2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LTD. 2012 ANNUAL REPORT March 2013 1 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section I. Important Notes, Contents & Explanation The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff 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 factuality, accuracy and completeness of the contents carried in this report. Mr. Chen Yugang, Company Principal, Mr. Wang Hangjun, Person in Charge of Accounting Work, CFO Mr. Gong Sixin and Ms. Shen Xueying, Person-in-charge of the accounting organ (Chief of Accounting) and Financial Manager, hereby confirm that the Financial Report enclosed in the Annual Report is true and complete. All directors have attended the board session for reviewing this report. The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into share capital. This report is prepared in both Chinese and English. Should there be any understanding discrepancy between the two versions, the Chinese version shall prevail. 2 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Contents 2012 Annual Report ...........................................................................................................................1 Section I. Important Notes, Contents & Explanation.....................................................................2 Section II. Company Profile..............................................................................................................4 Section III. Accounting & Financial Highlights ..............................................................................6 Section IV. Report of the Board of Directors.................................................................................10 Section V. Significant Events...........................................................................................................25 Section VI. Change in Shares & Shareholders ..............................................................................35 Section VII. Directors, Supervisors, Senior Management Staff & Employees...........................42 Section VIII. Corporate Governance .............................................................................................49 Section IX. Internal Control ...........................................................................................................54 Section X. Financial Report ............................................................................................................60 Section XI. Documents Available for Reference..........................................................................209 3 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section II. Company Profile I. Basic information of the Company Stock abbreviation SWYA, SWYB Stock code 000011、200011 Stock exchange listed with Shenzhen Stock Exchange Chinese name of the Company 深圳市物业发展(集团)股份有限公司 Abbr. of the Chinese name of 深物业集团 the Company English name of the Company ShenZhen Properties & Resources Development (Group) Ltd. (if any) Abbr. of the English name of SZPRD the Company (if any) Legal representative of the Mr. Chen Yugang Company 39/F and 42/F, International Trade Center, Renmin South Road, Shenzhen, Guangdong Registered address Province, P.R.China Postal code for the registered 518014 address 39/F and 42/F, International Trade Center, Renmin South Road, Shenzhen, Guangdong Office address Province, P.R.China Postal code for the office 518014 address Internet website of the www.szwuye.com.cn Company II. For Contact Company Secretary Securities Affairs Representative Name Fan Weiping Qian Zhong, Huang Fengchun 42/F, International Trade Center, Renmin 42/F, International Trade Center, Renmin Contact address South Road, Shenzhen, Guangdong South Road, Shenzhen, Guangdong Province, P.R.China Province, P.R.China Tel. 0755-82211020 0755-82211020 Fax 0755-82210610, 82212043 0755-82210610, 82212043 E-mail 000011touzizhe@163.com 000011touzizhe@163.com 4 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. III. About information disclosure and where this report is placed Newspapers designated by the Company for A-share: Securities Times information disclosure B-share: Ta Kung Pao (HK) Internet website designated by CSRC for www.cninfo.com.cn disclosing this report BOD Office, 42/F, International Trade Center, Renmin South Road, Shenzhen, Where this report is placed Guangdong Province, P.R.China IV. Change of the registered information Registration code of Registration date Registration place Business license No. Organizational code taxation Industrial and Commercial Administration Initial registration 17 Jan. 1983 440301103570124 440301192174135 19217413-5 Bureau of Shenzhen Municipal Government Change of the Company’s main business Unchanged since listing (if any) Changes of the controlling shareholder (if Unchanged any) V. Other information The CPAs firm hired by the Company: Name Union Power Certified Public Accountants Co., Ltd. Office address 16th - 18th Floor, Tower B, Wuhan International Mansion 5 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section III. Accounting & Financial Highlights I. Major accounting data and financial indicators Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or correction of any accounting error? √ Yes □ No Increase or decrease of this 2011 2010 year over last 2012 year (%) Before After After Before After adjustment adjustment adjustment adjustment adjustment Operating revenues (RMB 1,861,298,830. 1,408,565,307. 1,430,211,933. 1,016,389,026. 30.14% 993,175,350.38 Yuan) 99 32 75 19 Net profit attributable to shareholders of the Company 375,422,129.64 257,461,077.54 261,108,340.62 43.78% 174,998,534.79 176,701,254.63 (RMB Yuan) Net profit attributable to shareholders of the Company 337,545,206.86 257,538,768.66 257,538,768.66 31.07% 160,273,095.99 160,273,095.99 after extraordinary gains and losses (RMB Yuan) Net cash flows from operating -361,467,587.7 -354,083,921.1 -101,778,470.6 805,714,197.38 327.55% -92,901,678.94 activities (RMB Yuan) 0 3 4 Basic EPS (RMB Yuan/share) 0.6299 0.432 0.4381 43.78% 0.2936 0.2965 Diluted EPS (RMB Yuan/share) 0.6299 0.432 0.4381 43.78% 0.2936 0.2965 ROE (%) 28.43% 25.67% 25.79% 2.64% 23.27% 23.28% Increase or decrease of this As at 31 Dec. 2011 year-end than As at 31 Dec. 2010 As at 31 Dec. last year-end 2012 (%) Before After After Before After adjustment adjustment adjustment adjustment adjustment 4,006,705,938. 3,499,608,314. 3,552,025,374. 2,913,281,353. 2,982,006,967. Total assets (RMB Yuan) 12.8% 73 21 73 84 39 Net assets/owners’ equity 1,502,852,915. 1,130,243,873. 1,141,460,658. attributable to shareholders of 31.66% 874,185,621.88 881,777,845.08 53 92 78 the Company (RMB Yuan) 6 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. II. Differences between accounting data under domestic and overseas accounting standards 1. Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards Unit: RMB Yuan Net profit attributable to shareholders of the Net assets attributable to shareholders of the Company Company 2012 2011 Closing amount Opening amount According to Chinese 375,422,129.64 261,108,340.62 1,502,852,915.53 1,141,460,658.78 accounting standards Items and amounts adjusted according to international accounting standards According to international 375,422,129.64 261,108,340.62 1,502,852,915.53 1,141,460,658.78 accounting standards 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards Unit: RMB Yuan Net profit attributable to shareholders of the Net assets attributable to shareholders of the Company Company 2012 2011 Closing amount Opening amount According to Chinese 375,422,129.64 261,108,340.62 1,502,852,915.53 1,141,460,658.78 accounting standards Items and amounts adjusted according to overseas accounting standards According to overseas 375,422,129.64 261,108,340.62 1,502,852,915.53 1,141,460,658.78 accounting standards 3. Explain reasons for the differences between accounting data under domestic and overseas accounting standards No difference III. Items and amounts of extraordinary gains and losses Unit: RMB Yuan Items 2012 2011 2010 Notes Gain/loss on the disposal of non-current assets (including the offset part of the asset 534,657.73 -26,955.97 3,666,926.49 impairment provisions) 7 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Government grants recognized in the current year, except for those acquired in the ordinary course of business or granted at 1,720,000.00 certain quotas or amounts according to the country’s unified standards The gain of RMB 47,444,108.36 on non-monetary asset swap was formed in the asset trade-in Gain/loss on non-monetary asset swap 47,444,108.36 between the Company and Shenzhen Investment Holdings. See the asset trade-in matters for details. The expenses of RMB -3,152,560.00 on business reorganization, such as expenses on staff Expenses on business reorganization, such arrangements, as expenses on staff arrangements, -3,152,560.00 -87,077.70 integration, etc. were integration, etc. because the subsidiary Shenxin Taxi carried out three mechanisms in the reporting period to reform the dismissal welfare. Current gains and losses of subsidies acquired from business combination under 1,312,539.70 2,936,782.09 2,740,419.93 the same control as from period-begin to combination date Gain/loss on contingent events irrelevant to 3,533,281.90 the Company’s normal business Gains and losses on change in fair value from tradable financial assets and tradable financial liabilities, as well as investment income from disposal of tradable financial 240,074.81 39,900.00 assets and tradable financial liabilities and financial assets available for sales except for effective hedging related with normal businesses of the Company 8 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Reversal of provision for impairment that 623,086.75 842,092.26 1,478,071.21 made impairment test independently Non-operating income and expense other 778,062.12 -1,458,137.35 6,620,338.00 than the above Income tax effects 11,982,949.11 26,727.37 526,001.10 The minority interests effects were the gain/loss distributable to Shenzhen Minority interests effects (after tax) -599,977.23 -1,062,443.49 1,037,700.09 Investment Holdings for Jan.-May 2012 when the subsidiary Shenxin Taxi stripped off assets. Total 37,876,922.78 3,569,571.96 16,428,158.64 -- 9 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section IV. Report of the Board of Directors I. Overview In 2012, the central government made clearer the real estate macro-control concept of “protect rational demand for residence purpose and restrain demand for speculative investment purpose”. It continued to carry out policies such as differential credit and limited housing purchase in a strict manner. Many cities in the country adjusted their housing reserve funds mechanisms and increased the first house credit line to meet rational demands. In the year, the central bank decreased the deposit reserve rate and the interest rate twice. The said policies resulted in an obvious “down and then up” trend in the real estate market. The first-hand commercial house turnover of major cities in China picked up in the second half of the year from both the same period of last year and the first half of the year. De-inventory of real estate enterprises accelerated and major enterprises excellently fulfilled their sales amount and area goals, with their capital status improving significantly. As a result, the second half of the year saw a heat-up of the land market, with investment growth in real estate development gradually picking up. In view of the heat-up in some regional real estate markets at the end of 2012 and in the beginning of 2013, the central government unveiled in Feb. 2013 the “new five real estate macro-control measures of the State Council”, fully indicating its determination to maintain stability of house prices through policy. As local governments unveil their specific implementation measures, new effects will take place in the market. The Company will pay close attention to the effects of relevant policies on the market, attach importance to the ability to manage multiple real estate projects and focus on improving the project development and management capability. At the same time, it will also emphasize building of the “SZPRD” brand and effectively enhance its ability to resist risks. II. Main business analysis 1. Overview For the reporting year, the Company achieved operating revenues of RMB 1,861,298,800, up 30.14% over last year; operating profit of RMB 485,398,200, up 41.07% on a year-on-year basis; total profit of RMB 487,048,100, up 42.01% from last year; and net profit of RMB 374,822,200, up 44.14% over last year. The operating revenues, operating profit, total profit and net profit increased considerably mainly because the real estate income rose significantly. Overview of the reporting period progress of development strategies and business plans disclosed in previous periods: State the reasons why the Company’s actual business performance is 20% lower or higher than the earning forecast for the reporting period which has been publicly disclosed earlier: □ Applicable √ Inapplicable 2. Revenues Explanation: The Company specializes in real estate development, with taxi transportation service, property management, house leasing, etc. as its sidelines. In 2012, the revenue generated from the main 10 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. business reached RMB 1,827,263,100, representing a year-on-year growth of 30.59%; and gross profit of the main business reached RMB 993,371,300. The sales income from the top five customers reached RMB 326,371,800, accounting for 17.86% of the main business income. Is the Company’s goods selling revenue higher than the service revenue? □ Yes □ No Major orders held: □ Applicable √ Inapplicable Significant change or adjustment of the Company’s products or services during the reporting period: □ Applicable √ Inapplicable Major customers: Total sales to the top 5 customers (RMB Yuan) 326,371,841.37 Ratio of the total sales to the top 5 customers to the 17.53% annual total sales (%) Information about the top 5 customers: √ Applicable □ Inapplicable Serial No. Name of customer Sales (RMB Yuan) Proportion in annual total sales (%) 1 Shenzhen Investment Holdings Co., Ltd. 286,024,220.45 15.37% 2 Natural person 13,073,842.00 0.7% 3 Natural person 10,357,958.00 0.56% 4 Tianhong Shopping Plaza Co., Ltd. 9,368,289.92 0.5% 5 Feiran Technology (Shenzhen) Co., Ltd. 7,547,531.00 0.41% Total —— 326,371,841.37 17.53% 3. Costs Real estate development and operation is the core business of the Company. When developing a project, the Company chooses the general contractor or the design institution in the form of open bidding in the government’s relevant construction engineering trading service center according to bidding laws and regulations of China and the project location. For general contracting, the contractor shall purchase main construction materials, and the Company is responsible for procurement for the marketing center on site, sample house decoration, external landscaping, some engineering design, etc. The above-mentioned bidding or procurement projects shall be carried out and the contractors shall be determined according to the bidding administrative rules of the Company. The procurement from the top five suppliers totaled RMB 50.55 million for the year, accounting for 53.8% of the total procurement. Major suppliers: Total purchases from the top 5 suppliers (RMB Yuan) 50,549,459.00 11 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Ratio of the total purchases from the top 5 suppliers to the 53.85% annual total purchases(%) Information about the top 5 suppliers: √ Applicable □ Inapplicable Procurement amount (RMB Proportion in annual total procurement Serial No. Name of supplier Yuan) amount (%) Jiangsu Shanshui Environmental 1 15,959,021.00 17% Construction Group Co., Ltd. Nantong Construction Group Joint-Stock 2 12,548,438.00 13.37% Co., Ltd. Aube Architecture Design (France) Co., 3 9,920,000.00 10.57% Ltd. Shenzhen Jian Zhuang Ye Group (Stock) 4 6,380,000.00 6.8% Co., Ltd. Huasen Architectural & Engineering 5 5,742,000.00 6.11% Designing Consultant Ltd. Total —— 50,549,459.00 53.85% 4. Expense YoY changes of the operating expenses, administrative expenses, financial expenses and income tax expenses, as well as the main reasons for the changes: Item Jan.-Dec. 2012 (RMB Jan.-Dec. 2011 (RMB YoY +/-% Yuan) Yuan) Operating expenses 43,951,174.60 32,792,286.16 34.03 Financial expenses -1,504,589.66 12,452,491.31 -112.08 Income tax 112,225,990.61 82,914,212.42 35.35 expenses Explanation: ① Operating expenses increased mainly because projects for sale increased and marketing was enhanced according to the market changes, causing increase of the marketing expenses. ② Financial expenses decreased mainly because last year, bank borrowings that did not satisfy capitalization conditions were recorded into financial expenses. ③ Income tax expenses increased mainly because total profit rose. 5. Cash flows Unit: RMB Yuan 12 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Item 2012 2011 YoY +/-(%) Subtotal of cash inflows from 2,164,869,117.40 794,880,082.28 172.35% operating activities Subtotal of cash outflows from 1,359,154,920.02 1,148,964,003.41 18.29% operating activities Net cash flows from operating 805,714,197.38 -354,083,921.13 327.55% activities Subtotal of cash inflows from 10,486,382.45 6,020,861.21 74.17% investing activities Subtotal of cash outflows from 4,327,597.65 16,042,221.98 -73.02% investing activities Net cash flows from investing 6,158,784.80 -10,021,360.77 161.46% activities Subtotal of cash inflows from 186,000,000.00 612,495,212.00 -69.63% financing activities Subtotal of cash outflows from 669,463,515.74 324,324,897.53 106.42% financing activities Net cash flows from financing -483,463,515.74 288,170,314.47 -267.77% activities Net increase in cash and cash 328,410,569.80 -76,152,852.96 531.25% equivalents Reasons for any over-30% YoY movement of the data above: √ Applicable □ Inapplicable ① Subtotal of cash inflows from operating activities increased over last year mainly because capital inflows increased due to sale of projects. ② Net cash flows from operating activities increased over last year mainly because capital inflows increased due to sale of projects. ③ Subtotal of cash inflows from investing activities increased over last year mainly because the cash received as investment gains increased. ④ Subtotal of cash outflows from investing activities decreased over last year mainly because vehicle renewal of the relevant subsidiary was less. ⑤ Net cash flows from investing activities increased over last year mainly because the cash received as investment gains increased and vehicle renewal of the relevant subsidiary was less. ⑥ Subtotal of cash inflows from financing activities decreased over last year mainly because the cash received as borrowings decreased. ⑦ Subtotal of cash outflows from financing activities increased over last year mainly because the cash used for loan repayment increased. ⑧ Net cash flows from financing activities decreased over last year mainly because the Company secured fewer borrowings and repaid more loans. ⑨ Net increase in cash and cash equivalents increased over last year mainly because capital inflows increased due to sale of projects. 13 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Reasons for a big difference between the operating cash flows and the net profit: √ Applicable □ Inapplicable There was a great difference between the net cash flows of RMB 805,714,197.38 from operating activities and the net profit of RMB 374,822,152.41. This was mainly because the “cash received from sale of goods and rendering of services” in the cash flow statement was larger than the corresponding “operating revenues” in the income statement due to the fact that the Company received some prepayments for part of the projects but the terms of settlement had not yet been satisfied. III. Breakdown of main business Unit: RMB Yuan Increase/decrease Increase/decrease Increase/decrease Operating Gross profit rate of operating of gross profit Operating costs of operating costs revenues (%) revenues over last rate over last year over last year (%) year (%) (%) Classified by industry: Real estate 1,429,818,416.04 529,936,876.93 62.94% 37.48% 86.91% -9.8% Property management and 284,730,882.17 240,033,558.66 15.7% 13.96% 7.26% 5.26% leasing Transportation 71,332,140.87 36,881,838.97 48.3% -1.58% 14.03% -7.08% Catering service 25,909,847.37 21,782,438.16 15.93% 16.43% 21.08% -3.23% Other 15,471,780.42 5,257,045.72 66.02% 5.62% 45.43% -9.3% Classified by product: Real estate 1,429,818,416.04 529,936,876.93 62.94% 37.48% 86.91% -9.8% Property management and 284,730,882.17 240,033,558.66 15.7% 13.96% 7.26% 5.26% leasing Transportation 71,332,140.87 36,881,838.97 48.3% -1.58% 14.03% -7.08% Catering service 25,909,847.37 21,782,438.16 15.93% 16.43% 21.08% -3.23% Other 15,471,780.42 5,257,045.72 66.02% 5.62% 45.43% -9.3% Classified by region: Shenzhen 1,714,040,958.25 733,366,869.03 57.21% 32.39% 55.42% -6.34% Other 113,222,108.62 100,524,889.41 11.21% 8.3% 12.46% -3.28% Where the Company’s accounting standard of the main business data above changed during the reporting period, give the main business data of the latest year adjusted according to the accounting standard at the end of the reporting period: 14 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. □ Applicable √ Inapplicable IV. Asset and liability analysis 1. Major changes of asset items Unit: RMB Yuan As at 31 Dec. 2012 As at 31 Dec. 2011 Proportio Proportion in Proportion in n change Explain any major change Amount total assets Amount total assets (%) (%) (%) 797,724,311.3 Capital inflows increased due to sale of Monetary funds 19.91% 469,313,741.57 13.21% 6.7% 7 projects. Increase of receivables from house Accounts 76,584,008.68 1.91% 70,557,693.71 1.99% -0.08% owners by the property management receivable subsidiary The prepayment for some land in 2,300,674,551. 1,814,992,629. Inventories 57.42% 51.1% 6.32% Yangzhou was transferred in and the 14 34 project input increased. Investing real 285,258,604.1 7.12% 302,632,518.55 8.52% -1.4% Provisions for depreciation estate 7 Long-term equity 84,249,349.70 2.1% 81,103,539.95 2.28% -0.18% Earnings from associates increased. investment Some fixed assets for leasing were transferred into investing real estate Fixed assets 78,821,168.21 1.97% 86,855,289.26 2.45% -0.48% and the relevant provisions for depreciation were made. Construction in 57,000.00 0% 57,000.00 0% 0% process The prepayment for some land in Prepayments 64,714,990.11 1.62% 474,354,748.39 13.35% -11.73% Yangzhou was transferred in inventories. Deferred income 194,507,824.5 Increase of pre-withdrawn deductible 4.85% 124,102,202.41 3.49% 1.36% tax assets 0 land VAT 2. Major changes of liability items Unit: RMB Yuan 2012 2011 Proportio n change Explain any major change Amount Proportion in Amount Proportion in (%) 15 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. total assets total assets (%) (%) Short-term 360,000,000.0 Some mature short-term borrowings 8.98% 601,495,212.00 16.93% -7.95% borrowings 0 were repaid. Long-term 19,316,666.64 0.48% 7,333,333.32 0.21% 0.27% Increase of borrowings borrowings The tentatively estimated cost 298,525,752.3 Accounts payable 7.45% 187,093,587.42 5.27% 2.18% increased as some projects were 2 completed. Accounts 678,075,291.0 received in 16.92% 208,655,909.41 5.87% 11.05% Increase of project sale 1 advance Some projects were carried forward Taxes and fares 733,659,679.7 18.31% 499,957,087.36 14.08% 4.23% into revenues and the relevant land payable 1 VAT provisions increased. 195,045,649.9 The payable for the land of the Moon Other payables 4.87% 480,433,469.91 13.53% -8.66% 8 Bay was transferred out. Non-current liabilities due 14,909,888.32 0.37% 218,359,888.32 6.15% -5.78% Due liabilities were repaid. within one year 3. Assets and liabilities measured at fair value Unit: RMB Yuan Gain/loss on Cumulative fair Impairment Purchased fair value Sold amount in Opening value change provisions in amount in the Closing Item change in the the reporting amount recorded into the reporting reporting amount reporting period equity period period period Financial assets 1. Financial assets measured at fair value and of which changes are 0.00 0.00 recorded into current gains/losses (excluding derivative 16 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. financial assets) 2. Derivative 0.00 0.00 financial assets Subtotal of 0.00 0.00 financial assets Total of the 0.00 0.00 above Financial 0.00 0.00 liabilities Did any significant change occur to the attribute of the Company’s main asset measurement during the reporting period? □ Yes √ No V. Core competitiveness analysis In face of a complex and changeable real estate market, the Company was honored as one of the “Top 100 Real Estate Listed Companies of China for 2012” in the year. Meanwhile, Building No. 21 of SZPRDShengang No. 1 and SZPRDLangqiao International helped the Company win the best project award in the first “Golden Building Awards” of Shenzhen and some other honors. The size and profitability of the Company keep increasing because the existing Shenzhen projects have a great value due to low costs for land and the position in the core of the city; and the Company has been carrying out the fine product strategy in recent years with highly-positioned development projects, excellent product quality and an increasingly recognized brand image. In the coming future, the Company will continue to adhere to the development philosophy of “Quality Property, Quality Life”, keep increasing the management and operation capability, build up high-end products, better the brand, and cultivate and improve the core competitiveness. VI. Investment analysis 1. Investments in equities of external parties (1) Securities investments Equity-holdings in other listed companies: Change of Code of Name of Initial investment Stake in the Closing book Gain/loss for Accounting Source of owners’ equity in securities securities amount investee value reporting period title stock reporting period 000509 S*STHS 2,962,500.00 0.33% 802,199.55 0.00 0.00 Purchasing Long-term legal person equity shares investment directionally 17 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total 2,962,500.00 - 802,199.55 0.00 0.00 2. Analysis to main subsidiaries and stock-participating companies Particulars about main subsidiaries and stock-participating companies: Operating Operating Main Total assets Net assets Company Company Registered revenues profit Net profit Industry products/ser (RMB (RMB name variety capital (RMB (RMB (RMB Yuan) vices Yuan) Yuan) Yuan) Yuan) Constructio n, operation and Shenzhen managemen Huangchen t of 1,937,161,3 490,463,07 1,375,285,5 458,707,1 345,045,448. g Real Subsidiary Real estate 30,000 developmen 66.63 1.30 06.24 50.73 06 Estate Co., t facilities Ltd. at Huanggang Port SZPRD Developme Real Estates 697,633,47 99,418,957. 99,259,652. 28,239,58 21,116,343.1 Subsidiary Real estate nt of real 30,950 Developme 4.81 23 00 6.14 0 estate nt Co., Ltd. Explain particulars about main subsidiaries and stock-participating companies: The operating profit and net profit of Shenzhen Huangcheng Real Estate Co., Ltd. increased significantly due to the considerable growth of the real estate sales income. And the profit was turned in, so net assets remained almost the same. Subsidiaries acquired or disposed during the reporting period: □ Applicable √ Inapplicable 3. Significant projects invested with non-raised funds Unit: RMB’000 Estimated total Input for this Cumulative actual Project name Project progress Project earnings investment year input SZPRD-Langqiao Construction has International (Langqiao 514,170 174,290.67 578,370.68 —— been completed. Residence) SZPRD-Caitianyise Construction was 170,000 65,946.53 176,094.49 —— about to come to 18 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. an end. SZPRD-Banshanyujing 793,000 118,824.78 346,397.12 In construction —— (first and second phases) SZPRD-Songhulangyuan (previously land in 687,110 10,741.25 234,982.86 In construction —— Dalang, Dongguan) SZPRD-Jinling Holiday (previously land in 3,494.63 65,492.62 In preparation —— Huanggang Port) SZPRD-West Lake Wonder (land in 185,849.14 621,738.94 In preparation —— Yangzhou) SZPRD-Blue Bay (land 906.38 272,210.75 In preparation —— in the Moon Bay) Total 560,053.38 2,295,287.46 —— Note: All the above were real estate development projects. VII. Entities controlled by the Company for special purposes For details, see “Section X. Financial Report; VI. Business combination; 2. Events”. VII. Outlook of the Company’s future development 1. Countermeasures against risks (1) About policy risks In 2013, the macro-control policies such as “limited purchase” will carry on and be further enhanced. Local governments’ specific implementation rules of the “five real estate macro-control measures of the State Council” will impose more requirements on differential credit, real estate tax, pre-sale management of commercial houses, etc. This round of real estate macro-control will extend to the trading of second-hand houses, producing both short-term and long-term effects on the market. As such, the market in 2013 is full of uncertainties. The Company will attach great importance to studying the policy trend, enhance analysis on the specified policies for the project locations, analyze possible market changes in depth and formulate development and marketing strategies for all projects with the big picture in mind and within the framework of the annual goals. (2) About financial risks In the year, the central bank decreased the deposit reserve rate and the interest rate twice, giving some credit relief. Despite a market recovery at the end of 2012, the policy of “limited purchase and credit” is still strict in 2013 and the financing channels of real estate enterprises are greatly restrained. As such, the market uncertainties in 2013 may impose risks on the sales and capital inflow of the Company. The Company will strengthen financial risk control and beef up capital inflow from project sale; activate the existing assets and expand financing channels for more capital support; and enhance financial management and stick to the management mode of “capital pool” within the Group to maximize the capital effects. (3) About operating risks 19 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. ① Operation risks The real estate macro-control measures such as limited purchase and credit, mass construction of houses for low-income people, etc. in recent years have objectively and relatively narrowed the market space, causing a shift from an extensive to an intensive competition in the sector. With a bigger size, leading enterprises are gaining more and more advantages in terms of financing, investment, risk resistance, etc. while small-and medium-sized enterprises are facing fiercer competition. The Company has always kept a clear mind in dealing with pressure from competition. It enhances the main operation capability of real estate, accelerates the turnover of project development and makes full use of re-investment to achieve snowball-style development. In order to ensure a sustainable development, the Company will keep an eye on Shenzhen and its surroundings, Xuzhou, Yangzhou and other target land. Upon in-depth study and analysis, the Company will increase its land reserve properly so as to expand the development scale. Meanwhile, development and accumulation over a long time has given the Company excellent fundamentals. And it will enhance its study on the capital market under the current conditions to look for opportunities to increase its overall strength. ② Management risks A good corporate management is an important guarantee for performance stability and financial security. Affected by the real estate macro-control, the current operating environment in the sector is complex and changeable. Along with more and more development projects, projects outside Shenzhen in particular, it is increasingly complicated for the Company to manage. In 2012, the Company achieved outstanding progress in improving and standardizing real estate development management, internal control & risk management, corporate culture management, etc. In 2013, the Company will continue to improve all the management mechanisms; focus on the formulation and execution of a brochure for real estate development; optimize the organizational, operation and process management of the main business of real estate; and effectively enhance control over all projects. 2. Plans for 2013 For 2013, the Company plans to achieve main operating revenues of RMB 1.58 billion with the period expense and cost at RMB 870 million. The Company will stabilize the sideline operation with increasing profitability as the core, enhance scientific management, and strengthen mechanisms for risk control and internal control. It will also build a professional and competitive team, cultivate a corporate culture of “be the first and reform for growth”, and try to achieve a quality and steady growth, as well as a sustained overall development. The Company will focus on the following tasks in 2013: (1) With the fine product strategy as the core, the Company will try to achieve a sustained and sound growth of the main business of real estate. On the basis of standardizing real estate development mechanisms and processes, the Company will work on high-quality buildings, promote the brand image of “Quality Property, Quality Life”, beef up the construction progress of all projects, input great efforts for the engineering quality, and improve customer service for projects on sale. Meanwhile, it will enhance study on the government’s macro-economic policies, analyze the real estate market policies in a scientific way, optimize its real estate development strategies, improve the market-oriented operation of the main business of real estate, keep an eye on the land markets of the second-and third-tier cities in the country, and increase its land reserve properly. (2) The Company will improve management measures to enhance its scientific management capability. With the “Real Estate Brochure” as the basis and project management as the core, the Company specifies the power & responsibility mechanism and the management scope for real estate development, improves management measures for all projects, specifies working standards and standardizes working processes. At the same time, it completes the management mechanisms for financial affairs, personnel, business, etc. of its real estate subsidiaries outside Shenzhen; builds up a data base of qualified suppliers; improves the post-project appraisal mechanism; 20 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. and keeps increasing its real estate development and management capability. (3) The Company will promote and implement its cultural philosophy and make innovations of its corporate culture. With its corporate culture brochure and employees’ brochure as the foundation, the Company standardizes behaviors of its employees, promote pragmatism and efficiency among them, and encourages reform and innovation. These will bring the philosophy of modern corporate management into minds of the employees, enable the spirit of “be the first and reform for growth” to enter all sectors of the Company, and thus enable the Company to enter a new stage of corporate culture development. 3. Particulars about demand for capital, plan for capital use and capital source In the year 2013, it is expected that over RMB 660 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. IX. Explain change of the accounting policy, accounting estimate and measurement methods as compared with the financial reporting of last year N/A X. Explain retrospective restatement due to correction of significant accounting errors in the reporting period N/A XI. Explain change of the consolidation scope as compared with the financial reporting of last year See “Section X. Financial Report; VI. Business Combination and Consolidated Financial Statements; 2, 3 and 4”. XII. Profit allocation and dividend distribution Formulation, execution or adjustment of the Company’s profit distribution policy, especially the cash dividend policy, during the reporting period: In the reporting period, in order to set up a scientific, sustained and steady mechanism concerning returns for shareholders as required by CSRC, the Company has worked out a plan for returns for shareholders for the coming three years. Meanwhile, it revises its Articles of Association, which has increased the transparency of cash dividend distribution, safeguarded the legal rights and interests of minority shareholders in a better way and improved the corporate governance. The Company’s preplans for profit distribution and turning capital reserve into share capital for the reporting period were in compliance with relevant rules such as the Company’s Articles of Association. The Company’s preplans or plans for profit distribution and turning capital reserve into share capital for the recent three years (including the reporting year): Year Plan for profit allocation or turning capital reserve into share capital 2012 The Company did not allocate profit or turn capital reserve into share capital. 