2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LTD. 2013 ANNUAL REPORT March 2014 1 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section I. Important Reminders, Catalogue & 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 is factual, accurate and complete without any false record, misleading statement or material omission. And they shall be jointly and severally liable for that. All directors attended the board session for reviewing this report. The Company’s profit distribution preplan upon review and approval of this board session: Based on the total shares of the Company as at 31 Dec. 2013, a cash dividend of RMB 2.00 (tax included) will be distributed for every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be turned into share capital. Mr. Chen Yugang, Company Principal, Mr. Wang Hangjun, Person in Charge of Accounting Work, Mr. Gong Sixin, CFO, and Ms. Shen Xueying, Person-in-charge of the accounting organ (Chief of Accounting), hereby confirm that the Financial Report enclosed in the Annual Report is true and complete. This report is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. 2 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Catalogue 2013 Annual Report ...........................................................................................................................1 Section I. Important Reminders, Catalogue & Explanation..........................................................2 Section II. Company Profile..............................................................................................................6 Section III. Accouonting & Business Highlights .............................................................................9 Section IV. Report of the Board of Directors.................................................................................12 Section V. Significant Events...........................................................................................................27 Section VI. Change in Shares & Shareholders ..............................................................................34 Section VII. Directors, Supervisors, Senior Management Staff & Employees错 误 ! 未 定 义 书 签。 Section VIII. Corporate Governance .............................................................................................47 Section IX. Internal Control ...........................................................................................................52 Section X. Financial Report ............................................................................................................54 Section XI. Documents Available for Reference..........................................................................200 3 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Explanation Refers Term Contents to Company, the Company Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen Municipal People’s Government State-owned Assets Shenzhen SASAC Supervision and Administration Commission SIHC Shenzhen Investment Holdings Co., Ltd. SCIHC Shenzhen Construction Investment Holdings Corporation SIM Shenzhen Investment Management Co., Ltd. 4 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Reminder of Major Risks Possible risks and countermeasures have been described in detail in “Outlook of the Company’s future development” in “Section IV. Report of the Board of Directors” of this report. 5 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section II. Company Profile I. Company information 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 Province, Registered address P.R.China Postal code for the registered 518014 address 39/F and 42/F, International Trade Center, Renmin South Road, Shenzhen, Guangdong Province, Office address P.R.China Postal code for the office 518014 address Internet website of the www.szwuye.com.cn Company Email address 000011touzizhe@szwuye.com.cn II. Contact us 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 6 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. E-mail 000011touzizhe@szwuye.com.cn 000011touzizhe@szwuye.com.cn 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 Industrial and Commercial At the end of the Administration 10 May 2013 440301103570124 440301192174135 19217413-5 reporting period Bureau of Shenzhen Municipal Government Changes of the main business since listing Unchanged (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 LLP Office address 16th - 18th Floor, Tower B, Wuhan International Mansion Signing accountants Wang Yu, Fan Guiming Sponsor engaged by the Company to conduct sustained supervision during the reporting period □ Applicable √ Inapplicable 7 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Financial consultant engaged by the Company to conduct sustained supervision during the reporting period □ Applicable √ Inapplicable 8 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section III. Accounting & Business 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 2012 2011 year over last 2013 year (%) Before After After Before After adjustment adjustment adjustment adjustment adjustment Operating revenue (RMB 1,619,227,227. 1,861,298,830. 1,861,298,830. 1,430,211,933. 1,430,211,933. -13.01% Yuan) 60 99 99 75 75 Net profit attributable to shareholders of the Company 300,840,563.81 375,422,129.64 375,422,129.64 -19.87% 261,108,340.62 261,108,340.62 (RMB Yuan) Net profit attributable to shareholders of the Company 300,239,183.47 337,545,206.86 337,545,206.86 -11.05% 257,538,768.66 257,538,768.66 after extraordinary gains and losses (RMB Yuan) Net cash flows from operating -354,083,921.1 -354,083,921.1 110,424,330.10 805,714,197.38 805,714,197.38 -86.29% activities (RMB Yuan) 3 3 Basic EPS (RMB Yuan/share) 0.5048 0.6299 0.6299 -19.86% 0.4381 0.4381 Diluted EPS (RMB Yuan/share) 0.5048 0.6299 0.6299 -19.86% 0.4381 0.4381 Weighted average ROE (%) 18.19% 28.43% 28.42% -10.23% 25.79% 25.79% Increase or decrease of this As at 31 Dec. 2012 year-end than As at 31 Dec. 2011 As at 31 Dec. last year-end 2013 (%) Before After After Before After adjustment adjustment adjustment adjustment adjustment 3,873,252,714. 4,006,705,938. 3,950,705,938. 3,552,025,374. 3,496,025,374. Total assets (RMB Yuan) -1.96% 32 73 73 73 73 Net assets attributable to 1,802,781,292. 1,502,852,915. 1,503,156,542. 1,141,460,658. 1,141,764,286. shareholders of the Company 19.93% 68 53 93 78 18 (RMB Yuan) 9 2013 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 2013 2012 Closing amount Opening amount According to Chinese 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 accounting standards Items and amounts adjusted according to international accounting standards According to international 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 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 2013 2012 Closing amount Opening amount According to Chinese 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 accounting standards Items and amounts adjusted according to overseas accounting standards According to overseas 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 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 Item 2013 2012 2011 Note Gains/losses on the disposal of non-current assets (including the offset part of the asset 72,626.95 534,657.73 -26,955.97 impairment provisions) 10 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at 1,720,000.00 certain quotas or amounts according to the government’s unified standards Gain/loss on non-monetary asset swap 47,444,108.36 Expenses on business reorganization, such as expenses on staff arrangements, -3,152,560.00 integration, etc. Current net gains and losses of subsidiaries acquired in business combination under the 1,312,539.70 2,936,782.09 same control from period-begin to combination date 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 assets and tradable financial liabilities and financial assets available for sales except for effective hedging related with normal businesses of the Company Impairment provision reversal of accounts receivable on which the impairment test is 833,813.78 623,086.75 842,092.26 carried out separately Non-operating income and expense other -724,421.19 778,062.12 -1,458,137.35 than the above Less: Income tax effects -419,360.80 11,982,949.11 26,727.37 Minority interests effects (after tax) -599,977.23 -1,062,443.49 Total 601,380.34 37,876,922.78 3,569,571.96 -- Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item □ Applicable √ Inapplicable 11 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section IV. Report of the Board of Directors I. Overview In 2013, due to a faltering recovery of the global economy and the slowdown in growth of the domestic economy, a series of economic indicators showed great pressure on China’s macro economy. The real estate macro-control policies of the central government softened under the idea of “let the market lead”. Under the joint actions of relevant policies and the macro-economy, the real estate market this year presented a key word—“polarization”. To be specific, both trade volumes and prices of commodity houses in cities at the first and second tiers were still on the rise while those in some cities at the third and fourth tiers showed a distinct slowdown and prices even eased off in some of these cities. In view of that, developers focused more on cities at the first and second tiers to avoid risks. Meanwhile, land trading of cities at the first and second tiers was active while that of cities at the third and fourth tiers was sluggish. Large real estate enterprises were more competitive due to their ample funds, land reserve and development experience. And more enterprises joined the “Club for Real Estate Enterprises with Market Value over RMB 100 Billion”. “Polarization” is a challenge and an opportunity at the same time. It reminds real estate enterprises to pay attention to development risks and reexamine their ways of operation. We have confidence in the future development of real estate on the ground that there are still potentialities in the basic forces such as urbanization, increasing living standards and the growing population that drive the development of the real estate industry. We carried out in-depth researches on changes of the development trends in the real estate market, adjusted our operating strategies in time according to the market changes, and kept enhancing brand promotion. Meanwhile, we carried out effective planning management with the “Real Estate Brochure”, pushed forward in an orderly manner the accomplishment of every task in the real estate projects, and kept improving out management means and increasing the project operation efficiency. When we vigorously developed the main business of real estate, we also at the same time tapped our potentialities and steadily developed the non-core business lines of property management, automobile operation, etc. II. Main business analysis 1. Overview For the reporting period, the Company achieved operating revenues of RMB 1,619,227,300, operating profit of RMB 423,586,300, total profit of RMB 422,934,500 and net profit of RMB 300,840,600. The annual operating objectives were fulfilled. The Company specializes in real estate development, with taxi operation, property management, house leasing, etc. as its sidelines. In 2013, the revenues generated from the main business reached RMB 1,583,396,900; the costs in the main business stood at RMB 738,087,600; and gross profit of the main business reached RMB 845,309,300. 2. Revenues Major customers: 12 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total sales to the top 5 customers (RMB Yuan) 184,851,646.72 Ratio of the total sales to the top 5 customers to the 11.42% 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 Natural person 76,060,000.00 4.7% 2 Huawei Technologies Co., Ltd. 47,924,975.84 2.96% 3 Natural person 42,325,800.00 2.61% 4 Tianhong Shopping Plaza Co., Ltd. 9,616,787.88 0.59% 5 Natural person 8,924,083.00 0.55% Total -- 184,851,646.72 11.42% 3. Costs Classified by industry: Unit: RMB Yuan 2013 2012 Proportion in Proportion in Industry Item YoY +/- (%) Amount operating costs Amount operating costs (%) (%) Real estate 429,705,982.89 58.22% 529,936,876.93 63.55% -18.91% development Property leasing 249,763,782.57 33.84% 240,220,196.84 28.81% 3.97% and management Taxi operation 27,119,490.19 3.67% 36,881,838.97 4.42% -26.47% Catering service 24,408,368.58 3.31% 21,782,438.16 2.61% 12.06% Other 7,089,966.81 0.96% 5,070,407.54 0.61% 39.83% Total 738,087,591.04 100% 833,891,758.44 100% -11.49% 4. Expense YoY changes of the operating expenses, administrative expenses, financial expenses and income tax expenses: Jan.-Dec. 2013 (RMB Jan.-Dec. 2012 (RMB Item YoY +/-% Yuan) Yuan) Operating expenses 40,219,755.20 43,951,174.60 -8.49% Administrative expenses 109,662,479.90 109,680,547.70 -0.02% Financial expenses -6,334,701.69 -1,504,589.66 321.03% 13 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Income tax expenses 122,093,910.62 112,225,990.61 8.79% Note: The financial expenses for the reporting period and last year were both negative, i.e. gains, which increased mainly because last year, some interest on bank borrowings did not satisfy the capitalization conditions and was recognized as financial expenses. 5. R&D expenses Inapplicable 6. Cash flows Unit: RMB Yuan Item 2013 2012 YoY +/-(%) Subtotal of cash inflows from 1,094,310,185.61 2,164,869,117.40 -49.45% operating activities Subtotal of cash outflows from 983,885,855.51 1,359,154,920.02 -27.61% operating activities Net cash flows from operating 110,424,330.10 805,714,197.38 -86.29% activities Subtotal of cash inflows from 18,659,065.60 10,486,382.45 77.94% investing activities Subtotal of cash outflows from 12,696,883.02 4,327,597.65 193.39% investing activities Net cash flows from investing 5,962,182.58 6,158,784.80 -3.19% activities Subtotal of cash inflows from 461,243,352.00 186,000,000.00 147.98% financing activities Subtotal of cash outflows from 397,380,895.98 669,463,515.74 -40.64% financing activities Net cash flows from financing 63,862,456.02 -483,463,515.74 -113.21% activities Net increase in cash and cash 179,447,502.83 328,410,569.80 -45.36% equivalents Reasons for any over-30% YoY movement of the data above: √ Applicable □ Inapplicable ① Subtotal of cash inflows from operating activities decreased from last year mainly because the funds inflows from project sale decreased. ② Net cash flows from operating activities decreased from last year mainly because the funds inflows from project sale decreased. ③ Subtotal of cash inflows from investing activities increased from last year mainly because the cash received from asset disposal increased. 14 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. ④ Subtotal of cash outflows from investing activities increased from last year mainly because subsidiaries renewed more vehicles. ⑤ Subtotal of cash inflows from financing activities increased from last year mainly because the Company secured more borrowings. ⑥ Subtotal of cash outflows from financing activities decreased from last year mainly because loan repayments decreased. ⑦ Net cash flows from financing activities increased from last year mainly because the Company secured more borrowings and repaid less. ⑧ Net increase in cash and cash equivalents decreased from last year mainly because the funds inflows from project sale decreased. Reasons for a big difference between the operating cash flows and the net profit: √ Applicable □ Inapplicable Net cash flows from operating activities of the Company in the reporting period stood at RMB 110,424,330.10, representing a big difference with the net profit of RMB 300,840,563.81, which was mainly because the “cash received from sale of goods and rendering of services” in the cash flow statement was less than the corresponding “operating revenues” in the income statement due to the fact that some sales were made in previous years and met the settlement conditions in the reporting period. III. Breakdown of main business Unit: RMB Yuan Increase/decrease Increase/decrease Increase/decrease Operating Gross profit rate of operating of gross profit Operating cost of operating cost revenue (%) revenue over last rate over last year over last year (%) year (%) (%) Classified by industry: Real estate 1,175,698,776.00 429,705,982.89 63.45% -17.77% -18.91% 0.51% development Property leasing 314,335,156.29 249,763,782.57 20.54% 6.78% 3.97% 2.15% and management Taxi operation 58,366,214.95 27,119,490.19 53.54% -18.18% -26.47% 5.24% Catering service 28,424,750.75 24,408,368.58 14.13% 9.71% 12.06% -1.8% Other 6,571,956.46 7,089,966.81 -7.88% 12.64% 39.83% -20.98% Classified by product: Real estate 1,175,698,776.00 429,705,982.89 63.45% -17.77% -18.91% 0.51% development Property leasing 314,335,156.29 249,763,782.57 20.54% 6.78% 3.97% 2.15% and management Taxi operation 58,366,214.95 27,119,490.19 53.54% -18.18% -26.47% 5.24% 15 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Catering service 28,424,750.75 24,408,368.58 14.13% 9.71% 12.06% -1.8% Other 6,571,956.46 7,089,966.81 -7.88% 12.64% 39.83% -20.98% Classified by region: Shenzhen 1,426,001,069.12 605,546,055.42 57.54% -16.8% -17.43% 0.32% Other 157,395,785.33 132,541,535.62 15.79% 39.02% 31.85% 4.58% 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: □ Applicable √ Inapplicable IV. Asset and liability analysis 1. Major changes of asset items Unit: RMB Yuan As at 31 Dec. 2013 As at 31 Dec. 2012 Proportio Proportion in Proportio n change Explain any major change Amount total assets Amount n in total (%) (%) assets (%) Borrowings increased and repayments Monetary funds 977,171,814.20 25.23% 797,724,311.37 20.19% 5.04% decreased. Amounts due from house owners to Accounts 22,208,022.21 0.57% 20,584,008.68 0.52% 0.05% property management subsidiaries receivable increased. 2,101,399,879.9 Inventories 54.25% 2,300,674,551.14 58.23% -3.98% Project settlement 3 Investing real 273,314,623.03 7.06% 285,258,604.17 7.22% -0.16% Provisions for depreciation estate Long-term Cash bonuses received at the equity equity 78,414,131.22 2.02% 84,249,349.70 2.13% -0.11% method investment Fixed assets 75,301,015.72 1.94% 78,821,168.21 2% -0.06% Provisions for depreciation Construction in progress met the Construction in 0% 57,000.00 0% 0% settlement conditions and was progress transferred out. The pre-paid taxes and fares were Prepayments 35,904,799.33 0.93% 64,714,990.11 1.64% -0.71% transferred out due to project settlement. Intangible assets 106,945,090.07 2.76% 114,098,153.11 2.89% -0.13% Amortization 16 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Deferred Project advances met the settlement income tax 191,592,588.80 4.95% 194,507,824.50 4.92% 0.02% conditions and the deferred income tax assets assets on the expected profit decreased. 2. Major changes of liability items Unit: RMB Yuan 2013 2012 Proportio Proportion Proportion in n change Explain any major change Amount in total Amount total assets (%) assets (%) (%) Short-term 300,000,000.00 7.75% 360,000,000.00 9.11% -1.36% Mature ones were repaid. borrowings Long-term Project borrowings secured by 116,243,352.00 3% 19,316,666.64 0.49% 2.51% borrowings subsidiaries increased. Accounts payable 265,697,047.64 6.86% 298,525,752.32 7.56% -0.7% Some were settled as agreed. Advances 141,082,677.48 3.64% 678,075,291.01 17.16% -13.52% Project settlement received Taxes and fares Land VAT on the project income 865,513,058.59 22.35% 733,659,679.71 18.57% 3.78% payable increased. Other payables 123,967,110.64 3.2% 138,742,022.58 3.51% -0.31% Some were settled as agreed. Non-current Some long-term borrowings were liabilities due 67,009,888.28 1.73% 14,909,888.32 0.38% 1.35% transferred into this item. within 1 year Other non-current 139,138,400.76 3.59% 145,997,301.31 3.7% -0.1% Some were settled as agreed. liabilities V. Core competitiveness analysis In recent years, the Company has been expanding the real estate development scale, improving the management capability, enhancing cost control and upholding, as always, the philosophy where quality is the core. In 2013, the Company was honored as one of the “Top 500 Real Estate Developers of China for 2013”, the “Top 100 Real Estate Listed Companies of China for 2013”, the “Top 20 Real Estate Developers of Shenzhen”, etc. The Company keeps growing, with its operating results constantly hitting new highs. It has two well-located, low-land-cost and high-value projects in development in Shenzhen, a core city in China. It also has in-development projects with great potential in Xuzhou, Yangzhou and Dongguan, all major cities in the Yangtze River Delta or the Pearl River Delta. 17 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. In addition, development of the Company’s sidelines has stepped into a new level. In 2013, subordinate Guomao Tian’an Properties won the “Alibaba Taobao Town” project, representing a new management area about 300,000 square meters. In terms of the property management business, the Company gradually optimizes the existing projects on the basis of continuing to seek for more high-value new projects such as office buildings and industrial parks. As for the vehicle operation business, it proactively enhances management, increases the per-vehicle profitability and seeks for proper chances to expand the scale. The Company will, amid a complex and changeable environment in the industry, seize opportunities in a timely and accurate manner, improve lean management by promoting the “Real Estate Brochure”, etc., vigorously develop the main business of real estate, run the sidelines in a steady manner, and keep increasing its operating results and overall strength. VI. Investment analysis 1. Investments in equities of external parties (1) Equity-holdings in financial enterprises Naught (2) Securities investments Shareholdings in other listed companies: √ Applicable □ Inapplicable The Company’s Change of Initial shareholdin Gain/loss for Closing book owner’s equity Accounting Source of Stock code Stock abbr. investment g reporting value in the reporting title stock amount percentage period period in the investee 000509 S*STHS 2,962,500.00 0.33% 802,199.55 0.00 0.00 Purchasing Long-term legal person equity shares investment directionall y Total 2,962,500.00 - 802,199.55 0.00 0.00 18 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. During the reporting period, the Company was not involved in any wealth management entrustment, derivative investment or entrustment loan. 3. The Company did not raise funds in the reporting period; nor did the use of any funds raised before the reporting period last to the reporting period. 4. Analysis to main subsidiaries and stock-participating companies Main subsidiaries and stock-participating companies: Unit: RMB Yuan Comp Main Company Indu Registered Operating any products/s Total assets Net assets Operating profit Net profit name stry capital revenues variety ervices Shenzhen Huangche Real Subsid Sale of ng Real estat 30,000,000.00 1,657,661,262.76 532,994,758.41 621,799,190.17 191,432,701.49 142,531,687.11 iary houses Estate Co., e Ltd. SZPRD Real Real Estate Subsid Sale of estat 30,950,000.00 130,854,324.16 55,407,692.33 76,851,494.00 20,987,684.58 15,988,735.10 Developm iary houses e ent Co., Ltd. Real estat Shenzhen e Sale of Guomao and houses and Subsid Vehicle mot motor 29,850,000.00 657,892,737.07 201,857,102.75 523,791,521.47 185,170,461.75 138,758,893.86 iary Industry or transportat Co., Ltd. trans ion port ation Subsidiaries acquired or disposed during the reporting period: □ Applicable √ Inapplicable 5. Significant projects invested with non-raised funds Unit: RMB Ten Thousand Cumulative actual Total planned Project name Input for this period input as at the Project progress Project earnings investment period-end SZPRD-Langqiao 51,417 2,358.17 47,638.26 Completed ---- 19 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. International SZPRD-Banshanyuji ng (first and second 79,300 8,106.92 42,009.92 In construction ---- phases) SZPRD-Songhulang 68,711 4,770.68 28,116.93 In construction ---- yuan SZPRD-Jinling Holiday (previously 132.02 6,681.28 In preparation ---- land in Huanggang Port) SZPRD-Hupanyujin g (first and second 116,372 5,560.31 67,734.21 In construction ---- phases) SZPRD-Qianhai Bay (land in the Moon 155.82 27,376.9 In preparation ---- Bay) Total 315,800 21,083.92 219,557.5 -- -- Index when the relevant interim announcement was disclosed on the Naught designated website VII. Predict the operating results of Jan.-Mar. 2014 Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the next reporting period according to prediction, as well as explanations on the reasons: √ Applicable □ Inapplicable Prediction: Considerable decrease at the same direction Type of the predicted data: exact data Jan.-Mar. 2014 Jan.-Mar. 2013 +/- (%) Predicted accumulative net 3,000 23,636 Down 87.31% profit (RMB Ten thousand) Basic EPS (RMB Yuan/share) 0.0503 0.3966 Down 87.31% Reason for the considerable fluctuation of the business results: The “SZPRD-Caitianyise” Project satisfied the conditions for carrying over into income in Jan.-Mar. 2013. The part that could be carried over into income was all settled in that period, resulting in a considerable decrease in the Explanation about the total available-for-settlement area in Jan.-Mar. 2014. The aforesaid estimate is just preliminary predictions measurement given by the Company according to the current sales situation of real estate projects. Investors are kindly reminded to be noted that the actual earnings of the Company for Jan.-Mar. 2014 shall be subject to data disclosed in the Company’s report for the first quarter of 2014. 20 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. VIII. Entities controlled by the Company for special purposes For details, see “Section X. Financial Report; VI. Business combination; 2. Events”. IX. Outlook of the Company’s future development 1. Views about the macro economy and countermeasures against risks (1) Market risks Establishing a market-oriented long-effective mechanism is expected to be the core of the real estate macro-control in 2014. The nationwide dealing of commodity houses and land at the beginning of 2014 indicates further polarization among real estate markets of cities at different tiers, and there are great uncertainties in the markets in the near future. In view of that, the Company will continue to study market trends in an in-depth manner; improve its predictions about the market situation, particularly the detailed analysis on the project regions; adjust the project development and marketing strategies in time according to market changes; and try its best to avoid the unfavorable impact brought by market risks. (2) Operation risks The beginning of 2014 has witnessed inactive house trading and active land trading in China. Specific policies of the macro-control “long-effective mechanism” wait to be implemented and it’s hard to tell their influence on the market. All these have made it more difficult to make arrangements for development projects, especially those outside Shenzhen. In view of that, the Company will continue to improve its operation and management capability, perfect the operation and management system, strictly follow the “Real Estate Brochure”, enhance standardization and effectiveness in operation and management planning, urge in time the accomplishment of tasks according to the actual situation, accelerate progress of real estate projects and increase the project operation efficiency. (3) Financial risks The house mortgage policy is expected to continue to tighten in 2014. The down payment ratio for a second house has risen to 70%. Many banks have cancelled preferential loan interest rates and brought up the benchmark interest rates to a great extent. Some banks even stop lending money to real estate developers, which directly affects project sale and funds inflows of the latter. Meanwhile, banks become stricter with real estate financing projects. Real estate developers still face the old problems of high financing costs, few financing channels, slow arrival of bank loans, etc. In view of that, the Company will, as always, enhance financial management, strictly control financial risks, make proper arrangements for sales inflows and investment in project development, perfect the pre-caution mechanism, to detect and solve various financial risks in time and ensure the security of the capital chain. It will also proactively explore financing channels, activate existing assets, secure more capital support and make the best use of capital. 