SHENZHEN INTERNATIONAL ENTERPRISE CO., LTD.
INTERIM REPORT 2011
(unaudited)
Disclosure Date: 24 August 2011
1
Section I Important Statement, Paraphrase and Contents
I. Important Notice
The Board of Directors and directors of Shenzhen International Enterprise Co., Ltd.
(hereinafter referred to as the Company) guarantee that there are no any omissions,
fictitious or serious misleading statements carried in the report and will take all
responsibilities, individual and/or joint, for the authenticity, accuracy and
completeness of the whole contents.
This interim report has not been audited by any law firm.
Chairman of the Board of the Company Mr. Zheng Kanghao, CFO and GM Chen
Xiaohai as well as Financial Manager Xu Xiaoyun hereby confirm that the financial
report enclosed in the interim report is authentic and complete.
This report was prepared in both Chinese and English. Should there be any difference
in interpretation between the two versions, the Chinese version shall prevail.
II. Contents
Section I Important Statement, Paraphrase and Contents……………………………..2
Section II Company Profile…………………………………………………………..3
Section III Changes in Share Capital and Shares Held by Principal Shareholders…..5
Section IV Particulars about Directors, Supervisors and Senior Executives………8
Section V Report of the Board of Directors………………………………….………9
Section VI Significant Events………………………………………………………13
Section VII Financial Report………………………………………………………..19
Section VIII Documents Available for Reference…………………………………....35
2
Section II Company Profile
I. Basic information
1. Legal Name of the Company
In Chinese: 深圳市国际企业股份有限公司
In English: SHENZHEN INTERNATIONAL ENTERPRISE CO., LTD.
2. Legal Representative: Zheng Kanghao
3. Secretary of the Board of Directors: Cao Jian
E-mail: cj000056@21cn.com
Securities Affairs Representative: Wu Xiaoshuang
E-mail: zhaiwu2006@21cn.com
Tel: (0755)82281888、82535565
Contact Address: 6/F Huang Gang Business Centre, 2028JinTian Rd. Futian
District Shenzhen
Fax: (0755)82566573
4. Registered Address and Office Address: 23/F, Development Center Bldg., Renmin
South Road, Shenzhen
Post Code: 518001
Office address: 6/F Huang Gang Business Centre, 2028JinTian Rd. Futian District
Shenzhen
Post Code: 518100
Internet Website: http://www.china-ia.com
E-mail: sgs000056@163.com
5. Newspapers Chosen for Information Disclosure of the Company: Securities Times
and Hong Kong Ta Kung Pao
Internet Website Designated by CSRC for Publishing the Annual Report:
http://www.cninfo.com.cn
The Place Where the Annual Report is Prepared and Placed: Securities Affairs
Dep. of the Company
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: SZIEC-A SZIEC-B
Stock Code: 000056 200056
3
II. Main financial data and indices
Unit: RMB Yuan
At the end of the At the period-end of Increase/decrease compared with the
reporting period last year period-end of last year (%)
Total assets 1,677,965,868.79 1,540,732,957.65 8.91%
Owners‘ equity attributable to shareholders of list
38,790,208.77 54,308,600.82 -28.57%
companies
Share capital 220,901,184.00 220,901,184.00 0.00%
Net asset per share attributable to shareholders of
0.18 0.25 -28.00%
list companies (Yuan/share)
In the reporting The same period of Increase/decrease compared with the
period (Jan.-Jun.) last year same period of last year (%)
Operating revenue 6,482,200.61 6,003,596.33 7.97%
Operating profit -21,111,728.17 -37,605,701.21 43.86%
Total profit -20,656,273.71 -39,774,544.55 48.07%
Net profit attributable to shareholders of listed
-15,518,392.05 -21,740,816.44 28.62%
companies
Net profit attributable to shareholders of listed
companies after deducting non-recurring gains and -15,814,437.44 -88,603,612.28 82.15%
losses
Basic earnings per share (Yuan/share) -0.070 -0.0984 28.86%
Diluted earnings per share (Yuan/share) -0.070 -0.0984 28.86%
Net return on equity (%) -33.34% -10.12% -23.22%
Net return on equity after deducting non-current
-33.97% -10.01% -23.96%
gains and losses
Net cash flow from operating activities -69,614,199.80 14,066,656.87 -594.89%
Net cash flow from operating activities per share
-0.32 0.06 -633.33%
(Yuan/share)
Unit: RMB Yuan
Note 1: Items and amount of non-recurring gains and losses deducted
Items of non-recurring gains and losses Amount Notes (if applicable)
Gains and losses from disposal of non-current assets -45,845.54
Government subsidies recorded into current gains and losses,
excluding those related closely to the routine business of the Company Discount for loans for the
and continuously enjoyed by the Company at fixed amounts or ratios forest business
according to state policies and regulations 450,000.00
Other non-operating income/expense 51,300.00
Income tax effects -113,863.62
Minority interests effects -45,545.45
4
Total 296,045.39
Note 2: Difference between PRC GAAP and IFRS is inapplicable.
Section III Changes in Share Capital and Shares Held by Principle
Shareholders
I. Particulars about changes in share capital
Share capital of the Company remained unchanged in the report period.
II. Statement of changes in share capital of the Company in the reporting period (as to
30 Jun. 2011)
Unit: Share
Before the change Increase/decrease in this time (+, - ) After the change
Issuance Capitalization
Proporti Bonus Proporti
Amount of new of public Others Subtotal Amount
on shares on
shares reserve
I. Shares subject to
427,680 0.19% -87,249 -87,249 340,431 0.15%
trading moratorium
1. Shares held by state
2. Shares held by
state-owned corporation
3. Shares held by
domestic investors
Including: shares held by
domestic non-state-owned
corporation
Shares held by domestic
natural person
4. Shares held by foreign
investors
Including: shares held by
foreign corporation
Shares held by foreign
natural person
5. Shares held by senior
427,680 0.19% -87,249 -87,249 340,431 0.15%
executives
II. Shares not subject to
220,473,504 99.81% 220,560,753 99.85%
trading moratorium
1. RMB ordinary shares 118,785,312 53.77% 427,680 427,680 119,212,992 53.97%
2. Domestically listed
101,688,192 46.03% -340,431 -340,431 101,347,761 45.88%
foreign shares
3. Overseas listed foreign
5
shares
4. Others
III. Total shares 220,901,184 100.00% 220,901,184 100.00%
III. Particulars about shares held by principal shareholders (as to 30 Jun. 2011)
Total shareholders 15,125 shareholders (including 10,884 ones of A-share, 4,241 ones of B-share)
Particulars about shares held by the top ten shareholders
Number of shares held
Nature of Shareholdi Total shares Shares pledged or
Name of shareholders subject to trading
shareholders ng ratio held frozen
moratorium
Multi Profit Asia Pacific Investment
Foreign corporation 13.70% 30,264,192 0 0
Ltd
Shenzhen Special Economic Zone State-owned
9.26 % 20,448,857 0 10,780,000
Development (Group) Co., Ltd. corporation
UOB Investment (China) Limited Foreign corporation 7.03% 15,528,941 0 0
Domestic
Shenzhen Maoye Emporium Ltd non-state-owned 6.15% 13,577,548 0 0
corporation
Foreign natural
Zhong Zhiqiang 3.72% 8,215,594 0 0
person
Guoyuan Asset Management (Hong
Foreign corporation 2.54% 5,611,463 0 0
Kong) Limited
Domestic natural
Chen Qiaoling 1.41% 3,109,255 0 0
person
Domestic natural
Zhou Di 1.36% 3,004,100 0 0
person
Domestic natural
Chen Shaolan 1.14% 2,528,341 0 0
person
GUOTAI JUNAN
SECURITIES(HONGKONG) Foreign corporation 1.06 % 2,329,147 0 0
LIMITED
Particulars about shares held by the top ten shareholders not subject to trading moratorium
Number of shares held subject to trading
Name of shareholder Type of shares
moratorium
Multi Profit Asia Pacific Investment Ltd 30,264,192 Domestically listed foreign shares
Shenzhen Special Economic Zone Development
20,448,857 RMB ordinary shares
(Group) Co., Ltd.
UOB Investment (China) Limited 15,528,941 Domestically listed foreign shares
Shenzhen Maoye Emporium Ltd 13,577,548 RMB ordinary shares
Zhong Zhiqiang 8,215,594 Domestically listed foreign shares
Guoyuan Asset Management (Hong Kong) Limited 5,611,463 Domestically listed foreign shares
Chen Qiaoling 3,109,255 RMB ordinary shares
6
Zhou Di 3,004,100 RMB ordinary shares
Chen Shaolan 2,528,341 RMB ordinary shares
GUOTAI JUNAN SECURITIES(HONGKONG)
2,329,147 Domestically listed foreign shares
LIMITED
Inquired by the Company, Shenzhen Wongtee Real Estate Investment Co., Ltd. which was holding by Mr.
Zheng Kanghao, actual controller of Multi Profit Asia Pacific Investment Ltd., holds 2,202,546 ones of
Explanation on associated A-share of the Company, and Mr. Zheng‘s private account holds 453,909 ones of B-share of the Company,
relationship or Mr. Zheng and Multi Profit Asia Pacific Investment Ltd. were person acting in concert. There exists no
action-in-concert among the related relationship between Shenzhen Special Economic Zone Development (Group) Co., Ltd. and
above shareholders companies listed above. Shenzhen Maoye Emporium Ltd and UOB Investment (China) Limited were person
acting in concert. Besides, it is unknown whether there were other related relations or action-in-concert
regulated in Administrative Measures for Takeover of Listed Companies among the above shareholders.
Ⅳ. Particulars about controlling shareholder and actual controller of the Company
during the reporting period
Controlling shareholder and actual controller of the Company remained unchanged
during the reporting period.
7
Section IV Particulars about Directors, Supervisors and Senior
Executives
I. Particulars about changes in shares held by directors, supervisors and senior
executives in the reporting period.
Including:
Shares held Increment in Decrement in Stock options
Shares held shares held Reasons of
Name Title at current current held at
at period-end with trading change
period-begin period period period-end
moratorium
Shareholding
Zheng Chairman of the
0 453,909 0 453,909 340,431 0 increase in the
Kanghao Board
aftermarket
Note: Except for the above person, there are no other directors, supervisors or senior
executives holding shares of the Company.
II. Changes in engagement of directors, supervisors and senior executives in the
reporting period
In the reporting period, engagement of directors, supervisors and senior executives of
the Company remained unchanged.
8
Section V Report of the Board of Directors
I. Business review for the first half of 2011
1. Analysis and discussion by the management
For the reporting period, the Company achieved operating revenues of RMB
6,482,200.61, up 7.97% from a year earlier; operating profits of RMB -21,111,728.17,
representing a loss reduction of 43.86% as compared with the same period of last year;
net profits of RMB -20,656,273.71, representing a loss reduction of 48.07% on the
year-on-year basis; and net profits attributable to shareholders of the Company of
RMB -15,518,392.05, representing a loss reduction of 28.62%.
In the first half of 2011, according to the annual business plan, the Company went all
out to carry on with the shopping mall project in Futian CBD, beefing up decoration
of the shopping mall. Currently, the external faade restructuring design has been
accomplished, the internal structural reconstruction has been basically finished, the
shopping mall is in the elaborate decoration process, and relevant business solicitation
is moving on steadily.
During the reporting period, Shenzhen Rongfa Investment Co., Ltd., one of the
Company‘s controlled subsidiary, successfully borrowed RMB 1.2 billion from China
Construction Bank And RMB 0.3 billion of the borrowing provided by Bohai
International Trust Co., Ltd. was also successfully extended upon its maturity. These
moves reduced the Company‘s financial pressure and boosted the shopping mall‘s
elaborate decoration and preparation made to open business.
In the first half of 2011, all bases of forestry subsidiaries carried on with their
intermediate culture. A total of 29,094-mu forest land in the three bases of Wengyuan,
Xingning and Wuhua has been fertilized. Some forests in the Wengyuan and Wuhua
bases planted in 2005 have been available for cutting. Up to the end of Jun. 2011,
about 3,000-mu forests in the Wengyuan base had been realized.
Analysis on main financial data:
The reporting period The same period of
Increase/decrease (%)
(Jan.-Jun.) last year
Total operating income 6,482,200.61 6,003,596.33 7.97%
Financial expenses 5,142,446.26 23,228,909.22 -77.86%
Operating profit -21,111,728.17 -37,605,701.21 43.86%
Net profit attributable to owners of the Company -15,518,392.05 -21,740,816.44 28.62%
Notes:
(1) Operating income increased mainly due to increase of the income from property
management.
(2) Financial expenses decreased mainly due to increase of interest capitalization in
the reporting period.
9
(3) Operating profit increased mainly due to decrease of period expenses.
(4) Net profit attributable to owners of the Company increased mainly due to decrease
of period expense.
2. Business performance of the Company in the reporting period
(1) Main businesses classified according to industries
Unit: RMB Ten thousand
Main businesses classified according to industries
Increase/decreas Increase/decreas Increase/decrease
Operating Gross profit ratio e of operating e of operating of gross profit
Industry or product Operating cost
income (%) income cost ratio year-on-year
year-on-year (%) year-on-year (%) (%)
Property management 621.29 595.94 4.08% 6.81% 9.38% -2.26%
Forestry 22 16.14 26.64% - - -
(2) Main businesses classified according to regions
Unit: RMB Ten thousand
Increase/decrease of operating income over the same period of
Region Operating income
last year (%)
Shenzhen 600.54 33.63%
Shaoguan, Guangdong Province 22.00 -
Huizhou, Guangdong Province 20.75 -
3. In the reporting period, profit breakdown, main business and its breakdown
remained unchanged as compared with last year.
4. In the reporting period, there was no other operating business that greatly impacted
the Company‘s net profit.
5. Controlled subsidiaries and share-holding subsidiaries that greatly influenced net
profit of the Company:
Shenzhen International Commercial Property Management Co., Ltd., whose 61%
equity is held by the Company, is mainly engaged in property management with a
registered capital of RMB 7 million. During the reporting period, total assets of the
subsidiary stood at RMB 13,046,715.76 and it achieved an operating income of RMB
6,212,929.51, with its total profit standing at RMB -863,452.81.
6. Problems and difficulties in operation in the reporting period：
The Company was still in the transformation period, the project of shopping center in
central area of Futian District was still under construction, and, despite that some
forests were realized into cash, the forestry project just brought tiny revenue on the
whole. As a result, profits from main businesses of the Company were low, and the
Company‘s cash flow became tense.
The Company is now pushing forward the construction of shopping center with strong
10
efforts, and positively seeking for and enlarging new commercial real estates projects.
7. Statement given by the Board of Directors about the progress in handling matters
mentioned in the ―Non-standard Audit Report‖ issued by the CPA firm last year
In the 2010 Annual Audit Report, Reanda Certified Public Accountants Co., Ltd.
issued the Statement on Issuing Unqualified Audit Opinion with Paragraphs of
Pinpointed Matters for 2010 Annual Financial Report to Shenzhen International
Enterprise Co., Ltd. Statement given by the Board of Directors about the progress in
handling matters mentioned in the report are as the following:
Qualified matters:
(1) Internal-staff subscription of shops in the project of shopping center in central area
of Futian District: In line with resolutions made by the Shareholders‘ General Meeting,
the Board of Directors and the management personnel of the Company organized a
special group to actively communicate and negotiate with subscribers, and kept
promoting settlement and disposal of that event. As at the reporting date of this
Semi-Annual Report, the Company has reached agreements with 10 subscribers and
completed relevant compensation work. On the one hand, the Company, in an active
manner, negotiated with subscribers for solution; on the other hand, the Company is
also seeking for and demonstrating other ways, including filing a lawsuit, to solve that
problem.
(2) Land use right of Rongfa East Road, Pingdi Town:
The Company has actively communicated and negotiated with the transferee of equity
at that time, and confirmed the ownership of use right of the land. However, it‘s hard
to search related materials due to long-term duration period of the event, and the
transferee of equity hasn‘t cooperated with the Company to confirm the ownership.
The Company is now demonstrating other ways to solve the problem.
Pinpointed matters:
The Company emphasized on financing in the 1st half year, and its subsidiary Rongfa
Company finished the whole procedure of borrowing RMB 1.2 billion from China
Construction Bank in Jun. 2011; moreover, the Company extended the term of the
matured loan of RMB 300 million from Bohai International Trust Co., Ltd. The above
activities cut down financial expenses of the Company, relieved the tension of cash
flow, and provided capital guarantee for the construction of the project of shopping
center in central area of Futian District.
Along with overall promotion of investment invitation of the project of shopping
center in central area of Futian District, the Company will receive leasing income in
succession, which will gradually relieve current tension of cash flow. It is expected
that cash flow of the Company will be substantially improved after the shopping
center opens.
II. Investment of the Company
1. In the reporting period, the Company had no raised proceeds or raised proceeds in
the previous periods carried over to the reporting period.
11
2. Other significant investment projects with non-raised proceeds.
In the reporting period, non-raised proceeds of the Company were mainly used to
replace trust loans and invest on the construction of the project of shopping center in
central area of Futian District, Shenzhen.
12
Section VI Significant Events
I. Corporate governance and progress in construction of internal control
standards of the Company
(I). Corporate Governance
During the reporting period, the Company continuously perfected corporate
governance structure, further improved operation of the Company according to
requirements of the Company Law, Securities Law and relevant laws and regulations.
Governance and operation of the Company basically complied with requirements of
governance rules of listed companies. Corporate governance organ of the Company
was perfected and the efficiency was high. Responsibilities of Shareholders‘ General
Meeting, the Board of Directors, the Supervisory Committee and other internal organ
were definite, which was operated in accordance with relevant provisions and rules.
(II). Progress in construction of internal control standards
In accordance with the unified arrangement, the Company actively implemented the
requirements stipulated by the Circular on Doing Well the Internal Control Pilot Work
in Listed Companies in Shenzhen (Shen-Zheng-Ju-Gong-Si-Zi (2011) No. 31). As the
pilot unit for Enterprise Internal Control Basic Rules and relevant supporting
guidelines, the Company will actively promote the internal control construction.
During the reporting period, the Company promulgated the Work Plan on
Implementation of Internal Control Basic Rules, which was reviewed and approved
by the Board of Directors. The Company also established the Internal Control
Construction Steering Committee, including the implementation work of Internal
Control Basic Rules in the Company‘s internal control management system to carry
out as a whole. Besides, the Company also strengthened its staffs‘ awareness on
internal control system construction by convening work sessions on implementing
Internal Control Basic Rules and carrying out special training on Internal Control
Rules, etc.. In the next half year, the Company will advance the implementation work
of Internal Control Rules with the assistance by agency for internal control
construction as schedule, improve its internal control system, prevent risks and create
environment to realize its development goal.
II. The Company has not carried out any profit distribution, capitalization of public
reserves or issuance of new shares in the reporting period. Neither profit distribution
nor capitalization of pubic reserves will be implemented in the interim of 2011.
III. Significant lawsuits and arbitrations
The Company‘s significant lawsuits or arbitrations occurred in the reporting period
are as follows:
(I) The case on contract between Shenzhen Zhongtie Property Co., Ltd. (hereinafter
13
referred as ―Zhongtie Property‖) and Shenzhen Rongfa Investment Co., Ltd.
(hereinafter called ―Rongfa Company‖)
On 17 Feb. 2009, the Company‘s subsidiary, Rongfa Company, and Zhongtie Property
signed a Property Management Agreement on the Shopping Mall Project in Futian
CBD. Due to the Company‘s overall planning and position for the project, the
Company required to releasing the contract with Rongfa Company on 8 Dec. 2010.
Zhongtie Property sued to Shenzhen Futian District People‘s Court of Guangdong
Province, appealing Rongfa Company to pay the penalty as RMB 5 million and other
losses as RMB 8,658,315.88.
Up to the disclosure date of this report, the case is still under trial.
(II) The case on equity transfer distribute between Malaysia Foh Chong & Sons
SDN.BHD. (hereinafter referred as ―Foh Chong Company‖) and Shenzhen
International Enterprise Co., Ltd.
Foh Chong Company (the plaintiff) and the Company (defendant) signed Equity
Transfer Contract with Shenzhen Rongfa Investment Co., Ltd. on 31 May 2001, Foh
Chong Company transferred its 10% equity of Shenzhen Rongfa Investment Co., Ltd.
to the Company with the transfer price as RMB 20.6 million. However, after the
contract taking into effect, the Company didn‘t pay the equity transfer payment.
In Aug. 2011, the Company received the charging document from Shenzhen
Intermediate People‘s Court by Foh Chong Company, Foh Chong Company required
that: (1) sentencing the defendant to pay it the principal, interest and overdue penalty
totaling RMB 37,077,645.55; (2) sentencing the defendant to undertake all the losses
caused by not fulfillment its legal obligation and the litigation costs as well as other
expenses related with the case.
Up to the disclosure date of this report, the case has not been open for trial by
Shenzhen Intermediate People‘s Court.
(III) The case on guarantee obligation dispute between Shenzhen International
Enterprise Co., Ltd. and Shum Kong Industry & Trade Co., Ltd. (hereinafter referred
as Shum Kong Industry & Trade)
On 27 Sep. 1999, Shum Kong Industry & Trade gained a loan of RMB 10 million
from Shennan East Road Branch of Shenzhen Development Bank, for which the
Company provided the joint guarantee. After the expiry date of the Loan Contract,
Shum Kong Industry & Trade only paid part of the interest, which still owed the
principal sum and part of interest for the bank.
