registry on Mar 1, 2010.
Note 2: The decreased balance of investment of Shenzhen Huajing Glass Bottle Company Limited was
due to equity transfer in 2010, details refer to Note VI- 6(3).
Note 3: The decreased balance of investment and impairment provision of Macao Huashen Enterprise
Co., Ltd., Saipan Project, Chongqing Guangfa Real estate development Co., Ltd., which was due to
translation of financial statements in foreign currencies.
10. Investment property
(1) Details are as following:
73
Item Opening balance Increase Decrease Closing balance
1.Cost 390,329,319.59 58,141,042.20 3,408,645.31 445,061,716.48
Including: Property and building 379,359,365.19 58,141,042.20 408,645.31 437,091,762.08
Land use right 10,969,954.40 3,000,000.00 7,969,954.40
2.Accumulated depreciation and amortization 133,223,353.65 16,689,769.08 436,110.34 149,477,012.39
Including: Property and building 130,752,892.34 16,158,947.66 258,364.68 146,653,475.32
Land use right 2,470,461.31 530,821.42 177,745.66 2,823,537.07
3.The net book value 257,105,965.94 295,584,704.09
Including: Property and building 248,606,472.85 290,438,286.76
Land use right 8,499,493.09 5,146,417.33
4. Provision for impairment loss
Including: Property and building
Land use right
5.Carrying amount 257,105,965.94 295,584,704.09
Including: Property and building 248,606,472.85 290,438,286.76
Land use right 8,499,493.09 5,146,417.33
Note: Amount of accumulated depreciation and amortization is RMB 15,333,131.15 in current fiscal
year.
(2)The increased cost of property and building during the current period was due to the investment
property transferred from inventories under leasing and fixed assets.
(3)The investment properties with restricted ownership, refers to Note V-15.
(4)The real estate held for sales:
Estimated
Item Carrying amount Fair value Disposal time
disposal cost
Shop in Danshui 2,563,426.76 10,721,620.00 761,000.00 May 2011
Wuye City
Note 1: Shop in Danshui Wuye City include: 62 shops in 1st floor, 32 shops in 2nd floor, No. 2
warehouse and No.4 warehouse.
Note 2: The real estate held for sales is the assets which will be replaced according the Assest
Replacement Agreement signed with Shenzhen Investment Holdings, details refer to Note IX-1.
74
11. Fixed assets
(1) Details:
Item Opening balance Increase Decrease Closing balance
1.Cost 173,582,555.83 18,942,264.09 24,338,869.35 168,185,950.57
Including: Property and buildings 113,702,741.43 4,514,055.17 5,924,965.98 112,291,830.62
Machineries 39,889.00 3,803.42 43,692.42
Vehicles 44,725,152.17 13,135,040.00 18,042,682.52 39,817,509.65
Electronic and other equipment 10,866,362.64 1,289,365.50 371,220.85 11,784,507.29
Decoration 4,248,410.59 - 4,248,410.59
2.Depreciation 96,521,046.55 12,780,232.49 19,303,791.14 89,997,487.90
Including: Property and buildings 56,846,066.61 4,212,149.88 1,814,390.05 59,243,826.44
Machineries 26,471.91 6,950.78 33,422.69
Vehicles 28,462,605.94 7,458,742.75 17,140,548.40 18,780,800.29
Electronic and other 7,337,620.21 1,008,497.48 348,852.69 7,997,265.00
equipment
Decoration 3,848,281.88 93,891.60 3,942,173.48
3.The net book value 77,061,509.28 78,188,462.67
Including: Property and buildings 56,856,674.82 53,048,004.18
Machineries 13,417.09 10,269.73
Vehicles 16,262,546.23 21,036,709.36
Electronic and other 3,528,742.43 3,787,242.29
equipment
Decoration 400,128.71 306,237.11
4. Provision for mpairment loss 75,717.16 75,717.16
Including: Property and buildings
Machineries
Vehicles
Electronic and other 75,717.16 75,717.16
equipment
Decoration
5.Carrying amount 76,985,792.12 78,112,745.51
Including: Property and buildings 56,856,674.82 53,048,004.18
Machineries 13,417.09 10,269.73
Vehicles 16,262,546.23 21,036,709.36
Electronic and other 3,453,025.27 3,711,525.13
equipment
Decoration 400,128.71 306,237.11
75
Note1: Amount of accumulated depreciation is RMB 12,780,232.49 in current fiscal year.
Note2: Vehicles changed mainly because subsidiaries renewed their taxies in reporting period.
(2) Details of temporarily idle fixed assets are as follows:
Accumulated Impairment Expected date for put
Categories Cost Carrying amount
depreciation loss into usage
16,355,470.46 3,512,595.93 12,842,874.53
Property and
buildings
16,355,470.46 3,512,595.93 12,842,874.53
Total
(3)The fixed assets held for sales:
Estimated disposal
Item Carrying amount Fair value Disposal time
cost
Shop in Danshui 4,357,131.16 15,357,630.00 1,090,000.00 May 2011
Wuye City
Note 1: Shop in Danshui Wuye City include: 34 shops in 1st floor, 145 shops in 2nd floor and No. 3
warehouse.
Note 2: The fixed assets held for sales are the assets which will be replaced according the Assest
Replacement Agreement signed with Shenzhen Investment Holdings; details refer to Note IX-1.
12. Intangible assets
Item Opening balance Increase Decrease Closing balance
1.Cost 146,798,497.31 187,649.49 146,986,146.80
-Operating license plate 144,851,143.70 144,851,143.70
-Repurchased operating right of taxi’s
operating license plate 1,947,353.61 187,649.49 2,135,003.10
2.Accumulated amortization 33,904,820.19 6,517,660.69 40,422,480.88
-Operating license plate 33,465,836.04 6,395,302.20 39,861,138.24
-Repurchased operating right of taxi’s
operating license plate 438,984.15 122,358.49 561,342.64
76
Item Opening balance Increase Decrease Closing balance
3.The net book value 112,893,677.12 106,563,665.92
-Operating license plate 111,385,307.66 104,990,005.46
-Repurchased operating right of taxi’s
operating license plate 1,508,369.46 1,573,660.46
4. Provision for mpairment loss
-Operating license plate
-Repurchased operating right of taxi’s
operating license plate
5.Carrying amount 112,893,677.12 106,563,665.92
-Operating license plate 111,385,307.66 104,990,005.46
-Repurchased operating right of taxi’s
operating license plate 1,508,369.46 1,573,660.46
Note 1: Accumulated amortization is RMB 6,517,660.69 in current year.
Note 2: The intangible assets with restricted ownership, referring to Note V -15.
13. Deferred tax assets and liabilities
（1）Recognized deferred tax assets and liabilities
Item Closing balance Opening balance
I. Deferred tax assets
Provision for impairment loss 26,972.53 6,736,873.12
Accrued land VAT 38,588,791.11 32,844,451.12
Accrued unpaid dismiss welfare 686,097.78
Deductible loss 731,982.32 7,527,746.56
Deductible employee education fee 141.24
Unrealized internal profit 1,952,088.51 3,900,332.44
Expected profits calculated from booking sale of properties 41,909,673.60
Subtotal 83,209,649.31 51,695,501.02
II. Deferred tax liabilities
Change of financial asset fair value 807.48
Subtotal 807.48
77
（2）details of deferred tax assets and liabilities
Item Amount
Deferred tax liabilities
Change of financial asset fair value 3,364.50
Subtotal 3,364.50
I. Deferred tax assets
Provision for impairment loss 112,385.53
Accrued land VAT 160,146,445.31
Accrued unpaid dismiss welfare 2,927,929.27
Deductible loss 564.94
Deductible employee education fee 8,060,857.58
Unrealized internal profit 174,623,640.00
Expected profits calculated from booking sale of properties 345,871,822.63
Subtotal
14. Provision for impairment loss
Decrease
Opening Closing
Foreign
Item Increase
balance balance
Reversal Written off currencies
effects
I. Provision for 156,163,755.86 651,777.76 1,478,071.21 394,560.00 154,942,902.41
bad debt
Including: 51,712,133.34 335,869.30 52,048,002.64
Accounts
receivable
Other 104,451,622.52 315,908.46 1,478,071.21 394,560.00 102,894,899.77
receivables
78
Decrease
Opening Closing
Foreign
Item Increase
balance balance
Reversal Written off currencies
effects
II. Provision 97,963,060.35 46,550.00 58,583,825.70 24,290.79 948,899.16 38,452,594.70
for impairment
of inventories
III. Provision 64,475,761.99 7,600,000.00 155,027.17 56,720,734.82
for impairment
of long-term
equity
investments
VI. Provision 75,717.16 75,717.16
for impairment
of fixed assets
Total 318,678,295.36 698,327.76 60,061,896.91 7,624,290.79 1,498,486.33 250,191,949.09
15. Assets with restriction on ownership
(1)The reason for restriction on ownership
A. The subsidiary of the Company, Shenzhen ITC Vehicles Services Company, mortgaged 80
property certificates of operating vehicle plate for a long-term bank loan RMB 19,000,000.00, and the
closing balance is RMB 7,960,000.00, and the loan expires within a year.
B. The subsidiary of the Company, Shenzhen Huangcheng Real Estate Company Limited, uses
District 0058, three floors of District A of Shenzhen ITC Building and Building 4-01 as collateral to
receive a 240,000,000 RMB long-term bank loan, and the closing balance was RMB 200,000,000.00.
C. The subsidiary of the Company, Shenzhen ITC Vehicles Services Company, uses Donggua
Ridge Land (Land right number is SFDZ No. 3000412119)as collateral to receive a 90,000,000 RMB
79
long-term bank loan, and the closing balance was RMB 12,000,000.00.
(2)Details of the assets with restriction on ownership area as follows:
Categories Opening balance Increase Decrease Closing balance
Assets used in guarantee
10,911,211.81 10,911,211.81
Fixed asset- property and building
106,842,307.85 102,228,648.89 4,613,658.96
Investment property -property and building
175,007,383.76 140,744,331.42 315,751,715.18
Inventories-costs
35,700,358.40 35,700,358.40
- developments
36,166,666.66 2,068,780.22 34,097,886.44
Intangible asset - operating license plate
364,627,928.48 140,744,331.42 150,908,999.32 354,463,260.58
Subtotal
The assets sealed up or frozen due to lawsuit
1,423,898.44 1,423,898.44
cash and cash equivalents
232,200.00 232,200.00
Trading financial assets
29,302,199.55 29,302,199.55
Long-term equity investment
28,500,000.00 28,500,000.00
including：Huangcheng Real Estate Company Limited
equity（note）
802,199.55 802,199.55
SST Huasu Holdings Co.,Ltd directional shares
11,881,191.46 11,881,191.46
Fixed asset- property and building
86,475,296.75 86,475,296.75
Investment property -property and
building
47,836,352.35 47,836,352.35
Inventories- property and building
177,151,138.55 177,151,138.55
Subtotal
74,676,808.33 74,676,808.33
less： Assets used for collateral and sealed up, frozen
467,102,258.70 140,744,331.42 253,383,329.54 354,463,260.58
Total
80
Note : The decrease of “The assets sealed up or frozen due to lawsuit” in 2010 because the Court
released relevant asset sealed up or frozen due to Haiyi Case reconciliation, details referring to Note
VII-2(1).
16. Short -term borrowings
Categories Closing balance Opening balance
Credit loan 10,000,000.00 200,000,000.00
Total 10,000,000.00 200,000,000.00
Note 1: The details of repayment after the balance sheet date refer to Note Ⅷ-1.
Note 2: The year-end credit loan is the loan made by the subsidiary Shenzhen ITC Vehicles Services
Company through the China Everbright Bank JingTian Shenzhen Branch to Shenzhen Investment
Holding Co., Ltd. Details refers to Note VI-6 (2).
17. Trade payable
（1）Trade payable details
Item Closing balance Opening balance
Amount 105,465,038.93 112,470,139.39
Note1: Accounts payable over 1 year is mainly comprised of payables for construction works and
project quality guarantees.
Note 2: There was no amount due to shareholders with more than 5% (including 5%) of the voting
shares of the Company in trade payables.