21 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2011 The Company did not allocate profit or turn capital reserve into share capital. 2010 The Company did not allocate profit or turn capital reserve into share capital. Cash dividend distribution of the Company over the recent three years: Unit: RMB Yuan Ratio the amount of cash Net profit attributable to dividend to the net profit Amount of cash dividend shareholders of the Company in Year attributable to shareholders of (tax included) the consolidated statement for the Company in the the year consolidated statement (%) 2012 0.00 375,422,129.64 0% 2011 0.00 261,108,340.62 0% 2010 0.00 176,701,254.63 0% The Company (including its subsidiaries) made profit in the reporting period and the retained profit of the Company (without subsidiaries) was positive, but it did not put forward a preplan for cash dividend distribution: √ Applicable □ Inapplicable Reason for the Company (including its subsidiaries) making profit in the reporting period with the retained profit of the Use plan for retained profit Company (without subsidiaries) being positive, but not putting forward a preplan for cash dividend distribution Considering the Company’s 2013 annual business plan, its current capital situation and the continuously strict macro-control by the government on the real estate market in 2013, the main capital source of the Company in 2013, i.e. capital inflows from sale of houses, is expected to be greatly uncertain. Therefore, in To be continuously input for development of the existing project order to satisfy capital needs for project development and ensure that all projects are developed in a smooth way and the strategic planning goals are achieved, the Company will not allocate profit or turn capital reserve into share capital for 2012. XIII. Social responsibilities Following a strict engagement procedure, the Company adhered to the open, transparent and fair engagement principles, provided competitive remunerations and attracted a team of great talent. According to post and actual needs, the Company enhanced training and provided its employees with high quality trainings such as new employee trainings, occupational spirit trainings, leading capability trainings for managerial personnel, various professional skill trainings, etc. to help its employees improve their comprehensive quality and professional skills. Meanwhile, the Company encouraged a performance-oriented culture, objectively appraising employees’ working performance and conducts through objective, fair, standardized, transparent and scientific performance appraisal methods; promoting continuous improvement of the performance of both the Company and its employees; and providing a fair development space for employees. The Company also worked on creating an active and healthy cultural atmosphere for employees by encouraging them to attend various activities by the labor union such as 22 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. sports activities of badminton, soccer, mountain climbing and swimming. The Company built up a smooth communication mechanism based on face-to-face talks, discussions and meetings, online forums, staff satisfaction survey, etc. to listen to voices of its employees. The Company is a big supporter for the “one-on-one” support project of SASAC. In 2012, it took an active part in helping the poor area of Zhanjiang, contributing a great support to the local economy. It set up a poverty relief fund and conducted the 7th campaign of “Hand in Hand, Heart to Heart” to donate to employees in difficulty. The kind-hearted drivers of the subordinate businesses Shenzhen Guomao Vehicle Industry Co., Ltd. and Shenxin Taxi Co., Ltd. organized a vehicle team to offer quality and free-of-charge transportation service to disabled people, students who were going to attend the university entrance exam, other special groups and some large-sized commonweal activities (like the Ceramic Fair). XIV. Particulars about researches, visits and interviews received in this reporting period Main discussion and Time of reception Place of reception Way of reception Visitor type Visitor materials provided by the Company BOD Office of the When would the Qianhai 15 Feb. 2012 By phone Individual Investor Company Project kick off? Progress on the equity BOD Office of the 16 Feb. 2012 By phone Individual Investor transfer of Shenxin Taxi Company Co., Ltd. BOD Office of the Did the Company have any 2 Mar. 2012 By phone Individual Investor Company project outside Shenzhen? BOD Office of the Progress on the Qianhai 11 Apr. 2012 By phone Individual Investor Company Project BOD Office of the Progress on the projects 23 May 2012 By phone Individual Investor Company outside Shenzhen BOD Office of the When would the Qianhai 3 Jul. 2012 By phone Individual Investor Company Project kick off? BOD Office of the The Company’s dividend 18 Jul. 2012 By phone Individual Investor Company planning BOD Office of the Progress on the projects 9 Aug. 2012 By phone Individual Investor Company outside Shenzhen BOD Office of the Particulars about the project 11 Sept. 2012 By phone Individual Investor Company in Yangzhou Implementation of the stock BOD Office of the 20 Sept. 2012 By phone Individual Investor right splitting reform by the Company majority shareholder Investor interaction The Company’s market 31 Oct. 2012 Written inquiry Individual Investor platform expansion plan 31 Oct. 2012 Investor interaction Written inquiry Individual Investor Countermeasures adopted 23 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. platform and the Company’s expectations about the market BOD Office of the 14 Dec. 2012 Field research Individual Investor Project progress Company 24 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section V. Significant Events I. Significant lawsuit or arbitration 1. No new significant lawsuit or arbitration occurred in the reporting period. 2. Reporting period progress on significant lawsuits or arbitrations disclosed previously (1) The case of “Meisi Company Lawsuit” disclosed continuously by the Company in the Annual Reports from 2004 to 2012 Shenzhen Meisi Industrial Co., Ltd. (“Meisi Company”) brought a civil action (Case (2009) SZFMWCZ No. 71) against the Company in Feb. 2009. During the trial by Shenzhen Intermediate People’s Court, the plaintiff Meisi Company filed a withdrawal application. Upon discussion by the Trial Committee of the court on 30 Sept. 2012, the ruling was given that the plaintiff Meisi Company was permitted to withdraw its accusation. On 8 Oct. 2012, the Company received the civil judgment issued by Guangdong Shenzhen Intermediate People’s Court. The case withdrawal by Meisi Company left the ownership of the involved land and housing properties in an uncertain status. Therefore, the Company brought a civil action against Meisi Company, hoping to solve this ownership dispute through civil legal channels. On 26 Oct. 2012, the civil action brought by the Company against Shenzhen Luohu Economic Development Co., Ltd. and Meisi Company was accepted by Guangdong Shenzhen Intermediate People’s Court. The Company requested the court to rule that the land and housing properties involved in the case shall belong to the Company. For details, see the interim announcements disclosed by the Company on “Securities Times”, “Ta Kung Pao (HK)” and the website designated for information disclosure (http://www.cninfo.com.cn) dated 10 Oct. 2012 and 29 Oct. 2012 respectively. II. Occupation of the Company’s capital by the controlling shareholder and its related parties for non-operating purposes III. Asset transactions 1. Asset acquisition Net profit Net profit Ratio of Relationsh contributed to contributed to the net ip between the Company the Company profit the Transacti Transacti from the from the contribut Related transaction on party Asset on price acquisition date year-begin to ed by the -party party and or acquired (RMB Disclosure Disclosure Progress to the the period-end asset to transact the ultimate or Ten date index period-end (RMB Ten the ion or Company controlle bought in thousand (RMB Ten thousand) Compan not (applicable r ) thousand) (applicable for y to the for (applicable for business total related-par business combinations profit ty 25 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. combinations under the (%) transaction not under the same control) s) same control) Land Parcel T102-02 37 of the Shenzhe All Moon Controllin n transferre Bay and g http://www.c Investme d to the 100% 30,409 37.04 0.1% Yes shareholde 4 Sept. 2012 ninfo.com.c nt Compan equity r of the n Holdings y in May interests Company Co., Ltd. 2012 of Shenxin Taxi Co., Ltd. Overview of asset acquisition: For details, see Section X. Financial Report: VI. Business Combination and Consolidated Financial Statements and IX. Related parties and related-party transactions. 2. Sale of assets Relation Net Ratio of ship profit Whether the net between contribu or not Whether profit the ted by the or not Transact contribu transacti the the asset Gain/los ownersh creditor’ ion ted to Related- on party from the s on sale ip of the s right Transact price the Pricing party and the and Disclos Asset Date of period-b (RMB asset liabilitie Disclos ion (RMB Compan principl transacti Compan ure sold sale egin to Ten involve s ure date party Ten y by the e on or y involved index the date thousan d has have thousan asset not (applica of sale d) been been d) sale to ble for fully (RMB fully transferr the total related- Ten transferr ed profit party thousan ed (%) transacti d) ons) Shenzhe Some 31 May Controll http://w n housing 2010 Market ing 4 Sept. ww.cnin Investm properti (owners 30,656 0 3,500 9.32% evaluati Yes Yes Yes sharehol 2012 fo.com. ent es such hip on price der cn Holding as the transfer 26 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. s Co., Huangc formalit Ltd. heng ies Square complet held by ed in the 2012) Compan y and its wholly-f unded subsidia ry Shenzhe n Huangc heng Real Estate Co., Ltd. Overview of sale of assets: For details, see Section X. Financial Report: VI. Business Combination and Consolidated Financial Statements and IX. Related parties and related-party transactions. 3. Business combination For details, see Section X. Financial Report: VI. Business Combination and Consolidated Financial Statements and IX. Related parties and related-party transactions. IV. Significant related-party transactions 1. Credits and liabilities with related parties Was there any credit or liability with any related party for non-operating purpose? √ Yes □ No Amount Non-operating Variety of Opening incurred in Closing capital Related party Relationship credit or Reason balance (RMB reporting balance (RMB occupation or liability Ten thousand) period (RMB Ten thousand) not? Ten thousand) Shenzhen Guomao Joint venture Creditor’s Tian’an Properties Dividend of the rights No 971 -971 0 receivable Co., Ltd Company receivable 27 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. from the related party Creditor’s The Company rights Anhui Nanpeng Working held a 30% receivable No 768 -3 765 Papermaking Co., Ltd funds stake in it. from the related party Creditor’s Shenzhen Guomao The Company rights Working Industry Development held a 38.33% receivable No 255 -20 235 funds Co., Ltd. stake in it. from the related party Creditor’s Shenzhen Wufang The Company rights Working Pottery & Porcelain held a 26% receivable No 175 175 funds Industrial Co., Ltd stake in it. from the related party Under the Creditor’s same control rights Shenzhen Guest House Intra-Group of the parent receivable No 91 91 Co., Ltd. funds company of from the the Company related party Creditor’s Controlling rights Shenzhen Investment Intra-Group shareholder of receivable No 16 26 42 Holdings Co., Ltd. funds the Company from the related party Creditor’s Joint venture rights SZPRD Jifa Intra-Group of the receivable No 1,555 400 1,955 Warehouse Co., Ltd funds Company from the related party Creditor’s Shenzhen Tian’an Joint venture rights International Building Intra-Group of the receivable No 150 150 Property funds Company from the Management Co., Ltd related party Creditor’s Shenzhen Guomao Joint venture rights Tian’an Properties Intra-Group of the receivable No 1,350 1,350 funds Co., Ltd Company from the related party 28 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Creditor’s Entrustment Controlling rights borrowings Shenzhen Investment shareholder of receivable and No 76,177 -52,177 24,000 Holdings Co., Ltd. the Company from the intra-Group related party funds V. Particulars about significant contracts and their fulfillment 1. Provision of guarantees Unit: RMB Ten thousand Guarantees provided by the Company for external parties (excluding those for subsidiaries) Disclosure date of Guarante Actual relevant Actual e for a Amount for occurrence date Type of Period of Executed Guaranteed party announcem guarantee related guarantee (date of guarantee guarantee or not ent on the amount party or agreement) guarantee not amount Shenzhen Guomao 23 May Vehicle Industry Co., 2,600 11 Jan. 2012 2,420 Pledge 3 years No No 2011 Ltd. Joint-liability Shenzhen Guomao 23 May 4,000 27 Jul. 2012 4,000 guarantee; 1 year No No Car Rental Co., Ltd. 2011 pledge Shenzhen Guomao 19 Mar. Mortgage; Vehicle Industry Co., 4,000 29 Mar. 2012 4,000 1 year No No 2010 pledge Ltd. Total external guarantee line Total actual occurred amount approved during the reporting 0 of external guarantee during 10,420 period (A1) the reporting period (A2) Total external guarantee line that Total actual external guarantee has been approved at the end of 10,600 balance at the end of the 10,420 the reporting period (A3) reporting period (A4) Guarantees provided by the Company for its subsidiaries Disclosure Guarante date of Actual Actual e for a relevant Amount for occurrence date Type of Period of Executed Guaranteed party guarantee related announcem guarantee (date of guarantee guarantee or not amount party or ent on the agreement) not guarantee 29 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. amount Shenzhen 19 Mar. Huangcheng Real 46,000 29 Mar. 2012 20,000 Mortgage 1 year No No 2010 Estate Co., Ltd. Shenzhen Guomao 23 May Joint-liability Vehicle Industry Co., 21,400 28 Apr. 2012 6,000 1 year No No 2011 guarantee Ltd. Shenzhen Guomao 23 May Vehicle Industry Co., 2,000 11 May 2012 2,000 Mortgage 1 year No No 2011 Ltd. Total guarantee line approved for Total actual occurred amount the subsidiaries during the of guarantee for the 141,000 28,000 reporting period subsidiaries during the (B1) reporting period (B2) Total guarantee line that has been Total actual guarantee balance approved for the subsidiaries at 210,400 for the subsidiaries at the end 28,000 the end of the reporting period of the reporting period (B4) (B3) Total guarantee amount provided by the Company (total of the above-mentioned two kinds of guarantees) Total guarantee line approved Total actual occurred amount during the reporting period 141,000 of guarantee during the 38,420 (A1+B1) reporting period (A2+B2) Total guarantee line that has been Total actual guarantee balance approved at the end of the 221,000 at the end of the reporting 38,420 reporting period period (A4+B4) (A3+B3) Proportion of total guarantee amount (A4+B4) in the net assets 25.56% of the Company Of which: Amount of guarantee for shareholders, actual controller and 0 related parties (C) Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not less than 70% directly or 38,420 indirectly (D) Part of the amount of the total guarantee over 50% of net assets 0 (E) Total amount of the above three guarantees (C+D+E) 38,420 The Company provided a total guarantee amount of RMB 384.20 Explanation on the possibility of bearing joint responsibility of million to external parties, including a guarantee amount of RMB liquidation due to immature guarantee 280 million provided by the Company for its subsidiaries and a 30 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. guarantee amount of RMB 104.20 million provided by subsidiaries to subsidiaries. Neither the Company nor its subsidiaries provided guarantees for any company not in the consolidation scope. Up to the end of the reporting period, subsidiaries were in normal operation and the loans were also in a normal status, with the risk being controllable. Explanation on provision of guarantees for external parties in N/A violation of the prescribed procedure Particulars about guarantees provided in a compound way: 2. Other significant contracts Book Evaluated value of value of Base day Transactio Related-pa Execution involved involved Evaluation Signing Signing for Pricing n price rty Relationsh progress assets assets agency (if company person evaluation principle (RMB Ten transaction ip up to (RMB Ten (RMB Ten any) (if any) thousand) or not period-end thousand) thousand) (if any) (if any) VI. Fulfillment of commitments 1. Commitments made during the reporting period or ending before the end of the reporting period by the Company or shareholders owning over 5% shares Shenzhen Construction Investment Holdings Co., Ltd. (hereinafter referred to as “Construction Holdings”) and Shenzhen Investment Management Co., Ltd. (hereinafter referred to as “Investment Management Company”) were nominal shareholders of the Company (Shares of the Company are registered under the name of these two companies.). Later, these two companies and Shenzhen Trade & Commerce Investment Holdings Co., Ltd. combined on a legal basis and became one company known as Shenzhen Investment Holdings Co., Ltd. (hereinafter referred to as “Investment Holdings”). However, due to various reasons, the Company’s shares held by Construction Holdings and Investment Management Company has not been transferred to Investment Holdings, which is the actual controller of the Company. 1. Investment Holdings stated that it would establish and perfect the internal control over undisclosed information of the listed company known by it, urge relevant insiders not to trade the shares of the Company by making use of the undisclosed information, not suggest other buying and selling shares of the Company, nor leak any undisclosed information of the Company. Meanwhile, it would provide an insider name list to the Company in a timely, factual, accurate and complete way so that the Company could submit the name list to the Shenzhen Bureau of CSRC and the Stock Exchange for records. In the reporting period, it was found that no actual controller of the Company or insiders bought and sold stocks of the Company by taking advantage of undisclosed information of the Company. And the Company submitted monthly the particulars about the parties to which the undisclosed information had been submitted to CSRC Shenzhen Bureau for reference. 2. Commitments made by non-tradable shareholders in the share merger reform 31 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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: ①Non-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, 32 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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.; till 29 March 2011, Shenzhen Investment Holdings has provided entrust loan of RMB 500 million for the Company. This commitment has been fulfilled. 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. VII. Particulars about employing and dismissing accounting firms Accounting firm in employment Name of accounting firm from inside China Union Power Certified Public Accounts Co., Ltd. Payment of accounting firm from inside 52 China(ten thousand) Number of years of audit service conducted in succession by accounting firm from inside 11 China During the reporting period, with the need of internal control audit, the Company employed Union Power Certified Public Accounts Co., Ltd. as the accounting firm for internal control audit. Within 33 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. the period, the Company paid RMB 230,000 for internal control audit. 34 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section VI. Changes in shares and particulars about shareholders I. Changes in shares Before the change Increase/decrease for this reporting period(+, - ) After the change Transfer Newly of Proporti Bonus Proporti Amount issued capital Other Subtotal Amount on (%) shares on (%) shares reserve to shares I. Shares subject to 383,219, 382,438, 64.3% -780,585 64.17% trading moratorium 164 579 2. Share held by 380,287, 380,365, state-owned 63.81% 78,515 63.82% 429 944 corporations 3. Shares held by other 2,931,73 2,072,63 0.49% -859,100 0.35% domestic investors 5 5 Among which: Shares 2,403,73 2,072,63 held by domestic 0.4% -331,100 0.35% 5 5 corporations Shares held by domestic natural 528,000 0.09% -528,000 0 persons 5. Shares held by 0 0% senior executives II. Shares not subject 212,759, 213,540, 35.7% 780,585 35.83% to trading moratorium 928 513 1. RMB ordinary 145,154, 145,935, 24.36% 780,585 24.49% shares 685 270 2. Domestically listed 67,605,2 67,605,2 11.34% 0 11.34% foreign shares 43 43 III. Total amount of 595,979, 595,979, 100% 100% shares 092 092 Reasons for changes in shares (I) Explanation about increase/decrease for this reporting period of I. Shares subject to trading moratorium (1) Reasons why shares held by state-owned corporations increased 78,515 shares are as follows: Non-tradable shares held by Geng Qunying, the natural person and committeeman of Labor Union Committee of China Shenzhen International Cooperation (Group) Co., Ltd, has ended the restricted period, and Geng Qunying has repaid the party paying in advance the consideration in reform of 35 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. non-tradable shares— Shenzhen Construction Investment Holdings Company(state-owned corporation). Shares accumulatively repaid reached 78,515 shares and the obligation of repaying advanced payment was fulfilled on 18 June 2012. Therefore, shares held by state-owned corporations under the title had an increase. For details see Informative Announcement on Canceling Restriction on Non-tradable shares. (2) Reasons about a decrease of 859,100 shares in shares held by other domestic investors are as follows: Geng Qunying, the natural person and committeeman of Labor Union Committee of China Shenzhen International Cooperation (Group) Co., Ltd, repaid the advanced payment on 18 June 2012 and Shares accumulatively repaid reached 78,515 shares. Shares held by Geng Qunying were unlocked on 23 July 2012 and began to circulate in the market (For details see Informative Announcement on Canceling Restriction on Non-tradable Shares published on 20 July 2012). The total amount of circulating shares of this time reached 780,585 shares, and shares held by other domestic investors decrease by 859,100. (II) Particulars about increase/decrease for this reporting period of II. Shares not subject to trading moratorium: Geng Qunying, the natural person and committeeman of Labor Union Committee of China Shenzhen International Cooperation (Group) Co., Ltd, repaid the advanced payment on 18 June 2012. Shares held by him were unlocked on 23 July 2012 and began to circulate in the market (For details see Informative Announcement on Canceling Restriction on Non-tradable Shares published on 20 July 2012). The total amount of circulating shares of this time reached 780,585 shares. Therefore, the total increase of shares not subject to trading moratorium was 780,585 shares. (III) Subsequent events A shares of the Company held by Shenzhen Construction Investment Holdings Company were unclocked on 4 Nov. 2012. According to the commitment of Shenzhen Investment Holdings on unlocking non-tradable shares, 5% shares of the Company held by Shenzhen Construction Investment Holdings Company, that’s to say, 29,798,954 shares have been unclocked, and began to circulate on 24 Jan. 2013. For details see Informative Anouncement on Cancelling Restriction on Non-tradable Shares on 22 Jan. 2013. Till the announcement date of this report, the total amount of non-tradable shares of the Company will reach 352,639,625 shares, the total amount of tradable shares will reach 243,339,467 shares. II. Issuance and listing of securities 1. Issuance of securities till the end of this reporting period Amount of Name of shares Issue price(or shares Ending date of and derivative Issue date Issue quantity Listing date ratio) authorized for exchange securities listed exchange Stocks Convertible corporate bonds, separably-traded convertible bonds, corporate bonds warrants 36 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Issuance of securities of the last three times During the last three years till the end of the reporting period, the Company never issued stocks, Convertible corporate bonds, separably-traded convertible bonds, corporate bonds and other derivative securities. 2. Explanation about changes in total amount of shares, shareholder structure, corporate assets and debt structure During the reporting period, there existed no change in total amount of shares, stock structure, and no change in corporate assets and debt structure resulting from the former change. III. Particulars about shareholders and actual controllers 1. Amount of corporate shareholders and shareholdings Unit: Share Total amount of shareholders till the end of the Total amount of shareholders 45,928 5th trading day before the disclosure date of 44,999 within the reporting period annual report Stockholdings of shareholders owning over 5% shares Increas Pledged or frozen shares Amou e/ nt of decrea Amou Amou shares Proportion of se nt of nt of Name of Type of till the shareholding during non-tra tradabl Condition of Shareholder shareholders end of Amount (%) the dable e shares reporti reporti shares shares ng ng period period SHENZHEN CONSTRUCT ION State-owned 323,78 323,78 54.33% 0 INVESTMEN corporation 3,371 3,371 T HOLDINGS COMPANY SHENZHEN INVESTMEN T State-owned 56,582 56,582 MANAGEME 9.49% 0 corporation ,573 ,573 NT CORPORATI ON SHENZHEN GUO MAO State-owned 2,514, 2,514, 0.42% 0 0 CENTER corporation 781 781 PROPERTY 37 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. MANAGERM ENT COMPANY SHENZHEN Non-state-own DUTY-FREE ed corporation 1,730, 1,730, 0.29% 0 COMMODIT from inside 300 300 Y CO., LTD. China GUOSEN SECURITIES- CLIENT CREDIT Non-state-own COLLATERA ed corporation 1,387, 1,387, 0.23% 0 L from inside 000 000 SECURITIES China TRADING ACCOUNT WU Domestic 1,193, 1,193, 0.2% 0 XUELING natural person 300 300 CHINA MERCHANTS SECURITIES- CLIENT Non-state-own CREDIT ed corporation 1,164, 1,164, COLLATERA 0.19% 0 from inside 604 604 L China SECURITIES TRADING ACCOUNT CHEN Domestic 1,007, 1,007, 0.17% 0 LIYING natural person 151 151 Domestic 1,000, 1,000, LONG KEYI 0.17% 0 natural person 011 011 GUOTAI JUNAN Foreign legal 932,30 932,30 SECURITIES 0.16% 0 person 4 4 (HONGKONG ) LIMITED Strategic investors or common legal persons become the top None 10 shareholders because of 38 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. issue of additional shares (if there exists such situation) The first and second principal shareholders of the Company are managed by Shenzhen Investment Holding Corporation, the actual controlling shareholder of Explanation about associated the Company. The third shareholder is the wholly-owned subsidiary company relationship or concerted action indirectly controlled by the Company. Except for these, the Company is not among the above shareholders aware of whether there exists associated relationship or concerted action among the other seven shareholders. Shareholdings of the top ten shareholders not subject to trading moratorium Amount of shares not subject to trading Type of share Name of shareholders moratorium till the end of the year(Note 4) Type of share Amount SHENZHEN GUO MAO CENTER PROPERTY RMB ordinary 2,514,781 2,514,781 MANAGERMENT shares COMPANY GUOSEN SECURITIES-CLIENT CREDIT COLLATERAL RMB ordinary 1,387,000 1,387,000 SECURITIES TRADING shares ACCOUNT RMB ordinary WU XUELING 1,193,300 1,193,300 shares CHINA MERCHANTS SECURITIES-CLIENT CREDIT COLLATERAL RMB ordinary 1,164,604 1,164,604 SECURITIES TRADING shares ACCOUNT Foreign capital CHEN LIYING 1,007,151 shares listed in 1,007,151 China RMB ordinary LONG KEYI 1,000,011 1,000,011 shares GUOTAI JUNAN Foreign capital SECURITIES (HONGKONG) 932,304 shares listed in 932,304 LIMITED China Foreign capital ZHOU YONGHONG 668,500 shares listed in 668,500 China 39 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. CHINA INTERNATIONAL RMB ordinary 645,974 645,974 CAPITAL CORPORATION shares Foreign capital LIU LIAOYUAN 641,900 shares listed in 641,900 China Explanation about associated relationship and concerted action among the top ten shareholders not subject to trading moratorium as well as Whether there exists associated relation or concerted action among the top ten between the top ten shareholders not subject to trading moratorium is unknown. shareholders not subject to trading moratorium and the top ten shareholders 2. Particulars about controlling shareholders 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”. During the reporting period, there existed no change in the controlling shareholder and the actual controller. 3. Particulars about the actual controller Block diagram of property rights and control relationship between the Company and the actual controller 40 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. State-owned Assets Supervision and Administration Commission of Shenzhen 100% 100% Shenzhen Investment Holdings Co., Ltd. 63.82% The Company 4. Other institutional shareholders owning over 10% shares During the reporting period, there existed no other institutional shareholders owning over 10% (including 10%) shares. 41 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section VII. Directors, supervisors, senior executives and staff I. Changes in shares held by directors, supervisors, senior executives During the reporting period, there existed no directors, supervisors, senior executives holding shares of the Company. II. Particulars about employers Work experience of current directors, supervisors and senior executives over the recent five years 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. Since 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 42 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 kept acting as CFO of the Company. Since June 2011, he is acting as director and 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 April 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 Department in Shenzhen Investment Holdings Co., Ltd. and Director of the Company. Independent Directors: Mr. Li Xiaofan, was born in May 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;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. Mr. Dong Zhiguang, was born in February 1957, Bachelor Degree, is a 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. 43 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 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 44 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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; since Jan. 2009 to present, he acted as Secretary to the Board of Directors and chief legal consultant in the Company. Since Feb. 2012, he has been Vice General Manager, Secretary to the Board of Directors and chief legal consultant in the Company. Particulars about employers in the shareholders’ companies √ Applicable □ Non-applicable Whether Posts held receiving in Name of Start date of Expiration subsidies and Name of shareholders’ companies shareholder employers tenure Date of tenure remuneration in s’ shareholders’ companies companies Vice director of Shenzhen Investment Holdings Co., manageme Wen Li 1 July 2005 Yes Ltd. nt centre of constructio n projects Manager of the first Shenzhen Investment Holdings Co., section of Guo Liwei 1 Oct. 2004 Yes Ltd. enterprise manageme nt Vice Shenzhen Investment Holdings Co., director of 1 March Zhang Shilei Yes Ltd. general 2008 office Manager of audit Wang Shenzhen Investment Holdings Co., department 1 Dec. 2007 Yes Xiuyan Ltd. (the Supervisor 45 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. y Committee Office) Particulars about employers in other companies √ Applicable □ Non-applicable Whether Expiration receiving Name of Posts held Start date of Name of other companies date of subsidies and employers in other employment employment remuneration in companies other companies Research scholar, Shenzhen Urban Development Administrat Li Xiaofan Research Center, China Productive ive Syndic 1 June 2006 Yes Power Commission and Vice Secretary-g eneral College of Economics and Zha Management of Shenzhen Dean Yes Zhenxiang Polytechnic Chairman Dong Shenzhen Osgate Trading Co., Ltd. of the Yes Zhiguang board III. Remuneration of directors, supervisors, senior executives and staff Decision-making process, determination, actual payment of remuneration of directors, supervisors, senior executives During the reporting period, the board and the management of the Company signed statement of operation objectives responsibility for 2012, conducted appraisal system integrating operation indicators, classification indicators with management objectives. After the end of the reporting period, assessment was implemented by the board. Remuneration of senior executives, according to “Management Method of Annual salary System of Directors, Supervisors and Senior Executives”, adopted annual salary system, and need to be implemented after assesment of the board. Remuneration of directors, supervisors, senior executives during the reporting period Total amount Total amount Actual of of remuneration Incumbent or Name Post Gender Age remuneration remuneration till the end of not received received the reporting from the from the period 46 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Company sharesholder s’ companies Chairman of Chen Yugang Male 56 Incumbent 781,350.00 0.00 781,350.00 the board Director, Wei Zhi General Male 56 Incumbent 756,950.00 0.00 756,950.00 Manager Director, Liu Chairman of Male 55 Incumbent 725,598.00 0.00 725,598.00 Guangxin Labor Union Director, Gong Sixin Male 45 Incumbent 412,800.00 0.00 412,800.00 CFO Wen Li Director Female 44 Incumbent 0.00 Guo Liwei Director Male 40 Incumbent 0.00 Independent Li Xiaofan Male 60 Incumbent 80,000.04 0.00 80,000 director Zha Independent Male 58 Incumbent 80,000.04 0.00 80,000 Zhenxiang director Dong Independent Male 56 Incumbent 80,000.04 0.00 80,000 Zhiguang director Chairman of the Dai Xianhua Male 51 Incumbent 422,800.00 0.00 422,800.00 supervisory committee Zhang Shilei Supervisor Male 35 Incumbent 0.00 Wang Supervisor Female 51 Incumbent 0.00 Xiuyan Supervisor、 manager of Wang development Female 43 Incumbent 302,250.00 0.00 302,250.00 Qiuping management department Supervisor、 Zhang manager of Male 38 Incumbent 301,750.00 0.00 301,750.00 Gejian audit department Vice general Wang manager, Male 47 Incumbent 725,598.00 0.00 725,598.00 Hangjun financial employee in 47 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. charge Vice general Li Zipeng Male 47 Incumbent 725,598.00 0.00 725,598.00 manager Vice general manager, Fan Weiping Male 48 Incumbent 725,598.00 0.00 725,598.00 secretary of the board Particulars about equity incentive granted to directors, supervisors, senior executives during the reporting period □ Applicable √ Non-applicable IV. Particulars about employees The Company has totally 2750 employees in office at present, including 1783 production personnel, 130 salespersons, 550 technicians, 95 financial personnel and 192 administrative personnel. 1250 persons graduated from technical secondary school and college or above. At present, the Company needs to bear the expenses of 185 retirees. 48 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section VIII. Corporate Governance I. Particulars about 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. 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 Committee 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. Whether there existed differences between corporate governance and regulations of “Company Law” and CSRC □ Yes √ No There existed no difference between corporate governance and regulations of “Company Law” and CSRC. Particulars about development of special activities of corporate governance and formulation and performance of registration and management of insiders 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. 