English Translation for Reference Only
SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.
INTERIM REPORT 2011
Date of disclosure: 31 Jul. 2011
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Section I Important Notice & Contents
The Board of Directors, the Supervisory Committee as well as directors, supervisors
and senior executives of the Company guarantee that there are no any omissions,
fictitious or serious misleading statements carried in the report and will take all
responsibilities, individual and/or joint for the authenticity, accuracy and integrality of
the whole contents.
The Summary of Interim Report 2011 is abstracted from the full text of the Interim
Report 2011, and the full text of the Interim Report 2011 is published on the Internet
website http://www.cninfo.com.cn in the mean time. Investors are suggested to read
the full text to understand more details.
No directors, supervisors and senior managers have objections to the report of the true,
accurate and complete.
Chairman of the Board of the Company Mr. Chen Yugang, Person in Charge of
Accounting Work Mr. Wang Hangjun, CFO Mr. Gong Sixin and Manager of
Financial Department Ms. Shen Xueying hereby guarantee that Financial Statements
in this report are true and complete.
The interim financial report of the Company has not been audited.
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Contents
Section I Important Notice & Contents………………………………………………..2
Section II Company Profile……………………………………………………………4
Section III Changes in Share Capital and Shares Held by Principal Shareholders……6
Section IV Particulars about Directors, Supervisors and Senior Executives………...12
Section V Report of the Board of Directors…………………………………….….. 13
Section VI Significant Events………………………………………………………..22
Section VII Financial Report…………………………………………………………36
Section VIII Documents for Reference…………………………………………….. 37
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Section II Company Profile
(I) Company Profile
1. Name of the Company in Chinese: 深圳市物业发展（集团）股份有限公司
(Abbreviation: 物业集团)
In English: Shenzhen Properties & Resources Development (Group) Ltd. (PRD)
2. Legal Representative: Chen Yugang
3. Secretary of the Board of Directors and Securities Affairs Representative
42/F, International Trade Center,
Contact address
Renmin South Road, Shenzhen
Tel 0755-82211020
Fax 0755-82210610、82212043
E-mail 000011touzizhe@163.com
4. Registered/Office Address: 39/F and 42/F, International Trade Center, Renmin
South Road, Shenzhen
Post Code: 518014
5. Media Designated for Disclosing Information
A share: Securities Times; B Share: Ta Kung Pao
Internet Website Designated by CSRC for Publishing Annual Report:
http://www.cninfo.com.cn
The Place Where the Interim Report is Prepared and Placed: Office of the Board of
Directors, 42/F, International Trade Center, Renmin South Road, Shenzhen
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of Stock: Shenwuye A, Shenwuye B
Stock Code: 000011, 200011
(II) Main financial data and indices
1. Main accounting data and financial indices
Unit: RMB Yuan
Increase/decrease
At the end of the reporting
Items At the end of last year compared with the end of
period
last year (%)
Total assets 3,042,454,908.26 2,913,281,353.84 4.43
Owners’ equity (or shareholders’
1,173,197,481.69 874,185,621.88 34.20
equity)
Share capital 595,979,092.00 595,979,092.00 0.00
Net assets per share 1.9685 1.4668 34.20
In the reporting period The same period of last Increase/decrease
Items
(from Jan. to Jun.) year year-on-year (%)
Total operating revenue 1,146,591,748.07 697,428,583.67 64.40
Operating profit 396,042,594.95 146,552,962.57 170.24
Total profit 396,114,375.04 152,910,566.41 159.05
Net profit 299,688,854.39 126,752,423.52 136.44
Net profit after deducting
298,838,849.27 117,563,897.99 154.19
non-recurring gain/loss
Basic earnings per share 0.5029 0.2127 136.44
Diluted earnings per share 0.5029 0.2127 136.44
Weighted average return on equity 29.28% 17.49% 11.79
Weighted average return on equity
29.19% 16.22% 12.97
after deducting non-recurring gain
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and loss
Net cash flow from operating
-442,971,012.62 49,327,311.75 -998.02
activities
Net cash flow from operating
-0.7433 0.0828 -998.02
activities per share
2. Items of non-recurring gains and loss
Unit: RMB Yuan
Items Amount
Profit and loss from disposal of non-current assets,
including the offset part of the impaired assets; -21,155.77
Enterprises ’ reorganization fees, such as staffing
expenses and integration fees -76,574.00
Recovery of account receivable that make
independent impairment test
812,904.94
Gain and lose received from external assigned loan 49,600.00
Other non-operating income and expenses besides the
above items 92,935.86
Other items that conform to the definition of
extraordinary profit and loss -7,705.91
Total 850,005.12
3. Difference due to CAS and IFRS
Unit: RMB Yuan
Net profit attributable to owners of Equities attributable to owners of parent
Items
parent company (Jan.-Jun. 2011) company (as at 30 Jun. 2011)
According to CAS 299,688,854.39 1,173,197,481.69
According to IFRS 299,688,854.39 1,173,197,481.69
Notes to the difference No difference
4. Net return on equity, earnings per share and diluted earnings per share was
accounted in accordance with requirement in Compilation Rules for Information
Disclosures by Companies That Offer Securities to the Public (No. 9)-Calculation and
Disclosure of Net Return on equity and earnings per share issued by CSRC (Revised
in 2007)
Unit: RMB Yuan
Net return on equity Earnings per share
Jan.-Jun. 2011 Weighted Basic earnings Diluted earnings
Fully diluted
average per share per share
Net profit attributable to
shareholders holding ordinary 25.54 29.28 0.5029 0.5029
shares of the Company
Net profit attributable to
shareholders holding ordinary
shares of the Company after 25.47 29.19 0.5014 0.5014
deducting non-recurring profit
and loss
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Section III Changes in Share Capital and Shares Held by Principal
Shareholders
(I) Changes in the Company’s total shares and its structure of share capital in the
reporting period,
On 14 April 2011, part of the Company’s trading shares with trading moratorium after
share reform was released for listing. On 15 June 2011, the Company held the 1st
Provisional Shareholders’ General Meeting of 2011, on which the Company re-elected
members of the Board of Directors and Supervisory Committee. Due to reasons listed
above, the structure of share capital of the Company has changed, while total shares
of the Company remained 595,979,092, changes are listed as follows:
Unit: share
Before the change Increase or decrease in the change (+ -) Subsequent to the change
Capitalization
Issuance of Bonus
Amount Proportion of public Other Subtotal Amount Proportion
new shares shares
reserve fund
I. Shares
subject to
388,640,594 65.21% -2,665,745 -2,665,745 385,974,849 64.76%
trading
moratorium
1. Shares held
by the State
2. Share held
by
382,509,385 64.18% 269,080 269,080 382,778,465 64.23%
state-owned
corporation
3. Shares held
by other
6,127,167 1.03% -2,936,327 -2,936,327 3,190,840 0.54%
domestic
investors
Among
which: Shares
held by
domestic 5,599,167 0.94% -2,936,327 -2,936,327 2,662,840 0.45%
non-state-own
ed
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
persons
5. Frozen
shares held by
4,042 0.0007% 1,502 1,502 5,544 0.0009%
senior
executives
II. Shares not
subject to 207,338,498 34.79% 2,665,745 2,665,745 210,004,243 35.24%
trading
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moratorium
1. RMB
ordinary 139,737,297 23.45% 2,667,093 2,667,093 142,404,390 23.89%
shares
2.
Domestically
67,601,201 11.34% -1,348 -1,348 67,599,853 11.35%
listed foreign
shares
3. Overseas
listed foreign
shares
4. Others
III. Total
595,979,092 595,979,092
shares
Notes: Changes in share capital of the Company is detailed as follows:
Note A. Explanation for changes under the item of “I. Shares subject to trading
moratorium”:
(1) Increase of 269,080 shares under the item of “shares held by state-owned
corporations” was due to the following reasons:
Shares subject to trading moratorium that former hold by Shenzhen Tongsheng
Industrial Co., Ltd. SHANGHAI KUNLING INDUSTRY & TRADE CO.,LTD,
Hainan Weibang Investment and Development Co., Ltd. and SHANGHAI ZHAODA
INVESTMENT CONSULTANT CO., LTD. have came to the expiration of trading
moratorium term and all of the above three paid back prepayment to SHENZHEN
CONSTRUCTION INVESTMENT HOLDINGS CORPORATION (state-own legal
person), which was the consideration party of advance on equity division reform. The
above four companies paid back the repayment totaling 269,080 shares that incurred
related increase in state-owned corporation, for details please refer to Informative
Announcement on Shares with Trading Moratorium Released for Listing published by
the Company on 13 April 2011.
(2) Decrease of 2,936,327 shares under the item of “Shares held by domestic natural
persons” was due to the following reasons:
① Former holders of Shenzhen Tongsheng Industrial Co., Ltd. SHANGHAI
KUNLING INDUSTRY & TRADE CO.,LTD, Hainan Weibang Investment and
Development Co., Ltd. that with shares subject to trading moratorium has paid back
prepayment of 269,080 as of conducting equity reform. Then incurred to related
decrease under the item;
② A total of 2,667,247 shares of former shares hold by Shenzhen Tongsheng
Industrial Co., Ltd. SHANGHAI KUNLING INDUSTRY & TRADE CO.,LTD,
Hainan Weibang Investment and Development Co., Ltd. that subject to trading
moratorium was released for listing with nature changing to trading shares not subject
to trading moratorium. Then incurred to related decrease under the item.
(3) The increase of 1,502 shares under the item of “Frozen shares hold by the senior
executives” was due to the following reasons:
Former director of the Company Mr. Guo Lusi hold 154 shares of A-share, 5,390
shares of B-share 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%
amounted to 4,042 shares, while A-share held by Guo Lusi is less than 1,000 shares
that not need to lock. On 15 June 2011, the Company hold re-election for members of
Supervisory Committee and after the re-election, Guo Lusi no longer acts as director
of the Company. As in accordance of related regulations, all shares hold by Guo Lusi
shall not be able to transfer within half years after he left office, then 154 shares of
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A-share, 5,390 shares of B-share shall be locked entirely.
Note B. Explanation for changes under the item of “II. Shares not subject to trading
moratorium”
(1) Increase of 2,667,093 shares under the item of “RMB ordinary shares” was due to
the following reasons:
① A total of 2,667,247 shares of former shares hold by Shenzhen Tongsheng
Industrial Co., Ltd. SHANGHAI KUNLING INDUSTRY & TRADE CO.,LTD,
Hainan Weibang Investment and Development Co., Ltd. that subject to trading
moratorium was released for listing with nature changing to trading shares not subject
to trading moratorium. Then incurred to related increase under the item;
② 154 shares of A-share hold by Guo Lusi, former director of the Company was
locked that incurred a decrease of 154 shares under the item.
(2) Decrease of 1,348 shares under the item of “Domestically listed foreign shares”
was due to the following reasons:
5390 shares of B-share held by Guo Lusi is locked at a ratio of 75% amounted to
4,042 shares. On 15 June 2011, the Company hold re-election for members of
Supervisory Committee and after the re-election, Guo Lusi was no longer acted as
director of the Company. As in accordance of related regulations, all shares hold by
Guo Lusi shall not be able to transfer within half years after he left office, then 5390
shares of B-share held by Guo Lusi was entirely locked, which led to 1,348 shares
under the item.
(Ⅱ) Number of total shareholders, shareholding of top ten shareholders and top
ten shareholders holding shares not subject to trading moratorium as at 30 June
2011 according to the registration book from the Shenzhen branch of China
Securities Depository and Clearing Co., Ltd.:
Total shareholders at the end of the By the end of the reporting period, the Company has 48,944 shareholders in
reporting period total；including 40,359 ones of A-share and 8,585 ones of B-share.
Shareholding of top ten shareholders
Shares subject to
Nature of Shareholdin Number of Shares pledged or
Name of shareholder trading
shareholder g ratio (%) shares held frozen
moratorium
SHENZHEN
CONSTRUCTION
State-owned legal
INVESTMENT 54.31 323,681,111 323,681,111 0
person
HOLDINGS CO.,
LTD.
SHENZHEN
INVESTMENT & State-owned legal
9.49 56,582,573 56,582,573 0
MANAGEMENT person
CO., LTD.
Domestic natural
ZENG YING 0.56 3,350,000 0 0
person
CHINA
MERCHANTS State-owned legal
0.56 3,323,251 0
SECURITIES (HK) person
CO., LTD.
LABOR UNION OF
SHENZHEN
INTERNATIONAL State-owned legal
0.42 2,514,781 2,514,781 0
TRADE PROPERTY person
MANAGEMENT
COMPANY
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BANK OF
Fund, financing
CHINA-HUATAI-PB
products and 0.35 2,107,885 0 0
VALUE GROWTH
others
STOCK
SHENZHEN
SPECIAL ZONE
Ordinary domestic
DUTY-FREE 0.29 1,730,300 1,730,300 0
legal person
COMMODITY CO.,
LTD
XIAMEN
INTERNATIONAL
TRUST CO., LTD.－
Fund, financing
LEIDEYING products and 0.22 1,305,770 0 0
INDEPENDENT others
MANAGEMENT
TRUST FUND
NO.030
Domestic natural
CHEN HUAYUAN 0.14 846,200 0 0
person
HAINAN
WEIBANG
Ordinary domestic
INVESTMENT AND 0.13 785,869 0 0
legal person
DEVELOPMENT
CO., LTD.
Shareholding of top ten shareholders holding shares not subject to trading moratorium
Amount of tradable shares held at the period-end
Name of shareholders Type of share
(share)
Domestically listed foreign
ZENG YING 3,350,000
share
CHINA MERCHANTS Domestically listed foreign
3,323,251
SECURITIES (HK) CO., LTD. share
BANK OF CHINA-HUATAI-PB
2,107,885 RMB ordinary share
VALUE GROWTH STOCK
XIAMEN INTERNATIONAL
TRUST CO., LTD.-LEIDEYING
1,305,770 RMB ordinary share
INDEPENDENT MANAGEMENT
TRUST FUND NO.030
CHEN HUAYUAN 846,200 RMB ordinary share
HAINAN WEIBANG
INVESTMENT AND
785,869 RMB ordinary share
DEVELOPMENT CO., LTD.
LI LANHUA 782,426 RMB ordinary share
GUOTAI JUNAN
Domestically listed foreign
SECURITIES(HONGKONG) 769,089
share
LIMITED
LIN JIAOFANG 726,199 RMB ordinary share
Domestically listed foreign
LIU LIAOYUAN 641,900
share
Explanation on associated
relationship among the It was unknown whether there exists associated relationship among the shareholders
aforesaid shareholders or mentioned above.
acting-in-concert
Explanation on holding term of
placing shares by strategic N/A
investor and ordinary legal
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person
(Ⅲ) Shareholding of top ten shareholders holding shares subject to trading
moratorium, as well as trading moratoriums
Number of shares
Name of shareholder
Serial subject to trading Date when available New shares available
holding shares subject to Trading moratorium
No. moratorium held by for trading for trading
trading moratorium
the shareholder
1. The originally
Shenzhen Construction 4 Nov. 2012 29,798,954 non-tradable shares
Investment Holdings held by the
Co., Ltd. shareholder shall not
1 323,681,111 4 Nov. 2013 29,798,954 be listed for trading
Shenzhen Construction
Investment Holdings or transferred within
Co., Ltd. Remaining 36 months since
4 Nov. 2014
shares implementation of
the share reform;
4 Nov. 2012 29,798,954 2. Upon expiration
of the moratorium
above, the
proportion of
originally
Shenzhen Investment non-tradable shares
2 & Management Co., 56,582,573 sold via the stock
Ltd. Remaining exchange in the total
4 Nov. 2013
shares Shenwuye shares
shall not exceed 5%
within 12 months
and 10% within 24
months.
Labor Union of
Shenzhen International
3 Trade Property 2,514,781 Unknown
Management Company
(Note I)
Shenzhen Special Zone The originally
4 Duty-Free Commodity 1,730,300 Unknown non-tradable shares
Co., Ltd held by the
shareholder shall not
5 Geng Qunying 528,000 Unknown
be listed for trading
CHINA SHENZHEN
or transferred within
INTERNATIONAL
6 441,400 Unknown 12 months since
COOPERATION(GRO
implementation of
UP) CO.,LTD.
the share reform;
Shenzhen Nanyou
non-tradable shares
7 Cultural Service Co., 148,806 Unknown
held by the
Ltd.
shareholder where
Shenzhen Nanyue considerations have
8 Investment and 86,515 Unknown not been executed
Development Co., Ltd shall not be listed
Shanghai Weihong for trading (Note
9 Industry and Trade Co., 55,000 Unknown Ⅱ).
Ltd
Shenzhen South China
Investment and
10 54,840 Unknown
Development Stock
Limited Corporation
Shenzhen Longgang
10 District Changsheng 54,840 Unknown
Real Estate Co., Ltd
Note I: 2,514,781 shares hold by Shenzhen International Trade Property Management
Company have been released for listing. Please refer to Informative Announcement on
Shares with Trading Moratorium Released for Listing published by the Company on
Security Times, Ta Kung Pao and http://cninfo.com.cn designated for information
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disclosure dated 12 June, 2011.
Note Ⅱ: Shenzhen Construction Investment Holdings Co., Ltd. has made some
advance payment acted as consideration shares of related share reform for part of
non-trading shareholders as of conducting equity division reform. The said
consideration shares by advancement gained an equity distribution in interim of 2009
on Nov. 2009 (one share for every existing 10 shares and distributed RMB 0.112 yuan
in cash). When shares hold by the said part of non-trading shareholders listing, they
shall pay back the prepayment paid by Shenzhen Construction Investment Holdings
Co., Ltd., receive written agreement from Shenzhen Investment Holdings Co., Ltd., as
well as pay back shares and cash income gained from equity division by the
prepayment to Shenzhen Construction Investment Holdings Co., Ltd.
(Ⅳ) Changes of controlling shareholder and actual controller
The controlling shareholder and actual controller of the Company remained
unchanged during the report period.
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Section IV Particulars about Directors, Supervisors and Senior Executives
(I) Shareholding changes of directors, supervisors and senior executives during
report period
1. Former supervisor Guo Lusi holds a small number of Shenwuye shares (see the
table below for more details). On 15 June 2011, the Company held re-election for the
Supervisory Committee of the Company, of which decided that Guo Lusi no longer
take post of supervisory of the Company. In accordance with relevant regulations,
shares held by Guo Lusi shall not be transferred within half a year.
Shareholding Shareholding Of which:
Office Shares held Shares held at Reasons for
Name increase for decrease for restricted
term at year-begin period-end change
report period report period shares held
A-share: 154
A-share: 154 A-share: 154
Guo Lusi Supervisor B-share: 0 0 --------
B-share: 5390 B-share: 5390
5390
2. Except for former director Guo Lusi, there were no other directors, supervisors or
senior executives hold shares of Shenwuye.
(Ⅱ) Particulars about changes on directors, supervisors and senior executives of
the Company:
1. In the reporting period, with the term of the 6th Board of Directors and Supervisory
Committee came to expiration, the Company hold re-election on the 1st Provisional
Shareholders’ General Meeting 2011 and then elected the 7th Board of Directors and
Supervisory Committee, of which:
① Mr. Chen Yugang, Mr. Wei Zhi, Mr. Liu Guangxin, Ms. Wen Li and Mr. Guo Liwei,
former directors of the 6th Board of Directors continued to act as directors of the 7th
Board of Directors; Mr. Li Xiaofan, MR. Zha Zhenxiang and Mr. Dony Zhiguang,
former directors of the 6th Board of Directors continued to act as independent
directors of the 7th Board of Directors; Mr. Gong Sixin was elected as director of the
7th Board of Directors.
With review and approval on the 1st Session of the 7th Board of Directors, Mr. Chen
Yugang was elected as president of the Company.
② Mrs. Wang Xuyan, Mrs. Wang Qiuping, Mr. Zhang Gejian, former supervisor of
the 6th Supervisory Committee continued to act as supervisors of the 7th Supervisory
Committee; Ms. Cao Ziyang, Mrs. Guo Lusi, former supervisor of the 6th Supervisory
Committee no longer act as supervisors; Mr. Cao Ziyang no longer act as Chairman of
Supervisory Committee either. Mr. Dai Xianhu, Mr. Zhang Shilei were elected as
supervisor of the 7th Supervisory Committee.
With review and approval on the 1st Session of the 7th Supervisory Committee, Mr.
Dai Xianhua was elected as Chairman of the Supervisory Committee.
2. In order for better operation of the Company, the Company decided to engaged Mr.
Wang Hangjun as deputy GM and person in charge of finance with review and
approval on the 1st Session of the 7th Board of Directors, continued to engage Mr. Li
Zipeng and Mrs. Wang Huimin as deputy GM, continued to engage Mr. Gong Sixin as
CFO. Please refer to Resolution Announcement on the 1st Session of the 7th Board of
Directors.
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Section V Report of the Board of Directors
(I) Business review for the reporting period
2011 has been a troubled year with the world economy in face of a lot of challenges.
As the kick-off year for China’s 12th five-year plan for its national economic and
social development, 2011 saw a tottering economy in the first six months, with rising
inflation, stricter macro control and frequent natural disasters. As the government
became tougher on real estate, the industry was seriously affected. Monetary policy
amendment, loan restriction, purchase restriction, price limit, re-launch of the
“low-income housing + commercial housing” double track mechanism, accountability
mechanism and other control measures hit the real estate sector harder and harder. As
a result, hesitant sentiment dominated property markets in most cities, investment and
rigid demand was depressed, the trading volume decreased and developers were
forced to adjust house prices.
The management of the Company believes: the adverse economic situation and the
macro-control policies have affected recent development of the property market to
some degree; and the fact that CPI keeps rising and breaking records leads to a
general rise in labor, capital, raw material and other kinds of cost, increasing the
burden on the Company’s main business of real estate, as well as taxi, property
management, etc.. In the first half of the year, the Company held the “Seminar on
Real Estate Situation Analysis for 2011”, the “Conference on Contract Management
and Cost Control” and other many conferences to share research results of many
notable domestic marketing & planning agencies, study market trends and improve
internal management. Meanwhile, the Company carried on with all its real estate
projects in a steady manner. With the goal of building delicate “Shengang” house
series, in virtue of outstanding geographical positions of its real estate projects, the
Company stepped up efforts in advertising and marketing innovation. As such, the
Company successfully fulfilled business goals set for the first half of 2011.
(II) Performance during the reporting period
1. General performance
For the reporting period, the Company achieved an operating income of RMB
1,146,591,700, up 64.40% from a year earlier; a net profit reaching RMB 299,688,800,
representing a year-on-year growth of 136.44%; and a net profit attributable to
shareholders of the Company amounting to RMB 299,688,800, representing a
year-on-year increase of 136.44%. The sharp growth of the operating income and net
profit was mainly because much more income was recognized in the real estate
business in the first half of the year as compared with the same period of last year, and
the gross profit rate was relatively high.
As at 30 Jun. 2011, the Company’s total assets stood at RMB 3,042,454,908.26, up
4.43% as compared with the end of last year, and shareholders’ equity (excluding
minority interests) stood at RMB 1,173,197,481.69, up 34.20% from the end of last
year.
(1) Changes in operating income, operating profit, net profit, net increase of cash and
cash equivalents over the same period of last year and analysis on reasons for those
changes:
Unit: RMB Yuan
Items Jan.-Jun. 2011 Jan.-Jun. 2010 Increase/decrease %
Operating income 1,146,591,748.07 697,428,583.67 64.40
Operating profit 396,042,594.95 146,552,962.57 170.24
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Net profit 299,688,854.39 126,752,423.52 136.44
Net increase of cash and
-87,833,438.28 -124,292,904.66 -29.33
cash equivalents
Explanation on reasons for the changes:
① Operating income increased 64.40% from a year earlier mainly due to much more
income carried over from real estate sales in the reporting period.
② Operating profit and net profit increased 170.24% and 136.44% respectively from
a year earlier, which was mainly because much more income was recognized in the
real estate business in the first half of the year as compared with the same period of
last year, and the gross profit rate was relatively high.
③ Net increase of cash and cash equivalents decreased because the Company paid off
some loans in the reporting period.
(2) Analysis on increase/decrease of total assets, shareholders’ equity and other items
compared with the beginning of the reporting period and reasons for those changes:
Unit: RMB Yuan
Items 30 Jun. 2011 31 Dec. 2010 Increase/decrease %
Total assets 3,042,454,908.26 2,913,281,353.84 4.43
Accounts receivable 76,828,194.74 67,935,785.29 13.09
Other accounts receivable 37,431,732.20 37,787,880.10 -0.94
Inventories 1,414,805,616.50 1,576,183,305.38 -10.24
Long-term equity
82,069,526.83 81,390,188.20 0.83
investment
Fixed assets 69,415,898.81 78,112,745.51 -11.13
Intangible assets 103,302,907.67 106,563,665.92 -3.06
Deferred income tax
109,521,482.63 83,209,649.31 31.62
assets
Other non-current assets 9,000,000.00 - 100.00
Shareholders’ equity
(excluding minority 1,173,197,481.69 874,185,621.88 34.20
interests)
Explanation on reasons for the changes:
① Total assets increased over the period-begin mainly because the Company obtained
new bank loans in the reporting period.
② Accounts receivable increased over the period-begin mainly due to increase of
receivables from property management in the reporting period.
③ Other accounts receivable decreased over the period-begin mainly because
subsidiaries collected some debts in the reporting period.
④ Inventories decreased over the period-begin mainly because some projects were
settled and relevant costs were carried over in the reporting period.
⑤ Long-term equity investment increased over the period-begin mainly because
profit from investees increased at the equity method in the reporting period.
⑥ Fixed assets decreased over the period-begin mainly due to depreciation provisions
in the reporting period.
⑦ Intangible assets decreased over the period-begin mainly due to amortization in the
reporting period.
⑧ Deferred income tax assets increased over the period-begin mainly because land
VAT to be deducted increased in the reporting period.
⑨ Other non-current assets increased over the period-begin mainly because
subsidiaries provided loans by mandate to Shenxin Taxi Co., Ltd. in the reporting
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period (please find details in Note V 14 under the Notes to Financial Statements.
⑩ Shareholders’ equity increased over the period-begin due to profits during the
reporting period.
(3) Particulars about measuring significant assets, liabilities, income and expenses
with the fair value mode
Accounting of the Company is based on the accrual basis. Transactional financial
assets and available-for-sale financial assets are measured at fair value, and other
assets are usually measured based on historical cost. For assets calculated with
methods of replacement cost, net realizable value, present value and fair value, the
amounts of the accounting elements must be obtainable and can be measured reliably.
① Items measured at fair value
Unit: RMB Ten thousand
Gain and
Accumulative
loss from fair Impairment
fair value
Amount at value withdrawn in Amount at
Items changes
period-begin changes in reporting period-end
recorded into
reporting period
equity
period
Financial assets
Of which: 1. Financial assets
measured at fair value and
of which changes are
recorded into current gains
and losses
27.21 27.21
Including: Derivative
financial assets
2. Available-for-sale
financial assets
Subtotal of financial assets 27.21 27.21
Financial liabilities
Investing properties
Production biological assets
Others
Total 27.21 27.21
Note: Financial assets measured at fair value and of which changes are recorded into
current gains and losses were tradable shares purchased from the aftermarket, with
closing prices announced by the stock exchanges as the fair value.
② Financial assets and liabilities held in foreign currencies
The Company did not hold any financial assets or liabilities in foreign currency at the
end of the reporting period.