18. Advance from customers
（1）Advance from customers details:
Item Closing balance Opening balance
Amount 878,660,737.46 745,527,226.22
81
（2) Details of advance from customers on main projects of properties for sale are as follows:
Estimated date of
Item Aging Closing balance Opening balance
completion
Loyal Garden 3,040,791.00 Completion
Huangcheng Plaza 2-3years 2,176,421.15 2,176,421.15 Completion
Huangyu Garden District A 2-5years 846,495.63 846,495.63 Completion
Huangyu Garden District B 2-5years 218,413.26 218,413.26 Completion
Fengrun Garden 4-5years 70,638.00 70,638.00 Completion
Xinhua City Within 1 year 1,550,000.00 488,378,752.00 Completion
Shengang No.1 Within 2 year 869,876,870.00 246,228,024.00 January 2011
Total 874,738,838.04 740,959,535.04
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.
19. Payroll payable
Closing
Categories Opening balance Increase Decrease
balance
I. Salary, bonus, allowance, subsid 35,744,813.86 133,342,616.93 136,421,508.34 32,665,922.45
II. Employee welfare 9,012,538.28 9,012,538.28
III. Social insurance 438,879.64 19,535,296.57 19,990,476.42 -16,300.21
Including: 1.Medical insurance 10,247.34 3,100,648.60 3,115,713.35 -4,817.41
2.Basic retirement insurance 27,784.64 11,026,868.06 11,072,047.74 -17,395.04
3.Annuity fee 394,920.00 3,931,865.46 4,326,785.46
4.Unemployment insurance 3,387.24 337,410.53 337,419.34 3,378.43
5.Injury insurance 1,354.89 356,914.47 356,918.00 1,351.36
6.Pregnancy insurance 1,185.53 390,809.83 390,812.91 1,182.45
7.Labor cooperation medical care 1,930.00 1,930.00
8.Other social insurance 388,849.62 388,849.62
IV. Public housing fund 74,444.34 13,039,953.82 55,322.40 13,059,075.76
V. Labour union fee and employee 2,553,402.06 3,888,965.28 3,380,175.78 3,062,191.56
education fee
VI. Non-monetary welfare
Ⅶ.Redemption for termination s of 13,170,665.07 87,077.70 8,211,226.97 5,046,515.80
labor contract
Total 51,982,204.97 178,906,448.58 177,071,248.19 53,817,405.36
82
Note: The public housing fund balance at the end of the year is big because the Company accrued public
housing fund from May 2009 to December 2010 according the “Shenzhen interim measures for the
administration of public housing fund” (SF (2010) No.176) which was issued by Shenzhen municipal
people's government on November 24, 2010, and “ The notice tomunicipalizational state-owned
enterprise to build system of public housing fund”( SGZJ(2011) No.6) which was issued by State-owned
Assets Supervision and Administration Commission of Shenzhen on January 21, 2011. The Company
made a provision on public housing fund of RMB 12, 984,631.42.
20. Taxes payable
Categories Closing balance Opening balance
1.VAT 56,624.81 24,686.83
2.Business tax 3,375,734.58 9,551,059.52
3.Income tax 30,732,401.20 33,444,737.01
4.Stamp tax -9,805.53 47,309.79
5.Education surtax 105,068.39 287,991.28
6.Land value appreciation tax 159,797,764.26 158,676,881.17
7.Urban maintenance and construction tax 218,743.52 201,419.84
8.Property tax 909,138.25 845,667.42
9.Individual income tax 393,918.78 2,236,551.30
10.Embankment maintenance fee 2,842.64 14,789.69
19.Others 2,749.97 784.09
Totals 195,585,180.87 205,331,877.94
21. Other payables
（1）Other payables details
Item Closing balance Opening balance
Totals 229,549,997.54 208,240,882.65
（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：
83
Item Amount Nature
Accrued Land value appreciation tax 56,303,627.40 Accrued Land value appreciation tax
HaiNan Yirun Real Estate Co., Ltd 44,120,049.09 Receipts under custody
Rent deposits 21,780,050.24 Deposits
Shenzhen Guanghong Investment Co., Ltd 17,270,000.00 Current account
Guangzhou Lishifeng Motor Company Limited 15,344,017.08 Current account
Total 154,817,743.81
(4)The details of the account payables to other related party in other account payables of this reporting
period refer to Note VI-7.
22. Non-current liabilities due within 1 year
(1) Details:
Item Closing balance Opening balance
Long-term borrowings 250,960,000.00 200,000,000.00
Total 250,960,000.00 200,000,000.00
(2) Long-term borrowings due within 1 year:
Item Closing balance Opening balance
Guarantee borrowings 243,000,000.00 200,000,000.00
Pledged borrowings 7,960,000.00
Total 250,960,000.00 200,000,000.00
Details:
Closing balance Opening balance
Interes
Loan
Loan currenc t Fore
Loaner starting Foreign
ending date y rate(% Home ign
date currenc Home Currency
) Currency curr
y
ency
China 1, April 30,March RMB 5.67 — — 200,000,000.00
constructio 2008 2010
n bank, ltd.,
shenzhen
branch
84
Shenzhen 26,October 25,October RMB 4.86 — 43,000,000.00
east branch 2009 2011
of
agricultural
bank of
China
Shenzhen 27, January 25,October RMB 4.86 — 100,000,000.00 —
east branch 2010 2011
of
agricultural
bank of
China
Shenzhen 3,February 25,October RMB 4.86 — 100,000,000.00 —
east branch 2010 2011
of
agricultural
bank of
China
Central 8,Decembe 8,Decembe RMB 5.67 — 7,960,000.00 —
Commercia r 2008 r 2011
l branch of
pingan
bank
Total — — 250,960,000.00 — 200,000,000.00
Note: The details of significant repayment and borrowing after the balance sheet date refer to Note
VIII-1.
23. Long-term borrowings
（1）classification:
Borrowing terms Closing balance Opening balance
Mortgage borrowings 212,000,000.00
Pledge borrowings 13,480,000.00
Guarantee borrowings 250,000,000.00
Total 212,000,000.00 263,480,000.00
（2）Details:
85
Closing balance Opening balance
starting maturity Interest
Loaner currency Foreign
date date rate(%) Foreign Home Home
currenc
currency Currency Currency
y
Shenzhen 20,Marc 19,March RMB 4.86 —— 200,000,000.00 —— 200,000,000.00
east branch h 2009 2012
of
agricultural
bank of
China
Shenzhen 26,Octo 25,Octob RMB 4.86 —— —— 50,000,000.00
east branch ber 2009 er 2011
of
agricultural
bank of
China
Central 8,Decem 8,Decem RMB 5.67 —— 13,480,000.00
Commercial ber 2008 ber 2011
branch of
pingan bank
Central 10,Marc 10,March RMB 5.40 —— 12,000,000.00
Commercial h 2010 2012
branch of
pingan bank
Total —— 212,000,000.00 —— 263,480,000.00
Note: The details of significant loan after the balance sheet date refer to Note Ⅷ-1.
24. Provision for contingent liabilities
Closing
Item Opening balance Increase Decrease
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 69,284,708.83
Note 1: The decrease of “Pending action of Haiyi case” of provision for contingent liabilities refers to
NoteVII-2 (1).
86
Note 2: The decrease of “inspection matter” of provision for contingent liabilities refer to Note VII-3.
25. Other non-current liabilities
Item Closing balance Opening balance
1.Utility specific fund 7,958,418.62 20,588,927.64
2.Housing principle fund 10,772,085.75 9,596,210.03
3.House warming deposit 8,372,874.11 8,403,367.49
4.Electric Equipment Maintenance fund 4,019,415.44 4,019,415.44
5.Deputed Maintenance fund 26,952,949.71 25,928,572.02
6.Taxi Deposit 28,190,000.00 28,080,000.00
7.Lease income of taxi license to be written off 15,268,733.25 16,732,781.41
8.Others 660,000.38 2,447,000.39
Total 102,194,477.26 115,796,274.42
Note: “Others” is borrowing of Shenzhen ITC Automobile Industry Co., Ltd, Shenzhen ITC Industry car
rental Co., LTD due to the drivers.
26. Paid-in capital
Unit: (0’000) shares
Before Increase/Decrease (+/-) After
Item Issuing Bonus Reserves
Quantity Proportion Others Subtota Quantity Proportion
new shares transferred
(0’000) (%) (0’000) (0’000)l (0’000) (%)
shares (0’000) to shares
A. Unlisted shares 38,864.06 65.21 38,864.06 65.21
1.State owned shares
2.State-owned corporate
38,250.94 64.18 38,250.94 64.18
shares
3.Other domestic owned
613.12 1.03 613.12 1.03
shares
Including
Shares held by domestic
559.92 0.94 559.92 0.94
legal persons
Shares held by domestic 53.20 0.09 53.20 0.09
87
Before Increase/Decrease (+/-) After
Item Issuing Bonus Reserves
Quantity Proportion Others Subtota Quantity Proportion
new shares transferred
(0’000) (%) (0’000) (0’000)l (0’000) (%)
shares (0’000) to shares
natural person
4.Shares held by
overseas legal persons
Including
Shares held by overseas
legal persons
Shares held by overseas
natural person
B. Listed shares 20,733.85 34.79 20,733.85 34.79
1.RMB-denominated
13,973.73 23.45 13,973.73 23.45
ordinary shares
2.Domestically listed
6,760.12 11.34 6,760.12 11.34
foreign shares
3.Overseas listed
foreign shares
4.Others
Total 59,597.91 100.00 59,597.91 100.00
27. Capital surplus
Opening Closing
Item Increase Decrease
balance balance
Share premium 38,687,344.20 38,687,344.20
Others 25,332,931.52 25,332,931.52
Including: Other changes besides net gains or losses
in shareholders' equity of the investee under 25,332,931.52 25,332,931.52
equity method
Total 25,332,931.52 38,687,344.20 64,020,275.72
Note: The increase of capital surplus in 2010 is the fractional shares of Investment Holdings's bought-in
assets change commitment value (the asset value to be injected promised by Investment Holdings in
Share Reform Instruction, which is not lower than 500 million), the part belongs to the inactivated
recapitalization fund appointed by Share Reform Instruction, Investment Holdings pay compensation of
88
RMB 38,687,344.20, 20% of the gap, to the Company, detail refers to Note IX-1.
28. 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
29. Retained earnings
Item Amounts Extraction or allocation proportion
-26,036,870.39
Before beginning retained earnings
plus：Retained earnings at the beginning of the year
-26,036,870.39
Adjusted retained earnings at the beginning of the year
174,998,534.79
Plus: Net profit attributable to parent company transferred in
Less: the statutory reserved fund
Ordinary stock dividends payable
Ordinary dividend from shares transferred to share capital
148,961,664.40
Retained earnings at the end of the year
30. Revenue and Cost of Sales
(1) Revenue and Cost of Sales
Item 2010 2009
Revenue from main operations 966,145,989.88 820,863,345.37
Revenue from other operations 27,029,360.50 24,503,594.32
Total Revenue 993,175,350.38 845,366,939.69
Cost of sales 673,496,987.55 431,856,954.60
Note: Revenue in 2010 increased by 17.48% than that in 2009, mainly due to the revenue of Xinhua City
project recognized in this period is more than that of Imperial Garden project. Cost of sales in 2010
increased 55.95% than that in 2009, mainly because the margin profit of Xinhua City project carried
down is less than that of Imperial Garden carried down last period despite the revenue of Xinhua City
89
project recognized in this period is more than that of Imperial Garden project.
（2）Main Business (by industry)
2010 2009
Categories
Revenue Cost of sales Revenue Cost of sales
Sale of properties 690,303,822.33 446,538,955.54 581,318,329.08 234,317,556.65
Property rental and 190,707,764.42 173,327,651.93 156,628,206.23 150,249,112.52
management services
income
Transportation services 50,748,337.82 26,879,010.86 47,550,926.15 22,906,029.46
Hotel and restaurant 20,146,558.50 18,204,518.95 16,885,322.86 14,392,204.20
operations
Others 14,239,506.81 3,892,624.33 18,480,561.05 4,775,622.94
Total 966,145,989.88 668,842,761.61 820,863,345.37 426,640,525.77
Note: “Others” is comprised of engineering supervision income , elevator maintenance income and car
repair income.