2. Plans for 2014 (1) We will strictly follow the “Real Estate Brochure” and improve our management capability. The “Real Estate Brochure” has been promulgated. And complete organization management, operation management and process management mechanisms have taken shape. In the future, we will continue to strictly follow the “Real Estate Brochure” in project development, improve the management means, increase the project operation efficiency, speed up real estate development and ensure that the projects proceed as scheduled. (2) We will increase our land reserve properly. In 2014, we will continue to activate the existing land resources. With close attention to the land market in 2013, we will follow up proper land parcels in the centers of major cities in rich areas such as the Pearl River Delta and the Yangtze River Delta; work on information collection and 21 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. advance researches regarding the land markets in the target areas; and explore land acquisition channels, so as to make a quality land reserve and solidify the basis for future development. (3) We will proactively push forward the brand strategy and improve our company image. Carrying out in-depth researches and analysis on markets, taking into account the characteristics of the industry and learning from the mature experience from model enterprises such as Vanke and Shenzhen Zhenye Group, we will proactively push forward the brand strategy, focus on high-end buildings in promotion, show our spirit and make SZPRD a more famous brand in the market. X. Explanation by the Board of Directors and the Supervisory Committee about the “non-standard audit report” issued by the CPAs firm for the reporting period N/A XI. Explain any change of the accounting policies, the accounting estimates and the accounting methods when compared to the financial report for last year Unchanged XII. Explain if any major correction of accounting errors occurred in the reporting period and for that retroactive restatement was needed See “Item 34”, “IV. Main Accounting Policies, Estimates & Errors”, “Section X. Financial Report” in this report. XIII. Explanation of the changes of the consolidated statement scale compared to the last financial report Unchanged XIV. Profit allocation and dividend payout Formulation, execution or adjustment of the Company’s profit allocation policy, especially the cash dividend policy, during the reporting period: □ Applicable √ Inapplicable The Company’s preplans or plans for profit allocation 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 2013 A cash dividend of RMB 2.00 (tax included) for every 10 shares, and no shift from capital reserve to share capital 2012 The Company did not allocate profit or turn capital reserve into share capital. 2011 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 Year Amount of cash dividend Net profit attributable to Ratio in net profit attributable to 22 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (tax included) shareholders of listed shareholders of listed companies under the companies under the consolidated statement in the consolidated statement (%) year 2013 119,195,818.40 300,840,563.81 39.62% 2012 0.00 375,422,129.64 0% 2011 0.00 261,108,340.62 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 XV. Pre-plan for profit allocation and turning capital reserve into share capital for the reporting period Bonus shares for every 10 shares (share) 0 Dividend for every 10 shares (RMB Yuan) (tax 2.00 included) Total shares as the basis for the allocation preplan 595,979,092 (share) Total cash dividends (RMB Yuan) (tax included) 119,195,818.40 Distributable profit (RMB Yuan) 972,271,884.95 Percentage of the cash dividends in the total 100% distributed profit (%) Cash dividend policy: If the Company is in a mature development stage and has no plans for any significant expenditure, in profit allocation, the ratio of cash dividends in the profit allocation shall be 80% or above. Details about the pre-plan for profit allocation and turning capital reserve into share capital According to the Company’s Articles of Association, as well as the actual situation of its development and operation, the pre-plan of the Company for 2013 annual profit allocation was as follows: Based on the total 595,979,092 shares of the Company as at 31 Dec. 2013, a cash dividend of RMB 2.00 (tax included) will be distributed for every 10 shares held by shareholders, with the total cash dividends to be distributed amounting to RMB 119,195,818.40. No capital reserve will be turned into share capital. XVI. Social responsibilities We have been carrying out our social responsibilities in a proactive way and showing our love towards the society. We have taken part in the activities to help employees in economic difficulty as a municipal state-owned enterprise for a row of six years. We try our best to help people in severe poverty and with major diseases to support philanthropy. Employees of the motor subordinate have visited cerebral palsy children for quite a few times and brought gifts and money to their parents. In addition, during the National University Entrance Exam, 23 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. over 180 of our taxies escorted over 1,500 students and their family. Our efforts in charity have won extensive compliments from the society. The Party Committee of the Group has organized over 50 communist and non-communist volunteers to help clean up communities and give environment protection lectures in communities. And these volunteers have offered service of over 300 hours to over 200 people in the communities. The Party Committee of the Group has also organized the communists in the Company to take part in blood donation, to which the employees respond enthusiastically. Does the listed company or any of its subsidiaries belong to the heavily polluting industries stipulated by the environmental protection authorities of the country? □ Yes √ No □ Inapplicable Does the listed company or any of its subsidiaries have any other significant social security problems? □ Yes √ No □ Inapplicable Any administrative punishment during the reporting period? □ Yes √ No □ Inapplicable XVII. 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 Investor interaction platform of About the Company’s land 8 Jan. 2013 Other Individual Investor Shenzhen Stock in Qianhai Exchange Investor interaction Could the Company benefit platform of 23 Jan. 2013 Other Individual Investor from the land reform of Shenzhen Stock Shenzhen? Exchange Investor interaction platform of About the Company’s land 24 Jan. 2013 Other Individual Investor Shenzhen Stock reserve Exchange BOD Office of the About the Company’s 20 Mar. 2013 By phone Individual Investor Company projects About the Company’s BOD Office of the 2 Apr. 2013 By phone Individual Investor market expansion plan and Company progress 24 Apr. 2013 Investor interaction Other Individual Investor About the Company’s 24 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. platform of B-shares Shenzhen Stock Exchange Investor interaction About the financial platform of 26 Apr. 2013 Other Individual Investor expenses disclosed in the Shenzhen Stock 2012 Annual Report Exchange Investor interaction About the sales income platform of 26 Apr. 2013 Other Individual Investor from projects in the first Shenzhen Stock quarter of 2013 Exchange Investor interaction platform of About the Langqiao 7 May 2013 Other Individual Investor Shenzhen Stock Residence project Exchange Investor interaction platform of 30 May 2013 Other Individual Investor About cash dividends Shenzhen Stock Exchange Investor interaction About the Company’s land platform of 9 Jul. 2013 Other Individual Investor in Qianhai and interim Shenzhen Stock dividend plan Exchange Investor interaction platform of Basic information about the 17 Jul. 2013 Other Individual Investor Shenzhen Stock Company Exchange Investor interaction platform of About the predicted 3 Aug. 2013 Other Individual Investor Shenzhen Stock business results Exchange Investor interaction Sale of the existing projects platform of 9 Aug. 2013 Other Individual Investor and progress of the projects Shenzhen Stock in construction Exchange Investor interaction platform of The Company’s projects in 5 Sept. 2013 Other Individual Investor Shenzhen Stock Xuzhou and Dongguan Exchange Online Q&A 13 Sept. 2013 Other Individual Investor Daily operation organized by CSRC 25 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen Could the Company benefit BOD Office of the 23 Sept. 2013 By phone Individual Investor from the Qianhai-related Company policy? About the Company’s BOD Office of the 25 Sept. 2013 By phone Individual Investor market expansion plan and Company focuses Investor interaction platform of About the Company’s land 11 Oct. 2013 Other Individual Investor Shenzhen Stock in Qianhai Exchange Investor interaction platform of The Company’s projects on 18 Nov. 2013 Other Individual Investor Shenzhen Stock sale and land reserve Exchange Investor interaction The Company’s land in platform of 18 Nov. 2013 Other Individual Investor Ting Kau, Hong Kong and Shenzhen Stock taxi license Exchange Investor interaction The Jinling Holiday project platform of 20 Nov. 2013 Other Individual Investor and the Langqiao Shenzhen Stock International project Exchange Investor interaction platform of Settlement of projects in the 22 Nov. 2013 Other Individual Investor Shenzhen Stock fourth quarter Exchange 26 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section V. Significant Events I. Significant lawsuits or arbitrations □ Applicable √ Inapplicable There was no significant lawsuit or arbitration during the reporting period. II. Media’s queries □ Applicable √ Inapplicable There was no media’s query during in the reporting period. III. Bankruptcy and reorganization Inapplicable IV. Asset transactions 1. Acquisition of assets Inapplicable 2. Sale of assets Inapplicable 3. Business combination Inapplicable VI. Implementation of equity incentive and its influence Inapplicable VII. Significant related-party transactions 1. Related-party transactions concerning routine operation Naught in the reporting period 2. Related-party transactions arising from asset acquisition or sale Naught in the reporting period 27 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 3. Significant related-party transactions arising from joint investment in external parties Naught in the reporting period 4. 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) Creditor’s The Company rights Anhui Nanpeng Working held a 30% receivable No 765 -36 729 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 235 0 235 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 0 175 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 0 91 Co., Ltd. funds company of from the the Company related party Creditor’s Controlling rights Shenzhen Investment Intra-Group shareholder of receivable No 42 199 241 Holdings Co., Ltd. funds the Company from the related party Creditor’s Joint venture SZPRD Jifa rights Intra-Group of the No 1,955 400 2,355 Warehouse Co., Ltd receivable funds Company from the 28 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. related party Creditor’s Shenzhen Tian’an Joint venture rights International Building Intra-Group of the receivable No 150 261 411 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 0 funds Co., Ltd Company from the related party Creditor’s Entrustment Controlling rights borrowings Shenzhen Investment shareholder of receivable and No 24,000 52 24,052 Holdings Co., Ltd. the Company from the intra-Group related party funds 5. Other significant related-party transactions Naught in the reporting period VIII. Significant contracts and their execution 1. Trusteeship, contracting and leasing (1)Trusteeship Naught in the reporting period Any trusteeship event with an over-10% influence on the total profit of the Company for the reporting period: □ Applicable √ Inapplicable (2)Contracting Naught in the reporting period Any contracting event with an over-10% influence on the total profit of the Company for the reporting period: □ Applicable √ Inapplicable (3)Leasing Naught in the reporting period Any leasing event with an over-10% influence on the total profit of the Company for the reporting period: □ Applicable √ Inapplicable 29 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Guarantees provided by the Company Unit: RMB Ten Thousand Guarantees provided by the Company for external parties (excluding those for subsidiaries) Disclosure Guarante Actual date of Actual e for a Amount for occurrence date Type of Period of Executed Guaranteed party relevant guarantee related guarantee (date of guarantee guarantee or not announcem amount party or agreement) ent not Shenzhen Guomao 23 May Vehicle Industry Co., 2,600 11 Jan. 2012 1,565 Pledge 3 years No No 2011 Ltd. Joint-liability Shenzhen Guomao 21 Apr. 4,000 17 Apr. 2013 4,000 guarantee; 1 year No No Car Rental Co., Ltd. 2012 pledge Total external guarantee line Total actual occurred amount approved during the reporting 0 of external guarantee during 4,000 period (A1) the reporting period (A2) Total external guarantee line that Total actual external guarantee has been approved at the end of 6,600 balance at the end of the 5,565 the reporting period (A3) reporting period (A4) Guarantees provided by the Company for its subsidiaries Disclosure Guarante Actual date of Actual e for a Amount for occurrence date Type of Period of Executed Guaranteed party relevant guarantee related guarantee (date of guarantee guarantee or not announcem amount party or agreement)) ent not Shenzhen Guomao 21 Apr. Vehicle Industry Co., 2,000 8 Apr. 2013 2,000 Pledge 1 year No No 2012 Ltd. Dongguan Guomao Joint-liability Changsheng Real 21 Apr. 44,000 11 Jan. 2013 6,124 guarantee; 3 years No No Estate Development 2012 pledge Co., Ltd. SZPRD Yangzhou Real Estate 21 Apr. Joint-liability 15,000 27 Jun. 2013 10,000 2 years No No Development Co., 2012 guarantee Ltd. Total guarantee line approved for Total actual occurred amount the subsidiaries during the 75,000 of guarantee for the 18,124 reporting period (B1) subsidiaries during the 30 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. reporting period (B2) Total guarantee line that has been Total actual guarantee balance approved for the subsidiaries at 179,000 for the subsidiaries at the end 18,124 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 75,000 of guarantee during the 22,124 (A1+B1) reporting period (A2+B2) Total guarantee line that has been Total actual guarantee balance approved at the end of the 185,600 at the end of the reporting 23,689 reporting period (A3+B3) period (A4+B4) Proportion of total guarantee amount (A4+B4) to the net assets 13.14% 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 23,689 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) 23,689 The Company provided a total guarantee amount of RMB 236.89 million to external parties, including a guarantee amount of RMB 181.24 million provided by the Company for its subsidiaries and a guarantee amount of RMB 55.65 million provided by subsidiaries Explanation on possible bearing joint responsibility of to subsidiaries. Neither the Company nor its subsidiaries provided liquidation due to immature guarantee (if any) 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 (if any) (1) Illegal provision of guarantees for external parties Naught in the reporting period 31 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 3. Other significant contracts Naught in the reporting period 4. Other significant transactions Inapplicable IX. Fulfillment of commitments 1. Commitments made by the Company or shareholders holding over 5% of the Company’s shares in the reporting period, or such commitments carried down into the reporting period Naught 2. If earnings from any of the Company’s assets or projects are expected to occur during a period and the report period is within that period, explain whether the asset or project reaches the expected earnings or not, as well as the reasons Inapplicable X. Particulars about engagement and disengagement of CPAs firm CPAs firm engaged at present Name of the domestic the CPAs firm Union Power Certified Public Accounts LLP Fee for the domestic the CPAs firm (RMB Ten 52 thousand) Consecutive years of the audit services provided by 12 the domestic CPAs firm Names of the certified public accountants from the Wang Yu, Fan Guiming CPAs firm CPAs firm changed? □ Yes √ No Any CPAs firm, financial accountant or sponsor engaged for the audit of internal control: √ Applicable □ Inapplicable In the reporting period, the Company engaged Union Power Certified Public Accounts LLP for its internal control audit and paid an internal control audit fee of RMB 230,000 to it for the year. 32 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. XI. Explanation of the Supervisory Committee and independent directors (if applicable) on the “Non-standard Audit Report” issued by the CPAs firm during the reporting period Inapplicable XII. Punishment and rectification Rectification □ Applicable √ Inapplicable Was any director, supervisor, senior management or shareholder holding more than 5% shares of the Company suspected of trading the Company’s shares in violation of regulations, and the Company had announced the call-in of such illegal gains? □ Applicable √ Inapplicable XIII. Possibility of listing suspension and termination after disclosure of this annual report Inapplicable XIV. Other significant events Inapplicable XV. Significant events regarding subsidiaries Inapplicable XVI. Issue of corporate bonds Inapplicable 33 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section VI. Change in Shares & Shareholders I. Changes in shares Unit: share Before the change Increase/decrease (+, -) After the change Capitaliz Bonu New ation of Number of Proportion s Number of Proporti shares public Other Subtotal shares (%) share shares on (%) issued reserve s fund I. Restricted shares 382,438,579 64.17% -29,877,541 -29,877,541 352,561,038 59.16% 2. Share held by 380,365,944 63.82% -29,786,001 -29,786,001 350,579,943 58.82% state-owned corporations 3. Shares held by other 2,072,635 0.35% -91,540 -91,540 1,981,095 0.33% domestic investors Among which: shares held 2,072,635 0.35% -141,355 -141,355 1,931,280 0.32% by domestic corporations Shares held by domestic natural 0 0% 49,815 49,815 49,815 0.01% persons II. Non-restricted shares 213,540,513 35.83% 29,877,541 29,877,541 243,418,054 40.84% 1. RMB ordinary shares 145,935,270 24.49% 29,877,541 29,877,541 175,812,811 29.5% 2. Domestically listed 67,605,243 11.34% 0 67,605,243 11.34% foreign shares III. Total number of shares 595,979,092 100% 595,979,092 100% Reason for the change in shares √ Applicable □ Inapplicable (I) Explanation about the increase/decrease in the reporting period of “I. Restricted shares”: (1) The shares held by state-owned corporations decreased by 29,786,001 because: According to the commitment of the Company’s controlling shareholder Shenzhen Investment Holdings Co., Ltd. (“SIHC”) on unlocking restricted shares, 5% shares of the Company (29,798,954 shares) held by Shenzhen Construction Investment Holdings Corporation (“SCIHC”) became non-restricted on 24 Jan. 2013. For details, see the “Suggestive Announcement on Unlocking Restricted Shares” disclosed on 22 Jan. 2013. As such, the shares held by state-owned corporations decreased by 29,798,954 shares. In 2013, Shenzhen Nanyue Investment & Development Co., Ltd. and natural person Yang Fuze (both former restricted share holders) repaid 7,928 and 5,025 shares respectively (a total of 12,953 shares) which had been paid by SIHC on behalf of them in the share reform. The unlocking formalities for these shares were not yet completed. For details, see the “Suggestive 34 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Announcement on Unlocking Restricted Shares” disclosed on 12 Sept. 2013 and 6 Jan. 2014 respectively. As such, the shares held by state-owned corporations decreased by 29,786,001 shares in total. Up to the end of the reporting period, the total restricted floating shares of the Company stood at 352,561,038 shares and the non-restricted floating shares at 243,418,054 shares. (2) The shares held by other domestic investors decreased by 91,540 shares because: Former restricted share holder Shenzhen Nanyue Investment & Development Co., Ltd. (formerly holding 86,515 shares) accumulatively repaid on 2 Jul. 2013 the 7,928 shares which had been paid on behalf of it in the share reform, and the remaining 78,587 shares were unlocked on 16 Sept. 2013. For details, see the “Suggestive Announcement on Unlocking Restricted Shares” disclosed on 12 Sept. 2013. The total 51,840 shares of the Company held by former restricted share holder Shenzhen Longgang Changsheng Industrial Co., Ltd. were frozen and auctioned as a judicial procedure. Natural person Yang Fuze obtained these shares in the auction and the transfer formalities were completed in Jul. 2013. Later, Yang Fuze went through the unlocking formalities for these shares and accumulatively repaid in Nov. 2013 the 5,025 shares which had been paid by SIHC on behalf of the former shareholder. For details, see the “Suggestive Announcement on Unlocking Restricted Shares” disclosed on 6 Jan. 2014. Up to 31 Dec. 2013, the 49,815 shares held by Yang Fuze were still locked up. As such, the shares held by domestic corporations decreased by 141,355 shares, the shares held by domestic natural persons increased by 49,815 shares, and the shares held by other domestic investors decreased by 91,540 shares in total. (II) Explanation about the increase/decrease in the reporting period of “I. Non-restricted shares”: According to the commitment of the Company’s controlling shareholder Shenzhen Investment Holdings Co., Ltd. (“SIHC”) on unlocking restricted shares, 5% shares of the Company (29,798,954 shares) held by Shenzhen Construction Investment Holdings Corporation (“SCIHC”) became non-restricted on 24 Jan. 2013. For details, see the “Suggestive Announcement on Unlocking Restricted Shares” disclosed on 22 Jan. 2013. The 79,587 restricted shares held by former restricted share holder Shenzhen Nanyue Investment & Development Co., Ltd. were unlocked on 16 Sept. 2013. For details, see the “Suggestive Announcement on Unlocking Restricted Shares” disclosed on 12 Sept. 2013. As such, the non-restricted floating shares increased by 29,877,541 shares in total. (III) Subsequent events The total 51,840 shares of the Company held by former restricted share holder Shenzhen Longgang Changsheng Industrial Co., Ltd. were frozen and auctioned as a judicial procedure. Natural person Yang Fuze obtained these shares in the auction and the transfer formalities were completed in Jul. 2013. Later, Yang Fuze went through the unlocking formalities for these shares and accumulatively repaid in Nov. 2013 the 5,025 shares which had been paid by SIHC on behalf of the former shareholder. On 8 Jan. 2014, the 49,815 shares of the Company held by Yang Fuze became tradable. For details, see the “Suggestive Announcement on Unlocking Restricted Shares” disclosed on 6 Jan. 2014. Approval of the change in shares □ Applicable √ Inapplicable Transfer of share ownership √ Applicable □ Inapplicable The total 51,840 shares of the Company held by former restricted share holder Shenzhen Longgang Changsheng Industrial Co., Ltd. were frozen and auctioned as a judicial procedure. Natural person Yang Fuze obtained these shares in the auction and the transfer formalities were completed in Jul. 2013. The Shenzhen branch of China Securities Depository and Clearing Co., Ltd. issued the “Securities Transfer Confirmation” for him. 35 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes over the last year and last period □ Applicable √ Inapplicable Other contents that the Company considered necessary or were required by the securities regulatory authorities to disclose □ Applicable √ Inapplicable II. Issuance and listing of securities 1. Securities issued in the three years ended 31 Dec. 2013 In the three years ended 31 Dec. 2013, the Company did not issue any shares, convertible corporate bonds, warrant bonds, corporate bonds or other derivative securities. 2. Changes in total shares of the Company and the shareholder structure, as well as the asset and liability structures In the reporting period, the total shares and the share capital structure of the Company remained the same, which thus caused no change of its asset and liability structures. 3. Existing shares held by the staff of the Company Naught III. Shareholders and actual controller 1. Total number of shareholders and their shareholdings Unit: share Total number of shareholders at the Total number of shareholders on the fifth trading 44,931 44067 end of the reporting period day before the disclosure date of the annual report Particulars about shares held by shareholders with a shareholding percentage over 5% or by the top ten shareholders holding shares Increase/d Pledged or frozen shares Shareholdi Number of Total shares ecrease Number of Name of Nature of ng non-restrict held at the during the restricted Status of shareholder shareholder percentage ed shares Number of shares period-end reporting shares held shares (%) held period SHENZHEN CONSTRUCTIO State-owned 54.33% 323,796,324 293,997,370 29,798,954 0 N corporation INVESTMENT 36 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. HOLDINGS CORPORATION SHENZHEN INVESTMENT State-owned 9.49% 56,582,573 56,582,573 0 0 MANAGEMENT corporation CORPORATION SHENZHEN GUOMAO State-owned PROPERTY 0.32% 1,881,841 1,881,841 0 corporation MANAGERME NT CO., LTD. SHENZHEN DUTY-FREE Domestic COMMODITY non-state-own 0.29% 1,730,300 1,730,300 0 ENTERPRISES ed corporation CO., LTD. Domestic LONG KEYI 0.19% 1,102,600 1,102,600 0 natural person Domestic CHEN LIYING 0.17% 1,036,051 1,036,051 0 natural person Domestic LIU YUNDE 0.17% 1,001,300 1,001,300 0 natural person Domestic ZHANG HUI 0.17% 1,000,000 1,000,000 0 natural person GUOTAI JUNAN Foreign SECURITIES 0.16% 975,000 975,000 0 corporation (HONGKONG)L IMITED HONG Domestic 0.14% 850,019 850,019 0 GENGDONG natural person Strategic investor or general corporation becoming a top ten Naught shareholder due to placing of new shares (if any) (see Note 3) Explanation on associated The first and second principal shareholders of the Company are managed by Shenzhen Investment relationship or/and persons acting Holding Corporation, the actual controlling shareholder of the Company. The third principal in concert among the shareholder is a wholly-funded subsidiary of the Company. And the Company does not know above-mentioned shareholders: whether there are related parties or acting-in-concert parties among the other 7 shareholders. Particulars about shares held by the top ten non-restricted share holders 37 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Type of shares Name of shareholder Number of non-restricted shares held at the period-end Type of shares Number SHENZHEN CONSTRUCTION RMB ordinary INVESTMENT HOLDINGS 29,798,954 29,798,954 shares CORPORATION SHENZHEN GUOMAO RMB ordinary PROPERTY MANAGERMENT 1,881,841 1,881,841 shares CO., LTD. RMB ordinary LONG KEYI 1,102,600 1,102,600 shares Domestically CHEN LIYING 1,036,051 listed foreign 1,036,051 shares RMB ordinary LIU YUNDE 1,001,300 1,001,300 shares RMB ordinary ZHANG HUI 1,000,000 1,000,000 shares Domestically GUOTAI JUNAN SECURITIES 975,000 listed foreign 975,000 (HONGKONG)LIMITED shares RMB ordinary HONG GENGDONG 850,019 850,019 shares RMB ordinary ZHONG LAIQUN 732,700 732,700 shares RMB ordinary LU YANHONG 663,400 663,400 shares Explanation on associated The first and second principal shareholders of the Company are managed by Shenzhen relationship or/and persons acting in Investment Holding Corporation, the actual controlling shareholder of the Company. The third concert among the top ten tradable principal shareholder is a wholly-funded subsidiary of the Company. And the Company does shareholders and between the top ten not know whether there are related parties or acting-in-concert parties among the other 7 tradable shareholders and the top ten shareholders. shareholders Explanation on the ten top shareholders participating in the Naught margin trading business (if any) (note 4) Did any shareholder of the Company conduct any promissory repo during the reporting period? □ Yea √ No 2. Particulars about controlling shareholders 38 2013 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. Shenzhen Investment Holdings Corporation was a wholly state-owned limited liability company established on the basis of the original three Shenzhen state-owned assets management companies, and was a municipal state-owned assets management company operating mainly on the business such as property management, capital operation, investment and financing, with the registered capital of RMB 7 billion. The main function of the Company was according to the execution of the obligation of the contributor of the municipal stated-owned enterprises granted by the Municipal State-owned Assets Supervision and Administration Commission; acted as the integrated disposal platform of reform and adjust the stripping assets of Shenzhen state-owned enterprises and administrative institution; responsible for the loans guarantee business of the municipal state-owned enterprises; engaged in the real estate development business in the scale of acquired the land use right legally; executed policy and strategic investment according to the requirements of the Municipal State-owned Assets Supervision and Administration Commission. 