HAINAN PEARL RIVER HOLDINGS CO., LTD.
SEMI-ANNUAL REPORT 2009
Important notice: The Board of Directors, the Supervisory Committee as well as
directors, supervisors and senior executives of HaiNan Pearl River Holdings Co.,
Ltd. (hereinafter referred to as the Company) guarantee that no fictitious
recordation, misleading statement or significant omit is carried over in this report,
and individually and jointly accept responsibility for the correctness, accuracy
and completeness of the contents of this report.
None of directors, supervisors and senior executives stated that he (she) could not
ensure the correctness, accuracy and completeness of the contents of the Interim
Report or have objection for this report.
The semi-annual financial report of the Company has not been audited.
Mr. Zheng Qing, Chairman of the Board as well as General Manager, Mr. Chen Binglian,
Standing Deputy General Manager as well as Chief Financial Officer, and Mr. Yang
Daoliang, Manager of Financial Department hereby confirm that t he Financial Report
enclosed in the Semi-annual Report is true and complete.
I. COMPANY PROFILE
1. Legal name of the Company
In Chinese: 海南珠江控股股份有限公司
In English: Hainan Pearl River Holdings Co., Ltd.
2. Registered Address: 29/F, Royal Empire Building, Pearl River Plaza, Binhai
Avenue, Haikou
Office Address: 29/F, Royal Empire Building, Pearl River Plaza, Binhai Avenue,
Haikou
Post Code: 570125
E-mail: hnpearl@public.hk.hi.cn
3. Legal Representative: Zheng Qing
4. Secretary of the Board: Gu Lirong
Contact Address: 29/F, Royal Empire Building, Pearl River Plaza, Binhai Avenue,
Haikou
Tel: (86) 898-68581888 ext.
Fax: (86) 898-68581026
5. Newspapers Designated by the Company for Disclosing Information:
China Securities Journal and Hong Kong Wen Wei Po
Internet Website Designated by China Securities Regulatory Commission for
Publishing the Semi-Annual Report: http://www.cninfo.com.cn
Place Where the Annual Report is Prepared and Placed: Secretariat of the Board
of Directors
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: *ST Pearl River, * ST Pearl River BStock Code: 000505, 200505
7. Initial registration date and place: Jan. 11, 1992 in Haikou, Hainan
Registered number for business license of corporation: 4600001006830
Registered number of taxation: 460100201284556
Organization Code Certificate: 20128455-6
Certified Public Accountant engaged by the Company: Daxin Certified Public
Accountants Co., Ltd.
Office address: 15/F, College of Beijing Nation Mansion. No.1 Zhichun Road.
Haidian District, Beijing
II. MAIN FINANCIAL DATA AND INDEXES
1. Main accounting data and financial index
Unit: RMB
End of this report period Period-end of last year
Increase/decrease at the end of this
report period compared with that at
the end of last year（%）
Total assets 1,758,942,187.24 975,122,914.20 80.38
Owners’ equity(or shareholders’ equity) 617,785,808.15 119,086,531.85 418.77
Net assets per share 1.4477 0.2791 418.70
Report period
(Jan. to Jun., 2009)
The same period of last
year
Increase/decrease in this report
period year-on-year (%)
Operating profit 83,656,958.37 -46,903,511.26 278.36
Total profit 83,591,061.49 -47,501,992.22 275.97
Net profit 84,803,402.31 -46,511,719.43 282.33
Net profit after deducting non-recurring
gains and losses -46,260,675.51 -45,978,464.73 -0.61
Basic earnings per share 0.1987 -0.1090 282.29
Diluted earnings per share 0.1987 -0.1090 282.29
Return on equity 13.73% -31.18% Increased 44.91 percentage points
Net cash flow arising from operating
activities 36,604,404.48 -82,847,973.65 144.18
Net cash flow arising from operating
activities per share
0.09 -0.19 147.37
2. Items of non-recurring gains and losses
Items of non-recurring gains and losses Amount
Gains and losses arising from disposal of non-current assets 125,324.57
Other net non-operating income and expense -191,221.45
Investment gains from the disposal of financial assets available for
sales
131,129,924.21
Less: Impact on income tax
Less: Influence on gains and losses of minority shareholders -50.49
Total 131,064,077.823. Return on equity and earnings per share
According to regulations of Rule No.9 for Information Edit for Company Offering
Public Shares – Calculation and Disclosure for Return on Equity and Earnings per
Share (emended in 2007) released by CSRC, the r eturn on equity, basic earnings per
share and diluted earnings per share calculated with fully diluted and weighted
average method by the Company are listed as follows:
Return on equity Earnings per share (RMB)
Profit of the report period
Fully diluted Weighted average
Basic earnings
per share
Diluted
earnings
per share
Jan.-June, 2009
Net profit attributable to common shareholders of the Company
13.7270% 23.0171% 0.1987 0.1987
Net profit attributable to common shareholders of the Company after
deducting the non-recurring losses and gains
-7.4881% -12.5560% -0.1084 -0.1084
Jan.-June, 2008
Net profit attributable to common shareholders of the Company
-31.1785% -26.9736% -0.1090 -0.1090
Net profit attributable to common shareholders of the Company after
deducting the non-recurring losses and gains
-30.8211% -26.6643% -0.1077 -0.1077
4. Influences on net profit and net asset by IAS
Net profit attributable to
shareholders of listed company
Owners’ equity attributable to
shareholders of listed company
Amount in the report
period
Amount in last
period
Amount in period-end
Amount in
period-begin
IAS 84,803,402 -46,511,719 616,448,808 63,785,532
CAS 84,803,402 -46,511,719 617,785,808 119,086,532
Sub-items and total adjusted based on IAS:
- Adjustment of amortization of land use
rights -1,337,000 -1,337,000
- Unrecognized switching back the
reserve for impairment of financial
assets available for sales
-44,035,000
- Adjustment to investing profit of
associated companies
-9,929,000
Total amount of differences between CAS
and IAS 0 0 -1,337,000 -55,301,000
Explanations on differences between CAS
and IAS
Land use right of original construction in progress was amortized based on IAS before
adopting Accounting Standard for Business Enterprise 2006.
III. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHAREHOLDERS
(I)Changes in share capital
1. In the report period, the total shares of the Company remained unchanged.2. Statement of changes in shares of the Company
Unit: share
Before the change Increase or decrease（+，- ）as of the period After the change
Amount Proportion
New shares
offered
Bonus
share
Capitalizatio
n of public
reserve
Others Subtotal Amount Proportion
I. Restricted shares 123,004,609 28.82% 123,004,609 28.82%
1. State-owned shares
2. State-owned legal person’s shares 119,080,478 27.90% 149,500 149,500 119,229,978 27.94%
3. Other domestic shares 3,924,131 0.92% -149,500 -149,500 3,774,631 0.88%
Including: Domestic non state-owned legal
person’s shares
3,898,500 0.91% -149,500 -149,500 3,749,000 0.88%
Domestic natural person’s shares 25,631 0.01% 25,631 0.01%
4. Foreign shares
Including: Foreign legal person’s shares
Foreign natural person’s shares
5. Senior shares
II. Unrestricted shares 303,740,795 71.18% 303,740,795 71.18%
1. RMB Ordinary shares 238,765,795 55.95% 238,765,795 55.95%
2. Domestically listed foreign shares 64,975,000 15.23% 64,975,000 15.23%
3. Overseas listed foreign shares
4. Others
III. Total shares 426,745,404 100.00% 426,745,404 100.00%
(II)Shares held by main shareholders
1. Ended the report period, the total shareholders of the Company holding A-share
amounted to 40,605 and 7,708 for those who hold B-share.
2. Shares held by the top ten shareholders and top ten unrestricted shareholders
Unit: Share
Total shareholders 48313
Particulars about shares held by the top ten shareholders
Shareholder Nature of shareholder Holding proportion Total shares
held
Total restricted
shares held
Shares
pledged or
frozen
Beijing Wanfa Real Estate Development Co.,
Ltd.
State-owned legal person 26.11 111,432,978 111,432,978 0
Hebei Securities Co., Ltd. State-owned legal person 1.52 6,497,500 6,497,500 0
Yang Bochen Domestic natural person 1.17 5,000,000 0 0
Gu Hongjuan Domestic natural person 0.71 3,019,800 0 0
Yang Jianzhong Domestic natural person 0.61 2,600,000 0 0
Jintian Industrial Co., Ltd. Domestic non-state-owned
legal person
0.61 2,599,000 2,599,0000 2,599,000
HOLY TIME GROUP LIMITED Foreign legal person 0.54 2,300,000 0 0
Wang Shuxia Domestic natural person 0.48 2,047,641 0 0
Zhang Xiaoxia Domestic natural person 0.46 1,949,250 0 0
SOUTH CHINA FINANCIAL HOLDINGS
LIMITED
Domestic non-state-owned
legal person
0.30 1,299,500 1,299,500 0
Particulars about shares held by the top ten unrestricted shareholders
Shareholder Total unrestricted shares held Type of shares
Yang Bochen 5,000,000 RMB common share
Gu Hongjuan 3,019,800 RMB common share
Yang Jianzhong 2,600,000 RMB common share
HOLY TIME GROUP LIMITED 2,300,000 Domestically listed foreign share
Wang Shuxia 2,047,641 RMB common share
Zhang Xiaoxia 1,949,250 Domestically listed foreign share
Pan Qi 1,066,123 Domestically listed foreign share
Zhuang Haizhang 1,030,900 Domestically listed foreign share
Zhuang Yingzhen 1,016,100 Domestically listed foreign share
Fan Jun 1,000,120 RMB common share
Explanation on associated relationship
among the top ten shareholders or consistent action
Among the above shareholders, the largest
shareholder of the Company has neither related
relationship with other shareholders, nor belongs
to consistent actors regulated by Management
Regulation of Information Disclosure on Change
of Shareholding for Listed Companies It is
unknown whether related relationship exists
among other shareholders or they belong to
consistent actors regulated by the aforesaid
regulation.
Note: Only Beijing Wanfa Real Estate Development Co., Ltd., the first largest
shareholder of the Company, holds over 5% shares of the Company. In the report period,due to the shareholders holding less than 5% restricted shares of the Company
reimbursed consideration for share merger reform, 149,500 shares were increased for
Beijing Wanfa Real Estate Development Co., Ltd.
2. In the report period, the controlling shareholder and actual controller of the
Company remained unchanged.
IV. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES
(I)Shares held by directors, supervisors and senior executives:
Name Positions
Shares held at the
year-begin
Amount of
increasing
shareholding in
the report period
Amount of
decreasing
shareholding in
the report period
Shares held at the
period-en
Reason for change
Zheng Qing
Chairman of the Board &
General Manager
34175 0 0 34175
Remained unchanged in the
report period
(II)The Company has not newly engaged or dismissed directors, supervisors and senior
executives in the report period.
(III)The Company has not implemented stock option incentive plan yet. No directors,
supervisors and senior executives hold stock option or restricted shares of the
Company in the report period.
V. REPORT OF THE BOARD
(I)Main operation in the report period
The main business of the Company is real estate development. The progress of the
main projects is as follows;
1. Till Jun 30th of 2009, civil construction for Wutongdao project, phase-II project
of Meiling Qingcheng, has been completely finished. As for region A, engineering
for city planning, road and virescence have been accomplished; water supply is
available for every family. What’s going on is the work for power and gas supply;
as for region B, works for city planning and roads have been fully carried out.
2. As for phase-III project of Longzhu, prophase works are just being done,
especially for the works in market investigation and programming adjustment.
(II)Analysis on operation achievements and financial condition
Item Jan.–June, 2009 Jan.–June, 2008
Increase or
decrease (%)
Sales expense 8,524,798 4,658,741 82.99
Losses of asset devaluation 7,398,280 3,625,615 104.06
Investment income 131,129,924 0
Net profit 83,538,723 -47,529,160 275.76
Other consolidated income 413,895,874 0
Net cash flow arising from operating
activities
36,604,404 -82,847,974 144.18
Net cash flow arising from o investing
activities
-1,063,139 -24,712,752 95.70
Net cash flow arising from financing
activities
12,080,952 28,370,535 -57.42
Item June 30, 2009 Dec. 31, 2008
Increase or
decrease (%)
Monetary fund 67,965,850 36,655,536 85.42
Account paid in advance 41,501,406 28,251,518 46.90
Other account received 186,263,316 33,822,326 450.71
Financial assets available for sales 577,220,000 0
Long-term equity investment 13,153,951 81,154,403.00 -83.79
Account received in advance 309,840,386 142,957,606 116.74
Tax payable -15,979,691 2,503,332 -738.34
Deferred income tax liabilities 120,863,750 0
Capital reserve 748,156,031 334,260,157 123.82(III)Operation classified according to industry and products
1. Main operation classified according to industry and products
Classified according to industries
or products
Operation
income
Operation
cost
Gross profit
ratio (%)
Increase or
decrease of
operating
income over
that of last
year (%)
Increase or
decrease of
operating cost
over that of
last year (%)
Increase or
decrease of
operating profit
ratio over that
of last year (%)
Sales of real estate
460,000 449,307 2.32 -80.59 -52.34
Decreased 57.9
percentage
points
Service of property management
33,005,993 29,223,745 11.46 37.30 41.74
Decreased 2.78
percentage
points
Tourism hotel service
14,323,510 8,528,710 40.46 1.67 -41.08
Increased 43.21
percentage
points
2. Operation classified according to areas
Unit: RMB
Area Operation income
Increase or decrease of operating income over that of last
year (%)
Hainan 47,014,573 23.31
Hubei 314,930 -74.22
Shanghai 460,000 -60.00
(IV) Investment of the Company
In the report period, the Company had no investment project of raise capital or
previous raised capital.
(V) Operation development plan in the next half year
1. Phase II of Wuhan Wutongdao project would be completed and used in the second
half year, which tried to gain better profit for the Company with high quality and
efficiency.
2. Days Hotel and Suite Sanya Resort continued to explore customer sources and tried
to increase operation income(VI) Performance prediction
Performance prediction Loss Great increase
Great Decrease √ Turnover
Explanation on performance prediction (Explanation on
reasons, uncertainty and influence of performance
prediction).
The equity of Southwest Securities Co., Ltd. held by
the Company was judicially sold. The investment
income of the equity was about RMB 0.13 billion. It’s
expected that the Company will make profit out of loss
in the third quarter of 2009. The specific amount
could not be predicted, which will be disclosed in
the Third Quarterly Report.
VI. SIGNIFICANT EVENTS
(I) Corporation governance
Strictly according to requirements of Company Law, Securities Law, Governance Rules
of Listed Company, Guidance on Listed Company Articles of Association (2006 Revision)
and related laws and regulations issued by CSRC, the Company normally operated, and
the present governance of the Company basically accorded with the regulations of
relevant documents, the Company has established basic governance structure
including the general shareholders’ meeting, the board of directors, audit
committee, remuneration and examination committee, supervisory committee,
independent directors, secretary of the board of directors and senior executives,
and also had perfect internal control system. The actual condition of the Company’s
governance had no significant difference with the requirements of relevant documents
issued by CSRC.
(II) Neither profit distribution nor capitalization of capital public reserves would
be performed in the semi-annual year of 2009.
(III) Significant lawsuits and arbitration in the report period
Because the Company didn’t compensate the loans of RMB 130,000,000.00 and relevant
loss of capital occupation for Chongqing Putian Communication Equipment Co., Ltd.
within time limit, Chongqing Putian Communication Equipment Co., Ltd. submitted the
civil lawsuit to Chongqing the 5th Intermediate People’s Court on Oct. 16, 2007.
Then the Company received the Civil Indictment and Document No. 377 of civil ruling
with (2007) YWZMCZi from Chongqing the 5th Intermediate People’s Court via e-mail
on Nov. 30, 2007. According to the application for property preservation from
Chongqing Putian Communication Equipment Co., Ltd., the document No. 377 of civil
ruling ordered that 75 million shares of Southwest Securities Co., Ltd. (now
converting into restricted shares of 53.25 million of Southwest Securities Co., Ltd.)
held by the Company was sealed up.
Chongqing the 5 th Intermediate People’s Court judged the lawsuit, and sent Document
No. 377 of civil ruling with (2007) YWZMCZi on June 5, 2008 as follows:
The defendant Hainan Pearl River Holdings Co., Ltd. should compensate principle sumof loan RMB 130 million to the accuser Chongqing Putian Telecommunications Co., Ltd.
within 10 days since the judgment begin to have force effect, and the capital
occupancy loss is calculated as annual interests rate 6.804% since Sep. 21, 2007
till the principle sum is paid off.
Because the Company was judged to compensate the principal of the loan and loss of
capital occupation, after the lawsuit came into the phase of implementation, the
Company would make an action for pledge to compensate according to Chongqing
Taiding Action Co., Ltd., Chongqing Runtong Action Co., Ltd. and Chongqing Jingfeng
Action Co., Ltd. were entrusted by Chongqing the 5th Intermediate People’s Court
to make an action for restricted shares of Southwest Securities Co., Ltd. held by
the Company on Jun.16, 2009 in No.128, Zhongshan 3 rd Road, Yuzhong District, C hongqing
City (Action Hall on the 2 nd floor of C hongqing United Assets and Equity Exchange).
There were total 40 actions which was 20 million shares, with 0.5 million shares
as one action. The total deal amount was RMB 156,670,000, with average price RMB
7.83 of each deal, which was 23% more than the average price of action on Apr. 14
judged to cancel. All the fund of the judicial sale would be used for compensating
the principal of loan and relevant loss of capital occupation to the accuser. The
investment income of about RMB 0.13 billion formed in this equity action was the
main reason that the Company made profit out of loss in the semi-annual half of 2009.
Notices of the lawsuit were disclosed in Securities Times on Dec. 14, 2007 and China
Securities Jounal on Aug. 6, 2008, Apr. 16, 2009, May 5, 2009 and Jun. 3, 2009.
(IV) In the report period, the Company had no securities investment or income.