31. Business taxes and surcharges
Item 2010 2009 Base of payment
Business tax 49,645,456.08 42,686,850.27 3% or 5% of taxable income
Urban maintenance and 804,792.75 627,685.37 1% or 7% of VAT and Business tax
construction tax
Additional education Fees 1,508,811.25 1,297,578.03 3% of VAT and Business tax
Land appreciation tax 30,527,472.92 101,297,169.97 30%－60% four level progressive rates
Levee fee 148,063.00 101,854.59 0.01% of operating revenue.
Others 14,921.32 13,414.99
Total 82,649,517.32 146,024,553.22
Note: Business taxes and surcharges in 2010 decreased by 43.40% than that in 2009, which mainly
because the margin profit of Xinhua City project carried down is less than that of Imperial Garden
carried down, resulting in decrease of accrued land appreciation tax.
90
32. Distribution Expenses
Item 2010 2009
Paid for employees and expense of sale institution 5,867,927.01 8,780,802.84
Sales agent charges, advertising expense and promotion expenses 5,511,724.30 10,584,153.40
Others 3,576,658.05 1,844,615.57
Total 14,956,309.36 21,209,571.81
33. Administrative expenses
Item 2010 2009
Employee benefit expenses and 67,044,686.68 77,938,509.41
Administrative expenses
Property fee 5,292,645.03 5,805,822.47
Lawsuit fee 5,443,162.24 3,778,698.00
Taxation expenses 4,877,706.53 4,840,788.63
Others 9,984,637.95 9,645,877.76
Total 92,642,838.43 102,009,696.27
34. Financial costs
Item 2010 2009
Interest expense 2,332,153.81 18,013,330.40
Less: Interest income 5,219,447.80 3,046,279.32
Exchange loss, net -300,147.23 119,130.81
Others 374,191.00 967,843.14
Total -2,813,250.22 16,054,025.03
Note: Financial costs in 2010 decreased by 117.52% than that in 2009, which mainly because the interest
expense of specific loan have been capitalized according to relevant rules from Accounting Standards
for Business Enterprises.
35. Impairment loss
91
Item 2010 2009
Bad debt -826,293.45 -1,820,764.38
Depreciation of inventory -58,537,275.70 6,627.73
Depreciation of long-term equity investment 780,645.20
Total -59,363,569.15 -1,033,491.45
36. Gain/loss on change in fair value
Source 2010 2009
Trading financial assets 39,900.00 -705,776.78
Total 39,900.00 -705,776.78
37. Gain/loss on investment
(1) The source of gain/loss on investment:
Source 2010 2009
1.Gain on investment under equity method 1,692,778.22 -795,082.08
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 3,141,428.11
4.Gain on investment from holding financial assets 38,342.22
5.Gain on investment from disposal of helding-to-maturity investment -3,000.00
Total 3,232,684.58 2,381,688.25
38. Non-operating income
Amount of
non-recurring gain
Item 2010 2009
and loss included in
2010
1. Income from disposal of non-current assets 2,181,341.85 462,807.80 2,181,341.85
Including: Disposal of fixed assets 350,649.31 462,807.80 350,649.31
2．Others 7,120,255.64 4,589,404.05 7,120,255.64
including: Debts unneeded to pay 3,588,380.82 3,588,380.82
Income from Forfeit 2,823,460.36 2,063,390.43 2,823,460.36
Income from compensation 261,118.40 2,240,000.00 261,118.40
Total 9,301,597.49 5,052,211.85 9,301,597.49
92
39. Non-operating expense
Amount of
non-recurring
Item 2010 2009
gain and loss
included in 2010
1. Loss on disposal of non-current assets 54,321.72 401,097.48 54,321.72
Including: Disposal of fixed assets 54,321.72 401,097.48 54,321.72
2、Public welfare donations 25,000.00 95,000.00 25,000.00
3、Tax late fee and forfeit 52,355.46 19,492.78 52,355.46
4、Estimated liability -3,533,281.90 8,031,974.39 -3,533,281.90
5、.Others 422,562.18 128,426.07 422,562.18
Total -2,979,042.54 8,675,990.72 -2,979,042.54
40. Income tax expense
Item 2010 2009
Income tax for the current period 63,674,547.72 68,736,118.86
Plus: Deferred tax expense ( "-"for gain) -31,513,340.81 -38,372,643.07
Income tax expense 32,161,206.91 30,363,475.79
41. Earnings per share
Item 2010 2009
Basic Earnings Per Share 0.29 0.16
Diluted Earnings Per Share 0.29 0.16
Calculation of earnings per share is as following:
Basic Earnings Per Share＝174,998,534.79÷595,979,092.00＝0.29
Diluted Earnings Per Share＝174,998,534.79÷595,979,092.00＝0.29
Recalculation of earnings per share of last year is as following
Basic Earnings Per Share＝96,933,951.02÷(541,799,175+54,179,917)＝0.16
Diluted Earnings Per Share＝96,933,951.02÷(541,799,175+54,179,917)＝0.16
93
Note: The method of basic earnings per share and diluted earnings per share calculation
A．Basic Earnings Per Share =P 0 ÷S
S= S 0 ＋S 1 ＋S i ×M i ÷M 0 -S j ×M j ÷M 0 -S k
P 0 represents the amounts attributable to ordinary equity holders of the Company in respect of:
(a) Profit or loss attributable to the Company; and
(b) Profit or loss after deducting extraordinary gain or loss attributable to the Company.
S 0 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. S 1 represents the number of
additional ordinary shares issued on capital surplus transfer or share dividends appropriation; Si
represents the number of ordinary shares issued in exchange for cash or issued as a result of the
conversion of a debt instrument to ordinary shares during the period. Sj represents reduced number of
ordinary shares such as shares buy back. S k represents the number of a reverse share split. Mo represents
the months during the period. Mi represents the months from the following month after issuing
incremental shares to the end of the period. Mj represents the months from the following month after
reducing shares to the end of the period.
B．Diluted Earnings Per Share =P 1 /(S 0 ＋S 1 ＋S i ×M i ÷M 0 –S j ×M j ÷M 0 –S k + The weighted average
number of incremental ordinary shares on warrants, options, convertible debt and so on）
P 1 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 other
relevant provisions. The Company considered in sequence from dilutive potential ordinary shares to get
the lowest earnings per share.
42. Other comprehensive income
Item 2010 2009
1．Gain/loss on investment from disposal of available-for-sale financial assets
less： income tax from disposal of available-for-sale financial asset
The other comprehensive income from previous year transfer into the current net
94
Item 2010 2009
profits and losses
Sub-total
2. Other comprehensive income from investment under equity method
Less: income tax from investment under equity method
The other comprehensive income from previous year transfer into the current net
profits and losses
Sub-total
3. Gain(loss) generated by cash flow of hedging instrument
Less: Income tax influence of cash flow hedge instruments
Net amount written into other gains and transferred into gain/loss in previous terms
Adjustment converted to initially recognized amount of
hedging subject
Sub-total
-942,810.23 -38,974.41
4．Foreign exchange difference
Less: net amount transfer into net profit and losses from oversea business
-942,810.23 -38,974.41
Subtotal
5. Others
Less: Income tax influence by other accounted into other misc. incomes
Net amount accounted into other misc. income and transferred into current gain/loss in
previous terms
Subtotal
-942,810.23 -38,974.41
Total
43. Relevant information about cash flow statement
(1) Other cash received from operating activities
95
Item Amount
Other cash received from operating activities 59,815,186.84
Including ： Receipts under custody of Hainan yirun real estate Co., ltd 15,608,264.18
Collecting fees for getting property ownership certificates 12,492,258.66
Current account from Shenzhen Jifa Warehouse Co., Ltd 6,000,000.00
Collect debts from Duokuai Elevator 3,280,000.00
(2) Other cash paid relating to operating activities
Item Amount
Other cash paid relating to operating activities 119,848,063.69
Including: Compensation for Haiyi case 58,000,000.00
Administrative expenses 36,915,401.21
Sales expenses 11,816,285.43
Paying CSRC penalties 7,751,426.93
(3) Other cash received from financing activities
Item Amount
Other cash received from financing activities 38,687,344.20
Including: Compensation from Shenzhen Construction Investment
Holdings promised in Share Reform 38,687,344.20
(4) Other cash paid relating to financing activities
Item Amount
Other cash paid relating to financing activities 4,284,926.00
Including: Significant borrowing charges 4,284,926.00
(5) Supplementary information of cash flow statement
Supplementary information 2010 2009
1.Adjustment from net profit to cash flows from operating activities
Net profit 174,998,534.79 96,934,287.02
Plus: Provision for impairment of assets -59,363,569.15 -1,033,491.45
96
Supplementary information 2010 2009
Depreciation of fixed assets, Oil-gas assets and Productive 28,113,363.64 28,301,543.77
biological assets
Amortization of intangible assets 6,517,660.69 6,508,663.80
Amortization of long-term deferred expense 221,211.29 306,160.08
Loss on disposal of fixed assets, intangible assets and other non-current -2,127,020.13 -58,710.32
assets(“-” for gain)
Loss on fixed assets retirement (“-” for gain)
Loss on change in fair value(“-” for gain) -39,900.00 705,776.78
Financial costs(“-” for gain) 33,944,870.52 18,304,330.40
Loss on investment(“-” for gain) -3,232,684.58 -2,381,688.25
Decrease of deferred tax assets(“-” for increase) -31,514,148.29 -38,372,643.07
Increase of deferred tax liabilities(“-” for decrease) 807.48
Decrease of inventory(“-” for increase) -317,023,344.48 -100,469,254.00
Decrease in operating receivables(“-” for increase) 8,668,684.14 -31,773,227.76
Increase in operating payables(“-” for decrease) 59,057,063.44 782,678,879.69
Others
Net cash flow from operating activities -101,778,470.64 759,650,626.69
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 534,418,695.36 830,055,588.25
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 -295,636,892.89 558,346,860.39
(6) Cash and cash equivalents
97
Item 2010 2009
Cash 534,418,695.36 830,055,588.25
Including: Cash on hand 184,769.91 227,928.12
Bank deposit on demand 529,017,318.87 821,405,437.46
Other monetary assets on demand 5,216,606.58 6,998,324.23
Cash and cash equivalents at the end of the period 534,418,695.36 830,055,588.25
including: Restricted Cash and cash equivalents held by parent 1,423,898.44
company or subsidiaries
98
44. Segment part
Property rental and management
Sale of properties Transportation Hotel and restaurant operations
Item services
2010 2009 2010 2009 2010 2009 2010 2009
I. Revenue 690,303,822.33 587,838,309.08 196,953,261.96 166,594,498.71 50,748,337.82 47,550,926.15 21,155,158.50 17,753,352.86
Including: External revenue 690,303,822.33 581,318,329.08 190,707,764.42 156,628,206.23 50,748,337.82 47,550,926.15 20,146,558.50 16,885,322.86
Revenue from segments 6,519,980.00 6,245,497.54 9,966,292.48 1,008,600.00 868,030.00
II. Cost 542,319,044.18 414,339,392.22 253,463,719.51 234,732,516.55 41,043,471.00 38,741,414.21 21,816,535.27 18,396,356.61
III. Operating profit (“-”for loss) 147,984,778.15 173,498,916.86 -56,510,457.55 -68,138,017.84 9,704,866.82 8,809,511.94 -661,376.77 -643,003.75
IV. Total assets 1,676,008,580.41 2,126,337,426.54 611,338,154.21 554,363,198.60 166,441,206.55 159,191,196.30 3,962,638.27 4,691,497.12
V. Total liabilities 1,422,716,460.40 1,732,941,201.16 441,501,680.14 303,106,940.80 78,292,534.31 95,377,198.35 3,054,957.70 4,983,460.21
Item Others Elimination Total
2010 2009 2010 2009 2010 2009
I. Revenue 49,121,418.32 48,463,979.28 -15,106,648.55 -22,834,126.39 993,175,350.38 845,366,939.69
Including: External revenue 41,268,867.31 42,984,155.37 993,175,350.38 845,366,939.69
Revenue from segments 7,852,551.01 5,479,823.91 -15,106,648.55 -22,834,126.39
II. Cost 29,828,911.07 29,417,141.60 -27,539,278.59 -18,472,020.26 860,932,402.44 717,154,800.93
III. Operating profit (“-”for loss) 19,292,507.25 19,046,837.68 12,432,630.04 -4,362,106.13 132,242,947.94 128,212,138.76
IV. Total assets 2,204,139,788.15 1,072,449,130.64 -1,748,609,013.75 -1,082,614,494.60 2,913,281,353.84 2,834,417,954.60
V. Total liabilities 1,749,726,694.31 1,103,534,230.82 -1,657,058,681.96 -1,067,829,716.92 2,038,233,644.90 2,172,113,314.42
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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. Information of parent company
Name of the Registered Legal Business Registered
Relationship Nature
parent company address person propert Capital(0’000)
Shenzhen Parent Limited liability Shenzhen, Chen State-owned 400,000
Investment company company China Hongbo Property
Holdings Co., (state-owned)
Management
Ltd.
