SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.
ANNUAL REPORT 2011
29 Mar. 2012
Section I. Important Notes and Contents
The Board of Directors, Supervisory Committee as well as directors, supervisors and
senior executives of Shenzhen Properties & Resources Development (Group) Ltd.
(hereinafter referred to as the Company) warrant that this report does not contain any
false or misleading statements or omit any material facts and hereby accept,
individually and collectively, responsibility for the truth, accuracy and completeness
of the contents of this report.
None of the directors, supervisors or senior executives has objection to the factuality,
accuracy or completeness of this Report.
All directors of the Company personally attended the Board Meeting.
China Chain International Certified Public Accountant issued audit report with
standard unqualified opinion for the Company.
Mr. Chen Yugang, Chairman of the Board of the Company, Mr. Wang Hangjun,
Person in Charge of Accounting Work, CFO Mr. Gong Sixin and Ms. Shen Xueying,
Manager of Financial Management Department, hereby confirm that the Financial
Report enclosed in the Annual Report 2011 is true and complete.
This report has been prepared in Chinese version and English version respectively. In
the event of difference in interpretation between the two versions, the Chinese version
shall prevail.
Content
Section I Important Notes and Content………………………………………………..
Section II Company Profile……………………………………………………………
Section III Summary of Accounting Highlights and Business Highlights...…………..
Section IV Changes in Share Capital and Particulars about Shareholders………….....
Section V Directors, Supervisors and Senior Executives and Employee………….…..
Section VI Corporate Governance Structure…………………………………….…......
Section VII Brief Introduction to the Shareholders’ General Meeting…………………
Section VIII Report of the Board of Directors………………………………………….
Section IX Report of the Supervisory Committee………………………………………
Section X Significant Events……………………………………………………………
Section XI Financial Report…………………………………………………………….
Section XII Documents Available for Reference……………………………………….
Section II. Company Profile
I. Legal Name of the Company
In Chinese: 深圳市物业（发展）集团股份有限公司
Abbr. in Chinese: 物业集团
In English: Shenzhen Properties & Resources Development (Group) Ltd. (PRD)
II. Legal Representative: Chen Yugang
III. Secretary to the Board of Directors and Securities Affairs Representative:
Secretary to the Board of Directors Securities Affairs Representative
Name Fan Weiping Qian Zhong, Huang Fengchun、
nd nd
Contract 42 Floor, International Trade Center, 42 Floor, International Trade Center,
Address Renmin South Road, Shenzhen Renmin South Road, Shenzhen
0755-82211020
Tel 0755-82211020
0755-82210610、82212043
Fax 0755-82210610、82212043
000011touzizhe@163.com
E-mail 000011touzizhe@163.com
th nd
IV. Registered Address and Office Address: 39 and 42 Floor, International Trade
Center, Renmin South Road, Shenzhen
Post Code: 518014
Internet Website of the Company: www.szwuye.com.cn
V. Media Designated for Information Disclosure of the Company:
Securities Times for A-Share, Ta Kung Pao for B-Share
Internet Website Designated by CSRC for Publishing the Annual Report:
http://www.cninfo.com.cn
Place Where the Annual Report is Prepared and Placed: Office of Board of
Directors, on 42nd Floor, International Trade Center, Renmin South Road,
Shenzhen
VI. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of Stock and Stock Code: Shen Wuye A (000011)
Shen Wuye B (200011)
VII. Registration date: Jan. 17, 1983
Address: Industrial and Commercial Administration Bureau of Shenzhen
Municipal Government
Registration Code of Enterprise Business License: 440301103570124
Registered number of taxation: 440301192174135
Organization code: 19217413-5
Name and address of engaged by the Company:
Domestic Accounting Firm: China Chain International Certified Public
Accountant
Address: 16th - 18th Floor, Tower B, Wuhan International Mansion
Section III. Summary of Accounting Highlights and
Business Highlights
I. Accounting data as of the year 2011
Unit: RMB Yuan
Increase/d
2011 2010 ecrease 2009
(%)
Operating revenue 1,408,565,307.32 993,175,350.38 41.82% 845,366,939.69
Operating profit 340,988,497.94 194,879,101.67 74.97% 130,921,541.68
Total profit 339,503,404.62 207,159,741.70 63.88% 127,297,762.81
Net profit
attributable to
257,461,077.54 174,998,534.79 47.12% 96,933,951.02
shareholders of
parent company
Net profit excluding
non-recurring
gain/loss attributable 257,538,768.66 160,273,095.99 60.69% 109,832,961.93
to shareholders of
parent company
Net cash flow from
-361,467,587.70 -101,778,470.64 255.15% 759,650,626.69
operating activities
Increase/d
ecrease
31 Dec. 2011 31 Dec. 2010 31 Dec. 2009
year-on-y
ear (%)
Total assets 3,499,608,314.21 2,913,281,353.84 20.13% 2,834,417,954.60
Total liability 2,368,502,353.23 2,038,233,644.90 16.20% 2,172,113,314.42
Net assets per share
attributable to
shareholders of 1,130,243,873.92 874,185,621.88 29.29% 661,442,553.12
parent company
(RMB Yuan)
Total share capital 595,979,092.00 595,979,092.00 0.00% 595,979,092.00
Items of extraordinary gains and losses deducted and the relevant amount:
Unit: RMB Yuan
Amount in Amount in
Items Note Amount in 2009
2011 2010
Gains and losses on disposal of -26,955.97 3,666,926.49 58,710.32
non-current assets, including
provision for asset impairment
write-off
Corporate restructuring cost, such as -87,077.70 -12,700,956.90
employee resettlement expense,
integration costs etc.
Gains and losses on contingencies 3,533,281.90 -8,031,974.39
not relating to routine operation
Gains or losses arising from a change 240,074.81 39,900.00 2,473,993.55
in the fair value of a financial asset or
financial liability and investment
income from disposal of tradable
financial assets and liabilities as well
as available-for-sale financial assets
that is not part of a hedging
relationship related to ordinary
operation of the Company
Recovery of accounts receivable that 842,092.26 Refer to Notes 1,478,071.21
independently make provision for to financial
impairment statements
Ⅴ.4, 5
Gains and losses on external 351,962.50
entrusted loan
Other non-operating income -1,458,137.35 Mainly of 6,620,338.00 4,346,485.20
and expense apart from the compensation
above items for payment to
Peace Hotel
Subtotal -50,963.75 15,251,439.90 -13,853,742.22
Less: Income tax influence excluding 26,727.37 526,001.10 -954,731.31
extraordinary gains and losses
Total -77,691.12 14,725,438.80 -12,899,010.91
Difference in PRC GAAP and IFRS
Unit: RMB Yuan
Net profit attributable to Owner’s equity attributable to parent
Item owners of parent company company
（Jan.-Dec.2011） （as at 31 Dec. 2011）
As per PRC GAAP 257,461,077.54 1,130,243,873.92
As per IFRS 257,461,077.54 1,130,243,873.92
Explanation for difference No difference
II. Major accounting data and financial indexes of the Company over the last
three years
1. Main accounting data
Unit: RMB Yuan
2011 2010 Increase/dec 2009
rease
year-on-year
(%)
Basic earnings per share 0.4320 0.2936 47.14% 0.1626
Diluted earnings per share 0.4320 0.2936 47.14% 0.1626
Basis earnings per share after 0.4321 0.2689 60.69% 0.1843
deducting non-recurring gains and
losses
Fully diluted return on net assets 22.78% 20.02% 2.76% 14.65%
Weighted average return on net 25.67% 23.27% 2.40% 15.67%
assets
Fully diluted return on net assets 22.79% 18.33% 4.46% 16.61%
after deducting non-recurring
gains and losses
Weighted average return on net 25.68% 21.31% 4.37% 17.76%
assets after deducting
non-recurring gains and losses
Net cash flow per share arising -0.6065 -0.1708 255.09% 1.2746
from operating activities
Increase/dec
At the end of At the end of rease At the end of
2011 2010 year-on-year 2009
(%)
Net assets per share attributable to 1.8964 1.4668 29.29% 1.1098
shareholders of the company
Asset-liability ratio 67.68% 69.96% -2.28% 76.63%
Section IV. Changes in Share Capital and Particulars about
Shareholders
I. Changes in share capital of the Company in 2011
(I) Changes in shares
Unit: Share
Before the change Increase/decrease for this accounting period (+, - ) After the change
Capit
Issu alizat
ance Bo ion of
Proport of nus publi Proporti
Amount Other Subtotal Amount
ion new sha c on
shar res reser
es ve
fund
I. Shares
subject to
388,640,594 65.21% -5,421,430 -5,421,430 383,219,164 64.30%
trading
moratorium
1. Shares held
by the State
2. Share held
by
382,509,385 64.18% -2,221,956 -2,221,956 380,287,429 63.81%
state-owned
corporation
3. Shares held
by other
6,127,167 1.03% -3,195,432 -3,195,432 2,931,735 0.49%
domestic
investors
Among
which: Shares
held by
domestic 5,599,167 0.94% -3,195,432 -3,195,432 2,403,735 0.40%
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
stock on
4,042 0.0007% -4,042 -4,042 0 0
senior
executive
II. Shares not
subject to
207,338,498 34.79% +5,421,430 +5,421,430 212,759,928 35.70%
trading
moratorium
1. RMB
ordinary 139,737,297 23.45% +5,417,388 +5,417,388 145,154,685 24.36%
shares
2.
Domestically
67,601,201 11.34% +4,042 +4,042 67,605,243 11.34%
listed foreign
shares
3. Overseas
listed foreign
shares
4. Others
III. Total
595,979,092 595,979,092
shares
Note: ―Frozen stock on senior executives‖ in ―hares subject to trading moratorium‖ is
154 shares of A-share and 5390 shares of B-share held by Guo Lusi, supervisor of the
Company. In accordance with Rules on Management of Stock and of Which Changes
of Directors, Supervisors and Senior Executives of the Company, 5390 shares of
B-share held by Guo Lusi is locked at a ratio of 75%, while A-share held by Guo Lusi
is less than 1,000 shares that not need to lock.
Statement of Change in Shares Subject to Trading Moratorium
Unit: Share
Shares Increase of
Shares released Shares subject
subject to shares subject to
Name of from trading to trading Date of
trading trading Reason
Shareholder moratorium in moratorium at releasing
moratorium moratorium
this year the year-end
at the subscription in
year-begin this year
Shenzhen
Construction
Restriction
Investment 323,158,332 0 546,524 323,704,856 4 Nov. 2012
sale
Holdings
Corporation
Shenzhen
Investment Restriction
56,582,573 0 0 56,582,573 4 Nov. 2012
Management sale
Corporation
Other
shareholder of Restriction
8,895,647 59,639,12 0 2,931,735 Unknown
non-tradable sale
shares
Shares held
Guo Lusi 4,042 4,042 0 0 by Dec. 2011
supervisor
Total 388,640,594 0 0 383,219,164
Note: At the end of the reporting period, among among other shareholder of
non-tradable shares, shares subject to trading moratorium held by seven shareholders
with trading moratorium has released for trading, details please refer to Suggested
Notice on Releasing Shares Subject to Trading Moratorium disclosed on Securities
Time and Ta Kung Pao, as well as website http://www.cninfo.com.cn respectively
dated on 13 Apr., 12 Jul. and 15 Dec. 2011.
(II) Issuance and listing of shares
1. Particulars on securities issuance and stock changes of the latest three years
① Proposal on share merger reform of the Company was passed in Shareholders’
General Meeting on 21 Oct. 2009. The reform is base on 91,391,300 shares of A-share
of Shen Wuye, non-tradable shareholders paid shares to A-share tradable shareholders
at the rate of 3.9 shares for 10 every share, and the non-tradable shareholders paid
35,642,607 shares to tradable shareholders in total.
② On 23 Nov. 2009, the Company performed the bonus shares to all shareholders
with retained profits at the rate of 1 share for every 10 shares, and 54,179,917 bonus
shares were distributed in total.
③Over the previous three years as at end of the report period, the Company failed to
issue shares on sale, convertible corporate bond, separate-transaction convertible bond,
corporate bonds and other derivative securities.
2. In the reporting period, total shares and share structure remained unchanged.
II. About shareholders
1. Number of shareholders and shares held by shareholders
In accordance with the name list for registration provided by China Securities
Depository & Clearing Corporation Limited Shenzhen Branch to the Company, shares
held by the top ten shareholders and the top ten shareholders not subject to trading
moratorium as at 31 Dec. 2011 are as below:
Unit: Share
By the end of the reporting period, the Company has 47653 shareholders in total,
Total number of shareholders
including 38038 ones of A-share and 9615 ones of B-share.
Particulars about shares held by the top ten shareholders
Number of shares
Type of Proport Total number of Share pledged or
Full name of Shareholder subject to trading
shareholders ion (%) shares held frozen
moratorium
SHENZHEN
CONSTRUCTION
State-owned
INVESTMENT 54.31 323,704,856 323，704，856 0
corporation
HOLDINGS
CORPORATION
SHENZHEN
INVESTMENT State-owned
9.50 56,582,573 56，582，573 0
MANAGEMENT corporation
CORPORATION
CHINA INDUSTRIAL
INTERNATIONAL TRUST Funds,
LIMITED- First Phase financing 0.92 5,461,000 0 0
(three phases) of products etc.
Subscription of CBC Wealth
SHENZHEN
INTERNATIONAL TRADE
State-owned
CENTER PROPERTY 0.42 2,514,781 0 0
corporation
MANAGERMENT
COMPANY
Domestic
Guang Ping 0.35 2,058,212 0 0
natural person
Domestic
Zeng Ying 0.29 1,750,000 0 0
natural person
SHENZHEN SPECIAL
Domestic
ZONE DUTY-FREE 0.29 1,730,300 1，730，300 0
general person
COMMODITY CO.
Domestic
Li Ping 0.15 881,216 0 0
natural person
Domestic
Xu Guoxing 0.13 785,869 0 0
natural person
Domestic
Zhou Yonghong 0.11 682,832 0 0
natural person
Explanation on associated The first and second principal shareholders of the Company are managed by Shenzhen
relationship among the Investment Holding Corporation, the actual controlling shareholder of the Company. The
above shareholders or forth shareholder is labor union of wholly-owned subsidiary company indirectly controlled by
consistent action the Company. Except for these, the Company is not aware of whether there exists associated
relationship or consistent action among the other seven shareholders holding trade shares or
not.
Shares held by the top ten shareholder not subject to trading moratorium
Numbers of shares not subject
Name of shareholders Type of share
to trading moratorium
CHINA INDUSTRIAL
INTERNATIONAL TRUST
5,461,000 RMB ordinary shares
LIMITED- First Phase (three phases)
of Subscription of CBC Wealth
SHENZHEN INTERNATIONAL
TRADE CENTER PROPERTY 2,514,781 RMB ordinary shares
MANAGERMENT COMPANY
Guang Ping 2,058,212 RMB ordinary shares
Zeng Ying 1,750,000 Domestically listed foreign shares
Li Ping 881,216 RMB ordinary shares
Xu Guoxing 785,869 RMB ordinary shares
Zhou Yonghong 682,832 Domestically listed foreign shares
Sun Lihua 660,100 RMB ordinary shares
Liu Liaoyuan 641,900 Domestically listed foreign shares
Long Keyi 638,500 RMB ordinary shares
Explanation on associated The Company is not aware of whether there exists associated relationship or
relationship among the above consistent action among the top ten shareholders not subject to trading moratorium
shareholders or consistent action or not.
(II) Number of shares held by the top ten shareholder holding shares subject to trading
moratorium and conditions
Number of Number of
Date that
shares subject additional
No. Name of shareholders shares can Trading moratorium
to trading marketable
be listed
moratorium shares
1. The originally
SHENZHEN 4 Nov. 2012 29,798,954
non-tradable shares
CONSTRUCTION 323,704,856
1 4 Nov. 2013 29,798,954 held by the shareholder
INVESTMENT HOLDINGS
Remaining shall not be listed for
CORPORATION 4 Nov. 2014
shares trading or transferred
within 36 months since
4 Nov. 2012 29,798,954 implementation of the
share reform;
2. Upon expiration of
the moratorium above,
SHENZHEN INVESTMENT the proportion of
2 MANAGEMENT 56,582,573 originally non-tradable
CORPORATION Remaining shares sold via the
4 Nov. 2013
shares stock exchange in the
total Shenwuye shares
shall not exceed 5%
within 12 months and
10% within 24 months.
SHENZHEN SPECIAL
3 ZONE DUTY-FREE 1,730,300 Unknown
COMMODITY CO.
4 Geng Qunying 528,000 Unknown
The originally
CHINA SHENZHEN
non-tradable shares
INTERNATIONAL
5 331,101 Unknown held by the shareholder
COOPERATION(GROUP)
shall not be listed for
CO.,LTD.
trading or transferred
Shenzhen Nanyue Investment
6 86,515 Unknown within 12 months since
and Development Co., Ltd
implementation of the
Shanghai Weihong Industry
7 55,000 Unknown share reform;
and Trade Co., Ltd
non-tradable shares
Shenzhen Longgang District
held by the shareholder
8 Changsheng Real Estate Co., 54,840 Unknown
where considerations
Ltd
have not been executed
Shenzhen South China
shall not be listed for
9 Investment and Development 54,840 Unknown
trading (Note Ⅱ).
Stock Limited Corporation
Quality Management
10 Association of Wenling 54,839 Unknown
Municipal
Note: The trading moratorium of shares held by shareholders not subject to trading
moratorium from No. three to No. ten came to expire on 4 Nov. 2010. It still needs to
clear advance and proceeding releasing procedure before public listing.
(III) About the controlling shareholder and actual controller of the Company
1. By the end of reporting period, the controlling shareholder of the Company is still
Shenzhen Construction Investment Holdings Corporation (―the holding company‖) in
register book. In 2004, Shenzhen Municipal Government incorporated Shenzhen
Construction Investment Holdings Corporation with the other two municipal assets
operation and management companies, namely Shenzhen Investment Management
Corporation and Shenzhen Trade and Business Holdings Corporation to establish
Shenzhen Investment Holdings Co., Ltd.. Therefore, the Company’s actual controlling
shareholder is Shenzhen Investment Holdings Co., Ltd., a sole state-funded limited
company, who was established in Oct. 13, 2004 with the registered capital of RMB 4
billion and Mr. Fan Mingchun as its legal representative. Main business scope:
providing guarantee to municipal state-owned enterprises, management of
state-owned equity, assets reorganization and reformation of enterprises, assets
operation and equity investment and etc.. As a government department, State-owned
Assets Supervision and Administration Commission of Shenzhen implemented
management for Shenzhen Investment Holdings Co., Ltd. on behalf of Shenzhen
municipal government. Thus, the final controller of the Company is State-owned
Assets Supervision and Administration Commission of Shenzhen with locating at
Investment Bldg., Shen Nan Av., Futian District, Shenzhen and postcode of ―518026‖.
2. Change in the controlling shareholder and actual controller
During the reporting period, the controlling shareholder and actual controller
remained unchanged.
3. The controlling relationship between the Company and the actual controller is as
below:
State-owned Assets Supervision and
Administration Commission of Shenzhen 100%
Shenzhen Investment Holdings Co., Ltd. 63.81%
The Company
（（
The second principal shareholder of the Company is Shenzhen Investment
Management70.2% Corporation (holding 9.5% equity of the Company), who was
established in Feb. 1988 with the registered capital of RMB 2 billion, as well as Mr.
Li Heihu as its legal representative. It is an assets operation management company
owned by the whole people. In accordance with the document of SGZW [2004] No.
223 ―Decision on Establishing Shenzhen Investment Holdings Co., Ltd.‖, in 2004,
Shenzhen Investment Management Corporation incorporated with Shenzhen
Construction Investment Holdings Corporation and Shenzhen Trade and Business
Holdings Corporation. The corporate shares of the Company held by the aforesaid
three companies were managed by new company after incorporation — Shenzhen
Investment Holdings Co., Ltd.
4. About other shareholders holding over 10% (including 10%) shares of the
Company
In the reporting period, the Company has no other corporation shareholders holding
over 10% (including 10%) shares of the Company.
Section V. Directors, Supervisors and Senior Executives and
Employee
I. About directors, supervisors and senior executives
(I) Particulars about changes in current directors, supervisors and senior executives
Holding Holding
shares at shares at
Reasons
Name Office title Sex Age Office term the the +/-
of change
year-begin year-end
(share) (share)
Chen
Chairman of the Board Male
Yugang 54 Jun. 2011-Jun. 2014 0 0 0
Director, General
Wei Zhi Male
Manger 54 Jun. 2011-Jun.2014 0 0 0
Liu Director, Chairman of
Male
Guangxin Labor Union 53 Jun. 2011-Jun.2014 0 0 0
Wen Li Director Female
44 Jun. 2011-Jun.2014 0 0 0
Guo Liwei Director Male
42 Jun. 2011-Jun.2014 0 0 0
Li Xiaofan Independent Director Male
39 Jun. 2011-Jun.2014 0 0 0
Zha
Independent Director Male
Zhenxiang 55 Jun. 2011-Jun.2014 0 0 0
Chen
Chairman of the Board Male
Yugang 59 Jun. 2011-Jun.2014 0 0 0
Director, General
Wei Zhi Male
Manger 56 Jun. 2011-Jun.2014 0 0 0
Dai Chairman of
Male 49 Jun. 2011-Jun.2014 0 0 0
Xianhua Supervisory Committee
Zhang
Supervisor Male 34 Jun. 2011-Jun.2014 0 0 0
Shilei
Wang
Supervisor Female
Xiuyan 49 Jun. 2011-Jun.2014 0 0 0
Supervisor, Manger of
Wang
Development Female
Qiuping 42 Jun. 2011-Jun.2014 0 0 0
Management Dept.
Zhang Supervisor, Manager of
Male
Gejian Auditing Dept. 36 Jun. 2011-Jun.2014 0 0 0
Deputy General
Wang
Manager, person in Male
Hangjun 45 Jun. 2011-Jun.2014 0 0 0
charge of finance
Deputy General
Li Zipeng Male
Manager 45 Jun. 2011-Jun.2014 0 0 0
Deputy General
Fan
Manager, Secretary to Male
Weiping 47 Jun. 2011-Jun.2014 0 0 0
the Board of Directors
Note: Before the date of this report, secretary to the Board of Directors was engaged
as Deputy General Manager of the Company. Please refer to Announcement on
Resolution of the Board of Directors on Securities Time, Ta Kung Pao and website
http://www.cninfo.com.cn dated 12 Feb. 2012.
Changes in shares of former directors, senior executives in the reporting period
Holding Holding
Reaso
shares at shares at
ns of
Name Office title Sex Age Office term the the +/-
chang
year-begin year-end
e
(share) (share)
Cao Former Chairman of
Male 60 Jun. 2007-Jun. 2011 0 0 0
Ziyang Supervisory Committee
Wang
Former Deputy GM Female 44 Jun. 2011-Nov. 2011 0 0 0
Huiming
(II) Work experience of current directors, supervisors and senior executives, post or
concurrent posts in other companies excluding shareholder companies
Members of the Board of Directors:
Mr. Chen Yugang, was born in September 1957, Postgraduate degree, is senior
Political Worker. He gains rich experience in government administrative management
and enterprise management over 20 years. He held some important posts in many
municipal departments. He served as GM and Secretary of the CPC in Shenzhen
Shenhua Group Company. Also, he served as GM and Vice Secretary of the CPC in
Shenzhen Xianke Enterprise Group, and Deputy General Manager of Shenzhen
Investment Holdings Co., Ltd. From May 2006, he has served as Secretary of CPC in
the Company. And in June 2006, he was elected as Chairman of the Board of the
Company. Now he acts as Secretary of CPC and Chairman of the Board in the
Company.
Mr. Wei Zhi, was born in November 1957, Bachelor Degree, holds the title of
interpretation. He gains rich experience in enterprise management for over 20 years.
He ever worked in Shenzhen International Engineering Co., Ltd. as Deputy Manager
of Overseas Department, in Shenzhen Zhongshen Overseas Development Company as
Manage of Labor Affairs Department and Deputy General Manager, in China
Shenzhen International Cooperation (Group) Co., Ltd. in Hong Kong Liyuan
Company as Director and General Manager; in Shenzhen Construction Investment
Holdings Corporation as Deputy Manager of Overseas Department, in Shenzhen
Construction Investment Holdings Corporation as Deputy Manager of Contract
Department, in Shenzhen Tonge (Group) Co., Ltd. as Assistant General Manager and
Deputy General Manager, in Tonge Real Estates Development Company as Chairman
of the Board and General Manager. Since October 2007, he took the posts of the Vice
Secretary of CPC and Standing Deputy General Manager in the Company. ince 20
Dec. 2007, he held the posts of Director, Vice Secretary of CPC and GM of the
Company. Since 15 Jul. 2008 to present, he acts as Vice Secretary of CPC, Director
and GM of the Company.
Mr. Liu Guangxin, was born in May 1958, College Diploma, is an Economist. He
gains experience in enterprise management over 10 years. Since May 1989, he held a
job in the Company as Director of the Office in Properties Engineering Development
Company, General Manager of International Trade Center Industrial Development
Company, General Manager of International Trade Center Food Company, Deputy
Director and Director of the GM Office of the Company, as well as Manager of
Operation and Management Department of the Company. Since October 2007, he
took the posts of Vice Secretary of CPC and Secretary of Discipline Inspection
Committee in the Company. Since November 2007, he was appointed as Chairman of
the Labor Union of the Company. Now he acts as Vice Secretary of CPC, Director,
Secretary of Discipline Inspection Committee as well as Chairman of Labor Union in
the Company.
Mr. Gong Sixin, was born in Feb. 1968, Master of Economics, Senior Accountant. He
has profound experiences in financial accounting management. He ever took posts of
CFO of Shandong Weigao Medical Polymer Company Limited, of CFO of Shenzhen
3Nod Technology Co., Ltd. as well as CFO of Shenzhen Jiehe Technology Co., Ltd.
Since Sep. 2010, he is acting as CFO of the Company.
Ms. Wen Li, born in December 1969, Postgraduate Degree, Master Degree, is an
Economist as well as Engineer. She gains experience in enterprise management over
10 years. She ever worked in Shenzhen Fantasia Investment Development as Assistant
of Standing Deputy General Manger, Manager of Project Department, as well as
Manager of Market Planning Department. Since July 2005, worked in Shenzhen
Investment Holdings Co., Ltd.. She was ever appointed as Deputy Department
Director of Investment Department of Shenzhen Investment Holdings Co., Ltd. Now
she acts as Vice Director of Management Center of Construction Project of Shenzhen
Investment Holdings Co., Ltd., Director of the Company.
Mr. Guo Liwei, was born in 1973, Postgraduate Degree, is a master of Law. He once
successively held the posts in General Department of Ping An Insurance (Group)
Company of China as legal consultant, and Shenzhen Investment Management
Corporation as Business Manager of Legal Affairs Department. Since October 2004,
he worked in Shenzhen Investment Holdings Co., Ltd as Deputy GM of Legal Affairs
Department. He now acts as Manager of the First Enterprise Management in
Shenzhen Investment Holdings Co., Ltd. and Director of the Company.
Members of Independent Directors:
Mr. Dong Zhiguang, was born in February 1957, Bachelor Degree, is an Senior
Accountant aw well as CPA. He gains experience in enterprise management over 20
years. He ever took the posts of Deputy Division Chief and Division Chief of China
Construction Bank Heilongjiang Branch, General Manager of Planning & Financial
Department, Chief Accountant and Director in Southern Securities Co., Ltd., and
President of China Antai Group Co., Ltd. Now he acts as Chairman of the Board in
Shenzhen Osgate Trading Co., Ltd., Independent Director of the Company.
Mr. Li Xiaofan, was born in 1953, holder of Master-degree of economics with
register management consultant and research scholar. He once successively held posts
in Economic Research Institute of the Gansu Provincial Academy of Social Sciences
as Vice Director, in Shenzhen System Restructuring Office as Chief Division, as well
as Chief Division of Market System Office; and Director of Investment Promotion
Liaison Office of Shenzhen Municipal Government in European office, inspector of
Former Foreign Economic & Trade Bureau of Shenzhen. From 2006 to now, he has
held posts in Shenzhen Urban Development Research Center as a research scholar; in
China Productive Power Commission as Administrative Syndic and Vice
Secretary-general. Now he is the Independent Director of the Company.
Mr. Zha Zhenxiang, was born in November 1955, Doctor Degree, holds title of
Professor, and enjoys special allowance from Government of the State Council. Mr.
Zha has profound theoretical basis in business management. He ever held the posts of
Vice Dean in College of Economics and Management of China Agricultural
University, Director of Development and Research Center of China Bao’an Group Co.,
Ltd., Chief Economist of Nanhai Nengxing Development Group Co., Ltd. Now he
took the posts of Dean in College of Economics and Management of Shenzhen
Polytechnic and concurrently Director of Social Development Research Center, as
well as Independent Director of the Company.
Members of the Supervisory Committee:
Mr. Dai Xianhua, was born in April 1962, doctor degree, Party member of CPC. He
gains adequate work experience of over 20 years. He worked as a lecturer in School
of Business and Economy of Zhongnan University of Economics and Law from 1986
to 1989. He took posts of editor of department of theory and review, assistant director,
vice director in Shenzhen Economic Daily from 1992 to 1997; worked in Shenzhen
State Assets Administration Committee (hereinafter referred as ―Shenzhen SAC‖) as
Vice Section Chief of Assets Department, and Assets Management Department, Vice
Director, investigator of Office, and investigator of Appraisal and Distribution
Department from 1997 to 2009. He acted as investigator of Appraisal and Distribution
Department in Shenzhen Municipal People’s Government State-owned Assets
Supervision and Administration Commission from 2009 to 2011. Now he is Chairman
of the Supervisory Committee of the Company.
Mr. Zhang Shilei, was born in Feb. 1978, master degree holder. He worked as a
marketing engineer in CyberMart Business Department of Foxconn Enterprise Group
from 2002 to 2004; as Director, Secretary to the Board of Shenzhen Information
Pipeline Co., Ltd. from 2004 to 2008; and has been working as Vice Director of
Office of Shenzhen Investment Holdings Co., Ltd. Now he is Director of the
Company.
Ms. Wang Xiuyan, was born in Aug. 1962, MBA degree, is an accountant. From May
1997 to Sep. 2004, she worked in Shenzhen Investment Management Corporation,
once acted as secretary of the Supervisory Committee Office, Business Manager of
Audit Department, Director of Women’s Labor Union, Senior Business Manager of
Audit Department and Supervision Department; from Oct. 2004 to Dec. 2007, she
acted as manager of Supervision and Inspection Department in Shenzhen Investment
Holding Co., Ltd.; from Dec. 2007 to present, she is manager of Audit Department
(the Supervisory Committee Office) in Shenzhen Investment Holding Co., Ltd., now
she is supervisor of the Company.
Ms. Wang Qiuping, was born in Jan. 1970, Bachelor degree, is a senior economist.
Since 1992, she worked for the Company, she ever took post in GM office, Plan and
Finance Department and Operation and Management Department for comprehensive
operation and management as well as planning and management. Now she is
Supervisor, Manager of Development and Management Department of the Company.
Mr. Zhang Gejian, was born in September 1975, Bachelor Degree, is an Accountant
as well as Auditor. He was engaged in internal auditing work in Audit Department of
the Company since July 1997. Now he acts as Supervisor of the Company and
concurrently Manager of Audit Department.
Senior executives:
Mr. Wang Hangjun, was born in Nov. 1966, graduated from Zhongnan University of
Economics with a master degree of economy. He is a senior auditor and has over 20
years corporate management experience. He ever took post of Deputy Chief of Audit
Bureau of Nanshan District, Shenzhen; of Vice Minister, Minister of Audit
Department of Shenzhen Investment and Management Company; of Vice Minister,
Minister of Supervision Department of Shenzhen Investment and Management
Company; of Minister of Audit and Inspection Department of Shenzhen Investment
Holding Co., Ltd. He has been Deputy GM of the Company since Oct. 2007.
Mr. Li Zipeng, was born in May 1966, Bachelor Degree from Civil Department of
Huazhong University of Science and Technology. He successfully held the posts of
Section Chief of Engineering, Field Manager of Real Estate Project, Principal of
Housing Sale Department, Assistant General Manager, Deputy General Manager as
well as General Manager in Shenzhen Huangcheng Properties Co., Ltd. (shareholding
subsidiary company of the Company). From October 2007, he was appointed as
Deputy General Manager of the Company and concurrently General Manger of
Shenzhen Huangcheng Properties Co., Ltd, shareholding subsidiary company of the
Company.
Mr. Fan Weiping, was born in Apr. 1965, graduated from Southwest University of
Political Science & Law in 1988 and holder of postgraduate degree. He worked in
Shenzhen Shenhua Group Company in 2003, successively acted as section chief of
Law section of Supervisory and Audit Department; Vice Secretary and Secretary of
Law Department; Assistant to General Manager; Chief Legal adviser; from Jan. 2009
to present, he acts as Secretary to the Board of Directors and chief legal consultant in
the Company.
(III) Particulars about annual remuneration of the Company’s directors, supervisors
and senior executives
Remuneration drawn by the Company’s directors, supervisors and senior executives
for the year 2011 are as follows (tax included):
Annual remuneration
No. Name Office title Remark
(RMB’0000)
1 Chen Yu Gang Chairman of the Board 76.73
2 Wei Zhi Director, General Manger 74.36
Director, Chairman of Labor
3 Liu Guangxin 61.72
Union
4 Gong Sixin Director, CFO 41.10
Drawing salary from
5 Wen Li Director 0
controlling shareholder
Drawing salary from
6 Guo Liwei Director 0
controlling shareholder
Allowance for
7 Dong Zhiguang Independent Director 8.00
independent director
Allowance for
8 Li Xiaofan Independent Director 8.00
independent director
Allowance for
9 Zha Zhenxiang Independent Director 8.00
independent director
Remuneration was check
and ratified by Shenzhen
Chairman of the Supervisory Investment Holding Co.,
10 Cao Ziyang 21.20
Committee Ltd. and assigned by the
Group (Retired in Jul.
2011)
Remuneration was check
and ratified by Shenzhen
Chairman of the Supervisory Investment Holding Co.,
11 Dai Xianhua 20.90
Committee Ltd. and assigned by the
Group (Retired in Jun.
2011)
12 Zhang Shilei Supervisor 0 Drawing salary from
controlling shareholder
Drawing salary from
13 Wang Xiuyan Supervisor 0
controlling shareholder
Supervisor, Deputy Manger
14 Wang Qiuping of Development 28.45
Management Dept.
Supervisor, Deputy Manager
15 Zhang Gejian 28.40
of Auditing Dept.
Deputy General Manager,
16 Wang Hangjun 61.72
person in charge of finance
17 Wang Huimin Deputy General Manger 39.59 Left office in Nov. 2011
18 Li Zipeng Deputy General Manger 61.72
Deputy General Manger,
19 Fan Weiping 61.72
Secretary to the Board
Total 601.60
(IV) Changes and reason for changes on Supervisors, Senior Executives
1. In Jul. 2011, former Chairman of the Supervisory Committee of the Company, Mr.
Cao Ziyang retired from the Company, then the Supervisory Committee elected Mr.
Dai Xianhua as new Chairman of the Supervisory Committee.
2. In Nov. 2011, former Deputy GM of the Company submitted resignation to the
Company to resign from the post of Deputy GM of the Company due to work change.
Please refer to Announcement on Resignation of Senior Executives published on
Securities Time and Ta Kung Pao, as well as website http://www.cninfo.com.cn dated
22 Nov. 2011.
II. About employees
The Company has totally 2723 employees in office at present, including 1775
production personnel, 120 salespersons, 542 technicians, 96 financial personnel and
190 administrative personnel. 1206 persons graduated from technical secondary
school and college or above. Presently, the Company needs to bear the expenses of
180 retirees.
Section VI Corporate Governance Structure
I. Actual status of corporate governance
During the reporting period, in accordance with the requirement of the Company Law,
Securities Law, Code of Corporate Governance for Listed Companies in China and
Stock Listing Rules of Shenzhen Stock Exchange as well as relevant laws and statutes
of CSRC, the Company continuously regulated and perfected corporate governance
structure, established and perfected internal management and control system and
investigated in management activities of the Company, which promoted the
Company’s standard management level.
In the reporting period, the Company implemented Working Rules on Annual Report,
Working Rules on Legal Consultant, Management Rules on Contract, revised and
implemented Rules of Accountabilities for Significant Mistakes in Annual Report
Information Disclosure. As from the end of the reporting period to the reporting date,
the Company drew up Management Rules on Person in Charge of Financial
Accounting, revised Working Rules on General Manager. In the process, the internal
control system of the Company is more perfected.
As to the end of the reporting period, the internal control system of the Company is
complete, accomplished and defined that in accordance with Company Law, Articles
of Association and other laws and regulations as well as requirements of regulatory
documents. The convene of Shareholders’ General Meeting, the Board of Directors
and Supervisory Committees are strictly in accordance with relevant rules and
regulations, all directors and supervisors earnestly and diligently commit their
responsibilities. Corporate structure of the Company is complete and the operation of
the Company is standardized.
(I) Shareholders and the Shareholders’ General Meeting
Convening, holding and resolution procedure of the Shareholders’ General Meeting
are in line with the regulations stipulated in the Rules for Shareholders’ General
Meeting of Listed Companies, Articles of Association, and Rules of Procedure for
Shareholders’ General Meeting of the Company. Shareholders’ Genera Meeting was
presided over by Chairman of the Board, and invited lawyers to witness on the spot.
The Company equally treated all shareholders, no matter minority shareholders or
principal shareholders, and ensured all the shareholders especially minority
shareholders to exercise the power of right to know and right to participate fully
through various means. Meanwhile, associated shareholders avoided voting for related
transactions for the purpose of ensuring that decision-making procedure of the related
transactions are legal and are conducted openly, honestly and fairly. There was no
controlling shareholder who has done harm to interests of the Company and of
minority shareholders.
(II) Directors and the Board of Directors
Member and composition of the Board of Directors are in line with laws and statutes
as well as requirement of Articles of Association, and all the directors of the Company
are qualified. The Company held the Board meetings and shaped the resolutions
strictly in accordance with regulations in the Articles of Association and Rules of
Procedure for the Board of Directors. All Directors attended the Board Meetings
earnestly and responsibly, made decisions carefully and expressed clear opinion on
matters discussed. In a word, directors faithfully performed obligations of diligence
and credibility, and protected interest of minority shareholders.
The Board of Company divides into Strategic Development and Investment
Committee under the Board, Audit Committee under the Board, Nomination
Committee under the Board and Remuneration and Appraisal Committee under the
Board that all specific committees completed relevant working rules. All committees
earnestly carry on operation in accordance with working rules and provide support for
making scientific decision and regulating management.
(III) Supervisors and the Supervisory Committee
Member and composition of the Supervisory Committee are in line with laws and
statutes as well as requirement of Articles of Association. Supervisors of the Company
seriously performed their duties according to requirements of the Articles of
Association and of Rules of Procedure for the Supervisory Committee, and made
effective supervision to every aspect of the Company’s production and operation
management, as well as the legitimacy of directors and senior management
personnel’s performance of duties, and earnestly protected interest of the Company
and shareholders.
(IV) Information disclosure and transparency
During the reporting period, the Company strengthened Management System on
Information Disclosure of the Company and performed obligation of information
disclosure strictly in accordance with provisions of relevant laws and statutes and. The
Company discloses the information authentically, accurately, timely and completely to
ensure all investors have equal opportunity to acquire information, which enhanced
transparency and played important role in protection of knowing right of minority
investors.
(V) Managements team
Managements team of the Company is engaged by the Board, which is responsible for
convene of Shareholders’ General Meeting and disposals passed on the Board,
decision-making on daily operation issues of the Company, as well as carrying on and
implementing major decisions. Management team of the Company is working with
cautions, functioning regularly, operating honestly and strictly in accordance with
regulations of Articles of Association. There are no act in excess of authority, no tend
of ―inside control‖, no commitment of responsibilities in dishonest or in violation of
responsibilities.
(VI) Performance appraisal and incentive mechanism
The Remuneration and Appraisal Committee established under the Board of Directors
is in charge of the performance appraisal to the directors, supervisors and senior
management staffs of the Company, meanwhile, the committee formulated reasonable
performance appraisal system. The Company’s existing performance appraisal and
incentive mechanism is in accord with development of the Company that both
motivate staff work enthusiastic and subjective initiative and effectively promote
regular operation and health development of the Company.
The Company has not yet established an equity incentive system.
(VII) About stakeholders
The Company adequately respected and protected legitimated rights of stakeholders,
realized harmony and equality of interest of sociality, shareholders, banks, other
creditors, the Company, employees and consumers, and jointly advanced the
Company’s sustained, healthy and durative development through active cooperation,
mutual benefit and honesty faith with its stakeholders.
(VIII) Relationship between controlling shareholder and listed company
Behavior of controlling shareholder of the Company was normative, and exercised
right of provider through the Shareholders’ General Meeting in line with the laws,
never directly or indirectly intervene decision-making and operation over the
Shareholders’ General Meeting. The Company is independent in personnel, assets,
finance, organization and operations from its controlling shareholder. The Company’s
Board of Directors, Supervisory Committee and Internal Operating Units can operate
independently. Related transactions between the Company and controlling shareholder
are reasonable and fair, and decision-making procedures comply with the Rules.
Neither capital occupied by controlling shareholder, nor harms done to interests of the
Company and of minority shareholders by controlling shareholder. There was no
guarantees provided by the Company for the controlling shareholder and its subsidiary
companies existed in the Company.
II. Particulars on corporate governance and specific activities
(I) Information disclosure and particulars about special activities
In accordance with spirit of ―Meeting on Specific Work of Information Disclosure of
Listed Companies in Shenzhen‖ by Shenzhen CSRC on 2 Aug. 2011 and Notice on
Earnestly Carrying out Spirit of Meeting on Specific Work of Information Disclosure
of Listed Companies in Shenzhen (SZJGSZ [2011] No.87) by Shenzhen CSRC on 8
Aug. 2011, the Company convened an on-site training meeting in meeting room, 39/F
of International Trade Center Masion, Luohu, Shenzhen on 9 Sep. 2011, of which all
Directors, Supervisors, Senior Executives and relevant financial personnel presented
the meeting. The meeting was presided over by Director of the Board Office, Qian
Zhong, of which Secretary of the Board, Fan Weiping conveyed relevant content and
spirit of the meeting. Chairman of the Board, Chen Yugang made address and called
on all presenters earnestly learn from the meeting, and broadcast the spirit of the
meeting to relevant departments and subsidiaries, further enforce supervision and
administration. Qian Zhong made an introduction of regulations concerning insider
trading and market operation etc. stipulated in Securities Law, Criminal Law and
Administration Method on Information Disclosure of Listed Companies; Opinion on
Cracking Down, Preventing and Controlling Insider Trading of Capital Market in
Accordance with Law published by CSRC and other four authorities as well as
relevant notices of Shenzhen CSRC. Three Independents and two largest shareholder
and Directors didn’t present the meeting due to work reason. The Company sent
training record, relevant documents and materials to them after meeting.
Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter referred to
as ―the Company‖), as a listed company actually controlled by Shenzhen SAC,
receiving dual supervision and administration from CSRC and departments of SAC,
thereof, the Company continued sparing no effort on reinforcement of insider trading
management and information disclosure management. The Company has set up strict
management system on inside information and person with inside information, drew
up firm resolutions to protect and prevent reveal of inside information and inside
trading, accomplished completed management system on information disclosure and
earnestly carried out. In terms of share reform conducted in 2009, the Company kept
confidentiality and with no leakiness in the whole process: information disclosure was
in time and in detail, powerfully ensured and completed the share reform and
hammered out a model in respect of information disclosure for listed companies. The
Company will strictly practice confidential system and disclosure system as always,
do well in supervision and administration of information as well as information
disclosure. In line with relevant requirements, the Company further regulated system
on interview and reception of investors. With an adequate consciousness of the
function of new media, the Company reinforced supervision and administration on
blogs and micro blogs of person with inside information.
(II) Establishment of internal control
In accordance of Announcement on Conducting Work Affairs Related to Experimental
Projects of Internal Control Standards of Listed Companies in Shenzhen
Administration Area (Shen-Zheng-Ju-Gong-Si-Zi [2011] No.31), to further
standardizing internal control system of the Group, to promote corporate regulated
operation, to advance constant and healthy development, to protect statutory rights
and interest of investors and to guard security of assets, the Company laid out for
relevant work concerning reinforcement of establishing internal control in line with
Basic Standards for Enterprises Internal Control and its supporting guidelines
published by Ministry of Finance and other four authorities, No. 31 Announcement of
Shenzhen CSRC and based on risk-oriented. The Company primarily communicated
with professional internal control intermediary, and established Scheme on Overall
Construction of Enterprise Internal Control System at the suggestion of the
intermediary. Scheme on Overall Construction of Enterprise Internal Control System
was reviewed and approved by the 31st Session of the 6th Board of Directors of the
Company on 28 Apr. 2011.
In accordance with Scheme on Overall Construction of Enterprise Internal Control
System of the Company, the Group combined the headquarter, Shenzhen Huangcheng
Properties Co., Ltd. Shenzhen Property and Real Estate Development Co., Ltd.,
Shenzhen International Trade Center Property Management Co., Ltd. and Shenzhen
International Trade Center Vehicles Industry Co., Ltd. into the first stage of
construction of internal control. Leaders of the Group called on all enterprises and
employees to work with pragmatic attitude, preciseness spirit, to comprehend the
actual content of the construction of internal control system profoundly, firmly in line
with the spirit of documents published by five ministries of the Company and actual
situation of the Company, steadily and consistently put forward the big project of
construction of internal control system and endeavor to make achievement on the
improvement of enterprise operation and administration level and risk-prevention
capability.
With a comprehensive consideration of aspects of team configuration, work
experience etc., the Group chose BDO China Shu Lun Pan Certified Public
Accountants LLP (hereinafter referred as ―BDO China‖) as intermediary for internal
control services. BDO China began to work in the Group in June and then conducted
work to relevant personnel of the headquarter of the Group and subsidiaries in the first
stage such as interviews, collection of resources, unscrambling the business processes
and making of risk lists, and then they will find the deficits of enterprise internal
control, reflect feedback and accomplish making of deficits of enterprise internal
control of subsidiaries in the first stage. In the process, BDO China will submit
feedback to management level and relevant business department, make classification
analysis to existing deficits of internal control and further forward with rectification
scheme.
As to the end of 2011, the Group and subordinated companies has completed making
of internal control manual and basically fulfilled as scheduled. The Group will carry
out internal control test and other following work in the next.
III. Duty performance of Directors, Chairman of the Board and Independent
Directors
(I) Duty performance of directors
In the reporting period, all the directors of the Company performed their
responsibilities honestly, credibly, diligently and independently, actively attended
relevant meetings, carefully reviewed resolutions of the Board Meeting, made
decision-making deliberately, expressed clear opinion to matters discussed, so as to
stick to interest of the Company and shareholders and protect legitimated interest of
minority shareholders.
Times of
Times of Times of
meetings Times of Objection
Name Title attendance in commission
should be absence proposed
person attendance
attended
Chen Yu Chairman of
10 10 0 0 0
Gang
the Board
Wei Zhi Director 10 10 0 0 0
Liu
Director
10 10 0 0 0
Guangxin
Gong Director
10 10 0 0 0
Sixin
Director
Wen Li 10 9 1 0 0
(External)
Director
Guo Liwei 10 10 0 0 0
(External)
Dong Independent
10 10 0 0 0
Zhiguang Director
Li Xiaofan Independent 10 10 0 0 0
Director
Zha Independent
10 10 0 0 0
Zhenxiang Director
(II) Duty performance of Chairman of the Board
Chairman of the Board of the Company actively advanced formulation and perfection
of all internal systems, strengthened construction of the Board, convening and
presiding the Board Meetings and Shareholders’ General Meeting in line with laws,
which ensured all previous Board Meetings were held in line with laws and supervise
execution of resolutions; meanwhile, Chairman of the Board created good condition
for duty performance, adequately ensured knowing right of all directors; reported
operation of the Board of Directors to all directors. Also, Board Chairman supervised
high- and middle-level executives to seriously study relevant laws and statutes and
improve consciousness that duties performance was in line with laws.
(III) Duty performance of Independent Directors
With attitude of credibility and diligence to the Company and all shareholders,
independent directors was diligent and responsible, reviewed all resolutions, and in
line with their professional knowledge and capability, made independent, objective
and fair judgment away from influence from the Company and principal shareholders
of the Company. Also, independent directors expressed independent, objective and
fair opinion on relevant events, which made practical efforts to safeguard interests of
the Company and minority shareholders.
The Board of Directors of the Company convened ten formal sessions in 2011. All
Independent Directors presented the meetings in time and practiced voting rights at
each session. Within one year, Independent Directors issued independent opinions to
the following issues:
1. Issued independent opinions on continuously engaging BDO Wuhan Zhonghuan
Certified Public Accountants Ltd. to responsible for financial accounting report 2011
of the Company;
2. Issued independent opinions on self-appraisal report on internal control 2010 of the
Company;
3. Issued independent opinions on external guaranty 2010 of the Company;
4. Issued independent opinions on offering entrusted loan to Shenxin Taxi Co., Ltd.;
5. Issued independent opinions on proposal of candidates for the 7th Board of
Directors.
On 17 Mar. 2011, the Company convened the 6th Board of Audit Committee Meeting
in meeting room, 39th Floor, International Trade Center, Renmin South Road, Luohu
District, Shenzhen, of which three Independent Directors presented the meeting and
debriefed audit work addressed by BDO Wuhan Zhonghuan Certified Public
Accountants Co., Ltd. as well as reviewed primarily issued audit opinions by BDO
Wuhan Zhonghuan Certified Public Accountants Co., Ltd. Audit Committee of the
Board expressed opinions to annual financial statements for Y2010 of the Company.
After the meeting of Audit Committee, the Company convened special meeting of
Independent Directors, of which senior management level of the Company reported
particulars about operation to each Independent Directors and arranged for field trips
and on-site office for Independent Directors.
IV. The Company’s five separations from the controlling shareholder
The Company was independent from the controlling shareholder in business,
personnel, assets, organization and finance to realize that independent personnel,
independent finance, complete assets, independent organization and independent
business.
(I) In aspect of business: The Company was independent from the controlling
shareholder with independent and complete business and independent operation
capability. There was no business which was same or competitive with the controlling
shareholder.
(II) In aspect of personnel: The Company was complete independent from the
controlling shareholder in terms of labor and personnel, management on remuneration.
All Senior Executives drew the remuneration from the Company, and none held a post
concurrently in shareholders’ company. Personnel of the Company are independent,
all ones signed labor contract with the Company. The Company was independent from
the shareholders or other related parties in personnel management, social security,
salary etc.
(III) In aspect of asset: The Company’s assets were complete and independent, the
property relationship was clear. There was no capital occupation by controlling
shareholder, and assets of the Company were completely independent from
controlling shareholder.
(IV) In aspect of organization: The Company’s organization was independent, and the
Company implemented rules and regulations as well as responsibilities for all
departments, formed independent responsibilities and rights, scientific and rational
internal control system. Independence of the Company on operation and management
is free from impact from controlling shareholders and other subordinated units. There
were no controlling shareholders intervene organization of the Company.
(V) In aspect of finance: The Company’s finance was independent with independent
finance department. The Company established the independent finance settling system
and financial management system, had its own finance account and paid the tax in line
with laws, run finance decision-making independently.
The controlling shareholder of the Company performed normatively with no conduct
that intervened with the operation decision-making and operation activities directly or
indirectly over the shareholders’ general meeting, however, the controlling
shareholder could influence on the significant decision-making through the shares
holding.
V. Key control activities
(I) Proportion of shares held by the controlling subsidiaries of the Company
Proportion of shares
No. Full name of the company
held
1 Shenzhen Huangcheng Real Estate Co., Ltd. 100%
Shenzhen Property and Real Estate Development
2 100%
Co., Ltd.
Shenzhen International Trade Center Vehicles
3 100%
Industry Co., Ltd.
Xuzhou Dapeng Real Estate Development Co.,
4 100%
Ltd.
Dongguan International Trade Center Changsheng
5 100%
Real Estate Development Co., Ltd.
Shenzhen International Trade Center Property
6 100%
Management Co., Ltd.
7 Hainan Xinda Development Co., Ltd. 100%
Shenzhen Property Construction Supervision Co.,
8 100%
Ltd.
9 Shenzhen International Trade Center Food Co., Ltd 100%
10 Shenzhen Real Estate Exchange 100%
11 Shum Yip Properties Development Co., Ltd. 100%
Shenzhen International Trade Center Plaza Co.,
12 100%
Ltd.
Zhanjiang Shenzhen Real Estate Development Co.,
13 100%
Ltd.
Note: Shenzhen Real Estate Exchange was managed by Shenzhen International Trade
Center Property Management Co., Ltd. in trust.
(II) Internal control on controlling subsidiaries
The Company brought finance, significant investment, personnel and information
disclosure into unified management system and formulated unified management rules
by appoint senior executives to concurrently hold the post of Chairman of the Board
of Directors and control joint stock company through appointed directors and
supervisors; if significant event happen to controlling subsidy that in accordance with
standards stipulated in Rules on Managing Information Disclosure, it shall be
recorded as corporate actions, the Board of the Company shall account for disclosure
and public notice for the event in accordance with regulations; controlling subsidies
shall carry on financial accounting system of the Company in accord, and draw up
individual accounting measurement system and internal control system accordingly;
person in charge of finance in controlling subsidies shall be assigned by the Company
and engaged by the controlling subsidy; the Company carried on internal audit system
to controlling subsidies, conducted various audit and examination in controlling
subsidies regularly and irregularly.
In accordance with regulations of Guidelines on Internal Control issued by Shenzhen
Stock Exchange, internal control to subsidies conducted by the Company was serious,
adequate, and valid that there was no violation of Guidelines on Internal Control
occurred.
(III) Internal control on related transactions
The Company put much importance on internal management of related transactions.
In order to regulate related transactions of the Company, ensure the fairness of related
transactions, the Company implemented and carried on Method for Managing Related
Transactions, thoroughly defined the definition principle of related transactions,
involving events of related transactions, deliberation and implementation of related
transactions, method on avoiding voting of related parties etc. In the reporting period,
all related transactions occurred in the Company were strictly implemented in
accordance with regulations stipulated in Articles of Association, Method for
Managing Related Transactions, adopted principle of honest, credit, equality,
voluntary, fairness, public, justice and performed information disclosure responsibility
for related transactions. Related directors and shareholders withdrew from the voting
when the Company implemented procedure of decision-making of the Board Meeting
and the Shareholders’ General Meeting, independent directors performed their
responsibilities in processing of decision-making of related transactions and
information disclosure. Decision-making procedure and information disclosure were
in line with requirements of Rules for Listing Shares in Shenzhen Stock Exchange and
Guidelines on Internal Control of Listed Companies.
(IV) Internal control on external guarantee
The Company confirmed examination and approval authority, examination and
approval procedures of the Shareholders’ General Meeting and the Board of Directors
on external guarantees. Meanwhile, the Company formulated relating internal control
system for external guarantees, which regulated in approval of authority, estimation
and control on guarantees, control on implementation of guarantees and information
disclosure of guarantees. Internal control on external guarantee was in line with
principle of legitimate, fair, willing and mutual benefit, and strictly control risk from
guarantees.
(V) Internal control on use of raised proceeds
The Company clearly defined use, examination and approval procedure of raised
proceeds so as to ensure earmarking of funds.
In the reporting period, the Company neither conducted proceeds-raising in stock
market, nor had former raised proceeds reserving to this reporting period.
(VI) Internal control on significant investment
Examination and approval authority and procedures on significant investment were
clearly regulated in Articles of Association, Rules of Procedure for the Board of
Directors. In the reporting period, the Company carried out strict procedures such as
review in earlier stage, research on feasibility, internal evaluation and
decision-making of investment, and all decision-making of significant investment was
in compliant with examination and approval procedure by the Board Meetings or the
Shareholders’ General Meeting in accordance with relevant statutes.
(VII) Internal control on bulk purchase business
The Company implemented and strictly carried on Administrative Rules for Biding
Business, of which clearly defined that bulk purchase business shall public operate in
accordance with operation procedure and control method on biding business, clearly
realize responsibility authority and division of work on biding body, supervision
department and departments participated in decision-making, earnestly ensure
transparency on business procedure, properly and efficiently control purchase cost.
(VIII) Internal control on information disclosure
The Company implemented Administrative Rules for Information Disclosure Affairs,
Administrative Measures for Extend and Reception, Specific System on Avoiding
Capital Occupation on Controlling Shareholders and Related Parties and
Administrative Rules on Senior Executives Holding, Buying and Selling Stock of the
Company, regulated overall control and general procedure control on information
disclosure, defined regulations for information disclosure agency, personnel,
documents, affairs management, disclosure procedure, information report etc.
Establishment, publishing and effective implementation of system exerted important
impact on behaviors such as enforcing information quality, improving information
secrecy, restricting act of information insider, supervisors and senior executives
buying and selling stock of the Company etc.
The Company reinforced communication platform for investors on various channels,
strived to promote standardization of information disclosure of the Company,
improved information disclosure quality, protected legal equity of investors, so as to
ensured truthfulness, accuracy, complete, timeliness and fair on work of information
disclosure.
Information disclosure of the Company strictly followed relevant laws and statutes,
Rules for Listing Shares in Shenzhen Stock Exchange and Rules for Information
Disclosure Affairs of the Company, and there was no information disclosure violating
regulations.
VI. Problems existing and rectification plan
(I) Problems existing in key control activities in the internal control of the Company
1. Providing undisclosed information to the first principal shareholder and the actual
controller
(1) In the reporting period, the Company, in accordance with the notice from financial
budget department of Shenzhen Investment Holdings Co., Ltd., regularly submitted
the financial express of the preceding month to Shenzhen Investment Holdings Co.,
Ltd. (the controlling shareholder, the actual controller of the Company) during the
first ten days of every month through State-owned Assets Management Information
System of Shenzhen Municipal SASAC.
(2) At the end of the reporting period, in accordance with Notice on Preparation for
Overall Budget Administration Work for Corporations in 2012, the Company
submitted annual budget of 2012 to controlling shareholder of the Company, actual
controller Shenzhen Investment Holdings Co., Ltd.
In accordance with regulations of Notice on Reinforcing Supervision on Listed
Companies Providing Private Information to Substantial Shareholders and Supporting
Notice on Reinforcing Supervision on Act of Listed Companies Providing Private
Information to Substantial Shareholders and Other Irregular Act issued by Shenzhen
Securities Regulatory Bureau, the Company has already reported private information
and list of insiders to Shenzhen Securities Regulatory Bureau. In the reporting period,
there was no insiders use private information buying or selling stock of the Company
violated to regulations.
The above acts are common behavior of state controlling listed companies that they
are estimated to be unchanged within short-term. The Company shall continue to
submit and report particulars on private information insiders, preventing insiders from
revealing and use private information to buy and sell stock of the Company violated
to the regulations.
2. In view of unceasing amendment and perfection of internal control system along
with change in inside and outside environment, rapid growth of businesses and
advancement of management requirements, the Company still need to enhance how to
grasp keystone of the internal control in changing environment, so as to advance
innovation of management and system and promote persistence and effectiveness of
internal control.
(II) To further strengthen and perfect internal control plan
1. Deep improving the implementation of Basic Standards for Enterprise Internal
Control. The Company shall carry on and realize Basic Standards for Enterprise
Internal Control and relevant supporting guidelines, advance the construction process
of enterprise internal control system, improve administration standards on corporate
operation and standards on risk prevention, and finally promote the sustainable
development of the Company. At present, the internal control formulation has
basically been finished. And the Company will move on to the next step, i.e. internal
control self-evaluation and debugging;
2. Further strengthen sense of operation according to laws, enhance force of law of
internal control, reinforce training and study to directors, supervisors and senior
executives of the Company, set up consciousness of risk prevention, and cultivate
good spirit of enterprise and internal control culture;
3. Further intensify executive force of internal control system and audit work, give
full play to supervision function of audit committee for the effective implementation
of all systems;
4. Further perfect corporate governance, enhance level of corporate governance
standardization, strengthen construction and operation of each special committee
under the Board of Directors, better play the role of each special committee within the
professional field, so as to further upgrade the Company’s scientific decision-making
capacity and risk prevention capacity.
VII. Establishment and implementation of performance appraisement and
incentive mechanisms for senior executives
In the reporting period, the annual operating target plan 2011 was went forth to the
management team by the Board of Directors, of which the Company adopted
appraisal method by the score combination of operation index, category index and
administrative goal. At the end of the fiscal year, the Board of Directors examined the
final score. For senior executives of the Company, the Company adopted annual
salary system in accordance with Management Measure for Annual Salary System of
Directors, Supervisors and Senior Executives, which shall be implemented after the
Board of Directors completing fiscal examination.
VIII. Opinions on self-evaluation of internal control of the Company
In accordance with public document of [2010] No. 37 issued by CSRC and laws and
regulations of Guidelines on Internal Control of Listed Companies, Basic Standards
for Enterprise Internal Control, Rules for Internal Accounting Control issued by
Shenzhen Stock Exchange as well as actual conditions of the Company, the Company
combed, completed and supplemented business procedure and standardization
management of the Company. During the reporting year, as one of the pilot listed
companies for the internal control regulations of Shenzhen Stock Exchange, the
Company carried out a thorough internal control campaign based on its actual
situation. With BDO China Shu Lun Pan Certified Public Accountants LLP as a
consultative agency for internal control, the internal audit organ of the Company was
in charge of carrying out the internal control self-evaluation, evaluating the
effectiveness of internal control, preparing an internal control self-evaluation report
and urging the rectification of internal control defects found in the evaluation.
The Company has established comparatively completed and relatively proper internal
control system that there aren’t major faults in completeness, regularity, efficiency etc.
The existing internal control system is mainly in accordance with requirements of
relevant state regulations and securities supervisory departments, in line with the
demand of actual production and operation conditions of the Company. Internal
control of the Company is of completeness, rationality and validity.
(I) Self-appraisal of the Board of Directors on internal control
Corporate governance structure of the Company is complete and operation with norm.
Internal control system of the Company is comparatively complete and rational,
totally in accordance with requirements of CSRC, Shenzhen Stock Exchange on
internal control of listed companies. Design and operation of internal control of the
Company properly ensured rationality of operation management of the Company,
guarded safety of assets of the Company; able to ensure faithful and complete draft of
accounting statement; able to disclosure information faithfully, accurately, timely,
fairly and in line with requirements of laws and regulations as well as supervision
departments. The Company shall further perfect construction of internal control
system, and make it always in line with requirements of laws and regulations as well
as supervision departments.
(II) Opinions on self-evaluation on internal control of the Company expressed by the
Independent Directors
After independent director of the Company seriously verified Report on Self-appraisal
of Internal Control of Shenzhen Properties & Resources Development (Group) Ltd for
the year 2011, they considered that the Company has established complete and
rigorous internal control system, which was in line with requirements of relevant laws
and statutes of the state and was legitimate, reasonable and effective. Activities such
as corporate governance, production and operation, information disclosure, substantial
event etc. of the Company were strictly in accordance with regulations of all internal
control system of the Company, insider and outsider risk that may exist in all process
of operation activities has been properly controlled that now they were in line with
requirements of relevant laws and regulations of the state. The existing internal
control of the Company is of legality, rationality and validity. Report on self-appraisal
of internal control 2011 of the Company faithfully and objectively reflected actuality
of corporate governance and internal control. The Company shall further strengthen
internal control of the Company, continue normative operation, endlessly amend and
improve each internal control system in time according business development of the
Company and the provisions of relevant laws and regulations, so as to further improve
and perfect internal control system;
(III) Opinions on self-evaluation on internal control of the Company expressed by the
Supervisory Committee
After reviewing the 2011 internal control self-evaluation report produced by the
Board of Directors, as well as the formulation and execution of the Company’s
internal control rules, the Supervisory Committee believes that: The Company has
formulated a comparatively sound internal control system, which is effectively
executed in accordance with the Internal Control Guideline of Shenzhen Stock
Exchange for Listed Companies and other regulatory documents; The internal control
self-evaluation report gives a factual and objective picture of the formulation,
improvement and execution of the Company’s internal control system, which meets
the Company’s internal control needs; And generally speaking, the internal control
self-evaluation is objective and accurate.
Section VII. Brief Introduction to the Shareholders’ General Meeting
Up till the publication date, the Company held 2 shareholders’ general meetings,
which are, the Annual Shareholders’ General Meeting 2010 and the 1st Special
Shareholders’ General Meeting 2011. Procedure of convening, holding and voting was
in line with the requirement of Company Law, Articles of Association and relevant
laws and regulations.
I. The Annual Shareholders’ General Meeting 2010
The Annual Shareholders’ General Meeting 2010 was held at the conference room on
39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 20 May 2011. Following proposals were reviewed and approved at the
meeting:
（1）Work Report 2010 of the Board of Directors;
（2）Work Report 2010 of the Supervisory Committee;
（3）Financial Statements Report 2010;
（4）Financial Budget Report 2011;
（5）Annual Report 2010;
（6）Preplan for Profit Distribution of Y2010;
（7）Proposal on Applying Entrusted Loans from Controlling Shareholders;
（8）Proposal on Reengaging the CPAs Firm;
（9）Proposal on Authorizing the Board of Directors to Make Decisions about
Land Investments
Resolutions made by the Annual Shareholders’ General Meeting 2010 were published
in Securities Times, Ta Kung Pao and website http://www.cninfo.com.cn on 23 May
2011.
II. The 1st Special Shareholders’ General Meeting 2011
The 1st Special Shareholders’ General Meeting 2011 was held at the conference room
on 39/F of Shenzhen International Trade Building located at Renmin South Road,
Shenzhen on 15 Jun. 2011. The Proposal on the Re-election of the Board of Directors,
the Proposal on the Re-election of the Supervisory Committee and the Proposal on
Providing Guarantees for the Xuzhou Subsidiary’s Application for Bank Loans were
reviewed and approved at the meeting.
Resolutions of the 1st Special Shareholders’ General Meeting 2011 were published in
Securities Times, Ta Kung Pao and website http://www.cninfo.com.cn on 16 Jun.
2011.
Section VIII. Report of the Board of Directors
I. Business review for the reporting period
(I) Analysis of the market environment
Macro-control and market fluctuations remained the theme for the real estate industry in 2011,
with ―a sharp drop in trading‖ and ―decreasing average prices‖ becoming new key phrases for
the year. The government carried out macro-control throughout the year, increasing the number
of cities with limited purchase, specifying the limited purchase conditions and shifting the focus
from ―preventing house prices from going up too fast‖ to ―promoting reasonable regression of
house prices‖. As a result, commercial house trading in major cities recorded a decreasing trend
in both the trading number and prices for the first time in recent years. Growth in the national
average price for selling commercial houses continued to slow down as compared with last year.
The land market was sluggish with houses often being traded at bottom prices, real estate
investment & development declined from the peak, and real estate enterprises were in face of
difficulties concerning sales, financing and re-investment.
The regression of house prices in major cities to a certain level indicates that the macro-control
is taking effect. The Company always believes that if house prices grow too high and too fast to
go beyond the endurance of ordinary citizens, it will not only bring social problems, but also
affect the long-term healthy development of the industry. Objectively speaking, although
macro-control stimulates the periodic adjustment of the industry, increases the risk of
fluctuations and imposes great challenges to enterprises, it helps with the normative operation
in the industry and the transformation from extended development to connotative development.
Considering its improving business performance and richer market experience, the Company is
still very confident of the future development of itself and the industry as a whole. The industry
temporarily slows down mainly because the policy restricts some purchasing power and
enterprise financing channels. In the long run, the urbanization progress, the rising resident
income, the improving living standards, the decreasing developable land in cities and other
factors that support development of the industry remain unchanged fundamentally. Therefore,
enterprises which adhere to steady operation and product quality improvement will see greater
development opportunities.
(II) Overall performance of the Company
In the reporting period, the Company achieved operating revenue of RMB
1,408,565,307.32, up by 41.82% over last year; operating profit of RMB 340,988,497.94,
up by 74.97％year on year; total profit of RMB 339,503,404.62, an increase of 63.88%
from last year; net profit of RMB 257,461,077.54, increasing by 47.12% compared to last
year; and net profit attributable to owners of the Company of RMB 257,461,077.54,
representing a year-on-year growth of 47.12%.
Operating revenue increased by a great margin mainly because real estate income
increased considerably and managed and leased property areas also became larger.
Operating profit, total profit and net profit also recorded significant growth mainly
because income from some new real estate projects met the carry-forward conditions.
(III) Operation of main businesses
1. Operation and scope of main businesses
The Company specializes in real estate development, with taxi transportation service,
property management, house leasing, etc. as its sidelines. In 2011, the revenue generated
from the main business reached RMB 1,377,581,701.71, representing a year-on-year
growth of 42.59%, i.e. RMB 411,435,711.83; and main business profit reached RMB
478,265,576.86. And the composition of main business revenue and profit was specified
as follows:
(1) Classified according to industries:
In terms of the business of real estate development, the income generated stood at RMB
1,039,983,994.06, with profit of RMB 434,347,389.86;
In terms of the business of property management and leasing, the income generated stood
at RMB 246,969,986.05, with profit of RMB 5,670,705.84;
In terms of the business of taxi transportation service, the income generated stood at RMB
54,490,052.27, with profit of RMB 25,649,950.32;
In terms of the catering business, the income generated stood at RMB 22,254,535.68, with
profit of RMB 3,040,275.41;
In terms of other businesses, the income generated stood at RMB 13,883,133.65, with
profit of RMB 9,557,255.43.
(2) Classified according to regions:
In terms of the business in Shenzhen, the income generated stood at RMB
1,273,033,823.42;
In terms of the business in other areas, the income generated stood at RMB
104,547,878.29.
As could be seen from the above classification according to industries and regions, the
Company’s business income mainly came from Shenzhen and the real estate development
business contributed a large proportion of the business income.
(2) Composition of the Company’s main business
Main business revenue, cost and gross profit rate:
Unit: RMB’000
Business income Business cost Gross profit rate
Industry Change over last Change over last Profit rate Change over last
Amount Amount
year (%) year (%) (%) year (%)
Real estate
development 1,039,984 50.66 283518 -36.51 72.74 37.43
Property
management and
246,970 29.50 223709 29.07 9.42 0.30
leasing
Taxi passenger
transportation
54,490 7.37 27011 0.49 50.43 3.39
service
Catering service
22,255 10.46 17990 -1.18 19.16 9.52
Other businesses
13,883 -2.50 3562 -8.49 74.34 1.68
Notes: Other businesses refer to project supervision, auto repair service, elevator
maintenance, etc.
Explanation on the strengthened profitability of the Company in the reporting period
compared with that of last year: Main business revenue increased over last year mainly
due to increase of incomes from real estate, property management and lease. Gross profit
rates for the main businesses also rose significantly mainly due to the considerable growth
of income from real estate with a comparatively higher gross profit rate. Real estate
income increased with decreased cost mainly because selling prices for main
carried-forward real estate projects in 2011 were much higher than those of last year but
their unit costs were similar.
(3) Suppliers and customers
In its business of real estate development, the Company transferred, by means of bid
invitation, its real estate projects to the company which won the bid. And the building
contractor was responsible for the purchase of construction materials. The Company made
no bulk purchases this year; The Company’s commercial houses were sold to individual
customers. And the sales income from the top 5 customers stood at RMB 20,757,489,
accounting for 1.47% of the operating revenue.
(IV) Changes of the Company’s asset composition in the reporting period compared to
that of last year, as well as the main reasons for changes
1. Changes of asset composition compared to that of last year
Increase or Asset
31 Dec. 2011 31 Dec. 2010
decrease of increase
the or
Item Proportio Proportion
Amount Amount proportion decrease
n in total in total
(RMB, Yuan) (RMB, Yuan) in total over last
assets (%) assets (%)
assets (%) year (%)
Monetary 463,775,328.93 13.25 534,418,695.36 18.34 -5.09 -13.22
capital
474,354,748.39 13.55 49,360,431.87 1.69 11.86 861.00
Prepayment
Other 3,346,988.49 0.10 37,787,880.10 1.30 -1.20 -91.14
receivables
1,814,992,629.34 51.86 1,576,183,305.38 54.10 -2.24 15.15
Inventory
Fixed assets 65,011,538.39 1.86 78,112,745.51 2.68 -0.82 -16.77
Intangible 100,040,864.15 2.86 106,563,665.92 3.66 -0.80 -6.12
assets
Deferred 124,102,202.41 3.55 83,209,649.31 2.86 0.69 49.14
income tax
assets
Other 9,000,000.00 0.00 0.00 0.00 0.00
non-current
assets
Short-term 601,495,212.00 17.19 10,000,000.00 0.34 16.85 5914.95
borrowings
Accounts 187,083,147.42 5.35 105,465,038.93 3.62 1.73 77.39
payable
Accounts 208,655,909.41 5.96 878,660,737.46 30.16 -24.20 -76.25
received in
advance
Employees’ 45,013,122.69 1.29 53,817,405.36 1.85 -0.56 -16.36
compensation
payable
Taxes and 499,430,386.43 14.27 195,585,180.87 6.71 7.56 155.35
fares payable
Other 479,430,681.58 13.70 229,549,997.54 7.88 5.82 108.86
payables
Non-current 218,359,888.32 6.24 250,960,000.00 8.61 -2.37 -12.99
liabilities due
within 1 year
Long-term 7,333,333.32 0.21 212,000,000.00 7.28 -7.07 -96.54
borrowings
Total assets 3,499,608,314.21 2,913,281,353.84 20.13
Notes on the changes:
(1) Monetary capital decreased 13.22% over last year, which was mainly because the
Company received fewer property payments;
(2) Prepayment increased 861.00% over last year, which was mainly because the
Company prepaid more for the land in Yangzhou and taxes concerning relevant projects
according to the Law of Tax;
(3) Other receivables decreased 91.14% over last year, which was mainly because the
Company modified its accounting estimation method for bad-debt provisions and
increased such provisions;
(4) Inventory increased 15.15% over last year, which was mainly because construction in
process proceeded as scheduled and inventories purchased according to the construction
progress increased accordingly.
(5) Fixed assets decreased 16.77% over last year, which was mainly because some fixed
assets previously used for leasing were restated as investment properties and were
depreciated;
(6) Intangible assets decreased 6.12% over last year, which was mainly due to
amortization of intangible assets;
(7) Deferred income tax assets increased 49.14% over last year, which was mainly
because more land VAT pre-withdrawn by the Company was recognized as deferred
income tax assets.
(8) Other non-current assets increased over last year, which was mainly because a
subsidiary provided entrusted financing for Shenxin Taxi Co., Ltd.;
(9) Short-term borrowings increased 5914.95% over last year, which was mainly because
the Company received entrusted financing from Shenzhen Investment Holdings Co., Ltd.;
(10) Accounts payable increased 77.39% over last year, which was mainly because the
PRD-Shengang No. 1 Project was completed and its preliminarily estimated cost was
recognized;
(11) Accounts received in advance decreased 76.25% over last year, which was mainly
due to the income carried forward from the Shengang No. 1 Project;
(12) Employees’ compensation payable decreased 16.36% over last year, which was
mainly because the housing public reserve funds withdrawn at the end of last year for
previous years were paid in the reporting period;
(13) Taxes and fares payable increased 155.35% over last year, which was mainly because
income from the PRD-Shengang No. 1 Project was recognized and relevant land VAT was
withdrawn accordingly.
(14) Other payables increased 108.86% over last year, which was mainly because the
Company carried out the asset exchange as promised in the share reform and brought in
some land in Moon Bay;
(15) Non-current liabilities due within 1 year decreased 12.99% over last year, which was
mainly because mature loans were repaid;
(16) Long-term borrowings decreased 96.54% over last year, which was mainly because
some long-term borrowings were restated as non-current liabilities due within 1 year;
(17) Total assets increased 20.13% over last year, which was mainly because the
Company’s business and borrowings received expanded.
2. Changes in operating expenses, administrative expenses, financial expanses and income
tax expenses over last year, as well as main reasons for the changes
Year-on-year
Items Jan.-Dec. 2011 (RMB, Yuan) Jan.-Dec. 2010 (RMB, Yuan)
Increase / decrease（±%）
Operating expenses 32,792,286.16 14,956,309.36 119.25
Administrative 92,292,907.64 92,642,838.43 -0.38
expenses
Financial expanses 12,119,255.73 -2,813,250.22 530.79
Income tax 82,042,327.08 32,161,206.91 155.10
expenses
Notes:
(1) Operating expenses increased mainly because more projects were sold and marketing
effort was enhanced according to market changes, causing higher a higher marketing
expenditure;
(2) Administrative expenses decreased mainly because the Company enhanced its cost
control;
(3) Financial expenses increased mainly because the Company increased borrowings for
working capital according to its capital needs and some project loans were not capitalized
but recognized as financial expenses due to their completion;
(4) Income tax expenses increased mainly because the total profit increased.
3. No significant changes took place on the measurement attributes of the Company’s
main assets during the reporting period.
(V) Items measured by fair value, as well as the held foreign-currency financial assets and
financial liabilities
The Company’s financial accounting was conducted on the accrued basis. Except that the
transaction financial assets and the available-for-sale financial assets were measured by
fair value, other assets were usually measured on the basis of the historical costs. Where
the replacement cost, net realizable, capitalized value or fair value was adopted as the
measurement basis, it was made sure that the amount of the determined accounting
elements could be obtained and reliably measured.
(1) Items measured by fair value
Unit: RMB
Impairm
Gains or
Accumulative ent
Amount at losses due
changes of fair withdra Amount at
Items period-begi to fair value
value recorded wn in period-end
n changes in
in the equity this
this period
period
Financial assets
Of which: 1. Financial
assets measured by fair 272,100.00 -3,364.50 0.00
value and the changes
were included in the
current gains or losses
Of which: derivative
financial assets
2. Available-for-sale
financial assets
Subtotal of financial
assets 272,100.00 -3,364.50 0.00
Financial liabilities
Investment real estate
Productive biological
assets
Others
Total 272,100.00 -3,364.50 0.00
Notes: The financial assets measured by fair value and of which the changes were
included in the current gains or losses referred to the tradable shares purchased in the
secondary market. And the aforesaid financial assets were measured at the closing price of
the stock exchange as the fair value. All of the financial assets were sold out by the
period-end.
(2) Foreign-currency financial assets and financial liabilities held
In the reporting period, the Company didn’t hold any foreign-currency financial asset or
financial liability.
(3) No significant changes took place on the measurement attributes of the Company’s
main assets during the reporting period.
(VI) Changes in main items of cash flow statement in the reporting period over last year,
as well as the reasons for changes
Increase or
Items 2011 (RMB, Yuan) 2010 (RMB, Yuan)
decrease (%)
Ⅰ. Cash flow arising from operating
activities
Sub-total of cash inflows
769,733,785.15 1,191,281,389.97 -35.39
Sub-total of cash outflows
1,131,201,372.85 1,293,059,860.61 -12.52
Net cash flows arising from operating
activities -361,467,587.70 -101,778,470.64 255.15
Ⅱ. Cash flow arising from investing
activities
Sub-total of cash inflows
5,828,454.81 12,057,679.84 -51.66
Sub-total of cash outflows
21,411,814.98 19,488,536.34 9.87
Net cash flows arising from investing
activities -15,583,360.17 -7,430,856.50 109.71
Ⅲ. Cash flows arising flow financing
activities
Sub-total of cash inflows
612,495,212.00 260,687,344.20 134.95
Sub-total of cash outflows
305,869,745.03 446,954,370.52 -31.57
Net cash flows arising from financing
activities 306,625,466.97 -186,267,026.32 264.62
Notes:
(1) The net cash flows arising from operating activities was negative, representing more
net outflows than last year, which was mainly because a smaller area was sold during the
reporting period, causing fewer property payments received.
(2) The net cash flows arising from investing activities was negative, representing more
net outflows than last year, which was mainly because the Company received less cash
from the disposal of fixed assets and other long-term assets.
(3) The net cash flows arising from financing activities increased over last year, which was
mainly because the Company obtained entrusted financing of RMB 490 million from
Shenzhen Investment Holdings Co., Ltd. and bank loans repaid decreased.
(4) The net cash flows arising from operating activities during the reporting period was
RMB -361,467,587.70, representing a great difference from the net profit of RMB
257,461,077.54 for the reporting period, which was mainly because:
A. ―Cash paid for goods and services‖ in the Company’s cash flow statement was higher
than ―Main business cost‖ in the income statement, which was mainly due to the great
construction payment of RMB 159 million for unsettled construction projects and the
amount of RMB 435 million paid for the land of the Yangzhou project;
B. Depreciation and amortization of RMB 35.19 million in the income statement were not
paid in cash;
C. Deducted interest expense of RMB 16.43 million in the income statement did not
belong to cash flows arising from operating activities;
D. Asset impairment provision of RMB 22.26 million in the income statement did not
cause cash outflow.
7. Operation and performance analysis of the Company’s main subsidiaries and joint stock
companies
Unit: RMB’000
Total assets Net assets Operation profit Net profit
Increase/ Increase/ Increase/ Increase/
Company Main Registered
decrease decrease decrease decrease
name products capital Amount Amount Amount Amount
over last over last over last over last
year (%) year (%) year (%) year (%)
Development,
construction,
operation and
Shenzhen management
Huangcheng supporting
Real Estate commercial 30,000 2,063,437.87 14.44 486,918 126.98 352,068 1,187 272,394.58 705.22
Co., Ltd. service
facilities at
Huangcheng
Port
Shenzhen
Properties &
Resources Development
Real Estates of real estates 30,950 606,681.48 -2.75 78,303 38.34 27,120 -81 21,699.05 -80.71
Development
Co., Ltd.
Shenzhen Automobile
ITC Vehicles transportation
Services of passengers 29,850 437,392.10 41.48 63,329 11.73 8,931 -17 6,650.53 -21.55
Company and leasing of
automobiles
Shenzhen Huangcheng Real Estate Co., Ltd. earned little income from real estate last year.
However, some of its real estate project reached the condition for carrying forward income
this year, and its net assets, operating profit and net profit rose significantly as a result.
Real estate income earned by Shenzhen Properties & Resources Real Estates Development
Co., Ltd. was much less than last year, and its operating profit and net profit decreased
considerably as a result.
8. Changes of the main sales and technical personnel, as well as other information relevant
to the Company’s operation
In the reporting period, there existed no major changes concerning the sales and technical
personnel of the Company.
9. Special-purpose entities controlled by the Company
There existed no special-purpose entities controlled by the Company.
Ⅱ. Prospect of the future development of the Company
1. Risks faced by the Company, as well as the countermeasures
(1) Risks concerning policies
At the 2011 Central Conference on Economic Work and the 11th National People’s
Congress held in 2012, it was clearly expressed that the government was to maintain the
macro-control over real estate, stick to the real estate macro-control policies, promote
rational regression of house prices, beef up construction of ordinary commercial houses to
increase the effective supply, and boost healthy development in the real estate sector.
Policies unveiled by some cities to relax the control have been stopped, indicating the
central government’s determination of macro-control. Therefore, in 2012, limited purchase,
limited credit, limited prices and other macro-control policies are expected to continue,
which may bring great impact on the commercial house sales volume, the average sales
price, funds inflow, enterprise financing, etc.
The Company attaches great importance to studying and predicting macro-control policies.
It carries out in-depth analysis of the policies’ various influence on the market, looks for
maximum development within the policy limitation, tries to meet market demands in
terms of project positioning, house design, the landscape environment, etc., tries to build
quality houses under the concept of ―A quality property makes an eternal classic. We give
you a better life with a beautiful house.‖, and tries to win customer trust with excellent
product quality and services.
2. Financial risk
The macro-control policies have put a strict limit on lendings from commercial banks and
other financial institutions to real estate developers. Statistics show that the growth of
domestic loans granted to real estate developers was nil in 2011. Sales of commercial
houses remains weak, with shrinking sold areas and average selling prices. Funds inflow
from property sales slowed down significantly, with a notably decreasing turnover rate of
funds for real estate enterprises. It is thus expected that, in 2012, limited funds inflow
from property sales and restricted external financing will continue to put double pressure
on the capital chain of real estate enterprises, increase the capital cost and increase the
financial risk.
The Company has always kept to stable operation, putting capital safety on the top priority
and monitoring financial risk in a dynamic way. It will rationally control its pace of
investment and sales and ensure the smooth running of the capital chain. Meanwhile, it
will enhance internal management and strictly control various costs. And it will also
promote development of its sideline businesses, trying any possible means to expand
financing channels and try to obtain external financing support.
3. Operating risk
(1) Market risk
With the continuously tight macro-control policies, sale of commercial houses is expected
to encounter great challenges in 2012. The absolute number of clients eligible for house
purchase in cities with restricted purchase will decrease while the stock of commercial
houses is on the rise. As social security houses are completed, some rigid demand is
attracted. The market risk should be kept in mind in 2012.