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. II. Particulars about annual shareholders’ general meetings and temporary shareholders’ meetings during the reporting period 1. Particulars about annual shareholders’ general meetings during the reporting period 49 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Date of holding Name of proposal Result of Index for Name of meeting Date of disclosure the meeting on the meeting resolution disclosure 2011 Annual 2011 Annual www.cninfo.com. 20 April 2012 Work Report of Approval 23 April 2012 Shareholders’ cn the Board General Meeting 2011 Annual Work Report of www.cninfo.com. Approval 23 April 2012 the Supervisory cn Committee 2011 Annual www.cninfo.com. Approval 23 April 2012 Report cn 2011 Annual Report on www.cninfo.com. Financial Approval 23 April 2012 cn Statement 2012 Annual www.cninfo.com. Report on Approval 23 April 2012 cn Financial Budget Proposal on Profit Distribution and Transfer of www.cninfo.com. Approval 23 April 2012 Capital Reserve cn to Common Shares for 2011 Proposal on Further www.cninfo.com. Employment of Approval 23 April 2012 cn Accounting Firm Proposal on www.cninfo.com. Guarantee loans Approval 23 April 2012 cn of subsidiaries 2. Particulars about temporary shareholders’ meetings during the reporting period Date of holding Name of proposal Result of Index for Name of meeting Date of disclosure the meeting on the meeting resolution disclosure The first session Proposal on Plan www.cninfo.com. 24 Aug. 2012 Approval 24 Aug. 2012 of temporary of Shareholder cn 50 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. shareholders’ Returns in the meeting for 2012 Future Three Years Proposal on www.cninfo.com. Revising Articles Approval 24 Aug. 2012 cn of Association III. Execution of duty of independent directors during the reporting period 1. Attendance of independent directors in the board meetings and shareholders’ meetings Attendance of independent directors in the board meetings Number of the Number of Whether not board Number of meetings Number of Number of attending Name of meetings meetings attended in the meetings meetings meetings by independent attended attended on means of attended by skipped from oneself two director during the the spot communicatio mandatary times in reporting n succession period Li Xiaofan 6 3 3 No Zha Zhenxiang 6 3 3 No Dong Zhiguang 6 3 3 No Explanations about absence from the board meetings two times in succession 2. Particulars about objections to relevant events of the Company raised by independent directors Whether independent directors raised objections to relevant events of the Company □ Yes √ No During the reporting period, independent directors never raised objections to relevant events of the Company 3. Other particulars about execution of duty of independent directors Whether the Company took the advices proposed by independent directors √ Yes □ No Explanations about the adoption or rejection in respect of independent directors’ advices 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. 51 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. IV. Duty performance of special committee affiliated to the Board during the reporting period Special committee affiliated to including audit committee, remuneration and nomination committee, investment and decision committee, according to “Governance Principle of listed Company”, “Articles of Association”, “and Rules of Procedure of the Board of Directors” and implementation rules of special committee, earnestly performed their duties. (I) Duty performance of strategic development and investment committee During the reporting period, strategic development and investment committee paid attention to authorization of the board to project development and financing, kept good contact with the management and had a good knowledge of matters within their power. (II) Duty performance of nomination committee During the reporting period, nomination committee held working conference once, conducted vote through communication once and verified the qualification of Mr. Fan Weiping as vice general manager of the Company and issued “Opinions About Verification and Examination of Qualification of Mr. Fan Weiping as Vice General Manager of the Company”. (III) Duty performance of remuneration and assessment committee During the reporting period, remuneration and assessment committee earnestly performed their duties, kept good contact with the management and conducted several communication with the management for relevant matters. (IV) Duty performance of audit committee During the reporting period, audit committee held on-the-spot working conference once, listened to report of Union Power Certified Public Accounts Co., Ltd. on audit work, deliberate preliminary audit opinion issued by Union Power Certified Public Accounts Co., Ltd. and proposed their opinions about 2011 Financial Statement of the Company. After the meeting of audit committee, the Company arranged on-the-spot investigation for important development projects. V. Particulars about the work of the supervisory committee Whether there existed risks in the Company according to supervision of the supervisory committee during the reporting period □ Yes √ No The supervisory committee raised no objection to matters under the supervision during the reporting period. VI. Independence and integrity of the Company and controlling shareholders in respect of business, personnel, asset, organization, finance 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, 52 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. VII. Assessment and incentive mechanisms for senior executives Within the reporting period, the annual operating target plan 2012 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. 53 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section IX. Internal Control I. Construction of internal control In 2012, the Company had established good governance structure, organizational structure, and related internal control system. In respects of management of businesses, treasury, accounting system, human resources and salary, as well as information communication and disclosure, a complete internal control system was formed. Board of the Company authorized the audit department to take charge of concrete organization and implementation of internal control assessment, which is to audit and assess on high-risk fields and units included into the assessment area. In this fiscal year, the Company engaged the Unison Power Accounting Firm to take independent audit on the establishment, perfection, and execution of the Company’s internal control system, and issue internal control audit report. As at the end of the reporting period, by nearly 2-year establishment of system and mechanism, the Company has systematically perfected Risk Database, Internal Control Manual, and Internal Control Assessment Manual, improving the establishment of internal control constantly. 1. Internal environment (1) Governance structure By strictly referring to related laws and administrative regulations including Corporation Law and Securities Act, as well as rules of Articles of association, the Company established and perfected corporate governance structure complied with the Code of Corporate Governance for Listed Companies. Based on the target of standard corporate governance structure, the Company has established and perfected rules and systems for Shareholders’ General Meeting, Board of Directors, and the Supervisory Committee, ensuring them to effectively execute the right to make decision, execute, and supervise. In 2012, by thoroughly clearing up systems and mechanisms, the Company revised and perfected risk-control points of all important businesses, and formed documents of internal control management system, such as Risk Database, Internal Control Manual, and Internal Control Assessment Manual. (2) Institution setting and distribution of rights and liabilities ① Shareholders’ General Meeting: Shareholders’ General Meeting, the top-high power institution of the Company, on the basis of terms of reference set by laws, regulations, rules, and systems including Corporation Law and Articles of Association, review and decide for significant items of the Company, such as operation policy, investment plan, significant transaction items, change of the Company’s capital, as well as appointment and dismissal of directors and supervisors. The Company prepares and strictly executes systems and rules including Rules of Procedures of the Shareholders’ General Meeting to ensure all shareholders’ equity. ②Board of Directors: It is the Company’s decision-making institution and responsible for the Shareholders’ General Meeting, and in charge of establishing and perfecting the Company’s internal control system. There’re Board Secretary and Board office under the Board of Directors, accounting for daily affairs of the Board and information disclosure of the Company. There are also Audit Committee, Remuneration and Assessment Committee, Strategy Development and Investment Committee, and Nomination Committee under the Board. According to related work rules, the four special committees respectively undertake functions of discussion, decision-making, supervision, and assessment of the Company’s significant work items to improve operation efficiency of the Company’s Board. ③ Supervisory Committee: Supervisory Committee, the Company’s supervisory institution, review, supervise, and inspect on work execution of directors and senior management of the Company. It is responsible to the Shareholder’s General Meeting, the institution for the Supervisory Committee to report work to. ④Management: The management is responsible for the Board of Directors, works 54 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. as the decision-executing group for the Shareholders’ General Meeting and Board of Directors, gets engaged by the Board of Directors, and accounts for the Company’s routine business and administration, as well as routine operation of internal control. ⑤Functional departments of the Company: Functional departments, including Board Office, office of the general manager, cost control department, department of design and planning, human resources department, development management department, financial budget department, audit department (the Supervisory Committee Office), department of risk control and legal affairs, rental center, and Party-masses office, which all perform their duties, and strictly develop their work in light of internal control system, so as to ensure normal operation of the Company. (3) Internal audit Audit department accounts for internal audit for the Company. It is directly responsible for the Board of Directors, which ensures the independence of audit work. According to annual audit plan, the audit department, through executing internal audit or special audit, issues opinions on integrity and effectiveness of internal control, as well as compliance of financial revenue and expense and operation management. It proposes rectification plan for exposed problems, and regularly check the implementation of rectification. For internal control defects found in audit, the audit department, according to defect nature and in line with report procedures, reports to the Board of Director, the Supervisory Committee, and the management. 2. Risk assessment The Company sets department of risk control and legal affairs based on its need, and strictly executes Risk Management Method of the Company, as well as Implementation Management Method of Financial Risk Warning System. The Company regularly organizes and implements comprehensive risk assessment, timely identifies and assess on risk factors faced by the Company in operating activities, including external risk factors, such as policy and market environment, and internal factors, such as financial status, project operation management, and asset management, finishes risk assessment reports, so as to control risks effectively. 3. Main control activities (1) Decision-making management for real estate projects Rules of Real Estate Project Demonstration and Decision-making Management of the Company clarifies the liabilities of headquarter and subsidiaries in the process of project development, and standardizes liability departments and related work procedures involved in project development process; Management Rules of Project Engineering of the Company clarifies detail implementation rules of engineering projects related to launching preparation, construction plan, safety, quality, construction progress, related technologies, cost control, completion acceptance, as well as technology service and supervision. The effective execution of those systems and measures basically ensures the Company’s control over engineering price and cost through standard project operation, achieving the target of improving company’s economic benefit. (2) Management of subsidiaries As needed by strategic development planning of the Company, the Company has established and perfected internal control system for subsidiaries, prepared management systems including Management Rules for Reports from Representatives of Property Rights of Subsidiaries, Management Rules of Routine Operation of Secondary Companies, and Assessment and Management Method for Liability Statement of Annual Business Target of Secondary Companies, and standardized management over review processes of subsidiaries for official documents, contracts, and payments. The Company regularly acquires statistics and analysis materials of financial statements of subsidiaries, and timely check and control their operation and management status. In respects of marketing planning, cost control, financial management, investment and financing management, management of labor, human resources, and salary, as well as information disclosure, the Company intensifies management and decreases decision-making 55 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. risks. (3) Management of significant investment Articles of Association clarifies limits of authorities and procedures of reviewing external investment by the Shareholders’ General Meeting, the Board of Directors, as well as the management. The Company has prepared Investment Management Rules to control investment risks and promote standard operation and health development of the Company. As for investment management, the Company emphasizes on rationality of price and controllability of risks, strictly assesses feasibility of project return, and thoroughly supervises on significant investment according to classified authority-review-and-approval procedures, so as to ensure validity, safety, and profitability of investment. (4) Finance and accounting control The Company implements unified finance management and accounting system. So far, the Company has prepared complete finance and accounting system, covering standards of basic accounting work, financial budget management, treasury management, expense management, treasury management, tax management, financial information system management, accounting, and financial reports. In respect of treasury management, the Company executes strict payment review and approval procedure to strictly limit external borrowings. All payments should go through related signature review and approval process, and payments of significant amount should be reported, reviewed, and approved by the Board of Directors. In respect of financial budget, the Company executes strict budget system for fund, expense, and purchase of fixed assets to strictly control expenses out of budgets. All budgets should be attached with detail and actual preparation basis materials. Financial budget, together with budget execution status of last fiscal year, should be passed by the Board of Directors. In respect of asset management, the Company regularly checks all physical assets to make sure consistence of accounting records and physical assets, as well as the effective usage of all assets. In respect of accounting and financial reports, the Company accounts while using unified accounting system and setting unified accounting entries, and improve the accuracy and standardization of accounting disposal, as well as ensure the quality of accounting information by distributing all detail business accounting index on the basis of unifying accounting system and method. (5) Tender procurement management The Company has also established and perfected a series of tender procurement systems, covering Management System of Tender Procurement, Notice on Strengthening Tender and Bidding of the Group, and Notice on Strengthening Standardized, Normalized, and Planned Management of Tender Procurement Announcement, ruled management requests for tender opening, tender invitation, and tender assessment, standardized tender management of the Company, strictly supervised its implementation, effectively controlled procurement cost, and avoided honesty risk in the process of tender procurement. (6) Comprehensive budget management Comprehensive Budget Management Rule of the Company forms the process of comprehensive budget of the Group and subsidiaries. It aims at establishing and perfecting internal control system, standardizing financial management behaviors, intensifying budget management, and make sure budget preparation comply with development strategy and target of the Company. According to all index in liabilities statement of targets signed by subsidiaries and the Group at the year-begin, the audit department reviewed the completion status of index of subsidiaries, reviewed and analyzed on concrete reasons for deviation from budget index, and issued audit report. (7) Human resources management The Company has prepared a series of human resources management systems, covering Management Rule of Employee Recruitment, Management Rule of Remuneration of the Company, Management Rule of Performance Assessment of the Company, which aim at optimizing and using human resources needed by company production according to planned target, and 56 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. allocating talents needed by the Company according to development need, so that the Group and subsidiaries can orderly and highly effectively accomplish targets of comprehensive human resources management. (8) Control over related transaction businesses The Company has prepared rules such as Management Method of Related Transactions of the Company and Special System of the Company for Avoiding Capital Occupation by Controlling Shareholders and Related Parties, and at the same time, makes sure that the Company can adopt fair, sound, and Company-beneficial principals to related transactions, as well as fully protects investors’ benefits by perfect corporate governance structure. Significant related transactions should be submitted for the Board’s review only after having been recognized by independent directors, and should be externally disclosed in time in line with rules. (9) Internal control on external guarantee The Company strictly executes Management Method of Guarantee Business of the Company. Links of review, approval, execution, management, and disclosure of all guarantee businesses are in strict accordance with systems and processes In the reporting period, there’s no guarantee behaviors of violation against rules regulated in Notice on Standardizing Capital Flow Between Listed Companies and Related Parties and Several Problems About External Guarantee of Listed Companies, as well as Notice on Standardizing External Guarantee Behaviors of Listed Companies. (10) Control on raised capital In the reporting period, there’s no circumstance where the Company raised capital in securities market, nor previously raised capital extended to this reporting period. 4. Information and communication Internal control systems of the Company, including Management Rule of Information Disclosure Affairs, Regulation for Work of Annual Report of Audit Committee, Liability Accountability System for Significant Errors in Information Disclosure of Annual Report, Working System of Annual Report, Management System of Internal Information Insiders, Management System of Investor Relations, clarify on the management of information disclosure scope and its standards, processes, and law liabilities, internal communication and transmission procedures of significant information, significant internal information and its insiders, as well as investor relations, so as to ensure the authenticity, accuracy, integrity, timeliness, and fairness of information disclosure of the Company. II. Statement on the Responsibility for Internal Control from the Board of Directors The Board of Directors and all its directors hereby ensure that this announcement contains no false information, misleading statement or material omission, and shall be jointly and severally liable for the factuality, accuracy and completeness of the information carried in this announcement. Establishing , perfecting and effectively conducting internal control is the liability of the Board of Directors; establishment and implementation of internal control conducted by the Board is under the supervision of the supervisory committee; the management is responsible for organizing and guiding daily operation of internal control. 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, protect the legal interests of the Company, investors and other interested parties. Because of the inherent limitation of internal control, the above objective can only receive reasonable guarantee. The Board, according to requirements of “Basic Standards on Internal Control”, has appraised the internal control related to financial statements and the appraisal took effect on 31 Dec. 2012(base day). 57 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. III. Foundation on which internal control of financial reports are based The Company carried out unified financial management and accounting calculation system. At present, intact finance and calculation system has been formulated, including standardization of basic work of accounting, management of financial budget, fund management, expense management, asset management, taxation management, management of financial information system, accounting calculation and financial reports, etc.. In respect of treasury management, the Company executes strict payment review and approval procedure to strictly limit external borrowings. All payments should go through related signature review and approval process, and payments of significant amount should be reported, reviewed, and approved by the Board of Directors. In respect of financial budget, the Company executes strict budget system for fund, expense, and purchase of fixed assets to strictly control expenses out of budgets. All budgets should be attached with detail and actual preparation basis materials. Financial budget, together with budget execution status of last fiscal year, should be passed by the Board of Directors. In respect of asset management, the Company regularly checks all physical assets to make sure consistence of accounting records and physical assets, as well as the effective usage of all assets. In respect of accounting and financial reports, the Company accounts while using unified accounting system and setting unified accounting entries, and improve the accuracy and standardization of accounting disposal, as well as ensure the quality of accounting information by distributing all detail business accounting index on the basis of unifying accounting system and method. IV. Self-assessment report on internal control Specific explanations about significant defects of internal control found during the reporting period in self-assessment report on internal control During the reporting period, none significant defect of internal control was found. Date of disclosure of whole article of self-assessment 30 March 2013 report on internal control Index for disclosure of whole article of self-assessment Cninfo(http://www.cninfo.com.cn) report on internal control V. Audit report on internal control √ Applicable □ Non-applicable Deliberations in audit report on internal control We believe that, Shenzhen Properties & Resources Development (Group) Ltd. maintained efficient internal control of financial reports in all significant aspects according to “Basic Standards of Corporate Internal Control” and relevant regulations. Date of disclosure of whole article of audit report on 30 March 2013 internal control Index for whole article of Cninfo(http://www.cninfo.com.cn) 58 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. audit report on internal control Whether accounting firm issued unqualified audit report on internal control □ Yes √ No Whether the audit report on internal control issued by accounting firm was consistent with self-assessment report from the Board √ Yes □ No VI. Establishment and implementation of accountability system of significant mistakes in annual reports The Company established accountability system of significant mistakes in annual reports, and thoroughly carried out special activities on standardizing basic work of accounting. During the reporting period, there existed no significant mistake in annual reports. 59 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section X. Financial Report I. Auditor’s report Type of audit opinion Standard unqualified audit opinion Date for signing the auditor’s report 28 Mar. 2013 Name of the auditor’s report Union Power Certified Public Accountants Co., Ltd. Document No. of the auditor’s report ZHS Zi (2013) No. 010163 Text of the auditor’s report 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. 2012, 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. 60 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. II. Financial statements Monetary unit of notes to financial statements: RMB Yuan 1. Consolidated balance sheet Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Closing balance Opening balance Current Assets: Monetary funds 797,724,311.37 469,313,741.57 Settlement reserves Intra-group lendings Transactional financial assets Notes receivable 200,000.00 Accounts receivable 76,584,008.68 70,557,693.71 Accounts paid in advance 64,714,990.11 474,354,748.39 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserves Interest receivable Dividend receivable Other accounts receivable 6,371,689.34 3,428,342.39 Financial assets purchased under agreements to resell Inventories 2,300,674,551.14 1,814,992,629.34 Non-current assets due within 1 year Other current assets Total current assets 3,246,069,550.64 2,832,847,155.40 Non-current assets: Loans by mandate and advances granted Available-for-sale financial assets Held-to-maturity investments Long-term accounts receivable Long-term equity investment 84,249,349.70 81,103,539.95 61 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Investing property 285,258,604.17 302,632,518.55 Fixed assets 78,821,168.21 86,855,289.26 Construction in progress 57,000.00 57,000.00 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 114,098,153.11 121,254,256.15 R&D expense Goodwill Long-term deferred expenses 3,644,288.40 3,173,413.01 Deferred income tax assets 194,507,824.50 124,102,202.41 Other non-current assets Total of non-current assets 760,636,388.09 719,178,219.33 Total assets 4,006,705,938.73 3,552,025,374.73 Current liabilities: Short-term borrowings 360,000,000.00 601,495,212.00 Borrowings from Central Bank Customer bank deposits and due to banks and other financial institutions Intra-group borrowings Transactional financial liabilities Notes payable Accounts payable 298,525,752.32 187,093,587.42 Accounts received in advance 678,075,291.01 208,655,909.41 Financial assets sold for repurchase Handling charges and commissions payable Employee’s compensation payable 54,721,616.91 46,354,982.87 Tax payable 733,659,679.71 499,957,087.36 Interest payable Dividend payable Other accounts payable 195,045,649.98 480,433,469.91 Reinsurance premiums payable Insurance contract reserves 62 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Payables for acting trading of securities Payables for acting underwriting of securities Non-current liabilities due within 1 14,909,888.32 218,359,888.32 year Other current liabilities Total current liabilities 2,334,937,878.25 2,242,350,137.29 Non-current liabilities: Long-term borrowings 19,316,666.64 7,333,333.32 Bonds payable Long-term payables Specific payables Estimated liabilities Deferred income tax liabilities 2,739,089.94 Other non-current liabilities 145,997,301.31 160,019,158.28 Total non-current liabilities 168,053,057.89 167,352,491.60 Total liabilities 2,502,990,936.14 2,409,702,628.89 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 595,979,092.00 595,979,092.00 Capital reserves 63,783,019.03 77,820,275.72 Less: Treasury stock Specific reserves Surplus reserves 70,368,860.95 70,368,860.95 Provisions for general risks Retained profits 778,604,846.00 403,182,716.36 Foreign exchange difference -5,882,902.45 -5,890,286.25 Total equity attributable to owners of 1,502,852,915.53 1,141,460,658.78 the Company Minority interests 862,087.06 862,087.06 Total owners’ (or shareholders’) equity 1,503,715,002.59 1,142,322,745.84 Total liabilities and owners’ (or 4,006,705,938.73 3,552,025,374.73 shareholders’) equity 63 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Balance sheet of the Company Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Closing balance Opening balance Current Assets: Monetary funds 399,641,751.92 83,846,009.34 Transactional financial assets Notes receivable Accounts receivable 56,779,588.68 57,610,601.35 Accounts paid in advance 138,000.00 435,617,463.60 Interest receivable Dividend receivable Other accounts receivable 793,063,936.59 66,901,359.57 Inventories 324,442,304.42 323,385,959.42 Non-current assets due within 1 year 475,000,000.00 Other current assets Total current assets 2,049,065,581.61 967,361,393.28 Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term accounts receivable Long-term equity investment 316,537,110.68 300,514,039.95 Investing property 193,719,444.41 196,918,915.36 Fixed assets 18,999,543.38 29,002,844.78 Construction in progress Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets R&D expense Goodwill Long-term deferred expenses 1,816,250.25 1,989,226.53 Deferred income tax assets 64 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Other non-current assets 475,000,000.00 Total of non-current assets 531,072,348.72 1,003,425,026.62 Total assets 2,580,137,930.33 1,970,786,419.90 Current liabilities: Short-term borrowings Transactional financial liabilities Notes payable Accounts payable 33,664,931.14 33,981,501.43 Accounts received in advance 426,641.50 351,401.50 Employee’s compensation payable 10,017,975.02 7,550,348.37 Tax payable 2,092,132.57 1,829,406.16 Interest payable Dividend payable Other accounts payable 1,503,502,567.38 1,268,548,668.33 Non-current liabilities due within 1 year Other current liabilities Total current liabilities 1,549,704,247.61 1,312,261,325.79 Non-current liabilities: Long-term borrowings Bonds payable Long-term payables Specific payables Estimated liabilities Deferred income tax liabilities Other non-current liabilities 1,851,595.90 4,161,870.46 Total non-current liabilities 1,851,595.90 4,161,870.46 Total liabilities 1,551,555,843.51 1,316,423,196.25 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 595,979,092.00 595,979,092.00 Capital reserves 37,754,232.28 38,914,227.99 Less: Treasury stock Specific reserves Surplus reserves 69,712,050.51 69,712,050.51 65 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. General risk provision Retained profits 325,136,712.03 -50,242,146.85 Foreign exchange difference Total owners’ (or shareholders’) equity 1,028,582,086.82 654,363,223.65 Total liabilities and owners’ (or 2,580,137,930.33 1,970,786,419.90 shareholders’) equity 3. Consolidated income statement Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2012 Amount in 2011 I. Total operating revenues 1,861,298,830.99 1,430,211,933.75 Including: Sales income 1,861,298,830.99 1,430,211,933.75 Interest income Premium income Handling charge and commission income II. Total operating cost 1,379,046,423.21 1,086,070,404.13 Including: Cost of sales 841,932,253.07 568,646,701.95 Interest expenses Handling charge and commission expenses Surrenders Net claims paid Net amount withdrawn for the insurance contract reserve Expenditure on policy dividends Reinsurance premium Taxes and associate charges 398,859,737.67 345,918,833.09 Selling and distribution expenses 43,951,174.60 32,792,286.16 Administrative expenses 109,680,547.70 103,909,870.96 Financial expenses -1,504,589.66 12,452,491.31 Asset impairment loss -13,872,700.17 22,350,220.66 Add: Gain/(loss) from change in fair -3,364.50 value (“-” means loss) 66 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Gain/(loss) from investment (“-” 3,145,809.75 -43,208.94 means loss) Including: share of profits in associates 3,145,809.75 -286,648.25 and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 485,398,217.53 344,094,956.18 Add: non-operating income 4,025,211.48 1,634,947.04 Less: non-operating expense 2,375,285.99 2,769,793.67 Including: loss from non-current asset 58,269.77 28,235.97 disposal IV. Total profit (“-” means loss) 487,048,143.02 342,960,109.55 Less: Income tax expense 112,225,990.61 82,914,212.42 V. Net profit (“-” means loss) 374,822,152.41 260,045,897.13 Including: Net profit achieved by combined parties before the 1,312,539.70 2,936,782.09 combinations Attributable to owners of the 375,422,129.64 261,108,340.62 Company Minority shareholders’ income -599,977.23 -1,062,443.49 VI. Earnings per share -- -- (I) Basic earnings per share 0.6299 0.4381 (II) Diluted earnings per share 0.6299 0.4381 Ⅶ. Other comprehensive incomes 7,383.80 -1,402,825.50 Ⅷ. Total comprehensive incomes 374,829,536.21 258,643,071.63 Attributable to owners of the 375,429,513.44 259,705,515.12 Company Attributable to minority -599,977.23 -1,062,443.49 shareholders Where business mergers under the same control occurred in this report period, the net profit achieved by the merged parties before the business mergers was RMB 1,312,539.70. 