Name of the Shareholding of Voting power of the Ultimate holder of Organization
parent company the parent co. parent company % the Company code
Shenzhen 54.22 54.22 Shenzhen 767566421
Investment State-owned Assets
Holdings Co., Supervision and
Ltd. Administration
Bureau
The registered controlling shareholders of the Company for the moment is Shenzhen Construction
Investment Holdings, the details refer to Note I-4.
3. Information about subsidiaries of the Company refers to Note IV-1.
4. Information about joint venture and associated enterprises of the Company refers to Note V-8.
5. Other related parties:
Name Relationship Organization code
Shenzhen Tongchan Packaging Group Co., LTD Controlled by the same parent company 715273299
6. Related Party Transactions
(1) Receiving guarantee
Companies have not provide guarantee to other company outside consolidated financial statements, the
details about guarantee provided to the subsidiary company see Note Ⅶ-4
(2) Entrust loan by related parties
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：0’000 RMB）：
100
Name of Name of Borrowin Borrowin
Annual
the The g at the Borrowin Repaid g at the
Borrowers interest Interest
entrusting entrusted beginning g this year this year end of
（%）
party party of year year
Shenzhen China Shenzhen 5.0523 15,000.00 15,000.00 199.99
Investmen everbright Huangche
t Holding bank ng Real
Co., Ltd. JingTian Estate
shenzhen Co., Ltd
branch
Shenzhen Shenzhen Shenzhen 5.3100 5,000.00 5,000.00 238.21
Investmen branch of Property
t Holding agricultur and Real
Co., Ltd. al bank of Estate
China Developm
ent Co.,
Ltd.
Shenzhen China Shenzhen 5.5439 1,000.00 1,000.00
ITC
Investmen everbright
Vehicles
t Holding bank
Industry
Co., Ltd. JingTian Co., Ltd.
shenzhen
branch
Total 20,000.00 1,000.00 20,000.00 1,000.00 438.20
(3) Related party equity transfer
On February 26, 2010, the Company signed the Equity Transfer Agreement with Shenzhen Tongchan
Package Co., Ltd. The Company will transfer the 15.83% share right of Shenzhen Huajing Glass Bottle
Company Limited to Shenzhen Tongchan Package Co., Ltd., the transfer price is RMB 1,550,000.00.
According to the ZLPBZ [2009] No. 258 assessment reports, with March 31, 2009 as the base day,
issued by Zhonglian Asset Assessment Co. Ltd, the net asset assessed value is -60,650,000.00. The
equity transfer is approved by the 20th session of the sixth conference of the Company’s board of
directors.. Shenzhen United Assets and Equity Exchange, which issued Assets and Equity Exchange
Appraisal Paper SCQJZ(2010) No.10104, guided the transfer transactions comply with the legal
procedures. The transferring procedure of equity is finished at the end of this report period.
(4) Remuneration of key management
In this year the Company paid total RMB 5.6644 million (including IIT) to key management,
(including IIT). The Company paid RMB 6.0129million (including IIT) to key management in the
previous year.
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7. Receivables from and payables to related parties
Receivable from related parties
Closing balance Opening balance
Projects Name of the parties
Bad debt Bad debt
Amount Amount
provision provision
Other receivables Shenzhen ITC Tian’an 14,705,931.45 19,705,931.45
Property Co., Ltd
Other receivables Anhui Nanpeng Papermaking 8,295,584.00 8,295,584.00 8,690,144.00 8,690,144.00
Co., Ltd
Other receivables Shenzhen ITC Industrial 2,551,652.48 2,551,652.48 2,431,652.48 2,431,652.48
Development Co., Ltd
Other receivables Shenzhen Wufang Pottery & 1,747,264.25 1,747,264.25 1,747,264.25 1,747,264.25
Porcelain Industrial Co., Ltd
Payable to related parties
Projects Name of the parties Closing balance Opening balance
Other payables Shenzhen ITC Petroleum Co. 7,196,769,67 7,196,769.67
Other payables Shenzhen Jifa Warehouse Co. 12,148,556.00 6,288,296.00
Note VII. Contingencies
1. Pending litigations
（1）In 1993, the Company signed Right of Development Transfer Contract of Jiabin Building (name
of Jiabin Building has been changed to Jinlihua Commercial Plaza) with Shenzhen Haibin Property
Development Co., Ltd. (name of which has been changed to Shenzhen Jiyong Property Development
Co., Ltd., hereinafter referred to as Jiyong Company). In January 1999, Jiyong Company sued the
company to Guangdong Higher People’s Court (hereinafter referred to as “Guangdong Higher Court”)
for termination of the transfer contract and refund of the transfer consideration and construction
payment paid on the ground that the area of premises was in discrepancy with the contract. With
respect to this, the Company counterclaimed the opposing party to pay back the rest transfer
consideration and applied for sealing up their property with an area of 28,000 square meters.
On July 29, 2001, Guangdong Higher Court issued Civil Court Judgment YGFM (1999) No. 3
(hereinafter referred to as Judgment No. 3) to judge that ① the Company should transfer the title of
land use right specified in the transfer contract to Jiyong Company within 30 days from the date the
judgment taking into effect and ② Jiyong Company should pay off the transfer consideration
amounting to RMB143, 860,000.00 within 60 days from the date the Company transferred the title of
land use right. On November 27, 2001, the Company applied to Guangdong Higher Court for forcible
execution, however Guangdong Higher Court adjudicated to release the sealing property of Jiyong
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Company approximately 10,000 square meters since Industrial & Commercial Bank of China Zhejiang
Branch disagree to seal the properties.
In January 2006, Guangdong Higher Court issued Civil Court Judgment YGFZ (2002) No. 1 and
adjudicated because that ① the Company has not yet transferred the title of land use right specified in
the transfer contract to Jiyong Company and ② Jiyong Company cannot provide other properties
available for execution and the Company also cannot provide the property available for execution, the
second judgment of the Judgment No. 3 - “Jiyong Company should pay off the transfer consideration
amounted RMB143,860,000 within 60 days from the date the Company transferred the title of land use
right” is terminated for execution. When the conditions causing termination for execution of the second
judgment are eliminated, the second judgment should still be executed.
In March 2006, according to the ordain of Guangdong Higher People’s Court, the properties in Jiabin
Building that have been sealed up in this case have been released automatically. On September 2009,
company received YGFZ (2002) No. 1-1 Resume Execution Notice from Guangdong Province Higher
Court claimed to resume execution the case that the transfer money owed by Jiyong company about
Jibin building project.
In October 2009, the Company received (Verdict YGFZ (2002) No. 1-2) from Guangdong Higher
Court. The verdict claimed: The resume execution of this case is according to the "The requirements
for the Guangdong Higher Court to concentrate the implementation of accumulated cases" Through the
investigation conducted by Guangdong Higher Court to Shenzhen department of motor vehicles,
Shenzhen Securities Registration and Settlement Organizations, Shenzhen Land resources and real
estate administration and the opening bank of the executed party, the executed party – Jiyong Company
does not have any executable property. For these, Guangdong Higher Court adjudicated : ①
Terminate the executive procedure of Verdict YGFZ (2002) No. 1; ② When the execution conditions
are satisfied, the applicant can apply for resume execution.
No new essential progress occurred in the report period.
(2)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(hereinafter refered to as “Shenzhen Intermediate 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 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)
103
No. 108 issued by Shenzhen Intermediate 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 Court on October 20, 2005. Shenzhen
Intermediate Court issued Administrative Judgment SZFXCZ (2005) No. 23 and adjudicated that
Decision on Administrative Reconsideration SFFJ (2005) No. 294 is sustained. The Company
disagreed with this administrative judgment and appealed to Guangdong Higher Court on August 2,
2006. Guangdong Higher Court issued Administrative Judgment YGFXZZ (2006) No. 154 in which
the appeal was rejected and Administrative Judgment SZFXCZ (2005) No. 23 was sustained.
According to this Judgment, Shenzhen Municipal Bureau of Land Resources and Housing Management
would reconsider the request of Meisi Company 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
104
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 (hereinafter refered as to “Futian 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 (hereinafter refered as to “No.10 Case”). On January 2008, Meisi Company
prosecuted an administrative litigation to Futian Court for revoking the above administrative decision
of Shenzhen Municipal Bureau of Land Resources and Housing Management, revoking Property
Ownership Certificates SFDZ No. 0103142 and No. 0103139, and restoring the land use right to Meisi
Company with the litigation number of SFFX(2008) No. 70 (hereinafter refered as to “No.70 Case”).
On May 2008, the 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 Court in which the
trial of No. 10 Case was terminated.
On December 2008, Shenzhen Intermediate Court issued the Administrative Ruling Paper SZFXZZ
(2008) No. 223, in which the final adjudication of appeal No. 70 Case was made and the original
verdict was sustained. Moreover, the final adjudication stated that the controversy over the land use
right in this case between Meisi Company and the Company should be settled through civil procedures;
the Bureau of Land Resources and Housing Management of Shenzhen Municipality should not proceed
the registration procedure until the controversy is final settled.
On February 11, 2009, the Company received the Civil Complaint from Futian 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
105
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, Futian Court sent the Notice to the Company
to inform that this case has been transferred to Shenzhen Intermediate Court for adjudication.
On 22 December 2009, the Company received court ruling delivered by the Guangdong Higher Court.
After investigated by Guangdong Higher Court, it is considered that the retrial application to Shenzhen
Intermediate Court Judgment SZFZ (2008) No. 223 by the company is complied to the law, and
adjudicated: ① Arraign by Guangdong Highest People's Court ② suspended the execution of the
original verdict during the retrial.
No new essential progress occurred in the report period.
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 do not have significant impact on the Company’s financial position.
2. Settled 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
suspended the execution of the case after the Company provided possession’s drawing. At the end of
2003, Guangdong Higher Court overruled the application of the Company after investigation. The
Company estimated related losses amounted to RMB 41,772,906.07 according to the carrying amount
of the property drawn. The company believes that there are problems such as unclear recognition of the
truth, improper application of the law, and violation of the legal procedures and so on. Hence the
Company applied to the Highest People’s Court for the case to be retried. In February 2008, the
106
Highest People’s Court decided that the judgment of YGFM (1998) No. 298 (No. 1 case of commercial
company) should be retried. The case was reopened by Guangdong Higher Court on June 18, 2008.
On April 6, 2009, the company received 34 copies of Resume Execution Notice issued by Shenzhen
Intermediate Court on March 23, 2009. It claims that eight proprietors including Haiyi Industrial
(Shenzhen) Co., Ltd. Applied to Shenzhen Intermediate Court for resume execution of the 34 copies of
verdict issued by Guangdong Province Supreme Court in 1999. Shenzhen Intermediate Court accepted
their applications. Because the market value of the company’s original escrow properties has been
changes, the Company has recorded RMB 19,481,328.37 of estimated losses as the provision for
contingent liabilities in previous financial year. The company received Seizure, frozen property notice
from Shenzhen Intermediate People's Court on 2 June 2009 and 25 June 2009 respectively. Part of the
real estate, equity and bank accounts of the Company are sealed or frozen.
In Oct, 2009, the Highest People’s Court ruled that the verdict of YGFM (1998) No. 311 (JinHaiJing
company) should be retried.
In Jul. 2010, the Supreme People’s Court ruled that the Guangdong Higher Court should retry the other
32 cases and the execution of the original judgment should be suspended.
In Oct. 2010, the Company entered into the Settlement Agreement with Haiyi Industrial
(Shenzhen) Co., Ltd. and other seven enterprises by Shenzhen Intermediate Court’s mediation.