On 30 Dec. 2002, Shenzhen International Enterprise Co., Ltd. undertook the joint
obligation in accordance with the (2002) SZFJYC Zi No. 5 document of Civil
Mediation Paper from Shenzhen Intermediate People's Court, and paid the principal
sum and remained interest for Shum Kong Industry & Trade. On 26 Mar. 2003, the
Company applied to Shenzhen Intermediate People's Court for compulsory execution
of the (2002) SZFJYC Zi No. 5 document of Civil Mediation Paper, requiring to
recovering the security of RMB 13,583,873.68 paid in advance from Shum Kong
Industry & Trade. The case was executed by Intermediate Court of Guangzhou
14
Railway Transport with the case number: (2005) GTZFZ Zi No. 59. On 16 Jun. 2009,
the Company had sent the application for joining in the distribution to Shenzhen
Intermediate People's Court and Intermediate Court of Guangzhou Railway Transport,
requiring joining in the distribution for sales income of about RMB 18 million from
the land of Shum Kong Industry & Trade with land No. T102-0001. On 17 Mar. 2011,
Shenzhen Intermediate People's Court made a notification to notify the Company that
it was not qualified to join the distribution by law, thus couldn‘t gain the distribution.
The Company has put forward the objection in the stipulated time. Now there was no
further information.
IV. There were no significant purchases or sales of assets in the reporting period.
V. Significant related transaction in the reporting period
1. Up to 30 Jun. 2011, the outgoing and incoming of the Company‘s non-operating
creditor‘s rights and debts with related parties are as follows:
Unit: RMB Ten Thousand
Funds provided by the Company Funds provided by related parties
Related parties to related parties to the Company
Occurred amount Balance Occurred amount Balance
SHENZHEN CHUNHUA MEDICINE UNITED
0.00 0.00 0.00 208.52
CO., LTD
SHENZHEN GUOSHANG MEDICINE CO., LTD 0.00 0.00 0.00 147.48
SHENZHEN INTERNATIONAL ARCADE
0.00 0.00 0.00 414.02
TRADING CO., LTD
ZHENG KANGHAO 0.00 0.00 0.00 181.65
SHENZHEN WONGTEE REAL ESTATE GROUP
0.00 0.00 1,054.27 1,376.69
CO., LTD.
POWERLAND HOLDING LIMITED 0.00 0.00 0.00 699.96
Total 0.00 0.00 1,054.27 3,028.32
Of which: the funds provided by the Company to controlling shareholder and its
subsidiaries during the reporting period totaled RMB 0.00, as well as the balance of
RMB 0.00.
2. The Company convened the First Special Session for Y2011 of the Sixth Board of
Directors on 10 Jan. 2011, at which reviewed and approved the Proposal on the House
Leasing Contract Planned to Be Signed with Shenzhen Wongtee Commercial
Management Co., Ltd. by the Company. The Company planned to rent the 6th floor of
Huanggang Business Centre in Futian District as the new office (for details, please
refer to the No. 2011-03 public notice disclosed in Securities Times, Ta Kung Pao
(HK) and http://www.cninfo.com.cn on 12 Jan. 2011)
VI. Significant contracts in reporting period and their implementation
15
1. Except for the contracts already disclosed in this report, there is no trusteeship,
contract, and tenancy of the Company‘s assets by other companies happened or vice
versa during the reporting period.
2. Important guarantee contracts of the Company in the reporting period
(1) According to the conventions of the sales of commercial housing through
mortgage among real estate companies, the subsidiary Rongfa Company provided
guarantees for the mortgages for the sales of the properties developed by itself. By 30
Jun. 2011, the balance of the mortgage guarantees provided by Rongfa Company
stood at RMB 15,478,800.
(2) According to the conventions of the sales of commercial housing through
mortgage among real estate companies, the subsidiary Huizhou Rongfa Industrial
Investment Co., Ltd. provided guarantees for the mortgages for the sales of the
properties developed by itself. By 30 Jun. 2011, the balance of the mortgage
guarantees provided by Huizhou Rongfa was RMB 12,061,600.
(3) In the reporting period, according to the decision-making procedure as prescribed
in the Articles of Association, the Company provided new guarantees for its
subsidiaries as follows:
Name of the guaranteed
(Proportion of equity held Guarantee Starting date and ending
No. Guarantor Explanation on the guarantee
Shenzhen International amount date of the guarantee
Enterprise Co., Ltd.)
1 Shenzhen International Shenzhen Rongfa Investment RMB 300 Providing guarantee for the loan 2 Jul. 2011 – 2 Jan. 2013
Enterprise Co., Ltd. Co., Ltd.（60%） million of RMB 300 million
2 Shenzhen International Shenzhen Rongfa Investment RMB 1.2 Providing guarantee for the loan 25 Jun. 2011 – 24 Jun.
Enterprise Co., Ltd. Co., Ltd.（60%） billion of RMB 1.2 billion 2021
3. In the reporting period, the Company did not entrust other parties to manage its
cash and assets, or to get loans.
4. The Company had no other significant contracts in the reporting period
5. Special explanation and independent opinion on the Company‘s cash flow with its
related parties and external guarantee by the independent directors:
There is no controlling shareholder or other related parties occupying the Company‘s
capital.
During the reporting period, the Company strictly controlled its risk of external
guarantee, with no new external guarantee except for the guarantee provided for its
controlling subsidiaries for developing its main business. During the reporting period,
the decision-making and approval procedure on external guarantee was legal and
compliant. The Company didn‘t provide guarantee for its shareholders, actual
controller, other related parties, any non-legal-person units or individuals, existing no
harm to the interest of the listed company and its shareholders.
16
VII. Other commitments made by the Company or shareholders holding over 5%
shares of the Company and disclosed on the designated newspapers and website in the
reporting period.
1. The commitments made by the Company, directors, supervisors, senior executives,
the shareholders holding over 5% shares of the Company and other actual controllers
and other relevant parties during the reporting period or continued to the reporting
period:
Commitment
Commitment Contents of commitment Execution
maker
Commitments concerning Shareholders have fulfilled the
- -
the share reform commitment.
Commitments made in the
Shareholders have fulfilled the
Acquisition Report or the - -
commitment.
Report on Equity Changes
In Aug. 2010, the obligor for information disclosure
Commitments made in shall not reduce the shares of Multi Profit Asia Pacific
Zheng The commitment was being
significant asset Investment Ltd. obtained from this acquisition or reduce
Kanghao strictly executed.
reorganization the shares of SZIEC indirectly held by the obligor from
this acquisition within the coming 60 months.
Commitments made when
- - -
issuing shares
Other commitments
(including supplementary - - -
ones)
2. Particulars in fulfillment of commitments
Strictly performed
VIII. In the reporting period, the Company‘s Board of Directors, Supervisory
Committee, directors, supervisors and senior management staff received no
investigations, administrative punishments or criticism by circular from CSRC, as
well as no open criticism from Shenzhen Stock Exchange.
IX. Other significant events
For details, please refer to the qualified matters in ―Section V (I). 7—Statement given
by the Board of Directors about the progress in handling matters mentioned in the
―Non-standard Audit Report‖ issued by the CPA firm last year‖, otherwise, no other
significant events existed.
X．Surveys, interviews and visits received in the reporting period
Main discussion and materials
Time Location Way of reception Visitors
provided by the Company
6/F, Huanggang 1. Particulars about development
5 May 2011 Field research Dacheng Fund
Business Center projects; 2. Particulars about the
17
land parcel in Bantian; 3.
Performance of the forestry
business; 4. Financing Plan; 5.
Shareholder composition; 6. Plan
for the future.
1. Particulars about development
projects; 2. Financing progress; 3.
6/F, Huanggang Ping An Asset
10 May 2011 Field research Progress of repurchasing
Business Center Management
employee-owned shops; 4. Plan
for the future.
1. Particulars about development
projects; 2. Financing progress; 3.
Performance of the forestry
business; 4. Progress of
6/F, Huanggang repurchasing employee-owned
13 Jun. 2011 Field research Zexi Investment
Business Center shops; 5. Progress of business
solicitation; 6. Land Parcel in
Longguan; 7. Whether the
majority shareholder will give
financial support
XI. Index for information disclosed in the reporting period
No. Information disclosed Date
2011-01 Public Notice on Resolutions of the Fourth Special Shareholders‘ 1 Jan. 2011
General Meeting for Y2010
2011-02 Public Notice on Resolutions of the First Special Session of the Sixth 12 Jan. 2011
Board of Directors for Y2011
2011-03 Public Notice on Related Transaction of Signing House Leasing 12 Jan. 2011
Contract Signed with Shenzhen Wongtee Commercial Management
Co., Ltd. by the Company.
2011-04 Public Notice on Estimated Business Performance of Shenzhen 28 Jan. 2011
International Enterprise Co., Ltd. for Y2010
2011-05 Public Notice on Abnormal Fluctuation of Stock Price 22 Feb. 2011
2011-06 Public Notice on Abnormal Fluctuation of Stock Price 15 Mar. 2011
2011-07 Public Notice on Reduction of Shares Held by Shareholders 25 Mar. 2011
2011-08 Public Notice on Changing the Company‘s Office Address 29 Mar. 2011
2011-09 Public Notice on Equity Transfer Progress of the Controlling 13 Apr. 2011
Subsidiary of Shenzhen International Enterprise Co., Ltd.
2011-10 Public Notice on Earnings Forecast of Shenzhen International 14 Apr. 2011
Enterprise Co., Ltd. for Y2010
2011-11 Public Notice on Earnings Forecast for the First Quarter of 2011 14 Apr. 2011
2011-12 Public Notice on Resolutions of the Second Session of the Sixth Board 26 Apr. 2011
18
of Directors for Y2011
2011-13 Public Notice on Resolutions of the First Session of the Sixth 26 Apr. 2011
Supervisory Committee for Y2011
2011-14 Public Notice on the Summary of the Annual Report of Shenzhen 26 Apr. 2011
International Enterprise Co., Ltd. for Y2010
2011-15 Public Notice on the Test of the First Quarterly Report of Shenzhen 26 Apr. 2011
International Enterprise Co., Ltd. for Y2011
2011-16 Public Notice on Correction of Accounting Errors 26 Apr. 2011
2011-17 Public Notice on the Related Transaction of Abandoning the 26 Apr. 2011
Preemptive Right for the 40% Equity of Rongfa Company
2011-18 Public Notice on the Correction of Periodic Report 27 Apr. 2011
2011-19 Clarification Public Notice 10 May 2011
2011-20 Suggestive Notice on Reduction of Shares Held by Shareholders 12 May 2011
2011-21 Public Notice on Resolutions of the Board Session 4 Jun. 2011
2011-22 Circular on Shareholders‘ General Meeting 4 Jun. 2011
2011-23 Public Notice on Borrowing from Banks or Other Financial Institutes 4 Jun. 2011
and Authorizing the Board of Directors to Handle the Borrowing and
Relevant Guarantee Events
2011-24 Suggestive Notice on Convening the Shareholders‘ General Meeting 18 Jun. 2011
for Y2010
2011-25 Public Notice on Resolutions of the Shareholders‘ General Meeting for
25 Jun. 2011
Y2010
2011-26 Public Notice on Borrowing from Banks or Other Financial Institutes
25 Jun. 2011
and Providing Guarantee Therefore
2011-27 Public Notice on Progress of Borrowing from Banks or Other Financial 30 Jun. 2011
Institutes and Providing Guarantee Therefore
Section VII Financial Report (Un-audited)
The Semi-annual Report 2011 of the Company has not been audited, with details
attached below.
Consolidated Balance Sheet (1/2)
30 Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
19
Assets Notes 30 Jun. 2011 31 Dec. 2010
Current Assets:
Monetary funds 170,979,778.01 153,356,391.84
Transactional financial assets
- -
Notes receivable
- -
Accounts receivable 739,576.54 1,275,452.62
Accounts paid in advance 45,715,687.62 173,112.00
Interest receivable
- -
Dividend receivable
- -
Other accounts receivable 3,680,453.57 3,990,327.14
Inventories 1,370,048,608.41 1,295,921,630.89
Non-current assets due within 1 year
-
Other current assets 2,100,000.00
Total current assets 1,593,264,104.15 1,454,716,914.49
Non-current assets:
Available-for-sale financial assets
- -
Held-to-maturity investments
- -
Long-term accounts receivable - -
Long-term equity investment 5,699,905.49 5,699,905.49
Investing property 1,133,241.22 1,168,880.14
Fixed assets 51,947,535.87 52,778,422.12
Construction in progress
- -
Engineering materials
- -
Disposal of fixed assets
- -
Production biological assets
- -
Oil-gas assets
Intangible assets 25,831,082.06 26,248,835.41
R&D expense
Goodwill
Long-term deferred expenses 90,000.00 120,000.00
Deferred income tax assets
20
- -
Other non-current assets
- -
Total of non-current assets 84,701,764.64 86,016,043.16
Total assets 1,677,965,868.79 1,540,732,957.65
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
Consolidated Balance Sheet (2/2)
30 Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Liabilities and shareholders’ equity Notes 30 Jun. 2011 31 Dec. 2010
Current liabilities:
Short-term borrowings - 1,300,000,000.00
Transactional financial liabilities
- -
Notes payable
- -
Accounts payable 35,128,437.63 45,178,810.77
Accounts received in advance 36,040,472.12 32,310,622.12
Employee‘s compensation payable 2,064,443.34 4,059,693.09
Tax payable 2,598,822.50 3,500,382.04
Interest payable 3,981,587.16
-
Dividend payable 5,127,701.36 5,127,701.36
Other accounts payable 144,461,005.43 177,632,900.99
Non-current liabilities due within 1
20,000,000.00 16,590,000.00
year
Other current liabilities
- -
Total current liabilities 245,420,882.38 1,588,381,697.53
Non-current liabilities:
Long-term borrowings 1,535,850,000.00 35,000,000.00
Bonds payable
- -
Long-term payables
- -
Specific payables
- -
Estimated liabilities 66,839,317.32 66,839,317.32
Deferred income tax liabilities
- -
21
560,438.13
Deferred earnings 560,438.13
Total non-current liabilities 1,603,249,755.45 102,399,755.45
Total liabilities 1,848,670,637.83 1,690,781,452.98
Shareholders‘ equity:
Share capital 220,901,184.00 220,901,184.00
Capital reserves 72,315,347.06 72,315,347.06
Less: Treasury stock
-
Surplus reserves 125,929,834.48 125,929,834.48
Retained profits (380,356,156.77) (364,837,764.72)
Foreign exchange difference -
-
Total equity attributable to owners of
38,790,208.77 54,308,600.82
the Company
Minority interests (209,494,977.81) (204,357,096.15)
Total shareholders’ equity (170,704,769.04) (150,048,495.33)
Total liabilities and shareholders’
1,677,965,868.79 1,540,732,957.65
equity
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
Balance Sheet of the Company (1/2)
30 Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Assets Notes 30 Jun. 2011 31 Dec. 2010
Current Assets:
Monetary funds 417,219.09 360,786.67
Transactional financial assets
- -
Notes receivable
- -
Accounts receivable
- -
Accounts paid in advance
- -
Interest receivable
- -
Dividend receivable
- -
Other accounts receivable 67,362,747.31 64,562,300.84
Inventories
22
- -
Non-current assets due within 1 year
- -
Other current assets
- -
Total current assets 67,779,966.40 64,923,087.51
Non-current assets:
Available-for-sale financial assets
- -
Held-to-maturity investments
- -
Long-term accounts receivable
- -
Long-term equity investment 65,073,896.52 65,073,896.52
Investing property 840,131.87
819,288.05
Fixed assets 4,847,429.86 4,738,121.88
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 90,000.00 120,000.00
Deferred income tax assets
- -
Other non-current assets
- -
Total of non-current assets 70,830,614.43 70,772,150.27
Total assets 138,610,580.83 135,695,237.78
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
23
Balance Sheet of the Company (2/2)
30 Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Liabilities and shareholders’ equity Notes 30 Jun. 2011 31 Dec. 2010
Current liabilities:
Short-term borrowings
- -
Transactional financial liabilities
- -
Notes payable
- -
Accounts payable
- -
Accounts received in advance 70,000.00
70,000.00
Employee‘s compensation payable 1,820,873.54
714,215.98
Tax payable 4,079,568.66 3,987,373.26
Interest payable
- -
Dividend payable 5,127,701.36 5,127,701.36
Other accounts payable 60,145,523.76 46,548,513.07
Non-current liabilities due within 1
year - -
Other current liabilities
- -
Total current liabilities 70,137,009.76 57,554,461.23
Non-current liabilities:
Long-term borrowings
- -
Bonds payable
- -
Long-term payables
- -
Specific payables
- -
Estimated liabilities
- -
Deferred income tax liabilities
- -
Other non-current liabilities - -
Total non-current liabilities
24
- -
Total liabilities 70,137,009.76 57,554,461.23
Shareholders‘ equity:
Share capital 220,901,184.00 220,901,184.00
Capital reserves 64,951,444.59 64,951,444.59
Less: Treasury stock
- -
Surplus reserves 96,841,026.39 96,841,026.39
Retained profits (314,220,083.91) (304,552,878.43)
Total equity attributable to owners of
68,473,571.07 78,140,776.55
the Company
Minority interests
- -
Total shareholders’ equity 68,473,571.07 78,140,776.55
Total liabilities and shareholders’
138,610,580.83 135,695,237.78
equity
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
Consolidated Income Statement
Jan.-Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Items Notes Jan.-Jun. 2011 Jan.-Jun. 2010
I. Operating revenues 6,482,200.61 6,003,596.33
Less: Operating costs 6,816,911.34 5,655,724.21
Taxes and associate charges 380,097.83 380,643.65
Selling and distribution expenses
- 661,010.17
Administrative expenses 15,116,490.87 13,703,388.45
Financial expenses 5,142,446.26 23,228,909.22
Asset impairment loss 137,982.48 -20,378.16
Add: Gain/(loss) from change in fair value
-
(―-‖ means loss) -
Gain/(loss) from investment (―-‖
-
means loss) -
Including: share of profits in associates and
-
joint ventures -
II. Business profit (“( )” means loss) (21,111,728.17) （37,605,701.21）
Add: non-operating income 504,910.00 2,999,252.66
25
Less: non-operating expense 49,455.54 5,168,096.00
Including: loss from non-current asset
disposal - -
III. Total profit (“( )” means loss) (20,656,273.71) (39,774,544.55)
Less: Income tax expense
- -
IV. Net profit (“( )” means loss) (20,656,273.71) (39,774,544.5)
Attributable to owners of the
(15,518,392.05)
Company (21,740,816.44)
Minority shareholders‘ income (5,137,881.66) (18,033,728.11)
V. Earnings per share
(I) Basic earnings per share -0.070 -0.0984
(II) Diluted earnings per share -0.070 -0.0984
VI. Other comprehensive incomes -
VII. Total comprehensive incomes (20,656,273.71) (39,774,544.55)
Attributable to owners of the
(15,518,392.05)
Company (21,740,816.44)
Attributable to minority shareholders (5,137,881.66) (18,033,728.11)
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
Income Statement of the Company
Jan.-Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Items Notes Jan.-Jun. 2011 Jan.-Jun. 2010
I. Operating revenues 34,271.10 171,800.00
8,345.70 202,743.58
Less: Operating costs
Taxes and associate charges 1,851.36 -
Selling and distribution expenses -
-
Administrative expenses 7,534,340.69 5,752,504.28
Financial expenses (10,353,542.25) (8,412,757.07)
Asset impairment loss 12,508,247.20 44,005,982.58
26
Add: Gain/(loss) from change in fair value
-
(―-‖ means loss) -
Gain/(loss) from investment (―-‖
-
means loss) -
Including: share of profits in associates
-
and joint ventures -
II. Business profit (“( )” means loss) (9,664,971.60) (41,376,673.37)
Add: non-operating income 3,650.00 2,910,912.64
Less: non-operating expense 5,883.88 6,858.89
Including: loss from non-current asset
-
disposal -
III. Total profit (“( )” means loss) (9,667,205.48) (38,472,619.62)
Less: Income tax expense -
-
IV. Net profit (“( )” means loss) (9,667,205.48) (38,472,619.62)
Attributable to owners of the
(9,667,205.48) (38,472,619.62)
Company
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
Consolidated Cash Flow Statement
Jan.-Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Items Notes Jan.-Jun. 2011 Jan.-Jun. 2010
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of
11,046,772.54 6,544,612.36
service
Tax refunds received -
-
Other cash received relating to operating activities 30,447,863.13 115,259,513.46
Subtotal of cash inflows from operating activities 41,494,635.67 121,804,125.82
Cash paid for goods and services 74,059,575.03 78,459,700.62
Cash paid to and for employees 12,803,130.49 9,035,961.49
Various taxes paid 2,193,105.67 1,067,337.33
Other cash payment relating to operating activities 22,053,024.28 19,174,469.51
Subtotal of cash outflows from operating activities 111,108,835.47 107,737,468.95
Net cash flows from operating activities (69,614,199.80) 14,066,656.87
II. Cash flows from investing activities:
Cash received from retraction of investments - -
27
Cash received from return on investments - -
Net cash received from disposal of fixed assets, intangible
2,350.00 13,696,125.00
assets and other long-term assets
Net cash received from disposal of subsidiaries or other
-
business units -
Other cash received relating to investing activities 411.00 -
Subtotal of cash inflows from investing activities 2,761.00 13,696,125.00
Cash paid to acquire fixed assets, intangible assets and other
1,341,213.58 68,832.00
long-term assets
Cash paid for investment - -
Net cash paid to acquire subsidiaries and other business units - -
Other cash payments relating to investing activities - -
Subtotal of cash outflows from investing activities 1,341,213.58 68,832.00
Net cash flows from investing activities (1,338,452.58) 13,627,293.00
III. Cash Flows from Financing Activities: - -
Cash received from capital contributions -
-
Cash received from borrowings 2,222,000,000.00 35,000,000.00
Other cash received relating to financing activities 270,000.00
-
Subtotal of cash inflows from financing activities 2,222,000,000.00 35,270,000.00
Repayment of borrowings 2,056,349,444.44 52,000,000.00
Cash paid for interest expenses and distribution of dividends
70,546,890.32 16,579,806.60
or profit
Other cash payments relating to financing activities -
6,526,710.00
Sub-total of cash outflows from financing activities 2,133,423,044.76 68,579,806.60
Net cash flows from financing activities 88,576,955.24 (33,309,806.60)
IV. Effect of foreign exchange rate changes on cash and
(916.69) -
cash equivalents
V. Net increase in cash and cash equivalents 17,623,386.17 (5,615,856.73)
Add: Opening balance of cash and cash equivalents 153,356,391.84 18,673,470.06
VI. Closing balance of cash and cash equivalents 170,979,778.01 13,057,613.33
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
Cash Flow Statement of the Company
Jan.-Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Items Notes Jan.-Jun. 2011 Jan.-Jun. 2010
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of
service - 51,800.00
28
Tax refunds received
- -
Other cash received relating to operating activities
26,913,139.76 22,518,052.99
Subtotal of cash inflows from operating activities 26,913,139.76 22,569,852.99
Cash paid for goods and services
- -
Cash paid to and for employees
4,540,865.14 3,292,130.53
Various taxes paid
723,193.79 173,200.48
Other cash payment relating to operating activities
21,022,072.23 32,800,277.63
Subtotal of cash outflows from operating activities 26,286,131.16 36,265,608.64
Net cash flows from operating activities
627,008.60 (13,695,755.65)
II. Cash flows from investing activities:
-
Cash received from retraction of investments
- -
Cash received from return on investments
- -
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 2,350.00 13,693,825.00
Net cash received from disposal of subsidiaries or other
business units - -
Other cash received relating to investing activities
- -
Subtotal of cash inflows from investing activities
2,350.00 13,693,825.00
Cash paid to acquire fixed assets, intangible assets and other
long-term assets 572,030.00 39,474.00
Cash paid for investment
- -
Net cash paid to acquire subsidiaries and other business units
- -
Other cash payments relating to investing activities
- -
Subtotal of cash outflows from investing activities
572,030.00 39,474.00
Net cash flows from investing activities
(569,680.00) 13,654,351.00
III. Cash Flows from Financing Activities:
29
-
Cash received from capital contributions
- -
Cash received from borrowings
- 5,000,000.00
Other cash received relating to financing activities
- -