(V) Particular about holding equity of other listed companies, joint stock financial
companies and companies planned to be listed
1. In the report period, particulars about equity of other listed companies and
companies planned to be listed.
Stock
code
Short form
of the stock
Initial
investment
amount
Amount held
Proportion
in equity of
the Company
Book value at
period-end
Gains and
losses in
report
period
Changes on
owners’
equity in the
report period
600369
Southwest
Securities
RMB 150
million
33.25
million
shares
1.75% 577,220,000.00 413,895,873.99
2. In the report period, the Company did not hold equity of other financial companies
(VI) In the report period the Company had no purchase and sale of assets, takeover
and merger.
(VII) In the report period, the Company had no significant related transaction or
related transaction related with daily operation.(VIII) Related Creditor’s rights and liability
Funds offered to
related parties
Funds offered to the listed
company by related parties
Related parties
Relationships with
related parties
Occurring
Amount
of
debtor
Amount in
period-en
d
Occurring
Amount
of
lender
Amount in
period-end
Beijing Xinxing Real Estate
Development General Company
The first largest
shareholder of the
Company
-2,150,000.00 152,540,447.00
Beijing Wanfa Real Estate
Development Co., Ltd.
Controlling
shareholder of the
first largest
shareholder
6,500,000.00 81,725,000.00
Beijing Yulong Jisheng Real
Estate Co., Ltd.
Controlled by one
party jointly
1,500,000.00
Total 4,350,000 235,765,447.00
Of which: in the report period, the occupied occurring amount and balance that listed
company provided capital to its shareholders and subsidiaries were respectively RMB
0.00 and RMB 0.00.
(IX) Significant contract
1. In the report period, the Company did not sign any significant contract.
2. In the report period, the Company had no entrustment, contract or leasing
proceeding.
3. In the report period, the Company had no significant guarantee proceeding.
(X) In the report period, the Company and shareholders holding over 5% equity had
no commitment.
Shareholders holding over 5% equity had no commitment of additional-delivering
restricted shares and increasing holding plan of their own accord in 2009.
(XI) Special explanation and independent opinions of independent directors on
capital occupancy and external guarantee of related parties
Independent directors of the Company expressed Special explanation and independent
opinions on capital occupancy and external guarantee of related parties as follows:
1. In the report period, the Company did not provide guarantee for controlling
shareholders or other related parties;
2. The Company had no external guarantee happened in the past year and lasted to
the end of the report period;
3. There was no capital occupancy of controlling shareholders and other related
parties.
(XII) In the report period, the Company made information disclosure and relevantwork according to equality principle, with no reception of investors’ research and
interview.
(XIII) The semi-annual financial report did not be audited by CPAs, and the Company
did not change CPAs in the report period.
(XIV) In the report period, the Company and its directors, supervisors, senior
executives, shareholders and actual controllers did not be punished by relevant
department.
VII. FINANCIAL STATEMENT (NOT BE AUDITED) (ATTACHMENT)
VIII. DOCUMENT AVAILABLE FOR REFERENCE
1. The 2009 S emi-annual report carrying with personal signatures of Chairman of the
Board.
2. Financial statements carrying with personal signatures and seals of the legal
representative, financial principal and person in charge of accounting;
3. All documents publicly disclosed in the report period on China Securities Journal;
4. Articles of Association.
The Board of Directors of
Hainan Pearl River Holdings Co., Ltd.
August 2009Hainan Pearl River Holding Company Limited
Consolidated Balance Sheet
30 June 2009
Unit: Renminbi Yuan
Items Notes 30-Jun-09 31-Dec-08
Current assets:
Monetary funds V.1 67,965,850.02 36,655,536.17
Financial assets held for trading
Notes receivable
Accounts receivable V.2 2,366,493.75 4,129,361.34
Advances to suppliers V.3 41,501,405.97 28,251,517.83
Interest receivable
Dividend receivable 260,015.00 260,015.00
Other receivables V.4 186,263,316.22 33,822,326.10
Inventories V.5 544,340,892.20 454,982,865.16
Non-current asset due within 1 year
Other current assets
Total current assets 842,697,973.16 558,101,621.60
Non-current assets:
Available-for-sale financial assets V.6 577,220,000.00
Held-to-maturity securities
Long-term receivables
Long-term equity investments V.7 13,153,951.24 81,154,403.04
Investment real estates V.8 21,226,012.20 21,668,361.96
Fixed assets V.9 271,345,964.75 280,665,887.45
Construction in progress
Engineering material 606,206.60 606,206.60
Disposal of fixed assets 45,277.22
Bearer biological assets
Oil and gas assets
Intangible assets V.10 32,464,487.04 32,926,433.55
Expense on research and development
Goodwill
Long-term prepayments 182,315.03
Deferred income tax assets
Other non-current asset
Total non-current assets 916,244,214.08 417,021,292.60
Total assets 1,758,942,187.24 975,122,914.20
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Consolidated Balance Sheet
30 June 2009
Expressed in Renminbi
Items Notes 30-Jun-09 31-Dec-08
Current liabilities:
Short-term loans V.13 21,320,000.00 24,000,000.00
Financial liabilities held for trading
Notes payable
Accounts payable V.14 32,794,320.82 32,924,422.72
Advances from customers V.15 309,840,386.45 142,957,606.19
Accrued payroll V.16 3,304,296.85 4,026,386.21
Taxes payable V.17 -15,979,690.58 2,503,332.27
Interest payable V.18 84,077,337.80 69,783,831.76
Dividend payable 3,213,302.88 3,213,302.88
Other payables V.19 409,668,219.48 403,308,365.93
Non-current liabilities due within 1 year V.20 5,000,000.00 5,000,000.00
Other current liabilities
Total current liabilities 853,238,173.70 687,717,247.96
Non-current liabilities:
Long-term borrowings V.21 157,000,000.00 157,000,000.00
Bonds payable
Long-term payables
Special payables
Accrued liabilities
Deferred income tax liabilities 120,863,750.00
Other non-current liabilities
Total non-current liabilities 277,863,750.00 157,000,000.00
Total liabilities 1,131,101,923.70 844,717,247.96
Owner's equity:
Share capital V.22 426,745,404.00 426,745,404.00
Capital surplus V.23 748,156,030.97 334,260,156.98
Less:treasury stock
Surplus reserves V.24 114,177,485.88 114,177,485.88
Special reserves
Undistributed profits V.25 -671,293,112.70 -756,096,515.01
Foreign currency translation differences
Total owner's equity attributable to parent company 617,785,808.15 119,086,531.85
Minority interests 10,054,455.39 11,319,134.39
Total owner's equity 627,840,263.54 130,405,666.24
Total liabilities and owner's equity 1,758,942,187.24 975,122,914.20
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pear l River Holding Company Limited
Balance Sheet
30-Jun-09
Expressed in Renminbi
Items Notes 30-Jun-09 31-Dec-08
Current assets:
Monetary funds 630,103.56 4,869,795.27
Financial assets held for trading
Notes receivable
Accounts receivable VI.1 1,096,591.26 2,675,761.66
Advances to suppliers
Interest receivable
Dividend receivable 260,015.00 260,015.00
Other receivables VI.2 208,452,623.15 60,334,145.29
Inventories 83,224,998.82 81,860,455.91
Non-current asset due within 1 year
Other current assets
Total current assets 293,664,331.79 150,000,173.13
Non-current assets:
Available-for-sale financial assets 577,220,000.00
Held-to-maturity securities
Long-term receivables
Long-term equity investments VI.3 201,511,309.90 269,511,761.70
Investment real estates
Fixed assets 21,357,705.61 22,340,376.54
Construction in progress
Engineering material
Disposal of fixed assets
Bearer biological assets
Oil and gas assets
Intangible assets 1,719,863.34 1,743,695.16
Expense on research and development
Goodwill
Long-term prepayments
Deferred income tax assets
Other non-current asset
Total non-current assets 801,808,878.85 293,595,833.40
Total assets 1,095,473,210.64 443,596,006.53
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Balance Sheet
30-Jun-09
Expressed in Renminbi
Items Notes 30-Jun-09 31-Dec-08
Current liabilities:
Short-term loans 21,320,000.00 24,000,000.00
Financial liabilities held for trading
Notes payable
Accounts payable 4,093,088.24 4,200,330.44
Advances from customers 36,167.00
Accrued payroll 615,898.07 957,127.11
Taxes payable -3,585,876.63 -2,087,904.47
Interest payable 50,730,185.45 40,928,604.71
Dividend payable 3,213,302.88 3,213,302.88
Other payables 244,729,510.48 240,018,631.52
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 321,116,108.49 311,266,259.19
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Special payables
Accrued liabilities
Deferred income tax liabilities 120,863,750.00
Other non-current liabilities
Total non-current liabilities 120,863,750.00
Total liabilities 441,979,858.49 311,266,259.19
Owner's equity:
Share capital 426,745,404.00 426,745,404.00
Capital surplus 751,172,370.51 337,276,496.52
Less:treasury stock
Special reserves
Surplus reserves 109,487,064.39 109,487,064.39
Undistributed profits -633,911,486.75 -741,179,217.57
Total owner's equity 653,493,352.15 132,329,747.34
Total liabilities and owner's equity 1,095,473,210.64 443,596,006.53
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Consolidated Income Statement
Year ended 30 June 2009
Expressed in Renminbi
Items Notes Jan-Jun 2009 Jan-Jun 2008
I.Total operating income V.26 48,037,860.58 40,889,875.40
Less：operating cost V.26 38,235,750.59 36,457,606.78
Operating taxes and extras V.27 2,404,089.65 2,732,837.01
Sales expenses 8,524,797.64 4,658,741.27
General and administrative expenses 23,196,749.46 25,386,952.29
Financial expenses V.28 15,751,159.41 14,931,634.34
Loss of devaluation of assets V.29 7,398,279.67 3,625,614.97
Add:Changing income of fair value
Investment income V.30 131,129,924.21 0.00
Including: investment income on affiliated company and joint venture 0.00
II.Operating profit 83,656,958.37 -46,903,511.26
Add: Non-operating income V.31 153,122.17 30,345.02
Less: Non-operating expenses V.32 219,019.05 628,825.98
Including: disposal loss of non-current asset 27,500.00 9,819.10
III.Total profit 83,591,061.49 -47,501,992.22
Less: income tax V.33 52,338.18 27,167.30
IV.Net profit 83,538,723.31 -47,529,159.52
Less:Profit and loss of minority interests -1,264,679.00 -1,017,440.09
V. Net profit attributable to parent company's owner 84,803,402.31 -46,511,719.43
VI.Earnings per share
i.Basic earnings per share 0.20 -0.11
ii.Diluted earnings per share 0.20 -0.11
VII.Other comprehensive income V.34 413,895,873.99
VIII.Total comprehensive income 497,434,597.30 -47,529,159.52
Including:comprehensive income attributable to parent company's
owner
498,699,276.30 -46,511,719.43
Comprehensive income of miniority interests -1,264,679.00 -1,017,440.09
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Income Statement
Year ended 30 June 2009
Expressed in Renminbi
Items Notes Jan-Jun 2009 Jan-Jun 2008
I.Total operating income VI.4 193,955.00 516,553.75
Less:Operating costs VI.4 33,987.67 208,046.94
Operating taxes and extras -208,897.74 28,410.46
Sales expenses 7,309.00
General and administrative expenses 5,988,699.54 5,149,611.17
Financial expenses 10,686,670.74 8,661,368.23
Loss of devaluation of assets 7,332,347.15 3,626,528.56
Add:Changing income of fair value
Investment income VI.5 131,129,924.21
Including: investment income on affiliated company and joint
venture
II.Operating profit 107,483,762.85 -17,157,411.61
Add: Non-operating income
Less: Non-operating ex penses 216,032.03 5,402.50
Including: disposal loss of non-current asset 27,500.00 5,402.50
III.Total profit 107,267,730.82 -17,162,814.11
Less: income tax
IV.Net profit 107,267,730.82 -17,162,814.11
V.Other comprehensive income 413,895,873.99
VI.Total comprehensive income 521,163,604.81 -17,162,814.11
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Consolidated Cash Flow Statement
Year ended 30 June 2009
Expressed in Renminbi
Items Notes Jan-Jun 2009 Jan-Jun 2008
I.Cash flows from operating activities:
Cash received from sales of goods or rendering of services 213,082,465.53 70,281,079.21
Refunds of taxes
Cash received relating to other operating activities V.36 8,392,724.03 10,235,973.36
Subtotal of cash inflows 221,475,189.56 80,517,052.57
Cash paid for goods and services 122,587,504.80 114,972,791.83
Cash paid to and on behalf of employees 28,255,257.03 20,813,507.25
Payments of all types of taxes 22,536,589.32 15,566,450.92
Cash paid relating to other operating activities V.36 11,491,433.93 12,012,276.22
Subtotal of cash outflows 184,870,785.08 163,365,026.22
Net cash flows from operating activities 36,604,404.48 -82,847,973.65
II.Cash flows from investing activities:
Cash received from return of investments
Cash received from return on investments
Net cash received from the sale of fixed assets, intangible assets and other
long-term assets
71,938.50 36,190.00
Net cash rec eived from selling subsidiary company and joint venture
Cash received relating to other investing activities
Subtotal of cash inflows 71,938.50 36,190.00
Cash paid to acquire fixed assets, intangible assets and other long-term assets 1,135,077.55 24,748,942.33
Cash paid to acquire investments
Net increase on the pledged loan
Net cash paid to purchase subsidiary company and joint venture
Cash paid relating to other investing activities
Subtotal of cash outflows 1,135,077.55 24,748,942.33
Net cash flows from investing activities -1,063,139.05 -24,712,752.33
III.Cash flows from financing activities:
Cash received from investments by others
Cash received from borrowings V.36 7,850,000.00 81,130,000.00
Cash received relating to other financing activities
Subtotal of cash inflows 7,850,000.00 81,130,000.00
Cash repayments of amounts borrowed V.36 6,380,000.00 20,500,000.00
Cash paid for distribution of dividends or profits and for interest expenses 5,700,951.58 7,868,687.35
Cash paid relating to other financing activities 1,848.00
Subtotal of cash outflows 12,080,951.58 28,370,535.35
Net cash flows from financing activities -4,230,951.58 52,759,464.65
IV.Effect of foreign exchange rate changes on cash
V.Net increase in cash and cash equivalents 31,310,313.85 -54,801,261.33
Add:balance of cash and cash equivalents at the beginning of the year 36,655,536.17 110,933,403.84
VI.Balance of cash and cash equivalents at the end of the year 67,965,850.02 56,132,142.51
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Cash Flow Statement
Year ended 30 June 2009
Expressed in Renminbi
Items Notes Jan-Jun 2009 Jan-Jun 2008
I.Cash flows from operating activities:
Cash received from sales of goods or rendering of services 1,796,479.00 8,530,271.50
Refunds of taxes
Cash received relating to other operating activities 3,838,922.45 2,652,803.12
Subtotal of cash inflows 5,635,401.45 11,183,074.62
Cash paid for goods and services 1,250,136.22 2,265,932.02
Cash paid to and on behalf of employees 1,840,545.41 1,939,159.20
Payments of all types of taxes 1,821,020.66 504,973.02
Cash paid relating to other operating activities 9,219,631.41 3,209,237.79
Subtotal of cash outflows 14,131,333.70 7,919,302.03
Net cash flows from operating activities -8,495,932.25 3,263,772.59
II.Cash flows from investing activities:
Cash received from return of investments
Cash received from return on investments
Net cash received from the sale of fixed assets, intangible assets and other
long-term assets
- 1,250.00
Net cash received from selling subsidiary company and joint venture
Cash received relating to other investing activities
Subtotal of cash inflows - 1,250.00
Cash paid to acquire fixed assets, intangible assets and other long-term assets 35,166.00 1,230,522.00
Cash paid to acquire investments
Net cash paid to purchase subsidiary company and joint venture
Cash paid relating to other investing activities
Subtotal of cash outflows 35,166.00 1,230,522.00
Net cash flows from investing activities -35,166.00 -1,229,272.00
III.Cash flows from financing activities:
Cash received from investments by others
Cash received from borrowings 7,850,000.00 10,800,000.00
Cash received relating to other financing activities
Subtotal of cash inflows 7,850,000.00 10,800,000.00
Cash repayments of amounts borrowed 2,680,000.00 10,500,000.00
Cash paid for distribution of dividends or profits and for interest expenses 878,593.46 1,593,791.94
Cash paid relating to other financing activities 1,848.00
Subtotal of cash outflows 3,558,593.46 12,095,639.94
Net cash flows from financing activities 4,291,406.54 -1,295,639.94
IV.Effect of foreign exchange rate changes on cash
V.Net increase in cash and cash equivalents -4,239,691.71 738,860.65
Add:balance of cash and cash equivalents at the beginning of the year 4,869,795.27 2,188,333.46
VI.Balance of cash and cash equivalents at the end of the year 630,103.56 2,927,194.11
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Consolidated Statement of Changes in Equity
Year ended 30 June 2009
Expressed in Renminbi
Jan-Jun 2009
Total owner's equity attributable to parent company
Items
Share capital Capital reserves
Less:t
reasur
y
stock
Surplus reserves
Common
risk
provision
Undistributed
profits
Total owner's equity
attributed to parent
company
Minority
interests
Total owner's
equity
I.Amount at the end of last
year
426,745,404.00 334,260,156.98 114,177,485.88 -756,096,515.01 119,086,531.85 11,319,134.39 130,405,666.24
1.Amount because the change
of accounting policy
2.Amount because correction of
accounting error
3.Others
II.Amount at the beginning of
this year
426,745,404.00 334,260,156.98 114,177,485.88 -756,096,515.01 119,086,531.85 11,319,134.39 130,405,666.24
III.Increment and decrement
of this year
413,895,873.99 84,803,402.31 498,699,276.30 -1,264,679.00 497,434,597.30
1.Net profit 84,803,402.31 84,803,402.31 -1,264,679.00 83,538,723.31
2.Profit and loss through
owner's equity directly
413,895,873.99 413,895,873.99 413,895,873.99
(1) Net changing amount of fair
value of available-for-sale
financial assets
534,759,623.99 534,759,623.99 534,759,623.99
(2) Influence of other owner's
equity change of invested
enterprise under equity method
(3) Relating income tax effect
through owner's equity items
-120,863,750.00 -120,863,750.00 -120,863,750.00
(4) Other
Subtotal of above 1 and 2 413,895,873.99 84,803,402.31 498,699,276.30 -1,264,679.00 497,434,597.30
3.Owners invest or reduce
capital
(1) Owners invest capital
(2) Share-based payment
recorded into owner's equity
(3) Other
4. Profit distribution
(1) Draw surplus reserves
(2) Distribute to owners
(shareholders)
(3) Other
5. Inner rotation within owner's
equity
(1) Capital reserves transfer to
share capital
(2) Surplus reserves transfer to
share capital
(3) Surplus reserves offset
loss
(4) Other
IV.Amount at the end of this
year
426,745,404.00 748,156,030.97 114,177,485.88 -671,293,112.70 617,785,808.15 10,054,455.39 627,840,263.54
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Statement of Changes in Equity
Year ended 30 June 2009
Expressed in Renminbi
Jan-Jun 2009
Items
Share capital
Capital
reserves
Less:tre
asury
stock
Surplus
reserves
Undistributed
profits
Total owner's
equity
I.Amount at the end of last year 426,745,404.00 337,276,496.52 109,487,064.39 -741,179,217.57 132,329,747.34
1.Amount because the change of accounting
policy
2.Amount because correction of accounting
error
3.Others
II.Amount at the beginning of this year 426,745,404.00 337,276,496.52 109,487,064.39 -741,179,217.57 132,329,747.34
III.Increment and decrement of this year 413,895,873.99 107,267,730.82 521,163,604.81
1.Net profit 107,267,730.82 107,267,730.82
2.Profit and loss through owner's equity
directly
413,895,873.99 413,895,873.99
(1) Net changing amount of fair value of
available-for-sale financial assets
534,759,623.99 534,759,623.99
(2) Influence of other owner's equity change
of invested enterprise under equity method