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 Changes on the actual controller during the reporting period □ Applicable √ Inapplicable Block diagram of property rights and control relationship between the Company and the actual controller The actual controller controlled the Company by entrustment or other assets management methods 39 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. □ Applicable √ Inapplicable 4. Other institutional shareholders owning over 10% shares During the reporting period, there existed no other institutional shareholders owning over 10% (including 10%) shares. IV. Explanation on shareholding increase scheme during the reporting period proposed or implemented by the principal shareholders and act-in-concert persons There was no any shareholding increase scheme during the reporting period proposed or implemented by the principal shareholders and act-in-concert persons. 40 2013 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 Sep. 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 Nov. 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 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 Dec. 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 41 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Apr. 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 Jianxin, was born in Sep. 1954, University Degree, member of Communist Party of China. He graduated from Zhongnan University of Economics and Law in 1978; Once held the post in Wuhan Bureau of Statistics; Engaged in the scientific research in Hubei Academy of Social Sciences, Institute of Economics in 1980; Acted as Deputy Director of Hubei Academy of Social Sciences, Institute of Agricultural Economics in 1988; Acted as Standing Deputy Director, Associate Professor and Postgraduate Tutor in 1992; Transferred into Shenzhen Newrand Securities Investment Consulting Co., Ltd. and acted as Marketing Manager in 1995; Transferred into Shenzhen Academy of Social Sciences in 1996, and had served successively as Deputy Director, Director, Associate Professor in Institute of Economics. He acted as Independent Director of Shenzhen Kondarl (Group) Co., Ltd. from 2001 to 2006; Acted as Independent Director of Shenzhen Tagen Group Co., Ltd. from 2003 to 2009; Acted as Independent Director of Shenzhen Kondarl (Group) Co., Ltd. from 2009 to present. He recently acted as Chairman and Associate Professor in Shenzhen Academy of Social Sciences, Center of Open Economics, and 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. 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 42 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 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. 43 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Particulars about employers in the shareholders’ companies √ Applicable □ Inapplicable Whether receiving subsidies and Name of Posts held in shareholders’ Name of shareholders’ companies remuneration in shareholders’ employers companies companies Minister of Enterprise First Wen Li Shenzhen Investment Holdings Co., Ltd. Yes Department Vice-minister of Legal Guo Liwei Shenzhen Investment Holdings Co., Ltd. Yes Department Zhang Shilei Shenzhen Investment Holdings Co., Ltd. Deputy Director of the Office Yes Vice-minister of Audit Wang Xiuyan Shenzhen Investment Holdings Co., Ltd. Yes Department Particulars about employers in other companies √ Applicable □ Inapplicable Name of Whether receiving subsidies and Name of other companies Posts held in other employers remuneration in other companies companies Li Jianxin Shenzhen Academy of Social Sciences Research scholar Yes College of Economics and Management of Zha Zhenxiang Dean Yes Shenzhen Polytechnic Dong Zhiguang Shenzhen Osgate Trading Co., Ltd. Chairman of the Board Yes III. Remuneration of directors, supervisors, senior executives and staff During the reporting period, the board and the management of the Company signed statement of operation objectives responsibility for 2013, 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 assessment of the board. Remuneration of directors, supervisors, senior executives during the reporting period Unit: RMB Yuan Total amount Total amount Actual of of remuneration Incumbent or remuneration Name Post Gender Age remuneration till the end of not received from received from the reporting the the Company period shareholders’ 44 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. companies Chairman of Chen Yugang Male 57 Incumbent 875,750 0 875,750 the board Director, Wei Zhi General Male 57 Incumbent 844,300 0 844,300 Manager Director, Liu Guangxin Chairman of Male 56 Incumbent 826,125 0 826,125 Labor Union Gong Sixin Director, CFO Male 46 Incumbent 447,800 0 447,800 Paid by the Paid by the Wen Li Director Female 45 Incumbent 0 control control shareholders shareholders Paid by the Paid by the Guo Liwei Director Male 41 Incumbent 0 control control shareholders shareholders Independent Lian Jianxin Male 60 Incumbent 60,000 0 60,000 Director Independent Zha Zhenxiang Male 59 Incumbent 80,000 0 80,000 director Independent Dong Zhiguang Male 57 Incumbent 80,000 0 80,000 director Independent Li Xiaofan Male 61 Left 20,000 0 20,000 director Chairman of Dai Xianhua the supervisory Male 52 Incumbent 427,800 0 427,800 committee Paid by the Paid by the Zhang Shilei Supervisor Male 36 Incumbent 0 control control shareholders shareholders Paid by the Paid by the Wang Xiuyan Supervisor Female 52 Incumbent 0 control control shareholders shareholders Supervisor、 manager of Wang Qiuping development Female 44 Incumbent 337,250 0 337,250 management department Supervisor、 Zhang Gejian Male 39 Incumbent 336,750 0 336,750 manager of 45 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. audit department Vice general manager, Wang Hangjun financial Male 48 Incumbent 826,125 0 826,125 employee in charge Vice general Li Zipeng Male 48 Incumbent 790,500 0 790,500 manager Vice general manager, Fan Weiping Male 49 Incumbent 826,125 0 826,125 secretary of the board Total -- -- -- -- 6,778,525 0 6,778,525 Particulars about equity incentive granted to directors, supervisors, senior executives during the reporting period □ Applicable √ Inapplicable IV. Changes on directors, supervisors and senior executives of the Company Name Position Type Date Reason Independent Left as the term Li Xiaofan 29 Mar. 2013 Term of service expired Director expired Director Li Xiaofan expired of his service term and Independent Li Jianxin Elected 29 Mar. 2013 Mr. Li Jianxin was nominated as newly Director Independent Director. V. Changes on the core technical team or key technical staff of the reporting period (except for directors, supervisors and senior executives) N/A. VI. Particulars about employees The Company has totally 3110 employees in office at present, including 1956 production personnel, 185 salespersons, 670 technicians, 110 financial personnel and 189 administrative personnel. 1420 persons graduated from technical secondary school and college or above. At present, the Company needs to bear the expenses of 200 retirees. 46 2013 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. 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. 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. II. Particulars about annual shareholders’ general meetings and temporary shareholders’ meetings during the reporting period 47 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 1. Particulars about annual shareholders’ general meetings during the reporting period Date of holding the Name of proposal on Name of meeting Result of resolution Date of disclosure Index for disclosure meeting the meeting 2012 Annual Work Approval 23 Apr. 2013 www.cninfo.com.cn Report of the Board 2012 Annual Work Report of the Approval 23 Apr. 2013 www.cninfo.com.cn Supervisory Committee 2012 Annual Report on Financial Approval 23 Apr. 2013 www.cninfo.com.cn Statement 2013 Annual Report Approval 23 Apr. 2013 www.cninfo.com.cn on Financial Budget 2012 Annual Report Approval 23 Apr. 2013 www.cninfo.com.cn Proposal on Profit Distribution and Transfer of Capital Approval 23 Apr. 2013 www.cninfo.com.cn Reserve to Common 2012 Annual Shares for 2012 Shareholders’ 23 Apr. 2013 General Meeting Proposal on Further Employment of Approval 23 Apr. 2013 www.cninfo.com.cn Accounting Firm Proposal on Loans and Guarantee Loans Approval 23 Apr. 2013 www.cninfo.com.cn of subsidiaries Proposal on Nominating Candidates for Approval 23 Apr. 2013 www.cninfo.com.cn Independent Directors Proposal on Authorizing the Investment Approval 23 Apr. 2013 www.cninfo.com.cn Permission of the Board of Directors of the Company 48 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Particulars about temporary shareholders’ meetings during the reporting period There was no temporary shareholders’ meeting held during the reporting period. III. Execution of duty of independent directors during the reporting period 1. Attendance of independent directors in the board meetings and shareholders’ meetings Particulars about attendance of independent directors in board meetings Amount of Amount of Amount of Amount of Amount of Whether being meetings meetings meetings director meetings director meetings absent from Name of independent independent independent attended in the authorized independent board meetings director director need director attended means of others’ director was two times in attend this year in person communication attendance absent from succession Li Xiaofan 5 1 4 0 0 No Zha Zhenxiang 5 1 4 0 0 No Dong Zhiguang 5 1 4 0 0 No Amount of shareholders’ general meetings that independent directors 1 attended 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. 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. 1. Duty performance of strategic development and investment committee During the reporting period, strategic development and investment committee paid attention to authorization of 49 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. the board to project development and financing, kept good contact with the management and had a good knowledge of matters within their power. 2. 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. Li Jianxin as Independent Director of the Company, and put forward the Proposal on Recommending Mr. Li Jianxin as Independent Director of the Company. 3. 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. 4. Duty performance of audit committee During the reporting period, audit committee held on-the-spot working conference once, listened to report of Union Power CPAs on audit work, deliberate preliminary audit opinion issued by Union Power CPAs and proposed their opinions about 2013 Financial Statement of the Company. 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. 1. 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. 2. In aspect of personnel: The Company was complete independent from the controlling shareholder in terms of labor and personnel, management on remuneration. All Senior Executives drew the remuneration from the Company, and none held a post concurrently in shareholders’ company. Personnel of the Company are independent, all ones signed labor contract with the Company. The Company was independent from the shareholders or other related parties in personnel management, social security, salary etc. 3. 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. 4. 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. 5. In 50 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. Particulars about the horizontal competition Inapplicable. VIII. Assessment and incentive mechanisms for senior executives Within the reporting period, the annual operating target plan 2013 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. 51 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section IX. Internal Control I. Construction of internal control In 2013, 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 3-year establishment of system and mechanism, the Company has systematically perfected Risk Database, Internal Control Manual, and Internal Control Assessment Manual as well as improved the establishment of internal control constantly. 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. 2013 (base day). 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 52 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 report on 1 Apr. 2014 internal control Index for disclosure of whole article of self-assessment report on http://www.cninfo.com.cn internal control V. Audit report on internal control √ Applicable □ Inapplicable 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 1 Apr. 2014 of audit report on internal control Index for whole article of audit http://www.cninfo.com.cn 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. 53 2013 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 31 Mar. 2014 Name of the auditor’s report Union Power Certified Public Accountants Co., Ltd. Document No. of the auditor’s report ZHS Zi (2014) No. 010665 Name of the CPA Wang Yu, Fan Guiming 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. 2013, 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. 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. 2013 and their operating results and cash flows for the year then ended. 54 2013 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 977,171,814.20 797,724,311.37 Settlement reserves Intra-group lendings Transactional financial assets Notes receivable Accounts receivable 22,208,022.21 20,584,008.68 Accounts paid in advance 35,904,799.33 64,714,990.11 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserves Interest receivable Dividend receivable Other accounts receivable 7,919,365.82 6,371,689.34 Financial assets purchased under agreements to resell Inventories 2,101,399,879.93 2,300,674,551.14 Non-current assets due within 1 year Other current assets Total current assets 3,144,603,881.49 3,190,069,550.64 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 78,414,131.22 84,249,349.70 Investing property 273,314,623.03 285,258,604.17 55 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Fixed assets 75,301,015.72 78,821,168.21 Construction in progress 57,000.00 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 106,945,090.07 114,098,153.11 R&D expense Goodwill Long-term deferred expenses 3,081,383.99 3,644,288.40 Deferred income tax assets 191,592,588.80 194,507,824.50 Other non-current assets Total of non-current assets 728,648,832.83 760,636,388.09 Total assets 3,873,252,714.32 3,950,705,938.73 Current liabilities: Short-term borrowings 300,000,000.00 360,000,000.00 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 265,697,047.64 298,525,752.32 Accounts received in advance 141,082,677.48 678,075,291.01 Financial assets sold for repurchase Handling charges and commissions payable Employee’s compensation payable 50,023,230.98 54,721,616.91 Tax payable 865,513,058.59 733,659,679.71 Interest payable 934,568.21 Dividend payable Other accounts payable 123,967,110.64 138,742,022.58 Reinsurance premiums payable Insurance contract reserves Payables for acting trading of 56 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. securities Payables for acting underwriting of securities Non-current liabilities due within 1 67,009,888.28 14,909,888.32 year Other current liabilities Total current liabilities 1,814,227,581.82 2,278,634,250.85 Non-current liabilities: Long-term borrowings 116,243,352.00 19,316,666.64 Bonds payable Long-term payables Specific payables Estimated liabilities Deferred income tax liabilities 2,739,089.94 Other non-current liabilities 139,138,400.76 145,997,301.31 Total non-current liabilities 255,381,752.76 168,053,057.89 Total liabilities 2,069,609,334.58 2,446,687,308.74 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 595,979,092.00 595,979,092.00 Capital reserves 120,086,646.43 120,086,646.43 Less: Treasury stock Specific reserves Surplus reserves 121,542,385.81 102,882,532.15 Provisions for general risks Retained profits 972,271,884.95 690,091,174.80 Foreign exchange difference -7,098,716.51 -5,882,902.45 Total equity attributable to owners of 1,802,781,292.68 1,503,156,542.93 the Company Minority interests 862,087.06 862,087.06 Total owners’ (or shareholders’) equity 1,803,643,379.74 1,504,018,629.99 Total liabilities and owners’ (or 3,873,252,714.32 3,950,705,938.73 shareholders’) equity Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 57 2013 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 420,568,966.65 399,641,751.92 Transactional financial assets Notes receivable Accounts receivable 1,158,087.49 779,588.68 Accounts paid in advance 429,546.00 138,000.00 Interest receivable 631,400.00 Dividend receivable Other accounts receivable 1,104,282,291.68 793,063,936.59 Inventories 326,684,862.09 324,442,304.42 Non-current assets due within 1 year 475,000,000.00 Other current assets 150,000,000.00 Total current assets 2,003,755,153.91 1,993,065,581.61 Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term accounts receivable Long-term equity investment 310,701,892.20 316,537,110.68 Investing property 181,492,088.46 193,719,444.41 Fixed assets 15,709,482.23 18,999,543.38 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 1,643,273.97 1,816,250.25 Deferred income tax assets 58 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Other non-current assets 130,000,000.00 Total of non-current assets 639,546,736.86 531,072,348.72 Total assets 2,643,301,890.77 2,524,137,930.33 Current liabilities: Short-term borrowings 240,000,000.00 Transactional financial liabilities Notes payable Accounts payable 28,121,986.86 33,664,931.14 Accounts received in advance 12,801,629.50 426,641.50 Employee’s compensation payable 8,230,148.81 10,017,975.02 Tax payable 2,051,845.65 2,092,132.57 Interest payable 433,972.60 Dividend payable Other accounts payable 1,136,178,056.53 1,447,198,939.98 Non-current liabilities due within 1 year Other current liabilities Total current liabilities 1,427,817,639.95 1,493,400,620.21 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 Total non-current liabilities 1,851,595.90 Total liabilities 1,427,817,639.95 1,495,252,216.11 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 595,979,092.00 595,979,092.00 Capital reserves 94,057,859.68 94,057,859.68 Less: Treasury stock Specific reserves Surplus reserves 120,885,575.37 102,225,721.71 59 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. General risk provision Retained profits 404,561,723.77 236,623,040.83 Foreign exchange difference Total owners’ (or shareholders’) equity 1,215,484,250.82 1,028,885,714.22 Total liabilities and owners’ (or 2,643,301,890.77 2,524,137,930.33 shareholders’) equity Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 3. Consolidated income statement Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2013 Amount in 2012 I. Total operating revenues 1,619,227,227.60 1,861,298,830.99 Including: Sales income 1,619,227,227.60 1,861,298,830.99 Interest income Premium income Handling charge and commission income II. Total operating cost 1,200,805,740.45 1,379,046,423.21 Including: Cost of sales 744,847,455.76 841,932,253.07 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 312,773,207.11 398,859,737.67 Selling and distribution expenses 40,219,755.20 43,951,174.60 Administrative expenses 109,662,479.90 109,680,547.70 Financial expenses -6,334,701.69 -1,504,589.66 60 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Asset impairment loss -362,455.83 -13,872,700.17 Add: Gain/(loss) from change in fair value (“-” means loss) Gain/(loss) from investment (“-” 5,164,781.52 3,145,809.75 means loss) Including: share of profits in associates 5,164,781.52 3,145,809.75 and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 423,586,268.67 485,398,217.53 Add: non-operating income 2,445,277.76 4,025,211.48 Less: non-operating expense 3,097,072.00 2,375,285.99 Including: loss from non-current asset 88,561.24 58,269.77 disposal IV. Total profit (“-” means loss) 422,934,474.43 487,048,143.02 Less: Income tax expense 122,093,910.62 112,225,990.61 V. Net profit (“-” means loss) 300,840,563.81 374,822,152.41 Including: Net profit achieved by combined parties before the 1,312,539.70 combinations Attributable to owners of the 300,840,563.81 375,422,129.64 Company Minority shareholders’ income -599,977.23 VI. Earnings per share -- -- (I) Basic earnings per share 0.5048 0.6299 (II) Diluted earnings per share 0.5048 0.6299 Ⅶ. Other comprehensive incomes -1,215,814.06 7,383.80 Ⅷ. Total comprehensive incomes 299,624,749.75 374,829,536.21 Attributable to owners of the 299,624,749.75 375,429,513.44 Company Attributable to minority -599,977.23 shareholders Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 61 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 4. Income statement of the Company Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2013 Amount in 2012 I. Total sales 51,786,335.36 48,210,057.27 Less: cost of sales 14,620,872.04 20,151,948.72 Business taxes and surcharges 7,700,375.63 9,028,751.88 Distribution expenses Administrative expenses 44,011,892.19 43,915,015.22 Financial costs 7,797,249.44 -2,354,237.66 Impairment loss -16,097,045.15 -15,500,366.74 Add: gain/(loss) from change in fair value (“-” means loss) Gain/(loss) from investment (“-” means 191,239,981.52 381,808,751.52 loss) Including: income form investment on 5,164,781.52 3,145,809.75 associates and joint ventures II. Business profit (“-” means loss) 184,992,972.73 374,777,697.37 Add: non-business income 1,637,357.28 2,089,256.20 Less: non-business expense 31,793.41 1,488,094.69 Including: loss from non-current asset 1,793.41 1,470.30 disposal III. Total profit (“-” means loss) 186,598,536.60 375,378,858.88 Less: income tax expense IV. Net profit (“-” means loss) 186,598,536.60 375,378,858.88 V. Earnings per share -- -- (I) Basic earnings per share 0.3131 0.6299 (II) Diluted earnings per share 0.3131 0.6299 VI. Other comprehensive income VII. Total comprehensive income 186,598,536.60 375,378,858.88 Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 62 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 5. Consolidated cash flow statement Prepared by Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2013 Amount in 2012 I. Cash flows from operating activities: Cash received from sale of 1,065,181,587.19 2,127,163,532.80 commodities and rendering of service Net increase of deposits from customers and dues from banks 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 29,128,598.42 37,705,584.60 operating activities Subtotal of cash inflows from operating 1,094,310,185.61 2,164,869,117.40 activities Cash paid for goods and services 368,302,207.22 613,923,266.79 Net increase of customer lendings and advances Net increase of funds deposited in the central bank and amount due from banks 63 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 254,498,181.42 244,711,375.88 Various taxes paid 270,951,854.45 395,582,349.38 Other cash payment relating to 90,133,612.42 104,937,927.97 operating activities Subtotal of cash outflows from 983,885,855.51 1,359,154,920.02 operating activities Net cash flows from operating activities 110,424,330.10 805,714,197.38 II. Cash flows from investing activities: Cash received from withdrawal of investments Cash received from return on 9,705,931.45 investments Net cash received from disposal of fixed assets, intangible assets and other 18,659,065.60 780,451.00 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 18,659,065.60 10,486,382.45 investing activities Cash paid to acquire fixed assets, intangible assets and other long-term 12,696,883.02 4,327,597.65 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 12,696,883.02 4,327,597.65 investing activities Net cash flows from investing activities 5,962,182.58 6,158,784.80 64 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. III. Cash Flows from Financing Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 461,243,352.00 186,000,000.00 Cash received from issuance of bonds Other cash received relating to financing activities Subtotal of cash inflows from financing 461,243,352.00 186,000,000.00 activities Repayment of borrowings 372,330,333.35 618,961,878.68 Cash paid for interest expenses and 23,373,070.63 48,917,137.06 distribution of dividends or profit Including: dividends or profit paid by subsidiaries to minority shareholders Other cash payments relating to 1,677,492.00 1,584,500.00 financing activities Sub-total of cash outflows from 397,380,895.98 669,463,515.74 financing activities Net cash flows from financing activities 63,862,456.02 -483,463,515.74 IV. Effect of foreign exchange rate -801,465.87 1,103.36 changes on cash and cash equivalents V. Net increase in cash and cash 179,447,502.83 328,410,569.80 equivalents Add: Opening balance of cash and 797,724,311.37 469,313,741.57 cash equivalents VI. Closing balance of cash and cash 977,171,814.20 797,724,311.37 equivalents Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 6. Cash flow statement of the Company Prepared by Shenzhen Properties & Resources Development (Group) Ltd. 65 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Unit: RMB Yuan Item Amount in 2013 Amount in 2012 I. Cash flows from operating activities: Cash received from sale of 50,534,901.36 48,165,574.83 commodities and rendering of service Tax refunds received Other cash received relating to 19,754,794.25 1,238,725,468.05 operating activities Subtotal of cash inflows from operating 70,289,695.61 1,286,891,042.88 activities Cash paid for goods and services 8,723,060.88 7,593,201.26 Cash paid to and for employees 22,284,922.53 17,689,894.18 Various taxes paid 11,664,415.35 12,331,745.43 Other cash payment relating to 469,502,088.72 970,661,663.27 operating activities Subtotal of cash outflows from 512,174,487.48 1,008,276,504.14 operating activities Net cash flows from operating activities -441,884,791.87 278,614,538.74 II. Cash flows from investing activities: Cash received from retraction of 195,000,000.00 investments Cash received from return on 25,443,800.00 46,868,931.45 investments Net cash received from disposal of fixed assets, intangible assets and other 11,983,185.60 2,220.00 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 232,426,985.60 46,871,151.45 investing activities Cash paid to acquire fixed assets, intangible assets and other long-term 551,487.00 9,689,947.61 assets Cash paid for investment Net cash paid to acquire subsidiaries and other business units 66 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Other cash payments relating to investing activities Subtotal of cash outflows from 551,487.00 9,689,947.61 investing activities Net cash flows from investing activities 231,875,498.60 37,181,203.84 III. Cash Flows from Financing Activities: Cash received from capital contributions Cash received from borrowings 240,000,000.00 Cash received from issuance of bonds Other cash received relating to financing activities Subtotal of cash inflows from financing 240,000,000.00 activities Repayment of borrowings Cash paid for interest expenses and 8,720,000.00 distribution of dividends or profit Other cash payments relating to 343,492.00 financing activities Sub-total of cash outflows from 9,063,492.00 financing activities Net cash flows from financing activities 230,936,508.00 IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash 20,927,214.73 315,795,742.58 equivalents Add: Opening balance of cash and 399,641,751.92 83,846,009.34 cash equivalents VI. Closing balance of cash and cash 420,568,966.65 399,641,751.92 equivalents Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 7. Consolidated statement of changes in owners’ equity Prepared by Shenzhen Properties & Resources Development (Group) Ltd. 67 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2013 Unit: RMB Yuan Reporting period Equity attributable to owners of the Company Less: Spec Gener Total Item Minority Paid-up capital Capital treas ific Surplus al risk Retained owners’ (or share Others interests reserve ury reser reserve reserv profit equity capital) stock ve e I. Balance at the end of 63,783,019 102,882,53 746,091,17 -5,882,9 862,087.0 1,503,715, 595,979,092.00 the previous year .03 2.15 4.80 02.45 6 002.59 Add: change of accounting policy Correction of errors 56,303,627 -56,000,00 303,627.40 in previous periods .40 0.00 Other II. Balance at the 120,086,64 102,882,53 690,091,17 -5,882,9 862,087.0 1,504,018, 595,979,092.00 beginning of the year 6.43 2.15 4.80 02.45 6 629.99 III. Increase/ decrease 18,659,853. 