ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
SHENZHEN SPECIAL ECONOMIC ZONE REAL ESTATE &
PROPERTIES (GROUP) CO., LTD.
ANNUAL REPORT 2021
2022-006
March 2022
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
Part I Important Notes, Table of Contents and DefinitionsThe Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of ShenZhen Special Economic Zone Real Estate &Properties (Group) Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee thefactuality, accuracy and completeness of the contents of this Report and its summary, andshall be jointly and severally liable for any misrepresentations, misleading statements ormaterial omissions therein.Liu Zhengyu, chairman of the Company’s Board, Wang Jianfei, the Company’s ChiefFinancial Officer, and Qiao Yanjun, head of the Company’s financial department (equivalentto financial manager) hereby guarantee that the Financial Statements carried in this Reportare factual, accurate and complete.All the Company’s directors have attended the Board meeting for the review of this Reportand its summary.Certain descriptions about the Company’s operating plans or work arrangements for thefuture mentioned in this Report and its summary, the implementation of which is subject tovarious factors, shall NOT be considered as promises to investors. Therefore, investors arereminded to exercise caution when making investment decisions.The Company is subject to the information disclosure requirements for the real estateindustry in the Disciplinary and Regulatory Guideline No. 3 of the Shenzhen Stock Exchangefor Listed Companies—Industry-specific Information Disclosure.Risks facing the Company have been explained in detail in “XI Prospects” in “Part IIIManagement Discussion and Analysis” herein.The Board has approved a final dividend plan as follows: based on the total share capital of1,011,660,000 shares, a cash dividend of RMB0.88 (tax inclusive) per 10 shares is to bedistributed to the shareholders, with no bonus issue from either profit or capital reserves.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versionsshall prevail.
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 6
Part III Management Discussion and Analysis ...... 11
Part IV Corporate Governance ...... 41
Part V Environmental and Social Responsibility ...... 66
Part VI Significant Events ...... 68
Part VII Share Changes and Shareholder Information ...... 77
Part VIII Preferred Shares ...... 84
Part IX Bonds ...... 85
Part X Financial Statements ...... 86
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
Documents Available for Reference
1. The financial statements with the personal signatures and stamps of the Company’s legalrepresentative, Chief Financial Officer and head of the financial department;
2. The original of the Auditor’s Report with the stamp of the CPA firm, as well as the personalsignatures and stamps of the CPAs; and
3. The originals of all the documents and announcements disclosed by the Company on SecuritiesTimes, China Securities Journal and Ta Kung Pao during the Reporting Period.
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
Definitions
| Term | Definition |
| “Shenzhen SASAC” or the “Municipal SASAC” | The State-owned Assets Supervision and Administration Commission of the People’s Government of Shenzhen Municipal |
| SIHC | Shenzhen Investment Holdings Co., Ltd. |
| The “Company”, the “Group”, “SPG” or “we” | ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. and its consolidated subsidiaries, except where the context otherwise requires |
| Shenzhen Property Management | Shenzhen Property Management Co., Ltd. |
| Petrel Hotel | Shenzhen Petrel Hotel Co., Ltd. |
| Zhentong Engineering | Shenzhen Zhentong Engineering Co., Ltd. |
| Huazhan Construction Supervision | Shenzhen Huazhan Construction Supervision Co., Ltd. |
| Jianbang Group | Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. |
| Chuanqi Real Estate Development | Shenzhen SPG Chuanqi Real Estate Development Co., Ltd. |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
Part II Corporate Information and Key Financial InformationI Corporate Information
| Stock name | SPG, SPG-B | Stock code | 000029, 200029 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 深圳经济特区房地产(集团)股份有限公司 | ||
| Abbr. | 深房集团 | ||
| Company name in English (if any) | ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. | ||
| Abbr. (if any) | SPG | ||
| Legal representative | Liu Zhengyu | ||
| Registered address | 45/F-48/F, SPG Plaza, Renmin South Road, Luohu District, Shenzhen, Guangdong, P.R.China | ||
| Zip code | 518001 | ||
| Changes of the registered address | N/A | ||
| Office address | 47/F, SPG Plaza, Renmin South Road, Luohu District, Shenzhen, Guangdong, P.R.China | ||
| Zip code | 518001 | ||
| Company website | http://www.sfjt.com.cn | ||
| Email address | spg@163.net | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Luo Yi | Hong Lu |
| Address | 47/F, SPG Plaza, Renmin South Road, Luohu District, Shenzhen, Guangdong, P.R.China | 47/F, SPG Plaza, Renmin South Road, Luohu District, Shenzhen, Guangdong, P.R.China |
| Tel. | （86 755）25108897 | （86 755）25108837 |
| Fax | （86 755）82294024 | （86 755）82294024 |
| Email address | spg@163.net | spg@163.net |
III Media for Information Disclosure and Place where this Report Is Lodged
| Stock exchange website where this Report is disclosed | Shenzhen Stock Exchange (http://www.szse.cn/) |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Newspaper and website where this Report is disclosed | Domestic: Securities Times, China Securities Journal, and http://www.cninfo.com.cn Overseas: Ta Kung Pao (HK) |
| Place where this Report is lodged | 47/F, SPG Plaza, 3005 Renmin South Road, Luohu District, Shenzhen, Guangdong, P.R.China |
IV Change to Company Registered Information
| Unified social credit code | 91440300192179585N (unified social credit code) |
| Change to principal activity of the Company since going public (if any) | No change |
| Every change of controlling shareholder since incorporation (if any) | On 24 March 1999, the controlling shareholder was changed from Shenzhen Investment Management Co., Ltd. to Shenzhen Construction Investment Holdings Co., Ltd. And on 14 February 2006, it was changed to Shenzhen Investment Holdings Co., Ltd. |
V Other Information
The independent audit firm hired by the Company:
| Name | Grant Thornton China |
| Office address | 5/F, Sci-Tech Plaza, 22 Jianguomenwai Avenue, Chaoyang District, Beijing |
| Accountants writing signatures | Zhao Juanjuan and Jiang Xiaoming |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2021 | 2020 | 2021-over-2020 change (%) | 2019 | |
| Operating revenue (RMB) | 1,320,790,648.45 | 1,615,009,713.88 | -18.22% | 2,548,740,319.49 |
| Net profit attributable to the listed company’s shareholders (RMB) | 220,836,309.93 | 290,229,772.23 | -23.91% | 552,452,307.59 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 208,306,710.37 | 253,595,334.11 | -17.86% | 524,204,812.66 |
| Net cash generated from/used in | -1,205,952,107.94 | 285,164,013.17 | -522.90% | 603,607,724.75 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| operating activities (RMB) | ||||
| Basic earnings per share (RMB/share) | 0.2183 | 0.2869 | -23.91% | 0.5461 |
| Diluted earnings per share (RMB/share) | 0.2183 | 0.2869 | -23.91% | 0.5461 |
| Weighted average return on equity (%) | 5.72% | 7.81% | -2.09% | 15.90% |
| 31 December 2021 | 31 December 2020 | Change of 31 December 2021 over 31 December 2020 (%) | 31 December 2019 | |
| Total assets (RMB) | 6,182,498,050.43 | 4,936,916,746.74 | 25.23% | 4,909,669,536.09 |
| Equity attributable to the listed company’s shareholders (RMB) | 3,938,260,291.97 | 3,797,512,488.22 | 3.71% | 3,666,874,569.99 |
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there wasuncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
√ Applicable □ Not applicable
Unit: RMB
| Net profit attributable to the listed company’s shareholders | Equity attributable to the listed company’s shareholders | |||
| 2021 | 2020 | Ending amount | Beginning amount | |
| Under CAS | 220,836,309.93 | 290,229,772.23 | 3,938,260,291.97 | 3,797,512,488.22 |
| Adjusted as per IFRS | ||||
| Under IFRS | 220,836,309.93 | 290,229,772.23 | 3,938,260,291.97 | 3,797,512,488.22 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 415,282,352.53 | 279,315,865.94 | 272,065,605.11 | 354,126,824.87 |
| Net profit attributable to the listed company’s shareholders | 88,040,167.60 | 44,406,954.54 | 29,640,906.70 | 58,748,281.09 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 87,395,877.39 | 44,042,111.19 | 29,576,289.10 | 47,292,432.69 |
| Net cash generated from/used in operating activities | 303,456,191.73 | -588,996,943.19 | -978,555,623.09 | 58,144,266.61 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from whathave been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2021 | 2020 | 2019 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -13,451.61 | 11,429.23 | ||
| Government subsidies charged to current profit or loss (exclusive of government subsidies consistently given in the Company’s ordinary course of business at fixed quotas or amounts as per government policies or standards) | 1,669,479.40 | 3,370,769.21 | 1,168,127.90 | |
| Gain or loss on assets entrusted to other | 13,024,710.91 | 15,217,058.60 | 31,425,651.98 | Purchase of currency |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| entities for investment or management | fund | |||
| Reversed portions of impairment allowances for receivables which are tested individually for impairment | 482,790.04 | |||
| Non-operating income and expense other than the above | 1,542,604.01 | 29,009,657.60 | 1,118,861.69 | |
| Other gains and losses that meet the definition of exceptional gain/loss | 1,237,002.86 | |||
| Interest income from undue structured deposits | 3,950,685.00 | |||
| Less: Income tax effects | 4,176,533.19 | 12,211,479.38 | 9,415,831.64 | |
| Total | 12,529,599.56 | 36,634,438.12 | 28,247,494.93 | -- |
Details of other gains and losses that meet the definition of exceptional gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Part III Management Discussion and AnalysisI Industry Overview for the Reporting Period
The Company is subject to the information disclosure requirements for the real estate industry in the Disciplinary and RegulatoryGuideline No. 3 of the Shenzhen Stock Exchange for Listed Companies—Industry-specific Information Disclosure.In order to achieve the central government's target of stabilizing land and housing prices as well as marketexpectations, real estate regulators have successfully implemented a series of policies, including "three red lines",real estate loan concentration management mechanism in 2020 and "concentrated supply of land" in 2021. Thesepolicies resulted in a significant difference between different districts in the same city and an overall stable andslow trend in nationwide real estate market.II Principal Activity of the Company in the Reporting Period
The Company is subject to the information disclosure requirements for the real estate industry in the Disciplinary and RegulatoryGuideline No. 3 of the Shenzhen Stock Exchange for Listed Companies—Industry-specific Information Disclosure.The Company primarily develops residential properties, with its available-for-sale projects mainly located inShenzhen and Shantou during the Reporting Period. Meanwhile, two new projects have been launched, one inHuizhou, which is close to Shenzhen, and another in Guangming District, Shenzhen. In Shenzhen, the ChuanqiDonghu Mingyuan project and the Cuilinyuan project both completed construction and have started the hand-overand move-in process, with some remnant units still available for sale. In Shantou, the Tianyuewan projectcompleted construction in June 2021, with Phase I around 80% sold cumulatively and Phase II around 20%. Inmid May 2021, the Company completed the acquisition of a controlling stake in the Linxinyuan project (located inHuizhou, close to Shenzhen), which resumed construction in late June 2021 and has kicked off pre-sale for PhaseI in mid December 2021. Additionally, the Company won the bid for the right to use the state-owned Land Lot No.A511-0039 in Guangming District, Shenzhen in late September 2021, with construction kicking off in midJanuary 2022.
New additions to the land bank:
| Name of land lot or project | Location | Planned use of land | Site area（㎡） | Floor area with plot ratio （㎡） | How the land is obtained | The Company’s interest | Total land price (RMB’0,000) | Consideration of the Company’s interest (RMB’0,000) |
| Linxinyuan (previously the “Linxijun” project) | Changbu Village, Xinxu Town, Huiyang District, Huizhou City, | Commercial and residential | 198,676.60 | 397,353.20 | Acquisition | 51.00% | 60,667 | 45,000 |
| Guangdong Province | ||||||||
| SPG Guangmingli | Southeast corner of the junction of Mingzheng Road and Deya Road, Guangming Street, Guangming District, Shenzhen | Commercial and residential, type 2 | 10,721.07 | 53,605.00 | Bidding at an auction | 100.00% | 96,500 |
Cumulative land bank:
| Name of project/area | Site area（0,000 ㎡） | Floor area（0,000 ㎡） | Floor area available for development（0,000 ㎡） |
| Xinfeng Building in Shantou | 0.59 | 2.66 | 2.66 |
| Linxinyuan Phase II | 2.57 | 7.72 | 7.72 |
| Linxinyuan Phase III | 4.31 | 9.57 | 9.57 |
| Linxinyuan Phase IV | 3.23 | 6.45 | 6.45 |
| SPG Guangmingli | 1.07 | 5.36 | 5.36 |
| Total | 11.77 | 31.76 | 31.76 |
Development status of major projects:
| City/region | Name of project | Location | Status | The Company’s interest | Time for commencement of construction | % developed | % constructed | Site area（㎡） | Planned floor area with plot ratio （㎡） | Floor area completed in the Current Period（㎡） | Cumulatively completed floor area （㎡） | Expected total investment (RMB’0,000) | Cumulative investment (RMB’0,000) |
| Shantou | Tianyuewan Phase II | Chaoyang District | Completed | 100.00% | 1 October 2018 | 100% | 100.00% | 33,362 | 127,770 | 127,770 | 127,770 | 65,485 | 64,597 |
| Huizhou | Linxinyuan Phase I | Huiyang | Framework in construction | 51.00% | 11 June 2021 | 77% | 77.00% | 64,278 | 159,761 | 0 | 0 | 115,750 | 89,044 |
| Shenzhen | SPG Guangmingli | Guangming District | Foundation pit being | 100.00% | 19 January 2022 | - | 10,721 | 53,605 | - | - | 151,758 | 99,395 |
Sales status of major projects:
built
City/regi
on
| City/region | Name of project | Location | Status | The Company’s interest | Floor area with plot ratio （㎡） | Floor area available for sale （㎡） | Cumulatively pre-sold/sold floor area （㎡） | Floor area pre-sold/sold in the Current Period（㎡） | Pre-sale/sales revenue generate in the Current Period (RMB’0,000) | Cumulatively settled floor area (㎡) | Floor area settled in the Current Period（㎡） | Pre-sale/sales revenue settled in the Current Period (RMB’0,000) |
| Shenzhen | Chuanqi Donghu Mingyuan | Luohu District | Ready for sale | 100.00% | 55,727 | 32,857 | 32,440 | 7,160 | 48,361 | 30,012 | 14,169 | 70,662 |
| Shenzhen | Cuilinyuan | Longgang District | Ready for sale | 100.00% | 60,111 | 56,137 | 51,969 | 35 | 161 | 51,969 | 338 | 1,148 |
| Shantou | Tianyuewan Phase I | Chaoyang District | Ready for sale | 100.00% | 153,470 | 160,372 | 114,462 | 14,951 | 7,967 | 92,524 | 15,531 | 8,008 |
| Shantou | Tianyuewan Phase II | Chaoyang District | On pre-sale | 100.00% | 127,770 | 137,059 | 17,004 | 15,829 | 9,174 | 11,517 | 11,517 | 6,159 |
| Huizhou | Linxinyuan Phase I | Huiyang District | On pre-sale | 51.00% | 159,761 | 159,761 | 844 | 844 | 1,018 |
Rental status of major projects:
| Name of project | Location | Use | The Company’s interest | Rentable area （㎡） | Cumulative rented area （㎡） | Average occupancy rate |
| Real Estate Mansion | Shenzhen | Commercial | 100.00% | 3,413.88 | 3,413.88 | 100.00% |
| North Block of Guoshang Mansion | Shenzhen | Commercial | 100.00% | 4,819.71 | 4752.98 | 98.62% |
| Petrel Building | Shenzhen | Commercial | 100.00% | 22,475.47 | 22,475.47 | 100.00% |
| SPG Plaza | Shenzhen | Office building | 100.00% | 61015.82 | 36667.96 | 60.09% |
| SPG Plaza Podium | Shenzhen | Commercial | 100.00% | 19886.3 | 16123.49 | 81.08% |
| Wenjin Garden | Shenzhen | Commercial | 100.00% | 3,531.60 | 3,531.60 | 100.00% |
Primary land development:
□ Applicable √ Not applicable
Financing channels:
| Financing channel | Ending balance of financings | Financing cost range/average financing cost | Maturity structure | |||
| Within 1 year | 1-2 years | 2-3 years | Over 3 years | |||
Development strategy and operating plan for the coming year:
Please refer to “XI Prospects” in this part of the Report.
Provision of guarantees for homebuyers on bank mortgages:
√ Applicable □ Not applicable
| Project | Guarantee period | Guarantee amount (RMB’0,000) | Note |
Cuilinyuan
| Cuilinyuan | Until the property ownership certificate is registered as collateral and handed over to bank for keeping | 2,802.31 |
Chuanqi DonghuMingyuan
| Chuanqi Donghu Mingyuan | Until the property ownership certificate is registered as collateral and handed over to bank for keeping | 2,924.43 | |
| Tianyuewan | Until the property ownership certificate is registered as collateral and handed over to bank for keeping | 33,511.08 | |
| Total | 39,237.82 |
Joint investments by directors, supervisors and senior management and the listed company (applicable for such investments wherethe directors, supervisors and senior management are the major source of investment):
√ Applicable □ Not applicable
| Project | Type of investor | Investment amount (RMB) | As % of total investment | As % of the peak of project funds | Cumulative returns | Disinvestment | Compatibility of actual investment and returns |
| Linxinyuan (previously the “Linxijun” project) | Director, supervisor or senior management of the Company | 8,950,000.00 | 39.25% | 0.90% | 0.00 | N/A | N/A |
III Core Competitiveness Analysis
As a pioneer of real estate development enterprises in Shenzhen, the Company has created a number of "firstplaces" in the history of real estate development in China. For example, the first to use the paid state-owned land,the first to introduce the foreign investment for the cooperative land development, the first to raise developmentfunds by means of pre-sale of buildings, the first to carry out public bidding for construction projects in
accordance with international practices, the first to set up a property management company to the buildings andresidences developed in an all-rounded manner, the first to win the bid in the auction of land use rights held in theShenzhen Special Economic Zone, etc.Over the past 40 years, the company has developed more than 100 high-rise buildings, 500 multi-storey residentialbuildings, and 400 garden villas, with a cumulative building area of more than 4 million square meters. It has paidgreat efforts to the establishment of a modern enterprise HR management system and works hard in building aprofessional and high-quality development team. It also keeps improving the management mechanism andprocesses for project development. As a result, its planning, construction, cost control, sales ability and brandimage have been effectively improved. More importantly, its main business operation ability and corecompetitiveness have been greatly enhanced.In 2021, the Company were granted the titles of “Socially Responsible Company” and “Honest Company” inthe real estate world of Shenzhen.
IV Core Business Analysis
1. Overview
In 2021, in the face of many challenges such as the ever-changing environment, the pandemic, the economicdownturn and the intensifying market competition, the Company’s management team conscientiouslyimplemented the decisions and deployment of the controlling shareholder, the CPC Committee of the Group andthe Board of Directors, led the working staff to unite as one, stay determined and focus on operation andmanagement, and completed all tasks in an all-round way, achieving a good start for the “14th Five-Year Plan”.The development of the Company became more stable, more high-quality and more resilient. The mainachievements in the past year are as follows:
(I) Impressive results in major corporate events by seizing opportunities and preventing risks
1. New breakthroughs in project expansion
The Company actively promoted the expansion of main business projects. In mid-May, it successfully completedthe acquisition of Linxinyuan Project in Huizhou. On 28 September, it participated in the second-round auction ofShenzhen’s “concentrated supply of land” for 2021 and successfully won the bid for No. A511-0039 land inGuangming District, Shenzhen at the reserved price. Throughout the year, the new capacity development areatotaled 450,000 square meters, injecting new momentum for the Company’s sustainable development.
2. New progress in project construction
First, the Company completed the completion acceptance for Longgang Project and Shantou Tianyuewan Phase IIProject in April and June, respectively. Second, in Huizhou, the Company recovered the construction forLinxinyuan Project at the end of June and the project was opened for sale in early December. Third, the land ofSPG Guangmingli Project was acquired at the end of September and the construction started smoothly inmid-January 2022.
3. New achievements in real estate sales
In 2021, 307 units of the Company’s main business projects were sold in initial subscription, with a sales area of38,729 square meters and a sales amount of RMB676 million, including 69 units in Shenzhen (with a sales area of7,923 square meters and a sales amount of RMB504 million) and 238 units in Shantou (with a sales area of 30,806square meters and a sales amount of RMB172 million).
4. New actions in quality and efficiency improvement
First, the Company successfully completed the tourism transformation of Petrel Hotel. Second, the Companycompleted the signing of the equity transfer agreement for Shenzhen Property Management. Third, the Companyintroduced high-end pharmaceutical, medical and medical aesthetic companies such as Shenzhen Luohu HospitalGroup, and actively made a plan for creating an SPG Plaza-centric “comprehensive health eco-economic industrycomplex”. Fourth, the equity transfer of Yunnan Kunpeng Air Service Co., LTD. was listed on The StockExchange of Hong Kong Limited. Fifth, steady progress was made in clearing out zombie companies anddisposing of and reducing losses.
5. New explorations for future development
First, the Company actively conducted research on its future development and formulated the QualityImprovement Action Plan to provide action guidelines for the Company’s future development. Second, theCompany made studies and demonstrations of new industry markets, and actively sought target projects withstrategic synergies in the industry. Third, the Company enhanced communication with capital platforms in theSASAC system to solicit support in aspects such as strategic consulting and project expansion, and exploreindustry fund cooperation.
6. New guarantees for safety and stability
First, the Company thoroughly implemented safe production accountability, established sound policies of safetymanagement, and intensified efforts on checking and rectifying potential safety hazards, thereby maintainingstable production safety throughout the year. Second, the Company adhered to regular pandemic prevention andcontrol with targeted measures, fulfilled all work requirements of the CPC Shenzhen Municipal Committee, theShenzhen Municipal People’s Government, the Municipal SASAC and the controlling shareholder, and sawresponsibilities were fulfilled by all the stakeholders. As a result, a steady situation of pandemic prevention andcontrol was guaranteed. Third, the Company coordinately focused on stability maintenance of petitioning andpublic opinion monitoring to create a harmonious and stable environment for business operation and development.(II) Gratifying achievements in business management by strengthening the foundation and making up fordeficiencies
1. Continuous improvement of corporate governance
The Company fully revised and improved policies including the Rules of Procedure of the CPC Committee andthe List of Major Business Operation and Management Matters for the CPC Committee to Study and Discuss. Bymaking the CPC Committee’s studies and discussions a prerequisite for the decision-making of major issues bythe Board of Directors and the management team, the Company strictly controlled its major decision-makingprocesses. Additionally, the Company revised/formulated 42 policies related to corporate governance and internalmanagement, and compiled them into a book to build a more scientific and sounder policy system, constantlyimproving the level of corporate governance. It continued to promote the development of a comprehensive riskmanagement system and organized all units to carry out internal control self-assessment, which consolidated thefoundation for the steady development of the Company.
2. Practical effectiveness of financial management
First, the Company successfully completed the distribution of profits for 2020 and paid cash dividends to allshareholders, achieving normal cash dividends for three consecutive fiscal years. Second, the Company attainedcapital gains of more than RMB40 million through negotiated deposits, monetary funds and other means
throughout the year. Third, the Company thoroughly cleaned up its receivables and recovered nearly RMB20million of overdue receivables. Fourth, the Company was active in coordination and communication. It completedthe land appreciation tax refund process for Longgang Project and received a tax refund of more than RMB70million. Fifth, the Company overcame difficulties and completed the mortgage bank cooperation negotiations forLinxinyuan Project in Huizhou, obtaining a mortgage of RMB800 million to provide support for project sales.
3. Breakthroughs in addressing issues left over from history
The Company actively took measures to speed up the execution of cases such as those involving Fresh PeakProperty, Sandao and Golden Times, with more than RMB1.7 million recovered. It also kept promoting thespecial work of historical housing payment collection. A total of more than RMB1.5 million in arrears wasrecovered throughout the year.
4. Good results in cost control
The Company continued to strictly control project development costs. It implemented full cost, whole process,and penetration management, and paid close attention to the budget and final accounting of major projects.Throughout the year, the Company prepared 32 budgets and the reduction rate of budget amount was 2.08%; 27settlement audits were completed and the reduction rate of settlement amount was 5.34%.
5. Steady growth in lease business
The Company promoted lease property through multiple channels. Throughout the year, a total of 109 leasecontracts were newly signed or renewed, covering an area of 33,000 square meters; the Company’s cumulativelease revenue reached 107.6% of the annual target, a year-on-year increase of 33%.
6. Orderly development of human resources work
The Company explored the establishment of a sound incentive/constraint mechanism, and organized employeeco-investment in Linxinyuan Project in Huizhou, so as to stimulate employees’ enthusiasm and creativity. Itactively carried out human resources management and enriched the cadre and staff teams. It also completed thework for full coverage of special review of personnel files efficiently with quality and quantity assured inaccordance with the requirements of the Organization Department of the CPC Shenzhen Municipal Committeeand SIHC.
7. Solid progress in audit supervision
The Company actively carried out internal audit supervision. It completed the audit and assessment filing for thecapital verification based on physical inventory of Linxinyuan Project in Huizhou and Yunnan Kunpeng AirService Co., LTD., conducted special inspections of the capital safety management of subordinated enterprises,and organized and coordinated the investment control audit team to complete the special audit of TianyuewanProject in Shantou, empowering the stable and healthy development of the Company.(III) New momentum to the development of subordinated enterprises by stabilizing operation andovercoming difficulties
1. Business performance
Affected by factors such as the economic downturn, industry regulation and the pandemic, the Shantou branch ofthe Company, Petrel Hotel and Zhentong Engineering operated under pressure. Shenzhen Property Managementand Huazhan Construction Supervision overcame many difficulties and adverse factors, paid close attention tooperation, and achieved their annual business objectives.
2. Business management
Shenzhen Property Management successfully completed the re-certification for its management system andcarried out the special action of garbage sorting in communities. Its management level was improved to a certainextent. Petrel Hotel standardized its operating process and organized special training such as sales and etiquette,promoting its services to a higher level. Zhentong Engineering successfully obtained the Grade B qualification for
curtain wall design, which created good hardware conditions for business expansion. Huazhan ConstructionSupervision strengthened on-site supervision to effectively guarantee project safety and project quality. TheShantou branch of the Company intensified efforts on project cost control, thereby effectively reducing projectcosts. Jianbang Group coordinately advanced different tasks including development, construction, marketing, andpromotion, with practical results achieved.
3. Market expansion
Zhentong Engineering made great efforts to develop external markets and signed 57 projects. Petrel Hotelintroduced the internet-famous shop project and successfully leased out some properties that had been vacant for along time. Huazhan Construction Supervision successfully won the bid for the supervision project of the TigoSemiconductor Memory Industry Base.(IV) A clean and righteous atmosphere that enables entrepreneurs to focus on business development byworking on Party building and fostering harmony
1. Solid progress in Party building
The CPC Committee of the Company created new methods to promote the provision and effectiveness of Partyhistory education. Party organizations at all levels in the system integrated the education of the Party history intoeveryday life. Adhering to the problem-orientated concept, the Company continuously led the practice of “I dopractical things for the masses” in depth and donated property management equipment to support happycommunity building. With a strict and pragmatic approach, it consolidated the development of community-levelParty organizations, normalized and institutionalized the study by the Theoretical Center Team of the CPCCommittee, and earnestly carried out all tasks of the “Five Ones” project in the education of Party members.
2. Furthering deepening of clean and honest Party conduct development
The Company fully implemented the joint deployment, implementation, inspection, and assessment of clean andhonest Party conduct development and business operation. It gave full play to the synergy of the big supervisionsystem, facilitated the integration of different supervision measures, focused on the main business and primaryresponsibilities, and effectively ensured that all tasks in the annual list of tasks for development of clean andhonest Party conduct and anti-corruption work, as well as key points of annual supervision, were implemented.On the occasion of the 100th anniversary of the founding of the Party, the Company enhanced honesty publicityand education, solidly organized the discipline education and learning month, strengthened work styledevelopment, promoted the positive energy of honesty, and created a clean and righteous atmosphere that enablesentrepreneurs to focus on business development.
3. Great vitality of corporate culture development
Throughout the year, the Company organized more than 150 football, tennis, badminton, table tennis, yoga andother interest group and sports activities, enriching employees’ lifestyle after work. The Company successfullyheld the “SPG Cup” Table Tennis Invitational Competition, and carried out the “Zouhongqiao”, “EmployeeCollective Birthday Party”, visits to Linxinyuan Project in Huizhou, and other activities, creating a soundenvironment where the Company builds platforms and the employees participate, enhancing corporatecohesiveness.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2021 | 2020 | Change (%) |
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 1,320,790,648.45 | 100% | 1,615,009,713.88 | 100% | -18.22% |
| By operating division | |||||
| Property sales | 876,161,088.60 | 66.34% | 1,158,411,393.81 | 71.73% | -24.37% |
| Engineering and construction | 200,259,571.16 | 15.16% | 251,454,463.43 | 15.57% | -20.36% |
| Property management | 162,526,580.18 | 12.31% | 151,968,675.51 | 9.41% | 6.95% |
| Rental service | 81,791,161.56 | 6.19% | 63,254,584.48 | 3.92% | 29.30% |
| Other | 15,776,937.12 | 1.19% | 12,215,550.30 | 0.76% | 29.15% |
| Eliminated internal transactions and accounts | -15,724,690.17 | -1.19% | -22,294,953.65 | -1.38% | -29.47% |
| By product category | |||||
| Residential units | 875,153,000.99 | 66.26% | 1,157,620,917.61 | 71.68% | -24.40% |
| Shops and parking lots | 1,008,087.61 | 0.08% | 790,476.20 | 0.05% | 27.53% |
| Other | 460,354,250.02 | 34.85% | 478,893,273.72 | 29.65% | -3.87% |
| Eliminated internal transactions and accounts | -15,724,690.17 | -1.19% | -22,294,953.65 | -1.38% | -29.47% |
| By operating segment | |||||
| Guangdong Province | 1,308,786,001.07 | 99.09% | 1,613,933,749.67 | 99.93% | -18.91% |
| Other regions in China | 27,096,812.69 | 2.05% | 22,531,905.61 | 1.40% | 20.26% |
| Overseas | 632,524.86 | 0.05% | 839,012.25 | 0.05% | -24.61% |
| Eliminated internal transactions and accounts | -15,724,690.17 | -1.19% | -22,294,953.65 | -1.38% | -29.47% |
| By marketing model | |||||
| Principal operations | 1,320,738,401.50 | 100.00% | 1,625,089,117.23 | 100.62% | -18.73% |
| Other | 15,776,937.12 | 1.19% | 12,215,550.30 | 0.76% | 29.15% |
| Eliminated internal transactions and accounts | -15,724,690.17 | -1.19% | -22,294,953.65 | -1.38% | -29.47% |
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of OperatingRevenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Property sales | 876,161,088.60 | 292,260,823.05 | 66.64% | -24.37% | -24.61% | 0.11% |
| Engineering and construction | 200,259,571.16 | 186,409,100.14 | 6.92% | -20.36% | -23.76% | 4.16% |
| Property management | 162,526,580.18 | 145,898,235.49 | 10.23% | 6.95% | 4.26% | 2.31% |
| By product category | ||||||
| Residential units | 875,153,000.99 | 292,183,630.99 | 66.61% | -24.40% | -24.57% | 0.08% |
| Shops and parking lots | 1,008,087.61 | 77,192.06 | 92.34% | 27.53% | -73.44% | 29.11% |
| By operating segment | ||||||
| Guangdong Province | 1,308,786,001.07 | 799,028,972.30 | 38.95% | -18.91% | 0.00% | -24.50% |
| By marketing model | ||||||
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
| Operating division | Item | Unit | 2021 | 2020 | Change (%) |
| Property sales | Sales volume | RMB’0,000 | 69,045 | 38,767 | 78.10% |
| Output | RMB’0,000 | 204,708 | 15,616 | 1,210.89% | |
| Inventory | RMB’0,000 | 403,220 | 121,599 | 231.60% |
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
Compared with 2020, the year 2021 saw growth and breakthroughs in property development, sales and investment.
(4) Execution Progress of Major Signed Sales or Purchase Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
| Operating division | Item | 2021 | 2020 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Property sales | 292,260,823.05 | 43.86% | 387,659,747.71 | 48.13% | -24.61% | |
| Engineering and construction | 186,409,100.14 | 27.97% | 244,511,214.58 | 30.35% | -23.76% | |
| Property management | 145,898,235.49 | 21.90% | 139,937,487.12 | 17.37% | 4.26% | |
| Rental service | 35,545,938.32 | 5.33% | 35,984,852.34 | 4.47% | -1.22% | |
| Other | 22,151,678.03 | 3.32% | 11,611,768.12 | 1.44% | 90.77% | |
| Eliminated internal transactions and accounts | -15,917,413.55 | -2.39% | -14,196,621.19 | -1.76% | 12.12% | |
| Total | 666,348,361.48 | 100.00% | 805,508,448.68 | 100.00% | -17.28% | |
Note:
Affected by markets and development cycles, property sales and construction both experienced a year-on-year drop.
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
See “VI Changes to the scope of consolidation” in “Part X Financial Statements”.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 58,130,053.77 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 4.45% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
Information about top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Legal person A | 15,319,118.77 | 1.17% |
| 2 | Legal person B | 11,483,285.27 | 0.88% |
| 3 | Legal person C | 11,167,029.09 | 0.86% |
| 4 | Legal person D | 10,532,814.03 | 0.81% |
| 5 | Legal person E | 9,627,806.61 | 0.74% |
| Total | -- | 58,130,053.77 | 4.45% |
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
| Total purchases from top five suppliers (RMB) | 89,911,678.31 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 34.81% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 12.00% |
Information about top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Legal person A | 30,985,550.60 | 12.00% |
| 2 | Legal person B | 32,704,335.85 | 12.66% |
| 3 | Legal person C | 10,113,649.04 | 3.92% |
| 4 | Legal person D | 8,196,092.74 | 3.17% |
| 5 | Legal person E | 7,912,050.08 | 3.06% |
| Total | -- | 89,911,678.31 | 34.81% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
| 2021 | 2020 | Change (%) | Reason for any significant change | |
| Selling expense | 42,737,748.22 | 55,989,397.22 | -23.67% |
| Administrative expense | 98,307,831.60 | 93,616,226.75 | 5.01% | |
| Finance costs | -18,083,491.01 | -21,505,685.05 | 15.91% |
4. R&D Investments
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
| Item | 2021 | 2020 | Change (%) |
| Subtotal of cash generated from operating activities | 1,805,846,506.24 | 1,783,707,997.05 | 1.24% |
| Subtotal of cash used in operating activities | 3,011,798,614.18 | 1,498,543,983.88 | 100.98% |
| Net cash generated from/used in operating activities | -1,205,952,107.94 | 285,164,013.17 | 522.90% |
| Subtotal of cash generated from investing activities | 799,855,541.48 | 1,019,824,221.85 | -21.57% |
| Subtotal of cash used in investing activities | 1,751,621,932.29 | 749,215.31 | 233,694.20% |
| Net cash generated from/used in investing activities | -951,766,390.81 | 1,019,075,006.54 | -193.40% |
| Subtotal of cash generated from financing activities | 266,256,968.76 | 76,893,995.94 | 246.26% |
| Subtotal of cash used in financing activities | 164,908,415.94 | 218,571,160.17 | -24.55% |
| Net cash generated from/used in financing activities | 101,348,552.82 | -141,677,164.23 | 155.44% |
| Net increase in cash and cash equivalents | -2,056,810,291.67 | 1,161,914,166.47 | -277.02% |
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
Cash used in operating activities increased substantially year-on-year, primarily because property investment and developmentincreased.Net cash generated from investing activities decreased primarily due to the purchase of financial products for investment purposes.Net increase in cash and cash equivalents decreased substantially year-on-year, primarily due to investment in property project.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
√ Applicable □ Not applicable
There is a big difference between the net operating cash flow and the net profit for the year, primarily due to the long time span
between property development, sales and revenue recognition.V Analysis of Non-Core Businesses
□ Applicable √ Not applicable
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 31 December 2021 | 1 January 2021 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As a % of total assets | Amount | As a % of total assets | |||
| Monetary assets | 564,358,824.63 | 9.13% | 2,687,465,070.01 | 54.44% | -45.31% | Purchase of project stake and land |
| Accounts receivable | 61,048,785.11 | 0.99% | 59,590,944.06 | 1.21% | -0.22% | |
| Inventories | 4,034,933,562.62 | 65.26% | 1,220,464,112.56 | 24.72% | 40.54% | New project and new addition to land bank |
| Investment property | 588,865,777.16 | 9.53% | 616,365,621.53 | 12.48% | -2.95% | |
| Long-term equity investments | 272,168.28 | 0.00% | 377,489.65 | 0.01% | -0.01% | |
| Fixed assets | 23,920,424.55 | 0.39% | 28,039,978.43 | 0.57% | -0.18% | |
| Right-of-use assets | 365,351.97 | 0.01% | 0.00% | 0.01% | ||
| Short-term borrowings | 50,440,116.24 | 0.82% | 76,893,995.94 | 1.56% | -0.74% | |
| Contract liabilities | 199,965,490.08 | 3.23% | 196,786,977.19 | 3.99% | -0.76% | |
| Lease liabilities | 125,920.77 | 0.00% | 0.00% | 0.00% | ||
| Taxes payable | 600,497,936.70 | 9.71% | 459,709,646.95 | 9.31% | 0.40% | Land value-added tax provision |
| Other payables | 581,377,415.64 | 9.40% | 277,105,129.74 | 5.61% | 3.79% | Borrowing to project company from minority shareholder |
Indicate whether overseas assets account for a high proportion of total assets.
□ Applicable √ Not applicable
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other changes | Ending amount |
| Financial assets | ||||||||
| 4. Investments in other equity instruments | 37,510,860.51 | -1,188,156.18 | 4,509,209.49 | 36,322,704.33 | ||||
| Subtotal of financial assets | 37,510,860.51 | -1,188,156.18 | 4,509,209.49 | 36,322,704.33 | ||||
| Total of the above | 37,510,860.51 | -1,188,156.18 | 4,509,209.49 | 36,322,704.33 | ||||
| Financial liabilities | 0.00 | 0.00 | ||||||
Other changeSignificant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
| Item | Ending carrying value | Reasons for restriction |
| Accounts receivable | 50,440,116.24 | Put in pledge for short-term borrowings |
| Monetary assets | 3,500,000.00 | Frozen in a lawsuit case |
| Monetary assets | 5,674,439.78 | Project of public facilities inside and surrounding the urban renewal project of Longgang District, Shenzhen-construction funds |
| Total | 59,614,556.02 | -- |
VII Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
| Total investment amount in the Reporting Period (RMB) | Total investment amount in last year (RMB) | Change (%) |
| 2,047,080,000.00 | 205,660,000.00 | 895.37% |
2. Significant Equity Investments Made in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
| Name of investee enterprise | Main businesses | Investment methods | Invested amount | Shareholding percentage | Funding Resources | Partners | Investment Duration | Product type | Status as on the date of the balance sheet | Predicted return | Investment return in the current period | Whether involved in any legal actions | Date of disclosure (if any) | Disclosure index (if any) |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | Real estate development | acquisition | 450,000,000.00 | 51.00% | Self-owned | Guangzhou Bopi Enterprise Management Consulting Co., Ltd. | - | Residential units and shops | Ownership transfer formalities were completed in mid May 2021. Jianbang Group has been included in the Company’s consolidated financial statements. The Linxinyuan project developed by Jianbang Group has resumed construction in late June 2021, with Phase I kicking off pre-sale in mid December 2021. Currently, the | 637,500,000.00 | -6,422,929.28 | Yes | 15 May 2021 | Announcement on Progress on Acquisition of 51% of Equity in Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. (No.: 2021-020) |
| Company is operating as planned. | disclosed on www.cninfo.com.cn | |||||||||||||
| Shenzhen SPG Chuanqi Real Estate Development Co., Ltd. | Real estate development | Incorporated | 995,000,000.00 | 100.00% | Self-owned | - | - | Residential units and shops | Incorporation formalities were completed on 29 October 2021. This project has started construction in mid January 2022. | 335,670,000.00 | -626,468.85 | No | 1 November 2021 | Announcement on Progress on Incorporation of Wholly-owned Subsidiary (No. 2021-048) disclosed on www.cninfo.com.cn |
| Total | -- | -- | 1,445,000,000.00 | -- | -- | -- | -- | -- | -- | 973,170,000.00 | -7049398.13 | -- | -- | -- |
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
√ Applicable □ Not applicable
| Counterparty | Equity interests sold | Date of sale | Selling price (RMB’0,000) | Amount contributed by the equity interests to net income of the Company from period-beginning to date of sale (RMB’0,000) | Effect of the sale on the Company | Amount contributed by the sale to net income of the Company as a percentage of the Company’s net income (%) | Pricing principle | Related-party transaction or not | Relationship between counterparty and the Company | Ownership fully transferred or not | Executed as scheduled or not, if not, state reason and actions taken | Disclosure date | Index to disclosed information |
| Shenzhen International Trade Center Property Management Co., Ltd. | 100% of equity interests of Shenzhen Property Management Co., Ltd. | 11 February 2022 | 19,667.67 | 334.69 | This transaction is in line with the Company’s development strategies and is conducive to the Company’s further optimization and adjustment of its industry structure, enrichment of capital reserves, expansion of new profit growth areas, and continuous improvement of its quality. Proceeds from this equity transfer will be carried forward in 2022 and will have a positive impact on the cash flows of the Company. The specific impact is subject to the annual auditing result issued by the audit firm. | 0.00% | The transaction price is determined based on the net asset valuation assessed by the evaluation agency on the base date of 30 June 2021. | Yes | Shenzhen International Trade Center Property Management Co., Ltd. (hereinafter referred to as “ITC Property Management”) is a wholly-owned subsidiary of ShenZhen Properties & Resources Development (Group) Ltd. “hereinafter referred to as “SZPRD” and both SZPRD and the Company are majority-owned subsidiaries of Shenzhen Investment Holdings Co., Ltd. Thus, an association relationship is formed. | Yes | Yes | 15 February 2022 | Announcement on the Progress of the Related-party Transaction regarding the Transfer of 100% of Equity Interests of Shenzhen Property Management Co., Ltd. (No.: 2022-001) disclosed on www.cninfo.com.cn |
IX Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Guangdong | Subsidiary | Development | 2,800,000.00 | 1,194,312,56 | -7,511,961.3 | -8,490,635.4 | -6,422,929.2 |
| Jianbang Group (Huiyang) Industrial Co., Ltd. | of real estate | 2.50 | 5 | 4 | 8 | |||
| Shenzhen SPG Chuanqi Real Estate Development Co., Ltd. | Subsidiary | Development of real estate | 30,000,000.00 | 994,623,335.62 | 994,373,531.15 | -826,235.27 | -626,468.85 | |
| Shenzhen SPG Longgang Development Co., Ltd. | Subsidiary | Development of real estate | 30,000,000.00 | 265,395,040.07 | 124,744,977.43 | 28,911,854.28 | 9,645,676.62 | 10,236,841.31 |
| Shantou SEZ, Wellam FTY, Building Development, Co., Ltd. | Subsidiary | Development of real estate | 91,226,120.44 | 170,626,252.25 | 122,561,035.98 | 1,008,087.61 | 251,183.65 | 170,289.40 |
| Shantou Huafeng Real Estate Development Co., Ltd. | Subsidiary | Development of real estate | 80,000,000.00 | 978,047,725.92 | 21,038,772.45 | 141,667,875.10 | 542,656.62 | 397,168.52 |
| Great Wall Estate Co., Inc. (U.S.) | Subsidiary | Development of real estate | 2,051,146.00 | 18,201,422.13 | -80,904,534.73 | 632,524.86 | -284,455.30 | -284,455.30 |
| Shenzhen Zhentong Engineering Co., Ltd. | Subsidiary | Installation and maintenance | 10,000,000.00 | 122,011,401.31 | 19,822,359.67 | 201,876,257.29 | -6,226,318.90 | -4,786,992.98 |
| Shenzhen Property Management Co., Ltd. | Subsidiary | Property management | 7,250,000.00 | 100,916,928.47 | 35,164,476.41 | 163,141,074.63 | 4,514,075.45 | 3,346,927.48 |
| Shenzhen Petrel Hotel Co., Ltd. | Subsidiary | Hotel Service | 30,000,000.00 | 49,219,742.72 | 39,446,188.22 | 17,378,195.07 | -3,539,934.35 | -2,703,299.91 |
| Shenzhen Huazhan | Subsidiary | Construction | 8,000,000.00 | 10,639,068.8 | 10,035,220.9 | 3,214,530.36 | 111,097.51 | 99,035.57 |
| Construction Supervision Co., Ltd. | supervision | 6 | 1 | |||||
| Xin Feng Enterprise Co., Ltd. | Subsidiary | Investment and management | 502,335.00 | 413,340,621.60 | -132,382,885.12 | 1,285,471.06 | 1,285,471.06 |
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
| Name | Way of gaining and disposing subsidiaries | Influence on overall production and operation as well as performance |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | Share acquisition | The real estate project company is currently under the development and construction and will be carried forward in 2023. |
| Shenzhen SPG Chuanqi Real Estate Development Co., Ltd. | Newly established | It is currently in the initial stage of development and construction and will be carried forward in 2024. |
Information about major majority- and minority-owned subsidiaries:
1. In May 2021, through the payment of consideration of RMB450 million, the Group acquired 51% equity interest in GuangdongJianbang Group (Huiyang) Industrial Co., Ltd. The project company will develop the Linxingyuan Project with a gross site area of200,000 square meters and a total capacity building area of 0.4 million square meters, which will be developed in four phases and isexpected to achieve revenue of RMB6 billion and total profit of approximately RMB1.8 billion from 2023 to 2025. The Group hascontrol over the project company, which will be included in the scope of consolidation in May 2021.
2. In October 2021, the Company won the bid for a land plot in Guangming District and established the project company ShenzhenSPG Chuanqi Real Estate Development Co., Ltd. to be responsible for the development and construction of the land.