4. Income statement of the Company Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2012 Amount in 2011 I. Total sales 48,210,057.27 48,557,559.48 67 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Less: cost of sales 20,151,948.72 35,318,571.13 Business taxes and surcharges 9,028,751.88 6,677,356.44 Distribution expenses Administrative expenses 43,915,015.22 37,525,862.49 Financial costs -2,354,237.66 796,873.78 Impairment loss -15,500,366.74 20,832,527.84 Add: gain/(loss) from change in fair -3,364.50 value (“-” means loss) Gain/(loss) from investment (“-” means 381,808,751.52 17,549,461.29 loss) Including: income form investment on 3,145,809.75 -286,648.25 associates and joint ventures II. Business profit (“-” means loss) 374,777,697.37 -35,047,535.41 Add: non-business income 2,089,256.20 135,208.33 Less: non-business expense 1,488,094.69 2,481,283.79 Including: loss from non-current asset 1,470.30 2,826.50 disposal III. Total profit (“-” means loss) 375,378,858.88 -37,393,610.87 Less: income tax expense -807.48 IV. Net profit (“-” means loss) 375,378,858.88 -37,392,803.39 V. Earnings per share -- -- (I) Basic earnings per share 0.6299 -0.0627 (II) Diluted earnings per share 0.6299 -0.0627 VI. Other comprehensive income VII. Total comprehensive income 375,378,858.88 -37,392,803.39 5. Consolidated cash flow statement Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2012 Amount in 2011 I. Cash flows from operating activities: Cash received from sale of 2,127,163,532.80 755,242,978.35 commodities and rendering of service Net increase of deposits from customers and dues from banks 68 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Net increase of loans from the central bank Net increase of funds borrowed from other financial institutions Cash received from premium of original insurance contracts Net cash received from reinsurance business Net increase of deposits of policy holders and investment fund Net increase of disposal of tradable financial assets Cash received from interest, handling charges and commissions Net increase of intra-group borrowings Net increase of funds in repurchase business Tax refunds received Other cash received relating to 37,705,584.60 39,637,103.93 operating activities Subtotal of cash inflows from operating 2,164,869,117.40 794,880,082.28 activities Cash paid for goods and services 613,923,266.79 696,932,522.62 Net increase of customer lendings and advances Net increase of funds deposited in the central bank and amount due from banks Cash for paying claims of the original insurance contracts Cash for paying interest, handling charges and commissions Cash for paying policy dividends Cash paid to and for employees 244,711,375.88 223,300,664.36 Various taxes paid 395,582,349.38 145,141,064.57 Other cash payment relating to 104,937,927.97 83,589,751.86 operating activities 69 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Subtotal of cash outflows from 1,359,154,920.02 1,148,964,003.41 operating activities Net cash flows from operating activities 805,714,197.38 -354,083,921.13 II. Cash flows from investing activities: Cash received from withdrawal of 512,174.81 investments Cash received from return on 9,705,931.45 4,648,037.50 investments Net cash received from disposal of fixed assets, intangible assets and other 780,451.00 860,648.90 long-term assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities Subtotal of cash inflows from 10,486,382.45 6,020,861.21 investing activities Cash paid to acquire fixed assets, intangible assets and other long-term 4,327,597.65 16,042,221.98 assets Cash paid for investment Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from 4,327,597.65 16,042,221.98 investing activities Net cash flows from investing activities 6,158,784.80 -10,021,360.77 III. Cash Flows from Financing Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 186,000,000.00 612,495,212.00 Cash received from issuance of 70 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. bonds Other cash received relating to financing activities Subtotal of cash inflows from financing 186,000,000.00 612,495,212.00 activities Repayment of borrowings 618,961,878.68 278,960,000.00 Cash paid for interest expenses and 48,917,137.06 43,968,697.53 distribution of dividends or profit Including: dividends or profit paid by subsidiaries to minority shareholders Other cash payments relating to 1,584,500.00 1,396,200.00 financing activities Sub-total of cash outflows from 669,463,515.74 324,324,897.53 financing activities Net cash flows from financing activities -483,463,515.74 288,170,314.47 IV. Effect of foreign exchange rate 1,103.36 -217,885.53 changes on cash and cash equivalents V. Net increase in cash and cash 328,410,569.80 -76,152,852.96 equivalents Add: Opening balance of cash and 469,313,741.57 545,466,594.53 cash equivalents VI. Closing balance of cash and cash 797,724,311.37 469,313,741.57 equivalents 6. Cash flow statement of the Company Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2012 Amount in 2011 I. Cash flows from operating activities: Cash received from sale of 48,165,574.83 48,186,363.60 commodities and rendering of service Tax refunds received Other cash received relating to 1,238,725,468.05 955,034,252.86 operating activities Subtotal of cash inflows from operating 1,286,891,042.88 1,003,220,616.46 activities Cash paid for goods and services 7,593,201.26 450,309,709.08 71 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Cash paid to and for employees 17,689,894.18 16,853,488.87 Various taxes paid 12,331,745.43 8,620,041.58 Other cash payment relating to 970,661,663.27 20,083,193.31 operating activities Subtotal of cash outflows from 1,008,276,504.14 495,866,432.84 operating activities Net cash flows from operating activities 278,614,538.74 507,354,183.62 II. Cash flows from investing activities: Cash received from retraction of 512,174.81 investments Cash received from return on 46,868,931.45 22,592,670.23 investments Net cash received from disposal of fixed assets, intangible assets and other 2,220.00 1,280.00 long-term assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities Subtotal of cash inflows from 46,871,151.45 23,106,125.04 investing activities Cash paid to acquire fixed assets, intangible assets and other long-term 9,689,947.61 534,622.00 assets Cash paid for investment 525,000,000.00 Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from 9,689,947.61 525,534,622.00 investing activities Net cash flows from investing activities 37,181,203.84 -502,428,496.96 III. Cash Flows from Financing Activities: Cash received from capital contributions Cash received from borrowings Cash received from issuance of 72 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. bonds Other cash received relating to financing activities Subtotal of cash inflows from financing activities Repayment of borrowings Cash paid for interest expenses and distribution of dividends or profit Other cash payments relating to financing activities Sub-total of cash outflows from financing activities Net cash flows from financing activities IV. Effect of foreign exchange rate -125.07 changes on cash and cash equivalents V. Net increase in cash and cash 315,795,742.58 4,925,561.59 equivalents Add: Opening balance of cash and 83,846,009.34 78,920,447.75 cash equivalents VI. Closing balance of cash and cash 399,641,751.92 83,846,009.34 equivalents 7. Consolidated statement of changes in owners’ equity Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Reporting period Unit: RMB Yuan Reporting period Equity attributable to owners of the Company Paid-up Total Item Minority capital Less: General Capital Specific Surplus Retaine owners’ (or treasury risk Others interests reserve reserve reserve d profit equity share stock reserve capital) I. Balance at the end of the 595,979 64,020,2 69,712, 406,422, -5,890,2 862,087.0 1,131,105, previous year ,092.00 75.72 050.51 741.94 86.25 6 960.98 Add: change of accounting policy Correction of errors in 73 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. previous periods 13,800,0 656,810 -3,240,0 11,216,784 Other 00.00 .44 25.58 .86 II. Balance at the beginning of 595,979 77,820,2 70,368, 403,182, -5,890,2 862,087.0 1,142,322, the year ,092.00 75.72 860.95 716.36 86.25 6 745.84 III. Increase/ decrease of -14,037, 375,422, 361,392,25 amount in the year (“-” means 7,383.80 256.69 129.64 6.75 decrease) 375,422, 375,422,12 (I) Net profit 129.64 9.64 (II) Other comprehensive 7,383.80 7,383.80 incomes 375,422, 375,429,51 Subtotal of (I) and (II) 7,383.80 129.64 3.44 (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 provisions 3. Appropriations to owners (or shareholders) 4. Other (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 74 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period -14,037, -14,037,25 (Ⅶ) Other 256.69 6.69 595,979 63,783,0 70,368, 778,604, -5,882,9 862,087.0 1,503,715, IV. Closing balance ,092.00 19.03 860.95 846.00 02.45 6 002.59 Last year Unit: RMB Yuan Last year Equity attributable to owners of the Company Paid-up Total Item Minority capital Less: General Capital Specific Surplus Retaine owners’ (or treasury risk Others interests reserve reserve reserve d profit equity share stock reserve capital) I. Balance at the end of the 595,979 64,020,2 69,712, 148,961, -4,487,4 862,087.0 875,047,70 previous year ,092.00 75.72 050.51 664.40 60.75 6 8.94 Add: retrospective adjustments due to business 13,800,0 398,328 10,081,1 24,279,468 combinations under the same 00.00 .48 40.34 .82 control Add: change of accounting policy Correction of errors in previous periods -16,709, -16,709,94 Other 947.04 7.04 II. Balance at the beginning of 595,979 77,820,2 70,110,3 142,332, -4,487,4 862,087.0 882,617,23 the year ,092.00 75.72 78.99 857.70 60.75 6 0.72 III. Increase/ decrease of 258,481 260,849, -1,402,8 259,705,51 amount in the year (“-” means .96 858.66 25.50 5.12 decrease) 261,108, 261,108,34 (I) Net profit 340.62 0.62 75 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (II) Other comprehensive -1,402,8 -1,402,825. incomes 25.50 50 261,108, -1,402,8 259,705,51 Subtotal of (I) and (II) 340.62 25.50 5.12 (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 258,481 -258,48 (IV) Profit distribution .96 1.96 1. Appropriations to 258,481 -258,48 surplus reserves .96 1.96 2. Appropriations to general risk provisions 3. Appropriations to owners (or shareholders) 4. Other (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 for the period 2. Used in the period (Ⅶ) Other IV. Closing balance 595,979 77,820,2 70,368, 403,182, -5,890,2 862,087.0 1,142,322, 76 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. ,092.00 75.72 860.95 716.36 86.25 6 745.84 8. Statement of changes in owners’ equity of the Company Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Reporting period Unit: RMB Yuan Reporting period Paid-up Less: General Total Item capital (or Capital Specific Surplus Retained treasury risk owners’ share reserve reserve reserve profit stock reserve equity capital) I. Balance at the end of the 595,979,09 38,914,227 69,712,050 -50,242,14 654,363,22 previous year 2.00 .99 .51 6.85 3.65 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of 595,979,09 38,914,227 69,712,050 -50,242,14 654,363,22 the year 2.00 .99 .51 6.85 3.65 III. Increase/ decrease of amount -1,159,995. 375,378,85 374,218,86 in the year (“-” means decrease) 71 8.88 3.17 375,378,85 375,378,85 (I) Net profit 8.88 8.88 (II) Other comprehensive incomes 375,378,85 375,378,85 Subtotal of (I) and (II) 8.88 8.88 (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 77 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Appropriations to general risk provisions 3. Appropriations to owners (or shareholders) 4. Other (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 for the period 2. Used in the period -1,159,995. -1,159,995. (Ⅶ) Other 71 71 595,979,09 37,754,232 69,712,050 325,136,71 1,028,582, IV. Closing balance 2.00 .28 .51 2.03 086.82 Last year Unit: RMB Yuan Last year Paid-up Less: General Total Item capital (or Capital Specific Surplus Retained treasury risk owners’ share reserve reserve reserve profit stock reserve equity capital) I. Balance at the end of the 595,979,09 38,914,227 69,712,050 -12,849,34 691,756,02 previous year 2.00 .99 .51 3.46 7.04 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of 595,979,09 38,914,227 69,712,050 -12,849,34 691,756,02 78 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. the year 2.00 .99 .51 3.46 7.04 III. Increase/ decrease of amount -37,392,80 -37,392,80 in the year (“-” means decrease) 3.39 3.39 -37,392,80 -37,392,80 (I) Net profit 3.39 3.39 (II) Other comprehensive incomes -37,392,80 -37,392,80 Subtotal of (I) and (II) 3.39 3.39 (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 provisions 3. Appropriations to owners (or shareholders) 4. Other (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 for the period 2. Used in the period 79 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (Ⅶ) Other 595,979,09 38,914,227 69,712,050 -50,242,14 654,363,22 IV. Closing balance 2.00 .99 .51 6.85 3.65 III. Company Profile 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 5.6 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 12th session of the 7th board of directors of the Company on 28 Mar. 2013. Ⅳ . Main accounting policies, accounting estimates and corrections of prior accounting errors 1. Basis for preparation of financial statements 80 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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) Business combination under the same control 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) Business combination not under the same control 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. 81 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. Preparation methods for consolidated financial statements (1) Preparation methods for consolidated financial statements 1) Consolidated scope 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; 82 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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)Preparation methods for consolidated financial statements 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)Statement of minority interests and profits or losses 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) Accounting treatment of 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) Accounting treatment on increase or decrease of the subsidiaries during the reporting period 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 amount at the beginning of the period in the consolidated balance sheet. When disposing subsidiary during the reporting period, the Company makes no adjustment for the amount at the beginning of the period in the consolidated balance sheet. For any subsidiary acquired by the Company through business combination under the common control, when the consolidated income statement for the current period are being prepared, revenue, expense and profit for the period from the beginning of the consolidated period to the year end of the reporting period are included in the consolidated income statement. For addition business combination not under common control during the reporting period, revenue, expense and profit for the period from acquisition date to the year end of the reporting period is included in the consolidated income statement. When disposing subsidiary during the reporting period, revenue, expense and profit for the period from the beginning to the disposal date are included in the consolidated income statement. For any subsidiary acquired by the Company through business combination under the common control, when the consolidated cash flow statement for the current period are being prepared, cash flow for the period from the beginning of the consolidated period to the year end of the reporting period is included in the consolidated cash flow statement. For addition business combination not under common control during the reporting period, cash flow for the period from acquisition date to the year end of the reporting period is included in the consolidated cash flow 83 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. statement. When disposing subsidiary during the reporting period, cash flow for the period from the beginning to the disposal date is included in the consolidated cash flow statement. (2) As for the event about purchasing and then selling (or selling and then purchasing) equities of the same subsidiary, the Company shall disclose relevant accounting treatment methods. 7. Recognition standards for cash and cash equivalents 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 and accounting method for foreign currency (1) Foreign currency business 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. Treatment of 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. Financial instruments (1) Category of financial instruments 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. 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. 84 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. The Company's financial liabilities are classified as financial liabilities at fair value through profit or loss, and other financial liabilities. (2) Recognition and measurement of financial liabilities 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. 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. Subsequent 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. Financial 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. Subsequent 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. (3) Recognition and accounting method for transfer of financial assets 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). 85 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. (4) Derecognition conditions of financial liabilities The derecognition of financial liabilities refers to the financial liabilities are written off in the company account and balance sheet. When the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. (5) Recognition method for fair value of financial assets and financial liabilities A. If there is an active market for the financial instrument, the fair value is quoted prices in the active market. B. If the market for a financial instrument is not active, the Company establishes fair value by using a valuation technique. (6) Withdrawal of impairment provision for financial assets (excluding accounts receivable) 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. 86 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 87 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. (7) As for event about reclassifying the undue held-to-maturity investment into available-for-sale financial assets, the Company shall state the basis of changes in holding purpose or ability A. No available financial resources continuously providing the funds support for the financial assets to make them hold to maturity; B. It’s hard for the Company to hold the financial assets to maturity due to the restriction of laws and administrative regulations; C. Other situations showing that the Company has not the ability to hold the financial assets with fixed term to maturity. 10. Recognition criteria and withdrawal methods for bad debts provision of accounts receivable (1) Bad debt provision for individually significant accounts receivable Judgement basis or monetary standards of provision for bad debts of Amount of individual receivable is greater than RMB 2 the individually significant accounts receivable millions (and including 2 millions) On balance sheet day, the impairment test is carried on individually for the individually significant receivables; if it is impaired after the impairment test, the Company provides Method of individual provision for bad debts of the individually provision for impairment loss for the amount which is significant accounts receivable measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, and withdraws relevant bad debt provision. (2) Accounts receivable for which bad debt provisions are made on the group basis Withdrawal method of bad Name of group debt provision on the group Recognition basis of group basis Receivables among the Company and its subsidiaries within the Group 1 Other method consolidation scope which prove not impaired after individual tests As for other receivables which prove not impaired after Group 2 Aging analysis method individual tests than those in Portfolio 1, considering the current situation, the Company determines the bad-debt provisions ratio 88 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. In the groups, adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Withdrawal proportion for accounts Withdrawal proportion for other accounts receivable Age receivable (%) (%) Within 1 year (including 1 year) 3% 3% 1-2 years 10% 10% 2-3 years 30% 30% 3-4 years 50% 50% 4-5 years 80% 80% Over 5 years 100% 100% In the groups, adopting balance percentage method to withdraw bad debt provision □ Applicable √ Inapplicable In the groups, adopting other methods to withdraw bad debt provision √ Applicable □Inapplicable Name of group Note of method Receivables among the Company and its subsidiaries within the Group 1 consolidation scope which prove not impaired after individual tests. Such group shall not be withdrawn bad debts provision. (3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made individually The receivable which is individually insignificant Reason of individually withdrawing bad debt provision but the credit risk is high, objective evidence to indicate impairment. The impairment test is carries out individually, the Company recognizes provision for impairment loss for the amount which is measured as the difference Withdrawal method for bad debt provision between the asset's carrying amount and the present value of estimated future cash flows, and withdraws relevant bad debts provision. 11. Inventory (1) Classification Inventories of the Company include raw materials, finished goods, low-value consumption goods, land use right 89 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. held for real estate development, properties under development and completed properties for sale. (2) Pricing method for outgoing inventories Pricing method: Specific identification method 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. (3) Recognition basis of net realizable value and withdrawal method of depreciation reserves for inventories 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 produced and marketed in the same geographical area, and therefore cannot be practicably evaluated separately from other 90 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. items in that product line, costs and net realizable values of those items may be determined on an aggregate basis. (4) Inventory system for inventories Inventory system for inventories: Perpetual inventory system The inventory system for inventories is perpetual inventory system. (5) Amortization method of the low-value consumption goods and packing articles Low-value consumption goods Amortisation method: one-off amortization method Packing articles Amortisation method: Inapplicable 12. Long-term equity investment (1) Recognition of initial investment cost 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. 91 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 92 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (2) Subsequent measurement and recognition of profits or losses 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. ① For 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 93 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. its unrecognized losses. ③ 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 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. ④ On 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. 94 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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. 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 that 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 95 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. Fixed assets (1) Recognized standard 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. A fixed asset shall be initially recognized at cost when the following conditions 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) Recognition basis and pricing method of fixed assets by 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. (3) Depreciation methods of fixed assets 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: Category of fixed assets Useful life (Y) Expected net salvage value Annual deprecation Housing and building 25 10% 4.5% Machinery equipments 10 5% 9.5% Electronic equipments 5 5% 19% Transportation vehicle 5 5% 19% Other equipments 5 5% 19% Decoration of fixed assets 5 20% 96 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (4) Testing method of impairment and withdrawal method of provision for impairment on fixed assets Impairment of fixed asset refers to accounting policy “Impairment of assets” of the Company. (5) Other explanations 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 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. The useful life of the housing and building of the Company is 20 to 25 five years, with the expected net salvage value of 5% to 10% and the annual depreciation ratio of 3.8% to 4.5%. 15. Construction in progress (1) Categories of construction in progress The construction in progress includes the construction work, installation work, technical reformation work, overhaul work during the preparation period and the construction period. Relevant construction costs are recognized with the total expenses actually occurred. (2) Standards and time of transferring construction in progress into fixed asset Construction in process is transferred to fixed assets with the total expenses actually occurred when the construction in progress are ready for their intended use. (3) Impairment test method and withdrawal method for impairment provision of construction in progress Impairment of construction in progress refers to accounting policy “Impairment of assets” of the Company. 16. Borrowing costs (1) Recognition principles for capitalization of borrowing costs 97 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. (2) Capitalization period of borrowing costs The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs, excluding the period of suspension of capitalization of the borrowing costs. (3) Period of suspension of capitalization of borrowing costs 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. (4) Calculation method of capitalized amount of 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 rate of the general borrowings. 98 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 17. Biological assets Inapplicable 18. Oil-gas assets Inapplicable 19. Intangible assets (1) Pricing method of intangible assets Intangible assets are identifiable non-monetary asset that are owned or controlled by the Company and are without physical substance. Recognition of intangible asset: 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. Measurement of intangible assets ①An intangible asset is measured initially at its cost. ②Subsequent measurement of intangible assets: 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. (2) Estimated useful life of intangible assets with limited useful life If an intangible asset is gained from contractual rights or other legal rights, its useful life shall not exceed the power limit of contractual rights or other legal rights. If the estimated useful life of an intangible asset is shorter than the period stipulated under the contractual rights or other legal rights, it shall use the estimated useful life to determine the useful life of intangible assets. Item Estimated useful life Basis Taxi operating license 50 years, 12 years Period stipulated in the contractual rights plate (3) Judgment basis of intangible assets with uncertain useful life If it is unable to forecast the period when the intangible asset can bring economic benefits to the enterprise, it shall be regarded as an intangible asset with uncertain service life, which shall not be amortized. (4) Withdrawal of impairment provision of intangible assets Impairment of intangible assets refers to accounting policy “Impairment of assets” of the Company. (5) Criteria of separating the research phase and development phase of internal R&D project The term "research" refers to the creative and planned investigation to acquire and understand new scientific or technological knowledge. The term "development" refers to the application of research achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device or product, or substantially improved material, device and product. 99 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (6) Calculation of the expenditures of internal R&D project 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. 20. Amortization method 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. 21. Assets transfer with repurchasing 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. 22. Estimated liabilities (1) Recognition criteria of estimated 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 estimated liabilities To fulfill the present obligations, which initially measured by the best estimate of the expenditure required to settle the liability. Where there is a continuous range of possible amounts of the expenditure required to settle the liability, as all kinds of possibilities are at same level, the best estimate should be determined according to the average of the lower and upper limit of the range. In other cases, the best estimate should be determined in 100 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 23. Share-based payment and equity instruments (1) Categories of share-based payment Recognition and measurement of share-based payment are based on true, complete and valid share-based payment agreement. Share-based payment transaction comprises equity-settled share-based payment transactions and cash-settled share-based payment transactions. (2) The measures for the recognition of the fair value of the equity instrument 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. 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. (3) Basis for the recognition of the best estimation 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) Relevant accounting treatment on the implementation, revision and termination of share-based payment plan 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 101 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 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. 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. 24. Repurchase of 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 102 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 25. Revenue (1) Criteria for recognition time of revenue from selling goods 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. 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. 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. (2) Recognition basis of revenue from transferring use right of asset 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. (3) Recognition basis of revenue from rendering of services The revenue from rendering of services 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. (4) Recognition basis and method for the schedule of contracted project when recognizing the revenue from providing labor services and construction contract by percentage-of-completion method 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. 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 103 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 26. Government subsidies (1) Types 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) Accounting treatment method 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 balance 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. 27. Deferred income tax assets and deferred income tax liabilities (1) Recognition basis of deferred income tax assets The Company adopts the balance sheet liability method for income tax expenses. 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 104 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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) Recognition basis of deferred income tax liabilities 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. 28. Operating lease and financial lease (1) Accounting treatments of 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) Accounting treatments of financial 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. 105 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. (3) Accounting treatment for those sale and lease-back Inapplicable 29. Assets held for sale (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 the assets held for sale 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. 30. Capitalization of assets Inapplicable 31. Hedging accounting Inapplicable 32. Changes in main accounting policies and estimates Were the main accounting policies or estimates changed during the report period? □Yes √No (1) Change of accounting policies Were the main accounting policies changed during the report period? □Yes √No (2) Change of accounting estimates 106 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Were the main accounting estimates changed during the report period? □Yes √No 33. Correction of previous accounting errors Was any accounting error made in previous periods discovered in the report period? □Yes √No (1) Retrospective restatement method Was any previous accounting error adopting retrospective restatement method discovered in the report period? □Yes √No (2) Prospective application method Was any previous accounting error adopting prospective application method discovered in the report period? □Yes √No 34. Other main accounting policies and estimates as well as compilation method of financial statements Accounting policy for impairment of assets of the Company: 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 107 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. (V) Taxation 1. Main taxes and tax rate Category of taxes Tax basis Tax rate VAT Operating revenue 3%, 6%, 17% Business tax Operating revenue 3%, 5% Urban maintenance and construction tax Turnover tax payable 1%, 7% Enterprise income tax Taxable income 25% Education surtax Turnover tax payable 3% Local education surtax Turnover tax payable 2% Levee fee Operating revenue 0.01% Added amount from transfer of Four progressive levels with the tax rate Land value appreciation tax real property ranging from 30% to 60%. The income tax rates adopted by each subsidiary and branch factory Note: The applicable income tax rate of the subsidiaries located in main land China is 25%; the applicable income tax rate of the subsidiaries located in Hongkong is 16.5%. 2. Tax preference and approval 3. Other explanations In accordance with the Notice on the Tax Payers Dealing with the Tax Business upon the Pilot of Changing Business Taxes for VAT (SGSG [2012] No. 11) issued by Shenzhen Municipal Office of SAT and Administration of Local Taxation of Shenzhen Municipality and the Notice on Renewing the Administrative Methods of Taxes Preference for VAT and Consumption Taxes ([2012] No. 10) issued by Shenzhen Municipal Office of SAT, the Company’s subsidiaries—Shenzhen GUOMAO Vehicles Industry Co., Ltd.,Shenzhen GUOMAO Motor Rent Co., Ltd.and Shenzhen Shenxin Taxi Co., Ltd. started the pilot of changing the business taxes for VAT from 1 Nov. 2012 by collecting the VAT with an easy charging percentage of 3%. 108 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. VI. Business combination and consolidated financial statement 1. Subsidiaries (1) Subsidiaries obtained by establishment and investment Unit: RMB Yuan Balance of parent compan y’s equity after Actual deductin amount The The Include g the of Other proporti proporti d in Deducti Register Minorit differen Subsidia Register Busines Busines investm essential on of on of consolid ble Type ed y ce that ries ed place s nature s scope ents at investm holding voting ated minority capital interest loss of the ent shares rights stateme interests minority period-e (%) (%) nt interests nd exceed equity obtained by minority sharehol ders Shenzhe Wholly- Develop n owned ment, Huangc subsidia construc heng ry tion, Real operatio Estate n and Co., Real manage Ltd. Shenzhe estate 30,000, ment of 30,000, 100% 100% Yes n develop 000.00 commer 000.00 ment cial service facilities relevant to Huangg ang port 109 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhe Wholly- Land n owned develop Property subsidia ment, and ry real Real estate Estate Real manage Develop Shenzhe estate 30,950, ment; 30,950, 100% 100% Yes ment n develop 000.00 construc 000.00 Co., ment tion Ltd. supervis ion; property manage ment PRD Wholly- Develop Group owned ment Xuzhou subsidia and sale Dapeng ry of Real real Estate estate, Develop Real construc ment estate 50,000, tion 50,000, Xuzhou 100% 100% Yes Co.,Ltd develop 000.00 manage 000.00 ment ment, lease of properti es, commo dity sales Donggu Wholly- an owned Develop Guomao subsidia ment Changs ry and sale Real heng of Donggu estate 20,000, 20,000, Real real 100% 100% Yes an develop 000.00 000.00 Estate estate, ment Develop lease of ment properti Co., es Ltd. PRD Wholly- Yangzh Real 50,000, Develop 50,000, 100% 100% Yes Yangzh owned ou estate 000.00 ment 000.00 110 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. ou Real subsidia develop and sale Estate ry ment of Develop real ment estate, Co., construc Ltd. tion manage ment, purchas e of material s Hainan Wholly- Real Xinda owned estate Develop subsidia develop ment ry ment, Co., Ltd decorati Real on estate 20,000, 20,000, Haikou engineer 100% 100% Yes develop 000.00 000.00 ing,; ment planting ; import & export practice Shenzhe n GUOM Wholly- Property AO Property owned Shenzhe 20,000, rent and 20,000, Property manage 100% 100% Yes subsidia n 000.00 manage 000.00 Manage ment ry ment ment Co., Ltd. Shenzhe Property n manage Huangc ment; Wholly- heng Property court owned Shenzhe 5,000,0 5,000,0 Real manage virescen 100% 100% Yes subsidia n 00.00 00.00 Estate ment ce and ry Manage cleansin ment g Co., services 111 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Ltd. Property Shando manage ng ment; Shenzhe houseke n eping Wholly- GUOM Property services, owned 5,000,0 5,000,0 AO Jinan manage property 100% 100% Yes subsidia 00.00 00.00 Property ment sales ry Manage and ment agency Co., and Ltd. catering services Chongqi Chongqi ng ng Shenzhe n Property Wholly- GUOM Property manage owned 5,000,0 5,000,0 AO manage ment 100% 100% Yes subsidia 00.00 00.00 Property ment and ry Manage agency ment Co., Ltd. Chongqi Installin ng g, reconstr ucting Chongqi and ng Wholly- repairin Ao’bo owned 2,000,0 g the 2,000,0 Service 100% 100% Yes Elevator subsidia 00.00 elevator 00.00 Co., ry ; sales Ltd. of elevator and accessor ies Shenzhe Wholly- Mainten n owned Shenzhe 5,000,0 ance of 5,000,0 Service 100% 100% Yes Tianque subsidia n 00.00 elevator 00.00 Elevator ry and air 112 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Technol conditio ogy Co., n Ltd. Domesti Shenzhe c n commer GUOM ce; AO material Property Wholly- supply; Manage owned Shenzhe 1,200,0 1,200,0 Service mainten 100% 100% Yes ment subsidia n 00.00 00.00 ance Enginee ry and ring repair of Equipm electric ent Co., equipme Ltd. nt Retail Shenzhe sales of n Chinese Wholly- GUOM meal, owned Shenzhe Catering 2,000,0 2,000,0 AO western- 100% 100% Yes subsidia n service 00.00 00.00 Food style ry Co., food Ltd. and wine Supervi Shenzhe sion of n general Property Wholly- Constru industri Constru owned Shenzhe ction 3,000,0 al and 3,000,0 ction 100% 100% Yes subsidia n Supervi 00.00 civil 00.00 Supervi ry sion construc sion tion Co., engineer Ltd. ing Providin g Shenzhe Wholly- property n Real owned Shenzhe 1,380,0 informat 1,380,0 Estate Service 100% 100% Yes subsidia n 00.00 ion, 00.00 Exchan ry property g agency and 113 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. evaluati on Shenzhe n Motor GUOM Wholly- transpor AO owned Shenzhe 29,850, 29,850, Service t and 100% 100% Yes Vehicles subsidia n 000.00 000.00 motor Industry ry rent Co., Ltd. Shenzhe Motor n transpor GUOM Wholly- t and AO owned Shenzhe 16,000, motor 16,000, Service 100% 100% Yes Motor subsidia n 000.00 rent 000.00 Rent ry Co., Ltd. Shenzhe n Tesu Vehicle Wholly- Driver owned Shenzhe 2,000,0 Driver 2,000,0 Service 100% 100% Yes Training subsidia n 00.00 training 00.00 Center ry Co., Ltd. Shenzhe Investin n g in Internati commer onal Wholly- cial, Trade owned Shenzhe 12,000, material 12,000, Trading 100% 100% Yes Plaza subsidia n 000.00 and 000.00 ry supplyin g compan y Sichuan Wholly- Wholes Tianhe owned Chengd 8,000,0 ale in 8,000,0 Trading 100% 100% Yes Industry subsidia u 00.00 domesti 00.00 Co., Ltd ry c market Zhanjia Wholly- Zhanjia Real 2,530,0 Real 2,530,0 100% 100% Yes ng owned ng estate 00.00 estate 00.00 114 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhe subsidia develop develop n Real ry ment ment Estate and Develop sales of ment commo Co., dity Ltd. premise s Shum Property Yip agency Properti Wholly- Real and es owned Hongko estate 20,000, investm 20,000, 99,803, 100% 100% Yes Develop subsidia ng develop 000.00 ent 000.00 433.85 ment ry ment Co., Ltd. Wayhan Property g Wholly- Real develop Develop owned Hongko estate ment 2.00 2.00 100% 100% Yes ment subsidia ng develop Co., ry ment Ltd. Chief Property Wholly- Real Link agency owned Hongko estate 862,087 Properti 100.00 and 100.00 70% 70% Yes subsidia ng develop .06 es Co., investm ry ment Ltd. ent Syndis Wholly- Real Property Investm owned Hongko estate investm 4.00 4.00 100% 100% Yes ent Co., subsidia ng develop ent Ltd. ry ment Other notes to subsidiaries obtained by establishment and investment: Syndis Investment Co., Ltd. is the wholly owned subsidiary of Chief Link Properties Co., Ltd.. (2) Subsidiaries obtained by business combination under the same control Unit: RMB Yuan Actual The The Include Balance Other Deducti Register amount proporti proporti d in Minorit of Subsidia Register Busines Busines essential ble Type ed of on of on of consolid y parent ries ed place s nature s scope investm minority capital investm holding voting ated interest compan ent interests ents at shares rights stateme y’s 115 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. the (%) (%) nt equity period-e after nd deductin g the differen ce that loss of minority interests exceed equity obtained by minority sharehol ders Shenzhe Operati n Wholly on of Shenxin owned Shenzhe 13,800, taxi and 33,195, Service 100% 100% Yes Taxi subsidia n 000.00 property 948.77 Co., ry manage Ltd. ment Other explanation on subsidiaries obtained by business combination under same control (3) Subsidiaries obtained by business combination not under the same control Unit: RMB Yuan Balance of parent compan Actual y’s amount The The Include equity of Other proporti proporti d in Deducti after Register Minorit Subsidia Register Busines Busines investm essential on of on of consolid ble deductin Type ed y ries ed place s nature s scope ents at investm holding voting ated minority g the capital interest the ent shares rights stateme interests differen period-e (%) (%) nt ce that nd loss of minority interests exceed equity 116 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. obtained by minority sharehol ders Other explanation on subsidiaries obtained by business combination not under same control The Company had no subsidiaries obtained by business combination not under same control. 