Being fully aware of the market risks to come, the Company will keep to the development
concept of ―A quality property makes an eternal classic. We give you a better life with a
beautiful house.‖, and focus on improving product quality, increasing inner value of
products, promoting the brand with products and promoting product sales with the brand.
With clear macro-control policies, the slightly eased monetary policy and policy support
for rigid demand, the Company will increase clients’ confidence to purchase, integrate
marketing resources and work out a marketing plan for a ―joint sale of four projects‖ in
Shenzhen, so as to accomplish the annual sales target.
(2) Operating risk
Periodic fluctuations of the real estate industry increase the operating risk. Especially for
investments covering more than one region and projects, real estate developers must
carefully handle the investment and sale progress and consider their financial positions.
Currently, the macro-economy is hard to predict and costs of raw materials, financing and
labor force keep rising, which increases operating costs and makes it harder for real estate
developers to manage its cooperation partners.
In 2012, the Company will run 10 development projects in Shenzhen, Dongguan, Xuzhou,
Yangzhou and other regions at the same time. With capital plans as the core, the Company
will work out development plans, enhance strategic management, monitor the actual
investment & development progress in a dynamic way, and flexibly adjust development
plans according to market changes. Meanwhile, it will formulate and improve various cost
control mechanism, offset the pressure of rising costs, improve the operating risk
monitoring and pre-warning system, capitalize on its experience and enhance management
over partners.
(3) Management risk
The macro-control hands over the right to lead the real estate market to buyers. As a result,
buyers will be more rational when making choices. They will favor projects developed by
top brands, which objectively leads to fiercer competition among real estate developers
and raises more requirements for their development and management capability. Therefore,
real estate enterprises need to formulate a perfect management flow chart that goes with
their actual situation covering development plan management, progress management, cost
control, construction quality, etc.
The Company has been aware of the importance of improving its real estate development
and management capability since a long time ago. As its development projects cover more
types and regions, the Company carries out a whole-process evaluation after every project
is completed or a phasic evaluation after a stage of investment is made. It capitalizes on its
development experience, combines with improvement of its internal control system, and
improves the management flow chart and development management mechanism. It also
carries forward the target management, learns from advanced enterprises and keeps
improving its management.
(II) Competitive edges and potential of the Company
As a mature listed company specializing in real estate, the Company has experienced
various adjustments and integrations of the industry, which has equipped the Company
with rich experience of risk handling and product development. In recent years, the
Company has successfully launched and completed quite a few influential real estate
projects in Shenzhen. As such, the Company has won a lot of honorable titles such as ―Top
50 Real Estate Listed Companies in China‖ (granted by China Real Estate Research) and
―Top 10 Real Estate Developers in Guangdong with the Best Development Potential for
2011‖ (granted by Guangdong Entrepreneurs Association).
The Company focuses on building quality houses to safeguard its brand image. In terms of
the PRD-Shengang No. 1 Project, the PRD-Langqiao International Project, the
PRD-Caitianyise Project and other best-quality projects developed by the Company, it
started from planning & designing, carried out in-depth market researches, kept improving
in the house design, positioned the project at a high quality from the outside elevation and
landscape, strictly supervised over the construction quality during the construction process,
and introduced high-quality property management services afterwards. The best-quality
projects of the Company were well received by the market. The ―PRD‖ brand with the
Shengang Metropolis series as the representative has aroused remarkable attention in the
market.
The good business performance and improving management become strong support for
the development of more projects. Since 2008, the business performance of the Company
has been making new records again and again, with higher and higher income and profit.
Its strength and risk resistance have been significantly enhanced, with better and better
business results and a larger and larger development scale.
(III) Plan for 2012
For 2012, the Company plans to achieve main business revenue of RMB 1.54 billion, with
the planned period expenses being RMB 820 million. With the Company’s 12th five-year
development strategic planning as the guidance, adhering to the theme of development,
the Company will carry forward the elaborate house strategy in the main business of real
estate, enhance marketing, and realize steady growth in both the business results and the
development scale. Meanwhile, it will ensure the steady operation of its sideline business,
deepen reforms, push forward normative management, improve the internal control
system, formulate a risk control system and promote sustained and healthy development
of the Company. Major tasks for the Company in 2012 are as follows:
1. To carry on with all the real estate development projects. With the annual financial plan
as the core, the Company will improve its strategic management, enhance coordination of
development plans for all the real estate projects, rationally formulate the schedules for all
projects, and specify management over key points in the progress of all the projects.
Besides, it will beef up marketing and properly handle price strategies and sales pace for
pre-sale projects and restricted-sale projects, so as to achieve the annual business
objectives.
2. To improve internal management. Based on improvements in 2011 in internal control,
enterprise culture, three mechanism reforms, target management, compilation of
management rules, etc, the Company will further deepen promotion, accomplish the
formulation of the internal control system and the corporate culture system, deepen target
management and keep improving the management rules based on trial implementations.
(IV) Particulars about demand for capital, plan for capital use and capital source
In the year 2012, it is expected that over RMB 884 million is needed for the construction
in-progress of the Company. In order to ensure the capital supply and satisfy the need of
the business development, the Company intends to solve the capital issue by more bank
loans, the payment by customers for the real estate sold, etc.
III. Investment in the reporting period
(I) There were no raised proceeds of the Company in the reporting period, neither was
there any continuous usage of the previously raised proceeds.
(II) Significant investment with non-raised funds, as well as their progress and
profitability
Unit: RMB’ 000
Total Accumulative
Investment for
Name of Project planned actual Project progress Earnings
the year
input investment
Construction has
completed and 57% is
PRD-Shengang No. 1 422,860 22,870.00 377,870.67
residents start to move sold.
in.
External wall
Partly
PRD-Langqiao Residence 514,170 81,718.10 352,390.86 decoration and
pre-sold
landscaping
The main construction Partly
PRD-Caitianyise 110,000 36,319.75 104,124.16
has been topped off. pre-sold
PRD-Banshanyujing (first and First phase under basic
793,000 28,214.19 227,572.34 ——
second phases) construction
PRD-Jinling Holiday (previously
233.00 61,997.99 Preceding planning ——
land in Huanggang Port)
PRD-Songhulangyuan (previously
3,370.66 224,241.60 Preceding planning ——
land in Dalang, Dongguan)
PRD-West Lake Wondering (land in
435,889.79 435,889.79 Preceding planning ——
Yangzhou)
PRD-Blue Bay (land in the Moon
271,304.37 271,304.37 Preceding planning ——
Bay)
Total 879,919.86 2,055,391.78 ——
Notes: 1. PRD-Blue Bay (land in the Moon Bay) is the asset that the principal
shareholder has promised in the share reform to give through exchange transactions;
2. All the projects in the table above are real estate projects.
(III) Entrusted financing for external parties
On 20 May 2011, with the Shenzhen branch of Ping An Bank Co., Ltd. as the trustee,
Shenzhen International Trade Center Property Management Co., Ltd.—one of the
Company’s subsidiaries—provided a loan by mandate of RMB 9 million to Shenxin Taxi
Co., Ltd.—one of the subsidiaries of the Company’s controlling shareholder.
IV. Reasons for and influences by the changes in accounting policies, accounting
estimation and correction of significant accounting errors
(I) In the reporting period, there were no changes in the accounting policies in the
Company.
(II) Change of accounting estimates for the reporting period
1. Contents of the accounting estimate change and the approval procedure
At the 4th Session of the 7th Board of Directors held during the reporting period, the
Accounting Policy and Estimate of ShenZhen Properties & Resources Development
(Group) Ltd. was reviewed and approved to adjust the standard for dividing account
receivable risk portfolios according to risk features and the methods for making bad-debt
provisions. Details are as follows:
A. For details of the new policy, please refer to Note (II) 10 to the financial statements.
B. The original policy is as follows:
Receivables that are provided for provision on a basis of portfolio:
Basis on determine the portfolio
Receivables portfolio of similarity or with similar credit risk
characteristics for the subsidiaries engage in property
Portfolio 1
management business, except receivables which have provided
for provision separately with obviously high credit risk.
Receivables portfolio for the subsidiaries beside the ones
which engage in property management business, except
Portfolio 2
receivables which have provided for provision separately with
obviously high credit risk.
The method of provision for impairment according to portfolio
Portfolio 1 Percentage of balance method
On balance sheet day, the impairment test is carried on
individually according significance; the Company provides
Portfolio 2 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.
The percentage of provision for the portfolio：
Percentage of provision for Percentage of provision for
Portfolio Name
accounts receivable (%) other receivables (%)
Portfolio 1 3.00 3.00
2. Influence of the accounting estimate change on the reporting period
Items Before the change Influenced amounts After the change
Items in the balance sheet:
Accounts receivable 71,906,190.53 -1,374,850.75 70,531,339.78
Other receivables 25,233,658.76 -21,886,670.27 3,346,988.49
Long-term equity 83,150,532.14 -2,046,992.19 81,103,539.95
investment
Deferred income tax assets 123,788,245.69 313,956.72 124,102,202.41
Items in the income
statement:
Asset impairment loss -997,372.33 23,261,521.02 22,264,148.69
Investment income 2,355,745.75 -2,046,992.19 308,753.56
Income tax expense 82,356,283.80 -313,956.72 82,042,327.08
Net profit 282,455,634.03 -24,994,556.49 257,461,077.54
(III) In the reporting period, there were no significant accounting errors in the Company.
V. Routine Work of the Board of Directors
(I)Board sessions convened in the reporting period
1. On 21 Jan. 2011, the 29th Session of the 6th Board of Directors was convened, at which
the Proposal on Revising the Work Rules of PRD for GM, the Proposal on Reviewing the
Financial Chief Management Rules of PRD, the Preplan on Asking the Shareholders’
General Meeting to Authorize the Board of Directors to Make Decisions about Land
Investments, the Proposal on the Authorization Given by the Board of Directors to Its
Chairman, and the Proposal on a Subsidiary’s Applying for Project Financing from a
Financial Institution & Providing a Loan by Mandate for Another Subsidiary were
reviewed and approved. The public notice on the resolutions made at the session was
published at Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 24 Jan. 2011.
2. On 22 Apr. 2011, the 30th Session of the 6th Board of Directors was convened, at which
the 2010 Annual Work Report of the Board of Directors, the Full Text and Summary of the
2010 Annual Report, the 2010 Final Financial Report, the Proposal on Reducing Various
Asset Impairment Provisions, the Proposal on Withdrawing Various Impairment
Provisions, the 2010 Annual Profit Distribution Preplan, the 2011 Annual Budget Report,
the Proposal on Renewing the Engagement of the CPAs Firm, the Proposal on the Internal
Control Self-evaluation Report, the Proposal on Applying for Financing from Financial
Institutions and the Proposal on Convening the 2010 Annual Shareholders’ General
Meeting were reviewed and approved. And the public notice on the resolutions made at
the session was published at Securities Times, Ta Kung Pao and http://cninfo.com.cn
designated for information disclosure dated 26 Apr. 2011.
3. On 29 Apr. 2011, the 31st Session of the 6th Board of Directors was convened, at which
the First Quarterly Report for 2011, the Proposal on Adjusting the Organizational
Structure and the Proposal on the Work Plan for Thorough Improvement of Internal
Control were reviewed and approved. And the public notice on the resolutions made at the
session was published at Securities Times, Ta Kung Pao and http://cninfo.com.cn
designated for information disclosure dated 30 Apr. 2011.
4. On 13 May 2011, the 32nd Session of the 6th Board of Directors was convened, at which
the Proposal on Providing a Loan by Mandate for Shenxin Taxi Co., Ltd. was reviewed
and approved. And the public notice on the resolutions made at the session was published
at Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for information
disclosure dated 16 May 2011.
5. On 26 May 2011, the 33rd Session of the 6th Board of Directors was convened, at which
the Proposal on Authorizing the Management to Make Decisions about Land Investments,
the Proposal on the Re-election of the Board of Directors and the Proposal on Convening
the First Special Shareholders’ General Meeting for 2011 were reviewed and approved.
And the public notice on the resolutions made at the session was published at Securities
Times, Ta Kung Pao and http://cninfo.com.cn designated for information disclosure dated
27 May 2011.
6. On 21 Jun. 2011, the 1st Session of the 7th Board of Directors was convened, at which
the Proposal on Electing Chairman for the 7th Board of Directors, the Proposal on Electing
Members for All Special Committees under the 7th Board of Directors, the Proposal on
Engaging GM and Company Secretary and the Proposal on Appointing Senior Executives
were reviewed and approved. And the public notice on the resolutions made at the session
was published at Securities Times, Ta Kung Pao and http://cninfo.com.cn designated for
information disclosure dated 22 Jun. 2011.
7. On 29 Jul. 2011, the 2nd Session of the 7th Board of Directors was convened, at which
the 2011 Semi-annual Report and Its Summary was reviewed and approved. And the
public notice on the resolutions made at the session was published at Securities Times, Ta
Kung Pao and http://cninfo.com.cn designated for information disclosure dated 30 Jul.
2011.
8. On 24 Oct. 2011, the 3rd Session of the 7th Board of Directors was convened, at which
the Third Quarterly Report for 2011 and Its Summary was reviewed and approved. And
the public notice on the resolutions made at the session was published at Securities Times,
Ta Kung Pao and http://cninfo.com.cn designated for information disclosure dated 25 Oct.
2011.
9. On 25 Nov. 2011, the 4th Session of the 7th Board of Directors was convened, at which
the Proposal on Formulating the Management Rules of PRD for Asset Impairment
Provisions, the Proposal on Formulating the Accounting Policy and Estimate of PRD, the
Proposal on Liquidating the Hainan Subsidiary and the Proposal on the Disposal of Assets
in Hainan were reviewed and approved. And the public notice on the resolutions made at
the session was published at Securities Times, Ta Kung Pao and http://cninfo.com.cn
designated for information disclosure dated 28 Nov. 2011.
10. On 8 Dec. 2011, the 5th Session of the 7th Board of Directors was convened, at which
the Proposal on Formulating the Management Rules of PRD for Modification of
Accounting Policies and Estimates & Accounting Error Correction, the Proposal on
Formulating the Management Rules of PRD for Financial Reporting, the Proposal on
Formulating the Methods of PRD for the Board of Directors to Appoint Senior Executives
and the Proposal on Formulating the Methods of PRD for the Board of Directors to
Appraise Senior Executives were reviewed and approved. And the public notice on the
resolutions made at the session was published at Securities Times, Ta Kung Pao and
http://cninfo.com.cn designated for information disclosure dated 9 Dec. 2011.
(II) Implementation of the Resolutions Made at the Shareholders’ General Meeting by the
Board
1. Proposals reviewed and approved at the 2010 Annual Shareholders’ General Meeting:
the 2010 Annual Work Report of Board of Directors, the 2010 Annual Work Report of
Supervisory Committee, the 2010 Annual Final Financial Report, the 2011 Annual
Financial Budget Report, the 2010 Annual Report, the Pre-plan for 2010 Annual Profit
Distribution, the Proposal on Renewing Engagement of CPAs Firm, the Proposal on
Applying for Financing from Financial Institutions and the Proposal on Authorizing the
Board of Directors to Make Decisions about Land Investments.
2. The First Special Shareholders’ General Meeting for Y2011 reviewed and approved the
Proposal on Re-electing the Board of Directors, the Proposal on Re-electing the
Supervisory Committee and the Proposal on Providing Guarantees for the Xuzhou
Subsidiary’s Application for Bank Loans. All the aforesaid proposals have been fully
executed.
(III) Duty performance of the Audit Committee under the Board
The Audit Committee under the Board of the Company consists of 3 Directors, including
2 Independent Directors, with the post of Chairman of the Committee held by Independent
Director Mr. Dong Zhiguang. In the reporting period, according to the requirement of
CSRC and Shenzhen Stock Exchange as well as the Work Rules for the Audit Committee
under the Board, the Audit Committee fulfilled the following duties with diligence and
responsibility, mainly reviewed the Company’s Periodic Financial Report, the Annual
Appraisal on Duty Performance of Audit Organ and Its Renew Engagement, Plan for the
Company’s Basic Work of Finance & Accounting, the Self-inspection Report and
Rectification Report of the Company’s Basic Work of Finance & Accounting, etc.
1. Duty performance of the 2011 Annual Auditing Work
(1) On 31 Dec. 2011, the Audit Committee under the Board fully communicated with the
principal for the annual auditing work, negotiated to decide the date for the entry of the
CPAs and the work plan for annual auditing of financial report. On 11 Feb. 2012, the
CPAs firm came to the Company and officially started the audit.
(2) After the entry of the CPAs, the Audit Committee under the Board communicated with
the CPAs responsible for the Company’s annual audit on the problems occurring in the
auditing process. On 1 Mar. 2012, the CPAs firm issued the preliminary audit opinion and
reported to the Audit Committee on some issues arising in the audit process. And the Audit
Committee expressed their first opinion as follows after reviewing the financial statements
prepared by the Company: the Financial Statements 2011 of the Company had been
complied according to the provision of Accounting Standard for Business Enterprises, and
the statements had reflected the actual operating situation and cash flow of the Company
as at Dec. 31, 2011, which were in line with relevant requirements of CSRC. And the
Audit Committee therefore agreed to submit the financial statements (un-audited)
prepared by the Company and relevant materials to the CPAs firm for auditing. Meanwhile,
the Committee also expressed their wish for the management of the Company to cooperate
closely with China Chain International Certified Public Accountants to carry out the
auditing of the financial statements in 2011.
(3) On 21 Mar. 2011, the Audit Committee expressed their second opinion as follows after
reviewing the financial statements prepared by the Company: the Financial Statements
2011 of the Company was complied strictly according to the provision of Accounting
Standard for Business Enterprises and Accounting System for Business Enterprises, as
well as in compliance with the New Accounting Standards and relevant documents issued
by the Ministry of Finance; the notes to the financial statements were complied in line
with relevant regulations issued by CSRC. The financial statements and the notes to
financial statements objectively and fairly reflected the financial status, business
achievement and cash flow of the Company as at Dec. 31, 2011; the audit conclusion was
in line with the actual situation of the Company and the Committee thus agreed to submit
the 2011 Annual Financial Report to the Board of Directors for review.
(4) The Audit Committee believes that during the process on providing the audit service
for the Company, China Chain International Certified Public Accountants scrupulously
abided by the duty, follow the independent, objective and fair code of ethics, successively
finished the auditing work for the 2011 Annual Report. The audited financial statements
were a fair presentation of the Company’s financial position as at 31 Dec. 2011, as well as
the operating results and cash flows as of the year 2011. And the audit conclusion issued
was in line with the actual situation of the Company. In light that China Chain
International Certified Public Accountants had strictly executed the Auditing Rules and
Quality Control System of CPAs Firm in compliance with the new auditing standards for
CPAs, the CPAs firm is good in practice, scrupulously abide by the duty and familiar with
the Company’s situation, it was decided to submitted the Proposal on Renewing
Engagement of China Chain International Certified Public Accountants as the Audit Organ
for Y2012 to the Board of Directors for review.
In the auditing work for 2011 Annual Report, the Audit Committee has faithfully fulfilled
its duty with responsibility, brought its supervisory function into due plan, and ensured the
independence of auditing, which safeguarded the legal interests and rights of the Company
and the minor interests.
2. Duty performance of Special Campaign on the Basic Work of Finance & Accounting
In accordance with Accounting Law of PRC, Basic Rules for Internal Control of Enterprise and
other laws and rules, the Company made the overall self-inspection on every issues involved in the
basic work of financial & accounting, the Audit Committee under the Board successively
reviewed the Plan for the Company’s Basic Work of Financial & Accounting,
Self-inspection Report on the Special Campaign on Standardization of Basic Work of
Finance & Accounting and Rectification Report on Generally and Deeply Carrying out a
Special Campaign on Standardization of Basic Work of Finance & Accounting, wishing
the Company seriously pay attention to the execution of the rectification measurements, as
well as continuously perfect the Company’s basic work of financial & accounting.
(IV) Duty Performance of the Remuneration and Appraisal Committee under the Board
The Remuneration and Appraisal Committee under the Board consisted of 3 Directors,
including 2 Independent Directors, and the post of Chairman of the Committee is held by
Independent Director Mr. Li Xiaofan. In the reporting period, according to requirements of
CSRC and Shenzhen Stock Exchange, as well as the Company’s Work Rules for
Remuneration and Appraisal Committee under the Board, the Committee conscientiously
fulfilled its duties, examining the remunerations for directors, supervisors and senior
executives in accordance with the Company’s Management Rules for Remuneration and
Performance Appraisal. And the Committee was of the opinion that the annual salary
mechanism for directors, supervisors and senior executives connected their remuneration
with the annual business performance of the Company, which was in line with the actual
situation of the Company. And there existed no violation of or inconsistency with the
remuneration rules.
(V) Duty performance of the Strategic Development and Investment Committee under the
Board
The Strategic Development and Investment Committee under the Board consists of 5
directors, with Chairman of the Board Mr. Chen Yugang as Chairman of the Committee.
In the reporting period, the Committee fully played its professional advantage to give
scientific and reasonable advice for significant events, strengthen democracy, science and
accuracy for group decision-making of the Board of Directors, further ensure the healthy
development of the Company.
During the reporting period, the Strategy Committee under the Board focused on
researching to make the strategic development plan of the Company and other relevant
affairs.
(VI) Duty performance of the Nomination Committee under the Board
The Nomination Committee under the Board consists of 3 directors, including 2
independent directors, with Independent Director Mr. Zha Zhenxiang as Chairman of the
Committee. In the re-election of the Board of Directors, the Nomination Committee gave
full play to its role of an independent examiner and advisor and ensured that the election
was open, just and fair.
VI. Profit Distribution Preplan or Preplan on Capitalization of Capital Reserves for
the year 2011
(I) Profit Distribution Preplan for 2011
As audited by China Chain International Certified Public Accountants, the Company
achieved, in the year 2011, a consolidated net profit attributable to owners of the Company
(as the parent company) reaching RMB 257,461,077.54 and a consolidated profit available
for distribution for the year standing at RMB 406,422,741.94; In the year 2011, the
Company (as the parent company) achieved a net profit of RMB -37,392,803.39, plus the
retained profit at the beginning of 2011 amounting to RMB -12,849,343.46, the actual
profit available for distribution of the Company (as the parent company) for the year 2011
stood at RMB -50,242,146.85.
Considering that the Company (as the parent company) acted as the main body in the
profit distribution of the Company, the Company would not conduct profit distribution for
the end of 2011 or capitalize capital reserves. And the retained funds would be used for
development of the present projects.
(II) Profit distribution and capitalization of capital reserves in the previous three years
Year Plan for profit distribution and capitalization of capital reserves
2010 The Company did not conduct profit distribution or capitalize capital reserves.
With the Company’s total shares (541,799,175 shares) as the base, one bonus share and a cash
2009
dividend of RMB 0.112 (tax included) were distributed for every 10 shares held by any shareholder.
2008 The Company did not conduct profit distribution or capitalize capital reserves.
(III) Cash dividends in the previous three years
Percentage
Consolidated
Net profit in the net Percentage in the
net profit
Amount of belonging to profit consolidated net profit
belonging to
Year cash shareholders of belonging to belonging to
shareholders of
dividends the parent shareholders shareholders of the
the parent
company of the parent parent company
company
company
2010 0.00 18,982,840.06 174,998,534.79 0.00 0.00
2009 6,067,788.90 462,937,195.91 96,933,951.02 1.31% 6.26%
2008 0.00 -26,155,872.73 9,829,397.29 0.00 0.00
VII. The Execution of Management Rules for Insiders and Self-inspection on Inside
Dealings
The Company always pays attention to standardize the management for inside information,
such as promulgating the Management Rules for Insiders, making clear about the contents
of inside information, making the scope of insiders and accountability system for inside
dealings. After reporting and submitting non-published information to the controlling
shareholders, the Company all registered the relevant information of insiders and then
submitted to securities regulatory authorities, as well as strictly controlled the transmission
scope of inside information, further strengthened the security work of inside information.
According to the spirit conveyed at the Special Work Conference for Information
Disclosure of Listed Companies in Shenzhen held by the CSRC Shenzhen Bureau on 2
Aug. 2011, as well as the Circular on Seriously Following the Spirit Conveyed at the
Special Work Conference for Information Disclosure of Listed Companies in Shenzhen
(Shen-Zheng-Ju-Gong-Si-Zi [2011] No. 87) issued by the CSRC Shenzhen Bureau on 8
Aug. 2011, the Company gave a lecture on the provisions about insider trading and market
manipulation in the Securities Law, the Criminal Law and the Administrative Methods for
Information Disclosure of Listed Companies, the Opinion on Combating, Preventing and
Controlling Insider Trading in the Capital Market according to Applicable Laws and
Regulations jointly issued by the CSRC and other four authorities, and the relevant
circular issued by the Shenzhen bureau of CSRC at the conference room on 39/F of
International Trade Center, Luohu, Shenzhen on 9 Sept. 2011. Upon Self-inspection,
during the reporting period, there were no particulars about insiders took advantages of
inside information to purchase or sell shares of the Company before the disclosure of
major sensitive information that shall have an impact on the share price of the Company,
nor any investigation and punishment as well as rectification from the regulatory authority.
From now on, the Company will continuously strengthen to learn relevant rules and laws,
scrupulously execute the Management Rules for Insider Information and Insiders,
standardize the corporate governance of the Company, do well the work of preventing
inside dealings.
VIII. Statement on the Responsibility for Internal Control from the Board of
Directors
The Board of Directors will earnestly bear the overall responsibility for establishing and
perfecting the Company’s internal control and its effective operation, take in charge for the
promulgation of the Company’s internal control and its effective execution, continue to
establish and perfect the procedure of the Company’s internal control in accordance with
Code of Enterprise’s Internal Control, Guideline for Enterprise’s Internal Control and
other rules and laws; the Supervisory Committee will be responsible for supervising the
establishment and execution of internal control by the Board of Directors; the
management team of the Company will be responsible for organizing and leading the
routine operation of the Company’s internal control; the Audit Committee under the Board
of Directors will be responsible for guiding and supervising the effectiveness of the
appraisal for internal control by the Company’s internal institution.
The goals of the Company’s internal control: reasonably guarantee the legality and
compliance of the Company’s operating management, safety of assets, authenticity and
completeness of financial report and relevant information; enhance the level of operating
management and ability of risk prevention, improve the operating efficiency and result,
promote the Company’s sustainable development, protect the legal interest of the
Company, shareholders and stakeholders, as well as maintain the market order and
interests of the general public. The internal control has its own limitation, so the Company
can only provide the reasonable guarantee for the above goals, the effectiveness of the
internal control may change with the change in the Company’s internal and external
environment and operating situation, for which, the Company has established the
inspection and supervision mechanism of internal control, including measurement for
risks identification and prevention. Once any defect of internal control were found, the
Company would take the relevant rectification measurement.
IX. Other Events
(I) Special explanation and independent opinion of Independent Directors on external
guarantee of the Company
Based on the provisions in the Articles of Association and Notice on Regulating the
Capital Transaction Between Listed Companies and the Affiliated Parties, as well as Some
Problems in External Guarantee of Listed Companies (ZJF [2003] No. 56), we checked
over the external guarantee of the Company with serious and responsible attitude, and
explanation on relevant situation is as follows: The balance of guarantees provided by the
Company for its subsidiaries totaled RMB 323.50 million, of which RMB 111.50 million
occurred in the reporting period. At the end of the reporting period, the total guarantee
amount accounted for 28.62% of the Company’s net assets, of which the guarantee
amount provided for shareholders, the actual controller and their related parties was RMB
0, the debt guarantee amount provided directly or indirectly for entities with a debt asset
ratio over 70% was RMB 323.50 million, and the amount of the total guarantee amount
exceeding 50% of the Company’s net assets was RMB 0. We believe that the Company
has strictly followed the provisions in the Articles of Association and Notice on
Regulating the Capital Transaction Between Listed Companies and the Affiliated Parties,
as well as Some Problems in External Guarantee of Listed Companies (ZJF [2003] No.
56), regulated the behavior of external guarantee, and controlled the risk of external
guarantee. In the reporting period, there was no illegal guarantee.
(II) In the reporting period, the Company designated Securities Times and Ta Kung Pao as
the newspapers for information disclosure, and no change has been made.
Section IX Report of the Supervisory Committee
In 2011, the Supervisory Committee conscientiously performed its various supervisory
duties and actively protected the legal interest of the Company and its shareholder in
accordance with Company Law, Articles of Association, Rules of Procedure for
Supervisory Committee as well as other laws and regulations.
I. Work of the Supervisory Committee
(I) Sessions held by the Supervisory Committee
In the reporting period, the Supervisory Committee convened six sessions:
1. The first session was convened on 22 Apr. 2011, at which the 2010 Annual Report and
Its Summary, the 2010 Annual Profit Distribution Preplan, the Proposal on Reducing the
Impairment Provision for Various Assets, the Proposal on Withdrawal of Various
Impairment Provision, the Self-evaluation Report on Internal Control and Work Report for
Supervisory Committee in 2010 were reviewed and approved.
2. The second session was convened on 29 Apr. 2011, at which the First Quarterly Report
in 2011 was reviewed and approved.
3. The third session was convened 26 May 2011, at which the Preplan on the Re-election
of Supervisory Committee was reviewed and approved.
4. The fourth session was convened on 21 Jun. 2011, at which Mr. Dai Xianhua was
recommended to be the Chairman of the Seventh Supervisory Committee.
5. The fifth session was convened on 29 Jul. 2011, at which reviewed and approved the
Semi-annual Report in 2011 and Its Summary.
6. The sixth session was convened on 24 Oct. 2011, at which reviewed and approved the
Third Quarterly Report for 2011 and Its Summary.
(II) Diligently and responsibly sat in on the board sessions and shareholders’ general
meetings
In 2011, the Supervisory Committee of the Company sat in on 9 board sessions and 2
shareholders’ general meetings, heard 33 issues of the board session and 12 issues of the
shareholders’ general meeting, as well as supervised the compliance and legality of the
convening of the board sessions, as well as the content and procedure of voting, so as to
ensure the good operation of the corporate governance mechanism.
(III) Continued to supervise the legality and compliance of the operational activities of the
Company’s directors and senior executives
In 2011, the Supervisory Committee made a continuous supervision on the compliance of
relevant laws and regulations by the Company’s directors and senior executives during the
business operation, and the particulars on the implementation of resolutions made in the
Shareholders’ General Meeting, so as to ensure the standardization of the Company’s
operational management activities.
II. Independent opinions given by the Supervisory Committee on relevant issues of
the Company
(I) Operation in line with the law
In 2011, the Supervisory Committee consciously performed its duties, sat in on all
shareholders’ general meetings and board sessions, supervised the convening, holding,
procedure of voting, resolutions and particulars on the execution of the resolutions made
in Shareholders’ General Meeting by the Board of Directors, as well as the Company’s
operation by law in 2011. The Supervisory Committee believed that the Board of
Directors convened and held sessions in accordance with relevant laws, regulations and
other regulatory documents with every decision-making procedure being legal and diligent
work, which also conscientiously executed various resolutions made in the Shareholders’
General Meeting; the Company had established a perfect internal control system, which
also operated in accordance with relevant laws, regulations and regulatory documents; the
directors, managers and other senior executives performed their duties without any
behavior in violation of the laws, regulations and the Articles of Association of the
Company or doing harm to the interests of the Company.
(II) Inspection of financial status:
The Supervisory Committee made an effective supervision, inspection and reviewal on the
financial status and financial results of the Company for 2011, and believed that the
Company had set up sound financial system, perfect internal control system, standard
financial operation. The unqualified Auditors’ Report issued by Wuhan Zhonghuan
Certified Public Accountants Co., Ltd. was object and fair as well as gave a true, objective
and complete reflection of the Company's financial status and business performance.
(III) Review of internal control
The Supervisory Committee reviewed the Self-appraisal Report of Internal Control for the
Company in 2011, the Establishment and Operation of the Internal Control System for the
Company, and believed that the Company had established a relevant perfect internal
control system and executed it effectively, which was in compliance with the requirements
of the Guidelines of Shenzhen Stock Exchange on Internal Control in Listed Companies
and other relevant documents; the Self-appraisal Report of Internal Control for the
Company in 2011 gave a true and objective reflection of the establishment, perfect and
operation of the Company's internal control system, which was in line with the needs of
internal control for the Company; the overall appraisal for internal control was object and
accurate.
(IV) Input of raised funds
In the reporting period, no funds were raised from the public during the reporting period.
(V) Related transaction
The Supervisory Committee inspected and supervised on the Company’s related
transactions for Y2011. In 2011, Shenzhen Investment Holdings Co., Ltd., the Company’s
controlling shareholder (hereinafter referred to as Investment Holdings), provided a total
loan of RMB 0.49 billion by entrustment loan, which were detailed as follows:
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%, and the total interest paid during the reporting
period was RMB 12.6542 million; 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%, and the total
interest paid during the reporting period was RMB 8,568,800; 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%, and the total interest paid during the reporting period was RMB 1,713,800.
The Supervisory Committee inspected on the Company’s related transactions for Y2011,
and believed that the events of the entrustment loans provide by the controlling
shareholder for the Company had been reviewed and approved on the 22nd Session of the
6th Board of Directors, which had fulfilled the necessary decision-making procedure. And
it was in line with relevant laws, regulations and Articles of Association, didn’t violate the
principles of openness, fairness and justice as well as without any harm to interests of the
Company and its shareholders.
(VI) Disposal of assets
In the reporting period, the business of assets disposal was standard, which was in line
with the legal procedure. The said transaction was objective, just and fair without insider
dealing, and didn’t do harm to interests of the Company and the shareholders.
(VII) External investment
During the reporting period, the Company was in compliance with the Company Law,
Articles of Association, Rules of Procedure for Board of Directors and other relevant
investment management regulations, strictly analyzed and researched on the feasibility as
well as executed the approval procedure for investment, which existed no fiscal
investment behaviors or events.
Section X. Significant Events
I. The significant lawsuits or arbitrations
(I). New significant lawsuit or arbitration events occurred in the reporting period
1. On 6 Dec. 2010, the Company received a Written Decision on Paying the Special Funds
for Public Facilities of Houses in a Limited Time from the Shenzhen Luohu Housing
Bureau, which sent to the Company and Shenzhen Xingtong Real Estate Development Co.,
Ltd.(hereinafter referred as Xingtong Company). According to the said Written Decision,
the Wanshida Mingyuan II jointly developed by the Company and Xingtong Company
should pay RMB 2310274.56 for the special funds for public facilities of houses. The
Company believed that the Written Decision didn’t clearly divide the responsibility for
both parties, and sent a letter to the Housing Bureau on 5 Aug. 2011, Luohu Housing and
Development Bureau (the previous form of Housing Bureau) sent written reply to the
Company on 10 Aug. 2011, saying that any party of the Company and Xingtong Company
is fully responsible for settlement. However, the Company believed that the written reply
had no legal basis, thus it submitted the administrative reconsideration to the superior
administrative organ of Luohu Housing and Development Bureau— Shenzhen Housing
and Development Bureau, requiring to cancel the written reply. However, Shenzhen
Housing and Development Bureau maintained the written reply after the administrative
reconsideration, then the Company raised an administrative suit to Shenzhen Luohu
People’s Court, requiring to cancel the written reply, and the court accepted the said case,
which is under trial. In Aug. 2011, Luohu Housing and Development Bureau applied to
Luohu People’ Court to compulsorily executed the Written Decision on Paying the Special
Funds for Public Facilities of Houses in a Limite Time. On 30 Dec. 2011, the Company
received the Notice of Execution issued from Shenzhen Luohu People’s Court to the
Company and Xingtong Company, which required the Company and Xingtong Company
to perform the responsibility on paying the special funds for public facilities of houses for
Wanshida II.
2. As to the case on Shenzhen Branch of Fujian No. 5 Construction Engineering Company
suing the Company’s subsidiary—Shenzhen Huangcheng Real Estate Co., Ltd. on the
Construction Contract Disputes (SZS Zi [2011] No. 0284), Shenzhen Arbitration
Committee issued the Arbitration Letter on 30 Aug. 2011 (SZS Zi [2011] No. 501),
deciding that the Company should pay the interest of arrear construction account, penalty
and arbitration cost to Fujian No. 5 Construction Engineering Company, which totaled
RMB 1,922,407.68. And Shenzhen Huangcheng Real Estate Co., Ltd. received the Notice
of Execution from Futian Court on 29 Nov. 2011, requiring the Company to execute the
arbitration by law, but Shenzhen Huangcheng Real Estate Co., Ltd. submitted the
Application of No Execution and Application of Suspending Execution to Futian Court,
then Futian Court open a court to try the case of the Application of No Execution from
Shenzhen Huangcheng Real Estate Co., Ltd. on 6 Jan. 2012. On 24 Feb. 2012, the court
delivered the Civil Written Verdict to Shenzhen Huangcheng Real Estate Co., Ltd., the
court accepted the reason of the application of no executing the Arbitration Letter (i.e.
SZC Zi [2011] No. 501) from Shenzhen Huangcheng Real Estate Co., Ltd., deciding not
to execute the SZC [2011] No. 501.
(II) During the reporting period, the progress of the significant lawsuits and arbitrations
disclosed in the previous years:
1. Concerning the cases of ―Haiyi Company‖ disclosed by the Company in the annual
reports from 1999 to 2009
In Oct. 2010, the Company signed Settlement Agreement with Haiyi Company and other
seven companies after mediation of Shenzhen Intermediate People’s Court, the Company
compensated RMB 58 million for Haiyi Company and other seven companies, who gave
up the application of lawsuit towards the Company, thus the 34 cases could be solved by
settlement. On 21 Oct. 2010, the Shenzhen Intermediate Court relieved the seizure of the
Company’s property. The Company paid all the indemnity payment in accordance with the
Settlement Agreement. In Dec. 2011, the Company received the Notice of Settlement from
Shenzhen Intermediate People’s Court, thus the 34 cases were all settled.
2. With regard to the case of ―Meisi Company Lawsuit‖ disclosed continuously by the
Company in the Annual Reports from 2004 to 2010
In Jul. 2011, Guangdong Higher People's Courts made the (2010) Administrative
Judgment YGFSJZ Zi No. 8, and maintained the Administrative Judgment (2008) SZFXZ
Zi No. 223, and believed that the dispute on the ownership of land between both parties
was the relationship of civil rights confirmation, both parties should find other legal way
to solve. For details, please refer to the public notice published at Securities Times, Ta
Kung Pao and http://cninfo.com.cn designated for information disclosure dated 18 Aug.
2011.
3. Concerning the ―China Orient Asset Management Company Lawsuit‖ disclosed by the
Company in the 2009 and 2010 Annual Report.
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. The case started to be tried on 11 Jun. 2010, and Shenzhen Intermediate Court
made the first instance: the shareholders of Felicity Industrial occupied the assets of
Felicity Industrial, which didn’t belong to the same legal relationship with guarantee loan
contract dispute between the Company and Felicity Industrial or Felicity Hotel, thus it
shall not sentence the shareholder of Felicity Industrial to take a joint liability of
compensation for the loan of Felicity Hotel in the case. And after the judgment that the
Company needn’t to take a liability, it no longer received the legal document from the
plaintiff. For details, please refer to the interim public notice at Securities Times, Ta Kung
Pao and http://cninfo.com.cn dated on 17 May 2011.
4. Concerning the case of Shenzhen Office of Hubei Foreign Economic Trade Cooperation
Department suing against the Company disclosed in the Annual Reports from 2005 to
2006
Not satisfied with the decision of the second retrial for the case, the Company applied to
the Supreme Court of Guangdong Province, however, which rejected the Company’s such
application in May 2006. The Company believed that the rejection decision of the retrial
application from the Supreme Court of Guangdong Province had the errors on the
recognition of facts and application of laws, thus applied to the Supreme Court of
Guangdong Province for retrial. In Oct. 2007, the Supreme Court of Guangdong Province
decided to retry the case. However, the Company withdrew the application of retrial after
comprehensive consideration, and the Supreme Court of Guangdong Province approved
for the Company’s withdrawal of lawsuit. After the Company repaid housing fund of
Jiabin Building and interest totaled RMB 25.50 million to Shenzhen Office of Hubei
Foreign Economic Trade Cooperation Department (hereinafter referred as ―Hubei Foreign
Economic Trade Shenzhen Office‖), the returned 14/F and 15/F of Jiabin Building from
Hubei Foreign Economic Trade Shenzhen Office should be belong to the Company in line
with law. In order to resolve ownership of the property and after investigation, the
Company found that 14/F and 15/F of Jiabin Building was registered under the name of
Zhuhai West Yinzhu Industrial Development Co., Ltd. (Zhuhai Yinzhu Company) with
method of file registration. In Jun. 2008, the Company sued Zhuhai West Yinzhu
Industrial Development Co., Ltd. to the Court of Luohu District, appealed the court to
confirm the Company as obligee of 14/F and 15/F of Jiabin Building and judge to transfer
registration under the name of the Company. The Court of Luohu District accepted the
case. On 21 Jul. 2008, the Court opened a court session and presided to intermediation.
The Company and Zhuhai Yinzhu Company came to Civil Mediation Agreement with
(2008) SLFMSC Zi No. 1442, in which: 1) both parties unanimously agreed that the 14/F
and 15/F of Jinlihua Commercial Plaza (the former Jiabin Building) located in Bao’an
Road South, Luohu District, Shenzhen City owned by the Company; 2) Zhuhai Yinzhu
Company cooperated with the Company to handle relevant transfer procedure of the
aforesaid property within three days when the Civil Mediation Agreement came to effect.
The mediation agreement now is effective complied with law.
In order to vitalize Jinlihua Business Square and maintain the interest of the Company and
its shareholders, in accordance with the minutes of session held by Shenzhen Municipal
Government, the Company, together with Shenzhen Longyuan Kaili Hengfeng Real Estate
Co., Ltd. (hereinafter referred as ― Longyuan Kaili‖) and Shenzhen Huaneng Jindi Real
Estate Co., Ltd. (hereinafter referred as ― Huaneng Real Estate‖) signed the Supplemented
Agreement for Grant Contract of Land Use Right with Urban Planning Land and
Resources Commission of Shenzhen Municipality, at which 14/F and 15/F of Jiabin
Building were recognized as commodity house, which should be constructed and
decorated in accordance with the united building standards for the project by Longyuan
Kaili and Huaneng Real Estate; the use term of the land was adjusted as 50 years from 21
Feb. 2011 to 20 Feb. 2061. The Company disclosed the relevant information, for details,
please refer to the interim public notice at Securities Times, Ta Kung Pao and
http://cninfo.com.cn dated on 9 Mar. 2011.