2. Main business scope and performance
The Company is mainly engaged in real estate development, property management
and lease, with by-lines of taxi and catering. In the reporting period, the Company
realized incomes from main operations amounting to RMB 1,135,069,800 and
comprehensive gross profit amounting to RMB 773,136,900. Breakdowns of incomes
from main operations and gross profit were as follows:
(1) Classified by industries
Income from real estate development was RMB 975,099,900 and gross profit was
RMB 739,784,300;
Income from property lease was RMB 22,385,200 and gross profit was RMB
11,557,300;
Income from property management was RMB 98,442,200 and gross profit was RMB
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5,969,900;
Income from taxi was RMB 27,322,500 and gross profit was RMB 14,115,000;
Income from catering was RMB 8,202,700 and gross profit was RMB 1,224,000;
Income from other business was RMB 3,617,300 and gross profit was RMB 486,300.
(2) Classified by regions:
Income in Shenzhen was RMB 1,086,541,400, taking up 95.72% of total incomes;
Income in other regions was RMB 48,528,400, taking up 4.28% of total incomes.
For the first half of 2011, the Company’s revenues and profit mainly came from its
real estate business in Shenzhen. Real estate income accounted for 85.91% of main
incomes.
(3) As for major products contributing a great deal to main business income or profit,
details of sales revenues, costs and gross profit rates are as follows:
Unit: RMB’000
Operating income Operating cost Gross profit rate
Increase/decrease Increase/decrease Increase/decrease
Industry over the same over the same Gross profit over the same
Amount Amount
period of last year period of last year ratio (%) period of last
(%) (%) year (%)
Real estate
975,099 76.54% 235,315 -38.66% 75.87 45.32
development
Property lease 22,385 -2.79% 10,827 29.00% 51.63 -11.92
Property
98,442 36.10% 92,472 39.02% 6.06 -1.98
management
Taxi 27,322 10.96% 13,207 8.97% 51.66 0.88
A. Income and the gross profit rate of real estate increased sharply because main real
estate projects sold and carried over in the reporting period and the period from a year
earlier were different, with selling prices of the former much higher than those of the
latter. B. Real estate development cost was much lower mainly because the total
project area sold and carried over in the reporting period was about 15,000 square
meters less than that in the same period of last year. C. The gross profit rate of
property lease dropped mainly because repair expenses on leased assets rose a lot in
the reporting period.
3. Particulars about suppliers and customers
In real estate development, the Company usually contracts a whole development
project to the constructor with the best offer in a bidding competition. Construction
materials are purchased by the chosen constructor. There were no big purchases
during the reporting period.
Commercial houses of the Company were mainly sold to individual customers. Sales
to the top five customers accounted for 1.01% of the Company’s total sales.
4. Explanation on great changes in profit breakdown, main business breakdown and
profitability in the reporting period
No substantial change took place in the Company’s profit breakdown, main business
breakdown and profitability during the reporting period. Sales income and net profit
increased by a large margin because the Company sold and carried over the
PRDShengang No. 1 Project. The project was located in Huanggang Port in
Shenzhen and targeted at high-end customers, which resulted in a relatively high
profit rate.
5. Other operating activities that have great influence on profit for the reporting period
There were no other such operating activities.
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6. Business and performance of the Company’s main subsidiaries and share-holding companies
Unit: RMB’000
Total assets Net assets Operating profit Net profit
Increase/decrease Increase/decrease Increase/decrease Increase/decrease
Company Registered
Main products compared to the compared to the compared to the compared to the
name capital Amount Amount Amount Amount
same period of same period of same period of same period of
last year (%) last year (%) last year (%) last year (%)
Development,
construction,
Shenzhen
operation, and
Huangchen
management
g Real 30,000 1,904,778 4.04 505,324 175.27 381,975 12489.82 290,801 9993.75
of supporting
Estate Co.,
companies in
Ltd
Huanggang
Port
Shenzhen
Wuye Real
Real estate
Estate 30,950 611,549 -7.29 66,199 177.79 14,209 -85.98 9,596 -87.96
development
Development
Co., Ltd.
Shenzhen Transportation
ITC Vehicle of
29,850 399,927 34.07 62,607 17.09 7,721 6.07 5,928 12.51
Industry passengers,
Company and taxi
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English Translation for Reference Only
A. Net assets, operating profit and net profit of Shenzhen Huangcheng Real Estate Co.,
Ltd. increased significantly mainly because the Shengang No. 1 Project sold and
carried over in the reporting period generated great profits while the Company sold
and carried over just some leftover houses of the Imperial Garden Project in the same
period of last year. B. Operating profit and net profit of Shenzhen Wuye Real Estate
Development Co., Ltd. decreased by a large margin mainly because the Company just
sold some leftover houses of the Xinhua Town Project in the reporting period. But the
subsidiary’s net assets increased, which was mainly due to earnings from the Xinhua
Town Project in the second half of last year and the reporting period.
7. Problems and difficulties in operation and countermeasures by the management
(1) Risks and countermeasures
① Policy and market risks
In the first half year of 2011, series of measures to regulate and control the real estate
market were promulgated by the government, causing great pressure on sales and
financing in the real estate industry. As influenced by policies including purchase
restriction, the turnover and trade prices of residences in some major cities were down
as compared with the same period of last year. However, house prices in some
relatively small and smaller cities are still rising, bring about another round of
measures for regulation and control.
In a short term, with measures including purchase restriction expanding to cities
where housing prices still go upward, it is estimated that measures to regulate the real
estate market will go further in the second half year. In future, there may be more
people tending to wait and see for investment and purchase in the market, sliding
turnover and trade prices, as well as depressing and accumulated rigid demand. In an
environment where the global economy is in a mess and slowly progressing, there
may be timing windows, for instance, the timeslot to wait for policies to come into
effect, when domestic policies for regulation and control are promulgated. The
Company thinks that the purpose of this round of regulation and control in the real
estate market is clear, and measures and approaches thereof are various – firstly,
demands are restrained thorough purchase restriction; secondly, property developers
are bounded by measures, such as shutdown of normal financing channels and
restriction to loans provided for purchasers, to get funds; thirdly, housing prices are
stabilized and even knocked down by the increasing house supply, which is
guaranteed by the expansion and acceleration of construction of security houses. As
for the second half year of 2011, it is widely agreed in the industry that, under the
pressure of regulation and control, housing market may be regulated in some regions,
and more relevant industries and regions may be thus affected.
Facing the serious situation of the real estate industry, the Company managed to
predict and make judgments, set targets and accomplish correspondent procedures,
and operate steadily. It arranged the utilization of funds on schedule and in order,
ensuring the safety of funds, normal operation of project, and the healthy development
of the enterprise. With the expectation of advance in policies including household
registration and the progress of urbanization, the future trend of the industry can be
analyzed behind market regulation – house prices in some regions are gradually
returning to a rational level, and the real estate industry shall develop healthily and
orderly with market regulation. The Company still holds cautious and optimistic
attitude towards the prospect of the real estate industry, and will continue to choose
and reserve high-quality land resources.
② Project development and risk control:
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According to the Company’s development strategy, and in order to reinforcing the
Company’s management in real estate business, making full use of resources,
integrating advantages, strengthening and enlarging the real estate business as the
main business, the Company will put two real estate companies in Shenzhen into
integrated administration, establish new departments in the headquarter, including
Cost Control Department and Planning and Design Department, carry out the focusing
strategy, concentrating on developing the main business, rationally and orderly
organize the operation and construction of real estate projects, take overall control of
the time schedule of all projects, strictly control key time points of projects and the
capital chain, organically form a system involving capital resources, capital utilization,
realization of income and profit in annual reports, as well as sustainable development
of projects, ensure normal and sustainable operation of the Company, and realize risk
management during the overall process of project development.
In respect of administration, the Company shall put more stress on refine management,
put cost control, project quality, brand construction, service strengthening, process
rebuilding, as well as system perfection as work highlights; and at the same time
ensure abundant capital, control finance risks, enhance internal strength, and prepare
core competiveness, so as to put itself in good response to the forever changing
market.
(2) Work focuses and countermeasure for possible risks of the Company for the
second half year
Differentiating from market changes after previous rounds of regulation and control,
demands, as well as purchase prices will be one of the main factors influencing house
sales in the second half year of 2011. However, non-market measures, including price
restriction in some regions, may result in sales slowdown and sliding sales profit,
putting certain effect on the realization of expected business targets of the Company.
Thorough analysis and judgment on future developing trend of the real estate industry,
and also putting positive fundamentals of the Company into consideration, the
Company shall, despite facing certain objective difficulties and risks in the market,
have full confidence in its development and put the nest step into practice, which is to
carry on its research on the industry environment, put great emphasis on internal
management, ensure financial security, and accomplish targets of the year. Work
focuses and countermeasure for possible risks of the Company for the second half
year are mainly as follows:
① To put capital into strictly concentrated management, effectively manage capital,
improve use efficiency, and control capital risks. As for industry development, capital
is the source of life. Considering that the main pressure of industry regulation
primarily comes from demand vacancies, and then comes from capital shortage, the
Company will raise capital by appropriately accelerating circulation, positively
financing, internally allocating resources and tapping potentialities, accelerating sales
progress of projects, reinforcing sales and so on, and at the same time try its best to
cut down capital cost and risks.
② To perfect internal control system, consummate system mechanism, intensify
executive force, and take precautions against systematic defects, as well as deviation
risks of progress execution. The Company will practically improve efficiency and
quality of operation of the enterprise by reinforcing cost control, product R&D,
product design, and so on; continue to modify and perfect the construction of internal
control system according to specific performance by approaches such as overall risk
management, construction of internal control, overall budget management, as well as
audit supervision; make each link in the management chain closely connected with
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each other by taking documented, systematic and sequencing control over positions,
authorities, and duties of each link in operation management; and strictly progress in
line with procedures, continually improve product quality and administration quality,
and make high-quality property.
③ To continue promoting the general counsel system of the Group, strictly control
contract risks and progress risks, timely propose risk warning analysis, take measures
to prevent and keep away risks, nip in the bud, improve risk management level by
enhancing the force of risk management, make full use of its advantages, enhance its
coping capacity, grab the initiative of competitions, and gradually make itself under
normal operation.
④ To innovate in operation ideas, administration systems, and product creation. In
respects of marketing strategies, service means, operation mechanism, product R&D,
and so on, the Company will reinforce innovation, strengthen the potential of
development, increase technological content and improve environment protection
standard in its real estate products, improve the competitiveness of products while
taking effective cost control, enhance the force of sales, accelerating capital return,
realize positive operation and development of the Company, and purchase and reserve
high-quality land while the market goes down.
⑤ To do well in post-project assessment and benchmarking management, and fully
improve development efficiency and quality of projects. In terms of major links, such
as design, engineering, investment, and sales service, the Company will put detailed
costs of projects into consideration, fully and deeply analyze existing problems during
the process of project development, summarize experience, propose advice, and
improve work; learn advanced experience from benchmarking real estate companies,
introduce, digest, and draw those companies’ experience while put the Company’s
actual situation into consideration, insist on centering around economic benefits,
thoroughly implement the following policy – “finding differences between
benchmarking companies and the Company, cutting down cost thorough
benchmarking management, constantly improving and increasing economic benefits,
and make high-quality products to win the market”, and continuously transcend itself,
so as to more effectively promote the level and standards of the Company’s work and
products to get close to the best level of the industry.
(III) Investment during the report period
1. There were no raised proceeds of the Company in the report period, neither was the
continuous usage of the early raised proceeds.
2. Significant investment projects from funds from non-financial activities, and their
progress and benefit.
Unit: RMB’000 Yuan
Estimated
total Investment in
Name of Project Project progress Sales
investment in 2011
the project
D block of
The roof has been sealed.
Huangyuyuan
514,000 38,460 Interior and outside —
(Langqiao
decoration is in progress.
International)
Caitianyise
Construction of the typical
(The project at 160,000 16,640 --
floor of the main body.
Caitian Road)
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Songhulangyuan
Pre-preparation for
(The project in 720,000 920 --
construction.
Dongguan)
Banshanyujing Preliminary work is close to
(The project in 670,000 18,000 the end. Construction is --
Xuzhou) about to be set up in August.
Total 2,064,000 74,020 — —
(Ⅳ) Completion progress of targets set for 2011
The Company disclosed in the 2010 Annual Report a planned operating income for
the year 2011 reaching RMB 1,340 million and a planned cost of 630 million. Up
until 30 Jun. 2011, an operating income of RMB 1,146,590,000 has been achieved,
which is mainly because the PRD-Shengang No. 1 Project developed by the Company
satisfied conditions for being carried over to income in the reporting period.
(V) About revising on operation plan in 2011
During the report period, the Company never revised operation plan in 2011 disclosed
in Annual Report 2010.
(VI) Warnings of possible loss or large-margin change of the accumulated net
profit made during the period from the beginning of the year to the end of the
next reporting period compared with the same period of the last year according
to prediction, as well as explanations on the reasons
In the reporting period, the PRDShengang No.1 Project constructed by the Company
satisfied conditions for being carried over to income. The income carried over
registered a sharp year-on-year increase over the carried-over income of PRDXinhua
Town Project, and the gross profit also hiked. Therefore, the Company estimates that
the accumulated net profit as at the end of the next reporting period will be in the
range of RMB 290 million and RMB 340 million, representing a year-on-year
increase of 114%~151%.
The above forecast is the initial estimate reckoned by the Company in accordance
with current sales situation of PRDShengangNo.1 Project. For actual profitability of
the Company in January to September of 2011, data in the 3rd Quarterly Report of
2011 shall prevail.
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Section VI Significant Events
(I) Particulars about corporate governance
During the reporting period, in strict compliance with the Company Law, the
Securities Law, the Stock Listing Rules of Shenzhen Stock Exchange, the Code for
Corporate Governance of Listed Companies and other laws and regulations, the
Company continued to improve corporate governance, better management capability,
strengthen information disclosure and regulate operation. The actual governance of
the Company was basically in line with requirements of relevant documents issued by
CSRC.
In the reporting period, the Company prepared Management System for Person(s) in
Charge of Finance and Work Bylaws for General Manager, further perfecting and
consummating internal control system of the Company.
(Ⅱ) Formulation and execution of internal control rules
The Company has formulated a system of legal, rational and effective internal control
rules based on its own operation characteristics.
In the report period, the Company conducted careful examinations on the internal
control of the Company in 2010 and disclosed the Self-evaluation Report on Internal
Control. All internal control rules of the Company have been effectively implemented,
which firmly guarantees normal operation of the Company. The Company will
continue to improve and regulate its corporate governance, increase management
capability, regulate operation and effectively prevent risks, so as to lay a good
foundation for long-term and healthy development of the Company.
(Ⅲ) Profit distribution and implementation
1. In accordance with resolutions of the Shareholders’ General Meeting 2010, the
Company would not distribute profit or turn capital reserves into share capital for the
year 2010.
2. For the first half of 2011 ended 30 Jun. 2011, the Company achieved a consolidated
net profit attributable to the parent company reaching RMB 299,688,854.39 with the
parent company achieving a net profit of RMB -8,283,043.80. As at 30 Jun. 2011, the
consolidated undistributed profit of the Company stood at RMB 448,650,518.79, with
the undistributed profit of the parent company standing at RMB -21,132,387.26.
Since the parent company is the main body of profit distribution, the Company
intends not to distribute profits or turn capital reserves into share capital for the first
half of 2011.
(Ⅳ) Significant lawsuits and arbitrations and equity of other listed companied
held
1. In the reporting period, no new significant lawsuit or arbitration events occurred
during the report period.
2. In the reporting period, the progress of the significant lawsuits and arbitrations
disclosed in the previous years:
(1) Concerning the case of “Jiyong Company” disclosed in the Annual Reports from
2000 to 2010
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
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to the Court for execution resumption when it finds that the executed party has
properties for execution.
(2) Regarding the case against Guomao Jewel & Gold Co., Ltd. (hereinafter referred
to as “GMJG”) located in Shengfeng Road, Shenzhen as disclosed in the Annual
Reports from 2005 to 2010.
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.
(3) With regard to the case of “Meisi Company Lawsuit” disclosed continuously by
the Company in the Annual Reports from 2004 to 2010
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. At present, the case is under
trial. And the Company disclosed the relevant progress of the case in the interim
public notice published at Securities Times, Ta Kung Pao and http://cninfo.com.cn
designated for information disclosure dated 23 Dec. 2009.
(4) Regarding the case of “Guarantee for Jintian” as disclosed in Annual Report from
2007 to 2010
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.
(5) 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, as well as the Annual Report 2010
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
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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 Property Co., Ltd. (hereinafter referred as “ Huaneng
Property”) 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 Property; 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.
(6) Concerning the “China Orient Asset Management Company Lawsuit” disclosed by
the Company in the Annual Reports from 2009 to 2010
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. On 13 May
2011, the Company received the (2009) SZFMECZ No. 77 Civil Judgment sent by
Shenzhen Intermediate Court. According to the judgment, the Company took no legal
liabilities in the case. For details, please refer to the interim public notices at
Securities Times, Ta Kung Pao and http://cninfo.com.cn dated on 30 Dec. 2009 and 17
May 2011.
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.
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2009.
In Jun. 2010, China Orient Asset Management withdrew the accusation against the
Company.
3. Equity of other listed companies the Company held
(1) Securities investment
Proportion Profits or
Initial Number
in total losses in
Securities Securities Short form investment of Book value
No. securities the report
variety code of securities amount shares at period-end
investment period
(RMB) held
(%) (RMB)
Shenzhen
1 000030 ST Sunrise 268,735.50 30,000 272,100.00 100.00 0.00
A stock
Other securities investment held at the
period-end
Profits or losses of securities sold in the
---- ---- ---- ---- 0.00
report period
Total 268,735.50 ---- 272,100.00 100.00 0.00
(2) Equity of other listed companies the Company held
Propo
rtion Profits Changes
in or of
Short Initial Book value
Securities equit losses owners’ Accounting
form of investment at Resource
code y of in the equity in subject
securities amount period-end
the report the report
Com period period
pany
Directional
Long-term
S*ST 0.33 purchase of
000509 2,962,500.00 802,199.55 0.00 0.00 equity
Huasu % corporate
investment
shares
Total 2,962,500.00 - 802,199.55 0.00 0.00
(V) Briefing and progress of the Company’s significant asset acquisition, sale and
mergers
In the reporting period, the Company did not conduct any significant asset mergers.
(VI) Related transactions
1. Related transaction incurred in reporting period
(1) 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. According to
the commitment of equity division reform and resolutions of the Shareholders’
General Meeting, Shenzhen Investment Holdings Co., Ltd., the Company’s
controlling shareholder (hereinafter referred to as Investment Holdings), should
provide the Company with cash support of no less than RMB 500 million. To fulfill
the commitment of equity division reform, Investment Holdings accumulatively
provided entrust loan of RMB 500 million to the Company. Following are the details:
① 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%.
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② On 26 Jan. 2011, Investment Holdings entrusted Shenzhen Jingtian Sub-branch of
China Everbright Bank to provide entrust loan of RMB 250 million for the
Company’s subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. with the expiry
date as 26 Jan. 2012 and annual interest rate as 5.5386%.
③ On 29 Mar. 2011, Investment Holdings entrusted Shenzhen Jingtian Sub-branch of
China Everbright Bank to provide entrust loan of RMB 200 million for the
Company’s subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. with the expiry
date as 29 Mar. 2012 and annual interest rate as 5.7767%.
④ On 29 Mar. 2011, Investment Holdings entrusted Shenzhen Jingtian Sub-branch of
China Everbright Bank to provide entrust loan of RMB 40 million for the Company’s
subsidiary Shenzhen ITC Vehicles Services Company with the expiry date as 29 Mar.
2012 and annual interest rate as 5.7767%.
(2) 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.
(hereinafter referred as “Investment Holdings”) 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., 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 and Significant Related
Transaction published on 17 Sep. 2010 and Resolutions on the First Special
Shareholders’ General Meeting for Y2010 published on 14 Oct. 2010.
On17 Nov. 2011, Investment Holdings transferred 20% of the difference between the
amount it had committed to pay and the amount it actually paid in the restructuring
action, which totaled to RMB 38,687,344.20; On 7 Jul. 2011, transfer procedures of
No. T102-0237 land in Moon Bay, the swap-in asset, were accomplished, and the No.
T102-0237 land in Moon Bay was then registered in the Company’s name. For details,
please refer to the Public Notice on Implementation of Commitment of Share Merger
Reform on Assets Replacement and Significant Related Transaction published on 18
Nov. 2010 and 11 Jul. 2011.
(3) From January to June in 2011, the Company paid interest of the entrust loan
amounting to RMB 9,120,000 to Shenzhen Investment Holdings Co., Ltd., the
Company’s actual controlling shareholder.
(4) On 13 May 2011, the 32nd Session of the 6th Board of Directors of the Company
reviewed and passed the Proposal on Providing Entrust Loan to Shenxin Taxi Co., Ltd.
For details, please refer to the Public Notice on Resolutions of the Board Session on
16 May 2011.
On 20 May 2011, Shenzhen International Trade Property Management Company, the
Company’s subsidiary, entrusted Shenzhen Branch of Ping An Bank to provide entrust
loan of RMB 9 million for Shenxin Taxi Co., Ltd., the subsidiary of the Company’s
controlling shareholder, with the expiry date as 20 May 2013 and annual interest rate
26
English Translation for Reference Only
as 6.40%. In the reporting period, the loan brought interest income of RMB 49,600.
Shenxin Taxi Co., Ltd., of which the Company holds 100% swap-in equity, is a
swap-in enterprise after the Company made commitment on share merger reform and
replaced assets. As at the end of the reporting period, relevant transfer procedures are
still in progress.
2. For the credits and liabilities between the Company and its related parties as at the
end of the reporting period, please refer to the Note （VI）. 6、7 Balance of accounts
receivable from and payable to related parties under the Notes to the financial
statements.
(VII) Significant contracts and implementation thereof
1. Significant contracts
(1) On 28 Jan. 2011, the Company obtained the use right of state-owned construction
land of No.676 plot located at Weiyang District, Yangzhou, Jiangsu Province by spot
auction with transaction price reaching RMB 9,015//M2 and an area of 67,872 square
meters. The Company disclosed the above event on 31 Jan. 2011 in the public notice
published in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
Whereafter, the Company entered into the Grant Contract of State-owned Land Use
Right with Yangzhou National Territory Resources Bureau.
(2) In Mar. 2011, the No.1 Management Bureau under Urban Planning Land and
Resources Commission of Shenzhen Municipality (hereinafter referred to as “party A”)
signed Supplementary Agreement of Grant Contract of Land Use Right of Shenzhen
Municipality with Shenzhen Longyuan Kaili Hengfeng Real Estate Co., Ltd.
(hereinafter referred to as “Longyuan Kaili”), Shenzhen Huaneng Jindi Property Co.,
Ltd. (hereinafter referred to as “Huaneng Property”), and the Company (hereinafter
referred to as “party B”). Agreements were reached as follows: ① Party A approved to
change transferees of the parcel of land to Longyuan Kaili and Huaneng Property;
②Longyuan Kaili and Huaneng Property accepted all rights, liabilities, and
obligations concerning the parcel of land, settled relations concerning transferred
houses by themselves, and assisted in handling relevant procedures; ③ Longyuan
Kaili and Huaneng Property committed to deal with pledges and pre-seizure existing
in the project. Longyuan Kaili and Huaneng Property shall handle any dispute resulted
from the change of transferees of the land use right, and assume legal and economic
liabilities thereof; ④ The Company owned the property of the 14th floor and the 15th
floor of the project, which belonged to commodity housing in nature and was in the
charge of Longyuan Kaili and Huaneng Property for construction and renovation
according to the unified handover standard of the project; ⑤ Land use age of the
parcel of land was adjusted to 50 years, ranging from 21 Feb. 2011 to 20 Feb. 2061.
For details, please refer to the Announcement on Signing a Supplementary Agreement
for the Contract on Transferring Land Use Rights of Jinlihua Commercial Plaza
disclosed by the Company on Securities Times, Ta Kung Pao (HK) and the website
designated for information disclosure （http://cninfo.com.cn）on 9 Mar. 2011.
(3) During the reporting period, there was no other significant transaction, trust,
contract or lease of assets.
2. Significant guarantees
(1) The Company provided a joint-liability guarantee for the long-term loan of RMB
240 million borrowed by Shenzhen Huangcheng Real Estate Co., Ltd. from the East
Shenzhen Sub-branch of China Agricultural Bank, and mortgaged the loan with its
27
English Translation for Reference Only
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 240 million, the loan will be due within
one year..
(2) The Company and its subsidiaries Shenzhen Property & Real Estate Development
Co., Ltd. and Shenzhen ITC Vehicles Industry Co., Ltd. provided a joint-liability
guarantee for the long-term loan of RMB 250 million borrowed by Shenzhen
Huangcheng Real Estate Co., Ltd. from the East Shenzhen Sub-branch of China
Agricultural Bank. The closing balance of the loan stood at RMB 93 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 Industry Co., Ltd. from Shenzhen
Hongbao sub-branch of Ping An Bank, and the closing balance of the loan stood at
RMB 22.10 million, the loan will be due within one year.
(4) The Company’s subsidiary Shenzhen ITC Vehicles Industry Co., Ltd. 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 5.2 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 30 Jun.
2011, the guarantee amount unsettled was RMB 535.50 million. The guarantee is that
the real estate developer provides petty proprietor with guarantee for purchasing of
commodity houses of the Company, which is a common phenomenon in this business.
3. Special explanation and independent opinion from independent directors on
capital occupation by related parties and provision of external guarantees by the
Company
Li Xiaofan, Dong Zhiguang and Zha Zhenxiang, all independent directors of the
Company, issued their independent opinion concerning the capital occupation by the
Company’s related parties and the provision of external guarantees by the Company.
In accordance with the Guiding Opinion of CSRC on Establishing Independent
Director System in Listed Companies, the Circular of Shenzhen Stock Exchange on
Disclosure of Semi-annual Report 2011 of Listed Companies and other laws and
regulations, as well as the Company’s Articles of Association and its Rules for
Independent Directors, we, as the independent directors of Shenzhen Properties &
Resources Development (Group) Ltd., conducted careful examinations on the
significant guarantees provided by the Company and the capital occupation by the
Company’s holding shareholder and other related parties in the first half of 2011.
Upon the examinations, we hereby expressed our independent opinions as follows:
A. During the report period, the Company provided RMB 9 million of capital
occupation to the subsidiary of its controlling shareholder, and with the closing
balance of RMB 9 million. In this case, Shenzhen ITC Property Management Co.,
Ltd., the Company’s subsidiary, entrusted Shenzhen Sub-branch of Ping An Bank to
provide RMB 9 million of entrust loan to the subsidiary of the Company’s controlling
shareholder— Shenxin Taxi Co., Ltd. on 20 May 2011, with the due date on 20 May
2013 and the annual interest rate at 6.40%. And the Company gained RMB 49,600 of
interest income from the aforesaid loan. Shenxin Taxi Co., Ltd. was the swap-in
enterprise with replacement of assets under the commitments of share division reform,
with 100% of swap-in equities. Up to 30 Jun. 2011, the relevant transfer procedures
was under handle.
B. The Company earnestly carried out regulations of Circular on Regulating External
28
English Translation for Reference Only
Guarantee of Listed Companies, strictly controlled risks from guarantees and the
specialist tracked in real time. The Company assured that procedure of
decision-making was legitimate, reasonable and fair and never damaged interest of
shareholders and the Company. Up to 30 Jun. 2011, all guarantees of the Company
were under controller. Total guarantee amount of the Company was RMB 355.10
million, all of which were under control and demand of routine business of the
Company.
4. Significant cash assets management the Company trusted other parties
There was no significant event of trusteeship of cash assets management in the report
period.
(VIII) Commitment made by the Company or shareholders holding over 5% of
shares (include 5%) 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.
Status of performance: 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 in share division 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
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English Translation for Reference Only
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 Construction Holdings and Investment Management
Company controlled by of 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 Division Reform on Assets Replacement
and Significant Related Transaction on 17 Sep. 2010, 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 on 14 Oct. 2010;
On 17 Nov. 2010, Investment Holdings has paid the Company 20% of the difference
between the value of swap-in assets and that of swap-out assets, i.e. RMB
38,687,344.20 according to its commitment.
On 7 Jul. 2011, the land T102-0237 located at Moon Bay, the swap-in assets, was
finished relevant transferring procedures and was registered under the name of the
Company. For details, please refer to Public Notice on Progress of Implementation of
Commitment of Share Division Reform on Assets Replacement and Significant
Related Transaction published on 11 Jul. 2011.
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English Translation for Reference Only
In Nov. 2009, 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 Within 24 months since non-tradable shares held by Construction Holdings and
Investment Management Company controlled by Investment Holdings acquired right
to trade, Investment Holdings 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 Management 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 Construction Investment
Holdings and Shenzhen Investment Management Co., Ltd. controlled by Shenzhen
Investment Holdings Co., Ltd., acquired right to trade.
On 18 Mar., 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 no less than RMB 500 million of
entrusted loan agreement, renewal of loan, borrow a new loan to repay old 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 2009 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 Industry Co., Ltd.; during the report period, 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.
(IX) The Company’s Semi-annual Report 2011 has not been audited.
(X) During the report period, punishment to the Company and its management
from securities regulatory authorities.
During the report period, the Company and its 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.
(XI) During the report period, no shareholder holding over 5% shares of the
Company made such commitments as voluntarily extending the trading
moratorium term, and setting or raising the lowest price for reducing
shareholding.
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English Translation for Reference Only
(XII) Researches, interviews and visits received by the Company in report period
1. In the report period, the Company received no field visits from institutional
investors. Instead, it received phone calls for consultation from a great number of
individual investors and some institutional investors.
Main discussion and materials
Reception time Reception place Reception way Visitor
provided
Communication by Whether the Company’s earnings in
27 Jan. 2011 The Office of BOD Individual investor
Telephone 2010 is better than 2009?
Whether the formalities of
Communication by
11 Feb. 2011 The Office of BOD Individual investor transferring the land of Moon Bay
Telephone
has been completed?
The Company’s stock trade
suddenly increased at the first 10
Communication by minutes of early quotation, whether
23 Feb. 2011 The Office of BOD Individual investor
Telephone the Company existed any
non-published significant
information?
The price of the Company’ share
surged to trade limit at the
Communication by
10 Mar. 2011 The Office of BOD Individual investor afternoon, whether the Company
Telephone
existed any non-published bull
information?
Communication by Will the Company make profit in
28 Apr. 2011 The Office of BOD Individual investor
Telephone 2011?
Communication by Will the projects of Langqiao
29 Apr. 2011 The Office of BOD Individual investor
Telephone Garden and Caitianyise be settled?
Will the Company’s buildings be
Communication by
2 May 2011 The Office of BOD Individual investor carried forward in the next half
Telephone
year?
What are the differences between
Communication by
9 May 2011 The Office of BOD Individual investor residents joining the partnership and
Telephone
Carrying forward?
Communication by Will the Company make profit in
21 Jun. 2011 The Office of BOD Individual investor
Telephone the first half year of 2011?
Communication by Did the Company suffer losses at
19 Jul. 2011 The Office of BOD Individual investor
Telephone the second quarter of 2011?
The Company answered the aforesaid phone calls for consultation in strict compliance
with requirements and principles of the Guide on Fair Information Disclosure for
Listed Companies, and protected the investors’ right to get the information equally.
All the investors were treated fairly and no undisclosed information was leaked to the
investors.
2. Index for information disclosed
Date of disclosure Serial No. Name
Public Notice on the Resolutions of the Board of Directors
24 Jan. 2011 2011-01
(the 29th Session of the 6th Board of Directors)
Public Notice on Acquiring the Use Right of Land Located
31 Jan. 2011 2011-02
at Weiyang District, Yangzhou City
Public Notice on Signing the Supplemented Agreement for
9 Mar. 2011 2011-03
Grant Contract on Use Right of Land of Jinlihua Square
Public Notice on Forecast of Earning Growth in the First
13 Apr. 2011 2011-04
Quarter of 2011
13 Apr. 2011 2011-05 Earnings Prediction for Y2010
Suggestive Public Notice on Releasing the Shares Subject to
13 Apr. 2011 2011-06
Trading Moratorium
Public Notice on the Resolutions of the Board of Directors
26 Apr. 2011 2011-07
(the 30th Session of the 6th Board of Directors)
Public Notice on Resolutions of the 19th Session of the 6th
26 Apr. 2011 2011-08
Supervisory Committee
Notice on Holding the Annual Shareholders’ General
26 Apr. 2011 2011-09
Meeting 2010
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English Translation for Reference Only
26 Apr. 2011 2011-10 Summary of Annual Report 2010
Public Notice on the Resolutions of the Board of Directors
30 Apr. 2011 2011-11 (the 31st Session of the 6th Board of Directors)
30 Apr. 2011 2011-12 The First Quarterly Report 2011
Public Notice on Resolutions of the 20th Session of the 6th
30 Apr. 2011 2011-13 Supervisory Committee
Public Notice on the Company’s CPAs Firm Changed Its
5 May 2011 2011-14
Name and Office Address
Public Notice on the Resolutions of the Board of Directors
16 May 2011 2011-15
(the 32nd Session of the 6th Board of Directors)
Public Notice on the Progress of China Orient Asset
17 May 2011 2011-16
Management Company Lawsuit
Public Notice on Resolutions of the Annual Shareholders’
23 May 2011 2011-17
General Meeting 2010
Public Notice on the Resolutions of the Board of Directors
27 May 2011 2011-18
(the 33rd Session of the 6th Board of Directors)
Circular on Convening the First Special Shareholders’
27 May 2011 2011-19
General Meeting for Y2011
27 May 2011 2011-20 Statement of Independent Director Nominatees
27 May 2011 2011-21 Statement of Independent Director Candidates
Public Notice on Resolutions of the 21st Session of the 6th
27 May 2011 2011-22
Supervisory Committee
Public Notice on the Resolutions of the First Special
16 Jun. 2011 2011-23
Shareholders’ General Meeting for Y2011
Public Notice on Resolutions of the 1st Session of the 7th
22 Jun. 2011 2011-24
Board of Directors
Public Notice on Resolutions of the 1st Session of the 7th
22 Jun. 2011 2011-25
Supervisory Committee
Events after balance sheet date
Public Notice on Progress of Implementation of
11 Jul. 2011 2011-26 Commitment of Share Division Reform on Assets
Replacement and Significant Related Transaction
Suggestive Public Notice on Releasing the Shares Subject to
12 Jul. 2011 2011-27
Trading Moratorium
20 Jul. 2011 2011-28 Public Notice on Change of Sponsor Deputy
(XIII) 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 30 Jun. 2011, the relevant works were under handle.
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 “(IV). 2. (3)” in this chapter.
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.
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English Translation for Reference Only
3. Restrictions on the total 2,667,247 shares subject to trading moratorium held by
shareholders, including Shanghai Zhaoda Investment Consultant Co., Ltd., Hainan
Weibang Investment and Development Co., Ltd., Shanghai Kunling Industrial and
Trade Co., Ltd., and Shenzhen Tongsheng Industrial Co., Ltd., were released due to
expiration of the restriction period. For details, please refer to the Company’s
Suggestive Public Notice on Releasing the Shares Subject to Trading Moratorium on
13 Apr. 2011 in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
4. Restrictions on the total 2,514,781 shares subject to trading moratorium held by
shareholders of Shenzhen ITC Property Management Co., Ltd. were released due to
expiration of the restriction period. For details, please refer to the Company’s
Suggestive Public Notice on Releasing the Shares Subject to Trading Moratorium on
12 Jul. 2011 in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
5. In order to implement 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 fully carried out the construction work of enterprise internal
control system, and formed leading team on construction of enterprise internal control
system, and formulated the Scheme on Overall Construction of Enterprise Internal
Control System, which was reviewed and approved by the 31st Session of the 6th
Board of Directors as well as disclosed; Meanwhile, the Company engaged BDO
China Shu Lun Pan Certified Public Accountants LLP as professional consultant
agency to provide guidance for the Company to undertake check for internal control
operation system in accordance with Basic Standards for Enterprise Internal Control
and Application Guidance of Enterprise Internal Control.
Up to the date of this public notice, as for the overall construction work of enterprise
internal control, the Group and its subsidiaries—Shenzhen Huangcheng Real Estate
Co., Ltd., Shenzhen ITC Property Management Co., Ltd., Shenzhen Property and Real
Estate Development Co., Ltd. and Shenzhen ITC Vehicles Industry Co., Ltd. has
finished the relevant work such as interviews, collection of resources, unscrambling
the business processes and making of risk lists, and now they are finding the deficits
of enterprise internal control.
6. Wuhan Zhonghuan Certified Public Accountants Co., Ltd. which provides annual
auditing service for the Company changed its name as BDO Wuhan Zhonghuan
Certified Public Accountants Co., Ltd. with the new office address as Zhonghuan
Building, No. 169 Donghu Road, Wuchang District, Wuhan. For details, please refer
to the Public Notice on the Company’s CPAs Firm Changed Its Name and Office
Address on 5 May 2011 published on Securities Times, Ta Kung Pao and
http://cninfo.com.cn.
7. Mr. Yao Xiaoping, the sponsor deputy of the Company’s share division reform
project, left the Company’s sponsor institution for share division reform— Essence
Securities Co., Ltd. due to job change. Then Essence Securities Co., Ltd. arranged Mr.
Ju Zeyun to take over his post for continual supervising the Company’s share division
reform. For details, please refer to the Public Notice on Change of Sponsor Deputy for
Share Division Reform on 20 Jul. 2011 published on Securities Times, Ta Kung Pao
and http://cninfo.com.cn.
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English Translation for Reference Only
8. 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.
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English Translation for Reference Only
Section VII Financial Report
I. Financial report of the report period had not been audited.
II. Financial statement
1. Balance sheet (attached)
2. Income statement (attached)
3. Cash flow statement (attached)
4. Statement of Changes in Owners’ Equity(attached)
III. Notes to the financial statements (attached)
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English Translation for Reference Only
Section VIII Documents Available for Reference
I. Text of the Semi-Annual Report 2011 with the signature of Legal
Representative;
II. Financial statement with the signatures and stamps of legal representative,
the person in charge of accounting and manager of financial department;
III. Texts of all the public notices disclosed in the report period on Securities
Times and Ta Kung Pao;
The aforesaid documents are prepared and placed in Office of the Board of Directors,
42/F, International Trade Center, Renmin South Road, Luohu District, Shenzhen.
Board of Directors
Shenzhen Properties & Resources Development (Group) Ltd.
31 Jul. 2011
37
English Translation for Reference Only
Balance Sheet
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. As at 30 Jun. 2011 Unit: RMB Yuan
Closing balance Opening balance
Items Notes
Consolidation The Company Consolidation The Company
Current Assets:
Monetary fund （V）1 446,585,257.08 160,114,074.98 534,418,695.36 78,920,447.75
Transactional financial assets （V）2 272,100.00 272,100.00 272,100.00 272,100.00
Notes receivable （V）3 300,000.00
Accounts receivable （V）4 76,828,194.74 58,645,723.19 67,935,785.29 59,680,032.75
Accounts paid in advance （V）6 391,083,162.72 390,111,115.86 49,360,431.87
Dividends receivable
Other receivables （V）5 37,431,732.20 267,515,304.44 37,787,880.10 558,839,822.28
Financial assets purchased under
agreement to resell
Inventories （V）7 1,414,805,616.50 56,594,638.32 1,576,183,305.38 56,594,638.32
Non-current assets due within 1
year
Other current assets
Total current assets 2,367,006,063.24 933,252,956.79 2,266,258,198.00 754,307,041.10
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 82,069,526.83 301,480,026.83 81,390,188.20 250,800,688.20
Investing property （V）10 300,063,314.41 204,700,927.86 295,584,704.09 205,439,020.58
Fixed assets （V）11 69,415,898.81 30,117,252.82 78,112,745.51 35,645,685.39
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets （V）12 103,302,907.67 106,563,665.92
R&D expenses
Goodwill
Long-term deferred expenses 2,075,714.67 2,075,714.67 2,162,202.81 2,162,202.81
Deferred tax assets （V）13 109,521,482.63 83,209,649.31
Other non-current assets （V）14 9,000,000.00 195,000,000.00
Total non-current assets 675,448,845.02 733,373,922.18 647,023,155.84 494,047,596.98
Total assets 3,042,454,908.26 1,666,626,878.97 2,913,281,353.84 1,248,354,638.08
Current Liabilities:
Short-term borrowings （V）17 550,096,450.00 10,000,000.00
Transactional financial liabilities
Notes payable
Accounts payable （V）18 97,684,187.85 34,130,905.87 105,465,038.93 34,423,717.04
Account received in advance （V）19 28,734,267.71 475,578.00 878,660,737.46 79,725.48
Financial assets sold under
agreements to repurchase
Handling charges and
commissions payable
Payroll payable （V）20 35,809,879.39 8,066,613.34 53,817,405.36 9,636,557.03
Taxes payable （V）21 507,080,874.51 1,373,808.91 195,585,180.87 1,264,740.40
Dividends payable
Interests payable
Other payables （V）22 232,581,437.35 936,677,017.59 229,549,997.54 508,763,899.07
Non-current liabilities due within
（V）23 310,200,000.00 250,960,000.00
1 year
Other current liabilities
Total current liabilities 1,762,187,096.81 980,723,923.71 1,724,038,360.16 554,168,639.02
38
English Translation for Reference Only
Non-current Liabilities:
Long-term borrowings （V）24 212,000,000.00
Bonds payable
Long-term payables
Specific purpose account
payables
Estimated liabilities
Deferred tax liabilities （V）13 3,259,675.80 807.48 807.48 807.48
Other non-current liabilities （V）25 102,948,566.90 2,429,164.54 102,194,477.26 2,429,164.54
Total non-current liabilities 106,208,242.70 2,429,972.02 314,195,284.74 2,429,972.02
Total liabilities 1,868,395,339.51 983,153,895.73 2,038,233,644.90 556,598,611.04
Owners’ equity (or shareholders’
Equity):
Paid-in capital (or share 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 64,020,275.72 38,914,227.99
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）29 448,650,518.79 -21,132,387.26 148,961,664.40 -12,849,343.46
Foreign exchange difference -5,164,455.33 -4,487,460.75
Total owners’ equity attributable
1,173,197,481.69 683,472,983.24 874,185,621.88 691,756,027.04
to parent company
Minority interest 862,087.06 862,087.06
Total owner’s equity 1,174,059,568.75 683,472,983.24 875,047,708.94 691,756,027.04
Total liabilities and owner’s equity 3,042,454,908.26 1,666,626,878.97 2,913,281,353.84 1,248,354,638.08
Income Statement
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Jan.-Jun. 2011 Unit: RMB Yuan
Jan.-Jun. 2011 Jan.-Jun. 2010
Items Notes
Consolidation The Company Consolidation The Company
I. Total operating revenues 1,146,591,748.07 18,167,414.59 697,428,583.67 17,749,203.17
Including: Sales income （V）30 1,146,591,748.07 18,167,414.59 697,428,583.67 17,749,203.17
II. Total operating cost 751,278,091.75 29,523,973.42 553,077,908.86 -4,258,704.82
Including: Cost of sales （V）30 364,020,033.56 9,305,983.12 484,094,910.86 6,724,019.13
Taxes and associate charges （V）31 334,516,034.85 2,638,254.38 55,987,291.87 1,044,046.92
Selling and distribution
（V）32 7,800,071.81 5,750,823.99
expenses
Administrative expenses （V）33 40,600,226.81 16,940,118.01 33,364,276.21 13,809,239.79
Financial expenses （V）34 4,842,829.37 503,880.15 -112,265.18 1,584,483.40
Asset impairment loss （V）35 -501,104.65 135,737.76 -26,007,128.89 -27,420,494.06
Add: Gain/(loss) from change in fair
（V）36 39,900.00 39,900.00
value (“-” means loss)
Gain/(loss) from investment （V）37 728,938.63 3,757,738.63
39
English Translation for Reference Only
(“-” means loss) 2,162,387.76 2,162,387.76
Including: share of profits in 622,481.40 622,481.40
679,338.63 679,338.63
associates and joint ventures
Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss) 396,042,594.95 -7,598,820.20 146,552,962.57 24,210,195.75
Add: non-operating income （V）38 939,663.41 89,247.07 6,584,473.90 2,592,417.93
867,883.32
Less: non-operating expense （V）39 773,470.67 226,870.06 -275,311.32
Including: loss from non-current
21,155.77 47,253.80 1,173.62
asset disposal
IV. Total profit (“-” means loss) 396,114,375.04 -8,283,043.80 152,910,566.41 27,077,925.00
Less: Income tax expense （V）40 96,425,520.65 26,158,142.89
V. Net profit (“-” means loss) 299,688,854.39 -8,283,043.80 126,752,423.52 27,077,925.00
Attributable to owners of the
299,688,854.39 -8,283,043.80 126,752,423.52 27,077,925.00
Company
Minority shareholders’ income
VI. Earnings per share
0.2127 0.0454
(I) Basic earnings per share （V）41 0.5029 -0.0139
(II) Diluted earnings per share （V）41 0.5029 -0.0139 0.2127 0.0454
Ⅶ. Other comprehensive incomes （V）42 -676,994.58 -244,754.36
Ⅷ. Total comprehensive incomes 299,011,859.81 -8,283,043.80 126,507,669.16 27,077,925.00
Attributable to owners of the
299,011,859.81 -8,283,043.80 126,507,669.16 27,077,925.00
Company
Attributable to minority
shareholders
Cash Flow Statement
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Jan.-Jun. 2011 Unit: RMB Yuan
Jan.-Jun. 2011 Jan.-Jun. 2010
Items Notes
Consolidation The Company Consolidation The Company
Ⅰ.Cash flows from operating
activities:
Cash received from sale of
commodities and rendering of 315,949,761.89 18,502,177.06 714,318,827.68 360,650.31
service
Net increase of disposal of
transactional financial assets
Tax refunds received
Other cash received relating to
（V）43 34,676,208.44 925,014,502.58 21,789,909.96 10,548,995.85
operating activities
Subtotal of cash inflows from
350,625,970.33 943,516,679.64 736,108,737.64 10,909,646.16
operating activities
Cash paid for purchase of
commodities and reception of 549,328,105.78 392,035,919.29 425,507,670.13 47,420.36
service
Cash paid to and for employees 108,175,599.81 10,147,785.42 91,922,579.85 151,646.50
Various taxes paid 103,292,538.33 3,756,069.19 134,131,780.63 59,001.14
Other cash paid relating to
（V）43 32,800,739.03 212,918,191.72 35,219,395.28 10,490,126.04
operating activities
Subtotal of cash outflows from 793,596,982.95 618,857,965.62
40
English Translation for Reference Only
operating activities 686,781,425.89 10,748,194.04
Net cash flows from operating
-442,971,012.62 324,658,714.02 49,327,311.75 161,452.12
activities
Ⅱ. Cash flows from investing
activities:
Cash received from disposal of 1,550,000.00
investments
Cash received from obtaining
49,600.00 3,078,400.00
investment income
Net cash received from disposal of
fixed assets, intangible assets and 1,000.00 903,120.00
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
50,600.00 3,078,400.00 2,453,120.00
investing activities
Cash paid to acquire fixed assets,
intangible assets and other 3,143,536.28 1,543,362.00 17,056,128.48 152,154.58
long-term assets
Cash paid for investment 9,000,000.00 245,000,000.00
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
12,143,536.28 246,543,362.00 17,056,128.48 152,154.58
investment activities
Net cash flows from investing
-12,092,936.28 -243,464,962.00 -14,603,008.48 -152,154.58
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 540,096,450.00 212,000,000.00
Cash received from issuance of
bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from
540,096,450.00 212,000,000.00
financing activities
Repayment of borrowings 152,760,000.00 354,760,000.00
Cash paid for interest expenses
and distribution of dividends or 19,181,005.02 15,051,190.87
profit
Including: dividends or profit
paid by subsidiaries to minority
shareholders
Other cash payments relating
（V）43 822,200.00 1,162,500.00
to financing activities
41
English Translation for Reference Only
Sub-total of cash outflows from
172,763,205.02 370,973,690.87
financing activities
Net cash flows from financing
367,333,244.98 -158,973,690.87
activities
IV. Effect of foreign exchange rate
changes on cash and cash -102,734.36 -124.79 -43,517.06 -123.92
equivalents
V. Net increase in cash and cash
-87,833,438.28 81,193,627.23 -124,292,904.66 9,173.62
equivalents
Add: Cash and cash
（V）43 534,418,695.36 78,920,447.75 830,055,588.25 2,539,358.76
equivalents at the period-begin
VI. Cash and cash equivalents at the
（V）43 446,585,257.08 160,114,074.98 705,762,683.59 2,548,532.38
period-end
Consolidated Statement of Changes in Owners’ Equity
June 2011
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amount for current period (Jun. 2011)
Owners’ equity attributable to shareholders of the Company
Le
Items ss: Minority Total owners’
Paid-in capital tre interests equity
Capital Surplus
(or share asu Retained profit Others (note)
reserve reserve
capital) ry
sto
ck
I. Balance at the
end of the 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
previous year
Add: change of
accounting policy
Correction of
errors in previous
periods
Others
II. Balance at the
beginning of the 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
year
III. Increase/
decrease of
amount in the 299,688,854.39 -676,994.58 299,011,859.81
year (“-” means
decrease)
(I) Net profit 299,688,854.39 299,688,854.39
(II) Other
comprehensive -676,994.58 -676,994.58
incomes
Subtotal of (I)
299,688,854.39 -676,994.58 299,011,859.81
and (II)
(III) Capital paid
42
English Translation for Reference Only
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
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 1,174,059,568.7
595,979,092.00 64,020,275.72 69,712,050.51 448,650,518.79 -5,164,455.33 862,087.06
balance 5
Note: Item “Other” is foreign exchange difference.
Consolidated Statement of Changes in Owners’ Equity (Continued)
June 2011
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Amount for previous period (Jun. 2010)
Owners’ equity attributable to shareholders of the Company
Les
Items s: Minority Total owners’
trea interests equity
Paid-in capital Capital Surplus
sur Retained profit Others (note)
(or share capital) reserve reserve
y
stoc
k
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
43
English Translation for Reference Only
policy
Correction of
errors in
previous
periods
Others
II. Balance at -
the beginning 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
of the year
III. Increase/
decrease of
amount in the
126,752,423.52 -244,754.36 126,507,669.16
year (“-”
means
decrease)
(I) Net profit 126,752,423.52 126,752,423.52
(II) Other
-244,754.36 -244,754.36
comprehensiv
e incomes
Subtotal of (I)
126,752,423.52 -244,754.36 126,507,669.16
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
distribution
1.
Appropriation
s to surplus
reserves
2.
Appropriation
s 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)
44
English Translation for Reference Only
from surplus
reserves
3. Surplus
reserves for
making up
losses
4. Other
IV. Closing
595,979,092.00 25,332,931.52 69,712,050.51 100,715,553.13 -3,789,404.88 862,087,06 788,812,309.34
balance
Note: Item “Other” is foreign exchange difference
Statement of Changes in Owners’ Equity
June 2011
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. (the Company) Unit: RMB Yuan
Amount for current period (Jun. 2011)
Owners’ equity attributable to shareholders of the Company
Les
Items s: Minority Total owners’
Paid-in capital Capital trea Surplus interests equity
Retained profit Others
(or share capital) reserve sury reserve
stoc
k
I. Balance at the
end of the previous 595,979,092.00 38,914,227.99 69,712,050.51 -12,849,343.46 691,756,027.04
year
Add: change of
accounting policy
Correction of
errors in previous
periods
Others
II. Balance at the
beginning of the 595,979,092.00 38,914,227.99 69,712,050.51 -12,849,343.46 691,756,027.04
year
III. Increase/
decrease of amount
-8,283,043.80 -8,283,043.80
in the year (“-”
means decrease)
(I) Net profit -8,283,043.80 -8,283,043.80
(II) Other
comprehensive
incomes
Subtotal of (I) and
-8,283,043.80 -8,283,043.80
(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
45
English Translation for Reference Only
(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. Others
IV. Closing
595,979,092.00 38,914,227.99 69,712,050.51 -21,132,387.26 683,472,983.24
balance
Statement of Changes in Owners’ Equity (Continued)
June 2011
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. (the Company) Unit: RMB Yuan
Amount for previous period (Jun. 2010)
Owners’ equity attributable to shareholders of the Company
Les
Items s: Minority Total owners’
Paid-in capital Capital trea Surplus interests equity
Retained profit Others
(or share capital) reserve sury reserve
stoc
k
I. Balance at the
595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
end of the previous
year
Add: change of
accounting policy
Correction of
errors in previous
periods
Others
II. Balance at the
595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
beginning of the
year
III. Increase/
decrease of amount 27,077,925.00 27,077,925.00
in the year (“-”
means decrease)
46
English Translation for Reference Only
27,077,925.00 27,077,925.00
(I) Net profit
(II) Other
comprehensive
incomes
Subtotal of (I) and 27,077,925.00 27,077,925.00
(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
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 595,979,092.00 661,163,767.78
226,883.79 69,712,050.51 -4,754,258.52
balance
47
English Translation for Reference Only
NOTES TO THE FINANCIAL STATEMENTS
As of June 30, 2011
Note I. Corporate information
Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter referred to as the
“Company”) was a company limited by shares incorporated based on the reconstruction of
Shenzhen Properties & Resources Development Co., Ltd. upon approval by the Document ZFBF
[1991] No. 831 from the People’s Government of Shenzhen Municipality. The business
registration number is 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. Fan Mingchun and the registered capital is RMB 4 billion. Its main
business scope is providing guarantee to municipal state-owned enterprises, management of
state-owned equity, assets reorganization, reformation, capital operation, and equity investment of
enterprises and etc. As a government department, Shenzhen State-owned Assets Supervision and
Administration Commission manage Shenzhen Investment Holdings Co., Ltd. on behalf of
People’s Government of Shenzhen Municipality. Thus, the final controller of the Company is
Shenzhen State-owned Assets Supervision and Administration Commission.
5. Authorization and date of issuing the financial statements
The financial statements were approved and authorized for issue by the 20th session of the
Company’s Seventh Board of Directors on July 29, 2011.
Note II. Main Accounting Policies and Accounting Estimation
1. Basis of preparation for 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.
48
English Translation for Reference Only
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 and liabilities that the combining party obtained in a business combination shall be
measured on their carrying amount in the combined party on the combining date. The difference
between the carrying amount of net assets acquired by the combining party and the carrying
amount of the consideration paid by it (or the total par value of the shares issued) shall be adjusted
to capital surplus. If the capital surplus is not sufficient for adjustment, retained earning is adjusted
respectively. The business combination costs that are directly attributable to the combination, such
as audit fees, valuation fees, legal service fees and so on are recognized in profit or loss during the
current period when they occurred. The bonds issued for a business combination or the handling
fees, commissions and other expenses for bearing other liabilities shall be recorded in the amount
of initial measurement of the bonds or other debts. The handling fees, commissions and other
expenses for the issuance of equity securities for the business combination shall be credited
against the surplus of equity securities; if the surplus is not sufficient, the retained earnings shall
be offset. Where a relationship between a parent company and a subsidiary company is formed
due to a business combination, the parent company shall, on the combining date, prepare
consolidated financial statements according to the accounting policy of the Company.
(2) The Company adopts acquisition method for business combination not under common control.
The acquirer shall recognize the cost of combination under the following principles: ① 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; ② For the business combination involving more than one exchange transaction, the
equity of the acquiree held by the acquirer before the acquisition date shall be treated differently in
the individual financial statements and the consolidated statements:
A. In the individual financial statements, the initial cost of the investment shall be the aggregate of
the carrying amount of the equity investment held by the acquirer in the acquiree before the
acquisition date and the cost of the newly-made investment on the acquisition date; Where the
equity held by the acquirer in the acquiree before the acquisition date involves other
comprehensive incomes, the involved other comprehensive incomes (for example, the fair value
changes of available-for-sale financial assets that are recorded in capital reserves; same below)
shall be transferred into current investment gains when disposing the equity investment.
B. In the consolidated financial statements, the equity held by the acquirer in the acquiree before
the acquisition date shall be re-measured according to the equity’s fair value on the acquisition
date, and the difference between the fair value and the carrying amount shall be recorded into
current investment gains; Where the equity held by the acquirer in the acquiree before the
acquisition date involves other comprehensive incomes, the involved other comprehensive
incomes shall be transferred into current investment gains of the acquisition date. The acquirer
shall disclose in the notes to financial statements the fair value on the acquisition date of the equity
held by it in the acquiree before the acquisition date, as well as the gains/losses arising from the
re-measurement of fair value.
③ The acquirer shall recognize intermediary expenses (expenses on audit, legal service,
assessment & consulting, etc.) and other relevant management expenses incurred for the business
combination into current gains and losses on the occurrence; The acquirer shall recognize the
trading expenses on equity securities or debt securities issued by it as the consideration for the
business combination into the initial recognition amount of the equity securities or debt securities.
④ 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
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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. (i) 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; (ii)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
The consolidation scope covers all subsidiaries under the Company’s control.
When the parent owns, directly or indirectly through subsidiaries, more than half of the voting
power of the investee company, the investee company is regarding as subsidiary and included in
the consolidated financial statements. If the parent owns half or less of the voting power of an
entity when there is any following condition incurred, the investee company is regarding as
subsidiary and included consolidated financial statements.
A. power over more than half of the voting rights by virtue of an agreement with other investors;
B. power to govern the financial and operating policies of the entity under a statute or an
agreement;
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 shall 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 intra-group
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
In the consolidated financial statements, where the current losses of a subsidiary attributable to
minority shareholders exceed the share attributable to minority shareholders in the subsidiary’s
opening owners’ equity, the difference shall offset minority interests.
（5）Increase or decrease of the subsidiaries
For any subsidiary acquired by the Company through business combination under the common
control, when the consolidated balance sheet for the current period are being prepared, the amount
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at the beginning of the period in the consolidated balance sheet is made corresponding
modification. For addition business combination not under common control during the reporting
period, the Company makes no adjustment for the amount at the beginning of the period in the
consolidated balance sheet. When disposing subsidiary during the reporting period, the Company
makes no adjustment for the amount at the beginning of the period in the consolidated balance
sheet.
For any subsidiary acquired by the Company through business combination under 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, cash
flow 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, cash flow 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, cash flow for the period from the beginning to
the disposal date is included in the consolidated cash flow statement.
7. Cash and cash equivalent
Cash equivalent is defined as the short-term (normally matured within three months after
purchased date), highly-liquid investment which is easily transferred into cash and has low risk of
change of value.
8. Foreign currency translations
Any transaction is converted into the accounting standard currency according to the approximate
exchange rate of the sight rate on the occurrence date of the transaction. The Company adopts the
middle exchange rate announced by the People's Bank of China at last year end as current
exchange rate.
(1) Foreign currency exchange difference
On balance sheet date, the Company accounts for monetary and non-monetary items denominated
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
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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 recognizes a financial asset or financial liability on its balance sheet when, and only
when, the Company becomes a party to the contractual provisions of the instrument.
(2) Classification and measurement of financial 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 recognized 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 recognized in profit or
loss when it incurred and relevant transaction costs are recognized as expense when it incurred.
For other financial assets, the transaction costs are recognized 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 recognizes 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 amortized cost using the effective interest
method. A gain or loss is recognized in profit or loss during the current period when the financial
asset is derecognized or impaired and through the amortization process.
C. Loans and receivables are measured at amortized cost using the effective interest method. A
gain or loss is recognized in profit or loss during the current period when the financial asset is
derecognized or impaired and through the amortization 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 recognized as capital reserve which
is transferred into profit or loss when it is impaired or derecognized. Interests or cash dividends
during the holding period are recognized in profit or loss for the current period.
④ Impairment of financial assets
A. The Company assesses the carrying amount of the financial assets except the financial asset
at fair value through profit or loss at each balance sheet date, if there is any objective evidence that
a financial asset or group of financial assets is impaired, the Company shall recognize impairment
loss.
B. The objective evidences that the Company uses to determine the impairment are as follows:
a）significant financial difficulty of the issuer or obligor;
b）a breach of contract, such as a default or delinquency in interest or principal payments;
c）the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting
to the borrower a concession that the lender would not otherwise consider;
d）it becoming probable that the borrower will enter bankruptcy or other financial reorganization;
e）the disappearance of an active market for that financial asset because of financial difficulties;
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.
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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 amortized cost has been incurred, the amount of the loss is measured as the
difference between the asset's carrying amount and the present value of estimated future cash
flows. The amount of the loss is recognized 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 recognized 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 recognized, the previously
recognized impairment loss of financial asset measured at amortized cost is be reversed. The
amount of the reversal is recognized 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 recognized
directly in equity, the cumulative loss that had been recognized directly in equity is removed from
equity and recognized in profit or loss even though the financial asset has not been derecognized.
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be reliably measured, or on
a derivative asset that is linked to and must be settled by delivery of such an unquoted equity
instrument, the amount of the impairment loss is measured as the difference between the carrying
amount of the financial asset and the present value of estimated future cash flows discounted at the
current market rate of return for a similar financial asset. Such impairment losses are recognized 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 recognized in profit or loss, the impairment loss is reversed, with the amount of the
reversal recognized in profit or loss of the current period.
Impairment losses recognized 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 recognized as expense when it
incurred. For the other financial liabilities, relevant transaction costs are recognized 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 recognizes a financial liability at fair value through profit or loss at its fair value. A gain
or loss of change in fair value is recognized in the profit or loss of the current period.
B. Other financial liabilities are measured by amortized cost using effective interest rate.
(4) Fair value measurement consideration
①If there is an active market for the financial instrument, the fair value is quoted prices in the
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active market.
②If the market for a financial instrument is not active, the Company establishes fair value by
using a valuation technique.
(5) Recognition and measurement of financial assets transfer
The Company derecognizes 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 recognized 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 recognized
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 recognized and the part that is derecognized, based on the
relative fair values of those parts on the date of the transfer. The difference between the follows is
recognized in profit or loss of the current period.
①the carrying amount allocated to the part derecognized;
②the sum of the consideration received for the part derecognized and any cumulative gain or loss
allocated to it that had been recognized directly in equity (including financial assets transferred to
available for sale category).
Accumulative gain or loss that had been recognized in equity is allocated between the part that
continues to be recognized and the part that is derecognized, based on the relative fair values of
those parts.
If a transfer does not qualify for derecognition, the Company continues to recognize the
transferred asset in its entirety and shall recognize a financial liability for the consideration
received.
When the Company continues to recognize a financial asset to the extent of its continuing
involvement, the Company also recognizes 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. Recognition and withdrawal of bad-debt provisions for receivables
(1) Individually significant receivables for which bad-debt provisions are made individually
Criteria or amount standard for an individually Any receivable that is individually over RMB
significant receivable two million (inclusive)
On the balance sheet date, an independent
impairment test will be carried out on the
receivable. In case of any impairment upon the
Making individual bad-debt provision for an test, the impairment loss shall be recognized
individually significant receivable and the bad-debt provision shall be made
according to the positive difference between the
present value of the receivable’s future cash
flows and its carrying amount.
(2) Receivables for which bad-debt provisions are made on the group basis
Grouping criteria
Receivables of property management subsidiaries
with similar credit risk, excluding those with
Group 1
relatively high credit risk and for which bad-debt
provisions have been made individually
Receivables of other subsidiaries than property
management subsidiaries, excluding those with
Group 2
relatively high credit risk and for which bad-debt
provisions have been made individually
Making bad-debt provisions on the group basis
Group 1 The outstanding percentage method
On the balance sheet date, an independent
Group 2
impairment test will be carried out on the
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receivable based on importance. In case of any
impairment upon the test, the impairment loss shall
be recognized and the bad-debt provision shall be
made according to the positive difference between
the present value of the receivable’s future cash
flows and its carrying amount. Where there is no
impairment upon the test, no bad-debt provision
shall be made.
For receivable groups for which bad-debt provisions are made with the outstanding percentage
method:
Group name Bad-debt provision
Bad-debt provision percentage
percentage for receivables
for other receivables (%)
(%)
Group 1 3.00 3.00
(3) Individually insignificant receivables for which bad-debt provisions are made individually
When there are objective evidences proving
When individual bad-debt provision can be made that an individually insignificant receivable is
for an individually insignificant receivable with relatively high credit risk and that
impairment has probably occurred on it
An independent impairment test will be
carried out on the receivable. The impairment
loss shall be recognized and the bad-debt
Making bad-debt provisions for such receivables provision shall be made according to the
positive difference between the present value
of the receivable’s future cash flows and its
carrying amount.
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
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
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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.
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 acquirer shall recognize intermediary expenses (expenses on audit, legal service,
assessment & consulting, etc.) and other relevant management expenses incurred for the business
combination into current gains and losses on the occurrence; The acquirer shall recognize the
trading expenses on equity securities or debt securities issued by it as the consideration for the
business combination into the initial recognition amount of the equity securities or debt securities;
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
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the fair value of the equity securities issued. However, cash dividends or profits that are declared
but unpaid shall not be included in the initial cost. Direct costs attributed to issue equity securities
such as handling charges and commissions paid to securities underwriting agencies are deducted
from premium of equity securities. If the premium is not sufficient for deduction, reserved fund
and retained earnings is adjusted respectively.
C. For the long-term equity investment invested by investors, the initial cost is the agreed value
prescribed in the investment contract or agreement unless the agreed value is not fair.
D. For the long-term equity investment acquired through non-monetary asset exchange, the
initial cost is recognized according to “Accounting Standards for Business Enterprises No.
7-Non-monetary transactions”.
E. For the long-term equity investment acquired through debt restructuring, the initial cost is
recognized according to “Accounting Standards for Business Enterprises No. 12-Debt
restructuring”.
③If there are cash dividends or profits that are declared but unpaid included in the consideration
paid, the cash dividends or profits declared but unpaid shall be recognized as receivables
separately rather than as part of initial cost of long-term equity instruments no matter through
which method the long-term equity investment is acquired.
(2) Subsequent measurement
The Company adopts either cost method or equity method for the long-term equity investment
hold according to the extent of influence, existence of active market and availability of fair value.
The equity method is used when the Company has joint control or significant influence over the
investee enterprise. The cost method is used when the Company has the control or does not have
joint control or significant influence over the investee enterprise and there is no quote price in
active market or there is no reliable fair value.
①For the long-term equity investment under cost method, and except from cash dividends or
profits distributed are declared but unpaid included in the consideration paid, the other declared
cash dividends or profits are normally recognized as investment income for the current period
when it incurred. The net profits are no longer divided into the pre-investment profits and
after-investment profits.
The Company recognizes the receivable cash dividends or profits according to above regulations,
and the impairment test is needed to be concerned. To indicate the evidence of impairments, it
should be concerned about whether the carrying amount of the long-term equity investments is
greater than the book value of net assets that have been acquired (including the related goodwill)
or other similar situations. When these situations occur, the impairment test of long-term equity
investments should be performed according to “Chinese Accounting Standard No.8 - Impairment
of assets”, Where the carrying amount of long-term equity investment exceeds the recoverable
amount, the difference shall be recognized as impairment loss, and a provision for impairment loss
should be made.
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
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disposed, the amount of change in owner’s equity of the investee enterprise other than net profit or
loss which is previously recorded in owner’s equity of the Company shall be transferred to profit
or loss for the current period according to corresponding proportion.
(3) The basis for determination of joint control or significant influence over investee enterprise
A joint control over investee enterprise is established when the investment of the Company
satisfied the following conditions: ①Any Joint ventures party cannot control the operating
activities of Joint ventures individually; ②Decisions regarding the basic operating activities of
Joint ventures shall be agreed by all Joint ventures parties; ③All Joint ventures parties may
appoint one of them to manage the operating activities of Joint ventures, and the management over
the financial and operating policies exercised by the Joint ventures party appointed shall be limited
to the extent agreed by all Joint ventures parties.
A significant influence over investee enterprise is established when the investment of the
Company satisfied the following conditions: ①The Company has representation on the board of
directors or equivalent governing body of the investee. ②The Company participates in
policy-making processes, including participation in decisions about dividends or other
distributions. ③Material transactions occur between the Company and the investee enterprise.
④The Company dispatches managerial personnel to the investee enterprise. ⑤The Company
provides essential technical information to the investee enterprise. If the Company holds, directly
or indirectly (e.g. through subsidiaries), 20 percent or more but less than 50 percent of the voting
power of the investee enterprise, it is presumed that the Company has significant influence over
the investee enterprise.
(4) Impairment test and method of provision for impairment loss
The Company adopts the same manner of financial instrument for the impairment of long-term
equity investment which is measured under cost method and there is no quoted price in active
market or there is no reliable fair value. Impairment of long-term equity investments other than
above refers to accounting policy “Impairment of assets” of the Company.
13. Recognition and measurement of investment properties
(1) Investment properties of the Company are properties held to earn rentals or for capital
appreciation or both, mainly comprising:
①Land use right which has already been rented;
②Land use right which is held for transfer out after appreciation;
③Property which has already been rented.
(2) Investment property shall be recognized as an asset when the following conditions are
satisfied:
①It is probable that the future economic benefits that are associated with the investment property
will flow to the Company;
②The cost of the investment property can be measured reliably.
(3) Initial measurement
An investment property is measured initially at its cost.
①The cost of a purchased investment property comprises its purchase price, related tax expenses
and any directly attributable expenditure.
②The cost of a self-constructed investment property comprises all necessary construction
expenditures incurred before the property is ready for its intended use.
③The cost of a property acquired by other means shall be recognized according to relevant
accounting standards.
(4) Subsequent measurement
After initial recognition, the Company adopts the cost model to measure its investment properties.
The Company amortizes or depreciates its investment properties measured by using cost model in
the same way as fixed assets and intangible assets.
The Company values the investment property measured by 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
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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 likely 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 cost of the asset when the
expenditure qualifies for recognition. Subsequent expenditure that does not qualify for recognition
shall be recognized as current gains and losses.
The depreciation method adopted by the Company is straight-line method.
The estimated useful life, residual value and annual depreciation rate of fixed assets are shown as
follows:
Estimated Annual
Residual value
The categories useful life depreciation rate
(%)
(years) (%)
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 term between the useful life of the leased asset and the lease term.
(4) Impairment of fixed asset refers to accounting policy “Impairment of assets” of the Company.
15. Recognition and measurement of borrowing cost
(1) Capitalization and capitalization period of borrowing costs
The costs of borrowings designated for acquisition or construction of qualifying assets should be
capitalized as part of the cost of the assets. Capitalization of borrowing costs starts when
① The capital expenditures have incurred;
② The borrowing costs have incurred;
③ The acquisition and construction activities that are necessary to bring the asset to its
expected usable condition have commenced.
Other borrowing costs that do not qualify for capitalization should be expensed off during current
period.
Capitalization of borrowing costs should be suspended during periods in which the acquisition or
construction is interrupted abnormally, and the interruption period is three months or longer. These
borrowing costs should be recognized directly in profit or loss during the current period. However,
capitalization of borrowing costs during the suspended periods should continue when the
interruption is a necessary part of the process of bringing the asset to working condition for its
intended use.
Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed
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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 interest
income from depositing the unused borrowings or 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 multiplies the weighted average of excess of
accumulated expenditures on qualifying asset over that on specific purpose borrowing. The
capitalization rate is determined by weighted average rate of general borrowings.
16. Recognition and measurement of intangible assets
Intangible assets are identifiable non-monetary asset that are owned or controlled by the Company
and are without physical substance.
(1) Recognition of intangible assets
The Company recognizes an intangible asset when that intangible asset meets 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 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
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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 criteria and measurement of estimated liabilities
(1) Recognition criteria of estimated liabilities
The company should recognize the related obligation as an estimated liabilities 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 estimated 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;
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 estimated 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 of 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 reserves 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 reserves at the fair value of the equity instruments on the date of the grant.
The fair value of the equity instrument：
① For the shares granted to the employees, its fair value shall be measured in accordance to the
market price of the entity stocks, and at the same time it shall make adjustment in the
consideration of the relative terms and conditions which the stocks are granted (excluding the
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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
②For 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.
(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. Accounting treatments of shares repurchase
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 retained 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
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equity cost.
The repurchasing shares shall be managed as treasury shares before they are cancelled or
transferred. The total cost to repurchase shares shall be transferred to the cost of the treasury
shares.
During the transfer of the treasury shares, when the transfer income is greater than the cost of
treasury shares, the capital reserve should be increased; when the transfer income is less than the
cost of treasury shares, capital reserve, surplus reserve, and retained 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. Recognition treatments and principles of 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 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
A. 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.
B. 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.
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C. 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. Recognition and measurement of government grant
(1) Recognition of government grants
The Company’s government grants which including monetary or non-monetary grants at fair value,
shall not be recognized until there is reasonable assurance that:
① The entity will comply with the condition attaching to them;
② The grants will be received from government.
(2) Measurement of government grants
① If monetary grants are received, it recognized at actual received or receivable amount. If
non-monetary grants are received, it recognized at fair value, replacing with nominal amount
while fair value is not reliable.
②The Capital approach for government grants, the grant is recognized as deferred income when it
is acquired. Since the related assets achieve its intended using status, the deferred income is
amortized and recognized in profit and loss during asset’s using period. If related assets were
disposed before using period ended, undistributed deferred income shall be shift to current profit
and loss at once.
The Income approach for government grants, to retrieve expense or loss of the Company in further
period, the government grants is recognized as deferred income, and shall be recorded in profit
and loss when that expense or loss occurred. To retrieve expense or loss of the Company in
current period, the government grants shall be recorded directly in current profit and loss.
③ Repayment of recognized government grants
A. When deferred income exists, the repayment shall deduct the carrying amount 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. Accounting treatments of income tax
The Company adopts the balance sheet liability method for income tax expenses.
(1) Deferred tax asset
① Where there are deductible temporary differences between the carrying amount of assets or
liabilities in the balance sheet and their tax bases, a deferred tax asset shall be recognized for all
those deductible temporary differences to the extent that it is probable that taxable profit will be
available against which the deductible temporary difference can be utilized. Deferred tax assets
arising from deductible temporary differences should be measured at the tax rates that are
expected to apply to the period when the asset is realized or the liability is settled.
② At the balance sheet date, where there is strong evidence showing that sufficient taxable profit
will be available against which the deductible temporary difference can be utilized, the deferred
tax asset unrecognized in prior period shall be recognized.
③ The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If
it’s probable that sufficient taxable profit will not be available against which the deductible
temporary difference can be utilized, the Company shall write down the carrying amount of
deferred tax asset, or reverse the amount written down later when it’s probable that sufficient
taxable profit will be available.
(2) Deferred tax liability
A deferred tax liability shall be recognized for all taxable temporary differences, which are
differences between the carrying amount of an asset or liability in the balance sheet and its tax
base, and measured at the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled.
25. Accounting treatments of 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. .
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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 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 current financial income;
Contingent rents shall be charged as expenses in the periods in which they are incurred.
26. Recognition criteria and accounting treatments of 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 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.
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(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 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
66
English Translation for Reference Only
30% to 60%.
7. Income tax expense
(1) The Company and its subsidiaries registered 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 its subsidiaries registered in Shenzhen is 24%。
(2) Domestic subsidiaries not registered in Shenzhen
The applicable income tax rate of domestic subsidiaries not registered in Shenzhen is 25%。
(3) Subsidiaries registered in Hongkong
The applicable income tax rate of subsidiaries registered in Hongkong is 17%。
Note IV. Business combination and consolidated financial statements
1. Subsidiaries
(1) The subsidiaries obtained through the establishment of or investment on subsidiary
Enterp Regist Legal
Enterprise Busin Registered
Categ rise ered repres
No. Subsidiaries organizati ess capital Business scope
ories catego addres entativ
on code nature (0’000)
ries s e
1 Shenzhen Wholl Limite Shenz Li 19218483 Real 3,000 Development,
Huangcheng y-own d hen Zipen 5 estate construction,
Real Estate ed liabilit g develo operation and
Co., Ltd. subsid y pment managementof
iary compa commercial
ny service facilities
relevant to
Huanggang port
2 Shenzhen Wholl Limite Shenz Wei 19217456 Real 3,095 Land
Property and y-own d hen Zhi 5 estate development,
Real Estate ed liabilit develo real estate
Development subsid y pment operation,
Co., Ltd. iary compa construction
ny supervision and
property
management
3 PRD Group Wholl Limite Xuzho Li 55252545 Real 5,000 Development
Xuzhou y-own d u Zipen 4 estate and sale of real
Dapeng Real ed liabilit g develo estate,
Estate subsid y pment construction
Development iary compa management,
Co., Ltd. ny house leases
and commodity
sales
4 Dongguan Wholl Limite Dongg Li 56256265 Real 2,000 Development
ITC y-own d uan Zipen 4 estate and sales of real
Changsheng ed liabilit g develo estate, house
Real Estate subsid y pment leases
Development iary compa
Co., Ltd. ny
5 Hainan Xinda Wholl Limite Haiko Liu 20126461 Real 2,000 Real estate
Development y-own d u Yinhu 9 estate development,
Co., Ltd. ed liabilit a develo decoration
subsid y pment engineering,
iary compa planting and
ny import & export
practice
6 Shenzhen ITC Wholl Limite Shenz Wang 19217454 Proper 2,000 Property rent
Property y-own d hen Hangj 9 ty and
Management ed liabilit un manag management
67
English Translation for Reference Only
Enterp Regist Legal
Enterprise Busin Registered
Categ rise ered repres
No. Subsidiaries organizati ess capital Business scope
ories catego addres entativ
on code nature (0’000)
ries s e
Co., Ltd. subsid y ement
iary compa
ny
7 Shenzhen Wholl Limite Shenz Li 75760133 Proper 500 Property
Huangcheng y-own d hen Zipen 4 ty management,co
Real Estate ed liabilit g manag urt virescence
Management subsid y ement and cleansing
Co., Ltd. iary compa services
ny
8 Shandong Wholl Limite Jinan Li 68481594 Proper 500 Property
Shenzhen ITC y-own d Dongf 7 ty management,
Property ed liabilit eng manag housekeeping
Management subsid y ement service,
Co., Ltd. iary compa property sales
ny and agency,
catering and etc.
9 Chongqing Wholl Limite Chong Zeng 20285302 Proper 500 Property
Shenzhen ITC y-own d qing Xiang 8 ty management
Property ed liabilit rong manag and agency
Management subsid y ement
Co., Ltd. iary compa
ny
10 Chongqing Wholl Limite Chong Zeng 66085719 Servic 200 Installing,
Ao’bo y-own d qing Xiang X e reconstructing
Elevator Co., ed liabilit rong and repairing
Ltd. subsid y the elevator;
iary compa sales of elevator
ny and accessories
11 Shenzhen Wholl Limite Shenz Wang 19227775 Servic 500 Maintenance of
Tianque y-own d hen Zhiyo 9 e elevator and air
Elevator ed liabilit ng conditioning
Technology subsid y equipement
Co., Ltd. iary compa
ny
12 Shenzhen ITC Wholl Limite Shenz Bao 19233251 Servic 120 Domestic
Property y-own d hen Gang 9 e commerce,
Management ed liabilit material supply,
Engineering subsid y maintenance
Equipment iary compa and repair of
Co., Ltd. ny electric
equipment
13 Shenzhen ITC Wholl Limite Shenz Liu 73884274 Cateri 200 Retail sales of
Food y-own d hen Yinhu 9 ng Chinese meal,
Enterprise ed liabilit a western-style
Co., Ltd. subsid y food and wine
iary compa
ny
14 Shenzhen Wholl Limite Shenz Liu 27938335 Constr 300 Supervision of
Property y-own d hen Yinhu 1 uction general
Construction ed liabilit a superv industrial and
Supervision subsid y ision civil
Co., Ltd. iary compa construction
ny engineering
15 Shenzhen Wholl Limite Shenz Yao 19217779 Servic 138 Providing
Real Estate y-own d hen Cheng 0 e property
Exchange ed liabilit xin information,
subsid y property agency
iary compa and evaluation
ny
16 Shenzhen ITC Wholl Limite Shenz Wei 19217731 Servic 2,985 Automobile
Vehicles y-own d hen Zhi X e transportation
68
English Translation for Reference Only
Enterp Regist Legal
Enterprise Busin Registered
Categ rise ered repres
No. Subsidiaries organizati ess capital Business scope
ories catego addres entativ
on code nature (0’000)
ries s e
Industry Co., ed liabilit of passengers
Ltd. subsid y and leasing of
iary compa automobiles
ny
17 Shenzhen ITC Wholl Limite Shenz Li 19226733 Servic 1,600 Automobile
Vehicles y-own d hen Laoge 1 e transportation
Services ed liabilit n of passengers
Company subsid y and leasing of
iary compa automobiles
ny
18 Vehicle Repair Wholl Limite Shenz Zeng X1928443 Servic 150 Maintenance of
Plant of y-own d hen Lansh 7 e automobiles and
Shenzhen ITC ed liabilit eng their accessories
Vehicles subsid y as well as motor
Industry Co., iary compa accessories
Ltd. ny
19 Shenzhen ITC Wholl Limite Shenz Li 19225069 Tradin 850 Sales of
Petroleum y-own d hen Laoge 5 g gasoline, diesel
Company ed liabilit n oil, various
Limited subsid y lubricating oil
iary compa and kerosene
ny
20 Shenzhen Wholl Limite Shenz Xiao 19232566 Servic 200 Vehicle driver
Tesu Vehicle y-own d hen Dejun 9 e training
Driver ed liabilit
Training subsid y
Center Co., iary compa
Ltd. ny
21 Shenzhen ITC Wholl Limite Shenz Luo 19218224 Tradin 1,200 Investing in
Plaza y-own d hen Junde X g commercial,
ed liabilit material and
subsid y supplying
iary compa company
ny
22 Sichuan Wholl Limite Cheng Li Jun 75474862 Tradin 800 Wholesale in
Tianhe y-own d du 1 g domestic
Industry Co., ed liabilit market
Ltd. subsid y
iary compa
ny
23 Zhanjiang Wholl Limite Zhanji Duan 19435140 Real 253 Real estate
Shenzhen y-own d ang Zuopi 6 estate development
Real Estate ed liabilit ng develo and sales of
Development subsid y pment commodity
Co., Ltd. iary compa premises
ny
24 Shum Yip Wholl Limite Hongk N/A N/A Real HKD2,00 Property agency
Properties y-own d ong estate 0 and investment
Development ed liabilit develo
Co., Ltd. subsid y pment
iary compa
ny
25 Wayhang Wholl Limite Hongk N/A N/A Real HKD0.00 Property
Development y-own d ong estate 02 development
Co., Ltd. ed liabilit develo
subsid y pment
iary compa
ny
26 Chief Link Share Limite Hongk N/A N/A Real HKD0.01 Property agency
Properties holdin d ong estate and investment
Co., Ltd. g liabilit develo
subsid y pment
iaries compa
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English Translation for Reference Only
Enterp Regist Legal
Enterprise Busin Registered
Categ rise ered repres
No. Subsidiaries organizati ess capital Business scope
ories catego addres entativ
on code nature (0’000)
ries s e
ny
27 Syndis Share Limite Hongk N/A N/A Real HKD0.00 Property
Investment holdin d ong estate 04 investment
Co., Ltd. g liabilit develo
subsid y pment
iary compa
ny
28 PRD Group Wholl Limite Yangz Li 57384293 Real 5,000 Development
Yangzhou y-own d hou Zipen 4 estate and sale of real
Real Estate ed liabilit g develo estate,
Development subsid y pment construction
Co., Ltd. iary compa management,
ny commodity
sales
The The
Other
proportio proportio Included in Deductibl
Paid-in essential Minority
No n of n of consolidate e
Subsidiaries capital investme interest(0’00
. holding voting d minority
(0’000) nt 0)
shares rights statements interest
(0’000)
(%) (%)
1 Shenzhen 3,000 100 100 Yes
Huangchen
g Real
Estate Co.,
Ltd.
2 Shenzhen 3,095 100 100 Yes
Property
and Real
Estate
Developme
nt Co., Ltd.
3 PRD Group 5,000 100 100 Yes
Xuzhou
Dapeng
Real Estate
Developme
nt Co., Ltd.
4 Dongguan 2,000 100 100 Yes
ITC
Changshen
g Real
Estate
Developme
nt Co., Ltd.
5 Hainan 2,000 100 100 Yes
Xinda
Developme
nt Co., Ltd.
6 Shenzhen 2,000 100 100 Yes
ITC
Property
Manageme
nt Co., Ltd.
7 Shenzhen 500 100 100 Yes
Huangchen
g Real
Estate
Manageme
nt Co., Ltd.
8 Shandong 500 100 100 Yes
Shenzhen
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ITC
Property
Manageme
nt Co., Ltd.
9 Chongqing 500 100 100 Yes
Shenzhen
ITC
Property
Manageme
nt Co., Ltd.
10 Chongqing 200 100 100 Yes
Ao’bo
Elevator
Co., Ltd.
11 Shenzhen 500 100 100 Yes
Tianque
Elevator
Technology
Co., Ltd.
12 Shenzhen 120 100 100 Yes
ITC
Property
Manageme
nt
Engineering
Equipment
Co., Ltd.
13 Shenzhen 200 108.55 100 100 Yes
ITC Food
Enterprise
Co., Ltd.
14 Shenzhen 300 223.08 100 100 Yes
Property
Constructio
n
Supervision
Co., Ltd.
15 Shenzhen 138 100 100 Yes
Real Estate
Exchange
16 Shenzhen 2,985 100 100 Yes
ITC
Vehicles
Industry
Co., Ltd.
17 Shenzhen 1,600 100 100 Yes
ITC
Vehicles
Services
Company
18 Vehicle 150 100 100 Yes
Repair
Plant of
Shenzhen
ITC
Vehicles
Industry
Co., Ltd.
19 Shenzhen 850 100 100 No（Note
ITC 1）
Petroleum
Company
Limited
20 Shenzhen 200 100 100 Yes
Tesu
Vehicle
Driver
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Training
Center Co.,
Ltd.
21 Shenzhen 1,200 100 100 Yes
ITC Plaza
22 Sichuan 800 100 100 Yes
Tianhe
Industry
Co., Ltd.
23 Zhanjiang 253 100 100 Yes
Shenzhen
Real Estate
Developme
nt Co., Ltd.
24 Shum Yip HKD2,000 3218.42 100 100 Yes
Properties
Developme
nt Co., Ltd.
25 Wayhang HKD0.000 100 100 Yes
Developme 2
nt Co., Ltd.
26 Chief Link HKD0.01 70 70 Yes 86.21
Properties
Co., Ltd.
27 Syndis HKD0.000 70 70 Yes
Investment 4 （Note
Co., Ltd. 2）
28 PRD Group 5,000 100 100 Yes
Yangzhou
Real Estate
Developme
nt Co., Ltd.
Note 1: In Jan. 2008, Shenzhen ITC Vehicles Industry Co., Ltd. and Shenzhen Guanghong
investment Co., Ltd. signed a gas station operating lease contract, prescribing that Shenzhen
Guanghong investment Co., Ltd. lease and manage the assets such as land of gas station, gas
station shed, operating buildings, accommodations, equipments in gas station and so on, equity
and management right of Shenzhen ITC Petroleum Co., Ltd (which is wholly-owned subsidiary of
Shenzhen ITC Vehicles Industry Co., Ltd.), the lease term is 15 years. Since the start of the
operating lease, the Company has no control over Shenzhen ITC Petroleum Co., Ltd. According to
Accounting Standards for Business Enterprises, the financial statements of this subsidiary are
excluded from consolidation scope.
Note 2: Syndis Investment Co., Ltd is a wholly-owned subsidiary of Chief Link Properties
Limited.
(2) The subsidiaries obtained through business combination which under the common control
There is no such kind of subsidiaries in the reporting period.
(3) The subsidiaries obtained through business combination which under the non-common control
There is no such kind of subsidiaries in the reporting period.
2. Changing of Consolidation Scope
(1) The new subsidiaries which are included in consolidation scope in the reporting period
Net assets at
Reason of Date of Net profit for
Name of entity the end of
change change current period
period
PRD Group Yangzhou Real Estate New founded
May 2011 49,760,410.63 -239,589.37
Development Co., Ltd. company
(2) The companies which are excluded from consolidation scope
There is none in the reporting 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:
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(1) For assets and liabilities, using the spot exchange rate of RMB against HKD (1:0.8316) on the
balance sheet date;
(2) For the paid-in capital, using the spot exchange rate of RMB against HKD (1:0.7917) when
obtained;
(3) For the income statement, using the average exchange rate of RMB against HKD (1:0.8413)
when trade occurred.
Note Ⅴ. Notes to the main subjects in consolidated financial statements
(Except for especially indicated, the closing balance and the opening balance refer to the balance
at June 30, 2011 and December 31, 2010 respectively; the current period refers to January to June
2011, and the last period refers to January to June 2010; all amounts are presented in RMB.)
1. Cash and cash equivalents
Item Closing balance Opening balance
Cash on hand
333,103.73 184,769.91
Bank deposit
441,048,076.10 529,017,318.87
Other cash and cash
equivalents 5,204,077.25 5,216,606.58
Total
446,585,257.08 534,418,695.36
Note 1: Other cash and cash equivalents mainly is refundable deposits in security company and
balance of other margin accounts.
Closing balance
Item
Currency Original currency Exchange rate RMB
Cash on hand RMB 320,081.77 1.0000 320,081.77
USD 3.58 6.4716 23.17
HKD 15,631.06 0.8316 12,998.79
Sub-total -- -- 333,103.73
Bank deposit RMB 436,607,744.49 1.0000 436,607,744.49
USD 12.43 6.4716 80.44
HKD 5,339,407.37 0.8316 4,440,251.17
Sub-total -- -- 441,048,076.10
Other cash and cash
RMB 5,204,077.25 1.0000 5,204,077.25
equivalents
Sub-total 5,204,077.25
Total 446,585,257.08
Opening book 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 cash
RMB 5,216,606.58 1.0000 5,216,606.58
equivalents
Sub-total —— —— 5,216,606.58
Total —— —— 534,418,695.36
2. Trading financial assets
Item Closing balance (fair value) Opening balance (fair value)
Held-for-trading equity
272,100.00 272,100.00
instrument
Total 272,100.00 272,100.00
Note: This item is of trading share *ST Shenrun A totaling 30,000 shares. The Company has
73
English Translation for Reference Only
suspended and entered into bankrupt and reconstruction procedure on 18 May 2010. On 22 Oct.
2010, Shenzhen Intermediate People’s Court entered a verdict as Civil Verdict SZFMQCZZ No.
5-5, of which The Reconstruction Plan for Guangdong Sunrise Holdings Co., Ltd. was approved
and the reconstruction procedure of Guangdong Sunrise Holdings Co., Ltd. was terminated. Up
until the reporting period, *ST Shenrun A was still suspended for the reconstruction plan was
incomplete. In accordance with closing price dated 17 May 2010, fair value of *ST Shenrun A was
confirmed at RMB 272,100.00.
3. Notes receivable
Categories Closing book balance Opening book balance
Bank acceptance note 300,000.00
Total 300,000.00
4. Accounts receivable
(1) Accounts receivable by categories are as follows:
Closing balance
Categories Book balance Provision for bad debt
Proportio Proportio
Amount Amount
n (%) n (%)
Individually significant receivables with
104,266,173.89 81.23 48,266,173.89 46.29
individually make provision for bad debt
Make provision for bad debt by group
receivables
Group 1 20,026,691.33 15.60 600,800.73 3.00
Group 2 735,332.88 0.58
Sub-total of group 20,762,024.21 16.18 600,800.73 2.89
Individually insignificant receivables with 3,328,956.27 2.59 2,661,985.01 79.96
Total 128,357,154.37 100.00 51,528,959.63 40.14%
Opening balance
Categories Book balance Provision for bad debt
Proportion Proportion
Amount Amount
(%) (%)
Individually significant receivables with
104,266,173.89 86.90 48,266,173.89 46.29
individually make provision for bad debt
Make provision for bad debt by group
receivables
Group 1 8,869,994.67 7.39 266,099.84 3.00
Group 2 3,036,227.93 2.53
Sub-total of group 11,906,222.60 9.92 266,099.84 2.23
Individually insignificant receivables with
3,811,391.44 3.18 3,515,728.91 92.24
individually make provision for bad debt
Total 119,983,787.93 100.00 52,048,002.64 43.38
Explanation for categories:
A. Individually significant receivables with individually make provision for bad debt at period-end
Closing book Bad debt Provision
Content Reason for provision
balance provision proportion (%)
Shenzhen Jiyong Involved in lawsuit, refer to
Properties & Resources 98,611,328.05 42,611,328.05 43.21 Note XII-1(1), Note IX-2
Development Company
Shenzhen Tewei Industry Uncollectible for a long term
2,836,561.00 2,836,561.00 100.00
Co., Ltd.
Shenzhen Lunan Industry
2,818,284.84 2,818,284.84 100.00 Poor operational status
Development Co., Ltd.
Total 104,266,173.89 48,266,173.89 ——
B. Within accounting group, receivables that make provision for bad debt by adopting percentage
method
Name of group Book balance Percentage (%) Provision for bad debt
Group 1 20,026,691.33 3.00 600,800.74
Total 20,026,691.33 600,800.74
C. Individually insignificant receivables with individually make provision for bad debt at
period-end
74
English Translation for Reference Only
Provision
Content Book balance Bad debt provision Reason for provision
proportion (%)
Shenzhen Crown
1,018,170.14 351,198.88 34.49 Uncollectible
Prince Restaurant
Zhanjiang Haihu Real
700,000.00 700,000.00 100.00 Uncollectible
Estate Co., Ltd
Shenzhen Shengfenglu,
ITC Jewel & Gold Co., 498,681.65 498,681.65 100.00 Uncollectible
Ltd.
Shenyang Jinfeng
449,590.30 449,590.30 100.00 Uncollectible
Hotel
Hainan Meijia Tea
126,318.15 126,318.15 100.00 Uncollectible
House
Other 536,196.03 536,196.03 100.00 Uncollectible
Total 3,328,956.27 2,661,985.01
(2) Particulars about reversal or recovery in the reporting period
Basis to
Accumulated amount
confirm Reversal or
Reason for reversal or of reversal or recovery
Content original recovery
recovery that already made
provision for amount
provision for bad debt
bad debt
Proprietor defaulted on Proprietor agree to
property management fees make payment after Uncollectible 1,689,338.38 812,904.94
etc. negotiations
Total 1,689,338.38 812,904.94
(3) There is no accounts receivable cancelled after verification in the reporting period.
(4) There is no accounts receivable due from shareholders with more than 5% (including 5%) of
the voting shares of the Company in the reporting period.
(5) At end of the year, particulars about significant accounts receivable of the top five at the year
end are as follows:
Proportion to
Company Relationship Amount Aging total accounts
receivables (%)
Shenzhen Jiyong Properties & Non-related
98,611,328.05 Over 3 years 76.83
Resources Development Company parties
Shenzhen Tewei Industry Co.,Ltd. Non-related
2,836,561.00 Over 3 years 2.21
parties
Shenzhen Lunan Industry Non-related
2,818,284.84 2.20
Development Co., Ltd. parties Over 5 years
Rainbow Plaza Co., Ltd Non-related
2,645,723.19 2.06
parties 1-3 years
Shenzhen Crown Prince Restaurant Non-related
1,018,170.14 0.79
parties 1-3 years
Total 107,930,067.22 84.09
(6) There is no related parties default on the payment in the reporting period.
5. Other receivables
(1) Other receivables by categories as follows:
Closing balance
Book balance Provision for bad debt
Categories
Proportio Proportion
Amount Amount
n (%) (%)
Other individually significant receivables
with individually make provision for bad
debt 93,228,151.68 66.57 93,228,151.68 100.00
Other make provision for bad debt by
group receivables
Group 1
Group 2 5,959,711.33 4.26 178,791.34 3.00
31,650,806.21 22.60
Sub-total of group 37,610,517.54 26.85 178,791.34 0.48
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English Translation for Reference Only
Closing balance
Book balance Provision for bad debt
Categories
Proportio Proportion
Amount Amount
n (%) (%)
Other individually insignificant receivables
with individually make provision for bad
debt 9,215,789.11 6.58 9,215,783.11 100.00
Total 140,054,458.33 100.00 102,622,726.13 73.27
Opening balance
Categories Book balance Provision for bad debt
Proportion Proportion
Amount Amount
(%) (%)
Other individually significant receivables
with individually make provision for bad 93,518,263.68 66.48 93,518,263.68 100.00
debt
Other make provision for bad debt by
group receivables
Group 1 5,329,966.00 3.79 159,898.98 3.00
Group 2 32,617,813.08 23.18
Sub-total of group 37,947,779.08 26.97 159,898.98 0.42
Other individually insignificant
receivables with individually make 9,216,737.11 6.55 9,216,737.11 100.00
provision for bad debt
Total 140,682,779.87 100.00 102,894,899.77 73.14
Explanation for categories of other receivables:
Other individually significant receivables with individually make provision for bad debt in the
period-end
Provision for bad Withdrawal
Content Book balance Reason for provision
debt proportion (%)
Payment for discharging
of guaranty
Gintian Industry
56,600,000.00 56,600,000.00 100.00 responsibility that was
(Group) Co., Ltd
difficult to be
recollected
Anhui Nanpeng Uncollectible for a long
8,005,472.00 8,005,472.00 100.00
Papermaking Co., Ltd period
Shenzhen There is no asset to
Shengfenglu, ITC 6,481,353.60 6,481,353.60 100.00 execute the verdict, thus
Jewel & Gold Co., Ltd lead to uncollectibility
Shanghai Yutong Real
Uncollectibility for the
estate development 5,676,000.00 5,676,000.00 100.00
reason of verdict
Co., 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 93,228,151.68 93,228,151.68 ——
Within the group, other receivables that make provision for bad debt by adopting percentage
method:
Name of group Book balance Provision percentage (%) Provision for bad debt
Group 1 5,959,711.33 3.00 178,791.34
Total 5,959,711.33 178,791.34
Other individually insignificant receivables with individually make provision for bad debt:
Provision
Provision for
Content Book balance proportion Reason for provision
bad debt
(%)
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 Person retired that leads to
76
English Translation for Reference Only
uncollectibility
Times Residence ABC mortgage
601,762.21 601,762.21 100.00 Proprietor unable to repay
restitution payment
Disappear leads to
Chen Liangfang 500,000.00 500,000.00 100.00
uncollectibility
Uncollectible for a long
Yan Kunping 496,307.77 496,307.77 100.00
period
Shenzhen Property Architecture
335,828.92 335,828.92 100.00 Uncollectible
Design Company
Other 4,177,488.85 4,177,482.85 100.00 Uncollectible
Total 9,215,789.11 9,215,783.11
(2) In the reporting period, there is no other receivables that makes provision for bad debt at full
amount before the current period, or provision at full amount, or with a big provision proportion
but reverse or recover at full amount at the current period, or reverse or recover at a big amount
the current period.
(3) There is no other receivables cancelled or verified in the reporting period.
(4) There is 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 Over 3
56,600,000.00 40.41
parties years
Shenzhen ITC Tian’an Properties Co., Joint ventures
Ltd
Over 3
14,705,931.45 10.50
years
Interests in Over 3
Anhui Nanpeng Papermaking Co., Ltd 8,005,472.00 5.72
associates years
Shenzhen Shengfenglu, ITC Jewel & Non-related Over 3
6,481,353.60 4.63
Gold Co., Ltd parties years
Shanghai Yutong Real estate Non-related Over 3
5,676,000.00 4.05
development Co., Ltd parties years
Total 91,468,757.05 65.31
(6) Details of other receivables refer to Note VI-7.
6. Prepayment
(1) Aging analysis
Aging Closing balance Opening balance
Amount Proportion (%) Amount Proportion (%)
Within 1 year (including 1
year) 388,462,284.09 99.33 33,804,247.57 68.48
1-2 years (including 2 years) 2,477,239.25 0.63 15,412,693.95 31.22
2-3 years (including 3 years) 100,901.00 0.03 90.00
Over 3 years 42,738.38 0.01 143,400.35 0.30
Total 391,083,162.72 100.00 49,360,431.87 100.00
(2) The significant prepayments are as following:
Company Relationship Amount Aging Reason
Prepayment of
land cost and Non-related parties 385,563,863.60 Within 1 year Note 1
contact tax
Prepayment of
Non-related parties 4,245,842.40 Within 1 year Note 2
taxes
Total 389,809,706.00
Note 1: On 28 Jan. 2011, by means of on-site bidding, the Company obtained the use right of
state-owned construction land of No.676 plot located at Weiyang District, Yangzhou, Jiangsu
Province at an amount of RMB 611,866,080, signed land use right transfer contract and paid land
cost and contact tax of RMB 385,563,863.60. Up until the end of the reporting period, the land
authority hasn’t transferred into the Company. For details refer to public notice on the Board of
Directors dated 31 Jan. 2011.
Note 2: According to regulations of “Provisional Regulations on Business Tax”, transfer of land
77
English Translation for Reference Only
use right or real estate sales, using method of pre-collection (including deposit in advance), and
the obligation for tax occurs on pre-collection date. The balance of pre-paid the taxes and fees
refer to the prepaid business tax, city construction tax, education surtax and other tax fees, basing
on pre-sale income of commercial housing sales.
(3) There is no amount due from shareholders with more than 5% (including 5%) of the voting
shares of the Company in prepayment in the reporting period.
7. Inventories
(1) Categories
Proportion of
reversal of
Including:
provision for
Opening Closing Capitalized
Categories Increase Decrease impairment of
balance balance borrowing
inventories to
cost
closing
balance
Raw materials 1,945,434.11 1,584,789.90 1,657,860.67 1,872,363.34
Finished
46,487.22 162,661.29 161,647.71 47,500.80
products
Low-value
consumption 286,508.16 383,666.06 188,999.06 481,175.16
goods
Land use right
held for real
564,148,342.07 14,181,696.75 1,101,207.89 577,228,830.93
estate
development
Properties
under 708,419,461.27 68,077,281.52 373,022,052.81 403,474,689.98 42,474,890.34
development
Completed
properties for 339,789,667.25 374,926,359.53 245,152,600.22 469,563,426.56 25,096,974.95
sale
Total 1,614,635,900.08 459,316,455.05 621,284,368.36 1,452,667,986.77 67,571,865.29
Note: Details of ownership restricted stock refer to Note. Ⅴ-16.
(2) Provision for impairment of inventories:
Decrease
Opening Currency Closing
Categories Increase Written
balance Reversal translation balance
off
effects
Raw materials 412,218.40 10,116.54 402,101.86
Land use right
held for real estate 38,040,376.30 580,107.89 37,460,268.41
development
Total 38,452,594.70 10,116.54 580,107.89 37,862,370.27
NoteⅠ: Currency translation effect is 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
Huanggang Port Land 46,923,373.98 46,823,373.98
Hainan Qiongshan Land 6,648,404.13 6,648,404.13 6,648,404.13 6,648,404.13
Shenhui Garden 36,081,191.89 36,081,191.89
Fuchang Second Term
5,816,127.11 5,816,127.11 5,816,127.11 5,816,127.11
Land
Hong Kong Tingjiu
47,448,937.17 24,995,737.17 48,550,145.06 25,575,845.06
Land
Dongguan Dalang Land 221,790,487.95 220,870,945.40
Total 212,520,308.70 199,358,154.50
Xuzhou Dapeng Land 577,228,830.93 37,460,268.41 564,148,342.07 38,040,376.30
B. Properties under development
78
English Translation for Reference Only
Closing balance Opening balance
Expected
Project Starting Expected total Capitalization Capitalization
completion
name time investment Book balance of profit Book balance of profit
time
balance balance
Shenwuye
– Shengang
No.1
(original
2007.1 2011.1 422,860,000.00 355,000,672.49 43,529,960.53
HuangYu
Garden
District
C-B)
Shenwuye
-Langqiao
Residence
(original 2008.3 2012.6 514,170,000.00 319,593,928.10 37,573,739.32 285,614,373.55 25,691,436.49
HuangYu
Garden
District D)
Cai Tian Yi
2009.7 2012.12 110,000,000.00 83,880,761.88 4,901,151.02 67,804,415.23 3,182,963.80
Se
Total 403,474,689.98 42,474,890.34 708,419,461.27 72,404,360.82
C. Completed properties for sale
Provision
for
Completion Opening Closing
Item Increase Decrease impairment
time balance balance
of
inventories
ITC Plaza 1995.12 7,372,250.95 7,372,250.95
Huangyu Garden
2,754,653.11 2,754,653.11
District A 2001.06
Huangyu Garden
District B 2003.12 15,346,340.13 15,346,340.13
Imperial Garden 2008.11 432,522.28 2,174.94 434,697.22 0.00
Huangcheng Plaza 1997.05 165,983,041.16 165,983,041.16
Haikou Waterfront of
Blue Island 2008.12 6,817,404.62 6,817,404.62 0.00
Xinhua City 2010.6 127,276,489.74 17,517,501.63 109,758,988.11
Rihao Garden 4,654,651.00 4,654,651.00
Fuchang
Comprehensive
Building 6,421,447.63 6,421,447.63
Shengang No.1 374,924,184.59 220,382,996.75 154,541,187.84
Other projects 2,730,866.63 2,730,866.63
Total 339,789,667.25 374,926,359.53 245,152,600.22 469,563,426.56
8. Invested in joint ventures, associates
Name of Regi
company stere Legal Registered Proportions of
Business Proportions of
d represent capital shareholding
nature voting rights (%)
plac ative (0’000) (%)
e
I. Joint
ventures
Shenzhen Jifa She
Limited Wang
Warehouse nzhe Service industry HKD5,415 50.00 50.00
company Hangjun
Co., Ltd n
Shenzhen ITC
She
Tian’an Limited Chen
nzhe Service industry USD888 50.00 50.00
Properties company Yugang
n
Co., Ltd
Shenzhen ITC
She Zhang
Tian’an Limited Property
nzhe Changsh 300 50.00 50.00
Properties company management
n eng
Management
79
English Translation for Reference Only
Co., Ltd
II. Associates
Shenzhen ITC
She Za
Industrial Limited
nzhe Shengmi Service industry HKD3,280 38.33 38.33
Development company
n ng
Co., Ltd
Anhui
She
Nanpeng Limited Wang Industrial
nzhe USD800 30.00 30.00
Papermaking company Yizhong production
n
Co., Ltd
Shenzhen
Wufang
She
Pottery & Limited Yan Industrial
nzhe USD12,500 26.00 26.00
Porcelain company Wenbo production
n
Industrial Co.,
Ltd
Rel
Total Total operation Net profit of ated
Name of Total closing Total closing net Organization
closing revenue of the the current relat
company liabilities asset code
asset current period period ions
hip
I. Joint
ventures
Join
Shenzhen Jifa
t
Warehouse
56,571,8 vent
Co., Ltd
03.94 2,651,254.04 53,920,549.90 3,398,860.00 694,196.01 ure 618847828
Shenzhen ITC Join
Tian’an t
Properties 128,049, vent
Co., Ltd 459.64 53,905,057.33 74,144,402.31 9,200,066.54 323,439.58 ure 618845152
Shenzhen ITC Join
Tian’an t
Properties vent
Management 32,331,6 ure
Co., Ltd 76.68 26,827,212.37 5,469,702.31 8,725,713.36 341,041.66 618930517
II. Associates
Shenzhen ITC Ass
Industrial ocia
Development te
Co., Ltd
Anhui Ass
Nanpeng ocia
Papermaking te
Co., Ltd
Shenzhen Ass
Wufang ocia
Pottery & te
Porcelain
Industrial Co.,
Ltd
9. Long-term equity investment
Proportions
Proportions
Investment Opening Increase/ Closing of
Company of voting
cost balance Decrease balance shareholding
rights (%)
(%)
I. Investment
under equity
method
Shenzhen Jifa
Warehouse 30,645,056.04 26,613,176.96 347,098.01 26,960,274.97 50.00 50.00
Co., Ltd
Shenzhen ITC
Tian’an 23,186,124.00 36,910,481.36 161,719.79 37,072,201.15 50.00 50.00
Properties Co.,
80
English Translation for Reference Only
Ltd
Shenzhen ITC
Tian’an
Properties 1,500,000.00 2,564,330.33 170,520.83 2,734,851.16 50.00 50.00
Management
Co., Ltd
II. Investment
under cost
method
Shenzhen
Wufang
Pottery &
18,983,614.14 18,983,614.14 18,983,614.14 26.00 26.00
Porcelain
Industrial Co.,
Ltd
Shenzhen ITC
Industrial
20,154,840.79 3,682,972.55 3,682,972.55 38.33 38.33
Development
Co., Ltd
Anhui
Nanpeng
13,824,000.00 13,824,000.00 13,824,000.00 30.00 30.00
Papermaking
Co., Ltd
China T.H. Co.,
2,962,500.00 2,962,500.00 2,962,500.00 0.33 0.33
Ltd.
North
Machinery
3,465,000.00 3,465,000.00 3,465,000.00 12.66 12.66
(Group) Co.,
Ltd.
Guangdong
Huayue Real 8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Estate Co., Ltd.
Shenzhen ITC
Petroleum
8,500,000.00 8,500,000.00 8,500,000.00 100.00 100.00
Company
Limited
Guangzhou
Lishifeng
6,000,000.00 6,000,000.00 6,000,000.00 30.00 30.00
Automobile
Co., Ltd.
Sanya East
Travel Co.,
1,350,000.00 1,350,000.00 1,350,000.00 0.28 0.28
Ltd. Legal
persons shares
Shensan Co.,
17,695.09 17,695.09 17,695.09
Ltd.
Macao
Huashen
85,621.36 82,611.65 -1,873.79 80,737.86 10.00 10.00
Enterprise Co.,
Ltd.
Chongqing
Guangfa Real
estate 2,598,061.52 2,506,736.09 -56,857.46 2,449,878.63 27.25 27.25
development
Co., Ltd.
Saipan Project 1,935,184.04 1,867,159.65 -42,350.66 1,824,808.99 30.00 30.00
Total —— 138,110,923.02 578,256.72 138,689,179.74 —— ——
Make
provision
Note for difference
for
between proportions Provision for Provision for Cash
Company impairmen
of voting rights and impairment impairment dividends
t for the
shareholding hold
current
period
I. Investment under
81
English Translation for Reference Only
equity method
Shenzhen Jifa
Warehouse Co., Ltd
Shenzhen ITC Tian’an
Properties Co., Ltd
Shenzhen ITC Tian’an
Properties
Management Co., Ltd
II. Investment under
cost method
Shenzhen Wufang
Pottery & Porcelain 18,983,614.14
Industrial Co., Ltd
Shenzhen ITC Tian’an
Properties 3,682,972.55
Management Co., Ltd
Anhui Nanpeng
13,824,000.00
Papermaking Co., Ltd
China T.H. Co., Ltd. 2,160,300.45
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 Lishifeng
Automobile Co., Ltd.