2. Special purpose entities or operating entities with control right formed by entrusted operation or lease Unit: RMB Yuan Main business dealt with the Closing balance of main assets & liabilities recognized within Name Company the consolidated statements Other explanation on special purpose entities or operating entities with control right formed by entrusted operation or lease: The Company and controlling shareholders in Shenzhen Investment Holdings Co., Ltd. (hereinafter referred to as “SIH”) entered into Asset Replacement Agreement in September 2010, agreeing that the Company replaces Moon Bay T102-0237 land and 100% equity of Shenzhen Shenxin Taxi Co., Ltd. (hereinafter referred to as “SX Company”) possessed by SIH with parts of house property owned by the Company and wholly-owned subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. In order to optimize structure of replaced asset, SIH agrees that assets and liabilities which are not suitable to be included into the listed company such as non-market commodity house and non-performing loans and debts owned by SX Company and shown in No. [2010] 103 file of SIH (hereinafter referred to as “Divestiture Assets of SX Company” or “Divestiture Assets”) will not be incorporated into scope of replacement and will be divested. In principle, Divestiture Assets shall handle procedures of registration of transfer and transfer of credit and debt. SIH, Shenzhen Foreign Economy & Trade Investment Co., Ltd. (hereinafter referred to as FET Company”) and SX Company signed Contract on Transfer of Divestiture Assets in June 2012. According to agreement of the Contract, SIH requires SX Company to transfer Divestiture Assets to FET Company for management. Since there are legal impediments in partial transfer of Divestiture Assets, FET Company and SX Company concluded and signed Contract on Entrusted Management of Divestiture Assets and Liabilities, promising that FET Company has entrusted SX Company to liquidate, manage and dispose of Divestiture Assets. The entrusted period ends on December 31, 2014. SX Company paid for FET Company with 313,000 yuan income obtained from assets operation from June 1, 2012 to December 31, 2012. Since then SX Company will pay 626,000 yuan to FET Company each year and the remaining incomes gained from assets operation will be possessed by SX Company. Divestiture Assets as of May 31, 2012 (the beginning date of entrusted management) are as follows: Item Amount Item Amount Monetary capital 1,306,441.05Tax payable 100,983.72 Account receivable 193,011.05Other payables 790,951.81 Other receivables 56,353.90 Total liabilities 891,935.53 117 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Investing real estate 11,231,600.79Capital reserve 103,770.03 Fixed assets 12,353,947.30Surplus reserves 10,290,753.74 Project under construction 57,000.00Undistributed profit 15,047,526.32 Long-term unamortized 1,135,631.53 Total owners’ equity 25,442,050.09 expenses Total assets 26,333,985.62 Total liabilities and owners’ 26,333,985.62 equity Balance of Divestiture Assets as of December 31, 2012 in consolidated statements is as follows: Item Amount Item Amount Monetary capital 53,346.40 100,983.72 Accounts receivable 193,011.05Other payables 790,951.81 Other receivable 56,353.90Other non-current liabilities 23,101,930.71 Investing real estate 10,894,186.92 Fixed assets 11,884,861.77 Project under construction 57,000.00 Long-term unamortized 855,106.20 expenses Total assets 23,993,866.24 Total liabilities and equity 23,993,866.24 Notes: other non-current liabilities shall belong to equity of SIH Divestiture Assets. Through the above Contract on Entrusted Management of Divestiture Assets and Liabilities, the Company has actually controlled SX Company’s Divestiture Assets which become a business entity with control rights by entrusted business mode. 3. Explanations on changes of consolidation scope Explanations on changes of scope of consolidated statements (1) According to Asset Replacement Agreement signed between the Company and SIH in September 2010, the Company replaces Moon Bay T102-0237 land and 100% equity of SX Company possessed by SIH with parts of house property owned by the Company and wholly-owned subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. The two parities have completed delivery of all replaced assets and procedures on equity transfer of SX Company. The Company has actually taken over SX Company which therefore is incorporated into consolidation scope. (2) In accordance with the above 2 special purpose entity or business entity which forms control rights by entrusted operation or via leasing, the Company can actually control Divestiture Assets of SX Company and therefore such assets are incorporated into consolidation scope. □Applicable □ Inapplicable 4. Main entities which are newly included into or are not included into consolidation scope during the reporting period Subsidiary, special purpose entity and business entity which forms control rights through entrusted operation or via leasing that are 118 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. newly included into consolidation scope in current period Unit: RMB Yuan Name Net assets at the end of period Net profits in current period Shenzhen Shenxin Taxi Co., Ltd. 12,473,773.99 1,256,989.13 Divestiture Assets of SX Company 200,485.17 200,485.17 Subsidiary, special purpose entity and business entity which forms control rights through entrusted operation or via leasing that are not included into consolidation scope in current period Unit: RMB Yuan Net profits from the beginning of Name Net assets on disposal date the year to disposal date Other explanations on main entities which are newly included into or are not included into consolidation scope Net assets at the end of the period and net profits in current period of Divestiture Assets are only the parts belonging to the Company. None subsidiary, special purpose entity and business entity which forms control rights through entrusted operation or via leasing that are not included into consolidation scope in current reporting period 5. Business combination under the same control during the reporting period Unit: RMB Yuan Cash flow of Judgment criterion Income from the Net profits from Actual controller operating activities The party to be of business beginning of current combination under the same from current combined combination under combination period period to control combination period the same control to combination date combination date to combination date The combined two parties are Shenzhen Shenzhen Shenxin Taxi controlled by SIH Investment 7,215,746.00 1,659,816.93 2,060,484.57 Co., Ltd. during a continuous Holdings Co., Ltd. period of over 12 months The combined two parties are Shenzhen Divestiture Assets of controlled by SIH Investment SX Company during a continuous Holdings Co., Ltd. period of over 12 months Other explanations of business combination under the same control 119 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Both incomes from the beginning of current combination period to combination date and net profits from current combination period to combination date related to Divestiture Assets are possessed by SIH. 6. Business combination not under same control during the reporting period Unit: RMB Yuan The combined party Amount of goodwill Calculation method of goodwill Other notes to business combination not under same control: Naught 7. Subsidiaries reduced by selling equities without control right during the reporting period Name of subsidiaries Disposal date Recognition method of gains and losses Other notes to subsidiaries reduced by selling equities without control right during the reporting period: Naught 8. The counter purchases in the reporting period Calculation method of goodwill Judgment basis of counter Recognition method of recognized or included into The backdoor party purchase combination costs current gains and losses in the combination Other notes to counter purchases: Naught 9. Mergers in the reporting period Unit: RMB Yuan Type of merger Main assets merged in Main liabilities merged in Mergers under the same control Item Amount Item Amount Mergers not under the same control Item Amount Item Amount Other notes to mergers: Naught 10. Exchange rates of major items in financial statements for foreign entities For Hongkong registered subsidiaries included in consolidated scope, such as Shum Yip Properties Development 120 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 (1:0.8109) 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 (1:0.8108) when trade occurred. Ⅶ. Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Yuan Closing balance Opening balance Item Amount in Exchange Amount in Exchange Amount in RMB Amount in RMB foreign currency rate foreign currency rate Cash: -- -- 197,165.38 -- -- 280,115.14 RMB -- -- 196,113.48 -- -- 278,422.35 HKD 1,297.20 81.09% 1,051.90 2,088.06 81.07% 1,692.79 Bank deposit: -- -- 793,456,036.83 -- -- 464,486,960.65 RMB -- -- 788,676,797.01 -- -- 460,015,126.75 HKD 5,893,747.47 81.09% 4,779,239.82 5,516,015.66 81.07% 4,471,833.90 Other monetary funds: -- -- 4,071,109.16 -- -- 4,546,665.78 RMB -- -- 4,071,109.16 -- -- 4,546,665.78 Total -- -- 797,724,311.37 -- -- 469,313,741.57 Special explanation shall be made for the accounts limited by being mortgaged, pledged or frozen, deposited overseas or with potential collecting risks: (1) The Company has no such accounts limited by being mortgaged, pledged or frozen, deposited overseas or with potential collecting risks during the reporting period. (2) The closing amount of monetary funds increased by 69.98% over the opening amount, mainly because the sales funds from the property projects increased over last period. 2. Trading financial assets (1) Trading financial assets Unit: RMB Yuan Item Closing fair value Opening fair value 121 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (2) Trading financial assets with realizable limit Unit: RMB Yuan Trading restriction or other significant limits in Item Closing balance realization (3) Hedging instruments and notes to relevant hedging transaction 3. Notes receivable (1) Category of notes receivable Unit: RMB Yuan Category Closing balance Opening balance Bank acceptance bill 200,000.00 Total 200,000.00 (2) Notes receivable pledged at period-end Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark (3) Notes transferred to accounts receivable because drawer of the notes fails to execute the contract or agreement, and undue notes endorsed to other parties at the end of the period Notes transferred to accounts receivable because drawer of the notes fails to execute the contract or agreement Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark Notes: Inapplicable Undue notes endorsed to other parties by the Company Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark Note: Inapplicable Notes of bank acceptance bill that already discounted or pledged: Inapplicable 4. Dividends receivable Unit: RMB Yuan 122 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Impairment of Unrecovered Item Opening balance Increase Decrease Closing balance relevant accounts reason or not Including: -- -- -- -- -- -- Including: -- -- -- -- -- -- Note: 5. Interest receivable (1) Interest receivable Unit: RMB Yuan Increase in current Decrease in current Item Opening balance Closing balance period period (2) Overdue interest Unit: RMB Yuan Borrowing entity Overdue days (day) Amount of overdue interest (3) Notes to interest receivable 6. Accounts receivable (1) Accounts receivable listed by categories Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Proportion Proportion Proportion Proportion Amount Amount Amount Amount (%) (%) (%) (%) Accounts receivable with significant single amount 107,016,17 51,016,173. 107,016,1 51,016,173.8 and individually 80.31% 47.67% 84.75% 47.67% 3.89 89 73.89 9 withdrawn bad debt provision Accounts receivable for which bad debt provisions are made on the group basis 22,907,922. 2,323,913.9 15,700,26 Group 2 17.19% 10.14% 12.44% 1,765,426.15 11.24% 62 4 5.53 Subtotal of the groups 22,907,922. 17.19% 2,323,913.9 10.14% 15,700,26 12.44% 1,765,426.15 11.24% 123 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 62 4 5.53 Accounts receivable with insignificant single 3,328,980.0 3,328,980.0 3,551,562 amount and individually 2.5% 100% 2.81% 2,928,708.65 82.46% 5 5 .98 withdrawn bad debt provision 133,253,07 56,669,067. 126,268,0 55,710,308.6 Total -- -- -- -- 6.56 88 02.40 9 Notes to category of accounts receivable: Accounts receivable with significant single amount and individually withdrawn bad debt provision √ Applicable □ Inapplicable Unit: RMB Yuan Provision for bad Withdrawing Content of accounts receivable Book balance Reason debt proportion(%) Involved in lawsuit, Shenzhen Jiyong Properties & Resources referring to Note 98,611,328.05 42,611,328.05 43.21% Development Company XI.1 of the “Section X. Financial Report” Uncollectible for a Shenzhen Tewei Industry Co.,Ltd. 2,836,561.00 2,836,561.00 100% long period Shenzhen Lunan Industry Development Poor operational 2,818,284.84 2,818,284.84 100% Co., Ltd. status Uncollectible for a Zhou Tanjin 2,750,000.00 2,750,000.00 100% long period Total 107,016,173.89 51,016,173.89 -- -- In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Opening balance Aging Book balance Provision for bad Book balance Provision for bad Amount Proportion debts Amount Proportion debts Within 1 year Including: -- -- -- -- -- -- Within 1 year 18,822,782.16 82.17% 564,683.46 12,011,655.38 76.51% 360,349.66 (including 1 year) Subtotal of within 18,822,782.16 82.17% 564,683.46 12,011,655.38 76.51% 360,349.66 1 year 124 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 1-2 years 1,626,810.61 7.1% 162,681.06 794,149.48 5.06% 79,414.95 2-3 years 70,733.43 0.31% 21,220.03 1,314,269.42 8.37% 394,280.83 Over 3 years 2,387,596.42 10.42% 1,575,329.39 1,580,191.25 10.06% 931,380.71 3 to 4 years 1,314,269.42 5.74% 657,134.71 1,282,525.85 8.17% 641,262.93 4 to 5 years 775,661.60 3.38% 620,529.28 37,738.10 0.24% 30,190.48 Over 5 years 297,665.40 1.3% 297,665.40 259,927.30 1.65% 259,927.30 Total 22,907,922.62 -- 2,323,913.94 15,700,265.53 -- In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision □Applicable√ Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision □Applicable√ Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable: √ Applicable □ Inapplicable Unit: RMB Yuan Content of accounts Withdrawing proportion Book balance Provision for bad debt Reason receivable (%) Shenzhen Prince Unlikely to be recovered 1,248,639.52 1,248,639.52 100% Restaurant due to disputes Zhanjiang Haihu Real With a long age that was 700,000.00 700,000.00 100% Estate Co., Ltd unrecoverable Shenzhen Shengfenglu, With a long age that was GUOMAO Jewel & Gold 498,681.65 498,681.65 100% unrecoverable Co., Ltd. With a long age that was Huidong CarsCo., Ltd. 250,000.00 250,000.00 100% unrecoverable Zhanjiang With a long age that was 135,972.00 135,972.00 100% SpecialCement Plant unrecoverable With a long age that was Hainan Meijia Tea House 126,318.15 126,318.15 100% unrecoverable With a long age that was Other 369,368.73 369,368.73 100% unrecoverable Total 3,328,980.05 3,328,980.05 -- -- (2) Accounts receivable reversed or collected in the reporting period Unit: RMB Yuan Content of accounts Reversed or collected Recognition basis of Reversed or collected Reversed or collected receivable reason original bad debt amount of the accrued amount 125 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. provision bad debt provision Shenzhen Luohu District Predicted to be Recovery 222,750.75 222,750.75 Construction Works Bureau irrecoverable Total -- -- 222,750.75 -- The withdrawal of bad debt provision of accounts receivable with significant single amount or insignificant single amount but individually made impairment test at the end of reporting period: Unit: RMB Yuan Withdrawing proportion Content Book balance Bad debt amount Reason (%) Notes to accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics: (3) The write-off accounts receivable Unit: RMB Yuan Whether arising Nature of accounts Name of entity Write-off time Write-off amount Write-off reason from related party receivable transaction or not? Notes to write off of accounts receivable: Naught (4) Particulars about accounts receivable due to shareholders holding 5% (including 5%) voting rights of the Company Unit: RMB Yuan Closing balance Opening balance Name of entity Book balance Withdrawal amount Book balance Withdrawal amount Shenzhen Investment Holdings Co., 415,302.14 12,459.06 156,217.34 4,686.52 Ltd. Total 415,302.14 12,459.06 156,217.34 4,686.52 (5) Information of top 5 accounts receivable: Unit: RMB Yuan The relationship with the Name of entity Amount Aging Proportion Company Shenzhen Jiyong Properties & Resources Non-related-party 98,611,328.05 Over five years 74% Development Company Huwei Technologies Co., Non-related-party 9,548,705.35 Within one year 7.17% 126 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Ltd. Shenzhen Tewei Industry Non-related-party 2,836,561.00 Over five years 2.13% Co., Ltd. Shenzhen Lunan Industry Non-related-party 2,818,284.84 Over five years 2.11% Development Co., Ltd. Zhou Tanjin Non-related-party 2,750,000.00 Over five years 2.06% Total -- 116,564,879.24 -- 87.47% (6) The amounts due from related parties Unit: RMB Yuan The relationship with the Name of entity Amount Proportion Company Shenzhen Investment Controlling shareholder 415,302.14 0.31% Holdings Co., Ltd. Total -- 415,302.14 0.31% (7) Information of accounts receivable that terminated recognition Unit: RMB Yuan Gains or loses related to the termination of Item Amount of termination recognition (8) If securitization is carried out on accounts receivable as the underlying assets, please list amount of assets and liabilities arising from further involvement Unit: RMB Yuan Item Period-end Assets: Liabilities: 7. Other accounts receivable (1) Other accounts receivable disclosed by type: Unit: RMB Yuan Closing balance Opening balance Category Balance Provision for bad debts Balance Provision for bad debts Proportio Proportio Proportion Proportio Amount Amount Amount Amount n (%) n (%) (%) n (%) Other accounts 92,670,839.6 76.86% 92,670,839.6 100% 92,900,407.6 72.46% 92,900,407.68 100% 127 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. receivable that is 8 8 8 individually significant and provisions for bad debts individually Other accounts receivable that provisions for bad debts by group 17,971,840.9 11,600,151.6 25,190,013.6 Group 2 14.91% 64.55% 19.64% 21,761,671.21 86.39% 6 2 0 17,971,840.9 11,600,151.6 25,190,013.6 Subtotal of group 14.91% 64.55% 19.64% 21,761,671.21 86.39% 6 2 0 Other accounts receivable that is 10,125,581.5 individually insignificant 9,925,245.51 8.23% 9,925,245.51 100% 7.9% 10,125,581.51 100% 1 but provisions for bad debts individually 120,567,926. 114,196,236. 128,216,002. Total -- -- -- 124,787,660.40 -- 15 81 79 Notes for categories of other accounts receivable: Other closing accounts receivable that is individually significant and provisions for bad debts individually. √ Applicable □Inapplicable Unit: RMB Yuan Content of other accounts Withdrawing proportion Book balance Bad debt amount Reason receivable (%) Payment for discharging Gintian Industry (Group) of guaranty responsibility 56,600,000.00 56,600,000.00 100% Co., Ltd that was difficult to be recollected Anhui Nanpeng Uncollectible for a long 7,648,160.00 7,648,160.00 100% Papermaking Co., Ltd period Shenzhen Shengfenglu, There is no asset to GUOMAO Jewel & Gold 6,481,353.60 6,481,353.60 100% execute the verdict, thus Co., Ltd lead to uncollectibility Shanghai Yutong Real Uncollectibility for the estate development Co., 5,676,000.00 5,676,000.00 100% reason of verdict Ltd Wuliangye Restaurant 5,523,057.70 5,523,057.70 100% Has been liquidated HongKong Yueheng 3,271,837.78 3,271,837.78 100% Has been liquidated Development Co., Ltd Dameisha Tourism 2,576,445.69 2,576,445.69 100% Suspended project 128 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Center Shenzhen GUOMAO Industrial Development 2,351,652.48 2,351,652.48 100% The company is insolvent Co., Ltd Elevated Train Project 2,542,332.43 2,542,332.43 100% Suspended project Total 92,670,839.68 92,670,839.68 -- -- In the group, other accounts receivable that provisions for bad debts by aging analysis: √ Applicable □ Inapplicable Unit: RMB Yuan Period-end Period-begin Book balance Book balance Aging Provision for bad Provision for bad Proporti Proporti Amount debts Amount debts on on Within 1 year Including: Within 1 year (including 5,907,685.35 32.87% 177,230.56 2,329,457.87 9.25% 69,883.74 1 year) Subtotal of within 1 year 5,907,685.35 32.87% 177,230.56 2,329,457.87 9.25% 69,883.74 1-2 years 528,158.03 2.94% 52,815.80 151,914.64 0.6% 15,191.46 2-3 years 33,129.44 0.18% 9,938.83 822,345.71 3.26% 246,703.71 Over 3 years 11,502,868.14 64.01% 11,360,166.43 21,886,295.38 86.89% 21,429,892.30 3 to 4 years 3,596.51 0.02% 1,798.26 704,517.32 2.8% 352,258.66 4 to 5 years 704,517.32 3.92% 563,613.86 520,722.10 2.07% 416,577.68 Over 5 years 10,794,754.31 60.07% 10,794,754.31 20,661,055.96 82.02% 20,661,055.96 Total 17,971,840.96 -- 11,600,151.62 25,190,013.60 -- 21,761,671.21 In the group, other accounts receivable that provisions for bad debts by balance percentage: □Applicable√ Inapplicable In the group, other accounts receivable that provisions for bad debts by other methods: □Applicable√ Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable: √ Applicable □ Inapplicable Unit: RMB Yuan Content of other accounts Book balance Provision for bad debts Withdrawal proportion Reason receivable Shenzhen Wufang Pottery & Porcelain 1,747,264.25 1,747,264.25 100% Poor operation status Industrial Co., Ltd 129 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Unrecoverable due to Liang Weimin 1,357,137.11 1,357,137.11 100% retirement of employee Shenzhen Guesthouse 909,960.40 909,960.40 100% Unrecoverable Chongqing Hua’er Owner unable to repay 799,163.50 799,163.50 100% Decorations Co., Ltd. the loan Unrecoverable due to Compensation for Shidai new residence mortgage 601,762.21 601,762.21 100% disappearance of the guarantee in ABC debtor Unrecoverable for a long Chen Liangfang 500,000.00 500,000.00 100% term Unrecoverable for a long Yan Kunping 496,307.77 496,307.77 100% term Fang Bijia 344,134.00 344,134.00 100% Unrecoverable Shenzhen Property Unrecoverable Architectural Design 335,828.92 335,828.92 100% Company Other 2,833,687.35 2,833,687.35 100% Unrecoverable Total 9,925,245.51 9,925,245.51 -- -- (2) Information of other accounts receivable reversed or recovered in the reporting period Unit: RMB Yuan Content of other accounts Reason for reversed or Basis for determination Accrued amount before Amount of reversed or receivable recovered of bad debts provision reversal or recovery recovered Offset of the creditor's Shenzhen GUOMAO rights and liabilities for Estimated to be Industrial Development Co., 2,551,652.48 200,000.00 the original Longhua unrecoverable Ltd property projects Offset of the creditor's Longhua real estate project rights and liabilities for Estimated to be 200,000.00 200,000.00 receivable the original Longhua unrecoverable property projects Mailbox expense receivable Estimated to be Recover 336.00 336.00 from owners unrecoverable 130 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total -- -- 2,751,988.48 -- Withdrawal of closing individually significant or insignificant but provisions for bad debts individually accounts receivable: Unit: RMB Yuan Content of other Book balance Amount of bad debts Withdrawal percentage Reason accounts receivable Notes of individually insignificant but was of big risk after grouped by credit risk other accounts receivable: (3) Information of other accounts receivable written off in the reporting period Unit: RMB Yuan Whether arising from Nature of other Name of company Write off date Write off amount Write off reason related party accounts receivable transactions or not Notes of written-off of other accounts receivable: Naught (4) Other accounts receivable is due from shareholders with more than 5% (including 5%) of the voting shares of the Company Unit: RMB Yuan Closing balance Opening balance Name of entity Withdrawal amount Withdrawal amount Book balance Book balance of bad debts of bad debts (5) Nature or details of other significant accounts receivable Unit: RMB Yuan Nature or details of the Name of entity Amount Proportion of the total (%) amount Gintian Industry (Group) Co., Executed amount of 56,600,000.00 46.94% Ltd. guarantee Anhui Nanpeng Papermaking 7,648,160.00 Operating turnover funds 6.34% Co., Ltd Shenzhen Shengfenglu, GUOMAO Jewel & Gold Co., 6,481,353.60 Current account 5.38% Ltd Shanghai Yutong Real estate 5,676,000.00 Current account 4.71% development Co., Ltd Wuliangye Restaurant 5,523,057.70 Current account 4.58% 131 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. HongKong Yueheng 3,271,837.78 Current account 2.71% Development Co., Ltd Dameisha Tourism Center 2,576,445.69 Current account 2.14% Shenzhen GUOMAO Industrial 2,351,652.48 Current account 1.95% Development Co., Ltd Elevated Train Project 2,542,332.43 Current account 2.11% Total 92,670,839.68 -- 76.86% Note: (6) Information of top five other accounts receivable Unit: RMB Yuan Relationship with the Proportion of the total Name of entity Amount Aging Company (%) Gintian Industry (Group) Non-related-party 56,600,000.00 Over five years 46.94% Co.,Ltd. Anhui Nanpeng Joint venture 7,648,160.00 Over five years 6.34% Papermaking Co., Ltd Shenzhen Shengfenglu, GUOMAO Jewel & Gold Non-related-party 6,481,353.60 Over five years 5.38% Co., Ltd Shanghai Yutong Real estate development Co., Non-related-party 5,676,000.00 Over five years 4.71% Ltd Wuliangye Restaurant Non-related-party 5,523,057.70 Over five years 4.58% Total -- 81,928,571.30 -- 67.95% (7) Information of the amounts due from related parties Unit: RMB Yuan Name of entity Relationship with the Company Amount Proportion (%) Anhui Nanpeng Papermaking Associated enterprise 7,648,160.00 6.34% Co., Ltd Shenzhen GUOMAO Industrial Development Co., Associated enterprise 2,351,652.48 1.95% Ltd Shenzhen Wufang Pottery & Associated enterprise 1,747,264.25 1.45% Porcelain Industrial Co., Ltd Shenzhen Guesthouse With the same controller of the 909,960.40 0.75% 132 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. parent company of the Company Total -- 12,657,037.13 10.5% (8) Information of other accounts receivable that terminated recognition Unit: RMB Yuan Gains or loses related to the termination of Item Amount of termination recognition (9) If securitization is carried out on other accounts receivable as the underlying assets, please list amount of assets and liabilities arising from further involvement Unit: RMB Yuan Item Closing balance Assets: Liabilities: 8. Prepayment (1) List by aging analysis: Unit: RMB Yuan Closing balance Opening balance Aging Proportion Proportion Amount Amount (%) (%) Within 1 year 55,422,464.21 85.64% 472,521,763.10 99.62% 1 year to 2 8,839,702.60 13.66% 108,805.50 0.02% years 2 years to 3 72,805.50 0.11% 1,586,058.25 0.33% years Over 3 years 380,017.80 0.59% 138,121.54 0.03% Total 64,714,990.11 -- 474,354,748.39 -- Notes of aging of prepayment: The closing amount of the prepayment decrease by 86.36% over the opening amount, which mainly due to the prepaid transfer fee for Yangzhou land was transferred to the inventories during the reporting period. (2) Information of the top 5 prepayment Unit: RMB Yuan 133 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Relationship with the Name of entity Amount Aging Reason for unsettled Company Prepayment of taxes Refer to the notes to the Non-related-party 48,597,463.86 1 Jan. 2012 prepayment Prepayment of social Refer to the notes to the security charges in Non-related-party 5,925,702.60 22 Jul. 2011 prepayment building industry Zhanjiang Yuexi Not reaching the Construction Engineering Non-related-party 5,850,000.00 3 Mar. 2012 settlement conditions for Co., Ltd projects Shenzhen Ailite Not reaching the Mechanical and Non-related-party 1,504,000.00 5 Apr. 2012 settlement conditions for Electrical Equipment projects Co., Ltd. Not reaching the Chongqing Guangtian Non-related-party 292,879.20 6 Jul. 2012 settlement conditions for Metal Products Co., Ltd. projects Total -- 62,170,045.66 -- -- Notes of important companies of prepayment: All the companies of prepayment during the reporting period had no relationship with the Company. (3) Information about amount due from shareholders with more than 5% (including 5%) of the voting shares of the Company in prepayment Unit: RMB Yuan Closing balance Opening balance Name of entity Amount of provision Amount of provision Book balance Book balance for bad debts for bad debts (4) Notes of prepayment 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 advance), and the obligation for tax occurs on pre-collection date. The balance of pre-paid the taxes and fees refer to the prepaid business tax, education surtax and other tax fees, basing on pre-sale income of commercial housing sales. 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. 134 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 9. Inventory (1) Category Unit: RMB Yuan Closing balance Opening balance Item Impairment of Impairment of Book balance Book value Book balance Book value inventories inventories Raw materials 1,902,535.57 506,522.30 1,396,013.27 1,908,615.92 538,069.88 1,370,546.04 Inventory goods 43,286.70 43,286.70 37,356.20 37,356.20 Turnover material 515,562.10 515,562.10 589,437.96 589,437.96 Products held for real estate 1,054,626,950.28 32,647,460.45 1,021,979,489.83 652,893,160.93 36,911,568.66 615,981,592.27 development Properties under 736,298,555.66 736,298,555.66 684,087,366.66 684,087,366.66 development Completed 540,441,643.58 540,441,643.58 512,926,330.21 512,926,330.21 properties for sale Total 2,333,828,533.89 33,153,982.75 2,300,674,551.14 1,852,442,267.88 37,449,638.54 1,814,992,629.34 (2) Provision for falling price of inventories Unit: RMB Yuan Opening book Decease Category Increase Closing book balance balance Reversal Write-off Raw materials 538,069.88 31,547.58 506,522.30 Land to be develope 36,911,568.66 4,264,108.21 32,647,460.45 d Total 37,449,638.54 4,264,108.21 31,547.58 33,153,982.75 (3) Details of provision for falling price of inventories Proportion of reversal of Basis on provision for falling Item Reasons for reversal provision for impairment of price of inventories inventories to closing balance The estimated net realizable Raw materials value is lower than the book value The estimated net realizable Land to be developed The net realizable value 13.08% value is lower than the book 135 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. value resumed to increase Notes of inventory: (4) Particulars about the capitalization amount of borrowing costs in the closing balance of inventory Category of Project Closing balance Increase for the Decrease for the Closing balance inventory year year Completed Xinhua City 6,222,040.71 3,348,534.75 2,873,505.96 properties Shengang No.1 20,512,106.56 13,243,238.62 7,268,867.94 Langqiao Gardern 51,689,147.66 31,388,555.29 24,648,257.11 58,429,445.84 Properties under Caitianyise 6,023,792.66 6,264,615.79 12,288,408.45 development Banshanyujing 7,367,181.38 7,367,181.38 Phase I Songhulangyuan 1,520,319.93 1,520,319.93 Total 84,447,087.59 46,540,672.39 41,240,030.48 89,747,729.50 10. Other current assets Unit: RMB Yuan Item Closing balance Opening balance Notes of other current assets: 11. Available-for-sale financial assets (1) Information of available-for-sale financial assets Unit: RMB Yuan Item Closing fair value Opening fair value In the reporting period, the Company reclassified the held-to-maturity investment into available-for-sale financial assets, a total of RMB* was reclassified, which takes *% of total matured investment before reclassification. Notes of available-for-sale financial assets (2) Long-term liability investment of available-for-sale financial assets Unit: RMB Yuan Accrued Initial Interest in the accounts Opening Closing Item Category Balance investment Matured date reporting receivable or balance balance cost period received interest Notes of long-term liability investment of available-for-sale financial assets: 136 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 12. Held-to-maturity investment (1) Information Unit: RMB Yuan Item Closing book balance Opening book balance Notes of held-to-maturity investment: (2) Information of held-to-maturity investment sold in the reporting period but was not matured Unit: RMB Yuan Item Amount Percentage of the investment amount before sales Notes of undue held-to-maturity investment sold in the reporting period: 13. Long-term accounts receivable Unit: RMB Yuan Category Closing balance Opening balance 14. Investment to joint ventures and associated enterprises Unit: RMB Yuan Percentage of Voting Total operation Net profit of Name of holding shares percentage of Total closing Total closing Net closing revenue of the the reporting investee of the the Company assets liabilities assets reporting period Company in investee period I. Joint ventures Shenzhen Jifa Warehouse 50% 50% 59,038,833.28 2,702,691.32 56,336,141.96 6,999,762.65 1,622,013.88 Co., Ltd Shenzhen GUOMAO Tian’an 50% 50% 117,024,039.13 42,528,265.04 74,495,774.09 19,834,382.07 3,688,160.44 Properties Co., Ltd Shenzhen 50% 50% 35,843,829.64 28,781,445.39 7,062,384.25 17,641,222.90 981,445.18 Tian’an 137 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. International Building Property Management Co., Ltd II. Associated enterprises Shenzhen GUOMAO Industrial 38.33% 38.33% Development Co., Ltd Anhui Nanpeng 30% 30% Papermaking Co., Ltd Shenzhen Wufang Pottery & 26% 26% Porcelain Industrial Co., Ltd Notes if significant differences exist between the important accounting policies and accounting estimations of joint ventures, associated enterprises and the Company: 15. Long-term equity investment 138 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (1) List of long-term equity investment Unit: RMB Yuan Explanati on for indifferen Withdraw ces n Share between Cash Voting impairme Accounti Initial holding the share Impairme bonus in Opening Increase/d Closing percentag nt Investee ng investmen percentag holding nt the balance ecrease balance e in provision method t cost e in percentag provision reporting investee in the investee e and period reporting voting period percentag e in investee Shenzhen Jifa Warehous Equity 30,645,05 27,357,06 811,006.9 28,168,07 50% 50% e method 6.04 4.04 4 0.98 Company Limited Shenzhen GUOMA Equity 23,186,12 35,403,80 1,844,080 37,247,88 O Tian’an 50% 50% method 4.00 6.83 .22 7.05 Properties Co., Ltd Shenzhen Tian’an Internatio nal Equity 1,500,000 3,040,469 490,722.5 3,531,192 Building 50% 50% method .00 .53 9 .12 Property Managem ent Co., Ltd Shenzhen Wufang Pottery & Cost 18,983,61 18,983,61 18,983,61 18,983,61 26% 26% Porcelain method 4.14 4.14 4.14 4.14 Industrial Co., Ltd 139 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen GUOMA O Cost 20,154,84 3,682,972 3,682,972 3,682,972 Industrial 38.33% 38.33% method 0.79 .55 .55 .55 Develop ment Co., Ltd Anhui Nanpeng Cost 13,824,00 13,824,00 13,824,00 13,824,00 Papermak 30% 30% method 0.00 0.00 0.00 0.00 ing Co., Ltd China Cost 2,962,500 2,962,500 2,962,500 2,160,300 T.H. Co., 0.33% 0.33% method .00 .00 .00 .45 Ltd. North Machiner Cost 3,465,000 3,465,000 3,465,000 3,465,000 12.66% 12.66% y (Group) method .00 .00 .00 .00 Co., Ltd. Guangdo ng Huayue Cost 8,780,645 8,780,645 8,780,645 8,780,645 8.47% 8.47% Real method .20 .20 .20 .20 Estate Co., Ltd. Shenzhen GUOMA O Cost 8,500,000 8,500,000 8,500,000 Petroleu 100% 100% method .00 .00 .00 m Company Limited Guangzh ou Lishifeng Cost 6,000,000 6,000,000 6,000,000 30% 30% Automobi method .00 .00 .00 le Co., Ltd. Sanya East Cost 1,350,000 1,350,000 1,350,000 1,350,000 0.28% 0.28% Travel method .00 .00 .00 .00 Co., Ltd. 140 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shensan Cost 17,695.09 17,695.09 17,695.09 17,695.09 Co., Ltd. method Macao Huashen Cost Enterpris 85,621.36 78,708.74 19.42 78,728.16 10% 10% 78,728.16 19.42 method e Co., Ltd. Chongqin g Guangfa Real Cost 2,598,061 2,418,523 -29,627.0 2,388,896 2,388,896 -29,627.0 27.25% 27.25% estate method .52 .82 2 .80 .80 2 developm ent Co., Ltd. Saipan Cost 1,935,184 1,748,731 1,779,386 1,779,386 30,655.08 30% 30% 30,655.08 Project method .04 .17 .25 .25 143,988,3 137,613,7 3,146,857 140,760,5 56,511,23 Total -- -- -- -- 1,047.48 42.18 31.11 .23 88.34 8.64 (2) Information of the limitation on the capability to transfer capital to investee Unit: RMB Yuan Item that with limitation on the capability Investment losses unrecognized in current Reason for limitation to transfer capital to investee period Notes of long-term equity investment: Note 1: In Jan. 2008, Shenzhen GUOMAO 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. 141 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 16. Investment property (1) Investment property calculated by cost Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance I. Total cost 477,601,561.00 23,533,501.17 30,359,709.98 470,775,352.19 1. Property and 469,631,606.60 23,533,501.17 30,359,709.98 462,805,397.79 buildings 2. Land use right 7,969,954.40 7,969,954.40 II Accumulated depreciation and 174,969,042.45 18,282,603.49 7,734,897.92 185,516,748.02 amortization 1. Property and 171,636,360.26 17,773,458.37 7,734,897.92 181,674,920.71 buildings 2. Land use right 3,332,682.19 509,145.12 3,841,827.31 III. Total net book value of investment 302,632,518.55 5,250,897.68 22,624,812.06 285,258,604.17 real estate 1. Property and 297,995,246.34 5,760,042.80 22,624,812.06 281,130,477.08 buildings 2. Land use right 4,637,272.21 -509,145.12 4,128,127.09 V. Total book value of 302,632,518.55 5,250,897.68 22,624,812.06 285,258,604.17 investment real estate 1. Property and 297,995,246.34 5,760,042.80 22,624,812.06 281,130,477.08 buildings 2. Land use right 4,637,272.21 -509,145.12 4,128,127.09 Unit: RMB Yuan The reporting period Amount of amortization and depreciation in the reporting period 17,492,026.14 Withdrawal amount of provision for impairment of investment real estate 0.00 in the reporting period (2) Investment real estate measured by fair value Unit: RMB Yuan Opening fair Increase for the year Decrease for the year Closing fair Item value Acquisition Transfer of Gains and Disposal Transfer to value 142 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. self-occupie losses from self-occupie d property or changes in d property inventories fair value Explanation on investment real estates that changed the measurement method and have not completed to handle the property right certificate during the reporting period, and relevant explanation on the reason for failing to complete to handle the property right certificate and the expected completion time: The housing and building increased for the year mainly due to leasing the investment real estates transferred from inventories and fixed assets. The housing and building decreased for the year mainly due to the decrease in completion of assets replacement and the leased properties transferred to fixed assets. 17. Fixed assets (1) Fixed assets details Unit: RMB Yuan Opening book Decrease in the Closing book Item Increase in the reporting period balance reporting period balance I. Total original book value 213,214,030.40 16,446,190.37 21,770,990.73 207,889,230.04 Including: Property and 120,984,990.42 5,805,252.26 9,936,695.53 116,853,547.15 building Machineries 9,096,738.14 177,770.08 187,123.00 9,087,385.22 Vehicles 55,190,657.69 9,260,390.00 10,997,240.00 53,453,807.69 Electrical and other 23,248,233.56 1,165,009.65 649,932.20 23,763,311.01 equipments Decoration of fixed assets 4,693,410.59 37,768.38 4,731,178.97 Closing book Opening book Increase in the Withdrawal in the Decrease in the -- balance in current balance reporting period reporting period reporting period period II. Accumulated 126,283,023.98 350,456.50 15,596,141.06 13,237,276.87 128,992,344.67 depreciation Including: Property and 66,428,477.27 350,456.50 4,117,540.36 1,986,293.68 68,910,180.45 building Machineries 6,374,435.96 112,728.87 158,196.29 6,328,968.54 Vehicles 30,870,888.51 9,642,389.00 10,476,205.00 30,037,072.51 Electrical and other 18,537,928.01 1,544,411.80 607,129.40 19,475,210.41 equipments Decoration of fixed assets 4,071,294.23 179,071.03 9,452.50 4,240,912.76 143 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Opening book Closing balance in -- -- balance current period III. The net book value of 86,931,006.42 -- 78,896,885.37 fixed assets Including: Property and 54,556,513.15 -- 47,943,366.70 building Machineries 2,722,302.18 -- 2,758,416.68 Vehicles 24,319,769.18 -- 23,416,735.18 Electrical and other 4,710,305.55 -- 4,288,100.60 equipments Decoration of fixed assets 622,116.36 -- 490,266.21 IV. Total impairment 75,717.16 -- 75,717.16 provision Including: Property and 75,717.16 -- 75,717.16 building Decoration of fixed assets -- V. Total book value of fixed 86,855,289.26 -- 78,821,168.21 assets Including: Property and 54,556,513.15 -- 47,943,366.70 building Machineries 2,722,302.18 -- 2,758,416.68 Vehicles 24,319,769.18 -- 23,416,735.18 Electrical and other 4,634,588.39 -- 4,212,383.44 equipments Decoration of fixed assets 622,116.36 -- 490,266.21 Depreciation amount of this reporting period was RMB 15,596,141.06, RMB 0.00 was transferred into fixed assets from construction project. (2) Temporary idle fixed assets Unit: RMB Yuan Accrued Impairment Item Original book value Net book value Note depreciation provision Property and 4,059,207.77 1,692,842.88 2,366,364.89 building (3) Fixed assets leased in from financing lease Unit: RMB Yuan 144 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Item Original book value Accrued depreciation Net book value (4) Fixed assets leased out from operation lease Unit: RMB Yuan Category Closing book value (5) Information of hold-for-sale fixed assets at period-end Unit: RMB Yuan Item Book value Fair value Estimated disposal cost Estimated settle date (6) Information of fixed assets failed to accomplish certification of property Reason for failing to accomplish Estimated time of completing the Item certification of property certification of property Notes of fixed assets: The housing and building decreased in the reporting period mainly due to the leased properties transferred from fixed assets to investment properties and the decrease of assets replacement. The vehicles decreased during the reporting period mainly due to the taxi subsidiaries changed the operating vehicles. 18. Construction in progress (1) Unit: RMB Yuan Closing balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Smoke emission renovation 57,000.00 57,000.00 57,000.00 57,000.00 for Shenxin Building Total 57,000.00 57,000.00 57,000.00 57,000.00 (2) Significant changes in construction in progress Unit: RMB Yuan Accumul Includin Capitaliz Project Transferr ative g: ation input Source Name of Opening ed to Other Project amount amount ratio of Closing Budget Increase percenta of project balance fixed decrease process of of interest balance ge of funding assets capitaliz capitaliz in the budget ation of ation of reporting 145 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. interest interest period in the (%) reporting period Notes to change in construction in progress (3) Impairment provision of construction in progress Unit: RMB Yuan Increase in the Decrease in the Reason for Item Opening amount Closing balance reporting period reporting period withdrawal (4) Information of procedures of significant construction in progress Item Project process Note (5) Notes of construction in progress 19. Engineering materials Unit: RMB Yuan Increase in the Decrease in the Item Opening balance Closing balance reporting period reporting period Notes of engineering materials: 20. Clearance of fixed assets Unit: RMB Yuan Reason for transferring to Item Opening book value Closing book value clearance Notes of clearance process of fixed assets with a clearance term of over 1 year since the transfer into fixed assets: 21. Productive biological assets (1)Measured by cost Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance I. Crop farming industry II. Animal husbandry and aquaculture industry III. Forest industry 146 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. IV. Aquatic products industry (2)Measured by fair value Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance J. Crop farming industry II. Animal husbandry and aquaculture industry III. Forest industry IV. Aquatic products industry Notes to productive biological assets: 22. Oil and gas assets Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance Notes of oil and gas assets: 23. Intangible assets (1) Information Unit: RMB Yuan Increase in the reporting Decrease in the Item Opening book balance Closing book balance period reporting period I. Total original book value 170,884,406.80 170,884,406.80 Taxi operating licenses 170,866,146.80 170,866,146.80 Official software 18,260.00 18,260.00 II. Total accrued amortization 49,630,150.65 7,156,103.04 56,786,253.69 Taxi operating licenses 49,616,050.65 7,152,203.04 56,768,253.69 Official software 14,100.00 3,900.00 18,000.00 III. Total net book value of 121,254,256.15 -7,156,103.04 114,098,153.11 intangible assets Taxi operating licenses 121,250,096.15 -7,152,203.04 114,097,893.11 Official software 4,160.00 -3,900.00 260.00 Taxi operating licenses Official software Total book value of 121,254,256.15 -7,156,103.04 114,098,153.11 147 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. intangible assets Taxi operating licenses 121,250,096.15 -7,152,203.04 114,097,893.11 Official software 4,160.00 -3,900.00 260.00 Amortization was of RMB 7,156,103.04 in the reporting period (2) Company development expense Unit: RMB Yuan Decrease Item Opening balance Increase Recognized into Recognized as Closing balance current gains/losses intangible assets The percentage of development expense in the total expenditure of R&D projects in the reporting period: The percentage of the value of intabgible assets formed from the internal R&D of the Company in the closing book value of intangible assets: Notes of the developed projects of the Company, including the projects with individual value more than RMB 1 million and recorded with the assessed value, relevant assessment agency and method shall be disclosed: 24. Goodwill Unit: RMB Yuan Impairment Name of investee or event that Increase in the Decrease in the Opening balance Closing balance provision at generated goodwill reporting period reporting period period-end Notes of test method of goodwill impairment and impairment withdrawal method: 25. Long-term amortization expense Unit: RMB Yuan Amortization Reason for other Item Opening balance Increase Other decrease Closing balance balance decrease Reformation project for 1,989,226.53 172,976.28 1,816,250.25 Tianhong Subway No. 3 Fire-fighting renovation of 1,184,186.48 177,070.28 1,007,116.20 Shenxin Building Renovation for 820,921.95 820,921.95 repair shops Total 3,173,413.01 820,921.95 350,046.56 3,644,288.40 -- 148 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Notes of long-term amortization expense: 26. Deferred tax assets and liabilities (1) Deferred tax assets and liabilities are not listed as the net value after offset Deferred tax assets and liabilities that already recognized Unit: RMB Yuan Item Closing balance Opening balance Deferred income tax assets:: Provision for impairment of assets 335,764.51 378,187.84 Deductible losses 11,495,872.46 6,392,371.80 Accrued land VAT 140,731,876.12 105,073,836.93 Accrued unpaid dismiss welfare 788,140.00 32,314.75 Transferred employee education fee pay 1,140.51 4,878.12 deductible in the following year Transferred advertisement fee deductible in the 664,109.00 206,936.50 following year Unrealized internal sales gain and loss 7,828,210.75 2,662,855.97 Estimated profit calculated at pre-sale revenue of 32,662,711.15 9,350,820.50 property enterprises Subtotal 194,507,824.50 124,102,202.41 Deferred income tax liabilities Prepaid land VAT 2,739,089.94 Subtotal 2,739,089.94 List of unrecognized deferred income tax assets Unit: RMB Yuan Item Closing balance Opening balance Deductible losses of unrecognized deferred income tax assets will due in the following years Unit: RMB Yuan Year Closing balance Opening balance Remark List of taxable differences and deductible differences items Unit: RMB Yuan Item Temporary differences amount 149 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. As at period-end As at period-begin Taxable differences items Prepaid land VAT 10,956,359.77 Subtotal 10,956,359.77 Deductible difference projects Assets impairment provision 1,343,057.99 1,512,751.31 Accrued land VAT 562,927,504.45 420,295,347.70 Deductible losses 45,983,489.80 25,569,487.18 Transferred advertisement fee deductible in the 2,656,436.00 827,746.00 following year Transferred employee education fee pay deductible 4,562.04 19,512.47 in the following year Accrued unpaid dismiss welfare 3,152,560.00 129,259.00 Estimated profit calculated at pre-sale revenue of 130,650,844.60 37,403,282.01 property enterprises Unrealized internal sales gain and loss 31,312,842.98 10,651,423.89 Subtotal 778,031,297.86 496,408,809.56 (2) Deferred income tax assets and liabilities are listed as the net value after offset Notes of deferred income tax assets and liabilities after offset with each other Unit: RMB Yuan Deferred income tax assets and Deductible or taxable Deferred income Deductible or taxable liabilities after temporary assets or liabilities temporary Item offset with each differences after after offset at differences after other at offset at period-end period-begin offset at period-begin period-end Deferred income tax assets 194,507,824.50 124,102,202.41 Deferred income tax liabilities 2,739,089.94 Details about the deferred income tax assets and liabilities offset with each other Unit: RMB Yuan Item Offset amount at the reporting period Explanation on deferred income tax assets and liabilities 27. List of provision for assets impairment Unit: RMB Yuan Item Opening book Increase Decrease Closing book 150 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. balance Reversal Written off balance I. Provision for bad debt 180,497,969.09 -8,980,020.32 652,644.08 170,865,304.69 II. Provision for inventory 37,449,638.54 4,264,108.21 31,547.58 33,153,982.75 falling price V. Impairment provision of 56,510,191.16 1,047.48 56,511,238.64 long-term equity investment VII. Impairment provision of 75,717.16 75,717.16 fixed assets Total 274,533,515.95 -8,978,972.84 4,916,752.29 31,547.58 260,606,243.24 Notes of the list of assets impairment: 28. Other non-current assets Unit: RMB Yuan Item Closing balance Opening balance Notes of other non-current assets 29. Short-term loan (1) Category Unit: RMB Yuan Category Closing balance Opening balance Mortgage loan 220,000,000.00 40,000,000.00 Guarantee loan 60,000,000.00 41,495,212.00 Credit loan 490,000,000.00 Guarantee loan + mortgage loan 30,000,000.00 Guarantee loan + pledge loan 40,000,000.00 Mortgage loan + pledge loan 40,000,000.00 Total 360,000,000.00 601,495,212.00 Notes: (2) List of unsettled mature short-term loan Unit: RMB Yuan Reason for Name of creditor Amount of loan Rate of loan Usage Estimated settle date unsettlement Total 0.00 -- -- -- -- RMB000 was paid back after the Balance Sheet Date. Notes of short-term loan, for those gaining extended term, notes term of extension and new mature date: A. The short-term loan of RMB 0.2 billion was the entrusted loan that Shenzhen Investment Holdings Co., Ltd. entrusted Shenzhen Jingtian Sub-branch of China Everbright Bank to borrow, which was the credit loan. After the expiry on 39 Mar. 2012, the Company extent the period of the entrusted loan by mortgaging the five houses 151 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. located at Guomao Plaza (Phase II), Nanhu Road, Luohu District, Shenzhen; 105 houses located at Guomao Commercial Building, Nanhu Road, Luohu District, Shenzhen; 19/F Tian’an International Building, Renmin South Road, Luohu District, Shenzhen; 7 houses located at Small Commodity Market, Peace New Home, Chuanbu Street, Heping Road, Luohu District, Shenzhen and 1-7/F, Peace Hotel, Heping Road, Luohu District, Shenzhen, so the due date extended to 28 Mar. 2013, and the annual loan interest rate increased from 5.7767% to 6.9554%. B. The short-term loan of RMB 40 million was the entrusted loan that Shenzhen Investment Holdings Co., Ltd. entrusted Shenzhen Jingtian Sub-branch of China Everbright Bank to borrow, which was the credit loan. After the expiry on 39 Mar. 2012, Shenzhen GUOMAO Vehicles Industry Co., Ltd. extent the period of the entrusted loan by mortgaging its Room 2701, Huangcheng Plaza Building and Room 2901 and 3101, Huangcheng Plaza Building owned by the Company’s subsidiary of Shenzhen Huangcheng Real Estate Co., Ltd. as well as pledging 120 Taxi Operating Licenses owned by the Company’s subsidiary of Shenzhen Shenxin Taxi Co., Ltd., and the annual loan interest rate increased from 5.7767% to 6.9554%. 30. Trading financial liabilities Unit: RMB Yuan Item Closing fair value Opening fair value Notes of trading financial liabilities: 31. Notes payable Unit: RMB Yuan Category Closing balance Opening balance RMB000 will be due in next fiscal period. Notes of notes payable: 32. Accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Accounts payable 298,525,752.32 187,093,587.42 Total 298,525,752.32 187,093,587.42 (2) The accounts payable to shareholders with more than 5% (including 5%) of the voting shares of the Company Unit: RMB Yuan Name of entity Closing balance Opening balance Shenzhen Investment Holdings Co., Ltd. 703,821.38 Total 703,821.38 (3) Notes of the significant accounts payable aging over one year: The Company’s accounts payable aging over one year are mainly the unpaid construction payment and pledged 152 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. amount, etc. The closing amount of accounts payable increased by 59.56% over the period-begin, which mainly due to the unpaid construction payment for the property projects at the end of reporting period increased. There was no accounts payable due to other related parties during the reporting period. 33. Advance from customers (1) Unit: RMB Yuan Item Closing balance Opening balance Advance from customers 678,075,291.01 208,655,909.41 Total 678,075,291.01 208,655,909.41 (2) Advanced from customers from shareholders with more than 5% (including 5%) of the voting shares of the Company Unit: RMB Yuan Name of entity Closing balance Opening balance (3)Notes of significant advance from customers aging over one year: The significant advance from customers aged over one year mainly due to the accounts received had not transferred to income for not reaching the recognition conditions of income. The closing amount of the accounts advance from customers increased by 224.97% over that of period-begin, which mainly due to many sales accounts received in advance of the property projects during the reporting period hadn’t been transferred to income for not reaching the recognition conditions of income. There was no advance from customers due to the shareholders holding over 5% (including 5%) voting rights of the Company and other related parties. 34. Payroll payable Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance I. Salary, bonus, 40,057,771.77 197,075,052.17 192,174,363.92 44,958,460.02 allowance, subsidy II. Employee welfare 11,531,536.53 11,531,536.53 III. Social insurance 83,997.89 26,214,476.54 25,884,020.81 414,453.62 Including: Medical 33,090.94 5,660,368.68 5,610,157.75 83,301.87 insurance premiums Basic pension 33,182.60 13,638,889.02 13,482,257.98 189,813.64 benefits Annuity 2,520.00 4,750,713.19 4,643,113.19 110,120.00 Unemployment 8,688.19 731,402.45 723,226.13 16,864.51 insurance 153 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Work-related injury 3,475.30 705,276.73 701,292.29 7,459.74 insurance Maternity insurance 3,040.86 508,280.83 504,427.83 6,893.86 Other social 219,545.64 219,545.64 insurance IV. Housing fund 1,415,088.34 7,410,068.17 7,269,142.26 1,556,014.25 V. Redemption for terminations of labor 1,129,832.80 4,633,370.00 1,776,991.00 3,986,211.80 contract VI. Others 3,668,292.07 6,213,506.51 6,075,321.36 3,806,477.22 Of which: labor union budget and 3,668,292.07 6,213,506.51 6,075,321.36 3,806,477.22 employee education budget Total 46,354,982.87 253,078,009.92 244,711,375.88 54,721,616.91 RMB 0.00 is the amounts in arrears in the payroll payable. The labor union budget and employee education budget is RMB 3,806,477.22, and the non-monetary benefits are RMB 0.00, as well as the compensation for terminating the labor contract is RMB 1,776,991.00. The estimated distribution date and amount as well as other arrangements for payroll payable: 35. Taxes payable Unit: RMB Yuan Item Closing balance Opening balance Value-added tax 160,057.44 -10,022.86 Business tax 7,085,925.17 4,993,024.88 Corporate income tax 160,519,629.84 71,331,210.33 Personal income tax 762,203.88 393,853.77 Urban maintenance and construction tax 505,130.58 336,526.08 Stamp duty -10,066.15 -10,903.55 Education surtax 219,588.15 154,901.24 Local education surtax 146,185.40 62,430.77 Land VAT 562,927,504.45 421,667,014.45 Property tax 980,346.47 1,007,885.90 Leeve fee 6,945.79 23,510.98 Other 356,228.69 7,655.37 Total 733,659,679.71 499,957,087.36 Notes of taxes payable: for the taxable income of branch companies and factories approved to be inter-adjusted by 154 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. their local tax authorities, the Company shall specified their calculation procedure. The closing balance of taxes payable increased by 46.74% over the period-begin mainly due to accrued land VAT increased at the period-end and the balance of the total amount of profits over the accrued enterprise income taxes for last period increased. 36. Interest payable Unit: RMB Yuan Item Closing balance Opening balance Notes: 37. Dividends payable Unit: RMB Yuan Reason for unsettlement over 1 Name of company Closing balance Opening balance year Notes: 38. Other accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Other accounts payable 195,045,649.98 480,433,469.91 Total 195,045,649.98 480,433,469.91 (2) Other accounts payable from shareholders with more than 5% (including 5%) of the voting shares of the Company Unit: RMB Yuan Name of entity Closing balance Opening balance Shenzhen Investment Holdings Co., Ltd. 271,065,981.63 Total 271,065,981.63 (3) Notes of the other large amount accounts payable aging over 1 year. The Company’s other large amount accounts payable aging over 1 year are mainly the accrued land VAT and various deposits, etc.. (4) Notes of other accounts payable with significant amount The Company’s other accounts payable with significant amount are as follows: Item Amount Nature or content Accrued land VAT 56,303,627.40 Accrued land VAT Rental deposit 30,860,222.04 Deposit Shenzhen Jifa Warehouse Co., Ltd 19,545,808.00 Current accounts 155 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Guangzhou Lishifeng Automobile Co., Ltd. 15,344,017.08 Current accounts Shenzhen GUOMAO Tian’an Properties Co., Ltd 13,500,000.00 Current accounts Total 135,553,674.52 39. Estimated liabilities Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Notes: 40. Non-current liabilities due within 1 year (1) Unit: RMB Yuan Item Closing balance Opening balance Long-term loan due within 1 year 12,216,666.68 215,666,666.68 Long-term accounts payable due within 1 year 2,693,221.64 2,693,221.64 Total 14,909,888.32 218,359,888.32 (2) Long-term loan due within 1 year Long-term loan due within 1 year Unit: RMB Yuan Item Closing balance Opening balance Pledge loan 12,216,666.68 3,666,666.68 Mortgage loan 200,000,000.00 Guarantee loan 12,000,000.00 Total 12,216,666.68 215,666,666.68 RMB000 of long-term loan due within 1 year was of mature loan with extended term. Top five long-term loans due within 1 year Unit: RMB Yuan Closing balance Opening balance Foreign Foreign Creditor Starting date Ending date Currency Rate (%) currency RMB balance currency RMB balance balance balance Shenzhen Branch of 11 Jan. 2012 10 Jan. 2015 RMB Yuan 6.77% 0.00 8,550,000.00 Ping An Bank Shenzhen Shangbu 23 Nov. 2011 23 Nov. 2014 RMB Yuan 6.77% 0.00 3,666,666.68 0.00 3,666,666.68 Sub-branch of Shenzhen 156 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Development Bank Shenzhen Eastern Sub-branch 200,000,000. of 31 Mar. 2009 30 Mar. 2012 RMB Yuan 4.86% 0.00 00 Agricultural Bank of China Shenzhen Branch of 12,000,000.0 10 Mar. 2010 10 Mar. 2012 RMB Yuan 5.4% 0.00 0.00 0.00 Ping An 0 Bank 12,216,666.6 215,666,666. Total -- -- -- -- -- -- 8 68 Mature loan of long-term loan due within 1 year: Unit: RMB Yuan Reason for Estimated settle Creditor Amount of loan Overdue date Annual rate (%) Usage unsettlement date Total 0.00 -- -- -- -- -- RMB 2,716,700.00 was paid back after Balance Sheet Date: Notes of long-term borrowings due within 1 year: (3) Bonds payable due within 1 year Unit: RMB Yuan Accrued Interest paid Opening Closing Issuance Issuing interest in in the Closing Name Par value Term interest interest date amount current reporting balance payable payable period period Notes: (4) Long-term accounts payable due within 1 year Unit: RMB Yuan Creditor Term Initial amount Rate (%) Accrued interest Closing balance Conditions To be transferred income from 1,293,221.64 0% 0.00 1,293,221.64 renting operating license plate To be transferred income from 1,400,000.00 0% 0.00 1,400,000.00 renting Shenzhen GUOMAO 157 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Petroleum Co., Ltd Notes of long-term accounts payable due within 1 year: 41. Other current liabilities Unit: RMB Yuan Item Closing book balance Opening book balance Notes of other non-current liabilities: 42. Long-term loan (1) Category of long-term loan Unit: RMB Yuan Item Closing balance Opening balance Pledge loan 19,316,666.64 7,333,333.32 Total 19,316,666.64 7,333,333.32 Notes: (2)The top five long-term loans Unit: RMB Yuan Closing balance Opening balance Foreign Foreign Creditor Starting date Ending date Currency Rate (%) currency RMB amount currency RMB amount amount amount Shenzhen Branch of 15,650,000.0 11 Jan. 2012 10 Jan. 2015 RMB Yuan 6.77% 0.00 Ping An 0 Bank Shenzhen Shangbu Sub-branch 23 Nov. 2011 23 Nov. 2014 RMB Yuan 6.77% 0.00 3,666,666.64 0.00 7,333,333.32 of Shenzhen Development Bank 19,316,666.6 Total -- -- -- -- -- -- 7,333,333.32 4 Notes of long-term loan: for the long-term loans arising from mature loans with extended term, the Company shall explain the conditions of extension, principal, interest, expected repayment arrangement: 43. Bonds payable Unit: RMB Yuan Issuance Issuing Opening Accrued Interest paid Closing Closing Name Par value Term date amount interest interest in in the interest balance 158 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. payable the reporting payable reporting period period Notes of bonds payable, including the conditions and date of conversion of the convertible corporate bonds: 44. Long-term payable (1) The top five long-term payable Unit: RMB Yuan Conditions of Company Term Initial amount Rate (%) Accrued interest Closing balance loan (2) List of the financing lease payable under the long-term loan Unit: RMB Yuan Closing balance Opening balance Company Foreign currency RMB Foreign currency RMB RMB000 was guarantee for the Company’s financing lease provided by the independent third party. Notes of the long-term payable: 45. Specific payable Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Note Notes of specific payable: 46. Other non-current liabilities Unit: RMB Yuan Item Closing book balance Opening book balance Utility specific fund 2,088,759.35 9,676,157.29 Housing principle fund 14,502,134.27 13,339,582.42 House warming deposit 8,229,980.31 7,806,572.95 Electric Equipment Maintenance fund 4,019,415.44 4,069,140.20 Deputed Maintenance fund 28,128,684.34 27,646,929.23 Taxi Deposit 40,620,500.00 44,286,458.90 To be transferred income from renting operating 11,389,068.33 12,682,289.97 license plate To be transferred income from renting Shenzhen 13,070,000.00 14,470,000.00 GUOMAO Petroleum Co., Ltd Equity of stripped assets attributable to investment 23,101,930.71 26,042,027.32 holding 159 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Other 846,828.56 Total 145,997,301.31 160,019,158.28 Notes of other non-current liabilities, including each government grants relevant to assets and income received in the reporting period and their closing amounts: The other non-current liabilities were mainly the drivers mutual aid money charged for the drivers by the taxi company. 47. Share capital Unit: RMB Yuan Increase/Decrease (+/-) Opening Capitalization Closing Issuing new balance Bonus shares of public Other Subtotal balance shares reserves Total shares 595,979,092.00 595,979,092.00 Notes of changes in share capital, for those action of increasing capital or decreasing capital in the reporting period, the Company shall disclose the name of the accounting firm executing the capital verification and document number of the capital verification report; for joint-stock companies running for less than three years, only the net assets shall be specified for particulars before establishment; while for case of totally changing the limited liability companies into joint-stock companies, capital verification on the establishment shall be specified: 48. Treasury stock Notes of treasury stock: 49. Special reserves Notes of special reserves: 50. Capital reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Capital premium (share 52,487,344.20 922,739.02 14,959,995.71 38,450,087.51 capital premium) Other capital reserves 25,332,931.52 25,332,931.52 Total 77,820,275.72 922,739.02 14,959,995.71 63,783,019.03 Note: A. The increase of capital reserves in the reporting period arised from the business combination under the same control, at which Shenzhen Shenxin Taxi Co., Ltd. transferred RMB 922,739.02 of the losses of retained income attributable to the Company realized before the combination from the capital reserves to retained income. B. The decrease of capital reserves in the reporting period mainly included (1) RMB 13,800,000.00 from Shenzhen Shenxin Taxi Co., Ltd. gained by the business combination under the same control adjusting the opening capital reserves during the reporting period, and (2) RMB 1,159,995.71 from Shenzhen Shenxin Taxi Co., Ltd. gained by the business combination under the same control paying the balance of the consideration over the 160 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. net assets. 51. Surplus reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Legal surplus reserves 70,368,860.95 70,368,860.95 Total 70,368,860.95 70,368,860.95 Notes of surplus reserves: for surplus reserves transferred to share capital, compensating losses and distributed as dividends, relevant resolutions shall be explained. 52. Provision for general risk Notes of provision for general risk: 53. Retained profits Unit: RMB Yuan Withdrawal or distributed Item Amount proportion Opening balance of retained profits before 406,422,741.94 -- adjustments Adjustments of opening balance of retained profits -3,240,025.58 -- (“+” means add, “-” means reduce) Opening balance of retained profits after 403,182,716.36 -- adjustments Add: Net profit attributable to owners of the 375,422,129.64 -- Company Closing retained profits 778,604,846.00 -- 1) RMB0.00 of opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. 2) RMB0.00 of opening retained profits was affected by changes on accounting policies. 3) RMB0.00 of opening retained profits was affected by correction of significant accounting errors. 4) RMB-3,240,025.58 opening retained profits was affected by changes in combination scope arising from same control. 5) RMB0.00 of opening retained profits was affected totally by other adjustments. Notes: as for IPO companies, if the accumulated profits were enjoyed by new and original shareholders according to the resolutions made at the shareholders’ general meeting before public offering, the Company shall explain clearly; if the accumulated profits were distributed before public offering and enjoyed by the original shareholders according to the resolutions made at the shareholders’ general meeting, the Company shall clearly disclose the audited profits of dividends payable enjoyed by the original shareholders. 54. Revenue and Cost of Sales (1) Revenue, Cost of Sales Unit: RMB Yuan 161 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Item Reporting period Same period of last year Sales of main business 1,827,263,066.87 1,399,216,328.14 Other operating income 34,035,764.12 30,995,605.61 Cost of sales 841,932,253.07 568,646,701.95 (2) Main business (Classified by industry) Unit: RMB Yuan Reporting period Same period of last year Industry Revenue of sales Costs of sales Revenue of sales Costs of sales Sale of properties 1,429,818,416.04 529,936,876.93 1,039,983,994.06 283,518,049.86 Property rental and management 284,730,882.17 240,033,558.66 249,854,476.48 223,785,969.04 services income Transportation services 71,332,140.87 36,881,838.97 72,474,745.27 32,344,262.61 Catering services 25,909,847.37 21,782,438.16 22,254,535.68 17,990,260.81 Other 15,471,780.42 5,257,045.72 14,648,576.65 3,614,782.57 Total 1,827,263,066.87 833,891,758.44 1,399,216,328.14 561,253,324.89 (3) Main business (Classified by product) Unit: RMB Yuan Reporting period Same period of last year Product Revenue of sales Costs of sales Revenue of sales Costs of sales Property 1,429,818,416.04 529,936,876.93 1,039,983,994.06 283,518,049.86 Property rental and management 284,730,882.17 240,033,558.66 249,854,476.48 223,785,969.04 services Transportation 71,332,140.87 36,881,838.97 72,474,745.27 32,344,262.61 Catering services 25,909,847.37 21,782,438.16 22,254,535.68 17,990,260.81 Other 15,471,780.42 5,257,045.72 14,648,576.65 3,614,782.57 Total 1,827,263,066.87 833,891,758.44 1,399,216,328.14 561,253,324.89 (4) Main business (Classified by area) Unit: RMB Yuan Reporting period Same period of last year Area Revenue of sales Costs of sales Revenue of sales Costs of sales 162 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Revenue of Shenzhen area 1,714,040,958.25 733,366,869.03 1,294,668,449.85 471,862,306.80 Revenue of other area 113,222,108.62 100,524,889.41 104,547,878.29 89,391,018.09 Total 1,827,263,066.87 833,891,758.44 1,399,216,328.14 561,253,324.89 (5) The revenue of sales from the top five customers Unit: RMB Yuan Customer Main business revenue Proportion of total business revenue (%) Shenzhen Investment Holdings 286,024,220.45 15.37% Co., Ltd. Natural person 13,073,842.00 0.7% Natural person 10,357,958.00 0.56% Tianhong Shopping Plaza Co., 9,368,289.92 0.5% Ltd. Feiran Technology Development 7,547,531.00 0.41% Co., Ltd. Total 326,371,841.37 17.53% Note: The amount of revenue of sales in the reporting period increased by 30.14% over the same period of last year, which mainly due to the revenue of the property projects carried forward in the reporting period increased over the same period of last year; the amount of costs of sales increased by 48.06% over the same period of last year, which mainly due to the gross profit margin of the carried forward partial property projects decreased over the same period of last year. And other revenue were mainly the revenue from construction supervision, elevator maintenance and auto repair, etc.. Besides, the revenue of sales included RMB 280,484,029.00 from assets replaced with Shenzhen Investment Holdings Co., Ltd. 55. Revenue from the construction contracts Unit: RMB Yuan Accumulated gross Fixed price contract Contract project Amount Accumulated costs profits (“-” means Settled amount losses) Accumulated gross Cost-plus contract Contract project Amount Accumulated costs profits (“-” means Settled amount losses) Notes of construction contracts 56. Business tax and surcharges Unit: RMB Yuan Item Reporting period Same period of last year Calculation and payment standard Business tax 95,453,743.31 71,350,239.20 3%, 5% of revenue of sales 163 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Urban maintenance and construction 6,621,819.90 2,889,371.77 1%, 7% of taxable turnover tax tax Education surtax 2,746,629.49 2,117,119.73 3% of taxable turnover tax Local education surtax 1,814,176.79 489,453.51 2% of taxable turnover tax Four progressive levels with the tax Land VAT 288,711,440.64 266,319,269.78 rate ranging from 30% to 60% of the added value from properties transfer. 1.2% of the 70% cost of property per Property tax 2,743,585.68 2,663,246.52 year Leeve fee 181,348.52 63,820.50 0.01% of revenue of sales Other 586,993.34 26,312.08 Total 398,859,737.67 345,918,833.09 -- Note: 57. Selling expenses Unit: RMB Yuan Item Reporting period Same period of last year Employee’s remuneration 5,483,080.09 2,247,819.53 Office expenses of the business 7,210,378.11 3,314,675.51 organization Sales agents fees, advertising fees and 29,022,570.25 23,881,333.13 promotional expenses Other 2,235,146.15 3,348,457.99 Total 43,951,174.60 32,792,286.16 58. Administrative expenses Unit: RMB Yuan Item Reporting period Same period of last year Employee’s remuneration 64,668,597.75 56,577,069.14 Administrative office expenses 26,036,025.42 23,644,489.81 Assets amortization and depreciation 6,177,229.63 7,885,279.36 expenses Lawsuit expenses 1,891,251.70 3,273,700.30 Taxes 1,763,772.44 1,988,020.81 Other 9,143,670.76 10,541,311.54 Total 109,680,547.70 103,909,870.96 164 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 59. Financial expenses Unit: RMB Yuan Item Reporting period Same period of last year Interest expenditures 3,590,492.70 15,551,421.36 Interest income -6,735,176.98 -3,878,151.12 Net losses of foreign currency exchange 1,432.52 -301,011.16 Other 1,638,662.10 1,080,232.23 Total -1,504,589.66 12,452,491.31 60. Gains and losses from changes in fair value Unit: RMB Yuan Source Reporting period Same period of last year Trading financial assets -3,364.50 Total -3,364.50 Notes: 61. Investment income (1) List of investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income accounted by 3,145,809.75 -286,648.25 equity method Investment income received from holding of trading 3,364.50 financial assets Investment income received from disposal of 240,074.81 trading financial assets Total 3,145,809.75 -43,208.94 (2) Long-term equity investment income accounted by cost method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease year (3) Long-term equity investment income accounted by equity method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease year 165 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen Jifa Warehouse Co., Ltd 811,006.94 743,887.08 Increase of realized profits Shenzhen GUOMAO Tian’an 1,844,080.22 -1,506,674.53 Increase of realized profits Properties Co., Ltd Shenzhen Tian’an International Building Property Management Co., 490,722.59 476,139.20 Increase of realized profits Ltd Total 3,145,809.75 -286,648.25 -- Notes of investment income: make notes if there is significant limitation for recovery of investment income. If there isn’t the said limitation, notes too: The Company’s recovery of investment income exist no significant limitation. 62. Impairment losses Unit: RMB Yuan Item Reporting period Same period of last year I. Bad debts losses -9,603,107.07 22,270,720.66 II. Inventory falling price losses -4,269,593.10 79,500.00 Total -13,872,700.17 22,350,220.66 63. Non-operating revenue (1) Unit: RMB Yuan Amount recorded in current Item Reporting period Same period of last year non-operating gains and losses Total gains from disposal of non-current 592,927.50 351,626.69 592,927.50 assets Including:Gains from disposal of fixed 592,927.50 351,626.69 592,927.50 assets Government grants 1,726,600.00 1,726,600.00 Other 1,705,683.98 1,283,320.35 1,705,683.98 Total 4,025,211.48 1,634,947.04 (2) List of government grants Unit: RMB Yuan Item Reporting period Same period of last year Note Compensation for external wall 1,726,600.00 renovation Total 1,726,600.00 -- Notes 64. Non-operating expenses Unit: RMB Yuan 166 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Amount recorded in Item Reporting period Same period of last year current non-operating gains and losses Loss on disposal of non-current assets 58,269.77 28,235.97 58,269.77 Including: Loss on disposal of fixed assets 58,269.77 28,235.97 58,269.77 Loss on exchange of non-monetary assets 1,382,794.36 1,382,794.36 Taxes overdue payment fines and other fines 133,502.29 Other 934,221.86 2,608,055.41 934,221.86 Total 2,375,285.99 2,769,793.67 2,375,285.99 Notes: 65. Income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense accounted by tax and relevant 179,892,522.76 123,807,573.01 regulations Adjustment of income tax -67,666,532.15 -40,893,360.59 Total 112,225,990.61 82,914,212.42 63. Calculation procedure of basic earnings per share and diluted earnings per share Calculation procedure of basic earnings per share and diluted earnings per share is as follows: Item The reporting period Same period of last year Basic Earnings Per Share 0.63 0.44 0.63 0.44 Diluted Earnings Per Share Calculation of earnings per share is as following: Basic Earnings Per Share=375,422,129.64÷595,979,092.00=0.63 Diluted Earnings Per Share=375,422,129.64÷595,979,092.00=0.63 Recalculation of earnings per share of last year is as following: Basic Earnings Per Share=261,108,340.62÷595,979,092.00=0.44 Diluted Earnings Per Share=261,108,340.62÷595,979,092.00=0.44 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 167 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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. 67. Other comprehensive income Unit: RMB Yuan Item Reporting period Same period of last year 4. Converted amount of foreign currency financial statements 7,383.80 -1,402,825.50 Subtotal 7,383.80 -1,402,825.50 Total 7,383.80 -1,402,825.50 Notes: 68. Notes of Cash Flow Statement (1) Other cash received relevant to operating activities Unit: RMB Yuan Item Amount Large current funds received 19,000,000.00 Interest income 6,735,176.98 Net margins, security deposit and various special funds received 1,908,936.39 Government grants 1,726,600.00 Other small receivables 8,334,871.23 Total 37,705,584.60 Notes 168 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Amount Paying administration expenses in cash 37,070,947.88 Paying sales expenses in cash 30,749,811.66 Collecting and paying net current account of Hainan Yirun Real Estate Co., 28,402,434.10 Ltd. Large current funds paid 3,999,000.00 Other small receivables 4,715,734.33 Total 104,937,927.97 Notes (3) Other cash received relevant to investment activities Unit: RMB Yuan Item Amount Notes of other cash received relevant to investment activities: (4) Other cash paid relevant to investment activities Unit: RMB Yuan Item Amount Notes of other cash paid relevant to investment activities: (5) Other cash received relevant to financing activities Unit: RMB Yuan Item Amount Notes of other cash received relevant to financing activities: (6) Other cash paid relevant to financing activities Unit: RMB Yuan Item Amount Handling charges of significant loans 1,584,500.00 Total 1,584,500.00 Notes of other cash paid relevant to financing activities: 69. Supplemental information for Cash Flow Statement (1) Supplemental information for Cash Flow Statement Unit: RMB Yuan Supplemental information Reporting period Same period of last year 1. Reconciliation of net profit to net cash flows generated -- -- from operations: 169 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Net profit 374,822,152.41 260,045,897.13 Add: Provision for assets impairments -13,872,700.17 22,350,220.66 Depreciation of fixed assets, oil-gas assets and productive 33,088,167.20 32,564,407.60 biological assets Amortization of intangible assets 7,156,103.04 7,231,006.41 Amortization of long-term deferred expense 593,793.54 479,457.80 Losses/gains on disposal of property, intangible asset and -536,128.03 -323,390.72 other long-term assets (gains: negative) Losses/gains on scrapped of fixed assets (gains: 1,470.30 negative) Losses/gains from variation of fair value (gains: negative) 3,364.50 Financial cost (income: negative) 50,502,740.42 45,480,247.58 Investment loss (gains: negative) -3,145,809.75 43,208.94 Decrease in deferred tax assets (increase: negative) -70,405,622.09 -40,892,553.10 Increase in deferred tax liabilities (decrease: negative) 2,739,089.94 -807.48 Decrease in inventory (increase: negative) -462,135,380.57 -237,806,367.80 Decrease in accounts receivable from operating activities 400,796,829.31 -418,204,813.77 (increase: negative) Increase in accounts payable from operating activities 486,109,491.83 -25,053,798.88 (decrease: negative) Net cash flows generated from operating activities 805,714,197.38 -354,083,921.13 2. Significant investing and financing activities without -- -- involvement of cash receipts and payments 3. Change of cash and cash equivalent: -- -- Closing balance of Cash 797,724,311.37 469,313,741.57 Less: opening balance of cash 469,313,741.57 545,466,594.53 The net increase in cash and cash equivalents 328,410,569.80 -76,152,852.96 (2) Relevant information of acquisition or disposal of subsidiaries and other operation entities in the reporting period Unit: RMB Yuan Supplemental information Reporting period Same period of last year I. Relevant information on acquisition of subsidiaries and -- -- other operation entities: II. Relevant information on disposal of subsidiaries and -- -- other operation entities (3) Composition of cash and cash equivalents Unit: RMB Yuan 170 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Item Reporting period Same period of last year I. Cash 797,724,311.37 469,313,741.57 Including: Cash on hand 197,165.38 280,115.14 Bank deposit on demand 793,456,036.83 464,486,960.65 Other monetary funds on demand 4,071,109.16 4,546,665.78 III. Closing balance of cash and cash equivalents 797,724,311.37 469,313,741.57 Notes 70. Notes to statement of changes in owners’ equity Notes on the items under “Other” for adjusting the opening balance and the relevant adjusted amounts as well as retrospective adjustment arising from business combination under the same control, etc.: The adjustment of the opening balance of “Other” item under the Statement on changes in consolidated owners’ equity for the reporting period is the retrospective adjustment arising from business combination under the same control, for details please refer to (VI) Business Combination of Section X. Financial Report. VIII. Accounting treatment of assets securitization business 1. Notes of main trade arrangement and its accounting treatment of assets securitization business as well as articles of bankruptcy remote 2. Main information about the special purpose entities in which the Company has no control right but bears relevant risks: Unit: RMB Yuan Revenue of sales Total closing Total closing Net profit in the Name Net closing assets in the reporting Note assets liabilities reporting period period IX. Related Parties and Related-party Transactions 1. Information of the parent company of the Company Unit: RMB Yuan The The parent The parent ultimate Legal Parent Relationsh Business Registered Business Registered company's company's controlling Organizati Representa company ip Type place nature Capital shareholdi voting party of on Code tive ng (%) right (%) the Company Shenzhen Limited State-owne Shenzhen Controllin Managing liability d Assets Investment g Fan 560000000 76756642 company Shenzhen state-owne 63.81% 63.81% Administra Holdings shareholde Mingchun 0 1 (state-own tion and Co., Ltd. r d assets ed) Supervisio n Note: 171 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 5.6 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. 2. Information of subsidiaries of the Company Unit: RMB Yuan Percentage Legal Percentage Business Registered Business Registered of Organizatio Full name Type representati of voting type place nature capital Shareholdin n code ve right (%) g (%) Shenzhen Huangchen Limited Property Controlled g Real Liability Shenzhen Li Zipeng developmen 30000000 100% 100% 192184835 subsidiary Estate Co., Company t Ltd. Shenzhen Property Limited Property and Real Controlled Liability Shenzhen Li Zipeng developmen 30950000 100% 100% 192174565 Estate subsidiary Company t Developme nt Co., Ltd. PRD Group Xuzhou Limited Property Dapeng Controlled Liability Xuzhou Li Zipeng developmen 50000000 100% 100% 552525454 Real Estate subsidiary Company t Developme nt Co.,Ltd Dongguan Guomao Limited Property Changsheng Controlled Liability Dongguan Lu Xia developmen 20000000 100% 100% 562562654 Real Estate subsidiary Company t Developme nt Co., Ltd. PRD Controlled Limited Yangzhou Zhang Property 50000000 100% 100% 573842934 172 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Yangzhou subsidiary Liability Bangwen developmen Real Estate Company t Developme nt Co., Ltd. Hainan Limited Property Xinda Controlled Liability Haikou Liu Yinhua developmen 20000000 100% 100% 201264619 Developme subsidiary Company t nt Co., Ltd Shenzhen GUOMAO Limited Property Controlled Wang Property Liability Shenzhen managemen 20000000 100% 100% 192174549 subsidiary Hangjun Managemen Company t t Co., Ltd. Shenzhen Huangchen Limited Property g Real Controlled Wang Liability Shenzhen managemen 5000000 100% 100% 757601334 Estate subsidiary Hangjun Company t Managemen t Co., Ltd. Shandong Shenzhen Limited Property GUOMAO Controlled Wang Liability Jinan managemen 5000000 100% 100% 684815947 Property subsidiary Zhiyong Company t Managemen t Co., Ltd. Chongqing Shenzhen Limited Property GUOMAO Controlled Zeng Liability Chongqing managemen 5000000 100% 100% 202853028 Property subsidiary Xiangrong Company t Managemen t Co., Ltd. Chongqing Limited Ao’bo Controlled Zeng Liability Chongqing Service 2000000 100% 100% 66085719X Elevator subsidiary Xiangrong Company Co., Ltd. Shenzhen Tianque Limited Controlled Wang Elevator Liability Shenzhen Service 5000000 100% 100% 192277759 subsidiary Zhiyong Technology Company Co., Ltd. Shenzhen Controlled Limited Shenzhen Bao Gang Service 1200000 100% 100% 192332519 GUOMAO subsidiary Liability 173 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Property Company Managemen t Engineering Equipment Co., Ltd. Shenzhen Limited GUOMAO Controlled Fan Catering Liability Shenzhen 2000000 100% 100% 738842749 Food Co., subsidiary Weiping service Company Ltd. Shenzhen Property Limited Constructio Controlled Project Liability Shenzhen Li Zipeng 3000000 100% 100% 279383351 n subsidiary supervision Company Supervision Co., Ltd. Shenzhen Limited Controlled Yao Real Estate Liability Shenzhen Service 1380000 100% 100% 192177790 subsidiary Chengxin Exchange Company Shenzhen GUOMAO Limited Controlled Fan Vehicles Liability Shenzhen Service 29850000 100% 100% 19217731X subsidiary Weiping Industry Company Co., Ltd. Shenzhen Limited GUOMAO Controlled Fan Liability Shenzhen Service 16000000 100% 100% 192267331 Motor Rent subsidiary Weiping Company Co., Ltd. Shenzhen Tesu Vehicle Limited Controlled Driver Liability Shenzhen Xiao Dejun Service 2000000 100% 100% 192325669 subsidiary Training Company Center Co., Ltd. Shenzhen Limited Internationa Controlled Liability Shenzhen Luo Junde Trading 12000000 100% 100% 19218224X l Trade subsidiary Company Plaza Sichuan Limited Controlled Tianhe Liability Chengdu Li Jun Trading 8000000 100% 100% 754748621 subsidiary Industry Company 174 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Co., Ltd Zhanjiang Shenzhen Limited Property Controlled Duan Real Estate Liability Zhanjiang developmen 2530000 100% 100% 194351406 subsidiary Zuoping Developme Company t nt Co., Ltd. Shum Yip Limited Property Properties Controlled HKD20000 Liability Hongkong Inapplicable developmen 100% 100% Inapplicable Developme subsidiary 000 Company t nt Co., Ltd. Wayhang Limited Property Controlled Developme Liability Hongkong Inapplicable developmen HKD2 100% 100% Inapplicable subsidiary nt Co., Ltd. Company t Chief Link Limited Property Controlled Properties Liability Hongkong Inapplicable developmen HKD100 70% 70% Inapplicable subsidiary Co., Ltd. Company t Syndis Limited Property Controlled Investment Liability Hongkong Inapplicable developmen HKD4 100% 100% Inapplicable subsidiary Co., Ltd. Company t 3. Information of joint ventures and associated enterprises Unit: RMB Yuan Percentage Legal Percentage Name of Business Registered Business Registered of Relationshi Organizatio representati of voting investee type address nature capital shareholdin p n code ve rights (%) g (%) I. Joint ventures Shenzhen Shenzhen Limited Jifa Wang Jifa HKD54150 Joint Liability Shenzhen 50% 50% 618847828 Warehouse Hangjun Warehouse 000 venture Company Co., Ltd Co., Ltd Shenzhen Shenzhen GUOMAO Limited GUOMAO Wang USD888000 Joint Tian’an Liability Shenzhen Tian’an 50% 50% 618845152 Hangjun 0 venture Properties Company Properties Co., Ltd Co., Ltd Shenzhen Shenzhen Tian’an Tian’an Limited Internationa Zhang Internationa Joint Liability Shenzhen 3000000 50% 50% 618930517 l Building Changsheng l Building venture Company Property Property Managemen Managemen 175 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. t Co., Ltd t Co., Ltd II. Associated enterprises Shenzhen Shenzhen GUOMAO Limited GUOMAO Zha HKD32800 Associated Industrial Liability Shenzhen Industrial 38.33% 38.33% Shengming 000 enterprise Developme Company Developme nt Co., Ltd nt Co., Ltd Anhui Anhui Limited Nanpeng Wang Nanpeng USD800000 Associated Liability Huainan 30% 30% Papermakin Yizhong Papermakin 0 enterprise Company g Co., Ltd g Co., Ltd Shenzhen Shenzhen Wufang Wufang Limited Pottery & Pottery & USD125000 Associated Liability Shenzhen Yan Wenbo 26% 26% Porcelain Porcelain 000 enterprise Company Industrial Industrial Co., Ltd Co., Ltd 4. Information of other related parties of the Company Name of other related party Relationship Organization code Under the same control of the parent Shenzhen Guesthouse Restaurant 192197353 company of the Company Shenzhen Foreign Economy & Trade Under the same control of the parent 192210765 Investment Co., Ltd. company of the Company Notes: 5. Related-party transactions (1) Purchase of goods and acceptance of labor service Unit: RMB Yuan Pricing method Reporting period Same period of last year and Content of the Related party decision-making transaction Proportio Proportio Amount Amount procedures for the n (%) n (%) transaction Shenzhen Agreement pricing Investment Holdings Rental payment by reference to 189,544.18 100% Co., Ltd. market price Sales of goods and rendering of service Unit: RMB Yuan Related party Content of the Pricing method Reporting period Same period of last year 176 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. transaction and decision-making Proportio Proportio Amount Amount procedures for the n (%) n (%) transaction Shenzhen Agreement pricing Collecting property Investment Holdings by reference to 5,540,191.45 100% 259,084.80 100% management fee Co., Ltd. market price (2) Information of related party trust/contract Information of entrusted management/contract Unit: RMB Yuan Trust / contract Name of Type of the Initial date of Ending date of Pricing basis for Name of trustee income entrusting entrusted/contract being being the trust / contract /contractor recognized in the party/contractee ed assets entrusted/contract entrusted/contract income reporting period Shenzhen Foreign Shenzhen Economy & Detailed note as Shenxin Taxi Co., Other assets trust 1 Jun. 2012 31 Dec. 2014 200,485.17 Trade Investment follows Ltd. Co., Ltd. Information of entrusting management/contracted Unit: RMB Yuan Trust / contract Name of Type of the Initial date of Ending date of Pricing basis for Name of trustee fee recognized in entrusting entrusted/contract entrusting/ being entrusting/ being the trust / contract /contractor the reporting party/contractee ed assets contracted contracted fee period Notes of related-party trust / contract In Nov. 2012, Shenzhen Foreign Economy & Trade Investment Co., Ltd. signed the Contract on Entrusting Management of Stripped Assets and Liabilities with the Company’s subsidiary—Shenzhen Shenxin Taxi Co., Ltd., agreeing on changing to entrust Shenzhen Shenxin Taxi Co., Ltd. to clear, operate, manage and dispose the stripped assets, for details, please refer to VI.2.3 Business Combination of Section X Financial Report. According the above-mentioned contract, Shenzhen Shenxin Taxi Co., Ltd. paid RMB 313,000 of assets operating income to Shenzhen Foreign Economy & Trade Investment Co., Ltd.. During the entrusting management period from 1 Jun. 2012 to 31 Dec. 2012, the stripped assets operating situation as follows: Item Amount Revenue of sales 2,652,332.93 Cost of sales 63,253.89 Business tax and surcharges 148,530.64 Administrative expenses 2,173,234.83 Total profits 267,313.57 Income taxes expenses 66,828.39 Net profits 200,485.18 177 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Note: the administrative expenses included RMB 313,000 of assets operating income paid to Shenzhen Foreign Economy & Trade Investment Co., Ltd.. (3) Information of related-party lease Rental situation of the Company Unit: RMB Yuan Rental income Category of the Pricing basis for Name of lessor Name of lessee Initial date Ending date recognized in the leased assets the rental income reporting period Lease situation of the Company Unit: RMB Yuan Rental income Category of the Pricing basis for Name of lessor Name of lessee Initial date Ending date recognized in the leased assets the rental income reporting period Notes of related-party lease (4) Information of related-party guarantee Unit: RMB Yuan Whether the guarantee was Guarantor Secured party Guarantee amount Initial date Due date accomplished or not ShenZhen Properties Shenzhen & Resources Huangcheng Real 200,000,000.00 29 Mar. 2012 29 Mar. 2013 No Development Estate Co., Ltd. (Group) Ltd. ShenZhen Properties Shenzhen & Resources GUOMAO Vehicles 60,000,000.00 28 Apr. 2012 28 Apr. 2013 No Development Industry Co., Ltd. (Group) Ltd. ShenZhen Properties Shenzhen & Resources GUOMAO Vehicles 20,000,000.00 11 May 2012 11 May 2013 No Development Industry Co., Ltd. (Group) Ltd. Shenzhen Huangcheng Real Shenzhen Estate Co., Ltd., GUOMAO Vehicles 40,000,000.00 29 Mar. 2012 29 Mar. 2013 No Shenzhen Shenxin Industry Co., Ltd. Taxi Co., Ltd. Shenzhen Shenzhen 24,200,000.00 11 Jan. 2012 10 Jan. 2015 No GUOMAO Motor GUOMAO Vehicles 178 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Rent Co., Ltd. Industry Co., Ltd. Shenzhen Shenzhen GUOMAO Vehicles GUOMAO Motor 40,000,000.00 27 Jul. 2012 18 Apr. 2013 No Industry Co., Ltd. Rent Co., Ltd. Notes: The Company and its subsidiaries didn’t provide guarantees for other companies beyond the range of consolidated financial statements. The above guarantees are those the Company and its subsidiaries provided to each other. (5) Related-party call loan Unit: RMB Yuan Related party Amount of call loan Initial date Due date Note Loan from banks and other financial institutions Lending to banks and other financial institutions (6) Information about assets transfer, debt reorganization of related parties Unit: RMB Yuan Pricing method Reporting period Same period of last year Type of and related Content of the decision-making Related party Proportio Proportio party transaction procedures for Amount Amount n (%) n (%) transaction the related-party transaction (7) Other related-party transaction A. Entrusted loans of related parties Unit: RMB Ten Thousand Name of Name of Borrower Annual Closing Amount of Amount of Closing Interest paid entrusting entrusted interest rate amount of loan payment in amount of in the party party (%) loan borrowed in the reporting loan reporting the reporting period period period Shenzhen Shenzhen Shenzhen 6.9544 4,000.00 4,000.00 269.73 Investment Jingtian GUOMAO Holdings Sub-branch Vehicles Co., Ltd. of China Industry Co., Everbright Ltd. Bank Shenzhen Shenzhen Shenzhen 6.9544 25,000.00 25,000.00 1,644.27 Investment Jingtian Huangcheng Holdings Sub-branch Real Estate Co., Ltd. of China Co., Ltd. 179 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Everbright Bank Shenzhen Shenzhen Shenzhen 6.9544 20,000.00 20,000.00 1,348.63 Investment Jingtian Huangcheng Holdings Sub-branch Real Estate Co., Ltd. of China Co., Ltd. Everbright Bank Total —— 49,000.00 25,000.00 24,000.00 3,262.63 Note 1: The entrusted loan of RMB 40 million for Shenzhen GUOMAO Vehicles Industry Co., Ltd. was the credit loan originally. After the expiry on 39 Mar. 2012, Shenzhen GUOMAO Vehicles Industry Co., Ltd. extent the period of the entrusted loan by mortgaging Room 2701, Huangcheng Plaza Building and Room 2901 and 3101, Huangcheng Plaza Building owned by the Company’s subsidiary of Shenzhen Huangcheng Real Estate Co., Ltd. as well as pledging 120 Taxi Operating Licenses owned by the Company’s subsidiary of Shenzhen Shenxin Taxi Co., Ltd., and the annual loan interest rate increased from 5.7767% to 6.9554%. Note 2: The entrusted loan of RMB 0.2 billion for Shenzhen Huangcheng Real Estate Co., Ltd. was the credit loan originally. After the expiry on 39 Mar. 2012, the Company extent the period of the entrusted loan by mortgaging the five houses located at Guomao Plaza (Phase II), Nanhu Road, Luohu District, Shenzhen; 105 houses located at Guomao Commercial Building, Nanhu Road, Luohu District, Shenzhen; 19/F Tian’an International Building, Renmin South Road, Luohu District, Shenzhen; 7 houses located at Small Commodity Market, Peace New Home, Chuanbu Street, Heping Road, Luohu District, Shenzhen and 1-7/F, Peace Hotel, Heping Road, Luohu District, Shenzhen, and the annual loan interest rate increased from 5.7767% to 6.9554%. B. Assets replacement In Sept. 2010, in order to perform the commitments made in the equity splitting reform, the Company signed the Agreement on Assets Replacement with the controlling shareholder Shenzhen Investment Holdings Co., Ltd., at which the Company swapped in No. T102-0237 land in Moon Bay held by the Shenzhen Investment Holdings Co., Ltd. and 100% equities of Shenxin Taxi Co., Ltd. (hereinafter referred to as “Shenxin Company”) (the equity of Shenxin Company after stripping partial assets and liabilities in accordance with STKH [2010] No. 103) with part of properties (hereinafter referred to as “swap-out assets”) held by the Company and its wholly-owned subsidiary Shenzhen Huangcheng Real Estate Co., Ltd.. As of 31 May 2012, except for the stripped assets had not stripped out from Shenxin Company substantially (for details about the stripped assets, please refer to the VI. Business Combination of Section X. Financial Report), the other assets involved in the assets replacement had been completed the delivery and transfer procedures, with the details as follows: 1. The Company delivered the swap-out assets on 31 May 2012 to Shenzhen Investment Holdings Co., Ltd., with relevant situation as follows: Accounting account Appraisal value 31 May 2012 Construction No. Name of asset Statement on the base date Original book area(m2) Sub-item Book value item of replacement value Annex property Completed 1 18,838.14 Inventories 206,155,646.00 168,382,821.16 168,382,821.16 of Huangcheng development 180 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Plaza products Annex property Investment Housing and 2 of Huangyuyuan 2,703.04 36,491,040.00 26,154,921.97 19,473,956.81 property building Area A Annex property Completed 3 of Huangyuyuan 3,133.27 Inventories development 37,837,343.00 15,346,340.13 15,346,340.13 Area B products Housing and Property of 8,735.97 Fixed assets 15,357,630.00 5,552,847.49 4,357,131.16 building 4 Danshui Property Investment Housing and Town 5,139.63 10,721,620.00 3,266,903.01 2,563,426.76 property building 306,563,279.00 218,703,833.76 210,123,676.02 Note: The appraisal value was made on the base date of replacement as 31 May 2010. 1. The appraisal value of the swap-in asset T102-0237 Land in Moon Bay on the base date of replacement was RMB 270,894,484.00, which had been transferred to the Company by Shenzhen Investment Holdings in Jul. 2011; and the appraisal value of the stripped 100% equity of Shenxin Company on the base date of replacement was RMB 33,195,948.77, which had been transferred to the Company by Shenzhen Investment Holdings on 25 May 2012, so the Company decided 31 May 2012 as the combination date, and the net asset of Shenxin Company after stripping out on the combination date was RMB 12,877,260.98. 2. The difference of consideration between the swap-in asset and the swap-out asset was RMB 2,472,846.23, which had been paid to the Company by Shenzhen Investment Holdings Co., Ltd.. 3. The items added in the Income Statement for the reporting period due to assets replacement are as follows: Item of the Income Statement Amount Revenue of sales 280,484,029.00 Cost of sales 203,235,723.63 Business taxes and surcharges 28,421,402.65 Non-operating expenses 1,382,794.36 Total profits 47,444,108.36 Income taxes expenses 12,448,068.19 Net profits 34,996,040.17 Then the implementation work on assets replacement & significant related-party transactions had been totally completed. C. Remuneration of key management staffs The total remuneration (including personal income taxes) paid for the key management staffs in the reporting period was RMB 6,120,300; while the total remuneration (including personal income taxes) paid for the key management staffs in last period was RMB 6,016,000. 6. Amounts due from/to related parties Amount due from related parties Unit: RMB Yuan Item Related party Closing balance Opening balance 181 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Provision for bad Provision for bad Book balance Book balance debts debts Shenzhen GUOMAO Other accounts receivable Tian’an Properties 9,705,931.45 9,705,931.45 Co., Ltd Anhui Nanpeng Other accounts receivable 7,648,160.00 7,648,160.00 7,677,728.00 7,677,728.00 Papermaking Co., Ltd Shenzhen GUOMAO Other accounts receivable Industrial 2,351,652.48 2,351,652.48 2,551,652.48 2,551,652.48 Development Co., Ltd Shenzhen Wufang Other accounts receivable Pottery & Porcelain 1,747,264.25 1,747,264.25 1,747,264.25 1,747,264.25 Industrial Co., Ltd Shenzhen Guesthouse Other accounts receivable 909,960.40 909,960.40 909,960.40 909,960.40 Restaurant Shenzhen Investment Accounts receivable 415,302.14 12,459.06 156,217.34 4,686.52 Holdings Co., Ltd. Amount due to related parties Unit: RMB Yuan Item Related party Closing balance Opening balance Shenzhen Jifa Warehouse Co., Other payables 19,545,808.00 15,545,808.00 Ltd Shenzhen Tian’an International Building Other payables 1,500,000.00 Property Management Co., Ltd Shenzhen GUOMAO Tian’an Other payables 13,500,000.00 Properties Co., Ltd Shenzhen Investment Other payables 271,065,981.63 Holdings Co., Ltd. Shenzhen Investment Accounts payable 703,821.38 Holdings Co., Ltd. Shenzhen Investment Short-term borrowings 240,000,000.00 490,000,000.00 Holdings Co., Ltd. X. Share-based Payment 1. Overview of share-based payment Unit: RMB Yuan Note: 182 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Information of equity-settled share-based payment Unit: RMB Yuan Note: 3. Information of cash-settled share-based payment Unit: RMB Yuan Note: 4. Information of share-based payment service Unit: RMB Yuan 5. Modification, termination of share-based payment XI. Contingency 1. Contingent liabilities and its financial effect arising from unsettled litigation or arbitration (1) In 1993, the Company signed Right of Development Transfer Contract of Jiabin Building (name of Jiabin Building has been changed to Jinlihua Commercial Plaza) with Shenzhen Haibin Property Development Co., Ltd. (name of which has been changed to Shenzhen Jiyong Property Development Co., Ltd., hereinafter referred to as Jiyong Company). In January 1999, Jiyong Company sued the company to Guangdong Higher People’s Court (hereinafter referred to as “Guangdong Higher Court”) for termination of the transfer contract and refund of the transfer consideration and construction payment paid on the ground that the area of premises was in discrepancy with the contract. With respect to this, the Company counterclaimed the opposing party to pay back the rest transfer consideration and applied for sealing up their property with an area of 28,000 square meters. On July 29, 2001, Guangdong Higher Court issued Civil Court Judgment YGFM (1999) No. 3 (hereinafter referred to as Judgment No. 3) to judge that ① the Company should transfer the title of land use right specified in the transfer contract to Jiyong Company within 30 days from the date the judgment taking into effect and ② Jiyong Company should pay off the transfer consideration amounting to RMB143, 860,000.00 within 60 days from the date the Company transferred the title of land use right. On November 27, 2001, the Company applied to Guangdong Higher Court for forcible execution, however Guangdong Higher Court adjudicated to release the sealing property of Jiyong 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. 183 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. In April 2012, the Company raised the subrogation right lawsuit to Shenzhen Luohu District People's Court, based on the creditor’s right for Jiyong Company decided by the Civil Ruling Paper YGFMC (1999) No. 3, prosecuting the obligor of Jiyong Company—Shenzhen Zongli Investment Co., Ltd. (hereinafter referred to as “Zongli Company”), which was required to compensate for the Company within its debt range for Jiyong Company. Meanwhile, due to it was highly similar in the management level of Shenzhen Huaneng-Jindi Property Co., Ltd. (hereinafter referred to as “Huaneng-Jindi Company”) and Zongli Company, the Company believed that there was significant related-party relationship between Huaneng-Jindi Company and Zongli Company, therefore, the Company also prosecuted Huaneng-Jindi Company, which was required to undertake the joint liability for the debts born by Zongli Company. On 7 Jan. 2013, Luohu District People’s Court open for the case, and now it is to wait for the ruling. (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. 184 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 referred 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 referred 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 referred 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 185 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 received the ruling of Shenzhen Medium People's Court in Oct. 2012, at which the court approved legally Meisi Company’s application on canceling the lawsuit towards the Company. After receiving the above ruling, due to the Administrative Ruling Paper SZFXZ Zi (2008) No. 223 had clearly ruled that the dispute on Meilin land between the Company and Meisi Company should be settled through civil law procedures, therefore, the Company raised the civil lawsuit to Meisi Company and Luojingfa Company, requiring to recognize the ownership of the above involved land for the Company, and the court has accepted the above mentioned lawsuit. Then, Meisi Company raised the counterclaim towards the Company, requiring to recognize its ownership of the above involved land. And the two cases were combined for public trial on 1 Mar. 2013, and now it’s waiting for ruling. 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. 186 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Contingent liabilities and its financial effect arising from loan guarantee offered to other companies (1) The Company provided a joint-liability guarantee for the short-term loan of RMB 60 million borrowed by its subsidiary—Shenzhen ITC Vehicle Industry Co., Ltd. from Bank of Shanghai Shenzhen Branch, and the closing balance of the loan stood at RMB 60 million. (2) The Company provided a joint-liability guarantee for the short-term loan of RMB20 million borrowed by its subsidiary—Shenzhen ITC Vehicles Industry Co., Ltd. from Bank of Beijing Shenzhen Branch, and provided the mortgage guarantee for the subsidiary by mortgaging its 39/F, 42/F and 2-07 room in Block B of Shenzhen International Trade Center Plaza located at Renmin South Road, Luohu District, Shenzhen, and the closing balance stood at RMB 20 million. (3) Shenzhen ITC Vehicles Industry Co., Ltd., a subsidiary to the Company, obtained a long-term loan of RMB 26 million from PingAn Bank Co., Ltd. Shenzhen Branch by mortgaging 100 taxi operating license plates of Shenzhen Guomao Car Rental Co., Ltd., and the closing balance stood at RMB 24.20 million of which RMB 8.55 million will be due within one year. (4) Shenzhen ITC Vehicles Industry Co., Ltd., Shenzhen Huangcheng Real Estate Co., Ltd., and Shenzhen Shenxin Taxi Co., Ltd., subsidiaries of the Company, asked Shenzhen Investment Holdings Co., Ltd. (trustee: China Everbright Bank Shenzhen Jingtian Sub-branch) to make a time limit extension for RMB 40 million entrust loan by mortgaging their properties, including Room 2701 in Huangcheng Plaza owned by Shenzhen ITC Vehicles Industry Co., Ltd., Room 2901 and 3101 in Huangcheng Plaza owned by Shenzhen Huangcheng Real Estate Co., Ltd. and 120 taxi operating license plates owned by Shenzhen Shenxin Taxi Co., Ltd., and the closing balance stood at RMB 40 million. (5) Shenzhen ITC Vehicles Industry Co., Ltd. provided a joint-liability guarantee for a short-term loan of RMB 40 million from Industrial Bank Shenzhen Branch by mortgaging 33 and 93 taxi operating license plates respectively owned by Shenzhen ITC Car Rental Co., Ltd. and Shenzhen ITC Vehicles Industry Co., Ltd. which are subsidiaries of the Company, and the closing balance stood at RMB 40 million. (6) The Company asked Shenzhen Investment Holdings Co., Ltd. (trustee: China Everbright Bank Shenzhen Jingtian Sub-branch) to make a time limit extension for trust loans borrowed by Shenzhen Huangcheng Real Estate Co., Ltd. by mortgaging the Company’s properties of five houses located at ITC Plaza (Phase II), Nanhu Road, Luohu District, Shenzhen, 105 houses located at International Trade Commercial Building, Nanhu Road, Luohu District, Shenzhen, the entire 19th floor located at Tian’an International Building, Renmin South Road, Luohu District, Shenzhen, 7 houses located at Hepingxinju small commodity market, Chuanbu Street, Heping Road, Luohu District, Shenzhen and the 1st to 7th floor of Peace Hotel located at Heping Road, Luohu District, Shenzhen, and the closing balance stood at RMB 200 million. (7) Guarantee for the proprietors: The Company and its subsidiaries provided the commodity houses purchasers with mortgage guarantee to the bank. Up to 31 Dec. 2012, the guarantee amount unsettled was RMB 25.48 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. 187 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Other contingent liabilities and its financial effect: Particulars about contingent assets as follows: 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 referred 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. Hubei FTEC Shenzhen branch applied for the court to implement the case. At the end of January 2005, Guangzhou Railway Transportation Intermediate Court (hereinafter referred to as “GRTIC” was appointed by Guangdong Higher Court to execute the case of Hubei FTEC suing the Company. GRTIC had sent seizure adjudication to liquidation team of Luohu Hotel to seal up the Company’s RMB 23 million of distributed obligatory right in Luhu Hotel. The Company rejected the adjudication of Guangdong Higher People’s Court and applied for retrial to the Supreme People’s Court. In August 2005, the Supreme People’s Court issued (2004) MEJZ No.146-1 Civil Judgment, adjudicating that Guangdong Higher People’s Court carried out retrial for this case and the original judgment was suspended to be implemented during retrial period. On May 12, 2006, Guangdong Higher People’s Court concluded retrial of No. 90 Judgment and maintained adjudication of No. 90 Judgment. The execution of this case was resumed. Hubei FTEC Shenzhen branch asked GRTIC for payment and re-execution of interest judgment during retrial period. Meanwhile, the Company applied for temporary respite. On June 30, 2006, GRTIC issued (2004) GTZFZZ No. 225-4 Civil Judgment, adjudicating that: ① the application for temporary respite of the Company was not adopted due to the lack of fact and legal basis; ②the application of Hubei FTEC Shenzhen branch related to payment was in conformity with stipulations of law and GRTIC decided to remit the rest of money to the account of Hubei FTEC Shenzhen branch after deducting execution fees from RMB 23 million; ③ Hubei FTEC Shenzhen branch’s application on asking repayment of interest during retrial period was not supported; ④ Repayment duty of the Company confirmed by No. 90 Judgment was executed and finished according to law; ⑤ No. 90 Judgment was terminated and executed. The Company had confirmed losses according to the above adjudications and added the accounts receivable of Jiyong Company and withdrawn provision for bad debt. The Company considered that there were errors in identified fact and applicable law of the retrial adjudication from Guangdong Higher People’s Court and therefore applied for retrial in the Supreme People’s Court. The Supreme People’s Court issued (2004) MEJZ No. 146-3 Civil Judgment in October 2007, adjudicating that the Supreme People’s Court would execute retrial for this case. However, the Company revoked the retrial appeal toward the Supreme Court after comprehensive considerations, and the Supreme Court approved such cancel. The 14th and 15th floors of Jiabin Building retuned by Hubei FTEC Shenzhen branch were possessed by the Company legally after the Company had pay for housing compensation and interest. For the purpose of resolving building property right problem and through investigation the Company found that the 14th and 15th floors of Jiabin Building were registered under the name of Yinzhu Industrial Development Company of Western Zhuhai (hereinafter referred to as “Zhuhai Yinzhu Company” by the means of filing registration. The Company submitted civil action to Luohu Court on June 2008 to prosecute Zhuhai Yinzhu Company, ask the Court to confirm that the Company was oblige of the 14th and 15th floors of Jiabin Building and judge that the 14th and 15th floors of Jiabin Building was transferred to and registered under the name of the Company. Luohu Court accepted this case 188 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. according to law with the case number of (2008) SLFMSCZ No. 1442. On July 21, 2008, the Court made public hearing and presided over mediation for this case. The Company and Zhuhai Yinzhu Company reached a settlement and Luohu Court issued Civil Mediation Agreement which mainly contained the following contents: ① the two parties agreed to return the 14th and 15th floors of Jiabin Building to plaintiff (the Company); ② Defendant should assist plaintiff (the Company) to handle related procedures about transferring the above house property to the name of the plaintiff. This Civil Mediation Agreement entered into force pursuant to the law. As of the end of reporting year, the 14th and 15th floors of Jiabin Building were registered under the name of the Company by Registration Center for Property of Real Estate of Shenzhen Municipality in the way of filing registration. 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”) attempted 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 which was shown as follows: ① SUPLRC agreed that the transferee for the right of use of the land with a land parcel No. H206-0002 and an area of 6,892 square meters was changed to Longyuan-Kaili and Huaneng Property; ② Longyuan-Kaili and Huaneng Property undertook all rights, responsibilities and liabilities of this land parcel and straightened out the relationship of the transferred property on their own and assisted to handle relevant procedures; ③ Longyuan-Kaili and Huaneng Property promised to resolve existing mortgage and pre-seizure of this project, coped with all disputes arising from changes on transferee of right of use of this land and assumed legal and economic responsibilities; ④ the property right of the 14th and 15th floors in this project which belonged to commodity houses, were owned by the Company and Longyuan-Kaili and Huaneng Property were responsible for the construction and decoration of this project according to harmonized standards on delivery of building; ⑤ the period of use of land parcel was adjusted to 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. XII. Commitments 1. Significant commitments Inapplicable 2. Fulfillment of previous commitments Inapplicable XIII. Events after the Balance Sheet Date 1. Notes of significant events after the Balance Sheet Date Unit: RMB Yuan Item Details Influence number on financial Reason for failing to estimate 189 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. status and operating results the influence number 2. Notes of profit distribution after Balance Sheet Date Unit: RMB Yuan 3. Notes of other events after Balance Sheet Date A. The borrowing and repayment events after the balance sheet date: (1) The Company’s subsidiary Shenzhen GUOMAO Vehicles Industry Co., Ltd. repaid the long-term loans of RMB 300,000, RMB 750,000 and RMB 750,000 to Shenzhen Branch of Ping An Bank respectively on 9 Jan. 2013, 9 Feb. 2013 and 9 Mar. 2013. (2) The Company’s subsidiary Dongguan Guomao Changsheng Real Estate Development Co., Ltd. gained the long-term loans of RMB 2,220,000 and RMB 7,570,000 from Dongguan Branch of Bank of Communications respectively on 11 Jan. 2013 and 28 Jan. 2013. (3) The Company’s subsidiary Shenzhen GUOMAO Motor Rent Co., Ltd. repaid the long-term loan of RMB 916,700 to Shenzhen Shangbu Sub-branch of Shenzhen Development Bank Co., Ltd. (now renamed as Shenzhen Fuhong Sub-branch of Ping An Bank Co., Ltd.) on 25 Feb. 2013. (4) On 28 Mar. 2013, the Company’s subsidiary Shenzhen Huangcheng Real Estate Co., Ltd. and Shenzhen GUOMAO Vehicles Industry Co., Ltd. extent the period of their entrusted loans of RMB 0.2 billion and RMB 40 million in Jingtian Sub-branch of China Everbright Bank respectively, with the due date after the extension as 27 Mar. 2014, the loan principal changed as the Company, and the entrusting party as the Company’s controlling shareholder Shenzhen Investment Holdings Co., Ltd.. B. Profits Distribution Pre-plan The Board of Directors of the Company approved its 2012 Annual Profits Distribution Pre-plan by voting on 28 Mar. 2013, at which the Company won’t conduct the profits distribution nor the capitalization of capital reserves. And such pre-plan needs to be submitted to the Shareholders’ General Meeting of the Company for review and approval. XIV. Notes of other significant events 1. Exchange of non-monetary assets For details, please refer to IX. Related parties and related-party transactions of Section X. Financial Report. 2. Debt reorganization Inapplicable 3. Business combination For details, please refer to VI. Business Combination of Section X. Financial Report. 190 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 4. Lease Inapplicable 5. Closing financial instruments that externally issued and convertible into shares Inapplicable 6. Assets and liabilities measured at fair value Unit: RMB Yuan Gains and losses Accumulated Accrued from the changes in changes in fair Item Opening amount impairment in the Closing amount fair value in the value recorded in reporting period reporting period equity Financial assets 7. Foreign currency financial assets and liabilities Unit: RMB Yuan Gains and losses Accumulated Accrued from the changes in changes in fair Item Opening amount impairment in the Closing amount fair value in the value recorded in reporting period reporting period equity Financial assets 8. Main content and significant changes of annuity plan Inapplicable 9. Other (1) 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. (2) 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 191 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. As of the end of the reporting period, Hainan Company was conducting the preparatory work on bankrupt liquidation. XV. Notes of main items in the financial statements of the Company 1. Accounts receivable (1) Accounts receivable Unit: RMB Yuan Closing balance Opening balance Book balance Provision for bad debts Balance Provision for bad debts Category Propo Proporti Proporti Proporti Amount rtion Amount Amount Amount on (%) on (%) on (%) (%) Accounts receivable with significant single amount and individually 101,447,889.05 98.1% 45,447,889.05 44.8% 101,447,889.05 97.45% 45,447,889.05 44.8% withdrawn bad debt provision Accounts receivable for which bad debt provisions are made on the group basis Group 2 1,908,314.21 1.85% 1,128,725.53 59.15% 2,603,890.77 2.5% 993,289.42 38.15% Subtotal of the groups 1,908,314.21 1.85% 1,128,725.53 59.15% 2,603,890.77 2.5% 993,289.42 38.15% Accounts receivable with insignificant single amount but individually 54,380.35 0.05% 54,380.35 100% 54,380.35 0.05% 54,380.35 100% withdrawn bad debt provision Total 103,410,583.61 -- 46,630,994.93 -- 104,106,160.17 -- 46,495,558.82 -- Notes to category of accounts receivable: Accounts receivable with significant single amount and individually withdrawn bad debt provision at period-end √ Applicable □ Inapplicable Unit: RMB Yuan Withdrawal Content of accounts receivable Book balance Bad debts provision Withdrawal reason proportion Involved in lawsuit, referring to XI.1 Shenzhen Jiyong Properties & Resources 98,611,328.05 42,611,328.05 43.21% Contingent events of Development Company Section X. Financial Report 192 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Uncollectible for a Shenzhen Tewei Industry Co., Ltd. 2,836,561.00 2,836,561.00 100% long period Total 101,447,889.05 45,447,889.05 -- -- In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Opening balance Book balance Book balance Aging Proporti Bad debt provision Proporti Bad debt provision Amount Amount on (%) on (%) Within 1 year Including: -- -- -- -- -- -- Within 1 year (including 1 38,135.00 2% 1,144.05 133,932.00 5.14% 4,017.96 year) Subtotal for those aging 38,135.00 2% 1,144.05 133,932.00 5.14% 4,017.96 within 1 year 2-3 years 1,228,539.62 47.18% 368,561.89 Over 3 years 1,870,179.21 98% 1,127,581.48 1,241,419.15 47.68% 620,709.57 3-4 years 1,228,539.62 64.38% 614,269.81 1,241,419.15 47.68% 620,709.57 4-5 years 641,639.59 33.62% 513,311.67 Total 1,908,314.21 -- 1,128,725.53 2,603,890.77 -- 993,289.42 In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □Applicable √Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: □Applicable √Inapplicable Accounts receivable with insignificant single amount but individually withdrawn bad debt provision at period-end: √Applicable □Inapplicable Unit: RMB Yuan Content of accounts Book balance Bad debts provision Withdrawal proportion Withdrawal reason receivable Luohu Economic Uncollectible for a long 54,380.35 54,380.35 100% Development Company period Total 54,380.35 54,380.35 -- -- (2) Information of accounts receivable reversed or recovered in the report period Unit: RMB Yuan 193 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Withdrawal amount of Content of accounts Reason for reversal or Basis on recognition of Reversed or recovered bad debt provision before receivable recovery provision for bad debts amount the reversal or recovery The withdrawal of bad debt provision of accounts receivable with significant single amount or insignificant single amount but individually made impairment test at the end of report period: Content of accounts Withdrawal proportion Book balance Amount of bad debts Reason receivable (%) Notes to accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics: (3) Information of accounts receivable that written off in the report period Unit: RMB Yuan Whether arising Name of company Nature Date Amount Reason from related-party transaction or not Notes: There was no accounts receivable that written off in the report period. (4) Information of shareholders with more than 5% (including 5%) of the voting shares of the Company in accounts receivable in report period Unit: RMB Yuan Closing balance Opening balance Name of entity Provision for bad Book balance Book balance Provision for bad debts debts (5) Nature or content of other accounts receivable with significant amount The other accounts receivable with significant amount was mainly RMB 98,611,328.05 of project accounts receivable due from Shenzhen Jiyong Properties & Resources Development Company (6) Top five accounts receivable Unit: RMB Yuan Name of company Relationship Amount Term Proportion (%) Shenzhen Jiyong Properties & Resources Non-related party 98,611,328.05 Over five years 95.36% Development Company Shenzhen Tewei Industry Non-related party 2,836,561.00 Over five years 2.74% Co., Ltd. Tianhong Shopping Plaza Non-related party 1,870,179.21 3-4 years 1.81% Co., Ltd. 194 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total -- 103,318,068.26 -- 99.91% (7) Accounts receivable due from related parties Unit: RMB Yuan Name of entity Relationship Amount Proportion (%) (8) RMB 000 was transferred from the accounts receivable not meeting the conditions of termination recognition. (9) If securitization is carried out on accounts receivable as the underlying asset, please brief on the arrangement of relevant transactions. 2、Other accounts receivable (1)Other accounts receivable Unit: RMB Yuan Closing balance Opening balance Provision for bad Book balance Provision for bad debts Book balance debts Category Propo Propo Propo Propo Amount rtion Amount rtion Amount rtion Amount rtion (%) (%) (%) (%) Other accounts receivable with significant single 77.44 84.94 80.05 amount and individually 236,213,999.72 23.9% 182,918,860.23 235,934,964.21 188,864,152.75 % % % withdrawn bad debt provision Other accounts receivable for which bad debt provisions are made on the group basis 74.82 Group 1 739,478,916.64 19,553,302.91 7.04% % 97.15 Group 2 10,179,715.93 1.03% 9,889,835.47 19,873,081.80 7.15% 19,595,836.60 98.6% % 75.85 14.19 Subtotal of the groups 749,658,632.57 9,889,835.47 1.32% 39,426,384.71 19,595,836.60 49.7% % % Other accounts receivable with insignificant single amount but individually 2,421,326.23 0.25% 2,421,326.23 100% 2,421,326.23 0.87% 2,421,326.23 100% withdrawn bad debt provision 195 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total 988,293,958.52 -- 195,230,021.93 -- 277,782,675.15 -- 210,881,315.58 -- Notes of category: Other accounts receivable with significant single amount and individually withdrawn bad debt provision at period-end: √Applicable □Inapplicable Unit: RMB Yuan Content of other accounts Withdrawing proportion Book balance Bad debt amount Reason receivable (%) Shum Yip Properties Uncollectible for a long 99,803,433.49 46,508,294.00 46.6% Development Co., Ltd. period Payment for discharging Gintian Industry (Group) of guaranty responsibility 56,600,000.00 56,600,000.00 100% Co., Ltd that was difficult to be recollected Hainan Xinda Uncollectible for a long 49,262,784.25 49,262,784.25 100% Development Co., Ltd period Anhui Nanpeng Uncollectible for a long 7,648,160.00 7,648,160.00 100% Papermaking Co., Ltd period Shenzhen Shengfenglu, There is no asset to GUOMAO Jewel & Gold 6,481,353.60 6,481,353.60 100% execute the verdict, thus Co., Ltd lead to uncollectibility Shanghai Yutong Real Uncollectibility for the estate development Co., 5,676,000.00 5,676,000.00 100% reason of verdict Ltd HongKong Yueheng 3,271,837.78 3,271,837.78 100% Has been liquidated Development Co., Ltd Dameisha Tourism 2,576,445.69 2,576,445.69 100% Suspended project Center Shenzhen GUOMAO Industrial Development 2,351,652.48 2,351,652.48 100% The company is insolvent Co., Ltd Elevated Train Project 2,542,332.43 2,542,332.43 100% Suspended project Total 236,213,999.72 182,918,860.23 -- -- In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Aging Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision 196 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Proporti Proporti Amount Amount on (%) on (%) Within 1 year Including: -- -- -- -- -- -- Within 1 year (including 1 290,732.42 2.86% 8,721.97 276,670.84 1.39% 8,300.12 year) Subtotal for those aging 290,732.42 2.86% 8,721.97 276,670.84 1.39% 8,300.12 within 1 year 1-2 years 8,037.68 0.08% 803.77 5,058.09 0.03% 505.81 2-3 years 458.09 0% 137.43 5,310.25 0.03% 1,593.08 Over 3 years 9,880,487.74 97.06% 9,880,172.30 19,586,042.62 98.55% 19,585,437.59 3-4 years 310.25 0% 155.13 801.57 0% 400.79 4-5 years 801.57 0.01% 641.25 1,021.23 0.01% 816.98 Over 5 years 9,879,375.92 97.05% 9,879,375.92 19,584,219.82 98.54% 19,584,219.82 Total 10,179,715.93 -- 9,889,835.47 19,873,081.80 -- 19,595,836.60 In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision: □Applicable √Inapplicable In the groups, other accounts receivable adopting other methods to withdraw bad debt provision: □Applicable √Inapplicable Other accounts receivable with insignificant single amount but individually withdrawn bad debt provision at period-end: √ Applicable □ Inapplicable Unit: RMB Yuan Content of other accounts Book balance Bad debts provision Withdrawal proportion Withdrawal reason receivable Shenzhen Wufang Poor operation status Pottery & Porcelain 1,747,264.25 1,747,264.25 100% Industrial Co., Ltd Compensation for Shidai Owner unable to repay new residence mortgage 601,762.21 601,762.21 100% the loan guarantee in ABC Zhanjiang Shenzhen Real Insolvency thus Estate Development Co., 53,478.77 53,478.77 100% Ltd. uncollectible Meilin Synthetic Fibre Uncollectible for a long Company 11,000.00 11,000.00 100% period Others 7,821.00 7,821.00 100% Uncollectible for a long 197 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. period Total 2,421,326.23 2,421,326.23 -- -- (2) Information of other accounts receivable reversed or recovered in the reporting period Unit: RMB Yuan Withdrawal amount of Content of other accounts Reason for reversal or Basis on recognition of Reversed or recovered bad debt provision before receivable recovery provision for bad debts amount the reversal or recovery Offset of the creditors’ Shenzhen GUOMAO right and liabilities for Estimated to be Industrial Development Co., 2,551,652.48 200,000.00 Longhua property uncollectible Ltd project Increase of the value Shum Yip Properties Uncollectible for a long of land to be 52,708,792.73 6,200,498.73 Development Co., Ltd. period developed Total -- -- 55,260,445.21 -- The withdrawal of bad debt provision of other accounts receivable with significant single amount or insignificant single amount but individually made impairment test at the end of report period: Unit: RMB Yuan Content of other Withdrawal proportion Book balance Amount of bad debts Reason accounts receivable (%) Notes to other accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics: (3) Information of the write-off other accounts receivable Unit: RMB Yuan Whether arising from Name of company Nature Date of written off Amount Reason related-party transactions Notes: There was no write-off other accounts receivable during the reporting period. (4) The other accounts receivable due from shareholders with more than 5% (including 5%) of the voting shares of the Company in the reporting period Unit: RMB Yuan Closing balance Opening balance Name of entity Withdrawal amount of Withdrawal amount Book balance Book balance bad debts of bad debts 198 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (5) Nature or content of other accounts receivable with significant amount The Company’s other accounts receivable with significant amount are mainly the current accounts receivable due from subsidiaries and RMB 56,600,000.00 of guarantee litigation accounts receivable due from Gintian Industry (Group) Co., Ltd.. (6) Top five other accounts receivable Unit: RMB Yuan Name of company Relationship Amount Term Proportion (%) PRD Yangzhou Real Estate Development Co., Subsidiary 633,632,910.60 Within one year 64.11% Ltd. Shum Yip Properties Subsidiary 99,803,433.49 Over five years 10.1% Development Co., Ltd. PRD Group XuzhouDapeng Real Subsidiary 61,732,422.13 Within one year 6.25% Estate Development Co., Ltd Gintian Industry (Group) Non-related party 56,600,000.00 Over five years 5.73% Co., Ltd Hainan Xinda Subsidiary 49,262,784.25 Within three years 4.98% Development Co., Ltd Total -- 901,031,550.47 -- 91.17% (7) Other account receivable due from related parties Unit: RMB Yuan Name of company Relationship Amount Proportion (%) PRD Yangzhou Real Estate Subsidiary 633,632,910.60 64.11% Development Co., Ltd. Shum Yip Properties Subsidiary 99,803,433.49 10.1% Development Co., Ltd. PRD Group XuzhouDapeng Real Estate Development Subsidiary 61,732,422.13 6.25% Co.,Ltd Hainan Xinda Development Subsidiary 49,262,784.25 4.98% Co., Ltd Shenzhen GUOMAO Property Subsidiary 37,283,443.62 3.77% Management Co., Ltd. Anhui Nanpeng Papermaking Associated enterprise 7,648,160.00 0.77% Co., Ltd Shenzhen GUOMAO Food Subsidiary 4,183,868.40 0.42% 199 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Co., Ltd Shenzhen GUOMAO Industrial Development Co., Associated enterprise 2,351,652.48 0.24% Ltd Shenzhen Wufang Pottery & Subsidiary 1,902,094.59 0.19% Porcelain Industrial Co., Ltd Shenzhen International Trade Associated enterprise 1,747,264.25 0.18% Plaza Zhanjiang Shenzhen Real Subsidiary 744,177.30 0.08% Estate Development Co., Ltd Shenzhen GUOMAO Industrial Development Co., Subsidiary 53,478.77 0.01% Ltd (8) RMB000 was transferred from the other accounts receivable not meeting the conditions of termination recognition. (9) If securitization is carried out on the other accounts receivable as the underlying asset, please brief on the arrangement of relevant transactions. 3. Long-term equity investments Unit: RMB Yuan Explanati ons on Withdraw difference al amount s between of Cash Sharehold Voting sharehold Provision Accounti Initial impairme bonus in The Opening Increase/ Closing ing right ing for ng investmen nt the investee balance decrease balance Proportio Proportio proportio impairme method t cost provision reporting n n n and nt loss in the period voting reporting right period proportio n Shenzhen Jifa Equity 30,645,05 27,357,06 811,006.9 28,168,07 50% 50% Warehous method 6.04 4.04 4 0.98 e Co., Ltd Shenzhen GUOMA Equity 23,186,12 35,403,80 1,844,080 37,247,88 50% 50% O Tian’an method 4.00 6.83 .22 7.05 Properties 200 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Co., Ltd Shenzhen Tian’an Internatio nal Equity 1,500,000 3,040,469 490,722.5 3,531,192 Building 50% 50% method .00 .53 9 .12 Property Managem ent Co., Ltd Shenzhen GUOMA O Cost 29,850,00 29,850,00 29,850,00 90% 90% Vehicles method 0.00 0.00 0.00 Industry Co., Ltd. Hainan Xinda Cost 20,000,00 20,000,00 20,000,00 20,000,00 Develop 100% 100% method 0.00 0.00 0.00 0.00 ment Co., Ltd Shenzhen Property and Real Cost 30,950,00 30,950,00 30,950,00 Estate 100% 100% method 0.00 0.00 0.00 Develop ment Co., Ltd. Shenzhen Huangche Cost 28,500,00 28,500,00 28,500,00 ng Real 95% 95% method 0.00 0.00 0.00 Estate Co., Ltd. Shenzhen GUOMA O Cost 20,000,00 20,000,00 20,000,00 Property 95% 95% method 0.00 0.00 0.00 Managem ent Co., Ltd. Shenzhen Cost 33,195,94 12,877,26 12,877,26 100% 100% Shenxin method 8.77 0.98 0.98 201 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Taxi Co., Ltd. Shenzhen GUOMA Cost 1,600,000 1,600,000 1,600,000 1,600,000 80% 80% O Food method .00 .00 .00 .00 Co., Ltd Shenzhen Property Construct Cost 3,000,000 3,000,000 3,000,000 ion 100% 100% method .00 .00 .00 Supervisi on Co., Ltd Shenzhen Internatio Cost 12,000,00 12,000,00 12,000,00 12,000,00 100% 100% nal Trade method 0.00 0.00 0.00 0.00 Plaza Shenzhen Real Cost 1,380,000 1,380,000 1,380,000 100% 100% Estate method .00 .00 .00 Exchange Shensan Cost 17,695.09 17,695.09 17,695.09 17,695.09 Co., Ltd. method Zhanjiang Shenzhen Real Cost 2,530,000 2,530,000 2,530,000 2,530,000 Estate 100% 100% method .00 .00 .00 .00 Develop ment Co., Ltd Shum Yip Properties Cost 15,834,00 15,834,00 15,834,00 15,834,00 Develop 100% 100% method 0.00 0.00 0.00 0.00 ment Co., Ltd. Shenzhen Wufang Pottery & Cost 18,983,61 18,983,61 18,983,61 18,983,61 26% 26% Porcelain method 4.14 4.14 4.14 4.14 Industrial Co., Ltd 202 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen GUOMA O Cost 20,154,84 3,682,972 3,682,972 3,682,972 Industrial 38.33% 38.33% method 0.79 .55 .55 .55 Develop ment Co., Ltd Anhui Nanpeng Cost 13,824,00 13,824,00 13,824,00 13,824,00 Papermak 30% 30% method 0.00 0.00 0.00 0.00 ing Co., Ltd China Cost 2,962,500 2,962,500 2,962,500 2,160,300 T.H. 0.33% 0.33% method .00 .00 .00 .45 Co.,Ltd. North Machiner Cost 3,465,000 3,465,000 3,465,000 3,465,000 12.66% 12.66% y (Group) method .00 .00 .00 .00 Co., Ltd. Guangdo ng Huayue Cost 8,780,645 8,780,645 8,780,645 8,780,645 8.47% 8.47% Real method .20 .20 .20 .20 Estate Co., Ltd. PRD Group XuzhouD apeng Cost 50,000,00 50,000,00 50,000,00 Real 100% 100% method 0.00 0.00 0.00 Estate Develop ment Co., Ltd Donggua n Guomao Changshe Cost 20,000,00 20,000,00 20,000,00 100% 100% ng Real method 0.00 0.00 0.00 Estate Develop ment Co., 203 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Ltd. PRD Yangzhou Real Cost 50,000,00 50,000,00 50,000,00 Estate 100% 100% method 0.00 0.00 0.00 Develop ment Co., Ltd. Sanya East Cost 230,500.0 230,500.0 230,500.0 0.28% 0.28% Travel method 0 0 0 Co., Ltd. 442,589,9 403,392,2 16,023,07 419,415,3 102,878,2 Total -- -- -- -- 24.03 67.38 0.73 38.11 27.43 Notes: 4. Revenue and Cost of Sales (1) Revenue, Cost of Sales Unit: RMB Yuan Item Reporting period Same period of last year Main business revenue 48,210,057.27 48,557,559.48 Total 48,210,057.27 48,557,559.48 Cost of sales 20,151,948.72 35,318,571.13 (2) Main business (Classified by industry) Unit: RMB Yuan Reporting period Same period of last year Industry Revenue of sales Costs of sales Revenue of sales Costs of sales Property 6,337,155.01 6,387,356.92 Property rental and 48,210,057.27 20,151,948.72 42,220,404.47 28,931,214.21 management Total 48,210,057.27 20,151,948.72 48,557,559.48 35,318,571.13 (3) Main business (Classified by product) Unit: RMB Yuan Reporting period Same period of last year Name of products Revenue of sales Costs of sales Revenue of sales Costs of sales 204 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Property 6,337,155.01 6,387,356.92 Property rental and 48,210,057.27 20,151,948.72 42,220,404.47 28,931,214.21 management services Total 48,210,057.27 20,151,948.72 48,557,559.48 35,318,571.13 (4) Main business (Classified by area) Unit: RMB Yuan Reporting period Same period of last year Name of area Revenue of sales Costs of sales Revenue of sales Costs of sales Shenzhen Area 48,210,057.27 20,151,948.72 48,557,559.48 35,318,571.13 Total 48,210,057.27 20,151,948.72 48,557,559.48 35,318,571.13 (5) Revenue of sales from the top five customers Unit: RMB Yuan Proportion of total Customers Total revenue of sales revenue of sales (%) Tianhong Shopping Plaza Co., Ltd. 9,368,289.92 19.43% Shenzhen Branch of China Pacific Property Insurance Co., Ltd. 4,909,644.00 10.18% Shenzhen Jindu Wedding Etiquette Co., Ltd. 2,236,289.00 4.64% Seven Days Hotel (Shenzhen) Co., Ltd. 1,963,494.00 4.07% Shenzhen Branch of Bank of China Limited 1,746,420.00 3.62% Notes: 5. Investment income (1) List of investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income accounted by cost 341,500,000.00 method Long-term equity investment income accounted by equity 3,145,809.75 -286,648.25 method Investment income received from holding of trading financial 3,364.50 assets Investment income received from disposal of trading 240,074.81 financial assets Other 37,162,941.77 17,592,670.23 Total 381,808,751.52 17,549,461.29 205 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (2) Long-term equity investment income accounted by cost method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease YoY year No profits were distributed at the end Shenzhen Huangcheng Real Estate Co., Ltd. 341,500,000.00 0.00 of last period Total 341,500,000.00 0.00 -- (3) Long-term equity investment income accounted by equity method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease YoY year Shenzhen Jifa Warehouse Co., Ltd 811,006.94 743,887.08 Increase of realized profits Shenzhen GUOMAO Tian’an Properties 1,844,080.22 -1,506,674.53 Increase of realized profits Co., Ltd Shenzhen Tian’an International Building 490,722.59 476,139.20 Increase of realized profits Property Management Co., Ltd Total 3,145,809.75 -286,648.25 -- Notes of investment income: The Company’s recovery of investment income exist no significant limitation. 6. Supplemental information of Cash Flow Statement Unit: RMB Yuan Supplemental information Reporting period Same period of last year 1. Reconciliation of net profit to net cash flows generated from -- -- operations: Net profit 375,378,858.88 -37,392,803.39 Add: Provision for assets impairments -15,500,366.74 20,832,527.84 Depreciation of fixed assets, oil and gas assets and productive 15,995,267.74 15,694,741.33 biological assets Amortization of long-term deferred expense 172,976.28 172,976.28 Losses/gains on disposal of property, intangible asset and other 1,546.50 long-term assets (gains: negative) Losses/gains on scrapped of fixed assets (gains: negative) 1,470.30 Losses/gains from variation of fair value (gains: negative) 3,364.50 Financial cost (income: negative) -125.07 Investment loss (gains: negative) -381,808,751.52 -17,549,461.29 Increase in deferred tax liabilities (decrease: negative) -807.48 Decrease in inventory (increase: negative) -1,056,345.00 -266,870,821.10 206 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Decrease in accounts receivable from operating activities (increase: -284,117,822.66 32,637,652.81 negative) Increase in accounts payable from operating activities (decrease: 569,549,251.46 759,825,392.69 negative) Net cash flows generated from operating activities 278,614,538.74 507,354,183.62 2. Significant investing and financing activities without -- -- involvement of cash receipts and payments 3. Change of cash and cash equivalent: -- -- Closing balance of cash 399,641,751.92 83,846,009.34 Less: opening balance of cash 83,846,009.34 78,920,447.75 The net increase in cash and cash equivalents 315,795,742.58 4,925,561.59 7. Information of assets and liabilities recognized by evaluation value from the counter purchase Information of assets and liabilities recognized by fair value from the counter purchase Unit: RMB Yuan Recognition method of Calculation process Item Fair value Original book value fair value of fair value Information of long-term investment formed by counter purchase Unit: RMB Yuan Amount of long-term investment formed Calculation process Item by counter purchase Of long-term equity investment XVI. Supplemental information 1. Return on equity and earnings per share Unit: RMB Yuan The weighted average ROE EPS Profit in the reporting period (%) Basic EPS Diluted EPS Net profit attributable to the Company's 28.43% 0.63 0.63 common stock shareholders Net profit attributable to shareholders of the Company's common stock after deducting 25.62% 0.56 0.56 non-recurring gains and losses 2. Particulars on the abnormal conditions of main items in the financial statements of the Company and relevant reasons Movement in the main items of the financial statements of the Company and relevant reasons are as follows: Closing Opening Item Movement Reasons for movement balance balance 207 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 797,724,3 469,313,741.5 Monetary fund 69.98% Increase of the funds recovered from sales projects 11.37 7 64,714,99 474,354,748.3 The prepayment for Yangzhou land was transferred to Prepayment -86.36% 0.11 9 inventories. Other accounts 6,371,689 The unsettled accounts paid in advance by the 3,428,342.39 85.85% receivable .34 subsidiaries increased. 2,300,674 1,814,992,629 The prepayment for Yangzhou land was transferred in Inventories 26.76% ,551.14 .34 and the project input increased Deferred income tax 194,507,8 124,102,202.4 56.73% Increase of the accrued to-be-deducted land VAT assets 24.50 1 360,000,0 601,495,212.0 Short-term loan -40.15% Returned for expiry 00.00 0 298,525,7 187,093,587.4 Tentative estimated costs for completing the projects Accounts payable 59.56% 52.32 2 increased Accounts received in 678,075,2 208,655,909.4 224.97% Sales of project increased advance 91.01 1 733,659,6 499,957,087.3 The accrued land VAT for carrying forward the projects Taxes payable 46.74% 79.71 6 to revenue increased 195,045,6 480,433,469.9 The original moon bay land on account was transferred Other accounts payable -59.40% 49.98 1 out Non-current liabilities 14,909,88 218,359,888.3 -93.17% Returned for expiry due within one year 8.32 2 19,316,66 Long-term loan 7,333,333.32 163.41% Increase of loan 6.64 778,604,8 403,182,716.3 Retained profits 93.11% Increase of profits realized in the reporting period 46.00 6 Reporting Same period Item period of last year 1,861,298 1,430,211,933 The project income carried forward during the reporting Revenue of sales 30.14% ,830.99 .75 period increased over the same period of last year 841,932,2 568,646,701.9 The project income carried forward during the reporting Costs of sales 48.06% 53.07 5 period increased over the same period of last year 43,951,17 The sales projects increased and thus relevant expenses Selling expenses 32,792,286.16 34.03% 4.60 increased for reinforcing the sales -1,504,58 Financial expenses 12,452,491.31 -112.08% Increase of capitalization of interest 9.66 -13,872,7 Increase of recovery of accounts receivable and reversal Assets impairment losses 22,350,220.66 -162.07% 00.17 of provision for falling price of inventories 3,145,809 Investment income -43,208.94 7380.46% Realized revenue of joint ventures increased .75 Operating profits 485,398,2 344,094,956.1 41.07% Increase of income and reversal of impairment 208 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 17.53 8 487,048,1 342,960,109.5 Total profits 42.01% Increase of income and reversal of impairment 43.02 5 374,822,1 260,045,897.1 Net profits 44.14% Increase of income and reversal of impairment 52.41 3 Net cash flow from 805,714,1 -354,083,921. 327.55% Increase of funds returned from selling the houses operating activities 97.38 13 Net cash flow from 6,158,784 -10,021,360.7 Increase of cash gained from receiving the investment 161.46% investment activities .80 7 income Net cash flow from -483,463, 288,170,314.4 Decrease of loans gained and increase of loans returned -267.77% financing activities 515.74 7 back 209 2012 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. XI. Documents Available for Reference 210