II. Equity of other listed companies held and traded by the Company
1. Securities investment
Short Initial Number Percentage to
Book Profits and losses
Type of Stock form investment of total securities
No. value at in the reporting
securities code of (RMB shares investment at the
year-end period
Stock Yuan) held year-end (%)
Other securities investment held at
period-end
Profit and loss from selling securities
---- ---- ---- ---- 240,074.81
investment in the report period
Total ---- 240,074.81
2. Equity of other listed companies held by the Company
Equity Profit Change in
Short
Initial proportion and loss the owners’
Stock form Book value at Accountin Source of
investment in that of in the equity in the
code of the year-end g item shares
amount this reportin reporting
stock
company g period period
Purchasing
Long-term
S*ST legal person
000509 2,962,500.00 0.33% 802,199.55 0.00 0.00 equity
T.H. shares
investment
directionally
Total 2,962,500.00 - 802,199.55 0.00 0.00
3. Equity of other listed companies bought and sold by the Company
Amount of
shares
Name of Opening bought/sold Closing Investment
Item Used capital
stock amount during the amount income
reporting
period
Bought
Total
Sold ST Shengrun 26,000 26,000 240,074.81
Total 26,000 26,000 240,074.81
Note: the Company held 30,000 shares of ST Shengrun at period-began, and remained
26,000 shares after transferring 4,000 shares due to the corporate organization on 1 Apr.
2011.
III. Purchases, sales of assets, or mergers of the Company in the reporting period
1. In the report period, the Company had no significant asset acquisition, sales or mergers.
IV. Equity incentive plan
In the reporting period, the Company conducted no equity incentive plan.
V. Significant related transactions
(I) Significant related transactions
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%. The borrowing had been paid back on the
expiry date, and the total interest paid during the reporting period amounted to RMB
562,100.
(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%, and the total interest paid during the reporting
period amounted to RMB 12,654,200.
(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%, and the total interest paid during the reporting
period amounted to RMB 8,568,800.
(3) 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%, and the total interest paid during the reporting
period amounted to RMB 1,713,800.
The above capital support has relieved the severe capital situation for the Company, which
ensure the normal production and operation of the Company.
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; On 17 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. The transfer
procedures for other swap-in assets are still in progress
3. 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 ITC Property Management Co., Ltd., 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 as
6.40%. In the reporting period, the loan brought interest income of RMB 352,000. The
entrustment loan belongs to credit loan, which was used in operational turnover for
Shenxin Taxi Co., Ltd.. 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.
(II) Credits and liabilities between the Company and its related parties as well as
guarantee events
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（2）（3）and (VI) 7 Entrustment
Borrowings for Related Parties, Entrustment Loan for Related Parties, Account
Receivables and Payables for Related Parties. For details of guarantee events, please refer
to Note (VI). 6. (1) Guarantee for Related Parties.
VI. Significant contracts and implementation
(I) Significant transaction, trusteeship, contract or lease of assets
1. During the reporting period, the Company did not hold a trust, contract or lease assets
of the other companies and the other companies did not hold a trust and contract the
Company’s assets.
2. In the report period, there were no such significant events where the Company leased its
assets.
(II) Significant guarantees
The total balance of guarantee for subsidiaries at period-end amounted to RMB 323.50
million, accounting for 28.62% of the net assets of the Company, of which RMB 111.50
million occurred during the reporting period. Of the total balance of guarantee for
subsidiaries at period-end, the guarantee provided for shareholders, actual controller and
their related parties was RMB 0, the guarantee directly or indirectly provided for the
guaranteed objects with the ratio of liabilities to assets exceeding 70% amounted to RMB
323.50 million, and the amount of the total guarantee over 50% of the net assets of the
Company was RMB 0.
The Company provided a joint-liability guarantee for the long-term loan of RMB 240
million borrowed by its subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. from the
East Shenzhen Sub-branch of China Agricultural Bank, and mortgaged the loan with its
properties on No. 4-01 and 3/F, Block A of Shenzhen International Trade Center Plaza.
The closing balance of the loan stood at RMB 240 million, which will be due within one
year.
The Company provided a joint-liability guarantee for the long-term loan of RMB 90
million borrowed by Shenzhen ITC Vehicle Industry Co., Ltd. from Shenzhen Sub-branch
of Ping An Bank, and the closing balance of the loan stood at RMB 3,495,212.00, which
will be due within one year.
The Company provided a joint-liability guarantee for the short-term loan of RMB 20
million borrowed by its subsidiary—Shenzhen ITC Vehicle Industry Co., Ltd. from
Guangzhou Zhuhai Sub-branch of Bank of Communications, and the closing balance of
the loan stood at RMB 20 million.
The Company provided a joint-liability guarantee for the short-term loan of RMB 30
million borrowed by its subsidiary—Shenzhen Tianque Elevator Technology Co., Ltd.
from Shenzhen Eastern Sub-branch of Agricutural Bank of China, and mortgaged its B20,
16/F, Block B of Shenzhen International Trade Center Plaza located at Renmin South
Road, Luohu District, Shenzhen and properties on No. 4-05, and the closing balance of the
loan stood at RMB 30 million.
Guarantee for the proprietors: The Company and its subsidiaries provided the commodity
houses purchasers with mortgage guarantee to the bank. Up to 31 Dec. 2011, the guarantee
amount unsettled was RMB 50.71 million. The guarantee is that the real estate developer
provides petty proprietor with guarantee for purchasing of commodity houses of the
Company, which is a common phenomenon in this business.
(III) Cash assets management the Company trusted other parties
1. There was no event of trusteeship of cash assets management in the reporting period.
2. Particulars on entrustment loans: On 20 May, the Company’s subsidiary—Shenzhen
ITC Property Management Co., Ltd. entrusted Shenzhen Branch of Ping An Bank to
provide entrust loan of RMB 9 million to the subsidiary of the Company’s controlling
shareholder—Shenxin Taxi Co., Ltd..
IX. Commitment made by the Company or shareholders holding over 5% of shares
of the Company
Shenzhen Construction Investment Holdings Co., Ltd. (hereinafter referred to as
―Construction Holdings‖) and Shenzhen Investment Management Co., Ltd. (hereinafter
referred to as ―Investment Management Company‖) were nominal shareholders of the
Company (Shares of the Company are registered under the name of these two companies.).
Later, these two companies and Shenzhen Trade & Commerce Investment Holdings Co.,
Ltd. combined on a legal basis and became one company known as Shenzhen Investment
Holdings Co., Ltd. (hereinafter referred to as ―Investment Holdings‖). However, due to
various reasons, the Company’s shares held by Construction Holdings and Investment
Management Company has not been transferred to Investment Holdings, which is the
actual controller of the Company.
(I) Investment Holdings stated that it would establish and perfect the internal control over
undisclosed information of the listed company known by it, urge relevant insiders not to
trade the shares of the Company by making use of the undisclosed information, not
suggest other buying and selling shares of the Company, nor leak any undisclosed
information of the Company. Meanwhile, it would provide an insider name list to the
Company in a timely, factual, accurate and complete way so that the Company could
submit the name list to the Shenzhen Bureau of CSRC and the Stock Exchange for
records.
In the report period, it was found that no actual controller of the Company or insiders
bought and sold stocks of the Company by taking advantage of undisclosed information of
the Company. And the Company submitted monthly the particulars about the parties to
which the undisclosed information had been submitted to CSRC Shenzhen Bureau for
reference.
(II) Commitments made by non-tradable shareholders in the share merger reform
1. The Company’s non-tradable share holders Construction Holdings and Investment
Management Company made a common commitment to abide by laws, regulations and
rules and perform prescribed commitment duties. And they also made special
commitments as follows:
Non-tradable shares held by Construction Holdings and Investment Management
Company would not be traded or transferred within 36 months since they acquired right of
trade. After expiration of the aforesaid commitment, originally non-tradable shares sold
through the listing and trading system on the Shenzhen Stock Exchange should not exceed
5 percents of total shares of the Company within 12 months, as well as not exceed 10
percents within 24 months. In case these companies acted against the above commitment
and sold shares of the Company, the income from sales of the shares would belong to the
Company.
Up to the date of public notice, Construction Holdings and Investment Holdings never
sold shares of the Company.
2. Investment Holdings made a commitment to abide by laws, regulations and rules and
perform prescribed commitment duties. And it also made special commitments as follows:
(1) Non-tradable shares held by Investment Holdings would not be traded or transferred
within 36 months since they acquired right of trade. After expiration of the aforesaid
commitment, originally non-tradable shares sold through the listing and trading system on
the Shenzhen Stock Exchange should not exceed 5 percents of total shares of the
Company within 12 months, as well as not exceed 10 percents within 24 months. In case
these companies acted against the above commitment and sold shares of the Company, the
income from sales of the shares would belong to the Company.
Up to the date of public notice, Investment Holdings never sold shares of the Company
actually controlled.
(2) Within one year since the non-tradable shares held by Construction Holdings and
Investment Management Company controlled by Investment Holdings acquired the right
of trading, Shenzhen Investment Holdings Co., Ltd will start up capital injection to the
Company, that is, Shenzhen Investment Holdings Co., Ltd will inject legitimate capital no
less than RMB 500 million including land resource in lump sum or in batches by replace
or other legitimate way, will increase land reserves of the Company and enhance
profitability in the future. In case the aforesaid capital failed to start completely within one
year, Shenzhen Investment Holdings Co., Ltd will compensate 20% of reorganization
capital failing to start to the Company within 30 days when expiration of 1 year, and
continued to implement the capital injection which had been started. As for the capital
injection failing to start, Shenzhen Investment Holdings Co., Ltd will not implement. Note:
Startup of capital injection means capital injection program has been reviewed and
approved by the Shareholders’ General Meeting of the Company. Shenzhen Investment
Holdings Co., Ltd was willing to entrust China Securities Depository and Clearing
Corporation Limited Shenzhen Branch to freeze 30 million shares of the Company, which
was under name of Shenzhen Construction Investment Holdings and actually controlled
by Shenzhen Investment Holdings Co., Ltd, as guarantee for the above commitment.
In order to implement the commitment, the Company prepared to start the relevant affairs
together with Investment Holdings, and disclosed the Public Notice on Implementation of
Commitment of Share Merger Reform on Assets Replacement and Significant Related
Transaction, which was reviewed and approved at the First Special Shareholders’ General
Meeting for 2010, for details, please refer to Public Notice on Resolutions of the First
Special Shareholders’ General Meeting for 2010; Investment Holdings has applied to
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited for
freezing its actual controlled 30 million shares of the Company under the name of
Construction Holdings, now the frozen period is due and the frozen shares has been
released.
(3) Since non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen
Construction Investment Holdings and Shenzhen Investment Co., Ltd acquired right to
trade within 24 months, Shenzhen Investment Holdings Co., Ltd commit that they will
support balance no less than RMB 500 million with method of entrust loan in line with
relevant provisions of laws and administrative statutes to release nervous capital of the
Company. The aforesaid balance means accumulative incurred amount within 24 months
since the date when non-tradable shares held by Shenzhen Investment Holdings Co., Ltd,
Shenzhen Construction Investment Holdings and Shenzhen Investment Co., Ltd acquired
right to trade, and each entrust loan for support will not be less than 12 months; the above
cash support of RMB 500 million excluded entrust loan offered before the date when
non-tradable shares held by Shenzhen Investment Holdings Co., Ltd, Shenzhen
Construction Investment Holdings and Shenzhen Investment Co., Ltd acquired right to
trade.
On 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 entrusted loan agreement, renewal of loan, borrow a
new loan to repay old within RMB 500 million according to actual need of operation and
based on negotiation with Investment Holdings and relevant banks. For details, please
refer to Public Notice on the Resolutions of Annual Shareholders’ General Meeting on 19
Mar. 2010. On 28 Dec. 2010, Investment Holdings entrusted Shenzhen Jingtian
Sub-branch of China Everbright Bank to provide entrust loan of RMB 10 million for the
Company’s subsidiary Shenzhen ITC Vehicle Industry Co., Ltd.; from the end of report
period to the date of the public notice, Investment Holdings has provided entrust loan of
RMB 490 million for the Company.
(4) In case that net profit of the Company in any year of 2010, 2011 and 2012 was less
than 2009, Shenzhen Investment Holdings Co., Ltd. will make up balance of net profit
between the year and 2009 with cash.
Whether the commitment will be implemented is according to net profit of 2012.
X. Engagement and disengagement of CPAs firm
In the reporting period, the Company still engaged China Chain International Certified
Public Accounts Co., Ltd. to do the auditing work for the year 2011. Since the first
agreement on the auditing work signed by the auditor, China Chain International Certified
Public Accounts Co., Ltd. has been providing auditing service for 10 reporting years for
the Company in succession. The CPA Wang Yu has made signature for auditing of the
Company’s annual report for consecutive four years (accumulated), while CPA Xie Feng
has made signature for auditing of the Company’s annual report for consecutive six years
(accumulated).
The annual auditing fees for 2011 totaled RMB 620,000 (including business trip
expenses).
XI. Punishment to the Company, its Directors, Supervisors and Senior Executives
and rectification in the reporting period
(I) There was no punishment and rectification orders for the Company from relevant
authorities in the reporting period
(II) In the report period, the Company’s present directors, supervisors, senior executives,
shareholders and actual controller received no investigations by competent authorities,
enforcement measures by judicial and regulatory authorities, transferring to judicial
departments or prosecution for criminal liability, inspection or administrative punishment
by CSRC, non-admission to securities market, or punishment by other administrative
departments or public condemnation by the Shenzhen Stock Exchange as a result of being
identified as an inappropriate entity.
XII. Other Significant Events
(I) 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. For details,
please refer to the Company’s Public Notice on Acquisition of Land Use Right of Weiyang
District, Yangzhou published in Securities Times, Ta Kung Pao and
http://www.cninfo.com.cn on 31 Jan. 2011.
(II) The restriction on shares subject to trading moratorium was released. Restrictions on
the total 2,514,781 shares subject to trading moratorium held by shareholders of Shanghai
Zhaoda Investment Consultant Co., Ltd., Hainan Weibang Investment and Development
Co., Ltd.(the original China Eagle Securities Co., Ltd. ), Shanghai Kunling Industry &
Trade Co., Ltd. and Shenzhen Tongsheng Industrial Co., Ltd., Shenzhen ITC Property
Management Co., Ltd., Shenzhen Nanyou Cultural Service Co., Ltd. and China Shenzhen
International Cooperation (Group) 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, 12 Jul. 2011 and 15
Dec. 2011 in Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
(III) 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.
Meanwhile, the Company engaged BDO China Shu Lun Pan Certified Public Accountants
LLP as professional consultant agency to provide the defects diagnosis for the Company’s
internal control. Now it has made a list on the Group’s defects of internal control, and is
further proposing the rectification and improvement program.
(IV) Wuhan Zhonghuan Certified Public Accountants Co., Ltd. which provides annual
auditing service for the Company changed its name as China Chain International Certified
Public Accounts 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 in Securities Times, Ta Kung Pao and http://cninfo.com.cn.
(V) 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 in Securities Times, Ta Kung Pao and http://cninfo.com.cn.
(VI) The Company’s Vice GM Wang Huimin resigned in Nov. 2011 due to work change,
For details, please refer to the Public Notice on the Change of the Sponsor Deputy for the
Share Division Reform on 22 Nov. 2011 published in Securities Times, Ta Kung Pao and
http://cninfo.com.cn.
(VII) 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. (hereinafter referred as Shenxin Taxi) with part
of properties (hereinafter referred as swap-out asset) held by the Company and its
wholly-owned subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. (Equities after
removing part of assets and liabilities of Shenxin Taxi Co., Ltd. in accordance with STKH
[2010] No. 103)
As at the end of the reporting period, the swap-out asset had not been transferred to
Investment Holdings, which was under the transfer procedure; while No. T102-0237 land
in Moon Bay, the swap-in asset, had been transferred to the Company and the relevant
land transfer procedures had been transferred; the equities of Shenxin, the swap-in asset,
hadn’t finished the removing of assets and liabilities, and the property transfer procedure
was under the handle.
(VIII)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.
(IX) On 25 Nov. 2011, the 4th Session of the 7th Board of Directors was held, at which
reviewed and approved the Proposal on the Bankruptcy and Liquidation of Hainan Xinda
Development Co., Ltd. (hereinafter referred as Hainan Company). Hainan Company was
established in 1998 as a wholly-owned subsidiary of the Company, which has no
development project and land reserves now with continuous losses for many years. The
Board of the Company ever approved the Proposal on Wholly Tranferring the Hainan
Company in Jan. 2009, which couldn’t continue to advance due to various factors, such as
policies. And now the Company applied to make bankruptcy and liquidation on Hainan
Company by judicial procedure, which is under the process now.
XIII. Researches, interviews and visits received by the Company in the reporting
period
1. In the reporting period, the Company received no field visits from institutional
investors.
2. In the reporting period, the Company received field visits from individual investors.
Reception
Reception time Reception place Visitor Main discussion and materials provided
way
Communicat
Individual Whether the Company’s earnings in 2010 is better
27 Jan. 2011 The Office of BOD ion by
investor than 2009?
Telephone
Communicat Individual Whether the formalities of transferring the land of
11 Feb. 2011 The Office of BOD
ion by investor Moon Bay has been completed?
Telephone
The Company’s stock trade suddenly increased at
Communicat
Individual the first 10 minutes of early quotation, whether the
23 Feb. 2011 The Office of BOD ion by
investor Company existed any non-published significant
Telephone
information?
Communicat The price of the Company’ share surged to trade
Individual
10 Mar. 2011 The Office of BOD ion by limit at the afternoon, whether the Company
investor
Telephone existed any non-published bull information?
Communicat
Individual Why the shares subject to trading moratorium
7 Apr. 2011 The Office of BOD ion by
investor were not released upon the expiration?
Telephone
Communicat
Individual Will the projects of Langqiao Garden and
29 Apr. 2011 The Office of BOD ion by
investor Caitianyise be settled?
Telephone
Communicat
Individual Will the Company’s buildings be carried forward
2 May 2011 The Office of BOD ion by
investor in the next half year?
Telephone
Communicat
Individual What are the differences between residents joining
9 May 2011 The Office of BOD ion by
investor the partnership and Carrying forward?
Telephone
Communicat
Individual Will the Company make profit in the first half year
21 Jun. 2011 The Office of BOD ion by
investor of 2011?
Telephone
Communicat
Individual Did the Company suffer losses at the second
19 Jul. 2011 The Office of BOD ion by
investor quarter of 2011?
Telephone
Communicat
Individual Why did the Company’s stock price still slump
3 Aug. 2011 The Office of BOD ion by
investor with such good business performance?
Telephone
Communicat
Individual Why does the Company’s stock price continue to
23 Sept. 2011 The Office of BOD ion by
investor slump recently?
Telephone
Communicat
Individual Whether there is any influence on the share price
24 Nov. 2011 The Office of BOD ion by
investor caused by the resignation of Mr. Wang?
Telephone
Communicat
Individual Whether there is any influence on the share price
27 Nov. 2011 The Office of BOD ion by
investor caused by the disposal of Hainan Company?
Telephone
After balance sheet
date event
Communicat
Individual
15 Feb. 2011 The Office of BOD ion by When will the project in Qianhai start?
investor
Telephone
Communicat
Individual The progress on the equity transfer of Shenxin
16 Feb. 2011 The Office of BOD ion by
investor Company.
Telephone
Communicat
Individual Whether the Company has any project outside
2 Mar. 2011 The Office of BOD ion by
investor Shenzhen?
Telephone
The Company answered the aforesaid phone calls for consultation in strict compliance
with requirements and principles of the Guide on Fair Information Disclosure for Listed
Companies, and protected the investors’ right to get the information equally. All the
investors were treated equally and no undisclosed information was leaked to the investors.
XIV. Index for significant information disclosed
In the report period, the public notices have been published at Securities Times, Ta Kung
Pao and http://cninfo.com.cn designated for information with details as follows:
Date of disclosure Serial No. Name
24 Jan. 2011 2011-01 Public Notice on the Resolutions of the Board of Directors
Public Notice on Acquiring the Use Right of Land Located at
31 Jan. 2011 2011-02
Weiyang District, Yangzhou City
Public Notice on Signing the Supplemented Agreement for Grant
9 Mar. 2011 2011-03
Contract on Use Right of Land of Jinlihua Square
Public Notice on Forecast of Earning Growth in the First Quarter of
13 Apr. 2011 2011-04
2011
13 Apr. 2011 2011-05 Earnings Prediction for Y2010
Suggestive Public Notice on Releasing the Shares Subject to Trading
13 Apr. 2011 2011-06
Moratorium
26 Apr. 2011 2011-07 Public Notice on the Resolutions of the 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 Meeting
26 Apr. 2011 2011-09
2010
26 Apr. 2011 2011-10 Summary of Annual Report 2010
30 Apr. 2011 2011-11 Public Notice on the Resolutions of the 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 Name
5 May 2011 2011-14
and Office Address
16 May 2011 2011-15 Public Notice on the Resolutions of the Board of Directors
Public Notice on the Progress of China Orient Asset Management
17 May 2011 2011-16
Company Lawsuit
Public Notice on Resolutions of the Annual Shareholders’ General
23 May 2011 2011-17
Meeting 2010
27 May 2011 2011-18 Public Notice on the Resolutions of the Board of Directors
Circular on Convening the First Special Shareholders’ General
27 May 2011 2011-19
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 Shareholders’
16 Jun. 2011 2011-23
General Meeting for Y2011
Public Notice on Resolutions of the 1st Session of the 7th Board of
22 Jun. 2011 2011-24
Directors
Public Notice on Resolutions of the 1st Session of the 7th
22 Jun. 2011 2011-25
Supervisory Committee
Public Notice on Progress of Implementation of Commitment of
11 Jul. 2011 2011-26 Share Division Reform on Assets Replacement and Significant
Related Transaction
Suggestive Public Notice on Releasing the Shares Subject to Trading
12 Jul. 2011 2011-27
Moratorium
Public Notice on Change of Sponsor Deputy for the Share
20 Jul. 2011 2011-28
Division Reform
Public Notice on the Resignation of Securities Affairs
26 Jul. 2011 2011-29
Representative
18 Aug. 2011 2011-30 Public Notice on the Progress of Meisi Company Lawsuit
25 Oct. 2011 2011-31 The Third Quarterly Report for 2011
Public Notice on the Change in Shareholding of Stated-own
16 Nov. 2011 2011-32
Corporate
22 Nov. 2011 2011-33 Public Notice on the Resignation of Senior Executives
25 Nov. 2011 2011-34 Public Notice on the Resolutions of the Board of Directors
8 Dec. 2011 2011-35 Public Notice on the Resolutions of the Board of Directors
Suggestive Notice on the Release of the Shares Subject to Trading
15 Dec. 2011 2011-36
Moratorium
After balance sheet
event
20 Feb. 2012 2012-01 Public Notice on the Resolutions of the Board of Directors
XV. Specific Explanation on Capital Currents with Related Parties
Specific Explanation on Capital Occupation by Controlling Shareholders and Other
Related Parties of Shenzhen Properties & Resources Development (Group) Ltd.
issued by China Chain International Certified Public Accounts Co., Ltd.
Shenzhen Properties & Resources Development (Group) Ltd.
Specific Explanation on Capital Occupation by Controlling Shareholder and Other
Related Parties in 2011
ZHZ Zi (2012) No. 253
Board of Directors of Shenzhen Properties & Resources Development (Group) Ltd.:
As entrusted by Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter
referred to as ―the Company‖), we, according to the Accounting Standards for Chinese
Registered Accountants, have audited the Company’s balance sheet and consolidated
balance sheet as at 31 Dec. 2011, income statement and consolidated income statement as
of the year 2011, statement of owners’ equity and consolidated statement of owners’
equity as of the year 2011, cash flow statement and consolidated cash flow statements as
of the year 2010, and the notes to the financial statements. And we issued the Auditor’s
Report ZHS Zi (2012) No. 407 on 29 Mar. 2011.
According to the Circular on Regulating Capital Currents Between Listed Companies and
Their Related Parties and Several Issues Concerning External Guarantees of Listed
Companies (ZJF [2003] No.56) issued by the China Securities Regulatory Commission,
the Company has produced the Statement of Capital Occupation by Controlling
Shareholders and Other Related Parties of Shenzhen Properties & Resources Development
(Group) Ltd. in 2011 (Up to 31 Dec. 2011).
It is the responsibility of the Company’s management to prepare the Capital Occupation
Statement and ensure its factuality, legitimacy and completeness. We have checked the
Capital Occupation Statement against the audited 2011 financial statements of the
Company and other relevant information, and no discrepancy has been found in all
significant information. Except for the relevant auditing procedures conducted by us on
the related transactions while auditing the 2011 financial statements for the Company, we
have not conducted any extraordinary auditing procedure or other procedures to the
information carried by the Capital Occupation Statement.
In order to better understand the capital occupation by the controlling shareholder and
other related parties of the Company in 2011, the Capital Occupation Statement is
suggested to be read together with the audited financial statements.
This specific explanation is for the purpose of being submitted by the Company to the
China Securities Regulatory Commission and the Shenzhen Stock Exchange, and it shall
not be used for any other purposes.
Attached: the Statement of Capital Occupation by Controlling Shareholder and Other
Related Parties of Shenzhen Properties & Resources Development (Group) Ltd. in 2011.
China Chain International Certified Public Accounts
Chinese registered accountant:
Chinese registered accountant:
Wuhan, China 29 Mar. 2012
Section XI Financial Report
Auditor's Report
ZHSZ (2012) NO.407
TO THE SHAREHOLDERS OF SHENZHEN PROPERTIES & RESOURCES
DEVELOPMENT (GROUP) LTD.：
We have audited the accompanying financial statements of Shenzhen Properties & Resources
Development (Group) Ltd. (hereinafter referred to as ―Company‖ or ―the Company‖), which comprise
the balance sheet and the consolidated balance sheet as at 31 Dec. 2011, the income statement and the
consolidated income statement, the statement of change in equity and the consolidated statement of
change in equity, the cash flow statement and the consolidated cash flow statement for the year then
ended, and a summary of significant accounting policies and other explanatory notes.
I. Management's responsibility for the financial statements
The management of the Company is responsible for the preparation of these financial statements and
fair presentation. These responsibilities include: (1) preparing financial statements according to the
Accounting Standards for Business Enterprises and make them a fair presentation; and (2) designing,
implementing and maintaining internal control relevant to the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
II. Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audit in accordance with China’s Independent Auditing Standards. Those Standards
require that we comply with relevant ethical requirements and plan and perform the audit to obtain
reasonable assurance as to whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The audit procedures selected depend on our judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, we consider internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles
used and the reasonableness of accounting estimates made by the management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidences we have obtained are sufficient and effective, providing a
reasonable basis for our opinion.
III. Opinion
In our opinion, the financial statements comply with Accounting Standards for Business Enterprises in
all material aspects, and present fairly the consolidated and the Company’s financial positions as of 31
Dec. 2011 and their operating results and cash flows for the year then ended.
China Chain International CPAs CPA
CPA
Wuhan, China 29 March 2012
Consolidated Balance Sheet (Assets)
Consolidated financial statement 01
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Assets Notes 31 Dec. 2011 31 Dec. 2010
Current Assets:
Monetary funds （V）1 463,775,328.93 534,418,695.36
Settlement reserve
Intra-Group lendings
Trading financial assets （V）2 272,100.00
Notes receivable （V）3 200,000.00 300,000.00
Accounts receivable （V）4 70,531,339.78 67,935,785.29
Prepayment （V）6 474,354,748.39 49,360,431.87
Premium receivable
Receivables from reinsurers
Reinsurance contract reserve receivable
Interest receivable
Dividends receivable
Other receivables （V）5 3,346,988.49 37,787,880.10
Financial assets purchased under agreement to resell
Inventories （V）7 1,814,992,629.34 1,576,183,305.38
Non-current assets due within 1 year
Other current assets
Total current assets 2,827,201,034.93 2,266,258,198.00
Non-current assets:
Loan and payment on other's behalf disbursed
Available-for-sale financial assets
Investment held to maturity
Long-term receivables
Long-term equity investment （V）9 81,103,539.95 81,390,188.20
Investment property （V）10 291,159,907.85 295,584,704.09
Fixed assets （V）11 65,011,538.39 78,112,745.51
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets （V）12 100,040,864.15 106,563,665.92
R&D expenses
Goodwill
Long-term deferred expenses 1,989,226.53 2,162,202.81
Deferred income tax assets （V）13 124,102,202.41 83,209,649.31
Other non-current assets （V）14 9,000,000.00
Total non-current assets 672,407,279.28 647,023,155.84
Total assets 3,499,608,314.21 2,913,281,353.84
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Consolidated Balance Sheet (Liabilities and shareholders’ equity)
Consolidated financial statement 01
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Liabilities and shareholders’ equity Notes 31 Dec. 2011 31 Dec. 2010
Current Liabilities:
Short-term borrowings （V）17 601,495,212.00 10,000,000.00
Borrowings from the central bank
Customer bank deposits and due to banks and other
financial institutions
Intra-Group borrowings
Tradable financial liabilities
Notes payable
Accounts payable （V）18 187,083,147.42 105,465,038.93
Advance from customers （V）19 208,655,909.41 878,660,737.46
Financial assets sold under agreements to repurchase
Service charge and commission payables
Payroll payable （V）20 45,013,122.69 53,817,405.36
Taxes payable （V）21 499,430,386.43 195,585,180.87
Interest payable
Dividends payable
Other payables （V）22 479,430,681.58 229,549,997.54
Reinsurance payables
Insurance contract reserve
Acting trading of securities
Acting underwriting of securities
Non-current liabilities due within 1 year （V）23 218,359,888.32 250,960,000.00
Other current liabilities
Total Current Liabilities 2,239,468,347.85 1,724,038,360.16
Non-current Liabilities:
Long-term borrowings （V）24 7,333,333.32 212,000,000.00
Bonds payable
Long-term payables
Specific purpose account payables
Provision for contingent liabilities
Deferred income tax liabilities （V）13 807.48
Other non-current liabilities （V）25 121,700,672.06 102,194,477.26
Total Non-current Liabilities 129,034,005.38 314,195,284.74
TOTAL LIABILITIES 2,368,502,353.23 2,038,233,644.90
Shareholders’ Equity:
Share capital （V）26 595,979,092.00 595,979,092.00
Capital reserve （V）27 64,020,275.72 64,020,275.72
Less: Treasury stock
Specific reserve
Surplus reserve （V）28 69,712,050.51 69,712,050.51
General risk provision
Retained earnings （V）29 406,422,741.94 148,961,664.40
Foreign exchange difference -5,890,286.25 -4,487,460.75
Total owners’ equity attributable to the Company 1,130,243,873.92 874,185,621.88
Minority interests 862,087.06 862,087.06
Total shareholders’ equity 1,131,105,960.98 875,047,708.94
Total liabilities and shareholders’ equity 3,499,608,314.21 2,913,281,353.84
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Consolidated Income Statement
Consolidated financial statement 02
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Items Notes 2011 2010
I. Total sales 1,408,565,307.32 993,175,350.38
Including: Sales （V）30 1,408,565,307.32 993,175,350.38
Interest income
Premium income
Service charge and commission income
II. Total cost of sales 1,067,882,198.44 801,568,833.29
Including: Cost of sales （V）30 563,184,206.93 673,496,987.55
Interest expense
Service charge and commission expense
Surrender value
Net claims paid
Net insurance contract reserve
Policy dividend payments
Expenses for reinsurance accepted
Taxes and associate charges （V）31 345,229,393.29 82,649,517.32
Selling and distribution expenses （V）32 32,792,286.16 14,956,309.36
Administrative expenses （V）33 92,292,907.64 92,642,838.43
Financial expense （V）34 12,119,255.73 -2,813,250.22
Impairment loss （V）35 22,264,148.69 -59,363,569.15
Add: gain/(loss) from change in fair value
（V）36
(―-‖ means loss) -3,364.50 39,900.00
Investment income (―-‖ means loss) （V）37 308,753.56 3,232,684.58
Including: income form investment on
associated enterprises and joint ventures -286,648.25 1,692,778.22
Foreign exchange difference (―-‖ means
loss)
III. Business profit (―-‖ means loss) 340,988,497.94 194,879,101.67
Plus: non-operation income （V）38 1,284,700.35 9,301,597.49
Less: non- operation expense （V）39 2,769,793.67 -2,979,042.54
Including: loss from non-current asset
disposal 28,235.97 54,321.72
IV. Total profit (―-‖ means loss) 339,503,404.62 207,159,741.70
Less: Income tax expense （V）40 82,042,327.08 32,161,206.91
V. Net profit (―-‖ means loss) 257,461,077.54 174,998,534.79
Including: Net profit achieved by combined
parties before the combination dates
Net profit attributable to owners of the
Company 257,461,077.54 174,998,534.79
Minority interest income
VI. Earnings per share
(I) basic earnings per share (Yuan/share) （V）41 0.43 0.29
(II) diluted earnings per share (Yuan/share) （V）41 0.43 0.29
VII. Other composite income （V）42 -1,402,825.50 -942,810.23
VIII. Total composite income 256,058,252.04 174,055,724.56
Attributable to owners of the Company 256,058,252.04 174,055,724.56
Attributable to minority shareholders
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Consolidated Cash Flow Statement
Consolidated financial statement 03
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Items Notes 2011 2010
Ⅰ.Cash flows from operating activities:
Cash received from sale of commodities and
733,772,242.53 1,131,466,203.13
rendering of service
Net increase of cash received on customer bank
deposits and from banks and other financial
institutions
Net increase of cash received on borrowings
from central bank
Net increase of cash received on placements
from other financial institutions
Premium received from original insurance
contracts
Net cash received from reinsurance
Net increase of cash received on policyholder
deposits and investments
Net increase of disposal of tradable financial
assets
Interest, handling charges and commissions
received
Cash received on placements from banks, net
Cash received under repurchasing, net
Tax refunds received
Other cash received relating to operating
（V）43 35,961,542.62 59,815,186.84
activities
Subtotal of cash inflows from operating
769,733,785.15 1,191,281,389.97
activities
Cash paid for purchase of commodities and
696,932,522.62 820,344,512.15
reception of service
Net increase in loans and advances drawn
Net increase of deposits in central bank, banks
and other financial institutions
Claims paid for original insurance contracts
Interest, handling charges and commissions paid
Dividends paid to policyholders
Cash paid to and for employees 215,354,850.02 182,972,116.90
Various taxes paid 142,506,935.31 169,895,167.87
Other cash paid relating to operating activities （V）43 76,407,064.90 119,848,063.69
Subtotal of cash outflows from operating
1,131,201,372.85 1,293,059,860.61
activities
Net cash flows from operating activities -361,467,587.70 -101,778,470.64
Ⅱ. Cash flows from investing activities:
Cash received from disposal of investments 512,174.81 1,540,000.00
Cash received from obtaining investment
5,000,000.00 5,000,000.00
income
Net cash received from disposal of fixed assets,
316,280.00 5,517,679.84
intangible assets and 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 investing
5,828,454.81 12,057,679.84
activities
Cash paid to acquire fixed assets, intangible
12,411,814.98 19,488,536.34
assets and other long-term assets
Cash paid for investment 9,000,000.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries and other
operating units
Other cash paid relating to other investment
activities
Subtotal of cash outflows from investment
21,411,814.98 19,488,536.34
activities
Net cash flows from investing activities -15,583,360.17 -7,430,856.50
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 612,495,212.00 222,000,000.00
Cash received from issuance of bonds
Other cash received relating to financing
38,687,344.20
activities
Subtotal of cash inflows from financing
612,495,212.00 260,687,344.20
activities
Cash repayments of amounts borrowed 260,960,000.00 413,009,500.00
Cash paid interest expenses and distribution of
43,513,545.03 29,659,944.52
dividends or profit
Of which: stock dividends and profits paid to
minority shareholders by subsidiaries.
Payment of cash relating to other financing
（V）43 1,396,200.00 4,284,926.00
activities
Subtotal of cash outflows from financing
305,869,745.03 446,954,370.52
activities
Net cash flows from financing activities 306,625,466.97 -186,267,026.32
Ⅳ. Effect of foreign exchanges on cash and
-217,885.53 -160,539.43
cash equivalents
Ⅴ. Net increase of cash and cash equivalents -70,643,366.43 -295,636,892.89
Plus: Beginning balance of cash and cash
（V）43 534,418,695.36 830,055,588.25
equivalents
Ⅵ. Closing balance of cash and cash
（V）43 463,775,328.93 534,418,695.36
equivalents
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Consolidated Statement of Changes in Owners’ Equity
Consolidated financial statement 04
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
2011
Equity attributable to owners of the Company
Minor
Items Le Ge Total
Sp ity
Share Capital ss: Surplus neral Retained Others owners’ equity
ecific interests
capital reserve treasury reserve risk profit (note)
reserve
stock reserve
I. Balance
at the end of 595,979,0 64,020,2 69,712,0 148,961,6 -4,487,4 862,0 875,047,708
the previous 92.00 75.72 50.51 64.40 60.75 87.06 .94
year
Add:
Retrospective
adjustment
resulted from
business
combinations
under the same
control
Change
of accounting
policy
Correctio
n of errors in
previous
periods
Other
II.
Balance at the 595,979,0 64,020,2 69,712,0 148,961,6 -4,487,4 862,0 875,047,708
beginning of 92.00 75.72 50.51 64.40 60.75 87.06 .94
the year
III.
Increase/
decrease of
257,461,0 -1,402,8 256,058,252
amount in the
77.54 25.50 .04
year (―-‖
means
decrease)
(I) Net 257,461,0 257,461,077
profit 77.54 .54
(II) Other
-1,402,8 -1,402,825.
comprehensive
25.50 50
incomes
Subtotal 257,461,0 -1,402,8 256,058,252
of (I) and (II) 77.54 25.50 .04
(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 general risk
reserve
3.
Appropriations
to owners (or
shareholders)
4. 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
(VI)
Specific
reserve
1.
Withdrawn in
this period
2. Used
in this period
(VII)
Others
IV.
595,979,0 64,020,2 69,712,0 406,422,7 -5,890,2 862,0 1,131,105,9
Closing
92.00 75.72 50.51 41.94 86.25 87.06 60.98
balance
Note: Item ―Other‖ is foreign exchange difference.
Legal representative: Chief of the accounting work: Chief of the accounting organ:
Consolidated Statement of Changes in Owners’ Equity
Consolidated financial statement 04
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
2010
Equity attributable to owners of the Company
Minor
Items Le Ge Total
Sp ity
Share Capital ss: Surplus neral Retained Others owners’ equity
ecific interests
capital reserve treasury reserve risk profit (note)
reserve
stock reserve
I. Balance 595,979,0 25,332,9 69,712,0 -26,036,8 -3,544,6 862,0 662,304,640
at the end of 92.00 31.52 50.51 70.39 50.52 87.06 .18
the previous
year
Add:
Retrospective
adjustment
resulted from
business
combinations
under the same
control
Change
of accounting
policy
Correctio
n of errors in
previous
periods
Other
II.
595,979,0 25,332,9 69,712,0 -26,036,8 -3,544,6 862,0 662,304,640
Balance at the
92.00 31.52 50.51 70.39 50.52 87.06 .18
beginning of
the year
III.
Increase/
decrease of
38,687,3 174,998,5 -942,810 212,743,068
amount in the
44.20 34.79 .23 .76
year (―-‖
means
decrease)
(I) Net 174,998,5 174,998,534
profit 34.79 .79
(II) Other
-942,810
comprehensive -942,810.23
.23
incomes
Subtotal 174,998,5 -942,810 174,055,724
of (I) and (II) 34.79 .23 .56
(III)
Capital paid in 38,687,3 38,687,344.
and reduced 44.20 20
by owners
1. Capital
paid in by
owners
2.
Amounts of
share-based
payments
recognized in
owners’ equity
38,687,3 38,687,344.
3. Others
44.20 20
(IV)
Profit
distribution
1.
Appropriations
to surplus
reserves
2.
Appropriations
to general risk
reserve
3.
Appropriations
to owners (or
shareholders)
4. 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
(VI)
Specific
reserve
1.
Withdrawn in
this period
2. Used
in this period
(VII)
Others
IV.
595,979,0 64,020,2 69,712,0 148,961,6 -4,487,4 862,0 875,047,708
Closing
92.00 75.72 50.51 64.40 60.75 87.06 .94
balance
Note: Item ―Other‖ is foreign exchange difference.