Sanya East Travel Co.,
Ltd. Legal persons 1,350,000.00
shares
Shensan Co., Ltd. 17,695.09
Macao Huashen
Enterprise Co., Ltd. 80,737.86 -1,873.79
Chongqing Guangfa
Real estate
development Co., Ltd. 2,449,878.63 -56,857.46
Saipan Project 1,824,808.99 -42,350.66
Total 56,619,652.91 -101,081.91 0.00
NoteⅠ: 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) Break down of investment property:
Item Opening book Increase Decrease Closing book
balance balance
Ⅰ. Cost 445,061,716.48 15,218,015.13 266,447.78 460,013,283.83
1. Property and building 437,091,762.08 15,218,015.13 266,447.78 452,043,329.43
2. Land use right 7,969,954.40 7,969,954.40
Ⅱ. Accumulated depreciation and
10,654,660.35 181,703.32 159,949,969.42
amortization 149,477,012.39
1. Property and building 146,653,475.32 10,400,087.79 181,703.32 156,871,859.79
2. Land use right 2,823,537.07 254,572.56 3,078,109.63
Ⅲ. The net book value 295,584,704.09 300,063,314.41
1. Property and building 290,438,286.76 295,171,469.64
2. Land use right 5,146,417.33 4,891,844.77
Ⅳ. Provision for impairment loss
1. Property and building
2. Land use right
Ⅴ. Carrying amount 295,584,704.09 300,063,314.41
1. Property and building 290,438,286.76 295,171,469.64
2. Land use right 5,146,417.33 4,891,844.77
Note： Amount of accumulated depreciation and amortization is RMB 8,283,686.02 in current
period.
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(2) Increase in cost of property and building is due to rental of investment property transferred
from inventories, fixed assets.
(3) For details about all restricted investment property refer to Note Ⅴ-16.
(4) Particulars about holding-for-sale investment property at the period-end:
Estimated disposal Estimated disposal
Name of asset Book value Fair value
expense time
Freshwater Property
2,563,426.76 10,721,620.00 761,000.00 Sep. 2011
City Shops
Note 1: Freshwater Property City Shops including 62 shops on the first floor, 32 shops on the
second floor and 2# storehouse and 4# storehouse.
Note 2: Holding-for-sale investment property is assets replacement involved in assets replacement
contract signed between the Company and Shenzhen Investment Holding Co., Ltd., refer to Note
Ⅸ-1.
11. Fixed assets
(1) Break down:
Item Opening book Increase Decrease Closing book
balance balance
Ⅰ. Cost 168,185,950.57 1,698,424.56 7,051,685.28 162,832,689.85
Including: Property and buildings 112,291,830.62 6,712,210.28 105,579,620.34
Machineries 43,692.42 43,692.42
Vehicles 39,817,509.65 934,036.00 272,000.00 40,479,545.65
Electronic and other
764,388.56 67,475.00 12,481,420.85
equipment 11,784,507.29
Decoration 4,248,410.59 4,248,410.59
Ⅱ. Depreciation 89,997,487.90 6,167,973.01 2,824,387.03 93,341,073.88
Including: Property and buildings 59,243,826.44 1,942,643.78 2,505,770.20 58,680,700.02
Machineries 33,422.69 1,820.20 35,242.89
Vehicles 18,780,800.29 3,607,031.58 258,400.00 22,129,431.87
Electronic and other
569,531.65 60,216.83 8,506,579.82
equipment 7,997,265.00
Decoration 3,942,173.48 46,945.80 3,989,119.28
Ⅲ. Total impairment provision 78,188,462.67 69,491,615.97
Including: Property and buildings 53,048,004.18 46,898,920.32
Machineries 10,269.73 8,449.53
Vehicles 21,036,709.36 18,350,113.78
Electronic and other
3,974,841.03
equipment 3,787,242.29
Decoration 306,237.11 259,291.31
Ⅳ. The net book value 75,717.16 75,717.16
Including: Property and buildings
Machineries
Vehicles
Electronic and other
equipment 75,717.16 75,717.16
Decoration
Ⅴ. Total book value 78,112,745.51 69,415,898.81
Including: Property and buildings 53,048,004.18 46,898,920.32
Machineries 10,269.73 8,449.53
Vehicles 21,036,709.36 18,350,113.78
Electronic and other
3,899,123.87
equipment 3,711,525.13
Decoration 306,237.11 259,291.31
Note 1: Amount of accumulated depreciation is RMB 6,111,240.21 in current period.
(2) Break down of temporarily idle fixed assets is as follows:
Accumulated Net carrying Expected date for
Categories Cost Impairment loss
depreciation amount put into usage
Property and
11,259,145.58 2,884,467.86 8,374,677.72
buildings
Total 11,259,145.58 2,884,467.86 8,374,677.72
(3) Particulars about holding-for-sale fixed assets at the period-end
Estimated disposal Estimated disposal
Name Book value Fair value
expense time
83
English Translation for Reference Only
Freshwater Property
4,357,131.16 15,357,630.00 1,090,000.00 Sep. 2011
City Shops
Note 1: Freshwater Property City Shops including 34 shops on the first floor, 145 shops on the
second floor and 3# storehouse.
Note 2: Holding-for-sale investment property is assets replacement involved in assets replacement
contract signed between the Company and Shenzhen Investment Holding Co., Ltd., refer to Note
Ⅸ-1.
12. Intangible assets
Opening
Item Increase Decrease Closing balance
balance
Ⅰ. Cost 146,986,146.80 146,986,146.80
-Operating license plate 144,851,143.70 144,851,143.70
-Repurchased operating right of taxi’s
operating license plate 2,135,003.10 2,135,003.10
Ⅱ. Accumulated amortization 40,422,480.88 3,260,758.25 43,683,239.13
-Operating license plate 39,861,138.24 3,197,651.10 43,058,789.34
-Repurchased operating right of taxi’s
operating license plate 561,342.64 63,107.15 624,449.79
Ⅲ. The net book value 106,563,665.92 103,302,907.67
-Operating license plate 104,990,005.46 101,792,354.36
-Repurchased operating right of taxi’s
operating license plate 1,573,660.46 1,510,553.31
Ⅳ. Provision for impairment loss
-Operating license plate
-Repurchased operating right of taxi’s
operating license plate
Ⅴ. Carrying amount 106,563,665.92 103,302,907.67
-Operating license plate 104,990,005.46 101,792,354.36
-Repurchased operating right of taxi’s
operating license plate 1,573,660.46 1,510,553.31
Note 1: Accumulated amortization is RMB 3,260,758.25 in current period.
Note 2: The intangible assets with restricted ownership, referring to Note Ⅴ-16.
13. Deferred tax assets and liabilities
(1) Confirmed deferred tax assets and liabilities
Item Closing balance Opening balance
Deferred tax assets
Assets provision for impairment 26,972.53 26,972.53
Withdrawn land VAT pay in advance 103,425,261.50 38,588,791.11
Withdrawn dismission welfare pay in advance
Deductible loss 2,545,920.89 731,982.32
Transferred employee education fee pay in the following year 5,807.66 141.24
Unrealized internal sales gain and loss 1,865,702.54 1,952,088.51
Estimated profit calculated at pre-sale revenue of property
41,909,673.60
enterprises
Deferred tax arising from withdrawn payable development expense 1,651,817.51
Sub-total 109,521,482.63 83,209,649.31
Deferred tax liabilities:
Fair value change of financial assets 807.48 807.48
Deferred tax liabilities arising from amortization of carport cost 3,258,868.32
Sub-total 3,259,675.80 807.48
(2) Breakdown of tax difference and deductible difference items:
Item Amount
Tax difference item:
Deferred tax liabilities arising from amortization of
3,364.50
carport cost
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English Translation for Reference Only
Deferred tax liabilities arising from amortization of
13,035,473.28
carport cost
Sub-total 13,038,837.78
Deductible difference item:
Assets provision for impairment 112,385.53
Withdrawn land VAT pay in advance 430,137,727.82
Deductible loss 10,203,448.86
Transferred employee education fee pay in the following
year 23,230.62
Unrealized internal sales gain and loss 7,692,339.57
Estimated profit calculated at pre-sale revenue of ,
property enterprises
Sub-total 448,169,132.40
14. Other non-current assets
Item Closing book balance Opening book balance
Other non-current assets 9,000,000.00
Total 9,000,000.00
Note：Other non-current assets is an entrust loan of RMB 9 million provided by Shenzhen
International Trade Property Management Company, the Company’s subsidiary and for Shenxin
Taxi Co., Ltd., the subsidiary of the Company’s controlling shareholder on 20 May 2011. The
trustee is Shenzhen Branch of Ping An Bank. The expiry date of the loan is 20 May 2013 and
annual interest rate is 6.40%. In the reporting period, the loan brought interest income of RMB
49,600. Shenxin Taxi Co., Ltd., of which the Company holds 100% swap-in equity, is a swap-in
enterprise after the Company made commitment on share merger reform and replaced assets. As at
the end of the reporting period, relevant transfer procedures are still in progress.
15. Provision for impairment loss
Decrease
Opening Foreign
Item Increase Closing balance
balance Reversal Written off currencies
effects
I. Provision
for bad debt 154,942,902.41 442,547.72 943,652.37 290,112.00 154,151,685.76
Including:
1. Accounts
receivable 52,048,002.64 416,711.58 935,754.59 51,528,959.63
2. Other
receivables 102,894,899.77 25,836.14 7,897.78 290,112.00 102,622,726.13
II. Provision
for
impairment
of
inventories 38,452,594.70 10,116.54 580,107.89 37,862,370.27
III. Provision
for
impairment
of long-term
equity
investments 56,720,734.82 101,081.91 56,619,652.91
VI.
Provision for
impairment
of fixed
assets 75,717.16 75,717.16
Total 250,191,949.09 442,547.72 943,652.37 10,116.54 971,301.80 248,709,426.10
16. Assets with restriction on ownership
(1) The reason for restriction on ownership
A. The Company’s subsidiary Shenzhen ITC Vehicles Industry Company mortgaged 80 operation
licenses of Shenzhen ITC Motor Rent Co., Ltd. for a long-term loan of RMB 19 million, the
closing balance of the loan stood at RMB 5.2 million and it’s with a due term of one year.
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English Translation for Reference Only
B. The Company’s subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. mortgaged its 3/F,
Block A of Shenzhen International Trade Center Plaza and properties on No. 4-01 for a long-term
loan of RMB 240 million. The closing balance of the loan stood at RMB 240 million and it’s with
a due term of one year.
C. The Company’s subsidiary Shenzhen ITC Shenzhen ITC Vehicles Industry Company
mortgaged a land located at Caitian Road West, Donggua Mountain with a warrant (SFDZ No.
3000412119) for RMB 90 million and an advance of RMB 10,096,450.00 the current period. The
closing balance of the load stood at RMB 22,096,450.00 and it’s with a due term of one year.
(2) Details of the assets with restriction on ownership area as follows:
Opening book Closing book
Categories Increase Decrease
balance balance
Assets used in guarantee:
Fixed asset- property and building
Investment property -property and building 4,613,658.96 447,711.54 4,165,947.42
Inventories-costs 315,751,715.18 50,055,901.20 365,807,616.38
- developments
Intangible asset - operating license plate 34,097,886.44 1,808,333.33 32,289,553.11
Total 354,463,260.58 50,055,901.20 2,256,044.87 402,263,116.91
17. Short-term borrowings
Categories Closing balance Opening balance
Credit loan 500,000,000.00 10,000,000.00
Mortgaged loan 50,096,450.00
Total 550,096,450.00 10,000,000.00
Note 1: Significant loan, pay-back loan after balance sheet date refer to Note Ⅷ-1.
Note 2: Credit loan at the period-end is a loan that Shenzhen Investment Holding Co., Ltd.
entrusted Shenzhen Jingtian Branch of China Everbright Bank to provide for the Company’s
subsidy, Shenzhen ITC Vehicles Industry Company and Shenzhen Huangcheng Real Estate Co.,
Ltd., refer to Note Ⅵ -6(2).
18. Trade payable
(1) Particulars of trade payable:
Item Closing book balance Opening book balance
Amount 97,684,187.85 105,465,038.93
Note: Trade payable of the Company with an account age of over one year mainly is construction
cost, QA money etc.
(2) There is no amount due to shareholders with more than 5% (including 5%) of the voting shares
of the Company in trade payables.
19. Advance from customers
(1) Particulars about advance from customers
Item Closing book balance Opening book balance
Amount 28,734,267.71 878,660,737.46
Note: Advance from customers decreased 96.73% is mainly due to prepayment of Shengang No.1
project satisfy conditions of confirmation in the reporting period, so it is recognized as revenue.
(2) Particulars about of advance from customers on main projects of properties for sale:
Estimated date of
Item Aging Closing balance Opening balance
completion
Huangcheng Plaza Completion
2-3 years 2,176,421.15 2,176,421.15
Huangyu Garden Completion
District A 2-5 years 846,495.63 846,495.63
Huangyu Garden Completion
District B 2-5 years 218,413.26 218,413.26
Fengrun Garden 4-5 years 70,638.00 70,638.00 Completion
Xinhua City Completion
Within 1 year 14,916,913.00 1,550,000.00
Shengang No.1 Completion
Within 1 year 3,073,356.00 869,876,870.00
Total 21,302,237.04 874,738,838.04
Note: Note: Advances from customers with the aging over 1 year is due to the terms of revenue
86
English Translation for Reference Only
reorganization having not been satisfied.
(3) There is no amount due to shareholders with more than 5% (including 5%) of the voting shares
of the Company in advance from customers.
20. Payroll payable
Categories Opening book Increase Decrease Closing
balance Book balance
Ⅰ. Salary, bonus, allowance,
79,126,041.83 86,028,371.89 25,763,592.39
subsidy 32,665,922.45
Ⅱ. Employee welfare 2,909,681.39 2,909,681.39
Ⅲ. Social insurance -16,300.21 8,492,383.78 8,380,134.34 95,949.23
Including: 1. Medical insurance -4,817.41 1,336,476.26 1,295,387.25 36,271.60
2. Basic retirement insurance -17,395.04 4,683,200.27 4,623,337.19 42,468.04
3. Annuity fee 1,926,339.62 1,924,719.62 1,620.00
4. Unemployment insurance 3,378.43 155,630.15 150,100.24 8,908.34
5. Injury insurance 1,351.36 132,119.37 129,907.40 3,563.33
6. Pregnancy insurance 1,182.45 146,739.11 144,803.64 3,117.92
7. Labor cooperation medical care 27,102.00 27,102.00
8. Other social insurance 84,777.00 84,777.00
Ⅳ. Public housing fund 13,059,075.76 2,840,817.31 10,613,006.09 5,286,886.98
Ⅴ. Labour union fee and employee
education fee 3,062,191.56 2,294,716.79 1,694,031.36 3,662,876.99
Ⅵ. Non-monetary welfare
Ⅶ.Redemption for terminations of
labor contract 5,046,515.80 76,574.00 4,122,516.00 1,000,573.80
Total 53,817,405.36 95,740,215.10 113,747,741.07 35,809,879.39
21. Taxes payable
Categories Closing book balance Opening book balance
1. VAT 516,798.32 56,624.81
2. Business tax 2,178,368.58 3,375,734.58
3. Income tax 71,501,692.12 30,732,401.20
4. Stamp tax -10,939.80 -9,805.53
5. Education surtax 88,417.13 105,068.39
6. Land VAT 430,404,494.35 159,797,764.26
7. Urban maintenance and construction tax 174,400.62 218,743.52
8. Property tax 900,550.63 909,138.25
9. Individual income tax 1,313,985.36 393,918.78
10. Embankment maintenance fee 2,643.10 2,842.64
11. Others 10,464.10 2,749.97
Total 507,080,874.51 195,585,180.87
Note: The increase in taxes payable is due to Shengang No. 1 project satisfies conditions of
carry-forward in the reporting period that incurred to increase in land VAT.
22. Other payables
(1) Particulars about other payables in the reporting period:
Item Closing book balance Opening book balance
Total 232,581,437.35 229,549,997.54
(2) There is no amount due to shareholders with more than 5% (including 5%) of the voting shares
of the Company in other payables.
(3) Particulars about the top five other payables:
Item Amount Nature or content
Accrued land value
Accrued Land value appreciation tax 56,303,627.40
appreciation tax
HaiNan Yirun Real Estate Co., Ltd 34,509,983.13 Receipts under custody
Rent deposits and other deposits 29,804,294.27 Deposits
Shenzhen Guanghong Investment Co., Ltd 17,270,000.00 Current amount
Guangzhou Lishifeng Motor Company Limited 15,344,017.08 Current amount
Total 153,231,921.88
(4) Related payable accounts of other payables in the reporting period refer to Note Ⅵ-7.
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English Translation for Reference Only
23. Non-current liabilities due within 1 year
(1) Break down:
Item Closing book balance Opening book balance
Long-term borrowings 310,200,000.00 250,960,000.00
Total 310,200,000.00 250,960,000.00
(2) Long-term borrowings due within 1 year:
Item Closing book balance Opening book balance
Guarantee borrowings 93,000,000.00 243,000,000.00
Mortgage loan 212,000,000.00
Pledge loan 5,200,000.00 7,960,000.00
Total 310,200,000.00 250,960,000.00
Particulars:
Loan Loan Closing balance Opening balance
Interest
Loan starting ending currency Foreign Home Foreign Home
rate
date date currency Currency currency Currency
Shenzhen —— 43,000,000.00
East Branch
of 26 Oct. 25 Oct.
RMB 5.76
Agricultural 2009 2011
Bank of
China
Shenzhen —— —— 100,000,000.00
East Branch
of 27 Jan. 25 Oct.
RMB 5.76
Agricultural 2010 2011
Bank of
China
Shenzhen —— 93,000,000.00 —— 100,000,000.00
East Branch
of 3 Feb. 25 Oct.
RMB 5.76
Agricultural 2010 2011
Bank of
China
Central —— 5,200,000.00 —— 7,960,000.00
Commercial
8 Dec. 8 Dec.
branch of RMB 6.40
2008 2011
Ping An
Bank
Shenzhen 200,000,000.00
East Branch
20
of 19 Mar.
Mar. RMB 5.49
Agricultural 2012
2009
Bank of
China
Central 12,000,000.00
Commercial 10
10 Mar.
branch of Mar. RMB 6.40
2012
Ping An 2010
Bank
Total —— —— 310,200,000.00 —— 250,960,000.00
Note: Significant loan and pay-back accounts after balance sheet date refer to Note Ⅷ-1.
24. Long-term borrowings
(1) Classification:
Borrowing terms Closing book balance Opening book balance
Mortgage borrowings 212,000,000.00
Total 212,000,000.00
(2) Break down:
Closing balance Opening balance
Starting Maturity Interest
Loan entity Currency Foreign Home Foreign Home
date date rate
currency Currency currency Currency
Shenzhen 20 Mar. 19 Mar. RMB 5.49 —— —— 200,000,000.00
88
English Translation for Reference Only
Closing balance Opening balance
Starting Maturity Interest
Loan entity Currency Foreign Home Foreign Home
date date rate
currency Currency currency Currency
East Branch 2009 2012
of
Agricultural
Bank of
China
Central
Commercial
10 Mar. 10 Mar.
branch of RMB 6.40 —— 12,000,000.00
2010 2012
Ping An
Bank
Total —— —— —— 212,000,000.00
Note: Significant loans, pay-back accounts refer to Note Ⅷ-1.
25. Other non-current liabilities
Item Closing book balance Opening book balance
1. Utility specific fund 7,958,418.62 7,958,418.62
2. Housing principle fund 12,225,560.93 10,772,085.75
3. House warming deposit 7,586,237.23 8,372,874.11
4. Electric Equipment Maintenance fund 4,019,415.44 4,019,415.44
5. Deputed Maintenance fund 27,126,812.25 26,952,949.71
6. Taxi Deposit 29,410,000.00 28,190,000.00
7. Lease income of taxi license to be written off 14,622,122.43 15,268,733.25
8. Others 660,000.38
Total 102,948,566.90 102,194,477.26
26. Paid-in capital
Unit: (0’000) shares
Before Increase/Decrease (+/-) After
Reser
Iss
ves Sub-tot
Item Proporti uing Bonus Quantit Propo
Quantity transf Others al
on new shares y rtion
(0’000) erred (0’000) (0’000)
(%) share (0’000) (0’000) (%)
to l
s
shares
Ⅰ. Shares subject
38,597.
to trading 38,864.06 65.21 -266.57 64.76
49
moratorium
1. State owned
shares
2. State-owned 38,277.
38,250.94 64.18 26.91 64.23
corporate shares 85
3. Other domestic
613.12 1.03 -293.63 319.64 0.54
owned shares
Including
Shares held by
domestic legal 559.92 0.94 -293.48 266.29 0.45
persons
Shares held by
domestic natural 53.20 0.09 0.15 53.35 0.09
person
4. Shares held by
overseas legal
persons
Including
Shares held by
overseas legal
persons
Shares held by
overseas natural
person
Ⅱ. Shares not 21,000.
20,733.85 34.79 266.57 35.24
subject to trading 42
89
English Translation for Reference Only
Before Increase/Decrease (+/-) After
Reser
Iss
ves Sub-tot
Item Proporti uing Bonus Quantit Propo
Quantity transf Others al
on new shares y rtion
(0’000) erred (0’000) (0’000)
(%) share (0’000) (0’000) (%)
to l
s
shares
moratorium
1．RMB-denomin
14,240.
ated ordinary 13,973.73 23.45 266.71 23.89
44
shares
2. Domestically
6,759.9
listed foreign 6,760.12 11.34 -0.14 11.35
8
shares
3. Overseas listed
foreign shares
4. Others
Ⅲ. Total 59,597.
59,597.91 100 100
91
27. Capital surplus
Item Opening book Increase Decrease Closing book
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 25,332,931.52 25,332,931.52
the investee under equity method
Total 64,020,275.72 64,020,275.72
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
Extraction or allocation
Item Amounts
proportion
Before beginning retained earnings 148,961,664.40
plus：Retained earnings at the beginning of the
year
Adjusted retained earnings at the beginning of
148,961,664.40
the year
Plus: Net profit attributable to parent company
299,688,854.39
transferred in
Less: the statutory reserved fund
Ordinary stock dividends payable
Ordinary dividend from shares transferred to
share capital
Retained earnings at the end of the year 448,650,518.79
30. Revenue and cost of sales
(1) Revenue and cost of sales
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Main operation revenue 1,135,069,760.67 682,795,978.92
Other operation income 11,521,987.40 14,632,604.75
Total operation revenue 1,146,591,748.07 697,428,583.67
Operation cost 364,020,033.56 484,094,910.86
Note: Revenue of the current period up 66.40% compared to last period, mainly due to revenue
recognized from Shengang No.1 project of the current period is larger than Xinhua City project of
last period; operation cost of the current period downed 24.80% compared to last period, mainly
due to the volume of recognized projects is lessen than corresponding period of last year.
(2) Main operation (by industry)
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English Translation for Reference Only
Jan.-Jun. 2011 Jan.-Jun. 2010
Name Operation revenue Operation cost Operation Operation cost
revenue
Real estate 975,099,886.31 235,315,564.21 552,327,378.25 383,594,599.90
House rent and property
management 120,827,361.03 103,300,190.29 95,360,097.27 74,909,212.99
Transportation 27,322,534.36 13,207,549.70 24,623,306.06 12,120,951.47
Catering services 8,202,720.56 6,978,766.50 7,446,456.48 5,843,092.73
Other 3,617,258.41 3,130,870.02 3,038,740.86 3,016,977.91
Total 1,135,069,760.67 361,932,940.72 682,795,978.92 479,484,835.00
Note: Other is revenue from construction supervision and management, elevator maintenance,
vehicle maintenace etc.
31. Business taxes and surcharge
Item Jan.-Jun. 2011 Jan.-Jun. 2010 Base of payment
Business tax 57,521,548.07 35,243,324.39 3% or 5% of taxable income
Urban maintenance 1% or 7% of VAT and Business tax
and construction tax 1,476,112.55 460,735.10
Additional education 3% of VAT and Business tax
Fees 1,780,002.35 1,057,714.57
Land appreciation tax 272,221,768.10 19,121,492.51 30%－60% four level progressive rates
Embankment 0.01% of operating revenue.
maintenance fee 25,276.21 99,621.40
Property tax 1,327,501.80 1.2% of 70% of original property value
RMB 9-30 per square of occupied land square
Land use tax 138,747.78 annually
Other 25,077.99 4,403.90
Total 334,516,034.85 55,987,291.87
Note: Business taxes in current period up by 497.49% than in last period, which mainly because
the completion of Shengang No. 1 project brought increase in revenue which at the same time led
to increase of margin profit of circulation tax and recognized items and finally incurred the
increase of land VAT.
32. Sales expense
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Employee fees and business organization
charges 2,857,923.77 1,555,748.65
Proxy sales expense, advertising expense
and promotion expense 3,851,131.14 315,664.57
Other 1,091,016.90 3,879,410.77
Total 7,800,071.81 5,750,823.99
Note: Sales expense up 35.63% in current period mainly because expense for advertising and
exhibition increased.
33. Administration expense
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Employee payroll and administration
expense 31,234,935.10 23,412,351.45
Property expense 2,559,565.98 2,635,515.89
Lawsuit cost 437,000.00 791,996.24
Taxes 589,879.34 2,537,951.32
Other 5,778,846.39 3,986,461.31
Total 40,600,226.81 33,364,276.21
34. Financial costs
Categories Jan.-Jun. 2011 Jan.-Jun. 2010
Interest expense 6,707,708.89 2,056,720.96
Less: Interest income 1,989,769.10 2,301,053.14
Exchange loss, net -199,051.95 -61,672.71
Others 323,941.53 193,739.71
Total 4,842,829.37 -112,265.18
Note: Financial cost in current period increased RMB 4,955,094.55 mainly because of the
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English Translation for Reference Only
completion of Shengang No. 1 project adjourned the capitalization of project loan recognized into
current gains and loss and interest income decreased.
35. Impairment loss
Item Jan.-Jun. 2011 Jan.-Jun. 2010
1. Bad debt -501,104.65 -51,166.00
2. Depreciation of inventory -25,955,962.89
Total -501,104.65 -26,007,128.89
36. Gain/loss on change in fair value
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Gain/loss on change in fair value 39,900.00
Total 39,900.00
37. Gains/loss on investment
Source Jan.-Jun. 2011 Jan.-Jun. 2010
1. Gain on investment under equity method 679,338.63 622,481.40
2. Gain on investment from disposal of long-term
equity investment 1,539,906.36
3. Gain on loan by custody 49,600.00
Total 728,938.63 2,162,387.76
Note: Proxy loan refers to Note Ⅴ-14.