Subtotal of cash inflows from financing activities
- 5,000,000.00
Repayment of borrowings
- 5,000,000.00
Cash paid for interest expenses and distribution of dividends
or profit - -
Other cash payments relating to financing activities
- -
Sub-total of cash outflows from financing activities
- 5,000,000.00
Net cash flows from financing activities
- -
IV. Effect of foreign exchange rate changes on cash and
cash equivalents (896.18)
V. Net increase in cash and cash equivalents 56,432.42 (41,404.65)
Add: Opening balance of cash and cash equivalents
360,786.67 252,948.06
VI. Closing balance of cash and cash equivalents 417,219.09 211,543.41
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai
Head of the accounting department: Xu Xiaoyun
30
Consolidated Statement of Changes in Shareholders’ Equity
Jan.-Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Reporting period Last year
Equity attributable to owners of the Company Equity attributable to owners of the Company
Gen
Paid-up Less: Specif Total Paid-up Less: Speci Gener Total
Items eral Minority Ot Minority
capital (or Capital treasu ic Surplus Retained Oth owners‘ capital (or Capital treasu fic Surplus al risk Retained owners‘
risk interests her interests
share reserve ry reserv reserve profit ers equity share reserve ry reserv reserve reserv profit equity
reser s
capital) stock e capital) stock e e
ve
I. Balance at the end of the previous 125,929, -364,837,
220,901,184 72,315,3 -204,357,0 -150,048 220,901,18 72,315,3 125,929, -197,128, -91,101,8 130,916,
year 834.48 764.72
.00 47.06 96.15 ,495.33 4.00 47.06 834.48 052.01 96.53 417.00
Add: change of accounting policy
Correction of errors in previous
periods
Other
II. Balance at the beginning of the 125,929, -364,837,
220,901,184 72,315,3 -204,357,0 -150,048 220,901,18 72,315,3 125,929, -197,128, -91,101,8 130,916,
year 834.48 764.72 - -
.00 47.06 96.15 ,495.33 4.00 47.06 834.48 052.01 96.53 417.00
III. Increase/ decrease of amount in
-15,518,3 -5,137,881 -20,656, -167,709, -113,255, -280,964
the year (―-‖ means decrease)
92.05 .66 273.71 712.71 199.62 ,912.33
(I) Net profit
-15,518,3 -5,137,881 -20,656, -167,709, -113,255, -280,964
31
92.05 .66 273.71 712.71 199.62 ,912.33
(II) Other comprehensive incomes
-113,255, -280,964
Subtotal of (I) and (II) -15,518,3 -5,137,881 -20,656, -1677097
199.62 ,912.33
92.05 .66 273.71 12.71
(III) Capital paid in and reduced by
owners
1. Capital paid in by owners
2. Amounts of share-based
payments recognized in owners‘
equity
3. Others
(IV) Profit distribution
1. Appropriations to surplus
reserves
2. Appropriations to general risk
provisions
3. Appropriations to owners (or
shareholders)
4. Other
(V) Internal carry-forward of
owners‘ equity
1. New increase of capital (or
share capital) from capital public
reserves
32
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
125,929,
IV. Closing balance 220,901,184 72,315,3 -380,356, -209,494,9 -170,704 220,901,18 72,315,3 125,929, -364,837, -204,357, -150,048
834.48 -
.00 47.06 156.77 77.81 ,769.04 4.00 47.06 834.48 764.72 096.15 ,495.33
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai Head of the accounting department: Xu Xiaoyun
Statement of Changes in Shareholders’ Equity of the Company
Jan.-Jun. 2011
Prepared by Shenzhen International Enterprise Co., Ltd. Unit: RMB Yuan
Reporting period Last year
Paid-up Paid-up
Less: General Total Less: General Total
Items capital (or Capital Specific Surplus Retained capital (or Capital Specific Surplus Retained
treasury risk owners‘ treasury risk owners‘
share reserve reserve reserve profit share reserve reserve reserve profit
stock reserve equity stock reserve equity
capital) capital)
220,901,18 64,951,4 96,841,02 220,901,1 64,951,44 96,841,02 -206,665, 176,028,6
I. Balance at the end of the previous year -304,552, 78,140,77
4.00 44.59 6.39 84.00 4.59 6.39 033.59 21.39
878.43 6.55
Add: change of accounting policy
33
Correction of errors in previous periods
Other
220,901,18 64,951,4 96,841,02 220,901,1 64,951,44 96,841,02 -206,665, 176,028,6
II. Balance at the beginning of the year -304,552, 78,140,77
4.00 44.59 6.39 84.00 4.59 6.39 033.59 21.39
878.43 6.55
III. Increase/ decrease of amount in the year
-9,667,20 -9,667,20 -97,887,8 -97,887,8
(―-‖ means decrease)
5.48 5.48 44.84 44.84
(I) Net profit -9,667,20 -9,667,20 -97,887,8 -97,887,8
5.48 5.48 44.84 44.84
(II) Other comprehensive incomes
Subtotal of (I) and (II) -9,667,20 -9,667,20 -97,887,8 -97,887,8
5.48 5.48 44.84 44.84
(III) Capital paid in and reduced by owners
1. Capital paid in by owners
2. Amounts of share-based payments
recognized in owners‘ equity
3. Others
(IV) Profit distribution
1. Appropriations to surplus reserves
2. Appropriations to general risk
provisions
3. Appropriations to owners (or
shareholders)
34
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
220,901,18 64,951,4 96,841,02 220,901,1 64,951,44 96,841,02
IV. Closing balance -314,220, 68,473,57 -304,552, 78,140,77
4.00 44.59 6.39 84.00 4.59 6.39
083.91 1.07 878.43 6.55
Legal representative: Zheng Kanghao Head of the accounting work: Chen Xiaohai Head of the accounting department: Xu Xiaoyun
35
Shenzhen International Enterprise Co., Ltd.
Notes to Financial Statements
For the year ended June 30, 2011
(All amounts are expressed in RMB yuan unless otherwise stated)
English translation for reference only, should there be any inconsistency between the Chinese and English versions, the Chinese version
shall prevail.
Ⅰ. General Information
1. History of the company
Shenzhen International Enterprise Co., Ltd. (―the Company‖) on the approval of People's
Government of Shenzhen and issued Shenfubanfu [1992]No. 1867 document to restructured as a
stock limited company in March 1993 and directional issued 41,701,800 shares. The Company
on the approval of Securities Administration Office Shenzhen the Company issued 41,701,800
bonus shares by the ratio 10:10 in 1994. The Company on the approval of Document No. 48 [1995]
Shenfubanhan the company issued 50,000,000 B shares and lisited in the in the Shenzhen Stock
Exchange in 1995. The Compnay on the approval of Document No. 99 [1996] Zhengjianfashen zi
which issued by China Securities Regulatory Commission the company issued 20,000,000 A shares
and lisited in the Shenzhen Stock Exchange in 1996. The Company on the approval of board of
directors and Securities Administration Office Shenzhen‘s Document No. 38 [1997]
Shenzhengbanfu the company issued bonus shares by the ratio 10:1 and the capital fund transferred
to share capital by the ratio 10:1, in the total of 30,680,720 shares. In May 1998 on the approval of
board of directors and Securities Administration Office Shenzhen‘s Document No. 45 [1998]
Shenzhengbanfu that the share capital of company increased 36,816,864 shares by the transfer of
the capital fund by the ratio 10:2 in May 1998, by now the shares of the company are increased to
220,901,184 shares. The company has acquired the Qiguyuezong business license with No.110114,
that issued by Shenzhen Administration for Iudustry and Commerce, the total registered share
capital of the compnay is RMB 220,901,184 Yuan.
Legal representative: Jinquan Li
Registered Address: Luohu District, Shenzhen
2. The Industry
The company operates within real estate, commercial retail, forestry industry
3. Scope of business
The approved business scop: Merchandise retail, real estate, purchasing, distribution, plant,
tree sales, import and export.
II. Summary of Significant Accounting Policies 、 Accounting Estimates and
Correct Previous Accounting Period Errors
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1. Basis for preparation
The Company maintain its accounting records and prepare its statutory financial statement
based on the assumption of going concern, recognition and measurement in accordance with the
fact and substance of transactions, and in accordance with the China Enterprise Accounting
Standards issued by the Ministry of Finance on 15th February 2006, as well as based on those
accounting policies and accounting estimates that described as below.
2. Declaration of Compliance with the Enterprise Accounting Standards
The Company‘s financial statements prepared follow the requirements of the Enterprises
Accounting Standard promulgated by the Ministry of Finance; fairly and completely present
the financial position, operation result and cash flows, and other relevant information of the
Company.
3. Accounting Year
The Company employs a period of calendar days from January 1 to December 31 each year
as accounting year.
4. Reporting currency
The Company‘s reporting currency is Renminbi (―RMB‖).
5. Accounting treatment of the business combination that is under the common control
and not under the common control.
(1) Accounting treatment of the business combination that is under the common control
Those assets and liabilities obtained by the Company during the business combination should
be recognized in the carrying value of the shareholder‘s equity of the subsidiary on the merger
date. The difference between the carrying amount of the net assets obtained and carrying amount
of the merger consideration shall be adjusted to capital reserve. If the capital reserve is not
sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
(2) Accounting treatment of the business combination that is not under the common control
The consideration paid for the business combination exceeds the acquirer‘s interest in the fair
value of the bargainor‘s identifiable net assets, the difference shall be recognized as goodwill;
Where the cost of combination is less than the acquirer‘s interest in the fair value of the
bargainor‘s identifiable net assets, should be review the fair value of bargainor‘s identifiable
assets、 liabilities and contingency liabilities , as well as the computation of combination cost,
after reassessment, the difference shall be recognized in profit or loss to the current period.
6. Basis of Consolidated Financial Statement
(1) Consolidation Scope
The consolidated financial statements prepared are in accordance with the No. 33 Enterprise
Accounting Standards – Consolidated Financial Statement issued in February, 2006. The
consolidated financial statements incorporate the financial statements of the Company and
enterprises direct controlled or indirect controlled by the Company (―its subsidiaries‖). Control is
refer to the Company has the power to govern the financial and operating policies of an investee
enterprise so as to obtain benefits from its operating activities.
If there is evidence provide that the invested company can not controlled by holding
company, the invested company shall not include in consolidation scope.
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(2) Buy and sale the shares of subsidiaries
The effective purchase day and sales day recognized, should has transferred the material risk
and reward of ownership of share of subsidiaries. The consolidated income statement and
consolidated cash flow statement has included the results of operation and cash flow of
subsidiaries(not under the same control) before disposal or after acquired the share; for the
subsidiaries under the same control from business combination, the operation results and cash
flow has been included in the consolidated income statement and consolidated cash flow statement
from beginning of combination period to consolidation date and disclosed in statement individual,
the comparative amount in consolidation statement has been adjusted correspond to it.
If the Company acquires minority equity shares of subsidiaries, thus hold the long-term
equity investment, on the date of prepare consolidation statement, the difference between the
value of the new long-term equity investment and the value of subsidiary‘s net assets enjoyed by
proportion of shareholdings(begin with acquired date or combination date), shall be adjusted to
capital reserve, if the capital reserve is not sufficient to absorb the difference, any excess shall be
adjusted against retained earnings
(3) Adjusted the subsidiaries‘financial statement, when the subsidiaries have different
accounting policy and reporting period.
If the subsidiaries has different accounting policy and reporting period with the parent
company, the consolidated financial statement prepared according to the parent company‘s
accounting policy ,and adjusted the subsidiaries‘ financial statement; For those subsidiaries
acquired not under the same control, according to the fair value of identifiable assets、liabilities
and contingency liabilities of the subusidiary on the acquisition date, to adjusted subsidiaries‘
financial statement.
(4) Consolidation method
All significant intercompany transaction and balances between group enterprises are
eliminated on consolidation.
The minority interest should disclose in consolidation statement alone. Decrease minority
interest if the minority shareholders should afford to the loss of the subsidiaries that allocate to
minorities, otherwise, the Company would bear the loss of exceed.
7. Standards of cash equivalents
Cash equivalents of the company refers to the investments with short term (it usually expires
within three months from the purchase date), highly liquidity, easy to convert into known amount
of cash, and low-risk of changes in value. Equity investments shall not deem as cash equivalents.
8. Foreign currency translation and convertion of foreign currency financial statement
（1）Foreign currency transactions
The Company‘s foreign currency transactions are convered into presentation currency (RMB)
at spot exchange rates (Usually refers to the middle rate of the exchange price quotation that
announced by the People's bank of China) prevailing on the day in which the transactions take
place.
On the balance sheet date, those foreign currency monetary items within the financial
statement should be convered at the spot rates prevailing on the balance sheet date. The exchange
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difference caused by the change in the exchange rate from the initial recognized date and the
current balance sheet date, included in profit and loss for the year. With historical cost
measurement of foreign currency non-monetary items, the transaction is convered at the spot
exchange rate of transaction day, without changing its presentation currency amount. In the fair
value measurement of foreign currency non-monetary items, convered at the spot exchange rate at
that day when the fair value can be determined, the difference between amount after converted
into presentation currency and the original presentation currency amount, as the changes in the fair
value, recognized in the current profits and losses.
（2）Conversion of foreign currency financial statement
① Assets and liability items in balance sheet are converted at the spot rates prevailing on the
balance sheet date; items in shareholders‘ equity are converted at the spot rates prevailing on date
of transaction except undistributed profit.
② Revenue and expense in income statement are converted at the approximate rates of spot
rates prevailing on the transaction date.
The exchange differences caused by above method are disclosure in the shareholders‘ equity
individually.
③ Cash flow statement items converted at the spot rates prevailing on the cash flow date.
The exchange differences should disclosure individually in the cash flow statement.
9. Financial Instruments: Recognition and Measurement
(1) Classification of financial assets and financial liabilities
The Company in accordance with the investment purpose and economic substance of the
ownership of financial assets are divided into four category, which is fair value through profit or
loss; Held-to-maturity investments; Loans and receivables; Available-for-sale financial assets.
According to the economic substance those financial liabilities are divided into fair value
through profit or loss and others.
①Financial assets or financial liabilities at fair value through profit or loss: including held
for trading financial assets or financial liabilities and designated by the Company as at fair value
through profit or loss.
A financial asset or financial liability is classified as held for trading if it is:
a、Acquired or incurred principally for the purpose of selling or repurchasing it in the near
term; or
b、Part of a portfolio of identified financial instruments that are managed together and for
which there is evidence of a recent actual pattern of short-term profit-taking; or
c、A derivative (except for a derivative that is a designated and effective hedging instrument,
a derivative of financial guarantee contract, a derivative that settle by equity instrument, which the
price of instrument could not be quoted in active market and the fair value could not measure
reasonably).
A financial asset or financial liability is classified as designated fair value through profit or
loss if it is:
a、The designation can be eliminated or significantly reduced the inconsistent situation or
relate profit and loss cause by different measurement basis of financial assets and financial
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liabilities;
b、Company risk management or investment strategy has been enshrined in a formal written
document that the financial assets portfolio, the financial liabilities portfolio, or the financial
assets and financial liabilities portfolio are management in fair value-based and evaluation and
report to key management person.
②Held-to-maturity investments: are non-derivative financial assets with fixed or
determinable payments and fixed maturity that company has the positive intention and ability to
hold to maturity. Mainly include the Company's management has a clear intention and ability to
hold to maturity of fixed-rate national bonds, floating-rate corporate bonds.
③Receivables: are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Receivables of the Company mainly refer to the Company's
sales of goods or rendering of services to form the accounts receivable and other receivables.
④Available-for-sale financial assets: are those non-derivative financial assets that are
designated as available for sale at initial recognized, or those financial assets are not measured in
fair value based and through to profit and loss, or loans and receivables, or held-to-maturity
investments.
⑤Other financial liabilities: financial liabilities not divided into measurement in fair value
base and through into profit and loss account.
(2) Measurement of financial assets and financial liabilities
The Company‘s financial asset or financial liability is recognized at its fair value initially.
For financial assets or financial liabilities at fair value through profit or loss, relevant transaction
costs that are directly attributable to current profit and loss; for other types of financial assets or
financial liabilities, transaction costs related to the amount included in the initial confirmation
cost.
Subsequent measurement of financial assets and financial liabilities:
① Financial assets or financial liabilities at fair value through profit or loss measured at its
fair value, at balance sheet date, the changed difference of fair value are accounted for profit and
loss in current period.
② Held-to-maturity investments, which shall be measured at amortized cost using the
effective interest method, the profit or loss of termination confirmation, impairment or
amortization included in the profit and loss account.
③ Loans and receivables, which shall be measured at amortized cost using the effective
interest method, the profit or loss from termination confirmation, impairment or amortization
included in the profit and loss account.
④ Available-for-sale financial assets, are measured with fair value, any changes of fair value
of available-for-sale financial assets at the end of period are accounted for capital reserve (other
capital reserve). Disposal of available-for-sale financial assets, the difference between
consideration received and carrying value of the financial assets included into investment profit or
loss account; at the same time, turn out the original cumulative amount of fair value change of
corresponding part within the equity, included into investment profit or loss account. The
impairment losses and exchange differences of foreign monetary financial assets including into
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current profit and loss. Interest received and cash dividends received during the hold period are
recognized as investment income.
⑤ Other financial liabilities, together with the equity instrument that price not be quoted in
active market and the fair value could not measure reasonably measured, as well as the subsequent
measurement should according to the cost of derivative financial liabilities.
The financial guarantee contract is not belong to financial liabilities designated by the
Company as at fair value through profit or loss, as well as the loan commitment is not belong to
financial liabilities designated by the Company as at fair value through profit or loss and belower
than market rate, After initial recognition, measured higher of: (a)Amount confirmed by <
Enterprise Accounting Standard 13-- Provisions, Contingent Liabilities and Contingent Assets>；
(b)Balance of initial recognition amount minus the accumulated amortization refer to .
Other financial liabilities adopt the effective interest method, subsequent measured by
amortization cost, recognized the profits and losses by termination confirmation or amortization to
current profit and loss account.
⑥ Fair value：It‘s the amount for which an asset could be exchanged or a liability settled,
between knowledgeable, willing parties in an arm‘s length transaction. In a fair deal, the
transaction should the two sides are continuing operations enterprises, do not intend to carry out
the liquidation or a major reduction in scale of operation, or under adverse conditions is still
trading. The existence of an active market of financial assets or financial liabilities, the quotation
within the active market should be used to determine its fair value. If there is no active market,
company should adopt valuation techniques to determine the fair value.
⑦ The amortized cost of a financial asset or financial liability： it‘s the amount at which the
financial asset or financial liability is measured at initial recognition minus principal repayments,
plus or minus the cumulative amortization using the effective interest method of any difference
between that initial recognized amount and the maturity date amount, and minus any reduction for
impairment or unrecoverable.
⑧The effective interest method: It‘s a method of using effective interest calculating the
amortized cost of a financial asset or a financial liability (or group of financial assets or financial
liabilities) and of allocating the interest income or interest expense over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash flows through the
expected life of the financial instrument or, when appropriate, a shorter period to the net carrying
amount of the financial asset or financial liability. Then calculating the effective interest rate,
company shall estimate cash flows considering all contractual terms of the financial instrument
(for example, prepayment, call and similar options) but shall not consider future credit losses.
(3) Transfers and derecognize of financial assets
① Derecognize financial asset if, and only if, meets one of the following three conditions:
a. terminate the contractual rights of cash flows from the financial asset;
b. the financial assets have been transferred, and the ownership of the risks and rewards of
financial assets transfered to other party;
c. The financial assets have been transferred, but the Company neither transfered the
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ownership of the risks and rewards of financial assets, nor retained, and gives up control of the
financial assets.
② When termination conditions of entire transferred assets have been satisfied, the
differences between the amounts of following items shall be recognised in the current period
profits and losses account:
a. The carrying value of transferred financial assets;
b. The consideration received from the transfer, and the accumulative amount of the changes
of the fair value originally recorded in the shareholders‘ equities.