(3) Relating income tax effect through owner's
equity items
-120,863,750.00 -120,863,750.00
(4) Other
Subtotal of above 1 and 2 413,895,873.99 107,267,730.82 521,163,604.81
3.Owners invest or reduce capital
(1) Owners invest capital
(2) Share-based payment recorded into
owner's equity
(3) Other
4. Profit distribution
(1) Draw surplus reserves
(3) Distribute to owners (shareholders)
(4) Other
5. Inner rotation within owner's equity
(1) Capital reserves transfer to share capital
(2) Surplus reserves transfer to share capital
(3) Surplus reserves offset loss
(4) Other
IV.Amount at the end of this year 426,745,404.00 751,172,370.51 109,487,064.39 -633,911,486.75 653,493,352.15
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Consolidated Statement of Changes in Equity
Year ended 30 June 2009
Expressed in Renminbi
Jan-Jun 2008
Total owner's equity attributable to parent company
Items
Share capital
Capital
reserves
Less:t
reasur
y
stock
Surplus
reserves
Common
risk
provision
Undistributed
profits
Total owner's
equity
attributed to
parent
company
Minority
interests
Total owner's
equity
I.Amount at the end of last
year
426,745,404.00 334,260,156.98 114,177,485.88 -679,492,733.72 195,690,313.14 14,492,502.00 210,182,815.14
1.Amount because the
change of accounting policy
2.Amount because correction
of accounting error
3.Others
II.Amount at the beginning
of this year
426,745,404.00 334,260,156.98 114,177,485.88 -679,492,733.72 195,690,313.14 14,492,502.00 210,182,815.14
III.Increment and
decrement of this year
-46,511,719.43 -46,511,719.43 -1,017,440.09 -47,529,159.52
1.Net profit -46,511,719.43 -46,511,719.43 -1,017,440.09 -47,529,159.52
2.Profit and loss through
owner's equity directly
(1) Net changing amount of
fair value of available-for -sale
financial assets
(2) Influence of other owner's
equity change of invested
enterprise under equity
method
(3) Relating income tax effect
through owner's equity items
(4) Other
Subtotal of above 1 and 2 -46,511,719.43 -46,511,719.43 -1,017,440.09 -47,529,159.52
3.Owners invest or reduce
capital
(1) Owners invest capital
(2) Share-based payment
recorded into owner's equity
(3) Other
4. Profit distribution
(1) Draw surplus reserves
(3) Distribute to owners
(shareholders)
(4) Other
5. Inner rotation within
owner's equity
(1) Capital reserves transfer
to share capital
(2) Surplus reserves transfer
to share capital
(3) Surplus reserves offset
loss
(4) Other
IV.Amount at the end of this
year
426,745,404.00 334,260,156.98 114,177,485.88 -726,004,453.15 149,178,593.71 13,475,061.91 162,653,655.62
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Statement of Changes in Equity
Year ended 30 June 2009
Expressed in Renminbi
Jan-Jun 2008
Items
Share capital
Capital
reserves
Less:tre
asury
stock
Surplus reserves
Undistributed
profits
Total owner's
equity
I.Amount at the end of last year 426,745,404.00 337,276,496.52 109,487,064.39 -720,087,798.59 153,421,166.32
1.Amount because the change of
accounting policy
2.Amount because correction of
accounting error
3.Others
II.Amount at the beginning of this
year
426,745,404.00 337,276,496.52 109,487,064.39 -720,087,798.59 153,421,166.32
III.Increment and decrement of this
year
-17,162,814.11 -17,162,814.11
1.Net profit -17,162,814.11 -17,162,814.11
2.Profit and loss through owner's equity
directly
(1) Net changing amount of fair value of
available-for-sale financial assets
(2) Influence of other owner's equity
change of invested enterprise under
equity method
(3) Relating income tax effect through
owner's equity items
(4) Other
Subtotal of above 1 and 2 -17,162,814.11 -17,162,814.11
3.Owners invest or reduce capital
(1) Owners invest capital
(2) Share-based payment recorded into
owner's equity
(3) Other
4. Profit distribution
(1) Draw surplus reserves
(2) Distribute to owners (shareholders)
(3) Other
5. Inner rotation within owner's equity
(1) Capital reserves transfer to share
capital
(2) Surplus reserves transfer to share
capital
(3) Surplus reserves offset loss
(4) Other
IV.Amount at the end of this year 426,745,404.00 337,276,496.52 109,487,064.39 -737,250,612.70 136,258,352.21
Corporate representative:Zheng Qing Chief Accountant:Chen Binglian Accounting Supervisor: Yang DaoliangHainan Pearl River Holding Company Limited
Notes on the Financial Statements for the Period ended 30 June 2009
(All amounts are stated in RMB Yuan unless otherwise stated)
Hainan Pearl River Holding Company Limited Notes on the Financial Statements
I. General information
The old name of Hainan Pearl River Holding Company Limited (the "Company") was Hainan Pearl River
Industry Company Limited. Hainan Provincial People's Government Office approved the
reorganization of the Company into a joint stock limited company according to the document of
Qiong Fu Ban [1992] No.1. The Company was registered in Hainan Administration for Industry and
Commerce in January 1992 The Company issued 21,086,400 shares of RMB common stock to the public
and was listed on Shenzhen Stock Exchange according to the document of securities administration
office [1992] No. 83 of the People's Bank of China in December 1992. The Company issued the domestic
listing foreign capital stock (B-share) with the approval of China Securities Regulatory
Commission in June 1995. The Company changed to present name in January 2000. In August 2006,
the Company increased stocks with capital surplus to all shareholders, and the registered capital
was changed to 426,745,400 Yuan from 377,650,800 Yuan.
The business license number: 4600001006830
Office address: 29/F., Dihao Building, Pearl River Plaza, Binhai Avenue, Haikou, Hainan, the PRC.
Corporate representative: Zheng Qing
The operation scope: Industrial investment, tropical farming, aquaculture, real estate
development and management, hotel investment and management, material supply, construction
equipment purchasing, leasing, hardware, chemical, trade of household items, decoration, vehicle
parking, and high-tech investment projects, investment in environmental protection projects,
investment advice. The company mainly engaged in real e state development and property management,
which belong to real estate aspect.
The Company's basic organizational structure: General meeting of shareholders is the highest organ
of power. Board of directors is the executing agency. Supervisory board is the Company's internal
auditing agency. General Manager is responsible for the Company's daily operational management.
There are General Manager Office, Securities Department, Tourism Real Estate Department,
Financial Department, Management Department, Auditing Department and others in the Company.
II. Accounting policies, accounting estimates and error correction of previous years
1. Announcement about compliance with Accounting Standards for Business EnterprisesThe Company’s financial statements are prepared in accordance with the requirements of the
Accounting Standards for Business Enterprises, and they fairly and completely present the
financial position, operation results, cash flow and other relevant information of the Company.
2. Preparation basis of financial statement
Preparation of the financial statements is based on going concern postulate. Recognition and
measurement comply with actual transactions or events, and the Company prepares financial
statements on these bases.
3. Accounting year
Accounting year of the Group is the calendar year from January 1 to December 31.
4. Reporting currency
The Company’s reporting and presentation currency is the Renminbi (“RMB”).
5. Accounting measurement characters
The main measurement method of financial statements’ items is history cost system. Financial
assets and financial liabilities that measured by fair value and changes recorded into current
profit and loss, and financial assets available for sale and derivative instrument are measured
by fair value. Purchasing inventory and fixed assets that exceed normal credit terms deferred
payment are measured by present value of purchase price. Stocks occurring impairment losses are
measured by net realizable value. Other impairment assets are measured by recoverable amount (the
higher one between fair value and present value). Surplus assets are measured by the replacement
cost.
6. Cash and Cash equivalents
Cash refers to cash on hand and demand deposits. “Cash equivalents” refer to short-term, highly
liquid investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk on change in value.
7. Foreign currency transactions
Foreign currency (currency other than the reporting currency) transactions are translated into
reporting currency at spot exchange rates prevailing on the day in which the transactions take
place. Monetary items are adjusted according to spot exchange rates at the balance sheet date.
The exchange balance on foreign currency shall be capitalized and recorded into the cost of
relevant assets if it is eligible for capitalization; other exchange balance on foreign currency
shall be recorded into current profit and loss. Foreign currency non-monetary items measured with
history cost are translated into reporting currency at spot exchange rates on the occurrence date.
Foreign currency non-monetary items measured with fair value are translated into reporting
currency at spot exchange rates of fair value confirming date; the difference is recorded as the
changes in the profit and loss of fair value.Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
restated into the reporting currency using the spot exchange rates at that date. Among the equity
items, all items are translated into reporting currency at spot exchange rates on the occurrence
date except the item of undistributed profits. Income Statement items are translated into
reporting currency at spot exchange rate on the occurrence date. The exchange difference from
translation of financial statements denominated in foreign currency is included in the equity
and presented individually.
8. Financial Instruments
(1) Classification of financial assets and financial liabilities
Financial assets shall be classified into the following four categories when they are initially
recognized: the financial assets which are measured at their fair values and the variation of
which is recorded into the profits and losses of the current period, including transactional
financial assets and the financial assets which are measured at their fair values and of which
the variation is included in the current profits and losses; held-to-maturity investments; loans
and account receivables; available-for-sale financial assets.
Financial liabilities shall be classified into the following two categories when they are
initially recognized: the financial liabilities which are measured at their fair values and of
which the variation is included in the current profits and losses, including transactional
financial liabilities and the designated financial liabilities which are measured at their fair
values and of which the variation is included in the current profits and losses; and other financial
liabilities.
(2) Recognition and measurement of financial instruments
When an enterprise becomes a party to a financial instrument, it shall recognize a financial asset
or financial liability. The financial assets and financial liabilities initially recognized by
an enterprise except loans and account receivables shall be measured at their fair values; loans
and account receivables initially recognized by an enterprise shall be measured at price in the
contract or agreement. For the financial assets and liabilities measured at their fair values
and of which the variation is recorded into the profits and losses of the current period, the
transaction expenses thereof shall be directly recorded into the profits and losses of the current
period; for other categories of financial assets and financial liabilities, the transaction
expenses thereof shall be included into the initially recognized amount.
An enterprise shall make subsequent measurement on its financial assets according to their fair
values, and may not deduct the transaction expenses that may occur when it disposes of the said
financial asset in the future. However, those under the following circumstances shall be excluded:
a. The investments held until their maturity, loans and accounts receivable shall be measured
on the basis of the post-amortization costs by adopting the actual interest rate method; b. The
equity whose fair value cannot be measured reliably, and the derivative financial assets which
are connected with the said equity instrument and must be settled by delivering the said equity
instrument shall be measured on the basis of their costs.An enterprise shall make subsequent measurement on its financial liabilities on the basis of the
post-amortization costs by adopting the actual interest rate method, with the exception of those
under the following circumstances: a. For the financial liabilities measured at their fair values
and of which the variation is recorded into the profits and losses of the current period, they
shall be measured at their fair values, and none of the transaction expenses may be deducted,
which may occur when the financial liabilities are settled in the future. b. For the derivative
financial liabilities, which are connected to the equity instrument for which there is no quotation
in the active market and whose fair value cannot be reliably measured, and which must be settled
by delivering the equity instrument, they shall be measured on the basis of their costs. c. For
the financial guarantee contracts which are not designated as a financial liability measured at
its fair value and the variation thereof is recorded into the profits and losses of the current
period, and for the commitments to grant loans which are not designated to be measured at the
fair value and of which the variation is recorded into the profits and losses of the current period
and which will enjoy an interest rate lower than that of the market, a subsequent measurement
shall be made after they are initially recognized according to the higher one of the following:
the best estimation required to pay when carrying out the prevailing obligations, and initially
recognized amount deducting accumulative amortization which adopts the actual interest rate
method.
(3) Recognition and measurement of transfer of financial assets
Where an enterprise has transferred nearly all of the risks and rewards related to the ownership
of the financial asset to the transferee, it shall stop recognizing the financial asset. If it
retained nearly all of the risks and rewards related to the ownership of the financial asset,
it shall not stop recognizing the financial asset. Where an enterprise does not transfer or retain
nearly all of the risks and rewards related to the ownership of a financial asset, it shall deal
with it according to the circumstances as follows, respectively: a. If it gives up its control
over the financial asset, it shall stop recognizing the financial asset; b. If it does not give
up its control involvement in the transferred financial asset, recognize the related financial
asset and recognize the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition,
the difference between the amounts of the following 2 items shall be recorded in the profits and
losses of the current period: a. The book value of the transferred financial asset; b. The sum
of consideration received from the transfer, and the accumulative amount of the changes of the
fair value originally recorded in the owner's equities. If the transfer of partial financial asset
satisfies the conditions to stop the recognition, the entire book value of the transferred
financial asset shall, between the portion whose recognition has been stopped and the portion
whose recognition has not been stopped, be apportioned according to their respective relative
fair value, and the difference between the amounts of the following 2 items shall be included
into the profits and losses of the current period : a. The book value of the portion whose
recognition has been stopped; b. The sum of consideration of the portion whose recognition has
been stopped, and the portion of the accumulative amount of the changes in the fair value originally
recorded in the owner's equities which is corresponding to the portion whose recognition has b een
stopped.
(4) Determination of the fair value of main financial assets and financial liabilitiesAs for the financial assets or financial liabilities for which there is an active market, the
quoted prices in the active market shall be used to determine the fair values thereof. Where
there is no active market for a financial instrument, the enterprise concerned shall adopt value
appraisal techniques to determine its fair value. The value appraisal techniques mainly include
the prices adopted by the parties, who are familiar with the condition, in the latest market
transaction upon their own free will, the current fair value obtained by referring to other
financial instruments of the same essential nature, the cash flow capitalization method and the
option pricing model, etc. As for the financial assets initially obtained or produced at source
and the financial liabilities assumed, the fair value thereof shall be determined on the basis
of the transaction price of the market.
(5) Impairment of financial assets
An enterprise shall carry out an inspection, on the balance sheet day, on the carrying amount
of the financial assets other than those measured at their fair values and of which the variation
is recorded into the profits and losses of the current period. An impairment test shall be made
on the financial assets with significant single amounts. With regard to the financial assets with
insignificant single amounts, they shall be included in a combination of financial assets with
similar credit risk features so as to carry out an impairment-related test. Where, upon independent
test, the financial asset (including those financial assets with significant single amounts and
those with insignificant amounts) has not been impaired, it shall be included in a combination
of financial assets with similar risk features so as to conduct another impairment test.
Where a financial asset measured on the basis of post-amortization costs is impaired, the carrying
amount of the said financial asset shall be written down to the current value of the predicted
future cash flow (excluding the loss of future credits not yet occurred), and the amount as written
down shall be recognized as loss of the impairment of the asset. Where there is a very small gap
between the predicted future cash flow of a short-term account receivable item and the current
value thereof, the predicted future cash flow is not required to be capitalized when determining
the relevant impairment-related losses. Where an equity instrument investment for which there
is no quoted price in the active market and whose fair value cannot be reliably measured, or a
derivative financial asset which is connected with the equity instrument and which must be settled
by delivering the equity instrument, suffers from any impairment, the gap between the carrying
amount of the equity instrument investment or the derivative financial asset and the current value
of the future cash flow of similar financial assets capitalized according to the returns ratio
of the market at the same time shall be recognized as impairment-related losses. Where
available-for-sale financial assets are impaired due to significant drop of fair value and the
drop is not temporary, the accumulative losses arising from the decrease of the fair value of
the owner’s equity which was directly included shall be transferred out and recorded into the
profits and losses of the current period.
9. Accounts receivable and bad debts
(1) Measurement method and the percentage of bad debts
Measurement method of bad debts: accounted with allowance method.