38. Non-operation income
Amount written into
Item Jan.-Jun. 2011 Jan.-Jun. 2010 current gains and loss
of non-current
1. Income from disposal of
non-current assets 316,049.31
Including: Disposal of fixed assets 316,049.31
2．Others 939,663.41 6,268,424.59 939,663.41
including: Debts no need to pay 43,224.37 3,608,476.00 43,224.37
Penalty of House rental deposit 40,450.00 328,121.69 40,450.00
Income from Forfeit 939,663.41 6,584,473.90 939,663.41
39. Non-operation expense
Amount written into
Item Jan.-Jun. 2011 Jan.-Jun. 2010 current gains and loss
of non-current
1. Loss on disposal of non-current
assets 21,155.77 47,253.80 21,155.77
Including: Disposal of fixed assets 21,155.77 47,253.80 21,155.77
2. Public welfare donations 25,000.00
3. Overdue payment and penalties 26,095.00 19,937.73 26,095.00
4. Estimated liability -279,047.46
5. Compensation 774,698.00 401,062.35 774,698.00
6. Others 45,934.55 12,663.64 45,934.55
Total 867,883.32 226,870.06 867,883.32
40. Income tax expense
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Income tax for the current period 120,115,805.03 7,181,860.70
Plus: Deferred income tax expense (Gain is listed
as “-”) -23,690,284.38 18,976,282.19
Income tax expense 96,425,520.65 26,158,142.89
41. Earnings per share
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Basic Earnings Per Share 0.5029 0.2127
Diluted Earnings Per Share 0.5029 0.2127
Calculation of earnings per share is as following:
92
English Translation for Reference Only
Basic Earnings Per Share＝299,688,854.39÷595,979,092.00＝0.5029
Diluted Earnings Per Share＝299,688,854.39÷595,979,092.00＝0.5029
Recalculation of earnings per share of last period is as following
Basic Earnings Per Share＝126,752,423.52÷595,979,092.00＝0.2127
Diluted Earnings Per Share＝126,752,423.52÷595,979,092.00＝0.2127
Note: The method of basic earnings per share and diluted earnings per share calculation
A. Basic Earnings Per Share = P0÷S
S= S0＋S1＋Si×Mi÷M0-Sj×Mj÷M0-Sk
P0 represents the amounts attributable to ordinary equity holders of the Company in respect of:
(a) Profit or loss attributable to the Company; and
(b) Profit or loss after deducting extraordinary gain or loss attributable to the Company.
S0 represents the weighted average number of ordinary shares outstanding during the period. S0
represents the number of ordinary shares at the beginning of the period. S1represents the number
of additional ordinary shares issued on capital surplus transfer or share dividends appropriation; Si
represents the number of ordinary shares issued in exchange for cash or issued as a result of the
conversion of a debt instrument to ordinary shares during the period. Sj represents reduced number
of ordinary shares such as shares buy back. Sk represents the number of a reverse share split. Mo
represents the months during the period. Mi represents the months from the following month after
issuing incremental shares to the end of the period. Mj represents the months from the following
month after reducing shares to the end of the period.
B．Diluted Earnings Per Share = P1/(S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+ The weighted average
number of incremental ordinary shares on warrants, options, convertible debt and so on)
P1 represents the amounts attributable to ordinary equity holders of the Company in respect of: (a)
Profit or loss attributable to the Company; and (b) Profit or loss after deducting extraordinary gain
or loss attributable to the Company, adjust according to the accounting standards for enterprises
and 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 Jan.-Jun. 2011 Jan.-Jun. 2010
1. Gains and loss amount arising from available-for-sale financial assets
Less: Income tax relating to available-for-sale financial assets
Net amount transferred into profit and loss in the current period that was
recorded into other comprehensive income in pervious period
Sub-total
2. Attributable share measured at equity method in other comprehensive
income of the invested entity
Less: Effects of income tax generating from attributable share measured at
equity method in other comprehensive income of the invested entity
Net amount transferred into profit and loss in the current period that was
recorded into other comprehensive income in previous period
Sub-total
3. Gain/(loss) arising from effective hedging portion of cash flow hedging
instruments
Less: Income tax relating to cash flow hedging instruments
Net amount transferred into profit and loss in the current period that was
recorded into other comprehensive income in previous period
The adjustment value that is the converted initial recognition amount of
arbitrage project
Sub-total
4. Exchange difference arising from translating foreign operations
-676,994.58 -244,754.36
Less: Net amount of disposal of foreign operations that is transferred into
profit and loss in the current period
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English Translation for Reference Only
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Sub-total
-676,994.58 -244,754.36
5. Other
Less: Effects of income tax generating from other recorded into other
comprehensive income
Net amount transferred into profit and loss in the current period that was
recorded into other comprehensive income in previous period
Sub-total
Total
-676,994.58 -244,754.36
43. Relevant information about cash flow statement
（1）Other cash received from operating activities
Item Amount
Other cash received from operating activities
34,676,208.44
Including: Collecting margins and security deposits
9,083,940.79
Collecting transformation fee of parking lots and air
conditioners for proprietors 7,908,087.29
Collecting proceeds for Hainan Yirun Real Estate Co., Ltd.
6,000,000.00
Collecting incoming and outgoing accounts for Shenzhen PRD
Jifa Warehouse Co., Ltd 2,000,000.00
（2）Other cash paid relating to operating activities
Item Amount
Other cash paid relating to operating activities
32,800,739.03
Including: Paying administration expenses in cash
10,952,766.50
Paying expenses for handling property ownership certificates
for others 8,221,032.04
Paying sales expenses in cash
3,749,622.86
Paying water and electricity charges for proprietors
2,471,286.52
(3) Other cash paid relating to financing activities
Item Amount
Other cash paid relating to financing activities 822,200.00
Including: handling charges for large amount of borrowings 822,200.00
(4) Supplementary information of cash flow statement
Supplementary information Jan.-Jun. 2011 Jan.-Jun. 2010
1.Adjustment from net profit to cash flows from operating activities
Net profit 299,688,854.39 126,752,423.52
Plus: Provision for impairment of assets -501,104.65 -26,007,128.89
Depreciation of fixed assets, Oil-gas assets and Productive
biological assets 14,394,926.23 14,151,383.67
Amortization of intangible assets 3,260,758.25 3,254,331.90
Amortization of long-term deferred expense 86,488.14 110,249.27
Loss on disposal of fixed assets, intangible assets and other non-current
assets(“-” for gain) 21,155.77 -2,126,627.73
Loss on fixed assets retirement (“-” for gain) 27,139.68
Loss on change in fair value(“-” for gain) -39,900.00
Financial costs(“-” for gain) 20,003,205.02 2,056,720.96
Loss on investment(“-” for gain) -728,938.63 -2,162,387.76
Decrease of deferred tax assets(“-” for increase) -26,311,833.32 9,685,932.83
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English Translation for Reference Only
Supplementary information Jan.-Jun. 2011 Jan.-Jun. 2010
Increase of deferred tax liabilities(“-” for decrease) 3,258,868.32
Decrease of inventory(“-” for increase) 153,458,007.32 -21,265,374.02
Decrease in operating receivables(“-” for increase) -349,167,775.75 -13,621,245.49
Increase in operating payables(“-” for decrease) -560,433,623.71 -40,841,043.95
Others -647,162.24
Net cash flow from operating activities -442,971,012.62 49,327,311.75
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 446,585,257.08 705,762,683.59
Less: Cash at the beginning of the period 534,418,695.36 830,055,588.25
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Increase in cash and cash equivalents -87,833,438.28 -124,292,904.66
(5) Cash and cash equivalents:
Item Jan.-Jun. 2011 Jan.-Jun. 2010
I. Cash 446,585,257.08 705,762,683.59
Including: Cash on hand 333,103.73 403,656.61
Bank deposit on demand 441,048,076.10 699,876,568.17
Other monetary assets on demand 5,204,077.25 4,057,964.27
II. Cash and cash equivalents at the end of the period 446,585,257.08 705,762,683.59
Including: Restricted Cash and cash equivalents held by parent company
or subsidiaries 1,424,494.54
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
Registered
Name of
Type of Registration Corporate Business capital
parent Relationship
enterprise place representative nature (RMB ten
company
thousand)
Shenzhen Limited
Managing
Investment Parent liability
Shenzhen Fan Chunming state-owned 400,000
Holdings company company
assets
Co., Ltd. (state-owned)
Shareholding Proportion of voting
Ultimate
Name of parent proportion of the rights of the parent
controller of the Organization code
company parent company in company in the
Enterprise
the Enterprise (%) Enterprise (%)
Shenzhen
Shenzhen
State-owned
Investment
54.22 54.22 Assets 767566421
Holdings Co.,
Administration
Ltd.
Bureau
The controlling shareholder of the Company is now registered as Shenzhen Construction
Investment Holdings Co., Ltd. For details, please refer to Note (I) 4.
3. For details about subsidiaries of the Company, please refer to Note (IV) 1.
4. For details about joint ventures and associated enterprises of the Company, please refer to Note
(V)8.
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5. Other related party
Relationship between the related
Name of other related party Organization code
party and the Enterprise
All controlled by parent company of the
Shenzhen Shenxin Taxi Co., Ltd. 192200516
Company
6. Related party transactions
(1) Related guarantee
The Company and its subsidiaries didn’t provide guarantees for other companies beyond the
range of consolidated financial statements. For details about guarantees provided by and for
each other, please refer to Note (VII) 4.
(2) Entrust loans of related parties
Unit: RMB ten thousand
Borrowin
Name of Name of Annual Borrowin Borrowin Repaymen Interests
g at the
the the interest g at the g in the t in the paid in the
Debtor end of the
entrusting entrusted beginning reporting reporting reporting
rate（%） reporting
party party of the year period period period
period
Jingtian Shenzhen
Shenzhen
Sub-branc ITC
Investmen
h of China Vehicles 5.5439 1,000.00 1,000.00 26.95
t Holdings
Everbright Industry
Co., Ltd.
Bank Co., Ltd.
Jingtian Shenzhen
Shenzhen
Sub-branc Huangche
Investmen
h of China ng Real 5.7767 20,000.00 20,000.00 269.58
t Holdings
Everbright Estate
Co., Ltd.
Bank Co., Ltd
Jingtian Shenzhen
Shenzhen
Sub-branc Huangche
Investmen
h of China ng Real 5.5386 25,000.00 25,000.00 561.55
t Holdings
Everbright Estate
Co., Ltd.
Bank Co., Ltd
Jingtian Shenzhen
Shenzhen
Sub-branc ITC
Investmen
h of China Vehicles 5.7767 4,000.00 4,000.00 53.92
t Holdings
Everbright Industry
Co., Ltd.
Bank Co., Ltd.
Shenzhen
ITC Shenzhen Shenzhen
Property Branch of Shenxin
6.40 900.00 900.00 4.96
Managem Ping An Taxi Co.,
ent Co., Bank Ltd.
Ltd.
Total 1,000.00 49,900.00 50,900.00 916.96
7. Accounts receivable from and payable to related parties
Accounts of listed companies receivable from related parties
30 Jun. 2011 1 Jan. 2011
Item Related party Bad debt Bad debt
Book balance Book balance
provision provision
Other Shenzhen ITC Tian’an
14,705,931.45 14,705,931.45
receivables Property Co., Ltd
Other Anhui Nanpeng Papermaking
8,005,472.00 8,005,472.00 8,295,584.00 8,295,584.00
receivables Co., Ltd
Other Shenzhen ITC Industrial
2,551,652.48 2,551,652.48 2,551,652.48 2,551,652.48
receivables Development Co., Ltd
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30 Jun. 2011 1 Jan. 2011
Item Related party Bad debt Bad debt
Book balance Book balance
provision provision
Other Shenzhen Wufang Pottery &
1,747,264.25 1,747,264.25 1,747,264.25 1,747,264.25
receivables Porcelain Industrial Co., Ltd
Accounts of listed companies payable to related parties
Book balance on 30 Book balance on 1 Jan.
Item Related party
Jun. 2011 2011
Other payables Shenzhen ITC Petroleum Co., Ltd 7,062,002.47 7,196,769.67
Shenzhen PRD Jifa Warehouse Co.,
Other payables 14,045,808.00 12,148,556.00
Ltd
Note VII. Contingencies
1. Pending litigations
（1）In 1993, the Company signed Transfer Contract of Right of Development of Jiabin Building
(name of Jiabin Building has been changed to Jinlihua Building) with Shenzhen Haibin Property
Development Co., Ltd. (name of which has been changed to Shenzhen Jiyong Property
Development Co., Ltd., hereinafter referred to as Jiyong Company). In Jan. 1999, Jiyong
Company sued the company to Guangdong Higher People’s Court for termination of the transfer
contract and refund of the transfer consideration and construction payment paid on the ground that
the area of premises was in discrepancy with the contract. With respect to this, the Company
counterclaimed the opposing party to pay back the rest transfer consideration and applied for
sealing up their property with an area of 28,000 square meters.
On 29 Jul. 2001, Guangdong Higher People’s Court issued Civil Court Judgment YGFMC (1999)
No. 3 (hereinafter referred to as Judgment No. 3) to judge that ① the Company should transfer the
title of land use right specified in the transfer contract to Jiyong Company within 30 days from the
date the judgment taking into effect and ②Jiyong Company should pay off the transfer
consideration amounting to RMB143,860,000 within 60 days from the date the Company
transferred the title of land use right. On 27 Nov. 2001, the Company applied to Guangdong
Higher People’s Court for forcible execution, however Guangdong Higher People’s Court
adjudicated to release the sealing property of Jiyong Company approximately 10,000 square
meters since Industrial & Commercial Bank of China Zhejiang Branch disagree to seal the
properties.
In Jan. 2006, Guangdong Higher People’s Court issued Civil Court Judgment YGFZ Zi (2002) No.
1 and adjudicated because that ① the Company has not yet transferred the title of land use right
specified in the transfer contract to Jiyong Company and ② Jiyong Company cannot provide other
properties available for execution and the Company also cannot provide the property available for
execution, the second judgment of the No. 3 verdict - “Jiyong Company should pay off the
transfer consideration amounted RMB143,860,000 within 60 days from the date the Company
transferred the title of land use right” is terminated for execution. When the conditions causing
termination for execution of the second judgment are eliminated, the second judgment should still
be executed.
In Mar. 2006, according to the ordain of Guangdong Higher People’s Court, the properties in
Jiabin Building that have been sealed up in this case have been leased automatically. In Sep. 2009,
the Company received the (2002) YGFZ Zi No.1-1 Enforcement Restore Notice sent from
Guangdong Higher People’s Court, which announced that the court decided to restore enforcement
for the case, in which the Company applied for enforcement for transfer accounts of the
Company’s Jiabin Building Project owed by Jiyong Company.
In Oct. 2009, the Company received the (2002) YGFZ Zi No.1-2 Enforcement Judgment sent from
Guangdong Higher People’s Court, announcing that: the enforcement restore of the case was in
line with the “Requirements of the Supreme People’s Court on Focusing on the Nationwide
Activity of Clearing Long-pending Cases”; as investigated by Guangdong Higher People’s Court
on units including Shenzhen Vehicle Management Station, Shenzhen Securities Clearing
Institution, Shenzhen Land Resources and Housing Administrative Bureau, and account opening
banks of the party subjected to enforcement, it was found that there’s no property of Jiyong
Company, the party subjected to enforcement, for enforcement. Therefore, Guangdong Higher
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People’s Court made the following judgment: ① Ceasing the enforcement procedure of (2002)
YGFZ Zi No.1 case for this time; ② allowing the party applying for enforcement to file for
enforcement when the case satisfies the condition for enforcement.
In the reporting period, there’s no substantial progress in that case.
(2) In Jun. 2004, Shenzhen Meisi Industrial Co., Ltd. (hereinafter referred to as Meisi Company)
prosecuted Shenzhen Luohu Economic Development Co., Ltd and the Company to Shenzhen
Intermediate People’s Court for illegal use of land owned by Meisi Company dated Jun. 1991 and
request for ceasing the infringing act and receiving a compensation amounted RMB 8 million. In
Mar. 2005, Shenzhen Intermediate People’s Court issued Civil Ruling Paper SZFMC Zi (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 25 Nov.
2005, Guangdong Higher Court adjudicated that the Civil Ruling Paper SZFMC Zi (2004) No.
108 issued by Shenzhen Intermediate People’s Court should be cancelled and the prosecution of
Meisi Company were overruled.
During the process of trial of second instance, Meisi Company applied to Registration Center for
Property of Real Estate of Shenzhen Municipality for revoking Property Ownership Certificates
SFDZ No. 3000320987 and No. 300119899 owned by the Company. On 7 Jul. 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 8 Oct. 2005, the
People's Government of Shenzhen Municipality issued Decision on Administrative
Reconsideration SFFJ (2005) No. 294 and judged that aforesaid 2 certificates were registered
illegally and should be revoked, reply of SFDH (2005) No. 84 was canceled accordingly.
The Company refused to accept Decision on Administrative Reconsideration SFFJ (2005) No. 294
and prosecuted an administrative litigation to Shenzhen Intermediate People’s Court on 20 Oct.
2005. On 26 Jun. 2006, Shenzhen Intermediate People’s Court issued Administrative Judgment
SZFXC Zi (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 2 Aug. 2006. Guangdong Higher Court issued
Administrative Judgment YGFXZ Zi (2006) No. 154 in which the appeal was rejected and
Administrative Judgment SZFXC Zi (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 SFD Zi No. 3000320987
and No. 3000119899 dated 2005 of the Company.
On 15 May 2007, Registration Center for Property of Real Estate of Shenzhen Municipality issued
Decision on Revoking the Property Ownership Certificates SFD Zi No. 3000320987 and No.
3000119899 (SFD (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 SFD Zi 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 9 Jul. 2007, the Company applied the administrative reconsideration to the Administrative
Reconsideration Office of the People's Government of Shenzhen Municipality, which considered
that those action that Registration Center for Property and Real Estate of Shenzhen Municipality
revoked property ownership certificate SFD Zi 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 SFD (2007) No.27 Decision on .Revoking Property Ownership
Certificates SFDZ No. 3000320987 and No. 300119899. On 6 Sep. 2007, the People's
Government of Shenzhen Municipality issued Decision on Administrative Reconsideration SFFJ
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(2007) No. 255 to sustain the administrative decision of Shenzhen Municipal Bureau of Land
Resources and Housing Management.
In Nov. 2007, Shenzhen Municipal Bureau of Land Resources and Housing Management rejected
the application of Meisi Company for revoking Property Ownership Certificates SFD Zi No.
0103142 and No. 0103139. Meisi Company prosecuted an administrative litigation to Shenzhen
Futian People’s Court to ask for revoking the administrative decision of Shenzhen Municipal
Bureau of Land Resources and Housing Management. The Company was involved as third party.
Court session started on 8 Jan. 2008 with litigation number of (2008) SFFXC Zi No. 10
(hereinafter referred to as the No.10 Case). In Jan. 2008, Meisi Company prosecuted an
administrative litigation to Shenzhen Futian People’s Court for revoking the above administrative
decision of Shenzhen Municipal Bureau of Land Resources and Housing Management, revoking
Property Ownership Certificates SFD Zi No. 0103142 and No. 0103139, and restoring the land use
right to Meisi Company with the litigation number of SFFXC Zi(2008) No. 70 (hereinafter
referred to as the No.70 Case). In May 2008, the Shenzhen Futian Court made adjudication to No.
70 Case in which the property ownership certificates SFD Zi 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. In Jul. 2008, the company
has received the Administrative Ruling Paper from Futian People’s Court in which the trial of the
No.10 Case was terminated.
In Dec. 2008, Shenzhen Intermediate People’s Court issued the Administrative Ruling Paper
SZFXZ Zi (2008) No. 223, in which the final adjudication of the 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 finally settled.
On 11 Feb. 2009, the Company received the Civil Complaint from ShenZhen Futian People’s
Court; Meisi Company has made a civil prosecution against the Company and Shenzhen Luohu
Commercial Development Co., Ltd. for the confirmation of Meisi Company’s land use right and
the buildings in original Property Ownership Certificates SFD Zi 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 4 Mar. 2009,
ShenZhen Futian People’s Court sent the Notice to the Company to inform that this case has been
transferred to Shenzhen Intermediate People’s Court for adjudication. On 2 Jul. 2009, Shenzhen
Intermediate People’s Court opened a court session for the case.
On 22 Dec. 2009, the Company received a written verdict from the Guangdong Higher People’s
Court. Upon investigations, the Guangdong Higher People’s Court considered that the Company’s
appeal against the Administrative Verdict (2008) SZFXZ Zi No.223 issued by the Shenzhen
Intermediate People’s Court was in compliance with relevant laws, and thus ruled that: ① The
case would be removed for trial by the Guangdong Higher People’s Court; ② Execution of the
original verdict should be suspended during the second trial.
In the reporting period, there’s no substantial progress in that case.
The Company believes that the land use right and ownership of above building should be legally
confirmed to the Company. The Company will secure its own legal rights through all legal means,
and the above issues would not have significant impact on the Company’s financial position.
2. Guarantees
(1) The Company provided a joint-liability guarantee for the long-term loan of RMB 240 million
borrowed by its subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. from the Shenzhen East
branch of China Agricultural Bank, with properties at No.4-01 and 3/F of A Block of Shenzhen
International Trade Center as pledges. And the closing balance of the said loan stood at RMB 240
million. The loan would be due within 1 year..
(2) The Company and its subsidiaries—Shenzhen PRD Real Estate Development Co., Ltd. and
Shenzhen ITC Vehicles Industry Co., Ltd.—provided a joint-liability guarantee for the long-term
loan of RMB 250 million borrowed by Shenzhen Huangcheng Real Estate Co., Ltd. from the
Shenzhen East branch of China Agricultural Bank. And the closing balance of the said loan stood
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at RMB 93 million. The loan would be due within 1 year.
(3) The Company provided a joint-liability guarantee for the long-term loan of RMB 90 million
borrowed by its subsidiary Shenzhen ITC Vehicles Industry Co., Ltd. from the Shenzhen Hongbao
Sub-branch of Ping An Bank. And the closing balance of the said loan stood at RMB 22.1 million.
The loan would be due within 1 year..
(4) With the guarantee of ownership certificates of 80 operating vehicle licenses owned by the
subsidiary of Shenzhen ITC Vehicles Industry Co., Ltd., namely Shenzhen ITC Motor Rent Co.,
Ltd, , Shenzhen ITC Vehicles Industry Co., Ltd, which is the subsidiary of the Company, borrowed
a long-term loan of RMB 19 million. And the closing balance of the said loan stood at RMB 5.2
million. The loan would be due within 1 year.
(5) Guarantee for the house owners: The Company and its subsidiaries provide mortgage
guarantee for commodity premise purchasers. The total unsettled guarantee is RMB 535.5 million
as at 30 Jun. 2011. It is common that the real estate developer provides mortgage guarantee for
small owners.
3. Contingent assets
(1) Bureau of Foreign Trade and Economic Cooperation of Hubei province Shenzhen branch
(hereinafter referred to as “Hubei FTEC Shenzhen branch”) sued the Company to Shenzhen
Intermediate People’s Court in Jul. 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 Jiabin 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 (2002) YGFMYZ Zi No. 90 judgment (hereinafter
referred to as the No.90 Judgment) and adjudicated that the Company should refund the Hubei
FTEC Shenzhen branch purchase payment of RMB 10.8 million and related interests.
The Hubei FTEC Shenzhen branch applied for execution to Guangdong Higher People’s Court.
Guangdong Railage Intermediate Court (hereinafter referred to as the “Railage Court”) was
appointed by Guangdong Higher People’s Court to execute the case at the end of Jan. 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 Aug. 2005, the Supreme Court issued the Civil Judgment (2004) MEJ Zi No.146-1 and
adjudicated that Guangdong Higher People’s Court should give the case second instance and the
execution should be suspended during the second instance. On 12 May 2006, Guangdong Higher
People’s Court made the judgment that the original No.90 Judgment should be sustained and the
execution thereof 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 Jun. 2006, the (2004) GTZFZ Zi No. 225-4 Civil Judgment
was issued by the Railage Court in which ① The Company’s execution suspension application
was denied because it lacked facts and legal evidence; ② It was legal for the Hubei FTEC
Shenzhen branch to apply and the Railage Court decided to transfer RMB 23 million from the
sealed account which had been transferred to the Railage court after deduction of execution fees to
the Hubei FTEC Shenzhen branch; ③ The Hubei FTEC Shenzhen branch’s application of interest
during the second trial was denied; ④ The Company’s repayment obligation ruled by the No.90
Judgment had been legally executed; ⑤ 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 MEJ Zi (2004) No. 146-3 in Oct. 2007 and adjudicated that this litigation would be retried
by the Supreme People's Court. Later on, after taking full consideration, the Company rescinded
the application for retrial from the Supreme People’s Court, which allowed the Company to
withdraw the lawsuit.
Ownership of the 14th and 15th floors of Jiabin 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 Jiabin Building was registered
as Zhuhai Western Yingzhu Industrial Development Co., Ltd. addressing the ownership of the
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properties, therefore, in Jun. 2008 the Company sued Zhuhai Western Yingzhu Industrial
Development Co., Ltd. to the People’s Court of Luohu District in Shenzhen (hereinafter referred to
as “Luohu Court”) for confirmation of the above properties’ ownership and adjudicating the
Company’s ownership of the 14th and 15th floors of Jiabin Building in the registration. The Luohu
Court processed the case with the litigation number of (2008) SLFMSC Zi No. 1442. On 21 Jul.
2008, the court held a public trail and hosted the mediation; the Company reached a settlement
with Zhuhai Western Yingzhu Industrial Development Co., Ltd.. And a civil mediation letter was
issued by the Luohu Court, in which stated ① both agree that the 14th and 15th floor of Jiabin
building belongs to the complaint company; ② the defendant should assist the complaint party
(the Company) with the procedures of transferring the property to the complaint company within 3
days since the agreement becomes effective. The agreement is legally valid. Up to Sep. 2008, the
14th and 15th floor of Jiabin building has been registered under the Company’s name by China
Committee of Real Estate Title.
As Shenzhen Longyuan Kaili Hengfeng Real Estate Co., Ltd. (hereafter referred to as “Longyuan
Kaili”) and Shenzhen Huaneng Jindi Property Co., Ltd. (hereafter referred to as “Huaneng
Property”) intended to carry on reconstruction of Jinlihua Commercial Plaza, on 3 Mar. 2011, the
Company signed the Second Supplementary Agreement of Grant Contract of Land Use Right of
Shenzhen Municipality [SDH Zi (1992) No. 0228] with the No.1 Management Bureau under
Urban Planning Land and Resources Commission of Shenzhen Municipality， Longyuan Kaili,
and Huaneng Property, reaching the following agreements – ① Shenzhen Land Resources Bureau
approved to alter the transferees of the land use right of the parcel of land (H206-0002), which
covered 6,892 square meters, to Longyuan Kaili and Huaneng Property; ② Longyuan Kaili and
Huaneng Property accepted all the rights, liabilities, and obligations affiliated to the parcel of land,
and should settle relations between the transferred real estates by themselves, and assist in
handling relevant procedures; ③ Longyuan Kaili and Huaneng Property committed to deal with
pledges and pre-seizure existing in the project. Longyuan Kaili and Huaneng Property shall handle
any dispute resulted from the change of transferees of the land use right, and assume legal and
economic liabilities thereof; ④ The Company owned the property of the 14th floor and the 15th
floor of the project, which belonged to commodity houses in nature and were in the charge of
Longyuan Kaili and Huaneng Property for construction and renovation according to the unified
handover standard of the project; ⑤ Land use age of the parcel of land was adjusted to 50 years,
ranging from 21 Feb. 2011 to 20 Feb. 2061.
As the abovementioned agreements were signed, the Company’s rights of the 14th and 15th floors
of Jinlihua Commercial Plaza were confirmed. However, there were still certain risks in the
process of handover and usage of the property, as well as the acquisition of property ownership
certificates, bringing about significant uncertainty on whether the property could bring economic
benefits for the Company. In accordance with relevant provisions of Accounting Standards for
Business Enterprises, the property didn’t satisfy the criteria for asset recognition.
（2）On 25 May 2006, the People’s Government of Shenzhen Municipality released the Circular
on Plan of Handing over Community Facilities and Public Service Houses (SFB [2006] No.79).