③ If the transfer of partial financial assets satisfies the conditions of derecognize, the entire
book value of the transferred financial asset shall apportion, between the portion whose
derecognize and the recognized portion (under such circumstance, the service asset retained shall
be deemed as a portion of financial asset whose derecognize), be apportioned according to their
respective relative fair value, and the difference between the amounts of the following two items
shall be accounted for the profits and losses of the current period .
a. The portion of carrying value derecognized;
b. The consideration received from the transfer, and the accumulative amount of the
changes of the fair value originally recorded in the shareholders‘ equities.
④ If the Company fails to satisfy the conditions of derecognize for transferred financial
assets, it shall continue to recognize the entire financial assets to be transferred and shall recognize
the consideration it receives as a financial liability. For those financial assets transfer adopt
continuing involvement method, the Company should recognize one financial asset and one
financial liability, according to the extent of the transferred financial assets of continuing
involvement.
(4) Impairment of financial assets
① If the Company have the following evidence to prove the impairment of financial assets,
should recognize the provision of impairment:
a. significant financial difficulty of the issuer or obligor;
b. a breach of contract, such as a default or delinquency in interest or principal payments;
c. the lender, for economic or legal reasons relating to the borrower’s financial difficulty,
granting to the borrower a concession that the lender would not otherwise consider;
d. it becoming probable that the borrower will enter bankruptcy or other financial
reorganisation;
e. the disappearance of an active market for that financial asset because of financial
difficulties;
f. observable data indicating that there is a measurable decrease in the estimated future cash
flows from a group of financial assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial assets in the group;
g. adverse changes in the payment status of borrowers in the group, let the lender may cannot
recover the investment cost;
h. the fair value of financial instrument investment incur serious or non-temporary decline;
i. other objective evidence that prove impairment of financial assets.
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② On the balance sheet date, the Company should adopt different impairment test method
for different type financial assets, and recognize provision of impairment:
a. Held-to-maturity investments: on the balance sheet date, if there are objective evidence of
impairment for the investment, the Company has recognized the impairment loss by the asset’s
carrying amount and the present value of estimated future cash flows.
b. Available-for-sale financial assets: on the balance sheet date, the Company analyse the
impairment evidences of the financial assets, experienced judgement whether continuing decline
in the fair value. Generally, if the fair value of financial assets incurred serious decline, after
consideration of all relevant factors, anticipate this is non-temporary, therefore can identified the
available-for-sale financial assets has impaired, should recognize the impairment loss. When a
decline in the fair value of an available-for-sale financial asset has been recognised directly in
equity and there is objective evidence that the asset is impaired, the cumulative loss that had been
recognised directly in equity shall be removed from equity and recognised in impairment loss
account of income statement.
10. Accounts receivable
（1）Method of provision for bad debts for individual accounts receivable with significant
amounts:
At the end of the period, the balance of accounts receivable and other accounts receivable
more than RMB 1 million (including RMB 1 million) should classified as individual significant
accounts receivable, one by one to carry out impairment test, if there is objective evidence that the
accounts receivable have been impaired, the impairment loss shall be recognized based on the
difference of the book values higher than the present value of future cash flows.
（2）Method of provision for bad debts for individual accounts receivable with non-
significant amounts, but in according to the characteristics of credit risk portfolio, the risk of the
portfolio is high:
For other non-significant receivables, classification primarily on the basis of account age,
those accounts receivable‘s account age more than three year and individual account balance less
than RMB 1 million, that shall be classified as non-significant in amount but in accordance with
the characteristics of credit risk portfolio, the risk of the portfolio is high.
For those account receivables classified as non-significant in amount but in accordance with
the characteristics of credit risk portfolio, the risk of the portfolio is high, as well as other
individual non-significant receivable accounts that not impaired after impairment test, these
account receivables will carry out age analysis by the Company and consider the debtor‘s actual
business situation and cash flow to determine the recoverable amount of receivables, a reasonable
estimate of bad debts.
(3) The Company adopt age analysis method to estimate the following percentage of
provision for bad debts:
Age Percentage of accounts Percentage of other
receivable accounts receivable %
Within 1 year (including 1 year) 5% 5%
1-2 years (including 2 years) 10% 10%
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2-3 years (including 3 years) 15% 15%
3-4 years (including 4 years) 20% 20%
4-5 years (including 5 years) 25% 25%
More than 5 years 30%-100% 30%-100%
11. Inventory: Recognition and Measurement
（1）Inventory of the Company refers to enterprises in the day-to-day activities of the holder
for the sale of finished goods, product that in the production process, and materials consumed in
the production process or provision of services. Including inventory finished goods, consigned
goods, development costs, development products, low-value consumable supplies, package
materials, and consumable biology assets etc.
（2）Inventories stock physical count system
The Company adopts the perpetual stocktaking system.
（3）Valuation methods of inventories input and output
The acquired inventory of the company to be initially measured at cost, the inventory
includes costs of purchase and processing costs and other costs.
①Retail merchandise is accounted for by purchase price.
②All direct and indirect costs incurred in development process for real estate development
enterprise are accounted for development costs, and transfer to development products when the
projects are completed. Among of them:
a、Land used in development: Land is entirely transferred to work-in-process when the
whole project is developed; Land is transferred partially to work-in-process when the project is
developed by installment, and undeveloped land is still accounted for inventory.
b、Public facilities: Public facilities are initially accounted for as development costs by actual
cost, and transferred to salable properties such as residences etc when the projects are completed.
If the public facilities own their operation values and developers own the right of profit inflows
from the public facilities, then those public facilities are accounted for lease development products
or finished development products by individually.
The inventory output valued in weighted average cost.
（4）Low consumable supplies or package materials are amortized at one time when they are
issued.
（5）Amortization method for lease development products and turnover properties: Amortize
by straight-line method on predicted useful lives.
（6）Mothod of provision for inventory impairment loss
At the balance sheet date, the evaluation criteria should base on the lower value between
costs and net realizable value. When net realizable values are lower than costs, provision for
impairment loss of inventories shall be made. Under normal circumstances, the Company
provision impairment loss in according to individual inventory items, but for large quantity and
low-unit-price inventories, provision for impairment loss of inventories shall be made based on the
category of inventories; for those inventories that relating to the same product line that have
similar purposes or end uses, are produced and marketed in the same geographical area, and
cannot be practicably evaluated separately from other items in that product line, their impairment
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loss provision shall be consolidated.
When the circumstances that previously caused inventories to be written off below cost no
longer exist or when there is clear evidence of an increase in net realizable value because of
changed economic circumstances, the amount of the write-off is reversed (i.e. the reversal is
limited to the amount of the original write-off) so that the new carrying amount is the lower of the
cost and the revised net realizable value. The amount reversed recording into current profit and
loss.
Estimates of net realizable value: For those stocks used for directly sale, the net realizable
value is referred to the estimated selling price minus the estimated selling expenses and related tax
and fees in normal operating process. Those stocks need to process; the net realizable value is
referred to the estimated selling price minus the estimated finished cost and estimated selling
expenses and related tax and fees in normal operating process; the net realizable value of the
quantity of inventory held to satisfy firm sales or service contracts is based on the contract price. If
the sales contracts are for less than the inventory quantities held, the net realisable value of the
excess is based on general selling prices.
12．Biological Assets
（1）The biological assets of the Company refer to the consumable forest assets.
（2）The initial measurement shall be made to the biological asset at its cost. The cost of a
purchased biological asset consists of the purchase price, the relevant taxes, freight, insurance
premium and other expenses that may bedirectly attributable to the purchase of this asset. An
investor shall ascertain the cost of biological asset inaccordance with the value as stipulated in
the investment contract or agreement, unless the unfair value is stipulated in the contract or
agreement. The cost of self-planting consumable forest assets consists of the necessary expenses
for forestation, forest tending, forest operating facilities, testing of good species, investigation
and design, indirect apportionment.
The subsequent expenses for the management and protection or for the breeding of a
biological asset after closure or after the accomplishment of the expected objective of production
and operation shall be included in the current profits and losses.
The Company‘s crown density of forest assets is 0.8.
For the consumable forest assets, when harvesting, carry down to costs by their carrying
value, the month of carry down including weighted average method.
（3）At the end of each year, the company examines the consumable forest assets. If any
well established evidence indicates that the net realizable value of any consumable forest assets
is lower than its book value as a result of natural disaster, plant diseases and insect pests, animal
disease or change of market demand, the Company shall,based on the difference between the net
realizable value and the book value, make provision for the loss on decline in value of or for the
impairment of the biological asset and shall include it into the current profits and losses.
If the factors causing any provision for impairment of a consumable forest asset have
disappeared, the write-down value shall be resumed and shall be reversed from the provision for
the loss on decline in value of the consumable forest asset that has been made. The reversed
amount shall be included in the current profits and losses.
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13. Long-term Equity Investment
Long-term equity investment including the equity investments held by the Company, who
can able to exercise control, joint control or significant influence to the invested entity, or the
Company do not have control, joint control or significant influence on the invested entity, and
there is no active market quotation, the fair value measurement should not reliable.
（1）Initial measurement
The Company separates the following two cases of long-term equity investment in the initial
measurement:
① Long-term equity investment obtained through business combinations:
a. For obtaining subsidiary under common control, the consideration cost can be cash
payment, non-monetary assets transfer or taking over the subsidiary‘s liability. Under this
situation, the initial investment cost is carrying amount of shareholder‘s equity of the subsidiary
on the merger date. The difference between the carrying amount of the net assets obtained and
initial investment cost of long-term equity investment shall be adjusted to capital reserve. If the
capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against
retained earnings. In the case of company issues equity securities as the consideration, the initial
investment cost is carrying amount of shareholder‘s equity of the subsidiary on the merger date. If
the book value amount of the issued shares is deemed as the capital, the difference between the
carrying amount of the issued shares and initial investment cost of long-term equity investment
shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference,
any excess shall be adjusted against retained earnings All direct expenses related to the merger,
including the auditor fee, evaluation expense, legal service expense, etc will be
accrued to the current profit and loss.
b. For obtaining subsidiary not under common control, the cost of long-term equity
investment is fair value of assets paid, liabilities undertaken by the Company, or the fair value of
equity bonds issued. Where the cost of a business combination exceeds the acquirer‘s interest in
the fair value of the bargainor‘s identifiable net assets, the difference shall be recognized as
goodwill, Where the cost of combination is less than the acquirer‘s interest in the fair value of the
bargainor‘s identifiable net assets, after reassessment, the difference shall be recognized in profit
or loss for the current period (non-operating income). The costs directly related to business
combinations shall be included in the cost of business combinations (except issuing expenses of
bonds and equity instruments).
② Other types of long-term equity investment, accordance with the following principles to
determine their initial investment costs:
a. Long-term equity investment, which is acquired by cash consideration, the actual cash
payment amount will be deemed as the initial investment cost. The initial investment cost
includes the direct expenses related to the long-term equity investment, taxes and other necessary
expenses. But if the actual payment contains cash dividend that has not been received but has
been announced, that should be accounted separately.
b. Long-term equity investment, which is acquired by issuing equity securities, the fair value
of the issued equity will be deemed as the initial investment cost.
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c. For the long-term equity investment made by the investors, the values agreed in the
investment contracts or agreements will be deemed as the initial investment cost, except that the
contracts or agreements provide that the values are not fair.
d. Long-term equity investment is acquired by exchange of non-monetary assets, if this
transaction has commercial substance or the fair values of exchange assets can be reliably
measured, the fair values of these assets and relevant taxes will be deemed as the initial
investment cost; the difference between the fair values of the assets and book values will be
record into the current profit and loss; if the non-currency asset exchange does not satisfy these
two conditions mention above, the book values of the assets and relevant taxes will be deemed
as the initial investment cost.
e. Long-term equity investment, which is acquired by the debt restructuring, the fair values
of the obtained equities will be deemed as the initial investment cost; the difference between the
initial investment cost and book values of credit will be record into the current profit and loss.
（2）Subsequent Measurement
The cost method is employed to calculate the long-term equity investment of subsidiaries
and will be adjusted in accordance with the equity method in the preparation of the consolidated
financial statements.
The Company uses cost method for the following conditions: a long-term equity investment
where the investing enterprise does not have joint control or significant influence over the
investee, the investment is not quoted in an active market and its fair value can‘t be reliably
measured.
The Company uses equity method for the following conditions: a long-term equity
investment where the investing enterprise has joint control or significant influence over the
investee.
a、When using cost method, increase or recovery of investment need to adjust the cost of
long term equity investment. Cash dividends or profit distributions declared by the investee shall
be recognized as investment income in the current period. However, investment income
recognized by the investing enterprise shall be limited to the amount distributed to it out of
accumulated net profits of the investee arising after the investment was made. Any cash dividends
or distributions received in excess of this amount shall be treated as a recovery of initial
investment cost.
b、When using equity method, after the investing enterprise has acquired a long-term equity
investment, it shall recognize its share of net profits or losses made by the investee as investment
income or losses, and adjust the carrying amount of the investment accordingly.
The Company shall recognize current period investment profits or losses following its share
of the net profits or losses made by the investee. Base on the investee‘s book value of net profit, if
the investee used inconsistent accounting policies with the Company, the Company shall adjust
the net profits by the balances of the depreciation or amortization of the investee‘s fixed assets
and intangible assets measured by fair value on the investment acquired date, as well as adjust the
net profits by the balance of the impairment losses of investee‘s assets measured by fair value on
the investment acquired date. Set off the internal transaction profit and loss between the Company
47
and the joint enterprises or the jointly-run enterprises, and then recognize the investment profit or
loss on this basis. The internal transaction profit and loss between the Company and the joint
enterprises or the jointly-run enterprises, refer to the < Enterprise Accounting Standard 8:
Impairment of assets>, belong to asset impairment loss is recognized in full.
If an investor‘s share of losses of an associate equals or exceeds its interest in the associate,
the investor discontinues recognizing its share of further losses, after the investor‘s interest is
reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent
that the investor has incurred legal or constructive obligations or made payments on behalf of the
associate; If the associate subsequently reports profits, the investor resumes recognizing its share
of those profits only after its share of the profits equals the share of losses not recognized, recover
investment interests, and in the book value of the long-term equity investment successively.
Those long term equity for affiliated company and joint company, hold before first executive
date, if ther is relevant investment debit difference, according to residual time to amortize in
straight line method, the amortization amount recognized in current profit and loss account.
（3）Scope of common control and significant influence for investee
①The existence of jointly control by an investor is usually evidenced in one or more of the
following ways: a.any venturer cannot control the jointly controlled company‘s operation alone; b.
the strategy decision of the jointly controlled company, should be agreed by each venture parties; c.
the venturers may appoint one of them to manange the jointly controlled company, through control
or agreement, but the management must follow all venturers s financial and operation strategies.
When the jointly controlled company during legal reconstruction or bankrupt, or the transfer funds
to investors strictly restricted in long time, the venturers cannot exercise joint control to the
investee. However, if the joint control is really exsit can be certified, the venturers still adopt
equity method of long term equity investment principle to account.
②The existence of significant influence by an investor is usually evidenced in one or more of
the following ways: a. representation on the board of directors or equivalent governing body of the
investee; b. participation in policy-making processes, including participation in decisions about
dividends or other distributions; c. material transactions between the investor and the investee; d.
dispatch of managerial personnel; or e. provision of essential technical information.
（4）Method of impairment test of long term equity investment and provision for impairment:
On the balance sheet date, the Company shall assess the long term equity investment one by
one ,according to the investee‘s operation strategy、legal environment、market demand、industry
and profitability etc, to decide whether there are impairment indicators. The long term equity
investment is impaired when its carrying amount exceeds its recoverable amount, the differences
should be recognized as provision for impairment. If the impairment loss has recognized, never
carry back in future accounting periods.
14. Investment property
Investment property is held to earn rentals or for capital appreciation or for both. Investment
property includes leased or ready to transfer after capital appreciation land use rights and leased
buildings.
（1） Depreciation or amortization method of property investment is measured by cost
48
model:
Property investment is measured by cost model, according to its expected useful life and net
residual rate on buildings and land-use right to calculate depreciation. The Company‘s expected
useful life, net residual rate and annual depreciation rate of investment property as follow:
Categories Expected residual rate Expected useful life Annual depreciation rate
Buildings、structures 10% 30 years 3%
（2）Basis of impairment of property investment is measured by cost model
At the balance sheet date, the evaluation criteria should base on the lower value between
costs and net realizable value. When net realizable values are lower than costs, provision for
impairment loss of property investment shall be made. If the value of the impaired investment
property recovered, the provided impairment loss in prior period cannot be carry back.
15. Fixed Assets
（1）Recognition of fixed assets:
Fixed assets are tangible assets, held for use in production or supply of goods or services, for
rental to others, or for administrative purpose, and have high unit price, as well as useful lives
more than one accounting year. Fixed assets shall be recognized by actual costs incurred, if they
meet the following conditions:
① The economic benefits related to fixed asset probably flows to the enterprise;
② The cost of fixed asset may be reliably measured.
The expenses relate meet above condition to fixed asset would be capitalized in the cost of
asset, if not, it would be recognized as expense in profit and loss account of that period.
（2）The depreciation method of fixed assets:
Straight-line method is in used to calculate the depreciation of fixed assets.
The estimated useful lives, expected residual value and annual depreciation rate of different
kinds of fixed assets are listed as follows:
Estimated useful Estimated residual value Estimated annual
Categories of fixed assets
life rate depreciation rate
Buildings and structures 30 years 10% 3%
Vehicles 5 years 10% 18%
Electronic device and other equipments 5 years 10% 18%
（3）Method of impairment test and provision for impairment loss of fixed assets:
At the balance sheet date, the Company assess all types of fixed assets whether there is any
indication that an asset may be impaired, if any such indication exists, the entity shall estimate the
recoverable amount of the asset, reducing the carrying value to the estimated recoverable amount,
the difference recognized into the current profit and loss account, simultaneous recognize the
provision for impairment. Once the impairment loss has recognized, never carry back in future
acoounting period. In assessing whether there is any indication that an asset may be impaired, an
entity shall consider, as a minimum, the following indications:
① during the period, an asset‘s market value has declined significantly more than would be
expected as a result of the passage of time or normal use;
49
② significant changes with an adverse effect on the entity 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 entity 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 significant changes with an adverse effect on the entity have taken place during the period,
These changes include the asset becoming idle, plans to discontinue or restructure the operation to
which an asset belongs, plans to dispose of an asset before the previously expected date;
⑥ evidence is available from internal reporting that indicates that the economic performance
of an asset is, or will be, worse than expected. For example: the net cash inflow or realized
operating profits( or losses) made by the assets has declined significantly more than would be
expected.
⑦ Other indications that an asset may be impaired.
（4）Recognision of finance leased fixed assets
When have transfered substantially all the risks and rewards incidental to ownership, the
Company recognize the fixed assets of finance lease. At the commencement of the lease term, the
Company shall recognise finance leases as assets and liabilities in their balance sheets at amounts
equal to the fair value of the leased property or, if lower, the present value of the minimum lease
payments. The depreciation policy for depreciable leased assets shall be consistent with that for
depreciable assets that are owned. If there is reasonable certainty that the Company will obtain
ownership by the end of the lease term, the asset shall be fully depreciated over the lease term,
however, if there is no reasonable certainty that the lessee will obtain ownership by the end of the
lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.
16. Borrowing costs
（1）Recognition of capitalization of borrowing costs and capitalization period:
Borrowing costs that are direct attributable to construction, purchase and production of assets and
comply with capitalization conditions, shall be capitalized and accounted to costs of relate assets;
otherwise, borrowing costs shall be recognized as expenses when incurred and accounted through
in profit and loss in current period. The capitalization of borrowing costs shall satisfy the
following conditions:
①The capital expenditures have been incurred.
② The borrowing costs have been incurred.
③Activities relating to acquisition, construction or production that are necessary to make the
assets being intended for use or sales have been launched.
Other borrowing costs、discount or premium and difference of foreign exchange, should be
recognized in the current profit and loss account.
Capitalization of borrowing costs shall be suspended during periods in which acquisition,
construction or production of assets is interrupted abnormally, and is interrupted for over
continuous period of three months.
50
Capitalisation of borrowing costs should cease when substantially all the activities necessary
to prepare the qualifying asset for its intended use or sale are complete. Borrowing costs should be
recognised as an expense in the subsequent period
（2）Measurement of capitalized borrowing costs
For a specific purpose borrowing, the amount of interest to be capitalized shall be the actual
interest expenses incurred for the period less deposit interests of the borrowing founds or
investment income from the temporary investment.
Where funds are borrowed under general purpose, the entity shall determine the amount of
interest to be capitalized by applying capitalization rate to weighted average of the excess amount
between cumulative expenditures on the asset and the amount of specific-purpose borrowings. The
capitalization rate shall be weighted average of the interest rates applicable to the general-purpose
borrowings.
17. Intangible assets
(1) Measurement of intangible assets:
Intangible assets were recognized initially at cost.
(2) Estimate of useful life and impairment of intangible assets:
Period of intangible asset that could bring future economic benefit inflow to company could
determined reasonably according to the judgment according to reason of contract right or other
legal right, condition in same industry, history experience, and demonstrate of expert would be
recognize as finite useful life assets. Otherwise, the asset would be recognize as infinite useful life
assets.
① To estimate the life of finite useful years asset would consider factor of: a. The life cycle
of the product produced by the assets, and the information of similar asset; b. The development of
craftwork and technology, and the estimate of future development trend; c. The demand condition
in market of the product produced by the asset; d. The estimated action would be taken by
competitor or potential competitor; e. The expense expected to maintain the assets to bring future
economic benefits and the ability of the Company to pay for it; f. The relevant law restriction on
control period of the asset or other similar restriction such as franchise, lease period; g. Relation
with other assets‘ useful life, that hold by the Company.
② The intangible asset with finite useful years should be amortization on a systematic and
rational basic according its economic benefit achievement plan. A straight line method would be
used if the plan could not define.
(3) Method of impairment test and provision for impairment of infinite useful years asset:
Intangible asset with infinite useful years would not amortize, but would conduct
impairment test every year. the useful life of such an asset should be reviewed each reporting
period to determine whether events and circumstances continue to support an indefinite useful life
assessment for that asset., if still under uncertainty situation after the revaluation, shall conduct
impairment test. When the net recoverable amount lower than the carryng value, reducing the
carrying value to the estimated recoverable amount, the difference recognized into the current
profit and loss account, simultaneous recognize the provision for impairment. Once the
impairment loss has recognized, never carry back in future acoounting period.