Legal representative: Chief of the accounting work: Chief of the accounting organ:
Balance Sheet (Assets)
Company financial statement 01
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Assets Notes 31 Dec. 2011 31 Dec. 2010
Current Assets:
Monetary funds 83,846,009.34 78,920,447.75
Trading financial assets 272,100.00
Notes receivable
Accounts receivable （X）1 57,610,601.35 59,680,032.75
Prepayment 435,617,463.60
Interest receivable
Dividends receivable
Other receivables （X）2 66,901,359.57 558,839,822.28
Inventories 323,385,959.42 56,594,638.32
Non-current assets due within 1 year
Other current assets
Total current assets 967,361,393.28 754,307,041.10
Non-current assets:
Available-for-sale financial assets
Investment held to maturity
Long-term receivables
Long-term equity investment （X）3 300,514,039.95 250,800,688.20
Investment property 196,918,915.36 205,439,020.58
Fixed assets 29,002,844.78 35,645,685.39
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets
R&D expenses
Goodwill
Long-term deferred expenses 1,989,226.53 2,162,202.81
Deferred income tax assets
Other non-current assets （X）4 475,000,000.00
Total non-current assets 1,003,425,026.62 494,047,596.98
Total assets 1,970,786,419.90 1,248,354,638.08
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Balance Sheet (Liabilities and shareholders’ equity)
Company financial statement 01
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Liabilities and shareholders’ equity Notes 31 Dec. 2011 31 Dec. 2010
Current Liabilities:
Short-term borrowings
Tradable financial liabilities
Notes payable
Accounts payable 33,981,501.43 34,423,717.04
Advance from customers 351,401.50 79,725.48
Payroll payable 7,550,348.37 9,636,557.03
Taxes payable 1,829,406.16 1,264,740.40
Interest payable
Dividends payable
Other payables 1,268,548,668.33 508,763,899.07
Non-current liabilities due within 1 year
Other current liabilities
Total Current Liabilities 1,312,261,325.79 554,168,639.02
Non-current Liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Specific purpose account payables
Provision for contingent liabilities
Deferred income tax liabilities 807.48
Other non-current liabilities 4,161,870.46 2,429,164.54
Total Non-current Liabilities 4,161,870.46 2,429,972.02
TOTAL LIABILITIES 1,316,423,196.25 556,598,611.04
Shareholders’ Equity:
Share capital 595,979,092.00 595,979,092.00
Capital reserve 38,914,227.99 38,914,227.99
Less: Treasury stock
Specific reserve
Surplus reserve 69,712,050.51 69,712,050.51
General risk provision
Retained earnings -50,242,146.85 -12,849,343.46
Total shareholders’ equity 654,363,223.65 691,756,027.04
Total liabilities and shareholders’ equity 1,970,786,419.90 1,248,354,638.08
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Income Statement
Company financial statement 02
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Items Notes 2011 2010
I. Total sales （X）5 48,557,559.48 35,828,118.43
Less: cost of sales （X）5 35,318,571.13 16,789,454.03
Taxes and associate charges 6,677,356.44 1,866,079.35
Selling and distribution expenses
Administrative expenses 37,525,862.49 43,351,688.19
Financial expense 796,873.78 1,551,183.42
Impairment loss 20,832,527.84 -37,276,392.48
Add: gain/(loss) from change in fair value
-3,364.50 39,900.00
(―-‖ means loss)
Investment income (―-‖ means loss) （X）6 17,549,461.29 3,232,684.58
Including: income form investment on
-286,648.25 1,692,778.22
associated enterprises and joint ventures
II. Business profit (―-‖ means loss) -35,047,535.41 12,818,690.50
Plus: non-operation income 135,208.33 2,643,526.20
Less: non- operation expense 2,481,283.79 -3,521,430.84
Including: loss from non-current asset
2,826.50 10,241.54
disposal
III. Total profit (―-‖ means loss) -37,393,610.87 18,983,647.54
Less: Income tax expense -807.48 807.48
IV. Net profit (―-‖ means loss) -37,392,803.39 18,982,840.06
V. Other composite income
VI. Total composite income -37,392,803.39 18,982,840.06
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Cash Flow Statement
Company financial statement 03
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
Items 2011 2010
Ⅰ.Cash flows from operating activities:
Cash received from sale of commodities and rendering
of service 48,186,363.60 3,823,346.28
Tax refunds received
Other cash received relating to operating activities 955,034,252.86 111,410,661.94
Subtotal of cash inflows from operating activities 1,003,220,616.46 115,234,008.22
Cash paid for purchase of commodities and reception of
service 450,309,709.08 12,104,251.58
Cash paid to and for employees 16,853,488.87 1,729,974.36
Various taxes paid 8,620,041.58 676,447.84
Other cash paid relating to operating activities 20,083,193.31 149,964,390.89
Subtotal of cash outflows from operating activities 495,866,432.84 164,475,064.67
Net cash flows from operating activities 507,354,183.62 -49,241,056.45
Ⅱ. Cash flows from investing activities:
Cash received from disposal of investments 512,174.81
Cash received from obtaining investment income 22,592,670.23 157,180,496.74
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 1,280.00
Net cash received from disposal of subsidiary or other
operating business units
Other cash received relating to investing activities
Subtotal of cash inflows from investing activities 23,106,125.04 157,180,496.74
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 534,622.00 245,261.58
Cash paid for investment 525,000,000.00 20,000,000.00
Net cash paid to acquire subsidiaries and other
operating units
Other cash paid relating to other investment activities
Subtotal of cash outflows from investment activities 525,534,622.00 20,245,261.58
Net cash flows from investing activities -502,428,496.96 136,935,235.16
Ⅲ.Cash flows from financing activities
Cash received from capital contribution
Cash received from borrowings
Cash received from issuance of bonds
Other cash received relating to financing activities 38,687,344.20
Subtotal of cash inflows from financing activities 38,687,344.20
Cash repayments of amounts borrowed 50,000,000.00
Cash paid interest expenses and distribution of
dividends or profit
Payment of cash relating to other financing activities
Subtotal of cash outflows from financing activities 50,000,000.00
Net cash flows from financing activities -11,312,655.80
Ⅳ . Effect of foreign exchanges on cash and cash
equivalents -125.07 -433.92
Ⅴ. Net increase of cash and cash equivalents 4,925,561.59 76,381,088.99
Plus: Beginning balance of cash and cash equivalents 78,920,447.75 2,539,358.76
Ⅵ. Closing balance of cash and cash equivalents 83,846,009.34 78,920,447.75
Legal representative: Chief of the accounting work:
Chief of the accounting organ:
Statement of Changes in Owners’ Equity
Company financial statement 04
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
2011
Less:
Items Specific
Share capital Capital reserve treasury Surplus reserve Retained profit Total owners’ equity
reserve
stock
Ⅰ. Balance at the end of the previous year 595,979,092.00 38,914,227.99 69,712,050.51 -12,849,343.46 691,756,027.04
Add: 1. changes of accounting policy
2. Correction of errors in previous
periods
3. Others
Ⅱ. Balance at year-begin 595,979,092.00 38,914,227.99 69,712,050.51 -12,849,343.46 691,756,027.04
Ⅲ. Increase/decrease in the year (―-‖
-37,392,803.39 -37,392,803.39
means decrease)
(Ⅰ) Net profit -37,392,803.39 -37,392,803.39
(Ⅱ) Other comprehensive income
Subtotal of (Ⅰ) and (Ⅱ) -37,392,803.39 -37,392,803.39
(Ⅲ) Capital input and reduced by
owners
1. Input by owners
2. Share-based payments recognized
in owners’ equity
3. Others
(Ⅳ) Profit distribution
1. Surplus reserve withdrawn
2. Distribution to owners (or
shareholders)
3. Others
(Ⅴ) Internal carrying forward of
owners’ equity
1. Transferring capital reserve to
capital (or share capital)
2. Transferring surplus reserve to
capital (or share capital)
3. Making up loss with surplus
reserve
4. Others
(Ⅵ) Specific reserve
1. Withdrawn in this period
2. Used in this period
(Ⅶ) Others
Ⅳ. Closing balance 595,979,092.00 38,914,227.99 69,712,050.51 -50,242,146.85 654,363,223.65
Legal representative: Chief of the accounting work: Chief of the accounting organ:
Statement of Changes in Owners’ Equity
Company financial statement 04
Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan
2010
Less:
Items Specific
Share capital Capital reserve treasury Surplus reserve Retained profit Total owners’ equity
reserve
stock
Ⅰ. Balance at the end of the previous year 595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
Add: 1. changes of accounting policy
2. Correction of errors in previous
periods
3. Others
Ⅱ. Balance at year-begin 595,979,092.00 226,883.79 69,712,050.51 -31,832,183.52 634,085,842.78
Ⅲ. Increase/decrease in the year (―-‖
38,687,344.20 18,982,840.06 57,670,184.26
means decrease)
(Ⅰ) Net profit 18,982,840.06 18,982,840.06
(Ⅱ) Other comprehensive income
Subtotal of (Ⅰ) and (Ⅱ) 18,982,840.06 18,982,840.06
(Ⅲ) Capital input and reduced by
38,687,344.20 38,687,344.20
owners
1. Input by owners
2. Share-based payments recognized
in owners’ equity
3. Others 38,687,344.20 38,687,344.20
(Ⅳ) Profit distribution
1. Surplus reserve withdrawn
2. Distribution to owners (or
shareholders)
3. Others
(Ⅴ) Internal carrying forward of
owners’ equity
1. Transferring capital reserve to
capital (or share capital)
2. Transferring surplus reserve to
capital (or share capital)
3. Making up loss with surplus
reserve
4. Others
(Ⅵ) Specific reserve
1. Withdrawn in this period
2. Used in this period
(Ⅶ) Others
Ⅳ. Closing balance 595,979,092.00 38,914,227.99 69,712,050.51 -12,849,343.46 691,756,027.04
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 Dec. 2011
Note I Corporate information
Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter referred to as ―company ‖ or
―the Company‖) was incorporated based on the reconstruction of Shenzhen Properties & Resources
Development Co., Ltd. after obtaining approval of ZFBF [1991] No. 831 from People’s Government of
Shenzhen Municipality. The registration number of Business License for Enterprises as Legal Person is
ZQFZ No. 440301103570124.
1. Registered capital of the Company
The registered capital of the Company was RMB 541, 799,175 after bonus issue of shares on the basis
of one share for every existing 10 shares based on existing paid-in capital of the Company in 1996 and
it changes to RMB 595,979,092 after bonus issue of shares on the basis of one share for every existing
10 shares based on previous paid-in capital of RMB 541,799,175 in 2009.
2. Registered office, organization form and headquarter address of the Company
Registered office: Shenzhen Municipal, Guangdong Province, PRC
Organization form: joint-stock company with limited liability
Headquarter address: 39th and 42nd Floor, International Trade Center, Renmin South Road, Shenzhen.
3. Nature of the business and main business scope of the Company
The business scope of the Company and its subsidiaries includes development and sale of commodity
premises, construction and management of buildings, lease of properties, supervision of construction,
domestic trading and materials supply and marketing (excluding exclusive dealing and monopoly sold
products and commodities under special control to purchase).
4. About the controlling shareholder of the Company and the Group
By the end of the reporting period, the controlling shareholder of the Company is still Shenzhen
Construction Investment Holdings in register book. In 2004, People’s Government of Shenzhen
Municipality incorporated Shenzhen Construction Investment Holdings with the other two municipal
asset management companies, namely Shenzhen Investment Management Corporation and Shenzhen
Trade and Business Holding Company, and established Shenzhen Investment Holdings Co., Ltd. Thus,
the Company’s actual controlling shareholder is Shenzhen Investment Holdings Co., Ltd., a sole
state-funded limited company, who was established in Oct. 13, 2004; its legal representative is Mr.
Chen Hongbo and the registered capital is RMB 4 billion. Its main business scope is providing
guarantee to municipal state-owned enterprises, management of state-owned equity, assets
reorganization, reformation, capital operation, and equity investment of enterprises and etc. As a
government department, Shenzhen State-owned Assets Supervision and Administration Bureau manage
Shenzhen Investment Holdings Co., Ltd. on behalf of People’s Government of Shenzhen Municipality.
Thus, the final controller of the Company is Shenzhen State-owned Assets Supervision and
Administration Bureau.
5. Authorization and date of issuing the financial statements
The financial statements were approved and authorized for issue by the 7th session of the 7th board of
directors of the Company on 29 Mar. 2012.
Note II Summary of Main Accounting Policies and Accounting Estimation
1. Basis of preparation of the financial statements
The company recognizes and measures transactions occurred according to Chinese Accounting
Standards – Basic standard and other related accounting standards, prepares the financial statements
based on accrual accounting and the underlying assumption of going concern.
2. Statement of compliance with Enterprise accounting standards
The company's financial statements comply with the requirements of Accounting Standards; the
company's financial position, operating results, changes in shareholder's equity and cash flow, and
other relevant information are truly and completely disclosed in financial statements.
3. Fiscal year
The Company adopts the Gregorian calendar for its accounting period, starting on January 1 and
ending on December 31 of the year.
4. Recording currency
Renminbi (RMB) is used as the recording currency.
5. Accounting method of business combination under the common control and not under the
common control
(1) The Company adopts equity method for business combination under common control. The assets
and liabilities that the combining party obtained in a business combination shall be measured on their
carrying amount in the combined party on the combining date. The difference between the carrying
amount of net assets acquired by the combining party and the carrying amount of the consideration
paid by it (or the total par value of the shares issued) shall be adjusted to capital surplus. If the capital
surplus is not sufficient for adjustment, retained earning is adjusted respectively. The business
combination costs that are directly attributable to the combination, such as audit fees, valuation fees,
legal service fees and so on are recognized in profit or loss during the current period when they
occurred. The bonds issued for a business combination or the handling fees, commissions and other
expenses for bearing other liabilities shall be recorded in the amount of initial measurement of the
bonds or other debts. The handling fees, commissions and other expenses for the issuance of equity
securities for the business combination shall be credited against the surplus of equity securities; if the
surplus is not sufficient, the retained earnings shall be offset. Where a relationship between a parent
company and a subsidiary company is formed due to a business combination, the parent company shall,
on the combining date, prepare consolidated financial statements according to the accounting policy of
the Company.
(2) The Company adopts acquisition method for business combination not under common control.
The acquirer shall recognize the initial cost of combination under the following principles:
①When business combination is achieved through a single exchange transaction, the cost of a business
combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the
acquiree;
②For the business combination involved more than one exchange transaction, accounting treatments
will be carried out separately on individual and consolidated financial statements as the followings:
A. In the individual financial statements, the initial investment cost of the particular project will be the
sum of book value of equity in the entity before the date of acquisition and the newly added investment
cost; When the share equity before the date of acquisition involves with other integrated gains, such
gains (such as the part of fair value of the sellable financial assets accounted into capital reserves, same
for the followings) are transferred into current investment income account.
B. In the consolidated financial statements, the share equity in the acquired entity before the date of
acquisition is recalculated upon the fair value of the equity at the date of acquisition. The balance
between the fair value and book value shall be accounted into current investment income account;
when the share equity before the date of acquisition involves with other integrated gains, such gains are
transferred into investment income account of the period when it occurred. Within the notes of
financial statement, the acquirer shall be disclosed the fair value (on the merger date) of the
shareholdings of the bargainor hold and profits or losses recognized by the revaluation.
③Agency expenses and other administrative expenses such as auditing, legal consulting, or appraisal
services occurred relating to the merger of entities are accounted into current income account when
occurred; the transaction fees of equity certificates or liability certificates issued by the purchaser for
payment for the acquisition are accounted at the initial amount of the certificates.
④Where a business combination contract or agreement provides for a future event which may adjust
the cost of combination, the Company shall include the amount of the adjustment in the cost of the
combination at the acquisition date if the future event leading to the adjustment is probable and the
amount of the adjustment can be measured reliably.
The acquirer shall, on the acquisition date, measure the assets given and liabilities incurred or assumed
by an enterprise for a business combination in light of their fair value, and shall record the balances
between them and their carrying amounts into the profits and losses at the current period.
The acquirer shall distribute the combination costs on the acquisition date, and shall recognize all
identifiable assets, liabilities and contingent liabilities it obtains from the acquiree. (1) the acquirer
shall recognize the difference that the combination costs are over the fair value of the identifiable net
assets obtained from acquiree as goodwill; (2) if the combination costs are less than the fair value of the
identifiable net assets obtained from acquiree, the acquirer shall reexamine the measurement of the fair
values of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree as well
as the combination costs; and then after the reexamination, the result is still the same, the difference
shall be recorded in the profit and loss of the current period.
Where a relationship between a parent company and a subsidiary company is formed due to a business
combination, the parent company shall prepare accounting books for future reference, which shall
record the fair value of the identifiable assets, liabilities and contingent liabilities obtained from the
subsidiary company on the acquisition date. When preparing consolidated financial statements, it shall
adjust the financial statements of the subsidiary company on the basis of the fair values of the
identifiable assets, liabilities and contingent liabilities determined on the acquisition date according to
the Company’s accounting policy of ―Consolidated financial statement‖.
6. Basis of consolidation
（1）Scope of consolidation
Consolidated financial statements are included all subsidiaries of the parent.
When the parent owns, directly or indirectly through subsidiaries, more than half of the voting power
of the investee company, the investee company is regarding as subsidiary and included in the
consolidated financial statements. If the parent owns half or less of the voting power of an entity when
there is any following condition incurred, the investee company is regarding as subsidiary and included
consolidated financial statements.
A. power over more than half of the voting rights by virtue of an agreement with other investors;
B. power to govern the financial and operating policies of the entity under a statute or an agreement;
C. power to appoint or remove the majority of the members of the board of directors or equivalent
governing body;
D. power to cast the majority of votes at meetings of the board of directors or equivalent governing
body and control of the entity is by that board or body.
If there is evidence suggesting that no control of the investee company exists, the investee company
does not be included in the consolidated financial statements.
（2）Principle of consolidation
The consolidated financial statements are based on the financial statements of individual subsidiaries
which are included in the consolidation scope and prepared after adjustment of long-term equity
investment under equity method and elimination effect of intragroup transaction.
（3）Minority interests
The portion of the equity of the subsidiaries that are not owned by the parent is presented as minority
interest in the consolidated balance sheet.
The portion of the profit or loss of the subsidiaries that are not owned by the parent is presented as
minority interest in the consolidated income statement.
（4）Excess losses
When the share of losses attributable to the minor shareholders has exceeded their shares in the
shareholders’ equity at the beginning of term, the shareholders’ equity shall be deducted thereof.
（5）Increase or decrease of the subsidiaries
For any subsidiary acquired by the Company through business combination under the common control,
when the consolidated balance sheet for the current period are being prepared, the amount at the
beginning of the period in the consolidated balance sheet is made corresponding modification. For
addition business combination not under common control during the reporting period, the Company
makes no adjustment for the the amount at the beginning of the period in the consolidated balance sheet.
When disposing subsidiary during the reporting period, the Company makes no adjustment for the
amount at the beginning of the period in the consolidated balance sheet.
For any subsidiary acquired by the Company through business combination under the common control,
when the consolidated income statement for the current period are being prepared, revenue, expense
and profit for the period from the beginning of the consolidated period to the year end of the reporting
period are included in the consolidated income statement. For addition business combination not under
common control during the reporting period, revenue, expense and profit for the period from
acquisition date to the year end of the reporting period is included in the consolidated income statement.
When disposing subsidiary during the reporting period, revenue, expense and profit for the period from
the beginning to the disposal date are included in the consolidated income statement.
For any subsidiary acquired by the Company through business combination under the common control,
when the consolidated cash flow statement for the current period are being prepared, cashflow for the
period from the beginning of the consolidated period to the year end of the reporting period is included
in the consolidated cash flow statement. For addition business combination not under common control
during the reporting period, cashflow for the period from acquisition date to the year end of the
reporting period is included in the consolidated cash flow statement. When disposing subsidiary during
the reporting period, cashflow for the period from the beginning to the disposal date is included in the
consolidated cash flow statement.
7. Cash and cash equivalent
Cash equivalent is defined as the short-term (normally matured within three months after purchased
date), highly-liquid investment which is easily transferred into cash and has low risk of change of
value.
8. Foreign currency translations
Any transaction is converted into the accounting standard currency according to the approximate
exchange rate of the sight rate on the occurrence date of the transaction.
The Company adopts the middle exchange rate announced by the People's Bank of China at last year
end as current exchange rate.
(1) Foreign currency exchange difference
On balance sheet date, the Company accounts for monetary and non-monetary items denominated in
foreign currencies as follows: a) monetary items denominated in foreign currencies are translated at the
foreign exchange rates ruling at the balance sheet date. Foreign exchange gains and losses arising from
the difference between the balance sheet date exchange rate and the exchange rate ruling at the time of
initial recognition or the exchange rate ruling at the last balance sheet date are recognized in income
statement; b) Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the current exchange rates ruling at the transaction dates. Non-monetary items
denominated in foreign currencies that are stated at fair value are translated using the current exchange
rates ruling at the dates the fair value was determined, the difference between the amount of functional
currency after translation and the original amount of functional currency is treated as part of change in
fair value (including change in exchange rate) and recognized in income statement. During the
capitalization period, exchange differences arising from foreign currency borrowings are capitalized as
part of the cost of the capitalized assets.
(2) Translations of financial statements in foreign currencies
The Company translates the financial statements of its foreign operation in accordance with the
following provisions: a) the asset and liability items in the balance sheets shall be translated at a spot
exchange rate ruling at the balance sheet date. Among the owner's equity items, except the ones as
"retained earnings", others shall be translated at the spot exchange rate ruling at the time when they
occurred; b) The income and expense items in the income statements shall be translated at an exchange
rate which is determined in a systematic and reasonable way and is approximate to the spot exchange
rate (calculated by the average of starting rate and closing rate on the reporting period) ruling at the
transaction date. The foreign exchange difference arisen from the translation of foreign currency
financial statements shall be presented separately under the owner's equity in the balance sheet. The
translation of comparative financial statements shall be subject to the aforesaid provisions.
9. Recognition and measurement of financial instrument
(1) Recognition of financial assets
The Company recognises a financial asset or 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 recognises
the gain or loss arising from a change in the fair value of a financial asset at fair value through profit or
loss as profit or loss in the current period.
B. Held-to-maturity investments are measured at 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.
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
recognises a financial liability at fair value through profit or loss at its fair value. A gain or loss of
change in fair value is 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
If there is an active market for the financial instrument, the fair value is quoted prices in the active
market.
If the market for a financial instrument is not active, the Company establishes fair value by using a
valuation technique.
(5) Recognition and measurement of financial assets transfer
The Company 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).
A cumulative 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 recognises an associated liability. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that the Company has retained.
10. Accounting method of bad debt
(1) Receivables that are individually significant and provided for provision separately:
Standards of the individually significant Amount of individual receivable is greater than RMB
receivables 2 millions (and including 2 millions)
On balance sheet day, the impairment test is carried
on individually for the individually significant
The method of provision for impairment of the
receivables; the Company provides provision for
individually significant receivables
impairment loss for the amount which is measured as
the difference between the asset's carrying amount
and the present value of estimated future cash flows.
(2) Receivables that are provided for provision on a basis of portfolio:
Basis on determine the portfolio:
Receivables among the Company and its subsidiaries
Portfolio 1 within the consolidation scope which prove not
impaired after individual tests
As for other receivables which prove not impaired
after individual tests than those in Portfolio 1,
considering the current situation, the Company
Portfolio 2 determines the bad-debt provisions ratio for them
based on the actual loss ratio of the receivable
portfolio in previous years with the same or similar
account age or the similar credit risk.
The method of provision for impairment according to portfolio:
Portfolio 1 No bad-debt provision
Portfolio 2 Aging analysis
Making bad-debt provisions for receivable portfolios according to aging analysis:
Account age Percentage of provision for Percentage of provision for
accounts receivable (%) other receivables (%)
Within 1 year (including 1 year) 3 3
1-2 years (including 2 years) 10 10
2-3 years (including 3 years) 30 30
3-4 years (including 4 years) 50 50
4-5 years (including 5 years) 80 80
Over 5 years 100 100
（3）Receivables that are not individually significant but provided for provision separately:
The receivable which is individually
Reasons for impairment separately
insignificant but the credit risk is high, objective
evidence to indicate impairment.
The impairment test is carried on individually,
the Company provides provision for impairment
loss for the amount which is measured as the
The method of provision for impairment
difference between the asset's carrying amount
and the present value of estimated future cash
flows.
11. Classification and measurement of inventories
(1) Inventories of the Company include raw materials, finished goods, low-value consumption goods,
land use right held for real estate development, properties under development and completed properties
for sale.
(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 lump sum amortization method for low-value consumption goods.
(5) Inventories shall be measured at the lower of cost and net realizable 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 realizable 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
realizable value, the materials are measured at net realizable value.
The net realizable value of inventories held to satisfy sales or service contracts is generally based on
the contract price.
If the quantity specified in sales contracts is less than the inventory quantities held by the Company, the
net realizable 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 realizable 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 realizable 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 a business combination that involves more than one exchange transaction, the initial investment
cost is the summation of the book value of the equity interests of the acquiree held by the Company
before the acquisition date and the new investment cost on the acquisition date;
c) The fees incurred for audit, legal consultation, valuation services and other management expenses
are to be recognized in profit or loss at the time such costs incurred. The transaction costs incurred by
the acquirer for issuing equity securities or debt securities as the consideration of the acquisition are to
be recognized as the initial amount of such equity security or debt security.
d) Where a business combination contract or agreement provides for a future event which may adjust
the cost of combination, the Company shall include the amount of the adjustment in the cost of the
combination at the acquisition date if the future event leading to the adjustment is probable and the
amount of the adjustment can be measured reliably.
②For long-term equity investment obtained in any method other than business combination, the initial
cost is recognized under the following principles.
A. If the long-term equity investment is acquired in cash consideration, the initial cost is the actual
payment which includes direct expenses paid to acquire the long-term equity investment, taxes and
other necessary expense.
B. If the long-term equity investment is acquired by issuing equity securities, the initial cost is the
fair value of the equity securities issued. However, cash dividends or profits that are declared but
unpaid shall not be included in the initial cost. Direct costs attributed to issue equity securities such as
handling 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 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 using cost model in the
same way as fixed assets and intangible assets.
The Company values the investment property measured using cost model at the lower of its cost and its
recoverable amount at the end of the period. Where the cost exceeds the recoverable amount, the
difference shall be recognized as impairment loss. Once a provision for impairment loss is made, it
cannot be reversed.
14. Recognition and measurement of fixed assets
Fixed assets are tangible assets that: 1) are held for use in the production or supply of goods or services,
for rental to others, or for administrative purposes; and 2) have useful life more than one year.
(1) A fixed asset shall be initially recognized at cost when the following condition are satisfied:
① It is probable that future economic benefits associated with the assets will flow to the Company;
② The cost of the assets can be measured reliably.
(2) Depreciation
Subsequent expenditure relating to a fixed asset shall be added to the carrying amount of the asset
when the expenditure qualifies for capitalization. Subsequent expenditure that does not qualify for
capitalization shall be recognized as an expense for the current period.
The depreciation method adopted by the Company is straight-line method.
The estimated useful lives, residual value and annual depreciation rate of fixed assets are shown as
follows:
Estimated useful lives Annual depreciation rate
Categories Residual value (%)
(years) (%)
Property and buildings 20-25 5-10 3.8-4.5
Machineries 10 5 9.5
Vehicles 5 5 19
Electronic and other 5 5 19
equipments
Decoration of fixed assets 5 20
The Company reviews the useful life, estimated residual value and depreciation method of a fixed asset
at the end of each financial year. If expectations are significantly different from previous estimates, the
useful life shall be revised accordingly. If expectations are significantly different from previous
estimates, the estimated residual value also shall be revised accordingly. If there has been a significant
change in the expected realization pattern of economic benefits from those assets, the depreciation
method shall be changed accordingly. The changes in useful life, estimated residual value and
depreciation method shall be treated as change in accounting estimates.
(3) Fixed assets acquired under finance lease
The Company identifies a lease of asset as finance lease when substantially all the risks and rewards
incidental to legal ownership of the asset are transferred.
A fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased
asset and the present value of the minimum lease payments at the inception of lease.
The depreciation method of fixed assets acquired under finance lease is consistent with that for
depreciable assets owned by the Company. If the Company can reasonably confirm that it will obtain
the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the
useful life of the leased asset. If the Company cannot reasonably confirm that it will obtain the
ownership of leased asset at the end of lease term, the leased asset shall be depreciated during shorter
of the useful life of the leased asset and the lease term.
(4) Impairment of fixed asset refers to accounting policy ―Impairment of assets‖ of the Company.
15. Recognition and measurement of borrowing cost
(1) Capitalization and capitalization period of borrowing costs
The costs of borrowings designated for acquisition or construction of qualifying assets should be
capitalized as part of the cost of the assets. Capitalization of borrowing costs starts when
① The capital expenditures have incurred;
② The borrowing costs have incurred;
③ The acquisition and construction activities that are necessary to bring the asset to its expected usable
condition have commenced.
Other borrowing costs that do not qualify for capitalization should be expensed off during current
period.
Capitalization of borrowing costs should be suspended during periods in which the acquisition or
construction is interrupted abnormally, and the interruption period is three months or longer. These
borrowing costs should be recognized directly in profit or loss during the current period. However,
capitalization of borrowing costs during the suspended periods should continue when the interruption is
a necessary part of the process of bringing the asset to working condition for its intended use.
Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed is
substantially ready for its intended use. Subsequent borrowing costs should be expensed off during the
period in which they are incurred.
(2) Calculation method of capitalization for borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a
qualifying asset, the amount of borrowing costs eligible for capitalization on that asset is determined as
the actual borrowing costs incurred on that borrowing during the period less any investment income on
the temporary investment of the borrowing.
To the extent that funds are borrowed generally and used for the purpose of acquiring or constructing a
qualifying asset, the amount of borrowing costs eligible for capitalization shall be determined by
applying a capitalization rate to the weighted average of excess of accumulated expenditures on
qualifying asset over that on specific purpose borrowing. The capitalization rate is the weighted
average of the borrowing costs applicable to the borrowings of the Company that are outstanding
during the period, other than borrowings made specifically for the purpose of acquiring or constructing
a qualifying asset.
16. Recognition and measurement of intangible assets
Intangible assets are identifiable non-monetary asset that are owned or controlled by the Company and
are without physical substance.
(1) Recognition of intangible assets
The Company recognizes an intangible asset when that intangible asset fulfills both of the following
conditions:
①It is probable that the economic benefits associated with that asset will flow to the Company; and
②The cost of that asset can be measured reliably.
Expenditures incurred during the research phase of an internal project shall be recognized as expenses
in the period in which they are incurred. Expenditures incurred during the development phase of an
internal project shall be recognized as an intangible asset if, and only if, the Company can demonstrate
all of the following:
①The technical feasibility of completing the intangible asset so that it will be available for use or sale;
②Its intention to complete the intangible asset and use or sell it;
③The method that the intangible asset will generate probable future economic benefits. Among other
things, the Company can demonstrate the existence of a market for the output of the intangible asset or
the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
④The availability of adequate technical, financial and other resources to complete the development
and to use or sell the intangible asset;
⑤It’s able to reliably measure 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 whether
selling goods satisfies the recognition of revenue in accordance to the contract or agreement. Normally,
the transaction of repurchase after sale belongs to a financial transaction, the main risk and rewards of
the goods ownership has not been transferred. The enterprise shall not recognize the revenue. For the
amount which the repurchase price greater than the original sale price, the enterprise shall accrue the
interest fees to the financial fees within the repurchase period.
For the property transfer with repurchase conditions, in consideration of the economic substance of
transactions, the accounting method shall be disclosed.
19. Recognition and measurement of provision for liabilities
(1) Recognition of provision for liabilities
The company should recognize the related obligation as a provision for liability when the obligation
meets the following conditions:
①That obligation is a present obligation of the enterprise;
②It is probable that an outflow of economic benefits from the enterprise will be required to settle the
obligation;
③A reliable estimate can be made of the amount of the obligation.
(2) Measurement of provision for liabilities
To fulfill the present obligations, which initially measured by the best estimate of the expenditure
required to settle the liability. Where there is a continuous range of possible amounts of the expenditure
required to settle the liability, as all kinds of possibilities are at same level, the best estimate should be
determined according to the average of the lower and upper limit of the range. In other cases, the best
estimate should be determined in accordance with the following methods:
①Where the contingency involves a single item, the best estimate involves a singe item, the best
estimate should be determined according to the most likely outcome;
②Where the contingency involves several items; the best estimate should be determined by weighting
all possible outcomes by their associated probabilities of occurrence.
To determine the best estimate, it should be considered with factors such as: related contingency risks,
uncertain matters and time value of currency. If time value of currency has a significant impact, the
best estimate should be measured at its converted present value through the relevant future cash
outflows.
Where some or all of the expenditures are expected to be reimbursed by a third party, the
reimbursement should be separately recognized as an asset only when it is virtually received. The
amount of the reimbursement should not exceed the carrying amount of the liability recognized.
At balance sheet date, the Company should review book value of provision for liabilities. If there is
strong evidence that the book value does not truly indicate the current best estimate, it should be
adjusted in accordance with the current best estimate.
20. Recognition and measurement share-based payment
Recognition and measurement of share-based payment are based on true, complete and valid
share-based payment agreement. Share-based payment transaction comprises equity-settled share-based
payment transactions and cash-settled share-based payment transactions.
(1) Equity-settled share-based payment transactions
Equity-settled share-based payment transactions in which the Company receives employee’s services
as consideration for equity instruments of the Company are measured as fair value of the equity
instrument granted to the employees. As to an equity-settled share-based payment in return for services
of employees, if the right may be exercised immediately after the grant, the fair value of the equity
instruments shall, on the date of the grant, be included in the relevant cost or expense and the capital
surplus shall be increased accordingly. As to a equity-settled share-based payment in return for
employee services, if the right cannot be exercised until the vesting period comes to an end or until the
prescribed performance conditions are met, then on each balance sheet date within the vesting period,
the services obtained during the current period shall, based on the best estimate of the number of vested
equity instruments, be included in the relevant costs or expenses and capital surplus at the fair value of
the equity instruments on the date of the grant.
The fair value of the equity-settled share-based:
① For the shares granted to the employees, its fair value shall be measured in accordance to the
market price of the entity stocks, and at the same time it shall make adjustment in the consideration
of the relative terms and conditions which the stocks are granted (excluding the vesting conditions
besides the market conditions). If the entity is not traded publicly, it should be measured in
accordance to the estimated market prices and it shall make adjustment in the consideration of the
relative terms and conditions which the stocks are granted.
② For the stock options granted to the employees, if there is no similar terms and conditions for the
option trade, it shall estimate the fair value of the granted option through option pricing model.
When the enterprise determines the fair value on the granting date of the equity instruments, it shall
consider the influence by the market conditions of the vesting conditions and the non vesting
condition in the share-based payment agreement. For the share-based payment containing non
vesting conditions, as long as the employees or other party satisfy all the non-marketing conditions
of the vesting conditions (such as service period, etc.), the enterprise shall confirm the relevant
costs of the received service.
(2) Cash-settled share-based payment transactions
Cash-settled share-based payment is measured in accordance with the fair value of liability undertaken
by the Company that is calculated based on the shares or other equity instruments. As to a cash-settled
share-based payment, if the right may be exercised immediately after the grant, the fair value of the
liability undertaken by the Company, on the date of the grant, is included in the relevant costs or
expenses, and the liabilities shall be increased accordingly. As to a cash-settled share-based payment, if
the right may not be exercised until the vesting period comes to an end or until the specified
performance conditions are met, on each balance sheet date within the vesting period, the services
obtained during the current period shall, based on the best estimate of the information about the
exercisable right, be included in the relevant costs or expenses and the corresponding liabilities at the
fair value of the liability undertaken by the enterprise.
(3) Confirmation of the best estimate of the vested equity instruments: On the balance sheet date during
the waiting period, the company shall make the best estimate based on the subsequence information
regarding the number of employees who newly obtains the vest; revise the quantity of the predicted
vested equity instruments in order to make the best estimate of vested equity instruments.
(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 recognized 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 recognized 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 recognize immediately the amount that otherwise would have been recognized for
services received over the remainder of the vesting period.
21. Accounting methods for repurchase shares of the Company
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 (capital premium), surplus reserve, and undistributed profits; for the amount less than the total
of the par value of shares, the capital reserve (capital premium) should be increased for the amount less
than corresponding equity cost.
The repurchasing shares shall be managed as treasury shares before they are cancelled or transferred.
The total cost to repurchase shares shall be transferred to the cost of the treasury shares.
During the transfer of the treasury shares, when the transfer income is greater than the cost of treasury
shares, the capital reserve (capital premium) should be increased; when the transfer income is less than
the cost of treasury shares, capital reserve (capital premium), surplus reserve, and undistributed profits
should be written-down in turns.
Repurchasing stocks in purpose of equity incentives, the value of treasury stocks is measured at all the
actual cost relating to repurchasing stocks, and the details should be taken reference to the registration.
22. Revenue recognition method and principle
(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.
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 assistance or non-monetary grants at fair
value, shall not be recognized until there is reasonable assurance that:
①The entity will comply with the condition attaching to them;
②The grants will be received from government.
(2) Measurement of government grants
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.
② The Capital approach for government grants, the grant is recognized as deferred income when it is
acquired. Since the related assets achieve its intended using status, the deferred income is amortized
and recognized in profit and loss during asset’s using period. If related assets were disposed before
using period ended, undistributed deferred income shall be shift to current profit and loss at once.
The Income approach for government grants, to retrieve expense or loss of the Company in further
period, the government grants is recognized as deferred income, and shall be recorded in profit and loss
when that expense or loss occurred. To retrieve expense or loss of the Company in current period, the
government grants shall be recorded directly in current profit and loss.
③ Confirmed repayment of government grants
A. When deferred income exists, the repayment write-downs closing balane of deferred income, and
the exceed part shall be recognized in current profit and loss;
B. When no deferred income exists, the repayment shall be recognized directly in current profit and
loss.
24. Income tax
The Company adopts the balance sheet liability method for income tax expenses.
(1) Deferred tax asset
①Where 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.
②At 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.
③The 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 income tax liability
A deferred tax liability shall be recognized for all taxable temporary differences, which are differences
between the carrying amount of an asset or liability in the balance sheet and its tax base, and measured
at the tax rates that are expected to apply to the period when the asset is realized or the liability is
settled.
25. Operating lease and financial lease
(1) Operating lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset
cost or the current profit or loss on a straight-line basis over the lease term. The initial direct costs
incurred shall be recognized as the current profit or loss; Contingent rents shall be charged as expenses
in the periods in which they are incurred.
Lessors in an operating lease shall present the assets subject to operating leases in the relevant items of
their balance sheet according to the nature of the asset. Lease income from operating leases shall be
recognized as the current profit or loss on a straight-line basis over the lease term; Initial direct costs
incurred by lessors shall be recognized as the current profit or loss; Lessors shall apply the depreciation
policy for the similar assets to depreciate the fixed assets in the operating lease; For other assets in the
operating lease , lessors shall adopt a reasonable systematical method to amortize; Contingent rents
shall be charged as expenses in the periods in which they are incurred.
(2) Finance lease
For the lessee, a fixed asset acquired under finance lease shall be valued at the lower of the fair value of
the leased asset and the present value of the minimum lease payments at the inception of lease. The
minimum lease payments as the entering value in long-term account payable, the difference as
unrecognized financing charges; The initial direct costs identified as directly attributable to activities
performed by the lessee during the negotiation and signing of the finance lease such as handling fees,
legal fees, travel expenses, stamp tax shall be counted as lease asset value; the unrecognized financing
charges shall be apportioned at each period during the lease term and adopt the effective interest rate
method to calculate and confirm the current financing charge; Contingent rents shall be charged as
expenses in the periods in which they are incurred.
When the lessee calculates the present value of the minimum lease payments, for that lessee who can
obtain the interest rate implicit in the lease, the discount rate shall be the interest rate implicit in the
lease; otherwise the discount rate shall adopt the interest rate specified in the lease agreement. If the
lessee can 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
non-guaranteed residual value; recognize the difference between the total minimum lease payments ,
initial direct costs, non-guaranteed 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 and measurement 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 estimate
(1) Changes in accounting policies
There is no change in accounting policies during the financial year.
(2) Changes in accounting estimates
① Content and review and approval of accounting estimates
The 4th Session of the 7th Board of Directors reviewed and approved Accounting Policies and
Accounting Estimates of Shenzhen Properties & Resources Development (Group) Ltd., of which made
adjustments to basis of accounts receivable that was grouped according to risk quality and to method
for preparation of provision for bad debts. Details are as follows:
A. For details about new policies please refer to Note (Ⅱ).10.
B. Former policies is as follows:
Accounts receivable that make provision for bad debts by portfolio:
Basis on determine the portfolio
Receivables portfolio of similarity or with similar credit risk characteristics for the subsidiaries
Portfolio 1 engage in property management business, except receivables which have provided for provision
separately with obviously high credit risk.
Receivables portfolio for the subsidiaries beside the ones which engage in property
Portfolio 2 management business, except receivables which have provided for provision separately with
obviously high credit risk.
The method of provision for impairment according to portfolio:
Portfolio 1 Proportion of balance method
On balance sheet day, the impairment test is carried on individually according significance; the
Company provides provision for impairment loss for the amount which is measured as the
Portfolio 2
difference between the asset's carrying amount and the present value of estimated future cash
flows.
Among the portfolio, the proportion of balance in provision for bad debt:
Portfolio Name Percentage of provision for Percentage of provision for other
accounts receivable (%) receivables (%)
Portfolio 1 3.00 3.00
② Influence of changes in accounting estimate to this reporting period
Items Amounts before the Amounts influenced Amounts after the
change change
Items of balance sheet:
Accounts receivable 71,906,190.53 -1,374,850.75 70,531,339.78
Other receivables 25,233,658.76 -21,886,670.27 3,346,988.49
Long-term equity 83,150,532.14 -2,046,992.19 81,103,539.95
investment
Deferred income tax 123,788,245.69 313,956.72 124,102,202.41
assets
Items of income
statement:
Assets impairment losses -997,372.33 23,261,521.02 22,264,148.69
Investment income 2,355,745.75 -2,046,992.19 308,753.56
Income tax cost 82,356,283.80 -313,956.72 82,042,327.08
Net profit 282,455,634.03 -24,994,556.49 257,461,077.54
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) in 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. Main taxes and tax rate
Items Basis for taxation Rate (%)
VAT Operating revenue 6、17
Business tax Operating revenue 3、5
Urban maintenance and
construction tax Turnover tax payable 1、7
Education surtax Turnover tax payable 3
Local education surtax Turnover tax payable 2
Levee fee Operating revenue 0.01
Four progressive levels with the
Added amount from transfer of
Land value appreciation tax tax rate ranging from 30% to
real property
60%.
Income tax Income tax amount Note
Note: The applicable income tax rate of the Company and the subsidiaries located in Shenzhen is 24%;
the applicable income tax rate of the subsidiaries located outside Shenzhen is 25%; the applicable
income tax rate of the subsidiaries located in Hongkong is 17%.
2. Tax preference and approval
According to Notification of the State Council on Carrying out the Transitional Preferential Policies
concerning Corporate income tax (Guo Fa [2007] No.39), from January 1, 2008, enterprises which
enjoy the preferential policies of low tax rates in the past shall gradually transit to apply the statutory
tax rate within 5 years after the Corporate Income Tax Law of the People's Republic of China is put
into force. Among them, the enterprises which enjoy the corporate income tax rate of 15% shall be
subject to the corporate income tax rate of 18% in 2008, 20% in 2009, 22% in 2010, 24% in 2011 and
25% in 2012. The applicable income tax rate of the Company and the subsidiaries located in Shenzhen
is 24%.
Note Ⅳ. Business combination and consolidated financial statements
1. Subsidiaries
(1) The subsidiaries obtained through the establishment of or investment subsidiary
Type
Cate Registe Legal Organi
Serial Subsidia of Business Registered capital
gorie red representati zation
number. ries busin nature (0’000)
s address ve Code
ess
Shenzhen Wholly- Limit Shen Li 192184835 Real 3,000 Development,
Huangcheng owned ed zhen Zipeng estate construction, operation
Real Estate subsidia Com develop and management of
Co., Ltd. ry pany ment commercial service
facilities relevant to
Huanggang port
Shenzhen Wholly- Limit Shen Wei Zhi 192174565 Real 3,095 Land development,
Property and owned ed zhen estate real estate
Real Estate subsidia Com develop management;
Developmen ry pany ment construction
t Co., Ltd. supervision; property
management
PRD Group Wholly- Limit Xuzh Li 552525454 Real 5,000 Development and sale
Xuzhou owned ed ou Zipeng estate of
Dapeng Real subsidia Com develop real estate,
Estate ry pany ment construction
Developmen management, lease of
t Co.,Ltd properties, commodity
sales
Dongguan Wholly- Limit Dong Li 562562654 Real 2,000 Development and sale
Guomao owned ed guan Zipeng estate of
Changsheng subsidia Com develop real estate, lease of
Real Estate ry pany ment properties,
Developmen
t Co., Ltd.