282,180,71 -1,215,8 299,624,74 of amount in the year 66 0.15 14.06 9.75 (“-” means decrease) 300,840,56 300,840,56 (I) Net profit 3.81 3.81 (II) Other -1,215,8 -1,215,814. comprehensive incomes 14.06 06 Subtotal of (I) and 300,840,56 -1,215,8 299,624,74 (II) 3.81 14.06 9.75 (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 18,659,853. -18,659,85 distribution 66 3.66 1. Appropriations 18,659,853. -18,659,85 to surplus reserves 66 3.66 68 2013 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 (VII) Other 120,086,64 121,542,38 972,271,88 -7,098,7 862,087.0 1,803,643, IV. Closing balance 595,979,092.00 6.43 5.81 4.95 16.51 6 379.74 2012 Unit: RMB Yuan Last year Equity attributable to owners of the Company Less: Total Item Minority Paid-up capital General Capital treas Specific Surplus Retaine owners’ (or share risk Others interests reserve ury reserve reserve d profit equity capital) reserve stock I. Balance at the end of 64,020,275 69,712, 406,422, -5,890,2 862,087.0 1,131,105, 595,979,092.00 the previous year .72 050.51 741.94 86.25 6 960.98 69 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Add: retrospective adjustments due to 13,800,000 656,810 -3,240,0 11,216,784 business combinations .00 .44 25.58 .86 under the same control Add: change of accounting policy Correction of errors 56,303,627 -56,000, 303,627.40 in previous periods .40 000.00 Other II. Balance at the 134,123,90 70,368, 347,182, -5,890,2 862,087.0 1,142,626, 595,979,092.00 beginning of the year 3.12 860.95 716.36 86.25 6 373.24 III. Increase/ decrease -14,037,25 32,513, 342,908, 361,392,25 of amount in the year 7,383.80 6.69 671.20 458.44 6.75 (“-” means decrease) 375,422, 375,422,12 (I) Net profit 129.64 9.64 (II) Other 7,383.80 7,383.80 comprehensive incomes Subtotal of (I) and 375,422, 375,429,51 7,383.80 (II) 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 32,513, -32,513, distribution 671.20 671.20 1. Appropriations 32,513, -32,513, to surplus reserves 671.20 671.20 2. Appropriations to general risk provisions 3. Appropriations to owners (or shareholders) 70 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 -14,037,25 -14,037,25 (VII) Other 6.69 6.69 120,086,64 102,882 690,091, -5,882,9 862,087.0 1,504,018, IV. Closing balance 595,979,092.00 6.43 ,532.15 174.80 02.45 6 629.99 Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 8. Statement of changes in owners’ equity of the Company Prepared by Shenzhen Properties & Resources Development (Group) Ltd. 2013 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 37,754,232 102,225,72 292,623,04 1,028,582, 71 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. previous year 2.00 .28 1.71 0.83 086.82 Add: change of accounting policy Correction of errors in 56,303,627 -56,000,00 303,627.40 previous periods .40 0.00 Other II. Balance at the beginning of 595,979,09 94,057,859 102,225,72 236,623,04 1,028,885, the year 2.00 .68 1.71 0.83 714.22 III. Increase/ decrease of amount 18,659,853 167,938,68 186,598,53 in the year (“-” means decrease) .66 2.94 6.60 186,598,53 186,598,53 (I) Net profit 6.60 6.60 (II) Other comprehensive incomes 186,598,53 186,598,53 Subtotal of (I) and (II) 6.60 6.60 (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 18,659,853 -18,659,85 (IV) Profit distribution .66 3.66 1. Appropriations to surplus 18,659,853 -18,659,85 reserves .66 3.66 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 72 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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 595,979,09 94,057,859 120,885,57 404,561,72 1,215,484, IV. Closing balance 2.00 .68 5.37 3.77 250.82 2012 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 -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 56,303,627 -56,000,00 303,627.40 previous periods .40 0.00 Other II. Balance at the beginning of 595,979,09 95,217,855 69,712,050 -106,242,1 654,666,85 the year 2.00 .39 .51 46.85 1.05 III. Increase/ decrease of amount -1,159,995. 32,513,671 342,865,18 374,218,86 in the year (“-” means decrease) 71 .20 7.68 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 73 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Amounts of share-based payments recognized in owners’ equity 3. Others 32,513,671 -32,513,67 (IV) Profit distribution .20 1.20 1. Appropriations to surplus 32,513,671 -32,513,67 reserves .20 1.20 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 94,057,859 102,225,72 236,623,04 1,028,885, IV. Closing balance 2.00 .68 1.71 0.83 714.22 Legal representative: Chen Yugang Person-in-charge of the accounting work: Wang Hangjun Chief of the accounting division: Shen Xueying 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. 74 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 17th session of the 7th Board of Directors of the Company on 31 Mar. 2014. I V . Main accounting policies, accounting estimates and corrections of prior accounting errors 1. Basis for preparation of financial statements The company recognizes and measures transactions occurred according to Chinese Accounting Standards – Basic standard and other related accounting standards, prepares the financial statements based on accrual accounting and the underlying assumption of going concern. 2. Statement of compliance with Enterprise accounting standards The company's financial statements comply with the requirements of Accounting Standards; the company's financial position, operating results, changes in shareholder's equity and cash flow, and other relevant information are truly and completely disclosed in financial statements. 3. Fiscal year 75 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 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 bargainer 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 76 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. Relevant specific accounting policy of disposing the equity step by step till lose the control right (1) Principle of judgment of “package deal” If the regulations, conditions and its economic influences of each deal of disposing the equity investment of the subsidiary met with following one or more kinds of situations, it indicated that the multiple transactions would consolidate as package deal for accounting treatment: ①these transactions are formatted under the situation of contemporary or considering of the mutual influences; ②only the entirety of these transactions could achieve a complete commercial result; ③the happen of one transaction depends on at least the happen of other one transaction; ④to see independently of one transaction is not economic while to considered with other transactions are economic. (2) Accounting treatment methods of “package deal” If the each transaction of disposing the equity investment of the subsidiaries till lose the control right which belongs to package deal, each transaction would be executed accounting treatment as a transaction of disposing the subsidiaries that lose the control right; however, before losing the control right, for the balance between each disposal of the remuneration and the corresponding shares of net assets of investing the subsidiary, would be confirmed as other comprehensive benefits in the consolidate financial statement and would be transferred into the current gains and losses of losing the control right when losing it. If not belongs to the package deal, before losing the control right, or when losing it, should execute the accounting treatment according to the aforesaid situation of not losing the control right to dispose party equity investment of the subsidiaries as well as according to the accounting policy of losing the control right of the original subsidiaries. 77 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. If the regulations, conditions and its economic influences of each deal of disposing the equity investment of the subsidiary met with following one or more kinds of situations, it indicated that the multiple transactions would consolidate as package deal for accounting treatment: ①these transactions are formatted under the situation of contemporary or considering of the mutual influences; ②only the entirety of these transactions could achieve a complete commercial result; ③the happen of one transaction depends on at least the happen of other one transaction; ④to see independently of one transaction is not economic while to considered with other transactions are economic. Execute the accounting treatment of the several financial statements of disposing the equity step by step till lose the control right according to the accounting policy of disposing the long-term equity investment. (3) Accounting treatment methods of non “package deal” If not belongs to the package deal, before losing the control right, or when losing it, should execute the accounting treatment according to the aforesaid situation of not losing the control right to dispose party equity investment of the subsidiaries as well as according to the accounting policy of losing the control right of the original subsidiaries. 7. 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; 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 intra-group 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 78 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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, and included the consolidate cash flow from the period-begin to the period-end of the subsidiary into the consolidate cash flow 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 and included the consolidate cash flow from the purchasing date to the period-end of the subsidiary into the consolidate cash flow 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. When losing the control right of the original subsidiary owing to the disposing of party equity investment or other reasons, for the remaining equity investment after the disposing, should be remeasured according to the fair value of the date of losing the control right. The amount of the sum between the consideration of disposing the equity and the fair value of the remaining equity that minus the balance between the shares of net assets that gained from the original subsidiaries by continuously calculation according the original shareholding ratio since the purchasing date should accrued into the current investment benefits of losing the control right. The other comprehensive benefits related to the equity investment of the original subsidiaries should be transferred into the current investment benefits when losing the control right. The balance between the newly gained long-term equity investment owning to the purchasing of the minority equities and the net identifiable assets enjoyed from the subsidiaries according to the newly increased shareholding ratio, and the balance between the dispose of remuneration which gained from the partly depose of the equity investment of the subsidiaries under the situation of not losing the control right and the corresponding shares of net assets from the subsidiaries when disposing the long-term equity investment, should both adjust the share premium of the capital surplus of the consolidate balance sheet. If the share premium of the capital surplus is not sufficient for adjustment, retained earning is adjusted respectively. 79 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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. Inapplicable 8. 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. 9. 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. 10. Financial instruments (1) Category of financial instruments The Company recognizes a financial asset or financial liability on its balance sheet when, and only when, the Company becomes a party to the contractual provisions of the instrument. The Company based on the reasons such as risks management, investment strategies and objective of holding the financial assets, classifies the financial assets into the following four categories: a) financial assets at fair value 80 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. through profit or loss; b) held-to-maturity investments; c) loans and receivables; and d) available-for-sale financial assets. 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 recognizes a financial asset or financial liability on its balance sheet when, and only when, the Company becomes a party to the contractual provisions of the instrument. 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 recognizes the gain or loss arising from a change in the fair value of a financial asset at fair value through profit or loss as profit or loss in the current period. B. Held-to-maturity investments are measured at amortized cost using the effective interest method. A gain or loss is recognized in profit or loss during the current period when the financial asset is derecognized or impaired and through the amortization process. C. Loans and receivables are measured at amortized cost using the effective interest method. A gain or loss is recognized in profit or loss during the current period when the financial asset is derecognized or impaired and through the amortization process. D. Available-for-sale financial assets are measured at fair value and the gain or loss arising from a change in the fair value of available-for-sale financial assets is recognized as capital reserve which is transferred into profit or loss when it is impaired or derecognized. Interests or cash dividends during the holding period are recognized in profit or loss for the current period. 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 recognizes a financial liability at fair value through profit or loss at its fair value. A gain or loss of change in fair value is recognized in the profit or loss of the current period. B. Other financial liabilities are measured by amortized cost using effective interest rate. (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 derecognizing of a financial asset in its entirety, the difference between the 81 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. follows is recognized in profit or loss of the current period. ①the carrying amount of transferring financial assets; ②the sum of the consideration received and any cumulative gain or loss that had been recognized directly in equity (including financial assets transferred to available for sale category). If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognizing 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 derecognizing, the Company continues to recognize the transferred asset in its entirety and shall recognize a financial liability for the consideration received. When the Company continues to recognize a financial asset to the extent of its continuing involvement, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. (4) Derecognizing conditions of financial liabilities If the whole or partly of the current obligation of the financial liabilities of the Company is relieved, should derecognize the financial liabilities or partly of it. The Company signs an agreement with the creditors is of the method by undertaking the new financial liabilities to replace the current financial liabilities. if the new financial liabilities are different from the current one on the essence of contract terms, should derecognize the current financial liabilities and recognize the new one at the same time. If the whole or partly of the financial liabilities had derecognized, should derecognize balance between partly of the book value and the paid consideration (including the turned out non-cash assets or the new financial liabilities)and accrued into the current gains and losses. (5) Recognition method for fair value of financial assets and financial liabilities ① If there is an active market for the financial instrument, the fair value is quoted prices in the active market. The offer of the active market refers to the prices that are liable to receive from the exchange, broker’s agency, industry association and pricing service institution, etc, which represent the prices of the market dealing that actually occurs in the fair dealing. ② If the market for a financial instrument is not active, the Company establishes fair value by using a proper valuation technique on the basis of conservatism principle. The result by adopting the valuation technique reflect the transaction value possible be adopted in the fair dealing on the valuation date. The valuation technique includes the prices using in the recently market dealing between the parties which had referred to and knew of the situation and decided to trade voluntary, the current fair value referred to the same other financial instrument in essence, the discount cash flow method and options pricing model etc. 82 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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. 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 83 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 The Company takes the individual investment of impairment test for available-for-sale financial assets. On the balance sheet date, it could judge whether the fair value of available-for-sale financial assets are seriously or non-temporary decline: if the decline of the fair value of the individual available-for-sale financial assets exceeds 50% of the cost, or had continuously declined for over 12 months, should be recognized the available-for-sale financial assets had decreased and should recognized the impairment losses according to the impairment provision for the balance between the cost and the fair value. The cost at the period-end of available-for-sale financial assets is the amortized cost which is initially measured according to the investment cost when receiving and is calculated by the weighted average method when selling. When a decline in the fair value of an available-for-sale financial asset has been recognized directly in equity, the cumulative loss that had been recognized directly in equity is removed from equity and recognized in profit or loss even though the financial asset has not been derecognized. If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are recognized in the profit or loss of the current period. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed, with the amount of the reversal recognized in profit or loss of the current period. Impairment losses recognized in profit or loss for an investment in an equity instrument classified as available for sale is not reversed through profit or loss. For impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the impairment loss is not reversed through profit or loss. (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. 11. Recognition criteria and withdrawal methods for bad debts provision of accounts receivable 84 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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 individual tests than those in Portfolio 1, considering the current situation, the Company determines the bad-debt provisions ratio Group 2 Aging analysis method 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 85 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Reason of individually withdrawing bad debt The receivable which is individually insignificant but the credit risk is high, provision 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 between the Withdrawal method for bad debt provision asset's carrying amount and the present value of estimated future cash flows, and withdraws relevant bad debts provision. 12. Inventory (1) Classification Inventories of the Company include raw materials, finished goods, and low-value consumption goods, land use right held for real estate development, properties under development and completed properties for sale. Reorganization of inventory: the Company confirms the inventory when meeting the following conditions at the same time: ① the economic benefits related to the inventory possibility would flow into the enterprise; ② the cost of the inventory could be reliably calculated. (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: 86 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 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 Amortization method: one-off amortization method The amortization of the low-value consumption goods are by one-off amortization method. Packing articles Amortization method: Inapplicable 13. Long-term equity investment (1) Recognition of initial investment cost 87 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. The Company initially measures long-term equity investments under two conditions: ①For long-term equity investment arising from business combination, the initial cost is recognized under the following principles. A. If the business combination is under the common control and the acquirer obtains long-term equity investment in the consideration of cash, non-monetary asset exchange or bearing acquiree’s liabilities, the initial cost is the carrying amount of the proportion of the acquiree’s owner’s equity at the acquisition date. The difference between cash paid, the carrying amount of the non-monetary asset exchanged and the acquiree’s liabilities beard and the initial cost of the long-term equity investment should be adjusted to capital surplus. If the capital surplus is not sufficient for adjustment, retained earning is adjusted respectively. The business combination costs that are directly attributable to the combination, such as audit fees, valuation fees, legal service fees and so on are recognized in profit or loss during the current period when they occurred. If the acquirer issuing equity securities as consideration, the initial cost is the carrying amount of the proportion of the acquiree’s owner’s equity at the acquisition date. Amount of share capital equal to the par value of the shares issued. The difference between initial cost of the long-term equity investment and the par value of shares issued is adjusted to capital surplus. If the capital surplus is not sufficient for adjustment, retained earning is adjusted respectively. The costs of issuing equity securities occurred in business combination such as charges of security issuing and commissions are deducted from the premium of equity securities. If the premium is not sufficient for deducting, retained earning is adjusted respectively. B. If the business combination is not under the common control, the acquirer recognizes the initial cost of combination under the following principles. a) When business combination is achieved through a single exchange transaction, the cost of a business combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree; b) For a business combination that involves more than one exchange transaction, the initial investment cost is the summation of the book value of the equity interests of the acquiree held by the Company before the acquisition date and the new investment cost on the acquisition date; c) The fees incurred for audit, legal consultation, valuation services and other management expenses are to be recognized in profit or loss at the time such costs incurred. The transaction costs incurred by the acquirer for issuing equity securities or debt securities as the consideration of the acquisition are to be recognized as the initial amount of such equity security or debt security. d) Where a business combination contract or agreement provides for a future event which may adjust the cost of combination, the Company shall include the amount of the adjustment in the cost of the combination at the acquisition date if the future event leading to the adjustment is probable and the amount of the adjustment can be measured reliably. ②For long-term equity investment obtained in any method other than business combination, the initial cost is 88 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. recognized under the following principles. A. If the long-term equity investment is acquired in cash consideration, the initial cost is the actual payment which includes direct expenses paid to acquire the long-term equity investment, taxes and other necessary expense. B. If the long-term equity investment is acquired by issuing equity securities, the initial cost is the fair value of the equity securities issued. However, cash dividends or profits that are declared but unpaid shall not be included in the initial cost. Direct costs attributed to issue equity securities such as handling charges and commissions paid to securities underwriting agencies are deducted from premium of equity securities. If the premium is not sufficient for deduction, reserved fund and retained earnings is adjusted respectively. C. For the long-term equity investment invested by investors, the initial cost is the agreed value prescribed in the investment contract or agreement unless the agreed value is not fair. D. For the long-term equity investment acquired through non-monetary asset exchange, the initial cost is recognized according to “Accounting Standards for Business Enterprises No. 7-Non-monetary transactions”. E. For the long-term equity investment acquired through debt restructuring, the initial cost is recognized according to “Accounting Standards for Business Enterprises No. 12-Debt restructuring”. ③If there are cash dividends or profits that are declared but unpaid included in the consideration paid, the cash dividends or profits declared but unpaid shall be recognized as receivables separately rather than as part of initial cost of long-term equity instruments no matter through which method the long-term equity investment is acquired. (2) Subsequent measurement 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 89 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. impairment test of long-term equity investments should be performed according to “Chinese Accounting Standard No.8 - Impairment of assets”, Where the carrying amount of long-term equity investment exceeds the recoverable amount, the difference shall be recognized as impairment loss, and a provision for impairment loss should be made. ②For long-term equity investment under equity method, the Company adjusts carrying amount of the long-term equity investment and recognizes investment income according to the proportion of net profit or loss realized by the investee enterprise after acquisition. The Company reduces carrying amount of the long-term equity investment by the proportion of declared cash dividend or profit which shall be distributed to the Company. For long-term equity investment under equity method, the Company recognizes net losses incurred by the investee enterprise to the extent that the carrying amount of the long-term equity investment and other long-term equities that are in substance treated as net investment in the investee enterprise is reduced to zero except there is further obligation of the excess losses. If the investee enterprise makes net profits in subsequent periods, the Company shall continue to recognize investment income after using its share of net profits of the investee enterprise to cover its unrecognized losses. 