3. The subordinate subsidiaries engaged in real estate development also include: Shenzhen SPG Longgang Development Co., Ltd.,Shantou SEZ, Wellam FTY, Building Development, Co., Ltd., Shantou Huafeng Real Estate Development Co., Ltd. The Cuilinyuanproject developed by Shenzhen SPG Longgang Development Co., Ltd. brought forward RMB29 million in 2021 (the percentage ofaccumulative sales carried forward was 95%), accounting for 2.19% of the Company's operating revenue. Jinyedao andYuejingDongfang developed by Shantou SEZ, Wellam FTY, Building Development, Co., Ltd. left a few amount of remainingbuildings for sale. And Shantou Huafeng Real Estate Development Co., Ltd. was responsible for the development of Tianyuewanproject (divided into Phase I and Phase II). Tianyuewan Phase I was opened for sale in October 2016 and completed in December2019. The Phase II started construction in November 2018 and was completed at the end of June 2021. The overall sales progress isrelatively slow with an accumulated sales rate of about 72% for Phase I and 13% for Phase II.
4. Shenzhen Zhentong Engineering Co., Ltd. was engaged in the business of building installation and maintenance with the 2021operating revenues of RMB202 million and of 15.28% to the operating revenues of the Company.
5. Shenzhen Property Management Co., Ltd was engaged in the industry of property management. The 2021 operating revenues wasof RMB163 million that was of 12.35% to the operating revenues of the Company.
6. The 2021 net profit of Xin Feng Enterprise Co., Ltd. was of RMB1.29 million which mainly due to the changes of exchange rateand it conducts no business.
7. The 2021 net profit of Shenzhen Petrel Hotel Co., Ltd. was of RMB-2.7 million which mainly due to the epidemic.
X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI Prospects
(I) Industrial Pattern and TrendThe state continues to uphold the principle that “houses are for living in, not for speculating on”, encourages bothhousing purchase and renting, and implements city-specific policies to promote a virtuous circle and the healthydevelopment of the real estate industry. Under the continuous control of multiple financial regulatory policies, thereal estate enterprises have gradually shifted their development goals from “quantity first” to “quality first”. The topenterprises with high qualities, as a result, will be easy to get more resources, and a new industry competitionlandscape will be presented.(II) Potential Risks and Countermeasures
1. Macroeconomic risks and countermeasures
The real estate industry has a greater correlation with the macroeconomy and is more influenced by themacroeconomic cycle. At present, along with the accelerated rate of global vaccination and the lifting oflockdown measures in various countries, the global economic recovery has been significantly enhanced, but theworld economic situation remains complicated and severe due to the repeated ups and downs of the pandemic andfrequent variants of the virus. The Company will continue to pay attention to the international and domesticmacroeconomic situation and actively adjust its business strategy.
2. Industry regulation risks and countermeasures
Under the guidance of "housing is for living in, not for speculation", the regulation and control policies areprogressive. The market is entering a period of adjustment and the industry is entering a stage of profoundchanges. The development of the Company is undergoing new tests. The Company will continue to deepen itsresearch on industry policies, follow the national strategies, innovate its operating model and optimize itsdevelopment method. At the same time, the Company will conduct research on strategic emerging industries in atimely manner to explore new areas and cultivate new business models.
3. Business operating risks and countermeasures
Due to the implementation of a series of policies such as the real estate loan concentration managementmechanism and "centralized land supply", it poses new challenges for the Company to expand its developmentland reserve. The Company will pay close attention to the market and industry policy changes, formulate targetedland expansion plans, and The Company will pay close attention to the quality and efficiency improvement ofexisting assets, and maintain a good operating revenue scale and performance level.(III) Development strategy and operating planThe year 2022 will see the convening of the 20th National Congress of the Communist Party of China. It is also acrucial year for the Company to deepen its reform. The Company will resolutely implement the decisions anddeployment of the CPC Shenzhen Municipal Committee, the Shenzhen Municipal People’s Government, theMunicipal SASAC, and SIHC. The “Dual Zone” construction in Shenzhen and the policy of deepening the reformof state-owned assets and enterprises have brought strategic opportunities for the Company to plan for projectsreserves and stabilize operation and management. Correspondingly, the Company will strive to seek newbreakthroughs in its reform and development.The Company has made an overall operating plan for 2022. Guided by the Xi Jinping Thought on Socialism withChinese Characteristics for a New Era, the Company will conscientiously implement the spirit of the 19th
National Congress of the Communist Party of China, all previous plenary sessions of the 19th Central Committeeof the Communist Party of China, and the Central Economic Work Conference, and take overall planning ofproduction and operation by Party building and high-quality development. It will stabilize the operation on thebasis of safety management, explore future development directions, and focus on project development and saleswhile strengthening the implementation. At the same time, the Company will make efforts in key tasks such asproject financing, quality and efficiency improvement, and risk control. Additionally, the Company will work hardto improve its internal strength and operate meticulously, making every effort to promote its high-qualitydevelopment to a new level.
1. Focus on the main business and continue to build a solid foundation for developmentFirst, the Company will accelerate project construction to ensure the smooth implementation of projectdevelopment plans. Second, the Company will fully boost project sales to provide sufficient cash flow andperformance support for its future development. Third, the Company will intensify efforts to research real estatepolicies, work on land development surveys, moderately expand the resource reserves of main business projects,and continually strengthen the foundation for high-quality development.
2. Enhance synergy and actively explore future development directions
First, with the help of intermediary service agencies, the Company will keep strengthening market research onstrategic emerging industries. Second, the Company will continue to enhance communication with the MunicipalSASAC and the controlling shareholder, and strive to achieve strategic synergy with the systems. Third, theCompany will cooperate with system capital platforms to leverage social capital in the form of industryinvestment funds and jointly explore business opportunities. Fourth, through fund operation, the Company willselect target projects that generate stable revenue and profits, show great growth potential and can be integrated inorder to steadily increase profits.
3. Improve quality and efficiency, and continuously optimize the industry structureFirst, the Company will speed up the collection of equity transfer funds and the transfer of assets and personnelwith respect to Shenzhen Property Management. Second, the Company will sell self-owned properties that do nothave urban renewal qualifications or appreciation potential. Third, the Company will accelerate the equity transferof Yunnan Kunpeng Air Service Co., LTD. and recover the investment funds as soon as possible. Fourth, theCompany will continue to clear out zombie companies. Fifth, the Company will keep promoting in-depthcooperation with the Luohu District People’s Government and Shenzhen Luohu Hospital Group on the theme ofcomprehensive health.
4. Make sound overall planning to conduct major works in an orderly fashionFirst, the Company will enhance communication with financial institutions, strive to expand financing channels,flexibly operate different financing instruments, and rationally optimize its asset-debt structure. Second, theCompany will strengthen organizational guarantees, fulfill its responsibilities, and make every effort to solveproblems left over from history. Third, benchmarked against model enterprises, the Company will turn to leanmanagement, improve rules and regulations continuously, and standardize decision-making procedures in order toimprove the quality of decision-making and fully enhance its comprehensive strength. Fourth, the Company willmaintain team stability, optimize the age structure and knowledge structure of the talent team, and ensure that theteam’s combat effectiveness does not decline and execution power does not lag behind. Fifth, the Company willtake multiple measures to consolidate responsibilities, and intensify efforts to collect arrears. Sixth, the Companywill deeply advance the development of its policies on supervision, inspection and accountability,comprehensively strengthen the application of supervision results, take accountability and performancemanagement seriously, and focus on improving execution power to ensure the implementation of all tasks.
5. Make unremitting efforts on the implementation of different measures for safe productionThe Company will unify its thinking, clarify its directions, carry out safe production and petitioning stabilitymaintenance creatively with high standards closely based on its own reality, and strive to break new grounds insafety and stability. First, the Company will continue to establish sound policies of safe production management,strictly implement the accountability system for safe production, intensify efforts on checking potential safetyhazards, and enhance safety governance in major areas. Second, the Company will adhere to regular pandemicprevention and control with targeted measures by taking various steps and stringent precautions for strictlypreventing and controlling the pandemic to guarantee a steady situation of pandemic prevention and control.
6. Strengthen leadership and work on Party building
Guided by the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the Company willorganize the study, publicity and implementation of the spirit of the 20th National Congress of the CommunistParty of China, consolidate and deepen the achievements of Party history education, and incorporate Party historyeducation into all Party building tasks. On top of that, the Company will strengthen its Party organizationtheoretically and organizationally and improve the Party organization’s conduct. Playing a leadership role, theParty organization will set the right direction, keep in mind the big picture, ensure the implementation of Partypolicies and principles, and mobilize and give full play to the exemplary and vanguard role of Party members. TheCompany will take a two-pronged approach on both Party building and business operation, effectively integratingParty leadership into corporate governance to lead to high-quality development of the Company.
XII Communications with the Investment Community such as Researches, Inquiries andInterviews during the Reporting Period
√ Applicable □ Not applicable
| Date of visit | Place of visit | Way of visit | Type of visitor | Visitor | Contents and materials provided | Index to main inquiry information |
| 2021-01-07 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-01-13 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-01-22 | The Company | By telephone | Individual | Individual investor | Inquired of the land reserves and projects progress of the Company, and | N/A |
| didn’t offer written materials | ||||||
| 2021-01-25 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-02-03 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-02-26 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-03-01 | The Company | By telephone | Individual | Individual investor | Inquired of business situation, and didn’t offer written materials | N/A |
| 2021-03-02 | The Company | By telephone | Individual | Individual investor | Inquired of the land reserves and projects progress of the Company, and didn’t offer written materials | N/A |
| 2021-03-18 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and | N/A |
| didn’t offer written materials | ||||||
| 2021-03-25 | The Company | By telephone | Individual | Individual investor | Inquired of business situation, and didn’t offer written materials | N/A |
| 2021-03-30 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-04-07 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-04-16 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-04-28 | The Company | By telephone | Individual | Individual investor | Inquired of the land reserves and projects progress of the Company, and didn’t offer written materials | N/A |
| 2021-05-14 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-05-18 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-05-20 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-06-02 | The Company | By telephone | Individual | Individual investor | Inquired of the land reserves and projects progress of the Company, and didn’t offer written materials | N/A |
| 2021-06-11 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-06-22 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-06-24 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-06-29 | The Company | By telephone | Individual | Individual investor | Inquired of business | N/A |
| situations and strategic planning of the Company, and didn’t offer written materials | ||||||
| 2021-07-07 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-07-20 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-08-11 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-08-19 | The Company | By telephone | Individual | Individual investor | Inquired of project sales and future development plan of the Company and didn’t offer written materials | N/A |
| 2021-08-24 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-09-01 | The Company | By telephone | Individual | Individual investor | Inquired of the future development | N/A |
| plan of the Company, and didn’t offer written materials | ||||||
| 2021-09-02 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-09-15 | The Company | By telephone | Individual | Individual investor | Inquired of the land reserves and projects progress of the Company, and didn’t offer written materials | N/A |
| 2021-09-23 | The Company | By telephone | Individual | Individual investor | Inquired of business situations and strategic planning of the Company, and didn’t offer written materials | N/A |
| 2021-10-11 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-10-15 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-10-26 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the | N/A |
| Company, and didn’t offer written materials | ||||||
| 2021-11-03 | The Company | By telephone | Individual | Individual investor | Inquired of the land reserves and projects progress of the Company, and didn’t offer written materials | N/A |
| 2021-11-11 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-11-18 | The Company | By telephone | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
| 2021-12-07 | The Company | By telephone | Individual | Individual investor | Inquired of the land reserves and projects progress of the Company, and didn’t offer written materials | N/A |
| 2021-12-21 | The Company | By telephone | Individual | Individual investor | Inquired of project sales of the Company, and didn’t offer written materials | N/A |
| 2021-12-29 | The Company | Field research | Individual | Individual investor | Inquired of the future development plan of the Company, and didn’t offer written materials | N/A |
Part IV Corporate GovernanceI Basic Situation of Corporate Governance
In accordance with the requirements of the Company Law, the Securities Law, the Code on the Governance ofListed Companies and other laws and regulations, the Company has been improving its governance structurecontinuously, adhering to standardized operation, and an operational mechanism featuring decision-making by theboard of directors, execution by the management team, and supervision by the board of supervisors has beenformed.During the reporting period, the Company's governance institutions at all levels have carried out theirresponsibilities and authorities clearly and definitely and have performed their own functions. At the same time,they have checked and balanced each other in decision-making, implementation and supervision effectively, andhave operated in a coordinated manner.
(1) Operation of the general meeting of shareholders
The preparation, holding of the annual and extraordinary general meetings of shareholders of the Company aswell as disclosure of the resolutions made at the meetings have been carried out in strict accordance with theCompany Law, the Rules of the General Meeting of Shareholders of Listed Companies of China SecuritiesRegulatory Commission (CSRC), the Articles of Association and the Rules of Procedure of the General Meetingof Shareholders of the Company. The notification time of the meeting, the procedure of authorization, theprocedure of convening, the convener, the qualification of the personnel attending the meeting and the votingprocedure of the meeting have all been in line with relevant provisions. An on-site interaction for shareholders hasbeen set at the shareholders' meeting to ensure that the shareholders, especially the small and medium-sizedshareholders, can exercise their legitimate rights.
(2) Operation of the board of directors
The preparation and holding of the board meeting of the Company and the disclosure of the resolution made at themeeting have been carried out in strict accordance with the Company Law, the Self-regulation Guidelines forListed Companies of Shenzhen Stock Exchange No. 1-Standardized Operation of Listed Companies on the MainBoard, the Articles of Association and the Rules of Procedure of the Board Meeting of the Company. The numberand manning of the board of directors have met the requirements of laws and regulations. The directors haveworked diligently and responsibly, and the board of directors has worked hard in making decisions and setting thedirection for the Company, and has exercised its power in accordance with the requirements for corporategovernance.
(3) Operation of the supervisory committee
The number and manning of the board of supervisors have met the requirements of laws and regulations. Allmembers of the board of supervisors of the Company have performed their duties diligently and conscientiously.They have supervised and inspected the important matters of the Company in strict accordance with the CompanyLaw, the Self-regulation Guidelines for Listed Companies of Shenzhen Stock Exchange No. 1-StandardizedOperation of Listed Companies on the Main Board, the Articles of Association and the Rules of Procedure of theBoard of Supervisors of the Company, exercised the power of supervision effectively, gave a full play to thesupervisory function, have played a substantial role in the operation and management of the Company, and haveprotected the legitimate rights and interests of the Company and the shareholders.
(4) Operation at manager level
The manager level of the Company has performed its duties in strict accordance with the Company Law, theSelf-regulation Guidelines for Listed Companies of Shenzhen Stock Exchange No. 1-Standardized Operation ofListed Companies on the Main Board, the Articles of Association and the Detailed Working Rules for the GeneralManager of the Company. The manager level is responsible for the production, operation and management of theCompany all-roundly. They have performed their duties diligently and conscientiously, and have carried out thedecisions of the board of directors effectively. The members at the manager level have had a clear division oflabor among them, they have worked diligently and conscientiously, and there has not existed any situation of"control under insiders ".Indicate by tick market whether there is any material incompliance with laws, administrative regulations and regulations governingthe governance of listed companies issued by the CSRC.
□ Yes √ No
No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder and Actual Controller inBusiness, Personnel, Asset, Organization and Financial Affairs(I) In respect of assets, the Company possessed independent and integrated assets and the property of theCompany is transparent.(II) In respect of personnel, the Company was absolutely independent in management of labor, personnel andsalaries from the controlling shareholders. All the senior executives of the Company took no office titleconcurrently and drew no remunerations from the Shareholder Company.(III) In respect of finance, the Company has independent financial department, independently accounted and paidtaxes according to the law. The Company established a complete accounting system, financial accounting systemand financial administrative systems. The Company opened independent bank accounts.(IV) In respect of organization, the Board of Directors and the Supervisory Board operated independently. Thereexisted no superior-inferior relationship between the controlling shareholder and its function department and theCompany.(V) In respect of business, the Company possessed independent production, supply and sales system.
III Horizontal Competition
√ Applicable □ Not applicable
| Type | Relationship with the Company | Company name | Company nature | Course | Countermeasures | Progress and follow-up plan |
| Horizontal competition | Controlling shareholder | Shenzhen Investment Holdings Co., Ltd. | Other | The Company and ShenZhen Properties & Resources Development (Group) Ltd. (hereinafter referred to as “SZPRD”) are majority-owned subsidiaries of Shenzhen Investment Holdings Co., Ltd. The | For the Company’s existing business that has horizontal competition with ShenZhen Properties & Resources Development (Group) Ltd., Shenzhen Investment Holdings Co., | Refer to the Announcement on Receiving the Avoiding Horizontal Competition Commitment Letter from the |
| Company and SZPRD are operating real estate development and commercial property sales business, which belong to the same industry. There is horizontal competition. | Ltd. will, within the scope permitted by laws and regulations, timely launch one or several of the following solutions that is practically feasible, and complete the implementation of the relevant solution(s) before 9 November 2024 to solve the existing horizontal competition problem: (1) Solve the horizontal competition between the two through asset sales or asset replacement; (2) Solve the horizontal competition between the two through equity transfer; (3) Take other measures that can effectively solve the problem of horizontal competition. | Controlling Shareholder (No.: 2021-032) disclosed by the Company on 11 September 2021 and the Announcement on Resolutions of the 1st Extraordinary General Meeting of 2021 (No.: 2021-34) disclosed by ShenZhen Properties & Resources Development (Group) Ltd. on 27 September 2021 for details. |
IV Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Convened date | Disclosure date | Index to disclosed information |
| The 2020 Annual General Meeting | Annual General Meeting | 63.55% | 28 April 2021 | 29 April 2021 |
Resolutions of 2020Annual GeneralMeeting disclosedon China Securities,Securities Times, TaKung Pao and
www.cninfo.com.cn
(No.: 2021-011)
| The 1st Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 63.55% | 16 July 2021 | 17 July 2021 | Resolutions of the 1st Extraordinary General Meeting of 2021 disclosed on |
| China Securities, Securities Times, Ta Kung Pao and www.cninfo.com.cn (No.: 2021-026) | |||||
| The 2nd Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 63.59% | 11 October 2021 | 12 October 2021 | Resolutions of the 2nd Extraordinary General Meeting of 2021 disclosed on China Securities, Securities Times, Ta Kung Pao and www.cninfo.com.cn (No.: 2021-040) |
| The 3rd Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 1.98% | 29 December 2021 | 30 December 2021 | Resolutions of the 3rd Extraordinary General Meeting of 2021 disclosed on China Securities, Securities Times, Ta Kung Pao and www.cninfo.com.cn (No.: 2021-053) |
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
V Directors, Supervisors and Senior Management
1. Basic Information
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Stock options | Number of granted restricted shares (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) | Reason for change |
| Liu Zhengyu | Chairman of the | Incumbent | Male | 52 | 15 January 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Board | ||||||||||||||
| Tang Xiaoping | Director | Incumbent | Male | 52 | 31 December 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Tang Xiaoping | GM | Incumbent | Male | 52 | 14 December 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Deng Kangcheng | Director | Incumbent | Male | 56 | 17 April 2012 | 10,000 | 0 | 0 | 0 | 0 | 0 | 10,000 | ||
| Wang Jianfei | Director | Incumbent | Male | 49 | 11 October 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Wang Jianfei | CFO | Incumbent | Male | 49 | 22 September 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Wen Li | Director | Incumbent | Female | 53 | 8 September 2006 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Sun Minghui | Director | Incumbent | Male | 41 | 31 December 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Kang Xiaoyue | Independent director | Incumbent | Male | 58 | 15 May 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| He Zuowen | Independent director | Incumbent | Male | 60 | 30 June 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Mi Xuming | Independent director | Incumbent | Male | 47 | 30 June 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Li Lian | Chairman of the Supervisory | Incumbent | Female | 55 | 31 December 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Committee | ||||||||||||||
| Ren Wei | Supervisor | Incumbent | Male | 42 | 15 May 2018 | 2,000 | 0 | 0 | 0 | 0 | 0 | 2,000 | ||
| Li Yufei | Supervisor | Incumbent | Female | 44 | 17 April 2012 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Feng Hongwei | Supervisor | Incumbent | Male | 51 | 2 March 2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Lin Jun | Supervisor | Incumbent | Female | 53 | 27 April 2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Wei Hanping | Vice GM | Incumbent | Female | 56 | 28 September 2012 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Zhang Hongwei | Vice GM | Incumbent | Male | 56 | 15 July 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Luo Yi | Secretary of the Board | Incumbent | Male | 48 | 31 December 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Zhao Zhongliang | Director | Former | Male | 52 | 31 December 2020 | 11 October 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Zhao Zhongliang | CFO | Former | Male | 52 | 14 December 2020 | 22 September 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Total | -- | -- | -- | -- | -- | -- | 12,000 | 0 | 0 | 0 | 0 | 0 | 12,000 | -- |
Indicate by tick mark whether any directors or supervisors left or any senior management were disengaged during the ReportingPeriod
√ Yes □ No
Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Zhao Zhongliang | Director | Left | 11 October 2021 | Job change |
| Zhao Zhongliang | CFO | Left | 22 September 2021 | Job change |
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors andsenior management:
1. Liu zhengyu: he once was the director of Inspection Department in State-owned Assets Supervision andAdministration Commission of the People’s Government of Shenzhen Municipal, Chief Accountant, vice GM andmember of CPC of Shenzhen Investment Holdings Co., Ltd. Now he acts as the executive director, president andVice Secretary of CPC of Shenzhen International Holdings Limited, the Chairman of the Board, secretary of CPCof the Company.
2. Tang Xiaoping: he ever act as CFO and finance minister of Shenzhen HRD Assets Management Company,minister of Financial Operations Management Department of Shenzhen Foreign Labor Service Co., Ltd. andexecutive director of Shenzhen Foreign Affairs Service Center, Manager of Financing Plan Department, deputyGM of the Company and secretary of the Board of the Company. He is currently the director, GM and deputysecretary of the CPC of the Company.
3. Deng Kangcheng: he was once deputy director, director of the Office of Shenzhen Investment Holdings Co.,Ltd., and supervisor of the Company. And now he acts as the director, Vice Secretary of CPC and Chairman of theTrade Union Federation of the Company.
4. Wang Jianfei: he was once the minister of the Financial Management Department of Shenzhen ConstructionDevelopment (Group) Company, vice GM of Hubei SIHC Investment Development Co., Ltd. And now he acts asthe director and CFO of the Company.
5. Wen Li: she once worked as the vice chief of the Investment and Development Department, vice director ofManagement Center for Construction Project and Minister of Enterprise Department I of Shenzhen InvestmentHoldings Co., Ltd. Now, she serves as the director, GM and vice secretary of CPC in Shenzhen Bay TechnologyDevelopment Co., Ltd. and the director of the Company.
6. Sun Minghui: Former the senior director of the Finance Department and the Office of the Board of Directors ofShenzhen Investment Holdings Co., Ltd., and the deputy director of the Finance Department (Settlement Center);currently, he is the director of the Finance Department (Settlement Center) of Shenzhen Investment Holdings Co.,Ltd. and a director of the Company.
7. Kang Xiaoyue: he was once the staff member of Department of Justice of Jiangxi Province, a reporter, editorand head of Special Issue Department of Shenzhen Legal Newspaper. Chief Lawyer, senior partner of GuangdongNew Century Law Firm (later renamed Guangdong Wancheng Law Firm). Now he serves as a senior partner ofBeijing Weiheng (Shenzhen) Law Firm and the independent director of the Company.
8. He Zuowen: formerly associate professor of accounting, director of teaching and research section and memberof the Disciplinary Committee of Changsha University of Science & Technology, partner and deputy director ofShenzhen Huapeng Certified Public Accountants, director and vice GM of Beijing Zhongtian Huazheng CertifiedPublic Accountants Co., Ltd. (Dahua Certified Public Accountants) as well as head of Shenzhen Branch of it,partner of BDO Certified Public Accountants; advisory expert of Internal Control Standard Committee of theMinistry of Finance, director of Shenzhen Institute of Certified Public Accountants, Vice Secretary of CPC &Secretary of the Disciplinary Committee of Shenzhen CPA Industry Committee, etc., currently partner of DahuaCertified Public Accountants (Special General Partnership), Secretary of CPC General Branch of Shenzhen
Branch, Chairman of Shenzhen Tianye Tax Agent Co., Ltd., and also served as the independent director ofShenzhen JPT Opto-Electronics Co., Ltd., Shenzhen Textile (Group) Co., Ltd., Shenzhen Bioeasy BiotechnologyCo., Ltd., Shenzhen Tongyi Industry Co., Ltd. and the Company. The main social positions are: judge of theGuangdong Provincial Senior Accountant Review Committee, external master tutor of Shenzhen University,member of the Shenzhen Municipal Social Organization Disciplinary Inspection Committee of the CommunistParty of China, member of Shenzhen CPA Industry Committee, director of Shenzhen Certified Tax AgentsAssociation and Member of the Capital Market Advisory Expert Committee of the Xinjiang Regulatory Bureau ofthe China Securities Regulatory Commission.
9. Mi Xuming: Former lecturer at Shenzhen University, post-doctor of post-doctoral mobile station for appliedeconomics of School of Economics of Xiamen University, visiting scholar at the University of Exeter; currentlyassociate professor and master tutor of Shenzhen University, and at the same time as the independent directors ofChinaLin Securities Co., Ltd., Shenzhen Farben Information Technology Co., Ltd. and the Company.
10. Li Lian: Former Deputy Director and Deputy Secretary of the Party Branch of Shenzhen Foreign Economicand Trade Service Center, Secretary of the Disciplinary Committee and Chairman of the Supervisory Committeeof Shenzhen Shentou Education Co., Ltd.; currently Chairman of the Supervisory Committee, Secretary of theDisciplinary Committee and member of CPC of the Company.
11. Ren Wei: he once was the CFO of Xian Zhenye Real Estate Development Co., Ltd., minister of Budget &Financing Department and director of Fund Centre of Shenfubao Group Co., Ltd. Now he serves as the viceminister of Audit Department of Shenzhen Investment Holdings Co., Ltd. and the supervisor of the Company.
12. Li Yufei: she ever worked as the Assistant to the Manager of the Investment Department and Assistant to theManager & Vice Manager of Assets Management Centre as well as the Senior Management Staff of EnterpriseDepartment I and Enterprise Department II (Journal Center) in Shenzhen Investment Holdings Co., Ltd. Now, sheserves as the deputy director of Discipline Inspection Office in Shenzhen Investment Holdings Co., Ltd. and thesupervisor of the Company.
13. Feng Hongwei: he once was the Vice Chief of the Board Secretariat, and the Securities Representative. Nowhe acts as the supervisor, member of the Disciplinary Committee and minister of Audit Department of theCompany.
14. Lin Jun: She once was the Vice Chief and Chief of the Party-Mass Work Department. And she has been actingas a supervisor of the Company, the Vice Discipline Inspection Secretary and Director of Discipline Inspectionand Supervision Office (Office of the Board of Supervisors).
15. Wei Hanping: she ever worked as the manager of the Leasing Operation Department in Shenzhen CityConstruction Development (Group) Co. and the manager of Cost Control Department of the Company. And shenow serves as the Vice GM and member of CPC of the Company.
16. Zhang Hongwei: once served as GM of Shenzhen Urban Construction Investment Development Co., Ltd.,Hefei Ruifa Urban Construction Investment Development Co., Ltd., manager of the Company's DevelopmentDepartment, Sales Department, Project II Department, Project Management Department; currently deputy GM ofthe Company, member of CPC, Chairman of Jianbang Group, and GM of Longgang Development Company.
17. Luo Yi: He was once the Vice GM, Deputy Director of Board Secretariat and Securities Representative in theShantou branch of the Company. And he now serves as the Board Secretary and Director of the Board Secretariatin the Company.Offices held concurrently in shareholding entities:
√Applicable □Not applicable
| Name | Shareholding entity | Office held in | Start of tenure | End of tenure | Remuneration or |
| the shareholding entity | allowance from the shareholding entity | ||||
| Liu Zhengyu | Shenzhen Investment Holdings Co., Ltd | Vice GM, member of CPC | 9 January 2017 | 9 August 2021 | Yes |
| Sun Minghui | Shenzhen Investment Holdings Co., Ltd | Chief of Financial Department (Settlement Center) | 11 November 2020 | Yes | |
| Ren Wei | Shenzhen Investment Holdings Co., Ltd | Vice minister of Audit Department | 18 September 2017 | Yes | |
| Li Yufei | Shenzhen Investment Holdings Co., Ltd | Deputy Director of Discipline Inspection Office | 9 July 2015 | Yes |
Offices held concurrently in other entities:
√Applicable □Not applicable
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity |
| Liu Zhengyu | Shenzhen International Holdings Limited | Executive director, president and Vice Secretary of CPC | 19 August 2021 | Yes | |
| Liu Zhengyu | China's State Owned Capital Venture Capital Fund | Director | 16 August 2016 | 9 September 2021 | No |
| Liu Zhengyu | Kashi Shenzhen City Co., Ltd. | Director | 8 October 2013 | 18 October 2021 | No |
| Liu Zhengyu | Shenzhen Investment Holdings Bay Area Development Co., Ltd. | Non-executive director, Chairman of the Board | 14 March 2018 | 30 December 2021 | No |
| Liu Zhengyu | Shenzhen Investment International Capital Holdings Infrastructure Co., Ltd. | Director | 18 December 2017 | 18 October 2021 | No |
| Liu Zhengyu | Shenzhen Investment International Capital Holdings Co., Ltd. | Director | 9 September 2016 | 18 October 2021 | No |
| Liu Zhengyu | Tsinghua Tri Shenzhen Co., Ltd. | Director | December 12, 2019 | 18 October 2021 | No |
| Liu Zhengyu | SIHC Hong Kong Investment Holdings Limited | Director | March 11, 2019 | 18 October 2021 | No |
| Liu Zhengyu | Research Institute of Tsinghua University in Shenzhen | Member of a council | April 10, 2018 | 18 October 2021 | No |
| Wen Li | Shenzhen Bay Technology Development Co., Ltd. | Director, GM and Vice Secretary of CPC | December 2, 2016 | Yes | |
| Wen Li | Hubei SIHC Investment Development Co., Ltd. | Director | 1 February 2018 | No | |
| Wen Li | Shenzhen Chuangke Park Investment Co., Ltd. | Director, GM and legal representative | 30 December 2021 | No | |
| Wen Li | Chengdu Xingjin Bailuwan Construction and Development Co., Ltd. | Chairman of the Board | 7 July 2021 | No | |
| Sun Minghui | China Nanshan Development (Group) Co., Ltd. | Supervisor | October 17, 2017 | No | |
| Sun Minghui | Shenzhen Highway Passenger Transportation Service Centre Co., Ltd. | Supervisor | June 16, 2017 | No | |
| Sun Minghui | China Science And Technology Development Co., Ltd. | Supervisor | June 27, 2017 | No | |
| Sun Minghui | ULTRARICH INTERNATIONAL LIMITED | Director | November 11, 2020 | No | |
| Sun Minghui | China Southern Fund Management Co., Ltd. | Supervisor | November 11, 2020 | April 28, 2021 | No |
| Sun Minghui | Hubei SIHC Investment Development Co., Ltd. | Director | November 11, 2020 | No | |
| Sun Minghui | Shenzhen Textile (Holdings) Co., Ltd. | Director | February 10, 2021 | No | |
| Sun Minghui | Shenzhen Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone Development Co., Ltd. | Director | October 18, 2021 | No | |
| Ren Wei | Shenzhen Sungang China Resources Land Development Co., Ltd. | Supervisor | October 17, 2017 | No | |
| Li Yufei | Shenzhen Dapengwan Huaqiao Tomb | Director | November 19, 2015 | No | |
| Deng | Shenzhen Leaguer Co., Ltd. | Director | 15 June 2020 | No |
| Kangcheng | |||||
| Wei Hanping | Shenzhen Talents Housing Group Co., Ltd. | Director | 4 November 2021 | No | |
| Wei Hanping | Shenzhen Special Zone Construction Engineering Group Co., Ltd. | Director | 4 November 2021 | No | |
| Kang Xiaoyue | Beijing Weiheng (Shenzhen) Law Firm | Senior partner | December 2, 2019 | Yes | |
| He Zuowen | Dahua Certified Public Accountants (Special General Partnership) | Partner | December 1, 2002 | Yes | |
| He Zuowen | Shenzhen Tianye Tax Agency Co., Ltd. | Chairman of the Board | December 1, 2008 | Yes | |
| He Zuowen | Shenzhen JPT Opto-Electronics Co., Ltd. | Independent director | June 1, 2017 | Yes | |
| He Zuowen | Shenzhen Textile (Holdings) Co., Ltd. | Independent director | July 19, 2017 | Yes | |
| He Zuowen | Shenzhen Bioeasy Biotechnology Co., Ltd. | Independent director | October 1, 2017 | Yes | |
| He Zuowen | Shenzhen Tongyi Industry Co., Ltd. | Independent director | October 11, 2018 | Yes | |
| Mi Xuming | Shenzhen University | Associate professor and master tutor | December 1, 2009 | Yes | |
| Mi Xuming | ChinaLin Securities Co., Ltd. | Independent director | April 10, 2017 | Yes | |
| Mi Xuming | Shenzhen Farben Information Technology Co., Ltd. | Independent director | January 29, 2021 | Yes |
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
1. The remuneration of the Company's directors, supervisors and senior managers shall be determined and implemented in accordancewith the regulations of the Company's remuneration management system.
2. After the review and approval at the 2013 Annual General Meeting of Shareholders held on April 23, 2014, the allowance forindependent directors has been adjusted to RMB7000 (tax included) per person per month since May 2014, and independent directorswill not receive any remuneration other than it from the Company.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB’0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Liu Zhengyu | Chairman of the Board | Male | 52 | Incumbent | Yes | |
| Tang Xiaoping | Director and GM | Male | 52 | Incumbent | 122.22 | No |
| Deng Kangcheng | Director | Male | 56 | Incumbent | 109.43 | No |
| Wang Jianfei | Director and CFO | Male | 49 | Incumbent | 9.63 | No |
| Wen Li | Director | Female | 53 | Incumbent | Yes | |
| Sun Minghui | Director | Male | 41 | Incumbent | Yes | |
| Kang Xiaoyue | Independent director | Male | 58 | Incumbent | 8.4 | No |
| He Zuowen | Independent director | Male | 60 | Incumbent | 8.4 | No |
| Mi Xuming | Independent director | Male | 47 | Incumbent | 8.4 | No |
| Li Lian | Chairman of the Supervisory Committee | Female | 55 | Incumbent | 101.70 | No |
| Ren Wei | Supervisor | Male | 42 | Incumbent | Yes | |
| Li Yufei | Supervisor | Female | 44 | Incumbent | Yes | |
| Feng Hongwei | Supervisor | Male | 51 | Incumbent | 63.15 | No |
| Lin Jun | Supervisor | Female | 53 | Incumbent | 63.15 | No |
| Wei Hanping | Vice GM | Female | 56 | Incumbent | 105.31 | No |
| Zhang Hongwei | Vice GM | Male | 56 | Incumbent | 98.46 | No |
| Luo Yi | Secretary of the Board | Male | 48 | Incumbent | 65.62 | No |
| Zhao Zhongliang | Director and CFO | Male | 52 | Former | 80.77 | No |
| Total | -- | -- | -- | -- | 844.64 | -- |
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
| Meeting | Date of the meeting | Disclosure date | Index to disclosed information |
| The 60th Meeting of the 7th Board of Directors | 19 March 2021 | 20 March 2021 | Announcement on Resolutions of the 60th Meeting of the 7th Board of Directors (No.: 2021-004) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 61st Meeting of the 7th Board of Directors | 28 April 2021 | 29 April 2021 | Announcement on Resolutions of the 61st Meeting of the 7th Board of Directors (No.: 2021-012) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 62nd Meeting of the 7th Board of Directors | 30 April 2021 | 6 May 2021 | Announcement on Resolutions of the 62nd Meeting of the 7th Board of Directors (No.: 2021-018) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 63rd Meeting of the 7th Board of Directors | 30 June 2021 | 1 July 2021 | Announcement on Resolutions of the 63rd Meeting of the 7th Board of Directors (No.: 2021-023) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 64th Meeting of the 7th Board of Directors | 20 August 2021 | 21 August 2021 | Announcement on Resolutions of the 64th Meeting of the 7th Board of Directors (No.: 2021-027) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 65th Meeting of the 7th Board of Directors | 27 August 2021 | 28 August 2021 | Announcement on Resolutions of the 65th Meeting of the 7th Board of Directors (No.: 2021-028) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 66th Meeting of the 7th Board of Directors | 22 September 2021 | 23 September 2021 | Announcement on Resolutions of the 66th Meeting of the 7th Board of Directors (No.: 2021-033) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 67th Meeting of the 7th Board of Directors | 19 October 2021 | 20 October 2021 | Announcement on Resolutions of the 67th Meeting of the 7th Board of Directors (No.: 2021-042) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 68th Meeting of the 7th Board of Directors | 25 October 2021 | 26 October 2021 | Announcement on Resolutions of the 68th Meeting of the 7th Board of Directors (No.: 2021-044) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
| The 69th Meeting of the 7th Board of Directors | 13 December 2021 | 14 December 2021 | Announcement on Resolutions of the 69th Meeting of the 7th Board of Directors (No.: 2021-049) disclosed on China Securities Journal, Securities Times, Ta Kung Pao and www.cninfo.com.cn. |
2. Attendance of Directors at Board Meetings and General Meetings
| Attendance of directors at board meetings and general meetings | |||||||
| Director | Total number of board meetings the director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the director failed to attend | The director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Liu Zhengyu | 10 | 5 | 5 | 0 | 0 | No | 4 |
| Tang Xiaoping | 10 | 5 | 5 | 0 | 0 | No | 4 |
| Deng Kangcheng | 10 | 5 | 5 | 0 | 0 | No | 4 |
| Wang Jianfei | 3 | 1 | 2 | 0 | 0 | No | 1 |
| Wen Li | 10 | 3 | 7 | 0 | 0 | No | 1 |
| Sun Minghui | 10 | 5 | 5 | 0 | 0 | No | 2 |
| Kang Xiaoyue | 10 | 5 | 5 | 0 | 0 | No | 4 |
| He Zuowen | 10 | 2 | 8 | 0 | 0 | No | 4 |
| Mi Xuming | 10 | 5 | 5 | 0 | 0 | No | 4 |
| Zhao Zhongliang | 7 | 4 | 3 | 0 | 0 | No | 2 |
Why any independent director failed to attend two consecutive board meetings:
Not applicable
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the Company:
During the Reporting Period, all directors of the Company performed their duties diligently and conscientiously.They thoroughly mastered the Company’s production and operation, internal control, and standardized operation,and put forward relevant opinions on the Company’s major governance and operation decisions based on theirprofessional advantages. These opinions were fully communicated and discussed among the directors beforeforming consensus, which effectively promoted scientific and objective decision-making by the Board of Directors,and helpfully safeguarded the legitimate rights and interests of the Company and all shareholders.VII Performance of Duty by Specialized Committees under the Board in the Reporting Period
| Committee | Members | Number of meetings convened | Convened date | Content | Important opinions and suggestions raised | Other information about the performance of duty | Details about issues with objections (if any) |
| Strategic Committee of the Board of Directors | Liu Zhengyu, Tang Xiaoping, Wen Li, Mi Xuming, Kang | 1 | 30 April 2021 | Deliberation on the acquisition of 51% equity interest in | It is believed that the Company’s acquisition of 51% equity interest in Guangdong Jianbang Group |
| Xiaoyue | Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | (Huiyang) Industrial Co., Ltd. will effectively increase the Company’s land reserve resources, which is conducive to the sustainable development of the Company in the future; the project has good economic benefits, is conducive to enhancing the Company’s future business performance and profitability, and is in line with the interests of the Company and all shareholders. | |||||
| Audit Committee of the Board of Directors | He Zuowen, Sun Minghui, Mi Xuming | 4 | 20 January 2021 | Deliberation on the Company’s 2020 financial statements | It is believed that the Company has chosen and applied appropriate accounting policies and made reasonable accounting estimates in accordance with the provisions of the new Accounting Standards for Business Enterprises. The Company has always been cautious about changes in accounting policies and accounting estimates. There is no use or abuse of changes in accounting policies or accounting estimates to adjust profits. The financial statements prepared by the Company are true and reliable with complete contents. | ||
| 16 March 2021 | Deliberation on the preliminary audit opinions of Grant Thornton China (LLP) on the Company’s 2020 financial | It is believed that the Company’s 2020 financial statements prepared by Grant Thornton China (LLP) comply with all provisions of the Accounting Standards for Business Enterprises, and |
| statements | truly and completely represent the Company’s financial position as of 31 December 2020 and its operating results and cash flows for the year 2020 in all material respects. | |||
| 19 March 2021 | Deliberation on the summary of the 2020 audit service provided by Grant Thornton China (LLP) for the Company | It is believed that Grant Thornton China (LLP) has completed the audit of the Company’s 2020 financial statements well. | ||
| 25 June 2021 | Deliberation on the proposed renewal of the audit firm | It is believed that Grant Thornton China (LLP) (hereinafter referred to as “Grant Thornton”) possesses independence, professional competence, the ability to protect investors, and the experience and capability of providing audit services for listed companies. During the audit of the Company’s 2020 financial statements and internal control, Grant Thornton was able to earnestly perform its duties in accordance with the requirements of the auditing standards and the Basic Code for Internal Control of Enterprises. It independently, objectively and fairly evaluated the Company’s financial position and operating results, demonstrating occupational ethics and professional competence. Therefore, it is proposed to |
| the Company’s Board of Directors that Grant Thornton should be renewed as the auditing agency for the Company’s 2021 financial statements and internal control. | |||||||
| Remuneration and Appraisal Committee of the Board of Directors | Mi Xuming, Zhao Zhongliang, He Zuowen | 1 | 19 March 2021 | Deliberation on the annual remuneration of directors, supervisors and senior management as disclosed in the Company’s 2020 annual report | It is believed that the remuneration decision-making procedures for the Company’s directors, supervisors and senior management are compliant, the remuneration payment standards for the Company’s directors, supervisors and senior management are in line with the regulations of the remuneration system, and that the remuneration disclosed in the 2020 annual report is true and accurate. | ||
| Nomination Committee of the Board of Directors | Kang Xiaoyue, Deng Kangcheng, He Zuowen | 1 | 14 September 2021 | Deliberation on the nomination of Mr. Wang Jianfei as the Company’s director and CFO | It is believed that Mr. Wang Jianfei is not involved in the circumstances stipulated in Article 146 of the Company Law that prohibit him from serving as a director or a senior management member, has never received punishment by the China Securities Regulatory Commission and other relevant authorities or disciplinary action by the stock exchange, has not been placed on file for investigation by judicial organs for suspected crimes or placed on file for inspection by the China Securities Regulatory Commission for suspected violations of laws and |
VIII Performance of Duty by the Supervisory CommitteeIndicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the ReportingPeriod.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.IX Employees
1. Number, Functions and Educational Backgrounds of Employees
regulations, is not adefaulter, is not a personheld liable or punished fordishonesty, and has thequalifications required byrelevant laws,administrative regulations,departmental rules, andnormative documents. It isagreed that Mr. WangJianfei may berecommended as theCompany’s director andCFO and that the relevantproposal should besubmitted to the 66thMeeting of the 7th Board ofDirectors of the Companyfor deliberation.Number of in-service employees of the Company as the parent atthe period-end
| Number of in-service employees of the Company as the parent at the period-end | 109 |
| Number of in-service employees of major subsidiaries at the period-end | 1,469 |
| Total number of in-service employees at the period-end | 1,578 |
| Total number of paid employees in the Reporting Period | 1,575 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 0 |
| Functions | |
| Function | Employees |
| Production | 950 |
| Sales | 79 |
| Technical | 422 |
| Financial | 53 |
| Administrative | 74 |
| Total | 1,578 |
| Educational backgrounds | |
| Category | Number |
| Doctors | 1 |
| Masters | 15 |
| Bachelors | 175 |
| College graduates | 214 |
| Technical secondary school graduates | 88 |
| High school graduates and below | 1,085 |
| Total | 1,578 |
2. Employee Remuneration Policy
The management personnel above vice general manager (including vice GM) of the Company conducted annualsalary system, other employees conducted contacting the performance with the benefit salary system.
3. Employee Training Plans
The Company established annual training plan in line with Measures for the Management of Employee TrainingThe Company adopts internal training, hires experts give lectures to the Company or participate professionaltraining, train the on job employees with job knowledge, professional skills, rules and regulations, the businessprocess etc., which enrich and renew the professional knowledge, enhance the comprehensive quality and businessskills of the employees.
4. Labor Outsourcing
□ Applicable √ Not applicable
X Profit Distributions (in the Form of Cash and/or Stock)How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the Reporting Period:
□ Applicable √ Not applicable
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that theCompany has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders arepositive.