PRD Wholly- Limit Yang Li 573842934 Real 5,000 Development and sale
Yangzhou owned ed zhou Zipeng estate of
Real Estate subsidia Com develop real estate,
Developmen ry pany ment construction
t Co., Ltd. management, purchase
of materials
Hainan Wholly- Limit Haik Liu 201264619 Real 2,000 Real estate
Xinda owned ed ou Yinhua estate development,
Developmen subsidia Com develop decoration
t Co., Ltd ry pany ment engineering,; planting;
import & export
practice
Shenzhen Wholly- Limit Shen Wang 192174549 Propert 2,000 Property rent and
ITC owned ed zhen Hangju y management
Property subsidia Com n manage
Type
Cate Registe Legal Organi
Serial Subsidia of Business Registered capital
gorie red representati zation
number. ries busin nature (0’000)
s address ve Code
ess
Management ry pany ment
Co., Ltd.
Shenzhen Wholly- Limit Shen Wang 757601334 Propert 500 Property management;
Huangcheng owned ed zhen Hangju y court virescence and
Real Estate subsidia Com n manage cleansing services
Management ry pany ment
Co., Ltd.
Shandong Wholly- Limit Jinan Wang 684815947 Propert 500 Property management
Shenzhen owned ed Zhiyon y and agency
ITC subsidia Com g manage
Property ry pany ment
Management
Co., Ltd.
Chongqing Wholly- Limit Chon Zeng 202853028 Propert 500 Property management
Shenzhen owned ed gqing Xiangro y and agency
ITC subsidia Com ng manage
Property ry pany ment
Management
Co., Ltd.
Chongqing Wholly- Limit Chon Zeng 66085719X Service 200 Installing,
Ao’bo owned ed gqing Xiangro reconstructing and
Elevator subsidia Com ng repairing the elevator;
Co., Ltd. ry pany sales of elevator and
accessories
Shenzhen Wholly- Limit Shen Wang 192277759 Service 500 Maintenance of
Tianque owned ed zhen Zhiyon elevator and air
Elevator subsidia Com g condition
Technology ry pany
Co., Ltd.
Shenzhen Wholly- Limit Shen Bao 192332519 Service 120 Domestic commerce;
ITC owned ed zhen Gang material supply;
Property subsidia Com maintenance and repair
Management ry pany of electric equipment
Engineering
Equipment
Co., Ltd.
Shenzhen Wholly- Limit Shen Wang 738842749 Restaur 200 Retail sales of Chinese
ITC Food owned ed zhen Huimin ant meal, western-style
Co., Ltd. subsidia Com operati food and wine
ry pany ons
Type
Cate Registe Legal Organi
Serial Subsidia of Business Registered capital
gorie red representati zation
number. ries busin nature (0’000)
s address ve Code
ess
Shenzhen Wholly- Limit Shen Wang 279383351 Constru 300 Supervision of general
Property owned ed zhen Huimin ction industrial and civil
Construction subsidia Com Supervi construction
Supervision ry pany sion engineering
Co., Ltd.
Shenzhen Wholly- Limit Shen Yao 192177790 Service 138 Providing property
Real Estate owned ed zhen Chengx information, property
Exchange subsidia Com in agency and evaluation
ry pany
Shenzhen Wholly- Limit Shen Wei Zhi 19217731X Service 2,985 Motor transport and
ITC Vehicles owned ed zhen motor rent
Industry subsidia Com
Co., Ltd. ry pany
Shenzhen Wholly- Limit Shen Li 192267331 Service 1,600 Motor transport and
ITC Motor owned ed zhen Laogen motor rent
Rent Co., subsidia Com
Ltd. ry pany
Shenzhen Wholly- Limit Shen Xiao 192325669 Service 200 Driver training
Tesu Vehicle owned ed zhen Dejun
Driver subsidia Com
Training ry pany
Center Co.,
Ltd.
Shenzhen Wholly- Limit Shen Luo 19218224X Trading 1,200 Investing in
International owned ed zhen Junde commercial, material
Trade Plaza subsidia Com and supplying
ry pany company
Sichuan Wholly- Limit Chen Li Jun 754748621 Trading 800 Wholesale in domestic
Tianhe owned ed gdu market
Industry subsidia Com
Co., Ltd ry pany
Zhanjiang Wholly- Limit Zhanj Duan 194351406 Real 253 Real estate
Shenzhen owned ed iang Zuopin estate development and sales
Real Estate subsidia Com g develop of commodity
Developmen ry pany ment premises
t Co., Ltd.
Shum Yip Wholly- Limit Hong NA NA Real HKD2,000 Property agency and
Properties owned ed kong estate investment
Developmen subsidia Com develop
t Co., Ltd. ry pany ment
Type
Cate Registe Legal Organi
Serial Subsidia of Business Registered capital
gorie red representati zation
number. ries busin nature (0’000)
s address ve Code
ess
Wayhang Wholly- Limit Hong NA NA Real HKD0.0002 Property development
Developmen owned ed kong estate
t Co., Ltd. subsidia Com develop
ry pany ment
Chief Link Holding Limit Hong NA NA Real HKD0.01 Property agency and
Properties subsidia ed kong estate investment
Co., Ltd. ries Com develop
pany ment
Syndis Holding Limit Hong NA NA Real HKD0.0004 Property investment
Investment subsidia ed kong estate
Co., Ltd. ries Com develop
pany ment
Inclu
The The
Actual ded in Losses shared
proporti proportio
Capital Other essential conso Minority by
on of n of
Subsidiaries amounts of investment lidate interest(0 minority
holding voting
the year end (0’000) d ’000) equity
shares rights
(0’000) state holders
(%) (%)
ments
Shenzhen Huangcheng 3,000 100 100 Yes
Real Estate Co., Ltd.
Shenzhen Property and 3,095 100 100 Yes
Real Estate
Development Co., Ltd.
PRD Group Xuzhou 5,000 100 100 Yes
Dapeng Real Estate
Development Co.,Ltd
Dongguan Guomao 2,000 100 100 Yes
Changsheng Real
Estate Development
Co., Ltd.
PRD Yangzhou Real 5,000 100 100 Yes
Estate Development
Co., Ltd.
Hainan Xinda 2,000 100 100 Yes
Development Co., Ltd
Shenzhen ITC 2,000 100 100 Yes
Property Management
Co., Ltd.
Inclu
The The
Actual ded in Losses shared
proporti proportio
Capital Other essential conso Minority by
on of n of
Subsidiaries amounts of investment lidate interest(0 minority
holding voting
the year end (0’000) d ’000) equity
shares rights
(0’000) state holders
(%) (%)
ments
Shenzhen Huangcheng 500 100 100 Yes
Real Estate
Management Co., Ltd.
Shandong Shenzhen 500 100 100 Yes
ITC Property
Management Co., Ltd.
Chongqing Shenzhen 500 100 100 Yes
ITC Property
Management Co., Ltd.
Chongqing Ao’bo 200 100 100 Yes
Elevator Co., Ltd.
Shenzhen Tianque 500 100 100 Yes
Elevator Technology
Co., Ltd.
Shenzhen ITC 120 100 100 Yes
Property Management
Engineering
Equipment Co., Ltd.
Shenzhen ITC Food 200 100 100 Yes
Co., Ltd.
Shenzhen Property 300 100 100 Yes
Construction
Supervision Co., Ltd.
Shenzhen Real Estate 138 100 100 Yes
Exchange
Shenzhen ITC 2,985 100 100 Yes
Vehicles Industry Co.,
Ltd.
Shenzhen ITC Motor 1,600 100 100 Yes
Rent Co., Ltd.
Shenzhen Tesu Vehicle 200 100 100 Yes
Driver Training Center
Co., Ltd.
Shenzhen International 1,200 100 100 Yes
Trade Plaza
Sichuan Tianhe 800 100 100 Yes
Industry Co., Ltd
Inclu
The The
Actual ded in Losses shared
proporti proportio
Capital Other essential conso Minority by
on of n of
Subsidiaries amounts of investment lidate interest(0 minority
holding voting
the year end (0’000) d ’000) equity
shares rights
(0’000) state holders
(%) (%)
ments
Zhanjiang Shenzhen 253 100 100 Yes
Real Estate
Development Co., Ltd.
Shum Yip Properties HKD2,000 RMB 318.75 100 100 Yes
Development Co., Ltd. HKD11,914.65
Wayhang HKD0.0002 100 100 Yes
Development Co., Ltd.
Chief Link Properties HKD0.01 70 70 Yes 86.21
Co., Ltd.
Syndis Investment HKD0.0004 100 100 Yes
Co., Ltd. (Note)
Note: Syndis Investment Co., Ltd is a wholly-owned subsidiary of Chief Link Properties Limited.
(2) The subsidiaries obtained through business combination which under the common control
There is no such kind of subsidiaries in report period.
(3) The subsidiaries obtained through business combination which under the non-common control
There is no such kind of subsidiaries in report period.
2. Special purpose entities or operation entities that formed control through commission operation or
charter
There were no special purpose entities or operation entities that formed control through commission
operation or charter in the Company.
3. Explanation for changes in consolidation scope
In the reporting period, the Company newly established wholly-owned subsidiary SPD Yangzhou Real
Estate Development Co., Ltd in Yangzhou, Jiangsu for the development of No. 676 land in Weiyang
District, Yangzhou. The Company received business license with a register No. 321000000081100 that
approved and issued by Administration for Industry & Commerce of Yangzhou, Jiangsu on 9 May 2011.
The registration capital is RMB 50 million and all be funded by monetary capital of the Company.
4. Entities which are included in consolidation scope or not included in consolidation scope in 2011
(1) Subsidiaries, specific purpose entities or operation entities formed through commission operation or
charter that are included in consolidation scope in 2011
Name Net assets at period-end Net profit in 2011
PRD Yangzhou Real Estate 48,453,023.08 -1,546,976.92
Development Co., Ltd.
(2) Subsidiaries, specific purpose entities or operation entities formed through commission operation or
charter that are not included in consolidation scope in the period
NA
5. The subsidiaries obtained through business combination which under the common control in the
period
NA
6. The subsidiaries obtained through business combination which under the non-common control in the
period
NA
7. Subsidiaries reduced for the sales of equity then losses its control in the period
NA
8. Repurchase in the period
NA
9. Combination or merge in the period
NA
10. The exchange rate for main subjects of overseas economies
For Hongkong registered subsidiaries included in consolidated scope, such as Shum Yip Properties
Development Co., Ltd., Wayhang Development Co., Ltd., Chief Link Properties Co., Ltd., and Syndis
Investment Co., Ltd. The exchange rates of currencies are as follows:
(1) For assets and liabilities, using the spot exchange rate of HKD against RMB (1:0.8107.)on the
balance sheet date;
(2) For the paid-in capital, using the spot exchange rate of HKD against RMB (1：0.7917) when
obtained;
(3) For the income statement, using the average exchange rate of HKD against RMB (1：0.8308) 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
December 31, 2011 and December 31, 2010 respectively; this year refer to the year 2011 and last year
refer to the year 2010; all amounts are presented in RMB.)
1．Cash and cash equivalents
Closing balance Opening balance
Foreign Foreign
Items Exchange Exchange
currency RMB amount currency RMB amount
rate rate
amount amount
Cash on hand —— —— 276,688.67 —— —— 184,769.91
Closing balance Opening balance
Foreign Foreign
Items Exchange Exchange
currency RMB amount currency RMB amount
rate rate
amount amount
RMB —— —— 274,995.88 —— —— 180,214.38
HKD 2,088.06 0.8107 1,692.79 5,325.62 0.8509 4,531.82
USD 3.58 6.6227 23.71
Bank deposit —— —— 458,951,974.48 —— —— 529,017,318.87
RMB —— —— 454,480,140.58 —— —— 524,488,253.51
HKD 5,516,015.66 0.8107 4,471,833.90 5,321,667.56 0.8509 4,528,215.20
USD 128.37 6.6227 850.16
Other cash and
—— —— 4,546,665.78 —— —— 5,216,606.58
cash equivalents
RMB —— —— 4,546,665.78 —— —— 5,216,606.58
Total —— —— 463,775,328.93 —— —— 534,418,695.36
2. Trading financial assets
Item Closing balance (fair value) Opening balance (fair value)
Held-for-trading equity
instrument 272,100.00
Total 272,100.00
3. Notes receivable
Item Closing balance Opening balance
Bank acceptance notes 200,000.00 300,000.00
Total 200,000.00 300,000.00
4. Accounts receivable
(1) Accounts receivable by categories are as follows:
Closing balance
Balance Provision for bad debt
Categories
Proportio Proportio
Amount Amount
n (%) n (%)
Individually significant and provided for 104,266,173.89 84.60 48,266,173.89 46.29
bad debts separately
Provided for bad debts by portfolio
Portfolio 2 15,673,096.53 12.72 1,764,611.08 11.26
Subtotal 15,673,096.53 12.72 1,764,611.08 11.26
Individually not significant but provided 3,297,612.98 2.68 2,674,758.65 81.11
for bad debts separately
Closing balance
Balance Provision for bad debt
Categories
Proportio Proportio
Amount Amount
n (%) n (%)
Total 123,236,883.40 100.00 52,705,543.62 42.77
Opening balance
Balance Provision for bad debt
Categories
Proportio Proportio
Amount Amount
n (%) n (%)
Individually significant and provided for 104,266,173.89 86.90 48,266,173.89 46.29
bad debts separately
Provided for bad debts by portfolio
Former portfolio 1 8,869,994.67 7.39 266,099.84 3.00
Former portfolio 2 3,036,227.93 2.53
Subtotal 11,906,222.60 9.92 266,099.84 2.23
Individually insignificant but provided for 3,811,391.44 3.18 3,515,728.91 92.24
bad debts separately
Total 119,983,787.93 100.00 52,048,002.64 43.38
Interpretation of receivables:
Receivables with individually significant amount and provided for bad debt separately:
Bad debt Proportio
Name of company Amount Reason for provision
provision n (%)
Shenzhen Jiyong Properties 98,611,328.05 42,611,328.05 43.21 Involved in lawsuit,
& Resources Development referring to Note
Company Ⅶ-1(1), Note Ⅸ-2
Shenzhen Tewei Industry 2,836,561.00 2,836,561.00 100.00 Uncollectible for a long
Co.,Ltd. period
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 ——
Among the portfolio, receivables with bad debt provision according to age analysis:
Closing balance
Age Book balance
Provision for bad debt
Amount Proportion (%)
Within 1 year (including 1 11,984,486.38 76.46 359,534.59
year)
1 year to 2 years (including 2 794,149.48 5.07 79,414.95
years)
Closing balance
Age Book balance
Provision for bad debt
Amount Proportion (%)
2 year to 3 years (including 3 1,314,269.42 8.39 394,280.83
years)
3 year to 4 years (including 4 1,282,525.85 8.18 641,262.93
years)
4 year to 5 years (including 5 37,738.10 0.24 30,190.48
years)
Over 5 years 259,927.30 1.66 259,927.30
Total 15,673,096.53 100.00 1,764,611.08
Among the portfolio, receivables with bad debt provision according to the proportion of balance:
Opening balance
Portfolio Name
Book balance Proportion (%) Provision for bad debt
Former portfolio 1 8,869,994.67 3.00 266,099.84
Total 8,869,994.67 —— 266,099.84
Receivables with individually insignificant amount but provided for bad debt separately:
Provision for Proportion
Name of company Amount Reason for provision
bad debt (%)
Shenzhen Huangtaizi Existing a dispute that
1,248,471.70 625,617.37 50.11
Restaurant probably unrecoverable
Zhanjiang Haihu With a long age that was
700,000.00 700,000.00 100.00
Real Estate Co., Ltd unrecoverable
Shenzhen
Shengfenglu, ITC With a long age that was
498,681.65 498,681.65 100.00
Jewel & Gold Co., unrecoverable
Ltd.
Shenzhen Luohu
Existing a dispute that
Office of 222,750.75 222,750.75 100.00
probably unrecoverable
Construction
Zhanjiang With a long age that was
135,972.00 135,972.00 100.00
SpecialCement Plant unrecoverable
Hainan Meijia Tea With a long age that was
126,318.15 126,318.15 100.00
House unrecoverable
With a long age that was
365,418.73 365,418.73 100.00
Other unrecoverable
Total 3,297,612.98 2,674,758.65 ——
(2) Reversal or recovery in this period
Content of accounts Reason for Basis for Reversal or recovery of Reversal or
receivable reversal or recognition of former bad debt recovery
recovery former bad debt provision amount
provision
Shenyang Jinfeng Hotel Negotiated to Estimated to be 449,590.30 449,590.30
recover unrecoverable
Shenzhen Yunpeng Hotel Negotiated to Estimated to be 274,286.32 274,286.32
Co.,Ltd Vienna Branch recover unrecoverable
Yongyuheng Property Negotiated to Estimated to be 34,805.30 34,805.30
Development Co., Ltd. recover unrecoverable
Construction Works Negotiated to Estimated to be 305,039.09 82,288.34
Bureau of Luohu District, recover unrecoverable
Shenzhen
Total 1,063,721.01 840,970.26
(3) No account receivables were written off during the reporting period.
(4) There was no accounts receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company
(5) Details of top 5 receivable accounts:
Proportion to
Company Relationship Amount Aging total accounts
receivables (%)
Shenzhen Jiyong Properties & Non-related 98,611,328.05 Over 5 years 80.02
Resources Development Company parties
Non-related 3,301,286.72 Within 1year 2.68
Huwei Technologies Co., Ltd.
parties
Shenzhen Tewei Industry Co.,Ltd. Non-related 2,836,561.00 Over 5 years 2.30
parties
Shenzhen Lunan Industry Non-related 2,818,284.84 Over 5 years 2.29
Development Co.,Ltd. parties
Rainbow Plaza Co., Ltd Non-related 2,469,958.77 1 year to 3 2.00
parties years
Total 110,037,419.38 89.29
(6) There was no accounts receivable due from related parties.
5. Other receivables
(1) Other receivables by categories are as follows:
Closing balance
Categories
Book balance Provision for bad debt
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided 92,900,407.68 73.07 92,900,407.68 100.00
for bad debts separately
Provided for bad debts by portfolio
Portfolio 2 25,027,358.80 19.68 21,680,370.31 86.63
Subtotal 25,027,358.80 19.68 21,680,370.31 86.63
Individually not significant but 9,215,615.11 7.25 9,215,615.11 100.00
provided for bad debts separately
Total 127,143,381.59 100.00 123,796,393.10 97.37
Opening balance
Book balance Provision for bad debt
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided 93,518,263.68 66.48 93,518,263.68 100.00
for bad debts separately
Provided for bad debts by portfolio
Former portfolio 1 5,329,966.00 3.79 159,898.98 3.00
Former portfolio 2 32,617,813.08 23.18
Subtotal 37,947,779.08 26.97 159,898.98 0.42
Individually not significant but 9,216,737.11 6.55 9,216,737.11 100.00
provided for bad debts separately
Total 140,682,779.87 100.00 102,894,899.77 73.14
Interpretation of other receivables:
Other receivables with individually significant amount and provided for bad debt separately:
Provision for Proporti
Content Book balance Reason for provision
bad debt on (%)
Gintian Industry (Group) Co.,Ltd 56,600,000.00 56,600,000.00 100.00 Payment for
discharging of
guaranty
responsibility that
was difficult to be
recollected
Anhui Nanpeng Papermaking Co., 7,677,728.00 7,677,728.00 100.00 Uncollectible for a
Ltd long period
Shenzhen Shengfenglu, ITC Jewel 6,481,353.60 6,481,353.60 100.00 There is no asset to
& Gold Co., Ltd execute the verdict,
thus lead to
Provision for Proporti
Content Book balance Reason for provision
bad debt on (%)
uncollectibility
Shanghai Yutong Real estate 5,676,000.00 5,676,000.00 100.00 Uncollectibility for
development Co., Ltd the reason of verdict
Wuliangye Restaurant 5,523,057.70 5,523,057.70 100.00 Has been liquidated
HongKong Yueheng Development 3,271,837.78 3,271,837.78 100.00 Has been liquidated
Co., Ltd
Dameisha Tourism Center 2,576,445.69 2,576,445.69 100.00 Suspended project
Shenzhen ITC Industrial 2,551,652.48 2,551,652.48 100.00 The company is
Development Co., Ltd insolvent
Elevated Train Project 2,542,332.43 2,542,332.43 100.00 Suspended project
Total 92,900,407.68 92,900,407.68 ——
Among the portfolio, other receivables with bad debt provision according to age analysis:
Closing balance
Age Book balance
Provision for bad debt
Amount Proportion (%)
Within 1 year (including 1 2,329,407.87 9.31 69,882.24
year)
1 year to 2 years (including 2 151,914.64 0.61 15,191.46
years)
2 year to 3 years (including 3 822,345.71 3.29 246,703.71
years)
3 year to 4 years (including 4 541,906.57 2.17 270,953.29
years)
4 year to 5 years (including 5 520,722.05 2.08 416,577.65
years)
Over 5 years 20,661,061.96 82.54 20,661,061.96
Total 25,027,358.80 100.00 21,680,370.31
Among the portfolio, other receivables with bad debt provision according to the proportion of balance:
Name of portfolio Opening balance
Book balance Proportion (%) Provision for bad debt
Portfolio 1 5,329,966.00 3.00 159,898.98
Total 5,329,966.00 —— 159,898.98
Other receivables with individually insignificant amount but provided for bad debt separately:
Content Book balance Provision for 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
Content Book balance Provision for Proportion Reason for provision
bad debt (%)
Liang Weimin 1,357,137.11 1,357,137.11 100.00 Unrecoverable due to
retirement of
employee
Chongqing Hua’er 799,163.50 799,163.50 100.00 Unrecoverable
Decorations Co., Ltd.
Compensation for Shidai new 601,762.21 601,762.21 100.00 Owner unable to repay
residence mortgage guarantee the loan
Chen Liangfang 500,000.00 500,000.00 100.00 Unrecoverable due to
disappearance of the
debtor
Yan Kunping 496,307.77 496,307.77 100.00 Unrecoverable for a long
term
Fang Bijia 344,134.00 344,134.00 100.00 Unrecoverable for a long
term
Shenzhen Property 335,828.92 335,828.92 100.00 Unrecoverable
Architectural Design
Company
Others 3,034,017.35 3,034,017.35 100.00 Unrecoverable
Total 9,215,615.11 9,215,615.11 ——
(2) Interpretation of reversal or recovery in the period:
Content Basis to
Accumulated amount
Reason for recognize the Amount of
of provision for bad
reversal and original reversal or
debts before reversal or
recovery provision for recovery
recovery
bad debts
Mailbox expense Recover Estimated to be 1,122.00 1,122.00
receivable from owners unrecoverable
Total 1,122.00 1,122.00
(3) Other receivables that were written off in the period
Whether
arising
Nature of
Written-off from
Name of entities other Reason for written-off
amount related
receivables
party or
not
Remaining 50.00 Payment has cleared that didn’t No
Wuxi Wire Rope Plant
payment of make accounting treatment
purchasing
goods
Shanghai Shuanglong Rubber Remaining 159.20 Payment has cleared that didn’t No
and Plastics Products Co., Ltd. payment of make accounting treatment
purchasing
goods
Shanghai Shuanglong Rubber Remaining 307.60 Payment has cleared that didn’t No
and Plastics Products Co., Ltd. payment of make accounting treatment
purchasing
goods
Sichuan Xinghua Shipin Remaining 5,000.00 Payment has cleared that didn’t No
Technology Co., Ltd. payment of make accounting treatment
purchasing
goods
Shenzhen Coal Gas Company Deposit 1,300.00 Coal gas bottle was rusted that No
unable to withdraw deposit
Total 6,816.80
(4) There was no other receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
(5) Details of top 5 other receivables:
Relationship
Proportion of
Name of entities with the Amount Aging
the total (%)
Company
Gintian Industry (Group) Co.,Ltd. Non-related 4 to 5 years
parties 56,600,000.00 and over 5 44.52
years
Shenzhen ITC Tian’an Properties Joint ventures Over 5
9,705,931.45 7.63
Co., Ltd years
Anhui Nanpeng Papermaking Co., Associated Over 5
7,677,728.00 6.04
Ltd enterprises years
Shenzhen Shengfenglu, ITC Jewel Non-related Over 5
6,481,353.60 5.10
& Gold Co., Ltd parties years
Shanghai Yutong Real estate Non-related Over 5
5,676,000.00 4.46
development Co., Ltd parties years
Total 86,141,013.05 67.75
(6) Details of other receivables refer to Note Ⅵ-7.
6. Prepayment
(1)Aging analysis:
Closing balance Opening balance
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1
year(including 1 year) 472,521,763.10 99.62 33,804,247.57 68.48
1-2 years(including 2
years) 108,805.50 0.02 15,412,693.95 31.22
2-3 years(including 3
years) 1,586,058.25 0.33 90.00 0.00
Over 3 years 138,121.54 0.03 143,400.35 0.30
Total 474,354,748.39 100.00 49,360,431.87 100.00
(2) The significant prepayments are as following:
Relationship
Reason for
Name of entities with the Amount Term
unsettlement
Company
Transfer fee for land in Yangzhou Non-related 435,563,863.60 Within 1
party year
Prepayment of taxes Non-related 11,665,783.49 Within 2 Note 1
party years
Prepayment of social security charges Non-related 9,010,663.20 Within 1 Note 2
in building industry party year
Dongtong Automobile Non-related 8,803,620.00 Within 1
Trade Co., Ltd. party year
Hulun Buir Guangxia Real Estate Non-related 4,224,151.00 Within 1
Development Co., Ltd. party year
Total 469,268,081.29
Note 1: According to ―Provisional Regulations on Business Tax Business tax‖, transfer of land use right
or real estate sales, using method of pre-collection (including deposit in advace), and the obligation for
tax occurs on pre-collection date. The balance of pre-paid the taxes and fees refer to the prepaid
business tax, education surtax and other tax fees, basing on pre-sale income of commercial housing
sales.
Note 2: Prepayment of social security charges in building industry was prepaid in accordance with
requirements of Temporary Method on Management of Prepayment of Social Security Charges in
Building Industry of Xuzhou (XZBF (2009) No.113). Social security charges in building industry refer
to charges in aspects of social securities the building enterprises contributed for employees such as
endowment insurance, medical insurance, unemployment insurance, insurance against injury at work,
maternity insurance etc. (including part of personnel contribution). This charge is base on engineer
project, conducting unity measure basis that charge from building entities in unity and making final
settlement with building enterprises in unity.
(3) There was no amount due from shareholders with more than 5% (including 5%) of the voting shares
of the Company in prepayment.
7. Inventories
(1) Details:
Categories Closing balance Opening balance
Book balance Provision Book value Book balance Provision Book value
for for
impairment impairment
of of
inventories inventories
Raw materials 1,908,615.92 538,069.88 1,370,546.04 1,945,434.11 412,218.40 1,533,215.71
merchandise 37,356.20 37,356.20 46,487.22 46,487.22
on hand
Reusable 589,437.96 589,437.96 286,508.16 286,508.16
materials
Products held 652,893,160.9 36,911,568. 615,981,592.2 579,089,958.4 38,040,376. 541,049,582.1
for real estate 3 66 7 2 30 2
development
Properties 684,087,366.6 684,087,366.6 693,477,844.9 693,477,844.9
under 6 6 2 2
development
Completed 512,926,330.2 512,926,330.2 339,789,667.2 339,789,667.2
properties for 1 1 5 5
sale
Total 1,852,442,267. 37,449,638. 1,814,992,629. 1,614,635,900. 38,452,594. 1,576,183,305.
88 54 34 08 70 38
Details are as following:
A. Products held for real estate development
Closing balance Opening balance
Provision for Provision for
Items
Amount impairment of Amount impairment of
inventories inventories
Hainan Qiongshan Land 6,648,404.13 6,648,404.13 6,648,404.13 6,648,404.13
Fuchang Second Term 5,895,627.11 5,895,627.11 5,816,127.11 5,816,127.11
Land
Hong Kong Tingjiu Land 46,256,437.42 24,367,537.42 48,550,145.06 25,575,845.06
Shenhui Garden Land 36,222,791.89 36,081,191.89
Shenwuye – Jinling Jiari 61,997,990.33 61,764,990.33
(original Huanggang Port
Land)
Shenwuye –Songhu 224,241,604.95 220,870,945.40
Langyuan (original
Closing balance Opening balance
Provision for Provision for
Items
Amount impairment of Amount impairment of
inventories inventories
Dongguan Dalang Land)
Shenwuye –Banshan 199,358,154.50
Yujing(original Xuzhou
Dapeng Land)
Shenwuye –Xihu 325,933.00
Changxiang(Yangzhou
Land)
Shenwuye –Blue 271,304,372.10
Harbor(Moon Bay Land)
Total 652,893,160.93 36,911,568.66 579,089,958.42 38,040,376.30
B. Properties under development
Closing balance Opening balance
Expected
Starting Expected total Capitalisation Capitalisation
Project name completion
time investment Book balance of interest Book balance of interest
time
accumulate accumulate
Shenwuye – 2007.1 2011.1 422,860,000.00 355,000,672.49 43,529,960.53
Shengang No.1
Shenwuye 2008.3 2012.10 514,170,000.00 352,390,860.94 51,689,147.66 270,672,757.20 25,691,436.49
-Langqiao
Residence
Shenwuye - Cai 2009.7 2013.3 110,000,000.00 104,124,163.48 6,023,792.66 67,804,415.23 3,182,963.80
Tian Yi Se
Shenwuye 2011.9 2013.10 793,000,000.00 227,572,342.24
–Banshan
Yujing First
Term
Shenwuye 2012.8 2014.6
–Banshan
Yujing Second
Term
Total —— 684,087,366.66 57,712,940.32 693,477,844.92 72,404,360.82
C. Completed properties for sale
Provision
for
Completi Opening Closing
Item Increase Decrease impairment
on time balance balance
of
inventories
Provision
for
Completi Opening Closing
Item Increase Decrease impairment
on 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
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
Rihao Garden 4,654,651.00 4,654,651.00
Fuchang
Comprehensive
Building 6,421,447.63 6,421,447.63
Shenwuye –Imperial 2008.11 432,522.28 432,522.28
garden
Shenwuye –Xinhua
City 2010.6 127,276,489.74 1,688,136.18 34,265,793.73 94,698,832.19
Shenwuye
–Shengang No.1 2011.01 461,821,999.15 244,203,100.74 217,618,898.41
Others 2,730,866.63 2,730,866.63
Total 339,789,667.25 463,510,135.33 290,373,472.37 512,926,330.21
(2)Provision for impairment of inventories:
Decrease in current year
Provision
Opening Writt
Categories increased in Reve Currency translation Closing balance
balance en
current year rsal effects
off
Raw materials 412,218.40 125,851.48 538,069.88
Land use right held 1,208,307.64
for real estate 38,040,376.30 79,500.00 36,911,568.66
development
Completed
properties for sale
Total 38,452,594.70 205,351.48 1,208,307.64 37,449,638.54
(3) Particulars on provision for impairment of inventories:
Reason for reversing
The proportion of reversal amount
Withdrawal basis on the provision for the provision for
Categories in the closing balance of the
impairment of inventories impairment of
inventory (%)
inventories in the year
Estimated net realizable value lower than
Raw materials
the book value
Land use right
held for real Estimated net realizable value lower than
estate the book value
development
Total
8. Investment in joint and associated enterprises
Proportio
Register Legal Registered Proportions of
Type of Business ns of
Investee ed represen capital voting rights
business nature sharehold
address tative (0’000) (%)
ing (%)
I.Joint ventures
Shenzhen Jifa Limited Shenzhe Wang Service HKD5,415 50.00 50.00
Warehouse Co., Company n Hangjun
Ltd
Shenzhen ITC Limited Shenzhe Wang Service USD888 50.00 50.00
Tian’an Company n Hangjun
Properties Co.,
Ltd
Shenzhen Tian’an Limited Shenzhe Zhang Property 300 50.00 50.00
International Company n Changsh managem
Building Property eng ent
Management Co.,
Ltd
II.Associated
companies
Shenzhen ITC Limited Shenzhe Zha Service HKD3,280 38.33 38.33
Industrial Company n Shengm
Development Co., ing
Ltd
Anhui Nanpeng Limited Huainan Wang Industry USD800 30.00 30.00
Papermaking Co., Company Yizhong
Ltd
Shenzhen Wufang Limited Shenzhe Yan Industry USD12,500 26.00 26.00
Pottery & Company n Wenbo
Porcelain
Industrial Co., Ltd
Total net
Total asset Total Total sales Total net Relat
asset the Organizati
Name of company the liability revenue this profit this ions
year on. code
year end the year end year year hip
end
I.Joint ventures
Shenzhen Jifa 57,234,267. 2,515,153.7 54,719,113.7 7,069,536.00 1,492,759. Joint 61884782
Warehouse Co., 48 5 3 83 vent 8
Ltd ures
Shenzhen ITC 112,094,771 41,287,158. 70,807,613.6 18,844,249.54 -3,013,349. Joint 61884515
Tian’an Properties .81 14 7 06 vent 2
Co., Ltd ures
Shenzhen Tian’an 32,407,691. 26,326,752. 6,080,939.08 17,924,123.56 952,278.43 Joint 61893051
International 76 68 vent 7
Building Property ures
Management Co.,
Ltd
II.Associated
companies
Shenzhen ITC Asso
Industrial ciate
Development Co., s
Ltd
Anhui Nanpeng Asso
Papermaking Co., ciate
Ltd s
Shenzhen Wufang Asso
Pottery & ciate
Porcelain s
Industrial Co., Ltd
9. Long-term equity investment
Proportio
Amount of Proportions of
Opening Increase/ Closing ns of
Company initial voting rights
balance Decrease balance sharehold
investment (%)
ing (%)
I. Investment
under equity
method
Shenzhen Jifa 30,645,056.04 26,613,176.96 743,887.08 27,357,064.04 50.00 50.00
Warehouse
Company Limited
Shenzhen ITC 23,186,124.00 36,910,481.36 -1,506,674.53 35,403,806.83 50.00 50.00
Tian’an
Properties Co.,
Proportio
Amount of Proportions of
Opening Increase/ Closing ns of
Company initial voting rights
balance Decrease balance sharehold
investment (%)
ing (%)
Ltd
Shenzhen Tian’an 1,500,000.00 2,564,330.33 476,139.20 3,040,469.53 50.00 50.00
International
Building Property
Management Co.,
Ltd
II. Investment
under cost method
Shenzhen Wufang 18,983,614.14 18,983,614.14 18,983,614.14 26.00 26.00
Pottery &
Porcelain
Industrial Co., Ltd
Shenzhen ITC 20,154,840.79 3,682,972.55 3,682,972.55 38.33 38.33
Industrial
Development Co.,
Ltd
Anhui Nanpeng 13,824,000.00 13,824,000.00 13,824,000.00 30.00 30.00
Papermaking Co.,
Ltd
China T.H. 2,962,500.00 2,962,500.00 2,962,500.00 0.33 0.33
Co.,Ltd.
North Machinery 3,465,000.00 3,465,000.00 3,465,000.00 12.66 12.66
(Group) Co.,Ltd.
Guangdong 8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Huayue Real
Estate Co.,Ltd.
Shenzhen ITC 8,500,000.00 8,500,000.00 8,500,000.00 100.00 100.00
Petroleum
Company Limited
Guangzhou 6,000,000.00 6,000,000.00 6,000,000.00 30.00 30.00
Lishifeng
Automobile
Co.,Ltd.
Sanya East Travel 1,350,000.00 1,350,000.00 1,350,000.00 0.28 0.28
Co.,Ltd.
Shensan Co.,Ltd. 17,695.09 17,695.09 17,695.09
Macao Huashen 85,621.36 82,611.65 -3,902.91 78,708.74 10.00 10.00
Enterprise
Co.,Ltd.
Chongqing 2,598,061.52 2,506,736.09 -88,212.27 2,418,523.82 27.25 27.25
Proportio
Amount of Proportions of
Opening Increase/ Closing ns of
Company initial voting rights
balance Decrease balance sharehold
investment (%)
ing (%)
Guangfa Real
estate
development
Co.,Ltd.
Saipan Project 1,935,184.04 1,867,159.65 -118,428.48 1,748,731.17 30.00 30.00
Total —— 138,110,923.02 -497,191.91 137,613,731.11 —— ——
Provision
Note for difference
Provision written Cash
between proportions Provision for
Company increased in off in divide
of voting rights and impairment
current year current nds
shareholding hold
year
I. Investment under equity method
Shenzhen Jifa Warehouse Company
Limited
Shenzhen ITC Tian’an Properties
Co., Ltd
Shenzhen Tian’an International Building
Property Management Co., Ltd
II. Investment under cost method
Shenzhen Wufang Pottery & Porcelain
18,983,614.14
Industrial Co., Ltd
Shenzhen ITC Industrial Development
3,682,972.55
Co., Ltd
Anhui Nanpeng Papermaking Co., Ltd 13,824,000.00
China T.H. Co.,Ltd. 2,160,300.45
North Machinery (Group) Co.,Ltd. 3,465,000.00
Guangdong Huayue Real Estate
8,780,645.20
Co.,Ltd.
Shenzhen ITC Petroleum Company
Limited
Guangzhou Lishifeng Automobile
Co.,Ltd.
Sanya East Travel Co.,Ltd. Legal
1,350,000.00
persons shares
Shensan Co.,Ltd. 17,695.09
Macao Huashen Enterprise Co.,Ltd. 78,708.74 -3,902.91
Chongqing Guangfa Real estate
2,418,523.82 -88,212.27
development Co.,Ltd.
Saipan Project 1,748,731.17 -118,428.48
Provision
Note for difference
Provision written Cash
between proportions Provision for
Company increased in off in divide
of voting rights and impairment
current year current nds
shareholding hold
year
Total 56,510,191.16 -210,543.66
Note 1: In the reporting period, Shenzhen ITC Vehicle Industry Co., Ltd. (hereinafter as the ―Vehicles
Company‖) signed a gas station lease contract with Shenzhen Guanghong Investment Company
Limited,, which promises that Shenzhen Guanghong Investment Co., Ltd rents the assets and rights
such as the land of gas station, the gas station, business occupancy, dormitory, equipments and facilities,
as well as business management right from Shenzhen Guomao Oil Co., Ltd (Shenzhen Guomao
Automobile Industry Co., Ltd holds 100% equity of the company) and takes over the operation and
management, with a lease term of 15 years. Since the date of operating lease, the Company no longer
exerts actual control on Shenzhen Guomao Oil Co., Ltd, therefore, included in the consolidation scope,
according to the Accounting Standard for Enterprises.
Note 2: The decreased balance of investment and impairment provision of Macao Huashen Enterprise
Co., Ltd., Saipan Project, Chongqing Guangfa Real estate development Co., Ltd., which was due to
translation of financial statements in foreign currencies.
10. Investment property
(1) Details are as following:
Item Opening balance Increase Decrease Closing balance
1. Cost 445,061,716.48 14,273,830.62 459,335,547.10
Including: Property and
437,091,762.08 14,273,830.62 451,365,592.70
building
Land use right 7,969,954.40 7,969,954.40
Newly
Provision in
increase in
current year
current year
2. Accumulated
depreciation and 149,477,012.39 2,427,707.13 16,270,919.73 168,175,639.25
amortization
Including: Property and
146,653,475.32 2,427,707.13 15,761,774.61 164,842,957.06
building
Land use right 2,823,537.07 509,145.12 3,332,682.19
3. The net book value 295,584,704.09 291,159,907.85
Including: Property and
290,438,286.76 286,522,635.64
building
Land use right 5,146,417.33 4,637,272.21
4. Provision for impairment
loss
Including: Property and
Item Opening balance Increase Decrease Closing balance
building
Land use right
5. Carrying amount 295,584,704.09 —— —— 291,159,907.85
Including: Property and
290,438,286.76 286,522,635.64
building —— ——
Land use right 5,146,417.33 —— —— 4,637,272.21
(2)The increased cost of property and building during the current period was due to the investment
property transferred from inventories under leasing and fixed assets.
(3)The investment properties with restricted ownership, refers to Note V-16.
(4)The real estate held for sales at period-end:
Estimated disposal
Item Carrying amount Fair value Disposal time
cost
Shop in Danshui 2,563,426.76 10,721,620.00 761,000.00 Jun. 2012
Wuye City
Note 1: Shop in Danshui Wuye City include: 62 shops in 1st floor, 32 shops in 2nd floor, No. 2
warehouse and No.4 warehouse.
Note 2: The real estate held for sales is the assets which will be replaced according the Assest
Replacement Agreement signed with Shenzhen Investment Holdings.
11. Fixed assets
(1) Details:
Item Opening balance Increase Decrease Closing balance
1. Cost 168,185,950.57 3,579,070.98 7,378,829.26 164,386,192.29
Including: Property and buildings 112,285,030.62 6,845,740.26 105,439,290.36
Machineries 43,692.42 43,692.42
Vehicles 40,054,809.65 1,338,853.00 272,000.00 41,121,662.65
Electronic and other equipment 11,554,007.29 1,795,217.98 261,089.00 13,088,136.27
Decoration 4,248,410.59 445,000.00 4,693,410.59
2. Depreciation 89,997,487.90 12,233,336.60 2,931,887.76 99,298,936.74
Including: Property and buildings 59,243,826.44 3,613,185.07 2,427,707.13 60,429,304.38
Machineries 33,422.69 3,649.36 37,072.05
Vehicles 18,787,733.63 7,297,249.01 258,400.00 25,826,582.64
Electronic and other equipment 7,990,331.66 1,190,132.41 245,780.63 8,934,683.44
Decoration 3,942,173.48 129,120.75 4,071,294.23
3. The net book value 78,188,462.67 65,087,255.55
Including: Property and buildings 53,041,204.18 45,009,985.98
Machineries 10,269.73 6,620.37
Vehicles 21,267,076.02 15,295,080.01
Electronic and other equipment 3,563,675.63 4,153,452.83
Decoration 306,237.11 622,116.36
4. Provision for impairment loss 75,717.16 75,717.16
Item Opening balance Increase Decrease Closing balance
Including: Property and buildings
Machineries
Vehicles
Electronic and other equipment 75,717.16 75,717.16
Decoration
5. Carrying amount 78,112,745.51 —— —— 65,011,538.39
Including: Property and buildings 53,041,204.18 —— —— 45,009,985.98
Machineries 10,269.73 —— —— 6,620.37
Vehicles 21,267,076.02 —— —— 15,295,080.01
Electronic and other equipment 3,487,958.47 —— —— 4,077,735.67
Decoration 306,237.11 —— —— 622,116.36
Note 1: Amount of accumulated depreciation is RMB 12,233,336.60 in current fiscal year.