According to the Circular, the community facilities and public service houses that should be
handed over to the government included: ① the buildings built by a developer for residents’
committees and primary and secondary schools (excluding those with the land contracts clearly
stating that the relevant property rights belonged to the developer) since the implementation of the
scheme of transferring land-use rights with compensation on 3 Jan. 1998; and ② public service
buildings such as kindergartens that should had been handed over to the government according to
land contracts or other agreements but had had not been handed over. For those buildings of
residents’ committees and primary and secondary schools with the land contracts not clearly
stating whether the property rights belonged to the government or whether those buildings should
be handed over to the government at the cost prices, the government would take them back at the
cost prices. According to the Circular, the cost prices should be determined based on the principle
of solving historical problems in broad outline instead of going into too much detail, i.e. to
determine the cost prices based on the prices and cost indexes announced by the construction cost
management stations at the year of completion. And the auditing department should perform
review on the pricing scheme.
As shown by the statistics, the Company and its subsidiaries had such community facilities and
public service houses with the total building area of 36,000 square meters. It had been confirmed
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that the building area of 3,483 square meters in supporting facilities of Shenzhen Huangcheng
Real Estate Co., Ltd., the Company’s subsidiary, was not included in houses to be handed over.
And another building area of 15,183 square meters was also not expected to be included in such
houses. As at the end of the reporting period, a total building area covering about 17,334 square
meters of the Company and its subsidiaries was in the range of community facilities and public
service houses specified by SFB [2006] No.79 Document, and the aforesaid property was handed
over to relevant departments. The government still didn’t carry out area recognition and review on
cost prices.
Note VIII. Events after balance sheet date
1. Loans and repayments after balance sheet date
On 20 Jul. 2011, Shenzhen ITC Vehicles Industry Co., Ltd., the Company’s subsidiary, returned a
long-term loan of RMB 460,000 to Central Business Sub-branch of Ping An Bank.
2. Other significant events after balance sheet date
On 7 Jul. 2011, the alteration of registration of the swap-in asset, Moon Bay T102-0237 plot,
which belonged to the Company’s asset replacement and significant related transaction with
Shenzhen Investment Holdings Co., Ltd. was accomplished, and the plot was registered in the
Company’s name. For details, please refer to Note (IX) 1 (2).
Note IX. Other significant events
1. On 19 Sep. 2010, for the purpose of fulfilling commitment of equity division reform, the
Company signed Agreement on Asset Replacement with its controlling shareholder, Shenzhen
Investment Holdings Co., Ltd. (hereinafter referred to as Investment Holdings). The Company
swapped No. T102-0237 land in Moon Bay held by Investment Holdings and 100% equity of
Shenxin Taxi Co., Ltd. with part of properties held by the Company and its wholly-owned
subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. According to the appraisal report, of which
the base date was 31 May 2010, the appraised value of the Company’s swap-out asset totaled to
RMB 306,563,279.00, the appraised value of Investment Holdings’ swap-in asset totaled to RMB
304,090,432.77, and the difference amounting to RMB 2,472,846.23 between the swap-out assets
and swap-in assets would be compensated in cash by Investment Holdings. The balance between
the value of the swap-in asset and the committed value (namely the asset value which Investment
Holdings committed to inject to the Company in Specifications on Equity Division Reform and
was less than RMB 500 million) of Investment Holdings was a part of the non-start-up capital as
agreed in Specifications on Equity Division Reform. Investment Holdings compensated 20% of
the balance, which amounted to RMB 38,687,344.20, to the Company in cash. Following is the
information relevant to replaced assets:
(1) Swap-out assets
According to ZLPB Zi [2010] No.615 and ZLPB Zi [2010] No.616 appraisal reports, of which the
base date was 31 May 2010, issued by China United Assets Appraisal Group on 18 Aug. 2010, the
original book value of the swap-out assets of the Company totaled to RMB 215,563,329.18, the
net book value thereof totaled to RMB 177,864,274.63, and the appraised value totaled to RMB
306,563,279.00. For details, pleases refer to the following table:
Name of Status on the Area Net book value Appraised value Appraised
No.
asset base date (㎡) ( RMB Yuan) (RMB Yuan) appreciation
I. Shenzhen Properties & Resources Development (Group) Co., Ltd.
Most shops
Shops at
were vacant,
Properties
and a handful of 13,875.60 6,920,557.92 26,079,250.00 276.84%
Mall in
shops were rent
Danshui
out.
II. Shenzhen Huangcheng Real Estate Co., Ltd
Most shops
Shops at
were vacant,
Huangcheng
and a handful of 24,674.45 170,943,716.71 280,484,029.00 64.08%
Plaza and
shops were rent
Huangyuyuan
out.
Total 38,550.05 177,864,274.63 306,563,279.00 72.36%
(2) Swap-in assets
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According to the appraisal report, of which the base date was 31 May 2010, the Company
swapped in the asset of use right of Moon Bay Land No. T102-0237, which provided a plot
covering 19,894.11 square meters with a valid term of use right amounting to 70 years, ranging
from 8 Nov. 1997 to 7 Nov. 2067. The land was rated as R2 for usage, and its nature was defined
as commodity property. The deadline for completion of development was 31 Dec. 2012. Book cost
of the land amounted to RMB 112,858,827.00, the appraised value amounted to RMB
270,894,484.00, and the appraised appreciation amounted to 140.03%. The Company swapped in
the asset of 100% equity of Shenzhen Shenxin Taxi Co., Ltd. As decided by STKH [2010] No.103
Document, some assets and liabilities of Shenzhen Shenxin Taxi Co., Ltd. were stripped apart. On
the basis of the Audit Report on the Stripping of Net Assets of Shenzhen Shenxin Taxi Co., Ltd. as
at 31 May 2010(Reanda-Z Zi [2010] No.1470) issued by Reanda Certified Public Accountants Co.,
Ltd., net assets of Shenxin Taxi Co., Ltd. amounted to RMB 6,349,551.21 after stripping and audit
as at 31 May 2010, the base date of appraisal. After appraisal, the appraised value amounted to
RMB 33,195,948.77, and the appraised appreciation totaled to 422.81%.
On 17 Nov 2010, Investment Holdings transferred RMB 38,687,344.20, namely 20% of the
balance between the value it committed and the value it actually carried out in reorganization, to
the Company’s bank account. The compensation directly increased capital reserve of the
Company.
On 7 Jul. 2011, the registration alteration of Moon Bay Land T102-0237 was accomplished, and
the plot was registered in the Company’s name.
On 10 Aug. 2010, the above plans of asset replacement were reviewed and approved by the Reply
on Fulfilling the Commitment of Equity Division Reform of Shenzhen Properties & Resources
Development (Group) Co., Ltd. (SGZJ [2010] No.178) issued by Shenzhen State-owned Assets
Supervision and Administration Bureau.
On 18 Aug. 2010, appraisal on the abovementioned replaced assets was finished by China United
Assets Appraisal Group, which respectively issued appraisal reports of ZLPB Zi [2010] No.613,
ZLPB Zi [2010] No.614, ZLPB Zi [2010] No.615, and ZLPB Zi [2010] No. 616. On 21 Sep. 2010,
the aforesaid appraisal reports were reported to Shenzhen State-owned Assets Supervision and
Administration Bureau for the record.
The abovementioned agreements on asset replacement were respectively reviewed and approved
on the 27th Session of the 6th Board of Directors of the Company dated 17 Sep. 2010 and the 1st
Special Shareholders’ General Meeting in 2010 of the Company on 13 Oct. 2010.
2. 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 of RMB 56,303,627.40 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.
3. 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. As at the end of the reporting
period, relevant work was still in progress.
Note X. Notes to the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by categories:
Closing amount
Categories Book balance Provision for bad debt
Proportio Proportion
Amount Amount
n (%) (%)
103
English Translation for Reference Only
Closing amount
Book balance Provision for bad debt
Categories
Proportio Proportion
Amount Amount
n (%) (%)
Accounts receivable with significant single amount 101,447,889.0 45,447,889.0
97.41 44.80
and to be separately allotted for bad debt provision 5 5
Accounts receivable to be allotted for bad debt
provision in group
Group 1
Group 2 2,645,723.19 2.54
Subtotal of groups 2,645,723.19 2.54
Accounts receivable with insignificant single
amount but to be separately allotted for bad debt 54,380.35 0.05 54,380.35 100.00
provision
104,147,992.5 45,502,269.4
Total 100.00 43.69
9 0
Opening amount
Categories Book balance Provision for bad debt
Proportion Proportion
Amount Amount
(%) (%)
Accounts receivable with significant single
amount and to be separately allotted for bad debt 101,447,889.05 96.45 45,447,889.05 44.80
provision
Accounts receivable to be allotted for bad debt
provision in group
Group 1
Group 2 3,680,032.75 3.50
Subtotal of groups 3,680,032.75 3.50
Accounts receivable with insignificant single
amount but to be separately allotted for bad debt 54,380.35 0.05 54,380.35 100.00
provision
Total 105,182,302.15 100.00 45,502,269.40 43.26
Explanation on categories of accounts receivable:
Accounts receivable with significant single amount and to be separately allotted for bad debt
provision at the end of the reporting period:
Contents of accounts Provision for bad Withdrawal
Book balance Reasons for withdrawal
receivable debt proportion (%)
Shenzhen Jiyong Involved in lawsuit, refer to
Property
98,611,328.05 42,611,328.05 43.21 Note （VII）1 （1） and Note
Development Co.,
Ltd. （IX）2
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 44.80
Accounts receivable with insignificant single amount but to be separately allotted for bad debt
provision at the end of the reporting period:
Contents of accounts Provision for bad Reasons for
Book balance Age
receivable debt withdrawal
Luohu District Economy Uncollectible for a
54,380.35 54,380.35 Over 3 years
Development Co., Ltd. long period
Total 54,380.35 54,380.35
(2) In the reporting period, there were no accounts receivable which had been fully allotted for bad
debt provision before the reporting period, or accounts receivable which had been fully allotted for
bad debt provision, or allotted for bad debt provision in a large proportion before the reporting
period, but were fully recovered or written back, or recovered and written back in a large
proportion in the reporting period.
(3) In the reporting period, there were no accounts receivable cancelled after verification.
(4) In the reporting period, there were no accounts receivable from shareholder units holding more
than 5% (5% included) voting rights of the Company.
(5) Top 5 units owing largest sums of accounts receivable:
Relation with Proportion in
Unit Amount Age
the Company total amount of
104
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accounts
receivable (%)
Shenzhen Jiyong Property Non-related
98,611,328.05 Over 3 years 94.68
Development Co., Ltd. party
Non-related
Shenzhen Tewei Industry Co., Ltd. 2,836,561.00 Over 3 years 2.73
party
Non-related
Rainbow Department Store Co., Ltd. 2645723.19 1-3 years 2.54
party
Luohu District Economy Non-related
54,380.35 Over 3 years 0.05
Development Co., Ltd. party
Total 104,147,992.59 100.00
(6) In the reporting period, there were no accounts receivable from related party.
2. Other receivables
(1) Other receivables classified by categories:
Closing amount
Book balance Provision for bad debt
Categories
Proportio Proportion
Amount Amount
n (%) (%)
Other receivables with significant single
amount and to be separately allotted for bad 238,692,262.45 51.84 190,523,411.80 79.82
debt provision
Other receivables to be allotted for bad debt
provision in group
Group 1
Group 2 219,346,453.79 47.64
Subtotal of groups 219,346,453.79 47.64
Other receivables with insignificant single
amount but to be separately allotted for bad 2,421,326.23 0.53 2,421,326.23 100.00
debt provision
Total 460,460,042.47 100.00 192,944,738.03 41.90
Opening amount
Categories Book balance Provision for bad debt
Proportion Proportion
Amount Amount
(%) (%)
Other receivables with significant single
amount and to be separately allotted for bad 241,202,085.87 32.02 191,932,077.06 79.57
debt provision
Other receivables to be allotted for bad debt
provision in group
Group 1
Group 2 509,569,813.47 67.66
Subtotal of groups 509,569,813.47 67.66
Other receivables with insignificant single
amount but to be separately allotted for bad 2,421,326.23 0.32 2,421,326.23 100.00
debt provision
Total 753,193,225.57 100.00 194,353,403.29 25.80
Explanation on categories of other receivables:
Other receivables with significant single amount and to be separately allotted for bad debt
provision at the end of the reporting period:
Contents of other Provision for bad Withdrawal
Book balance Reasons for withdrawal
receivables debt proportion (%)
Shum Yip Properties Uncollectible for a long
102,269,766.98 54,100,916.33 52.90
Development Co., Ltd. period
Payment for discharging of
Gintian Industry
56,600,000.00 56,600,000.00 100.00 guaranty liability that was
(Group) Co., Ltd.
difficult to be recollected
Hainan Xinda Uncollectible for a long
48,717,401.49 48,717,401.49 100.00
Development Co., Ltd period
Anhui Nanpeng Uncollectible for a long
8,005,472.00 8,005,472.00 100.00
Papermaking Co., Ltd period
Shenzhen Shengfenglu There was no asset to
6,481,353.60 6,481,353.60 100.00
ITC Jewel & Gold Co., execute the verdict, thus led
105
English Translation for Reference Only
Ltd to uncollectibility
Shanghai Yutong Real
Uncollectibility for the
Estate Development 5,676,000.00 5,676,000.00 100.00
reason of verdict
Co., Ltd
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
Center
Shenzhen ITC
Industrial 2,551,652.48 2,551,652.48 100.00 Insolvency
Development Co., Ltd
Elevated Train Project 2,542,332.43 2,542,332.43 100.00 Suspended
Total 238,692,262.45 190,523,411.80
Other receivables with insignificant single amount but to be separately allotted for bad debt
provision:
Contents of other Provision for bad Withdrawal
Book balance Reasons for withdrawal
receivables debt proportion (%)
Shenzhen Wufang
Pottery & Porcelain 1,747,264.25 1,747,264.25 100.00 Poor operation status
Industrial Co., Ltd
Compensation for
mortgage-backed
Proprietors were unable to
guarantee at 601,762.21 601,762.21 100.00
pay back.
Agricultural Bank of
China for Shidai Xinju
Zhanjiang Shenzhen The accounts were insolvent
Real Estate 53,478.77 53,478.77 100.00 and thus difficult to be
Development Co., Ltd collected.
Meilin Synthetic Fibre Uncollectible for a long
11,000.00 11,000.00 100.00
Co., Ltd. period
Uncollectible for a long
Others 7,821.00 7,821.00 100.00
period
Total 2,421,326.23 2,421,326.23 ——
(2) In the reporting period, there were no other receivables which had been fully allotted for bad
debt provision before the reporting period, or other receivables which had been fully allotted for
bad debt provision, or allotted for bad debt provision in a large proportion before the reporting
period, but were fully recovered or written back, or recovered and written back in a large
proportion in the reporting period.
(3) In the reporting period, there were no other receivables cancelled after verification.
(4) In the reporting period, there were no other receivables from shareholder units holding more
than 5% (5% included) voting rights of the Company.
(5) Top 5 units owing largest sums of other receivables:
Relation Proportion in total
Unit with the Amount Age amount of other
Company receivables (%)
PRD Xuzhou Dapeng Real
Subsidiary 173,419,592.00 1-2 years 37.66
Estate Development Co., Ltd.
Shum Yip Properties
Subsidiary 102,269,766.98 Over 3 years 22.21
Development Co., Ltd.
Gintian Industry (Group) Co., Non-related
56,600,000.00 Over 3 years 12.29
Ltd. party
Hainan Xinda Development Within 1 year or
Subsidiary 48,717,401.49 10.58
Co., Ltd over 3 years
Shenzhen ITC Tian’an Associated
14,705,931.45 Over 3 years 3.19
Properties enterprise
Total 395,712,691.92 85.94
（6） Other accounts receivable from related parties:
Proportion in
Relation with the total amount of
Unit Amount
Company other receivables
(%)
PRD Xuzhou Dapeng Real Estate
Subsidiary 173,419,592.00 37.66
Development Co., Ltd.
Shum Yip Properties Development Co., Subsidiary 102,269,766.98 22.21
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Ltd.
Hainan Xinda Development Co., Ltd Subsidiary 48,717,401.49 10.58
Shenzhen ITC Tian’an Properties Joint venture 14,705,931.45 3.19
Shenzhen ITC Property Management Co.,
Subsidiary 9,556,358.62 2.08
Ltd.
Anhui Nanpeng Papermaking Co., Ltd Associated enterprise 8,005,472.00 1.74
Shenzhen ITC Food Co., Ltd Subsidiary 4,226,627.40 0.92
Shenzhen Property Construction
Subsidiary 3,285,212.59 0.71
Supervision Co., Ltd
Shenzhen ITC Industrial Development Co.,
Associated enterprise 2,551,652.48 0.55
Ltd
Shenzhen Wufang Pottery & Porcelain
Associated enterprise 1,747,264.25 0.38
Industrial Co., Ltd
Shenzhen International Trade Plaza Subsidiary 744,177.30 0.16
Zhanjiang Shenzhen Real Estate
Subsidiary 53,478.77 0.01
Development Co., Ltd
Total 369,282,935.33 80.19
3. Long-term equity investment
Proportio
Shareholdin n of
Investment Opening Increase / Closing g proportion voting
Invested unit
cost balance decrease balance in invested rights in
unit (%) invested
unit (%)
I. Long-term
equity
investment
accounted by
equity
method
Shenzhen
Jifa
Warehouse 30,645,056.04 26,613,176.96 347,098.01 26,960,274.97 50.00 50.00
Company
Limited
Shenzhen
ITC Tian’an
23,186,124.00 36,910,481.36 161,719.79 37,072,201.15 50.00 50.00
Properties
Co., Ltd
Shenzhen
Tian’an
International
Building 1,500,000.00 2,564,330.33 170,520.83 2,734,851.16 50.00 50.00
Property
Management
Co., Ltd
II.
Long-term
equity
investment
accounted by
cost method
Shenzhen
ITC Vehicles
29,850,000.00 29,850,000.00 29,850,000.00 90.00 90.00
Industry Co.,
Ltd.
Hainan
Xinda
20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00
Developmen
t Co., Ltd
Shenzhen
Property and
Real Estate 30,950,000.00 30,950,000.00 30,950,000.00 100.00 100.00
Developmen
t Co., Ltd.
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Proportio
Shareholdin n of
Investment Opening Increase / Closing g proportion voting
Invested unit
cost balance decrease balance in invested rights in
unit (%) invested
unit (%)
Shenzhen
Huangcheng
28,500,000.00 28,500,000.00 28,500,000.00 95.00 95.00
Real Estate
Co., Ltd
Shenzhen
ITC
Property 20,000,000.00 20,000,000.00 20,000,000.00 95.00 95.00
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
Construction 3,000,000.00 3,000,000.00 3,000,000.00 100.00 100.00
Supervision
Co., Ltd
Shenzhen
International 12,000,000.00 12,000,000.00 12,000,000.00 100.00 100.00
Trade Plaza
Shenzhen
Real Estate 1,380,000.00 1,380,000.00 1,380,000.00 100.00 100.00
Exchange
Shensan Co.,
17,695.09 17,695.09 17,695.09
Ltd.
Zhanjiang
Shenzhen
Real Estate 2,530,000.00 2,530,000.00 2,530,000.00 100.00 100.00
Development
Co., Ltd
Shum Yip
Properties
15,834,000.00 15,834,000.00 15,834,000.00 100.00 100.00
Development
Co., Ltd.
Shenzhen
Wufang
Pottery &
18,983,614.14 18,983,614.14 18,983,614.14 26.00 26.00
Porcelain
Industrial
Co., Ltd
Shenzhen
ITC
Industrial 20,154,840.79 3,682,972.55 3,682,972.55 38.33 38.33
Development
Co., Ltd
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
Huayue Real
8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Estate Co.,
Ltd.
PRD Xuzhou
50,000,000.00 50,000,000.00 50,000,000.00 100.00 100.00
Dapeng Real
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Proportio
Shareholdin n of
Investment Opening Increase / Closing g proportion voting
Invested unit
cost balance decrease balance in invested rights in
unit (%) invested
unit (%)
Estate
Development
Co., Ltd.
Dongguan
ITC
Changsheng
20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00
Real Estates
Development
Co., Ltd/
Sanya
Oriental
230,500.00 230,500.00 230,500.00 0.28 0.28
Tourism Co.,
Ltd.
PRD
Yangzhou
50,000,000.0
Real Estates 50,000,000.00 50,000,000.00 100.00 100.00
0
Development
Co., Ltd.
Total 353,678,915.6 50,679,338.6 404,358,254.2
—— —— ——
3 3 6
Explanation on
Impairment
difference between Impairment
provision
shareholding provision
Impairment written off Cash
Invested unit proportion and of the
provision in the dividends
proportion of voting reporting
reporting
rights in invested period
period
unit
I. Long-term equity investment
accounted by equity method
Shenzhen Jifa Warehouse
Company Limited
Shenzhen ITC Tian’an
Properties
Co., Ltd
Shenzhen Tian’an International
Building Property
Management Co., Ltd
II. Long-term equity
investment accounted by cost
method
Shenzhen ITC Vehicles
Industry Co., Ltd.
Hainan Xinda Development
20,000,000.00
Co., Ltd
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
109
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Explanation on
Impairment
difference between Impairment
provision
shareholding provision
Impairment written off Cash
Invested unit proportion and of the
provision in the dividends
proportion of voting reporting
reporting
rights in invested period
period
unit
Shensan Co., Ltd. 17,695.09
Zhanjiang Shenzhen Real
2,530,000.00
Estate Development Co., Ltd
Shum Yip Properties
15,834,000.00
Development 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
China T.H. Co., Ltd. 2,160,300.45
North Machinery (Group) Co.,
3,465,000.00
Ltd.
Guangdong Huayue Real
8,780,645.20
Estate Co., Ltd.
PRD Xuzhou Dapeng Real
Estate Development Co., Ltd.
Dongguan ITC Changsheng
Real Estates Development Co.,
Ltd/
Sanya Oriental Tourism Co.,
Ltd.
Total 102,878,227.43
4. Operating income and operating cost
(1) Operating income and operating cost
Item Jan.-Jun. 2011 Jan.-Jun. 2010
Income from main business 18,167,414.59 17,749,203.17
Income from other business
Total operating income 18,167,414.59 17,749,203.17
Operating cost 9,305,983.12 6,724,019.13
(2) Main business (classified by categories)
Jan.-Jun. 2011 Jan.-Jun. 2010
Industry
Operating income Operating cost Operating income Operating cost
Real estates 5,688.42
House rental and property
18,161,726.17 9,305,983.12 17,749,203.17 6,724,019.13
management
Total 18,167,414.59 9,305,983.12 17,749,203.17 6,724,019.13
5. Investment income
Sources where investment income arises from Jan.-Jun. 2011 Jan.-Jun. 2010
1. Long-term equity investment income accounted by
679,338.63 622,481.40
equity method
2. Disposal of long-term equity investment income 1,539,906.36
3. Income from entrust loan 3,078,400.00
Total 3,757,738.63 2,162,387.76
Note: On 8 Apr. 2011, the Company entrusted Shenzhen Branch of Ping An Bank to provide
entrust loan of RMB 195 million to its subsidiary Dongguan ITC Changsheng Real Estates
Development Co., Ltd., with the expiry date as 8 Apr. 2013 and annual interest rate as 7.68%. And
the income from entrust loan was the interest income of RMB 3,078,400.00 from the aforesaid
loan.
6. Supplementary information of cash flow statement
Supplementary information Jan.-Jun. 2011 Jan.-Jun. 2010
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Supplementary information Jan.-Jun. 2011 Jan.-Jun. 2010
1.Adjustment from net profit to cash flows from
operating activities
Net profit -8,283,043.80 27,077,925.00
Plus: Provision for impairment of assets 135,737.76 -27,420,494.06
Depreciation of fixed assets, Oil-gas assets and
Productive 7,839,887.29 7,235,231.07
biological assets
Amortization of intangible assets
Amortization of long-term deferred expense
86,488.14 85,775.39
Loss on disposal of fixed assets, intangible assets and
-326,049.31
other non-current assets(“-” for gain) -
Loss on fixed assets retirement (“-” for gain)
1,154.18
Loss on change in fair value(“-” for gain) -39,900.00
Financial costs(“-” for gain) 1,946,846.03
Loss on investment(“-” for gain) -3,757,738.63 -2,162,387.76
Decrease of deferred tax assets(“-” for increase)
Increase of deferred tax liabilities(“-” for decrease)
Decrease of inventory(“-” for increase) -770,267.00
Decrease in operating receivables(“-” for increase) -97,917,901.43 -214,922,302.05
Increase in operating payables(“-” for decrease) 426,555,284.69 209,455,920.63
Others
Net cash flow from operating activities
324,658,714.02
161,452.12
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 160,114,074.98 2,548,532.38
Less: Cash at the beginning of the period 78,920,447.75 2,539,358.76
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Increase in cash and cash equivalents 81,193,627.23 9,173.62
Note XI. Supplementary information
1. Non-recurring gains and losses
（1）According to the announcement (2008)No.43“Regulation on the Preparation of Information
Disclosures of Companies Issuing Public Shares No. 1: Non-recurring gains and losses (2008)”
issued by CSRC, non-recurring gains and losses of the company of this reporting period are
calculated as follows:
(Positive: gains, Negative: losses)
Item Jan.-Jun. 2011 Explanation
Gains and Losses on disposal of non-current assets, including provision
for the write-off part of asset impairment -21,155.77
Refunding and exemption of taxes in excess of authority or without
official approval documents, or with contingency
Government subsidies accounted into current income account, except for
those government subsidies closely related to the Company’s normal
operation business, according with state policies, and sustainably received
by quota or ration
Capital adoption fee collected from non-financial organizations and
accounted into current gain/loss
Gain/loss from differences between the investment cost from subsidiaries,
associated enterprise, as well as joint ventures and the fair value of
recognizable net asset of the invested entities
Gain/loss from non-monetary assets
Gain/loss from commissioned investment or assets
Asset impairment provisions provided for force-majeure, for example,
natural disasters
Gain/loss from debt reorganization
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Item Jan.-Jun. 2011 Explanation
Enterprise reorganizing expenses, such as employee placement fee and
integration fee -76,574.00
Gain/loss from trade departing from fair value
Current net gain/loss of subsidiaries under same control from beginning of
term till date of consolidation
Gain/loss generated by contingent liabilities without connection with main
businesses
Gain/loss from change of fair value of transactional asset and liabilities,
and investment gains from disposal of transactional financial assets and
liabilities and sellable financial assets, other than valid period value
instruments related to the Company’s common businesses
Restoring of receivable account impairment provision tested individually 812,904.94
Gain/loss from commissioned loans 49,600.00
Gain/loss from change of fair value of investment property measured at
fair value in follow-up measurement
Influence of one-time adjustment made on current gain/loss account
according to the laws and regulations regarding tax and accounting
Consigning fee received for consigned operation
Other non-business income and expenditures other than the above 92,935.86
Other gain/loss items satisfying the definition of nonrecurring gain/loss
account
Subtotal 857,711.03
Influenced amount of income tax 7,705.91
Influenced amount of minor shareholders’ equity
Total 850,005.12
2. According to CSRC regulations of announcement “Disclosure requirements No.9 for the public
listed companies—disclosure of ROE (%) and EPS” (revised in 2010), the calculated data are as
following:
Weighted EPS
Profit in reporting period average ROE
Basic EPS Diluted EPS
(%)
Net profit attributable to ordinary shareholders 29.28 0.5029 0.5029
Net profit attributable to ordinary shareholders after
29.19 0.5014 0.5014
deducting non-recurring gain or loss
Legal representative: Chen Yugang Head of the accounting work: Wang
Hangjun
Principal of the accounting organ: Shen Xueying
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113