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 90 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. limited to the extent agreed by all Joint ventures parties. A significant influence over investee enterprise is established when the investment of the Company satisfied the following conditions: ①The Company has representation on the board of directors or equivalent governing body of the investee. ②The Company participates in policy-making processes, including participation in decisions about dividends or other distributions. ③Material transactions occur between the Company and the investee enterprise. ④The Company dispatches managerial personnel to the investee enterprise. ⑤The Company provides essential technical information to the investee enterprise. If the Company holds, directly or indirectly (e.g. through subsidiaries), 20 percent or more but less than 50 percent of the voting power of the investee enterprise, it is presumed that the Company has significant influence over the investee enterprise. (4) Impairment test and method of provision for impairment loss The Company adopts the same manner of financial instrument for the impairment of long-term equity investment which is measured under cost method and there is no quoted price in active market or there is no reliable fair value. Impairment of long-term equity investments other than above refers to accounting policy “Impairment of assets” of the Company. 14. 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. 91 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (3) Initial measurement An investment property is measured initially at its cost. ①The cost of a purchased investment property comprises its purchase price, related tax expenses and any directly attributable expenditure. ②The cost of a self-constructed investment property comprises all necessary construction expenditures incurred before the property is ready for its intended use. ③The cost of a property acquired by other means shall be recognized according to relevant accounting standards. (4) Subsequent measurement After initial recognition, the Company adopts the cost model to measure its investment properties. The Company amortizes or depreciates its investment properties measured using cost model in the same way as fixed assets and intangible assets. The Company values the investment property measured using cost model at the lower of its cost and its recoverable amount at the end of the period. Where the cost exceeds the recoverable amount, the difference shall be recognized as impairment loss. Once a provision for impairment loss is made, it cannot be reversed. 15. 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 92 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Subsequent expenditure related to the fixed assets should accrued into the cost of fixed assets if met with the stipulated reorganization conditions of fixed assets; if not, should accrued directly into the current gains and losses when occurred. 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 (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. 93 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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%. 16. Construction in progress (1) Categories of construction in progress The construction in progress of the Company includes the construction work, installation work, equipment under installment, deferred cost and individual engineering etc. The valuation of the construction in progress: recognizes the engineering cost according to the cost actual occurred. The cost of construction in progress also includes the borrowing expenses and exchange gains and losses which should be capitalized. (2) Standards and time of transferring construction in progress into fixed assets The Company should transfer the construction in progress into fixes assets when the construction in progress is ready for their intended use. If the built construction had reached the state ready for intended use but had not settled the fixed assets of completion settlement, should recognized as fixed assets according to the estimated value as well withdrew and depreciated; after execute the completion settlement procedure, it should adjust the original provisional estimate value according to the actual cost but not the original withdrew depreciation amount. (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. 17. Borrowing costs (1) Recognition principles for capitalization of borrowing costs The costs of borrowings designated for acquisition or construction of qualifying assets should be capitalized as part of the cost of the assets. Capitalization of borrowing costs starts when ① The capital expenditures have incurred; ② The borrowing costs have incurred; ③ The acquisition and construction activities that are necessary to bring the asset to its expected usable condition have commenced. Other borrowing costs that do not qualify for capitalization should be expensed off during current period. (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 94 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 18. Biological assets Inapplicable 19. Oil-gas assets Inapplicable 20. 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; 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 95 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 plate 50 years, 12 years Period stipulated in the contractual rights (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. (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 is able to reliably measure the expenditure attributable to the intangible asset during its development. 21. 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. 22. 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 96 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 23. 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 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. 24. 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 97 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 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 98 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 25. 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 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. 26. 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 99 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 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. 27. 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 100 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 28. 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 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. 29. 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. 101 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 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 30. 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. 102 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 31. Capitalization of assets Inapplicable 32. Hedging accounting Inapplicable 33. 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 There was no change of accounting policies during the reporting period. (2) Change of accounting estimates Were the main accounting estimates changed during the report period? □Yes √No There was no change of accounting estimates during the reporting period. 34. Correction of previous accounting errors Was any accounting error made in previous periods discovered in the report period? √Yes □No See details to the following retrospective restatement method. (1) Retrospective restatement method 103 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Was any previous accounting error adopting retrospective restatement method discovered in the report period? √Yes □No (1) Event of verification and transfer of the withholding land value increment fee of the development rights of Jin Lihua Commercial Plaza which was of RMB 56,303,627.40 In 1993, the Company and Shenzhen Waterfront Property Development Co., Ltd. (now is renamed as Shenzhen Jiyong Property Development Co., Ltd., hereinafter refers to as Jiyong Company ) signed the Compensatory Transfer Contract of the Development Right of “Champion Building”(Champion Building now is renamed as Jin Lihua Commercial Plaza), and after the above transfer contracts recognized the income before 2001, the Company withheld the land value increment fee of RMB 56,303,627.40 at the same time. According to No. 5 regulation of the Decision about Strengthen the Marketization of Land Management for Further Invigorate and Specify the Real Estate Market (SF [2001] No. 94) on “Exemption the secondary and tertiary real estate markets for the land value increment fee”, and No. 14 regulation of the Notice about Executing the Strengthen of Marketization of Land Management for Further Invigorate and Specify the Real Estate Market (SGT [2014] No. 314) on “the No. 15 regulation of the Notice about the land value increment fee of the secondary and tertiary real estate markets that, the fees had handed over would not refund while the unhanded is exempted; and the No. 16 regulation will be executed from the issuing date of the Notice.” During the reporting period, the Company executed retrospective adjustment of the withholding land value increment fee of the transfer of Jin Lihua Plaza which was of RMB 56,303,627.40 as the previous errors, adjusted to increase the capital surplus at the year-end of 2001 of RMB 56,303,627.40 and adjusted to decreased the withholding expenses (reported to other accounts payable) at the year-end of 2001 of RMB56, 303,627.40. (2) Event of supplementary withdrawal of bad debt provision receivables from Jiyong Company which had transferred the development rights of Jin Lihua Plaza In Sep. 2005, Guangdong Higher People’s Court delivered the unlock judge to Shenzhen Land Resources and Real Estate Authority, Registration Department: owing to the official unlock of the property about 10 thousand square meter which had been closed down of Jiyong Company of the mentioned case in Annotation (VII) 1 (1). And in Jan. 2006, Guangdong Higher People’s Court made the (2002) YGFZ Zi No. 1 Civil Ruling Paper, which found out there were no any following situation: such as Jiyong Company had no other property for executing, and the Company also couldn’t offer the properties for executing. So it was judged to suspend the executing of the repayment of the development rights that Jiyong Company transferred Ji Lihua Plaza by the requirements in the (1999) YGFMC No. 3 Civil Judgment Paper issued by Guangdong Higher People’s Court in Jul. 2001. So the Company supplementary withdrew of the bad debt provision receivables from Jiyong Company which had transferred the development rights of Jin Lihua Plaza of RMB 56,000,000.00, and executed the retrospective adjustment as the previous errors, adjusted to increase the 2005 annual management expenses of RMB 56,000,000.00, and adjusted to decrease the accounts receivable at the year-end of 2005 of RMB 56,000,000.00. After the supplementary withdrawal, the Company had withdrawn the bad debt provision of the transfer accounts receivable of Jiyong Company. After the retrospective restatement, the influence situation of the current comparative financial statement was as follows: Influenced report item 31 Dec. 2012 Before retrospection Amount of the After the retrospection retrospection Accounts receivable 76,584,008.68 -56,000,000.00 20,584,008.68 Other accounts payable 195,045,649.98 -56,303,627.40 138,742,022.58 104 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Capital surplus 63,783,019.03 56,303,627.40 120,086,646.43 Retained profits 746,091,174.80 -56,000,000.00 690,091,174.80 Total of owners’ equity 1,503,715,002.59 303,627.40 1,504,018,629.99 Total of owners’ equity attributed to the 1,502,852,915.53 303,627.40 1,503,156,542.93 Company Specific notes Unit: RMB Yuan The content of the correction of Name of the influenced report Accumulative influenced Situation of approval process accounting errors of each comparative period amount Event of verification and transfer of the withholding land value increment fee of the development Other accounts payable -56,303,627.40 rights of Jin Lihua Commercial Plaza Capital surplus 56,303,627.40 Event of supplementary withdrawal of bad debt provision receivables from Jiyong Company which had Accounts receivable -56,000,000.00 transferred the development rights of Jin Lihua Plaza Retained profits -56,000,000.00 (2) Prospective application method Was any previous accounting error adopting prospective application method discovered in the report period? □Yes √No 35. 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 105 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. will be, worse than expected, for example, the net cash flow generated from assets or the operating profit (or loss) realized by assets is lower (higher) than the excepted amount, etc.; and (7) Other evidence indicates that assets may be impaired. The Company assesses long-term equity investment, fixed assets, construction materials, constructions in progress and intangible assets (except for those with uncertain useful life) that apply Accounting Standard for Business Enterprises No. 8 - Impairment of assets at the balance sheet date. If there is any indication that an asset may be impaired, the Company should assess the asset for impairment and estimate the recoverable amount of the impaired asset. Recoverable amount is measured as the higher of an asset's fair value less costs to sell and the present value of estimated future cash flows from continuing use of the asset. If carrying amount of an asset is higher than its recoverable amount, the carrying amount of this asset should be written down to its recoverable amount with the difference recognized as impairment loss and charged to profit or loss accordingly. Simultaneously a provision for impairment loss should be made. There is any indication that an asset may be impaired, the Company usually estimates its recoverable amount on an individual item basis. However if it’s not possible to estimate recoverable amount of the individual asset, the Company should determine the recoverable amount of the cash-generating unit to which the asset belongs. An asset's cash-generating unit is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Identification of cash-generating unit is based on whether the cash inflows generated by the cash-generating unit are largely independent of the cash inflows from other assets or groups of assets. The Company assesses goodwill acquired in a business combination and intangible assets with uncertain useful life for impairment each year no matter whether indication that an asset may be impaired exists or not. Impairment assessment of goodwill is carried together with the impairment assessment of related cash-generating unit or group of cash-generating units. Once impairment loss is recognized, it cannot be reversed in subsequent financial period. 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 16.5%、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 106 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. tax rate of the subsidiaries located in Hong Kong is 16.5%. 2. Tax preference and approval N/A. 3. Other explanations N/A. 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, Real Huangc subsidia construc Shenzhe estate 300000 30,000, heng ry tion, 100% 100% Yes n develop 00.00 000.00 Real operatio ment Estate n and Co., manage 107 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Ltd. ment of commer cial service facilities relevant to Huangg ang port 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% No 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- Real Develop an owned Donggu estate 20,000, ment 20,000, 100% 100% Yes Guomao subsidia an develop 000.00 and sale 000.00 Changs ry ment of 108 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. heng real Real estate, Estate lease of Develop properti ment es Co., Ltd. PRD Wholly- Develop Yangzh owned ment ou Real subsidia and sale Estate ry of Develop real ment Real estate, Co., Yangzh estate 50,000, construc 50,000, 100% 100% Yes Ltd. ou develop 000.00 tion 000.00 ment 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. 109 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhe Property n manage Huangc ment; heng Wholly- Property court Real owned Shenzhe 5,000,0 5,000,0 manage virescen 100% 100% Yes Estate subsidia n 00.00 00.00 ment ce and Manage ry cleansin ment g Co., services 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, Chongqi reconstr ng Wholly- ucting Ao’bo owned 2,000,0 3,500,0 Service and 100% 100% Yes Elevator subsidia 00.00 00.00 repairin Co., ry g the Ltd. elevator ; sales 110 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. of elevator and accessor ies Shenzhe Mainten n Wholly- ance of Tianque owned Shenzhe 5,000,0 elevator 5,000,0 Elevator Service 100% 100% Yes subsidia n 00.00 and air 00.00 Technol ry 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 Shenzhe Supervi n sion of Property general Wholly- Constru Constru industri owned Shenzhe ction 3,000,0 3,000,0 ction al and 100% 100% Yes subsidia n Supervi 00.00 00.00 Supervi civil ry sion sion construc Co., tion Ltd. engineer 111 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. ing Providin Shenzhe g n property GUOM Wholly- informat AO owned Shenzhe 138000 ion, 1,380,0 Service 100% 100% Yes Real subsidia n 0.00 property 00.00 Estate ry agency Trading and Center 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 Wholly- commer onal owned Shenzhe 12,000, cial, 12,000, Trading 100% 100% Yes Trade subsidia n 000.00 material 000.00 Plaza ry and supplyin g 112 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Real ng estate Shenzhe develop n Real Wholly- Real ment Estate owned Zhanjia estate 2,530,0 and 2,530,0 100% 100% Yes Develop subsidia ng develop 00.00 sales of 00.00 ment ry ment commo Co., dity Ltd. premise s Shum Property Yip agency Properti Wholly- Real and es owned Hong estate 20,000, investm 20,000, 96,860, 100% 100% Yes Develop subsidia Kong develop 000.00 ent 000.00 513.83 ment ry ment Co., Ltd. Wayhan Property g Wholly- Real develop Develop owned Hong estate ment 2.00 2.00 100% 100% Yes ment subsidia Kong develop Co., ry ment Ltd. Chief Property Wholly- Real Link agency owned Hong estate 862,087 Properti 100.00 and 100.00 70% 70% Yes subsidia Kong develop .06 es Co., investm ry ment Ltd. ent Syndis Wholly- Real Property Investm owned Hong estate investm 4.00 4.00 100% 100% Yes ent Co., subsidia Kong 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. 113 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (2) Subsidiaries obtained by business combination under the same control 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 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 There was no subsidiary obtained by business combination not under the same control of the Company. 2. Special purpose entities or operating entities with control right formed by entrusted operation or lease 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 Sep. 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 114 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Jun. 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 Dec. 31, 2014. SX Company paid for FET Company with 313,000 Yuan income obtained from assets operation from Jun. 1, 2012 to Dec. 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. Balance of Divestiture Assets as of December 31, 2013 in consolidated statements is as follows: Item Amount Item Amount Other receivables 100,973.73 Other payables 784,501.81 Investing real estate 10,315,762.93 Other non-current liabilities 21,289,629.66 Fixed assets 11,175,714.91 Long-term unamortized expenses 481,679.90 Total assets 22,074,131.47 Total liabilities and owners’ 22,074,131.47 equity 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 N/A 4. Main entities which are newly included into or are not included into consolidation scope during the reporting period N/A 5. Business combination under the same control during the reporting period N/A 115 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 6. Business combination not under same control during the reporting period Other notes to business combination not under same control: N/A Whether there was any situation of multiple transactions which realized the enterprise merger step by step and gained the control right during the reporting period? □ Applicable √ Inapplicable 7. Subsidiaries reduced by selling equities without control right during the reporting period N/A Whether there was situation of multiple transactions which disposed the investment of the subsidiaries step by step till lost the control right during the reporting period? □ Applicable √ Inapplicable 8. The counter purchases in the reporting period N/A 9. Mergers in the reporting period N/A 10. Exchange rates of major items in financial statements for foreign entities For Hong Kong registered subsidiaries included in consolidated scope, such as Shum Yip Properties Development Co., Ltd., Wayhang Development Co., Ltd., Chief Link Properties Co., Ltd., and Syndis Investment Co., Ltd. The exchange rates of currencies are as follows: (1) For assets and liabilities, using the spot exchange rate of HKD against RMB (1:0.7862) 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 (1:0.7986) when trade occurred. VII. Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Yuan Item Closing balance Opening balance 116 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Amount in Exchange Amount in Exchange Amount in RMB Amount in RMB foreign currency rate foreign currency rate Cash: -- -- 263,857.71 -- -- 197,165.38 RMB -- -- 260,719.04 -- -- 196,113.48 HKD 3,992.20 0.7862 3,138.67 1,297.20 0.8109 1,051.90 Bank deposit: -- -- 974,606,475.15 -- -- 793,456,036.83 RMB -- -- 928,389,282.62 -- -- 788,676,797.01 HKD 58,785,541.24 0.7862 46,217,192.53 5,893,747.47 0.8109 4,779,239.82 Other monetary funds: -- -- 2,301,481.34 -- -- 4,071,109.16 RMB -- -- 2,301,481.34 -- -- 4,071,109.16 Total -- -- 977,171,814.20 -- -- 797,724,311.37 Notes: There was no any account limited by being mortgaged, pledged or frozen, deposited overseas or with potential collecting risks of the Company during the reporting period. 2. Trading financial assets (1) Trading financial assets N/A (2) Trading financial assets with realizable limit N/A (3) Hedging instruments and notes to relevant hedging transaction Inapplicable 3. Notes receivable (1) Category of notes receivable Inapplicable (2) Notes receivable pledged at period-end Inapplicable (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 Inapplicable 117 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 4. Dividends receivable Inapplicable 5. Interest receivable Inapplicable 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 107,016,17 107,016,17 107,016,1 107,016,173. and individually 79.74% 100% 80.31% 100% 3.89 3.89 73.89 89 withdrawn bad debt provision Accounts receivable for which bad debt provisions are made on the group basis 24,700,058. 2,492,035.8 22,907,92 Group 2 18.4% 10.09% 17.19% 2,323,913.94 10.14% 09 8 2.62 24,700,058. 2,492,035.8 22,907,92 Subtotal of the groups 18.4% 10.09% 17.19% 2,323,913.94 10.14% 09 8 2.62 Accounts receivable with insignificant single 2,495,166.2 2,495,166.2 3,328,980 amount and individually 1.86% 100% 2.5% 3,328,980.05 100% 7 7 .05 withdrawn bad debt provision 134,211,39 112,003,37 133,253,0 112,669,067. Total -- -- -- -- 8.25 6.04 76.56 88 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 (%) 118 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Involved in lawsuit and no executable Shenzhen Jiyong Properties & Resources property, referring to 98,611,328.05 98,611,328.05 100% Development Company Note 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 Poor operating Shenzhen Lunan Industry Development conditions, 2,818,284.84 2,818,284.84 100% Co., Ltd. uncollectible for a long period Zhou Tanjin (is attribute to the stripping Uncollectible for a assets of Shenxin Company of Shenzhen 2,750,000.00 2,750,000.00 100% long period Investment Holding Co., Ltd.) Total 107,016,173.89 107,016,173.89 -- -- 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 21,347,415.50 86.43% 640,422.47 18,822,782.16 82.17% 564,683.46 (including 1 year) Subtotal of within 21,347,415.50 86.43% 640,422.47 18,822,782.16 82.17% 564,683.46 1 year 1-2 years 1,230,175.21 4.98% 123,017.52 1,626,810.61 7.1% 162,681.06 2-3 years 140,084.33 0.57% 42,025.30 70,733.43 0.31% 21,220.03 Over 3 years 1,982,383.05 8.02% 1,686,570.59 2,387,596.42 10.42% 1,575,329.39 3 to 4 years 65,917.15 0.27% 32,958.57 1,314,269.42 5.74% 657,134.71 4 to 5 years 1,314,269.42 5.32% 1,051,415.54 775,661.60 3.38% 620,529.28 Over 5 years 602,196.48 2.43% 602,196.48 297,665.40 1.3% 297,665.40 Total 24,700,058.09 -- 2,492,035.88 22,907,922.62 -- 2,323,913.94 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 119 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. □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 (%) Zhanjiang Haihu Real With a long age that was 700,000.00 700,000.00 100% Estate Co., Ltd unrecoverable Shenzhen Prince The owner was missing 414,825.74 414,825.74 100% Restaurant that was unrecoverable Shenzhen Shengfenglu, With a long age that was GUOMAO Jewel & Gold 498,681.65 498,681.65 100% unrecoverable Co., Ltd. Huidong Cars Co., Ltd. (is attribute to the stripping assets of With a long age that was 250,000.00 250,000.00 100% Shenxin Company of unrecoverable Shenzhen Investment Holding Co., Ltd.) Zhanjiang Special With a long age that was 135,972.00 135,972.00 100% Cement 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 2,495,166.27 2,495,166.27 -- -- (2) Accounts receivable reversed or collected in the reporting period Unit: RMB Yuan Recognition basis of Reversed or collected Content of accounts Reversed or collected Reversed or collected original bad debt amount of the accrued receivable reason amount provision bad debt provision Predicted to be Shenzhen Prince Restaurant Recovery 1,248,639.52 833,813.78 irrecoverable Total -- -- 1,248,639.52 -- (3) The write-off accounts receivable Notes to write off of accounts receivable: 120 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. N/A (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., 2,412,618.73 72,378.56 415,302.14 12,459.06 Ltd. Total 2,412,618.73 72,378.56 415,302.14 12,459.06 (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 73.47% Development Company Huwei Technologies Co., Non-related-party 9,814,973.95 Within one year 7.31% Ltd. Shenzhen Tewei Industry Non-related-party 2,836,561.00 Over five years 2.11% Co., Ltd. Shenzhen Lunan Industry Non-related-party 2,818,284.84 Over five years 2.1% Development Co., Ltd. Zhou Tanjin (is attribute to the stripping assets of Shenxin Company of Non-related-party 2,750,000.00 Over five years 2.05% Shenzhen Investment Holding Co., Ltd.) Total -- 116,831,147.84 -- 87.04% (6) The amounts due from related parties Unit: RMB Yuan The relationship with the Name of entity Amount Proportion Company Shenzhen Investment Controlling shareholder 2,412,618.73 1.8% Holdings Co., Ltd. 121 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total -- 2,412,618.73 1.8% (7) Information of accounts receivable that terminated recognition Inapplicable (8) If securitization is carried out on accounts receivable as the underlying assets, please list amount of assets and liabilities arising from further involvement Inapplicable 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 receivable that is 92,308,727.6 92,308,727.6 92,670,839.6 individually significant 75.57% 100% 76.86% 92,670,839.68 100% 8 8 8 and provisions for bad debts individually Other accounts receivable that provisions for bad debts by group 19,924,299.6 12,004,933.8 17,971,840.9 Group 2 16.31% 60.25% 14.91% 11,600,151.62 64.55% 6 4 6 19,924,299.6 12,004,933.8 17,971,840.9 Subtotal of group 16.31% 60.25% 14.91% 11,600,151.62 64.55% 6 4 6 Other accounts receivable that is individually insignificant 9,925,245.51 8.12% 9,925,245.51 100% 9,925,245.51 8.23% 9,925,245.51 100% but provisions for bad debts individually 122,158,272. 