Note 2: The decrease of property and building during the current period was due to the investment
property transferred from fixed assets under leasing.
(2) Details of temporarily idle fixed assets are as follows:
Accumulated Expected date for
Categories Cost Impairment loss Carrying amount
depreciation put into usage
Property and
buildings 10,437,480.46 1,956,145.28 8,481,335.18
Total 10,437,480.46 1,956,145.28 8,481,335.18
Note: The temporarily idle property and buildings included the fixed assets held for sales.
(3)The fixed assets held for sales:
Estimated disposal
Item Carrying amount Fair value Disposal time
cost
Shop in Danshui 4,357,131.16 15,357,630.00 1,090,000.00 2012年6月
Wuye City
Note 1: Shop in Danshui Wuye City include: 34 shops in 1st floor, 145 shops in 2nd floor and No. 3
warehouse.
Note 2: The fixed assets held for sales are the assets which will be replaced according the Assest
Replacement Agreement signed with Shenzhen Investment Holdings.
12. Intangible assets
Decreas
Item Opening balance Increase Closing balance
e
1. Cost 146,986,146.80 146,986,146.80
-Operating license plate for taxi 146,986,146.80 146,986,146.80
2. Accumulated amortization 40,422,480.88 6,522,801.77 46,945,282.65
-Operating license plate for taxi 40,422,480.88 6,522,801.77 46,945,282.65
Decreas
Item Opening balance Increase Closing balance
e
3. The net book value 106,563,665.92 100,040,864.15
-Operating license plate for taxi 106,563,665.92 100,040,864.15
4. Provision for impairment loss
-Operating license plate for taxi
5. Carrying amount 106,563,665.92 —— —— 100,040,864.15
-Operating license plate for taxi 106,563,665.92 —— —— 100,040,864.15
Note 1: Accumulated amortization is RMB 6,522,801.77 in current year.
Note 2: The intangible assets with restricted ownership, referring to Note V -16.
13. Deferred tax assets and liabilities
(1) Recognized deferred tax assets and liabilities
Item Closing balance Opening balance
I. Deferred tax assets
Provision for impairment loss 378,187.84 26,972.53
Accrued land VAT 105,073,836.93 38,588,791.11
Accrued unpaid dismiss welfare 32,314.75
Deductible loss 6,392,371.80 731,982.32
Transferred employee education fee pay deductible in the following 4,878.12 141.24
year
Transferred advertisement fee deductible in the following year 206,936.50
Unrealized internal sales gain and loss 2,662,855.97 1,952,088.51
Estimated profit calculated at pre-sale revenue of property enterprises 9,350,820.50 41,909,673.60
Subtotal 124,102,202.41 83,209,649.31
II. Deferred tax liabilities
Change of transactional financial asset fair value 807.48
Subtotal 807.48
(2) Breakdown of taxable difference and deductible difference items:
Item Amount
Taxable difference item:
None
Deductible difference item:
Assets provision for impairment 1,512,751.31
Withdrawn land VAT pay in advance 420,295,347.70
Deductible loss 25,569,487.18
Transferred employee education fee pay deductible in the
following year 827,746.00
Transferred advertisement fee deductible in the following
year 19,512.47
Accrued unpaid dismiss welfare 129,259.00
Item Amount
Estimated profit calculated at pre-sale revenue of property 37,403,282.01
enterprises
Unrealized internal sales gain and loss 10,651,423.89
Subtotal 496,408,809.56
14. Other non-current assets
Item Closing balance Opening balance
Entrustment loan 9,000,000.00
Total 9,000,000.00
Note: The entrustment loan was that Shenzhen ITC Property Management Co., Ltd., the Company’s
subsidiary, entrusted Shenzhen Branch of Ping An Bank to provide credit loan for Shenxin Taxi Co.,
Ltd., for details, please refer to Note (VI) 6 (3).
15. Provision for impairment loss
Decrease in current year
Provision
Opening Foreign Closing
Item increased in Written
balance Reversal currencies balance
current year off
effects
I. Provision for
154,942,902.41 23,018,982.57 842,092.26 617,856.00 176,501,936.72
bad debt
Including:
Accounts 52,048,002.64 1,498,511.24 840,970.26 52,705,543.62
receivable
Other receivables 102,894,899.77 21,520,471.33 1,122.00 617,856.00 123,796,393.10
II. Provision for
impairment of 38,452,594.70 205,351.48 1,208,307.64 37,449,638.54
inventories
III. Provision for
impairment of
56,720,734.82 210,543.66 56,510,191.16
long-term equity
investments
VI. Provision for
impairment of 75,717.16 75,717.16
fixed assets
Total 250,191,949.09 23,224,334.05 842,092.26 2,036,707.30 270,537,483.58
16. Assets with restriction on ownership
(1)The reason for restriction on ownership
A. The subsidiary of the Company, Shenzhen ITC Vehicles Services Company, mortgaged 35 property
certificates of operating vehicle plate with a term of 50 years for a long-term bank loan RMB
15,000,000.00 from Shenzhen Shangbu Sub-branch of Shenzhen Development Bank, the accumulated
granted loan amounted to RMB 11,000,000.00, of which the granted loan for the year was RMB
11,000,000.00; and the closing balance was RMB 11,000,000.00, of which RMB 3,666,666.68 would
be due with one year.
B. The subsidiary of the Company, Shenzhen Huangcheng Real Estate Company Limited, uses three
floors of District A of Shenzhen ITC Building and Building 4-01 as the mortgage to gain a long-term
borrowings of RMB 240,000,000.00, the accumulated granted loan amounted to RMB 240,000,000.00,
of which the granted loan for the year was RMB 40,000,000.00; and the closing balance was RMB
240,000,000.00, of which RMB 40,000,000.00 would be included in the short-term borrowings, while
RMB 200,000,000.00 would be due within one year and included in the non-current liabilities due
within one year.
collateral to receive a 240,000,000 RMB long-term bank loan, and the closing balance was RMB
200,000,000.00.
C. The Company’s subsidiary—Shenzhen Tianque Elevator Technology Co., Ltd. gained a short-term
borrowings of RMB 30 million from East Shenzhen Sub-branch of Agricultural Bank of China by
mortgaging its B20, 16/F, Block B of Shenzhen International Trade Center Plaza located at Renmin
South Road, Luohu District, Shenzhen and with the Company as the guarantor, the loan granted in
current year amounted to RMB 30 million and the closing balance stood at RMB 30 million.
(2)Details of the assets with restriction on ownership are as follows:
Categories Opening balance Increase Decrease Closing balance
Assets used in guarantee:
1. The newly increased assets
used for guarantee
Intangible asset - operating license
7,824,258.18 227,891.03 7,596,367.15
plate
Investment real estate- property and
3,123,656.96 284,565.60 2,839,091.36
building
Subtotal 10,947,915.14 512,456.63 10,435,458.51
2. The assets released from
guarantee in the year
Intangible asset - operating license
34,097,886.44 3,616,666.66 30,481,219.78
plate
Inventories- development costs 315,751,715.18 81,546,555.63 397,298,270.81
Subtotal 349,849,601.62 81,546,555.63 3,616,666.66 427,779,490.59
3. Assets used for guarantee
continuously
Investment real estate- property and
4,613,658.96 895,423.08 3,718,235.88
building
Subtotal 4,613,658.96 895,423.08 3,718,235.88
The total book value of guaranteed
354,463,260.58 —— —— 14,153,694.39
assets
17. Short -term borrowings
(1) Short -term borrowings listed by categories
Categories Closing balance Opening balance
Credit loan 490,000,000.00 10,000,000.00
Guaranteed loan 41,495,212.00
Mortgage loan 70,000,000.00
Total 601,495,212.00 10,000,000.00
(2) Details of short-term borrowings
Closing balance Opening balance
Interes Foreig Foreig
Loan Beginning Ending Currenc
t rate n n
providing unit date date y RMB RMB
(%) curren curren
cy cy
Shenzhen 26 Jan. 26 Jan. RMB 5.54 —— 200,000,000.00 ——
Jingtian 2011 2012
Sub-branch of
China
Everbright
Bank
Shenzhen 29 Mar. 29 Mar. RMB 5.78 —— 250,000,000.00 ——
Jingtian 2011 2012
Sub-branch of
China
Everbright
Bank
East 6 Apr. 13 Mar. RMB 6.31 —— 40,000,000.00 ——
Shenzhen 2011 2012
Sub-branch of
Agricultural
Bank of
China
Guangzhou 29 Dec. 29 Dec. RMB Note 1 —— 20,000,000.00 ——
Haizhu 2011 2012
Sub-branch of
Bank of
Communicati
ons
Shenzhen 25 Apr. 10 Mar. RMB 6.40 —— 6,478,450.00 ——
Hongbao 2011 2012
Sub-branch of
Ping An Bank
Shenzhen 12 May 10 Mar. RMB 6.40 —— 3,618,000.00 ——
Closing balance Opening balance
Interes Foreig Foreig
Loan Beginning Ending Currenc
t rate n n
providing unit date date y RMB RMB
(%) curren curren
cy cy
Hongbao 2011 2012
Sub-branch of
Ping An Bank
Shenzhen 8 May 10 Mar. RMB 7.57 —— 2,340,000.00 ——
Hongbao 2011 2012
Sub-branch of
Ping An Bank
Shenzhen 25 Aug. 10 Mar. RMB 7.57 —— 5,258,762.00 ——
Hongbao 2011 2012
Sub-branch of
Ping An Bank
Shenzhen 12 Oct. 10 Mar. RMB 7.54 —— 3,800,000.00 ——
Hongbao 2011 2012
Sub-branch of
Ping An Bank
Shenzhen 29 Mar. 29 Mar. RMB 5.54 —— 40,000,000.00 ——
Jingtian 2011 2012
Sub-branch of
China
Everbright
Bank
Shenzhen 28 Dec. 28 Dec. RMB 5.54 —— 10,000,000.00
Jingtian 2010 2011
Sub-branch of
China
Everbright
Bank
East 13 Oct. 12 Oct. RMB Note 2 —— 15,000,000.00 ——
Shenzhen 2011 2012
Sub-branch of
Agricultural
Bank of
China
East 20 Oct. 12 Oct. RMB Note 2 —— 15,000,000.00 ——
Shenzhen 2011 2012
Sub-branch of
Agricultural
Bank of
China
Closing balance Opening balance
Interes Foreig Foreig
Loan Beginning Ending Currenc
t rate n n
providing unit date date y RMB RMB
(%) curren curren
cy cy
Total —— —— 601,495,212.00 —— 10,000,000.00
Note 1: Floating up by 20% basing the benchmark interest at the same period and level published by
People’s Bank of China.
Note 1: Floating up by 30% basing the benchmark interest at the same period and level published by
People’s Bank of China.
(3) No short-term borrowing was unpaid upon the expiry date.
(4) For details of significant borrowings and repayment after balance sheet date, please refer to Note
(VIII).
(5) For details of the short-term borrowings due to shareholders with more than 5% (including 5%) of
the voting shares of the Company, please refer to Note (VI) 6 (2).
(6) There were no short-term borrowings due to other related parties.
18. Trade payable
（1）Trade payable details
Item Closing balance Opening balance
Amount 187,083,147.42 105,465,038.93
Note 1: Trade payable over 1 year is mainly comprised of payables for construction works and
project quality guarantees.
(2) For details about the amount due to shareholders with more than 5% (including 5%) of the voting
shares of the Company in trade payable, please refer to Note (VI) 7.
(3) There was no trade payable due to other related parties.
19. Advance from customers
（1）Advance from customers details:
Item Closing balance Opening balance
Amount 208,655,909.41 878,660,737.46
(2) Details of advance from customers on main projects of properties for sale are as follows:
Estimated date of
Item Aging Closing balance Opening balance completion
Huangcheng Plaza 3-4 years 2,176,421.15 2,176,421.15 Completion
Huangyu Garden
District A 3-5 years 846,495.63 846,495.63 Completion
Huangyu Garden 3-5 years 218,413.26 218,413.26 Completion
District B
Fengrun Garden Over 5 years 70,638.00 70,638.00 Completion
Shenwuye-Xinhua
City Within 1 year 787,759.00 1,550,000.00 Completion
Shenwuye-Shengang
No.1 Within 1 year 981,344.00 869,876,870.00 Completion
Shenwuye-Langqiao
Garden Within 1 year 182,793,736.00
Shenwuye-Cai Tian
Yi Se Within 1 year 13,912,411.00
Total 201,787,218.04 874,738,838.04
Note: Advances from customers with the aging over 1 year is due to the terms of revenue
reorganization having not been satisfied.
(3)There was no amount due to shareholders with more than 5% (including 5%) of the voting shares of
the Company and other related parties in advance from customers.
20. Payroll payable
Opening Closing
Categories Increase Decrease
balance balance
I. Salary, bonus, allowance, subsidies 32,665,922.45 170,371,146.86 164,351,954.77 38,685,114.54
II. Employee welfare 9,574,970.64 9,574,970.64
III. Social insurance -16,300.21 16,981,765.53 16,881,467.43 83,997.89
Including: 1. Medical insurance -4,817.41 3,109,369.78 3,071,461.43 33,090.94
2. Basic retirement insurance -17,395.04 8,971,209.98 8,920,632.34 33,182.60
3. Annuity fee 3,989,998.24 3,987,478.24 2,520.00
4. Unemployment insurance 3,378.43 277,066.35 271,756.59 8,688.19
5. Injury insurance 1,351.36 310,601.09 308,477.15 3,475.30
6. Pregnancy insurance 1,182.45 272,133.62 270,275.21 3,040.86
7. Other social insurance 51,386.47 51,386.47
IV. Public housing fund 13,059,075.76 5,060,437.76 16,744,580.01 1,374,933.51
V. Labor union fee and employee
3,062,191.56
education fee 4,687,339.36 4,010,286.97 3,739,243.95
VI. Redemption for termination s of 5,046,515.80 -1,434,560.00 2,482,123.00 1,129,832.80
labor contract
Total 53,817,405.36 205,241,100.15 214,045,382.82 45,013,122.69
21. Taxes payable
Categories Closing balance Opening balance
1.VAT -10,022.86 56,624.81
2. Business tax 4,916,404.87 3,375,734.58
3. Income tax 71,055,532.78 30,732,401.20
Categories Closing balance Opening balance
4. Stamp tax -10,903.55 -9,805.53
5. Education surtax 152,624.52 105,068.39
6. Local education surtax 60,912.96
7. Land value appreciation tax 421,667,014.45 159,797,764.26
8. Urban maintenance and construction tax 331,213.78 218,743.52
9. Property tax 901,798.66 909,138.25
10. Individual income tax 334,644.47 393,918.78
10. Embankment maintenance fee 23,510.98 2,842.64
19. Others 7,655.37 2,749.97
Total 499,430,386.43 195,585,180.87
22. Other payables
(1) Other payables details
Item Closing balance Opening balance
Total 479,430,681.58 229,549,997.54
(2) For details about the amount due to shareholders with more than 5% (including 5%) of the voting
shares of the Company in other payables, please refer to Note (VI) 7.
(3) Top five units on other payables
Item Amount Nature or content
Shenzhen Investment Holdings Co., Profits and losses from the account of the Moon Bay Land
271,065,981.63
Ltd. and the swap-out assets in assets swap
Accrued Land value appreciation
56,303,627.40 Accrued Land value appreciation tax
tax
HaiNan Yirun Real Estate Co., Ltd 41,802,200.14 Receipts under custody
Rent deposits 28,150,144.86 Deposits
Shenzhen Jifa Warehouse Co., Ltd 15,545,808.00 Current account
Total 412,867,762.03
(4) For details about the other payables due to other related parties, please refer to Note (VI) 7.
23. Non-current liabilities due within 1 year
(1) Details:
Item Closing balance Opening balance
Long-term borrowings 215,666,666.68 250,960,000.00
To be transferred income from renting operating
license plate 1,293,221.64
To be transferred income from renting Shenzhen
ITC Petroleum Co., Ltd 1,400,000.00
Total 218,359,888.32 250,960,000.00
(2) Long-term borrowings due within 1 year:
Item Closing balance Opening balance
Guaranteed borrowings 12,000,000.00 243,000,000.00
Mortgage borrowings 200,000,000.00
Pledge borrowings 3,666,666.68 7,960,000.00
Total 215,666,666.68 250,960,000.00
No long-term borrowings due within 1 year overdue for the period.
Particulars on long-term borrowings due within 1 year
Closing balance Opening balance
Inter
Foreig Foreig
Loan providing Beginning Ending Currenc est
n n
unit date date y rate RMB RMB
curren curren
(%)
cy cy
East Shenzhen 31 Mar. 30 Mar. RMB Note —— 200,000,000.00
Sub-branch of 2009 2012
Agricultural
Bank of China
East Shenzhen 26 Oct. 25 Oct. RMB Note —— 43,000,000.00
Sub-branch of 2009 2011
Agricultural
Bank of China
East Shenzhen 27 Jan. 25 Oct. RMB Note —— 100,000,000.00
Sub-branch of 2010 2011
Agricultural
Bank of China
East Shenzhen 3 Feb. 26 Oct. RMB Note —— 100,000,000.00
Sub-branch of 2010 2011
Agricultural
Bank of China
Central 8 Dec. 8 Dec. RMB 5.76 —— 7,960,000.00
Business 2008 2011
Sub-branch of
Ping An Bank
Shenzhen 10 Mar. 10 Mar. RMB 5.40 —— 12,000,000.00
Branch of Ping 2010 2012
An Bank
Shenzhen 23 Nov. 23 Nov. RMB 7.32 —— 3,666,666.68
Shangbu 2011 2012
Sub-branch of
Shenzhen
Development
Closing balance Opening balance
Inter
Foreig Foreig
Loan providing Beginning Ending Currenc est
n n
unit date date y rate RMB RMB
curren curren
(%)
cy cy
Bank
Total —— 215,666,666.68 —— 250,960,000.00
Floating down by 10% basing the benchmark interest at the same period and level published by
People’s Bank of China.
For details of significant borrowings and repayment after balance sheet date, please refer to Note
(VIII).
24. Long-term borrowings
(1) Classification:
Borrowing terms Closing balance Opening balance
Mortgage borrowings 212,000,000.00
Pledge borrowings 7,333,333.32
Total 7,333,333.32 212,000,000.00
(2) Details:
Closing balance Opening balance
Intere Fore Forei
Beginning Ending Currenc
Loan providing unit st rate ign gn
date date y RMB RMB
(%) curr curre
ency ncy
Shenzhen Shangbu 23 Nov. 23 Nov. RMB 7.32 —— 7,333,333.32
Sub-branch of 2011 2014
Shenzhen
Development Bank
East Shenzhen 31 Mar. 30 Mar. RMB Note —— 200,000,000.00
Sub-branch of 2009 2012
Agricultural Bank
of China
East Shenzhen 10 Mar. 10 Mar. RMB 5.4 —— 12,000,000.00
Sub-branch of 2010 2012
Agricultural Bank
of China
Total —— 7,333,333.32 —— 212,000,000.00
Floating down by 10% basing the benchmark interest at the same period and level published by
People’s Bank of China.
(3) No long-term borrowings overdue for the period.
(4) For details of significant borrowings and repayment after balance sheet date, please refer to Note
(VIII).
25. Other non-current liabilities
Item Closing balance Opening balance
1. Utility specific fund 9,676,157.29 7,958,418.62
2. Housing principle fund 13,339,582.42 10,772,085.75
3. House warming deposit 7,806,572.95 8,372,874.11
4. Electric Equipment Maintenance fund 4,069,140.20 4,019,415.44
5. Deputed Maintenance fund 27,646,929.23 26,952,949.71
6. Taxi Deposit 32,010,000.00 28,190,000.00
7. To be transferred income from renting
operating license plate 12,682,289.97 15,268,733.25
8. To be transferred income from renting
Shenzhen ITC Petroleum Co., Ltd 14,470,000.00
9. Others 660,000.38
Total 121,700,672.06 102,194,477.26
Note: ―Others‖ is borrowing of Shenzhen ITC Vehicle Industry Co., Ltd., Shenzhen ITC Car Rental Co.,
Ltd. due to the drivers.
26. Paid-in capital
Unit: (0’000) shares
Before Increase/Decrease (+/-) After
Iss
ui B
Reserve
ng on
Proporti s Propor
Item Quantity ne us
on transferr Others Subtotal Quantity tion
(0’000) w sh
(%) ed to (%)
sh ar
shares
ar es
es
I. Shares subject to
38,864.06 65.21 -542.15 -542.15 38,321.91 64.30
trading moratorium
1. Shares held by the
State
2. Share held by
state-owned 38,250.94 64.18 -222.20 -222.20 38,028.74 63.81
corporation
3. Shares held by other
613.12 1.03 -319.95 -319.95 293.17 0.49
domestic investors
Before Increase/Decrease (+/-) After
Iss
ui B
Reserve
ng on
Proporti s Propor
Item Quantity ne us
on transferr Others Subtotal Quantity tion
(0’000) w sh
(%) ed to (%)
sh ar
shares
ar es
es
Including
Shares held by
559.92 0.94 -319.55 -319.55 240.37 0.40
domestic legal persons
Shares held by
53.20 0.09 -0.40 -0.40 52.80 0.09
domestic natural person
4. Shares held by
foreign investors
Including
Shares held by overseas
legal persons
Shares held by overseas
natural person
II. Shares not subject to
20,733.85 34.79 542.15 542.15 21,276.00 35.70
trading moratorium
1. RMB ordinary shares 13,973.73 23.45 541.74 541.74 14,515.47 24.36
2. Domestically listed
6,760.12 11.34 0.41 0.41 6,760.53 11.34
foreign shares
3. Overseas listed
foreign shares
4. Others
III. Total shares 59,597.91 100.00 59,597.91 100.00
27. Capital surplus
Decreas
Item Opening balance Increase Closing balance
e
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 25,332,931.52 25,332,931.52
losses in shareholders' equity of the investee under
equity method
Total 64,020,275.72 64,020,275.72
28. Surplus reserves
Item Opening balance Increase Decrease Closing balance
Statutory surplus 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 owners’ equities of 257,461,077.54
the Company
Less: the statutory surplus reserves
Ordinary stock dividends payable
Ordinary dividend from shares transferred to
share capital
Retained earnings at the end of the year 406,422,741.94
30. Revenue and Cost of Sales
(1) Revenue and Cost of Sales
Item 2011 2010
Revenue from main operations 1,377,581,701.71 966,145,989.88
Revenue from other operations 30,983,605.61 27,029,360.50
Total Revenue 1,408,565,307.32 993,175,350.38
Cost of sales 563,184,206.93 673,496,987.55
Note: Revenue in 2011 increased by 41.82% than that in 2010, mainly due to the revenue of
Shenwuye- Shengang No. 1 project recognized in this period is more than that of Shenwuye- Xinhua
City project, and the property management areas and the leasing areas are more than that of 2010; Cost
of sales in 2011 decreased 16.38% than that in 2010, mainly because the margin profit of Shenwuye-
Shengang No. 1 project is more than that of Shenwuye- Xinhua City project.
（2）Main Business (by industry)
2011 2010
Categories
Revenue Cost of sales Revenue Cost of sales
Sale of properties 1,039,983,994.06 283,518,049.86 690,303,822.33 446,538,955.54
Property rental and 246,969,986.05 223,709,240.98 190,707,764.42 173,327,651.93
management services income
Transportation services 54,490,052.27 27,010,972.35 50,748,337.82 26,879,010.86
Hotel and restaurant 22,254,535.68 17,990,260.81 20,146,558.50 18,204,518.95
operations
Others 13,883,133.65 3,562,305.87 14,239,506.81 3,892,624.33
2011 2010
Categories
Revenue Cost of sales Revenue Cost of sales
Other 1,377,581,701.71 555,790,829.87 966,145,989.88 668,842,761.61
Note: ―Others‖ is comprised of engineering supervision income, elevator maintenance income and
car repair income.
31. Business taxes and surcharges
Item 2011 2010 Base of payment
Business tax 70,734,667.93 49,645,456.08
Urban maintenance and
2,846,281.79 804,792.75
construction tax
Additional education Fees 2,098,652.60 1,508,811.25
Local additional education For details, please refer to
477,142.09
fees Note（III）1
Land value added tax 266,319,269.78 30,527,472.92
Property tax 2,663,246.52
Levee fee 63,820.50 148,063.00
Others 26,312.08 14,921.32
Total 345,229,393.29 82,649,517.32
Note: Business taxes and surcharges in 2011 increased by 317.70% than that in 2010, which mainly
because the value added rate of Shenwuye- Shengang No. 1 project is higher, causing the land value
added tax higher than that of Shenwuye- Xinhua City project.
32. Distribution Expenses
Item 2011 2010
Remuneration for staffs 2,247,819.53 1,590,747.93
Expense of sale institution 3,314,675.51 4,277,179.08
Sales agent charges, advertising expense and 23,881,333.13 5,511,724.30
promotion expenses
Others 3,348,457.99 3,576,658.05
Total 32,792,286.16 14,956,309.36
Note: The sales expense increased by 119.25% on a year on year base, which was mainly caused by the
increase of advertisement input.
33. Administrative expenses
Item 2011 2010
Remuneration for staffs 49,549,219.52 47,888,454.72
Administrative expenses 22,693,152.51 19,156,231.97
Asset amortization and depreciation expense 5,435,662.55 5,292,645.03
Lawsuit fee 3,273,700.30 5,443,162.24
Taxation expenses 1,528,340.69 4,877,706.52
Item 2011 2010
Others 9,812,832.07 9,984,637.95
Total 92,292,907.64 92,642,838.43
34. Financial costs
Item 2011 2010
Interest expense 15,085,668.86 2,332,153.81
Less: Interest income 3,737,256.12 5,219,447.80
Exchange loss, net -301,011.16 -300,147.23
Others 1,071,854.15 374,191.00
Total 12,119,255.73 -2,813,250.22
Note: Financial costs in 2011 increased substantially than that in 2010, which was mainly from the
bank loan not qualified for capitalization..
35. Impairment loss
Item 2011 2010
1. Bad debt 22,184,648.69 -826,293.45
2. Depreciation of inventory 79,500.00 -58,537,275.70
Total 22,264,148.69 -59,363,569.15
Note: The bad debt losses in 2011 increased substantially than that in 2010, which is mainly because
more bad debt provision was withdrawn due to the change in the recognition basis for the risk portfolio
of trade payables and the withdrawal method for bad debt provision, for details, please refer to Note (II)
27（２）．
36. Gain/loss on change in fair value
Source 2011 2010
Trading financial assets -3,364.50 39,900.00
Total -3,364.50 39,900.00
37. Gain/loss on investment
The source of gain/loss on investment: 2011 2010
1. Gain on investment under equity method -286,648.25 1,692,778.22
2. Gain on investment from disposal of long-term
1,539,906.36
equity investment
3. Gain on investment from disposal of trading financial
240,074.81
assets
4. Gain on investment from holding financial assets 3,364.50
5. Interest income from entrustment loan 351,962.50
Total 308,753.56 3,232,684.58
38. Non-operating income
Amount of
Item 2011 2010 non-recurring gain and
loss included in 2011
1. Income from disposal of non-current
1,380.00 2,181,341.85 1,380.00
assets
Including: Disposal of fixed assets 1,380.00 350,649.31 1,380.00
2．Others 1,283,320.35 7,120,255.64 1,283,320.35
including: Debts unneeded to pay 547,761.66 3,588,380.82 547,761.66
Income from Forfeit 563,261.97 2,823,460.36 563,261.97
Income from compensation 44,481.26 261,118.40 44,481.26
Total 1,284,700.35 9,301,597.49 1,284,700.35
39. Non-operating expense
Amount of
Item 2011 2010 non-recurring gain and
loss included in 2011
1. Loss on disposal of non-current
28,235.97 54,321.72 28,235.97
assets
Including: Disposal of fixed assets 28,235.97 54,321.72 28,235.97
2. Public welfare donations 25,000.00
3. Tax late fee and forfeit 133,502.29 52,355.46 133,502.29
4. Estimated liability -3,533,281.90
5. Others 2,608,055.41 422,562.18 2,608,055.41
Including: Compensation for Peace
2,400,000.00 2,400,000.00
Hotel
Total 2,769,793.67 -2,979,042.54 2,769,793.67
40. Income tax expense
Item 2011 2010
Income tax for the current period according tax law
and relevant regulations 122,935,687.67 63,674,547.72
Plus: Deferred income tax expense ( "-"for gain) -40,893,360.59 -31,513,340.81
Income tax expense 82,042,327.08 32,161,206.91
41. Earnings per share
Item 2011 2010
Basic Earnings Per Share 0.43 0.29
Diluted Earnings Per Share 0.43 0.29
Calculation of earnings per share is as following:
Basic Earnings Per Share＝257,461,077.54÷595,979,092.00＝0.43
Diluted Earnings Per Share＝257,461,077.54÷595,979,092.00＝0.43
Recalculation of earnings per share of last year is as following
Basic Earnings Per Share＝174,998,534.79÷595,979,092.00＝0.29
Diluted Earnings Per Share＝174,998,534.79÷595,979,092.00＝0.29
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.
S represents the weighted average number of ordinary shares outstanding during the period. S0
represents the number of ordinary shares at the beginning of the period. S1 represents the number of
additional ordinary shares issued on capital surplus transfer or share dividends appropriation; Si
represents the number of ordinary shares issued in exchange for cash or issued as a result of the
conversion of a debt instrument to ordinary shares during the period. Sj represents reduced number of
ordinary shares such as shares buy back. Sk represents the number of a reverse share split. Mo
represents the months during the period. Mi represents the months from the following month after
issuing incremental shares to the end of the period. Mj represents the months from the following month
after reducing shares to the end of the period.
B．Diluted Earnings Per Share =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 2011 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
Item 2011 2010
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 -1,402,825.50 -942,810.23
Less: Net amount of disposal of foreign operations that is transferred into profit
and loss in the current period
Sub-total -1,402,825.50 -942,810.23
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 -1,402,825.50 -942,810.23
43. Relevant information about cash flow statement
(1) Other cash received from operating activities
Item Amount
Other cash received from operating activities 35,961,542.62
Including: Net margins, security deposits and various special funds, etc.
15,710,187.43
received .
Compensation received for Pinghu land 3,555,139.88
（2）Other cash paid relating to operating activities
Item Amount
Other cash paid relating to operating activities 76,407,064.90
Including: Paying administration expenses in cash 35,242,796.65
Paying sales expenses in cash 26,522,066.54
Paying compensation for Peace Hotel 1,498,615.47
(3) Other cash paid relating to financing activities
Item Amount
Other cash paid relating to financing activities 1,396,200.00
Including: handling charges for large amount of borrowings 1,396,200.00
(4) Supplementary information of cash flow statement
Supplementary information 2011 2010
1. Adjustment from net profit to cash flows from operating activities
Net profit 257,461,077.54 174,998,534.79
Plus: Provision for impairment of assets 22,264,148.69 -59,363,569.15
Depreciation of fixed assets, Oil-gas assets and Productive 28,504,256.33 28,113,363.64
biological assets
Amortization of intangible assets 6,522,801.77 6,517,660.69
Amortization of long-term deferred expense 172,976.80 221,211.29
Loss on disposal of fixed assets, intangible assets and other non-current 26,855.97 -2,127,020.13
assets(―-‖ for gain)
Loss on fixed assets retirement (―-‖ for gain)
Loss on change in fair value(―-‖ for gain) 3,364.50 -39,900.00
Financial costs(―-‖ for gain) 16,429,884.39 33,944,870.52
Loss on investment(―-‖ for gain) 43,208.94 -3,232,684.58
Decrease of deferred tax assets(―-‖ for increase) -40,892,553.10 -31,514,148.29
Increase of deferred tax liabilities(―-‖ for decrease) -807.48 807.48
Decrease of inventory(―-‖ for increase) -209,544,392.69 -317,023,344.48
Decrease in operating receivables(―-‖ for increase) -418,499,491.53 8,668,684.14
Increase in operating payables(―-‖ for decrease) -23,958,917.83 59,057,063.44
Others
Net cash flow from operating activities -361,467,587.70 -101,778,470.64
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 463,775,328.93 534,418,695.36
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 -70,643,366.43 -295,636,892.89
(5) Cash and cash equivalents:
Item 2011 2010
I. Cash 463,775,328.93 534,418,695.36
Including: Cash on hand 276,688.67 184,769.91
Bank deposit on demand 458,951,974.48 529,017,318.87
Item 2011 2010
Other monetary assets on demand 4,546,665.78 5,216,606.58
II. Cash and cash equivalents at the end of the period 463,775,328.93 534,418,695.36
Including: Restricted Cash and cash equivalents held by parent company or
subsidiaries
44. Segment part
Property rental and management
Sale of properties Transportation Hotel and restaurant operations
Item services
2011 2010 2011 2010 2011 2010 2011 2010
I. Revenue 1,039,983,994.06 690,303,822.33 254,805,604.74 196,953,261.96 54,490,052.27 50,748,337.82 23,958,048.68 21,155,158.50
Including: External
1,039,983,994.06 690,303,822.33 246,969,986.05 190,707,764.42 54,490,052.27 50,748,337.82 22,254,535.68 20,146,558.50
revenue
Revenue from
7,835,618.69 6,245,497.54 1,703,513.00 1,008,600.00
segments
II. Cost 659,983,376.30 542,319,044.18 300,560,715.75 253,463,719.51 46,201,732.03 41,043,471.00 23,311,741.19 21,816,535.27
III. Operating profit 380,000,617.76 147,984,778.15 -45,755,111.01 -56,510,457.55 8,288,320.24 9,704,866.82 646,307.49 -661,376.77
IV. Total assets 1,969,580,852.56 1,676,008,580.41 876,074,761.72 611,338,154.21 167,360,861.89 166,441,206.55 3,730,596.67 3,962,638.27
V. Total liabilities 1,736,424,184.25 1,422,716,460.40 597,756,844.23 441,501,680.14 14,626,682.98 78,292,534.31 3,349,087.06 3,054,957.70
Others Elimination Total
Item
2011 2010 2011 2010 2011 2010
I. Revenue 52,753,804.73 49,121,418.32 -17,426,197.16 -15,106,648.55 1,408,565,307.32 993,175,350.38
Including: External revenue 44,866,739.26 41,268,867.31 1,408,565,307.32 993,175,350.38
Revenue from segments 7,887,065.47 7,852,551.01 -17,426,197.16 -15,106,648.55
II. Cost 52,987,975.99 29,828,911.07 -37,427,491.51 -27,539,278.59 1,045,618,049.75 860,932,402.44
III. Operating profit -234,171.26 19,292,507.25 20,001,294.35 12,432,630.04 362,947,257.57 132,242,947.94
IV. Total assets 2,961,248,137.91 2,204,139,788.15 -2,478,386,896.54 -1,748,609,013.75 3,499,608,314.21 2,913,281,353.84
V. Total liabilities 2,348,537,036.84 1,749,726,694.31 -2,332,191,482.13 -1,657,058,681.96 2,368,502,353.23 2,038,233,644.90
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
Co., Ltd. (state-owned) assets
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
63.81 63.81 Assets 767566421
Holdings Co.,
Ltd. Administration
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.
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) 2.
(2) Entrust loans of related parties
Unit: RMB ten thousand
Borrowin
Name of Name of Borrowin Borrowin Repaymen Interests
Annual g at the
the the g at the g in the t in the paid in the
Debtor interest end of the
entrusting entrusted beginning reporting reporting reporting
rate（%） reporting
party party of the year period period period
period
Jingtian Shenzhen 5.5439 1,000.00 1,000.00 56.21
Shenzhen Sub-branc ITC
Investmen
h of China Vehicles
t Holdings
Co., Ltd. Everbright Industry
Bank Co., Ltd.
Shenzhen
Jingtian Shenzhen 5.7767 4,000.00 4,000.00 171.38
Investmen
t Holdings
Sub-branc ITC
Co., Ltd.
h of China Vehicles
Everbright Industry
Bank Co., Ltd.
Jingtian 5.5386 25,000.00 25,000.00 1,265.42
Shenzhen
Shenzhen Sub-branc
Huangche
Investmen
h of China ng Real
t Holdings
Estate
Co., Ltd. Everbright
Co., Ltd
Bank
Jingtian 5.7767 20,000.00 20,000.00 856.88
Shenzhen
Shenzhen Sub-branc
Huangche
Investmen
h of China ng Real
t Holdings
Estate
Co., Ltd. Everbright
Co., Ltd
Bank
Total —— 1,000.00 49,000.00 1,000.00 49,000.00 2,349.89
(3) Entrust loan for related parties
Unit: RMB ten thousand
Borro
Repay
wing Borrowin
Borrowin ment Interests
Name of the Name of the Annual at the g at the
g in the in the paid in the
entrusting entrusted Debtor interest beginn end of the
reporting reporti reporting
party party rate（%） ing of reporting
period ng period
the period
period
year
Shenzhen Hongbao Shenzhen 6.40 900.00 900.00 35.20
ITC Property Sub-branch Shenxin Taxi
Management of Ping An Co., Ltd.
Co., Ltd. Bank
Total 900.00 900.00 35.20
The entrust loan belongs to credit loan, which is used for the operational turnover of Shenzhen
Shenxin Taxi Co., Ltd. with an annual interest rate of 6.40% and a term from 20 May 2011 to 20
May 2013. The said entrust loan has been reviewed and approved by the 32nd Session of the 6th
Board of Directors of the Company.
(4) Remuneration of key management
In this year the Company paid total RMB 6.0160 million (including IIT) to key management. The
Company paid RMB5.6644 million (including IIT) to key management in the previous year.
7. Receivables from and payables to related parties
Receivable from related parties
Closing balance Opening balance
Projects Name of the parties Book Bad debt Bad debt
Book balance
balance provision provision
Shenzhen ITC Tian’an Property
Other receivables 9,705,931.45 9,705,931.45 14,705,931.45
Co., Ltd
Anhui Nanpeng Papermaking
Other receivables 7,677,728.00 7,677,728.00 8,295,584.00 8,295,584.00
Co., Ltd
Shenzhen ITC Industrial
Other receivables Development Co., Ltd 2,551,652.48 2,551,652.48 2,551,652.48 2,551,652.48
Shenzhen Wufang Pottery &
Other receivables 1,747,264.25 1,747,264.25 1,747,264.25 1,747,264.25
Porcelain Industrial Co., Ltd
Other
non-current Shenzhen Shenxin Taxi Co., Ltd. 9,000,000.00
liabilities
Payable to related parties
Projects Name of the parties Closing balance Opening balance
Other payables Shenzhen Jifa Warehouse Co., Ltd. 15,545,808.00 12,148,556.00
Other payables Shenzhen Investment Holding Co., Ltd. 271,065,981.63 95,103.35
Trade payable Shenzhen Investment Holding Co., Ltd. 703,821.38 224,661.36
Short-term Shenzhen Investment Holding Co., Ltd. 490,000,000.00
Projects Name of the parties Closing balance Opening balance
borrowings
Note VII. Contingencies
1. Pending litigations
(1) In 1993, the Company signed Right of Development Transfer Contract of Jiabin Building
(name of Jiabin Building has been changed to Jinlihua Commercial Plaza) with Shenzhen Haibin
Property Development Co., Ltd. (name of which has been changed to Shenzhen Jiyong Property
Development Co., Ltd., hereinafter referred to as Jiyong Company). In January 1999, Jiyong
Company sued the company to Guangdong Higher People’s Court (hereinafter referred to as
―Guangdong Higher Court‖) for termination of the transfer contract and refund of the transfer
consideration and construction payment paid on the ground that the area of premises was in
discrepancy with the contract. With respect to this, the Company counterclaimed the opposing
party to pay back the rest transfer consideration and applied for sealing up their property with an
area of 28,000 square meters.
On July 29, 2001, Guangdong Higher Court issued Civil Court Judgment YGFM (1999) No. 3
(hereinafter referred to as Judgment No. 3) to judge that ① the Company should transfer the title
of land use right specified in the transfer contract to Jiyong Company within 30 days from the date
the judgment taking into effect and ②Jiyong Company should pay off the transfer consideration
amounting to RMB143, 860,000.00 within 60 days from the date the Company transferred the title
of land use right. On November 27, 2001, the Company applied to Guangdong Higher Court for
forcible execution, however Guangdong Higher Court adjudicated to release the sealing property
of Jiyong Company approximately 10,000 square meters since Industrial & Commercial Bank of
China Zhejiang Branch disagree to seal the properties.
In January 2006, Guangdong Higher Court issued Civil Court Judgment YGFZ (2002) No. 1 and
adjudicated because that ① the Company has not yet transferred the title of land use right
specified in the transfer contract to Jiyong Company and ② Jiyong Company cannot provide
other properties available for execution and the Company also cannot provide the property
available for execution, the second judgment of the Judgment No. 3 - ―Jiyong Company should
pay off the transfer consideration amounted RMB143,860,000 within 60 days from the date the
Company transferred the title of land use right‖ is terminated for execution. When the conditions
causing termination for execution of the second judgment are eliminated, the second judgment
should still be executed.
In March 2006, according to the ordain of Guangdong Higher People’s Court, the properties in
Jiabin Building that have been sealed up in this case have been released automatically. On
September 2009, company received YGFZ (2002) No. 1-1 Resume Execution Notice from
Guangdong Province Higher Court claimed to resume execution the case that the transfer money
owed by Jiyong company about Jiabin building project.
In October 2009, the Company received (Verdict YGFZ (2002) No. 1-2) from Guangdong Higher
Court. The verdict claimed: The resume execution of this case is according to the "The
requirements for the Guangdong Higher Court to concentrate the implementation of accumulated
cases" Through the investigation conducted by Guangdong Higher Court to Shenzhen department
of motor vehicles, Shenzhen Securities Registration and Settlement Organizations, Shenzhen
Land resources and real estate administration and the opening bank of the executed party, the
executed party – Jiyong Company does not have any executable property. For these, Guangdong
Higher Court adjudicated : ① Terminate the executive procedure of Verdict YGFZ (2002) No. 1;
② When the execution conditions are satisfied, the applicant can apply for resume execution.
No new essential progress occurred in the report period.
