The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Shenzhen Special Economic Zone Real Estate & Properties (Group)
Co., Ltd.
The 2015 Annual Report
2016-006
March 2016
1
The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section I Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee as well as the directors, supervisors and senior
management staff of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
(hereinafter referred to as “the Company”) warrant that this Report is factual, accurate and complete
without any false record, misleading statements or material omissions. And they shall be jointly and
severally liable for that.
Zhou Jianguo, board chairman, Chen Maozheng, GM, Tang Xiaoping, chief of the accounting work,
and Qiao Yanjun, chief of the accounting organ (chief of accounting), hereby confirm that the
Financial Report carried in this Report is factual, accurate and complete.
All directors attended the board meeting for reviewing this Report.
China Securities Journal, Ta Kung Pao (HK) and www.cninfo.com.cn were designated by the
Company for its information disclosure in 2015. And all information about the Company shall be
subject to what’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention to
possible investment risks.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserves into
share capital.
This Report is prepared in both Chinese and English. Should there be any understanding
discrepancy between the two versions, the Chinese version shall prevail.
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Contents
Section I Important Statements, Contents & Terms ............................................. 2
Section II Company Profile & Financial Highlights ............................................. 5
Section III Business Profile ...................................................................................... 9
Section IV Discussion & Analysis by the Management ...................................... 11
Section V Significant Events .................................................................................. 22
Section VI Share Changes & Particulars about the Shareholders .................... 32
Section VII Preference Shares ............................................................................... 38
Section VIII Directors, Supervisors, Senior Management Staff & Employees 39
Section IX Corporate Governance ........................................................................ 45
Section X Financial Report .................................................................................... 54
Section XI Documents Available for Reference ................................................. 177
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Terms
Term Specific meaning
Shenzhen Special Economic Zone Real Estate & Properties
Company, the Company, the Group
(Group) Co., Ltd.
The controlling company of the
Shenzhen Investment Holdings Co., Ltd.
Company
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section II Company Profile & Financial Highlights
I. Basic information of the Company
Stock abbreviation SPG A（SPG B） Stock code 000029（200029）
Stock abbreviation after
---
change (if any)
Stock exchange Shenzhen Stock Exchange
Company name in
深圳经济特区房地产(集团)股份有限公司
Chinese
Abbr. of Company name
深房集团
in Chinese
Company name in
ShenZhen Special Economic Zone Real Estate&Properties (Group).co.，Ltd．
English (if any)
Abbr. of Company name
SPG
in English (if any)
Legal representative Zhou Jianguo
Registered address 45/F-48/F, SPG Plaza, Renmin South Road, Shenzhen, Guangdong, P.R.China
Zip code 518001
Office address 47/F, SPG Plaza, Renmin South Road, Shenzhen, Guangdong, P.R.China
Zip code 518001
Company website http://www.sfjt.com.cn
Email address spg@163.net
II. Contact information
Company Secretary Securities Affairs Representative
Name Mr. Chen Ji Mr. Luo Yi
47/F, SPG Plaza, Renmin South 47/F, SPG Plaza, Renmin South
Contact address Road, Shenzhen, Guangdong, Road, Shenzhen, Guangdong,
P.R.China P.R.China
Tel. (86 755) 82293000-4718 (86 755) 82293000-4715
Fax (86 755) 82294024 (86 755) 82294024
E-mail address spg@163.net spg@163.net
III. About information disclosure and where this Report is placed
Newspapers designated by the Company for Domestic: China Securities Journal
information disclosure Overseas: Ta Kung Pao (HK)
Internet website designated by CSRC for
http://www.cninfo.com.cn
disclosing this Report
47/F, SPG Plaza, 3005 Renmin South Road, Luohu District,
Where this Report is placed
Shenzhen, Guangdong, P.R.China
IV. Changes in the registered information
Organizational code 19217958-5
Changes in main business since
Inapplicable
listing (if any)
Changes of controlling shareholder On 24 Mar. 1999, the controlling shareholder was changed from Shenzhen
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
(if any) Investment Management Co., Ltd. to Shenzhen Construction Investment
Holdings Co., Ltd. And on 14 Feb. 2006, it was changed to Shenzhen
Investment Holdings Co., Ltd.
V. Other information
The CPAs firm hired by the Company
Name Ruihua Certified Public Accountants LLP
9 F, West Tower, China Overseas Property Plaza, Building No. 7, Compound No.
Office address
8, Xi Binhe Road, Yong Ding Men, Dong Cheng District, Beijing, China
Signing accountants Cai Xiaodong, Wang Huansen
Sponsor engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable
Financial consultant engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate the accounting data of previous years due to changes in the
accounting policy or correction of accounting errors?
□ Yes √ No
Increase/decrease
2015 2014 of current year over 2013
last year
Operating revenues (RMB
2,163,365,575.33 2,132,311,222.93 1.46% 2,116,482,684.93
Yuan)
Net profits attributable to
shareholders of the Company 301,129,840.84 298,033,316.49 1.04% 228,268,271.23
(RMB Yuan)
Net profits attributable to
shareholders of the Company
300,963,536.83 297,166,883.74 1.28% 222,844,093.95
after extraordinary gains and
losses (RMB Yuan)
Net cash flows from operating
1,097,144,254.51 322,162,063.36 240.56% 194,953,683.40
activities (RMB Yuan)
Basic EPS (RMB Yuan/share) 0.2977 0.2946 1.05% 0.2256
Diluted EPS (RMB
0.2977 0.2946 1.05% 0.2256
Yuan/share)
Weighted average ROE (%) 13.21% 14.81% -1.60% 13.05%
Increase/decrease
As at 31 Dec. 2015 As at 31 Dec. 2014 of current year-end As at 31 Dec. 2013
than last year-end
Total assets (RMB Yuan) 4,179,937,120.75 4,375,098,314.05 -4.46% 4,215,099,296.67
Net assets attributable to
shareholders of the Company 2,331,704,116.07 2,161,537,401.78 7.87% 1,863,347,135.33
(RMB Yuan)
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
VII. Differences of the accounting data under the domestic and the overseas accounting
standards
1. Differences of the net profits and the net assets disclosed in the financial reports prepared under the
international and the Chinese accounting standards
√ Applicable □ Inapplicable
Unit: RMB Yuan
Net profits attributable to shareholders of Net assets attributable to shareholders of
the Company the Company
2015 2014 Closing amount Opening amount
According to Chinese
301,129,840.84 298,033,316.49 2,331,704,116.07 2,161,537,401.78
accounting standards
Items and amounts adjusted according to international accounting standards
According to international
301,129,840.84 298,033,316.49 2,331,704,116.06 2,161,537,401.78
accounting standards
2. Differences of the net profits and the net assets disclosed in the financial reports prepared under the
overseas and the Chinese accounting standards
√ Applicable □ Inapplicable
Unit: RMB Yuan
Net profits attributable to shareholders of Net assets attributable to shareholders of
the Company the Company
2015 2014 Closing amount Opening amount
According to Chinese
301,129,840.84 298,033,316.49 2,331,704,116.07 2,161,537,401.78
accounting standards
Items and amounts adjusted according to overseas accounting standards
According to overseas
301,129,840.84 298,033,316.49 2,331,704,116.06 2,161,537,401.78
accounting standards
3. Reason for any differences in the accounting data under the domestic and the overseas accounting
standards
□ Applicable √ Inapplicable
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenues 321,122,572.61 826,430,201.35 460,650,552.32 555,162,249.05
Net profits attributable to
24,918,992.83 161,488,831.55 47,584,448.58 67,137,567.88
shareholders of the Company
Net profits attributable to
shareholders of the Company
24,919,437.35 161,208,719.55 48,001,073.77 66,834,306.16
after extraordinary gains and
losses
Net cash flows from operating
-21,091,779.41 476,978,723.36 347,789,579.83 293,467,730.73
activities
Any material differences between the financial indicators above or their summations and those which have been
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
disclosed in quarterly or semi-annual reports?
□ Yes √ No
IX. Extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item 2015 2014 2013 Note
Gains/losses on disposal of
non-current assets (including offset -65,371.34 -133,442.39 5,778,882.64
part of asset impairment provisions)
Non-operating income and expense
287,110.02 1,319,554.06 812,505.76
other than above
Less: Income tax effects 55,434.67 319,678.92 1,167,211.12
Total 166,304.01 866,432.75 5,424,177.28 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item
□ Applicable √ Inapplicable
No such cases in the reporting period.
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section III Business Profile
I. Main business during the reporting period
Specializing in housing real estate development, we upheld the operating strategy of “Carefully
Devise Our Development Strategy, Meticulously Carry on Our Main Business, Strictly Control Our
Costs and Continuously Improve Our Management Capability” and dedicated ourselves to building
up quality projects. As a result, our brand effect gradually emerged and our operating results saw a
steady growth. In the reporting period, the three projects of SPG Chuanqishan, Chuanqi Shanglin
and Shantou Yuejing Dongfang were all completed; Cuizhuyuan, Tianyuewan and Jingtian started
construction; Chuanqi Donghu Mingyuan found its general contractor through bids invitation and
would also start construction soon.
In 2015, with consumption promotion and destocking as its keynote, China’s real estate market saw
quite a few easing policies for supply and demand, which resulted in a stable rebound in both the
turnover and the prices. However, polarization among cities remained and market competition was
still fierce. To deal with that, we worked hard on our project quality and progress and adjusted our
marketing strategies in a timely manner. As a result, the development and sales of our projects
proceeded smoothly and the development and operation of our main business entered a positive
cycle.
II. Significant changes in the main assets
1. Significant changes in the main assets
Main asset Reason for any significant change
Equity assets No significant changes
Fixed assets No significant changes
Intangible assets No significant changes
Construction in progress No significant changes
RMB1,175,756,306.36 as at 31 Dec. 2015, up 73.17% from opening amount,
Monetary funds
mainly because of increase in housing sales
RMB18,663,872.02 as at 31 Dec. 2015, down 84.43% from opening amount,
Notes receivable
mainly because customers changed their settlement modes
RMB112,543,908.66 as at 31 Dec. 2015, up 33.36% from opening amount, mainly
Accounts receivable
because of increase in engineering receivables
RMB22,952,379.40 as at 31 Dec. 2015, up 28.79% from opening amount, mainly
Prepayments because prepayments for materials had not yet satisfied condition to be carried
over to inventories
RMB2,146,223,895.61 as at 31 Dec. 2015, down 23.25% from opening amount,
Inventories
mainly because inventories were carried over to costs as houses were sold
RMB40,315,831.06 as at 31 Dec. 2015, up 224.19% from opening amount,
Other current assets
mainly because business tax and land VAT were prepaid
RMB32,197,368.21 as at 31 Dec. 2015, up 132.36% from opening amount,
mainly because of increase in corresponding deferred income tax assets of
Deferred income tax assets
anticipated profits of real estate subsidiaries on advance house payments from
customers and non-deductible land VAT provision
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The 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
2. Main assets overseas
□ Applicable √ Inapplicable
III. Core competitiveness analysis
As one of the earliest real estate listed companies in Shenzhen, the Company has a history over 30
years in real estate development in Shenzhen and rich experience in the main business of real estate
development. In recent years, thanks to the experience learned from the SPG Chuanqishan project
in Guangming, Shenzhen, the SPG Shanglin Garden project in Longgang, Shenzhen and the project
in Shantou, the Company accelerates the establishment of a modern enterprise HR management
system and works hard in building a professional and high-quality development team. It also keeps
improving the management mechanism and processes for project development. As a result, the
professionalism and management capability of the Company have improved significantly; planning,
construction, cost control, marketing capability and brand image have been effectively enhanced;
and the operational capability in the main business of real estate keeps increasing, along with the
core competitiveness. The Company has carried out a profit distribution for the first half of 2015.
And the reporting period has witnessed a consecutive seventh-year growth in the Company’s
operating revenues and profits. In the third quarter of 2015, the stocks of the Company were
included in the component stocks of the “Hang Seng Shenzhen & Hong Kong Index” and the “Hang
Seng Shenzhen & Hong Kong Real Estate Index”. What’s more, in 2015, the Company was granted
quite a few titles such as “The Most Honest Enterprise in the Guangdong Province” and “The
Five-Star Well-Behaved & Law-Abiding Lessor”.
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section IV Discussion & Analysis by the Management
I. Business review
2015 marked the closing year for the 12th Five-Year Development Plan of the Company. In the year,
with common efforts, we overcame difficulties and achieved remarkable results in our business
performance and corporate culture. Our development capability in the main business improved
significantly, and our profits saw a consecutive seventh-year growth and maintained a rising trend.
Our employees became more enterprising, united and professional. And our brand effect gradually
emerged.
For the reporting period, the Company achieved operating revenues of RMB2,163,365,600, up
1.46% from last year; operating profits of RMB409,683,200, up 2.56% from last year; total profits
of RMB409,904,900, up 2.31% from last year; and net profits of RMB301,129,800 attributable to
the shareholders of the Company, up 1.04% from last year. As at 31 Dec. 2015, the net assets
attributable to the shareholders of the Company stood at RMB2,331,704,100, up 7.87% from last
year.
II. Main business analysis
1. Overview
See “I. Business review” in “Discussion & Analysis by the Management”.
2. Revenues and costs
(1) Breakdown of the operating revenues
Unit: RMB Yuan
2015 2014
In operating In operating +/-
Amount Amount
revenues revenues
Operating
2,163,365,575.33 100% 2,132,311,222.93 100% 1.46%
revenues
By segment
Real estate 1,451,882,212.00 67.11% 1,476,320,296.06 69.24% -2.12%
Construction 518,895,054.20 23.99% 488,183,328.15 22.89% 1.09%
Leasing 79,149,162.72 3.66% 78,833,382.73 3.70% -0.04%
Property
128,945,973.91 5.96% 118,842,883.81 5.57% 0.39%
management
Other 21,421,062.40 0.99% 20,671,548.67 1.42% -2.88%
Internally offset -36,927,889.90 -1.71% -50,540,216.49 -2.37% 0.66%
By product
Residential
1,267,905,057.00 58.61% 1,418,885,068.06 66.54% -7.93%
houses
Shops 18,977,155.00 0.88% 57,435,228.00 2.69% -1.81%
Warehouses 165,000,000.00 7.63%
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Other products 748,411,253.23 34.59% 706,531,143.36 33.13% 1.46%
Less: Internally
-36,927,889.90 -1.71% -50,540,216.49 -2.37% 0.66%
offset
By area
Guangdong
2,143,635,244.42 99.09% 2,121,324,452.84 99.48% -0.40%
Province
Other regions in
56,204,916.71 2.60% 60,941,449.28 2.86% -0.26%
China
Overseas 453,304.10 0.02% 585,537.30 0.03% -0.01%
Internally offset -36,927,889.90 -1.71% -50,540,216.49 -2.37% 0.66%
(2) Segments, products or areas contributing over 10% of the operating revenues or profits
√ Applicable □ Inapplicable
Unit: RMB Yuan
Operating Gross profit
Operating Gross profit Operating cost:
Operating cost revenue: YoY margin: YoY
revenue margin YoY +/-%
+/-% +/-%
By segment
Real estate 1,451,882,212.0 782,516,505.6
46.10% -1.66% -7.86% 3.63%
0 3
490,709,048.8
Construction 518,895,054.20 5.43% 6.29% 6.40% -0.09%
7
By product
Residential 1,267,905,057.0 760,996,677.0
39.98% -10.64% -7.82% -1.84%
houses 0 8
Shops 18,977,155.00 7,004,414.66 63.09% -66.96% -70.45% 4.35%
Warehouses 165,000,000.00 14,515,413.89 91.20% 100.00% 100.00% 0.00%
By area
Guangdong 2,143,635,244.4 1,360,470,301.
36.53% 1.03% -1.74% 1.80%
Province 2 42
Main business data of the previous year restated according to the changed statistical caliber for the reporting
period
□ Applicable √ Inapplicable
(3) Product sales revenue higher than the service revenue
√ Yes □ No
Business segment Item Unit 2015 2014 +/-
Real estate development Sales volume 78,251.65 84,926.85 -7.86%
(RMB Ten Thousand Output 28,876.86 65,175.16 -55.69%
Yuan) Stock 192,479.09 241,853.88 -20.42%
Reason for any over 30% YoY movements in the data above
√ Applicable □ Inapplicable
The real estate investment decreased from last year.
(4) List of the execution of the signed significant sales contracts of the Company up to the reporting period
□ Applicable √ Inapplicable
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
(5) Operating cost form
Classified by industries
Unit: RMB Yuan
2015 2014
Classified by
Items Ratio to the Ratio to the YoY +/- (%)
industries Amount Amount
operating cost operating cost
Real estate 782,516,505.63 56.31% 1,476,320,296.06 60.25% -3.93%
Engineering
490,709,048.87 35.31% 488,183,328.15 32.72% 2.59%
construction
Lease 29,731,750.12 2.14% 78,833,382.73 2.11% 0.03%
Property
110,204,670.86 7.93% 118,842,883.81 7.19% 0.74%
management
Other 15,185,380.88 1.09% 20,671,548.67 1.13% -0.04%
Internal offset
-38,720,066.88 -2.79% -50,540,216.49 -3.39% 0.61%
amount
Notes
(6) Whether there were changes of the consolidation scope during the reporting period
□ Yes √ No
(7) List of the significant changes or adjustment of the industries, products or services of the Company
during the reporting period
□ Applicable √ Inapplicable
(8) List of the major trade debtors and major suppliers
List of the major trade debtors of the Company
Total sales to the top 5 customers (RMB Yuan) 119,173,771.38
Ratio of the total sales to the top 5 customers to
5.59%
the annual total sales
Information of the top 5 customers of the Company
Serial
Name of customer Sales amount (RMB Yuan) Proportion in annual total sales
No.
1 Legal person I 40,784,800.00 1.91%
2 Legal person II 29,987,587.93 1.41%
3 Legal person III 18,298,000.00 0.86%
4 Legal person IV 16,290,000.00 0.76%
5 Legal person V 13,813,383.45 0.65%
Total -- 119,173,771.38 5.59%
Notes of the other situation of the major customers
□ Applicable √ Inapplicable
List of the major suppliers of the Company
Total purchase to the top 5 suppliers (RMB Yuan) 113,367,326.53
Ratio of the total purchase to the top 5 suppliers
18.33%
to the annual total purchase
Information of the top 5 suppliers of the Company
No. Name of supplier Purchase amount (RMB Ratio to the annual purchase amount
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Yuan)
1 Legal person I 59,255,206.00 9.58%
2 Legal person II 27,989,572.20 4.53%
3 Legal person III 13,581,059.80 2.20%
4 Legal person IV 6,444,000.00 1.04%
5 Natural person 6,097,488.53 0.99%
Total -- 113,367,326.53 18.33%
Notes of the other situation of the major suppliers
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB Yuan
2015 2014 YoY +/- Notes of the significant changes
Selling expenses 46,977,100.96 44,525,387.33 5.51%
Management
58,883,597.38 64,982,801.88 -9.39%
expenses
Financial expenses 32,367,511.56 33,816,128.14 -4.28%
4. R&D investment
□ Applicable √ Inapplicable
5. Cash flow
Unit: RMB Yuan
Item 2015 2014 YoY +/-
Subtotal of cash inflows
2,593,917,264.63 1,867,088,183.88 38.93%
from operating activities
Subtotal of cash outflows
1,496,773,010.12 1,544,926,120.52 -3.12%
from operating activities
Net cash flows from
1,097,144,254.51 322,162,063.36 240.56%
operating activities
Subtotal of cash inflows
386,230.00 24,690.00 1,464.32%
from investing activities
Subtotal of cash outflows
7,894,632.61 3,016,118.70 161.75%
from investing activities
Net cash flows from
-7,508,402.61 -2,991,428.70 -151.00%
investing activities
Subtotal of cash inflows
227,837,400.00 362,013,496.47 -37.06%
from financing activities
Subtotal of cash outflows
818,348,503.54 530,373,267.61 54.30%
from financing activities
Net cash flows from
-590,511,103.54 -168,359,771.14 -250.74%
financing activities
Net increase in cash and
499,636,457.33 150,835,476.59 231.25%
cash equivalents
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Inapplicable
The amount of the cash inflow from operating activities was of RMB2,593,917,264.63 in 2015 that
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
increased of 38.93% over that of last year with the main reason of the increase of the houses selling
and the engineering amount received from providing the labor services and the goods selling of
2015.
The amount of the cash outflow from operating activities was of RMB1,496,773,010.12 in 2015
that decreased of 3.12% over that of last year with the main reason of the decrease of the
engineering amount paid for purchasing the goods and the accepting the labor services.。
Net amount of the cash flow from operating activities was of RMB1,097,144,254.51 in 2015 that
increased of 240.56% over that of last year with the main reason of the increase of the houses
selling and the engineering amount received from providing the labor services and the goods selling
of 2015.
The amount of the cash inflow from investment activities was of RMB386,230.00 in 2015 that
increased of 1464.32% over that of last year with the main reason of receiving the bonus of the
financial assets avaiable-for-sale during the holding period in 2015.
The amount of the cash outflow from investment activities was of RMB7,894,632.61 in 2015 that
increased of 161.75% over that of last year with the main reason of the increase of the purchase of
the fixed assets, intangible assets and other long-term assets as well as the entrust financial products
of 2015.
The net amount of the cash flow from investment activities was of RMB-7,508,402.61 in 2015 that
decreased of 151.00% over that of last year with the main reason of the increase of the purchase of
the fixed assets, intangible assets and other long-term assets as well as the investment of the entrust
financial products of 2015.
The amount of the cash inflow from financing activities was of RMB227,837,400.00 in 2015 that
decreased of 37.06% over that of last year with the main reason of the increase of the cash flow
from operating activities and the decrease of the external financing demand of 2015.
The amount of the cash outflow from financing activities was of RMB818,348,503.54 in 2015 that
increased of 54.30% over that of last year with the main reason of the increase of the paid bank
loans of 2015.
The net increase amount of the cash and cash equivalents was of RMB499,636,457.33 in 2015 that
increased of 231.25% over that of last year with the main reason of the increase of the net amount
of the cash flow from operating activities of 2015.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the
net profits of 2015 of the Company during the reporting period
□ Applicable √ Inapplicable
III. Analysis of the non-core business
□ Applicable √ Inapplicable
IV. List of the assets and liabilities
1. List of the significant changes of the assets form
Unit: RMB Yuan
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
As at 31 Dec. 2015 As at 31 Dec. 2014
Proporti
Proportion Proportion
on Explain any major change
Amount in total Amount in total
change
assets assets
Monetary 1,175,756,30 678,957,249. Mainly due to the increase of the
28.13% 15.52% 12.61%
funds 6.36 03 sales amount of the buildings.
Accounts 112,543,908. 84,388,842.4
2.69% 1.93% 0.76%
receivable 66 3
Mainly due to the transfer of the
2,146,223,89 2,796,551,65
Inventories 51.35% 63.92% -12.57% cost from the sales of the
5.61 6.42
buildings in 2015.
Investing real 435,058,564. 454,628,505.
10.41% 10.39% 0.02%
estate 20 97
Long-term
57,768,804.3 57,730,086.7
equity 1.38% 1.32% 0.06%
6 9
investment
52,213,985.3 54,321,296.2
Fixed assets 1.25% 1.24% 0.01%
1 2
Short-term 143,418,286. 149,846,192.
3.43% 3.42% 0.01%
loans 29 64
Long-term 382,233,324. 478,985,579.
9.14% 10.95% -1.81%
loans 88 95
Mainly due to the settlement of
Accounts 290,453,110. 541,538,762. the final payment of the
6.95% 12.38% -5.43%
payable 50 36 completion of the products
development of 2015.
475,620,347. 144,315,921. Mainly due to the increase of the
Prepayments 11.38% 3.30% 8.08%
35 34 sales of the houses of 2015.
63,459,415.4 96,394,993.6 Mainly due to the increase of the
Taxes payable 1.52% 2.20% -0.68%
2 7 taxes payment of 2015.
Non-current Mainly due to the decrease of the
168,727,608. 453,207,700.
liabilities due 4.04% 10.36% -6.32% long-term loans due in 1 year of
54 00
in 1 year 2015.
2. List of the significant changes of the liabilities items
□ Applicable √ Inapplicable
V. List of the investment
1. Overall condition
□ Applicable √ Inapplicable
2. List of the significant equity investment acquired from the reporting period
□ Applicable √ Inapplicable
3. List of the significant non-equity investment has been executing during the reporting period
□ Applicable √ Inapplicable
16
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
4. Investment on the financial assets
(1) List of the securities investment
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
(2) List of the derivative investment
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
5. Use of raised funds
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
VI. Selling of the significant assets and the equities
1. List of the selling of the significant assets
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
2. List of the selling of the significant equities
□ Applicable √ Inapplicable
VII. Analysis of the major controlling and stock-participating companies
√ Applicable □ Inapplicable
List of the stock-participating companies with more than 10% influences on the net profits of the major
subsidiaries and the Company
Unit: RMB Yuan
Name Type Main Registered Operating Operating
Total assets Net assets Net profit
services capital revenues profit
Shenzhen SPG
Developme
Longgang Subsidiar Real 797,490,525. 80,255,478.8 408,928,149. 113,068,391. 84,073,455.
nt of real
Development y estate 11 1 00 02 52
estate
Co., Ltd.
Shantou SEZ,
Wellam FTY, Developme
Subsidiar Real 302,321,667. 123,083,742. 54,196,300.0
Building nt of real 2,162,911.06 385,208.94
y estate 23 11 0
Development, estate
Co., Ltd.
Shantou Huafeng Subsidiar Real Developme 409,834,859. 13,449,885.4 -6,431,751.9 -4,823,813.
Real Estate y estate nt of real 42 7 5 96
17
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Development estate
Co., Ltd.
Developme
Great Wall Estate Subsidiar Real 18,731,758.1 -81,485,573.
nt of real 453,304.10 -153,716.45 -153,716.45
Co., Inc. (U.S.) y estate 4 98
estate
Shenzhen Fixing and
Zhentong Subsidiar maintenanc 252,040,392. 17,584,212.5 520,664,605. 2,343,417.1
Service 3,154,043.92
Engineering Co., y e of 51 6 34 5
Ltd. projects
Shenzhen
Property
Property Subsidiar 84,891,078.2 18,042,863.6 128,945,973. 1,641,497.1
Service manageme 1,460,618.67
Management y 1 3 91 4
nt
Co., Ltd.
Shenzhen Petrel Subsidiar Hotel 45,258,407.0 37,616,384.2 28,311,969.6 1,940,189.3
Service 2,428,111.07
Hotel Co., Ltd. y Service 4 8 2 6
Shenzhen SPG
Subsidiar Rent of 17,112,905.8 13,097,086.0
Mini-bus Rent Service 4,382,090.55 941,124.27 669,583.66
y mini-bus 1 5
Co., Ltd.
Shenzhen
Huazhan Constructio
Subsidiar
Construction Service n 9,260,085.42 8,392,048.42 3,655,609.36 116,226.91 87,170.19
y
Supervision Co., supervision
Ltd.
Investmen Investment
Xin Feng
Subsidiar t and 152,968,245. -408,298,23 -17,335,428. -17,338,902
Enterprise Co., 148,000.00
y managem manageme 77 0.28 27 .85
Ltd.
ent nt
Subsidiaries acquired or disposed during the reporting period
□ Applicable √ Inapplicable
Notes to the major controlling stock-participating companies
The subordinate subsidiaries of the Company
1. The subordinate subsidiaries engaged in real estate development mainly include: Shenzhen SPG Longgang
Development Co., Ltd., Shantou SEZ, Wellam FTY, Building Development, Co., Ltd. and Shantou Huafeng Real
Estate Development Co., Ltd.. The Longgang Company was responsible for the development of Shenzhen
Properties Shanglin Garden Project with the carried forward sales of 2015 of RMB0.409 billion, the carry forward
ratio of the sales of 25.36%, and the proportion of the opertaing income to that of the Group Company of 18.9%
as well as the proportion of the net profits which was of RMB0.084 billion to that of the Group Company of
27.9%. Shantou Wellam Company took the responsibility of developing the projects such as the Jinye Island and
Yuejing Dongfang, with the 2015 carried forward sales of the Yuejing Dongfang Project of RMB0.029 billion, the
carry forward ratio of the sales of 10.21% and the carried forward sales of the remaining building of Jinye Island
of RMB0.025 billion. Shantou Huafeng Company took the responsibility of developing the Shantou Jingzaiwan
Project which had carried out full-scale production after the completion of the started licensing of 2015 and the
operating revenues of RMB-6.43 million was the interests expenses before the formally starting.
2. Shenzhen Zhentong Engineering Co., Ltd. was engaged in the business of building installation and maintenance
with the 2015 operating income of RMB0.521 billion and of 24.09% to the operoating income of the Group
Company.
3. The 2015 operating income of Shenzhen Property Management Co., Ltd. was of RMB0.129 billion that was of
5.96% to the operating income of the Group Company.
4. The 2015 net profits of Xin Feng Enterprise Co., Ltd. was of RMB-17.34 million which mainly due to the bad
debt provision of RMB8.42 million and the losses of the exchange rate changes of RMB7.05 million.
18
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
VIII. List of the structured main bodies controlled by the Company
□ Applicable √ Inapplicable
IX. Outlook of the Company’s future development
Y2016 is the starting year of the national Thirteenth Five-Year Plan with the marco economy
insisting to seek improvement in stability while the economy downward pressure was rather big and
the property market was of polarization, thus the Company carefully planned the development
strategics, executed refine cultivation on the main business operating, made careful calculation and
strict budgeting on the intensification of the cost control, kept improving the enhancing of the
management and control level, accelerated the projects construction and sales, and strived for the
improvement of the professional level and the brand influence to seek for the stable devleopment of
the Company.
In 2016, the Company will make great efforts to grasp the following work of three aspects:
(I) To guarantee the construction, development and sales of the projects could be as quick as
possible. To base on the pitch point of the projects, to comprehensively strengthen the planning and
coordination as well as the control ability during the development process,to improve the
merchanism and process to ensure the quality and progress especially to intensify the control of the
engineering quality. To accelerate the to-the-rate-of the property sales, to seize the current favorable
situation, to intensify the management and urgement of the marketing of the intermediaries and to
accelerate the remaining building sales. To highly pay attention to the safety production. To insist
the working policy of “Safety First, Prevention First, Comprehensive Treatment”, to implement the
safety production responsibility and to intensify the safety management measures. To intensify the
ability construction of the owned enterprises and to promote the transformation and upgrade.
(II) To constantly enhance the management and control level. To improve the corporate governance
structure which regarded the construction of the Board of the Directors as the core and to revise and
improve the Thirteenth Five-Year Plan strategic planning; to earnestly carry out the responsibilities
of the listed companies and to intensify the information disclosure and the investors relationship
management; to intensify the enterprise internal construction for building the base for realizing the
capital opertion of the enterprises.To intensify the enterprise management, to constantly improve
the management and control mechanism and the business process of the Company, to improve the
informatization management, to intensify the planning, arrangement, management and control
ability of the property projects during the whole development process; to intensify the cost control
to cover the whole process of the development for realizing the value creation; to improve the
planning and the design level as well as the engineering management level, to pay close attention to
the quality system of the engineering construction and the to close the good quality most; to
intensify the learning, absorbing and reference of the new technology, new process and the new
mode of the management during the process of the projects development and construction, to strive
for the building of the boutique projects
(III) To constantly intensify the team construction. To carry on the execution of the constrution of
“Elite Talent, Excellent Team”that forge the professional team. To perfect the incentive system, to
deepen the salary system reform, to constantly improve the performance appraisal management
approach and to positively explore the long term stimulation mechanism of the listed companies. To
19
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
propose the professional and specialized talents mechanism, to encourage the whole staffs to
possess with promotion position and self-taught ability, to cultivate the staffs to become the expert
of their own work and the technicians become the expert of their own profession as well as the
department heads of the expert of their depeartment and profession.
X. List of the received researches, visits and interviews
1. Particulars about researches, visits and interviews received in this reporting period
√ Applicable □ Inapplicable
Time of Way of
Visitor type Index of the researches basic information
reception reception
Telephone Inquired of the progress of the projects development and the
22 Jan. 2015 Individual
communication number of the shareholders etc. and didn’t offer written materials
Inquired of the appointed disclosure time of the annual report
Telephone
16 Mar. 2015 Individual and the number of the shareholders etc. and didn’t offer written
communication
materials
Telephone Inquired of the progress of the state-funded and state-owned
27 Apr. 2015 Individual
communication enterprise reform and didn’t offer written materials
Telephone Inquired of the process of the projects development and the sales
15 May 2015 Individual
communication and didn’t offer written materials
Inquired of the operating of the first-half year of the Company
Telephone
29 Jun. 2015 Individual and the progress of the state-funded and state-owned enterprise
communication
and didn’t offer written materials
Telephone Inquired of the definiment of the Company and the measures
6 Jul. 2015 Individual
communication facing with the crises didn’t offer written materials
Inquired of the operating situation of the first-half year of the
Telephone
31 Jul. 2015 Individual Company and the appointed disclosure date of the semi-annual
communication
report and didn’t offer written materials
Inquired of the relevant information of the disclosed semi-annual
Telephone
31 Aug. 2015 Individual report and the relevant events of the semi-annual profits
communication
distribution and didn’t offer written materials
Telephone Inquired of the third-quarter operating situation and the
29 Sep. 2015 Individual
communication third-quarter report disclosure time didn’t offer written materials
Telephone Inquired of the situation of the projects development and sales
28 Oct. 2015 Individual
communication progress and didn’t offer written materials
Telephone Inquired of the annual operating situation and didn’t offer written
28 Dec. 2015 Individual
communication materials
Reception times 11
Number of reception institutions 0
Number of reception person 11
Number of receipting other targets 0
Whether disclose, reveal or let out
No
unpublished significant information
2. Particulars about researches, visits and interviews received from the period-end to the disclosure date
√ Applicable □ Inapplicable
Time of reception Way of reception Visitor type Index of the researches basic information
Inquired of the annual operating situation of the
Telephone
11 Jan. 2016 Individual Company and the reasons of the falling stock price
communication
and didn’t offer written materials
9 Mar. 2016 Telephone Individual Inquired of the annual operating situation of the
20
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
communication Company and progress of the state-funded and
state-owned enterprise reform and didn’t offer
written materials
Reception times 2
Number of reception institutions 0
Number of reception person 2
Number of receipting other targets 0
Whether disclose, reveal or let out
No
unpublished significant information
21
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section V Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
List of the formulation, execution or adjustment of the profits distribution policies of the common shares,
especially the cash dividend policies
√ Applicable □ Inapplicable
The 2014 profits distribution proposal of the Company had been reviewed and approved by the 24th
Session of the 7th Board of the Directors held on 27 Mar. 2015 and the 2014 Annual General
Meeting held on 28 Apr. 2015 by the Company, which confirmed that the 2014 net profits be used
for making up the losses of the previous years and neither execute the profits distribution nor the
turn from capital reserve to share capital.
The 2015 semi-annual profits distribution proposal had been reviewed and approved by the 26th
Session of the 7th Board of the Directors held on 28 Aug. 2015 and the 2015 1st Extraordinary
General Meeting held on 21 Sep. 2015 by the Company, which confirmed to base on 1,011,660,000
shares of the total share capitao of the Company that to distribute the cash of RMB1.30 (tax
included) for every 10 shares held by its shareholders, and there was neither the bonus shares (tax
included) nor the turn from capital reserve to share capital.
Special explanation of cash dividend policy
The conditions and process of formulation of the
Whether conformed with the regulations of the Articles Retribution Plan for the Company’s Shareholders, the
of association or the requirements of the resolutions of revision of the Articles of Association was compliance and
the shareholders’ meeting: transparent with the contents met with the requirements
of the relevant laws and regulations as well as CSRC.
Whether the dividend standard and the proportion were The dividend standard and the proportion were definite
definite and clear: and clear after revision.
Whether the relevant decision-making process and the The relevant decision-making process and system was
system were complete: completed.
The independent director executed dutifully and gave
Whether the independent director acted dutifully and
independent advice of the cash dividend policy of the
exerted the proper function:
Company.
Whether the medium and small shareholders had the
chances to fully express their suggestions and appeals, Yes
of which their legal interest had gained fully protection:
Whether the conditions and the process met the
regulations and was transparent of the adjustment or Yes
altered of the cash dividend policy:
Pre-plan or plan for profit distribution and turning capital reserve into share capital in recent 3 years (including the
reporting period)
In 2013, the net profit of 2013 will be used for covering the deficit of the previous years. And thus
no profit distribution or capitalization of capital reserves will be conducted;
In 2014, the net profit of 2014 will be used for covering the deficit of the previous years. And thus
no profit distribution or capitalization of capital reserves will be conducted;
In the semi-annual of 2015, based on the 1,011,660,000 shares of the current general capital, the
Company distributed the cash of RMB1.30 (tax included) for every 10 shares held by its
shareholders, and there was neither the bonus shares (tax included) nor the turn from capital reserve
to share capital;
In 2015, the net profit of 2015 will be used for covering the deficit of the previous years. And thus
no profit distribution or capitalization of capital reserves will be conducted;
Cash dividend distribution of the common shares of the Company of the recent 3 years (including the reporting
period)
22
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Unit: RMB Yuan
The ratio
Net profit
accounting in net
belonging to
profit which
shareholders of
Amount of cash belongs to Amount of the Ratio of the cash
the listed
Dividend year dividend shareholders of cash dividend by dividend by other
company in
(including tax) the listed other methods methods
consolidated
company in
statement of
consolidated
dividend year
statement
2015 131,515,800.00 301,129,840.84 43.67% 0.00 0.00%
2014 0.00 298,033,316.49 0.00% 0.00 0.00%
2013 0.00 228,268,271.23 0.00% 0.00 0.00%
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the
common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put
forward a preplan for cash dividend distribution of the common shares:
√ Applicable □ Inapplicable
Reason Usage and utility plan of the retained profits of the Company
The retained and undistributed profits were mainly used for the development of
the projects in construction and the newly increase of the land reserves when
2015 semi-annual profits
appropriate and properly reduced the external loans balance that efficiently
distribution had been executed.
reduced the financial expenses and ensured the sustainable operating and
development of the Company.
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
□ Applicable √ Inapplicable
The Company planed not to distribute the cash bonus, not to distribute the bonus shares and no turn from capital
reserve to share capital of 2015.
III. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, the
Directors, the Supervisors and the Senior Executives or the other related parties during the reporting
period and those hadn’t been completed execution up to the period-end
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
2. Assets or projects existing profit forecast, which were still in the profit forecast period, the Company
made note and explain to the assets or project arrived at original profit forecast
□ Applicable √ Inapplicable
IV. Occupation of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
23
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
V. Explanation by the Board of Directors, the Supervisory Committee and the Independent
Directors (if any) about the “non-standard audit report” issued by the CPAs firm for the
reporting period
□ Applicable √ Inapplicable
VI. Explanation of the changes of the accounting policy, the accounting estimates and the
accounting methods compared to the last financial report
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
VII. Explain retrospective restatement due to correction of significant accounting errors in
the reporting period
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
VIII. Explain change of the consolidation scope as compared with the financial reporting of
last year
□ Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
IX. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present
Name of domestic CPAs firm Ruihua CPAs (LLP)
Remuneration for domestic CPAs firm for the reporting
58
period (RMB Ten Thousand Yuan)
Consecutive years of the audit services provided by
3
domestic CPAs firm
Name of domestic CPAs firm Cai Xiaodong, Wang Huansen
Name of overseas CPAs firm N/A
Remuneration for overseas CPAs firm for the reporting
0
period (RMB Ten Thousand Yuan)
Consecutive years of the audit services provided by
N/A
overseas CPAs firm
Name of overseas CPAs firm N/A
Reengage the CPAs firm at current period or not?
□ Yes √ No
Particulars on engaging the audit firm for the internal control, financial adviser or sponsor
√ Applicable □ Inapplicable
During the reporting period, the Company engaged Ruihua CPAs (LLP) to provide internal control
audit service with the service expeditures of RMB0.25 million.
X. Particulars about trading suspension and termination faced after the disclosure of annual
report
□ Applicable √ Inapplicable
24
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
XI. Bankruptcy and reorganization
□Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
XII. Significant lawsuit or arbitration
√ Applicable □ Inapplicable
Lawsuit
Whether Situation of
Basic amount Process of
form into execution of
situation of (RMB lawsuit Trial results and influences Disclosure Disclosure
estimate judgment of
lawsuit Ten (arbitratio of lawsuit (arbitration) date index
d lawsuit
(arbitration) Thousan n)
liabilities (arbitration)
d)
① Business Tourism
Company had to pay for the
compensation RMB36,620 The applicant
Xi’an thousand and the relevant has received
Project interest (from 14 Sept. 1998 RMB 15.20
Lawsuit to the payment day) to Xi’an million. Now
(For details, Fresh Peak Company within Business
see “Notes one month after the Tourism
X”—“Conti judgment entering into force. Company has
ngent If the Business Tourism no executable
2015
Events”—“1 Company failed to pay in properties
time, it had to pay double and Semi-annua
. Contingent In Xi’an 29 Aug.
2,100 No l Report on
liabilities execution debt interests to Xi’an Fresh Joint 2015
www.cninf
due to Peak Company for the Commission
o.com.cn
pending overdue period; ② Xi’an on Commerce
lawsuits or Joint Commission on has been
arbitrations, Commerce had jointly and refusing to
as well as severally obligation of the execute the
the financial interests of the ruling. It is
influence compensation; .③ Business difficult to
thereof”.) Tourism Company shall bear recover the
RMB227,500 of the rest.
acceptance fee and the
security fee.
Luofu Hill
project
Lawsuit
(For details, ① Luofu Hill Tourism Because the
see “Notes Company has paid back state-owned
X”—“Conti RMB9.6 million; ② land resource
ngent Luofushan Administration administratio 2015
Events”—“1 Committee had to undertake n cannot
Semi-annua
. Contingent In one third of the debts which work out the 29 Aug.
960 No l Report on
liabilities execution Luofushan Tourism was planning key 2015
www.cninf
due to unable to repay; ③ Luofu points for the o.com.cn
pending Hill Tourism Company shall sealed
lawsuits or bear RMB167,700 of the land, the land
arbitrations, case acceptance fee and the cannot be
as well as security fee. auctioned.
the financial
influence
thereof”.)
25
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
XIII. Punishment and rectification
□ Applicable √ Inapplicable
No such cases in the reporting period.
XIV. Honesty situations of the Company, its controlling shareholders and actual controller
□ Applicable √ Inapplicable
XV. List of the execution of the stock incentive plan, ESOP, or other Staff incentives
□ Applicable √ Inapplicable
No such cases in the reporting period.
26
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Inapplicable
Transa Settle
Pricing Approve
ction Wheth ment
Type Conten princip Propor d
amoun er metho
of the t of the le of tion in transacti Simila
Transa t exceed d of Disclo
Related Relation related related- the same on quota r Disclosure
ction (RMB the the sure
party ship -party party related kind of (RMB market index
price Ten approv related date
transac transac -party transac Ten price
Thous ed -party
tion tion transac tions Thousan
and quota transac
tion d Yuan)
Yuan) tion
Shenzhe
Shenzhe n 2014
n Jianan Zhenton Negoti Bank 28 Annual
Constr 1 Jun.
Group g ated - 707.22 1.36% 707.22 No transfe - Mar. Report on
uction 2012
Co., Engineer price r 2015 www.cninf
Ltd. ing Co., o.com.cn
Ltd.
Total -- -- 707.22 -- 707.22 -- -- -- -- --
Details of large amount of sales returns N/A
As for the prediction on the total amount of routine
related-party transactions to be occurred in the
Inapplicable
reporting period by relevant types, the actual
performance in the reporting period (if any)
Reason for significant difference between the
Inapplicable
transaction price and the market price (if any)
2. Related-party transactions regarding purchase and sales of assets
□ Applicable √ Inapplicable
No such cases in the reporting period.
3. Related-party transactions common external investment
□ Applicable √ Inapplicable
No such cases in the reporting period.
4. Credits and liabilities with related parties
□ Applicable √ Inapplicable
No such cases in the reporting period.
5. Other significant related-party transactions
□ Applicable √ Inapplicable
No such cases in the reporting period.
27
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such cases in the reporting period.
(2) Contract
□ Applicable √ Inapplicable
No such cases in the reporting period.
(3) Lease
□ Applicable √ Inapplicable
No such cases in the reporting period.
2. Significant guarantees
√ Applicable □ Inapplicable
(1) Guarantees provided by the Company
Unit: RMB Ten Thousand Yuan
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Disclosure date Guarante
Actual
of relevant Amount Actual e for a
Guaranteed occurrence Type of Period of Execute
announcement for guarantee related
party date (date of guarantee guarantee d or not
on the guarantee guarantee amount party or
agreement)
amount not
Total external guarantee line approved during Total actual occurred amount of external
0 0
the reporting period (A1) guarantee during the reporting period (A2)
Total external guarantee line that has been Total actual external guarantee balance at the
0 0
approved at the end of the reporting period (A3) end of the reporting period (A4)
Guarantees provided by the Company for its subsidiaries
Disclosure date Guarant
Actual
of relevant Amount Actual ee for a
Guaranteed occurrence Type of Period of Executed
announcement for guarantee related
party date (date of guarantee guarantee or not
on the guarantee guarantee amount party or
agreement)
amount not
Shantou
SEZ,
Wellam Joint
FTY, 31 Oct. 2012 13,000 17 Apr. 2013 0 liability 3 years Yes Yes
Building guarantee
Developmen
t Co., Ltd.
Total guarantee line approved for the 0 Total actual occurred amount of guarantee for 0
28
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
subsidiaries during the reporting period (B1) the subsidiaries during the reporting period
(B2)
Total guarantee line that has been approved for Total actual guarantee balance for the
the subsidiaries at the end of the reporting 0 subsidiaries at the end of the reporting period 0
period (B3) (B4)
Guarantees provided by the subsidiaries for its subsidiaries
Disclosure date Guarante
Actual
of relevant Amount Actual e for a
Guaranteed occurrence Type of Period of Execute
announcement for guarantee related
party date (date of guarantee guarantee d or not
on the guarantee guarantee amount party or
agreement)
amount not
Total actual occurred amount of guarantee for
Total guarantee line approved for the
0 the subsidiaries during the reporting period 0
subsidiaries during the reporting period (C1)
(C2)
Total guarantee line that has been approved for Total actual guarantee balance for the
the subsidiaries at the end of the reporting 0 subsidiaries at the end of the reporting period 0
period (C3) (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during the Total actual occurred amount of guarantee
0 0
reporting period (A1+B1+C1) during the reporting period (A2+B2+C2)
Total guarantee line that has been approved at
Total actual guarantee balance at the end of the
the end of the reporting period 0 0
reporting period (A4+B4+C4)
(A3+B3+C3)
Proportion of total guarantee amount (A4+B4+C4) to
0.00%
the net assets of the Company
Of which:
Amount of guarantee for shareholders, actual controller
0
and related parties (D)
Amount of debt guarantee provided for the guaranteed
party whose asset-liability ratio is not less than 70% 0
directly or indirectly (E)
Part of the amount of the total guarantee over 50% of net
0
assets (F)
Total amount of the above three guarantees (D+E+F) 0
The Company needed to provide the mortgage loan
Explanation on the occurred warranty liability or
guarantees for the bank for the commercial residential
possible bearing joint responsibility of liquidation due to
building purchasers and up to 31 Dec. 2015, the
immature guarantee (if any)
unsettled guaranteed amount was of RMB44.87 million.
Explanation on provision of guarantees for external
N/A
parties in violation of the prescribed procedure (if any)
Explanation on particulars about the guarantees by complex ways:
The Company belongs to the property industry and according to the relevant regulations of the People’s Bank of
China, the developers must provide the mortgage loan guarantees for the home buyers, and the guarantee that the
Company recently provided for the home buyers was the phased joint guarantee with the period from the date
when the bank released the loans to the date when the home buyers completed the real estate license. If during the
above guarantee period, the home buyers didn’t execute the debtor responsibility, the Company has the right to
recover the sold property and the guarantee would not cause any actual loss for the Company.
(2) Illegal external guarantee
□ Applicable √ Inapplicable
There was no such situation.
29
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
3. Cash assets management entrustment
(1) Wealth management entrustment
□ Applicable √ Inapplicable
There was no such situation.
(2) Entrustment loans
□ Applicable √ Inapplicable
There was no such situation.
4 Other significant contracts
□ Applicable √ Inapplicable
There was no such situation.
XVIII. Other significant events
□ Applicable √ Inapplicable
There was no such situation.
XIX. Significant events of subsidiaries
□ Applicable √ Inapplicable
XX. Social responsibilities
√ Applicable □ Inapplicable
The Company paid attention on the execution of the social responsibilities and positively protect the
legal interets of the stakeholders such as the creditors, employees, customers, suppliers and
community as well as executed the social responsibilities. During the reporting period, the
Company organized the volunteer team and the party member volunteer service team and positively
developed the volunteer service and the party member volunteer service activities; to insist on
developing the donation activity of “Municipal State-owned Enterprises Arm in Arm, Love and
Assis Heart to Heart” to release the condolence payments to the party members in difficulties, the
staffs and the staffs in hospital owning to illness, and to denote the money as well as clothes to the
Hujing Community, Luohu Districts etc; to positively develop the interest teams activities such as
the badminton, table tennis, mountain climbing and basketball as well as the activities of the health
knowledge lectures. During the reporting period, the Company gained the title of “2014 Best
High-integrity Enterprise of Guangdong Province”.
Does the listed company or its subsidiaries belong to the heavily polluting industries stipulated by the
environmental protection authorities of the country?
□ Yes √ No
30
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Whether issue social responsibility report or not?
□ Yes √ No
XXI. Corporation bonds
Whether existing corporation bonds public issued and listed in Stock Exchange and maturity or maturity but not
fully paid on the approval report date of annual report
No
31
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section VI Share Changes & Particulars about the Shareholders
I. Changes in shares
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitaliz
Newly
Proporti Bonus ation of Proporti
Amount issue Other Subtotal Amount
on shares public on
share
reserves
I. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%
1.Shares held by the state 0 0.00% 0 0 0 0 0 0 0.00%
2. Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
state-own Legal-person
3. Shares held by other
0 0.00% 0 0 0 0 0 0 0.00%
domestic investors
Among which: shares
held by domestic legal 0 0.00% 0 0 0 0 0 0.00%
person
Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
domestic natural person
4. Shares held by
0 0.00% 0 0 0 0 0 0.00%
foreign investment
Among which: shares
held by oversea legal 0 0.00% 0 0 0 0 0 0 0.00%
person
Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
oversea natural person
II. Shares not subject to 1,011,66 1,011,66 100.00
100.00% 0 0 0 0 0
trading moratorium 0,000 0,000 %
891,660, 891,660,
1. RMB ordinary shares 88.14% 0 0 0 0 0 88.14%
000 000
2. Domestically listed 120,000, 120,000,
11.86% 0 0 0 0 0 11.86%
foreign shares 000 000
3. Oversea listed foreign
0 0.00% 0 0 0 0 0 0 0.00%
shares
4. Other 0 0.00% 0 0 0 0 0 0 0.00%
1,011,66 1,011,66 100.00
III. Total shares 100.00% 0 0 0 0 0
0,000 0,000 %
Reason for the change in shares
□ Applicable √ Inapplicable
Approval of the change in shares
□ Applicable √ Inapplicable
Reason for the change in shares
□ Applicable √ Inapplicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common
32
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
shareholders of the Company and other financial indexes over the last year and last period
□ Applicable √ Inapplicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities to
disclose
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: share
Number Number Increase Number
Name of of of number of
sharehold opening unlocked of closing Reason Date of unlocked
er restricted restricted restricted restricted
share shares share share
The settlement Company did not unlock the
restricted shares, in line with the relevant
Share held by
regulations of decrease of shareholding by
Senior
Qiu Lihua 0 0 45,382 0 directors and supervisors issued by CSRC,
Executives
1,250 shares of restricted share was unlocked
relatives
on 8 Jan. 2016, and 10,096 shares unlocked on
9 Jan. 2016.
Deng Share held by
2,500 shares of restricted share was unlocked
Kangchen 0 0 10,000 7,500 Senior
on 8 Jan. 2016
g Executives
Share held by
Zhuang 20,000 shares of restricted share was unlocked
0 0 80,000 60,000 Senior
Quan on 9 Jan. 2016
Executives
The settlement Company did not unlock the
Share held by restricted shares, in line with the relevant
Wang Senior regulations of decrease of shareholding by
0 0 10,000 0
Xiulan Executives directors and supervisors issued by CSRC,
relatives 2,500 shares of restricted share was unlocked
on 1 Jan. 2016.
Total 0 0 145,382 67,500 -- --
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) in reporting period
□ Applicable √ Inapplicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and
liabilities
□ Applicable √ Inapplicable
33
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
3. Existent shares held by internal staffs of the Company
□ Applicable √ Inapplicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number of Total number of preferred
Total number of
Total number of shareholders on the stockholder with vote right
preferred
shareholders at 30th trading day restored on the 30th trading
71,731 76,765 stockholder with 0 0
the reporting before the disclosure day before the disclosure
vote right
period date of the annual date of the annual
restored( if any)
report report( notes 8)
Shareholding of shareholders holding more than 5% shares
Number Pledged or frozen shares
Increase Number of
Number of of shares
and shares
shareholdin held
Holding decrease held not
Name of Nature of g at the end subject
percenta of shares subject to Status of
shareholder shareholder of the to Amount
ge (%) during trading shares
reporting trading
reporting moratoriu
period moratori
period m
um
Shenzhen
Investment State-owned 642,884,26 642,884,2
63.55% 0 0
Holdings Co., corporation 2 62
Ltd
Domestic
Tang Yidan 0.82% 6,350,000 0 0 6,350,000
individual
Century Domestic
Securities Co., non-state-owne 0.43% 4,411,700 0 0 4,411,700
Ltd. d corporation
Domestic
Lu Zhigao 0.38% 4,241,449 0 0 4,241,449 Pledged 2,724,402
individual
Domestic
Zhou Qijia 0.34% 2,339,009 0 0 2,339,009
individual
Domestic
Chen Jianxin 0.18% 2,216,700 0 0 2,216,700
individual
CCB -Huafu
Competitiveness
Domestic
Selected Mixed
non-state-owne 0.14% 1,430,000 0 0 1,430,000
Type
d corporation
Open-Ended
Fund
Lion Fund
-CCB -China
Life Insurance
-Lion Fund Domestic
Stock Mixed non-state-owne 0.12% 1,275,400 0 0 1,275,400
Type Fund d corporation
Entrusted by
China Life
Insurance
34
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Domestic
Xu Yiqiao 0.11% 1,234,100 0 0 1,234,100
individual
Central Huijin
Asset State-owned
0.11% 1,165,500 0 0 1,165,500
Management corporation
Co., Ltd.
Strategic investors or the general
legal person due to the placement
N/A
of new shares become the top 10
shareholders (if any) (notes 3)
No related parties or acting-in-concert parties as defined in the Information
Explanation on associated
Administration Measures for Shareholding Changes in Listed Companies are
relationship or/and persons
found among the shareholders above.
Particulars about shares held by top 10 shareholders not subject to trading moratorium
Number of shares held not Type of share
Name of shareholder subject to trading moratorium
Type of share Amount
at the end of the period
Shenzhen Investment Holdings Co., Ltd 642,884,262 RMB ordinary shares 642,884,262
Tang Yidan 6,350,000 RMB ordinary shares 6,350,000
Century Securities Co., Ltd. 4,411,700 RMB ordinary shares 4,411,700
Lu Zhigao 4,241,449 RMB ordinary shares 4,241,449
Zhou Qijia 2,339,009 RMB ordinary shares 2,339,009
Chen Jianxin 2,216,700 RMB ordinary shares 2,216,700
CCB -Huafu Competitiveness Selected
1,430,000 RMB ordinary shares 1,430,000
Mixed Type Open-Ended Fund
Lion Fund -CCB -China Life Insurance
-Lion Fund Stock Mixed Type Fund 1,275,400 RMB ordinary shares 1,275,400
Entrusted by China Life Insurance
Xu Yiqiao 1,234,100 RMB ordinary shares 1,234,100
Central Huijin Asset Management Co.,
1,165,500 RMB ordinary shares 1,165,500
Ltd.
Explanation on associated relationship
among the top ten shareholders of
tradable share not subject to trading
No related parties or acting-in-concert parties as defined in the
moratorium, as well as among the top
Information Administration Measures for Shareholding Changes in Listed
ten shareholders of tradable share not
Companies are found among the shareholders above.
subject to trading moratorium and top
ten shareholders, or explanation on
acting-in-concert
Particular about shareholder participate The 2nd and 5th shareholders hold all of their shares in the Company in a
in the securities lending and borrowing credit securities account, and the 4th shareholder holds part of his shares in
business ( if any) the Company in such an account.
Whether the shareholders of a company conducted the transaction of repurchase under the agreement during the
reporting period
□ Yes √ No
There were no shareholders of a company conduct the transaction of repurchase under the agreement during the
reporting period.
2. Particulars about the controlling shareholder
Nature of controlling shareholder: Local state-controlled
Type of controlling shareholder: legal person
Name of Legal representative / Date of Organization
Business scope
controlling company principal establishment code
35
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
shareholder
State-owned equity investment
SHENZHEN and management, the
INVESTMENT government allocation of land
Xiong Peijin 13 Oct. 2004 76756642-1
HOLDINGS CO., development and management
LTD and strategic emerging industry
investment and service.
SWY (000011): with a total of 379,740,000shares held and shareholding proportion of
Shares held by 63.72%;
the controlling SFZ (000045): with a total of 234,069,000 shares held and shareholding proportion of
shareholder in 46.21%;
other listed SSB (000019): with a total of 48,170,000 shares held and shareholding proportion of 14%;
companies by STD (000023): with a total of 14,790,000 shares held and shareholding proportion of 10.66%;
holding or ZGPA (601318): with a total of 962,720,000 shares held and shareholding proportion of
shareholding 5.27%;
during the Guotai Junan (601211): with a total of 624,070,000 shares held and shareholding proportion
reporting period of 8.18%;
E-top (834386): with a total of 42,000,000shares held and shareholding proportion of 60%;
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
The controlling shareholder did not change during the reporting period
3. Particulars about actual controller
Nature of actual controllers: local state-owned assets management institutions
Type of actual controller: legal person
Legal
Name of the actual representative / Date of
Organization code Business scope
controller company establishment
principal
Perform the responsibilities
Shenzhen State-owned
of investor on behalf of the
Assets Supervision and
Gao Zimin 1 Aug. 2004 K3172806-7 state, and supervise and
Administration
manage the authorized
Commission
state-owned assets legally.
Equity of shareholding and
participating shares of In addition to the Company controlling shareholder - Shenzhen Investment Holding
actual controllers in other Co., Ltd. Other domestic and overseas listed companies whose equity held by the
domestic and foreign listed actual controllers did not rank among the top ten shareholders of the Company
company during the before.
reporting period
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
The actual controller did not change during the reporting period
The ownership and controlling relationship between the actual controller of the Company and the Company is
detailed as follows:
36
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Shenzhen State-owned Assets Supervision and
Administration Commission
Shenzhen Investment Holdings Co., Ltd.
The Company
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Inapplicable
4. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable √ Inapplicable
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller,
restructuring parties and other commitment entities
□ Applicable √ Inapplicable
37
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section VII Preference Shares
□ Applicable √ Inapplicable
There was no preferred stock during reporting period.
38
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section VIII Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
Amount Amount
Shares of of Shares
Other
Beginni Ending held at shares shares held at
changes
Current/ ng date date of the increase decrease the
Name Position Gender Age increase
former of office office year-beg d at the d at the year-beg
/decreas
term term in reportin reportin in
e
(share) g period g period (share)
(share) (share)
Chairma
Zhou 17 Apr. 16 Apr.
n of the Current Male 60 0 0 0 0
Jianguo 2012 2015
Board
General
Chen
Manage 17 Apr. 16 Apr.
Maozhe Current Male 51 0 0 0 0
r and 2012 2015
ng
Director
Zhuang Supervis 17 Apr. 16 Apr.
Current Male 60 0 80,000 0 0 80,000
Quan or 2012 2015
Deng
17 Apr. 16 Apr.
Kangch Director Current Male 49 0 10,000 0 0 10,000
2012 2015
eng
17 Apr. 16 Apr.
Wen Li Director Current Female 46 0 0 0 0
2012 2015
Jiang 17 Apr. 16 Apr.
Director Current Female 51 0 0 0 0
Lihua 2012 2015
CFO
Zhang 17 Apr. 16 Apr.
and Current Male 47 0 0 0 0
Lei 2012 2015
Director
Liu Indepen
15 Oct. 14 Oct.
Quanmi dent Current Male 51 0 0 0 0
2010 2016
n director
Indepen
Song 15 Oct. 14 Oct.
dent Current Male 47 0 0 0 0
Botong 2010 2016
director
Zhang Indepen
23 Apr. 22 Apr.
Shunwe dent Current Male 49
2014 2017
n director
Wang Supervis 17 Apr. 16 Apr.
Current Female 51 0 0 0 0
Xiuyan or 2012 2015
Supervis 17 Apr. 16 Apr.
Li Yufei Current Female 37 0 0 0 0
or 2012 2015
Xiong
Supervis 17 Apr. 16 Apr.
Xingnon Current Male 59 0 0 0 0
or 2012 2015
g
Shi
Supervis 17 Apr. 16 Apr.
Chunron Current Male 59 0 0 0 0
or 2012 2015
g
Teng Vice Current Male 58 17 May 16 May 0 0 0 0
39
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Xianyou GM 2012 2015
Wei Vice 28 Sept. 16 May
Current Female 49 0 0 0 0
Hanping GM 2012 2015
Tang
Vice 22 Oct. 16 May
Xiaopin Current Male 45 0 0 0 0
GM 2013 2015
g
Chairma
n 17 May 16 May
Chen Ji Current Male 44 0 0 0 0
Secretar 2012 2015
y
Total -- -- -- -- -- -- 0 90,000 0 0 90,000
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
III. Resumes of important personnel
Main working experience of current directors, supervisors and senior management staff
1. Zhou Jianguo: he was once the Vice GM of Shenzhen Investment Holdings Co., Ltd. And he has
been the Secretary of the Party Committee and Chairman of the Board of the Company since Feb.
2009.
2. Chen Maozheng: he once was the Vice GM, Vice Secretary of the Party Committee, Director GM of Shenzhen
City Construction Development (Group) Co. Ltd. And he has been the Vice Secretary of the Party Committee and
Director as well as GM of the Company since Oct. 2009.
3. Zhuang Quan: he once was Chairman of the Supervisory Committee of Shenzhen Shenfubao Group Co., Ltd..
He has been the Chairman of the Supervisory Committee of the Company since Apr. 2012.
4. Deng Kangcheng: he was once deputy director, director of the Office of Shenzhen Investment Holdings Co.,
Ltd., and supervisor of the Company. And he has been director, Vice Secretary of CPC and Secretary in
Discipline Inspection Committee of the Company since Feb. 2009.
5. Zhang Lei: he was once the CFO and Secretary to the Board of SDIC ZHONGLU FRUIT Co., Ltd. And he has
been the Director and CFO of the Company since Oct. 2010.
6. Liu Quanmin: he ever worked as the full-time lawyer of Shaanxi Hengda Law Firm, and the partner and
licensed lawyer of Guangdong Shenyatai Law Firm. Now he is the director of the center for real estate investment
and financing in Shenzhen Yingke law firm, He has been the independent director of the Company since Oct.
2010.
7. Song Botong: he ever took posts of Deputy Chief of Civil Engineering Department in College of Architecture
and Civil Engineering and Chairman of Labor Union of Shenzhen University. Now he acts as Standing Deputy
Director of Research Center for Real Estate of Shenzhen University. He has been the Independent Director of the
Company since Oct. 2010.
8. Zhang Shunwen: he acted as Director of the Shenzhen Juyuan Certified Public Accounting, now he acts as
partner of BDO China Shu Lun Pan Certified Public Accountants LLP. He acts as Independent Directors of the
Company since Apr. 2014.
9. Wen Li: she once worked as the Vice Chief of the Investment and Development Department, Vice Director of
Management Center for Construction Project of Shenzhen Investment Holdings Co., Ltd. And she has been the
Director of the Company since Sept. 2006.
40
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
10. Jiang Lihua: she once was the Vice Manager, Manager and Vice Chief of the Finance Department of
Shenzhen Investment Holdings Co., Ltd. And she has been acting as Director of the Company since Feb. 2009.
11. Wang Xiuyan: she once was the Audit Project Manager of the Audit Department of Shenzhen Investment
Holdings Co., Ltd. and vice minister of ministry of audit and risk management and she has been acting as
Supervisor of the Company since Feb. 2009.
12. Xiong Xingnong: he once was the Secretary of the Supervisory Committee and Deputy Manager of Audit
Supervisory Department of the Company. And he has been taking the post of Supervisor of the Company since
Jun. 2004.
13. Shi Chunrong: he ever worked as the Director to Office for Discipline Supervision & Investigation, Manager
of Property Operation Department, Director of work departments of the Party Committee and Discipline
Inspection Commission in SPG. Now he acts as Vice Secretary of the Discipline Inspection Commission, Member
of CPC Committee, Director of Party-Masses Work Department and Vice Chairman of Labor Union in the
Company. He has been the Supervisor of the Company since Feb. 2009.
14. Li Yufei: she ever worked as the Assistant Manager of the Investment Department and Assistant Manager &
Vice Manager of Assets Management Centre as well as Senior Management Staff of Enterprise Dept. I in
Shenzhen Investment Holdings Co., Ltd. And she has been the Supervisor of the Company since Apr. 2012.
15. Teng Xianyou: he once was the Assistant GM and Vice GM of Shenzhen Tonge Group Co., Ltd., and
concurrently as GM of Shenzhen Municipal Engineering Corp. And he has been Vice GM of the Company since
Dec. 2009.
16. Wei Hanping: he ever worked as the Manager of the Leasing Operation Department in Shenzhen City
Construction Development (Group) Co. and the Manager of Cost Control Department of the Company. And he
has been the Vice GM of the Company since Sept. 2012.
17. Tang Xiaoping: he ever act as CFO of Shenzhen HRD Assets Management Company, minister of Financial
Operations Management Department of Shenzhen Foreign Labor Service Co., Ltd. Legal representative, the
executive director of the Shenzhen Foreign Affairs Service Center, and financing plan department manager of the
Company. Since 22 Dec. 2013 he acts as deputy GM of the Company.
18. Chen Ji: he once was the Director of the CPC Office of Shenzhen City Construction Investment Development
Company. And he has been the Secretary to the Board and Director of the Secretariat of Board of the Company
since Dec. 2002.
Post-holding in shareholder units
√ Applicable □ Inapplicable
Name of the Receives
Ending date
person holding Name of the shareholder Position in the Beginning date payment from
of office
any post in any unit shareholder unit of office term the shareholder
term
shareholder unit unit?
SHENZHEN Minister of the 1
Wen Li INVESTMENT department of the 1 Apr. 2013 Yes
HOLDINGS CO., LTD enterprise
SHENZHEN The minister of
Jiang Lihua INVESTMENT inspection distribution 1 Apr. 2015 Yes
HOLDINGS CO., LTD department
SHENZHEN Vice minister of
Wang Xiuyan INVESTMENT ministry of audit and 1 May 2013 Yes
HOLDINGS CO., LTD risk management
SHENZHEN Senior director of the
Li Yufei INVESTMENT 2 department of the 1 Jul. 2015 Yes
HOLDINGS CO., LTD enterprise
Notes to Naught
41
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
post-holding in
shareholder units
Post-holding in other units
√ Applicable □ Inapplicable
Name of the
person Receives
Beginning
holding any Position in Ending date of payment from
Name of other unit date of office
post in any other unit office term the shareholder
term
shareholder unit?
unit
Investment and Financing Center of Director,
Liu Quanmin Real Estate and Energy of Beijing practicing 1 Jun. 2013 Yes
Yingke Law Firm (Shenzhen) lawyer
Infrastructure Department of
Song Botong Director 1 Mar. 2013 Yes
Shenzhen University
Zhang BDO China Shu Lun Pan Certified
Partner 1 Mar. 2008 Yes
Shunwen Public Accountants LLP.
Notes to
post-holding Naught
in other units
Particulars about the Company's current directors, supervisors and senior executives ‘punishments from Securities
Regulatory Institution of recent three years in reporting period
□ Applicable √ Inapplicable
IV. Remuneration for directors, supervisors and senior management
Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors
and senior management
It was executed according to the procedures stipulated in the Interim Measures for the Administration of Human
Resources of the Company.
Their remuneration was decided in accordance with the Interim Provisions of the Annual Salary System for
Managers of the State-owned Enterprises in Shenzhen and spirit of relevant documents as well as the Interim
Measures for the Administration of Human Resources of the Company.
The Directors Jiang Lihua and Wen Li, and the Supervisor Wang Xiuyan and Li Yufei took posts in the
shareholders’ units without drawing remuneration from the Company.
With review and approval of the Shareholders’ General Meeting 2014 convened on 23 Apr. 2014, allowance for
each independent director was adjusted to RMB7,000 (tax included) per month since May. 2014. Besides, they
received no other rewards from the Company.
The Company paid their remuneration monthly according to relevant systems for remuneration management of
the Company.
Remuneration of the directors, supervisors and senior management of the Company during the reporting period is
as follow:
Unit: RMB Thousand Yuan
Whether
Total gained
before-tax remuneration
Name Position Gender Age Current/former remuneration from the
gained from related parties
the Company of the
Company
Zhou Jianguo Chairman of Male 60 Current 90.18 No
42
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
the Board
General
Chen
Manager and Male 51 Current 86.88 No
Maozheng
Director
Zhuang Quan Supervisor Male 60 Current 44 No
Deng
Director Male 49 Current 71.27 No
Kangcheng
Wen Li Director Female 46 Current 0 Yes
Jiang Lihua Director Female 51 Current 0 Yes
CFO and
Zhang Lei Male 47 Current 43 No
Director
Independent
Liu Quanmin Male 51 Current 8.4 No
director
Independent
Song Botong Male 47 Current 8.4 No
director
Zhang Independent
Male 49 Current 8.4 No
Shunwen director
Wang Xiuyan Supervisor Female 53 Current 0 Yes
Li Yufei Supervisor Female 37 Current 0 Yes
Shi Chunrong Supervisor Male 59 Current 46.28 No
Xiong
Supervisor Male 59 Current 35.85 No
Xingnong
Teng Xianyou Vice GM Male 58 Current 71.27 No
Wei Hanping Vice GM Female 49 Current 71.27 No
Tang Xiaoping Vice GM Male 45 Current 71.27 No
Chairman
Chen Ji Male 44 Current 46.28 No
Secretary
Total -- -- -- -- 702.75 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company
during the reporting period
□ Applicable √ Inapplicable
V. About employees
1. Number of employee, professional structure and education
Amount of the incumbent employees of the Company 125
Amount of the incumbent employees of the main
1,660
subsidiaries
Total amount of the incumbent employees 1,785
Total number of employees accepted salaries(person) 1,785
Number of retirees whose retirement pension shall be
441
borne by the Company and the main subsidiaries
Professional structure
Category Number
Production personnel 1,163
Sales personnel 71
Technicians 434
Financial personnel 49
Administrative personnel 68
Total 1,785
Education
Category Number
43
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Doctoral candidate 1
Master Degree Candidate 27
Bachelor 150
Junior college 241
Technical secondary school 151
High school or below 1,215
Total 1,785
Remuneration policy
The vice GM and management personnel above conducted annual salary system, other employees
conducted contacting the performance with the benefit salary system.
Training plan
The Company established annual training plan in line with Measures for the Management of
Employee Training The Company adopts internal training, hires experts give lectures to the
Company or participate professional training, train the on job employees with job knowledge,
professional skills, rules and regulations, the business process etc., which enrich and renew the
professional knowledge, enhance the comprehensive quality and business skills of the employees.
4. Particulars about labor outsourcing
□ Applicable √ Inapplicable
Total labor hours of labor outsourcing (hour)
Total remuneration paid for labor outsourcing (RMB)
Note: If the labor outsourcing is large, the Company shall disclose the total labor hours and total remuneration for
labor outsourcing.
44
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
Section IX Corporate Governance
I. Basic details of corporate governance
In the reporting period, the Company strictly accorded with requirements of Company Law,
Securities Law, Code of Corporate Governance of Listed Companies and other laws and statutes,
continuously perfected its corporate governance, and standardized its operation. The actual situation
of corporate governance was in line with the requirements of the relevant normative documents.
The operating mechanism, of which the Board of Directors made decisions, the management team
took execution, and the Supervisory Committee implemented supervision.
(I) Preparations and holding of shareholders’ general meeting and disclosure of resolution of the
meetings were normatively in line with Articles of Association and Rules for Procedure of the
Shareholders’ General Meeting; all shareholders were on an equal position and could fully exercise
their legal rights.
(II) Directors and the Board of Directors: power of decision-making was exercised normatively;
preparations, holding and disclosure of resolution of the Board sessions were normatively in line
with the Articles of Association and Rules of Procedure for the Board of Directors; Special
committees concerning strategy, audit, nomination, remuneration and appraisal under the Board can
operate positively and effectively; all directors performed their obligations in an honest and
diligence manner.
(III) Supervisors and the Supervisory Committee: structure of the Supervisory Committee was
reasonable. The Supervisory Committee conducted the supervision and inspection for the
significant events of the Company strictly in accordance with the Rules for Procedure of the
Supervisory Committee, and exercised its supervision right effectively and brought its supervision
function into fully play.
(IV) Manager level: the manager level of the Company was fully responsible for the production and
management of the Company, performed their obligations in an honest and diligence manner.
Implemented the resolution of the Board , and acquired good achievement.
Whether it exists any difference between the corporate governance and the Company Law and relevant rules of
CSRC or not?
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.
II. Particulars about the Company’s separation from the controlling shareholder in respect of
business, personnel, assets, organization and financial affairs
(I) In respect of business, the Company possessed independent production, supply and sales system;
(II) In respect of personnel, the Company was absolutely independent in management of labor,
personnel and salaries from the controlling shareholders. All the senior executives of the Company
took no office title concurrently and drew no remunerations from the Shareholder Company.
(III) In respect of assets, the Company possessed independent and integrated assets and the property
45
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
of the Company is transparent.
(IV) In respect of organization, the Board of Directors and the Supervisory Committee operated
independently. There existed no superior-inferior relationship between the controlling shareholder
and its function department and the Company.
(V) In respect of finance, the Company has independent financial department, independently
accounted and paid taxes according to the law. The Company established a complete accounting
system, financial accounting system and financial administrative systems. The Company opened
independent bank accounts.
III. Horizontal competition
□ Applicable √ Inapplicable
IV. Particulars about the annual shareholders’ general meeting and special shareholders’
general meetings held during the reporting period
Particulars about the shareholders’ general meeting in reporting period
Proportion of
Session Type investors' Convening date Disclosure date Index to the disclosed
participation
The Annual
The Annual Announcement on resolution
Shareholders’
Shareholder of 2014 annual shareholders’
General 63.59% 28 Apr. 2015 29 Apr. 2015
s’ General general meeting (Cninfo
Meeting of
Meeting website) www.cninfo.com.cn
2014
The First
Special Special Announcement on resolution
Shareholders’ Shareholder of 2015 first special meeting
63.55% 21 Sept. 2015 22 Sept. 2015
General s’ General of shareholders (Cninfo
Meeting for Meeting website) www.cninfo.com.cn
2015
Particulars about institution investors
Attendance times in shareholders’
Name of investors Number of directors attended
general meeting
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting
right
□ Applicable √ Inapplicable
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
V. Performance of the Independent Directors
1. Particulars about the independent directors attending the board sessions and the shareholders’ general
meetings
1. Particulars about the independent directors attending the board sessions
Sessions Non-attendanc
Attendance by
required to Entrusted e in person for
Independent Attendance in way of
attend during presence Absence rate two
director person telecommunic
the reporting (times) consecutive
ation
period times
Liu Quanmin 5 3 2 0 0 No
Song Botong 5 2 2 1 0 No
Zhang Shunwen 5 3 2 0 0 No
General meetings sat in on by
2
independent directors
Note to non-attendance in person for two consecutive times
N/A
2. Particulars about independent directors proposing objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes √ No
During the reporting period, no independent directors proposed any objection on relevant events of the Company.
3. Other explanations about the duty performance of independent directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
N/A
VI. Performance of the Special Committees under the Board during the reporting period
During reporting period, there was no change in the relevant committees of the board of directors,
the committees actively, effectively work, providing powerful guarantee to the scientific
decision-making, the relevant situations are as follows:
(I) Performance of the Audit Committee of the Board
During the reporting period, the Audit Committee reviewed on the Company’s following issues:
Arrangement on the Annual Audit Work, Periodic Financial Report, Profit Distribution Plan,
Engagement of CPAs Firm, Written Submission of the Administration on CPAs Firm, Construction
of Internal Control, Fund Transfer Between Listed Companies and Related Parties and Guarantee
Events, etc.. Besides, it also kept full and necessary communication with the annual auditors of the
Company.
Upon the start of the audit for the 2013 Annual Report, the Audit Committee actively promoted the
progress of the audit work and conducted communication with the CPAs firm to determine the
arrangements for the audit. During the reporting period, the Audit Committee has convened three
47
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
sessions, reviewed the Company’s 2014financial statements for two times and the preliminary
auditing result issued by the annual auditors of the Company, as well as issued their opinions after
the review. The Audit Committee made the summary for the 2014 annual audit work as followings:
1. Review opinions issued concerning the Company’s 2014 Annual Financial Report
Based on their professional knowledge and experience, the members of Audit Committee reviewed
the 2014 Annual Financial Report prepared by the Company. In the reporting period, according to
relevant regulations of CSRC, the Audit Committee issued two review opinions on the annual
report.
After finishing formulating annual financial statements, the Audit Committee of the board of
directors carried out meticulous review. And the Audit Committee was of the opinion that:
According to the New Accounting Standards for Business Enterprises, the Company chose and
applied a proper accounting policy, with reasonable accounting estimates. The Company always
adopted a prudent attitude towards the changes of the accounting policy and estimates, with no such
cases as manipulating the changes of the accounting policy and estimates to adjust the profits. And
the financial report prepared by the Company was factual and reliable with complete contents.
After the preliminary audit opinion had been issued by the registered accountants on the Company’s
2014 Financial Report, the Audit Committee reviewed, for a second time, the financial report and
conducted discussions with the registered accountants. And they were of the same opinion that the
2014 Financial Report prepared by Ruihua Certified Public Accountants (Special General
Partnership) for the Company was in accordance with the requirements of the accounting standards
for business enterprises, factually and completely presenting the Company’s operating results and
cash flows in 2014and its financial position as at 31 Dec. 2014 in all major aspects.
2. The Committee’s supervising and urging the audit work of the CPAs firm
Before the audit, the Audit Committee formulated a comprehensive plan for the annual audit by
discussing and determining the scope and the schedule for the audit report with the existing CPAs
firm. Upon the presence of the audit team, the Committee communicated with the person in
charge of the audit project, learnt about the audit progress and the accountant’s concerns, and timely
offered the feedback to relevant departments of the Company, so as to make sure the progress of the
annual audit and information disclosure in accordance with the set plan.
3. Summary report on the 2015 annual audit conducted by Ruihua Certified Public Accountants
(Special General Partnership)
In accordance with stipulations on relevant work for 2015 annual report by CSRC and Shenzhen
Stock Exchange, the Company’s Audit Committee summarized the 2015 annual audit conducted by
Ruihua Accounting Firm (Special General Partnership) (hereinafter referred to as “Ruihua”) as
follows:
Considering that the Company employed RSM China as the audit institution of financial audit and
internal control audit, the financial audit and internal control audit would be conducted
synchronously.
(1) Preparation before the audit
① Formulation of the audit plan
The 2015 annual audit lasted from 5 Dec. 2015 to 29 Mar. 2016 as schedule.
Of which, the pre-audit and internal test lasted from 5 Dec. 2015 to 5 Jan. 2016; the substantial test
lasted from 6 Jan. 2016 to 5 Mar. 2016; the compilation of audit report, its re-check in CPAs firm
and formulation of first draft lasted from 6 Mar. 2016 to 10 Mar. 2016
48
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
② Review of the financial statements
Before the presence of the registered accountants for the annual audit, the Audit Committee
carefully reviewed the financial statements prepared by the Company and formed the relevant
written opinion.
(2) Audit process
From 5 Dec. 2015, the audit team from Ruihua conducted a thorough audit on the Company and its
subsidiaries. During the audit process, the Audit Committee, for several times, urged Ruihua to
closely follow the audit schedule and finish the audit on time. Ruihua submitted to the Audit
Committee the first draft of the Audit Report of the 2015 Annual Report on 10 March 2016, issued
preliminary audit opinions on financial accounting statements and internal control assessment. The
Audit Committee reviewed again the financial accounting statements and assessment report on
internal control after conducting preliminary audit and held the opinion that: the above statements
factually, accurately, completely demonstrated financial status and operation results of the Company
up to 31 Dec. 2015, and they approved the formation of 2015 Annual Report and Abstract on the
basis of the above statements; the above assessment report on internal control factually, accurately,
completely demonstrated construction results of internal control of the Company up to 31 Dec.
2015, and they approved the formation of assessment report on internal control and audit report on
internal control on the basis of the above report. On 29 March 2016, the final version of audit report
was issued. And this marked the end of the site audit conducted by Ruihua on the Company’s 2015
financial report.
(II) Performance of the Nomination, Remuneration and Evaluation Committee
The Remuneration and Appraisal Committee under the Board carefully examined the annual
remuneration of the Company’s directors, supervisors and senior executives disclosed in the 2015
Annual Report. And it was of the opinion that: the decision-making procedure concerning the
remuneration of the directors, supervisors and senior executives was in line with relevant
regulations; the standards for remuneration paid to the Company’s directors, supervisors and senior
executives complied with the remuneration system; and the remuneration disclosed in the 2015
Annual Report was factual and accurate.
VII. Performance of the Supervisory Committee
During the reporting period, the Supervisory Committee found whether there was risk in the Company in the
supervisory activity
□ Yes √ No
The Supervisory Committee has no objection on the supervised events during the reporting period.
In 2015, the supervisors in line with the Company Law and Article of Association, and under the
energetically support of board of directors, management team and lots of shareholders, actively
maintain the equity of shareholders and faithfully fulfill their duties of supervision.
(I) Performance of the Supervisory Committee
Conduct effective right of supervision in each kinds of resolution meeting. Focus on the enterprise
core assets operation and the usage of significant capital and compliance of significant engineering
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
projects, enforce and perfect the enterprise supervision and restraint mechanism and internal control
system, continue to perfect and curing the supervision system new pattern, integrated supervision
power, implement the joint conference system of supervision, which ensure the enterprise funds and
assets risk under control. Promote the public Company affairs, decision democratization,
supervising decision-making rules, specification and effectiveness of program; strengthen the daily
the supervision of the significant business activities. Enhance each special supervision and
inspection, conduct capital safety inspection, and the contract inspection, property leasing
inspection supervision, and enhance the supervision to the lawsuit cases, and each invitation for
bids of engineering projects and the inspection to the efficiency implementation of enterprise
system. Supervision of internal audit, conduct performance assessment, operation management,
capital management and audit of financial expenses. Enhance the supervision of information
disclosure, and disclosure of report of directors and the Company, reviewed in progress, ensure the
authenticity, accuracy, completeness, and timeliness of the disclosure of information.
(II)Particulars about the meetings held by the Supervisory Committee
1. On 27 Mar. 2015, the 12th Meeting of the 7th Board of Directors was held, the meeting reviewed
and approved the Annual Report and Abstract of 2015, Profit Allocation Pre-plan of 2015,
Supervision Committee Report of 2015, Report on Self-appraisal Internal Control in 2015, there
were 5 supervisors participated the meeting, the voting situation: 5 consent, 0 against, 0 abstention.
2. On 28 Apr. 2015, the 13th Meeting of the 7th Board of Directors was held, the meeting reviewed
and approved the First Quarter Report and Abstract of 2015, there were 5 supervisors participated
the meeting, the voting situation: 5 consent, 0 against, 0 abstention
3. On 28 Aug.2015, the 14th Meeting of the 7th Board of Directors was held, the meeting reviewed
and approved the Semi-annual Report and Abstract of 2015. There were 5 supervisors participated
the meeting, the voting situation: 5 consent, 0 against, 0 abstention
4. On 30 Oct.2015, the 11th Meeting of the 7th Board of Directors was held, the meeting reviewed
and approved the Third Quarter Report and Abstract of 2015, there were 5 supervisors participated
the meeting, the voting situation: 5 consent, 0 against, 0 abstention. There were 5 supervisors
participated the meeting, the voting situation: 5 consent, 0 against, 0 abstention
(III)The independent opinions of the relevant events of the Company given by Supervisor
Committee
1.the Company's legal operation: in 2015, the members of supervisor committee attended the
meetings of the Board of Directors, and the chief of supervisors, Zhuang Quan represented the
supervisor committee to attend the resolution meetings of the management, the GM office meetings
and other important meetings. In line with each stipulations, the Supervisor Committee believed
that: during reporting period, the decision-making of the Company conducted in line with the laws
and regulations and Articles of Association, and had no damage to the equity of shareholders, and
50
2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
further perfected the internal management mechanism and the Company control system. The
Directors, senior executives implemented Company position without violating to laws and laws and
regulations, Article and Associations, and damages the equity of the Company, and was
conscientious and compliance in their performance.
2.Financial status: during reporting period, the Supervisor Committee seriously perform their
supervision to the financial status, the operation and risk situation of the Company, and issue audit
opinion to each periodic report. The Supervisor Committee believed that: the standard unqualified
opinions of the financial report issued by Ruihua Certified Public Accountants (Special General
Partnership) truly and objectively reflected the operation results of financial status of the Company.
3. During reporting period, there was no fund-raising in the Company.
4. During reporting period, the related transaction and guarantee of the Company:
(1) During reporting period, there was no non-operating occupying capital of the Company by
controlling shareholders, actual controllers and other related party; and there was no controlling
shareholders, other related party, illegal person, unit or individual providing guarantee.
(2) During reporting period, the wholly-owned Company Zhentong Company undertook the
project implementation of related party Shenzhen Jianan (Group) Co., Ltd. (the total package
contractor of Chuan Qi Montain project of the Company), and received RMB7.0722 million of
project funds.
(3) During reporting period, the related transaction of the Company was fairness and compliance,
there was no any damage to equity of minority shareholders and profits of the Company; there was
no new increase of guarantee events in the Company during reporting period.
5. Opinion on self-appraisal report of internal control:
In 2015, the Company continue enforce the risk management and standardized construction of
internal control, the internal control of the Company covered the department and its affiliated
companies, and the important activities of internal control was in line with the stipulations of each
rules, there was no defect, the Company's self-appraisal was confirm with the actual situation of the
Company.
VIII. Performance Evaluation and Incentive Mechanism for Senior Management Staff
The Company successfully conducted change of sessions of the board of directors, the supervisory
committee and the management. The management was examined, appraised and employed by the
board of directors; in the means of open competition, the board of directors chose and recruited a
Vice General Manager inside the Company. The Company executed annual salary system for senior
executives, and did not implement stock incentive plan.
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2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.
IX. Internal Control
1. Particulars about significant defects found in the internal control during reporting period
□ Yes √ No
2. Self-appraisal report on internal control
Disclosure date of the Self-appraisal Report on Internal
30 Mar. 2016
Control
Disclosure index of the Self-appraisal Report on Internal Cninfo website (www.cninfo.com.cn)
Control “Self-assessment Report of Internal Control”
The proportion of total assets included in evaluation
scope entities in the Company's total assets of the 100.00%
consolidated financial statements
The proportion of operation revenue included in
evaluation scope entities in the Company's operation 100.00%
revenue of the consolidated financial statements
Defect judging standards
Category Section XI. Financial Report Non-Financial Report
The criterion of quality of the recognition of
defects of internal control in the
non-financial statements mainly were order of
The Company in line with the severity of defect involving business nature,
actual situation, when the follows the direct or potential negative influence
events or indications happen, which nature and the influence scope and other
means there probably existing large factors. If the follows events or indicators
or significant defects in the occur, there may be large or significant defects
financial report; (1) the directors, of internal control in the non-financial
supervisors and senior executives statements : (1) Lack democratic
decision-making process, if lack significant
were fraud.（ 2 ） Certified Public
problem decision-making, important
Accountant find that there is a
appointment and dismissal of cadres,
significant error in the financial
Qualitative criteria significant project investment
report, however, the internal control
decision-making; usage of large capital (three
did not discover it when conducting
important, one large); (2) Unscientific
internal control; （ 3 ） The Audit decision-making process, such as the major
Committee under the Board and decision-making errors, has caused a serious
Internal Audit Service's supervision property loss to the company; (3) Seriously
to the internal control is invalid. (4) violating state laws and regulations; (4) Loss
The accounting personnel were of key management personnel or important
without necessary qualities to talent; (5) Negative news media appear
complete the preparation of frequently and widely spread; (6) The results
financial statements. of the internal control evaluation especially
large or significant defects have not been
corrected. (7) Important business systems
lack control rules, or systemic failure.
Large defects: the defects, or defect
The criterion of quantity of the recognition of
group may lead to the financial
defects of internal control in the non-financial
results misstatement or potential
statements mainly were amount of direct
losses >3% of net assets; significant
Quantitative criteria economy losses, in line with the criterion of
defects: 1% of net assets quantity of the recognition of defects of defects, or defect group may lead to internal control in financial report of the the financial results misstatement or Company. potential losses ≤ 3% of net assets; 52 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. General defects: the defects, or defect group may lead to the financial results misstatement or potential losses ≤ 1% of net assets. Note: Net assets in a recent issue of the audited financial report shall prevail Number of significant defects of financial report 0 (piece) Number of significant defects of non- financial 0 report (piece) Number of important defects of financial report 0 (piece) Number of important defects of non-financial 0 report (piece) X. Audit report on internal control √ Applicable □ Inapplicable Audit opinion paragraphs in the Audit Report on Internal Control We believe, Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. maintained effective internal control of financial statements in all significant aspects on 31 Dec. 2015 in accordance with Basic Standards for Internal Control and relevant regulations Particulars about Audit Report Disclosure on Internal Control Disclosure date of the Audit 30 Mar. 2016 Report on Internal Control Disclosure index of the Audit Cninfo website (www.cninfo.com.cn) “Audit Report on Internal Control” Report on Internal Control Type of Audit Report on Unqualified auditor's report Internal Control Whether there is significant No defect in non-financial report Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not? □ Yes √ No Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or not? √ Yes □ No 53 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Section X Financial Report SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., LTD. Financial Statements with Auditors’ Report For The Year Ended 31 December 2015 （English Translation for Reference Only） Ruihua Shen Zi [2016] No. 48400009 CONTENTS AUDITOR’S REPORT 55 AUDITED FINANCIAL STATEMENTS 1. Consolidated Balance Sheet 57 2. Consolidated Income Statement 59 3. Consolidated Cash Flow Statement 60 4. Consolidated Statement of Change in Owner’s Equity . 61 5. Balance Sheet 63 6. Income Statement 65 7. Cash Flow Statement 66 8. Statement of Change in Owner’s Equity 67 9. Notes to the Financial Statements 69 54 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. 通讯地址：北京市东城区永定门西滨河路 8 号院 7 号楼中海地产广场西塔 3-9 层 Postal Address:3-9/F,West Tower of China Overseas Property Plaza, Building 7,NO.8,Yongdingmen Xibinhe Road, Dongcheng District, Beijing 邮政编码（Post Code）：100077 电话（Tel）：+86(10)88095588 传真（Fax）：+86(10)88091199 Auditor’s Report Ruihua Shen Zi [2016]48400009 To The Board of Directors of SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO. Ltd.： We have audited the accompanying consolidated financial statements of SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) CO., Ltd. and its subsidiaries (hereinafter shall be referred as “the Group”) consisting of the company’s and the consolidated balance sheet as of December 31, 2015, and the consolidated income statement, cash flow statement and consolidated statement of change in owner’s equity for the year then ended, and the notes to financial statements. Management’s responsibility for the financial statements It is the responsibility of the Group’s management to prepare and present fairly the financial statements. These responsibilities include: (a) prepare the financial statement in conformity with the requirements of Accounting Standards Business Enterprises, the Accounting Regulations Business Enterprises and make true and fair presentation;(b) design, perform and maintain the internal control related to the financial statements to ensure that these financial statements are free of material misstatement, whether caused by fraud or error. Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with relevant rules in the Chinese Auditing Standards for the Certified Public Accountants. Those standards require that we follow the Standards of China CPA’s Professional Ethics, plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 55 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. An audit includes performing audit process to obtain evidence supporting the amounts and disclosures in the financial statements. Auditing procedures are based on the CPAs’ judgment, including assessing the risk of material misstatement caused by accounting fraud or errors. When assessing the risk, we consider the internal control related to the preparation of financial statements in order to select the proper auditing process. An audit also includes assessing the accounting principles used and significant estimates made by the Group, as well as evaluating the overall financial statements presentation. We believe that the evidence we obtained are appropriate and our audit provides a reasonable basis for our opinion. Audit opinion In our opinion, the financial statements of the Group present fairly, in all material respects, the Company’s and its subsidiaries’ financial position as of December 31, 2015 and the company’s results of operation and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises. Ruihua Certified Public Accountants Certified Public Accountants Cai Xiaodong Certified Public Accountants Beijing. China Liu Yuxiang March 29, 2016 56 Consolidated Balance Sheet As of 31 December 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd Currency: RMB Yuan Item Note Closing balance Opening balance Current Assets： Monetary funds 6.1 1,175,756,306.36 678,957,249.03 Notes receivable 6.2 18,663,872.02 119,846,192.64 Account receivables 6.3 112,543,908.66 84,388,842.43 Prepayments 6.4 22,952,379.40 17,821,748.23 Dividends receivable 6.5 1,052,192.76 1,052,192.76 Other receivables 6.6 61,673,343.42 59,528,298.21 Inventories 6.7 2,146,223,895.61 2,796,551,656.42 Other current assets 6.8 40,315,831.06 12,436,024.40 Total current assets 3,579,181,729.29 3,770,582,204.12 Non-current assets Available- for- sale financial assets 6.9 17,464,240.74 17,464,240.74 Long-term equity investments 6.10 57,768,804.36 57,730,086.79 Investment properties 6.11 435,058,564.20 454,628,505.97 Fixed assets 6.12 52,213,985.31 54,321,296.22 Intangible assets 6.13 5,654,820.00 6,201,226.83 Long-term deferred assets 6.14 397,608.64 314,159.41 Deferred tax assets 6.15 32,197,368.21 13,856,593.97 Other non-current assets -- -- Total non-current assets 600,755,391.46 604,516,109.93 TOTAL ASSETS 4,179,937,120.75 4,375,098,314.05 57 Consolidated Balance Sheet As at 31 December 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Item Note Closing balance Opening balance Current liabilities: Short-term loans 6.16 143,418,286.29 149,846,192.64 Notes payable 6.17 -- 2,780,000.00 Accounts payable 6.18 290,453,110.50 541,538,762.36 Deferral 6.19 475,620,347.35 144,315,921.34 Employee benefits payable 6.20 38,750,019.72 38,068,842.03 Taxes payable 6.21 63,459,415.42 96,394,993.67 Interest payables 6.22 17,535,277.94 18,716,395.18 Other payables 6.23 385,811,304.33 406,871,917.76 Non-current liabilities due within one year 6.24 168,727,608.54 453,207,700.00 Total current liabilities 1,583,775,370.09 1,851,740,724.98 Non-current liabilities: Long-term loans 6.25 382,233,324.88 478,985,579.95 Long-term payables 6.26 10,480,629.35 11,267,012.97 Total non-current liabilities 392,713,954.23 490,252,592.92 Total liabilities 1,976,489,324.32 2,341,993,317.90 Owners' equity： Share capital 6.27 1,011,660,000.00 1,011,660,000.00 Capital reserve 6.28 978,244,910.11 978,244,910.11 Less: treasury shares Other comprehensive income 6.29 10,063,591.61 9,510,918.16 Surplus reserve 6.30 40,823,841.35 4,974,391.15 Undistributed profit 6.31 290,911,773.00 157,147,182.36 Total owners' equity attributable to parent company 2,331,704,116.07 2,161,537,401.78 Minority interests -128,256,319.64 -128,432,405.63 Total owners’ equity 2,203,447,796.43 2,033,104,996.15 Total liabilities and owners’ equity 4,179,937,120.75 4,375,098,314.05 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 58 Consolidated Income Statement For the Year 2015 Prepared by: SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE& PROPERTIES (GROUP) CO., LTD Currency: RMB Yuan Amount for the Amount for the prior Item Note current period period Ⅰ. Total operating income 6.32 2,163,365,575.33 2,132,311,222.93 Including: Operating income 6.32 2,163,365,575.33 2,132,311,222.93 Ⅱ. Total operating Costs 1,754,071,091.19 1,732,830,070.97 Including: Operating costs 6.32 1,389,627,289.48 1,409,664,863.08 Business tax and surcharge 6.33 217,613,031.65 179,371,317.23 Selling expenses 6.34 46,977,100.96 44,525,387.33 Administrative expense 6.35 58,883,597.38 64,982,801.88 Financial expense 6.36 32,367,511.56 33,816,128.14 Impairment losses of assets 6.37 8,602,560.16 469,573.31 Add: Gains from changes in fair value ("-" means loss) -- -- Investment income ("-" means loss) 6.38 388,717.57 -6,325.06 Including: Investment income from associates and joint 6.38 38,717.57 -6,325.06 venture Ⅲ. Operating profit ("-" means loss) 409,683,201.71 399,474,826.90 Add: Non-operating income 6.39 974,019.63 1,596,644.62 Including: Gains from disposal of non-current assets 6.39 -- 396.00 Less: Non-operating expenses 6.40 752,280.95 410,532.95 Including: Loss on disposal of non-current assets 6.40 23,390.74 133,838.39 Ⅳ .Total profit ("-" means loss) 409,904,940.39 400,660,938.57 Less: Income tax expenses 6.41 108,835,873.61 102,602,788.98 Ⅴ . Net profit ("-" means loss) 301,069,066.78 298,058,149.59 Net attributable to owners of parent company 301,129,840.84 298,033,316.49 Minority interests -60,774.06 24,833.10 Ⅵ . After-tax net of other comprehensive incomes 6.42 789,533.50 42,159.54 After-tax net of other comprehensive incomes owned by 552,673.45 156,897.95 owner of the parent company (I)Other comprehensive incomes that cannot be classified -- -- into profit and loss in the future (II)Other comprehensive incomes that would be classified 552,673.45 156,897.95 into profit and loss in the future 1.Loss and profit of change in fair value of -- -- available-for-sale financial assets 2.Loss and profit of held-to-maturity investments reclassifying -- -- into available-for-sale financial assets 3.Translation difference in the foreign currency financial 552,673.45 156,897.95 statement Net of tax from other comprehensive incomes owned by 236,860.05 -114,738.41 minority stockholders Ⅶ . Total comprehensive income 301,858,600.28 298,100,309.13 Total comprehensive income attributable to owners of 301,682,514.29 298,190,214.44 parent company Total comprehensive income attributable to minority 176,085.99 -89,905.31 interests Ⅷ .Earnings per share -- Basic Earnings per share 0.2977 0.2946 Diluted Earnings per share 0.2977 0.2946 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 59 Consolidated Cash Flow Statement For the Year 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Items Note Amount for the Amount for the current period prior period Ⅰ. Cash Flow from Operating Activities： Cash received from sales of goods or rendering of services 2,567,618,949.74 1,804,972,330.58 Refund of taxes and levies -- -- Cash received relating to other operating activities 6.43(1) 26,298,314.89 62,115,853.30 Sub-total of Cash Inflows 2,593,917,264.63 1,867,088,183.88 Cash paid for goods and services 874,557,874.73 990,792,625.54 Cash paid to and on behalf of employees 140,617,529.10 138,814,983.27 Cash paid on taxes and levies 402,794,877.07 313,460,106.78 Cash paid relating to other operating activities 6.43(2) 78,802,729.22 101,858,404.93 Sub-total of Cash Outflows 1,496,773,010.12 1,544,926,120.52 Net Cash Flows from Operating Activities 1,097,144,254.51 322,162,063.36 Ⅱ. Cash Flows from Investing Activities: Cash received from return of investments -- -- Cash received investing income 350,000.00 -- Net cash received from disposal of fixed assets, intangible assets and other long assets" 36,230.00 24,690.00 Net cash flows from disposal subsidiary and other operating unite -- -- Other cash received relating to investing activities -- -- Sub-total of Cash Inflows 386,230.00 24,690.00 Cash paid to acquire fixed assets, intangible assets and other long assets 4,894,632.61 3,016,118.70 Cash paid on investments -- -- Net cash paid on obtain subsidiary and other operating unite -- -- Cash paid on other investing activities 3,000,000.00 -- Sub-total of Cash Outflows 7,894,632.61 3,016,118.70 Net Cash Flows from Investing Activities -7,508,402.61 -2,991,428.70 Ⅲ. Cash flow from Financing Activities Cash received from investments -- -- Including: Cash received from investments by minority interests of subsidiaries -- -- Cash received from borrowing 225,000,000.00 361,980,844.46 Cash received from issuing bonds -- -- Other cash received relating to Financing activities 6.43(3) 2,837,400.00 32,652.01 Sub-total of Cash Inflows 227,837,400.00 362,013,496.47 Cash repayments on borrowed amounts 636,232,346.53 456,502,746.62 Cash payments for distribution of dividends or profits 182,116,157.01 71,090,520.99 Including: Dividends or profit paid to minority interests of subsidiaries -- -- Cash payments on other financing activities 6.43(4) -- 2,780,000.00 Sub-total of cash Outflows 818,348,503.54 530,373,267.61 Net cash flows from financing activities -590,511,103.54 -168,359,771.14 Ⅳ. Effect of foreign exchange rate on cash 511,708.97 24,613.07 Ⅴ. Net increase in cash and cash equivalents 499,636,457.33 150,835,476.59 Add: cash equivalents at the beginning of the period 670,119,849.03 519,284,372.44 Ⅵ. Cash equivalents at the end of the period 1,169,756,306.36 670,119,849.03 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 60 CONSOLIDATED STATEMENT OF CHANGE IN OWNER'S EQUITY For the Year 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Attribute to the equity of parent company Other Speci Less: General Minority Total owners' Items comprehensive al Surplus Undistributed Share capital Capital reserve Treasury risk interests equity income reser reserve profit shares provision ve I. Balance at the end of last period 1,011,660,000.00 978,244,910.11 -- 9,510,918.16 -- 4,974,391.15 -- 157,147,182.36 -128,432,405.63 2,033,104,996.15 Add: Changes of accounting -- -- -- -- -- -- -- -- -- -- policies Prior year adjustments -- -- -- -- -- -- -- -- -- -- Corporate combination under -- -- -- -- -- -- -- -- -- -- common control Others -- -- -- -- -- -- -- -- -- -- II. Balance at the Beginning of the 1,011,660,000.00 978,244,910.11 -- 9,510,918.16 -- 4,974,391.15 -- 157,147,182.36 -128,432,405.63 2,033,104,996.15 Year III.Increase/Decrease movements -- -- -- 552,673.45 -- 35,849,450.20 -- 133,764,590.64 176,085.99 170,342,800.28 in this Year ("-" means loss) (I) Total comprehensive income -- -- -- 552,673.45 -- -- -- 301,129,840.84 176,085.99 301,858,600.28 (II) Capital paid in and reduced by -- -- -- -- -- -- -- -- -- -- the shareholders (III) Profit distribution -- -- -- -- -- 35,849,450.20 -- -167,365,250.20 -- -131,515,800.00 1.Draw statutory surplus reserve -- -- -- -- -- 35,849,450.20 -- -35,849,450.20 -- -- 2.Draw generic risk reserve -- -- -- -- -- -- -- -- -- -- 3.Distribution to shareholders -- -- -- -- -- -- -- -131,515,800.00 -- -131,515,800.00 4.Others -- -- -- -- -- -- -- -- -- -- (IV)Internal carry-forward of -- -- -- -- -- -- -- -- -- -- shareholders’ equity (V) Special Reserve -- -- -- -- -- -- -- -- -- -- (VI) Others -- -- -- -- -- -- -- -- -- -- IV. Balance at the end of the 1,011,660,000.00 978,244,910.11 -- 10,063,591.61 -- 40,823,841.35 -- 290,911,773.00 -128,256,319.64 2,203,447,796.43 period The notes to the financial statements set out on pages 15 to 133 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 61 CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY For the Year 2014 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Attribute to the equity of parent company Less: Other General Minority Total owners' Items Surplus Special Undistributed Share capital Capital reserve Treasury comprehensive risk interests equity reserve reserve profit shares income provision 1,011,660,000.0 978,244,858.1 4,974,3 -140,886,134.1 -128,342,500.3 1,735,004,635.0 -- 9,354,020.21 -- -- I. Balance at the end of last period 0 0 91.15 3 2 1 Add: Changes of accounting policies -- -- -- -- -- -- -- -- -- -- Prior year adjustments -- -- -- -- -- -- -- -- -- -- Corporate combination under common -- -- -- -- -- -- -- -- -- -- control Others -- -- -- -- -- -- -- -- -- 1,011,660,000.0 978,244,858.1 4,974,3 -140,886,134.1 -128,342,500.3 1,735,004,635.0 -- 9,354,020.21 -- -- II. Balance at the Beginning of the Year 0 0 91.15 3 2 1 III. Increase/Decrease movements in -- 52.01 -- 156,897.95 -- -- -- 298,033,316.49 -89,905.31 298,100,361.14 this Year ("-" means loss) (I) Total comprehensive income -- -- -- 156,897.95 -- -- -- 298,033,316.49 -89,905.31 298,100,309.13 (II) Capital paid in and reduced by the -- 52.01 -- -- -- -- -- -- -- 52.01 shareholders 1.Ordinary shares invested by -- -- -- -- -- -- -- -- -- -- shareholders 2.Capital invested by the other equity -- -- -- -- -- -- -- -- -- -- investments holders 3.Amounts of share-based payments -- -- -- -- -- -- -- -- -- -- recognized in shareholders’ equity 4.Others -- 52.01 -- -- -- -- -- -- -- 52.01 (III) Profit distribution -- -- -- -- -- -- -- -- -- -- (IV)Internal carry-forward of -- -- -- -- -- -- -- -- -- -- shareholders’ equity (V) Special Reserve -- -- -- -- -- -- -- -- -- -- (VI) Others -- -- -- -- -- -- -- -- -- -- 1,011,660,000.0 978,244,910.1 4,974,3 -128,432,405.6 2,033,104,996.1 IV. Balance at the end of the period 0 1 -- 9,510,918.16 -- 91.15 -- 157,147,182.36 3 5 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 62 Balance Sheet As at 31 December 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Item Note Closing balance Opening balance Current assets Monetary funds 858,492,165.42 332,170,340.34 Accounts receivable 14.1 9,412,675.23 39,403,575.24 Prepayments -- 69,000.00 Dividends receivable 140,763,284.58 -- Other receivables 14.2 682,468,446.16 675,944,666.16 Inventories 892,015,463.86 1,481,149,880.16 Other current assets 24,782,301.67 7,961,089.71 Total current assets 2,607,934,336.92 2,536,698,551.61 Non-current Assets: Available-for-sale financial assets 12,000,000.00 12,000,000.00 Long-term equity investments 14.3 316,403,759.70 316,365,042.13 Investment properties 379,377,363.53 398,040,383.57 Fixed assets 28,849,484.59 31,477,401.72 Intangible assets 662,400.00 1,031,266.83 Long-term deferred assets 377,908.74 76,395.75 Deferred tax assets 5,717,550.76 850,769.96 Other non-current assets -- -- Total non-current assets 743,388,467.32 759,841,259.96 Total Assets 3,351,322,804.24 3,296,539,811.57 63 Balance Sheet (Continued) As at 31 December 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan LIABILITIES AND OWNERS' EQUITY Note Closing balance Opening balance Current liabilities: Short-term loans -- -- Account payable 69,300,670.37 225,934,147.53 Deferral 243,559,137.60 36,334,967.00 Employee benefits payable 13,579,802.91 13,613,754.45 Taxes payable 37,099,690.34 48,212,677.31 Interest payable 17,535,277.94 18,328,034.07 Other payables 292,391,556.70 390,836,659.90 Non-current liability due within one year 168,727,608.54 253,207,700.00 Other current liability -- -- Total current liabilities 842,193,744.40 986,467,940.26 Non-current liabilities： Long-term loans 382,233,324.88 445,996,227.72 Total non-current liabilities 382,233,324.88 445,996,227.72 Total liabilities 1,224,427,069.28 1,432,464,167.98 Owners' equity: Share capital 1,011,660,000.00 1,011,660,000.00 Capital reserve 978,244,910.11 978,244,910.11 Surplus reserve 17,694,227.94 -- Undistributed profit 119,296,596.91 -125,829,266.52 Total owners' equity attributable to parent 2,126,895,734.96 1,864,075,643.59 company Total liabilities and owners' equity 3,351,322,804.24 3,296,539,811.57 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 64 Income Statement For the Year 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Amount for the current Amount for the prior Item Note period period I. Total operating income 14.4 1,056,966,713.96 634,628,332.73 Less: Operating cost 14.4 568,667,535.09 369,071,677.90 Business tax and surcharge 128,014,886.94 43,735,811.30 Selling expenses 25,444,324.18 14,077,556.37 Administrative expense 30,232,942.46 33,934,825.55 Financial expense -3,785,029.66 18,105,774.80 Impairment losses of assets 159,351.00 -51,045,921.78 Add: Gain from changes in fair value ("-" means loss) -- -- Investment income ("-" means loss) 14.5 163,210,586.51 270,602,716.90 Including: Investment income from associates 14.5 -129,692.73 -6,325.06 and joint venture II. Operating profit ("-" means loss) 471,443,290.47 477,351,325.49 Add: Non-operating income 93,670.00 603,903.72 Including: gains from disposal of non-current -- -- assets Less: Non-operating expenses 52,469.13 70,687.90 Including: Loss from disposal of non-current 2,310.77 11,687.90 assets III. Total profit ("-" means loss) 471,484,491.34 477,884,541.31 Less: Income tax expenses 77,148,599.96 39,685,378.61 IV.Net profit ("-" means loss) 394,335,891.37 438,199,162.70 V. Other comprehensive income -- -- VI. Total comprehensive income 394,335,891.37 438,199,162.70 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 65 Cash Flow Statement For the Year 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Amount for the current Amount for the prior Item Note period period Ⅰ. Cash Flow from Operating Activities： Cash received from sales of goods or rendering of services 1,294,181,784.57 553,520,820.72 Refund of taxes and levies -- -- Cash received relating to other operating activities 20,687,551.72 73,572,569.13 Sub-total of cash inflows 1,314,869,336.29 627,093,389.85 Cash paid for goods and services 119,247,297.98 169,494,543.93 Cash paid to and on behalf of employees 30,177,724.69 42,143,223.14 Cash paid on taxes and levies 245,411,338.53 192,165,574.72 Cash paid relating to other operating activities 47,664,610.80 33,954,055.89 Sub-total of Cash Outflows 442,500,971.99 437,757,397.68 Net Cash Flows from Operating Activities 872,368,364.30 189,335,992.17 Ⅱ. Cash Flows from Investing Activities: Cash received from return of investments -- 30,000,000.00 Cash received investing income 350,000.00 -- Net cash received from disposal of fixed assets, -- 10,400.00 intangible assets and other long assets Other cash received relating to investing activities -- 17,251,324.21 Sub-total of Cash Inflows 350,000.00 47,261,724.21 Cash paid to acquire fixed assets, intangible assets and 740,321.05 828,454.00 other long assets Cash paid on investments -- -- Cash paid on other investing activities -- -- Sub-total of cash outflows 740,321.05 828,454.00 Net Cash Flows from Investing Activities -390,321.05 46,433,270.21 Ⅲ. Cash flow from Financing Activities Cash received from investments -- -- Cash received from borrowing 200,000,000.00 220,000,000.00 Cash received from issuing bonds -- -- Cash received from other financing activities -- 52.01 Sub-total of cash inflows 200,000,000.00 220,000,052.01 Cash repayments on borrowed amounts 373,242,994.30 433,502,746.62 Cash payments for distribution of dividends or profits 172,425,222.27 53,049,461.10 Cash payments on other financing activities -- -- Sub-total of cash Outflows 545,668,216.57 486,552,207.72 Net cash flows from financing activities -345,668,216.57 -266,552,155.71 Ⅳ. Effect of foreign exchange rate on cash 11,998.40 81.20 Ⅴ.Net increase in cash and cash equivalents 526,321,825.08 -30,782,812.13 Add: cash equivalents at the beginning of the period 326,170,340.34 356,953,152.47 Ⅵ. Cash equivalents at the end of the period 852,492,165.42 326,170,340.34 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 66 Statement of Changes in Owners’ Equity For the year 2015 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Attribute to the equity of parent company Less: Other General Total owners' Items Surplus Undistributed Share capital Capital reserve Treasury comprehensiv risk equity reserve profit shares e income provision 4,974,391. I. Balance at the End of Last Period 1,011,660,000.00 978,244,910.11 -- 9,510,918.16 15 -- -125,829,266.52 1,864,075,643.59 Add: Changes of accounting policies -- -- -- -- -- -- -- -- Prior year adjustments -- -- -- -- -- -- -- -- Corporate combination under common control -- -- -- -- -- -- -- -- Others -- -- -- -- -- -- -- -- II. Balance at the Beginning of the Year 1,011,660,000.00 978,244,910.11 -- -- -- -- -125,829,266.52 1,864,075,643.59 III. Increase/Decrease movements in this Year ("-" means loss) -- -- -- 17,694,227.94 -- -- 245,125,863.43 262,820,091.37 (I) Total comprehensive income -- -- -- -- -- -- 394,335,891.37 394,335,891.37 (II) Capital paid in and reduced by the shareholders -- -- -- -- -- -- -- -- 17,694,22 (IV) Profit distribution -- -- -- -- 7.94 -- -149,210,027.94 -131,515,800.00 17,694,22 1.Draw statutory surplus reserve -- -- -- -- 7.94 -- -17,694,227.94 -- 2.Draw generic risk reserve -- -- -- -- -- -- -- -- 3.Distribution to shareholders -- -- -- -- -- -- -131,515,800.00 -131,515,800.00 4.Others -- -- -- -- -- -- -- -- (V)Internal carry-forward of shareholders’ equity -- -- -- -- -- -- -- -- (VI) Special Reserve -- -- -- -- -- -- -- -- (VII) Others -- -- -- -- -- -- -- -- 17,694,22 IV. Balance at the end of the period 1,011,660,000.00 978,244,910.11 -- -- 7.94 -- 119,296,596.91 2,126,895,734.96 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: Statement of Changes in Owners’ Equity 67 For the year 2014 Prepared by：SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE & PROPERTIES (GROUP) Co., Ltd. Currency: RMB Yuan Attribute to the equity of parent company Other General Less: Total owners' Items comprehensive Surplus risk Undistributed Share capital Capital reserve Treasury equity income reserve provisio profit shares n I. Balance at the End of Last Period 1,011,660,000.00 978,244,858.10 -- -- -- -- -564,028,429.22 1,425,876,428.88 Add: Changes of accounting policies -- -- -- -- -- -- -- -- Prior year adjustments -- -- -- -- -- -- -- -- Corporate combination under common control -- -- -- -- -- -- -- -- Others -- -- -- -- -- -- -- -- II. Balance at the Beginning of the Year 1,011,660,000.00 978,244,858.10 -- -- -- -- -564,028,429.22 1,425,876,428.88 III. Increase/Decrease movements in this Year ("-" -- 52.01 -- -- -- -- 438,199,162.70 438,199,214.71 means loss) (I) Total comprehensive income -- -- -- -- -- -- 438,199,162.70 438,199,162.70 (II) Capital paid in and reduced by the shareholders -- 52.01 -- -- -- -- -- 52.01 1.Ordinary shares invested by shareholders -- -- -- -- -- -- -- -- 2.Capital invested by the other equity investments holders -- -- -- -- -- -- -- -- 3.Amounts of share-based payments recognized in shareholders’ equity -- -- -- -- -- -- -- -- 4.Others -- 52.01 -- -- -- -- -- 52.01 (III) Profit distribution -- -- -- -- -- -- -- -- (IV)Internal carry-forward of shareholders’ equity -- -- -- -- -- -- -- -- (V) Special Reserve -- -- -- -- -- -- -- -- (VI) Others -- -- -- -- -- -- -- -- IV. Balance at the end of the period 1,011,660,000.00 978,244,910.11 -- -- -- -- -125,829,266.52 1,864,075,643.59 The notes to the financial statements set out on pages 15 to 127 are an integral part of these financial statements Financial statements on pages 3 to page 14 signed by the following persons: Legal representative: Person in charge of accounting: Person in charge of accounting organ: 68 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Note 1 General information Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd. (the “Group” or “the Company”) was established in July 1993, as approved by the Shenzhen Municipal Government with document SFBF (1993) 724. The Company issued A shares on 15th September, 1993 and issued B shares on 10 January 1994. On 31 August 1994, B shares issued were listed in New York Exchange market as class A recommendation. The total share capital are 1,011,660,000 shares, of which, A shares are 891,660,000 shares, and the B shares are 120, 000,000 shares. The company business license registration number is 440301103225878, and the registered capital is RMB 1,011,660,000.00. The Company’s registered site is 45-48 floor, ShenFang Square, renmin nan Road, Shenzhen. The headquarters office address is 47 floor, ShenFang Square, renmin nan Road, Shenzhen. On 13 October 2004，according to the document No.(2004) 223 “Decision on establishing Shenzhen investment Holding Co., Ltd.” issued by State-Owned Assets Supervision and Administration Commission of Shenzhen Municipal Government, former major shareholder – Shenzhen Construction Investment Holding Company with two other assets management companies merged to form the Shenzhen Investment Holding Co., Ltd. By the State-owned Assets Supervision and Administration Commission of the state council，and quasi-exempt obligations tender offer as approved by China Security Regulatory Committee with document No.(2005)116, this issue of consolidated has been authorized and the registration changing had been done on 15 February 2006. As at the end of the reporting period, Shenzhen Investment Holding Limited holds 642,884,262 shares of the Company (63.55% of the total share capital). The shares are all selling unrestricted shares. Business scope: mainly engaged in real estate development and sales, property leasing and management, retail merchandising and trade, hotel, equipment installation and maintenance, construction, interior decoration and so on. The main products or services provided: commodity housing, property leasing and management, hotel service, construction and installation service, renovation service. The parent of the Company is Shenzhen Investment Holdings Co., Ltd. As of Dec.31,2015, 26 subsidiary companies have been consolidated in the company, for the detail refer to Note “Equities in other entities’’.There were no changes in the consolidation scope during 2015. The Financial statement published on Mar 29th, 2016, which approved by Group’s 69 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Board of Directors. Note 2 The Basis of Preparation of Financial Statements The financial statements of the Group have been prepared on the basis of going concern in conformity with the Chinese Accounting Standards for Business Enterprises –The basic standards(Issued by order No.33 of the Ministry of Finance, Revised by order No.76 of the Ministry of Finance), the 41 specified Accounting Standards for Business Enterprise issued and revised by the Ministry of Finance of People’s Republic of China on 15 February, 2006 and thereafter, the guidance for the application of the Accounting Standards for Business Enterprise, the explanation for the Accounting Standards for Business Enterprise and other relevant regulations( thereinafter referred as “Accounting Standards for Business Enterprises”) and Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15—General Provisions on Financial Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC). According to the relevant accounting regulations of Chinese Accounting Standards for Business Enterprises, the Group has adopted the accrual basis of accounting. The Group adopts the historical cost as the principle of measurement in the financial statements except some financial instruments. Provision will be made if any assets impair in accordance with relevant requirements. Note 3 Statement of Compliance with Accounting Standards 3.1 Basis of Preparation The financial statements of the Group are recognized and measured in accordance with the regulations of the Chinese Accounting Standards for Business Enterprises and they give a true and fair view of the financial position, business result and cash flow of the Group as of 31 December 2015. In addition, the financial statements of the Group comply, in all material respects, with the revised disclosure requirements for financial statements and the notes of Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15—General Provisions on Financial Reports (2014 Revision) issued by China Securities Regulatory Commission (CSRC). 3.2 Going Concern There do not exist any significant suspicious events and conditions to the Group’s ability to operate as going concern within 12 months since the report date. Note 4 Important Accounting Principles and Accounting Estimates 70 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. The Group and its subsidiaries are engaged in the business of real estate development. The Group and its subsidiaries have established several specified accounting policies and accounting estimations for its transactions and events, such as the revenue recognition, according to the Group’s and its subsidiaries’ actual operating characters and relevant requirements of Accounting Standards for Business Enterprises. Please refer to note 4.22- Revenue for details. For the significant accounting judgments and estimates made by the management, please refer to note 4.28 - Significant accounting judgments and estimates. 4.1 Accounting period The accounting period of the Group is classified as interim period and annual period. Interim period refers to the reporting period shorter than a complete annual period. The accounting period of the Group is the calendar year from January 1 to December 31. 4.2 Operating cycle The normal operating cycle refers to period from Group’s buying assets for manufacturing to realizing the cash or cash equivalent .The Group chooses 12 months as an operating cycle. The assets and liabilities are classified as current and non-current according to the operating cycle standards. 4.3 Monetary Unit Renminbi (RMB) is the currency of the primary economic environment in either Group & its domestic subsidiaries or foreign subsidiary in HK. Therefore, the Group, the domestic subsidiaries and foreign subsidiary in HK choose RMB as their functional currency. While the Group’s foreign subsidiary in U.S.A. chooses USD dollar as its functional currency on the basis of the primary economic environment it operates. The Group adopts RMB to prepare its functional statements. 4.4 Accounting Treatment Under Common/Non-common control A business combination is a transaction or event that brings together two or more separate entities into one reporting entity. Business combinations involve enterprises under common control and non-common control. (1) Business combination involving entities under common control A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. 71 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. For a business combination involving enterprises under common control, the party that, on the combination date, obtains control of another enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a party being absorbed. Combination date is the date on which the absorbing party effectively obtains control of the party being absorbed. The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise being absorbed at the combination date. The difference between the carrying amount of the net assets obtained and the carrying amount of consideration paid for the combination (or the total face value of shares issued) is adjusted to the capital premium (or share premium) in the capital reserve. If the balance of the capital premium (or share premium) is insufficient, any excess is adjusted to retained earnings. The cost of a combination incurred by the absorbing party, including any costs directly attributable to the combination, shall be recognized as an expense through profit or loss for the current period when incurred. (2) Business combination involving entities under non common control A business combination involving enterprises under non common control happens if the combining enterprises are not ultimately controlled by the same party or parties both before and after the business combination. For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of another enterprise participating in the combination is the acquirer, while the other enterprise participating in the combination is the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree. For a business combination not involving enterprise under common control, the combination cost including the sum of fair value, on the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy services etc. and other associated administrative expenses attributable to the business combination are recognized in profit or loss when they are incurred. The transaction cost arose from issuing of equity securities or liability securities should be initially recognized as cost of equity securities or liability securities. The contingent consideration related to the combination shall be booked as 72 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. combination cost at the fair value on the acquisition date. If, within the 12 months after acquisition, new or additional information can prove the existence of related information on acquisition date and the contingent consideration need to be adjusted by relatively adjusting the combination goodwill. Acquirer ‘s combination cost and the obtained identifiable net assets are measured with the fair value on the acquisition date. The excess of the combination cost over the fair value of identifiable net assets on the acquisition date is recorded as goodwill. When the fair value of identifiable assets exceeds the combination cost , first of all, the fair value of items of obtained acquiree’s identifiable assets, liabilities or contingent liabilities and combination cost need to be reassessed. And then, when the combination cost is still less than the fair value of identifiable net assets on the acquisition date after reassess, the difference should be recorded in the current year’s profit and loss. The deductible temporary differences obtained from the acquiree which cannot be recognized as deferred tax assets ,on the acquisition date, because some conditions are not met. Within 12 months after the acquisition ,if new or additional information indicate that the relevant information exist on the acquisition date and the economic benefits related with the deductible temporary difference can be realized, the deferred tax assets should be recognized. The goodwill should be reduced and if the goodwill is less than the deferred tax assets recognized, the rest part should be recorded in the current year profit and loss. For a business combination achieved in stages that involves multiple exchange transactions, according to the “No.5 Inform of Printing and Distributing the Explanation of Accounting Standards issued by the Finance of Ministry (Caikuai [2012] No.19)”and Article 51of “Chinese Accounting Standards for Business Enterprises No.33- Consolidated financial statement”, relating with the judgment standards of package deal( refer to note 4.5(2)), a judgment about whether it is package deal or not should be made. If it is package deal, please refer to the note 4.13 - Long-term equity investment for accounting treatment; if it is not package deal, distinguish them as individual financial statement and consolidated financial statement for accounting treatment. For the individual financial statements, the book value of the long-term equity investment held before the acquisition date plus the newly added equity investment on the acquisition date, and then sum should be recorded as the original investment 73 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. cost; the long-term equity investment involved with other comprehensive income held before the acquisition date, the way to deal with the investment will be the same with the way the acquiree directly dispose the related assets and liabilities (i.e., under the equity method, beside the portion caused by the acquiree’s recalculated defined benefit plan’s net assets and net liabilities, the rest are transferred into investment income). For the consolidated financial statements, for the shares in acquiree held before the acquisition date, the shares are recalculated according to the fair value on the acquisition date. The difference between the fair value and book value should be recorded in the current year investment income; For the shares in the acquiree held before the acquisition date involving other comprehensive income. The way to deal with the other comprehensive income should be the same with the way the acquiree directly dispose the relevant assets and liabilities(i.e., under the equity method, beside the portion of changes caused by the acquiree’s recalculated defined benefit plan’s net assets and net liabilities, the rest are transferred into investment income ). 4.5 Preparation of consolidated financial statements (1)The standards of determining the scope of consolidation The scope of consolidation in the consolidated financial statements is determined on the basis of control. Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating activities. The scope of consolidation includes the Group and all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Group. Once the changes of relevant facts and conditions result in the factors involving with the above definition of the control, the Group will proceed to reassess. (2)The method of preparing the consolidated financial statements The subsidiary of the Group is included in the consolidated financial statements from the date when the control over the net assets and business decisions of the subsidiary is effectively obtained, and excluded from the date when the control ceases. For a subsidiary being disposed of by the Group, the operating results and cash flows before the date of disposal (the date when control is lost) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate. For a subsidiary disposed during the period, no adjustment is made to the opening balance of the consolidated financial statements. 74 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. For a subsidiary acquired through a business combination not under common control, the operating results and cash flows from the acquisition date (the date when the control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate; no adjustment is made to the opening balance and comparative figures in the consolidated financial statements. Where a subsidiary was acquired during the reporting period, through a business combination involving enterprises under common control, the financial statements of the subsidiary are included in the consolidated financial statements. The results of operations and its cash flow are appropriately included in the consolidated balance sheet and the consolidated income statement, respectively, from the beginning of the year to the date of acquisition and the comparative figures of the consolidated financial statements are restated. When the accounting period or accounting policies of a subsidiary are different from those of the Group, the Group makes necessary adjustments to the financial statements of the subsidiary based on the Group’s accounting period or accounting policies. For the subsidiaries acquired through combination involving enterprises under non common control, the financial statements should be adjusted based on the fair value of the indentified net assets on the acquisition date. Intra-group balances and transactions, and any unrealized profit or loss arising from intra-group transactions, are eliminated when preparing the consolidated financial statements. Minority interest and the portion in the net profit or loss not attributable to the Group are presented separately in the consolidated balance sheet within shareholders’/ owners’ equity. Net profit or loss attributable to minority shareholders in the subsidiaries is presented separately as minority interest in the consolidated income statement below the net profit line item. When the amount of loss for the current period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders’ portion of the opening balance of [shareholders’] [owners’] equity of the subsidiary, the excess is still allocated against the minority interests. When the Group loses control of a subsidiary due to the disposal of a portion of an equity investment or other reasons, the remaining equity investment is re-measured at its fair value on the date when control is lost. The difference between 1) the total amount of consideration received from the transaction that resulted in the loss of 75 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. control and the fair value of the remaining equity investment and 2) the carrying amounts of the interest in the former subsidiary’s net assets immediately before the loss of the control is recognized as investment income for the current period when control is lost. The amount recognized in other comprehensive income in relation to the former subsidiary’s equity investment is reclassified as investment income for the current period when control is lost. The retained interest is subsequently measured according to the rules stipulated in the “Chinese Accounting Standards for Business Enterprises No.2—Long-term equity investment” or “Chinese Accounting Standards for Business Enterprises No.22—Determination and measurement of financial instruments” (see note 4.13-Long-term equity investment and 4.9-Financial instruments). The Group’s losing control of subsidiaries through multistep transactions of disposing of the long-term equity investment, need to indentify whether every transaction, involving with disposing of the investment in subsidiary until losing the control, is belonging to package deal. Several transactions should be accounted for as a package deal if conditions and the economic impact of disposal of investments in subsidiaries are in compliance with one or more of the following circumstances: ① These transactions are considered simultaneously or ② these transactions as a whole in order to reach a complete business results; another case of the occurrence of the impact of entering into a transaction depends ③ had at least one other transaction; ④ see a transaction alone is not economical, but, it is economical when other transactions are taken into account. If it is not package deal, every transaction of the non-package deals is treated according to the applicable accounting standards of “partly disposing of the long-term equity investment without losing control ”( refer to 4.13(2) ④ for detail) and “losing the control to subsidiary due to partly disposing the equity investment or other reasons ” (see the former paragraph for details). When every transaction involving with disposing of equity investment in subsidiary until losing control is a package deal, they will be treated as a single deal of disposing of the investment in subsidiary until losing control for accounting treatment. But, before the control are lost, the difference between each receipt of every transaction and the related shared proportion of indentified net assets are recognized as other comprehensive income. The other comprehensive income will be transferred into profit and loss in the period when losing control. 4.6 Joint venture arrangement classification& mutual office account treatment 76 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Joint venture arrangement is referred to the arrangement that are under common control of two or more participating parties. The Group classifies the joint venture arrangement into mutual office and joint venture, according to the rights shared and obligation undertaken in the joint venture arrangement. Mutual office represents the joint venture arrangement that the Group shares the assets related with arrangement and undertakes the obligations related with the arrangement. Joint venture is referred to the joint venture arrangement that the Group only have the right to the net assets of the arrangement. The Group measures the joint venture investment using the equity method. Please refer to accounting policies listed on note 4.13 (2) ②-long-term equity investment measured using the equity method. As one party of the mutual office, the Group recognizes the separately owned assets and separately assumed obligations, and the proportionate commonly held assets and commonly assumed obligations per the company’s percentage of share interest; recognize the revenue from the selling of the Group’s shared output of the mutual office; recognize the common revenue generated from the selling of the common output of the mutual office according to the Group’s share percentage; recognize the expense separately incurred by the Group and the proportionate expense incurred by the mutual office according to the Group’s share percentage. When the Group sells invest or sell assets to the mutual office as one of the mutual office party( the assets do not constitute a business, the same to below), or buys assets from the mutual office, before the assets are sold to the third party, the Group only recognizes the portion of profit and loss attributable to the other participating parties. According to requirements of Chinese Accounting Standards for Business Enterprises No.8- Asset impairment, when the assets are impaired , for the assets invested or sold to the mutual office by the Group, the Group fully recognizes the impairment loss; for assets that the Group bought from the mutual office, the impairment loss is recognized according to the share percentage by the Group. 4.7 Cash and cash equivalent Cash and cash equivalents of the Group include cash on hand, ready usable deposits and investments having short holding term (normally will be due within three months from the day of purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be measured reliably and have low risks of change. 4.8 Foreign exchange 77 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (1) Translation in foreign exchange transactions The Group’s initial recognition of the foreign currency transactions is recorded by the functional currency translated by the spot rate (commonly refer to the middle rate of the daily foreign currency rate publicly released by the People’s Bank of China)on the transaction date. But the Group’s foreign currency exchange and foreign currency exchange relevant transactions, is recorded by the functional currency translated by the exchange rate actually used. (2)Translation method for foreign currency monetary items and non-monetary items. On the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the balance sheet date. All the exchange differences thus resulted are taken into profit or loss, except for ①those relating to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs; ②The exchange difference from changes of other account balance of foreign currency monetary items available-for-trade is recorded into profit or loss except for amortization cost. When preparing the consolidated financial statements involving with oversea operation, the foreign currency difference caused by the foreign exchange rate changes should be recorded in other comprehensive income, if it substantially constitutes the monetary items related to net investment to the oversea operation. When the oversea operation are disposed, the other comprehensive income should be transferred into current year profit and loss. Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rate prevailing on the transaction date, and the amount denominated in the functional currency is not changed. Non-monetary foreign currency items measured at fair value are translated at the spot exchange rate prevailing at the date when the fair values are determined. The exchange difference thus resulted are recognized in profit or loss for the current period or as other comprehensive income. (3) The translation of financial statement in foreign currency When the consolidated financial statements include foreign operation(s), if there is a foreign currency monetary item constituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates are recognized as “exchange differences arising on translation of financial statements denominated in 78 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. foreign currencies” in owner’s equity, and in profit or loss for the period upon disposal of the foreign operation. The Group translates the financial statements of its foreign operations into RMB by following rules; 1） Assets and liabilities in the balance sheet are translated at the spot exchange rate prevailing on the balance sheet date; All equity items except for retained earnings are translated at the spot exchange rates at the date on which such items occur; 2） Income and expenses in income statement are translated at the spot exchange rates at the date of transaction. 3） The opening undistributed profit is the closing undistributed profit of last period after translation of last year. 4） The closing balance of undistributed profit is calculates and presented in the basis of each translated income statements and profit distribution item. 5） The difference between the assets and liabilities and shareholder’s equity shall be booked as translation difference of translating foreign currency financial statements, and shall be presented as other comprehensive income in the separate component of equity in the balance sheet. 6） When losing control over Group’s oversea operation due to disposal, the translation difference of translating foreign currency financial statements related with the oversea operation which is separately presented under the shareholder’s equity section as accumulated other comprehensive income, should be fully or proportionately transferred into the current period profit and loss according to the disposal percentage. 7）Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot exchange rates. The effect of exchange rate changes on cash is separately presented as an adjustment item in the cash flow statement. 8）The opening balance and actual figures of last year are displayed as the figures translated last year. 9）When disposing the Group’s all shareholders’ equity of oversea operation or the Group losing control over the oversea operation due to partial disposal of the oversea equity investment or other reasons, the translation difference caused by the translating of foreign currency financial statement related with the oversea operation , which is presented under the equity section on the balance sheet and is attributable 79 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. to the parent company’s shareholders, should be transferred to the current period profit and loss. 10)When the partial disposal of the equity investment of oversea operation and other reasons cause the share percentage of oversea operation to decrease without making the power of control to disappear, the translation difference of translation foreign currency financial statement related with the part of oversea operation disposed should be attributable to the minority interest and do not transfer to the current period profit and loss. When the oversea operation disposing is a jointly run business or joint venture, the translation difference of translating foreign currency financial statements should be transferred to the current period profit and loss according to the percentage of oversea operation disposal. 4.9 Financial instruments When the Group becomes one party of the financial instrument contract, a financial asset or financial liability should be recognized. The initial measurement of the financial asset and financial liability is based on the fair value. For financial asset and financial liability measured at fair value and designated its changes into current period profit and loss, the related trading expense should be recorded in the profit and loss. For the financial asset and financial liability of other categories, the related trading expense should be recorded as part of initial cost. (1) The method of determining the fair value of financial assets and financial liabilities Fair value is the price that the market participators can get when selling an assets or need to pay when transferring an obligation incurred in an orderly transaction on the measurement date. When there is active market for the financial instruments, the quotation in the active market is used as the fair value. Quotation in the active market means the price that can be easily and periodically got from the exchange market, broker’s agency, Guild, pricing service organization etc. It represents the actually happened trading price in the fair trading. When there is no active market for the financial instruments, the fair value is determined by the valuation techniques. The valuation techniques include making a reference to the used price in recent market trading among the parties who know the situations and is willing to trade, making a reference to the current fair value that is used by the other substantially similar financial assets, discounting the future cash flow and option pricing model etc. (2) Classification of financial assets All regular way purchases or sales of financial assets are recognized and 80 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. derecognized on a trade date basis. On initial recognition, the Group’s financial assets are classified into one of the four categories, including financial assets at fair value though profit or loss, held-to maturity investments, loans and receivables and available-for-sell financial assets. 1) Financial assets at fair value through profit or loss: Including financial assets held-for-trade and financial assets designated at fair value through profit or loss. Financial asset held-for-trade is the financial asset that meets one of the following conditions: A. The financial asset is acquired for the purpose of selling it in a short term; B. The financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term profits; C. The financial asset is a derivative, except for a derivative that is designated and effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. For such kind of financial assets, fair values are adopted for subsequent measurement. Financial asset is designated on initial recognition as at fair value through profit or loss only when it meets one of the following conditions: A. The designation eliminates or significantly reduces the inconsistency in the measurement or recognition of relevant gains or losses that would otherwise arise from measuring the financial instruments on different bases. B. A group of financial instruments is managed and its performance is evaluated on a fair value basis, and is reported to the enterprise’s key management personnel. Formal documentation regarding risk management or investment strategy has prepared. Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any gains or losses arising from changes in the fair value and any dividends or interest income earned on the financial assets are recognized in the profit or loss. 2) Investment held-to maturity Held-to-maturity investments are non-derivative financial assets with fixed or 81 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity. Such kind of financial assets are subsequently measured at amortized cost using the effective interest method. Gains or losses arising from derecognition, impairment or amortization are recognized in profit or loss for the current period. Effective interest rate is the rate that exactly discounted estimated future cash flows through the expected life of the financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group shall estimate future cash flow considering all contractual terms of the financial asset or financial liability without considering future credit losses, and also consider all fees paid or received between the parties to the contract giving rise to the financial asset and financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc. 3) Loans and receivables Loans and receivables are non-derivative financial assets with fixed determinable payment that are not quoted in an active market. Financial assets classified as loans and receivables by the Group include note receivables, account receivables, interest receivable dividends receivable and other receivables. Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit or loss. 4) Financial assets available-for-sell Financial assets available-for-sell include non-derivative financial assets that are designated on initial recognition as available for trade, and financial assets that are not classified as financial assets at fair value through profit or loss, loans and receivables or investment held-to-maturity. Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are recognized as other comprehensive income and included in the capital reserve, except that impairment losses and exchange differences related to amortized cost of monetary financial assets denominated in foreign currencies are recognized in profit or loss, until the financial assets are derecognized, at which time the gains or losses are released and 82 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. recognized in profit or loss. Interests obtained and dividends declared by the investee during the period in which the financial assets available-for-trade are held, are recognized in investment gains. The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss and other financial liabilities. For financial liabilities at fair value through profit or loss, relevant transaction costs are immediately recognized in profit or loss for the current period, and transaction costs relating to other financial liabilities are included in the initial recognition amounts. (3) Impairment of financial assets (not including account receivables) The Group assesses, at the balance sheet date, the carrying amount of every financial asset except for the financial assets that measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, provision for impairment is recorded. The Group makes an impairment test for a financial asset that is individually significant. For a financial asset that is not individually significant, it is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment or individually assessed for impairment. If no objective evidence of impairment incurs for an individually assessed financial asset (whether the financial asset is individually significant or not individually significant), it is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. Assets for which an impairment loss is individually recognized is not included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. 1) Impairment on held-to maturity investment, loans and receivables The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the reserving date. 2) Impairment loss on available-for-trade financial assets When decision is made with all related factors on whether the fall of fair value 83 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. investment of an equity instrument available-for-trade is significant or non-transient, it indicates impairment of such equity instrument investment, in which, Significant means over 20% of fall in fair value and Non-transient means over 12 months of subsequent fall. When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in fair value that had been recognized in capital reserve shall be removed and recognized in profit or loss. The amount of the cumulative loss that is removed shall be difference between the acquisition cost with deduction of recoverable amount less amortized cost, current fair value and any impairment loss on that financial asset previously recognized in profit or loss. If, after an impairment loss has been recognized, there is objective evidence that the value of the financial asset is recovered, and it is objectively related to an event occurring after the impairment loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss on available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss on available-for-trade debt instrument is recorded in the current profit or loss. The equity instrument where there is no quoted price in an active market, and whose fair value cannot be reliably measured, or impairment loss on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument shall not be reversed. (4) Recognition and measurement of financial assets transfer The Group derecognizes a financial asset when one of the following conditions is met: 1) The rights to receive cash flows from the asset have expired; 2) The enterprise has transferred its rights to receive cash flows from the asset to a third party under a “pass-through” arrangement; or 3) The enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the asset is recognized according to the extent it exists as financial asset, and correspondent liability is recognized. The extent of existence refers the level of risk by the financial asset changes the enterprise is facing. 84 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount of the financial asset transferred; and (b) the sum of the consideration received from the transfer and any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss. If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset is allocated between the part that continues to be recognized and the part that is derecognized, based on the relative fair value of those parts. The difference between (a) the carrying amount allocated to the part derecognized; and (b) the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to the part derecognized which has been previously recognized in other comprehensive income, is recognized in profit or loss. For the financial assets sold with recourse and the endorsed, the Group should make a judgment whether the risks and rewards related with the financial assets’ ownership have been almost all transferred. For the financial assets of which the risks and rewards related with its ownership have been, in substantial, all transferred, it should be derecognized. For the financial assets of which the risks and rewards have been, in substantial, all retained, it should be not be derecognized. For the financial assets, the related ownership of which have not been neither ,in substantial, all transferred nor retained, the Group need to make a judgment about whether the control over the financial assets have been kept or not and then deal with it according to the standards mentioned in the previous paragraphs. (5) Classification of the financial liabilities and measurement The financial liabilities are classified into financial liabilities measured at fair value with its changes into profit and loss and other financial liabilities. The initial measurement is made at its fair value. For the financial liabilities measured at fair value with its changes into profit and loss, the related trading expense are recorded into current period profit and loss; for other financial liabilities, the related trading expenses are recorded in its initial cost. 1) Financial liabilities measured by the fair value and the changes recorded in profit or loss The classification by which financial liabilities held-for-trade and financial liabilities designated at the initial recognition to be measured by the fair value follows the same criteria as the classification by which financial assets held-for-trade and financial 85 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. assets designated at the initial recognition to be measured by the fair value and their changes are recorded in the current profit or loss. For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair values are adopted for subsequent measurement. All the gains or losses on the change of fair value and the expenses on dividends or interests related to these financial liabilities are recognized in profit or loss for the current period. 2) Other financial liabilities Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active market and their fair value cannot be measured reliably, is subsequently measured by cost. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for the current period. 3) Financial guarantee contracts For financial guarantee contracts that are not designated as at fair value through profit or loss, or loan commitments not designated as at fair value through profit or loss but to offer at the interest rate lower than market level they are, after initial recognition, subsequently measured at the higher of: (i) the amount determined according to the principles of Accounting Standards for Business Enterprises No. 13 - Contingencies, and (ii) the amount initially recognized less the accumulated amortization determined according to the principles of Accounting Standards for Business Enterprises No. 14 - Revenue. (6) Derecognition The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part of it) is discharged or cancelled or has expired. An agreement between the Group (an existing borrower) and existing lender to replace original financial liability with a new financial liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. When the financial liabilities are fully and partially derecognized, the difference between the carrying value of the part derecognized and consideration paid ( including the non-current assets transferred out or new financial liabilities assumed ) should be recorded in the current period profit and loss. 4.10 Account receivables 86 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. The account receivable by the Group includes account receivables, and other receivables. The Group carries out an inspection on the balance sheet date. Where there is any objective evidence proving that the receivables have been impaired, an impairment provision shall be made: 1) A serious financial difficulty occurs to the issuer or debtor; 2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.; 3) The debtor will probably become bankrupt or carry out other financial reorganizations; 4) Other objective evidences showing the impairment of the receivables. (1)Provisions of bad debts in account receivables that is individually significant. The Group treats account receivables over RMB 5,000,000.00 (including 5,000,000.00) as individually significant item. For an account receivable that is individually significant, the asset is individually assessed for impairment. If there is objective evidence indicating that the asset is impaired. The impairment loss is recognized in the profit and loss at the excess of carrying value over its predicted future cash flow (excluding the non-incurred future credit loss ) discounted with original actual interest rate. (2) Provisions of bad debts for accounts receivables that is individually insignificant. For the accounts receivables that is individually insignificant, if there are signs indicating the impairment, such as long-aging, having a dispute with the obligator or obligator suffering serious financial difficulties, it should be individually tested for impairment. 4.11 Inventories (1) Classification of inventory Inventory was classified according to real estate development and non-development of products. The real estate development products are the real estate developing products, real estate developed products and real estate which are going to be developed. The non-real estate development products include raw materials, finished products and stocks, low-value consumable products and construction in progress. (2) Valuation method of inventories upon delivery Inventories are initially carried at the actual cost. Cost of inventories comprises all costs of purchase, costs of conversion and other costs. The actual cost of inventories 87 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. transferred out is assigned by using weighted average method, and development products by specific identification method. (3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events. At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined by the difference of the cost of individual item less its realizable value. After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period. (4) Inventory count system is based on the perpetual stock system. (5) Amortization method for low cost and short-lived consumable items and packaging materials. Low cost and short-lived consumable items are amortized using immediate write-off method; packaging materials are amortized using immediate write-off method. (6) Cost of land constitutes land development costs for pure land development project. Together with the overall development of the property, its cost is included in housing costs generally based on the actual area. (7)Public Facilities Fee: The cost is the actual construction cost incurred. If several estate projects benefit from the same facility, they stay in the same category. The cost of fee should be measured according to the allocation of sales area. If they got benefit but in different categories, the cost was measured according to the allocation of the area covered. (8)Utility reserve funds：Utility reserve funds were received by the Group and 88 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. recorded in Long-term payables. The funds were used to maintain and renew communal facilities. (9)Quality Guarantees：Quality Guarantees was put into the account of real estate developing according to the contract amount and also recorded in the accounts payable at the same time. The actual payment incurs after the expiry of guarantee. 4.12 Held-for-sale assets The non-current assets which can be sold at its current conditions, the Group’s disposal decision have been made, an un-revocable transferring agreement has been made and the transfer can be finished within one year, it should be recognized as held-for-sale non-current assets. The amortization or depreciation will be ceased since the day it is reclassified as held-for-sale assets. And it should be measured at the lower of carrying amount and its fair value less cost of disposal. The held-for-sale non-current assets include the individual assets and asset group of disposal. If the asset group met the definition regulated in the Chinese Accounting Standards for Business Enterprises No.8 –Asset impairment and it has been allocated with the goodwill gained through the enterprises combination according to the provision of the regulation, or the asset group of disposal is a business of the asset group, the asset group should include the goodwill resulted from the enterprise combination. The individual non-current assets classified as held-for-sale and assets within the asset group of disposal, should be represented individually in the current assets section of the balance sheet; The liabilities which belong to the disposal group of held-for-sale and is related with transferring the possession of assets, it should be individually represented in the current liability section of the balance sheet. Some assets or assets group of disposal that have been classified as held-for-sale but the conditions are not met for being recognized as held-for-sale non-current assets thereafter. The assets should be stopped being classified as held-for-sale and should be measured at the lower of: 1) The book value of assets and asset group of disposal before they are classified as held-for-sale, being adjusted by the amortization, depreciation or impairment pretending that they were not initially classified as held-for-sale; and 2) the recoverable amount on the day when decide not to sell. 4.13 Long-term equity investments The long-term equity investment mentioned in this section is about the equity 89 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. investment of which the Group has control, common control or significant influences over the investee. For the investments that the Group has no control, common control or significant influences over the investee, they will be recorded as available-for-sale or financial instrument assets measured at fair value with its changes into profit and loss. Please refer to note 4.9-Financial instruments for detail. Common control means the Group’s mutual control to the arrangement according to the related agreement and the arrangement’s activities related decisions can be made only after getting the mutual agreement from other parties sharing the control power. Significant influences represent that the Group has the right to participate in the decision of the financial and operating policies, but cannot control or control together with other parties to make the policy related decision. (1) Determination of investment cost For a business combination involving enterprises under common control, the initial investment cost of the long-term equity investment shall be carrying value of the absorbing party’s share of the shareholder’s of the party being absorbed at the date of combination. For a business combination not involving enterprise under common control, the combination cost including the sum of fair value, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy services etc and other associated administrative expenses attributable to the business combination are recognized in profit or loss when they are incurred. The transaction cost for the equity securities or liability securities issued by the acquirer in the business combination shall be recognized as initial amount of equity security or liability. The equity investments other than the long-term equity through combination shall be initially measured by cost. The cost shall be recognized to the difference in the way of acquisition of long-term equity investment. Theses ways include the cash purchase price the Group actually paid, the fair value of equity security issued by the Group, value specified in the investment contract or agreement, the fair value or carrying value of the asset transferred out in the transaction of non-monetary asset exchanges, and the fair value of the long-term equity investment. Expenses, taxes and other necessary expenditures directly attributable to the acquisition of long-term 90 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. equity investment are taken into investment cost. For the long-term equity investments that the Group can have significant influence or common control on the investee, but cannot control the investee, because of the added investments, the cost of the long-term equity investment should be the sum of original fair value of the investment and the cost of newly added investment. (2) Subsequent measurement Where an investing enterprise can exercise common control or significant influence over the investee, a long-term investment shall be accounted for using the equity method. Besides, the cost method shall be adopted in a long-term equity investment when the Group can exercise control over the investee. 1) Cost method of accounting for long-term equity investments Under the cost method, a long-term equity investment is measured at initial investment cost. Except for cash dividends or profits declared but not yet paid that are included in the price or consideration actually paid upon acquisition of the long-term equity investment, investment income is recognized in the period in accordance with the attributable share of cash dividends or profit distributions declared by the investee. 2) Equity method of accounting for long-term equity investments Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in the fair values of the investee’s identifiable net assets at the time of acquisition, no adjustment shall be made to the initial investment cost. Where the initial investment cost of a long-term equity investment is less than the investing enterprise’s interest in the fair values of investee’s identifiable net assets at the time of acquisition, the difference shall be charged to profit or loss for the current period, and the cost of the long-term equity investment shall adjusted accordingly. Under the equity method，the Group recognizes its share of the net profit or loss and other comprehensive income of the investee for the period as investment income or loss and other comprehensive income for the period and adjusts the book value of the long-term equity investment simultaneously. The Group reduces the book value of the long-term equity investment, according to the shared profit or cash dividends declared by the investee. For the changes of investee’s equity beside the net profit, other comprehensive income and profit distribution, adjust the book value of the long-term equity investment and its capital surplus. 91 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. When determining the share percentage of investee’s net profit, it should be made based on the fair value of investee’s identifiable assets after adjusting the investee’s net profit on the acquisition date. When the investee’s accounting period and accounting policies are different with the Group’s, the subsidiary’s financial statements should be adjusted according to the Group’s and recognize the investment income and other comprehensive income based on it. Unrealized profits or losses resulting from the Group’s transactions with its associates and joint ventures are recognized as investment income or loss to the extent that those attributable to the Group’s equity interest are eliminated. However, unrealized losses resulting from the Group’s transactions with its investees on the transferred assets, in accordance with "Accounting Standards for Enterprises No. 8 - Impairment of Assets", are not eliminated. When the Group’s assets invested to joint venture and jointly run business are a deal and the Group obtains the long-term equity investment without getting the power of control, the initial cost of the investment is determined by fair value of the assets invested. The difference between the initial cost and the book value of the assets invested should be fully taken into profit and loss. When the Group’s assets sold to joint venture and jointly run business are a deal, the differences between the consideration received and the book value are fully taken into the profit and loss. When the Group’s buying assets from joint venture and jointly run business are a deal, the gain and loss would be fully recognized according to the Accounting Standards for Business Enterprises No.20 -Enterprises combination. When the investee is recognized net losses, reduce the carrying value of long-term equity investments and long-term equity of net investment (in substance) in investee to zero. In addition, the Group has the obligations on additional losses, then the expected obligation as estimated liabilities and included in the current investment losses. Where the net profit from investee units, restoration confirm the amount of revenue sharing after offset the amount of unrecognized loss sharing. For long-term equity investments in associates and joint ventures which had been held by the Group before its first time adoption of Accounting Standards for Business Enterprises, where the initial investment cost of a long-term equity investment exceeds the Group’s interest in the investee’s net assets at the time of acquisition, the excess is amortized and is recognized in profit or loss on a straight line basis over the original remaining life. 3) Acquisition of minority interest 92 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. The difference between newly increased equity investment due to acquisition of minority interests and portion of net asset cumulatively calculated from the acquisition date is adjusted as capital reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted against retained earnings. 4) Disposal of long-term equity investment Where the parent company disposes long-term investment in a subsidiary without a change in control, the difference in the net asset between the amount of disposed long-term investment and the amount of the consideration paid or received is adjusted to the owner’s equity. If the disposal of long-term investment in a subsidiary involves loss of control over the subsidiary, the related accounting policies in Note 4.5 applies. (3) Accounting policies retailed on “the method of preparing consolidated financial statements” On disposal of a long-term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is recognized in profit or loss for the period. For long-term equity investment accounted for using the equity method, when the rest of the long-term equity investment is still accounted for using the equity method after disposal, the other comprehensive income originally recorded into the equity should be dealt with by the same way as the investee’s directly dealing with its assets or liabilities. The other investee equity changes caused beside the net profit, other comprehensive income and profit distribution should be proportionately transferred into current year profit and loss. For long-term equity investment accounted for using the cost method, when the rest of the long-term equity investment is still accounted for using the cost method after disposal, other comprehensive income recognized using the equity method or the method of recognizing and measuring the financial instruments before obtaining the control over the investee should be dealt with as the same way with investee’s direct disposing of its assets and liabilities and be proportionately taken into profit and loss; The other investee equity changes caused beside the net profit, other comprehensive income and profit distribution should be proportionately transferred into current year profit and loss. When the Group loses control over the investee but still can exercise the common control or significant influences over the investee after partial disposal of the 93 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. long-term equity investment, the equity method should be used to prepare individual financial statements. The rest equity investment is treated as accounted using the equity method upon the acquisition and is adjusted; If no control and significant influences cannot be exercised, the rest equity investments should be recognized and measured by the accounting standards to financial instruments. The difference between the fair value and book value is taken into current profit and loss. For the other comprehensive income recognized under the equity method or the financial instrument related method before obtain the control over investee, it will be treated as the same way with investee’s directly disposing its assets or liabilities when losing the control over investee. The equity changes under equity method caused beside the net profit, other comprehensive income and profit distribution should be transferred into the profit and loss when losing the control over investee. Including, other comprehensive income and other owner’s equity should be proportionately transferred, when the rest equity investment is accounted with equity method; Other comprehensive income and other owner’s equity should be fully transferred, when the rest equity investment is accounted with accounting standards of financial instruments. The Group loses the control and significant influences over the investee, because of disposing of part of long-term equity investment. The difference between fair value and book value on the day when losing the control and significant influences over the investee should be taken into profit and loss. Other comprehensive income recognized for the original equity investments under equity method, would be dealt with as the same way with investee’s directly disposing of its assets and liabilities when cease using the equity method. The equity changes caused beside the net profit, other comprehensive income and profit distribution, should be transferred into investment income when cease using the equity method. For the Group’s multiple-step dealing with its long-term equity investments until losing control, if the transactions are package deal, each transaction should be treated as a transaction dealing with its long-term equity investments until losing control, the difference between the consideration received and the book value of the equity investment should be firstly recognized as other comprehensive income before losing control over investee and then all transferred into current profit and loss. 4.14 Investment properties Investment property is property held to earn rental or for capital appreciation or both. 94 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. It includes a land use right that is leased out, a land use right held for transfer upon capital appreciation, and a building that is leased out. Besides, the Group has buildings empty for operating lease. If there is a written decision from the Board (or similar organization) with clear indication for operating lease and intension that no change shall be made in the near future, the buildings shall be presented as investment properties. An investment property is measured initially at cost. Subsequent expenditures incurred for such investment property are included in the cost of the investment property if it is probable that economic benefits associated with an investment property will flow to the Group and the subsequent expenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the period in which they are incurred. The Group uses the cost method for subsequent measurement of investment property, and adopts a depreciation or amortization policy for the investment property which consistent with that for building or land use rights. Where self-occupied property or inventory converts into investment property, or investment property converts into self-occupied property, the carrying amount before the change shall be accounted as the value after conversion. When an investment property changes into self-occupied property, it should be converted into fixed asset or intangible asset on the date of conversion. When the purpose of a self-occupied property changes into rental earning or capital increase, fixed asset or intangible asset should be converted into an investment property from the date of conversion. Where the cost model is used in the measurement of investment property during the conversion, the carrying amount before the conversion is accounted as the value after conversion. Where the investment property is measured by the fair value after conversion, the fair value at the conversion date is adopted as value after conversion. Where an investment property is disposed or no longer in use permanently and no economic benefits shall be obtained from the disposal, derecognized the investment property. The income from sale, transfer or disposal of the investment property is recorded in the profit or loss after deduction of its carrying amount and related tax. 4.15 Fixed assets (1) The conditions of recognition Fixed assets refers to the tangible assets that are held for the sake of producing 95 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. commodities, rendering labor service, renting or business management and their useful life is in excess of one fiscal year. (2) Recognition and measurement of financial lease Finance leases which transfer substantially all the risks and rewards of ownership. The depreciation policy for assets held under finance leases should be consistent with that for owned assets. If there is no reasonable certainty that the lessee will obtain ownership at the end of the lease – the asset should be depreciated over the shorter of the lease term or the life of the asset (3) The method for depreciation Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial measurement. From the following month of state of intended use, depreciation method of the straight-line method is used for different categories of fixed assets to take depreciation. The recognition of the classification, useful life and estimated residual rate are as follows: Category Expected useful life Estimated residual value（%） Depreciation（%） Building & construction 30 5 3.17 Machines & equipments 7 5 13.57 Vehicles 6 5 15.83 Electronic appliances 5 5 19.00 Expected net residual value of fixed assets is the balance of the Group currently obtained from the disposal of the asset less the estimated costs of disposal amount, assuming the asset is out of useful life and state the expected service life in the end. (4) Measurement and recognition of fixed assets impairment Fixed assets should be estimated the recoverable amount if there is an indication. The recoverable amount is according to the high one of net value of fair value minus the disposal with the present value of the future cash flows. The estimation should be based on individual assets, if it is difficult to estimate the recoverable amount, change into estimating the group of assets it belongs to. Once provision for impairment, it could not be reversed in later accounting period. (5) Others A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the Company and the cost of the asset can be measured reliably. Subsequent expenditure incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the fixed asset, and the carrying amount of the 96 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall be recognized in profit or loss in the period in which they are incurred. The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction of carrying value and related tax. The Group conducts a review of useful life, expected net realizable value and depreciation methods of the fixed asset at least on an annual base. Any change is regarded as change in accounting estimates. 4.16 Construction in progress (1) The types of construction in progress Construction in progress includes preparation before construction, construction engineering in progress, installation engineering in progress, technical improvement engineering, repair engineering etc. whose costs are determined by the actually incurred expenditures. (2) The standards and time of transferring the construction in progress to fixed assets. When the constructions in progress reach the condition of available for use, it should be transferred to the fixed assets per the full actually incurred costs. (3) The method of testing the impairment and the provision for impairment loss The method of testing the impairment loss for the construction in progress and the way to accrue the provision for the impairment loss is detailed listed on the note 4.20-“long-term assets impairment”. 4.17 Borrowing costs (1) The standards for capitalizing the borrowing cost Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as an expense in the period in which they are incurred. (2) The period of capitalizing the borrowing costs The period of borrowing costs capitalization is calculated from the point when borrowing costs beginning capitalizing to the time stopping capitalizing. The period suspending capitalizing the borrowing costs are excluded. 97 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (3) The period suspending capitalizing the borrowing costs Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use or sale, when the interruption is for a continuous period of more than 3 months. Borrowing costs incurred during these periods recognized as an expense for the current period until the acquisition, construction or production is resumed. (4) The method for calculating the amount of borrowing cost capitalized Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by applying a weighted average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings. During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are recognized in profit or loss in the period in which they are incurred. 4.18 Intangible assets (1) Recognition and calculation of intangible asset The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed or controlled by enterprises. The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be booked in the profit or loss when they occur. Land use rights that are purchased by the Group are accounted for as intangible assets. Buildings, such as plants that are developed and constructed by the Group, and relevant land use rights and buildings, are accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings purchased are 98 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. allocated between the land use rights and the buildings; if they cannot be reasonably allocated, all of the land use rights and buildings are accounted for as fixed assets. When an intangible asset with a definite useful life is available for use, its original cost less net residual value and any accumulate impairment losses is amortized over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortized. For an intangible asset with a definite useful life, the Group reviews the useful life and amortization method at the end of the period, and makes adjustment when necessary.. An additional review is also carried out for useful life of the intangible assets with indefinite useful life. If there is evidence showing the foreseeable limit period of economic benefits generated to the enterprise by the intangible assets, then estimate its useful life and amortize according to the policy of intangible assets with definite useful life. (2) The estimation of the useful life of the indefinite intangible assets Item Estimated useful life Basement Taxi license 38 years The recorded years of taxi license Fixed assets, electronic and other Software 5 years equipments useful lives (3) The basis to judgment intangible assets whose useful lives are uncertainty The periods of which the intangible assets can bring benefits to the Group cannot be reasonably determined, the intangible assets will be classified as indefinite intangible assets. (4) Methods of impairment assessment and determining the provision for impairment losses of intangible assets The testing method for intangible assets impairment and the calculation of the provision for impairment is detailed listed on the note 4.20-Long-term assets impairment. (5) The standards to distinguishing the research stage and development stage of internally developed intangible assets Research stage: the stage when the creative planned investigation and research activities are carried on, in order to obtain and understand the new sciences and technical knowledge; Development stage: the stage of applying the research results and other knowledge to the specified plan or design so as to produce new or substantially improved 99 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. materials , equipments and products before commercial production or use. (6) The accounting of expenditures of internally researched and developed project Expenditure on the research phase of an internal research is recognized in profit & loss in the period in which it is incurred. Expenditure during the development phase that meets all of the following conditions at the same time is recognized as intangible asset. Expenditure during development phase that does not meet the following conditions is recognized in profit or loss for the period. 1) it is technical feasible to complete the intangible asset so that it will be available for use or sale; 2) the Group has the intention to complete the intangible asset and use or sell it; 3) the Group can demonstrate the ways in which the intangible asset will generate economic benefits including the evidence of the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; 4) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and 5) the expenditure attributable to the intangible asset during its development phase can be reliably measured. If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes all of them in profit or loss for the period. 4.19 Long-term deferred assets Long-term deferred assets represent expenses incurred that should be borne and amortized over the current and subsequent period (together of more than one year). Long-term deferred assets are amortized by using straight line method. 4.20 Long-term assets impairment On each balance sheet date, the Group will make judgments to determine whether there are signs for impairment to the fixed assets ,construction in progress, definite intangible assets, investment properties& equity investment in subsidiaries& joint ventures& jointly run business measured using the cost method etc. non-current and non-financial assets. If there are signs for impairment, the impairment should be tested by estimating the recoverable amount. Goodwill, indefinite intangible assets and intangible assets having not reached the usable condition, should be yearly tested for impairment no matter whether there are signs for impairment. 100 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. The result of impairment test demonstrates that the recoverable amount is less than its carrying amount, the difference will be recorded as provision for impairment and debited as impairment loss. The recoverable amount equals to the greater of 1) fair value less disposal expenses and 2) present value of the predicted future cash flows. The fair value of the assets is determined by the sale contract price of fair trade; When there are no sale contracts but exist active market ,the fair value will be determined with the quotation from the buyer; When there exist neither sale contracts nor active market, the assets fair value will be determined by the best information available. The disposal expenses include the legal expenses, related taxes, delivery fees and other direct fees incurred for making the assets reach the salable condition. The present value of the predicted future cash flows is calculated according to the predicted future cash flows generated from the continuous use of the assets and final disposal discounted with the applicable discounted rate. The provision for impairment test should be recognized based on the individual asset. If it is hard to estimate the recoverable amount to individual asset, the recoverable amount of the assets group of which the individual assets are included should be determined. Assets group is the smallest unit that can independently generate the cash inflow. For the goodwill separately displayed on the financial statement, when making the impairment test, the carry value of the goodwill should be allocated to assets group or the group of assets group predicted to be benefit from the synergistic effect from the enterprises combination. When the rest result shows that the recoverable of the assets group or the group of assets group having been allocated with the relevant goodwill is less than the carrying amount, the related impairment loss should be recognized. The impairment losses will firstly reduce the book value of the goodwill allocated and then reduce the book value of each asset of the assets group or the group of assets group according to the percentage of each asset to the assets group or the group of assets group beside the goodwill. The impairment loss of the above assets would not be reversed back once they are recognized. 4.21 Accrued liabilities Accrued liabilities (or Provisions) are recognized when following obligations related to a contingency are satisfied simultaneously. They are (a) such obligation is the present obligation of the Group, (b)it is probable that an outflow of economic benefits 101 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. will be required to settle the obligation, and (c) the amount of the obligation can be measured reliably. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account factors pertaining to a contingency such as risks, uncertainties and time value of money. Where all or some of the expenditure required to settle a provision is expected to be reimbursed by a third party, the reimbursement is recognized as a separate asset only when it is virtually certain that reimbursement will be received, and the amount of reimbursement recognized does not exceed the carrying amount of the provision. (1)Onerous contracts An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The exceeding part over the assets in the contract shall be recognized as a provision when an executor contract becomes an onerous contract and the obligation arising under the onerous contract satisfies the requirements of provisions. (2)Restructuring Obligation The amount of a restructuring provision shall be recognized by the total direct expenditures arising from the restructuring when the enterprise has a detailed, formal plan for the restructuring, and a public announcement of the plan has been made for restructuring and above requirements for the provision mentioned above are satisfied. [For the restructuring obligation carried for the portion of business for sale, the obligation related to the restructuring can only be recognized when the Group has committed for the sales of portion of the business (signing the selling agreement with termination)] 4.22 Revenue (1) Revenue from sales of goods The Group has transferred to the buyer the significant risks and rewards of ownership of the goods; the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the associated costs incurred or to be incurred can be measured reliably. According to the principles above, the Group established real estate sales revenue is recognized, must satisfied the following four conditions at the same time: 102 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. A. Real estate is completed, and is completed checking and accepting; B. Signed a contract of sale and make recording in land department C. Installment, if it is deferred for receiving money with financing, the cost should be measured in present value according to the contract price. Mortgage, has been received, and have completed the first phase of the mortgage loan approval procedures; D. Agreed in the contract of sale and transfer the property to buyers. (2) Revenue from rendering service When the outcome of a transaction involving the rendering of services can be estimated reliably at the balance sheet date, revenue associated with the transaction is recognized using the percentage of completion method, or otherwise, the revenue is recognized to the extent of costs incurred that are expected to be recoverable. The stage of completion of a transaction for rendering services is determined based on [survey of work performed / services performed to the date of as a percentage of total services to be performed / the proportion that costs incurred to date bear to the estimated total costs of the transaction] The outcome of a transaction involving rendering of services can be estimated reliably when all of the following conditions are satisfied: 1) the amount of revenue can be measured reliably; 2) it is probable that the associated economic benefits will flow to the Group; 3) the stage of completion of the transaction can be measured reliably; 4) the costs incurred and to be incurred for the transaction can be measured reliably. If the outcome of a transaction involving rendering of services cannot be estimated reliably, the revenue is recognized by the cost incurred and estimated compensation, and the actual cost is booked into profit and loss. No revenue is recognized if the cost incurred cannot be recovered. For contract or agreement entered between the Group and other enterprises with sales of goods and rendering services, if part of goods selling and the part of rendering service can be separated and measured individually, they are settled separately. If the part of goods selling and the part of rendering service cannot be separated or they can be separated but cannot be measured individually, the parts in the contract shall be treated as goods of selling. (3) Revenue from construction contracts Where the outcome of a construction contract can be estimated reliably, contract 103 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. revenue and costs are recognized using the percentage of completion method at the balance sheet date. The stage of completion of a contract is determined using the proportion that actual contract costs incurred to date bears to the estimated total contract costs. The outcome of a construct contract can be measured reliably when the following conditions are met: 1) The total revenue of the contract can be measured reliably; 2) It is probable that the associated economic benefits will flow to the enterprise; 3) The actual cost of the contract incurred can be determined and measured reliably; 4) The stage of completion of the contract and the costs to be incurred associated with the completion of the contract can be measured reliably. Where the outcome of a construction contract cannot be estimated reliably, (1) if contract costs are expected to be recoverable, contract revenue is recognized to the extent of contract costs that are expected to be recoverable; and contract costs are recognized as expenses in the period in which they are incurred; (2) if contract costs are not expected to be recoverable, they are recognized as expenses immediately when incurred and contract revenue is not recognized. When the uncertainties that prevented the outcome of the construction contract from being estimated reliably no longer exist, revenue and expenses associated with the construction contract are recognized using the percentage of completion method. If the estimated total contract costs exceed total contract revenue, the expected loss is recognized immediately as an expense for the period. 4.23 Government Grants Government grants are transfer of monetary assets and non-monetary assets from the government to the Group at no consideration, excluding the capital invested by the government as equity owner. Government grant can be classified as grant related to the assets and grants related to the income. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a nominal amount is recognized immediately in profit or loss for the period. A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset. For a government 104 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period. For repayment of a government grant already recognized, if there is a related deferred income, the repayment is offset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for the period. If there is no related deferred income, the repayment is recognized immediately in profit or loss for the period. 4.24 Deferred income tax assets and deferred income tax liabilities At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, according to the requirements of tax laws. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects at the balance sheet date, to recover the assets or settle the liabilities. For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or between the nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balance sheet liability method. For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax liability related is recognized except where the Group is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above are recognized. 105 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. For temporary deductible differences associated with the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset is recognized. For taxable temporary deductible differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax asset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it is not probable to obtain taxable income which can be used for the deduction of the temporary difference in the future. Except mentioned above, the Group recognizes other deferred income tax assets that can deduct temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws that are expected to apply in the period in which the asset is realized or the liability is settled. At the balance sheet date, the Group reviews the carrying amount of deferred tax assets. If it is no longer probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax assets to be used, the Group reduces the carrying amount of deferred tax assets. The amount of such reduction is reversed when it becomes probable that sufficient taxable profit will be available. 4.25 Leases (1) Operating Lease ①The Group as Lessee under Operating Lease Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term, and either included in the cost of the related asset or charged to profit or loss for the current period. The contingent rents shall be recorded in the profit or loss of the period in which they actually arise. ②The Group as Leaser under Operating Lease Lease income from operating leases shall be recognized by the leaser in profit or loss 106 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. on a straight-line basis over the lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another basis is more systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in the period in which they actually arise. (2)Financing Lease ①The Group as Lessee under Operating Lease For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at the lower of its fair value at the lease commencement and the present value of the minimum lease payments, and the minimum lease payment is recorded as the carrying amount of the long-term payables; the difference between the recorded amount of the leased asset and the recorded amount of the payable is accounted for as unrecognized finance charge, Initial direct costs incurred by the lessee during the process of negotiating and securing the lease agreement shall be added to the amount recognized for the leased asset. The net amount of minimum lease payment deducted by the unrecognized finance shall be separated into long-term liabilities and long-term liability within one year for presentation. Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingent rent shall be booked into profit or loss when actually incurred. ②The Group as Leaser under Operating Lease For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inception of the lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed residual value is recorded at the same time; the difference between the aggregate of the minimum lease receipt, initial direct costs, and unguaranteed residual value, and the aggregate of their present values, is recognized as unearned finance income, which is amortized using the effective interest rate method over each period during the lease term. Finance lease receivable less unearned finance income shall be separated into long-term liabilities and long-term liability within one year for presentation. Unearned finance income shall be computed by the effective interest method during the lease term. Contingent rent shall be credited into profit or loss in which actually incurred. 4.26 Employee Benefits 107 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. The benefits of employees in the Group include short-term benefits, welfare after demission, demission welfare and other long-term welfare. The short-term benefits include the employees’ salary, bonus, allowance and compensation, employee welfare, medical insurance, maternity insurance, employment injury insurance, housing fund, labor union expense and employee education expense and non-currency welfare etc. The Group recognizes the actually incurred short-term employee benefits as liability during the period when the employees’ services are rendered, the expenses are recorded into the current period profit and loss or related asset costs according to the benefit object. For the non-currency welfare, it is recognized according to its fair value. Welfare after demission mainly includes the defined contribution plan and the defined benefit plan. The defined contribution plan and the defined benefit plan mainly include the basic endowment insurance premium, unemployment insurance expense and pension etc..For the defined contribution plan, the sinking fund deposited to the an independent entity for the service provided by employee in the accounting period on the balance sheet is recognized as the debt and included in the current profit and loss or related asset costs according to the benefit object. There is no defined benefit plan in the Group. When the Group cannot unilaterally withdraw the dismissal welfare provided for the plan on the cancellation of labor relationship or layoff proposal, or recognize the cost or expense involved with the recombination of dismissal welfare or payment of such dismissal welfare (whichever is earlier), the employee’s remuneration incurred by dismissal welfare is recognized as the debt and included in the current profits and losses or related assets cost. But when then dismissal is predicted not to be paid in the following 12 months after the report date, it would be classified as other long-term welfare. Employee internal retirement plan is treated as the same way with dismissal welfare mentioned above. The Group would record the relevant salaries and social insurances provided to the employees under the plan into the profits and losses (dismissal welfare) during the period from the day stopping providing the services to the legal retirement day, when the conditions for recognizing the contingency liability are met. Other long-term welfare provided by the Group is referred to as the welfare beside the short-term benefits, welfare after demission, demission welfare. It would be 108 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. recognized as the requirements of defined contribution plan, when conditions are met. Or else, it would be recorded as defined benefit plan. 4.27 Changes in major accounting policies and accounting estimates (1) Changes of accounting policies There were no changes of accounting policies during this period. (2)Changes of accounting estimates There were no changes of main accounting estimations during this period. 4.28 Material accounting judgments and accounting estimations Because of the inherent uncertainties of the operating activities, the Group need to make judgments, estimations and assumptions to the financial statement items whose carrying amount cannot be accurately measured. Those judgments, estimations and assumptions are made based on the management’s historical experience and taking other relevant factors into account. Those judgments, estimations and assumptions would influence the reported amount of revenue, expense, asset and liability and disclosure of the contingency liability on the balance sheet date. However, the actual result caused by the uncertainty of these estimations may be different with the present estimation made by the management, which may cause significant adjustments to the carrying amount of the influenced assets and liabilities in the future. The Group are making periodical review on the judgments, estimations and assumptions mentioned above based on the premise of going concern. For the changes of estimations that only influence the current period, the influenced amount will be recognized in the current period. For the changes of estimations that not only influence the current period ,but also affect the future periods, the influenced amount will be recognized in the current period and future period. As of the balance sheet date, the material areas that need to be judged ,estimated and assumed are listed below: （1） The classification of lease The lease are classified into operating lease and finance lease, according to the “Accounting Standards for Business Enterprise No.21-Lease” .When making the classification, the management need to make analysis and judgment about whether all risk and reward related with the ownership of assets leased out have been substantially transferred to the lessee or not ,or whether all risk and reward related with the ownership of the assets leased have substantially assumed by the Group. （2） The provision for allowance for bad debt 109 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. The Group applies the allowance method to estimate the bad debt, according to the policy of accounts receivable. The impairment of accounts receivable is based on the evaluation of accounts receivable’s possibility of collection. The difference between the actual result and the original estimation would influence the accounts receivable’s carrying value and cause the balance of allowance for bad debt to increase or reverse back during the period when the estimation is changed. （3） Provision for inventory According to inventory accounting policy, the ending inventory is measured by the lower of cost and net realizable value. When the cost is greater than the net realizable value and the obsolete and unsalable inventory, the inventory falling price reserve shall be withdrawn. Reduce the inventory to the net realizable value is based on the evaluation the salable of the inventory and its net realizable value. Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made and take into consideration the purpose for which the inventory is held and the influences of events occurring after the balance sheet date. The difference between the actual result and original estimation will influence the carrying amount of the inventory and cause the provision for inventory to increase or reverse back during the period when the estimation is changed. （4） The fair value of financial instrument For the financial instrument lacking active trading market, the Group will use several valuation methods to make sure the fair value. The methods include the model to analyze the discounted cash flow etc. The Group will evaluate the following aspects, such as the future cash flow, credit risk, market volatility and the relativity etc. and then choose the applicable discounted rate, when making the evaluation. There are uncertainties for the relevant assumptions whose changes will influence the fair value of financial instrument. （5） Provision for non-financial and non-current assets The Group will make judgment on the non-current assets beside the financial assets about whether there are signs for impairment on the balance sheet date. For the intangible assets whose life is uncertain, when there are signs for impairment, it should be tested for impairment, beside the yearly impairment test. Other non-current assets beside the financial statement, when there are signs indicating that the carrying value are unrecoverable, it should be tested for impairment. When the carrying value of the asset or asset group is greater than the recoverable amount (i.e., the net value of fair value less the cost of disposal and present value of 110 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. the predicted future cash flow whichever is higher), it indicates impairment. The net value of fair value less the cost of disposal, is referred to the agreed sale price of similar assets under fair trade or the observable market price, less the incremental cost directly related with the disposal of the assets. The Group need to make significant judgment to the output of assets (or assets group), sale price, relevant operating cost and the discounted rate when estimating the present value of future cash flows. The Group will make use of any relevant material available when estimating the recoverable amount , including the prediction of the output, sale price and relevant operating cost according to reasonable and supportable assumptions. The Group will test the goodwill for impairment at least once a year, which requires to estimate the present value of the future cash flows of the assets and assets group allocated with the goodwill. When estimating the present value to the future cash flow, the Group need to estimate the cash flows generating from the assets and assets group, and choose the applicable discount rate to determine the present value. （6） Depreciation and amortization The Group use the straight-line method to depreciate and amortize the investment real estate, fixed assets and intangible assets within the useful life after taking into the consideration of the residual value. By the way, the amount of depreciation and amortization during the report period are determined. The useful life is determined based on past experience and the predicted technical changes of similar assets. If there are significant changes of previous estimations, the depreciation and amortization would be adjusted in the future periods. （7） Deferred tax asset To the degree that there are sufficient taxable profit to make up the deductible losses, the Group will recognize the deferred tax assets for the un-used deductible losses. It requires the management to apply massive judgments to estimate the time and amount the taxable profits will generate in the future period combining with the strategic of tax planning to determine the amount of deferred tax asset. （8） Income tax There are some uncertainties for some trades’ ultimate tax treatment and calculation. Some items need the determination from the tax authorities about whether they are deductible before tax or not. If the ultimate tax determination are different with the originally estimated amount, the difference will influence the current period income tax and the deferred income tax when the tax determination are finally made. 111 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Note 5 Principal Taxes Applied Taxes and their rates Category Taxable basis Tax rate Value added tax (“VAT”) Goods sales income, taxi operating income 17% & 3% Proceeds from sales of properties, leasing Business tax 5% income, property management income Business tax Construction, installation income 3% Construction tax Turnover tax 7% Education surcharge(Local Turnover tax 5% Educationsurcharge) Income tax Income tax payable 25% & 16.5% Progressive rates ranging Land appreciation tax Sales revenue of properties from 30%-60% *The rate of domestic enterprises is 25%, and the rate of HK enterprises is 16.5%. 112 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Note 6 Notes to the Consolidated Financial Statements Unless specified, the items of the Opening in the followings (including the notes to the Company financial statements) refers to the date of January 1, 2015, the Closing refers to the December 31, 2015; the items of the prior period refers to the year 2014, the current period refers to the year 2015. 6.1 Monetary funds Item Closing balance Opening balance Cash on hand 54,487.37 61,413.08 Cash in bank 1,169,701,818.99 670,058,435.95 Other monetary funds 6,000,000.00 8,837,400.00 Total 1,175,756,306.36 678,957,249.03 Including amount deposited in the foreign countries 9,096,056.99 9,057,907.94 Note: (1)As of Dec.31,2015, for the funds that the Group’s ownership are restricted is RMB 6,000,000.00 deposited in the Company's rent escrow account for the Company's borrowings. 6.2Note receivables (1)Note receivables by types Item Closing balance Opening balance Bank acceptance -- -- Trade acceptance 18,663,872.02 119,846,192.64 Total 18,663,872.02 119,846,192.64 (2)Note receivables pledged at year end As at end of the year, there were no any note receivables which had been pledged. (3)Note receivables endorsed or discounted at year end and not matured yet on the balance sheet date Item Amt. derecognized at year end Amt. not derecognized at year end Bank acceptance -- -- Trade acceptance -- 18,663,872.02 Total -- 18,663,872.02 Note: As of Dec.31,2015, the trade acceptance discounted but not matured is RMB 18,663,872.02(RMB 77,033,595.47 as of Dec.31,2014), the balance of related pledged borrowing is 18,663,872.02(RMB 77,033,595.47 as of Dec.31,2014) (referring to the note 6.16). When the trade acceptance cannot be honored when it is mature, the bank has the power to ask the Group to repay the amount un-settled. The Group continues to 113 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. recognize the carrying amount of the trade acceptance and records the amount received as pledged borrowing because of the transfer, due to the Group’s undertaking the main risk, such as credit risk, relating with the trade acceptance. (4)There are no situations of reclassifying the note receivables to the accounts receivables, because of the issuer dishonoring. 6.3Accounts receivables (1) Accounts receivable by categories Closing balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Accounts receivable of which provision for -- -- -- -- bad debts is of individually significant Accounts receivable of which provision for 131,787,566.17 100.00 19,243,657.51 14.60 bad debts is of individually insignificant Total 131,787,566.17 100.00 19,243,657.51 14.60 (Continued) Opening balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Accounts receivable of which provision for -- -- -- -- bad debts is of individually significant Accounts receivable of which provision for 103,554,193.95 100.00 19,165,351.52 18.51 bad debts is of individually insignificant Total 103,554,193.95 100.00 19,165,351.52 18.51 (2) Accounts receivable by aging balance Closing balance Opening balance Amount (%) Amount (%) Within 1 year 102,662,642.01 77.90 75,192,337.53 72.61 1-2 years 1,190,655.05 0.90 3,040,957.54 2.94 2-3 years 2,631,545.04 2.00 253,116.00 0.24 Over 3 years 25,302,724.07 19.20 25,067,782.88 24.21 Total 131,787,566.17 100.00 103,554,193.95 100.00 (3) Bad debt provision The bad debt provision of accounts receivable during this period is RMB 78,306.00. Bad debt provision of accounts receivable which is of individually insignificant 114 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Proportion of Reasons for the Content of accounts receivable Carrying amount Amount of bad debt provision provision Receivables of import and export A separate provision is agency business 11,574,556.00 11,574,556.00 100 established according House pay to be collected 11,049,363.77 6,968,694.02 63.07 to the recoverability of each receivable with Engineering construction funds long aging and little and others 109,163,646.40 700,407.49 0.64 retrievability. Total 131,787,566.17 19,243,657.51 14.60 (4)There were no any account receivables which had been accrued fully or large proportion provision but had been fully collected or reversed back in this accounting year. (5) There were no any significant account receivables which had been written off in this accounting year. (6)No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the above balance of accounts receivable. (7) Top 5 entities with the largest balances of accounts receivable Proportion of the amount Name of entity Relationship with the Group Amount Age to the total AR (%) Corporate unit No.1 Un-related party 99,754,414.27 Within 1 year 75.69 Corporate unit No.2 Un-related party 1,898,129.55 Within 1 year 1.44 Individual No.1 Un-related party 1,200,000.00 over 5 years 0.91 Corporate unit No.3 Related party 1,137,877.25 Within 1 year 0.86 Individual No.2 Un-related party 876,864.11 over 5 years 0.67 Total 104,867,285.18 79.57 (8) Details for receivables due from related parties, please refer to Note 9.6. (9) There were no any accounts receivable that have been derecognized. (10) There were no any accounts receivable which had been securitized. 6.4Prepayments (1) Aging analysis Closing balance Opening balance Aging Amount (%) Amount (%) Within 1 year 20,002,413.22 87.15 17,816,263.48 99.96 1-2 years 2,949,204.73 12.85 2,735.00 0.02 115 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. 2-3 years -- -- -- -- Over 3 years 761.45 0.00 2,749.75 0.02 Total 22,952,379.40 100.00 17,821,748.23 100.00 (2) Top 5 entities with the largest balances of prepayments Name of entities Relationship with the Group Amount Timing Reasons for unsettlement The un-settled prepayment of Project 1 Un-related party 9,679,720.01 Within 1 year engineering materials and materials un-warehousing The un-settled prepayment of Project 2 Un-related party 6,772,528.16 Within 1 year engineering materials and materials un-warehousing The un-settled prepayment of Project 3 Un-related party 2,042,190.43 Within 1 year engineering materials and materials un-warehousing The un-settled prepayment of Project 4 Un-related party 1,291,000.00 Within 1 year engineering materials and materials un-warehousing The un-settled prepayment of Project 5 Un-related party 654,289.00 Within 1 year engineering materials and materials un-warehousing Total 20,439,727.60 (3) No prepayments to shareholders at least 5% of the Group’s shares with voting power during the current period. 6.5 Dividends receivables (1) Details of dividends receivable Item(Or name of investee) Closing balance Opening balance Yunnan KunPeng Flight service Co., Ltd 1,052,192.76 1,052,192.76 Total 1,052,192.76 1,052,192.76 (2) Dividends receivable aging over 1year Reasons for Closing Whether the amount is impaired Item(Or name of investee) Aging uncollected balance and the base of judgment amounts Yunnan KunPeng Flight service Co., Ltd 1,052,192.76 3-4 years Delay to pay No Total 1,052,192.76 6.6 Other receivables 116 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (1) Other receivables by categories Closing balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Other receivables of which provision for bad debts is of individually significant 162,687,688.88 65.17 157,552,042.76 96.84 Other receivables of which provision for bad debts is of individually insignificant 86,943,815.99 34.83 30,406,118.69 34.97 Total 249,631,504.87 100.00 187,958,161.45 75.29 (Continued) Opening balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Other receivables of which provision for 162,317,209.49 68.13 148,762,358.18 91.65 bad debts is of individually significant Other receivables of which provision for 75,916,605.39 31.87 29,943,158.49 39.44 bad debts is of individually insignificant Total 238,233,814.88 100.00 178,705,516.67 75.01 (2) Other receivables by aging balance Closing balance Opening balance Amount (%) Amount (%) Within 1 year 17,952,055.06 7.19 13,021,175.42 5.47 1-2 years 9,312,721.81 3.73 4,521,021.36 1.90 2-3 years 3,130,052.57 1.25 4,927,273.39 2.07 Over 3 years 219,236,675.43 87.83 215,764,344.71 90.56 Total 249,631,504.87 100.00 238,233,814.88 100.00 (3) Other receivables by nature Nature Closing balance Opening balance Other receivables between subsidiaries that are not included in the consolidated statement 130,433,537.72 129,692,578.94 Others 119,197,967.15 108,541,235.94 Total 249,631,504.87 238,233,814.88 (4) Bad debt provision (a) Bad debt provision of other receivables which is of individually significant 117 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Content of accounts Amount of bad Proportion of Carrying amount Reasons for the provision receivable debt provision A separate provision is Other receivables between established according to the subsidiaries that are not 129,109,401.68 129,109,401.68 100.00 recoverability of each included in the consolidated receivables with long aging and statement little retrievability Others 33,578,287.20 28,442,641.08 84.71 Total 162,687,688.88 157,552,042.76 96.84 (b) Bad debt provision of other receivables which is of individually insignificant Proportion of Amount of bad Content of other receivables Carrying amount Reasons for the provision provision debt Other receivables between A separate provision is subsidiaries that are not established according to the 1,324,136.04 1,116,316.04 84.31 included in the consolidated recoverability of each statement receivables with long aging and Others 85,619,679.95 29,289,802.65 34.21 little retrievability Total 86,943,815.99 30,406,118.69 34.97 (5)There were no any account receivables which had been accrued fully or at large proportion provision but had been fully collected or reversed back during the current period. (6)There were no any other material receivables written off during the current period. (7)There were no any other receivables due from shareholders at least 5% of the Group’s shares with voting power during the current period. (8)Top 5 entities with the largest balances of other receivables Proportion of the Provision for bad Relationship with Name of entity Amount Age amount to the debt at year end the Group total OR (%) Canada Great Subsidiary Above 3 years Wall( Vancouver) Co.,Ltd * 89,035,748.07 35.66 89,035,748.07 Bekaton property Limited * Subsidiary 12,559,290.58 Above 3 years 5.03 12,559,290.58 Paklid Limited * Subsidiary 18,816,702.93 Above 3 years 7.54 18,816,702.93 Guangdong province Huizhou Joint venture Above 3 years Luofu Hill Mineral Water 10,465,168.81 4.19 10,465,168.81 118 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Proportion of the Provision for bad Relationship with Name of entity Amount Age amount to the debt at year end the Group total OR (%) Co.,Ltd Luofu Hill Travelling Un- related party Above 3 years Corporation 9,600,000.00 3.85 4,800,000.00 Total 140,476,910.39 56.27 135,676,910.39 Note: The above subsidiaries were not included in the Group’s consolidated financial statements. Refer to Note 8.1 for details. (9)For details of receivables due from related parties, please refer to Note 9.6. (10) There were no any other receivables that have been derecognized. (11) There were no any other receivables which had been securitized during the current period. 6.7 Inventory (1) Categories of inventory Closing balance Item Carrying amount Provision for inventories Net carrying amount Real estate development projects Real estate developing products 545,991,041.32 -- 545,991,041.32 Real estate developed products 1,391,791,237.50 12,991,351.75 1,378,799,885.75 Real estate which are going to be developed 159,653,497.75 -- 159,653,497.75 Non real estate development projects Raw materials 525,723.92 -- 525,723.92 Finished products 673,786.32 278,891.91 394,894.41 Low-value consumable products -- -- -- Construction in progress 60,858,852.46 -- 60,858,852.46 Total 2,159,494,139.27 13,270,243.66 2,146,223,895.61 (Continued) Opening balance Item Carrying amount Provision for inventories Net carrying amount Real estate development projects Real estate developing products 206,672,758.28 -- 206,672,758.28 119 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Real estate developed 2,236,980,404.61 25,114,387.88 2,211,866,016.73 products Real estate which are going to 324,164,580.02 -- 324,164,580.02 be developed Non real estate development projects Raw materials 522,104.77 -- 522,104.77 Finished products 643,946.37 278,891.91 365,054.46 Low-value consumable -- -- -- products Construction in progress 52,961,142.16 -- 52,961,142.16 Total 2,821,944,936.21 25,393,279.79 2,796,551,656.42 (2) Real estate developing products Estimated total Starting time Finished time Closing balance Opening balance investment ChuanQi DongHu Building(Fromer 2018 73,200.00 97,301,146.79 136,423,233.30 DongHuDiJing Building) JingTian Heaven 2015 2017 11,000.00 49,285,247.15 -- International Apartment Shengfang CuiLin Building) 2015 2017 50,000.00 147,515,288.98 46,371,960.75 ShanTou Fresh Peak 24,396,781.61 23,877,564.23 Building TianYue Bay No.1 2015 2018 79,801.00 227,492,576.79 -- Total 545,991,041.32 206,672,758.28 Note: In 2014, according to the government planning, DongHuDiJing Building project’s H312-0061 land parcel volume rate is decreased from 10.1 to 5.8. In order to compensate the Group, Shenzhen Municipal Land Planning Commission’s first direct authority issued the document, determining to replace DongHuDiJing Building project’s decreased H312-0061land parcel with the area of Jingtian, statutory chart 08-22 land parcel.the related procedures are completed in 2015.The general contracting bidding of ChuanQi DongHu Building is completed and is going to be constructed.JingTian project has already been on operation in 2015. (3)Real estate developed products 120 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Finished Name of project Opening balance Additions Reductions Closing balance time Jinye Island Multi-tier villa 1997 38,933,768.09 -- -- 38,933,768.09 Jinye Island villa No.6 2007 2,961,996.22 -- -- 2,961,996.22 Jinye Island villa No.10 2010 32,478,194.38 -- 8,879,414.94 23,598,779.44 Jinye Island villa No.11 2008 13,177,368.28 -- 98,764.74 13,078,603.54 YueJing dongfang Project 2014 117,347,660.94 -- 22,329,624.03 95,018,036.91 Wenjing Garden 3,818,939.87 -- -- 3,818,939.87 Real Estate building 11,025,444.77 -- -- 11,025,444.77 HuaFeng Building 1,631,743.64 -- -- 1,631,743.64 HuangPuXinCun 350,245.69 -- 60,442.81 289,802.88 Wenjin Warehouse 13,507,895.61 -- 13,507,895.61 -- XingHu Garden 156,848.69 -- -- 156,848.69 Chuanqishan Project 2013 1,310,962,978.80 -- 583,742,826.06 727,220,152.74 Shenfang Shanglin Garden 2014 689,955,498.96 -- 216,202,935.30 473,752,563.66 BeiJing Fresh Peak Buliding 671820.67 -- 367,263.62 304,557.05 Total 2,236,980,404.61 -- 845,189,167.11 1,391,791,237.50 Real estate which are going to be developed Opening balance Additions Reductions Closing balance TianYue Bay No.2 324,164,580.02 164,511,082.27 159,653,497.75 (Shantou Jingzaiwan) -- Total 324,164,580.02 -- 164,511,082.27 159,653,497.75 The reduction of this year is as the development of Shantou Jingzaiwan project is separated into two-part operation,first phase construction begun in this year and the land premium is put into construction product development - TianYue Bay No.1. (5) Movement of Provision of inventories Decrease Item Opening balance Increase Closing balance Reversals Write-off Shengfang Shanglin Garden 25,114,387.88 -- -- 12,123,036.13 12,991,351.75 Finished products 278,891.91 -- -- -- 278,891.91 Total 25,393,279.79 12,123,036.13 13,270,243.66 (6) Capitalized borrowing cost at year end is RMB 53,885,784.79,for the detail please refer the following information: Capitalization Capitalization Name of project Opening balance fund Indirect import Closing balance rate YueJing dongfang Project 1,692,512.28 -- 340,168.31 1,352,343.97 121 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Capitalization Capitalization Name of project Opening balance fund Indirect import Closing balance rate Chuanqishan Project 55,379,950.40 -- 33,432,600.82 21,947,349.59 Shengfang Shanglin Garden 40,855,564.42 -- 19,720,803.58 21,134,760.84 Shengfang CuiLin Building -- 705,566.51 -- 705,566.51 TianYue Bay No.1 -- 8,745,763.89 -- 8,745,763.89 5.35% 合 计 97,928,027.11 9,451,330.40 53,493,572.71 53,885,784.79 6.8 Other current assets Item Contents Closing balance Opening balance Value added tax Input tax to be deducted 4,747,581.57 4,382,360.04 Business tax Tax paid for advances from customers 12,721,511.78 -- City construction surcharge Tax paid for advances from customers 991,440.88 32,221.30 Education surcharge Tax paid for advances from customers 300,938.18 -- Local education surcharge Tax paid for advances from customers 214,188.54 -- Embankment Protection Fee Tax paid for advances from customers 5,737.34 60,353.35 Increment tax on land value Tax paid for advances from customers 18,334,432.77 7,961,089.71 Financial products of trust 3,000,000.00 -- Total 40,315,831.06 12,436,024.40 6.9 Available-for-sale financial assets (1) Details of available-for-sale financial assets Closing balance Opening balance Item Book balance Impairment Book value Book balance Impairment Book value Available-for-sale debt -- -- -- -- -- -- instrument Available-for-sale 17,464,240.74 -- 17,464,240.74 17,464,240.74 -- 17,464,240.74 equity instrument Including：measured by -- -- -- -- -- -- fair value Measured by cost 17,464,240.74 -- 17,464,240.74 17,464,240.74 -- 17,464,240.74 Others -- -- -- -- -- -- Total 17,464,240.74 -- 17,464,240.74 17,464,240.74 -- 17,464,240.74 122 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (2)Available-for-sale financial assets measured by cost at year end Book balance Provision for impairment Proportion Curr. Investee Opening rate in year Opening bal. Increase. Decrease Closing bal. increase decrease Closing bal. bal. investee（%） cash div. Shantou Small &Medium Enterprises 12,000,000.00 -- -- 12,000,000.00 -- -- -- -- 10.00 -- Financing Guarantee Co., Ltd Yunnan KunPeng Flight service Co.,Ltd 5,464,240.74 -- -- 5,464,240.74 -- -- -- -- 25.00 -- Total 17,464,240.74 -- -- 17,464,240.74 -- -- -- -- -- Note: The Group’s shareholding proportion to Yunnan Kunpeng Flight service Co., Ltd is 25%. Because the Group have no participating right to its finance and operating policies, the Group cannot exercise the significant influence on the investee. 6.10Long-term equity investments (1) Long-term equity investments by types Change amount of this year Opening Other Invested company Additional Negative Profit and loss on investments Other equity balance comprehensive investment investment confirmed with equity method change income adjustment I.Joint ventures Guangdong province Huizhou Luofu Hill Mineral 9,969,206.09 -- -- -- -- -- Water Co.,Ltd Fengkai Xinhua Hotel 9,455,465.38 -- -- -- -- -- Jiangmen Xinjiang Real Estate Co., Ltd 9,037,070.89 -- -- -- -- -- Xi’an Fresh Peak Property Trading Co., Ltd 32,840,729.61 -- -- -- -- -- Dongyi Real Estate Co., Ltd 30,376,084.89 -- -- -- -- -- 123 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Change amount of this year Opening Other Invested company Additional Negative Profit and loss on investments Other equity balance comprehensive investment investment confirmed with equity method change income adjustment Subtotal 91,678,556.86 -- -- -- -- -- II.Affiliated enterprises Shenzhen Ronghua JiDian Co.,ltd 1,372,207.20 -- -- 38,717.57 -- -- Shenzhen Runhua Automobile trading Co.,Ltd 1,445,425.56 -- -- -- -- -- Subtotal 2,817,632.76 -- -- 38,717.57 -- -- III.Other equity investments 206,636,006.42 -- -- -- -- -- Subtotal 206,636,006.42 -- -- -- -- -- Total 301,132,196.04 -- -- 38,717.57 -- -- (Continuted) Change amount of this year Ending Provision for impairment balance Invested company Change amount Ending Invested company balance at year end of this year balance I.Joint ventures Guangdong province Huizhou Luofu Hill Mineral -- -- -- 9,969,206.09 9,969,206.09 Water Co.,Ltd Fengkai Xinhua Hotel -- -- -- 9,455,465.38 9,455,465.38 Jiangmen Xinjiang Real Estate Co., Ltd -- -- -- 9,037,070.89 912,537.16 Xi’an Fresh Peak Property Trading Co., Ltd -- -- -- 32,840,729.61 20,673,831.77 Dongyi Real Estate Co., Ltd -- -- -- 30,376,084.89 21,225,715.87 Subtotal -- -- -- 91,678,556.86 62,236,756.27 124 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Change amount of this year Ending Provision for impairment balance Invested company Change amount Ending Invested company balance at year end of this year balance II.Affiliated enterprises Shenzhen Ronghua JiDian Co.,ltd -- -- -- 1,410,924.77 1,076,954.64 Shenzhen Runhua Automobile trading Co.,Ltd -- -- -- 1,445,425.56 1,445,425.56 Subtotal -- -- -- 2,856,350.33 2,522,380.2 III.Other equity investments -- -- -- 206,636,006.42 178,642,972.78 Subtotal -- -- -- 206,636,006.42 178,642,972.78 Total -- -- -- 301,170,913.61 243,402,109.25 Note: The details of other equity investments are listed on note 8.1-Equity in subsidiaries. 125 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. 6.11 Investment properties Investment properties measured at cost. Construction in Item House& building Land-use right Total progress I.Original carrying value 1.Opening balance 757,560,363.04 94,368,659.33 -- 851,929,022.37 2.Increase in the year -- 5,434,860.40 -- 5,434,860.40 （1）Outsourcing -- -- -- -- （2）Carried over from inventory -- -- -- -- （3）Others -- 5,434,860.40 -- 5,434,860.40 3.Decrease in the year -- -- -- -- 4.Closing balance 757,560,363.04 99,803,519.73 -- 857,363,882.77 II. Accumulative depreciation& amortization 1.Opening balance -- -- 305,719,209.78 305,719,209.78 2.Increase in the year -- -- 20,544,158.64 20,544,158.64 （1）Withdrawing or amortization -- -- 20,544,158.64 20,544,158.64 （2）Carried over from assets -- -- -- -- 3.Decrease in the year -- -- -- -- 4. Closing balance 326,263,368.42 -- -- 326,263,368.42 III. Provision for impairment 1.Opening balance -- 91,581,306.62 14,128,544.62 77,452,762.00 2.Increase in the year -- -- 4,460,643.53 4,460,643.53 3.Decrease in the year -- -- -- -- 4.Closing balance -- 96,041,950.15 14,128,544.62 81,913,405.53 IV. Book value 1.Closing book value -- 126 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Construction in Item House& building Land-use right Total progress 417,168,450.00 17,890,114.20 435,058,564.20 2.Opening book value 437,712,608.64 16,915,897.33 454,628,505.97 Note:(a) Current year depreciation and amortization is RMB 20,544,158.64; (b)The increase of original carrying value and provision for impairment of land-use right is caused by the fluctuation of foreign exchange rate when translating the foreign currency financial statements; (c)Among the investment properties, there were house &building with carrying value RMB 358,193,091.33 that were used as mortgage of long-term loans(including the long-term loans that will mature within one year), referring to note 6.45 for details. 6.12 Fixed assets Electronic Houses& Transportation Item equipment and Total Buildings equipment others I.Original carrying value 1.Opening balance 106,068,689.59 15,927,469.18 14,232,832.72 136,228,991.49 2. Increase in the year 2,870,061.83 2,796,742.64 510,328.92 6,177,133.39 （1）Purchasing 2,870,061.83 2,796,742.64 510,328.92 6,177,133.39 （2）Transferred from the construction in -- -- -- -- progress 3. Decrease in the year 1,828,000.00 1,459,444.00 514,833.36 3,802,277.36 （1）Disposal or discard as useless -- -- -- -- （2）Decrease of cooperation combination -- -- -- -- （3）Transferred to investment property -- -- -- -- 4. Closing balance 107,110,751.42 17,264,767.82 14,228,328.28 138,603,847.52 II. Accumulated depreciation 1.Opening balance 59,822,761.65 11,908,897.93 10,176,035.69 81,907,695.27 2. Increase in the year 5,281,127.97 1,342,714.30 1,399,238.41 8,023,080.68 Including：withdrawing 5,281,127.97 1,342,714.30 1,399,238.41 8,023,080.68 3. Decrease in the year 1,668,237.72 1,386,471.80 486,204.22 3,540,913.74 127 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Electronic Houses& Transportation Item equipment and Total Buildings equipment others （1）Disposal or discard as useless 1,668,237.72 1,386,471.80 486,204.22 3,540,913.74 （2）Decrease of corporate combination -- -- -- -- （3）Transferred to investment property -- -- -- -- 4. Closing balance 63,435,651.90 11,865,140.43 11,089,069.88 86,389,862.21 III. Provision for Impairment 1.Opening balance -- -- -- -- 2. Increase in the year -- -- -- -- Including：Withdrawing -- -- -- -- 3. Decrease in the year -- -- -- -- 4. Closing balance -- -- -- -- IV. Book value -- -- -- -- 1. Ending book value 43,675,099.52 5,399,627.39 3,139,258.40 52,213,985.31 2. Beginning book value 46,245,927.94 4,018,571.25 4,056,797.03 54,321,296.22 Note: (1)The depreciation for the current year is RMB 8,023,080.68. There were no constructions in progress transferred to fixed assets during the period. (2)Details of fixed assets whose ownership are restricted As of 31 December 2015, amounting to RMB 22,023,775.71 of houses& buildings were used as mortgage for the long-term loans (including long-term loans that would mature within one year). Refer to Note 6.45. 6.13 Intangible assets Item Software Taxi license Total I.Carrying value 1. Opening balance 2,241,800.00 6,368,000.00 8,609,800.00 2.Increase in the year -- -- -- （1）Purchased -- -- -- （2）Internally developed -- -- -- （3）Increase of corporate combination -- -- -- 3. Decrease in the year -- -- -- （1）Disposal -- -- -- 128 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Item Software Taxi license Total （2）Decrease of corporate combination -- -- -- 4. Closing balance 2,241,800.00 6,368,000.00 8,609,800.00 II. Accumulated amortization 1.Opening balance 1,180,653.17 1,227,920.00 2,408,573.17 2. Increase in the year 167,580.00 378,826.83 546,406.83 Including：withdrawing 167,580.00 378,826.83 546,406.83 3. Decrease in the year -- -- -- （1）Disposal -- -- -- （2）Decrease of corporate combination -- -- -- 4. Closing balance 1,348,233.17 1,606,746.83 2,954,980.00 III. Provision for impairment -- 1. Opening balance -- -- -- 2. Increase in the year -- -- -- Including: withdrawing -- -- -- 3. Decrease in the year -- -- -- 4. Closing balance -- -- -- IV. Book value 1. Ending book value 893,566.83 4,761,253.17 5,654,820.00 2. Beginning book value 1,061,146.83 5,140,080.00 6,201,226.83 6.14 Long-term deferred assets Opening Other Closing Reason for other Item Increase Amortization balance reductions balance reductions Renovation costs 237,242.59 441,475.05 287,025.90 -- 391,691.74 Others 76,916.82 70,999.92 -- 5,916.90 Total 314,159.41 441,475.05 358,025.82 -- 397,608.64 6.15 Deferred tax assets (1) Recognized deferred tax assets Closing balance Opening balance Item Deductible or taxable Deferred tax Deductible or taxable Deferred tax assets temporary differences assets temporary differences Provision for land appreciation -- -- tax liquidation reserves 13,815,126.66 55,260,506.64 129 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Provision for impairment 6,278,596.97 25,114,387.88 losses of assets 3,247,837.94 12,991,351.75 Deductible loss 5,516,704.85 22,066,819.40 3,908,766.86 15,635,067.44 Expected profit for advances 2,324,965.32 9,299,861.26 from customers 8,937,569.06 35,750,276.24 Eliminated unrealized profit when consolidating financial 1,344,264.82 5,377,059.31 statement 680,129.70 2,720,518.78 Total 32,197,368.21 128,789,472.81 13,856,593.97 55,426,375.89 (2) Details of unrecognized deferred tax assets Item Closing balance Opening balance Deductible operating losses 3,374,340.71 1,718,556.24 Bad debt provision 49,490,244.69 49,444,405.95 Provision for decline in value of inventories 69,722.98 69,722.98 Provision for impairment of long-term investments 60,850,527.31 60,850,527.31 Provision for impairment of investment properties 22,895,326.66 22,895,326.66 Total 136,680,162.35 134,978,539.14 (3) Unrecognized deductible losses of deferred tax assets will be expire at the end of following years Year Closing balance Opening balance 2015 -- 2,662,914.18 2016 1,008,640.93 1,008,640.93 2017 138,864.68 136,226.52 2018 1,665,661.89 2,942,317.62 2019 124,125.69 124,125.69 2020 17,615,495.00 -- Total 20,552,788.19 6,874,224.94 6.16 Short-term loans Item Closing balance Opening balance Entrusted loan -- -- Credit Loan 25,000,000.00 30,000,000.00 Mortgage Loan -- -- Pledged Loan 118,418,286.29 119,846,192.64 合计 143,418,286.29 149,846,192.64 130 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Note: Refer to note 6.2/Notes receivable for the details of pledged loan and note 6.45. 6.17 Notes payable Item Closing balance Opening balance Trade acceptance -- -- Bank acceptance -- 2,780,000.00 Total -- 2,780,000.00 Note: There were no notes payable that were mature but not paid at the end of the year. 6.18 Accounts payable (1) Details of accounts payable Item Closing balance Opening balance Within 1 year 23,462,580.29 298,794,068.00 Over 1 year 266,990,530.21 242,744,694.36 Total 290,453,110.50 541,538,762.36 (2)There were no any accounts payable to shareholders holding at least 5% of the Group’s shares with voting right or to related parties in the reporting period. (3)Significant accounts payable aged more than one year is for the unsettled project at the end of the period. 6.19 Advances from customers (1) Details of advances from customers Item Closing balance Opening balance Within one year 469,766,020.08 116,587,933.19 Over one year 5,854,327.27 27,727,988.15 Total 475,620,347.35 144,315,921.34 (2) There were no any advances from customers to shareholders holding at least 5% of the Group’s shares with voting right or to related parties in the reporting period. (3)Significant advances from customers aged more than one year is the import and export agency business payment and advanced payment from housing buyers, as such receipts have not been transferred to income at the end of the year. 131 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (4) Details of advances from customers Item Closing balance Opening balance Estimated time of completion Jinye Island villa No.6 6,500,000.00 6,500,000.00 Completed Jinye Island villa No.10 11,504,069.00 27,191,578.00 Completed Jinye Island villa No.11 2,926,326.00 632,624.00 Completed Shenfang Chuanqishan 243,465,702.60 36,241,532.00 Completed Shenfang Shanlin Garden 96,077,847.00 20,315,434.00 Completed Yuejing dongfang 40,497,969.00 8,637,269.00 Completed Total 400,971,913.60 99,518,437.00 6.20 Employee benefits payable (1) Details of employee benefits payable Item Opening balance Increase Decrease Closing balance I.Short-term remuneration 36,791,196.66 129,443,745.47 128,762,567.78 37,472,374.35 II. Post-employment benefit-defined benefit plans 1,277,645.37 11,854,961.34 11,854,961.34 1,277,645.37 III. Severance welfares -- -- -- -- IV. Other benefits due within 1 year -- -- -- -- Total 38,068,842.03 141,298,706.81 140,617,529.12 38,750,019.72 (2) Details of short-term remuneration Item Opening balance Increase Decrease Closing balance I.Salary, bonus, allowance and subsidies 34,905,319.98 114,533,192.24 113,808,784.68 35,629,727.54 II. Employee welfare -- 2,975,940.99 2,975,940.99 -- III. Social insurance premium 1,094,679.31 5,102,895.62 5,102,895.62 1,094,679.31 Including: Medical insurance premium 1,093,804.76 3,283,431.75 3,283,431.75 1,093,804.76 Industries insurance premium 672.12 314,930.26 314,930.26 672.12 Maternity insurance premium 202.43 1,504,533.61 1,504,533.61 202.43 IV. Housing fund 4,140.10 5,563,506.18 5,519,485.42 48,160.86 V. Union expenses and employee education 787,057.27 1,268,210.44 1,355,461.07 699,806.64 expenditure VI. Short-term paid absence -- -- -- -- VII. Short-term profit share plan -- -- -- -- Total 36,791,196.66 129,443,745.47 128,762,567.78 37,472,374.35 132 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (3) The details of defined contribution plans Item Opening balance Increase Decrease Closing balance I. Basic endowment insurance 1,250,798.81 8,388,863.52 8,388,863.52 1,250,798.81 premium II. Unemployment insurance 114.92 3,246,699.07 3,246,699.07 114.92 premium III. Company annuity payment 26,731.64 219,398.75 219,398.75 26,731.64 Total 1,277,645.37 11,854,961.34 11,854,961.34 1,277,645.37 Note: The Group participates in the basic endowment insurance and unemployment plan sponsored by the government according to the regulations. Beside the monthly payment mentioned above, the Group undertakes no further payment obligation. The related expenses are recognized in profit and loss or the cost of relevant asset in the current period incurred. 6. 21 Taxes payable Item Closing balance Opening balance Corporate income tax 52,363,258.82 71,199,952.35 Individual income tax 923,572.01 732,767.28 Property tax 1,715,996.96 1,763,706.34 Land appreciation tax 5,708,711.22 7,142,066.16 Business tax 2,066,816.91 13,509,112.94 Construction tax 106,889.20 856,235.33 Education surcharge 50,165.66 475,089.21 Local Education surcharge 22,824.84 298,969.54 Others 501,179.80 417,094.52 Total 63,459,415.42 96,394,993.67 6.22 Interest payable Item Closing balance Opening balance Interest of long-term loans with interest payable by 1,000,000.00 2,181,117.24 installments and principle payable on maturity Interest payable on short-term loans -- -- Others 16,535,277.94 16,535,277.94 Total 17,535,277.94 18,716,395.18 Note: The balance of “Other” interests payable due to Shenzhen Investment Holdings Co.，Ltd., being accrued for the loans interst. Please refer refer to note 9.6 (2). 133 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. 6.23 Other payables (1)Details of other payables Item Closing balance Opening balance Land appreciation tax accrued 146,838,995.86 128,273,955.95 Payable to related parties 63,340,761.01 88,340,761.01 Deposits 82,194,532.63 48,535,401.89 Others 93,437,014.83 141,721,798.91 Total 385,811,304.33 406,871,917.76 (2) Other payables to shareholders holding at least 5% of the Group’s shares with voting right or to related parties in the reporting period. Please refer to Note 9.6 Related party accounts receivable and payable. (3) Description of significant other payables aged more than one year Name of entity Amount Reason for overdue If paid after reporting date Tax accrued- land appreciation tax 43,347,446.23 Unexpired No Shenzhen Investment Holdings Co.，Ltd. 28,848,819.24 Unsettled No Total 72,196,265.47 (4) Description for significant balances of other payables The Group made provision for LAT, according to Guo Shui Fa [2006] No. 187 "LAT liquidation management issues of real estate development enterprises made by the State Administration of Taxation ". As at December 31, 2015, the closing balance is RMB 146,838,995.86. 6.24 Non-current liabilities due within one year (1)Details of non-current liabilities due within one year Item Closing balance Opening balance Long-term loans due within one year (Note 6.25) 168,727,608.54 453,207,700.00 Total 168,727,608.54 453,207,700.00 (2) Long-term loan due within one year 1) Details of Long-term loan due within one year Item Closing balance Opening balance Loan with mortgage 168,727,608.54 453,207,700.00 Total 168,727,608.54 453,207,700.00 2)Top 5 long-term loans due within one year 134 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Inception Lender date of Maturity date Currency Closing balance Opening balance loans Huashang Bank (Shenzhen Branch) 2015.4.1 2016.12.1 RMB 40,000,000.00 -- 2012.8.28 2015.8.27 RMB -- 100,000,000.00 CCB (Shenzhen Branch) 2012.11.21 2015.8.27 RMB -- 100,000,000.00 2014.11.27 2016.12.27 RMB 24,000,000.00 24,000,000.00 2014.12.1 2015.12.1 RMB 50,000,000.00 Shenzhen Rural Commercial Bank 2013.8.29 2016.12.21 RMB 13,200,000.00 13,200,000.00 2012.6.14 2015.6.14 RMB -- 40,909,090.94 2012.9.29 2015.12.29 RMB -- 20,000,000.00 Huaxia Bank (Buji Branch) 2012.10.24 2015.12.24 RMB -- 20,000,000.00 Bank of Shanghai (Shenzhen 2013.12.27 2016.12.27 RMB 48,000,000.00 Branch) 48,000,000.00 Zheshang Bank（Shenzhen Branch） 2013.8.23 2016.12.22 RMB 20,000,000.00 20,000,000.00 NCB Bank（Shenzhen Branch） 2007.12.29 2016.12.29 RMB 13,527,608.54 -- Total 158,727,608.54 436,109,090.94 Note: (a)Amounts repaid after the balance sheet date are RMB 17,431,440.20. (b)The rates of above borrowing depend on the benchmark interest rate of the People's Bank of China for the same period plus a certain proportion floating of the benchmark interest rate. 6.25 Long-term loans (1) Long-term loans categories Item Closing balance Opening balance Loan with mortgage 550,960,933.42 932,193,279.95 Less: long-term loans due within one year (Note 6.24) 168,727,608.54 453,207,700.00 Total 382,233,324.88 478,985,579.95 Note: The categories and amounts of mortgaged assets of mortgaged loans are shown in note 6.45. (2)Top 5 significant long-term loans Lender The inception of loans Maturity date Currency Closing balance Opening balance 135 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Huashang Bank (Shenzhen RMB -- Branch) 2015.4.1 2025.4.1 140,000,000.00 Shenzhen Rural 2014.11.27 2019.11.27 RMB 70,000,000.00 94,000,000.00 Commercial Bank 2013.8.29 2018.8.29 RMB 66,000,000.00 79,200,000.00 2012.9.29 2017.9.29 RMB -- 35,000,000.00 Huaxia Bank (Buji Branch) 2012.10.24 2017.10.24 RMB -- 40,000,000.00 Zheshang Bank(Shenzhen 2013.8.23 2018.8.16 RMB 93,000,000.00 Branch) 73,000,000.00 Bank of Shanghai 2013.12.27 2016.12.27 RMB 54,000,000.00 (Shenzhen Branch) 6,000,000.00 Beijing Bank(Shenzhen 2014.12.9 2017.12.9 RMB 40,000,000.00 Branch) 30,000,000.00 Total 385,000,000.00 435,200,000.00 Note: The rates of above loans depend on the benchmark interest rate of the People's Bank of China for the same period adding a certain floating proportion of the benchmark interest rate. 6.26 Long-term payables Details of long-term payables Item Closing balance Opening balance Maintenance fund 10,480,629.35 11,267,012.97 Total 10,480,629.35 11,267,012.97 6.27 Share capital Changes for the period（+ 、-） Newly Capitalization Item Opening balance Bonus Closing balance issued of surplus Other Subtotal issued shares reserve Total shares 1,011,660,000.00 -- -- -- -- -- 1,011,660,000.00 6.28 Capital surplus Item Opening balance Increase Decrease Closing balance Capital premium 557,433,036.93 -- -- 557,433,036.93 Including: Capital contributed by investors 557,433,036.93 -- -- 557,433,036.93 Other capital reserve 420,811,873.18 -- -- 420,811,873.18 Including: Transfer from capital reserve under the previous -- -- 136 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. accounting system 420,811,821.17 420,811,821.17 Total 978,244,910.11 -- -- 978,244,910.11 6.29 Other comprehensive income Amount incurred this year Less: Accrual previous Attributable Attributable Opening before years‘ OCI Less: Closing Item to parent to minority balance income transferred to income balance company shareholders tax this P&L in tax after tax after tax year current. period I. Other comprehensive income that could -- -- -- -- -- -- -- not be classified into profit and loss in the future II. Other comprehensive income that would 789,533.5 10,063,591.6 9,510,918.16 -- -- 552,673.45 236,860.05 be classified into 0 1 profit and loss in the future including：the difference of 789,533.5 10,063,591.6 foreign currency 9,510,918.16 -- -- 552,673.45 236,860.05 0 1 financial statement translation Total 789,533.5 10,063,591.6 9,510,918.16 -- -- 552,673.45 236,860.05 0 1 6.30 Surplus reserve Item Opening balance Increase Decrease Closing balance Statutory surplus reserve 4,974,391.15 35,849,450.20 -- 40,823,841.35 Total 4,974,391.15 35,849,450.20 -- 40,823,841.35 6.31 Undistributed profit Amount for the Amount for the prior Proportion of Item current period period appropriation 137 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Amount for the Amount for the prior Proportion of Item current period period appropriation Before adjustment: Undistributed profits at the end of 157,147,182.36 -140,886,134.13 prior year Adjustment: adjust the beginning undistributed profits -- -- (Increase +, decrease -) After adjustment: Undistributed profits at beginning of 157,147,182.36 -140,886,134.13 year Plus: net profit attributable to the shareholders of the 301,129,840.84 298,033,316.49 parent company in the period Less: Appropriation to the statutory surplus reserve 35,849,450.20 -- Appropriation to discretionary surplus reserve -- -- Common stock dividends declared 131,515,800.00 -- Conversion of ordinary shares’ dividends into share -- -- capital Undistributed profit at the end of the period 290,911,773.00 157,147,182.36 6.32 Operating income and costs (1) Operating income and operating costs Item Amount for the current period Amount for the prior period Principal operating income 2,141,944,512.93 2,111,639,674.26 Other operating income 21,421,062.40 20,671,548.67 Total of operating income 2,163,365,575.33 2,132,311,222.93 Principal operating costs 1,374,441,908.60 1,393,715,283.78 Other operating costs 15,185,380.88 15,949,579.30 Total of operating costs 1,389,627,289.48 1,409,664,863.08 (2)Principal operating activities (classified by industries) Amount for the current period Amount for the prior period Name of industry Operating income Operating costs Operating income Operating costs Real estate 1,451,882,212.00 782,516,505.63 1,476,320,296.06 849,268,477.47 Construction 518,895,054.20 490,709,048.87 488,183,328.15 461,212,716.07 Leasing 79,149,162.72 29,731,750.12 78,833,382.73 29,729,040.27 Property management 128,945,973.91 110,204,670.86 118,842,883.81 101,337,156.50 Subtotal 2,178,872,402.83 1,413,161,975.48 2,162,179,890.75 1,441,547,390.31 Less: offset the 36,927,889.90 38,720,066.88 50,540,216.49 47,832,106.53 internal amount Total 2,141,944,512.93 1,374,441,908.60 2,111,639,674.26 1,393,715,283.78 138 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (3) Principal operating activities (classified by geographical areas) Name of geographical Amount for the current period Amount for the prior period area Operating income Operating costs Operating income Operating costs Domestic: GuangDong Province 2,122,214,182.02 1,360,470,301.42 2,100,652,904.17 1,384,529,733.71 Others 56,204,916.71 52,691,674.06 60,941,449.28 57,017,656.60 Overseas： 453,304.10 -- 585,537.30 -- Subtotal 2,178,872,402.83 1,413,161,975.48 2,162,179,890.75 1,441,547,390.31 Less: offset the internal amount 36,927,889.90 38,720,066.88 50,540,216.49 47,832,106.53 Total 2,141,944,512.93 1,374,441,908.60 2,111,639,674.26 1,393,715,283.78 (4) Operating income from the Company’s top 5 customers Amount for the current period Total operating income Proportion to total operating income of the Company (%) Corporation unit No.1 165,000,000.00 7.63 Corporation unit No.2 39,730,600.00 1.84 Corporation unit No.3 23,868,952.16 1.10 Corporation unit No.4 15,591,000.00 0.72 Corporation unit No.5 13,218,403.95 0.61 Total 257,408,956.11 11.90 (Continued) Amount for the prior period Total operating income Proportion to total operating income of the Company (%) Corporation unit No.1 40,784,800.00 1.91 Corporation unit No.2 29,987,587.93 1.41 Corporation unit No.3 18,298,000.00 0.86 Corporation unit No.4 16,290,000.00 0.76 Corporation unit No.5 13,813,383.45 0.65 Total 119,173,771.38 5.59 6.33 Business taxes and surcharges Item Amount for the current period Amount for the prior period Business tax 100,574,853.07 101,441,087.90 City construction and maintenance tax 7,202,367.40 7,095,458.59 Education surcharges 3,141,809.89 3,165,740.76 Property tax 6,251,947.02 6,295,071.12 139 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Land appreciation tax 98,251,399.57 58,854,846.05 Local education surcharges 1,901,070.30 1,896,642.68 Embankment Protection Fee 289,584.40 622,470.13 Total 217,613,031.65 179,371,317.23 Note: Details of business taxes and surcharges please refer to Note 5 Taxation. 6.34 Selling expenses Item Amount for the current period Amount for the prior period Employee benefits 4,493,027.23 5,240,288.53 Advertising expenses 4,159,095.26 13,677,234.58 Entertainment expenses 844,005.00 841,499.20 Sales agency fees and commissions 31,508,093.81 19,912,951.23 Others 5,972,879.66 4,853,413.79 Total 46,977,100.96 44,525,387.33 6.35 Administrative expenses Item Amount for the current period Amount for the prior period Employee benefits 35,263,753.44 39,210,987.99 Taxes 3,382,248.49 3,276,939.04 Depreciation 3,611,960.02 3,795,871.58 Entertainment expenses 3,652,195.72 3,801,841.81 Intermediary fee 2,555,594.06 1,878,341.50 Travel expense 781,756.73 849,727.48 Administrative expenses 1,270,535.48 1,369,033.33 Repair charge 762,712.36 903,451.80 Water and electricity charges 1,074,552.33 1,274,269.17 Other amortization 733,201.97 797,152.36 Others 5,795,086.78 7,825,185.82 Total 58,883,597.38 64,982,801.88 6.36 Financial expenses Item Amount for the current period Amount for the prior period Interest expenses 49,419,239.77 71,704,900.26 Less: Interest income 7,906,007.15 6,613,297.55 Less: capitalized interest expenses 9,131,179.11 31,645,239.33 Exchange differences -678,825.12 -33,766.19 140 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Less: Capitalized exchange differences -- -- Others 664,283.17 403,530.95 Total 32,367,511.56 33,816,128.14 6.37 Impairment losses of assets Item Amount for the current period Amount for the prior period Bad debt loss 8,602,560.16 469,573.31 6.38 Investment income (1) Details of investment income Amount for the current Amount for the prior Item period period Investment income from long-term investments under cost method -- -- Investment income from long-term investments under equity method 38,717.57 -6,325.06 Investment income on disposal of long-term investments -- -- Investment income from holding trading financial assets -- -- Investment income for the sale of financial assets during the holding 350,000.00 -- period Total 388,717.57 -6,325.06 (2) Income from long-term investments under equity method Amount for the Amount for the prior Name of investee Reasons for changes current period period Shenzhen Ronghua JiDian Co.,ltd 38,717.57 -6,325.06 Investee’s operating profit Total 38,717.57 -6,325.06 (3) Income for the sale of financial assets during the holding period Amount for the Amount for the prior Name of investee Reasons for changes current period period Shantou Small &Medium Enterprises 350,000.00 -- Profit for the year Financing Guarantee Co., Ltd Total 350,000.00 -- 6.39 Non-operating income Amount for the Amount for the Amount included in non-recurring Item current period prior period profit or loss for the period Total gains on disposal of non-current assets -- 396.00 -- Including: Gains on disposal of fixed assets -- 396.00 -- Gains on penalty 795,492.54 12,000.00 795,492.54 141 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Amount for the Amount for the Amount included in non-recurring Item current period prior period profit or loss for the period Others 178,527.09 1,584,248.62 178,527.09 Total 974,019.63 1,596,644.62 974,019.63 6.40 Non-operating expenses Amount for the Amount for the Amount included in non-recurring Item current period prior period profit or loss for the period Total losses on disposal of non-current assets 65,371.34 133,838.39 65,371.34 Including: Losses on disposal of fixed assets 55,410.59 133,838.39 55,410.59 Donations to third parties 69,000.00 93,000.00 69,000.00 Penalty expense 548,033.70 15,320.95 548,033.70 Compensation expense -- 12,229.96 -- Others 69,875.91 156,143.65 69,875.91 Total 752,280.95 410,532.95 752,280.95 6.41 Income tax expenses (1) Details of income tax expenses Item Amount for the current period Amount for the prior period Current tax expense calculated according to 113,361,521.19 89,666,922.93 tax laws and relevant requirements Adjustments to deferred tax -4,525,647.58 12,935,866.05 Total 108,835,873.61 102,602,788.98 (2) The process of calculating the income tax based on accounting profit Item Incurred in the current year Consolidated profit this year 409,904,940.39 Income tax calculated at legal or applicable tax rate 102,476,235.10 Impact of various tax rates applicable to subsidiaries 2,358,059.06 Adjustment of impact on the income tax in the previous period 6,058.10 Impact of non-taxable income -97,179.39 Impact of non-deductible cost, expense and loss 439,457.12 Impact of deductible losses deferred income tax assets unconfirmed in the previous use period -594,521.83 Impact of the deductible temporary differences or deductible loss of unconfirmed deferred tax assets of this year. 4,247,765.45 Changes of the deferred tax assets/liability caused by the adjustment of tax rate -- Income taxes 108,835,873.61 6.42 Other comprehensive income 142 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Note: Please refer to note 6.29. 6.43 Notes to items in the cash flow statements (1) Other cash receipts relating to operating activities Item Amount for the current period Amount for the prior period Interest income 7,906,007.15 5,044,373.39 Cash pledge and security deposits 7,001,005.92 38,607,800.67 The collecting and paying on another's behalf 8,719,760.61 6,519,298.92 Others 2,671,541.21 11,944,380.32 Total 26,298,314.89 62,115,853.30 (2) Other cash payments relating to operating activities Item Amount for the current period Amount for the prior period Cash paid to general and administrative expenses 17,633,788.35 20,489,046.66 Cash paid to operating expenses 42,462,419.13 27,594,595.89 Cash pledge and security deposits 5,209,609.78 40,716,209.41 The collecting and paying on another's behalf 9,844,225.31 6,161,991.56 Others 3,652,686.65 6,896,561.41 Total 78,802,729.22 101,858,404.93 (3)Other cash payments relating to investment activities Item Amount for the current period Amount for the prior period Financial products of trust 3,000,000.00 -- Total 3,000,000.00 -- (4)Other cash receipts relating to financing activities Item Amount for the current period Amount for the prior period Bank acceptance 2,837,400.00 -- The guarantee deposit -- 32,600.00 Others -- 52.01 Total 2,837,400.00 32,652.01 (5)Other cash payment relating to financing activities Amount for the current Amount for the prior Item period period Regulatory capital for bank borrowings -- -- The guarantee deposit -- 2,780,000.00 143 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Amount for the current Amount for the prior Item period period Total -- 2,780,000.00 6.44 Supplementary information to the cash flow statement (1) Supplementary information to the cash flow statement Amount for the Amount for the Item current period prior period I.Reconciliation of net profit to cash flows from operating activities: Net profit 301,069,066.78 298,058,149.59 Add：Provision for asset impairment 8,602,560.16 469,573.31 Depreciation of fixed assets, bio-assets, and natural gas 28,567,239.32 27,855,133.72 Amortization of intangible assets 546,406.83 552,339.96 Amortization of long-term deferred expense 358,025.82 214,192.80 Losses on disposal of fixed assets, intangible assets and other long-term 121,754.49 assets(deduct: gains) 53,099.82 Losses on scrapping of fixed assets (deduct: gains) 2,310.77 11,687.90 Loss of fair value variation (deduct: gains) - -- Financial expenses (deduct: gains) 40,288,060.66 39,110,007.69 Losses from investments (deduct: gains) -388,717.57 6,325.06 Decrease in deferred tax assets (deduct: increase)） -18,340,774.24 12,935,866.05 Increase in deferred tax liabilities (deduct: decrease) - -- Decrease in inventories (deduct: increase) 658,722,395.41 180,053,189.23 Decrease in operating receivables (deduct: increase) 28,540,820.59 -177,878,359.98 Increase in operating payables (deduct: decrease) 49,123,760.16 -59,347,796.46 Others -- -- Net cash flows from operating activities 1,097,144,254.51 322,162,063.36 II. Investing and financing activities that do not affect cash receipt and payment Liabilities converted capital -- -- Reclassify convertible bonds to be expired within one year as current liability -- -- Fixed assets subject to finance leases -- -- III. Net increase in cash and cash equivalents: Cash at the end of the period 1,169,756,306.36 670,119,849.03 Less: cash at the beginning of the period 670,119,849.03 519,284,372.44 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 499,636,457.33 150,835,476.59 144 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (2)Information of cash and cash equivalents Amount for the Amount for the Item current period prior period I.Cash Including: Cash on hand 54,487.37 61,413.08 Bank deposits 1,169,701,818.99 670,058,435.95 Other monetary funds -- -- Deposits with the central bank -- -- Deposits made with other banks -- -- Placements with banks -- -- II. Cash equivalents -- -- Including: Investments in debt securities due within three months -- -- III. Closing balance of cash and cash equivalents 1,169,756,306.36 670,119,849.03 6.45 Ownership or use-right restricted assets Categories of assets Item Closing balance The reasons for restriction Subtotal of pledged or mortgaged assets: Monetary fund 6,000,000.00 Refer to note 6.1 Notes receivable 18,663,872.02 Short-term loan mortgaged Accounts receivable 99,754,414.27 Short-term loan mortgaged Inventories (Real estate developed Real Estate Building 5-6 Long-term loan mortgaged 7,492,175.18 product ) floor Investment property Shenfang Square 234,317,289.70 Long-term loan mortgaged Investment property Petrel Building 67,922,370.43 Long-term loan mortgaged Investment property GuoShang North 2 floor 55,953,431.20 Long-term loan mortgaged Shenfang Square 46-48 Long-term loan mortgaged Fixed assets 22,023,775.71 floor Total 512,127,328.51 6.46 The items of foreign currency (1) Details of items of foreign currency Balance of foreign Balance of RMB Item Exchange rate currency at year end converted Monetary fund Including：USD 131,879.82 6.49360 853,921.84 HKD 10,130,478.68 0.83778 8,462,794.43 Other accounts receivable 145 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Balance of foreign Balance of RMB Item Exchange rate currency at year end converted Including：USD -- -- -- HKD 20,174,699.60 0.83778 16,709,792.39 Other accounts payable Including：USD 643,582.16 6.49360 4,179,165.11 HKD 15,918,034.59 0.83778 12,856,112.05 （2）Oversea operating entities The Group’s significant oversea operating entities are American Great Wall Co., Ltd and Fresh Peak Investment Co., Ltd. American Great Wall Co., Ltd chooses the USD as the its functional currency, for its main operating activities are in the USA; Fresh Peak Investment Co., Ltd. chooses the RMB as its functional currency, for it is a investment company and its main operating activities are in the mainland of China. Note 7 The changes of the scope of consolidation There were no changes for the Group’s consolidation scope this year. Note 8 Equities in other entities. 8.1 Equities in the subsidiaries (1) The formation of the Group Main Shareholding Reg. Business Name of the subsidiary operating proportion（%） Method of acquiring place nature area Direct Indirect Acquiring through establishment Shenzhen Petrel Hotel Co. Ltd. Shenzhen Shenzhen Services 68.10 31.90 or investment Shenzhen City Property Acquiring through establishment Shenzhen Shenzhen Services 95.00 5.00 or investment Management Ltd. Shenzhen Zhen Tung Acquiring through establishment Shenzhen Shenzhen Services 73.00 27.00 or investment Engineering Ltd. Shenzhen City We Gen Acquiring through establishment Shenzhen Shenzhen Services 75.00 25.00 or investment Construction Management Ltd. Acquiring through establishment Shenzhen City Car Rental Ltd. Shenzhen Shenzhen Services 55.00 45.00 or investment Acquiring through establishment Shenzhen Shenfang Car Park Shenzhen Shenzhen Services 70.00 30.00 or investment Ltd. Acquiring through establishment Shenzhen City Shenfang Shenzhen Shenzhen Investment 90.00 10.00 or investment Investment Ltd. Acquiring through establishment Shenzhen City Shenfang Free Commecial Shenzhen Shenzhen 95.00 5.00 or investment Trade Trading Ltd. trade Acquiring through establishment Shenzhen City SPG Long Gang Shenzhen Shenzhen Real estate 95.00 5.00 or investment 146 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Main Shareholding Reg. Business Name of the subsidiary operating proportion（%） Method of acquiring place nature area Direct Indirect Development Ltd. Acquiring through establishment Shenzhen Special Economic or investment Zone Real Estate (Group) Guangzhou Guangzhou Real estate 100 -- Guangzhou Property and Estate Co., Ltd. Acquiring through establishment Beijing fresh peak property or investment development management Beijing Beijing Real estate 75.00 25.00 limited company Acquiring through establishment Beijing SPG Property Beijing Beijing Services 10.00 90.00 or investment Management Limited Acquiring through establishment Shenzhen ShenWu Elebator Shenzhen Shenzhen Services -- 100.00 or investment Co.,Ltd Acquiring through establishment Shenzhen Lain Hua Industry and Shenzhen Shenzhen Services 95.00 5.00 or investment Trading Co. Ltd. Acquiring through establishment Investment or investment Fresh Peak Holding Ltd. HongKong HongKong and 100.00 -- management Acquiring through establishment Investment Wellam Ltd. HongKong HongKong 100.00 -- or investment holding Acquiring through establishment Shantou SEZ Wellam Fty Bldg., ShanTou ShanTou Real estate -- 100.00 or investment Dev. Co. Acquiring through establishment Shantou Huafeng Estate ShanTou ShanTou Real estate 100.00 -- or investment Dev.Co. Acquiring through establishment Great Wall Estate Co., Inc USA USA Real estate 70.00 -- or investment Acquiring through establishment Investment or investment Fresh Peak Holdings Ltd. HongKong HongKong and 100.00 -- management Acquiring through establishment Fresh Peak Investment Ltd. HongKong HongKong Investment -- 55.00 or investment Investment and Acquiring through establishment Openice Ltd. HongKong HongKong management 20.00 80.00 or investment Acquiring through establishment Barenie Co. Ltd. HongKong HongKong Investment -- 80.00 or investment Acquiring through establishment Keyear Development Ltd. HongKong HongKong Investment -- 100.00 or investment Acquiring through establishment Guangzhou Huangpu Xizun real GuangZhou GuangZhou Real estate -- 100.00 or investment 147 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Main Shareholding Reg. Business Name of the subsidiary operating proportion（%） Method of acquiring place nature area Direct Indirect estate limited company Acquiring through establishment Fresh Peak Real Estate Dev. WuHan WuHan Real estate -- 100.00 or investment Construction (Wuhan) Co. Ltd.* Shantou Special Economic Subsidiary acquired through Zone Real Estate (Group) Shantou Shantou Real estate -- 100.00 emerge under non-common Songshan Property and Estate control Co., Ltd. Shenzhen Shenfang Department Commecial Acquiring through establishment Shenzhen Shenzhen 95.00 5.00 Store Co. Ltd.* ① trade or investment Shenzhen CyberPort Co., Ltd Acquiring through establishment Shenzhen Shenzhen Consultant 70.00 -- *② or investment Shenzhen City SPG Bao An Acquiring through establishment Shenzhen Shenzhen Real estate 95.00 5.00 Development Ltd.* ③ or investment Shenzhen Real Estate Integrated Acquiring through establishment Consolidated Service Co., Ltd shenzhen shenzhen 100.00 -- Services or investment *④ Shenzhen Shen Fang Industrial Acquiring through establishment Shenzhen Shenzhen Investment 100.00 -- Development Co., Ltd.* ⑤ or investment Shenzhen Tefa Real Estate Acquiring through establishment Consolidated Service Co., Ltd.* Shenzhen Shenzhen Services 100.00 -- or investment ⑥ Acquiring through establishment Bekaton Property Limited *⑦ Australia Australia Real estate 60.00 -- or investment Canada Great Wall ( Vancouver) Acquiring through establishment Canada Canada Real estate -- 60.00 *⑦ or investment Commecial Acquiring through establishment Paklid Limited *⑦ HongKong HongKong 100.00 -- trade or investment Shenzhen City Shenfang Commecial Acquiring through establishment Construction and Decoration Shenzhen Shenzhen 100.00 -- trade or investment Materials Ltd *⑧ Shenzhen ZhongGang Haiyan Integrated Acquiring through establishment Shenzhen Shenzhen 68.00 -- Enterprise Ltd. *⑨ Services or investment 148 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Main Shareholding Reg. Business Name of the subsidiary operating proportion（%） Method of acquiring place nature area Direct Indirect Shenzhen Xing Dongfang Store Commecial Acquiring through establishment Shenzhen Shenzhen 100.00 -- Ltd.* ⑩ trade or investment Guangdong Province Fengkai Guangdongf Guangdongf Acquiring through establishment Manufacturing Co., Ltd * Lain Feng Cement Manufacture -- 90.00 engkai engkai or investment *① Shenzhen Shenfang Department Store Co. Ltd The shareholders meeting held on 29 October 2007 passed the resolution to terminate business, liquidation and formed a group to carry out the liquidation procedures. The liquidation group issued a notice of liquidation on 7 December 2007. According to the principle of “Enterprise Accounting Standards No.33- the Consolidation Financial Statement”, the Store will not be included in the Company’s consolidated financial statement. The book value of the investment account of the Company is zero. *② Shenzhen CyberPort Co., Ltd The shareholders meeting held on 12 May 2008 passed the resolution to terminate business, liquidation and formed a group to carry out the liquidation procedures. The liquidation group issued a notice of liquidation on 5 December 2008. According to the principle of “Enterprise Accounting Standards No.33- the Consolidation Financial Statement”, the corporation will not be included in the Company’s consolidated financial statement. The book value of the investment account of the Company is zero. *③ Shenzhen City SPG Bao An Development Ltd. The shareholders meeting held on 18 September 2009 passed the resolution to terminate business, liquidation and formed a group to carry out the liquidation procedures. According to the principle of “Enterprise Accounting Standards No.33- the Consolidation Financial Statement”, the Store will not be included in the Company’s consolidated financial statement. Shenzhen City SPG Bao An Development Ltd. The shareholders meeting held on 18 September 2009 passed the resolution to terminate business, liquidation and formed a group to carry out the liquidation procedures. According to the principle of “Enterprise Accounting Standards No.33- the Consolidation Financial Statement”, the Store will not be included in the 149 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Company’s consolidated financial statement. *④ Shenzhen Real Estate Consolidated Service Co., Ltd. The operating period of this corporation is from 26 January 1983 to 28 August 1999. And this Company has ceased operations for many years. And the corporation had been terminated its licenses by law on 8 February 2002 because of failing to take part in annual inspection. *⑤ Shenzhen Shen Fang Industrial Development Co., Ltd The operating period of this corporation is from 3 October 1993 to 3 October 1998. And this Company has ceased operations for many years. And the corporation had been terminated its licenses by law on 8 February 2002 because of failing to take part in annual inspection. *⑥ Shenzhen Tefa Real Estate Consolidated Service Co., Ltd The operating period of this corporation is from 7 March 1983 to 10 April 1995. And this company has ceased operations for many years. And the corporation had been terminated its licenses by law in 2004 because of failing to take part in annual inspection. *⑦ Bekaton Property Limited ,Canada Great Wall ( Vancouver)and Paklid Limited These 3 subsidiaries were set up overseas in early times. The board of directors passed a resolution to terminate the corporations’ business on Dec.13, 2000. *⑧ Shenzhen City Shenfang Construction and Decoration Materials Ltd The operating period of this corporation is from 1 January 1984 to 6 July 2004. And this company has ceased operations for many years. And the corporation had been terminated its licenses by law on February 8, 2002 because of failing to take part in annual inspection. *⑨Shenzhen ZhongGang Haiyan Enterprise Ltd The operating period of this corporation is from 16 October 1984 to 16 October 2004. And this company has ceased operations for many years. And the corporation had been terminated its licenses by law in 1999 because of failing to take part in annual inspection. *⑩ Shenzhen Xin Dongfang Store Ltd The operating period of this corporation is from 14 November 1995 to 14 November 2025. And this company has ceased operations for many years. And the corporation had been terminated its licenses by law at 1999 because of failing to take part in annual inspection. * Guangdong Province Fengkai Lian Feng Cement Manufacturing Co., Ltd The total assets (including tangible and intangible assets) of the corporation were 150 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. auctioned for debt repayment at 22 January 2006. The Company's investment in the company's book value is zero. Except for *①, *②, *③, the above subsidiaries which are not included the company’s consolidated financial statement had ceased operations for many years. And the entities of the corporations didn’t exist. And the Company has no control over its subsidiaries’ businesses. According to the principle of “Enterprise Accounting Standards No.33- the Consolidation Financial Statement”, the corporation will not be included in the Company’s consolidated financial statement. The book value of the investment account of the Company is zero. The following are the details. Accounting Investment Investee Opening balance Changes Closing balance Method cost Shenzhen Shen Fang Industrial Cost Method 4,500,000.00 4,500,000.00 -- 4,500,000.00 Development Co., Ltd Shenzhen ZhongGang Haiyan Cost Method 12,940,900.00 12,940,900.00 -- 12,940,900.00 Enterprise Ltd Shenzhen Real Estate Consolidated Cost Method 5,958,305.26 5,958,305.26 -- 5,958,305.26 Service Co., Ltd Paklid Limited Cost Method 201,100.00 201,100.00 -- 201,100.00 Bekaton Property Limited Cost Method 906,630.00 906,630.00 -- 906,630.00 Shenzhen Tefa Real Estate Cost Method 8,180,003.63 8,180,003.63 -- 8,180,003.63 Consolidated Service Co., Ltd Shenzhen Xing Dongfang Store Ltd Cost Method 18,500,000.00 18,500,000.00 -- 18,500,000.00 Shenzhen City Shenfang Construction Cost Method 2,680,000.00 2,680,000.00 -- 2,680,000.00 and Decoration Materials Ltd Shenzhen Shenfang Department Cost Method 10,000,000.00 10,000,000.00 -- 10,000,000.00 Store Co. Ltd Shenzhen CyberPort Co., Ltd Cost Method 14,000,000.00 7,613,507.96 -- 7,613,507.96 Shenzhen City SPG Bao An Cost Method 20,000,000.00 20,379,525.68 -- 20,379,525.68 Development Ltd Shantou Huafeng Building Cost Method 68,731,560.43 58,547,652.25 -- 58,547,652.25 Guangdong Province Fengkai Lain Cost Method 121,265,000.00 56,228,381.64 -- 56,228,381.64 Feng Cement Manufacturing Co., Ltd Total 287,863,499.32 206,636,006.42 -- 206,636,006.42 (Continued) Increased current Provision for Current year Investee year provision for Remarks impairment cash dividends impairment 151 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Increased current Provision for Current year Investee year provision for Remarks impairment cash dividends impairment Shenzhen Shen Fang Industrial Development Co., 4,500,000.00 -- -- Ltd Shenzhen ZhongGang Haiyan Enterprise Ltd 12,940,900.00 -- -- Shenzhen Real Estate Consolidated Service Co., Ltd 5,958,305.26 -- -- Paklid Limited 201,100.00 -- -- Bekaton Property Limited 906,630.00 -- -- Shenzhen Tefa Real Estate Consolidated Service 8,180,003.63 -- -- Co., Ltd Shenzhen Xing Dongfang Store Ltd 18,500,000.00 -- -- Shenzhen City Shenfang Construction and 2,680,000.00 -- -- Decoration Materials Ltd Shenzhen Shenfang Department Store Co. Ltd 10,000,000.00 -- -- Shenzhen CyberPort Co., Ltd -- -- -- Shenzhen City SPG Bao An Development Ltd -- -- -- Sahntou Huafeng Building 58,547,652.25 -- -- Guangdong Province Fengkai Lain Feng Cement 56,228,381.64 -- -- Manufacturing Co., Ltd Total 178,642,972.78 -- -- (2)Significant non-wholly owned subsidiary Current year profit and Minority interest Current year dividends Minority interest loss attributable to Name of subsidiary share proportion distributed to minority equity balance at minority interest (%) interest shareholders the end of the year shareholders Great Wall Estate Co., Inc 30.00 -46,114.94 -- -21,655,721.01 Fresh Peak Investment 45.00 Ltd. -10,393.29 -- -104,570,647.69 Barenie Co. Ltd. 20.00 -4,265.83 -- -2,029,950.94 (3) The main financial information of significant non-wholly owned subsidiary Closing balance Name fo subsidiary Non-current Current Non-current Current assets Total Assets Total liabilities assets liabilities liabilities Great Wall Estate Co., Inc 841,643.94 17,890,114.20 18,731,758.14 100,217,332.12 -- 100,217,332.12 Fresh Peak Investment Ltd. 220,030,060.27 24,793,206.35 244,823,266.62 254,694,603.78 -- 254,694,603.78 152 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Name fo subsidiary Closing balance Barenie Co. Ltd. 973.38 30,373,713.87 30,374,687.25 32,758,096.84 -- 32,758,096.84 (Continued) Opening balance Name of subsidiary Non-current Current Non-current Current assets Total Assets Total liabilities assets liabilities liabilities Great Wall Estate Co., 948,985.22 16,915,897.33 17,864,882.55 94,759,937.32 -- 94,759,937.32 Inc Fresh Peak Investment 220,030,019.94 24,793,206.35 244,823,226.29 254,671,467.24 -- 254,671,467.24 Ltd. Barenie Co. Ltd. 919.27 30,373,713.87 30,374,633.14 32,736,713.60 -- 32,736,713.60 (Continued) Incurred in current year Incurred in previous year Cash flow Cash flow Name of Total of Total of Operating from Operating from subsidiary Net profit comprehensiv Net profit comprehensi income operating income operating e income ve income activities activities Great Wall Estate Co., 453,304.10 -153,716.45 -- -150,839.00 585,537.30 119,858.52 -- 119,858.52 Inc Fresh Peak Investment -- -23,096.21 -- -- -- -17,111.99 -- -- Ltd. Barenie Co. -- -21,329.13 -- -- -- -17,120.29 -- -- Ltd. 8.2 Equities in joint ventures or associated enterprises （1）Insignificant joint ventures or associated enterprises Closing balance/Incurred this Opening balance/Incurred last Item year year Joint ventures*①： Total investment book value 29,441,800.59 29,441,800.59 Totals of the following items calculated per respective shareholding proportion —Net profit -- -- —Other comprehensive income -- -- 153 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Closing balance/Incurred this Opening balance/Incurred last Item year year —Total comprehensive income -- -- Associated enterprises*②： Total investment book value 295,252.56 295,252.56 Totals of the following items calculated per respective shareholding proportion —Net profit 38,717.57 -6,325.06 —Other comprehensive income -- -- —Total comprehensive income -- -- *① All of the Group’s joint ventures are insignificant. For details of the joint ventures, please refer to 6.10, including: 1) Guangdong province Huizhou Luofu Hill Mineral Water Co.,Ltd The operting period of the company was form June 5, 1991 to June 4, 2001. And the company had ceased operations because of operating loss for many years. And the Company had been terminated its licenses by law at July 6, 2001 because it failed to pass the annual inspection. Besides, the corporation stopped preparing the financial statement. As of the end of the year, the book value of the investment account of the Company is zero. According to the joint venture agreement, the Company didn’t have the obligation to bear the additional loss. 2)Fengkai Xinghua Hotel The FengKai XingHua Hotel was announced bankruptcy by the Guangdong Province Zhaoqing City second-middle intermediate Peoples’ court with the document (2002) ZHFJPZ No.2. And the corporation had finished the bankruptcy procedure. As of the end of the year, the book value of the investment account of the Company is zero. According to the joint venture agreement, the Company didn’t have the obligation to bear the additional loss. 3)Jiangmen Xinjian Real Estate Co. Ltd., Xi’an Fresh Peak Building Co. Ltd, DongYi Property Co., Ltd The above corporations were the joint ventures set up with the local partners for the properties developing projects. Consider the projects had been stopped, and the joint ventures had closed operating activities for many years with no preparation of financial statements. Already the corresponding provision for the investment of these joint ventures was accrued. Refer to Note 6.10 for details. 154 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. *② All associated enterprises of the Group are insignificant. For details of associated enterprises, please refer to note 6.10, including: 1) Shenzhen Runhua Automobile Trading Co., Ltd The operating period of this corporation was form Feb 24, 1992 to Feb 24, 1997, and it had ceased operations because of operating loss for many years. Besides, it had been terminated its licenses by law because it failed to pass the annual inspection and no financial statement was prepared afterwards. As the end of the year, the book value of the investment account of the company is zero. According to the associate agreement, the company didn’t have the obligation to bear the additional loss. 2) Shenzhen Dongfang New World Store Co., Ltd The operating period of this corporation was from June 7, 1993 to June 7, 1998, and the company had ceased operations because of operating loss for many years. And the company had been terminated its licenses by law at Jan 10, 2001 because it failed to pass the annual inspection. Besides, the company stopped making the financial statement. At Dec 31, 2010, the book value of the investment account of the company is zero. According to the associate agreement, the company didn’t have the obligation to bear the additional loss. （2）The excess losses of the joint ventures or associated enterprises incurred. Accumulated Accumulated Unrecognized losses Name of the joint ventures or associated unrecognized losses unrecognized losses this year (or shared enterprises as of the end of last as of the end of this net profit this year) year year Shenzhen Fresh Peak property consultant Co., Ltd 701,817.53 -120,605.82 581,211.71 Note 9 Related party relationships and transactions 9.1 Parent of the Company Related party Type of the Place of Legal Name of the parent Business Nature relationship entity incorporation representative Guangdong Investment, Real Shenzhen Investment Parent of the State-owned province Xiong Peijin estate development, Shareholding Co. Ltd Group Enterprises Shenzhen Guarantee (Continued) Proportion of the Proportion of the Registered Company’s ownership Company’s voting Ultimate controlling Organization Name of the parent capital interest held by the power held by the party of the Company code parent (%) parent (%) 155 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Shenzhen Investment State-owned assets RMB 21.450 Shareholding Co. 63.55 63.55 management 76756642-1 billion Ltd commitee 9.2 Subsidiaries of the Company Please refer to Note 8.1. 9.3 Associates and joint ventures of the entity Please refer to Note 8.2 –Equities in joint venture or associated enterprises 9.4 Other related parties of the Company Relationship between other related parties and the Name of other related party Organization code Company Shenzhen Jian'an Group Co., Ltd. The same controlling shareholders 19219737X 9.5 Related party transactions (1)Contracting with related parties List of contracting item Basis of Contracting Name of main Type of assets Reception Expiration pricing of income contract issuing Name of contractor under date of date of contracting recognized in the party contracting contracting contracting income current year Shenzhen Jian'an Shenzhen Zhen Tung Construction 2012-6-1 Negotiations 7,072,153.00 Group Co., Ltd. Engineering Ltd （2）Guarantees with related parties Inception Expiration Whether execution of Guaranteed Guarantor Guaranteed party date of date of guarantee has been amount guarantee guarantee completed The Group Shantou Hualin Estate Dev. Co. 130,000,000.00 2013.4.17 2016.4.16 No The Company provided the maximum amount of guarantee for all the main contracts by its subsidiary, Shantou Hualin Estate Dev. Co and Bank of Communications (Shantou Guoxin Branch) from 17 April 2013 to 16 April 2016. The maximum amount of debt guaranteed by the Company is RMB 130,000,000.00.As of Dec.31,2015,the loans balance of Shantou Hualin Estate Dev. Co at the Bank is zero. (3) Compensation for key management personal Item Amount for the current period Amount for the prior period Total 6.7755 [million] 5.6149 [million] 9.6 Amounts due from / to related parties (1) Amounts due from related party 156 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Closing balance Opening balance Item Carrying Bad debt Carrying Bad debt amount provision amount provision Accounts receivable Shenzhen Fresh Peak property consultant 1,137,877.25 -- 1,087,214.22 -- Co.,Ltd Total 1,137,877.25 -- 1,087,214.22 -- Other receivables Guangdong Province Huizhou Luofu Hill 10,465,168.81 10,465,168.81 10,465,168.81 10,465,168.81 Mineral Water Co., Ltd Shenzhen Runhua Automobile Trading Co., 3,072,764.42 3,072,764.42 3,072,764.42 3,072,764.42 Ltd Canada GreatWall（Vancouver）Co. ,Ltd 89,035,748.07 89,035,748.07 89,035,748.07 89,035,748.07 Bekaton Property Limited 12,559,290.58 12,559,290.58 12,559,290.58 12,559,290.58 Paklid Limited 18,816,702.93 18,816,702.93 18,446,223.54 18,443,271.41 Shenzhen Shenfang Department Store Co. 237,648.82 189,179.82 237,648.82 189,179.82 Ltd. Shenzhen Real Estate Consolidated Service 1,086,487.22 927,136.22 1,086,487.22 927,136.22 Co., Ltd. Shenzhen City Shenfang Construction and 8,327,180.71 8,327,180.71 8,327,180.71 8,327,180.71 Decoration Materials Ltd. Shenzhen RongHua JiDian Co.,Ltd 475,223.46 -- 475,223.46 -- Xi’an Fresh Peak property management& 8,419,205.19 8,419,205.19 8,419,205.19 -- Trading Co.,Ltd Total 152,495,420.21 151,812,376.75 152,124,940.82 143,019,740.04 (2) Amounts due to related party Item Closing balance Opening balance Other payables Shenzhen Tefa Real Estate Consolidated Service Co., Ltd. 598,012.16 598,012.16 Shenzhen Shen Fang Industrial Development Co., Ltd 1,534,854.91 1,534,854.91 Shenzhen ZhongGang Haiyan Enterprise Ltd. 135,853.52 135,853.52 Shenzhen Dongfang New world store Co., Ltd 902,974.64 902,974.64 Shenzhen Xin Dongfang Store Ltd. 1,394,704.21 1,394,704.21 Guangdong Province Fengkai Lain Feng Cement Manufacturing Co., Ltd. 1,867,348.00 1,867,348.00 Shenzhen Cyber Port Co., Ltd 7,964,749.26 7,964,749.26 157 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Shenzhen Shenfang Group BaoAn Developing Co.,Ltd 20,093,445.07 20,093,445.07 Shenzhen Investment Holding Co.,Ltd 53,848,819.24 58,848,819.24 Total 88,340,761.01 93,340,761.01 Item Closing balance Opening balance Interest payable: Shenzhen Investment Holding Co.,Ltd 16,535,277.94 16,535,277.94 Total 16,535,277.94 16,535,277.94 Note 10 Contingencies 10.1 Contingencies arising from pending litigations or arbitrations and their financial effects ① Xi’an project Lawsuit Xi’an Fresh Peak Holding limited company (hereinafter referred to as “Fresh Peak Company”) was sino-foreign joint venture set up in Xi’an city. The shareholder of the Fresh Peak Company – Hongkong Fresh Peak Co., Ltd was the wholly owned subsidiary of the company. And the Hongkong Fresh Peak Co., Ltd contributed 84% of the Fresh Peak Company’s share- capital in cash. And Xi’an trade building which was the enterprise under the Xi’an Joint Commission on Commerce and Trade contributed 16% of the Fresh Peak Company’s share- capital with the land-use right. The core business was property development. And the project was Xi’an Trade Building. The project was started on 1995-11-28. But the project had been stopped in 1996 because of the two parties differences on the operating policy of the project. In 1997, the Xi’an government withdrew the Xi'an Fresh Peak investment project compulsively and assigned the project to Xi’an Business Tourism Co., Ltd (hereinafter referred to as “Business Tourism Company”). But the two parties had insulted a lawsuit on compensation. The ShanXi Province High Peoples Court made a judgement “(2000) SJ-CZ No.25”. The judgement was as follows: 1. Business Tourism Company had to pay for the compensation Rmb 36,620 thousand to Xi’an Fresh Peak Company after the judgment entering into force. If the Business Tourism Company failed to pay in time, it had to pay double debt interests to Xi’an Fresh Peak Company. 2. Xi’an Joint Commission on Commerce had jointly and severally obligation of the interests of the compensation. Untill 31 December 2011, the amount of RMB 15,201,000.00 had been called back. Because of Fresh Peak Company’s application, ShanXi Province High Peoples Court resumed the execution on September 5, 2011. Now the case is proceeding and there was no any new substantive progress in the reporting period. 158 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. As at 31 December 2015, the book value of the investment of Xi’an Fresh Peak Company was Rmb 12,166,897.84. The provision for investment was Rmb 20,673,831.77. ②Luofu Hill project Lawsuit The company cooperated with Luofu Hill Tourism Company (hereinafter referred to as “Tourism Company”) on Luofu Hill Tourism project in early years. The company instituted legal proceedings against Tourism Company because the Tourism Company failed to carry out the agreement. The judgement which issued by GuangDong Province High Peoples Court on 2007-12-21 was as follows: 1)Tourism Company had to pay for Rmb 9,600 thousand to the company in 10 days after the judgment entering into force. 2)Tourism Company should paid the interests for the occupation of Rmb 9,600 thousands with The People's Bank of China similar loans rate in 10 days after the judgment entering into force. Of which, the interests for the occupation of Rmb 4,400 thousand were caluated from 1986-5-1 to the day the Tourism company paid off the debt. The interests for the occupation of Rmb 4100 thousand were caluated from 1988-2-1 to the day the Tourism Company paid off the debt. The interests for the occupation of Rmb 1,100 thousand were caluated from 1989-6-15 to the day the Tourism Company paid off the debt. The interest of Rmb 8,580 thousand that the Tourism Company had paid for to the company can be deducted from the interest payable. 3)Luofushan Administration Committee had to undertake one third of the debts which Luofushan Tourism was unable to repay; 4)Interest of debts would be double if the Tourism Company and Luofushan Administration Committee failed to fulfill their obligations within the designated period of this judgment; 5)Tourism company undertaked all the litigation fees (RMB 167,714.00). The expense of first instance and the second instance had to pay to the company during the duration of payment. There was no any new substantive progress after the judgment announced. The Company applied the GuangDong Province High People’s Court to supervise implementation on December 17, 2009. The GuangDong Province High people’s Court issued a document “(2009) YGYZDZ No. 67 to Huizhou intermediate people’s court and asked the Huizhou intermediate people’s court to close this case in 3 months after receiving the document. Until 17 Mar 2010, Huizhou intermediate people’s court had finished the evaluation of the land use right of the executor. On 159 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. 13th October 2010, the land-use right was auctioned by the national resource department at the price of RMB 51,200 thousand. According to the relevant provisions of the Huizhou local authorities, auction of land should be approved by local department of land and be implemented in real estate trading center set up under Land Branch. Huizhou Intermediate Court has issued an official letter to inform Boluo Land Bureau of its decision, and notify the relevant assistance. Boluo Land Bureau replied the Huizhou Intermediate Court that the land for auction would be surveyed and mapped (different from land evaluation), new planning point would be made by them as the conditions of auction. Boluo Land Bureau have surveyed and mapped Luofu Hill Tourism site that was sealed. The cadastral map and land red line chart were submitted to Huizhou Municipal Intermediate People's Court in June 2011. Detailed regulation is deemed as the basis for the development of planning points, while the preparation of detailed regulation relies on Luofushan Administration Committee. Because the planning points were not made, the land failed to be auctioned. As at 31 December 2015, the book value of the Company’s creditor rights on Tourism Company was RMB 9,600,000.00. The provision for bad debt was RMB 4,800,000.00. 10.2 Contingent liabilities arising from providing debt guarantees to other entities and their financial effects ① The company provided debt guarantees for its related parties, please refer to note 9.5（2）. ②The Company provided loan guarantees for purchaser of real estate. Up to Dec 31,2015, the amount and duration of the unsettled guarantee is as follows: Unsettled amount Items Duration (ten thousand) Yuejing Dongfang project From real estate license granted and mortgaged 255.00 Shenfang Chuanqishan From real estate license granted and mortgaged 862.00 Shenfang Shanglin Garden From real estate license granted and mortgaged 3,370.00 Total 4,487.00 Note 11 Commitments 11.1 Significant commitments Item Amount for the current period Amount for the prior period Capital commitments that have been entered into but -- -- have not been recognized in the financial statements - Significant outsourcing contracts 697,895,950.68 11,293,531.55 160 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Total 697,895,950.68 11,293,531.55 11.2 Fulfillment progress of previous commitments The amount of significant outsourcing contracts is RMB 11,293,531.55, which was paid during the report period and has been entered into the prior period but has not been recognized in the financial statements. Note 12 Events after Balance Sheet Date On ,2016, the proposal of distributing the profit of 2015 was approved by the Group’s board of direct. The Group’s BOD decide to use the profit to make up the losses of previous years, without distributing the profit to shareholders and converting the capital surplus to capital. The proposal still need to be submitted to the Company's general meeting of stockholders for voting. Note 13 Other material facts As of 31 Dec,2015, there were no other material facts that need to be disclosed by the Group. Note 14 Notes to Items in the Financial Statements of the Company 14.1 Accounts receivable (1) Accounts receivable by categories Closing balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Accounts receivable of which provision for -- -- -- -- bad debts is of individually significant Accounts receivable of which provision for 16,381,369.25 100.00 6,968,694.02 42.54 bad debts is of individually insignificant Total 16,381,369.25 100.00 6,968,694.02 42.54 (Continued) Opening balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Accounts receivable of which provision for -- -- -- -- bad debts is of individually significant Accounts receivable of which provision for 46,372,269.26 100.00 6,968,694.02 15.03 bad debts is of individually insignificant Total 46,372,269.26 100.00 6,968,694.02 15.03 (2) Accounts receivable by aging balance 161 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Closing balance Opening balance Item Amount (%) Amount (%) Within 1 year 5,573,731.28 34.02 35,580,792.53 76.72 1-2 years 34,336.05 0.21 -- -- 2-3 years -- -- 253,116.00 0.55 Over 3 years 10,773,301.92 65.77 10,538,360.73 22.73 Total 16,381,369.25 100.00 46,372,269.26 100.00 (3) Bad debt provision Bad debt provision of accounts receivable which is of individually significant Carrying Amount of bad Proportion of Content of accounts receivable Reasons for the provision amount debt provision House pay to be collected A separate provision is established 11,049,363.77 6,968,694.02 63.07 according to the recoverability of Rental to be collected each receivable with long aging 5,455,121.48 -- -- and little retrievability. Total 16,504,485.25 6,968,694.02 42.54 (4) There were no any account receivables that had been fully or at a great proportion rate accrued for bad debt but had been fully collected or reversed back in the current period. (5) There were no any significant accounts receivables written off in the current period. (6) No amount due from shareholders at least 5% of the Company’s shares with voting power in the reporting period (7) Top 5 entities with the largest balances of accounts receivable Relationship with the Proportion of the amount to Name of entity Amount Age Group the total AR (%) Corporation No.1 Related party 3,457,256.48 Within 1year 21.10 Corporation No.2 Un-related party 1,898,129.55 Within 1year 11.59 Individual No.1 Un-related party 1,200,000.00 Over 5year 7.33 Corporation No.3 Related party 1,137,877.25 Within 1year 6.95 Individual No.2 Un-related party 876,864.11 Over 5year 5.35 Total 8,570,127.39 52.32 (8) Receivables due from related parties Relationship with the Name of entity Amount （%）of receivables Group Shenzhen Fresh Peak property consultant Co.,Ltd Associate 1,137,877.25 6.95 162 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Relationship with the Name of entity Amount （%）of receivables Group Shenzhen Petrol Hotel Co., Ltd Related party 3,457,256.48 21.10 Total 4,595,133.73 28.05 (9)There were no any account receivables which had been derecognized. (10) There were no any accounting receivable which had been securitized. 14.2 Other receivables (1) Other receivables by categories Closing balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Other receivables of which provision for bad debts is of individually significant 1,473,146,864.58 98.55 802,518,692.30 54.48 Other receivables of which provision for bad debts is of individually insignificant 21,628,190.82 1.45 9,787,916.94 45.26 Total 1,494,775,055.40 100 812,306,609.24 54.34 (Continued) Opening balance Category Carrying amount Bad debt provision Amount (%) Amount (%) Other receivables of which provision for 1,463,080,604.66 98.32 799,518,692.30 54.65 bad debts is of individually significant Other receivables of which provision for 25,011,319.74 1.68 12,628,565.94 50.49 bad debts is of individually insignificant Total 1,488,091,924.40 100.00 812,147,258.24 54.58 (2) Other receivables by aging balance Closing balance Opening balance Item Amount (%) Amount (%) Within 1 year 145,341,611.20 9.72 86,119,834.17 5.79 1-2 years 405,973,492.62 27.16 322,059,351.67 21.64 2-3 years 18,868,896.02 1.26 67,471,437.25 4.53 Over 3 years 924,591,055.56 61.86 1,012,441,301.31 68.04 Total 1,494,775,055.40 100.00 1,488,091,924.40 100.00 (3) Bad debt provision (a) Bad debt provision of other receivables which is of individually significant 163 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Proportion of Content of accounts receivable Carrying amount Amount of bad debt Reasons for the provision provision Other receivables between A separate provision is subsidiaries that are included in established according to consolidated statement 1,323,622,983.63 658,127,505.34 49.72 the recoverability of each Other receivables between receivables with long subsidiaries that are not included aging and little in consolidated statement 120,994,319.55 120,994,319.55 100.00 retrievability Others 28,529,561.40 23,396,867.41 82.01 Total 1,473,146,864.58 802,518,692.30 54.48 (b) Bad debt provision of other receivables which is of individually insignificant Proportion of Amount of bad Content of other receivables Carrying amount Reasons for the provision provision debt Other receivables between subsidiaries that are included in A separate provision is consolidated statement 8,712,048.49 -- -- established according to Other receivables between the recoverability of each subsidiaries that are not included receivable with long aging in consolidated statement 1,324,136.04 1,116,316.04 84.31 and little retrievability Others 11,592,006.29 8,671,600.90 74.81 Total 21,628,190.82 9,787,916.94 45.26 (4) Provision for bad debt reversed back or collected There were no any other bad debt reversed back or collected in the current period. (5) There were no any other significant receivables written off for in the current period. (6) There were no any other receivables due from shareholders owning at least 5% of the Company’s shares with voting power in the reporting period. (7) Top 5 entities with the largest balances of other receivables Relationship Proportion of the amount Name of Entity with the Amount Age to the total OR (%)（%） Group 7,993,662.28 Within 1 year 918,538.43 1-2 years Fresh Peak Enterprise Co., Ltd Subsidiary 35.02 500,000.00 2-3 years 514,023,745.20 Over 3years Shantou Huafeng Estate Development Co., Subsidiary 43,722,391.26 Within 1 year 21.88 164 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Relationship Proportion of the amount Name of Entity with the Amount Age to the total OR (%)（%） Group Ltd 23,292,246.48 260,000,000.00 1-2year 82,692,281.29 Within 1 year Shenzhen ShenFang Group LongGang 1,540,861.82 1-2 years Subsidiary 14.67 Development Co., Ltd 60,000,000.00 2-3 years 75,000,000.00 Over 3 years American Great Wall Co., Ltd Subsidiary 101,379,954.81 Over 3 years 6.78 Canada Great Wall( Vancouver ) Co., Ltd Subsidiary 89,035,748.07 Over 3 years 5.96 Total 1,260,099,429.64 84.31 (8)There were no any other receivables which had been derecognized in this reporting year. (9) There were no any other receivables which had been securitized in this reporting year. 14.3 Long-term equity investments (1) Long-term equity investments by types Closing balance Opening balance Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment Investment in 437,984,380.71 121,914,591.14 316,069,789.57 437,984,380.71 121,914,591.14 316,069,789.57 subsidiaries Investment in associates and 22,281,021.80 21,947,051.67 333,970.13 22,242,304.23 21,947,051.67 295,252.56 joint ventures Total 460,265,402.51 143,861,642.81 316,403,759.70 460,226,684.94 143,861,642.81 316,365,042.13 165 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (2)investment in subsidiaries Curr. Curr. year Closing balance of Curr. year Name of investee Opening balance year Closing balance impairment impairment Increase decrease provision provision Shenzhen City Property Management Ltd. 12,821,791.52 -- -- 12,821,791.52 -- -- Shenzhen Petrel Hotel Co. Ltd. 20,605,047.50 -- -- 20,605,047.50 -- -- Shenzhen City Shenfang Investment Ltd. 9,000,000.00 -- -- 9,000,000.00 -- -- Fresh Peak Enterprise Ltd. 556,500.00 -- -- 556,500.00 -- -- Fresh Peak Zhiye Co., Ltd. 22,717,697.73 -- -- 22,717,697.73 -- -- Shenzhen Special Economic Zone Real Estate (Group) 20,000,000.00 -- -- 20,000,000.00 -- -- Guangzhou Property and Estate Co., Ltd. Shenzhen Zhen Tung Engineering Ltd 11,332,321.45 -- -- 11,332,321.45 -- -- American Great Wall Co., Ltd 1,435,802.00 -- -- 1,435,802.00 -- -- Shenzhen City Shenfang Free Trade Trading Ltd. 4,750,000.00 -- -- 4,750,000.00 -- -- Shenzhen City Hua Zhan Construction Management Ltd. 6,000,000.00 -- -- 6,000,000.00 -- -- Shenzhen City Car Rental Ltd. 6,495,225.00 -- -- 6,495,225.00 -- -- QiLu Co.,Ltd 212,280.00 -- -- 212,280.00 -- -- Beijing Shenfang Property Management Co., Ltd. 500,000.00 -- -- 500,000.00 -- -- Shenzhen Lain Hua Industry and Trading Co., Ltd. 13,458,217.05 -- -- 13,458,217.05 -- -- Shenzhen City SPG Long Gang Development Ltd. 30,850,000.00 -- -- 30,850,000.00 -- -- Beijing Fresh Peak Property Development Management 64,183,888.90 -- -- 64,183,888.90 -- -- Limited Company Shenzhen Shenfang Car Park Ltd. 29,750,000.00 -- -- 29,750,000.00 -- -- 166 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Curr. Curr. year Closing balance of Curr. year Name of investee Opening balance year Closing balance impairment impairment Increase decrease provision provision Shantou City Huafeng Real Estate Devepment Co., Ltd 30,000,000.00 -- -- 30,000,000.00 -- -- Shenzhen Shen Fang Industrial Development Co., Ltd 4,500,000.00 -- -- 4,500,000.00 -- 4,500,000.00 Shenzhen ZhongGang Haiyan Enterprise Ltd. 12,940,900.00 -- -- 12,940,900.00 -- 12,940,900.00 Shenzhen Real Estate Consolidated Service Co., Ltd. 5,958,305.26 -- -- 5,958,305.26 -- 5,958,305.26 Paklid Limited 201,100.00 -- -- 201,100.00 -- 201,100.00 Bekaton Property Limited 906,630.00 -- -- 906,630.00 -- 906,630.00 Shenzhen Tefa Real Estate Consolidated Service Co., Ltd. 8,180,003.63 -- -- 8,180,003.63 -- 8,180,003.63 Shenzhen Xin Dongfang Store Ltd. 18,500,000.00 -- -- 18,500,000.00 -- 18,500,000.00 Shenzhen City Shenfang Construction and Decoration 2,680,000.00 -- -- 2,680,000.00 -- 2,680,000.00 Materials Ltd. Shenzhen Shenfang Department Store Co. Ltd. 9,500,000.00 -- -- 9,500,000.00 -- 9,500,000.00 Shenzhen CyberPort Co., Ltd 12,401,018.42 -- -- 12,401,018.42 -- -- ShenZhen ShenFang BaoAn Development Co., Ltd 19,000,000.00 -- -- 19,000,000.00 -- -- Shantou Fresh Peak Building 58,547,652.25 -- -- 58,547,652.25 -- 58,547,652.25 Total 437,984,380.71 -- -- 437,984,380.71 -- 121,914,591.14 167 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (3)Investment in associates and joint ventures Changes in this period Adjustments of Change Investment Name of investee Opening balance Add Reduce other s of income under investment investment comprehensive other equity method income equity I.Joint ventures Guangdong Huizhou Luofu Hill 9,969,206.09 -- -- -- -- -- Mineral Water Co., Ltd Fengkai Xinghua Hotel 9,455,465.38 -- -- -- -- -- Subtotal 19,424,671.47 -- -- -- -- -- II. Associates Shenzhen Runhua Automobile 1,445,425.56 -- -- Trading Co., Ltd -- -- -- Shenzhen Ronghua Jidian Co., Ltd 1,372,207.20 -- -- 38,717.57 -- -- Subtotal 2,817,632.76 -- -- 38,717.57 -- -- Total 22,242,304.23 -- -- 38,717.57 -- -- (Continued) Changes in this period Closing balance Name of investee Cash dividend or Provision for Closing balance of impairment Others profit declared impairment provision I.Joint ventures Guangdong Huizhou Luofu Hill -- -- -- 9,969,206.09 9,969,206.09 Mineral Water Co., Ltd Fengkai Xinghua Hotel -- -- -- 9,455,465.38 9,455,465.38 Subtotal -- -- -- 19,424,671.47 19,424,671.47 II. Associates Shenzhen Runhua Automobile -- -- -- 1,445,425.56 1,445,425.56 Trading Co., Ltd Shenzhen Ronghua Jidian Co., Ltd -- -- -- 1,410,924.77 1,076,954.64 Subtotal -- -- -- 2,856,350.33 2,522,380.2 Total -- -- -- 22,281,021.80 21,947,051.67 168 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. 14.4 Operating income and costs (1) Operating income and operating costs Item Amount for the current period Amount for the prior period Principal operating income 1,056,257,548.27 634,382,232.73 Other operating income 709,165.69 246,100.00 Total of operating income 1,056,966,713.96 634,628,332.73 Principal operating costs 568,667,535.09 369,071,677.90 Other operating costs -- -- Total of operating costs 568,667,535.09 369,071,677.90 (2)Principal operating activities (classified by industries) Amount for the current period Amount for the prior period Name of industry Operating income Operating costs Operating income Operating costs Real estate 988,757,763.00 546,260,030.84 569,913,978.06 346,555,648.74 Leasing 67,499,785.27 22,407,504.25 64,468,254.67 22,516,029.16 Total 1,056,257,548.27 568,667,535.09 634,382,232.73 369,071,677.90 (3) Principal operating activities (classified by geographical areas) Name of geographical Amount for the current period Amount for the prior period area Operating income Operating costs Operating income Operating costs Shenzhen 1,056,257,548.27 568,667,535.09 634,382,232.73 369,071,677.90 Total 1,056,257,548.27 568,667,535.09 634,382,232.73 369,071,677.90 (4) Operating income from the Company’s top 5 customers Amount for the current period Name of customers Operating income Proportion to total operating income of the Company (%) Corporation No.1 165,000,000.00 15.62 Individual No.1 12,845,576.00 1.22 Individual No.2 10,147,591.00 0.96 Individual No.3 10,147,591.00 0.96 Individual No.4 10,725,034.00 1.02 Total 208,865,792.00 19.78 169 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (Continued) Amount for the prior period Name of customers Operating income Proportion to total operating income of the Company (%) Individual No.1 40,784,800.00 6.43 Individual No.2 7,296,706.00 1.15 Individual No.3 6,403,792.00 1.01 Individual No.4 6,210,119.00 0.98 Individual No.5 6,179,028.00 0.97 Total 66,874,445.00 10.54 14.5 Investment income (1) Details of investment income Item Amount for the current period Amount for the prior period Investment income from long-term equity investment 350,000.00 -- Including：Investment income from investee’s dividend 270,602,716.90 distributed 162,860,586.51 Investment income from long-term investments under 270,609,041.96 equity method 162,821,868.94 Total 38,717.57 -6,325.06 163,210,586.51 270,602,716.90 (2) Investment income from investee’s dividend distributed Name of investee Amount for the current period Amount for the prior period Fresh Peak Zhiye Co.,Ltd 10,401,320.27 270,609,041.96 Shenzhen Zhen Tung Engineering Ltd 2,089,355.74 -- Shenzhen City Car Rental Ltd. 2,449,516.66 -- Shenzhen City Shenfang Investment Ltd. 7,118,391.69 -- Shenzhen City SPG Long Gang Development Ltd. 140,763,284.58 -- Total 162,821,868.94 270,609,041.96 (3) Income from long-term investments under equity method Amount for the current Amount for the prior Name of investee Reasons for changes period period Shenzhen Ronghua JiDian Co.,ltd 38,717.57 -6,325.06 Total 38,717.57 -6,325.06 14.6 Supplementary information to the cash flow statement 170 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Amount for the Amount for the Item current period prior period (1) Reconciliation of net profit to cash flows from operating activities: Net profit 394,335,891.37 438,199,162.70 Add: Provision for impairment loss of assets 159,351.00 -51,045,921.78 Depreciation of fixed assets, bio-assets, and natural gas 21,427,710.12 21,333,217.10 Amortization of intangible assets 368,866.83 374,799.96 Amortization of long-term deferred expenses 139,962.06 56,530.20 Losses on disposal of fixed assets, intangible assets and other - -- long-term assets(deduct: gains) Losses on scrapping of fixed assets (deduct: gains) 2,310.77 11,687.90 Loss of fair value variation (deduct: gains) - -- Financial expenses (deduct: gains) 39,775,198.08 20,154,884.77 Losses from investments (deduct: gains) -163,210,586.51 -270,602,716.90 Decrease in deferred tax assets (deduct: increase) -4,866,780.80 2,379,866.32 Increase in deferred tax liabilities (deduct: decrease) - -- Decrease in inventories (deduct: increase) 589,134,416.29 340,784,597.95 Decrease in operating receivables (deduct: increase) 50,703,922.59 -21,222,262.79 Increase in operating payables (deduct: decrease) -55,601,897.50 -291,087,853.26 Others - Net cash flows from operating activities 872,368,364.30 189,335,992.17 (2) Investing and financing activities that do not affect cash receipt and payment Liabilities converted capital -- -- Reclassify convertible bonds to be expired within one year as current -- -- liability Fixed assets subject to finance leases -- -- (3) Net increase in cash and cash equivalents: Cash at the end of the period 852,492,165.42 326,170,340.34 Less: cash at the beginning of the period 326,170,340.34 356,953,152.47 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 526,321,825.08 -30,782,812.13 171 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Note15. Supplementary Materials 15.1 Breakdown non-recurring profit or loss Items Amount for the current period Amount for the prior period Profit or loss on disposal of non-current assets -65,371.34 -133,442.39 Tax refunds or reductions with ultra vires approval or without official approval documents -- -- Government grants recognized in profit or loss (other than grants which are closely related to the Company’s business and are -- -- either in fixed amounts or determined under quantitative methods in accordance with the national standard) Income earned from lending funds to non-financial institutions and recognized in profit or loss -- -- The excess of attributable fair value of identifiable net assets over the consideration paid for the acquisition of subsidiaries, -- -- associates and joint ventures Profit or loss on exchange of non-monetary assets -- -- Profit or loss on entrusted investments or assets management -- -- Impairment losses on assets due to force majeure events, e.g, natural disasters -- -- Profit or loss on debt restructuring -- -- Entity restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc. -- -- Profit or loss attributable to the evidently unfair portion of transaction price, being transacted price in excess of fair transaction -- -- price, of a transaction Net profit or loss of subsidiaries from the beginning of the period up to the business combination date recognized as a result of -- -- business combination of enterprises under common control Profit or loss arising from contingencies other than those related to normal operating business -- -- Profit or loss on changes in the fair value of held-for-trade financial assets, and held-for-trade financial liabilities and financial -- -- 172 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Items Amount for the current period Amount for the prior period assets available-for-sale, other than those used in the effective hedging activities relating to normal operating business Reversal of provision for account receivables that are tested for impairment losses individually -- -- Profit or loss on entrusted loans -- -- Profit or loss on changes in the fair value of investment properties that are subsequently measured using the fair value model -- -- Effects on profit or loss of one-off adjustment to profit or loss for the period according to the period requirements of tax laws and -- -- accounting laws and regulations Custodian fees earned from entrusted operation -- -- Other non-operating income or expenses other than the above 287,110.02 1,319,554.06 Other profit or loss that meets the definition of non-recurring profit or loss -- -- Subtotal 221,738.68 1,186,111.67 Tax effects -55,434.67 -319,678.92 Effects attributable to minority interests (after tax) -- -- Total 166,304.01 866,432.75 173 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Note：”+” means income or gain and “-” means loss or expense The Group defines items as non-recurring profit or loss items according to “Information Disclosure and Presentation Rules for Companies Making Public Offering of Securities No.1---Non-recurring Profit or Loss”(CSRC No.[2008]43) 15.2 Return rate of net assets and earning per share Weighted return Earning per share (yuan / stock)（元/股） Profit the in the reporting year rate of net assets Basic EPS Diluted EPS Net profit attributable to common stockholders 13.21% 0.2977 0.2977 Less： Net profit attributable to common stockholders after deducting non-recurring losses 13.20% 0.2975 0.2975 15.3Differences between amounts prepared under foreign accounting standards and China Accounting Standards (CAS) Differences in the net profit and net assets between those disclosed in the financial statements in compliance with International / Hongkong Finance Reporting Standards and CAS Net profit attributable to shareholders of listed Net assets attributable to shareholders companies t of listed companies Amount for the current Amount for the prior Amount for the Amount for the prior period period current period period In accordance with CASs 301,129,840.84 298,033,316.49 2,331,704,116.06 2,161,537,401.78 In accordance with IFRS 301,129,840.84 298,033,316.49 2,331,704,116.06 2,161,537,401.78 15.4 List of abnormal situations and reasons for the variances of main consolidated financial statement items (1) Balance sheet items The closing balance of monetary fund as of 31 Dec,2015 was RMB 1,175,756,306.36, which increased by 73.17% comparing with the opening balance. It’s mainly due to the increased of the income of building sales. The closing balance of note receivables as of 31 Dec,2015 was RMB 18,663,872.02, which decreased by 84.43% comparing with the opening balance. It’s mainly due to the customers’ changing of the method of settlement. The closing balance of account receivables as of 31 Dec,2015 was RMB 112,543,908.66, which increased by 33.36% comparing with the opening balance. The main reasons for that are the increases of receivables of project payment. The closing balance of payment in advance as of 31 Dec,2015 was RMB 22,952,379.40, which increased by 28.79%. It is mainly caused by the advance 174 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. payment for materials had not met the conditions to be transferred into inventory. Inventory have a balance of RMB 2,146,223,895.61 as of 31 Dec,2015, which decreased by 23.25% comparing with the opening balance, for the sale of building,the inventory had been transferred into cost of sales. Other current assets have a balance of RMB 40,315,831.06 as of 31 Dec,2015, which increased by 224.19% comparing with the opening balance, because of the prepayment of current period land appreciation tax. The ending balance of deferred tax assets was RMB 32,197,368.21 as of 31 Dec, 2015, which increased by 132.36% compared with the opening balance. It is mainly due to the confirmation of advance house fund profit of real estate enterprises corresponding to deferred income tax assets is expected to increase. Accounts payable balance as of 31 Dec,2015 was RMB 290,453,110.50, which decreased by 46.37% compared with the beginning balance. The main reason is the payment of real estate developed product’s settlement balance. The balance of advance from customer as of as of 31 Dec, 2015 was RMB 475,620,347.35, which increased by 229.57% compared with the opening balance due to building sale increasement. The balance of tax payable is RMB 63,459,415.42 which decreased by 34.17% comparing with the beginning balance. It’s mainly caused by the increased accrual of tax during this reporting period. The balance of non-current liabilities that will mature within one year as of 31 Dec,2015 was RMB 168,727,608.54 which decreased by 62.77%. It is mainly caused by the decreased amount of long-term loans that will mature within one year. The balance of long-term loan as of 31 Dec,2015 was RMB 382,233,324.88 which decreased by 20.20%.It is mainly due to some of long-term loans are repaid in the current year. (2)Income statement and statement of cash flow items Impairment losses of assets incurred in 2015 is RMB 8,602,560.16 which increased by 1732% compared with that of last year. The reason is that the provision of Xi’ an Fresh Peak Holding limited company’s creditor rights caused by special preparation in this year. The current period cash inflow from operating activities is RMB 2,593,917,264.63 which increased by 38.93% comparing with that of last year. It’s mainly caused by the increased of cash for house fund and project fund received while providing labor services in selling goods. 175 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. The current period cash outflow from operating activities was RMB 1,496,773,010.12, which decreased by 3.12% comparing with the last year’s balance, for the payment of project is less than last year’s when purchasing goods and accepting services. The net cash flow from operating activities incurred in 2015 was RMB 1,097,144,254.51, which increased by 240.56%. It’s mainly caused by the increased of cash for house fund and project fund received while providing labor services in selling goods. The cash inflow from investing activities incurred in 2015 was RMB 386,230.00 which increased by 1464.32% comparing with that of last year, It’s mainly from the sale of financial assets dividend received during the holding period. The cash outflow from investing activities incurred in 2015 was RMB 7,894,632.61 which increased by 161.75% comparing with the one of last year, for it is mainly caused by the increased purchase of fixed assets, intangible assets,other long-term assets and financial products of trust in this period. The net cash flow from investing activities incurred in 2015 was RMB-7,508,402.61, which decreased by 151.00% comparing with that of last year. for it is mainly caused by the increased purchase of fixed assets, intangible assets,other long-term assets and financial products of trust in this period. The cash inflow from financing incurred in 2015 was RMB 227,837,400.00, which decreased by 37.06% comparing with that of last year.As the increased of cash inflow from operating activities led to external financing needed decreased. The cash outflow from financing incurred in 2015 was RMB 818,348,503.54, which increased by 54.30% comparing with that of last year, for the repaying of bank borrowing increased. Net increase in cash and cash equivalents was RMB 499,636,457.33 during 2015, which increased by 231.25% comparing with prior year’s .The reason for such increase is that the cash from operating activities have a net increase. 176 2015 Annual Report of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Section XI Documents Available for Reference 1. The accounting statements with personal signatures and seals of Legal Representative, Chief Accountant and the person in charge of the accounting agency. 2. Original document of audit report stamped by accountant firm, signed and sealed by certificated accountant; 3. The originals of all the documents and public notices disclosed on China Securities Journal and Ta Kung Pao by the Company during the reporting period. 177
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