51
Execise impairment test for intangible assets, if meet the one or more the following
conditions:
a. significant changes with an adverse effect on the profitability of intangible assets have
taken place during the period, These changes include the intangible replaced by other
new technique;
b. The market value has declined in current period, and may not rise in the future residual
period;
c. Other indication to prove that the carrying value higher than the recoverable value.
(4) The rules of divide the research stage and the development stage of internal research and
developmet project:
Internal organizational research expenses are accounted through profit and loss in current
period; development costs which are recognized as intangible assets shall satisfy the following
conditions: ① it is technical feasible for use or sales upon the completion of the intangible
assets; ② it is intended for use or sales upon the completion of the intangible assets; ③ the
manner to provide that expect future economic benefits that are attributable to the intangible assets
including a market is exist for the asset or product of the asset or provide evidence of serviceable
if asset are inside used; ④ the entity should have enough technology, financial and other
resources to support the completion of development, and have ability to use or sale the intangible
assets; ⑤ the cost of intangible asset can be measured reliably.
18. Long-term deferred expenses
The Long-term deferred expenses are defined as those expenses in this year but should be
allocated in following few years (more than one year, not include one year). The amount transfer
to the account are the amount actual paid, and allocate equally in beneficial period.
19. Accrued liabilities
(1) Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in
dispute, guarantee on quality of product, cut-down plan, loss of contract, recombine obligation,
obligation on abandon fixed asset, and meet the follow condition simultaneously would
determined as liabilities:
①This obligation is current obligation of the Company; and,
②The performance of this obligation will probably cause economic benefits outflow of the
Company; and, ③The amount of this obligation can be reliably measured.
Loss contracts and restructuring obligations of the Company meet the above conditions shall
be recognized as accrued liabilities.
（2）Measurement of accrued liabilities
Accrued liabilities would be measured initial according to the optimum evaluation of outflow
of economic benefit, and the Company perform relate obligation that consider risk, incertitude,
time value of currency of contingency factor. Discount future cash flow to present value to
determine the optimum evaluation if the time value of currency has great impact. On balance sheet
date, check the carry amount of accrued liabilities, and make adjustment to carry amount to reflect
the optimum evaluation. The increase amount in carry amount of accrued liabilities cause by time
52
process would be determined as interest fee.
（3）Optimum evaluation of accrued liabilities
If the necessary payments have scopes, the optimum evaluation shall be determined based on
the average amount between the upper and lower limit amount of scope ; if the necessary
payments do not have such scopes, then the optimum evaluation shall be determined in the
following method:
① If the contingent event is involved in an individual project, the optimum evaluation
amount will be determined base on the most possible amount;
② If the contingent event is involved more than one project, the optimum evaluation amount
shall be determined base on possible amount and occurrence probability. In case of all or part of
payments about the confirmed liquidation liabilities are expected to be compensated by the third
parties or other parties, and the compensation amounts are surely received, then such amounts
shall be separately recognized as assets. The confirmed compensation amounts shall not exceed
book values of confirmed liabilities.
20．Revenue
Recognition and measurement of revenue:
（1）Revenue from sale of goods
Revenue from the sale of goods shall be recognized when all of the following conditions are
satisfied:
①the entity has transferred the significant risks and reward ownership of goods to the buyer;
② the entity retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over goods sold;
③the amount of revenue can be measured reliably;
④relate economic benefit is probably inflow to the enterprise;
⑤the associated costs incurred or to be incurred can be measured reliably.
（2）Contract revenue
①When the outcome of a construction contract can be estimated reliably, contract revenue
and contract costs associated with the construction contract should be recognised as revenue and
expenses respectively by reference to the stage of completion of the contract activity at the
balance sheet date. The recognition of revenue and expenses by reference to the stage of
completion of a contract is often referred to as the percentage of completion method. Under this
method, contract revenue is matched with the contract costs incurred in reaching the stage of
completion, resulting in the reporting of revenue, expenses and profit which can be attributed to
the proportion of work completed.
In the case of a fixed price contract, the outcome of a construction contract can be estimated
reliably when all the following conditions are satisfied:
a. total contract revenue can be measured reliably;
b. it is probable that the economic benefits associated with the contract will flow to the
enterprise;
c. the contract costs attributable to the contract can be clearly identified and measured
reliably so that actual contract costs incurred can be compared with prior estimates; and
53
d. both the contract costs to complete the contract and the stage of contract completion at the
balance sheet date can be measured reliably.
In the case of a cost plus contract, the outcome of a construction contract can be estimated
reliably when all the following conditions are satisfied:
a. it is probable that the economic benefits associated with the contract will flow to the
enterprise; and
b. the contract costs attributable to the contract, can be clearly identified and measured
reliably.
On the balance sheet date, under the percentage of completion method, contract revenue is
recognised as revenue in the income statement in the accounting periods in which the work is
performed. Contract costs are usually recognised as an expense in the income statement in the
accounting periods in which the work to which they relate is performed. The Company may
have incurred contract costs, indemnity or reward, caused by the change of the contract. Such
contract costs can be recognised as revenue, if such costs represent an amount due from the
customer and there is an agreement with the customer.
② When the outcome of a construction contract cannot be estimated reliably:
a. Revenue should be recognised only to the extent of contract costs incurred that it is
probable will be recoverable; and
b. If the cost can not be recovered, contract costs should be recognised as an expense in the
period in which they are incurred.
③An expected loss on the construction contract should be recognised as an expense
immediately.
（3）Revenue from rendering of services
① The entity recognize revenue from rendering of service when come out of rendering of
service can be measured reliably at balance sheet date, and adopt percentage of completion
method in recognition of revenue. The method depends on schedule of complete to determined
revenue and expense.
the outcome of service can be estimated reliably when all the following conditions are
satisfied:
a. the amount of revenue can be measured reliably;
b. relate economic benefit is probably inflow to the enterprise;
c. the complete of schedule could be determined reliably;
d. the associated costs incurred or to be incurred can be measured reliably.
② When the outcome of rendering of service cannot be measured reliably at balance sheet
date:
a. revenue shall be recognized to the extent of costs incurred that are expected to be
recoverable if compensation are predict to be award;
b. to those cost that without compensation in predict, through to profit and loss account
without recognize revenue.
（4）Transfer of asset use rights
The revenue of transfer of asset use right including : interest income、user charges etc,
54
recognized when all the following conditions are satisfied:
①the economic benefits related to the transaction are probably will flow into enterprise;
②the amounts can be reliably measured.
Interest income, compute base on the funds used time by other peoples and the actual interest
rate.
User charges, compute base on the chargeable time and method arranged in the contract or
agreement.
21、Deferred income tax assets and deferred income tax liabilities
The Company uses balance sheet-liability method in calculation of income taxes.
According the difference between carry amount of asset and liability and its tax base, apply
tax rate to determine deferred income tax asset or liability according the predict period of recover
asset or discharge liability.
（1）Recognition of deferred income tax assets
① Deferred income tax assets shall be recognized according to deductible temporary
differences to the extent that is probable that tax profits will be available against which the
deductible temporary differences can be utilized, but deferred income tax asset arise from initial
recognize of asset and liabilities in transaction that have character listed below would not
recognised:
a. The transaction is not business combination;
b. At the time of the transaction, it affects neither accounting profit nor taxable profit (or
deductible loss).
② The company and subsidiaries, associated companies and joint venture investments that
can be related to deductible temporary differences, while meeting the following conditions, to
confirm the corresponding deferred income tax assets:
a. Temporary differences in the foreseeable future is likely to switch back to; and
b. It is likely to be used for deductible temporary differences in taxable income in the future.
③ The Company can carry forward for the subsequent year's tax losses and tax credits, to
very likely be used to offset tax losses and tax credits amount of future taxable income limit,
verify the corresponding deferred income tax assets.
（2）Recognition of deferred income tax liabilities
Deferred tax liabilities shall be recognized for all taxable temporary differences, except to the
extent that the deferred tax liabilities arise from:
① the initial recognition of goodwill;
② the initial recognition of assets or liabilities, when all the following conditions are
satisfied:
a. the transaction is not a business combination;
b. at the time of the transaction, it affects neither accounting profit nor taxable profit (or
deductible loss).
③ Temporary differences arise from the investments in subsidiaries, associates and interests
in joint ventures, when all the following conditions are satisfied:
a. the parent, investor or venturer is able to control the timing of the reversal of the temporary
55
difference; and
b. it is probable that the temporary difference will not reverse in the foreseeable future.
（3）The carrying amount of a deferred tax asset should be reviewed at each balance sheet
date. The Company should reduce the carrying amount of a deferred tax asset to the extent that it
is no longer probable that sufficient taxable profit will be available to allow the benefit of part or
all of that deferred tax asset to be utilised. Any such reduction should be reversed to the extent that
it becomes probable that sufficient taxable profit will be available.
22.Significant accounting estimates and judgements
The company applies continuous assessment to significant accounting estimates and key
assumption in consideration of historical experience and other relevant factors, including
reasonable expectation of future events.
Significant accounting estimates and judgements
The following significant estimates and judgements may render significant risk arising from
significant adjustment to the carrying value of assets and liabilities for the next accounting year.
①Accounting estimates of accrued liabilities arising from obligation and compensation
associated with terminated transactions
As disclosed in Note 10.3, the Board of Directors judged that liabilities shall be recognized for the
year ended December 31st, 2010 for the probable loss arising from the obligation and
compensation associated with the terminated contract between Shenzhen Rong Fa Investment Co.,
Ltd., a subsidiary of the Company, and a third party.
23. Changes in accounting policies、accounting estimates
（1）Change in accounting policies
There are no changes in accounting policy during current period.
（2）Change in accounting estimates
There are no changes in accounting estimates during current period.
24. Correct previous accounting period errors
There are no items of correct previous accounting period error in current period.
Ⅲ.Taxation
The type of tax and tax rate for the Company are list below:
Categories of taxes Tax base Tax rate
VAT Revenue from sale of products 17%
Revenue from sale of real estates- amount of According to progressive tax
Land Value Added Tax
deductable items rates 30% - 60%
Business Tax Revenue from sale of real estates, Leasing and 5%
Rendering of service
Corporation Tax Taxable Income 22%、25% Note
Urban Construction Tax VAT payable, consumption tax payable and 1%
business tax payable
56
Education Surcharge VAT payable, consumption tax payable and 3%
business tax payable
Note: （1）Shenzhen Special Economic Zone: The applicable Corporation Tax rate in
Shenzhen Special Economic Zone is 22% in 2010、24% in 2011、25% in 2012. （2）Other Cities:
The applicable Corporation Tax rate in other cities is 25%.
Ⅳ. Enterprise Consolidation and Consolidation Financial Statements
1. Information of subsidiaries
（1）Subsidiary through the establishment or investment method obtained
Registration
Subsidiaries‘ name Subsidiaries‘ type Nature of business Registered capital Business scope
location
Shenzhen ShenGuoShang Business Wholly owned
Shenzhen Retail store 15,000,000.00 Retail store
Management Co., Ltd（Business Company） subsidiary
Shenzhen International Arcade Chain Store Wholly owned
Shenzhen Retail store 10,000,000.00 Retail store
（Chain Store） subsidiary
Shenzhen International Arcade Property
Property
Management Co., Ltd. （Guoshang Holding subsidiary Shenzhen 7,000,000.00 Property management
management
Property）
Shenzhen Rongfa Investment Co., Ltd (Rongfa Real estate
Holding subsidiary Shenzhen USD5,000,000.00 Real estate development
Investment） development
Holding
Huizhou Rongfa Industry Investment Co., Ltd Real estate
subsidiary‘s Huizhou 6,000,000.00 Real estate development
（Huizhou Rongfa） development
subsidiary
Holding
Wengyuan Guoshanglinhai Development Co., Afforestation、forest Afforestation、forest
subsidiary‘s Wengyuan 7,000,000.00
Ltd.（Wengyuan Guoshang） management management
subsidiary
Holding
Wuhua Guoshanglinye Development Co., Ltd Afforestation、forest Afforestation、forest
subsidiary‘s Wuhua 10,000,000.00
（Wuhua Guoshang） management management
subsidiary
Holding Lumber purchase Lumber purchase and
Shenzhen Guoshanglinye Development Co., Ltd
subsidiary‘s Shenzhen and sale, Industrial 10,000,000.00 sale, Industrial
（Guoshanglinye）
subsidiary establishment establishment
Holding
Shenzhen Longgang International Arcade
subsidiary‘s Shenzhen Retail store 3,000,000.00 Retail store
Enterprise Co., Ltd. （Guoshang Enterprise）
subsidiary
Holding
XingningGuoshanglineye Development Co., Ltd Afforestation、forest Planting、and lumber
subsidiary‘s Xingning 5,000,000.00
（XingningGuoshang） management sales
subsidiary
Real estate development
Holding
Real estate and sales,
Luoyang Rongfazhiye Co., Ltd（Rongfazhiye） subsidiary‘s Luoyang 10,000,000.00
development property
subsidiary
management and
57
rental
Shenzhen International Enterprise Trading Co., Ltd
Holding subsidiary Shenzhen International trade 5,600,000.00 International trade
（International Trade） Note1
Shenzhen Chunhua Medicine United Enterprise Co., Drugs and medical Drugs and medical
Holding subsidiary Shenzhen 3,000,000.00
Ltd（Chunhua Medicine） Note1 appliances appliances
Shenzhen Guoshang Medicine Co., Ltd Drugs and medical Drugs and medical
Holding subsidiary Shenzhen 3,000,000.00
（Guoshang Medicine） Note1 treatment treatment
Holding Industrial establishment、
Shenzhen Royal Noble Industry Co., Ltd
subsidiary‘s Shenzhen Healthcare massage 5,000,000.00 Healthcare
（Gangyi East Club） Note2
subsidiary massage
Subsidiary through the establishment or investment method obtained（Continued）
The balance of other
Actual
project, substantially Holding Voting rights
Subsidiaries‘ name investment
constitute the net proportion proportion
amount
investment in subsidiary.
-
Shenzhen ShenGuoShang Business Management Co.,
21,427,272.93 100.00% 100.00%
Ltd（Business Company）
-
Shenzhen International Arcade Chain Store
10,000,000.00 100.00% 100.00%
（Chain Store）
-
Shenzhen International Arcade Property Management
4,270,000.00 61.00% 75.00%
Co., Ltd. （Guoshang Property）
-
Shenzhen Rongfa Investment Co., Ltd
35,296,718.10 60.00% 60.00%
(Rongfa Investment）
-
Huizhou Rongfa Industry Investment Co., Ltd
6,000,000.00 64.70% 100.00%
（Huizhou Rongfa）
-
Wengyuan Guoshanglinhai Development Co., Ltd.
7,000,000.00 60.00% 100.00%
（Wengyuan Guoshang）
-
Wuhua Guoshanglinye Development Co., Ltd
10,000,000.00 60.00% 100.00%
（Wuhua Guoshang）
-
Shenzhen Guoshanglinye Development Co., Ltd
10,000,000.00 60.00% 100.00%
（Guoshanglinye）
-
Shenzhen Longgang International Arcade Enterprise
3,000,000.00 90.00% 100.00%
Co., Ltd. （Guoshang Enterprise）
-
XingningGuoshanglineye Development Co., Ltd
5,000,000.00 60.00% 100.00%
（XingningGuoshang）
58
-
Luoyang Rongfazhiye Co., Ltd
10,000,000.00 60.00% 100.00%
（Rongfazhiye）
-
Shenzhen International Enterprise Trading Co., Ltd
5,320,000.00 98.75% 100.00%
（International Trade） Note1
-
Shenzhen Chunhua Medicine United Enterprise Co., Ltd
2,250,000.00 75.00% 75.00%
（Chunhua Medicine） Note1
-
Shenzhen Guoshang Medicine Co., Ltd
3,000,000.00 98.00% 100.00%
（Guoshang Medicine） Note1
-
Shenzhen Royal Noble Industry Co., Ltd
5,000,000.00 64.00% 0.00%
（Gangyi East Club） Note2
Subsidiary through the establishment or investment method obtained（Continued）
The amount of The balance of parent company‘s equity, that is
Whether minority equity used equal to the parent shareholders‘ equity less the
Subsidiaries‘ name consolidated Minority equity for decrease in the subsidiary‘s current loss undertaken by the minority
statements profits and losses of shareholders according their quotient of the
minority shareholders beginning of the period
Shenzhen ShenGuoShang Business Management Co., Ltd - - -
Yes
（Business Company）
Shenzhen International Arcade Chain Store （Chain Store） Yes
- - -
Shenzhen International Arcade Property Management Co., Ltd. - -
Yes
（Guoshang Property） -4,525,426.00
Shenzhen Rongfa Investment Co., Ltd (Rongfa Investment） Yes -199,831,670.15 - -
Huizhou Rongfa Industry Investment Co., Ltd - - -
Yes
（Huizhou Rongfa）
Wengyuan Guoshanglinhai Development Co., Ltd. - - -
Yes
（Wengyuan Guoshang）
Wuhua Guoshanglinye Development Co., Ltd - - -
Yes
（Wuhua Guoshang）
Shenzhen Guoshanglinye Development Co., Ltd - - -
Yes
（Guoshanglinye）
Shenzhen Longgang International Arcade Enterprise Co., Ltd. - - -
Yes
（Guoshang Enterprise）
XingningGuoshanglinye Development Co., Ltd - - -
Yes
（XingningGuoshang）
Luoyang Rongfazhiye Co., Ltd （Rongfazhiye） Yes
- - -
Shenzhen International Enterprise Trading Co., Ltd - - -
No
（International Trade） Note1
59
Shenzhen Chunhua Medicine United Enterprise Co., Ltd - - -
No
（Chunhua Medicine） Note1
Shenzhen Guoshang Medicine Co., Ltd - - -
No
（Guoshang Medicine） Note1
Shenzhen Royal Noble Industry Co., Ltd - - -
No
（Gangyi East Club） Note2
Note 1: Shenzhen International Enterprise Trading Co., Ltd, Shenzhen Chunhua Medicine
United Enterprise Co., Ltd and Shenzhen Guoshang Medicine Co., Ltd have suspended their
business for several years, and their registration therefore have been cancelled due to no renewal
of registration certificates, according to the Shenzhen Stock Exchange provisions, they were not included in the
scope of financial statements consolidation in current period.
Note 2: On January 31, 2007, Rongfa Investment and Shenzhen International Commercial
Centre Co.,Ltd(―International Commercial Centre‖), with Shenzhen Baotian Investment
Development Co., Ltd (― Baotian Investment‖), signed the < Shareholding Transfer Contract>,
according to contract signed by both parties: Rongfa Investment and International Commercial
Centre transferred 85% and 10% shareholdings of Gangyi East Club respectively to Baotian
Investment. After the shareholding transfer, Baotian Investment and Rongfa Investment hold 95%
and 5% shareholdings of Gangyi East Club respectively. After accepted the 95% shareholdings,
within six years of operating period, Baotian Investment must tranferred the shareholdings to
Rongfa Investment or any party designated by Rongfa Investment, and the consideration of the
transfer must be RMB 1 million. Then, Rongfa Investment with Baotian Investment signed <
Shareholding Transfer Contract: Supplemental Agreement >, according to agreement signed by
both parties: Rongfa Investment decided to give up the gains and future gains from the 5%
shareholdings of Gangyi East Club, which means, after the shareholdings transfer, Rongfa
Investment within six years shall be not enjoy the distribution of incomes of Gangyi East Club‘s
operation, and undertaken any operating losses.
The substance of this shareholding transfer is Shenzhen Baotian Investment Development
Co., Ltd (―Shenzhen Baotian‖) shall lease Shenzhen Royal Noble Industry Co., Ltd‘s business
qualification and business location in future six years, and Shenzhen Rongfa shall not control
Shenzhen Royal Noble Industry Co., Ltd‘s business operation and financial activities in the six
years, so the Company accounts for it using Cost method. According to the agreement, Shenzhen
Rongfa accepted Shenzhen Royal Noble Enterprise Co., Ltd‘s assets and liabilities prior to the
transferring date. After the shareholding the Shenzhen Gangyi Oriental Club Industrial Co., Ltd
was renamed as Shenzhen Royal Noble Industry Co., Ltd.
2. Changes in consolidation scope
There is no change on the scope of consolidated financial statements for the reporting
period.