At the end of the period, impairment test shall be made on individual accounts receivable with
significant amounts. If there is objective evidence that they have been impaired, bad debt lossshall be recognized and provision for bad debts shall be made base on the differences between
book values and the present value of future cash flows.
For those individual accounts receivable without significant amounts at the end of the period,
along with those accounts receivable that have been tested individually but not impaired, the
Company classifies them in line with similar credit risk characteristics into several groups,
and make a specific percentage of bad debts provision on the accounts receivable balances at
balance sheet date. On the basis of the actual loss rate of receivable accounts, with same or
similar credit risk characteristics of accounts receivable package in previous year, the Company
also considers current situation and determine the percentage of bad debt provision.
Here is the Company’s bad debts provision policy:
Ages Percentage (%)
Within 1 year (including 1 year, same as following) 2
1 year to 2 years 5
2 years to 3 years 10
3 years to 4 years 20
4 years to 5 years 30
Over 5 years 50
There is strong evidence that accounts receivable can’t be recovered or little possibility of
recovery (it is unable to pay in the short term due to bankruptcy, insolvent, serious shortage
of cash flow, serious natural disasters and etc. ) as well as other evidences of occurring loss,
the Company can make full provision for the accounts receivable.
(2) The accounts receivable meeting the following criteria are recognized as bad debts:
For accounts receivable that are surely uncollectible, such as they can be written off as bad
debts after the approval of the general meeting of shareholders or the board of directors.
10. Inventories
(1) Inventories include: development cost (constructing development product), development
product, finished goods, low-value consumable supplies and etc. All inventories are calculated
at actual cost when acquire. The issue of inventories is calculated according to individual
cognizance method. The low–value consumable supplies are amortized at one time. Inventories stock
physical count system: perpetual inventory method
Measurement method of land used for development: the land used for development is included in
“Inventories - development cost”.
Public facilities costs: public facilities such as schools, as well as public facilities fees
acquired by government departments, the cost is included in "development costs" and itsapportionment and detailed calculation are in accordance with calculation objects and cost items.
(2) For inventories at balance sheet date, the evaluation criteria should base on the lower value
between costs and net values that can be converted into cash. When net values that can be converted
into cash are lower than costs, provision for impairment loss of inventories shall be made and
recorded into current profit and loss.
11. Long-term equity investment
(1) The initial cost of the long-term equity investment
For the business combination under the same control, it shall, on the date of merger, regard the
share of the book value of the owner's equity of the merged enterprise as the initial cost of
the long-term equity investment. For the business combination not under same control, the initial
cost of long-term equity investment is fair value of assets paid, liabilities undertaken, the
equity securities issued by the Company, and includes all direct expenses and future events that
will influence combination cost.
Besides the long-term equity investments formed by the business combination, the initial cost
of a long-term equity investment obtained by other means shall be ascertained in accordance with
the provisions as follows: The initial cost of a long-term equity investment obtained by making
payment in cash shall be the purchase cost which is actually paid; the initial cost of a long-term
equity investment obtained on the basis of issuing equity securities shall be the fair value of
the equity securities issued; the initial cost of a long-term equity investment of an investor
shall be the value stipulated in the investment contract or agreement.
(2) Subsequent measurement
The Company uses cost method for the following conditions: a long-term equity investment where
the investing enterprise can exercise control over the investee, or 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. For a long-term equity
investment where the investing enterprise can exercise control over the investee, the investing
enterprise shall make an adjustment by employing the equity method when it works out consolidated
financial statements. When adopting cost method, the dividends or profits declared to distribute
by the invested entity shall be recognized as the current investment income. The investment income
recognized by the investing enterprise shall be limited to the amount received from the
accumulative net profits that arise after the invested entity has accepted the investment. Where
the amount of profits or cash dividends obtained by the investing entity exceeds the aforesaid
amount, it shall be regarded as recovery of initial investment cost.
A long-term equity investment of the investing enterprise that does joint control or significant
influences over the invested entity shall be measured by employing the equity method. If the
initial cost of a long-term equity investment is more than the investing enterprise' attributable
share of the fair value of the invested entity's identifiable net assets for the investment, the
initial cost of the long-term equity investment may not be adjusted. If the initial cost of a
long-term equity investment is less than the investing enterprise' attributable share of the fairvalue of the invested entity's identifiable net assets for the investment, the difference shall
be included in the current profits and losses and the cost of the long-term equity investment
shall be adjusted simultaneously. After an investing enterprise obtains a long-term equity
investment, it shall, in accordance with the attributable share of the net profits or losses of
the invested entity, recognize the investment profits or losses and adjust the book value of the
long-term equity investment. Where any change is made to the owner's equity other than the net
profits and losses of the invested entity, the book value of the long-term equity investment shall
be adjusted and be included in the owner's equity.
The Company should have impairment test for any long-term equity investment on very balance sheet
date. When the estimated value in use is less than its book value, it will be treated as impairment
loss. And this loss should be transferred into current profit and loss account; meanwhile, the
company should set up provision for the long-term equity investment impairment loss. To any
long-term equity investments, which are measured by cost method, there is no price or its fair
value can not be measured reliably, the impairment loss of these investments should be the
difference between the book value and the present value of the future cash flow calculated by
using current market rate of similar financial asset.
For other long-term equity investment, where any evidence shows that there is possible assets
impairment, the impairment provision is made according to relevant regulations and methods.
(3) Recognization basis of joint control and significant influences
The term "joint control" refers to the control over an economic activity in accordance with the
contracts and agreements, which does not exist unless the investing parties of the economic
activity with one an assent on sharing the control power over the relevant important financial
and operating decisions. The term "significant influences" refers to the power to participate
in making decisions on the financial and operating policies of an enterprise, but not to control
or do joint control together with other parties over the formulation of these policies.
(4) Disposal of long-term equity investment
When disposing of a long-term equity investment, the difference between its book value and the
actual purchase price shall be included in the current profits and losses. If any change other
than the net profits and losses of the invested entity occurs and is included in the owner's equity,
the portion previously included in the owner's equity shall, when disposing of a long-term equity
investment measured by employing the equity method, be transferred to the current profits and
losses according to a certain proportion.
12. Business combinations
(1) Business combinations under the same control
A business combination under the same control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or the same parties both before
and after the business combination and on which the control is not temporary. The assets and
liabilities that the combining party obtains in a business combination shall be measured on the
basis of their carrying amount in the combined party on the combining date. As for the balancebetween the carrying amount of the net assets obtained by the combining party and the carrying
amount of the consideration paid by it (or the total par value of the shares issued), the additional
paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset,
the retained earnings shall be adjusted.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining
enterprises are not ultimately controlled by the same party or the same parties both before and
after the business combination. The acquirer shall recognize the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains from the acquiree
as business reputation. The business reputation upon initial measurement shall be measured on
the basis of its costs minus the accumulative impairment provisions. If the combination costs
are less than the fair value of the identifiable net assets it obtains from the acquiree, after
the reexamination, it shall record the balance into the profits and losses of the current period.
13. Investment property
The term "investment property" refers to the real estates held for generating rent and/or capital
appreciation. Including: the right to use any land which has already been rented; the right to
use any land which is held and prepared for transfer after appreciation; and the right to use
any building which has already been rented. The initial measurement of the investment property
shall be made at its cost. An enterprise shall make a follow-up measurement to the investment
real estate through the cost pattern. For buildings which have already been rented, the Company
calculates depreciation as the same method of fixed assets. For the right to use any land, it
is amortized with straight-line method according to the serviceable life. At the balance sheet
date, where any evidence shows that there is possible assets impairment, the impairment provision
is made.
14. Fixed assets
(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for use in production or supply of goods or services,
for rental to others, or for administrative purpose, and have useful lives more than one accounting
year.
The expected discard expenses should be taken into consideration in the ascertainment of the cost
of a fixed asset.
(2) The category and depreciation method of fixed assets
Fixed assets include buildings and structures, vehicles, general equipments, specific equipments
and other equipments. 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 various types
fixed assets are listed as follows:
Category
Estimated useful lives
(years)
Expected residual
value (%)
Annual depreciation rate
(%)Buildings and structures 25 5 3.8
Vehicles 5 5 19.0
General equipments 10 5 9.5
Specific equipments 5 5 19.0
Other equipments 5 5 19.0
Depreciation shall be made for the fixed assets on a monthly basis. Fixed assets increased this month
shall make depreciation from next month; fixed assets decreased this month shall stop making
depreciation from next month.
The company shall, at least at the end of each year, have a check on the us eful life, expected residual
value and the depreciation method of the fixed assets, and adjust them when necessary.
At the balance sheet date, where any evidence shows that there is possible assets impairment, the
impairment provision is made according to Notes II. 17.
(3) Idle fixed assets
Fixed assets that are not used for six months continuously due to underemployment or natural disasters
are identified as idle fixed assets (except for seasonal break).
The depreciation method of idle fixed assets is consistent with other fixed assets.
(4) Fixed assets under financing lease
When one or more of the following criteria are met, a lease shall be classified as a financial lease:
a. the lease transfers ownership of the leased asset to the lessee by the end of the lease term;
b. the lessee has the option to purchase the leased asset at a price that is expected to be sufficiently
lower than the fair value at the date the option becomes exercisable such that, at the inception of the
lease, it is reasonably certain that the option will be exercised by the lessee;
c. the lease term is for the major part of the useful life of the leased asset even if title is not transferred;
d. in the case of the lessee, at the inception of the lease the present value of the minimum lease
payments amounts to substantially all of the fair value of the leased asset; in the case of lesser, at the
inception of the lease the present value of the minimum lease receipts amounts to substantially all of the
fair value of the leased asset;
e. the leased assets are of a specialized nature such that only the lessee can use them without major
modifications being made.
Fixed assets under financing lease shall be recorded at the lower one of the fair value of the leased asset
and the present value of the minimum lease payments. The depreciation method is consistent with fixed
assets of the Company.
15. Construction in progress
Construction in progress (“CIP”) includes all costs incurred during the preparation period before
commencement of construction and until the asset is ready for its intended use. These costs include
direct materials, direct labour, equipment for installation, construction and installation charges,management fees, gain or loss on trial run production and borrowing costs which are qualified for
capitalization.
CIP is transferred to fixed assets when the asset is ready for its intended use.
At the balance sheet date, where any evidence shows that there is possible CIP impairment, the
impairment provision is made according to Notes II.17.
16. Intangible assets
The term "intangible assets" refers to the identifiable non-monetary assets possessed or controlled by
enterprises which have no physical shape. If it is unable to forecast the period when the intangible asset
can bring economic benefits to the enterprise, it shall be regarded as an intangible asset with uncertain
service life. The intangible assets shall be initially measured according to its cost. If it is unable to
determine the expected realization pattern reliably, intangible assets shall be amortized by the
straight-line method. An enterprise shall, at least at the end of each year, check the service life and the
amortization method of intangible assets with limited service life, and adjust them when necessary.
Intangible assets with uncertain service life may not be amortized. An enterprise shall check the service
life of intangible assets with uncertain service life during each accounting period. Where any evidence
shows that there is possible assets impairment, the impairment provision is made.
17. Impairment of assets
At the balance sheet date, where there is any evidence indicating a possible impairment of assets except
inventories, investment property measured at fair value model, deferred income tax assets and financial
assets whose impairment losses are calculated according to special regulations, the enterprise shall, on
the basis of single item assets, estimate the recoverable amount. Where it is difficult to do so, it shall
determine the recoverable amount of the group assets on the basis of the asset group to which the asset
belongs. When the recoverable amount of the asset is less than its carrying amount, the differences are
recognized as impairment loss and accounted for profit and loss in current period. Once the impairment
loss is recognized, it can not be reversed in subsequent years.
The recoverable amount shall be determined in light of the higher one of the net amount of the fair value
of the assets minus the disposal expenses and the current value of the expected future cash flow of the
assets.
No matter whether there is any sign of possible assets impairment, the business reputation formed by the
merger of enterprises and intangible assets with uncertain service lives shall be subject to impairment
test every year.
18. Borrowing Costs
Borrowing costs are interest and other related costs incurred by the Company in connection with the
borrowing of funds, and include interest, amortization of discounts or premiums related to borrowings,
ancillary costs incurred in connection with the arrangement of borrowings, and exchange differencesarising from foreign currency borrowings. Borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset shall be capitalized as part of the cost of that asset. The
amounts of other borrowing costs incurred shall be recognized as an expense in the period in which they
are incurred.
Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take a
substantial period of time for acquisition, construction or production to get ready for their intended use or
sale. The capitalization of borrowing costs can commence only when all of the following conditions are
satisfied: (1) expenditures for the asset are being incurred; (2) borrowing costs are being incurred; (3)
activities relating to the acquisition, construction or production of the asset that are necessary to prepare
the asset for its intended use or sale have commenced.
When the qualified asset under acquisition and construction or production is ready for the intended use or
sale, the capitalization of the borrowing costs shall be ceased; then the borrowing costs incurred shall be
recorded into the profits and losses of the current period. Borrowing costs due to loans from real estate
development are recorded into development cost before the completion of the project and recorded into
current profit and loss after the completion of the project. Borrowing costs are recorded into development
cost and amortized quarterly.
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and
the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be
suspended. The borrowing costs incurred during such period shall be recognized as expenses, and shall
be recorded into the profits and losses of the current period.
During the capitalization period, the amount of interest to be capitalized for each accounting period shall
be determined as follows:
(1) for a specific-purpose borrowing, the amount of interest to be capitalized shall be the actual interest
expense incurred for the period less temporary deposit’s interest or investment income;
(2) where funds are borrowed under general-purpose borrowings, the Company shall determine the
amount of interest to be capitalized by applying a capitalization rate to the weighted average of the
excess amounts of cumulative expenditures on the asset over and above the amounts of
specific-purpose borrowings. The capitalization rate shall be the weighted average of the interest rates
applicable to the general-purpose borrowings.
19. Payroll
The term "employee compensation" refers to all kinds of payments and other relevant expenditures given
by enterprises in exchange of the services offered by the employees. The employee compensation shall
include: wages, bonuses, allowances and subsidies for the employees, non-monetary welfare and etc.
During the accounting period of an employee' providing services to an enterprise, the enterprise shall, in
accordance with beneficiaries of the services offered by the employee, treat the following circumstances
respectively:
(1)The compensation for the employee for producing products or providing services shall be recorded asthe product costs and service costs;
(2)The compensation for the employee for any on-going construction project or for any intangible asset
shall be recorded as the costs of fixed asset or intangible assets;
(3)The compensation for the cancellation of the labor relationship with the employee shall be recorded
into general and administrative expenses of the current period.
The compensation for the employee other than those as mentioned above shall be recorded as profit or
loss for the current period.
20. Contingencies liabilities
The obligation pertinent to a Contingencies shall be recognized as accrued liabilities when the following
conditions are satisfied simultaneously: (1)That obligation is a current obligation of the enterprise; (2)It
is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the
obligation; (3)The amount of the obligation can be measured in a reliable way. The estimated debts shall
be initially measured in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
21. Share-based payments
The term "share-based payment" refers to a transaction in which an enterprise grants equity instruments
or undertakes equity-instrument-based liabilities in return for services from employee or other
parties. The share-based payments shall consist of equity-settled share-based payments and
cash-settled share-based payments. The equity-settled share-based payment in return for employee
services shall be measured at the fair value of the equity instruments granted to the employees. An
equity-settled share-based payment in return for the service of any other party shall be measured at the
fair value of the service on the acquisition date; If the fair value of the service of any other party can not
be measured in a reliable way, it shall be measured at the fair value of the equity instruments on the
acquisition date. The fair value of the equity instruments is recognized according to following methods:
(1) For which there is an active market, the quoted prices in the active market shall be used to determine
the fair values.
(2) Where there is no active market for equity instrument, the enterprise concerned shall adopt value
appraisal techniques to determine its fair value. The value appraisal techniques mainly include the prices
adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own
free will, the current fair value obtained by referring to other financial instruments of the same essential
nature, the cash flow capitalization method and the option pricing model, etc.
The Company makes the best estimation to the equity instruments can be exercised rights according to
subsequent information, for example, change of employees who can exercise rights as currently
obtained.
22. Revenue recognition
(1) Revenue from the sale of goods shall be recognized only when all of the following conditions are
satisfied:a. the enterprise has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. the enterprise retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
c. the amount of revenue can be measured reliably;
d. it is probable that the associated economic benefits will flow to the enterprise;
e. the associated costs incurred or to be incurred can be measured reliably.
Real estate sales revenue: the Company can recognize real estate sales revenue after the completion
and acceptance of the property, signing sale contract, acquiring payment proof from buyer and delivery.
When the buyer receives written delivery notice and has no warrant to refuse to accept it, the sales
revenue is realized after delivery limit closed of delivery notice. For the development project consigned
by other, as well as in accordance with " Accounting Standards for Business Enterprises -Construction
Contract", the revenue shall be recognized in light of the percentage-of- completion method. The
percentage-of- completion is determined by the proportion of finished workload.
(2) Rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably at the
balance sheet date (including: the amount of revenue can be measured reliably; it is probable that the
associated economic benefits will flow to the enterprise; the stage of completion of the transaction can be
measured reliably; the costs incurred and to be incurred for the transaction can be measured reliably),
revenue associated with the transaction shall be recognized using the percentage of completion method,
and the stage of completion of the transaction is recognized according to the proportion of the cost
having taken place occupied the estimated total cost.
When the outcome of a transaction involving the rendering of services can not be estimated reliably at
the balance sheet date: when the costs incurred are expected to be recoverable, revenue shall be
recognized to the extent of costs incurred and an equivalent amount shall be charged to profit or loss as
service costs; when the costs incurred are not expected to be recoverable, the costs incurred shall be
recognized in profit or loss for the current period and no service revenue shall be recognized.
The revenue of property management service is recognized when following conditions are satisfied: the
property management service has been offered; the associated economic benefits will flow to the
enterprise; the associated costs can be measured reliably.
(3) Use by others of enterprise assets
Revenue arising from the use by others of enterprise assets shall be recognized only when both of the
following conditions are satisfied: it is probable that the associated economic benefits will flow to the
enterprise; the amount of the revenue can be measured reliably. The amount of interest shall be
determined according to the length of time for which the enterprise’s currency fund is used by others and
the effective interest rate. The amount of royalties shall be determined according to the period and
method of charging as stipulated in the relevant contract or agreement.
23. Government grantsGovernment grants shall be recognized at fair value on the conditions that the Company can receive the
grant and comply with the conditions attaching to the grant. For a government grant related to income, if
the grant is a compensation for related expenses or losses to be incurred by the Company in subsequent
period, the grant shall be recognized as deferred income, and recognized in profit or loss over the
periods in which the related costs are recognized. A government grant related to an asset shall be
recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related
asset.
24. Income tax
The Company shall use the balance sheet liabilities method to measure income tax. The income tax
expenses include income tax of current period and deferred income tax expense (or income). The
income taxes of the current period and deferred income tax of an enterprise shall be treated as income
tax expenses or incomes, and shall be recorded into the current profits and losses, excluding the income
taxes incurred under the following circumstances: the business combination; and the transactions or
events directly recognized as the owner's rights and interests.
The current income tax is calculated with the amounts of taxable income of enterprises for the current
period. The taxable income is adjusted according to Tax Law and based on current profit.
At the balance sheet date, the Company analyzes the carrying amount of assets or liabilities and its tax
base; where there is difference between the carrying amount of the assets or liabilities and its tax base,
the deferred income tax assets, the deferred income tax liabilities or corresponding deferred income tax
expense (or income) shall be determined. When the carrying amount of assets is higher than its tax base
or the carrying amount of liabilities is lower than its tax base, the taxable temporary differences occur and
the deferred income tax liabilities shall be recognized; When the carrying amount of assets is lower than
its tax base or the carrying amount of liabilities is higher than its tax base, the deductible temporary
differences occur and the deferred income tax assets shall be recognized.
25. Maintenance fund
The Company’s property management company receives and manages public maintenance fund
consigned by owners, and charges to “agency fund”. The fund is used in the maintenance and update of
the common apparatus and common position of the house and communal facilities of property
management region.
26. Quality assurance reserve funds
Construction party should remain quality assurance reserve funds according to the amount in the
construction contract, and list in "accounts payable". The funds should be paid according to the actual
conditions and contract after guarantee period.
27. Preparation method of consolidated financial statementsThe Company shall include all subsidiaries within the scope of consolidation.
The consolidated financial statements shall be prepared by parent based on the financial statements of
the parent and its subsidiaries, using other related inform ation and after adjusting the long-term equity
investments in subsidiaries using the equity method according to “Accounting Standard for Business
Enterprises No.33— Consolidated Financial Statements”.
28. Changes of accounting policies and accounting estimates and error correction
(1) Changes of accounting policies
Not applicable.
(2) Changes of accounting estimates and error correction
Not applicable.
III. Taxation
The main taxes include: business tax, city construction and maintenance tax, education fee, income tax
and etc. The tax rates are as following:
Category Rate Taxable base
Business tax 5%
Revenue of house property sale and lease, property
management income and etc.
City construction and maintenance tax 5%, 7% Business tax and value-added tax
Education fee 3% Business tax and value-added tax
Income tax 20%, 25% Taxable income
Note: Except that income tax of companies in Hainan District and Hainan Pearl River Enterprises
Holding Co., Ltd. Shanghai Real Estate Co. is levied at 20% of taxable income, the income tax
of other companies is levied at 25% of taxable income.
IV. Business combinations and consolidation financial statements
1. Subsidiaries established by the Company
Subsidiary’s name
Registered
address
Registered
capital
(RMB 0’000)
Principal
activities
Holding
proportion
Voting rights
proportion
Amount invested by the
Company
(RMB 0’000)
Hainan Pearl River
Properties and Hotels
Management Co., Ltd.
Hainan
Haikou
500
Properties and
Hotels
Management
98% 98% 490
Hainan Pearl River
Environmental Projects Co.,
Ltd.
Hainan
Haikou
100
Gardens
engineering
construction
100% 100% 100Subsidiary’s name
Registered
address
Registered
capital
(RMB 0’000)
Principal
activities
Holding
proportion
Voting rights
proportion
Amount invested by the
Company
(RMB 0’000)
Hainan Pearl River Estate
Cleaning Company
Hainan
Haikou
20
Cleaning
projects
100% 100% 20
Hainan Pearl River Estate
Machine Engineering
Company
Hainan
Haikou
150
Mechanical and
electrical
products sales
100% 100% 150
Hainan Pearl River Estate
Marketing Co., Ltd.
Hainan
Haikou
100
Real Estate
Marketing
Planning
100% 100% 100
Sanya Wanjia Hotel
Management Co., Ltd.
Hainan Sanya 10,800 Hotel service 100% 100% 10,800
Sanya WanJia industrial Co., LTD
Hainan Sanya 2,000
Cultural and
sports services
100% 100% 2,000
Hubei Pearl River Real Estate
Development Co., Ltd.
Hubei Wuhan 6,500
Real estate
development and
management
88% 88% 5,720
Wuhan Pearl River Meilin
Hotels Management Co.,
Ltd.
Hubei Wuhan 50 Service 100% 100% 50
Hainan Pearl River
Enterprises Holding Co.,
Ltd. Shanghai Real Estate Co.
Shanghai 4,000
Real estate
development and
management
100% 100% 4,000
2. Changes of consolidation scope
The Company did not change the consolidation scope of the financial statements during this
reporting period.
3. Information about minority interest of subsidiaries
Subsidiary’s name
Minority interest on 1
Jan 2009
Increment decrement
Minority interest on 30
Jun 2009
Hubei Pearl River Real Estate Development
Co., Ltd.
11,158,788.99 1,263,837.89 9,894,951.10
Hainan Pearl River Properties and Hotels
Management Co., Ltd.
160,345.40 841.11 159,504.29
Total 11,319,134.39 1,264,679.00 10,054,455.39
V. Notes to significant items of the consolidated financial statements1. Monetary funds
Items 30 Jun 2009 1 Jan 2009
Cash 232,710.39 257,690.21
Bank deposit 67,703,139.63 36,367,845.96
Other monetary funds 30,000.00 30,000.00
Total 67,965,850.02 36,655,536.17
Note: Ending amount of monetary funds is increased by 85.42% compared with initial amount. It
is mainly due to Hubei Pearl River Real Estate Development Co., Ltd. increasing amount of advances
from customers.
2. Accounts receivable
(1) Detailed information
30 Jun 2009 1 Jan 2009
Items
Balance
Proportion
(%)
Bad debts Net value Balance
Proportion
(%)
Bad debts Net value
Individual with significant amount 7,761,707.60 61.43 7,761,707.60 0.00 9,157,687.60 63.32 7,789,627.20 1,368,060.40
Individual without significant
amount,but with
significant credit risk
2,602,630.43 20.60 2,270,220.52 332,409.91 2,825,626.55 19.54 2,253,870.24 571,756.31
Other unimportant receivables 2,271,122.06 17.97 237,038.22 2,034,083.84 2,479,093.98 17.14 289,549.35 2,189,544.63
Total 12,635,460.09 100.00 10,268,966.34 2,366,493.75 14,462,408.13 100.00 10,333,046.79 4,129,361.34
(2) Aging analysis
30 Jun 2009 1 Jan 2009
Ages
Balance
Proportion
(%)
Bad debts Net value Balance
Proportion
(%)
Bad debts Net value
Within 1 year 1,408,384.64 11.15 28,167.69 1,380,216.95 2,980,744.98 20.61 59,614.90 2,921,130.08
1-2 years 204,751.00 1.62 10,237.55 194,513.45 418,921.00 2.90 20,946.05 397,974.95
2-3 years 265,000.00 2.10 26,500.00 238,500.00 475,408.00 3.29 236,908.00 238,500.00
3-4 years 470,997.00 3.73 94,199.40 376,797.60 100,000.00 0.69 20,000.00 80,000.00
4-5 years 100,000.00 0.79 30,000.00 70,000.00 200,997.00 1.39 60,299.10 140,697.90
Over 5 years 10,186,327.45 80.62
10,079,861.70
106,465.75 10,286,337.15 71.12 9,935,278.74 351,058.41
Total 12,635,460.09 100.01
10,268,966.34
2,366,493.75 14,462,408.13 100.00 10,333,046.79 4,129,361.34
Note 1: The year end balance did not contain any debt owned by major shareholders who own more
than 5% of the Company’s share capital.
2: The top five debtors’ ending total balance is 8,259,227.60 Yuan, and is 65.37% of accountsreceivable total amount.
3: There are 8,259,227.60 Yuan over 5 years in the top five debtors’ ending total balance.
Details are as follows:
Name Owned amount Ages
Hainan racing entertainment Co., LTD 2,406,158.00 over 5 years
Hainan Baoping company 2,218,494.43 over 5 years
Hainan centaline property agency 2,090,069.77 over 5 years
Hainan dragon flim studio 1,046,985.40 over 5 years
Haikou PeiJie clothing company 497,520.00 over 5 years
Total 8,259,227.60
4: The bad debts proportion and reasons for individual accounts receivable with significant
amount
Individual accounts receivable whose amount is more than 1 million and whose ending balance
is owned more than 5% (including 5%) of the total other receivables will be recognized as individual
accounts receivable with significant amount.
At the e nd of this year, the individual accounts receivable with significant amount that doesn’t
occur impairment loss after individual testing, shall base on actual loss rates of accounts
receivable portfolio with same ages and present situation to determine the bad debts proportion.
Among them, the balance over 5 years is 8,259,227.60Yuan.
5: The bad debts proportion and reasons for individual accounts receivable without significant
amount, but with significant credit risk according to credit risk characteristics portfolio
For the accounts receivable over 5 years, the bad debts proportion is 50% of the balance. For
accounts receivable that are surely uncollectible, the bad debts proportion could be increased
to 100% of the balance. After deducting individual accounts receivable with significant amount
from accounts receivable satisfied with above situations, the leavings are individual accounts
receivable without significant amount, but with significant credit risk.
3. Advances to suppliers
30 Jun 2009 1 Jan 2009
Ages
Balance Proportion (%) Balance Proportion (%)
Within 1 year 36,175,220.94 87.17 27,891,517.83 98.73
1-2 years 5,016,185.03 12.09 60,000.00 0.21
2-3 years 10,000.00 0.02Over 3 years 300,000.00 0.72 300,000.00 1.06
Total 41,501,405.97 100.00 28,251,517.83 100.00
Note 1: The year end balance did not contain any debt owned by major shareholders who own more
than 5% of the Company’s share capital.
2 : Ending carrying amount of a dvances to suppliers is increased by 46.9% compared with initial
amount. It is mainly due to its subsidiary H ubei pearl real estate development Co., LTD made project
prepayment.
4. Other receivables
(1) Detailed information
30 Jun 2009 1 Jan 2009
Items
Balance
Proportion
(%)
Bad debts Net value Balance
Proportion
(%)
Bad debts Net value
Individual with significant amount 177,837,500.00 74.63 24,300,900.00 153,536,600.00 49,250,125.00 62.84 19,342,875.00 29,907,250.00
Individual without significant amount,
but with significant credit risk
41,022,568.21 17.22 25,433,818.21 15,588,750.00 25,104,007.81 32.03 24,874,333.10 229,674.71
Other unimportant receivables 19,421,262.22 8.15 2,283,296.00 17,137,966.22 4,023,847.38 5.13 338,445.99 3,685,401.39
Total 238,281,330.43 100.00 52,018,014.21 186,263,316.22 78,377,980.19 100.00 44,555,654.09 33,822,326.10
(2) Aging analysis
30 Jun 2009 1 Jan 2009
Ages
Balance Proportion (%) Bad debts Net value Balance Proportion (%) Bad debts Net value
Within 1 year 173,538,406.39 72.84 3,470,768.13 170,067,638.26 3,132,090.58 4.00 62,641.80 3,069,448.78
1-2 years 2,362,542.37 0.99 118,127.12 2,244,415.25 5,691,756.80 7.26 505,804.19 5,185,952.61
2-3 years 893,389.54 0.37 89,338.95 804,050.59 800,000.00 1.02 80,000.00 720,000.00
3-4 years 505,129.00 0.21 101,025.80 404,103.20 6,005,129.00 7.66 1,201,025.80 4,804,103.20
4-5 years 21,888,381.65 27.93 6,858,810.14 15,029,571.51
Over 5 years 60,981,863.13 25.59 48,238,754.21 12,743,108.92 40,860,622.16 52.13 35,847,372.16 5,013,250.00
Total 238,281,330.43 100.00 52,018,014.21 186,263,316.22 78,377,980.19 100.00 44,555,654.09 33,822,326.10
Note 1: The year end balance did not contain any debt owned by major shareholders who own more
than 5% of the Company’s share capital.
2: The top five debtors’ ending total balance is 193,920,125.00 Yuan, and is 81.38% of other
receivables total amount.
3: There are 156,670,000.00 Yuan within 1 year and 37,250,125.00 Yuan over 5 years in the top
five debtors’ ending total balance. Details are as follows:
Name Owned amount Ages
Chongqing fifth intermediate people's court 156,670,000.00 Within 1 yearName Owned amount Ages
Hainan Baxter industrial Co., LTD 11,417,500.00 Over 5 years
Beijing Yidong international Properties Co., LTD 9,750,000.00 Over 5 years
YangPu Nanhua Datong Holding Co., LTD 9,600,000.00 Over 5 years
Shenzhen impression computer Co., LTD 6,482,625.00 Over 5 years
Total 193,920,125.00
4: Ending amount of other receivables is increased by 204.02% compared with initial
amount. It is mainly due to increase 156,670,000.00 Yuan of account receivable. Details refer to Notes
XIII. Other important events 3.
5: The bad debts proportion and reason for individual other receivables with significant amount
The year end balance did not contain any debt owned by major shareholders who own more than 5%
of the Company’s share capital.
Individual other receivables whose amount is more than 1 million and whose ending balance is
owned more than 5% (including 5%) of the total other receivables will be recognized as individual other
receivables with significant amount.
At the end of this year, the individual other receivables with significant amount that doesn’t occur
impairment loss after individual testing, shall base on actual loss rates of other receivables portfolio with
same ages and present situation to determine the bad debts proportion. Among them, the balance over 5
years is 37,250,125.00 Yuan.
6: The bad debts proportion and reason for individual other receivables without significant amount, but
with significant credit risk according to credit risk characteristics portfolio
For the other receivables over 5 years, the bad debts proportion is 50% of the balance. For other
receivables that are surely uncollectible, the bad debts proportion could be increased to 100% of the
balance. After deducting individual other receivables with significant amount from other receivables
satisfied with above situations, the leavings are individual other receivables without significant amount,
but with significant credit risk.
5. Inventories
(1) Inventories category
30 Jun 2009 1 Jan 2009
Items
Balance
Impairment
provision
Balance Impairment provision
Raw material 2,475,815.39 2,754,432.65
Low-value consumption
goods
55,009.70 55,009.70
Finished goods 269,603.99 28,983.79
Constructing 539,618,677.34 41,686,535.83 450,222,653.24 41,686,535.8330 Jun 2009 1 Jan 2009
Items
Balance
Impairment
provision
Balance Impairment provision
development product
Development product 61,298,993.96 17,690,672.35 61,298,993.96 17,690,672.35
Total 603,718,100.38 59,377,208.18 514,360,073.34 59,377,208.18
Net value 544,340,892.20 454,982,865.16
Note 1: Net realizable value of inventories is the net value of market price in the voluntary
transactions deducting further development or sales costs according to the individual stock item
in a fair market transaction. Details of inventory impairment provision refer to Notes V. 5 (4).
2: Inventory mortgage is as follows:
a. The area of Pearl River Plaza 5th floor west side is 2,046.00 square meters, the book value
is 7,958,858.16 Yuan; the area of Longzhu Plaza 21st floor is 792.2 square meters, the book value
is 1,048,080.60 Yuan; investment real estates listed in Notes V. 7 note 2; fixed-assets listed
in Notes V. 8 note 1; these assets have been mortgaged to the B ank of Communication Hainan Branch,
and loan amount is 21,320,000 Yuan.
b. Meilin Qingcheng land use right and commercial house of 63,327.00 square meters in the Road
No.20 Wuchang District of Wuhan, the book value is 74,946,255.99 Yuan, have been mortgaged to
the Construction Bank of China Wuchang Branch, the loan amount is 150,000,000 Yuan.
4: Capitalized interest amount is 5,282,872.50 Yuan included in the increase of inventories.
Capitalization rate is same as the bank lending rate over the same period.
(2) Constructing development product is as follows:
Project name Commencement date
Estimated time
for completion
Estimated total
investment
(0’000)
30 Jun 2009 1 Jan 2009
Wuhan Meilin
Qingcheng second and
third period
projects
In Sep 2006 In 2011 79,929.00 427,490,036.30 339,458,555.11
Longzhu third period
project
Note 1 50,956,564.24 49,592,021.33
Along No.1 road
engineering project
Note 2 61,172,076.80 61,172,076.80
Total 539,618,677.34 450,222,653.24Note 1: The Company and Haikou Land Resources Bureau signed the "supplementary agreement of land
for construction" on 31 August 2004. The Land Resources Bureau agreed that the Company can defer
exploiting the land of 16,512.62 square meters, locating in Longkun North Road No.2 (Pearl River
International Hotel land). The project plan is waiting for the government’s examining and
approving.
2: According to “Equity application letter about Changdi along river No.1 road project” of Haikou
City Development Co., Ltd (dismantlement and direct department of Changdi along river No.1 road)
on 23 September 2006, it is required the Company applies relevant equity and data of the project.
On 11 October 2006, the basic intention of the Company for the project is to obtain land with
same value in Haikou according to actual capital invested by the Company or transfer the investment
to new investors.
(3) Development product is as follows:
Project name
Time for
completion
1 Jan 2009 Increment Decrement 30 Jun 2009
F2 Dihao In 1995
F4 Pearl River Plaza attaching
building
In 1995
Pearl River Plaza F3 Dijing In 1995 5,315,696.54 5,315,696.54
Pearl River Plaza F4 attaching
building
In 1995 8,412,701.88 8,412,701.88
Longzhu Plaza In 1992 1,598,659.60 1,598,659.60
Pearl River Plaza
underground garage
In 1995 6,919,373.98 6,919,373.98
Longzhu Plaza underground
garage
In 1992 2,664,000.00 2,664,000.00
Rose garden high floor In 2000 1,908,873.88 1,908,873.88
Rose garden attaching
building
In 2000
Rose garden underground
garage two floor
In 2000 30,345,040.97 30,345,040.97
Wuhan Meilin Qingcheng first
period project
In Aug 2006 4,134,647.11 4,134,647.11
Total 61,298,993.96 61,298,993.96
(4) Inventories impairment provisionDecrement
Items 1 Jan 2009 Increment
Transfer back Write off
30 Jun 2009
Development product 17,690,672.35 17,690,672.35
Constructing
development product
41,686,535.83 41,686,535.83
Total 59,377,208.18 59,377,208.18
6. Available for sale financial assets
Items Fair value at 30 Jun 2009 Fair value at 1 Jan 2009
Equity instruments available for sale 577,220,000.00
Total 577,220,000.00
Details of Available for sale financial assets ：
Share name Holding amount Investment cost Fair value at 30 Jun 2009
Southwest securities 33,250,000.00 42,460,376.01 577,220,000.00
Total 33,250,000.00 42,460,376.01 577,220,000.00
Note: The fair value of available for sale financial asset at the end of this period was higher than investment
cost 534,759,623.99 Yuan. The company recognized capital reserve 413,895,873.99 yuan and deferred income tax
liabilitiesthe 120,863,750.00 yuan.
7. Long-term Equity Investment
(1) Category
30 Jun 2009 1 Jan 2009
Items
Balance Provision Book value Balance Provision Book value
Investment to joint
venture
457,831.42 332,092.00 125,739.42 457,831.42 332,092.00 125,739.42
Investment to
affiliate
1,616,901.92 1,616,901.92 1,616,901.92 1,616,901.92
Other equity
investment
46,494,955.29 35,083,645.39 11,411,309.90 206,200,703.44 126,788,941.74 79,411,761.70
Total 48,569,688.63 35,415,737.39 13,153,951.24 208,275,436.78 127,121,033.74 81,154,403.04
(2) Adopting equity methodEquity increment or
decrement
Name of invested companies
Percentage
%
Initial
investing
amount
1 Jan 2009
Amount of
this year
Accumulative
amount
30 Jun 2009
Beijing Yangguang Tiancheng Property
Management Co., Ltd
30 1,500,000.00 1,616,901.92 1,616,901.92
Shanghai Bright Pearl at Sea Property
Management Company
50 832,000.00 457,831.42 457,831.42
Total 2,332,000.00 2,074,733.34 2,074,733.34
(3) Adopting cost method
Name
Percentage
%
Initial
investing
amount
1 Jan 2009 Increment Decrement 30 Jun 2009
Southwest Security 3.21 150,000,000.00 159,705,748.15 159,705,748.15
Guangzhou Pearl River Investment
Management Co., Ltd
9.4785 18,177,240.29 18,177,240.29 18,177,240.29
China Net Promoting Science and
Technology Investment Company
10 10,000,000.00 10,000,000.00 10,000,000.00
China (Hainan) Reform Development Academe 8,640,000.00 8,640,000.00 8,640,000.00
Hainan Tongsheng Harbor Company 15 6,000,000.00 6,000,000.00 6,000,000.00
Hainan South Ocean Ship Industry Stock Co., Ltd 1,680,000.00 1,680,000.00 1,680,000.00
Nanli Lake member card 662,400.00 662,400.00 662,400.00
Hainan Pearl River Pipe and Peg Co., Ltd 1.33 618,500.00 426,315.00 426,315.00
Hainan General Commercial Board 6.67 500,000.00 500,000.00 500,000.00
Nanli Lake Golf member card 249,000.00 249,000.00 249,000.00
Hainan Huadi Pearl River Base-Project Co., Ltd 2 160,000.00 160,000.00 160,000.00
Total 196,687,140.29 206,200,703.44 159,705,748.15 46,494,955.29
Note: The decreased amount of the long-term equity investment is due to reclassifying the
investment in Southwest Security to financial asset available for sale. Details refer to Note
XIII. Other important events.
(4) Long-term investment impairment provisionDecrement
Name 1 Jan 2009 Increment Transfer
back
Write off
30 Jun 2009 Reason
Southwest Security 91,705,296.35 91,705,296.35
Guangzhou Pearl River Investment
Management Co., Ltd
7,352,245.39 7,352,245.39
Deterioration
of the financial
situation
China Net Promoting Science and
Technology Investment Company
10,000,000.00 10,000,000.00
Be revoked the
business
license
China (Hainan) Reform Development
Academe
8,640,000.00 8,640,000.00
Unable to
recover
investment
Hainan Tongsheng Harbor
Company
6,000,000.00 6,000,000.00
Project has
already been
suspended
Hainan South Ocean Ship Industry
Stock Co., Ltd
1,680,000.00 1,680,000.00
Negative net
assets
Nanli Lake member card 662,400.00 662,400.00
Unable to
recover
investment
Hainan General Commercial Board 500,000.00 500,000.00
Unable to
recover
investment
Shanghai Bright Pearl at Sea
Property
Management Company
332,092.00 332,092.00
Deterioration
of the financial
situation
Nanli Lake Golf member card 249,000.00 249,000.00
Unable to
recover
investment
Total 127,121,033.74 91,705,296.35 35,415,737.39
8. Investment real estates
Items 1 Jan 2009 Increment Decrement 30 Jun 2009
I. Original value 26,260,649.34 26,260,649.34
(1) Buildings and structures 26,260,649.34 26,260,649.34
(2) Land use rightItems 1 Jan 2009 Increment Decrement 30 Jun 2009
II. Accumulated depreciation and amortization 1,613,203.50 2,055,553.26
(1) Buildings and structures 1,613,203.50 442,349.76 2,055,553.26
(2) Land use right
III. Impairment provision 2,979,083.88 2,979,083.88
(1) Buildings and structures 2,979,083.88 2,979,083.88
(2) Land use right
IV. Book value 21,668,361.96 21,226,012.20
(1) Buildings and structures 21,668,361.96 21,226,012.20
(2) Land use right
Note 1: The Company adopts cost pattern to measure investment property.
2: Shanghai Pudong Avenue 1097 No. 23 and No. 24 attaching building first floor, area is 749.64
square meters, the book value is 2,733,826.70 Yuan; Shanghai Pudong Avenue 1097 No. 23 and No. 24
attaching building second floor, area is 749.65 square meters, the book value is 3,266,323.26 Yuan.
underground garage one-floor with 104 parking spaces, parking area is 3,517.28 square meters; the
book value is 14,875,794.08Yuan. All these have been mortgaged to Bank of Communication Hainan
Branch, details refer to Notes V. 5 (1) note 3.
9. Fixed assets and accumulated depreciation
Items 1 Jan 2009 Increment Decrement 30 Jun 2009
I. Original value
Buildings and structures 265,697,819.82 265,697,819.82
General equipments 40,232,961.64 285,553.50 550,000.00 39,968,515.14
Vehicles 15,580,171.36 168,300.00 1,447,600.40 14,300,870.96
Other equipments 31,349,629.43 497,915.05 14,456.00 31,833,088.48
Total 352,860,582.25 951,768.55 2,012,056.40 351,800,294.4
II. Accumulated
depreciation
Buildings and structures 17,946,985.98 4,671,121.01 22,618,106.99
General equipments 18,521,371.71 1,197,805.90 522,500.00 19,196,677.61
Vehicles 7,312,328.60 1,012,595.31 564,703.94 7,760,219.97
Other equipments 11,382,380.81 2,470,415.57 5,099.00 13,847,697.38
Total 55,163,067.10 9,351,937.79 1,092,302.94 63,422,701.95Items 1 Jan 2009 Increment Decrement 30 Jun 2009
III. Impairment
provision
Buildings and structures 17,031,627.70 17,031,627.70
General equipments
Vehicles
Other equipments
Total 17,031,627.70 17,031,627.70
IV. Book value
Buildings and structures 230,719,206.14 226,048,085.13
General equipments 21,711,589.93 20,771,837.53
Vehicles 8,267,842.76 6,540,650.99
Other equipments 19,967,248.62 17,985,391.10
Total 280,665,887.45 271,345,964.75
Note 1: Longzhu Plaza’s twenty-two floor and its north-east side 2-floor are 792.20 and 1,669.13
square meters respectively, and the total carrying amount is 2,534,048.87 The two properties have
been mortgaged to the Bank of Communication Hainan Branch; details refer to Notes V. 5 (1) note
3.
Equipment: 2 sets of air conditionings, 2 sets of diesel generators, and 8 Elevators of Huayu
brand (included in property value), the book value is 6,515,121.08 Yuan, as well as the right
to use land in Sanya hotel, these have been mortgaged to the Bank of China Hainan Yeshumeng b ranch,
and loan amount is 12,000,000 Yuan.
2: The carrying amount of Wuhan Meilin Club is 6,616,310.00 Yuan; the relevant property ownership
certificate is in the course of handling.
10. Intangible assets
Items 1 Jan 2009 Increment Decrement 30 Jun 2009
I. Original value 34,859,953.18 34,861,953.18
Land use right of Sanya hotel 30,342,484.00 30,342,484.00
Sanya villa land 1,839,022.44 1,839,022.44
Wuhan club land 1,443,725.13 1,443,725.13
Shanghai house use right 695,732.00 695,732.00
Software 538,989.61 2,000.00 540,989.61Items 1 Jan 2009 Increment Decrement 30 Jun 2009
II.Accumulative amortization 1,933,519.63 463,946.51 2,397,466.14
Land use right of Sanya hotel 1,498,360.74 394,224.92 1,892,585.66
Sanya villa land 95,327.28 23,831.82 119,159.10
Wuhan club land 32,183.27 10,312.32 42,495.59
Shanghai house use right 216,488.18 6,957.32 223,445.50
Software 91,160.16 28,620.13 119,780.29
III. Carrying amount 32,926,433.55 32,464,487.04
Note 1: The right to use land of 30,780.13 square meters in Sanya hotel has been mortgaged to the
Hainan Yeshumeng branch of the Bank of China. Details refer to Notes V. 8 .
2: The carrying amount of land use right in Wuhan Club is 1,443,725.13 Yuan; the relevant property
ownership certificate is in course of handling.
11. Assets impairment provision
Decrement
Items 1 Jan 2009 Increment
Transfer back Write off
30 Jun 2009
Bad debt provision 54,888,700.88 7,398,279.67 62,286,980.55
Inventories impairment provision 59,377,208.18 59,377,208.18
long-term equity investment
impairment provision
127,121,033.74 91,705,296.35 35,415,737.39
Investment property impairment
provision
2,979,083.88 2,979,083.88
Fixed assets impairment
provision
17,031,627.70 17,031,627.70
Others
Total 261,397,654.38 7,398,279.67 91,705,296.35 177,090,637.70
Note: The decrement of investment property impairment provision is 91,705,296.35 Yuan; it is due to
reclassifying the investment in Southwest securities into Available for sale financial assets and therefor
reduction of the provision of impairment.
12. Assets with restricted ownershipItems Assets name Area Amount Remark
1.Inventories Subtotal 83,953,194.75
Development product
Pearl River Plaza attaching
building 5-floor west side real
estates
2,046.00 7,958,858.16
Longzhu Plaza 21-floor 792.20 1,048,080.60
They have been mortgaged to
the China Construction Bank
Hainan Branch for loan 21.32
million Yuan.
Constructing
development product
Land use right of Wuhan Meilin
Qingcheng second period project
63,327.00 74,946,255.99
It has been mortgaged to the
Construction Bank of China
Wuchang Branch for loan 150
million Yuan.
2.Investment real
estates
Subtotal 20,875,944.04
Buildings and
structures
Shanghai Pudong Avenue 1097 No. 23
and No.24 attaching buildings
1-floor and 2-floor real estates
1,499.28 6,000,149.96
Buildings and
structures
Underground garage 1-floor with
104 parking spaces
3,517.28 14,875,794.08
They have been mortgaged to
the China Construction Bank
Hainan Branch for loan 21.32
million Yuan.
3.Fixed assets Subtotal 9,049,169.95
Buildings and
structures
Longzhu Plaza 22-floor and its
northeast 2-floor real estates
2,461.33 2,534,048.87
They have been mortgaged to
the China Construction Bank
Hainan Branch for loan 21.32
million Yuan.
Equipments General equipments 6,515,121.08
It has been mortgaged to the
Bank of China Hainan
Yeshumeng branch for loan 12
million Yuan.
4.Intangible assets Subtotal 28,844,123.26
Land Land use right of Sanya hotel 30,780.13 28,844,123.26
It has been mortgaged to the
Bank of China Hainan
Yeshumeng branch for loan 12
million Yuan.
5.Available for sale
financial assets
33,250,000 shares of Southwest
Security
577，
220,000.00
Details refer to Notes VIII.
Note: Assets with restricted ownership are mainly used for guarantee of bank loans. The
procedure for the relief of equity pledge 33,250,000 shares of Southwest securities is in process.13. Short-term loans
Category 30 Jun 2009 1 Jan 2009
Guaranteed loans
Pledge loans 21,320,000.00 24,000,000.00
Total 21,320,000.00 24,000,000.00
Note 1: Beijing Wangfa Real Estate Development provides loan guarantee of 43,000,000 Yuan
that the Company gets from the Bank of Communication Hainan Branch, and the ending amount of the
loan is 21,320,000 Yuan. At the same time, the Company provides mortgage for the loan, details
refer to Notes V. 12.
2: There are no unpaid overdue short-term loans this year.
14. Accounts payable
Ages 30 Jun 2009 1 Jan 2009
Within 1 year 1,811,352.93 3,391,600.90
1-2 years 2,967,567.26 21,545,357.34
2-3 years 20,047,593.39 166,672.39
Over 3 years 7,967,807.24 7,820,792.09
Total 32,794,320.82 32,924,422.72
Note 1: The end of this reporting period did not contain debt owned by any major shareholders
who own more than 5% of the Company’s share capital.
2: Accounts payable over 3 years is unpaid project fund.
15. Advances from customers
Ages 30 Jun 2009 1 Jan 2009
Within 1 year 309,840,386.45 142,868,649.50
1-2 years 88,956.69
2-3 years
Over 3 years
Total 309,840,386.45 142,957,606.19
Note 1: The end of this reporting period did not contain debt owned by any major shareholders
who own more than 5% of the Company’s share capital.
Note 2: Ending carrying amount of advances from customers is increased by 116.74% compared with
initial amount. It is mainly due to the pre-sale of Wuhan Meilin Qingcheng second period project.16. Accrued payroll
Items 1 Jan, 2009 Increment Decrement 30 Jun 2009
I. Salary, bonus, allowance 1,606,976.82 22,665,006.58 23,746,435.82 525,547.58
II. Employee Welfare expenses 1,420,004.11 1,420,004.11
III. Social insurance 3,043.78 3,022,811.48 3,022,663.02 3,192.24
Including: 1. medicare 777,305.90 777,269.97 35.93
2. basic endowment insurance 3,043.78 1,959,780.67 1,959,678.97 3,145.48
3. annuity
4.unemployment insurance 183,953.84 183,947.06 6.78
5.labour injury insurance 56,509.04 56,507.36 1.68
6.bearing insurance 45,262.03 45,259.66 2.37
IV. Housing accumulation fund 13,952.00 201,616.75 215,568.75 0
V. Labor union outlay and employee education outlay 2,402,413.61 672,944.88 299,801.46 2,775,557.03
VI. Non-monetary welfares
VII. Compensation for dismissal 19,500.00 19,500.00
VIII. Other 62,961.54 62,961.54
Total 4,026,386.21 28,064,845.34 28,786,934.70 3,304,296.85
Note: There is no accrued payroll without paid on time or linking with work efficiency.
17. Taxes payable
Items 30 Jun 2009 1 Jan 2009
VAT -141,619.46 -154,353.80
Individual income tax 33,755.53 62,517.25
City construction and maintenance tax -659,096.78 46,497.50
Corporate income tax -2,349,361.21 138,975.17
Property tax 508,000.56 483,589.37
Business tax -9,995,407.15 119,498.18
Land use tax 167,145.90 69,255.57
Education fee -410,560.91 -107,699.03
Local education fee -155,187.31 24,100.15
Land value-added tax -2,656,734.09 1,691,791.89
Others -320,625.66 129,160.02
Total -15,979,690.58 2,503,332.27
Note: the ending balance of t axes payable is negative amount and is caused by its subsidiary
Hubei pearl real estate development Co., LTD. paying taxes based on advance from customer.
18. Interest payableItem 30 Jun 2009 1 Jan 2009
Loan interest 84,077,337.80 69,783,831.76
Total 84,077,337.80 69,783,831.76
Note : The end of this year did not contain debt owned by any major shareholders who own
more than 5% of the Company’s share capital. Details refer to Notes VII. Related party
relationship and transactions.
19. Other payables
Ages 30 Jun 2009 1 Jan 2009
Within 1 year 42,135,212.89 53,962,760.10
1-2 years 55,814,315.12 254,658,213.94
2-3 years 219,550,454.92 54,592,536.88
Over 3 years 92,168,236.55 40,094,855.01
Total 409,668,219.48 403,308,365.93
Note 1: The end of this year did not contain debt owned by any major shareholders who own
more than 5% of the Company’s share capital. Details refer to Notes VII. Related party
relationship and transactions.
2: Other payables over 3 years are mainly due to loan from shareholders. Details refer to Notes
VII. Related party relationship and transactions.
20. Non-current liability due within one year
Category 30 Jun 2009 1 Jan 2009
Credit loans
Pledge loans 5,000,000.00 5,000,000.00
Total 5,000,000.00 5,000,000.00
Note 1: The information of non-current liability within one year about pledge loans 5 million
Yuan refers to Notes V. 12. and the information of loan guarantee refers to Notes V.21.
21. Long-term borrowings
Category 30 Jun 2009 1 Jan 2009
Credit loans
Pledge loans 157,000,000.00 157,000,000.00
Total 157,000,000.00 157,000,000.00
Note 1: Pledge loans, of which 150 million yuan was pledged by the 63,327.00 square meters’ landuse right of Hubei Meiling Qingcheng second project which located in No.20 Fangji Road, Wuchang
District, Wuhan. Details refer to Note V.12.
The information about pledge loans 7 million Yuan refers to Notes V. 12. Among them, Beijing
Wangfa Real Estate Development provides loan guarantee for loan 7 million Yuan, the amount in
the loan contract is 30million Yuan and ending balance is 12 million Yuan, and the amount due
within one year is 5 million yuan.
Note 2: There are no unpaid overdue long-term borrowings this period.
22. Share capital
Unit: share
23. Capital surplus
Items 30 Jun 2009 1 Jan 2009
Share premium 224,960,139.16 224,960,139.16
Other capital surplus (transfer from capital surplus under
original accounting regulation)
109,300,017.82 109,300,017.82
Other capital surplus (changes in the fair value of
Available for sale financial assets )
534,759,623.99
Other capital surplus (influence of income tax related with
the capital surplus)
-120,863,750.00
Total 748,156,030.97 334,260,156.98
1 Jan 2009 Increment or decrement (+,-) 30 Jun 2009
Items
Num. of Shares
Percentage
(%)
issued
new
shares
Bonus
issue
Surplus
converted
others subtotal amount
Percentage
%
1. Unlisted shares 123,004,609.00 28.82 123,004,609.00 28.82
State owned shares
State corporate shares 119,080,478.00 27.90 149,500 149,500 119,229,978.00 27.94
Other domestic shares 3,924,131.00 0.92 -149,500 -149,500 3,774,631.00 0.88
Including:Domestic corporate shares 3,898,500.00 0.91 -149,500 -149,500 3,749,000.00 0.87
Domestic natural person shares 25,631.00 0.01 25,631.00 0.01
2.Listed shares 303,740,795.00 71.18 303,740,795.00 71.18
A shares 238,765,795.00 55.95 238,765,795.00 55.95
B shares 64,975,000.00 15.23 64,975,000.00 15.23
3. Total shares 426,745,404.00 100.00 426,745,404.00 100.0024. Surplus reserves
Items 30 Jun 2009 1 Jan 2009
statutory surplus reserve 76,542,657.95 76,542,657.95
General surplus reserve 37,634,827.93 37,634,827.93
Total 114,177,485.88 114,177,485.88
25. Undistributed profits
Items Jan-Jun 2009 Jan-Jun 2008
Balance at the end of last year -756,096,515.01 -679,492,733.72
Add: Change in accounting policy
Balance at the beginning of this year -756,096,515.01 -679,492,733.72
Add: Net profit attributable to parent company this
year
84,803,402.31 -76,603,781.29
Profit available for distribution -671,293,112.70 -756,096,515.01
Less: Draw statutory surplus reserve
Draw legal public welfare funds
Profit available for distribution of investors -671,293,112.70 -756,096,515.01
Less: Preferred shares dividends payables
Draw free surplus reserves
Common stock dividends payables
Common stock dividends transferred to capital
stock
Undistributed profits at the end of the year -671,293,112.70 -756,096,515.01
26. Operating income and cost
(1) details of operating income and cost
Items Jan-Jun 2009 Jan-Jun 2008
Main operating income 47,789,502.38 40,497,489.65
Other operating income 248,358.20 392,385.75
Total 48,037,860.58 40,889,875.4
Main operating costs 38,201,762.92 36,035,341.64
Other operating costs 33,987.67 422,265.14
Total 38,235,750.59 36,457,606.78
(2) Operating income and cost①The details of main operating income and cost are as follows according to products:
Items Jan-Jun 2009 Jan-Jun 2008
Main operating income
Real estate sales 460,000.00 2,370,026.00
Property management services 33,005,992.65 24,039,834.96
Tourist hotel services 14,323,509.73 14,087,628.69
Subtotal 47,789,502.38 40,497,489.65
Main operating costs
Real estate sales 449,307.08 942,782.34
Property management services 29,223,745.48 20,617,340.91
Tourist hotel services 8,528,710.36 14,475,218.39
Subtotal 38,201,762.92 36,035,341.64
Operation gross profit
Real estate sales 10,692.92 1,427,243.66
Property management services 3,782,247.17 3,422,494.05
Tourist hotel services 5,794,799.37 -387,589.70
Subtotal 9,587,739.46 4,462,148.01
Note : The top five customers’ total balance is 43,35,081.79 Yuan, and is 9.02% of total income.
27. Operating taxes and extras
Items Jan-Jun 2009 Jan-Jun 2008
City construction and maintenance tax 141,911.22 143,114.56
Education fee 65,391.41 61,334.81
Business tax 2,179,713.63 2,044,493.77
Land value-added tax
Others 17,073.39 483,893.87
Total 2,404,089.65 2,732,837.01
Note: Rate and taxable base refer to Notes III. Taxation.
28. Financial expenses
Items Jan-Jun 2009 Jan-Jun 2008
Interest expenses 15,661,852.24 14,919,881.82
Less: Interest income 66,344.79 98,152.98
Loss or gain of exchange 924.65
Commission charge 156,576.61 109,905.50
Other
Total 15,751,159.41 14,931,634.3429. Loss of devaluation of assets
Items Jan-Jun 2009 Jan-Jun 2008
Bad debt 7,398,279.67 3,625,614.97
Inventory falling price provision
Total 7,398,279.67 3,625,614.97
30. Investment income
Items Jan-Jun 2009 Jan-Jun 2008
Net increase or decrease of invested enterprise’s owner’s equity adjusted
at the end of the year
Income from transferring equity investment
Investment return onAvailable for sale financial asset 131,129,924.21
Total 131,129,924.21
31. Non-operating income
Items Jan-Jun 2009 Jan-Jun 2008
Profit on disposal of fixed assets 152,824.57 29,145.00
Net income from penalty
Demolition compensation
Balance not required to repay
Others 297.60 1,200.02
Total 153,122.17 30,345.02
32. Non-operating expenses
Items Jan-Jun 2009 Jan-Jun 2008
Loss on disposal of fixed assets 27,500.00 9,819.10
Donation 100,000.00
Penalty payout 139,583.58
Indemnity for breaking a contract 493,552.16
Others 51,935.47 25,454.72
Total 219,019.05 628,825.98
33. Income taxItems Jan-Jun 2009 Jan-Jun 2008
Income tax this period 52,338.18 27,167.30
Deferred income tax
Total 52,338.18 27,167.30
34.Other comprehensive income
Items Jan-Jun 2009 Jan-Jun 2008
Available-for-sale financial assets 665,889,548.20
Less:amount transferred to profit and loss from other conprehensive income 131,129,924.21
subtotal 534,759,623.99
Less: income tax impact relating with other conprehensive income 120,863,750.00
Total 413,895,873.99
35. Information of cash flow statement
(1) Cash received relating to other operating activities
Details of significant amount items:
Items Jan-Jun 2009 Jan-Jun 2008
Fee of handling certificate for customer 1,568,956.80
Collecting water and electricity fee in charge of owners 2,805,110.00 2,896,200.50
Receiving deposit for water and electricity decoration 1,119,960.00 1,953,200.00
Current accounts 3,218,920.97 1,560,500.00
Interest income 66,344.79
Others 1,182,388.27 2,257,116.06
Total 8,392,724.03 10,235,973.36
(2) Cash paid relating to other operating activities
Details of significant amount items:
Items Jan-Jun 2009 Jan-Jun 2008
Information disclosure fee 240,000.00 120,000.00
Audit and consultation fee 548,592.00 400,000.00
Advertisement publicity expenses 848,330.80 2,180,568.00
Sale agent fee 245,928.62 1 , 170,791.00
Fee of handling certificate from customer 1,238,253.82
Paying water and electricity fee in charge of owners 2,826,468.92 2,752,603.86
Handing back deposit for water and electricity decoration 385,075.51 1,530,468.00
Current accounts 3,297,684.33 525,600.00Items Jan-Jun 2009 Jan-Jun 2008
Other management fees 4,963,347.87 2,093,991.54
Total 11,491,433.93 12,012,276.22
(3) “Cash received from borrowings” includes loan 7,850,000.00 yuan from Beijing Xinxing Real
Estate Development Company and Beijing Wangfa Real Estate Development Holdings Co., Ltd; “Cash
repayments of amounts borrowed” includes repayment 3,500,000.00 Yuan to Beijing Xinxing Real
Estate Development Company.
(4)Supplementary information of cash flow statement
Items Jan-Jun 2009 Jan-Jun 2008
1． Reconciliation of net profit to cash flows from operating
activities:
Net profit 83,538,723.31 -47,529,159.52
Add: Provision for impairment of assets 7,398,279.67 3,202,666.99
Depreciation of fixed assets 9,794,287.55 9,435,924.56
Amortization of intangible assets 463,946.51 445,619.44
Amortization of long-term prepayments 4,725.97
Losses on disposal of fixed assets, intangible assets and other
long-term assets
-125,324.57 -22,337.45
Losses on scrapping of fixed assets 3,011.55
Losses on fair value change
Financial expenses 15,661,852.24 14,904,084.37
Investment losses -131,129,924.21
Decrease in deferred income tax assets
Increase in deferred income tax liabilities
Decrease in inventories -85,081,371.04 -56,962,429.81
Decrease in operating receivables -7,305,375.37 -12,812,100.28
Increase in operating payables 143,384,584.42 6,486,746.50
Others
Net cash flows from operating activities 36,604,404.48 -82,847,973.65
2．Significant investing and financing activities that do not inv olve
cash receipts and payments
Conversion of debt into capital
Convertible bonds to be expired within one year
Fixed assets under finance lease
3．Net increase in cash and cash equivalentsItems Jan-Jun 2009 Jan-Jun 2008
Cash at the end of the period 67,965,850.02 56,132,142.51
Less: Cash at the beginning of the period 36,655,536.17 110,933,403.84
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Net increase in cash and cash equivalents 31,310,313.85 -54,801,261.33
(5) Cash and cash equivalents
Items Jan-Jun 2009 Jan-Jun 2008
1. Cash 67,965,850.02 56,132,142.51
Including: Cash on hand 232,710.39 520,416.69
Bank deposit paid at any time 67,703,139.63 55,530,763.39
Other monetary funds paid at any time 30,000.00 80,962.43
2. cash equivalents
3. Cash and cash equivalents at the end of year 67,965,736.66 56,132,142.51
VI. Notes to significant items of the parent company’s financial statements
1. Accounts receivable
(1) Detailed information
30 Jun 2009 1 Jan 2009
Items
Balance
Proportion
(%)
Bad debts Net value Balance
Proportion
(%)
Bad debts Net value
Individual with
significant
amount
7,761,707.60 69.01 7,761,707.60 9,157,687.60 71.06 7,789,627.20 1,368,060.40
Individual without
significant
amount,but with
significant credit
risk
2,602,630.43 23.14 2,270,220.52 332,409.91 2,733,637.13 21.21 2,161,880.82 571,756.31
Other
unimportant
receivables
882,248.00 7.85 118,066.65 764,181.35 995,829.00 7.73 259,884.05 735,944.95
Total 11,246,586.03 100.00 10,149,994.77 1,096,591.26 12,887,153.73 100.00 10,211,392.07 2,675,761.66
(2) Aging analysis30 Jun 2009 1 Jan 2009
Ages
Balance
Proportion
(%)
Bad debts Net value Balance
Proportion
(%)
Bad debts Net value
Within 1
year
151,500.00 1.34 3,030.00 148,470.00 1,497,480.00 11.62 29,949.60 1,467,530.40
1-2 years 164,751.00 1.46 8,237.55 156,513.45 418,921.00 3.25 20,946.05 397,974.95
2-3 years 265,000.00 2.36 26,500.00 238,500.00 475,408.00 3.69 236,908.00 238,500.00
3-4 years 100,000.00 0.89 20,000.00 80,000.00 100,000.00 0.78 20,000.00 80,000.00
4-5 years 200,997.00 1.79 60,299.10 140,697.90 200,997.00 1.56 60,299.10 140,697.90
Over 5
years
10,364,338.03 92.16 10,031,928.12 332,409.91 10,194,347.73 79.10 9,843,289.32 351,058.41
Total 11,246,586.03 100.00 10,149,994.77 1,096,591.26 12,887,153.73 100.00 10,211,392.07 2,675,761.66
Note 1: The end of this year did not contain any debt owned by major shareholders who own more
than 5% of the Company’s share capital.
2: The first five debtors’ ending total balance is 8,259,227.60 Yuan, and is 73.44% of
accounts receivable total amount.
3: There is 8,259,227.60 Yuan over 5 years in the first five debtors’ ending total balance.
Details refer to the following statement:
Name Amount Ages
Hainan racing entertainment Co., LTD 2,406,158.00 Over 5 years
Hainan Baoping company 2,218,494.43 Over 5 years
Hainan centaline property agency 2,090,069.77 Over 5 years
Hainan dragon flim studio 1,046,985.40 Over 5 years
Haikou Peijie Costume Company 497,520.00 Over 5 years
Total 8,259,227.60
4: The bad debts proportion and reasons for individual accounts receivable with significant
amount
Individual account receivables whose amount is more than 1 million and whose ending balance
is owned more than 5% (including 5%) of the total account receivables will be recognized as
individual other receivables with significant amount.
At the end of this year, the individual accounts receivable with significant amount that
doesn’t occur impairment loss after individual testing, shall base on actual loss rates of
accounts receivable portfolio with same ages and present situation to determine the bad debts
proportion. Among them, the balance over 5 years is 8,259,227.60 Yuan.
5: The bad debts proportion and reasons for individual accounts receivable without significantamount, but with significant credit risk according to credit risk characteristics portfolio
For the accounts receivable over 5 years, the bad debts proportion is 50% of the balance. For
accounts receivable that are surely uncollectible, the bad debts proportion could be increased
to 100% of the balance. After deducting individual accounts receivable with significant amount
from accounts receivable satisfied with above situations, the leavings are individual accounts
receivable without significant amount, but with significant credit risk.
2. Other receivables
(1) Detailed information
30 Jun 2009 1 Jan 2009
Items
Balance
Proportion
(%)
Bad debts
Net value
Balance
Proportion
(%)
Bad debts
Net value
Individual with significant amount 233,420,025.99 88.67 39,282,900.57 194,137,125.42 79,250,025.99 73.56 21,332,250.57 57,917,775.42
Individual without significant
amount,but with significant credit risk
27,539,943.21 10.46 15,451,193.21 12,088,750.00 27,309,923.89 25.35 25,802,651.89 1,507,272.00
Other unimportant receivables 2,289,397.25 0.87 62,649.52 2,226,747.73 1,177,194.26 1.09 268,096.39 909,097.87
Total 263,249,366.45 100.00 54,796,743.30 208,452,623.15 107,737,144.14 100.00 47,402,998.85 60,334,145.29
(2) Aging analysis
30 Jun 2009 1 Jan 2009
Ages
Balance
Proportion
(%)
Bad debts Net value Balance
Proportion
(%)
Bad debts Net value
Within 1 year 158,744,878.25 60.30 3,174,897.57 155,569,980.68 732,655.94 0.68 14,653.12 718,002.82
1-2 years 11,679.00 - 583.95 11,095.05 244,538.32 0.23 233,443.27 11,095.05
2-3 years 200,000.00 0.08 20,000.00 180,000.00 200,000.00 0.19 20,000.00 180,000.00
3-4 years 2,840.00 - 568.00 2,272.00 2,840.00 0.00 568.00 2,272.00
4-5 years - 21,465,978.62 19.92 6,648,728.62 14,817,250.00
Over 5 years 104,289,969.20 39.62 51,600,693.78 52,689,275.42 85,091,131.26 78.98 40,485,605.84 44,605,525.42
Total 263,249,366.45 100.00 54,796,743.30 208,452,623.15 107,737,144.14 100.00 47,402,998.85 60,334,145.29
Note 1: The end of this year did not contain any debt owned by major shareholders who own more than
5% of the Company’s share capital.
2: The first five debtors’ ending total balance is 236,420,025.99 Yuan, and is 89.81% of other
receivables total amount.
3: There are 156,670,000.00 Yuan within 1 year and 79,750,025.99 Yuan over 5 years in the first
five debtors’ ending total balance. Details are as follows:Name Amount Ages
Chongqing Fifth Intermediate People’s Court 156,670,000.00 within 1 year
Shanghai real estate company 55,582,525.99 over 5 years
Hainan Baxter industrial Co., LTD 11,417,500.00 over 5 years
Beijing Yidong international Properties Co., LTD 9,750,000.00 over 5 years
YangPu Nanhua Datong investment Co., LTD 3,000,000.00 over 5 years
Total
4: Other receivables is increased by 245.50 ％ compared with initial amount. It is mainly due to
receivable of 156.67 million yuan from Chongqing Fifth Intermediate People’s Court this year. Details
refer to Note XIII. Other important issues 1.
5: The bad debts proportion and reason for individual other receivables with significant amount
Individual other receivables whose amount is more than 1 million and whose ending balance is
owned more than 5% (including 5%) of the total other receivables will be recognized as individual other
receivables with significant amount.
At the end of this year, the individual other receivables with significant amount that doesn’t occur
impairment loss after individual testing, shall base on actual loss rates of other receivables portfolio with
same ages and present situation to determine the bad debts proportion. Among them, the balance over 5
years is 55,582,525.99 Yuan.
6: The bad debts proportion and reason for individual other receivables without significant amount,
but with significant credit risk according to credit risk characteristics portfolio
For the other receivables over 5 years, the bad debts proportion is 50% of the balance. For other
receivables that are surely uncollectible, the bad debts proportion could be increased to 100% of the
balance. After deducting individual other receivables with significant amount from other receivables
satisfied with above situations, the leavings are individual other receivables without significant amount,
but with significant credit risk.
3. Long-term equity investment
(1) Category
30 Jun 2009 1 Jan 2009
Items
Balance Provision Book value Balance Provision Book value
Investment to subsidiary 230,100,000.00 40,000,000.00 190,100,000.00 230,100,000.00 40,000,000.00 190,100,000.00
Investment to affiliate
Other equity investment 46,245,955.29 34,834,645.39 11,411,309.90 205,951,703.44 126,539,941.74 79,411,761.70Total 276,345,955.29 74,834,645.39 201,511,309.90 436,051,703.44 166,539,941.74 269,511,761.70
(2) Investment to subsidiary
Name
Holding
proportion
Initial
investing
amount
1 Jan 2009
Incre
ment
Equity
increase or
decrease
this year
Accumulative
equity increase
or decrease
Decre
ment
30 Jun 2009
Hainan Pearl River Prope rties and Hotels
Management Co., Ltd.
98% 4,900,000.00 4,900,000.00 4,900,000.00
Sanya Wanjia Hotel Management Co., Ltd. 100% 108,000,000.00 108,000,000.00 108,000,000.00
Sanya Wanjia investment Co., Ltd. 100% 20,000,000.00 20,000,000.00 20,000,000.00
Hubei Pearl River Real Estate
Development Co., Ltd.
88% 57,200,000.00 57,200,000.00 57,200,000.00
Hainan Pearl River Enterprises Holding
Co., Ltd. Shanghai Real Estate Co.
100% 40,000,000.00 40,000,000.00 40,000,000.00
Total 230,100,000.00 230,100,000.00 230,100,000.00
(3) Other equity investment
Name
Holding
proportion %
Initial investing
amount
1 Jan 2009
Incre
ment
Decre
ment
30 Jun 2009
Southwest Security 3.21 150,000,000.00 159,705,748.15 159,705,748.15
Guangzhou Pearl River Investment Management Co., Ltd 9.4785 18,177,240.29 18,177,240.29 18,177,240.29
China Net Promoting Science and Technology Investment Company 10 10,000,000.00 10,000,000.00 10,000,000.00
China (Hainan) Reform Development Academe 8,640,000.00 8,640,000.00 8,640,000.00
Hainan Tongsheng Harbor
Company
15
6,000,000.00 6,000,000.00 6,000,000.00
Hainan South Ocean Ship Industry Stock Co., Ltd 1,680,000.00 1,680,000.00 1,680,000.00
Nanli Lake member card 662,400.00 662,400.00 662,400.00
Hainan Pearl River Pipe and Peg Co., Ltd 1.33 618,500.00 426,315.00 426,315.00
Hainan General Commercial Board 6.67 500,000.00 500,000.00 500,000.00
Hainan Huadi Pearl River Base-Project Co., Ltd 2 160,000.00 160,000.00 160,000.00
Total 196,438,140.29 205,951,703.44 159,705,748.15 46,245,955.29
Note: During the long-term equity investment, the investment in Southwest Security was
reclassified to available-for-sale financial assets. Details refer to Note XIII. Other important
events.(4) Long-term investment impairment provision
Decrement
Name 1 Jan 2009 Increment
Transfer back Write off
30 Jun 2009 Reason
Southwest Security 91,705,296.35 91,705,296.35
Hainan Pearl River Enterprises Holding Co.,
Ltd. Shanghai Real Estate Co.
40,000,000.00 40,000,000.00 Huge loss
Guangzhou Pearl River Investment
Management Co., Ltd
7,352,245.39 7,352,245.39
Deterioration of the
financial situation
China Net Promoting Science and Technology
Investment Company
10,000,000.00 10,000,000.00
Be revoked the
business license
China (Hainan) Reform Development
Academe
8,640,000.00 8,640,000.00
Unable to recover
investment
Hainan Tongsheng Harbor Company 6,000,000.00 6,000,000.00
Project has already
been suspended
Hainan South Ocean Ship Industry
Stock Co., Ltd
1,680,000.00 1,680,000.00
Negative net assets
Nanli Lake member card 662,400.00 662,400.00
Unable to recover
investment
Hainan General Commercial Board 500,000.00 500,000.00
Unable to recover
investment
Total 166,539,941.74 91,705,296.35 74,834,645.39
4. Operating income and cost
Items Jan-Jun 2009 Jan-Jun 2008
Main operating income 394,168.00
Other operating income 193,955.00 122,385.75
Total 193,955.00 516,553.75
Main operating costs 208,046.94
Other operating costs 33,987.67
Total 33,987.67 208,046.94
5. Investment incomeItems Jan-Jun 2009 Jan-Jun 2008
Income from disposal of available-for-sale financial assets 131,129,924.21
Income from transferring equity investment
Dividend received
Total 131,129,924.21
Note: Details refer to Note XIII. Other important events.
VII. Related party relationship and transactions
1. Related party relationship
(1) Related parties with control relationship
a. Parent company and ultimate controller:
Name
Registered
address
Organization
code
Principal
operating
Relationship
with the
Company
Registered
capital
Holding
proportion
Voting
rights
proportion
Beijing Wangfa
Real Estate
Development
Holdings Co.,
Ltd
Beijing 60003715-7
Real estate
development
and operation
The first
largest
shareholder
280 million
Yuan
26.08% 26.08%
Beijing
Xinxing Real
Estate
Development
Company
Beijing 10113538-5
Real estate
development
and operation
Controller of
the first
largest
shareholder
10 million
Yuan
b. Registered capital and its changes about related party with controlling relationships
Name 1 Jan 2009 Increment Decrement 30 Jun 2009
Beijing Wangfa Real Estate
Development Holdings Co., Ltd
280 million Yuan 280 million Yuan
c. Equity and its changes about related party with controlling relationships
1 Jan 2009 30 Jun 2009
Name
Balance %
Increment Decrement
Balance %
Beijing Wangfa Real Estate 111,283,500 26.08 111,283,500 26.08Development Holdings Co.,
Ltd
d. Information about subsidiaries
Details refer to IV. Business combinations and consolidation financial statements.
(2) Information about joint venture and affiliate of the Company
Name
Organization
code
Registered
address
Principal
operating
Registered
capital
Holding
proportion
Voting rights
proportion
Shanghai Bright Pearl at Sea
Property Management
Company
60732602-3 Shanghai
Property
management
service
1,660,000 50% 50%
Beijing Yangguang Tiancheng
Property Management Co.,
Ltd
77954738-3 Beijing
Property
management
service
5,000,000 30% 30%
(3) Other related parties
Name
Relationship with
the Company
Beijing Yulong Jisheng Real Estate Development Co., Ltd. With same controller
Bohua Asset Management Co., Ltd. With same controller
2. Related party transactions
(1) Providing funds
a. The Company borrowed 1.35 million Yuan from Beijing Xinxing Real Estate Development Company,
then the accumulated borrowing balance is 10,510,400.00 yuan on 30 Jun 2009. The company also
borrowed 6.5 million yuan from Beijing Wanfa Real Estate Development Company during this reporting
period, and the accumulated borrowing balance is 62,025,000 yuan on 30 Jun 2009. Borrowing rate
is complied with one-year RMB benchmark lending rate of the People's Bank of China and changed
according its change.
b. The Company’s subsidiary Hubei Pearl River Real Estate Development Co., Ltd. repaid 3.5 million
Yuan to Beijing Xinxing Real Estate Development Company this period, and the accumulated borrowing
balance is zero yuan on 30 Jun 2009. Borrowing rate is complied with one-year RMB benchmark
lending rate of the People's Bank of China and changed according its change.
c. The Company’s subsidiary Sanya Wanjia Hotel Management Co., Ltd borrowed zero Yuan from
Beijing Xinxing Real Estate Development Company this report period, and the accumulated borrowingbalance is 142.03 million yuan on 30 Jun 2009. It also borrowed zero yuan from Beijing Wangfa
Real Estate Development Company, and the accumulated borrowing balance is 19.7 million yuan on
30 Jun 2009. Borrowing rate is complied with one-year RMB benchmark lending rate of the People's
Bank of China and changed according its change.
During the reporting period, the interests for related party loans in the above are
6,259,116.04 yuan, on 30 Jun 2009 the accumulated interest payable is 53,450,529.87 yuan.
(2) Loan guarantee
During this period, Beijing Wangfa Real Estate Development Holdings Co., Ltd provided loan
guarantee of 23,120,000 Yuan that the Company got from the Bank of Communication Hainan Branch.
It also provided loan guarantee of 12,000,000 Yuan that Sanya Wanjia Hotel Management Co., Ltd
which is the Company’s subsidiary got from the Bank of China Haikou Yeshumeng Branch.
3. Balances of related party receivable and payable
1 Jan 2009 30 Jun 2009
Items
Amount Proportion（%）
Increment Decrement
Amount Proportion（%）
1. Other payables
Beijing Xinxing Real Estate
Development Company 154,690,447.00 38.36 1,350,000.00 3,500,000.00 152,540,447.00 37.24
Beijing Wangfa Real Estate
Development Holdings Co., Ltd.
75,225,000.00 18.65 6,500,000.00 81,725,000.00 19.95
Beijing Yulong Jisheng Real Estate
Development Co., Ltd.
1,500,000.00 0.37 1,500,000.00 0.37
Total 231,415,447.00 57.38 7,850,000.00 3,500,000.00 235,765,447.00 57.55
2. Interest payable
Beijing Xinxing Real Estate
Development Company
31,411,940.84 45.01 4,223,413.29 35,635,354.13 42.38
Beijing Wangfa Real Estate
Development Holdings Co., Ltd.
15,779,472.99 22.61 2,035,702.75 17,815,175.74 21.19
Total 47,191,413.83 67.63 6,259,116.04 53,450,529.87 63.57
3. Reward of key managers
Items 2009 Jan-Jun 2008 Jan-Jun
Total amount 341,480.00 292,000.00
Of which: the amount of the top three directors with highest reward 159,800.00 108,500.00
the amount of the top three senior managers with highest
reward
195,280.00 252,000.00
VIII. Contingent eventsNot applicable.
IX. Commitments
On 25 August 2004, the Company and the Bank of China Haikou Yeshumeng branch signed loan
agreement with total contract amount 30 million Yuan, and the Company shall repay the loan at 6 times
up to 25 August 2012. The loan balance is 12 million Yuan on 30 Jun 2009.
X. Non-adjusting events after the balance sheet date
Not applicable.
XI. Non-monetary transactions
Not applicable.
XII. Debt restructuring
Not applicable.
XIII. Other important events
1. On 2007 March Hainan Pearl River Holding Company Limited (the Company) borrowed
130,000,000.00 Yuan from Chongqing Putian Communication Equipment Co., Ltd for six months with
annual interest rate of 6.804%. The Company’s 75 million shares of Southwest Securities Company Ltd.
were used as mortgage and pledged in Chongqing Banan rural credit cooperative.
As the Company didn’t repay at due date, Chongqing Putian Communication Equipment Co., Ltd. (the
plaintiff) appealed the Company (the defendant) and asked the company to repay principal
130,000,000.00 Yuan and the corresponding interest. The company received "the civil lawsuit" and "the
civil judgment” on November 30, 2007. According to the civil judgment, the Company's 75 million shares
of Southwest Securities Company Ltd. were sealed up.
On June 5, 2008, according to "the civil judgment”, the Company shall repay principal 130,000,000.00
Yuan to Chongqing Putian Communication Equipment Co., Ltd. within 10 days when the judgment came
into force; and repay funds occupied loss at the annual interest rate of 6.804% from September 21, 2007
until paying off principal.
On June 16, 2009, Chongqing Fifth Intermediate People's Court assigned Chongqing Taiding Auction
Co., Ltd., Chongqing Runtong Auction Co., Ltd. and Chongqing Jingfeng Auction Co., Ltd. to auction the
limited shares of Southwest Securities Company Ltd., then the 20 million shares were sold for 156.67
million Yuan at 7.83 yuan per share.The auction proceeds will be used to repay the loan principal and corresponding loss of funds occupation.
The investment income of share auction is 131 million Yuan.
2. On August 26, 2008, the Company convened 20th session of fifth board of directors , The Company
agreed to use 75 million shares of Southwest Securities before the merger of Southwest Securities ,
occupied 3.21% of registered capital, to exchange additional shares of Chongqing Changjiang River
Transport Limited Company. After the completion of the absorption merger, the Company will be the
shareholder of Changyun Stock holding 53.25 million shares , occupied 2.797% of total shares.
Changyun Stock applies to change its name to "Southwest Securities Co., Ltd.".
On January 22, 2009, the above mentioned restructuring program was approved by China Securities
Regulatory Commission with a document (2009) No. 62 "On the approval of Asset Reorganization and
Absorption Merger between Chongqing Changjiang River Transport Limited Company and Southwest
Securities Co., LTD ", and on February 17, 2009 it complete all registration procedures . Then the
Company became a shareholder of Southwest Securities Co., Ltd. with holding 53,250,000 shares,
which representing 2.797% of the total share capital.
On February 26, 2009, Changyun Stock resume trading, and change its stock name from "* ST Chang
Yun" to "Southwest Securities", stock code "600369" remain the same. 53,250,000 shares held by the
company are limited sale outstanding shares with limited sale period of three years.
On April 24, 2009, the Company's Board of Directors passed the resolution "the report of using fair value
for equity of Southwest Securities Co., Ltd. ", so the investment in Southwest Security was reclassified to
available-for-sale financial assets.
3. On March 17, 2008, the Company received the notice from Beijing Wanfa Real Estate Development
Co., Ltd and Beijing Xinxing Real Estate Development Corporation, and was informed that the actual
controller of Beijing Xinxing Real Estate Development Corporation and CITIC Group were negotiating
and communicating about the reorganization issue of Beijing Xinxing Real Estate Development
Corporation. There was no clear progress of the communication about reorganization between Beijing
Xinxing Real Estate Development Corporation and CITIC Group untill the year end.
XIV. Supplementary information
1. According to “Information disclosure requirement No.1 for the companies issuing securities publicly –
Non-recurring Profit and Loss [2008]” issued by China Securities Regulatory Commission ([2008] No. 43),
the amount of non-recurring profit and loss is as follows (profit is “+”, loss is “-”):
Items 2009 Jan-Jun 2008 Jan-Jun
Profit and loss on disposal of non-current assets 125,324.57 19,325.90
Income from disposal of available-for-sale financial assets 131,129,924.21
Net amount from non-operating income and expense other than the above
items
-191,221.45 -617,806.86
Less: Income tax impact
Less: Minority shareholder impact -50.49 -65,226.26Items 2009 Jan-Jun 2008 Jan-Jun
Attributable to the parent company of extraordinary gains and lossesaffect 131,064,077.82 -533,254.70
net profit attributable to parent company after deducting extraordinary gains
and losses
-46,260,675.51 -45,978,464.73
2. According to “Rules for the Compilation of Information Disclosures by the Companies That Offer
Securities to the Public No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings Per
Share” issued by China Securities Regulatory Commission (revised in 2007), the return on net assets
and earnings per share are as follows:
(1) Return on net assets
Return on net assets
Fully diluted Weighted average
Profit of this period
2009
Jan-Jun
2008 Jan-Jun 2009 Jan-Jun 2008 Jan-Jun
Net profit attributable to common shareholders 13.73% -31.179% 23.02% -26.974%
Net profit excluding non-recurring profit and loss
attributable to common shareholders
-7.49% -30.821% -12.56% -26.664%
(2) Earnings per share
Earnings per share
Profit of this period Basic earnings per share Diluted earnings per share
Jan-Jun 2009 Jan-Jun 2008 Jan-Jun 2009 Jan-Jun 2008
Net profit attributable to common
shareholders
0.199 -0.109 0.199 -0.109
Net profit excluding non-recurring profit and
loss attributable to common shareholders
-0.108 -0.108 -0.108 -0.108
Items Jan-Jun 2009 Jan-Jun 2008
Calculation of basic earnings per share and diluted earnings per share
1. Numerator
Net profit deducting tax 84,803,402.31 -46,511,719.43
Profit and loss attributable to common shareholders of parent company 84,803,402.31 -46,511,719.43
Diluted Profit and loss attributable to common shareholders of parent company 84,803,402.31 -46,511,719.43
2. Denominator
Outstanding weighted average of ordinary shares 426,745,404.00 426,745,404.00
Diluted Outstanding weighted average of ordinary shares 426,745,404.00 426,745,404.00
3. Earnings per share
Basic earnings per share 0.199 -0.109Items Jan-Jun 2009 Jan-Jun 2008
Diluted earnings per share 0.199 -0.109
(3) Calculation process
Fully diluted return on net assets = net profit attributable to common shareholders or net profit
attributable to common shareholders after deducting extraordinary items ÷ net assets
attributable to common shareholders at the end of this year
Weighted average return on net assets = net profit attributable to common shareholders or net
profit attributable to common shareholders after deducting extraordinary items ÷ (net assets
at the beginning of this year + net profit attributable to common shareholders ÷ 2)
Basic earnings per share = net profit attributable to common shareholders or net profit
attributable to common shareholders after deducting extraordinary items ÷ outstanding w eighted
average of ordinary shares
Diluted earnings per share = net profit attributable to common shareholders or net profit
attributable to common shareholders after deducting extraordinary items ÷ outstanding weighted
average of ordinary shares after adjusted
There are no potential diluted ordinary shares in the Company during the report period.
XV. The financial statements were approved by 24th session of fifth board of directors of the
Company.
Hainan Pearl River Holding Company Limited
Aug. 20, 2009