According to the Agreement, the Company should pay RMB 58 million to Haiyi Company
and other seven enterprises; Haiyi Company and other seven enterprises give up other
litigation request to the Company, 34 cases came to an end by compromise solution.
On October 14 2010, the Shenzhen Intermediate Court sent the Civil Judgment Letters (2009) SZFHZ
Zi No.364--397 to the Company, stating that “the property which have been sealed and frozen should
be released”.
The Company paid RMB 58 million compensation according Settlement Agreement in reporting
period, the balance between compensation and provision for liabilities which offsetted non-
operating expens is RMB 3,254,234.44.
(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
Shenzhen Luohu District People's Court (hereinafter referred as to “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 RMB 5.87million.
In May 2009, Luohu Court retried this case. The plaintiff add claim to collect the compensation of 1.5
million RMB past-due interest on top of the original claim.
On 1 December 2009, Luohu Court made the verdict of the first trial, and deliver the Verdict SLFM2C
107
(2003) No. 240 Civil Ruling Paper, Judgment reject the plaintiff's (Huaxi Company) claim against the
company.
On 12 October, 2010, Shenzhen Intermediate People's Court delivered the Verdict SZFMWZ No. 803
Civil Ruling Paper, rejected accuser's appeal; the Company doesn’t need to bear the civil liability. The
judgment is the final adjudication.
（3）The case of Duokuai Elevator
A、On July 11, 2002, Shenzhen Huangcheng Real Estate Co., Ltd., a subsidiary of the Company,
(hereinafter referred to as Real Estate Company) and Duokuai Elevator (Far East) Co., Ltd.
(Hereinafter referred to as Duokuai Company) signed Elevator Equipment Contract and House
Mortgage and Purchasing Contract to purchase the elevators for Huang Yu Yuan District B from
Duokuai Company, Taoboming agreed to provide guaranty with the mortgage of his own properties to
Real Estate Company to ensure that Duokuai Company would supply the elevators on time. On
December 6, 2004, Real Estate Company applied to Shenzhen Arbitration Committee for arbitration to
cancel the contract on the ground that Duokuai Company did not supply the elevators, and demanded
from the Elevator Company to return the double amount of the deposit paid to the amount of 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 Court for revoking the arbitration on December 7, 2005. In 2006, Shenzhen Intermediate
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 Court and applied to it for an auction of
the properties mortgaged.
Shenzhen Intermediate Court had already sold two properties under the name of Duokuai Elevator
Company by auction: Shenzhen Huangchen Plaza and ITC Plaza with total areas of 957.31 square
meters in 2009. The auction price is RMB 4,280,000.00. In April 2009, Shenzhen Huangcheng Real
Estate Co., Ltd. received RMB 3,000,000.00 from Shenzhen Intermediate Court. According the notice
from Shenzhen Intermediate Court Judgment SZFZ (2006) No. 516, five properties, which comprised
of Huangcheng Plaza 1902, Huangcheng Plaza Podium Building 1029, Huangcheng Plaza Podium
108
Building 1029A, Huangcheng Plaza Podium Building 1030 and Huangcheng Plaza Podium Building
1030A under the name of Duokuai Company., Duokuai Elevator Far East (1996) Co.,
Ltd.(hereinafter referred to as “Duokuai Company 1996”) and Hainan Duokuai Elevator
Maintenance(Far East) Co., Ltd., (hereinafter referred to as “Duokuai Maintenance”) had been sold by
auction on 24 April, 2009. The auction price is RMB 5,140,000. 00.
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 Court issued Civil Ruling Paper SZFMEZZ (2007) No. 827 and adjudicated
that Real Estate Company and Huangcheng Management Company should pay the maintenance fee
amounted RMB893,100.00 and RMB1,102,730.00 respectively together with a compensation on
related interest loss to Duokuai Shenzhen Company. Real Estate Company and Huangcheng
Management Company have recognized relevant expenses in the financial statements.
On March 15, 2010, all parties of this lawsuit： Real Estate Company, Huangcheng Management
Company, Tao Boming, Duokuai Company, Duokuai Company 1996, Duokuai Maintenance and
Duokuai Shenzhen Company come to Settlement Agreement of the Cases Between Real Estate
Company and Tao Boming and the Companies of Affiliation (hereinafter referred to as “settlement”).
The main contents of the settlement are: ①The ownership of Huang Yu Yuan District A 6-901, Huang
Yu Yuan District A 4-2901, Huang Yu Yuan District A Block 5-6 6-2708 and Huang Zhou Yuan 2806
belongs to Real Estate Company. Real Estate Company returns the purchase payment, which amounts
to RMB 3,200,000, to Tao Boming and it will be transferred by Shenzhen Intermediate Court. ②The
house property located at Hong Kong Center Room 2607 of Changshawan Road No. 778 belongs to
Tao Boming. ③ Under the agreement of all parties, the money and entities acquired by Real Estate
Company are: a, the auction payment RMB 5,140,000.00 of Huangcheng Plaza 1902, Huangcheng
Plaza Podium Building 1029, Huangcheng Plaza Podium Building 1029A, Huangcheng Plaza
Podium Building 1030 and Huangcheng Plaza Podium Building 1030A ; b, Auction Payment RMB
4,280,000 of ITC Plaza 3506 and Huangcheng Shop 1031 under the name of Tao Boming; c, Real
Estate Company gets the executive money about RMB 175,233.94 deducted by the court from Jiexun
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Transport (Shenzhen) Co., Ltd, and the specific amount is determined by the court; d, Duokuai
Shenzhen Company agrees to transfer the creditor’s rights on maintenance money of Huangcheng
Management Company in (2008) SFFZZ No. 1650 to Real Estate Company for free and its creditor’s
rights on Real Estate Company are removed, the total amount is RMB 2,255,828.06; e, Real Estate
Company gains the elevators and fittings provided by Duokuai Company and the actually used
properties; f, Real Estate Company gains Huang Yu Yuan District A 6-901, Huang Yu Yuan District A
4-2901, Huang Yu Yuan District A Block 5-6 6-2708, and Huang Zhou Yuan 2806, the specific
procedures are coordinated and solved by Shenzhen Intermediate Court; ④ Real Estate Company bears
executive money of RMB 10,000.00, and the left are beard by Tao Boming, Duokuai Company,
Duokuai Company 1996, Duokuai Maintenance and Duokuai Shenzhen Company; ⑤ Tao Boming,
Duokuai Company, Duokuai Company 1996, Duokuai Maintenance and Duokuai Shenzhen Company
affirm that Huang Yu Yuan District A 6-901, Huang Yu Yuan District A 4-2901, Huang Yu Yuan
District A Block 5-6 6-2708, and Huang Zhou Yuan 2806 belong to Real Estate Company and
promise not to claim any rights on them; ⑥The elevators and fittings, as well as the actually used
properties provided by Duokuai Company to Real Estate Company belong to Real Estate Company,
and Duokuai Company promises not to claim any right to Real Estate Company. ⑦Duokuai Shenzhen
Company agrees to transfer the creditor’s rights on maintenance money of Huangcheng Management
Company in (2008) SFFZZ No. 1650 to Real Estate Company for free, and its creditor’s rights on Real
Estate Company are removed and it promises not to claim any right to Real Estate Company and
Huangcheng Management Company on this case. ⑧ Real Estate Company promises to apply to
Shenzhen Intermediate Court for removing the sealing up of stock rights of Duokuai Maintenance, and
Shenzhen Intermediate Court will issue a ruling paper to affirm that. ⑨Real Estate Company
withdraws its appeal against Duokuai Company, Duokuai Company 1996 and Duokuai Maintenance in
the case of house ownership affirmation, and promises not to claim any right to Duokuai Company,
Duokuai Company 1996 and Duokuai Maintenance. ⑩ Real Estate Company promises not to claim
any right to Tao Boming and Duokuai Company after the first and third items in this agreement are
fulfilled, and all the creditor’s rights and debts of (2009) SZFHZZ No. 750, (2008) SFFZZ No. 1958
and (2008) SZFZZ No.345 are cleared up. According the settlement, after the settlement fully fulfilled,
the rights and obligations of all parties of this lawsuit will be clear up.
According to this settlement agreement, Real Estate Company receives the executive money of RMB
3.28 million deducted by Shenzhen Intermediate Court on May 11, 2010, and the transferring
procedures of all the house properties belonging to Real Estate Company are finished at the end of this
report period. Real Estate Company reversals the bad debt provision at RMB 1,478,071.21.
On November 30, 2010, Real Estate Company receives 6 closing notices about the serial case from
Shenzhen Intermediate Court.
3. Inspection matter
On 10 September, 2009, company received the Notice of investigation from China Securities
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Regulatory Commission Shenzhen Investigation Bureau. An investigation in the company’s violation
to the securities laws and regulations has been conducted. On 3 December 2009, company received
Notice of the administrative punishment beforehand, in which accused the company violating securities
laws, and intend to make punishment for the violation to the securities laws and regulations,
confiscating the illegal income RMB 250,849.80 by buying and selling securities using personal
account, illegal income HK$8,544,744. 97 by buying and selling in B share market using other legal
person’s account, and fine RMB 250,849.80. The China securities supervision and management
committee also intend to give warning and impose fine to the responsible persons. According to the
relative regulations in The Administrative Punishment Law, China Securities Supervision and
Management Committee Administrative Hearing Regulation, the responsible persons have the rights to
state and defend or request for hearing. The company has completed the statement and defense. Up to
the reporting date, the company has not received the notice of the result of the investigation. Though
the company has completed the statement and defense, the company predicts that the punishments
stipulated in Notice of the administrative punishment beforehandmay still occur; therefore, the
company converts the fine to RMB with the provision of the predicted debts of RMB 8,030,474.39
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: ①to confiscate the illegal income of RMB
250,849.80 obtained by the Company through trading securities via personal accounts, ② to
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), and the balance between forfeit and provision for
liabilities which offset non-operating expenses is 279,047.46.
4. Guarantee
(1). The company provided joint liability for the RMB 240,000,000.00 long term loan from China
Agricultural Bank Shenzhen East Branch made by Shenzhen Huangcheng Real Estate Company
Limited, and use three floors of District A of Shenzhen ITC Building and Building 4-01 as collateral.
The ending balance of the loan was RMB 200,000,000.00.
(2). The company and the subsidiaries Shenzhen Property and Real Estate Development Co., Ltd. and
Shenzhen ITC Vehicles Industry Co., Ltd .provided joint liability for the RMB 250,000,000.00 long
term loan from China Agricultural Bank Shenzhen East Branch made by Shenzhen Huangcheng Real
Estate Company Limited. The ending balance was RMB 243,000,000.00 and the loan expires within a
year.
(3). The company and the subsidiaries Shenzhen ITC Vehicles Services Company provided joint
liability for the RMB 90,000,000.00 long term loan from Pingan Bank Shenzhen Branch. Shenzhen
ITC Vehicles Services Company uses Donggua Ridge Land (Land right number is SFDZ No.
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3000412119) as collateral. The ending balance was RMB 12,000,000.00.
(4). The subsidiary of the Company, Shenzhen ITC Vehicles Services Company, 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 7,960,000.00, and the loan expires within a year.
(5). Guarantee for the property owner: The company and the subsidiary provide mortgage guarantee for
the commercial house purchasers to the bank. Up to 31 December, 2010, the unsettled guarantee
amount was RMB 85,496,500.00. This guarantee is the real estate developers provided for owners to
purchase the company’s commercial house. It is common in the real estate industry.