Ⅴ. Main Notes In The Consolidation Statement
60
1. Monetary Funds
30.6.2011 31.12.2010
Currency Exchange Exchange
Original currency Presentation currency Original currency Presentation currency
rate rate
Cash in hand
CNY 364,530.37 1.0000 364,530.37 113,033.44 1.0000 113,033.44
HKD 10,325.56 0.8316 8,586.74 10,678.30 0.8509 9,086.49
MYD 347.23 2.1410 743.42 357.00 2.1437 765.29
Subtotal 373,860.53 122,885.22
Demand deposits
CNY 170,579,129.57 1.0000 170,579,129.57 152,829,405.81 1.0000 152,829,405.81
HKD 8,158.58 0.8316 6,784.67 8,002.46 0.8509 6,809.53
USE 0.50 6.4716 3.24 0.00 6.6227 0.00
Subtotal 170,585,917.48 152,836,215.34
Other monetary
funds
CNY 397,291.28 1.0000 397,291.28
20,000.00 1.0000 20,000.00
Subtotal - 20,000.00 397,291.28
Total 170,979,778.01 153,356,391.84
2. Accounts Receivable
（1）Account receivable listed according to the categories:
30.6.2011 31.12.2010
Provision for Provision for
Book value Proportion Proportion Book value Proportion Proportion
bad debts bad debts
(CNY) (%) (%) (CNY) (%) (%)
Category (CNY) (CNY)
Receivables of
0.00 0.00% 0.00 0.00% 0.00 0.00% 0.00 0.00%
individual significance
Credit-risk-categorised
receivables
Categorisation by
963,324.99 100.00% 223,748.45 100.00% 1,489,002.65 100.00% 213,550.03 100.00%
nature of receivables
Subtoal 963,324.99 100.00% 223748.45 100.00% 1,489,002.65 100.00% 213,550.03 100.00%
Receivables of
individual
insignificance subject
0.00 0.00% 0.00 0.00% 0.00 0.00% 0.00 0.00%
to individual
assessment for
impairment
Total 963,324.99 100.00% 223,748.45 100.00% 1,489,002.65 100.00% 213,550.03 100.00%
61
（2）Account receivable listed according to the account age:
Age 30.6.2011 31.12.2010
Provision
Provision for
Book value Proportion for bad Carrying value Book value Proportion Carrying value
bad debts
debts
Within 1 year 20,000.00 2.08% 1,000.00 0.45% 545,677.66 36.65% 27,283.88 12.78%
1-2 years 0.00 0.00% 0.00 0.00% 199,840.43 13.42% 19,984.04 9.36%
2-3 years 199,840.43 20.74% 29,976.06 13.40% 156,786.71 10.53% 23,518.01 11.01%
3-4 years 156,786.71 16.28% 31,357.34 14.01% 292,966.16 19.68% 58,593.23 27.44%
4-5 years 292,966.16 30.41% 73,241.54 32.73% 78,972.77 5.30% 19,743.19 9.25%
More than 5 years 293,731.69 30.49% 88,173.51 39.41% 214,758.92 14.42% 64,427.68 30.16%
Total 963,324.99 100.00% 223,748.45 100.00% 1,489,002.65 100.00% 213,550.03 100.00%
5.2.3. The top five account receivables
Relationship with the % of total accounts
Name of company Amount (CNY) Age
Company receivables
st 102,999.36 10.69%
1 Unrelated party Over 5 years
2nd Unrelated party 54,535.98 Over 5 years 5.66%
3rd Unrelated party 26,433.96 Over 5 years 2.74%
4th Unrelated party 26,000.00 Over 5 years 2.70%
5th Unrelated party 20,000.00 Within 1 year 2.08%
Total 229,969.30 23.87%
3. Advance To Suppliers
（1）Age analysis
Age 30.6.2011 Proportion 31.12.2010 Proportion
Within 1 year 45,543,925.62 99.62% - -
1-2 years - - 63,392.00 36.62%
2-3 years 62,042.00 0.14% 109,720.00 63.38%
More than 3 years 109,720.00 0.24% - -
Total 45,715,687.62 100.00% 173,112.00 100.00%
（2）List the balance of top five Advance To Suppliers:
Proportion of total other
Company name Balance accounts receivable Age
Shenzhen Fanhua Project Group Co,Ltd 30,000,000.00 65.62% Within one year
Shenzhen Hengrui Decoration & Design Project
6,300,000.00 13.78% Within one year
Co,Ltd,
Benoy Limited 3,846,850.62 8.41% Within one year
62
Baoying Construction Group Stock Co,Ltd,
2,152,000.00 4.71% Within one year
Shenzhen City
Choushi Culture Spread Co,Ltd, Shenzhen City 664,778.00 1.45% Within one year
Total 42,963,628.62 93.98%
4. Other Accounts Receivable
（1）Other accounts receivable listed according to the categories:
30.6.2011 31.12.2010
Provision for Provision for
Category Book value Proportion Proportion Book value Proportion
bad debts bad debts Proportion (%)
(CNY) (%) (%) (CNY) (%)
(CNY) (CNY)
Receivables of individual
11,932,131.44 68.52% 11,932,131.44 88.89% 11,932,131.44 68.52% 11,932,131.44 88.89%
significance
Credit-risk-categorised
receivables
Categorisation by nature of
4,399,304.83 25.53% 718,851.26 5.30% 4,030,223.89 23.14% 591,067.20 4.40%
receivables
Subtoal 4,399,304.83 25.53% 718,851.26 5.30% 4,030,223.89 23.14% 591,067.20 4.40%
Receivables of individual
insignificance subject to
900,000.00 5.22% 900,000.00 6.64% 1,451,170.45 8.34% 900,000.00 6.70%
individual assessment for
impairment
Total 17,231,436.27 100.00% 13,550,982.70 100.00% 17,413,525.78 100.00% 13,423,198.64 100.00%
（2）Other receivable listed according to the account age:
Age 30.6.2011 31.12.2010
Provision for Provision for
Book value Proportion Proportion Book value Proportion Proportion
bad debts bad debts
Within 1
1,000,708.53 22.75% 50,035.43 6.96% 439,605.09 10.91% 21,980.28 3.72%
year
1-2 years 599,801.88 13.63% 59,980.19 8.34% 871,070.70 21.61% 87,107.05 14.74%
2-3 years 223,468.70 5.08% 33,520.31 4.66% 1,661,405.87 41.22% 249,210.88 42.16%
3-4 years 1,661,405.87 37.77% 332,281.17 46.22% 722,836.02 17.94% 144,567.20 24.46%
4-5 years 622,836.02 14.16% 155,709.01 21.66% 247,801.83 6.15% 61,950.47 10.48%
More than 5
291,083.83 6.62% 87,325.15 12.15% 87,504.38 2.17% 26,251.32 4.44%
years
Total 4,399,304.83 100.00% 718,851.26 100.00% 4,030,223.89 100.00% 591,067.20 100.00%
63
（3）Other receivables of individual insignificance subject to individual assessment for
impairment
Bad and doubtful
Details Book value(CNY) Proportion (%) Comment
debt(CNY)
Consideration for share transfer 900,000.00 900,000.00 100.00% Debtor unlocatable
receivable from Guangzhou Sun
Star Company
(广州太阳星公司)
（4）List the balance of top five other receivable:
Proportion of total
other accounts Reason of
Company name Balance receivable Age arrearage
Shenzhen Shengang Gongmao Import and
Above 5 years Note
Export Co.,Ltd 10,082,131.44 58.51%
Shenzhen Mantingfang Trading Investment 3-4 years、4-5
Current account
Co., Ltd 1,850,000.00 10.74% years
Guangzhou Sun-Star Company 900,000.00 5.22% Above 5 years Current account
Shenzhen Baotian Investment Development
2-3 years Deposit
Co., Ltd 506,272.02 2.94%
ZhengzhongRealEstateDevelopmentCo,Ltd,
376,979.50 2.19%
1-2years Rental pledge
Shenzhen City
Total 13,715,382.96 79.60%
Note: The amount is due to existing historical issues between the Group and Shenzhen
Shengang Gongmao Import and Export Co., Ltd (― Shenggang Gongmao‖) the lender Shenzhen
Development Bank, Shennandonglu Branch (―the Bank‖) sued the Group and filed a claim at the
Intermediate People's Court of Shenzhen (―the Court‖) in 2000 and requested the Group shall have
joint repayment liability to a guaranteed RMB 10 millions loan and the overdue interests. On
February 27, 2001, the court made (2001) Shenzhongfajingyichuzi No.53 civil judgments, and
ruled the Group has jointly repayment liability to the above-mentioned guaranteed loan.
On December 30, 2002, under the intermediation by the court, The Group and the Bank
reached reconciliation, and agreed that, the Group would repay the loan principal and interests for
Shenggang Gongmao, meanwhile, the Group would claim the repayment from Shenggang
Gongmao. Shenggang Gongmao promised the Group in assistance of transfer of its ownership on
the sun house in top floor of Shengang haoyuan mingshang loft to the Group, also provided its
land in Baoan Nan road in Luohu district (4000 square meters) and jointed construction for
buildings with the Group. The method of joint operation as following: the Group contributed
capital for development, and the initial profits after completion of development shall be used for
64
repayment of the debts. The Group accounted for the estimated losses for the guaranteed loan
which amounted to RMB 3,403,456.00 as non-operating expense in 2002.
In 2004, during the claim of Shenggang Gongmao for repayment of debts, the Group had
confirmed that ownership of the above-mentioned properties and land use rights were unable to
transfer, and Shenggang Gongmao had no other executive property. Therefore, the Group decided
to make full bad debt provision for unrecognized loss of RMB 10,180,249.93.
（5）The details of full amount of provision for bad debts:
Company name Amount Content Amount of Provision Age Reason of provision
Shenzhen Shengang
Gongmao Import and
Refer FS Note Ⅴ、4、(3)
Export Co.,Ltd 10,082,131.44 Guarantee for debt repayment 10,180,249.93 More than 5 years Note for details
Guangzhou Sun-Star
More than 5 years
Company 900,000.00 Current account 900,000.00 Predict unable recovered
Mantingfang Business
and Trade Investment
Co,Ltd, Shenzhen City 1,850,000.0 Current accounts 1,850,000.0 More than 5 year Expected no way to received
Total 12,832,131.44 12,832,131.44
5. Inventory
（1）Category of inventory:
Items 30.6.2011 31.12.2010
Provision for Provision for
Book value Carrying value Book value Carrying value
impairment loss impairment loss
479,763.66 - 479,763.66 607,252.16 - 607,252.16
Raw materials
Consumable forest - -
assets 84,992,036.37 84,992,036.37 84,180,139.04 84,180,139.04
- 1,204,898,019.13 1,130,768,496.61 - 1,130,768,496.61
Development costs 1,204,898,019.13
Development - -
products 33,156,769.72 33,156,769.72 33,156,769.72 33,156,769.72
Lease development - -
products 46,522,019.53 46,522,019.53 47,208,973.36 47,208,973.36
Total 1,370,048,608.41 - 1,370,048,608.41 1,295,921,630.89 - 1,295,921,630.89
65
① Development costs
Provision for Provision for
Items Start Date Estimated Estimated
31.12.2010 30.6.2011
completed date investment impairment loss impairment loss
Bantian industrial estate - - 4,600.00 -
Rongfu Garden second - -
phase 6,448,481.22 6,448,481.22
Crystal Island - -
International Shopping
Center January 2003 Year 2011 1300 million 1,124,320,015.39 1,198,444,937.91
- -
Total 1,130,768,496.61 1,204,898,019.13
② Development products
Provision for Provision for
Items Completed Date 31.12.2010 30.6.2011
impairment loss impairment loss
Gangyihaoting December 2000 33,156,769.72 - 33,156,769.72 0.00
③ Lease development products
Remaining
Items 31.12.2010 Increment Amortization Decrement 30.6.2011 amortization life
- -
Gangyihaoting 41,609,450.67 636,483.02 40,972,967.65 30.5 – 40.5years
- -
Guoqi Building 290,643.11 3,927.61 286,715.50 36.5 years
- -
Huizhou
Sunshine 100 5,308,879.58 46,543.20 5,262,336.38 56.5 years
- -
Total 47,208,973.36 686,953.83 46,522,019.53
Inventory:
Note 1: The company moves developing cost of the Crystal Island project into pledge to be
borrowed from bank, pledge accounts prices of RMB 1,198,444,937.91.
Note 2: The company moves consuming forest capital into pledge to be borrowed from bank,
pledge accounts prices of RMB 52,755,061.81.
6. Long-term Equity Investment
（1）Long-term equity investment measured by cost method
Changes in Accumulated Impairment
Name of investee 31.12.2009(CNY) 31.12.2010(CNY)
year(CNY) impairment provision in
66
provision(CNY) year(CNY)
1. Investments accounted for using
the historical convention
Shenzhen Chunhua Pharmaceuticals
2,250,000.00 0.00 2,250,000.00 418,949.38 0.00
United Enterprise Co., Ltd.
Shenzhen Guoshang Pharmaceuticals
3,000,000.00 0.00 3,000,000.00 1,375,215.11 870,357.35
Co., Ltd.
Shenzhen Internaiontal Enterprise
5,320,000.00 0.00 5,320,000.00 3,075,930.02 0.00
Commerce Co., Ltd.
Shenzhen Royal Noble Industry Co.,
5,000,000.00 0.00 5,000,000.00 5,000,000.00 0.00
Ltd.
Total 15,570,000.00 0.00 15,570,000.00 9,870,094.51 870,357.35
(Continued)
Initial
Shareholding
Name of investee investment Voting right(%) Cash dividends (CNY)
proportion(%)
cost(CNY)
A. Investments accounted for
using the historical convention
Shenzhen Chunhua Pharmaceuticals 0.00
75.00% 75.00%
United Enterprise Co., Ltd. 2,250,000.00
Shenzhen Guoshang 0.00
98.00% 100.00%
Pharmaceuticals Co., Ltd. 3,000,000.00
Shenzhen Internaiontal Enterprise 0.00
98.75% 100.00%
Commerce Co., Ltd. 5,320,000.00
Shenzhen Royal Noble Industry 0.00
64.00% 0.00
Co., Ltd. 5,000,000.00
Total 15,570,000.00 0.00
Notes: The registration of Shenzhen Chunhua Medical Union Enterprise Co., Ltd, Shenzhen
Guoshang Medical Co., Ltd and Shenzhen International Arcade Medical Co., Ltd have been
cancelled due to no renewal of registration certificates, and not included in the scope of financial
statements consolidation in current period. An amount of RMB 4,870,094.51 impairment loss
provision has been made for the long-term equity investment.
7. Investment Properties
(1) Investing real estate in terms of cost type accounting
Item Increased in Decreased in
31.12.2010(CNY) year (CNY) year (CNY) 30.6.2011(CNY)
A. Historical costs 2,374,068.11 0.00 0.00 2,374,068.11
1. Houses and buildings 2,374,068.11 0.00 0.00 2,374,068.11
2. Land use rights 0.00 0.00 0.00 0.00
67
B. Cumulative depreciation and
1,205,187.97 35,638.92 0.00 1,240,826.89
cumulative amortisation
1. Houses and buildings 1,205,187.97 35,638.92 0.00 1,240,826.89
2. Land use rights 0.00 0.00 0.00 0.00
C. Cumulative impairment allowance 0.00 0.00 0.00 0.00
1. Houses and buildings 0.00 0.00 0.00 0.00
2. Land use rights 0.00 0.00 0.00 0.00
D. Net carrying amount 1,168,880.14 -35,638.92 0.00 1,133,241.22
1. Houses and buildings 1,168,880.14 -35,638.92 0.00 1,133,241.22
2. Land use rights 0.00 0.00 0.00 0.00
Note: In the period investing real estate of accrual depreciation (disposal of amounts) RMB
35,638.92.
（2）Until June 30th,2011, non-property right‘s building Construction of account prices of
RMB 107,557.81, property right not belonged to the company of Consideration Statement in
which important accounts price of RMB 313,953.17 in building construction.
Capital Name Original price Accumulated depre Net amounts of Note
of accounting ciation(disposal) accounting
Jiefang North Road, Dabei New Street 302,979.90 195,422.09 107,557.81 Non-property
Hotel No.22, Guangzhou certification
Yuhe Garden Room 121、131、132, Floor 4, 294,520.21 191,144.56 103,375.65 Important unit of
Haikou City property right whether
Yuhe Garden Room 111, Floor 8, Haikou 689,958.00 479,380.48 210,577.52 belong to
City consideration
8. Fixed Assets and Accumulated Depreciation
Items 31.12.2010 Increment Decrement 30.6.2011
ⅰ. Total book values: 77,973,454.60 911,477.75 650,897.78 78,234,034.57
Buildings and structures 67,042,843.18 - - 67,042,843.18
Vehicles 7,747,371.00 541,258.00 395,000.00 7,893,629.00
Electronic device and other equipments 3,183,240.42 370,219.75 255,897.78 3,297,562.39
25,195,032.48 577,536.67 26,286,498.70
ⅱ. Total accumulated depreciation 1,669,002.89
18,627,139.48 - 19,606,977.58
Buildings and structures 979,838.10
4,309,860.18 355,500.00 4,517,833.06
Vehicles 563,472.88
68
2,258,032.82 222,036.67 2,161,688.06
Electronic device and other equipments 125,691.91
- - - -
ⅲ. Total accumulated impairment loss:
- - - -
Buildings and structures
- - - -
Vehicles
- - - -
Electronic device and other equipments
ⅳ. Total carrying value: 52,778,422.12 51,947,535.87
Buildings and structures 48,415,703.70 47,435,865.60
Vehicles 3,437,510.82 3,375,795.94
Electronic device and other equipments 925,207.60 1,135,874.33
（2）Accrual depreciation RMB 1,669,002.89 in the period.
（3）Until June 30th 2011，non-property certification of building construction is bellowed:
Capital Name Original Accounts Accumulated Net amounts of Note
depreciation accounting
(Disposal)
National Enterprises building 22,942,599.85 9,406,439.61 13,536,160.24 Non-property Certi
underground parking in 1-2 floor fication
9、Intangible assets
（1）The situation of intangible assets
items Accounts balance i Accounts balance
Increased in the Decreased in the
n the beginning ye in the end of th
year year
ar e year
- -
一、Total of original accounts 47,893,568.15 47,893,568.15
- -
Land using right 47,893,568.15 47,893,568.15
-
二、Total of accumulated disposal 17,066,254.84 417,753.35 17,484,008.19
-
Land using right 17,066,254.84 417,753.35 17,484,008.19
-
三、 Total of net amounts of
30,827,313.31 -417,753.35 30,409,559.96
intangible assets
-
Land using right 30,827,313.31 -417,753.35 30,409,559.96
- -
四、Total of depreciation reserves 4,578,477.90 4,578,477.90
- -
Land using right 4,578,477.90 4,578,477.90
69
items Accounts balance i Accounts balance
Increased in the Decreased in the
n the beginning ye in the end of th
year year
ar e year
-
五 、 Total of accounts price in
26,248,835.41 -417,753.35 25,831,082.06
intangible assets
- 25,831,082.06
Land using right 26,248,835.41 -417,753.35
（2）Accrual disposal of RMB 417,753.35 in the period.
10. Long-term Deferred Expense
Accumulated
Type Original Amount 31.12.2010 Increment Amortization Transfer out Amortization 30.6.2011
software 300,000.00 120,000.00 - 30,000.00 - 210,000.00 90,000.00
11. Provision for Assets Impairment Loss
Items Decrement
31.12.2010 Increment 30.6.2011
Reversal Write-off
Provision for bad debts 13,636,748.67 137,982.48 - - 13,774,731.15
Provision for inventory
9,870,094.51 - - - 9,870,094.51
impairment loss
Provision for long-term
equity investment impairment 4,578,477.90 - - - 4,578,477.90
loss
Total 28,085,321.08 137,982.48 - - 28,223,303.56
12. Restricted Assets Ownership
（1）Reasons of assets‘ ownership that restricted
That is due to assets are pledged to obtain bank loans.
（2）List of assets‘ ownership that restricted
Types of restricted assets 31.12.2010 Increment Decrement 30.6.2011
1.Fixed assets-buildings and - -
structures 175,289.05 175,289.05
2.Investment properties 728,029.36 - 728,029.36 -
3.Inventories-Development products 23,682,207.87 - 23,682,207.87 -
4.Inventories-Development costs 1,124,320,015.39 74,124,922.52 - 1,198,444,937.91
5. Inventories-Consumable forest
assets 52,185,028.91 569,987.90 - 52,755,016.81
Total 1,201,090,570.58 74,694,910.42 24,585,526.28 1,251,199,954.72
70
13. Short-term Loan
Loan condition 30.6.2011 31.12.2010
Pledge loan 0.00 1,300,000,000.00
14. Accounts Payable
（1）Age analysis:
Age 30.6.2011 31.12.2010
973,000.00 11,312,200.88
Within 1 year
34,155,437.63 33,866,609.89
More than 1 year
35,128,437.63 45,178,810.77
Total
（2）Accounts payable of significant value of which the age is over 1 year.
Amount Post balance-sheet
Name Age Reason
(CNY) date payment
Shenzhen Fanhua Construction Group Co., Ltd.
27,259,701.72 1 to 2 years Payment not due 0.00
Benoy Limited 1,629,701.14 1 to 2 years Payment not due 0.00
RTKL International Ltd 1 to 2 years
645,713.25 Payment not due 0.00
2 to 3 years
400,000.00 Over 3 years Payment not due 0.00
广州经济技术开发区达一农业有限公司东莞肥料厂
Total 29,935,116.11 0.00
（3）There is no Accounts payable balance due to shareholders who own five or over five
percent voting rights as at June 30, 2011.
15. Advanced From Customers
（1）Age analysis:
Age 30.6.2011 31.12.2010
3,729,850.00 -
Within 1 year
32,310,622.12 32,310,622.12
More than 1 year
36,040,472.12 32,310,622.12
Total
（2）The reasons of accounts payable of significant value of which the age is over 1 year.
Name Amount (CNY) Age Reason
71
Revenue from sales of shops at
32,186,642.05 Over 5 years Validity of buyer‘s option not expired
Grace Mansion
Total 32,186,642.05
（3）Balance of Advance from customers related to real estate projects:
Item 30.6.2011 31.12.2010 Completed date Content
Gangyihaoting 32,186,642.05 32,186,642.05 December 2000 Sales of shops
（4）There is no Advanced from customers balance due to shareholders who own five or over
five percent voting rights on June 30, 2011.