□ Applicable √ Not applicable
Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicable
| Bonus shares for every 10 shares (share) | 0 |
| Dividend for every 10 shares (RMB) (tax inclusive) | 0.88 |
| Total shares as the basis for the profit distribution proposal (share) | 1,011,660,000 |
| Cash dividends (RMB) (tax inclusive) | 89,026,080.00 |
| Cash dividends in other forms (such as share repurchase) (RMB) | 0.00 |
| Total cash dividends (including those in other forms) (RMB) | 89,026,080.00 |
| Distributable profit (RMB) | 220,836,309.93 |
| Total cash dividends (including those in other forms) as % of total profit distribution | 100% |
| Cash dividend policy | |
| It’s not easy to distinguish in the Company’s development stage. While, when there is a major capital spending, the percentage of cash dividends to the profit distribution shall be 20% at least when conducting the profit distribution. | |
| Details about the proposal for profit distribution and converting capital reserve into share capital | |
| The Profit Distribution Plan of 2021 was reviewed and approved by the 71st Meeting of the 7th Board of Directors held on 17 March 2022, and intended to be submitted to The 2021 Annual General Meeting for review. Based on the total 1,011,660,000 shares of the Company as at 31 December 2021, a cash dividend of RMB0.88 (tax included) will be distributed to the A-share and B-share holders for every 10 shares they hold without bonus share (tax included), and no share capital increase from capital reserve would be conducted. The profit distribution plan can be implemented upon review and approval of the Shareholders’ General Meeting of the Company. | |
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
The Company has established a relatively complete and continuously effective internal control system, and hascarried out internal control evaluation in accordance with the internal control matrix and documents. In accordancewith the requirements of the standard system for enterprise internal control and relevant regulations, the Companyhas maintained effective internal control over financial reporting in all material respects. No major deficiencies ininternal control not related to financial reporting have been found, and no factors affecting the evaluation conclusion
of internal control effectiveness have occurred. At the same time, the Company attaches great importance to theregulation and steering role of the big supervision system. By holding joint supervision meetings and carrying outkey supervision and inspection, the Company has promoted the standardization level improvement of relevantmanagement work. No major violations of regulations and disciplines have been found. In the future, the Companywill continue to develop internal control in a standardized manner and strengthen the supervision and inspection ofinternal control in order to promote the healthy and sustainable development of the Company.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
XIII Management and Control over Subsidiaries by the Company for the Reporting Period
| Subsidiary | Integration plan | Integration progress | Problem | Countermeasures taken | Settlement progress | Follow-up settlement plan |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | During the Reporting Period, the Company acquired 51% equity interest in Jianbang Group. The equity registration change was completed in mid-May 2021. | Jianbang Group has been included in the scope of the Company’s consolidated statements. The construction for Linxinyuan Project developed by the Company was successfully resumed at the end of June 2021, and the Phase I was pre-sold in mid-December. At present, the company’s operation and management are being carried out as planned. | N/A | N/A | N/A | N/A |
XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on InternalControl
1. Internal Control Self-Evaluation Report
| Disclosure date of the internal control | 18 March 2022 |
| self-evaluation report | ||
| Index to the disclosed internal control self-evaluation report | 2021 Internal Control Self-Evaluation Report on www.cninfo.com.cn | |
| Evaluated entities’ combined assets as % of consolidated total assets | 85.58% | |
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 99.16% | |
| Identification standards for internal control weaknesses | ||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting |
| Nature standard | The Company in line with the actual situation, when the follows events or indications happen, which means there probably existing serious or important defects in the financial report; (1) the directors, supervisors and senior executives were fraud. (2) Certified Public Accountant find that there is a significant error in the financial report, however, the internal control did not discover it when conducting internal control; (3) The Audit Committee under the Board and Internal Audit Service's supervision to the internal control is invalid. (4) The accounting personnel were without necessary qualities to complete the preparation of financial statements. | The criterion of quality of the recognition of defects of internal control in the non-financial statements mainly were order of severity of defect involving business nature, the direct or potential negative influence nature and the influence scope and other factors. If the follows events or indicators occur, there may be serious or important defects of internal control in the non-financial statements:(1) Lack democratic decision-making process, if lack significant problem decision-making, important appointment and dismissal of cadres, significant project investment decision-making; usage of large capital (three important, one large); (2) Unscientific decision-making process, such as the major decision-making errors, has caused a serious property loss to the company; (3) Seriously violating state laws and regulations; (4) Loss of key management personnel or important talent; (5) Negative news media appear frequently and widely spread; (6) The results of the internal control evaluation especially large or significant defects have not been corrected. (7) Important business systems lack control rules, or systemic failure. |
| Quantitative standard | Serious defects: the defects, or defect group | The criterion of quantity of the |
| may lead to the financial results misstatement or potential losses >3% of net assets; important defects: 1% of net assets<the defects, or defect group may lead to the financial results misstatement or potential losses ≤ 3% of net assets; 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 | recognition of defects of internal control in the non-financial statements mainly were amount of direct economy losses, in line with the criterion of quantity of the recognition of defects of internal control in financial report of the Company. | |
| Number of material weaknesses in internal control over financial reporting | 0 | |
| Number of material weaknesses in internal control not related to financial reporting | 0 | |
| Number of serious weaknesses in internal control over financial reporting | 0 | |
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal control | |
| We believe that Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. maintained effective internal control of financial statements in all significant aspects on 31 December 2021 in accordance with Basic Standards for Internal Control and relevant regulations. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 18 March 2022 |
| Index to such report disclosed | Report on Internal Control disclosed on www.cninfo.com.cn. |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | No |
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internalcontrol.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internalcontrol self-evaluation report issued by the Company’s Board.
√ Yes □ No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for ListedCompany Governance
1. In accordance with the requirements of relevant laws, regulations and regulatory rules and in light of the reality ofthe Company, the Company completed the revision of ten governance policies including the Rules of Procedure ofthe General Meeting of Shareholders, the Rules of Procedure of the Board Meeting, the Rules of Procedure of theBoard of Supervisors, the implementation rules of the special committees under the Board of Directors, the WorkPolicy for Independent Directors, the Registration and Administration Policy for Persons with Insider Information,and the Information Disclosure Affairs Management Policy during the Reporting Period.
2. The transition of the 7th Board of Directors and the 7th Board of Supervisors of the Company has not beencompleted as scheduled due to the planning of major asset restructuring (already terminated). The 7th Board ofDirectors of the Company consists of nine members (including three independent directors). So far, seven membershave been changed (all the three independent directors have been changed). The Board of Supervisors consists offive members, and four members have been changed. The Company has communicated with the controllingshareholder about initiating the transition of the Board of Directors and the Board of Supervisors and will continueto maintain communication with the controlling shareholder to complete the transition of the Board of Directors andthe Board of Supervisors as soon as possible.
Part V Environmental and Social ResponsibilityI Major Environmental IssuesIndicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmentalprotection authorities of China.
□ Yes √ No
Administrative penalties imposed for environmental problems during the Reporting Period
| Name | Reason | Case | Result | Influence on production and operation | Rectification measures |
| N/A | N/A | N/A | N/A | N/A | N/A |
Other environmental information disclosed with reference to the heavily polluting businessThe Company and its subsidiaries are not imposed any administrative penalties for environmental problems during the ReportingPeriod.
Measures taken to decrease carbon emission in the Reporting Period and corresponding effects
□ Applicable √ Not applicable
Reason for failure of disclosing other environmental informationThe Company and its subsidiaries isn’t a heavily polluting business identified by the environmental protection authorities of China.II Social Responsibility
The Company has proactively fulfilled its social responsibilities. While pursuing economic benefits and protectingthe interests of shareholders, it complied with the overall development of the country and society, protected thelegal rights of creditors and employees and treated the suppliers, customers and consumers with integrity.Participating in the public welfare undertakings positively, the Company took efforts in keeping a harmoniousdevelopment of the Company itself and the whole society. During the Reporting Period, the Company continuedto deepen its volunteer services. It organized the “SPG with Love, Supporting People’s Livelihood”environmentally friendly clothing donation, and jointly launched the public welfare activity of “Positive Energyfrom the Youth to the Party” with Shenzhen Good Youth Technology Innovation Development Co., Ltd. Also, theCompany collaborated with community workstations to prevent and control the pandemic, assisted in thecompletion of nucleic acid testing in 27 communities, and provided “Buy and Deliver” door-to-door services.With respect to the actual difficulties brought to Tianyuewan Community by the water supply measure that watersupply is made available for three days and then cut off for five days, the increase of water supply channels wasadopted to properly solve the drinking water problem for the residents of the community. Besides, in accordancewith the idea of “creating a civilized community” in Jiabei Community, the Company actively participated in thevoluntary activity of traffic civilization persuasion. 162 people volunteered throughout the year. At the same time,the Company supported the work of family affairs in the region, and donated RMB30,000 in the charityfund-raising activity of “Joining Hands on Fertility Care, Caring for Families in Need” of Jiabei Community. It
also donated property management equipment worth RMB230,000 to Cuizhuyuan Community, CuizhuSub-district, Luohu District, to help build Cuizhuyuan into a happy community.III Consolidation and Expansion of Poverty Alleviation Outcomes, and Rural RevitalizationDuring the Reporting Period, the Company actively promoted the special action of poverty alleviation. Thepurchases for poverty alleviation in the system totaled RMB800,000 throughout the year, helping to consolidatepoverty alleviation outcomes.
Part VI Significant Events
I Fulfillment of Commitments
1. Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and Acquirers, aswell as the Company Itself and Other Entities Fulfilled in the Reporting Period or Ongoing at thePeriod-End
√ Applicable □ Not applicable
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in share reform | ||||||
| Commitments made in acquisition documents or shareholding alteration documents | ||||||
| Commitments made in time of asset restructuring | The Company | Asset restructuring | The Company's major asset restructuring was terminated, and trading of the stocks was resumed on 9 November 2020. The Company promises that it will not initiate the major asset restructuring after the announcement of termination was disclosed within at least two months. | 9 November 2020 | Two months | Completed |
| Commitments made in time of IPO or refinancing | ||||||
| Equity incentive commitments | ||||||
| Other commitments made to minority interests | Shenzhen Investment Holdings Co., Ltd. | Avoiding horizontal competition | To avoid horizontal competition, Shenzhen Investment Holdings Co., Ltd. made such a commitment: For the Company’s existing business that has horizontal competition with ShenZhen Properties & Resources Development (Group) Ltd., | 10 September 2021 | Before 9 November 2024 | Ongoing |
| Shenzhen Investment Holdings Co., Ltd. will, within the scope permitted by laws and regulations, timely launch one or several of the following solutions that is practically feasible, and complete the implementation of the relevant solution(s) before 9 November 2024 to solve the existing horizontal competition problem: (1) Solve the horizontal competition between the two through asset sales or asset replacement; (2) Solve the horizontal competition between the two through equity transfer; (3) Take other measures that can effectively solve the problem of horizontal competition. Above commitment came into force upon the review and approval on the shareholders’ meeting of ShenZhen Properties & Resources Development (Group) Ltd. (dated 27 September 2021). | |||
| Fulfilled on time | Yes | ||
| Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | N/A | ||
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Partiesfor Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”on the Financial Statements
□Applicable √ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates or Correction of Material AccountingErrors
√ Applicable □ Not applicable
Please refer to “33. Changes in significant accounting policies and accounting estimates” of “III. Significant accounting policies andaccounting estimates” in “Part X Financial Statements” for details.VII YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
See “VI Changes to the scope of consolidation” in “Part X Financial Statements”.VIII Engagement and Disengagement of Independent AuditorCurrent independent auditor
| Name of the domestic independent auditor | Grant Thornton China (LLP) |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 53 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 3 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Zhao Juanjuan, Jiang Xiaoming |
| How many consecutive years the certified public accountants from the domestic independent auditor have provided audit service for the Company | 3 |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√Applicable □ Not applicable
The Company engaged Grant Thornton China (LLP) for the audit of internal controls with payment of RMB0.23 million in theReporting Period.IX Possibility of Delisting after Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XI Major Legal Matters
√Applicable □ Not applicable
| General information | Involved amount (RMB’0,000) | Provision | Progress | Decisions and effects | Execution of decisions | Disclosure date | Index to disclosed information |
| Xi’an Project Lawsuit | 2,100 | No | In execution | ? Xi’an Business Tourism Company Limited (hereinafter referred to as “Business Company”) had to pay for the compensation RMB36.62 million and the relevant interest (from 14 September 1998 to the payment day) to Xi’an Fresh Peak Company within one month after the judgment entering into force. If the Business | Shaanxi High People’s Court Sold all assets of Business Company by auction in accordance with laws in 2004. The applicant has received RMB15.20 million. Now Business Company has no executable properties and Xi’an Joint Commission on Commerce has been refusing to execute the ruling. It is difficult to | 28 August 2021 | Interim Report 2021 (full text) (No.: 2021-031) on www.cninfo.com.cn |
| Company failed to pay in time, it had to pay double debt interests to Xi’an Fresh Peak Company for the overdue period; ② Xi’an Joint Commission on Commerce had jointly and severally obligation of the interests of the compensation; .③ Business Company shall bear RMB227,500 of the acceptance fee and the security fee. | recover the rest. |
XII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Amounts Due to and from Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies
□ Applicable √ Not applicable
The Company did not make deposits in, receive loans or credit from and was not involved in any other finance business with anyrelated finance company or any other related parties.
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□ Applicable √ Not applicable
The finance company controlled by the Company did not make deposits, receive loans or credit from and was not involved in anyother finance business with any related parties.
7. Other Major Related-Party Transactions
√Applicable □ Not applicable
The Company transferred 100% equity interests of Shenzhen Property Management Co., Ltd. to ShenzhenInternational Trade Center Property Management Co., Ltd. which was a related-party transaction and wasreviewed and approved on the 69
th Meeting of the 7
th Board of Directors and the 3
rdExtraordinary GeneralMeeting of 2021 of the Company.
Index to announcements on major related-party transactions
| Announcement | Disclosure time | Disclosure website |
| Announcement on Resolutions of the 69th Meeting of the 7th Board of Directors (No.: 2021-049) | 14 December 2021 | www.cninfo.com.cn |
| Announcement on Progress of the Related-Party Transaction regarding the Transfer of 100% of Equity Interests in Shenzhen Property Management Co., Ltd. (No.: 2021-052) | 24 December 2021 | www.cninfo.com.cn |
| Announcement on Resolutions of the 3rd Extraordinary General Meeting of 2021 (No.: | 30 December 2021 | www.cninfo.com.cn |
| 2021-053) | ||
| Announcement on Progress of the Related-Party Transaction regarding the Transfer of 100% of Equity Interests in Shenzhen Property Management Co., Ltd. (No.: 2022-001) | 15 February 2022 | www.cninfo.com.cn |
XV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of cash entrusted for wealth management in the Reporting Period
Unit: RMB’0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount | Unrecovered overdue amount with provision for impairment |
| Others | Self-owned funds | 130,000 | 51,402.47 | 0 | 0 |
| Total | 130,000 | 51,402.47 | 0 | 0 |
High-risk entrusted wealth management with significant single amount or low security and poor liquidity:
□ Applicable √ Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment forentrusted wealth management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVI Other Significant Events
√ Applicable □ Not applicable
In order to implement the plan of the State Council for transferring parts of state-owned capital to enrich the socialsecurity fund, in January 2021, SIHC, the controlling shareholder of the Company, decided to transfer 64,288,426tradable ordinary A-shares of the Company (accounting for 6.355% of the total share capital) to ShenzhenState-owned Equity Management Co., Ltd. (hereinafter referred to as "State-owned Equity Company") free ofcharge to enrich the social security fund State-owned Equity Company is a wholly-owned subsidiary newlyestablished by SIHC to manage the transferred state-owned equity in a special account. In March 2021, theregistration procedure for the above share transfer was completed. Before and after the free transfer ofstate-owned equity, the controlling shareholder and actual controller of the Company remained unchanged. Formore details, see the Suggestive Announcement on the Free Transfer of Parts of State-owned Equity ofControlling Shareholders to Enrich the Social Security Fund (Announcement No. 2021-001) and theAnnouncement on the Completion of Free Transfer Registration of Parts of State-owned Equity of ControllingShareholders to Enrich the Social Security Fund (Announcement No. 2021-003) disclosed on 29 January and 18March 2021.After deliberation and approval at the 2020 General Meeting of Shareholders, the Company decided to purchaseliability insurance for Directors, Supervisors and Senior Managers. For more details, please refer to theAnnouncement on Purchasing Liability Insurance for Directors, Supervisors and Senior Managers(Announcement No. 2021-008) and the Announcement on the Resolution of the 2020 General Meeting ofShareholders (Announcement No. 2021-011) disclosed on 20 March and 29 April 2021. During the ReportingPeriod, the issue regarding Liability Insurance for Directors, Supervisors and Senior Managers has beencompleted.After deliberation and approval at the 61st Meeting of the 7th Board of Directors, the Company purchased wealthmanagement products of RMB1.3 billion with its own funds in June 2021 which has been partly redeemed in theReporting Period. For more details, see the Announcement on Resolutions of the 61st Meeting of the 7th Board ofDirectors (Announcement No. 2021-012), the Announcement on Authorizing the Management Group to Use Own
Funds to Purchase Wealth Management Products (Announcement No. 2021-017), the Announcement on theProgress of Using Own Funds to Purchase Wealth Management Products (Announcement No. 2021-022) and theAnnouncement on the Progress of Using Own Funds to Purchase Wealth Management Products (AnnouncementNo. 2021-036) disclosed on 29 April, 4 June, and 24 September 2021.After deliberation and approval at the 62nd Meeting of the 7th Board of Directors, the Company decided toacquire 51% equity of Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. held by Guangzhou BopiEnterprise Management Consulting Co., Ltd. with its own capital of RMB450 million. Transaction transfer andregistration changes were completed in the Reporting Period. For more details, see the Announcement onResolutions of the 62nd Meeting of the 7th Board of Directors (Announcement No. 2021-018), the Announcementon Acquisition of 51% Equity of Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. (Announcement No.2021-019) and the Announcement on Progress of Acquisition of 51% Equity of Guangdong Jianbang Group(Huiyang) Industrial Co., Ltd. (Announcement No. 2021-020) disclosed on 6 May and 15 May 2021.The Measures for the Management of Employees' Co-investment and the Measures for the Management ofEmployees' Co-investment of Linxijun Project were deliberated and approved at the 63rd Meeting of the 7thBoard of Directors and the 2021 First Extraordinary General Meeting. For more details, see the Announcement onResolutions of the 63rd Meeting of the 7th Board of Directors (Announcement No. 2021-023) and theAnnouncement on Resolutions of the 2021 First Extraordinary General Meeting of Shareholders (AnnouncementNo. 2021-026) disclosed on 1 July and 17 July 2021. During the Reporting Period, co-investing employees madeproject co-investments through partnership establishment and completed the payment of the subscription funds forthe co-investments.During the Reporting Period, the Company received the Letter of Commitment on Avoiding HorizontalCompetition from Shenzhen Investment Holdings Co., Ltd., the controlling shareholder. For more details, see theAnnouncement on Receiving the Letter of Commitment on Avoiding Horizontal Competition from the ControllingShareholder (Announcement No. 2021-032) disclosed on 11 September 2021 and the Announcement onResolutions of the 2021 First Extraordinary General Meeting of Shareholders (Announcement No. 2021-34)disclosed by ShenZhen Properties & Resources Development (Group) Ltd. on 27 September 2021.On 28 September 2021, the Company participated in the land use right assignment activity through quotation heldby the Land and Mining Rights Business Branch of Shenzhen Exchange Group Co., Ltd., and won the use right ofNo. A511-0039 state-owned land with RMB965 million. After deliberation and approval at the 67th Meeting of the7th Board of Directors, the Company established a wholly owned subsidiary (Shenzhen SPG Chuanqi Real EstateDevelopment Co., Ltd.) to facilitate the development and construction of the aforesaid land. For more details, seethe Announcement on Winning the Bid of State-owned Land Use Right (Announcement No. 2021-039), theAnnouncement on Resolutions of the 67th Meeting of the 7th Board of Directors (Announcement No. 2021-042),the Announcement on the Investment and Construction of No. A511-0039 Land in Guangming District and theEstablishment of Shenzhen SPG Group Guangming Development Co., Ltd. (Announcement No. 2021-043), and theAnnouncement on the Progress of Wholly Owned Subsidiary Establishment (Announcement No. 2021-048)disclosed on 30 September 2021, 20 October 2021, and 1 November 2021.XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
Part VII Share Changes and Shareholder InformationI Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| 1. Restricted shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.1 Shares held by the state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.2 Shares held by state-own Legal-person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.3 Shares held by other domestic investors | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Among which: shares held by domestic legal person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0.00% | |
| Shares held by domestic natural person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.4 Oversea shareholdings | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0.00% | |
| Among which: shares held by oversea legal person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by oversea natural person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Unrestricted shares | 1,011,660,000 | 100.00% | 0 | 0 | 0 | 0 | 0 | 1,011,660,000 | 100.00% |
| 2.1 RMB ordinary shares | 891,660,000 | 88.14% | 0 | 0 | 0 | 0 | 0 | 891,660,000 | 88.14% |
| 2.2 Domestically listed foreign shares | 120,000,000 | 11.86% | 0 | 0 | 0 | 0 | 0 | 120,000,000 | 11.86% |
| 2.3 Oversea listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2.4 Other | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Total shares | 1,011,660,000 | 100.00% | 0 | 0 | 0 | 0 | 0 | 1,011,660,000 | 100.00% |
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinaryshareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary shareholders | 55,596 | Number of ordinary shareholders at the month-end prior to the disclosure of this | 53,831 | Number of preferred shareholders with resumed voting rights (if any) | 0 | Number of preferred shareholders with resumed voting rights at the month-end | 0 |
| Report | prior to the disclosure of this Report (if any) | ||||||||||
| Shareholding of ordinary shareholders holding more than 5% shares or the top 10 of ordinary shareholders | |||||||||||
| Name of shareholder | Nature of shareholder | Holding percentage (%) | Number of shareholding at the end of the Reporting Period | Increase and decrease of shares during Reporting Period | Number of restricted shares | Number of unrestricted shares | Pledged, marked or frozen shares | ||||
| Status of shares | Amount | ||||||||||
| Shenzhen Investment Holdings Co., Ltd | State-owned legal person | 57.19% | 578,595,836 | -64288426 | 578,595,836 | ||||||
| Shenzhen State-owned Equity Management Co., Ltd. | Domestic non-state-owned legal person | 6.35% | 64,288,426 | +64288426 | 64,288,426 | ||||||
| Yang Jianmin | Domestic natural person | 0.45% | 4,514,677 | 4,514,677 | |||||||
| Zhang Xiujuan | Domestic natural person | 0.36% | 3,597,300 | 3,597,300 | |||||||
| Pan Jun | Domestic natural person | 0.33% | 3,288,900 | 3,288,900 | |||||||
| Lin Weirong | Domestic natural person | 0.31% | 3,116,400 | 3,116,400 | |||||||
| Wang Yulan | Domestic natural person | 0.23% | 2,329,691 | 2,329,691 | |||||||
| Zhu Fengbo | Domestic natural person | 0.21% | 2,100,000 | 2,100,000 | |||||||
| Liu Yuqing | Domestic natural person | 0.21% | 2,090,201 | 2,090,201 | |||||||
| Shenzhen Bao'an Songgang Huamei Industry Company | Domestic non-state-owned legal person | 0.20% | 2,021,200 | 2,021,200 | |||||||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder due to rights issue (if any) | None | ||||||||||
| Related or acting-in-concert parties | Among the top 10 shareholders of the Company, Shenzhen State-owned Equity | ||||||||||
| among the shareholders above | Management Co., Ltd. is a wholly-owned subsidiary of Shenzhen Investment Holdings Co., Ltd. The Company does not know whether there exists associated relationship among the other shareholders, or whether they are persons acting in concert as prescribed in the Administrative Measures for the Acquisition of Listed Companies. | ||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | None | ||
| Special account for share repurchases (if any) among the top 10 shareholders | None | ||
| Top 10 unrestricted shareholders | |||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | |
| Type | Shares | ||
| Shenzhen Investment Holdings Co., Ltd | 578,595,836 | RMB ordinary shares | 578,595,836 |
| Shenzhen State-owned Equity Management Co., Ltd. | 64,288,426 | RMB ordinary shares | 64,288,426 |
| Yang Jianmin | 4,514,677 | RMB ordinary shares | 4,514,677 |
| Zhang Xiujuan | 3,597,300 | RMB ordinary shares | 3,597,300 |
| Pan Jun | 3,288,900 | RMB ordinary shares | 3,288,900 |
| Lin Weirong | 3,116,400 | RMB ordinary shares | 3,116,400 |
| Wang Yulan | 2,329,691 | RMB ordinary shares | 2,329,691 |
| Zhu Fengbo | 2,100,000 | RMB ordinary shares | 2,100,000 |
| Liu Yuqing | 2,090,201 | RMB ordinary shares | 2,090,201 |
| Shenzhen Bao'an Songgang Huamei Industry Company | 2,021,200 | RMB ordinary shares | 2,021,200 |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Among the top 10 unrestricted public shareholders of the Company, Shenzhen State-owned Equity Management Co., Ltd. is a wholly-owned subsidiary of Shenzhen Investment Holdings Co., Ltd. The Company does not know whether there exists associated relationship among the other shareholders, or whether they are persons acting in concert as prescribed in the Administrative Measures for the Acquisition of Listed Companies. | ||
| Top 10 ordinary shareholders involved | Among the top 10 shareholders of the Company, the third, fourth, sixth, ninth and tenth | ||
| in securities margin trading (if any) (see Note 4) | shareholders respectively held 1,466,400 shares, 3,597,300 shares, 1,957,700 shares, 2,010,201 shares and 2,021,200 shares in their credit securities accounts. |
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of theCompany conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a local state-owned legal personType of the controlling shareholder: legal person
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| Shenzhen Investment Holdings Co., Ltd. | He Jianfeng | 13 October 2004 | 767566421 | Investment in equities on behalf of the government and management of those investments; development and operation of government-allocated land; and investment in and provision of services for strategic emerging industries |
| Controlling shareholder’s holdings in other listed companies at home or abroad in the Reporting Period | 301,410,000 shares in SZPRD A (000011), representing a stake of 50.57%;; 234,070,000 shares in STHC (000045) , representing a stake of 46.21%; 9,590,000 shares in Shenzhen Universe A (000023) , representing a stake of 6.91%; 962,720,000 shares in Ping An (601318) , representing a stake of 5.27%; 3,223,110,000 shares in Guosen Securities (002736) , representing a stake of 33.53%; 609,430,000 of A shares and 103,370,000 of H shares in Guotai Junan (601211) , representing a stake of 8%; 195,030,000 shares in Telling Holding (000829) , representing a stake of 19.03%; 985,640,000 shares in Shenzhen International (00152) , representing a stake of 43.48%; 604,820,000 shares in BEAUTYSTAR (002243), representing a stake of 49.96%; 2,213,450,000 shares in Bay Area Development (00737), representing a stake of 71.83%; 315,830,000 shares in Infinova (002528), representing a stake of 26.35%; 388,450,000 shares in EA (002183), representing a stake of 14.96%; 49,500,000 shares in SWPD (301038), representing a stake of 37.50%; 6,770,000 shares in Shenzhen Energy (000027), representing a stake of 0.14%; 9,520,000 shares in BOCOM (601328), representing a stake of 0.01%; 113,980,000 shares in Techand Ecology (300197), representing a stake of 4.04%; | |||
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Local institution for state-owned assets managementType of the actual controller: legal person
77,270,000 shares in Vanke (02202), representing a stake of 0.66%.Name of actual controller
| Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| Shenzhen State-owned Assets Supervision and Administration Commission | Wang Yongjian | 31 July 2004 | K3172806-7 | Perform the responsibilities of investor on behalf of the state, and supervise and manage the authorized state-owned assets legally. |
| Other listed companies at home or abroad controlled by the actual controller in the Reporting Period | In addition to the Company controlling shareholder - Shenzhen Investment Holding Co., Ltd. Other domestic and overseas listed companies whose equity held by the actual controllers did not rank among the top ten shareholders of the Company. | |||
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the LargestShareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company heldby Them
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Specific Implementation of Share Repurchase during the Reporting PeriodProgress on any share repurchase:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Part IX Bonds
□ Applicable √ Not applicable
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
Part X Financial Statements
| Type of the audit opinion | Unmodified unqualified opinion |
| Date of signing this report | 17 March 2022 |
| Name of the audit institution | Grant Thornton Accounting Firm (LLP) |
| Number of the audit report | GTCSZ（2022）No. 441A002546 |
| Name of the certified public accountants | Zhao Juanjuan, Jiang Xiaoming |
Auditor’s Report
GTCSZ（2022）No. 441A002546
To the Shareholders of Shenzhen Special Economic Zone Real Estate & Properties(Group) Co., Ltd:
OpinionWe have audited the financial statement of Shenzhen Special Economic Zone Real Estate &Properties (Group) Co., Ltd (the "Group"), which comprise the consolidated statement offinancial position as at 31 December 2021, and the consolidated statement of comprehensiveincome, consolidated statement of changes in equity and consolidated statement of cash flowsfor the year then ended, and the notes to the consolidated financial statements.In our opinion, the accompanying consolidated financial statement present fairly, in all materialrespects, the consolidated financial position of the group as at 31 December 2021, and itsconsolidated financial performance and its consolidated cash flows for the year then ended inaccordance with Accounting Standards for Business Enterprises.Basis for OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilitiesunder those standards are further described in the Auditor’s Responsibilities for the Audit of the
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
Financial Statement Section of our report. We are independent of the Group in accordance withthe Code of Ethics for Chinese Certified Public Accountant (Ethics Code) together with theethical requirements that are relevant to our audit of the financial statements, and we fulfilledour other ethical responsibilities in accordance with these requirements and the Ethics Code.We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.Key audit mattersKey audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the consolidated financial statements of the current period. Thesematters were addressed in the context of our audit of the consolidated financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters.I. Recognition of revenue from sales of propertiesThe relevant information disclosure is detailed in Note III. 24 and Note V.35.
1. Description of the matter
In 2021, the revenue from sales of properties is CNY 0.876 billion, which accounts for 66.34%of total revenue of the Group.The Group recognizes the revenue of sales of properties when all of the following conditionshave been met: ①sales contract is signed and filed with housing construction bureau;②properties were completed and passed acceptance inspection; ③for lump-sum settlement,payment has been received in full; for mortgage, the first installment payment has beenreceived and approval procedures of bank mortgage have been completed;④the procedures ofhousing delivery have completed in accordance with the requirements of the sales contract.Due to the importance of revenue from sales of properties, and any misstatements in revenue
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
recognition will have a significant impact on the profit of the Group. Therefore, the recognitionof revenue from sales of properties is identified as a key audit matter.
2. Audit response
Our audit procedures for the recognition of revenue from sales of properties include:
① Understanding, assessing and testing the design and implementation of key internalcontrols about the progress of contract performance and revenue recognition.
② Examining the main clauses in sales contracts to evaluate the appropriateness of theGroup’s revenue recognition policy associated with the relevant accounting standards;
③ Performing tests, on a sample basis, to examine contracts of sales of properties, trace tocollection of revenue and check letter of admission (elements of revenue recognition) in orderto assess the compliance with the Group’s revenue recognition policy.
④ Evaluating the revenue of sales of properties, on sample basis, before and after thebalance sheet date by checking to sales contracts, revenue collection and the letter ofadmission, for the appropriateness of the period of revenue recognition
⑤Calculating average house price and comparing it with the price from last year to analyze thereasonableness of revenue and gross profit.
⑥Evaluating the appropriateness of accounting treatment, presentation and disclosure of therevenue recognition of sales of properties and other relevant information by the Group in thefinancial statements.II. Provision of land appreciation taxThe relevant information disclosure is detailed in Note IV. tax and Note V.36.
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
1. Description of the matter
Land appreciation tax is one of the major tax of the group.The sale of developed real estate is subject to land value-added tax at a progressive rate of30% - 60% on the land appreciation. At the end of each financial reporting period, themanagement needs to estimate the accrued amount of land appreciation tax. When makingestimation judgments, the main factors to be considered include the provisions andinterpretations of relevant tax laws and regulations, and the estimated income from the sale ofproperties minus estimated deductible land costs, real estate development costs, interestexpenses, development expenses, etc. When Shenzhen Real Estate Group settles and settlesthe land appreciation tax, the actual tax payable may be different from the amount estimated byShenzhen Real Estate Group.Due to the importance of the LAT accrual to the consolidated financial statements, andmanagement's judgment when making estimates includes consideration of relevant tax lawsand regulations and practical practices. Therefore, we identified the accrual of LAT of theGroup as a key audit matter.
2. Audit response
For the provision and evaluation of land value-added tax, we mainly performed the followingaudit procedures:
① Evaluating the design and effectiveness of key internal controls related to themeasurement of LAT;
② Involving our internal tax specialists in the PRC to assess the provision of LAT on 31December 2021 on basis of our experience, knowledge, understanding of the practicaloperation of relevant tax laws by local tax authorities, to evaluate the Group’s assumptions andjudgments;
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
③ Evaluating the management's expected estimates of the estimated income from the sale ofreal estate and the amount of deductible items, and assess the Group’s assumptions andjudgments;
④Recalculating the amount of provision of LAT and comparing it to management estimateIII. Assessment of Inventory’s net realizable valueThe relevant information disclosure is detailed in Note III. 12 and Note V.7.
1. Description of the matter
The Group’s finished goods, work in progress and products to be developed (hereinafterreferred to as "Inventory"), are measured at the lower of cost and net realizable value. Theending balance of inventory was 4.035 billion yuan, accounting for 65.26% of the endingbalance of the Group’s total assets.Management determines the net realizable value of each inventory item at the balance sheetdate. In determining the net realizable value of inventory, management is required to provide anup-to-date estimate of the construction costs to be incurred for each product to be developedand work in progress until completion, and to estimate the expected future net selling price(with reference to the recent transaction price of the real estate project in the vicinity) and thefuture selling costs as well as the related sales tax for each inventory.Due to the importance of inventories to the assets of the Group and the inherent risks ofestimating the construction costs and future net selling prices to be incurred when inventoryitems reach completion status, especially in view of the current economic environment, theassessment of the net realizable value of the group's inventory is identified as a key auditmatter.
2. Audit response
For assessing the net realizable value of inventory, we mainly performed the following audit
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
procedures:
① Understanding and evaluating the design and operational effectiveness of key internalcontrols related to real estate development cost budgeting, dynamic cost management, andestimates of net realizable value;
② Organizing filed trips to real estate development projects based on selected samples, andask the development progress and dynamic cost budget of these projects
③ Evaluating the management's calculation method of expected future selling price, futureselling cost and related sales taxes, such as by comparing the estimated selling price withmarket availability data and the project's sales budget plan;
④ Reconciling the actual costs of inventory in current real estate development projects withthe latest project budget, and comparing the latest budgeted costs as of 31 December 2021with those as of 31 December 2020, to evaluate the accuracy of management forecasts;
⑤ Recalculating the net realizable value of inventory and comparing it to managementestimate.Other InformationManagement of Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd(the "Management") is responsible for the other information. The other information comprisesthe information included in the Annual Report of 2021, but does not include the financialstatements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.In connection with our audit of financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistentwith the financial statements or our knowledge obtained in the audit or otherwise appears to be
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
materially misstated.If, based on the work we have performed, we conclude that there is material misstatement ofthis other information, we are required to report that fact. We have nothing to report in thisregard.Responsibilities of Management and Those Charge with Governance for the FinancialStatementThe Management is responsible for the preparation and fair presentation of the financialstatement in accordance with Accounting Standards for Business Enterprises, and for suchinternal control as management determines in necessary to enable the preparation of financialstatements that are free form material misstatement, whether due to fraud or error.In preparing the financial statements, management is responsible for assessing the Group’sability to continue as a going concern, disclosing, as applicable, matters related to goingconcern and using the going concern basis of accounting unless management either intends toliquidate the Group or to cease operations, or has no realistic alternative but to do so.Those charge with governance are responsible for overseeing the Group’s financial reportingprocess.Auditor’s Responsibilities for the Audit of the Financial StatementOur objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordance with China Standards on Auditingwill always detect a material misstatement when it exists. Misstatements can arise form fraudor error and are considered material if, individually or in the aggregate, they could reasonablybe expected to influence the economic decisions of users taken on the basis of these financialstatements.As part of an audit in accordance with China Standards on Auditing, we exercise professional
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
judgment and maintain professional skepticism throughout the audit. We also:
? Identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than forone resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
? Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
? Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
? Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Group’s abilityto continue as a going concern. If we conclude that a material uncertainty exists, we arerequired to draw attention in our auditor’s report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusionsare based on the audit evidence obtained up to the date of our auditor’s report. However,further events or conditions may cause the Group to cease to continue as a going concern.
? Evaluate the overall presentation, structure and content of the financial statements, andwhether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
? Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within Group to express an opinion on the consolidatedfinancial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
planned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.We also provide those charged with governance a statement that we have complied with theethical requirements relating to our independence and communicate to those charged withgovernance relationships and other matters that may reasonably be believed to affect ourindependence, as well as the relevant precautions, if applicable.From the matters we communicated with those charged with governance, we determined whichmatters were most material to the audit of the financial statements for the current period andthus constituted the key audit matters. We describe such matters in our audit reports, unlesslaws and regulations prohibit public disclosure of such matters or, in rare circumstances, wedetermine that we should not communicate a matter in our audit report if it is reasonablyexpected that the negative consequences of communicating such matter in our audit reportwould outweigh the benefits in the public interest.
| Grant Thornton China ·Beijing | Auditor's signature and stamp： Auditor's signature and stamp： | Zhao Juanjuan, Jiang Xiaoming |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report2021
| 17 March 2022 |
| Balance Sheet | |||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | ||||
| Item | Note | As at 31/12/2021 | As at 31/12/2020 | ||
| Consolidated | Company | Consolidated | Company | ||
| Current assets: | |||||
| Cash at bank and on hand | V、1 | 564,358,824.63 | 304,130,181.74 | 2,687,465,070.01 | 2,329,517,987.02 |
| Trading financial assets | V、2 | 514,024,710.91 | 514,024,710.91 | - | - |
| Bills receivable | V、3 | 3,530,537.37 | - | 35,438,045.34 | - |
| Accounts receivable | V、4 | 61,048,785.11 | 9,708,285.93 | 59,590,944.06 | 5,418,024.74 |
| Accounts receivable financing | - | - | - | - | |
| Prepayments | V、5 | 4,899,011.32 | 200,000.00 | 3,205,534.51 | 200,000.00 |
| Other receivables | V、6 | 30,614,008.08 | 1,587,300,891.76 | 32,745,043.84 | 1,160,414,195.39 |
| including：interests receivables | - | - | - | - | |
| dividends receivables | 1,052,192.76 | - | 1,052,192.76 | - | |
| Inventories | V、7 | 4,034,933,562.62 | 42,348,499.39 | 1,220,464,112.56 | 207,606,220.98 |
| Contract assets | - | - | - | - | |
| Assets held for sale | V、8 | 78,940,232.10 | 12,821,791.52 | - | - |
| Non-current assets due within one year | - | - | - | - | |
| Other current assets | V、9 | 68,216,887.04 | 7,144,189.24 | 102,907,134.79 | 945,499.13 |
| Total current assets | 5,360,566,559.18 | 2,477,678,550.49 | 4,141,815,885.11 | 3,704,101,927.26 | |
| Non-current assets: | |||||
| Debt investments | - | - | - | - | |
| Other debt investments | - | - | - | - | |
| Long-term receivables | - | - | - | - | |
| Long-term equity investments | V、10 | 272,168.28 | 1,582,657,055.03 | 377,489.65 | 150,584,167.95 |
| Investment in other equity instruments | V、11 | 36,322,704.33 | 13,831,938.92 | 37,510,860.51 | 13,508,202.32 |
| Other financial non-current assets | - | - | - | - | |
| Investment properties | V、12 | 588,865,777.16 | 476,622,089.39 | 616,365,621.53 | 499,145,554.67 |
| Fixed assets | V、13 | 23,920,424.55 | 15,722,627.74 | 28,039,978.43 | 17,743,083.73 |
| Construction in progress | - | - | - | - | |
| Productive biological assets | - | - | - | - | |
| Oil and gas assets | - | - | - | - | |
| Right of use assets | V、14 | 365,351.97 | - | - | - |
| Intangible assets | V、15 | - | - | - | - |
| Development costs | - | - | - | - | |
| Goodwill | - | - | - | - | |
| Long-term deferred expenses | V、16 | 2,164,963.18 | 1,167,500.83 | 61,667.53 | 61,667.53 |
| Deferred tax assets | V、17 | 170,020,101.78 | 134,299,017.38 | 112,745,243.98 | 83,740,299.64 |
| Other non-current assets | - | - | - | - | |
| Total non-current assets | 821,931,491.25 | 2,224,300,229.29 | 795,100,861.63 | 764,782,975.84 | |
| Total assets | 6,182,498,050.43 | 4,701,978,779.78 | 4,936,916,746.74 | 4,468,884,903.10 | |
| Balance Sheet(continued) | |||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | ||||
| Item | Note | As at 31/12/2021 | As at 31/12/2020 | ||
| Consolidated | Company | Consolidated | Company | ||
| Current liabilities: | |||||
| Short-term loans | V、18 | 50,440,116.24 | - | 76,893,995.94 | - |
| Trading financial liabilities | - | - | - | - | |
| Bills payable | V、19 | 247,376,403.56 | - | - | - |
| Accounts payable | V、20 | 141,447,559.24 | 29,750,790.44 | 176,926,614.28 | 77,187,914.50 |
| Advances from customers | V、21 | 6,411,427.04 | - | 5,940,092.15 | - |
| Contract liabilities | V、22 | 199,965,490.08 | 159,752,627.50 | 196,786,977.19 | 172,241,938.46 |
| Employee benefits payable | V、23 | 43,926,711.78 | 33,496,830.45 | 60,467,834.09 | 27,255,860.05 |
| Taxes payable | V、24 | 600,540,872.48 | 588,031,923.05 | 459,709,646.95 | 450,281,265.17 |
| Other payables | V、25 | 581,377,415.64 | 207,613,656.49 | 277,105,129.74 | 194,609,459.87 |
| Including: interests payables | 16,535,277.94 | 16,535,277.94 | 16,535,277.94 | 16,535,277.94 | |
| dividends payables | - | - | - | - | |
| Liabilities held for sale | V、8 | 65,752,452.06 | - | - | - |
| Non-current liabilities due within one year | V、26 | 83,023.44 | - | - | - |
| Other current liabilities | V、27 | 8,196,849.13 | 7,987,260.50 | 8,917,027.07 | 8,612,096.92 |
| Total current liabilities | 1,945,518,320.69 | 1,026,633,088.43 | 1,262,747,317.41 | 930,188,534.97 | |
| Non-current liabilities: | |||||
| Long-term loans | - | - | - | - | |
| Debentures payable | - | - | - | - | |
| Leased liabilities | V、28 | 125,920.77 | - | - | - |
| Long-term payables | V、29 | - | - | 7,480,233.43 | - |
| Provisions | - | - | - | - | |
| Deferred income | - | - | - | - | |
| Deferred tax liabilities | V、16 | 9,524,639.56 | 5,027,520.65 | 9,601,940.74 | 4,812,392.47 |
| Other non-current liabilities | - | - | - | - | |
| Total non-current liabilities | 9,650,560.33 | 5,027,520.65 | 17,082,174.17 | 4,812,392.47 | |
| Total liabilities | 1,955,168,881.02 | 1,031,660,609.08 | 1,279,829,491.58 | 935,000,927.44 | |
| Share capital | V、30 | 1,011,660,000.00 | 1,011,660,000.00 | 1,011,660,000.00 | 1,011,660,000.00 |
| Capital reserve | V、31 | 978,244,910.11 | 964,711,931.13 | 978,244,910.11 | 964,711,931.13 |
| Less: treasury shares | - | - | - | - | |
| Other comprehensive income | V、32 | 36,088,963.95 | 1,373,954.19 | 28,163,050.13 | 1,131,151.74 |
| Specific reserve | - | - | - | - | |
| Surplus reserve | V、33 | 241,144,854.93 | 218,015,241.52 | 218,724,273.67 | 195,594,660.26 |
| Retained earnings | V、34 | 1,671,121,562.98 | 1,474,557,043.86 | 1,560,720,254.31 | 1,360,786,232.53 |
| Total equity attributable to shareholders of the Company | 3,938,260,291.97 | 3,670,318,170.70 | 3,797,512,488.22 | 3,533,883,975.66 | |
| Non-controlling interests | 289,068,877.44 | - | -140,425,233.06 | - | |
| Total shareholders' equity | 4,227,329,169.41 | 3,670,318,170.70 | 3,657,087,255.16 | 3,533,883,975.66 | |
| Total liabilities and shareholders' equity | 6,182,498,050.43 | 4,701,978,779.78 | 4,936,916,746.74 | 4,468,884,903.10 | |
| Legal reprensentative: The person in charge of accounting affairs: The head of the accounting department: | |||||
| Income Statement | ||||||
| For the year ended 31 December 2021 | ||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | |||||
| Item | Note | Year ended 31/12/2021 | Year ended 31/12/2020 | |||
| Consolidated | Company | Consolidated | Company | |||
| I.Operating income | V、35 | 1,320,790,648.45 | 774,065,610.33 | 1,615,009,713.88 | 911,839,269.70 | |
| Less: operating costs | V、35 | 666,348,361.48 | 198,814,980.86 | 805,508,448.68 | 241,307,783.52 | |
| Taxes and surcharges | V、36 | 254,360,315.85 | 239,589,346.99 | 329,962,066.50 | 289,600,033.09 | |
| Selling and distribution expenses | V、37 | 42,737,748.22 | 25,703,001.79 | 55,989,397.22 | 42,814,758.60 | |
| General and administrative expenses | V、38 | 98,307,831.60 | 62,162,730.22 | 93,616,226.75 | 56,022,941.66 | |
| Research and development expenses | - | - | - | - | ||
| Financial expenses | V、39 | -18,083,491.01 | -35,842,822.63 | -21,505,685.05 | -39,280,862.44 | |
| Including: Interest expenses | - | - | - | - | ||
| Interest income | 28,863,878.27 | 41,651,307.37 | 30,130,066.10 | 51,099,467.08 | ||
| Add: Other income | V、40 | 1,669,479.40 | 41,188.24 | 4,607,772.07 | 150,785.59 | |
| Investment income ("-" for losses) | V、41 | 1,783,839.07 | 1,783,839.07 | 15,724,469.63 | 15,724,469.63 | |
| Including: Income from investment in associates and joint ventures ("-" for losses) | -105,321.37 | -105,321.37 | -92,348.97 | -92,348.97 | ||
| Gain from derecognition of financial assets measured at amortized cost ("-" for losses) | ||||||
| Net exposure hedging gains ("-" for losses) | ||||||
| Gains from changes in fair value ("-" for losses) | V、42 | 11,828,130.44 | 11,828,130.44 | - | - | |
| Credit impairment losses ("-" for losses) | V、43 | -7,795,219.71 | -153,318.35 | -358,999.15 | 464,438.79 | |
| Impairment losses ("-" for losses) | V、44 | 268,941.60 | - | - | - | |
| Gains from assets disposal ("-" for losses) | V、45 | -8,852.73 | - | 11,429.23 | - | |
| II.Operating profit ("-" for losses) | 284,866,200.38 | 297,138,212.50 | 371,423,931.56 | 337,714,309.28 | ||
| Add: Non-operating income | V、46 | 1,746,134.87 | 1,584,736.54 | 30,693,761.57 | 30,679,050.88 | |
| Less: Non-operating expenses | V、47 | 208,129.74 | 32,989.65 | 1,684,103.97 | 106,542.24 | |
| III.Profit before income tax ("-" for losses) | 286,404,205.51 | 298,689,959.39 | 400,433,589.16 | 368,286,817.92 | ||
| Less: Income tax expenses | V、48 | 68,804,535.78 | 74,484,146.80 | 110,470,834.78 | 93,272,470.62 | |
| IV.Net profit for the year ("-" for net losses) | 217,599,669.73 | 224,205,812.59 | 289,962,754.38 | 275,014,347.30 | ||
| (1) Classification according to operation continuity | ||||||
| Including: Net profit from continuing operations ("-" for net loss) | 214,252,742.25 | 224,205,812.59 | 286,164,165.74 | 275,014,347.30 | ||
| Net profit from discontinued operations ("-" for net loss) | 3,346,927.48 | 3,798,588.64 | ||||
| (2) Classification according to attibute | ||||||
| Including: Shareholders of the company("-" for net loss) | 220,836,309.93 | 224,205,812.59 | 290,229,772.23 | 275,014,347.30 | ||
| Income Statement | ||||||
| For the year ended 31 December 2021 | ||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | |||||
| Item | Note | Year ended 31/12/2021 | Year ended 31/12/2020 | |||
| Consolidated | Company | Consolidated | Company | |||
| Non-controlling interests("-" for net loss) | -3,236,640.20 | - | -267,017.85 | - | ||
| V.Other comprehensive income, net of tax | 8,837,349.05 | 242,802.45 | 9,065,166.63 | 209,025.97 | ||
| Other comprehensive income (net of tax) attributable to shareholders of the company | 7,925,913.82 | 242,802.45 | 7,332,046.00 | 209,025.97 | ||
| A.Items that will not be reclassified to profit or loss | -891,117.14 | 242,802.45 | 3,288,097.86 | 209,025.97 | ||
| a. Changes in fair value of other equity instrument investments | -891,117.14 | 242,802.45 | 3,288,097.86 | 209,025.97 | ||
| B. Items that may be reclassified to profit or loss | 8,817,030.96 | - | 4,043,948.14 | - | ||
| a. Translation differences arising from translation of foreign currency financial statements | 8,817,030.96 | - | 4,043,948.14 | - | ||
| Other comprehensive income (net of tax) attributable to non-controlling interests | 911,435.23 | - | 1,733,120.63 | - | ||
| VI.Total comprehensive income for the year | 226,437,018.78 | 224,448,615.04 | 299,027,921.01 | 275,223,373.27 | ||
| Attributable to: Shareholders of the company | 228,762,223.75 | 224,448,615.04 | 297,561,818.22 | 275,223,373.27 | ||
| Non-controlling interests | -2,325,204.97 | - | 1,466,102.78 | - | ||
| VII.Earnings per share | ||||||
| (1) Basic earnings per share | 0.2183 | - | 0.2869 | - | ||
| (2)Diluted earnings per share | 0.2183 | - | 0.2869 | - | ||
| Legal reprensentative: The person in charge of accounting affairs: The head of the accounting department: | ||||||
| Cash Flow Statement | |||||
| For the year ended 31 December 2021 | |||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | ||||
| Item | Note | Year ended 31/12/2021 | Year ended 31/12/2020 | ||
| Consolidated | Company | Consolidated | Company | ||
| I.Cash flows from operating activities | |||||
| Proceeds from sales of goods or rendering of services | 1,427,249,424.24 | 800,728,093.14 | 1,729,680,056.34 | 1,078,103,371.61 | |
| Refund of taxes | - | - | - | - | |
| Proceeds from other operating activities | V、49 | 378,597,082.00 | 55,262,411.37 | 54,027,940.71 | 64,609,945.07 |
| Sub-total of cash inflows | 1,805,846,506.24 | 855,990,504.51 | 1,783,707,997.05 | 1,142,713,316.68 | |
| Payment for goods and services | 2,301,256,194.02 | 53,822,715.55 | 550,912,214.50 | 32,909,312.44 | |
| Cash Flow Statement | |||||
| For the year ended 31 December 2021 | |||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | ||||
| Item | Note | Year ended 31/12/2021 | Year ended 31/12/2020 | ||
| Consolidated | Company | Consolidated | Company | ||
| Payment to and for employees | 191,511,263.39 | 55,225,745.09 | 164,940,269.68 | 41,972,734.54 | |
| Payments of various taxes | 235,554,836.77 | 276,459,274.35 | 708,116,426.50 | 183,703,076.95 | |
| Payment for other operating activities | V、49 | 283,476,320.00 | 472,880,097.57 | 74,575,073.20 | 388,932,614.43 |
| Sub-total of cash outflows | 3,011,798,614.18 | 858,387,832.56 | 1,498,543,983.88 | 647,517,738.36 | |
| Net cash flows from operating activities | -1,205,952,107.94 | -2,397,328.05 | 285,164,013.17 | 495,195,578.32 | |
| II.Cash flows from investing activities | |||||
| Proceeds from disposal of investments | - | - | - | - | |
| Investment income received | 1,889,160.44 | 1,889,160.44 | 19,767,503.60 | 19,767,503.60 | |
| Net proceeds from disposal of fixed assets, intangible assets and other long-term assets | 162,961.51 | 1,253.56 | 56,718.25 | - | |
| Net proceeds from disposal of subsidiaries and other business units | - | - | - | - | |
| Proceeds from other investing activities | 797,803,419.53 | 797,803,419.53 | 1,000,000,000.00 | 1,000,000,000.00 | |
| Sub-total of cash inflows | 799,855,541.48 | 799,693,833.53 | 1,019,824,221.85 | 1,019,767,503.60 | |
| Payment for acquisition of fixed assets, intangible assets and other long-term assets | 1,845,495.54 | 1,283,857.85 | 749,215.31 | - | |
| Payment for acquisition of investments | - | - | - | - | |
| Net payment for acquisition of subsidiaries and other business units | 449,776,436.75 | 1,444,894,678.60 | - | - | |
| Payment for other investing activities | V、49 | 1,300,000,000.00 | 1,300,000,000.00 | - | - |
| Sub-total of cash outflows | 1,751,621,932.29 | 2,746,178,536.45 | 749,215.31 | - | |
| Net cash flows from investing activities | -951,766,390.81 | -1,946,484,702.92 | 1,019,075,006.54 | 1,019,767,503.60 | |
| III.Cash flows from financing activities | |||||
| Proceeds from investors | - | - | - | - | |
| Including: Proceeds from non-controlling shareholders of subsidiaries | - | - | - | - | |
| Proceeds from borrowings | 50,440,116.24 | - | 76,893,995.94 | - | |
| Proceeds from other financing activities | 215,816,852.52 | 22,800,000.00 | - | - | |
| Sub-total of cash inflows | 266,256,968.76 | 22,800,000.00 | 76,893,995.94 | - | |
| Repayments of borrowings | 76,893,995.94 | - | 51,647,260.17 | - | |
| Payment for dividends, profit distributions or interest | 88,014,420.00 | 88,014,420.00 | 166,923,900.00 | 166,923,900.00 | |
| Including: Dividends and profits paid to non-controlling shareholders of subsidiaries | - | - | - | - | |
| Payment for other financing activities | - | - | - | - | |
| Sub-total of cash outflows | 164,908,415.94 | 88,014,420.00 | 218,571,160.17 | 166,923,900.00 | |
| Net cash flows from financing activities | 101,348,552.82 | -65,214,420.00 | -141,677,164.23 | -166,923,900.00 | |
| IV.Effect of foreign exchange rate changes on cash and cash equivalents | -440,345.74 | - | -647,689.01 | - | |
| V.Net increase in cash and cash equivalents | -2,056,810,291.67 | -2,014,096,450.97 | 1,161,914,166.47 | 1,348,039,181.92 | |
| Cash Flow Statement | |||||
| For the year ended 31 December 2021 | |||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | ||||
| Item | Note | Year ended 31/12/2021 | Year ended 31/12/2020 | ||
| Consolidated | Company | Consolidated | Company | ||
| Add: Cash and cash equivalents at the beginning of the year | 2,669,103,926.82 | 2,311,776,619.47 | 1,507,189,760.35 | 963,737,437.55 | |
| VI.Cash and cash equivalent at the end of the year | 612,293,635.15 | 297,680,168.50 | 2,669,103,926.82 | 2,311,776,619.47 | |
| Legal reprensentative: The person in charge of accounting affairs: The head of the accounting department: | |||||
| Consolidated Statement of Changes in Shareholders' Equity | |||||||||
| For the year ended 31 December 2021 | |||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | ||||||||
| Item | Year ended 31/12/2021 | ||||||||
| Attributable to shareholders' equity of the parent company | Non-controlling interests | Total | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||
| I.Balance at the end of last year | 1,011,660,000.00 | 978,244,910.11 | - | 28,163,050.13 | - | 218,724,273.67 | 1,560,720,254.31 | -140,425,233.06 | 3,657,087,255.16 |
| Add：Changes in accounting policies | - | - | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - | - | - |
| business combinations under common control | - | - | - | - | - | - | - | - | - |
| Other | - | - | - | - | - | - | - | - | - |
| II.Balance at the beginning of the year | 1,011,660,000.00 | 978,244,910.11 | - | 28,163,050.13 | - | 218,724,273.67 | 1,560,720,254.31 | -140,425,233.06 | 3,657,087,255.16 |
| III.Changes in equity during the year( "- "for decrease) | - | - | - | 7,925,913.82 | - | 22,420,581.26 | 110,401,308.67 | 429,494,110.50 | 570,241,914.25 |
| (I)Total comprehensive income | - | - | - | 7,925,913.82 | - | - | 220,836,309.93 | -2,325,204.97 | 226,437,018.78 |
| (II)Shareholders' contributions and decrease of capital | - | - | - | - | - | - | - | - | - |
| 1.Contribution by ordinary shareholders | - | - | - | - | - | - | - | - | - |
| 2. Equity settled share-based payments | - | - | - | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - | - | - | - |
| (III) Appropriation of profits | - | - | - | - | - | 22,420,581.26 | -110,435,001.26 | - | -88,014,420.00 |
| 1. Appropriation for surplus reserves | - | - | - | - | - | 22,420,581.26 | -22,420,581.26 | - | - |
| 2. Distributions to shareholders | - | - | - | - | - | - | -88,014,420.00 | - | -88,014,420.00 |
| 3. Others | - | - | - | - | - | - | - | - | - |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital reserves | - | - | - | - | - | - | - | - | - |
| Consolidated Statement of Changes in Shareholders' Equity | |||||||||
| For the year ended 31 December 2021 | |||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | ||||||||
| Item | Year ended 31/12/2021 | ||||||||
| Attributable to shareholders' equity of the parent company | Non-controlling interests | Total | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||
| transfer | |||||||||
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - | - |
| 3.Transfer of surplus reserve to offset losses | - | - | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - | - | - |
| (V)Specific Reserve | - | - | - | - | - | - | - | - | - |
| 1. Appropriation during the year | - | - | - | - | - | - | - | - | - |
| 2.Utilisation during the year | - | - | - | - | - | - | - | - | - |
| (VI)Others | - | - | - | - | - | - | - | 431,819,315.47 | 431,819,315.47 |
| IV.Balance at the end of the year | 1,011,660,000.00 | 978,244,910.11 | - | 36,088,963.95 | - | 241,144,854.93 | 1,671,121,562.98 | 289,068,877.44 | 4,227,329,169.41 |
| Legal reprensentative: | The person in charge of accounting affairs: | The head of the accounting department: | |||||||
| Consolidated Statement of Changes in Shareholders' Equity | |||||||||
| For the year ended 31 December 2021 | |||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd Expressed in CNY | |||||||||
| Item | Year ended 31/12/2020 | ||||||||
| Attributable to shareholders' equity of the parent company | Non-controlling interests | Total | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||
| I.Balance at the end of last year | 1,011,660,000.00 | 978,244,910.11 | - | 20,831,004.13 | - | 191,222,838.94 | 1,464,915,816.81 | -141,891,335.84 | 3,524,983,234.15 |
| Add：Changes in accounting policies | - | - | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - | - | - |
| business combinations under common control | - | - | - | - | - | - | - | - | - |
| Other | - | - | - | - | - | - | - | - | - |
| II.Balance at the beginning of the year | 1,011,660,000.00 | 978,244,910.11 | - | 20,831,004.13 | - | 191,222,838.94 | 1,464,915,816.81 | -141,891,335.84 | 3,524,983,234.15 |
| III.Changes in equity during the year( "- "for decrease) | - | - | - | 7,332,046.00 | - | 27,501,434.73 | 95,804,437.50 | 1,466,102.78 | 132,104,021.01 |
| (I)Total comprehensive income | - | - | - | 7,332,046.00 | - | - | 290,229,772.23 | 1,466,102.78 | 299,027,921.01 |
| (II)Shareholders' contributions and decrease of capital | - | - | - | - | - | - | - | - | - |
| 1.Contribution by ordinary shareholders | - | - | - | - | - | - | - | - | - |
| 2. Equity settled share-based payments | - | - | - | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - | - | - | - |
| (III) Appropriation of profits | - | - | - | - | - | 27,501,434.73 | -194,425,334.73 | - | -166,923,900.00 |
| 1. Appropriation for surplus reserves | - | - | - | - | - | 27,501,434.73 | -27,501,434.73 | - | - |
| 2. Distributions to shareholders | - | - | - | - | - | - | -166,923,900.00 | - | -166,923,900.00 |
| 3. Others | - | - | - | - | - | - | - | - | - |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital reserves | - | - | - | - | - | - | - | - | - |
| Consolidated Statement of Changes in Shareholders' Equity | |||||||||
| For the year ended 31 December 2021 | |||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd Expressed in CNY | |||||||||
| Item | Year ended 31/12/2020 | ||||||||
| Attributable to shareholders' equity of the parent company | Non-controlling interests | Total | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||
| transfer | |||||||||
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - | - |
| 3.Transfer of surplus reserve to offset losses | - | - | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - | - | - |
| (V)Specific Reserve | - | - | - | - | - | - | - | - | - |
| 1. Appropriation during the year | - | - | - | - | - | - | - | - | - |
| 2.Utilisation during the year | - | - | - | - | - | - | - | - | - |
| (VI)Others | - | - | - | - | - | - | - | - | - |
| IV.Balance at the end of the year | 1,011,660,000.00 | 978,244,910.11 | - | 28,163,050.13 | - | 218,724,273.67 | 1,560,720,254.31 | -140,425,233.06 | 3,657,087,255.16 |
| Legal reprensentative: | The person in charge of accounting affairs: | The head of the accounting department: | |||||||
| Statement of Changes in Shareholders' Equity | ||||||||
| For the year ended 31 December 2021 | ||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | |||||||
| Item | Year ended 31/12/2021 | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total | |
| I.Balance at the end of last year | 1,011,660,000.00 | 964,711,931.13 | - | 1,131,151.74 | - | 195,594,660.26 | 1,360,786,232.53 | 3,533,883,975.66 |
| Add：Changes in accounting policies | - | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - |
| II.Balance at the beginning of the year | 1,011,660,000.00 | 964,711,931.13 | - | 1,131,151.74 | - | 195,594,660.26 | 1,360,786,232.53 | 3,533,883,975.66 |
| III.Changes in equity during the year( "- "for decrease) | - | - | - | 242,802.45 | - | 22,420,581.26 | 113,770,811.33 | 136,434,195.04 |
| (I)Total comprehensive income | - | - | - | 242,802.45 | - | - | 224,205,812.59 | 224,448,615.04 |
| (II)Shareholders' contributions and decrease of capital | - | - | - | - | - | - | - | - |
| 1.Contribution by ordinary shareholders | - | - | - | - | - | - | - | - |
| 2. Equity settled share-based payments | - | - | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - | - | - |
| (III) Appropriation of profits | - | - | - | - | - | 22,420,581.26 | -110,435,001.26 | -88,014,420.00 |
| 1. Appropriation for surplus reserves | - | - | - | - | - | 22,420,581.26 | -22,420,581.26 | - |
| 2. Distributions to shareholders | - | - | - | - | - | - | -88,014,420.00 | -88,014,420.00 |
| 3. Others | - | - | - | - | - | - | - | - |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital reserves transfer | - | - | - | - | - | - | - | - |
| Statement of Changes in Shareholders' Equity | ||||||||
| For the year ended 31 December 2021 | ||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd | Expressed in CNY | |||||||
| Item | Year ended 31/12/2021 | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total | |
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - |
| 3.Transfer of surplus reserve to offset losses | - | - | - | - | - | - | - | - |
| 4.Others | - | - | - | - | - | - | - | - |
| (V)Specific Reserve | - | - | - | - | - | - | - | - |
| 1. Appropriation during the year | - | - | - | - | - | - | - | - |
| 2.Utilisation during the year | - | - | - | - | - | - | - | - |
| (VI)Others | - | - | - | - | - | - | - | - |
| IV.Balance at the end of the year | 1,011,660,000.00 | 964,711,931.13 | - | 1,373,954.19 | - | 218,015,241.52 | 1,474,557,043.86 | 3,670,318,170.70 |
| Legal reprensentative: | The person in charge of accounting affairs: | The head of the accounting department: | ||||||
| Statement of Changes in Shareholders' Equity | ||||||||
| For the year ended 31 December 2021 | ||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd Expressed in CNY | ||||||||
| Item | Year ended 31/12/2020 | |||||||
| Share capital | Capital reserve | Less: | Other | Specific | Surplus reserve | Retained earnings | Total | |
| treasury shares | comprehensive income | reserve | ||||||
| I.Balance at the end of last year | 1,011,660,000.00 | 964,711,931.13 | - | 922,125.77 | - | 168,093,225.53 | 1,280,197,219.9600 | 3,425,584,502.39 |
| Add：Changes in accounting policies | - | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - |
| II.Balance at the beginning of the year | 1,011,660,000.00 | 964,711,931.13 | - | 922,125.77 | - | 168,093,225.53 | 1,280,197,219.9600 | 3,425,584,502.39 |
| III.Changes in equity during the year( "- "for decrease) | - | - | - | 209,025.97 | - | 27,501,434.73 | 80,589,012.5700 | 108,299,473.27 |
| (I)Total comprehensive income | - | - | - | 209,025.97 | - | - | 275,014,347.3000 | 275,223,373.27 |
| (II)Shareholders' contributions and decrease of capital | - | - | - | - | - | - | - | - |
| 1.Contribution by ordinary shareholders | - | - | - | - | - | - | - | - |
| 2. Equity settled share-based payments | - | - | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - | - | - |
| (III) Appropriation of profits | - | - | - | - | - | 27,501,434.73 | -194,425,334.7300 | -166,923,900.00 |
| 1. Appropriation for surplus reserves | - | - | - | - | - | 27,501,434.73 | -27,501,434.7300 | - |
| 2. Distributions to shareholders | - | - | - | - | - | - | -166,923,900.0000 | -166,923,900.00 |
| 3. Others | - | - | - | - | - | - | - | - |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital reserves transfer | - | - | - | - | - | - | - | - |
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - |
| 3.Transfer of surplus reserve to offset losses | - | - | - | - | - | - | - | - |
| 4.Others | - | - | - | - | - | - | - | - |
| (V)Specific Reserve | - | - | - | - | - | - | - | - |
| 1. Appropriation during the year | - | - | - | - | - | - | - | - |
| Statement of Changes in Shareholders' Equity | ||||||||
| For the year ended 31 December 2021 | ||||||||
| Prepared by：Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd Expressed in CNY | ||||||||
| Item | Year ended 31/12/2020 | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total | |
| 2.Utilisation during the year | - | - | - | - | - | - | - | - |
| (VI)Others | - | - | - | - | - | - | - | - |
| IV.Balance at the end of the year | 1,011,660,000.00 | 964,711,931.13 | - | 1,131,151.74 | - | 195,594,660.26 | 1,360,786,232.5300 | 3,533,883,975.66 |
| Legal reprensentative: | The person in charge of accounting affairs: | The head of the accounting department: | ||||||
Notes to the Financial Statements
I. Company Information
1. Company’s profile
Shenzhen Special Economic Zone Real Estate and Properties (Group) Co., Ltd. (the “Group” or “theCompany”) was established in July 1993, as approved by the Shenzhen Municipal Government withdocument SFBF (1993) 724. The Company issued A shares on 15 September 1993 and issued Bshares on 10 January 1994. On 31 August 1994, the issued B shares were listed in the New YorkExchange market as class A recommendation. The total share capital is 1,011,660,000 shares, including891,660,000 of A shares, and 120,000,000 of B shares. The company business license registrationnumber is 91440300192179585N, and the registered capital is CNY 1,011,660,000.00. The Company’sheadquarter is located at Floor 45-48, Shen Fang Plaza, Ren Min South Road, Luo Hu District, ShenZhen, Guangdong province.On 13 October 2004, according to the document No. (2004) 223 “Decision on establishing Shenzheninvestment Holding Co., Ltd.” issued by State-Owned Assets Supervision and AdministrationCommission of Shenzhen Municipal Government, the former major shareholder – ShenzhenConstruction Investment Holding Company with two assets management companies merged, and theShenzhen Investment Holding Co., Ltd formed, which causes the Company's equity to change. By theState-owned Assets Supervision and Administration Commission of the state council, and quasi-exemptobligations tender offer as approved by China Security Regulatory Committee with document No.(2005)116, this issue of consolidated has been authorized and the change in registration had beencompleted on 15 February 2006. At the end of the reporting period, Shenzhen Investment HoldingLimited holds 578,595.836 shares of the Company (57.19% of the total share capital). The shares areall tradable unrestricted shares.The Company has established the corporate governance structure of the general meeting ofshareholders, the board of directors and the board of supervisors. At present, it has human resources,financing plan department, marketing department, engineering management department etc.The Company and its subsidiaries (hereinafter referred to as "the Group") are principally engaged in realestate development and sales, property leasing and management, retail merchandising and trade, hotel,equipment installation and maintenance, construction, interior decoration, etc.These financial statements and notes to the financial statements were approved by the Board ofDirectors of the Group at the 71
thBoard meeting dated on 17 March 2022.
2. Scope of consolidated financial statements
For details about the scope of consolidated statements, please refer to Note VII “Interests in otherentities”.
Refer to Note VI and VII for changes in consolidation scope in current period.II. The Basis of Preparation of Financial StatementsThe financial statements are prepared in accordance with the Accounting Standards for BusinessEnterprises and corresponding application guidance, interpretations and other related provisions issuedby the Ministry of Finance (collectively, " Accounting Standards for Business Enterprises "). In addition,the Group also discloses relevant financial information in accordance with the China SecuritiesRegulatory Commission's "Information Disclosure and Reporting Rules for Companies that PublicIssued Securities" No. 15 - General Provisions on Financial Reporting (revised in 2014).These financial statements are presented on going concern basis.The Group adopts the accrual basis of accounting. Except for certain financial instruments, the financialstatements are prepared under the historical cost convention. In the event that impairment of assetsoccurs, a provision for impairment is made accordingly in accordance with the relevant regulations.III. Significant accounting policies and accounting estimatesThe company take its own operation and production characteristics into consideration to determine therevenue recognition policy. Please refer to Note III.24.
1. Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements have been prepared in compliance with the Accounting Standards for Business
Enterprises to truly and completely present the Group’s and the Company’s financial position as at 31
December 2021 and the Group’s and the Company’s operating results and cash flows for the year
ended 31 December 2021.
2. Accounting period
The accounting period of the Group is from 1 January to 31 December.
3. Operating cycle
The Group's operating cycle is 12 months.
4. Functional currency
The Group and domestic subsidiaries (including Hong Kong) use Chinese Yuan (“CNY”) as their
functional currency. Offshore subsidiaries, Great Wall Real Estate Co. LTD, determine American dollar
as their functional currency according to the primary economic environment where they operate. The
financial statements of the Group have been prepared in CNY.
5. Accounting treatments for business combinations involving enterprises under common control and
business combinations not involving enterprises under common control
（1）Business combinations involving enterprises under common control
For a business combination involving enterprises under common control, the assets acquired andliabilities assumed are measured based on their carrying amounts in the consolidated financialstatements of the ultimate controlling party at the combination date, except for adjustments due todifferent accounting policies. The difference between the carrying amount of the net assets acquiredand the consideration paid for the combination is adjusted against share premium in the capital reserve,with any excess adjusted against retained earnings.Business combination involving enterprises under common control through step by step multipletransactions.In individual financial statements, the share of the net assets of the consolidated party in the book valueof the consolidated financial statements of the ultimate controlling party of the net assets of theconsolidated party on the consolidation date, calculated by the shareholding ratio on the consolidationdate, shall be taken as the initial investment cost of the investment; the difference between the initialinvestment cost and the sum of the book value of the investment held before the merger plus the bookvalue of the newly consideration paid shall be adjusted for the capital reserve. If the capital reserve isinsufficient to be written down, the retained earnings shall be adjusted.In the consolidated financial statement, the assets and liabilities of the consolidated party shall bemeasured according to the book value of the consolidated financial statement of the ultimate controllingparty on the merger date, except for the adjustment due to different accounting policies; the balancebetween the book value of the investment held before the merger and the book value of the newlyconsideration paid and the book value of the net assets obtained during the merger shall be adjusted forcapital reserves. If the capital reserves are insufficient to be written down, the retained earnings shall beadjusted. For long-term equity investment held by the merging party prior to acquiring control of themerged party, the relevant profit and loss, other comprehensive income and other changes in owners'equity which have been recognized by the merging party from later of the date on which the originalequity was acquired and the date on which the merging party and the merged party are ultimately underthe control of the same party to the merging date, shall offset the beginning retained earnings or profitsand losses of the current period.
（2）Business combinations involving enterprises not under common controlFor business combinations involving enterprises not under common control, the consideration costsinclude acquisition-date fair value of assets transferred, liabilities incurred or assumed and equitysecurities issued by the acquirer in exchange for control of the acquiree. At the acquisition date, theacquired assets, liabilities and contingent liabilities of the acquiree are measured at their fair value. Theacquiree’s identifiable asset, liabilities and contingent liabilities, are recognised at their acquisition-datefair value.Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s identifiablenet assets, the difference is recognised as goodwill, and subsequently measured on the basis of its costless accumulated impairment provisions. Where the combination cost is less than the acquirer’s interestin the fair value of the acquiree’s identifiable net assets, the difference is recognised in profit or loss forthe current period after reassessment.
Business combination involving enterprises not under common control through step by step multipletransactions.In individual financial statements, the sum of the book value of the equity investment held by thepurchaser before the purchase date and the cost of the newly added investment on the purchase date istaken as the initial investment cost of the investment. If other comprehensive income of equityinvestment held before the purchase date is recognized by using the equity method, such othercomprehensive income will not be treated on the purchase date, and the investment will be treated onthe same basis as the direct disposal of relevant assets or liabilities by the invested entity. The owners'equity recognized as a result of changes in owners' equity other than net profit and loss, othercomprehensive income and profit distribution of the investee shall be transferred to the current profit andloss during the disposal period at the time of disposal of the investment. If the equity investment heldbefore the purchase date is measured at fair value, the accumulated change in fair value originallyrecorded in other comprehensive income is transferred to the profit and loss of the current period whenit is calculated by the cost method.In the consolidated financial statement, the consolidated cost is the sum of the consideration paid on thepurchase date and the fair value on the purchase date of the equity held by the Purchaser prior to thepurchase date. For the equity held by the Purchaser before the purchase date, it shall be re-measuredaccording to the fair value of the equity on the purchase date, and the difference between the fair valueand the book value shall be recorded into the current income; The equity held by the Purchaser beforethe purchase date involves other comprehensive income, and other changes in owners' equity turn intocurrent income on the purchase date, except for other comprehensive income generated by changes innet liabilities or net assets of the remeasured income plan of the investee.
（3）Transaction costs for business combination
The overhead for the business combination, including the expenses for audit, legal services, valuationadvisory, and other administrative expenses, are recorded in profit or loss for the current period whenincurred. The transaction costs of equity or debt securities issued as the considerations of businesscombination are included in the initial recognition amount of the equity or debt securities.
6. Consolidated financial statements
（1）Scope of consolidated financial statements
The scope of consolidated financial statements is based on control. Control exists when the Group haspower over the investee; exposure, or rights to variable returns from its involvement with the investeeand has the ability to affect its returns through its power over the investee. A subsidiary is an entity thatis controlled by the Group (including enterprise, a portion of an investee as a deemed separatecomponent, and structured entity controlled by the enterprise).
(2) Basis of preparation of consolidated financial statements
The consolidated financial statements are prepared by the Group based on the financial statements ofthe Group and its subsidiaries and other relevant information. When preparing consolidated financial
statements, the accounting policies and accounting periods of the subsidiaries should be consistent withthose established by the Group, and all significant intra-group balances and transactions are eliminated.Where a subsidiary or business was acquired during the reporting period, through a businesscombination involving enterprises under common control, the financial statements of the subsidiary orbusiness are included in the consolidated financial statements as if the combination had occurred at thedate that the ultimate controlling party first obtained control.Where a subsidiary or business was acquired during the reporting period, through a businesscombination involving enterprises not under common control, the identifiable assets and liabilities of theacquired subsidiaries or business are included in the scope of consolidation from the date that controlcommences.The portion of a subsidiary’s equity that is not attributable to the parent is treated as non-controllinginterests and presented separately in the consolidated balance sheet within shareholders’ equity. Theportion of net profit or loss of subsidiaries for the period attributable to non-controlling interests ispresented separately in the consolidated income statement below the “net profit” line item. When theamount of loss for the current period attributable to the non-controlling shareholders of a subsidiaryexceeds the non-controlling shareholders’ share of the opening owners’ equity of the subsidiary, theexcess is still allocated against the non-controlling interests.
（3）Changes in non-controlling interests
Where the Group acquires a non-controlling interest from a subsidiary’s non-controlling shareholders ordisposes of a portion of an interest in a subsidiary without a change in control, the transaction is treatedas equity transaction, and the book value of shareholder’s equity attributed to the Group and to thenon-controlling interest is adjusted to reflect the change in the Group’s interest in the subsidiaries. Thedifference between the proportion interests of the subsidiary’s net assets being acquired or disposedand the amount of the consideration paid or received is adjusted to the capital reserve in theconsolidated balance sheet, with any excess adjusted to retained earnings.
（4）Disposal of subsidiaries
When the Group loses control over a subsidiary because of disposing part of equity investment or otherreasons, the remaining part of the equity investment is re-measured at fair value at the date when thecontrol is lost. A gain or loss is recognised in the current period and is calculated by the aggregate ofconsideration received in disposal and the fair value of remaining part of the equity investmentdeducting the share of net assets in proportion to previous shareholding percentage in the formersubsidiary since acquisition date and the goodwill.Other comprehensive income related to the former subsidiary is transferred to profit or loss when thecontrol is lost, except for the comprehensive income arising from the movement of net liabilities orassets in the former subsidiary’s re-measurement of defined benefit plan.
7. Joint arrangement classification and accounting treatment for joint operation
A joint arrangement is an arrangement of which two or more parties have joint control. The Groupclassifies joint arrangements into joint operations and joint ventures.
（1）Joint operations
A joint operation is a joint arrangement whereby the joint operators have rights to the assets, andobligations for the liabilities, relating to the arrangement.The Group recognizes the following items relating to its interest in a joint operation, and account forthem in accordance with relevant accounting standards:
A. its solely-held assets, and its share of any assets held jointly;B. its solely-assumed liabilities, and its share of any liabilities assumed jointly;C. its revenue from the sale of its share of the output arising from the joint operation;D. its share of the revenue from the sale of the output by the joint operation; andE. its solely-incurred expenses, and its share of any expenses incurred jointly.
（2）Joint ventures
A joint venture is a joint arrangement whereby the joint venturers have rights to the net assets of thearrangement.The Group adopts equity method under long-term equity investment in accounting for its investment injoint venture.
8. Cash and cash equivalents
Cash comprises cash in hand and deposits that can be readily withdrawn on demand. Cash equivalentsinclude short-term, highly liquid investments that are readily convertible to known amounts of cash andare subject to an insignificant risk of change in value.
9. Foreign currency transactions and translation of foreign currency financial statements
（1）Foreign currency transactions
Foreign currency transactions are translated to the functional currency of the Group at the spotexchange rates on the dates of the transactions.Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rateat the balance sheet date. The resulting exchange differences between the spot exchange rate onbalance sheet date and the spot exchange rate on initial recognition or on the previous balance sheetdate are recognised in profit or loss. Non-monetary items that are measured at historical cost in foreigncurrencies are translated to Renminbi using the exchange rate at the transaction date. Non-monetary
items that are measured at fair value in foreign currencies are translated using the exchange rate at thedate the fair value is determined. The resulting exchange differences are recognised in profit or loss.
（2）Translation of foreign currency financial statements
When translating the foreign currency financial statements of overseas subsidiaries, assets andliabilities of foreign operation are translated to Renminbi at the spot exchange rate at the balance sheetdate. Equity items, excluding “retained earnings”, are translated to Renminbi at the spot exchange ratesat the transaction dates.Income and expenses of foreign operation are translated to Renminbi at the spot exchange rates at thetransaction dates.Cash flow statement of foreign operation is translated to Renminbi at the spot exchange rates at thecash flow occurence dates. Effect of foreign exchange rate changes on cash and cash equivalents ispresented separately as “Effect of foreign exchange rate changes on cash and cash equivalents” in thecash flow statement.The resulting translation differences are recognised in other comprehensive income in shareholders’equity of balance sheet.The translation differences accumulated in shareholders’ equity with respect to a foreign operation aretransferred to profit or loss in the period when the foreign operation is disposed.
10. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financialliability or an equity instrument of another enterprise.
（1）Recognition and derecognition of financial instruments
A financial asset or a financial liability is recognized when the Group becomes a party to the contractualprovisions of a financial instrument.If one of the following criteria is met, a financial asset is derecognised:
①the contractual rights to the cash flows from the financial asset expire; or②The financial asset was transferred, and the transfer qualifies for derecognition in accordance withcriteria set out below in “Transfer of Financial Assets”.A financial liability (or part of it) is derecognized when its contractual obligation (or part of it) isdischarged or cancelled or expires. If the Group (as a debtor) makes an agreement with the creditor toreplace the current financial liability with assuming a new financial liability, and contractual provisionsare different in substance, the current financial liability is derecognized and a new financial liability isrecognized.
If the financial assets are traded regularly, the financial assets are recognized and derecognized at thetransaction date.
（2）Classification and measurement of financial assets
The Group classifies financial assets as subsequently measured at amortized cost, fair value throughother comprehensive income or fair value through profit or loss at initial recognition on the basis of boththe entity’s business model for managing the financial assets and the contractual cash flowcharacteristics of the financial asset.Financial assets measured at amortized costThe Group classifies the financial assets that meet the following conditions and are not designated asmeasured at fair value through profit or loss as financial assets measured at amortized cost:
? The Group's business model of managing the financial assets is to collect contractual cash flows as
the target;? The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.After the initial recognition, the effective interest rate method is adopted to measure the amortized costof such financial assets. Gains or losses arising from financial assets that are measured at amortizedcost and are not part of any hedging relationship shall be recorded in the current profit or loss when therecognition is terminated, amortized according to the effective interest method or the impairment isrecognized.Financial assets measured at fair value through other comprehensive incomeThe Group classifies the financial assets that simultaneously meet the following conditions and are notspecified as measured at fair value through profit or loss as financial assets measured at fair valuethrough other comprehensive income:
? The Group's business model of managing the financial asset aims at both collecting the contract
cash flow and selling the financial asset.? The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.After the initial recognition, this type of financial assets are subsequently measured at fair value. Theinterest, impairment loss or gain and exchange loss or gain calculated using the effective interest ratemethod are included in the current profit or loss, while other gains or losses are included in othercomprehensive income. When derecognized, the accumulated gains or losses previously recorded inother comprehensive income shall be transferred out from other comprehensive income and recorded inthe current profit or loss.Financial assets measured at fair value through profit or loss
In addition to the above financial assets measured at amortized cost and measured at fair value throughother comprehensive income, the Group classifies all other financial assets as financial assetsmeasured at fair value through profit or loss. At the time of initial recognition, in order to eliminate orsignificantly reduce accounting mismatches, the Group irrevocably designates some financial assetsthat should have been measured at amortized cost or measured at fair value through othercomprehensive income as financial assets measured at fair value through profit or loss.After the initial recognition, this kind of financial asset is subsequently measured at its fair value, and thegains or losses (including interest and dividend income) generated are recorded into the current profit orloss, unless the financial asset is part of the hedging relationship.However, for non-trading equity instrument investment, the Group irrevocably designates it as a financialasset measured at fair value through other comprehensive income at the time of initial recognition. Thedesignation is made on a single investment basis and the relevant investments meet the definition of anequity instrument from issuer's perspective.After the initial recognition, this kind of financial assets are subsequently measured at fair value.Satisfied dividend income is included in the profit or loss, other gains or losses and changes in fair valueare included in other comprehensive income. When derecognized, the accumulated gains or lossespreviously recorded in other comprehensive income are transferred out and recorded in retainedearnings.The business model of managing financial assets refers to how the group manages financial assets togenerate cash flows. The business model determines whether the cash flow from the financial assetsunder management of the Group is derived from the receipt of contractual cash flows, the sale offinancial assets or a combination of both. The Group determines its business model for managingfinancial assets on the basis of objective facts and the specific business objectives for the managementof financial assets determined by key management personnel.The Group assesses the contractual cash flow characteristics of financial assets to determine whetherthe contractual cash flows generated by the relevant financial assets on specified dates are solelypayments of principal and interest on the principal amount outstanding. Principal refers to the fair valueof financial assets at initial recognition. Interest includes consideration for the time value of money, thecredit risk associated with the amount of principal outstanding over a given period, and other basiclending risks and costs, as well as a profit margin. In addition, the Group assesses contractual termsthat may cause a change in the time distribution or amount of the contractual cash flows of financialassets to determine whether they meet the requirements of the above contractual cash flowcharacteristics.Only when the Group changes the business model of managing financial assets, all affected relatedfinancial assets shall be reclassified on the first day of the first reporting period after the change of thebusiness model, otherwise the financial assets shall not be reclassified after the initial recognition.Financial assets are measured at fair value at the time of initial recognition. For financial assetsmeasured at fair value through profit or loss, relevant transaction costs are directly recorded into currentprofit or loss; for other classes of financial assets, the relevant transaction costs are included in theinitial recognition amount. For accounts receivable arising from the sale of products or provision ofservices, which do not contain or do not take into account the material financing component, the Groupis entitled to collect the consideration amount as expected as the initial recognition amount.
（3）Classification and measurement of financial liabilities
At the time of initial recognition, the financial liabilities of the Group are classified as: financial liabilitiesmeasured at fair value through current profit or loss, and financial liabilities measured at amortized cost.For financial liabilities that are not classified as measured at fair value through profit or loss, relevanttransaction costs are included in their initial recognized amounts.Financial liabilities measured at fair value through profit or lossFinancial liabilities measured at fair value through profit or loss include trading financial liabilities andfinancial liabilities designated at the time of initial recognition as measured at fair value through profitor loss. For such financial liabilities, the subsequent measurement shall be made according to the fairvalue, and the gains or losses caused by changes in the fair value as well as the dividends and interestexpenses related to such financial liabilities shall be recorded into current profit or loss.Financial liabilities measured at amortized costFor other financial liabilities, the effective interest rate method shall be adopted, and the subsequentmeasurement shall be made at the amortized cost, and the gains or losses arising from derecognition oramortization shall be recorded into current profit or loss.The distinction between financial liabilities and equity instrumentsFinancial liabilities refer to liabilities that meet one of the following conditions:
① A contractual obligation to deliver cash or other financial assets to other parties.
② a contractual obligation to exchange financial assets or financial liabilities with another party underpotentially adverse conditions.
③ Non-derivative instrument contracts that will be settled with or available to the firm's own equityinstruments in the future, under which the firm will deliver a variable number of its own equityinstruments.
④ a derivative contract in which the firm's own equity instruments are to be settled or used in thefuture, except for a derivative contract in which a fixed number of its own equity instruments are to beexchanged for a fixed amount of cash or other financial assets.An equity instrument is a contract that certifies ownership of the remaining interest in an enterprise'sassets after all liabilities have been deducted.If the Group cannot unconditionally avoid fulfilling a contractual obligation by delivering cash or otherfinancial assets, such contractual obligation meets the definition of a financial liability.If a financial instrument is to be settled with or available to the Group's own equity instrument,consideration needs to be given to whether the Group's own equity instrument used to settle theinstrument is to be used as a substitute for cash or other financial assets or to give the holder of theinstrument the remaining interest in the Issuer's assets after deduction of all liabilities. If the former, the
instrument is a financial liability of the group; If it is the latter, the instrument is an equity instrument ofthe Group.
（4）Fair value of financial instruments
For the determination of fair value of financial assets and financial liabilities, see Note III. 11.
（5）Impairment of financial assets
On the basis of expected credit losses, the Group conducts impairment accounting treatment for thefollowing items and confirms the loss provision:
? Financial assets measured at amortized cost;? Receivables and creditor's rights investments measured at fair value and accounted for in othercomprehensive income;? Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 -Revenue;? Lease receivables;Financial guarantee contract (measured at fair value and its changes included in the current profit andloss, except the financial asset transfer does not meet the conditions for termination of recognition orcontinues to involve the transferred financial asset).Measurement of expected credit lossesThe term "expected credit loss" refers to the weighted average of the credit loss of a financial instrumentweighted by the risk of default. Credit loss refers to the difference between all contractual cash flowsreceivable under the contract and all cash flows expected to be collected by the Group discounted atthe original effective interest rate, that is, the present value of all cash shortages.The Group calculates the probabilistic weighted amount of the present value of the difference betweenthe cash flows receivable under the Contract and the cash flows expected to be received andrecognizes the expected credit loss, taking into account reasonable and evidential informationconcerning past events, current conditions and Itemions of future economic conditions, and weightingthe risk of default.he Group measures the expected credit losses of financial instruments at different stages. If the creditrisk of the financial instrument has not increased significantly since the initial recognition, the Groupshall measure the loss provision in accordance with the expected credit loss in the next 12 months inthe first stage;If the credit risk of a financial instrument has increased significantly since the initialrecognition but no credit impairment has occurred, it is in the second stage, and the Group measuresthe loss provision according to the expected credit loss of the entire life period of the instrument; If creditimpairment has occurred to a financial instrument since its initial recognition, it is in the third stage, andthe Group shall measure the loss provision according to the expected credit loss of the entire life periodof the instrument.
For financial instruments with low credit risk at the balance sheet date, the Group assumes that thecredit risk has not increased significantly since the initial recognition, and measures the loss provision inaccordance with the expected credit loss for the next 12 months.The term "expected credit loss over the entire expected life of a financial instrument" refers to theexpected credit loss resulting from all possible events of default during the entire expected life of afinancial instrument. The expected credit loss within the next 12 months refers to the expected creditloss caused by the default event of the financial instrument that may occur within 12 months after thedate of the balance sheet (or the expected duration of the financial instrument if the expected durationof the financial instrument is less than 12 months) and is part of the expected credit loss over the entirematurity period.When measuring expected credit losses, the Group shall take into account the longest contract period(including the option to renew the contract) for which the enterprise is exposed to credit risk.The Group calculates interest income on the basis of the book balance before impairment provisionsand the effective interest rate for financial instruments in stage I and stage II and with lower credit risk.For financial instruments in the third stage, the interest income is calculated on the basis of theamortized cost of the book balance less the impairment provision and the effective interest rate.For notes receivable, accounts receivable and contract assets, regardless of whether there is a materialfinancing component, the Group always measures its loss provision in accordance with the amountequivalent to the expected credit loss within the whole duration period.When a single financial asset cannot assess the information of expected credit loss at a reasonable cost,the Group divides the notes receivable and accounts receivable into portfolios according to the creditrisk characteristics, calculates the expected credit loss on the basis of the portfolios, and determines theportfolios based on the following:
A. Notes receivable? Notes receivable portfolio 1: banker acceptance notes? Notes receivable portfolio 2: commercial acceptance notesB. Receivables? Accounts receivable portfolio 1: related parties receivable? Accounts Receivable Portfolio 2: Receivable from property sales? Accounts receivable portfolio 3: receivable from other customersC. Contract assets? Contract Portfolio 1: Product Sales? Contract Portfolio 2: Works Construction
For the notes receivable and contract assets divided into portfolios, the Group calculates the expectedcredit loss through default risk exposure and the expected credit loss rate over the entire duration byreferring to the historical credit loss experience, combining the current situation and the forecast of thefuture economic situation.For the receivables divided into portfolios, the Group refers to the historical credit loss experience andcombines the current situation with the forecast of the future economic situation to compile acomparison table between the age of receivables/overdue days and the expected credit loss rate of theentire duration period to calculate the expected credit loss.Other receivablesThe Group divides other receivables into several portfolios according to the credit risk characteristics,and calculates the expected credit loss on the basis of the portfolio. The basis for determining theportfolio is as follows:
? Other Receivables Portfolio 1: Receivables from government agencies? Other Receivables Portfolio 2: Other receivables from employee’s petty cash? Other receivables portfolio 3: Other receivables from the collecting and paying on behalf? Other receivables portfolio 4: Other receivables from other customers? Other receivables portfolio 5: Receivables from related partiesFor other receivables divided into portfolios, the Group calculates the expected credit loss by default riskexposure and the expected credit loss rate over the next 12 months or the entire duration.Debt investment and Other debt investmentFor debt investment and other debt investment, the Group calculates the expected credit loss based onthe default risk exposure and the expected credit loss rate within the next 12 months or the entireduration according to the nature of the investment and the various types of counterparties and riskexposures.An assessment of a significant increase in credit riskBy comparing the risk of default of financial instruments on the balance sheet date with the risk ofdefault on the initial recognition date, the Group determines the relative change of default risk within theexpected duration of financial instruments, so as to evaluate whether the credit risk of financialinstruments has significantly increased since the initial recognition.In determining whether credit risk has increased significantly since the initial recognition, the Groupconsiders reasonable and informed information, including forward-looking information that can beobtained without unnecessary additional cost or effort. Information considered by the Group includes:
? The debtor fails to pay the principal and interest as due under the contract;
? A material deterioration, if any, of the external or internal credit rating of the financial instrument that
has occurred or is expected;? A serious deterioration of the debtor's business results occurred or is expected;? A change in the existing or anticipated technological, market, economic or legal environment whichwill have a material adverse effect on the debtor's ability to repay the Group.? According to the nature of financial instruments, the Group evaluates whether credit risk increases
significantly on the basis of individual financial instruments or a combination of financial
instruments. When assessing on the basis of a portfolio of financial instruments, the Group may
classify financial instruments based on common credit risk characteristics, such as overdue
information and credit risk rating.If overdue for more than 30 days, the Group determines that the credit risk of the financial instrumenthas increased significantly.The Group believes that the financial assets are in default under the following circumstances:
? The Borrower is unlikely to pay its arrears to the Group in full and this assessment does not take
into account any recourse actions taken by the Group, such as liquidating the collateral (if held); or? Financial assets are more than 90 days overdue.A financial asset whose credit has been impairedOn the balance sheet date, the Group evaluates whether credit impairment has occurred in financialassets measured at amortized cost and debt investments measured at fair value and whose changesare included in other comprehensive income. When one or more events which have an adverse effecton the expected future cash flow of a financial asset occur, the financial asset becomes a financial assetwith credit impairment. Evidence of credit impairment of financial assets includes the followingobservable information:
? Major financial difficulties occur to the issuer or the debtor;? A breach of contract by the debtor, such as a default or late payment of interest or principal;? The Group, for economic or contractual considerations relating to the debtor's financial difficulties,
gives concessions that the debtor would not have made under any other circumstances;? The debtor is likely to go bankrupt or undergo other financial restructuring;? The financial difficulties of the issuer or debtor result in the disappearance of an active market for
the financial asset.Presentation of expected credit loss provisionsIn order to reflect the change of the credit risk of financial instruments since the initial recognition, theGroup re-measures the expected credit loss on each balance sheet date, and the increase or rolleback
amount of the loss provision thus formed shall be recorded into the current profit and loss as animpairment loss or profit. For a financial asset measured at amortized cost, the loss provision shalloffset the carrying value of the financial asset as stated in the balance sheet; For the debt investmentmeasured at fair value and its changes included in other comprehensive income, the Group recognizesits loss provision in other comprehensive income and does not deduct the book value of the financialasset.Written-offIf the Group no longer reasonably expects that the contractual cash flow of a financial asset can berecovered in whole or in part, the carrying balance of the financial asset shall be directly written down.Such writedowns constitute termination recognition of the relevant financial assets. This usually occurswhen the Group determines that the debtor does not have assets or sources of income that generatesufficient cash flow to repay the amount to be written down. However, in accordance with the Group'sprocedures for recovering amounts due, the financial assets that have been written down may still beaffected by the execution activities.If a financial asset that has been written down is recovered later, it shall be carried back as animpairment loss and recorded in the profit and loss of the current period.
（6）Transfer of financial assets
Transfer of financial assets is the transfer or delivery of financial assets to another party (the transferee)other than the issuer of financial assets.A financial asset is derecognised if the Group transfers substantially all the risks and rewards ofownership of the financial asset to the transferee. A financial asset is not derecognised if the Groupretains substantially all the risks and rewards of ownership of the financial asset to the transferee.The Group neither transfers nor retains substantially all the risks and rewards of ownership of thefinancial asset, and the accounting treatment is shown as following: if the Group has forgone controlover the financial asset, the financial assets is derecognized, and new assets and liabilities arerecognized. If the Group retains control over the financial asset, the financial asset is recognised to theextent of its continuing involvement in the transferred financial asset, and an associated liability isrecognised.
（7）Offset of financial assets and financial liabilities
Where the Group has the legal right to set off the recognized financial asset and financial liability, and iscurrently able to enforce such legal right, and the Group plans to settle the financial asset on a net basisor simultaneously realize the financial asset and pay off the financial liability, the financial asset andfinancial liability shall be shown in the balance sheet with the offset amount. In addition, financial assetsand financial liabilities shall be separately presented in the balance sheet and shall not be set off againsteach other.
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date.The Group measures related assets or liabilities at fair value assuming the assets or liabilities areexchanged in an orderly transaction in the principal market; in the absence of a principal market,assuming the assets or liabilities are exchanged in an orderly transaction in the most advantageousmarket. Principal market (or the most advantageous market) is the market that the Group can normallyenter into a transaction on measurement date. The Group adopts the presumptions that would be usedby market participants in achieving the maximized economic value of the assets or liabilities.For financial assets or financial liabilities with active markets, the Group uses the quoted prices in activemarkets as their fair value. Otherwise, the Group uses valuation technique to determine their fair value.Fair value measurement of a non-financial asset takes into account market participants’ ability togenerate economic benefits using the asset in its best way or by selling it to another market participantthat would best use the asset.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficientdata are available to measure fair value, maximizing the use of relevant observable inputs, and usingunobservable inputs only if the observable inputs aren’t available or impractical.Fair value level for assets and liabilities measured or disclosed at fair value in the financial statementsare determined according to the significant lowest level input to the entire measurement: Level 1 inputsare quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group canaccess at the measurement date; Level 2 inputs are inputs other than quoted prices included withinLevel 1 that are observable for the assets or liabilities, either directly or indirectly; Level 3 inputs areunobservable inputs for the assets or liabilities.At the balance sheet date, the Group revalues assets and liabilities being measured at fair valuecontinuously in the financial statements to determine whether to change the levels of fair valuemeasurement.
12. Inventories
（1）Classification
The Group's inventory is classified by real estate development and non-real estate development.Inventory is mainly real estate development projects, including development costs and developmentproducts. Development cost include the development costs of development products to be developedand development products under construction. Development products include completed developmentproducts and development products intended for sell but temporarily leased. Non-real estatedevelopment projects include raw materials, finished goods and engineering construction.
（2）Mesurement method of cost of inventories
The group’s inventories are measured at actual cost when acquired. The actual cost of developing aproduct includes land transfer fee, infrastructure expenditure, construction and installation projectexpenditure, borrowing expenses incurred before the completion of the development project and otherrelated expenses in the development process.。When a product is developed and shipped, the actualcost is determined by specific identification method.Raw materials and finished goods are calculated using weighted average method.
（3）Basis for determining the net realisable value and method for provision for obsolete inventoriesNet realisable value is the estimated selling price in the ordinary course of business less the estimatedcosts of completion and the estimated costs necessary to make the sale and relevant taxes. The netrealisable value is measured based on the verified evidences and considerations for the purpose ofholding inventories and the effect of post balance sheet events.Any excess of the cost over the net realisable value of of inventories is recognised as a provision forobsolete inventories, and is recognised in profit or loss. The Group usually recognises provision fordecline in value of inventories by a single inventory item. If the factors caused the value of inventorypreviously written-down have disappeared, the provision for decline in value of inventories previouslymade is reversed.
（4）Inventory count system
The Group maintains a perpetual inventory system
（5）Amortization methods of low-value consumables and packaging materialsLow-value consumables are charged to profit or loss when they are used.
13. Assets held for sale and discontinued operations
(1) Classification and measurement of non-current assets or disposal groups held for saleThe Group classifies a non-current asset or disposal group as held for sale when the carrying amount ofthe non-current asset or disposal group will be recovered through a sale transaction (including anexchange transaction of non-monetary assets with commercial substance) rather than throughcontinuing use.Above mentioned non-current assets do not include investment properties subsequently measured withthe fair value model, biological assets measured at fair value less costs to sell, assets arising fromemployee benefits, financial assets, deferred tax assets and contractual rights under insurancecontracts.The disposal group is a group of assets to be disposed of, by sale or otherwise, together as a whole in asingle transaction, and liabilities directly associated with those assets that will be transferred in the
transaction. In certain circumstances, disposal groups include goodwill acquired in a businesscombination.A non-current asset or disposal group is classified as held for sale when all the following criteria are met:
According to the customary practices of selling such asset or disposal group in similar transactions, thenon-current asset or disposal group is available for immediate sale in its present condition; The sale ishighly probable to occur, that is, the Group has made a resolution on a sale plan and entered into alegally binding purchase agreement with other parties. The sale is expected to be completed within oneyear. The Group that is committed to a sale plan involving loss of control of a subsidiary classifies all theinvestment in that subsidiary as held for sale in its separate financial statements, and classifies all theassets and liabilities of that subsidiary as held for sale in its consolidated financial statements, when theclassification criteria for held for sale are met, regardless of whether the Group retains a non-controllinginterest in its former subsidiary after the sale.Non-current assets or disposal groups held for sale are initially and subsequently measured at the lowerof carrying amount and fair value less costs to sell. Any excess of the carrying amount over the fairvalue less costs to sell is recognised as an impairment loss in profit or loss. The impairment lossrecognised for a disposal group firstly reduces the carrying amount of goodwill allocated to the disposalgroup, and then reduces the carrying amount of other non-current assets pro rata on the basis of thecarrying amount of each non-current asset in the disposal group.The Group recognises a gain for any subsequent increase in fair value less costs to sell of an asset, butnot in excess of the cumulative impairment loss that has been recognised after classified as held forsale. The reduced carrying amount of goodwill is not recovered.The Group does not depreciate (or amortise) a non-current asset while it is classified as held for sale orwhile it is part of a disposal group classified as held for sale. Interest and other expenses attributable tothe liabilities of a disposal group classified as held for sale continue to be recognised. If an investmentor a part of investment in an associate or a joint venture is classified as held for sale, equity method isnot used for the part classified as held for sale, while equity method is used for the rest part (the part notclassified as held for sale) continuely. When the Group does not have material impact on an associateor a joint venture due to the sale transaction, it stops using equity method.The Group measures a non-current asset that ceases to be classified as held for sale at the lower of:
① its carrying amount before the asset or disposal group was classified as held for sale, adjusted forany depreciation, amortisation or impairment that would have been recognised had the asset ordisposal group not been classified as held for sale, and
② its recoverable amount.
(2) Discontinued operations
The Group classifies a component as a discontinued operation either upon disposal of the operation orwhen the operation meets the criteria to be classified as held for sale if it is separately identifiable andsatisfies one of the following conditions:
① It represents a separate major line of business or a separate geographical area of operations;
② It is part of a single co-ordinated plan to dispose of a separate major line of business or a separategeographical area of operations;
③ It is a subsidiary acquired exclusively with a view to resale.
(3) Presentation
The Group presents a non-current asset classified as held for sale and the assets of a disposal groupclassified as held for sale as “Assets held for sale” in balance sheet. The liabilities of a disposal groupclassified as held for sale is presented as “Liabilities held for sale” in balance sheet.The Group presents profit or loss from discontinued operations separately from profit or loss fromcontinuing operations in income statement. Impairment loss and reversal amount and any disposal gainor loss of a non-current asset or disposal group classified as held for sale that does not meet thedefinition of a discontinued operation is included in profit or loss from continuing operations. Any gain orloss from continuing operation of discontinued operations, including impairment loss and reversalamount, and disposal gain or loss is included in profit or loss from discontinued operations.A disposal group which is planned to cease operation rather than for sale, and meets the criteria of apart of discontinued operation, the Group presents it as discontinued operation from the date ofcessation.Where an operation is classified as discontinued in the current period, profit or loss from continuingoperations and profit or loss from discontinued operations are separately presented in the incomestatement for the current period. If the Group ceases to classify a discontinued operation as held forsale, the information previously presented in discontinued operations is reclassified and included inincome from continuing operations for all periods presented.
14. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries and equity investments in jointventures and associates. An associate is an enterprise over which the Group has significant influence.
（1）Determination of initial investment cost
The initial cost of a long-term equity investment acquired through a business combination involvingenterprises under common control is the Group’s share of the carrying amount of the subsidiary’s equityin the consolidated financial statements of the ultimate controlling party at the combination date. For along-term equity investment obtained through a business combination not involving enterprises undercommon control, the initial cost is the combination cost.
A long-term equity investment acquired other than through a business combination: A long-term equityinvestment acquired other than through a business combination is initially recognised at the amount ofcash paid if the Group acquires the investment by cash, or at the fair value of the equity securitiesissued if an investment is acquired by issuing equity securities.
（2）Subsequent measurement and recognition of profit or loss
Long-term equity investments in subsidiaries are accounted for using the cost method. An investment ina joint venture or an associate is accounted for using the equity method for subsequent measurement.For a long-term equity investment which is accounted for using the cost method, Except for cashdividends or profit distributions declared but not yet distributed that have been included in the price orconsideration paid in obtaining the investments, the Group recognises its share of the cash dividends orprofit distributions declared by the investee as investment income for the current period.For a long-term equity investment which is accounted for using the equity method, where the initial costof a long-term equity investment exceeds the Group’s interest in the fair value of the investee’sidentifiable net assets at the date of acquisition, the investment is initially recognised at cost. Where theinitial investment cost is less than the Group’s interest in the fair value of the investee’s identifiable netassets at the date of acquisition, the investment is initially recognised at the investor’s share of the fairvalue of the investee’s identifiable net assets, and the difference is recognised in profit or loss.Under the equity method, the Group recognises its share of the investee’s profit or loss and othercomprehensive income as investment income or losses and other comprehensive income respectively,and adjusts the carrying amount of the investment accordingly. Once the investee declares any cashdividends or profit distributions, the carrying amount of the investment is reduced by the amountattributable to the Group. Changes in the Group’s share of the investee’s owners’ equity, other thanthose arising from the investee’s net profit or loss, other comprehensive income or profit distribution(referred to as “other changes in owners’ equity”), is recognised directly in the Group’s equity, and thecarrying amount of the investment is adjusted accordingly. In calculating its share of the investee’s netprofits or losses, other comprehensive income and other changes in owners’ equity, the Grouprecognises investment income and other comprehensive income after making appropriate adjustmentsto align the accounting policies or accounting periods with those of the Group based on the fair value ofthe investee’s identifiable net assets at the date of acquisition.When the Group becomes capable of exercising joint control or significant influence (but not control)over an investee due to additional investment or other reasons, the Group uses the fair value of thepreviously-held equity investment, together with additional investment cost, as the initial investment costunder the equity method. The difference between the fair value and carrying amount of thepreviously-held equity investment, and the accumulated changes in fair value included in othercomprehensive income, shall be transferred to profit or loss for the current period upon commencementof the equity method.When the Group can no longer exercise control over an investee due to partial disposal of the equityinvestment or other reasons, and the remaining equity after disposal can exercise joint control of orsignificant influence over an investee, the remaining equity is adjusted as using equity method fromacquisition. When the remaining equity can no longer exercise joint control of or significant influenceover an investee, the remaining equity investment shall be accounted for using Accounting Standard for
Business Enterprises No. 22-Recognition and Measurement of Financial Instruments, and the differencebetween the fair value and the carrying amount of the remaining equity investment shall be charged toprofit or loss for the current period at the date of loss of control.When the Group can no longer exercise control over an investee due to new capital injection by otherinvestors, and the Group can exercise joint control of or significant influence over an investee, theGroup recognizes its share of the investee’s new added net assets using new shareholding percentage.The difference between its new share of the investee’s new added net assets and its decreasedshareholding percentage of the original investment is recognized in profit or loss. And the Group adjuststo the equity method using the new shareholding percentage as if it uses the equity method since itobtains the investment.Unrealised profits and losses resulting from transactions between the Group and its associates or jointventures are eliminated to the extent of the Group’s interest in the associates or joint ventures.Unrealised losses resulting from transactions between the Group and its associates or joint ventures areeliminated in the same way as unrealised gains but only to the extent that there is no impairment.
（3）Criteria for determining the existence of joint control or significant influence over an investeeJoint control is the contractually agreed sharing of control of an arrangement, which exists only whendecisions about the relevant activities require the unanimous consent of the parties sharing control.When assessing whether the Group can exercise joint control over an investee, the Group firstconsiders whether no single participant party is in a position to control the investee’s related activitiesunilaterally, and then considers whether strategic decisions relating to the investee’s related activitiesrequire the unanimous consent of all participant parties that sharing of control. All the parties, or a groupof the parties, control the arrangement collectively when they must act together to direct the relevantactivities. When more than one combination of the parties can control an arrangement collectively, jointcontrol does not exist. A party that holds only protective rights does not have joint control of thearrangement.Significant influence is the power to participate in the financial and operating policy decisions of aninvestee but does not have control or joint control over those policies. When determining whether theGroup can exercise significant influence over an investee, the effect of potential voting rights (forexample, warrants, share options and convertible bonds) held by the Group or other parties that arecurrently exercisable or convertible shall be considered.When the Group, directly or indirectly through subsidiaries, owns 20% of the investee (including 20%) ormore but less than 50% of the voting shares, it has significant influence over the investee unless there isclear evidence to show that in this case the Group cannot participate in the production and businessdecisions of the investee, and cannot form a significant influence. When the Group owns less than 20%of the voting shares, generally it does not have significant influence over the investee, unless there isclear evidence to show that in this case the Group can participate in the production and businessdecisions of the investee so as to form a significant influence.
（4）Method of impairment testing and impairment provision
For investments in subsidiaries, associates and joint ventures, refer to Note III. 20 for the Group’smethod of asset impairment.
15. Investment property
Investment properties are properties held either to earn rental income or for capital appreciation or forboth. The Group’s investment properties include leased houses, leased buildings, leased land use rights.In addition, for a vacant building held by the company for operating lease, if the board of directors (or asimilar institution) makes a written resolution expressly indicating that it is used for operating lease andthe intention of holding does not change in the short term, it is also considered as Investment property.Investment properties are initially measured at acquisition cost, and depreciated or amortized using thesame policy as that for fixed assets or intangible assets.For the impairment of the investment properties accounted for using the cost model, refer to Note III.20.The balance of the disposal income from the sale, transfer, scrapping or damage of the investment realestate after deducting its book value and relevant taxes and fees shall be recorded into the current profitand loss.
16. Fixed assets
（1）Recognition of fixed assets
Fixed assets represent the tangible assets held by the Group for use in production of goods, use insupply of services, rental or for administrative purposes with useful lives over one accounting year.Fixed assets are only recognised when its related economic benefits are likely to flow to the Group andits cost can be reliably measured.Fixed asset are initially measured at cost.Subsequent expenses related to fixed assets shall be recorded into cost of fixed assets when its relatedeconomic benefits are likely to flow to the Group and its cost can be reliably measured; the cost of dailyrepairs to fixed assets that do not meet the conditions for subsequent expenditures for capitalization offixed assets, at the time of occurrence, shall be recorded into the profit or loss of the current period orthe cost of the related assets. For the part that is replaced, its carrying amount is derecognized
（2）Depreciation of fixed assets
The cost of a fixed asset is depreciated using the straight-line method since the state of intended use,unless the fixed asset is classified as held for sale. Not considering impairment provision, the estimateduseful lives, residual value rates and depreciation rates of each class of fixed assets are as follows:
| Class | Estimated useful life （years） | Residual value rate % | Depreciation rate % |
| Plant and buildings | 30 | 5 | 3.17 |
| Motor vehicles | 6 | 5 | 15.83 |
| Electronic equipment and others | 5 | 5 | 19.00 |
For impaired fixed assets, cumulative amount of impairment provision is deducted in determinating thedepreciation rate.
(3) For the impairment of the fixed assets, please refer to Note III.20.
(4) Useful lives, estimated residual values and depreciation methods are reviewed at least at eachyear-end.The Group adjusts the useful lives of fixed assets if their expected useful lives are different with theoriginal estimates and adjusts the estimated net residual values if they are different from the originalestimates.
(5) Disposal of fixed asset
When a fixed asset is disposed of, or when it is expected that no economic benefit will be generatedthrough the use or disposal, the fixed asset shall be derecognised. Proceeds from the disposal of fixedassets sold, transferred, scrapped or damaged, net of their carrying amount and associated taxes, shallbe recorded in the profit or loss for the current period.
17. Construction in progress
Construction in progress is recognized based on the actual construction cost, including all expendituresincurred for construction Items, capitalised borrowing costs and any other costs directly attributable tobringing the asset to working condition for its intended use.Construction in progress is transferred to fixed asset when it is ready for its intended use.For the impairment of construction in progress, please refer to Note III.20.
18. Borrowing costs
（1）Capitalisation criteria
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifyingasset shall be capitalised as part of the cost of that asset. Other borrowing costs are expensed in profitor loss as incurred. The capitalisation of borrowing costs shall commence only when the followingcriteria are met:
①capital expenditures have been incurred, including expenditures that have resulted in payment ofcash, transfer of other assets or the assumption of interest-bearing liabilities;②borrowing costs have been incurred;
③the activities that are necessary to prepare the asset for its intended use or sale have commenced.（
）Capitalisation periodThe capitalisation of borrowing costs ceases when the asset under acquisition or construction becomesready for its intended use, the borrowing costs incurred thereafter are recognised in profit or loss for thecurrent period.Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction ofa fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until theacquisition or construction is resumed.
（3）Capitalisation rate of borrowing costs and calculation basis of capitalised amountFor interest expense actually incurred on specific borrowings, the eligible capitalised amount is the netamount of the borrowing costs after deducting any investment income earned before some or all of thefunds are used for expenditures on the qualifying asset. To the extent that the Group borrows fundsgenerally and uses them for the purpose of obtaining a qualifying asset, the Group shall determine theamount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditureson that asset, the capitalisation rate shall be the weighted average of the borrowing costs applicable tothe borrowings of the Group that are outstanding during the period, other than borrowings specifically forthe purpose of obtaining a qualifying asset.In the capitalisation period, exchange differences of specific borrowings in foreign currency shall becapitalised; exchange differences of general borrowings in foreign currency is recognised in profit orloss for the current period.
19. Intangible assets
（1）Valuation, Useful life and Impairment
Intangible assets include software, land use right, and patent rights etc.Intangible assets are stated at actual cost upon acquisition and the useful economic lives aredetermined at the point of acquisition. When the useful life is finite, amortisation method shall reflect thepattern in which the asset’s economic benefits are expected to be realised. If the pattern cannot bedetermined reliably, the straight-line method shall be used. An intangible asset with an indefinite usefullife shall not be amortised.The Group shall review the useful life and amortisation method of an intangible asset with a finite usefullife at least at each year end. Changes of useful life and amortisation method shall be accounted for asa change in accounting estimate.An intangible asset shall be derecognised in profit or loss when it is not expected to generate futureeconomic benefits.
For the impairment of intangible assets, please refer to Note III.20.
20. Impairment of assets
The impairment of long-term equity investments in subsidiaries, associates and joint ventures,investment properties measured using a cost model, fixed assets, construction in progress, productivebiological assets measured using a cost model, intangible assets, goodwill, proven oil and gas miningrights and wells and related facilities, etc. (Excluding inventories, investment property measured using afair value model, deferred tax assets and financial assets) is determined as follows:
At each balance sheet date, the Group determines whether there is any indication of impairment. If anyindication exists, the recoverable amount of the asset is estimated. In addition, the Group estimates therecoverable amounts of goodwill, intangible assets with indefinite useful lives and intangible assets notready for use at each year-end, irrespective of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs to sell and its present valueof expected future cash flows. The recoverable amount is estimated for each individual asset. If it is notpossible to estimate the recoverable amount of each individual asset, the Group determines therecoverable amount for the asset group to which the asset belongs. An asset group is the smallestidentifiable group of assets that generates cash inflows that are largely independent of the cash inflowsfrom other assets or asset groups.An impairment loss is recognised in profit or loss when the recoverable amount of an asset is less thanits carrying amount. A provision for impairment of the asset is recognised accordingly.For goodwill impairment test, the carrying amount of goodwill arising from a business combination isallocated reasonably to the relevant asset group since the acquisition date. If the carrying amount ofgoodwill is unable to be allocated to asset group, the carrying amount of goodwill will be allocated toasset portfolio. Asset group or portfolio of asset group is asset group or portfolio of asset group whichcan be benefit from synergies of a business combination and is not greater than the reportable segmentof the Group.In impairment testing, if impairment indication exists in asset group or portfolio of asset group containingallocated goodwill, impairment test is first conducted for asset group or portfolio of asset group that doesnot contain goodwill, and corresponding recoverable amount is estimated and any impairment loss isrecognized. Then impairment test is conducted for asset group or portfolio of asset group containinggoodwill by comparing its carrying amount and its recoverable amount. If the recoverable amount is lessthan the carrying amount, impairment loss of goodwill is recognized.Once an impairment loss is recognised, it is not reversed in a subsequent period.
21. Long-term deferred expenses
Long-term deferred expenses are recorded at the actual cost, and amortized using a straight-linemethod within the benefit period. For long-term deferred expense that cannot bring benefit in futureperiod, the Group recognized its amortised cost in profit or loss for the current period.
22. Employee benefits
（1）Scope of employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in exchangefor service rendered by employees or for the termination of employment relationship. Employee benefitsinclude short-term employee benefits, post-employment benefits, termination benefits and otherlong-term employee benefits. Benefits provided to the Group’s spouse, children, dependents, familymembers of deceased employees or other beneficiaries are also part of the employee benefits.According to liquidity, employee benefits are presented as “employee benefits payable” and “long-termemployee benefits payable” on the balance sheet.
(2) Short-term employee benefits
In the current period, the Group has accrued for the actual wages, bonuses, medical insurance foremployees based on standard rate, work injury insurance and maternity insurance and other socialinsurance and housing fund incurred and these are recognised as liabilities and corresponding costs inthe profit or loss. If these liabilities are not expected to be fully paid 12 months after the end of thereporting period in which employee renders the service to the Group, and if the financial impact issignificant, these liabilities shall be discounted using the net present value method.
（3）Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans. Definedcontribution plans are post-employment benefit plans under which an enterprise pays fixed contributionsinto a separate fund and will have no future obligations to pay the contributions. Defined benefit plansare post-employment benefit plans other than defined contribution plans.Defined contribution plansDefined contribution plans include primary endowment insurance, unemployment insurance andcorporate pension plan, etc.Besides basic pension insurance, the Group establishes corporate pension plans in accordance with therelated policies of corporate pension regulations. Employees can join the pension plan voluntarily. TheGroup has no other significant commitment of employees’ social security.The Group shall recognise, in the accounting period in which an employee provides service, thecontribution payable to a defined contribution plan as a liability, with a corresponding charge to the profitor loss for the current period or the cost of a relevant asset.Defined benefit plansFor a defined benefit plan, an actuarial valuation is performed by an independent actuary at the annualbalance sheet date to determine the cost of providing benefits using the expected accrued benefit unit
method. The employee compensation cost caused by the benefit plan of the Group includes thefollowing components:
① Service cost, including current service cost, past service cost and settlement profit or loss. Including,the current service cost refers to the increase in the present value of the defined benefit plan obligationcaused by the current provision of services by employees; The past service cost refers to the increaseor decrease in the present value of the defined benefit plan obligations related to the employee servicesof the previous period as a result of the modification of the defined benefit plan.
② Set the net interest on the net liabilities or net assets of the benefit plan, including the interestincome on the plan assets, the interest expense on the defined benefit plan obligations and the intereston the impact of the asset cap.
③ The changes caused by the remeasurement of the net liabilities or net assets of the benefit plan.Unless other accounting standards require or allow the cost of employee benefits to be included in thecost of assets, the Group will include items ① and ② above in the current profit and loss; Item ③is included in other comprehensive income and will not be turned back to profit and loss in subsequentaccounting periods. When the originally defined benefit plan is terminated, the part originally included inother comprehensive income within the scope of equity is carried forward to undistributed profit.
（4）Termination benefits
The Group provides for termination benefits to the employees and shall recognise an employee benefitsliability for termination benefits, with a corresponding charge to the profit or loss for the current period, atthe earlier of the following dates: When the Group cannot unilaterally withdraw the offer of thetermination benefits because of an employment termination plan or a redundancy proposal; or when theGroup recognises the costs or expenses relating to a restructuring that involves the payment of thetermination benefits.For employees who implement the internal retirement plan, the economic compensation before theofficial retirement date belongs to dismiss welfare. During the normal retirement date when theemployees stop providing services, the salary and social insurance premium to be paid by theemployees who retire within the Group shall be included in the profit and loss of the current period in alump sum. Economic compensation after the official retirement date (such as the normal pension) shallbe treated as after-service benefits.
（5）Other long-term employee benefits
Other long-term employee benefits provided by the Group to the employees satisfied the conditions forclassifying as a defined contribution plan; those benefits shall be accounted for in accordance with theabove requirements relating to defined contribution plan. When the benefits satisfied a defined benefitplan, it shall be accounted for in accordance with the above requirements relating to defined benefit plan,but the movement of net liabilities or assets in re-measurement of defined defined benefit plan shall berecorded in profit or loss for the current period or cost of relevant assets.
23. Provisions
A provision is recognised for an obligation related to a contingency if all the following conditions aresatisfied:
(1) the Group has a present obligation;
(2) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) the amount of the obligation can be estimated reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the relatedpresent obligation. Factors pertaining to a contingency such as the risks, uncertainties and time value ofmoney are taken into account as a whole in reaching the best estimate.Where the effect of the timevalue of money is material, provisions are determined by discounting the expected future cash flows.The Group reviews the carrying amount of a provision at the balance sheet date and adjusts thecarrying amount to the current best estimate.If all or part of the expenditure necessary for settling the provision is expected to be compensated by athird party, the amount of compensation is separately recognized as an asset when it is basically certainto be received. The recognized compensation amount shall not exceed the carrying amount of theprovision.
24. Revenue
(1) General principles
The Group has fulfilled its contractual obligation to recognize revenue when the customer acquirescontrol of the relevant goods or services.If the contract contains two or more performance obligations, the Group shall, on the commencementdate of the contract, allocate the transaction price to each single performance obligation according tothe relative proportion of the individual selling price of the commodity or service committed by eachsingle performance obligation, and measure the income according to the transaction price allocated toeach single performance obligation.If one of the following conditions is satisfied, the Group shall perform its obligations within a certainperiod of time; otherwise, it belongs to the performance obligation at a certain point:
① The Client obtains and consumes the economic benefits brought by the Group's performance at thesame time of the Group's performance.
② The customer can control the goods under construction during the performance of the Group.
③ The commodities produced by the Group during the performance of the Contract have irreplaceablepurposes, and the Group has the right to collect payment for the accumulated part of the performancecompleted so far during the whole period of the Contract.
For the performance obligations performed within a certain period of time, the Group shall recognize theincome in accordance with the performance progress within that period.If the performance progresscannot be reasonably determined and the Group is expected to be compensated for the costs alreadyincurred, the revenue shall be recognized according to the amount of the costs already incurred until theperformance progress can be reasonably determined.For performance obligations performed at a certain point, the Group recognizes revenue at the pointwhen the customer acquires control of the relevant goods or services.In determining whether acustomer has acquired control of goods or services, the Group will take into account the followingindications:
① The Group has a current right to receive payment for the goods or services, that is, the Customerhas a current obligation to pay for the goods.
② The Group has transferred the legal ownership of the commodity to the customer, that is, thecustomer has the legal ownership of the commodity.
③ The Group has transferred the goods in kind to the customer, that is, the customer has physicalpossession of the goods.
(4) The Group has transferred the main risks and rewards on the ownership of the commodity to thecustomer, that is, the customer has acquired the main risks and rewards on the ownership of thecommodity.
⑤ The customer has accepted the goods or services.
⑥ Other indications that the customer has acquired control of the product.The Group's right to receive consideration for goods or services transferred to a customer (and this rightdepends on other factors other than the passage of time) is a contract asset which is subject toimpairment on the basis of expected credit losses (see Note III, 10 (5)). The Group's right, unconditional(depending only on the passage of time) to collect consideration from customers is shown as areceivable. The Group's obligation to transfer goods or services to customers for which it has receivedor receivable consideration is a contractual liability.The contract assets and contract liabilities under the same contract shall be presented on a net basis. Ifthe net amount is the debit balance, it shall be presented under the item of "Contract Assets" or "OtherNon-current Assets" according to its liquidity; If the net amount is a credit balance, it shall be shownunder the item "Contract Liabilities" or "Other Non-current Liabilities" according to its liquidity.
（2）Specific methods
The specific methods of the Group's revenue recognition are as follows:
① The method for recognizing revenue from property sales
(1) the sale contract has been signed and filed with housing construction bureau; (2) the propertydevelopment is completed and pass the acceptance; (3) For Lump-sum payment, revenue is recognized
by the group when the consideration is fully received. For instalment payment, revenue is recognizedwhen the first installment has been received and the bank mortgage approval procedures have beencompleted. (4) completed the procedures for entering the partnership in accordance with therequirements stipulated in sale contract.
② The method for recognizing revenue from property services provided
According to property service contract, agreed service period, area served and unit price, revenue isrecognized evenly within agreed service period.
③ The method for recognizing revenue from construction activities
As the customer can control the goods under construction during the performance of the Group, thegroup shall recognize the income in accordance with the performance progress within a certain period oftime (except for performance progress cannot be reasonably determined). The group shall determinethe performance progress based on cost incurred. If the performance progress cannot be reasonablydetermined and the Group is expected to be compensated for the costs already incurred, the revenueshall be recognized according to the amount of the costs already incurred until the performanceprogress can be reasonably determined. If the contract costs cannot be recovered, the cost should berecognized immediately in current period when incurred. When the estimated total cost of the contract islikely to exceed the total revenue of the contract, the cost of the main business and the estimatedliabilities shall be recognized in accordance with the unexecuted loss contract. The loss shall berecognized as current cost and put into provisions.
④ The method for recognizing revenue from other income
Revenue from other income include income from hotel operations, etc. Rooms revenue from hoteloperations shall be recognized in accordance with the performance progress within agreed period, asthe client obtains and consumes the economic benefits brought by the Group’s performance and thegroup’s performance obligations has performed at a certain period of time. For other income, the grouprecognizes revenue at the point when the customer acquires control of the relevant goods or services,which indicate the group has a right to receive payment for services or goods provided in accordancewith the relevant contract.
25. Contract costs
Contract costs include incremental costs incurred to obtain the contract and contract performance costs.Incremental costs incurred to obtain a contract are costs (such as sales commissions, etc.) that theGroup would not have incurred without the contract. If the cost is expected to be recovered, the Groupwill recognize it as an asset as the contract acquisition cost. Other expenses incurred by the Group forthe acquisition of contracts, other than the incremental costs expected to be recovered, are recordedinto the profit and loss of the current period when incurred.
If the cost incurred for the performance of the contract does not fall within the scope of accountingstandards for inventories and other enterprises and meets the following conditions at the same time, theGroup will recognize it as an asset as the contract performance cost:
① The costs are directly related to a current or prospective contract and include direct labor, directmaterials, overhead (or similar), costs that are expressly borne by the customer and other costs incurredsolely in connection with the contract;
② This cost increases the Group's future resources for fulfilling its performance obligations;
③ The cost is expected to be recovered.
Assets with contract acquisition cost recognition and assets with contract performance cost recognition(hereinafter referred to as "assets related to contract cost") shall be amortized on the same basis asincome recognition of goods or services related to such assets and shall be recorded into current profitand loss. If the amortization period does not exceed one year, it will be recorded in the current profit andloss at the time of occurrence.When the book value of the assets related to the contract cost is higher than the difference between thefollowing two items, the Group shall make provision for impairment of the excess part and recognize itas impairment loss of the assets:
① the remaining consideration that the Group is expected to obtain as a result of the transfer of thegoods or services related to the asset;
② Estimate the costs to be incurred for the transfer of the relevant goods or services.The contract performance cost recognized as an asset shall be shown in the "Inventory" item with anamortization period of no more than one year or one normal operating cycle at the time of initialrecognition, while the amortization period exceeding one year or one normal operating cycle at the timeof initial recognition shall be shown in the item of "Other Non-current Assets".The contract acquisition cost recognized as an asset shall be shown in the item of "Other CurrentAssets" with an amortization period of less than one year or one normal operating cycle at the time ofinitial recognition, and shall be shown in the item of "Other Non-current Assets" with an amortizationperiod of more than one year or one normal operating cycle at the time of initial recognition.
26. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be receivedand that the Group will comply with the conditions attaching to the grant.If a government grant is in the form of a transfer of a monetary asset, it is measured at the amountreceived or receivable. If a government grant is in the form of a transfer of a non-monetary asset, it ismeasured at fair value. If fair value cannot be reliably determined, it is measured at a nominal amount ofCNY 1.
Government grants related to assets are grants whose primary condition is that the Group qualifying forthem should purchase, construct or otherwise acquire long-term assets. Government grants related toincome are grants other than those related to assets.For government grants with unspecified purpose, the amount of grants used to form a long-term asset isregarded as government grants related to an asset, the remaining amount of grants is regarded asgovernment grants related to income. If it is not possible to distinguish, the amount of grants is treatedas government grants related to income.A government grant related to an asset is offset against the carrying amount of the related asset,or.recognised as deferred income and amortised to profit or loss over the useful life of the related asseton a reasonable and systematic manner. A grant that compensates the Group for expenses or lossesalready incurred is recognised in profit or loss or offset against related expenses directly. A grant thatcompensates the Group for expenses or losses to be incurred in the future is recognised as deferredincome, and included in profit or loss or offset against related expenses in the periods in which theexpenses or losses are recognised. The Group applies a consistent approach to same or similargovernment grant transactions.A grant related to ordinary activities is recognised as other income or offset against related expensesbased on the economic substance. A grant not related to ordinary activities is recognised asnon-operating income.When a recognised government grant is reversed, carrying amout of the related asset is adjusted if thegrant was initially recognized as offset against the carrying amount of the related asset. If there isbalance of relevant deferred income, it is offset against the carrying amount of relevant deferred income.Any excess of the reversal to the carrying amount of deferred income is recognised in profit or loss forthe current period. For other circumstances, reversal is directly recognized in profit or loss for thecurrent period.
27. Deferred tax assets and Deferred tax liabilities
Income tax comprises of current tax and deferred tax. Current tax and deferred tax are recognised inprofit or loss except to the extent that they relate to transactions or items recognised directly in equityand goodwill arising from a business combination.Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary differencesrespectively, being the differences between the carrying amounts of assets and liabilities for financialreporting purposes and their tax bases.All the taxable temporary differences are recognized as deferred tax liabilities except for those incurredin the following transactions:
(1) initial recognition of goodwill, or assets or liabilities in a transaction that is not a businesscombination and that affects neither accounting profit nor taxable profit (or deductible loss);
(2) taxable temporary differences associated with investments in subsidiaries, associates and jointventures, and the Group is able to control the timing of the reversal of the temporary difference andit is probable that the temporary difference will not reverse in the foreseeable future.
The Group recognises a deferred tax asset for deductible temporary differences, deductible losses andtax credits carried forward to subsequent periods, to the extent that it is probable that future taxableprofits will be available against which deductible temporary differences, deductible losses and taxcredits can be utilised, except for those incurred in the following transactions:
(1) a transaction that is not a business combination and that affects neither accounting profit nor
taxable profit (or deductible loss);
(2) deductible temporary differences associated with investments in subsidiaries, associates and jointventures, the corresponding deferred tax asset is recognized when both of the following conditionsare satisfied: it is probable that the temporary difference will reverse in the foreseeable future; andit is probable that taxable profits will be available in the future against which the temporarydifference can be utilized.At the balance sheet date, deferred tax is measured based on the tax consequences that would followfrom the expected manner of recovery or settlement of the carrying amount of the assets and liabilities,using tax rates enacted at the reporting date that are expected to be applied in the period when theasset is recovered or the liability is settled.The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is reduced tothe extent that it is no longer probable that the related tax benefits will be utilised. Such reduction isreversed to the extent that it becomes probable that sufficient taxable profits will be available.
28. Leases
(1) Identification of leases
On the commencement date of the contract, the Group, as lessee or lessor, assesses whether thecustomer under the contract is entitled to receive almost all the economic benefits arising from the useof the identified assets during the use period and to direct the use of the identified assets during the useperiod.The Group considers the contract to be a lease or an inclusive lease if one of the parties to thecontract relinquishes control over the use of one or more identified assets for a certain period of time inexchange for consideration.
(2) The Group acts as the lessee
On the commencement date of the lease, the Group recognizes the right-of-use assets and leaseliabilities for all leases, except for simplified short-term leases and leases of low value assets.For the accounting policy of the Right-of-use assets, see Note III.29.Lease liabilities are initially measured at the present value of the outstanding lease payments at thecommencement date of the lease at the embedded interest rate on the lease. The rental paymentamount includes: fixed payment amount and substantial fixed payment amount. If there is leaseincentive amount, the relevant amount of lease incentive amount will be deducted. Variable leasepayments depending on an index or ratio; The exercise price of the Option provided that the Lessee isreasonably certain that the Option will be exercised; The amount to be paid to exercise the option to
terminate the lease if the lease term reflects that the lessee will exercise the option to terminate thelease; And the amount expected to be payable based on the residual value of the security provided bythe Lessee. The interest expense of the lease liability in each period of the lease term shall becalculated in accordance with the fixed periodic interest rate and recorded into the profit and loss of thecurrent period. The variable lease payment not included in the measurement of lease liabilities shall berecorded into the current profit and loss when actually incurred.Short term leaseShort-term tenancy is a tenancy for a period of not more than 12 months at the commencement date ofthe tenancy, except for tenancies that include a purchase option.The Group will record the lease payment amount of short-term lease into the cost of relevant assets orcurrent profit and loss in each period of the lease term according to the straight-line method [or othersystemically reasonable method].For short-term lease, the Group chooses to adopt the above simplified treatment method for the itemsthat meet the short-term lease conditions in the following asset types according to the categories ofleased assets.Low value asset leasingLeasing of low-value assets refers to the leasing of a single leased asset whose value is less than CNY100,000.00 when it is a brand-new asset.The Group will include the lease payment of the low-value asset lease into the cost of the relevant assetor current profit and loss in each period of the lease term according to the straight-line method.For low-value asset leases, the Group chooses to adopt the above simplified treatment methodaccording to the specific situation of each lease.
(3) The Group acts as the lessor
When the Group acts as the lessor, the leases that substantially transfer all the risks and rewardsrelated to the ownership of the assets are recognized as financial leases, and other leases other thanfinancial leases are recognized as operating leases.Finance leaseIn the case of financial leasing, the Group takes the net lease investment as the book value of thereceivable finance lease funds at the beginning of the lease period, and the net lease investment is thesum of the unguaranteed residual value and the present value of the unreceived lease income at thebeginning of the lease period discounted at the embodied interest rate.The Group, as the lessor,calculates and recognizes interest income for each period of the lease term at a fixed periodic rate.Thevariable lease payment obtained by the Group as the lessor and not included in the measurement of thenet lease investment shall be recorded into the current profit and loss when actually incurred.The termination recognition and impairment of financial lease receivable shall be accounted for inaccordance with the provisions of the Accounting Standards for Business Enterprises No. 22 -
Recognition and Measurement of Financial Instruments and the Accounting Standards for BusinessEnterprises No. 23 - Transfer of Financial Assets.Operating leaseFor the rent in the operating lease, the Group shall recognize the profits and losses of the current periodin accordance with the straight-line method during each period of the lease term. The initial directexpenses incurred in connection with the operating lease shall be capitalized, allocated on the samebasis as the recognition of rental income during the lease term and recorded into the current profit andloss in installments. The variable lease payments obtained in connection with the operating lease andnot included in the lease receipts shall be recorded into the current profit and loss when actuallyincurred.Change of LeaseIn addition to the simplified method for contract changes directly caused by COVID-19 epidemic, if thereis a change in the operating lease, the group shall, as of the effective date of the change, treat it as anew lease, the amount received in advance or in respect of the lease receivable relating to the leaseprior to the change shall be deemed to be the amount received for the new lease.In addition to the simplified method of contract changes directly caused by COVID-19 epidemic, if thefinancial lease is changed and the following conditions are met at the same time, the group accounts forthe change as a separate lease: 1 the change extends the scope of the lease by adding the right to useone or more leased assets; 2 the increased consideration is equivalent to the amount of the individualprice of the extended portion of the lease, adjusted in accordance with the circumstances of thecontract.Where a change in a financial lease is not accounted for as a separate lease, the group shall treat thechanged lease as follows: 1 if the change becomes effective on the lease commencement date, if thelease will be classified as an operating lease, the group will treat it as a new lease from the effectivedate of the lease change, the book value of the leased asset shall be the net investment in the leaseprior to the effective date of the lease change. 2 if the change takes effect on the effective date of thelease, the lease will be classified as a financial lease, the accounting treatment of the group is inaccordance with the provisions of the "Accounting Standards for enterprises No. 22-recognition andmeasurement of financial instruments" concerning modification or renegotiation of contracts.
(4) Rental concession caused by COVID-19 epidemic
For rent concessions such as rent remission or deferred payment reached between the Group and thelessee or lessor on existing lease contracts directly caused by the COVID-19 epidemic, and meeting thefollowing conditions, the Group adopts a simplified method for [houses and buildings] and othercategories of leases:
(1) The lease consideration after the concession is reduced or basically unchanged compared with thatbefore the concession, in which, the lease consideration is not discounted or discounted at the discountrate before the concession;
② The concession is only for the lease payment payable before June 30, 2021;
③ There are no significant changes in other terms and conditions of the lease after comprehensiveconsideration of qualitative and quantitative factors.The Group does not evaluate whether a lease change has occurred.When the Group is the lessee, the Group will continue to calculate the interest expense of the leaseliability at the same discount rate as before the concession and record it into the current profit and loss,and continue to carry out depreciation and other subsequent measurements on the Right-of-use assetsin the same way as before the concession. In case of rent remission, the Group will take the remittedrent as the variable lease payment amount. When the original rent payment obligation is terminated byreaching a concession agreement, the Group will deduct the relevant asset cost or expense by theamount discounted at the undiscounted or pre-concession discount rate, and adjust the lease liabilityaccordingly. In case of deferred rent payment, the Group shall write off the lease liabilities confirmedearlier when actually paying the rent.For short-term leases with simplified treatment and leases oflow-value assets, the Group continues to record the rental under the original contract as the cost orexpense of the relevant assets in the same manner as before the concession. In case of rent remissionor reduction, the Group shall treat the remission or reduction of rent as variable lease payment and writeoff the cost or expense of relevant assets during the remission or reduction period. If the rent is delayedin payment, the Group shall recognize the rent payable during the original payment period as thepayable amount, and deduct the payable amount confirmed earlier when the actual payment is made.When the Group acts as the lessor, for the operating lease, the Group continues to recognize theoriginal contract rent as lease income in the same way as before the concession. In case of rentremission or reduction, the Group shall treat the remission or reduction as variable lease payment anddeduct the lease income during the remission or reduction period. If the rent collection is delayed, theGroup will recognize the rent collected as receivable during the original collection period, and deduct thereceivable confirmed in the earlier period when the rent is actually received. For finance leases, theGroup continues to calculate interest and recognize it as lease income at the same discount rate asbefore the concession. In case of rent reduction or reduction, the Group will take the rent reduced orreduced as the variable lease payment amount. When the right to charge the original rent is waived byreaching a concession agreement, the Group will deduct the original confirmed lease income by theamount of discount before the concession or at the discount rate before the concession, and record theinsufficient write-off into investment income, and adjust the receivable finance lease funds accordingly.In case of delayed payment of rent, the Group shall write off the finance lease receivable confirmed inthe earlier period when it actually receives the rent.
29. Right-of-use assets
(1) Conditions for the confirmation of the right-of-use assets
The Group's right-of-use assets refer to the Group's right to use the leased assets during the lease termas the lessee.On the beginning date of the lease period, the right-of-use assets shall be initially measured at cost. Thecost includes: the initial measurement amount of the lease liability; For the amount of lease paymentpaid on or before the commencement date of the lease term, if there is a lease incentive, the relevantamount of lease incentive already enjoyed will be deducted; Initial direct expenses incurred by the
Group as the lessee; The costs which the Group, as the Lessee, expects to incur in dismantling andremoving the Leased Assets, restoring the premises on which the Leased Assets are located orrestoring the Leased Assets to the state agreed in the Lease Terms. The Group, as the lessee, shallconfirm and measure the costs of demolition and restoration in accordance with the AccountingStandards for Business Enterprises No. 13 - Contingencies. Subsequent adjustments are made for anyremeasurement of lease liabilities.
(2) Depreciation method of the right-of-use assets
The Group uses the straight line method of depreciation. Where the Group, as the lessee, canreasonably determine that it obtains the ownership of the leased assets upon expiration of the leaseterm, depreciation shall be accrued over the remaining service life of the leased assets. Where it isimpossible to reasonably determine that the ownership of the leased asset can be acquired at theexpiration of the lease term, depreciation shall be accrued in the shorter period between the lease termand the remaining useful life of the leased asset.
(3) See Note III.20 for the impairment test method of the right-of-use assets and the provision forimpairment.
30. Maintenance Fund
When the Group collects the maintenance fund from the owners according to a certain proportion of thesales amount of commercial houses, it shall be included in other payables for accounting; When thecollected maintenance funds are handed over to the land and housing administrative departments inaccordance with the regulations, the maintenance funds collected on behalf of them shall be reduced.
31. Quality Deposit
The Group shall keep the quality deposit in proportion to the payment period stipulated in the contract ofcivil engineering and installation engineering, and deduct it from the civil engineering and installationItem payment, which shall be classified as other payables. The maintenance expenses incurred due toquality during the warranty period shall be directly charged under this item and liquidated after thewarranty period.
32. Accounting judgments and estimates
The Group conducts an ongoing evaluation of the significant accounting estimates and key assumptionsused in the light of historical experience and other factors, including reasonable expectations of futureevents. Important accounting estimates and key assumptions that are likely to result in the risk of amaterial adjustment in the carrying value of assets and liabilities during the next fiscal year are set outbelow:
Classification of financial assetsThe Group's major judgments in determining the classification of financial assets include the analysis ofbusiness models and contractual cash flow characteristics.
The Group determines the business model for the management of financial assets at the level of itsfinancial portfolio, taking into account factors such as the way in which the performance of financialassets is evaluated and reported to key managers, the risks affecting the performance of financialassets and their management methods, and the way in which managers of related businesses areremunerated.When evaluating whether the contractual cash flow of financial assets is consistent with the basiclending arrangement, the Group has the following main judgments: whether the time distribution oramount of the principal in the duration period may change due to reasons such as prepayment; Doesinterest include only the time value of money, credit risk, other fundamental borrowing risks, andconsideration for costs and profits? For example, does the prepayment amount only reflect theoutstanding principal and interest based on the outstanding principal and reasonable compensation forearly termination of the contract.Measurement of expected credit losses in accounts receivableThe Group calculates the expected credit loss of accounts receivable through the default risk exposureof accounts receivable and the expected credit loss rate, and determines the expected credit loss ratebased on the default probability and the default loss rate. In determining the expected credit loss rate,the Group uses data such as internal historical credit loss experience, and adjusts the historical data incombination with the current situation and forward-looking information. When consideringforward-looking information, the indicators used by the Group include the risk of an economic downturn,changes in the external market environment, the technological environment and customer conditions.The Group regularly monitors and reviews assumptions relating to the calculation of expected creditlosses.Deferred tax assetsDeferred tax assets should be recognized for all unutilized tax losses to the extent that there is likely tobe sufficient taxable profit to offset the loss. This requires management to use a great deal of judgmentto estimate when and how much future taxable profits will occur, in combination with tax planningstrategies, to determine the amount of deferred tax assets that should be recognized.The provision of land appreciation taxThe Group is subject to land appreciation tax (“LAT”). The accrual of LAT is subject to management’sestimation which is made based on its understanding of the requirements of relevant tax laws andregulations. However, the actual LAT is levied by tax authorities according to the interpretation of the taxrules. The group is not stepping on formulating the final tax plan with relevant tax authorities, hence thefinal tax outcome could be different from the amount that was initially recorded, and these differenceswill have an impact on tax provision in current period.Determination of fair value of unlisted equity investments
The fair value of an unlisted equity investment is the estimated future cash flows discounted at thecurrent discount rate for Items with similar terms and risk characteristics. This valuation requires theGroup to estimate expected future cash flows and the discount rate and is therefore subject touncertainty. In limited circumstances, if the information used to determine the fair value is insufficient, orif the possible estimates of the fair value are spread over a wide range and the cost represents the bestestimate of the fair value within that range, the cost may represent the appropriate estimate of the fairvalue within that range.
33. Changes in significant accounting policies and accounting estimates
(1) Significant changes in accounting policies
① New leasing standard
The Ministry of Finance issued the Accounting Standards for Business Enterprises No. 21 - Leasing(revised) in 2018, which requires companies listed both domestically and abroad and those listedoverseas to prepare their financial statements using IFRS or Accounting Standards for BusinessEnterprises, effective from January 1, 2019. Other entities can adopt it from January 1, 2021. The Groupdecided to implement the new leasing standard from January 1, 2021, and the relevant contents ofaccounting policies were adjusted. Please refer to Note III.28 and 29 for the accounting policy after thechange.For the existing contracts prior to the first implementation date, the Group chooses not to re-evaluatewhether they are leases or include leases on the first execution date.The definition of lease in the new leasing standard does not have a significant impact on the scope oflease contracts.As lesseeThe new leasing standard requires lessees to recognize right-of-use assets and lease liabilities for allleases, with the exception of simplified short-term leases and leases of low-value assets, and torecognize depreciation and interest expenses respectively.The new leasing standard allows lessees to choose one of the following methods of connectionaccounting:
? In accordance with the provisions of the Accounting Standards for Business Enterprises No. 28 -Changes in Accounting Policies, Accounting Estimates and Errors Correction, retrospectiveadjustment method is adopted.? According to the cumulative impact of the first implementation of the standard, the amount ofretained earnings and other relevant items in the financial statements at the beginning of the yearof the first implementation of this standard will be adjusted, without adjusting the information forcomparable periods.As lessor
According to the new lease criterion, the group without on the cohesion as the lessor's lease inaccordance with the provisions of adjustment, but the need to implement new leasing criterion for thefirst time since carried out in accordance with the new lease standard accounting treatment.
(2) Changes in significant accounting estimates
During reporting period, there is no changes in significant accounting estimate.IV. Taxation
1. Main types of taxes and corresponding tax rates
| Tax Type | Tax Basis | Tax Rate% |
| VAT | Taxable income | 9/6/5/3 |
| Land appreciation tax | It shall be levied on the basis of the added value of the real estate transferred | Four progressive rates of excess rate: 30,40,50, 60 |
| Property tax | 70% of the original value of properties | 1.2 |
| City maintenance and construction tax | Turnover tax payable | 7 |
| Education surcharge | Turnover tax payable | 3 |
| Local education surcharge | Turnover tax payable | 2 |
| Corporate income tax | Taxable profits | 25/ 16.5 |
Explanation for the VAT rate of different business activities:
With regards to revenue from property development, property management and construction activities,
from May 1
st, 2016, the group’s taxable items and tax rates are shown in the following table, which in
accordance with the relevant regulations of《Notice on Comprehensively Promoting the Trial of
Replacing Business Tax with Value-Added Tax》(No. 36 of CaiKuai [2016]):
| Taxable income | Means to calculate Tax | Tax Rate% |
| Revenue from property sales | Simplified Tax Method | 5 |
| Revenue from construction | Simplified Tax Method | 9/ 3 |
| Rental income | Simplified Tax Method | 5 |
| Revenue from property management | General Tax Method | 6 |
Explanation of corporate income tax rates for different taxpayers:
The corporate income tax rate for companies registered in mainland China is 25%, while the corporate
profits tax rate for companies registered in Hong Kong is 16.5%.
2.Tax preferential treatments and approval documents
Subsidiaries of the Group, Shenzhen Huazhan Construction Supervision Co., Ltd. and Shantou Special
Economic Zone Xiangshan Real Estate Development Co., Ltd. are applicable to the preferential tax rate
of 20% for small and low-profit enterprises.
V. Notes to the consolidated financial statements
1. Cash at bank and Cash Equivalent
| Item | 2021.12.31 | 2020.12.31 |
| Cash in hand | 12,082.00 | 61,121.83 |
| Deposits with banks | 316,834,778.45 | 1,026,042,804.99 |
| Other monetary funds | 247,511,964.18 | 1,661,361,143.19 |
| Total | 564,358,824.63 | 2,687,465,070.01 |
| Including: Total overseas deposits | 5,970,125.18 | 6,699,719.34 |
At the end of year 2021, there were CNY9,174,439.78 of restricted funds in the bank deposits, of whichCNY3,500,000.00 were the funds frozen by the lawsuit and CNY5,674,439.78 were the funds for theconstruction of public facilities in and around the city of Longgang district.At the end of year 2021, the balance of other monetary funds is seven-day notice deposit, includingprincipal of CNY 240,100,000.00 and interest of CNY 7,411,964.18.
2. Trading financial assets
| Item | 2021.12.31 | 2020.12.31 |
| Financial Fund | 514,024,710.91 | -- |
3. Notes receivable
| Types of notes | 2021.12.31 | 2020.12.31 | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |
| Banker acceptance notes | -- | -- | -- | -- | -- | -- |
| Commercial acceptance notes | 6,394,766.22 | 2,864,228.85 | 3,530,537.37 | 37,303,205.62 | 1,865,160.28 | 35,438,045.34 |
| Total | 6,394,766.22 | 2,864,228.85 | 3,530,537.37 | 37,303,205.62 | 1,865,160.28 | 35,438,045.34 |
Note:
(1) There is no notes receivable pledged by the Group at the end of the period
(2) Outstanding endorsed or discounted notes that have not matured at the end of the year
| Types | Derecognized Amount at the end of the period | Amount that is not derecognized at the end of the period |
| Commercial acceptance notes | -- | 754,600.00 |
(3) Notes receivable transferred to accounts receivable by the Group due to the drawer's
non-performance at the end of the period
| Types | Amount transferred to accounts receivable at the end of the period |
| Commercial acceptance notes | 7,163,029.79 |
(4) Classified by bad debt provision method
| Types | 2021.12.31 | |||||||||||
| Book balance | Bad debt provision | Book balance | ||||||||||
| Amount | Percentage (%) | Amount | Expected credit loss rate (%) | |||||||||
| Bad debt provisions made on an individual basis | 4,626,346.44 | 72.35 | 2,775,807.86 | 60.00 | 1,850,538.58 | |||||||
| Bad debt provisions made on a combination basis | 1,768,419.78 | 27.65 | 88,420.99 | 5.00 | 1,679,998.79 | |||||||
| Including: | ||||||||||||
| Banker acceptance notes | -- | -- | -- | -- | -- | |||||||
| Commercial acceptance notes | 1,768,419.78 | 27.65 | 88,420.99 | 5.00 | 1,679,998.79 | |||||||
| Total | 6,394,766.22 | 100.00 | 2,864,228.85 | 44.79 | 3,530,537.37 | |||||||
| Types | 2020.12.31 | |||||||||||
| Book balance | Bad debt provision | Book balance | ||||||||||
| Amount | Percentage (%) | Amount | Expected credit loss rate (%) | |||||||||
| Bad debt provisions made on an individual basis | -- | -- | -- | -- | -- | |||||||
| Bad debt provisions made on a combination basis | -- | -- | -- | -- | -- | |||||||
| Including: | ||||||||||||
| Banker acceptance notes | -- | -- | -- | -- | -- | |||||||
| Commercial acceptance notes | 37,303,205.62 | 100.00 | 1,865,160.28 | 5.00 | 35,438,045.34 | |||||||
| Total | 37,303,205.62 | 100.00 | 1,865,160.28 | 5.00 | 35,438,045.34 | |||||||
Note:
Bad debt provision made on an individual basis:
| Item | 2021.12.31 | |||
| Book balance | Bad debt provision | Expected credit loss rate (%) | Reason | |
| Shenzhen Hongteng Investment Management Co., Ltd. | 4,626,346.44 | 2,775,807.86 | 60.00 | Low recoverability is expected |
Bad debt provision made on a combination basis:
Combined withdrawal item: commercial acceptance notes
| Item | 2021.12.31 | 2020.12.31 | ||||
| Notes receivable | Bad debt provision | Expected credit loss rate (%) | Notes receivable | Bad debt provision | Expected credit loss rate (%) | |
| Within one year | 1,768,419.78 | 88,420.99 | 5.00 | 37,303,205.62 | 1,865,160.28 | 5.00 |
(5) Additions, recoveries or reversals of provision for the current period
| Bad debt provision | |
| 2020.12.31 | 1,865,160.28 |
| Additions | 999,068.57 |
| Recoveries or reversals | -- |
| Written-off | -- |
| 2021.12.31 | 2,864,228.85 |
4. Accounts receivable
（1）Disclosure by Aging
| Aging | 2021.12.31 | 2020.12.31 |
| Within 1 year | 67,970,511.50 | 61,614,768.47 |
| 1 to 2 year | 290,567.01 | -- |
| 2 to 3 years | -- | 66,518.00 |
| More than 3 years | 23,975,620.75 | 24,688,143.06 |
| Subtotal | 92,236,699.26 | 86,369,429.53 |
| Less: Bad Debt Provision | 31,187,914.15 | 26,778,485.47 |
| Total | 61,048,785.11 | 59,590,944.06 |
（2）Classified by bad debt provision method
| Types | 2021.12.31 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Percentage (%) | Amount | Expected credit loss rate (%) | ||
| Bad debt provisions made on an individual basis | 32,550,436.93 | 35.29 | 29,212,403.37 | 89.75 | 3,338,033.56 |
| Bad debt provisions made on a combination basis | 59,686,262.33 | 64.71 | 1,975,510.78 | 3.31 | 57,710,751.55 |
| Including: | -- | -- | -- | -- | -- |
| Types | 2021.12.31 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Percentage (%) | Amount | Expected credit loss rate (%) | ||
| Receivable from property sales | 1,064,220.18 | 1.15 | 53,211.01 | 5.00 | 1,011,009.17 |
| Receivable from other corporate customers | 58,622,042.15 | 63.56 | 1,922,299.77 | 3.28 | 56,699,742.38 |
| Total | 92,236,699.26 | 100.00 | 31,187,914.15 | 33.81 | 61,048,785.11 |
Continued:
| Types | 2020.12.31 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Percentage (%) | Amount | Expected credit loss rate (%) | ||
| Bad debt provisions made on an individual basis | 24,688,143.06 | 28.58 | 24,688,143.06 | 100.00 | -- |
| Bad debt provisions made on a combination basis | 61,681,286.47 | 71.42 | 2,090,342.41 | 3.39 | 59,590,944.06 |
| Including: | -- | -- | -- | -- | -- |
| Receivable from property sales s | 11,114,285.60 | 12.87 | 555,714.28 | 5.00 | 10,558,571.32 |
| Receivable from other corporate customers s | 50,567,000.87 | 58.55 | 1,534,628.13 | 3.03 | 49,032,372.74 |
| Total | 86,369,429.53 | 100.00 | 26,778,485.47 | 31.00 | 59,590,944.06 |
Bad debt provision made on an individual basis:
| Item | 2021.12.31 | |||
| Book balance | Bad debt provision | Expected credit loss rate (%) | Reason | |
| Agent for import and export business payment | 11,574,556.00 | 11,574,556.00 | 100.00 | Could be uncollectible |
| Long-term receivable of property sale | 9,649,415.20 | 9,649,415.20 | 100.00 | Could be uncollectible |
| Shenzhen Hongteng Investment Management Co., Ltd. | 8,345,083.91 | 5,007,050.35 | 60.00 | recoverability is relatively small |
| Receivable from revoked subsidiaries | 2,328,158.40 | 2,328,158.40 | 100.00 | Could be uncollectible |
| Receivable from other customers | 653,223.42 | 653,223.42 | 100.00 | Could be uncollectible |
| Total | 32,550,436.93 | 29,212,403.37 | 89.75 | |
Continued:
| Item | 2020.12.31 |
| Book balance | Bad debt provision | Expected credit loss rate (%) | Reason | |
| Agent for import and export business payment | 11,574,556.00 | 11,574,556.00 | 100.00 | Could be uncollectible |
| Long-term receivable of property sale | 10,132,205.24 | 10,132,205.24 | 100.00 | Could be uncollectible |
| Shenzhen Hongteng Investment Management Co., Ltd. | 2,328,158.40 | 2,328,158.40 | 100.00 | Could be uncollectible |
| Receivable from revoked subsidiaries | 653,223.42 | 653,223.42 | 100.00 | Could be uncollectible |
| Total | 24,688,143.06 | 24,688,143.06 | 100.00 |
Bad debt provision made on a combination basis:
Combined withdrawal item: property sales receivable
| 2021.12.31 | 2020.12.31 | |||||
| Accounts receivable | Bad debt provision | Expected credit loss rate (%) | Accounts receivable | Bad debt provision | Expected credit loss rate (%) | |
| Within 1 year | 1,064,220.18 | 53,211.01 | 5.00 | 11,114,285.60 | 555,714.28 | 5.00 |
| 1 to 2 years | -- | -- | -- | -- | -- | -- |
| Total | 1,064,220.18 | 53,211.01 | 5.00 | 11,114,285.60 | 555,714.28 | 5.00 |
Bad debt provision made on a combination basis:
Combined withdrawal item: other customers receivables
| 2021.12.31 | 2020.12.31 | |||||
| Accounts receivable | Bad debt provision | Expected credit loss rate (%) | Accounts receivable | Bad debt provision | Expected credit loss rate (%) | |
| Within 1 year | 58,622,042.15 | 1,922,299.77 | 3.28 | 50,500,482.87 | 1,531,302.23 | 3.03 |
| 1 to 2 years | -- | -- | -- | 66,518.00 | 3,325.90 | 5.00 |
| Total | 58,622,042.15 | 1,922,299.77 | 3.28 | 50,567,000.87 | 1,534,628.13 | 3.03 |
(3) Additions, recoveries or reversals of provision for the current period
| Bad debt provision | |
| 2020.12.31 | 26,778,485.47 |
| Additions | 4,433,371.85 |
| Recoveries or reversals | -- |
| Bad debt provision | |
| Written-off | -- |
| Adjustment to asset held for sale | 23,943.17 |
| 2021.12.31 | 31,187,914.15 |
(4) The top five units with the ending balance of accounts receivable collected by the debtor
| Name of the entity | Accounts receivable The ending balance | % of the total closing balance of accounts receivable | Bad debt provision The ending balance |
| Wuhan 249 Poly Real Estate Development Co., Ltd. | 19,355,805.11 | 20.98 | 580,674.15 |
| Wuhan Yutian Xingye Land Co., LTD | 12,736,852.59 | 13.81 | 382,105.58 |
| Shenzhen Hongteng Investment Management Co., Ltd. | 8,345,083.91 | 9.05 | 5,007,050.35 |
| Wuhan Linyun Real Estate Development Co., Ltd. | 8,314,761.62 | 9.01 | 249,442.85 |
| Wuhan Liantou Vanke Real Estate Co., Ltd. | 3,698,300.50 | 4.01 | 110,949.02 |
| Total | 52,450,803.73 | 56.86 | 6,330,221.95 |
At the end of the period, due to the factoring of accounts receivable, the factoring amount is CNY50,440,116.24. At the same time, the book value of accounts receivable is CNY 50,440,116.24 was notderecognized. For pledge of accounts receivable, please refer to Note V.51.
5. Prepayments
(1) The aging analysis of prepayments is as follows:
| Aging | 2021.12.31 | 2020.12.31 | ||
| Amount | % | Amount | % | |
| Within 1 year | 4,698,254.37 | 95.90 | 3,004,771.47 | 93.74 |
| 1 to 2 years | 206.95 | 0.00 | 213.04 | 0.01 |
| 2 to 3 years | -- | -- | 200,000.00 | 6.23 |
| More than 3 years | 200,550.00 | 4.09 | 550.00 | 0.02 |
| Total | 4,899,011.32 | 100.00 | 3,205,534.51 | 100.00 |
(2) The top five units of the ending balance of prepayments
The sum of the top five prepayments collected by prepaid objects at the end of the period is CNY4,279,208.74, which accounts for 87.35 % of the total ending balance of prepayments.
6. Other receivables
| Item | 2021.12.31 | 2020.12.31 |
| Interest receivable | -- | -- |
| Dividends receivable | 1,052,192.76 | 1,052,192.76 |
| Item | 2021.12.31 | 2020.12.31 |
| Other receivables | 29,561,815.32 | 31,692,851.08 |
| Total | 30,614,008.08 | 32,745,043.84 |
(1) Dividends receivable
| Items | 2021.12.31 | 2020.12.31 |
| Yunnan Kunpeng Air Service Co., LTD | 1,052,192.76 | 1,052,192.76 |
| Less: Bad Debt Provision | -- | -- |
| Total | 1,052,192.76 | 1,052,192.76 |
Significant dividends receivable overdue more than one year are as follows:
| Items | The ending balance | aging | Reasons for not retrieving | Whether impairment occurs and the basis for judgment |
| Yunnan Kunpeng Air Service Co., LTD | 1,052,192.76 | 5 years | Delay to issue | No |
(2) Other receivable
① Disclosure by aging
| Aging | 2021.12.31 | 2020.12.31 |
| Within 1 year | 29,436,729.02 | 29,101,943.94 |
| 1 to 2 years | 905,350.96 | 724,840.46 |
| 2 to 3 years | 106,096.34 | 266,855.66 |
| More than 3 years | 188,306,797.86 | 196,836,127.29 |
| Subtotal | 218,754,974.18 | 226,929,767.35 |
| Less: Bad Debt Provision | 189,193,158.86 | 195,236,916.27 |
| Total | 29,561,815.32 | 31,692,851.08 |
② Disclosure by nature
| Item | 2021.12.31 | 2020.12.31 | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |
| Other receivables from government | -- | -- | -- | 553,009.68 | -- | 553,009.68 |
| Other receivables from employee’s petty cash | 580,911.83 | -- | 580,911.83 | 364,674.25 | -- | 364,674.25 |
| Other receivables from the collecting and paying on behalf | 627,681.27 | -- | 627,681.27 | 665,251.08 | -- | 665,251.08 |
| Other receivables from other customers | 48,840,482.91 | 20,487,260.69 | 28,353,222.22 | 63,398,344.58 | 33,288,428.51 | 30,109,916.07 |
| Other receivables from related parties | 168,705,898.17 | 168,705,898.17 | -- | 161,948,487.76 | 161,948,487.76 | -- |
| Total | 218,754,974.18 | 189,193,158.86 | 29,561,815.32 | 226,929,767.35 | 195,236,916.27 | 31,692,851.08 |
③ Bad Debt Provision
At the end of the period, bad debt provision at the first stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Other receivables from employee’s petty cash | 580,911.83 | -- | -- | 580,911.83 | |
| Other receivables from the collecting and paying on behalf | 627,681.27 | -- | -- | 627,681.27 | |
| Other receivables from other customers | 29,844,939.16 | 5.00 | 1,491,716.94 | 28,353,222.22 | |
| Total | 31,053,532.26 | 4.80 | 1,491,716.94 | 29,561,815.32 |
At the end of the period, the Company does not have interest receivable, dividends receivable and otherreceivables at the second stageAt the end of the period, bad debt provisions at the third stage:
| Types | Book balance | Expected credit loss rate over the entire duration (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions shall be made on an individual basis | -- | -- | -- | -- | |
| Other receivable from other revoked subsidiary | 3,838,281.67 | 100.00 | 3,838,281.67 | -- | Could be uncollectible |
| Other receivable from other surviving subsidiary | 183,863,160.25 | 100.00 | 183,863,160.25 | -- | Could be uncollectible |
| Including :Other receivables from related parties | 168,705,898.17 | 100.00 | 168,705,898.17 | -- | Could be uncollectible |
| Total | 187,701,441.92 | 100.00 | 187,701,441.92 |
Bad Debt Provision as at December 31, 2020:
As at December 31, 2020, bad debt provision at the first stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions is drawn on a combination basis | |||||
| Other receivables from government | 553,009.68 | -- | -- | 553,009.68 | |
| Other receivables from employee’s petty cash | 364,674.25 | -- | -- | 364,674.25 | |
| Other receivables from the collecting and paying on behalf | 665,251.08 | -- | -- | 665,251.08 | |
| Other receivables from other customers | 31,694,648.48 | 5.00 | 1,584,732.41 | 30,109,916.07 | |
| Other receivables from related parties | -- | -- | -- | -- | |
| Total | 33,277,583.49 | 4.76 | 1,584,732.41 | 31,692,851.08 |
As of December 31, 2020, the Company does not have interest receivable, dividends receivable andother receivables at the second stage.As of December 31, 2020, bad debt provisions at the third stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions shall be made on an individual basis | |||||
| Other receivable from other revoked subsidiary | 3,275,882.44 | 100.00 | 3,275,882.44 | -- | Could be uncollectible |
| Other receivable from other surviving subsidiary | 190,376,301.42 | 100.00 | 190,376,301.42 | -- | Could be uncollectible |
| Including :Other receivables from related parties | 161,948,487.76 | 100.00 | 161,948,487.76 | -- | Could be uncollectible |
| Total | 193,652,183.86 | 100.00 | 193,652,183.86 | -- |
④ Bad debt provisions in the current period
| Bad debt provision | The first stage | The second stage | The third stage | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit loss over the entire duration (credit impairment has occurred) | ||
| Balance as at December 31, 2020 | 1,584,732.41 | -- | 193,652,183.86 | 195,236,916.27 |
| The balance as at December 31, 2020 is in the current period | -- | -- | -- | -- |
| -- Turn to the second stage | -- | -- | -- | -- |
| -- Transfer to the third stage | -- | -- | -- | -- |
| -- Go back to the second stage | -- | -- | -- | -- |
| -- Go back to the first stage | -- | -- | -- | -- |
| Current period | 65,525.13 | -- | 2,297,254.16 | 2,362,779.29 |
| Return the current | -- | -- | -- | -- |
| The current reseller, | -- | -- | -- | -- |
| This verification | -- | -- | -- | -- |
| Other changes | -158,540.60 | -- | -8,247,996.10 | -8,406,536.70 |
| Balance as of December 31, 2021 | 1,491,716.94 | -- | 187,701,441.92 | 189,193,158.86 |
Note：Other changes were mainly due to the transfer of bad debts of Shenzhen Property ManagementCo., Ltd. to assets for sale at CNY 8,213,958.86, and the impact of foreign exchange gains and losseson bad debt provisions of CNY 192,577.84.
⑤ The top five units of ending balance of other receivables
| Name of the entity | Nature of other receivables | Ending balance of other receivables | Aging | Proportion of total ending balance of other receivables (%) | Ending balance of bad debt provision |
| Canada Great Wall (Vancouver) Co., Ltd | Other receivables from related parties | 89,035,748.07 | More than 5 years | 40.70 | 89,035,748.07 |
| Paklid Limited | Other receivables from related parties | 18,870,785.54 | More than 5 years | 8.63 | 18,870,785.54 |
| Australia Bekaton property Limited | Other receivables from related parties | 12,559,290.58 | More than 5 years | 5.74 | 12,559,290.58 |
| Guangdong province Huizhou Luofu Hill Mineral Water Co.,Ltd | Other receivables from related parties | 10,465,168.81 | More than 5 years | 4.78 | 10,465,168.81 |
| Xi’an Fresh Peak Property Trading Co., Ltd | Other receivables from related parties | 8,419,205.19 | More than 5 years | 3.85 | 8,419,205.19 |
| Total | -- | 139,350,198.19 | -- | 63.70 | 139,350,198.19 |
7. Inventories
(1) Inventory classification
| Item | 2021.12.31 | 2020.12.31 | ||||
| Book balance | Provision for price decline/provision for impairment of contract performance cost | The book value | Book balance | Provision for price decline/provision for impairment of contract performance cost | The book value | |
| Real estate development： | ||||||
| Development cost | 3,037,991,969.96 | -- | 3,037,991,969.96 | 556,589,091.25 | -- | 556,589,091.25 |
| Product development | 994,212,857.29 | -- | 994,212,857.29 | 659,403,711.71 | 268,941.60 | 659,134,770.11 |
| Subtotals | 4,032,204,827.25 | -- | 4,032,204,827.25 | 1,215,992,802.96 | 268,941.60 | 1,215,723,861.36 |
| Non-real estate development items: | ||||||
| Raw materials | 8,458.34 | -- | 8,458.34 | 873,107.59 | 240,000.00 | 633,107.59 |
| Inventory goods | 334,040.04 | 38,891.91 | 295,148.13 | 631,926.30 | 38,891.91 | 593,034.39 |
| Constructions | 2,425,128.90 | -- | 2,425,128.90 | 3,514,109.22 | -- | 3,514,109.22 |
| Subtotals | 2,767,627.28 | 38,891.91 | 2,728,735.37 | 5,019,143.11 | 278,891.91 | 4,740,251.20 |
| Total | 4,034,972,454.53 | 38,891.91 | 4,034,933,562.62 | 1,221,011,946.07 | 547,833.51 | 1,220,464,112.56 |
(2) Provision for inventories
| Item | 2021.01.01 | Increase in current | The reduced | 2021.12.31 | ||
| provision | Others | To turn back or resell | other | |||
| Real estate development： | ||||||
| Product development | 268,941.60 | -- | -- | 268,941.60 | -- | -- |
| Non-real estate development items: | ||||||
| Raw materials | 240,000.00 | -- | -- | -- | 240,000.00 | -- |
| Inventory goods | 38,891.91 | -- | -- | -- | -- | 38,891.91 |
| Total | 547,833.51 | -- | -- | 268,941.60 | 240,000.00 | 38,891.91 |
Provision for Decline in Inventory (continued)
| Item | Specific basis for determining net realizable/residual consideration and costs to be incurred | Current roll-back or roll-off Reasons for inventory depreciation provision |
| Development cost | The amount of estimated selling price minus the estimated costs to be incurred at completion, estimated selling expenses, and related taxes | -- |
| Product development | The amount of estimated selling price minus estimated selling expenses and related taxes | -- |
| Raw materials | The amount of estimated selling price minus the estimated costs to be incurred at completion, estimated selling expenses, and related taxes | -- |
| Inventory goods | The amount of estimated selling price minus estimated selling expenses and related taxes | -- |
| Construction | The amount of estimated selling price minus the estimated costs to be incurred at completion, estimated selling expenses, and related taxes | -- |
(3) The ending balance of inventory contains the explanation of the capitalized amount of borrowingexpenses:
As at 31st December 2021, the Group's inventory balance contains capitalized borrowing costs at CNY12,237,466.31 (The amount is CNY 3,497,172.46 as at 31st December 2020).
(4)Development cost
| Project name | Starting time | Estimated completion time | Expected total investment | 2021.12.31 | 2020.12.31 | Ending provision |
| ShanTou Fresh Peak Building | -- | -- | -- | 28,291,908.11 | 25,291,908.11 | -- |
| Tianyue Bay No.2 | In 2018 | In 2021 | 65,485.00 | 531,297,183.14 | -- | |
| Lin Xin Garden | In 2021 | In 2023 | 300,000.00 | 2,015,750,061.85 | -- | -- |
| Shenfang GuangmingLi | In 2022 | In 2024 | 152,060.00 | 993,950,000.00 | -- | -- |
| Total | 65,485.00 | 3,037,991,969.96 | 556,589,091.25 | -- |
(5) Product development
| The item name | Time for completion | 2021.01.01 | Increase in current | The reduced | 2021.12.31 | End of the fall | |
| Jinye Island Multi-tier villa | 1997 | 39,127,219.14 | 367,543.46 | -- | 39,494,762.60 | -- | |
| Jinye Island villa No.10 | 2010 | 5,387,376.71 | 308,630.54 | -- | 5,696,007.25 | -- | |
| Jinye Island villa No.11 | 2008 | 2,333,281.42 | -- | -- | 2,333,281.42 | -- | |
| YueJing dongfang Project | 2014 | 7,727,546.84 | -- | 421,927.47 | 7,305,619.37 | -- | |
| The item name | Time for completion | 2021.01.01 | Increase in current | The reduced | 2021.12.31 | End of the fall | |
| Wenjin Garden | -- | 23,198.37 | -- | 23,198.37 | -- | -- | |
| HuangPu XinCun | -- | 140,000.00 | -- | -- | 140,000.00 | -- | |
| Shenfang Shanglin Garden | 2014 | 10,206,656.46 | -- | 10,206,656.46 | -- | -- | |
| Beijing Fresh Peak Buliding | - | 304,557.05 | -- | -- | 304,557.05 | -- | |
| TianYue Bay No.1 | 2017 | 335,020,709.01 | -- | 64,478,654.34 | 270,542,054.67 | -- | |
| Shengfang CuiLin Building | 2018 | 55,783,765.78 | 2,885,290.38 | -- | 58,669,056.16 | -- | |
| Chuanqi Donghu | 2019 | 203,349,400.93 | -- | 161,515,343.69 | 41,834,057.24 | -- | |
| TianYue Bay No.2 | 2021 | -- | 617,484,635.86 | 49,591,174.33 | 567,893,461.53 | ||
| Total | 659,403,711.71 | 621,046,100.24 | 286,236,954.66 | 994,212,857.29 | -- | ||
8. Assets and liabilities held for sale
| Item | 2021.12.31 | 2020.12.31 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| 1) Non-current assets held for sale | -- | -- | -- | -- | -- | -- |
| (2) Assets included in disposal groups held for sale | -- | -- | -- | -- | -- | -- |
| Including： Shenzhen Property Management Co., Ltd. | 78,940,232.10 | -- | 78,940,232.10 | -- | -- | -- |
| Total | 78,940,232.10 | -- | 78,940,232.10 | -- | -- | -- |
| Item | 2021.12.31 | 2020.12.31 |
| Liabilities held for sale: | -- | -- |
| Liabilities included in disposal groups held for sale | -- | -- |
| Including： Shenzhen Property Management Co., Ltd. | 65,752,452.06 | -- |
| Total | 65,752,452.06 | -- |
In order to optimize and adjust the industrial structure, on 30 December, 2021, the Company and itssubsidiary Shenzhen Shenfang Investment Co., Ltd. and Shenzhen Guomao Property Management Co.,Ltd. signed the Equity Acquisition Agreement to transfer a total of 100% of the equity of ShenzhenProperty Management Co., Ltd. to Shenzhen Guomao Property Management Co., Ltd., with a transferprice of CNY 196.6767 millionDisposal groups held for sale
Shenzhen Property Management Co., Ltd.
| Item | Carrying amount as at 2021.12.31 | Fair value as at 2021.12.31 | Costs to sell | Timetable |
| Assets included in disposal groups held for sale | -- | -- | -- | -- |
| Cash and bank | 64,521,214.48 | 64,521,214.48 | -- | 2022年 |
| Accounts receivable | 454,920.23 | 454,920.23 | -- | 2022年 |
| Other accounts receivable | 4,239,993.91 | 4,239,993.91 | -- | 2022年 |
| Inventory | 834,370.65 | 834,370.65 | -- | 2022年 |
| Other current asset | 4,832,730.35 | 4,832,730.35 | -- | 2022年 |
| Investment Property | 1,434,434.11 | 1,434,434.11 | -- | 2022年 |
| Fixed asset | 2,516,947.44 | 2,516,947.44 | -- | 2022年 |
| Deferred tax asset | 105,620.93 | 105,620.93 | -- | 2022年 |
| Liabilities included in disposal groups held for sale | -- | -- | -- | -- |
| Wage payable | 17,949,449.66 | 17,949,449.66 | -- | 2022年 |
| Tax payable | 1,906,577.65 | 1,906,577.65 | -- | 2022年 |
| Other accounts payable | 38,059,508.29 | 38,059,508.29 | -- | 2022年 |
| Long-term payable | 7,836,916.46 | 7,836,916.46 | -- | 2022年 |
9. Other current assets
| Item | 2021.12.31 | 2020.12.31 |
| Income tax overpaid or prepaid | 3,205,104.33 | 68,880,760.27 |
| VAT prepaid | 7,643,969.22 | 25,577,294.63 |
| Input tax to be deducted | 53,061,826.30 | 4,741,378.98 |
| Land appreciation tax | 2,481,541.71 | 2,083,793.61 |
| Business Tax | 259,308.30 | 312,287.17 |
| Other | 1,565,137.18 | 1,311,620.13 |
| Total | 68,216,887.04 | 102,907,134.79 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
10. Long-term equity investments
| Investee | 2020.12.31 | Movements during the year | 2021.12.31 | Balance of provision for impairment as at 2021.12.31 | |||||||
| Increase in capital | Decrease in capital | Investment income recognised under equity method | Other comprehensive income | Other equity movements | Declared distribution of cash dividends or profits | Provision for impairment | Other | ||||
| ① Joint ventures | |||||||||||
| Guangdong province Huizhou Luofu Hill Mineral Water Co., Ltd | 9,969,206.09 | -- | -- | -- | -- | -- | -- | -- | -- | 9,969,206.09 | 9,969,206.09 |
| Fengkai Xinhua Hotel | 9,455,465.38 | -- | -- | -- | -- | -- | -- | -- | -- | 9,455,465.38 | 9,455,465.38 |
| Subtotal | 19,424,671.47 | -- | -- | -- | -- | -- | -- | -- | -- | 19,424,671.47 | 19,424,671.47 |
| ②Associates | |||||||||||
| Shenzhen Ronghua JiDian Co., ltd | 1,454,444.29 | -- | -- | -105,321.37 | -- | -- | -- | -- | -- | 1,349,122.92 | 1,076,954.64 |
| Shenzhen Runhua Automobile trading Co., Ltd | 1,445,425.56 | -- | -- | -- | -- | -- | -- | -- | -- | 1,445,425.56 | 1,445,425.56 |
| Dongyi Real Estate Co., Ltd | 30,376,084.89 | -- | -- | -- | -- | -- | -- | -- | -- | 30,376,084.89 | 30,376,084.89 |
| Subtotal | 33,275,954.74 | -- | -- | -105,321.37 | -- | -- | -- | -- | -- | 33,170,633.37 | 32,898,465.09 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Investee | 2020.12.31 | Movements during the year | 2021.12.31 | Balance of provision for impairment as at 2021.12.31 | |||||||
| Increase in capital | Decrease in capital | Investment income recognised under equity method | Other comprehensive income | Other equity movements | Declared distribution of cash dividends or profits | Provision for impairment | Other | ||||
| ③Other equity investment | - | ||||||||||
| Paklid Limited | 201,100.00 | -- | -- | -- | -- | -- | -- | -- | -- | 201,100.00 | 201,100.00 |
| Australia Bekaton Property Limited | 906,630.00 | -- | -- | -- | -- | -- | -- | -- | -- | 906,630.00 | 906,630.00 |
| Shenzhen Shenfang Department Store Co. Ltd. | 10,000,000.00 | -- | -- | -- | -- | -- | -- | -- | -- | 10,000,000.00 | 10,000,000.00 |
| Shantou Fresh Peak Building | 58,547,652.25 | -- | -- | -- | -- | -- | -- | -- | -- | 58,547,652.25 | 58,547,652.25 |
| Guangdong Province kaiFeng Lian Feng Cement Manufacturing Co., Ltd | 56,228,381.64 | -- | -- | -- | -- | -- | -- | -- | -- | 56,228,381.64 | 56,228,381.64 |
| Jiangmen XinJiang real estate compnay | 9,037,070.89 | -- | -- | -- | -- | -- | -- | -- | -- | 9,037,070.89 | 9,037,070.89 |
| Xian Xinfeng property trading ltd. | 32,840,729.61 | -- | -- | -- | -- | -- | -- | -- | 32,840,729.61 | 32,840,729.61 | |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Investee | 2020.12.31 | Movements during the year | 2021.12.31 | Balance of provision for impairment as at 2021.12.31 | |||||||
| Increase in capital | Decrease in capital | Investment income recognised under equity method | Other comprehensive income | Other equity movements | Declared distribution of cash dividends or profits | Provision for impairment | Other | ||||
| Subtotal | 167,761,564.39 | -- | -- | -- | -- | -- | -- | -- | 167,761,564.39 | 167,761,564.39 | |
| Total | 220,462,190.60 | -- | -- | -105,321.37 | -- | -- | -- | -- | -- | 220,356,869.23 | 220,084,700.95 |
Note：Other equity investment items are the equity of the Company's subsidiaries which are not included in the scope of the merger. Some of these subsidiarieswere winded up, but the Group hasn’t write off its long-term equity investment. Some of these subsidiaries have ceased operating for many years and no longerexist, the group could not implement effective management control over them. Refer to Note VII for more details.
11. Investment in other equity instruments
| Item | 2021.12.31 | 2020.12.31 |
| Shantou SME Financing Guarantee Co., Ltd. | 13,831,938.92 | 13,508,202.32 |
| Yunnan Kun Peng Aviation Service Limited Corporation | 22,490,765.41 | 24,002,658.19 |
| Total | 36,322,704.33 | 37,510,860.51 |
Note: Since the Group plans to hold the above equity investment for a long term for strategic purposes,the Group designates them as financial assets measured at fair value and the change in it is included inother comprehensive income.
| Item | Dividend income recognized during the current period | The cumulative gains | The cumulative loss | The amount of other comprehensive income transferred into retained earnings | To reason |
| Shantou SME Financing Guarantee Co., Ltd. | 692,580.00 | 4,736,640.00 | -- | -- | -- |
| Yunnan Kun Peng Aviation Service Limited Corporation | 1,653,305.67 | -- | -- | -- |
12. Investment Properties
(1) Investment properties measured using the cost model
| Item | Buildings | Land use rights | Total |
| Ⅰ.Cost | |||
| 1.2020.12.31 | 1,054,731,893.62 | 100,572,661.91 | 1,155,304,555.53 |
| 2.Additions during the year | -- | -- | -- |
| （1）Transfers from inventories | -- | -- | -- |
| （2）Other transfers(exchange rate movement) | -- | -- | -- |
| （3）Additions due to business combinations | -- | -- | -- |
| 3. Decrease during the year | 11,819,871.23 | 2,299,719.72 | 14,119,590.95 |
| （1）Other transfers | 11,819,871.23 | -- | 11,819,871.23 |
| （2）Other decrease (exchange rate movement） | -- | 2,299,719.72 | 2,299,719.72 |
| 4.2021.12.31 | 1,042,912,022.39 | 98,272,942.19 | 1,141,184,964.58 |
| Ⅱ.Accumulated depreciation or amortization | |||
| 1.2020.12.31 | 442,265,712.97 | -- | 442,265,712.97 |
| 2.Charge for the year | 25,653,177.83 | -- | 25,653,177.83 |
| （1）Depreciated or amortised | 25,653,177.83 | -- | 25,653,177.83 |
| Item | Buildings | Land use rights | Total |
| （2）Additions due to business combinations | -- | -- | -- |
| （3）Others(exchange rate movement） | -- | -- | -- |
| 3. Reductions during the year | 10,385,437.12 | -- | 10,385,437.12 |
| （1）Disposals | -- | -- | -- |
| （2）Other transfers out | 10,385,437.12 | -- | 10,385,437.12 |
| （3）Others(exchange rate movement） | -- | -- | -- |
| 4.2021.12.31 | 457,533,453.68 | -- | 457,533,453.68 |
| III.Provision for impairment | |||
| 1.2020.12.31 | 14,128,544.62 | 82,544,676.41 | 96,673,221.03 |
| 2.Charge for the year | -- | -- | -- |
| （1）Other additions (exchange rate movement） | -- | -- | -- |
| 3. Reductions on disposals | -- | 1,887,487.29 | 1,887,487.29 |
| （2）Other transfers (exchange rate movement） | -- | 1,887,487.29 | 1,887,487.29 |
| 4.2021.12.31 | 14,128,544.62 | 80,657,189.12 | 94,785,733.74 |
| IV.Carrying amounts | |||
| 1. Carrying amount as at 2021.12.31 | 571,250,024.09 | 17,615,753.07 | 588,865,777.16 |
| 2. Carrying amount as at 2020.12.31 | 598,337,636.03 | 18,027,985.50 | 616,365,621.53 |
Note: The reduction in the original value of land use rights and impairment provisions is caused byexchange rate movement at the time of translation of foreign currency statements. The other reductionin original value of building and other depreciation is due to the reclassification of investment property toassets held for sale, which caused by the intention of selling Shenzhen Property Management Co., Ltd.
13. Fixed assets
| Item | 2021.12.31 | 2020.12.31 |
| Fixed assets | 23,920,424.55 | 28,039,978.43 |
① Fixed assets
| Item | Plant & buildings | Machinery & equipment | Electronic device and others | Total |
| I.Cost | ||||
| 1.2020.12.31 | 107,700,181.42 | 10,441,558.92 | 13,645,811.86 | 131,787,552.20 |
| 2.Additions during the year | -- | 742,347.12 | 1,290,327.93 | 2,032,675.05 |
| （1）Purchases | -- | 742,347.12 | 960,533.10 | 1,702,880.22 |
| （2）Other transfers | -- | -- | -- | -- |
| （3）Additions due to business combinations | -- | -- | 329,794.83 | 329,794.83 |
| Item | Plant & buildings | Machinery & equipment | Electronic device and others | Total |
| 3. Decrease during the year | 7,582,373.32 | 2,876,450.63 | 7,662,559.96 | 18,121,383.91 |
| （1）Disposals or written-offs | -- | 477,402.00 | 2,584,295.09 | 3,061,697.09 |
| （2）Others | 7,582,373.32 | 2,399,048.63 | 5,078,264.87 | 15,059,686.82 |
| 4.2021.12.31 | 100,117,808.10 | 8,307,455.41 | 7,273,579.83 | 115,698,843.34 |
| II.Accumulated depreciation: | - | |||
| 1.2020.12.31 | 83,519,658.69 | 9,059,003.88 | 11,168,911.20 | 103,747,573.77 |
| 2.Charge for the year | 2,493,103.50 | 302,686.87 | 646,638.80 | 3,442,429.17 |
| (1)Provision | 2,493,103.50 | 302,686.87 | 627,083.93 | 3,422,874.30 |
| （2）business combination | -- | -- | 19,554.87 | 19,554.87 |
| 3.Reductions for the year | 6,821,632.35 | 2,497,009.59 | 6,092,942.21 | 15,411,584.15 |
| (1)Disposal or written-offs | -- | 474,852.00 | 2,393,992.77 | 2,868,844.77 |
| (1) (2)Others | 6,821,632.35 | 2,022,157.59 | 3,698,949.44 | 12,542,739.38 |
| 4.2021.12.31 | 79,191,129.84 | 6,864,681.16 | 5,722,607.79 | 91,778,418.79 |
| III.Provision for impairment | -- | -- | -- | -- |
| IV.Carrying amount | ||||
| 1. As at 2021.12.31 | 20,926,678.26 | 1,442,774.25 | 1,550,972.04 | 23,920,424.55 |
| 2. As at 2020.12.31 | 24,180,522.73 | 1,382,555.04 | 2,476,900.66 | 28,039,978.43 |
Note: other decrease is due to the reclassification of fixed assets to assets held for sale which causedby the sale of Shenzhen Property Management Co., Ltd.
14. Right-of-use assets
| Item | Houses and Buildings |
| I. Original book value: | |
| 2020.12.31 | -- |
| Add: changes in accounting policy | -- |
| 1.2021.01.01 | -- |
| 2. Amount increased during the current period | 431,779.61 |
| Addition due to business combination | 431,779.61 |
| 3. Decrease amount in current period | -- |
| 4. 2021.12.31 | 431,779.61 |
| II. Accumulative depreciation | |
| 2020.12.31 | -- |
| Add: changes in accounting policy | -- |
| 1.2021.01.01 | -- |
| 2. Amount increased during the current period | 66,427.64 |
| Addition due to business combination | 66,427.64 |
| Item | Houses and Buildings |
| 3. Decrease amount in current period | -- |
| 4. 2021.12.31 | 66,427.64 |
| III. Impairment Provisions | |
| 2020.12.31 | -- |
| Add: changes in accounting policy | -- |
| 1.2021.01.01 | -- |
| 2. Amount increased during the current period | -- |
| 3. Decrease amount in current period | -- |
| 4. 2021.12.31 | -- |
| IV. Book value | |
| 1. as at 2021.12.31 | 365,351.97 |
| 2. as at 2020.01.01 | -- |
15. Intangible assets
(1) Intangible assets
| Item | Software |
| I.Cost | |
| 1. 2020.12.31 | 2,241,800.00 |
| 2.Additions during the year | -- |
| 3.Decrease during the year | -- |
| 4.2021.12.31 | 2,241,800.00 |
| II.Accumulative amortization | |
| 1. 2020.12.31 | 2,241,800.00 |
| 2.Charge for the year | -- |
| 3.Reduction for the year | -- |
| 4. 2021.12.31 | 2,241,800.00 |
| III.Provision for impairment | -- |
| IV.Carrying amount | |
| 1. As at 2021.12.31 | -- |
| 2. As at 2020.12.31 | -- |
16. Long-term deferred expenses
| Item | 2020.12.31 | Additions during the year | Decreases during the year | 2021.12.31 | |
| Amortisation for the year | Others decreases | ||||
| Renovation costs | 61,667.53 | 1,880,290.16 | 237,990.14 | -- | 1,703,967.55 |
| Other | -- | 463,232.73 | 2,237.10 | -- | 460,995.63 |
| Item | 2020.12.31 | Additions during the year | Decreases during the year | 2021.12.31 | |
| Amortisation for the year | Others decreases | ||||
| Total | 61,667.53 | 2,343,522.89 | 240,227.24 | -- | 2,164,963.18 |
17. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and deferred tax liabilities that are not offset
| Item | 2021.12.31 | 2020.12.31 | ||
| Deductible/Taxable Temporary Differences | Deferred tax assets/liabilities | Deductible/Taxable Temporary Differences | Deferred tax assets/liabilities | |
| Deferred tax assets: | ||||
| Provision for impairment | 11,676,505.43 | 2,919,126.36 | 6,549,009.33 | 1,637,252.34 |
| Pre-tax recoverable operating losses | 60,853,662.72 | 15,213,415.68 | 48,676,321.03 | 12,169,080.25 |
| Provision for land appreciation tax | 537,081,594.36 | 134,270,398.59 | 334,846,723.41 | 83,711,680.85 |
| Unrealised profits of intra-group transactions | 48,439,321.68 | 12,109,830.42 | 40,305,039.22 | 10,076,259.81 |
| Accrued Contractual cost | 22,029,322.92 | 5,507,330.73 | 20,603,882.91 | 5,150,970.73 |
| Subtotal | 680,080,407.11 | 170,020,101.78 | 450,980,975.90 | 112,745,243.98 |
| Deferred tax liabilities: | ||||
| Unmatured interest | 7,411,964.20 | 1,852,991.05 | 18,361,143.19 | 4,590,285.80 |
| Changes in the fair value of other equity investments | 18,858,463.59 | 4,714,615.90 | 20,046,619.77 | 5,011,654.94 |
| Changes in the fair value of trading financial assets | 11,828,130.44 | 2,957,032.61 | -- | -- |
| Subtotal | 38,098,558.23 | 9,524,639.56 | 38,407,762.96 | 9,601,940.74 |
(2) Details of unrecognized deferred tax assets
| Item | 2021.12.31 | 2020.12.31 |
| Deductible losses | 10,875,646.42 | 21,878,078.42 |
| Bad debt provision | 211,607,688.34 | 217,879,386.20 |
| Impairment provision for long-term equity investments | 220,084,700.95 | 220,084,700.95 |
| Impairment provision for Investment property | 94,785,733.74 | 96,673,221.03 |
| Total | 537,353,769.45 | 556,515,386.60 |
Note：Due to the uncertainty of future taxable income, the Group did not recognize deferred tax assetsfor the temporary deductible differences and deductible losses.
(3) Expiration of deductible tax losses for unrecognised deferred tax assets
| Year | 2021.12.31 | 2020.12.31 | Note |
| 2021 | —— | 11,349,323.06 | |
| 2022 | 5,753,184.38 | 5,753,184.38 | |
| 2023 | 4,085,485.24 | 4,085,485.24 | |
| 2024 | 688,456.49 | 688,456.49 | |
| 2025 | 1,629.25 | 1,629.25 | |
| 2026 | 346,891.06 | —— | |
| Total | 10,875,646.42 | 21,878,078.42 |
18. Short-term loans
(1) Classification of short-term loans
| Item | 2021.12.31 | 2020.12.31 |
| Pledge loans | 50,440,116.24 | 76,893,995.94 |
Note: The ending balance of loan includes the factoring loan applied by the group for accountsreceivable and discounted commercial acceptance notes receivable which is not derecognized.
19. Notes payable
| Item | 2021.12.31 | 2020.12.31 |
| Commercial acceptance notes | 247,376,403.56 | -- |
| Banker acceptance notes | -- | -- |
| Total | 247,376,403.56 | -- |
Note: The notes payable due but unpaid at the year end is CNY 23,790,000.00.
20. Accounts Payable
| Item | 2021.12.31 | 2020.12.31 |
| Construction | 139,000,203.58 | 174,552,420.54 |
| Other | 2,447,355.66 | 2,374,193.74 |
| Total | 141,447,559.24 | 176,926,614.28 |
21. Advances from customers
| Item | 2021.12.31 | 2020.12.31 |
| Payment for goods-import and export | 4,218,370.69 | 4,218,370.69 |
| Others | 2,193,056.35 | 1,721,721.46 |
| Item | 2021.12.31 | 2020.12.31 |
| Total | 6,411,427.04 | 5,940,092.15 |
22. Contractual liabilities
| Item | 2021.12.31 | 2020.12.31 |
| Advance collection of house sales | 199,909,796.88 | 196,619,100.77 |
| Room charges in advance | 55,693.20 | 167,876.42 |
| Total | 199,965,490.08 | 196,786,977.19 |
23. Employee benefits payable
| Item | 2020.12.31 | Accrued during the year | Decreased during the year | 2021.12.31 |
| Short-term employee benefits | 60,375,684.92 | 178,996,492.79 | 195,580,189.34 | 43,791,988.37 |
| Post-employment benefits - defined contribution plans | 92,149.17 | 14,546,364.79 | 14,503,790.55 | 134,723.41 |
| Total | 60,467,834.09 | 193,542,857.58 | 210,083,979.89 | 43,926,711.78 |
(1) Short-term employee benefits
| Item | 2020.12.31 | Accrued during the year | Decreased during the year | 2021.12.31 |
| Salaries, bonus, allowances | 59,181,979.88 | 157,159,991.84 | 172,705,010.07 | 43,636,961.65 |
| Staff welfare | 37,800.00 | 6,180,350.16 | 6,182,350.16 | 35,800.00 |
| Social insurances | 1,850.44 | 5,397,620.93 | 5,399,471.37 | -- |
| Including：1. Medical insurance | 1,259.40 | 4,944,592.21 | 4,945,851.61 | -- |
| 2. Work-related injury insurance | 591.04 | 76,805.95 | 77,396.99 | -- |
| 3. Maternity insurance | -- | 376,222.77 | 376,222.77 | -- |
| Housing Fund | 583,666.83 | 6,368,585.34 | 6,921,211.85 | 31,040.32 |
| Labor union fees, staff and workers’ education fee | 570,387.77 | 3,889,944.52 | 4,372,145.89 | 88,186.40 |
| Total | 60,375,684.92 | 178,996,492.79 | 195,580,189.34 | 43,791,988.37 |
Note: there There is CNY 17,949,449.66 in decreased during the year and reclassified to liabilities heldfor sale.
(2) Defined contribution plans
| Item | 2020.12.31 | Accrued during the year | Decreased during the year | 2021.12.31 |
| Post-employment benefits | 92,149.17 | 14,546,364.79 | 14,503,790.55 | 134,723.41 |
| Including: 1．Basic pension insurance | 75,318.93 | 10,345,263.18 | 10,348,582.11 | 72,000.00 |
| 2．Unemployment insurance | 914.12 | 246,238.03 | 247,152.15 | -- |
| Item | 2020.12.31 | Accrued during the year | Decreased during the year | 2021.12.31 |
| 3．Annuity | 15,916.12 | 3,954,863.58 | 3,908,056.29 | 62,723.41 |
| Total | 92,149.17 | 14,546,364.79 | 14,503,790.55 | 134,723.41 |
24. Taxes payable
| Item | 2021.12.31 | 2020.12.31 |
| Corporate income tax | 55,260,539.21 | 116,073,629.88 |
| Land appreciation tax | 541,127,363.69 | 339,492,860.89 |
| Value-added tax | 2,364,703.76 | 2,225,243.79 |
| Individual income tax | 741,740.25 | 1,067,279.80 |
| City maintenance and construction tax | 243,387.84 | 240,165.30 |
| Property tax | 262,015.56 | 272,984.08 |
| Education surcharge | 105,021.26 | 180,666.76 |
| Local Education surcharge | 56,806.29 | 11,963.23 |
| Other | 379,294.62 | 144,853.22 |
| Total | 600,540,872.48 | 459,709,646.95 |
25. Other payables
| Item | 2021.12.31 | 2020.12.31 |
| Interest payables | 16,535,277.94 | 16,535,277.94 |
| Dividend payables | -- | -- |
| Other payables | 564,842,137.70 | 260,569,851.80 |
| Total | 581,377,415.64 | 277,105,129.74 |
（1）Interest payable
| Item | 2021.12.31 | 2020.12.31 |
| Non-financial institution borrowing interest (interest payable to parent company) | 16,535,277.94 | 16,535,277.94 |
Significant overdue interest outstanding:
| Debtor | Overdue amount | Overdue reason |
| Shenzhen Investment Holdings Co., Ltd. | 16,535,277.94 | Defer payment |
（2）Other payable
| Item | 2021.12.31 | 2020.12.31 |
| Non-related party transactions | 161,537,615.36 | -- |
| Accrued land appreciation tax | 36,447,111.94 | 59,789,921.48 |
| Related party transactions | 215,460,862.07 | 18,119,380.19 |
| Item | 2021.12.31 | 2020.12.31 |
| Deposits | 48,106,373.19 | 100,280,051.56 |
| Others | 103,290,175.14 | 82,380,498.57 |
| Total | 564,842,137.70 | 260,569,851.80 |
（3）significant other payables aging over 1 year
| Item | amount | Reason for no repayment |
| Accrued land appreciation tax | 36,447,111.94 | Not yet to clear |
26. Non-current liabilities due within one year
| Item | 2021.12.31 | 2020.12.31 |
| Lease liabilities due within one year | 83,023.44 | -- |
27. Other current liabilities
| Item | 2021.12.31 | 2020.12.31 |
| Other | 8,196,849.13 | 8,917,027.07 |
28. Lease liabilities
| Item | 2021.12.31 | 2021.01.01 |
| Buildings | 208,944.21 | -- |
| Subtotal | 208,944.21 | -- |
| Minus: lease liabilities due within one year | 83,023.44 | -- |
| Total | 125,920.77 | -- |
Note: The interest expense of leasing liabilities accrued in 2021 is CNY 9,920.46, which is included inthe financial expense - interest expense.
29. Long-term payables
| Item | 2021.12.31 | 2020.12.31 |
| Long-term payables | -- | 7,480,233.43 |
(1) Long-term payables
| Item | 2021.12.31 | 2020.12.31 |
| Maintenance fund | -- | 7,480,233.43 |
Note: at the end of the period, CNY 7,480,233.43 in long-term payables is reclassified to liabilities heldfor sale.
30. Capital stock (unit: 10,000 shares)
| Item | 2020.12.31 | Increase or decrease of current period (+, -) | 2021.12.31 | ||||
| New shares | Stock dividand | Conversion from reserve to shares | Others | Subtotal | |||
| The total number of shares | 101,166.00 | -- | -- | -- | -- | -- | 101,166.00 |
31. Capital reserve
| Item | 2020.12.31 | Additions during the year | Reductions during the year | 2021.12.31 |
| Share premium | 557,433,036.93 | -- | -- | 557,433,036.93 |
| Other capital reserves | 420,811,873.18 | -- | -- | 420,811,873.18 |
| Total | 978,244,910.11 | -- | -- | 978,244,910.11 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
32. Other comprehensive income
| Item | 2020.12.31 （1） | Current amount | 2021.12.31 （3）=（1）+（2） | ||||
| The current income tax before the amount | Minus: early entry into other comprehensive income into the current period of profit and loss | Minus: income tax expense | After-tax attributable to parent company (2) | After tax, it belongs to minority shareholders | |||
| Other comprehensive income that cannot be reclassified into profits and losses | 15,034,964.83 | -1,188,156.18 | -- | -297,039.04 | -891,117.14 | -- | 14,143,847.69 |
| 1. Changes in the fair value of other equity instrument investments | 15,034,964.83 | -1,188,156.18 | -- | -297,039.04 | -891,117.14 | -- | 14,143,847.69 |
| Other comprehensive income which is reclassified into profit and loss | 13,128,085.30 | 8,817,030.96 | -- | -- | 8,817,030.96 | 911,435.23 | 21,945,116.26 |
| 1. Difference in translation of foreign currency financial statements | 13,128,085.30 | 8,817,030.96 | -- | -- | 8,817,030.96 | 911,435.23 | 21,945,116.26 |
| Total other comprehensive income | 28,163,050.13 | 7,628,874.78 | - | -297,039.04 | 7,925,913.82 | 911,435.23 | 36,088,963.95 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
33. Surplus reserve
| Item | 2020.12.31 | Additions during the year | Reductions during the year | 2021.12.31 |
| Statutory surplus reserve | 218,724,273.67 | 22,420,581.26 | -- | 241,144,854.93 |
| Arbitrary surplus reserve | -- | -- | -- | |
| Total | 218,724,273.67 | 22,420,581.26 | -- | 241,144,854.93 |
34. Retained earnings
| Item | Year ended 2021.12.31 | Year ended 2020.12.31 | Appropriation or distribution percentage |
| Retained earnings as at 31/12/2020 (before adjustment) | 1,560,720,254.31 | 1,464,915,816.81 | -- |
| Total adjustments for opening retained earnings（“+” for increase; “–” for decrease） | -- | -- | |
| Retained earnings as at 01/01/2021 (after adjustment) | 1,560,720,254.31 | 1,464,915,816.81 | |
| Add: Net profits for the year attributable to shareholders of the Group | 220,836,309.93 | 290,229,772.23 | -- |
| Less: Appropriation for statutory surplus reserve | 22,420,581.26 | 27,501,434.73 | 10% |
| Appropriation for ordinary share dividend | 88,014,420.00 | 166,923,900.00 | -- |
| Retained earnings as at 2021.12.31 | 1,671,121,562.98 | 1,560,720,254.31 | -- |
35. Operating revenue and operating costs
(1) Operating revenue and operating costs
| Item | Year ended 2021.12.31 | Year ended 2020.12.31 | ||
| Income | Cost | Income | Cost | |
| Main business | 1,305,013,711.33 | 644,196,683.45 | 1,602,794,163.58 | 793,896,680.56 |
| Other business | 15,776,937.12 | 22,151,678.03 | 12,215,550.30 | 11,611,768.12 |
| Total | 1,320,790,648.45 | 666,348,361.48 | 1,615,009,713.88 | 805,508,448.68 |
(2) Operating revenue and operating costs are divided by industry (or product type)
| Main Industry name | Current amount | Amount of previous period | ||
| income | The cost of | income | The cost of | |
| Real estate | 876,161,088.60 | 280,828,284.77 | 1,158,411,393.81 | 387,659,747.71 |
| Construction | 200,259,571.16 | 194,607,475.30 | 251,454,463.43 | 244,511,214.58 |
| Property Management | 162,526,580.18 | 145,898,235.49 | 151,968,675.51 | 139,937,487.12 |
| Lease | 81,791,161.56 | 38,780,101.44 | 63,254,584.48 | 35,984,852.34 |
| subtotal | 1,320,738,401.50 | 660,114,097.00 | 1,625,089,117.23 | 808,093,301.75 |
| Less：Internal offset | 15,724,690.17 | 15,917,413.55 | 22,294,953.65 | 14,196,621.19 |
| Total | 1,305,013,711.33 | 644,196,683.45 | 1,602,794,163.58 | 793,896,680.56 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
(3) The revenue and cost of main business shall be divided by region (if not applicable, it shall bedeleted)
| Main business area | Current amount | Amount of previous period | ||
| Main business revenue | Main business cost | Main business revenue | Main business cost | |
| Domestic： | 1,320,105,876.64 | 660,114,097.00 | 1,624,250,104.98 | 807,403,891.75 |
| Guangdong Province | 1,308,786,001.07 | 652,104,794.06 | 1,613,933,749.67 | 799,028,972.30 |
| Other | 11,319,875.57 | 8,009,302.94 | 10,316,355.31 | 8,374,919.45 |
| Overseas： | 632,524.86 | -- | 839,012.25 | 689,410.00 |
| America | 632,524.86 | -- | 839,012.25 | 689,410.00 |
| Subtotal | 1,320,738,401.50 | 660,114,097.00 | 1,625,089,117.23 | 808,093,301.75 |
| Less：Internal offset | 15,724,690.17 | 15,917,413.55 | 22,294,953.65 | 14,196,621.19 |
| Total | 1,305,013,711.33 | 644,196,683.45 | 1,602,794,163.58 | 793,896,680.56 |
(4) Business revenue decomposition information
| Item | Current amount | Total | ||||
| Real estate | Construction | Property Management | Leases | Other | ||
| Main business revenue | 876,161,088.60 | 192,993,579.90 | 159,487,885.27 | 76,371,157.56 | -- | 1,305,013,711.33 |
| Including: Confirm at a certain point | 876,161,088.60 | -- | -- | -- | -- | 876,161,088.60 |
| Confirm at a certain time | -- | 192,993,579.90 | 159,487,885.27 | 76,371,157.56 | -- | 428,852,622.73 |
| Other business income | -- | -- | -- | -- | 15,776,937.12 | 15,776,937.12 |
| Total | 876,161,088.60 | 192,993,579.90 | 159,487,885.27 | 76,371,157.56 | 15,776,937.12 | 1,320,790,648.45 |
36. Taxes and surcharges
| Item | Current amount | Amount of previous period |
| Land appreciation tax | 234,706,353.29 | 311,880,157.14 |
| Property tax | 9,928,730.40 | 7,554,272.86 |
| Urban maintenance and construction tax | 4,235,765.07 | 5,098,758.97 |
| education surcharge | 1,910,215.37 | 2,261,494.65 |
| Local education surcharge | 1,081,322.37 | 1,372,146.74 |
| Embankment protection fees | 2,497,929.35 | 1,795,236.14 |
| Total | 254,360,315.85 | 329,962,066.50 |
Note: the tax and additional payment standards are detailed in Note IV. Tax.
37. Selling expense
| Item | Current amount | Amount of previous period |
| Sales agency fee and commission | 26,587,685.99 | 44,260,043.83 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | Current amount | Amount of previous period |
| Employee benefits | 9,474,880.74 | 6,493,766.61 |
| Entertainment expenses | 3,261,755.78 | 2,131,882.24 |
| Advertising expenses | 2,932,966.45 | 2,646,392.11 |
| Other | 480,459.26 | 457,312.43 |
| Total | 42,737,748.22 | 55,989,397.22 |
38. Administrative expenses
| Item | Current amount | Amount of previous period |
| Employee benefits | 79,343,163.63 | 64,704,357.03 |
| Agency fee | 4,027,178.08 | 12,450,245.35 |
| Entertainment expenses | 2,857,097.54 | 2,167,046.29 |
| Depreciation expense | 2,567,845.33 | 3,850,384.39 |
| Office expenses | 2,364,940.64 | 1,831,836.07 |
| Maintenance expenses | 985,033.96 | 717,959.58 |
| Office expenses | 496,794.63 | 297,270.72 |
| Other Amortization | 421,749.41 | 436,258.47 |
| water and electricity | 273,581.21 | 431,830.71 |
| Other | 4,970,447.17 | 6,729,038.14 |
| Total | 98,307,831.60 | 93,616,226.75 |
39. Financial expenses
| Item | Current amount | Amount of previous period |
| The interest payments | 12,247,386.77 | -- |
| Minus: Capitalization of interest | 12,237,466.31 | -- |
| Interest income | 28,863,878.27 | 30,130,066.10 |
| Exchange gains and losses | 9,320,742.60 | 7,808,608.84 |
| Minus: Capitalization of exchange gains and losses | -- | -- |
| Commission charges and others | 1,449,724.20 | 815,772.21 |
| Total | -18,083,491.01 | -21,505,685.05 |
40. Other income
| Subsidies (other sources of revenue) | Current amount | Amount of previous period | With respect to assets / Related to revenue |
| VAT deduction | 1,483,095.28 | 1,062,301.22 | Related to revenue |
| Subsidies for job-for-training | 165,000.00 | -- | Related to revenue |
| Additional deductions for input tax | 11,384.12 | 174,534.77 | Related to revenue |
| Renovation of back streets and alleys around farmers' markets (public health fund) | 10,000.00 | -- | Related to revenue |
| Subsidies for epidemic prevention | -- | 3,245,019.09 | Related to revenue |
| Subsidies for keeping people in their jobs | -- | 125,750.12 | Related to revenue |
| VAT deduction in simplified method | -- | 166.87 | Related to revenue |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Subsidies (other sources of revenue) | Current amount | Amount of previous period | With respect to assets / Related to revenue |
| Total | 1,669,479.40 | 4,607,772.07 |
41. Investment Income
| Item | Current amount | Amount of previous period |
| Long-term equity investment income calculated by the equity method | -105,321.37 | -92,348.97 |
| Dividend income from investments in other equity instruments | 692,580.00 | 599,760.00 |
| Yield on maturity of structured deposits | 1,196,580.44 | 15,217,058.60 |
| Total | 1,783,839.07 | 15,724,469.63 |
42. Income from changes in fair value
| The source of the fair value change income | Current amount | Amount of previous period |
| Trading financial assets | 11,828,130.44 | -- |
43. Credit impairment loss (loss marked with "-")
| Item | Current amount | Amount of previous period |
| Accounts receivable bad debt loss | -4,433,371.85 | -1,865,160.28 |
| Other losses on receivable bad debts | -2,362,779.29 | 1,380,875.47 |
| Bad debt losses on notes receivable | -999,068.57 | 125,285.66 |
| Total | -7,795,219.71 | -358,999.15 |
44. Impairment loss of assets (loss is marked with "-")
| Item | Current amount | Amount of previous period |
| Losses from falling inventory prices | 268,941.60 | -- |
45. Income from asset disposal
| Item | Current amount | Amount of previous period |
| Gain on disposal of fixed assets (loss is marked with "-")） | -8,852.73 | 11,429.23 |
46. Non-operating income
| Item | Current amount | Amount of previous period | Amount booked into current non-recurring profits and losses |
| Compensation | - | 30,000,000.00 | - |
| Penalty income | 1,506,996.67 | 670,000.10 | 1,506,996.67 |
| Other | 210,438.20 | 2,600.16 | 210,438.20 |
| Income from sale of waste | 28,700.00 | 21,161.31 | 28,700.00 |
| Total | 1,746,134.87 | 30,693,761.57 | 1,746,134.87 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
47. Non-operating expenses
| Item | Current amount | Amount of previous period | Amount booked into current non-recurring profits and losses |
| Public welfare donation expenditure | 31,464.96 | 89,121.31 | 31,464.96 |
| Loss of non-current assets damaged and scrapped | 16,439.20 | 69,581.08 | 16,439.20 |
| Penalty | 85,686.90 | -- | 85,686.90 |
| Other | 74,538.68 | 1,525,401.58 | 74,538.68 |
| Total | 208,129.74 | 1,684,103.97 | 208,129.74 |
48. Income tax expenses
(1) Income tax expense details
| Item | Current amount | Amount of previous period |
| Current income tax calculated according to the tax law and relevant provisions | 125,965,276.65 | 173,172,138.96 |
| Deferred tax expense | -57,160,740.87 | -62,701,304.18 |
| Total | 68,804,535.78 | 110,470,834.78 |
(2) The relationship between income tax expense and total profit is listed as follows :(inapplicable itemscan be deleted, and "other" amounts should not be too large)
| Item | Current amount | Amount of previous period |
| Profit total | 286,404,205.51 | 400,433,589.16 |
| Income tax expense at statutory (or applicable) rate (gross profit *25%) | 71,601,051.38 | 100,108,397.29 |
| Impact of different tax rates applied to certain subsidiaries | -810,905.02 | -523,491.63 |
| Adjustment of income tax for the current period of the previous period | -378,391.66 | -- |
| The profits and losses of joint ventures and associated enterprises calculated by equity method | 26,330.35 | -126,852.76 |
| Tax-free income (marked with "-") | -173,145.00 | |
| Non-deductible costs, expenses and losses | 563,064.63 | 15,046,324.88 |
| Take advantage of the tax impact of unrecognized deductible losses and deductible temporary differences in previous years (fill in with "-") | -2,008,151.87 | -4,257,625.20 |
| Tax effects of deductible losses and deductible temporary differences are not recognized | -15,317.03 | 692,907.43 |
| Reduction of Corporate income tax | -- | -468,825.23 |
| Income tax expense | 68,804,535.78 | 110,470,834.78 |
49. Notes for items in the statement of cash flows
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
(1) Receipt of other cash related to operating activities
| Item | Current amount | Amount of previous period |
| Interest Income | 39,813,057.28 | 11,768,922.91 |
| Receivables and others | 338,784,024.72 | 42,259,017.80 |
| Total | 378,597,082.00 | 54,027,940.71 |
(2) Other cash payments related to operating activities
| Item | Current amount | Amount of previous period |
| Charges | 1,449,724.20 | 815,772.21 |
| Out-of-pockets expenses | 50,267,187.02 | 72,468,127.90 |
| Payables and others | 231,759,408.78 | 1,291,173.09 |
| Total | 283,476,320.00 | 74,575,073.20 |
(3) Receipt of other cash related to investment activities
| Item | Current amount | Amount of previous period |
| Financing products and etc. | 797,803,419.53 | 1,000,000,000.00 |
(4) Other cash payments related to investment activities
| Item | Current amount | Amount of previous period |
| Financing products and etc. | 1,300,000,000.00 | -- |
(5) Receipt of other cash in connection with financing activities
| Item | Current amount | Amount of previous period |
| Borrowings from subsidiary shareholders | 193,016,852.52 | -- |
| fund from Linxijun employees | 22,800,000.00 | -- |
| Total | 215,816,852.52 | -- |
50. Supplementary information to the statement of cash flows
(1) Supplementary information of the cash flow statement
| Additional information | Current amount | Amount of previous period |
| 1. Adjust net profit to cash flow from operating activities | ||
| Net profit | 217,599,669.73 | 289,962,754.38 |
| Plus: impairment loss on assets | -268,941.60 | -- |
| Credit impairment loss | 7,795,219.71 | 358,999.15 |
| Depreciation of Fixed Assets, Depreciation of Usability Assets, Depreciation of Investment Real Estate, Depreciation of Oil and Gas Assets, Depreciation of Productive Biological Assets (Items not applicable can be deleted) | 29,162,034.64 | 29,954,172.05 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Additional information | Current amount | Amount of previous period |
| Amortization of intangible assets | -- | -- |
| Amortization of long-term prepaid expenses | 240,227.24 | 100,458.19 |
| Loss on disposal of fixed assets, intangible assets and other long-term assets (marked with "-" for gains) | 13,451.61 | -11,429.23 |
| Loss on the scrapping of fixed assets (marked with "-" for income) | 16,439.20 | 69,581.08 |
| Loss from changes in fair value (marked with "-" for earnings) | -11,828,130.44 | -- |
| Financial expenses (revenue marked with "-") | 450,266.20 | 647,689.01 |
| Loss on investment (marked with "-" for income) | -1,783,839.07 | -15,724,469.63 |
| Deferred tax assets decreased (marked with "-" for increase) | -57,380,478.73 | -66,303,918.73 |
| Deferred tax liability increased (marked with "-" for decrease) | 85,543.83 | 3,602,614.55 |
| Decrease in stock (marked with "-" for increase) | -1,600,400,189.74 | 231,291,659.65 |
| Decrease of operating receivable items (marked with "-" for increase) | 79,815,735.11 | -54,000,863.50 |
| Increase in operational payable items (marked with "-" for decrease) | 130,530,884.37 | -134,783,233.80 |
| other | -- | -- |
| Net cash flow from operating activities | -1,205,952,107.94 | 285,164,013.17 |
| 2. Major investment and financing activities that do not involve cash receipts and expenditures: | -- | -- |
| Debt to capital | -- | -- |
| A convertible corporate bond maturing within one year | -- | -- |
| Leasing of fixed assets through financing | -- | -- |
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Ending balance of cash | 612,293,635.15 | 2,669,103,926.82 |
| Minus: Opening balance of cash | 2,669,103,926.82 | 1,507,189,760.35 |
| Plus: ending balance of cash equivalents | -- | -- |
| Minus: Beginning balance of cash equivalents | -- | -- |
| Net increase in cash and cash equivalents | -2,056,810,291.67 | 1,161,914,166.47 |
（2）Composition of cash and cash equivalents
| Item | Ending balance | Opening balance |
| 1. Cash | 612,293,635.15 | 2,669,103,926.82 |
| Including: cash on hand | 12,082.00 | 61,121.83 |
| Bank deposits available for payment at any time | 372,181,553.15 | 1,026,042,804.99 |
| Other monetary fund readily available for payment | 240,100,000.00 | 1,643,000,000.00 |
| 2. Cash equivalents | -- | -- |
| Including: bond investments maturing within three months | -- | -- |
| 3. Closing cash and cash equivalents balance | 612,293,635.15 | 2,669,103,926.82 |
| Where: the parent company or a subsidiary of the group uses restricted cash and cash equivalents | -- | -- |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
Note：CNY 64,521,214.48 in bank deposits available for payment at any time is reclassified to assetheld for sales.
51. Assets whose ownership or use rights are restricted
| Item | Ending book value | Reason for limitation |
| Accounts receivables | 50,440,116.24 | Pledge of short-term loans |
| Cash at bank and Cash Equivalent | 3,500,000.00 | Frozen by litigation |
| Cash at bank and Cash Equivalent | 5,674,439.78 | funds for the construction of public facilities in and around the city of Longgang District |
52. Foreign currency monetary items
(1) Foreign currency monetary items
| Item | Ending Foreign Currency Balance | Exchange rate | Balance converted into CNY at the end |
| Monetary fund | |||
| Including: US dollar | 153,319.14 | 6.3757 | 977,516.84 |
| Hong Kong dollars | 6,667,176.97 | 0.8176 | 5,451,083.89 |
| Accounts receivable | |||
| Including: US dollar | 16,000.00 | 6.3757 | 102,011.20 |
| Hong Kong dollars | 4,905,150.10 | 0.8176 | 4,010,450.72 |
| Other payables | |||
| Including: US dollar | 733,761.87 | 6.3757 | 4,678,245.55 |
53. Government subsidies
The government subsidies accounted into the current profits and losses by the total amount method
| Subsidy Item | species | Amount booked into profit and loss in the previous period | Amount booked into profit and loss for the current period | Reporting items included in profit and loss | Relating to assets/earnings |
| Tax subsidy | Fiscal allotment | 1,237,002.86 | 1,494,479.40 | Other Income | Related to earnings |
| Epidemic prevention subsidy | Fiscal allotment | 3,245,019.09 | - | Other Income | Related to earnings |
| Employment subsidies | Fiscal allotment | 125,750.12 | 165,000.00 | Other Income | Related to earnings |
| Total | 4,607,772.07 | 1,659,479.40 |
VI. Changes to the scope of consolidation
1. Business combination involving enterprises not under common control
1) On 30 April 2021, the company and Guangzhou Bopi Business Management Consulting Co. , Ltd.signed a cooperative development agreement, the 51.00% stake in Guangdong Jianbang Group(Huiyang) Industrial Co. , Ltd. (hereinafter referred to as "Guangdong Jianbang") was sold to the
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
company for CNY 0.45 billion. At the time of the acquisition, Guangdong Jianbang owned all theinterests in Linxi County (later renamed "Shenfang Lin Xinyuan") , which accounted for 95.48% of thetotal assets, so the transaction does not constitute a business merger. On 11 May 2021, the companytook control of Guangdong Jianbang and incorporated it into its consolidated statements from that day.
2) Shenzhen real estate group entrusted Evergrande real estate group Pearl River Delta Real EstateDevelopment Co. , Ltd. to develop real estate, the specific contents include, but are not limited to, themanagement of Project Investigation, planning, design, bidding, project progress, quality, safety,marketing, cost, etc. , however, the financial and fund management is the responsibility of GuangdongJianbang Group (Huiyang) Industrial Company Limited. In the course of project management, contractsfor procurement, design, engineering, supervision, publicity, sales, property, etc. need to be signed withforeign parties, guangdong Jianbang Group (Huiyang) Industrial Co. , Ltd. entrusted Evergrande realestate group Pearl River Delta Real Estate Development Co. , Ltd. to sign in the name of GuangdongJianbang Group (Huiyang) Industrial Co. , Ltd. , all expenses incurred in the operation are borne byGuangdong Jianbang Group (Huiyang) Industrial Co. , Ltd. .
3) Guangzhou Bopi Enterprise Management Consulting Co. , Ltd. is committed to achieving acumulative net profit of no less than CNY 1.25 billion from 2021 to 2025 for Guangdong Jianbang Group(Huiyang) Industrial Co. , Ltd. , the total net profit is not affected by the land use condition and economicand technical index of the Government Adjustment Project. The accumulated realized net profit from2021 to 2023 is no less than CNY 0.3 billion; that of 2021-2024 is no less than CNY0.75 billion; and thatof 2021-2025 is no less than CNY 1.25 billion. In order to fulfill the net profit commitment of GuangzhouBopi Business Management Consulting Co. , Ltd. , the parties, before 31 December 2026, shallcomplete the accounting of project’s net profit as of December 31,2025 , and shall comply with thefollowing agreement:
If Guangzhou Bopi Management Consulting Co. , Ltd. fails to meet its performance commitments, thenwhen distributing the profits of the project in 2025, Guangzhou Bopi Enterprise Management ConsultingCo. , Ltd. will pay part or all of its distributed profits to the Shenzhen real estate group until thecumulative distribution of profits from 2021 to 2025 reached the target of CNY 0.6375 billion in the profitcommitment; if Guangzhou Bopi Enterprise Management Consulting Co. , Ltd. has paid all the profitsdistributed in 2025 to the Shenzhen real estate group, and the cumulative distributed profit of Shenzhenreal estate group still cannot reach CNY0.6375 billion committed in profit distribution, the shortfall will bemade up by Guangzhou Bopi Business Management Consulting Co. , Ltd. by 31 May 2026; and afterGuangzhou Bopi Business Management Consulting Co. , Ltd. has made up the shortfall to ShenfangGroup, the profits generated by Guangdong Jianbang Group (Huiyang) Industrial Co. , Ltd. after 31December 2025, shall be allocated to Guangzhou Bopi Enterprise Management Consulting Co. , Ltd. ,until the cumulative distribution profit of Guangzhou Bopi Enterprise Management Consulting Co. , Ltd.reached CNY 0.6125 billion in accordance with the profit commitment, the portion of the total net profitof guangdong Jianbang Group (Huiyang) Industrial Co. , Ltd. exceeding CNY1.25 billion is distributedbetween Guangzhou Bopi Enterprise Management Consulting Co. , Ltd. and Shenzhen Real EstateGroup Co. , Ltd. in proportion to their equity.Evergrande real estate group Pearl River Delta Real Estate Development Co. , Ltd. provides joint andseveral liability for profit commitment and difference compensation of Guangzhou Bopi EnterpriseManagement Consulting Co. , Ltd. .
2. Other
On 27 October 2021, the group set up a wholly-owned subsidiary in Shenzhen, Shenzhen ShenfangChuanqi Real Estate Development Co., Ltd., with registered capital 30 million yuan.
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
VII. Interest in other entities
1. Interests in subsidiaries
(1) Composition of the Group
| Name | Principal place of business | Registration place | Business nature | Shareholding% | Acquisition method | |
| Direct | Indirect | |||||
| Shenzhen City SPG Long Gang Development Ltd. | Shenzhen | Shenzhen | Real estate development | 95.00 | 5.00 | Acquiring through establishment or investment |
| American Great Wall Co., Ltd | U.S. | U.S. | Real estate development | 70.00 | -- | Acquiring through establishment or investment |
| Shenzhen City Property Management Ltd. | Shenzhen | Shenzhen | Property management | 95.00 | 5.00 | Acquiring through establishment or investment |
| Shenzhen Petrel Hotel Co. Ltd. | Shenzhen | Shenzhen | Hotel Services | 68.10 | 31.90 | Acquiring through establishment or investment |
| Shenzhen Zhen Tung Engineering Ltd. | Shenzhen | Shenzhen | Installation and maintenance | 73.00 | 27.00 | Acquiring through establishment or investment |
| Shenzhen City We Gen Construction Management Ltd. | Shenzhen | Shenzhen | Supervision | 75.00 | 25.00 | Acquiring through establishment or investment |
| Shenzhen Lain Hua Industry and Trading Co., Ltd. | Shenzhen | Shenzhen | Mechanical & Electrical device installation | 95.00 | 5.00 | Acquiring through establishment or investment |
| Fresh Peak Zhiye Co., Ltd. | Hong Kong | Hong Kong | Investment and management | 100.00 | -- | Acquiring through establishment or investment |
| Xin Feng Enterprise Co., Ltd. | Hong Kong | Hong Kong | Investment and management | 100.00 | -- | Acquiring through establishment or investment |
| Shenzhen City Shenfang Free Trade Trading Ltd. | Shenzhen | Shenzhen | Commercial trade | 95.00 | 5.00 | Acquiring through establishment or investment |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Name | Principal place of business | Registration place | Business nature | Shareholding% | Acquisition method | |
| Direct | Indirect | |||||
| Shenzhen City Shenfang Investment Ltd. | Shenzhen | Shenzhen | Investment | 90.00 | 10.00 | Acquiring through establishment or investment |
| Shenzhen Special Economic Zone Real Estate (Group) Guangzhou Property and Estate Co., Ltd. | Shenzhen | Shenzhen | Real estate development | 95.00 | 5.00 | Acquiring through establishment or investment |
| Beijing fresh peak property development management limited company | Beijing | Beijing | Real estate operation | 75.00 | 25.00 | Acquiring through establishment or investment |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | Huizhou | Huizhou | Real estate operation | 51.00 | Acquiring through business acquisition | |
| Shenzhen Shenfang Chuanqi Real Estate Development Co., Ltd. | Shenzhen | Shenzhen | Real estate operation | 100.00 | Acquired through establishment or investmen | |
Note：
①In consolidation scope, there are five subsidiaries in “revoked but not cancelled” condition: BeijingSPG Property Management Limited, Guangzhou Huangpu Xizun real estate limited company,Shenzhen Special Economic Zone Real Estate (Group) Guangzhou Property and Estate Co., Ltd.,Fresh Peak Real Estate Dev. Construction (Wuhan) Co. Ltd. and Beijing Shenfang PropertyManagement Co., Ltd. They are presented on the basis of discontinued operations; these fivesubsidiaries have made full provision for impairment of debt for the companies outside the consolidationscope.
② The cancelled, revoked and closed subsidiaries of the Company that are not included in thescope of consolidation are as follows:
| Name | Principal place of business | Registration place | Business nature | Shareholding% | Acquisition method | |
| Direct | Indirect | |||||
| Shenzhen Shenfang Department Store Co. Ltd | Shenzhen | Shenzhen | Commercial trade | 95.00 | 5.00 | Acquiring through establishment or investment |
| Paklid Limited | Hong Kong | Hong Kong | Commercial trade | 60.00 | 40.00 | Acquiring through establishment or investment |
| Bekaton Property Limited | Australia | Australia | Real estate | 60.00 | -- | Acquiring through establishment or investment |
| Canada Great Wall (Vancouver) | Canada | Canada | Real estate | -- | 60.00 | Acquiring through establishment or investment |
| Guangdong Fengkai County Lianfeng Cement Manufacturing Co., Ltd. | Fengkai Guangdong | Fengkai Guangdong | Manufacturing | -- | 90.00 | Acquiring through establishment or |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Name | Principal place of business | Registration place | Business nature | Shareholding% | Acquisition method | |
| Direct | Indirect | |||||
| investment | ||||||
| Jiangmen Xinjiang Real Estate Co., Ltd | Jiangmen Guangdong | Jiangmen Guangdong | Real estate | -- | 90.91 | Acquiring through establishment or investment |
| Xi’an Fresh Peak Property Trading Co., Ltd | Xi’an Shanxi | Xi’an Shanxi | Real estate | -- | 67.00 | Acquiring through establishment or investment |
| Shenxi Limited | Shenzhen | Shenzhen | Building Decoration | 70.00 | -- | Acquiring through establishment or investment |
| Shenzhen Zhentong New Electromechanical Industry Development Co., Ltd. | Shenzhen | Shenzhen | Mechanical and electrical engineering | 95.00 | 5.00 | Acquiring through establishment or investment |
| Shenzhen Real Estate Electromechanical Management Company | Shenzhen | Shenzhen | Mechanical and electrical Management | 100.00 | -- | Acquiring through establishment or investment |
| Shenzhen Nanyang Hotel Co., Ltd. | Shenzhen | Shenzhen | Hotel Management | 95.00 | 5.00 | Acquiring through establishment or investment |
| Shenzhen Kangtailong Industrial Electric Cooker Co., Ltd. | Shenzhen | Shenzhen | Industrial manufacturing | -- | 100.00 | Acquiring through establishment or investment |
| Shenzhen Longgang Henggang Huagang Industrial Co., Ltd. | Shenzhen | Shenzhen | Industrial Investment | -- | 79.92 | Acquiring through establishment or investment |
Note：
1. Shenzhen Shenfang Department Store Co. Ltd called a shareholder meeting on 29 October 2007,decided to terminate the business and establish a liquidation team to conduct the liquidation. Theliquidation team issued a liquidation report on 7 December, 2007.
2. Paklid Limited, Bekaton Property Limited and Canada Great Wall (Vancouver) were established by
the group abroad in the early years. On 13 December 2000, the group held a board meeting anddecided to liquidate these three companies. Bekaton Property Limited and Canada Great Wall(Vancouver) have been winded up.
3. All assets from Guangdong Fengkai County Lianfeng Cement Manufacturing Co., Ltd. (includingtangible and intangible asset) were auctioned by the court on 22 January 2019, becoming a shellcompany.
4. Shenxi Limited was a holding subsidiary of Shenzhen Tefa Real Estate Consolidated Services Co.,Ltd. which is a deregistered subsidiary of the group. By the Group’s announcement, “The notice onthe merger of Shenzhen Zhen Tung Engineering Ltd and Shenxi Limited” (Shenfang [1997] No.19),all businesses form Shenxi Limited were undertaken by Shenzhen Zhen Tung Engineering Ltd andShenxi Limited and were revoked on 8 February 2002.The group could no longer effectively control these invested companies which have not been included inthe consolidation scope were either been cancelled or ceased operation many years ago, and were no
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
longer exist. According to “Accounting Standard for Business Enterprises No. 33-Consolidated FinancialStatements”, the group already accrued full amount of impairment for the book value of the netinvestment in above companies which are not included in the consolidated scope.
(2) Material non-wholly owned subsidiaries
| Name | Proportion ofownership interest held by non-controlling interests % | Profit or loss allocated to non-controlling interests during the year | Dividend declared to non-controlling shareholders during the year | Balance of non-controlling interests as at 2021.12.31 |
| American Great Wall Co., Ltd | 30.00 | -85,336.59 | -- | -19,533,105.73 |
| Xinfeng Investment Co., Ltd. | 45.00 | -1,375.31 | -- | -116,180,387.59 |
| Baiwei Real Estate Co., Ltd. | 20.00 | -2,692.95 | -- | -3,889,709.36 |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | 49.00 | -3,120,424.87 | -- | 428,698,890.60 |
(3 )Key financial information about material non-wholly owned subsidiaries
| Name | 2021.12.31 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| American Great Wall Co., Ltd | 585,669.06 | 17,615,753.07 | 18,201,422.13 | 99,105,956.86 | -- | 99,105,956.86 |
| Xinfeng Investment Co., Ltd. | 4,748.07 | 36,016.90 | 40,764.97 | 258,219,487.07 | -- | 258,219,487.07 |
| Baiwei Real Estate Co., Ltd. | 957.41 | -- | 957.41 | 32,908,874.92 | -- | 32,908,874.92 |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | 1,190,571,804.12 | 3,795,473.63 | 1,194,367,277.75 | 1,201,698,603.08 | 125,920.77 | 1,201,824,523.85 |
Continued(1)：
| Name | 2020.12.31 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| American Great Wall Co., Ltd | 135,920.52 | 18,027,985.50 | 18,163,906.02 | 101,822,102.87 | -- | 101,822,102.87 |
| Xinfeng Investment Co., Ltd. | 4,769.05 | 36,016.90 | 40,785.95 | 258,216,451.81 | -- | 258,216,451.81 |
| Baiwei Real Estate Co., Ltd. | 985.56 | -- | 985.56 | 32,895,438.31 | -- | 32,895,438.31 |
Continued(2)：
| Name | Year ended 2021.12.31 | Year ended 2020.12.31 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
| American Great Wall Co., Ltd | 632,524.86 | -284,455.30 | -284,455.30 | 352,837.90 | 839,012.25 | -774,074.99 | -774,074.99 | -774,075.02 |
| Xinfeng Investment Co., Ltd. | - | -3,056.24 | -3,056.24 | -20.98 | -- | -53,650.12 | -53,650.12 | -- |
| Baiwei Real Estate Co., Ltd. | - | -13,464.76 | -13,464.76 | -28.15 | - | -53,264.03 | -53,264.03 | -- |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | - | -6,368,214.03 | -6,368,214.03 | -748,387,911.00 | -- | -- | -- | -- |
2. Interests in joint ventures or associates
（1）Summarised financial information of immaterial joint ventures and associates:
| Item | As at/Year ended 2021.12.31 | As at/Year ended 2020.12.31 |
| Joint ventures: | ||
| Aggregate carrying amount of investments | -- | -- |
| Aggregate amount of share of | -- | -- |
| Net profit | -- | -- |
| Other comprehensive income | -- | -- |
| Total comprehensive income | -- | -- |
| Associates： | ||
| Aggregate carrying amount of investments | 272,168.28 | 377,489.65 |
| Aggregate amount of share of | ||
| Net profit | -105,321.37 | -92,348.97 |
| Other comprehensive income | -- | -- |
| Total comprehensive income | -- | -- |
（2）Excess loss from joint ventures or associates
| Investee | Accumulated unrecognized loss in prior periods | Unrecognized loss (or share of net profit)for the year | Accumulated unrecognized loss as at 2021.12.31 |
| Shenzhen Fresh Peak property consultant Co., Ltd | 2,217,955.89 | -- | 2,217,955.89 |
Note:
Shenzhen Fresh Peak property consultant Co., Ltd was established on 15 March 1993 with registeredcapital of CNY 3,000,000. The group subscribed CNY 600,000 (20% in total capital). As at 31
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
December 2021, the actual investment is CNY 600,000 the Company has recognized long-term equityinvent lose for CNY 600,000.
VIII. Risk Management of Financial InstrumentsThe Group's main financial instruments include the monetary funds, notes receivable, other receivables,trading financial assets, other current assets, accounts receivable, other equity instrument investments,accounts payable, other payables, short-term borrowing, long-term payables. Details of the variousfinancial instruments are disclosed in the relevant notes. The risks associated with these financialinstruments and the risk management policies adopted by the Group to mitigate these risks aredescribed below. The management of the Group manages and monitors these exposures to ensure thatthese risks are contained within the limits specified.
1. Risk management objectives and policies
The Group's goal in risk management is to strike an appropriate balance between risks and benefits,and strive to reduce the adverse impact of financial risks on the Group's financial performance. Basedon this risk management objective, the Group has developed a risk management policy to identify andanalyze the risks faced by the Group, set an appropriate acceptable risk level and design thecorresponding internal control procedures to monitor the risk level of the Group. The Group regularlyreviews these risk management policies and the relevant internal control systems to adapt to marketconditions or changes in the Group's business activities. The Group's internal audit department alsoregularly or randomly checks whether the implementation of the internal control system complies withthe risk management policy.The main risks arising from the Group's financial instruments are credit risk, liquidity risk, market risk(including exchange rate risk, interest rate risk and commodity price risk).The Board of Directors is responsible for planning and establishing the Group's risk managementstructure, formulating the Group's risk management policies and relevant guidelines and overseeing theimplementation of risk management measures. The Group has developed risk management policies toidentify and analyze the risks faced by the Group. These risk management policies clearly stipulatespecific risks, covering market risk, credit risk, liquidity risk management and many other aspects. TheGroup regularly evaluates changes in the market environment and the Group's business activities todetermine whether to update its risk management policies and systems.The Group diversifies the risks of financial instruments through appropriate diversification of its portfolioof investments and businesses, and reduces the risk of concentration in a single industry, a specificregion or a specific counterparty through the development of appropriate risk management policies.
（1）Credit risk
Credit risk refers to the risk of financial loss to the Group resulting from the failure of the counterparty tofulfill its contractual obligations.The Group manages credit risks according to portfolio classification. Credit risks mainly arise from bankdeposits, notes receivable, accounts receivable, other receivables.
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
The Group's bank deposits are mainly held in state-owned banks and other large and medium-sizedlisted banks (or mainly in financial institutions with good reputations and high credit ratings), and theGroup does not expect that the bank deposits will pose a significant credit risk.For notes receivable, accounts receivable, other receivables and long-term receivables, the Group setspolicies to control credit risk exposure. The Group evaluates customers' credit qualifications and setscredit periods based on their financial status, credit history and other factors such as current marketconditions. The Group will regularly monitor the credit records of customers. For customers with poorcredit records, the Group will use written methods to urge payment, shorten the credit period or cancelthe credit period to ensure that the overall credit risk of the Group is within a controllable range.The debtors of the Group's accounts receivable are customers distributed in different industries andregions. The Group continuously conducts credit assessments on the financial position of accountsreceivable and, where appropriate, takes out credit guarantee insurance.The maximum credit risk exposure of the Group is the carrying amount of each financial asset on thebalance sheet. The Group does not provide any other security which may expose the Group to a creditrisk.Of the Group's accounts receivable, the accounts receivable of the top five customers account for
56.87% of the Group's total accounts receivable (in 2020: 53.97%); Among other receivables of theGroup, other receivables from the top five companies in arrears amount to 63.70% (2020: 61.40%) ofthe total amount of other receivables of the Group.
（2）Liquidity risk
Liquidity risk refers to the risk that the Group will encounter a shortage of funds when fulfilling itsobligations to settle by delivering cash or other financial assets.In managing liquidity risks, the Group maintains and monitors cash and cash equivalents deemedsufficient by the management to meet the operational needs of the Group and to reduce the impact ofcash flow fluctuations. The Group's management monitors the use of bank borrowings and ensurescompliance with borrowing agreements. It also secured a commitment from major financial institutionsto provide adequate standby funds to meet short - and long-term funding needs.The Group finances its working capital through funds generated from its operations and bank and otherborrowings. As at 31 December 2021, the Group's unutilized bank loan amount is CNY 0 million (31December 2020: CNY 0 million).At the end of the period, the maturity analysis of the financial assets, financial liabilities and off-balancesheet guarantee items held by the Group according to the undiscounted remaining contract cash flow isas follows (unit: CNY 10,000) :
| Item | 2021.12.31 | |||
| Within one year | One to Five years | More than five years | Total | |
| Financial liabilities: | ||||
| Short-term loans | 5,044.01 | -- | -- | 5,044.01 |
| Notes payable | 24,737.64 | -- | -- | 24,737.64 |
| Accounts payable | 14,144.76 | -- | -- | 14,144.76 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Interest payables | 1,653.53 | -- | -- | 1,653.53 |
| Other payables | 56,484.21 | -- | -- | 56,484.21 |
| Liabilities held for sale | 5,791.56 | 783.69 | -- | 6,575.25 |
| Guarantees for client | 39,237.82 | -- | -- | 39,237.82 |
| Total financial liabilities and contingent liabilities | 141,301.97 | 6,575.25 | - | 147,877.22 |
At the beginning of the period, the maturity analysis of the financial assets, financial liabilities andoff-balance sheet guarantee items held by the Group according to the undiscounted remaining contractcash flow is as follows (unit: CNY 10,000) :
| Item | 2020.12.31 | |||
| Within one year | One to Five years | More than five years | Total | |
| Financial liabilities: | ||||
| Short-term loans | 7,689.40 | -- | -- | 7,689.40 |
| Accounts payable | 17,692.66 | -- | -- | 17,692.66 |
| Interest payables | 1,653.53 | -- | -- | 1,653.53 |
| Other payables | 26,056.99 | -- | -- | 26,056.99 |
| Long-term payables | -- | 748.02 | -- | 748.02 |
| Guarantees for client | 37,135.79 | -- | -- | 37,135.79 |
| Total financial liabilities and contingent liabilities | 90,228.36 | 748.02 | -- | 90,976.38 |
The amount of financial liabilities disclosed in the above table is undiscounted contractual cash flowsand may be different from the carrying amount on the balance sheet.The maximum amount of a guarantee contract that has been signed does not represent the amount tobe paid.
（3）Market risks
The market risk of financial instruments refers to the risk that the fair value or future cash flow offinancial instruments will fluctuate due to market price changes, including interest rate risk, exchangerate risk and other price risks.Interest rate riskInterest rate risk refers to the risk that the fair value of a financial instrument or future cash flow willfluctuate due to changes in market interest rates. Interest rate risk can arise from recognizedinterest-bearing financial instruments and from unrecognized financial instruments (such as certain loancommitments).The interest rate risk of the Group mainly arises from long-term bank borrowings. Floating interest ratefinancial liabilities expose the Group to cash flow interest rate risk, while fixed interest rate financialliabilities expose the Group to fair value interest rate risk. The Group determines the relative proportionof fixed and floating rate contracts based on prevailing market conditions and maintains an appropriatemix of fixed and floating rate instruments through regular review and monitoring.
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
During the reporting period, the Group operates by its own working capital. As at 30 June 2021, theGroup has no financial liabilities with fixed or floating interest rate, such as bank loan. Therefore, theGroup believes that the interest rate risk is insignificant
Currency riskThe term "exchange rate risk" refers to the risk that the fair value of a financial instrument or future cashflow will fluctuate due to changes in foreign exchange rates. Exchange rate risk can arise from financialinstruments denominated in a foreign currency other than the standard currency.Exchange rate risk is mainly the Group's financial position and cash flows are affected by foreignexchange rate fluctuations. In addition to the subsidiary established in Hong Kong holding assets inHong Kong dollar as the settlement currency, only a small amount of Hong Kong market investmentbusiness, the group's foreign currency assets and liabilities accounted for the overall assets andliabilities of the proportion is not significant. Therefore, the Group believes that the exchange rate risk isnot significant.
2. Capital management
The objective of the Group's capital management policy is to ensure that the Group can continue as agoing concern, thereby providing a return to shareholders and benefiting other stakeholders, whilemaintaining an optimal capital structure to reduce the cost of capital.In order to maintain or adjust its capital structure, the Group may adjust its financing method, adjust theamount of dividends paid to shareholders, return capital to shareholders, issue new shares and otherequity instruments or sell assets to reduce its debt.The Group monitors the capital structure on the basis of the debt-to-asset ratio (i.e., total liabilitiesdivided by total assets). As at 31 December 2021, the Group's liability to asset ratio was 31.62% (31December 2020: 25.92%).IX. Fair valueThe level in which fair value measurement is categorised is determined by the level of the fair valuehierarchy of the lowest level input that is significant to the entire fair value measurement. The levels aredefined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement datefor identical assets or liabilities.Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable forunderlying assets or liabilities.Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
(1) Items and amounts measured at fair value
As at December 31, 2021, the assets and liabilities measured at fair value are listed as followsaccording to the above three levels :
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | The first level of fair value measurement | The second level of fair value measurement | The third level of fair value measurement | Total |
| I.Recurring fair value measurement | ||||
| (1) Trading financial assets | 514,024,710.91 | -- | -- | 514,024,710.91 |
| (2) Investment in other equity instruments | -- | -- | 36,322,704.33 | 36,322,704.33 |
| Total assets measured at fair value on a recurring basis | 514,024,710.91 | -- | 36,322,704.33 | 550,347,415.24 |
(2) Quantification information of important unobservable input values used in the third level of fair valuemeasurement
| Within the capacity | Ending fair value | Valuation techniques | The input value cannot be observed | Range (weighted mean) |
| Equity instrument investment:： | ||||
| Non-listed equity investments: | 36,322,704.33 | Net asset method | Book value of net assets with discount of liquidity | N/A |
(3) Items and amounts that are not measured at fair value but disclose their fair valueThe financial assets and financial liabilities of the Group measured at amortized cost mainly includemonetary funds, accounts receivable, other receivables, short-term borrowings, accounts payable, otherpayables, long-term borrowings, etc.Except for the following financial assets and financial liabilities, the carrying value of other financialassets and financial liabilities which are not measured at fair value varies very little from fair value.X. Related parties and related party transactions
1. Information about the parent of the Group
| Name | Registration place | Business nature | Registered capital (CNY0,000) | Shareholding percentage % | Percentage of voting rights % |
| Shenzhen Investment Holdings Co., Ltd. | Shenzhen, Guangdong province | Investment, real estate development, guarantee | 2,800,900.00 | 57.19 | 57.19 |
The ultimate controlling party of the Group is State-owned Assets Supervision and ManagementCommission of Shenzhen Municipal People’s Government.In the reporting period, the registered capital of the parent company is not changed.
2. Information about the subsidiaries of the Group
For information about the subsidiaries of the Group, refer to Note 02.
3. Information on other related parties
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Name | Related party relationship |
| Shenzhen Jian ‘an Group Co., Ltd. | Both controlled by the parent company |
| Shenzhen Dongfang New world store Co., Ltd | Participating stock companies |
| Shenxi Limited | Not included in Consolidated Financial Statements’ Subsidiary that had been terminated its licenses by law but not cancellation |
| Shenzhen Zhentong New Electromechanical Industry Development Co., Ltd. | Not included in Consolidated Financial Statements’ Subsidiary (Long-term without operation) |
| Shenzhen Nanyang Hotel Co., Ltd. | Not included in Consolidated Financial Statements’ Subsidiary that had been terminated its licenses by law but not cancellation |
| Shenzhen Real Estate Electromechanical Management Company | Not included in Consolidated Financial Statements’ Subsidiary that had been terminated its licenses by law but not cancellation |
| Shenzhen Longgang Henggang Huagang Industrial Co., Ltd. | Not included in Consolidated Financial Statements’ Subsidiary that had been terminated its licenses by law but not cancellation |
| Guangzhou Bobi Enterprise Management Consulting Co., Ltd. | Shareholder of Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. |
| Directors, Supervisors, CFO and Board secretary | Key management personnel |
4. Transactions with related parties
(1)Purchases/sales
①Purchase of goods/receiving of services
| Related party | Nature of transaction | Year ended 2021.12.31 | Year ended 2020.12.31 |
| Shenzhen RongHua JiDian Co., Ltd | Elevator maintenance | 1,329,886.76 | 1,293,962.28 |
②Sales of goods/rendering of services
| Related party | Nature of transaction | Year ended 2021.12.31 | Year ended 2020.12.31 |
| Shenzhen Jian'an Group Co., Ltd. | Decoration services | 7,614,678.90 | 7,258,154.64 |
| Shenzhen RongHua JiDian Co., Ltd | Property Services | 68,772.00 | 68,772.00 |
(2) Trust/contracting arrangement
① contracting undertaken by related parties on behalf of the Group
| main contractor | Name of related party | Type of contracted | Inception date of contracting | Maturity date of contracting | contracting revenue | contracting revenue recognized in 2020 |
| Shantou City Huafeng Real Estate Devepment Co., Ltd | Shenzhen Jian'an Group Co., Ltd. | Construction | 19 Oct. 2018 | 1 May 2021 | Negotiations | 30,985,550.60 |
② Funding from related party
| Related party | Amount of funding | Inception date | Maturity date | Note |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Related party | Amount of funding | Inception date | Maturity date | Note |
| Funds received | ||||
| Shenzhen Investment Shareholding Co. Ltd | 16,535,277.94 | 9 November 2006 | 22 December 2016 | The principal of the loan was repaid on 22 December 2016, and the remaining amount is interest payable. |
Note: at the end of the reporting period, the balance of interest on loan to Shenzhen Investment HoldingCo. , Ltd. is CNY 16,535,277.94.
（3）Remuneration of key management personnel
The Group has 10 key management personnel in 2021, and 13 key management personnel in 2020.Information about remuneration is as follows:
| Item | Year ended 2021.12.31 | Year ended 2020.12.31 |
| Remuneration of key management personnel | 844.64 | 884.86 |
（4）In order to encourage the core employees of the group to share the operating results of themarket-oriented projects with the company, share the operating risks, stimulate the endogenousmotivation of improving efficiency and increasing benefits, enhance the efficiency of asset management,and realize the preservation and appreciation of the value of state-owned assets, the company hasformulated the "Management Measures for Investment From the Staff of Shenfang Group Linxi JunProject". According to the above-mentioned management measures, the related party transactions willform a joint investment with some directors, supervisors and senior executives of the company. As of 31December 2021, the company's directors, supervisors and senior executives had invested a total ofCNY 8.95 million.
6. Receivables from and payables to related parties
(1) Receivables from related parties
| Item | Related party | 2021.12.31 | 2020.12.31 | ||
| Book value | Provision for bad and doubtful debts | Book value | Provision for bad and doubtful debts | ||
| Accounts receivable | Shenzhen Fresh Peak property consultant Co., Ltd | 1,118,383.88 | 1,118,383.88 | 1,144,740.49 | 1,144,740.49 |
| Other receivables | Guangdong Province Huizhou Luofu Hill Mineral Water Co., Ltd | 10,465,168.81 | 10,465,168.81 | 10,465,168.81 | 10,465,168.81 |
| Other receivables | Shenzhen Runhua Automobile Trading Co., Ltd | 3,072,764.42 | 3,072,764.42 | 3,072,764.42 | 3,072,764.42 |
| Other receivables | Canada GreatWall (Vancouver) Co., Ltd | 89,035,748.07 | 89,035,748.07 | 89,035,748.07 | 89,035,748.07 |
| Other receivables | Australia Bekaton Property Limited | 12,559,290.58 | 12,559,290.58 | 12,559,290.58 | 12,559,290.58 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | Related party | 2021.12.31 | 2020.12.31 | ||
| Book value | Provision for bad and doubtful debts | Book value | Provision for bad and doubtful debts | ||
| Other receivables | Bekaton Property Limited | 18,689,545.58 | 18,870,785.54 | 18,870,785.54 | 18,870,785.54 |
| Other receivables | Shenzhen Shenfang Department Store Co. Ltd. | 237,648.82 | 237,648.82 | 237,648.82 | 237,648.82 |
| Other receivables | Shenzhen RongHua JiDian Co., Ltd | 475,223.46 | 475,223.46 | 475,223.46 | 23,761.17 |
| Other receivables | Xi’an Fresh Peak property management& Trading Co., Ltd | 8,419,205.19 | 8,419,205.19 | 8,419,205.19 | 8,419,205.19 |
| Other receivables | Shenzhen Shenxi Architectural Decoration Company | 7,660,529.37 | 7,660,529.37 | 7,660,529.37 | 7,660,529.37 |
| Other receivables | Shenzhen Jian'an Group Co., Ltd. | 3,168,721.00 | 3,168,721.00 | 3,168,721.00 | 3,168,721.00 |
（2）Payables to related parties
| Item | Related party | 2021.12.31 | 2020.12.31 |
| Interest payables | Shenzhen Investment Shareholding Co. Ltd | 16,535,277.94 | 16,535,277.94 |
| Accounts payable | Shenzhen Jian'an Group Co., Ltd. | 25,576,607.95 | 54,193,856.16 |
| Other payables | Shenzhen Dongfang New world store Co., Ltd | 902,974.64 | 902,974.64 |
| Other payables | Guangdong Province Fengkai Lain Feng Cement Manufacturing Co., Ltd. | 1,867,348.00 | 1,867,348.00 |
| Other payables | Shenzhen Real Estate Electromechanical Management Company | 14,981,420.99 | 14,981,420.99 |
| Other payables | Shenzhen Zhentong New Electromechanical Industry Development Co., Ltd. | 8,827,940.07 | 8,827,940.07 |
| Other payables | Shenzhen Shenfang Department Store Co. Ltd. | 639,360.38 | 639,360.38 |
| Other payables | Shenzhen Longgang Henggang Huagang Industrial Co., Ltd. | 165,481.09 | 165,481.09 |
| Interest payables | Shenzhen Investment Shareholding Co. Ltd | 193,016,852.52 | -- |
XI. Commitments and contingencies
1. Significant commitments
(1) Capital commitments
| Capital commitments entered into but not recognized in the financial statements | 2021.12.31 | 2020.12.31 |
| Material sales or purchases contracts | 475,137,087.80 | 153,945,220.09 |
(2) Information on implementation of commitments in previous yearsRefer to Note X.5 (2) for detailed of contracting of related parties.As at 31 December 2021, there is no other commitment to be disclosed.
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
2. Contingencies
(1) Contingent liabilities arising from pending arbitration and pending litigation and related financialimpact
| Plaintiff | Defendant | Case | Appellate court | Amount of the object of action | Progress of cases |
| Xi’an Fresh Peak Holding limited company | Xi'an Commercial and Trade Commission Xi'an Commerce and Tourism Co., Ltd. | Investment compensation disputes | Shaanxi Higher People's Court | CNY 36.62 million and interest | Pending |
Xi’an Fresh Peak Holding limited company (hereinafter referred to as “Fresh Peak Company”) wasSino-foreign joint venture set up in Xi’an. Among them, Fresh Peak Enterprise Co., Ltd made 67% of theshares in cash. Xi’an Trade Building, a company directly under the Xi'an Commercial and TradeCommission (hereinafter referred to as "Xi'an C&T Commission"), invested 16% of the shares in landuse rights. Hong Kong Dadiwang Industrial Investment Company holds 17% of the shares. The corebusiness was property development. And the project was Xi’an Trade Building. The project was startedon 28 November 1995. But the project had been stopped in 1996 because of the two parties’ differenceson the operating policy of the project. In 1997, the Xi’an government withdrew the Xi'an Fresh Peakinvestment project compulsively and assigned the project to Xi’an Business Tourism Co., Ltd(hereinafter referred to as “Business Tourism Company”). But two parties had insulted a lawsuit oncompensation. The ShanXi Province High Peoples Court made a judgement “(2000) SJ-CZ No.25”. Thejudgement was as follows: 1. Business Tourism Company had to pay for the compensation CNY 36,620thousand to Xi’an Fresh Peak Company after the judgment entering into force. If the Business TourismCompany 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 thecompensation.By auctioning assets of Business Tourism Company, the amount of CNY 15,201,000.00 had been calledback. The company has obtained new property clues, submitted an application for resumption ofexecution, this case is still pending until 31 December 2021.As at 31 December 2021, the book value of the long-term equity investment of Xi’an Fresh PeakCompany is CNY 32,840,729.61. The book balance of assets was CNY 8,419,205.19. Both have beentaken full provision for impairment loss
(2) Contingent liabilities arising from guarantee provided to other entities and related financial effects.As at 31 December 2021, the Group provides commercial housing purchaser with guarantees at CNY392,378,200.00 for the following loans:
| Item | Duration | Amount (In ten thousand) | Note |
| Shengfang CuiLin Building | Until the Premises Permit mortgage registration is finished and in bank custody | 2,802.31 | |
| ChuanQi DongHu Building (Former DongHuDiJing Building) | Until the Premises Permit mortgage registration is finished and in bank custody | 2,924.43 | |
| TianYue Bay | Until the Premises Permit mortgage | 33,511.08 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | Duration | Amount (In ten thousand) | Note |
| registration is finished and in bank custody | |||
| Total | 39,237.82 |
(3) Other contingencies（Not including contingent liabilities that are highly unlikely to result in an outflowof economic benefits from the business）For information about contingency of joint venture or joint venture investment, refer to Note VII 2. (2).As at 31 December 2021, there is no other contingency to be disclosed.XII. Post balance sheet date events
1. Profit appropriations plans after the balance sheet date
The company intends to pay a cash dividend of CNY 0.88 (including tax) , totaling CNY 89,026,080.00,to all shareholders on 1,011,660,000 shares as at 31 December 2021.
2. The sale of Shenzhen Shenfang Investment Co. , Ltd.
In order to optimize and adjust the industrial structure, on 30 December 2021, the group and itssubsidiary Shenzhen Shenfang Investment Co. , Ltd. signed an Equity Purchase Agreement withShenzhen Guomao Property Management Co. , Ltd., the total holding of Shenzhen PropertyManagement Co. , Ltd. 100% equity transfer to Shenzhen International Trade Property ManagementCo. , Ltd. , the transfer price is CNY 196,676.7 million. On 11 February 2022, the company hascompleted the above equity transfer.As at 17 March 2022, there is no other post balance sheet date events in the group to be disclosed.XIII. Other significant items
1. Termination of operation
| Item | Current amount | Amount of previous period |
| Income from Termination of Operations (A) | 163,141,074.63 | 151,546,323.15 |
| Less: termination expenses (B) | 160,034,977.84 | 149,890,088.34 |
| Gross profit from terminated operations (C) | 4,470,327.62 | 5,171,663.63 |
| Minus: Income tax expense for termination of operations (D) | 1,123,400.14 | 1,373,074.99 |
| Net profit from operating activities (E=C-D) | 3,346,927.48 | 3,798,588.64 |
| Impairment loss on assets/(reverse) (F) | -- | -- |
| Gross disposal proceeds (G) | -- | -- |
| Disposal of related income tax expense (H) | -- | -- |
| Net profit on disposal (I= g-h) | -- | -- |
| Net profit from terminated operations (J=E+F+I) | 3,346,927.48 | 3,798,588.64 |
| Including: profit from terminated operations attributable to shareholders of the parent company | 3,346,927.48 | 3,798,588.64 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | Current amount | Amount of previous period |
| Termination profit attributable to minority shareholders | -- | -- |
| Net cash flow from operating activities | -3,487,467.47 | -2,615,700.26 |
| Net cash flow from investment activities | -528,491.28 | -615,198.54 |
| Net cash flow from financing activities | - | -- |
Note: The above items are the financial data of Shenzhen Property Management Co. , Ltd. which hassigned an agreement for sale.XIV. Notes for main items in the parent company's financial statements
1. Accounts Receivable
(1) Disclosed by aging
| Aging | 2021.12.31 | 2020.12.31 |
| Within one year | 9,893,622.09 | 5,281,165.00 |
| One to two years | -- | -- |
| Two to three years | -- | 66,518.00 |
| More than three years | 9,710,249.94 | 10,221,420.93 |
| Subtotal | 19,603,872.03 | 15,569,103.93 |
| Less: bad debt provision | 9,895,586.10 | 10,151,079.19 |
| Total | 9,708,285.93 | 5,418,024.74 |
(2) Disclosed by categories
| Item | 2021.12.31 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion | Amount | Provision proportion | ||
| Bad debt provisions made on an individual basis | 9,649,415.20 | 49.22 | 9,649,415.20 | 100.00 | -- |
| Bad debt provisions made on an combination basis | 9,954,456.83 | 50.78 | 246,170.90 | 2.47 | 9,708,285.93 |
| Including： | -- | -- | -- | -- | -- |
| Receivables from related parties within consolidated scope | 5,031,038.74 | 25.67 | - | - | 5,031,038.74 |
| Receivables from other customers | 4,923,418.09 | 25.11 | 246,170.90 | 5.00 | 4,677,247.19 |
| Total | 19,603,872.03 | 100.00 | 9,895,586.10 | 50.48 | 9,708,285.93 |
Continued：
| Item | 2020.12.31 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion | Amount | Provision proportion | ||
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | 2020.12.31 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion | Amount | Provision proportion | ||
| Bad debt provisions made on an individual basis | 10,132,205.24 | 65.08 | 10,132,205.24 | 100.00 | -- |
| Bad debt provisions made on an combination basis | 5,436,898.69 | 34.92 | 18,873.95 | 0.35 | 5,418,024.74 |
| Including： | -- | -- | -- | -- | -- |
| Receivables from related parties within consolidated scope | 5,059,419.69 | 32.50 | -- | -- | 5,059,419.69 |
| Receivables from other customers | 377,479.00 | 2.42 | 18,873.95 | 5.00 | 358,605.05 |
| Total | 15,569,103.93 | 100.00 | 10,151,079.19 | 65.20 | 5,418,024.74 |
Bad debt provision made on an individual basis:
| Item | 2021.12.31 | 2020.12.31 | |||||
| Book balance | Bad debt provision | Expected credit loss rate (%) | Reason | Book balance | Bad debt provision | Expected credit loss rate (%) | |
| long-term accounts receivable from property sales | 9,649,415.20 | 9,649,415.20 | 100.00 | 10,132,205.24 | 10,132,205.24 | 100.00 | Uncollected is expected |
Bad debt provision made on a combination basis:
Combined withdrawal item: related parties in consolidation scope
| Aging | 2021.12.31 | 2020.12.31 | ||||
| Accounts receivable | Bad debt provision | Expected credit loss rate (%) | Accounts receivable | Bad debt provision | Expected credit loss rate (%) | |
| Within 1 year | 5,031,038.74 | -- | -- | 5,059,419.69 | -- | -- |
Combined withdrawal item: receivables from other customers
| 2021.12.31 | 2020.12.31 | |||||
| Accounts receivable | Bad debt provision | Expected credit loss rate (%) | Accounts receivable | Bad debt provision | Expected credit loss rate (%) | |
| Within 1 year | 4,923,418.09 | 246,170.90 | 5.00 | 310,961.00 | 15,548.05 | 5.00 |
| 1 to 2 years | -- | -- | -- | -- | -- | -- |
| 2 to 3 years | -- | -- | -- | 66,518.00 | 3,325.90 | 5.00 |
| Total | 4,923,418.09 | 246,170.90 | 5.00 | 377,479.00 | 18,873.95 | 5.00 |
(3) Additions, recoveries or reversals of provision for the current period
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Bad debt provision | |
| 2020.12.31 | 10,151,079.19 |
| Additions | -- |
| Recoveries or reversals | 255,493.09 |
| Written-off | -- |
| 2021.12.31 | 9,895,586.10 |
(4) The top five units with the ending balance of accounts receivable collected by the debtor
| Name of the entity | Accounts receivable The ending balance | % of the total closing balance of accounts receivable | Bad debt provision The ending balance |
| Shenzhen Haiyan Hotel Co., Ltd. | 5,031,038.74 | 25.66 | -- |
| Shenzhen Xinfeng Real Estate Consulting Co., Ltd. | 1,118,383.88 | 5.70 | 1,118,383.88 |
| Daxing Automotive parts Co., Ltd. | 1,857,730.28 | 9.48 | 1,857,730.28 |
| Weidong Wang | 1,200,000.00 | 6.12 | 1,200,000.00 |
| Guangyao Cai | 876,864.11 | 4.47 | 876,864.11 |
| Total | 10,084,017.01 | 51.43 | 5,052,978.27 |
2. Other receivables
(1) Disclosure by aging
| Aging | 2021.12.31 | 2020.12.31 |
| Within 1 year | 568,919,874.78 | 342,045,464.68 |
| 1 to 2 years | 209,903,464.26 | 79,875,511.65 |
| 2 to 3 years | 78,698,092.26 | 140,372,735.75 |
| More than 3 years | 1,522,297,306.33 | 1,399,130,297.43 |
| Subtotal | 2,379,818,737.63 | 1,961,424,009.51 |
| Less: bad debt provision | 792,517,845.87 | 801,009,814.12 |
| Total | 1,587,300,891.76 | 1,160,414,195.39 |
(2) Disclosure by nature
| Item | 2021.12.31 | 2020.12.31 | ||||
| Book balance | Bad debt provision | Book Value | Book balance | Bad debt provision | Book Value | |
| Other receivables from government | -- | -- | -- | 165,460.00 | -- | 165,460.00 |
| Other receivables from the collecting and paying on behalf | 203,659.15 | -- | 203,659.15 | 307.17 | -- | 307.17 |
| Other receivables from other customers | 4,801,159.55 | 4,056,565.36 | 744,594.19 | 5,464,176.55 | 3,647,753.92 | 1,816,422.63 |
| Other receivables from related | 137,211,313.52 | 137,211,313.52 | -- | 137,211,313.52 | 137,211,313.52 | -- |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | 2021.12.31 | 2020.12.31 | ||||
| Book balance | Bad debt provision | Book Value | Book balance | Bad debt provision | Book Value | |
| parties | ||||||
| Other receivables in consolidation scope | 2,237,602,605.41 | 651,249,966.99 | 1,586,352,638.42 | 1,818,582,752.27 | 660,150,746.68 | 1,158,432,005.59 |
| Total | 2,379,818,737.63 | 792,517,845.87 | 1,587,300,891.76 | 1,961,424,009.51 | 801,009,814.12 | 1,160,414,195.39 |
(3) Bad Debt Provision
At the end of the period, bad debt provision at the first stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Other receivables from government | -- | -- | -- | -- | -- |
| Other receivables from the collecting and paying on behalf | 203,659.15 | -- | -- | 203,659.15 | 203,659.15 |
| Other receivables from other customers | 783,783.36 | 5.00 | 39,189.17 | 744,594.19 | 783,783.36 |
| Other receivables from related parties | -- | -- | -- | -- | -- |
| Total | 987,442.51 | 3.97 | 39,189.17 | 948,253.34 | 987,442.51 |
At the end of the period, bad debt provision at the second stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions shall be made on an individual basis | |||||
| Other receivables in consolidation scope | 2,237,602,605.41 | 29.10 | 651,249,966.99 | 1,586,352,638.42 | Could be uncollectible |
At the end of the period, bad debt provisions at the third stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions shall be made on an individual basis | -- | -- | -- | -- | Could be uncollectible |
| Other receivables from other customers | 4,017,376.19 | 100.00 | 4,017,376.19 | -- | Could be uncollectible |
| Other receivables from related parties | 137,211,313.52 | 100.00 | 137,211,313.52 | -- | Could be uncollectible |
| Total | 141,228,689.71 | 100.00 | 141,228,689.71 | -- |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
Bad Debt Provision as at December 31, 2020:
As at December 31, 2020, bad debt provision at the first stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions is drawn on a combination basis | |||||
| Other receivables from government | 165,460.00 | -- | -- | 165,460.00 | |
| Other receivables from employee’s petty cash | -- | -- | -- | -- | |
| Other receivables from the collecting and paying on behalf | 307.17 | -- | -- | 307.17 | |
| Other receivables from other customers | 1,912,023.82 | 5.00 | 95,601.19 | 1,816,422.63 | |
| Other receivables from related parties | -- | -- | -- | -- | |
| Total | 2,077,790.99 | 4.60 | 95,601.19 | 1,982,189.80 |
As of December 31, 2020, bad debt provisions at the second stage:
| Types | Book balance | Expected credit loss rate over the next 12 months (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions shall be made on an individual basis | |||||
| Other receivables in consolidation scope | 1,818,582,752.27 | 36.30 | 660,150,746.68 | 1,158,432,005.59 | Could be uncollectible |
As of December 31, 2020, bad debt provisions at the third stage:
| Types | Book balance | Expected credit loss rate over entire duration (%) | Bad debt provision | Book value | Reason |
| Bad debt provisions shall be made on an individual basis | |||||
| receivables from other customers | 3,552,152.73 | 100.00 | 3,552,152.73 | -- | Could be uncollectible |
| receivables from related parties | 137,211,313.52 | 100.00 | 137,211,313.52 | -- | Could be uncollectible |
| Total | 140,763,466.25 | 100.00 | 140,763,466.25 | -- |
(4) Bad debt provisions in the current period
| Bad debt provision | The first stage | The second stage | The third stage | Total |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit loss over the entire duration (credit impairment has occurred) | ||
| Balance as at December 31, 2020 | 948,253.34 | 660,150,746.68 | 139,910,814.10 | 801,009,814.12 |
| Current period | -909,064.17 | -- | 1,317,875.61 | 408,811.44 |
| Current roll-back | -- | -- | -- | -- |
| Current Resale | -- | -- | -- | -- |
| This verification | -- | -- | -- | -- |
| Other changes | -- | -8,900,779.69 | -- | -8,900,779.69 |
| Balance as of December 31, 2021 | 39,189.17 | 651,249,966.99 | 141,228,689.71 | 792,517,845.87 |
Note：Other changes were mainly due to the exchange rate movements.
(5) The top five units of ending balance of other receivables
| Name of the entity | Nature of other receivables | Ending balance of other receivables | Aging | Proportion of total ending balance of other receivables (%) | Ending balance of bad debt provision |
| Huafeng Real Estate Devepment Co., Ltd | Receivables from subsidiary | 786,160,642.90 | Within 1 year, 1 to 3 years, more than 3 years | 33.03 | -- |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | Receivables from subsidiary | 564,501,364.30 | Within 1 year | 23.72 | -- |
| Xinfeng enterprise Limited. | Receivables from subsidiary | 530,624,324.60 | Within 1 year, more than 5 years | 22.30 | 508,377,320.74 |
| Shenzhen Longgang Industrial Co., Ltd. | Receivables from subsidiary | 108,417,692.30 | Within 1 year | 4.56 | -- |
| American Great Wall Co., Ltd | Receivables from subsidiary | 94,502,416.46 | More than 5 years | 3.97 | 94,502,416.46 |
| Total | 2,084,206,440.56 | 87.58 | 602,879,737.20 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
3. Long-term equity investment
| Item | 2021.12.31 | 2020.12.31 | ||||
| Book balance | Impairment loss | The book value | Book balance | Impairment loss | The book value | |
| Invest in subsidiaries | 1,735,224,157.90 | 152,839,271.15 | 1,582,384,886.75 | 303,045,949.42 | 152,839,271.15 | 150,206,678.27 |
| Investment in joint ventures | 9,455,465.38 | 9,455,465.38 | - | 9,455,465.38 | 9,455,465.38 | -- |
| Invest in associated enterprises | 2,794,548.48 | 2,522,380.20 | 272,168.28 | 2,899,869.88 | 2,522,380.20 | 377,489.68 |
| Total | 1,747,474,171.76 | 164,817,116.73 | 1,582,657,055.03 | 315,401,284.68 | 164,817,116.73 | 150,584,167.95 |
(1) Invest in subsidiaries
| Investee unit | 2020.12.31 | Increase in current | The reduced | 2021.12.31 | Provision for impairment in the current period | Impairment loss The ending balance |
| Shenzhen Property Management Co., Ltd. | 12,821,791.52 | -- | 12,821,791.52 | - | -- | -- |
| Shenzhen Haiyan Hotel Co., Ltd. | 20,605,047.50 | -- | -- | 20,605,047.50 | -- | -- |
| Shenzhen City Shenfang Investment Ltd. | 9,000,000.00 | -- | -- | 9,000,000.00 | -- | -- |
| Xinfeng enterprise Limited. | 556,500.00 | -- | -- | 556,500.00 | -- | -- |
| Xinfeng Real Estate Co. , Ltd. | 22,717,697.73 | -- | -- | 22,717,697.73 | -- | -- |
| Shenzhen Special Economic Zone Real Estate (Group) Guangzhou Property and Estate Co., Ltd. | 19,000,000.00 | -- | -- | 19,000,000.00 | -- | 19,000,000.00 |
| Shenzhen Zhentong New Electromechanical Industry Development Co., Ltd. | 11,332,321.45 | -- | -- | 11,332,321.45 | -- | -- |
| American Great Wall Co., Ltd | 1,435,802.00 | -- | -- | 1,435,802.00 | -- | -- |
| Shenzhen Shenfang Free Trade Co., Ltd. | 4,750,000.00 | -- | -- | 4,750,000.00 | -- | -- |
| Shenzhen Huazhan Construction Supervision Co., Ltd. | 6,000,000.00 | -- | -- | 6,000,000.00 | -- | -- |
| Kai Luk Company Limited | 212,280.00 | -- | -- | 212,280.00 | -- | -- |
| Beijing Shenfang Property Management Co., Ltd. | 500,000.00 | -- | -- | 500,000.00 | -- | 500,000.00 |
| Shenzhen Lianhua Enterprise Co., Ltd. | 13,458,217.05 | -- | -- | 13,458,217.05 | -- | -- |
| Shenzhen Longgang Industrial Co., Ltd. | 30,850,000.00 | -- | -- | 30,850,000.00 | -- | -- |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Investee unit | 2020.12.31 | Increase in current | The reduced | 2021.12.31 | Provision for impairment in the current period | Impairment loss The ending balance |
| Beijing fresh peak property development management limited company | 64,183,888.90 | -- | -- | 64,183,888.90 | -- | 64,183,888.90 |
| Shantou City Huafeng Real Estate Devepment Co., Ltd | 16,467,021.02 | -- | -- | 16,467,021.02 | -- | -- |
| Bekaton Property Limited | 201,100.00 | -- | -- | 201,100.00 | -- | 201,100.00 |
| Australia Bekaton Property Limited | 906,630.00 | -- | -- | 906,630.00 | -- | 906,630.00 |
| Shenzhen Shenfang Department Store Co., Ltd. | 9,500,000.00 | -- | -- | 9,500,000.00 | -- | 9,500,000.00 |
| ShanTou Fresh Peak Building | 58,547,652.25 | -- | -- | 58,547,652.25 | -- | 58,547,652.25 |
| Guangdong Jianbang Group (Huiyang) Industrial Co., Ltd. | -- | 450,000,000.00 | -- | 450,000,000.00 | -- | -- |
| Shenzhen Shenfang Chuanqi Real Estate Development Co., Ltd. | -- | 995,000,000.00 | -- | 995,000,000.00 | -- | -- |
| Total | 303,045,949.42 | 1,445,000,000.00 | 12,821,791.52 | 1,735,224,157.90 | -- | 152,839,271.15 |
Note: At December 2021, the Group decided to transfer its 100% equity in Shenzhen Property Management Co. , Ltd. to Shenzhen International Trade PropertyManagement Co. , Ltd. for business development ; The Company has reclassified the investment in Shenzhen Property Management Co. , Ltd. to assets held forsale.
(2) Investment in joint ventures and joint ventures
| Investee unit | 2020.12.31 | Change of increase or decrease in current period | 2021.12.31 | Ending balance of impairment provision | |||||||
| Additional /new investment | Reduce investment | Under the equity method To confirm the Investment profit and loss | Other comprehensive Income adjustment | Changes in other interests | Declare payment of cash dividends or profits | Provision for impairment To prepare | other | ||||
| ① joint ventures | |||||||||||
| Fengkai Xinhua Hotel | 9,455,465.38 | -- | -- | -- | -- | -- | -- | -- | -- | 9,455,465.38 | 9,455,465.38 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Investee unit | 2020.12.31 | Change of increase or decrease in current period | 2021.12.31 | Ending balance of impairment provision | |||||||
| Additional /new investment | Reduce investment | Under the equity method To confirm the Investment profit and loss | Other comprehensive Income adjustment | Changes in other interests | Declare payment of cash dividends or profits | Provision for impairment To prepare | other | ||||
| subtotal | 9,455,465.38 | -- | -- | -- | -- | -- | -- | -- | -- | 9,455,465.38 | 9,455,465.38 |
| ② Joint venture | |||||||||||
| Shenzhen Ronghua JiDian Co., ltd | 1,454,444.32 | -- | -- | -105,321.37 | -- | -- | -- | -- | -- | 1,349,122.95 | 1,076,954.64 |
| Shenzhen Runhua Automobile trading Co., Ltd | 1,445,425.56 | -- | -- | -- | -- | -- | -- | -- | -- | 1,445,425.56 | 1,445,425.56 |
| subtotal | 2,899,869.88 | -- | -- | -105,321.37 | -- | -- | -- | -- | -- | 2,794,548.51 | 2,522,380.20 |
| Total | 12,355,335.26 | -- | -- | -105,321.37 | -- | -- | -- | -- | -- | 12,250,013.89 | 11,977,845.58 |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
4. Operating Income and Operating Costs
| Item | Year ended 2021.12.31 | Year ended 2020.12.31 | ||
| Income | Cost | Income | Cost | |
| Main business | 774,049,479.78 | 198,814,980.86 | 911,815,174.45 | 241,307,783.52 |
| Other business | 16,130.55 | -- | 24,095.25 | -- |
| Total | 774,065,610.33 | 198,814,980.86 | 911,839,269.70 | 241,307,783.52 |
(1) Operating revenue and operating costs are divided by industry
| Industry type | Current amount | Amount of previous period | ||
| income | The cost of | income | The cost of | |
| Real estate | 706,622,743.82 | 166,178,270.82 | 860,010,047.62 | 211,257,440.88 |
| Lease | 67,426,735.96 | 32,636,710.04 | 51,805,126.83 | 30,050,342.64 |
| Total | 774,049,479.78 | 198,814,980.86 | 911,815,174.45 | 241,307,783.52 |
(2)The revenue and cost of main business shall be divided by region
| Main business area | Current amount | Amount of previous period | ||
| Main business revenue | Main business cost | Main business revenue | Main business cost | |
| Guangdong Province | 774,049,479.78 | 198,814,980.86 | 911,815,174.45 | 241,307,783.52 |
5. Investment Income
| Item | Current amount | Amount of previous period |
| Long-term equity investment income calculated by the equity method | -105,321.37 | -92,348.97 |
| Dividend income from investments in other equity instruments | 692,580.00 | 599,760.00 |
| Investment gains from structured deposit | 1,196,580.44 | 15,217,058.60 |
| Total | 1,783,839.07 | 15,724,469.63 |
XV. Supplementary Information
1. Statement of non-recurring gains and losses for the current period
| Item | Current amount | instructions |
| Gains and losses on disposal of illiquid assets | -13,451.61 | |
| Government subsidies included in current profits and losses (except government subsidies that are closely related to the normal business of the Group and are continuously enjoyed in accordance with national policies and certain standard quota or quantitative amount) | 1,669,479.40 | |
| Profit or loss on entrusted investments or assets management | 13,024,710.91 | |
| Unmatured interest on structured deposit |
ShenZhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. Annual Report 2021
| Item | Current amount | instructions |
| The receivables for which the impairment test is conducted separately will be turned back | 482,790.04 | |
| Other non-operating income and expenses other than those mentioned above | 1,542,604.01 | |
| Other items of profit and loss that meet the definition of non-recurring profit and loss | ||
| Total non-recurring gains and losses | 16,706,132.75 | |
| Minus: income tax impact of non-recurring gains and losses | 4,176,533.19 | |
| Net non-recurring gains and losses | 12,529,599.56 | |
| Minus: impact of non-recurring net gains and losses attributable to minority shareholders (after tax) | ||
| Non-recurring gains and losses attributable to common shareholders of the Group | 12,529,599.56 |
2. Return on equity and earnings per share
| Profit in reporting period | Weighted Average Net Assets Yield % | Earnings per share |
| Basic earnings per share | ||
| Net income attributable to the common shareholders of the Group | 5.72% | 0.2183 |
| Net profit attributable to common shareholders of a company after deducting non-recurring gains and losses | 5.40% | 0.2059 |