5. Contingent assets
（1）Bureau of Foreign Trade and Economic Cooperation of Hubei province Shenzhen branch
(hereinafter referred as to “Hubei FTEC Shenzhen branch”) sued the Company to Shenzhen
Intermediate 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 Commercial Plaza) 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(hereinafter refered as to “No. 90 Judgement”) 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 Court. Guangdong
Railage Intermediate Court (hereinafter as the “Railage Court”) was appointed by the Guangdong
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 Guangdong Higher Court should give the case second instance and the execution should be
suspended during the second instance. On 12 May 2006 the Guangdong Higher Court made the
judgment that the original judgment should be sustained and the executions should be resumed. The
Hubei FTEC Shenzhen branch applied to the Railage Court for the payment and bank interest in the
second trial period, while the Company applied for the suspension of execution. On 30 June 2006, the
(2004) GTZFZZ No. 225-4 Civil Judgment was issued by the Railage Court in which (i) The
Company’s execution suspension application was denied because it lacked for facts and legal evidence;
(ii) It was legal for the Hubei FTEC Shenzhen branch to apply and the Railage Court decided to
transfer RMB23 million from the sealed account which had been transferred to the Railage court after
deduction of execution fees to t the Hubei FTEC Shenzhen branch; (iii) The Hubei FTEC Shenzhen
branch’s application of interest during the second trial was denied; (iv) The Company’s repayment
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obligation ruled by the No.90 Judgment had been legally executed; (v) the execution of No.90
Judgment was terminated. The Company recognized losses based on the above judgments, and
increased the receivables due from Jiyong Company and made provision for bad debts accordingly.
The Company considered that there is error of fact recognition and application of the law in the
adjudication of the second trial and appealed to the Supreme People's Court. The Supreme People's
Court issued the Civil Ruling Paper MEJZ (2004) No. 146-3 and adjudicated that this litigation would
be retried by the Supreme People's Court in October 2007. After comprehensive consideration, the
Company withdrawed the retrial application to the Supreme People's Court, and Supreme People's
Court approved the application.
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.(hereinafter refered as “Zhuhai Yingzhu Company”)
addressing the ownership of the properties, therefore, on June, 2008 the Company sued Zhuhai
Yingzhu Company to the People’s Court of Luohuo District in Shenzhen (hereinafter referred as
“Luohu Court”) for confirmation of the above properties’ ownership and adjudicating the Company’s
ownership of the 14th and 15th floors of Jiabing Building in the registration. The Luohu Court processed
the case with the litigation number of (2008) SLFMSCZ No. 1442. On July 21, 2008, the court held a
public trail and hosted the mediation; the Company reconciled with Zhuhai Yingzhu Company and
Luohu Court issed Civil Mediation Agreement 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.
Since Shenzhen Longyuan-Kaili-Hengfeng Real Estate Co., Ltd ( hereinafter as the “Longyuan-Kaili”)
and Shenzhen Huaneng-Jindi Property Co., Ltd.( hereinafter as the “Huaneng Property”) attempt to
reconstruct Jinlihua Commercial Plaza, the Company, the first administration directly under Shenzhen
Urban Planning and Land Resources Committee (hereinafter as the “SUPLRC”), Longyuan-Kaili and
Huaneng Property signed SDHZ (1992) No. 0228 Second Supplementary Agreement of Shenzhen
Grant Contract of Land Use Right on March 3, 2011, and the following agreements are reached: ①
SUPLRC agrees to change the use right assignee of ground date No. H206-0002, an area of 6,892
square meters into Longyuan-Kaili and Huaneng Property; ② Longyuan-Kaili and Huaneng Property
undertake all the rights, responsibilities and duties of the ground, and rationalize independently the
relationships of the transferred house property and assist the transaction of relative formalities. ③
Longyuan-Kaili and Huaneng Property promise to solve the mortgage and the pre-sealing up in the
project independently. Any dispute caused by the change of the use right assignee will be beard by
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Longyuan-Kaili and Huaneng Property and they will undertake the legal and economic
responsibilities.④The property right of the 14th and 15th floors, which is commodity housing, belongs
to the Company. Longyuan-Kaili and Huaneng Property will build and decorate according to the
unified handing-over standard of this project.⑤ The ground use term has changed into 50 years, from
February 21, 2011 to February 20, 2061.
After signing the above agreements, the Company’s right on the 14th and 15th floors at Jinlihua
Commercial Plaza is affirmed. But due to the existing risks in delivery of this house property and
acquisition of property ownership certificate, great uncertainties exist in whether or not it will bring
economic interests to the Company. According to the related regulations of Accounting Standards for
Business Enterprises, it does not match the recognition criteria.
（2）On May 25, 2006, the People's Government of Shenzhen Municipality announced the Notice on
Transferrable Plan of Shenzhen Community Facilities and Public Services Houses (SFB [2006] No.79),
which stipulated the scope of the transfer covers the buildings built for resident committees and junior
and senior schools (excluding that the land contract clearly indicates the property right belongs to land
development entity). If the buildings built for resident committees and junior and senior schools were
not definite in the contracts whether the property rights belonged to the government or whether these
buildings were transferred government at cost price, the government would take the buildings back at
cost price. The cost price should be based on information price and costing index publicized in the
construction costing management station at the completion year. The auditing department should
perform review on the pricing scheme.
Base on the statistics in 2009, the part of Company and its subsidiaries have transferred to relate
government department the community facilities and public services houses of the building area of
36,000 square meters, which complied with the above scheme, However, although part of the buildings
in these community facilities has been mapped, its area and cost price has not been confirmed by the
government, hence, the final confirmation on the area and amount of compensation could not be
confirmed. The subsidiary of the Company Shenzhen Huangcheng Real Estate Company Limited,
Related facilities have not been transferred ,the final confirmation on the area and amount of
compensation could not be confirmed.，thus the Company did not recognize the above contingent assets
in the financial statements.
Through statistics of last year, the Company and subsidiary have community support and public service
houses of about 36,000 square meters building area. In this report period, the 3,483 square meters
relevant supporting facilities of Shenzhen Huangcheng Real Estate Co., Ltd., subsidiary of the
Company, are sure not in the transferring scope, and it is estimated that 15,183 square meters is not in
the transferring scope. Till the end of this report period, it is estimated that the building area of
community support and public service, which matches the regulations of SFB (2006) No. 79, of our
company and subsidiary will be about 17,334 square meters. The above house property has been
transferred to the relevant department, and the government has not affirmed the area and audited the
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cost price.
Note VIII. Events after balance sheet date
1. Details about borrowing and repaying after balance sheet date
(1) The subsidiary of the company, Shenzhen Huangcheng Real Estate Company Limited has paid back
the long term loan for the amount of RMB 50,000,000.00 to China Agriculture Bank Co., LTD,
Shenzhen East Branch on January 4, 2011.
(2)The subsidiary of the Company, Shenzhen ITC Vehicles Services Company has paid back the
long-term loan for the amount of RMB 460, 000.00 to Bank of Pinan Central Commercial Shenzhen
Branch on January 20, 2011.
(3) The subsidiary of the Company, Shenzhen Huangcheng Real Estate Company Limited has
borrowed the long-term loan, which entrusted by Shenzhen Investing Holdings, for the amount of
RMB 250,000,000.00 from China Everbright Bank Co., LTD, Jingtian Branch on January 26, 2011.
The expiration date of the loan is January 26, 2012.
(4) The subsidiary of the company, Shenzhen Huangcheng Real Estate Company Limited has paid
back the long term loan for the amount of RMB 50,000,000.00 to China Agriculture Bank Co., LTD,
Shenzhen East Branch on February 17, 2011.
(5) The subsidiary of the Company, Shenzhen ITC Vehicles Services Company has paid back the
long-term loan for the amount of RMB 460, 000.00 to Bank of Pinan Central Commercial Shenzhen
Branch on February 20, 2011.
(6) The subsidiary of the Company, Shenzhen ITC Vehicles Services Company has paid back the
long-term loan for the amount of RMB 460, 000.00 to Bank of Pinan Central Commercial Shenzhen
Branch on March 20, 2011.
(7) The subsidiary of the Company, Shenzhen Huangcheng Real Estate Company Limited has
borrowed the long-term loan, which entrusted by Shenzhen Investing Holdings, for the amount of
RMB 200,000,000.00 from China Everbright Bank Co., LTD, Jingtian Branch on March 29, 2011. The
expiration date of the loan is March 29, 2012.
(8) The subsidiary of the Company, Shenzhen ITC Vehicles Services Company has borrowed the
long-term loan, which entrusted by Shenzhen Investing Holdings, for the amount of RMB
40,000,000.00 from China Everbright Bank Co., LTD, Jingtian Branch on March 29, 2011. The
expiration date of the loan is March 29, 2012.
(9) ) The subsidiary of the company, Shenzhen Huangcheng Real Estate Company Limited has paid
back the long term loan for the amount of RMB 50,000,000.00 to China Agriculture Bank Co., LTD,
Shenzhen East Branch on April 6, 2011.
(10) The subsidiary of the company, Shenzhen Huangcheng Real Estate Company Limited has
borrowed the short term loan for the amount of RMB 40,000,000.00 to China Agriculture Bank Co.,
LTD, Shenzhen East Branch on April 6, 2011. The expiration date of the loan is March 13, 2012.
(11) The subsidiary of the Company, Shenzhen ITC Vehicles Services Company has paid back the
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long-term loan for the amount of RMB 460, 000.00 to Bank of Pinan Central Commercial Shenzhen
Branch on April 20, 2011.
2. Other siganificant events after balance sheet date
（1） On January 28, 2011, through bidding on site, the Company acquired use right of the
state-owned land parcel No.676 located in Weiyang District, Yangzhou City, Jiangsu Province. And
the Company has signed the Contract on Granting Use Right of State-owned Land Used for Building
with Yangzhou State-owned Land and Resources Bureau on Februry 26, 2011.The price is 9,015/M2,
the land area is 67,872 square meters, and the total price is RMB 611.86608 million. The Company has
paid land-transferring fees, which amount is RMB 367,119,648.00, by the report issued day.
(2) On March 3, 2011, our company, the first administration directly under Shenzhen Urban Planning
and Land Resources Committee, Shenzhen Longyuan-Kaili-Hengfeng Real Estate Co., Ltd, and
Shenzhen Huaneng-Jindi Property Co., Ltd signed SDHZ (1992) No. 0228 Second Supplementary
Agreement of Shenzhen Grant Contract of Land Use Right, details referring to Note VII-5.
Note IX. Other significant events
1. On September 17, 2010, for the purpose of performing the commitment of share reform, the
Company and Shenzhen Investment Holdings Co., Ltd. (hereinafter referred to as “Investment
Holdings”) signed the Assest Replacement Agreement, the Company intends to replace the part of
building properties held by it and its wholly-owned subsidiary — Shenzhen Huangcheng Real Estate
Co., Ltd. with the plot T102-0237 located in Yueliang Bay and 100% equities of Shenzhen Shenxin
Taxi Co., Ltd. held by Investment Holdings. According to the assessment report with May 31, 2010 as
the base day, the asset assessment value swapped out by the Company is RMB 306,563,279.00 and the
asset assessment value swapped in by Investment Holdings is RMB 304,090,432.77. The gap between
the replacement assets is RMB 2,472,846.23 and it will be filled by Investment Holdings in cash. The
fractional shares of Investment Holdings's swapped-in assets change commitment value (the asset value
to be injected promised by Investment Holdings in Share Reform Instruction, which is not lower than
500 million), the part belongs to the inactivated recapitalization fund appointed by Share Reform
Instruction, Investment Holdings will pay compensation of RMB 38,687,344.20, 20% of the gap, to the
Company. The relevant conditions of asset replacement are:
（1）Relevant Conditions of Swapped-out Assets
According to the ZLPBZ [2010] No. 615 and ZLPBZ [2010] No. 616 assessment reports, with May 31,
2010 as the base day, issued by Zhonglian Asset Assessment Co. Ltd on August 8, 2010, the book
balance of the assets swapped out by the Company amounts to RMB 215,563,329.18, the book value
amounts to RMB 177,864,274.63, and the assessed value amounts to RMB 306,563,279.00. See the
table below:
Serial Assets Situation on Area Book value Assessed value Assessment
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Number base day （square （RMB） （RMB） value-added
meter）
I. Shenzhen Properties & Resources Development (Group) Ltd.
Shop in Most
Danshui vacancy, a 13,875.60 6,920,557.92 26,079,250.00 276.84%
Wuye City few for rent
II. Shenzhen Huangcheng Real Estate Co., Ltd.
Shop in
Huangcheng Most
Plaze and vacancy, a 24,674.45 170,943,716.71 280,484,029.00 64.08%
Huang few for rent
YuYuan
Total 38,550.05 177,864,274.63 306,563,279.00 72.36%
（2）Relevant Conditions of Swapped-in Asset
According to the assessment report with May 31, 2010 as the base day, the Company swapped in the
use right of Yueliangwan in Nanshan district of Shenzhen, whose ground date is T102-0237. The
ground area of it is 19.894.11 square meters and the usage period is 70 years, from November 8, 1997
to November 7, 2067. The land function is residential land under category two and the land property is
commodity housing. The construction must be developed and completed before September 31, 2012.