114,238,907. 120,567,926. Total -- -- -- 114,196,236.81 -- 85 03 15 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 Book balance Bad debt amount Withdrawing proportion Reason 122 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 7,286,048.00 7,286,048.00 100% 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 Uncollectible for a long Wuliangye Restaurant 5,523,057.70 5,523,057.70 100% period Hong Kong Yueheng Uncollectible for a long 3,271,837.78 3,271,837.78 100% Development Co., Ltd period 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 92,308,727.68 92,308,727.68 -- -- In the group, other accounts receivable that provision for bad debts by aging analysis: √ Applicable □ Inapplicable Unit: RMB Yuan Period-end Period-begin Book balance Book balance Aging Proporti Provision for bad Proporti Provision for bad Amount on debts Amount on debts (%) (%) Within 1 year Including: Within 1 year (including 3,525,128.34 17.69% 105,753.86 5,907,685.35 32.87% 177,230.56 1 year) Subtotal of within 1 year 3,525,128.34 17.69% 105,753.86 5,907,685.35 32.87% 177,230.56 1-2 years 4,838,702.38 24.29% 483,870.24 528,158.03 2.94% 52,815.80 123 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2-3 years 184,851.23 0.93% 55,455.37 33,129.44 0.18% 9,938.83 Over 3 years 11,375,617.71 57.09% 11,359,854.37 11,502,868.14 64.01% 11,360,166.43 3 to 4 years 30,088.09 0.15% 15,044.05 3,596.51 0.02% 1,798.26 4 to 5 years 3,596.51 0.02% 2,877.21 704,517.32 3.92% 563,613.86 Over 5 years 11,341,933.11 56.92% 11,341,933.11 10,794,754.31 60.07% 10,794,754.31 Total 19,924,299.66 -- 12,004,933.84 17,971,840.96 -- 11,600,151.62 In the group, other accounts receivable that provision for bad debts by balance percentage: □Applicable√ Inapplicable In the group, other accounts receivable that provision for bad debts by other methods: □Applicable√ Inapplicable Other closing individually insignificant but provision for bad debts individually accounts receivable: √ Applicable □ Inapplicable Unit: RMB Yuan Content of other accounts Withdrawal proportion Book balance Provision for bad debts Reason receivable (%) Shenzhen Wufang Pottery & Porcelain 1,747,264.25 1,747,264.25 100% Poor operation status Industrial Co., Ltd Unrecoverable due to Liang Weimin 1,357,137.11 1,357,137.11 100% retirement of employee Shenzhen Guesthouse (is Unrecoverable attribute to the stripping assets of Shenxin 909,960.40 909,960.40 100% Company of Shenzhen Investment Holding Co., Ltd.) 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 Yan Kunping 496,307.77 496,307.77 100% Unrecoverable for a long 124 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Inapplicable (3) Information of other accounts receivable written off in the reporting period N/A. (4) Other accounts receivable is due from shareholders with more than 5% (including 5%) of the voting shares of the Company Inapplicable (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 46.33% Ltd. guarantee Anhui Nanpeng Papermaking 7,286,048.00 Operating turnover funds 5.96% Co., Ltd Shenzhen Shengfenglu, GUOMAO Jewel & Gold Co., 6,481,353.60 Current account 5.31% Ltd Shanghai Yutong Real estate 5,676,000.00 Current account 4.65% development Co., Ltd Wuliangye Restaurant 5,523,057.70 Current account 4.52% Hong Kong Yueheng 3,271,837.78 Current account 2.68% Development Co., Ltd Dameisha Tourism Center 2,576,445.69 Current account 2.11% 125 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen GUOMAO Industrial 2,351,652.48 Current account 1.93% Development Co., Ltd Elevated Train Project 2,542,332.43 Current account 2.08% Total 92,308,727.68 -- 75.57% (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 46.33% Co., Ltd. Anhui Nanpeng Joint venture 7,286,048.00 Over five years 5.96% Papermaking Co., Ltd Shenzhen Shengfenglu, GUOMAO Jewel & Gold Non-related-party 6,481,353.60 Over five years 5.31% Co., Ltd Shanghai Yutong Real estate development Co., Non-related-party 5,676,000.00 Over five years 4.65% Ltd Wuliangye Restaurant Non-related-party 5,523,057.70 Over five years 4.52% Total -- 81,566,459.30 -- 66.77% (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 7,286,048.00 5.96% Co., Ltd Shenzhen GUOMAO Industrial Development Co., Associated enterprise 2,351,652.48 1.93% Ltd Shenzhen Wufang Pottery & Associated enterprise 1,747,264.25 1.43% Porcelain Industrial Co., Ltd With the same controller of the Shenzhen Guesthouse 909,960.40 0.74% parent company of the Company Total -- 12,294,925.13 10.06% 126 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (8) Information of other accounts receivable that terminated recognition Inapplicable (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 Inapplicable (10) Government subsidy recognized according to the accounts receivable during the reporting period Inapplicable 8. Prepayment (1) List by aging analysis: Unit: RMB Yuan Closing balance Opening balance Aging Proportion Proportion Amount Amount (%) (%) Within 1 year 30,389,540.42 84.64% 55,422,464.21 85.64% 1 year to 2 978,600.00 2.73% 8,839,702.60 13.66% years 2 years to 3 4,535,619.60 12.63% 72,805.50 0.11% years Over 3 years 1,039.31 0% 380,017.80 0.59% Total 35,904,799.33 -- 64,714,990.11 -- (2) Information of the top 5 prepayment Unit: RMB Yuan Relationship with the Name of entity Amount Aging Reason for unsettled Company Prepayment of taxes According to the regulations of the Interim Regulations on Business Tax Implementation Non-related-party 6,264,370.14 Within 1 year Rules provisions to transferred the land use right or to sold the real estate, if adopted the 127 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. method receiving the accounts in advance (including receiving the deposit in advance), its happening date of the rateability was day received the prepayments. The surplus tax prepayments of the Company were the taxes such as the operating tax, urban construction tax and educational surcharges that had not reached the reorganization income conditions. Social security charges in building industry refers to the payment from the construction enterprises which paid for the staffs of their social security charges such as pension insurance, medical insurance, unemployment insurance, work-related Prepayment of social injury insurance and security charges in Non-related-party 26,662,579.90 1 to 3 years maternity insurance building industry (including the part that the individual paid). It executed the unified calculation and withdrawal standard, uniformly withdrew from the construction entities and uniformly settled the construction enterprises by taking the engineering project as unit. Shenzhen Ailite Mechanical and Non-related-party 1,504,000.00 1 to 3 years Engineering uncompleted Electrical Equipment 128 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Co., Ltd. Shenzhen Kailong Building Strengthening Non-related-party 268,241.05 Within 1 year Engineering uncompleted Technology Co., Ltd. Chongqing Xiyong Micro-electronics Non-related-party 154,798.00 Within 1 year Engineering uncompleted Industrial Park Development Co., Ltd. Total -- 34,853,989.09 -- -- (3) Information about amount due from shareholders with more than 5% (including 5%) of the voting shares of the Company in prepayment Inapplicable (4) Notes of prepayment Prepayment at the period-end decreased 44.52% when compared to the beginning of the period, mainly because the prepayment of the real estate projects which had reached the income recognizing conditions that carried forward into the operating revenue and the corresponding taxes which had transferred into the operating taxes and surcharges during the reporting period. There was no amount due from shareholders with more than 5% (including 5%) of the voting shares of the voting shares of the Company in prepayment or the arrears of other related party. 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 1,798,069.73 459,762.21 1,338,307.52 1,902,535.57 506,522.30 1,396,013.27 Inventory goods 41,414.10 41,414.10 43,286.70 43,286.70 Turnover material 472,708.60 472,708.60 515,562.10 515,562.10 Products held for real estate 389,667,048.37 12,544,031.24 377,123,017.13 1,054,626,950.28 32,647,460.45 1,021,979,489.83 development Properties under 1,378,610,580.99 1,378,610,580.99 736,298,555.66 736,298,555.66 development 129 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Completed 343,813,851.59 343,813,851.59 540,441,643.58 540,441,643.58 properties for sale Total 2,114,403,673.38 13,003,793.45 2,101,399,879.93 2,333,828,533.89 33,153,982.75 2,300,674,551.14 (2) Provision for falling price of inventories Unit: RMB Yuan Opening book Decease Category Increase Closing book balance balance Reversal Write-off Raw materials 506,522.30 -46,760.09 459,762.21 Land to be develope 32,647,460.45 20,103,429.21 12,544,031.24 d Total 33,153,982.75 -46,760.09 20,103,429.21 13,003,793.45 (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 value is lower than the book value Notes of inventory: Particulars about the capitalization amount of borrowing costs in the closing balance of inventory Category of inventory Project Closing balance Increase for the Decrease for the Closing balance year year Properties under Banshanyujing 7,367,181.38 16,913,826.07 24,281,007.45 development Properties under Hupanyujing 2,438,051.09 2,438,051.09 development Properties under Songhulangyuan 1,520,319.93 6,196,707.27 7,717,027.20 development Completed properties Xinhua City 2,873,505.96 2,574,509.26 298,996.70 for sale Completed properties Shengang No.1 7,268,867.94 5,157,819.87 2,111,048.07 for sale Completed properties Langqiao Garden 58,429,445.84 16,666,074.18 41,763,371.66 130 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. for sale Completed properties Caitianyise 12,288,408.45 749,529.78 12,383,460.60 654,477.63 for sale Total 89,747,729.50 26,298,114.21 36,781,863.90 79,263,979.81 10. Other current assets Inapplicable 11. Available-for-sale financial assets (1) Information of available-for-sale financial assets Inapplicable (2) Long-term liability investment of available-for-sale financial assets Inapplicable (3) Impairment of available for sale financial assets Inapplicable (4) Changes in impairment of available for sale financial assets during the reporting period Inapplicable (5) The fair value falling sharply or continue falling of equity instruments available for sale Inapplicable 12. Held-to-maturity investment (1) Information Inapplicable 131 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (2) Information of held-to-maturity investment sold in the reporting period but was not matured Inapplicable 13. Long-term accounts receivable Inapplicable 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% 60,782,597.82 2,694,442.79 58,088,155.03 7,049,153.14 1,752,013.07 Co., Ltd Shenzhen GUOMAO Tian’an 50% 50% 81,715,772.83 18,535,963.22 63,179,809.61 29,822,890.68 7,912,727.32 Properties Co., Ltd Shenzhen Tian’an International Building 50% 50% 33,488,264.16 28,532,365.51 4,955,898.65 15,639,100.00 664,822.60 Property Management Co., Ltd II. Associated enterprises Shenzhen 38.33% 38.33% GUOMAO 132 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Industrial Development Co., Ltd Anhui Nanpeng 30% 30% Papermaking Co., Ltd Shenzhen Wufang Pottery & 26% 26% Porcelain Industrial Co., Ltd 15. Long-term equity investment (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 Equity 30,645,05 28,168,07 876,006.5 29,044,07 Warehous 50% 50% method 6.04 0.98 4 7.52 e Company 133 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Limited Shenzhen GUOMA Equity 23,186,12 37,247,88 -5,657,98 31,589,90 9,614,345 O Tian’an 50% 50% method 4.00 7.05 2.23 4.82 .90 Properties Co., Ltd Shenzhen Tian’an Internatio nal Equity 1,500,000 3,531,192 -1,053,24 2,477,949 1,385,654 Building 50% 50% method .00 .12 2.79 .33 .10 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 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 Cost 8,780,645 8,780,645 8,780,645 8,780,645 8.47% 8.47% ng method .20 .20 .20 .20 134 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Huayue Real 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. Shensan Cost 17,695.09 17,695.09 17,695.09 17,695.09 Co., Ltd. method Macao Huashen Cost Enterpris 85,621.36 78,728.16 -2,398.06 76,330.10 10% 10% 76,330.10 -2,398.06 method e Co., Ltd. Chongqin g Guangfa Real Cost 2,598,061 2,388,896 -72,765.7 2,316,131 2,316,131 -72,765.7 27.25% 27.25% estate method .52 .80 6 .04 .04 6 developm ent Co., Ltd. Saipan Cost 1,935,184 1,779,386 -54,200.0 1,725,186 1,725,186 -54,200.0 30% 30% Project method .04 .25 7 .18 .18 7 143,988,3 140,760,5 -5,964,58 134,796,0 56,381,87 -129,363. 11,000,00 Total -- -- -- -- 42.18 88.34 2.37 05.97 4.75 89 0.00 135 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (2) Information of the limitation on the capability to transfer capital to investee Notes of long-term equity investment: A: 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. B: 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. 16. Investment property (1) Investment property calculated by cost Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance I. Total cost 470,775,352.19 6,676,687.78 338,236.82 477,113,803.15 1. Property and 462,805,397.79 6,676,687.78 338,236.82 469,143,848.75 buildings 2. Land use right 7,969,954.40 7,969,954.40 II Accumulated depreciation and 185,516,748.02 18,282,432.10 203,799,180.12 amortization 1. Property and 181,674,920.71 17,773,286.98 199,448,207.69 buildings 2. Land use right 3,841,827.31 509,145.12 4,350,972.43 III. Total net book value of investment 285,258,604.17 -11,605,744.32 338,236.82 273,314,623.03 real estate 1. Property and 281,130,477.08 -11,096,599.20 338,236.82 269,695,641.06 buildings 2. Land use right 4,128,127.09 -509,145.12 3,618,981.97 V. Total book value of 285,258,604.17 -11,605,744.32 338,236.82 273,314,623.03 investment real estate 1. Property and 281,130,477.08 -11,096,599.20 338,236.82 269,695,641.06 136 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. buildings 2. Land use right 4,128,127.09 -509,145.12 3,618,981.97 Unit: RMB Yuan The reporting period Amount of amortization and depreciation in the reporting period 18,145,915.99 Withdrawal amount of provision for impairment of investment real estate 0.00 in the reporting period (2) Investment real estate measured by fair value Inapplicable 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 207,889,230.04 13,904,860.72 14,394,822.78 207,399,267.98 Including: Property and 116,853,547.15 1,389,533.11 115,464,014.04 building Machineries 53,453,807.69 10,839,882.00 12,348,623.83 51,945,065.86 Vehicles 32,850,696.23 1,650,457.72 618,897.46 33,882,256.49 Electrical and other 4,731,178.97 1,414,521.00 37,768.38 6,107,931.59 equipments 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 128,992,344.67 15,394,331.40 12,364,140.97 132,022,535.10 depreciation Including: Property and 68,910,180.45 4,103,661.84 136,516.12 72,877,326.17 building Machineries 30,037,072.51 9,410,117.84 11,683,936.34 27,763,254.01 Vehicles 25,804,178.95 1,599,019.72 541,170.63 26,862,028.04 Electrical and other 4,240,912.76 281,532.00 2,517.88 4,519,926.88 equipments Opening book Closing balance in -- -- balance current period 137 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. III. The net book value of 78,896,885.37 -- 75,376,732.88 fixed assets Including: Property and 47,943,366.70 -- 42,586,687.87 building Machineries 23,416,735.18 -- 24,181,811.85 Vehicles 7,046,517.28 -- 7,020,228.45 Electrical and other 490,266.21 -- 1,588,004.71 equipments 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 78,821,168.21 -- 75,301,015.72 assets Including: Property and 78,821,168.21 -- 75,301,015.72 building Machineries 47,943,366.70 -- 42,586,687.87 Vehicles 23,416,735.18 -- 24,181,811.85 Electrical and other 6,970,800.12 -- 6,944,511.29 equipments Decoration of fixed assets 490,266.21 -- 1,588,004.71 Depreciation amount of this reporting period was RMB 15,394,331.40, 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 7,326,436.37 3,197,450.69 4,128,985.68 building (3) Fixed assets leased in from financing lease Inapplicable 138 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (4) Fixed assets leased out from operation lease Inapplicable (5) Information of hold-for-sale fixed assets at period-end Inapplicable (6) Information of fixed assets failed to accomplish 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)Construction in progress 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 for Shenxin Building Total 57,000.00 57,000.00 (2) Significant changes in construction in progress Unit: RMB Yuan Inapplicable (3) Impairment provision of construction in progress Inapplicable (4) Information of procedures of significant construction in progress Inapplicable (5) Notes of construction in progress Inapplicable 139 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 19. Engineering materials Inapplicable 20. Clearance of fixed assets Inapplicable 21. Productive biological assets (1)Measured by cost Inapplicable (2)Measured by fair value Inapplicable 22. Oil and gas assets Inapplicable 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 56,786,253.69 7,153,063.04 63,939,316.73 Taxi operating licenses 56,768,253.69 7,152,803.04 63,921,056.73 Official software 18,000.00 260.00 18,260.00 III. Total net book value of 114,098,153.11 -7,153,063.04 106,945,090.07 intangible assets Taxi operating licenses 114,097,893.11 -7,152,803.04 106,945,090.07 Official software 260.00 -260.00 Taxi operating licenses Official software 140 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total book value of 114,098,153.11 -7,153,063.04 106,945,090.07 intangible assets Taxi operating licenses 114,097,893.11 -7,152,803.04 106,945,090.07 Official software 260.00 -260.00 Amortization was of RMB 7,153,063.04 in the reporting period (2) Company development expense Inapplicable 24. Goodwill Inapplicable 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 1,816,250.25 172,976.28 1,643,273.97 Tianhong Subway No. 3 Fire-fighting renovation of 1,007,116.20 31,410.00 556,846.30 481,679.90 Shenxin Building Renovation for 820,921.95 353,937.30 218,429.13 956,430.12 repair shops Total 3,644,288.40 385,347.30 948,251.71 3,081,383.99 -- 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 872,048.94 335,764.51 Deductible losses 11,495,872.46 141 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Accrued land VAT 184,251,177.59 140,731,876.12 Accrued unpaid dismiss welfare 788,140.00 Transferred employee education fee pay 1,140.51 deductible in the following year Transferred advertisement fee deductible in the 664,109.00 following year Unrealized internal sales gain and loss 763,588.63 7,828,210.75 Estimated profit calculated at pre-sale revenue of 5,705,773.64 32,662,711.15 property enterprises Subtotal 191,592,588.80 194,507,824.50 Deferred income tax liabilities: Prepaid land VAT 2,739,089.94 Subtotal 2,739,089.94 List of taxable differences and deductible differences items Unit: RMB Yuan Temporary differences amount Item 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 3,488,195.78 1,343,057.99 Accrued land VAT 737,004,710.28 562,927,504.45 Deductible losses 3,152,560.00 Transferred advertisement fee deductible in the 45,983,489.80 following year Transferred employee education fee pay deductible 4,562.04 in the following year Accrued unpaid dismiss welfare 2,656,436.00 Estimated profit calculated at pre-sale revenue of 3,054,354.48 31,312,842.98 property enterprises Unrealized internal sales gain and loss 22,823,094.60 130,650,844.60 Subtotal 766,370,355.14 778,031,297.86 142 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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 191,592,588.80 766,370,355.14 194,507,824.50 778,031,297.86 Deferred income tax liabilities 2,739,089.94 10,956,359.77 27. List of provision for assets impairment Unit: RMB Yuan Opening book Decrease Closing book Item Increase balance Reversal Written off balance I. Provision for bad debt 226,865,304.69 574,421.94 833,813.78 363,629.78 226,242,283.07 II. Provision for inventory 33,153,982.75 -46,760.09 20,103,429.21 13,003,793.45 falling price V. Impairment provision of 56,511,238.64 -129,363.89 56,381,874.75 long-term equity investment VII. Impairment provision of 75,717.16 75,717.16 fixed assets Total 316,606,243.24 398,297.96 833,813.78 20,467,058.99 295,703,668.43 Notes of the list of assets impairment: Cancel after verification of provision for bad debt and impairment of long-term equity investment increase in the current period was influenced by conversion of foreign currency. The resale of provision for inventory falling price in the current period was because rolling out of the sale of inventory of Tingjiu real estate. 28. Other non-current assets Inapplicable 29. Short-term loan (1) Category Unit: RMB Yuan Category Closing balance Opening balance Mortgage loan 260,000,000.00 220,000,000.00 Guarantee loan 60,000,000.00 Guarantee loan + pledge loan 40,000,000.00 40,000,000.00 143 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Mortgage loan + pledge loan 40,000,000.00 Total 300,000,000.00 360,000,000.00 Table of short-term borrowing: Closing balance Interest rate The loan equity Starting date End date Currency Foreign (%) currency Local currency amount amount Shenzhen Investment Holdings 17 May 2013 16 May 2014 Renminbi 6.00 —— 240,000,000.00 Co., Ltd. Bank of Beijing Co., Ltd. 8 Apr. 2013 8 Apr. 2014 Renminbi 6.60 —— 20,000,000.00 Shenzhen Branch Industrial Bank Co., Ltd. 17 Apr. 2013 17 Apr. 2014 Renminbi 6.30 —— 40,000,000.00 Shenzhen Branch Total —— —— 300,000,000.00 RMB 24 million was Shenzhen Investment Holding Co., Ltd entrusting China Everbright Bank JingTian branch to borrow, after the maturity on28 Mar. 2013 renew the loans and lending on 17 May 2013,the borrowing rate changed from 6.9554% to 6% . (2) List of unsettled mature short-term loan Inapplicable 30. Trading financial liabilities Inapplicable 31. Notes payable Inapplicable 32. Accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Accounts payable 265,697,047.64 298,525,752.32 Total 265,697,047.64 298,525,752.32 (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. 520,975.68 144 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Total 520,975.68 0.00 (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 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 141,082,677.48 678,075,291.01 Total 141,082,677.48 678,075,291.01 (2) Advanced from customers from shareholders with more than 5% (including 5%) of the voting shares of the Company Inapplicable (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 decreased by79.19%, over that of period-begin, which mainly due to accounts advance from customers of the sale of real estate project reaching to the revenue recognition conditions and had been transferred to 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. Main advance from customers of the sale of real estate project: Item Aging Closing balance Estimated completion time SZPRD-Shengang No. 1 Within one year 23,300,085.00 Has be completed SZPRD-Langqiao Garden Within one year 85,288,659.00 Has be completed SZPRD-Caitianyise Within one year 2,197,022.00 Has be completed Total 110,785,766.00 34. Payroll payable Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance I. Salary, bonus, 44,958,460.02 191,000,761.00 190,662,373.95 45,296,847.07 allowance, subsidy 145 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. II. Employee welfare 11,723,182.03 11,723,182.03 III. Social insurance 414,453.62 29,797,109.05 30,211,562.67 Including: Medical 83,301.87 5,660,816.82 5,744,118.69 insurance premiums Basic pension 189,813.64 16,949,823.11 17,139,636.75 benefits Annuity 110,120.00 4,696,648.13 4,806,768.13 Unemployment 16,864.51 1,163,526.52 1,180,391.03 insurance Work-related injury 7,459.74 542,409.97 549,869.71 insurance Maternity insurance 6,893.86 552,913.83 559,807.69 Other social 230,970.67 230,970.67 insurance IV. Housing fund 1,556,014.25 7,732,402.39 7,817,604.45 1,470,812.19 V. Redemption for terminations of labor 3,986,211.80 3,685,083.12 7,042,504.12 628,790.80 contract VI. Others 3,806,477.22 5,861,257.89 7,040,954.19 2,626,780.92 Of which: labor union budget and 3,806,477.22 5,861,257.89 7,040,954.19 2,626,780.92 employee education budget Total 54,721,616.91 249,799,795.48 254,498,181.41 50,023,230.98 RMB 0.00 is the amounts in arrears in the payroll payable. The labor union budget and employee education budget is RMB 2,626,780.92, and the non-monetary benefits are RMB 0.00, as well as the compensation for terminating the labor contract is RMB 7,042,504.12. 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 169,814.58 160,057.44 Business tax 6,467,191.84 7,085,925.17 Corporate income tax 118,945,842.15 160,519,629.84 Personal income tax 638,522.93 762,203.88 Urban maintenance and construction tax 460,533.83 505,130.58 146 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Stamp duty -8,763.57 -10,066.15 Education surtax 201,566.29 219,588.15 Local education surtax 134,440.12 146,185.40 Land VAT 737,004,710.28 562,927,504.45 Property tax 981,324.08 980,346.47 Levee fee 5,177.08 6,945.79 Other 512,698.98 356,228.69 Total 865,513,058.59 733,659,679.71 36. Interest payable Unit: RMB Yuan Item Closing balance Opening balance Interest payable of short-term loan 934,568.21 Total 934,568.21 37. Dividends payable Inapplicable 38. Other accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Other accounts payable 123,967,110.64 138,742,022.58 Total 123,967,110.64 138,742,022.58 (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 Total 0.00 0.00 (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.. 