16. Payroll Payable
Items 31.12.2010 Increased provision Payment 30.6.2011
1.Salary, bonus and allowance 1,672,710.42 8,734,590.98 10,314,765.15 92,536.25
2.Employee welfare - 554,578.44 1,059,682.10 -505,103.66
3.Social insurance: 28,174.52 1,517,697.06 1,547,589.11 -1,717.53
Including:①Medical insurance - 285,171.06 285,531.51 -360.45
②Basic retirement insurance 28,174.52 1,160,491.51 1,189,832.25 -1,166.22
③Unemployment insurance - 27,411.75 27,538.98 -127.23
④Injury insurance - 16,445.52 16,487.94 -42.42
⑤Pregnancy insurance - 28,177.22 28,198.43 -21.21
4.Housing accumulation fund 17,507.00 696,816.00 709,428.00 4,895.00
5. Labour union fee and employee education
2,341,301.15 347,911.43 215,379.30 2,473,833.28
fee
6. Non-monetary welfare - - - -
7. Redemption for termination of labor
- 379,991.00 379,991.00 -
contract
8. Others: - - - -
Including: share payment by cash - - - -
Total 4,059,693.09 12,231,584.91 14,226,834.66 2,064,443.34
17. Tax Payable
Types 30.6.2011 31.12.2010
VAT -16,414.16 -6,597.55
Business Tax -11,083.55 -98,526.08
Consumption Tax -31,516.27 -31,516.27
Urban construction tax 166,082.25 164,306.08
72
Corporation Tax 1,548,888.51 1,548,888.51
Property tax 127,949.61 246,807.02
Land Add-Value Tax 45,991.56 45,991.56
Personal income Tax 3,594.04 -33,747.91
Education Surcharge 56,119.11 55,067.22
Others 709,211.40 1,609,709.46
Total 2,598,822.50 3,500,382.04
18.Dividend Payable
Name of investor 30.6.2011 31.12.2010
Shareholder of Legal shares 5,127,701.36 5,127,701.36
19. Other Accounts Payable
（1）Age analysis
Age 30.6.2011 31.12.2010
Within 1 year 31,706,777.29 50,715,437.20
More than 1 year 112,754,228.14 126,917,463.79
Total 144,461,005.43 177,632,900.99
（2）Below as other accounts receivable big amounts detailed listing:
Unit Name Owing Amounts Owing date Proportion of Accounts types or
other accounts contents
receivable
Malaysia Hechang Father and son Dividend right
20,084,460.60 Above 3 years 13.90%
Company changeable accounting
Huangting Real Estate Group Co,Ltd,
13,766,940.04 Within 1 year 9.53% Loan
Shenzhen City
Dividend right
Songqing Chen 10,750,000.00 Within 1 year 7.44%
changeable accounting
POWERLAND HOLDING LIMITED 6,999,584.65 Above 3 years 4.85% Dividend
1-2year Above 3 ye
International Trade 4,140,185.75 2.87% Current accounts
ars
Total 55,741,171.04 38.59%
Until June 30th,2011, staff purchase funds of shop and compensation total amounts of RMB
121,121,503.85
（3）The details of other accounts payable, which is significant in amount:
Company name Balance Nature or Content
Huangting Real Estate Group Co,Ltd, Shenzhen
City 13,766,940.04 Loan
73
Zheng kang hao 1,816,504.52 Loan
POWERLAND HOLDING LIMITED 6,999,584.65 Borrowings Note1
Shenzhen Guoshang Medicine Co., Ltd 1,474,784.89 Current accounts
Shenzhen International Enterprise Trading Co., Ltd 4,140,185.75 Current account
Shenzhen Chunhua Medicine United Enterprise Co., Ltd 2,085,211.19 Current account
Total 30,283,211.04
20. Non-current Liability Due Within One Year
（1）Category
Item 30.6.2011 31.12.2010
Long-term borrowing due within one year 20,000,000.00 16,590,000.00
（2）Long-term borrowing due within one year
①Categories of long-term borrowing due within one year
Types 30.6.2011 31.12.2010
Pledge loan 20,000,000.00 16,590,000.00
② Circumstance of long-term borrowing due within one year:
30.6.2011 31.12.2010
Companies Start date Due date Currency Rate%
(CNY) (CNY)
Agricultural Bank of China,
30.06.2009 29.06.2012 CNY 5.4% 20,000,000.00 0.00
Wu Hua Town Subbranch
Wengyuan Town Rural Credit
Cooperatives 29.04.2007 28.04.2011 CNY 8.190% 0.00 7,590,000.00
Wengyuan Town Rural Credit
Cooperatives 07.08.2008 06.08.2011 CNY Floating rate 0.00 9,000,000.0
Total 20,000,000.00 16,590,000.00
21. Long-term Loans
（1）Types of long-term loans:
Type 30.6.2011 31.12.2010
Pledge loan 35,850,000.00 35,000,000.00
Pledge and assure loan 1,500,000,000.00 -
Total 1,535,850,000.00 35,000,000.00
74
（2）Circumstance of long-term loans
30.6.2011 31.12.2010
Companies Start date Due date Currency Rate%
(CNY) (CNY)
Agricultural Bank of China, Wuhua
30.06.2009 29.06.2012 CNY 5.4% 0.00 20,000,000.00
Branch
Agricultural Bank of China, Wuhua
19.03.2010 18.03.2013 CNY 5.94% 0.00 10,000,000.00
Branch
Agricultural Bank of China, Wuhua
19.03.2010 18.03.2013 CNY 5.94% 0.00 5,000,000.00
Branch
CHINA CONSTRUCTION BANK 15.06.2011 14.06.2021
CNY 6.60% 1,200,000,000.00 0.00
CORPORATION
Bohai International Trust Co., Ltd. 02.07.2011 02.01.2013 CNY Floating rate 300,000,000.00 0.00
Agricultural Bank of China, Wuhua
19.03.2010 18.03.2013 CNY 5.94% 10,000,000.00 0.00
Branch
Agricultural Bank of China, Wuhua
19.03.2010 18.03.2013 CNY 5.94% 5,000,000.00 0.00
Branch
Wengyuan County Rural Credit
26.04.2011 25.04.2014 CNY Floating rate 20,850,000.00 0.00
Cooperatives
Total 1,535,850,000.00 35,000,000.00
(1) Pledge guaranteed loans in the closing date of RMB 12 millions are provided by Rongfa
Investment from China Construction Bank, Shenzhen Branch, the loan term is 10 years, by Shenzhen
International Enterprises Stock Co,Ltd totally provided liability insurance, Rongfa Investment Co,Ltd
makes holding 80,608.64 m2 building property of Shenzhen building word No.3000627642 that located
on the centre of Futian District, Shenzhen City to provide pledge guarantee for 12 billion Mortgage
Payment, Rongfa Investment Co,Ltd will put arising rental receivable of the Crystal Island shopping
centre totally pledge to Shenzhen Branch, China Construction Bank.
（2）Pledge guaranteed loans in the closing date of RMB 3 millions are provided by Bohai
International Trust Co., Ltd., the loan term is 18 months, by Shenzhen International Enterprises Stock
Co,Ltd totally provided liability insurance, POWERLAND HOLDING LIMITED provided the pledge
guarantee for 460 million of the said loan with 40% equities of Rongfa Company held, Shenzhen
International Enterprise Co., Ltd. provided the pledge guarantee for 485 million of the said loan with
60% equities of Rongfa Company held. Rongfa Company mortgaged with its IA MALL (80608.64m2, ,
Property Certificate No.: SFD Zi No. 3000627642).
（3）Note: Details of the pledged assets please refer NoteⅤ. 5.
75
22. Accrued Liabilities
December Increased in the Decreased in the
Item June 30th, 2011 Reason for shape
31th,2010 year year
Non-making law 3,250,000.00 - - 3,250,000.00 Finishing contract
Staff shop expected Staff shop
63,589,317.32 - - 63,589,317.32
compensation compensation
Total 66,839,317.32 - - 66,839,317.32
23. Deferred Income
Item 30.6.2011 31.12.2010
Unrecognized leaseback income 560,438.13 1,029,282.11
Note: The unrecognized leaseback income is the unrecognized income from leaseback of
shops in Gangyihaoting.
24. Share Capital
Chang in current year（+、－）
Allotment Bonus Transfer Others Subtotal
of shares
shares reserves
into
Items 31.12.2010 shares 30.6.2011
ⅰ. Restricted shares
Including:
shares held by states - - - - - - -
Shares held by
domestic legal persons - - - - - - -
Shares held by
overseas legal persons - - - - - - -
Executives shares 427,680.00 - - - -87,249.00 -87,249.00 340,431.00
Sub-total 427,680.00 - - - -87,249.00 -87,249.00 340,431.00
ⅱ. Unrestricted shares - - -
1. Ordinary shares
118,785,312.00 427,680.00 427,680.00 119,212,992.00
listed in mainland - - -
2. Foreign shares listed
101,688,192.00 -340,431.00 -340,431.00 101,347,761.00
in mainland - - -
3. Foreign shares listed - - - - - - -
76
in overseas
4. Others - - - - - - -
Total listed shares 220,473,504.00 - - - 87,249.00 - 220,560,753.00
ⅲ. Total shares 220,901,184.00 - - - - - 220,901,184.00
Note: The share capital has been verified by Zhongqing Certified Public Accountants and
issued a Capital Verification Report with Yanqianzi［1998］No.S006.
25. Capital Reserves
Type 31.12.2010 Increment Decrement 30.6.2011
Share premium 50,995,056.63 - - 50,995,056.63
Other capital reserves 21,320,290.43 - - 21,320,290.43
Total 72,315,347.06 - - 72,315,347.06
26. Surplus Reserves
Type 31.12.2010 Increment Decrement 30.6.2011
Statutory surplus reserves 84,526,481.13 - - 84,526,481.13
Discretionary surplus reserve 41,403,353.35 - - 41,403,353.35
Total 125,929,834.48 - - 125,929,834.48
27. Undistributed Profits
Items 30.6.2011 31.12.2010
Openning balance of undistributed profits -364,837,764.72 -197,128,052.01
Add: Net profit for current year -15,518,392.05 -167,709,712.71
Appropriation of statutory surplus reserves - -
Appropriation of staff incentive and welfare fund - -
Appropriation of reserve fund - -
Withdrawal of Enterprise development fund - -
Reimbursement of investment - -
Less: dividends payable for preference shares - -
Withdrawal of surplus reserves - -
Dividends payable for ordinary shares - -
Dividends for ordinary shares transfer into capital - -
Closing balance of undistributed profits -380,356,156.77 -364,837,764.72
28. Minority interests
Investees Proportion 30.6.2011 (CNY) 31.12.2010 (CNY)
Guoshang Property 39.00% -4,880,475.41 -4,525,426.00
77
Rong Fa Investment 40.00% -204,614,502.40 -199,831,670.15
Total -209,494,977.81 -204,357,096.15
29. Operating Revenues and Operating Costs
（1）Operating revenues and operating costs listed according to the categories
Items Current reporting period (CNY) Last reporting period (CNY)
Operating Operating Operating Operating
Operating profit Operating cost
revenue cost revenue profit
ⅰ. Main operation 6,432,929.51 6,120,785.31 312,144.20 5,816,796.33 5,448,294.02 368,502.31
Income from sales of real estate - - - - - -
Property management
income 6,212,929.51 5,959,431.31 253,498.20 5,816,796.33 5,448,294.02 368,502.31
Income from forestry 220,000.00 161,354.00 58,646.00
ⅱ. Other operation 49,271.10 9,172.20 40,098.90 186,800.00 207,430.19 -20,630.19
Disposal of investment
property - - - 120,000.00 200,044.80 -80,044.80
Rental income 49,271.10 9,172.20 40,098.90 66,800.00 7,385.39 59,414.61
Total 6,482,200.61 6,129,957.51 352,243.10 6,003,596.33 5,655,724.21 347,872.12
（2）Operating revenues and operating costs listed according to the areas
Item Current reporting period (CNY) Last reporting period (CNY)
Operating Operating
Operating cost Operating profit Operating cost Operating profit
revenue revenue
Shenzhen
City 6,039,713.41 5,667,895.57 371,817.84 6,003,596.33 5,655,724.21 347,872.12
Huizhou City 207,487.20 299,881.44 -92,394.24 - - -
Haikou City 15,000.00 826.50 14,173.50 - - -
Shaoguan
- - -
City 220,000.00 161,354.00 58,646.00
Total 6,482,200.61 6,129,957.51 352,243.10 6,003,596.33 5,655,724.21 347,872.12
（3）Details of operating revenues from top five clients
Clients name Operating revenues Proportion to total operating revenues
The First 434,911.19 6.71%
The Second 294,994.74 4.55%
78
The Third 187,469.77 2.89%
The Fourth 135,213.54 2.09%
The Fifth 80,348.13 1.24%
Total 1,132,937.37 17.48%
30. Business Tax and Surtax
Items Current reporting period (CNY) Last reporting period (CNY)
Business tax 344,214.55 307,968.28
Urban construction tax 24,447.96 3,078.56
Land Value Added Tax - 67,016.35
Others 11,435.32 2,580.46
Total 380,097.83 380,643.65
31．Sale Expenses
Item Current reporting period (CNY) Last reporting period (CNY)
Inventory disposal - 287,205.48
Fixed assets depreciation expenses - 373,804.69
Total - 661,010.17
32．Management Expenses
Item Current reporting period (CNY) Last reporting period (CNY)
Car Expenses 734,706.33 395,382.24
Salaries and Insurance 6,605,547.72 3,637,880.43
Labour union and staff education
262,647.98 86,030.42
expenses
Social insurance expenses 920,973.90 403,659.29
Depreciation and disposal 1,180,855.55 820,347.49
Operational entertaining expenses 913,629.10 1,232,421.10
Office expenses 388,337.16 108,422.13
Water and electrical expenses 40,516.79 1,764,335.40
Message expenses 102,681.98 -
Rental expenses 928,823.20 2,435,850.40
Protecting expenses 1,036,043.18 -
Traveling expenses 145,045.50 147,154.71
Tax expenses -90,286.57 128,966.71
Repairing expenses 1,348.80 31,450.00
Lawsuit expenses 279,054.50 -17,781.50
79
Item Current reporting period (CNY) Last reporting period (CNY)
Property managing expense 105,216.97 210,483.94
Advertisement expenses 450.00 21,000.00
Others 1,560,898.78 2,297,785.69
Total 15,116,490.87 13,703,388.45
33. Financial Expenses
Items Current reporting period (CNY) Last reporting period (CNY)
Interest expenses 991,504.26 23,228,199.64
Less: Interest Incomes 311,551.26 19,978.75
Exchange losses - 5.31
Less: Exchange gains - -
Bank charges 329,586.57 20,683.02
Other 4,131,990.00 -
Total 5,141,529.57 23,228,909.22
34. Assets Impairment Loss
Item Current reporting period (CNY) Last reporting period (CNY)
Bad debts 137,982.48 -20,378.16
35. Investment Income
Item Current reporting period (CNY) Last reporting period (CNY)
Gains from transfer of equity investment - -
36. Non-operating Income
Items Current reporting period (CNY) Last reporting period (CNY)
1,410.00
Gains from disposal of fixed assets 2,913,212.64
Others 503,500.00 86,040.02
Total 504,910.00 2,999,252.66
Note: The Gains from disposal of fixed assets is mainly due to dispose of the 23th floor of
Shenzhen Development Center.
80
37. Non-operating expenses
Items Current reporting period (CNY) Last reporting period (CNY)
47,255.54
Loss on disposal of fixed assets 16,699.41
2,200.00
default payment 5,149,396.59
Others - 2,000.00
Total 49,455.54 5,168,096.00
Note: The default payment is caused by borrowings with Chen Jianqi and Lin Wanying, please refer to
Note 18. (3).1 for details.
38. Income Tax Expense
Items Current reporting period (CNY) Last reporting period (CNY)
Income tax for current period - -
39、Basic Earnings Per Share and Dilution of Earnings Per Share
Current reporting period (CNY) Last reporting period (CNY)
Profit in the reporting date
Basic EPS Dilution of EPS Basic EPS Dilution of EPS
Net profit belonged to company‘s
ordinary shares‘ shareholder of the -0.070 -0.070 -0.0984 -0.0984
company
Net profit that discount non-usual profit
and loss belonged to company‘s -0.072 -0.072 -0.0974 -0.0974
ordinary shares‘ shareholder
40. Notes to the consolidated cash flow statement
（1）. Other cash receipts in relation to operating activities
Items Current reporting period (CNY) Last reporting period (CNY)
Cash received from accounts balances 29,433,468.66 112,954,323.19
Others 1,014,394.47 2,305,190.27
Total 30,447,863.13 115,259,513.46
（2）. Other cash payments in relation to operating activities
Items Current reporting period (CNY) Last reporting period (CNY)
Cash received from accounts balances 15,683,633.08 10,418,998.69
Rent 928,823.20 2,435,850.40
Operating expenses 913,629.10 1,232,421.10
Legal fees 279,054.50 0.00
81
Protecting expenses 1,036,043.18 0.00
Audit fees 320,000.00 1,764,335.40
Car Expenses 734,706.33 395,382.24
Office expenses 596,236.11 466,060.78
Others 1,560,898.78 2,461,420.90
Total 22,053,024.28 19,174,469.51
41．Supplemental Information for Cash Flow Statement
Current reporting Last reporting
Supplemental informations
period (CNY) period (CNY)
Adjusting net profit to cash flow from operating activities:
Net profits
-15,518,392.05 -39,774,544.55
Add: Provision for assets impairment loss
137,982.48 -20,378.16
Depreciation of fixed assets、oil and gas assets and productbility biological
assets 1,704,641.81 2,157,724.10
Amortization of intangible assets 417,753.35 -
Amortization of Long-term deferred expenses 30,000.00 30,000.00
Loss on disposal of fixed assets、intangible assets and other long-term assets
(The gain is listed beginning with ―-―) 48,045.54 -2,816,468.43
Losses on scraped fixed assets (The gain is listed beginning with ―-―) - -
Losses from fluctuation in fair values (The gain is listed beginning with ―-―) - -
Financial costs (The gain is listed beginning with ―-―) 7,241,529.57 23,228,204.95
Losses on investment (The gain is listed beginning with ―-―) - -
Decrease of deferred income tax assets (The increase is listed beginning with
―-―) - -
Increase of deferred income tax liabilities (The decrease is listed beginning with
―-―) - -
Decrease of inventories (The increase is listed beginning with ―-―) -74,126,977.52 -3,262,921.33
Decrease of operating receivables (The increase is listed beginning with ―-―) -46,658,843.49 3,041,034.57
Increase of operating payables (The decrease is listed beginning with ―-―) 57,110,060.51 31,484,005.72
Others - -
Net cash flow arising from operating activities -69,614,199.80 14,066,656.87
42. Cash and Cash Equivalent
Current reporting Last reporting
Items
period (CNY) period (CNY)
82
1、Cash 170,979,778.01 13,057,613.33
Including: Cash on hand 373,860.53 202,642.75
Unrestricted bank deposit 170,585,917.48 12,764,635.12
Unrestricted other monetary funds 20,000.00 90,335.46
Deposit in central bank - -
Placement in other banks or financial institutions - -
Due to other banks or financial institutions - -
2、Cash equivalents - -
Including: Bond investment due within three month - -
3、Ending balance of cash and cash equivalents 170,979,778.01 13,057,613.33
Including: restricted cash and cash equivalents for the parent or subsidiaries in
the Group - -
Ⅵ. Related Party Relationships and Transactions
1. Identification norm of related party
The Company has control, jointly control or significant influence on the other party or any
party can control, jointly control or significant influence on the Company; or is under same party‘s
control, jointly control or significant influence with other company, is deemed as related parties.
2. The relationship of related parties
Related party with non-controllable relationship
Name of company Relationship with the Company
Baili Asia-Pacific Investment Co., Ltd Holding 13.70% equity interests of the
Company
ShenzhenTefa Group Limited Holding9.44% equity interests of the
Company
Holding7.03% equity interests of the
Dahua Investment (China) Co., Ltd Company
Shenzhen Maoye Shangsha Co., Ltd Holding6.15% equity interests of the
Company
Note1: Because the Company‘s equity structure is quite decentralizing, and has no absolute
control shareholder for the Company, therefore the Company listed Baili Asia-Pacific Investment
Co., Ltd (The first Shareholder), ShenzhenTefa Group Limited (The second Shareholder), Dahua
Investment (China) Co., Ltd (The third Shareholder), and Shenzhen Maoye Shangsha Co., Ltd
(The fourth Shareholder)as related parties with non-controllable relationship.
Note2: Malaysia Foh Chong & Sons SDN.BHD with Baili Asia-Pacific Investment Co., Ltd
signed the 《Shenzhen international limited liability company negotiable B shares transfer
83
agreement》 that 30,264,192 B shares hold by Malaysia Foh Chong & Sons SDN.BHD transferred
to Multi Profit Asia Pacific Investment Limited. The above mentioned shareholding transfer have
completed on 7 July 2009.
3. Related party transactions
（1）Details of guarantee between related parties, please refer to Note 5. 13
（2）The balance of payables and receivables among related parties:
30.6.2011 31.12.2010
Related parties
Balance Proportion Balance Proportion
Other accounts payables:
Shenzhen Chunhua Medicine United Co., Ltd. 2,085,211.19 1.44% 2,085,211.19 1.17%
Shenzhen Guoshang Medicine Co., Ltd 1,474,784.89 1.02% 1,474,784.89 0.83%
Shenzhen International Enterprise Trading Co., Ltd 4,140,185.75 2.87% 4,140,185.75 2.33%
Zhengkanghao 1,597,050.00 1.11% 1,816,504.52 1.02%
Shenzhen Huangting Real Estate Group Co., Ltd 7,524,165.00 5.21% 3,224,248.50 1.82%
POWERLAND HOLDING LIMITED 6,999,584.65 4.85% 6,999,584.65 3.94%
Total 23,820,981.48 16.49% 19,740,519.50 11.11%
VII. Contingency
1. Guarantee
（1）According to common practices of the sale of mortgage properties in the property
investment industry, Shenzhen Rongfa Investment Co., Ltd. provides guarantees for those
mortgage property sales which developed by itself. Until June 30, 2011, Rongfa Investment
provides guarantees for mortgage property sales for RMB 15,478,761.11.
（2）According to common practices of the sale of mortgage properties in the property
investment industry, Huizhou Rongfa Investment Co., Ltd. provides guarantees for those mortgage
property sales which developed by itself. Until June 30, 2011, Huizhou Rongfa Investment Co.,
Ltd provides guarantees for mortgage property sales for RMB 12,061,605.54.
2. Pledge
The Company has no other pledge event except mentioned in Notes Ⅴ. 5 .7.8
3. Litigation
In September 2005, Shenzhen Intermediate People‘s Court issued Review Order [2005]
Shenzhongfaminerzaizi No.22, ruled that the Group has joint and several liability to a guaranteed
84
loan (RMB6 million and related overdue interest) borrowed from Bank of China, Shenzhen
Shangbu branch ( ―Shangbu branch‖) Shenzhen Shengang Gongmao Co., Ltd. (―Shengang
Gongmao‖) in 1999.
In accordance with conservative principle, the Company accounted for guaranteed loan
principal and its interest in RMB 8,670,209.16 as accrued liabilities, and accrued interests in RMB
782,925.00 for the year of 2005, 2006, 2007, and 2008.
In the year 2004, Bank of China , Shangbu subbranch transferred all the rights of above
mentioned borrowing contract to China Orient Asset Management Corporation, Shenzhen Branch
(―Orient Asset Shenzhen Branch‖), on July 19, 2009, Orient Asset Shenzhen Branch transferred
the debts to Dongxin United Asset Management Co., Ltd, then Orient Asset Shenzhen Branch
accepted the entrustment by Dongxin United Asset Management Co., Ltd, in Orient Asset
Shenzhen Branch‘ s own name to deal with the aboved mentioned debts.
In the year 2009, the Company with Orient Asset Shenzhen Branch comes to a settlement
agreement, according to the agreement: if the Company can be paid RMB 6 million before June
20, 2010, exempt the duties undertaken by the Company, that is caused by the joint and several
liability for payment. On April 22, 2010, the Company has paid RMB 6 million to Orient Asset
Shenzhen Branch.
VIII. Commitment
As at the reporting date, the Company signed non-revocable operating lease contracts with
third party as follows:
Maturity date Rental payable Deferred investment income
Within one year 5,129,423.12 411,712.84
1-2 years - 411,712.84
Total 5,129,423.12 823,425.68
IX. Events after the Balance Sheet Date
On Auguest 3rd,2011, company receive legal instruments which Shenzhen intermediate court
accept and hear the case of quries of the company‘s dividend right changeable from Malasiya
hechang father and son Co.Ltd (Below named as ―hechang company‖). According to plaintiff
impleading presentation, hechang company and the company sign <> on May 13th,2001, hechang company
will give holding 10% of diveidend right to Shenzhen national business, the changeable
expenses are RMB 20,600,000. After contract becomes effective, Shenzhen national business is
not yet paid for changeable dividend fees. Hechang Company litigates and complain that the
company pay for the capital of changeable dividend、interests and overdue penalty which
comprises total RMB 37,077,645.55. The case relate to dividend fees of capital RMB 20,600,000
that write in the other accounts payable of the company.
Due to the case is not yet opened to hear, the law is no way to judge for the company‘s
influence of profit in the period.
Except for above things、and ten、3 disclosed things, the company ( include holding stock
companies) is no existence of open and close other significant law、arbitration of things.
X. Other Significant Events
1 . For the purpose of financing the IA MALL project, the Company adopted the then prevailing
financing option by entering into internal sales agreement of shops at IA MALL (hereafter, the
Internal Sales Agreements) with employees. As provided by the Internal Sales Agreements, the
internal sales were priced at 15,000.00/square-metre. Funding raised by the Internal Sales
Agreement amounted to 34,750,984.61. The Internal Sale Agreements provide that non-delivery
occurs, whether due to sales of shops by the Company to parties other than the purchasers or
seizures, the Company shall reimburse the purchasers for the amount equal to the original
consideration received plus 20% compensation. The provision noted in the previous sentence was
approved by the 2007 2nd Meeting of the 5th Term of Board of Directors and is pending resolution
by the General Meeting.
On November 13th, 2008, the Board of Director, in consideration of the special requirements of the
mega shopping centre, that construction of IA MALL was yet to reach completion, and other
relevant factors, approved the proposal regarding cancellation of the Internal Sales Agreements.
The approval of the Board of Directors was submitted to the 2008 1st Extraordinary General
Meeting held on November 29th, 2008 and was disapproved by the General Meeting. For the
purpose of smooth settlement of issues surrounding the Internal Sales Agreements, the Company
continued to develop feasible solution for consideration by relevant management authorities after
the disapproval of the General Meeting.
On December 10th, 2010, Dacheng Law Offices issued its Legal Advice
(DaCheng(Yi)Zi[2010]Di032Hao) stating that as provided by Article 58 of the Contract Law of
the People‘s Republic of China, the Internal Sales Agreements were deemed invalid and the
Company shall repay any amount received from the thirty-three purchasers plus interests
calculated using the prevail lending rates for the same duration borrowing.
On December 31st, 2010, the proposal regarding settlement of the Internal Sales Agreements was
approved by the 2010 4th Extraordinary General Meeting. The resolution authrised that the
Company shall compensate each purchaser for an amount not exceeding 300% of the amount
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originally received from that purchaser (inclusive of principal and compensation, not exceeding
45,000.00/square-metre) and shall revoke the Internal Sales Agreements upon the compensation.
On April 19th, 2011, the proposal regarding settlement of the Internal Sales Agreements was
approved by the 2011 2nd Meeting of the 6th Term of Board of Directors. The resolution authorised
that the Company shall reimburse any personal income tax chargeable on the purchasers arising
from receipt of the compensation.
For the issues noted in the above paragraphs, the Compan had cumulatively recognised loss
amounting to 86,370,519.24 (including 76,907,913.24 recognised in non-operating expenses for
the year ended December 31st, 2010 and 9,462,606.00 for the reporting periods prior to the year
ended December 31st, 2010. As at the date of the issuance of the Financial Statements, the
Company has entered into agreements directed by resolutions noted in the previous two
paragraphs with ten buyers out of thirty-five buyers. Total compensation agreed by the agreements
amounts to 31,893,682.70 and total size of shop area of the agreements is 606.16 square-metres.
Due to disagreement on the amount of compensation, the Company has not reached agreement
with the remaining twenty-five buyers. Total size of shop area of the remaining twenty-five buyers
is 1,701.56 square-metres.
2. Shenzhen Rong Fa Investment Co., Ltd. and Shenzhen International Enterprise Commercial
Management Co., Ltd. (previously known as Shenzhen Longgang International Arcade Co., Ltd.)
disposed in full their shareholding in Shenzhen Longgang Rongfa Investment Co., Ltd. in 2001.
As per agreements signed by Shenzhen Rong Fa Investment Co., Ltd. and Shenzhen YahaoYuan
Investment Co., Ltd. on June 27th, 2001 and July 12th, 2002, the ownership of the land use right
of a piece of land located at Rongfadong Lu, Pingdi Townshall belong to Shenzhen Rong Fa
Investment Co., Ltd. The Land Serial of the land use right noted in the previous sentence is
G10205—0011 and the land use right has a net carrying value amounting to 6,448,481.22 in the
inventories account of Shenzhen Rong Fa Investment Co., Ltd.
Inspection of ownership revealed that the ownership of the land use right noted in the
previous paragraph is registered to Shenzhen Eastern Landmark Industry Co., Ltd. (the
descendants of Shenzhen Longgang Rongfa Investment Co., Ltd.), of which the registered name
was changed to Eastern Landmark Group Co., Ltd. on February 14th, 2011.
3. Rong Fa Investment, a subsidiary of the Company, entered into the Property Management
Contract with Shenzhen Zhongtie Property Development Co., Ltd.on February 17th, 2009. Rong
Fa Investment unilaterally declared dismissal of the contract on December 8th, 2010. Shenzhen
Zhongtie Property Development Co., Ltd. initiated litigation against Rong Fa Investment to Futian
People‘s Court demand payment by Rong Fa Investment including penalty charge amounting to 5
million and other losses amounting to 8,658,315.88. On the basis of the estimate provided by the
independent practicing solicitor, the Board of Directors estimated that the Company may incur
contingent liabilities for the litigation for the year ended December 31st, 2010.
As at the date of issuance of the Financial Statements, the litigation is still in its due process.
Ⅺ.The changeable project of going concern competences
Until June 30th, 2011, the capital of Shenzhen National Business amounts of RMB
154,073.30, capital liabilities rate of 109.74%, and current liabilities are RMB 158,838.17. The
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company has already been adopted many projects that increased item development、liquidize
remnant assets、finance and so on, positively improved the competence of going concern
a) The forestry industry item of the company goes into harvest period in 2010, and
has already been disposed and received a part of capital, can acquire a little net
cash inflow in 2011 and later.
b) According to merchants‘ planning of the company, Crystal Island project will
finish merchants‘ work in 2011, and start formal operation.
c) By the end of the reporting date, the company big shareholder of Shenzhen city
Huangting Real Estate Group Co,Ltd has already accepted and provided capital.
d) The company has required loans of Crystal Island project from bank.
Ⅶ. Main Notes to Financial Statements of Parent Company
1. Other Accounts Receivable
（1）Other accounts receivable listed according to the categories
30.6.2011(CNY) 31.12.2010(CNY)
Item Provision for Provision for
Book value % of total % of total Book value % of total % of total
bad debts bad debts
Receivables of individual
347,863,550.09 82.19% 347,863,550.09 97.75% 336,271,697.89 82.43% 336,271,697.89 97.93%
significance
Credit-risk-categorised receivables
Categorisation by nature of
74,487,040.40 17.60% 7,124,293.09 2.00% 70,770,198.93 17.35% 6,207,898.09 1.81%
receivables
Subtoal 74,487,040.40 17.60% 7,124,293.09 2.00% 70,770,198.93 17.35% 6,207,898.09 1.81%
Receivables of individual
insignificance subject to individual 900,000.00 0.21% 900,000.00 0.25% 900,000.00 0.22% 900,000.00 0.26%
assessment for impairment
Total 423,250,590.49 100.00% 355,887,843.18 100.00% 407,941,896.82 100.00% 343,379,595.98 100.00%
（2）Other accounts receivable listed according to the age
30.6.2011(CNY) 31.12.2010(CNY)
Age Provision for bad Provision for Carrying
Book value Proportion Carrying value Book value Proportion
debts bad debts value
Within 1
6,610,066.97 8.87% 330,503.35 4.64%
year 17,651,131.33 4.33% 882,556.58 16,768,574.75
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1-2 years 67,842,161.43 91.08% 6,784,216.14 95.23% 53,028,502.60 13.00% 5,302,850.26 47,725,652.34
2-3 years 4,800.00 0.01% 720.00 0.01% 1,500.00 0.00% 225.00 1,275.00
3-4 years 1,500.00 0.00% 300.00 0.00% 0.00 0.00% 0.00 0.00
4-5 years - 0.00% - 0.00% 89,065.00 0.02% 22,266.25 66,798.75
More than 5
28,512.00 0.04% 8,553.60 0.12%
years - 0.00% - -
Total 74,487,040.40 100.00% 7,124,293.09 100.00% 70,770,198.93 17.35% 6,207,898.09 64,562,300.84
（3）List the amount of top five other accounts receivable
Proportion of total
Company name Balance Age Nature other accounts
receivable
Shenzhen Rongfa Investment Within 1 year、
Current account 75.07%
Co., Ltd 317,754,804.95 1-3year
Shenzhen Guoshanglinye Within 1
Current account 17.37%
Development Co., Ltd 73,501,401.29 year,1-3 years
Shenzhen International Arcade
4-5 years Current account 4.05%
Chain Store 17,122,151.90
Shenzhen Shengang Industrial
More than 5 Please refer Note V、4、(3)
Trading Inport & Export 2.38%
years note for details
Company 10,082,131.44
Shenzhen Gangyidongfanghui
3-4 years Current account 0.69%
business Co., Ltd 2,904,461.80
Total 421,364,951.38 99.55%
2. Long-term Equity Investment
（1）Long-term equity investment and provision for impairment
30.6.2011(CNY) 31.12.2010(CNY)
Items Provision for Provision for
Book value Carrying value Book value Carrying value
impairment impairment
Long-term equity investment 79,943,991.03 14,870,094.51 65,073,896.52 79,943,991.03 14,870,094.51 65,073,896.52
Including: Investment for
subsidiaries 79,943,991.03 14,870,094.51 65,073,896.52 79,943,991.03 14,870,094.51 65,073,896.52
Investment for other - - - - - -
companies
（2）Long-term equity investment account by cost method
Name of investees Initial investment 31.12.2010 Increment Decrement 30.6.2011
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cost
Shenzhen Chunhua Medicine - -
United Co., Ltd. 2,250,000.00 2,250,000.00 2,250,000.00
Shenzhen Guoshang Medicine Co., - -
Ltd. 2,850,000.00 2,850,000.00 2,850,000.00
Shenzhen International trade - -
enterprise Co., Ltd 5,320,000.00 5,320,000.00 5,320,000.00
Shenzhen International Arcade - -
Property Management Co., Ltd 2,800,000.00 2,800,000.00 2,800,000.00
Shenzhen Rongfa Investment Co., - -
Ltd. 35,296,718.10 35,296,718.10 35,296,718.10
Shenzhen Longgang International - -
Arcade Enterprise Co., Ltd. 21,427,272.93 21,427,272.93 21,427,272.93
Shenzhen International Arcade - -
Chain Store 10,000,000.00 10,000,000.00 10,000,000.00
- -
Total 79,943,991.03 79,943,991.03 79,943,991.03
Note 1: See Note 5.13 for details of pledging of shareholding in Rong Fa Investment.
（3）Provision for impairment loss of long-term equity investment
Name of investees 31.12.2010 Increment Decrement 30.6.2011
- -
Shenzhen Chunhua Medicine United Co., Ltd 418,949.38 418,949.38
- -
Shenzhen Guoshang Medicine Co., Ltd. 1,375,215.11 1,375,215.11
- -
Shenzhen International trade enterprise Co., Ltd 3,075,930.02 3,075,930.02
- -
Shenzhen International Arcade Chain Store 10,000,000.00 10,000,000.00
Total 14,870,094.51 - - 14,870,094.51
（4）60% shareholding in Rong Fa Investment (amounting to 35,296,718.10) has been
pledged as security for the short-term borrowing raised by Rong Fa Investment, a holding
subsidiary of the Company, from Bohai International Trust Co., Ltd. The principal of the
short-term borrowing amounts to 1.3 billion.
3. Operating Revenue and Operating Costs
（1）Operating revenues and operating costs listed according to the categories
Current reporting period (CNY) Last reporting period (CNY)
Items Operating Operating
Operating costs Operating profits Operating costs Operating profits
revenue revenue
Rental income 34,271.10 8,345.70 25,925.40 51,800.00 2,698.78 49,101.22
Disposal of investment
-80,044.80
property - - - 120,000.00 200,044.80
Total 34,271.10 8,345.70 25,925.40 171,800.00 202,743.58 -30,943.58
90
（2）Operating revenues and operating costs listed according to the areas
Items Current reporting period (CNY) Last reporting period (CNY)
Operating Operating Operating Operating
Operating costs Operating costs
revenue profits revenue profits
Shenzhen 34,271.10 8,345.70 25,925.40 171,800.00 202,743.58 -30,943.58
35. Supplemental Information for Cash Flow Statement
Current reporting Last reporting
Supplemental informations
period (CNY) period (CNY)
Adjusting net profit to cash flow from operating activities: -
-
Net profits -9,667,205.48 -38,472,619.62
Add: Provision for assets impairment loss 12,508,247.20 44,005,982.58
Depreciation of fixed assets、oil and gas assets and productbility biological
522,615.20
assets 685,701.25
Amortization of intangible assets - 0.00
Amortization of Long-term deferred expenses 30,000.00 30,000.00
Loss on disposal of fixed assets、intangible assets and other long-term assets
5,733.88 -2,816,468.43
(The gain is listed beginning with ―-―)
Losses on scraped fixed assets (The gain is listed beginning with ―-―) -
Losses from fluctuation in fair values (The gain is listed beginning with ―-―) -
Financial costs (The gain is listed beginning with ―-―) -10,354,438.43 -8,412,757.07
Losses on investment (The gain is listed beginning with ―-―) -
Decrease of deferred income tax assets (The increase is listed beginning with
-
―-―)
Increase of deferred income tax liabilities (The decrease is listed beginning with
-
―-―)
Decrease of inventories (The increase is listed beginning with ―-―) -
Decrease of operating receivables (The increase is listed beginning with ―-―) -1,389,332.72 -20,161,448.72
Increase of operating payables (The decrease is listed beginning with ―-―) 8,971,388.95 11,445,854.36
Others - 0.00
Net cash flow arising from operating activities 627,008.60 -13,695,755.65
36. Cash and Cash Equivalent
Current reporting Last reporting
Items
period (CNY) period (CNY)
1、Cash 417,219.09 211,543.41
Including: Cash on hand 287,919.67 25,876.14
Unrestricted bank deposit 109,299.42 95,331.81
Unrestricted other monetary funds 20,000.00 90,335.46
91
Deposit in central bank - -
Placement in other banks or financial institutions - -
Due to other banks or financial institutions - -
2、Cash equivalents - -
Including: Bond investment due within three month - -
3、Ending balance of cash and cash equivalents 417,219.09 25,876.14
Including: restricted cash and cash equivalents for the parent or subsidiaries in
-
the Group -
Ⅷ. Details of Extraordinary Profits or Losses
Items Jan-Jun 2011
(1) Profit and loss from disposal of non-current assets, including the offset part of the impaired
assets; -45,845.54
(2) Unauthorized examination and approval, or lack of official approval documents, or
occasional tax revenue return and abatement; -
(3) Governmental subsidies counted into the current profit and loss, except for the one closely
related with the normal operation of the company and gained constantly at a fixed amount or 450,000.00
quantity according to certain standard based on state policies;
Items Jan-Jun 2011
(4) Capital occupation fees charged to the non-financial enterprises and counted into the current -
profit and loss; -
(5) Gains when the investment cost of acquiring a subsidy, an allied enterprise and a joint -
venture is less than the fair value of the identifiable net assets of the invested entity;
(6) Profit and loss from non-monetary assets exchange -
(7) Profit and loss from entrusting others for investment or asset management -
(8) Retained asset impairment provisions resulting from force majeure such as natural disasters -
(9) Profit and loss from debt restruction -
(10) Enterprises ‘ reorganization fees, such as staffing expenses and integration fees -
(11) Profit and loss that exceeds the fair value in transaction with unfair price -
(12) Current net profit and loss of the subsidies established by merger of enterprises under -
unified control from the beginning of the period to the merger day
(13) Profit and loss on contingency that has no relation with the normal operation of the -
company
(14) Profit or loss from change in fair value by holding tradable financial assets and liabilities, -
and investment income from disposal of tradable financial assets and liabilities as well as salable
financial assets, excluding the effective hedging businesses related with the normal operations of
the company
(15) Switch -back of impairment provisions of accounts receivable that have undergone -
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impairment test alone;
(16) Profit and loss from outward entrusted loaning -
(17) Profit and loss from the change of investment property‘ s fair value by follow-up -
measurement in fair value mode
(18) Impact on the current profit and loss by one-off adjustment to the current profit and loss -
according to the requirements of the tax as well as accounting laws and rules
(19) Custody fees of entrusted operation; -
-
(20) Other non-operating income and expenses besides the above items
(21) Other items that conform to the definition of extraordinary profit and loss 51,300.00
Subtotal 455,454.46
Less：Amount influenced by income tax 113,863.62
Less：Non-recurring profit attributable to minority interest 45,545.45
Total 296,045.40
Ⅸ. Yield Rate of Net Assets and Earnings Per Share
Weighted Earnings Per Share
Profit in the report period
Average Yield Rate of Net Assets Basic EPS Basic EPS
Net profits attributable to ordinary
shareholders -33.34% -0.070 -0.070
Net profits attributable to ordinary
shareholders that have deducted -33.97% -0.072 -0.072
extraordinary profits or losses.
Ⅹ. Reasons and details of extraordinary movement of line items of financial
statements
（1）Accounts receivable: The decrease of 42.01% from the beginning balance to closing
balance, that is mainly due to receive account receivables.
（2）Prepayment accounts: The increase of 26308.26% from the beginning balance to closing
balance, that is mainly due to pay for jingdao repaired fees.
（3）Non-current liabilities due within one year: The increase of 76.92% times from the
beginning balance to closing balance, that is mainly due to decrease returning in the period..
(4) Staff compensions payable: The decrease of 49.65% from the beginning balance to
closing balance, that is mainly due to provide the beginning accrual compensions.
（5）Long-term borrowings: The increase of 3431% from the beginning balance to closing
balance, that is mainly due to increase loans in the period.
（6）Operating Revenue: The decrease of 100% from the previous reporting period to current
reporting period, that is mainly due to no operating business in the current reporting period, not
93
happening relevant expenses.
（7）Financial expenses: The decrease of 77.86% from the previous reporting period to current
reporting period, that is mainly due to increase interest capital in the period.
（8）Non-operating income: The decrease of 83.17% from the previous reporting period to
current reporting period, that is mainly due to decrease selling fixed assets in the year.
（9）Non-operating expense: The decrease of 99.04% from the previous reporting period to
current reporting period, that is mainly due to provision of default payment decreased.
Note 16. Issuance of the Financial Statements
The Financial Statements was approved and declared for issuance by the Board of Directors on
August 22th, 2011.
Shenzhen International Enterprise Co.,
Ltd
Page 36 to Page94 of the Financial Statements and the Notes to the Financial Statements were
signed by the following management personnel:
Legal representative Person in charge of accounting Person in charge of accounting
Zheng Kanghao work department
Chen Xiaohai Xu Xiaoyun
Date: August 22th, 2011 Date: August 22th, 2011 Date: August 22th, 2011
94
Section VIII Documents Available for Reference
The following documents are available:
(I) The semi-annual report carrying the chairman‘s signature.
(II) Accounting statements with the signatures and seals of the Legal Representative,
the person in charge of the accounting work and the person in charge of the
accounting department.
(III) Original copies of all the documents and announcements of the Company
disclosed on Securities Times and Ta Kung Pao (HK) in the reporting period.
(IV) The Company‘s Articles of Association.
(V) Other relevant documents.
Where the documents above can be found: the Securities Department of the Company
Chairman of the Board: Zheng Kanghao
Board of Directors
Shenzhen International Enterprise Co., Ltd.
24 August 2011
95