(2)In June 2004, Shenzhen Meisi Industrial Co., Ltd. (hereinafter referred to as ―Meisi Company‖)
prosecuted Shenzhen Luohu Economic Development Co., Ltd and the Company to Shenzhen
Intermediate People’s Court(hereinafter refered to as ―Shenzhen Intermediate Court‖) for illegal
use of land owned by Meisi Company and request for ceasing the infringing act and receiving a
compensation amounted RMB 8 million. In March 2005, Shenzhen Intermediate Court issued
Civil Ruling Paper SZFMCZ (2004) No. 108 and adjudicated that the Company should return the
land with an area of 4,782 square meters to Meisi Company within 3 months and other claims of
Meisi Company were overruled. The Company refused to accept the verdict and appealed to
Guangdong Higher Court. On November 25, 2005, Guangdong Higher Court adjudicated that the
Civil Ruling Paper SZFMCZ (2004) No. 108 issued by Shenzhen Intermediate Court should be
cancelled and the prosecution of Meisi Company were overruled.
During the process of trial of second instance, Meisi Company applied to Registration Center for
Property of Real Estate of Shenzhen Municipality for revoking Property Ownership Certificates
SFDZ No. 3000320987 and No. 300119899 owned by the Company. On July 7, 2005, Registration
Center for Property of Real Estate of Shenzhen Municipality issued the reply of SFDH (2005) No.
84 to Meisi Company and judged that aforesaid certificates are legal and effective and should not
be revoked. Meisi Company disagreed with this judgment and applied the administrative
reconsideration to the People's Government of Shenzhen Municipality. On October 8, 2005, the
People's Government of Shenzhen Municipality issued Decision on Administrative
Reconsideration SFFJ (2005) No. 294 and judged that aforesaid 2 certificates were registered
illegally and should be revoked, reply of SFDH (2005) No. 84 was canceled accordingly.
The Company refused to accept Decision on Administrative Reconsideration SFFJ (2005) No. 294
and prosecuted an administrative litigation to Shenzhen Intermediate Court on October 20, 2005.
Shenzhen Intermediate Court issued Administrative Judgment SZFXCZ (2005) No. 23 and
adjudicated that Decision on Administrative Reconsideration SFFJ (2005) No. 294 is sustained.
The Company disagreed with this administrative judgment and appealed to Guangdong Higher
Court on August 2, 2006. Guangdong Higher Court issued Administrative Judgment YGFXZZ
(2006) No. 154 in which the appeal was rejected and Administrative Judgment SZFXCZ (2005)
No. 23 was sustained. According to this Judgment, Shenzhen Municipal Bureau of Land
Resources and Housing Management would reconsider the request of Meisi Company to revoke
the Property Ownership Certificates SFDZ No. 3000320987 and No. 3000119899 of the
Company.
On May 15, 2007, Registration Center for Property of Real Estate of Shenzhen Municipality
issued Decision on Revoking the Property Ownership Certificates SFDZ No. 3000320987 and No.
3000119899 (SFZ (2007) No. 27). Registration Center for Property of Real Estate of Shenzhen
Municipality decided to revoke property ownership certificates SFDZ No. 3000320987 and No.
3000119899 owned by the Company that indicating the ownership of occupied property of Meilin
Workshop, Comprehensive Building and the land use right of 11,500 square meters and restore the
registration of the ownership of occupied property of Meilin Workshop, Comprehensive Building
and the land use right of certificates of SFDZ No. 0103142 and No. 0103139. The Company had
the ownership of occupied property of Meilin Workshop, Comprehensive Building and the land
use right of 11,500 square meters according to original property ownership certificates.
On July 9,2007, the Company applied the administrative reconsideration to the Administrative
Reconsideration Office of the People's Government of Shenzhen Municipality, which considered
that those action that Registration Center for Property and Real Estate of Shenzhen Municipality
revoked property ownership certificate SFDZ No. 3000320987 and No. 3000119899 owned by the
Company and restore the registration of Meilin Workshop, Comprehensive Building and land use
right violated the provisions of the Decision on Strengthening Land Market Management and
further Enlivening and Standardizing Real Estate Market (SF (2001) No. 94) promulgated by
People’s Government of Shenzhen Municipality, and requested People’s Government of Shenzhen
Municipality to rescind the Decision. On September 6, 2007, the People's Government of
Shenzhen Municipality issued Decision on Administrative Reconsideration SFFJ (2007) No. 255
to sustain the administrative decision of Shenzhen Municipal Bureau of Land Resources and
Housing Management.
In November 2007, Shenzhen Municipal Bureau of Land Resources and Housing Management
rejected the application of Meisi Company for revoking Property Ownership Certificates SFDZ
No. 0103142 and No. 0103139. Meisi Company prosecuted an administrative litigation to
Shenzhen Futian People’s Court (hereinafter refered as to ―Futian Court‖) to ask for revoking the
administrative decision of Shenzhen Municipal Bureau of Land Resources and Housing
Management. The Company was involved as third party. Court session started on January 8, 2008
with litigation number of (2008) SFFXCZ No. 10 (hereinafter refered as to ―No.10 Case‖). On
January 2008, Meisi Company prosecuted an administrative litigation to Futian Court for revoking
the above administrative decision of Shenzhen Municipal Bureau of Land Resources and Housing
Management, revoking Property Ownership Certificates SFDZ No. 0103142 and No. 0103139,
and restoring the land use right to Meisi Company with the litigation number of SFFX(2008) No.
70 (hereinafter refered as to ―No.70 Case‖). On May 2008, the Futian Court made adjudication to
No. 70 Case in which the property ownership certificates SFDZ No. 0103142 and No. 0103139
owned by the Company were revoked and Shenzhen Municipal Bureau of Land Resources and
Housing Management were required to re-investigate the application of Meisi Company. The
company, the Shenzhen Municipal Bureau of Land Resources and Housing Management as well
as Meisi Company refused to accept the verdict and made an appeal. On July 2008, the Company
has received the Administrative Ruling Paper from Futian Court in which the trial of No. 10 Case
was terminated.
On December 2008, Shenzhen Intermediate Court issued the Administrative Ruling Paper
SZFXZZ (2008) No. 223, in which the final adjudication of appeal No. 70 Case was made and the
original verdict was sustained. Moreover, the final adjudication stated that the controversy over
the land use right in this case between Meisi Company and the Company should be settled through
civil procedures; the Bureau of Land Resources and Housing Management of Shenzhen
Municipality should not proceed the registration procedure until the controversy is final settled.
On February 11, 2009, the Company received the Civil Complaint from Futian Court; Meisi
Company has made a civil prosecution against the Company and Shenzhen Luohu Commercial
Development Co., Ltd. for the confirmation of Meisi Company’s land use right and the buildings
in original Property Ownership Certificates SFDZ No., 0103142 and No., 0103139. Furthermore,
Meisi Company requests that return of related land use right and a compensation of RMB7.5
Million. The Company has submitted an objection to jurisdiction. On March 4, 2009, Futian Court
sent the Notice to the Company to inform that this case has been transferred to Shenzhen
Intermediate Court for adjudication.
On 22 December 2009, the Company received court ruling delivered by the Guangdong Higher
Court. After investigated by Guangdong Higher Court, it is considered that the retrial application
to Shenzhen Intermediate Court Judgment SZFZ (2008) No. 223 by the company is complied to
the law, and adjudicated: ① Arraign by Guangdong Highest People's Court ② suspended the
execution of the original verdict during the retrial.
On 15 Aug. 2011, the Company received the Administrative Ruling Paper (YGFSJZ Zi (2010) No.
8) from the Guangdong Higher Court, which maintained the Administrative Ruling Paper (SZFXZ
Zi (2008) No. 223), and it believed that the dispute on the land ownership for both parties was
civil right confirmation, and both parties should find other legal way to solve.
The Company believes that the land use right and ownership of above building should be legally
confirmed to the Company. The Company will secure its own legal rights through all legal means,
and the above issues do not have significant impact on the Company’s financial position.
2. Guarantee
(1) The Company provided a joint-liability guarantee for the long-term loan of RMB 240 million
borrowed by its subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. from the East Shenzhen
Sub-branch of China Agricultural Bank, and mortgaged the loan with its properties on No. 4-01
and 3/F, Block A of Shenzhen International Trade Center Plaza. The closing balance of the loan
stood at RMB 240 million, of which, the loan granted for the year of RMB 40 million was
included in the short-term borrowings, while RMB 200 million would be due within one year and
then included in other non-current liability due within one year.
(2) The Company provided a joint-liability guarantee for the long-term loan of RMB 90 million
borrowed by Shenzhen ITC Vehicle Industry Co., Ltd. from Shenzhen Sub-branch of Ping An
Bank, and the closing balance of the loan stood at RMB 33,495,212.00, of which RMB
21,495,212.00 would be included in short-term borrowings, while RMB 12,000,000.00 would be
included in other non-current liabilities due within one year.
(3) The Company provided a joint-liability guarantee for the short-term loan of RMB 20 million
borrowed by its subsidiary—Shenzhen ITC Vehicle Industry Co., Ltd. from Bank of
Communications, and the closing balance of the loan stood at RMB 20 million.
(4) The Company’s subsidiary—Shenzhen Tianque Elevator Technology Co., Ltd. gained a
short-term borrowings of RMB 30 million from East Shenzhen Sub-branch of Agricultural Bank
of China by mortgaging its B20, 16/F, Block B of Shenzhen International Trade Center Plaza
located at Renmin South Road, Luohu District, Shenzhen and with the Company as the guarantor,
and the closing balance stood at RMB 30 million.
(5) Guarantee for the proprietors: The Company and its subsidiaries provided the commodity
houses purchasers with mortgage guarantee to the bank. Up to 31 Dec. 2011, the guarantee
amount unsettled was RMB 50.71 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. Contingent assets
（1）Bureau of Foreign Trade and Economic Cooperation of Hubei province Shenzhen branch
(hereinafter referred as to ―Hubei FTEC Shenzhen branch‖) sued the Company to Shenzhen
Intermediate Court on July 2000 for termination of the agreement between the Hubei FTEC
Shenzhen branch and the Company about office property of 4,000 square meters purchasing in
Jiabing Building (now known as Jinlihua Commercial Plaza) and asked for refund of purchase
payment of RMB10.8 million and an indemnify of RMB18.6756 million on the ground of delayed
delivery. Guangdong Higher Court issued YGFMYZZ No. 90 judgment(hereinafter refered as to
―No. 90 Judgement‖) and adjudicated that the Company should refund the Hubei FTEC Shenzhen
branch purchase payment of RMB 10.8 million and related interests.
The Hubei FTEC Shenzhen branch applied for execution to Guangdong Higher Court. Guangdong
Railage Intermediate Court (hereinafter as the ―Railage Court‖) was appointed by the Guangdong
Higher Court to execute the case at the end of January 2005. The Railage Court delivered the
seal-up order to the liquidation team of Luohu Hotel, sealing up the debt right amounted RMB 23
million allocated to the Company.
The Company rejected the adjudication and applied for retrial to the Supreme Court of the P.R.C.
In August 2005, the Supreme Court issued the Civil Judgment (2004) MEJZ No.146-1 and
adjudicated that the Guangdong Higher Court should give the case second instance and the
execution should be suspended during the second instance. On 12 May 2006 the Guangdong
Higher Court made the judgment that the original judgment should be sustained and the
executions should be resumed. The Hubei FTEC Shenzhen branch applied to the Railage Court for
the payment and bank interest in the second trial period, while the Company applied for the
suspension of execution. On 30 June 2006, the (2004) GTZFZZ No. 225-4 Civil Judgment was
issued by the Railage Court in which (i) The Company’s execution suspension application was
denied because it lacked for facts and legal evidence; (ii) It was legal for the Hubei FTEC
Shenzhen branch to apply and the Railage Court decided to transfer RMB23 million from the
sealed account which had been transferred to the Railage court after deduction of execution fees to
t the Hubei FTEC Shenzhen branch; (iii) The Hubei FTEC Shenzhen branch’s application of
interest during the second trial was denied; (iv) The Company’s repayment obligation ruled by the
No.90 Judgment had been legally executed; (v) the execution of No.90 Judgment was terminated.
The Company recognized losses based on the above judgments, and increased the receivables due
from Jiyong Company and made provision for bad debts accordingly. The Company considered
that there is error of fact recognition and application of the law in the adjudication of the second
trial and appealed to the Supreme People's Court. The Supreme People's Court issued the Civil
Ruling Paper MEJZ (2004) No. 146-3 and adjudicated that this litigation would be retried by the
Supreme People's Court in October 2007. After comprehensive consideration, the Company
withdrawed the retrial application to the Supreme People's Court, and Supreme People's Court
approved the application.
Ownership of the 14th and 15th floors of Jiabing Building retuned by the Hubei FTEC Shenzhen
branch belongs to the Company after indemnity of house payment and interest. The Company
investigated and found that the owner of the 14th and 15th floors of Jiabing Building was registered
as Zhuhai Western Yingzhu Industrial Development Co., Ltd.(hereinafter refered as ―Zhuhai
Yingzhu Company‖) addressing the ownership of the properties, therefore, on June, 2008 the
Company sued Zhuhai Yingzhu Company to the People’s Court of Luohuo District in Shenzhen
(hereinafter referred as ―Luohu Court‖) for confirmation of the above properties’ ownership and
adjudicating the Company’s ownership of the 14th and 15th floors of Jiabing Building in the
registration. The Luohu Court processed the case with the litigation number of (2008) SLFMSCZ
No. 1442. On July 21, 2008, the court held a public trail and hosted the mediation; the Company
reconciled with Zhuhai Yingzhu Company and Luohu Court issed Civil Mediation Agreement in
which stated ① both agree that the 14th and 15th floor of Jiabin building belongs to the complaint
company; ② the defendant should assist the complaint party (the Company) with the procedures
of transferring the property to the complaint company within 3 days since the agreement becomes
effective. The agreement is legally valid. Up to the end of current financial period, the 14th and
15th floor of Jiabin building has been registered under the Company’s name by China Committee
of Real Estate Title.
Since Shenzhen Longyuan-Kaili-Hengfeng Real Estate Co., Ltd ( hereinafter as the
―Longyuan-Kaili‖) and Shenzhen Huaneng-Jindi Property Co., Ltd.( hereinafter as the ―Huaneng
Property‖) attempt to reconstruct Jinlihua Commercial Plaza, the Company, the first
administration directly under Shenzhen Urban Planning and Land Resources Committee
(hereinafter as the ―SUPLRC‖), Longyuan-Kaili and Huaneng Property signed SDHZ (1992) No.
0228 Second Supplementary Agreement of Shenzhen Grant Contract of Land Use Right on March
3, 2011, and the following agreements are reached: ① SUPLRC agrees to change the use right
assignee of ground date No. H206-0002, an area of 6,892 square meters into Longyuan-Kaili and
Huaneng Property; ② Longyuan-Kaili and Huaneng Property undertake all the rights,
responsibilities and duties of the ground, and rationalize independently the relationships of the
transferred house property and assist the transaction of relative formalities. ③ Longyuan-Kaili and
Huaneng Property promise to solve the mortgage and the pre-sealing up in the project
independently. Any dispute caused by the change of the use right assignee will be beard by
Longyuan-Kaili and Huaneng Property and they will undertake the legal and economic
responsibilities.④The property right of the 14th and 15th floors, which is commodity housing,
belongs to the Company. Longyuan-Kaili and Huaneng Property will build and decorate according
to the unified handing-over standard of this project.⑤ The ground use term has changed into 50
years, from February 21, 2011 to February 20, 2061.
After signing the above agreements, the Company’s right on the 14th and 15th floors at Jinlihua
Commercial Plaza is affirmed. But due to the existing risks in delivery of this house property and
acquisition of property ownership certificate, great uncertainties exist in whether or not it will
bring economic interests to the Company. According to the related regulations of Accounting
Standards for Business Enterprises, it does not match the recognition criteria.
Note VIII. Events after the balance sheet date
Details about borrowing and repaying after the balance sheet date:
(1) On 11 Jan. 2012, the Company’s subsidiary Shenzhen ITC Vehicle Industry Company Limited
obtained a long-term borrowing of RMB 26 million from the Shenzhen branch of Ping An Bank.
(2) On 26 Jan. 2012, the entrustment loan of RMB 250 million of the Company’s subsidiary
Shenzhen Huangcheng Real Estate Company Limited via the Jingtian sub-branch of Everbright
Bank was extended to 25 Jan. 2013. The entrusting party was the Company’s controlling
shareholder Shenzhen Investment Holdings Co., Ltd.
(3) On 15 Feb. 2012, 22 Feb. 2012 and 10 Mar. 2012, the Company’s subsidiary Shenzhen ITC
Vehicle Industry Co., Ltd. Limited repaid a long-term borrowing of RMB 6 million, 6 million and
21.50 million respectively to the Shenzhen branch of Ping An Bank. The said long-term
borrowing has all been repaid.
(4) On 20 Feb. 2012, the Company’s subsidiary Shenzhen ITC Car Rental Co., Ltd. repaid a
long-term borrowing of RMB 916,700 to the Shenzhen Shangbu sub-branch of Shenzhen
Development Bank.
(5) On 13 Mar. 2012, the Company’s subsidiary Shenzhen Huangcheng Real Estate Company
Limited repaid a short-term loan of RMB 40 million to the Shenzhen East sub-branch of the
Agricultural Bank of China.
(6) On 29 Mar. 2012, the entrustment loan of RMB 200 million of the Company’s subsidiary
Shenzhen Huangcheng Real Estate Company Limited via the Jingtian sub-branch of Everbright
Bank was extended to 28 Mar. 2013. The entrusting party was the Company’s controlling
shareholder Shenzhen Investment Holdings Co., Ltd.
Note IX. Other significant events
1. On 17 Sept. 2010, for the purpose of performing the commitment of share reform, the Company
and its controlling shareholder Shenzhen Investment Holdings Co., Ltd. (hereinafter referred to as
―Investment Holdings‖) signed the Assest Exchange Agreement. According to the Agreement, the
Company intends to exchange some real estate held by it and its wholly-owned subsidiary —
Shenzhen Huangcheng Real Estate Co., Ltd. （the ―swapped-out assets‖） for the land plot
T102-0237 located in Yueliang Bay and 100% equities (equities after stripping some assets and
liabilities from Shenxin Taxi according to STKH[2010]No. 103) of Shenzhen Shenxin Taxi Co.,
Ltd. (Shenxin Taxi) held by Investment Holdings.
Up to the end of the reporting period, the swapped-out assets have not been transferred to
Investment Holdings. The ownership transfer procedure is proceeding. The swapped-in land plot
T102-0237 located in Yueliang Bay has been transferred to the Company and the land certificate
transfer procedure has been finished. As for the swapped-in equities of Shenxin Taxi, the asset and
creditor’s rights stripping procedure has not been finished and the ownership transfer procedure is
proceeding.
2. The Company has accrued expense of the Jinlihua Plaza land VAT amounting to RMB
56,303,627.40 in the previous financial year. According to the SGT (2001) No. 314 Document,
unpaid or overdue land VAT could be exempted. However, as the land use right has not been
transferred, the Company will proactively proceed with the exemption procedure of the Jinlihua
Plaza land VAT of RMB 56,303,627.40, and will write off the accrued expense of Jinlihua Plaza
land VAT of RMB 56,303,627.40 when the Company receives the approval reply.
The Company has a receivable house payment of Jinlinhua Plaza from Shenzhen Jiyong Property
Development Co., Ltd, which amounted to RMB 98.6113 million. For that, a bad-debt provision
of RMB 42.6113 million has been made with the net amount being RMB 56 million.
3. On 25 Nov. 2011, the proposal on liquidating Hainan Xinda Development Co., Ltd. (hereinafter
referred to as ―Hainan Company‖) was reviewed and approved at the 4th Session of the 7th Board
of Directors. Hainan Company was founded in 1988 as a wholly-owned subsidiary of the
Company. At present, it has no development project or land reserve. And it has recorded deficit
for years. The Board of Directors once approved the proposal to transfer Hainan Company as a
whole in Jan. 2009. But the proposal could not proceed due to the policy factor and other reasons.
Currently, as a creditor, the Company started a judical proceeding to liquidate Hainan Company.
Note X. Notes to the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable by Categories are as follows:
Closing balance
Book balance Provision for bad debt
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for
101,447,889.05 97.45 45,447,889.05 44.80
bad debts separately
Provided for bad debts by portfolio
Portfolio 2
2,603,890.77 2.50 993,289.42 38.15
Subtotal
2,603,890.77 2.50 993,289.42 38.15
Individually not significant but provided for
54,380.35 0.05 54,380.35 100.00
bad debts separately
Total
104,106,160.17 100.00 46,495,558.82 44.66
Opening balance
Book balance Provision for bad debt
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for
101,447,889.05 96.45 45,447,889.05 44.80
bad debts separately
Provided for bad debts by portfolio
Portfolio 2
3,680,032.75 3.50
Subtotal
3,680,032.75 3.50
Individually not significant but provided for
54,380.35 0.05 54,380.35 100.00
bad debts separately
Total
105,182,302.15 100.00 45,502,269.40 43.26
Interpretation of account receivables:
Receivables with individually significant amount and provided for bad debt separately:
Bad debt Proportion
Name of company Closing balance Reason for provision
provision (%)
Shenzhen Jiyong 98,611,328.05 42,611,328.05 43.21
Involved in lawsuit, refers to Note
Property
Development Co., VII.1.(2) and Note IX.2
Ltd
Shenzhen Tewei 2,836,561.00 2,836,561.00 100.00
Uncollectible for a long period
Industry Co., Ltd.
Total 101,447,889.05 45,447,889.05 ——
Making bad-debt provisions for other receivable portfolios according to aging analysis:
Closing amount
Account age Book balance
Bad-debt provision
Amount Proportion (%)
Within 1 year (including 1 year) 133,932.00 5.14 4,017.96
2-3 years (including 3 years) 1,228,539.62 47.18 368,561.89
3-4 years (including 4 years) 1,241,419.15 47.68 620,709.57
Total 2,603,890.77 100.00 993,289.42
Receivables with individually insignificant amount but provided for bad debt separately:
Bad debt
Name of company Amount Aging Reason for provision
provision
Luohu Economic 54,380.35 54,380.35 Uncollectible for a long period
Over 3 years
Development Company
Total 54,380.35 54,380.35
(2) There is no receivable account that have been fully provided of bad debt provision, or
with great portion, and retrieved or written back in the reporting period, or such account with
significant amount.
(3) No receivable accounts were written off during the reporting period.
(4)There was no accounts receivable due from shareholders with more than 5% (including
5%) of the voting shares of the Company.
(5) Details of top receivable accounts:
Relationship Proportion to
Entity with the Amount Aging total accounts
Company receivables (%)
Shenzhen Jiyong Property Non-related 98,611,328.05 Over 5 years 94.72
Development Co., Ltd parties
Shenzhen Tewei Industry Co., Ltd.
Non-related 2,836,561.00 Over 5 years 2.72
parties
Tianhong Shopping Plaza Co., Ltd. Non-related 2,469,958.77 2-3 years 2.37
parties
Total 103,917,847.82 99.81
(6) There was no accounts receivable due from related parties.
2. Other receivables
（1）Other receivables by categories are as follows:
Closing balance
Book balance Provision for bad deb
Categories
Proportio Proportio
Amount Amount
n (%) n (%)
Closing balance
Book balance Provision for bad deb
Categories
Proportio Proportio
Amount Amount
n (%) n (%)
Individually significant and provided for bad 235,934,964.21 84.94 188,864,152.75 80.05
debts separately
Provided for bad debts by portfolio
Portfolio 1 19,553,302.91 7.04
Portfolio 2 19,873,081.80 7.15 19,595,836.60 98.60
Subtotal 39,426,384.71 14.19 19,595,836.60 49.70
Individually not significant but provided for 2,421,326.23 0.87 2,421,326.23 100.00
bad debts separately
Total 277,782,675.15 100.00 210,881,315.58 75.92
Opening balance
Book balance Provision for bad deb
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant and provided for bad 241,202,085.87 32.02 191,932,077.06 79.57
debts separately
Provided for bad debts by portfolio
Formerly Portfolio 2 509,569,813.47 67.66
Subtotal 509,569,813.47 67.66
Individually not significant but provided for 2,421,326.23 0.32 2,421,326.23 100.00
bad debts separately
Total 753,193,225.57 100.00 194,353,403.29 25.80
Interpretation of other receivables:
Receivables with individually significant amount and provided for bad debt separately:
Bad debt Proportion
Name of company Amount Reason for provision
provision (%)
Shum Yip Properties 99,779,604.19 52,708,792.73 52.83 Uncollectible for a long
Development Co., Ltd. period
Gintian Industry 56,600,000.00 56,600,000.00 100.00 Payment for discharging of
(Group) Co., Ltd. guaranty responsibility that
was difficult to be
recollected
Hainan Xinda 48,778,010.04 48,778,010.04 100.00 Uncollectible for a long
Development Co., Ltd period
Anhui Nanpeng 7,677,728.00 7,677,728.00 100.00 Uncollectible for a long
Papermaking Co., Ltd period
Shenzhen Shengfenglu 6,481,353.60 6,481,353.60 100.00 There is no asset to execute
ITC Jewel & Gold Co., the verdict, thus lead to
Ltd uncollectibility
Shanghai Yutong Real 5,676,000.00 5,676,000.00 100.00 Uncollectibility for the
estate development reason of verdict
Co., Lt
HongKong Yueheng 3,271,837.78 3,271,837.78 100.00 Has been liquidated
Development Co., Ltd
Dameisha Tourism 2,576,445.69 2,576,445.69 100.00 Suspended project
Center
Shenzhen ITC Food 2,551,652.48 2,551,652.48 100.00 Insolvency
Enterprise Co.,Ltd.
Elevated Train Project 2,542,332.43 2,542,332.43 100.00 Suspended project
Total 235,934,964.21 188,864,152.75 ——
Making bad-debt provisions for other receivable portfolios according to aging analysis:
Closing amount
Account age Book balance
Bad-debt provision
Amount Proportion (%)
Within 1 year (including 1 year) 276,670.84 1.39 8,300.12
1-2 years (including 2 years) 5,058.09 0.03 505.81
2-3 years (including 3 years) 5,310.25 0.03 1,593.08
3-4 years (including 4 years) 801.57 0.00 400.79
4-5 years (including 5 years) 1,021.23 0.01 816.98
Over 5 years 19,584,219.82 98.54 19,584,219.82
Total 19,873,081.80 100.00 19,595,836.60
Receivables with individually insignificant amount but provided for bad debt separately:
Bad debt Proportion
Name of company Amount Reason for provision
provision (%)
Shenzhen Wufang 1,747,264.25 1,747,264.25 100.00 Poor operation status
Pottery & Porcelain
Industrial Co., Ltd
Compensation for 601,762.21 601,762.21 100.00 Owner unable to repay the
Shidai new residence loan
mortgage guarantee
Zhanjiang Shenzhen 53,478.77 53,478.77 100.00 Insolvency
Real Estate
Development Co., Ltd.
Meilin Synthetic Fibre 11,000.00 11,000.00 100.00 Uncollectible for a long
Company period
Others 7,821.00 7,821.00 100.00 Uncollectible for a long
period
Total 2,421,326.23 2,421,326.23 ——
（2）There is no other receivable that have been fully provided of bad debt provision, or with
great portion, and retrieved or written back in the reporting period, or such account with
significant amount
（3）No other receivables were written off during the reporting period
（4）There was no other receivable due from shareholders with more than 5% (including 5%)
of the voting shares of the Company.
（5）Details of top 5 other receivables：
Proportion of the
Name of company Relationship Amount Aging
total (%)
Shum Yip Properties Subsidiary 99,779,604.19 Over 5 years 35.92
Development Co., Ltd.
Gintian Industry (Group) Non-related 56,600,000.00 Over 4 years 20.38
Co., Ltd. parties
Hainan Xinda Development Subsidiary 48,778,010.04 Within 2 years 17.56
Co., Ltd.
Shenzhen ITC Tian’an 9,705,931.45 Over 5 years 3.49
Joint venture
Properties Co., Ltd
Anhui Nanpeng Associated 7,677,728.00 Within 5 years 2.76
Papermaking Co., Ltd
company
Total 222,541,273.68 80.11
（6）Details about receivables from related parties:
Relationshi Proportion in the total other
Entity Amount
p with the receivables (%)
Company
Shum Yip Properties Development Co., Ltd. Subsidiary 99,779,604.19 35.92
Hainan Xinda Development Co., Ltd. Subsidiary 48,778,010.04 17.56
Joint
Shenzhen ITC Tian’an Properties Co., Ltd 9,705,931.45 3.49
venture
Shenzhen ITC Property Management Co.,
Subsidiary 8,223,602.62 2.96
Ltd.
Anhui Nanpeng Papermaking Co., Ltd Associated
7,677,728.00 2.76
company
Shenzhen ITC Food Co.,Ltd Subsidiary 4,300,310.40 1.55
Shenzhen Property Construction Supervision
Co., Ltd Subsidiary 3,285,212.59 1.18
Shenzhen ITC Vehicles Industry Co., Ltd. Subsidiary 3,000,000.00 1.08
Shenzhen ITC Industrial Development Co., Associated
Ltd 2,551,652.48 0.92
company
Shenzhen Wufang Pottery & Porcelain Associated
Industrial Co., Ltd 1,747,264.25 0.63
company
Shenzhen International Trade Plaza
Subsidiary 744,177.30 0.27
Zhanjiang Shenzhen Real Estate
Development Co., Ltd Subsidiary 53,478.77 0.02
Total
189,846,972.09 68.34
3. Long-term equity investment
Proportions
Amount of Proportions
Opening Increase/ Closing of
Company initial of voting
balance Decrease balance shareholdin
investment rights (%)
g (%)
I. Investment
under equity
method
Shenzhen Jifa 30,645,056.0 26,613,176.96 743,887.08 27,357,064.04 50.00 50.00
4
Warehouse
Company
Limited
Shenzhen ITC 23,186,124.0 36,910,481.36 -1,506,674. 35,403,806.83 50.00 50.00
Proportions
Amount of Proportions
Opening Increase/ Closing of
Company initial of voting
balance Decrease balance shareholdin
investment rights (%)
g (%)
Tian’an 0 53
Properties
Co., Ltd
Shenzhen 1,500,000.00 2,564,330.33 476,139.20 3,040,469.53 50.00 50.00
Tian’an
International
Building
Property
Management
Co., Ltd
II. Investment
under cost
method
Shenzhen ITC 29,850,000.0 29,850,000.00 29,850,000.00 90.00 90.00
0
Vehicles
Industry Co.,
Ltd.
Hainan Xinda 20,000,000.0 20,000,000.00 20,000,000.00 100.00 100.00
0
Development
Co., Ltd
Shenzhen 30,950,000.0 30,950,000.00 30,950,000.00 100.00 100.00
0
Property and
Real Estate
Development
Co., Ltd.
28,500,000.0 28,500,000.00 28,500,000.00 95.00 95.00
Shenzhen 0
Huangcheng
Real Estate Co.,
Ltd
20,000,000.0 20,000,000.00 20,000,000.00 95.00 95.00
Shenzhen ITC 0
Property
Proportions
Amount of Proportions
Opening Increase/ Closing of
Company initial of voting
balance Decrease balance shareholdin
investment rights (%)
g (%)
Management
Co., Ltd.
1,600,000.00 1,600,000.00 1,600,000.00 80.00 80.00
Shenzhen ITC
Food Co.,Ltd.
3,000,000.00 3,000,000.00 3,000,000.00 100.00 100.00
Shenzhen
Property
Construction
Supervision
Co., Ltd
12,000,000.0 12,000,000.00 12,000,000.00 100.00 100.00
Shenzhen 0
International
Trade Plaza
1,380,000.00 1,380,000.00 1,380,000.00 100.00 100.00
Shenzhen Real
Estate
Exchange
17,695.09 17,695.09 17,695.09
Shensan
Co.,Ltd.
2,530,000.00 2,530,000.00 2,530,000.00 100.00 100.00
Zhanjiang
Shenzhen Real
Estate
Development
Co., Ltd
15,834,000.0 15,834,000.00 15,834,000.00 100.00 100.00
Hong Kong 0
Proportions
Amount of Proportions
Opening Increase/ Closing of
Company initial of voting
balance Decrease balance shareholdin
investment rights (%)
g (%)
Shum Yip
Properties
Development
Co., Ltd.
18,983,614.1 18,983,614.14 18,983,614.14 26.00 26.00
Shenzhen 4
Wufang Pottery
& Porcelain
Industrial Co.,
Ltd
20,154,840.7 3,682,972.55 3,682,972.55 38.33 38.33
Shenzhen ITC 9
Industrial
Development
Co., Ltd
13,824,000.0 13,824,000.00 13,824,000.00 30.00 30.00
Anhui Nanpeng 0
Papermaking
Co., Ltd
2,962,500.00 2,962,500.00 2,962,500.00 0.33 0.33
China T.H.
Co.,Ltd.
3,465,000.00 3,465,000.00 3,465,000.00 12.66 12.66
North
Machinery
(Group)
Co.,Ltd.
8,780,645.20 8,780,645.20 8,780,645.20 8.47 8.47
Guangdong
Huayue Real
Proportions
Amount of Proportions
Opening Increase/ Closing of
Company initial of voting
balance Decrease balance shareholdin
investment rights (%)
g (%)
Estate Co.,Ltd.
50,000,000.0 50,000,000.00 50,000,000.00 100.00 100.00
PRD Group 0
XuzhouDapeng
Real
EstateDevelop
ment Co.,Ltd
20,000,000.0 20,000,000.00 20,000,000.00 100.00 100.00
Dongguan 0
Guomao
Changsheng
Real Estate
Development
Co., Ltd.
50,000,000.0 50,000,000. 50,000,000.00 100.00 100.00
PRD Yangzhou 0 00
Real Estate
Development
Co., Ltd.
230,500.00 230,500.00 230,500.00 0.28 0.28
Sanya East
Travel Co.,Ltd.
—— 353,678,915.6 49,713,351. 403,392,267.3 —— ——
Total 3 75 8
Note for
difference
between
Provision for Increse in Written off in Cash
Company proportions of
impairment current year current year dividends
voting rights and
shareholding
hold
I. Investment under
equity method
Shenzhen Jifa Warehouse
Company Limited
Shenzhen ITC Tian’an
Properties Co., Ltd
Shenzhen Tian’an
International Building
Property Management
Co., Ltd
II. Investment under cost
method
Shenzhen ITC Vehicles
Industry Co., Ltd.
Hainan Xinda 20,000,000.00
Development Co., Ltd
Shenzhen Property and
Real Estate Development
Co., Ltd.
Shenzhen Huangcheng
Real Estate Co., Ltd
Shenzhen ITC Property
Management Co., Ltd.
1,600,000.00
Shenzhen ITC Food
Co.,Ltd.
Note for
difference
between
Provision for Increse in Written off in Cash
Company proportions of
impairment current year current year dividends
voting rights and
shareholding
hold
Shenzhen Property
Construction Supervision
Co., Ltd
12,000,000.00
Shenzhen International
Trade Plaza
Shenzhen Real Estate
Exchange
17,695.09
Shensan Co.,Ltd.
2,530,000.00
Zhanjiang Shenzhen Real
Estate Development Co.,
Ltd
15,834,000.00
Hong Kong Shum Yip
Properties Development
Co., Ltd.
18,983,614.14
Shenzhen Wufang
Pottery & Porcelain
Industrial Co., Ltd
3,682,972.55
Shenzhen ITC Industrial
Development Co., Ltd
13,824,000.00
Anhui Nanpeng
Papermaking Co., Ltd
2,160,300.45
China T.H. Co.,Ltd.
3,465,000.00
North Machinery
Note for
difference
between
Provision for Increse in Written off in Cash
Company proportions of
impairment current year current year dividends
voting rights and
shareholding
hold
(Group) Co.,Ltd.
8,780,645.20
Guangdong Huayue Real
Estate Co.,Ltd.
PRD Group
XuzhouDapeng Real
EstateDevelopment
Co.,Ltd
Dongguan Guomao
Changsheng Real Estate
Development Co., Ltd.
PRD Yangzhou Real
Estate Development Co.,
Ltd.
Sanya East Travel
Co.,Ltd.
102,878,227.43
Total
4. Other non-current assets
Item Closing balance Opening balance
Entrustment borrowings 475,000,000.00
Total 475,000,000.00
Notes: All entrustment borrowings were borrowings by credit.
Details are as follows:
Closing balance Opening
balance
Beginning Ending Inter Amo
Amo Amou
date for date for Currenc est unt
Trustee Borrower unt in nt in
the the y rate Amount in in
forei record
borrowing borrowing (%) recording forei
gn ing
currency gn
curre curren
curre
ncy cy
ncy
Shenzhen Dongguan 8 Apr. 8 Apr. RMB 7.68 —— 195,000,000.00
branch of Guomao 2011 2013
Ping An Bank Changshe
ng Real
Estate
Developm
ent Co.,
Ltd.
Shenzhen 10 Aug. 10 Aug. RMB 7.98 —— 150,000,000.00
branch of PRD 2011 2013
Industrial
Bank Group
XuzhouD
apeng
Real
EstateDev
elopment
Co.,Ltd
Shenzhen 26 Sept. 26 Sept. RMB 7.98 —— 130,000,000.00
branch of PRD 2011 2013
Ping An Bank
Group
XuzhouD
apeng
Real
EstateDev
elopment
Co.,Ltd
Total —— —— 475,000,000.00
5. Revenue and cost of sales
（1）Revenue and cost of sales
Item 2011 2010
Revenue from main operations
48,557,559.48 35,828,118.43
Revenue from other operations
Total Revenue 48,557,559.48 35,828,118.43
Cost of sales 35,318,571.13 16,789,454.03
（2）Main Business (by industry)
2011 2010
Categories
Revenue Cost of sales Revenue Cost of sales
Sale of properties
6,337,155.01 6,387,356.92 147,590.79 772,065.26
Property rental and
42,220,404.47 28,931,214.21 35,680,527.64 16,017,388.77
management services
income
Total
48,557,559.48 35,318,571.13 35,828,118.43 16,789,454.03
6. Gain/loss on investment
Source 2011 2010
1.Gain on investment under equity method -286,648.25 1,692,778.22
2.Investment gain on long-term equity disposal 1,539,906.36
3. Gain on disposing trading financial assets 240,074.81
4. Gain on investment when holding trading financial assets 3,364.50
5. Interest income from entrustment lendings 17,592,670.23
Total 17,549,461.29 3,232,684.58
7. Supplementary information of cash flow statement
Supplementary information 2011 2010
1. Adjustment from net profit to cash flows from operating activities
Net profit
-37,392,803.39 18,982,840.06
Plus: Provision for impairment of assets
20,832,527.84 -37,276,392.48
Depreciation of fixed assets, Oil-gas assets and Productive biological
15,694,741.33 14,784,016.45
assets and amortisation of investment properties
Supplementary information 2011 2010
Amortization of intangible assets
Amortization of long-term deferred expense
172,976.28 172,263.53
Loss on disposal of fixed assets, intangible assets and other
1,546.50 -305,407.77
non-current assets(―-‖ for gain)
Loss on fixed assets retirement (―-‖ for gain)
Loss on change in fair value(―-‖ for gain)
3,364.50 -39,900.00
Financial costs(―-‖ for gain)
-125.07
Loss on investment(―-‖ for gain)
-17,549,461.29 -3,232,684.58
Decrease of deferred tax assets(―-‖ for increase)
Increase of deferred tax liabilities(―-‖ for decrease)
-807.48 807.48
Decrease of inventory(―-‖ for increase)
-266,870,821.10 -3,187,540.85
Decrease in operating receivables(―-‖ for increase)
32,637,652.81 -344,423,903.61
Increase in operating payables(―-‖ for decrease)
759,825,392.69 305,284,845.32
Others
Net cash flow from operating activities
507,354,183.62 -49,241,056.45
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
83,846,009.34 78,920,447.75
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
4,925,561.59 76,381,088.99
Note XI. Supplementary information
1. Extraordinary gains and losses (negative: loss)
（1）According to the announcement (2008)No.43―Regulation on the Preparation of Information
Disclosures of Companies Issuing Public Shares No. 1: Extraordinary gains and losses (2008)‖
issued by the CSRC, Extraordinary gains and losses of the company of this reporting period are
calculated as follows:
(Positive: gains, Negative:
losses)
Items 2011 Note
Gains and Losses on disposal of non-current assets, including provision -26,955.97
for asset impairment write-off
Ultra vires approval, or without official approval documents, or occasional
tax return or relief;
Government subsidies through current profit or loss, but are closely
related to normal operations of the Company, in line with national policies
and regulations. Except government subsidies continued to enjoy
according to certain standard amount or quantitaty;
Funds occupation fee through current profit or loss collected from
non-financial enterprises;
The investment cost for the Company to obtain subsidiaries and joint
ventures is less than the revenue generated from fair value of the
identifiable net assets of investee when obtaining investment;
Non-monetary assets exchange profit or loss;
Profit or loss from entrusting others to invest or manage assets;
Various provision for impairment of assets made due to force majeure,
such as natural disasters
Debt restructuring gains and losses;
Corporate restructuring costs, such as the employees placement expenses,
integration costs, etc.;
Profit or loss over the part of fair value generated by transactions with
obviously unfair trading price;
Current net profit or loss generated by subsidiary from business
combination under the common control from year beginning to the merge
date;
Items 2011 Note
Profit or loss generated by contingencies not related to the Company's
normal business;
240,074.81
In addition to effective hedging business related to the normal operations
of the Company, profit or loss from changes in fair values of financial
assets held for trading and trading financial liabilities, as well as
investment income from the disposal of trading financial assets, trading
financial liabilities and financial assets available for sale;
Reversal of provision for impairment of receivables through separate 842,092.26
impairment test;
Profit or loss from entrusted external loans; 351,962.50
Profit or loss generated from changes in fair value of investment property
that using fair value method for subsequent measurement;
According to tax, accountancy law and other regulations, the effect of
one-time adjustment on current profit or loss which made on current profit
or loss according to tax, accountancy law and other regulations;
Commission Income obtained from commission operation;
Other non-operating income and expenditure in addition to the above -1,458,137.35
items;
Other profit or loss items meet the definition of non-recurring gains and
losses.
Subtotal -50,963.75
Less:Income tax expense should be deducted from aforementioned 26,727.37
non-recurring gains and losses
Profit or loss of minority shareholders in consolidated financial
statement
Total -77,691.12
2. According to CSRC regulations of announcement ―Disclosure requirements No.9 for the public
listed companies—disclosure of ROE (%) and EPS‖ (edited in 2010), the calculated datas are as
following:
Weighted average EPS
Profit in reporting period
ROE (%) Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 25.67 0.43 0.43
Net profit attributable to ordinary shareholders after
25.68 0.43 0.43
deducting extraordinary gain or loss
Legal representative: Chief of the accounting work: Chief of the accounting organ:
