SHENZHEN INTERNATIONAL ENTERPRISE CO., LTD.
INTERIM REPORT 2012
（Unaudited）
Disclosure Date: 23 August 2012
1
I. Important Notes
The Board of Directors, the Supervisory Committee as well as directors, supervisors and senior executives of
Shenzhen International Enterprise Co., Ltd (hereinafter referred to as ―the Company‖) warrant that this report
does not contain any false or misleading statements or omit any material facts, and will take all responsibilities,
individual and joint for the authenticity, accuracy and completeness of the report.
All directors attend the Board meeting for reviewing the interim report.
This interim report of the Company hasn‘t been audited by certified public account 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 of the Interim Report 2012 is true and complete.
Explanation
Refer
Item Content for explanation
to
Refer
The Company, Company Shenzhen International Enterprise Co., Ltd.
to
Refer
Multi Profit Asia Pacific Multi Profit Asia Pacific Investment Ltd.
to
Refer
SDG Shenzhen Special Economic Zone Development (Group) Co., Ltd.
to
Refer
Rongfa Company Shenzhen Rongfa Investment Co., Ltd.
to
Refer Shenzhen International Enterprise Forestry Development Co., Ltd. and its
Forestry Company
to subordinated subsidiaries
Refer
Wongtee Mall Shenzhen Wongtee IA Shopping Mall (formerly known as Wongtee Mall)
to
II. Company Profile
(I) Basic information
A-share code 000056 B-share code 200056
A-share abbreviation *ST SZIEC-A B-share abbreviation *ST SZIEC-B
Stock exchange listed
Shenzhen Stock Exchange
with
Legal Chinese name of
深圳市国际企业股份有限公司
the Company
Abbr. of the legal Chinese
name of the Company
Legal English name of the
SHENZHEN INTERNATIONAL ENTERPRISE CO.,LTD.
Company
Abbr. of the legal English
name of the Company
Legal representative of
Zheng Kanghao
the Company
Registered address A of 6/F Huang Gang Business Centre, 2028JinTian Rd. Futian District Shenzhen
Postal code for the
518100
registered address
Office address 6/F Huang Gang Business Centre, 2028JinTian Rd. Futian District Shenzhen
Postal code for the office
518100
address
Internet website of the http://www.china-ia.com
2
Company
Email sgs000056@163.com
(II) For contact
Secretary to the Board of Directors Securities Affairs Representative
Name Cao Jian Wu Xiaoshuang
6/F Huang Gang Business Centre, 6/F Huang Gang Business Centre,
Contact address 2028JinTian Rd. Futian District 2028JinTian Rd. Futian District
Shenzhen Shenzhen
Tel. (0755)82281888 (0755)82535565
Fax (0755)82566573 (0755)82566573
Email cj000056@21cn.com zhaiwu2006@21cn.com
(III) About information disclosure and where the interim report is placed
Newspapers designated by the
Securities Times, Ta Kung Pao
Company for information disclosure
Internet website designated by CSRC
http://www.cninfo.com.cn
for disclosing the semi-annual report
Where the semi-annual report is
Securities Affairs Dep. of the Company
placed
III. Financial and Business Highlights
(I) Major accounting data and indexes
Any retrospective adjustment in previous financial statements?
√Yes □No □Inapplicable
Major accounting data
Reporting period Same period of last year Increase/decrease (%)
Major accounting data
(Jan.-Jun.) Before adjustment After adjustment After adjustment
Gross operating revenues (RMB
33,927,324.83 6,482,200.61 6,482,200.61 423.39%
Yuan)
Operating profit (RMB Yuan) 62,008,494.68 -21,111,728.17 -21,111,728.17
Total profit (RMB Yuan) 62,602,092.73 -20,656,273.71 -20,656,273.71
Net profit attributable to
shareholders of the Company 67,663,758.14 -15,518,392.05 -15,518,392.05
(RMB Yuan)
Net profit attributable to
shareholders of the Company
-23,275,148.05 -15,814,437.44 -15,814,437.44
after deducting non-recurring
gains and losses (RMB Yuan)
Net cash flow from operating
-91,931,077.98 -69,614,199.80 -69,614,199.80
activities (RMB Yuan)
As at the end of As at the end of last year Increase/decrease (%)
this reporting
period Before adjustment After adjustment After adjustment
Total assets (RMB Yuan) 1,711,777,392.37 1,537,761,372.58 1,545,337,848.28 10.77%
Owners‘ equity attributable to
shareholders of the Company -17,879,024.12 -84,350,914.14 -79,115,509.33
(RMB Yuan)
Total shares (share) 220,901,184.00 220,901,184.00 220,901,184.00
3
Major financial indexes
Reporting period Same period of last year Increase/decrease (%)
Major financial indexes
(Jan.-Jun.) Before adjustment After adjustment After adjustment
Basic EPS (RMB Yuan/share) 0.306 -0.07 -0.07
Diluted EPS (RMB Yuan/share) 0.306 -0.07 -0.07
Basic EPS after deducting
non-recurring gains and losses -0.105 -0.072 -0.072
(RMB Yuan/share)
Fully diluted ROE (%)
Weighted average ROE (%) -33.34% -33.34%
Fully diluted ROE after
deducting non-recurring gains
and losses (%)
Weighted average ROE after
deducting non-recurring gains -33.97% -33.97%
and losses (%)
Net cash flow per share from
operating activities (RMB -0.416 -0.32 -0.32
Yuan/share)
As at the end of As at the end of last year Increase/decrease (%)
this reporting
period Before adjustment After adjustment After adjustment
Net assets per share attributable
to shareholders of the Company -0.0809 -0.38 -0.36
(RMB Yuan/share)
Liability/asset ratio (%) 117.93% 123.99% 123.5%
Notes to major accounting data and financial indexes before the end of this reporting period (please write an
adjustment note if there‘s any retrospective adjustment)
In accordance with resolutions approved on the Third Special Shareholders‘ General Meeting 2012, the
subsequent accounting method of investment property was changed into fair value model from cost model in
aconting policies of the Company.
In accordance with rules of Corporate Accounting Standard, this change of accounting policies shall conduct
retrospective adjustment to financial statement dated 31 Dec. 2011. As for the investment property in
progree-Wongtee IA Shopping Mall was not complicated, the said item continued to measured by cost model until
it reached an estimated operation status. Thereof, on the aspect of investment property, this change of accounting
policies shall conduct retrospective adjustment to relevant effect arising from fair value change of lease out house
and buildings excepted to Wongtee IA shopping Mall.
(II) Accounting data differences under the domestic and overseas accounting standards
1. Net profit and net asset differences between financial reports disclosed according to the international and
Chinese accounting standards respectively
□Applicable √Inapplicable
2. Net profit and net asset differences between financial reports disclosed according to the overseas and
Chinese accounting standards respectively
□Applicable √Inapplicable
3. Specific items involving significant difference
□Applicable √Inapplicable
4. Notes to accounting data differences under the domestic and overseas accounting standards
□Applicable √Inapplicable
(III) Items of non-recurring gains and losses
√Applicable □Inapplicable
4
Jan.-Jun. 2012 (RMB
Items Notes
Yuan)
Gains and losses on disposal of non-current assets 103,675,861.68
Tax rebate, reduction or exemption due to un-authorized
approval or the lack of formal approval documents
Government grants recognized in the current year, except
for those acquired in the ordinary course of business or
granted at certain quotas or amounts according to the
country‘s unified standards
Capital occupation fees received from non-financial
enterprises that are included in current gains and losses
Gains generated when the investment costs of the
Company‘s acquiring subsidiaries, associates and joint
ventures are less than the fair value of identifiable net assets
in the investees attributable to the Company in the
acquisition of the investments
Exchange gains and losses of non-monetary assets
Gains and losses through entrusting others to invest or
manage assets
Various asset impairment provisions due to acts of God such
as natural disasters
Gains and losses on debt restructuring
Enterprise reorganization expenses, such as expenses on
employee settlement and integration
Gains and losses on the parts exceeding the fair value when
prices of transactions become unfair
Net current gains and losses from the period-begin to the
combination date of subsidiaries due to business
combinations under the same control
Gains and losses on contingent matters which are irrelevant
to the normal operation of the Company
Gains and losses on fair value changes of transactional
financial assets and liabilities, and investment gains on
disposal of transactional financial assets and liabilities and
available-for-sale financial assets, except for the effective
hedging business related to the Company‘s normal operation
Reversal of impairment provisions for accounts receivable
which are separately tested for impairment signs
Gains and losses on entrustment loans from external parties
Gains and losses on fair value changes of investing
properties for which the fair value method is adopted for -149,546.00
subsequent measurement
Current gain and loss effect due to a just-for-once
adjustment to current gains and losses according to
requirements of taxation and accounting laws and
regulations
Custodian fee income from entrusted operations with the
Company
Other non-operating incomes and expenses besides the
-654.50
items above
Other gain and loss items that meet the definition of
non-recurring gains and losses
Minority interests effects -12,586,754.99
Income tax effects
Total 90,938,906.19 --
5
IV. Changes in Share Capital and Particulars about Shareholders
(I) Changes in share capital
1. Statement of changes of shares
√Applicable □Inapplicable
Before the change Increase/decrease (+, -) After the change
Capitalizat
Issuance ion of
Proportion Bonus Proportio
Number of new public Others Subtotal Number
(%) shares n (%)
shares reserve
fund
I. Shares subject to trading 340,431.0 340,431.0
0.15% 0.00 0.00 0.00 0.00 0.00 0.15%
moratorium 0 0
1. State-owned shares 0.00 0% 0.00 0%
2. State-owned legal
0.00 0% 0.00 0%
person shares
3. Other domestic shares 0.00 0% 0.00 0%
Including: Shares held by
0.00 0% 0.00 0%
domestic legal persons
Shares held by
0.00 0% 0.00 0%
domestic individuals
4. Shares held by overseas
0.00 0% 0.00 0%
shareholders
Including: Shares held by
0.00 0% 0.00 0%
overseas legal persons
Shares held by
0.00 0% 0.00 0%
overseas individuals
5. Shares held by senior 340,431.0 340,431.0
0.15% 0.15%
management staff 0 0
II. Shares not subject to 220,560,7 220,560,7
99.85% 0.00 0.00 0.00 0.00 0.00 99.85%
trading moratorium 53.00 53.00
1. Ordinary shares 119,212,9 119,212,9
53.97% 53.97%
denominated in RMB 92.00 92.00
2. Domestically listed 101,347,7 101,347,7
45.88% 45.88%
foreign shares 61.00 61.00
3. Overseas listed foreign
0.00 0% 0.00 0%
shares
4. Others 0.00 0% 0.00 0%
220,901,1 220,901,1
III. Total shares 100% 0.00 0.00 0.00 0.00 0.00 100%
84.00 84.00
2. Changes of shares subject to trading moratorium
√Applicable □Inapplicable
Number of
Number of Number of Number of
shares subject Date of
shares subject shares released shares subject
Name of to trading releasing
to trading from trading to trading Reason
shareholder moratorium trading
moratorium at moratorium in moratorium at
increased in moratorium
year-begin current year year-end
current year
Defined in
Shares held by accordance with
Zheng Kanghao 340,431.00 0.00 0.00 340,431.00 senior regulations on
management changes of shares
held by senior
6
management
Total 340,431.00 0.00 0.00 340,431.00 -- --
(II) Issuance and listing of securities
1. Securities issues in the previous three years
□Applicable √Inapplicable
2. Changes of the Company’s share number and structure, as well as the corresponding changes in its
asset-liability structure
□Applicable √Inapplicable
3. Existing employee shares
□Applicable √Inapplicable
(III) Shareholders and actual controller
1. Total number of shareholders at the end of the reporting period
The Company had 13,961.00 shareholders at the end of reporting period.
2. Shareholding of the top ten shareholders
Particulars about shares held by the top ten shareholders
Number of Pledged or frozen shares
shares held
Name of shareholder (full Nature of Shareholding Total shares held
subject to Number of
name) shareholder percentage (%) at the period-end Status of shares
trading shares
moratorium
MULTI PROFIT ASIA
Foreign
PACIFIC INVESTMENT 13.7% 30,264,192.00 0.00 In pledge 30,000,000.00
corporation
LTD
SHENZHEN SPECIAL
ECONOMIC ZONE State-owned
9.06% 20,010,772.00 0.00
DEVELOPMENT corporation
(GROUP) CO., LTD.
UOB INVESTMENT Foreign
7.03% 15,528,941.00 0.00
(CHINA) LIMITED corporation
Foreign natural
ZHONG ZHIQIANG 3.72% 8,215,594.00 0.00
person
GUOYUAN
Foreign
SECURITIES (HK) CO., 3.46% 7,637,130.00 0.00
corporation
LTD.
SHENZHEN WONGTEE
Domestic
REAL ESTATE
non-state-owned 2.31% 5,106,702.00 0.00
INVESTMENT CO.,
corporation
LTD.
GUOTAI JUNAN
Foreign
SECURITIES(HONGKO 1.01% 2,229,808.00 0.00
corporation
NG) LIMITED
Domestic natural
CHEN SHU 0.97% 2,149,327.00 0.00
person
Domestic natural
ZENG HAIXING 0.97% 2,148,715.00 0.00
person
SHANGHAI HONG
Foreign
KONG WANGUO 0.89% 1,970,878.00 0.00
corporation
SECURITIES CO., LTD.
Note: (1) Shenzhen Special Economic Zone Development (Group) Co., Ltd. holds
Notes to particulars about shareholders
shares of the Company on behalf of the state.
Particulars about shares held by the top ten shareholders holding shares not subject to trading moratorium
√Applicable □Inapplicable
Number of shares held Type and number of shares
not subject to trading
Name of shareholder
moratorium at the Type Number
period-end
7
MULTI PROFIT ASIA PACIFIC INVESTMENT
30,264,192.00 B-share 30,264,192.00
LTD
SHENZHEN SPECIAL ECONOMIC ZONE
20,010,772.00 A-share 20,010,772.00
DEVELOPMENT (GROUP) CO., LTD.
UOB INVESTMENT (CHINA) LIMITED 15,528,941.00 B-share 15,528,941.00
ZHONG ZHIQIANG 8,215,594.00 B-share 8,215,594.00
GUOYUAN SECURITIES (HK) CO., LTD. 7,637,130.00 B-share 7,637,130.00
SHENZHEN WONGTEE REAL ESTATE
5,106,702.00 A-share 5,106,702.00
INVESTMENT CO., LTD.
GUOTAI JUNAN SECURITIES(HONGKONG)
2,229,808.00 B-share 2,229,808.00
LIMITED
CHEN SHU 2,149,327.00 B-share 2,149,327.00
ZENG HAIXING 2,148,715.00 B-share 2,148,715.00
SHANGHAI HONG KONG WANGUO
1,970,878.00 B-share 1,970,878.00
SECURITIES CO., LTD.
Explanation on associated relationship or/and persons acting in concert among the above-mentioned shareholders
Inquired by the Company, Multi Profit Asia Pacific and Shenzhen Wongtee Real Estate Investment Co., Ltd. were
persons acting in concert. In the meanwhile, actual controlling holder of Multi Profit Asia Pacific, MR. Zheng
Kanghao personally holds 571,511 shares of B shares (as at 30 Jun. 2012). SDG and other shareholders in the
above table are not related parties. Other than that, 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.
3. Controlling shareholder and actual controller
(1) Change of the controlling shareholder and actual controller
□Applicable √Inapplicable
(2) Particulars about the controlling shareholder and actual controller
Is there a new actual controller?
□Yes √No □Applicable
Name of the actual controller
Type of the actual controller Other
Notes:
Equity structure of the Company was decentralized that as to 30 Jun. 2012, shares held by the first three principal
shareholders were equal. They are Multi Profit Asia Pacific Investment Ltd., holding 13.7% shares of the
Company; Shenzhen Special Economic Zone Development (Group) Co., Ltd., holding 9.06% shares of the
Company and UOB Investment (China) Limited, holding 7.03% shares of the Company.
Chairman of the Company, Mr. Zheng Kanghao is actual controller of Multi Profit Asia Pacific, Mr. Zheng
Kanghao, his controlling Multi Profit Asia Pacific and Shenzhen Wongtee Real Estate Group Co., Ltd. hold
16.27% shares of the Company in total.
(3) Property right relationship and control relationship between the Company and actual controller
Zheng Kanghao
100% 99.67%
Multi Profit Asia Pacific Investment Ltd Shenzhen Wongtee Real Estate Group Co., Ltd.
90%
Shenzhen Wongtee Real Estate Investment Co., Ltd.
13.7% 0.26%
2.31%
Shenzhen International Enterprises Co., Ltd. 8
(4) The actual controller controls the Company via trust or other ways of asset management
□Applicable √Inapplicable
4. Other corporate shareholders with a shareholding over 10%
□Applicable √Inapplicable
(IV) Convertible corporate bonds
□Applicable √Inapplicable
V. Directors, Supervisors and Senior Management
9
(I) Shareholding changes of directors, supervisors and senior management
Receives
Number of Number of
Of which: Number of payment
Number of shares shares Number of
Starting date Ending date number of stock options Reason for from
Name Office title Sex Age shares held at increased in decreased in shares held at
of office of office restricted held at change shareholder
period-begin reporting reporting period-end
shares held period-end units or other
period period
related units?
Increasing
Zheng shares in
Chairman Male 36.00 10 Sep. 2010 9 Sep. 2013 453,909.00 117,602.00 0.00 571,511.00 340,431.00 0.00 Yes
Kanghao secondary
market
Total -- -- -- -- -- 453,909.00 117,602.00 0.00 571,511.00 340,431.00 0.00 -- --
Equity incentives granted to directors, supervisors and senior management during the reporting period
□Applicable √Inapplicable
10
(II) Post-holding particulars
Post-holding in shareholders units
√Applicable □Inapplicable
Name of the
Position in
person holding Receives payment
the Beginning date Ending date of
any post in any Name of the shareholder unit from the shareholder
shareholder of office term office term
shareholder unit?
unit
unit
Zheng
Multi Profit Asia Pacific Director 2 Aug. 2010 No
Kanghao
Zhang Jianmin SDG Deputy GM 1 Jan. 1997 Yes
Chief of
Audit and
Zhang Xinliang SDG 2 Jun. 2008 Yes
Supervision
Dep.
Notes to
post-holding in
other
shareholding
units
Information of post-holding in other units
√Applicable □Inapplicable
Whether withdrawal
Name of Post taken in Starting date of Ending date of
Name of other unit remuneration in
employee other units post post
other units?
Zheng Shenzhen Wongtee Real Estate Group Co., Chairman
8 Aug. 2005 Yes
Kanghao Ltd. and president
Executive
Shenzhen Wongtee Real Estate
director and 9 Aug. 2004 Yes
Development Co., Ltd.
president
Shenzhen Wongtee Real Estate Group Co., Vice
Chen Yong 6 Jun. 2007 Yes
Ltd. president
Shenzhen Wongtee Real Estate Group Co., Vice
Deng Weijie 15 Sep. 2004 Yes
Ltd. president
Executive
Liu Xiaohong Shenzhen Wongtee Hotel Company 3 Feb. 2012 Yes
director
Executive
WONGTEE V Hotel Shenzhen 3 Feb. 2012 Yes
director
Shenzhen Rainbow Fine Chemical Industry Independent
Xie Ruxuan 18 Jan. 2007 Yes
Co., Ltd. director
Sun Changxing University of Science and Technology of Vice 18 Aug. 1996 Yes
11
China president,
director of
teaching and
research of
law, master‘s
tutor
Independent
Anhui Zhongding Sealing Parts Co., Ltd. 16 Dec. 2007 Yes
director
Independent
Wuhu Yaxia Automobile Co., Ltd. 28 Nov. 2009 Yes
director
Independent
ANHUI JINHE INDUSTRIAL CO., LTD. 28 Jun. 2010 Yes
director
Notes to
post-holding in
other units
(III) Remuneration for directors, supervisors and senior management
Decision-making
According to regulations of the Articles of Association, remuneration of directors, supervisors was
procedure for the
defined by shareholders‘ general meeting, remuneration of senior executives was defined by the Board
remuneration of directors,
of Directors. Senior Executives hold posts in the Company all withdraw remuneration from the
supervisors and senior
Company.
management
In accordance with Remuneration System of Directors, Supervisors and Senior Executives, the
Basis for determining the
Company undertook an appraisal system of ―remuneration is link up with work performance‖ to senior
remuneration of directors,
management. The Remuneration and Appraisal Committee under the Board of the Company conducted
supervisors and senior
appraisal to work performance of senior management, and decided remuneration with a basis on the
management
appraisal result.
Actual payment of the
remuneration of directors, Payment of the remuneration is paid by stage with accordance of Remuneration Management System
supervisors and senior and Performance Appraisal System of the Company.
management
(IV) Change of directors, supervisors and senior management
Name Position Way of change Date of change Reason for change
Ding Jian Deputy GM Left office 22 May 2012 Personal affairs
(V) Employees
Number of on-job employees 361.00
Number of retired employees for whom the Company shall bear
0.00
expenses
Function structure
Type of function Number of personnel
Production 135.00
12
Sale 18.00
Technical 131.00
Financial 26.00
Administration 51.00
Level of education
Level of education Number of personnel
Master 6.00
University 82.00
Junior college 96.00
High school and below 177.00
Notes about particulars of employee:
1. Management personnel refer to personnel takes posts of vice GM of Dept. or above;
2. Technicians refer to personnel of engineer, design, cost, audit, IT, law, labour or drivers etc.
3. Production personnel refer to public securities, cleaners, waiters and customer service of IA property clubs.
Section VI Report of the Board of Directors
(I) Management Discussion and Analysis
During the reporting period, the Company achieved operating revenues of RMB 33,927,324.83, up
423.39% from a year earlier; operating profits of RMB 62,008,494.68, representing a profit increase
of RMB 83,120,222.85 as compared with the same period of last year; net profits of RMB
62,635,024.36, representing a profit increase of RMB 83,291,298.07 on the year-on-year basis; and
net profits attributable to shareholders of the Company of RMB 67,663,758.14 represented a profit
increase of RMB 83,182,150.19.
In the 1st half of 2012, on the basis of annual operating plan, the Company put all the strength on
carrying forward the construction of Wongtee Plaza, and speeded up decoration projects and
business promotion. So far, the transformation of civil engineering and electromechanical
equipment has been basically accomplished. Due to the new amending requirements proposed by
Shenzhen Government for the design plan of the south elevation of the project, together with more
weathers of typhoon and thunderstorm in Shenzhen in the 2nd half year, the dates of project
completion and trial-operation are expected to be delayed as compared with the original plan.
However, the Company will try to start trial-operation before the end of 2012. At present, the
progress of business promotion can satisfy the demand of trial-operation, and the proportion of area
of confirmed commercial tenants (including circumstances of signed contracts and letters of intent,
as well as agreements to be signed after discussion) to the total rental area is expected to reach 80%
before the opening of operation. The detail date of opening will be confirmed regarding the progress
of business promotion and project decoration.
In the 1st half of 2012, the Company turned standing timbers covering 6,000 mu area into cash, and
timely updated sprouts in cut-over land where standing timbers had been cut and turned into cash.
With the tightening policy made by some local governments in northeastern Guangdong, the cash
13
realization from forests of the Company is restricted. The Company has now got a cut indicator for
7,000 mu.
In the 1st half of 2012, in order to liquidize assets, focus resources to get core projects of the
Company well done, strengthen main businesses of the Company, as well as solve the cash flow
problem of the Company, the Company and its owned subsidiaries respectively sold the equity of
Shenzhen International Enterprise Business Administration Co., Ltd. and Shenzhen Longgang
International Enterprise Co., Ltd. at a total price of RMB 120 million, which provided a certain
amount of cash flow for company operation.
In the 1st half of 2012, the owned subsidiary of the Company, Rongfa Company, borrowed RMB
1.2 billion from Ping An Trust, of which RMB 1 billion was used by the Company to return
previous loan from the bank and Bohai International Trust Co., Ltd., and RMB 0.2 billion was used
for decoration, business promotion, and preliminary promotion before the operation opening of
Wongtee Plaza.
In the 1st half of 2012, with the purpose of more precisely reflecting the values of investment
properties held by the Company, improving the accuracy of financial information of the Company,
and enabling the Company management and investors know about the real financial condition and
operating results of the Company in time, the Company altered preliminary research and planning
of accounting policies, and got the proposals about alteration of preliminary research and planning
of accounting policies approved by the Board and Shareholders General Meeting. The subsequent
measurement for investment properties of the Company would be changed from cost measurement
to fair value measurement from 1 Jan 2012. The aforesaid item would cause significant effect on
financial statements of the Company. For example, in 2012, Wongtee Plaza, the core project of the
Company, achieved the standard of fair value measurement. Based on the evaluation opinion of
property evaluation company, market value of the project as at 31 Mar 2012 could reach RMB 5.97
billion with the assumption of putting Wongtee International Enterprise Shopping Plaza into
operation; if the fluctuation between market value as at 31 Dec 2012 and market value as at 31 Mar
2012 is small, fair value measure measurement of the project at the end of the year is expected to
increase RMB 3.315 billion on net profit of Y2012 of the Company, and increase RMB 1.989
billion on net profit attributable to the parent company. (For details, please refer to related
announcements respectively published on 15 Jun 2012 and 3 Jul 2012 in www.cninfo.com.cn,
Securities Times, and Hong Kong Ta Kung Pao, as well as notes to financial reports of the Interim
Report.)
Whether the actual operating results of the Company is lower or higher than the profit estimation or
operation plan publically disclosed in the reporting period by 20%
□ Yes √ No □ Inapplicable
Operating status and results analysis of main subsidiaries and joint-stock companies of the
Company
(1) The registered capital of Shenzhen Rongfa Investment Co., Ltd. is USD 5 million, of which 60%
equity is owned by the Company. The company mainly engages in property development. In the
reporting period, the company owned total asset of RMB 1,630,418,815.96, and realized operating
revenue of RMB 27,196,978.00 and operating profit of RMB -9,572,445.51.
(2) The registered capital of Shenzhen International Enterprise Forestry Development Co., Ltd., the
wholly-owned subsidiary of Rongfa Company, the Company‘s subsidiary, is RMB 10 million. The
company mainly engages in forest planting projects. In the reporting period, the company owned
14
total asset of RMB 89,045,570.41, and realized operating revenue of RMB 0 and operating profit of
RMB -5,156,497.14.
(3) The registered capital of Shenzhen International Enterprise Property Management Co., Ltd. is
RMB 7 million, of which 61% equity is owned by the Company. The company mainly engages in
property management. In the reporting period, the company owned total asset of RMB
14,584,166.95, and realized operating revenue of RMB 6,696,746.83 and operating profit of RMB
747,688.93.
All risk factor possibly causing negative effects on the realization of future development strategy
and operating purpose of the Company:
(1) Risk of industry competitions: The area of shopping centers in Shenzhen will exceed 3 million
square meters by the end of 2012, and more than 10 commercial complexes will be put into market,
which will cause extremely fierce pattern for industry competition.
(2) Policy risk: In recent years, eucalyptus planting has been rapidly developed. However, due to
the unplanned early eucalyptus development, which lacked guidance from governments, local
original species were exceedingly suppressed and vegetation was reduced, causing some ecological
problems. Cities in Guangdong, such as Meizhou and Heyuan, have introduced local policies
restricting eucalyptus.
(3) Risk of rising cost of human resources: The Company can always face risks of lacking various
senior business administration management and other talents in transitional period. The shortage of
talents in commercial property may restrict the rapid development of the Company. The Company
will further strengthen the building of talent team and enterprise culture, and enrich the Company‘s
talent team by multi channels.
1. Main business and operating status of the Company
(1) Main business by industry and product
Unit: RMB Yuan
YoY YoY YoY
Operating Gross margin increase/decrease increase/decrease increase/decrease
By industry/product Operating cost
revenue (%) of operating of operating cost of gross margin
revenue (%) (%) (%)
By industry
Sales revenue of
27,156,978.00 29,083,411.56 -7.09%
properties
Property
6,696,746.83 4,734,753.18 29.3% 7.79% -20.6% 25.22%
management revenue
The reason for large YoY change of gross margin
Gross margin in property management largely increased, because the depreciation and property
taxes of parking lot of Gangyi Haoting, parking lot of International Enterprise building, and Gangyi
Haoting Club were included into operating cost in the same period of last year, and according to
audit opinion issued by the accounting firm at the end of last year, in the reporting period, the
aforesaid asset depreciation and property taxes were recorded under Rongfa Company, the owner of
15
those assets, decreasing operating cost as a result.
(2) Main businesses by region
Unit: RMB Yuan
YoY increase/decrease of operating
Region Operating revenue
revenue (%)
Shenzhen 33,853,724.83 463.72%
Explanation on main businesses by region
In the reporting period, there‘s no significant change in the market of the Company‘s main
businesses.
Explanation on structure of the Company‘s main businesses
In the reporting period, there‘s no significant change in cost structure of the Company‘s main
businesses.
(3) Reason for significant change in main businesses and structure thereof
□ Applicable √ Inapplicable
(4) Reason for significant YoY change in profitability (gross margin) of main businesses
□ Applicable √ Inapplicable
(5) Reason for significant YoY change of profit structure
√Applicable □Inapplicable
In the reporting period, the Company and its owned subsidiaries respectively sold the equity of
Shenzhen International Enterprise Business Administration Co., Ltd. and Shenzhen Longgang
International Enterprise Co., Ltd. at a total price of RMB 120 million, which brought large
investment profit.
(6) Business nature, main products, or service, or net profit of joint-stock companies holding
more than 10% net profit
□ Applicable √ Inapplicable
(7) Problems and difficulties in operation
(i) Wongtee Plaza, the Company‘s core project, has not been put into formal operation yet. At the
same time, there‘ll be more than 10 commercial complexes put into market in 2012, causing
extremely fierce industry competition pattern. (ii) Due to the lack of further processing of the
Company‘s forestry, no establishment of industry chain for processing and value adding, together
with the way of direct cash realization of forests, the additional value of forests are not high.
Meanwhile, local policies introduced by local departments of eucalyptus planting area to restrict
eucalyptus development would cause certain impact on eucalyptus planting, cutting, and cash
realization.
16
2. Internal control systems related to fair value measurement
√Applicable □Inapplicable
The Company intended to take fair value measure for investment properties from 1 Jan 2012. To
ensure accurate and effective execution of fair value measurement for investment properties, as well
as the coherence and accuracy of related accounting information, according to related rules,
including Accounting Standards for Business Enterprises No.3 – Investment Property and Articles
of Association issued by Ministry of Finance, the Company drafted Management Method of Fair
Value Measurement for Investment Properties of the Company with the combination of actuality of
the Company, and got it approved by the 5th Special Session in 2012 of the 6th Board. For details,
please refer to announcement No. 2012-33 published in designated information disclosure media,
including Securities Times and Hong Kong Ta Kung Pao, on 15 Jun 2012.
Items related to fair value measurement
Unit: RMB Yuan
Change of
Profit/loss from Impairment
Beginning of the accumulated fair
Item change of fair provision of the End of the period
period value recorded
value of the period period
into equity
Financial assets
Of which: 1
Financial assets
measured by fair
value and whose
change is recorded
into current
profit/loss
Of which:
derivative
financial assets
2 Financial
assets available for
sale
Subtotal of
financial assets
Financial liabilities
Investment
8,674,078.00 -149,546.00 8,524,532.00
properties
Productive
biological assets
Others
17
Total 8,674,078.00 -149,546.00 8,524,532.00
Is there significant difference between evaluated results when fair values of the same or similar
items were confirmed by evaluation technologies? If yes, please specify.
□ Yes √ No □ Inapplicable
3. Holding of financial assets and financial liabilities in foreign currency
□ Applicable √ Inapplicable
(II) Investment of the Company
1. Total usage of raised funds
□ Applicable √ Inapplicable
2. Promised projects for raised funds
□ Applicable √ Inapplicable
3. Change of projects for raised funds
□ Applicable √ Inapplicable
4. Significant projects without investment of raised funds
√ Applicable □ Inapplicable
Unit: RMB 10 thousand
Date of
Project
Project name initial Project progress Project profit
amount
disclosure
Wongtee International
155,000 Development period No profit so far
Enterprise Shopping Plaza
Total 155,000 -- --
Explanation on significant projects without investment of raised funds
(III) Amending plan for operation plan of the Board in the 2nd half year
√ Applicable □ Inapplicable
The Wongtee Plaza was originally planned to put into trial-operation in Aug 2012. Due to the new
amending requirements proposed by Shenzhen Government for the design plan of the south
elevation of the project, together with more weathers of typhoon and thunderstorm in Shenzhen in
the 2nd half year, the dates of project completion and trial-operation are expected to be delayed as
compared with the original plan. However, the Company will try to start trial-operation before the
end of 2012.
(IV) Estimation for operating result of Jan-Sep 2012
18
Warning and reason for estimation of loss or significant YoY change of accumulated net profit from
the beginning of the year to the end of next reporting period
□ Applicable √ Inapplicable
(V) Statement of the Board for Non-standard Audit Report issued by the accounting firm for
the reporting period
□ Applicable √ Inapplicable
(VI) Statement of the Board for change and handing of concerned items in Non-Standard
Audit Report issued by the accounting firm for last year
√Applicable □ Inapplicable
On 18 Apr 2012, China Audit International Certified Public Accountants LTD. issued audit report
with emphasized paragraphs for items and qualified opinion for Y2011. Statement of the Board for
change and handling of concerned items is listed below:
(1) Qualified item: Shops of staffs are classified as the Company‘s historical problems, which will
be positively processed by the Board. Management of the Company organized a focused tem to
positively communicate and process the issue with staffs who subscribed shops at that time. Besides,
the Company has sued to the court regarding the item of shop subscription by some staffs, and some
subscribers have sued Rongfa Company. (For details, please refer to VII (III) Significant Events of
Litigation and Arbitration)
(2) Emphasized item
Problems regarding sustainable operating capability of the Company:
①Operating condition of the Company will be substantially improved after the opening of Wongtee
Plaza.
②In Mar 2012, the Company borrowed a new loan of RMB 0.2 billion, which provided capital
guarantee for company operation and project construction. With the progress of the project, the
Company is expected to further increase financing and improve liability structure, so as to meet the
development need of the Company‘s core projects.
③In 2012, the Company would intensify the efforts of cash realization of forests, and has turned
standing timbers covering 6,000 mu area into cash.
④ In order to liquidize assets, the Company and its owned subsidiary, Rongfa Company,
respectively sold the equity of Shenzhen International Enterprise Business Administration Co., Ltd.
and Shenzhen Longgang International Enterprise Co., Ltd. at a total price of RMB 120 million,
which provided a certain amount of cash flow for company operation.
(VII) Statement of discussion result of the Board for reason and impact of change in
accounting policy and accounting estimation, as well as correction of significant accounting
errors
√ Applicable □ Inapplicable
At present, main businesses of the Company are development and operation of commercial
properties. Based on the actual situation of business operation of the Company, some properties of
the Company are rented out in the way of operating lease and belong to investment properties. With
the purpose of more precisely reflecting the values of investment properties held by the Company,
19
improving the accuracy of financial information of the Company, and enabling the Company
management and investors know about the real financial condition and operating results of the
Company in time, the 5th Special Session in 2012 of the 6th Board and the 3rd Special Shareholders
General Meeting in 2012 reviewed and approved the Proposal of Changing Subsequent
Measurement for Investment Properties of the Company from Cost Measurement to Fair Value
Measurement, deciding to change the subsequent measurement for investment properties of the
Company from cost measurement to fair value measurement from 1 Jan 2012.
According to related rules in Accounting Standards for Business Enterprises No.3 – Investment
Properties, the Company shall change the subsequent measurement for investment properties
concerned in the alteration of accounting policy from cost measurement to fair value measurement.
The alteration of measurement will change accounting indicators, such as owners‘ equity and net
profit, but will not cause actual cash flow, and won‘t have huge impact on the Company‘s actual
profitability. (For details, please refer to related announcements published in Securities Times, Ta
Kung Pao, and www.cninfo.com.cn on 15 Jun 2012 and 3 Jul 2012.)
(VIII) Formulation and execution of cash dividend policy of the Company
According to the Notice on Further Implementing Related Items of Cash Dividends of Listed
Companies (hereinafter referred to as the Notice) issued by China Securities Regulatory
Commission and the Notice on Seriously Carrying out and Implementing ―the Notice on Further
Implementing Related Items of Cash Dividends of Listed Companies‖ (SZJGS Zi No.〔2012〕43)
issued by Shenzhen Securities Regulatory Bureau, Shenzhen International Enterprise Co., Ltd.
(hereinafter referred to as the Company) conveyed the Notice and related document spirit to
controlling shareholders, actual controllers, directors, supervisors, and senior management of the
Company, and organized related personnel to learn it hard. For the sake of enhancing the
transparency of cash dividends of the Company, and concurrently taking care of reasonable return
for investors and long-term development of the Company , strengthening corporate governance
structure of the Company, and forming highly-efficient, timely, and accurate discussion and
decision mechanism, on 3 Aug 2012, the 7th Session of the 6th Board of the Company reviewed and
approved the Proposal on Return Plan for Shareholders of the Company for the Future Three Years
(2012-2014), and the Proposal on Amending Articles of Association. (For details, please refer to
announcements published on Securities Times, Hong Kong Ta Kung Pao, and www.cninfo.com.cn
on 4 Aug 2012.) Meanwhile, the Proposal on Amending Articles of Association was submitted on
21 Aug 2012, and was reviewed and approved by the 4rd Special Shareholders General Meeting in
2012. The new standards and proportion of cash dividends are specified and clear, the decision
procedures are legal, and the mechanism is complete. Independent directors have fully declared
their opinions. The Company has thoroughly protected legal interest of minority shareholders by
asking and taking advices from them on the phone.
(IX) Preplan of profit distribution or capitalization of capital reserve
□ Applicable √ Inapplicable
(X) No preplan of cash dividends is proposed when the accumulated undistributed profit of
the Company is positive as at the end of 2011
20
□ Applicable √ Inapplicable
(XI) Other disclosure items
(XII) Liabilities, change of credit standing, as well as cash arrangement in future years for
returning liabilities of the Company (The form is only used for and filled by listed companies
issuing convertible bonds)
□ Applicable √ Inapplicable
Section VII Significant Events
(I) Corporate governance
During the reporting period, the Company continuously improved corporate governance structure,
further improved operation of the Company, perfected internal control systems, and strengthened
information disclosure, positively developed investor relations management, and further realized
standardized operation according to requirements of the Company Law, Securities Law and relevant
laws and regulations. The Company continued to carry out the spirit of special events about
corporate governance required by CSRC and Shenzhen Stock Exchange. Shareholders General
Meeting, Board of Directors, and the Supervisory Committee can independently fulfill their own
duties according to related laws and regulations. As at the end of the reporting period, there‘re no
problems of horizontal competition and connected transaction caused by mechanism transformation,
industry feature, state policy, acquisition, or merger. There‘re no non-standard behavior of the
Company, such as providing un-disclosed information to major shareholders and actual controllers.
The actual governance of the Company basically complies with requirements of standardization
documents issued by CSRC for the governance of listed companies.
The Company proactively pushed forward the implementation of internal control norms.
According to the Basic Norms of Internal Control for Enterprises and its mating guidelines (hereinafter referred to
as ―internal control norms‖), the Guidelines for Standardized Operation of Companies Listed on the Main Board
promulgated by Shenzhen Stock Exchange, the Notice of CSRC Shenzhen Bureau on Doing a Good Job in Pilot
Implementation of Internal Control Norms in Listed Companies in Shenzhen (SZJGS Zi [2011] No. 31) and the
Notice of CSRC Shenzhen Bureau on Doing a Better Job in Implementation of Internal Control Norms in Listed
Companies in Shenzhen (SZJF [2012] No. 105), the Company proactively improved its internal control system;
adjusted, optimized and evaluated its internal control system with help from the internal control advisory agency;
and hired BDO China Shu Lun Pan Certified Public Accountants LLP as the internal control audit agency for
2012 and to produce an internal control audit report regarding the internal control effectiveness as at 31 Dec.
2012.
In the first half of 2012, based on the previous internal control improvements that had been made, the Company
proactively carried on the internal control improvement project mainly regarding the following aspects. According
to the Work Plan for Implementation of Internal Control Norms reviewed and approved by the Board of Directors
in a session, the Company completed the implementation of basic internal control norms and built up an internal
control system regarding financial reporting.
A. Internal control evaluation task groups were set up, which improved the leadership and evaluation execution of
internal control improvement.
21
The Company set up the Internal Control Guiding Committee headed by Chairman Mr. Zheng Kanghao as the
leading organ for the internal control improvement project and appointed the Department of Securities & Legal
Affairs, the Financial Department and the Audit Department to work with the committee. Under the leadership of
the committee, internal control evaluation groups were set up with the Audit Department as the group leader and
specific personnel designated by relevant departments. These groups worked as the routine operation organs for
internal control evaluation. In terms of internal control evaluation execution, according to the Company‘s Work
Plan for Implementing the Basic Norms for Internal Control of Listed Companies, these evaluation groups were
responsible for the specific implementation work regarding internal control evaluation, as well as evaluating fields
and units with high risk included in the evaluation scope.
B. The specific work regarding internal control improvement proceeded as scheduled.
1. The Company further improved the internal control system. Based on the internal control improvements that
had been made in 2011, according to the internal control norms, changes to the Company‘s actual situation and
problems found in execution of the internal control process and rules, the Company revised the relevant rules,
flowcharts and sheets; optimized the approval procedure; and formulated an internal control system for financial
reporting.
2. The self-evaluation on internal control for the first half of 2012 was completed. The Company formulated,
issued and executed the Notice on Conducting the First Internal Control Evaluation for 2012 to provide guidance
for the self-evaluation on internal control.
3. Trainings regarding internal control were enhanced for various personnel. The Company carried out trainings at
multiple tiers and in many ways, sending core personnel out for trainings and providing general trainings within
the Company, which created a favorable environment and basis for the in-depth execution of the internal control
norms.
4. The internal control supervision mechanism was also further perfected. The Company carried out thorough and
systematic tests on various management activities, rules and procedures so as to spot defects and risks. Strict,
normative and delicate management and appraisal was carried out from the control environment to specific
control activities. Development, execution and appraisal of the internal control system were improved. And the
running efficiency, the supervision mechanism and the risk prevention effect regarding the internal control system
were also improved. Legal operation, asset safety, factuality and completeness of financial reports and relevant
information of the Company were better safeguarded.
(II) Execution of plans of profit distribution, capitalization of capital reserve, and issuance of
new shares drafted in previous period and implemented during the reporting period
□ Applicable √ Inapplicable
22
(III) Significant events of litigation and arbitration
√ Applicable □ Inapplicable
Involved
Basic Trial result and Execution of Disclosure date
Party taking Type of amount (RMB Progress of No. of related
Prosecutor Respondent information of impact of verdict of of related
joint litigation and 10 thousand) of litigation provisional
(Apply) (Be applied) litigation litigation litigation provisional
responsibility arbitration litigation (arbitration) announcements
(arbitration) (arbitration) (arbitration) announcements
(arbitration)
For details, For details,
please refer to please refer to
The Company
Shenzhen Shenzhen specified specified
has appealed,
Zhongtie Rongfa Contract explanation for explanation for
Non and the case is
Property Co., Investment Co., dispute significant significant
the process of
Ltd. Ltd. events of events of
the second trial.
litigation and litigation and
arbitration. arbitration.
For details, For details, 7 Apr 2012 2012-14
please refer to please refer to
The Company
Shenzhen specified specified
Malaysia Foh has appealed,
International explanation for explanation for
Chong & Sons Non Equity dispute and the case is
Enterprise Co., significant significant 5 Aug 2011 2011-32
SDN.BHD. the process of
Ltd. events of events of
the second trial.
litigation and litigation and
arbitration. arbitration.
Shenzhen Dispute for For details, Under the For details, The Company
Shum Kong
International recovery of please refer to auspices of please refer to has received
Industry & Non 24 Apr 2010 2010-12
Enterprise Co., guaranteed specified Shenzhen specified RMB
Trade Co., Ltd.
Ltd. liabilities explanation for Intermediate explanation for 2,646,498.19
23
significant People's Court, significant of the account
events of the Company events of for selling the
litigation and made friendly litigation and sealed-up land
arbitration. negotiation arbitration. in Mar. 2012.
with other
creditors
sealing up the
land of Shum
Kong Industry
& Trade, and
reached an
agreement on
the account for
selling the
sealed-up land,
the Company
could receive
RMB
2,651,149.33
from it.
For details, For details, 22 Feb 2012 2012-07
please refer to please refer to
The Company
Shenzhen Shenzhen specified specified
has appealed,
Rongfa Yahaoyuan explanation for explanation for
Non Equity dispute and the case is
Investment Investment Co., significant significant 26 Oct 2011 2011-37
the process of
Co., Ltd. Ltd. events of events of
the second trial.
litigation and litigation and
arbitration. arbitration.
24
Rongfa
For details, Company For details,
please refer to received the please refer to
Dispute for
Shenzhen 3 people, specified paper of civil specified
subscription The Company
Rongfa including Chen explanation for judgment for explanation for
Non contract of intends to 5 Jul 2012 2012-44
Investment XX, Song XX, significant the 1st trial significant
commodity appeal.
Co., Ltd. and Li XX events of from Shenzhen events of
properties
litigation and Futian District litigation and
arbitration. People‘s Court arbitration.
in Jul 2012.
For details,
please refer to
Dispute for
Shenzhen specified
7 people, subscription
Rongfa explanation for In the process No result or
including Yang Non contract of 5 Jul 2012 2012-44
Investment Co., significant of the first trial impact so far
XX commodity
Ltd. events of
properties
litigation and
arbitration.
Liabilities accrued for litigation and arbitration are RMB 25.26 million.
Specified explanation for significant events of litigation and arbitration
(1) The case on contract dispute between Shenzhen Zhongtie Property Co., Ltd. (hereinafter referred as ―Zhongtie Property‖) and Shenzhen Rongfa
Investment Co., Ltd. (hereinafter called ―Rongfa Company‖):
Overview of the case: On 17 Feb. 2009, 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, it required to release the contract with Rongfa Company in
2010.
Zhongtie Property sued to Shenzhen Futian District People‘s Court on 15 Dec. 2010, appealing Rongfa Company to pay the penalty as RMB 5 million
25
and other losses as RMB 8,658,315.88.
Progress of the case: the Company received a Judgment Letter for the first instance from Shenzhen Futian District People‘s Court in Oct. 2011,
sentencing it to pay a penal sum of RMB 4 million to Zhongtie Property. And the Company has raised the appeal, which is under the trial for the
second instance.
(2) The case on equity transfer dispute between Malaysia Foh Chong & Sons SDN.BHD. (hereinafter referred as ―Foh Chong Company‖, which sued
the Company) and the Company:
Overview of the case: according to the statement of complaint from Foh Chong Company, 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: (i) sentencing the defendant to pay it the principal, interest and overdue penalty totaling RMB 37,077,645.55 to the plaintiff; (ii)
sentencing the defendant to undertake all the losses caused by non-fulfillment of its legal obligation and the RMB 37,077,645.55 costs as well as other
expenses related with the case.
Progress of the case: the Company received a Judgment Letter for the first instance from Shenzhen Intermediate People‘s Court at the end of Mar.
2012, sentencing the Company to pay the principal of RMB 20.6 million, interest and overdue penalty within 10 days since the judgment coming into
effect (the interest was based on the principal of RMB 20.6 million and at the loan interest rate of the People‘s Bank of China calculated from 1 Jun.
2001 to 31 Dec. 2009; and the overdue penalty was calculated by 0.3‰ of the total accounts payable per day from 1 Jan. 2010 to the payment date
decided by the judgment.) (For details, please refer to the Company‘s announcements about significant litigation published on www.cninfo.com.cn,
Securities Times, and Hong Kong Ta Kung Pao on 4 Apr 2012)
The Company has raised an appeal to the Higher People‘s Court of Guangdong Province for the case, which is under the trial for the second instance.
(3) The case on dispute for guarantee obligation recovery between the Company and Shum Kong Industry & Trade Co., Ltd. (hereinafter referred as
Shum Kong Industry & Trade):
Overview of the case: 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.
26
On 30 Dec. 2002, the Company 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 recover 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 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.
Progress of the case: Under the auspices of Shenzhen Intermediate People's Court, the Company made friendly negotiation with other creditors sealing
up the land of Shum Kong Industry & Trade, and reached an agreement on the account for selling the sealed-up land, the Company could receive RMB
2,651,149.33 from it. And the Company has received RMB 2,646,498.19 of the account for selling the sealed-up land (after deducting the paid
executive expenses) in Mar. 2012.
(4) The case on equity transfer dispute between Shenzhen Rongfa Investment Co., Ltd. and Shenzhen Yahaoyuan Investment Co., Ltd. (hereinafter
referred as ―Yahaoyuan‖):
Overview of the case: For the case of equity transfer dispute between Rongfa Company and Shenzhen Yahaoyuan Investment Co., Ltd., Rongfa Company sued
to Shenzhen Longgang People‘s Court in Oct. 2011.
Progress of the case: In Feb. 2012, Rongfa Company received the Civil Judgment Letter [(2011) SLFMEC Zi No. 4549] from Shenzhen Longgang
People‘s Court, and the court believed that the evidence provided by the plaintiff couldn‘t prove the land, which is agreed in the three contracts
between the plaintiff and the defendant, is the No. G10205-0267 land required to be returned the land use right to the plaintiff by the defendant.
Therefore, the plaintiff should undertake the negative result for vague agreement in the contract. The court judged for the first instance to reject the
appeal of the plaintiff. And the case‘s acceptance fee of RMB 171,800 should be undertaken by the plaintiff. (For details please refer to the
announcements on significant lawsuits disclosed in Securities Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn on 26 Oct. 2011 and 22
Feb. 2012 respectively).
The Company has raised an appeal for the case, which is under the trial for the second instance.
(5) The case on shop subscription from staffs
Overview of the case: To properly settle the event of internal subscription from staffs for shops in Wongtee International Enterprise Shopping Plaza
(For details about the event of internal subscription, please refer to X. Other significant events in the Notes to 2011 Annual Report of the Company.),
27
Rongfa Company sued 3 people, including Chen XX, Song XX, and Li XX, to Shenzhen Futian District People‘s Court in Aug. 2011.
Progress of the case: In Jul. 2012, Rongfa Company received a Civil Judgment Letter for the first instance from Shenzhen Futian District People‘s
Court regarding Shenzhen Rongfa Investment Co., Ltd.‘s separate prosecution for contract dispute on commodity properties subscription of 3 people
(including Chen XX, etc.).
The judgment result for the case in which Rongfa Company sued Chen XX and Li XX is listed below:
① The Paper of Internal Subscription signed by the plaintiff and defendants for Shops in IA Mall is legal and effective；② The fulfillment of
subscription paper signed by the plaintiff and defendants should be terminated; ③ Other claims from the plaintiff are rejected; ④ Other
counterclaims from the defendants are rejected.
The judgment result for the case in which Rongfa Company sued Song XX to confirm the internal subscription relation between the plaintiff and the
defendant as invalid is as the following: The claim from the plaintiff, Shenzhen Rongfa Investment Co., Ltd., is rejected.
The Company intended to raise an appeal.
In addition, Rongfa Company successively received the litigation documents, including the Notice of Responding to Action and the Notice of
Adducting Evidence, related to the case in which other 7 people (including Yang XX, etc.) sued Rongfa Company to Shenzhen Futian District People‘s
Court regarding the event of internal subscription of shops. They required the court to decree Rongfa Company to deliver shops to the plaintiffs
immediately and undertake the lawsuit charge. The aforesaid case is under the trial for the first instance. (For details, please refer to the Company‘s
announcements on significant litigation published on http://www.cninfo.com.cn, Securities Times, and Hong Kong Ta Kung Pao on 5 Jul. 2012)
28
(IV) Events related to bankruptcy reorganization
□ Applicable √ Inapplicable
(V) Holding equity of other listed companies and joint financial enterprises
1. Securities investment
□ Applicable √ Inapplicable
Explanation on securities investment
2. Holding equity of other listed companies
□Applicable √ Inapplicable
Explanation on holding equity of other listed companies
3. Holding equity of non-listed financial enterprises
□ Applicable √ Inapplicable
Explanation on holding equity of non-listed financial enterprises
4. Trading stocks of other listed companies
□ Applicable √ Inapplicable
Explanation on trading stocks of other listed companies
(VI) Assets transaction events
29
1. Purchase of assets
□ Applicable √ Inapplicable
Explanation on purchase of assets
2. Sale of assets
√ Applicable □ Inapplicable
Net profit
(RMB Ten Whether or Relationship
Ratio of the
thousand) Whether or not the between the
net profit
contributed not the creditor‘s transaction
Transaction Gain/loss on Pricing contributed Disclosure date of
by the asset Related-party ownership of right and party and the
Transaction price (RMB sale (RMB principle for to the listed the provisional
Asset sold Date of sale to the listed transaction or the asset liabilities Company
party Ten Ten the sale of company by initial
company not involved has involved (applicable
thousand) thousand) asset the asset sale announcement
from the been fully have been for
to the total
period-begin transferred fully related-party
profit (%)
to the date of transferred transactions)
sale
Total equity of
Shenzhen
International
Shenzhen
Enterprise
Leanju
Business May 11， Market
Property 12,000 -0.364 10,308.16 No Yes Yes 134.61% 20 Apr. 2012
Administration 2012 Pricing
Development
Co., Ltd. and
Co., Ltd.
equity owned
by Rongfa
Company in
30
Shenzhen
Longgang
International
Enterprise Co.,
Ltd.
Explanation on sale of asset
In order to liquidize assets, focus resources to get core projects of the Company well done, strengthen main businesses of the Company, as well as
solve the cash flow problem of the Company, on 11 May 2012, the Company convened the Annual Shareholders General Meeting of Y2011, which
reviewed and approved the Proposal on the Sale of Total Equity of Shenzhen International Enterprise Business Administration Co., Ltd. and Equity
Owned by Rongfa Company in Shenzhen Longgang International Enterprise Co., Ltd.
The Company and its owned subsidiary, Rongfa Company, have separately signed the Agreement of Equity Transfer with the equity transferee,
Shenzhen Leanju Property Development Co., Ltd. (hereinafter referred to as Leanju Company), transferring 100% equity owned by the Company in
Shenzhen International Enterprise Business Administration Co., Ltd. and 25% equity owned by Rongfa Company in Shenzhen Longgang International
Enterprise Co., Ltd. (hereinafter referred to as Longgang International Enterprise) with a total transfer amount of RMB 120 million.
As at the end of the reporting period, the Company and Rongfa Company had fully received a sum of RMB 109 million for equity transfer. Leanju
Company would pay the rest amount for equity transfer according to payment progress agreed in the Agreement of Equity Transfer.
31
3. Exchange of assets
□Applicable √Inapplicable
Notes to exchange of assets:
32
4. Business combination
□Applicable √Inapplicable
5. Progress of these events after the publication of the assets reorganization report or public notices on the
purchases or sales of assets, as well as the influences of these events on the operation results and financial
status of the Company in this reporting period
□Applicable √Inapplicable
(VII) Explanation on shareholding increase scheme during the reporting period proposed or
implemented by the principal shareholders and act-in-concert persons
□Applicable √Inapplicable
(VIII) Implementation situation and influence of equity incentive plan of the Company
□Applicable √Inapplicable
(IX) Significant related-party transactions
33
1. Related-party transactions relevant to routine operation
□Applicable √Inapplicable
2. Related-party transactions regarding purchase and sales of assets
□Applicable √Inapplicable
3. Significant related-party transitions with joint investments
□Applicable √Inapplicable
4. Significant credits and liabilities with related parties
√ Applicable □ Inapplicable
Non-operating credits and liabilities with related parties exist or not?
√ Yes □ No
Lending funds to related parties (RMB Ten Thousand) Borrowing funds from related parties (RMB Ten Thousand)
Interest
Related party Relationship Opening Amount Amount Closing Interest Interest Opening Amount Amount Closing Interest
expense
balance occurred repaid balance income expenses balance occurred repaid balance income
s
Non-operation
Legal Representative,
ZHENG KANGHAO Chairman of the 159.71 108.49
Board
Company under the
SHENZHEN WONGTEE REAL ESTATE
control of Mr. Zheng 2,198.98 1,100
GROUP CO., LTD.
Kanghao
34
Company under the
POWERLANDHOLDINGLIMITED control of Mr. Zheng 699.96 699.96
Kanghao
Subtotal 3,058.65 1,150.2 1,908.45
Operation
Company under the
SHENZHEN WONGTEE COMMERCIAL
control of Mr. Zheng 78.02 37.75 40.27
MANAGEMENT CO., LTD.
Kanghao
Company under the
SHENZHEN WONGTEE HOTEL CO.,
control of Mr. Zheng 25 25
LTD.
Kanghao
Subtotal 78.02 25 37.75 65.27
Total 78.02 25 37.75 65.27 3,058.65 1,150.2 1,908.45
Amount of lending funds to controlling shareholder and its
25
subsidiaries during the reporting period (RMB 0‘000)
Of which: non-operating amount (RMB 0‘000) 0
Balance of lending funds to controlling shareholder and its
65.27
subsidiaries during the reporting period (RMB 0‘000)
Of which: non-operating balance (RMB 0‘000) 0
Reason of forming the credits and liabilities with related parties Loan and interest; Rental deposit
Situation on clearing the credits and liabilities with related parties
Commitments relevant to the credits and liabilities with related
parties
Effects of the credits and liabilities with related parties on the
35
business results and financial situation of the Company
Capital occupation during the reporting period and debt-clearing progress
□Applicable √Inapplicable
The accountability plan put forward by the Board of Directors when the Company had not completed collecting the capital occupied for non-operating purposes by the end
of the reporting period
□Applicable √Inapplicable
36
5. Other significant related-party transactions
Due to the house lease contract on the 6/F, Huanggang Business Center, Futian District rented as the office of the
Company has been expired, the Company reviewed and approved the Proposal on the House Lease Contract
Planed to be Signed Between the Company and Shenzhen Wongtee Commercial Management Co., Ltd. at the 8th
Special Session of the 6th Board of Directors for Y2011. Then the Company signed a House Lease Contract with
Shenzhen Wongtee Commercial Management Co., Ltd. under the control of Mr. Zheng Kanghao, with a lease
term of three years.
At the same time, to facilitate our work carried out smoothly, the company subsidiary financial investment the
Huanggang business center 27 V2 room as a grand square business center for business, reception and Exhibition
center. Rental price of 180000 yuan / month.
The related transaction was based on the needs for the Company‘s self operation development, which is good for
the Company‘s long-term development. The rent was referred to the market price for the real estate leased around,
and executed the market pricing after negotiation by both parties, which existed no behaviors of using the
related-party relationship to harm the interest of the Company, and it was predicted that such related transactions
would continue. The above transaction wouldn‘t affect the Company‘s independence or cause reliance on the
related parties in terms of main business of the Company.
(X) Significant contracts and execution
1. The trust, contract and lease whose profits reaching more than 10% (including 10%) of the total profits
of the Company in the reporting period
(1) Status of trust
□Applicable √Inapplicable
(2)Particulars about contracting
□Applicable √Inapplicable
(3)Particulars about leasing
□Applicable √Inapplicable
2. Guarantees provided by the Company
√Applicable □Inapplicable
Unit: RMB Ten thousand
Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Guaranteed party Disclosure Amount for Actual Actual Type of Period of Executed Guarante
37
date of guarantee occurrence date guarantee guarantee guarantee or not e for a
relevant (date of amount related
announcem agreement) party or
ent not
Until the
date when
Sales guarantee for 20 Apr. Warranty the property
722.09 1 Dec. 1999 722.09 No No
Rongfa Company 2012 guarantee owners
finish the
loan
Until the
date when
Sales guarantee for 20 Apr. Warranty the property
610.12 1 May 2004 610.12 No No
Huizhou Rongfa 2012 guarantee owners
finish the
loan
Total external guarantee line Total actual occurred amount
approved during the reporting 0 of external guarantee during 0
period (A1) the reporting period (A2)
Total external guarantee line that Total actual external guarantee
has been approved at the end of 1,332.21 balance at the end of the 1,332.21
the reporting period (A3) reporting period (A4)
Guarantees provided by the Company for its subsidiaries
Disclosure Guarante
Actual
date of Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party relevant guarantee related
guarantee (date of guarantee guarantee or not
announcem amount party or
agreement)
ent not
Shenzhen Rongfa
4 Jun. 2011 120,000 2 Jul. 2011 49,000 Mortgage Ten years No No
Investment Co., Ltd.
Total guarantee line approved for Total actual occurred amount
the subsidiaries during the of guarantee for the
0 0
reporting period subsidiaries during the
(B1) reporting period (B2)
Total guarantee line that has been
Total actual guarantee balance
approved for the subsidiaries at
49,000 for the subsidiaries at the end 49,000
the end of the reporting period
of the reporting period (B4)
(B3)
Total guarantee amount provided by the Company (total of the above-mentioned two kinds of guarantees)
Total guarantee line approved Total actual occurred amount
0 0
during the reporting period of guarantee during the
38
(A1+B1) reporting period (A2+B2)
Total guarantee line that has been
Total actual guarantee balance
approved at the end of the
50,332.21 at the end of the reporting 50,332.21
reporting period
period (A4+B4)
(A3+B3)
Proportion of total guarantee amount (A4+B4) to the net assets
of the Company
Of which:
Amount of guarantee for shareholders, actual controller and
0
related parties (C)
Amount of debt guarantee provided for the guaranteed party
whose asset-liability ratio is not less than 70% directly or 50,332.21
indirectly (D)
Part of the amount of the total guarantee over 50% of net assets
0
(E)
Total amount of the above three guarantees (C+D+E) 50,332.21
Explanation on possible bearing joint responsibility of
liquidation due to immature guarantee
Explanation on provision of guarantees for external parties in
violation of the prescribed procedure
39
3. Entrusted financial management
□Applicable √Inapplicable
40
4. Execution of significant contracts relevant to routine operation
5. Other significant contracts
□Applicable √Inapplicable
(XI) Explanation on issuing corporate bonds
□Applicable √Inapplicable
(XII) Performance of commitments
1. Commitments made by the Company or shareholders holding over 5% of the Company’s
shares in the reporting period, or such commitments carried down into the reporting period
√Applicable □Inapplicable
Commitment Contents of Time of making Period of
Commitment Execution
maker commitment commitment commitment
Commitments concerning the share reform
The obligor for
information
disclosure shall
not reduce the
shares of Multi
Profit Asia
Pacific
Investment Ltd.
held the obligor Strictly fulfilled
Commitments made in the Acquisition
Zheng Kanghao from this 6 Aug. 2010 60 months the
Report or the Report on Equity Changes
acquisition or commitments
reduce the
shares of SZIEC
indirectly held
by the obligor
from this
acquisition
within the future
60 months,.
Commitments made in exchange of assets
Commitments made when issuing shares
Other commitments made for minority
shareholders of the Company
Executed timely or not? √ Yes □ No □ Inapplicable
Detailed reason for failing to execute and
the next plan
Make commitments on causing the
problems of horizontal competition and □ Yes √ No □ Inapplicable
related-party transactions or not?
Settlement period of commitment
Way of settlement
Execution of commitment
2. The Company’s assets or projects exist profitable prediction and the reporting period is in
such prediction period, it states the profits from the assets or projects reaching original
prediction and relevant reasons
□Applicable √Inapplicable
(XIII) Items of other comprehensive income
Unit: RMB Yuan
Items This reporting period Same period of last year
1. Profits/(losses) from available-for-sale financial assets
Less: Effects on income tax generating from available-for-sale
financial assets
Net amount transferred into profit and loss in the current period that
recognized into other comprehensive income in prior period
Subtotal
2. Interests in the investee entities‘ other comprehensive income as per
equity method
Less: Effects on income tax generating from the interests in the
investee entities‘ other comprehensive income as per equity method
Net amount transferred into profit and loss in the current period that
recognized into other comprehensive income in prior period
Subtotal
3. Profits/(losses) from cash flow hedging instrument
Less: Effects on income tax generating from cash flow hedging
instrument
Net amount transferred into profit and loss in the current period that
recognized into other comprehensive income in prior period
The adjustment value that is the converted initial recognition amount of
arbitrage project
Subtotal
4. Converted amount of foreign currency financial statements
Less: Net value of disposal of oversea operations that recognized into
1
current profit and loss
Subtotal
5. Other
Less: Effects on income tax generating from the others that included
into other comprehensive income
Net amount transferred into profit and loss in the current period that
recognized into other comprehensive income in prior period
Subtotal
Total 0 0
(XIV) Particulars about researches, visits and interviews received in this reporting
period
Main discussion and
Time of reception Place of reception Way of reception Visitor type Visitor materials provided by the
Company
6/F, Huanggang The Company‘s operation
4 May 2012 Field research Individual Shareholder
Business Center and project progress
6/F, Huanggang The Company‘s operation
25 May 2012 Field research Individual Shareholder
Business Center and project progress
6/F, Huanggang The Company‘s operation
20 Jun. 2012 Field research Individual Shareholder
Business Center and project progress
(XV) Particulars about engagement and disengagement of CPAs firm
Has this semi-annual report been audited?
□Yes √ No □ Inapplicable
Whether changed to engage the CPAs firm?
√Yes □ No □ Inapplicable
CPAs firm engaged for now
Name of domestic CPAs firm BDO China Shu Lun Pan Certified Public Accountants LLP
Remuneration for domestic CPAs firm (RMB 0‘000) 90
Consecutive years of audit service provided by
domestic CPAs firm
Name of registered accounts of domestic CPAs firm
Name of overseas CPAs firm
Remuneration of overseas CPAs firm (RMB 0‘000)
Consecutive years of audit service provided by
overseas CPAs firm
Name of registered accountants of overseas CPAs
2
firm
The original CPAs firm
Name of domestic CPAs firm China Audit International Certified Public Accountants Ltd.
Remuneration for domestic CPAs firm (RMB 0‘000) 72
Consecutive years of audit service provided by
One year
domestic CPAs firm
Name of registered accounts of domestic CPAs firm Xie Jun and Ding Weiping
Name of overseas CPAs firm
Remuneration of overseas CPAs firm (RMB 0‘000)
Consecutive years of audit service provided by
overseas CPAs firm
Name of registered accountants of overseas CPAs
firm
Change to engage the CPAs firm during the audit period or not?
□ Yes √ No □ Inapplicable
Execute the approval procedures upon changing the CPAs firm or not?
√ Yes □ No □Inapplicable
Notes of engagement and disengagement of CPAs firm:
In light that the contract between the Company and China Audit International Certified Public
Accountants Ltd. has been expired, the Company no longer engaged it as the Company‘s financial
audit agency after friendly negotiation. In accordance with Articles of Association and Rules for the
Implementation of Audit Committee as well as other regulations, the Audit Committee under the
Board proposed to engage BDO China Shu Lun Pan Certified Public Accountants LLP as the
Company‘s financial audit agency for 2012, with a term of one year and an audit fee of RMB
900,000
The Proposal on Changing to Engage the CPAs Firm was reviewed and approved at the 6th Special
Session of the 6th Board of Directors for 2012 and the 4th Special Shareholders‘ General Meeting for
2012. (For details, please refer to relevant public notice disclosed in Securities Times, Ta Kung Pao
(HK) and http://www.cninfo.com.cn on 22 Jun. 2012 and 22 Aug. 2012 respectively)
(XVI) Particulars about punishment and rectification order received by the
Company, its directors, supervisors, senior executives, shareholders, actual
controller and acquirer
□Applicable √Inapplicable
(XVII) Explanation on other significant events
√Applicable □Inapplicable
(XVIII) Particulars about significant changes in the profitability, asset status and
3
credit status of the Company’s convertible bonds guarantor
(Only listed companies which issue convertible corporate bonds are required to fill the form below.)
□Applicable √Inapplicable
(XIX) Index for information disclosure
Internet website for disclosing
Newspapers for disclosing
Event Publishing date information and the searching
information and relevant page
approach
Announcement on Resolutions
Made at the 1st Special Session
Securities Times and Ta Kung
of the 6th Board of Directors for 18 Jan. 2012 http://www.cninfo.com.cn/
Pao
2012 of Shenzhen International
Enterprise Co., Ltd.
Announcement on Approving
Rongfa Company to Gain
Loans from Ping An Trust Co.,
Securities Times and Ta Kung
Ltd. and Financial Institutions 18 Jan. 2012 http://www.cninfo.com.cn/
Pao
by the Six Board of Directors
of Shenzhen International
Enterprise Co., Ltd.
Notice on Convening the First
Special Shareholders‘ General
Meeting for 2012 by the Six Securities Times and Ta Kung
18 Jan. 2012 http://www.cninfo.com.cn/
Board of Directors of Shenzhen Pao
International Enterprise Co.,
Ltd.
2011 Annual Earnings Forecast
Securities Times and Ta Kung
of Shenzhen International 19 Jan. 2012 http://www.cninfo.com.cn/
Pao
Enterprise Co., Ltd.
Suggestive Notice on
Convening the First Special
Shareholders‘ General Meeting
Securities Times and Ta Kung
for 2012 by the Six Board of 7 Feb. 2012 http://www.cninfo.com.cn/
Pao
Directors of Shenzhen
International Enterprise Co.,
Ltd.
Announcement on Resolutions
Made at the First Special
Securities Times and Ta Kung
Shareholders‘ General Meeting 15 Feb. 2012 http://www.cninfo.com.cn/
Pao
for 2012 by the Six Board of
Directors of Shenzhen
4
International Enterprise Co.,
Ltd.
Announcement on Progress of
Significant Litigations of Securities Times and Ta Kung
22 Feb. 2012 http://www.cninfo.com.cn/
Shenzhen International Pao
Enterprise Co., Ltd.
Announcement on Resolutions
Made at the Second Special
Session of the Six Board of Securities Times and Ta Kung
8 Mar. 2012 http://www.cninfo.com.cn/
Directors for 2012 of Shenzhen Pao
International Enterprise Co.,
Ltd.
Announcement on Rongfa
Company Gaining Loans from
Financial Institutions & Project Securities Times and Ta Kung
8 Mar. 2012 http://www.cninfo.com.cn/
Progress of Shenzhen Pao
International Enterprise Co.,
Ltd.
Notice on Convening the
Second Special Shareholders‘
General Meeting for 2012 by Securities Times and Ta Kung
8 Mar. 2012 http://www.cninfo.com.cn/
the Six Board of Directors of Pao
Shenzhen International
Enterprise Co., Ltd.
Announcement on
Shareholding Increase by
Securities Times and Ta Kung
Shareholders of Shenzhen 13 Mar. 2012 http://www.cninfo.com.cn/
Pao
International Enterprise Co.,
Ltd.
Suggestive Announcement on
Shareholding Decrease by
Securities Times and Ta Kung
Shareholders of Shenzhen 22 Mar. 2012 http://www.cninfo.com.cn/
Pao
International Enterprise Co.,
Ltd.
Announcement on Resolutions
Made at the Second Special
Shareholders‘ General Meeting
Securities Times and Ta Kung
for 2012 by the Six Board of 24 Mar. 2012 http://www.cninfo.com.cn/
Pao
Directors of Shenzhen
International Enterprise Co.,
Ltd.
Announcement on Progress of Securities Times and Ta Kung 7 Apr. 2012 http://www.cninfo.com.cn/
5
Significant Litigations of Pao
Shenzhen International
Enterprise Co., Ltd.
Announcement on Progress of
Rongfa Company Gaining
Loans from Financial Securities Times and Ta Kung
7 Apr. 2012 http://www.cninfo.com.cn/
Institutions of Shenzhen Pao
International Enterprise Co.,
Ltd.
2011 Annual Preliminary
Earnings Estimates of Securities Times and Ta Kung
14 Apr. 2012 http://www.cninfo.com.cn/
Shenzhen International Pao
Enterprise Co., Ltd.
Earnings Forecast for the First
Quarter of 2012 of Shenzhen Securities Times and Ta Kung
14 Apr. 2012 http://www.cninfo.com.cn/
International Enterprise Co., Pao
Ltd.
Announcement on Resolutions
Made at the Third Special
Session of the Six Board of Securities Times and Ta Kung
20 Apr. 2012 http://www.cninfo.com.cn/
Directors for 2012 of Shenzhen Pao
International Enterprise Co.,
Ltd.
Announcement on Resolutions
Made at the First Special
Session of the Six Supervisory Securities Times and Ta Kung
20 Apr. 2012 http://www.cninfo.com.cn/
Committee for 2012 of Pao
Shenzhen International
Enterprise Co., Ltd.
Announcement on Selling the
Whole Equities of Business
Company and Rongfa
Company Selling Its Equities Securities Times and Ta Kung
20 Apr. 2012 http://www.cninfo.com.cn/
Held in Shenzhen International Pao
Enterprise (Longgang) Co.,
Ltd. for Shenzhen International
Enterprise Co., Ltd.
Notice on Convening the 2011
Annual Shareholders‘ General
Securities Times and Ta Kung
Meeting by the Six Board of 20 Apr. 2012 http://www.cninfo.com.cn/
Pao
Directors of Shenzhen
International Enterprise Co.,
6
Ltd.
Announcement on Delisting
Risks Alarm for Shenzhen Securities Times and Ta Kung
20 Apr. 2012 http://www.cninfo.com.cn/
International Enterprise Co., Pao
Ltd.
Summary of the 2011 Annual
Report of Shenzhen Securities Times and Ta Kung
20 Apr. 2012 http://www.cninfo.com.cn/
International Enterprise Co., Pao
Ltd.
Summary of the First Quarterly
Report for 2012 of Shenzhen Securities Times and Ta Kung
20 Apr. 2012 http://www.cninfo.com.cn/
International Enterprise Co., Pao
Ltd.
Announcement on Correction
of Accounting Errors of Securities Times and Ta Kung
20 Apr. 2012 http://www.cninfo.com.cn/
Shenzhen International Pao
Enterprise Co., Ltd.
Announcement on Abnormal
Fluctuations in Stock Trading Securities Times and Ta Kung
3 May 2012 http://www.cninfo.com.cn/
of Shenzhen International Pao
Enterprise Co., Ltd.
Announcement on Resolutions
Made the 4th Special Session of
Securities Times and Ta Kung
the 6th Board of Directors for 11 May 2012 http://www.cninfo.com.cn/
Pao
2012 of Shenzhen International
Enterprise Co., Ltd.
Announcement on Resolutions
Made at the 2011 Annual
Securities Times and Ta Kung
Shareholders‘ General Meeting 12 May 2012 http://www.cninfo.com.cn/
Pao
of Shenzhen International
Enterprise Co., Ltd.
Announcement on Resignation
of Vice GM of Shenzhen Securities Times and Ta Kung
22 May 2012 http://www.cninfo.com.cn/
International Enterprise Co., Pao
Ltd.
Announcement on Correction
in Periodical Report of Securities Times and Ta Kung
26 May 2012 http://www.cninfo.com.cn/
Shenzhen International Pao
Enterprise Co., Ltd.
Announcement on Progress of Securities Times and Ta Kung
1 Jun. 2012 http://www.cninfo.com.cn/
Selling the Whole Equities of Pao
7
Business Company and Rongfa
Company Selling Its Equities
Held in Shenzhen International
Enterprise (Longgang) Co.,
Ltd.
Announcement on Trading
Securities Times and Ta Kung
Suspension Due to Significant 7 Jun. 2012 http://www.cninfo.com.cn/
Pao
Events
Suggestive Announcement of
Securities Times and Ta Kung
Shenzhen International 13 Jun. 2012 http://www.cninfo.com.cn/
Pao
Enterprise Co., Ltd.
Announcement on Resolutions
Made at the 5th Special Session
Securities Times and Ta Kung
of the 6th Board of Directors for 15 Jun. 2012 http://www.cninfo.com.cn/
Pao
2012 of Shenzhen International
Enterprise Co., Ltd.
Announcement on Resolutions
Made at the Second Special
Session of the Six Supervisory Securities Times and Ta Kung
15 Jun. 2012 http://www.cninfo.com.cn/
Committee for 2012 of Pao
Shenzhen International
Enterprise Co., Ltd.
Notice on Convening the Third
Special Shareholders‘ General
Securities Times and Ta Kung
Meeting for 2012 of Shenzhen 15 Jun. 2012 http://www.cninfo.com.cn/
Pao
International Enterprise Co.,
Ltd.
Announcement on Changes in
Accounting Policies of Securities Times and Ta Kung
15 Jun. 2012 http://www.cninfo.com.cn/
Shenzhen International Pao
Enterprise Co., Ltd.
Announcement on Trading
Suspension of Shenzhen Securities Times and Ta Kung
20 Jun. 2012 http://www.cninfo.com.cn/
International Enterprise Co., Pao
Ltd.
Announcement on Abnormal
Fluctuations in Stock Trading Securities Times and Ta Kung
21 Jun. 2012 http://www.cninfo.com.cn/
of Shenzhen International Pao
Enterprise Co., Ltd.
Announcement on Resolutions
Securities Times and Ta Kung
Made at the 6th Special Session 22 Jun. 2012 http://www.cninfo.com.cn/
Pao
th
of the 6 Board of Directors for
8
2012 of Shenzhen International
Enterprise Co., Ltd.
Announcement on Changing to
Engage the CPAs Firm of Securities Times and Ta Kung
22 Jun. 2012 http://www.cninfo.com.cn/
Shenzhen International Pao
Enterprise Co., Ltd.
Suggestive Notice on
Convening the Third Special
Shareholders‘ General Meeting Securities Times and Ta Kung
22 Jun. 2012 http://www.cninfo.com.cn/
for 2012 of Shenzhen Pao
International Enterprise Co.,
Ltd.
Announcement on Corrections
in Notice on Convening the
Third Special Shareholders‘ Securities Times and Ta Kung
22 Jun. 2012 http://www.cninfo.com.cn/
General Meeting for 2012 of Pao
Shenzhen International
Enterprise Co., Ltd.
VIII. Financial Report
(I)Audit opinion
Has this semi-annual report been audited?
√ Yes □ No □ Inapplicable
(II)Financial statements
Consolidated statements or not?
√ Yes □ No □ Inapplicable
The monetary unit in the financial statements of the financial report is RMB Yuan if not specified
otherwise.
Monetary unit of notes to financial statements: RMB Yuan
1. Consolidated balance sheet
Prepared by Shenzhen International Enterprise Co., Ltd.
Unit: RMB Yuan
Item Note 30 Jun. 2012 31 Dec. 2011
Current Assets:
Monetary funds 124,655,446.69 19,989,682.85
Settlement reserves
9
Intra-group lendings
Transactional financial assets
Notes receivable
Accounts receivable 21,509,528.20 515,018.36
Accounts paid in advance 22,943,278.12 16,772,527.40
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract
reserves
Interest receivable
Dividend receivable
Other accounts receivable 4,428,723.68 6,160,436.94
Financial assets purchased under
agreements to resell
Inventories 1,469,856,794.69 1,405,632,415.91
Non-current assets due within 1
year
Other current assets 1,050,000.00
Total current assets 1,643,393,771.38 1,450,120,081.46
Non-current assets:
Loans by mandate and advances
granted
Available-for-sale financial assets
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 5,699,905.49 5,699,905.49
Investing property 8,524,532.00 8,674,078.00
Fixed assets 51,359,230.73 52,552,621.28
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 97,633.20 25,413,328.71
R&D expense
10
Goodwill
Long-term deferred expenses 2,702,319.57 2,877,833.34
Deferred income tax assets
Other non-current assets
Total of non-current assets 68,383,620.99 95,217,766.82
Total assets 1,711,777,392.37 1,545,337,848.28
Current liabilities:
Short-term borrowings
Borrowings from Central Bank
Customer bank deposits and due
to banks and other financial
institutions
Intra-group borrowings
Transactional financial liabilities
Notes payable 0.00 0.00
Accounts payable 20,654,562.23 76,992,945.52
Accounts received in advance 9,045,080.51 1,243,980.07
Financial assets sold for
repurchase
Handling charges and
commissions payable
Employee‘s compensation
3,216,768.71 9,635,793.00
payable
Tax payable 3,869,926.44 5,384,922.31
Interest payable 4,351,444.44 3,640,635.05
Dividend payable 5,127,701.36 5,127,701.36
Other accounts payable 160,961,513.06 174,760,938.23
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of
securities
Payables for acting underwriting
of securities
Non-current liabilities due within
13,000,000.00 314,000,000.00
1 year
Other current liabilities
11
Total current liabilities 220,226,996.75 590,786,915.54
Non-current liabilities:
Long-term borrowings 1,709,670,000.00 1,228,850,000.00
Bonds payable
Long-term payables
Specific payables
Estimated liabilities 86,817,813.72 86,813,170.64
Deferred income tax liabilities 1,861,187.29 1,894,118.92
Other non-current liabilities 148,725.29 148,725.29
Total non-current liabilities 1,798,497,726.30 1,317,706,014.85
Total liabilities 2,018,724,723.05 1,908,492,930.39
Owners‘ equity (or shareholders‘
equity)
Paid-up capital (or share capital) 220,901,184.00 220,901,184.00
Capital reserves 65,888,074.13 72,315,347.06
Less: Treasury stock
Specific reserves
Surplus reserves 125,929,834.48 125,929,834.48
Provisions for general risks
Retained profits -430,598,116.73 -498,261,874.87
Foreign exchange difference
Total equity attributable to owners
-17,879,024.12 -79,115,509.33
of the Company
Minority interests -289,068,306.56 -284,039,572.78
Total owners‘ (or shareholders‘)
-306,947,330.68 -363,155,082.11
equity
Total liabilities and owners‘ (or
1,711,777,392.37 1,545,337,848.28
shareholders‘) equity
Legal representative: Zheng Kanghao Person-in-charge of the accounting work:
Chen Xiaohai
Chief of the accounting division: Xu Xiaoyun
2. Balance sheet of the Company
Unit: RMB Yuan
Item Note 30 Jun. 2012 31 Dec. 2011
12
Current Assets:
Monetary funds 266,860.58 119,729.05
Transactional financial assets
Notes receivable
Accounts receivable 18,000,000.00
Accounts paid in advance
Interest receivable
Dividend receivable
Other accounts receivable 107,526,427.88 44,463,138.71
Inventories
Non-current assets due within 1
year
Other current assets
Total current assets 125,793,288.46 44,582,867.76
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 43,646,623.59 65,073,896.52
Investing property 6,740,865.00 6,885,080.00
Fixed assets 4,875,611.29 5,524,253.95
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 657,333.34 657,333.34
Deferred income tax assets
Other non-current assets
Total of non-current assets 55,920,433.22 78,140,563.81
Total assets 181,713,721.68 122,723,431.57
Current liabilities:
13
Short-term borrowings
Transactional financial liabilities
Notes payable
Accounts payable
Accounts received in advance 60,000.00 60,000.00
Employee‘s compensation
1,507,522.08 4,945,706.86
payable
Tax payable 4,223,818.63 4,227,138.69
Interest payable
Dividend payable 5,127,701.36 5,127,701.36
Other accounts payable 55,654,658.96 62,152,881.86
Non-current liabilities due within
1 year
Other current liabilities
Total current liabilities 66,573,701.03 76,513,428.77
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Specific payables
Estimated liabilities 18,387,017.96 18,387,017.96
Deferred income tax liabilities 1,488,210.67 1,521,658.94
Other non-current liabilities
Total non-current liabilities 19,875,228.63 19,908,676.90
Total liabilities 86,448,929.66 96,422,105.67
Owners‘ equity (or shareholders‘
equity)
Paid-up capital (or share capital) 220,901,184.00 220,901,184.00
Capital reserves 58,524,171.66 64,951,444.59
Less: Treasury stock
Specific reserves
Surplus reserves 96,841,026.39 96,841,026.39
Provision for general risks
Retained profits -281,001,590.03 -356,392,329.08
Foreign exchange difference
14
Total owners‘ (or shareholders‘)
95,264,792.02 26,301,325.90
equity
Total liabilities and owners‘ (or
181,713,721.68 122,723,431.57
shareholders‘) equity
3. Consolidated income statement
Unit: RMB Yuan
Item Note Jan.-Jun. 2012 Jan.-Jun. 2011
I. Total operating revenues 33,927,324.83 6,482,200.61
Including: Sales income 33,927,324.83 6,482,200.61
Interest income
Premium income
Handling charge and
commission income
II. Total operating cost 74,850,893.28 27,593,928.78
Including: Cost of sales 33,945,931.43 6,816,911.34
Interest expenses
Handling charge and
commission expenses
Surrenders
Net claims paid
Net amount withdrawn for
the insurance contract reserve
Expenditure on policy
dividends
Reinsurance premium
Taxes and associate charges 1,860,002.40 380,097.83
Selling and distribution
11,602,352.79
expenses
Administrative expenses 18,333,324.64 15,116,490.87
Financial expenses 8,864,069.65 5,142,446.26
Asset impairment loss 245,212.37 137,982.48
Add: Gain/(loss) from change in fair
-149,546.00
value (―-‖ means loss)
Gain/(loss) from investment
103,081,609.13
(―-‖ means loss)
15
Including: share of profits in
associates and joint ventures
Foreign exchange gains (―-‖ means
loss)
III. Business profit (―-‖ means loss) 62,008,494.68 -21,111,728.17
Add: non-operating income 1,480,534.58 504,910.00
Less: non-operating expense 886,936.53 49,455.54
Including: loss from non-current
877,995.93
asset disposal
IV. Total profit (―-‖ means loss) 62,602,092.73 -20,656,273.71
Less: Income tax expense -32,931.63
V. Net profit (―-‖ means loss) 62,635,024.36 -20,656,273.71
Including: Net profit achieved
by combined parties before the
combinations
Attributable to owners of the
67,663,758.14 -15,518,392.05
Company
Minority shareholders‘ income -5,028,733.78 -5,137,881.66
VI. Earnings per share -- --
(I) Basic earnings per share 0.306 -0.07
(II) Diluted earnings per share 0.306 -0.07
Ⅶ. Other comprehensive incomes
Ⅷ. Total comprehensive incomes 62,635,024.36 -20,656,273.71
Attributable to owners of the
67,663,758.14 -15,518,392.05
Company
Attributable to minority
-5,028,733.78 -5,137,881.66
shareholders
Where business mergers under the same control occurred in this report period, the net profit achieved by the merged
parties before the business mergers was RMB .
Legal representative: Zheng Kanghao Person-in-charge of the accounting
work: Chen Xiaohai
Chief of the accounting division: Xu Xiaoyun
4. Income statement of the Company
Unit: RMB Yuan
Item Note Jan.-Jun. 2012 Jan.-Jun. 2011
16
I. Total sales 33,600.00 34,271.10
Less: cost of sales 0.00 8,345.70
Business taxes and surcharges 1,884.96 1,851.36
Distribution expenses
Administrative expenses 9,223,416.11 7,523,918.78
Financial costs -12,533,330.39 -10,353,542.25
Impairment loss 1,962,127.61 12,508,247.20
Add: gain/(loss) from change in fair
-144,215.00
value (―-‖ means loss)
Gain/(loss) from investment (―-‖
75,000,000.00
means loss)
Including: income form investment
on associates and joint ventures
II. Business profit (―-‖ means loss) 76,235,286.71 -9,654,549.69
Add: non-business income 3,650.00
Less: non-business expense 877,995.93 5,883.88
Including: loss from non-current
asset disposal
III. Total profit (―-‖ means loss) 75,357,290.78 -9,656,783.57
Less: income tax expense -33,448.27
IV. Net profit (―-‖ means loss) 75,390,739.05 -9,656,783.57
V. Earnings per share -- --
(I) Basic earnings per share
(II) Diluted earnings per share
VI. Other comprehensive income
VII. Total comprehensive income 75,390,739.05 -9,656,783.57
5. Consolidated cash flow statement
Unit: RMB Yuan
Item Jan.-Jun. 2012 Jan.-Jun. 2011
I. Cash flows from operating activities:
Cash received from sale of
38,961,808.12 11,046,772.54
commodities and rendering of service
Net increase of deposits from
customers and dues from banks
Net increase of loans from the central
17
bank
Net increase of funds borrowed from
other financial institutions
Cash received from premium of
original insurance contracts
Net cash received from reinsurance
business
Net increase of deposits of policy
holders and investment fund
Net increase of disposal of tradable
financial assets
Cash received from interest, handling
charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
Tax refunds received
Other cash received relating to
96,120,915.55 30,447,863.13
operating activities
Subtotal of cash inflows from operating
135,082,723.67 41,494,635.67
activities
Cash paid for goods and services 95,029,835.42 74,059,575.03
Net increase of customer lendings
and advances
Net increase of funds deposited in the
central bank and amount due from
banks
Cash for paying claims of the original
insurance contracts
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 29,303,899.64 12,803,130.49
Various taxes paid 4,894,102.10 2,193,105.67
Other cash payment relating to
97,785,964.49 22,053,024.28
operating activities
Subtotal of cash outflows from 227,013,801.65 111,108,835.47
18
operating activities
Net cash flows from operating activities -91,931,077.98 -69,614,199.80
II. Cash flows from investing activities:
Cash received from withdrawal of
investments
Cash received from return on
investments
Net cash received from disposal of
fixed assets, intangible assets and other 2,350.00
long-term assets
Net cash received from disposal of
99,000,000.00
subsidiaries or other business units
Other cash received relating to
411.00
investing activities
Subtotal of cash inflows from
99,000,000.00 2,761.00
investing activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 682,004.02 1,341,213.58
assets
Cash paid for investment 8,000,000.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries
7,200,000.00
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
15,882,004.02 1,341,213.58
investing activities
Net cash flows from investing activities 83,117,995.98 -1,338,452.58
III. Cash Flows from Financing
Activities:
Cash received from capital
8,000,000.00
contributions
Including: Cash received from
minority shareholder investments by
subsidiaries
Cash received from borrowings 1,200,000,000.00 2,222,000,000.00
Cash received from issuance of
bonds
19
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
1,208,000,000.00 2,222,000,000.00
activities
Repayment of borrowings 1,027,344,776.57 2,056,349,444.44
Cash paid for interest expenses and
59,422,210.92 70,546,890.32
distribution of dividends or profit
Including: dividends or profit paid
by subsidiaries to minority shareholders
Other cash payments relating to
7,754,166.67 6,526,710.00
financing activities
Sub-total of cash outflows from
1,094,521,154.16 2,133,423,044.76
financing activities
Net cash flows from financing activities 113,478,845.84 88,576,955.24
IV. Effect of foreign exchange rate
0.00 -916.69
changes on cash and cash equivalents
V. Net increase in cash and cash
104,665,763.84 17,623,386.17
equivalents
Add: Opening balance of cash and
19,989,682.85 153,356,391.84
cash equivalents
VI. Closing balance of cash and cash
124,655,446.69 170,979,778.01
equivalents
6. Cash flow statement of the Company
Unit: RMB Yuan
Item Jan.-Jun. 2012 Jan.-Jun. 2011
I. Cash flows from operating activities:
Cash received from sale of
commodities and rendering of service
Tax refunds received
Other cash received relating to
28,923,233.77 26,913,139.76
operating activities
Subtotal of cash inflows from operating
28,923,233.77 26,913,139.76
activities
Cash paid for goods and services
Cash paid to and for employees 7,721,957.67 4,540,865.14
Various taxes paid 1,257,451.76 723,193.79
20
Other cash payment relating to
86,752,680.31 21,022,072.23
operating activities
Subtotal of cash outflows from
95,732,089.74 26,286,131.16
operating activities
Net cash flows from operating activities -66,808,855.97 627,008.60
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 -3,135.00 2,350.00
long-term assets
Net cash received from disposal of
72,000,000.00
subsidiaries or other business units
Other cash received relating to
investing activities
Subtotal of cash inflows from
71,996,865.00 2,350.00
investing activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 40,777.50 572,030.00
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
40,777.50 572,030.00
investing activities
Net cash flows from investing activities 71,956,087.50 -569,680.00
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Cash received from borrowings
Cash received from issuance of
bonds
Other cash received relating to
21
financing activities
Subtotal of cash inflows from financing
0.00 0.00
activities
Repayment of borrowings 5,000,100.00
Cash paid for interest expenses and
distribution of dividends or profit
Other cash payments relating to
financing activities
Sub-total of cash outflows from
5,000,100.00 0.00
financing activities
Net cash flows from financing activities -5,000,100.00 0.00
IV. Effect of foreign exchange rate
-896.18
changes on cash and cash equivalents
V. Net increase in cash and cash
147,131.53 56,432.42
equivalents
Add: Opening balance of cash and
119,729.05 360,786.67
cash equivalents
VI. Closing balance of cash and cash
266,860.58 417,219.09
equivalents
7. Consolidated statement of changes in owners’ equity
Reporting period
Unit: RMB Yuan
Reporting period
Equity attributable to owners of the Company
Paid-up
Total
Item capital Less: General Minority
Capital Specific Surplus Retaine owners‘
(or treasury risk Others interests
reserve reserve reserve d profit equity
share stock reserve
capital)
I. Balance at the end of the 220,901 72,315,3 125,929 -498,26 -284,039, -363,155,0
previous year ,184.00 47.06 ,834.48 1,874.87 572.78 82.11
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the beginning of 220,901 72,315,3 125,929 -498,26 -284,039, -363,155,0
22
the year ,184.00 47.06 ,834.48 1,874.87 572.78 82.11
III. Increase/ decrease of
-6,427,2 67,663,7 -5,028,73 56,207,751
amount in the year (―-‖ means
72.93 58.14 3.78 .43
decrease)
67,663,7 -5,028,73 62,635,024
(I) Net profit
58.14 3.78 .36
(II) Other comprehensive
incomes
67,663,7 -5,028,73 62,635,024
Subtotal of (I) and (II)
58.14 3.78 .36
(III) Capital paid in and -6,427,2 -6,427,272.
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners 72.93 93
1. Capital paid in by
owners
2. Amounts of share-based
payments recognized in
owners‘ equity
-6,427,2 -6,427,272.
3. Others
72.93 93
(IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Appropriations to
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to
owners (or shareholders)
4. Other
(V) Internal carry-forward of
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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
23
1. Withdrawn for the
period
2. Used in the period
(Ⅶ) Other
220,901 65,888,0 125,929 -430,59 -289,068, -306,947,3
IV. Closing balance
,184.00 74.13 ,834.48 8,116.73 306.56 30.68
Last year
Unit: RMB Yuan
Last year
Equity attributable to owners of the Company
Paid-up
Total
Item capital Less: General Minority
Capital Specific Surplus Retaine owners‘
(or treasury risk Others interests
reserve reserve reserve d profit equity
share stock reserve
capital)
I. Balance at the end of the 220,901 72,315,3 125,929 -364,83 -204,357, -150,048,4
previous year ,184.00 47.06 ,834.48 7,764.72 096.15 95.33
Add: retrospective
adjustments due to business
combinations under the same
control
Add: change of accounting 5,235,40 446,951.9 5,682,356.
policy 4.81 7 78
Correction of errors in -14,884, -14,884,90
previous periods 902.73 2.73
Other
II. Balance at the beginning of 220,901 72,315,3 125,929 -374,48 -203,910, -159,251,0
the year ,184.00 47.06 ,834.48 7,262.64 144.18 41.28
III. Increase/ decrease of
-123,77 -80,129,4 -203,904,0
amount in the year (―-‖ means
4,612.23 28.60 40.83
decrease)
-123,77 -80,129,4 -203,904,0
(I) Net profit
4,612.23 28.60 40.83
(II) Other comprehensive
incomes
-123,77 -80,129,4 -203,904,0
Subtotal of (I) and (II)
4,612.23 28.60 40.83
(III) Capital paid in and
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners
24
1. Capital paid in by
owners
2. Amounts of share-based
payments recognized in
owners‘ equity
3. Others
(IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Appropriations to
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to
owners (or shareholders)
4. Other
(V) Internal carry-forward of
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
owners‘ equity
1. New increase of capital
(or share capital) from capital
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the
period
2. Used in the period
(Ⅶ) Other
220,901 72,315,3 125,929 -498,26 -284,039, -363,155,0
IV. Closing balance
,184.00 47.06 ,834.48 1,874.87 572.78 82.11
8. Statement of changes in owners’ equity of the Company
Reporting period
Unit: RMB Yuan
Reporting period
Item
Paid-up Capital Less: Specific Surplus General Retained Total
25
capital (or reserve treasury reserve reserve risk profit owners‘
share stock reserve equity
capital)
I. Balance at the end of the 220,901,18 64,951,444 96,841,026 -356,392,3 26,301,325
previous year 4.00 .59 .39 29.08 .90
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the beginning of 220,901,18 64,951,444 96,841,026 -356,392,3 26,301,325
the year 4.00 .59 .39 29.08 .90
III. Increase/ decrease of amount -6,427,272. 75,390,739 68,963,466
in the year (―-‖ means decrease) 93 .05 .12
75,390,739 75,390,739
(I) Net profit
.05 .05
(II) Other comprehensive
incomes
75,390,739 75,390,739
Subtotal of (I) and (II)
.05 .05
(III) Capital paid in and -6,427,272. -6,427,272.
0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners 93 93
1. Capital paid in by owners
2. Amounts of share-based
payments recognized in owners‘
equity
-6,427,272. -6,427,272.
3. Others
93 93
(IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Appropriations to surplus
reserves
2. Appropriations to general
risk provisions
3. Appropriations to owners
(or shareholders)
4. Other
(V) Internal carry-forward of
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
owners‘ equity
26
1. New increase of capital
(or share capital) from capital
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the period
2. Used in the period
(Ⅶ) Other
220,901,18 58,524,171 96,841,026 -281,001,5 95,264,792
IV. Closing balance
4.00 .66 .39 90.03 .02
Last year
Unit: RMB Yuan
Last year
Paid-up
Less: General Total
Item capital (or Capital Specific Surplus Retained
treasury risk owners‘
share reserve reserve reserve profit
stock reserve equity
capital)
I. Balance at the end of the 220,901,18 64,951,444 96,841,026 -304,552,8 78,140,776
previous year 4.00 .59 .39 78.43 .55
Add: change of accounting 4,564,976.
policy 83
Correction of errors in -14,884,90
previous periods 2.73
Other
II. Balance at the beginning of 220,901,18 64,951,444 96,841,026 -314,872,8 67,820,850
the year 4.00 .59 .39 04.33 .65
III. Increase/ decrease of amount -41,519,52 -41,519,52
in the year (―-‖ means decrease) 4.75 4.75
-41,519,52 -41,519,52
(I) Net profit
4.75 4.75
(II) Other comprehensive
incomes
Subtotal of (I) and (II) -41,519,52 -41,519,52
27
4.75 4.75
(III) Capital paid in and
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners
1. Capital paid in by owners
2. Amounts of share-based
payments recognized in owners‘
equity
3. Others
(IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Appropriations to surplus
reserves
2. Appropriations to general
risk provisions
3. Appropriations to owners
(or shareholders)
4. Other
(V) Internal carry-forward of
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
owners‘ equity
1. New increase of capital
(or share capital) from capital
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the period
2. Used in the period
(Ⅶ) Other
220,901,18 64,951,444 96,841,026 -356,392,3 26,301,325
IV. Closing balance
4.00 .59 .39 29.08 .90
28
Shenzhen International Enterprise Co., Ltd.
Notes to Financial Statements
For the year ended June 30, 2012
(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 issued 41,701,800 bonus shares by the ratio 10:10 in 1994. The Company on the approval of Document No.
48 [1995] Shenfubanhan 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, 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, issued bonus shares by the ratio 10:1 and the capital fund transferred to shared 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 shared 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 shared capital of
the compnay is RMB 220,901,184 Yuan.
Legal representative: Haokang Zheng
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
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,
29
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.
(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
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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.
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 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
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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 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.
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(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 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
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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 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
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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.
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.
（2）Methods of provision for bad debt for account receivables in accordance with the characteristics of credit
risk portfolio
Standard of portfolio recognition：
Portfolio Name Basis of portfolio recognition
as well as other individual non-significant receivable
accounts that not impaired after impairment test, these
Portfolios that estimate bad debt provision by aging account receivables will carry out age analysis by the
analysis 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.
Methods of provision for bad debt for account receivables in accordance with the characteristics of credit risk
portfolio：
Portfolio Name Methods of provision for bad debt
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Portfolios that estimate bad debt provision by aging
Age analysis
analysis
The Company adopt age analysis method to estimate the following percentage of provision for bad debts of account
receivables in accordance with the characteristics of credit risk portfolio:
Age Percentage of accounts Percentage of other accounts
receivable receivable %
Within 1 year (including 1 year) 5% 5%
1-2 years (including 2 years) 10% 10%
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%
（3）Method of provision for bad debts for individual accounts receivable with non- significant amounts,
if there is objective evidence that the accounts receivable have
been impaired specifically or impaired due to specific accounts
characterisctics , although with non-significant amounts
Reasons to estimate bad dept provision
individually, these account receivables shall carry out impairment
individully
test one by one , the impairment loss shall be recognized based on
the difference of the book values higher than the present value of
future cash flows.
One by one to carry out impairment test, the impairment loss shall
Method of provision for bad debts be recognized based on the difference of the book values higher
than the present value of future cash flows.
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
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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 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.
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（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.
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,
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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.
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
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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 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.
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（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）The company adopts the fair value pattern to make the follow-up measure for Investment property
For the investment property measured through the fair value pattern, where there is no accrual depreciation or
amortization made for it, its book value shall be adjusted on the basis of its fair value on the date of the balance sheet,
and the difference between the fair value and its original book value shall be included in the current profits and
losses.
（2）Measurement for investment property in construction process
If the fair value of or investment property in construction process is not able to be obtained in areliable way but
is expected to be obtained in be obtained in a continuous and reliable way, the Company measure the investment
property in cost partern, until the construction of the investment property in complete or the fair value of the
investment property is able to be obtained in a reliable way, which is ealier, the company then change to fair value
pattern to make the follow-up measurement.
Currently the Company’s main investment property in construction process is located in the CBD of Futian
District,Shenzhen City, and all the buildings of the comoany that are leased out are all located in the city centre of
Guangzhou, Haikou or Shenzhen etc. There is an active trading market of real estate in the locations of the each of
the above mentioned investment property; and The company is able to obtain the market prices of the identical or
similar real estates and other relevant information from the trading market of each of the above mentioned investment
properties, so as to be able to scientifically and reasonablly estimate the fair value of the investment properties. The
fair value of all the above mentioned investment properties can be obtained in a continuous and reliable way, the
follow-up mearment pattern complies with the requirements for investment property to adopt fair value pattern to
make follow-up mearement ruled by . The company’s main
investment property is used to lease, to adopt fair value pattern to make follow-up measurement is internationally
Internationally accepted method, for the reason to trulier and more objectively reflect the Compamy’s value helps a
wide range of investors to comprehend the Company’s operation and assets value, and the Company to state its
41
financial condition and management performance. Therefore, based on the and , the Company changed the follow-up measurement for
investment property from cost pattern into fair value pattern upon the approval of 2012 5 th provisional meeting of 6th
board of directors
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;
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
42
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 and measuring methods 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.
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
43
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.
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:
44
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.
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 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:
45
（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;
②the 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）Revenue from construction contract
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
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
46
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）Revenue from transfering of asset use rights
The revenue of transfer of asset use right including : interest income、user charges etc, 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
47
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 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.
23. Changes in accounting policies、accounting estimates
（1）Change in accounting policies
① Briefing of change in accountitng policies
A、The changed accounting policies
The Company changed the follow-up measurement for investment property from cost pattern into fair value
pattern upon the approval of 2012 5th provisional meeting of 6th board of directors
B、Reasons and basis for the change of accounting policies
The board of directors believes that the Company’s main investment property in construction process is located
in the CBD of Futian District,Shenzhen City, and all the buildings of the comoany that are leased out are all located in
the city centre of Guangzhou, Haikou or Shenzhen etc. There is an active trading market of real estate in the locations
of the each of the above mentioned investment property; and The company is able to obtain the market prices of the
48
identical or similar real estates and other relevant information from the trading market of each of the above
mentioned investment properties, so as to be able to scientifically and reasonablly estimate the fair value of the
investment properties. The fair value of all the above mentioned investment properties can be obtained in a
continuous and reliable way, the follow-up mearment pattern complies with the requirements for investment property
to adopt fair value pattern to make follow-up mearement ruled by . The
company’s main investment property is used to lease, to adopt fair value pattern to make follow-up measurement is
internationally Internationally accepted method, for the reason to trulier and more objectively reflect the
Compamy’s value helps a wide range of investors to comprehend the Company’s operation and assets value, and
the Company to state its financial condition and management performance. Therefore, based on the and , the Company changed the
follow-up measurement for investment property from cost pattern into fair value pattern upon the approval of 2012
5th provisional meeting of 6th board of directors
C、Date of change of accounting policies
The date of change of accounting policies of current accounting period is Janurary 1st 2012 upon the approval of
2012 5th provisional meeting of 6th board of directors
D、Investment properties that are involved with the change of accounting policies
As at the end of 31st March 2012, the carrying amount of investment property before change of accounting
policies of the Company was RMB1,296,420,499.70, including RMB1,079,782.84 leased buildings and
RMB1,295,340,716.86 investment property in construction process.
E、Accounting policies before and after the change
a、Accounting policies before the change
The 2007 4th meeting of the 5th borad of directors approved the Company to use cost pattern to make the
follow-up measurement of investment property, according to 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:
Expected
Categories Expected useful life Annual depreciation rate
residual rate
Buildings 、
10% 30 years 3%
structures
At the balance sheet date, the evaluation criteria should base on the lower value between costs and net realizable
49
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.
b、Accounting policies after the change
As approved by the Company’s 2012 5th provisional meeting of the 6th board of directors, the company adopts
the fair value pattern to make the follow-up measure for Investment property
For the investment property measured through the fair value pattern, where there is no accrual depreciation or
amortization made for it, its book value shall be adjusted on the basis of its fair value on the date of the balance sheet,
and the difference between the fair value and its original book value shall be included in the current profits and losses.
If the fair value of or investment property in construction process is not able to be obtained in areliable way but is
expected to be obtained in be obtained in a continuous and reliable way, the Company measure the investment
property in cost partern, until the construction of the investment property in complete or the fair value of the
investment property is able to be obtained in a reliable way, which is ealier, the company then change to fair value
pattern to make the follow-up measurement.
Influence of changes of the accounting policies upon the Company
According to the , the financial statements for the accounting
period ended at Dec 31st 2011 shall be adjusted retroactively. The investment property in construction process, the
IA Mall is still not completed, therefore IA Mall project shall be measured with cost pattern before it reaches the
condition ready for its intended use. Retroactive adjustment shall be made for the influence of fair value change
of the company’s leased buildings; the above mentioned influence upon consolidated statement of changes in
shareholders’ equity and as at 31st Dec 2011 and consolidated income statement is presented as below:
A、Influence upon consolidated statement of changes in shareholders’ equity and as at 31st Dec 2011 and
consolidated income statement
（Unit：RMB Yuan）
Before change of After change of Adjust
Items Adjusted amount
accounting policies accounting policies ed ratio %
Shared capital 220,901,184.00 220,901,184.00 - -
Capital reserve 72,315,347.06 72,315,347.06 - -
Surplus reserve 125,929,834.48 125,929,834.48 - -
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Retained profit -503,497,279.68 -498,261,874.88 5,235,404.80 -1.04
Owner’s equity attribute
-84,350,914.14 -79,115,509.34 5,235,404.80 -6.21
to the parent company
Minority interests -284,486,524.75 -284,039,572.78 446,951.97 -0.16
Total owner’s equty -368,837,438.89 -363,155,082.12 5,682,356.77 -1.54
Net profit -203,904,040.83 -204,135,655.20 -231,614.37 0.11
Including ： Net profit
-123,774,612.23 -123,991,050.56 -216,438.33 0.17
attribute to the parent company
Net Profit attribute to
-80,129,428.60 -80,144,604.64 -15,176.04 0.02
minority
B、Influence of changes of the accounting policies upon the Company’s financial statements of 2012
accounting period
The main influence of change of accounting policies upon the Company’s financial statements of 2012
accounting period is from the fair value change of IA Mall in construction process, after it starts operation this year.
The Company confirmed the operation strategy of merchants invitation to lease for IA Mall in 2007, Operation and
management team was formed specifically for the Merchants invitation, promotion, and management after it starts
operation for IA Mall project. As at March 31st 2012, the carrying amount of IA Mall in construction process was
RMB 1,295,000,000. The total cost of the completed construction of IA Mall was predicted to be RMB1,550,000,000
by the Company. IA Mall now is not completed, there fore it is investment property still in construction process, it
does not meet the requirements of fair value pattern follow-up measurement currently, but the fair value of IA Mall
after construction complete is expected to be obtained in continous and reliable way, according to the opinion of
appraisal company, on the assumption that IA Mall starts operation with year 2012, the fair value of IA Mall as at
appraisal date 31st Dec 2012 was 5,970,000,000. Based on the above mentioned reasons, on the assumption of fair
value of real-estate market without significant fluctuation during 31st Mar 2012 to 31st Dec 2012, if IA Mall project
completes construction and leases out all the units, the change of accounting policies will increase the deferred tax
liabilities by RMB1,105,000,000 and increase Net profit of 2012 by RMB3,315,000,000, including net profit attribute
to parental company RMB1,989,000,000.
C、Predicted Influence of changes of the accounting policies upon the Company’s income tax
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The predicted Influence of changes of the accounting policies upon the Company’s income tax after 2012
accounting period is mainly from depreciation and the fair value change of the IA Mall, which is still in construction
process, after it starts operation.
According to , for the investment property measured through the
fair value pattern, where there is no accrual depreciation or amortization made for it, its book value shall be adjusted
on the basis of its fair value on the date of the balance sheet, and the difference between the fair value and its original
book value shall be included in the current profits and losses.
According to the Tax Law, profit or loss from the fair value change is not accounted in the taxable income.
Meanwhile, depreciation or amortization shall be made according to the Tax Law to adjust in order to decrease
current taxable income. Therefore, the changes of accounting policies only have influence on the profit and loss, and
no influence on taxable income. The above mentioned difference from the discrepancy between carrying amount and
tax base of investment property, shall be treated by recognition of deferred tax and income tax adjustment. Accoridng
to the current fixed assets depreciation policy of property, after the operation of IA Mall, around RMB 46,500,000
depreciation per year is allowed to be accounted as pre-tax expense, the Company can decreaseincome tax expense
by RMB 11,600,000 and increse deferred tax assets by RMB 11,600,000, until the expected useful life of IA Mall
ends. Meanwhile and accordingly, the profit and loss from fair value change of current year is not accounted as
taxable income and deferred tax liability is to be adjusted.
D、Influence of changes of the accounting policies upon the Company’s cash flow of 2012 accounting period
There is no influence of changes of the accounting policies upon the Company’s cash flow
（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 24%、25% Note
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Urban Construction Tax VAT payable, consumption tax payable and 7%
business tax payable
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 Nature of Registered
Subsidiaries‘ name Subsidiaries‘ type Business scope
location business capital
Shenzhen International Arcade Chain Store Wholly owned
Shenzhen Retail store 10,000,000.00 Retail store
（Chain Store） subsidiary
Shenzhen International Arcade Property Property Property
Holding subsidiary Shenzhen 7,000,000.00
Management Co., Ltd. （Guoshang Property） management management
Shenzhen Rongfa Investment Co., Ltd (Rongfa Real estate Real estate
Holding subsidiary Shenzhen USD5,000,000.00
Investment） development development
Huizhou Rongfa Industry Investment Co., Ltd Holding subsidiary‘s Real estate Real estate
Huizhou 6,000,000.00
（Huizhou Rongfa） subsidiary development development
Afforestation、
Wengyuan Guoshanglinhai Development Co., Ltd. Holding subsidiary‘s Afforestation、forest
Wengyuan forest 7,000,000.00
（Wengyuan Guoshang） subsidiary management
management
Afforestation、
Wuhua Guoshanglinye Development Co., Ltd Holding subsidiary‘s Afforestation、forest
Wuhua forest 10,000,000.00
（Wuhua Guoshang） subsidiary management
management
Lumber
Lumber purchase and
Shenzhen Guoshanglinye Development Co., Ltd Holding subsidiary‘s purchase and
Shenzhen 10,000,000.00 sale, Industrial
（Guoshanglinye） subsidiary sale, Industrial
establishment
establishment
Afforestation、
XingningGuoshanglineye Development Co., Ltd Holding subsidiary‘s Planting、and lumber
Xingning forest 5,000,000.00
（XingningGuoshang） subsidiary sales
management
Luoyang Rongfazhiye Co., Ltd（Rongfazhiye） Holding subsidiary‘s Luoyang Real estate 10,000,000.00 Real estate
53
subsidiary development development
and sales,
property
management
and rental
Shenzhen International Enterprise Trading Co., Ltd International
Holding subsidiary Shenzhen 5,600,000.00 International trade
（International Trade） Note1 trade
Drugs and
Shenzhen Chunhua Medicine United Enterprise Co., Ltd Drugs and medical
Holding subsidiary Shenzhen medical 3,000,000.00
（Chunhua Medicine） Note1 appliances
appliances
Drugs and
Shenzhen Guoshang Medicine Co., Ltd Drugs and medical
Holding subsidiary Shenzhen medical 3,000,000.00
（Guoshang Medicine） Note1 treatment
treatment
Industrial
Shenzhen Royal Noble Industry Co., Ltd Holding subsidiary‘s Healthcare establishment、
Shenzhen 5,000,000.00
（Gangyi East Club） Note2 subsidiary massage Healthcare
massage
Business marketing
and promotion
Business
managemengt,
marketing and
Shenzhen Rongfa Business Management Co., Ltd Holding subsidiary Shenzhen 8,000,000.00 enterprise
promotion
management
managemengt
consulting, property
management, trading.
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
54
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、Explanation of change of consolidation range
Compared to last year, one consolidated entity has been included in the consolidation range since this year, for
the reason of new establishment
Compared to last year, two consolidated entity have been excluded from the consolidation range since this year,
for the reason of subsidiary disposal
3、Introductions of entities that have been included in or excluded from consolidation range since current reporting period
Entity that has been included in consolidated range since current reporting period
Entity‘s name Net assets as at the end of Net profit of current
current reporting period reporting period
Shenzhen Rongfa Business Management Co., Ltd 8,000,000.00 -813.62
Entities that have been excluded from consolidated range since current reporting period
Entity‘s name Net assets as at the end of Net profit of current
current reporting period reporting period
Shenzhen ShenGuoShang Business Management Co., Ltd 30,455,691.35 -3,640.00
（Business Company）
Shenzhen Longgang International Arcade Enterprise Co., Ltd. -4,863,667.55 ---
（Guoshang Enterprise）
V Main Notes In The Consolidation Statement
1. Monetary Funds
55
30.6.2012 31.12.2011
Currency Presentation Exchange Presentation
Original Exchange
Original currency
currency rate currency
currency rate
Cash in hand
CNY - 1.0000 143,457.27 - 1.0000 134,617.07
HKD 10,678.30 0.8107 8,656.90 10,678.30 0.8107 8,656.90
MYD 575.00 1.2335 709.25 357.00 1.9867 709.25
EUR 21,080.00 8.1625 172,065.50
Subtotal 152,823.42 316,048.72
Demand deposits
CNY - 1.0000 124,495,781.42 - 1.0000 19,666,801.82
HKD 8,353.97 0.8186 6,838.70 8,423.78 0.8107 6,829.16
USD 0.50 6.3000 3.15 0.50 6.3000 3.15
Subtotal 124,502,623.27 19,673,634.13
Other monetary
funds
CNY - - - - - -
Subtotal -- --
Total - - 124,655,446.69 - - 19,989,682.85
RMB 4,551,706.86 of the period end balance is mortigage deposit.
2. Accounts Receivable
（1）Account receivable listed according to the categories:
30.6.2012 31.12.2011
Provision for Provision for
Items Book value Book value Proportion
Proportion (%) bad debts Proportion (%) Proportion (%) bad debts
(CNY) (CNY) (%)
(CNY) (CNY)
Receivables of
individual significance -
subject to individual 21,000,000.00 95.73%- - - - - -
assessment for
impairment
Receivables sub ject to credit risk porfolio assessment for impairment
56
By nature of credit risk
937,834.83 4.27% 428,306.63 100.00% 943,324.99 100.00% 428,306.63 100.00%
portfolio
Subtotal of receivables
sub ject to credit risk
937,834.83 4.27% 428,306.63 100.00% 943,324.99 100.00% 428,306.63 100.00%
porfolio assessment for
impairment
Receivables of
individual
insignificance subject
- - - - - - - -
to individual
assessment for
impairment
Total
21,937,834.83 100.00% 428,306.63 100.00% 943,324.99 100.00% 428,306.63 100.00%
（2）Account receivable subject to credit risk portfolio assessment for inpairment according by account age:
30.6.2012 31.12.2011
Provision for Provision for
Age Book value Proportion Book value
bad debts Proportion (%) Proportion (%) bad debts Proportion (%)
(CNY) (%) (CNY)
(CNY) (CNY)
Within 1
year - - - - - - - -
1-2 years - - - - - - - -
2-3years 194,350.27 20.72% 29,976.06 7.00% 199,840.43 21.18% 29,976.06 7.00%
3-4years 156,786.71 16.72% 31,357.34 7.32% 156,786.71 16.62% 31,357.34 7.32%
4-5years 292,966.16 31.24% 73,241.54 17.10% 292,966.16 31.06% 73,241.54 17.10%
More than 5
293,731.69 31.32% 293,731.69 68.58%
years 293,731.69 31.14% 293,731.69 68.58%
Total 937,834.83 100.00% 428,306.63 100.00% 943,324.99 100.00% 428,306.63 100.00%
（3） The top five account receivables：
Relationship with the % of total accounts
Ranks of the company Amount (CNY) Age
Company receivables
1st Unrelated party 21,000,000.00 Within 1 year 95.73%
2nd Unrelated party 102,999.36 More than 5 years 0.47%
3rd Unrelated party 54,535.98 More than 5 years 0.25%
4th Unrelated party 26,433.96 More than 5 years 0.12%
57
Relationship with the % of total accounts
Ranks of the company Amount (CNY) Age
Company receivables
5th Unrelated party 26,000.00 More than 5 years 0.12%
Total 21,209,969.30 96.68%
3. Advance To Suppliers
（1）Age analysis
30.6.2012 31.12.2011
Age Proportion of total Proportion of total
Balance Balance
advance to suppliers advance to suppliers
Within 1 year 22,898,069.12 99.80% 16,725,968.40 99.72%
1-2 years - - - -
2-3 years 45,209.00 0.20% 46,559.00 0.28%
More than 3 years - - - -
Total 22,943,278.12 100.00% 16,772,527.40 100.00%
（2）List the balance of top five Advance To Suppliers:
Proportion of total
Name of supplier advance to
30.6.2012 suppliers Age
Shenzhen Jialeixin Industrial Co.,Ltd 8,750,000.00 52.17% Within 1 year
Shantou Jian‘an Industrial (Group) Co.,Ltd 6,300,000.00 37.56% Within 1 year
Shenzhen Duotian Gardens Design and Construction Co.,Ltd 6,000,000.00 4.54% Within 1 year
Shenzhen Baoying Construction Group Co., Ltd 882,000.00 2.98% Within 1 year
Shenzhen Shuda Elevator Construction Co., Ltd 500,000.00 0.95% Within 1 year
Total 22,432,000.00 97.77%
4、Other receivables
（1）Other receivables listed according to the categories:
30.6.2012 31.12.2011
Proportion Proportion Proportion Proportion
Items
Balance of total Provision of total Balance of total Provision of total
other provision other provision
58
receivables other receivables other
receivables receivables
Other receivables of
individual
significance subject
7,201,728.50 53.80% 7,201,728.50 80.41% 11,698,226.69 69.49% 9,047,077.36 84.76%
to individual
assessment for
impairrment
Other receivables subject to credit risk portfolio assessment for impairment
credit risk
portfolio by
5,283,505.61 39.47% 854,781.93 9.54% 4,235,635.92 25.16% 726,348.31 6.81%
nature of other
receivables
Subtotal of other
receivables
subject to credit
5,283,505.61 39.47% 854,781.93 9.54% 4,235,635.92 25.16% 726,348.31 6.81%
risk portfolio
assessment for
impairment
Other receivables of
individual
insignificance
900,000.00 6.72% 900,000.00 10.05% 900,000.00 5.35% 900,000.00 8.43%
subject to individual
assessment for
impairrment
Total 13,385,234.11 100.00% 8,956,510.43 100.00% 16,833,862.61 100.00% 10,673,425.67 100.00%
（2）Other receivables of individual significance subject to individual assessment for impairrment
30.6.2012
Reason for
Name of debtor Provison
Balance Provision provision
proportion（%）
59
Shenzhen Shengang
Gongmao Import and 7,201,728.50 7,201,728.50 100.00% Note
Export Co.,Ltd
Total 7,201,728.50 7,201,728.50 100.00%
（3）Other receivables subject to credit risk portfolio assessment for impairment-Age Analysis：
30.6.2012 31.12.2011
Proportion of Proportion of Proportion Proportion
other other of other of other
receivables receivables receivables receivables
subject to subject to subject to subject to
Age
Balance credit risk Provision credit risk Balance credit risk Provision credit risk
portfolio portfolio portfolio portfolio
assessment assessment assessment assessment
for for for for
impairment impairment impairment impairment
Within 1
year 1,533,030.40 29.02% 76,651.51 8.97% 1,117,819.12 26.39% 55,890.95 7.69%
1-2 years 1,002,207.72 18.97% 100,220.77 11.72% 106,400.00 2.51% 10,640.00 1.46%
2-3 years 97,460.00 1.84% 14,619.00 1.71% 217,168.70 5.13% 32,575.31 4.48%
3-4 years 1,015,430.24 19.22% 203,086.05 23.76% 1,748,905.87 41.29% 349,781.17 48.16%
4-5 years 608,172.02 11.51% 152,043.01 17.79% 722,836.02 17.07% 180,709.01 24.88%
Over 5
years 1,027,205.23 19.44% 308,161.59 36.05% 322,506.21 7.61% 96,751.87 13.32%
Total 5,283,505.61 100.00% 854,781.93 100.00% 4,235,635.92 100.00% 726,348.31 100.00%
（4）期末单项金额虽不重大但单独计提坏账准备的其他应收款：
Name of debtor Balance Provison Proportion of Reasons of provison
provision
Guangzhou Sun-Star Company 900,000.00 900,000.00 100.00% Debtor Missing
60
Name of debtor Balance Provison Proportion of Reasons of provison
provision
Total 900,000.00 900,000.00
（5）Other receivables of individual insignificance subject to individual assessment for impairrment
Proportion of total Nature of other
Name of Debtor Balance other receibles Age receivables
Shenzhen Shengang Gongmao Import and Over 5
7,201,728.50 53.80%
Export Co.,Ltd years Note
Over 5
Guangzhou Sun-Star Company 900,000.00 6.72%
years Current Account
Shenzhen Baotian Investment Development
506,272.02 3.78% 4-5 years
Co., Ltd Current Account
Over 5
Foh Chong & Sons Sdn Bhd 454,986.40 3.40% Loan
years
Shenzhen Wongtee Real Estate Within 1 Loan for
402,714.00 3.01%
Group Co., Ltd. year employees
Total 9,465,700.92 70.72%
Note: The balance arisen from the mutual guarantee between the Company and Shenzhen-Hongkong Industry and
Commerce Import and Export Company (hereafter, SH Industry and Commerce). In 2000, Shenzhen Development
Bank, ShennandongLu Branch (hereafter, the Bank) initiated litigation against the Company to the Shenzhen
Intermediate People's Court (hereafter, the Count) for that the Company shall be liable for the principal of the loan
lent to SH Industry and Commerce amounting to 10 million and the interests on the loan. As provided by the Count
Judgement (2001) ShenZhongFaJingYiChuZiDi53Hao ((2001) issued by the Count on February 27th, 2001, the
Company is liable for the principal of the loan lent to SH Industry and Commerce amounting to 10 million and the
interests on the loan.On December 30th, 2002, compromise was reached between the Company and the Bank under
the Count's arbitration that the Company shall repay to the Bank the principal of and the interests on the loan on
behalf of SH Industry and Commerce, and that the Company is entitled to recover damange from SH Industry and
Commerce. While exercising the recovery in 2004, ownerships of the Sun House and the Land were found
non-transferrable, and SH Industry and Commerce held no executable assets. As approved by the Board of Directors,
100% bad debt allowance was recognised for the recognized loss in 2004. Full amount CNY17,953,448 of sales
revenue (execution cost deducted) from auction of the land NO.T102-1 located in Moon Bay Avenue, Nanshan
District, Shenzhen City owned by SH Industry Commerce and seizure by Shenzhen Investment Holding Corporation
was assigned to Shenzhen Investment Holding Corporation by the court decision on March 17th 2011. Objection
letter was submitted to the court by the Company on March 22rd 2011. Coordination meeting was held on Nov 25th
2011 by the Court, suggesting mediation to settle the case. Preliminary settlement plan was such that: 10,000,000
61
shall be assigned to seizer first in order; 8,000,000 remained shall be assigned among the three queuing seizers upon
principal proportion; 2,651,149.33 shall be assigned to each seizer; and the settlement plan shall be effective upon
written confirmation by all seizers. Application to suspend the trial of the case was submitted to the court by the
Company on Dec 5th 2011. The settlement agreement was signed by four parties on Feb 9th 2012, the company
received CNY2,646, 498.19 (execution cost deducted) court remittance. Bad debt provision amounting to
2,651,149.33 was written off by the Company at the end of the year.
（6）Details of other receivables written off in current reporting period
Reason for
Time of Balance of
Nature of other other Related
other other
Name of debtor receivables receivable party
receivables receivables
written off s written transaction
written off written off
off
Shenzhen Longgang International Arcade
Uncollectab
Enterprise Co., Ltd. （ Guoshang Current account 2012.6 1,962,127.61 Not
le
Enterprise）
Total 1,962,127.61
5、Inventory
（1）Category of inventory:
30.6.2012 31.12.2011
Item Provision for Provision for
Balance Carrying amount Balance Carrying amount
impairment loss impairment loss
-
Raw materials 304,560.86 304,560.86 283,946.81 - 283,946.81
Consumable
79,300,862.09 12,599,702.43 66,701,159.66 80,145,739.84 13,658,854.91 66,486,884.93
forest assets
Development
1,362,594,395.66 6,448,481.22 1,356,145,914.44 1,265,423,298.10 6,448,481.22 1,258,974,816.88
expenditure
Development
41,206,578.65 - 41,206,578.65 58,839,914.87 - 58,839,914.87
projects
Lease
development 5,498,581.08 - 5,498,581.08 21,046,852.42 - 21,046,852.42
projects
62
Total 1,488,904,978.34 19,048,183.65 1,469,856,794.69 1,425,739,752.04 20,107,336.13 1,405,632,415.91
Note 1: Afforestation area of consumptive forestry inventories as at 30th June 2012 was 95, 255.10 Mu (a Chinese
unit), area of forestry as at Dec 31st 2011 was 86,696.99 Mu.
Note 2: Consumptive forestry inventories had been pledged for bank loans by the Company's subsidiaries Wengyuan
Guoshang and Wuhua Guoshang. The carrying amount as at 30th June 2012 of the pledged assets was
RMB37,012,980.13, with area as 34,775 Mu.
①Development expenditure
Predicted
Construction Balance as at 31st Impairment Balance as at 30th June Impairment
Items Predicted total
start time .Dec.2011 loss provision 2012 loss provision
completing time investment
Rongfu Garden 2nd
6,448,481.22 6,448,481.22 6,448,481.22 6,448,481.22
phase
IA Mall Jan, 2007 1.55 billion 1,258,974,816.88 - 1,356,145,914.44 -
Total 1,265,423,298.10 6,448,481.22 1,362,594,395.66 6,448,481.22
Note 1：The Company accrued 100% impairment loss for Rongfu Garden Phase 2 according to the Court’s first
judge, see Note 7.3.4 for details.
Note 2：Chinese name of IA Mall was changed from 晶岛国商购物中心 into 皇庭国商购物广场 on Nov 30th
2010 under the approval of the First Administration Bureau Directly Under Urban Planning, Land and Resources
Commission of Shenzhen Municipality.
Note 3：The Development expenditure of IA MALL had been pledged for bank loans
Note 4：The capitalized interests of IA MALL for current reporting period amounted to RMB70,216,530.60
②Development projects
Project Increase in Decrease in Remark
Balance as at Balance as at
construction current current
Project Name 31st 30th June
complete reporting reporting
.Dec.2011 2012
date period period
Shops of Grace Mansion Pending ownership
repurchased Dec 2000 20,675,800.97 - 123,371.97 20,552,429.00 registration
Shops of Grace Mansion
owned by the Company Dec 2000 25,562,844.95 123,371.97 13,535,140.22 12,151,076.70
63
Stereo Garage of Grace Without ownership
Mansion 12,601,268.95 - 4,098,196.00 8,503,072.95 registration
Total 58,839,914.87 123,371.97 17,756,708.19 41,206,578.65
① Lease development projects
Increase Remark
in Amortizatio Decrese in
Balance as at current n in current current Balance as
31st reportin reporting reporting at 30th June Remaining
Project Name .Dec.2011 g period period period 2012 life
Grace Mansion 15,348,271.3
15,348,271.34 - -
(港逸豪庭) 4
Pending
Shenzhen Enterprise Ownership
282,787.89 - 282,787.89
Mansion Registratio
(国企大厦) n
Without
5,215,793.1 Ownership
5,215,793.19 -
Huizhou Sunrise 100 9 Registratio
(惠州阳光 100) n
15,348,271.3 5,498,581.0
21,046,852.42
Total 4 8
6、Long-term Equity Investment
（1）Disclosure
Changes in Impairment Impairment Loss
Balance as at
current Balance as at 30th Loss Provision accrued
Name of Investee 31st
reporting June 2012 Provision in current reporting
.Dec.2011
period period
1. Investments accounted for using
the historical cost convention
64
Shenzhen Chunhua Pharmaceuticals
United Enterprise Co., Ltd.
2,250,000.00 - 2,250,000.00 418,949.38 -
Shenzhen Guoshang Pharmaceuticals Co.,
3,000,000.00 - 3,000,000.00 1,375,215.11 -
Ltd.
Shenzhen Internaiontal Enterprise
5,320,000.00 - 5,320,000.00 3,075,930.02 -
Commerce Co., Ltd
Shenzhen Royal Noble Industry Co., Ltd. 5,000,000.00 - 5,000,000.00 5,000,000.00 -
Total 15,570,000.00 - 15,570,000.00 9,870,094.51 -
Continued:
Cash dividends in
Initial investment Shareholding
Name of investee Voting right(%) current reporting
cost(CNY proportion(%)
period (CNY)
1. Investments accounted for using the
historical cost convention
Shenzhen Chunhua Pharmaceuticals United
-
75.00% 75.00%
Enterprise Co., Ltd. 2,250,000.00
Shenzhen Guoshang Pharmaceuticals Co., Ltd. 3,000,000.00 98.00% 100.00% -
Shenzhen Internaiontal Enterprise Commerce Co., -
98.75% 100.00%
Ltd 5,320,000.00
Shenzhen Royal Noble Industry Co., Ltd. 5,000,000.00 64.00% - -
Total 15,570,000.00 -
Note：The business licence 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 property
（1）Investment property measured using fair value convention
Fair value as Decrease in
Fair value as at
Item at 31st Dec Increase in current reporting period current reporting
30th June 2012
2011 period
65
Transferred Transferre
in this d out from
Profit and loss
Purch category Disp this
from fair value
ase from Use for osal category
change
its won or to use for
Inventry its won
1．Total cost 8,674,078.00 8,674,078.00
Houses and buildings 8,674,078.00 8,674,078.00
2．Cumulative fair value
（149,546.00） （149,546.00）
change
Houses and buildings （149,546.00） （149,546.00）
3．Balance of investment
8,674,078.00 （149,546.00） 8,524,532.00
property in total
Houses and buildings 8,674,078.00 （149,546.00） 8,524,532.00
（2）As at 30th June 2012, all the investment properties were without restricted ownership
（3）As at 30th June 2012, the carrying amount of houses and buildings which without asset ownership
registration is RMB1,300,000.00, And the carrying amount of houses and buildings with ownership belonging to
parties other than parties within the scope of consolidation is RMB1,783,667.00
Name of Investment property Fair value as at 30th Remark
June 2012
#22 Hostel, Dabeixin Jie, Jiefangbei Without ownership
1,300,000.00
Lu, Guangzhou registration
#121, #131, #132 Block 4, Yihe Ownership
734,858.00
Garden Haikou belonging to parties
other than parties
#111 Block 8 Yihe Garden, Haikou 1,048,809.00 within the scope of
consolidation
Total 3,083,667.00
8、Fixed assets and accumulated depreciation
（1）Classification
66
th
Items As at 31st Dec 2011 Increase in current reporting Decrease in 30 June 2012
period current
reporting
period
ⅰ. Total book values: 80,211,797.87 868,820.59 247,584.67 80,833,033.79
Houses and Buildings 67,042,843.18 - - 67,042,843.18
Vehicles 9,132,973.25 501,000.52 - 9,633,973.77
Electronic device and other equipments 4,035,981.44 367,820.07 247,584.67 4,156,216.84
Increase in Accrued in
current current reporting
reporting period
period
ⅱ. Total accumulated depreciation 27,659,176.59 - 1,963,582.03 148,955.56 29,473,803.06
Houses and Buildings 20,586,815.68 - 979,838.10 - 21,566,653.78
Vehicles 4,865,353.09 - 705,800.34 - 5,571,153.43
Electronic device and other equipments 2,207,007.82 - 277,943.59 148,955.56 2,335,995.85
ⅲ . Total accumulated impairment
52,552,621.28 51,359,230.73
loss:
Houses and Buildings 46,456,027.50 45,476,189.40
Vehicles 4,267,620.16 4,062,820.34
Electronic device and other equipments 1,828,973.62 1,820,220.99
ⅳ. Total impairment loss - -
V. Total carrying value: 52,552,621.28 51,359,230.73
Houses and Buildings 46,456,027.50 45,476,189.40
Vehicles 4,267,620.16 4,062,820.34
Electronic device and other equipments 1,828,973.62 1,820,220.99
（2）As at 30th June 2012, there’s no houses or buildings with restricted ownership in fixed assets.
（3）RMB1,963,582.03 accumulated depreciation has been accrued during current reporting period.
（4）As at 30th June 2012, Houses and buildings without ownership registration or ownership belonging to
parties other than parties within the scope of consolidation are as below:
67
Items Book value Acumulated Carrying Remark
depreciation or amount
amortization
2-floor underground carpark of 22,942,599.85 10,094,719.17 12,847,880.68 Without ownership
Shenzhen Enterprise Mansion registration
( 国企大厦地下 1-2 层车库 )
Tsui Chuk Garden 6-C 304,800.00 114,300.00 190,500.00 Ownership
belonging to parties
Tsui Chuk Garden B2,66 474,730.00 274,436.51 200,293.49
other than parties
within the scope of
consolidation
9、Intangible assets
（1）Disclosure of intangible assets
Items Increase in Decrease in
As at 31st Dec 2011 current reporting current reporting As at 30th June 2012
period period
i. Total book value 47,893,568.15 99,288.00 47,893,568.15 99,288.00
Land use rights 47,893,568.15 - 47,893,568.15 -
Others 99,288.00 99,288.00
ii Accumulated amortization 17,901,761.54 1,654.80 17,901,761.54 1,654.80
Land use rights 17,901,761.54 - 17,901,761.54 -
Others 1,654.80 1,654.80
iii Total net value 29,991,806.61 - - 97,633.20
Land use rights 29,991,806.61 - - -
Others 97,633.20
iv Total impairment provison 4,578,477.90 - 4,578,477.90
Land use rights 4,578,477.90 - 4,578,477.90
Others
v Total carrying amount 25,413,328.71 - - 97,633.20
Land use rights 25,413,328.71 - - -
Others 97,633.20
68
（2）Amortization accrued in current reporting period is RMB1,654.80.
10. Long-term Deferred Expense
Transferred
out from
Deferred
Amortization expense in
Increase in in current current
Historical current reporting reporting Accumulated
Items cost 31st Dec 2011 period period period amortization 30th June 2012
Kingtee Software 300,000.00 60,000.00 - - 240,000.00 60,000.00
Widesoft OA Software 290,000.00 270,666.67 - 19,333.33 270,666.67
Smartdot IC Software 350,000.00 326,666.67 - 23,333.33 326,666.67
static electricity Install 380,000.00 342,000.00 342,000.00 - 380,000.00 -
Office renovation 2,684,617.69 1,878,500.00 474,617.69 308,131.46 - 639,631.46 2,044,986.23
Total 4,004,617.69 2,877,833.34 474,617.69 650,131.46 - 1,302,298.12 2,702,319.57
12. Assets with restricted ownership
（1）reasons for restricted ownership of assets
Assets with restricted ownership of the company are mainly because assets are pledged to obtain bank loans.
（2）List of assets with restricted ownership
Increase in current Decrease in current
Types of restricted assets As at 31st Dec 2011 reporting period reporting period As at 30th June 2012
1. Inventory-Development cost 1,258,974,816.88 97,171,097.56 - 1,356,145,914.44
2. Inventory-Consumptive
forestry assets 42,039,764.66 - 5,026,784.53 37,012,980.13
Total 1,301,014,581.54 97,171,097.56 5,026,784.53 1,393,158,894.57
13、Accounts payable
69
（1）Age analysis:
Age As at 30th June 2012 As at 31st Dec 2011
Within 1 year 1,448,671.63 52,818,972.13
More than 1 year 19,205,890.60 24,173,973.39
Total 20,654,562.23 76,992,945.52
（2）Disclosure of accounts payable with age of more than 1 year.
Reasons for Post balance
Name of creditors Balance Age not paying sheet date
back payment
Payment
15,159,203.44 1-2 years -
Shenzhen Fanhua Construction Group Co., Ltd. not due
Shenzhen Guanghua insulating Payment
406,108.53 1-2 years -
glass Construction Co., Ltd not due
Payment
645,713.25 1-2 years -
RTKL International Ltd not due
Payment
969,500.00 1-2 years -
Li Daihao not due
Total 17,180,525.22
（3）There is no Accounts payable balance due to shareholders who own 5% or over 5% voting rights as at 30th
June, 2012.
14. Advanced From Customers
（1）Age analysis
Age As at 30th June 2012 As at 31st Dec 2011
Within 1 year 8,985,080.51 1,130,000.00
More than 1 year 60,000.00 113,980.07
Total 9,045,080.51 1,243,980.07
70
（2）There is no Accounts payable balance due to shareholders who own 5% or over 5% voting rights as at 30th
June, 2012.
15. Payroll Payable
Items Increase in Payment in
As at 30th June
st
As at 31 Dec 2011 current reporting current reporting
2012
period period
1.Salary, bonus and allowance 7,172,598.65 12,239,174.10 18,875,154.70 536,618.05
2.Employee welfare - 977,440.68 968,456.53 8,984.15
3.Social insurance: - 2,441,363.16 2,441,363.16 -
Including:①Medical insurance - 652,465.23 652,465.23 -
②Basic retirement insurance - 1,667,544.75 1,667,544.75 -
③Unemployment insurance - 33,299.15 33,299.15 -
④Injury insurance - 44,325.04 44,325.04 -
⑤Pregnancy insurance - 43,728.99 43,728.99 -
4.Housing accumulation fund 5,615.00 908,191.80 906,561.80 7,245.00
5. Labour union fee and employee education
2,457,579.35 341,705.46 135,363.30 2,663,921.51
fee
6. Non-monetary welfare - - - -
7. Redemption for termination of labor
- 496,752.92 496,752.92 -
contract
8. Others: - - - -
Including: share payment by cash - - - -
Total 9,635,793.00 17,404,628.12 23,823,652.41 3,216,768.71
16. Tax payable
Categories As at 30th June 2012 As at 31st Dec 2011
71
Categories As at 30th June 2012 As at 31st Dec 2011
VAT -20,295.25 -3,004.13
Business tax -61,749.64 576.58
Consumption Tax - -31,516.27
Urban construction tax 1,988.45 166,892.05
Corporation Income Tax 1,928,973.70 1,548,888.51
Property tax - 127,950.05
Land Add-Value Tax 45,991.56 45,991.56
Personal income Tax 1,924,665.31 1,377,377.56
Education Surcharge 50,290.72 57,742.65
Land use tax - 1,802,634.00
Others 61.59 291,389.75
Total 3,869,926.44 5,384,922.31
17.Dividend Payable
Name of investor As at 30th June 2012 As at 31st Dec 2011
Shareholder of Legal shares 5,127,701.36 5,127,701.36
合计 5,127,701.36 5,127,701.36
18、Other payables
（1）Age analysis
Age As at 30th June 2012 As at 31st Dec 2011
Within 1 year 1,494,302.98 38,208,711.14
More than 1 year 159,467,210.08 136,552,227.09
Total 160,961,513.06 174,760,938.23
（2）Other payables with single significant amount
Name of creditors Balance as at Age Proportion of total Nature
30th June 20 other receivables
12
72
Over 3 Payables of
Foh Chong & Sons Sdn Bhd 21,473,130.10 13.34%
years equity transfer
Loan principal
Chen Songqing 11,169,202.22 1-2 years 6.94%
and interests
Shenzhen Wongtee Real-estate Group Loan principal
11,000,000.00 1-3 years 6.83%
Co., Ltd and interests
Shenzhen International Enterprise Over 3
4,160,185.75 2.58% Current account
Trading Co., Ltd（International Trade） years
Beijing Bona Starlight Cinema
2,894,009.20 1-2 years 1.80% Rent deposit
Management Co., Ltd
Total 50,696,527.27 31.50%
Compensation for Internal Shop Sales (inclusive of principal and compensation) payables amounted to
24,825,065.38 as at 30th June, 2012
Principal payables arisen from shops of Grace Mansion repurchase amounted to 34,040,775.04, interests and
return on investment payables amounted to 3,058,533.37 as at 30th June 2012.
（3）Other payables owed to shareholders or related parties with 5% or more voting right as at 30th June 2012
Name of creditors Nature 2012 年 6 月 30 日
Loan principal and
Shenzhen Wongtee Real Estate Group Co., Ltd. 11,000,000.00
interests
Zheng Kanghao Loan interests 1,084,860.00
Shenzhen Chunhua Medicine United Enterprise
Current account 2,085,211.19
Co., Ltd
Shenzhen Guoshang Medicine Co., Ltd Current account 1,474,784.89
Shenzhen International Enterprise Trading Co.,
Current account 4,160,185.75
Ltd
Total 19,805,041.83
19. Non-current Liability Due Within One Year
（1）Category
Items As at 30th June 2012 As at 31st Dec 2011
73
Long-term loan due within 1 year 13,000,000.00 314,000,000.00
Total 13,000,000.00 314,000,000.00
（2）Long-term loan due within 1 year
①Nature of long-term loan due within 1 year
Nature As at 30th June 2012 As at 31st Dec 2011
Loans secured by non-current assets - -
Loans secured by pledge or/and
guarantees 13,000,000.00 14,000,000.00
Loans secured by collateral, pledge
or/and guarantees - 300,000,000.00
Total 13,000,000.00 314,000,000.00
②Disclosure of long-term loan due within 1 year
As at 30th June As at 31st Dec
Name of creditors Start date Due date Currency Rate%
2012 2011
Agricultural Bank of China
2010-3-19 2013-3-18 RMB 7.32% 8,000,000.00
Wuhua Branch*1
Agricultural Bank of China
2010-3-19 2013-3-18 RMB 7.32% 5,000,000.00
Wuhua Branch*1
Agricultural Bank of China
2009-6-30 2012-6-29 RMB 5.4% 14,000,000.00
Wuhua Branch
Bohai International Trust Floating
2011-7-3 2012-12-2 RMB 300,000,000.00
Co.,Ltd interest
Total 13,000,000.00 314,000,000.00
Note 1: Loan from Agricultural Bank of China, Wuhua Branch with outstanding balance of 10,000,000.00 as at 30th June 2012
was lent to the Company's subsidiary Wuhua Guoshang. Consumptive forestry inventories had been pledged for the loan and the loan
had been guaranteed by Guoshang Linye. RMB2,000,000 principal has been paid back, See Note 5.12 for details of pledged assets.
20、Long-term loan
74
（1）Categories of long-term loan
Category As at 30th June 2012 As at 31st Dec 2011
Loans secured by non-current assets 19,670,000.00 20,850,000.00
Loans secured by pledge or/and
guarantees - 13,000,000.00
Loans secured by collateral, pledge
or/and guarantees 1,690,000,000.00 1,195,000,000.00
Total 1,709,670,000.00 1,228,850,000.00
（2）Disclosure of long-term loan
As at 30th June As at 31st Dec
Name of creditors Start date Due date Currency Rate%
2012 2011
Ping An Trust *1 2012-3-30 2014-3-29 RMB 10.00% 1,200,000,000.00 -
Agricultural Bank of China RMB
2010-3-19 2013-3-18 5.94% - 8,000,000.00
Wuhua branch
Agricultural Bank of China RMB
2010-3-19 2013-3-18 5.94% - 5,000,000.00
Wuhua branch
Agricultural Bank of China RMB
2011-4-26 2014-4-25 floating 19,670,000.00 20,850,000.00
branch in Wengyuan *2
China Construction Bank branch 2011-6-21 2021-6-20 RMB
in Shenzhen City Department of 7.48% 490,000,000.00 490,000,000.00
*3
Total 1,709,670,000.00 1,228,850,000.00
Note 1: Loan from PingAn Trust Co., Ltd with principal of 1,200,000,000.00 was lent to the Company's subsidiary
Shenzhen Rongfa Investment Co., Ltd to repay the previous loan with principal of 1,000,000,000 and to invest in
renovation, merchants invitation, and promotion for IA Mall’s pre-opening. The ownership registration certification
of IA Mall was pledged for the loan. And the loan is also garranteed by Shenzhen Wongtee Real Estate Group Co.,
Ltd, holding subsidiary of Mr Zheng kanghao, the chairman of board of directors of the Company. 40% shares of the
Company’s subsidiary Shenzhen Rongfa Investment Co., Ltd held by Powerland Holdings Limited was pledged for
the loan, Annual rate of the loan is 10% and the Company has to pay 0.6% financial consulting fee for the loan.
75
Note 2: Loan from Agricultural Bank of China, Wengyuan Branch with principal of 22,000,000.00 was lent to the
Company's subsidiary Wengyuan Guoshang. Consumptive forestry inventories held by Wengyuan Guoshang had
been pledged for the loan. 2,330,000 of the principal had been repaid as at 30th June 2012.
Note 3: Loan from China Construction Bank Co., Ltd, Shenzhen Branch with principal of 1,200,000,000.00 was lent
to the Company's subsidiary Shenzhen Rongfa Investment Co., Ltd to lever the liability structure and to decorate IA
MALL project. IA MALL, which is located in Futian Central with area of 80,608.64 Square-meters, (Ownership
Registration No.: ShenFangDiZiDi3000627642) held by Shenzhen Rongfa Investment Co., Ltd. had been pledged for
the loan. Rent receivables may arisen from the IA MALL was pledge for the loan; and the loan had been guaranteed
by the Company. 710Million of the loan had been repaid as at 30th June 2012. Interest rate of the loan was 10%
upwards central bank benchmark lending rate of the value date (June 23rd 2011). Interest rate shall float in
accordance with the central bank benchmark lending rate every 12 month from value date to the date of full
repayment of the loan (principal and interests inclusive). Interest adjust date shall be the corresponding date in current
month of value date. If there should be no corresponding date in current month, interest adjust day shall be the last
day of current month. That the interests shall be settled monthly and the last interest shall be cleared with principal
had been reached by the bank and the Company. See Note 5.12 for details for ownership of pledged assets.
21. Accrued Liabilities
Decrease in
Increase in
Current As at 30th June Reasons for accrued
Items st
As at 31 Dec 2012 current
reporting 2012 liabilities
reporting period
period
Pending
4,030,087.50 4,030,087.50
litigation 1 Terminated contract
Pending
2,840,387.29 2,840,387.29
litigation 2 Labor disputes
Pending Equity transfer
18,387,017.96 18,387,017.96
litigation 3 payables
Compensation for
Internal shop 61,555,677.89 4,643.08 61,560,320.97 Compensation for
sales Internal shop sales
Total 86,813,170.64 4,643.08 86,817,813.72
Note1: Liability was accrued according to judgement and ruling of the first trial concerning contract termination
between Shenzhen Zhongtie Real-estate Management Development Co.,Ltd and the Company's subsidiary Shenzhen
76
Rongfa Investment Co.,Ltd
Note2: Liability was accrued according to judgement and ruling of the first trial concerning litigation of project process bonus and
economics compensation between the Company's subsidiary Shenzhen Rongfa Investment Co.,Ltd and its former employee
Note3: Liability was accrued according to judgement and ruling of the first trial concerning payables arisen from equity transfer
between the Company and Foh Chong & Sons Sdn Bhd. See Note 7.3.2 for details.
Note4: See Note 7.3.5 for details concerning compensation of Grace Mansion shops internal sales
22. Deferred Income
Item 30.6.2012 31.12.2011
Unrecognized leaseback income 148,725.29 148,725.29
Total 148,725.29 148,725.29
Note: The unrecognized leaseback income is the unrecognized income from leaseback of shops in
Gangyihaoting.
23. Share Capital
Chang in current year（+、－）
Allotment Bonus Transfer Others Subtotal
of shares
shares reserves
into
Items 31.12.2010 shares 30.6.2012
ⅰ. Restricted shares
Including:
- - - - - - -
shares held by states
Shares held by
- - - - - - -
domestic legal persons
Shares held by
- - - - - - -
overseas legal persons
Executives shares 340,431.00 - - - - - 340,431.00
Sub-total 340,431.00 - - - - - 340,431.00
77
ⅱ. Unrestricted shares - -
1. Ordinary shares listed
119,212,992.00 - - - - - 119,212,992.00
in mainland
2. Foreign shares listed
101,347,761.00 - - - - - 101,347,761.00
in mainland
3. Foreign shares listed
- - - - - - -
in overseas
4. Others - - - - - - -
Total listed shares 220,560,753.00 - - - - - 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.
24. Capital Reserves
Type 31.12.2011 Increment Decrement 30.6.2012
Share premium 50,995,056.63 - - 50,995,056.63
Other capital reserves 21,320,290.43 - 6,427,272.93 14,893,017.50
Total 72,315,347.06 - 6,427,272.93 65,888,074.13
25. Surplus Reserves
Type 31.12.2011 Increment Decrement 30.6.2012
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
26. Undistributed Profits
Items 30.6.2012 31.12.2011
Openning balance of undistributed profits -498,261,874.87 -364,837,764.72
78
Add:Change of accounting policies 5,235,404.81
Adjusted undistributed profits brought forward -14,884,902.73
Corrected errors from previous reporting peir -498,261,874.87 -374,487,262.64
Net profit attributable to shareholders of the parent 67,663,758.14 -123,774,612.23
Less: Statutory surplus reserve - -
Discretionary surplus reserve - -
Provision for general risks - -
Dividends payable for ordinary shares - -
Dividends for ordinary shares transfer into capital - -
Closing balance of undistributed profits -430,598,116.73 -498,261,874.87
27. Minority interests
Investees Proportion 30.6.2012 (CNY) 31.12.2011 (CNY)
Guoshang Property 39.00% -4,753,483.99 -4,753,483.99
Rong Fa Investment 40.00% -284,102,943.80 -279,246,674.00
Guoshang Qiye 10% - -486,366.76
Total -289,068,306.56 -284,486,524.75
28. 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 cost Operating profit Operating cost
revenue revenue profit
ⅰ. Main operation 33,853,724.83 33,818,164.74 35,560.09 6,432,929.51 6,120,785.31 312,144.20
Income from sales of real 27,156,978.00 29,083,411.56 -1,926,433.56 0.00 0.00 0.00
Property management
6,696,746.83 4,734,753.18 1,961,993.65
income 6,212,929.51 5,959,431.31 253,498.20
79
Income from forestry 220,000.00 161,354.00 58,646.00
ⅱ. Other operation 73,600.00 127,766.69 -54,166.69 49,271.10 9,172.20 40,098.90
Disposal of investment
property 0.00 0.00 0.00
Rental income 73,600.00 127,766.69 -54,166.69 49,271.10 9,172.20 40,098.90
Total 33,927,324.83 33,945,931.43 -18,606.60 6,482,200.61 6,129,957.51 352,243.10
（2）Operating revenues and operating costs listed according to the areas
Item Current reporting period (CNY) Last reporting period (CNY)
Operating revenue Operating cost Operating profit Operating revenue Operating cost Operating profit
Shenzhen
33,927,324.83 33,945,931.43 -18,606.60
City 6,039,713.41 5,667,895.57 371,817.84
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 33,927,324.83 33,945,931.43 -18,606.60 6,482,200.61 6,129,957.51 352,243.10
（3）Details of operating revenues from top five clients
Clients name Operating revenues Proportion to total operating revenues
The First 27,156,978.00 80.04%
The Second
The Third
The Fourth
The Fifth
Total
39. Business Tax and Surtax
80
Items Current reporting period (CNY) Last reporting period (CNY)
Business tax 1,696,366.24 344,214.55
Urban construction tax 114,905.06 24,447.96
Land Value Added Tax 48,731.10 0.00
Others --- 11,435.32
Total 1,860,002.40 380,097.83
30、Sales expenses
Items Current reporting period (CNY) Last reportingperiod (CNY)
Wages and Salaries 1,255,298.15
Benefits 24,638.90
Employee education funds 6,080.00
Social insurance 264,354.07
Advertisement expense 8,095,303.21
Car expense 35,700.00
Travel expense 58,058.52
Entertainment expense 22,429.60
Lease expense 360,000.00
Other expense 1,480,490.34
Total 11,602,352.79
31、General and administrative expenses
Items Current reporting period (CNY) Last reporting period (CNY)
Wages and salaries 7,015,601.45 6,605,547.72
Entertainment expense 951,099.82 913,629.10
Administration fee 1,127,139.46 388,337.16
Car expense 786,808.27 734,706.33
81
Items Current reporting period (CNY) Last reporting period (CNY)
Depreciation 1,707,035.23 1,180,855.55
Litigation expense 738,179.90 279,054.50
Travel expense 246,625.84 145,045.50
Telecom expense 238,977.59 102,681.98
Others 5,521,857.08 4,766,633.03
Total 18,333,324.64 15,116,490.87
32. Financial Expenses
Items Current reporting period (CNY) Last reporting period (CNY)
Interest expenses 7,454,681.19 991,504.26
Less: Interest Incomes 29,562.83 311,551.26
Exchange losses 0.00
Less: Exchange gains 0.00
Bank charges 22,908.07 330,503.26
Other 1,416,043.22 4,131,990.00
Total 8,864,069.65 5,142,446.26
33、Impairment loss on assets
Items Current reporting period (CNY) Last reporting period (CNY)
Bad and doubtful debt expenses 245,212.37 137,982.48
Impairment loss of inventory
Impairment loss of long-term equity
investment
Total 245,212.37 137,982.48
82
34. Investment Income
Item Current reporting period (CNY) Last reporting period (CNY)
Gains from transfer of equity investment 103,081,609.13 0.00
Total 103,081,609.13 0.00
35. Non-operating Income
Items Current reporting period (CNY) Last reporting period (CNY)
Gains from disposal of fixed assets 1,472,248.48 1,410.00
Government subsidy
Fines
Debts unable to repay
Others 8,286.10 503,500.00
Total 1,480,534.58 504,910.00
36. Non-operating expenses
Items Current reporting period (CNY) Last reporting period (CNY)
Loss on disposal of fixed assets 877,995.93 47,255.54
Penalty charges 2,200.00
Compensation for Internal Shop
Sales 0.00
Overdue fin -
Others 8,940.60 -
Total 886,936.53 49,455.54
37. Income Tax Expense
83
Items Current reporting period (CNY) Last reporting period (CNY)
Income tax for current period - -
Deferred Income tax -32,931.63
Total -32,931.63
38、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 belongs to company‘s ordinary
0.306 0.306 -0.070 -0.070
shares‘ shareholder of the company
Net profit that discount non-usual profit
and loss belongs to company‘s ordinary -0.105 -0.105 -0.072 -0.072
shares‘ shareholder
Basic EPS=P0÷S
S= S0＋S1＋Si×Mi÷M0– Sj×Mj÷M0-Sk
Including: P0 is net profit belongs to company’s ordinary shares’ shareholder of the company or net profit
that discount non-usual profit and loss belongs to company’s ordinary shares’ shareholder; S is issued weighted
average ordinary shares; S0 is the opening balance of total number of shares; S1 is the increase of shares in current
reporting period due to capital reserve converting to shared capital or stock dividends distribution; Si is the increase
of shares in current reporting period due to new issue of shares or debt-to-equity swap; Sj is the decrease of shares in
current reporting period due to repurchase of shares; Sk is the shares that drawn back by the Company; M0 is number
of mounths in current reporting period; Mi is the number of mounths in the period from next mounth after share
increase to the end of current reporting period; Mj is the number of mounths in the period from next mounth after
share decrease to the end of current reporting period.
Diluted EPS=P1/(S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+Weighted average of increased number of
shares due to warrant of purchase, stock option and/or convertible bond..
Including: P1 is net profit belongs to company’s ordinary shares’ shareholder of the company or net profit
that discount non-usual profit and loss belongs to company’s ordinary shares’ shareholder adjusted according to
84
regulations about shares dilution of.
39. Notes to the consolidated cash flow statement
（1）Other cash receipts in relation to operating activities
Items Jan to June 2012 Jan to June 2011
Current account 75,523,959.20 29,433,468.66
Deposit 13,465,799.53 -
Others 7,131,156.82 1,014,394.47
Total 96,120,915.55 30,447,863.13
（2）Other cash payments in relation to operating activities
Items Jan to June 2012 Jan to June 2011
Current account 79,523,253.50 15,683,633.08
Advertisement service fee 8,095,303.21 -
Rent 3,626,826.59 928,823.20
Entertainment 951,099.82 913,629.10
Forestry management fee 913,246.50 1,036,043.18
Litigation fee 738,179.90 279,054.50
Car maintainance 786,808.27 734,706.33
Others 3,151,246.70 2,477,134.89
Total 97,785,964.49 22,053,024.28
40. 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 62,635,024.36 -20,656,273.71
Add: Provision for assets impairment loss 245,212.37 137,982.48
Depreciation of fixed assets、oil and gas assets and productbility biological assets 1,963,582.03 1,704,641.81
Amortization of intangible assets 1,654.80 417,753.35
85
Amortization of Long-term deferred expenses 650,131.46 30,000.00
Loss on disposal of fixed assets、intangible assets and other long-term assets (The
877,995.93
gain is listed beginning with ―-―) 48,045.54
Losses on scraped fixed assets (The gain is listed beginning with ―-―) 0.00
Losses from fluctuation in fair values (The gain is listed beginning with ―-―) 149,546.00 0.00
Financial costs (The gain is listed beginning with ―-―) 8,864,069.65 7,241,529.57
Losses on investment (The gain is listed beginning with ―-―) -103,081,609.13 0.00
Decrease of deferred income tax assets (The increase is listed beginning with ―-―) 0.00
Increase of deferred income tax liabilities (The decrease is listed beginning with
-32,931.64
―-―) 0.00
Decrease of inventories (The increase is listed beginning with ―-―) -63,165,226.30 0.00
Decrease of operating receivables (The increase is listed beginning with ―-―) -23,716,632.06 -46,658,843.49
Increase of operating payables (The decrease is listed beginning with ―-―) 22,678,104.55 -11,879,035.35
Others 0.00
Net cash flow arising from operating activities (91,931,077.98) -69,614,199.80
41 . Cash and Cash Equivalent
Current reporting Last reporting
Items
period (CNY) period (CNY)
1、Cash 124,655,446.69 170,979,778.01
Including: Cash on hand 152,823.42 373,860.53
Unrestricted bank deposit 124,502,623.27 170,585,917.48
Unrestricted other monetary funds - 20,000.00
Deposit in central bank
- 0.00
Placement in other banks or financial institutions - 0.00
Due to other banks or financial institutions - 0.00
2、Cash equivalents - 0.00
Including: Bond investment due within three month - 0.00
3、Ending balance of cash and cash equivalents 124,655,46.69 170,979,778.01
86
Including: restricted cash and cash equivalents for the parent or subsidiaries in the
Group - 0.00
VI Related party relationships and transactions
1. Definition of related party
A related party is an entity which is controlled, jointly controlled or significantly influenced by the
Company, or an entity has control, joint control or significant influence over the Company, or an entity
which is under common control, joint control, or significant influence with the Company.
2. Related parties
Related parites without control relationship:
Name of related party Relationship with the Company
Multi Profit Asia Pacific Investment Co., Ltd. 13.70% shareholding in the Company
Shenzhen Tefa Group Co., Ltd. Shenzhen Tefa Group Co., Ltd.
Shenzhen Tefa Group Co., Ltd. 7.03% shareholding in the Company
Shenzhen Maoye Emporium Ltd. 6.15% shareholding in the Company
Legal representative and chairman of board of
Zheng Kanghao directors of the Company
Shenzhen Wongtee Real Estate Group Co.,Ltd Enterprise actually controlled by Zheng Kanghao
Shenzhen Wongtee Business Management Co.,Ltd Enterprise actually controlled by Zheng Kanghao
POWERLAND HOLDING LIMITED Enterprise actually controlled by Zheng Kanghao
The Company has a dispersed shareholding structure. No investor has absolute control over the Company.
Therefore, the first, second, third and fourth largest shareholders, namely, Multi Profit Asia Pacific Investment Co.,
Ltd., Shenzhen Tefa Group Co., Ltd. Dahua Investment (China) Co., Ltd. and Shenzhen Maoye Emporium Ltd. are
recognised as related parties without control relationship.
(4). Related party transactions:
（1）See Note5.20 and Note5.21 for details of related party guarantee.
（2）Related party lending and borrowing
Related party Balance Start date Due date Remark
87
Borrowing
Shenzhen Wongtee Real Estate 2012-6-29 2012-9-29
11,000,000.00
Group Co.,Ltd
Subtotal 11,000,000.00
（3）Related party lease
Disclosure
Rantal fee accrued in
Name of Name of Start date of Expiring date Pricing basis of
Assets leased current reporting
lessors Lessees lease of lease rental fee
period
Shenzhen F6 Huanggang
Shenzhen
Wongtee Business Centre, Both parties‘
International
Busisness NO.2028, Jintian 2012-2-1 2015-1-31 agreement based 390,600.00
Enterprise
Management Road, Shenzhen on market price
Co.,Ltd
Co., Ltd City
Shenzhen F6 Huanggang
Shenzhen
Wongtee Business Centre, Both parties‘
Rongfa
Busisness NO.2028, Jintian 2012-2-1 2015-1-31 agreement based 390,600.00
Investment
Management Road, Shenzhen on market price
Co.,Ltd
Co., Ltd City
V2 Meeting
Shenzhen room, F27,
Shenzhen
Wongtee Huanggang Both parties‘
Rongfa
Hotel Business Centre, 2012-1-1 2012-8.31 agreement based 390,600.00
Investment
Management NO.2028, Jintian on market price
Co.,Ltd
Co.,Ltd Road, Shenzhen
City
30.6.2012 31.12.2011
Related parties
Balance Proportion Balance Proportion
Other receivables:
Shenzhen Wongtee Business Management 402,714.00 3.01% 780,205.00 4.64%
Co.,Ltd
Shenzhen Wongtee Hotel Management Co.,Ltd 250,000.00 1.87%
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Other payables:
Shenzhen Chunhua Medicine United Co., Ltd. 2,085,211.19 1.30% 2,085,211.19 1.50%
Shenzhen Guoshang Medicine Co., Ltd 1,474,784.89 0.92% 1,474,784.89 1.06%
Shenzhen International Enterprise Trading Co., Ltd 4,160,185.75 2.58% 4,160,185.75 2.99%
Zhengkanghao 1,084,860.00 0.67% 1,597,050.00 1.15%
Shenzhen Huangting Real Estate Group Co., Ltd 11,000,000.00 6.83% 21,989,799.94 15.81%
POWERLAND HOLDING LIMITED 6,999,584.65 4.35% 6,999,584.65 5.03%
Total 26,804,626.48 16.65% 38,306,616.42 27.54%
VII Contingency
1. Guarantee
（1）Rong Fa Investment follows the property industry working practice that the property developer provides
guarantee for purchaseby-mortgage of property developed. As at 30th June 2012, the carrying amount of the
mortgages guaranteed by Rong Fa Investment amounted to RMB 12,034,900.
（2）Huizhou Rongfa follows the property industry working practice that the property developer provides
guarantee for purchase-bymortgage of property developed. As at December 31st, 2011, the carrying amount of the
mortgages guaranteed by Huizhou Rongfa amounted to RMB 9,430,000.
2. Assets pledged
Apart from disclosures in Note 5.5, Note 5.12 and Note 12.2, no other asset was being pledged as security.
3. Pending litigation
（1）Contract dispute between Shenzhen Zhongtie Property Management Co.,Ltd (Thereafter Zhongtie Property)
and Shenzhen Rongfa Investment Co., Ltd (Thereafter Tongfa Investment):
Case briefing: A property management contract was signed by both Rongfa Investment and Zhongtie Property
on 17th Feb 2009 concerning a shopping mall project in CBD Futian District. Rongfa request a revoke of this property
management contract because of its adjustment about the operation planning and targeting. Zhongtie Property filed a
lawsuit against the Company on 15th Dec 2010 to Intermediate People’s court of Futian District Shenzhen. Request
RMB 5,000,000 as penalty of penalty of breach contract and RMB8,658,315.88 as other loss from Rongfa
Investment.
Case progress update: In Oct 2011 the Company received the first trial decision that the Company shall pay
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Zhongtie Property RMB 4,000,000 as the contract breach penalty. The Company appealed, the case is in the progress
of second trial currently.
（2）Equity dispute between the Company and Foh Chong & Sons Sdn Bhd
Case briefing:
Malaysia Foh Chong & Sons Sdn Bhd (There after Foh Chong) and the Company signed on 31st May 2011, Foh Chong shall transfer 10%
equity share of Rongfa Investment to the Company at the price of RMB20,600,000, the Company had not paid for the
equity share transfer after the contract went effective. The company received the lawsuit notice of Foh Chong fileld to
Intermediate People’s Court of Shenzhen city. Foh Chong request ① The Company shall pay for the principal, the
interests and penalty of breaching contract for the equity transfer in total RMB 37,077,645.55. ②The Company shall
pay for the loss and litigation fee arisen from the dispute.
Case progress update: The Company received the first trial decision that The Company shall pay the principal,
interests and penalty for breach contract for the equity transfer in March 2012 based on the original price
RMB20,600,000.The interest shall be calculated in accordance with the loan interest rate stipulated by the People's
Bank of China for the corresponding period from 1st June 2001 t0 31st Dec 2009; Penalty shall be calculated as 0.03%
of total payables per day from 1st Jan 2010 to the date of payment confirmed by the court decision. See the Significant
lawsuit announcement announced by the Company on 7th April on cninfo.com.cn, Stock Times Cn and Dakungpao
HK.
The company has appealed the case to Higher People’s court of Guangdong province, and the case is in second
trial progess currently.
（3）Guarantee liability dispute between between the Company and Shenzhen-Hongkong Industry and Commerce
Import and Export Company (hereafter, SH Industry and Commerce)
Case briefing: In 2000, Shenzhen Development Bank, ShennandongLu Branch (hereafter, the Bank) initiated
litigation against the Company to the Shenzhen Intermediate People's Court (hereafter, the Count) for that the
Company shall be liable for the principal of the loan lent to SH Industry and Commerce amounting to 10 million and
the interests on the loan. As provided by the Count Judgement (2001) ShenZhongFaJingYiChuZiDi53Hao ((2001)
issued by the Count on February 27th, 2001, the Company is liable for the principal of the loan lent to SH Industry
and Commerce amounting to 10 million and the interests on the loan.On December 30th, 2002, compromise was
reached between the Company and the Bank under the Count's arbitration that the Company shall repay to the Bank
the principal of and the interests on the loan on behalf of SH Industry and Commerce, and that the Company is
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entitled to recover damange from SH Industry and Commerce. While exercising the recovery in 2004, ownerships of
the Sun House and the Land were found non-transferrable, and SH Industry and Commerce held no executable assets.
As approved by the Board of Directors, 100% bad debt allowance was recognised for the recognized loss in 2004.
Full amount CNY17,953,448 of sales revenue (execution cost deducted) from auction of the land NO.T102-1 located
in Moon Bay Avenue, Nanshan District, Shenzhen City owned by SH Industry Commerce and seizure by Shenzhen
Investment Holding Corporation was assigned to Shenzhen Investment Holding Corporation by the court decision on
March 17th 2011. Objection letter was submitted to the court by the Company on March 22rd 2011. Coordination
meeting was held on Nov 25th 2011 by the Court, suggesting mediation to settle the case. Preliminary settlement plan
was such that: 10,000,000 shall be assigned to seizer first in order; 8,000,000 remained shall be assigned among the
three queuing seizers upon principal proportion; 2,651,149.33 shall be assigned to each seizer; and the settlement plan
shall be effective upon written confirmation by all seizers.
Case process update:
Application to suspend the trial of the case was submitted to the court by the Company on Dec 5th 2011. The
settlement agreement was signed by four parties on Feb 9th 2012, the company received CNY2,646, 498.19
(execution cost deducted) court remittance.
（4）Equity dispute between Shenzhen Rong Fa Investment Co. Ltd and Shenzhen Yahaoyuan Investment
Co.,Ltd.
Case briefing:
Shenzhen Rong Fa Investment Co., Ltd filed a lawsuit againest Shenzhen Yahaoyuan Investment Co.,Ltd in Oct
2011 concerning the Equity dispute between Shenzhen Rong Fa Investment Co. Ltd and Shenzhen Yahaoyuan
Investment Co.,Ltd to the People‘s court of Longgang District Shenzhen city.
Case progress update:
Rongfa Investment received the court decision <(2011) Shenlongfaminerchuzi NO.4549> that the accuser
didn‘t provide sufficient proof to support that Land G10205-0267 was the land stated in the three contracts signed by
the accuser and the defendant. Therefore, the consequences of obscure statement of the contract shall be beared by the
accuser. The first trial courtdecision overruled the accusers request and litigation fee of RMB 171,800 shall be paid
by the accuser.
See the significant lawsuit announcement announced by the Company on 26th Oct 2011 and 22nd Feb 2012 on on
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7th April on cninfo.com.cn, Stock Times Cn and Dakungpao HK. for details
The company has appealed the case to Intermediate People‘s court of Shenzhen, and the case is in second trial
progess currently.
（5）Disputes between the Company and its employees concerning IA Mall internal sales repurchase
Case briefing:
Rongfa Investment filed lawsuits againt three of its former employees surnamed Chen, Song and Li in Aug 2011
to People’s court of Futia District of Shenzhen city to properly solve the disputes between the Company and its
employees concerning IA Mall internal sales repurchase. (See Note 10 of the Company’s 2011 financial report for
details of IA Mall internal sales)
Case progress update:
Rongfa investment received the first trial decision of the court in July 2012 that ①The signed by the accuser and the defendant is legally effective. ②①The
signed by the accuser and the defendant shall be revoked.
③Other requests by accuser rejected④counter-charge from the defendant rejected
Including: The Court’s decision about Rongfa vs Song concerning the effectiveness of internal sales agreement
is request from accuser rejected.
The Company plans to appeal
And, Rongfa Investment received lawsuit notice from 7 other former employees surnamed Yang etc, requesting
Rongfa deliver the shop immediately and bear the litigation fee. The case is in first trial progess currently. (See the
significant lawsuit announcement announced by the Company on 5th July 2012 on on 7th April on cninfo.com.cn,
Stock Times Cn and Dakungpao HK. for details)
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 250,365.16 148,725.29
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IX. Events after the Balance Sheet Date
N/A
X. Other Significant Events
About IA Mall (The previously named Crystal Island) Internal sales
For the purpose of financing the IA MALL project, the Company adopted the then prevailing financing option
by entering into internal sales agreement of part of the shops at IA MALL (hereafter, the Internal Sales Agreements)
with employees in March 2005.
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 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.
In addition, as provided by the Resolution for the 2nd Proposal regarding Internal Shop Sales (hereafter, the
2011 BD Resolution) issued by the 2011 2nd Meeting of the 6th Term of the Board of Directors held on April 25th,
2011, the Group shall be responsible for any personal income tax chargeable on employees arising from the
compensation. The Group had cumulative recognised loss amounting to RMB86,370,519.24 (including
RMB76,907,913.24 recognised in nonoperating income for the year ended December 31st, 2010 and 9,462,606.00
recognised for the reporting period prior to the year ended December 31st, 2010).
As at 30th June 2012, the Group has entered into agreements directed by the 2010 GM Resolution and the 2011
BD Resolution with eleven buyers out of thirty-five. Total compensation agreed by the agreements amounting to
9,925,919.23 and total size of shop area of the agreements is 660.39 square-metres. Due to disagreement on the
amount of compensation, the Group had not reached agreement with the remaining twenty-four buyers. Total size of
shop area of the remaining twenty-four buyers is 1,647.33 square-metres.
11 Measures for maintenance and improvement of the going concern
status
The carrying amount of total assets of the Company as at 30th June, 2012 was 1,711,777,400.00; the total
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liabilities at 30th June, 2012 was 2,018,724,700.00; and, the Total shareholders' equity of the Company as at 30th
June, 2012 was -17,879,000.00. The Company has implemented measures, including acceleration of project
development, improvement of asset utilisation and extra financing, etc., to improve the going concern status, such as:
（1）The Company’s investment property IA Mall is on comprehensive pre-openning preparation, and IA Mall
is predicted to start trial operation prior to the end of August 2012. As at the reporting day, certain results of
merchants invitation has been achieved, around 70% of the area of IA Mall has been leased. IA Mall’s operation is
expected to improve the Company’s operation.
（2）the Company had obtained another 200,000,000 loan in March 2012. Extra financing and optimization of
financing structure were expected in accordance with the project processes to insure the smooth going of the
Company's core projects.
（3）To utilize the assets, the Company and its holding subsidiaries sold theirs shares of Shenzhen Shen
GuoShang Business Management Co., Ltd（Business Company） and Shenzhen Longgang International Arcade
Enterprise Co., Ltd. （Guoshang Enterprise）, the total price of transcation was RMB110 Million. The predicted
increase of net profit attribute to the parent company was RMB93 Million, provided certain cash flow for the
Company.
（4）Strengthened act to liquidate forestry assets had been implemented by the Company. Liquidated forestry
was expected to reach 24,000 Mu during reporting period ended December 31st 2012, and 6,000 Mu had been
liquidated as at 30th June 2012.
XII. Main Notes to Financial Statements of Parent Company
1. Other Accounts Receivable
（1）Other accounts receivable listed according to the categories
30.6.2012(CNY) 31.12.2012(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 483,164,483. 376,771,862. 373,850,389.7 371,199,240.
99.56% 99.74% 88.54% 98.26%
significance 34 19 0 37
Credit-risk-categorised receivables
Categorisation by nature of
1,217,582.08 0.25% 83,775.35 0.02% 47,468,386.55 11.24% 5,656,397.17 1.50%
receivables
Subtoal 1,217,582.08 0.25% 83,775.35 0.02% 47,468,386.55 11.24% 5,656,397.17 1.50%
94
Receivables of individual
insignificance subject to individual 0.19% 900,000.00 0.24% 900,000.00 0.21% 900,000.00 0.24%
900,000.00
assessment for impairment
485,282,065. 377,755,637. 422,218,776.2 377,755,637. 100.00
Total 100.00%
42 100.00% 54 100.00% 5 54 %
（2）Other accounts receivable listed according to the age
30.6.2012CNY) 31.12.2011CNY)
Age Provision for bad Provision for
Book value Proportion Carrying value Book value Proportion Carrying value
debts bad debts
Within 1
1,122,217.08 24.05% 56,110.85 1,066,106.23
year 11,416,614.97 24.05% 570,830.75 10,845,784.22
1-2 years 0.00 14.14% 0.00 0.00 6,711,181.33 14.14% 671,118.13 6,040,063.20
2-3 years 6,300.00 61.62% 945.00 5,355.00 29,251,525.25 61.62% 4,387,728.79 24,863,796.46
3-4 years - 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
4-5 years - 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
More than 5
89,065.00 0.19% 26,719.50 62,345.50
years 89,065.00 0.19% 26,719.50 62,345.50
Total 1,217,582.08 100.00% 83,775.35 1,133,806.73 47,468,386.55 100.00% 5,656,397.17 41,811,989.38
（3）List the amount of top five other accounts receivable
Proportion of total
Company name Balance Age Nature other accounts
receivable
Shenzhen Rongfa Investment Co., Within 1 year、
399,429,741.86 Current account 82.31%
Ltd 1-3year
Shenzhen Guoshanglinye Within 1
56,506,399.28 Current account 11.64%
Development Co., Ltd year,1-3 years
Shenzhen International Arcade
17,122,151.90 4-5 years Current account 3.53%
Chain Store
95
Shenzhen Shengang Industrial
More than 5 Please refer Note V、4、(3)
Trading Inport & Export 7,201,728.50 1.48%
years note for details
Company
Shenzhen Gangyidongfanghui
2,904,461.80 3-4 years Current account 0.60%
business Co., Ltd
Total 483,164,483.34 99.56%
2. Long-term Equity Investment
（1）Long term equity investment and its impairment loss provison
As at 30th June 2012 As at 31st Dec 2011
Items Provision for Provision for
Book value Carrying value Book value Carrying value
impairment impairment
Long-term equity
investment 58,516,718.10 14,870,094.51 43,646,623.59 79,943,991.03 14,870,094.51 65,073,896.52
Including: Investment
for subsidiaries 58,516,718.10 14,870,094.51 43,646,623.59 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
cost 31.12.2011 Increment Decrement 30.6.2012
Shenzhen Chunhua Medicine
United Co., Ltd. 2,250,000.00 2,250,000.00 0.00 0.00 2,250,000.00
Shenzhen Guoshang Medicine Co.,
Ltd. 2,850,000.00 2,850,000.00 0.00 0.00 2,850,000.00
Shenzhen International trade
enterprise Co., Ltd 5,320,000.00 5,320,000.00 0.00 0.00 5,320,000.00
Shenzhen International Arcade
Property Management Co., Ltd 2,800,000.00 2,800,000.00 0.00 0.00 2,800,000.00
Shenzhen Rongfa Investment Co.,
Ltd. 35,296,718.10 35,296,718.10 0.00 0.00 35,296,718.10
96
Shenzhen Longgang International
Arcade Enterprise Co., Ltd. 21,427,272.93 21,427,272.93 0.00 21,427,272.93 0.00
Shenzhen International Arcade
Chain Store 10,000,000.00 10,000,000.00 0.00 0.00 10,000,000.00
Total 79,943,991.03 79,943,991.03 0.00 21,427,272.93 58,516,718.10
（3）Provision for impairment loss of long-term equity investment
Name of investees 31.12.2011 Increment Decrement 30.6.2012
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
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 33,600.00 8,345.70 25,254.30 34,271.10 8,345.70 25,925.40
Disposal of investment
property - -
Total 33,600.00 8,345.70 25,254.30 34,271.10 8,345.70 25,925.40
（2）Operating revenues and operating costs listed according to the areas
Items Current reporting period (CNY) Last reporting period (CNY)
Operating Operating
Operating costs Operating profits Operating costs Operating profits
revenue revenue
Shenzhen 33,600.00 8,345.70 25,254.30 34,271.10 8,345.70 25,925.40
97
4. 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 75,390,739.05 -9,667,205.48
Add: Provision for assets impairment loss 1,962,127.61 12,508,247.20
Depreciation of fixed assets、oil and gas assets and productbility biological assets 644,710.38 522,615.20
Amortization of intangible assets 0.00
Amortization of Long-term deferred expenses 30,000.00
Loss on disposal of fixed assets、intangible assets and other long-term assets (The
877,995.93 5,733.88
gain is listed beginning with ―-―)
Losses on scraped fixed assets (The gain is listed beginning with ―-―) 0.00
Losses from fluctuation in fair values (The gain is listed beginning with ―-―) 0.00
Financial costs (The gain is listed beginning with ―-―) -12,672,166.43 -10,354,438.43
Losses on investment (The gain is listed beginning with ―-―) -75,000,000.00 0.00
Decrease of deferred income tax assets (The increase is listed beginning with ―-―) 0.00
Increase of deferred income tax liabilities (The decrease is listed beginning with
-33,448.27
―-―) 0.00
Decrease of inventories (The increase is listed beginning with ―-―) 0.00
Decrease of operating receivables (The increase is listed beginning with ―-―) -48,039,086.50 -1,389,332.72
Increase of operating payables (The decrease is listed beginning with ―-―) -9,939,727.74 8,971,388.95
Others 0.00
Net cash flow arising from operating activities -66,808,855.97 627,008.60
5．Cash and Cash Equivalent
Current reporting Last reporting
Items
period (CNY) period (CNY)
1、Cash 266,860.58 417,219.09
Including: Cash on hand 86,367.36 287,919.67
Unrestricted bank deposit 180,493.22 109,299.42
Unrestricted other monetary funds - 20,000.00
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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 266,860.58 417,219.09
Including: restricted cash and cash equivalents for the parent or subsidiaries in the
Group -
XIII. Details of Extraordinary Profits or Losses
Items Jan-Jun 2012
(1) Profit and loss from disposal of non-current assets, including the offset part of the impaired 103,675,861.68
assets;
(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
quantity according to certain standard based on state policies;
Items -
(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 -
99
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 -
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 -149,546.00
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 -654.50
(21) Other items that conform to the definition of extraordinary profit and loss
Subtotal
Less：Amount influenced by income tax -
Less：Non-recurring profit attributable to minority interest -12,586,754.99
Total 90,938,906.19
XIV. Yield Rate of Net Assets and Earnings Per Share
Weighted Earnings Per Share
Profit in the report period Average Yield Rate of Net
Basic EPS Basic EPS
Assets
Net profits attributable to ordinary
--- 0.306 0.306
shareholders
Net profits attributable to ordinary
shareholders that have deducted --- -0.105 -0.105
extraordinary profits or losses.
100
15. Significant year-to-year movement of main elements of the Financial Statements
（1）Cash and cash equivalents: compared to last year there was a 5.24 times of increase in cash and cash
equivalents because of the increased bank loan and decreased interests expenses, operation expenses and the IA Mall
construction expenses.
（2）Account receivable: Compared to the beginning of current reporting period, there was a 40.76 times of
increase due to the increase of account receivables from supplier.
（3）Intangible Assets: Compared to the beginning of current reporting period, there was a 100% decrease
because of the disposal of Shenzhen Longgang International Arcade Enterprise Co., Ltd. （Guoshang Enterprise）
together with its intangible assets.
（4）Operating Income: The 4.23 times of increase in operating income from the previous reporting period to
current reporting period is mainly due to the disposal of shops of Grace Mansion.
（5）Operating cost: The 3.98 times of increase in operating cost from the previous reporting period to current
reporting period is mainly due to the disposal of shops of Grace Mansion.
（6）Sales expenses: The increase of RMB11,602,400 from the previous reporting period to current reporting
period is mainly due to the increase of advertisement fee, rental fee and sales service fee in current reporting
period.
（7）financial expenses: The increase of 72.37% from the previous reporting period to current reporting period is
mainly due to the decrease of capitalized borrowing expensesinterests.
16. Issuance of the Financial Statements
The Financial Statements was approved and declared for issuance by the Board of Directors on Aug 21,2012.
Shenzhen International Enterprise Co., Ltd.
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: Aug 21,2012. Date: Aug 21,2012. Date: Aug 21,2012.
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