147 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. There is no other accounts payable from shareholders with more than 5% (including 5%) of the voting shares of the Company in the reporting period. (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 Rental deposit 30,775,659.32 Guarantee deposit Shenzhen Jifa Warehouse Co., Ltd 23,545,808.00 Current accounts Guangzhou Lishifeng Automobile Co., Ltd. 15,344,017.08 Current accounts Shenzhen GUOMAO Tian’an Properties Co., Ltd 4,114,345.90 Current accounts Shenzhen Hengxin Aote Investment & 3,000,000.00 Earnest Money Development Co., Ltd. Total 76,779,830.30 39. Estimated liabilities Inapplicable 40. Non-current liabilities due within 1 year (1) Unit: RMB Yuan Item Closing balance Opening balance Long-term loan due within 1 year 64,316,666.64 12,216,666.68 Long-term accounts payable due within 1 year 2,693,221.64 2,693,221.64 Total 67,009,888.28 14,909,888.32 (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 14,316,666.64 12,216,666.68 Mortgage loan+ Guarantee loan 50,000,000.00 Total 64,316,666.64 12,216,666.68 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 11 Jan. 2012 10 Jan. 2015 RMB Yuan 6.77% 0.00 10,650,000.0 0.00 8,550,000.00 148 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Branch of 0 Ping An Bank Shenzhen Shangbu Sub-branch 23 Nov. 2011 23 Nov. 2014 RMB Yuan 6.77% 0.00 3,666,666.64 0.00 3,666,666.68 of Shenzhen Development Bank Bank of Communicati 20,000,000.0 ons Co., Ltd. 27 Jun. 2013 6 Sep. 2014 RMB Yuan 7.38% 0.00 0.00 0.00 0 Yangzhou Branch Bank of Communicati 30,000,000.0 ons Co., Ltd. 27 Jun. 2013 6 Dec. 2014 RMB Yuan 7.38% 0.00 0.00 0.00 0 Yangzhou Branch 64,316,666.6 12,216,666.6 Total -- -- -- -- -- -- 4 8 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 0.00 Total 0.00 -- -- -- -- -- RMB 3,466,666.67 was paid back after Balance Sheet Date: (3) Bonds payable due within 1 year Inapplicable (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 1,293,221.64 renting operating license plate To be transferred income from 1,400,000.00 1,400,000.00 renting Shenzhen 149 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. GUOMAO Petroleum Co., Ltd 41. Other current liabilities Inapplicable 42. Long-term loan (1) Category of long-term loan Unit: RMB Yuan Item Closing balance Opening balance Pledge loan 5,000,000.00 19,316,666.64 Mortgage loan+ Guarantee loan 111,243,352.00 Total 116,243,352.00 19,316,666.64 (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 5,000,000.00 0.00 Ping An 0 Bank Bank of Communicati ons Co., 50,000,000.0 21 Nov. 2013 11 Jan. 2016 RMB Yuan 6.15% 0.00 0.00 0.00 Ltd.Donggua 0 n DaLang Branch Bank of Communicati 50,000,000.0 ons Co., Ltd. 5 Nov. 2013 6 Mar. 2015 RMB Yuan 7.38% 0.00 0.00 0.00 0 Yangzhou Branch Bank of Communicati ons Co., 28 Jan. 2013 11 Jan. 2016 RMB Yuan 6.95% 0.00 7,567,803.00 0.00 0.00 Ltd.Donggua n DaLang Branch Bank of 11 Jan. 2013 11 Jan. 2016 RMB Yuan 6.95% 0.00 2,218,000.00 0.00 0.00 150 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Communicati ons Co., Ltd.Donggua n DaLang Branch Bank of Communicati ons Co., 29 Apr. 2013 11 Jan. 2016 RMB Yuan 6.95% 0.00 1,457,549.00 0.00 0.00 Ltd.Donggua n DaLang Branch 116,243,352. 15,650,000.0 Total -- -- -- -- -- -- 00 0 Note:there is no mature loan of long-term loan 43. Bonds payable Inapplicable 44. Long-term payable (1) The top five long-term payable Inapplicable (2) List of the financing lease payable under the long-term loan Inapplicable 45. Specific payable Inapplicable 46. Other non-current liabilities Unit: RMB Yuan Item Closing book balance Opening book balance Utility specific fund 237,163.45 2,088,759.35 Housing principle fund 12,840,943.08 14,502,134.27 House warming deposit 7,687,512.66 7,729,980.31 Electric Equipment Maintenance fund 4,019,415.44 4,019,415.44 Deputed Maintenance fund 28,583,685.95 28,128,684.34 Taxi Deposit 40,798,500.00 40,620,500.00 To be transferred income from renting operating 10,095,846.69 11,389,068.33 license plate To be transferred income from renting Shenzhen 11,670,000.00 13,070,000.00 GUOMAO Petroleum Co., Ltd 151 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Equity of stripped assets attributable to investment 21,289,629.66 23,101,930.71 holding Other 1,915,703.83 1,346,828.56 Total 139,138,400.76 145,997,301.31 Notes of other non-current liabilities The other non-current liabilities were mainly the drivers mutual aid money charged for the drivers by the taxi company. Liabilities project involving government subsidies Unit: RMB Yuan Amount of New increase non-operating Related to Closing Item Opening balance amount in the income record into Other changes assets/related to balance reporting period the reporting income period Total 0.00 0.00 0.00 0.00 0.00 -- 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 0.00 0.00 0.00 0.00 0.00 595,979,092.00 48. Treasury stock Inapplicable 49. Special reserves Inapplicable 50. Capital reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Capital premium (share 38,450,087.51 0.00 0.00 38,450,087.51 capital premium) Other capital reserves 81,636,558.92 0.00 0.00 81,636,558.92 Total 120,086,646.43 0.00 0.00 120,086,646.43 51. Surplus reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Legal surplus reserves 102,882,532.15 18,659,853.66 121,542,385.81 Total 102,882,532.15 18,659,853.66 121,542,385.81 152 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 52. Provision for general risk Inapplicable 53. Retained profits Unit: RMB Yuan Withdrawal or distributed Item Amount proportion Opening balance of retained profits before 746,091,174.80 -- adjustments Adjustments of opening balance of retained profits -56,000,000.00 -- (“+” means add, “-” means reduce) Opening balance of retained profits after 690,091,174.80 -- adjustments Add: Net profit attributable to owners of the 300,840,563.81 -- Company Closing retained profits 18,659,853.66 10% Opening balance of retained profits before 972,271,884.95 -- adjustments 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-56,000,000.00 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 Item Reporting period Same period of last year Sales of main business 1,583,396,854.45 1,827,263,066.87 Other operating income 35,830,373.15 34,035,764.12 Cost of sales 744,847,455.76 841,932,253.07 (2) Main business (Classified by industry) Unit: RMB Yuan Industry Reporting period Same period of last year 153 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Revenue of sales Costs of sales Revenue of sales Costs of sales Sale of properties 1,175,698,776.00 429,705,982.89 1,429,818,416.04 529,936,876.93 Property rental and management 314,335,156.29 249,763,782.57 294,368,019.69 240,220,196.84 services income Transportation services 58,366,214.95 27,119,490.19 71,332,140.87 36,881,838.97 Catering services 28,424,750.75 24,408,368.58 25,909,847.37 21,782,438.16 Other 6,571,956.46 7,089,966.81 5,834,642.90 5,070,407.54 Total 1,583,396,854.45 738,087,591.04 1,827,263,066.87 833,891,758.44 (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 1,175,698,776.00 429,705,982.89 1,429,818,416.04 529,936,876.93 Property rental and management 314,335,156.29 249,763,782.57 294,368,019.69 240,220,196.84 services Transportation 58,366,214.95 27,119,490.19 71,332,140.87 36,881,838.97 Catering services 28,424,750.75 24,408,368.58 25,909,847.37 21,782,438.16 Other 6,571,956.46 7,089,966.81 5,834,642.90 5,070,407.54 Total 1,583,396,854.45 738,087,591.04 1,827,263,066.87 833,891,758.44 (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 Revenue of Shenzhen area 1,426,001,069.12 605,546,055.42 1,714,040,958.25 733,366,869.03 Revenue of other area 157,395,785.33 132,541,535.62 113,222,108.62 100,524,889.41 Total 1,583,396,854.45 738,087,591.04 1,827,263,066.87 833,891,758.44 (5) The revenue of sales from the top five customers Unit: RMB Yuan Customer Main business revenue Proportion of total business revenue (%) Natural person 76,060,000.00 4.7% Huawei Technologies Co., Ltd 47,924,975.84 2.96% 154 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Natural person 42,325,800.00 2.61% Tianhong Shopping Plaza Co., 9,616,787.88 0.59% Ltd. Natural person 8,924,083.00 0.55% Total 184,851,646.72 11.41% Note: Income of other department of project supervision, elevator maintenance, car repair etc 55. Revenue from the construction contracts Inapplicable 56. Business tax and surcharges Unit: RMB Yuan Item Reporting period Same period of last year Calculation and payment standard Business tax 79,013,757.74 95,453,743.31 3%、5% of revenue of sales Urban maintenance and construction 5,669,510.66 6,621,819.90 1%, 7% of taxable turnover tax tax Education surtax 2,428,102.47 2,746,629.49 3% of taxable turnover tax Local education surtax 1,561,694.16 1,814,176.79 2% of taxable turnover tax Four progressive levels with the tax Land VAT 220,444,005.84 288,711,440.64 rate ranging from 30% to 60% of the added value from properties transfer. 1.2% of the 70% cost of property per Property tax 2,813,529.37 2,743,585.68 year Levee fee 201,640.94 181,348.52 0.01% of revenue of sales Other 640,965.93 586,993.34 Total 312,773,207.11 398,859,737.67 -- 57. Selling expenses Unit: RMB Yuan Item Reporting period Same period of last year Employee’s remuneration 4,821,154.30 5,483,080.09 Office expenses of the business 7,651,100.56 7,210,378.11 organization Sales agents fees, advertising fees and 25,890,176.93 29,022,570.25 promotional expenses Other 1,857,323.41 2,235,146.15 Total 40,219,755.20 43,951,174.60 155 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 58. Administrative expenses Unit: RMB Yuan Item Reporting period Same period of last year Employee’s remuneration 64,369,961.54 64,668,597.75 Administrative office expenses 27,650,387.41 26,036,025.42 Assets amortization and depreciation 5,746,139.38 6,177,229.63 expenses Lawsuit expenses 715,795.60 1,891,251.70 Taxes 989,554.57 1,763,772.44 Other 10,190,641.40 9,143,670.76 Total 109,662,479.90 109,680,547.70 59. Financial expenses Unit: RMB Yuan Item Reporting period Same period of last year Interest expenditures 3,590,492.70 Interest income -7,170,721.72 -6,735,176.98 Net losses of foreign currency exchange 55,533.95 1,432.52 Other 780,486.08 1,638,662.10 Total -6,334,701.69 -1,504,589.66 60. Gains and losses from changes in fair value Inapplicable 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 5,164,781.52 3,145,809.75 equity method Total 5,164,781.52 3,145,809.75 (2) Long-term equity investment income accounted by cost method Unit: RMB Yuan Name of investee Reporting period Same period of last Reason for increase/decrease 156 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. year Total 0.00 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 year Shenzhen Jifa Warehouse Co., Ltd 876,006.54 811,006.94 Increase of realized profits Shenzhen GUOMAO Tian’an 3,956,363.67 1,844,080.22 Increase of realized profits Properties Co., Ltd Shenzhen Tian’an International Building Property Management Co., 332,411.31 490,722.59 Increase of realized profits Ltd Total 5,164,781.52 3,145,809.75 -- Note: 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 -315,695.74 -9,603,107.07 II. Inventory falling price losses -46,760.09 -4,269,593.10 Total -362,455.83 -13,872,700.17 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 161,188.19 592,927.50 161,188.19 assets Including:Gains from disposal of fixed 161,188.19 592,927.50 161,188.19 assets Government grants 1,726,600.00 Other 2,284,089.57 1,705,683.98 2,284,089.57 Total 2,445,277.76 4,025,211.48 (2) List of government grants recorded in current non-operating gains and losses Unit: RMB Yuan Related to assets/related Whether non-operating Item Reporting period Same period of last year to income gains and losses or not 157 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Exterior wall renovation 0.00 1,726,600.00 Related to income Yes grants Total 0.00 1,726,600.00 -- -- 64. Non-operating expenses Unit: RMB Yuan Amount recorded in Item Reporting period Same period of last year current non-operating gains and losses Loss on disposal of non-current assets 88,561.24 58,269.77 Including: Loss on disposal of fixed assets 88,561.24 58,269.77 88,561.24 Loss on exchange of non-monetary assets 1,382,794.36 Taxes overdue payment fines and other fines 319,338.64 319,338.64 Other 2,689,172.12 934,221.86 2,689,172.12 Total 3,097,072.00 2,375,285.99 Notes: The other mainly is legal settlements 65. Income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense accounted by tax and relevant 121,917,764.86 179,892,522.76 regulations Adjustment of income tax 176,145.76 -67,666,532.15 Total 122,093,910.62 112,225,990.61 66 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 0.50 0.63 0.50 0.63 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 158 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. A.Basic Earnings Per Share =P0÷S S= S0+S1+Si×Mi÷M0-Sj×Mj÷M0-Sk P0 represents the amounts attributable to ordinary equity holders of the Company in respect of: (a) Profit or loss attributable to the Company; and (b) Profit or loss after deducting extraordinary gain or loss attributable to the Company. S represents the weighted average number of ordinary shares outstanding during the period. S0 represents the number of ordinary shares at the beginning of the period. S1 represents the number of additional ordinary shares issued on capital surplus transfer or share dividends appropriation; Si represents the number of ordinary shares issued in exchange for cash or issued as a result of the conversion of a debt instrument to ordinary shares during the period. Sj represents reduced number of ordinary shares such as shares buy back. Sk represents the number of a reverse share split. Mo represents the months during the period. Mi represents the months from the following month after issuing incremental shares to the end of the period. Mj represents the months from the following month after reducing shares to the end of the period. B.Diluted Earnings Per Share =P1/(S0+S1+Si×Mi÷M0–Sj×Mj÷M0–Sk+ The weighted average number of incremental ordinary shares on warrants, options, convertible debt and so on) P1 represents the amounts attributable to ordinary equity holders of the Company in respect of: (a) Profit or loss attributable to the Company; and (b) Profit or loss after deducting extraordinary gain or loss attributable to the Company, adjust according to the accounting standards for enterprises and other relevant provisions. The Company considered in sequence from dilutive potential ordinary shares to get the lowest earnings per share. 67. Other comprehensive income Unit: RMB Yuan Item Reporting period Same period of last year 4. Converted amount of foreign currency financial statements -1,215,814.06 7,383.80 Subtotal -1,215,814.06 7,383.80 Total -1,215,814.06 7,383.80 68. Notes of Cash Flow Statement (1) Other cash received relevant to operating activities Unit: RMB Yuan Item Amount Large current funds received 14,000,000.00 Interest income 7,327,583.63 Net margins, security deposit and various special funds received 5,019,428.30 Government grants 2,781,586.49 159 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Other small receivables 29,128,598.42 (2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Amount Paying administration expenses in cash 31,355,053.79 Paying sales expenses in cash 37,118,203.52 Collecting and paying net current account of Hainan Yirun Real Estate Co., 13,414,160.10 Ltd. Large current funds paid 5,987,385.57 Other small receivables 2,258,809.44 Total 90,133,612.42 (3) Other cash received relevant to investment activities Inapplicable (4) Other cash paid relevant to investment activities Inapplicable (5) Other cash received relevant to financing activities Inapplicable (6) Other cash paid relevant to financing activities Unit: RMB Yuan Item Amount Handling charges of significant loans 1,677,492.00 Total 1,677,492.00 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: Net profit 300,840,563.81 374,822,152.41 Add: Provision for assets impairments -362,455.83 -13,872,700.17 Depreciation of fixed assets, oil-gas assets and productive 33,540,247.39 33,088,167.20 biological assets Amortization of intangible assets 7,153,063.04 7,156,103.04 Amortization of long-term deferred expense 548,620.41 593,793.54 Losses/gains on disposal of property, intangible asset and -72,626.95 -536,128.03 other long-term assets (gains: negative) Losses/gains on scrapped of fixed assets (gains: 1,470.30 negative) 160 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Financial cost (income: negative) 260,000.00 4,290,492.70 Investment loss (gains: negative) -5,164,781.52 -3,145,809.75 Decrease in deferred tax assets (increase: negative) 2,915,235.70 -70,405,622.09 Increase in deferred tax liabilities (decrease: negative) -2,739,089.94 2,739,089.94 Decrease in inventory (increase: negative) 220,504,457.29 -415,923,132.85 Decrease in accounts receivable from operating activities 25,325,668.39 400,796,829.31 (increase: negative) Increase in accounts payable from operating activities -472,324,571.69 486,109,491.83 (decrease: negative) Net cash flows generated from operating activities 110,424,330.10 805,714,197.38 2. Significant investing and financing activities without -- -- involvement of cash receipts and payments 3. Change of cash and cash equivalent: -- -- Closing balance of Cash 977,171,814.20 797,724,311.37 Less: opening balance of cash 797,724,311.37 469,313,741.57 The net increase in cash and cash equivalents 179,447,502.83 328,410,569.80 (2) Relevant information of acquisition or disposal of subsidiaries and other operation entities in the reporting period Inapplicable (3) Composition of cash and cash equivalents Unit: RMB Yuan Item Reporting period Same period of last year I. Cash 977,171,814.20 797,724,311.37 Including: Cash on hand 263,857.71 197,165.38 Bank deposit on demand 974,606,475.15 793,456,036.83 Other monetary funds on demand 2,301,481.34 4,071,109.16 III. Closing balance of cash and cash equivalents 977,171,814.20 797,724,311.37 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.: Other in change statement of owner's equity refers to translation reserve. 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 Inapplicable 161 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2. Main information about the special purpose entities in which the Company has no control right but bears relevant risks: Inapplicable IX. Related Parties and Related-party Transactions 1. Information of the parent company of the Company 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 63.82% 63.82% Administra Holdings shareholde Mingchun 0 1 (state-own tion and Co., Ltd. r d assets ed) Supervisio n 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 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 Shenzhen Huangchen Limited Huangchen Controlled g Real Liability Shenzhen Li Zipeng g Real 30000000 100% 100% 192184835 subsidiary Estate Co., Company Estate Co., Ltd. Ltd. Shenzhen Limited Shenzhen Controlled Property Liability Shenzhen Li Zipeng Property 30950000 100% 100% 192174565 subsidiary and Real Company and Real 162 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Estate Estate Developme Developme nt Co., Ltd. nt Co., Ltd. PRD Group PRD Group Xuzhou Xuzhou Limited Dapeng Controlled Dapeng Liability Xuzhou Li Zipeng 50000000 100% 100% 552525454 Real Estate subsidiary Real Estate Company Developme Developme nt Co.,Ltd. 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 Yangzhou Limited Property Controlled Wang Real Estate Liability Yangzhou developmen 50000000 100% 100% 573842934 subsidiary Qiuping Developme Company t 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 Controlled Limited Chongqing Zeng Property 5000000 100% 100% 202853028 163 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen subsidiary Liability Xiangrong managemen GUOMAO Company t Property Managemen t Co., Ltd. Chongqing Limited Ao’bo Controlled Zeng Liability Chongqing Service 3500000 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 GUOMAO Property Limited Managemen Controlled Liability Shenzhen Bao Gang Service 1200000 100% 100% 192332519 t subsidiary Company 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 Controlled Limited Fan Shenzhen Service 16000000 100% 100% 192267331 GUOMAO subsidiary Liability Weiping 164 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Motor Rent 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 Tianhe Controlled Liability Chengdu Li Jun Trading 8000000 100% 100% 754748621 Industry subsidiary Company 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 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 165 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen Limited Jifa Wang HKD54150 Joint Liability Shenzhen Service 50% 50% 618847828 Warehouse Hangjun 000 venture Company Co., Ltd Shenzhen GUOMAO Limited Wang USD888000 Joint Tian’an Liability Shenzhen Service 50% 50% 618845152 Hangjun 0 venture Properties Company Co., Ltd Shenzhen Tian’an Internationa Limited Property Zhang Joint l Building Liability Shenzhen managemen 3000000 50% 50% 618930517 Changsheng venture Property Company t Managemen t Co., Ltd II. Associated enterprises Shenzhen GUOMAO Limited Zha HKD32800 Associated Industrial Liability Shenzhen Service 38.33% 38.33% Shengming 000 enterprise Developme Company nt Co., Ltd Anhui Limited Nanpeng Wang Industrial USD800000 Associated Liability Huainan 30% 30% Papermakin Yizhong production 0 enterprise Company g Co., Ltd Shenzhen Wufang Limited Pottery & Industrial USD167200 Associated Liability Shenzhen Yan Wenbo 26% 26% Porcelain production 00 enterprise Company Industrial 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 166 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Investment Co., Ltd. company of the Company 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 331,431.51 100% 189,544.18 100% Co., Ltd. market price Sales of goods and rendering of 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 Collecting property Investment Holdings by reference to 2,659,727.12 100% 5,540,191.45 100% 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 314,388.98 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 167 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 626,000 of assets operating income to Shenzhen Foreign Economy & Trade Investment Co., Ltd.. During the entrusting management period of 2013, the stripped assets operating situation as follows: : Item Amount Revenue of sales 3,991,674.01 Cost of sales 2,491,543.48 Business tax and surcharges 223,533.74 Administrative expenses 857,411.48 Total profits 419,185.31 Income taxes expenses 104,796.33 Net profits 314,388.98 Note: the administrative expenses included RMB 626,000 of assets operating income paid to Shenzhen Foreign Economy & Trade Investment Co., Ltd.. (3) Information of related-party lease Inapplicable (4) Information of related-party guarantee Unit: RMB Yuan Whether the Guarantor Secured party Guarantee amount Initial date Due date guarantee was accomplished or not ShenZhen Properties Shenzhen & Resources GUOMAO Vehicles 20,000,000.00 8 Apr. 2013 8 Apr. 2014 No Development Industry Co., Ltd. (Group) Ltd. ShenZhen Properties Dongguan Guomao & Resources Changsheng Real 61,243,352.00 11 Jan. 2013 11 Jan. 2016 No Development Estate Development (Group) Ltd. Co., Ltd. ShenZhen Properties PRD Yangzhou Real & Resources Estate Development 20,000,000.00 27 Jun. 2013 6 Sep. 2014 No Development Co., Ltd. (Group) Ltd. ShenZhen Properties PRD Yangzhou Real 30,000,000.00 27 Jun. 2013 6 Dec. 2014 No & Resources Estate Development 168 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Development Co., Ltd. (Group) Ltd. PRD Yangzhou Real Estate Development Co., Ltd. ShenZhen Properties & Resources Development PRD Yangzhou Real (Group) Ltd. Estate Development 50,000,000.00 5 Nov. 2013 6 Mar. 2015 No PRD Yangzhou Co., Ltd. Real Estate Development Co., Ltd. Shenzhen Shenzhen GUOMAO Vehicles GUOMAO Motor 40,000,000.00 17 Apr. 2013 17 Apr. 2014 No Industry Co., Ltd. Rent Co., Ltd. Shenzhen Shenzhen GUOMAO Motor GUOMAO Vehicles 15,650,000.00 11 Jan. 2012 10 Jan. 2015 No Rent Co., Ltd. Industry 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 Inapplicable (6) Information about assets transfer, debt reorganization of related parties Inapplicable (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 loan in the party party (%) loan borrowed in the reporting reporting the reporting period period period Shenzhen Shenzhen Shenzhen 6.9544 4,000.00 4,000.00 74.95 Investment Jingtian GUOMAO Holdings Sub-branch Vehicles Co., Ltd. of China Industry Co., Everbright Ltd. 169 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Bank Shenzhen Shenzhen Shenzhen 6.9544 20,000.00 20,000.00 374.76 Investment Jingtian Huangcheng Holdings Sub-branch Real Estate Co., Ltd. of China Co., Ltd. Everbright Bank Shenzhen Shenzhen The 6.0000 24,000.00 24,000.00 915.40 Investment Jingtian Company Holdings Sub-branch Co., Ltd. of China Everbright Bank Total —— 24,000.00 24,000.00 24,000.00 24,000.00 1,365.11 Note: The entrusted loan of RMB 40 million for Shenzhen GUOMAO Vehicles Industry Co., Ltd. and the entrusted loan of RMB 0.2 billion for Shenzhen Huangcheng Real Estate Co., Ltd. were returned on 28 Mar. 2013, the Company renew the loans on 17 May 2013, the loans expire on May 16, 2014, with interest rate of 6% by mortgaging the five houses located at Guomao Plaza (Phase II), Nanhu Road, Luohu District, Shenzhen; 74 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. 6. Amounts due from/to related parties Amount due from related parties Unit: RMB Yuan Closing balance Opening balance Item Related party Provision for bad Provision for bad Book balance Book balance debts debts Anhui Nanpeng Other accounts receivable 7,286,048.00 7,286,048.00 7,648,160.00 7,648,160.00 Papermaking Co., Ltd Shenzhen GUOMAO Other accounts receivable Industrial 2,351,652.48 2,351,652.48 2,351,652.48 2,351,652.48 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 2,412,618.73 72,378.56 415,302.14 12,459.06 Holdings Co., Ltd. 170 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Amount due to related parties Unit: RMB Yuan Item Related party Closing balance Opening balance Shenzhen Jifa Warehouse Co., Other payables 23,545,808.00 19,545,808.00 Ltd Shenzhen Tian’an International Building Other payables 4,114,345.90 1,500,000.00 Property Management Co., Ltd Shenzhen GUOMAO Tian’an Other payables 13,500,000.00 Properties Co., Ltd Shenzhen Investment Accounts payable 520,975.68 Holdings Co., Ltd. Shenzhen Investment Short-term borrowings 240,000,000.00 240,000,000.00 Holdings Co., Ltd. X. Share-based Payment 1. Overview of share-based payment Unit: RMB Yuan The total amount of equity instruments granted by the 0.00 Company in the reporting period The total amount of equity instruments granted by the 0.00 Company in the reporting period The total amount of equity instruments granted by the 0.00 Company in the reporting period Note of share-based payment Inaaplicable 2. Information of equity-settled share-based payment Unit: RMB Yuan Cumulative amounts of equity-settled share-based payment in 0.00 capital reserve Total cost confirmed by equity-settled share-based payment 0.00 Note of equity-settled share-based payment Inapplicable 171 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 3. Information of cash-settled share-based payment Unit: RMB Yuan Cumulative liabilities amount of cash-settled share-based payment 0.00 in liabilities Total cost confirmed by cash-settled share-based payment 0.00 Note of cash-settled share-based payment Inapplicable 4. Information of share-based payment service Unit: RMB Yuan Worker total service exchange by share-based payment 0.00 Other total amount of service exchange by share-based payment 0.00 5. Modification, termination of share-based payment Inapplicable XI. Contingency 1. Co(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. The Company thought the applicable law of the decision was error, and raised an objection to High Court of Guangdong province. In Sep.2005, the High Court of Guangdong province delivered unlocked decision to the Departments of Land and House Property Registers of Shenzhen. The aforesaid about ten thousand square meters of real estate was officially unlocked. 172 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. In January 2006, Guangdong Higher Court issued Civil Court Judgment YGFZ (2002) No. 1 and adjudicated because that ① the Company has not yet transferred the title of land use right specified in the transfer contract to Jiyong Company and ② Jiyong Company cannot provide other properties available for execution and the Company also cannot provide the property available for execution, the second judgment of the Judgment No. 3 - “Jiyong Company should pay off the transfer consideration amounted RMB143,860,000 within 60 days from the date the Company transferred the title of land use right” is terminated for execution. When the conditions causing termination for execution of the second judgment are eliminated, the second judgment should still be executed. In March 2006, according to the ordain of Guangdong Higher People’s Court, the properties in Jiabin Building that have been sealed up in this case have been released automatically. On September 2009, company received YGFZ (2002) No. 1-1 Resume Execution Notice from Guangdong Province Higher Court claimed to resume execution the case that the transfer money owed by Jiyong company about Jiabin building project. In October 2009, the Company received (Verdict YGFZ (2002) No. 1-2) from Guangdong Higher Court. The verdict claimed: The resume execution of this case is according to the "The requirements for the Guangdong Higher Court to concentrate the implementation of accumulated cases" Through the investigation conducted by Guangdong Higher Court to Shenzhen department of motor vehicles, Shenzhen Securities Registration and Settlement Organizations, Shenzhen Land resources and real estate administration and the opening bank of the executed party, the executed party – Jiyong Company does not have any executable property. For these, Guangdong Higher Court adjudicated : ① Terminate the executive procedure of Verdict YGFZ (2002) No. 1; ② When the execution conditions are satisfied, the applicant can apply for resume execution. According to note (Vii) 3, 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”) had registered the land of Jin Lihua Building to its name according to SDHZ (1992) No. 0228 Second Supplementary Agreement of Shenzhen Grant Contract of Land Use Right signed in 2011 and Meeting Summery about Research of Dealing with Problem Building Issued (No. 481) by Shenzhen Municipal Government. 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 11 Sep. 2013 Shenzhen Luohu District People's Court issued (2012) SLFMECZ No. 1150paper of civil judgment; the decision rejected the Company’s claims. The Company refused to accept the verdict, has instituted an appeal to the Shenzhen Intermediate People's Court, Now wait for a second trial court judgment. As the executable property are not found in the case so far, the Company withdraw bad debt provision for Shenzhen Jiyong Properties & Resources Development Company ‘s transfer amount of Jin Lihua Commercial Plaza (2) Lawsuit item about land approval of Meisi Company 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 173 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Court(hereinafter referred to as “Shenzhen Intermediate Court”) for illegal use of land owned by Meisi Company and request for ceasing the infringing act and receiving a compensation amounted RMB 8 million. In March 2005, Shenzhen Intermediate Court issued Civil Ruling Paper SZFMCZ (2004) No. 108 and adjudicated that the Company should return the land with an area of 4,782 square meters to Meisi Company within 3 months and other claims of Meisi Company were overruled. The Company refused to accept the verdict and appealed to Guangdong Higher Court. On November 25, 2005, Guangdong Higher Court adjudicated that the Civil Ruling Paper SZFMCZ (2004) No. 108 issued by Shenzhen Intermediate Court should be cancelled and the prosecution of Meisi Company were overruled. During the process of trial of second instance, Meisi Company applied to Registration Center for Property of Real Estate of Shenzhen Municipality for revoking Property Ownership Certificates SFDZ No. 3000320987 and No. 300119899 owned by the Company. On July 7, 2005, Registration Center for Property of Real Estate of Shenzhen Municipality issued the reply of SFDH (2005) No. 84 to Meisi Company and judged that aforesaid certificates are legal and effective and should not be revoked. Meisi Company disagreed with this judgment and applied the administrative reconsideration to the People's Government of Shenzhen Municipality. On October 8, 2005, the People's Government of Shenzhen Municipality issued Decision on Administrative Reconsideration SFFJ (2005) No. 294 and judged that aforesaid 2 certificates were registered illegally and should be revoked, reply of SFDH (2005) No. 84 was canceled accordingly. The Company refused to accept Decision on Administrative ReconsiderFation 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 174 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 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 175 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 2. Contingent liabilities and its financial effect arising from loan guarantee offered to other companies 1.The Company asked Shenzhen Investment Holdings Co., Ltd. (trustee: China Everbright Bank Shenzhen Jingtian Sub-branch) for RMB 240 million 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, 74 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 whole building of Peace Hotel located at Heping Road, Luohu District, Shenzhen, and the closing balance stood at RMB 240 million. 2. The Company provided joint liability guarantee and borrowed RMB 150 million from Bank of Communications Co., Ltd. Yangzhou Branch, by mortgaging the use right of area of 66,559 square meters (YGTY 2012 No. 0455) owned by the Company ‘s subsidiary PRD Yangzhou Real Estate Development Co., Ltd.. The Company accumulatively received RMB 100 million and the closing balance stood at RMB 100 million, of which RMB 50 million will be arrived within one year. 3. The Company’s subsidiary Dongguan Guomao Changsheng Real Estate Development Co., Ltd. borrowed 440 million from Bank of Communications Co., Ltd. Dongguan Branch, by mortgaging the use right of area of 66,881.10 square meters (DFGY (2010) NO. T316). RMB 61.2434 million had been received the closing balance stood at RMB 61.2434 million. The Company provided joint liability guarantee and mortgaged its 101-104, 2/F, 5/F in Block A and 1-02 and 1-03 room in Block B as a total of 8 sets of real estate of Shenzhen International Trade Center Plaza located at Renmin South Road, Luohu District, Shenzhen.。 4. 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. 5. 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 176 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Shenzhen Guomao Car Rental Co., Ltd., and the closing balance stood at RMB 15.65 million of which RMB 10.65 million will be due within one year. 6. 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. 7. Shenzhen ITC Vehicles Industry Co., Ltd. asked for a long-term loan of RMB15 million from Shenzhen Development Bank Co., Ltd. Shenzhen Shangbu Branch, now named as SZPA Shenzhen Fuhong Branch. RMB 11 million has been received, the closing balance stood at RMB 3.6667 million and the loan will be arrived within one year. 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 6.45 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. 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 177 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 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 178 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Naught 2. Notes of profit distribution after Balance Sheet Date Unit: RMB Yuan Profits or dividends planed to allocate 119,195,818.40 Profit or dividends declaration issued through reviewed and 119,195,818.40 approved 3. Notes of other events after Balance Sheet Date Inapplicable 179 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. XIV. Notes of other significant events 1. Exchange of non-monetary assets Inapplicable 2. Debt reorganization Inapplicable 3. Business combination Inapplicable 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 1.Financial assets measured at fair value and change calculated into 0.00 0.00 0.00 0.00 0.00 current profits and losses (Excluding derivative financial assets) 2. Derivative financial 0.00 0.00 0.00 0.00 0.00 assets) 3. Available-for-sale 0.00 0.00 0.00 0.00 financial assets Subtotal of financial 0.00 0.00 0.00 0.00 0.00 assets 180 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Investment property 0.00 0.00 0.00 Productive biological 0.00 0.00 0.00 asset Other 0.00 0.00 0.00 0.00 Total of above 0.00 0.00 0.00 0.00 0.00 Financial liability 0.00 0.00 0.00 0.00 0.00 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 Subtotal of financial 0.00 0.00 0.00 0.00 0.00 assets Financial liability 0.00 0.00 0.00 0.00 0.00 8. Main content and significant changes of annuity plan Inapplicable 9. Other On 25 Nov. 2011, the proposal on liquidating Hainan Xinda Development Co., Ltd. (hereinafter referred to as “Hainan Company”) was reviewed and approved at the 4th Session of the 7th Board of Directors. Hainan Company was founded in 1988 as a wholly-owned subsidiary of the Company. At present, it has no development project or land reserve. And it has recorded deficit for years. 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 97.64 101,447,889.05 101,447,889.05 100% 101,447,889.05 98.1% 101,447,889.05 100% significant single amount % 181 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. and individually withdrawn bad debt provision Accounts receivable for which bad debt provisions are made on the group basis Group 2 2,395,632.21 2.31% 1,237,544.72 51.66% 1,908,314.21 1.85% 1,128,725.53 59.15% Subtotal of the groups 2,395,632.21 2.31% 1,237,544.72 51.66% 1,908,314.21 1.85% 1,128,725.53 59.15% 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 103,897,901.61 -- 102,739,814.12 -- 103,410,583.61 -- 102,630,994.93 -- 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 98,611,328.05 100% Contingent events of Development Company Section X. Financial Report Uncollectible for a Shenzhen Tewei Industry Co., Ltd. 2,836,561.00 2,836,561.00 100% long period Total 101,447,889.05 101,447,889.05 -- -- 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 1 940,597.50 39.26% 28,217.93 38,135.00 2% 1,144.05 year) 182 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Subtotal for those aging 940,597.50 39.26% 28,217.93 38,135.00 2% 1,144.05 within 1 year 2-3 years 1,455,034.71 60.73% 1,209,326.79 1,870,179.21 98% 1,127,581.48 Over 3 years 1,228,539.62 64.38% 614,269.81 3-4 years 1,228,539.62 51.28% 982,831.70 641,639.59 33.62% 513,311.67 4-5 years 226,495.09 9.45% 226,495.09 Total 2,395,632.21 -- 1,237,544.72 1,908,314.21 -- 1,128,725.53 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 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 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 Total -- -- 0.00 -- 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: Unit: RMB Yuan Content of accounts Withdrawal proportion Book balance Amount of bad debts Reason receivable (%) Total 0.00 0.00 -- -- (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 183 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. transaction or not Total -- -- 0.00 -- -- 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 Total 0.00 0.00 0.00 0.00 (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 94.91% Development Company Shenzhen Tewei Industry Non-related party 2,836,561.00 Over five years 2.73% Co., Ltd. Tianhong Shopping Plaza Non-related party 2,258,848.71 4-5years 2.17% Co., Ltd. Total -- 103,706,737.76 -- 99.81% (7) Accounts receivable due from related parties Unit: RMB Yuan Name of entity Relationship Amount Proportion (%) Total -- 0.00 0% (8) RMB 000 was transferred from the accounts receivable not meeting the conditions of termination recognition. 184 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. (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 18.18 70.87 77.44 amount and individually 232,990,941.02 165,125,419.81 236,213,999.72 23.9% 182,918,860.23 % % % withdrawn bad debt provision Other accounts receivable for which bad debt provisions are made on the group basis 80.85 74.82 Group 1 1,036,276,191.73 739,478,916.64 % % 97.15 Group 2 10,019,165.31 0.78% 9,878,586.57 98.6% 10,179,715.93 1.03% 9,889,835.47 % 81.63 75.85 Subtotal of the groups 1,046,295,357.04 9,878,586.57 0.94% 749,658,632.57 9,889,835.47 1.32% % % Other accounts receivable with insignificant single amount but individually 2,421,326.23 0.19% 2,421,326.23 100% 2,421,326.23 0.25% 2,421,326.23 100% withdrawn bad debt provision Total 1,281,707,624.29 -- 177,425,332.61 -- 988,293,958.52 -- 195,230,021.93 -- 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 96,860,513.83 28,994,992.62 29.93% Uncollectible for a long 185 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 49,344,757.21 49,344,757.21 100% Development Co., Ltd period Anhui Nanpeng Uncollectible for a long 7,286,048.00 7,286,048.00 100% 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 Uncollectible for a long 3,271,837.78 3,271,837.78 100% Development Co., Ltd period 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 232,990,941.02 165,125,419.81 -- -- In the groups, other 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 1 123,050.47 1.23% 3,691.51 290,732.42 2.86% 8,721.97 year) Subtotal for those aging 123,050.47 1.23% 3,691.51 290,732.42 2.86% 8,721.97 within 1 year 186 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 1-2 years 22,888.01 0.23% 2,288.80 8,037.68 0.08% 803.77 2-3 years 470.68 0% 141.20 458.09 0% 137.43 Over 3 years 9,872,756.15 98.54% 9,872,465.06 9,880,487.74 97.06% 9,880,172.30 3-4 years 458.09 0% 229.05 310.25 0% 155.13 4-5 years 310.25 0% 248.20 801.57 0.01% 641.25 Over 5 years 9,871,987.81 98.54% 9,871,987.81 9,879,375.92 97.05% 9,879,375.92 Total 10,019,165.31 -- 9,878,586.57 10,179,715.93 -- 9,889,835.47 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 Unit: RMB Yuan Name Book balance Bad debt provision Group 1 1,036,276,191.73 0.00 Total 1,036,276,191.73 0.00 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 Insolvency thus Real Estate 53,478.77 53,478.77 100% uncollectible Development Co., Ltd. Meilin Synthetic Uncollectible for a long Fibre Company 11,000.00 11,000.00 100% period Others Uncollectible for a long 7,821.00 7,821.00 100% 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 Content of other accounts Reason for reversal or Basis on recognition of Withdrawal amount of Reversed or recovered 187 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. receivable recovery provision for bad debts bad debt provision before amount the reversal or recovery Total -- -- 0.00 -- 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 (%) Total 0.00 0.00 -- -- 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 Total -- -- 0.00 -- -- 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 Total 0.00 0.00 0.00 0.00 (5) Nature or content of other accounts receivable with significant amount 公The Company’s other accounts receivable with significant amount are mainly the current accounts receivable due from subsidiaries (6) Top five other accounts receivable Unit: RMB Yuan Name of company Relationship Amount Term Proportion (%) PRD Yangzhou Real Estate Development Co., Subsidiary 588,861,310.60 Within 2 years 45.94% Ltd. 188 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Dongguan Guomao Changsheng Real Estate Subsidiary 186,041,793.00 Over 1 year 14.52% Development Co., Ltd. PRD Group XuzhouDapeng Real Subsidiary 156,023,762.84 Within 2 years 12.17% Estate Development Co., Ltd Shenzhen GUOMAO Vehicles Industry Co., Subsidiary 98,100,000.00 Within 1 year 7.65% Ltd. Shum Yip Properties Subsidiary 96,860,513.83 Over 5 years 7.56% Development Co., Ltd. Total -- 1,125,887,380.27 -- 87.84% (7) Accounts receivable due from related parties Unit: RMB Yuan Name of entity Relationship Amount Proportion (%) PRD Yangzhou Real Estate Subsidiary 588,861,310.60 45.94% Development Co., Ltd. Dongguan Guomao Changsheng Real Estate Subsidiary 186,041,793.00 14.52% Development Co., Ltd. PRD Group XuzhouDapeng Real Estate Development Co., Subsidiary 156,023,762.84 12.17% Ltd Shenzhen GUOMAO Vehicles Subsidiary 98,100,000.00 7.65% Industry Co., Ltd. Shum Yip Properties Subsidiary 96,860,513.83 7.56% Development Co., Ltd. Hainan Xinda Real Estate Subsidiary 49,344,757.21 3.85% Development Co., Ltd Anhui Nanpeng Papermaking Joint venture 7,286,048.00 0.57% Co., Ltd Shenzhen GUOMAO Food Subsidiary 4,213,053.40 0.33% Co., Ltd Shenzhen GUOMAO Industrial Development Co., Joint venture 2,351,652.48 0.18% Ltd Shenzhen Property Subsidiary 2,292,094.59 0.18% 189 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Construction Supervision Co., Ltd. Shenzhen Wufang Pottery & Joint venture 1,747,264.25 0.14% Porcelain Industrial Co., Ltd Shenzhen International Trade Subsidiary 744,177.30 0.06% Plaza Zhanjiang Shenzhen Real Subsidiary 53,478.77 0% Estate Development Co., Ltd Total -- 1,193,919,906.27 93.15% (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. Inapplicable 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 28,168,07 876,006.5 29,044,07 50% 50% Warehous method 6.04 0.98 4 7.52 e Co., Ltd Shenzhen GUOMA Equity 23,186,12 37,247,88 -5,657,98 31,589,90 9,614,345 O Tian’an 50% 50% method 4.00 7.05 2.23 4.82 .90 Properties Co., Ltd Shenzhen Tian’an Equity 1,500,000 3,531,192 -1,053,24 2,477,949 1,385,654 50% 50% Internatio method .00 .12 2.79 .33 .10 nal 190 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Building Property Managem ent Co., Ltd Shenzhen GUOMA O Cost 29,850,00 29,850,00 29,850,00 100% 100% 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 60,000,00 Estate 100% 100% method 0.00 0.00 0.00 0.00 Develop ment Co., Ltd. Shenzhen Huangche Cost 28,500,00 28,500,00 28,500,00 100,000,0 ng Real 95% 95% method 0.00 0.00 0.00 00.00 Estate Co., Ltd. Shenzhen GUOMA O Cost 20,000,00 20,000,00 20,000,00 Property 100% 100% method 0.00 0.00 0.00 Managem ent Co., Ltd. Shenzhen Shenxin Cost 33,195,94 12,877,26 12,877,26 100% 100% Taxi Co., method 8.77 0.98 0.98 Ltd. Shenzhen Cost 1,600,000 1,600,000 1,600,000 1,600,000 GUOMA 80% 80% method .00 .00 .00 .00 O Food 191 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 Shenzhen GUOMA O Cost 20,154,84 3,682,972 3,682,972 3,682,972 38.33% 38.33% Industrial method 0.79 .55 .55 .55 Develop ment Co., 192 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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 ng Real 100% 100% method 0.00 0.00 0.00 Estate Develop ment Co., Ltd. PRD Yangzhou Cost 50,000,00 50,000,00 50,000,00 Real 100% 100% method 0.00 0.00 0.00 Estate Develop 193 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 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. 442,589,9 419,415,3 -5,835,21 413,580,1 102,878,2 171,000,0 Total -- -- -- -- 24.03 38.11 8.48 19.63 27.43 00.00 Note: the decrease of the long term equity investment of Shenzhen GUOMAO Tian’an Properties Co., Ltd and Shenzhen Tian’an International Building Property Management Co., Ltd mainly due to the cash dividends 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 51,786,335.36 48,210,057.27 Total 51,786,335.36 48,210,057.27 Cost of sales 14,620,872.04 20,151,948.72 (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 rental and 51,786,335.36 14,620,872.04 48,210,057.27 20,151,948.72 management Total 51,786,335.36 14,620,872.04 48,210,057.27 20,151,948.72 (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 Property rental and 51,786,335.36 14,620,872.04 48,210,057.27 20,151,948.72 management Total 51,786,335.36 14,620,872.04 48,210,057.27 20,151,948.72 (4) Main business (Classified by area) Unit: RMB Yuan 194 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Reporting period Same period of last year Name of area Revenue of sales Costs of sales Revenue of sales Costs of sales Shenzhen Area 51,786,335.36 14,620,872.04 48,210,057.27 20,151,948.72 Total 51,786,335.36 14,620,872.04 48,210,057.27 20,151,948.72 (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. 9,616,787.88 18.57% Shenzhen Branch of China Pacific Property Insurance Co., Ltd. 4,909,644.00 9.48% Shenzhen Jindu Wedding Etiquette Co., Ltd. 3,163,356.00 6.11% Shenzhen Meige Xiazi Catering Management Co., Ltd. 2,013,825.00 3.89% Shenzhen Seven Days Sunshine Hotel Management Co., Ltd. 2,009,856.00 3.88% Total 21,713,468.88 41.93% 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 160,000,000.00 341,500,000.00 method Long-term equity investment income accounted by equity 5,164,781.52 3,145,809.75 method Other 26,075,200.00 37,162,941.77 Total 191,239,981.52 381,808,751.52 (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 PRD Yangzhou Real Estate Development No profits were distributed at the end 60,000,000.00 0.00 Co., Ltd. of last period The implementation of profit Shenzhen Huangcheng Real Estate Co., Ltd. 100,000,000.00 341,500,000.00 distribution was decreased. Total 160,000,000.00 341,500,000.00 -- (3) Long-term equity investment income accounted by equity method Unit: RMB Yuan 195 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Same period of last Name of investee Reporting period Reason for increase/decrease YoY year Shenzhen Jifa Warehouse Co., Ltd 876,006.54 811,006.94 Increase of realized profits Shenzhen GUOMAO Tian’an Properties 3,956,363.67 1,844,080.22 Increase of realized profits Co., Ltd Shenzhen Tian’an International Building 332,411.31 490,722.59 Decrease of realized profits Property Management Co., Ltd Total 5,164,781.52 3,145,809.75 -- 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 186,598,536.60 375,378,858.88 Add: Provision for assets impairments -16,097,045.15 -15,500,366.74 Depreciation of fixed assets, oil and gas assets and productive 16,144,579.09 15,995,267.74 biological assets Amortization of long-term deferred expense 172,976.28 172,976.28 Losses/gains on disposal of property, intangible asset and other 1,793.41 long-term assets (gains: negative) Losses/gains on scrapped of fixed assets (gains: negative) 1,470.30 Financial cost (income: negative) 9,497,464.60 Investment loss (gains: negative) -191,239,981.52 -381,808,751.52 Decrease in inventory (increase: negative) 2,242,557.67 -1,056,345.00 Decrease in accounts receivable from operating activities (increase: -293,800,783.77 -284,117,822.66 negative) Increase in accounts payable from operating activities (decrease: -155,404,889.08 569,549,251.46 negative) Net cash flows generated from operating activities -441,884,791.87 278,614,538.74 2. Significant investing and financing activities without -- -- involvement of cash receipts and payments 3. Change of cash and cash equivalent: -- -- Closing balance of cash 420,568,966.65 399,641,751.92 Less: opening balance of cash 399,641,751.92 83,846,009.34 The net increase in cash and cash equivalents 20,927,214.73 315,795,742.58 196 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 7. Information of assets and liabilities recognized by evaluation value from the counter purchase Inapplicable XVI. Supplemental information 1. Items and amounts of extraordinary gains and losses Unit: RMB Yuan Item Amount Explanation Gains/losses on the disposal of non-current assets (including the 72,626.95 offset part of asset impairment provisions) Reversal of impairment provisions for the accounts receivable on 833,813.78 which impairment tests were carried out separately Other non-operating income and expenses other than the above -724,421.19 Less: Income tax effects -419,360.80 Total 601,380.34 -- The government subsidy recorded into the current gains and losses items shall be disclosed the recognized reason. □ Applicable √ Inapplicable 2. 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 2013 2012 Closing amount Opening amount According to Chinese 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 accounting standards Items and amounts adjusted according to international accounting standards According to international 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 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 197 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. 2013 2012 Closing amount Opening amount According to Chinese 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 accounting standards Items and amounts adjusted according to international accounting standards According to international 300,840,563.81 375,422,129.64 1,802,781,292.68 1,503,156,542.93 accounting standards (3)Explain reasons for the differences between accounting data under domestic and overseas accounting standards No difference 3. 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 18.19% 0.5048 0.5048 common stock shareholders Net profit attributable to shareholders of the Company's common stock after deducting 18.16% 0.5048 0.5048 non-recurring gains and losses 4. 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: Item Closing Opening Increase/ Reason amount amount decrease Advance 35,904,799.33 64,714,990.11 -44.52% Mainly due to project payment settlement transfer the advance payment of taxes and fees Advance 141,082,677.48 678,075,291.01 -79.19% Project report had reached receivable settlement condition and carried forward the income Non-current 67,009,888.28 14,909,888.32 349.43% Transfer long tem loan into liabilities due business accounting within one year Long tem loan 116,243,352.00 19,316,666.64 501.78% Acquire project loan from subsidiary 198 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Liabilities of 0 2,739,089.94 -100% Project report had reached deferred settlement condition and income taxes carried forward the income Retain profit 972,271,884.95 690,091,174.80 40.89% The profit increased in the reporting period Item Reporting Same period of Increase/ Reason period last year decrease Financial -6,334,01.69 -1,504,589.66 321.03% The decrease of interest expenses expense -362,455.83 -13,872,00.17 -97.39% The increase of receiving Assets account receivable in same impairment period of last year lead to the losses increase of transferring of bad debt provision Investment 5,164,781.52 3,145,809.75 64.18% The increase of the income of income joint venture Income from 5,164,781.52 3,145,809.75 64.18% The increase of the income of the investment joint venture of joint venture and cooperative enterprise Non-operating 2,445,277.76 4,025,211.48 -39.25% The obtain of government income subsidy in the same period of last year Non-operating 3,097,072 2,375,285.99 30.39% The occurrence of legal expense settlements in the report period Net cash flow 110,424,330.0 2,375,285.99 -86.29% The decrease of withdrawal from operating funds of sale project in the activities reporting period. Net cash flow 63,862,456.02 -483,463,515.74 -113.21% The increase of loan obtained from financing and the decrease of loan activities returned Net cash flow 179,447,502.83 328,410,569.80 -45.36% The decrease of withdrawal from cash and funds of sale project in the cash equivalent reporting period. 199 2013 Annual Report of Shenzhen Properties & Resources Development (Group) Ltd. Section XI Documents Available for Reference I. Annual Report with the signature of the Chairman of the Board; II. Accounting statements with the signatures and seals of the Legal Representative, the Chief Financial Officer and the person in charge of the accounting work; III. Originals of Auditors’ Reports with the seals of the Certified Public Accountants as well as the signatures and seals of the CPAs firm; IV. Texts of all the Company’s documents ever disclosed on Securities Times and Hong Kong Ta Kung Pao in the reporting period, and the originals of the public notices. Board of Directors Shenzhen Properties & Resources Development (Group) Ltd. 31 Mar. 2014 200