The book cost is RMB 112,858,827.00, assessed value is RMB 270,894,484.00, and the assessment
value rises by 140.03%; The Company swapped in the 100% share rights of Shenzhen Shenxin Taxi
Co., Ltd., and through the decision of [2010] No. 103 File of Investment Holdings, the partial assets
and debts of Shenxin Company are stripped on May 31, 2010. According to Audit Report on the Net
Assets Stripping of Shenzhen Shenxin Taxi Co., Ltd on May 31, 2010 issued by Lianda Accounting
Firm (LADZZ [2010] No. 1470), whose base day is May 31, 2010, the net asset value of Shenxin is
RMB 6,349,551.21 after stripping audit. The assessed value is RMB 33,195,948.77 and the assessment
value rises by 422.81%.
On November 17, 2010, Investment Holdings transfered compensation payment RMB 38,687,344.20,
20% of the gap between the promised recapitalization fund and the actually practiced one, to the bank
account of the Company, and that compensation payment directly increases capital reserve.
The above replacement program is approved by Approval of Fulfilling the Share Reform Comprise of
Shenzhen Properties & Resources Development (Group) Ltd. (SGZJ [2010] No. 178) issued by
Shenzhen State-owned Assets Supervision and Administration Bureau.
The above assessment work of the replacement assets is finished by Zhonglian Asset Assessment Co.,
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Ltd. on August 18, 2010. ZLPBZ [2010] No. 613, ZLPBZ [2010] No. 614, ZLPBZ [2010] No. 615 and
ZLPBZ [2010] No. 616 assessment reports are issued. The above assessment reports have been filed in
Shenzhen State-owned Assets Supervision and Administration Bureau on September 21, 2010.
The above asset replacement agreement are approved by the 27th meeting of the sixth board of directors
on September 17, 2010 and October 13,2010, as well as by the first interim shareholder meeting in
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 56,303,627.40exemption related procedures, and
will write off the accrued expense of Jinlihua Plaza land VAT amounted to RMB 56,303,627.40 when
the Company receives the reply.
The company has a receivable house payment of Jinlinhua Plaza from Shenzhen Jiyong Property
Development Co., Ltd, amounted to RMB 98.6113 millions, the provision for bad debts is amounted to
RMB 42.6113 millions and the net amount is RMB 56 millions.
3. According to the “Labor Legislation”, the “Labor Contract Law”, “The Opinion on Further
Standardization of Labor Relation of the Municipal SOE”, “The Notice to Reform the Human Resource
Allocation Improvement in Municipal SOE” which was issued on August 18, 2006, and some other
related documents, the Company formulated Compensation Measures of Human Resource Allocation
Improvement Reform of Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter
referred to as “Compensation Method”), The Compensation Method had been approved by the
Company’s employee representative conference on October 10, 2008. The Company formulated
employee dismiss plan based on the Compensation Method which was approved by the fourteenth
session of the sixth conference of the Company’s board of directors. According to the plan, the
Company made a provision on dismisses compensation of RMB36, 643,309.50 according to relevant
accounting standard in 2008. 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 in 2009.
The plan of dismissed compensation has already been completed in the report period, total
accumulative provision for dismissal is RMB 50,886,233.60, and accumulative payment is RMB
45,839,717.80, the balance is RMB 5,046,515.80. The balance of dismissed compensation which has
not paid is RMB 2,923,882.80 by the report issued day.
4. The proposal that transfer of overall property of Hainan Xinda Development Co., Ltd through
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trading with public listed companies, was approved in the 10th session of the 6th conference of the
Company’s board of directors on Jan 14, 2009.
Till the report date, the evaluation and audition has completed. But the relevant transfer proposal still
needs to be approved by Shenzhen State-owned Assets Supervision and Administration Bureau.
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. The Company will further track the details, and there is not effect temporarily.
Note X. Notes to the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable by Categories are as follows:
Closing balance
Balance Provision for bad debt
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for 101,447,889.05 96.45 45,447,889.05 44.80
bad debts seperately
Provided for bad debts by portfolio
Portfolio 1
Portfolio 2 3,680,032.75 3.50 .
Subtotal 3,680,032.75 3.50 .
Individually not significant but provided 54,380.35 0.05 54,380.35 100.00
for bad debts seperately
Total 105,182,302.15 100.00 45,502,269.40 43.26
Opening balance
Balance Provision for bad debt
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 101,447,889.05 94.84 45,447,889.05 44.80
debts seperately
Provided for bad debts by portfolio
Portfolio 1
Portfolio 2 5,464,246.43 5.11 .
Subtotal 5,464,246.43 5.11 .
Individually not significant but provided for bad 54,380.35 0.05 54,380.35 100.00
debts seperately
Total 106,966,515.83 100.00 45,502,269.40 42.54
119
Interpretation of account receivables:
Receivables with individually significant amount and provided for bad debt separately:
Bad debt Proportion
Name of company Closing balance Reason for provision
provision (%)
Shenzhen Jiyong 98,611,328.05 42,611,328.05 43.21 Involved in lawsuit, refers to Note
Property Development VII.1.(2) and Note IX.2
Co., Ltd
Shenzhen Tewei 2,836,561.00 2,836,561.00 100.00 Uncollectible for a long period
Industry Co., Ltd.
Total 101,447,889.05 45,447,889.05
Receivables with individually insignificant amount but provided for bad debt seperately:
Bad debt
Name of company Amount Aging Reason for provision
provision
Luohu Economic 54,380.35 54,380.35 Over 3 years Uncollectible for a long period
Development Company
Total 54,380.35 54,380.35
(2) There is no receivable account that have been fully provided of bad debt provision, or with
great portion, and retrieved or written back in the reporting period, or such account with significant
amount.
(3) No receivable accounts were written off during the reporting period.
(4)There was no accounts receivable due from shareholders with more than 5% (including 5%) of
the voting shares of the Company.
(5) Details of top 5 receivable accounts:
Proportion to total
Company Relationship Amount Aging accounts receivables
(%)
Shenzhen Jiyong Property Development Co., Non-related 98,611,328.05 Over 3 years 93.75
Ltd parties
Shenzhen Tewei Industry Co., Ltd. Non-related 2,836,561.00 Over 3 years 2.70
parties
Tianhong Shopping Plaza Co., Ltd. Non-related 3,006,543.75 1-3 years 2.86
parties
Seven days hotel (shenzhen) Co., Ltd Non-related 369,000.00 Within 1year 0.35
parties
Shenzhen Jindu wedding etiquette Co., Ltd Non-related 118,894.50 Within 1year 0.11
parties
Total 104,942,327.30 99.77
120
(6) There was no accounts receivable due from related parties.
2. Other receivables
（1）Other receivables by categories are as follows:
Closing balance
Balance Provision for bad deb
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 241,202,085.87 32.02 191,932,077.06 79.57
debts seperately
Provided for bad debts by portfolio
Portfolio 1
Portfolio 2 509,569,813.47 67.66
Subtotal 509,569,813.47 67.66
Individually not significant but provided for 2,421,326.23 0.32 2,421,326.23 100.00
bad debts seperately
Total 753,193,225.57 100.00 194,353,403.29 25.80
Opening balance
Balance Provision for bad deb
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 205,947,370.55 69.13 205,947,370.55 100.00
debts seperately
Provided for bad debts by portfolio
Portfolio 1
Portfolio 2 89,557,866.50 30.06
Subtotal 89,557,866.50 30.06
Individually not significant but provided for 2,421,326.23 0.81 2,421,326.23 100.00
bad debts seperately
Total 297,926,563.28 100.00 208,368,696.78 69.94
Interpretation of other receivables:
Receivables with individually significant amount and provided for bad debt separately:
121
Bad debt
Name of company Amount Proportion (%) Reason for provision
provision
Shum Yip Properties 104,569,295.30 55,299,286.49 52.88 Uncollectible for a long period
Development Co., Ltd.
Gintian Industry (Group) 56,600,000.00 56,600,000.00 100.00 Payment for discharging of
Co., Ltd. guaranty responsibility that
was difficult to be recollected
Hainan Xinda 48,637,584.59 48,637,584.59 100.00 Uncollectible for a long period
Development Co., Ltd
Anhui Nanpeng 8,295,584.00 8,295,584.00 100.00 Uncollectible for a long period
Papermaking Co., Ltd
Shenzhen Shengfenglu 6,481,353.60 6,481,353.60 100.00 There is no asset to execute
ITC Jewel & Gold Co., the verdict, thus lead to
Ltd uncollectibility
Shanghai Yutong Real 5,676,000.00 5,676,000.00 100.00 Uncollectibility for the reason
estate development Co., of verdict
Lt
HongKong Yueheng 3,271,837.78 3,271,837.78 100.00 Has been liquidated
Development Co., Ltd
Dameisha Tourism 2,576,445.69 2,576,445.69 100.00 Suspended project
Center
Shenzhen ITC Food 2,551,652.48 2,551,652.48 100.00 Insolvency
Enterprise Co.,Ltd.
Elevated Train Project 2,542,332.43 2,542,332.43 100.00 Suspended project
合 计 241,202,085.87 191,932,077.06 ——
Receivables with individually insignificant amount but provided for bad debt seperately:
Bad debt Proportion
Name of company Amount Reason for provision
provision (%)
Shenzhen Wufang Pottery 1,747,264.25 1,747,264.25 100.00 Poor operation status
& Porcelain Industrial Co.,
Ltd
Compensation for Shidai 601,762.21 601,762.21 100.00 Owner unable to repay the loan
new residence mortgage
guarantee
Zhanjiang Shenzhen 53,478.77 53,478.77 100.00 Insolvency
Real Estate Development
Co., Ltd.
Meilin Synthetic Fibre 11,000.00 11,000.00 100.00 Uncollectible for a long period
Company
Others 7,821.00 7,821.00 100.00 Uncollectible for a long period
Total 2,421,326.23 2,421,326.23 ——
122
（2）There is no other receivable that have been fully provided of bad debt provision, or with great
portion, and retrieved or written back in the reporting period, or such account with significant amount
（3）No other receivables were written off during the reporting period
（4）There was no other receivable due from shareholders with more than 5% (including 5%) of
the voting shares of the Company.
（5）Details of top 5 other receivables：
Proportion of the
Name of company Relationship Amount Aging
total (%)
Dongguan Guomao Wholly-owned 220,841,793.00 Within 1 year 29.33
Changsheng Real Estate subsidiary
Development Co., Ltd.
PRD Group XuzhouDapeng Wholly-owned 154,411,440.00 Within 1 year 20.50
Real EstateDevelopment subsidiary
Co.,Ltd
Shum Yip Properties Wholly-owned 104,569,295.30 Over 3 years 13.88
Development Co., Ltd. subsidiary
Gintian Industry (Group) Co., Non-related 56,600,000.00 Over 3 years 7.51
Ltd. parties
Shenzhen ITC Vehicles Wholly-owned 50,000,000.00 Within 1 year 6.64
Industry Co., Ltd. subsidiary
Total 586,422,528.30 77.86
（6）Details about receiveables from related parties:
Proportion of
Name of company Relationship Amount
the total (%)
Dongguan Guomao Changsheng Real Estate
Wholly-owned subsidiary 220,841,793.00 29.32
Development Co., Ltd.
PRD Group XuzhouDapeng Real
Wholly-owned subsidiary 154,411,440.00 20.50
EstateDevelopment Co.,Ltd
Shum Yip Properties Development Co., Ltd. Wholly-owned subsidiary 104,569,295.30 13.88
Shenzhen ITC Vehicles Industry Co., Ltd. Wholly-owned subsidiary 50,000,000.00 6.64
Hainan Xinda Development Co., Ltd Wholly-owned subsidiary 48,637,584.59 6.46
Shenzhen Huangcheng Real Estate Co., Ltd Wholly-owned subsidiary 47,180,496.74 6.26
Shenzhen ITC Tian’an Properties Co., Ltd Joint venture 14,705,931.45 1.95
Anhui Nanpeng Papermaking Co., Ltd Associated enterprises 8,295,584.00 1.10
123
Shenzhen ITC Food Co.,Ltd Wholly-owned subsidiary 4,082,560.40 0.54
Shenzhen Property Construction Supervision
Wholly-owned subsidiary 3,285,212.59 0.44
Co., Ltd
Shenzhen ITC Industrial Development Co.,
Associated enterprises 2,551,652.48 0.34
Ltd
Shenzhen Wufang Pottery & Porcelain
Associated enterprises 1,747,264.25 0.23
Industrial Co., Ltd
Shenzhen International Trade Plaza Wholly-owned subsidiary 744,177.30 0.10
Zhanjiang Shenzhen Real Estate
Wholly-owned subsidiary 53,478.77 0.01
Development Co., Ltd
Total 661,106,470.87 87.77
3. Long-term equity investment
Proportions of Proportions of
Amount of initial Increase/
Company Opening balance Closing balance shareholding voting rights
investment Decrease
(%) (%)
I. Investment under
equity method
Shenzhen Jifa 30,645,056.04 26,016,589.45 596,587.51 26,613,176.96 50.00 50.00
Warehouse
Company Limited
Shenzhen ITC 23,186,124.00 36,571,572.82 338,908.54 36,910,481.36 50.00 50.00
Tian’an Properties
Co., Ltd
Shenzhen Tian’an 1,500,000.00 1,807,048.16 757,282.17 2,564,330.33 50.00 50.00
International
Building Property
Management Co.,
Ltd
II. Investment under
cost method
Shenzhen ITC 29,850,000.00 29,850,000.00 29,850,000.00 90.00 90.00
Vehicles Industry
Co., Ltd.
Hainan Xinda 20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00
Development Co.,
Ltd
Shenzhen Property 30,950,000.00 30,950,000.00 30,950,000.00 100.00 100.00
and Real Estate
Development Co.,
Ltd.
124
Proportions of Proportions of
Amount of initial Increase/
Company Opening balance Closing balance shareholding voting rights
investment Decrease
(%) (%)
Shenzhen 28,500,000.00 28,500,000.00 28,500,000.00 95.00 95.00
Huangcheng Real
Estate Co., Ltd
Shenzhen ITC 20,000,000.00 20,000,000.00 20,000,000.00 95.00 95.00
Property
Management Co.,
Ltd.
Shenzhen ITC Food 1,600,000.00 1,600,000.00 1,600,000.00 80.00 80.00
Co.,Ltd.
Shenzhen Property 3,000,000.00 3,000,000.00 3,000,000.00 100.00 100.00
Construction
Supervision Co.,
Ltd
Shenzhen 12,000,000.00 12,000,000.00 12,000,000.00 100.00 100.00
International Trade
Plaza
Shenzhen Real 1,380,000.00 1,380,000.00 1,380,000.00 100.00 100.00
Estate Exchange
Shensan Co.,Ltd. 17,695.09 17,695.09 17,695.09
East Land Properties 93.64 93.64 -93.64
Limited
Zhanjiang Shenzhen 2,530,000.00 2,530,000.00 2,530,000.00 100.00 100.00
Real Estate
Development Co.,
Ltd
Hong Kong Shum 15,834,000.00 15,834,000.00 15,834,000.00 100.00 100.00
Yip Properties
Development Co.,
Ltd.
Shenzhen Huajing 7,600,000.00 7,600,000.00 -7,600,000.00
Glass Bottle Co.,
Ltd
Shenzhen Wufang 18,983,614.14 18,983,614.14 18,983,614.14 26.00 26.00
Pottery & Porcelain
Industrial Co., Ltd
Shenzhen ITC 20,154,840.79 3,682,972.55 3,682,972.55 38.33 38.33
Industrial
Development Co.,
Ltd
Anhui Nanpeng 13,824,000.00 13,824,000.00 13,824,000.00 30.00 30.00
Papermaking Co.,
Ltd
125
Proportions of Proportions of
Amount of initial Increase/
Company Opening balance Closing balance shareholding voting rights
investment Decrease
(%) (%)
China T.H. Co.,Ltd. 2,962,500.00 2,962,500.00 2,962,500.00 0.33 0.33
North Machinery 3,465,000.00 3,465,000.00 3,465,000.00 12.66 12.66
(Group) Co.,Ltd.
Guangdong Huayue 8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Real Estate Co.,Ltd.
PRD Group 50,000,000.00 50,000,000.00 50,000,000.00 100.00 100.00
XuzhouDapeng Real
EstateDevelopment
Co.,Ltd
Dongguan Guomao 20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00
Changsheng Real
Estate Development
Co., Ltd.
Sanya East Travel 230,500.00 230,500.00 230,500.00 0.28 0.28
Co.,Ltd.
Total —— 289,355,731.05 64,323,184.58 353,678,915.63 —— ——
Note for difference
between proportions of Provision for Increse in Written off in
Company Cash dividends
voting rights and impairment current year current year
shareholding hold
I. Investment under equity
method
Shenzhen Jifa Warehouse
Company Limited
Shenzhen ITC Tian’an Properties
Co., Ltd
Shenzhen Tian’an International
Building Property Management
Co., Ltd
II. Investment under cost method
Shenzhen ITC Vehicles Industry
Co., Ltd.
Hainan Xinda 20,000,000.00
Development Co., Ltd
126
Note for difference
between proportions of Provision for Increse in Written off in
Company Cash dividends
voting rights and impairment current year current year
shareholding hold
Shenzhen Property and Real
Estate Development Co., Ltd.
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
12,000,000.00
Plaza
Shenzhen Real Estate Exchange
Shensan Co.,Ltd. 17,695.09
East Land Properties Limited
Zhanjiang Shenzhen Real Estate
2,530,000.00
Development Co., Ltd
Hong Kong Shum Yip Properties
15,834,000.00
Development Co., Ltd.
Shenzhen Huajing Glass Bottle
7,600,000.00
Co., Ltd
Shenzhen Wufang Pottery &
18,983,614.14
Porcelain Industrial Co., Ltd
Shenzhen ITC Industrial
3,682,972.55
Development Co., Ltd
Anhui Nanpeng Papermaking
13,824,000.00
Co., Ltd
127
Note for difference
between proportions of Provision for Increse in Written off in
Company Cash dividends
voting rights and impairment current year current year
shareholding hold
China T.H. Co.,Ltd. 2,160,300.45
North Machinery (Group)
3,465,000.00
Co.,Ltd.
Guangdong Huayue Real Estate
8,780,645.20
Co.,Ltd.
PRD Group XuzhouDapeng Real
EstateDevelopment Co.,Ltd
Dongguan Guomao Changsheng
Real Estate Development Co.,
Ltd.
Sanya East Travel Co.,Ltd.
Total 102,878,227.43 7,600,000.00
Note: The decreased balance of investment of East Land Properties Limited and Shenzhen Huajing
Glass Bottle Company Limited refers to Note V-9 Note 1, Note 2.
4. Revenue and cost of sales
（1）Revenue and cost of sales
Item 2010 2009
Revenue from main operations 35,828,118.43 27,284,202.73
Revenue from other operations
Total Revenue 35,828,118.43 27,284,202.73
Cost of sales 16,789,454.03 18,575,069.16
（2）Main Business (by industry)
2010 2009
Categories
Revenue Cost of sales Revenue Cost of sales
Sale of properties 147,590.79 772,065.26
Property rental and 35,680,527.64 16,017,388.77 27,284,202.73 18,575,069.16
management services income
Total 35,828,118.43 16,789,454.03 27,284,202.73 18,575,069.16
128
5. Gain/loss on investment
Source 2010 2009
1.Gain on investment under cost method 522,000,000.00
2.Gain on investment under equity method 1,692,778.22 -795,082.08
3. Gain on investment from disposal of long-term equity investment 1,539,906.36
Total 3,232,684.58 521,204,917.92
6. Supplementary information of cash flow statement
Supplementary information 2010 2009
1. Adjustment from net profit to cash flows from operating activities
Net profit 18,982,840.06 462,937,195.91
Plus: Provision for impairment of assets -37,276,392.48 17,142,015.89
Depreciation of fixed assets, Oil-gas assets and Productive biological assets 14,784,016.45 13,315,806.69
and amortisation of investment properties
Amortization of intangible assets
Amortization of long-term deferred expense 172,263.53 166,150.08
Loss on disposal of fixed assets, intangible assets and other -305,407.77 -50,019.21
non-current assets(“-” for gain)
Loss on fixed assets retirement (“-” for gain)
Loss on change in fair value(“-” for gain) -39,900.00 -168,300.00
Financial costs(“-” for gain) 3,925,627.00
Loss on investment(“-” for gain) -3,232,684.58 -521,204,917.92
Decrease of deferred tax assets(“-” for increase)
Increase of deferred tax liabilities(“-” for decrease) 807.48
Decrease of inventory(“-” for increase) -3,187,540.85 -218,200.00
Decrease in operating receivables(“-” for increase) -344,423,903.61 195,066,602.51
Increase in operating payables(“-” for decrease) 305,284,845.32 -61,015,512.98
Others
Net cash flow from operating activities -49,241,056.45 109,896,447.97
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 78,920,447.75 2,539,358.76
Less: Cash at the beginning of the period 2,539,358.76 7,802,612.88
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Increase in cash and cash equivalents 76,381,088.99 -5,263,254.12
Note XI. Supplementary information
129
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 2010 Note
Gains and Losses on disposal of non-current assets, including provision for 3,666,926.49
asset impairment write-off
Ultra vires approval, or without official approval documents, or occasional tax
return or relief;
Government subsidies through current profit or loss, but are closely related to
normal operations of the Company, in line with national policies and
regulations. Except government subsidies continued to enjoy according to
certain standard amount or quantitaty;
Funds occupation fee through current profit or loss collected from
non-financial enterprises;
The investment cost for the Company to obtain subsidiaries and joint ventures
is less than the revenue generated from fair value of the identifiable net assets
of investee when obtaining investment;
Non-monetary assets exchange profit or loss;
Profit or loss from entrusting others to invest or manage assets;
Various provision for impairment of assets made due to force majeure, such as
natural disasters
Debt restructuring gains and losses;
Corporate restructuring costs, such as the employees placement expenses, -87,077.70
integration costs, etc.;
Profit or loss over the part of fair value generated by transactions with
obviously unfair trading price;
Current net profit or loss generated by subsidiary from business combination
under the common control from year beginning to the merge date;
Profit or loss generated by contingencies not related to the Company's normal 3,533,281.90 Note
business;
130
Items 2010 Note
In addition to effective hedging business related to the normal operations of 39,900.00
the Company, profit or loss from changes in fair values of financial assets held
for trading and trading financial liabilities, as well as investment income from
the disposal of trading financial assets, trading financial liabilities and
financial assets available for sale;
Reversal of provision for impairment of receivables through separate 1,478,071.21
impairment test;
Profit or loss from entrusted external loans;
Profit or loss generated from changes in fair value of investment property that
using fair value method for subsequent measurement;
According to tax, accountancy law and other regulations, the effect of
one-time adjustment on current profit or loss which made on current profit or
loss according to tax, accountancy law and other regulations;
Commission Income obtained from commission operation;
Other non-operating income and expenditure in addition to the above items; 6,620,338.00
Other profit or loss items meet the definition of non-recurring gains and
losses.
Subtotal 15,251,439.90
Less:Income tax expense should be deducted from aforementioned 526,001.10
non-recurring gains and losses
Profit or loss of minority shareholders in consolidated financial statement
Total 14,725,438.80
Note: “Profit or loss generated by contingencies not related to the Company's normal business;”
refers to offsetting the for contingent liabilities, details in Note V-24, Note VII-2, 3.
2. According to CSRC regulations of announcement “Disclosure requirements No.9 for the public
listed companies—disclosure of ROE (%) and EPS” (edited in 2010), the calculated datas are as
following:
Weighted average EPS
Profit in report period
ROE (%) Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 23.27 0.29 0.29
Net profit attributable to ordinary shareholders after 21.31 0.27 0.27
deducting extraordinary gain or loss
Legal:representative:Chen yugang Senior accountant:Wang hangjun Chief financial:officer:Shen xueying
131
